# Pakistan Economy - News & Updates - Archive



## Neo

Valued members and guests!

I've initiated this new thread to report a daily update about our growing economy.
I'll be providind newsarticles, editorials, opinions, surveys and stats from global media.

Please do join me and don't hesitate to contribute if you have interesting news you'd like to share with me and other readers of this thread.

Enjoy! :thumbsup:

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## Neo

Pakistan's economy to remain robust: survey 


ISLAMABAD (March 31 2006): Pakistan's economy would remain robust this year with gross domestic production (GDP) growth rate at 6.5 percent, says the Economic and Social Survey of Asia and the Pacific-2006.

However, there are concerns about the overall budgetary deficit in years ahead as it may rise again. Besides, weak buoyancy of tax revenue, unemployment and poverty still remain the big challenges.

The survey launched here on Thursday points out that the economy of the Asian Pacific region grew strongly in 2005, aided by a buoyant global economy and the region should maintain its growth momentum in 2006, barring any unfavourable external events.

For 2006, the survey forecasts that oil prices will fluctuate within the range of $50-55. There are fears, however, that they may touch $100 a barrel within the next four years.

Despite high global energy prices, the price pressures rose only moderately in 2005 and are expected to remain muted or even ease slightly in 2006.

The Unescap has praised Pakistan's impressive economic growth in 2005. The GDP growth of 8.4 percent in 2005 was the highest in the last two decades. The factors which contributed to acceleration were strong domestic demand, better weather conditions for agriculture, continuity of economic policies and a robust financial sector.

The government had set a growth target of 7 percent of GDP for 2006, less than the rapid 8.4 percent achieved in 2005 but higher than the long-term growth trajectory of 6 percent.

A number of factors may interfere however; agriculture, prone to weather-related fluctuations, may perform below expectations. On the other hand, large-scale manufacturing may achieve the target and growth in services is expected to remain strong. Sustaining a higher growth rate is thus possible.

The earthquake is expected to have a minimal impact on economic growth. Natural disasters, damage and destroy assets, however, the repair and rebuilding of these assets generates economic activity that can help growth. Keeping all these factors in view, the surveys indicates that the GDP should grow 6.5 percent or higher in 2006.

There are indications that the economy as a whole is not likely to lose momentum in the short-term as a result of the devastating quake.

There was a sharp increase in nominal investment supported by strong macroeconomic fundamentals, increased availability of credit and a significant rise in foreign direct investment (FDI).

However, the investment to GDP ratio has remained at about 17 percent in the last four years. On the supply side, agriculture performed exceptionally well in 2005, with good weather and supportive government policies contributing to growth rate of 7.5 percent, an increase of 2.2 percent than in 2004.

Large-scale manufacturing recorded an impressive and broad-based growth rate of 15.4 percent in 2005. The service sector grew by 7.9 percent in 2005, in line with the higher growth in the commodity-producing sectors.

Inflationary pressure strengthened considerably in 2005, as inflation rose from 4.6 percent in 2004 to 9.3 percent.

Three years of strong economic growth, complemented by record low interest rates and the ongoing structural shift of many households towards higher consumption have injected new vigour into domestic spending.

This spending, coupled with rising oil and other commodity prices, contributed to a sharp increase in inflation in 2005. Food inflation reached double digits, a heavy burden on the poor who spend most of their income on food.

The government took several measures to ease inflationary pressures by not passing on to consumers the entire increase in the international prices and it began to tighten monetary policy to ease demand pressures.

The inflation is expected to drop to about 8 percent in 2006, pulled down by the decline in aggregated demand implicit in the lower growth estimate, a high base effect for 2006 prices and an anticipated improvement in food supplies.

However, prices of construction materials are expected to increase at a faster pace because of supply bottlenecks associated with the reconstruction work in the wake of the earthquake.

Budget deficit brought down to a relatively low level in recent years may rise again. In fiscal year 2005, it stood at 3.3 percent of the GDP.

Tax revenue buoyancy remained weak, as reflected in the continuing fall in the tax to GDP ratio that limits the government's ability to provide adequate funds for infrastructure and social programmes.

High growth of exports was outpaced by even higher growth of imports and current account turned into deficit. In 2005, while exports grew at a healthy rate of 16.9 percent, imports grew almost twice as fast, at 32.3 percent.

Higher oil prices led to a substantial increase in import payments and to higher shipment charges and so to higher prices for other imports as well. While growing domestic demand boosted import, imports of machinery and raw material also increased substantially.

Coupled with these large remittances, gains from the lower interest payments on Pakistan's external debt and liabilities partially offset the impact of the large trade gap. As a result, the current account deficit was contained in 2005.

The survey points out that there has been a significant increase in net inflows of capital in 2005. Capital inflows included mainly one-off inflows and an increase in concessional long-term loans from the World Bank and the Asian Development Bank. Foreign Direct Investment (FDI) reached $1.5 billion in 2005, 61 percent higher than in 2004. New FDI is so far concentrated in a few sectors such as telecommunications, finance and insurance and oil and gas exploration.

Following the adoption of a robust strategy of debt reduction, Pakistan's external debt declined from $37.9 billion at June-end 2000 to $36.6 billion at March-end 2005.

Highlighting the challenges, the survey says that the government expenditure related to the earthquake is likely to put pressure on the budgetary balance but with the continuing fiscal discipline, prudent monetary policy and focused attention on improving infrastructure and social sector indicators, the economy should maintain its medium-term growth trajectory.

Besides, enhancing the buoyancy of tax revenues, the growth in current expenditure needs to be curtailed and imbalances in the external sectors need to be addressed to ensure that the economy does not deviate from the growth path, achieved in the past few years.

Volatile oil prices: The current bout of high oil prices is hurting countries and if oil prices rise further by $10 a barrel, GDP growth of a developing country such as Pakistan can drop by 0.5 percent, inflation can rise up to one percent and current account deficit can widen up to 0.3 percent of the GDP.

The Challenge of Avian Influenza: The region has suffered significant human and economic losses as a result of the outbreak of H5N1 and estimates of human deaths from a possible global pandemic of the highly pathogenic avian influenza range from five million to 150 million people.

As a conservative loss in GDP from a pandemic would amount to $200 billion in just one quarter and in a worst case-scenario could plunge the global economy into recession.

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## Neo

*Rs 825-Rs 850 billion likely revenue target for 2006-07* 
ISLAMABAD (March 11 2006): The Central Board of Revenue (CBR) has conveyed to the International Monetary Fund (IMF) that the revenue collection target for 2006-07 would range between Rs 825 billion and Rs 850 billion, depending on the continuity in the current pace of revenue collection till the end of 2005-06.

Official sources told Business Recorder on Friday that the initial sketch of tax projections for 2006-07 was discussed by the tax authorities and Fund mission during recent series of meetings convened by the Board.

IMF technical mission, comprising Schimmelpfennig, Flecher, Hakura, Savastano and Di Tata, held a series of meetings with CBR Chairman Abdullah Yusuf and his reform team headed by Member Tax Policy and Reforms Khawaja Tanveer Ahmed and other members including Member Income Tax Salman Nabi, Member Sales Tax Shahid Ahmed and Member Customs. Presently, the mission is in the process of revamping of the taxation system under Article IV Consultation.

Sources said that CBR has estimated to collect Rs 708 billion by the end of current fiscal year against the target of Rs 690 billion, showing an increase of Rs 18 billion. The estimated target, of Rs 825 to 850 billion, for 2006-07 would be substantially higher than the target of Rs 690 billion set for 2005-06.

Officials said that CBR has not yet finalised the exact target for 2006-07. Taking into account the economic indicators, like GDP growth rate, inflation and reform initiatives including expansion of tax-base, sources said that the break-up of tax-wise projections would be hammered out on the basis of final revenue collection in 2005-06.

Keeping in view the previous years' trend of revenue collection, the initial tax projections have been worked out between Rs 825 and 850 billion for the next financial year.

Officials said that CBR would be able to surpass the target through broadening of tax base, voluntary compliance and increase in imports of dutiable items.

The CBR members also briefed the IMF team on tax-wise performance, including income tax, sales tax, federal excise duty (FED) and customs duty, officials added.

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## Neo

*Pakistan's investment climate favourable: Merrill Lynch* 
ISLAMABAD (updated on: March 14, 2006: Merrill Lynch Investment, one of the world's largest investment management organisations, has shown its interest to avail opportunities of Pakistan's emerging mutual fund market.

The interest was shown by Managing Director Merrill Lynch Investment, David Graham, who called on Dr. Salman Shah Advisor to PM on Finance and Economic Affairs here on Tuesday and described the investment climate of Pakistan favourable for foreign investment.

The Managing Director is currently visiting Pakistan to explore possibilities of investment including portfolio investment prospects in Pakistan.

Merrill Lynch Investment has over $500 billion of assets under worldwide management.

They have also singed an agreement with one of the largest US Investment Management Firm M/S Black Rock and the combined assets of both entities are approximately one trillion dollars. KASB is the local affiliate of Merrill Lynch.

Welcoming David Graham to Pakistan, Dr. Salman Shah said that Pakistan's economy is growing rapidly and integrating in the regional and global markets. Pakistan offers tremendous investment opportunities in various sectors including portfolio investment.

He said, "we have introduced structural reforms in fiscal, financial sectors and the corporate governance has improved."

The investment policy of Pakistan is business friendly and liberal as compared to other countries of the region. It also provides liberal tax incentive, he added.

The Advisor said, "we are in the process of converting state owned National Saving Departments into a corporate body to make it more investor friendly and market-oriented."

The Advisor assured all possible support to Merrill Lynch on behalf of the Government.

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## Neo

*Pakistan spending more on development:* 
ISLAMABAD (March 15 2006): Prime Minister Shaukat Aziz said on Tuesday that Pakistan is now spending more on development than ever before, thanks to the additional fiscal space made available by efficient revenue collection and better debt management.

Consequently, the overall poverty in the country has declined by 6.7 percent, and the unemployment rate for the current year has fallen to 6.8 percent, he said, and added that the expected GDP growth is close to 6.5-7 percent in 2005-06, which would be well within the growth target of 6 to 8 percent.

The Prime Minister was talking to World Bank Vice-President for South Asia Praful C. Patel, who called on him at the Prime Minister House. He said economic growth is expected to maintain its momentum despite the tragic loss of life and large-scale destruction in the wake of October 8 earthquake and spikes in oil prices surging to $70 per barrel. Shaukat Aziz said the high growth rate has resulted in benefits as well as challenges, adding the government will take steps to bring down inflation as well as the interest rate regime and keep ready to cope with any global downturn. Bridging the skills gap, redistribution of wealth and more jobs for an increasing labour force, including human resource development and institutional capacity building are other challenges that the government is preparing to meet, he added.

The Prime Minister said: "The strong and sustained economic growth over the last several years is underpinned by our economic philosophy based on deregulation, liberalisation, privatisation and truly home grown wide-ranging and deep structural reforms, consensus, continuity, consistency and transparency in our policies, growing domestic demand and renewed confidence of the private sector, improved fiscal discipline and debt-restructuring with currency stabilisation, rising public sector development spending, robust performance of industrial sector, expanding services sector, aggressive privatisation program, higher foreign direct investment, strong revenue performance, expanding trade and buoyant capital markets."

He appreciated Pakistan-World Bank Co-operation in North-South corridor development, infrastructure development and other areas.

Praful Patel appreciated the implementation of economic reforms introduced by the government, and said that according to World Bank assessment Pakistan is moving in the right direction. "World Bank assessment about the economic performance of Pakistan is positives. The country is doing well", he added.

Also present at the meeting were Dr Salman Shah, Advisor to the Prime Minister on Finance; Ms Hina Rabbani Khar, and Minister of State for Economic Affairs and senior officials.

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## Neo

*Government keen to enhance level of coal energy up to 9 percent* 
ISLAMABAD (March 15 2006): Planning Commission of Pakistan Infrastructure Advisor Dr Asad Ali Shah said on Tuesday the country wanted to enhance the level of coal energy up to 19 percent by existing six percent.

Speaking in a PTV programme, he said according to the estimates there were about 175 billion tons of coal reserves in Thar area, which could be utilised as energy generating source.

He said keeping in view the future energy requirements the government had evolved a 25 years plan with an approximate cost of dollars 150 billion. Around two third of this plan would be implemented by the private sector, he added.

Under this plan, the level of nuclear and alternative energy sources would be raised up to 5 per cent each, he said adding presently nuclear energy contributed 0.8 per cent while the share of alternative energy sources was almost nil.

To a question, he said the quality of the Thar coal was suitable for producing electricity adding in Germany similar coal was being used for energy generation.

He said the price of the oil was on constant increase in the international market with very little new discoveries.

In such a situation, the oil would be a scarce commodity in the world he said and added it was under those conditions the government was looking for alternate energy sources.

He said there was existed great potential for Pak-US co-operation in the area of energy generation, which would hopefully be utilised, in the prevailing conditions.

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## Neo

*Musharraf pledges to develop tribal areas* 
RAWALPINDI (March 16 2006): President General Pervez Musharraf on Wednesday expressed a firm commitment to establish writ of the government in tribal areas and vowed to realise rapid socio-economic development of the people.

The President was speaking at a meeting he chaired to review general security situation with particular reference to the federally administered tribal areas. In his remarks, the President appreciated the performance of law enforcement agencies and political administration in the areas vis-ÃÂ -vis maintenance of law and order.

He emphasised on the need for continuation of processes till the enunciated objective are achieved, the writ of the government established the miscreants are brought to justice and foreign elements fomenting trouble are ousted.

On economic development of the areas, the President expressed the hope that the setting up of reconstruction zones would produce economic opportunities for the local populace.

"The economic activity will not only generate employment opportunities at grassroots level for the people but also set the pace for all-round and sustainable socio-economic progress of the region."

He said the government is committed to putting in place better health and education facilities in the areas, which will raise the quality of life and equip the youth with tools of progress and prosperity.

In this regard, the President underlined the importance of timely completion of the projects and said their effective implementation would begin a new era of development in the tribal areas and help steer the people out of backwaters of development and bring them at par with the mainstream developed areas.

Governor NWFP and Minister for Industries and Special Initiatives made presentations at the meeting.

The meeting was attended by Minister for Interior, Minister for Tourism, Minister of State for Water and Power and senior officials of law enforcement organisations.

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## Neo

*Concept of Pakistan emerging as energy hub widely recognised* 
KARACHI (March 16 2006): The concept of Pakistan emerging as the energy hub for all of Asia was widely recognised by the delegates attended the 2nd Annual Energy APAC-2006 conference held in Beijing the other day (March 13 & 14).

In a comprehensive presentation by the Sui Southern Gas Company (SSGC) Managing Director Munawar Baseer Ahmad highlighted Pakistan's comprehensive gas sector, high growth and large demand coupled with high economic growth rates matching that of China.

According to a message received here, the delegates accepted that Pakistan was ideally situated to cater to the energy and trading needs of other countries in the region, particularly the landlocked Central Asian Republics (CARs).

The SSGC MD also informed the conference about the progress on the new port of Gwadar in Balochistan, that is expected to serve as secure outlet as well as storage and transshipment hub for the Middle East and Central Asia oil and gas supplies through a well defined corridor passing through Pakistan.

Conference delegates appreciated Pakistan's position and complimented the Munawar Baseer for presenting the strategic concept of formulating a plausible solution to meet Asia's energy supply and security needs.

SSGC General Manager (IT) Zuhair Siddiqui also presented a paper portraying how SSGC had over the last three years used technology and expertise from the world's leading companies, to build its Enterprise Information System, which had provided for a transformation to excellence through effective implementation of IT for automation of various business processes and developed a company-wide culture of excellence.

He stated the SSGC now has the required proficiency to provide advisory services to other companies in Pakistan and the region on IT, as well as gas optimisation and conservation technology.

The 2nd Annual Energy APAC 2006 attracted strong sponsorship support from consulting, engineering and leading oil and gas companies. Media companies and publications were also present in force.

The avenue provided SSGC and the Pakistan delegation a vibrant forum for putting the country on the world's energy map, and presenting the concept of an interconnected and interdependent Asian energy network based on transnational pipelines from Middle East and CARs, to demand centers in Pakistan, India, China and other countries.

The proposed energy network will provide the producing companies the opportunity to supply oil and gas to user countries via multiple routes, modalities and different sources, thus ensuring energy safety, security and sustainability in the 21st century.

The conference delegates agreed to further review and develop the concept presented by Pakistan.

The SSGC delegation offered to hold a follow up discussion or workshop, where stakeholders may be invited to find solutions and develop strategies the proposed Asian energy network.

Speakers from China, Australia, United Kingdom, Germany, Holland, Singapore, India, Pakistan, Malaysia and Canada and representatives of oil / gas companies made their presentation in the Conference.

The theme of the Conference, "Creating energy solutions for the 21st century" was designed to address these concerns and look for opportunities to ensure predictable, secure and affordable access to energy resources, particularly, for the countries of Asia.

Alternative energy sources such as nuclear energy, renewable energy and natural gas, LNG and LPG also featured prominently as key discussion areas.

They covered topics such as barriers to energy security in Asia, the need to liberalise and deregulate energy trading, creation of energy partnerships, and the latest developments in oil and gas and related technology. There was focus on growing importance of LNG, renewable energy, nuclear energy as well as opportunities for foreign investments.

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## Neo

*Pakistan, China to discuss road projects* 
ISLAMABAD: Senior officials from Pakistan and China will meet in Urumqi on Monday to discuss ways to improve road transport facilities between the two countries. It will be a working-level consultation, from March 20 to 22 and will focus on how to facilitate the business community in enhancing bilateral trade.

Ã¢â¬ÅThe two sides have recently stepped up efforts to promote trade through the land route, so it is important to further develop their road network,Ã¢â¬Â official sources said on Wednesday.

The Karakorum Highway (KKH) provides an important link between the two countries and the proposals for the rehabilitation and upgrading of the KKH will also come under consideration during the forthcoming meeting, said the sources. Pakistan and China have signed a MoU for widening 600 kilometres of the KKH. According to the sources, road development transport system carries special significance when the two countries are engaged in consolidating their economic ties. The two countries have reduced tariff on a number of import and export items under the Early Harvesting Programme.

President Pervez Musharraf, during his recent visit to Beijing, told China daily in an interview that his country wants to act as a transit facility giving China access to Central Asian markets and energy sources. He was referring to the Gwadar Port through which crude oil imports from Iran and Africa could be transported to northwest ChinaÃ¢â¬â¢s Xinjiang Uighur autonomous region by land. 

Musharraf said that the route, on which a feasibility study was being conducted, was a shortcut compared to the one via the Straits of Malacca. The port is strategically located as it is quite near the Strait of Hormuz, through which 40 per cent of the worldÃ¢â¬â¢s oil passes. The president said he was looking forward to the result of the feasibility study on transporting crude oil via mountainous regions in Pakistan and suggested that building a railway route was an option. APP


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## Neo

*WB to give $2b to upgrade rail, road networks* 
ISLAMABAD: The World Bank will provide $2 billion to Pakistan over the next five years for the North-South Corridor development project for modernizing rail and road infrastructure across the country to promote trade and economic activity. 

Praful Patel, World Bank Vice-President for the South Asia region, said this while talking to reporters at the end of the inaugural session of the Pakistan Development Marketplace here on Wednesday.

He said the North South Corridor development is a infrastructure development and modernization project that will include development of infrastructure of roads, highways, bridges, rail links, rail system and infrastructure for future requirements of the country. 

This project aims to facilitate the transportation of export cargoes from Peshawar to Karachi and making it competitive. He informed that about six months ago at a meeting with President Pervez Musharraf this North South Corridor development initiative was discussed and was agreed with the World Bank. 

The project will modernize the infrastructure of the country. In the first phase, the infrastructure from Lahore to Karachi will be up-graded and modernized. He said the modernization of Pakistan Railways is also the main part of the project, under which it will be re-structured and reformed to meet the future requirements of the country. The demand is there, but the railway system is 50 years old that need up-gradation. 

The World Bank will provide $2 billion for North South Corridor development project over the next five years to help the country to modernize its infrastructure. He said the amount for re-structuring and reforming the railways for future requirements is to be decided in consultation with the local authorities. 

Responding to another question, he said inflation is in the range of 8% and the government is taking steps to bring it down to a reasonable level. He said the World Bank Portfolio review will be held on Thursday between the Bank authorities and Adviser to the Prime Minister on Finance and Revenues Dr Salman Shah. 

A special task force on the North South Corridor has already suggested to the government to rationalize taxes and duties on the import of modern multi-axle trucks with a view to improving the operational efficiency and modernization of trucking fleet in the country.

The task force had highlighted in its report that PakistanÃ¢â¬â¢s highway infrastructure is under multiple overload stress that is reducing its life to less than half. Annual maintenance and rehabilitation bill is touching staggering proportions, causing road sector inefficiency loss of Rs 240 billion per year, as per the World Bank Report 2002. Highways with 10-year design life becomes unserviceable in only 18 months (on an average) and is to be rehabilitated five times during the 10-year design period. 

The ministry of communications keeping in view the recommendations of the task force has proposed to the government that under the deletion programme condition the import of CKD trucks be allowed on 0% customs duty and 15% general sales tax against the existing rate of 20% customs duty and 15% general sales tax.

The ministry has also suggested to the government that import of trucks in CBU condition without deletion programme is allowed on 10% customs duty and 15% general sales tax against the existing rates 60% customs duty and 15% general sales tax so that the future requirement of trade and industry can be met through a modern fleet of trucks in the country. The government is expected to approve and announce some of the recommendations of the task force in the budget for the fiscal 2006-07.

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## Neo

*China to expand investment in Pakistan* 
ISLAMABAD (March 17 2006): Chinese government encourages its public and private sectors to actively take part in projects based in Pakistan and the objective of this visit is to strengthen co-operation between the corporate entities of the two countries in the manufacturing sector.

These views were expressed by Liu Yingjun, Deputy Director General of the Ministry of Commerce of China currently visiting Pakistan at the head of a 6-member delegation during a meeting in Board of Investment (BoI).

Jehangir Bashar, Secretary Board of Investment briefing the delegation about the economic and investment policies of the government said that Pakistan provides the most friendly environment to the foreign investors which is evident from the fact that over 600 multi-nationals are operating in Pakistan and not a single company, which came to Pakistan has gone back.

Bashar pointed out that unfortunately despite the time tested friendship on the political and diplomatic front, economic co-operation between the two countries remained insignificant. The inking of number of agreements during the recent visit of the President of Pakistan to Chine, he hoped, would boost bilateral trade in various fields and enhance economic ties of the two countries also.

He said that as China is now looking for expanding its investments abroad, given the geographical location, cheaper cost of production, economic reforms, liberal investment policies, abundant human resource and above all a local market of 150 million people, Pakistan is an ideal place for China to invest in.

Liu Yingjun expressing her gratitude on the supportive role of the Government of Pakistan, pointed out that the Chinese companies established in Pakistan were greatly facilitated by the government especially Board of Investment (BoI) and this has encouraged more Chinese companies to consider investment in Pakistan

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## Neo

*'All NWFP villages to be electrified by 2007'* 
PESHAWAR (March 18 2006): Under the Roshan Pakistan Programme of the federal government, the Peshawar Electricity Supply Company (Pesco) would electrify all villages of NWFP by end of year 2007.

Pesco Chief Executive Brigadier Sakhi Marjan announced this during a 33rd Board of Directors meeting of the company held under the chairmanship of Jamshed Savul at Wapda House, Peshawar.

Pesco Chief Executive Brigadier Sakhi Marjan, Dr Mir Hatim, Ahmed Nawaz Mughal, Chaudhry Abdul Qadeer, Ghulam Hussain Kulachi, members, Chief Engineer (Operation) Muhammad Shafiq Khattak, Chief Engineer (Technical) Roshan Din, Chief Engineer (Customer Services) Iqbal Ali Shah and Riaz Hussain, Secretary Board of Directors, attended the meeting.

Riaz Hussain, Secretary Board of Directors presented a comprehensive report about the minutes of the 32nd Board of Directors meeting, which were approved with minor amendments after a detailed discussion.

Pesco Chief Executive Brigadier Sakhi Marjan briefed the BoD regarding ongoing developmental schemes of electricity running under various programmes. He told the meeting that the government had chalked out its policy to electrify all villages in the country by December 2007.

The Pesco is taking all out efforts for implementation of the government directives and electrification work of all villages of NWFP is underway throughout the province.

He said that 3648 villages had been electrified from July 1, 2004 to February 28, 2006, with a cost of Rs 1204 million while work to electrify more villages is under progress.

The Pesco has prepared a detailed plan for electrification of all villages in the NWFP province by the end of December 2007, out of which 1191 villages would be electrified with a cost of Rs 631.9 million by December 2006, while remaining villages to be electrified by December 2007.

The board directed to complete the electrification of all villages of the province within stipulated time and directed to utilise all the available funds in this regard. The board stressed to ensure the availability of required material on sites for the developmental schemes. It called for the presentation of report on village electrification in the next meeting of the board.

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## Neo

*Asian Bank pledges $130 million for Balochistan* 
ISLAMABAD (March 17 2006): The Asian Development Bank (ADB) has agreed to provide $130 million loan from its Ordinary Capital Resources (OCR) for Balochistan Devolved Social Services (BDSS) programme to help achieve Millennium Development Goals (MDGs). The loan is for 15 years, including a grace period of three years. The Program is to be implemented during 2006-09. 

Sources told Business Recorder on Thursday that last year, a high-powered ADB mission visited Pakistan, and discussed modalities of the project with representatives of the Planning and Development Department of Balochistan (executing agency), Planning and Development Division and Economic Affairs Division (EAD). 


In July 2004, the bank had approved $0.40 million for project preparation now the government is seeking funds to execute the project, sources added. 


This programme aims at expanding the coverage of health services, especially for women and children, increasing school enrolment, improving educational facilities for handicapped children (girls) and improving water supply and sanitation services. It will also support institutional strengthening and partnership building to deliver social services effectively in Balochistan. 


The project will also execute social sector performance grants to the districts; support capacity building and institutional strength at both provincial and district levels in social service delivery; enable the private sector to participate in public and private social sector services delivery. It will also provide policy reform support for province-wide devolved social services in education, health and water supply and sanitation. The Planning and Development Department of Balochistan shall be the program-executing agency. The beneficiary shall pay to ADB an interest charge at the rate of one percent per annum during the grace period and 1.5 percent per annum thereafter.

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## Neo

*India, Pakistan trade almost doubles to one billion dollars: industry group* 
NEW DELHI (updated on: March 19, 2006, 13:48 PST): Trade between India and Pakistan almost doubled to cross the one billion dollar mark this year, an industry body said. 

The 400 million dollar increase in the year to March 2006 was attributed to the launch of a South Asian Free Trade Area Agreement (SAFTA) and the opening of rail and road links last year, the Associated Chambers of Commerce and Industry said in a statement.

"The establishment of relations along with SAFTA has brought changes in customs tariffs and reduced trade-related barriers, leading to restoration of direct trade linkages and reducing the transaction costs," said the statement quoted by the Press Trust of India news agency. India and Pakistan launched a peace process in January 2004.

After the start of the peace talks Pakistan scrapped import duties on 13 commodities from India that were scarce in its local markets including garlic, onions, potatoes, tomatoes and livestock.

India last year imported onions from Pakistan to make up for a domestic shortfall.

Bilateral trade, which stood at 161 million dollars almost five years ago, has the potential to reach 10 billion dollars by 2010, the industry body added.

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## Neo

*2007 to be celebrated as 'Visit Pakistan Year* 
PESHAWAR, Matrch.19 Federal Minister for Tourism Dr Ghazi Gulab Jamal said that 2007 would be celebrated as "Visit Pakistan Year" to attract tourists and promote the tourism industry of the country.

Talking to news agency he said the ministry had planned a number of events to further boost and attract domestic as well as international tourists to visit and explore the inspiring tourism sites of the country.

He said Pakistan was gifted with rich cultural and natural beauty, which is a great source of inspiration for the foreign tourist to visit and explore it.

The minister said, as tourism has become an industry it needs more attention towards its promotion to make it a productive tool in the development of national economy.

The minister underscored the role of local community in improving the industry by extending visitors maximum care and love.

Establishing skiing resort in the northern areas, Ghandara week and

Sufi festivals were the major events planned to attract local and foreign tourists, he added.

The minister further said that the opening of the route that Alexander the Great used during his invasion of sub-continent is also under consideration.

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## Neo

*UK to give $400 million grant for poverty alleviation* 
ISLAMABAD (updated on: March 21, 2006, 22:50 PST): Pakistan and the United Kingdom signed a Letter of Intent (LoI) on Tuesday to promote a long-term development partnership between the two countries, especially focusing on poverty alleviation and development.

Prime Minister Shaukat Aziz signed the LoI in Islamabad that was inked by his British counterpart Tony Blair in London. The agreement will cover UK grant assistance of 235 million Pounds (approximately 400 million dollars) over the period of three years.

The development partnership between the Pakistan and UK's Department for International Development (DFID) will target poverty alleviation, creating income-generating opportunity for poor and improving services delivery.

"The long term commitment signifies the confidence the British government has in our policies to reduce poverty," Prime Minister said after the signing ceremony attended by British ambassador Mark Lyall Grant, Minister of State for Finance Omer Ayub Khan and Minister of State for Economic Affairs Hina Rabbani Khar.

The long-term partnership also indicated the British government's commitment to help Pakistan achieve better health care, better education, empowerment of women and in fighting hunger and disease, he added.

Prime Minister said the country's economy was on the rise and the government was working to pass on the benefits of high growth down to the grass roots level.

"This is already happening," he said and referred to the 6.5 percent reduction in poverty level. He said as the majority of the country's population lived in the rural areas, the one good way to fighting poverty was through increasing level of agriculture income.

The government, he added, was working on a host of programmes to help farmers increase their income through major and minor crops, fisheries etc. that in turn will help the country move forward on the road to progress and prosperity.

The Premier termed the DFID as an excellent partner of Pakistan in its efforts to alleviate poverty and improve development.

He also thanked the British government for the earthquake relief assistance and their commitment to help Pakistan in the rehabilitation of people ravaged by the October 8 tremors.

British ambassador Mark Lyall Grant, on the occasion, said that the signing of the LoI indicated his country's long-term commitment and keenness to work closely with Pakistan to achieve Millennium Development Goals (MDGs).

He said that the government's policies were leading to reduction in poverty and the British government wanted to help Pakistan achieve the desired goals.

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## Neo

*President foresees $18 billion exports this fiscal* 
KARACHI (March 21 2006): President General Pervez Musharraf has said the government is fully encouraging the foreign direct investment (FDI) and foresaw the total export would reach $18 billion during the current fiscal year.

Speaking as chief guest at the Textile Asia 2006 Exhibition Gala Dinner at the Governor house here on Monday, he said the policy of deregulation was paying dividends, as a result the country has witnessed unprecedented foreign investment.

The President said during the last six years the economy has been transformed into a vibrant and dynamic state. The GDP, which was 60 to 65 billion dollars, is now touching the $135 billion mark.

"We have achieved a record growth rate of 8.4 percent during the last fiscal year and was expecting 7 percent this year," he added.

The President, welcoming foreign delegates, said Pakistan had provided a very attractive environment for investment. He said the profit margin in Pakistan is much higher. He said 600 to 700 foreign companies are doing business in Pakistan and earning 30 to 60 percent profits and some of them even earned up to 80 percent.

He said infrastructure is being developed and cited the development of ports, highways and roads in this regard.

The President was extremely upbeat on the vast opportunities that Pakistan is offering to foreign investors and looked forward to increasing inflow of FDIs.

He said the FDI had grown by 500 percent over the last five years. This flow of FDI would continue in future, he hoped.

He said an upsurge in the country's export has been witnessed due to privatisation, deregulation and liberalisation. He declared through the process of production, extension and value-addition, even bigger achievements in the export field will going to take place.

He was of the opinion that foreign investment creates jobs for people and eliminates poverty.

The President appreciated organisers for holding the Textile Asia 2006 Exhibition. He also lauded efforts of the textiles minister Mushtaq Ali Cheema, Sindh governor Dr Ishratul Ibad, Chief Minister Dr Arbab Ghulam Rahim, Sindh minister for industries Muhammad Adil Siddiqui and all others in making the event a success.

Speaking on the occasion, Sindh governor Dr Ishratul Ibad Khan said the participation of foreign delegates in the exhibition indicate the growing confidence of foreign investors in the Pakistan's economy.

He said 1250 acres of land has been given to set up Textile City in Karachi, which will create employment opportunities for the people.

He assured the province of Sindh would do its best to provide even more incentives for investment here.

Textiles minister Mushtaq Ali Cheema, speaking on the occasion, said the country under the leadership of President General Pervez Musharraf was witnessing an economic upswing and the contribution of textile sector to the GDP had increased while it maintained its position as the backbone in the economy.

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## Neo

*Pakistan becomes most 'surprising economic success story'* 
Pakistan becomes most 'surprising economic success story'

ISLAMABAD (March 22 2006): Pakistan has been described as the "most surprising economic success story," by prestigious Newsweek magazine as Prime Minister Shaukat Aziz told the publication the government will continue the reforms to sustain its phenomenal economic growth and face the challenges of globalisation head-on.

In its latest issue, Newsweek talked to the prime minister on the country's expanding economy and also published a two-page article titled "Promise in Pakistan" to explain how the country, that was once isolated internationally and in the grip of deep recession, made a turnaround in the last six years.

The publication introduced the prime minister as a veteran of international banking, who, it added, has been the architect of Pakistan's remarkable economic recovery ever since he joined President Pervez Musharraf's government in 1999.

In his interview to the magazine, Prime Minister Shaukat Aziz said that Pakistan's precarious financial situation - high fiscal deficits and debt levels, no money to pay next month's oil import bill, etc - prompted the government to start an aggressive reform agenda six years ago.

"So we started ensuring fiscal discipline, containing expenditures and increasing income. We focused on investment and growth. We bit many bullets to restore credibility. The fundamentals of reform were deregulation, liberalisation and privatisation," he added.

The prime minister said foreign investors' interest in Pakistan today was very strong and this year foreign investment would be the highest in Pakistan's history, at close to three billion dollars.

"There are opportunities in agribusiness, Information Technology, telecom, software, hotels, engineering goods and infrastructure. We see Pakistan as a hub for many multinationals," he added.

The report "Promise in Pakistan" began with a Lahore-based Iqbal Ahmed, who was a depressed businessman in late 1990s with his modest, liquefied-petroleum gas operation didn't seem to be going anywhere.

"I used to get up and say, 'What the hell, it's another day'," he recalls. "Now I can't wait for the day to begin. I see a very bright future."

Ahmed has good reason to be optimistic. Two years ago he signed a deal with Houston's Hanover Energy Co that has helped transform his LPG extraction plant into the largest and most efficient in Pakistan, with revenues last year of 130 million dollars.

Backed by several international investors, Ahmed has bid some 400 million dollars to buy a controlling interest in Southern Sui Gas, one of two state-owned gas production and distribution companies that are being privatised.

And he recently signed a memorandum of understanding with Excelerate Energy of Houston to import liquefied natural gas into Pakistan in supertankers.

"We're enjoying a sea change in economic conditions and opportunities," Ahmed, 60, told the Newsweek. "Pakistan is open for business."

The report cites Pakistan's impressive macroeconomic indicators to highlight the growing business environment in the country.

Last year, the country's Gross Domestic Product growth rate hit 8.4 percent, the world's second highest behind China, following two years of solid six percent growth. This year the economy is predicted to expand by nearly seven percent.

"After years of instability...a true middle class is now developing. Economic reforms have given the government money to invest in health and education, and foreign investors are eyeing Pakistan for the first time.

"In many ways the country has become the world's most surprising economic success story," the report said.

The report describes Pakistan's rising economy as a "heady turnaround" for a nation that, in the late 1990s, was practically a failed state with near-zero GDP growth.

http://www.brecorder.com/index.php?...&term=&supDate=


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## Neo

*Bosicor plans to set up new refinery* 
KARACHI (March 22 2006): Bosicor Pakistan has decided to set up an additional refinery with a cost of $225 million, substantially larger than any of the installed refineries in the country.

Sources on Tuesday said the refinery would have a capacity of 120,000 barrels per day with a configuration suited to the country's requirements. The world's leading process licensor and engineering consultant, Universal Oil Products Inc, was given the task of selecting and carrying out a thorough technical and economic due diligence.

After an extensive survey, the company has selected a state-of-the-art Bechtel design for the refinery. The company also said the refinery has the capacity to revamp the existing capacity to 180,000 barrels per day.

The refinery consists of mainly crude distillation, gas separation, naptha hydro-treating, platformer, diesel hydro desulphurisation, vacuum distillation and would maximise the production of low sulphur diesel and minimise fuel oil, which suits the requirements of the country.

Bosicor is finalising the new project, which is slated to bring in a substantial foreign investment and would be completed by December 2008.

The refinery is currently engaged in implementing four major projects: revamping of crude distillation unit to attain capacity of 30,000 barrels per day with energy conversation. It would be completed by October this year. Installation of single buoy mooring to be completed by November 2006 would help in receiving large crude oil tankers and export products.

The company plans to add 126,000 tonnes storage capacity to meet the requirements of revamping of the refinery. The project would be completed by November 2006. Installation of 12,500 barrels per day isomerisation plant to upgrade this refinery and other refineries surplus naphtha to gasoline for local market and export. The commissioning target of this plant is December 2007.

The total cost of all these projects amounted to Rs 4 billion, which has been arranged. The refinery has started its full commercial operations for almost two years with a present capacity of 18,000 barrels per day and so far Rs 6.5 billion had been invested in it.

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## Neo

*DPW may bid for Gwadar phase-2* 
DUBAI Ã¢â¬â DP World is expected to bid for the $865 million phase two of the new deepwater port of Gwadar built in PakistanÃ¢â¬â¢s Balochistan province with Chinese collaboration, according to shipping industry sources.


Last month Pakistan has approved the start of negotiations with DP World as a potential operator of Gwadar.

The total cost of the project is estimated at $1.6 billion, of which China has contributed about $198 million for the first phase, almost four times the amount Pakistan has contributed for this phase.

China has invested another $200 million to build a highway connecting Gwadar Port with PakistanÃ¢â¬â¢s largest city, Karachi, itself a port. 

The Pakistani government has already finalised plans for the second phase of the port to be built by the private sector. It will have three container terminals with a quay length of two kilometres, a bulk cargo terminal, a grain terminal and an oil terminal.

The Gwadar Port Implementation Authority is expected to begin negotiations with prospective operators soon before calling for official tenders. The government proposes to operate Gwadar as a free port along the lines of Jebel Ali terminal.

The second phase, which will have nine more berths, an approach channel and storage terminals, is also financed by China.

DP World was among companies that expressed interest in operating the portÃ¢â¬â¢s $300 million first phase, which was completed with a Chinese loan in April last year. Other companies in the running include DP WorldÃ¢â¬â¢s arch-rivals Hutchison Port Holdings of Hong Kong and PSA International of Singapore.

Although Hutchison already operates the two-berth Karachi International Container Terminal in Pakistan, DP World is considered the favourite, according to shipping industry observers.

The portÃ¢â¬â¢s first phase has three multipurpose berths with a quay length of 600 metres, a 100 metre service berth and a 4.35 kilometre long navigation channel that has a draught of between 11.5 metres and 12.5 metres, depending on the tidal situation.

The channel is being dredged to 14.5 metres to allow the latest generation container ships to call the port. 

According to shipping experts, handling over operations to an international operator would help to develop Gwadar as a regional hub.

Its strategic location as the southern extension of Pakistan into the Arabian Sea allows it to be the ideal egress gateway for transit traffic into the landlocked Central Asian republics, Afghanistan and Iran.

Pakistan Railways, meanwhile, is carrying out a feasibility study for building a railway line from Gwadar to the Afghani border.

Pakistan invited international bids early last year to operate its new deepwater multipurpose port at Gwadar.

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## Neo

*$10bn needed to develop trade corridor* 
KARACHI: Federal Minister for Commerce Humayun Akhtar said on Saturday that an investment of $10 billion was required to develop the National Trade Corridor (NTC) - to be established from Karachi to Torkhum. 

Inaugurating a meeting on NTC on the occasion of National Trade and Transport Facilitation Conference ÃÂ± 2006, he said that the World Bank had given a very positive and encouraging response on funding NTC. 


He said that action plan to implement the NTC programme would be ready by 2007. The National Logistics Corporation (NLC) had been assigned the task to establish four Border Trade Stations (BTS) - Wagah (Pakistan-India border), Sust (Pakistan-China border), Torkhum (Pakistan-Afghanistan border) and Chamman (Pakistan-Afghanistan border), he added. 


He said that these BTS would play the role of a catalyst in promoting national exports. 


Humayun said that the Ministry of Commerce had embarked on a new project called Domestic Commerce to focus on problems related to non-traditional export items and issues and solutions to the problems faced by the exporters. 


He said that the Ministry of Commerce was concentrating on Special Trade Agreements and Preferential Trade Agreements with many countries. 


He said that attaining efficiency in line with international standards was the first requirement for enhancing the quantum of exports. 


He said that the process of withdrawing trade subsidies by developed nations would start from 2010 and these would be completely eliminated by 2013. "We must prepare ourselves to enhance our exporting share in world trade." 


He pleaded for establishing big (business) chains in the country and starting branding of products, "unless we do this no foreigner will come to Pakistan to place orders." 


He was of the view that South Asia and Central Asia had more growth potential. 


He disclosed that the Government of Pakistan has deposited ratification instrument with UNO with regard to international road agreement called ASTIR and expressed hope that after ratification of this agreement, PakistanÃ¢â¬â¢s exports and imports through road would improve substantially.

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## Neo

*FDI up 151.60 percent, portfolio investment 472 percent* 
ISLAMABAD (March 23 2006): The State Bank of Pakistan (SBP) on Tuesday reported that total foreign private investment in July-February 2005-06 increased by 190 percent to $1.974 billion from $679.9 million in the corresponding period of the last year.

During the first eight months of 2005-06, Foreign Direct Investment (FDI) increased by 151.60 percent year-on-year basis to $1.504 billion from only $597.6 million and portfolio investment by 472 percent to $470.9 million, whereas it was $82.3 million in the corresponding period of the last year.

A significant feature of the data was that besides FDI, year-on-year basis inflow of portfolio investment increased enormously. It followed steep path right from the beginning of the new fiscal year.

During 2004-05, total investment inflow had crossed $1.67 billion mark as against $0.921 billion in 2003-04. However, for the current fiscal year there was hope of further improvement in foreign investment, especially with better macroeconomic indicators and infrastructure.

The government expects that the foreign investment in Pakistan is likely to touch $3 billion by the end this fiscal year.

Inflow of foreign private investment in February this year increased by 375.6 percent to 347.2 million as compared to only 73 million during February 2005.

Apart from this, FDI increased by 235 percent to 276.8 million and the portfolio investment jumped to 70.4 million in February 2006 as compared to 9.5 million in February 2005, which the investors withdrew in the same month of the last fiscal year.

The break-up of investment by countries shows that United States was the biggest investor in Pakistan with FDI of $326.9 million and portfolio investment of $394.7 million, totalling $721.5 million during July-February 2005-06.

Saudi Arabia is the next with total investment of $271.1 million, including FDI of $270.4 million and portfolio investment of only $0.8 million. However, in terms of direct investment, Switzerland was third following Saudi Arabia with $152.4 million. A significant feature of the data is that US portfolio investment during the period showed a high growth, it grew to $394.7 million from $43.5 million in the corresponding period of the last year. Besides this, FDI also grew to $326.9 million from $148.6 million.

Saudi Arabia's direct investment during the first eight months of this fiscal year jumped to $270.4 million, as it was only $10.8 million in the corresponding period of the last year.

Direct investment from the UK slightly moved up to $116.3 million as against $110.9 million of the last year, while its portfolio investment declined to minus $4.1 million as against $12.2 million in the same period of the last year.

FDI inflow from the United Arab Emirates and Netherlands was also sizeable which stood at $76.9 million and $62.6 million, respectively in eight months. The portfolio investment from the UAE jumped to $42.7 million ($28.1 million last year) and Netherlands investment climbed to $4.2 million as against only $0.2 million in the previous fiscal year.

Independent experts believe that the current inflow of foreign investment was not so satisfactory taking into account other countries of the region. During the last 15 years, Pakistan attracted nearly $10 billion with $1.67 billion in 2004-05.

While FDI in India since the onset of the liberalisation process was $36.28 billion (up to November 2005). FDI inflows in 2004-05 has increased by over 42 percent from $2.63 billion in 2003-04 to $3.75 billion in 2004-05 (this represents only the equity capital component of FDI).

During 2005-06 (April-November 2005), FDI inflows stood at $3.36 billion as compared to $2.25 billion during the corresponding period of the previous year.

China's FDI-led growth was a strong indicator where FDI inflows since 1978 amounted to over one trillion dollars with $153 billion in 2004 alone.

This has given a big boost to its economy by improving per capita income to $1,000 and the population living below the poverty line has declined to just 10 percent.

Foreign investors are in direct control of their investment funds, also transfers in the latest technology and modern management practices resulted in economic gains largely from efficient, effective and economic utilisation of the funds.

While the present economic managers boast of over $1 billion FDI during the last fiscal year, the reality is that given the prevalence of poverty and unemployment, this is too negligible an amount to have had a worthwhile impact on our economy.

Even Nigeria, which tops the Berlin-based Transparency International's Corruption Perception Index, has outperformed us by attracting $2 billion in FDI last year and hoped to increase it to $5 billion this year.

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## Neo

*'Government to complete uplift projects in time'* 
ISLAMABAD (March 23 2006): Government is committed to complete all development projects on time under Public Sector Development Programme (PSDP) during current financial year, Deputy Chairman Planning Commission Dr Akram Sheikh said.

Talking to private TV channel, he said it was the government's prime objective to complete all development project timely and within the sanctioned cost. During last four years, allocation for PSDP has been increased from 2.6 percent of GDP to 3.9 of GDP, he added.

He further said that in 2003-04, about Rs 113 billion were allocated for PSDP, while during the current financial year about Rs 204 billion with an increase of 81 percent were allocated for development projects. He said in 2003-04, works on about 769 development projects were launched

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## Neo

*Pakistan eyes over $4b remittances in 2005-06* 
ISLAMABAD Ã¢â¬â Pakistan government is projecting to collect over $4 billion foreign remittances by the Overseas Pakistanis in 2005-06.


According to the latest official estimates, during the first half of the current financial year, workers' remittances stood at little over $2 billion as against $1.9 billion during the same period last year, showing thereby an increase of 5.6 per cent. The United Stated continues to be the major country of origin of remittances followed by Saudi Arabia.

The foreign capital requirements are expected to increase from $3.9 billion in 2004-05 to $4.6 billion in 2005-06. During July-December 2005, imports stood at $13.6 billion showing an increase of 53.1 per cent over July-December 2004 and representing 68.9 per cent of the full year target of $19.8 billion.

Thus during July-December 2005 imports payments (CIF) exceed the export receipts by $5.5 billion. Higher import bill has been largely on account of increase in machinery group imports and petroleum crude.

As per Medium Term Development Framework (MDTF), imports and exports for 2005-06 are forecast to grow by 12.9 per cent and 11.9 per cent respectively in normal dollar terms. As a result, the trade account projected to be in deficit by $4.2 billion in 2005- 06 against a deficit of $3.6 billion in 2004-05.

However, the government has significantly lowered its overall agriculture sector growth rate target from 4.8 per cent to 3 per cent, making the job of its planners almost impossible to achieve 7 per cent GDP growth target in 2005-06.

The decline in the production of three major crops Ã¢â¬â wheat, sugarcane and cotton Ã¢â¬â suggests that the government is facing an uphill task to achieve even 6.2 per cent GDP growth rate in 2005- 06 against 8.4 per cent of the last financial year. Earlier, it was being anticipated that the government would end up managing 6.4 per cent growth rate during the current financial year.

According to the Planning Commission's new summary, submitted to the recently held meeting of the National Economic Council (NEC), sugarcane latest estimates were 40.947 million tones against the previous estimates of 45.886 million tons showing a further decrease of 10.8 per cent.

Similarly, there would be 12.7 million cotton bales against the target of 15 million. Wheat production will be close to 22 million tons against the target of 22.1 million tons.

"Thus the total decline over the last year, works out to be 13.3 per cent. This would result in a significant decline in production of sugar. As the sugar carries 4.15 per cent weight in the Quantum Index of Large Scale Manufacturing (LSM), the decline in sugar production would have significant negative impact on the LSM growth".

Secondly, less than targeted production of cotton would lead to reduced production of cotton yarn and cotton cloth and resultantly would pull down LSM growth.

Earlier, the government had estimated 6.4 per cent GDP during 2005-06 on the basis of 12 per cent growth of LSM as provided by the Federal Bureau of Statistics (FBS) for July-November.

There are, however, indications that LSM growth may be even smaller than 12 per cent probably 10 per cent on account of less sugarcane and cotton production.

It is also worth mentioning here that the production data for 39 items provided by ministry of industries and production for July-December 2005 is showing 6.7 per cent increase.

"If LSM growth is assumed at 10 per cent, the overall GDP growth would come down further to 6.2 per cent", the Commission estimates revealed.

The Commission's summary said that the ministry of food and agriculture (MINFAL) has provided the provisional estimates for major crops Ã¢â¬â sugarcane, rice, maize and cotton - and the revised target of wheat. On the basis of these five crops, the major crops have been estimated to grow at 1.9 per cent in 2005-06 against the target of 6.6 per cent, pulling down resultantly the overall agriculture sector growth.

The rate of inflation (CPI) for the year 2005-06 was targeted at 8 per cent which was to be achieved by increasing the supply of essential commodities and through judicious monetary policy. On the basis of July-January 2005-06 data, the annualised rate of inflation measured by the CPI stood at 8.5 per cent as against 8.8 per cent recorded during the corresponding period of 2004-05.

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## Neo

*US offers zero rating for Pakistani products* 
US offers zero rating for Pakistani products: Secretary Trade 

FAISALABAD, March 22 (Online): Federal Secretary for Trade Syed Asif Shah has said that United States (US) has offered zero-rating on Pakistani products on the pattern of its (US) trade agreement with Jordan and Israel. 
Addressing a ceremony of Pakistani Textile Exporters on Tuesday, the Secretary said that talks between US and Pakistan regarding its (US) offer for zero-rating Pakistani goods will be held next month. 

He noted that if US agreed to zero-rate Pakistani goods then it would be supportive of eradicating poverty and unemployment in the country. 

It will also be helpful in starting industrial and trade activities in underdeveloped areas, he added. 

Syed Asif said Pakistan signed valuable agreements with China, Malaysia, Indonesia, Sri Lanka and other countries. 

He hoped that Pakistan would easily get the target of $20 billion for export. 

http://paktribune.com/news/index.php?id=138180

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## Neo

*Economic impact of natural disasters show marked upward trend* 
LAHORE (March 24 2006): The economic impact of natural disasters has shown a marked upward trend over the last several decades, and additionally, developing countries, especially the Least Developed Countries (LDCs) are more affected by these hazards, thereby increasing their vulnerability and setting back their economic and social growth, sometimes by decades.

This observation was made by metrological experts while talking to Business Recorder with reference to 'World Metrological Day 2006' observed in various parts of the World on March 23.

It may be mentioned that every year on 23rd March, the World Meteorological Organisation (WMO) and its 187 members, as well as meteorological communities world-wide celebrate World Meteorological Day, which commemorates the entry into force on that date in 1950 of the Convention that created the Organisation. For the year 2006, the theme "Preventing and mitigating natural disasters" was chosen for the celebration.

The choice is made in recognition of the fact that 90 percent of all natural hazards are related to weather, climate and water and of the vital role played by WMO and the National Meteorological and Hydrological Services (NMHSs) in all countries in contributing to prevention, preparedness and mitigation of natural disasters, as well as those arising from environmental emergencies.

The year 2004 had already been earmarked as very severe in terms of natural disasters. In particular, on 26th December 2004, devastation by the Indian Ocean tsunami reached an exceptional level in terms of human loss, number of countries affected and the magnitude of subsequent response-and-recovery efforts.

The year 2005 was marked by prolonged droughts in parts of the Greater Horn of Africa, parts of Europe and Asia, Australia and Brazil. Malawi suffered its worst drought in a decade. Heavy rainfall, exceptional in some cases, caused extensive flooding in various parts of the world.

A record number of devastating hurricanes was observed in the Atlantic Ocean. Pakistan also faced huge loss of life and property due to devastating earthquake on October 8, 2005 in Azad Kashmir and other parts of the country.

According to meteorological experts, during the last 10-years, natural disasters world-wide were linked to more than 750,000 deaths and affecting over 2 billion people.

Economic losses from hydro-meteorological disasters were estimated at US $700 billion, thus accounting for about 65-percent of the total losses due to all natural disasters for the period. While natural hazards may not be avoided, integration of risk assessment and early warnings, with prevention and mitigation measures, can prevent them from becoming disasters, they argued. It is recognised that a fundamental pre-condition for disaster preparedness is a well-functioning early warning system, capable of delivering accurate information to the population at risk, dependably and in a timely manner, they added.

The WMO centers, including its three World Meteorological Centres and 40 Regional Specialised Meteorological Centers (RSMCs), provide all nations with the necessary global operational infrastructure for observing, detecting, modelling, forecasting and issuing early warnings for a wide range of hazards, ranging from short-lived, violent events of limited geographical extent, such as tornadoes and flash floods, to large-scale phenomena such as droughts, which can affect the better part of a continent and entire populations anywhere from months to years, they said.

It may be recalled that in January 2005, the Second World Conference on Disaster Reduction was held in Kobe, Hyogo, Japan, providing a unique opportunity to promote a strategic and systematic approach to reducing risk and vulnerability to hazards.

The conference adopted the Framework for Action 2005-2015: Building the Resilience of Nations and Communities to Disasters, also known as the "Hyogo Framework for Action". It also provided the framework for governments, international and regional agencies, non-governmental organisations (NGOs), the private sector and other actors, to work together in promoting a culture of prevention.

The experts stated that historical observations of hazards are also critical for assessing the vulnerability of communities to weather-climate and water-related hazards. Climate data are needed to quantify the intensity and frequency of events, characterising the potential damage of extreme events, and predicting expected damages.

Systematic studies of meteorological and hydrological observations of hazards and their impacts constitute a useful knowledge base for disaster risk managers, they added.

'Water shortage and quality problems are projected to keep increasing in many water-scarce regions of the world. There is a need for a better understanding of the climate system and the development of capabilities for predicting natural climate variability and human-induced climate change', they said.

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## Neo

*Execution of massive uplift schemes in Hyderabad from April* 
HYDERABAD (March 24 2006): The month of April 2006 is bringing new hope for the people of Hyderabad as the district government has decided to execute massive development schemes in different parts of the district.

The massive development plan is being executed in different sectors particularly in communication so that the people could enjoy all civic facilities at their nearest, the District Nazim Hyderabad Kanwar Naveed Jameel maintained this in panel interview with APP.

The requirements for execution of many of these development schemes have been completed and now the work will be started in the next month, he said.

Kanwar committed to bring the status of Hyderabad back by improving the living standard of the common man adding that the district government hired the services of a renowned firm of consultants in order to prepare the master plan and assess the requirements of Hyderabad up to the year 2025.

The district government has decided to carry out all development schemes according to master plan of M/s Usmani Consultants, one of the reputable firm that completed mega tasks, which completed the detailed survey of Hyderabad even using satellite technology, Kanwar said and hoped that Hyderabad will soon stand as one of the biggest and developed cities of the country.

He said that in the first, the schemes of water supply and sewerage have been taken up and the contractors concerned have initiated the work in different parts of the district.

On the advice of the consultants, the district government has prepared comprehensive plan to enhance supply of filter water from 35 MGD to 80 MGD by the year 2008, District Nazim informed.

At present, the requirement of citizens is 64 MGD, but the district government is able only to supply 30 MGD while the remaining requirement is being fulfilled from settled water, Kanwar said and added that the district government will be able to supply 80 MGD filter water by enhancing the capacity of existing filter plant and establishing three more plants in different parts of Hyderabad.

He informed that development schemes of over Rs 500 millions for laying sewerage system in Latifabad and Qasimabad will also be started from the next month. The completion of these schemes will help in overcoming the problems of choking of sewerage system in these areas, he added.

Besides, Kanwar said that the district government has also taken up the matter of increasing water table in Latifabad and Qasimabad talukas of the district which damaging the building structure with rapid pace.

The district government has re-operated 25 out of 49 subsoil wells, which were set up in 1990 in different parts of Latifabad but later abandoned for unknown reasons in 1994, he said and informed that all closed subsoil well will be re-operated in the next month.

A new subsoil well is being established near Qadam Gah Moula Ali which will also be functional from the next month, he said and added that if the consultant concerned advised, the district government will establish more subsoil wells in order to decrease the water table in Latifabad and Qasimabad talukas.

The District Nazim Hyderabad, Kanwar Naveed Jameel said that the District Government has also plan for construction of asphalt concrete roads in different parts of the district.

The project of the construction of roads with asphalt machines though will cost more amount as compared to the construction of roads with normal machinery, but it will enhance the life of roads and there will be no need of constructing roads for the next ten years, he said.

He said that all schemes of the construction of roads will be taken up after completion of sewerage and water supply schemes. The departments concerned including PTCL and SSGL have also been advised to complete their work as after completion of road schemes, no permission will be granted to cut off the roads, Kanwar said adding that an awareness campaign is also being launched to warn the people not to cut the road after completion.

He said that millions of rupees are being spent for construction of roads. The construction work of roads, which already been executed in Qasimabad Taluka, will be started in Hyderabad City Taluka from the next month, he informed.

Kanwar Naveed Jameel informed that the District Government has allocated maximum budgetary amount for improvement of education and health sectors of the district.

The District Government Hyderabad fully committed to improving the educational standard in all governmental education institutions of the district.

He said that the District Government had formed a monitoring committee having representation of public representatives and retired teachers to further improve the quality education in all eleven hundred educational institutions of the district.

He informed that he delegated some powers of District Nazim to this monitoring committee with advice to improve the standard of education of government learning institutions to the level of private institutions. The District Nazim informed that the District Government also decided to convert ten each Urdu and Sindhi medium schools of the district into English medium from the next academic year. The District Government has set the target of converting one hundred schools of the district into English medium, he said and added that this decision will help in introducing quality education to the future generation of the district.

Besides bring quality education in government institutions Kanwar said that the District Government also making out efforts to provide all road facilities to these institutions including repair and renovation of the buildings.

Sindh Secretary for Education has assured the provision of required syllabus for starting the English medium classes in the schools, Kanwar said and added that the provincial secretary also assured the imparting of required training to the teachers of government educational institutions of the district.

The District Nazim Hyderabad Kanwar Naveed Jawed said that the District Government also decided to effectively utilise the available resources for improvement in health facilities in the district.

The District Government is looking after the affairs of a total of 62 health units right from 200 bedded hospitals to Rural Health Centres in the district, he said and added that annual OPD at theme health units is over 3.5 millions per year.

The District Government is required maximum amount to effectively run these hospitals and provide health facilities to the people of the district, Kanwar said and added that the District Government has decided to approach philanthropists to seek financial assistance for these health.

He informed that he formed a monitoring committee comprising public representatives and eminent doctors with objective to ensure the utilisation of available funds for improvement of these health units. Besides, he informed that he has requested the management of Liaquat University of Medical and Health Sciences Jamshoro to affiliate the hospitals of the district so that the people could get quality health facilities from these units.

He said that the completion of all development schemes and improvement of facilities in various sectors particularly in education and health will definitely improve the living standard of the people and time is not far when Hyderabad will be rated again in one of the biggest cities of the country.

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## Neo

*Passengers, cargo flights for Hyderabad soon* 
HYDERADAD (March 24 2006): District Nazim Hyderabad Kanwar Naveed Jamil has said that passengers and cargo flight services at Hyderabad Airport would be started soon, adding that he had written letters to PIA and other private airlines in this connection.

A positive response is being received from the concerned departments and airline companies, he said while talking to APP here on Wednesday.

Kanwar said that a food-testing laboratory is under consideration to be established for checking and maintaining the quality and standard of food items being sold in the district.

He said that a project of construction of a trauma center was also under consideration of the district government to facilitate the accident patients with severe injuries.

The district government had contacted few investors engaged in five star hotel business in Pakistan for the construction of a international standard five star hotel in Hyderabad and the district government has received positive response from the investors, he added.

Naveed said that the three vigilance committees had been established in each union council to raise the problems faced by the citizens and to keep vigilance on the working of the departments in the district.

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## Neo

*China may give 3 N-power reactors* 
ISLAMABAD - China is likely to provide three nuclear power reactors to Pakistan to meet its ever-growing energy requirements, the diplomatic sources said here on Thursday.
Ã¢â¬ÅTalks between the old friendly nations on nuclear energy cooperation are underway in a positive manner and there is all likelihood that Pakistan will be provided with at least three nuclear power plants,Ã¢â¬Â said a diplomatic source. He said the whole process would take some years to complete but in the first phase Pakistan would be given a nuclear power plant of 325 MW. In next stage, a power plant of 325-MW would be provided followed by another one of 600-MW, he added.
According to sources, the US refusal to enter into nuclear energy cooperation with Pakistan has forced Islamabad to look the other way round for its energy requirements. Ã¢â¬ÅIn these circumstances, China is the best available option,Ã¢â¬Â a source said.
After the negative response from Washington, Only China could help Pakistan fulfil its plan of generating 8,000 MW of electrical power from nuclear fuel by 2020, the sources said.
China, which extended Islamabad a 300-MW nuclear reactor (Chashma-I), has also agreed to provide another nuclear power plant-Chashma-II that would be sited next to Chashma-I. 
A source said Pakistani scientists have also acquired, to some extent, indigenous capability in the construction of nuclear power plants, adding that this expertise would also be utilized in the building of Chashma-II that would become operational in five years. 
He said in addition to cooperation on nuclear power plants, Pakistan and China have signed an energy cooperation framework agreement that could be explored for gas pipelines from various countries to China via Pakistan in future.

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## Neo

*China, Pakistan to open four new road links* 
URUMQI, March 23 (Xinhua) -- China and Pakistan will open four new passenger and cargo road links in the first half of the year. 

Two of the four roads are for cargo transportation and the other two are for passengers and they will be opened on May 1 and June 1 respectively, according to an agreement signed Wednesday between the transport ministries of the two countries in Urumqi, capital of northwestern China's Xinjiang Uygur Autonomous Region. 

The two cargo routes run from Kashi in southern Xinjiang to Pakistan's ports of Karachi, Qasim and Gwadar. The passenger linesare from Kashi and Taxkorgan, also in southern Xinjiang, to Pakistan's northern Gilgit and Sost Pass respectively. 

The two transport ministries also agreed to have two regular meetings each year, held in Pakistan and China, to exchange information. 

The number of road links between Pakistan and China will rise to eight.

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## Neo

*President foresees $18 billion exports this fiscal* 
KARACHI (March 21 2006): President General Pervez Musharraf has said the government is fully encouraging the foreign direct investment (FDI) and foresaw the total export would reach $18 billion during the current fiscal year.

Speaking as chief guest at the Textile Asia 2006 Exhibition Gala Dinner at the Governor house here on Monday, he said the policy of deregulation was paying dividends, as a result the country has witnessed unprecedented foreign investment.

The President said during the last six years the economy has been transformed into a vibrant and dynamic state. The GDP, which was 60 to 65 billion dollars, is now touching the $135 billion mark.






"We have achieved a record growth rate of 8.4 percent during the last fiscal year and was expecting 7 percent this year," he added.

The President, welcoming foreign delegates, said Pakistan had provided a very attractive environment for investment. He said the profit margin in Pakistan is much higher. He said 600 to 700 foreign companies are doing business in Pakistan and earning 30 to 60 percent profits and some of them even earned up to 80 percent.

He said infrastructure is being developed and cited the development of ports, highways and roads in this regard.

The President was extremely upbeat on the vast opportunities that Pakistan is offering to foreign investors and looked forward to increasing inflow of FDIs.

He said the FDI had grown by 500 percent over the last five years. This flow of FDI would continue in future, he hoped.

He said an upsurge in the country's export has been witnessed due to privatisation, deregulation and liberalisation. He declared through the process of production, extension and value-addition, even bigger achievements in the export field will going to take place.

He was of the opinion that foreign investment creates jobs for people and eliminates poverty.

The President appreciated organisers for holding the Textile Asia 2006 Exhibition. He also lauded efforts of the textiles minister Mushtaq Ali Cheema, Sindh governor Dr Ishratul Ibad, Chief Minister Dr Arbab Ghulam Rahim, Sindh minister for industries Muhammad Adil Siddiqui and all others in making the event a success.

Speaking on the occasion, Sindh governor Dr Ishratul Ibad Khan said the participation of foreign delegates in the exhibition indicate the growing confidence of foreign investors in the Pakistan's economy.

He said 1250 acres of land has been given to set up Textile City in Karachi, which will create employment opportunities for the people.

He assured the province of Sindh would do its best to provide even more incentives for investment here.

Textiles minister Mushtaq Ali Cheema, speaking on the occasion, said the country under the leadership of President General Pervez Musharraf was witnessing an economic upswing and the contribution of textile sector to the GDP had increased while it maintained its position as the backbone in the economy.

http://www.brecorder.com/index.php?...&term=&supDate=

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## Neo

*China to provide $22.26 million for Gwadar port* 
BEIJING (March 25 2006): A credit agreement for 22.26 million dollars for additional dredging of Gwadar deep seaport project was signed here on Friday. The agreement was inked by Ambassador Salman Bashir and Ms Liang Xiang, Assistant President Exim Bank of China.

Extra dredging would enable 50,000 DWT vessels to utilise the Gwadar port. The development of Gwadar port is a shining example of Pakistan-China co-operation and it is expected to be ready for operation later this year.

Ms Liang also assured the ambassador that they would continue to actively support other major economic projects in Pakistan. The ambassador expressed gratitude of his government for the valuable support of China to Pakistan's economic development.

Meanwhile, sources told APP that the port will be functional after completion of additional dredging of the channel to 14.5 meters, making it the deepest port of Pakistan and transhipment port for the region.

The dredging of Gwadar port channel to 14.5 meters, which has been undertaken by a Chinese company, will make it a regional hub, as it will enable the port to receive the mother vessels. The cargo dropped by the mother vessels will be taken to Karachi and other regional ports by the feeder vessels or trucks.

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## Neo

*China gifts satellite data receiving system to Pak, Bangladesh* 
China gifts satellite data receiving system to Pak, Bangladesh 

Beijing, Mar 25: China will provide high-quality satellite data, products, services and applications to Bangladesh, Pakistan and five other nations in the Asia-Pacific region to strengthen regional co-operation in space. 

"We hope that more Asia-Pacific countries can benefit from the digital video broadcasting-satellite through China's Fengyun series of meteorological satellites for their meteorological research, disaster mitigation, economic growth and prosperity," head of the China Meteorological Administration (CMA) Qin Dahe said here today. 

CMA and China Space Administration (CNSA) gifted reception stations for the system to seven Asia-Pacific countries including Bangladesh, Indonesia, Iran, Mongolia, Pakistan, Peru and Thailand to further promote regional multilateral co-operation in space technology and applications. 

The system can receive real-time data from China's meteorological satellites, along with satellites owned by other countries worldwide, and broadcast them to countries in the Asia-Pacific region. 

China has used the system since last year for monitoring climate change, weather forecasting, disaster and environmental monitoring as well as services for many other fields including agriculture, forestry and civil aviation, said Zhang Wenjian, a CMA official. 

He said China has established more than 100 users of the system across its territory and said he hopes that more countries in the region will take the opportunity to share the information it collects and processes for their benefit.

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## Neo

*NTC to make Pakistan a hub of global trade: Prime Minister* 
ISLAMABAD (updated on: March 25, 2006, 20:49 PST): Prime Minister Shaukat Aziz has said that National Trade Corridor (NTC) improvement plan being actively followed by the government will improve the logistics chain, reduce cost of doing business, improve competitiveness of products and help make Pakistan a regional hub for global trade.

Chairing the fifth meeting of National Trade Corridor at the Prime Minister's House on Saturday, the Prime Minister asked all relevant agencies to move promptly on re-designing of procedures and processes, strengthening of infrastructure i.e. roads, railways, airports and ports to improve the logistics chain with a view to reduce the cost of business, facilitate trade and investment in Pakistan and increase competitiveness of Pakistani products in the global market.

"The comprehensive, integrated plan being developed to improve the logistics chain and improve various processes aims at taking the economy at new heights", said the Prime Minister.

The Prime Minister asked all Ministries/Departments present in the meeting to improve their marketing strategies and take all decisions after analysing their feasibility on commercial basis. "Most government entities have weak marketing strategies which adversely affects their profitability and hampers growth", said the Prime Minister.

The Prime Minister asked Pakistan Railways Board and PIA to improve their cargo handling facilities. He asked Ministry of Commerce to prepare a strategy for forecast of growth of air cargo so that infrastructure development could keep pace with the growth and specific requirements of different regions. The policy will be prepared in co-ordination with related departments.

The Prime Minister reviewed progress of various plans launched for ports and shipping modernisation trade facilitation, highways improvement trucking modernisation, railways restructuring, aviation and air transport modernisation.

The Prime Minister was informed that the revised National Aviation Policy is in final stages and will be submitted to the Cabinet in six to eight weeks. Two more private sector companies Pearl Air and Safe Air have been giver licenses to operate and open skies policy for cargo operations has been introduced. Development of cargo ware housing facilities/cargo-handling facilities is at various stages of completion at the Lahore, Gwadar, Islamabad and Karachi Airports.

The Prime Minister was informed that custom clearance time at Karachi Port has been reduced to 10 hours, national supply chain security strategy has been finalised and IC3 agreement has been signed with US and port entry charges at Port Qasim have been reduced by 15 percent.

The Prime Minister was also informed that by June 2006, a modern multi agency transit station will be fully operational at Jamrud and scanners at Lahore and Jamrud will be installed

The Prime Minister was also informed that the process of corporatisation of Pakistan Railways will be completed by December 2006, three daily express trains from Karachi-Lahore and up country have been started and two express freight trains will start service by June 2006.

The Prime Minister expressed satisfaction at the progress made and emphasised the need for a results oriented approach. He also highlighted the need to benchmark performance of our logistics chain with other developing and developed countries.

"We should not stay in our comfort zones but look around us to improve relative performance so that we achieve global standards of efficiency and performance", the Prime Minister said. 

The meeting was attended among others by Shamim Siddiqui, Minister for Ports & Shipping, Mian Shamim Haider, Minister for Railways, Dr. Muhammad Akram Shaikh, Dy. Chairman, Planning Commission and senior officials.

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## Neo

*CBR plans to increase tax-to-GDP ratio by at least 1pc in next 5 years* 
KARACHI (updated on: March 25, 2006, 21:11 PST): The Central Board of Revenue (CBR) has chalked out a plan to increase the tax-to-GDP ratio by at least 1 percent in next five years which means an additional revenue of $1.25 billion.

This was stated by Chairman CBR Abdullah Yousuf while speaking at the pre-budget seminar organized by the Institute Management Association of Pakistan (MAP) here on Saturday.

He said this ratio is currently hovering around 10 percent which is the lowest in the region as well as in the world. The neighbouring countries have about 15 to 18 percent tax-to-GDP ration, he added.

Calling it a challenge to enhance this ratio, Yousuf said that Pakistan has agreed with the World Bank to raise this ratio by 0.2 percent every year.

He said that in the past all the governments had tried to increase this ratio, but they could not do it. On the contrary previous governments had to revise down their tax collection targets and yet failed to achieve the revised targets, he noted. 

CBR chairman said that revenue collection targets are being surpassed every year and this year too, the revenue collection was ahead of the target.

Citing reasons for this rise, he said that fast growing economy was the major reason behind the increase in tax collection.

He said that the revenue collection has to increase to finance the infrastructure development as the rising industrial and commercial activities will put of load on the existing infrastructure facilities in the country.

"We have to look at our tax collection system, rules and procedures and simplify and fully automate the system to enlarge tax base", Yousuf said.

He pointed out that the government was trying to evolve a system which is simpler and transparent. We are cutting rates, facilitating tax payers, eliminating pendency in tax appeal cases, expediting refunds, etc.

CBR chairman said that 14 regional offices were being set up in the country besides the existing three large tax payers units to centralize tax collection by December 2007. In addition, 80 tax facilitation centres were also being set up in smaller towns which will be connected to the main system to facilitate tax payers, he added.

He said that all these centres will collect income tax, sales tax and central excise duty.

Responding to a demand to further cut tax rate, he said that there will be a uniform tax rate of 35 percent for all companies in next couple of years and added that listed companies after July 2004, will get an additional cut of 1 percent in tax rate.

Referring to pendency of tax appeals, CBR chairman said that there was no waiting time for new appeals as more than 60,000 cases of direct taxes and over 20,000 cases have been decided.

He said that CBR had requested the Supreme Court of Pakistan to put up a special bench. This request was agreed and till now 900 out of 1150 pending cases have been decided and remaining cases will be resolved by end of this year.

He said that at High Courts and tribunal level, 17,000 pending cases of direct taxes and 6000 of indirect taxes have been decided.

He pointed out that intake of new cases is only two to three which is negligible. This is because of introduction of self assessment scheme, he added.

Earlier, prominent tax consultants Ebrahim Sidat, Syed Masood Ali Naqvi and vice chairman MAP Abdul Qadir made suggestions to further simplify tax collection, expedite refunds and further cut tax rate.

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## Neo

*56pc of KPP for Balochistan* 
QUETTA (APP) - Prime Minister Shaukat Aziz has announced a development package of Rs2.8 billion for the district governments in Balochistan under Khushhal Pakistan Programme (KPP). 
All the districts of the province will get Rs100 million each except the Quetta City government that will receive Rs200 million. Kohlu will not benefit from the package as it has already been released Rs250 million out of total Rs1.5 billion announced by the President for the district during his last visit.
The PM made the announcement while addressing the District Nazimeen here at Chief Minister Secretariat on Saturday. Balochistan Governor Owais Ahmed Ghani, Chief Minister Jam Mohammad Yousaf, Federal Ministers Sardar Yar Mohammad Rind, Mir Naseer Mengal, Zubaida Jalal, Mohammad Ali Durrani, Deputy Chairman Senate Jan Mohammad Jamali and other elected representatives and senior officials were also present on the occasion.
The PM said that the federal govt has chalked out a development package of Rs5 billion for the entire country under the KPP this year out of which 56% which constitutes Rs2.8 billion has been allocated for Balochistan. 
The actual share of Balochistan is 5% only, but the federal government decided to provide the province with the lionÃ¢â¬â¢s share to improve the living style of the province people. 
Ã¢â¬ÅThe District Governments will themselves identify their projects to utilize this fund while we will only conduct monitoring for which a monitoring team will also be announced laterÃ¢â¬Â, he said, adding that the Nazmeen are bound to spend the funds on specific projects including construction and repair of roads, farm-to-market roads, pavements, ponds, basic health units, schools and sanitation schemes.
Referring to financial crisis of Balochistan, Aziz said that the federal government has provided a grant of Rs800 million to the province besides a debt relief of Rs1.7 billion to address the problem. 
He, however, said that the province should also realize the financial constraints of the federal government as Ã¢â¬ÅWe had to bear a loss of 300 billion in the last yearÃ¢â¬â¢s catastrophic earthquakeÃ¢â¬Â. 
The Prime Minister said that Balochistan was a backward province, but it has started making rapid progress since President Musharraf has come into power which is also evident from the fact that the volume of development funds being spent in the province has now touched the figure of Rs140 billion. 
Ã¢â¬ÅBalochistan has great resources and much potential to be developed in various sectors including mineral, agriculture, livestock and the likeÃ¢â¬Â he said , adding that the big companies of the world are now coming here for investment. 
Work on Gwadar port, Mirani Dam and Sabakzai Dam are in progress, he said, adding that Pat Feeder Canal would also be extended and Kachhi Canal would also constructed that would bring about great development and prosperity in the province. 
The Prime Minister said that the Coastal Highway would further be extended to Gabd, Naag, Basima from Gwadar to link it with N-25 and later to Ratodero.
Later, the Prime Minister gave away the cheques for Rs100 million each to district Nazmeen.

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## Neo

*Indo-Pak trade booming despite lingering bitter political disputes* 
26 March 2006 

ISLAMABAD - Pakistan and India may be far from resolving long-standing disputes, particularly over the divided region of Kashmir, but the nuclear-armed rivals are steadily forging closer ties in a sphere vital to both countries - trade.

Senior Commerce Ministry officials from both nations will hold three days of talks in Islamabad starting Monday to discuss ways to boost trade, which has been growing steadily since they began peace overtures two years ago after three wars and decades of hostility.

Pakistan-Indian trade reached US$850 in fiscal 2005-2006, up from US$550 million the previous year, said Syed Asif Shah, the top bureaucrat at PakistanÃ¢â¬â¢s Commerce Ministry. Shah will lead the Pakistani side at the talks, and Indian Commerce Secretary S. N. Menon will head the Indian delegation.

Ã¢â¬ÅThe issue is how we can increase trade and commerce between the two countries and improve our advantages so that both countries can benefit,Ã¢â¬Â said Shah, adding there was Ã¢â¬ÅunlimitedÃ¢â¬Â potential for trade to grow.

Pakistan and India have a history of hostile relations, mainly because of their dispute over Kashmir, a Himalayan region divided between the two. Each has claimed the region in its entirety since 1948, a year after they gained independence from Britain.

Peace talks that began in early 2004 have made little headway over Kashmir, but have seen a resumption of diplomatic ties, rail, air and road transportation links, which has allowed more people and commodities to move across their border. In the latest friendship gesture, Indian Prime Minister Manmohan Singh on Friday called for a peace and security treaty between the two countries.

This weekÃ¢â¬â¢s talks will focus on removing non-tariff barriers in select sectors such as textiles, and take stock of progress made in improving aviation and shipping links, an Indian Commerce Ministry official said on condition on anonymity as he was unauthorized to speak to the media.

Both countries have lifted some trade barriers and allowed goods to be shipped both ways by road, but more needs to be done, the official added.

Major Pakistani exports to India include textile and leather products, yarn and surgical goods, while the main imports from India are sugar, meat, livestock and other raw material for local industries, Shah said.

But illegal trade is much higher, estimated at about US$1 billion, according to a Pakistani Commerce Ministry official who declined to be identified due to the subjectÃ¢â¬â¢s sensitive nature.

Pakistani and Indian commentators said more progress was needed on political fronts, such as the Kashmir conflict, to push trade ties forward.

Ã¢â¬ÅThe progress is slow because differences still persist on the political front,Ã¢â¬Â said Ram Upendra Das, a New Delhi-based trade economist.

Ã¢â¬ÅHowever, both sides realize and appreciate the potential to boost trade is huge. Also, the political will to move in this direction is gaining momentum.Ã¢â¬Â

A Pakistani trade official said his own country was preventing joint Pakistani-Indian ventures, which could take advantage of IndiaÃ¢â¬â¢s cheap skilled labor and services and advanced technology.

Ã¢â¬ÅPolitical issues and security problems between the two countries are not letting both sides to get real benefits of their proximity,Ã¢â¬Â said M. A. Jabbar, senior official at the Federation of Pakistan Chambers of Commerce and Industry.

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## Neo

*Pakistan ranks 6th in Asia Pacific: Gas reserves* 
KARACHI, March 25: Based on 2004 data of remaining recoverable reserves, Pakistan with gas reserves of 28tcf (current reserves 32.8tcf) ranks 6th in the Asia Pacific region.

The country offers huge oil and gas potential and vast relatively unexplored acreage, with historical success ratio of 1:3.4. Ã¢â¬ÅThe major portion of hydrocarbons is untapped,Ã¢â¬Â says a JS Capital Markets report on Ã¢â¬ÅPakistanÃ¢â¬â¢s gas reserves and gas fieldsÃ¢â¬Â released on Wednesday.

The report notes that rising energy consumption level is an indication of growing economic activities in a country. PakistanÃ¢â¬â¢s primary energy supplies have grown at 5.2 per cent CAGR to 55.5mn toe during FY01-05. Currently, 72 per cent of total energy requirements are met through indigenous production while the rest is imported. Natural gas remains the mainstay of primary energy supplies, covering 50 per cent of the domestic energy mix in FY05. Local gas demand is met entirely through indigenous resources.

The report indicates the countryÃ¢â¬â¢s exploration acreage has found to have greater prospects for gas than that of oil. In the last five years (FY01-05), PakistanÃ¢â¬â¢s remaining recoverable gas reserves have grown at a CAGR of 6 per cent and reached 32.8tcf in FY05. Ã¢â¬ÅThis is quite an encouraging growth if one considers the rise in gas production level that has depicted 10 per cent CAGR in this period,Ã¢â¬Â say analysts, adding that against this, balance recoverable reserves of oil have registered a CAGR of four per cent.

According to the Energy Year Book 1998, PakistanÃ¢â¬â¢s wide sedimentary basin has a potential of 200tcf of natural gas. As per the Energy Year Book 2005, PakistanÃ¢â¬â¢s total gas reserves stood at 51.5tcf of which 18.7tcf have already been utilized and thus 32.8tcf are remaining recoverable reserves.

At current production rate, Pakistan possesses gas reserves for the next 24 years assuming no discovery takes place in the future. Compared to this, countryÃ¢â¬â¢s oil reserves are expected to last for the next 13 years at current production level and assuming no replacement in future. Gas reserve replacement ratio (calculated using reserves additions divided by production) has been encouraging in the past, with last five years average arrived at 237 per cent and is also quite better than the oil reserve replacement ratio of 92 per cent.

According to the JSCM report, Uch gas field (operated by OGDCL) ranks top, with remaining recoverable reserves of 4.61tcf. It is followed by Sui (3.98tcf), Mari (3.84tcf), Qadirpur (3.77tcf), Sawan (2.05tcf), Zamzama (1.95tcf), Kandra (1.73tcf), Manzalai (1.4tcf), Bhit (1.35tcf), Bhit (1.35tcf), Mari Deep (1.21tcf), Kandhkot (0.73tcf), Miano (0.72tcf), Makori (0.70tcf), Pirkoh (0.65tcf), Dhodak (0.56tcf), and others (3.55tcf). These fields cumulatively occupy the major chunk of around 90 per cent of the known balance gas reserves of Pakistan.

http://www.dawn.com/2006/03/26/ebr7.htm

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## Neo

*Musharraf for projecting soft image of Pakistan* 
MANGLA (March 27 2006): President General Pervez Musharraf has said the government is striving to project soft image of Pakistan through promotion of culture, tourism and sports. He was addressing a large gathering here on Sunday at Mangla View Resort launching ceremony. He said the inauguration of Mangla View Resort will prove to be a milestone for promotion of domestic and international tourism.

The President said the government has launched a series of projects to promote the tourism, including investment-friendly policies to encourage construction of hotels.

He said the Manlga View Resort is Pakistan's first quality resort, which will be a jewel in the crown of Pakistan tourism industry. It will not only give new dimension to healthy recreational activities and promote tourism, but also generate economic activity in the country, he added.

Musharraf said: "Once the project is completed in a few years time, there will be a major change in the mindset of the people about how to spend their leisure time, and I am sure that people with exquisite taste and good aesthetic sense will have life time experience while coming to Mangla."

He extended special appreciation for the Punjab government, the Tourism Ministry, Malaysian Tourism Minister Adnan Mansor, Mangla View Resort CEO Major Anur Adam (Retd), Mangla Corps Commander Lieutenant-General Javed Alam and the Jhelum District Nazim for their commitment and extending their patronage in development of the Mangla View Resort.

Lieutenant-General Javed Alam Khan, in his address of welcome, said that Mangla View Resort will be a wonderful tourist resort as well as having residential area along with recreational facilities.

He said that Mangla is blessed with plenty of natural beauty, which makes it very attractive for the people from all walks of life.

Malaysian Tourism Minister Adnan Mansor said that Mangla View Resort is the most ambitious resort development in Pakistan with a total developing cost of $2 billion.

He hoped that Mangla View Resort will be the catalyst for domestic tourism and will become an international tourist resort destination. He complimented the government for initiation this project.

It may be mentioned that Mangla View Resort is being constructed on 324-acre of land directly facing Mangla Lake. It is capable of housing 609 units of Banglows each 4,000 square feet, 110 units semi-detached houses, 179 units apartments, 90 units chalets.

It will also provide a facility of two hotels (total 500 rooms), a club house of 12,000 square feet covered area. The Mangla View Resort will also have the facility of international level water sports club and 18-hole Golf Club. It will also provide the facility of riding club and extreme games park.

The first phase of the project will be completed in mid-2007 and the project will be finally completed by end of 2009.

The administration of the Mangla View Resort also makes a contribution to President's Earthquake Relief Fund.

A cheque of Rs 10 million was presented to the President by Malaysian Tourism Minister Adnan Mansor and Mangla View Resort CEO Major Anur Adam (Retd). Earlier, on arrival at Mangla View Resort President General Pervez Musharraf cut the ribbon and unveiled the plaque to formally inaugurate the project.

Punjab Governor Lieutenant-General Khalid Maqbool (Retd), Punjab Chief Minister Chaudhry Pervaiz Elahi, Minister of State for Tourism Sumera Malik also accompanied the President during the launching ceremony.

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## Neo

*Export of textile goods up by 20pc* 
Export of textile goods up by 20pc

ISLAMABAD, March 25: PakistanÃ¢â¬â¢s export of textile products rose by 20.18 per cent to $6.323 billion during the eight months of the current fiscal year as against $5.261 billion the same period of last year.

Official figures released by Federal Bureau of Statistics (FBS) here on Friday showed that the increase was mainly attributable to growth achieved in the export of readymade garments during the month of Feb 2006.

The export of readymade garments surged 33.15 per cent to $872.276 million during Feb 2006 as against $655.125 million over the same month last year.

A decrease of 18.30 per cent was recorded in export of readymade garments during Jan 2006 and 4.92 per cent in December 2005 over the corresponding months of the last year.

The export of bedwear grew by 65.72 per cent, cotton yarn by 28.95 per cent, cotton cloth by 19.30 per cent, knitwear by 1.96 per cent and towels by 12.69 per cent during the eight months of the current fiscal.

However, the export of tents, canvas and tarpaulin declined by 71.42 per cent, art, silk, synthetic textile by 38.17 per cent and made-up articles by 14.35 per cent.

Similarly, the export of surgical goods and medical instruments fell by 11.17 per cent; gems by 1.2 per cent, jewellery by 52.40 per cent, furniture by 6.58 per cent and molasses by 63.56 per cent during the period under review.

The export of carpets, rugs increased by 2.91 per cent, sports goods by 8.33 per cent, engineering goods by 11.80 per cent, auto parts by 60.08 per cent, leather manufacturers by 46.4 per cent, footwear by 22.4 per cent, chemical and pharmaceutical products by 9.80 per cent during the period.

The export of primary commodities registered an overall growth of 24.77 per cent during the July-Fed 2005-06. Export of rice increased by 41.04 per cent, fish and fish preparations by 27.8 per cent and spices 78.20 per cent during the period under review.


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## Neo

*Plan to raise literacy rate* 
Tuesday March 28, 2006 (1045 PST)

HYDERABAD, March 27: District Naib Nazim Zafar Rajput says the district government has prepared a plan to raise literacy rate in collaboration with different education-oriented organizations to 85 per cent in the district by the end of 2008. 

Mr Rajput said during a briefing officials of the Aga Khan Education Service (AKES) gave on Monday him about Ã¢â¬ÅReleasing Confidence and Creativity (RCC)Ã¢â¬Â programme at district nazim office, the district was working with various educational organizations to raise the standard of education and increase literacy rate. 

Introduction of Early Childhood Education (ECE), English medium in primary schools, RCC programme and other activities under ESRA, DEEP and SDSSP were some of the steps the district had taken in this regard, he said. 

The district naib nazim said another purpose behind engaging educational organizations was to ensure the government teachers get the latest teaching expertise to be at par with their colleagues in private sector.

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## Neo

*Credit Suisse targets Vietnam, Pakistan* 
HONG KONG: Credit Suisse is pursuing new opportunities in Vietnam and Pakistan while it keeps up its search for a securities joint venture partner in China, its top Asia Pacific executive said on Monday.

Credit Suisse, which is hosting its annual Asian Investment Conference this week, is targeting state privatisations in Vietnam and providing client access to PakistanÃ¢â¬â¢s booming stock market, said Paul Calello, Chief Executive Asia Pacific.

"We have a really strong line up of speakers that can shed light on some of the lesser known investment opportunities, such as in Vietnam, Pakistan and in the private equity world," Calello, a Columbia MBA graduate, told Reuters in an interview.

Credit Suisse estimates there will be $5 billion to $6 billion in state-owned enterprise (SOE) privatisations in the next two to four years in Vietnam, a market that has drawn a lot of attention lately.

"TheyÃ¢â¬â¢re very much committed to moving forward with market reform," Calello said, noting VietnamÃ¢â¬â¢s plans to join the WTO in 2006 and its status as AsiaÃ¢â¬â¢s second-fastest growing economy. "WeÃ¢â¬â¢re working very closely with several SOEs to bring them private," he said.

The bank was the sole book-runner on VietnamÃ¢â¬â¢s $750 million inaugural sovereign issue last year. In Pakistan, Credit Suisse will form partnerships with local counterparties by as early as next month to give clients direct access to stocks in a market that is up 21 per cent this year after soaring 51 per cent in 2005.

"The efforts of privatisation have been really quite remarkable," said Calello, who met with Prime Minister Shaukat Aziz and senior officials there last week. "ItÃ¢â¬â¢s an open market."

Credit Suisse has invited VietnamÃ¢â¬â¢s vice minister of finance and the special economics and finance adviser to Shaukat Aziz to speak at its conference, which will draw more than 1,000 investors and 250 companies with a total market value of $2 trillion.

SwitzerlandÃ¢â¬â¢s second-largest bank is also continuing to search for a securities joint venture partner in China, where rivals Merrill Lynch and Goldman Sachs have recently set up their own shops. "ThereÃ¢â¬â¢re a lot of opportunities that weÃ¢â¬â¢ve looked at," Calello said. "WeÃ¢â¬â¢ve been to the altar a couple of times."

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## Neo

*Production of Boeing parts at PEC, PIA* 
Tuesday, March 28, 2006 

KARACHI: A ceremony was held at Precision Engineering Complex (PEC) of Pakistan International Airlines to inaugurate the production of Boeing 777 parts at PEC. 

According to a press release on Monday, chairman and chief executive officer PIA Tariq Kirmani congratulated Air Vice Marshal Muhammad Rafi, senior vice president PEC and his team of engineers for attaining a global recognition of manufacturing aviation parts for the Boeing Commercial Airplanes Company. 

He stressed on the PIA workforce to strive for expanding the customer base in the international market.

Supply of parts to Boeing would improve PakistanÃ¢â¬â¢s ability to produce aviation parts with a modest beginning of $1.2 million. The volume of sales would increase to $15 million and beyond.

Precision Engineering Complex of PIA is a department that has been engaged in producing state of the art aviation products for international customers like the Air Bus Industries and General Electric of United States. 

This is besides Fischer Advanced Composites Company (FACC) of Austria and the Boeing Commercial Airplanes. PEC was established in 1978 and has ever since contributed in establishing state of the art technologies including CNC machining, electronics fabrication and design, production of optical elements, manufacturing of printed circuit boards, investment casting and related technologies.

http://jang.com.pk/thenews/mar2006-...business/b6.htm

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## Neo

*Aziz orders work on improving KKH* 
ISLAMABAD, March 27: Prime Minister Shaukat Aziz has said that the government is focusing on building a network of roads to improve the logistics chain. Presiding over a meeting on road projects, the prime minister said the first phase of the motorway M-1 extension, linking Lahore with Charsadda, would be completed by December, while work on the Charsada-Peshawar section was also in progress.

He was informed that completion of M-1 up till Charsadda involved construction of bridges on Rivers Indus and Kabul. It would contribute to improvement of the north-south corridor and facilitate trade, he was told.

The prime minister directed the communications ministry and the National Highway Authority to initiate work on upgrading the Karakoram Highway immediately to facilitate speedy construction of the Diamer-Bhasha dam. He was told that funds for the work had been arranged. In the first phase, work on Hasan Abdal-Mansehra section will be initiated in July, while the designing of the second phase is in progress.

He was informed that a network of roads was being built with a cost of about Rs35 billion to provide better links to the Gwadar Port, which already had access up to Chaman through the Coastal Highway and the ECO Highway. An alternate route through Pangur-Basima-Sorab will be completed in three years.

The prime minister said the plan of dualisation of the Karachi-Thatha-Kotri National Highway should be included in the next yearÃ¢â¬â¢s Public Sector Development Programme. Project will be completed in two phases.

The National Highway Authority presented a proposal for import of bitumen on low tariffs to overcome its shortage and bring stability in its price. The prime minister said the possibility to implement the proposal would be explored.

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## Neo

*President confident of Balochistan uplift: Gwadar gas supply project inaugurated* 
GWADAR (updated on: March 29, 2006, 22:01 PST): President General Pervez Musharraf on Wednesday said Balochistan was very dear to him and his dream was to bring it at par with other developed provinces.

"I have a dream for you and trust me that I will make all efforts to realise this dream of bringing prosperity and development to your province to take it at par with other provinces of Pakistan", he said 

amid applause while speaking at the inauguration of Gwadar gas supply pilot project.

The project has been completed by Sui Southern Gas Co Ltd (SSGC) at a cost of Rs 100 million.

The President said he would do away with any sense of deprivation among the people of Balochistan and bring prosperity and development in the long-neglected province.

"I am confident I will achieve this goal," he added.

He said the focus is now on Balochistan as this province lagged behind in progress and development compared to other provinces of Pakistan. He said there was no dearth of finances and the government would allocate more funds for the development of Balochistan.

The people of Balochistan are as patriot as other Pakistanis, he said.

"We are striving to take the people forward and provide jobs. I ask you to also get education and skills to ensure that you can compete in the mainstream for securing jobs," he added.

He asked the Ports and Shipping Minister, Babar Khan Ghouri to prefer locals in appointments at the new port and relax conditions if some candidates lack minimum requirements to increase economic opportunities for them.

President said the government will provide Rs 3 billion for development projects in 29 districts of Balochistan and each of these districts will get Rs 100 million.

It is now the duty of each Nazim of every district to provide me with the details of development projects in their respective areas.

He said that the list of these projects will be in his office and he himself would monitor progress on these to ensure their completion.

"Money is not a problem in new Pakistan and we are providing huge funds for mega projects in Balochistan including Gawadar Port, Coastal Highway, Mirani Dams and many others."

He said a gas pipeline network will be laid in the entire Balochistan and the inexpensive fuel will be provided to people in each and every corner of this province either through pipelines or LNG and LPG projects.

Musharraf said the government is examining possibilities for providing gas to every Pakistani by 2007. We will try to provide gas to all 110 districts of the country at affordable rates, he added.

The Compressed Natural Gas (CNG), he said, is an economical option as compared with cylinder gas and this should be provided to remote areas of Pakistan where other options like laying long pipelines are difficult.

He directed for supply of gas to Zhob city.

President Musharraf appreciated the management, engineers and workers of SSGC for timely completion of the project.

State Minister for Petroleum and Natural Resources Mir Naseer Mengal, on the occasion, said the President has taken keen interest in fruition of development projects for prosperity and progress of Balochistan.

He said that this gas project was unique for Balochistan and it will cater to the requirement of people.

MD SSGC Munawar Baseer Ahmad, in his address, said that the LPG project was completed in a record period of three months on the instructions of President Musharraf.

He said that initially, 2500 domestic consumers will get gas connections which will be increased according to demand.

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## Neo

*'Improved energy efficiency to ensure economic stability'* 
ISLAMABAD (March 29 2006): The improvement in energy efficiency will help safeguard energy security and stable environment of the economy, while effective mechanism, saving and development of energy corridors would improve the overall energy security of the country.

This was the gist of a lecture by Private Power and Infrastructure Board (PPIB) Managing Director Khalid I Rahman on the 'Role and prospects of hydel and thermal power in energy security' at Pakistan Engineering Council Auditorium here on Tuesday.

Pakistan uses 31 units of energy to produce one dollar of Gross Domestic Product (GDP) while Bangladesh consumes 13 units for one dollar of GDP, and India 27 units for it, he said. "We have to increase it to the level of developed nations, which is below 10 units", the PPIB chief added.

Comparing the prices of natural gas and electric power with other countries of the region, Rahman said that they are relatively low and should be rationalised to attract more investors into the sector.

Short-term projection of energy is 79.39 MTOE till 2010 in which oil has 20.69, natural gas of 38.99, coal 7.16, hydro 11.03, renewable 0.84 and nuclear 0.69 against the production of 50.8 MTOE in 2004, he said. When compared with the regional countries, Pakistan, like India and Bangladesh, is around the same line of per capita GDP but it fell very short from per capita GDP of China (5000) and Malaysia (9000).

Pakistan, unlike regional countries, has more dependence on imports, as it has 24 percent import dependence while China had only 1 percent and Malaysia has exportable energy, he added.

Similarly, power generation plan for 2030 would be 162590 MW in which 8800 would be nuclear, 32660 hydel, 19910 coal, 9700 renewable, 7760 oil and 83760 gas.

In response to 2002 power policy, 45 projects with capacity of 11915 MW and investment of $11,203 million would be operational before 2015, he said.

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## Neo

*Pakistan attracts US$ 1 billion in petroleum sector: Jadoon* 
Wednesday March 29, 2006 

Federal Minister for Petroleum and Natural Resources Amanullah Khan Jadoon has said that PakistanÃ¢â¬â¢s petroleum sector attracted over US$ 1 billion direct and indirect investment in last few years.

ANKARA, March 29 (Online): Federal Minister for Petroleum and Natural Resources Amanullah Khan Jadoon has said that PakistanÃ¢â¬â¢s petroleum sector attracted over US$ 1 billion direct and indirect investment in last few years owing to continuation of policies, deregulation and restructuring measure. 
He said this while addressing a two-day Caspian and Black Sea Oil and Gas Summit 2006 here on Tuesday. The conference was organized by the Turkish Ministry of Petroleum and being attended by the Oil Ministers and senior officials from Russia, Iran, India, Pakistan, Afghanistan, Kazakhstan, Azerbaijan, Georgia and Ukraine. 

The Minister said that Pakistan would become an energy hub in the region due to its strategic location and would serve as a corridor for the international supply routes of energy to the landlocked Central Asian States for transporting their oil and gas to the world markets. 

Jadoon said that Pakistan has taken some bold steps during the last one year, which would conceivably bring about a major shift in the approach of regional countries to address the issues of energy supply on a mutually assured benefits basis. 

He invited the participants to visit Pakistan and see for yourself the immense opportunities available in the energy sector adding that "our government and oil and gas companies will fully facilitate investment and joint ventures. 

The minister said that the government has accorded top priority to the speedy development of the oil and gas sector and all out efforts were being made to exploit the indigenous hydrocarbon resources in order to meet the growing energy need of the country. 

He said that during the last few years, 1.5 billion cubic feet gas per day were added in the transmission system from the newly discovered fields. 

The minister said that to bridge the energy shortfall after 2010, the government was judiciously working on Iran, Turkmenistan, and Qatar Gas Pipeline Projects besides looking of LNG fuel.

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## Neo

*Musharraf asks exporters to focus on heavy industry* 
KARACHI (March 30 2006): President General Pervez Musharraf on Wednesday said Pakistan is hoping to achieve $18 billion of exports this year and the target for next year would be 20 billion dollars.

Inaugurating the Expo Pakistan-2006, he pointed out that in the first seven months of the current fiscal year from July to January, we have already hit $9.3 billion in terms of exports.

"I am very reasonably sure that if we continue like this we will Insha-Allah cross 18 billion dollars," Musharraf remarked and hoped that next year we ought to be crossing $20 billion.

He was of the view that exports amounting to 20 billion dollars were not even enough and we need to target much higher.

However, the President said we cannot target much higher unless we strategize and think of innovative methods of doing that. He stressed that we must go for market access through bilateral arrangements and we are going for preferential trade agreements and free trade agreements with many countries and within South Asia.

He called upon exporters to increase exports in heavy industry and engineering sector as they contribute 61 percent of the world exports.

Musharraf said we have also gone in for an early harvest arrangement with China and that this is the trend that we must pursue on a bilateral level to give a boost to the country's exports.

He also stressed that we would also have to diversify our products. The President pointed out that in the past we had bogged down in exports of agricultural products and textile, which form our backbone.

Musharraf said our industry is growing by leaps and bounds and in the year 2004 our industrial growth was 16.2 percent and in 2005 it was 14.6 percent and this year again we will hit double figures.

The President also emphasised the need for diversification of the markets. In the past we were bogged down in looking towards West only, which means Europe and the United States. He called for looking to the new markets in Africa, East Europe, South America, South East Asia and China, which is our friend for more than 50 years. "We never concentrated on trading with these countries."

He also highlighted the significance of value-addition in our exports. The President pointed out that Pakistan is the 5th largest milk producer in the world but we do not produce any cheese, butter or milk powder or yoghurt for export. "We must go for a white revolution which we are trying to bring about in the country today and become exporter in the dairy products", he added.

Musharraf also pointed out that the revenue collection in the country is expected to increase to Rs 850 billion this year as compared to 302 billion in the year 1999.

The President o emphasised for drawing investment to Pakistan and was glad that the country's economy is in upsurge with a GDP growth of 8.4 percent last year and targeting over 7 percent this year.

He was very sure that the country would sustain growth of above 7 percent in the coming five years and that the economy would remain in upsurge in the coming years. Musharraf stressed that this is an ideal time for an investor to come and invest in Pakistan because the demand-supply gap is vast.

He pointed out that there are about 700 foreign firms in Pakistan today and they are earning profit between 20 to 60 percent with some making more than 80 percent profit.

The President said it is a win-win situation for them as well as for Pakistan.

Musharraf also pointed out that Pakistan has a great advantage because of its strategic location. He said a tremendous amount of reconstruction activity is going on in Afghanistan and $12.5 billion have been promised for reconstruction there. He said Pakistan's trade with Afghanistan has increased beyond dollars one billion. He also stated that China is developing its western region and pumping in 120 billion dollars. The President pointed out that if we see this whole region, no interaction is possible without Pakistan. He said if India wants to have oil or gas it has to be through Pakistan, whether they want to get it through Iran, Qatar or Turkmenistan, Pakistan happens to be in the way.

Musharraf pointed out that the government is creating an investment-friendly environment in the country by amending and modifying rules and regulations and a lot has been done on this count.

He said today every sector of Pakistan economy is open to foreign investors and 100 percent equity is allowed to any foreign investor in Pakistan.

Musharraf said we are providing a level playing field to all the foreign investors like we have given to the local investors. He pointed out that the security of investment is guaranteed through law.

The President said that investment in Pakistan has risen by 300 percent this year. We are targeting 2.5 billion to 3 billion dollars and in this case the increase would be 1000 percent. He urged the representatives of 57 countries who were present at the inaugural session of Expo Pakistan to look at Pakistan,

The President said it was unfortunate that there are travel advisories against this country and that nothing could be farther from the truth.

He pointed out that Pakistan is a moderate, enlightened and progressive society. "The extremists are a fringe minority and we will suppress and control them."

Commerce Minister Humayun Akhtar said President Musharraf is pursuing a very aggressive trade policy that is earning great benefits for the country.

He said as a result of this policy we are holding talks with various countries for trade agreements.

Humayun said, "We would continue to make diplomatic efforts in the area of trade so that maximum foreign investment is ensured in the country." He said the slogan is "Pakistan is out there for trade".

The minister also called upon various countries to give Pakistan the market access and a level playing field in their markets.

Humayun said, "We want that our entrepreneurs could become competitors internationally with quality products and competitive prices for which the government would provide all incentives to them." The minister said foreign direct investment (FDI) is pouring into the country in a big way and there is no such example in the past.

He also thanked Chairman Export Promotion Bureau Tariq Ikram, Vice Chairman Zafar Mahmood, members of the Steering Committee and EPB staff for their untiring efforts for holding such a mega event in a successful manner. Earlier, in his speech Tariq Ikram said as many as 1000 delegates representing 57 countries and 350 exhibitors of goods and services from within the country are taking part in the Expo-2006 which itself speaks of a successful story.

He said the event is being held for the second consecutive year here and this time more and more investors are taking part.

This exhibition, the EPB chairman said, would help us in holding negotiations with large business houses whose senior executive otherwise were not easy to meet.

He said, "We are also holding a conference during the exhibition to examine the responses we got from our former exhibitors and visitors, the rules and regulations, incentives for the investors, etc.

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## Neo

*Account gap to be bridge with privatisation and FDIs* 
HONG KONG (March 30 2006): Pakistan is targeting up to $2.5 billion in asset sales and an equal amount of foreign direct investment each year to help bridge its growing current account deficit as the economy gathers pace, a government official said on Wednesday.

The economy, projected to expand by 6.7 percent in the current financial year up to June, and by 7.0 percent next year, has seen an investment boom after sanctions were lifted and debts rescheduled as reward for joining the US-led war on terrorism.

In 2005, portfolio inflows were estimated around $450 million, compared with an annual average of $150 million in previous three years, as Pakistan's stocks soared 51 percent. This year, they are up 21 percent.

"We have tight deadlines for privatisation. For example, before the fiscal year is out, we should have road shows for Pakistan Steel Mills, gas companies, Pakistan State Oil and OGDC GDR," Salman Shah, advisor to prime minister on finance, told Reuters. He said the government was aiming to raise $2 billion to $2.5 billion by selling state-owned assets and seeking to attract a similar amount via foreign direct investments in oil and gas, power, construction, real estate and textile sectors.

Analysts say textiles, the mainstay of Pakistan's economy, are expected to see a stiff challenge from growing Chinese competition since the abolition of textile quotas, but Shah argues that Pakistan enjoys an advantage over its rivals.

"We have a real surplus in textiles. Domestic demand in China and India is so high that it may not be sustainable for them to be major players in the global textiles business." Shah, who was in Hong Kong to address a Credit Suisse investment conference, said he was not perturbed by the decline in foreign exchange reserves, which have fallen steadily since a record high in April last year.

"If some of your reserves go down because you are financing expansion in the capacity of the economy, it is not a big deal as long as there are sufficient reserves to cover imports and the traditional indicators," Shah said.

Routine debt payments and the rising import bill have seen reserves fall by over a tenth to $11.404 billion since last April.

Foreign exchange reserve growth would be sustained by healthy expatriate remittances, which are supported by a boom in the Gulf economies and the shift of flows to formal from informal channels, he added.

He said annual remittances would stabilise at the current $4.5 billion.

BENCHMARK FOR INVESTORS: A recent international debt offering by Pakistan would help guide investment flows into the economy, Shah said. Pakistan sold $800 million in a dual-tranche sovereign bond, its third foray into the international debt market since 2004 which attracted more than $2 billion in orders.

"This has helped in establishing a benchmark for long-term investments in Pakistan ... it will help FDI, portfolio investments and in our ability to make major flotations of equity in global markets," he said. But he added that there were no plans for debt-swapping, a popular tool adopted by emerging market borrowers in recent months, despite the popularity of the bond issue.

"Out of the $34 billion of external debt only $2 billion is commercial, (the) rest is inexpensive long term debt. We don't have any major expensive debt," he said, adding that regular visits to the global debt markets would ensure an international yield curve.

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## Neo

Pak-China bus service from June
Thursday, March 30, 2006 



ISLAMABAD: Pakistan will launch from June a bus service with China which is keen to use the South Asian country as a transit facility to gain access to Central Asian markets and to help Beijing develop alternative energy sources. 

A tourism ministry spokesman said the decision to start the bus service between Pakistan's Northern Areas and China's Xinjiang region was taken at a meeting held in Urumqi on March 20-21. 

He said a formal agreement was signed Wednesday in China and both sides have agreed to operate one bus each daily from June 1 via the Sust and Tashkorgan border areas of the two countries. 

The spokesman said another bus service would operate between Kashghar and Gilgit via the same route thrice a week. 

The bus service to China follows closely on heels with bus services with three of its other neighbours - India, Iran and Afghanistan. 

Foreign office officials said the two countries would start a regular goods transportation service from May 1 via the Khunjerab pass on Pakistan's northern border with China. 

Both sides would issue 3,000 permits to registered goods transporters and each permit would be valid for one round trip between designated points. The number of permits could be gradually increased to keep up with the transporters' demand. 

Transporters in Pakistan have termed the protocol an important step for streamlining the existing road network between the countries. 

'It would promote commercial links and strengthen people-to-people contacts between the two countries,' Abdur Rehman, who imports toys from China, said.

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## Neo

*Six world-class engineering universities by 2008* 
KARACHI (March 31 2006): President General Pervez Musharraf on Thursday said that six world-class engineering universities will start functioning in Pakistan by 2008. Pakistan, he said, has embarked upon a programme to enhance the quality of its human resource.

"For this purpose, we have planned to establish six engineering universities in Pakistan with the help of Sweden, France, Germany, Netherlands and Austria," he added.

He was speaking at the groundbreaking ceremony of $130 million state-of-the-art steel making Tuwairqi Steel Mills (TSM) over an area of 220 acres at Port Qasim. The production capacity of the TSM can be expanded to 1.5 million tonnes and subsequently to 3 million tonnes in future.

Sindh Governor Dr Ishratul Ibad, Chief Minister Dr Arbab Rahim, Industries and Production Minister Jahangir Khan Tareen, Saudi Arabian Ambassador in Pakistan Ali S. Awadh Asseri and senior civil and military officials and members of the diplomatic corps were also present on the occasion.

He said that the disciplines of these universities will be heavy industry and engineering sector with a view to enhance expertise of our young engineers. "For enhancing expertise of our technicians, we have set up a separate body in the form of Technical Education and Vocational Training Authority (Tevta)," he said, adding that the body is headed by Saleem Altaf.

Referring to the training programme of Al-Tuwairqi Group for Pakistani engineers and technicians, he said that was the real transfer of technology and enhancing the quality of manpower in Pakistan.

He said that technical education was taken away from the Education Ministry and Tevta would look after it, which would ensure quality training of technicians. The government is also looking into the present and future needs of Pakistani industry and these universities would design disciplines according to these requirements.

"This is the spectrum how we want to take our youths forward. At the end of the day it is human resource development which will propel us forward," he said.

The president said that Pakistan would gradually shift its focus from agriculture and textile to heavy industry and engineering sector to achieve a quantum jump in exports.

He said that going into heavy industry and engineering sector is the future of Pakistan. "Since we are in the process of enhancing our exports, it becomes very clear that the country should go into heavy industry and engineering sector which is 60 percent of the world trade," he added.

Musharraf said that only textile sector contributed only 6 percent of the world trade, adding that this was the reason why country's exports were not at the desired level. "If we want to enhance our exports we have to go into heavy industry and engineering sector," he said.

The President said Pakistan and Saudi Arabia enjoy brotherly relations through many years. "His Majesty King Abdullah calls me his brother and he says he means it, I call him my elder brother and I mean it," the president said.

The president appreciated the efforts of Al-Tuwairqi Group Chairman Dr Hilal Al-Tuwairqi for development in Pakistan.

Talking of business and economic relations between Pakistan and Saudi Arabia, he said that both the countries would cement these bonds in the 21st century.

He said this century was not geo-politics, but it was geo-economic. It is the economic, trade and commercial relations, which cement bonds (between the nations), he added.

President Musharraf said that trade was improving between the two brotherly countries, but investment was to be further encouraged. Dr Hilal was exactly doing the same to further enhance bilateral relations.

Referring to the policy of deregulation, liberalisation and privatisation, he said that it has paid dividend and caused upsurge in the economy.

He urged Dr Hilal to participate in the privatisation of Pakistan Steel Mills and modernise it. This is the need of the country, he said.

The president said industry was growing at a fast pace. In 2004, it was 18.2 percent and it is in double digits this year and the country needs steel and energy, he added.

He expressed his desire that these two steel mills should expand their production to cater to the demands of the growing industry in Pakistan.

He termed the groundbreaking of Tuwairqi Steel Mills a landmark event.

Industry Minister Jahangir Khan Tareen said that the country's requirement for steel was about 5-6 million tonnes and it would be increased by 7-8 million tonnes in 10 years.

He said the government was undertaking programme to enhance technical expertise in the country. The minister said the government wanted to pass on the fruits of economic upsurge to the people by providing them education, healthcare and clean drinking water.

Dr Hilal Al-Tuwairqi in his lively speech said that his company has selected Pakistan for this latest steel mill due to its investment-friendly rules and regulations.

Calling President Musharraf as the strongest leader in the Islamic world and a man of Islam and peace, Tuwairqi said that he has changed Pakistan. He said that the mill with state-of-the-art technology would start production in 18 months.

Al-Tuwairqi Group Vice Chairman M. Tariq Barlas said that the plant using the latest directly reduced iron (DRI) technology would produce one million tonnes of steel in the first phase. This can go up to three million tonnes, he added.

He said this mill would directly employ 3,500 engineers and technicians and create job opportunities in the services sector.

Barlas said his group was the largest private steel-producing conglomerate in the Kingdom. Earlier, on his arrival, the president performed the groundbreaking and offered Dua for its success.

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## Neo

ISLAMABAD (March 31 2006): Pakistan's economy would remain robust this year with gross domestic production (GDP) growth rate at 6.5 percent, says the Economic and Social Survey of Asia and the Pacific-2006.

However, there are concerns about the overall budgetary deficit in years ahead as it may rise again. Besides, weak buoyancy of tax revenue, unemployment and poverty still remain the big challenges.

The survey launched here on Thursday points out that the economy of the Asian Pacific region grew strongly in 2005, aided by a buoyant global economy and the region should maintain its growth momentum in 2006, barring any unfavourable external events.

For 2006, the survey forecasts that oil prices will fluctuate within the range of $50-55. There are fears, however, that they may touch $100 a barrel within the next four years.

Despite high global energy prices, the price pressures rose only moderately in 2005 and are expected to remain muted or even ease slightly in 2006.

The Unescap has praised Pakistan's impressive economic growth in 2005. The GDP growth of 8.4 percent in 2005 was the highest in the last two decades. The factors which contributed to acceleration were strong domestic demand, better weather conditions for agriculture, continuity of economic policies and a robust financial sector.

The government had set a growth target of 7 percent of GDP for 2006, less than the rapid 8.4 percent achieved in 2005 but higher than the long-term growth trajectory of 6 percent.

A number of factors may interfere however; agriculture, prone to weather-related fluctuations, may perform below expectations. On the other hand, large-scale manufacturing may achieve the target and growth in services is expected to remain strong. Sustaining a higher growth rate is thus possible.

The earthquake is expected to have a minimal impact on economic growth. Natural disasters, damage and destroy assets, however, the repair and rebuilding of these assets generates economic activity that can help growth. Keeping all these factors in view, the surveys indicates that the GDP should grow 6.5 percent or higher in 2006.

There are indications that the economy as a whole is not likely to lose momentum in the short-term as a result of the devastating quake.

There was a sharp increase in nominal investment supported by strong macroeconomic fundamentals, increased availability of credit and a significant rise in foreign direct investment (FDI).

However, the investment to GDP ratio has remained at about 17 percent in the last four years. On the supply side, agriculture performed exceptionally well in 2005, with good weather and supportive government policies contributing to growth rate of 7.5 percent, an increase of 2.2 percent than in 2004.

Large-scale manufacturing recorded an impressive and broad-based growth rate of 15.4 percent in 2005. The service sector grew by 7.9 percent in 2005, in line with the higher growth in the commodity-producing sectors.

Inflationary pressure strengthened considerably in 2005, as inflation rose from 4.6 percent in 2004 to 9.3 percent.

Three years of strong economic growth, complemented by record low interest rates and the ongoing structural shift of many households towards higher consumption have injected new vigour into domestic spending.

This spending, coupled with rising oil and other commodity prices, contributed to a sharp increase in inflation in 2005. Food inflation reached double digits, a heavy burden on the poor who spend most of their income on food.

The government took several measures to ease inflationary pressures by not passing on to consumers the entire increase in the international prices and it began to tighten monetary policy to ease demand pressures.

The inflation is expected to drop to about 8 percent in 2006, pulled down by the decline in aggregated demand implicit in the lower growth estimate, a high base effect for 2006 prices and an anticipated improvement in food supplies.

However, prices of construction materials are expected to increase at a faster pace because of supply bottlenecks associated with the reconstruction work in the wake of the earthquake.

Budget deficit brought down to a relatively low level in recent years may rise again. In fiscal year 2005, it stood at 3.3 percent of the GDP.

Tax revenue buoyancy remained weak, as reflected in the continuing fall in the tax to GDP ratio that limits the government's ability to provide adequate funds for infrastructure and social programmes.

High growth of exports was outpaced by even higher growth of imports and current account turned into deficit. In 2005, while exports grew at a healthy rate of 16.9 percent, imports grew almost twice as fast, at 32.3 percent.

Higher oil prices led to a substantial increase in import payments and to higher shipment charges and so to higher prices for other imports as well. While growing domestic demand boosted import, imports of machinery and raw material also increased substantially.

Coupled with these large remittances, gains from the lower interest payments on Pakistan's external debt and liabilities partially offset the impact of the large trade gap. As a result, the current account deficit was contained in 2005.

The survey points out that there has been a significant increase in net inflows of capital in 2005. Capital inflows included mainly one-off inflows and an increase in concessional long-term loans from the World Bank and the Asian Development Bank. Foreign Direct Investment (FDI) reached $1.5 billion in 2005, 61 percent higher than in 2004. New FDI is so far concentrated in a few sectors such as telecommunications, finance and insurance and oil and gas exploration.

Following the adoption of a robust strategy of debt reduction, Pakistan's external debt declined from $37.9 billion at June-end 2000 to $36.6 billion at March-end 2005.

Highlighting the challenges, the survey says that the government expenditure related to the earthquake is likely to put pressure on the budgetary balance but with the continuing fiscal discipline, prudent monetary policy and focused attention on improving infrastructure and social sector indicators, the economy should maintain its medium-term growth trajectory.

Besides, enhancing the buoyancy of tax revenues, the growth in current expenditure needs to be curtailed and imbalances in the external sectors need to be addressed to ensure that the economy does not deviate from the growth path, achieved in the past few years.

Volatile oil prices: The current bout of high oil prices is hurting countries and if oil prices rise further by $10 a barrel, GDP growth of a developing country such as Pakistan can drop by 0.5 percent, inflation can rise up to one percent and current account deficit can widen up to 0.3 percent of the GDP.

The Challenge of Avian Influenza: The region has suffered significant human and economic losses as a result of the outbreak of H5N1 and estimates of human deaths from a possible global pandemic of the highly pathogenic avian influenza range from five million to 150 million people.

As a conservative loss in GDP from a pandemic would amount to $200 billion in just one quarter and in a worst case-scenario could plunge the global economy into recession.


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## Neo

ISLAMABAD (March 31 2006): The US ambassador, Rayan C Crocker has said that the social and economic development of Pakistan is the significant aspect of US-Pakistan strategic relationship.

Speaking at the launching ceremony of US-funded project of "Mitigating Child Labour through Education" here on Thursday, he said "earlier this month Bush and Musharraf committed themselves to the long-term strategic and significant partnership.

The ambassador said that promotion of education is the only suitable and sustainable way to achieve social and economic goals and the US has been the major partner of Pakistan in education sector.

Last year, Crocker said, the US government provided 66 million dollar to Pakistan under different programmes. Save the children-UK, in collaboration with US Department of Labour has prepared a project worth 4 million dollar to integrate 15,000 out-of-school children with the mainstream schooling system, he added.

He said that the evil of child labour could only be eradicated by making the access of education to every one, creating awareness and removing poverty. The terrible impact of child labour is that it not just deprives children from their inherent right of education but also leaves negative impact on social and economic development.

He said that the US government had provided 16 million dollar funding to Pakistan in different projects to help it eradicate the menace of the child labour.

Minister for Education, Javed Ashraf Qazi said the poverty and non-availability of education are the major causes of increasing child labour.

The minister denounced non-governmental approach in promoting literacy saying that a majority of their initiatives have failed to produce results because of their misdirected approach to the issue.

He said that the Pakistan needed long-term partnership and permanent initiatives in education sector rather than temporary programmes. It would have been better if 'Save the Children' would have established a vocational training centre on permanent basis rather than chalking out an initiative for 15,000 out-of-schools children for few years, he added.

He regretted that the ministry was not consulted before launching the project.

The minister also came hard on Afghans saying that they must return to their country as Pakistan had paid high price for hosting them. The Afghans are involving themselves in crimes, now. Since they have an elected government in their country, there is no point of staying in Pakistan, he observed.


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## Neo

KARACHI (APP): President Pervez Musharraf said Thursday Pakistan will gradually shift its focus from agriculture and textile to heavy industry and engineering sector to achieve a quantum jump in the country's exports. 

He was speaking at the ground breaking ceremony of US $ 130 million state-of-the-art steel making Tuwairqi Steel Mills (TSM) over an area of 220 acres at Port Qasim. The production capacity of the TSM can be expanded to 1.5 million tons and subsequently to 3 million tons in future. 

Sindh Governor Dr Ishratul Ibad, Chief Minister Dr Arbab Rahim, Industry Minister Jahangir Tareen, Saudi Ambassador in Pakistan Ali S Awadh Asseri and senior civil and military official and members of diplomatic corp were also present on the occasion. 

The President said going into heavy industry and engineering sector is the future of Pakistan. 

"Since we are in the process of enhancing our exports it becomes very clear that the country should go into heavy industry and engineering sector which is 60 percent of world trade", he added. 

President Musharraf noted that only six percent of world trade was in the textile sector and added that this was the reason why country's exports were not at desired high level. 

"If we want to enhance our exports we have to go into heavy industry and engineering sector", he observed. 

Referring to the training programme of Al-Tuwairqi Group for Pakistani engineers and technicians, he said that was the real transfer of technology and enhancing the quality of manpower in Pakistan. 

Pakistan, he said, has embarked upon a programme to enhance the quality of its human resource in Pakistan. "For this purpose, we have planned to establish six engineering universities in Pakistan with the help of Sweden, France, Germany, Netherlands and Austria", he added. 

President Musharraf said that these universities will start functioning in 2008 and their disciplines will be heavy industry and engineering sector with a view to enhance expertise of our young engineers. 

"For enhancing expertise of our technicians, we have set up a seperate body in the form of Technical Education and Vocational Training Authority (TEVTA)," he said and added that the body is headed by Saleem Altaf. 

He said that technical education was taken away from the Education Ministry and it will be looked after by TEVTA which will ensure quality training of technicians. 

The government is also looking into the present and future needs of Pakistani industry and these universities will design disciplines according to these requirements. 

"This is the spectrum how we want to take our youth forward. At the end of the day it is human resource development which will propel us forward", he opined. 

The president said that the power potential of a nation was basically based on its population and the quality of its human resource. Human resource is the area where we are lagging behind, he pointed out. 

He thanked Dr Hilal Husain of Al-Tuwairqi Group for imparting quality training to engineers and technicians. 

The President said Pakistan and Saudi Arabia enjoy brotherly relations through many many years. "His Majesty King Abdullah calls me his brother and he says he means it. I call him my elder brother and I mean it", the president said. 

Calling Dr Hilal as his brother, he appreciated his (Dr Hilal's) efforts for development in Pakistan. 

Talking of business and economic relations between Pakistan and Saudi Arabia, he said that both the countries will cement these bonds in the 21st Century. 

He said this century was not a geo-politics, but it was geo- economic. It is the economic, trade and commercial relations which cement bonds (between the nations), he added. 

President Musharraf said that trade was improving between the two brotherly countries but investment was to be further encouraged. 

Dr Hilal was exactly doing the same to further enhance biltaeral relations. 

Referring to the policy of deregulation, liberalization and privatization, he said that it has paid dividends and caused upsurge in the economy. 

He urged Dr Hilal to participate in the privatization of Pakistan Steel Mills and modernize it. This is the need of the country, he noted. 

He said industry was growing at a faster rate. In 2004, it was 18.2 percent and it is in double digit this year and the country needs steel and energy, he added. He expressd a desire that these two steel mills should expand their production to cater to the demand of the growing industry in Pakistan. 

Calling the ground breaking of Tuwairqi Steel Mill a landmark event, he said it a great day for Pakistan. This is in consonance with our vision of taking country forward. 

"Our vision is to shift focus gradually from agriculture and textile to heavy industry and engineering sector." 

Industry Minister Jahangir Khan Tareen said that country's requirement for steel was about 5 to 6 million tons and will be increased by 7 to 8 million tons in next ten years. 

He said the government was undertaking programme to enhance technical expertise in the country. 

He said the president of Pakistan will directly look at the investment opportunities. 

The Minister said the government wanted to pass on fruits of the economic upsurge to the people by providing them education, healthcare and clean drinking water. 

Chairman Al-Tuwairqi Group, Dr Hilal Al-Tuwairqi in his lively speech said that his company has selected Pakistan for this latest steel mill for its investment friendly rules and regulations. 

Calling President Musharraf as the strongest leader in the Islamic World and a man of Islam and peace, Tuwairqi said that he has changed Pakistan. 

Pakistan is a leader of the entire Muslim World, he said. 

He said that the mill with state of the art technology will start production in 18 months. 

Vice Chairman Al-Tuwairqi Group M Tariq Barlas in his address said that the plant using the latest directly reduced iron (DRI) technology will produce 1 million tons of steel in the first phase. This can go upto 3 million tons, he added. 

He said this mill will directly employ 3500 engineers and technicians and create a massive job opportunities in the services sector. 

Barlas said his group was the largest private steel producing conglomerate in the Kingdom. 

Earlier, on his arrival, the president performed ground breaking and offere dua for its success.


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## Neo

*The US Economic Relationship with India & Pakistan* 
Friday, 31 March 2006, 9:52 am
Press Release: US State Department 

The U.S. Economic Relationship with India and Pakistan 
PART I

Josette S. Shiner, Under Secretary for Economic, Business, and Agricultural Affairs 
Address to the Heritage Foundation 
Washington, DC 
February 24, 2006 


"I would define the objective of transformational diplomacy this way: To work with our many partners around the world to build and sustain democratic, well-governed states that will respond to the needs of their people and conduct themselves responsibly in the international system. . . This is a strategy rooted in partnership, not paternalism in doing things with other people, not for them. We seek to use America's diplomatic power and our foreign assistance to help foreign citizens to better their own lives, to build their own nations, transform their own futures, and to work with us to combat threats to our common security " 

Secretary Rice, Georgetown University, January 18, 2006 

TALKING POINTS AND THEMES 

* In a few days, President Bush will make historic visit to both India and Pakistan, two countries that are critical to this vision of transformational diplomacy, and with which we have developed close partnerships in the last few years. 

* Our relationships with both India and Pakistan are complex, broad, and deep, now covering dozens of global, regional and bilateral issues. 

* The President's trip will highlight how far these relationships have come since 2001. Nowhere is this more evident than on the economic side. 

* Our economic relationships are now a foundational part of these partnerships. Our economies are increasingly interlinked, bringing innovation, trade, opportunity, and prosperity to all our peoples. 

INDIA 

* When I was recently in Davos for the World Economic Forum, I saw a sign in the Zurich airport that said, "India: World's Fastest Democracy." 

* President Bush has made a fundamental judgment that strategic partnership with India will be central to the future success of American foreign policy in South Asia and around the world. The visit of Indian Prime Minister Manmohan Singh to Washington last July marked a watershed in our relationship; the President's visit there next week will be another major step. 

* These visits, and the initiatives we have launched, showcase the fact that the U.S.-India bilateral relationship has emerged from a long period of "unproductive estrangement." 

* This new relationship began 15 years ago, when India's leaders including current PM Manmohan Singh decided to initiative serious economic reforms. But only in the past 3 years can we say the "planets aligned" for a significant transformation in U.S.-India relations. 

* A strong, democratic India is an important and natural partner for the United States. We expect India to play an increasingly important leadership role in 21st Century Asia, working with us to promote democracy, economic growth, stability and peace in that vital region. 

* Our relationship with India has been transformed across the board: in trade, energy, education, agricultural cooperation, scientific research and in other areas. 

* We have launched strategic dialogues or concluded agreements on: + Airline access and open skies + Trade in sensitive technologies + Environment + Commercial issues and more 

* And, of course, the civilian nuclear agreement we are working to complete. 

* These initiatives showcase our common values and our shared commitment to preserve and promote open societies. We are interested in developing a strategic partnership that advances shared interests and enhances global security; and we look to strengthen cooperation in all areas important to the well being of both nations. 

Why Now? 

* President Bush and former PM Vajpayee took the initial steps to transform the U.S.-India relationship. And we have moved even farther with PM Singh. 

* Private Americans and Indians have worked hard to bring our countries closer together, though commercial, educational, cultural, scientific, and other ties. 

* Indians are a very influential presence in Washington, on Wall Street, and in the media. 2 million people of Indian origin are in the U.S. There are over 85,000 Indian students in the U.S., more than from China. 

* 25 percent of Silicon Valley firms were founded or are led by people of Indian origin. Polls in India show a remarkable 75percent favorable view of the U.S. 

The Economic Relationship 

* The U.S.-India economic relationship is poised to take off. The bilateral Economic Dialogue is the cornerstone of our economic cooperation, and the main avenue for addressing issues of the greatest importance to our private sectors. 

* Since the early 1990s, India has progressed far in liberalizing its tariff regime and investment environment, and these major changes have fueled the growth and increased prosperity of recent years. 

* By 2025, India's economy is expected to be one of the five largest in the world. It will soon be the world's most populous nation, with an increasingly young, skilled labor force. 

* U.S. exports to India grew 30 percent last year; Indian exports to the U.S. grew over 20 percent. Since 1997, bilateral trade has grown from $10 billion to almost $30 billion in 2005. 

* While outsourcing has become a controversial issue, the U.S. actually enjoys a healthy surplus in trade in services with India. In 2004, the U.S. exported $4.6 billion worth of services to India, a surplus of $1.8 billion. 

* Despite its impressive record of economic growth during the last decade, India still struggles with many of the persistent challenges faced by developing countries: insufficient and underdeveloped infrastructure, inefficient markets for goods and agricultural products, and minimal access of credit and capital among the urban and rural poor. 

* In addition, India still suffers from a shortage of foreign capital and investment, which can bring in key, new technologies, create jobs, and modernize industries. 

* While annual FDI to India is growing, India's FDI is still one-tenth of that of China. 

* Our near term energies will focus on several sectors where we believe further liberalization and reform are needed, including the financial sector, the retail sector, and improved IPR protection. And we need to resolve legacy commercial disputes that are important to U.S. and Indian companies. 

* In addition, we are working with India on a broad range of energy issues in the U.S.-India Energy Dialogue, which is aimed at strengthening energy security and promoting the development of stable and efficient energy markets in India. 

Civil Nuclear Agreement 

* In their July 18 Joint Statement, President Bush and Prime Minister Singh committed to work with Congress and with our international partners toward full cooperation with India in civil nuclear energy. India for its part committed to take a number of important nonproliferation steps that will bring it closer to international non-proliferation practices. 

* The goal of the initiative is to provide India access to the technology it needs from the U.S. and elsewhere to build a safe, modern, and efficient infrastructure that will promote a cleaner, more secure global energy supply to support India's growing economy. At the same time, the additional nonproliferation commitments India made as part of the Joint Statement will, once implemented, strengthen the international nuclear nonproliferation regime. 

* We are also working closely with India on issues in the WTO to propose solutions and forge agreements that can translate the promise of the WTO's mission and the new era of U.S.-India relations into reality. India's voice carries weight and credibility in many areas of the world, and many developing countries look to India as a leader in major global issues. This continued effort will take hard work on both sides, and we look forward to this opportunity to engage India seriously, on behalf of both our peoples.


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## Neo

PART II - continued

PAKISTAN 

* As the President said in his speech on Wednesday, Pakistan now has the opportunity to write a new chapter in its history. And the United States wants to build a broad and lasting strategic partnership with the people of Pakistan. 

* At their June 2003 meeting at Camp David, President Bush made a commitment to develop with Pakistan a long-term, broad-based partnership as evidenced by the five-year, 3 billion dollar commitment. 

* We look forward to building on that commitment, developing our shared interests in promoting prosperity, peace, security, mutual understanding and tolerance in the region and across the globe. 

* We also intend to strengthen cooperation on counter-terrorism and security including striking at the conditions that give rise to extremism and terrorism, such as poverty, ignorance, and hopelessness. 

* As the President stated on Wednesday, the United States will continue to work with Pakistan to strengthen the institutions that help guarantee civil liberties and help lay the foundations for a democratic future for the Pakistani people. The United States and Pakistan both want the elections scheduled for next year to be successful. This will be an important test of Pakistan's commitment to democratic reform, and the government in Islamabad must ensure that these elections are open, free and fair. 

* Our partnership with Pakistan will increasingly build on expanded bilateral commercial links, particularly greater trade and investment, and also cooperation aimed at fostering expanded commerce within the region including with Afghanistan and Central Asia. The U.S. is Pakistan's largest partner for both investment and trade. 

* We hear from many sectors of Pakistan's economy an eagerness for increased trade with the U.S. We have encouraged Pakistan to further diversify exports away from a heavy reliance on textiles in order to be less susceptible to economic shocks and in order to have more opportunity to expand and take advantage of its plentiful, skilled workforce. One of our assistance programs is focused on helping Pakistan improve its competitiveness in dairy, gems and jewelry, and marble (sectors identified through public-private dialogue). 

* Pakistan has experienced strong economic growth in the last five years. In 2005, Pakistan had the second fastest growing economy in Asia. Although it will need to continue economic reforms and contain inflation to continue these positive trends, Pakistan has taken great strides from its bleak performance in the late 1990s. 

* Pakistan, guided by a strong team headed by Shaukat Aziz, the previous Finance Minister who is also now Prime Minister, engineered a stunning turnaround during which strong export growth lead to record foreign reserves in 2004, after teetering on the brink of economic disaster in the late nineties. 

* Our engagement with Pakistan on building its economic future will grow in new and mutually beneficial ways. One that I can highlight today are our joint efforts to conclude negotiations for a high-standard Bilateral Investment Treaty, or BIT, which will increase investment opportunities in both of our countries. 

* By fostering economic development and opportunity, we will reduce the appeal of radical Islam and demonstrate that America's a steadfast friend and partner of the Pakistani people. 

* The American response to the needs of the Pakistani people after the recent earthquake is another sign of America's commitment to this partnership. Not only were American relief workers on the ground there almost immediately, but the United States has pledged more than a half a billion dollars for relief and reconstruction, including $100 million in private donations from our citizens. 

Conclusion 

The President spoke Wednesday about the great changes taking place inside India and Pakistan and how they are helping to transform the relationship between these important countries. He pointed out that good relations with America can help both nations in their quest for peace. He noted that Pakistan now understands that it benefits when America has good relations with India and that India understands it benefits when America has good relations with Pakistan. The President believes that India and Pakistan now have an historic opportunity to work toward a lasting peace and we are encouraged and optimistic because, as the President said, "Prime Minister Singh and President Musharraf have shown themselves to be leaders of courage and vision." The President concluded with the following words: 

[W]e can proceed with confidence because we know the power of freedom to transform lives and cultures and overcome tyranny and terror. We can proceed with confidence because we have two partners two strong partners in India and Pakistan. 

Some people have said the 21st century will be the Asian century. I believe the 21st century will be freedom's century. And together, free Asians and free Americans will seize the opportunities this new century offers, and lay the foundations of peace and prosperity for generations to come. 

Civ-Nuke (IF ASKED) 

Both India and the United States are taking steps to implement the civil nuclear cooperation initiative as spelled out in the July 18th agreement. The Government of India is currently working to create a credible and transparent plan for the separation of India's civilian and military nuclear facilities. Upon completion of such a plan, we hope to be able to secure the support of the U.S. Congress to adjust our legal frameworks to allow for full civil-nuclear cooperation with India. Similarly, we will work with our partners in the Nuclear Suppliers Group (NSG) to seek accommodation for India. 

* The initiative faces challenges. India's plan for separation of its civilian and military facilities must be credible and defensible from a nonproliferation standpoint and be comprehensive enough to assure supplier states and the IAEA that materials and equipment will not in any way contribute to India's weapons program. 

* We believe additional conditions such as implementing a moratorium on fissile material production, ratifying the Comprehensive Test Ban Treaty, and/or joining the NPT as a non-nuclear weapon state "would likely be deal-breakers." The Joint Statement commits India to work toward the completion of a multilateral Fissile Material Cutoff Treaty (FMCT) and we believe this is a significant step forward. 

Iran and Non-Proliferation (IF ASKED) 

* In September 2005 and earlier this month as well, India joined the majority of IAEA Board of Governors' members in supporting a resolution finding Iran in noncompliance of its safeguards obligations. 

* These votes are important, as they demonstrate that India is taking a greater, more active role in strengthening nuclear non-proliferation regime. India sees it in its own interest, as well as the world's, to join the growing international consensus calling on Iran not to develop a nuclear weapons capability. 

* Speaking of Iran, I should note that we do have concerns, with respect to India and some other countries, about investment in Iran's oil and gas sector, including aspects of energy cooperation with Iran such as pipelines and LNG exports. Proposals for a gas pipeline linking Iran with the Indian subcontinent are troubling. Our views on this are well-known and it remains an issue of our bilateral dialogue. 


Released on March 19, 2006

http://www.scoop.co.nz/stories/WO0603/S00556.htm


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## Neo

KARACHI (April 01 2006): Pakistan's strategic location makes it the most attractive place in the region to be used as a hub for carrying out international trade with a large number of countries.

Talking to APP here on Friday, Netherlands-Pakistan Business Council President Martin J. Leushuis said there were vast opportunities for foreign businessmen to send their exports to other countries through Pakistan.

That would not only expand the area of their trade but also propel economic activity in the region, which was the need of the hour in the era of global trade, he said.

Martin said he was doing his best to take business community from the Netherlands to Pakistan so that they could see for themselves the conducive environment available for engaging in a large number of different business activities.

Because, he said, wrong perceptions of European people would only be rectified when they themselves visited this country and interacted with the business community here.

He said a lot could be done to bring investment in the country and he acknowledged the serious efforts of the government of Pakistan on this count. He hoped that if sustained efforts were continued to be made in the vigorous manner like this, positive outcomes would certainly be seen.


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## Neo

Saturday April 01, 2006 

KARACHI, April 01 (Online): Governor State Bank of Pakistan Shamshad Akhter has said that Pakistan would be able to achieve its target of $ 28 billion exports in the year 2010. 
"In view of the past performance shown by Pakistan in exports, which increased by 8.6 billion in the past five years, a target of $ 28 billion in year 2010 was very much possible," she said while addressing at investment conference at a local hotel here on Friday. 

The export potential was high in areas such as food processing and milk processing, seafood, gemstones and software and IT services. 

"If these segments are effectively exploited, Pakistan will be able to realize its 2010 target," she said. 

Pakistan has a road map for further deepening of reforms and addressing any policy, legal and regulatory distortions, which would ensure the continuation of recent strong economic performance well into future, Shamshad said. 

The SBP chief pointed out that PakistanÃ¢â¬â¢s export structure in terms of share of value added goods, both in the textile and non-textile sectors, has improved, However, she said that there is further room for improvement and emphasized on the importance of diversifying the international export market of Pakistani products. 

Talking about the recent high inflation rates, Shamshad Akhter informed that due to right monetary stance taken by SBP, the inflationary pressures have started to ease off, she said. 

Dr Shamshad termed the private sector as the real engine of growth and indicated that credit, which is vital to facilitate its growth and robust performance, has been increasing steadily over the past many years.


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## Neo

RAWALPINDI (April 02 2006): In a meeting on Saturday, chaired by President General Pervez Musharraf, it was decided to start the process of rebuilding of destroyed houses in the earthquake affected areas from April 7, and build a new city in place of the completely ravaged town of Balakot, on modern lines.

The meeting was attended by Prime Minister Shaukat Aziz, NWFP Chief Minister Akram Khan Durrani, Information Minister Rashid Ahmad, Azad Jammu and Kashmir Prime Minister Sikandar Hayat, Earthquake Reconstruction and Rehabilitation Authority Chairman Altaf Saleem and senior officials.

The governments of NWFP and Azad Kashmir would begin distributing forms among the affectees from April 7, and after ten days' processing period, would start distribution of Rs 75,000 each for reconstruction of completely destroyed houses and Rs 50,000 each to the owners of partially damaged houses.

The meeting, which lasted for more three-and-a-half hours, also approved the provision of monthly subsistence allowance of Rs 3,000 to each affected family, for six months.

The President and the Prime Minister noted that distribution of Rs 4.5 billion over six months would greatly enable the families to recover from the losses, and start rebuilding their lives, and ultimately stand up on their own feet.

Addressing the meeting, the President vowed to build quake-resistant houses and infrastructure in the quake-shattered areas as part of the government's efforts to turn the challenge into an opportunity for the survivors.

He reaffirmed the government's commitment to rebuilding houses on owner-driven strategy and said that the government would assist the survivors with technical advice to construct their houses futuristically.

On the reconstruction of infrastructure, he said it would take place under a need-based strategy as the government would not just go for reinstating the damaged facilities but put in place educational institutions, hospitals, government buildings and roads on modern lines.

The President appreciated the efforts of Erra in planning the mammoth task of reconstruction of houses and infrastructure.


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## Neo

*'Safta to strengthen Pak-India trade relations'* 
KARACHI (April 02 2006): The South Asian Free-Trade Agreement (Safta) will be a stepping stone in boosting trade between India and Pakistan. This was stated by Indian delegation leader Jayanti M. Patel during a meeting with members of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) in Federation House here on Friday.

The Indian was here in connection with Expo Pakistan 2006. He said that there was a need to open up the borders so that all means of transportation could be used for exchange of goods.

There were several products which India and Pakistan were exporting through the third countries, thus benefiting those countries, he said, adding it was in the interest of both the countries to don direct trading in all those items.

The FPCCI President Chaudhry Muhammad Saeed expressed satisfaction with the progress of composite dialogue between Pakistan and India, which would lead to further improvement in bilateral trade relations.

He said that the opening of road, rail, sea and air links for transportation of goods, though belated, would be helpful.

He said that increase in bilateral trade would benefit the consumers of the both the countries. Jayanti Patel and Chaudhry Muhammad Saeed agreed that both the FICCI and FPCCI would recommend to their governments not to restrict businessmen to visit specific cities.

The FPCCI President stressed the need for resolving the core issue of Kashmir, and pointed out that Pakistan had given five to six options in this regard.-PR


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## Neo

Exports can go up to $100 billion

KARACHI (April 02 2006): Federal Commerce Minister Humayun Akhtar has said that Pakistan's exports can go up to $100 billion through a co-ordinated effort by different ministries.

In an interview with Aaj TV, he said that Federal Industries, Food and Agriculture and Information Technology Ministries could help the Commerce Ministry a lot in achieving this feat.

The minister said that the government was not alarmed at the continuously widening trade gap as it was only one of the many components of balance of payment, "which is satisfactorily under control right now".

The minister said that the Commerce Ministry should not be thought as solely responsible for the widening trade gap. He said that trade policies mostly influence exports of a country while imports are influenced by the overall economic policy of the country.

He said that the monetary policy of a country plays a major role in imports. The government had liberalised the monetary policy of the country because of which exports became cheaper and therefore increased manifold. If the government would tighten the monetary policy, imports would start falling the next day, he said.

He said that if the industrial and agricultural sectors of the country start producing surplus exportable goods, the Commerce Ministry "is ready to find markets for them". Citing an example he said his ministry found markets for export of wheat, and did export it for some time. But then it came to know about the shortage of wheat in the country to the extent that Pakistan needed to import wheat in the end.

"When we could not provide wheat to our just-found markets, we lost these markets for good. Through a co-ordinated effort, we can increase our exports to $100 billion," he added.

Humayun said that exports would rise by about 20 percent this year and the exports target would definitely be achieved. He said that the government was trying to diversify exports, "and that is why the share of textiles in total exports has been reduced from 68 to 59 percent". Textile sector was performing well, but the weaving sub-sector still needed further improvement, he added.

The minister said that progress in engineering sector was necessary for rapid growth of exports. The privatisation of Pakistan Steel Mills and establishment of steel mills in the private sector would give impetus to this growth, he said. The government was trying to rectify the fundamentals of this sector so that it could play its part in the national economy, he added.

http://www.brecorder.com/index.php?...&term=&supDate=


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## Neo

Over 4500 people to get job opportunities at Al-Tawairiqi Steel mills project worth $ 300m: Dr Bilawal 

KARACHI, March 29 (Online): Al-Tawairiqi Group of Companies is in process of establishing the state-of-the-art Steel Mills over 220 acres of land at Bin Qasim, where over 4500 people will get job opportunities . 
Addressing a press conference at a local hotel on Wednesday, Chairman Al-Tawairiqi Group of Companies Dr Bilawal Tawairiqi said, in first phase direct reduced iron (DRI) plant with capacity of 1 million direct reduced iron will be completed in next 18 to 24 months costing around $ 130 million . 

In phase two with an additional expenditure of $ 170 million, the plant will start making steel billets, wire rods, heavy structures, seamless pipes and other construction material. Tawairiqi Steel Mill project will cost of $ 300 million with production capacity up to 1.5 million tons of iron products annually, he said . 

Using the world's most advanced DRI technology, the plant will produce the direct reduced iron through the MIDREX process for a conversion further into steel through the electric Arc Furnace technology . 

Al-Tawairiqi Group of Companies (ATG) is one of the leading business concerns in Saudi Arabia and the largest private sector steel producer in the Kingdom . 

With an annual turnover of 1.5 billion Saudi Riyals, the group is among the top five industrial companies in private sector in Saudi Arabia . 

It has seven large industrial units in Saudi Arabia and UK, five of these units are metallurgical and steel plants . 

Founded in Saudi Arabia in 1977, the group is now a leading industrial conglomerate in the Kingdom, producing billets, rebars. Wire rods, spring wires, wire mesh, epoxy coated steel, medium voltage electric switch gears, protection and control panels, automation panels and compact sub stations . 

ATG's trading arm deals in a wide range of industrial supplies, building materials, and high tech medical equipment . 

Its three mega steel projects, one in Dammam, one Sharjah and one in Pakistan currently are in progress .


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## Neo

Expo 2006 visitors discover real Pakistan

By Afshan Subohi

KARACHI, April 1: The warm reception accorded to the Expo Pakistan 2006, currently in progress at Expo Centre in Karachi, by the foreign businessmen, only goes to reconfirm the fact that Pakistan has an immense export potential in both traditional and non-traditional items. All that needed Ã¢â¬â is a proper introduction to international business players and some space for private sector for matchmaking with business houses of the West.

A review of the 5-day mega event showed that businessmen and their representatives were quite excited and pleased with the commerce ministryÃ¢â¬â¢s performance this year.

The commerce ministry with the support of Export Promotion Bureau (EPB) is primarily responsible for putting up the show.

Unlike last year, there are believed to be many genuine potential western buyers of Pakistani products in attendance this year. Four days into the exhibition and the private sector of Pakistan has already signed a number of MoUs with visiting trade teams. It was learnt that many business houses and associations had been approached by representatives of international business houses in the city to make inquiries in order to evaluate different business options.

Some of the foreign delegates asked for their impression by Dawn, appeared quite satisfied with the arrangements and were all praise for Pakistani hospitality. They found the country to be a lot better than the way it is projected in international media. Ã¢â¬ÅWe only discovered the real Pakistan when we disembarked the flight,Ã¢â¬Â said a representative of a major business group. Ã¢â¬ÅFrankly, we carried a scary image of your country,Ã¢â¬Â he said and added that he was not aware of what they were missing out.

Ã¢â¬ÅMy colleagues and I are impressed by the quality of exhibits at the expo and are looking forward to forging a long term business relationship with Pakistani entrepreneurs and traders,Ã¢â¬Â he said.

The local business community is expecting many new trade and business relationships to materialize as there is a lot of match-making taking place on the sidelines of the expo. It would take about a yearÃ¢â¬â¢s time before the actual gains to the local businesses and to the Pakistani economy accrue. Business leaders are, nonetheless, satisfied with the show: Ã¢â¬ÅThe outcome is far better than what we expected,Ã¢â¬Â Ameen Bandukda, Chairman Site Association of Industry said commenting on the Expo.

He confided that the community was initially sceptical since the previous exhibition was not able to attract the kind of crowd from abroad that business people were expecting.

One of the reasons, they thought, was that last year the eventÃ¢â¬â¢s organization was handed over to an agency that probably mismanaged the show. Ã¢â¬ÅThe government can not and should not do it alone. It is a business event and its success to a great measure will depend upon the level of involvement of direct market players,Ã¢â¬Â said the chairman SITE Association. This year the government did well to involve trade associations and exporters in the organization of the event.

The business community attributed the proper performance of the Expo to a number of factors. Ã¢â¬ÅIn my view three major factors that contributed to the success are: one, inducting the private sector in the organization; two, efforts by the government to avoid mistakes of the last year; three, very effective performance of commercial councillors of Pakistan in Western countries,Ã¢â¬Â say Atiq A Kochra, Zonal Chairman of the Pakistan Readymade Garment Manufacturers and Exporters Association (Prgmea). He observed that there was no doubt in his mind that Pakistan had the potential and given an enabling environment the private sector can work wonders for the country.Ã¢â¬Â

Some textile associations have reportedly booked certain halls in hotels, where the delegates are housed, to facilitate their members to make one to one contacts with the visitors.

Zaid Bashir, the CEO of Gul Ahmed Lawn, who is exhibiting at the expo, expressed some reservations. He said: Ã¢â¬ÅWe have mostly management people here and not the decision-makers. It would be unrealistic to expect too much from them,Ã¢â¬Â adding: Ã¢â¬ÅWe should target the right people to make most out of this exercise.Ã¢â¬Â

Some businessmen were also critical of the government for unnecessarily politicising the event. Ã¢â¬ÅWe have a tendency to transform everything into a political affair. If the government wanted to honour the delegates it could have been done in some other way. Too much involvement of the political hierarchy in a business event only leads to frustration and time loss. Who likes to wait for the identification for hours, to listen to lengthy boring speeches, or for that matter, how could a fashion show exhibiting Eastern dresses in day-time amuse Westerners. They do not. These delegates are here to make business contacts and establish business relationships, the government should let them do what they are here for and should not tax their patience for accepting an invitation,Ã¢â¬Â said an angry businessman who did not approve of the VVIPs presence, which he felt, was more of a hassle.

Another marked feature of the exhibition was absence of businessmen from Saarc region. There are delegates from US, Sweden, France, Germany, Canada and several other far off nations but none from India, Bangladesh, Nepal or Sri Lanka was spotted. Ã¢â¬ÅThey are our competitors and not buyers primarily. However, it would have been good had they been here as well. Indians must be interested but there still are procedural problems that act as a discouraging factor,Ã¢â¬Â Amin Bandukda felt. Ã¢â¬ÅMay be it reflected the old mindset of looking Westward even when more can be achieved at much lesser cost by trading in the region,Ã¢â¬Â commented another businessman.

Weighing benefits against costs, the local business community generally felt that even if a handful of major deals are done, the event would be worth its while.


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## Neo

Sunday, April 02, 2006 

KARACHI: An agreement was reached on Saturday between the Pakistan-China Business Council (PCBC) of the FPCCI and the China Council for Promotion of International Trade (CCPIT) to hold the second joint meeting of Pakistan-China Business Council in China on a mutually-agreed date this year.

The agreement was reached between Syed Mazhar Ali Nasir, Chairman of the PCBC, Wang Zhingzhen, Assistant Chairman of the CCPIT, in Beijing at a meeting held in Federation House, Karachi.

Mr Nasir, who led the PCBC team, also announced that the site for the opening of FPCCI Liaison Office in China will be selected within one month and advertisement is being placed for hiring a Chinese national well conversant with English.

He said that the joint meeting of the PCBC would identify problems and bottlenecks being faced by the businessmen of Pakistan and China in promoting bilateral trade, which would be submitted to the respective governments for removal. 

Shahid Mehmood, commercial counsellor of Pakistan in China, made a presentation on the Pakistan-China Early Harvest Programme under the Free Trade Agreement, which was signed in April 2005 and became effective from January this year. Under EHP, a common list of 31 four-digit items and unilateral lists of 52 four-digit items have been agreed.

The items in the common list whose tariff was more than 15 percent will be reduced to 10 percent in 2006, 5 percent in 2007 and 0 percent in 2008; while the items in the unilateral lists whose tariff was between 5 and 15 percent will be reduced to5 percent in 2006 and 0 percent in 2007 while 575 items under the PTA whose duty was less than 5 percent will be reduced to 0 percent in 2006.

He mentioned that the common list under the EHP includes fruits and vegetables (mangoes, citrus, dates, garlic, etc.), stone material etc, while unilateral list for Pakistani products includes guar gum, industrial alcohol, cotton and blended fabrics, home textiles, instruments, cutlery, sports goods, etc. The unilateral list for Chinese products include machinery items and chemicals.

Wang Zhingzhen, assistant chairman of the CCPIT, said that Pakistan and China enjoy friendly relations and hoped that economic cooperation and trade between then will grow in coming years. 

He said that the bilateral trade, which was $1 billion in 2000, had increased to $4.2 in 2005 and investment of $100 million had been made by Chinese companies in Pakistan, which was not a big amount but there was potential for higher growth. He said that with the implementation of open-door policy the business environment has improved in China. Over 3,000 laws will be modified. 

According to a survey, 80 percent of the American investors in China feel comfortable. The taxes in China have been gradually reduced. Now tax on agriculture was 15% and on industry 9 percent. Under the economic plan approved by the Chinese Congress, the annual GDP growth of 7.5 percent will be maintained and energy consumption will be reduced by 20 percent in the next five years.

He said that $50 billion investment was made in 10,000 projects by China last year out of which $6 billion investment was made in Asian countries. 

He said that the total imports of China in the last five years amounted to $2.2 trillion and it was projected that the imports will increase to $5 trillion in the next five years, out of which $3 trillion imports will be from Asia.

He said that China has a huge domestic market of 1.3 billion people. Over 300 million people came out of poverty last year while 20 million people are still below the poverty line while there are 16 million disabled persons.


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## Neo

Sunday, April 02, 2006 

ADB to give $770m for $2.3b highwaysÃ¢â¬â¢ uplift plan

ISLAMABAD: The Asian Development Bank (ADB) will provide $770 million for the $2.3 billion National Highways Development Programme (NHDP). 

The investment programme comprising the first three batches to be implemented amounts approximately to $966.8 million equivalent, according to the report and recommendation of the president to the Board of Directors of ADB for the proposed Multitranche Financing Facility and Loan for National Highway Development Sector Investment Programme. 

The investment programme is structured into three batches of sub-projects. The first batch comprises three sample subprojects totalling 376 kilometers, the second batch five sub-projects totalling 460 km. The number of subprojects under the third batch has not yet been determined.

The ADB financing would be based on Multitranche Financing Facility (MFF) of up to $770 million from its ordinary capital resources. The MFF is expected to be drawn down in five separate periodic financing request (PFRs) during the 2006 to 2011 period. 

The loan will have a 32-year term, including a grace period of eight years, an interest rate of 1% per annum during the grace period and 1.5% per annum thereafter, and such other terms and conditions as set forth in the relevant draft loan and project agreements.

In 2005, the government approved a Medium-Term Development Framework 2005Ã¢â¬â2010 (MTDF) targeting key infrastructure sub-sectors. Roads, railway systems, ports and airports are some of the priorities. 

The investment programme under the framework will not only help modernize existing facilities, but will also add new assets. The outcome will be greater and better connectivity within and across the countryÃ¢â¬â¢s principal economic centres and into neighboring countries.

This will pave the way for greater and better logistics, which in turn will improve access to export points, peopleÃ¢â¬â¢s mobility, trade and competitiveness. Better logistics will also cut the final cost of goods and services.

The projected capital outlays from the National Highway Authority (NHA) over the next 10 years runs into Rs138.5 billion ($2.3 billion). The ADB is one of the financing sources being tapped by the authorities. Others include the private sector through the structuring of various investments under the modality of Private-Public Initiatives (PPIs), commercial banks and other multilateral and bilateral agencies. 

The investment programme includes non-investment interventions, especially in the area of capacity building. This support will focus on planning and design, management supervision for construction schedules, procurement, safeguards, and fiduciary arrangements. The work will also cover policy reform. The sector roadmap provides for public policy changes during the investment programme. 

Impact and Outcome: The investment programme will improve the existing road network, create new ones and advance policy reform. The latter will create an enabling environment for private sector participation in the system. The main reforms are summarized in the Road Sector Development Framework. This framework has been endorse by the NHA and will trigger future lending by the ADB to PakistanÃ¢â¬â¢s national highway sub-sector.

The Investment Programme will deliver on two basic objectives. The first is improvement in transport efficiency by (i) adopting a national transport policy, (ii) strengthening the NHA performance in managing the national highwaysÃ¢â¬â¢ network, (iii) improving road safety, and (iv) improving road maintenance and funding. 

The second objective is to increase the private sector participation in road sub-sector investments by (i) increasing outsourcing of road works, and (ii) establishing operations jointly with the NHA. To realize these objectives, the Investment Programme will consist of national highwaysÃ¢â¬â¢ network investment and institutional strengthening of the NHA.

The NHA will establish an investment programme coordinating committee, chaired by the NHA chairperson, to monitor and oversee the overall investment programme implementation. The NHA will establish two management units, one for implementation of the national highwaysÃ¢â¬â¢ improvement component and the other for implementation of institutional strengthening of the NHA. 

Pakistan is ideally located to act as a hub for sub-regional transport and to take advantage of the sub-regionÃ¢â¬â¢s rapidly improving political situation for the development of transit and cross-border trade and commerce. PakistanÃ¢â¬â¢s road corridors offer the shortest route to the sea by several hundred kilometers for landlocked Afghanistan, Central Asia, Xinjiang province of the PeopleÃ¢â¬â¢s Republic China, and parts of the Russian Federation. However, physical, institutional and other constraints currently prevent Pakistan from taking full advantage of its location. 

The potential for increased trade through improved trade facilitation, rehabilitated transport links, efficient cross-border movements and increased efficiency at ports is highly significant for the Pakistan economy. 

The proposed Investment Programme provides Pakistan with an opportunity to play the role of a catalyst in the development of such transport initiatives, thereby enhancing sub-regional cooperation in addition to promoting its domestic development.

http://www.dailytimes.com.pk/defaul...2-4-2006_pg5_13


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## Neo

DATED:, April 01, 2006
Pakistan on Friday sought civilian nuclear cooperation from France, which concluded a civilian nuclear agreement with India in February this year. 

Pakistan made the call in a meeting with a visiting four-member delegation of the French Senate commission for foreign affairs, defense and armed forces, headed by Jean Francois-Poncet, former foreign minister. The French delegation called on Pakistani Foreign Minister Khurshid M. Kasuri in the foreign office. 

In a statement at the end of the meeting, the foreign office said, "The foreign minister also briefed Francois-Poncet about Pakistan's growing energy requirements in view of its rapid economic development and stressed the need for a non- discriminatory approach by all Nuclear Suppliers Group members including France towards cooperation with Pakistan in the civilian nuclear sector." 

A wide range of bilateral issues were discussed with a view to enhancing cooperation in different areas and the Pakistani foreign minister briefed the French delegation on Pakistan's role as an anchor of peace and stability in the region, it said. 

Francois-Poncet, appreciating Pakistani President Pervez Musharraf's vision of Enlightened Moderation, commended Pakistan's role in promoting peace and stability and rooting out extremism from its society, the statement said. 

He also appreciated Pakistan's impressive economic development and stated that Pakistan was playing a credible role in regional peace, security and development, it said. 

He maintained that Pakistan can be a bridge between the West and the Muslim world to create better understanding and cooperation between the two, according to the statement.


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## Neo

ISLAMABAD (April 03 2006): The United States through USAID will provide more than $1.5 billion in development assistance to Pakistan over the next five years to improve education, health, governance and economic development.

United States Agency for International Development's Disaster Assistance Response Team (Dart) completed its portion of the earthquake relief assistance to Pakistan on March 31 and will continue to provide transition and reconstruction assistance designed to help those in the affected areas rebuild their homes and livelihood.

"Just as we were here with the US military and the Dart to help the government of Pakistan with the disaster-relief phase, we would continue to be a long-term partner to the government and the people of Pakistan in reconstruction phase," said US Ambassador to Pakistan Ryan C Croker, in a press release here on Sunday.

The statement added that USAID portion of the US humanitarian assistance to date has totalled more than $80 million, which is part of more than $510 million US commitment that includes $200 million for reconstruction during the next four years.

According to the release, USAID will continue to work with Pakistani officials at all levels. The UN agencies and international NGOs would also support transition and reconstruction efforts focussing on education, health and livelihood.-PR


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## Neo

SIALKOT (April 03 2006): The Punjab government is spending more than Rs 160 million during current fiscal year on the upgradation of existing industrial estates of Daska, Gujrat, Gujranwala and Sargodha.

Official sources told Business Recorder here on Sunday that under the programme missing facilities would be ensured in Daska, Sargodha, Gujrat and Gujranwala industrial estates aimed at facilitating the local business community.

Besides this the government has decided to initiate the 'Cluster development' scheme for imparting training and skill development to industrial workers in various trade fields. The step was being taken for the promotion and increasing manufacturing capacity of industrial sector of these cities.

The government has set aside Rs 8 billion for extending loan facilities to SMEs and other interested persons who are willing to start new industrial projects in the province. Under the programme loan facility upto Rs 5 million was available on 8.5 percent mark-up for upgradation of existing industrial units and for setting up new industrial projects in the province, the sources added.


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## Neo

*'Lahore-Sialkot motorway to boost Punjab's economy'* 
LAHORE (April 05 2006): Punjab Chief Minister Chaudhry Perviaz Elahi, while announcing the construction of motorway from Sialkot to Lahore in a Punjab Cabinet meeting on Tuesday, has said that this six-lane motorway, which would be completed during 2007, between two important industrial centers of Punjab would give an impetus to economic activities in the province.

According to an official, the meeting decided to take a number of steps for the welfare of the people and to accelerate the pace of ongoing development process. These measures include construction of an international standard motorway from Sialkot to Lahore, action on war footings against manufacturing and sale of spurious drugs, activating of provincial and district price control committees to monitor and maintain prices of daily use items as well as construction of a modern sports city in the provincial metropolis.

The Chief Minister said that the proposed motorway would pass through Gujranwala and would be linked with Gujrat, Wazirabad, Muridke and other industrial centers through highways.

"This first motorway of its kind in the country could be aptly termed as 'Shahrah-e-Sanat' and it would reduce the distance between Sialkot to Lahore to only 45 minutes. After construction of the proposed motorway, more such projects would be initiated in the province.

The purpose of this mega project is to facilitate export of the products grown or produced in Punjab and as such it would leave a positive impact on the economy of the whole country.

Referring to manufacturing and sale of spurious drugs, he ordered action on war footings against the elements involved in this heinous trade as they deserve no leniency. He directed that raids be conducted against those engaged in the sale or manufacturing of spurious drugs and such factories should be immediately closed down where injurious medicines are being produced.

He further said that drug stores and pharmacies, which sell bogus medicines, are equally guilty. He directed the administration to ensure strict implementation of the laws regulating sale of medicines and the licenses of all such medical stores should be cancelled that are operating under the name of only one qualified dispenser.

He further directed that government hospitals should purchase medicines from only those firms which guarantee their genuineness.

He also directed that price control committees be fully activated in the province for stabilising the prices of essential items.

"These committees to be headed by District Nazim of the concerned district, are being reconstituted and would hold their meetings on daily basis. I would personally receive reports of these committees and monitor their performance."

Regarding provision of health facilities to the masses, he said that the Punjab government is spending a sum of Rs 6 billion for this purpose and the major share of this amount would be spent in rural areas.

He averred that due to better facilities for the doctors serving in rural areas the number of willing candidates has raised manifold and 25 additional marks would be given in Punjab Public Service Commission interviews to doctors having two years service in villages.

The meeting also decided medical check up of all school-going children twice a year. The CM said that this decision would help early diagnosis of diseases.

The Provincial Cabinet also gave approval for setting up of a sports city in the provincial metropolis over an area of 3,000 acres. An amount of Rs 30 billion would be spent on this project, which would be undertaken through foreign investment under public-private partnership.

The meeting was informed that the services of only those experts would be acquired for this project who had undertaken construction of such sports centers in Dubai or western countries.

The Chief Minister said that after the construction of sports city, Pakistan would be able to host Asian games and other international competitions.

The meeting also decided to award proprietary rights to the residents of Herbanspura village. According to the decision, land would be allotted at the rate of Rs 600,000 per kanal to those living on 10-marlas of land. The CM would give away documents of proprietary rights to the residents at a public function to be held shortly.

The meeting also offered 'Fateha' for eternal peace of Muhammad Tahir MPA, who had died recently.


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## Neo

BEIJING (April 05 2006): Governor of the Xinjiang Uyger, autonomous region of China, Ismail Tiliwaldi has said his government will establish rail link with Pakistan to expand the avenues of bilateral co-operation in socio-economic sectors.

"We will soon hold a feasibility study to work out possibilities of operating rail network between the two brotherly countries through Kashgar," he said during his meeting held in Urumqi with the visiting delegation of Pakistan Muslim League (PML), led by Senator Mushahid Hussain Sayed.

China, particularly its western region (Xinjiang) attached great importance to its socio-economic ties with Pakistan and wished to have greater interaction to strengthen their mutually beneficial co-operative partnership, he added.

The two sides agreed that the western region envisaged rich potential to emerge as hub of Sino-Pak business activities, with further development of the road, rail and air network.

Pakistan and China have already decided to start a regular bus service between Kashgar and Gilgit on daily basis from June 1. Two countries will also start goods transportation service via Khunjrab pass from May 1.

Pakistan International Airlines and China Southern Airlines are also operating their flights on this route on regular basis.

The Xinjiang, Muslim-majority region has 17 ports open to the outside world. The region, also linked through old Silk Route could provide tremendous boost to economic collaboration at regional and international levels, said Mushahid Hussain.

Talking to newsmen, he said the two sides had bright prospects to strengthen their strategic partnership in various sectors, including trade, energy and defence.

He termed his visit to China as highly successful further strengthening the bonds of friendship. A framework of co-operation and regular exchanges has been worked out between the PML and Communist Party of China.


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## Neo

*Government to facilitate investors in setting up refineries: minister* 
ISLAMABAD (April 05 2006): Minister for Petroleum and Natural Resources Amanullah Khan Jadoon has said the government would encourage and facilitate local and foreign investors in setting up oil refineries in the country aimed at enhancing the existing 12.7 million tons per annum capacity to 16 million tons.

He said this while presiding over a high level meeting of Chief Executives of Oil Refineries here on Tuesday to review the updated progress of the refining sector.

Secretary Petroleum Ahmad Waqar, Additional Secretary Shaukat Hayat Durrani, Director General (Oil) Sabir Hussain, Chief Executives of Parco, ARL, NRL, PRL and Bosicor Refineries attended the meeting.

The minister said setting up new refineries in the country is the need of the hour to bridge the supply and demand gap in the refining sector.

He outlined the need to utilise the latest technology and know how for enhancing the local refineries production and to minimise the imports.

He said the government has deregulated and liberalised the petroleum sector and providing lucrative incentives to the investors in a business friendly environment in the country.

The minister said in view of the government's policy of deregulation, the prime objective was to develop market competition. Therefore, refineries should also improve their efficiency in supply of quality products to the consumers as well as to compete in the existing deregulated regime.

He said refineries should upgrade to produce international standards like low sulphur content to HSD and fuel oil.

Jadoon said refineries must ensure supply of their products to the oil marketing companies indiscriminately and hydro-desulphurisation and pipeline infrastructure projects be started as early as possible with a time frame to curtail its construction costs.

The chief executives of the refineries briefed the meeting about the updated progress and future development plans of their organisations.

It was informed that new refineries under construction were expected to start production by the year-2008.

They informed that hydro-desulphurisation and pipeline infrastructure projects were in process and all out efforts were being made to kick of as early as possible.


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## Neo

ISLAMABAD (April 04 2006): Attock Oil Refinery (AOR) will lay down white oil pipeline from Machi, Lahore to Talu Jhapa, Peshawar at an estimated cost of 180 million dollars. The project will be completed within two years.

Talking to journalists here on Monday, Chief Executive of AOR, M. Adil Khattak said that furnace, diesel and other petroleum products would be transported from this pipeline. This would be second project of white pipeline after Karachi-Gujrat (Muzaffargarh) pipeline. It would be environment-friendly and also reduce the cost of transportation of petroleum products from the refinery to its depot, Khattak added.

The company is also planning to install a 50-MW power plant at an estimated cost of 150 million dollars. The work on the plant will resume soon and it would be operational within 18 months, Khattak said.

About the tariff, Khattak said that the company has filed petition with the Nepra for determination of tariff, as the power would be sold to Wapda.


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## Neo

ISLAMABAD (April 04 2006): WorldCall Broadband Ltd (WBL) Karachi strikes yet another mega deal to lease its high quality metro fibre to TransTWA Ltd. The signing ceremony was held at Islamabad at TWA's Head office.

The contract was signed by Kamran Malik President/COO of TWA and Tanvir Ahmad Group, Managing Director of WorldCall group, while other senior executives from WroldCall and TWA were also present during the signing ceremony.

The contract in question warrants 117 KM of fibre cable laying and subsequent maintenance by WorldCall and is the latest in the series of such lease contracts after Mobilink, Paktel, Telenor, Financial institutions and other corporate sector segment.-PR


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## Neo

Foreign Office spokesperson, Ms Tasneem Aslam in her weekly press briefing said that Control of Gwadar seaport not being handed over to any other country.

ISLAMABAD, April 05 (Online): Pakistan ruled out handing over the control of Gwadar sea port to some other country. However Pakistan said that flow of investment from any part of world in Gwadar port would be welcomed.

This was said by foreign office spokesperson Ms Tasneem Aslam in her weekly press briefing here in foreign office Tuesday. 

On a question about handing over the control of Gwadar sea port to some other country she said Gwadar is located on Pakistan territory and its control is not being handed over to any other country.

On a question about missile test she has said that Pakistan will continue missile tests to ensure its national security and maintain minimum credible deterrence. Our relations with Afghanistan are vibrant and both the countries want the bilateral ties to grow stronger, she held. 

Citing to Richard Boucher visit to Pakistan she said that the visit is aimed to boost bilateral ties and it is follow up of President Bush visit to Pakistan. Boucher has met foreign minister Khurshid Mehmood Kasuri. He has held talks with the foreign secretary. Boucher is also likely to meet President Musharraf. 

To a question spokesperson said Inquiry commission are working to probe into killings of Pakistanis in Spin Boldak. One commission has been set up by interior ministry and second has been constituted by governor Kandahar. 

On resolution of Kashmir issue she said we are optimistic that headway would be made on this issue. International community is encouraging composite dialogue process between Pakistan and India. Both the countries are parties to this dispute as per UN resolutions. However Kashmiris are natural stakeholder. 

She told Mir Waiz had not made any hint in his interview that China was holding any part of Kashmir. He has given proposal to associate China with the dialogue process because China is a larger country. 

Responding to a question she said composite dialogue between Pakistan and India are aimed at addressing the issues rather than scaling down the tension. Problems will be solved only when there is a movement forward towards settlement of core issue of Kashmir. Work is underway through back door diplomacy and at diplomatic and political level to sort out the issue. 

Spokesperson said US had not sent any application to us to attain observer status in SAARC nor has SAARC secretariat informed us in this regard. 

She pointed out that extradition treaty has not been signed between Pakistan and UK. However it has taken final shape and it will be signed at opportune time.


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## Neo

ISLAMABAD, April 05 (Online): Federal Minister for Information Technology Awais Ahmad Khan Leghari has said the government had decided to outsource work worth billions of rupees to local software companies in the process of implementing big projects such as federal data centre project and e-procurement in the public sector. 
"The government is working aggressively to create demand for work in the IT sector and it will soon be identifying 15 to 20 key public services to outsource them to local IT companies who could then charge the government a certain price per transaction," he said in his address to a function organized by Pakistan Software Export Board (PSEB) to give away CMMI/ISO certificates to 28 national IT companies. 

With the award of 25 ISO certificates and 3 CMMI certificates in this latest round, the number of Pakistani companies having been awarded ISO/CMMI certification has touched 100 as compared to approximately 130 such companies in India. 

The ISO 9001 is the de facto standard of quality across the globe while CMMI (capability maturity model integration) is the process framework developed by the Carnegie Melon University in collaboration with the US Department of Defense and is considered a requirement in all major software tenders floated in the US. 

Awais Leghari believed quality could only be sustained as an element in the IT sector through a consistent supply of quality human resource which had emerged an major issue in recent years with the IT graduates being produced by the country not really matching up to the standard required by the sector. 

He said the ministry of information technology had set up a research & development fund boasting of over Rs 3 billion funds which would be used to train young IT professionals to fill three to four basic skill areas required by the industry. The programme would be implemented in consultation with the industry, which would be requested to pinpoint niche areas that could absorb such trained human resource. 

He said a sizeable amount of the R&D Fund was also being set aside to be used as seed money for the upcoming venture capital fund that would aim at providing financial assistance in launching innovative projects in the IT sector. 

He said the venture capital fund, to be supported by all players in the financial sector, would be used solely by the private sector with no inference from the government and the mechanism and framework for the fund was being prepared through international level consultancy. 

Awais Leghari admitted there was lack of space required by IT companies to set up and expand their operations in major urban centres such as Karachi, Lahore and Islamabad and while the issue called for a shift of focus in the real estate business, the ministry of information technology itself had tasked the NESPAK to construct in Islamabad a structure offering one million square feet space for setting up offices. 

He said the Dubai Internet City was also being wooed to set up a separate echo-system in Islamabad for which it would be provided land at subsidized rates. 

Later talking to newsmen, Awais Leghari said the countryÃ¢â¬â¢s IT industry was hugely under-estimated and the $ 48 million IT export figures recorded last year no way reflected on the size of the industry that had grown enormously in the last few years. 

He said the industry according to rough estimates was worth more than $100 million but the realistic size of the industry would be determined within the next four to six weeks his ministry was planning to use to acquire correct revenue figures and export proceeds data from the IT companies. 

He said today there were five to six national IT companies boasting a workforce of 2000 each and many more with 500-600 workforce size as compared to three to four years ago when the number of companies with 300-400 workforce was less than few. 

To a question, he said the Pakistan Steel privatization had been concluded in a smooth manner and the reports of its being underpaid were not correct. 

"It is good to have reservation about the privatization programme which is a norm everywhere, but criticizing a deal that comes up to all standards of merit and fair-play, is not fair," he said, clarifying that the government had set aside Pakistan Steel land worth Rs 48 billion alongside Rs 7-8 billion account money, while the 4500 acre land passed on the consortium would not be used for any purpose other than setting up additional steel plants. 

To a question, he said the next item on the privatization agenda list was Pakistan State Oil and its privatization schedule would b worked out in the next few weeks. 

He said privatization was a necessary process to keep the governments efficient and economies stable and flourishing, and all doors shut on misuse of power and misappropriation of government money. 

Earlier, Jehan Ara, chairperson of Pakistan Software Houses Association (PSHA), commended PSEB for assisting the local IT industry in acquiring different quality certification. 

She said the industry was picking up aggressively but certain issues such as lack of quality human resource capable of filling mid-level positions, lack of space, unavailability of capital, and underestimation of the IT industry were issued that needed to be addressed as early as possible to create a Pakistani brand in the international IT market. 

Pakistan Software Export Board managing director Yousaf Hussain said the PSEB was evolving a strategic vision to transform the IT industry through help and coordination received the government and the private sector. 

http://www.paktribune.com/news/index.php?id=139698


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## Neo

Low tariff, easy import policy bode well for computer sales

By Imran Ayub

KARACHI: Pakistan has become the fastest growing personal computer market among emerging Asian countries, mainly driven by public sector purchases, as well as the telecom and financial services, reports an international organisation.

A latest report issued by International Data Corporation said the PC market in Pakistan, Bangladesh and Sri Lanka totalled 393,184 units in the second half of 2005, thus bringing full year 2005 shipments to 851,735 units, representing a 16 per cent growth for the year.

"With full year growth of 19 per cent, Pakistan boasted of highest growth rate among the three markets, while Bangladesh and Sri Lanka achieved respectable 13 per cent and 12 per cent growth rates respectively," said the IDC report.

"In Pakistan, encouraging government-led policies and structural liberalisation in the financial and telecom sectors helped lift the PC market there. Bangladesh, on the other hand, was relatively unaffected by the influx of second-hand PCs, thus allowing the market to move ahead."

The report said despite some dampers in 2005, such as risky peace talks and the after-effects of the tsunami, the PC market in Sri Lanka exhibited resiliency largely due to public sector and non-government organisation purchases.

The IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecom and consumer technology markets.

With representation in more than 50 countries, IDC helps IT professionals, business executives, and the investment community to make fact-based decisions on technology purchases and business strategy.

It said the challenges in emerging Asian markets were numerous but they present many opportunities for current vendors and potential new entrants. It forecast even higher growth rate for Pakistani PC market.

"Over the long term, IDC predicts that the compounded annual growth rate from 2006-2010 for Pakistan, Bangladesh and Sri Lanka will reach 19 per cent, 22 per cent and 11 per cent respectively, largely driven by public sector purchases, as well as the telecom and financial services sectors," added the report.

"The compounded annual growth rates expected in these three countries make the rest of the Asia and pacific market look dull in comparison. In fact, PakistanÃ¢â¬â¢s total market size could exceed the much more developed Singapore PC market in absolute terms as early as 2007."

Local dealers endorse the international recognition saying that the increase in PC imports mainly from South East Asian countries was due to relaxed trading rules and cheaper duty slab.

"The computer imports got a boost in 2002 when the government removed duties and relaxed trade rules," said Abdul Ghaffoor of Pakistan Office Products, one of the biggest importers of computers and accessories in the country.

"Since then the number has been increasing with each passing day with more variety and price range. PC is no more a machine or an office product. It has become a kind of household thing."

He said currently a PC could be acquired from Rs10,000 to Rs12,000 but price could go beyond Rs100,000 a piece depending on the variety and brand.

The 12-storey Uni Centre at I I Chundirigar Road, is the countryÃ¢â¬â¢s biggest centre for new PCs and accessories with more than 200 shops. Dealers here, say the government in 2003 allowed PC import without any pre-permission from the Pakistan Telecommunications Authority.

"Before August 2003 we (importers) first had to get an NOC from the PTA and then place an order," said Khalid Shahab, a trader at Uni Centre. "But in August 2003 the PTA withdrew such condition, which encouraged imports of both new and used PCs."

http://jang.com.pk/thenews/apr2006-...business/b3.htm


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LAHORE: The US Ambassador to Pakistan Ryan C Crocker has said that he would take up the matter of duty-free access of Pakistani products, to be produced in earthquake-hit areas, to the US market with his government.

The ambassador gave the assurance to the President Lahore Chamber of Commerce and Industry Mian Shafqat Ali, who took up the matter with him, at a luncheon hosted by the LCCI in his honour at Punjab Club.

President LCCI Mian Shafqat Ali, Senior Vice President Abdul Basit, Vice President Aftab Ahmad Vohra, former president Mian Misbahur Rehman, former president FPCCI/LCCI Iftikhar Ali Malik and Executive Committee members welcomed the ambassador. American Consul General Brian Heath was also present on the occasion.

The US Ambassador said that the suggestion regarding duty-free access to Pakistani products would help speed up the process of industrialisation in those areas.

The LCCI president, on the occasion, said that he would convince maximum number of businessmen from Lahore to set up their industry in those areas once the United States gives its endorsement to the proposal.

The US Ambassador also lauded the measures taken by the government of Pakistan in the hour of need. He said that Pakistanis as a nation showed an unprecedented spirit which would be remembered for a long time to come.

He particularly appreciated the performance of LCCI Research and Development wing, saying that the department is providing useful service for the economic sector of the country.


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## Neo

*State Bank gets $1.3 billion from dollar bonds, PTCL sell-off* 
KARACHI (April 05 2006): The State Bank of Pakistan on March 31 received the dollar proceeds of the recently floated sovereign bonds worth about $800 million, and another $500 million from Etisalat in connection with PTCL privatisation, it is learnt.

It is also reported that against the rupee proceeds of these receipts the government has retired the State Bank''s debt worth about Rs 80 billion.

Meanwhile, according to the latest update released by the State Bank, budgetary borrowing by the government stood reduced to Rs 154 billion on March 18, after reaching an all-time high figure of Rs 168 billion, during the year, on March 11.

With borrowing under commodity operations and other heads still showing credit retirement of about Rs 34 billion, net government borrowing receded by Rs 14 billion, to Rs 122 billion, compared with Rs 135 billion of the previous week. Since the effect of foreign receipts on budgetary borrowing would have materialised during the week ended on April 1, it is hoped that, other things remaining constant, budgetary borrowing as on that date would have stood reduced to Rs 74 billion, or well below the Credit Plan target of Rs 98 billion.

Private sector borrowing, in the meantime, crossed the full-year credit target, albeit marginally, and stood at Rs 330.5 billion on March 18, though compared with last year''s corresponding period figure, it was still lower by Rs 16.5 billion. Bank credit to PSEs also rose this year to about Rs 2 billion compared with a retirement of Rs 10 billion last year. The only difference in terms of utilisation or retirement of credit was that this year the expansion in credit occurred exclusively on account of major autonomous bodies like Wapda, KESC, OGDC, PTCL, PIA and Pak Steel, whereas last year''s retirement of credit occurred mainly on account of ''Other PSEs''.

Other items of the banking system, however, exerted a contractionary impact of over Rs 91 million (indicating higher liabilities than assets) which was more or less matching with last year''s contractionary impact.

These movements in government and private sector borrowings led to an overall credit expansion of Rs 362 billion during FY06, so far, which adjusted for net draw-down of foreign assets or reserves by the economic agents (viz. Rs 94 billion) during the year resulted in overall monetary expansion of Rs 267.5 billion.

Last year, during this period, overall credit expansion was lower, at Rs 256 billion, mainly because of very low credit off-take by the government sector (viz Rs 11.5 billion only), though money supply was higher, at Rs 312 billion, mainly because of accumulation of reserves with the banking system (viz., plus Rs 56 billion).


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## Neo

KARACHI (updated on: April 06, 2006, 15:14 PST): Pakistan expects its cotton crop to increase by over six percent to 13.82 million bales in the 2006/07 crop year due to an increase in sowing area and higher yields, a government minister said on Thursday.

Agriculture Minister Sikandar Hayat Bosan said better availability of irrigation water during the sowing season also encouraged hopes of higher output, along with an estimated 3.8 percent increase in the area under cultivation.

Last year Pakistan planted cotton on 3.13 million hectares and harvested 13 million bales.

Cotton sowing usually starts in April and ends in June, while the harvest normally takes place in June/July in Sindh and September/October in Punjab.

"We expect output per acre would increase to 733 kg compared to this year's 706 kg," Bosan told Reuters.

He said the government had also ensured supplies of certified seed, fertiliser and pesticides, as well as timely distribution of loans to farmers.

A precise estimate of the new harvest would be made in October, but Bosan said the crop would certainly be bigger than the current year because farmers were getting good returns on cotton.

"Returns on cotton are far better then other crops, so we are hoping that the production next year could even exceed our target," he added.

Industry officials said average price of cotton in the domestic market remained at 11,000 rupees per maund (37.25 kg) compared to last year's average price of 900 rupees.

Cotton and textiles account for around two-third of the country's exports and a healthy cotton crop is vital to economic growth prospects, forecast over 7 percent this year.

Pakistan expects domestic consumption of 15 million bales in the season that will begin in July, in line with recent years.

Despite being the world's fourth-largest cotton producer, Pakistan annually imports around 1.5-2.0 million bales of high-grade cotton to meet growing demand from local textile mills.

Bosan said the government planned to give incentives to growers to produce a crop free from contamination, such as dust and dirt, which leads to quality problems.

"We have targeted that at least 10 percent of our cotton next year should be contamination-free, which will help cut imports," he said.

"The government will give additional price incentives to those growers who would respond to our plan."


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## Neo

ISLAMABAD (April 06 2006): The United States on Wednesday attributed the economic turnaround in Pakistan to the government's reforms based on deregulation and privatisation.

US Assistant Secretary of State for South and Central Asian Affairs Richard Boucher said this during separate meetings with the Senate Chairman Mohammadmian Soomro and the National Assembly (NA) Speaker Chaudhry Amir Hussain here at the Parliament House.

During the meeting, Soomro and Amir briefed the US senior diplomat about the working of the Parliament and democracy. Boucher lauded the legislation against money laundering and drug-trafficking.

Boucher acknowledged Pakistan's turnaround in economic field, saying that the relations between the two countries were moving in the right direction and their mutual co-operation was improving in different fields.

He hinted that the US could extend legislative support to Pakistan by helping the country to set up a legislative study centre to enhance parliamentary co-operation between the two countries.

Soomro said that Pakistan and US enjoyed strong and special relationship, which would contribute to peace, stability and economic growth at the regional and global levels.

He said the main purpose of the Senate's creation was to ensure equal representation to all the federating units, as the membership of the National Assembly was based on population.

"The Senate aims at promoting national cohesion and harmony among the federating units", he added.

The NA Speaker told the US diplomat that democratic institutions were strong and the masses had been empowered at the grassroots level under the new local government system.

He also apprised Boucher of the Press freedom, empowerment of the woman and protection to minorities.

Chaudhry Amir Hussain pointed out that the opposition was strong and played an important role in the parliamentary process.

Pakistan, he said, abhorred terrorism in all its forms and manifestations and as the US frontline state was playing an appreciable role in the anti-terror war.

He said that majority of Pakistanis was moderate and believed in enlightened moderation. The NA Speaker made it clear to the US diplomat that the government was committed to alleviating poverty and curbing inflation.

Boucher lauded Pakistan's role in the fight against terrorism, saying the US wanted to build long-term and multi-faceted strong relations with Pakistan.


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## Neo

Privatisation worth $10-15 billion in next five years: adviser 
ISLAMABAD (April 06 2006): Adviser to Prime Minister on Finance, Dr Salman Shah on Wednesday expressed the hope that privatisation worth $10 to $15 billion would be made in next five years.

There is power sector, oil and gas sectors and there are a lot of shares of banking and telecom sectors which would be brought in market gradually, Salman Shah told a private TV channel.

He Said efforts were being made to further deepen the stock markets to ensure better float in them. The expansion of business in stock markets would help attract substantial amount of international portfolio investment, he added.


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LAHORE (April 06 2006): Educational institutions run by the private sector should provide quality education to a wider cross section of society at affordable fee, said chairman Pak-US Business Council and former president FPCCI, Iftikhar Ali Malik.

Speaking as chief guest at the annual proclamation day of Customs Public School, Gulberg here on Wednesday, Malik urged the private sector educational institutions to keep their tuition fee and other charges at a reasonable and affordable level, so that children from all social strata, including the less privileged, might be able to avail quality education.

He said the future of any nation always depends on the young generation, which must be groomed in all disciplines and fields of knowledge, and excel in modern sciences and technologies to meet future challenges.

The Higher Education Commission of Pakistan (HECP) under the present government is offering record merit scholarships for studies abroad, up to Ph.D level in science subjects, to promote academic excellence in all areas of specialisation.

Malik referred to the various education reforms introduced for the first time in the country's history, and said the government was taking effective measures like the facility of free education, free books and scholarships provided to government school students throughout the Punjab province.

He urged philanthropists and well to do people to supplement the efforts of the government in providing better education to the masses.

Later, Iftikhar Malik awarded prizes, including 10 gold medals to the top achievers in different subjects, and announced a donation of Rs 100,000 for upgradation of the school library.

Dean Customs Public School, Muhammad Aslam presented the annual performance report of the school.

Collector Customs, Lahore, Zaheerud Din, Collector Sales Tax, Nazim Saleem, Additional Collector, Large Taxpayer Unit, Zahid Khokhar, other officials as well as parents of the students were present at the ceremony.


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## Neo

Wednesday April 05, 2006 (2353 PST)
ISLAMABAD: Minister for Information Technology, Investment and Privatization Awais Ahmad Khan Leghari Wednesday said Pakistani possessed a good IT talent which if groomed well could take top-niche positions in any global IT player. 
He said the ministry of information technology had already spent Rs. 200 million from its research & development to provide 60 scholarships to promising university students to pursue MS and PhD programme abroad while interaction with the local IT industry was also afoot to pinpoint three to four basic-skill areas in which the young IT graduates could be trained and subsequently absorbed in the industry. 

The minister was talking to a delegation of Cisco Systems, a US multinational, which is currently visiting Pakistan to recruit six Pakistani computer science graduates to train them for over a year in their graduate training program in Amsterdam. Once trained, these graduates will be part of the global operations of the company. 

Earlier the ministry of information technology had been engaged in discussions with Cisco Systems for over a year now, and a Memorandum of Understanding had been signed some months ago between the Pakistan Software Export Board and the company. As a follow up to this agreement, officials of the company are currently interviewing students at the top universities in the country, and the top ten will be flown to Dubai at company expense to be put through a rigorous selection process, after which the successful candidates will be offered jobs within the global corporation. 

"This is a clear indication of the skills and talent that we have within the country and I am glad to see that foreign multinationals have also recognized that they can benefit from the training that our Universities are imparting in Pakistan," said Mr Leghari. 

He said Pakistan produces over 5000 IT graduates every year, the majority of which find work within the country. The top few are recruited directly into the global IT industry by companies such as Cisco and others, who send teams of recruiters to search for the best talent across the globe. "Conventional wisdom now is that recruitment is not seen as "brain drain", on the contrary we think that these graduates will be able to help Pakistan in the longer term, as they grow in their professional careers and reach positions of responsibility within their respective companies," said the minister.


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## Neo

United News of India

New Delhi, April 5, 2006
Russia is interested in becoming an active partner in the Iran-Pakistan-India gas pipeline that would help India to meet its energy needs to a great extent.

The Russian proposal to be a partner in the proposed pipeline project was conveyed by Prime Minister Mikhail Fradikov during his visit here, Russian Ambassador to India Vyacheslav I Trubnikov informed at a seminar on "Indo Russian Relations in New Global Scenario" here on Tuesday evening.

The seminar, was organised by the Unity International Foundation and the Gandhi and Darshan Samiti, was inaugurated by former prime minister IK Gujral.

Russia has recently supplied 60 tonnes of low enriched uranium for the first and second reactor of the Tarapur nuclear plant.

The Ambassador said there was a great potential of cooperation in nuclear and energy sectors and the excellent ties between the two countries could help further consolidate cooperation in the nuclear field.

Gujral in his speech described Russia as a time tested friend, which had always stood by India at the time of crisis. He stressed the need for intensifications of cooperation in energy and fight against terrorism.

Former governor Bhishma Narain Singh also lauded the Russian leadership for their support to India on all critical issues.

Former Foreign Secretary Lalit Mansingh said the relations between India and Russia are not merely based on buying and selling, but have acquired new dimensions in the defence technology and space research.


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## Neo

ISLAMABAD (April 07 2006): High inflation rate and widening current account deficit are gray areas that would dip Pakistan's growth rate down to 6.5 percent in 2006, an Asian Development Bank's (ADB) outlook for South Asia released here on Thursday said.

However, the outlook gives better picture of Pakistan's economy in 2007 to again take its growth rate up to 7.3 percent. The outlook indicates that Pakistan grew 8.4 percent in 2005, the fastest rate of growth in the last two decades, but inflation and current account that slipped from surplus to deficit emerged as big challenges for Islamabad.

The outlook adds that tightening of monetary policy is expected to bring inflation down to 8.5 percent this year and to 7.6 percent in 2007. According to the bank, Pakistan's medium-term outlook is favourable for growth in the range of 6-8 percent, assuming continued robust performance in economic management, greater investment to ease infrastructure bottlenecks, continued security and political stability.

The outlook gives encouraging picture of the South Asian countries and expects increase in growth to 7.3 percent by 2007.

INDIA India's growth has averaged more than 8 percent over the last three years driven by broad-based domestic demand and expansive business dynamics. Its GDP is projected to grow by 7.6 percent in 2006 and 7.8 percent in 2007, as consumption and investment demands are slightly held back by price adjustments to reduce domestic petroleum subsidies and somewhat higher interest rates.

AFGHANISTAN Afghanistan continued its solid track record of macroeconomic and structural reforms in 2005 and elections were held without major disruptions. Its growth is projected to remain strong at 11.7 percent in 2006 and 10.6 percent in 2007.

BANGLADESH The GDP growth in Bangladesh has been forecast at 6.5 percent in 2006, reflecting a steady increase in domestic and external demand, with moderation to 6 percent in 2007.

BHUTAN Bhutan has established a record of sustained solid growth based on utilisation of its vast hydropower resources for export, sound policies, and strong support from development partners. Its GDP growth is expected to rise about 2 percentage points each year to 10 percent in 2006 and 12 percent in 2007, as production from the 1,020 megawatt Tala hydropower project is phased online.

MALDIVES The Maldives was hit hard by the 2004 tsunami and its GDP fell to 5.5 percent in 2005. This followed a strong performance in 2004 with robust growth, increasing per capita income and macroeconomic indicators that reflected prudent policies. Its GDP is expected to grow 9 percent in 2006, moderate to 6 percent in 2007.

NEPAL In Nepal, the economy faltered in 2005, reflecting a weather-related decline in paddy production, disruption caused by insurgency, a downturn in tourism and continued weak growth in the industry. Its GDP growth is likely to slow down to 2 percent in 2006 because of poor weather affecting production of both winter and summer crops. The growth is projected to pick up to 3.4 percent in 2007.

SRI LANKA The economic impact of the tsunami on Sri Lanka was muted, despite its devastating human cost. Talks between the government and the Tamil Tigers in February 2006 have improved the overall climate on the status of the cease-fire.


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## Neo

Friday, April 07, 2006 

LAHORE: The World Bank (WB) has offered $100 million to the Punjab government to improve the irrigation system of the province. The offer was made by a delegation of the bank in its meeting with Punjab Irrigation Minister Amir Sultan Cheema at his office on Thursday.

The bankÃ¢â¬â¢s members said that the organisation would launch initiatives to improve PunjabÃ¢â¬â¢s canal system, which was the biggest in the world. The money would be spent on improving the efficiency of the irrigation system, projects to save water wastage, national drainage schemes, the regulation of underground water and tube wells, and upgrading irrigation technology, they said. The minister praised the World BankÃ¢â¬â¢s financial and technical support for irrigation projects, saying that the Punjab government had allocated record funds for irrigation.

He said that farmers were being included in Punjab Irrigation Water Regulation Advisory Board


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ISLAMABAD (April 08 2006): Reconstruction, Rehabilitation Authority (Erra) Chairman Altaf Saleem has expressed the hope that international pledges worth $6.2 billion for reconstruction and rehabilitation in earthquake affected areas would be materialised.

"We believe that we will face no difficulty in getting the amount", the Erra chief told a private television channel in an interview telecast on Friday.

He said the shortage of funds would not restrict the rehabilitation activities, adding that Erra has adopted a strategy under which the projects would be presented before the donors to get the required funds which will ensure efficient and effective utilisation of funds.

He said the seismic zoning report about all the affected areas would be available during the current month. About Muzaffarabad, this report has already been completed and the same has been shared with the AJK government, he said, adding it is up to them now to evolve a strategy regarding the building code.

It is pleasing that 70 percent area in Muzaffarabad has been declared clear and the areas that have been identified in danger zone have sparse population.

Under the basic principle, no construction is made within 750-meter distance of fault line and there will be marginal relocation of the residential place in Muzaffarabad.

To a question, he said the fresh survey of the earthquake damages is being conducted so that damages occurred due to after shocks could also be listed and the affected persons be compensated. Altaf Saleem said the compensation amount for house construction would be paid to all quake-survivors within two months.

He said according to fresh data, there are around 6,004,000 damaged households in quake-affected areas of AJK and NWFP. He hoped the quake survivors would have some sort of shelter other than tents before arrival of next winter.


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## Neo

LAHORE (April 08 2006): Punjab Chief Minister Chaudhry Pervaiz Elahi has said that M-3 Industrial City project, over an area of 4,500 acres, in Faisalabad would prove to be a milestone towards accelerating the pace of industrial development in the country.

This project would generate as many as 1 million direct and 3 million indirect job opportunities and an investment of Rs 300 billion would be made in this project.

He was presiding over a briefing meeting of Faisalabad Industrial Development and Management Company (FIDMC) here on Friday, disclosed an official. Khurram Iftikhar, FIDMC Chief Executive, gave the briefing.

Punjab Chief Secretary Salman Siddique, IG Police Zia-ul-Hassan Khan, Faisalabad Industrial Development and Management Company Chairman Mian Muhammad Latif, Faisalabad Industrial Development and Management Company members of Faisalabad Industrial Development and Management Board Musaddaq Zulqernain, Malik Muhammad Anwar, Asim-ul-Haq, Mian Muhammad Hanif, Shahzad Ahmad Sheikh, Chairman P&D Salman Ghani, Senior Member Board of Revenue Safdar Javed Syed, Secretary Industries Javed Majeed, Secretary Labour Hassan Nawaz Tarrar, Secretary Environment Sh. Muhammad Iqbal and Special Secretary Finance Rao Iftikhar Ahmad were present on the occasion.

The Chief Minister said that Value Addition City is in the final stages of completion and the process of construction of roads and provision of gas, electricity, water and other infrastructure is underway expeditiously.

He said that value addition city will generate as many as 100,000 direct and 300,000 indirect job opportunities. He said that chemical, pharmaceutical, textile engineering, cement and other industries would be set up in Value Addition City and M-3 Industrial City.

He also gave approval to installation of combined effluent plant in Faisalabad at a cost of Rs 1 billion. He said that this project would ill help in overcoming environmental pollution and provision of better conditions for industrialisation.

"A model police station besides a police patrolling post would also be established near M-3 Industrial City for security purposes. This project would also promote foreign investment and all out facilities would be extended to Chinese investors for setting up industrial zones," he added.

Earlier, Faisalabad Industrial Development and Management Company Chairman Mian Muhammad Latif said that due to measures taken by the Chief Minister industrial sector is rapidly progressing. He said that Value Addition City and M-3 Industrial City projects are in line with the revolutionary industrial vision of Chief Minister Punjab.


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RAWALPINDI (April 08 2006): Liberalisation of trade and economy, deregulation measures and improvement in macro economic framework, Pakistan has now emerged as an investment friendly country, said Jalil Ahmed Malik, President Rawalpindi Chamber of Commerce and Industry (RCCI) here on Friday.

He was addressing a seminar as chief guest on "Latest Material Testing Trends" organised by Star Business Systems International. The seminar was also addressed by UK and Germany businessmen John Pillar, Hellefried Kroller and Shahzad Alam, Director PCSIR laboratories.

Lauding the economic reforms of the present government Malik said that these reforms in economic sector have helped country to gain economic stability and opened various vistas of investment. "Economic stability was attained due to the liberalisation of its economy, deregulation measures, improvement in macro-economic indicators and continuity in policies", he added.

"Government offers a level playing field to all investors, local and foreign, in various sectors, including agriculture, tourism, telecom, education, oil and gas with liberal incentives, hassle-free investment environment and economic ratio of profits", President RCCI said adding that Pakistan today was on its way towards economic stability and greater prosperity.

"We achieved the target of 8.2 percent annual growth and crossed the export target of 12.1 billion dollars last year, despite major challenges, such as imposition of 14.1 percent anti-dumping duty on bed linen by the European Union. This year we will cross 18 billion dollars", he said.

Malik said that material testing was no doubt a backbone of quality production process adding that in the era of cut throat competition, manufacturers have to focus each and every aspect of production cycle, further should remain in touch with latest trends and technologies.

He said quality has become such an attribute of the product that without this anybody can even think to throw his product in the market. "Now customer demands beyond Quality. You cannot think that you can sell your low quality product in the market. Quality is the ongoing process of building and sustaining relationships by assessing, anticipating, and fulfilling stated and implied needs of the customer", he added.


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## Neo

Saturday April 08, 2006 

KARACHI: The growing number of travel agencies catering to specialized needs of this new breed of big-spending tourists and AsiaÃ¢â¬â¢s burgeoning medical tourism industry, expected to be worth at least $4 billion by 2012, is proving a windfall for the travel and hospitality sector. 
This was informed in a report issued by Abacus International here on Friday. 

"The lure of low-cost, high quality healthcare in Asia is estimated to be attracting more than 1.3 million tourists a year to the key locations including Thailand, Singapore, India, South Korea and Malaysia," said Abacus International President and CEO Don Birch. 

"This is a new breed of travelers, who have particular needs. They are going to these locations for a specific reason, and reports are showing that their daily spend is more than double that of other tourists." 

Government research on this rapidly growing business shows a medical tourist spends average $362 a day, compared with the average travelersÃ¢â¬â¢ spend of $144.

http://www.paktribune.com/news/index.php?id=140028


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## Neo

KARACHI (April 09 2006): For the first time in the country's history, Pakistan's rice exports have crossed the $1 billion mark, to $1.002 billion, as a result of 2.81 million tons rice exported to different countries up to March 31.

According to figures available, 1.5 million tons Irri-6 variety was exported fetching $450 million, while 560,000 tons Basmati variety earned $325 million during nine months of the current fiscal year.

In addition to the above, 250,000 tons rice (both Irri-6 and Basmati varieties), worth $70 million, was exported to Iran, and 250,000 tons, worth $94 million to Afghanistan through land route, while 250,000 tons rice, worth $63 million, was exported to East African countries through container cargo during this period.

During last fiscal year 2004-05, Pakistan's total rice exports amounted to $933 million.

Total rice production in the current year has been recorded at 5.5 million tons, of which around 2.7 million tons was Irri-6 variety and equal quantity of Basmati variety has been produced.

Rice Exporters Association of Pakistan (Reap) Chairman Abdul Majeed, while talking to _Business Recorder _here on Saturday, said that it was a historic occasion that Pakistan has become a member of $1 billion exporters' club this year. He said that due to a bumper crop, value-addition and exploration of new markets by the rice exporters the exports of this commodity crossed the $1 billion mark this year.

"We would be able to achieve the $1.2 billion target of rice exports, set by the Reap this year", he said, adding that rice exports could cross $1.3 billion mark as there is still three months' time to export this commodity.

He said that this was a tremendous achievement by rice exporters which had been possible due to the positive economic policies of the present government and hard work by the Ministry of Commerce and Commerce Minister.

He also lauded Export Promotion Bureau and other concerned government departments for their co-operation with the exporters.

http://www.brecorder.com/index.php?id=408754&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pakistan faces stiff competition in textile exports: ADB* 
*RECORDER REPORT* ISLAMABAD (April 09 2006): There are mixed gains in the much-hyped Pakistan's textile and clothing exports under the WTO regime since January, 2005. According to ADB's 'Asian Development Outlook (ADO) 2006', Pakistan is facing stiff competition in textile and clothing (T&C) export sector due to several factors.

The ADB's assessment is based on 11 months' data since the advent of WTO regime.

*Here is what the ADO says: *The elimination of quantitative restrictions on textile and clothing exports since December 31, 2004 has significant implications for the economy.

With T&C accounting for more than two-thirds of total exports, approximately 10 percent of value-added in gross domestic product (GDP) and almost 40 percent of industrial employment, the opening of the global T&C market will have substantial repercussions on Pakistan exports and the economy.

In terms of policy developments, substantial progress in privatisation made in recent years in banking telecom, and oil and gas has started lifting these sectors' performance levels.

Pakistan's policy of free trade in cotton, the liberal import policy for textile machinery and other inputs, and the gradual deregulation of investment approval procedures, all resulted in substantial investment in modernisation of the country's T&C sector over the past few years.

It was generally thought that the T&C sector was well-positioned to benefit when developed countries would open their markets for these exports and, in fact, export data for 11 months from January 2005 bear this out.

T&C exports rose by over 20 percent year-on-year. Bedlinen emerged as the leading contributor to the increase, with receipts surging by 45 percent to $1.7 billion year-on-year.

Volume growth was even more impressive, at 48 percent. This was achieved despite the 13.1 percent anti-dumping duty imposed by the European Union. The second largest contributor was cotton cloth, with exports climbing by 30 percent to 2.1 billion dollars.

Exports of readymade garments, the third largest contributor to higher T&C exports, jumped by 54 percent to 1.3 billion dollars. Exports of knitwear and synthetic textiles, however, fell.

*IMPEDIMENTS *Notwithstanding the increase in the country's T&C exports, Pakistan's share in the EU, the largest market for the country's T&C exports, declined by 0.6 percentage points to 3.0 percent in 2005.

Its share in the United States market, which is the second largest market for the country's T&C exports, increased only marginally by 0.2 percentage points.

Among competitor exporters of T&C, the PRC's share rose by 7.6 percentage points in the EU and by 6.7 percentage points in the US-India gained 0.7 percentage points and 0.8 percentage points, respectively.

Imposition of anti-dumping duty on imports of bedlinen, as well as the loss of preferential access to the EU market under Generalised System of Preference (GSP), may have disadvantaged Pakistan's T&C exports to the EU. High business costs, coupled with low labour productivity, also seem to have undermined the country's competitiveness in the international export market.

While the action by the EU to reduce anti-dumping duty is expected to boost bedlinen exports, the ineligibility of the country's T&C exports to the EU's 'GSP+', together with the fact that Bangladesh, Sri Lanka and Vietnam have been given this concession, will continue to hurt Pakistan's exports.

Free trade agreements between the US and many of Pakistan's competitors in clothing exports, as well as the trade diversion effect of the May 2005 inclusion of 10 East European countries in the EU (itself one of the top 3 T&C exporters) could also affect the country's potential gains in exports.


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## Neo

KARACHI (April 09 2006): Foreign exchange reserves rose by $1.177 billion to $12.484 billion in the week ending on April 1, the State Bank of Pakistan (SBP) said on Saturday.

Reserves held by the SBP increased to $10.218 billion from $9.062 billion a week earlier, while those held by commercial banks rose to $2.266 billion from $2.245 billion, the SBP said in a statement.

A senior official at the central bank said inflows by the sale of $800 million in 10- and 30-year global bonds and $500 million as part of payment from the sale of a 26 percent stake in Pakistan Telecommunication Company last week supported the reserves.

http://www.brecorder.com/index.php?id=408741&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Salman addresses investment seminar in Tokyo* 
ISLAMABAD (April 09 2006): Adviser to Prime Minister on Finance, Revenue, Economic Affairs and Statistics, Dr Salman Shah urged the Japanese businessmen and financial institutions to take advantage of the investment opportunities available in Pakistan.

While addressing the Pakistan Investment Seminar in Tokyo, Dr Shah said the country's economy which was afflicted with stagflation six years ago came out as the second fastest growing economy of Asia by virtue of strong commitment to reform agenda, a message received here on Saturday from Tokyo said.

Advisor said foreign investment, which was close to US $403 million in 1998-99, is expected to surpass US $3.5 billion mark during current fiscal year.

Dr Shah stated that resource allocation system was completely in the private hands, which was being run according to the market check and balance system.

Advisor to PM informed the audience that 85 percent of banking and telecom sectors are already in private sector and the government of Pakistan intends to privatise the remaining public sector's assets like OGDC and utilities very soon. Around 10 to 15 billion dollar assets will be privatised in the near future, he estimated. The Advisor said that 2 to 2.5 billion dollars worth of disinvestment would take place every year.

Rising profitability has created strong demand for credit by the private sector, adding, on account of stable macroeconomic environment, rising foreign investment, sustainable debt, improving social indicators, Pakistan's economic growth is projected to range between 6-8 percent annually, he observed.

He said Pakistan was currently mulling on second generation reform agenda after successful implementation of the first generation reforms.

Earlier, Pakistan Ambassador Kamran Niaz informed the audience that in spite of difficulties and many challenges, Pakistan had in recent years succeeded in achieving an economic turnaround.

"Our economic growth rate of 8.4 percent in the last financial year was among the highest in Asia", he said adding, due to the prudent economic policies of the present government, foreign investment in the country crossed the $1.5 billion barrier last year. Foreign exchange reserves are sufficient to cover our imports for 10 months. Pakistan's exports and imports continue to grow at a healthy rate, Niaz stated.

Ambassador said, "Since the establishment of formal diplomatic ties in 1952, the relations between Pakistan and Japan have been marked by co-operation, understanding and shared perceptions on major international issues".

The friendly ties between the two countries entered a new phase with the visit of Prime Minister Junichiro Koizumi to Pakistan in April 2005 and the return visit of Prime Minister Shaukat Aziz in August last year." He observed, "The recent series of high level exchanges that have become a permanent feature of Pakistan-Japan relations testify to the health and vitality of this important relationship, he added.

General Manager of Marubeni Corporation Katsuhira Yamamoto also presented a case study of Japanese investment in Pakistan.

A large number of Japanese businessmen, representatives of financial institutions and trading houses, Pakistan Embassy officials as well as senior officials belonging to the Japanese Ministries of Foreign Affairs, Economic, Trade and Industry, Japan Bank of International Co-operation, Japan Institute for Overseas Investment, and JETRO attended the seminar.


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## Neo

KARACHI (April 09 2006): The Asian Development Bank (ADB) has accorded approval of loan amounting to Rs 24 billion, while Rs 790 million would also be provided under Technical Assistance for various mega projects of Karachi.

The Acting City Nazim Nasreen Jalil in this connection met with a delegation of Asian Development Bank comprising Asad Aleem, Anjum, Ibrahim and others. The EDO Finance Roshan Sheikh was also present, said a news release issued here on Saturday.

The delegation, while giving details, said the City District Government Karachi would spend Rs 790 million to carry out study on various projects including supply of water and sewerage, transport, solid waste management and other facilities so that in the light of the study various schemes are prepared and implemented.

The loan amounting to Rs 24 billion would be spent on various development projects in the city. Speaking on the occasion, the Acting Nazim called for encouraging local consultants for 'the development projects and to avoid unnecessary participation of foreign consultants.'

She said the appointment of international consultants was a burden on the expenditure of development projects and added there was a need to reduce that expenditure so that the money saved on that account could be spent on other development schemes.

Acting Nazim said it should be ensured that the obstacles pointed out by the Asian Development Bank were not repeated while carrying out various development projects.

She further said the maximum benefit should also be obtained from the experience gained by accomplishing various development schemes. Nasreen Jalil said there was also need to remove obstacles in the way of funds' release from federal government.

She said the city government's priorities included provision of better transport system, water supply and sewerage system, development in health and education sectors and proper lifting and disposal of solid waste.


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## Neo

FAISALABAD (April 09 2006): The Punjab government has approached the World Bank for financial assistance of $100 million to promote economic growth in major cities of the province through metropolitan level, strategic planning, integrated infrastructure, investment programmes and efficient urban service delivery.

According to official sources, specifically, the project would assist cities in developing strategic investment plans and improve service delivery in solid waste management, urban transport and strengthening local finances that support infrastructure investment and sustainable service delivery.

This objective will be met through the creation of three consecutive development policy loan (DPL) reform reports, where each set of reforms built on the previous DPL.

In a project report, Peter D Ellis, an Economist of the World Bank said that Punjab was Pakistan's most urbanised province, with roughly 36 percent population living in urban areas. While its capital, Lahore, is home to about 7 million people, the province has also four other cities with populations in excess of one million, namely Faisalabad, Rawalpindi, Multan and Gujranwala.

Not surprisingly, the population density of Punjab is 31/2 times more than the rest of Pakistan, he added.

According to data from the Development Data Platform (a World Bank Database), Pakistan's largely urban-based manufacturing and services sectors accounted for 77 percent of GDP in 2003, while contributing to over 90 percent of GDP growth between 1999-2003. Given its above average national urban structure and still rapidly urbanising process, the province is perhaps uniquely poised to place its cities at the center of its economic development and poverty alleviation strategies, he added.

However, Peter D Ellis mentioned that major cities in Punjab were facing many challenges, including a projected doubling of the population by 2021 if current growth rates continued.

The cities have inadequate infrastructure to meet current needs. In addition, cities are characterised by inefficient spatial structures (low-density ribbon development), restrictive land use regulations, rent control, and limited supplies of land for commercial, industrial and residential development.

Consequently, land is expensive relative to household and business incomes. Within the large cities of the province (population exceeding one million), responsibilities for service delivery are fragmented and fiscal capacity is limited, he added.

Peter D Ellis said that the shortfalls in urban services were not merely an outcome of aggregate resource constraints. They are, more fundamentally, a function of the institutional, governance, and financial arrangements that have defined local service delivery and financing.

Historically, investments in urban services have been provided by public operators riddled with operational and cost inefficiencies, as well as weak incentives for ensuring the sustainability of investment.

Uneconomic pricing and inefficient public service delivery mechanisms have limited the delivery of municipal services, and, indeed, most other local services, without providing benefits to the poor, most of whom are not served by existing systems, he added. The Punjab government, therefore, requested that the Bank project would support policy and institutional reforms within the province and large cities through a programmatic DPL, he mentioned.


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## Neo

Analysis by M. Aftab 

9 April 2006 


ISLAMABAD - Saudi Arabia has come up prominently in Pakistani steel sector. Saudis have invested in two major projects Ã¢â¬â a state of the art new steel plant, and purchase of PakistanÃ¢â¬â¢s biggest steel mill. 
The $ 130 million Tuwairqi Steel Mill (TSM), being built by Saudi ArabiaÃ¢â¬â¢s biggest steel producer, Dr. Hilal Hussain Al-Tuwairiqi, Chairman of Al-Tuwairqi Group of Companies (ATG), plans to start production within 18 months.
Saudi ATG, and its 3-member consortium has also purchased 75 per cent shares of the countryÃ¢â¬â¢s biggest industrial projectÃ¢â¬â Pakistan Steel Karachi (PS) for $ 362 million in an auction this week. The two other members of the consortium are: RussiaÃ¢â¬â¢s M. Magnitogorsk Iron & Steel Works Open JSC and Arif Habib Securities of Pakistan. It outbid the second Consortium that included Noor Financial of Kuwait, the Government of Ras Al Khaimah, Al-Jomaih Holdings of Saudi Arabia, and Industrial Union of Donbass of Ukraine.
Awais Ahmad Leghari, Minister for Privatisation, is highly upbeat over the sale of PS, and said Saudi Arabian, Gulf and Middle East interest "is very high in making new investment and purchase of big ticket state-owned enterprises that are being privatised." 
President Pervez Musharraf, this week, performed the Foundation Laying ceremony of Saudi TSM at Karachi, and its construction started. It will annually produce one million tons of steel. The capacity can be expanded to 1.5 tons, and later to three million tons.
President Musharraf applauded Dr. HilalÃ¢â¬â¢s decision to invest in steel in Pakistan, and provide excellent training to its personnel and engineers.
Dr. Hilal said "It is our first venture in Pakistan, but surely not the last. It has now been for more than 25 years of success of ATG Companies. It has been two and a half decades of Commitment and dedication to serve our people. Today, the Group by virtues of its immense diversification stands tall in the field of manufacturing and progressively going beyond the boundaries of the Kingdom of Saudi Arabia. We have always looked at business opportunities that may support and contribute towards the economic development of the countries that we work in, through our corporate goals and responsibilities. The same is our vision for Pakistan," where the GroupÃ¢â¬â¢s first steel mill is being established at Karachi.
Dr. Hilal said, " We believe, Pakistan is land of extraordinary talent and leadership qualities. The professionals in Pakistan, trained at our state of art steel complex at Karachi will evidently become an asset for the Group and accomplish our mission of expansion worldwide. Our focus remain on the fact track completion of the project." He said, ATG has "selected Pakistan for the modern steel mill for its investment-friendly rules, regulations and policies," he said.
ATG Vice Chairman M. Tariq Barlas said, " the plant, using the directly reduced iron (DRI) technology and will produce one million tons of steel a year in the first phase. It will, later, go up to three million tons a year." It will directly employ 3,500 engineers and technicians and create "massive job opportunities in the services sector."
President Musharraf, speaking at the foundation laying ceremony said, " Pakistani economy will gradually shift its focus from agriculture and textiles to heavy industry and engineering to achieve a quantum jump in the countryÃ¢â¬â¢s exports." He appreciated ATGÃ¢â¬â¢s proposed plan to train Pakistani engineers and technicians. He said, "Pakistan and Saudi Arabia enjoy brotherly relations for years. Trade is improving, but more investment is to be encouraged. Dr. Hilal is exactly doing this to further enhance bilateral relations. The two countries will cement their business and economic relations in the 21st century," he said.
As construction of the new TSM plant started, the highlight of the same week was purchase of the Pakistan Steel Karachi by ATG-Consortium. The Russian-built, state-owned Pakistan Steel went on stream in 1984, with a 1.1 million tons a year capacity. It is the countryÃ¢â¬â¢s only integrated steel plant. It includes coke oven batteries, a sintering plant, blast furnaces, steel converters, bloom & slab casters, billet mill, hot & cold rolling mills, galvanizing unit, supporting units, and a 165 mw of its own power generation capacity. It has 4,457 acres of land.
Among the three member consortium that has purchased 75 per cent shares of Pakistan Steel, Al-Tuwairiqi Group (ATG) has a 40 per cent share, M. Magnitogorsk Iron & Steel 40 per cent, and Arif Habib 20 per cent. The price of Rs16.80 per share for 1.29 billion shares comes to Rs 21.672 billion, equivalent to $ 362 million. The winning consortium will pay 25 per cent of the total bid money in 20 days, and complete the entire payment in 60 days. The total price of 100 per cent shares was $ 482 million at the rate of the successful bid. The second consortium, that lost the bid, had offered Rs16.50 a share, or Rs21.285 billion. 
Recent months have seen considerable Saudi and Gulf FDI inflows into Pakistan. The investment were into telecom, financial, infrastructure, utilities, energy, ports, and real estate sectors, besides steel.
Some of these include purchase of 26 per cent shares, with management control, in March, of the state-owned telecom giant, Pakistan Telecommunication Company Ltd (PTCL), by Abu DhabiÃ¢â¬â¢s Etisalat. Etisalat has purchased the shares for $ 2.6 billion. UAE also has launched its Al-Warid cellular phone company which is growing fast inspite of the fact that there are five more mobile companies in the field. The Abdu Dhabi Group (ADG) that purchased part of the shares with management control, of the big, state-owned United bank Ltd. two years ago, is growing fast. Its profit after tax was 62 per cent in 2005.
"United Arab Emirates will invest in all sectors in Pakistan, including energy, Muhammad bin DhaÃ¢â¬â¢en Al-Hameili, the UAE Minister for Energy, had announced during his February visit to Islamabad. A number of UAE investors have also started real estate projects in Karachi, Lahore and Islamabad. Saudi ArabiaÃ¢â¬â¢s Al-Jomaih Group, joined hands with Hassan Associates-Premium Mercantile of Pakistan Consortium that purchased 73 per cent shares and management control of the big state-owned power monopolyÃ¢â¬â Karachi Electricity Supply Company Ltd. (KESC) for $ 340 million, in November last. It generates 1,750 megawatt electricity and feeds the big industrial hub of Karachi and the southern part of Sindh province. GermanyÃ¢â¬â¢s Siemens is the technological partner in the Consortium. The Consortium has announced to invest an additional $ 500 million over five years to expand and upgrade KESC.
Custodian of Two Holy Mosques King Abdullah bin Abdul Aziz, during his recent visit to Islamabad announced that Saudi Arabia is planning to significantly expand its assistance, investment, trade and cooperation in the energy field in Pakistan. Oman this week announced it will invest $ 80 million to develop Gwadar port and infrastructure Ã¢â¬â a facility that has come up just across from the Straits of Hurmoz, at the western tip of PakistanÃ¢â¬â¢s Mekran Coastline. Omanese Foreign Minister Yousaf bin Alawi bin Abdullah announced said this week during his meeting with President Pervez Musharraf, that his country has already invested $ 20 million in Gwadar infrastructure, including its new international airport. Besides the sea port and airport, Gwadar will be a huge industrial, business, commercial, telecom and transshipment hub to serve Gulf-Saudi Arabia, South East Asia, the Central Asian Republics, most of which are landlocked quickly need a shipping outlet to trade with the Gulf, Middle East and South Asia, and rest of the world.​


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## Neo

KARACHI, April 8: Overseas travels of Pakistanis cost $701 million to the national exchequer during the first half (July-December) of the fiscal year 2005-06. Data obtained from the State Bank publication show that the country also received $91 million through foreigners visiting Pakistan during this period. So, net outflow of foreign exchange on account of overseas travels stood at $610 million during the first half of the current fiscal year. Indications are that spending on this net would not be less than $1.2 billion at the end of the financial year. And that would keep PakistanÃ¢â¬â¢s balance of payments under pressure.

State Bank officials say people travelling abroad are allowed to take with them not more than $10,000 or equivalent amount in cash. Then there are various slabs of foreign travelling quotas in place depending upon the nature of the foreign trips. So, the more than $700 million spending on foreign tours in six months just reflects the amount consumed in this head and properly documented. Actual amount of foreign exchange flowing out of the country in the name of overseas travels must be much higher.

Financing of foreign tours had consumed $1.034 billion in the fiscal year (July-June) 2004-05. Even on net basis the spending was $993 million as the country had seen an inflow of $41 million through foreigners visiting Pakistan. Huge spending on foreign tours had an adverse impact on the balance of payments in the last fiscal year and it would have the same impact during this year also.

In the first eight months of this fiscal year i.e. between July 2005 and February 2006, Pakistan saw an overall balance of payments deficit of $458 million Ã¢â¬â thanks mainly to a big current account deficit of $3.668 billion. The current account deficit itself has stemmed from a fast rising trade gap.

The balance of payments position for July-March 2005-06 may be slightly better. The reason is that in March 2006, Pakistan raised $800 million from global debt market by launching a sovereign bond. It also received $500 million as part payment for PTCL from Etisalat Ã¢â¬â the UAE-based telecommunication company that has bought 26 per cent shares of PTCL for $2.6 billion. Etisalat made another part payment of $640 million in the first week of this month. That would reflect in the balance of payments of July-April 2005-06.

Despite huge inflows on account of privatization and also on account of foreign direct and portfolio investment, Pakistan is bound to see a $5.5-$6 billion current account deficit chiefly because of soaring trade deficit. Trade deficit stood $7.4 billion in eight months of this fiscal year as imports totalled $18 billion and exports stood at $10.6 billion. Even on the basis of free-on-board value of imports and exports (which is the way the trade deficit is reported on the balance of payments), the trade gap stood at $5.317 billion during the first eight months of this fiscal year.


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## Neo

ISLAMABAD (April 10 2006): Pakistan has witnessed $3.668 billion current account deficit in the first eight months of this fiscal year against $1.08 billion during the same period the last fiscal year, depicting an increase of 239 percent or $2.58 billion, the central bank said.

It is worth mentioning that owing to higher than expected trade deficit, the finance ministry has revised target for current account deficit and set it at $5.137 billion (4.2 percent of GDP) against budgeted target of $2.7 billion (2.19 percent of GDP) for the current fiscal year.

The provisional data released by the State Bank show that the country saw a current account imbalance as trade deficit (in goods) jumped to $5.317 billion during July-February 2006 from just $2.988 billion in July-February 2005. The trade deficit figures are arrived at using the free-on-board value of imports and exports.

During July-February 2006, goods imports stood at $15.781 billion, whereas exports totalled $10.464 billion thus leaving a trade imbalance of $5.317 billion. During the last fiscal, imports had valued $12.24 billion and exports at $9.252 billion thus leaving a trade deficit of $2.988 billion.

The import bill in the first eight-month of this fiscal shot up not only because of higher prices of petroleum products, but also because of high import of food items, machinery and automobiles.

The services account also witnessed a large imbalance of $2.857 billion during July-February 2006 as inflows under this account stood at $2.44 billion whereas outflows totalled $5.297 billion.

In July-February 2006, the imbalance in services account was $2.10 billion as inflows under this account were estimated at $2.118 billion and outflows at $4.218 billion.

The break-up of the services account for July-February 2006 is not available, but July-December data provides a clue on why the services sector account has turned negative.

In October-December 2005, the services sector account saw a deficit of $1.121 billion as inflows under this account totalled $930 million, whereas outflows stood at $2.051 billion.

The factors responsible for this huge deficit included higher outflows on account of transportation, travel, insurance, construction services, royalties, and licence fees.

Pakistan had to spend $724 million on transportation account, whereas its earning under this head was only $251 million. Thus, the net deficit in the services account due to chartering of vessels for imports, exports shipment was $473 million.

Another factor responsible for a big services account deficit was a net outflow of $373 million on account of overseas travelling.

Pakistan had to spend $422 million to finance personal and business-related travelling abroad of individuals and groups whereas it earned only $49 million under this account.

A higher spending on transportation and travelling as witnessed in the second quarter of this fiscal year is believed to have continued through the third quarter as well.

Hence the services account deficit in July-February 2006. The same applies on spending on insurance and royalties and licence fees paid to international organisations and their employees operating in Pakistan.

The imbalances in the trade and services were so large in July-February 2006 that the current account turned negative despite a strong build-up in current transfers. Net current transfers rose to $6.262 billion in July-February 2006 from $5.625 billion in corresponding period last fiscal year.

Current transfers went up in the first eight months of this fiscal year as Pakistan received $2.804 billion in workers' remittances or foreign exchange sent back home by overseas Pakistanis during this period, up from $2.606 billion in a year-ago period.

A big increase in foreign currency deposits held by the resident deposit holders also boosted current transfers. However, it declined to $227 million during the period under review than $565 million in corresponding period primarily because of the stable rupee.

The rupee kept stable its value against the US dollar in July-February 2006, providing less incentive to those willing to maintain foreign currency deposits.


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## Neo

KARACHI (April 10 2006): On March 31, SBP received foreign exchange worth $1.3 billion on account of sovereign bonds ($800 million), floated in later part of March, and a payment instalment by Etisalat Telecom of UAE ($500 million) on account of PTCL' sell-off.

These receipts pushed up Pakistan's liquid foreign exchange reserves from $11,307.5 million on March 25 to $12,484.3 million on April 1--a level which roughly ruled during June/July 2005. Reserves could have been higher still if the liquid foreign exchange reserves of the country had not faced loss of $123 million over the week, visibly to finance more imports.

On Friday, April 7, Etisalat deposited the second instalment of $660 million with the State Bank to complete $1.4 billion upfront payment. Hopefully, after the addition of $660 million during the week ending on April 8, liquid foreign exchange reserves must have risen to $13 billion mark.

Earlier on, Pakistan's liquid foreign exchange reserves had touched the $13 billion mark in April 2005.

In the meanwhile, latest monetary update (April 8) showed that private sector borrowing, which at Rs 330.5 billion on March 18 had crossed the full-year credit target only marginally, reached Rs 340 billion on March 25 after scoring a quantum jump over the week.

In the previous two weeks, credit to this sector had been increasing at a nominal rate of about Rs 3 billion per week and, apparently, gave the feel that the State Bank's tight credit policy had started working. It did not appear during the week under report.

If the economy is going to grow by about 6.3 percent then one needs to inquire from the private sector where this huge chunk of credit is going--to add to physical production; to services financing; or just to add fuel to speculation in shares, hoarding certain commodities, real estate or precious metals?

Meanwhile, budgetary borrowing by the government increased to Rs 161 billion on March 25 compared with Rs 154 billion on March 18. With borrowing under commodity operations and other heads still showing credit retirement of well over Rs 33 billion, net government borrowing stood lower at about Rs 128 billion though, compared with the previous week, it is higher by about Rs 6 billion.

It is hoped that, other things remaining constant, budgetary borrowing on April 1 would have stood reduced to Rs 81 billion, ie, well below the Credit Plan target of Rs 98 billion, as the government is stated to have retired the State Bank's debt worth about Rs 80 billion on March 31--the date the aforesaid $1.3 billion were sold to the State Bank. It would stand reduced by another Rs 40 billion on April 8 marking the end of the next week.

As in the previous week, other items (net) or OINs of the banking system continued exerting contraction impact (indicating higher liabilities than assets) on domestic credit and as such on money supply. The contraction impact on this account rose to Rs 92.6 billion during the week under report compared with Rs 91 million in the previous week.

These upward changes in government and private sector borrowings, adjusted for downward movements in OINs, led to an overall credit expansion of Rs 375 billion on March 25 compared with Rs 362 billion on March 18. However, overall monetary expansion during the year so far was lower at Rs 282 billion compared with Rs 267 billion on March 18 because of the contraction of money supply originating from the unusually large draw-down of foreign reserves amounting to Rs 93 billion as on March 25 compared with Rs 94 billion a week ago. Last year, during this period, overall credit expansion was lower, at Rs261 billion, mainly because of very low credit off-take by the government sector (viz Rs 11.5 billion only), though money supply was higher, at Rs 313 billion, mainly because of accumulation of reserves worth Rs 52 billion with the banking system.

It is important to explain the impact of the government sale of foreign exchange worth about $2 billion to the State Bank--$1.3 billion on March 31 and about $0.7 billion on April 7.

It would be interesting to see that when the actual effect of these transactions would appear on the balance sheet of the central bank for the weeks ended on April 1 and April 8, budgetary borrowing would have depressed by Rs 80 billion on April 1, and by another Rs 40 billion on April 8. This would scale down the overall government borrowing from the banking system by about Rs 120 billion by April 8 which, in turn, would lead to an overall credit contraction in the economy.

Would reduced overall credit creation lead to an equivalent reduction in money supply? The answer is 'no', because though the government borrowing would stand reduced by Rs 120 billion by April 8 debt retirement to SBP earlier used as a substitute for foreign financing of the fiscal deficit as envisaged in the budget, the equivalent increase in NFA or foreign would neutralise the contraction impact of domestic bank borrowing for budgetary purpose.

There would, therefore, be no effect of domestic credit contraction on current money supply but it could moderate future money creation because of the resultant lower NDA (net domestic assets) of the State Bank and, hence, reserve money.


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## Neo

PESHAWAR (April 10 2006): Khyber Safari train, a majestic steam train service of Pakistan Railways, which is run between Peshawar to Landi Kotal (Khyber Agency) from time to time, is a great source to promote the dwindling tourism industry in Frontier province besides projecting the soft image of NWFP.

The Pakistan Railways arranged day-long trip for the domestic as well as foreign tourists to explore the hidden potential of historical Khyber Pass by ridding through majestic Khyber Steam Safari train.

A great enthusiasm and zeal have been witnessed among the participants before they were departed from here to Landi Kotal.

"The railway track was designed by Victor Belay, a British engineer 1880 with an estimated cost of Rs 210 million in 1920. There are 18 tunnels between Jamrud and Landi Kotai and 16 Tunnels between Landi Khana-Landi Kotal," Moatabar Khan, Station Manager of Jamrud railway station.


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## Neo

9 April 2006 


ISLAMABAD Ã¢â¬â The Asian Development Bank (ADB) has projected 6.3 per cent GDP growth rate for Pakistan in 2005-06 against the targeted 7 per cent mainly due to slower agricultural growth. However, it said that Pakistan should be able to manage 7.3 per cent GDP growth in 2006-07 by accelerating its industrial growth in the country. 
"South Asia's growth is expected to moderate to 7.3 per cent in 2005-06 as a result of some slowing in India and Pakistan, but then will rise slightly close to 7.5 per cent in 2006-07", according to a major ADB report released here yesterday. The region grew 7.8 per cent in 2005.
Pakistan, it said, grew 8.4 per cent in 2004-05, its fastest rate of growth in the past two decades, but inflation also pushed higher and the current account slipped from surplus to deficit. The Bank also believes that the tightening of monetary policy is expected to bring inflation down to 8.5 per cent this year and to 7.6 per cent in 2006-07.
The medium-term outlook is favourable for growth in the range of 6-8 per cent for Pakistan assuming continued robust performance in economic management, greater investment to ease infrastructure bottlenecks, continued security and political stability, the Bank added.
Average inflation for the region in 2005-06 is expected to increase to 6.1 per cent as removal of subsidies on some petroleum products in a number of countries boosts domestic prices. Most countries are projected to see somewhat larger current account deficits with the regional average projected at 3 per cent of GDP.
"Evidence is growing that South Asia is moving on to a higher growth path. But future growth will require progress on reforms across the region," said ADB Chief Economist Ifzal Ali at the launching the 2006 edition of ADB's flagship annual economic publication, Asian Development Outlook (ADO).
Focused investment aimed at breaking infrastructure bottlenecks in key economies would also open the door to stronger growth in the medium-term, he said.
India's growth has averaged more than 8 per cent over the past three years driven by broad based domestic demand and expansive business dynamics. GDP is projected to grow 7.6 per cent in FY2006 and 7.8 per cent in FY 2007 as consumption and investment demand are slightly held back by price adjustments to reduce domestic petroleum subsidies and somewhat higher interest rates. India faces two key policy challenges as it continues its structural transformation. First, it must maintain consolidation of its fiscal position while ensuring spending on infrastructure improvements to support industry and services development, and investment to advance rural productivity and human development. Second, it needs to improve the investment environment by lowering the cost of doing business.
http://www.khaleejtimes.com/DisplayArticle.asp?xfile=data/business/2006/April/business_April184.xml&section=business&col=


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## Neo

*Dark clouds over Ã¢â¬Ëshining economyÃ¢â¬â¢ euphoria*


*By S. M. Naseem*
DESPITE their virtual isolation from each other for over half a century, the elites of both India and Pakistan are aspiring to a remarkably common future. That future seems to be defined uniquely in terms of one parameter: the rate of economic growth.

In India, which recently triumphed over its fixation of overcoming the Ã¢â¬ÅHindu growth rateÃ¢â¬Â that had tormented its economic planners in the past, are now dreaming of a 10 per cent growth rate, as a means of catapulting it to the coveted club whose current membership is confined to China and East Asia, notwithstanding some deceleration in their growth rates.

PakistanÃ¢â¬â¢s economic managers, who have always day-dreamed of graduating into the Ã¢â¬Åmiddle-incomeÃ¢â¬Â group and have periodically declared the economyÃ¢â¬â¢s take-off, leaving the announcement of the Ã¢â¬Åcrash-landingÃ¢â¬Â to successor governments, are again hoping to achieve their unrealized dream.

Although PakistanÃ¢â¬â¢s long-term growth record has been considerably better, if more erratic, than IndiaÃ¢â¬â¢s, its main driving force has been external rather than domestic impulses. PakistanÃ¢â¬â¢s savings and investment rates have always lagged considerably behind IndiaÃ¢â¬â¢s, necessitating a much larger proportion of external flows.

While PakistanÃ¢â¬â¢s growth resurgence in the past three years, propelled by the massive infusion of external finance induced by the change in its political stance since 9/11, along with the uncritical adoption of the neo-liberal agenda is rather thinly based, IndiaÃ¢â¬â¢s economic revival has a firmer, domestic-based foundation.

Nonetheless, the almost manic preoccupation with high growth rates is a shared attribute of the two neighbouring nation states, who remain at odds on many public policy issues, notwithstanding the tortured attempts to improve their official relations.

Indeed, the elites of both countries are busy putting more gloss on the Ã¢â¬ÅshineÃ¢â¬Â of their respective economies that they presume would delude those living in the darkness of poverty and misery with their chauvinistic appeals as a new superpower or as the Ã¢â¬ÅenlightenedÃ¢â¬Â leader of a besieged faith.

How shining are the economies of India and Pakistan? Take Pakistan first, whose Ã¢â¬Åsuccess storyÃ¢â¬Â has been highlighted by the Newsweek, in its March 27 issue, which is studded with some incredible statistical inaccuracies, along with some revealing insights. Besides claiming that Ã¢â¬Åin many ways the country has become the worldÃ¢â¬â¢s most surprising economic success storyÃ¢â¬Â, the magazine quotes the prime minister as saying: Ã¢â¬Åin the past three years we have seen the emergence of a middle class that is creating demand and driving a lot of the growth. Our per capita income has gone up to $800. Two years ago it was $400.Ã¢â¬Â

One doesnÃ¢â¬â¢t know whether the Newsweek interviewers or the prime ministerÃ¢â¬â¢s advisers who prepared his brief realized that this implies an annual growth rate of over 40 percent per annum in per capita incomes, which is a preposterous claim even for a short period of two years, unless the countryÃ¢â¬â¢s coffers have been filled by a source known only to the prime minister.

Neither can the claim that the Ã¢â¬Åemergence of middle classÃ¢â¬Â, which normally takes decades rather than years in its formation, has been achieved during the last three years of Mr AzizÃ¢â¬â¢s stewardship of the economy, can easily be swallowed by any one besides the regimeÃ¢â¬â¢s sycophants. That the Ã¢â¬Åmiddle classÃ¢â¬Â is driving Ã¢â¬Åa lot of growthÃ¢â¬Â is true only in the sense that Ã¢â¬ÅgrowthÃ¢â¬Â is synonymous with the growth of bank-credit financed automobiles, which are crowding metropolitan roads, with heavy associated environmental and business costs.

It is easy to point out other gaping holes in the story. Shahid Javed Burki, rightly points out that the magazine, following the script provided by the government, exaggerates the downward slide of the economy in the 1990s, without taking into account the various constraints, especially the sanctions against nuclear explosions, which limited the governmentÃ¢â¬â¢s room for manoeuvre.

The magazine, however, hits the nail on the head when it says that what really turned the countryÃ¢â¬â¢s fortunes around was September 11 and quotes an emerging Lahore media, hotel and telecom tycoon and an ex-PPP legislator as saying: Ã¢â¬ÅThe 9/11 attack was the best thing that ever happened to Pakistan.Ã¢â¬Â

Another leading Lahore industrialist, who heads some of the countryÃ¢â¬â¢s biggest joint-venture companies, including Coca-Cola and NestlÃÂ©, is quoted as saying Ã¢â¬ÅThis is the best government weÃ¢â¬â¢ve had in the past 30 years.Ã¢â¬Â

The interviews were astutely focused on the real beneficiaries of the present boom and of the regime that engineered it and their euphoria about the current boom is understandable.

How much of this razzle-dazzle is for real? The surrealistic growth picture painted by the con artists in P and Q blocks in Islamabad is beginning to fade away. The 8.5 per cent growth rate registered last year, seems to have been a blip rather than a steady trend, which the government has been claiming to be.

This year, the growth rate is likely to be 6-7 per cent, although the spin doctors in the Finance Division are doing their best to pressure the national accountants in the Statistics Division to produce as rosy a picture as possible by using various gimmicks, including change of bases, underlying benchmarks and deflation procedures. By frequently changing personnel more amenable to pressure, the government can still fix or doctor the numbers to suit its purpose.

As pointed out by the US weekly ,the government may be motivated in putting the gloss on its performance by the possibility of an impending election next year. An unnamed foreign banker is quoted as saying: Ã¢â¬ÅThe government is running the [economy] like itÃ¢â¬â¢s heading for elections.Ã¢â¬Â The rush to build controversial dams and other arcane projects in insurgency-affected areas of Balochistan and NWFP is indicative of the governmentÃ¢â¬â¢s intentions.

Unless the government builds a firewall of non-interference and transparency, its economic management and statistical machinery will remain suspect and lack credibility.

The highly-politicised way in which the government has handled the earthquake relief and reconstruction efforts clearly points towards its intentions in manipulating the forthcoming polls.

Even if one were to take the GDP growth numbers for 2004-2005 on their face value, the quality of growth inherent in them is far from impressive. Both the growth in agriculture and manufacturing were the result of low growth in these sectors for the past few years: in agriculture because of an extended period of drought and in manufacturing because of the existence of widespread existence of excess capacity in the large-scale manufacturing sector, which the liberalization of trade policies have been able to help remove.

However, this is unlikely to recur in the future, unless more productive capacity is created through new investment. The evidence for this is still weak, despite the spiralling of the stock market index.

A rather disconcerting feature of the growth pattern in the last five years has been the lack of any significant structural transformation in the economy, which is the most robust sign of sustainable growth.

The share of agriculture in GDP is still well over 20 per cent, having declined from 26.2 per cent in 1990-91 to 23.1 per cent in 2004-05, an average yearly decline of less than a per cent during the 5-year period. In 2005-04, the year which is being celebrated as PakistanÃ¢â¬â¢s best year of growth, agricultureÃ¢â¬â¢s share in GDP remained almost static.

The share of manufacturing did rise from 14.8 to 18.3 per cent, with the large-scale manufacturing sectorÃ¢â¬â¢s share rising from 9.2 to 12.6 per cent, largely due to better capacity utilization during the period. However, large-scale manufacturing is known for its low elasticity of employment and, therefore, results in largely Ã¢â¬Åjobless growthÃ¢â¬Â.


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## Neo

The Indian growth experience in the past five years has been broadly similar, with two notable exceptions. IndiaÃ¢â¬â¢s agricultural growth has been marked slower than PakistanÃ¢â¬â¢s (IndiaÃ¢â¬â¢s four per cent against PakistanÃ¢â¬â¢s 5-6 per cent), while the growth in manufacturing has been about the same (about 10 per cent), but the service sector in India has grown almost twice as fast as in Pakistan(IndiaÃ¢â¬â¢s 12 per cent, against PakistanÃ¢â¬â¢s six per cent).

As a result, the Indian economy relies much less on the agricultural sector and much more on the knowledge-intensive service sector, because of its better record in human development and investment in human capital.

Pakistan, however, continues to rely on its large agricultural sector while its industrial sector is much less diversified and its service sector consists largely of low-skilled labour with low productivity.

While both India and Pakistan continue to be enamoured of high growth rates and India seems to have an edge in achieving that goal, both countries have continued to have a cavalier attitude towards the problem of equitably distributing the fruits of growth.

However, India does have a democratic political system which helps to some extent intermediate the problem of ensuring a better distribution of the fruits of growth, but it canÃ¢â¬â¢t be satisfactorily solved until growth and distribution are treated as an integrated whole, rather than as disjointed issues, as continues to be the case in both countries.

How can the goal of high growth be reconciled with the objective of a more balanced and equitable development? Past efforts to do so, often initiated by the World Bank and IMF to repair the damage done by their earlier more market fundamentalist policies, have failed to have a desirable effect on the pattern of development, except in the most superficial terms.

In a recently published book, Development with Dignity, the noted Indian economist, Amit Bhaduri, has succinctly presented a more integrated and realistic strategy for development which aims to syncretize the objectives of growth and distribution through fashioning institutions and policies in a more effective and durable way. I hope to discuss his contribution and its likely applicability in Pakistan on another occasion.


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## Neo

*Globalisation and de-industrialisation*


*By S.H. Zaidi*
OF late, the PM has claimed a reduction in both poverty and unemployment, but neither ground reality nor independent experts substantiate this view. Though the prices of real estate have soared, fuelled mainly by speculation and lack of avenues of productive investment, income levels, especially of small business, have substantially declined, and income disparity has increased, flow of aid and Ã¢â¬Ëloan re-schedulingÃ¢â¬â¢ after 9/11 notwithstanding.

The policy of privatization and ceaseless reiteration of the free market and foreign investment mantra have not helped. They have benefited a privileged certain class only.

PMÃ¢â¬â¢s frequent exultation over PakistanÃ¢â¬â¢s performance as certified by the IFIs notwithstanding, the lot of the common man has continued to worsen.

Most of what Ã¢â¬Ëforeign investmentÃ¢â¬â¢ has come in, is either in service sector or in low-skill technologies. Things like KFC, MacdonaldÃ¢â¬â¢s and Pizza Hut have only introduced Pakistanis to junk foodÃ¢â¬âof a highly expensive kind. Other Ã¢â¬Ëforeign investmentÃ¢â¬â¢ has consisted in handing over lucrative, captive local markets, such as in the fields of power and communications, to foreign interests rather than in new fields in industry and technology.

This dream of our economic managers alone cannot take us far unless foreign investment comes into fields where transfer of new technology occurs. We have not even succeeded in taking significant advantage from outsourcing of services.

Lack of interest by foreign capital has sometimes been blamed on the law and order situation. The fact is that terrorist threat emanating from Ã¢â¬ËIslamic fundamentalistÃ¢â¬â¢ elements has been exaggerated under foreign influence. While this policy may have been of benefit politically to the regime, productive Ã¢â¬Ëforeign investmentÃ¢â¬â¢ has been driven away precisely because of this policy. The Ã¢â¬Ëthreat of terrorismÃ¢â¬â¢ in any case stands accentuated due to involvement in the US Ã¢â¬Ëwar on terrorÃ¢â¬â¢ in a big way.

Economic growth has been driven mostly by workers remittances and grants and loans obtained after 9/11 at great political cost but has failed to translate into benefits for the common man.

No concerted policy to face the challenges of globalisation is in evidence, except that the ministers and officials repeat in a stereotyped manner the line orchestrated by the IFIs and the industrialized world. Being an elitist government, most of its policies have served privileged class. Globalisation, in its current form, is in the interest of the industrialized WestÃ¢â¬â¢s elite.

Our elite apparently have a tacit alliance with them. Consequently, they do not view it as a threat. Prior to January 2005, government departments had been placing big advertisements in the newspapers at state expense about the Ã¢â¬ËopportunitiesÃ¢â¬â¢ offered by globalisation after WTO provisions take effect.

While they do pay lip service to peopleÃ¢â¬â¢s welfare and talk of transferring Ã¢â¬Åbenefits of macroeconomic stability and growthÃ¢â¬Â to the common man, their main objective is to Ã¢â¬Ëstay on course of reform.Ã¢â¬â¢

Globalisation is like a tidal wave. The prime minister said in an interview with a foreign magazine: If you ride it, you will go far. If you try to stop it, you will be blown away. We decided to ride it.Ã¢â¬Â In the same interview, he outlined the fundamentals of reform as Ã¢â¬Åderegulation, liberalization and privatization.Ã¢â¬Â About privatization, he said: Ã¢â¬ÅIt is not the business of government to be in business. We decided to open everything up. We just sold 26 percent of Pakistan TelecomÃ¢â¬âwhich was overstaffed and inefficientÃ¢â¬âfor $2.6 billion. We eventually want nothing in the public sector.Ã¢â¬Â

Similarly, claiming to alleviate poverty while opposing government intervention and favouring privatization of health and education sectors, are contradictory in nature. Government must seriously consider its role in development of education and health facilities. Without this, no economy could take off. There are costs associated not only with action but also inaction. Inaction in the realms of health and education leads to deterioration of these two sectors with associated costs.

Expenditure on public health projects is not an Ã¢â¬Ëunproductive expense,Ã¢â¬â¢ as some unimaginative planners believe. It improves productivity by reducing wastage of man-hours due to poor health and sickness, and leads to a more healthy and enthusiastic workforce.

Misguided imported Ã¢â¬ËexpertsÃ¢â¬â¢ fail to realize the tangible and intangible benefits of providing education and health facilities to the populace through the state system.

Current trends of indirect, regressive taxation, downsizing government organizations, and establishment of Ã¢â¬Ëelite institutionsÃ¢â¬â¢ of learning while ignoring public sector universities, all ultimately increase poverty.

The notion that Ã¢â¬Ëpoverty alleviation,Ã¢â¬â¢ and even development of underdeveloped regions within the country, is some sort of a Ã¢â¬Ëcharitable obligation,Ã¢â¬â¢ is itself uncharitable. Charity can at best provide emergency relief in cases of dire necessity. The failure of Ã¢â¬Ëcompulsory Zakat deductionÃ¢â¬â¢ instituted during the tenure of another military ruler, General Ziaul Haque to make a dent in poverty is proof, if one were needed. In fact, economic development requires not merely administrative measures but social change.

Economic stability, that they worry so much about, is negated by the policy of frequent change in the prices of inputs like petroleum and power. The OCAC, a cartel of oil companies, is authorized to fix oil prices fortnightly, based on Ã¢â¬Åinternational market prices.Ã¢â¬Â

After hue and cry by the press and public and some opposition politicians, the government has now changed this policy and from April 2006, OGRA (Oil and Gas Regulatory Authority) is to oversee the OCAC price fixing. Still it cannot fix oil prices. Perhaps to placate public sentiments, or to give a smooth finish to the farce, NAB has been designated the task of finding the Ã¢â¬ËmethodologyÃ¢â¬â¢ behind the oil prices fixed by OCAC in the past.

A strange but interesting thing had come to light in the debate on oil pricing mechanism in the Senate in February, 2005 when Opposition Senator Farhatullah Babar disclosed that the petroleum development levy which was Rs9.5 per litre in May, 2004, had been reduced to 0.92 per litre in December, 2005, while the inland freight charges, which are paid back to marketing companies by the OCAC, were increased from Rs1.64 to Rs9.70 per litre. Under this juggling, the government stands deprived of the petroleum development levy, which is used by it for oil exploration.

The real question is why the government authorized the OCAC, a group of oil marketing companies and refineries, which had vested interest, to fix oil prices. The policy of increasing price of utilities in deference to the wishes of the IFIs has also had an adverse effect on industrial development as well as commerce.

The poor in general lose out under the kind of elitist authoritarian rule that has prevailed in Pakistan. The maladies of elitism and VIPism are becoming stronger by the day.

If we go by tall claims, we have a dynamic economy and soon will join the ranks of the Asian tigers. In reality, we are heading towards de-industrialisation. The globalizers, however, seem to be content with carving out a role for Pakistan as a supplier of raw materials and semi-finished goods, or at most, of textiles! The policy of reduction in the rate of interest under the belief that this would bring down the cost of capital and thus spur economic activity has, in this milieu, translated into benefits for the speculator and the influential.

Domestic policies are one side of the picture. The Ã¢â¬Ëunequal exchangeÃ¢â¬â¢ between the rich and poor nations, which the West is trying to sustain through corporate globalisation is another cause of endemic poverty in developing countries.

The impact is accentuated in those developing countries, such as Pakistan, where the elite is more fully in league with the developed worldÃ¢â¬â¢s elite. The neo-imperialist policies being pursued by the United States further complicate and exacerbate this situation, but the contribution of the developing countriesÃ¢â¬â¢ governments in the process cannot be discounted. Beggars may not be choosers but they can at least develop the will not to beg! It remains to be seen whether we ride the tidal wave or the tidal wave rides us.


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## Neo

Pakistan, Yemen agree to consolidate commerce and economic ties 
*ISLAMABAD *_(updated on: April 10, 2006, 22:47 PST_): President Pervez Musharraf and his Yemeni counterpart Ali Abdullah Saleh on Monday agreed to invigorate private sector participation for increased bilateral commerce and economic ties and also reaffirmed their commitment to forging co-operation in terrorism jointly.

President Musharraf and his counterpart Saleh, whose visit marks first by a Yemeni leader to Pakistan in almost two decades, went into an exclusive meeting immediately after the formal welcome ceremony for the visiting leader at the Aiwan-e-Sadr.

Later, senior aides from the two sides joined their leaders at bilateral talks, which focused on consolidating economic and trade ties.

President Musharraf, later, told a joint press conference that Pakistan and Yemen have tremendous scope for investment, joint ventures and their private sectors can identify products for bilateral trade.

"The government will facilitate the private sector, which should explore new areas of commerce and economic co-operation - this way we will be able to give further strength to our excellent political and diplomatic relations - we will have broad-based ties with Yemen," he stated.

The Pakistan leader said his country would also co-operate with Yemen in meeting needs of Yemeni police and security forces.

"We will also co-operate with Yemen in the area of defence production and security related areas."

Musharraf said, the two countries have agreed to intensify intelligence co-operation to combat terrorism and extremism jointly.

"We have decided to closely co-operate in the intelligence field so that we can have a joint strategy against terrorism."

President Musharraf, who visited Yemen in December 2005, also vowed to open doors of Pakistani universities to Yemeni students, especially its new soon-to-be-established science and technology institutions of higher learning.

President Musharraf also thanked the visiting leader, for Yemeni nation's support in the wake of October 8, 2005 earthquake.

The Yemeni leader, in his post-talks comments, described the bilateral talks as extremely productive and positive vis a vis setting pace for diverse relations between the two countries.

"We have agreed to explore more horizons for giving depth and expansion to our bilateral ties," he said.

Ali Abdullah Saleh praised President Musharraf's efforts for socio-economic uplift of the Muslims.

"I fully support President Musharraf's call for increasing intra-OIC trade as the Muslim world has both potential and resources to bring about their collective economic well being.

He said bilateral co-operation in the field of security would be beneficial for both the countries.

The balance of trade between the two countries has remained favourable to Pakistan and exports have registered continued increase in the last few years. In 2004-05, Pakistan's exports to the Arab country stood as US dollars 57.8 million, while its imports totalled just US dollars 5 million.

Yemen is among the top ten rice-importing countries from Pakistan. Other major export items from Pakistan include medicines, garments, fabrics footwear, woven cotton fabrics, electrical fans, electrical equipment etc.


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## Neo

ISLAMABAD (April 11 2006): Minister of State for Environment Malik Amin Aslam has said that Prime Minister Shaukat Aziz during his visit has convinced the Spanish businessmen about the potential business advantages in Pakistan and they were found very keen to invest in the country.

Amin Aslam who accompanied the Prime Minister during his visit was talking to PTV late Sunday night. He said there had been certain misunderstandings among the businessman in Spain about Pakistan, which the Prime Minister Shaukat Aziz has effectively removed.

During their interaction with the PM, some of the Spanish traders committed to turn Pakistan within a month to invest in power generation, Information Technology and many other areas, he said.

He said the PM effectively highlighted Pakistan's economic achievements and the flow of foreign investment in the country adding an advanced level of interest was witnessed among the Spanish businessmen.

Pakistan was moving ahead on way to economic progress from zero position and the world leadership and international organisations consider Prime Minister Shaukat Aziz an architect of this journey, the minister said.

He said Pakistan's experiences are now being discussed internationally by the experts and think tanks.

Pakistan's withdrawal from the regime of International Monetary Fund has surprised many in the world, the minister said.

To a question, he said the environment has emerged as a global issue in contemporary world, which requires a global management.

He said a number of treaties and agreements were evolved during the decade of 90s, which should duly be implemented to achieve the targets.

The United Nations is concentrating in these areas and the topic is included in the reform agenda of the World Body, he said.

Pakistan on its part is committed to abide by the international conventions in this regard and to cooperate the world community in reformatory efforts, he added.


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## Neo

Tuesday April 11, 2006 
ISLAMABAD: Pakistan Telecommunication Authority (PTA) has announced reduction in annual regulatory fees for WLL for the province of Balochistan. The decision will have positive impact on the growth of wireless local loop, says a PR issued by PTA, here today. 
As per details, annual regulatory fee for WLL for Western Telecom Region (WTR) has been reduced from 0.5% to 0.25% in subsequent two years. 

Similarly, annual spectrum fee has been cut down to 10% of the total amount to be paid as per WLL license. 

These reductions have made to facilitate the spread of WLL services in Balochistan and to improve the teledensity in scattered places of the province. 

It may be mentioned that PTA was taking a number of steps to improve the telecom facilities in unserved and underserved areas of the country.


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## Neo

*Work on six dams to begin in two yearsÃ¢â¬â¢*
ISLAMABAD, April 10: Water and Power Minister Liaquat Ali Jatoi said on Monday the government planned to start work on six major dams over the next two years. In a written reply to a question by Maulana Abdul Malik, the minister identified the dams as Bhasha-Diamer, Munda, Kurram Tangi, Kalabagh, Akhori and Nai Gaj and informed the National Assembly about the status of these projects.

He said that the Bhasha-Diamer dam, to be built in Chilas, would have a storage capacity of 7.3MAF (million acre feet). Bhasha would be the biggest dam among the six as far as the capacity is concerned. Its feasibility study has been completed and its design and tender documents are under preparation.

Munda dam will have a capacity of 0.67MAF and is planned to be constructed in Swat, he said, adding that a private company was preparing its feasibility report.

Kurram Tangi damÃ¢â¬â¢s design, envisaging a capacity of 0.614MAF, and tender documents are complete. The dam is planned for North Waziristan.

Mr Jatoi said that Kalabagh dam would have a capacity of 6.1MAF and its feasibility and tender documents were updated in 2005.

He said the Akhori dam, the second largest reservoir, would have a capacity of 7MAF and would be built near Attock. Its feasibility has been completed and is being reviewed by Wapda.

He said the PC-II of Nai Gaj dam, to be constructed in Dadu with a capacity of 0.13MAF, had been approved by the Central Development Working Party and added that the project would cost Rs62.36 million. Survey and other investigations for it are in progress.

*KALABAGH STUDIES: *Answering a question regarding the Kalabagh dam, the minister, in a written reply, stated that Rs1 billion had already been spent on various studies on this project. These reports have been reviewed by the World Bank, UNDP and Wapda.

He said that first these studies were undertaken in 1956 by M/s Tipton and Hill. In 1966 another study was done by M/s Chas T. Main, the World Bank consultants. M/s Associated Consulting Engineers Karachi carried out another study in 1975 and project engineering studies were done by the Kalabagh Consultants in 1988 with the help of the World Bank.

Five firms Ã¢â¬â Binnie and Partners (England), Hazara Engineering (USA), Preece and Cardew and Rider Ltd, Associated Consulting Engineers and Nespak Ã¢â¬â carried out project planning studies.

Mr Jatoi denied reports that the Bhasha-Diamer dam project had been shelved and said a consensus had been achieved among all the provinces on a water distribution formula.

He said the feasibility report of the renamed Bhasha-Diamer dam was ready and its groundbreaking would be performed by President General Pervez Musharraf as soon as weather permitted it.

He said work on the Gomal Zam dam project had stopped because of the killing of an engineer and abduction of another, which cost the government dearly in payment of compensation. He said the project would be re-tendered in accordance with its new cost which had been increased by about $50 million.

He denied there was any difference among provinces on the distribution of water as the Indus River System Authority had got a consensus agreement among the provinces on the quantum of water distribution.

He admitted that the newly installed telemetry system had run into trouble and said the ministry had taken up the matter with the contractor for its rectification. Ali Akbar Vaince of treasury claimed that Sindh was getting more than three times its share of water.

*POWER AFFAIRS: *In reply to a query, he said Pakistan had signed an MoU with Tajikistan for purchase of electricity for which talks would be held on April 30.

Responding to complaints by lawmakers from Karachi about over-billing by the KESC, he said: Ã¢â¬ÅWe will convey the concern of the members to the new KESC management since it has been privatised.Ã¢â¬Â

The minister assured the house that Wapda defaulters would be dealt with according to law. He said the Peshawar Electric Supply Company had defaulted on payment of Rs11 billion and unless this amount was recovered no substantial development work could be undertaken.

When Speaker Chaudhry Amir Hussain asked the minister to take defaulters to the task, he said: Ã¢â¬ÅIf this is the consensus of the house then he will proceed accordinglyÃ¢â¬Â.

The speaker said that instead of getting approval of the house Wapda should try to enforce rules to recover its dues.

Mr Jatoi admitted that power theft continued to haunt Wapda and said that action would be taken against those involved.

In response to a Fata memberÃ¢â¬â¢s concern about insufficient number of grid stations, the minister said work on several new projects was in progress but stressed the need for restoration of the law and order in the tribal region for timely completion of the projects.


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## Neo

Tuesday, April 11, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\04\11\story_11-4-2006_pg5_16
Imported cars may capture 24% of market 
_By Farhan Sharif_

KARACHI: Considering the demand and supply situation and the import duty structure, the share of completely built units (CBUs) or imported vehicles are expected to be 24 percent in the local market over the next five years. 

Both new and used CBUs would depict a healthy growth in years to come. Duty liberalization on import of new and used cars would be responsible for this. In CBU segment, used cars, in particular, would penetrate sharply and are expected to capture 24 percent market share in fiscal year 2010 from only three percent in fiscal year 2005, said Faraz Farooq, an analyst at Jahangir Siddiqui Capital Markets.

He said in overall projected market of 375,000 vehicles around 90,000 vehicles would belong to used CBUs as per calculation. This would happen due to the relaxation given by the government to import a three-year-old car subject to a maximum 50 percent depreciation under the gift scheme. In addition, car dealers have also started leasing schemes for financing used cars. The share of new CBUs will also improve as all local car assemblers have aggressively engaged in trading activities to capture the growing demand.

The auto sector is one of the fastest growing sectors in the economy with local auto sales depicting an impressive four-year CAGR of 35 percent during fiscal year 2002 to 2005 to 152,000. The total demand of passenger cars (PC) and commercial vehicles (CVs), including CKDs, CBUs and used CBUs, has posted a CAGR of 38 percent to 169,000 vehicles in this period. 

Assuming that the existing duty structure on CKD and CBU import will remain unchanged, PakistanÃ¢â¬â¢s total automobile market is expected to grow at five-year CAGR of 17 percent from 169,000 units in fiscal year 2005 to 375,000 units in fiscal year 2010. 

Pakistan has one of the lowest car penetration ratio in the world, that is, eigh cars per 1,000 persons. In India, China and Indonesia, this ratio stands at 12, 10 and 21 cars per 1,000 persons, respectively. It is believed that PakistanÃ¢â¬â¢s overall automobile market will remain buoyant on the back of rising disposable income, consumersÃ¢â¬â¢ preference for new and innovative models, availability of extensive car financing schemes and growing quantum of home remittances. Rising middle-class and growing consumerism across Pakistan further promises growth in this sector.

Locally assembled vehicles or CKDs have posted a flamboyant growth pattern in past years with last five yearsÃ¢â¬â¢ sales CAGR arrives at 31 percent from 40,000 vehicles in fiscal year 2000 to 152,000 vehicles in fiscal year 2005. For the next five year, the growth in CKD is expected to slow down as the high base effect will be there and expect a CAGR of 11 percent to reach around 250,000 by fiscal year 2010. Moreover, the CKDs will lose its share to CBUs, new and used in total market share and it is likely to come down to below 70 percent in fiscal year 2010 from over 90 percent in fiscal year 2005.

In CKD market, private car growth is expected to be lower than CKD market growth. Car demand is expected to grow at 10 percent in the next five years and reach above 210,000 in fiscal year 2010 from 127,000 in fiscal year 2005. Commercial vehicles will grow at a higher pace of 13 percent, expected rise from 25,000 in fiscal year 2005 to 46,000 in fiscal year 2010. This will be because of increased economic activity in the country.


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## Neo

Islamabad, April 10, 2006

A civil nuclear technology deal between Pakistan and China may be signed during President Pervez Musharraf's visit to Beijing in June to counter the Indo-US nuclear agreement, the Daily Times reported on Monday.

Pakistan has protested against the Indo-US deal and has also sought a similar deal. But the US has rejected the demand, saying that India and Pakistan were "two different cases".

There have been speculative reports since then that Pakistan might seek China's help.

Beijing has itself signed close to 30 international deals to import nuclear power technology.

The Indo-US civil nuclear pact agreed upon last year and formalised during President George W Bush's visit to the subcontinent last month.

The deal - if the US Congress clears it - will allow India access to previously denied nuclear fuel and technology in exchange for New Delhi separating its civilian and military reactors and opening the former to international inspections.

In a related report, the Daily Times quoted official sources as saying that separation of the civil and military nuclear facilities was in the offing and that a new regulatory authority for nuclear power generation would be in place shortly.

Musharraf would be discussing a 2,000 MGW nuclear power plant with the Chinese.

At a recent meeting chaired by Prime Minister Shaukat Aziz, the Pakistan Atomic Energy Commission (PAEC) said it was working on the authority's structure, powers, jurisdiction and operations.

The government is holding talks with China to set up nuclear power plants to generate 2,000 MW of electricity.

Sources said the site of the new plants had not yet been selected. They said the government was trying to get nuclear power technology from Europe, especially France and Italy.

The newspaper linked the nuclear power plant deal reports to the interior ministry's decision to heighten security of diplomats and officials posted to Pakistan and businessmen from China.

Quoting unnamed sources, the paper said intelligence reports say that terrorist organisations might target Chinese nationals to sabotage relations between the two countries.

In the light of these reports, the ministry has directed the authorities to gather information about Chinese nationals residing in Pakistan and make adequate security arrangements for them, the sources said.

Officials have also been asked to provide foolproof security to Chinese engineers and those working with multinational companies in Pakistan.

Chinese have been targeted particularly in Balochistan that is witnessing armed resistance by the tribals who are demanding greater economic and political rights.

http://www.hindustantimes.com/news/...00500020000.htm


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## Neo

KHALID KHOKHAR

During the last five years, the government initiated a number of mega development projects in Balochistan. The Gwadar deep seaport project is the foremost mega project, which would help the country to take a quantum leap in terms of economic progress. The port of Gwadar is being constructed at a cost of $ 1.5 billion with financial and technical assistance of China. The infrastructure facilities consisting of road-link, connecting Gwadar to the national highway, will serve as a gateway for trade from land-locked countries of Central Asia. It will facilitate the development of shipyards and export of mineral resources of Balochistan. 
The development of industrial zones in the port area will create opportunities for employment and private investment in the Province of Balochistan. Pakistan intends to build an export processing zone and a free trade area to maximise the potential of Gwadar port. A new railway track from Gwadar connecting with existing rail network at Quetta-Kohi Taftan section will be built to enhance trade activities at Gwadar Port. Besides the road network, there are plans to set up an international airport equipped with all modern aviation facilities. It will serve as the mother-port at the junction of traditional trade routes opposite Strait of Hormuz which lies so close to this base and at the mouth of the Persian Gulf.
Gwadar port is very important for China from both economic and security point of view. Since Gwadar will be linked with ChinaÃ¢â¬â¢s western province of Xingjian with Pakistan, therefore it is expected to become a gateway port for Central Asia and Xingjian. China wants to convert its western region into a hub of economic and commercial activities. 
Beijing and Islamabad have identified $12 billion projects, including Islamabad International Airport, oil refinery at Gwadar, Bunji hydropower project and Neelam-Jhelum hydropower project for Chinese investment. GwadarÃ¢â¬â¢s geo-strategic location also interests the United States, who considers Chinese presence in Gwadar a threat to its oil trade from Gulf to the Far East and Europe. Iran is also one of the main players in the region and considers Gwadar as a threat to its main route to the sea from Central Asia. Iran is currently building a port at Chabahar as a response to Gwadar port. Iran, with assistance from India, plans to channel and monopolise trade from Tajikistan, Kyrgyzstan and Kazakhstan destined for the East and the Gulf via Chabahar. IndiaÃ¢â¬â¢s geo-strategic interest in the region may be to prevent the Chinese from building influence in the Persian Gulf region and to assume the role of regional power. India has the means, resources and potential to give the Baloch rebels a hand. Therefore, the unrest in Balochistan becomes the Achilles heel in the war against terror and a constant worry over PakistanÃ¢â¬â¢s stability. India is surely helping insurgents in Balochistan and the instable Balochistan would be in IndiaÃ¢â¬â¢s interests, as it would improve IndiaÃ¢â¬â¢s security perception. What is fun of having so big consulates in Kandahar in Afghanistan and Zahidan in Iran equal to embassy in Tehran?
Pakistan enjoys a historical, cultural, political and religious links with UAE, which have been further fomented through bilateral and regional cooperation between the two countries. President HH Sheikh Zayed bin Sultan al Nahyan had a deep interest in developing relations with Pakistan and had a special feeling of warmth towards the people and leaders of Pakistan. Pakistan views relations with UAE as top priority among ties with all Asian countries. The BBC report about a statement attributed to the Balochistan Minister for Tourism, Culture and Fish harbour Syed Sher Jan Baloch as saying that Ã¢â¬ÅUAE is scared because the development of Gwadar will take away major share of international investment besides giving Pakistan the status of a major regional economic powerÃ¢â¬Â, is not taken in the true perspective. 
UAE has never spelled out even an iota of apprehensions of an economic threat from Gwadar port. In fact some of the anti-Pakistan element working in the UAE have dissipated this disinformation to create a wedge between two brotherly countries. Pakistan is very optimistic about the prospects and impacts of Gwadar. 
These two ports operating at Gwadar and UAE will complement each other and the positive outcome would be to find mutual advantages accrued from them. Pakistan intends to take on other Gulf ports, especially OmanÃ¢â¬â¢s Salalah and UAEÃ¢â¬â¢s Jebel Ali and offer Central Asian states their most efficient warm-water access to both the west and the east. 
Government of Pakistan has reportedly agreed to lease out land to UAE at Gwadar for the establishment of shipping companies and other related trade activities. UAE companies have shown a strong interest in the development of Gwadar port, with the promise of attracting more investment for the development of the whole area. The Saudi Investment Fund has promised to invest $100 million in the Pasni-Ormara section of the Mekran coastal highway, which is needed to connect Gwadar with other key regions of the country. 
Talks are also at an advanced stage with Oman and the UAE for co-financing $100m each in this project. UAE and Saudi funds are also expected to finance some water storage schemes, as well as some social uplift projects in Balochistan. Oman has already signed a deal for small development schemes in Gwadar. UAE investments in the automotive and other manufacturing fields have fuelled economic activity in Pakistan, while the presence of Pakistani workers in the UAE have given impetus to economic activity in the UAE.


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## Neo

ISLAMABAD, April 11 : Prime Minister Saukat Aziz has said that Pakistan is rich in mineral resources waiting to be tapped by both domestic and foreign investors by bringing in latest techniques and state-of-the-art technology in this attractive sector. 
The Prime Minister said this while talking to the Chairman of two of the worldÃ¢â¬â¢s largest copper and gold mining companies Jean Paul Luksic of Antofagasta and Gregory Charles Wilkings of Barrick Gold Corporation who called in him at PM House Tuesday. 
Prime Minister Shaukat Aziz told the delegation that currently several mining projects are underway in the province of Balochistan for exploring copper, lead and zinc as well as oil and gas. He said increase in mining activity in the country would contribute towards increase in economic growth and exports in addition to creating more jobs for the people. 
Gregory Charles Wilkings, CEO Barrik Gold Corporation told the Prime Minister that substantial amount of work needs to be done before the challenging project can be built. He appreciated the support given by the government and said both the companies would make sure that the project is viable. 
Jean Paul Luksic, Chairman Antofagasta appreciated the economic policies of the government ad said that because of the investor-friendly atmosphere foreign investors are happy to come here. We are looking forward to a long partnership with Pakistan, he said. 
The Prime Minister assured the visitors that the government would help the investors in every way in providing infrastructure, facilities and a level playing field. He emphasized the need t hire and train local personnel to work in the project. 
Prime Minister Shaukat Aziz said that logistics chain would be improved throughout the country to facilitate the movement of cargo. He expressed the hope that Gwadar Deep Sea Port would be a hub for the export of mining products from Balochistan and said that building roads ad infrastructure linking it with important business places in the country is a major priority for the government. 
Antofagasta and Barrick Gold Corporation are working all over the world and are looking at the possibilities of exploring copper ad gold reserves in Balochistan. When the reserves are verified, the companies will bring in billions of dollars worth of investment, in which the government of Balochistan would also have 25% share. 
Minister of State for Petroleum and Natural Resources Naseer Khan Mengal also attended the meeting in addition to senior government officials.


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## Neo

ISLAMABAD, April 10: The World Bank has urged the government to seriously concentrate on improving the Ã¢â¬Ålow productivity and efficiencyÃ¢â¬Â of the textile, garments and apparel industries, failing which it will not reap the benefits in the post textile quota regime, effective from January 2005.

Informed sources told Dawn here on Monday that the World Bank maintained that the impact of quota elimination for Pakistan would be serious as a result of growing competition from other countries.

The implication for the apparel sector, the WB believed, could be more serious, if no action was taken to improve the much needed productivity and efficiency.

PakistanÃ¢â¬â¢s per capita productivity has been estimated by the WB at only 37 per cent of the benchmark established by China.

Compared to this the Indian per capita productivity is also better at 46 per cent.

Ã¢â¬ÅFor Pakistan, raising productivity by improving the efficiency of the production process is a key to reaping benefits from the abolition of Multi-fibre Agreement (MFA),Ã¢â¬Â a source quoting WB officials said. If, for example, Pakistan is able to increase its productivity in textile and clothing sector by around 60 per cent to reach ChinaÃ¢â¬â¢s productivity level, the gain would likely to be over $1 billion per year, he added.

The concerned government official conceded that the countryÃ¢â¬â¢s garments industry is suffering from acute problems of low productivity, poor quality, weak management and marketing skillsÃ¢â¬â¢ and hence facing serious threat of losing its share in the international markets.

Keeping this in mind, the government is said to have decided to make exporters competitive in garment business so that they can be the catalysts to enhance the productivity of the garment industry by making it cost effective and thereby sustaining and improving its market share in the global market.

The main objective is to provide comprehensive consultancy services and technical guidance on all aspects of garment manufacturing and productivity enhancement methods in order to meet the challenges of global market.

Sources said the government was considering a proposal to hire foreign consultants from Hong Kong, China, Taiwan, Korea, Japan, Germany, Italy, UK, Turkey and Sri Lanka to help improve existing technology used in the garment industry.

Also, their relevant experience of working in their own countries in the garment industry with proven strength and highest level of production efficiencies will be the real advantage for learning by garment manufacturers.

The government, sources said, will ensure transfer of knowledge and expertise from foreign experts to local staff of the industry and to improve their capacity building by the professionals engaged for which a Project Implementation Cell will be established.

It has been proposed that in each factory, maximum three to four foreign experts of relevant areas such as dyeing, finishing, knitting, sewing, laundering, industrial engineering, printing, mechanical maintenance, designing and branding will be placed.

It has been proposed that the cumulative basic salaries bill for any recipient for its entire approved expatriate staff will not exceed $25,000 per month.

Garment manufacturing factories (preferably vertically integrated) from all over Pakistan will be part of the new programme. However, initially 10-12 factories will be selected from different garment clusters of the country. The basic selection criteria for any garment factory will be its export sales volume (in dollars). The export sales details of the last two consecutive financial years will be evaluated. All major garment export factories will be ranked according to their year-wise sales volumes.

Before the start of the programme implementation and engaging of foreign experts, National Productivity Organisation (NPO) will establish certain benchmarks for all relevant technical fields to be covered. The government will initially provide Rs300 million to carry out the job by the ministry of industries, production and special initiatives for technical upgrading of garment industry of Pakistan.

The benefits that the textile garment industry will get by the new initiative include improvement in the existing production practices according to the international standards resulting in the betterment of product quality, enhancement in productivity by learning best practices of foreign industry, update knowledge on latest technology, improvement in capacity and skills level, learning industrial engineering techniques for performing manufacturing operation efficiency in garment value chain, adoption of cost effective techniques to minimize wastage, development of on-job-training culture, optimal capacity utilisation of the garments units and introduce the concept of continuous improvement.

Ã¢â¬ÅTextile is the most important sector of the economy and, that is why, $4 billion investment has been made in modernisation and infrastructure development of the industry during the last 4 years,Ã¢â¬Â a source said.

It imparts 46 per cent share in total manufacturing. It contributes about 66 per cent of total exports and 38 per cent of total employment. The textile industryÃ¢â¬â¢s share in GDP is about 30 per cent in value added production by the manufacturing sector.


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## Neo

KARACHI: The most charming barrier of 12,000 points was briefly breached on Monday at the Karachi Stock Exchange, but finally KSE 100-share index closed below 7.77 points from this mark. At the end of the day, the index stood at 11,992.23.
Banking stocks helped maintain the upward drive for the sixth consecutive day as the index hit an intra-day high of 12,078 points, but profit-taking in energy scrips reduced the gains of the day by 55.64 points.
Analysts were of the view that the news published in some leading newspapers about EtisalatÃ¢â¬â¢s initial payment to take over the management control of PTCL put more fuel in the investors, who lifted index to new heights.
Most of the notable banking scrips performed superbly and provided support to the index. MCB, Union Bank, NBP and UBL posted increments of 2.5 per cent, 4.9 per cent, 1.6 per cent and 2.8 per cent respectively.
Profit-taking was evident in the energy scrips as PPL, POL and PSO closed in the red territory after marking intra-day highs at Rs278, Rs667.90 and Rs399.20 respectively. On the other hand, Oil and Gas Development Company soared by Rs1.25 to Rs161.
In cement sector, DG Khan Cement, Fauji Cement and Pakistan Cement depicted increment of 0.6 per cent, 1.7 per cent and 1.6 per cent while Lucky Cement and Maple Leaf Cement closed red.
The hectic competition drew the day trading session in favour of none, as gainers and losers were having difference of only two scrips, accordingly 185 scrips advanced, 187 declined while the value of 31 scrips remained intact.
The overall trading volumes evaporated to 380.186 million shares turnover as against 419.042 million shares recorded on the last Friday. Consequently, the market capitalisation improved by Rs14 billion to Rs3.399 trillion.
After a long time, Pakistan Telecommunication Company came first in terms of the day volume leaders with 35.494 million shares turnover. The scrip never crossed its opening rate in reverse during the day that is point to be noted. Therefore, it registered a marginal increase of 15 paisa and closed at Rs67.85.
Fauji Cement firmed by 45 paisa and closed at Rs26.85 with 31.226 million shares turnover. MCB Bank Limited soared by Rs6.45 and closed at Rs259.95 with 27.609 million shares turnover. Lucky Cement lost Rs2.10 and closed at Rs128.80 with 26.429 million shares turnover.
Pakistan Cement up by 30 paisa and closed at Rs19.20 with 23.948 million shares turnover. Pak Oilfields plunged Rs5.30 and closed at Rs655 with 17.540 million shares turnover.
Pak Petroleum shed Rs3.70 and closed at Rs272.05 with 16.492 million shares turnover. Union Bank improved by Rs3.40 and closed at Rs72.30 with 12.543 million shares turnover.
Pakistan State Oil eased by Re1 and closed at Rs388 with 11.627 million shares turnover. Pak PTA Ltd remained under selling pressuring for the second consecutive day and occupied tenth position among the top-ten volume leaders of the day, which was the day volume leader a couple of sessions before. The scrip downed by 35 paisa and closed at Rs9 with 11.298 million shares turnover.
Forward Counter: DG Khan Cement led the list of actives, enhanced by Re1 at Rs134 on 31 million shares, followed by Oil and Gas Development Company, which surged by Rs1.05 at Rs161.05 on 26 million shares, National Bank, deprived of Rs3.20 at Rs260.90 on 14 million shares, Lucky Cement declined by Rs1.15 at Rs130.35 on nine million shares, Pak Oilfields plunged Rs4.40 at Rs660.25 on eight million shares.


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## Neo

By Farhan Bokhari, Special to Gulf News​
Pakistan's opposition parties are clamouring for a fuller investigation into the recent privatisation of the country's biggest steel factory a move that's apparently meant to scuttle the government's overall privatisation plans. 
The response from the opposition, however, was nothing different from what could be easily predicted ahead of time. The opposition parties are protesting what they consider a modest price of $362 million for Pakistan Steel Mill (PSM) by a Russian-Saudi-Pakistani consortium for 75 per cent stock of the company, and thereby its management as well.
The opposition's protests, notwithstanding, the case against privatisation of PSM may well be a weak one. It's not surprising that Pakistan's latest privatisation drive has evoked a mixed reaction with many supporting the case. The reaction, opposing the deal, goes broadly in line with similarly adverse reaction experienced in other countries where privatisation of public sector units has progressed. For Pakistan though, the milestone along the road to privatisation is indeed welcome.
In the past, whenever the case of privatizing PSM was raised, there was much political opposition, especially from Karachi's Muttahida Qaumi Movement (MQM) political party-the city's largest political force whose many supporters were employed by the steel factory. The MQM had a vested interest in opposing the process fearing that many of PSM's workers would be made redundant.
Today, the MQM is an ally of the government and its political position has inspired it to go along with the PSM deal. But there are other important considerations which support the case. Pakistan's overall economic trends of today are such that the country has begun attracting the interest of foreign investors.
In sharp contrast to the 1990s when Pakistan's position often came close to the brink of collapse, the country's economic profile of today is such that its considered a relatively stable country. Though there's much to be said about the failure of the government in seeing the fruits of economic success trickle down to poorest of the poor, Pakistan is distant from the prospect of returning to the brink of its first ever foreign debt default which is a comforting development for many investors.
As for the price paid for the steel mill, this will always remain a contentious matter and subject of debate and disagreement. For any similar deal, controversy could be kicked up by comparing what was earned to what could have been earned. 
The simple reality, however, is that it is fundamentally wrong for any country including Pakistan to run largely loss-making public sector enterprises, keep on subsidising them through periodic financial aid to help them cut their losses and still expect to meet expenditures for other vital commitments such as social services. 
The PSM has indeed become profitable in the past few years, thanks to a successful program for pushing ahead with a reform plan. However, years of previous losses are a powerful reminder of not just the company's past, but also a possible mirror image of the future. Once successfully privatised, the PSM's future losses are now the liability of a private business rather than the Pakistani government which should finally turn its attention towards the welfare of its people.


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## Neo

KARACHI, April 10: The environment is very conducive to investment in Pakistan. This was stated by Italian Consul General in Karachi Bruno A. Pasquino here. He was speaking at the financial close ceremony of Dost Steel Limited, the first steel re-rolling mills in Pakistan.

Mr Pasquino is of the view that the steel sector in Pakistan now looks quite promising. Ã¢â¬ÅThis is a good moment for Pakistan and international investors should make investments in Pakistan. Foreign companies and especially those from Italy should find opportunities in different sectors of the economy.Ã¢â¬Â

He also referred to the provision of reinvestment as well as repatriation of capital for the foreign investors. Ã¢â¬ÅIt is even easier for the Italians and the Pakistanis to do business because our values and mentalities are close.Ã¢â¬Â

The project manager of Siemens Vai, Stefano Salentino, who is also from Italy, spoke about the project being undertaken with the Italian expertise.

He said Pakistan needed a lot of infrastructure and that steel was one of the tools that it required.Ã¢â¬âAPP


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## Neo

_​_KARACHI: Possible business links and energy cooperation came up for discussion at a presentation made by a Pakistani business forum at one of QatarÃ¢â¬â¢s major financial institutions recently.
The business potential of Pakistan in general and Balochistan in particular for investors from the Muslim world was the highlight of the presentation made to the Board of the Qatar International Islamic Bank in Doha. Sardar Shoukat Popalzai, President of the Balochistan Economic Forum, made the presentation on investment and trade prospects of Balochistan.
Popalzai, who is known to champion the economic potential of Balochistan, said the state of Qatar today attracts world attention because of its forward-looking leadership, favourable economic and political climate and strategic importance.
He added that as Qatar has one of the fastest growing economies in the World and by 2012 will be the largest liquefied natural gas supplier (LNG) globally, Pakistan is keen on expanding its ties with this country.
The BEF president said that Pakistan is looking for gas supply sources in the region. Pakistan expects QatarÃ¢â¬â¢s help to finance its $3 billion plan for developing a LNG supply chain infrastructure on the coastal area of Balochistan to help meet its fast approaching shortfall, Popalzai said.
Chairman of the Bank Ali Bin Abdullah Bin Thani Al Thani, giving his views said that Pakistan offers enormous opportunities in different economic sectors for profitable investments, which is why, he was launching an Islamic Insurance Company in the near future. He expressed hopes that the Qatar International Islamic Bank would also stretch its operations to Pakistan.
He said the Qatar government has started investing abroad as alternate investments to energy sector. Al Thani assured that he would introduce Balochistan to businessmen of Qatar and international investors.
He said Qatar and Pakistan enjoy very cordial economic and diplomatic relations. Presently, the bilateral trade between the two countries is in favour of Qatar that is fast emerging as one of the growing world markets for consumer and capital goods, services and skills, given the space at which its economy has been galloping.
The development covers all sectors, including, infrastructure, basic industry, real estate, tourism and energy, with these developments PakistanÃ¢â¬â¢s business community could take advantage of such situation for successful business ventures.
The sharp growth has pushed QatarÃ¢â¬â¢s GDP per capita to record level of $38,241 the highest in the Middle east, with this, Qatar now ranks as one of the worldÃ¢â¬â¢s wealthiest countries. Ali promised to support countryside parks for nature lovers in the province of Balochistan.
Popalzai said the trade between Qatar and Pakistan is increasing gradually while a gas import project worth $8 billion is in the pipeline. He said that 16 per cent population of Qatar comes from Pakistan, and plays very important part in the development of Qatar.
The Balochistan Economic Forum since its inception has played important role in attracting foreign investments in Balochistan. The Forum has organised several Seminars - Conferences on different economic related topics with an aim to familiarise the National & International economic community with opportunities for trade and investments in Balochistan.


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## Neo

POWERS that be often claim to have broken the begging bowl. It means that there is no fresh external borrowing. Given regular debt servicing, this should be reflected in reduction in the stock of outstanding external debt. What is the factual position? Before going into numbers, it is necessary to clear a semantic confusion created by official pronouncements in this regard.

New external loans actually contracted or expected are termed as Ã¢â¬ÅassistanceÃ¢â¬Â or Ã¢â¬ÅaidÃ¢â¬â¢ which is grossly misleading. Foreign assistance or aid ended with the termination of cold war. Now there are only loans and grants.

The grants are being gradually reduced so much so that even the compassionate support for the October earthquake has very little grant and mostly it will be loans, though on soft terms. Terms of a loan, even if it is at zero rate of interest and stretched over a long period, do not bring any relief in the debt liability on account of principal. It will be only proper, if the term loan and grant is used instead of assistance and aid.

Another confusion arises when officials use a short-hand term for the external debt burden. This has two elements, namely Ã¢â¬Åexternal debtÃ¢â¬Â and Ã¢â¬Åforeign exchange liabilitiesÃ¢â¬Â adding up to Ã¢â¬Åtotal external liabilitiesÃ¢â¬Â for which the heading used is Ã¢â¬ÅExternal Debt and Liabilities.Ã¢â¬Â The second element is much softer than external debt is the core problem. However, sometimes officials use the term external debt for total external liabilities, which can be misleading. 

The factual position is that, between June 00 and December 05, external debt and liabilities, or total external liabilities have been reduced by $2.7 billion but this has been largely due to foreign exchange liabilities, which fell by $4.0 billion, mainly due to foreign currency accounts of Pakistanis, totally wiped out, giving relief of $1.7 billion and Special Dollar Bonds falling by $0.9 billion . In contrast, total external debt has increased by $1.3 billion.

Within this category, private non-guaranteed debt has been reduced to less than half, from $2.8 to $1.3 billion, or by $1.5 billion whereas public and publically guaranteed debt went up by $2.9 billion. The increase in the public debt would have been greater, for that matter total external debt, but for large loan write-off with which Pakistan has been rewarded after 9\11 for its key role in the American sponsored campaign against terrorism

In short, the regime continues to burden future generations, or mortgage them, without in any way increasing their ability to cope with it. They could hope to be able to bear this burden, if their capacity to do so was, in any way, enhanced by the present generation by long-term real investment in the economy. Unfortunately, gross national investment has been lack lustre and stagnating.

Gross fixed investment hovered around 15.5 per cent during the last three years. National investment is quite short of the minimum rate considered essential for sustainable growth. If a realistic allowance is made for depreciation of the existing stock of capital, the net rate of national investment may very well turn out to be negative. Against this setting, breaking the begging bowl, or attaining the cherished goal of self-reliance, demands strenuous effort in three crucial areas, namely domestic saving, balance of payments and fiscal policy. External resources have a large role even in the present dismal national investment rate. This is a reflection on effort for domestic saving.

In a growing economy, domestic saving is expected to improve with the capacity to save. However, in Pakistan the situation has been just the reverse in recent years. While the growth rate increased from 1.8 FY 01 and 3.1 per cent in FY 02 to 8.4 per cent in FY 05, the rate of domestic saving over this period declined from 18.1 FY 02 to 13.2 per cent. The rate for household saving, which was 14.8 in FY 02 and 16.5 per cent in FY 03, dropped to 10.8 per cent in FY 05. The government seems least concerned about the low rate of domestic saving and has been, in fact, actively pursuing anti-saving policies.

Of these, the most prominent are negative rate of return to financial savers and positive encouragement to consumption through introduction of consumer credit, at the instance of the central bank, in an already highly consumption-oriented society.

The rate of increase in private consumption expenditure was only 0.5 per cent in FY 03 but jumped to 8.2 percent in FY 04 and more than doubled to 16.8 per cent in the following year. During FY 05, the expansion in formal consumer credit accounted for 7.7 per cent of the increase in private consumption. It would be stating the obvious that the benign neglect of this important problem needs to be given up and anti-saving policies reversed.

As to the balance of payments, current account surplus of $4.2 billion in FY 03 was gradually turned into a deficit of $1.3 billion in FY 05. In the first half of the current fiscal year, this stood at $2.8 billion as against $0.7 billion in the corresponding period last year. This is fourfold increase. The deterioration has been mainly due to the trade deficit, which increased from $0.4 billion to $4.4 billion over the fiscal years, or by 11-fold and was $3.9 billion in the fist half of FY 06 as compared with $2.2 billion in the corresponding period last year, an increase of 77.2 per cent.

This has been the result of a much faster increase in imports than exports. Exports in the current year do not cover more than 66 percent of imports as against 76 per cent in the same period last year. The ratios in FY 03, 04, 05 were 96 percent, 91 and 77 percent respectively.

The real solution, of course, lies in pushing up exports and this is not going to be easy in an intensely competitive environment created by WTO. Pakistan should not hope for continuance of market access specially granted to it in the wake of 9\11 and must brace up to compete with the rest of the world.

The country is fast heading towards a Ã¢â¬Ådo or dieÃ¢â¬Â situation. It must Ã¢â¬Åshape up or ship out.Ã¢â¬Â The traditional ways would not do and a drastic psychological shake up of producers and exporters is called for. Foreign investment is looked up to but it must not be forgotten that it does not come without cost. Already payments abroad on account of profit income touched $1.8 billion in FY 05 showing an increase of 33.5 per cent over the year.

Dividend return on direct investment remitted abroad has gone up from $990 million in FY 03 to $1,228 million in FY 04 to 1,639 million in FY 05. This means an increase of 33.5 per cent in one year and 65.6 percent in two years. In the current year, in seven moths, profit and dividend payments abroad have been $299 million as against $269 million last year. These payments are, in no small measure, related to inflation and interest rates.

Fiscal policy comes into the picture because of heavy reliance of federal budget on external resources. During FY 05, external resources provided Rs198 billion as compared with revenue receipts of Rs875 billion (gross) and Rs630 billion (net).They financed as much as 22.8 per cent of revenue-current and development expenditure. For FY 06, they are expected at Rs212 billion as compared with the revenue receipts of Rs927 billion (gross) and Rs643 billion (net) and will finance 22.1 per cent of total revenue expenditure.

Currently, the low tax-GDP ratio is often bemoaned. What sort of effort to replace external resources by internal resources is required and how long will this take place in a corruption-ridden society is not hard to imagine. That will keep the achievement of self-reliance at a distance, even if, by any miracle, the trade and current count deficits are wiped out.

It is time economic managers looked beyond crisis management and seriously address the basic structural problems of investment\saving, balance of payments and heavy reliance of the federal budget on external resources. Without significant improvement in these crucial areas, breaking the begging bowl will be a pipe dream.


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## Neo

ISLAMABAD, April 10: Prime Minister Shaukat Aziz on Monday said the government is working on a comprehensive plan to tap the tourism potential of the country that includes simplifying visa and other procedures for tourists desiring to visit Northern Areas.

He was talking to Prince Karim Aga Khan, the spiritual leader of Ismaili community, who called on him at the Prime MinisterÃ¢â¬â¢s House.

The prime minister said Pakistan had vast potential in tourism. Necessary facilities are being created to facilitate the tourists and plans are underway for packaging Gandhara and Northern Areas linkages to attract more tourists.

Investment and business opportunities in the country also came under discussion during the meeting.

The prime minister said the numerous investment opportunities had been created as a result of the governmentÃ¢â¬â¢s investor- friendly policies.

In this respect, he referred to the construction of a new airport, which would shortly begin, resumption/initiation of flights to Islamabad by a number of airlines and a host of other factors.

He said there was a vast scope for investment in hotel industry in Islamabad and a number of new hotels were being set up by renowned companies.

Mr Aziz said Islamabad by virtue of its location and scenic beauty had the potential to become a regional tourism hub.

He emphasized the need for promoting inter-civilizational dialogue, saying people belonging to various faiths needed to work harder to promote interfaith harmony to promote peace and prosperity in the world.

He briefed Prince Karim Aga Khan about the governmentÃ¢â¬â¢s plans for rebuilding and rehabilitation of earthquake-affected areas and restoration of roads and other infrastructure.

Prince Karim Aga Khan thanked the prime minister for the governmentÃ¢â¬â¢s assistance and the interest shown by it in setting up of an educational city in Karachi.

The prince said the Aga Khan University expansion was being done and presently academic planning was moving ahead.

He said at least six new graduate schools would be set up in the education city and the university would offer facilities in a wide range of disciplines in science, arts and humanities.

Prince Karim Aga Khan appreciated the investment-friendly policies of the government. He said the Aga Khan Foundation was working on plans to start more ventures in Pakistan.Ã¢â¬âAPP


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## Neo

ISLAMABAD, April 12: Chairman Senate, Mr. Mohammedmian Soomro has said that PakÃ¢â¬âNetherlands friendship is vital for peace, stability, economic growth and prosperity at the global level, an official statement said on Wednesday.
He made this observation at a banquet hosted in his honour of Chairman Senate by the President of the Dutch Senate, Mrs. Timmerman Buck, according to a message received here from The Hague on Wednesday.
The Senate Chairman informed his Dutch counterpart that the democratic institutions were flourishing in the country. He said that the main purpose for the creation of the Senate was to give equal representation to all the federating units. Underlying the need for greater cooperation between the two countries at the Parliamentary level, the Senate Chairman said that such interactions pave the way for strengthening of bilateral relations and the people to people contact. 
He told the Dutch Senate Chief that Pakistan was keen to improve economic & trade ties with Dutch Government and remarked that the people of Pakistan owe a gratitude to their Dutch brethren for making investments in fertilizers, fish processing and pharmaceutical industries.
The President of Dutch Senate, Mrs. Timmerman Buck welcoming the Pakistan Senate delegation expressed satisfaction that Parliamentary cooperation between the two countries was growing steadily.
Earlier, the Senate Chairman and members of the Senate delegation held detailed and fruitful meetings/discussions with Mr. Gerrit Zalm, Vice Premier & Foreign Minister of Holland as well as the Senate Committees for Foreign & Economic Affairs.
Mr. Mohammedmian Soomro stated that bilateral relations between the two countries have traditionally been cordial. He lauded the Dutch Government for playing a very supportive role in European commissionÃ¢â¬â¢s anti dumping.


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## Neo

KARACHI (April 13 2006): In the current financial year, for the first time ever, privatisation receipts from abroad are expected to overtake investment from overseas investors.

According to official projections, around $1.971 billion will be earned by the government due to the change of ownership in existing entities in FY06. This will include $255 million against sale of management stake in KESC; $99.27 million as the last tranche for 51 percent management stake in Habib Bank; $1.1 billion from Etisalat for PTCL; and around $361 million for the ownership sale of Pakistan Steel Mill Limited.

Besides the privatisation receipts, an additional amount of foreign direct investment (FDI) of $1.435 billion by the end of June 2006 is expected. In the first eight months, ie July '05 to February '06 the FDI has already reached $1.149 billion. It was only $597.9 million in the first eight months of FY05. The figure of FDI for 12 months of FY05 stood at $1.162 billion. As such, the rise in direct investment is just under 24 percent over last year.

On the other hand, privatisation receipts between FY05 and FY06 will quadruple to $1.971 billion in FY06 as against $360 million in FY05. Last year, the government received only two payments--$102.96 million from AKFED for HBL and $260 million from Etisalat as down payment for PTCL.

Portfolio investment in FY05 was $162 million. It rose sharply to $471 million in the first eight months of the current financial year. However, due to the high level of volatility in this type of investment, officials estimate some draw-down because of profit taking and portfolio investment is projected to be around $415 million at the end of the financial year. The government expects $56 million outflow under this head of account between March and June 2006.

Portfolio investments are not taken into FDI head but they do form part of the total private investment.

However, privatisation proceeds are traditionally lumped with FDI by the government. Until last year, they constituted a much smaller portion of FDI. In FY03 privatisation accounted for $176 million out of total FDI of $820.3 million, ie 21.5 percent. In FY04 privatisation (on account of HBL's sale) was $198.8 million within FDI amount of $921.7 million (21.5 percent). In FY05 privatisation receipts were slightly higher but still at 27.7 percent of FDI.

Since privatisation proceeds now constitute more than half of FDI, knowledgeable economists want the government to segregate the two heads to get a correct picture of fresh investment. They reiterate that privatisation receipts are not new investment per se but only reflect a change in ownership of existing investment on ground.

These economists also stress that the investment to GDP ratio continues to hover around 17 percent of GDP - which is on the low side. Unless, this ratio touches 23 to 24 percent, they do not see a major breakthrough towards industrialisation. It is emphasised that investment-to-GDP ratio had dropped below 17 percent in FY05 and is likely to be above 17 percent in FY06 but would still be way below the desirable figure of 23 to 24 percent required for creating new jobs to outstrip fresh entrants into the job market. This requires seeking investments both domestically and from overseas in labour-intensive industrial units as well as establishing of mega greenfield projects.

So far, cement manufacturing and auto assembling have received new investment from domestic constituents. Overseas interest has thus far remained confined to oil and gas and telecom. Food processing and agro based industry needs to be targeted, say the experts to bring about the right agro/industrial mix in the economy.


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## Neo

RAWALPINDI (April 13 2006): President General Pervez Musharraf on Wednesday assured full protection to foreign investment, saying foreign entrepreneurs enjoy an equal playing field with local investors amid growing prospects on the back of a vibrant economic growth.

He was speaking to leaders of two multinational mineral exploration companies of Latin American region, who expressed a keen desire to invest in Pakistan.

Highlighting the investment opportunities existing in the country, the president said the foreign entrepreneurs could hold 100 percent equity and have tremendous scope for healthy returns.

"All sectors of the economy are open to foreign investment and the latest figures show that foreign investors see Pakistan as a secure and promising destination for expanding their business," he stated.

President Musharraf noted that Pakistan is endowed with rich natural resources and offers attractive opportunities for their exploration and utilisation for sustaining high economic growth of the country.

He also identified rapidly growing sectors like energy, information technology, telecom, agriculture, small and medium enterprises, mining and exploration as holding great promise.

In this respect, the president noted that all macro economic indicators show positive trends, reinforcing the broad-based economic turnaround the country has achieved in the last few years.

The heads of Latin Companies, Tathyan Copper Company and Antofagasta and Barrick Gal Corporation, said they plan to shortly launch their business in Pakistan in a big way.

The delegates appreciated the consistency of investor-friendly policies and a range of economic reforms introduced in the last five years. They observed that Pakistan's recent economic strides have increased the international confidence manifold in the country's business climate. Minister of State for Petroleum and Natural Resources Naseer Mengal was also present.


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## Neo

FAISALABAD (April 13 2006): The World Bank will provide 'First NWFP Development Policy Credit' of 90 million dollars to contribute to poverty reduction, improving human development and accelerating broad-based, inclusive economic growth through support to the provincial government's medium-term reform programme.

According to World Bank sources, these overarching objectives will be reached through achieving intermediate objectives, which are:

-- Improving service delivery in health and education, focusing on access to and quality of services.

-- Fiscal sustainability and enhanced effectiveness and accountability of expenditures, and improved resource mobilisation.

-- Improved governance with transparency and enhanced accountability in the civil service, public financial management and procurement.

-- Improved administration of multi-tiered government and making local governments more accountable for improved service delivery.

The proposed NWFP DPC-1 is a transition operation that will complete the series of three IDA credits that assisted the government's fiscal reform agenda, and will also commence a new series of IDA support for the government's medium-term reform programme with a strong emphasis on human development and inclusive growth.

The DPC-1 is broad-based, reflecting the multi-sector and crosscutting nature of the provincial government's multi-year provincial reform programme (PRP).

The DPC-I supports the PRP through a disbursement to the government of Pakistan of 90 million dollars (IDA) with the rupee equivalent being on lent to the NWFP government on IDA terms.

The reform programme, launched by DPC-1, will support the following pillars of the government programme:

-- Human development (for progress in education and health indicators).

-- Fiscal reform.

-- Governance reform (focused on financial management, procurement, civil service and administrative devolution).

-- Continued support for private sector development to create sustainable employment opportunities.

The rapid environmental impact assessment undertaken by World Bank staff is that the DPC would have no negative environmental affect and may have beneficial consequences by improving the sustainability of common property management and promoting public sector efficiency.

After a decade of worsening macroeconomic problems, stagnation in the poverty reduction and social indicators and political instability, in 1999 Pakistan embarked on a new course with comprehensive economic and governance reforms, aiming at restoring macroeconomic stability, raising growth rates and reducing poverty.

The Federal reform policies had been supplemented by reforms in several provinces, including NWFP started in 2001, to further make the efforts in poverty reduction.


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## Neo

ISLAMABAD (April 13 2006): Russian oil and gas companies have expressed their keenness to invest in the cross-border pipeline, LNG, oil and gas exploration and upgradation of oilfields.

A five-member delegation from Russian Consortium of Oil and Gas Companies headed by Dr Alexander S. Bornov, Vice President, International Projects of Siburgo and Adviser to the President of International Co-operation of OGIC, called on Petroleum and Natural Resources Minister Amanullah Khan Jadoon on Wednesday and discussed with him investment prospects in the oil and gas sector.

The delegation said that they would mobilise reasonable number of drilling and exploratory rigs, logging equipment, unitary pipeline construction machinery and high calibre professionals to Pakistan shortly.

They also appreciated Pakistan's economic growth, oil and energy's sector development during the last few years. Welcoming the delegation, the minister said that there existed a lot of potential in oil and gas exploration, cross-border pipeline, gas storage, LNG projects, and upgradation of oilfields. The government would welcome the Russian consortium's participation in these activities for the mutual benefit, he said.

As many as 1,467 oil and gas exploratory wells have been drilled in the country with 183 successful discoveries - 51 of oil and 132 of gas. Twenty-six companies are engaged in oil and gas exploration and production activities of which 22 are foreign, the minister added.

Jadoon said that the government offers lucrative incentives to the investors engaged in the oil and gas exploration and production activities, attracting unprecedented investment.

Other members of the Russian delegation included Batyr A. Geldyev, President, ROSS, Russian Federation, Nikolay N. Velikorechin, General Manager, Drilling and Exploration, SIBURGEO, Moscow, Alexander V. Tokarev, Senior Geologist and Drilling Expert, SIBURGEO, Grigory N. Klimenok, Chief Engineer, Pipeline Construction Projects, ROSS, Moscow and Roman B. Geldyev, Senior Design Expert, Oil and Gas Projects, SIBURGEO.


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## Neo

Thursday April 13, 2006 
ISLAMABAD: Prime Minister Shaukat Aziz has said that Pakistan is rich in mineral resources waiting to be tapped by both domestic and foreign investors by bringing in latest techniques and staff-of-the-art technology in this attractive sector. 
The Prime minister said this while talking to the Chairman of two of the worldÃ¢â¬â¢s largest copper and gold mining companies Mr. Jean Paul Luksic of Antofagasta and Mr. Gregory Charles Wilkings of Barrick Gold Corporation who called on him at PM house Tuesday morning. 
Mr. Aziz told the delegation that currently several minings projects are underway in the province of Balochistan for exploring Copper, Lead and Zinc as well as oil & gas. 
He said increase in mining activity in the country would contribute towards increase in economic growth and exports in addition to creating more jobs for the people. 
Mr. Gregory Charles Wilkings, CEO Barrick Gold Corporation told the PM that substantial amount of works need to be done before the challenging project can be built. 
He appreciated the support given by the government and said both the companies would make sure that the project is viable. 
Mr. Jean Paul Luksic, Chairman Antofagasta appreciated the economic policies of the government and said that because of the investor-friendly atmosphere foreign investors are happy to come here. We are looking forward to a long partnership with Pakistan, he said. 
The Prime Minister assured the visitors that the government would help the investors in every way in providing infrastructure, facilities and a level playing field. 
He emphasized the need to hire and train local personnel to work in the project. 
Prime Minister Shaukat Aziz said that logistics chain would be improved throughout the country to facilitate the movement of Cargo. 
He expressed the hope that Gwadar Sea Port would be a hub for the export of mining products from Balochistan and said that building roads and infrastructure linking it with important business places in the country is a major priority for the government. 
When the companies would verified the copper and Gold reserves in the province the government of Balochistan would have 25% share in the investment. 
Minister of State for Petroleum and Natural resources Mr. Naseer Khan Mengal also attended the meeting in addition to senior government officials.


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## Neo

13 April 2006 


ISLAMABAD Ã¢â¬â Japan has fully restored its $400 million annual assistance to Pakistan in order to help complete its mega development projects. 
"Japan's yen loan package of about $400 million annual assistance has been fully resumed which was discontinued in 1998. Japan plans to help complete Pakistan's important development projects including the Indus highway programme", a diplomatic source said.
Pakistan and Japan, he pointed out, have decided to strengthen their existing political and economic ties aimed at fulfilling Islamabad's genuine needs in various fields.
Japan, he said, had recently disbursed $400 million to Pakistan which also included $200 million for the survivors of the October 8, 2005 earthquake. This $200 million assistance for earthquake was mainly a grant and was not the part of yen loan package, he clarified.
Responding to a question, he agreed that Pakistan needed nuclear energy for meeting its 8,800MW of electricity requirements by 2030. But he said Pakistan has limited choices to seek nuclear technology for civilian purposes.
"Pakistan is on a tight and difficult corner", he said adding that China might not be in a position to offer 12 to 15 nuclear power plants to Pakistan as it was busy constructing its own power plants. China, he said, did not have much capacity to extend cooperation to other countries in the field of nuclear technology.
Asked about US-India nuclear deal he, "My advice to Pakistan would be not to make hasty conclusions as it takes long time to get this deal through in the US Congress as well as in the Nuclear Suppliers Group (NSG)".
Japan, he said, was still examining the Indo-US nuclear deal and would comment on it after having all the official details about it. Japan needs details to pass a judgment about this deal.
The good thing about India, the source said, was that it has agreed for the first time that its 14 nuclear power plants out of 22 will be subjected to international safeguards.
"In that sense this deal may help advance the cause of nuclear non-proliferation. But it is a dilemma that the United States signed the deal without India signing the NPT", he said.
To another question, he said that Pakistan will never be able to achieve real development and progress unless it fully concentrated on education. "It is regrettable to have such a low literacy rate in Pakistan," he said adding that it was a fundamental question to promote education without which human development index of the country could not be substantially improved.


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## Neo

13 April 2006 


ISLAMABAD Ã¢â¬â The Asian Development Bank (ADB) will provide close to $4 billion, an all time high development assistance to Pakistan during 2006-08, informed sources said. 
They said that the ADB has expressed its willingness to assist the government in improving the country's weak and old infrastructure in order to help attract sizable local and foreign investment.
The Bank, which provided $15.8 billion as part of the project assistance during 1968 to 2005, sources said, has agreed to make further investment in sectors like energy, agriculture, transport & communication, social sector, governance, finance & trade and rural development.
The government has been advised to put certain effective dent on poverty by drastically improving its public and private sector education. The bank argues that given the poor quality of public sector education, regulatory checks are ill-designed and ineffectively enforced upon by the public and private institutions.
According to a new study got conducted by the ADB, the poor infrastructure particularly in the power sector has increased the cost of growth for firms of all sizes. Poor provision entails high cost, poor quality of service, lack of reliability and corruption in obtaining supplies.
"This reflects the failure of state-owned utility providers to deliver, and is reflected in high levels of line theft and opaque, politically negotiated power tariff rates that significantly distort the growth potential of Small and Medium Enterprises (SMEs)".
The bank believes that infrastructure constraints could be eased through privatisation, unbundling and competition. The success of this policy depends on the government's ability to establish strong, independent and suitably equipped sector- specific regulators. This will require significant investments in capacity building.
"These regulators will then be responsible for the creation, enforcement, and maintenance of a transparent, predicable and fair regulatory structure," the study said.
The bank asserts that the poor performance of the financial and leasing sectors has raised the cost of credit and lease finance for Pakistani firms.
The study also said that the labour regulations are not effectively enforced. Similarly, Pakistan's tax administration and regulatory procedure impose a significant burden on investors. 

http://www.khaleejtimes.com/DisplayArticle.asp?xfile=data/business/2006/April/business_April267.xml&section=business&col=​


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## Neo

*Porsche reveals long-term plans in Pakistan*

*Porsche Middle East & Africa is proud to announce the official launch of Porsche operations in the heart of Pakistan, in the state of the art Porsche Centre Lahore.*



Porsche's all-new Cayman S.

This highly important event coincides with the launch of Porsche's all-new Cayman S in the Pakistani market. Furthermore, a new Porsche showroom will open in Karachi in May 2006 while the Service Centre has already been operational there since January 2006. Porsche's next step in Pakistan will be the relocation to a permanent facility scheduled to take place during 2007. 

Speaking at the event, Deesch Papke, Managing Director of Porsche Middle East and Africa, said: 

'It is rewarding to come back to Pakistan after less than a year and witness the vast progress achieved to date. This temporary facility we are in at present leaves us full of confidence in our partner's ability to present the Porsche brand in Pakistan the way it is meant to be. Launching our latest all-new model here, the Cayman S, only adds to the significance of the occasion. Sales of this brilliant mid-engined coupe around the world are above expectations, a trend we expect to reflect strongly in the Pakistani market.'​
Although sales and service activities have already started, the official launch ceremonies were postponed due to the devastation following the earthquake in Northern Pakistan. However, as promised in August 2005 when the importership was awarded to Autotechnik, the opening date for the temporary facility (Porsche Centre Lahore) took place in the first quarter of 2006. 

Abuzar Bokhari, Chairman of Porsche Centre Lahore & Karachi, Autotechnik Pvt. Ltd., stressed the significance of holding on to previously set targets: 'Meeting targets is one way of assessing a company's professionalism and strong commitment to its business case. From this perspective, it is with utmost pleasure that I present to you the state of the art Porsche Centre in the heart of Pakistan, Lahore. It is with this kind of work that Autotechnik proves its full commitment to spreading Porsche's culture of pure-bred sports car excellence throughout Pakistan.' 

Cayman S will be the first in a series of new Porsche models to hit the Pakistani roads. Soon, the second most powerful road car ever built by Porsche after the Carrera GT, the Cayenne Turbo S, will follow in addition to the legendary new 911 Turbo and 911 GT3 in summer. The latter two cars will brim with many firsts in automotive technology that would guarantee a shattering performance and unrivalled driving pleasure. 

On the other hand, Attique Ahmed, CEO of Porsche Centre Lahore & Karachi, Autotechnik Pvt. Ltd., detailed the progress on ground for Porsche in Pakistan: 'Frantic activity in the past 11 months has resulted in great accomplishments. A Porsche showroom has already opened in Lahore, while another one will open soon in Karachi. Meanwhile, the site for the permanent Porsche Centre Lahore has been secured, while plans for the facility are in the process of being finalized. Currently, Autotechnik employs a staff of highly experienced and competent employees. As usual, training is an integral part of the development program all employees are subjected to.' 

Meanwhile, Porsche Middle East & Africa is on the way to setting a new sales record of at least 4,500 new cars by the end of the current 2005/06 fiscal year. In the first sixth months of this fiscal year sales were once again clearly exceeding the same period of the previous year and our order books are well filled. These figures confirm the strong growth potential of the Middle East region. Porsche will definitely continue to expand regionally in close cooperation with its motivated partners. 

Announcing the official launch of Porsche operations in Pakistan lays the foundations for a true sports car experience like no other. Every Porsche driver deserves the best, and the company's strict corporate identity guidelines, to which every Porsche Centre adheres, definitely guarantee that.


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## Neo

ISLAMABAD (April 14 2006): The World Bank economist Tercan Baysan called on Prime Minister's adviser on Finance Dr Salman Shah and presented to him a report on Pakistan's growth and export competitiveness.

The meeting discussed analysis and various options enumerated in the report to improve technology, skill and various components of value chains in the various sectors.

Welcoming the visiting economist Dr Salman Shah said the government's objective was to improve the GDP growth and sustain it between 7-8 percent.

He emphasised the need to prepare an action plan indicating the benchmarks of various components in the value chain, which need to be improved so as to make better the productivity, competitiveness and reduce the cost of production.

The adviser asked the economist to prepare recommendations for policy and structural changes conducive to improve growth and productivity. Dr Salman Shah added that Pakistan needed skilled professionals to get a competitive edge in export of surplus products over its neighbouring countries


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## Neo

ISLAMABAD (April 14 2006): President Hosny Mubarak of Egypt has extended an invitation to President General Pervez Musharraf to participate in the World Economic Forum to be held in Sharm el-Sheikh from May 20-22.

"President Mubarak is looking forward to welcome President Musharraf in Sharm el-Sheikh", said a press release issued here on Thursday by the Egyptian embassy. More than 1300 statesmen, senior officials, entrepreneurs, investors and media personnel from all over the world are expected to participate in the forum.

During the Forum the participants will hold discussions on peace in the Middle East, situation in Iraq, the role of the United States in the region, the current developments in the Arab World in addition to the role of the European Union in the region.

Moreover, challenges of unemployment and migration will be thoroughly discussed, with special emphasis on the current conditions of Muslim and Arab immigrants in the Europe.

The forum will also address the relation between Islamic thought and democracy, political reform, women empowerment, democracy in the Middle East and the political situation in Israel.-PR


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## Neo

LAHORE (April 14 2006): The 'Business Watch Programme' being launched in the Punjab capital to combat the cases of crime in the markets will be made successful at all cost.

This assurance was held out to the business community by Acting Deputy Inspector General Police, Lahore, Amir Zulifqar while addressing the members of Business Watch Committee, here on Thursday.

LCCI President Mian Shafqat Ali and Senior Vice President Abdul Basit also spoke on this occasion. Expressing a profound sense of optimism about the outcome of the liaison being developed between the Lahore Chamber of Commerce and Industry and the police, he said that this initiative would be as successful as the Citizen Police Liaison Committee (CPLC) working in the port city of Karachi.

He said, though the Business Watch Programme is new thing for Lahorites but such systems are already in place in various countries of the world.

Amir further said that performance of Lahore Police in combating the individual and organised crimes was exemplary despite the lacking resources. He urged the business community to extend full co-operation to the police so that it could be able to weed out the menace of crime. He also promised to hold regular meetings of Business Watch committee to make the Citizen-Police Liaison Programme effective in true sense.

Earlier, the LCCI President Mian Shafqat Ali expressed gratitude to the Inspector General of Police Ziaul Hasan, Additional Inspector General of Police Azhar Hasan Nadeem and DIG Amir Zulfiquar for giving a quick response to LCCI call for formation of Business Watch Committee. He said that from now onward, the business community would work hand in hand with police to eliminate crime from the society.

Speaking on the occasion, the LCCI Senior Vice President Abdul Basit said that formation of Business Watch Committee is a good step and would go a long way in redressing police-related complaints of the business community. He said the step would also bring to the limelight the problems confronted to the police which generally remain out of common man's perception.


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## Neo

RAWALPINDI (April 14 2006): Condemning the Nishtar Park suicide bombing, the Rawalpindi Chamber of Commerce and Industry (RCCI) has termed it a setback to economy and asked the government to ensure law and order in the country.

"Bomb blast in the Eid Miladun Nabi congregation in Karachi has sent wrong signals to investors", said RCCI President Jalil Ahmad Malik, while talking to reporters here on Thursday.


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## Neo

Thursday April 13, 2006 

ISLAMABAD: Prime Minister Shaukat Aziz has said that Pakistan is rich in mineral resources waiting to be tapped by both domestic and foreign investors by bringing in latest techniques and staff-of-the-art technology in this attractive sector. 
The Prime minister said this while talking to the Chairman of two of the worldÃ¢â¬â¢s largest copper and gold mining companies Mr. Jean Paul Luksic of Antofagasta and Mr. Gregory Charles Wilkings of Barrick Gold Corporation who called on him at PM house Tuesday morning. 

Mr. Aziz told the delegation that currently several minings projects are underway in the province of Balochistan for exploring Copper, Lead and Zinc as well as oil & gas. 

He said increase in mining activity in the country would contribute towards increase in economic growth and exports in addition to creating more jobs for the people. 

Mr. Gregory Charles Wilkings, CEO Barrick Gold Corporation told the PM that substantial amount of works need to be done before the challenging project can be built. 

He appreciated the support given by the government and said both the companies would make sure that the project is viable. 

Mr. Jean Paul Luksic, Chairman Antofagasta appreciated the economic policies of the government and said that because of the investor-friendly atmosphere foreign investors are happy to come here. We are looking forward to a long partnership with Pakistan, he said. 

The Prime Minister assured the visitors that the government would help the investors in every way in providing infrastructure, facilities and a level playing field. 

He emphasized the need to hire and train local personnel to work in the project. 

Prime Minister Shaukat Aziz said that logistics chain would be improved throughout the country to facilitate the movement of Cargo. 

He expressed the hope that Gwadar Sea Port would be a hub for the export of mining products from Balochistan and said that building roads and infrastructure linking it with important business places in the country is a major priority for the government. 

When the companies would verified the copper and Gold reserves in the province the government of Balochistan would have 25% share in the investment. 

Minister of State for Petroleum and Natural resources Mr. Naseer Khan Mengal also attended the meeting in addition to senior government officials.


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## Neo

Friday, April 14, 2006 

_By Maryam Hussain _

ISLAMABAD: An inquiry team constituted by Prime Minister Shaukat Aziz to investigate a $100million deal for the purchase of 69 locomotives from China has confirmed that top bosses of Pakistan Railways sanctioned the purchase even though the trains are too heavy for PakistanÃ¢â¬â¢s railway tracks. 

The 3,000-horsepower locomotives weigh 140 tonnes, but local tracks can withstand only up to 132 tonnes of weight and so the trains cannot be operated in Pakistan. 

The deal with the Chinese firms, with suppliers credit of $100 million, was signed when General (r) Javed Ashraf Qazi was railways minister. Another retired general, Saeedul Zafar, was then chairman of Pakistan Railways and secretary at the Ministry of Railways. 

The deal caused uproar in the Senate and after detailed discussions in the Public Accounts Committee, Prime Minister Aziz set up a team to investigate. The prime minister had originally asked former railways minister Dr Hafeez Sheikh to head the investigation team, but he declined. Dr Akram Sheikh, the deputy chairman for planning and development, was then appointed head of the investigating committee. The committee has reportedly finished its report and will soon submit its findings to the prime minister. 

The disclosure that top railways bosses had sanctioned the deal despite the locomotives being unfit for Pakistani rail track came at the second meeting of the inquiry team. Railways Secretary Shakeel Durrani, Finance Member Javed Akthar Sheikh, Locomotives Managing Director Asad Saeed and Finance Ministry officials also attended the meeting. 

According to documents made available to Daily Times, Dr Akram Sheikh was shocked when he was informed that railways bosses had not realised that the locomotives could not work on local tracks. Railways Secretary Durrani informed Sheikh that the Chinese locomotives could operate at a speed of 105-110 km per hour. However, from the operational point of view, this was not feasible since the railways system is not fit for trains operating at high speed.


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## Neo

KARACHI (April 15 2006): The foreign exchange reserves fell by $83 million to reach $12.401 billion in the week ended on April 8, the central bank said on Friday.

Reserves held by the State Bank of Pakistan (SBP) decreased to $10.124 billion from $10.218 billion a week earlier, however, those held by the commercial banks rose to $2.277 billion from $2.266 billion, the State Bank said in a statement. The central bank did not give any reason for the decline.


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## Neo

ISLAMABAD (April 15 2006): During the past nine months of the current fiscal year, Pakistan posted an all-time record $8.62 billion foreign trade deficit, which is almost 8.2 percent of the country's Gross Domestic Product (GDP).

In July-March 2005-06, the country's total imports stood at $20.693 billion, depicting 18.56 percent growth, and exports at $12.073 billion, with 43.24 percent increase over corresponding period of last fiscal year, according to Federal Bureau of Statistics (FBS) on Friday.

The data shows that during the nine months, trade deficit increased by 102.19 percent as compared to $4.263 billion of corresponding period of last fiscal year.

Economists believe that the soaring trade deficit would depreciate the Pak rupee against dollar and other currencies. Local importers' demand for dollars in the coming months would increase to finance their surplus imports, they added.

A large trade deficit is potentially destabilising, as it tends to weaken the rupee as compared to other currencies, they said.

The rise in the trade gap has been attributed to high oil import bill, and rise in the prices of food items, machinery and automobiles.

It is worth mentioning that the government has projected exports at $17 billion and imports at $21 billion, depicting a trade deficit of $4 billion for the FY 2005-06. However, the figures show that trade deficit has surpassed the target by 115.5 percent, or $4.62 billion, in just nine months of the fiscal year.

Independent economic experts say that the trade deficit would cross $10 billion this year. A glance at the trade data shows that consistent rise in the country's imports is disturbing the trade officials, as gap between exports and imports would be much wider than the estimated deficit of $4 billion.

Pakistan's demand for heavy machinery and petroleum products drew in 43.24 percent more imports during these nine months against imports of $14.45 billion recorded during the same period of last fiscal year. However, the exports of Pakistani goods had shown an increase of 18.56 percent against $10.18 billion in the same period.

The burgeoning deficit has put downward pressure on the rupee, which may also contribute to inflationary pressure as Pakistan is paying more for imported goods. It suggests that the value of rupee may still fall to help in narrowing the gap.

The trade bulletin further depicts that during March 2006, exports were worth $1.52 billion, recording an increase of 12.94 percent against exports of $1.35 billion in the same month last year. Imports have been recorded at $2.68 billion during March 2006, which reflected a growth of 25.76 percent as compared to imports of $2.135 billion in March 2005.

The figures show that the trade deficit in March also has widened by $1.164 billion, showing an increase of 47.66 percent against $788.35 million during March 2005.

However, comparing exports of March 2006 with the previous year, the bulletin says it registered an increase of 19.33 percent, which stood at $1.27 billion. The imports during the same month were also up by 21.48 percent as compared to $2.21 billion in February 2005.


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## Neo

ISLAMABAD, April 14: The Economic Coordination Committee of the cabinet on Friday decided to set up a $2-billion mega oil refinery at Khalifa Point in district Hub, Balochistan.

The ECC meeting was presided over by Prime Minister Shakuat Aziz.

The refinery, to be commissioned by 2010, would have a maximum refining capacity of 13 million tons of petroleum products Ã¢â¬â higher than the countryÃ¢â¬â¢s total existing capacity of 12.8 million tons.

The ECC directed the ministry of petroleum and natural resources to award the contract through an international competitive bidding on build, own and operate (BOO) basis.

At present the country consumes 16 million tons of petroleum products, of which 82 per cent requirement is met through imports. Total refining capacity in Pakistan currently stands at 12.8 million tons.

*TRUCKING INDUSTRY: *The ECC approved, in principle, a proposal to rationalise import tariff for the trucking industry in order to overcome shortage of trucks. This would be announced in the next yearÃ¢â¬â¢s budget.

*AUTO INDUSTRY: *The ECC also considered a policy of incentives for new entrants in the auto industry and constituted a committee to review this policy in details. The committee, led by the prime minister and comprising deputy chairman of the Planning Commission, commerce minister, secretary of the industries ministry, minister of state for investment and chairman of the Central Board of Revenue, would take a decision within a week.

*EXTENSION OF LEASE PERIOD:* The ECC allowed an extension of the lease period of mining, production and development of three major fields of Pakistan Petroleum Limited for their full life to get better price during the sale of 51 per cent of its shares.

*IMPORT OF POWER: *The ECC also approved about 67 per cent increase in power tariff for the import of 30mw of electricity from Iran for border areas of Taftan and Mashakhail. Wapda has been importing this electricity at three cents per unit under a three-year contract which has now been increased to five cents per unit.

*INDUSTRY STATUS: *The ECC rejected a proposal of the petroleum ministry for giving the CNG sector an industry status on the ground that the petroleum sector was already under a deregulated regime.

The ECC, however, approved a policy for the import of liquefied natural gas (LNG) which would be announced separately. Interestingly, the government has already issued a no-objection certificate to the Associated Group to begin LNG imports.

The ECC also reviewed the price situation, tax collection and import and exports during the first nine months of the current fiscal year and expressed the hope that the annual inflation target of eight per cent would be achieved.

It also decided to establish multiple vegetable markets in all major cities to break monopoly of the existing markets.


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## Neo

HYDERABAD: The United States Department of Agriculture (USDA)Ã¢â¬â¢s Foreign Agricultural Service has forecast Pakistan will produce 21 million metric tonnes of wheat in the current season, slightly lower than last yearÃ¢â¬â¢s record production of 21.6 million tonnes.
In a report titled Ã¢â¬ËPakistan Grain and Feed Annual Report 2006Ã¢â¬â¢ released in March, the USDA says dry spell during the early growing season and rise in temperature during February may push production slightly below last year.
Regardless of these factors, this yearÃ¢â¬â¢s crop is forecast to be the second largest harvest on record. This is due to increased availability of irrigation water, good management practices and increased application of fertilisers and herbicides.
The forecast of 21 million metric tonnes production assumes no further deterioration in the condition of the crop before harvest scheduled for the second half of March.
The report says increase in fertiliser use is one important factor that will determine the final crop size as consumption of urea and DAP fertiliser will increase by 10 per cent and 4 per cent respectively over last year.
"Pakistan has emerged rapidly from the ravages of a six-year drought. Water available for irrigation this year is 33 per cent more than the corresponding period last year," it said.
Stored water for irrigation is held mainly in two large reservoirs - Tarbela and Mangla - for use during the summer or winter growing season.
About two-thirds of the countryÃ¢â¬â¢s water for irrigation is sourced from snow and glacier melts, with the remainder derived from seasonal monsoon rains.
The report says since the irrigation system was completed in the 1970s, demand has increased by more than 50 per cent while storage capacity has decreased by one-third due to silting. This has left per capita availability at a fraction of its original level.
"As a result, chronic shortfalls in water available for irrigation are expected to impose an increasingly larger constraint on PakistanÃ¢â¬â¢s agricultural advancement."
In Sindh province, the shortage of water is less severe than last year and, since the harvest began early, the crop is in good shape. Ground water in most areas is alkaline and not fit for tube well irrigation, necessitating a greater reliance on canal water, the report says.
In the Punjab province, where extensive tube well irrigation is utilised, it says the crop was generally considered to be in normal condition as of March 9, 2006.
The planting of crop in NWFP and AJK has been affected by the devastating earthquake in October 2005, but as the area hit by this calamity is not part of traditional grain basket the effect on overall production will not be significant, the report says.
The Ministry of Food, Agriculture and Livestock has estimated the country will produce 22 million metric tonnes of wheat in 2006-07 (next season).
Local officials note around 1,000 metric tonnes of wheat and wheat flour is moving across the border to Afghanistan from different points daily. Therefore, 2006-07 consumption estimates have been increased to absorb the cross-border trade with Afghanistan and Iran.


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## Neo

ISLAMABAD, April 14: PakistanÃ¢â¬â¢s import bill is likely to cross $27 billion by the end of the current fiscal year owing to a rise in oil prices in the international market, putting more pressure on foreign exchange reserves.

Official figures released by the Federal Bureau of Statistics here on Friday showed that the import bill reached $20.693 billion in just nine months of the fiscal year 2005-06 as against $14.446 billion in the same period last fiscal year, showing an increase of 43.24 per cent.

With this increase in the import bill, trade deficit soared to $8.620 billion during nine months of this fiscal year as against $4.263 billion in the same period last year, indicating an increase of 102.19 per cent.

Commerce ministry officials told Dawn that the trade deficit would easily cross the $10 billion mark by the end of the current fiscal year as against the projected figure of $4.16 billion announced in the Trade Policy 2005-06. This will be the highest-ever trade deficit in the history of Pakistan.

The import bill in April-June of the fiscal year 2004-05 was $6.27 billion. This means that with an average 30 per cent growth in imports this year over the last year, the import bill is expected to reach $8.151 billion during the April-June period of the current fiscal year. With this the import bill would easily reach $28 billion by the end of the current fiscal year, added the officials.

According to the FBS figure, the trade deficit in March 2006 reached $1.164 billion as against $0.788 billion in the same month last year, an increase of 47.66 per cent.

The trade deficit stood at $1.740 billion in the fiscal year 1999-2000, $1.527 billion in 2000-01, $1.211 billion in 2001-02, $1.2 billion in 2002-03, $3.27 billion in 2003-04 and over $4 billion in the fiscal year 2004-05.

The officials said the high import bill would have a negative impact on the countryÃ¢â¬â¢s forex reserves. As countryÃ¢â¬â¢s exports rose by 18.56 per cent to $12.072 billion in nine months of this fiscal year as against $10.182bn in the same period last fiscal year.

The officials said that balance of payment was likely to be in a better position, as Pakistan raised $800 million from the global debt market by launching a sovereign bond coupled with $500 million received as a part of payment for PTCL from Etisalat. The UAE-based company also made another payment of $640 million recently.

The officials said that despite huge inflows privatization proceeds and foreign direct and portfolio investment, Pakistan would face a current account deficit of over $6 billion because of soaring trade deficit.


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## Neo

LAHORE, April 14: Pakistan has set a new record of kinno export this season by sending out over 150,000 tons so far, and the process still continues.

According to latest export figures by the Pakistan Horticulture Development & Export Board (PHDEB), the kinno exports had already broken the previous yearÃ¢â¬â¢s record of 149,000 tons.

Shamoon Sadiq, an official at PHDEB, told Dawn that it had been done without Indonesia, which has been our traditional market and alone uses to consume some 40 per cent of Pakistan citrus exports. The Indonesian authorities had raised duty on Pakistani citrus by 20 per cent and drove it out of the local market. Had the Indonesian market still available, the exports could have easily touched 250,000 tons.

Pakistan, he said, still has two more weeks of international monopoly in citrus and should be able to increase the figure substantially.

The exporters, however, contested the official figures and claimed that citrus export in fact had crossed 200,000 tons mark. Export to Central Asian States and other neighbouring countries skip normal customs procedures and are not reflected in official figures.

Ã¢â¬ÅIf those exports are also taken into account the export figure has already crossed the governmentÃ¢â¬â¢s target of 200,000 for the year. The PHDEB figures based on customs data, which are not comprehensive,Ã¢â¬Â says an exporter.

According to official figures, Russia had been the biggest buyer of Pakistan citrus this season by importing over 31,000 tons till April 1. It was followed by the UAE with around 30,000 tons and the Philippines with 16,795 tons. Iran, which resumes kinno imports from Pakistan after 25 years, bought 18,637 tons and more deals were in process. Indonesia had imported only 6,495 tons and Saudi Arabia 11,792 tons.

The momentum for kinno export has now been set, claimed Shamoon Sadiq. Ã¢â¬ÅChina has also recently cleared seven Pakistani companies for citrus export and so has been done by the Philippines. The government is also negotiating Early Harvest Programme with the Indonesian authorities and hopefully good news may be heard soon,Ã¢â¬Â he added.

Citrus remains key in talks with Indonesia and from next year the Iranian market would expand further. All these trends show that citrus exports are well set on their way to grow, he said. If everything goes well, the country would be able to touch a figure of 250,000 tons next year, he added.

He further said that the board was now concentrating on mango, which has more issues to tackle if exports of fruit are to grow. Ã¢â¬ÅThe main problem is that of shelf life, which is hardly of two weeks and exporters are unable to send mango by sea and air journey becomes too costly and render the fruit uncompetitive.Ã¢â¬Â

The board was now fully concentrating on increasing shelf life of mango. Ã¢â¬ÅExperiments are being conducted in post-harvest handling and other possible areas. If scientists are able to increase the shelf life of mango by another week, it would be a big economic relief to exporters. Some of these experiments have succeeded and hopefully things would start improving in a while,Ã¢â¬Â he concluded.


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## Neo

Saturday, April 15, 2006

_By Fida Hussain_

ISLAMABAD: The inauguration of China-financed Gwadar Port has been planned in June this year. 

The government is giving final touches to arrangements for inauguration of the port that will usher in a new era of economic prosperity for the country, Minister for Ports and Shipping Babar Khan Ghauri told the Daily Times. 

Ã¢â¬ÅThe Gwadar deep-sea port will be inaugurated most likely in June. The exact date will be fixed the next month or early June,Ã¢â¬Â said the minister. 

Before the inauguration, the government is also likely to finalize the leasing of Gwadar Port operations to the successful bidder. A senior government official, who asked not to be named, said that apart from other companies a well-known Dubai-based company is interested in getting the contract for ports operations at Gwadar. 

According to the official, the government is also interested in engaging the Dubai-based firm in Gwadar operations for that is considered to be beneficial in a sense that the same company is equipped with better understanding of operating the worldÃ¢â¬â¢s busy ports. The government and the Dubai-based company had some informal negotiations on the subject. 

China, which is the major financial contributor in the construction of Gwadar Port, is keen that some Chinese company should have the rights of operating the new port, the official said. 

However, Mr Ghauri denied that the government had held informal talks with any company on granting the operationsÃ¢â¬â¢ contract. The company to be awarded the contract will definitely be a successful one among the bidders. Several companies have submitted their bids and they will be opened in free, fair and transparent manner. Media organizations will be invited for the same, he added. 

The minister, however, admitted that some companies from the United Arab Emirates are taking part in bidding for the Gwadar port operations. But, at the same time, he also said that there are also a number of Chinese companies in the competition. The minister declined to give the exact number of companies, both local and foreign, which are aspiring to get the contract for the portÃ¢â¬â¢s operations. 

The Gwadar Port inauguration had been delayed in the past due to deteriorating law and order in Balochistan. However, the government this time is serious about doing business, the official said. According to the official, President General Pervez Musharraf is keen to inaugurate the port by the time next general elections. 

Pakistan identified Gwadar as a port site in 1964. 

However, it was only in 2001 that significant steps towards making the proposal a reality were taken, when China agreed to participate in the construction and development of the deep-sea port. In March 2002, Chinese vice premier Wu Bangguo, with General Pervez Musharaf, laid the foundation for Gwadar Port.

The credit goes to General Pervez Musharraf for commencement of work on Gwadar Port. And that is why the government is keen to inaugurate the port, which will be a historical turnaround for the countryÃ¢â¬â¢s economic progress, the official said.


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## Neo

THE report about the discovery of huge gold and copper deposits in the Rekodiq area in Balochistan is a matter of joy mixed with political concern because of the current situation in the province. First discovered by the Geological Survey of Pakistan in collaboration with an Australian firm in the last decade, the deposits have been estimated at 20 million ounces of gold and two billion tons of copper. At current market rates, this amounts to $65 billion, which is more than half of PakistanÃ¢â¬â¢s GDP. The project needs an initial investment of one billion dollars, but, when completed, it will produce 200,000 tons of copper and 400,000 ounces of gold annually, the yearly contribution to the economy coming to $1.25 billion. By any standards, this is a major discovery and makes the Rekodiq area one of the worldÃ¢â¬â¢s top seven copper reserves.

Pakistan, especially Balochistan, is rich in minerals of all kinds, including oil and gas at a time this countryÃ¢â¬â¢s energy requirements are growing fast. But unfortunately we have not succeeded in tapping even a small proportion of this hidden wealth. The problem is especially acute in Balochistan where its mineral resources have to be seen against the background of the political trouble in that province. The sabotage of gas pipelines is now a daily affair and goes to show how little some sections of our people care about the countryÃ¢â¬â¢s natural wealth. Countries like Japan and Israel do not have any minerals at all but they have made use of their human resources to achieve a high level of affluence and prosperity. While we have not paid much attention to education, we show little regard for natureÃ¢â¬â¢s blessings and go about blowing up our natural resources. One hopes the project will get going by 2010 and that it is the Baloch who will be given preference for the thousands of jobs it will generate. This also calls for a sincere dialogue between the government and Baloch leaders to ensure that, while the Baloch peopleÃ¢â¬â¢s just grievances are addressed, no quarter is given to the terrorists who blow up gas pipelines or bomb railway tracks and power stations.


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## Neo

ISLAMABAD (April 15 2006): The first meeting of the newly formed Pak-China Energy Forum will be held here from April 25 to 26 to devise out long-term energy co-operation between the two countries.

The official sources in the Petroleum and Natural Resources Ministry told _Business Recorder _here on Thursday that a Chinese delegation was expected in the third week of April. Petroleum and Natural Resources Secretary Ahmed Waqar will lead the Pakistani side during the meeting.

They would discuss at length all the avenues of co-operation, including nuclear, power, coal, mining, development, power generation, alternative sources and hydrocarbon exploration, they added.

They would deliberate upon constructing a strategic pipeline from Gwadar to its borders enabling it to import oil from Saudi Arabia, the official said.

Chinese expertise for constructing mega dams like Bhasha would also be discussed, the sources said.

In addition, the high profile officials from both the sides would also discuss co-operation in other sectors like agriculture and health, etc, they maintained.

China had shown interest in the privatisation of power distribution companies (Discos), the sources said, adding that besides power sector, they were also keen in the privatisation of energy entities like Sui Southern Gas Company Limited and Sui Northern Gas Pipelines.

President Musharraf in his recent visit to China had offered a "Trade Corridor" to get more access to the Central Asian States and he (President) is also scheduled to visit China again in June.


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## Neo

ISLAMABAD (April 16 2006): President General Pervez Musharraf and Saudi Prince Sultan bin Abdul Aziz on Saturday held wide-ranging talks at Aiwan-e-Sadr here, focusing particularly on expanding bilateral economic and trade relations.

The two leaders also exchanged views on regional and international issues of common concern, including counter-terrorism, conflict resolution, situation in Afghanistan, Iraq, Palestinian question, Iranian nuclear issue, OIC reform and the Kashmir dispute.Welcoming the Saudi Prince, the President said that Pakistan and Saudi Arabia were bound in indelible bonds of friendship, rooted in religion, culture and history.

"These relations will continue to grow, and I am fully confident that the business communities of the two countries would be able to explore new avenues for commerce, joint ventures and investment to further cement the excellent and broad-based ties between the two countries," the President said.

Identifying energy, refinery, infrastructure, food processing as some of the most potential areas for Saudi investment in Pakistan, he said that the country would facilitate entrepreneurs from Saudi Arabia and offer level playing field to them.

The two leaders also discussed defence co-operation. Musharraf thanked the Saudi government and people for extending assistance to Pakistan in the aftermath of last October's earthquake catastrophe and expressed hope for continued commitment.

Saudi Arabia has pledged $573 million in assistance for Pakistan's relief, reconstruction and rehabilitation efforts in the quake zone. "We look forward to more economic opportunities for Pakistan's skilled workforce in Saudi Arabia, especially from the quake-hit areas," he said.

The President discussed Pakistan-India relations and efforts for an early and peaceful resolution of the Kashmir dispute. The Crown Prince appreciated Pakistan's efforts in this respect and hoped for a successful outcome of these endeavours.

The two leaders also exchanged views on reform of the Organisation of Islamic Conference with a view to enabling it to lead the Muslim world to durable socio-economic progress and pull it out of its current turmoil.

In this regard, Musharraf particularly underlined the importance of enhancing intra-OIC trade, and said that a sustained focus on the issue through a dedicated department at the organisation could be greatly helpful.

"Pakistan believes that the way forward lies in greater trade and economic co-operation. Blessed with natural resources, the OIC countries can certainly supplement and complement each other's economies for the collective wellbeing of their people."

The Saudi Prince said that Riyadh views President Musharraf's efforts and initiatives for reorganisation of the OIC with great admiration. He particularly praised the Pakistani leader's vision of enlightened moderation, aimed at wellbeing.

Discussing counter-terrorism co-operation, the two leaders vowed to work together for efforts aimed at resolution of political disputes affecting the Muslims and promotion of inter-faith harmony for lasting peace, development and security in the world.

While Speaking at a banquet hosted in honour of Sultan bin Abdul Aziz, the two leaders pledged to impart further depth and strength to Pakistan and Saudi Arabia's multi-faceted relationship.

Prime Minister Shaukat Aziz, members of federal cabinet, services chiefs, foreign diplomats, notable citizens and senior officials attended the banquet.

In his speech, the President said Pakistan is for further expanding its economic and political ties with Saudi Arabia by taking the trade and commerce ties to new heights.

Musharraf expressed the hope that visit of the Crown Prince, following the visit of King Abdullah bin Abdul Aziz, would further cement strong brotherly relations between the two countries.

"Pakistan greatly cherishes its brotherly ties with the Kingdom of Saudi Arabia and has great respect for the efforts of Saudi leadership for the emancipation of the Muslim Ummah and also towards bringing peace and stability in the region," the President said.

Pakistan, Musharraf said, fully stands with King Abdullah and is supportive and committed to his efforts towards bringing peace and harmony in the region.

The Crown Prince, in his speech, said the Kingdom wishes continued development of Pakistan and added that King Abdullah greatly appreciates the Pakistani leadership and people for their recent economic strides.

The Saudi leadership, he said, is determined to further promote ties with Pakistan in all spheres, including cultural, economic, commercial and political.


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## Neo

ISLAMABAD (April 16 2006): A 10-member Mission of Official Development Assistance (ODA) from Japan led by Director Economic Co-operation Bureau of Foreign Office, Koichi Aiboshi held a meeting with Dr Salman Shah, Adviser to the Prime Minister on Finance and Economic Affairs, here on Saturday.

The Japanese mission is visiting Pakistan for consultation with the authorities and to speed up the process of project financing after the resumption of yen loan to Pakistan.

Appreciating the revival of yen loan and grant assistance for the relief and reconstruction efforts of earthquake-hit areas, Dr Salman gave an overview of improved macroeconomic indicators which the Adviser said were due to structural changes and policy reforms agenda of the government.

Dr Salman mentioned that ODA programme fits in Pakistan's development strategy.

The growth trajectory of the country's economy has shown significant progress despite tremendous international and domestic challenges, he said, adding the FDI has gained momentum, GDP growth is maintaining robust upward trends, budget deficit is reduced, tax collection is increasing, domestic and external debt is declining, exports are on the increase and services sector has improved.

Referring to the long-term strategy, the Adviser said that in order to achieve sustainable higher growth and to improve productivity we have increased the investment for human resource development, higher education, technical and vocational training and are focusing to build infrastructure, water reservoirs, highways, communications network and supply chain etc. Referring to the privatisation programme, the Adviser stated that there are 10 to 15 billion dollars of assets that will be privatised in the next five years.

The Japanese delegation remarked that they were happy to note that Pakistan's economy was booming and assured availability of yen loan to Pakistan for viable projects in key sectors like roads, water, power generation and distribution etc.


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## Neo

HYDERABAD: The United States Department of Agriculture (USDA) - Foreign Agricultural Service - foresees the rice production for 2006-07 at 5.2 million metric tonnes (MMT) based on expected improvement in yields and expanded sowing of Irri rice.In 2005-06, Basmati production totalled 2.55 MMT, (up 2,000 tonnes over the previous year) and Irri production totalled 2.9 MMT (up 199,000 tonnes over the previous year).
In a report titled Ã¢â¬ËPakistan Grain and Feed Annual Report 2006Ã¢â¬â¢, available with The News, said that during 2005-06 a record production was achieved, as during the year water availability was 46 per cent more as compared to the last year.
Water availability during the critical March-May period will depend on the amount of precipitation in the catchment areas. If a cut in water distribution during this period occurs, the effect would be more pronounced on the IRRI rice acreage than the Basmati. The IRRI rice generally is grown in areas that rely heavily on canal irrigation, while Basmati is grown in areas employing large-scale tubewell irrigation.
Based on the source of the water input and current water availability situation, both types of rice are expected to be sown on time.
Since 2000, the government discontinued setting a procurement price for paddy and milled rice, and abandoned rice procurement through state trading enterprises.
Rice consumption is increasing slowly as compared to that for wheat. About 50 per cent of the crop is destined for local consumption while the remaining is exported.
The government does not maintain official grade standards for rice. Annually an estimated 150,000 metric tonnes, 40-100 per cent broken is used in poultry feed.
Pakistan is a major exporter of rice and 2006-07 export volume is projected at 2.4 MMT, consisting 0.8 MMT of Basmati and 1.6 MMT of IRRI rice varieties. All trade is conducted by the private sector, as the state owned Rice Export Corporation was abolished in early 90Ã¢â¬â¢s.
Today, another state trading agency, the Trading Corporation of Pakistan (TCP), plays a limited role in the rice trade by facilitating government-to-government exports through the private sector.
The GOP, in consultation with the Rice Exporters Association of Pakistan (REAP), established a quality review committee to certify the quality of Pakistani rice prior to shipment in an effort to boost the image of Pakistani rice, especially that of Basmati rice.
Based on preliminary figures, in 2005 Pakistan exported 814,857 MT (812,507 MT in 2004) of Basmati rice and 207,639,6 MT of IRRI rice. The increase in rice trade (mainly in coarse rice) is 58 per cent as compared to the last year. This increase is mainly due to increase in production and favorable market conditions.
During 2005-06 ending stocks are projected to marginally decrease due to increase in exports and all stocks are held by the private sector and are in small lots.
It said that there is no restriction on rice exports and for rice imports there is 10 per cent import duty and 15 per cent sales tax.


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## Neo

Sunday, April 16, 2006javascript:; 
_By Arshad Hussain_

KARACHI: Industrial production and exports of the country suffered a huge loss of more than Rs seven billion because of the three-day shutdown in Karachi, industry experts said. 

They said such incidents prove disastrous for the countryÃ¢â¬â¢s exports. Ã¢â¬ÅPakistanÃ¢â¬â¢s industry is already finding it difficult to get orders from foreign buyers owing to the law and order situation in Karachi,Ã¢â¬Â said Khalid Ferooz Arfeen, president of the Karachi Chamber of Commerce and Industry (KCCI). Ã¢â¬ÅIf these kinds of incidents were not stopped in future, no foreign buyers would sign contract with this country.Ã¢â¬Â 

After the bomb blast on Tuesday night, in which 47 people were killed and another 50 were seriously injured, Karachi faced a shutdown on three consecutive days on April 12,13,14. Both commercial and industrial activity suffered badly in these three days.

This time the main reason behind the losses suffered by the industrial and exports sector was the closure of petrol pumps, market experts said.

Ã¢â¬ÅWe have seen the closure of all the petrol pump first time in Karachi during disturbances,Ã¢â¬Â said Gulzar Feroz, chairman of the Korangi Association of Trade and Industrial.

More than 200,000 workers work in over 2,000 units in KATI area, where 30-40 per cent are export-oriented units.

He said on the three days only 25 percent workers could turn up for work. Most workers and other employees said they could not come as public transport was unavailable and those who had their own conveyance said fuel was not available as petrol stations were closed. 

According to sources, the Sindh government had issued a direction to the petrol pump association in Karachi to keep their pumps closed till normality was restored. The order was issued on TuesdayÃ¢â¬â¢s night when around three petrol pumps were set on fire on M A Jinnah Road.

Industrialists said they were not able even to shift the manufactured goods to the ports because of unavailability of petrol. Export shipments could not be executed in the absence of transport.

There were hardly any production and it can be considered a complete shutdown of industrial activity in the area, said a Khalid Arfeen. Ã¢â¬Å After this incident, we have gone back around one year in business and trade, he added.

In the local industries, above 400,000 workers are on daily wages, who are the real affectees of this incident. They get wages on a daily basis who sit on the sidelines of the main roads, also lost their earnings due to complete shutdown. Ã¢â¬ÅPer day industrial losses in terms of taxes and duties and other charges are around Rs 2 billion in Karachi, the KCCI president said. Almost 65 percent industries are located in the SITE area.

Exporters suffered losses for not meeting timely shipments due to unavailability of trucks and containers. 

A businessman told the Daily Times that the banks were not opening letters of credit, as they had no sufficient staff. In the three days, the banks opened, but they also faced shortage of employees.

An official of the SITE Association of Industry said almost 95 percent of its industries remained closed from Wednesday to Friday. It means that there was no production in the industrial area.

Industrialists demanded of the government not to order closure of petrol pumps after such incidents in future as almost 75 percent workers used their own transports to travel to factories.


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## Neo

Technology in general, and Information Technology (IT) in particular, has over the last few decades changed the world unalterably. It has changed people's behaviour and thought patterns. It has changed the way people work, live their daily lives and deal with each other. Some of these technologies did not even exist a few years ago, but today we cannot imagine a life without the gadgets that have become an inseparable part of our daily existence.
One of the key areas that Information Technology has deeply impacted is business. It has totally transformed the business world - both in form and substance. IT is being employed in business in two ways. One, IT is being used to support and improve existing systems. Two, IT itself is now being developed and practiced as a core business. In this article, I will focus on the latter.
Information Technology has totally transformed the business landscape. It has introduced new business models, modified the business environment and even changed the nature of competition. It has converted our society into information or a knowledge-based one. The overall impact of IT business on a nation's economy is tremendous.
The capital needed to start up an IT company is not very large as compared to that for setting up conventional industries. Take the examples of Yahoo, Google, eBay, etc. They started small but soon made it big thanks to their innovative and dynamic approach to meeting their clients' needs. It is actually the intellectual capital that matters in the IT world. IT helps streamline and improve business processes, production and marketing techniques. There is no end to innovation, for the moment you cease to be creative, you are left behind.
Information Technology has helped evolve new business strategies. One of the new strategies in the internet world is to create a product and make it available for free, gradually building up a big loyal users base, and then use advertisements or premium services for earning revenues. 
Information Technology is a great challenge as well as an opportunity for the developing economies to move forward faster to make up for the lost time. IT can be used as a bridge to narrow the gap between the developing economies and developed economies. IT can help businesses to streamline, modernise and innovate and thus reduce the cost of production and marketing to earn more profits. But first we have to understand how a developing economy can take advantage of this unique and ever evolving technology. To illustrate the point I will take up the case of Pakistan.
How can we harness Information Technology to quicken the pace of development in Pakistan? Three most important areas demanding urgent attention in this connection are: quality of education, IT policies framed by the government and the country's international image.
Lack of a strong national education base is the biggest hurdle to the growth of the IT industry in Pakistan. Leaving aside a few expensive schools catering to the needs of the urban rich, Pakistan's outdated and decadent education system is not producing the kind of quality manpower needed for a knowledge-based discipline like IT. 
Most of our universities fail to meet the minimum quality standards and churn out, year after year, half-educated and semi-skilled graduates and post-graduates most of whom are unable to fill any slot in the job market. By comparison, those countries, which are doing well in the IT sector, have a highly developed educational infrastructure. If we want our IT industry to thrive we must create an enabling environment in the educational sector, and the sooner we do it the better for the country. 
The abysmal state of affairs in the education sector is reflected in the stunted growth of the IT industry in Pakistan. According to Pakistan Software Export Board (PSEB), the number of IT professionals in Pakistan during 2004-05 was 75,000. The number of IT graduates produced in Pakistan every year is 5500, out of whom hardly 10 per cent measure up to international quality requirements. By contrast, about 120,000 high quality IT professionals graduate from Indian universities every year, while the number of IT software and services professionals is close to a million. During FY 2004-05 the IT industry in India generated total revenue of $ 28 billion out of which exports were worth $ 17.9 billion. On the other hand, IT enabled services export from Pakistan during 2004-05 was a paltry $ 48.5 million.
The example of India and China proves that an enabling environment, which includes a strong education base and the right mix of policies, can play a key role in advancing the cause of the IT industry. In the case of IT industry not only did Pakistan made a late, halting start, but subsequent policy making too has suffered from lack of consistency and a strategic vision. 
As in other departments of life, here too a policy of ad-hocism has reigned supreme. Plans have been patchy and implementation of IT policies hesitant and sketchy. No wonder, results have fallen far short of the targets. Institutional weaknesses notwithstanding, there is no dearth of computing talent in the country. Pakistanis in their individual capacities have done exceedingly well in the IT field in USA and Europe. What we urgently need is a coherent policy framework which takes into account both the strengths and weaknesses of our present situation and chalks out a realistic path for our IT professionals to follow and prove themselves both at the national and international levels.
Last but not the least is the problem of our image abroad. I know from personal experience how foreign clients, alarmed by Pakistan's law and order situation, hesitate to award contracts to our IT companies which otherwise offer highly competitive bids. And if a contract is awarded, they remain fearful about the delivery of work on schedule. It cannot be emphasized too much that no amount of education and policy reforms can produce the desired results unless this aspect of the situation is taken care of on war footing. 
Information Technology is a huge opportunity for a developing country like Pakistan to overcome the economic backlog of previous decades. We should not let it go waste. It is not yet too late to plan ahead with an eye to our long term goal of building a modern and enlightened society in Pakistan.
The writer is an IT professional.


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## Neo

ISLAMABAD (April 17 2006): Prime Minister Shaukat Aziz on Sunday said Pakistan and Saudi Arabia are strategic partners and the visit of Prince Sultan Bin Abdul Aziz Al-Saud will further consolidate the unique relationship and bolster collaboration in all areas including economy, trade and investment, defence, security and education.

He was talking to the Saudi Crown Prince at the Prime Minister House.

The two leaders held a one on one meeting for thirty minutes and were later joined by members of Saudi and Pakistani delegations, comprising federal ministers and senior officials.

The two leaders discussed the avenues available for the expansion of bilateral ties. They also exchanged views on regional and global developments and issues concerning Ummah.

Shaukat Aziz said, "Pakistan and Saudi Arabia are bound in religious, emotional, historical and cultural ties."

The visit of Prince Sultan will impart further depth to the strategic relationship enjoyed by the two countries, he added.

The Prime Minister emphasised the need to promote interfaith, inter-civilisation dialogue to ensure better understanding between the Muslim World and the West.

Observing that Islam is a religion of peace, brotherhood and compassion and teaches moderation and tolerance, he said it is misunderstood in many parts of the world.

Shaukat Aziz said Muslims need to work harder to project Islam in its true perspective.

The Prime Minister said Muslims should forge more unity in their ranks. He said the Organisation of Islamic Conference should be strengthened to respond to the challenges faced by the Ummah.

Briefing the Crown Prince about the economic recovery achieved by Pakistan during the last six years, the Prime Minister said that the reform agenda of the government was broad-based and multifaceted.

Shaukat Aziz said the success of economic reforms, consistency of policies, an investment-friendly environment and transparency in policies and procedures have restored the confidence of investors, and investment today is all times high.

The Prime Minister said it is heartening to note the keen interest taken by Saudi investors in privatisation programme and more Saudi businessmen are looking for opportunities to invest in Pakistan.

He particularly mentioned investment by Al-Tuwairiqi Group to set up a steel mill in Karachi and Jamaih Holding's participation in the KESC sell-off.

Shaukat Aziz while talking of investment, opportunities, mentioned Pakistan's plans to set up a coastal oil refinery near Karachi and Gwadar as one of the potential areas for Saudi investment.

Briefing the Saudi Crown Prince about peace and stability in the region, the Prime Minister said Pakistan is a peace-loving country and is acting as an anchor of peace in the region.

He said, "It is pursuing a policy of peace with its neighbours" adding that only peace will bring progress and prosperity in the region.

He thanked Saudi Arabia for the interest shown by King Abdullah Bin Aziz for the resolution of Kashmir issue.

The Prime Minister said Pakistan is committed to the process of composite dialogue with India.

He said, "Sustainable peace will be possible only after the resolution of all outstanding issues between India and Pakistan including solution of the core issue of Kashmir, acceptable to Pakistan, India and the people of Kashmir.

Regarding Afghanistan, he said Pakistan desires to see peace, stability and prosperity in Afghanistan, which is also in the interest of Pakistan.

The Prime Minister expressed gratitude to the people and government of Saudi Arabia for their prompt and generous financial and medical support in the aftermath of October 8, earthquake.

Prince Sultan during the talks said Saudi Arabia considers Pakistan a very special friend and an important country of Muslim world.

He said the relationship is rare among the two nations and is based on firm basis of common faith and similarity of views on all important international issues.

He fully agreed with the Prime Minister on the need of promoting interfaith dialogue to create a better understanding of Islam in the world.

The Crown Prince appreciated the economic progress made by Pakistan and said Pakistan's policies have generated interest in Saudi investors and more companies are interested in starting joint ventures with Pakistani companies.

He invited Shaukat Aziz to visit Saudi Arabia to meet investors and said that they should take advantage of Pakistan's growing economy particularly by investing in real estate, IT & telecom, tourism, banking, agriculture and the services sector.

The Crown Prince said Saudi Arabia wants to see development and prosperity in Palestine.

Referring to the success of Hamas in elections, he said, the international community should respect the verdict given by Palestinians in favour of Hamas.

The two leaders also discussed the situation in Iraq and hoped for peace there. Exchanging views on Iran they hoped for a diplomatic solution of Iranian nuclear issue.

The meeting was attended among others by Senior Minister for Defence, Minister for Foreign Affairs, Minister for Interior, Minister for Labour & Manpower Minister for Defence Production, Pakistan's ambassador in Saudi Arabia, Saudi Ambassador in Pakistan, members of the Saudi delegation and senior officials.

Pakistan and Saudi Arabia while reaffirming their commitment to continue fight against terrorism termed it a threat to all faiths and societies and urged addressing the root-causes to achieve a lasting solution.

The unanimity of views was expressed by the Prime Minister Shaukat Aziz and the Saudi Crown Prince at a luncheon later hosted at the PM House.

The two leaders strongly condemned all forms of terrorism and extremism and vowed to continue their struggle against the menaces.

Moreover, according to a statement issued following the visit of the Crown Prince both the countries agreed on the need to foster better understanding and harmony among diverse faith through interfaith and inter-civilisation dialogue.

Prince Sultan Bin Abdul Aziz Al-Saud paid a two-day visit to Pakistan at the invitation extended by the Prime Minister Shaukat Aziz.

President General Pervez Musharraf and Prime Minister Shaukat Aziz conveyed the gratitude of the government and people of Pakistan for the generous relief assistance provided by the Kingdom to the earthquake victims. It included a continuous supply of relief goods and a financial pledge of $573 million for the reconstruction and rehabilitation operation.

Pakistani leadership held comprehensive and wide-ranging discussions with the Crown Prince.

At the official talks, views were exchanged between the two sides on a broad spectrum of bilateral as well as regional and international issues.

They agreed to further intensify their bilateral relations, specifically in the economic, commercial, investment and defence areas.

On the Middle East peace process, the two sides emphasised the need for the creation of an independent Palestinian state in accordance with the wishes of the Palestinians.

They expressed their concern and anguish over the deteriorating security situation in Iraq and the sufferings of the Iraqi people.

On Iran's nuclear issue, the two sides expressed the hope that the matter would be resolved through peaceful negotiations.

The Pakistan leadership briefed the Crown Prince on the process of confidence building between Pakistan and India.

They underlined Pakistan government's resolve to settle all outstanding disputes between the two countries including the long-standing issue of Jammu and Kashmir through peaceful means.

It was also explained to Prince Sultan that a secure and stable Afghanistan on Pakistan's western borders was of its vital interest.

The two sides expressed the hope that the visit of the Crown Prince would further strengthen the brotherly relations between the two countries.

Later, Prince Sultan Bin Abdul Aziz Al-Saud left here for Saudi Arabia in the evening.

He was given a warm send-off at Islamabad International Airport and was seen off by Prime Minister Shaukat Aziz. Defence Minister Rao Sikandar Iqbal, services chiefs and other senior officials were also present on the occasion.


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## Neo

KARACHI (April 17 2006): The automobile industry witnessed yet another month of extraordinary performance, posting sharp improvement in production and sales figures in all categories in March 2006.

Customised nature of auto financing by banks on soft and easy terms, coupled with introduction of new brand of cars by the locals, and reduction in premium on cars have paved the way towards an unimaginable growth in the sector. All these factors resulted in a jump of 29 percent and 26 percent in the overall local production and sales of cars to 112,478 units and 111,155 units, respectively.

Production and sales figure of tractor manufacturers also shot up by 16 percent and 22 percent to 36,383 units and 33,305 units, respectively. Almost a cent percent rise in the production of trucks was registered as the manufacturers anticipated its demand to rise on the back of a surge in the road trade and better relations of Pakistan with its neighbours and provisioning of food rations to remote earthquake affected areas. The influx of more and more second-hand buses under different schemes continued to submerge the local bus manufacturers.

"As the budget-making process sets in motion, the local automobile assemblers feel panicked over the proposed government's decision of duty withdrawal on import of CKD and CBU," Hettish Karmani, research analyst at Atlas Investment Bank said. The auto assemblers fear that the proposed policy would discourage new investment, create unemployment and would hamper expansion of their business. Also causing them worry is the increased imports of reconditioned cars and buses under the gift and transfer of residence scheme.

According to industry sources, the Engineering Development Board (EDB), along with the customs department, vendors and auto-assemblers have worked out a comprehensive tariff regime to be applicable on import of parts and accessories for automobiles. In the meeting it was decided to move away from a penalty-driven localisation policy, to a policy which would give incentives for local value-addition and export of auto-parts and completely built units (CBUs) from Pakistan.

In the proposed new policy, any new entrant who introduces new models, or if the original equipment manufacturers (OEM) bring new platform, they will have the relaxation on the localisation by way of import of 100 percent CKD at the CKD duty rate as an incentive for three years, after which, TBS will apply. As a consequence, in the absence of any reward for localisation, the new entrant will continue with a strategy of least localisation for three years, and may subsequently phase out the model. Such policy negates the basic premise of Tariff Based System, which is transparency and uniform application of rules.

Hettish said that after witnessing phenomenal growth in the demand and production of automobiles in Pakistan during the last few years because of ultra-liberal bank loans and lease, a considerable number of investors (foreign and local) who too are keen to grab a share from the growing market have entered the industry. Porsche and Rolls Royce, to say, are the initiators. Porsche returns to Pakistan after less than a year.

Porsche, 'Cayman's' would be the first in a series of new Porsche models to hit the Pakistani roads. Soon the second-most powerful road car ever built by Porsche after the Carrera GT, the Cayenne Turbo S, will follow in addition to the legendary new 911 Turbo and 911 GT3 in summer of 2006.

Porsche's next step in Pakistan will be relocation to a permanent facility scheduled to take place during 2007. Rolls Royce has signed its pact with Dewan Motors for distributing its state-of-the-art cars in Pakistan.

Automobile imports constitute single largest segment of the machine category as in the eight-month (July 2005 to February 2006) they witnessed a rise of over 44 percent. Total imports of vehicles in the last eight months, amounting to 16,000 units, claimed about $852 million, which are expected to exceed $1 billion figure by the end of this fiscal year. At the present level, imported cars have 8 percent share of the market, which is expected to go up to 12 percent--13 percent in the coming year.


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## Neo

ISLAMABAD (April 17 2006): The government is spending Rs 306 billion on the development of social sector during the current fiscal year and it will help alleviate poverty and generate employment opportunities in the country.

The Minister for Petroleum and Natural Resources Amanullah Khan Jadoon stated this while addressing a big public gathering at the Union Council Bohi, Dalola and Adora some 70 km away from here.

The Minister inaugurated road projects and telephone exchange and announced provision of gas facility to the areas.

He said under the directives of President General Pervez Musharraf and Prime Minister Shaukat Aziz, the government was taking concrete measures for raising the living standards of the people of remote areas on priority basis. Jadoon said the provision of electricity, gas and drinking water by 2007 was being ensured.

The Minister said rehabilitation of quake affected was in full swing and all out efforts were being made to stand them at their own feet so they could live a comfortable life.

He called upon the people to forge unity in their ranks and cooperate with the government in its efforts for completion of masses weal oriented development schemes as early as possible.

NWFP Assembly MPA Al-Haaj Qalandar Khan Lodhi on the occasion lauded the government steps for the development of remote and backward areas on priority basis.

He said the completion of mega socio-economic projects would usher in a new era of progress and prosperity in the country.

Earlier, Nazmeen and councillors of Bohi and Dalola Union Councils called on the Minister and apprised him of the basic problems being faced by the people of the area.

They appreciated the government's steps for speedy rehabilitation of the earthquake affected.


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## Neo

SIALKOT (April 17 2006): The International Labour Organisation (ILO) has claimed as many as 50 percent reduction in child labour from the export-oriented surgical instruments manufacturing industry here.

Underage workers, hazardous situations and exploitative working conditions in the different targeted areas of Sialkot district through the provision of education and other support services to the children indulged into the child labour in Sialkot`s surgical industry.

ILO Sialkot's Project Manager Muhammad Binyameen stated this, while giving a briefing to the visiting team of independent evaluators during a recently held special meeting here at Surgical Instruments Manufacturers Association (Sima) of Pakistan.

He said that the International Labour Organisation (ILO) has also successfully raised the awareness of child labour issues raised among the Sialkot-based stakeholders of surgical industry and partners and initiated action to address health and safety problems in the work places in Sialkot district under ILO`s special programme regarding combating hazardous and exploitative child labour in surgical instruments manufacturing industry of Sialkot through preventive, withdrawal and rehabilitation.

He said that the ILO and Sima were contributing towards the progressive elimination of child labour in Sialkot's surgical industry. He said that under Phase-II of this programme of ILO, as many as 1,000 working children in various processes of surgical instruments manufacturing would be withdrawn, 200 siblings would be targeted for prevention from work and 180 (15 percent) would be mainstreamed.

He said the child labour monitoring component of the project would verify such withdrawal of prevention from work through an established monitoring system., adding that as many as 400 older children (aged 13 years and over) from Non-Formal Education (NFE) centers would be given pre-vocational training by ILO in Sialkot, while, more than 170 children enrolled in under Phase-I would benefit.

Muhammad Binyameen said that ILO in active collaboration with Sima would soon establish Village Education and Action (VEA) Clusters in Sialkot district to provide non-formal education, practical skills training, recreation and linkages to health services for child workers of surgical industry.

He said that ILO was analysing the local job market and provides pre-vocational training to young workers.

He said that the establishment of a reliable and transparent child labour monitoring system is considered vital to ensure a measurable impact of the project, and also considering that only social protection may not be very effective in elimination of child labour in the surgical instruments manufacturing, a monitoring component has additionally been developed in collaboration with Sima.

Now, the ILO-IPEC has started the process of external monitoring of child labour elimination programme from Sialkot's surgical industry. An agreement to combat child labour in the surgical industry was signed between ILO and Sima , which is collecting data on vendor-workshops and has developed internal monitoring system in consultation with ILO-IPEC, he added.

Former Sima's chairman Chaudhry Muhammad Ikram and vice chairman Mian Shehbaz Akhtar told the meeting that Sima has established a child labour cell at its offices for facilitating the internal monitoring system, developing co-ordination between ILO-IPEC and surgical instruments manufacturers, creating awareness among members of Sima and vendors through the development of computerised data-base, besides, compiling and disseminating information on child labour.

Earlier, a high-powered team of independent evaluators led by Ms Saima Saghir evaluated the pace of ILO's child labour elimination programme in surgical industry. The team expressed satisfaction and stressed the need for developing mutual close working relationship between the manufacturers, vendors and surgical exporters to purge Sialkot's export-oriented surgical industry of child labour.


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## Neo

FAISALABAD (April 17 2006): Muhammad Ashraf Gandhi, Vice Chairman Standing Committee on Sales Tax and Taxation Committee and former Chairman Pakistan Yarn Merchants Association (Punjab and Sarhad Zone) has demanded that the exemption in the utility bills of all those industries who have been Zero Rated (Sales Tax) should be granted automatically on the verification of Chambers so as to prevent them from on going cumbersome procedures.

Talking to newsmen, while welcoming the decisions of the government to put various trade and industry in the Zero Rated, he said that business community feel yearly sales tax returns be made mandatory rather than monthly returns to facilitate the traders and industries falling in the Zero Rated Net.

Ashraf Gandhi said that it has been proved that refund culture has eroded the national exchequer and the Zero Rating of the Textile Industry and Trade has also proved this.

He said that such pragmatic act by the government (by getting rid of refund culture and placing various sectors in the Zero Rated net) has also helped in the improvement of social economic fabrics of the country. He suggested that all raw materials used in the manufacture of goods placed in Zero Rated net be also placed in the Zero net.

In order to benefit from globalisation of trade, Ashraf Gandhi suggested that input cost be taken care off to make Pakistanis products competitive. The hike in the interest rate has also made Pakistani products uncompetitive. It is irony of the fact that we had not been able to work on the Human Resources. Thus necessary funds should be allocated in this sector, he demanded.

Ashraf Gandhi said that the philosophy of Trade Police should be promote medium and small entrepreneurs so as to reduce unemployment and help poverty alleviation programme and discourage formation of cartels in the country. Measures be taken to improve environmental compulsions under WTO, he added.

He said that the elimination of "Deletion Programme" in the Auto Sector is a major blow to the vending industry. It would also hurt the growing engineering industry in the country. It would also hurt the growing engineering industry in the country. It would also facilitate monopolistic trend, he added.

Ashraf Gandhi further demanded that the potential in the export of marble should be properly exploited so as to benefit from the abundance of marble in the country.

He said that the import of agricultural machinery be encouraged to improve agriculture sector. Necessary know-how be provided to the existing engineering industry manufacturing agricultural implements so as to save precious foreign exchange. The import of spare parts manufactured in Pakistan for the Textile Industry be banned and the local manufacturers be encouraged to set up and manufactures the desired parts in the country. Textiles, the largest industry, do not fabricate spinning and weaving plants in the country should have an indigenous, he added.

Ashraf Gandhi said that dyes and chemicals play major role in the export of value added textile. Steps be taken to produce the same in the country to be able to compete with the neighbouring country. The major component of trade deficit, which has up-surged to $7.80 billion is import of luxury items which be restricted and the indigenous industry be encouraged to fill the gap, he added.

Ashraf Gandhi pointed out that it is interesting to note that the import duty on cars is far less than the motorcycle which is common man's vehicle.

The duty on the import of cars above 1300 cc may be increased and the duty on motorcycles be reduced so as to make the common man's vehicle more cheaper. He demanded that the import of juices, soft drinks etc should be banned to save hard earned foreign exchange.


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## Neo

MULTAN (April 17 2006): Oil prices may be increased to 120 dollars per barrel in the world market if United States attacked Iran which would badly hit the Pakistan's economy and PIA, now oil is available at 70 dollar per barrel in world market.

While it was only 15 dollar per barrel in July 1998, said Chairman of Pakistan International Airlines Tariq Kirmani while addressing the executive committee of Multan Chamber of Commerce and Industry here on Sunday chaired by Khawaja Muhammad Abdullah.

He disclosed that PIA was the first airline, which had introduced ticket booking on mobile phone in the world, which had achieved the 97 percent punctuality. He said that direct flights for Quetta and Peshawar would be introduced from Multan very soon and new scheme would be introduced to highlight the culture of Multan while two more flights would be added on Multan-Karachi route.

He ruled out the possibility of any reduction in the fare and said that PIA was spending 43 percent of its revenue on the oil because prices had climbed to 70 dollar per barrel. He assured that better facilities would be provided to the mango growers and exporters. He highlighted the improvements in per-seat revenue, passengers traffic, and market share.

The chairman said that 29 aircraft were being inducted in the PIA's fleet to provide the best air-travel facilities. General Manager/SVP Human Resource Waseem Bari, General Manager Public Relations Captain Hassan Rizvi (Retd), Public Relations In-charge (Lahore) Yasmeen Haroon were accompanied by him.


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## Neo

KARACHI (updated on: April 17, 2006, 16:12 PST): Pakistan expects to receive offers soon from foreign companies, including Saudi and Kuwaiti firms, to build a $2 billion oil refinery that could double the country's refining capacity, officials said on Monday.

Sited at Khalifa Point in the Hub district of Balochistan, about 15 km (9 miles) west of Karachi, the refinery will have a refining capacity of around 200,000 to 300,000 barrels per day (bpd) of middle distillate products, said Ahmad Waqar, permanent secretary at Pakistan's Petroleum Ministry in Islamabad.

"Our estimate is that the proposed refinery would cost around $2 billion, and it would be completed by 2010," he said.

International groups will soon be invited to submit offers for the project, being marketed on a build, own and operate (BOO) basis.

Land is being made available free of cost, and a cabinet minister said, on condition of anonymity, that Saudi and Kuwaiti firms were among the interested parties.

Previous plans for a joint-venture refinery with Iran at the same site were stillborn.

Pakistan consumes around 15 million tonnes of oil products annually.

At present, the country has an installed refining capacity of 12.82 million tonnes a year (just over 250,000 bpd). But last year, its refineries produced 11.33 million tonnes, official figures show.

Another refinery, the Indus Refinery, is under construction in Karachi. It will have the capacity to process 4.2 million tonnes of crude oil a year (around 84,000 bpd), and will be completed by December 2007 at a cost of around $250 million, industry officials said.

Pakistan imports 85 percent of its oil needs -- both crude and products.

Analysts expect the oil import bill for the 2005/06 fiscal year (July-June) to exceed $6.0 billion, compared with $4.4 billion in the previous fiscal year.

Pakistan's economy grew 8.4 percent in fiscal year 2004/05, and is forecast to expand by about 7 percent in the year ending June 30.


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## Neo

Sunday April 16, 2006

RAWALPINDI: Leader of the House in the Senate, Waseem Sajjad has said that difference between the developed and underdeveloped countries was the education and scientific education and it could be eliminated by getting success in the field of education. 
He pointed out that educated women could play vital role in any countryÃ¢â¬Ës development. 

Speaking at the last day of the Golden jubilee ceremony of Waqrun Nisa Higher Secondary School as chief guest he said that education could create political and national awareness and the spirit of progress among the women. 

But he said it depends on the system. "If the system is right, the institutions correct themselves," he added. 

He hailed the role being played by graduate students of the Waqarun Nisa Higher School in the education, social and economic development of the country. 

Earlier, principal of the school, Suraya Khalid highlighted the progress of the school.


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## Neo

By Dr Sardar Riaz A. Khan

DESPITE flawed policies of successive governments, the agriculture still constitutes 23 per cent of the GDP and engages 44 per cent of the total labour force.

The GDP growth rate was 8.4 per cent last year and its target was originally fixed at seven per cent for the present fiscal. It was revised to 6.5 per cent subsequently and even this may not be achieved due to substantial reduction in agricultural production during this year.

As a result the targeted agricultural growth rate of 4.8 per cent will also fall sharply. The main reasons are lower crop production, mismanagement, and defective marketing system. Fixing higher crop production targets and then not achieving these has become a routine of the policy makers.

Cotton production this year was about 12.5 million bales against the 15 million bales target. Of various reasons, spurious pesticides, high cost of urea, DAP, lack of quality seed, poor weed control, partly unfavourable growing season during flowering and boll formation stages, flood damage and earlier planting in most areas encouraged the attack of American boll worm.

The textile industry may face problems as it requires about 14 million bales to meet its requirements. This may not only increase import of lint cotton but also import of edible oil due to reduction in cottonseed production which contributes nearly 70 per cent domestic edible oil production.

It may further increase the trade deficit which was already at $5.5 billion during the first eight months of the present fiscal year and is estimated to increase to an stipulated 9-10 $10 billion by the end of the year.

Similarly, sugarcane serves as major source for the production of white sugar and gur. Its production of 53.4 million tons in 2003-04 declined to 47 million tons in 2004-05 and further to nearly 41 million tons this year as reported in the national press against the government fixed target of 45.88 million tons.

The minister has stated recently that the production of sugarcane was 44.23 million tons this year as against the target of 48 million tons. Even if this statement is accepted, it shows continued declining production.

This scribe has already written about technical limitations of low yield and production of sugarcane and how to increase it. Again, policy makers were warned that due to deliberate late starting of cane crushing, late payments to growers, under weighing, poor support pricing etc., may force the growers to shift to other crops.

Besides shifting to gur and brown sugar (Shakkar) making by the cane growers instead of selling to mills, and smuggling of these to Afghanistan at much higher profit will further complicate the situation but no action was taken. As a result the price of one kg of sugar has increased from Rs21 in December 2004 to Rs42-45 and even higher in some areas during MarchÃ¢â¬âApril 2006.

Hoarding was another factor for compounding the problems. For instance 17 sugar mills owned by ministers and parliamentarians of the present government released only 14 to 17 per cent of their production and hoarded the rest to sell at higher prices.

Both, President and the Prime Minister directed the ministry of finance and other concerned agencies to ascertain facts before taking action against these mill owners. The National Accountability Bureau (NAB) was asked to inquire into the scandal and take action against those creating sugar problems. However, due to political influence and power, the NAB closed investigations of these influential people. This reflects that the law of land is different for the politically-powerful and the common man.

Nevertheless, the government is planning to import 1,50,000 tons of sugar through the Trading Corporation of Pakistan, while the private sector has opened letters of credit for import of 4,00,000 tons of sugar since January this year. Out of which 2,50,000 tons has already arrived and 1,50,000 tons is expected to reach by the middle of April this year.

Wheat is the leading food grain crop. Its target was fixed at 22 million tons due to the expectations of a bumper crop. However, this target may fall short by 1.5 million tons due to late sowing of wheat in the rice and cotton belts of Punjab and late cane crushing further delayed the sowing of the following wheat crop.

The rising cost of inputs and grabbing big part of agricultural loans by the powerful feudal landlords and influential politicians may further affect wheat production of small, subsistent and below subsistent level farmers cultivating nearly 50 per cent of the total area. This 20.5 million ton of wheat production and nearly three million tons of stock lying with the food department and Passco should be more than enough to meet domestic requirements. It is not understandable that when the country had sufficient stock and was expecting a bumper crop then why one million tons of wheat was imported.

Delayed purchase of wheat by the food department and the unavailability of gunny bags to farmers not only facilitated the private sector and flour mill to get bags from the corrupt officials but also purchase wheat from the farmers at Rs940 against the government fixed price of Rs1,037 per bag. Thus, common growers were the major sufferers.

Hoarding by private dealers and influential flour mill owners could create wheat flour problems for common man as was done by hoarding sugar by the mill owners. Again, smuggling wheat and wheat flour by the politically influential people across our porous western borders to earn huge profits could compound the situation.

The Prime Minister has announced that the government will not allow wheat prices to fall. Such claims appear only for public consumption as despite all this, the prices of sugar, pulses, food grains, vegetables, fruits, edible oil, petrol, diesel, gas, electricity, cement etc., are increasing and the common man is the ultimate sufferer.

Rice is a high value cash crop and a major export item. It accounts for 5.7 per cent of the total value added and 1.3 per cent to the GDP. But its export declined to around 1.7 million tons by 2004-05 as the targets could not be achieved due to poor planning.

The paddy prices have gown down both in Punjab and Sindh due to delayed announcement by the government. Rice farmers were the major sufferers as exporters and traders deliberately delayed purchase of paddy, especially Irri-6 mostly grown in Sindh. As a result most farmers were forced to sell their paddy at lower price than its cost of production as they had to prevent late planting of the following wheat crop which would have seriously reduced it production thus causing further loss to farmers.

It is interesting to note that due to better marketing and trade policies of India, the price of fine basmati rice of India is much higher in the international market than that of the Pakistani.

The aforementioned review portrays the dismal policies of the government which is more interested in the development of manufacturing and industrial sector at the expense of agriculture sector. This view is supported by the statement of President made at the latest opening ceremony of a steel mill that the government will now pay greater attention towards the development of industrial sector than the development of agricultural sector as the former will be more profitable due to increase in export of its products.

The government should realize that the increase in export of industrial products will be greatly nullified due to the increased import of food items due to uncontrolled population increase and the neglect of agriculture sector. For example, earlier the country was generally self-sufficient in most of the food items and agriculture contributed 53 per cent of the GDP. Subsequently, with the development of manufacturing and industrial sector, the share of agriculture to the GDP declined now to 23 per cent.

Despite increase in the export of products and bye-products of industrial and manufacturing sector, the trade deficit is increasing due to greater import of food items. The policy makers should seriously consider developing both these sectors on sound economic parameters rather than on political basis


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## Neo

*India and Pakistan: the inflation differential*


*By Sarah Jafri*
AS Pakistan struggles to bring itsÃ¢â¬â¢ inflation down to eight per cent in FY06, itsÃ¢â¬â¢ Indian neighbour has managed to contain inflation in the 4-5 per cent range. Although ostensibly, India began its policy of tightening a full year before Pakistan, their monetary policy is not the only reason why Indian inflation is much lower than Pakistani inflation.

In fact, the composition of the consumer price index (CPI) and wholesale price index (WPI) basket, the food supply situation and the oil subsidy in India are the more important reasons for Indian inflation levels being lower than the Pakistani inflation levels.

The CPI basket in Pakistan assigns higher weights to the house rent, fuel and lighting group and transport group than the Indian CPI. Interestingly, the Indian CPI measure assigns a higher weight to Ã¢â¬Ëpan, supari, tobacco, and intoxicantsÃ¢â¬â¢ than to transportation. This partially explains why rising fuel prices do not seem to have had the same impact on the Indian economy that they have had on PakistanÃ¢â¬â¢s.

Since the food group constitutes the majority of IndiaÃ¢â¬â¢s CPI it is also relevant to point out that in recent years Indian agricultural output has been such that food shortages have not pushed prices upwards, year on year (remember the base effect matters when measuring inflation).

However, in India it is not the CPI index but the WPI index which matters and if we compare the two (i.e. Pakistani CPI with Indian WPI) the disparities in weights are greater.

On the other hand, the WPI inflation rate in both countries is hardly similar, a fact that can be accounted for largely by looking at weights. To illustrate, Indian food inflation has risen by 6.83 per cent as of the end of February and Pakistani food inflation has seen a rise of 6.9 per cent by the end of February, which is not a significant difference.

However, because of the discrepancy in weights, the Pakistani index overplays (relative to India) the impact of food prices. India assigns a 15.4 per cent weight to food in itsÃ¢â¬â¢ WPI whereas Pakistan assigns a 42 per cent weight to the same. Within the food group weights vary as well, as India assigns less than two per cent to wheat and wheat products and PakistanÃ¢â¬â¢s WPI weights are assigned on the basis of the value of marketable surpluses.

Given that wheat prices in India are 20 per cent higher than those in Pakistan, the difference in weights assigned to wheat will undoubtedly impact the numerical value for food inflation. The Indian WPI also gives a much higher weight to manufactures and it is worth noting that in Pakistan year on year WPI inflation for the manufactures group stands at 3.05 per cent in Feb 6, which is close to IndiaÃ¢â¬â¢s 2.3 per cent. Close, but not the same as IndiaÃ¢â¬â¢s with itsÃ¢â¬â¢ sustained manufacturing sector growth that has been better able to meet domestic demand. That aside, if we had the same weights as the Indian indices, then PakistansÃ¢â¬â¢ inflation levels would be significantly lower.

The question still stands that when oil prices began to skyrocket, why did PakistanÃ¢â¬â¢s WPI rise at an alarming rate, when itsÃ¢â¬â¢ Indian counterparts actually fell. There are four reasons for this. One is an easing of food inflation relative to a high base, the second is the effect of monetary tightening, and the third is the fact that the Indian WPI assigns a much lower weight to fuel than the Pakistani one. The fourth, and most important, one by far is the role of subsidies in keeping IndiaÃ¢â¬â¢s domestic oil prices low (refer to inset).

To give credit where credit is due, the Reserve Bank of India has been much more proactive in their inflation fighting than their counterparts on this side of the border. Recognizing the significant lag between monetary tightening and an easing of inflationary pressures they have conducted Ã¢â¬Ëpre-emptive strikesÃ¢â¬â¢ of sorts, raising key rates before inflation rears itsÃ¢â¬â¢ ugly head and not after. Therefore, despite the fact that annual inflation in India is below five per cent they revised their key rate (reverse repo rate) upwards by 25bps to 5.50 per cent.

However, at the end of the day, weights also matter. If the Pak WPI or the Pak CPI were composed in the same manner as our illustrious neighboursÃ¢â¬â¢, then the value assigned to domestic inflation would be quite different. Does this mean that we should recompose our inflation indices along Indian lines? No, it does not. All it means is that in cross country comparisons, numbers should always be interpreted with caution.


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## Neo

17 April 2006 


ISLAMABAD Ã¢â¬â Pakistan government has been advised by the World Bank to immediately improve legal, regulatory and institutional framework of the ministry of petroleum and natural resources as the issue is blocking sizable foreign investment in the country's mineral sector. 
Informed sources said that the World Bank also wanted the government to ensure uniformity of procedures, mineral concession rules & regulations and incorporation of social and environmental aspects in manners satisfactory to the foreign investors.
The government has been proposed to urgently go for "institutional strengthening" of the ministry of petroleum to lure foreign investors to invest in the mineral sector of the country.
"The government was also asked to rationalise fiscal/taxation regimes with a view to help small-scale minerals including coal, gemstones and dimension stones," a source said.
He said that considerable capacity improvements are needed to help establish mineral frameworks that are consistent at federal and provincial levels. 
The government has been informed that lack of institutional arrangements has impeded progress to attract any substantial foreign investment in the mineral sector.


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## Neo

LAST weekÃ¢â¬â¢s explosion in KarachiÃ¢â¬â¢s Nishtar Park which killed 57 and injured over 100 has had particularly painful implications for business.

The expected happened: commercial activity was virtually shut down for most of the week, industrial production dwindled to just 20 per cent of normal levels, and daily wage earners had to scrape by on just three working days out of seven.

Petrol stations across the city remained closed, compounding the chaos. The unexpected also happened this time around. The Karachi Stock Exchange did not open for business on Wednesday, the day after the explosion. This decision by the KSE was an especially bad idea.

Karachi is accustomed to violence on a regular basis. Business always suffers as wholesale and retail trade comes to a standstill and industrial activity takes a blow. Almost always, however, the KSE remains open no matter how thin trading volumes are.

According to the KSEÃ¢â¬â¢s own statistics, the last time trading was shut down for a full day on account of security concerns when General Pervez Musharraf staged a military coup in 1999. There has certainly been no paucity of violent incidents or law and order problems in the city since that time. Then why this decision?

The management of the KSE defends their decision on several counts. First, that this was the biggest incident of violence in recent years which killed several prominent religious leaders.

Second, that the funeral prayer for Haji Hanif Blue, one of the Sunni leaders slain in the Nishtar Park attack, was to take place at the Memon Masjid near the KSE building. Moreover, Billoo was from the nearby Kharadar area of the city and his funeral procession was to pass through the Mereweather Tower area en route to Mewa Shah graveyard. This, the management said, left the KSE vulnerable in the face of possible violence after the funeral prayer.

Third, was the fear of reaction from the band of green turbans who are in a significant majority among the trading community at the KSE.

Fourth, worries about the several hundred cars that are parked in the KSEÃ¢â¬â¢s parking lot each day. This could have attracted violent protestors looking for cars to set fire to, the management says.

This combination of factors led to a telephone discussion among the broker members of the KSE board on Wednesday morning. The decision to remain closed was communicated to the chairman of the Securities & Exchange Commission in Islamabad. Ultimately, barely minutes before trading was scheduled to begin, the management announced that the exchange would remain closed for the day.

This was a bad decision on several counts. First, the tension and panic already prevalent in the city from Tuesday eveningÃ¢â¬â¢s bomb blast was compounded on Wednesday morning with news of this announcement by the KSE. The business community suffered an additional ripple of jitters, unaccustomed as they are to this one trading centre closing for business.

Second, the closure of the KSE significantly worsened the countryÃ¢â¬â¢s image problems. As it is, treacherous headlines made the rounds the world over on Wednesday. But when international investors found out that even the stock market was closed, it led to a moment of pause.

As some stock brokers put it, the embarrassment for Pakistan was doubled by the KSEÃ¢â¬â¢s decision. Indeed, PakistanÃ¢â¬â¢s market is now much more closely watched than ever before. Foreign portfolio investors have turned active in the country this fiscal year with $470 million in net portfolio inflows coming in between July 2005 and February 2006, compared to just $82 million in the same period last year. Most of this, over three-fourths has come from the US, where investors are especially sensitive to reports of violence.

Additionally, with the launching of a third sovereign bond by the Pakistan government last month, the countryÃ¢â¬â¢s politics, economics and stock market are now closely and routinely scrutinized by investors who snapped up the long-term bond.

Bad news like the Nishtar Park incident are enough to rattle their confidence. They donÃ¢â¬â¢t need to see closed share markets along with that. Stock brokers dealing with major international investors say that they spend a good amount of time convincing their clients that Pakistan gets a raw deal from the international media and things on the ground are not as bad as they may seem. But when an incident leads to a closed share market, that argument is severely diluted.

Moreover, this level of severity that leads to the closure of markets also tests the nerves of local fund managers. Some of them have said this week that they plan to minimize the risk of investing in Pakistan by diversifying into other markets now that they have the legal permission to do so.

So why did the KSE not take a more prudent approach? For example, the government could have been requested to provide additional security in and around the KSE to ensure trading could continue. The KSE could also have coped with thinner volumes had that been the case.

The SECP chairman could also have exercised his authority and insisted the market open for business. Clearly, the fine line between micro management and effective oversight at critical times has not yet been entirely understood.

The KSEÃ¢â¬â¢s decision was proven wrong in share trade the very next day on Thursday when volumes ended the session at a perfectly decent level of 350 million shares and the index even crossed the 12,000 points level.

If security concerns alone were severe enough to prevent the market from being opened on Wednesday, why was it safe to open for trade on Thursday or Friday, both equally critical days for the city?

As brokers, exporters and businesses struggled to cope with the fallout of the Nishtar Park incident on their clientsÃ¢â¬â¢ willingness to do business with Pakistan, the federal government did not help to improve the situation. The day after the explosion President Musharraf held a meeting in Rawalpindi with two Latin American mineral exploration companies and the press reports issued by the state-run news wire service the following day carried this headline: Musharraf assures safety to foreign investors. This is enough to make even government supporter cringe with embarrassment.

The presidentÃ¢â¬â¢s assurance of Ã¢â¬Åfull protectionÃ¢â¬Â to foreign investors included a level playing field with local investors, vibrant economic growth and the prospect of strong returns. ThatÃ¢â¬â¢s all very well. But it is worrying when the countryÃ¢â¬â¢s leader does not even allude publically to the most obvious worries any foreign investor would have.

These problems are much more serious today when foreign investors of all kinds have finally put Pakistan on the radar screen. Foreign portfolio investors have been forced to look at the country given the strong rally in share prices, foreign direct investment has been picking up pace, the sovereign bond issues have led to more investors tracking developments in the country, and the privatization process has also led to greater interest. The internal losses are also significant.

The tangible financial losses of days without industrial and commercial activity and the resultant reduction in tax revenues are obvious. But there are also the longer term implications of domestic investors reconsidering their investment plans in the face of growing unrest.

While it is unlikely that any of the top leaders will satisfactorily address the fallout of this major incident in the country, the negative impact could have been restricted to the bad press alone. If the availability of petrol had been better managed, the KSE had remained open as always and acted to improve security rather than close for business, perhaps the embarrassment caused by the attack could have been a little less. At time likes this, every bit counts.


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## Neo

ANALYSIS BY M.AFTAB 

16 April 2006 


ISLAMABAD Ã¢â¬â Large credit expansion and import financing is boosting profits and breaking other financial targets. 
The private business credit target burst on March 18, when it reached a historic high of Rs.330.4b in just the first eight a half months of current fiscal 2006. The credit volume rose further to a record Rs.340.204b March 31Ã¢â¬â the first nine months of the current fiscal. 
The State Bank of Pakistan (SBP), the central bank had set the Rs.330b target for whole of fiscal 2006 that ends June 30, but it was overshot nearly three and a half months ahead March 18.
Critics of the SBPÃ¢â¬â¢s monetary policy were already quite apprehensive of the original target of Rs. 330b in view of the prevailing and developing inflationary pressures. 
Advances during the first nine months of 2005 were Rs.247.573b, which means a rise of Rs.92.631b in the like period of this year. The full-year lending in 2005 was Rs.428b, after the SBP had to revise its Rs.300b credit target, first, from Rs.300 to Rs. 350b, and then to Rs.400b.
The total bank advances on March 18 had climbed to Rs.2.112 trillion, up from Rs.1.274 trillion in 2004, and Rs.1.712 trillion (t) in 2005.
This extraordinary credit expansion has the governmentsÃ¢â¬â¢ nod to ensure a high growth rate, in view of the likely fall in GDP in 2006. SPB, uncaring for the citizens and the poorer sections of the society already badly hit by high cost of living and a rapid rise in the inflation rate, has signaled the commercial banks to deploy their maximum liquidity to provide credit.
The tight monetary policy (TMP) launched a year ago by SBP to check rising inflation has virtually failed in its objectives, as the cost of living, particularly food and housing, is spiralling. In normal circumstances, it should be a worrying scenario for any government. But, the present growth-centric military-civil administration and the central bank, have failed to come up to the citizensÃ¢â¬â¢ expectations. 
This is despite the fact that national elections are just around the corner in 2007. Even the official inflation estimates are around nine per cent but in the capital of Islamabad it is 11.5 per cent, although expert estimates are much higher. 
As the annual credit, monetary growth and other financial targets have already been reached in the first eight months, their growth in the remaining three to four months will be inflationary.
The inflationary pressures are likely to worsen in view of the governmentÃ¢â¬â¢s estimates of a 1.9 per cent lower production of the farm sector, including key commodities like cotton, wheat, and sugar cane and refined sugar. Prices of some of these items have already reached record highs, forcing the government to order imports to partially improve supplies, but without much success. 
The farm sector contributed 23 per cent to the GDP in 2005 when the overall GDP growth was claimed by the government to be 8.4 per cent. The official target for GDP growth in 2006 has been revised downwards from 7.3 to 6.5 per cent, but the government and multilateral lenders like the Manila-based Asian Development Bank (ADB) are already projecting it to be 6.3 per cent or lower. 
The poor performance of the farm sector has pushed the government to expand credit for other sectors to boost growth, unmindful of the inflationary nature of this growth, as well as lower farm supplies which itself will push food prices up. 
Consumer financing is one of the areas, which will receive more credit as it boosted production of autos, and consumers durables, besides housing loans.
As the current credit momentum goes on with a monthly average expansion of Rs. 37.8b Ã¢â¬â fiscal 2006 is likely to actually end with Rs. 453b. That will be Rs.123b, or 37.2 per cent, higher than the target. Contrary to the SBPsÃ¢â¬â¢ moderately tight money policy (MTM), the credit growth suits both the business and the banks whose profits have reached record levels. The business is funding part of their plant modernisation, up gradation and expansion with borrowed money, and financing hugely rising imports. Imports include machinery and capital goods, but more recently ever increasing numbers of completely built units (CBUÃ¢â¬â¢s) and in the form of completely knocked down units (CKD). 
Overall imports in the first eight months Ã¢â¬âJuly, 2005-February 2006 Ã¢â¬â rose an extraordinary 46 per cent. Oil imports, at the same time rose 56 per cent to $ 3.86b Ã¢â¬â up from $ 2.48b in the like period of fiscal 2005.
High government borrowing to meet its budget deficit and fund part of the relief and rehabilitation work in the wake of October 8 earthquake, is also fomenting monetary growth. The government had set a target of Rs. 98b borrowing for full-2006. 
But, its actual borrowing so for this year has already shot to Rs 155.9b. It was merely Rs.15.4b in the like eight months of 2005. 
The government borrowing by June 30, is projected by financial analysts at Rs. 200b.
SPB data available this week indicates that as a result of the current high, and rising, credit expansion by the banks, the central bankÃ¢â¬â¢s annual target of 12.81 per cent monetary growth will be exceeded, too. 
Already a 9.5 per cent growth has been recorded. The monetary growth in the like period of 2005 was 12.6 per cent.
While the present growth has helped the business, and the government which wishes to move the economy on a fast track of 6.3 per cent, after its claim of 8.4 per cent GDP growth in 2005, the banks have profited from using their growing liquidity to lend, rising lending rates, greater credit off take, and continuing to pay extremely low deposit rates.
Most of the banksÃ¢â¬â¢ profits were derived from interest-based income last year, while a large portion of their 2004 income had accrued from investments in stocks and shares at the booming Karachi Stock Exchange.
The banksÃ¢â¬â¢ profits have been the highest ever over the last two years. Their advances to deposit ratio is now averaging 77 per cent. 
Their spread between the deposit rates they pay to savers and the lending rates they charge had risen to 7.2 per cent in December, 2005 from 5.45 per cent, a year earlier. 
The average deposit rates are 27.41 of the inflation rates, which are not only eating into saversÃ¢â¬â¢ money and eroding its value in real terms, but also discouraging savings. Dr. Shahid Hassan Siddiqi, head of Research Institute of Islamic Banking & Finance says, "this is exploitation, in which SBP is supporting the banks rather than the savers." 
Dr. Shamshad Akhtar, Governor SBP soon after taking up her job, earlier this year, had described the deposits rates as too poor, and had advised the banks to share part of their profits with savers.
But, it has not happened, as the country continues to have one of the lowest rates of personal savings in the world.
A good part of the high bank profits also owe themselves to a substantial rise in bank fees leading to growing fee-based income.
PakistanÃ¢â¬â¢s 21 banks listed with SBP have 72 per cent of total assets, and 75 per cent of total deposits of the banking system. Their profit rose to Rs. 47.5b in 2005. 
This high profitability made banks the most lucrative of 33 other sectors listed on the countryÃ¢â¬â¢s key bourse Ã¢â¬â Karachi Stock Exchange. 
Jahangir Siddiqui Capital Markets Research, a prominent company in the financial sector, lists 17 listed banks, out of 21, made large profits in 2005. 
Three declared a loss and one did not announce the its results. 
Among the highest net profit makers were: MCB Bank, Allied, My Bank, National, Bank Al Habib, Union, Faysal, Alfalah, United, Meezan, Prime, Soneri, Punjab, and PICIC.​


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## Neo

17 April 2006 


ISLAMABAD Ã¢â¬â Pakistan government has decided to revive the grading system of agricultural and livestock products to enhance Pakistan's credibility as an exporter of good quality produce and meet requirements of the World Trade Organisation (WTO). 
Informed sources said that the grading to agricultural products had been held in abeyance under a cabinet decision as part of Trade Policy 2000. The cabinet had directed to redesign the existing system under the Agricultural Produce (Grading and Marketing) Act.
However, the recommendations finalised by a special cabinet committee were not fully reflected in the Trade Policy 2004-05 and 2005-06. The ministries of commerce, food, agriculture and export promotion bureau have been discussing the revival of standards and grading system of agricultural products for the last two years and are hoping to restore it in the next year's trade policy, these sources said.
The grades and standards of quality of agricultural produce would be provided to commercial attaches in Pakistan embassies abroad for wide coverage. 
These would also be provided to various agricultural inspection agencies and importers of agricultural produce so that they could enter in contracts for supply of goods on basis of these standards.
So far, compulsory grading and quality control of 41 items of both agriculture and livestock has been enforced before export. 
These products include chillies, fish, citrus fruits, fish meal, lime and lemon, animal hair and bones.​


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## Neo

Sunday, April 16, 2006javascript:; 
KARACHI: The president and chief executive officer of the Samsung Middle East and Africa Headquarters (MEAHQ) Chiwon Suh is visiting Pakistan to establish the companyÃ¢â¬â¢s firm commitment in a growing and emerging market. Samsung Electronics is the global digital technology innovator.

Mr Suh is a Samsung veteran of over 23 years and spearheads all aspects of the companyÃ¢â¬â¢s business in the Middle East region that comprises: the GCC countries (UAE, Saudi Arabia, Kuwait, Oman, Qatar and Bahrain), Levant, as well as Egypt, Iran, Pakistan, Turkey, Nigeria, Algeria, Tunisia, Kenya and South Africa.

Ã¢â¬ÅIn the last few years, the Middle East market, including Pakistan has gained unprecedented importance on the global business map. This is one of the fastest emerging regions in the world, and I am excited to lead SamsungÃ¢â¬â¢s next phase of growth in the region,Ã¢â¬Â Mr. Suh said. Ã¢â¬ÅGlobally the Samsung brand enjoys an extremely positive reputation. One of my top priorities is to continue to build on our previous regional successes, while bringing in new digital innovation, efficient business processes and unrivalled marketing strategies. staff report


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## Owais

*LPG Prices surges up to Rs. 40 per Kg *
ISLAMABAD: LPG manufacturers companies have increased the prices of LPG by Rs. 3210 per ton. The LPG prices remained till Monday as Rs. 17,000 per ton. 

The PPL, OGDC, and PARCO have increased the prices after two years. Now LPG prices in retail market has surged to Rs. 40 per Kg from Rs. 32 per Kg. 

LPG Dealers Association was reviewing the situation for any reaction in this connection.


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## Neo

ISLAMABAD (April 18 2006): Pakistan has agreed to exempt three Chinese banks (Export Import Bank, Agricultural Development Bank and State Development Bank) from taxes on their interest income.

"The government has accepted the request of Chinese government to amend Article 11(3c) of 'double taxation avoidance agreement 1989', to exempt three more banks from tax on interest income," official sources told _Business Recorder._

At present, Article 11(3c) of the agreement gives exemption to the State Bank of Pakistan (SBP) and the People's Bank of China on their interest income, sources said.

They said that the federal government had consulted SBP on the Chinese proposal, before conveying the assurance, and added that the SBP administration had no objection to the inclusion of these three banks in the agreement.

According to sources, both countries would amend Article 11 of the agreement through a protocol, expected to be signed during the forthcoming visit of President Pervez Musharraf or Prime Minister Shaukat Aziz to China.

"Such a protocol will encourage Chinese investment in Pakistan and further strengthen the existing bilateral economic relations between the two countries," sources added.

They said that the Cabinet had cleared the proposal, in accordance with the terms of Rule 16(1) (h) of the Rules of Business 1973, the amendment in article 11(3 c), and authorised the concerned Division to finalise the protocol with Chinese authorities.


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## Neo

KARACHI (April 18 2006): Pakistan received $3.228 billion as workers' remittances during nine months of the current fiscal year, against $3.050 billion received in the corresponding period of last year, showing an increase of $177.70 million, or 5.83 percent.

The amount of $3.228 billion includes $10.69 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

Pakistani workers remitted record $423.56 million in March. In previous eight months they had remitted $313.14 million, $348.41 million, $341.10 million, $372.50 million, $308.81 million, $371.24 million, $391.32 million and $358.13 million in July, August, September, October, November & December, 2005 and January & February, 2006, respectively.

The highest inflow of remittances during the nine months was $893.54 million from USA. However it showed a decline from the amount received in July-March period of last fiscal year.

The inflow of remittances from Saudia Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $515.59 million, $491.25 million, $429.32 million, $305.35 million and $87.62 million respectively as compared to $448.96 million, $507.83 million, $382.15 million, $270.38 million and $72.09 million during the corresponding period of last fiscal year.

Remittances received from Canada, Australia, Norway, Switzerland, Japan and other countries during July-March of 2005-06 amounted to $494.85 million as compared to $409.57 million in the corresponding period of last fiscal year.

The monthly average remittances in the said period come out to $358.69 million as compared to $338.95 million during the same period of the last fiscal year.

The country-wise break-up of inflow of remittances into Pakistan in March 2006 shows that remittances from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $108.13 million, $72.50 million, $71.96 million, $57.96 million, $38.63 million and $9.79 million, respectively. Remittances received from Canada, Australia, Norway, Switzerland, Japan and other countries during March 2006 amounted to $64.47 million.


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## Neo

KARACHI (April 18 2006): President General Pervez Musharraf on Monday invited investors to take advantage of investment-friendly economic policies of the government and abundant skilled cheap labour in Pakistan. He was speaking at a reception hosted by the American Business Council (ABC).

Sindh governor Dr Ishratul Ibad, chief minister Dr Arbab Ghulam Rahim, city nazim Syed Mustafa Kamal, naib nazim Nasreen Jalil, former State Bank governor Dr Ishrat Husain, Pakistan Rangers Director-General, Major-General Javed Zia, US ambassador Ryan C. Crocker and a large number of ABC members were also present on the occasion.

"There is no dearth of skilled, qualified and cheap labour in the country," the Prescient said and added privatisation, deregulation and liberalisation pursued by the government had given a big boost to our economic growth.

The President pointed out the country had achieved a record 8.4 percent economic growth last year and every effort will be made to sustain this growth in future.

The President said foreign direct investment has recorded an upsurge of 3 billion dollars this year.

He said he was personally presiding over meetings to address problems faced by investors. He said the boost in economic activities would help generate job opportunities, reduction in unemployment and poverty elevation.

"We intend to have access to US markets to boost our exports," the President said.

The wheel of economic activities in the country is moving faster which is evident from the fact that today hotel occupancy rate in Karachi and Lahore was more than 100 percent, he added.

He pointed out investors were like pigeons who go back en bloc but return only one by one. "By creating an investment-friendly environment, we are encouraging investors for maximum investment in Pakistan."

The President said country's exports have touched $17 billion mark and he has set a target of $18 billion which will hopefully be achieved. However, he said, these figures of FDI and exports were not enough and have to be improved further.

The President observed surge in imports was a healthy sign as we are importing value-added goods including machinery to modernise our textiles sector and this would ultimately pay dividends.

"Our direction is good, exports and FDI keep rising while unemployment and poverty keep reducing," he remarked. The President, appreciating ABC's 1.3 billion dollars investment in Pakistan, said economic activities generated through this investment would greatly benefit in reducing unemployment, poverty as well as in fighting extremism and terrorism.

Referring to the performance of stock market, the President said it was doing wonderful and today the Index (KSE) has already surpassed 12,000 points.

The President said policies of privatisation are successfully moving ahead, and so far government has earned Rs 150 billion. He referred to successful transfer of PTCL as an example and said a number of major concerns were in the pipeline for privatisation.

He said Pakistan's per capita income has increased from $435 to $800, which shows the sign of growth in the country's economy. He referred to the strategic importance of Pakistan and said interaction between regional countries will not be possible without involvement of Pakistan.

He said various countries have pledged $12 billion for development of Afghanistan and all these activities would take place through Pakistan. The President said the government was fully alive to maintain law and order and every effort in this direction was made to sustain peace and tranquility.

Referring to the Balochistan situation, the President expressed his determination that the government would establish its writ there. The President thanked the ABC for their contribution for the rehabilitation of quake-affected people.

Earlier, ABC President Zubyr Soomro, in his address of welcome, said the council was celebrating 22nd anniversary of its founding today.

He said the ABC was the single largest group with an investment of 1.3 billion dollars in Pakistan. Zubyr Soomro said the ABC's contribution to the national exchequer so far comes to Rs 35 billion.

He said ABC has 60 members, who belong to diverse business activities and provided job opportunities to 22,000 people. The ABC president further said in the next 12 months our members will bring substantial amount of investment.

He said policies of the present government have restored investors' confidence.

Zubyr Soomro also highlighted problems including Intellectual Property Rights.


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## Neo

KARACHI (April 18 2006): President General Pervez Musharraf said the national economy is on an upsurge and with consistency in policies, the GDP growth rate will remain between 7-8 percent in future, which is among the "best in the world".

"Our credit rating has also improved and prominent Economist magazine that tabulates top economic performers in the world has also put Pakistan in its list which is a big achievement," he noted while addressing annual dinner of Overseas Investors Chambers of Commerce & Industry (OICCI) here, Monday night.

The President urged OICCI members to project "a positive picture" of Pakistan abroad and assist the government in projecting "good image" which will attract foreign investment in the country and thus further accelerate economic growth.

He called for diversifying exports and venture in engineering goods and heavy industry with special emphasis on dairy products. "We are aiming to cross $20 billion annual exports mark by 2007. To achieve this, the government has signed Preferential Trade Agreement (PTA) and Free Trade Agreement (FTA) with various countries to boost exports," he added.

The President said privatisation was going "at a very fast pace with over 50 entities privatised bringing in capital of Rs 150 billion". He spoke of documentation of economy and said revenue will touch Rs 850 billion in current fiscal year as against Rs 302 billion in fiscal 1998-99, indicating 300 percent increase.

"We are conscious that we have to improve law and order situation in the country. We have made a strategy to confront terrorism and extremism and succeeded in curbing those elements that hinder investment process in the country." He assured foreign investors of a level playing field and security of their capital in Pakistan. The legal framework has also been devised for full protection and guarantees.

The President expressed gratitude to OICCI for contributing Rs 5.4 billion to October 8, 2005 earthquake relief and reconstruction fund. He lauded OICCI's members role as one of largest taxpayer of the country and their contribution towards economic development.

Commerce minister Humayun Akhtar and OICCI president Salman Burni also spoke. Chairman & CEO Philips Pakistan Shahid Zaki presented cheque of 300,000 euros to President Musharraf for quake relief and reconstruction fund.


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## Neo

BEIJING (April 18 2006): China sees a very promising socio-economic partnership with Pakistan and greater interaction in regional and international affairs for their common development, this was stated here on Monday by Cai Fangbai, Vice Chairman, Foreign Affairs Committee of the Ninth National People's Congress.

Addressing 'China Fortune Forum' that was attended by around 100 representatives of prominent Chinese companies, he said the Chinese government, while moving towards economic globalisation wished to strengthen its trade and business links with Pakistan.

The Chinese leadership, he added encouraged their entrepreneurs to invest in Pakistan for promoting mutually beneficial co-operative partnership. Pakistan Ambassador Salman Bashir addressing the forum gave a comprehensive presentation on Pakistan's rapid economic growth and reinforcement of Sino-Pak partnership in the recent years. A documentary on investment opportunities in Pakistan was also shown on the occasion.

Cai Fangbai, who is also President of the Association of Former Diplomats in China, spoke highly of the growing Sino-Pak strategic partnership and said their friendship was rooted in the hearts and minds of their people.

"Our friendship withstood test of the time and remained constant over the past five decades, in spite of twists and turns in regional and international arena."

Referring to his visit to Pakistan December last year, he said it provided him an opportunity to personally witness there a favourable and friendly economic environment for the Chinese investors. He hoped that the Chinese entrepreneurs would seize the opportunities further cementing the bonds of traditional friendship.

Cai further said China and Pakistan would continue work together facing common challenges in the regional and international affairs. The two sides visualised a better economic future, while citing the on-going negotiation on Free Trade Agreement (FTA) that would provide massive tariff reduction on a number of trade items. The negotiation on the FTA is expected to be finalised by the end of this year.

Ambassador Salman Bashir referred to the recent visit of President Pervez Musharraf to China and said it laid a strong foundation bringing the two countries more closely to each other in all fields of common interest, including trade and energy.

President Musharraf during his visit offered Pakistan's ports and highways to serve as a trade, transit and energy corridor to China. The president, during the visit held detailed discussion with the Chinese leaders about the geo-economic relevance of Pakistan to serve as energy and trade hub.

Both sides agreed to start the technical studies to make this futuristic vision a reality, the ambassador said and hoped, it would lead to establishment of oil and gas pipeline and possible rail link between the two countries. He said, Pakistan-China Energy Forum, scheduled to take place in Islamabad next week would be a step forward to realise the common goals in the energy sector.

Salman Bashir suggested that the two countries should establish special business orientation and facilitation centers to enhance awareness and interaction between their private sectors. The ambassadors of Spain, Indonesia and Korea also spoke on the occasion.


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## Neo

LAHORE (April 18 2006): One million Pakistanis living in North America, particularly in the United States and Canada, have resources of over 200 billion dollars, which could significantly help in the development of Pakistan's economy.

Pakistan's economy has registered tremendous growth of 8.4 percent during the last year while current year growth is also encouraging which is projected at 7.5 percent in the present fiscal. If overseas Pakistanis living in America and Western countries and also in the Middle East set up joint ventures with the Pakistani entrepreneurs, the country's economy would sustain at the present level also in coming day. The direct investment to Pakistan has left profound impact on the country's economy besides reducing poverty.

These views were expressed by Dominic Pulera, an internationally expert on matters involving race, culture, and diversity while addressing to a seminar on 'Thinking Globally: International Trade and American's Views of the World in the Post 9/11 Era' at Lahore University of Management and Sciences, Lahore on Monday.

The seminar was organised by The Indus Entrepreneurs (TIE) which is a global, non-profit network of entrepreneurs and professionals dedicated to the advancement of entrepreneurship.

Pulera said that because of 9/11 incident, Muslims have been facing lot of difficulties in getting US visas besides increasing the immigration problems. Due to such difficulties, the people have started shifting of their business to other countries. As a result, United States has lost 40,000-45,000 jobs only in its textile sector in post 9/11 era, he maintained. He further said that there is great potential for investment in various sectors including oil and gas. Pakistani tourism industry is also need to be tapped which has 4.5 times more potential than India.

After the 9/11 incidents, many people have started learning about Pakistan and Islam. However, some Americans have misconception about Islam and Pakistan as well. He stressed the need for improvement of Pakistan image in abroad.

During his speech, he addressed a number of issues including the great success of Pakistani Americans, Americans' views of international trade, Americans' views of the world in the post 9/11 era, the linkages of overseas Pakistanis with Pakistan and some reflections on Pakistan's image abroad and how it affects the efforts to attract greater amounts of tourism and foreign direct investment to Pakistan.

Speaking on the occasion, President TIE Lahore Chapter, Dr Khalid Javed Chaudhry said that Pakistan is passing through a transition phase and it needs consistency in its economic policies irrespective of government. He further said that expatriate Pakistani can play an active role in the development of country and added that they should bring investment into the country and avail the opportunity of enabling business environment.

Pakistan is more safe and secure for the investment to yield dividend to the investors, he maintained.

Dr Ishrat Waheed of Centre of Excellence in Molecular Biology, Punjab University also spoke on the occasion.


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## Neo

LAHORE (April 18 2006): Access to clean drinking water was the right of every citizen of the country and it was duty of the government to ensure its provision; moreover, before 2007 general elections all the commitments made by this government would be fulfilled.

Punjab Public Health Engineering Minister Mushtaq Ahmed Kiani expressed these views in a seminar on 'Community based water supply and sanitation,' which was organised by PCWSS here on Monday.

He said that for the provision of clean drinking water, the government started the Punjab Clean Water Supply and Sanitation (PCWSS) project with the backing of the Asian Development Bank (ADB) in 2003. "Under the project, 750 schemes that were focusing on the provision of clean water and sanitation in the province at the cost of Rs 4.5 billion, which would completed by next July," he added.

According to him, out of the 750 schemes, 500 were new, started by the present government, and while 250 were those that were sitting idle; moreover, till now 300 schemes have been handed over to the local communities after a successful run. Moreover, active participation of local communities in running the schemes is the focal point of the project.

He disclosed that they were planning to launch the third phase of the project and talks with ADB in this connection were in progress. He praised the Punjab government was prioritising drinking water; seriousness of the government on the subject could be gauged from the fact it provided additional Rs 90 million to PCWSS, since it has utilised its budget. Under the present government, water related schemes have been completed, he added.

Salman Ghani, Chairman of Planning and Development Board Punjab, stressed upon the active participation of local communities in development projects. He said that the very sense of ownership was the key to the success of such schemes. He further said that in the past such projects had failed due to lack of local communities participation. Raza Farrukh Chaudhry of ADB, Khalid Sultan, Punjab HUD&PHED Secretary, and Zahid Hussain Ch, Project Director, also addressed the seminar.


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## Neo

Tuesday April 18, 2006 

KARACHI: Expressing the fear that rising ratio of inflation has not only endangered national economy but also the budgets of countrymen, president General Pervez Musharraf Monday said we will have to take immediate steps to overpower the menace of price hike and State bank of Pakistan has a big role to play in this regard. 
"The Bank will have to take immediate and long term steps for resurrecting the situation. The bank must devise a clear strategy to control inflation," he observed this while addressing officers of State Bank of Pakistan during his visit to the head office of the Bank. Governor State Bank Dr Shamin Haider gave a detailed briefing to the president about PakistanÃ¢â¬â¢s economical picture. 

However, he pointed out we will have to shed off the dark clouds of extremism from our society to get rid of poverty because it has a clear impact on national economy. We should also work wholeheartedly for economical uplift if we want our country to prosper, he said and added extremism and deteriorating law and order are the main impediments in PakistanÃ¢â¬â¢s development and rising inflation. 

"There is no doubt that large number of foreign investors are showing interest in Pakistani market but still we have to do a lot to provide them safer environment where they could thrust more money and it will be good for national economy." 

He said I personally want foreign investors to show more interest in Pakistani market. 

He said: "we want to transfer the affects of growing economy to the rural population so that they could lead a respectable life and it will be only possible when situation of law and order is better." 

In previous governments, bureaucrats, politicians and bankers had embezzled the national exchequer in large extent and usurped huge sums they accumulated under the head of loans but incumbent government has brought an end to their corruption practices, he held. 

He said the previous government did not pay heed towards the national problems that augmented our problems but incumbent government is committed to overcome all the problems and has decided to build mega water reservoirs for national development. 

Commenting on the tax system, he said as far as tax system of Pakistan is concerned it is better then before, however the base of taxpayers must be expanded and more people should be included in the taxpayers network. 

He also highlighted the spectrum of Small and Medium Enterprises (SMEs) and Micro Finance economy and said there is still more space for projecting the SME and Mirco Finance economy in the country particularly in the rural areas so that people of these areas should reap their fruits. 

He said Banking sector in Pakistan is also growing whereas overall economic situation of Pakistan is satisfactory. 

He said Khushali Bank is performing well and its network should be widened. 

Shedding light on Balochistan situation, the president said the problem lies no more, we have resolved the issue Ã¢â¬â¢amicablyÃ¢â¬â¢ and peace has been restored in the province in latter and spirit. 

He said as far as situation in Waziristan is concerned, government is well aware of the overall picture of the area and the issue would be resolved very soon. 

"We have decided to introduce administrative reforms in Balochistan and FATA and under these reforms the system of Political Administrator in FATA will be abolished very soon, whereas government has started several development projects in Balochistan so that people of the province should be brought up to par with the other provinces," he maintained. 

The president government has already allocated Rs 10 billion package for the development projects in FATA and Balochistan and this sum will definitely change the face of the two regions.


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## Neo

Tuesday April 18, 2006 

ISLAMABAD: Various initiatives taken by the Textile Industry Ministry to increase the export of textile and improve the productivity and competitiveness of the textile industry were discussed at a high-level meeting chaired by the Prime Minister Shaukat Aziz at the PM House Monday. 
The Prime Minister said that the government will continue to take all necessary steps to help the textile industry improve its performance as the sector accounts for 60% of the countryÃ¢â¬â¢s exports and 38% of its manufacturing. 

He said that due to the substantial investment in the textile industry in the last five years it has registered significant improvement in upgrading and modernizing it. 

The Textile Industry Minister Mr. Mushtaq Ali Cheema updated the Prime Minister on the various challenges faced by the knitwear industry and the proposed steps to meet them. 

The Prime Minister appreciated the Clean Cotton Project launched by the textile industry ministry. He however emphasized the need to associate the provincial governments with it to create ownership so as to benefit cotton growers. He said the project can help facilitate value addition in the textile sector leading to increased foreign exchange earnings for the country. 

The meeting also discussed at length various proposals put forward by the Textile Ministry for inclusion in the upcoming budget. 

The meeting was also attended by Dr. Salman Shah Advisor to PM on Finance, Mr. Abdullah Yousuf Chairman CBR, Syed Masood Alam Rizvi Secretary Textile Industry and senior officials.


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## Neo

Tuesday April 18, 2006 

ISLAMABAD: An expert economic team is working under the leadership of Prime Minister Shaukat Aziz which is eventually bringing gradual betterment in economic situation of the country and tax net expansion is inevitable for strong and stable economy. 
This was stated by Abdul Rauf President Islamabad Chamber of Commerce and Industry while speaking in a meeting with Income Tax Subcommittee here in Chamber House. He further said that total 12 million returns are submitted while business community hold its share as only 5 million which is trifling, however commercial consumers of the WAPDA are 40 millions according to their record and these consumers pay monthly advance income tax in the power bills but return is not filled, these consumers could be added in the tax net by coordinating with CBR. 

He reiterated that Salman Shah, Umer Ayub, Hina Rabbani Khar, Dr. Shamshad Akhtar and Abdullah Yousuf Chairman CBR are working as a strong economic team and several reforms are practiced including Self Assessment System in income tax which increased the revenue. The government should expand the tax net rather then burdening the same taxpayers, he said.


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## Neo

Tuesday April 18, 2006 

GILGIT: The government is taking a keen interest in the socio-economic uplift of the Northern Areas and a huge amount is being spent on many projects to bring the area at par with other developed areas of the country. 

A tourism department spokesman said on Sunday that the government had started work on various projects including health, education, communication, hydropower projects, tourism and water supply schemes in the northern areas of NWFP. Giving the details of the projects, sources said that Gilgit-Naltar road was being constructed at a cost of Rs 20 million to link the area to other adjoining areas of the northern region. 


Sources said that rest houses and tourist resorts were also being constructed to attract locals and foreign tourists in the area. 


They said that the government was spending Rs 88 million for the promotion of tourism in the northern areas. The development projects were being completed at a fast pace under the directives of the Minister for Kashmir Affairs and Northern Areas Makhdoom Syed Faisal Saleh Hayat, sources said.


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## Neo

KHANEWAL, Apr 17 (APP): Punjab Literacy and Non-Formal Education Minister Hussain Jahanian Gardezi said here Monday that government efforts are aimed at achieving 100 per cent literacy rate in the province.
Talking to newsmen in the office of the EDO Literacy, Khalid Haraj, the minister said that the Chief Minister is determined to achieve the "education for all" target. 
"In this connection, the government has launched a 4-year education reforms programme in four model districts of the province, at a cost of Rs 1 billion," he said.
Under this programme people of 15 years of age and above will be imparted primary education to achieve the target. 
He disclosed that a sum of Rs 350 million would be spent to set up 1000 literacy centres in 100 union councils of district Khanewal.


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## Neo

ISLAMABAD (April 19 2006): The government has attributed dearness of essential commodities to the demand and supply imbalance, claiming the economy had fully recovered from the default-like situation.

Joint opposition in the National Assembly demanded of the government on Tuesday to step down as it failed to break monopolies and restore law and order across the country which, they termed, a pre-requisite to sustainable economic progress.

The opposition accused the government of showing total indifference to financial difficulties of the common man, who are trying to find 'salvation' in self-immolation and suicides.

Winding up the three-day debate on price hike, state minister for finance Omar Ayub contended 40 percent increase in inflation was because of a sudden rise in prices of daily-use items such as tomatoes and other vegetables. Omar Ayub said model vegetable markets would be established in all big cities to ensure balance in demand and supply of essential items.

The minister pointed out inflation rate in 1990-91 and 1994-95 stood at 12.7 percent and above 13 percent, respectively, and flayed the PPPP for raising hue and cry over current inflation rate that would be brought below 8 percent.

Contradicting the opposition's claim that over 40 percent population lived below the poverty line, he said, in fact the percentage is only 26. He added 5.5 million new jobs were created during the last 18 months.

The minister said foreign debt servicing formed 30.1 percent of the gross domestic product (GDP), unlike 66 percent of the GDP in 1988. The world community's support to Pakistan after the earthquake was a proof of the government's credibility and economic success, Omar Ayub claimed.

About higher inflation rate, he said due to significant economic growth, demand of daily-use items had gone up, leading to demand-supply imbalance, which is causing high inflation. However, he said under a tight fiscal policy, it would be brought down and the masses would get loans on low interest rate as directed by President Musharraf.

The minister said the agriculture sector had shown phenomenal growth and the farmers' community was now finding it easier to go for inputs of their choice. Referring to the opposition's criticism on the government failure to control prices of daily-use items, he said it was primarily provincial governments' responsibility. Why not the opposition asking about NWFP government's inability to check the price spiral, he questioned.

Adviser to prime minister on finance and economic affairs Dr Salman Shah, he added, had taken an assurance from sugar mill-owners to provide the commodity to utility stores at Rs27.50 per kilo. Not only sugar mill-owners are in the government but also in the opposition camp, who did not bring their prices down, he said.

He claimed flour was available at Rs19 per kilo in India while in Pakistan its rate was Rs15. Likewise, diesel was being sold in India at Rs42.35 whereas here its rate was Rs35.25 per litre.

Unlike in Pakistan where fiscal deficit was 3.5 percent, its percentage in India was 10.5, adding the government was spending 4 percent of the GDP on social sector while provincial governments had Rs 98 billion at their disposal for the purpose.

About the yawning trade deficit, he said the main reason was imports of heavy machinery and raw materials for industry. The minister said this year 12,000 villages would be electrified.


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## Neo

LAHORE (April 19 2006): Mian Fahim Qamar of Pak-Canadian Business Council has said that recently concluded visit of Crown Prince of Saudi Arabia Prince Sultan Bin Abdul Aziz Al-Saud would further strengthen the existing bilateral and economic relations between Pakistan and Saudi Arabia.

Fahim said Pakistan and Saudi Arabia were enjoying excellent religious and traditional relations. He said Saudi Arabia extended every kind of assistance to Pakistan soon after the October 8 earthquake, which badly hit Azad Kashmir and NWFP.

Saudi Arabia always helped Pakistan in time of need, he added. He said that presently the Joint Investment Company was working between Saudi Arabia and Pakistan, which needed to be strengthened. To a question, he said Pakistan's economic ties would be strengthened with Saudi Arabia in times to come.


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## Neo

DHAKA (April 19 2006): South Asian nations want to ease tariffs gradually with the aim of establishing a free trade zone in about a decade, experts at a trade meeting said on Tuesday.

South Asia is a vast economic powerhouse in terms of market potential, natural resources and qualified human resources, said Bangladesh Commerce Secretary Mohammad Abdul Karim, at the opening of the two-day meeting in Dhaka.

"The establishment of the South Asia free trade area (SAFTA) is seen as the first significant step towards deeper economic integration," Karim said.

SAFTA will operate within the South Asian Association for Regional Co-operation (SAARC) framework, grouping Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka. Afghanistan will join the group next year.

"With 1.4 billion population in the SAARC region, one of the largest areas in the world, the intra-regional trade is very minimal," Lyonpo Chenkyab Dorji, the secretary general of the SAARC Secretariat, told the meeting.

Intra-regional trade volume among SAARC countries stands at $6.0 billion, or about 4.4 percent of the total trade of member states worth $135 billion, officials said.

But Karim said: "The region can be expected to fare much better than what other economic blocs such as Europe, North America and Southeast Asia have achieved."

Intra-regional trade of European Union nations is 55 percent of the total trade of member states; that of North American Free Trade Agreement members is at 61 percent, and the Association of South East Asian Nations at 25 percent presently, officials said.


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## Neo

ISLAMABAD (April 19 2006): The Anglo-Dutch Company's 4Gas plans to expand its network in Asia, and it will be setting up an LNG terminal in Pakistan. The increasing pace of development and the government's strong interest in energy supply sector has prompted the company to develop gas network in the country, Company sources said.

According to an official statement issued on Tuesday, a delegation of the Company, led by Chief Executive Officer Paul Van Poecke, met with the Minister of State for Petroleum and Natural Recourses, Muhammad Naseer Mengal, at his office. Secretary Ahmad Waqar and Joint Secretary (Dev) Jehangir Khan were also present. The Minister welcomed potential plans for the construction and operation of an LNG terminal in Pakistan.

4Gas is the only global independent LNG terminal developer and operator. It has projects around the Atlantic basin, including in the United Kingdom, the Netherlands and Canada/USA. Van Poecke said that while the company's Atlantic network of LNG terminals is being finalised, 4Gas is now preparing its network throughout Asia.


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## Neo

_By Imran Ayub​_KARACHI: The federal government has asked Sindh fisheries authorities to ensure compliance with European Union quality standards by May this year, when an EU delegation is due to visit Pakistan, to ward off the looming threat of export ban.
In case the authorities failed to do so, the government said it would act independently and stop exports to European countries.
The Federal Ministry of Food, Agriculture and Livestock (MINFAL) has come up with a clear-cut argument, pointing the finger at institutions concerned within the Sindh government for non-compliance with quality measures required by the EU during its delegationÃ¢â¬â¢s visit last year.
"Non-compliance is largely attributed to management problems at the Karachi Fish Harbour and Fishermen Co-operative Society," said the federal secretary MINFAL in a letter to the Sindh chief secretary.
"I wish to emphasise that if the assurances given to the EU are not met within one month, the MINFAL will be constrained to take necessary remedial measures including suspension of fish exports to the EU countries."
The letter said the Marine Fisheries Department in the capacity of the competent authority and in consultation with the Government of Sindh had given assurances to the EU that their recommendations would be fully complied with.
"Export of seafood to the EU and other countries is critical to the national economy and for the livelihood of fishermen in coastal areas," said the letter.
A three-member team from the EUÃ¢â¬â¢s Food and Veterinary Office (FVO) visited Karachi in February 2005 to check seafood quality and inspected facilities and installations at the Karachi and Korangi fish harbours.
The team concluded the visit with warnings that Pakistani authorities should maintain seafood quality as per EUÃ¢â¬â¢s set standards, otherwise they would lose their largest seafood export market.
The EU warning rang alarm bells in the federal government quarters and in March 2005 it banned seafood export to European countries as a precautionary measure. Later, the government lifted the self-imposed ban in August 2005 on the assurance of Sindh government that it would meet required quality standards within next few months. But the misery goes on.
"The EU delegation in its earlier visit had inter alia recommended establishment of an isolated auction hall for EU, rehabilitation and improvement of chill room, flake ice plant and upgradation and improvement of 255 boats to bring them in accordance with the EU directives," said the letter.
"The next visit of the EU delegation is scheduled in May 2006, but little progress has been made for the rectification of these faults."
The MINFAL secretary urged the Sindh chief secretary to intervene in the matter and advise the organisations concerned for early implementation of the EU directives as non-compliance would have serious consequences for seafood exports to the EU.
Exporters share the same concerns as the country lost the European market for several months on the same grounds in 1998. The EU countries, which accounted for 54 per cent of PakistanÃ¢â¬â¢s $128 million seafood export during 2003-04, have already imposed 100 per cent checks on the import of frozen fish products from Pakistan.
"We have separately approached the prime minister, his adviser on economic affairs and other high officials," said Sardar Hanif Khan, President Pakistan Seafood Industry Association.
"They have issued necessary directives to the institutions concerned but unfortunately no one paid heed."
He said the situation was very critical and the EU delegationÃ¢â¬â¢s visit in May could negatively affect the overall seafood exports from the country.


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## Neo

Wednesday, April 19, 2006
_By Fida Hussain_

ISLAMABAD: The government is considering allowing the ministry of railways to resume the purchase of locomotives from a Chinese company, a senior government official told Daily Times on Tuesday. 

However, when contacted a senior official of the ministry of railways said that the ministry was unaware of any such development. He said that Economic Coordination Committee (ECC) had already constituted a committee with deputy chairman of the Planning Commission as head to look into the matter after detection of defects in the under-frames of railway engines of 3000 horsepower. The purchase of the locomotives was stopped after defects had been found and no review of the decision has been taken so far, he added. 

However, an official closed to the committee deliberations said the committee recently reviewed the operations of the defected railway engines and found them &#8220;fully satisfactory&#8221; after those were repaired. The Pakistan Railways signed a contract in 2001 for the purchase of 69 locomotives from M/s Dongfang Electric Corporation, China at a cost of Rs 89 million. M/s Dalian Locomotive and Rolling Stock Works, China is the manufacturer of the locomotives. This firm has manufactured more than 6000 engines of different horsepower. 

According to the official, 3000 HP engines had developed cracks. These cracks were later rectified by the supplier. According to the findings of the committee specially constituted by the ECC the defected locomotives have been operating well for over one year. 

The committee is also of the view that the 2000 HP locomotives supplied by the company did not develop any defect. The committee observed that similar teething problems were also experienced in the locomotives, which were supplied by various Western countries to Pakistan Railways.


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## Neo

Wednesday, April 19, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\04\19\story_19-4-2006_pg7_14

_By Zulfiqar Ghuman and Irfan Ghauri_

ISLAMABAD: The National AssemblyÃ¢â¬â¢s standing committee on food and agriculture on Tuesday criticised the government for failing to implement its decision of procuring wheat from farmers at support price.

Ã¢â¬ÅThe state promised the people to procure wheat from farmers at support price because if farmers did not get the price pledged to them, they will opt not to cultivate the crop in future leading to a wheat crisis and the country would lose self sufficiency in wheat,Ã¢â¬Â Makhdoom Ahmed Anwar Alam, the chairman of the committee, said.

The committee members from the government as well as the opposition said the government allowed the increase in input prices and reduced the number of purchase centres, creating chaos among farmers. They said the government announced the support price of Rs 415 per 40 kilograms, but farmers in Sindh were offered Rs 360 to Rs 370, which did not even cover the input cost of the crop.

The committee decided to meet the prime minister and convey the concerns of the farmers. They also demanded a ban on wheat imports and asked for taking every possible step to ensure that farmers got the price they were promised. Syed Zafar Ali Shah and Pir Aftab Shah Jilani of the Pakistan PeopleÃ¢â¬â¢s Party Parliamentarians complained that the Sindh government has politicised the procurement process and politicians included in the procurement committees, were patronising their political supporters and victimising opponents.

Taking notice of the complaint, the chairman told the Sindh Food Department to ensure transparency in procurement.

The committee was informed that the government had fixed 21.5 million tonnes as the wheat target this year but it was expected that the country would produce 20.5 million tonnes, which was less than the target set. Procurement in Sindh started on April 15 and 4000 tonnes had been procured so far. In Punjab, the procurement will start on April 20.

Ã¢â¬ÅThere are serious flaws in the system and market perceptions need to be changed,Ã¢â¬Â Ismail Qureshi, the Food and Agriculture secretary said. He said the issue had been taken up with the Economic Coordination Committee of the cabinet and important decisions were expected in a few days. He said 2.2 million tonnes of wheat was left over from the previous year in government stocks.

He said that on the directions of the prime minister, the Punjab government was to procure a minimum of 3 million tonnes, Sindh 0.7 million tonnes and PASSCO 1.30 million tonnes of wheat from farmers.

The government has decided that there would be no restrictions on inter-district and inter-provincial movement of wheat. The banks were also directed to provide a cash margin of 90:10 to the private sector for wheat procurement.

He said that since the prices of wheat remained stable this year, the private sector had not come to purchase wheat, which was adding to the farmersÃ¢â¬â¢ difficulties.

http://www.dailytimes.com.pk/default.asp?page=2006\04\19\story_19-4-2006_pg7_14


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## Neo

​
President General Pervez Musharraf raised a number of key economic issues during a meeting with the senior officers of the State Bank of Pakistan on Monday. Inflation, he said, should be controlled, trade deficit reduced, micro-finance made available to the poor and the benefits of economic progress carried to the people.
The president pointed out that tax revenue collection will exceed the target this year but there was still need to strengthen the tax to the gross domestic product ratio. He asked the banks to share the hefty profits they are making with the depositors by increasing the rate of return on deposits. The president has been quite candid in his observations and directives about various important economic matters that underscores the need for greater attention at all the policy-making levels for early initiatives to fully address these issues.
On this occasion, the State Bank Governor Dr Shamshad Akhtar informed that the central bank had continued with a tight monetary policy in order to control inflation. However, the price hike, especially of essential items, is an area where greater effort is required to keep inflation and prices under close watch and strict control. Sustained economic growth can alleviate poverty by increasing the access of poor people to micro-finance, agricultural credit and small and medium enterprises; finance was yet another key observation made by the president. This will generate new economic activity in rural areas and help reduce poverty. The president observed that exports should be increased to reduce the trade deficit.
Meanwhile, the president also addressed the members of the American Business Council and Overseas Investors Chamber of Commerce and Industry where he asked the investors to take advantage of investment-friendly policies and abundant skilled labour in Pakistan. The government has been encouraging maximum investment in the country. Pakistan has also been seeking greater market access to boost exports. During the current financial year, foreign direct investment will cross three billion dollars, which is highly encouraging, and this trend should not only be sustained but it should be further accelerated.


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## Owais

GDP in current fiscal year likely to remain at 6.8% 
KARACHI: PakistanÃ¢â¬â¢s gross domestic product (GDP)Ã¢â¬â¢s growth rate in the current fiscal is expected to range between 6.3-6.8 percent, while the national economic growth rate throughout this decade could be retained at over 6 percent per annum provided the process of reforms kept continuing.

State Bank of Pakistan (SBP) in its second quarterly report on the current fiscal year told that the weakness of the economy was mainly due to agricultural production decline, however, the services sector was seen excelling more than the expectations.

The Central Bank, foreseeing the possibility of inflation rate this year mellowing down to 7.7-8.3 percent, underscored the need of further toning down of this rate so that the contracting cost of production could expand exports.

SBP report also underlined the need of addressing the declining trend in savings and widening trade deficits. Current account deficit has been anticipated to remain at 4.7 percent of the GDP during current fiscal year.

The report further said that the wheat production was likely to be around 21 million tons. However, nothing categorical could be said about the large manufacturing sectorÃ¢â¬â¢s production due to non-availability of the relevant data, report said.


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## Neo

Thursday, April 20, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\04\20\story_20-4-2006_pg1_1

_* Inflation to fall to 7.7-8.3 percent
* Wheat yields could exceed record set last year
* Growth in textile, car sectors

By Sarfaraz Ahmed_

KARACHI: The GDP growth rate this financial year is likely to be less than the 7 percent target, according to the State Bank of Pakistan. 

Fast growing globalisation and increasing regional competition means Pakistan can ill afford to derail its macroeconomic stability, which has been the lynchpin in restoring domestic and foreign investor confidence, says the second quarterly report on Ã¢â¬Ëthe state of PakistanÃ¢â¬â¢s economyÃ¢â¬â¢ for financial year 2005-06 released by the State Bank on Wednesday. 

The central bank estimates that real GDP growth will fall in the range of 6.3 to 6.8 percent. The slowdown relative to the target owes principally to Ã¢â¬Åthe (estimated) weakness in the commodity producing sectors of the economy, the impact of which will be partially offset by an anticipated above-target performance of the service-sector,Ã¢â¬Â says the report.

Also, while inflationary pressures show a welcome decline, the downward trend is unsettled, and inflation remains relatively high. Inflation is projected to fall in the 7.7-8.3 percent range during FY06.

According to the central bank, the relative improvement in water availability and availability of agriculture credit bodes well for Rabi crops, in particular the wheat crop. Wheat yields could surpass the record (2586kg/hectare) set last year. In aggregate, minor crops could also do better than targeted during Rabi. The overall growth of the crops sub-sector remains below target due to underperformance by two major Kharif crops - cotton and sugarcane. 

In large-scale manufacturing, the report says the largest industrial group, textiles, grew 7.7 percent year-on-year (yoy) during the first seven months of FY06, but far below the 26.4 percent yoy growth in the corresponding period of FY05. The chemical industry posted only 4.4 percent yoy growth in output during July-Jan FY06, primarily due to capacity constraints. The fertiliser industry, also facing capacity constraints, witnessed 16.4 percent growth, as compared with 42.2 percent last year. However, the automobile industry posted encouraging growth of 28.2 percent.

The central bank report says the governmentÃ¢â¬â¢s fiscal position witnessed moderate deterioration during H1-FY06, despite recording strong growth in tax revenues. Monetary policy remained tight throughout July-Feb FY06, while the benchmark 6-month T-bill rate was kept almost unchanged. 

The report says that large government borrowing during July-Feb FY06 was mainly due to relief spending needs in the earthquake affected areas, retirement of long-term government paper and less than anticipated external receipts from NSS instruments.

PakistanÃ¢â¬â¢s overall external account deficit narrowed marginally during July-Jan FY06 to $0.58 billion from $0.61 billion in the corresponding period of FY05, says the report. The sharp deterioration in the current account ($2.4 billion) deficit was principally due to higher import related activities.

The central bank says a substantial part of improvement in financial flows was due to increased foreign private investment, especially FDI, including a substantial $255 million received as privatisation proceeds.

http://www.dailytimes.com.pk/default.asp?page=2006\04\20\story_20-4-2006_pg1_1
GDPexpected lower than 7%: SBP http://www.dailytimes.com.pk/default.asp?page=2006\04\20\story_20-4-2006_pg1_2 http://www.dailytimes.com.pk/default.asp?page=2006\04\20\story_20-4-2006_pg1_3


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## Neo

Thursday, April 20, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\04\20\story_20-4-2006_pg5_5
_Staff Report_

KARACHI: The inflows of the foreign direct investment has shown some improvement in the country during this current fiscal, but it is still less than one percent of the global FDI flows.

The central bank in its second quarterly report said while there has been some improvement in the investment climate of the country, much remains to be done in order to deepen these flows sustainably. Despite the gradual rise in foreign investment, Pakistan still receives a meagre share (less than one percent) of the global FDI flows.

It said a comparison with some other countries of the region PakistanÃ¢â¬â¢s share in the global FDI flows though rising is still less than the other large countries.

During the July-Jan period the FDI flows recorded a substantial rise of $711 million to reach $1.226 billion.

A large share of this increase came from rising investment in equity capital, the bulk of which was in the sectors of telecommunication, financial business services, oil and gas exploration, power and trade.

The countryÃ¢â¬â¢s outstanding export bills held by exporters increased by $173 million during July-Jan 2005-06 as compared with the $132 million rise in the same period last year.

During the period the trade balance deteriorated sharply from $2.6 billion to $4.7 billion during July-Jan 2005-06 as a very strong import growth of 31 percent outpaced a reasonable 13 percent growth in exports.


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## Owais

*Lending rates more likely to go up: State Bank second quarterly report for fiscal year 2006 issued* 

KARACHI (April 20 2006): The State Bank of Pakistan has ruled out any reduction in the interest rates in fiscal year 2006, and has indicated that a change, if warranted, is likely to be on the upside, through further monetary tightening.

The second quarterly report on the state of the economy fiscal year 2006, sent to the Federal legislature, released on Wednesday, says: "Despite evidence of the slowdown in credit off-take, relative to last year (which saw exceptionally high growth in net credit off-take), and a visible weakening in manufacturing growth, the SBP monetary policy stance has come under debate.

Ironically, this centres on a very welcome weakness in inflationary pressures and particularly the deceleration in core inflation. On the one hand, some stakeholders (including manufacturers and exporters) point to the fall in inflation and stress the need to immediately lower interest rates to reduce the cost of production and investment in order to strengthen growth.

On the other hand, the SBP is also exhorted by other stakeholders to tighten its monetary posture even further, by increasing rates immediately. It is argued that this is needed to reduce inflation to the low single digit, support long-term growth, and curb speculative pressures (alleging that asset bubbles have been created and need to be pricked), even at the risk of substantially depressing economic activities in the short-term. Both arguments merit some consideration."

The SBP says: "The problem with the first argument is simply that despite the decline, domestic inflation rates remain relatively high and, while slowing, fiscal year 2006 real GDP growth is also expected to remain strong, at over 6 percent.

At present, it can be argued that given the monetary overhang of the preceding years, a premature easing of monetary policy runs the risk of reversing the downtrend in inflation, and that any financial savings as a result of lower interest rates could therefore be quickly eaten up by a rise in the cost of inputs.

It must also be remembered that deposit growth (and indeed, the national savings rate) have already weakened in FY05 and fiscal year 2006." This means that the country will be hard-pressed to meet its growing investment requirements through domestic savings, with attendant costs in terms of a widening current account deficit, slower growth, and eventually, higher inflation, warns SBP.

In the light of the above, and the emerging competition for deposits, it therefore seems (particularly as increasing trade and fiscal imbalance, as well as the persistent high fuel prices may not allow inflationary expectations to weaken significantly), and the potential build-up of asset bubbles, a decision to sustain the current monetary stance must centre on the SBP's statutory responsibility to sustain both the price stability and the growth, in the economy.

Indeed, while there is some evidence of a slowdown in the commodity producing sectors, and particularly large-scale manufacturing, this seems to be driven more by factors other than a very substantial slowdown in demand (eg capacity constraints).

*ASSET BUBBLES: *It must be recognised that these are notoriously hard to define ex-ante, and there is also a considerable controversy in economic literature on the appropriate policy response. This is particularly true if the bubbles are restricted to small components of the economy, says the report.

The SBP says: "On balance, based on the above discussion there seems to be little room for a reduction in the interest rates through the remaining months of fiscal year 2006, and indeed there is some support for a policy bias towards a further tightening of the monetary stance.

In accordance with the Monetary Policy Statement for January-July fiscal year 2006, the SBP will therefore continue to monitor economic developments, particularly the trends in inflation, with a view to containing inflationary pressures without significant prejudice to growth."


----------



## Owais

*MoU signed for coal-based power plants in Thar* 

*RECORDER REPORT* 
KARACHI (April 20 2006): Sindh Coal Authority and Associate Group, an American-Canadian company, on Wednesday at the Chief Minister House here signed a memorandum of understanding (MOU) to set up two 250 megawatts coal-based power plants in Thar.

The Director-General, Sindh Coal Authority, Abbas Ali Shah, and Iqbal Z Ahmed of Associate Group signed the MoU. On this occasion, Sindh Chief Minister Dr Arbab Ghulam Rahim said that there were ample opportunities for foreign investment in minerals based projects in the province.

He said that in view of huge coal reserves in Thar the government was encouraging different projects that would use coal as the main material for industrial activities.

The company has already started work on feasibility report for power plants.

The chief minister said that there was no law and order concern in Thar and the entire region was rich in mineral resources. Coal reserves are one of the biggest in the world, he added.

He said that work on water the project was in progress and soon there would be plenty of water supply for industrial and other uses.

Minister for Mineral Development Irfanullah Marwat said that extractable coal would be enough to produce 10,000 mw electricity. He said he would provide help to investors and protect their investment. Secretary Mines and mineral Abdul Majeed Akhund, Director General Mines and Mineral Sohail Akber Shah were also present on the occasion.


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## Owais

KARACHI (April 20 2006): The consortium, led by Al-Tuwairqi Group of Saudi Arabia after receiving the letter of acceptance from the Privatisation Commission, on Wednesday deposited 25 percent (90.5 million dollars) of the bid money for Pakistan Steels, Zaigham Adil Rizvi told the _Business Recorder _here.

The Privatisation Commission had accepted the highest bid of 362 million dollars offered by the consortium and the bidders were asked to deposit 25 percent of the bid offer by April 20, which they did a day earlier, and the remaining amount in 60 days.

The winning consortium comprises Al-Tuwairqi Group, Magnitogorsk Iron and Steel Works (Russia) and Arif Habib Securities. The second highest bidder consortium comprised Al-Noor Financial Investment of Kuwait, Industrial Union of Donbass of Ukraine and Al-Jamiah Holdings of Saudi Arabia. Meanwhile, a three-member delegation of Islamic Development Bank (IDB), accompanied by two officials of Tuwairqi Steel Mills Limited (TSML), visited Port Qasim Authority (PQA) on Wednesday.

Since TSML will be utilising PQA's service for all imports and exports from Pakistan, they were briefed on the on-going and future projects. The delegation members evinced keen interest in port activities. PQA Chairman Vice-Admiral Asad Qureshi assured the delegation of full support to TSML whenever required. He also appraised the delegation of the reduced cost of port charges and terminal charges and also reduction in the berthing period of vessels calling at the port. All steps have been taken to make Port Qasim cost effective to enhance Pakistan's trade competitiveness, he said.

The IDB will be financing TSML projects in this connection. The delegation later paid a visit to Pakistan Steels jetty at the port as this jetty is likely to be used for transportation of raw material for TSML. The Tuwairqi Steel Mills Limited will start production from its plant within 18 months. It will be using the latest Directly Reduced Iron (DRI) technology and will produce one million tonnes of steel in the first phase and later go up to three million tonnes. The TSML will employ 3,500 engineers and technicians, thereby creating massive job opportunities in the service sector. Iqbal R. Siddiqui and Mateen Jalal Khattak from TSML and Sadiq R. Muhammad, Mehmet Fatih and Nohammad Hussein Khalif from ICIEC, a subsidiary of IDB were accompanied with the delegation.


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## Owais

ISLAMABAD (April 20 2006): The sugar import bill has jumped up from $230 million in December 2005, to $450 million in April 2006, as the international market has gone highly bullish, leaving no sign of relief for the consumers, at least for some months to come.

Two factors played a big role in increasing the import bill. These were delay in import, and the consumption of huge quantity of sugarcane in gur-making. Gur making had remained a great attraction for its commercial exporters who enjoy duty-free business at a time when gur prices touched Rs 45 and Rs 50 per kg level.

This was the first season when gur-making extended to Punjab. Pakistan proved the best market for commercial gur makers and exporters throughout last season. They made money by hurting the government as their entire activity remained tax-free, and the organised sector by utilising its share.

According to the market sources, gur makers widened the sugar shortfall by around 0.130 million tons. The import of this quantity would cost additional $67 million to the national exchequer.

Faced with a shortfall of 0.9 million tons sugar, the government is desperately placing orders now for import of the commodity at $480 and $490 per ton and, with freight, its cost would be around Rs 34 and Rs 35 per kg at Karachi port. Transportation and handling charges will add considerably to increase the rates to Rs 40 and even higher after August when locally produced commodity will be no more to supplement imported stocks. This equation shows that sugar rates will remain all-time high from now onward.

Only timely import could make a difference, but both advisers--Dr Salman Shah and Dr Ashfaque Hasan Khan--whom Prime Minister Shaukat Aziz had asked to keep on watching sugar situation in December last year to ensure adequate supply to the open market did not rise to the occasion. They contested the production and consumption figures in every meeting with industry representatives from December 2005 to March 2006, till the international market jumped up from $225 to $230, taking landed cost to $530 per ton.

Sources said the industry gave a clear picture of production and consumption in more than one meeting from December onward by conveying to the advisors that they should suggest the government to import at least 0.6 million tons sugar to ease stocks, but they preferred to wait till things went literally out of control in March- April this year.

Market analysts said had the import option used in December last year or even in January this year, its cost per ton could have been around $225 and $235 pert ton.

They added that the landed cost of one kg sugar in December 2005, at the rate of $225 and $230, could be Rs 20 and with freight and other cost its retail rates could be maximum Rs 22 and Rs 22.50. These rates went up to Rs 35 and Rs 36 per kg in March and April this year.

Market experts worked out import bill on the basis of official shortfall figures. The official figures on sugar production and estimated consumption showed that Pakistan needs 0.9 million tons additional stock to meet its requirement till November 30, possible start of the new crushing season 2006-07.


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## Owais

KARACHI (April 20 2006): Divergent trends were seen in the currency market on Wednesday in process of modest trading, dealers said. Importers rush for dollars pushed the rupee down at the forth quarter of the current fiscal year.

The rupee lost four paisa against the dollar in the interbank market for buying and selling at 60.02 and 60.04, respectively. Strong supply of dollars helped the rupee minimise its losses and it seems the rupee would move both ways in short-run, they said.

Reuters adds, dollar hit a seven-month low against euro in the world markets, extending losses made after minutes of the Federal Reserve's March meeting suggested the central bank was close to ending a two-year run of raising interest rates.

Amid a broad sell-off, the dollar also slipped to a fresh three-month trough versus the Swiss franc, stung by the minutes as well as softer-than-expected data for US producer prices and housing starts.

*OPEN MARKET RATES: *The rupee picked up two paisa against the dollar for buying and selling at 60.08 and 60.13, dealers said.

The rupee extended its erosion versus the euro, shedding 60 paisa for buying and selling at Rs 73.50 and Rs 73.60 after sharp rise in the value of the single European currency, dealers said. 
================================Buying Rs 60.08Selling Rs 60.13================================


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## Owais

*Inflation to remain around eight percent in fiscal year 2006: SBP* 
*RECORDER REPORT* KARACHI (April 20 2006): Inflationary pressures through most of the eight months of the current fiscal year weakened, because of the central bank's stance of continuing tight monetary posture, administrative measures and favourable movements in key international commodity prices, and the likelihood that 8 percent target would be achieved.

The State Bank of Pakistan in a report released on Wednesday on the 'State of the Economy' said that "particularly notable is the gradual reduction in CPI inflation despite sustained high oil prices and the supply shocks". It said that CPI inflation had dropped from 9.3 percent in the year ended June 30, 2005 to 8 percent in February 2006.

Moreover, while CPI inflation remained in high single digit throughout the period, the volatility in the inflation rate was significantly lower than what it was in the corresponding period of last year.

Also, core inflation, after clinging stubbornly in the range of 7-8 percent during Jun FY04-October FY05 period, was finally trending downwards, dropping to 6.4 percent by February 2006, for the first time in the last 20 months.

The report added that the WPI inflation had also decelerated, falling to 9.9 percent on year-on-year basis in February 2006, after maintaining an average of more than 11 percent during the first half of the current fiscal year. As with the CPI, the contribution to the decline in WPI inflation was quite broad-based, with all the sub-groups of the index recording a deceleration in price rises.

"While there exists a possibility of a rebound in food inflation, the impact of this should be mitigated by the impact on aggregate demand (and particularly non-food, non-oil demand) and lower volatility in energy prices." As a result, barring unforeseen supply shocks, SBP forecasts suggest that the average annual inflation for fiscal year 2006 is likely to be in the neighbourhood of the 8 percent annual target.

The central bank has emphasised that the monetary policy remained tight throughout July to February 2006 period, while the benchmark treasury bills rate was kept almost unchanged. The SBP increased its interventions during the period to ensure that short-term interbank rates remained close to discount rate, ie 9 percent.

The higher interbank rates, amidst declining market liquidity and rising credit deposit ratio of the banking sector, contributed significantly to the 196 basis point increase in the weighted average lending rate during July-February 06 and a consequent relative deceleration in non-government credit growth.

Although credit growth remained strong at 18.1 percent during the period under review, it was substantially lower than the very high growth of 25.3 percent during the same period of last year.

Thus, the lower monetary expansion during the period was due principally to the slowdown in non-government credit growth, and depletion in banking system NFA.


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## Owais

*Japanese-Korean consortium to set up LNG terminal at Port Qasim* 
*RECORDER REPORT* KARACHI (April 20 2006): A consortium of leading Japanese and Korean companies have expressed interest in setting up a LNG terminal at Bundal Island, Port Qasim.

A four-member delegation, comprising Mitsui (Japan) and Kogas and Vopak (Korea), visited the site on Wednesday, and showed deep interest in the site which, they said, had great potential and could be developed into a leading LNG terminal in the world.

Kogas from Korea is the largest LNG importer in the world and another Korean company Vopak are established chemical terminal operators.

The LNG terminal is likely to be established at Port Qasim with an investment of one billion dollars. Port Qasim Authority (PQA) had issued expression of interest (EOI), which attracted the attention of the consortium and ultimately led to their visit to the site.

The delegation members, comprising Ishikawa Eiichi, Reika Shin, Lee Ho In, and Takayuki Hori, were briefed on PQA's ongoing and future projects.

PQA Chairman Vice-Admiral Asad Qureshi apprised the delegation of PQA's three-pronged strategy to facilitate the trade ie, cost effective and time efficient port services and facilities, customer-friendly approach and close liaison with port users. He also enlightened the delegation members of his vision of Port Qasim.

The Chairman saw Port Qasim as the port of first choice for customers and stakeholders providing time efficient and cost effective port services and facilitating industrialisation thereby making tangible contribution towards the economic progress and prosperity of Pakistan.


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## Owais

*UBL and POL net profits climb* 
*RECORDER REPORT* KARACHI (April 20 2006): The net profit of United Bank Limited (UBL) was more than double, while Pakistan Oilfields Limited (POL) registered a growth of 50 percent in the quarter ended March 31, 2006 on higher deposits and sales. Both the companies announced their financial results on Thursday and sent a financial statement to the Karachi Stock Exchange.

Pakistan Oilfields announced a bonus of 50 percent, which means shareholders would get five shares for every 10 shares held. The net earnings in the first quarter ended March 31 stood at Rs 1.5 billion or Rs 11.44 per share as compared to Rs 999 million or Rs 7.6 per share.

Similarly, the nine-month profit also record growth and earnings in the period amounted to Rs 4.395 billion or Rs 33.45 per share, up from Rs 2.401 billion or Rs 18.27 per share.

The growth in earnings is expected to be higher sales revenue, which is expected to be fuelled by higher production levels and increased oil and gas prices. The scrip has appreciated by 13 percent in just five trading sessions.

The upward drive in the scrip is mainly on the back of expectations of oil and gas discoveries, higher international oil prices and the recent activity is fuelled by the expectations of a bonus issue along with the nine-month results.

United Bank profit before tax amounted to Rs 3.5 billion, up from Rs 1.695 billion, where the net profit climbed to Rs 2.26 billion as compared to Rs 1.012 billion. The earning per share for the period ended March 31 was Rs 3.49 per share against Rs 1.56 per share.


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## Neo

KARACHI (updated on: April 20, 2006, 16:21 PST): Higher domestic prices and a larger sown area have rekindled hopes of a bumper sugarcane harvest of over 50 million tonnes in the 2006/07 crop year, industry and the government officials said on Thursday.

Farm officials estimate that the area under sugarcane cultivation has risen by 8.7 percent to around one million hectares (2.5 million acres) against 920,000 hectares in the previous crop.

"The cultivation target was initially put at 960,000 hectares, but higher returns during the last season encouraged farmers to grow cane on a bigger area," an agriculture ministry official, who requested anonymity, said.

Pakistan's 13-month-long sugarcane season starts in February and ends in March the following year.

The sugarcane harvest fell last season to 44 million tonnes because of low rainfall and the loss of sugar-growing land to cotton. Around 10 percent of the total harvest in Punjab province was also damaged by frost.

But last year, sugarcane became the most profitable crop in the country, as shortages pushed prices to an all-time high of 120 rupees per 40 kg, almost double the government's fixed price.

The official said the sowing was completed on time and moderate winter rains had also improved the availability of irrigation water for the water-intensive crop.

"In Punjab particularly, growers have shifted to sugarcane from cotton crop due to the higher prices being offered for their produce," he added.

SUGAR OUTPUT 

Industry officials said refined sugar output is expected to rise in the 2006/07 crop year to between 3.3 million and 3.5 million tonnes from a year-earlier 2.6 million tonnes. Demand is around 3.9 million tonnes.

The country would need to import 250,000-350,000 tonnes of sugar by the end of calendar 2006 to fill a supply gap and avoid price spikes, said Jawed Kiyani, a Lahore-based sugar mill owner.

"But next season, imports will not be as high as we have seen this time around," Kiyani told Reuters. "Our estimate is that maximum 350,000 tonnes of raw sugar would be imported between October and February."

Muhammad Najib Balagamwalla, chief executive of Seatrade Group, said the state-run Trading Corporation of Pakistan and private traders have finalised import deals of around 500,000 tonnes of sugar during the last six months.

"Now, we have stocks of 2.05 million tonnes, which are more than enough to meet the demand till October when the cane crushing starts," Balagamwalla said.

"Imports will slow down quite a bit from now onwards, but we will see some aggressive buying of raw sugar at the start of the next calendar year."


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## Neo

M ISRAR KHAN 
ISLAMABAD (April 20 2006): The Asian Development Bank (ADB) has pinpointed that the frequently changing data collection methodology of the Federal Bureau of Statistics (FBS) during the last decade has affected the reliability and comparability of its survey data.

The bank has proposed adoption of reliable and independent internal mechanisms for supervision and validation of fieldwork to address the problem.

For instance, different data sources that are not necessarily comparable in terms of sample design, seasonality, or methodology, are often used to examine poverty trends, making the data unreliable.

The Household Integrated Economic Survey (HIES) is the main source of data for poverty estimates in Pakistan, and should be strengthened, at least to the extent of producing regular, credible data, even at intervals of two or three years. This would serve the purpose of poverty monitoring effectively.

The ADB in its Pakistan Poverty Assessment Update titled "The Reliability and Credibility of Statistical Data for Poverty Analysis in Pakistan" said, "The reliability and credibility of Pakistan's poverty database, which is generated primarily through household surveys, has been debated for a long time. Issues of concern include updating of the sampling frame; survey comparability; availability when needed; frequent changes in field methodology; and the quality of questionnaires used."

Criticising the Pakistan Social and Living Standards Measurement (PSLM) survey, the bank said that it does not, however, adequately monitor all millennium development goals (MDGs) and Poverty Reduction and Strategy Paper (PRSP) indicators. Fertility and child mortality rates, for instance, cannot be estimated through this survey.

One important MDGs indicator is the "proportion of children who reach Grade 5 of those admitted in Grade 1. This indicator requires data on school dropouts, which the PSLM does not provide. Like the PIHS, the PSLM survey also fails to monitor several other MDGs/PRSP indicators, such as maternal mortality and malnutrition (underweight children). The new survey is, therefore, inadequate for the purposes of monitoring all the MDGs/PRSP indicators.

The Bank also said that the credibility of data depends largely on how independent the executing agency is, and, more importantly, on the quality of the data itself.

The FBS ensures data quality by carrying out consistency checks and 'cleaning', but validating survey data in the field is the key to enhancing data quality. This is usually done through a post-enumeration survey (PES), which is not common in Pakistan. An alternative would be to validate FBS fieldwork externally, although this is not a common practice among data generating agencies in the developing world.

Third-party validation may in fact weaken the FBS's fieldwork supervision ability. Rather than introducing third-party validation to verify FBS household-level data, reliable and independent internal mechanisms for fieldwork supervision and validation could be developed to address the problem, it added.

It is important that such a mechanism establishes its credibility through long-term improvement in its data collection techniques. This will boost the confidence of the local staff and strengthen the FBS's ability to carry out surveys.

The Bank's background Paper-2 assesses the reliability and credibility of the household surveys that generate data for poverty analysis in Pakistan. It focuses on the data generated by four household surveys: the Household Integrated Economic Survey (HIES), Pakistan Integrated Household Survey (PIHS), Pakistan Demographic Survey (PDS), and Labour Force Survey (LFS), all the four are carried out by the Federal Bureau of Statistics (FBS).

A common observation on large surveys such as the HIES and PIHS is that the income accruing to the highest income group is seriously understated, and that the poorest are inadequately represented. This issue of the representation of high-income groups surfaced more seriously in the 2001-02 PIHS/HIES, where low- or middle-income group primary sampling units (PSUs) were enumerated against high-income PSUs.

The FBS report that was published subsequently blamed its field supervisors for the negligence. This is a poor defence - this is a serious sampling task and should be managed regularly well before a survey is started, it added.

The FBS has initiated a new survey, the Pakistan Social and Living Standards Measurement (PSLM) survey, but it does not contain a module on birth history to estimate fertility and child mortality rates. The PDS remains the main data source for these indicators.

Although a reliable data source, the PDS also faces certain concerns: recent changes in methodology may have affected fertility and mortality rates, but this impact has not been evaluated. In addition, data on children's height and weight is not regularly available to monitor child malnutrition. This information could be obtained through the PDS if female enumerators were inducted into the survey. It would be worth investing in the PDS for reliable demographic and health data.

The Bank said that in general, labour data remains inadequate; it would be worth investing more in the Labour Force Survey (LFS) to make it an annual survey.

The ADB also said that there is considerable debate on the urban sampling frame used by the FBS. Using the 1998 population and housing census data, the FBS revised its rural sampling frame, which was then used in the two combined rounds of the PIHS/HIES.

However, the FBS's urban frame was last updated in 1995, and this might affect the rural and urban distribution of a sample. It also affects the overall estimates of poverty, as well as comparability across years, and, thus, needs to be updated urgently. Frequent changes in data collection methodology also affect the reliability and comparability of survey data. Such changes include changes in the reference period for reporting births and deaths (the PDS) and for the expenditure module of the HIES/PIHS. Such changes may be required to improve data quality, but the frequency of changes in reference period may affect reporting quality and data comparability across surveys.

The quality of data produced by the household surveys so far implies that the quality of training and supervision of surveyors needs to be improved. One reason for the recent controversy over household size, which is an important variable in estimating poverty, was that ill-trained enumerators did not enlist household members properly.

The Bank said that the supervision system should be changed to allow supervisors to manage their field teams for the entire survey period, as was done by the FBS in the PIHS rounds. Household survey monitoring teams consisting of regular field staff posted at national, regional and field offices across the country could also monitor surveys more effectively.

FBS supervisors are responsible for many things: overseeing the identification of enumeration blocks (PSUs); household listing; selecting households using systematic random sampling techniques; field enumeration; editing and cross-checking data entries; and finally, "cleaning up" the data collected, the bank adds. The supervisors cannot carry out all these assignments efficiently, and should be relieved of some of the duties.

For example, when the 2001-02 PIHS data was cross-checked, some low-income households were found to have been included in high-income areas. The FBS blamed its field supervisors for this negligence. However, this is a serious sampling task and should not simply be relegated to the supervisors. Household survey monitoring teams consisting of regular field staff posted at national, regional and field offices across the country could be used effectively to monitor surveys.

The concept of teamwork is largely absent in the FBS's fieldwork strategy. One reason that non-government agencies produce better-quality household survey data is that their fieldwork teams are headed by supervisors who are based in the field for the entire duration of the survey.

While on the other hand, the FBS module is different: it uses mostly male enumerators who are not accompanied by the supervisors on a daily basis. The PIHS series is an exception; data was collected by mobile teams of male and female enumerators who were managed by a team of supervisors on a daily basis. It may be costly for the FBS to spare its staff, as supervisors who go into the field every day with their team, but such improvement in the field strategy are necessary to improve the quality of household survey data.


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## Neo

By Our Reporter

ISLAMABAD, April 19: Imtiaz A. Rastgar, vice-chairman and CEO of the Engineering Development Board, has assured representatives of the industry that the proposals made by the board on the basis of the Motor Industry Development Programme (MIDP) of South Africa will be circulated to them in order to get their support before submission to the government.

According to a press release here on Wednesday, Mr Rastgar was chairing a meeting of auto, refrigerators and air-conditioners manufacturers, tariff consultants, the CBR, the ministry of industries and production and members of delegations who recently visited South Africa for studding the MIDP.

Zahid Yaqoob, EDB managing director and leader of the delegation, gave a detailed presentation about the MIDP and their findings about the working of the programme in South Africa.

He said the South African authorities were ready to send their master trainers to Pakistan. He said the main objective of the MIDP was to rationalise production into smaller range of products and achieve economics of scale through exports.

In the auto sector, they have gradually reduced tariff on CBU from 65 per cent in 1995 to 32 per cent in the current year. The same had been reduced from 49 per cent to 26 per cent on CKD. Duty free allowance (DFA) was the main instrument of the programme, Mr Yaqoob added.

The meeting decided to meet again on May 2 to finalise its proposals for incorporation in the forthcoming budget.

Meanwhile, two sub-committees on motorcycles and refrigerators and air-conditioners will meet separately with an aim to recommend export incentives in the light of the MIDP.

The meeting also decided to study the development made in auto sectors of Thailand and Turkey by sending the same delegation to these countries in order to recommend which model suits Pakistan.

Magsood A. Basrra of Atlas Honda also made a presentation on findings of his visit to South Africa. He said the programme was successful due to the support of multinational manufacturers and its long duration of 20 years.

Shakeel Ahmed, representative of the refrigerator and AC manufacturers group, also briefed the meeting about his findings of the visit.


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## Neo

Thursday, April 20, 2006 

* Inflation to fall to 7.7-8.3 percent
* Wheat yields could exceed record set last year
* Growth in textile, car sectors

By Sarfaraz Ahmed

KARACHI: The GDP growth rate this financial year is likely to be less than the 7 percent target, according to the State Bank of Pakistan. 

Fast growing globalisation and increasing regional competition means Pakistan can ill afford to derail its macroeconomic stability, which has been the lynchpin in restoring domestic and foreign investor confidence, says the second quarterly report on Ã¢â¬Ëthe state of PakistanÃ¢â¬â¢s economyÃ¢â¬â¢ for financial year 2005-06 released by the State Bank on Wednesday. 

The central bank estimates that real GDP growth will fall in the range of 6.3 to 6.8 percent. The slowdown relative to the target owes principally to Ã¢â¬Åthe (estimated) weakness in the commodity producing sectors of the economy, the impact of which will be partially offset by an anticipated above-target performance of the service-sector,Ã¢â¬Â says the report.

Also, while inflationary pressures show a welcome decline, the downward trend is unsettled, and inflation remains relatively high. Inflation is projected to fall in the 7.7-8.3 percent range during FY06.

According to the central bank, the relative improvement in water availability and availability of agriculture credit bodes well for Rabi crops, in particular the wheat crop. Wheat yields could surpass the record (2586kg/hectare) set last year. In aggregate, minor crops could also do better than targeted during Rabi. The overall growth of the crops sub-sector remains below target due to underperformance by two major Kharif crops - cotton and sugarcane. 

In large-scale manufacturing, the report says the largest industrial group, textiles, grew 7.7 percent year-on-year (yoy) during the first seven months of FY06, but far below the 26.4 percent yoy growth in the corresponding period of FY05. The chemical industry posted only 4.4 percent yoy growth in output during July-Jan FY06, primarily due to capacity constraints. The fertiliser industry, also facing capacity constraints, witnessed 16.4 percent growth, as compared with 42.2 percent last year. However, the automobile industry posted encouraging growth of 28.2 percent.

The central bank report says the governmentÃ¢â¬â¢s fiscal position witnessed moderate deterioration during H1-FY06, despite recording strong growth in tax revenues. Monetary policy remained tight throughout July-Feb FY06, while the benchmark 6-month T-bill rate was kept almost unchanged. 

The report says that large government borrowing during July-Feb FY06 was mainly due to relief spending needs in the earthquake affected areas, retirement of long-term government paper and less than anticipated external receipts from NSS instruments.

PakistanÃ¢â¬â¢s overall external account deficit narrowed marginally during July-Jan FY06 to $0.58 billion from $0.61 billion in the corresponding period of FY05, says the report. The sharp deterioration in the current account ($2.4 billion) deficit was principally due to higher import related activities.

The central bank says a substantial part of improvement in financial flows was due to increased foreign private investment, especially FDI, including a substantial $255 million received as privatisation proceeds.


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## Neo

Thursday, April 20, 2006 

KARACHI: The inflows of the foreign direct investment has shown some improvement in the country during this current fiscal, but it is still less than one percent of the global FDI flows.

The central bank in its second quarterly report said while there has been some improvement in the investment climate of the country, much remains to be done in order to deepen these flows sustainably. Despite the gradual rise in foreign investment, Pakistan still receives a meagre share (less than one percent) of the global FDI flows.

It said a comparison with some other countries of the region PakistanÃ¢â¬â¢s share in the global FDI flows though rising is still less than the other large countries.

During the July-Jan period the FDI flows recorded a substantial rise of $711 million to reach $1.226 billion.

A large share of this increase came from rising investment in equity capital, the bulk of which was in the sectors of telecommunication, financial business services, oil and gas exploration, power and trade.

The countryÃ¢â¬â¢s outstanding export bills held by exporters increased by $173 million during July-Jan 2005-06 as compared with the $132 million rise in the same period last year.

During the period the trade balance deteriorated sharply from $2.6 billion to $4.7 billion during July-Jan 2005-06 as a very strong import growth of 31 percent outpaced a reasonable 13 percent growth in exports.


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## Neo

*Rs32bn development projects cleared*



Thursday April 20, 2006 (1037 PST)




http://pakistaniforces.com/forums/http://www.paktribune.com/news/topstories.phphttp://www.paktribune.com/news/print.php?id=141207http://www.paktribune.com/mypaktribune/favlink.php?t=Rs32bn development projects cleared
*ISLAMABAD, April 18: The Planning Commission has cleared 18 major development projects worth Rs32.1 billion which would now be formally approved by the Executive Committee of the National Economic Council (ECNEC) here on April 22. *



Official sources told Dawn on Tuesday that the ECNEC meeting to be presided over by Prime Minister Shaukat Aziz would ensure that the finance division releases funds well in advance for new development projects. 

The objective, sources said, was to remove the objections of the ministries, divisions and the provincial departments about the delay in disbursement of funds that invariably results in cost escalation of projects. 

The government has been advised by its economic advisors to avoid increase in the budget deficit due to various reasons, including an enormous increase in the cost of hundreds of development projects every year. 

The new development projects are in the energy, health, higher education, physical planning & housing, rural development/area development, social, transport and communication sectors. 

Five of the development projects for Karachi have especially been cleared by the Planning Commission which include a bridge over the Malir River connecting Shah Faisal Colony with Korangi sector-10 (Rs6.2 billion), establishment of accident and ancillary services complex at the Civil Hospital Karachi (Rs1.4 billion), construction of Sohrab Goth interchange at the intersection of Shahrah-i-Pakistan and Rashid Minhas Road (Rs579.95 million), institutional enhancement to implement the Karachi Mega City Development project (Rs1.1 billion) and provision of MRI and CT scanners for the Civil Hospital Karachi. 
Other projects are a Japanese-assisted rural road construction project (Rs9.8 billion), improvement and refurbishing of existing sewerage treatment plants (Rs2.7 billion), Fulbright Scholarship Support Programme (Rs7 billion), National Tuberculosis Control Programme 2005-10 (Rs1.1 billion), construction of the Sibi Rakhni Road (Rs1.4 billion), widening and remodelling of roads and intersection of the Islamabad International Airport to the Flying Club Rawalpindi (Rs1.2 billion), procurement of fire-brigades for Islamabad, the Kala Dhaka Development Project, transmission scheme for dispersal of power from the 2x50mw windmill power plant at Mirpur Sakro, the Kohistan Development Project, the Indus Highway Project (N-5 Phase III) and strengthening of the Gambat Institute of Medical Sciences.


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## Neo

Thursday April 20, 2006 

ISLAMABAD : Prime Minister Shaukat Aziz Tuesday directed the Civil Aviation Authority (CAA) to accelerate work on the planning phase of the new Islamabad international, which will be the most modern airport in the region.

Chairing a meeting of CAA here at the PM house, he directed the authority to assign work separately to two contractors to simultaneously start work on project, with one working on the runway and allied facilities and the other on the building. 

Ã¢â¬ÅThis will be the most modern airport and serve as a hub in the region and cater to growing needs of tourists and businessmen,Ã¢â¬Â the Prime Minister said.

He said the work on the airport will be started in next few months and will be accomplished on most modern lines. The meeting discussed in detail the civil aviation policy. The Prime Minister said local and foreign carriers need to be encouraged to increase flights to Pakistan, however said that this be done while keeping in view the requirements of the PIA. 

He directed the Civil Aviation Authority to focus on improving countryÃ¢â¬â¢s airports and facilitate the passengers. He also asked for development of valuable surplus land adjoining the airports.

He also expressed satisfaction that the Civil Aviation Authority has transformed itself into a self-sustaining organization through sound management policies and appreciated the hard work put in by its employees and management. 

Minister for Defence Rao Sikandar Iqbal informed the Prime Minister that technical and civil work of the new airport was being finalized while planning of the new Gwadar airport will commence next month.

The Federal Minister for Defence Rao Sikandar Iqbal, Minister of State for Defence Zahid Hamid, Secretary Defence, DG Civil Aviation Authority and senior officials attended the meeting.


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## Neo

DHAKA (April 21 2006): India and Pakistan on Thursday agreed not to levy import duties of more than 5 percent on products traded within the South Asia Free Trade Area (Safta).

The decision was made at a meeting of South Asian commerce ministers, which concluded in Dhaka on Thursday. The meeting primarily discussed implementation of a free trade area in the region over next decade.

"They have agreed to remove import duties above 5 percent in three years to 2008 under the South Asia free trade area (Safta) agreement," Bangladesh's commerce minister Altaf Hossain Choudhury told reporters.

"Immediate beneficiaries will be five other countries in the South Asian Association for Regional Co-operation (Saarc) and implement the reduced duty in four phases starting July this year," Choudhury said.

"The other five Saarc countries have also agreed to reduce their import duties by between 0 to five percent by next 10 years," he added.

The meeting was attended by commerce ministers of all Saarc nations, except Nepal.

The meeting decided to draw up a timetable to gradually ease tariffs to make Safta effective by 2016, officials at the meeting said.

Afghanistan will join Saarc next year.

"With 1.4 billion population in the Saarc region, one of the largest areas in the world, the intra-regional trade is very minimal," Lyonpo Chenkyab Dorji, the secretary general of the Saarc secretariat, told the opening session of the meeting on Thursday.

Intra-regional trade volume among Saarc countries stands at $6 billion, or about 4.4 percent of the total trade of member states worth $135 billion, officials said.

The SAFTA agreement signed at a summit in Islamabad in January 2004 came into effect in January this year. Tariff concessions under the agreement will be effective from July, 2006. A range of products that members deem sensitive will be excluded from the free trade deal.


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## Neo

ISLAMABAD (April 21 2006): Pakistan on Thursday announced the realisation of debt cancellation/swap of over $650 million from donor countries, including around $392 million pertaining to Canada against the expenditures on education.

Subsequent to Paris Club III rescheduling, Pakistan had initiated a dialogue for debt cancellation/debt swap with donor countries.

Following negotiations, Pakistan has succeeded in reducing its external debt burden by around $652 million over next five years out of which around $392 million pertains to Canada for which a debt conversion agreement is being signed by the economic affairs division secretary with the Canadian government on Thursday.

Under this arrangements, the Canadian ODA loan amounting to C$449 million (US $392 million) will be written off against expenditure on education, particularly to teachers' training in all the four provinces and the education ministry, according to a press release issued by the economic affairs division on Thursday.

Earlier, the division had finalised a debt cancellation of approximately $200 million from Italy out of which $100 million are being cancelled against Pakistan's expenditure on Afghan refugees and another $100 million against earthquake reconstruction expenditure.

Likewise, negotiations have also been completed with Germany for writing off an amount of $62 million loan owed by the government of Pakistan to Germany against expenditure on reconstruction in the earthquake-affected areas.

These initiatives, altogether, will help reduce Pakistan's external debt burden by $652 million.


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## Neo

KARACHI (April 21 2006): Liquid foreign exchange reserves have reached $12,906.5 million on April 15, 2006. According to the break up, the State Bank held $10,611.2 million whereas other banks held $2,295.3 million.


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## Neo

KARACHI (April 21 2006): President Pervez Musharraf has assured foreign investors of the security of their capital, saying that the government had formed a strategy to confront terrorism and extremism, which had yielded "encouraging results". Pakistan is undergoing a "societal transformation" with improvement in law and order, he said.

He was speaking at the annual dinner of the Overseas Investors Chamber of Commerce and Industry (OICC&I) at the Karachi Golf Club.

The President said that overseas investment is the "the main source of economic growth of Pakistan", and called on investors to help the government get more investment into the country. He said that foreign companies were making healthy profit but as the President put it "I do not grudge their earnings and profit. I look forward to more investment from abroad, so that the economy progresses."

The President said that he had decided to chair all conferences on foreign direct investment in the country.

He said that Rs 30 billion had been allocated for the social sector, which was three times as much as the allocation in the 1998-99 fiscal year. He pointed out that Pakistan's credit rating had improved and a leading economist magazine had included Pakistan in its list of the top 25 performers in the economic market. This he said, "Is a big achievement." He pointed out the increase in exports and urged export efforts for engineering goods and dairy products.

Speaking on the occasion, Federal Minister for Commerce, Humayun Akhtar Khan lauded the services of the chamber and the contribution of its members towards the economy of Pakistan.

Earlier the president of OICC&I Salman M Burney traced the 146 years history of the chamber. He gave interesting statistics about member companies who he said have an equity base in excess of Rs 240 billion and total assets of Rs 1,100 billion invested in Pakistan. Sales of member companies represent over 11 percent of GNP of the country and over 33 percent of the GDP in the manufacturing sector. He said that over 37 percent of our revenue is remitted to the government in the form of various taxes, 30 percent of the total national excise duty collection and over 20 percent of all import and sales tax is paid by our members.

Burney said that the vision and mission of the chamber is to ensure that the interests of our members and the country are aligned for mutual progress and development. He thanked the President for the economic stewardship by him and his team, which his government had provided over the last six years. He said during this period Pakistan's economy had emerged from a depressed phase, to a point where we have a resurgent business sector, generating strong economic growth at levels, which are amongst the best in a global context, year after year. Significantly this has been achieved whilst facing some of the most serious challenges that this country has ever seen and despite very major natural disasters of a scale which could have laid low many a countries' economy.

He pointed out that this has been possible due to some core principles. First and foremost was the clarity & stability of policy frameworks. Secondly, the principle of transparency and a level playing field for all. Thirdly & most significantly was the pro-business culture.

Burney said that we should not be complacent, and therefore it was encouraging to see that the government is working on second generation reforms aimed at increasing competitiveness and improving governance. He also emphasised the importance of intellectual property rights and said much more needs to be done on this front.

He outlined the efforts of member companies in the field of corporate social responsibility and said after the devastating earthquake the companies and their staff contributed significantly to the national effort and till to date member companies had contributed to the tune of over Rs 5.4 billion in cash and kind towards the relief and reconstruction effort.

The dinner was attended by over 400 top executives of member companies and high government officials including the governor and chief minister of Sindh.-PR


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## Neo

FAISALABAD (April 21 2006): In view of Pakistan's mixed experience of economic growth and poverty reduction, the consultants of Asian Development Bank argued that poverty cannot be tackled only through economic growth, and that there needs to be a strategy to ensure equitable distribution of income, employment generation, and social sector development.

Dr Emma Hooper, Poverty and Macro Economic Specialist, Asian Development Bank (Pakistan Resident Mission), said that under ADB's Country Strategy and Programme for 2002-06, poverty reduction has been the overall objective of ADB's development assistance to Pakistan. A new Country Strategy and Programme will be prepared to cover the period 2007-11, he added.

As input to this, Dr Emma Hooper said that the preparation of ADB's Pakistan Poverty Assessment Update started in 2005. Part of this process has been the commissioning (both in-house and from external consultants) of a number of draft background papers on specific topics for in-depth examination.

In particular, crosscutting themes such as poverty definitions, income and non-income poverty, gender and poverty, and issues such as the protection of the chronically poor, food security, and the social sector, have been the subject of research by the Poverty Group of the Country Policy Operations Unit at ADB.

In a recent report of ADB stated that Pakistan's structural adjustment reforms have not resulted in the economic growth or had the favourable impact expected. During the post-structural adjustment programme, growth slowed down, while income inequalities increased.

The taxation structure became more regressive and public expenditure on services used by the poor declined. Employment grew very slowly and real wages declined. Consequently, poverty increased considerably after FY1988.

Over 40 percent of Pakistan's population is below 15 years of age and about 22 percent comprises females of reproductive age. Such an age structure has a built-in momentum toward future population growth.

High dependency ratios, large families, and a small number of earners are the result of this age structure, and these factors are considered major correlates of poverty. Household size varies inversely with per capita expenditure quintile and is much larger among poor households in urban and rural areas. The mean number of children in the lowest quintile is three time as high as that in the highest-income group.

The dependency ratio for the top quintile is less than half that of the bottom quintile. Because of the rapid growth of population, the absolute size of the illiterate population has increased even faster than the literate population. The population boom has also led to irrevocable environmental degradation and high levels of housing poverty.

However, Pakistan has experienced a fertility transition in the last 2 decades. Consultants argued that economic hardship faced by Pakistan families in the 1990s may well have helped limit family size, but further studies are required to establish the causal relationship between population growth and poverty.

Poverty and the labour market are closely linked, because market earnings are among the main sources of income for workers.

The period from FY1988 to FY2002 shows that the slowdown in economic growth accompanied by an increasing imbalance in the supply and demand for labour, caused a sharp rise in unemployment and a significant increase in poverty levels during this period.

Given the concentration of workers in the low-paid informal sector, employment may not guarantee households a transition out of poverty. Policies directed at reducing unemployment, therefore, will only partly address the problem of poverty, and need to be reinforced by better terms of employment for the poor who are already employed. Wages are the most important component of the terms of employment.

The flow of foreign remittances has been an important factor in explaining changes in poverty level in the country. The results of a standard Keynesian macro-model show that, on average, remittances contributed a 2-percentage point decrease in poverty.

However, this inflow did little to improve income distribution. Based on household survey data, studies show that poverty tends to be much lower among migrant households than among non-migrant households. In urban areas, poverty was almost non-existent among migrant households while a quarter of non-migrant households were found to be below the poverty line. In rural areas, the poverty level was much higher among non-migrant households than among migrant households.

Overseas migration has thus had a significant impact on poverty reduction in Pakistan.

The ownership of land is highly unequal in Pakistan and considered one of the major causes of rural poverty. Less than half of all rural households own any agricultural land, while the top 2.5 percent account for over 40 percent of all land owned. Land inequality is relatively higher in poor districts located in the cotton/wheat belts of southern Punjab and Sindh.

The ownership of farm assets (other than land) among cultivating households is also unevenly distributed. These factors, along with the prevailing tenancy arrangements, particularly sharecropping, have a strong correlation with rural poverty.

The incidence of sharecropping has declined over time, although a large number of rural households still cultivate others' land as share-tenants. Studies find the highest level of poverty among these sharecroppers.


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## Neo

ISLAMABAD (April 21 2006): Pakistan would be the gateway of Asian trade towards the European countries in the near future due to its strategic location and consistent business-friendly policies coupled with the stature and influence of its visionary leadership.

In an interview with the APP, Federal Minister for Communications Shamim Siddiqui on Thursday said, as Pakistan provides a passageway to bridge China, Iran, India, Korea and Japan with Turkey and the rest of European countries, the government would spend billions of dollar in collaboration with World Bank and Asian Development Bank (ADB) till the year 2015 to construct a network of roads to materialise the Asian highways, which would bring about a huge economic activity within the whole region.

He said the volume of Chinese business through Gwadar Port would be around $25 billion, as this route would reduce 5000 kilometres from Beijing to Kashghar.

He said the credit for the future trade and investments in the country goes to the visionary leadership of President Musharraf and consistent policies of Prime Minister Shaukat Aziz.

To achieve the desired results, the government would introduce a network of roads, which would lead towards saving of Rs 240 billion of fuel. Besides, at least 55 percent time duration of travelling between Karachi and Peshawar would also be reduced, he added.

He said important Asian powers like China, Japan, Korea, Malaysia and India would use Gwadar as a trade link towards Turkey and other European states.

He said the Gwadar port would be functional in December this year and to ensure swift transportation from Gwadar to China and other neighbouring countries, there was a dire need to rehabilitate the N-25 route.

Describing the road demography, he said there were two road networks in the country. Around 1800-kilometre long GT Road (N-5) links Karachi with Peshawar via Bahawalpur, Multan and Lahore. The other route, which is 1400 kilometres long (N-55), connects Karachi with Peshawar through Jamshoro, Dadu, Sehwan, Rajanpur, D.G. Khan, D.I. Khan and Kohat.

To a question, the minister said the government was constructing third link named as Motorway, which would ensure smooth transportation of goods from Gwadar to Karakuram Highway, the route to China.


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## Owais

*Six more licences issued for bike manufacturing* 

KARACHI (April 21 2006): The government has given its final nod to six new players to set up plants for assembling and manufacturing of motorcycles in the country, sources privy to this development told _Business Recorder _on Thursday. With the issuance of these new licences, the number of motorcycle manufacturers and assemblers in the country has increased to 46 from 40.

*THE COMPANIES ARE: *Specialised Motorcycles (Karachi); Moon Traders (Karachi); Ghani Automobiles (Lahore); Master Engineering Corporation (Lahore); Buraq Motor Corporation (Lahore); and Stahlco Automobiles (Lahore).

Sources elaborated Specialised Motorcycles (Karachi) would enter into the market with a brand name of (Hunter HR-70), however, Moon Traders (Karachi) is coming with Moon Star 70cc.

Similarly, Ghani Automobiles would launch its product by the name Gi-70. Nevertheless, Master Engineering Corporation (Lahore) would launch two of its models, ie, Leader LD-70 and LD-100.

However, Buraq Motor Corporation is launching Buraq 100cc, while Stahlco Automobiles is coming with Stahlco 70cc.

Sources informed new players are currently giving final touches to their products and planning to launch their products shortly.

"They were just waiting for the final nod from the federal government and they would soon launch their product and marketing campaign," sources said.

They said all the six new players have made their plants operational and were all set to kick-off their production and were just waiting for the final approval.

The federal government had issued similar licenses to five companies in December last year including Babar Auto Manufacturing (Karachi); Moonstar Motor Corporation (Karachi); Master Motorcycles (Lahore); Super Sonic Corporation (Karachi); Bhawaja Automobiles (Karachi); and Crown Lifan (Sadiqabad).

Other than that some 40 companies were already operational in the country. Pak Hero Industries, Atlas Honda, Pakistan Cycle Industrial Co-operative Society Limited, Saigols Qingqi Motors Limited, Excel Industries, New Asia Automobiles, United Sales, Blue Star Automobile, Pacific Motor Company Limited, HKF Engineering (Pvt) Limited, Sazgar Engineering Works Limited, Star Asia and Zxmco Pakistan (Pvt) Limited are assembling 70cc motorcycles.

Suzuki Motorcycle Pakistan Limited, Dawood Yamaha Limited, Dewan Motorcycles Limited, Ahmed Automobile Company, NJ Auto Industries, Sitara Auto Impex, AB Engineering (Pvt) Limited are also producing motorbikes, besides companies from Hyderabad, Memon Associates Foundry Limited, Raazi Motor Industries and Shafiq Sons which are engaged in manufacturing Super Star SS-70, Hi Speed SR-70 motorcycles and Jinan JN-70cc motorcycles, respectively.

Other companies including DS Motors Fateh Motors, King Hero Motorcycle Industries, Super Asia Motors (Pvt) Limited, Toyo International Motorcycle, Suleman Auto Industries, Metro Hi-tech industries (Pvt) Limited, Eagle Industries, Raja Auto Cars, Ali Raza Industries, Habib Motorcycles (Pvt) Limited, NJ Auto Industries, Omega Industries, Pakistan CICS Limited, Rafiq Engineering Industries (Pvt) Limited and Sonica Auto Industries (Pvt) Limited are also manufacturing different models of motorbikes, mainly 70cc.


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## Owais

*Rs 489.822 billion tax collected in July-March* 

ISLAMABAD (April 21 2006): The Central Board of Revenue (CBR) has collected Rs 489.822 billion in July-March (2005-2006) against the target of Rs 476.4 billion, reflecting an increase of 2.82 percent.

According to final figures issued on Thursday, the CBR has collected Rs 489.822 billion in the first three quarters of current fiscal year against Rs 401.271 billion, showing an increase of 22.1 percent.

The CBR has to collect Rs 200.178 billion in the remaining three months of current fiscal year to meet the target of Rs 690 billion. In each month, the board needs to collect Rs 66.726 billion.

Latest tax-wise details of July-March 2005-2006 reveal, direct tax collection is Rs 152.696 billion against Rs 119 billion collected in the corresponding period last fiscal, showing an increase of Rs 33.696 billion.

Indirect taxes collection stood at Rs 337.126 billion in July-March 2005-2006 against Rs 282 billion collected in the same period last year, showing an increase of Rs 55.126 billion.

Sales tax collection is Rs 202.403 billion during this period against Rs 165.379 billion collected in the same period last year, showing an increase of Rs 37.024 billion.

GST collection at the import stage is Rs 121.107 billion against Rs 105.993 billion, reflecting an increase of Rs 15.114 billion. Sales tax collection on domestic consumption is Rs 81.296 million against Rs 59.386 million, with a growth of Rs 21.91 million.

The collection of customs duty is Rs 95.077 billion in July-March 2005-2006 against Rs 80 billion collected in the same period last year, indicating a growth of Rs 15.077 billion.

The collection of federal excise duty (FED) is Rs 39.646 billion against Rs 36.33 billion, showing an improvement of Rs 3.316 billion.

According to the data, CBR paid Rs 65.416 billion as refund/rebate to exporters during the period against Rs 75.56 billion of last fiscal, showing a decrease of Rs 10.144 billion.

The board paid Rs 26.823 billion as GST refund in July-March 2005-2006, whereas the payment of sales tax refund at the import stage was Rs 84 million while domestic refund stood at Rs 26,739 million.

Customs department paid Rs 14.107 billion as rebate/duty drawback, whereas the income tax refund stood at Rs 24.252 billion.

The collection during the month is Rs 70.5 billion against Rs 60.2 billion in last March, reflecting an increase of Rs 10.3 billion.

Following is the monthly break-up of individual taxes: sales tax collection was Rs 23.88 billion against Rs 20.2 billion, showing an increase of Rs 3.68 billion; customs duty, Rs 13.569 billion against Rs 12.1 billion with a growth of Rs 1.469 billion; federal excise duty (FED), Rs 5.2 billion against Rs 4.8 billion, reflecting a decrease of Rs 0.4 billion and collection of direct taxes was Rs 27.793 billion against Rs 23.1 billion, showing an increase of Rs 4.693 billion.

During the month, the CBR paid refund/rebates of Rs 8.7 billion including Rs 3.32 billion as sales tax refund.


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## Owais

*Duty, GST adjustment on cement demanded* 

KARACHI (April 21 2006): All Pakistan Cement Manufacturers Association (APCMA) was of the view instead of the allowing rebate at the import stage, the government should have made some adjustments in the excise duty and general sales tax to reduce prices and promote local companies to expand the production.

A great deal of interest has been generated in the electronic and print media regarding the ECC's decision to provide subsidy of Rs 60 per bag on imported cement regardless of its origin, allowing unlimited imports from India by sea and land routes and convert voluntary restraint on export particularly to Afghanistan into a ban till further notice, said a statement of the association received from Lahore.

These punitive measures have ostensibly been taken to bring down cement prices but are likely to have serious ill effects on the health of this industry, particularly in light of doubling of capacity from 21 million tons to 42 million tons within 18 months. APCMA's general body has reviewed these measures and has apprised the government of its serious concerns as a result of these unfortunate decisions.

It may be recalled it was APCMA that had recommended to government in September 2005 to allow duty free import of cement. However, hardly any imports have taken place for reasons that cement prices internationally are at all time high owing to a building boom in neighbouring countries and the Gulf. Costs have also increased rapidly in the area of energy, transportation and interest rates.

However, it has come as a rude shock that instead of providing protection to the domestic industry, the government has decided to provide subsidy of Rs 60 per bag, equivalent to US $1 per bag.

The benefit of this will directly go to Indian manufacturers to the detriment of the Pakistani cement industry. If at all the government is desirous that cement should be available to the general public at lower prices, the correct measure should have been adjustment in excise duty and GST which amounts to Rs 80 per bag and not providing subsidy to our competitors. To the best of our knowledge this has happened for the first time in Pakistan's economic history.

Furthermore, the decision to tax exports by withdrawal of zero rating and conversion of voluntary restraint on exports by APCMA into a ban is unfortunate, as it will result in hard won markets being lost.

We have therefore, recommended to government to agree to limited exports and not to tax exports which will prove to be a very short term measure since we have to take care of a huge exportable surplus which is likely to arise by the end of 2006.

APCMA will continue to make efforts to make more and more supplies available to the local market with a view to bringing down prices of cement which is a phenomenon totally and completely related to demand-supply imbalance and not to any other reason.

It is hoped that the government will reconsider favourably and do away with the punitive decisions taken by the ECC.


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## Neo

*ISLAMABAD *_(updated on: April 21, 2006, 22:09 PST_): Underlining the vital link between energy security and growth momentum, Prime Minister Shaukat Aziz has said that government is looking for power generation from diverse sources including renewable energy and planning to produce 500 to 600 MW from wind energy by 2007.

The Prime Minister was talking to a delegation of companies involved in production of wind power.

The delegation included Brian Fitzpatrick of AXOR, Canada and Rafic Dawood, Chairman Wind Power, a Pakistani company.

The Prime Minister said the energy needs of the country were growing by 8 to 12 percent annually, adding that energy security was critical to maintain growth and competitiveness in the rapidly globalise world.

The government is looking at diversified sources to bridge the impending gap between supply and demand, he added.

The Prime Minister said the government's strategic direction for development of energy sector includes; enhancing exploitation of hydropower, energy generation through the use of gas and furnace oil, alternate energy resources (solar, wind and biomas) and nuclear energy resources.

Pakistan, the Prime Minister said, has vast scope of generating energy from wind because of its geographical location.

Many parts of the country especially in Sindh lend themselves to obtaining energy from wind, he added.

The Prime Minister said that government was working to expedite development of alternate sources of energy to meet the growing demand of power on fast pace as well as to produce cheaper and environment friendly energy in the country.

He said that government has prioritised electrification of remote villages through wind and solar generating projects to provide cheaper electricity to the people of these areas and 500 to 600 MW wind power will be installed by 2007.

The delegation informed the Prime Minister that a consortium involving MS/AXOR of Canada and First Dawood Group would establish a 50 MW wind power project at Gharo, Sindh to meet the urgent needs for the power section in Pakistan. The project will be functional by summer, 2007.

Brian Fiztpatrick appreciated the investment friendly policies of the government and the co-operation extended by it in the implementation of the project.


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## Neo

21 April 2006 


ISLAMABAD Ã¢â¬â The Asian Development Bank (ADB) will offer close to $4 billion, an all time high development assistance to Pakistan in 2006-08. 
However, informed sources said the bank has urged the government to promote good governance with a view to effectively meet the challenge of poverty, unemployment and mobilising the much needed additional resources in the country.
It wanted the government to ensure an efficient judicial system, improve law and order situation and allocate more funds for education, health and poverty alleviation.
Sources said that the ADB is concerned over the wide spread poverty and made it its central objective which has been operationalised through promoting sustainable pro-poor growth.
Although prospects for achieving a rapid economic growth auger well in the medium term, there are some risks to achieving the poverty targets. The bank is of the view that worsening of income distribution could retard the poverty-reducing impact of high growth.
Sources said that the ADB has expressed its willingness to assist the government in improving the country's weak and old infrastructure in order to help attract sizable local and foreign investment.
The bank, which provided $15.8 billion as part of the project assistance during 1968 to 2005, sources said, has agreed to make further investment in sectors like energy, agriculture, transport & communication, social sector, governance, finance & trade and rural development.
The government has been advised to put certain effective dent on poverty by drastically improving its public and private sector education. The bank argues that given the poor quality of public sector education, regulatory checks are ill-designed and ineffectively enforced upon by the public and private institutions.
According to a new study got conducted by the ADB, the poor infrastructure particularly in the power sector has increased the cost of growth for firms of all sizes. Poor provision entails high cost, poor quality of service, lack of reliability and corruption in obtaining supplies. 
"This reflects the failure of state-owned utility providers to deliver, and is reflected in high levels of line theft and opaque, politically negotiated power tariff rates that significantly distort the growth
potential of Small and Medium Enterprises (SMEs)."
The bank believes that infrastructure constraints could be eased through privatisation, unbundling and competition. The success of this policy depends on the government's ability to establish strong, independent and suitably equipped sector-specific regulators. This will require significant investments in capacity building. "These regulators will then be responsible for the creation, enforcement, and maintenance of a transparent, predicable and fair regulatory structure," the study said.
The bank asserts that the poor performance of the financial and leasing sectors has raised the cost of credit and lease finance for Pakistani firms.
The study also said that the labour regulations are not effectively enforced. Similarly, Pakistan's tax administration and regulatory procedure impose a significant burden on investors.​


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## Neo

ENGR. MAZHAR ALI

About two-third of Pakistan's population lives in the rural areas. The people are heavily dependent upon agriculture as a means of livelihood. Agriculture is the backbone of Pakistan's economy and contributes 24% to the GDP, absorbs about half of the labour force and is the base of about three fourth of our exports. Irrigated agriculture consumes about 96% of available water while municipal and industrial use accounts for 4%. Direct rainfall contributes less than 15 per cent of crop water requirements. The Indus Basin Irrigation System, is the major source and user of river waters. About 103 Million Acre Feet (MAF), out of 157 MAF of surface water of our rivers, is being diverted annually for irrigation. 

With growing population, Pakistan is heading towards a situation of increasing water shortage. Per capita surface water availability, which was 5650 cubic meters in 1951, has reduced to 1200 cubic meter in 2006. The minimum per capita index of water requirement to avoid being a "water short country" is 1,000 cubic meters. By the year 2012, Pakistan would reach this stage if major steps are not urgently taken for improvement.

Lieftinck Report of 1967 was the first comprehensive Plan for Development of Water and Power Resources of Pakistan and assessment of the agriculture and power needs for economic and social development. WAPDA in its document of Water Resources and Hydropower Development vision 2025, gave an account of existing surface storages, the potential on-line and off-channel storage sites available for future development, and the need and urgency of their development. Due to excessive sediment inflows in the river water, all the three existing storages (Tarbela, Mangla, and Chashma) are rapidly losing their capacities and this loss is one MAF in six years. By the year 2010 these storages would have lost 34% (5.9 MAF) of their capacity, equal to loss of one mega Storage Dam.

The annual river water diversions for canal uses of all the four provinces have varied from 77 to 108 MAF, while an annual average of 35 MAF of river water escapes unutilised to the sea below Kotri. This escape level exceeds 90 MAF in wet years. This surplus water in the river system is available only for about 70-100 day period of summer high river flows. To conserve this excellent potential, construction of additional storage reservoirs is essential to make it useable for hydropower generation and sustainable irrigated agriculture. National demand for electricity is growing rapidly. Presently the hydel-thermal mix in the country is 28:72, which is almost the reverse of an ideal hydel - thermal mix of 70:30. Therefore, a sizeable injection of cheap hydropower through multipurpose storages is essential to keep the cost of electricity within affordable limits.

We are already experiencing increasing shortage of irrigation supplies and their damaging effect on agricultural production. This has been in spite of the support from stored supplies of the two storages at Mangla and Tarbela. It is alarming that these replacement storages have already lost 25% of their original 15 MAF capacity and the capacity loss is steadily increasing. 
Our existing live storage capacity is hardly 12 MAF or less than 10% of average annual river flows, while the world's average storage capacity for appropriate control is 40%. Our grossly inadequate regulatory storage capacity does not enable us to make optimum use of river resources. Even a modest target level of 30% would indicate the need of 30 MAF new storages. Series of storage dams at all feasible sites in the future, on-line as well as off-channel, are going to be our compelling requirement from considerations of water needs, food security as well as hydropower and flood control. We need urgently not one, but at least two or three major dams. The minimum need is to start construction work on at least two large dams. The two options available are Kalabagh and Basha. Together they have an aggregate capacity of about 12 MAF and are complimentary to each other providing our bare minimum pressing needs. It is not realistic to presume that Pakistan has the option to construct only one of these two dams. 

WAPDA and World Bank were responsible for planning, investigation and detailed engineering studies of the multi-purpose Kalabagh Storage Dam on the Indus located about 110 miles below Tarbela. World Bank was the executing agency while Pakistan was the cooperating agency? Services of competent local and foreign consultants and experts have been used over half a century. This project of a reduced capacity of 6.1 MAF capacity and 3600 MW hydropower generation has been studied and subjected to the most rigorous scrutiny for technical standards and economic viability, and found excellent on both counts.


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## Neo

Kalabagh Dam is the lower most available dam site on the lndus. This site has annual Indus river flow of 90 MAF, compared to 60 MAF at Tarbela, 50 MAF at Basha, and 25 MAF at Skardu. Additional water availability is from monsoon rains in the catchment area below Tarbela, and from the flows of major tributaries of Kabul, Soan and Haro. Kalabagh site is the only site to regulate and utilise the additional 30 MAF Indus river potential from summer rains.
This site is the only site enabling gravity irrigation of about 5 lac acres, through a right bank outlet, of D l Khan and Bannu areas in NWFP which presently are at low poverty levels. Kalabagh is also the only site, which would enable the integration of the lndus-Jhelum-Chenab Rivers into one single river basin for optimum use through a left bank outlet and extending life of Mangla Dam as a replacement storage. 

The Kalabagh Dam project was envisaged with storage level of 925ft and with 7.1 MAF live storage. WAPDA foreign consultants made a single dimensional computer model analysis which estimated about 25ft increase in peak flood heights at Nowshera over the years due to siltation of river bed above Kalabagh dam. The three-dimensional hydraulic model by Irrigation Research Institute at Nandipur, however, did not support these results. 

This Nandipur hydraulic model closely reproduced the flood levels in various river reaches recorded in 1929 and in other floods. The model test runs confirmed its reliability. The ten mile long Attock gorge has very steep slopes and let alone any silting of river bed, even a big size stone can not stand the fast river currents. The siltation of Indus riverbed over the years above Kalabagh could not travel up this gorge even after 100 years as all silt would be washed down. Kabul River joins the Indus above this gorge at Khairabad and its flood levels, which influence Nowshera flooding, experienced no rise whatsoever due to any siltation of the Indus river bed above Kalabagh. 
This physical model at Nandipur was a marvel and while in operation it was visited by the top authorities. It came out that the consultant's computer model had been designed by some novice who ignored the fast river flow through the steep Attock gorge. Instead, average Indus River slope from Kalabagh to Khairabad had erroneously been adopted. The fantastic projections made by foreign consultants of progressively rising flood levels along Kabul River at Nowshera had led to the proposal of protecting dykes and marking of flood levels on roof tops. The computer model was later modified and flood levels were reduced to correspond to Nandipur hydraulic model levels. Erroneous estimates of siltation impact were modified and all dykes were eliminated. However, the errors by WAPDA and the consultants had done the damage. 

It also came out clearly that even with 925ft storage level, there was no adverse effect on Nowshera flooding. But in an effort of appeasement, WAPDA decided without valid technical basis to reduce the storage level by 10ft, to 915ft. As could be anticipated, the political reaction in NWFP was adverse and there was loss of credibility by WAPDA. It was stressed that WAPDA had earlier been strongly defending 925ft level, but now by agreeing to reduce to 915ft, they had accepted NWFP view point and apprehensions, leading to the demand to reduce storage levels further.

Basha Dam is located on the Indus, 200 mile upstream of Tarbela Dam. Its catchment area is beyond the monsoon range. Indus annual flow available at this point is 50 MAF almost entirely from glacier-melt. The Project feasibility study is currently under review. The site of the dam, its height and capacity, location and size of power house, upgrading, and relocation of KKH, the High Voltage Transmission line etc. are undergoing critical appraisal. 
The complex and extensive site investigations, technical design and model studies are time consuming. Basha, a concrete gravity dam, located in a highly seismic area and subject to severe land slides and many other logistic problems have to be refined to the level of a bankable project and with high safety standards. Basha Dam Project is a feasible project, but it requires far more intensive and extensive investigations and studies requiring a period of five to six years to make it conform to recognised international standards. There is no scope for optimism, and rigorous safety standards and risk coverage have to be followed.

The issue of need of constructing more river storage dams and prioritisations of new dams was considered in depth by the Technical Committee on Water Resources. Seven out of eight members from all the four provinces observed that Pakistan has only a few good river storage sites and every site would need optimum exploitation. It was our economic and social compulsion to productively use every drop of our fresh water river flows. 

The dam construction activity over the future years has to be continuous, carefully planned and implemented, with a minimum target for new dam capacity of 20 - 25 MAF by the year 2020. Pakistan's requirements dictate that both Kalabagh and Basha dams be launched together. By the time Kalabagh Dam construction is completed by 2012, hopefully Basha Dam investigations and studies would have been satisfactorily completed. The KKH approach road from Abbottabad to Basha would also have been upgraded for movement of heavy construction machinery to enable completion of Basha Dam by 2020. Simultaneous start of activities for both the dam projects would be a big breakthrough to enable rapid development of water and hydropower resources of the country.


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## Neo

21 April 2006 

ISLAMABAD - The Canadian government has written off a 392-million-dollar loan owed by Pakistan after years of negotiations with the Paris Club, a media report said on Friday.

Under the debt write-off reached Tuesday, Pakistan must use the money that would have gone to pay back the loan for training teaching staff at educational institutions across the country, the English-language Dawn newspaper reported.

Pakistan initiated a dialogue with the Paris Club, of which Canada is a member, a few years ago for rescheduling debt and a debt swap with the aim of reducting PakistanÃ¢â¬â¢s external-debt burden.

Over the past six months, Pakistan has succeeded in reducing its external debt burden by about 652 million dollars.

The Italian government was also expected to write off 200 million dollars in Pakistani debt against spending by Pakistan on Afghan refugees and reconstruction of areas ravaged by the OctoberÃ¢â¬â¢s deadly earthquake there.

The newspaper also quoted officials in the finance ministry as saying that negotiations have been completed with Germany to get waiver of a 362-million-dollar loan against expenditures for quake reconstruction.

The magnitude-7.6 quake killed 75,000 people in North-Western Frontier Province and Pakistan-administered Kashmir.


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## SMC

Good job man keep up the good work


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## SMC

*City govt, banks make huge profits: Taiser Town scheme*


*By Shahid Iqbal*
KARACHI, April 21: The Taiser Town scheme proved a windfall for the banks, which are charging up to Rs200 for making a pay order, and the city government which increased the application form price by four times after the overwhelming public response to the first scheme.

Thousands of applicants make long queues daily in front of the Allied Bank, authorised to receive applications for 120 sq yard plots in Taiser Town scheme launched by the city government for lower income people, who would collectively lose millions without an inch of a land.

According to the applicants banks have been charging different rates for making a pay order. The minimum fee charged was Rs50 for the account holders of a bank, while most of the banks charged Rs200 per pay order.

The overwhelming response to the first scheme of 80 sq yards plots had attracted about 400,000 applications for about 34,000 plots. The price of the application form was Rs100 only.

However, the city government decided to charge Rs500 per form for the second scheme of 120 sq yards plots which is non refundable. If the same number of applications were received for the second scheme, the city government would digest some Rs200 million alone as form price.

&#8220;I believe more applications are coming for the second phase of the scheme,&#8221; said a bank manager. The final date for submission of forms has been extended by 10 days up to April 30.

The application form for the second scheme is not different from the previous one and the cost of the single-page form must not be more than 50 paisa, while thousands of applicants are downloading the form through the internet thus causing no cost to the government.

For the early scheme of 80 sq. yards of land, four hundred thousands people applied and an amount of R2 billion was deposited with the Allied Bank of Pakistan. However, balloting for the scheme was delayed and the refund of money to the unsuccessful applicants, after balloting in January 2006, is still continuing.

Compared to the previous scheme of 80 sq. yards, more money is expected to come to the banks for the second scheme. Seeing the high response to the scheme, the city government also increased the land price by hundred per cent.

The government charged Rs500 per square yard for the previous scheme, while in the second phase just after six months the land price has been fixed at Rs1,000 per sq. yard. The total cost of the 120 yard plot is Rs120,000.

The scheme has been started to provide houses to the low income people and it is a big relief for them as the land prices have gone beyond the reach of the middle and lower middle class.

Since no criteria was established for filing application for the plots scheme and no restriction was put on the rich people to keep them away from the scheme meant for the low income group, thousands of forms had been submitted by those who do not fall in the category.

A banker said that the Allied Bank would enjoy the benefit of the existing huge liquidity which would come with the application forms and remain there till balloting and even after that.

If the response remains the same as it was in the previous scheme, about Rs6 billion would come into the bank.

&#8220;It is not clear how much money of the previous scheme has gone out of the ABL, but people are still coming to withdraw their money after three months,&#8221; said the bank manager.

The previous scheme was announced in September 2005, and balloting took place in January 2006, which means that the money deposited with the ABL, remained with the bank even after six months.


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## SMC

*Pakistan, US close to signing BIT*


*By Anwar Iqbal*
WASHINGTON, April 21: Senior US and Pakistani officials said on Friday that the two countries were close to signing a bilateral investment treaty (BIT) and perhaps even a free trade agreement.

Pakistan and the US are expected to hold talks next week on some of the technical and legal issues still delaying the BIT, they said.

&#8220;We will be signing the BIT very soon and we may sing the FTA by 2007,&#8221; said Salman Shah, adviser to the prime minister on finance. Dr Shah is in Washington to attend the annual spring meetings of the World Bank.

&#8220;We are still close to signing the BIT,&#8221; said US Assistant Secretary of State for South and Central Asian Affairs Richard Boucher. &#8220;We still think it can be done and it is on our agenda.&#8221;

Before leaving for Pakistan in early March, President George W. Bush also had said that the two countries were close to signing a BIT, indicating that it might be finalised during his visit. But later US and Pakistani diplomats said last minute snags delayed the signing.

Asked to explain what caused the delay, Dr Shah said the US administration was seeking some safeguards for investors which Pakistan believed it could not offer to all investors. &#8220;We want an arrangement that can be made with other countries as well,&#8221; he said. &#8220;The wording has to be right and I believe we will soon be able to resolve these legal issues.&#8221;

Mr Boucher said the discussions on the treaty were now focused on &#8220;a couple of final issues&#8221; as &#8220;we could not find the right agreement on very technical matters important to both.&#8221;

But he said he believed these snags could be removed and the treaty could be signed soon.

A bilateral investment treaty is an agreement establishing the terms and conditions for private investment by nationals and companies of one state in the state of the other.

The FTA promotes trade between nations without protective restrictions.


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## SMC

*Egypt to cooperate in farm sector*
ISLAMABAD, April 21: Pakistan and Egypt have agreed to enhance mutual cooperation in crops productivity, livestock, horticulture, trade and exchange of expertise. During a meeting of Agriculture Minister Sikandar Hayat Khan Bosan with his Egyptian counterpart Amin Abaza, both the countries also signed an action plan to implement a memorandum of understanding for mutual exchange and sharing of positive experiences in realm of agriculture sectors.

During the meeting held in Cairo, Mr Bosan said Pakistan was interested in high-yielding, drought and virus-resistant crops of rice, wheat and sugarcane and cultivation of high sugar content plant, says a press release.

The meeting also decided that both the countries would exchange post-harvest technology in horticulture and frozen semen in livestock. The meeting decided that exchange of visits of professionals would be facilitated at al levels. Eventually, Pakistan will utilize the five scholarships provided annually by the Egyptian International Centre of Agriculture within specified areas of cooperation.

The action plan also accorded preference to encourage trade of agricultural products and commodities of mutual interests and needs.

Pakistani delegation also visited agriculture research stations, Agricultural Genetics and Engineering Research Institute, field crops and cotton research institutes and various horticulture farms in Cairo. The delegation was also briefed by the Horticulture Export Improvement Association.&#8212;APP


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## SMC

*Mobilink service*
KARACHI, April 21: Mobilink, the leading cellular company, is expanding its network to cover more cities and towns. Its network services are now available in over 750 cities, towns and villages, says a press release.


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## SMC

*DIB profits up by 127pc *


*By Our Staff Reporter*
KARACHI, April 21: Dubai Islamic Bank (DIB) has announced a record 127 per cent increase in its first quarter profit of 2006 to UAE dirham 695 million compared to 305 million in the corresponding period of 2005.

Net profit attributed to shareholders also rose to 332 million dirham, a 118 per cent increase as compared to 162 million dirham in the first quarter of 2005. The bankÃ¢â¬â¢s total assets grew by a record 109 per cent to 63.4 million dirham at the end of the 1st quarter of 2006 as compared to 30.3 million dirham at the end of Q1 2005.

Customer deposits also showed a growth of 37 per cent to reach 36.3 billion dirham at the end of the 1st quarter of 2006.


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## Bull

Ahsan_R said:


> *DIB profits up by 127pc *
> 
> 
> *By Our Staff Reporter*
> KARACHI, April 21: Dubai Islamic Bank (DIB) has announced a record 127 per cent increase in its first quarter profit of 2006 to UAE dirham 695 million compared to 305 million in the corresponding period of 2005.
> 
> Net profit attributed to shareholders also rose to 332 million dirham, a 118 per cent increase as compared to 162 million dirham in the first quarter of 2005. The bankÃ¢â¬â¢s total assets grew by a record 109 per cent to 63.4 million dirham at the end of the 1st quarter of 2006 as compared to 30.3 million dirham at the end of Q1 2005.
> 
> Customer deposits also showed a growth of 37 per cent to reach 36.3 billion dirham at the end of the 1st quarter of 2006.


 
Ahsaaaan whats DIB got to do with pakistan.....i think u r confused...or pasted the wrong article.


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## Owais

*THE RUPEE: marginal fall in open market* 
*RECORDER REPORT* KARACHI (April 22 2006): Stable trend was witnessed in the interbank market on Friday as the rupee maintained its overnight level for buying and selling at 60.00 60.02, respectively. Balanced demand and supply did not allow any unusual increase in the dollars' demand, dealers said.

Some money experts, however, said that the rupee may face slight erosion on strong buying by the corporate sector in the coming days.

The dollar showed firmness versus the major currencies in the international market following the upbeat US economic data, dealers said.

*OPEN MARKET RATES: *The rupee continued its weakness, losing three paisa versus the dollar for buying and selling at 60.15 and 60.20, dealers said.

The rupee followed the same trend in relation to the euro, falling 10 paisa for buying and selling at Rs 73.60 and Rs 73.70, moneychangers said. 
================================Buying Rs 60.15Selling Rs 60.20================================


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## Owais

*Over 65 percent increase in FDI from China* 

KARACHI (April 22 2006): Foreign Direct Investment (FDI) from China in Pakistan has increased by over 65 percent as 34 million dollars FDI was made in the year 2004-05 against 20.59 million dollars in 2003-04.

According to Board of Investment (BoI) figures available here, the flow of FDI from China in Pakistan was 15.8 million dollars in the first six months of the current fiscal 2005-06.

The figures show that a tremendous increase was recorded in FDI from China in Pakistan, as this figure was only 1.02 million dollars in 1998-99, which has now increased by over 3,200 percent in the last eight years.

The FDI flow trend showed an upward trend in 2002-03 when the figure went up to 8.61 million dollars against only 3.03 million dollars in the year 2001-02 and jumped up further to 20.59 million dollars in 2003-04.

"Although a tremendous increase was witnessed in FDI flow from China to Pakistan during the last few years, still it was lower than its real potential", the Board of Investment officials said.

They said that Pakistan and China, being the two top growing economies in the world, had been enjoying very close trade relations and there is enough potential to further increase FDI flow from China to Pakistan.

According to State Bank figures the total FDI inflow was recorded at 9.3 billion dollars during 1990 to 2005 with the major share of 35.1 percent from the USA. This was followed by 18.5 percent from the UK, 9.5 percent from UAE, 4.6 percent from Japan, 2.8 percent from Germany, 2.1 percent from Korea and 27.4 percent from all other countries.

Regarding the sectoral FDI, these figures show that 24 percent FDI flow was recorded in services sector followed by 21 percent in manufacturing sector, 20 percent in oil, gas, mines & quarrying sector, 15 percent in power sector, 11 percent in IT & telecom sector and 9 percent in other sectors.

Pakistani officials expect that FDI flow from China would increase in future as many Chinese companies are coming to Pakistan to invest here in different sectors.

Presently 31 Chinese companies including 11 companies in engineering sector, 5 in oil & gas, 3 in infrastructure, 3 in mining, 2 in IT & telecom, 2 in power, 2 in automobile and 3 other companies are working on different projects in the country.

Chinese public sector major projects in Pakistan include: Karakoram Highway, Pakistan Aeronautical Complex-Kamra, Heavy Mechanical Complex-Taxila, Saindak Metal (Copper/Gold), Islamabad Sports Complex while the ongoing projects are Gwadar Deep Sea Port, Coal Fired Power Plant Lakhra, Thar Coal Power Development and Chashma Nuclear Power Plant Expansion.

The upsurge in bilateral trade which was 2,848.9 million dollars in the year 2004-05 as against 1,226.61 million dollars in 1999-00 indicates that trade relations are increasing between the two countries with every passing day.


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## Neo

DOHA (updated on: April 22, 2006, 21:10 PST): Iran, Pakistan and India are close to signing a gas pipeline deal, the Iranian and Pakistani oil ministers told Reuters on Saturday, defying US opposition to the project.

Iranian Oil Minister Kazem Vaziri said he had an understanding with India and Pakistan and was unconcerned by US opposition.

"We have a very good understanding," Iranian Oil Minister Kazem Vaziri told Reuters. "They are willing and Iran is ready."

Asked when the deal would be signed, he said only: "I hope we are going to have a ministerial meeting in Tehran in June," adding it would be attended by the same three ministers.

Speaking after talks with his Iranian and Indian counterparts on the sidelines of the International Energy Forum in Doha, Pakistan's oil minister Amanullah Khan Jadoon told Reuters only technical issues had to be resolved.

The $7 billion pipeline through Pakistan would link Iran's abundant gas reserves, the world's second biggest, to India's booming economy.

It would carry 150 million cubic metres per day of gas for 25 years, Vaziri said.

The Indian oil minister Murli Deora declined to comment following Saturday's talks.


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## Neo

Ahsan_R said:


> Good job man keep up the good work


Thank you Sir!  
Feel free to contribute anything interesting you find in the media.


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## Neo

ISLAMABAD (updated on: April 22, 2006, 20:23 PST): President General Pervez Musharraf on Saturday said the government is pursuing a far-reaching Human Resource Development (HRD) strategy to lay firm foundations for befitting utilisation of power potential of the nation for Pakistan's sustained development.

Addressing the Students' Convention 2006, the President said the wide-ranging human resource development strategy revolves around poverty reduction, realisation of better health facilities and improved standards of education at all levels. 

"Our objective is to blend higher education with requirements of industrial progress - at the same time, we are setting up technical institutes under a separate department to raise a skilled workforce - these steps will certainly bring more foreign investment and lead to continued development," he stated. 

The President particularly emphasised the vital importance of equipping the younger generation with high quality of education and said his government had realised its crucial role and increased the budget manifold. 

"The budget for higher education has been increased from a mere Rs 500 million in 1999-2000 to Rs 11.2 billion this financial year," he said amid rousing applause from the best and brightest students of universities from across the country. 

Similarly, he said, the overall annual budgetary allocations for education have seen an unparalleled rise during this period. 

In his more than three hours interaction with the students, the President spoke about a host of challenges facing the country and vowed to gear all for its socio-economic progress through proper use of its human capital and natural resources. 

President Musharraf, who listened the speeches of the finalists, informed the gathering that the focus on human resource development has been possible due to economic turnaround the country has achieved in the last six years. 

"Pakistan's economy has been put on the path of high economic growth and now the international magazines include the country among the fastest growing economies," he said. 

Listing some of the steps taken by the government to pass the benefits of economic growth to common man, the President said he himself is overseeing progress in the areas of provision of safe drinking water, electrification of villages, supply of gas, improvement in the health facilities and education sector. 

Replying to a question, the President said he is committed to addressing some of the lingering issues including the construction of water reservoirs and problems retarding grassroots development in Balochistan. 

"I want to address these issues in the interest of continued development of Pakistan." 

Speaking on Balochistan, he said an overwhelming majority of people in the province wants socio-economic progress and observed that only a handful of anti-development elements are creating hurdles in the way of their common man's progress. 

"They do not want to see the people progress and prosper as they want to perpetuate their rule over them," he said. 

The government, he said, will establish the rule of the law all over the province and also provide economic opportunities to the common man. 

Describing the students in Quaid-e-Azam's words as "real makers of Pakistan" the President asked the gathering to have firm confidence in the country's ability to progress. 

"Pakistan is our identity, our dignity is directly related to the dignity of our homeland," he said. 

He termed the world as inter-dependent and stated that a nation's sovereignty is related to its dependence on others, particularly in the area of commerce. 

President Musharraf said Pakistan has earned an elevated status in the comity of nations due to its wise policies. The country has nuclear and missile capability and is a pivotal member of the Muslim world. 

"All the Muslim countries look up to Pakistan to play a lead role in these times," he said. 

On development of the backward areas, the President said the government is committed to bringing long-denied socio-economic progress to the common people. 

In this respect, he announced that the government has chalked out a plan to spend Rs 10 billion each year on development of federally administered tribal areas. 

"We are striving to remove any sense of deprivation and forge unity and solidarity in the nation," he said to rousing appreciation from the gathering. 

He made a particular mention of the mega development projects under completion in Balochistan and added that the province has received more development allocations than the largest Punjab province. 

"We are spending well over Rs 100 billion on projects like Gwadar deep sea port, a network of highways connecting the province with other parts, and realising water projects in Quetta and other areas - these will certainly bring development at grass roots level." 

In his address, the President also informed the students about the government's reconstruction and rehabilitation plans in the quake-shattered areas of NWFP and Kashmir and said the country is being cited as a textbook example in dealing with the natural disaster of immense proportions. 

"Nobody died of hunger, there were no deaths due to lack of protection against winter and no epidemics as feared by some observers," he said, recounting a range of measures that streamlined the nation's relief efforts in the aftermath of October 8, 2005 catastrophe through organised work by the Pakistan Army and the government agencies. 

He said a good leader must respond to the tragedy of such huge proportions calmly: he should visit the zone and meet with people to inspire confidence; assess the situation ; put in place an organisation to deal with the disaster; select a leader to head such an organisation; devise a comprehensive strategy; implement it and review these efforts regularly.


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## Neo

ISLAMABAD (April 22 2006): The Public Sector Development Programme (PSDP) 2006-07 is being projected at Rs 342 billion, showing an increase of Rs 60 billion over the current PSDP, it is learnt. The 2005-06 PSDP stands at Rs 272 billion, highest allocation in Pakistan's history so far.

The province-wise summary of PSDP utilisation for 2004-05 and 2005-06 shows that this year the provinces were released Rs 68 billion, against Rs 54 billion of last year. Province-wise break-up showed that from the current PSDP Punjab got Rs 32.4 billion against Rs 25.9 billion of last year, Sindh was released Rs 14.1 billion, against its share of Rs 9.2 billion in last year PSDP.

NWFP and Balochistan were released Rs 14.5 billion and Rs 7 billion against their share of Rs 11.4 billion and Rs 7.6 billion respectively. Balochistan, in addition to its share of Rs 7 billion from PSDP, was released Rs 3 billion under Khushal Pakistan Programme (KPP) Fund.

PSDP utilisation for the first nine months of the current fiscal year stood around 65 percent. Historically, PSDP utilisation in the past was very low.

Sources said that the highest ever utilisation and timely release of funds for development schemes made the current PSDP different from the previous programs. They said that this time the executing agencies were asked to monitor progress of work of their respective schemes for 2005-06, very closely to ensure that funds were utilised judiciously and without any hassle. The Planning Commission is conducting quarterly review of PSDP to ensure that none of development projects suffers due to paucity of funds.

An official, who is a part of the Planning Commission team conducting the quarterly review of PSDP 2005-06, told Business Recorder that with the exception of a few all PSDP schemes were on target. He said: "We are evaluating the performance of each executing agency very closely to ensure that PSDP-funded schemes are completed on time."

He claimed that a tight monitoring policy had made the current PSDP different from the previous ones and the same approach would be followed in the future to further improve the utilisation of public sector funds.

Sources said that availability of enhanced financial resources prompted the policy makers to go for substantial increase in 2006-07 PSDP. They were of the view that more allocations would help the Centre and provinces to go more aggressively for major social sector development programmes and provide the people better facilities to improve their living standard.


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## Neo

KARACHI (April 22 2006): The country's readymade garments' export target of $3,252 million for the current fiscal year 2005-06 is in jeopardy mainly due to the tough competition in the international market and increased cost of doing business locally, trade sources told Business Recorder on Friday.

Albeit the exports of Pakistan's readymade garments have witnessed a smart growth of around 14 percent during July 05-February 06 period, which currently stands at $1993 million, compared to $1754 million for the corresponding period of last year, its share in the international market has been declining, gradually.

"The aggregate exports of readymade garments from the country currently stand at $1993 million and we have still to fill the remaining gap of $1259 million in more or less three months. That is quite difficult," said a leading exporter.

"Despite the fact that the exports ratio has increased in terms of value, its share in the country's total export has slashed to 7.7 percent, from last year's 10 percent," he elaborated.

Another exporter pointed out that consistent and hectic efforts of the exporters with the assistance from the government have resulted in market diversification and exploration of new trade avenues.

"We (Pak exporters) have recently explored new markets in Poland and Romania," said a Karachi-based exporter, terming it a 'good omen' for the country's readymade garment exports.

He said that since the EU countries are considered among the biggest markets of the world, Pakistan's exporters have been concentrating meticulously on that region and have been striving to get further trade access in that region.

Baside that, some 800 members of Pakistan Readymade Garments Manufacturers and Exporters Association (Prgmea) across the country are engaged in exporting locally manufactured garments mainly to European Union (EU) countries followed by United States, Canada, United Arab Emirates (UAE) and Japan.

However, in total exports, the trade share of Karachi city is the biggest, followed by Lahore, Sialkot and Faisalabad.

According to statistics, China enjoyed biggest (19 percent) share of United States market in 2004-05. India was 8th in ranking with 3.4 percent, followed by Bangladesh and Pakistan with ranking 10th and 21st and market share of 2.8 percent and 1.7 percent, respectively.

Similarly, regarding EU countries, major chunk of export was claimed by China (13.2 percent), followed by Bangladesh (3.8 percent market share) and ranked 5th, India (2.9 percent) 6th in ranking, and Pakistan stood 11th with 1.1 percent market chunk during 2004-05.


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## Neo

KARACHI (April 22 2006): The Land Utilisation Department has issued Provisional Allotment Letter of 400 acres of land to Prime Transport Limited (PTL) to establish a car assembly/manufacturing plant at Dhabeji.

PTL envisages establishing a car assembly/manufacturing plant for assembly/manufacture of the famous Black Cabs of UK in Pakistan with rated capacity of 6000 units per annum on single shift basis.

The vehicles will be operated by PTL as Satellite Controlled Taxi Service in all major cities of Pakistan and would be exported to African, Asian and Middle Eastern countries from Pakistan. This car manufacturing plant would be established in the proposed industrial estate comprising of an area of 13,000 acres at Dhabeji.

PTL would also establish allied facilities including residential colony for its employees at the proposed industrial estate.

The Sindh Chief Minister Dr Arbab Ghulam Rahim had visited the area recently and announced establishment of new industrial estate in this area. He also visited the site earmarked for allotment to PTL together with the State Minister for Privatisation, Investment and Special Initiatives and Chairman of Board of Investment Umar Ahmed Ghuman and M. Dawood Khan, Chief Executive PTL.

Umar Ahmed Ghuman said on this occasion that the project of PTL was one of the major initiatives on investments. He pointed out that another company intends to establish the buses, trucks and cars of Mercedes Benz in Pakistan and they will also set-up their plant at Karachi.

The government of Pakistan attaches great importance to these projects, which will not only improve the economic conditions of the country but would also provide employment opportunities to the masses.


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## Neo

ISLAMABAD (April 22 2006): President General Pervez Musharraf has lauded efforts of Pakistani scientists for the progress and development of the country. The President made these remarks on the occasion of a dinner hosted to bid farewell to former KRL chairman Dr Javed Arshad Mirza and Pakistan Atomic Energy Commission chairman Pervez Butt at the Aiwan-e-Sadr Friday evening.

The President paid rich tributes to Pakistani scientists, saying it was due to their untiring efforts, dedication and devotion to duty that Pakistan's security had been ensured and the country was on the path of development.

He appreciated the contribution of Dr Javed Arshad Mirza and Pervez Butt to the country and expressed the hope the excellent tradition set by them would be emulated by their successors.

He welcomed KRL chairman Karim Ahmad and PAEC chairman Anwar Ali and said under their able leadership the two vital national institutions would continue to contribute to the national cause.

The dinner was also attended by federal ministers and senior officers of armed forces and scientists of KRL and PAEC.


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## Neo

WASHINGTON (April 22 2006): Adviser to the Prime Minister on Finance and Economic Affairs Dr Salman Shah on Thursday evening said there had been a significant headway in respect of the proposed Bilateral Investment Treaty (BIT) with the United States, which he hoped would be signed soon.

Replying to a question at a press briefing at the Pakistan Embassy, he said basically the aspect of legal interpretation in it was finding a due consideration.

"We will sign a Bilateral Investment Treaty with the United States, and a BIT is a stepping stone towards a Free Trade Agreement," he stated. A treaty's wording was very important, he said, adding "and, we want it to be right for us, and right for them." "It is very important that you have a good treaty, hence, there is no need to rush."

Asked why was it taking time, Dr Shah said whatever treaty we sign with the United States, similar kind of treaty would be enforced with other partners, say if a special treatment is allowed, it would then be extendable to others, as well. "So, the wording has to be right. We want to sign a treaty in which we can give the same safeguards to everybody. There are certain legal rights, which they want, and we are negotiating the right wording for it," he added.

To a question, Dr Shah said the government had an eye on prices and control of inflation, and more and more employment opportunities were being created.

Responding to a claim by a journalist that prices of essential goods are cheaper in India, he said, "to the contrary, most of the kitchen items in Pakistan are cheaper," in fact, these are on the lower side in the whole of South Asian region.

In this behalf, he referred to a recent study on 15 items, which are part of the basic budget, as well as the petroleum products, diesel and kerosine. "Our prices are cheaper than those in India," he added.

Dr Salman Shah made it clear that, it does not, however, mean that there was no inflation in Pakistan. Inflation was at 11.1 percent in April 2005, which is now on decline. It was initially growing at 15 percent on food items.

Explaining as to why food was cheaper in Pakistan than in India, he said that the reason was that Pakistan imported a lot of wheat, "and we now have huge stocks of wheat" in all the provincial governments, which were not seen in Pakistan's history. "And with the new crop coming in, there is a glut of wheat in Pakistan."

Wheat is the most essential commodity, and inflation in Pakistan is driven by it and as a consequence of huge wheat stocks, the projected inflation would be around 6.5 percent for next year.

Dilating on the policy, he said a year ago, prices of flour started increasing, and it occurred when the crop was under harvest. "As a strategy, we decided to open up its import, and when we looked for imports, we found that there were so many impediments that it was almost impossible to do so. We cleaned it out, and made it clear that whosoever wanted to import it, could do so."

And because of that, a million tonnes of wheat was imported and the godowns of the governments of Sindh and Punjab remained full, but the people did not buy from the government, while the private sector had a lot of stocks.

Further in respect of maintaining a check on prices, he said noticing that cement prices were going up, the government opened its import, and allowed trade subsidy on it. And, there was an instant lowering of per bag cement price from Rs 40 to 50.

"From Rs 375, it was yesterday selling at Rs 310, within three-four days," Economic Adviser to the Finance Ministry, Dr Ashfaq Ahmed Khan, who was present on the occasion, stated.

Difference in sugar and cement, Dr Shah said was that the sugar mills had increased the cost since farmer had enhanced prices of sugarcane.

The farmers benefited Rs 40-50 billion. But in cement, the increase in input was not there, in fact it was the same, while price shoot up to Rs 375 per bag. The only reason for it was that the cement producers were finding it a good opportunity to profit since there was an increase in its demand.

He said the cement price would lower further. In market economy, he stated, you can't allow monopoly. "When we see that a sector is going out of line, we try to balance it with import."

Earlier, the delegation members, along with Pakistani community members as well as invitees from the various US departments, attended a dinner hosted by Ambassador Jehangir Karamat, at Jamshed Marker Hall of the Embassy.


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## Neo

LAHORE (April 22 2006): The national economy has witnessed a significant improvement and the inflation rate has dropped from 5.7 per cent to 4.6 per cent, said Speaker National Assembly Chaudhry Amir Hussain, here on Friday.

While addressing the members of the Management Committee of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) in Lahore, Amir Hussain said there had also been a visible improvement in the country's exports.

FPCCI President Chaudhry Muhammad Saeed, Vice President Azhar Saeed Butt, Women Chamber of Commerce and Industry (WCCI) President Dr Shehla Akram, Honorary Consul General of Indonesia Jamil A Naz and representatives of trade associations also attended the meeting.

The speaker maintained that the country's economy, which was in bad shape in 1990s, was out of woods now because of the well-managed economic policies of the present government. Praising economic vision of Shaukat Aziz, he said he was a clear-minded person and his policies both as Prime Minister and earlier as finance minister played a key role in putting the economy on right track.

Highlighting the government policies, he said it had tried to provide enough incentives to trade and business community with the aim to make the country strong and stable in economic terms. He said he believed that a stronger economy also supplements the defence capabilities of any country.

Shedding light upon women's role in national uplift, the speaker viewed that womenfolk formed half of the country's total population, and therefore there was need to benefit from their capabilities in economic and other fields. No one can deny the mental capabilities of women as now they were joining armed forces and flying fighter aircraft.

About law and order situation, he said the government was taking all-out measures to facilitate the trade and business community and providing them a peaceful environment. Commenting on the concept of enlightened moderation, he said it did not mean westernisation, but "an effort to make Pakistan a forward looking and modern Islamic state."

Later, talking to newsmen the National Assembly Speaker said no proposal of election of businessmen as technocrats in the Lower House was under consideration. However, if such a proposal was ever tabled on the floor, the house would discuss it, he added.


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## Neo

ISLAMABAD (April 22 2006): The Asian Development Bank (ADB) will offer an amount equal to 4 billion dollars, an all time high development assistance to Pakistan in 2006-08. The bank has urged the government to promote good governance with a view to effectively meet the challenge of poverty, unemployment and mobilising the much needed additional resources in the country, Business Week reported.

The ADB is concerned over the poverty and made it its central objective, which has been operationalised by promoting sustainable pro-poor growth. The bank is of the view that bad income distribution could retard the poverty-reducing impact of high growth.

The ADB has expressed willingness to assist the government in improving the country's infrastructure in order to help attract sizeable local and foreign investment.

The bank, which provided 15.8 billion dollars as part of the project assistance during 1968 to 2005, sources said, has agreed to make further investment in sectors like energy, agriculture, transport & communication, social sector, governance, finance & trade and rural development.

The government has been advised to put certain effective measures by drastically improving its public and private sector education. The bank argues about the poor quality of public sector education and ineffectively enforced upon by the public and private institutions. The bank believes that infrastructure constraints could be eased through privatisation, unbundling and competition.

The success of this policy depends on the government's ability to establish strong, independent and suitably equipped sector-specific regulators. This will require significant investments in capacity building. "These regulators will then be responsible for the creation, enforcement, and maintenance of a transparent, predicable and fair regulatory structure," the study added.


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## Neo

LAHORE (April 22 2006): Working group of the Ministry of Industries, Production, and Special Initiatives (IP&SI) formed on 'Made in Gujranwala Vision' in its meeting held on Friday, decided to set up modern industrial estate at Gujranwala at a cost of Rs 1 billion.

Kamran Rasool, Federal Secretary IP&SI presided over the meeting at Small and Medium Enterprise Development Authority (Smeda) head office in Lahore. Almas Hyder, Chairman Tusdec, Sheikh Muhammad Aslam, Zonal Chairman FPCCI, Khawaja Zarrar Kaleem, former President Gujranwala Chamber of Commerce and Industry (GCCI), Khawaja Tahir Hussain, Ali Sheikh, former senior vice president GCCI, Arif Basra from National Industrial Parks Development and Management Authority and Muhammad Najeeb Aslam of the Punjab Revenue Department attended the meeting. Smeda General Managers Syed Iqbal Anwar Kidwai, Jameel Afaqi and Iftikhar Hussain also attended the meeting.

The working group discussed a number of proposals for establishment of a new industrial estate, business centre, Research and Development Cell, Dry Port, and a testing lab under Made in Gujranwala Vision, a long term plan for industrial expansion and development of Gujranwala.

Kamran Rasool advised the working group to purchase 2000 acres of land at some appropriate location between Lahore and Gujranwala for the proposed industrial estate. However, the first phase of this project would be planned on 1000 acres of land which will cost around Rs 1 billion, he said, adding that the requisite funds for this project would be obtained from banks against government guarantee.


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## Neo

ISLAMABAD (April 22 2006): Chief Engineer Gwadar Development Authority Aslam Lehri on Friday said that Gwadar deep seaport would hopefully be operational in June this year. Talking to private TV channel he said the port would hopefully handle its first commercial vessel in June.

Depth of Gwadar would be 14.5 m which would help the port handle large containerships and bulk carriers. Terminal facilities for container, general cargo and bulk cargo handling have already been set up.

At this stage, Gwadar deep seaport would be able to handle bulk carriers up to 30,000 Dead Weight Tonnes (DWT) and container vessels of 25,000 DWT. To a question he said main aim of setting up Gwadar Development Authority was to implement approved master plan in Gwadar.

In the master plan GDA has identified sites for housing schemes, commercial buildings and industrial states, he added. He said besides four main roads seven secondary roads would be constructed in Gwadar.

To another question he said federal government has granted Rs 1,500 million for the development of Gwadar area.


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## Neo

Karachi: Pakistan's biggest listed firm, Oil and Gas Development Co, (OGDCL), on Friday reported a 36 per cent increase in its nine-month net profit due to high oil and gas prices and increased production.

OGDCL earned a net profit of Rs33.2 billion ($553.42 million) for the nine months to March 31, up from Rs24.4 billion in the year-ago period, the company said in a statement to the Karachi Stock Exchange (KSE).

The result was in line with a range of Rs31.8-Rs35.1 billion, forecast by a Reuters survey of eight analysts.

OGDCL, which controls 39 per cent of Pakistan's oil and gas reserves, also announced an interim cash dividend of Rs2.25 per share.

The firm became the largest company on the KSE after listing in January 2004. OGDCL shares were trading 35 paisas down at Rs162.25 at yesterday morning in a broader market which was down 0.51 per cent.

Analysts said higher oil and gas prices and higher production were the primary contributors towards the earnings growth.

"The growth in earnings mainly stemmed from increased oil and gas production coupled with higher global oil prices," said Faraz Farooq, analyst at brokers Jahangir Siddiqui Capital Markets.

OGDCL's oil and gas production during the July-March period is expected to have increased by 5 per cent, he said.

The company did not release production details with the results.

Also, the gas wellhead tariffs of OGDCL went up by almost 26 per cent from January 1, which had a positive impact on the company's earnings.


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## Neo

Saturday, April 22, 2006 

LAHORE: The Pakistan Agric-ultural Storage and Services Corporation (PASSCO) is all set to procure 1.3 million tons of wheat under its procurement scheme 2006-07 for the 2005-06 wheat crop.

PASSCO and provincial food departments procure market surplus wheat every year.

The wheat crop for 2005-06 is estimated at more than 20 million tons. The government has determined five million tons wheat as market surplus that would be procured by PASSCO and provincial food departments. 

Of the five million tons market surplus, PASSCO will procure 1.3 million tons, the Punjab food department will procure three million tons and the Sindh food department 700,000 tons wheat under the procurement scheme 2006-07, said Abdul Majeed, General Manager Field PASSCO. 

He was talking to the Daily Times on Friday. 

He said PASSCO has sub-divided the procurement area into 16 zones countrywide to ensure effective control and better services to farmers. We have established more than 250 purchase centres and each centre is affiliated with the nearest bank to make payments to growers well in time. 

Mr Majeed said PASSOC had procured 997,000 tons wheat under the wheat procurement scheme 2005-06, out of which some 300,000 tons are still carried over. The Punjab food department is also carrying over 1.35 million tons besides about 300,000 tons are lying with the Sindh food department. He said the food departments of Balochistan and the NWFP have also carry-over stocks of over 100,000 tons. 

According to him, excessive import of soft wheat by the private sector has resulted in carry-over stocks in the country. 

But the government is committed to procuring a minimum of five million tons of wheat under the wheat procurement scheme 2006-07, he said, adding: Ã¢â¬ÅThe government would continue procuring further in case more production is on ground.Ã¢â¬Â

Pakistan is self-sufficient in wheat for 2005-06. Farmers, however, have apprehensions that the private sector could exploit the situation.


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## Neo

Saturday, April 22, 2006 

ISLAMABAD: Underlining the vital link between energy security and growth momentum, Prime Minister Shaukat Aziz has said that the government is looking for power generation from all possible sources, including wind energy, and the country will be producing 100 megawatt wind energy by June this year.

He was talking to a delegation of companies involved in the production of wind power. The delegation included Brain Fitzpatrick of AXOR, Canada, and Rafiq Dawood, Chairman of Win Power. 

Pakistan, the prime minister said, has vast scope of generating energy from wind because of its geographical location. Many parts of the country, especially in Sindh, lend themselves to obtaining energy from wind. 

He added that the government is working to expedite development of alternative sources of energy to meet the growing demand of power at a fast pace, as well as to produce cheaper and environmentally-friendly energy in the country. 

The prime minister said that the government has prioritized electrification of remote villages through wind and solar generating projects to provide cheaper electricity to the people of these areas and 500-600MW power generating capacity will be installed by 2007. 

The delegation informed the prime minister that a consortium involving MS/AXOR of Canada and First Dawood Group would establish a 50MW wind power project at Gharo, Sindh, to meet the urgent needs for electricity in Pakistan. The project will be functional by the summer of 2007. 

Brian Fiztpatrick appreciated the investment friendly policies of the government and the cooperation extended by it in the implementation of the project. The meeting was attended among others by Air Marshal Shahid Hamid (retd), Chairman of the Alternative Energy Development Board, and senior officials.


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## Neo

Saturday, April 22, 2006 

LAHORE: WAPDA has already supplied electricity to 9,300 villages and it will achieve its target of 13,000 villages by June, said WAPDA Chairman Tariq Hameed on Friday. Tariq was talking to reporters after attending a meeting presided over by President General Pervez Musharraf and attended by Prime Minister Shaukar Aziz in Rawalpindi. 

The chairman said the president wanted electricity supplied to 15,000 villages between July 2006 and June 2007. He said that except or certain parts of Balochistan, all villages of Punjab, Sindh and NWFP would be provided electricity by December 2007.


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## Neo

By Dr Akhtar Hasan Khan

BOEKE, a Dutch economist, enunciated the concept of duality in colonial developing countries. The two sectors which he identified were the metropolitan sector and the indigenous sector. By metropolitan sector he meant the thriving cities of Calcutta (Kolkata), Madras (Chenai), Bombay (Mumbai), Karachi, Delhi and few other big cities. The indigenous sector meant the vast backward rural country side.

This duality in the economy exists in almost all developing countries Ã¢â¬â between the industrial-***-urban sector and the rural-***-agricultural sector. As the majority of the population Ã¢â¬â more than 60 per cent in Pakistan, Ã¢â¬â still lives in rural areas, this duality is still a striking feature. In developed countries there is no such duality because the rural population depending on agriculture and agricultureÃ¢â¬â¢s contribution to the GDP is less than five per cent. In fact, in developed countries servicesÃ¢â¬â¢ contribution to the GDP is more than twothirds.

In China and India there is geographical duality also. In China the eastern sea board provinces are glowing with economic progress whereas the western landlocked provinces are still relatively backward. In India the southern states of Tamil Naidu, Karnataka, Maharashtra and Andhra Pradesh have much better economic and social indicators than the northern states of Uttar Pradesh, Bihar, Rajasthan and Madhya Pradesh. The southern states have also much better gender empowerment and religious tolerance.

Pakistan is no exception to this general duality in the economies of developing countries. The economic progress of Pakistan during the last six years has exacerbated this differential. There has been commendable progress in the industrial-***-financial sector. Large-scale manufacturing during this period has grown at an average rate of 11 per cent. Exports have more than doubled from eight billion dollars to $17 billion a year. The profits of the banking sector have almost tripled. The foreign exchange reserves have risen from one billion dollars to $ 12 billion, though the latest figure seems to have been artificially boosted by selling valuable national assets at throwaway prices to foreign firms.

The asset owners, whether of real estate or shares, have never had it so good as under the present regime in the entire history of Pakistan. The share index has multiplied by eight times Ã¢â¬â from 1,500 to more than 12,000. The real estate prices have skyrocketed by four to five times, especially in urban areas. The increase in remittances from one billion to more than four billion dollars after 9/11 has contributed to this golden period for asset owners. The business-friendly and stable economic policies of the present government have also contributed to this asset boom.

The cement production and demand in Pakistan has increased from 12 million tons a few years ago to about 20 million tons now. The surge in cement demand indicates a spurt in construction activity which reflects a higher level of investment in both the public and private sectors.

There has been a stark and equally significant stagnation in the rural-***-agriculture sector. The average growth rate of agriculture during this period is only two per cent and if we exclude the freak growth rate (7.5 per cent) in agriculture during 2005 the growth rate in agriculture in the remaining five years is just under one per cent. Even the average of two per cent for the whole period is less than the rate of population growth in rural areas of more than two per cent.

Hence, despite the governmentÃ¢â¬â¢s claims to the contrary, rural poverty has risen as indicated by the official figures of agricultural and population growth. Development economists all over the world are unanimous in stating that for rural poverty to decrease in a sustained manner, the agricultural growth rate must be more than four per cent. PakistanÃ¢â¬â¢s performance in this vital sector is much below the norm.

It is often stated that rapid growth in industrial-***-urban sector has a trickle-down effect on the rural sector. The trickle effect is both horizontal and vertical. Horizontally, the rapid industrial growth leads to a spurt in demand for agricultural products and induces underemployed rural population to migrate to the urban areas which offer better utilities and education-***-health facilities. As there has been stunted agricultural growth, the increase in demand for agricultural products which are mainly food has led to inflation at an average rate of 10 per cent during financial years 2005 and 2006. Hence there has been a negative impact on consumers all over the country by this sharp differential in industrial and agricultural growth rates.

The State Band of Pakistan in its latest second quarterly report for 2006 has stated, Ã¢â¬Åit is important to note that monetary policy alone will not be able to contain all of the rise in inflationary pressures. In particular, there is an urgent need for the government to supplement its very laudable supply-side measures with policies to address market structure problems. Specifically, anecdotal evidence clearly suggests that in recent years, speculative hoarding and collusive price setting have been significant contributors to domestic inflationary pressures in markets. Such pressures respond more to legal and administrative measures, and are less sensitive to monetary tighteningÃ¢â¬Â. The SBP could not have been more blunt in criticising the governmentÃ¢â¬â¢s failure to control Ã¢â¬Åspeculative hoarding and collusive price settingÃ¢â¬Â. The failure of the government to control the sugar cartel led to reduction in sugarcane output, doubling of sugar retail prices and sugar import of more than $ 450 million so far in fiscal 2006. The uncertain policy towards wheat procurement and the greater role given to the private sector is helping neither consumers nor producers.

The vertical trickle-down effect takes a lot of time to materialise and that too with limited impact. Famous economist John Galbraith lampoons, saying that Ã¢â¬Åtrickle down is like giving lots of grains to horses so that birds may have extra food on the streetsÃ¢â¬Â. If a person earns an additional crore in urban areas, he is most likely to spend it on buying better cars, houses and foreign travels. The real trickle down effect will be in employing more domestic workers or security personnel or construction workers. There will be an impetus for workers to migrate to big cities as Pathan workers have moved to Karachi but the overall impact in such cases is small and limited.

The spurt in construction activity has strong trickle down effects as it has maximum forward and backward linkages in the economy and it is also more employment-intensive than large-scale manufacturing.

The agricultural stagnation in Pakistan stems from policy failures. Our economic policymakers who have excellent urban background have neither the understanding nor the urge and sensitivity towards improving the lot of the rural poor. The GST on fertiliser and raising the price of gas for fertiliser factories has led to a sharp increase in fertiliser prices. The same is true of energy inputs of diesel and electricity for the agricultural sector. The spike in the price of agricultural inputs is far higher than a small increase in the prices of agricultural products especially for the small tenant farmers with no title to land which is a prerequisite for agricultural loans have been doubly hit.

The GDP growth rate in 2006 will be slightly above six per cent and has fallen by more than two per cent as compared to last yearÃ¢â¬â¢s stellar GDP growth of 8.4 per cent. Our economic policymakers need to understand the basic fact that high GDP growth of eight per cent plus cannot be sustained without a medium four per cent plus agricultural growth. The policies they have pursued in agricultural sector have failed to deliver.

There is an old economic adage, Ã¢â¬ÅThe rich get richer and the poor get childrenÃ¢â¬Â. With rising inequalities in income distribution and the highest rate of population growth among major developing countries, this adage is truer about Pakistan than about any other developing country.

The writer is a former secretary, planning.


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## Neo

WASHINGTON, Apr 21 (APP): There is an immense investor confidence in the economic reforms and booming Pakistan economy, Dr. Salman Shah, Advisor to the Prime Minister on Finance and Economic Affairs, said Thursday.

At a Press briefing at the Pakistan Embassy, he mentioned new benchmarks having been set. 

Dr. Shah is in the US as the head of a delegation to attend the annual Spring Meetings of the World Bank and the IMF.

"This is very important, because it sends a signal to our domestic audience, as well, that Pakistan's economic reforms have worked well, have been deep-rooted and broad enough for the investors to take a 30 year position on Pakistan."

Now, there is a benchmark of 5 years, 10 years, 30 years, and the prople who invest in a privatisation programme, can very easily calculate what is the cost of capital for investing in Pakistan.

Which means, he added, that basically the uncertainty as to what should be the return on investment in Pakistan is clear. "We are borrowing now, at 30 years at a rate which is just about 2 percent above the US government,i.e, at which the US borrows," he said as an instance, in response to a question.

The accomplishments have won kudos for the prudent and resilient economic policies pursued by Pakistan, he stated.

Governor State Bank of Pakistan, Dr. Shamshad Akhtar and Economic Advisor to the Finance Ministry, Dr. Ashfaq Ahmed Khan were also present. 

Dr. Shah said there used to be a time "when they were not even willing to lend you for one month, and now, we are talking about 30 years. So, this is the difference between the capacity of the economy to service the debt." 

He said Pakistan has a declining debt burden, and that means, that the risk of lending to Pakistan is much lower.


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## Owais

Iran-Pakistan-India gas link deal seen in June, despite US objection 

*DOHA *_(updated on: April 23, 2006, 12:45 PST_): Pakistan, India and Iran are likely to sign their $7 billion gas pipeline deal in June, in defiance of US pressure, Pakistan's and India's oil ministers told Reuters on Sunday.

The oil ministers of Iran and Pakistan had told Reuters on Saturday the three countries were very near final agreement on the project to pump Iranian gas through Pakistan to India.

Iranian Oil Minister Kazem Vaziri had said he expected the signing to take place in Tehran in June, but Indian and Pakistan had not given a precise time scale.

"Most probably it will be signed in June," Amanullah Khan Jadoon said on Sunday.

Indian Oil Minister Murli Deora also said on Sunday a June signing was likely and that he was impatient for progress on the project first mooted more than a decade ago.

"These things have taken so much time. We are all three parties sincerely dedicated to this project," he told Reuters.

Progress has been slow because of hostility between India and Pakistan and, more recently, US opposition to Iran because of its nuclear programme.

When asked about US pressure, Pakistan's energy minister said: "That's the (Pakistan) president's problem. I'm the energy minister. I must take care of energy needs."

The pipeline through Pakistan would link Iran's abundant gas reserves, the world's second biggest, to India's booming economy and it would carry 150 million cubic metres per day of gas for 25 years, Vaziri said


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## Owais

*Rs 80.8 billion decline in banking system NFA in eight months* 

KARACHI (April 23 2006): The net foreign assets (NFA) of the banking system registered a decline of Rs 80.8 billion during July-February FY06, compared with Rs 43.5 billion in the corresponding period of FY05.

The State Bank of Pakistan's second quarterly report for the year 2005-06 said that the FY 06 decline in the NFA was the result of the widening trade deficit that resulted in massive outflow of foreign assets and lower net receipts from external financing.

The report further says that within the banking system, both the SBP and the scheduled banks contributed to the overall decline in NFA.

The decline in SBP NFA was quite in line with the volume of its interventions in the forex market to reduce the exchange rate volatility, while the decline in scheduled banks' NFA was the outcome of expenditure of a stable exchange rate that resulted in a robust growth in trade related lending against FE-25 (foreign exchange circular No 25) deposits.

The report on reserve money was also not very rosy. It said that reserve money growth registered significant deceleration during the period under review while it increased by Rs 87.2 billion (9.59 percent) during July-February FY05.

This deceleration has been attributed to a slowdown in both SBP NDA and SBP NFA during the period under review.

In particular, the report said, the decline in SBP NFA during July-February FY06 was considerably larger than decline during July-February FY05. This was on account of lower inflow under programme loans (mainly from ADB and World Bank) during July-February FY06 compared with July-February FY05.

This slowdown in SBP NDA, despite higher government borrowing from SBP during July-February FY06, was attributed to a sharp decline in SBP OIN (other items net) during July-February compared with July-February FY06


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## Owais

*World Bank and IMF laud Pakistan's economic performance* WASHINGTON (April 23 2006): The Pakistani delegation has had "very good discussions" with the World Bank and the International Monetary Fund (IMF), during which, "the economic performance in Pakistan was appreciated".

This was stated by Adviser to the Prime Minister on Finance and Revenue Dr Salman Shah, who attended the IMFC meeting on Saturday, which continued till afternoon.

The important two-day annual WB-IMF spring meetings started on Saturday, while the Pakistan delegation is also holding multilateral and bilateral meetings.

Asked to comment on discussions underway, Salman told APP that "there is an ongoing and continuing support for Pakistan".

The meetings are being attended by finance ministers and governors of central banks of member countries from across the world. Earlier, on Saturday morning, the adviser held a meeting with IMF Deputy Managing Director Augustin Carstens.

The leader of the Pakistan delegation had held meetings with World Bank President Paul Wolfowitz and Vice President Praful Patel on Thursday and Friday.

As a result of these meetings, he said, "Our programmes have been scaled up considerably".

These programmes, he added, "are on track" and that "we are putting in the implementation of these programmes to make sure that we get all benefits out of the programmes".


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## Owais

*Musharraf discusses IPI gas line with Ahmadinejad* ISLAMABAD (April 23 2006): President General Pervez Musharraf and Iranian President Ahmadinejad spoke by telephone on Saturday. They discussed the Iran-Pakistan-India (IPI) gas pipeline project. The two leaders agreed that the experts of all sides should be asked to expedite the work on the pipeline project.

They also expressed support for the tripartite framework


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## Owais

*Ecnec approves 22 projects worth Rs 53.7 billion* 
*RECORDER REPORT* ISLAMABAD (April 23 2006): The Economic Co-ordination Committee of the Cabinet (Ecnec) met here on Saturday under the chairmanship of Prime Minister Shaukat Aziz and approved 22 projects worth Rs 53.7 billion.

Briefing newsmen about the decisions of the Ecnec, Deputy Chairman of Planning Commission Dr Akram Sheikh said that during its three quarterly meetings this year, Ecnec had approved major projects of infrastructure, education, health and other sectors worth Rs 240 billion, which would accelerate the economic growth and reduce poverty.

He said that the projects approved for improvement of infrastructure in Saturday's meeting included (a) Indus Highway (N-55) Phase III (Rs 6.28 billion ), (b) Bridge over Malir River connecting Shah Faisal Colony with Korangi sector 10 (Rs 1.2 billion), (c) construction of Sohrab Goth interchange on intersection of Shahrah-e-Pakistan and Rashid Minhas Road, Karachi (Rs 580 million), (d) Construction of 140 KM Sibi-Rakhni Road via Maiwand in Balochistan (Rs 1.48 billion), (e) Widening & Remodelling of Islamabad-Rawalpindi roads (Rs 1.22 billion) and (f) Islamabad-Muzaffarabad Road (N-75) Satra (17) Mile to Lower Topa (Rs 8.24 billion).

Akram said that in the health sector, schemes worth Rs 8 billion had been approved, whereas in higher education sector Fullbright Scholarships Support programme (Rs 7.2 billions) has been approved.

He said that other projects include improvement and refurbishing of sewage treatment plants (Rs 2.72 billion), Japanese assisted rural roads construction project phase II (Rs 3.73 billion, Urban water supply scheme phase VI Jacobabad (Rs 1.25 billion), and clean drinking water for all (Rs 7.87 billion).

Prime Minister Shaukat Aziz said that better fiscal management enabled the government to allocate unprecedented amounts for the development projects and the development budget had been consistently increased from Rs 130 billion in 2002-03 to Rs 272 billion in 2005-06. "This is 109 percent increase, resulting in jobs creation, poverty reduction and overall economic uplift," he added.

He said that focus on development was one of the hallmarks of the government pursuing the policy of balanced development with necessary emphasis both on the strengthening of infrastructure and the social sector.

"Whereas the government has allocated funds for the construction of roads, dams, bridges, its top priorities also include improvement in facilities of education, health, sanitation and safe drinking water," he added.

He emphasised that education "is the key to development". Therefore, the government was focusing on improving educational facilities at all tiers.

He said that the new National Finance Commission (NFC) Award would provide additional Rs 52 billion to the provinces in the next budget, so that they could allocate more funds for development projects.

Shaukat said that the development expenditure was instrumental in creation of jobs, decline in poverty and overall economic uplift.

He said that the amount of development expenditure to GDP ratio was enhanced by 3.9 percent this year from 2.6 percent last year, and in the next budget allocation for development projects would be further increased.

He said that all sectors of economy were exhibiting growth, and the government would meet 6-8 percent annual growth target this year. "The Public Sector Development Programme utilisation has shown an upward trend. In the first quarter, PSDP utilisation was 60-65 percent, and by the end of the financial year about 95 percent development funds are expected to be utilised," he added.

Referring to the government's philosophy of deregulation, liberalisation and privatisation, the Prime Minister said that the government wants increased involvement of private sector, particularly in health, education and energy sectors.

He said that the government did not increase oil prices but paid an unprecedented amount of $1 billion as oil subsidy despite the oil prices were going up to $70-75 per barrel.

He said that the Planning Division would be restructured to transform it from a reactive into a proactive organisation, and its monitoring and evaluation wings would be further strengthened to improve implementation of the projects.


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## Owais

*World Bank asks CBR to improve zero-rated sales tax regime* 
*RECORDER REPORT* ISLAMABAD (April 23 2006): The World Bank (WB) has asked the Central Board of Revenue (CBR) to bring about significant improvement in sales tax zero-rated regime, e-filing of returns, refund payment mechanism for the small and newly registered exporters and tax incentives for the small and medium enterprises (SMEs) and their registration.

Sources told _Business Recorder _on Saturday that the World Bank (WB) had conducted a study on the 'growth and export competitiveness' for creating a business-friendly environment for the investors. The study would be made part of WB report identifying key factors affecting productivity, competitiveness and overall growth in Pakistan.

The CBR is examining WB recommendations for improving GST refund system, zero-rating regime, e-filing and measures to expand the tax base.

The WB has recommended improvement in the sales tax zero-rating scheme for export-oriented sector by expanding the list of inputs/raw materials consumed by non-traditional export sectors. The decision would benefit the small and new exporters who face more difficulties in claiming sales tax refund as compared to better established ones.

The major exporters, who qualify for the gold/silver categories were given priority in claiming sales tax refund as compared to small exporters.

The WB has also raised some concerns about the facility of zero-rating on domestic sale of the products of five major export sectors (textile, leather, carpets, sports and surgical products).

The primary objective of zero-rating was to encourage exports of zero-rated sectors through speedy refund payment. Since 60 percent of the output of these sectors is being exported, three percent 'retail tax' was introduced on domestic sales to compensate potential revenue loss.

The CBR should preferably rely on enhanced efficiency of the sales tax refund system instead of zero-rating the domestic sale of products, WB observed.

The Bank pointed out that incorrect declarations made by taxpayers on the electronic format of sales tax returns was the major reason of delay in processing claims filed by smaller/new exporters.

In this regard, the board has conducted many training sessions on electronic filing of refund claims in Karachi, Lahore, Islamabad, Faisalabad and Multan. However, the issue of limited IT skill/capacity for correctly filing the electronic claims need to be addressed more vigorously.

The WB pinpointed that registered SMEs were facing problems in obtaining sales tax refunds. This was mostly in cases where the concerned vendor is not registered with the sales tax department. It is necessary to expand the list of sales tax payers to check the blockage of refund claims filed by the SMEs.

The WB noted that the problem of non-registered taxpayers is partly due to high failure rate of small businesses, seasonal nature of a variety of export-related vendors, and a large unregulated private sector.


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## Neo

KARACHI (April 23 2006): The State Bank of Pakistan (SBP) bought back Rs 14 billion ($233.37 million) of Treasury Bills on Saturday in a one-week reverse repo at 8.72 percent to inject liquidity into a tight market.


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## Neo

ISLAMABAD (April 23 2006): Tea imports from India may touch 25 million kilograms this year from the 10 million kilograms imported during 2005 as the visiting Pakistani importers were evincing interests in finalising more import deals with India.

The 12-member delegation of Pakistani importers led by Tea Association chairman Muhammad Altaf tasted over 250 samples of tea from various estates in south India.

The delegation of importers felt that the quality matched some of the material, it imported from Bangladesh where the quality had improved significantly over the last few years.

However, it felt that the prices were slightly higher, and it is learnt that the highest offer made for some of the Indian tea was at $1.25 per kg. Generally, the offer price was in the range of $1 to $1.2.

The country having a tea market for 170 million kilograms was importing around two-third of this from Kenya, and the CTC variety accounted for 97 percent of the total tea consumption.

Pakistan has been importing tea from over 10 countries with Kenya leading followed by India. Imports from India started way back in 1977, and over the years had gone up.

There was a feeling that the Pakistan industry was looking at jet black tea, which could be blended with Kenyan varieties. The prices offered were much lower than the ones fetched in the domestic market. While the average prices were around Rs 45, the offer of something around Rs 50 as the landing cost would not prove beneficial to the industry.

Leading Pakistani importer Abdul Jabbar Paracha said that the price was an important factor and some of the Kenyan tea that matched the south Indian quality was available at less than Rs 45 per kg in Pakistan and the better ones at over Rs 80. Also, in Kenya all the tea were sold through auction and the system was transparent.

Tea Board's Basudev Banerjee said that like done earlier, the Pakistani delegates could have offices in India and through agents could participate in the auctions.

Banerjee said that in just one year, exports to Pakistan had gone up three times and it was important for the industry to build on what had been done, The FE India reported.


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## Neo

BOAO (April 23 2006): Pakistan engaged in strengthening its interaction with China and other regional countries at the level of Boao Forum for Asia (BFA) to promote economic partnership.

This was stated by Minister of State for Investment Umar Ahmad Gumman here on Saturday, while talking to APP. The minister is here at the head of an 8-member delegation to participate in the three-day BFA's annual conference that started on Saturday morning.

Pakistan has been on the forefront making the BFA, an effective organisation for achieving common socio-economic goals through joint efforts. According to Syed Naveed Safdar Bokhari, an officer of the Pakistan Embassy in Beijing, Pakistan's delegation that includes senior business executive will avail the opportunity to enhance its co-operation with member countries.

Meanwhile, Chinese Vice President Zeng Qinghong said China will work for mutual benefit and common development in Asia and the world.


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## Neo

KARACHI (April 23 2006): Differences in South Asia have led to inability to take advantage of the international trading system. This was stated by A N Ram, a former Secretary, Indian Ministry of External Affairs and once its Ambassador to EU.

At the two-day Regional Consultation on 'WTO and South Asia: Strategizing Beyond Hong Kong', organised by 'Centre for Trade and Development (Centad), New Delhi, and Asia-Pacific Trade and Investment Initiative of UNDP-Colombo', held on April 21 and 22, 2006 in New Delhi.

According to a message received here, he said that trade talks could not be conducted, being devoid of the social dimension, as negotiators might be missing the social and developmental connection specific to their constituencies.

Participants expressed concern that political processes in the WTO were running in divergence from development processes needed for gaining from trade.

"The PFQF, in its current state is farcical", said Suhel Ahmed Chowdhary, former Commerce Secretary, Bangladesh. "LDCs spent 20 years changing S&DT clauses from 'should' to 'shall', and now recent evidence suggests that without monitoring mechanisms, 'shall' is useless," he said, signifying his disappointing with the lack of development focus in trade negotiations.

LDCs did not receive any incremental value in Hong Kong, supported Ratnakar Adhikari of UNDP, Colombo.

Engineer M A Jabbar, a former vice president of Federation of Pakistan Chambers of Commerce and Industry (FPCCI), was critical of trade negotiators and questioned whether they were sympathetic to poor stakeholders, and if they were, whether they translated it into negotiating positions. "Government officials should be made accountable if negotiators end up signing poor deals," he added.

"Negotiators often sign international agreements and misinterpret gains", criticised Basil Ilangakoon, Executive Vice Chairman, Marga Institute, Sri Lanka, as political mismanagement, lack of domestic consultation and inadequate reality checks were resulting in poorer gains for developing countries.

Abhijit Das of Unctad India Programme emphasised the need for capacity building of sub-national actors to ensure that agreements include real stakeholders. Since sub-national governments are also bound by trade negotiations, they need to be credibly informed and consulted, he added.

Over hundred South Asian trade experts, policy think-tanks and civil society representatives, including 50 participants from Bangladesh, Sri Lanka and Nepal had congregated at New Delhi to deliberate on providing inputs for development-friendly negotiating positions. This was the first attempt to understand and elicit a measure of consensus among the stakeholders across South Asia towards a development-friendly negotiating position after the Hong Kong Ministerial conference.

Professor Jayati Ghosh, of JNU, said that in the face of a growing agrarian crisis, where small farming has become unviable, South Asian countries are focusing their negotiating energy mainly on market access. Current South Asian negotiating positions at the WTO are based on the optimism fuelled by booming commodity prices, which could be short-lived. She urged that increased market access would only serve the interests of agri-business firms who are dominating agricultural marketing world-wide.

Voicing wide ranging concerns on the current state of trade negotiations at the WTO, delegates expressed grave disappointment on lack of progress on critical issues relating to agriculture, industrial market access and services, in view of the April 30 deadline.

Alamgir Farroukh Chowdhury, a former commerce secretary of Bangladesh, in his inaugural address, declared that despite a spectacular growth in world trade in recent years, empirical evidence showed that gains from trade had bypassed the 'Least Development Countries' of Bangladesh and Nepal because of 'rigged' rules.

About the current state of play at the WTO negotiations, he expressed disappointment and concern at the lack of co-operation between South Asian countries on trade negotiations. "South Asia is not speaking in one voice over the issues as fundamental to addressing development concerns as Duty Free Quota Free (DFQF) for LDCs. Worse, the regional body of Saarc did not even consider it necessary to hold any trade meeting in relation to the ongoing trade negotiations."

Dr Biswajit Dhar, Head of WTO Division at IIFT, was critical of the current confusion between aggressive and defensive interests in agriculture. "India is exploring offensive interests in the form of value-added agriculture and horticulture, which is a flawed strategy," he said. "Subsistence farming, distortions in global trade, possibility of cheaper imports and inadequate disciplines, present a strong case that India should continue to be defensive and work to protect its markets." He argued that agriculture negotiations must focus on people, and not look at GDP growth figures, as bulk of the people derive their livelihood from agriculture.

Dr Dhar called for agreement on an end date for elimination of all forms of domestic support in the current round.

Dr Debapriya Bhattacharya, Executive Director, Centre for Policy Dialogue, Bangladesh, underlined the need for taking on board the need of net food importing countries in the current negotiations. The consultations deliberated on issues of agriculture, Nama, services, trade policy formation process relating to the ongoing negotiating positions.


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## Neo

FAISALABAD (April 23 2006): The City District Government Jhang will complete 617 uplift schemes with Rs 659.6 million during the current financial year to provide basis amenities to the people of urban and rural areas.

District Jhang Nazim Sahibzada Sultan Hameed said this while talking to the different delegations at his office. He said 343 new developmental schemes at the cost of Rs 273.8 million had been included in the current budget while Rs 386.8 million had been allocated for the completion of 274 ongoing schemes. He said the concerned departments had been directed to complete these uplift schemes before the end of this financial year.

Giving details, the district nazim said the development schemes included 323 schemes of construction of roads, 182 of rural electrification, 27 of officials buildings' repair, 13 schemes of sewerage and drainage, 39 of education, 12 in health, 10 in sports, eight in culture, three each in Sui gas and agriculture sectors.

The district nazim also heard the people's problems on the occasion and issued orders for its redressal.

Meanwhile, the training programmes are continuing in 568 villages of the district to educate the farmers about the modern and scientific production technology of the cotton crop by the Agriculture Department. Agriculture District Officer Abdul Hameed said this while talking to newsmen here. He said 19 teams comprising agriculture experts were engaged in these training programmes. He said the training programmes under phase III would be completed at the end of May.


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## Neo

23 April 2006 

ISLAMABAD Ã¢â¬â Pakistan will have to rely on foreign resources if domestic fiscal efforts remain muted due to the likely impact of increasing oil prices on inflation, according to an official report. Prepared by the Planning Commission and made available to Dawn, the report warns that higher oil prices in the medium term could eventually create problems for Pakistan, like many other developing countries, especially those which were not categorised as Highly indebted Poor Countries (HIPC).


These countries were being forced to seek increased foreign assistance, either commercial or concessionary, to finance increasing social sector spending to achieve their Millennium Development Goals (MDGs).

The report "Millennium Development Goals 2005" said that in an environment of higher interest rates, the goal of debt sustainability is partly compromised once again. Thus either the pace of foreign exchange earnings must continue to rise via unhindered exports or they must be financed by depleting foreign reserves to maintain debt sustainability. The latter policy option again impacts the volatility of the exchange rate and thereby the inflation rate.


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## Neo

*By Moinuddin Ahmed*

Despite massive spending on development projects during the last five years, Sindh failed to register a dent in high unemployment. Unemploment has actually gone up and the province stands next to Balochistan in this regard while Punjab and NWFP have witnessed a drop in unemployment over the same period.

Estimating employment levels is not easy, more so in Pakistan where records are poorly maintained in most sectors.

The latest government statistics reveal that the rate of unemployment in Pakistan had come down from 8.3 per cent in 2001-02 to 6.9 per cent by January this year. The government also claimed that during the period from July 2004 to September 2005, it has created a record 5.54 million new jobs. This has been possible after huge investment in infrastructure, agriculture, telecommunications, information technology and housing sectors.

According to the Labour Force Survey 2003-04, the overall jobless rate of the country fell by 0.6 percentage points. However, the provinces of Sindh and Balochistan saw an increase in unemployment. The survey revealed that Sindh saw an increase in the jobless rate that touched 5.87 per cent as compared to 5.17 per cent in FY02. In Balochistan the jobless rate increased to 8.38 per cent against 7.60 in FY02.

The unemployment rate in Punjab and NWFP during the period under review declined and stood at 8.52 per cent and 13.2 per cent, respectively.

The Sindh minister for labour, industries and commerce was not available for comment despite repeated attempts by Dawn to seek his views on the issue. But an official on condition of anonymity said that the Labour Force Survey (LFS) was based on sampling that was not a credible methodology. He felt that there some fundamental flaws in the assessment technique. For example, daily-wagers and seasonal workers were braketed with fully employed persons.

Ã¢â¬ÅThe method of sample surveys may be an authentic method of assessment in the developed countries where literacy rates are high and where results of a survey of 100 randomly selected people may be good enough a measure to get a feedback, but this criterion cannot be applied in our country where people of different areas have different status, literacy rates, values and problems,Ã¢â¬Â the official explained.

An important factor that could have contributed to higher unemployment in Sindh is the ban on government jobs for the last over 10 years. However, this cannot be the key factor as the public sector offers a fraction of new jobs as compared to the private sector.

PakistanÃ¢â¬â¢s total labour force stood at 45 million in the year 2005. Out of this 30.13 million was in the rural areas and 14.87 million in the urban areas. Rural employment is estimated at 27.19 million and employment in urban areas is placed at 13.41 million in 2005. According to the survey, the countryÃ¢â¬â¢s total unemployed labour force was estimated at 3.84 million in 2005.

The province-wise data showed a wide variation in female economic participation, with the highest rate in Punjab at 15.6 per cent and the lowest in Sindh at 4.6 per cent. WomenÃ¢â¬â¢s economic participation in the NWFP was 6.9 per cent and in Balochistan it was 4.8 per cent.

According to the figures of the department of manpower and training, during the period from January 1, 2003 to December 31, 2005, a total number of 146,585 unemployed persons were registered at all employment exchanges in the province, including 153 ex-servicemen, 7,912 women and 138,520 men. Out of this, 28,201 were placed in gainful employment by the employment exchanges.

During the same period, 28,240 vacancies (64 government and 28,196 private) were notified by 5,309 employers (36 government and 5,273 private) to the employment exchanges in Sindh.

There is a total of 19 employment exchanges in Sindh. They operate on a voluntary basis. Ã¢â¬ÅThere should be a permanent regulatory body that could evaluate and find venues for new openings both in private and public sectors. Multinational companies often go unchecked as they fill their vacancies from outside sources without intimating the employment exchanges,Ã¢â¬Â the official added.

A district-based Multiple Indicators Cluster Survey carried out in Sindh from October 2003 to January 2004 showed that the unemployment ratio in men aged between 15 and 24 stood at 33 per cent in Karachi and 26 per cent in the rest of Sindh. The total jobless ratio of men and women of the same age group was calculated at 32 per cent in Karachi and 26 per cent in the rest of Sindh. The estimate shows that about 1.3 million young men and women are jobless in Karachi and 1.5 million in the rural areas of Sindh.


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## Neo

Sindh and its nerve centre, Karachi, hold a lot of interest among investors in construction activities and buying of property despite the fact that Punjab has a much larger population and offers more friendly policies to builders.

Being a port city, Karachi has higher property rates than Lahore and Islamabad/Rawalpindi owing to investorsÃ¢â¬â¢ choice for the destination.

However, it has been noticed that some investors have bought huge land along the Super Highway leading to Hyderabad for initiating mega housing projects in the private sector.

According to the Chairman of the Association of Builders and Developers (ABAD), Hafiz ur Rahman Butt, Pakistan needs to build 7.5 million houses a year in order to meet the burgeoning demand.

Of this number, 40 per cent is for Karachi alone because of its importance as the port city and a large number of migrations take place every year from various parts of the country to the metropolis, he said.

LahoreÃ¢â¬â¢s population is estimated at 10 million but it cannot compete with Karachi in any respect, he added. There have not been many projects announced by the builders in Lahore as compared to Karachi and other parts of Sindh like Hyderabad.

Construction activities depend mostly on the population of any city. There are more construction activities in Karachi and Hyderabad than Lahore and Islamabad/Rawalpindi.

Mr Butt said that the building rules in Punjab were friendly and much more relaxed than in Sindh. There have been some problems as the provincial government takes too much time in clearing frozen lands.

He said in Punjab, the private sector had been encouraged to boost housing sector but in Sindh the Board of Revenue looks after property issues. The Sindh government holds the auction of property and sometimes it does not release the plots and property which they allot to the parties. Ã¢â¬â ASK


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## Owais

*USA Ambassador, CG visit Port Qasim * KARACHI: US Ambassador in Pakistan Ryan C. Crocker and US Consul General Ms Marry H. Witt visited Port Qasim here Saturday and discussed trade related issues with officials of Port Qasim Authority.

Chairman PQA, Vice Admiral Asad Qureshi briefed them about the development plans of PQA that included deepening and widening the navigation channel for mother ships, direct foreign investment in the construction of new terminals -- liquified petroleum gas terminal and liquid cargo terminal- and in various other industrial and commercial units at Port Qasim, says PQA statement. 

Pakistan and US have signed the declaration of principles on Integrated Cargo Container Control (IC3) Programme , a trade security agreement. 

The IC3 programme envisaged joint screening of US-bound containerized cargo from Pakistan via a live video link by custom authorities of Pakistan and US. 

The US customs would not re-examine the screened cargo on its arrival at US ports. 

The Federal Cabinet had already approved the implementation of IC3 programme and allotted five acres of land at Port Qasim to Central Board of Revenue for this purpose. 

Under the declaration of the IC3 programme, the Government of Pakistan would safeguard its export interest to US markets by ensuring the security arrangements of cargo containers at Pakistan ports. 

The programme would serve the purpose of container security initiative (CSI) and mega port initiative (MPI) of the US Government to ensure secure cargo supply chain to the US here in Pakistan. 

The IC3 at Port Qasim would not only reduce the cost of exports but to save time in completing export orders


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## Owais

*Contract to install GIZ desalination plant awarded * GAWADAR: The contract for the installation of the desalination plant at Gawadar Industrial Zone (GIZ) for converting 0.2 million gallons per day of saline water into potable has been awarded to Siddique Sons.

Gawadar Industrial Estate&#8217;s project director, M. B. Magsi told Geo News that this project costing about Rs60 million would be completed in six months.

He told that Wapda has been provided 7 acres of land free of cost for the construction of a 24 Megawatt Grid Station, which would be supplying electricity to the industrial estate, while Sui Southern Gas was being contacted for the supply of gas.

Industrial Estate project has been planned over a sprawling 2000 acres of land, where the setting up of units detrimental to environment would be prohibited.

M. B. Magsi told that textile, engineering, pharmaceutical, chemical, steel re-rolling, flourmill and warehouse projects has thus far been proposed for set up.


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## Owais

*ADB plans to computerize its entire system * ISLAMABAD: Agriculture Development Bank (ADB) president, Rashid Akhtar Chughtai said that the bank would be entirely computerized in next 28 months.

Talking to Geo News here, he said that presently most of the ADB works were being done manually, which has proved to be quite irksome for the borrowers. He said that the Asian Development Bank was also providing assistance in the entire computerization of the bank&#8217;s system.

He vowed that the ADB would be turned around into a commercial and profitable organization sans subsidy. 

Rashid Akhtar Chughtai told that the ADB would be providing Rs350 millions agriculture loans under micro-credit scheme.


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## Owais

*Cotton production target set at 13.8 million bales * MULTAN: Federal committee for agriculture has fixed the target for cotton production from next crop at 13.8 million bales.

Multan Central Cotton Research Institute&#8217;s Director General, Mohammad Islam Gill told that the cultivation process in the province of Punjab has already been kicked off in the backdrop of this production target.

Countrywide area of cotton cultivation has also been set at 3.25 million hectres i.e. 8.25 million acres. Province-wise cotton productions set targets are: 10.58 million bales by cultivating on 2.56 million hectres in Punjab, 3.13 million bales on 0.64 million hectres in Sindh, 0.1 million bales on 0.040 million hectres in Balochistan and 0.1 million bales by cultivating on 0.010 million hectres. 

Cotton last year was cultivated on 3.1 million hectres, while the target for production was set at 13 million bales, which is about to be met.

He told that cotton cultivations in some areas have picked up, but the silver fibre cotton cultivation on large scale would kick off from May 1, which might continue mid June and even beyond.


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## Neo

Sunday, April 23, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\04\23\story_23-4-2006_pg1_1

_By Irfan Ghauri_

ISLAMABAD: President General Pervez Musharraf said on Saturday that he has accepted the difficult challenge of constructing Kalabagh Dam, a challenge no previous ruler of Pakistan had dared to take on. 

Seventy-eight percent of Pakistanis support the construction of the dam and the people opposed to it have no logical argument against it, he said at the National StudentsÃ¢â¬â¢ Convention 2006, organised by the Higher Education Commission.

Ã¢â¬ÅI have travelled extensively in Sindh and not a single person gave a logical argument as to why he was against the construction of the reservoir. Everybody says they have no trust,Ã¢â¬Â Musharraf said. He said experts believed that the only way to rehabilitate the barren lands in Sindh was for a certain amount of water to flow downstream of Kotri, and this was only be possible if more water was available. Ã¢â¬ÅLeadership ... sometimes has to swim against the waves,Ã¢â¬Â he said. 

Responding to questions from students about PakistanÃ¢â¬â¢s foreign and domestic policies, the president said that the situation in Balochistan was quite different to that of East Pakistan in 1971. Only a few tribal chiefs, whom he called Ã¢â¬Åopponents of developmentÃ¢â¬Â, were involved in sabotage activities, he said. Ã¢â¬ÅI know the military strategy well. The East Pakistan situation was different where there was a mass uprising of 80 million people. The representatives of these sardars in the parliament are misleading the people,Ã¢â¬Â Musharraf said.

He said none of the sub-tribes of the rebel Baloch sardars were with them. He said the rebel tribes were getting foreign funding and had a strong force of 5,000 men, each getting a Rs 6,000 per month salary.

He said rebel tribal chiefs Akbar Bugti and Khair Baksh Mari had Ã¢â¬Åfeasted onÃ¢â¬Â government money from gas royalties, while the salaries of people employed from their tribes had been going into the personal accounts of the tribal chiefs. With the past governmentsÃ¢â¬â¢ Ã¢â¬Åfunding and exploitation of their own peopleÃ¢â¬Â, the tribal chiefs grew stronger, he said. 

The levies system supervised by the sardars is being replaced with a police system, and the government is trying to convert 95 percent of the Ã¢â¬ËB areasÃ¢â¬â¢ of Balochistan into Ã¢â¬ËA areasÃ¢â¬â¢. Fourteen districts have come under A areas now, he said. The government has started major development projects worth Rs 125 billion in the province and is now starting several smaller projects, he said.

Gen Musharraf said the government would spend Rs 10 billion each year on the development of the tribal areas. In response to a student who criticised the governmentÃ¢â¬â¢s foreign policy, with special reference to 9/11, he said no nation in the world enjoys sovereignty in real terms and sometimes leadership has to take bold decisions. Ã¢â¬ÅA country cannot demand respect if you are a failed, intolerant and extremist nation. Emotionalism should not cloud logic,Ã¢â¬Â he said. 

Ã¢â¬ÅWe criticise our own country. Our own women malign us when they go abroad. I know there are problems. But they should be discussed here. Speak here, not abroad. This is my biggest worry,Ã¢â¬Â he said.The government plans to open six new engineering universities by 2008 where industry-related subjects will be taught, he said. 

The president urged students to fight terrorism, extremism and sectarianism. He said the Muslim Ummah looked towards Pakistan for leadership as it was the only Islamic nuclear power.

Ã¢â¬ÅYou must fight terrorism and extremism. There is no place for terrorism and extremism in Islam,Ã¢â¬Â he said. Everyone is entitled to his or her views, but using mosques and imambarghas for extremism is not acceptable, he added. He said chapters in Islamiyat textbooks which promote sectarianism will be removed. Ã¢â¬ÅYou can never impose a change. It is an evolutionary process. It is a change of mindset ... Only socio-economic change will bring about empowerment of women and it has to be a gradual change.Ã¢â¬Â


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## Neo

Sunday, April 23, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\04\23\story_23-4-2006_pg5_5

LAHORE: South Korea has a lot of potential in information technology and Pakistani IT experts can learn a lot from their Korean counterparts and win the global market in a big way.

Mr J Jang, head of a five-member South Korean delegation, expressed these views during his visit to the Lahore Chamber of Commerce & Industry on Saturday. LCCI President Mian Shafqat Ali and Vice President Aftab Ahmad Vohra also spoke on the occasion.

Mr Jang, who looked quite impressed with the progress made by Pakistani IT experts, said that all over the world big IT firms joining hands and Pakistan must not stay behind.

The South Korean delegation comprises Eugene Park, JunSeok Park, SeungMin Chun and YongJun Yoo. They asked a number of questions about the IT situation in Pakistan. 

The leader of the delegation spoke at length and threw light on pros and cons of South Korean technology. 

LCCI President Mian Shafqat Ali said that the present government was taking a special interest for the upgradation of information technology and had already allocated a big fund.

He said that there are many things, which we can learn from the Korean experience of development, particularly in the field of information technology, automobile manufacturing, mobile phones, electronic goods and equipments, cool chain system, etc. 

He said information is a key to success and future growth. This technology has emerged as the fastest growing sector in Pakistan. According to conservative estimates, there are about 300 software houses based in Pakistan, which are busy in developing, and exporting software to the developed world. The fields in which these companies are involved are virtually unlimited.

More and more opportunities are being thrown open to them every passing day as their skills, potential and strategic advantages are getting accepted in major software markets around the world. But this is only the tip of the iceberg, as a vast potential still exists for the local IT industry to become a formidable force in the global arena. 

LCCI Vice President Aftab Ahmad Vohra said South Korea is one of the highly developed countries in Southeast Asia, while Pakistan is on the route to progress and once the two countries join hands with each other the situation would be totally otherwise.

He said Pakistan's IT industry has everything. A modern and rapidly expanding telecommunication system, experts from various disciplines, highly skilled and cost effective workforce - all this backed by an unmatched investment package offered by the government of Pakistan. However, software developers and top-notch IT experts do not get high salaries in Pakistan resulting in brain drain. This has resulted in slow growth of IT in Pakistan. The real potential of IT applications has not been realized. If South Korean companies could come into direct investment or if they engage in joint ventures, not only will the growth of IT increase in Pakistan, but also the brain drain will slow down.


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## Owais

*Pakistan tea importers reach India&#8217;s Tamil Nadu * ISLAMABAD: A delegation of Pakistan tea importers reached India&#8217;s southern state of Tamil Nadu to see prospects of tea import.

Pakistan is the second largest consumer of tea in the world.

Pakistan imported 82 million kg tea from Kenya and 9.2 million from India last year. Meanwhile about 40 million kg tea was smuggled into the country from other sources. 

Pakistan&#8217;s traditional tea source Kenya was hit by drought, which has forced the South Asian country to see towards other tea exporting countries to meet at least 50 million KG shortfall. 

Pakistan has already reduced import duty on Indian tea from 35% to 10% to boost bilateral trade with the neighboring country.


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## Neo

Sunday, April 23, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\04\23\story_23-4-2006_pg5_14

LAHORE: Telenor Pakistan has officially opened its GSM mobile network for commercial service in 34 more destinations within a month of its last expansion on Pakistan Day. 

The new destinations include Ghakhar, Kotla, Kahna Nau, Zahirpir, Sadiqabad, Allu, Ahmadpur East, Dunyapur, Karorpakka, Burewala, Layyah, Pindi Gheb, Jand, Basal, Goliana, Dhudyial, Batkhela, Thana, Tarbela, Matiari, Qazi Ahmad, Mirpur Mathelo, Ubaro, Moro, Daulat Pur, Dharki, Hyderabad-Matiari Highway, Moro-Nosheroferoz Highway, Mirpur Mathelo-Ubaro Highway, Muzaffargarh-DG Khan Road, Ahmadpur-Sadiqabad Road, DG Khan-Taunsa Road, Qazi Ahmed-Dalatpur Highway and Burewala-Arifwala Road.


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## Neo

Sunday, April 23, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\04\23\story_23-4-2006_pg5_4

LAHORE: A delegation of US business leaders, headed by Jay Collins, Chairman of the US-Pak Business Council, will visit Pakistan from April 24 to 26 to explore investment opportunities with the Pak Private Society. 

This visit schedule of the American delegation was conveyed to Pak-S Business Council chief Iftikhar Ali Malik by Esperanza Gomez Jelalian, Executive Director of the US-Pak Business Council. 

Senior representatives of Boeing company, Citigroup, Cisco Systems, Coca-Cola and Merck will be part of the visiting delegation. They will meet members of the Federation of Pakistan Chambers of Commerce & Industry and hold key meetings with leading Pakistani businessmen. 

Iftikhar Malik termed it a positive response to President MusharrafÃ¢â¬â¢s recent address to the US Chamber of Commerce.


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## Owais

*S&T promotion and HRD strategised: President* ISLAMABAD (April 23 2006): President General Pervez Musharraf has said the promotion of science and technology (S&T) and human resource development has been strategised for the fast-paced progress of the country.

He was addressing the Students Convention 2006, organised by the Higher Education Commission (HEC) here on Saturday. Musharraf said six world class universities of science and technology would be established in the country with the assistance of renowned institutions of higher learning from Europe, Japan and Korea.

He said these institutions of higher learning will have linkages with the industry aimed at harmonising the higher education and industrial growth. These institutions of excellence would greatly help in robust industrial growth and start yielding results in 10 to 15 years, he added.

The President said an Information Technology University would be set up in Abbottabad and the land has already been allocated to he Higher Education Commission in this regard.

He referred to the phenomenal increase in the educational sector budget, and said that Rs 22 billion has been allocated for the promotion of primary, secondary and higher education, and would have enormous impact in enhancing the literacy level which currently stands among the lowest in the world.

The President said 265 PhDs have returned from the United States to take part in the development of the country in various spheres. Musharraf said the government is fully focused on providing quality education in the less developed parts of the country which were neglected in the past, adding a new university would be set up in Multan for the benefit of the southern Punjab which lags behind in quality educational situation.

Answering to various questions, raised by students, the President said we have to achieve gender empowerment through step by step approach as it would be an evolutionary process.

He said political and economic empowerment which is a way forward for the women, adding over 30,000 women are holding positions of power at various tiers of the government, including the Senate, the National Assembly and the local governments.

Referring to several mega development projects being undertaken in Balochistan, Musharraf said Rs 125 billion is being spent on various scheme, including highways for the fast pace progress of the province.

He said Rs 100 million each for all the districts of the province has been allocated for the socio-economic uplift of the people at the grassroots level.

He said a strategy has been finalised for the overall progress of the Federally-Administered Tribal Areas (Fata) and Rs 10 billion would be spent on its various development projects per annum.

Regarding construction of new water reservoirs, Musharraf said to meet country's growing energy needs for sustained socio-economic progress, new dams will be built. This would also help in increased flow downstream water for the benefit of tail-end growers, especially in Sindh, he added.

About the reconstruction of the quake-ravaged areas in NWFP and Azad Kashmir, the President said the government would rebuild houses and infrastructure on modern lines.

He said over Rs 25 billion has been disbursed among the quake survivors and efforts of Pakistan in dealing with the natural calamity of massive magnitude have been praised by the international community as a text book example.

The United Nations has also appreciated the handling of the earthquake tragedy by the government, the nation, the armed forces and the NGOs, he added.

On country's status in the comity of nations, the President said Pakistan has created a respectable place in the comity of nations as a leading country of the Ummah. He said Muslim states look upon Pakistan to provide leadership in these challenging times on the world stage.

Musharraf, however, stressed the need for removing misperceptions about Pakistan being an extremist stand in tolerance society. He said that in today interdependent world, no country enjoys complete sovereignty. He said greater interaction in trade and commerce with the world community would greatly help Pakistan to move on the path of economic growth.

The President exhorted the youth to have complete faith in the country and be proud of it and discard any pessimism, saying: "We must instil right in ourselves being Pakistanis and take the country, which has immense resources and talent, forward on the road to progress and prosperity."

The President also gave away the prizes, shields and certificates to the students who excelled in various debates.

The President renewed Pakistan's unswerving commitment to fighting off extremism and terrorism through a holistic strategy and emphasised that menaces will have no place in the country.

"We have to fight both extremism and terrorism as they retard progress - there is going to be no room for the menaces in Pakistan's future," he declared.

The President told the nation-wide gathering of students and faculty that incidents like bomb blast in Nishtar Park, Karachi, impacted the image of the country and portray the Pakistani people as divided into sects. He urged students to extend their support to efforts aimed at containing and curbing extremism.

"You must lend support to efforts aimed at curbing extremism - we must stop those misusing loudspeakers at places of worship and check those who spread hate material," he said.


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## Owais

*THE RUPEE: rates fall versus dollar, euro in open market* 
*RECORDER REPORT* KARACHI (April 23 2006): The rupee failed to show any reluctance in shedding its value versus the dollar following the surging demand for the greenback, dropping three paisa for buying at 60.18 and slipping by two paisa for selling at 60.22, dealers at the open market said on Saturday.

The rupee shed 10 paisa versus the euro for buying and selling at Rs 73.70 and Rs 73.80, moneychangers said.

In the world markets, the dollar showed little change versus the major currencies, dealers said.

*OPEN MARKET RATES: *Firmness prevailed in interbank market amid smooth supply of the greenback so the rupee held its overnight level for buying and selling at 60.00 60.02, dealers said.
================================Buying Rs 60.18Selling Rs 60.22================================


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## Neo

From MEHTAB HAIDER

ISLAMABAD - The government has decided to provide more funds to the provinces in next budget besides existing share in Public Sector Development Programme (PSDP) for major projects. 

Ã¢â¬ÅThe new NFC Award will provide additional Rs 52 billion to the provinces in the next budget 2006-07 and will enable them allocate more funds for development projects,Ã¢â¬Â said Prime Minister Shaukat Aziz while addressing the participants of ECNEC meeting here on Saturday.

After the meeting, Deputy Chairman of Planning Commission Dr Akram Sheikh told journalists in a Press briefing that the country is set to achieve its growth target within the range of 6.5 per cent during the current fiscal despite two shocks in shape of earthquake and unprecedented hike in oil prices.
Ã¢â¬ÅThe government provided support of $1 billion to absorb oil shock in last one year,Ã¢â¬Â he added.

He said the federal government would continue normal provincial share in PSDP for next fiscal year despite providing more funds to them under the new NFC Award.

Ã¢â¬ÅWe will provide indicative figures for provinces share in PSDP in next budget,Ã¢â¬Â he said while answering a query about abolishing provinces share in PSDP in the wake of providing more funds to them in the new NFC Award.
Dr Sheikh said the ECNEC approved 22 projects with total cost of Rs 53.7 billion in SaturdayÃ¢â¬â¢s meeting out of which 10 projects belonged to Sindh, 3 for Punjab, 2 for NWFP, 1 for Balochistan, 2 for Islamabad and 4 allover the country.

He said the APCC and NEC are expected to meet by last week of May 2006 and all development projects of next year have already been approved at the forum of ECNEC in order to avoid delay on their implementation. Ã¢â¬ÅWe will be able to utilize 95 per cent allocation of PSDP during the current fiscal year out of total allocated money of Rs 272 billion,Ã¢â¬Â he added.

Earlier, in his address during the ECNEC meeting, Prime Minister Shaukat Aziz said better fiscal management enabled the government to allocate unprecedented amount of funds for the development projects.
The government has allocated funds for the construction of roads, dams, bridges; the top priorities of the government also include improvement in facilities of education, health, sanitation, safe drinking water to people throughout the country, the Prime Minister said. He said education is the key to development and the government is focusing on improving educational facilities at all tiers. 

The premier said that the development expenditure was instrumental in creation of jobs, decline in poverty and overall economic uplift of the country. The amount of development expenditure to GDP ratio was enhanced to 3.9 per cent this year from 2.6 per cent last year. He said in the next budget government would further increase allocation for development projects. 
He said that this year all sectors of economy are exhibiting growth and the government will meet 6-8 per cent annual growth target. He said that PSDP utilisation has shown an upward trend. In the first quarter, PSDP utilization was 60-65 per cent and by the end of financial year over 90 per cent development funds are expected to be utilised. 

Shaukat Aziz said that planning Division would be restructured to transform it from a reactive to a pro-active organization. Its monitoring and evaluation wings will be further strengthened to improve implementation of projects. 
The ECC also approved clean drinking water for all with total cost of Rs 7871.740 million, institutional enhancement to implement Karachi mega city project Rs 799.840 m, procurement for fire fight vehicle for Islamabad Rs 725.268 m and Japanese assisted rural roads construction project Rs 3736.890 million.

On infrastructure side, the ECNEC approved tranmission scheme for dispersal of power frm 2X50 MW Wind Mall power plant at Mirpur Sakro with total cost of Rs 816 million, Indus Highway (N-55) phase-III with cost of Rs 6283.930 million, bridge over Malir river connecting Shah Faisal Colony with Korangi sector with cost of Rs 1007.243 million, construction of Sohrab Goth interchange with cost of Rs 579.949 million, construction of Sibi-Rakhni road with cost of Rs 1484.104 million, widening and remodelling of roads and intersection of Islamabad airport from Jinnah Park Chowk to Flying club Rs 1221.437 million and Islamabad-Muzaffarabad road Rs 8241.500 million.
On health side, the meeting approved National Tuberculosis Control program (2005-10) with cost of Rs 1184.412 million, establishment of accident & emergency and ancillary service complex at civil hospital Karachi Rs 1438.403 million, provision of MRI&CT scanner for civil hospital Karachi, Chandka Medical College Larkana, People Medical College Nawabshah and Liaqat University Hospital Hyderabad/Jamshoro Rs 564 million, strenghtening of Gambat Institute of Medical Sciences Rs 587 million, Punjab Municipal services improvement project Rs 3540 million, purchase of equipments for National Institute of Cardiovascular disease Karachi Rs 658.625 million.


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## Neo

ISLAMABAD (April 24 2006): Describing economic turnaround as his greatest achievement, President General Pervez Musharraf has said the country has been put on course to move forward as a dynamic, progressive and enlightened society.

"My greatest achievement is economic revival of Pakistan - the possibility of pulling the country out of deep economic morass looked remote in 1999 - it looked almost improbable in the face of an inextricable circle of debt-servicing but we managed it," he told PTV's programme, A Morning with the First Family, aired Sunday evening.

First Lady Begum Sehba Musharraf, President's son Bilal Musharraf and his daughter Ayela Raza candidly shared their experiences, thoughts and hopes for the country's future in the programme.

The President referred to ever mounting debts, debt-servicing to the tune of $5 billion per annum and low income, abysmal forex reserves at the time of assuming responsibilities of the government in 1999 and said for a while he felt disheartened at the state of affairs in the beginning.

"We managed to bring about a turnaround. God has been very kind - now there is a complete reversal...we have everything: minds, potential and resources to progress and prosper; all these were mismanaged in the past," he stated, adding putting right people as heads of state-owned companies like Steel Mills and PNSC delivered.

The nation now is moving forward because the economy is growing, it lies at the heart of progress in all fields, he remarked.

In response to a question, the President said he would like the nation to remember him for saving the country and steering it as a dynamic society.

"Not only I saved the country from sinking but I would like to be remembered for taking it forward and putting it on a course to move forward as a dynamic, progressive and enlightened society - that is what we achieved for Pakistan.

President Musharraf saw a strong desire in the Pakistani youth to take the country forward and said the upbeat economic growth has replaced their disillusionment with hope.

"I have full confidence in youth, they have an urge to do something for Pakistan, they feel for Pakistan, I can see that urge in them, in the past there was disillusionment, now I can see light in them."

He told the interviewer that heroism means true leadership and not "commanding through weight of authority".

Heroism does not mean commanding through weight of authority but earning support, affection and liking of the people, he said and added he takes his colleagues along to have their ownership.

Continuing, President Musharraf said Pakistan army is fully with him because he has braved off difficulties and dangers with them.

In the wide-ranging interview, the President said improving the image of Pakistan has been close to his heart. He said he has initiated a number of steps to project soft image of the country through culture, sport and tourism and cancel out the negative perceptions about it.

The President recalled the 1965 and 1971 wars as important events of his life and said he was deeply hurt at the fall of East Pakistan.

Sharing his daily morning routine, the President said it includes glancing at newspaper headlines and editorial pages of about half a dozen leading national dailies.

In sport, the President said he plays tennis and likes swimming, at least three to four times a week.

The First Lady, in her message to the nation, called for a futuristic approach and said the young people must equip themselves with skills required for contributing to national development and strive for improving its image.

Bilal Musharraf said his father encouraged him to take part in sports and the two play tennis even now whenever they get a chance. He said his father has been friendly and a practical person, who believes in moving forward.

The son and the daughter of the President said their father respects their views and added that the parents have allowed them to develop their own individual personalities and choose their career paths.

They said they are proud of their father but do not believe in boasting to people that they are children of the President.


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## Neo

ISLAMABAD (April 24 2006): The Asian Development Bank (ADB) has finally approved $42 million "Federally Administered Tribal Area (Fata) rural development project" designed to reduce incidence of poverty in far-flung areas of the region, it is reliably learnt.

The project was under discussion since 2002 as differences emerged about its design and execution among the bank, Fata secretariat and Ministry of States and Frontier Regions (Safron) delayed the project.

This is a soft loan project from the bank's Asian Development Fund (ADF). This is to be launched in three northern agencies - Bajaur, Mohmand and Khyber.

Objectives of the project is to contribute to efforts being made for reducing incidence of poverty among the rural population by increasing income and employment opportunities through a mix of economic and social intervention.

A well-placed official told Business Recorder, besides other problems, the contention between the NWFP governor's Fata secretariat and Ministry of States and Frontier Regions (Safron) for getting execution rights for the project delayed its approval.

A special high-powered delegation visited the ADB head office in Manila in March this year to finalise project modalities. The delegation comprised of representatives from economic affairs division (EAD), Fata secretariat and Safron, they said. Now issues relating to the project have been settled and the EAD is preparing for loan signing with the bank.

The project's total cost is $62.9 million. Out of which, the bank would provide $42 million from its ADF and the remaining amount will be arranged locally. Safron is now the executing agency, source said.

It is important to note that governor's secretariat (Fata) was eager to execute the project independently without the involvement of Safron. The bank has demanded of the secretariat to make it clear that it is independent in terms of utilisation of aid given by the international financial institutions (IFIs) or donor agencies. Besides, it has also expressed some reservations regarding the design and details of the project and its PC-I was still lying with the bank.

The issue emerged during the visit of ADB mission in 2004 wherein Fata secretariat demanded 100 feet height of nine small dams, which is not acceptable to the bank as small dams.

The EAD also informed the Fata secretariat about the instruction of water and power ministry that dams of 100 feet do not fall in the definition of small dams.

Endorsing the ministry's stance, the International Commission on Dams (ICD) also opined that reservoirs up to 15 meters height are small dams and more than 15 meters lie in the category of big dams.

After a series of meetings with Fata administration, sources said, the issue has been settled and the project's PC-I is in hand.


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## Neo

ROHTAS FORT (April 24 2006): Prime Minister Shaukat Aziz said it was time that Pakistan properly showcased its rich heritage, culture and history to the world to attract tourists from around the world.

He was speaking here at the third annual sound and light show at the sprawling greens inside the Rohtas Fort, the only surviving pre-Mughal military architecture in Pakistan and a World Heritage Site, Saturday night.

He emphasised that preserving cultural heritage is crucial not only to restore the beauty and grandeur of the past but also in economic development of a country as it fosters the local cultural industries and promotes tourism.

About the 450-year old fort, which is undergoing extensive restoration, Aziz said his government will "do the needful" to make the work on conservation of the project "go faster" and reiterated government's support to all such projects in the country.

"We have a lot to look back and a lot to look forward," Aziz said referring to the many historical sites in the country ranging from the ancient Gandhara civilisation to the Mughals, spread across the country.

The Rohtas Fort built on the orders of the emperor Sher Shah Suri in 1541 and completed after his death was in ruins and the surviving parts are being restored by Shell Pakistan at a cost of Rs 27.2 million.

He said being close to Islamabad the site can be yet another attraction for domestic and international tourists who can visit these locations, both for historical and religious reasons.

The Prime Minister also referred to the many Buddhist sites, the captivating mountainous Northern Areas and Moenjodharo as national treasures that can attract thousands of tourists and further strengthen the national economy.

"Lets package, what we have, and show it to the world," Prime Minister Aziz said.

Prime Minister Aziz also appreciated the efforts of Shell Pakistan, Himalayan Conservation Foundation and the Government of Norway in the conservation of the fort and said such public-private partnerships can go a long way in supporting similar projects across the country.

Rohtas is now a protected monument under the Antiquities Act 1975, and maintained by the Department of Archaeology.

He inaugurated the Sher Shah Museum, which has on display swords, books, household pottery and utensils dating back to that era.


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## Neo

SIALKOT (April 24 2006): The Punjab Chief Minister Chaudhry Pervaiz Elahi has released a special grant of Rs 12 billion to Sialkot district government for early establishing of Sialkot-Lahore Motorway. Punjab Minister for Industries Muhammad Ajmal Cheema disclosed this while talking to newsmen, here on Sunday.

Sialkot District Nazim Muhammad Akmal Cheema was also present on this occasion.

The provincial minister said that construction of Sialkot-Lahore Motorway would begin after June 30, 2006, with total cost of Rs 20 billions, which would open the new vistas of socio-economic development in the region including Sialkot, Narowal, Gujrat, Gujranwala and Sheikhupura districts, besides providing a strong industrial base.

He said that this motorway would also reduce the distance between Sialkot and Lahore and Lahore would be on the drive of only 45 minutes from Sialkot.

He said that the provincial government has won the hearts of people of Sialkot by approving and announcing the early construction of Sialkot-Lahore Motorway's grand project.

Cheema said the Punjab Chief Minister Chaudhry Pervaiz Elahi would inaugurate this grand project during his visit in beginning of May 2006.


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## Neo

ISLAMABAD (April 24 2006): After failing to convince Iran, the Pakistan government has decided to offer 2000 acres land in Hub (Balochistan), primarily acquired for the Pak-Iran refinery, to prospective investors to establish oil refinery through international competitive bidding (ICB).

In 2002,Tehran had unilaterally refused to help in establishing $1.3 billion refinery in Balochistan's coastal areas, saying that the project had no rate of return.

"The Ministry of Petroleum has indicated that the land acquired by State Petroleum and Petrochemical Corporation (Perac) for setting up the Pak-Iran refinery, is available at Khalifa Point (in Hub), Balochistan," official sources told Business Recorder.

They quoted the Ministry as saying that the estimated cost of a mega refinery project, with 200,000 to 300,000 barrels per day (bpd) refining capacity, was about $2 billion.

On May 16, 1991, Pakistan and Iran had signed an agreement to initiate the project, with a capacity to refine 120,000 barrels crude oil per day, but later Iran backtracked from the project and any argument from Pakistan side could not convince it in this regard.

The Ministry has now suggested to seek proposals from short-listed prospective investors (single entity or joint venture) to set up a state-of-the-art deep-conversion refinery of this capacity at Khalifa Point, on 'Build-Own-Operate' (BOO) basis, under the incentives regime applicable to projects established in the Export Processing Zones (EPZs), sources added.

They said that investment proposals would be evaluated on the basis of technical and financial soundness of development and operation of the proposed refinery.

However, the Ministry of Industries and the Central Board of Revenue (CBR) have locked horns with the Petroleum Ministry for declaring the refinery location as 'EPZ', according to sources.

The said that CBR was of the view that there was no provision to exempt crude oil imports from customs duty and other taxes, whereas Finance Ministry agreed with the proposal that no subsidy be provided under the proposed pricing mechanism and that the proposed concessions should not impact the competitiveness of existing refineries and also that the land may be leased out at nominal rates for the life of the project.

The country's current demand of petroleum products is about 16 million metric tons per annum, 82 percent of which is met through imports (crude and finished products) and the rest through indigenous resources.

Pakistan's total refining capacity at present is about 12.8 million tons per annum against total demand of 16 million tons.

Energy demand and supply projections indicate that by 2011-12, the total deficit of petroleum products in the country would be over nine million and 11 million tons, respectively.

The Economic Co-ordination Committee (ECC) of the Cabinet had decided in the last meeting that Petroleum Ministry and Ogra would select the party for setting up the refinery through ICB, with the objective to bring in quality investor which has the ability to set up a state-of-the-art refinery within the stipulated timeframe.


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## Neo

FAISALABAD (April 24 2006): Federal Education Minister Lieutenant-General Javed Ashraf Qazi (retd) has said the promotion of education is the mission of government and every effort would be made for this purpose.

Addressing a function of University of Faisalabad, he said that education is key to progress, therefore, the government has adopted this sector as one of the pillars for poverty reduction and benefit of masses.

He said the government is fully committed to providing best educational facilities to the youth within the minimum possible time. The reasons for Pakistan's low educational status are varied, but one important factor is that Pakistan's educational system has been highly fragmented and segmented, he added.

It has, therefore, created some intractable problems in the optimal utilisation of human resources under the given labour market condition, said the minister, adding the existing National Education Policy 1998-2010 was formulated keeping in view the prevailing problems in the society.

Javed Ashraf Qazi said the government has initiated major administrative reforms, such as 'devolution of power' and Education Sector Reforms. Moreover, Millennium Development Goals (MDGs) and Education For All (EFAs) are the international policy concerns announced in 2000, which need to be properly reflected in our Policy. As such, the Ministry of Education has taken in hand an exercise to review the National Education Policy (1998-2010) for updating to bring it in line the current needs of the country, he added.

The minister said the National Education Policy is to make Pakistan's education system more meaningful and relevant, aimed at creating a knowledge-based society, designed to support economic growth and poverty alleviation.

Javed Ashraf Qazi said that private sector is playing a substantial role and supplementing the government efforts for promotion of education. He assured that government will encourage and support the private educational institutions, which are not commercialising the education.

Earlier, presenting address of welcome, Faisalabad Chamber of Commerce and Industry (FCCI) President Mian Mohammad Hanif emphasised the need for fresh investment in the education sector for meaningful purposes, while so-called registered education institutions should be highlighted in the best interest of the students' career and investment of the parents.

Later, Javed Ashraf Qazi visited the Expo-Faisalabad 2006 and expressed satisfaction over the International standard of stall.


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## Neo

FAISALABAD (April 24 2006): The Punjab government is negotiating with the International Development Association of World Bank for obtaining $100 million as third and last Punjab Education Development Policy credit for budget support, which is implementing a wide-ranging sector reform agenda backed by fiscal and fiduciary reforms.

According to official sources, the Punjab education development policy credit would be third and last of a series of three development policy credits of International Development Association to support the provincial government's three-year education sector reform programme (PESRP) to improve quality of education.

The programme supported during the first year through $100 million Punjab Education Sector Adjustment Credit (PESAC) was approved by the World Bank in February 2004, and in the second year through the $100 million second Punjab Education Development Policy Credit, was approved in March 2005.

The proposed credit would help deepen the reforms that have been implemented with high commitment. The sources mentioned that the purpose of this third development policy credit is to provide budget support for the province, which is implementing a wide-ranging sector reform agenda.

The reforms are being implemented by the district governments through annual terms of partnership agreements (TOPs).

Improvements in the education outcomes in Punjab have a countrywide impact, and success could motivate other provinces to follow a similar path and undertake sector-wide reforms. The credit supports the key pillars of the Punjab Education Sector Reform Programme, including public finance reforms to increase public spending for education to improve quality, access and sector governance.

The programme document of the first Punjab Education Sector Adjustment Credit (PESAC) presented the three-year PESRP. There has been steady progress and a number of sector initiatives are already beginning to show impact, including promising increase in school enrolments.


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## Neo

Monday, April 24, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\04\24\story_24-4-2006_pg7_12

ISLAMABAD: The government of Pakistan owes loans amounting to $15.467 billion to the World Bank (WB) and the Asian Development Bank (ADB). 

Sources said the government owed the WB $9.155 billion up till February 28, 2006. The loans included IDA amounting to $6.950 billion and IBRD amounting $2.205 billion. 

The rate of interest for IBRD on the basis of spread loan or variable spread loan are LIBOR + 0.5 to 0.85 spread. The IDA loans are free of interest but incur a commitment charge of 0.5 percent and service charge of 0.75 percent. 

Sources said that the total amount Pakistan owed the Asian Development Bank as of January 31, 2006, stood at $ 6.312 billion. Out of this total loan amount, $1,891 million is from Ordinary Capital Resources and $4,421 million is from the Asian Development Fund. 
http://www.dailytimes.com.pk/default.asp?page=2006\04\24\story_24-4-2006_pg7_12


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## Owais

FDI reaches $2.2 billion in first nine months 
*KARACHI *_(updated on: April 24, 2006, 20:12 PST_): Foreign direct investment in the country reached $2.2 billion in the first nine months of the 2005/06 fiscal, led by inflows into the communications and energy industries and the financial sector, official figures show.

Data posted on State Bank of Pakistan's web site on Monday showed FDI for the July-March period rose from $792 million in the same period of the 2004/05 fiscal year.

The communications sector attracted the most foreign investment in the period, $1 billion, followed by $304 million invested in the power industry, $265 million in the financial sector and $217 million in oil and gas exploration.

In the splurge on communications mainly stemmed from the sale of a 26 percent stake in Pakistan Telecommunication Co. Ltd. to Dubai-based Emirates Telecommunications (Etislat).

The United Arab Emirates led the list of foreign investors with investment of $653.8 million in the first nine months of the year, followed by the United States with $369 and Saudi Arabia with $272 million.

Inflows from foreign portfolio investment during the period were recorded at $407 million, up from $108 million in the first nine months of 2004/05.


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## Owais

*OGDC GDRs offering: Shaukat directs to materialise deal by June 30* 

ISLAMABAD (April 24 2006): Prime Minister Shaukat Aziz has rescheduled the Oil and Gas Development Company (OGDC) Global Depository Receipts (GDRs) offering, and directed the Privatisation Commission to materialise the transaction by June 30.

Earlier, the Privatisation Commission Board had fixed July 31 as the deadline for the offer. The Board had discussed the issue in depth in its meeting last month and referred the case to the Cabinet Committee on the Privatisation (CCoP) for approval. But the CCoP could not discuss the issue due to heavy agenda.

Sources said that the Prime Minister directed the officials to arrange road shows in Singapore, London and Washington to get maximum response for the offering.

OGDC GDRs will be Pakistan's first ever attempt to offer any organisation's shares in world stock market. Since Islamabad's idea to float bonds to stay in the world market had been a great success in the recent past, the officials expect positive response for the GDRs.

Sources said that the Privatisation Commission was working actively to select one of four short-listed banks' consortiums as lead manager for the offering.

The lead manager will have a multiple role in the offering. It will have to suggest to the government to pick up any world stock market for listing of GDRs. besides deciding the size for one receipt.

Sources said the lead advisor will also be responsible of promoting Pakistan's image in the world market, besides reporting and maintaining the books of the offering, on behalf of the government of Pakistan (GoP).

Four parties/banks consortiums have shown interest in handling the GDRs. They have quoted different fees and cost for the job. Deutsche Bank quoted Rs 838 million; a consortium of UBS and JP Morgan Rs 989 million; City Group and Goldman Sachs consortium Rs 1,258 million; and Merrill Lynch Rs 1,342 million as fee and cost for the offering services. Sources said that the Privatisation Commission was negotiating the fee and cost services with the short listed parties/banks consortiums, and its final decision to pick any one them was expected in a couple of days. An official said that fee and cost matter was a secondary thing in GDRs issue, and the first priority would be given to credentials of the parties in appointment of lead manager.


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## Owais

*KSE proposes capital gain tax relief for 5 years* 

KARACHI (April 24 2006): The Karachi Stock Exchange (KSE) has proposed to the government to extend the capital gains tax exemption for a period of five years to avoid selling in stocks and help sustain the current levels of the market, creating more appetite for new investments leading to accelerated industrial activity in the country.

According to budget proposals prepared for the next fiscal year, the capital gains tax exemption is available until financial year ending on June 30, 2007 and is in place since 1975. The government is extending it for every one to five years since then.

This exemption is tax-neutral as capital gains from sale of shares are exempted, while capital losses are not allowed to set off against other taxable incomes. In case of withdrawal of this exemption, capital losses shall be subject to adjustment against other taxable incomes, which may cause loss of revenues for the government.

The other proposals tabled by the Exchange are tax rebate for listed companies, exemption on dividend income, compulsory distribution of dividend by listed companies, improvement in mutual funds industry and voluntary pension scheme, investment allowance, demutualization and capital tax exemption on corporatisation of individual stock exchange membership.

The Exchange said that the government is keen to see more and more new listings of companies to attract general public participation in the industrial progress in Pakistan. The government often expresses its concern that despite the stock market boom new listings have not picked up. Though lately some public offers have taken place but mainly under privatisation program of the government and mutual funds and banking sectors. Private industrial units are still shy of getting listed.

*THE REASONS FOR THIS ARE: *Until June, 2002, there was a tax differential of 10 percent for listed companies. Unlisted companies were subject to income tax rate of 45 percent, whereas listed companies had to pay 35 percent. In the 2002-03 budget the government had decided to progressively reduce the tax rates of private companies, thereby removing the tax difference of 10 percent between and private company and public company, leaving no tax incentive for listed companies.

The tax rate on dividend from unlisted companies and listed companies have become same @10 percent again no advantage to listed companies. Until June, 2002 ,tax rate on dividend from unlisted companies was 20 percent.

The stock exchange on directives from SECP has introduced code of corporate governance on the listed companies making them subject to much desired discipline to protect the shareholders of the listed companies. Many of the listed companies consider it a burden on them, with no advantage to them vis-ÃÂ -vis unlisted companies, particularly under the present environment of low interest rate with easy accessibility to credit.

In order to attract the companies for listing, it has been proposed that the tax rates for the public listed companies should also be reduced in the same ratio as the private companies so that the corporate tax rates for the listed companies are brought to the level of 25 percent and the non-listed companies at 35 percent. The differential tax treatment at 10 percent between the listed and non-listed companies will promote better disclosure of profits by the listed companies and will not only offset the revenue loss, if any, but would lead to growth of corporate tax due to reduced tax rates.

Tax on dividends of listed companies to be exempted from tax as dividend is distributed out of the profits earned after payment of corporate tax and is tantamount to double taxation. Revenue loss to the exchequer due to withdrawal of tax would not be much, as around 30 percent of the market is owned by the government and about 20 percent by mutual funds, which are already exempt from this tax. Similarly, 20 percent of market is owned by the corporates which are presently subject to 5 percent rate on dividends.

Hence, 30 percent of the market owned by the individuals would get the benefit of tax concession, which need to be encouraged.

Alternatively, tax rates on dividend income of listed companies to individual shareholders be reduced to 5 percent from 10 percent. The revenue loss against the total dividend amount of approximately Rs 40 billion would be less than Rs 2 billion, which will offset more than due to increased listings, growth and higher dividends as a result of this incentive.

The current saving and the investment rate in the country is low. The government has taken a good step with the introduction of an investment allowance. In last year's budget the government had increased the maximum limit of the allowance from Rs 100,000 to Rs 150,000, it is proposed to increase the ceiling of investment allowance at least up to Rs 500,000 so that the investments in equity can be further promoted.


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## Owais

*PC told to consult Petroleum ministry for PPL fields lease pacts rewriting* 
*RECORDER REPORT* ISLAMABAD (April 24 2006): The Economic Co-ordination Committee (ECC) of the Cabinet has directed the Privatisation Commission (PC) to consult Petroleum Ministry before re-writing agreements regarding lease, development and production of PPL (Pakistan Petroleum Limited) fields, official sources told _Business Recorder._

The PC, which is processing PPL privatisation to sell 51 percent equity shares and transfer management control to the strategic investors, had sought government approval to extend lease of Sui, Kandhkot and Mazarani to cover their respective lives.

Four parties, namely OMV Exploration and Production GmbH of Austria, a consortium of CNPC International and China ZhenHua Oil Co Ltd, a consortium of MOL Hungarian Oil and Gas Pic and Kuwait Foreign Petroleum Exploration Company (KUFPEC) and BP Pakistan Exploration and Production Inc have carried out due diligence.

The PC is of the view that analysis compiled by PPL technical consultants indicates that commercial production of oil and gas from most of PPL fields would continue for many years, beyond the expiry of their respective leases.

It said that all the parties interested in buying the shares in Sui, Kandhkot and Mazarani fields had sought assurances that the lease terms could be extended for the duration of commercial production, adding that in the absence of such safeguard the parties would heavily underestimate the value of PPL, even if they agreed to bid.

The maximum term of any lease depends on whether it is an 'Oil Mining Lease' (ML) granted under Pakistan Petroleum (Production) Rules, 1949 (the 1949 Rules) or a 'Development and Production Lease' (D&PL) granted under the Pakistan Petroleum (Exploration and Production) Rules, 1986 (the 1986 Rules).

The PC had argued that in order to create enabling environment for the PPL-operated leases to be extended to cover the producing lives of the fields, a fresh notification would need to be issued by the GoP under the Regulation of Mines and Oil-fields and Mineral Development (Government Control) Act 1948 (the 1948 Act).

Such a notification would allow extension of PPL-operated leases to cover their economic producing lives through exemptions on the application of the 1949 and 1986 rules, respectively.

Sources said that the Privatisation Commission would issue revised notification for extension in lease, development and production.


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## Neo

*ISLAMABAD *_(updated on: April 24, 2006, 22:28 PST_): Prime Minister Shaukat Aziz has said that Pakistan is tapping all possible sources of energy including hydel, thermal and nuclear in view of its rapidly growing energy requirements at 8 to 10 per cent per annum.

He said this while talking to Andre Mernier, Secretary General of the Energy Charter Secretariat who called on him at the Prime Minister's House on Monday.

The Energy Charter Treaty is a multilateral inter-governmental agency for cross border energy trade, transit and investment.

Giving an overview of Pakistan's energy needs, the Prime Minister said that Pakistan is focusing on obtaining energy from hydel sources as five out of the twelve highest mountain peaks in the world are located in Pakistan making it an ideal place for harnessing hydel sources.

Shaukat Aziz said Pakistan is also considering the possibility of importing gas from Iran and Turkmenistan through pipelines capable of being extended to India. Pakistan has a highly developed gas distribution system spread over 60,000 kilometer, which makes gas available all over the country.

To meet its growing energy requirement, Pakistan is considering import of liquefied nitrogen gas (LNG) and establishing an LNG terminal at the Karachi port from where it will be injected into the country-wide gas distribution system, said the Prime Minister.

He said Pakistan is also engaged in tapping alternative sources of energy including wind, solar and biomass energy and it expects to generate 500-600 MW of wind power by 2007.

Pakistan requires to generate 8800 MW of nuclear energy by 2025 with a view to ensuring energy security, which is critical to maintaining a growth rate between 6-8 per cent.

The Secretary General informed the Prime Minister that Pakistan, which is already an observer of the Energy Charter Treaty is being considered for its full membership in view of its growing energy requirements.


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## Neo

*By Naween A. Mangi*
In its second quarterly report on the economy released late last week, the State Bank of Pakistan warned that sustained growth in the long term would be dependent on improvements in infrastructure, implementation of further reform to strengthen governance and institutions and greater liberalization.

The central bank also cautioned that in the short run, Ã¢â¬Åemerging macroeconomic imbalances that are still small and not threateningÃ¢â¬Â need to be addressed. These include a widening savings-investment gap, rising trade and current account deficit, a weakening fiscal deficit, and persistently high levels of inflation.

The SBPÃ¢â¬â¢s prescription for long-run success is valid. The report says GDP growth will fall below the seven per cent target but will be in the range of 6.3 to 6.8 per cent. Disappointing harvests of cotton and sugarcane as well as lower-than-expected growth in large-scale manufacturing will be the major reasons for this. Typically, higher-than-expected GDP growth takes place when a bumper crop comes as a surprise. Last year, for example, a record cotton crop added 1.3 percentage points to the high GDP growth of 8.4 per cent. The SBPÃ¢â¬â¢s forecast of lower growth underscores the need to reduce continued dependence on agriculture and undertake serious investments in the sector which will increase productivity and yield in a sustainable way in the long term.

In the short term, there is far greater urgency than the SBP would have us believe to address the economic imbalances which are far from just Ã¢â¬ÅemergingÃ¢â¬Â and indeed have firmly taken root in the economy.

Savings-investment gap: One worry is the widening gap between the rates of savings and investment in the economy. The rate of savings has been on the decline leading to a widening gap between savings and investment. The savings rate stands around 14 per cent whole the rate of investment hovers near 16 per cent. Clearly, rising levels of consumption far exceed the nationÃ¢â¬â¢s ability to save. The SBP warns that in coming years Pakistan will be increasingly constrained in its ability to meet the growing consumption and investment needs without generating inflationary pressures and rising levels of debt. But the SBP clubs this problem with other Ã¢â¬ÅemergingÃ¢â¬Â imbalances which need to be addressed in the long term. To the contrary, the declining rate of savings and the rising gap with investment have been problems that have been emerging for some years now and should have been analysed and addressed by now. Economists say the rate of investment needs to rise to 23 per cent to keep growth in the economy strong. And the rate of savings needs to climb above its long-term historical trend rate in order to prevent the need for greater borrowing. However, the government has not yet proposed a plan on how to tackle this and the seven to eight per cent gap between savings and investment will need to be financed by foreign capital.

Current account deficit: Another increasingly worrying concern is the ballooning trade and current account deficits. The SBP predicts the current account deficit will close the year at 4.7 per cent of GDP as the trade balance continues to widen. Export growth is not insubstantial but is far from able to keep up with the 50 per cent plus growth in imports. The exchange rate has been maintained with a pro-import stance that penalizes exporters and with general elections scheduled for next year, it is unlikely the rupee will be allowed to depreciate this year. The SBP says it would favour a policy of reducing the rate of inflation and transport costs to reduce the trade deficit rather than resorting to large, sudden exchange rate adjustments. This makes little sense when the bulk of imports are consumer goods that do not add productive resources to the economy. Economists say the rupee needs to weaken by three to five per cent to help reduce imports and raise exports.

However, the real question is why the SBP chose to ignore in its report the serious and growing problem of massive consumer imports? In a research note put out this week, Sakib Sherani, chief economist at Abn Amro Bank points out that in the period from July to October 2006, consumer goods excluding food and oil food amounted to 36 per cent of total imports and for almost 40 per cent of the increase in imports over the same period last year. These numbers are alarming. Sherani predicts that the current account deficit will rise from $1.6 billion in 2005 to $8.9 billion in 2007. The SBP admits that in the longer run, larger current account deficits would initiate a vicious circle of debt creation, exchange rate depreciation and inflation. But it is severely disappointing that the central bank failed to take a hard line on this matter.

Fiscal worries: Part of the problem, of course, is that these economic imbalances have become dangerously intertwined. If imports are drastically curtailed in a bid to cut down the trade and current account deficits, revenue collection which has become heavily dependent on import duties will be hurt and the fiscal deficit will worsen. Already, the fiscal deficit is expected to widen to 4.5 per cent of GDP. The SBP points out that the revenue balance is in deficit in both years and even the primary balance has deteriorated significantly this year. This is as a result of lax discipline on both the expenditure sideÃ¢â¬âwhere unproductive current expenditure is rapidly increasingÃ¢â¬âand on the revenue side where import taxes excluded, collection is unable to match growth in the economy.

The issues on the fiscal front too, need to be addressed immediately rather than in the long term as the SBP says. Despite heavily publicized reform, the tax base has not been widened in any meaningful way. Sectors that have traditionally escaped the tax net continue to do so and the limited sectors that have always paid taxes continue to bear the burden. The Central Board of Revenue does not appear to have evolved a strategy to address this concern and impressive tax collection figures are largely a result of higher collection from import taxes as imports of consumer goods continue to rise.

Similarly, fiscal indiscipline has crept in and the governmentÃ¢â¬â¢s current expenditure continues to rise and add pressure to the fiscal deficit.

Persistent inflation: To finance its deficits, the government has resorted to heavy borrowings which are adding to already substantial inflationary pressures in the economy. The State Bank says that while the rate if inflation has moderated in recent months, the Ã¢â¬Ådowntrend is still unsettledÃ¢â¬Â and Ã¢â¬Åinflation remains at relatively high levels.Ã¢â¬Â

The SBP expects consumer price inflation to fall between 7.7 per cent and 8.3 per cent by the time the fiscal year draws to a close. However, several inflationary pressures remain in the pipeline. Primary among external factors is international oil prices which have not stabilized. Abn AmroÃ¢â¬â¢s Sherani says that every five dollar increase in oil prices that is passed on to domestic consumers increases the CPI by 3.5 percentage points. That is a major concern. Moreover, as the SBP points out, hoarding and collusive price setting by industry needs to be tackled by the government through tough monitoring in order to prevent internal inflationary pressures from rising in the economy. However, there is little hope on this front since no real plan has been put in place to revamp the powerless Monopoly Control Authority and manipulative industrialists resort to hoarding and profiteering with the greatest of ease, as has been the case in the sugar business. Political considerations are clearly paramount to the government and take precedence over consumer problems which is why President Pervez Musharraf and Prime Minister Shaukat Aziz wasted no time in calling off a NAB investigation on the sugar crisis.

The SBP says it will keep monetary policy tight and may even tighten further. The bank appears confused about whether price stability or maintaining growth is its real objective.

The way ahead: There are also greater worries ahead. While the economy will grow at a solid six to 6.5 per cent this year, the period beyond 2006 is far more uncertain. Elections in 2007 means there will be a reluctance to pursue tough reform. That, in turn means present import-friendly policies will continue, leading a ballooning current account deficit. It also means the government will be reluctant to crack down hard on tax evaders and so the fiscal deficit worries will persist. Additionally, the reluctance to tackle manipulation by industrial cartels will persist and intensify, leading to greater inflationary pressures in the economy.

Meantime, the dependence on external inflows will continue to grow. Privatization-related flows and promised funding for earthquake related spending all remains uncertain. This is perhaps a major factor that has forced the government to declare that sovereign bonds will be issued every year as a matter of policy. While Islamabad argues that this is a deliberate plan developed keep Pakistan on the radar screens of international investors, it is by now amply clear that the strategy is also borne out of necessity to finance the uncontrolled deficits in the economy.


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## Neo

*By Ashfak Bokhari*
A bilateral investment treaty (BIT) with the United States, that has been under discussion for long, was billed to be signed on the eve of President BushÃ¢â¬â¢s visit to Islamabad last month as a mark of WashingtonÃ¢â¬â¢s special favour to Pakistan, though no match to what it offered to India.

However, the signing ceremony was put off because the US draft contained some provisions, which President Musharraf later said were highly objectionable and, therefore, unacceptable, and needed to be renegotiated to both partiesÃ¢â¬â¢ satisfaction.

While little is known if the controversial provisions, which mostly related to security of investment and intellectual property rights, have been re-opened to a fresh round of discussion or not, commerce minister Humayun Akhtar has expressed eagerness for early conclusion of the proposed BIT in his meeting with assistant US trade representative, Douglas Alan Hartwick , who visited Islamabad mid-April.

He suggested that a meeting of Trade and Investment Facilitation Agreement (TIFA) council be held in Islamabad before June-end. The council last met in Washington in September 2004. Under the US policy, it is only under the good offices of the TIFA that negotiations can be held for a BIT and then an FTA. So, TIFAs set up a joint council to identify and discuss ways to remove regulatory barriers to trade and foreign investment.

A conspicuous feature of this exercise is the negotiating fatigue which is deliberately designed by the developed country partner.

This is especially acute for developing country governments holding talks with powerful countries like the US. Keeping pace with technical, complex and arcane legalistic negotiations puts a great strain on under-resourced officials and ministries of a government like ours, who often have little access to necessary information about these deals and can easily be pressured or bribed.

Pakistan thinks an FTA with the US will result in an enhanced volume of exports to that country and officials in Islamabad cite the example of Jordan whose exports to the US, after an FTA was signed, increased from $17 million to $1 billion. More than 85 per cent of PakistanÃ¢â¬â¢s exports to the US consist of textiles and apparel and other garment made-ups.

President Pervez Musharraf had himself been keen to see an early conclusion of a BIT and FTA with the US and had earlier raised the issue with President George Bush at a meeting in Washington in December 2004, and again in September 2005 in New York.

Last year, the US gave its Ã¢â¬Ëfinal textÃ¢â¬â¢ of the proposed BIT duly approved by various departments and insisted that it should be accepted by Islamabad without any amendment. The text included a Ã¢â¬Åconfidentiality agreementÃ¢â¬Â which Pakistan argued needed to be changed and that it should be made open so that the investors should not have apprehensions about it.

Then, there was a clause about Ã¢â¬Åpre-establishment phase of investmentÃ¢â¬Â which Pakistan wants to be deleted. According to this clause, if a US investor suffers a loss when he is still in the process of establishing his business in Pakistan, he would have to be compensated through a court of law.

Recent reports say that the World Bank and the Asian Development Bank are now putting pressure on Pakistan to adopt a dispute resolution mechanism in a manner as desired by the US and the corporate sector of the West , without much delay, if it was really serious to have foreign investment in a big way. So far, only non-West investors have shown interest in Pakistan and that too in the service sector or privatized units.

In many BITs, where a dispute cannot be settled amicably and procedures for settlement have not been agreed to within a specified period, they can be referred, for example, to the World BankÃ¢â¬â¢s International Centre for Settlement of Investment Disputes (ICSID) or the UN Commission on International Trade Law (UNCITRAL). Nafta lets unhappy investors choose between the two. Both recourses, however, represent the privatization of commercial justice. And Americans are unwilling to seek justice from Pakistani courts.

Pakistan is reluctant to accept the ICSID as a forum for dispute resolution or arbitration, which the US favours, but would agree to the UICITRAL for this purpose. Recently, the attorney-general of Pakistan and other legal experts had cautioned Islamabad against rushing into signing bilateral investment treaties (BITs) with foreign countries (the US in particular) for these can create Ã¢â¬ËpainfulÃ¢â¬â¢ legal implications.


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## Neo

However, Pakistan has, of late, been itself inclined towards bilateral activism. Only recently its FTA with Sri Lanka has gone into operation. Another 14 FTAs are to be or already being negotiated. The countries are China, Malaysia, Singapore, Indonesia, Tunisia, Mauritius, Morocco, Laos, Saudi Arabia, Oman, Kuwait, the UAE, Bahrain and Qatar. With China, there already exists a preferential trade agreement for tariff concession on numerous items.

Another issue that disturbs American investors is the inadequacy of intellectual property rights protection in Pakistan which the US-Pakistan Business Council has also been pointing out. The US Trade RepresentativeÃ¢â¬â¢s annual report has been placing Pakistan each year, since 1989, on Priority Watch List or Ã¢â¬ÅSpecial 301Ã¢â¬Â for piracy and counterfeit problems. The establishment of Pakistan Intellectual Property Organization (PIPRO), though admired, has not impressed the US authorities and the US copyright industry remains disappointed. However, American industry is now less angry (because of PakistanÃ¢â¬â¢s lead role in Ã¢â¬Ëwar on terrorÃ¢â¬â¢) and has asked the USTR for discontinuing further investigations into the rampant copyright violations.

The problem is that the US has always viewed WTO agreement on trade-related intellectual property rights (Trips) as being inadequate and wanted the WTO and World Intellectual Property Organization (WIPO) to set higher standards. The US attitude has largely been influenced by its failure to obtain an agreement on trade in counterfeit goods at the end of the Tokyo Round (1979) and later by resistance of the developing countries (led by India and Brazil) in the first half of the 1980s to include intellectual property as a negotiating item in a new Gatt round.

According to Aziz Chaudhry, an activist, Washington insists on both stiff intellectual property laws and settlement of outstanding investment disputes to be sorted out before negotiating a BIT. Progress on negotiations for a US-Pakistan bilateral investment treaty is being stalled by the US until it sees the introduction and better enforcement of IPR and the resolution of investment disputes, particularly in the energy sector.

Yet even more egregiously, in the draft US-Pakistan BIT, the US has been insisting that Pakistan pay damages to US companies for their Ã¢â¬ÅfutureÃ¢â¬Â investment in case there was an infringement of IPRs and unilateral cancellation of licences. According to PakistanÃ¢â¬â¢s law ministry officials, US negotiators insist that either Islamabad pay immediate compensation to the affected US firms or the World BankÃ¢â¬â¢s ICSID should pay the compensation and treat the amount as a loan to Pakistan.

Chaudhry is of the view that it is because of the fact that the WTO negotiations have so far failed to deliver as much as many corporations would want, the US and other governments, under the pressure of big business lobbies, are increasingly turning to bilateral free trade and investment agreements.

With President Bush completing his second term, one can expect more aggressive US free trade and investment bilateralism. These negotiations are being used strategically to advance not only US corporate interests, but also the US administrationÃ¢â¬â¢s broader foreign policy and geopolitical goals.

At the start of talks on the US-Pakistan bilateral investment treaty in September 2004, the then USTR chief Robert Zoellick said: Ã¢â¬Å Pakistan and the United States are partners in combating global terrorism.

A BIT based on high standards as contained in our model text can play an important role in strengthening PakistanÃ¢â¬â¢s economy, so as to create new opportunities for exporters and investors in both economies and assist in meeting the economic conditions to counter terrorism.Ã¢â¬Â

However, it is not the WTOÃ¢â¬â¢s failure alone to reach an overall accord under Doha mandate that the US is trying to cash on. It is in fact a greedy attempt on its part to extract maximum concessions from weak developing countries by taking the route of bilateral or sub-regional agreements. And the experience of several developing countries tells us that there has been no impact of BITs on investment flows from the signatory developed countries.

Developing countries are usually eager to attract foreign investment, whatever the conditions, under the belief that this is the only way out to get rid of under-development.

A study conducted by Prof. Carlos M. Corea, an expert on IPR issues, says the BITs or free and regional trade agreements (FTAs, RTAs) actually allow developed countries to influence the domestic political economy of developing countries and advance the interests of their corporations in the latterÃ¢â¬â¢s markets. The establishment of BITs has a strategic value for developed countries.

According to him, the BITs of American initiative often contain following concessions and guarantees on behalf of the developing country partner:

(1) Every sector of the economy is to be opened to foreign investment. These include health, education, electricity, water and even prisons.

(2) Ã¢â¬ËNational treatmentÃ¢â¬â¢ to be accorded to American companies. National treatment, a WTO term, means equal treatment.

(3) US investors to enjoy same privileges as local or any other foreign companies.

(4) Expectation of earnings by US businesses must be guaranteed.

(5) Compensations to US firms when they do not earn what they expect.

(6) US businesses to be protected against any kind of expropriation.


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## Neo

*By Zafar-ul-Hassan Almas*
PakistanÃ¢â¬â¢s economy has gained more strength during the course of last four years. Its macroeconomic indicators have posted marked improvement indicating sustained growth.

During the last five years (2000-05), there is a tremendous rise in inflow of remittances, exports, micro-credit, development expenditure, revenues, and low inflation rate which has only gone up last year but it is still below double-digit level.

The governmentÃ¢â¬â¢s poverty reduction strategy being followed for the last six years include: sustaining higher growth momentum, promoting social development, pursuing good governance and protecting the vulnerable segments of the society. Poverty and social sector related expenditures under the strategy are the most important fiscal intervention to target the poor and vulnerable sections of the society.

In 1997, Noble Laureate Amarta Sen said Ã¢â¬ÅUnlike agricultural growth, which often reduces poverty only by increasing mean consumption, the government expenditure reduces poverty both by increasing mean income and improving the distribution of incomeÃ¢â¬Â.

The spending on social sector witnessed a rise during the last five years. It was less than Rs100 billion six years ago and it increased to over Rs300 billion last year.

Over the last six years, the government has spent over Rs1 trillion in this area and is expecting positive results. Pakistan has invested heavily on infrastructure projects during the last three years which has enhanced the level of economic development.

Have such policies and programmes improved the living conditions of the people? Have they reduced poverty and improved social indicators? These are valid and frequently asked questions. The efforts to strengthen the economy will not be completed unless macroeconomic gains trickle down to masses in terms of improved living conditions.

The concept of pro-poor growth has recently emerged in the diction of economics. It is not the economic growth per se but quality of the growth that makes dent on poverty. The macroeconomic instability arising from unsound policy has a direct bearing on the well-being of the poor. The pro-poor growth means growth with macroeconomic stability and sectoral composition of growth matters depending on extent of labour intensity.

Agriculture and construction sectors are invariably more labour intensive than manufacturing and services sector. But within manufacturing and services sectors there are pockets of labour intensive sub-sectors. The small and medium industries contribute bulk of the manufactured exports and wholesale and retail trade account for bulk of services sector employment. The crop sector in the agriculture for example generates more than 40 percent of rural employments directly.

The major crop component witnessed a 57 per cent rise in value addition in nominal terms which implies transfer of huge amount to rural areas. When we see patterns of economic growth during the last three years in this backdrop, the pro-poor growth accounted for around 70 per cent of economic growth during the last yearÃ¢â¬â¢s growth of 8.4 per cent and significant contribution to growth in 2002-03 and 2003-04.

The industrial development is crucial because of limited capacity in the agriculture sector for the employment of growing labour force. The government has provided various incentives to boost industry and increase competitiveness. The large-scale manufacturing grew at an average rate of 11.1 per cent during the last five years which is highest persistent growth for any period in recent economic history.

Such an impressive growth in industrial production is not concentrated on few items; rather it is broad-based with construction related industries, consumer durables, capital goods etc witnessing tremendous growth.

Some five years ago, the country was producing nine million tons of cement. This year the production is likely to touch over 14 million tons. Five years ago, the country was producing some 33,000 cars. This year the production is expected to touch 125,000. Five years ago, the country was producing 95,000 motorcycles. This year, it is likely to produce 450,000. The prices of motorcycles have nosedived.

Considerable advancement has been made in the production of consumer durables. Five years ago, the country was producing 121,000 TV sets. This year the country is expected to produce 851,000 TV sets.

The prices have also come down. Five years ago, the country was producing 4821 air conditioners. This year 140,000 air conditioners will be produced. Similarly, five years ago, the country was producing 211,000 refrigerators. This year, the target is to produce 630,000 refrigerators.

These are the clear examples of growing consumer demand and emergence of a strong middle class. This is also a clear indication of the rising levels of income. The growth in large-scale manufacturing is not limited to consumer durables. This must have generated some employment. Call centres, information technological explosion, exploding mobile business and growth in many sectors should have created employment.

As a study by Centre for Research on Poverty Reduction and Income Distribution (CRPRID) suggests that poverty is characterized by large amounts of clustering around the poverty line. This suggests that there exists a high proportion of vulnerable population which is likely to move in and out of poverty as a result of changing economic conditions.

The concentration around poverty line implies that the poverty incidence can change dramatically or a large section of the population can be categorized as vulnerable Ã¢â¬â i.e. it is likely to fall into poverty as a result of a shock or move above the poverty line through targeted interventions of the government.

Estimates suggest reduction in poverty between 1990-91 and 1993-94, by approximately five percentage points, followed by an upward spike of four percentage points to 1998-99, and reduction of 6.7 per cent between 2001 and 2005. The wide swings in poverty in Pakistan are a norm rather than an exception.

Poverty is a concept that spans a range of dimensions, such as health, education, mortality and security that is not correlated with conventional measures of income poverty. But we have to live with the international norms and calculate the income poverty as others do.

There is another kind of statistics which reveal our poor show on these counts.

There can be a debate over improvement in the statistics and the government should not be complacent over a meagre reduction in poverty to the extent of 6.9 per cent.

More than one-fourth of our population lives below poverty line and difficult times are ahead.

http://www.dawn.com/2006/04/24/ebr9.htm


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## Neo

*By Sultan Ahmad*
In the oil, gas and power sector in Pakistan the need for investment capital is very large and the profits exceedingly good. Pakistanis would like to play a major role in this sector or willingly to commit small funds though such companies are available relatively cheap and on rather easy terms.

The cost of a mega oil refinery to be set up in Hub is $2 billion Dollars, for example heedless of the cost of dealing with the violence in the region. The refinery is to be commissioned by 2010. Investors are needed for this major project.

The government has directed the OGDC to drill a 1000 gas and oil wells during this financial year, but only a third of the wells have been drilled during the three-fourth of the financial year.

The government has been influencing the incentives for oil and gas companies but they have been asking for more than what the government is ready to give.

So it has come up with liberal tax incentives for major gas and power projects. It has offered to provide tax and duty holiday for LNG plants, which it prefers, with a 10 year tax and duty holiday. The tax relief covers import and distribution of LNG plants.

The government has also come up with a new tariff for hydro units. The average power tariff for gas-based projects has been increased 8Ã¢â¬â10 cents, and diesel projects to 13 cents. Work on six dams is to start in two years. But Pakistani investors in this area are too small to cope with the task of producing hydro power. And too few of them are very adventurous in this area.

They prefer risk free and maximum profit enterprises, which the energy sector is as the KESC-100 index shows.

Farooq Hasan, who wanted PakistanÃ¢â¬â¢s entrepreneurs to take over KESC following its Privatization, went from one rich Pakistani entrepreneur to another asking them to take over KESC jointly instead of letting that fall in to foreign hands, following its privatization. But all of them complained of the rowdy labour of KESC and opted out .

The same is the experience of the others, more or less who wanted the oil and gas companies led by the PSO, Sui Southern and Sui Northern gas following their privatization. And their eventual ownership remains to be seen.

With the purpose of achieving larger production of hydel power, work on six major dams including Basha dam, Kalabagh and munda dams is to begin in a period of two years says the minister for water and power Liaqat Jatoi.

The first to begin in Chilas would be the Basha dam with a storage capacity of 7.3 million-acre feet of water, the biggest dam of the six. Its feasibility study is complete and its design and tender documents are under preparation.

These dams including Akori dam and Nai Gaj are scheduled to be completed over a period of 10 years. As they come up, the power production units are expected to be setup to produce power even before their formal inauguration.

The World Bank and other international lenders may be ready to lend large sums for the dam. In fact, the World Bank had been urging the government to take early decisions on the dams, so that their construction can begin early.

While the World Bank loans will be available for the construction of the dams, the government expects the private sector to come up with a required investment for power production.

The higher Hydro rates may attract the foreign investors to play a role in producing more of the cheapest source of power in Pakistan. If necessary the government may raise the rates for hydel power higher. The higher rates have been announced at a time when the world oil price has shot up to $75 a barrel and even the Americans are outraged to pay $3 for a gallon of gasoline.

Unlike in the past more foreign countries are interested in the energy sector in Pakistan, the Russians with their waste experience in the oil and gas sector are keenly interested in the oil and gas projects.

A Russian consortium comprising five companies had recently visited Pakistan to take part in the cross border gas pipeline projects and to invest in import of natural gas, PNG and other major projects.

A five member delegation from Russia recently met the Pakistan petroleum minister Amanullah Khan Jadoon and discussed the investment prospects which appeared bright.

China which has a 300-MW nuclear power reactor working at Chashma and another construction in the same sight is ready to offer three more nuclear reactors with a capacity of 900 MW. China is interested in participating in other areas of energy production including renewable energy.

Pakistan has signed an agreement with the US during President BushÃ¢â¬Ës visit to set up a working group with the US to assist it in the expansion and diversification of its energy sources, except nuclear power.

Pakistan wants the US to treat it at par with India, but the US is not willing. But India is able to get nuclear fuel from the Soviet Union as well.

The US wants Pakistan to opt out of the Iran-Pakistan-India gas pipeline and if it does so, the US will help in financing the Turkmenistan-Afghanistan- Pakistan gas pipeline.

Apart from the Iran-Pakistan-India gas pipeline which is under negotiation, Pakistan has signed a memorandum of understanding for a gas pipeline from Turkmenistan passing through Afghanistan, before reaching Pakistan.

The pipeline may eventually end up in India. The Saudi Arabian investors are also interested in financing the pipeline and to participate in various other energy enterprises in the region after they have taken over KESC and Pakistan steel.

The issue is the Pakistani participation in the energy enterprises, which is very small. It is to be seen what part the Pakistani entrepreneurs will play following the privatization of PSO, Sui Southern and Sui Northern gas companies.

They will have to join hands to be able to play a substantial part in such companies. Otherwise too much of the large profits will be going out and straining the balance of payments critically over the years.


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## Nasir

*ISLAMABAD: The government of Pakistan owed loans amounting to US $15.467 billion to the World Bank (WB) and Asian Development Bank (ADB) collectively at present, Online learnt. *

" The government of Pakistan owes loans of an amount of US$ 9.155 billion up till 28th February 2006 to the World Bank at present," sources said. 
The sources said that the said loan included IDA amounting to US$ 6.950 billion and IBRD to the tune of US$ 2.205 billion by Feb28 2006. 
The rate of interest for IBRD on the basis of spread loan or variable spread loan (LIBOR+0.5 to 0.85 spread) and IDA loan are free of interest but incur a commitment charge of 0.5 percent and service charge of 0.75 percent. 
The sources said that the total amount of loan Pakistan owes to Asian Development Bank as on January 31, 2006 stands at US$ 6,312 million. 
Out of this total loan amount to ADB US$ 1,891 is from OCR (Ordinary Capital Resources) and as many as US $4,421 million is from ADF (Asian Development of Fund; concessional window). 
The rate of interest on OCR is determined according to LIBOR (London Inter Bank Offered rate) whereas the rate of interest on ADF is one percent during the grace period and 1.5 percent after the grace period," sources added. 
The amount of the loan is only of the two big banks of the country and Present government is to return the loan of many other countries of the world. The burden of the loan will increase more as the government is determined to taking loan for the rehabilitation and reconstruction of the quake-hit areas. 
The internal system of the Pakistan has become corrupt one as the political parities involve in taking money from the international institutions and take the money into their pockets and the burden of the loan is put on the masses. Then the international institutions like to IMF, WB, and ADB start pressuring the Pakistan to widen the tax net and bring more and more people into the tax net. 
Theses political parties get the loans from the Pakistani banks and get these laon written off worth million rupees as the commercial bank has written off the loans above one billion rupees for the year 2005 and the influential figures who are currently in the present government have availed the chance. 
It is also reported that the defaulted loans are in the range of Rs.200 billion. Of these, the biggest chunk of Rs.160 billion is owed to the public sector banks, as they have been vulnerable to political influence. 
That the loans were given under political pressure is also borne out by the fact that only 12 percent of the loans fall in the category of defaulted loans of less than Rs. 1 million. Bad debts of Rs. 30 million and over are 70 per cent of the total. The big defaulters are thus fewer in number but they hold by far the larger portion of the total unpaid loans.


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## Neo

ISLAMABAD (updated on: April 25, 2006, 16:10 PST): Prime Minister Shaukat Aziz on Tuesday emphasised the need to promote technical education to fill the skill gap in the growing economy of the country and to maintain the continuing progress in the economic field.

Addressing the inaugural session of two-day National Tripartite Forum, 'Employment and Skills,' organised by Ministry of Labour and Manpower with the cooperation of International Labour Organisation, the Prime Minister said its imperative for the workers to learn technical skills.

The Prime Minister said Pakistan because of its geo strategic location, investment friendly environment, reduced cost of doing business and hard- working workforce is a suitable place to become the regional hub for manufacturing and trade. 

He said the only need is to give technical training to the work force to prepare them to face future challenges and compete in the world.

Aziz said continuity of the economic policies was must to ensure the growing rate of economy by 8-10% annually.

Shaukat Aziz said the availability of highly qualified human capital and reduced cost of doing business has made Pakistan a destination place for the business.

The premier said government is investing in human capital to prepare a critical mass of highly qualified people in key areas of science and technology to lead the development process. 

He said, "We are gearing to take brain share along with muscle share of global economy by investing in education to build a knowledge economy in Pakistan." 

The Prime Minister said openness and transparency are the hallmarks of the government policies and no deviations on policies are made. 

He said the consistency and continuity of policies have restored confidence of investors and investments today are all times high.

The Prime Minister said the globalisation is fast becoming the way of life and it is no more an option but an imperative for the future. 

He said the distinctive features of globalisation are shrinking space, shrinking time, breaking borders and linking people's lives more deeply than ever before. 

The Prime Minister said the globalisation is like a tidal wave and added, "If we ride it, we will move forward and if you resist it, we will be left far behind."


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## Neo

ISLAMABAD (April 25 2006): The foreign direct investment (FDI) in Pakistan soared by 180.6 percent year-on-year to $2.22 billion and the portfolio investment by 276 percent to $407.4 million during the first nine-month of FY06, the central bank reported on Monday.

During July-March 2005-06, the FDI year-on-year increased to $2.224 billion from only $792.6 million and the portfolio investment to $407.4 million, whereas it was $108.1 million in the corresponding period last year, said the latest statistics released by the State Bank of Pakistan (SBP).

Therefore, on balance, the total foreign private investment in nine months increased by 192 percent to $2.632 billion from $900.7 million in the corresponding period last year.

It is pertinent to note that during 2004-05, the total investment inflow had crossed $1.67 billion mark as against $0.921 billion in 2003-04. However, for the current fiscal year, there was hope of further improvement in foreign investment, especially with better macro-economic indicators and infrastructure.

The government expects that the foreign investment in Pakistan is likely to cross $3 billion mark by end of this fiscal year. The rising trend of investment inflow since the beginning of this year also endorses the government's claim.

A significant feature of the data was that besides FDI, y-on-y basis inflow of the portfolio investment increased enormously. It followed steep path right from the beginning of the new fiscal year.

Comparing the inflow of foreign private investment in March with the same month of last year, it increased by 197.8 percent to $657.7 million, whereas it was only $220.8 million during March 2005.

The break-up of investment by countries shows that United Arab Emirates (UAE) was the biggest investor in Pakistan totalling $726.1 million with $653.8 million FDI and $72.3 million portfolio investment.

The United States was next with total investment of $710 million, including FDI of $369.3 million and portfolio investment of $340.7 million. However, in terms of direct investment, Saudi Arabia was the third ($272 million) following Switzerland with $156.9 million.

A significant feature of the data is that US portfolio investment during the period showed a high growth, it grew to $340.7 million from $22.3 million of the corresponding period last year. Besides, this, the FDI also grew to $369.3 million. However, the data reveal that during the month understudy US portfolio investment declined to minus 53.9 million dollars as it was minus 21.1 million dollars in March last fiscal year.

Saudi Arabia's direct investment during the first eight months of this fiscal year jumped to $272 million, as it was only $12.2 million in the corresponding period last year.

The direct investment from UK slightly moved up to $136.7 million as against $127.5 million of last year, while its portfolio investment declined to minus 5.2 million dollars as was 3.5 million dollars in the same period last year.

The FDI inflow from the Netherlands during first nine months this fiscal year doubled to $66.5 million against $30.4 million in the corresponding period last year. Its portfolio investment decreased considerably to minus 0.7 million dollars as last fiscal year it was 25 million dollars.

The United Arab Emirates (UAE) portfolio investment doubled to $72.3 million as against $36.6 million in the corresponding period last year. Independent experts believe that the current inflow of foreign investment was not satisfactory taking into account the other countries of the region. During the last 15 years Pakistan attracted nearly $10 billion, whereas it was $1.67 billion in 2004-05.

The FDI in India at the onset of the liberalisation process was $36.28 billion (up to November 2005). During 2005-06 (April-November 2005), FDI inflows were $3.36 billion as compared to $2.25 billion during the corresponding period previous year.

China's FDI-led growth was a strong indicator where FDI inflows since 1978 totalled over one trillion dollars with $153 billion in 2004 alone. It is worth mentioning that foreign investors are in direct control of their investment funds, also transfers in the latest technology and modern management practices resulted in economic gains largely from efficient, effective and economic utilisation of the funds.

While the present economic managers boast of over $1 billion FDI during the last fiscal year, the reality is that given the prevalence of poverty and unemployment, this is too negligible an amount to have had a worthwhile impact on our economy.


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## Neo

LAHORE (April 25 2006): Speakers at a pre-budget seminar held here on Monday said that concerted follow-up of the reforms programme, superior economic governance and bold strategic decisions have brought economic turn-around in the country.

Lahore Branch Council of Institute of Cost and Management Accountants of Pakistan organised the seminar, while Lahore Chamber of Commerce & Industry (LCCI) President Mian Shafqat Ali, Lahore Stock Exchange (LSE) former president Dr Yasir Mehmood, Rasool Textiles (Pvt) Ltd, CEO Khalid Rasool, ICMAP President Sher Afgan Malik and Athar Azeem delivered speeches.

The speakers maintained that there was substantial increase in foreign direct investment, as foreign investors had started taking long-term positions.

They said: "although the per capita income has been on the increase, our main problems remain poverty reduction and unemployment."

"In order to keep the tempo of development on, we should remain consistent in policy formation, live within our means, do not expose ourselves to ballooning debts, work to improve systemic inadequacies, respect sovereign commitments and guarantees, remove income disparities, ensure implementation of rules and regulations and adopt transparency and accountability in all spheres of life," they said.

Appreciating growing trend in revenue collection, they said that tax GDP ratio is lop-sided, which invites government attention. The tax structure needs to be rationalised so that each sector could contribute to revenue collection in correspondence with its share in GDP.

Despite the fact that agriculture sector contributes 24 percent to GDP, insignificant amounts are paid by the agriculturists in taxes. The sales tax might be charged only at the time of sales and not only on raw materials. The taxation laws and procedures need to be simplified, they said.

Apprehending that gas reserves are going to be exhausted by 2015, they stressed the need for arranging procurement of gas from Iran, Turkmenistan and Qatar etc.

In the interest of investment and industrialisation, they stressed that interest rate and export refinance be kept in check. Especially the export finance rate should not be more than 4 percent.

It was also brought into focus that we are suffering from water shortage, which is adversely affecting our crops. The only remedy for this problem is building new water reservoirs, they said.

"Our policy should be structured to ensure that the GDP growth remains around 8 percent, low interest regime continues with single digit inflation. The government should adopt the policy so that taxation and utility rates and other tariffs etc, are rationalised to keep up the competitiveness of our product."

Agriculture sector needs special attention for beefing up its performance by elimination of water scarcity and management and timely provision of other inputs. "We should avoid dollarisation of our economy by keeping the exchange rate stable", the speakers said.

About tax dispute resolution, one of the speakers suggested that dispute resolution committees might be vested with powers to make final decisions on the disputes instead of playing a recommendatory role according to the existing law in force.

Speaking on the occasion, Khalid Mahmood, Chairman, Lahore Branch Council, said, "our tax set-up is more pro-rich than pro-poor. Resultantly, the rich pays less tax than they should and the poor are compelled to pay taxes despite of the fact that they have very low capacity to pay."

He said that since its promulgation, numerous amendments had been made in "Income Tax Ordinance 2001" yet complications and complexities are still there. The tax system needs to be simplified to make it people's sympathetic especially for the poorer ones.


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## Neo

NH ZUBERI 
KARACHI (April 25 2006): The Karachi Chamber of Commerce and Industry (KCCI) noted that the present system works against the middle class and counting inflation has aggravated the problem.

In a report of Taxation, GST, Refund, Customs and Valuation sub-committee, the chamber pointed out that without growing middle class, rapid economic growth was not achievable as business remained deprived of adequate domestic demand.

THE CHAMBER PROPOSES MEASURES THAT THE GOVERNMENT SHOULD TAKE TO ENHANCE PURCHASING POWER OF MIDDLE CLASS, INCLUDING: 

-- Through raising exemption limit to Rs 150,000 from Rs 100,000.

-- Reducing maximum tax rate to 25 percent from 35 percent, increase limit for inclusion of perquisites in salary income to Rs 1,050,000.

-- Education expenses on children be allowed on straight-line deduction against the total income as it is a long-term investment.

-- All medical expenses be exempted from Income tax.

-- Allow exemption on expenses incurred on yearly holiday/ vacation trips made by the individual with his family either within or outside the country.

-- The house rent exemption of 45 percent basic salary from total income should be same for all salaried persons without any maximum threshold of house rent allowance of Rs 270,000 calculated on salary of Rs 600,000.

-- Salary tax of an employee borne by his employer should be allowed without considering it as a perquisite and should not be grossed up.

-- Valuation of conveyance or conveyance allowance paid in cash as per the provision of Income Tax Rule 2002 for salary income below Rs 600.000 should be applicable to all salaried employees irrespective of salary ceiling.

-- Expenses incurred on individual (not collective visits) for enhancement of professional expertise to other cities within the country and abroad should be exempted from inclusion in the income and from payment of income tax thereof.

-- As most of corporate sector salaried employees because of their better economic clout live in a joint family system, therefore, they have to bear the living expenses of their retired parents or non-adult, non-earning children/ nephews, nieces etc. This is taxing to some extent on the individual. Here a certain allowance be allowed for each year and should be income tax free/ exempted from total income.

-- Deducting in tax liability of salaried person as withdrawn be restored in Part-III of second schedule.


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## Neo

ISLAMABAD (April 25 2006): A large number of major Chinese companies are here for the China-Pakistan Energy Forum, organised by the petroleum ministry. The Chinese companies, which sent delegations for the China-Pakistan Energy Forum, were Sichuan Petroleum Administration (SPA), a subsidiary of China National Petroleum Corporation.

Its delegation is led by Senior Vice President Zhang Beiquan, accompanied by the officials of International Co-operation and Technical Departments. The Sichuan Petroleum delegation will have a number of sideline meetings during the Forum with the government officials and non-governmental organisations representatives.

The delegation will also call on Petroleum Minister Amanullah Khan Jadoon. The visiting delegation will discuss proposals during the meeting with the minister to enhance China's participation in Pakistan's energy sector.

It is worth mentioning that Sichuan Petroleum has over 40 years experience of oil and gas exploration, production and marketing. It has also built the largest natural gas industrial base is South West China. The company has advance expertise, equipment and professional workforce for geo-physical survey, drilling and associated services, well-testing, well-logging, engineering design mountain seismic and ultra deep, directional, cluster and horizontal well-drilling. It is capable of supplying system engineering services and related products, covering all aspects from exploration and production to surface construction.

The Sichuan Petroleum is also actively involved in Pakistan's oil and gas development for the past many years, along with its Pakistani partner, the Petroleum Exploration (Pvt) Limited.

The Chinese company has provided a number of drilling rigs, along with its crew of engineering and technical personnel. The Petroleum Exploration (Pvt) Limited is likely to acquire more drilling rigs from the Sichuan Petroleum, as the Pakistani company has already announced an ambitious plan for drilling a large number of development and exploration wells in its concessions in Sindh.


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## Neo

ISLAMABAD (April 25 2006): Sui Southern Gas Pipelines Limited (SSGPL) and Sui Northern Gas Pipelines Limited (SNGPL) were jointly injecting a sum of $250 million per annum for developing the infrastructure and capacity building of both the companies, MD SSGPL Munawwar Baseer Ahmad said.

Talking to private TV channel he said country's gas reserves would not prove insufficient for catering the ever increasing demand and supply situation after 2009-2010. Efforts were underway to arrange more gas from neighbouring countries aiming to meet the demands.


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## Neo

ISLAMABAD, April 24: Chinese Minister Hu Deping, who also heads the China Federation for Industry and Commerce, has sought the support of the Pakistan government in expanding investment in various sectors by the Chinese private sector.

Hu Deping currently visiting Pakistan at the head of a high level delegation met Jehangir Bashar, Secretary Board of Investment here on Monday.

He presented economic scenario of China and said that the objective of his visit was to help Pakistan in the earthquake reconstruction process and to bring the private sector of the two countries closer to have a conducive environment for boosting bilateral trade and investment.

He said Pakistan and China enjoyed strong diplomatic relations and the need was to convert this friendship into an even stronger economic relationship.

Secretary, BoI apprised the visiting delegation of the salient features of PakistanÃ¢â¬â¢s investment policy and investment opportunities available in various sectors.

He pointed out that the economy of Pakistan had improved tremendously which was evident from the macro-economic indicators.

He stressed the need for closer cooperation in the economic field between the two countries for mutual benefit.

Mr Bashar assured the delegation that BoI would provide every possible assistance to its Chinese counterparts in facilitating investment.

He acknowledged with gratitude the offer of assistance for the reconstruction in the quake-hit areas and said that the Chinese friends had always supported Pakistan in every hour of trial.

The Chinese delegation included representatives from the leading private sector companies along with officials of the UNDP.

Earlier, a delegation of JordanÃ¢â¬â¢s Shaheen Business and Investment group led by Dr Jawad Anani, ex-deputy prime minister of Jordan also met the secretary, BoI to discuss projects in various sectors in Pakistan.

This is the third visit by the group and they have shown interest in investing in the power, cement, oil and gas, hotel and housing projects in Pakistan.Ã¢â¬âAPP


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## Neo

25 April 2006 

ISLAMABAD Ã¢â¬â Pakistan's Balochistan has demanded the federal government to appoint an arbitration commission over its dispute with Sindh over gas development surcharge (GDS) and royalties through arbitration as bilateral efforts have failed to resolve the dispute.

Informed sources said Balochistan has written to the centre that provincial government would not be able to present its next year's budget owing to higher expenditure on law and order, interest payments and drought. Balochistan's overdraft has increased to Rs16.5 billion during the current fiscal year and its interest payments are going up. Additionally, the Asian Development Bank (ADB) would not be releasing its second tranche of the Provincial Resource Management Programme (PRMP) that would further squeeze Balochistan's financial situation.

Under the provincial government directives, Balochistan had reduced its current expenditure from Rs34 billion to Rs29 billion which would again post an incremental increase to Rs31 billion and thus annual development programme would become unmanageable creating problems for the provincial government in the election year.

These sources said the federal government has been reminded that an inter-provincial committee led by Senator Dilawar Abbas had recommended a formula for enhanced share to Balochistan out of GDS and royalty but that had not been implemented. 

"If Dilawar Abbas formula could not be implemented for some reason, the only option left is to resolve the dispute through arbitration," a source in the provincial government said.

The centre had informed the provinces recently that in view of an increase in the share of the provinces from the federal divisible pool in the new NFC award, no provincial nature of project will be financed or co-financed from the federal PSDP from next financial year (2006-07). 

The provinces have again developed serious differences with the centre over non-financing of their

projects from the federal development programme and have formally registered their protest with the federal government.

Sources said that resource distribution disputes between the centre and its federating units and among the provinces themselves have started cropping up once again as the next year budget preparations enter into a crucial stage.

Balochistan has also made a formal request for arbitration of its dispute with Sindh over gas development surcharge and oil and gas royalties, these sources said. 

Similarly, the NWFP has also asked the federal government to increase the size of its hydel profit as an interim arrangement till Justice Ajmal Mian led arbitral tribunal comes out with a final award.

The sources said that during a meeting of the Executive Committee of the National Economic Council last week, the two larger provinces Punjab and Sindh protested over the centre's decision not to finance or co-finance provincial development schemes and demanded its reversal.


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## Neo

WASHINGTON, April 24: The world economic outlook report for 2006 praised Pakistan as a country which has done well in sustaining major setbacks like an unprecedented hike in oil prices and the October 8 earthquake.

The report, issued after the weekend spring meetings of the World Bank and the International Monetary Fund, noted that in Pakistan Ã¢â¬Ågrowth has remained robust despite headwinds from higher oil prices, devastating natural disasters, and the elimination of international textile trade quotas.Ã¢â¬Â

But the report warned that during the current fiscal year, inflation has picked up, and urges Ã¢â¬Åa further tightening of monetary conditions, supported by continued prudent fiscal policiesÃ¢â¬Â to curb inflation.

The report urges policymakers in Pakistan to include energy sector in their priorities for structural reforms.

Another South Asian country which dealt successfully with rising oil prices is Bangladesh.

The report also included Pakistan and India among the countries where the current account has weakened during 2005, moving into deficit.

Ã¢â¬ÅThese disparate movements are due to the non-oil balance, which has generally declined in countries where domestic demand growth has accelerated and/or where the real effective exchange rate has appreciated,Ã¢â¬Â the report said.

Pakistan is also placed among countries Ã¢â¬â such as India, Indonesia and the Philippines Ã¢â¬âwith high public debt where the favourable outlook provides an opportunity to Ã¢â¬Åtake steps to put their public finances on a sustainable medium-term footing.Ã¢â¬Â

In a separate assessment of the Indian economy, the World Bank and IMF termed IndiaÃ¢â¬â¢s economic growth as Ã¢â¬ÅimpressiveÃ¢â¬Â, but also said the country faces a challenge in the infrastructure sector which it needs to improve upon in order to attract more foreign investment.

Ã¢â¬ÅOverall, India is doing impressively well. How a very large country with an extraordinarily diverse population can make real inroads in poverty reduction and in development with a democratic system, I think thatÃ¢â¬â¢s encouraging,Ã¢â¬Â World Bank President Paul Wolfowitz said.

Ã¢â¬ÅI think Indian officials that I spoke to arenÃ¢â¬â¢t satisfied with the 7 per cent or so that theyÃ¢â¬â¢re doing, but I must say that is impressive already, and I think they are making every effort to do more,Ã¢â¬Â Mr Wolfowitz said.

Managing Director of the International Monetary Fund Rodrigo de Rato observed that India was attaining its growth rate with very low inflation andsaid it Ã¢â¬Åshows the Indian economy is becoming much more efficient. We believe that maintaining macroeconomic stability and deepening reforms is the key for the future.Ã¢â¬Â

Ã¢â¬ÅWe have seen some very encouraging announcements by Prime Minister Manmohan Singh regarding further liberalisation of financial reforms, and certainly, infrastructure is a challenge for India and improving the business climate as to attract more foreign and domestic investment,Ã¢â¬Â he said.

Corruption and good government were the overriding themes of the final session of the World Bank Ã¢â¬â International Monetary FundÃ¢â¬â¢s meetings in Washington.

In his concluding remarks, the World Bank chief called aid effectiveness and good government Ã¢â¬Åtwin issuesÃ¢â¬Â in the battle to help the worldÃ¢â¬â¢s poorest people.

Ã¢â¬ÅEfforts to improve aid effectiveness cannot be separated from strengthening governance systems,Ã¢â¬Â he said. Ã¢â¬ÅWhen governance systems fail, service provision weakens, corruption increases and growth is undermined.Ã¢â¬Â

The problem with corruption, he said, was Ã¢â¬Åone that canÃ¢â¬â¢t be eliminated overnight, you have to tackle it progressively.Ã¢â¬Â

ColombiaÃ¢â¬â¢s Finance Ministers Alberto Carrasquilla serves as the chairman of the joint World Bank/IMF Development Committee. He said nations are looking to the international lenders for guidance to governing. Ã¢â¬ÅMembers called on the bank to lay out a broad strategy for helping member countries strengthen governance and deepen the fight against corruption,Ã¢â¬Â he said.

On the issue of energy, Mr Carrasquilla said there was broad support for the bank proposal to focus on the energy needs of developing countries. World BankÃ¢â¬â¢s Vice President for Infrastructure Katherine Sierra said the bank will increase investments in renewable energy sources such as hydropower and solar power.


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## Neo

By Engr. Husain Ahmed Siddiqui

In the recent years, Pakistan has witnessed a sharp increase in the demand of natural gas. The consumption of natural gas during 2004 was about 1,050 billion cubic feet, close to the level of production but still not enough to meet the total demand, mainly that of industrial and power sectors.

The country produces natural gas to the level of 1,343 billion cubic feet annually, or 3,680 mmcfd (million cubic feet per day), which translates into 28.20 million metric tons of oil equivalent (TOE).

The projected demand-supply position of natural gas indicates a deficit of 25 per cent of total gas requirement by 2010, as additional gas from indigenous production in coming years will rise by 10 per cent.

Gas import pipeline projects are planned. Nonetheless, their implementation will take a much longer period, given the present conditions.

Power sector is major consumer of natural gas, with over 40 per cent share in total national consumption. A number of new independent power producer (IPP) projects have been sanctioned recently, based on natural gas as primary fuel, with cumulative capacity of about 1,600 mw. In total, about 600 mmcfd gas has been earmarked for these projects, initially until 2010-11.

Gas is not committed for these power projects on year-round basis and it is not made available during 2-3 months of winter season. The power plants use alternate or back-up fuel for this period, depending on the technology applied for power generation. Generally, these are distillate (light) fuel oils, such as high-speed diesel (HSD), and residual (heavy) fuel oils, including low sulfur furnace oil (LSFO) and high sulfur furnace oil (HSFO).

Consumption of petroleum products by power sector at present is 2.74 million tons, mostly required for oil-based thermal power plants. Nonetheless, dual-fuel (gas-oil) fired power plants consume significant part of this figure. The up-coming gas-based/dual-fuel power projects in private sector will be a further strain on demand for petroleum products during winter when gas is not available.

In view of increasing cost of petroleum products globally and also PakistanÃ¢â¬â¢s persistent high import bill of oil, it is advisable to consider economical options. Petroleum naphtha, commonly known as naphtha, has the potential to be considered suitable in replacing the above liquid oil fuels, due to naphtha being indigenous and comparatively of lower price. A few of the IPPs are reported to be exploring the possibility of using naphtha as an alternate/back-up oil fuel.

Naphtha is primarily used as feedstock in refineries and chemical/ petrochemical industries. The least expensive of oil fuels, it is used the world over for power generation, either as primary fuel or alternate fuel to natural gas. Leading manufacturers of gas turbines and diesel/gas engines have installed, a number of simple-cycle and combined-cycle units using naphtha in many countries, including China and India. With a total power generation capacity of 115,545 MW, India has the worldÃ¢â¬â¢s largest experience of using naphtha on gas turbines.

Current naphtha production in Pakistan, as a by-product from the petroleum refineries, is around 833,000 tons per annum. The current production is enough to run at least six combined-cycle power plants of 100-mw capacity each, roughly, for a period of approximately two months when supply of natural gas would not be ensured. Only at one refinery the naphtha production is converted into high-octane gasoline, whereas all other refineries export the low-valued commodity, earning annually an amount of $160 million at optimum market price.

Unfortunately, PakistanÃ¢â¬â¢s hydro-cracker/naphtha-cracker project, originally approved in 1982, could not be set up. In 1990s an UAE- based company had joined hands with Pakistan to establish joint venture, but it lacked professionalism and required financial credibility. Hence the plan was shelved.

Naphtha, a colourless, volatile and inflammable liquid hydrocarbon mixture, is composed of different grades. Petroleum naphtha, which is the unprocessed component in the production of petrol/motor gasoline, is intermediate distillate between the lighter gasoline and heavier benzene. It has a specific gravity of 0.76. Transfer, transportation and storage of naphtha may pose problems. Its very low viscosity results in poor lubrication to metal surfaces, and therefore lubricity improvement additives are used for naphtha-fuelled power generation facilities.

Naphtha requires special safety considerations for use in gas turbines and diesel/gas engines. Its high volatility can cause fire explosions, as in case of other liquid fuels, though only one major accident is reported.

In July 1996, a fire explosion occurred in EnronÃ¢â¬â¢s Telside (UK) power station, which is 1,875 mw capacityÃ¢â¬âperhaps the worldÃ¢â¬â¢s largest gas-fired combined cycle heat and power plant. This was due to ignition of naphtha leak from a joint during fuel changeover. Since then the related technology has improved.

As regards environmental concerns, nitrogen oxide emissions burning naphtha are almost of the same levels as that for combustion of other heavy fuel oils, and the impact is effectively mitigated, by installing separators, bringing the same to acceptable and regulatory levels.

In fact, centrifugal liquid fuel treatment systems are installed, which significantly improves the quality of fuel before it enters gas turbine or diesel/gas engine, as the case may be.

There is no pricing policy for naphtha in Pakistan since it is not being sold in domestic market. It is however estimated that naphtha would be available to the IPPs at Rs40,643 per ton, or Rs28.39 per litre.

Based on this price, it is estimated that naphtha fuel component of power plant operation would be much lower in comparison to burning, for example, diesel (HSD) that currently costs Rs36.66 per litre. There is also no increase in cost of machinery and equipment, and the total cost of power plant. Using naphtha would significantly reduce power generation costs and resultantly electricity tariffs. In view of the foregoing, a feasibility study is needed to establish use of naphtha as alternate/backup oil fuel for gas-based power projects.


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## Neo

Tuesday April 25, 2006 

ISLAMABAD: Prime Minister Shaukat Aziz has said that the government will set up an Export Promotion Zone (EPZ) near Gwadar on a designated area to promote industrial activity with a view to providing new employment opportunities for the people of Balochistan. 
The Prime Minister said that EPZ at Gwadar will be given additional incentives than are available to other Export Processing Zones in the country in order to expedite the process of industrialization in the province. 

The Prime Minister directed the Ministry of Ports and Shipping and the government of Balochistan to prepare within a month a special package of incentives for the EPZ at Gwadar for approval by the Government. 

The Prime Minister made these observations at a meeting to review the progress on Gwadar port on Monday. 

Mr. Babur Ghouri, Minister for Ports and Shipping informed the Prime Minister that construction and dredging for deeper draft of 14.5 meters is proceeding on schedule. The meeting was also informed that the process of acquisition of additional land to build warehouses to enable the Gwadar Port to function as a trans-shipment hub for the country is also progressing satisfactorily. 

The Prime Minister emphasized the need to provide the investors facilities including water, gas and electricity in an expeditious manner as the port will become operational soon. 

The meeting was attended among others by Mr. Babur Khan Ghouri, Minister for Ports and Shipping, Secretaries for Commerce ,Industries, Ports & Shipping and Chief Secretary Baluchistan.


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## Neo

Tuesday April 25, 2006 

ISLAMABAD: The availability of high qualified human capital and reduced cost of doing business has made Pakistan an destination place for the IT software business, Prime Minister Shaukat Aziz said. 
The Prime Minister was talking to Sir Terence Mathews, Chairman, Wesley Clover and Mitel and March Network who called on him at Prime MinisterÃ¢â¬â¢s House on Monday. 

The Prime Minister said that the government being cognizant of the vital role played by emerging technologies in the development process today has placed development of education sector among its highest priorities. He said government is investing in human capital to prepared a critical mass of highly qualified people in key areas of science and technology to lead the development process. 

"We are gearing to take brain share along with muscle share of global economy by investing in education to build a knowledge economy in Pakistan", the Prime Minister said. 

The Prime Minister said the government has opened all economic sectors for Foreign Direct Investigation (FID) and 100 percent equity is allowed. Remittance of royalty, technical and franchise fees, capital, profits dividends have been allowed and foreign investments are fully protected. 

The Prime Minister said Pakistan has made good progress on the intellectual property rights (IPR) issues, and now Pakistan has been deleted from the international IPR watch list. 

Sir Terence Matthews informed the Prime Minister that his company in partnership with a UAE based company will set up a software company in telecom applications for the next generation networks. 

He said the company would use local experts. It will transfer technology and intellectual property rights of the software produced in Pakistan to its Pakistan based company. 

The meeting was also attended among others by Minister for IT and Telecommunication Awais Ahmad Khan Leghari and senior officials.


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## Neo

Tuesday April 25, 2006

ISLAMABAD: All relevant factors including the current revenue collection trend clearly indicate that CBR will not only achieve the high target of Rs. 690 bn set for current financial year but likely to surpass it. 
This was stated by Chairman, Central board of Revenue, Abdullah Yusuf while addressing the participants of the Quarterly Conference of Regional Commissioners of Income Tax, Director General of Large Taxpayers Units and Commissioners of Income Tax, held here on Monday. 

Yusuf informed the conference that in the first nine months of 2005-06, the revenue collection stood at Rs. 490 bn which was 22 Percent more than the revenue collection of Rs 401.27 bn, achieved in the same period of the last financial year i.e. 2004-05. 

Talking about the cleansing of National Tax Number, the Chairman told the Conference that out of total 2.4 million NTNs issued, 1.9 million have so far been cleaned up and henceforth this will be treated as Master Index. 

The Chairman said, we are entering to a new phase of tax reforms in next financial year as all the 12 Regional Tax Offices and one more large Taxpayers Units will be put in place. 

"All preparatory work in this regard should be completed well in time," the Chairman advised the Commissioners. All shortcomings needs to be plugged so that no hiccups are surfaced at the last moments, he directed the tax officers, he added. 

The Chairman was the opinions that the reforms can only move forward if there is a total commitment at the top tax management level i.e. at the level of commissionerates and collectorates. " 

You must ensure that the programme of the Government and the Board is executed as planned," he advised the participants. 

Abdullah Yusuf called upon the Commissioners to remove the doubts and misgivings, if any, in the minds of the taxpayers and tax officials about reforms. For this purpose, Commissionerates are required to hold regular briefings, seminars, discussions etc. to tell the 

people what are tax reforms about. A well thought out communication strategy is to be adopted for this purpose. 

Talking about the revenue collection from different sectors, the Chairman expressed the need to conduct sectoral study to find out " who is paying what and what they were supposed to pay. For this purpose, we have to capture the reliable data to confront with the potential taxpayers, he remarked. 

Yusuf asked the commissioners to come up with the issues confronting with the taxpayers and commissionerates and proposals to resolve them. 

Management thinking require fundamental change because we ore looking for a system which is more productive and simplified, he added. 

On liquidation of tax appeals, the Chairman said that although we have cleared the backlog but still we have some pendencies and issues. He hoped that judgments of the special benches of the Supreme Court would go a long way to clean up the litigation as they would serve as guiding principles for the lower courts and tribunals. 

Member (Legal), who was also present on the occasion, told the conference that 90% of the cases, filed in the SC benches, have already been disposed of and the remaining are expected to be taken up this week. 

Stressing on fulfillment of the training needs of CBR officials, the Chairman expressed the need to change the system for the better. Ã¢â¬â¢ You have to train the people in accordance with the global standards. 

We have to make our training institute modern, vibrant and one of the leading institute in the region at least. Board will provide all logistic support, help and infrastructure needed for this purpose, he added. 

Talking about tax-to-GDP ratio, the Chairman expressed the confidence that existing 9 % ratio will be increased upto 9.4 % by the end of current financial year. 

During the Conference, a number of agenda items came under consideration which included budget proposals, expansion of tax base, tax management system(IMS), weeding out of old record, strategy to achieve tax collection targets and to liquidate pendency, liquidation of refunds, real estate taxation, rationalization of withholding tax rates etc. 

The conference also reviewed the performance of ADR system, e-filing of returns and revenue projection in banking sector. 

Earlier, Member (DT), Mr. Salman Nabi, outlining the performance of commissionerates in first nine months of current financial year, informed that the direct tax collection was 28% more than the last financial year. He was confident that annual revenue collection target set for direct taxes will be achieved.


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## Neo

Tuesday, April 25, 2006 

* Suggests Pakistan adopt Unilateral Trade Liberalisation Programme

By Sajid Chaudhry

ISLAMABAD: The World Bank has suggested that Pakistan adopt Unilateral Trade Liberalization Programme and has asked the government to reduce maximum import tariff from the existing 25% to 20% possibly in fiscal 2007 or in fiscal 2008. 

The WB has also recommended eliminating the existing tariff exemptions and concession in near term, in 2-3 years, with a firm announcement in advance, a government official told the Daily Times on Monday. 

In a draft report on Ã¢â¬ÅPakistan Growth and Export CompetitivenessÃ¢â¬Â that is being finalized by incorporating views from ministries and divisions and will be handed over to the ministry of finance at the time of Pakistan Development Forum scheduled in May at Islamabad, include the suggestions, the official added. 

The WB has said that India has already lowered its normal maximum tariff rate to 15% in the budget for the current fiscal and there are plans to further reduce the tariff to 10% in the next fiscal year. 

The draft report suggests that regardless of the pace of the multilateral or regional trade negotiations, it is in the best interest of Pakistan to continue with trade reforms to reduce the existing anti-export bias by pushing export-led growth. Towards this ultimate target, in the meantime, the key interim reform steps will need to aim at reducing the average level, and particularly, the dispersion of normal protection. Obviously, it is preferable to pre-announce the schedule of tariff reductions as India has done recently. 

The key components of this pre-announced tariff rationalization programme would need to include: (a) Gradual reduction of tariff peaks towards the normal maximum tariff rates and further reduction of normal maximum rate. (B) The elimination of existing deletion programmes in the automotive industry and gradual but speedy elimination of tariff exemptions, concessions. 

The World Bank, while reviewing PakistanÃ¢â¬â¢s trade regime, has highlighted that since 1998, in a major departure from previous strongly protectionist, inward-oriented import substitution policies, the government has significantly liberalized the trade regime through tariff cuts and rationalization as well as by removing import quotas, import surcharges and regulatory duties. 

The un-weighted average statutory tariff has fallen from 47.1% in 1997-98 to 14.4% in 2005-06 with most recent changes announced under budget for fiscal year 2005-06. Considerable progress has been achieved in simplifying the tariff structure as well as in compressing tariffs. These actions have reduced significantly the anti-export bias of trade regime. 

On the negative side, however, tariff dispersion has increased, rising from about 45% of simple average tariff in 1997-98 to over 76% following the 2005-06 changes. Despite recent cuts in tariffs on cars, their duty rates are still 2-3 times higher than the normal maximum tariff rate of 25%. Some face even higher rates (tariff peaks). The resulting tariff escalation means that higher rates apply generally to final consumer products and that effective protection rates (ERPs) are probably even more skewed in favour of domestic production of final consumer goods than before 2005. 

The other trade barriers that adversely affect resource allocation include the domestic content requirements in the highly protected automobile industry and the income withholding taxes that are higher when applied on imports than domestic sales. With the budget 2005-06, five new import tariff slabs have been introduced applying mostly to inputs for the textile apparels sector. This new measure constitutes a backward step away from much simpler system of the previous four tariff slabs.


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## Neo

Tuesday, April 25, 2006 

By Arshad Hussain

KARACHI: The commercial banks have registered a growth of 45 percent in opening new online branches in the second quarter of the current fiscal year, State Bank of Pakistan data said on Monday. 

During this quarter retail payment transaction (paper based and electronic) registered a growth of 5.05 percent in numbers, whereas the value of transactions increased by 4.91 percent over the first quarter of 2005-06.

Quarterly growth on the basis of previous quarter showed growth at the rate of 5.45 percent and growth in value of transactions by 2.98 percent, whereas the growth rate was 23.46 percent and 12.20 percent in case of number of transactions and amount, respectively, in the previous quarter.

Electronic banking: The central bank data said electronic transactions have posted a growth of 3.05 percent in the number of transactions and the amount showed a growth of 66.20 percent during the current quarter. The main contributor to growth in the value is real time online funds transfer by online bank branches that posted a 73 percent increase.

During the last six quarters the transactions from paper-based banking to e-banking has increased in terms of number of transactions. However, the value has achieved a remarkable growth, which has been driven by B2B through online branch network.

Online Branch Network and Automated Teller Machines (ATMs): Online branch network is expanding to meet the funds movement needs of customers. This quarter witnessed the addition of 235 new branches in the online network. The coverage of online branches as a percentage of total branches has also increased from 41 percent in 

the previous quarter to 45 percent in the current quarter. As such, the total number of online branches reached 3,265 out of total branch network of 7,245 reported by banks.

Similarly, during the second quarter of fiscal year 2005-06 banks have added 75 new ATMs in their network, bringing the total to 1,217, registering a growth of 6.6 percent as compared with 11 percent in the last quarter.

As such, 189 new machines were added in the first half of the current financial year as compared with 110 new machines added during the same period last year.

Number of (credit/ debit/smart)cardholders: At the end of second quarter of the current fiscal the number of credit, debit, smart and ATM cardholders increased from 3.664 million to 4.072 million, showing a growth rate of 11 percent as compared with eight percent during the previous quarter. The total number of credit cards reached to 1.257 million from 1.181 million and registered a growth of six percent as compared with 13 percent in the preceding quarter.

The total number of debit cards increased from the previous quarter figure of 2.197 million to 2.556 million in the current quarter, showing a growth rate of 16 percent as compared with a 14 percent growth rate in the preceding quarter. The total number of ATM cards is 0.137 million in the current quarter as compared with 0.175 million in the previous quarter, showing a decline of 21 percent and it is because of convergence of ATM cards into debit or smart cards. The total number of smart cards, which offer a high level of security, has reached 0.122 million at the end of 2nd quarter as compared with 0.111 million at the end of the last quarter, showing a growth of 10 percent over the last quarter.

Volume on e-banking channels: During the second quarter the number of transactions increased from 2.848 million to 3.475 million, showing growth in transactions of 22 percent and the amount by 73 percent over the last quarter, as against the 1st quarterÃ¢â¬â¢s growth of 24 percent and 11 percent, respectively.

Internet Banking: Internet banking is getting momentum and during the second quarter the number of transactions was 0.094 million and the amount involved was Rs 4.321 billion as compared with 0.059 million transactions involving an amount of Rs 3.635 billion in the first quarter of the same fiscal, showing a growth of 59.32 percent in number and 18.87 percent in amount over the last quarter. The transfer pertains to intra- bank account to account transfer only.


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## Neo

Tuesday, April 25, 2006 

LAHORE: Energy consumption in South Asia has increased to 52 percent between 1993 and 2003, said a report of the Energy Information Administration (EIA).

The EIA energy statistics include only Ã¢â¬ÅcommercialÃ¢â¬Â energy sources and not animal waste, wood, or other biomass, which account for more than half of South AsiaÃ¢â¬â¢s total final energy consumption. 

In 2003, South Asia accounted for approximately four percent of world commercial energy consumption, up from 3.1 percent in 1993. Despite this growth in energy demand, South Asia continues to average among the lowest levels of per capita energy consumption in the world, but among the highest levels of energy consumption per unit of GDP. 

Discounting Ã¢â¬Ånon-commercialÃ¢â¬Â sources of energy, including animal waste, wood, and other biomass, South Asia's commercial energy mix in 2003 was 44 percent coal, 35 percent petroleum, 13 percent natural gas, six percent hydroelectricity, one percent nuclear and 0.3 percent Ã¢â¬Åother.Ã¢â¬Â There are significant variations within the region. 

BangladeshÃ¢â¬â¢s energy mix, for example, is dominated by natural gas (67 percent in 2003), whereas India relies heavily on coal (52 percent in 2003). Sri Lanka and the Maldives are overwhelmingly dependent on petroleum (84 percent and 100 percent, respectively). Pakistan is diversified among petroleum (38 percent), natural gas (41 percent), and hydroelectricity (14 percent). 

The Himalayan countries of Bhutan and Nepal had the highest shares of hydroelectric power in their energy consumption mix at 82 percent and 37 percent, respectively, in 2003. 

South Asian nations are faced with rapidly rising energy demand coupled with increasingly insufficient energy supplies. Most of South Asia is already grappling with energy shortfalls, typically in the form of recurrent, costly and widespread electricity outages. 

Because of the economic and political ramifications arising from such shortfalls, improving the supply of energy, particularly the supply of electricity, is an important priority of national and local governments. The countries of South Asia are looking to diversify their traditional energy supplies, promote additional foreign investment for energy infrastructure development, improve energy efficiency, reform and privatize energy sectors and promote and expand regional energy trade and investment. 

Another implication of rising energy demand in South Asia is its impact on the regionÃ¢â¬â¢s level of carbon dioxide emissions. 

As of 2003, South Asia accounted for 4.7 percent of global carbon dioxide emissions. With the demand for coal in India projected to increase rapidly in the coming years (from 431 million short tons (Mmst) in 2003 to 544 million short tons (Mmst) in 2010) and the recent introduction of coal into the fuel mix of other countries in the region, a significant increase in emissions in the future is expected.

The South Asian region is notable for its large and rapidly growing population (more than one-fifth of the world total). However, despite rapid economic growth during the 1990s, the nations in the region have among the lowest per capita incomes in the world.


----------



## Neo

The current financial year will be complete in just a little over two months. The economic performance over the last ten months reveals that while a high rate of growth will be sustained this year, a number of challenges are still there that require some extra effort to meet them more effectively. The issue of price hike, which was recently debated in the National Assembly for three days, needs continued closer attention at the highest policy-making level ensuring that the burden on the consumer caused by inflation and increase in prices is reduced, as far as possible, through suitable policy initiatives. Tight monetary policy, stricter watch on prices, increase in domestic production, and supply of essential items to the market, with an expansion in the chain of utility stores are some of the measures that could help stabilise the prices.

Employment generation and poverty alleviation are also highly important issues that have already been given priority on the government's development agenda. The need to create more jobs on a regular basis remains pressing and larger investment in various sectors of the economy is vitally important in this respect. The development of agro-based industries in the rural areas is also quite important and the availability of micro-finance for the development of such new areas can play an important role. In order to remain self-sufficient in food, more land should be brought under cultivation. The production and growth of vegetables, livestock and dairy products should be encouraged.

It is also quite obvious that the government will need to further improve the infrastructure, increase the availability of irrigation water and meet the energy needs of the economy in order to maintain the momentum of economic growth. Social sector development should get larger allocation of funds. Full utilisation of development funds during the financial year for which they were allocated should be ensured. The economy has to face growing competition in world markets and it should be ready to face it through production of cost-effective and quality goods. Liberalisation and deregulation have brought new opportunities for the economy to grow and bring prosperity to the people.


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## Owais

*World Bank demand to phase out gas subsidy turned down* 

ISLAMABAD (April 25 2006): The government has turned down the World Bank's demand to phase out subsidy for the first slab of domestic consumers, saying it was not practicable.

The exiting formula provides gas to the low-income group at concessional rates and the World Bank is demanding its withdrawal in phases.

An official of the petroleum ministry told _Business Recorder _phasing out of the subsidy from the first slab of domestic consumers was a longstanding demand of the World Bank, but it is in conflict with the government policy. He said the government was not considering any change in gas pricing mechanism.

He said: "It is our policy to protect the low-income group by giving subsidy on gas rates and the same policy will remain in vogue in future."

The World Bank had demanded of the government to cut down the size of the fist slab of consumers to do away with its subsidy-based gas pricing system.

The bank said the existing gas pricing system was causing domestic fuel disparity and hurting the low-income gas consumers.

It estimated gas subsidy at Rs 9 billion annually and cautioned that continuation of the exiting gas pricing system could disturb the economy.

Sources said the bank's mission, recently visited Islamabad, raised the issue and suggested various measures to curtail large volume of subsidy that was being given to consumers. The mission also demanded more powers for Ogra.

The mission was of the view the Oil & Gas Regulatory Authority (Ogra) does not have the authority to determine retail tariffs. It sets prescribed rates, which represent the price of gas.

It added the difference between retail tariffs for each category of consumers and prescribed rates accrues to the government as gas development surcharge (GDS).

It said commercial, industrial and power consumers, subsidise households and fertiliser producers, and subsidised tariffs do not even cover the cost of gas as a commodity.

The economic cost of subsidies to households is estimated at about Rs 9 billion annually. The subsidy is largely due to the first two slabs of the retail tariffs. The first slab accounts for some 54 percent of the consumers in the winter, and 82 percent in other months.

Given also the increasing block structure, consumers in higher slabs still benefit from subsidised first slab, as a result, two-third of the gas is sold under the first slab rate and 90 percent under the first two slabs.

The first slab quantity is also very substantial, representing about six bottles of LPG. Natural gas is by far the cheapest source of modern fuels, and its first block tariff represented only 13 percent of the kerosene-parity price in early 2003.

Fewer than 20 percent of Pakistani households use natural gas, and they belong largely to middle and upper income groups in urban areas.

According to the bank, as such, gas price subsidy to households benefits higher income urban families disproportionately, creating pro-rich subsidy inequalities.

It noted, in addition the cost of alternative hydrocarbon fuels is considerably higher. The bank strongly recommended reduction size of the first slab would help the SSGC and SNGPL get out of problematic pricing system.

It recommended the reduction-based formula. It maintained social protection would earmark about 30 percent of the consumers, among whom the majority of poor gas-users are likely to be found.

Eliminating the subsidy would require an increase in the average gas tariff of about 65 percent. If 70 percent of consumers cross-subsidise the bottom 30 percent and the subsidy for the household sector as a whole is eliminated, these users will face an average increase of about 70 percent.

While such an increase could be perceived as high, it could be made gradually and gas would still remain considerably cheaper for these households than the next best alternative.


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## Owais

*CSD refused same facility enjoyed by USC* 

ISLAMABAD (April 25 2006): The government has refused to give similar financial back-up to military's Canteen Stores Department (CSD) as being extended to Utility Stores Corporation (USC).

Official sources told _Business Recorder _that the Defence Ministry had approached the Economic Co-ordination Committee (ECC) of the Cabinet to seek same facilities for CSD as being given to USC, but the proposal was not entertained because of strong opposition by some Committee members.

The Defence Ministry said that since the government was making efforts to stabilise sugar prices in the market by allowing Trading Corporation Pakistan (TCP) to issue sugar to USC at reduced rates, why CSD was being deprived of this facility.

It may be noted that the Commerce Ministry had already allocated 300 tons sugar to CSD on ex-factory purchase rate in March, and 3000 tons in June 2005 on instructions from Prime Minister Shaukat Aziz.

The Defence Ministry said that CSD was selling sugar on reduced rate without earning profit, irrespective of the fact that subsidy was available to USC and not to CSD. It said that to sell atta at reduced rates to the personnel of Armed Forces and civilians residing in cantonment areas in CSD's 100 outlets spread all over the country it would be appropriate to extend subsidy so that it could also sell it at reduced rates.

"Finance Ministry was asked to treat CSD at par with USC and provide subsidy of Rs 200 million during the current fiscal year but it did not entertain the proposal, saying that subsidy to any organisation is allowed on directions of the ECC," sources added.

Defence Ministry, in its arguments, said that CSD and USC have been purchasing atta from the flour mills at the same rates, but the latter was selling the product at subsidised rates because of subsidy being granted by the ECC, whereas the former was not in a position to provide atta on the same rate because of non-availability of the same facility.

"Non-availability of subsidy to CSD has not only deprived the men in uniform and general public in and around the cantonments but also those residing in far-flung areas," sources quoted Defence Ministry as further pleading its case.

It may be mentioned here that CSD net profit ranges from one to two percent only, and the last three years' profit came to 1.66 percent.


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## Owais

*THE RUPEE: all round decline on currency market* 
*RECORDER REPORT* KARACHI (April 25 2006): The rupee shed two paisa against the dollar in the interbank market on Monday at 60.02 and 60.04 amid higher demand for the greenback, dealers said.

According the market sources, the rupee was unable to maintain its firmness due to tight supply of dollar due to international markets' closure.

They hope the rupee will recover its ground as pressure eases from the supply side. In the meantime, the rupee may come under pressure on heavy dollar buying to meet the year-end payments.

In the world markets, the dollar tumbled to a three-month low against the yen, coming under pressure after Group of Seven countries singled out China in their call for more flexibility in exchange rates.

Finance ministers of the world's biggest economies called for China's yuan and the currencies of other emerging market economies to rise against the dollar to help remove imbalances in the global economy.

*OPEN MARKET RATES: *The rupee continued its weekend's slide versus the dollar as it was sharply lower on rising demand for the US currency, dealers said.

The rupee lost 12 paisa in terms of the dollar for buying and selling at 60.30 and 60.35, they said.

On the euro's appreciation in the world markets the rupee crossed the barrier of Rs 74 in process of trading, shedding 35 paisa for buying and selling at 74.05 and Rs 74.15, they said.
================================Buying Rs 60.30Selling Rs 60.35================================


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## Owais

Rice exports reach record $1 billion 
*KARACHI *_(updated on: April 26, 2006, 18:29 PST_): The country sold a record 2.8 million tonnes of rice in the year to April 22, up more than 27 percent from last year, a senior industry official said on Wednesday. "The rice export revenues have crossed $1 billion this year, beating the previous all-time high of $933 million in the last season," Abdul Majid, chairman of Rice Exporters Association of Pakistan (REAP), told Reuters.

"We would be able to export rice worth of $1.20 billion this year because we still have three more months to complete the season and around 300,000 tonnes of exportable rice is also available."

Majid said the record overseas sales were made after a big harvest last season, when the rice crop was 5.5 million tonnes against 4.8 million in 2004/05. Pakistan's crop year runs from April to November.

Annual domestic consumption is about 2.3 million tonnes.

According to REAP data, private traders had exported 1.3 million tonnes of various varieties of aromatic basmati and 1.5 million tonnes of IRRI-6 rice as of April 22.

The main buyers of Pakistani rice were Iraq, Iran, Afghanistan and the Philippines.

Majid said the country plans to increase rice exports in fiscal 2006/07 (July-June) following reports of another big harvest despite fierce competition from Southeast Asia.

"If the crop situation remains as expected, we would see at least 10 to 15 percent increase in overseas sales next year," he added.

Pakistan's agriculture ministry officials expect the 2006/07 rice crop to exceed 5.7 million tonnes.

Rice production has risen in the past few years, backed by a government drive to boost production and as farmers switched to rice due to better availability of irrigation water.

Thailand, Vietnam, China, India and Myanmar are Pakistan's main competitors.

"Our target is to export $2 billion worth of rice by 2010 and we are exploring new markets in Africa and the Middle East," Majid said.

He said traders expected increased sales to the traditional African and Saudi markets and also more direct sales to Iran.

Pakistani exporters see Iran as a potential market, where the government imports at least 900,000 tonnes of superior quality rice a year to help meet domestic demand of 2.8 million tonnes.

Last month Pakistani exporters signed contracts for the sale of 40,000 tonne of superior quality rice to Iran, resuming bilateral rice trade after a gap of seven years.

Iran halted purchases from its eastern neighbour over quality issues in 1999.


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## Owais

*Pakistan cautioned over Mexican-style crisis* 

WASHINGTON (April 26 2006): A former finance minister of Pakistan and a retired World Bank official Shahid Javed Burki on Monday warned that Pakistan was facing symptoms that preceded the Mexican financial crisis more than 10 years ago.

Burki, who was incharge of the bank's Latin American division when Mexico was hit by the crisis in 1994, cited the South Asian nation's large current account deficit and what he called excessive speculative business activity and weak banking system.

"When I look at all these things (that preceded the Mexican crisis), I can see all of them present in Pakistan today," he said while talking to State Bank of Pakistan (SBP) Governor Shamshad Akhtar at a Washington forum on Monday.

"But I'm not saying it is likely to happen in Pakistan," he said.

"So, essentially what I am saying to you is it would be, I think, prudent on your part to worry about the worst case scenario," Burki told the SBP chief.

Shamshad Akhtar said that she was aware of the "downside risks" mentioned by Burki as well as the threat posed by inflationary pressures and escalating crude oil prices that could worsen the country's trade deficit.

She said the country was already under a "monetary tightening phase" and that the central bank and the national economic management teams were monitoring the situation very closely.

"Further escalation in oil prices could endanger the fragile balance that currently prevails between budget management and trade deficit. We have to walk a very tight rope," she said.

Akhtar, a former senior official of the Asian Development Bank, said the overall medium-term outlook for the Pakistani economy "is on track" based on an average economic growth of around 6.5 percent.

"I like to believe we do have the opportunity to make a difference along with my economic management team. The general view we have in the team is we would like to closely watch the situation almost on a week to week, and month to month basis and see what policy responses we can take," she said.

Burki, citing what he called a "casino culture" prevailing in Pakistan which, he said, was fuelled by easy credit extended by banks, disputed an assessment by Akhtar that Pakistani banks were in a reasonably good shape.

He said: "One particular bank gave me some numbers which I find them horrifying in terms of their exposure to weak assets."

He hoped it was "not representative of the entire banking sector."

Burki said after the forum that speculative business activity in Pakistan was "being financed by the banks, which are doing it on the basis of not enough reflection on their long-term health - which is what I saw in Mexico.

"If these things go sour, then it will be a very quick snowballing effect," he said, adding that Pakistan's relatively fixed exchange rate system was also under pressure.

State Bank has cut its year to June 2006 economic growth forecast to 6.0-6.6 percent, saying it was due to a sharp tail off in manufacturing and agriculture.

Inflation is likely to remain at the projected eight percent target, the bank said in December.

The 1994 economic crisis in Mexico was triggered by the sudden devaluation of the peso. A week or so of intense currency crisis was stabilised when US President Bill Clinton decided to grant Mexico a loan to bail the country out, to the tune of 50 billion dollars.


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## Owais

*Citigroup/Goldman Sachs to lead manage OGDC global depository receipts* 

ISLAMABAD (April 26 2006): The Citigroup/ Goldman Sachs consortium has been awarded the contract for Oil and Gas Development Company (OGDC) global depository receipts (GDRs) as it agreed to take the job as lead manager for Rs 833 million transaction fee and cost.

OGDC GDRs is Pakistan's second (PTCL first) transaction in the world market and its good response can encourage it for many more such offerings in the future.

The Privatisation Commission had conceived the idea of floating OGDC GDRs in the international stock market in 2004. The idea is basically a case to test worth of the organisation in the international market to decide whether or not it should be privatised.

After completing legwork, the Privatisation Commission sought bids from the reputed international banks and consortiums to appoint lead manager for the offering. Its response was encouraging. Finally, this process led to short-listing of four globally reputed banks and consortiums.

The Privatisation Commission evaluated the bids of the interested consortiums and banks to pick one as the lead manager for the transaction. It set two criterions - based on technical and financial bids - carrying 85 and 15 marks respectively.

Deutsche Bank got 15 marks for its lowest financial bid of Rs 833 million. The Citigroup/Goldman Sachs consortium beat all the others in the race by getting 85 marks for its technical bid.

Sources said the Privatisation Commission referred the bidders' evaluation report to the Cabinet Committee on Privatisation (CCoP) for its guidance.

The committee discussed the issue in detail in its one of the meetings and directed the Privatisation Commission to ask the Citigroup/Goldman Sachs to match Deutsche Bank's lowest financial offer to qualify for the job.

As per CCoP directions, the Citigroup/Goldman Sachs consortium was asked to match the lowest bid and its response was positive. However, after issuance of mandate to Citigroup/Goldman Sachs, the Privatisation Commission received an unsolicited offer from Merill Lynch/ABN Amro to undertake the GDR offering for Rs 750 million.

Sources said the Citigroup/Goldman Sachs has suggested the government to undertake GDRs offering by September 2006 for getting a better response from the international market. However, the government of Pakistan would like the process to be completed before the end of the financial year in order to reduce the current account deficit and retire government borrowing for budgetary support from the State Bank of Pakistan. As per government decision, Citigroup/Goldman Sachs has expressed their willingness to expedite the floatation by June 2006.

As lead manager, Citigroup/Goldman Sachs will have multiple role to make the offering a success. It will suggest Islamabad for picking up any world stock market for listing of GDRs besides deciding its size.

Sources said the lead manager will also be responsible of promoting Pakistan's image in the world market, besides reporting and maintaining the books of the offering on behalf of OGDC.


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## Owais

*SBP gives up forex buy and sell swap* 

*RECORDER REPORT* 

KARACHI (April 26 2006): Despite injection of liquidity through reverse repo, not allowing the market to borrow at lower than cost, and by raising its cut-off yield, the SBP's intention seems quite obvious.

It worries about inflation and does not want to risk leaving enough liquidity in the market, unless it has the evidence that the economy is not heating up anymore.

Last injection was seen on Saturday, April 22, when the central bank injected Rs 14 billion at 8.72 percent, but liquidity crunch persists in the interbank market. The central bank did not succumb to the market demand to lower its purchase of T/bills.

Latest SBP data suggest that the private sector credit soared to Rs 353 billion, against FY06 target of Rs 330 billion, and there are still two more months to go, which also indicates that there could be a repeat of last fiscal year's credit number for the second successive year.

Though April's inflation data may once again show a drop in the inflation, this would be due to point-to-point measuring, which would be misleading due to a higher base for the preceding year. This may not reflect the true picture. SBP, it seems, wants to wait for more evidence, as it fears that the real impact could be otherwise in the coming months.

Another factor that has more to do with the liquidity crunch is ambitious overbidding for Treasury bills by banks in the last two auctions rather than any inflationary concern. Banks in their bidding tested the SBP's resolve for T/bills.

The central bank was not willing to send a wrong signal by lowering the yield or leaving any surplus liquidity in the market. Against an auction target of Rs 2 billion, the banks offered Rs 14.65 billion at last cut-off yield of 8.7907 percent, anticipating an easing of the yield due to softer March inflation data, that was 6.9 percent, though there is no indication of major Rupee inflow in April or May.

The Chief dealer of a private commercial bank says: "The Rupee market is too tight, with no sign of inflow of funds, and the current borrowing cost is very high. Since SBP is lending money at a very high price, the bidding in three-month and six-month is not attractive. Interest in 12-month may see the last cut-off yield for a small amount."

Meanwhile, foreign exchange dealers have confirmed that the SBP had not been seen in the interbank FX market doing buy/sell swaps since last month. SBP's latest website update of its International Reserves and Foreign Currency liquidity position as of March 31 shows outstanding swap figure of $235 million.

FX dealers are of the view that SBP does not carry forward anymore swap outstanding position in its books and should square its long position. Dealers say that for the past few months the central bank had been doing only short dated swaps. Banks are comfortable in Nostro's and forward premiums are gradually on the rise. This also indicates that the SBP has successfully retired its forward position.

The Interbank foreign exchange market has been demanding that SBP should dispense with the swap transactions, and let the market decide the real rate, based on interest rate differential. Though the country's trade volume has doubled in a short span of time, the daily volumes in the interbank FX market, which was between $150 million to $200 million, fell to $75 to $100 in the last couple of years.

Estimates are that activity in the interbank market has once again regained its lost confidence. The SBP has recently extended swap trading cut-off time up to 1630 hours for interbank transactions. But it has not allowed banks to carry on with outright transactions after 1400 hours.

In May 2003, SBP was holding a plus $540 million position, but it has been carrying a perpetually negative swap position since April 30, 2004. In November 2004, SBP was carrying $590 million negative position, created by a Buy/Sell swap to show high foreign exchange reserves.

FX dealers say that allowing a wider Rupee/Dollar band has given both importers and exporters an ample opportunity to transact at a suitable price. Dealers also confirm increase in FX activity due to the widening band. On Tuesday, interbank FX market closed at 60.03/04.

FX forward premium is up due to liquidity crunch, as Rupee offers better return versus Dollar. One-month was dealt at 20 paisa, two-month traded at 38 paisa, three-month was at 55 paisa and six-month was at 104 paisa. In the absence of SBP from interbank FX swap market, dealers were targeting six-month for 120 to 130 paisa


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## Neo

DIAMIR (updated on: April 26, 2006, 20:20 PST): President General Pervez Musharraf on Wednesday performed the ground-breaking of $6.5 billion Diamir-Bhasha dam and declared that all dams including Kalabagh will be built under the '2016 Water Vision' to meet the country's growing water and energy requirements.

"Water and energy are matters of life and death for us. We have to build all dams," he said at the ceremony to mark the start of construction work of the first dam in 30 years.

"We have lagged far behind and have to work at a fast pace to catch up with the rest of the world," the President said.

The Diamir-Bhasha project is part of President Musharraf's "water vision" that also envisages construction of Kalabagh, Akori, Munda and Kuram Tangi dams by the year 2016.

Referring to the construction of dozens of dams in other countries every year, the President regretted that the past leadership lacked vision and interest to construct big water reservoirs for meeting future requirements.

He said if there were any controversy on other dams, the work on Bhasha dam could have been started in 1990s and the dam would have been completed by now.

Emphasising the urgent need of constructing major reservoirs the President said water and energy were needed for agricultural and industrial development and to catch up with the world.

"We need water to develop our agriculture while cheap energy is needed for the industrial development," he added.

The President, however, regretted the fact that Pakistan was producing a mere 6000 mw electricity through hydropower against the available capacity of generating 40,000 mw.

He alluded to the setting up of 14 IPPs (Independent Power Producers) in 1994 which were selling Rs.7 per unit of electricity as against Rs. 1 per unit, generated through hydro-power.

"The entire nation is suffering from this," the President said and vowed to convert the destruction caused by expensive electricity into a success by constructing major water reservoirs. 

President Musharraf said soon after taking over, he gave top priority to the building of water reservoirs and initiated feasibility study of Bhasha dam in 2001.

"The work on Bhasha dam has now started and we will build all dams, we will build Kalabagh and Akori dams," he said while adding that all guarantees would be provided to the NWFP and Sindh province.

The President pointed out to the fact that 35 million acre feet (MAF) of water is wasted every year that is equivalent to capacity of six Bhasha dams.

"This is despite the fact that the country is currently facing 9 maf of water shortage which will grow to 15-20 maf by 2020," he said.

Similarly, the President said that the country needed inexpensive electricity to meet the energy demand and sustain the current rate of economic and industrial growth.

"I will not let Pakistan commit suicide because of water and energy shortage," the President said.

The President, in this regard, referred to the "2016 Water Vision" that gives a whole concept of meeting future demand by water conservation, saving wastage and building new water reservoirs.

He said the work is already underway on raising the capacity of Mangla dam that will help save 2.9 maf of additional water and help produce cheap electricity. 

The government is also giving Rs.21 billion in compensation for those being affected by the raising of Mangla dam.

President Musharraf also announced an attractive compensation package for those who would be displaced by the construction of Diamir-Bhasha dam.

He said the government will provide 15 per cent more than the present value in case of land and 10 per cent extra in the case of a house in compensation.

Besides, Rs. 300,000 would be given in compensation for land that will be flooded by the dam water.

Five-marla and one-Kanal residential plots will also be given to the would-be affectees to build their houses in at least nine model villages.

The President also announced to provide vocational training facilities and said construction of Bhasha dam would create more job opportunities for them.

The President said the construction of Bhasha lake will create new economic opportunities for the people of the area as it will promote fishing.

In view of the construction of Bhasha dam, the existing Karakorum Highway will be further broadened and in turn will help increase more trade with China and generating more employment opportunities.

The government has planned nine re-settlement colonies to provide accommodation to the affected population while a net work of infrastructure including electricity, roads, water supply, schools and health centers would be provided for the people of the area.

The country's biggest reservoir, Diamir-Bhasha Dam would generate 4500 MW of electricity with a gross storage capacity of 7.3 Million Acre Feet of water, and located on Indus River about 315 km upstream of Tarbela Dam 165 km downstream of Northern Area Capital Gilgit and 40 km west of Chilas and 210 km north of capital Islamabad.

The Dam would have maximum height of 270 m and impend a reservoir of about 7.4 million acre feet (MAF), with live storage of more than 6.4 MAF. 

The Dam will preserve 15 per cent of annual flow of the River Indus, covering an area of 110 square km and extend 100 km upstream of the dam site upto Raiko Bridge on Karakoram High Way (KKH).

It will be the highest Roller Compacted Concrete type in the world, with an estimated lifespan of 100 years, owing to its design, that prevents silting.

It is estimated that by 2012, the present 5 MAF lost of Tarbela, Mangla and Chashma reservoirs would be increased to 6 MAF. 

The Diamir Bhasha dam will provide about 6.4 MAF of annual surface water storage for irrigation supplies during low flow periods.

The present demand of electricity in the country is above 17,000 MW which is estimated to cross 22,000 MW by year 2010. A large scale injection of power thus becomes inevitable and hydropower will provide the required electricity at affordable price.

Average hydel general unit costs for new projets is Rs. 1.00 per kilo watt hour against Rs. 5 per KWH for new oil based thermal generation. Pakistan's electricity demand is increasing by 7 per cent per annum.

Contribution of 4500 MW power from Diamer Bhasha Dam will go a long way in alleviating the situation.

The dam would also reduce the dependence on thermal power, thus saving foreign exchange.


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## Neo

Energy Forum inaugurated 

ISLAMABAD (April 26 2006): Prime Minister Shaukat Aziz on Tuesday called for strong and vibrant Pakistan-China economic partnership and promoting comprehensive cooperation between the two countries in the field of energy including nuclear power generation.

"The government and the people of Pakistan attach highest importance to further strengthening our age-old ties of friendship and cooperation and to add greater content, substance and vigor to our strategic partnership," he said while inaugurating the three-day Pakistan-China Energy Forum here.

"Time has come to reinforce our traditional friendship with a strong and vibrant economic partnership," he told the forum being attended by some 150 Chinese delegates and more than 300 Pakistani energy, financial experts and entrepreneurs.

This is the first meeting of the forum that is taking place after the two countries signed the Framework Agreement on Cooperation in Energy during President General Pervez Musharraf's visit to China in February.

Hu Deping, Minister and Vice Chairman All China Federation for Industry and Commerce also attended the forum.

Prime Minister Aziz said the government's policies of liberalisation, deregulation and privatisation, coupled with deep and wide-ranging structural reforms had set Pakistan on high growth path. However, he described water and energy security as critical to sustaining the accelerated growth within a band of six to eight percent.

He shared with the participants the government's strategic direction for development of the energy sector and to ensure sustainable supply of energy at competitive to all sectors of the economy. This included increasing emphasis on nuclear energy as the Prime Minister expressed the hope to generating 8800 MW through the source in the next 25 years.

The strategic direction also include enhancing exploitation of hydropower to make industry more competitive by reducing cost of inputs; developing and encouraging use of renewable energy resources, developing coal reserves, accelerating exploration and production of indigenous oil and gas, options to import gas and encouraging use of CNG, LPG and import of LNG to meet short-term gas requirements.

Prime Minister Aziz underlined Pakistan's geo-strategic location at the confluence of three vital regions South Asia, Central Asia and West Asia' providing the shortest access to the sea for all landlocked countries of Central Asia as well as Western China.

Pakistan, he added, was also fast emerging as the junction for multiple corridors of cooperation between all three regions involving energy, trade, transportation and tourism.

In this regard, the Prime Minister mentioned the building of deepwater port at Gwadar with the Chinese assistance and construction of road and rail links to facilitate and operationalise accesses among the three regions.

"We are interested in developing Gwadar not only as a transshipment port but also as an 'energy port' by establishing mega refineries, building storage capacity and laying pipeline ensuring secure and reliable supplies to Western China," he added.

Prime Minister Aziz said the Framework Agreement on Energy Cooperation reflected the determination of the Pakistan and Chinese government to promote comprehensive cooperation in the field of energy. That included nuclear power, fossil fuels, renewable resources, coal as well as realise the concept of building energy corridor between Pakistan and China, he added.

The Prime Minister urged the Forum to develop comprehensive agenda as well as mechanism to institutionalise energy cooperation between Pakistan and China.

He specifically asked the participants to focus on enhancing cooperation in nuclear power generation, increasing oil and gas exploration activity, building energy corridor to China, increasing oil refining, storage capacity and laying oil pipelines and ensuring secure supplies.

The Prime Minister also urged the forum to initiate studies for energy corridor to China, transportation networks from Pakistani ports overland to China and promote cooperation between private sectors of the two countries.

Chinese Minister Hu Deping recalled the all-weather Pakistan-China friendship, saying the two countries shared all-dimensional friendly ties.

He said China had 10 neighbours but its friendship with Pakistan was the most "loyal friendship" and the strong ties between the two trusted allies had withstood all changes at the global and regional level.

While the two countries enjoyed excellent political and diplomatic ties, Minister Hu Deping, however, called for more cooperation in trade and economic fields.

He recalled that during President Musharraf's visit to Beijing, the two countries signed 13 agreements and memorandum of understanding (MoUs) that will further boost their time-tested friendship.

Minister for Petroleum and Natural Resources Amanullah Khan Jadoon in his address highlighted Pakistan's energy requirements, which had grown by over nine percent last year.

He said Pakistan needed to make an investment of US 150 billion dollars in the next 25 years to meet its growing energy requirements and to fuel its economic and social development in a sustainable manner.

Pakistan's energy mix is highly dependent on fossil fuels - natural gas contributes 51 per cent, oil contributes 29 per cent, coal provides eight per cent, hydroelectricity meets 11 percent and nuclear energy makes up for one per cent of the total demand.


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## Neo

ISLAMABAD (April 26 2006): The Cabinet has allowed the Commerce Ministry to start negotiations with Russia to explore the possibility of a Free Trade Agreement (FTA)/Preferential Trade Agreement (PTA), which the officials believe would help Pakistan's textile sector to enter Moscow's market, sources told Business Recorder.

They said that Pakistan had extended complete support to Russia to be part of the World Trade Organisation (WTO) on the condition that Moscow would sign FTA with Islamabad.

"Both countries had agreed in those negotiations that all possible steps will be taken to finalise the agreement as early as possible," sources said.

They said that Commerce Ministry had submitted a summary to the Cabinet, seeking permission to start negotiations, after receiving confirmation from Moscow that they were willing to start negotiations at any date suitable to both countries.

Pakistan's exports to Russia were only $43.857 million during 2004-05 against imports of $279.213 million.

"Our exports to Russia will certainly increase as a result of tariff preferences, especially in the textile sector," sources said. Russia's trade team visited Islamabad in February last year to seek support for accession to WTO.

"After carefully evaluating the impact of Russian accession to WTO on Pakistan's exports, we sought market access for leather, surgical instruments, sports goods and textile," sources added.

Russia has already agreed to return $108 million to Pakistan's exporters who had exported articles to USSR before its disintegration. Sources said that Pakistan was also making endeavours to sign bilateral protocol with Azerbaijan on goods and services against support to it in accession to WTO, besides similar pacts.

"We ink agreement on goods and services only with brother countries and some of them have already expressed their willingness," sources quoted Elmar Mammadov, Azarbaijan's Third Secretary on WTO affairs, saying in a letter to Pakistan's mission in Geneva.


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## Neo

LONDON (April 26 2006): Minister for State for Overseas Pakistanis Senator Tariq Azeem has said a few tribal chieftains are the biggest hurdle in the way of development in the Balochistan and did nothing during their stint in power.

Addressing the expatriates at Pakistan High Commission here late on Monday, Azeem said the development funds were funnelled in the past through these tribal heads, but now the government had decided to give funds direct to the people to bring development across the province.

Referring to the situation in the province, he said of the 29 districts of the province, the conditions were normal while a few tribal heads were causing trouble only in Bugti and Kohlu districts. He said sons of these chieftains were studying at British universities, while they did not allow even to open schools in their areas just to keep their people backward.

He said 73,000 employees of Pakistan Petroleum Limited (PPL) had to be hired through Nawab Akbar Bugti which gave an inkling of the control of the tribal heads.

To a question on Kashmir, Tariq Azeem said Pakistan was striving to seek solution of the issue, which was acceptable to the people of occupied Kashmir.

He told the questioner that both President General Pervez Musharraf and Prime Minister Shaukat Aziz had raised the Kashmir issue at the United Nations, Organisation of Islamic Conference (OIC), Davos or name any forum which greatly helped bring the focus onto the issue.

Pakistan wanted peace with all its neighbours, including India, hence it was holding talks with New Delhi to find a peaceful and just solution of the Kashmir issue, said the minister.

To a question on measures taken for the welfare of the overseas Pakistanis, Azeem said he had taken many initiatives in this regard. For example, separate counters for overseas Pakistanis were being established at all the international airports of the country to give relevant information to expatriates and treat them in a decent manner. He said 19 officials had been recruited to run these counters while half of them were female to provide help to women expatriates who visited Pakistan.

Tariq said a separate wing in the ministry had been established to provide assistance to overseas Pakistani investors. Besides, Overseas Pakistani Foundation (OPF) had also started a free legal aid to help expatriates.

The minister was all praise for the contribution of the expatriates in supporting the relief, rehabilitation and reconstruction efforts of the quake-affected areas. He thanked them and appealed them to continue endeavours to back the rehabilitation drive of the government.

British MP Khalid Mehmood and Pakistan's envoy to London Dr Maleeha Lodhi were present on the occasion.


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## Neo

ISLAMABAD (April 26 2006): The Swiss Agency for Development and Co-operation (SDC) has provided Rs 400 million to 11 micro-finance partner organisations for poverty alleviation through its Financial Sector Strengthening Programme (FSSP).

While speaking at the contract singing ceremony for technical assistance, deputy country director Richard Kohli said the SDC is co-ordinating for the developmental and humanitarian activities in Pakistan.

He said besides FSSP, SDC assists the State Bank of Pakistan in building specific micro-finance-related staff capacities and provides technical assistance for setting up onsite examination and offsite surveillance systems for micro-finance banks.

The SDC is also partnering with the Leasing Association of Pakistan (LAP) and four private leasing companies to facilitate their downscaling from big-ticket leasing to micro-leasing, he added.

He said the SDC considers micro-finance a powerful tool for poverty alleviation, provided financial services for the poor are integrated in financially self-sufficient and socially sensitive financial systems. FSSP director Khalid Nawaz presented highlights of the project, its objectives, scope and overall performance.

Microfinance partner organisation are: Swabi Women Welfare Society (SWWS), Organisation for Participatory Development (OPD), Sarhad Rural Support Programme (SRSP), ASASAH in Punjab, Sindh Agricultural and Forestry Workers Co-operation (SAFWCO), First Microfinance Bank Limited (FMFB), Thardeep Rural Development Programme (TRDP), Pakistan Microfinance Network, Sindh Microfinance Network, Sarhad Microfinance Network and Centre of Excellence in Microfinance, Peshawar.


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## Neo

ISLAMABAD (April 26 2006): The petroleum ministry has offered 19 onshore and offshore oil exploration blocks to the visiting Chinese by entering into joint venture with Oil and Gas Development Corporation (OGDC) and Pakistan Petroleum Limited (PPL).

They have also been offered 15 more bocks but through open bidding.

On the opening day of three-day Pak-China Energy Forum, the delegation was informed that Chinese oil companies could invest in oil and gas exploration by working with OGDC and PPL in various offshore and onshore blocks, official sources told Business Recorder on Tuesday.

Out of 34 blocks, Chinese companies were offered to acquire 15 blocks through an open bidding while the rest through joint ventures with OGDC and PPL, sources added.

In a presentation, they were informed Chinese oil companies could enter into joint venture with ODGC for 14 blocks, of which 11 blocks would be onshore, and three offshore, they added.

While in the remaining five blocks, they have to work with the PPL of which four blocks would be onshore and one offshore, sources said. Sources further said the remaining 15 blocks would be offered through open bidding.


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## Neo

26 April 2006 

ISLAMABAD Ã¢â¬â Pakistan government has agreed, in principle, to allow one per cent increase in the interest rates of all the ongoing national saving schemes to make them competitive in the market.

Informed sources said the Central Directorate of National Savings (CDNS) has formally submitted its proposal to the ministry of finance to augment this one per cent increase in line with the improved rates of Karachi Interbank Offered Rate (KIBOR), Treasury Bills (T-Bills), Pakistan Investment Bonds (PIBs) and some other secondary market rates.

The new saving rates were to be announced on January 1 this year but were delayed due to unknown reasons. The CDNS, to be officially converted into "Pakistan Savings," is supposed to bi-annually review its interest rates policy.

Sources said that CDNS needed to function on par with market forces and would face investment problems if it did not offer increased interest rates to its investors.

"The issue is being linked with the market position that demands that CDNS should offer gradual increase on its saving rates," a source said, adding that one per cent proposed increase would help improve the country's poor savings rate.

Currently, various national savings offer 8-9 per cent interest rate which many government officials believe was less and needed to be revised upward to promote investment in the country.

Meanwhile, Prime Minister Shaukat Aziz has approved the conversion of CDNS into a "Corporation" which will now work under a proposed 8-member autonomous board. The federal cabinet is expected to formally approve the new Corporation shortly.

The head of the new Corporation will be called as chief executive instead of the director-general. The chief executive of the new Corporation would also be one of the members of the policy board. 

The secretary finance will also be the member and

the chairman of the board. Others members will include the economic advisor to the minister of finance, the additional secretary budget, ministry of finance and four other members to be taken from the private sector.

However, the cabinet division, sources said, has authorised the government to change the composition of the members of the policy board as and when required.

Pakistan Savings will have its own salary structure based on free market mechanism and the authority to expand the organisation with a view to substantially increase and diversify the saving products of the new organisation.

Sources said that CDNS, whose portfolio has increased from Rs80 billion to over Rs1 trillion along with 4 million plus clients, will enjoy the considerable financial autonomy after becoming Pakistan Savings.

The government had restored last month the agency functions of all the authorised banks to sell savings certificates of the Pakistan Savings.

The CDNS, which is currently fulfilling the requirement of deposit banking functions, is expected to offer good salary packages to the employees after it becomes Pakistan Savings.

The government, sources said, has also in principle, agreed that the new Corporation could go into the Mutual Fund business to be managed by professional assets management companies having a private sector management. This mutual fund will be a subsidiary of Pakistan Savings for which the government will initially provide the equity.

The proposed Pakistan Savings will diversify its business and play an important role in resource mobilisation and increasing the availability of domestic resources for investment.

The new organisation will also allow to introduce new products like offering funding for education, housing and marriage.

The ongoing pensioners and welfare schemes of the organisation are also likely to be further improved once the CDNS is converted into an Pakistan Savings.

The sources said that about 25 per cent of the total portfolio of the CDNS belonging to institutional investment including banks, has been rapid due to which there was some drop in the net portfolio. The government is considering to allow the proposed Pakistan Savings to also work like other Financial Development Institutions (DFIs). "A number of multi-dimensional targets and goals are currently being finalised," a source said.


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## Neo

ISLAMABAD, April 25: JordanÃ¢â¬â¢s Shaheen Business and Investment Group has expressed its interest to set up 800-mw thermal power plant in Pakistan on fast track basis and reaffirmed their commitment to invest in various other sectors.

These views were expressed by ex-deputy prime minister and head of the four-member delegation of Jordan Dr Jawad Ananai during a meeting with Federal Minister for Water and Power Liaquat Ali Jatoi here on Tuesday.

Dr Anani said that the group had planned to complete the project by June 2008. He said that due to good economic policies of the government of Pakistan the group was also interested in other energy sector projects and needed full cooperation in this regard.

Liaquat Ali Jatoi while welcoming the delegation said that the economy of Pakistan had made significant progress over the last few years. Ã¢â¬ÅPakistan is witnessing massive upsurge in economic activity, not seen before in many decades.Ã¢â¬Â

The confidence of the domestic as well foreign investors was gaining new heights on the back of a stable macroeconomic environment, the minister said.

Ã¢â¬ÅThe economy is now more stable, economic policies are transparent and predictable, confidence of the private sector is restored to a larger extent; expatriate Pakistanis are bringing their capital back; stock market is buoyant and PakistanÃ¢â¬â¢s credit rating in international capital markets has significantly improved,Ã¢â¬Â he explained.

He also stated that private power producers were getting high returns on their investment and Pakistan was a safe and secure place for investment coupled with a number of incentive and streamlined procedures.

He also assured that Ministry of Water and Power and the PPIB would provide all the assistance and their proposal would be processed on top priority basis.

Dr Ananai also thanked the minister for extending full cooperation regarding their proposal for setting up of power project in Pakistan.


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## Neo

By Ahmed Hassan

ISLAMABAD April 25: Prime Minister Shaukat Aziz has said that there will be no U-turn in the economic policies, which have earned the country record foreign direct investment (FDI) of $2.2 billion in last nine months of the current fiscal.

Talking to a delegation of Pak-US Business Council, led by Citigroup CEO Jay Collins, which called on him at Prime Minister House on Tuesday, the premier said that the government was working to increase the absorptive capacity to prepare the country to gain from opportunities offered by globalisation.

He said consistency in policies had created a predictable environment for investors and record high FDI was a manifestation of restored confidence of foreign investors.

He claimed that the economic recovery achieved by the country was one of deepest and broad based reforms ever undertaken which had steered Pakistan out of economic wilderness.

The per capita income stands at $800, double to what it was six years back, he maintained.

He emphasised the need to further expand Pak-US business relations and expressed the desire of an early finalisation of Bilateral Investment Treaty (BIT) with the United States and the council could play an important role.

He said that the government was paying special attention to improve infrastructure and had most modern telephone systems in the world with 95 per cent fibre optic.


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## Neo

Wednesday April 26, 2006 

ISLAMABAD: Uzbekistan Deputy Minister for Foreign Affairs Mr. Mustafa Aey Sao Faihbaev heading a six-member delegation met Secretary Ministry of Food, Agriculture and Livestock (MINFAL) Mr. Ismail Qureshi to discuss issues of mutual interest and cooperation. 
Deputy Minister said Uzbekistan wanted to enhance trade with Pakistan in energy resource development, promotion of quality cotton production and improvement in plant quarantine. 

The secretary MINFAL said Pakistan was desirous in seeking Uzbekistan cooperation in the fields of Agriculture Policy Studies, Agriculture and livestock production and marketing, and the exchange of Agriculture expert delegation. 

The secretary further said that two separate MOU on Agriculture Policy Studies, Agriculture and Livestock production and marketing, and Impact Evaluation and Research in Agriculture Extension Approaches/Technology transfer would be signed during the visit of Uzbekistan President to Pakistan. 

During the meeting Additional Secretary MINFAL, Muhammad Saleem Jhagra and other high officials of the ministry were also present in the meeting.


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## Neo

Wednesday April 26, 2006 

ISLAMABAD: The government will invite bids by international investors to establish a $1.3 billion oil refinery in its southwest province of Balochistan after IranÃ¢â¬â¢s refusal to carry out the project. 
About 2,000 acres of land was acquired at Khalifa Point in BalochistanÃ¢â¬â¢s coastal area of Hub for the Pakistan-Iran venture but in 2002 Tehran had refused to help in establishing the refinery, saying it would have no rate of return. 

According to official sources, the petroleum ministry has now indicated that the land acquired by the Petroleum and Petrochemical Corporation (Perac) at Khalifa Point in Balochistan for the refinery is available. 

The petroleum ministry plans to seek proposals from investors through international competitive bidding to set up a state-of-the-art deep-conversion refinery at Khalifa Point on a Ã¢â¬â¢Build-Own-OperateÃ¢â¬â¢ basis, sources said. On May 16, 1991, Pakistan and Iran had signed an agreement to initiate the project, with a capacity to refine 120,000 barrels crude oil per day, but later Tehran backtracked. 

PakistanÃ¢â¬â¢s current demand of petroleum products is about 16 million metric tonnes per annum, 82 per cent of which is met through imports (crude and finished products) and the rest through indigenous resources. 

The countryÃ¢â¬â¢s total refining capacity at present is about 12.8 million tonnes. Energy demand and supply projections indicate that by 2011-12, the total deficit of petroleum products in the country would be over nine million and 11 million tonnes, respectively.


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## Neo

Thursday April 27, 2006

ISLAMABAD: A delegation of US businessmen currently visiting Pakistan has termed the business environment in Pakistan friendly and conducive for the foreign investors. 
They expressed these views in a meeting with Jahanghir Bashar, Secretary Board of Investment on Wednesday. 

Welcoming the delegation, Secretary BOI pointed out that due to the liberalized policies and the economic reforms introduced by the government, foreign investors find Pakistan a safe place to invest in. 

He said that more than 600 foreign companies are operating in Pakistan reaping high interests. 

He said that Pakistan has received an unprecedented FDI of over 2 billion with 3 months still to go. All the economic indicators have shown an upward trend, which add to the investors confidence. 

Jay Collins appreciating the steps taken by the Government of Pakistan for the economic turn around said that YS is the biggest investor in Pakistan and more investment are keen to invest here. 

He said that US-Pakistan Business Council was established with the aim to advance the investment opportunities trade and commerce and to develop the business relationship between the two countries. 

They have come to Pakistan with the view to bring the private sectors of the two countries closer to create a conducive environment and also to give a positive signal to rest of the world that Pakistan is a safe place to invest in, he added.


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## Neo

Thursday April 27, 2006 

ISLAMABAD: Chairman, Central Board of Revenue, Mr M Abdullah Yusuf has directed the sales tax collectors to conduct a sectoral study in the areas of their respective collectorates to identify the sectors which have the potential to pay more taxes. 
He was addressing the Quarterly Conference of Collectors of Sales Tax & Federal Excise held here on Wednesday held under the auspices of CBR. 

Mr. Yusuf said that our major thrust should be on the expansion of the tax base in order to generate more revenue. This can only happen through concerted efforts by improving the tax collection system and bringing all the potential taxpayers into the tax net, he added. 

He said, the revenue so generated would be utilized by the government for the development of the country and improving the lot of the common man. 

Expressing satisfaction over the achievement of the targets of sales tax and federal excise collections set for first three quarters of the current financial year, the Chairman hoped that this trend will continue in all the federal taxes in the last quarter as well. 

He said, overall revenue collection in first nine months stood at Rs. 490 billion and hoped that the annual collection will be around Rs. 708 billion against the target of Rs. 690 billion. 

Stressing upon the improvement and upgradation of the sales tax system of processing and refunds, Mr. Yusuf said that we have to deal with all relevant issues in a professional manner. 

He called upon the concerned officials to immediately plug all the weaknesses of STARR and STREAM systems to address the concerns of the taxpayers. He asked the officials to ensure that new automated system does not allow manipulated tactics to stay which were used in the past. " The new system must ensure equity, transparency and efficiency", he added. 

The Chairman told the Conference that 12 new RTOs in 12 major cities of the country and a Large Taxpayers Unit (LTU) in Islamabad will be rolled out in the next financial year. He hoped that these offices would make a difference in terms of efficiency and transparency and towards facilitation of the taxpayers. 

While reviewing the goals/targets set for sales tax registration, the Chairman advised that all problems in this regard be dealt on priority basis to achieve the desired result. 

On payment of refunds issue, Mr. Abdullah Yusuf directed the collectors to keep a strict vigilance over the claimants of refunds on fake and bogus invoices . The conference considered, in detail, a number of proposals for the formulation of next federal budget. The proposals will be finalized in consultation with all the stakeholders. 

Earlier, Member (Sales Tax & Federal Excise), CBR, Mr. Shahid Ahmed informed the conference that as against Rs 165.379 bn sales tax collected in first nine of the last financial year, the collection of sales tax in the same period this year stood at Rs. 202.452 bn showing an increase of 22.4 %. 

Similarly, the collection of excise duty has also shown an increase of 3.3% as compared to the last financial year. 

The growth recorded in major revenue spinners in sales tax were POL products (10%) telecommunication (36%), sugar (6%) etc. and in federal excise were cigarettes (12%), cement (13%) POL products (-11.7%), beverages (28.4%) etc. 

Later, Member (Tax Policy & Reforms) CBR, Kh. Tanvir Ahmed, briefed the participants over the progress made so far on the opening of 12 Regional Tax Offices and one LTU in the financial year 2006-07. 

He told that four RTOs at Abbottabad, Peshawar, Rawalpindi and Hyderabad would become fully operational by December, this year. 

All necessary administrative formalities are being completed in this regard, he added.


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## Neo

Wednesday, April 26, 2006 

ISLAMABAD: The Pakistan Railways has struck a deal with a Chinese company for the purchase of 300 wagons at 15% lower rates of FOB price of $39,447 and CFR price of $41,819 per wagon. According to an official announcement, delivery of wagons would be completed within six months by December 31, 2006. Of the 300 wagons, 150 have already been manufactured, 80 would be assembled in Pakistan and 70 would be manufactured in Pakistan under the deal. About 35 leading national and international companies participated in open bidding and companies from China, Iran, Egypt, Ukraine, Malaysia and the Czech Republic participated in the bidding. After a pre-bid conference, the Pakistan Railways opened 19 financial offers. Chinese company Beijing Research and Design Institute came up with the lowest bid at FOB price of $39,447 and CFR price of $41,819 per wagon. This price is 15% lower than an earlier agreement signed by the Pakistan Railways with other Chinese companies at $47.934 per wagon in 2003. The second lower rate ($44,000) was of the other Chinese company followed by $81,800 by Iran and $83,790 by Ukraine. The Pakistan Railways management had been praised for making a deal at 15% lower rates. staff report


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## Neo

Wednesday, April 26, 2006 

ISLAMABAD: Prime Minister Shaukat Aziz said on Tuesday that Pakistan sought Chinese cooperation to meet its target to generate 8,800 megawatts of electricity through nuclear power plants in the next two decades.

Addressing the inaugural ceremony of the three-day Pak-China Energy Forum, Aziz said that Pakistan was negotiating with China for cooperation in nuclear power. 

The prime minister also said Pakistan would enhance its exploitation of hydropower to generate cheaper electricity. The two countries would also cooperate in power generation through coal and other energy alternatives, he added. He said the government of Pakistan wanted to develop coal reserves and accelerate indigenous oil and gas production including offshore drilling. Ã¢â¬ÅWe are also working on various options to import gas from Iran, Turkmenistan and Qatar,Ã¢â¬Â he added.

Around 150 Chinese delegates from the energy sector and 300 delegates from Pakistan are attending the forum, organised by the Ministry of Petroleum.

Aziz said Pakistan was located at the confluence of three vital regions providing the shortest access to the sea for the land locked countries of Central Asia, as well as Western China.

He said Pakistan was also fast emerging as the junction for multiple corridors between South Asia, Central Asia and Western Asia involving energy, trade, transportation and tourism. Ã¢â¬ÅFor this purpose Pakistan is building a deep water port at Gwadar with the assistance of China. We are interested in developing Gwadar not only as a trans-shipment port but also as an energy port for reliable oil supplies to western China and Central Asia,Ã¢â¬Â Aziz said. 

He expressed confidence that the forum would steer the long-time allies towards greater cooperation in energy and reinforce their economic partnership. 

Aziz said Pakistan intended to expand its economic cooperation with China particularly in manufacturing, information technology, telecommunications, real estate, petroleum, chemicals and infrastructure.

Hu Deping, Chinese minister and first vice chairman of the All China Federation of Industry and Commerce, said political relations between Pakistan and China had reached a new apex.


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## Owais

*All dams will be built under Water Vision: Musharraf lays Diamer-Bhasha dam ground* DIAMER (April 27 2006): President General Pervez Musharraf on Wednesday performed the ground-breaking of $6.5 billion Diamer-Bhasha dam, and declared that all dams, including Kalabagh will be built under the "2016 Water Vision" to meet the country's growing water and energy requirements.

"Water and energy are matters of life and death for us. We have to build all dams," he said at the ceremony to mark the start of construction work of the first dam in 30 years. "We have lagged far behind and have to work at a fast pace to catch up with the rest of the world", the President said.

The Diamer-Bhasha project is part of President Musharraf's "Water Vision" that also envisages construction of Kalabagh, Akori, Munda and Kuram Tangi dams by 2016.

Referring to the construction of dozens of dams in other countries every year, the President regretted that the past leadership lacked vision and interest to construct big water reservoirs for meeting future requirements.

The President assured that the government would remove apprehensions of NWFP and Sindh vis a vis water issues and said the country would move ahead with support of the nation.

"With the support of the nation, we shall move forward and achieve the goal of sustainable development," he said at the ceremony, attended by chief ministers of NWFP, Sindh and Balochistan. Punjab's Law minister represented the provincial government, as chief minister of the province is out of the country.

Information Minister Muhammad Ali Durrani, Railways Minister Sheikh Rashid Ahmed, Minister of Social Welfare, and some other members of the cabinet also attended the ceremony.

He said if there were any controversy on other dams, the work on Bhasha dam could have been started in 1990s and the dam would have been completed by now.

Emphasising the urgent need for constructing major reservoirs, President Musharraf said water and energy were needed for agricultural and industrial development and catching up with the world.

"We need water to develop our agriculture while cheap energy is needed for the industrial development," he added.

Musharraf, however, regretted the fact that Pakistan was producing a mere 6,000 MW electricity through hydropower against the available capacity of generating 40,000 MW.

He alluded to the setting up of 14 IPPs (Independent Power Producers) in 1994 which were selling Rs 7 per unit of electricity as against Re 1 per unit, generated through hydro-power.

"The entire nation is suffering from this," he said, and vowed to convert the destruction caused by expensive electricity into a success by constructing major water reservoirs. President Musharraf said soon after taking over, he gave top priority to the building of water reservoirs and initiated feasibility study of Bhasha dam in 2001.

"The work on Bhasha dam has now started and we will build all dams, we will build Kalabagh and Akori dams," he said, adding that all guarantees would be provided to NWFP and Sindh.

The President pointed out to the fact that 35 million acre feet (maf) of water is wasted every year that is equivalent to capacity of six Bhasha dams.

"This is despite the fact that the country is currently facing 9 maf of water shortage which will grow to 15-20 maf by 2020," he said. Similarly, the President said the country needed inexpensive electricity to meet the energy demand and sustain the current rate of economic and industrial growth.

"I will not let Pakistan commit suicide because of water and energy shortage," the President said.

Musharraf, in this regard, referred to the "2016 Water Vision" that gives a whole concept of meeting future demand by water conservation, saving wastage and building new water reservoirs.

He said the work is already underway on raising the capacity of Mangla dam that will help save 2.9 maf of additional water and help produce cheap electricity. The government is also giving Rs 21 billion in compensation for those being affected by the raising of Mangla dam.

Musharraf also announced an attractive compensation package for those who would be displaced by the construction of Diamer-Bhasha dam, saying the government will provide 15 percent more than the present value in case of land and 10 percent extra in the case of a house in compensation.

Besides, Rs 300,000 would be given in compensation for land that will be flooded by the dam water, he said, adding five-marla and one-Kanal residential plots will also be given to the would-be affectees to build their houses in at least nine model villages.

The President also announced to provide vocational training facilities and said the construction of Bhasha dam would create more job opportunities for them.

He said the construction of Bhasha lake will create new economic opportunities for the people of the area as it will promote fishing.

In view of the construction of Bhasha dam, the existing Karakoram Highway will be further broadened and, in turn, will help increase more trade with China and generating more employment opportunities.

The government has planned nine re-settlement colonies to provide accommodation to the affected population while a network of infrastructure, including electricity, roads, water supply, schools and health centers would be provided for the people of the area.


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## Neo

RAWALPINDI: April 27, 2006:

President General Pervez Musharraf on Thursday encouraged adoption of modern methods and techniques in farming to increase agricultural yield which would help alleviate poverty, particularly in the rural areas.

Inaugurating first-ever Hydroponics Greenhouse in Pakistan near Rawat set up by 'Bioblitz - Farmers Market,' he said the new ideas and methods would bolster the economy through the development of the agriculture sector.

The Hydroponics, which means process of growing plants in water or sand rather than in soil, is a modern technique widely used in Holland and is becoming popular in other countries. The method results in an increased yield while using less water and space.

President Musharraf lauded the company and chief executive officer Safdar K. Akhtar for the pioneering effort in Pakistan and said the government would encourage and support modern ideas and methods to promote the agriculture sector.

Underscoring the importance of gradually shifting towards industry and engineering, the President said the government's emphasis remains on the agriculture as it remains the backbone of the country's economy for the near future.

And, he added that related to the development of agriculture was the issue of poverty alleviation.

"Nearly 70 per cent of the population lives in rural areas and they look at agriculture for sustenance," he said and underlined the need of increasing their earnings to alleviate poverty from the rural areas.

"That can be done only by increasing (agricultural) yield and giving them more jobs," he said, adding that more jobs could be created by developing agro-based industry.

He said the government was going for yield-intensification and area-intensification by bringing more land under cultivation.

In this respect, he referred to his "Water Vision 2016" that encompasses a complete concept of water conservation, management and building of major water reservoirs. 

President Musharraf said the country had a great potential to boost agro-based industry as it had the best of fruits and vegetables in the world.

Similarly, he said that despite being the 5th largest milk producer, Pakistan was not producing enough dairy products even to meet its domestic requirements.

The Bioblitz has set up its first hydroponics greenhouse covering five acres of land and will grow as much tomatoes which, its CEO said, are normally grown on an area of 100 acres through traditional methods. 

The President appreciated the hydroponics techniques but asked for expanding the concept to whole of Pakistan to benefit the people and create more job opportunities.

He added that there was a need to develop an entire chain of transport and storage for the produce to reach markets.

Minister of Food and Agriculture Sikandar Hayat Bosan said the government was giving high priority to developing the agricultural sector which was the main driving force behind the economy.

He said agriculture contributes 24 per cent of the GDP and employs 42 per cent of the total labour force and accounts for two-third of the country's total export earning.

The Minister stated that the country's agricultural growth posted 7.5 increase in 2004-05 and expressed the confidence to sustain 5 per cent growth every year.

Bosan, however said that there was not much importance given to horticulture in Pakistan.

He informed that the government, with the help of the Asian Development Bank (ADB), is working on a programme to harness full potential of horticulture in Pakistan.

The CEO Bioblitz, Akhtar said that he plans to expand the hydroponics greenhouse as Pakistan provided an ideal climate and land for such a modern technique to be used for increasing yield.

Earlier, the President unveiled the plaque to inaugurate the greenhouse and also took a round of the facility.


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## Neo

KARACHI (April 27 2006): The KPT Board of Trustees, in a meeting on Wednesday, approved 15 percent reduction in KPT Port charges effective from July 1, 2006. The meeting, chaired by KPT Chairman Vice Admiral Ahmad Hayat, was attended by seven Trustees Vice Admiral S. Tauquir H. Naqvi, Farooq Rehmatullah, Iqbal Umer, Dewan, M. Ayub Khalid, Dr Arshad A. Vohra, Sohail Mansoor Khawaja, and Dr Fahimuddin Ansari.

The KPT earlier reduced 15 percent of its charges in FY04, which was first reduction in its history. The cumulative 30 pecent reduction in KPT's Wet Charges should benefit traders at large and make port more cost-effective.

This incentive should also result in more trade activities at the Karachi Port, which is premier port of Pakistan and handles almost 70 percent trade activities.

Wet charges as they are called pertain to ships calling at the Karachi Port and consist of charges like port dues, pilotage, berthing and use of KPT tugs. These dues are charged in US dollars and, therefore, constitute a major part of KPT's revenues.

Traditionally, wet charges have always gone up. It was for the first time in 2003, the KPT reduced its wet charges by 15 percent. The present 15 percent reduction is second in three years. After this revision charges paid by 20,000 Gross Registered Tonnage ship would reduce by 11.40 percent thus providing leverage to consignee and shippers for negotiating their freights. This loss of revenue would, however, be compensated by increasing number of ships and cargo volume at the Karachi Port. In the current financial year, 239 more ships have called at Karachi Port so far and dry cargo grown by 35 percent along with unprecedented container growth of 25 percent.


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## Neo

KARACHI (April 27 2006): Exports during July-March 2005 stood at $12.073 billion as compared to $10.183 billion during the corresponding period of the last year, showing a rise of 18.56 percent.

According to the provisional figures compiled and released by the Federal Bureau of Statistics (FBS) here on Wednesday, exports in March 2006 increased by 19.33 percent to $1.521 billion as compared to $1.273 billion in February 2006 and by 12.94 percent as compared to $1.347 billion in March 2005.

Exports during March 2006 amounted to Rs 91.279 billion as against Rs 76.337 billion in February 2006 and Rs 79.938 billion during March 2005, showing an increase of 19.97 percent over February 2006 and of 14.19 percent over March 2005.

The exports during July-March amounted to Rs 721.799 billion as against Rs 603.548 billion during the corresponding period of the last year, showing an increase of 19.59 percent.

Main commodities of exports during March 2006 were cotton cloth (Rs 10,987 million), Bedwear (Rs 9,425 million), cotton yarn (Rs 8,465 million), Knitwear (Rs 8,324 million), readymade garments (Rs 6,962 million), petroleum products (Rs 4,836 million), rice basmati (Rs 4,092 million), towels (Rs 3,212 million), rice others (Rs 2,938 million), and leather garments (Rs 2,320 million).

Imports during July-March 2006 amounted to $20.693 billion against $14.446 billion during the corresponding period of the last year, showing an increase of 43.24 percent.

Imports into Pakistan during March 2006 amounted to Rs 161.134 billion as against Rs 132.376 billion in February 2006 and Rs 126.729 billion during March 2005, showing an increase of 21.72 percent over February 2006 and of 27.15 percent over March 2005.In March 2006, imports increased by 21.48 percent to $2.685 billion as compared to $2.211 billion in February 2006 and by 25.76 percent as compared to $2.136 billion in March 2005.

Imports during July-March 2005-06 amounted to Rs 1.237 trillion as against Rs 856.827 billion during the corresponding period of the last year, showing an increase of 44.40 percent.

Main commodities of imports during March 2006 were petroleum crude (Rs 19,195 million), petroleum products (Rs 17,031 million), road motor vehicles (Rs 9,762 million), iron and steel (Rs 8,241 million), plastic materials (Rs 4,711 million), textile machinery (Rs 4,143 million), palm oil (Rs 3,597 million), power generating machinery (Rs 3,034 million), sugar (Rs 3,027 million) and electrical machinery and apparatus (Rs 2,365 million).

The balance of trade during July-March was (-) 515.444 million in terms of rupees and (-) 8.620 billion in terms of dollars, while in March 2006 it was (-) 69.855 billion in terms of rupees and (-) 1.164 billion in terms of dollars.


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## Neo

ISLAMABAD (April 27 2006): The Pakistan Telecommunication Company (PTCL) on Wednesday announced its un-audited nine months' accounts for the period ended March 31, 2006. The Company earned Rs 15.3 billion net profit during this period.

The results were presented to the Board of Directors in a meeting held on Wednesday, at PTCL Headquarters. It was the first Board meeting after Etisalat's taking over of management control of PTCL.

PTCL's domestic revenue for the reporting period continued to show growth, mainly due to expansion in domestic leased lines, interconnect and value-added services. The international incoming revenue, however, decreased due to aggressive competition from newly licensed Long Distance and International (LDI) operators, carving out a share of the market. Furthermore, during the nine months period, the Pakistan Telecommunication Authority (PTA) had twice reduced the settlement rates, by a total of 21 percent. International incoming revenue has been further reduced with the imposition of Universal Service Fund (USF)/Access Promotion Contribution (APC) which has affected the overall revenue receipts of the company.

The operating profit for the period is lower than last year, mainly due to reduced revenue and increase in operating cost. Profit before tax, and profit after tax, amounting to Rs 23.7 billion and Rs 15.3 billion, respectively, were 26.6 percent and 28.3 percent lower.

During the nine months, PTCL substantially expanded its capacity by adding 1,182,000 lines including 811,000 lines on Wireless Local Loop (WLL). PTCL is now the largest WLL CDMA operator in Pakistan with the potential of greatly increasing its market share.

The Board expressed satisfaction over the successful privatisation of PTCL and the transfer of the management control of company to Etisalat International Pakistan (EIP) L.L.C. It may be mentioned here that the new Board of Directors consists of 9 directors, five of them representing EIP, and four, including the Chairman, representing the Government of Pakistan. The new management of the company has requested Junaid Khan to continue as CEO of PTCL.-PR


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## Neo

ISLAMABAD (April 27 2006): US-Pakistan Business Council on Wednesday said Islamabad and Washington should show flexibility to materialise Bilateral Investment Treaty (BIT) for encouraging private and public sectors of both the countries to take benefit of each other's potential.

The Council's chairman Jay Collins CEO of Citigroup told a luncheon meeting organised by his Pakistani counterpart and former FPCCI president Iftikhar Ali Malik that the America was major trade partner of Pakistan and also the single largest investor. It was a well-attended function. The representatives of all trade and industries bodies were present on the occasion.

He said that US-Pakistan Business Council was pushing Bush administration for giving more access to Pakistani exporters to enable them increase export to the US market. He noted that Pakistan's progress in trade and industrialisation was a highly encouraging and it will pay it good dividend in coming years.

Jay said that American companies huge investment in Pakistan negates the impression that it was not a safe place for foreign direct investment. He was of the view that the situation on ground in Pakistan was totally different than the image that was being portrayed by the international media.

A 12-business executives US-Pakistan Business Council visited Islamabad from April 24-26. The council was formed in 2002 by the then FPCCI president Iftikhar Ali Malik. Prime Minister Shaukat Aziz had also travelled to US to participate the first meeting of the council held in USA.

The delegation met with President Pervez Musharraf, Prime Minister Shaukat Aziz, Minister of State for Foreign Affairs Makhdum Khusro Bakhtyar, Secretary of Commerce Syed Asif Shah, Secretary of Information Technology Farrakh Qayyum, Secretary of the Board of Investment Muhammad Jehangir Bashir, and Director General of the Intellectual Property Organisation Yasin Tahir. The delegates also met with officials of the US embassy in Islamabad. The delegation also met with the members of the Federation of Pakistani Chambers of Commerce and Industry.

The delegation was of the view that BIT was a necessary building block in order to move forward with discussions on US-Pakistan free trade agreement (FTA).

The council also appreciated the idea of setting up free trade and industrial zone on Pak-Afghan border. It was of the view the industrial activity in these areas will create jobs for depressed people and will help fight terrorism.

The delegation expressed optimism that US companies already operating in Pakistan will continue to grow their investments in the country based on their positive experience and profitability in the local market. However, the perception of Pakistan in the US lacks reality and is often dominated by issues surrounding security and terrorism. As a partner of the US in the war on terrorism, Pakistan continues to place a high priority on security.


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## Neo

KARACHI (April 27 2006): Tariq Kirmani, Chairman & CEO PIA in his address to the shareholders at 49th annual general meeting expressed his endeavour to increase the profitability of the corporation and improve the services of the airline.

He expressed his confidence in the management and the employees of the airline and assured that with their team effort, the airline will be able to meet the challenges faced by the aviation industry.

While speaking to the shareholders, he said the airline was able to achieve revenue of Rs 64.07 billion indicating an increase of Rs 6.2 billion in 2005 over 2004, which translates into a growth of 11 percent. Moreover, PIA experienced improvements in all key performance indicators including yield, market share, and number of passengers, aircraft utilisation, service standards and market value of share. The financial results for the year ended December 31, 2005 still reflect a change of colour although it conceals more than it reveals.

The otherwise profitable bottom-line was dented by an impact of Rs 7.8 billion on account of increase in the price of fuel alone and had the fuel prices remained the same at last years level, there would have been a pre-tax profit of Rs 3.328 billion in FY-2005, as against a loss before tax of 4.513 billion, as per financial results for the year 2005.

Fuel prices continued to rock the entire airline industry, as it impacted the budget and projections of most airlines and as per statistics, Iata carriers collectively recorded a loss of over US $7.5 billion. The fuel cost constitutes 43 percent of PIA's total cost of service, however the present management is undertaking a lot of corrective measures in marketing, operation and human resource areas to face the challenge.

In order to promote tourism, the airline has embarked on a strategy to introduce a newly designed product line, PIA holidays. PIA has entered into a code sharing agreement with Turkish airlines for flights on Istanbul-Karachi-Istanbul sector and Islamabad-Istanbul-Islamabad sector. PIA's Umrah 2005 operation was a roaring success. It operated 222 extra flights besides normal scheduled flights to Jeddah carrying 151,000 pilgrims this year. PIA transported 124,000 Haj pilgrims to Saudi Arabia through 349 flights to the Holy Land from the four provincial capitals and Islamabad, he added.

He said the airline inducted three B-777-200 ER in the year 2004 and in the beginning of the current year, two B 777-200LR, world's longest-range aircraft have joined the PIA fleet. The airline has also signed an agreement for acquisition of ATR aircraft, which will replace PIA's ageing F-27 aircraft fleet operated on socio-economic routes. The present management strongly believes in transparency and a MoU was signed between PIA and Transparency International last year for the implementation of transparency in the airline's procurement system.-PR


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## Neo

Thursday, April 27, 2006 

ISLAMABAD: The Central Board of Revenue (CBR) has directed the sales tax collectors to conduct a sectoral study in the areas of their respective collectorates to identify the sectors, which have the potential to pay more taxes. 

The services sector would be brought in the sales tax net and it will be the major sector for revenue generation in the next fiscal year. Identification of services, personal services and institutional services to be brought under tax net that would be finalized in consultation with the ministry of finance, an official said after the conference. 

CBR Chairman Abdullah Yusuf presided over the Quarterly Conference of Collectors of Sales Tax & Federal Excise here on Wednesday. 

Member (Sales Tax & Federal Excise), CBR, Shahid Ahmed informed the conference that as against Rs 165.379 billion sales tax collected in the first nine of the last financial year, the collection of sales tax in the same period this year stood at Rs 202.452 billion, showing an increase of 22.4 %. Similarly, the collection of excise duty has also shown an increase of 3.3% when compared with the last financial year. 

The growth recorded in major revenue spinners in sales tax were POL products (10%) telecommunication (36%), sugar (6%), etc. and in federal excise were cigarettes (12%), cement (13%) POL products (Ã¢â¬â11.7%), beverages (28.4%), etc. 

Mr Yusuf said that our major thrust should be on the expansion of the tax base in order to generate more revenue. This can only happen through concerted efforts by improving the tax collection system and bringing all the potential taxpayers in the tax net. 

He said the revenue so generated would be utilized by the government for the development of the country and improving the lot of the common man.

Expressing satisfaction with the achievement of the targets of sales tax and federal excise collections set for the first three quarters of the current financial year, the CBR chairman hoped that this trend will continue in all the federal taxes in the last quarter as well. He said overall revenue collection in the first nine months stood at Rs 490 billion and hoped that the annual collection will be around Rs 708 billion against the target of Rs 690 billion. 

Stressing the improvement and upgradation of the sales tax system of processing and refunds, Mr Yusuf said that we have to deal with all relevant issues in a professional manner.

He called upon the officials concerned to immediately plug all the weaknesses of STARR and STREAM systems to address the concerns of the taxpayers. He asked the officials to ensure that the new automated system does not allow manipulated tactics to stay that were used in the past. Ã¢â¬Å The new system must ensure equity, transparency and efficiencyÃ¢â¬Â, he added. 

While reviewing the goals/targets set for sales tax registration, he advised that all problems in this regard be dealt on a priority basis to achieve the desired result. On payment of refunds issue, Mr Yusuf directed the collectors to keep a strict vigilance over the claimants of refunds on fake and bogus invoices.

The conference considered, in detail, a number of proposals for formulation of the next federal budget. The proposals will be finalized in consultation with all the stakeholders. 

Later, Member (Tax Policy & Reforms) CBR, Tanvir Ahmed briefed the participants on the progress made so far on the opening of 12 Regional Tax Offices and one LTU in the financial year 2006-07. He said four RTOs at Abbottabad, Peshawar, Rawalpindi and Hyderabad would become fully operational by December this year. All necessary administrative formalities are being completed in this regard, he added.


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## Neo

Thursday, April 27, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\04\27\story_27-4-2006_pg5_14



ISLAMABAD: Prime Minister Shaukat Aziz has said that to meet the challenge of competitiveness posed by technological advancements and rapid improvements in production technologies the government is reorienting the education system to enhance skills development, productivity and employment.

He said to bridge the skills gap the government has established the National Technical and Vocational Training Authority, has consistently increased expenditure on education, including technical education, from Rs 56 billion in 2000-01 to Rs 120 billion in 2005-06 and it is implementing plans to increase vocational and technical training facilities from the existing 150,000 to one million by 2010.

Talking to Jose Emanuel Salazar, Executive Director, Employment Sector, International Labour Organization (ILO), Geneva, at the Prime MinisterÃ¢â¬â¢s House on Wednesday, the prime minister said that the ILO needs to work to change the mindset of people around the world about the importance of competitiveness and the vital role played by innovations and skills upgradation in industrial development.

Ã¢â¬ÅThe ILO can work as a catalyst to change the mindsets for better productivity and growthÃ¢â¬Â, he observed.

He said that globalization is fast becoming a way of life. Integration into the global economy poses both a competitive challenge and a tremendous opportunity. Countries that prepared themselves for globalization are benefiting from the opportunities it has unleashed. 

Realizing this the governmentsÃ¢â¬â¢ reforms agenda focused on competitiveness, openness and improving governance. The political stability achieved by the country is another positive factor, the prime minister added. He said that realizing the vital role played by revolutionary technological advancement in industrial development, the government is focusing on the engineering and technical education and six new engineering universities are being set up. 

Ã¢â¬ÅThe government is pursuing upgradation of industry, absorption of the revolution in technology and seeking expansion of our value-added sectorÃ¢â¬Â, he said.

The prime minister said that in addition to developing physical infrastructure the government is also working to bring change in the outlook, thought process and on increasing professionalism among entrepreneurs and workers, which is important for rapid industrial development. Ã¢â¬ÅInnovative and highly skilled workforce provides the economic and competitive edge. Therefore, it is imperative for workers of today and tomorrow to continuously polish their skills and adopt a professional approach to work,Ã¢â¬Â he said. 

The prime minister said that as a result of the several measures taken by the government, the relationship between labour and management has matured. There is better understanding and harmony and cooperation in the industrial sector and there have been no significant disruptions or dispute in any major industries. Most disputes between workersÃ¢â¬â¢ unions and management are mutually resolved in a spirit of give and take without taking recourse to courts of law that exist to protect the rights of all parties.

He said the government is fully committed to safeguarding the legitimate rights of the workers as enunciated in the labour laws or stipulated in the international conventions. Our country programme for decent work aims at achieving four strategic objectives which are: fundamental principles and rights at work, employment and income opportunities, social protection, social security and social dialogue and tripartism. 

The meeting was attended, among others, by Federal Minister for Labour, Manpower and Overseas Pakistani Ghulam Sarwar Khan and senior officials. staff report


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## Neo

Thursday, April 27, 2006 

ISLAMABAD: Nokia will set up a centre of expertise in Pakistan to develop a pool of professional human resource for Middle Eastern and African regions and Afghanistan.

This was announced at a press conference by Dr Walid Moneimne, NokiaÃ¢â¬â¢s central vice president for Central Europe, Middle East and Africa here on Wednesday. He was accompanied by Syed Veqar ul Islam, the country director Nokia Networks Pakistan.

The centre of expertise will hire and train local talent. Ã¢â¬ÅThe initiative is in line with the companyÃ¢â¬â¢s ongoing commitment to play an important role in the development of telecom professionals in Pakistan,Ã¢â¬Â said the company vice- president.


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## Neo

By Aamir Shafaat Khan

KARACHI, April 26: PakistanÃ¢â¬â¢s poultry industry is estimated to have suffered Rs9 to 10 billion loss in the last two months on account of declining sales due to the outbreak of bird flu in some farms in Northern Areas in February followed by detection of the virus in poultry farms in Islamabad last week.

The entire industry has been in the grip of crisis for the last two months and the sales of live bird, though much below average, have been fluctuating owing to change in consumersÃ¢â¬â¢ behaviour vacillating between their confidence in white meat and the bird flu scare.

In the middle of last month, poultry traders were hopeful as the consumers started showing signs of confidence again. The sector at that point decided to raise the price by Rs12 per kg owing to rising demand but the detection of virus in poultry farms around the federal capital and reports about shifting of three persons infected by the virus to the hospital have reverted the situation.

Central Chairman Pakistan Poultry Association (PPA), Raza Mehmood Khursan told Dawn from Lahore that the losses to the industry had been rising with every passing day.

The report about the outbreak of bird flu in Islamabad has virtually plunged the white meat sales by 50 per cent. Ahead of Islamabad incidence, poultry sales had either been recovering or showing mixed trends.

He said that the people in the industry had virtually stopped keeping day old chicks in their poultry farms. Many small and medium sized farmers have either switched over to other businesses after selling their farms or have gone into real estate business.

He said the central executive committee of the PPA met on Wednesday in Lahore to ascertain the situation arising out from the bird flu virus besides, chalking out a strategy to prevent the outbreak in other parts of the country.

Khursan said that the government had been too lethargic in releasing the vaccines to the farmers. The government has pledged to provide vaccines by May 5, to the farmers so that birds available in the farms in the vicinity of five km around Islamabad could be vaccinated in order to prevent the outbreak of bird flu in other farms.

The industry is facing problems due to the looming panic and fear among consumers over the use of white meat, although the WHO report clearly indicates safety measures for consuming chicken.

He said that government should come out with a rescue plan for the poultry industry by allowing one dish at the wedding parties so that people could freely consume white meat.

General Secretary Karachi Wholesale Poultry Association (KWPA), Kamal Akhtar Siddiqui, said that the poultry meat was selling under cost by Rs15 per kg due to the persistent decline in demand from the consumers. Even in Karachi, around 200,000 broiler live birds are being slaughtered daily as compared to 350,000-400,000 birds earlier.

He added that the poultry price had been slashed by Rs10 to Rs44 on April 24 from Rs54 on April 20 last week owing to the thin demand. He said in many areas retailers were now offering discount in order to lure more consumers besides recovering their past losses.

By April 13, poultry bird was selling at Rs48 per kg and farmers raised the prices to Rs58 on April 17 owing to rising demand from the consumers.

He said that birdsÃ¢â¬â¢ sales to hotels and restaurants had also been hit but the owners of hotels had not passed the benefit of the reduced price on to the consumers. They are charging higher prices which were prevailing ahead of bird flu scare.

To a query how many farmers have packed up their business, he said he could not give the exact numbers but people in this industry had started switching to other businesses after sustaining huge losses.

The industry has suffered Rs5 to 7 billion losses from February 22 to the last week of March, but it has gained pace further in the next one month, he added.

He said the day old chicksÃ¢â¬â¢ price had also fallen to Rs2 to 3 from Rs11 prior to the virus outbreak in various farms near Islamabad. Many farm owners have suspended putting the new chicks in their farms.


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## Neo

KARACHI, April 26: The import of automobiles exceeded $1 billion mark during the first nine months (July-March) and market sources predicted that it would be in close vicinity of $1.5 billion at the end of the current fiscal year.

Auto import now constitutes almost 20 per cent of the machinery import group which claimed $5.33 billion during July-March 2005-06. Textile machinery import maintained a rising tempo for last few years has now started showing a declining trend. As summer sets in and brings with it the long periods of power breakdown, the demand for electric power generators is on rise. Rise in import of electric power generators is one indicator of this mounting demand and it has so far claimed about $400 million.

Ã¢â¬ÅBulk of auto import is CKD (Completely Knock Down) and CBU (completely built units) comprise a small part,Ã¢â¬Â a very highly-placed source in federal commerce ministry tried to explain the journalists sometimes ago. But there is no break down of the auto import.

Market sources say that the number of reconditioned cars that are coming as accompanied baggage has increased considerably in last more than one year which has caused considerable discomfort to less than half a dozen auto assemblers who are sending an SOS every day to the government as the date of budget draws closer.

Driven by generous bank loans, the number of cars coming on roads is increasing every day and roughly half a million have been added in last two years aggravating pollution, increasing gas and fuel consumption, making roads more dense and traffic unmanageable. One of the immediate impacts of increase in automobile population is increase in demand of wages by the professional drivers.

Coupled with rising trend in the international prices of oil and increase in the number of automobiles and private electric generators, the oil import bill in the last nine months rose by more than 64 per cent to $4.62 billion as against $2.80 billion the same period last year.

As international oil prices touch $75 a barrel and indications are there that there could be a further rise, the total oil import bill could be in close vicinity of $6 billion.

Worsening conditions of roads in the cities and mounting gasoline prices can force a large number of middle income group people to dump their cars in the garages. Banks are not reporting recovery position of the auto loans advanced so far but may start sharing this information by next year.

An almost 36 per cent increase in food bill import is another worrisome factor for the economic managers of the country. Food import bill in last nine months amounted to $1.34 billion as against $990 million last year. Sugar import claimed more than $275 million, showing a phenomenal growth over last year. Edible oil, milk, pulses, wheat, spices and tea are now the permanent items on PakistanÃ¢â¬â¢s import list.

About 62 per cent growth in iron and steel group import costing $1.40 billion indicate growing demand for the housing and construction industry and in capital goods.


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## Neo

ISLAMABAD, April 26: A delegation of US businessmen currently visiting Pakistan has termed the business environment in Pakistan friendly and conducive to foreign investment.

The delegation, headed by Jay Collins, Chief Executive Officer of Public Sector Group, Citigroup, and Chairman of the US-Pakistan Business Council, expressed these views in a meeting with Jehangir Bashar, Secretary of the Board of Investment, here on Wednesday.

The BoI secretary pointed out that due to liberal policies and economic reforms foreign investors found Pakistan a safe place for investment. He said that more than 600 foreign companies were operating in Pakistan and were reaping high interests.

Foreign direct investment, he added, was an indicator of the success of foreign investments in any country and in the first nine months of this financial year, Pakistan had received a record FDI of over $2bn, with three months still to go. Ã¢â¬ÅAll economic indicators have shown an upward trend which add to the investors confidence.

Jay Collins said more foreign businessmen were keen to invest in Pakistan. Ã¢â¬ÅThis is a compliment to the liberal economic regime introduced by the government for foreign investors.Ã¢â¬Â


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## Neo

KARACHI (updated on: April 28, 2006, 11:42 PST): State-run Pakistan Petroleum Ltd. (PPL) on Friday reported a 41.7 percent rise in nine-month net profit, thanks to rising oil and gas production and higher prices.

PPL, which operates Pakistan's largest gas field at Sui in Balochistan, earned a net profit of 9.59 billion rupees ($159.7 million) in the nine months to March 31, it said in a statement to the Karachi Stock Exchange.

This compared with a net profit of 6.77 billion rupees for the corresponding year-ago period.

Analysts had forecast a net profit of between 8.5 and 9.6 billion rupees for the nine-month period.

The Sui field produces more than a third of Pakistan's gas. PPL also has five smaller fields in Balochistan and the southern province of Sindh.

"The profitability growth arrives from the phased increase in wellhead gas prices of the company's major fields, Sui and Kandhkot," said Faraz Farooq, analyst at brokers Jahangir Siddiqui Capital Markets.

These two fields constitute around 80 percent share of PPL's gas production, and their gas wellhead prices were raised by 20 percent from Jan. 1.

In addition, the wellhead price of Qadirpur filed, where PPL has a 7 percent share, was raised by 39 percent, while those for Sawan and Miano gas fields were increased by 10-14 percent.

Gas prices in Pakistan are revised every January and July. Under a government pricing formula, PPL tariffs are expected to be increased by an average of 25 to 26 percent annually until 2007.

Analysts said that rising oil prices also had a positive impact on PPL's profits. But it was very small compared with the impact of gas price rises, as only 2 percent of PPL's revenue was contributed by oil.

PPL did not release production figures with the financial results, but analysts said the company's oil and gas production was expected to have grown by 17 and 7 percent, respectively, in July-March.

But they added that it needed to further increase production before the guaranteed price hikes end in 2007. "PPL has a field portfolio including Sawan, Miano, Manzalai and Makori besides the declining Sui reserves, with balance recoverable reserves of approximately 4.5 TCF gas and 20.8 million barrels of oil," said Saad Bin Ahmed, analyst at Capital One Equities.

"PPL requires an uphill battle to attain volumetric growth and for that the company would seek avenues beyond its easy reach," he said.

PPL, which is high on the government's sell-off agenda, was part-privatised in July 2004, when the government sold 102.8 million shares to the public at 55 rupees each.

The state still holds a 78.4 percent stake in the firm, while 6 percent is held by the World Bank's private sector arm, International Finance Corp. The public holds 15 percent.

The government is yet to announce a bidding date for the sale of a 51 percent stake in PPL, but has pre-qualified four companies to enter the race.

PPL's stock carries a weighting of 6.57 percent on the KSE's benchmark 100-share index. At 0500 GMT, PPL shares were down 1.45 rupees at 281.05 rupees in a broader market that was down 0.69 percent.


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## Neo

WASHINGTON (April 28 2006): The United States wants to spearhead a mammoth project transmitting electricity from Central Asia across Afghanistan to Pakistan and India, a senior State Department official said on Wednesday.

Under the plan, a regional power grid stretching from Almaty to New Delhi will be fed by oil and gas from Kazakhstan and Turkmenistan and hydropower from Tajikistan and Kyrgyzstan.

"This vision is within our grasp," Assistant Secretary of State for South and Central Asian Affairs Richard Boucher told a Congressional hearing.

"Within the next few years, we expect to see private investment lead to the establishment of a 500 kilovolt power line transmitting much-needed electricity from Central Asia across Afghanistan to Pakistan and India," he said.

The United States, he said, would like to have a strategic dialogue with the countries of the region to advance regional economic development and integration, of which the high-voltage power project was a critical component.

Central Asia has an abundance of existing and potential oil, gas, and electricity sources that the growing economies of South Asia need.

"Together with other donors, we are exploring ways to export electricity from Central Asia to Afghanistan, Pakistan, and India," Boucher said.

Boucher said that in partnership with multilateral development banks and other donors, the United States wanted to help "build new links" among the countries of the broader region and connect them more closely to the rest of the world.

"One of our leading objectives is to fund a greatly expanded Afghan power grid, with connections to energy sources in Central Asia.

"It's a winning solution for both the sides, providing much-needed energy to Afghanistan and serving as a major source of future revenue for countries like Tajikistan and Kyrgyzstan," he said.

New energy routes, Boucher said, would ensure that the next generation of South and Central Asian entrepreneurs had access to the resources they needed to prosper.

"We want to give South Asians access to the vast and rapidly-growing energy resources in Central Asia, whether they are oil and gas in Kazakhstan and Turkmenistan, thermal power in Uzbekistan, or hydropower in Tajikistan and Kyrgyzstan," he said. Boucher said that the 'opening' of Afghanistan had transformed it from an 'obstacle' separating Central from South Asia into a 'bridge' connecting the two. "And this in turn opens exciting new possibilities."

The US and Russian companies are now the major players in the contest to develop and export energy resources in Central Asia, but Chinese and Indian entities have become increasingly competitive in recent months.

Moscow has long considered Central Asian states to be Russia's sphere of influence and has viewed with alarm Washington's rising profile in the region, especially since the 2001 overthrow of Afghanistan's Taleban leadership.

Boucher said the United States supported establishing "multiple, commercially viable" pipelines and other new energy transportation routes.

The United States "believes that diversification of energy transport routes to and from Central Asia increases stability and energy security, not just regionally but throughout the world," he said.

In June, the US Trade and Development Agency will host a forum on the Central Asian electricity sector, which Washington hopes will spur investment and promote further regional co-operation, Boucher said.

"We are also funding feasibility studies in energy, transportation, and telecommunications, and co-ordinating with the International Financial Institutions and other donors," he said.


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## Neo

RAWALPINDI (April 28 2006): President General Pervez Musharraf on Thursday encouraged adoption of modern methods and techniques in farming to increase agricultural yield which would help alleviate poverty, particularly in the rural areas.

Inaugurating first-ever Hydroponics Greenhouse in Pakistan near Rawat set up by 'Bioblitz - Farmers Market,' he said the new ideas and methods would bolster the economy through the development of the agriculture sector.

The Hydroponics, which means process of growing plants in water or sand rather than in soil, is a modern technique widely used in Holland and is becoming popular in other countries. The method results in an increased yield while using less water and space.

President Musharraf lauded the company and Chief Executive Officer Safdar K. Akhtar for the pioneering effort in Pakistan and said the government would encourage and support modern ideas and methods to promote the agriculture sector.

Underscoring the importance of gradually shifting towards industry and engineering, the President said the government's emphasis remains on the agriculture as it remains the backbone of the country's economy for the near future. And, he added that related to the development of agriculture was the issue of poverty alleviation.

"Nearly 70 percent of the population lives in rural areas and they look at agriculture for sustenance," he said and underlined the need of increasing their earnings to alleviate poverty from the rural areas.

"That can be done only by increasing (agricultural) yield and giving them more jobs," he said, adding that more jobs could be created by developing agro-based industry.

He said the government was going for yield-intensification and area-intensification by bringing more land under cultivation. In this respect, he referred to his "Water Vision 2016" that encompasses a complete concept of water conservation, management and building of major water reservoirs.

President Musharraf said the country had a great potential to boost agro-based industry as it had the best of fruits and vegetables in the world. Similarly, he said that despite being the 5th largest milk producer, Pakistan was not producing enough dairy products even to meet its domestic requirements.

The Bioblitz has set up its first hydroponics greenhouse covering five acres of land and will grow as much tomatoes which, its CEO said, are normally grown on an area of 100 acres through traditional methods.

The President appreciated the hydroponics techniques but asked for expanding the concept to whole of Pakistan to benefit the people and create more job opportunities. He added that there was a need to develop an entire chain of transport and storage for the produce to reach markets.

Minister of Food and Agriculture Sikandar Hayat Bosan said the government was giving high priority to developing the agricultural sector, which was the main driving force behind the economy. He said agriculture contributes 24 percent of the GDP and employs 42 percent of the total labour force and accounts for two-third of the country's total export earning.

The minister stated that the country's agricultural growth posted 7.5 increase in 2004-05 and expressed the confidence to sustain 5 percent growth every year.

Bosan however said that there was not much importance given to horticulture in Pakistan. He informed that the government, with the help of the Asian Development Bank (ADB), is working on a programme to harness full potential of horticulture in Pakistan.

The CEO Bioblitz, Akhtar said that he plans to expand the hydroponics greenhouse as Pakistan provide an ideal climate and land for such a modern technique to be used for increasing yield.

Earlier, the President unveiled the plaque to inaugurate the greenhouse and also took a round of the facility.


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## Neo

ISLAMABAD (April 28 2006): The total outstanding domestic debt rose from Rs 2.133 trillion at the end of June 2005 to Rs 2.264 trillion at the end of January 2006, showing an increase of Rs 131.02 billion (6.14 percent), the provisional data issued by the State Bank of Pakistan (SBP) here on Thursday said.

The increase in the domestic debt during the first seven months (July-January) of the fiscal 2005-06 was mostly from rise in the stocks of floating and un-funded debt. However, the permanent debt declined during the period under review. During the first seven months of the fiscal year, the floating debt increased by Rs 145.282 billion and un-funded debt by Rs 2.074 billion, whereas permanent debt declined by Rs 16.33 billion.

The permanent domestic debt comprising medium- and long-term market loans, federal government loans, special government loans, federal instruments and prize bonds, stands at Rs 484.54 billion, which was Rs 500.87 billion at the end of 2004-05.

The floating domestic debt, mainly comprising short-term debt instruments and market treasury bills, maintaining a climbing trend, stood at Rs 778.16 billion at the end of June 2005. And, during the following seven months, it went up to Rs 923.45 billion.

The data also showed that the un-funded domestic debt comprising National Saving Schemes (NSS) stands at Rs 856.12 billion, grew by Rs 2.08 billion from Rs 854.04 billion at the end of June 2005.

However, it said that net mobilisation under all instruments of the NSS, except relatively new instruments, ie, Bahbood Saving Certificates, Postal Life Insurance and Pension Benefit Accounts and Mahana Amdani accounts, remained negative during the period under review.

Net investment in NSS fell primarily because their rates of return had become too low for the investors to make fresh investment as a result of gradual cut in profit during the last few years.

From these three most popular instruments of the NSS, ie, 10-year Defence Saving Certificates (DSCs), five-year Regular Income Certificates (RICs) and three-year Special Saving Certificates (SSCs), net withdrawals stood at Rs 51.191 billion in the seven months of this fiscal year. The data revealed that the previously popular instruments, DSCs, SSCs, and RICs, seem to have become less attractive for the investors.

Besides, withdrawals from saving accounts, special saving accounts, saving accounts and general prevalent (GP) fund during the period under review stood at Rs 1.932 billion, Rs 1.332 billion and Rs 566 million, respectively.

The SBP data also showed that Bahbood Saving Certificates, Pensioners Benefit Accounts and Postal Life Insurance attracted fresh net investment of Rs 40.486 billion, Rs 11.472 billion and Rs 5.131 billion, respectively.


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## Neo

ISLAMABAD (April 28 2006): Total budgetary expenditures on poverty reduction programme during the first half of the current fiscal year rose by 33.18 percent to Rs 166.1 billion as compared to Rs 124.68 billion in the same period of the last year, Finance Ministry reported on Thursday.

The Poverty Reduction Strategy Paper (PRSP): Progress Report For the second Quarter of FY 2005-06 released by the ministry said that out of the total budgetary expenditures on 17 pro-poor sectors, education sector received largest proportion of 35 percent (Rs 58.068 billion). This was about 16 percent more than the expenditures increased during the same period of the last year.

Education sector was followed by law and order with Rs 25.428 billion or 15.3 percent of the total expenditures, showing 19.3 percent increase over the first quarter of the current fiscal year.

The expenditures on irrigation was the third highest, ie, Rs 23.81 billion (14.34 percent of the total PRSP expenditures), showing 90 percent increase than the first quarter.

During the second quarter of 2005-06, the government spent Rs 14.915 billion or 8.98 percent of the total expenditure on health; Rs 13.946 billion (8.4 percent of the total) on roads, highways and bridges; and Rs 8.487 billion (5.1 percent of the total outlay) on natural calamities such as October 8 earthquake, which was 35 times more than Rs 242 million spent during the last fiscal year.

The expenditures on rural development rose by 10.3 percent to reach Rs 7.398 billion in the second quarter as against Rs 6.079 billion during the same period of the last fiscal year.

Water supply and sanitation expenditures increased by 69.7 percent to reach Rs 3.665 billion, population planning by 83.2 percent to Rs 2.871 billion; social security and welfare by 4.8 percent to Rs 2.085 billion; administration of justice by 8.8 percent to Rs 1.508 billion and expenditures on food subsidies rose by 6.1 percent to reach Rs 1.125 billion during the second quarter of 2005-06.

The budgetary expenditures on rural electrification during the second quarter of the current fiscal year stood at Rs 969 million against the budgetary expenditures of Rs 371 million in the same period of the last fiscal year, indicating an increase of 161.2 percent.

Expenditures on four programmes, ie, Tawana Pakistan declined by 100 percent, Food Support Programme decline by 69 percent, low-cost housing down by 24.9 percent and land reclamation declined by 9.8 percent as compared to the expenditures during the same period of the last fiscal year.

The expenditures on land reclamation during the second quarter of the current fiscal year stood at Rs 971 million against the budgetary expenditures of Rs 1.076 billion in the same period of the last fiscal year, depicting a decline of 9.8 percent.

The PRSP budgetary expenditures on the Food Support Programme during the second quarter of the current fiscal year stood at Rs 637 million against the budgetary expenditures of Rs 2.053 billion in the same period of the last fiscal year, showing a decline of 69 percent.

Like the first quarter, the government had not spent even a single rupee on Tawana Pakistan Programme in the second quarter of the current fiscal year, however, during the same period of the last fiscal year it stood at Rs 59 million.

The expenditure on low-cost housing stood at Rs 172 million against Rs 229 million during the last fiscal year.

Expenditures on the pro-poor food subsidies stood at Rs 1.125 billion, which is 6.1 percent more as compared to the same quarter of the last fiscal year.

According to the break-up, Punjab's expenditure stood at 36 percent, followed by the federal government, 25 percent; Sindh, 18 percent; NWFP, 14 percent; and Balochistan, 7 percent of the total PRSP expenditure of 166.1 billion.

Largest increase (83 percent) in the PRSP budgetary expenditures during H1-FY06 over the same period in FY05 was witnessed in NWFP, which reached Rs 23 billion, primarily due to the October 8, 2005 earthquake.

More than 100 percent increase in PRSP budgetary expenditures by the federal government during H1-FY06 as compared to H1-FY05 was witnessed in population planning, natural calamities, irrigation and rural electrification.

During the same period, an enormous increase in expenditures were made by Punjab province in water supply and sanitation of which 88 percent expenditure was on development, indicating that the Punjab government is giving priority to this sector. Except for land reclamation, food support programme and low-cost housing, all other sectors in Punjab witnessed increase in H1-FY06 over H1-FY05.

Sindh witnessed increase in PRSP budgetary expenditures in most of the sectors, except rural development, food subsidies and food support programme. In Sindh there was an increase of 41 percent to Rs 30 billion in PRSP expenditures made during H1-FY06, as compared to the same period in FY05.

During the same period Balochistan registered an increase of 23 percent to Rs 11 billion in PRSP budgetary expenditures. Largest increase in expenditures was due to natural calamities in Balochistan, whereas increase was also witnessed in roads, highways and bridges, education, health, population planning, social security & welfare, irrigation, rural development, administration of justice and law & order.


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## Neo

PESHAWAR (April 28 2006): Central Board of Revenue (CBR) Chairman Abdullah Yusaf said that inflation rate in the country had been cut down by 3 percent during the current financial year.

He said that during the last financial year the rate was 11 percent, which had been brought down to 8 percent and efforts for further cut in it were continued.

Addressing a meeting of industrialists and traders here at the Sarhad Chamber of Commerce & Industry (SCCI), he said the government was taking measures to keep check on the prevailing inflation rate and control price hike in the country.

Regarding the unprecedented upward trend in the prices of food items, he said they linked to the supply and demand in the market.

SCCI President Ghazanfar Bilour presided over the meeting while prominent among those present on the occasion were Senator Ilyas Ahmad Bilour, Ghulam Sarwar Khan Mohmand, Zia-ul-Haq Sarhadi and senior officials of Pakistan Customs, Income Tax and Sales Tax.

The CBR chairman said that the trend of prices of food items had been changed all around the world due to unprecedented increase in the price of petroleum and a big sugar producing country had converted its industry to the use of ethanol.

He said the shortage had been occurred all around the world and governments are not in position to subsidise it. He said that three years back the price of one barrel petrol in the world market was just 25 dollars, but now it had climbed to 75 dollars.

"Such a big increase in the petrol price is out of control and has affected the entire world," he added. He said that the government even granted tax exemptions to sugar mill industry to facilitate the millers and provide cheap commodity to the people.

The CBR chief said the country has sufficient wheat stock this year and there was no pressure on its prices.

He expressed concern over the trade deficit and said it was due to lack of balance in payment and the imports were being made out of value. He termed increase in the price petrol a discouraging point. He said that import of machinery and raw material had registered increase, similarly, services sector had also registered unprecedented increase and the number of mobile phone consumers had climbed to 24 million in the country.

He said that per line cost of the company was $200 million and investment made in the sector is about $8 billion.

The agriculture sector, he said had also registered improvement and today Pakistani growers were getting price of their products according to international standard.

He said the sugarcane was being sold at the price of more than Rs 100/-per tonne, inflicting heavy loss to the sugar mill industry paid by the consumers. He said that micro-economic indicators of the country had shown improvement in increasing the credibility of the country, adding that issuance of 500 million dollars and 300 million dollars were ample proof of the people's confidence in the economic policy.

Abdullah Yusaf stressed substantial expansion of the tax net to fill the prevailing gap between tax and GDP ratio in the country. He said that Pakistan had a base of 1.3 million tax payers among which 0.6 million were government employees.

He said the trend was changed and now the total revenue had rose from Rs 300 billion to Rs 700 billion in just few years and further increase was in pipeline. But, he said, "despite these good figures we are still the lowest tax growth country."

He said, "last year we had set a 20 percent increase in the revenue growth, which will be raised by the same ratio this year too. For this purpose, he urged on the business community to educate their colleagues that government had reposed trust in them through initiating Universal Self-Assessment Scheme.

He said that further improvement would be made in the system and staff would be imparted better training to subside the culture of harassment of the taxpayers.

Yusaf Abdullah informed that retailers and whole sellers have 16 percent share in GDP and 2 percent in tax while transport sector has 16 percent share ratio in GDP and 4 percent in tax, saying that out of the millions of tax payers the number of retailers is 40,000.

He rules out exemption from sales tax on minimum sale, adding that the decision would not bring any positive result and was being considered impracticable. "There should not be one-way traffic and business community is also required to cooperate with the government in this connection," he added.

He said now the system had been totally revamped, and the businessmen should also acknowledge their responsibility and mobile them for filing of tax returns and serve the country. The change, he opined would ultimately come as they are making utmost efforts for it.

Regarding export, the CBR chief said it had been increased by 28 percent in rupees and 42 percent in dollar during the last 9 months of the current financial year, which is a record.

The matter of concern was that 42 percent increase in dollar export had been registered during the 9 months with 100 percent increase in the payment of Rs 2.2 billion as refund while during the same period last year the payment was Rs 1.2 billion.

Such unprecedented increase in the refund has created an impression that there is something wrong in the system resulting in billions of rupees loss to the national exchequer. "The exporters in some cases have filed fake claims in collaboration with the officials of CBR, inflicting heavy loss to the country," he said.

He assured that the government was interested in the promotion of genuine export not merely on papers.

About difficulties in the verification of export goods through the customs authorities of Afghanistan, he asked the business community to give a workable and authenticated solution into the matter.

He said, the CBR wanted to introduce fair and transparent system and would not allow any one to file fake claims.


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## Neo

FAISALABAD (April 28 2006): The Asian Development Bank (ADB) will provide a loan of $42.0 million from its special funds resources for "Federally Administered Tribal Areas Rural Development Project".

Which is designed to improve the productive potential of selected micro-watersheds and their associated natural resource base and to strengthen the planning, implementation, and management capacity of the target communities and implementing departments in the project area.

According to official sources, the total project cost is estimated at $60.4 million equivalent. The Pakistan government will provide $15.4 million equivalent, or 25 percent of the project cost. Project beneficiaries will contribute $3.0 million equivalent or 5 percent of the project cost through labour and other in-kind inputs.

The Asian Development Bank (ADB) will provide a loan of $42.0 million from its special funds resources. The loan will have a 32-year term, including a grace period of 8 years and an interest rate of 1.0 percent during the grace period and 1.5 percent per annum thereafter.

The Federally Administered Tribal Areas Rural Development Project will be accomplished by improving community infrastructure for production and communication, establishing effective and broad-based community organisations focused on development, increasing production from renewable natural resources, and strengthening agency-based planning, implementation, and capacity for improved service delivery to communities.

The project will generate significant quantifiable and non-quantifiable benefits. Effective implementation of the project will have a direct impact on household incomes.

Farm and livestock packages will increase the productivity of about 52,500 hectares on rain-fed (barani) lands and benefit around 37,500 households. It will also strengthen food security and improve the nutritional status of farm families.

The integrated approach involves the complementary management of natural resources, agriculture, and range management. Effective forestry and range management will ensure water harvesting and recharge of groundwater resources, check soil erosion, and provide forage and foliage to livestock.

The construction and rehabilitation of irrigation and small-scale water storage structures will ensure the availability of irrigation and drinking water supplies. Improved farming and livestock rearing practices and additional income from rehabilitation of the natural environment are livelihood strategies that will be made available for the benefit of individual households. The target population will obtain access to opportunities for improving their livelihoods, broaden their networks of knowledge and contacts with service providers, and learn more productive farming practices with all the community sharing access to new and improved supporting infrastructure.

Project initiatives focus on improving the quality of life for the region's inhabitants. Activities include establishing sustainable productive technologies with arrested environmental and resource degradation through integrated resource management, including agriculture and livestock production, and farm and community forestry. New construction and upgrading of existing infrastructure for production, water consumption, and transportation represent significant aspects of the project. Project management will operate closely with government line departments and the project will be implemented through community participation to improve community involvement in designing and implementing project interventions. Capacity-building initiatives, as well as training in community organisation, strengthened project management skills, and improved institutional capabilities for line departments to better address the needs of the poorer segments of the society are important project activities.

Poor and inefficient management of available natural resources contribute to the pervasive poverty in the Federally Administered Tribal Areas (Fata). The poor farm and livestock productivity and consequent poverty restrains transition from below-subsistence livelihoods. Capacity and the ability to explore other opportunities are restricted by poor access to productive and physical infrastructure. The degradation of the physical environment, if not checked, will worsen the situation.


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## Neo

ISLAMABAD (April 28 2006): Pakistan and China have decided to launch cargo service through land route by next month. Well placed sources in the Communication Ministry told Business Recorder on Wednesday that all necessary arrangements had been made to start import/export goods transportation between the two countries.

"We have agreed to open up land routes for transportation of goods from May 1, and it is most probably going to start in the first or second week of the next month," the sources said. Pakistan and China had already pledged to start a bus service from June 1.

Officials privy to the development said that initially two operators, the National Logistics Cell (NLC) and Northern Areas Transportation Company (Natco), would start cargo service from Pakistani side.

Pakistan Tourism Development Corporation (PTDC) would be in business when the bus service would be launched in June.

"We will welcome private sector's participation. We are ready to issue permit to any private operator who meets our laid down criteria," an official said, adding that permits would be issued by the Communication Ministry in consultation with the Northern Areas administration.

According to details, all the permissible goods between Pakistan and China would be imported or exported through the land route under this initiative.

The Central Board of Revenue (CBR) would deal with all such affairs, the sources said.

The authorities hoped that the initiative would not only help in strengthening Sino-Pak bilateral trade, but would also provide Pakistani products access to the Chinese market.

Currently, Pakistan export cotton, leather products, minerals and seafood to China, while China's main shipments to Pakistan include machinery, equipment, chemicals, electronics and footwear. China is very keen to use Pakistan as a transit route for Central Asian markets.


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## Neo

Friday, April 28, 2006 

KARACHI: SITE Association of Industry (SAI) has expressed grave concern over the performance of Karachi Electric Supply Corporation (KESC). 

Acting chairman SAI, Saboor Ahmed on Thursday said more than 60 percent of power shutdowns and loadshedding occur because of breakdowns and tripping at grids. 

He said the KESC has resorted to the worst loadshedding schedule on industries since April 25. It circulated a notice to the association informing that due to fault on a main 220 KV linking circuit of KESC between Bin Qasim Power Station and Korangi Creek Road Grid Station, KESC had to resort to load shedding in industrial areas fed from SITE, Haroonabad, Hub Chowki, Mauripur and North Karachi grid stations in addition to residential load shedding. 

He said KESC issued notices regarding the theft attempt on blue conductor without indicating when the repair work would be completed. This compelled the industries to brave loadshedding for an indefinite period. 

Mr Ahmed said export-oriented industries in particular, which are operating round the clock are finding it difficult to fulfill the export order commitments. 

He claimed the loadshedding damages latest expensive machinery employing electronic (computer) systems and secondly the cost of production goes up steeply for obvious reasons. 

He said the industrialists are not satisfied with the performance of KESC while public utility authorities and engineers are not keeping the industrialists informed of the factual position and the developments taking place for restoration of normal supply to industries. He said SITE industries are faced with LT and HT Cables Network that stands totally crippled thereby leading to intermittent supply of electricity.

He said out of 59 feeders in SITE area 85 percent feeders are victim of overloading and tripping as a result of which frequent breakdowns are occurring with 4-5 hours interval. He said that one of the objectives behind privatization of the power company was to improve its efficiency and working condition. Unfor-tunately, recent events have shown that there is marked deterioration in the quality of service and supply. 

He urged the governor of Sindh, Dr Ishrat-ul-Ebad, the minister for water and power Liaquat Ali Jatoi and the chief minister Sindh, Dr Arbab Ghulam Rahim to take serious note of the situation.


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## Owais

*US wants to spearhead power grid in Asia* WASHINGTON (April 28 2006): The United States wants to spearhead a mammoth project transmitting electricity from Central Asia across Afghanistan to Pakistan and India, a senior State Department official said on Wednesday.

Under the plan, a regional power grid stretching from Almaty to New Delhi will be fed by oil and gas from Kazakhstan and Turkmenistan and hydropower from Tajikistan and Kyrgyzstan.

"This vision is within our grasp," Assistant Secretary of State for South and Central Asian Affairs Richard Boucher told a Congressional hearing.

"Within the next few years, we expect to see private investment lead to the establishment of a 500 kilovolt power line transmitting much-needed electricity from Central Asia across Afghanistan to Pakistan and India," he said.

The United States, he said, would like to have a strategic dialogue with the countries of the region to advance regional economic development and integration, of which the high-voltage power project was a critical component.

Central Asia has an abundance of existing and potential oil, gas, and electricity sources that the growing economies of South Asia need.

"Together with other donors, we are exploring ways to export electricity from Central Asia to Afghanistan, Pakistan, and India," Boucher said.

Boucher said that in partnership with multilateral development banks and other donors, the United States wanted to help "build new links" among the countries of the broader region and connect them more closely to the rest of the world.

"One of our leading objectives is to fund a greatly expanded Afghan power grid, with connections to energy sources in Central Asia.

"It's a winning solution for both the sides, providing much-needed energy to Afghanistan and serving as a major source of future revenue for countries like Tajikistan and Kyrgyzstan," he said.

New energy routes, Boucher said, would ensure that the next generation of South and Central Asian entrepreneurs had access to the resources they needed to prosper.

"We want to give South Asians access to the vast and rapidly-growing energy resources in Central Asia, whether they are oil and gas in Kazakhstan and Turkmenistan, thermal power in Uzbekistan, or hydropower in Tajikistan and Kyrgyzstan," he said. Boucher said that the 'opening' of Afghanistan had transformed it from an 'obstacle' separating Central from South Asia into a 'bridge' connecting the two. "And this in turn opens exciting new possibilities."

The US and Russian companies are now the major players in the contest to develop and export energy resources in Central Asia, but Chinese and Indian entities have become increasingly competitive in recent months.

Moscow has long considered Central Asian states to be Russia's sphere of influence and has viewed with alarm Washington's rising profile in the region, especially since the 2001 overthrow of Afghanistan's Taleban leadership.

Boucher said the United States supported establishing "multiple, commercially viable" pipelines and other new energy transportation routes.

The United States "believes that diversification of energy transport routes to and from Central Asia increases stability and energy security, not just regionally but throughout the world," he said.

In June, the US Trade and Development Agency will host a forum on the Central Asian electricity sector, which Washington hopes will spur investment and promote further regional co-operation, Boucher said.

"We are also funding feasibility studies in energy, transportation, and telecommunications, and co-ordinating with the International Financial Institutions and other donors," he said.


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## Owais

*Vehicles import yields Rs 8.29 billion: CBR* 
*SOHAIL SARFRAZ* ISLAMABAD (April 28 2006): The import of vehicles has yielded Rs 8.29 billion as customs duty during July-March (2005-06) against Rs 3.13 billion in the same period of the last fiscal year, showing an increase of 165 percent.

According to the data collected by the Central Board of Revenue (CBR), the import of vehicles during this period cost Rs 16.91 billion against Rs 7.50 billion in the same period of the last fiscal year, showing an increase of Rs 9.41 billion.

The board collected Rs 4.41 billion as customs duty on the import of plant/machinery in July-March (2005-06) against Rs 3.34 billion collected in the same period of the last fiscal year, reflecting an increase of 32 percent.

The value of plant/machinery stood at Rs 78.41 billion in the first nine months of the current fiscal year against Rs 44.86 billion in the same period of the last fiscal year, reflecting an increase of Rs 33.55 billion.

Sources said on Thursday that the value of plant and machinery is substantially higher than the overall cost of vehicles imported during this period.

The data have been compiled to ascertain the impact of fiscal measures/tariff rationalisations introduced in the Budget 2005-06 on the import of various items.

The CBR collected Rs 1.9 billion on the import of textile fabrics/yarn in July-March 2005-06 against Rs 1.6 billion, reflecting 15 percent increase; pure terephathalic acid (PTA), Rs 747 million against Rs 640 million (17 percent); agriculture machinery, Rs 1.8 billion against Rs 1.6 billion (15 percent); worn clothing, Rs 191 million against Rs 84 million and Rs 33 million were collected as customs duty on the import of chip during July-March 2005-06 against Rs 29 million collected in the same period of the last fiscal year.

The collection of customs duty on raw materials import stood at Rs 5.4 billion during July-March (2005-06) against Rs 7.3 billion in the same period of the last fiscal year, showing a decrease of 26 percent; chemicals, Rs 1.3 billion against Rs 2.5 billion (47 percent decrease); plastic raw material, Rs 2.2 billion against Rs 2.5 billion (12 percent decrease); dyes, Rs 1.4 billion against Rs 1.7 billion (18 percent decrease); edible items, Rs 391 million against Rs 575 million (32 percent decrease); wood, Rs 266 million against Rs 341 million (22 percent decrease); photographic goods, Rs 21 million against Rs 65 million (68 percent decrease) and collection of customs duty on the import of raw materials (confectionery) stood at Rs 29 million during July-March (2005-06) against Rs 7.3 billion in the same period of the last fiscal year, showing a decrease of 25 percent.

The data reveal that the collection of customs duty on paper and paperboard import stood at Rs 2.5 billion in July-March (2005-06) against Rs 2 billion in the same period of the last fiscal year, showing a growth of 23 percent; articles of iron and steel, Rs 1.6 billion against Rs 1 billion (47 percent); pharmaceutical products, Rs 969 million against Rs 831 million (17 percent); man-made staple fibre, Rs 675 million against Rs 607 million (11 percent); ceramic products, Rs 698 million against Rs 286 million (41 percent); aluminium and its by-products, Rs 657 million against Rs 594 million (11 percent); plastics and articles thereof, Rs 4 billion against Rs 4.2 billion (-4 percent); organic chemicals, Rs 2.9 billion against Rs 3.8 billion (-26 percent); chemical products, Rs 1.3 billion against Rs 1.6 billion (-13 percent); rubber and articles thereof, Rs 1.16 billion against Rs 1.22 billion (-5 percent); man-made filaments, Rs 1.14 billion against Rs 1.20 billion (-5 percent); tanning/dying extracts, Rs 1.14 billion against Rs 1.15 (-one percent) and collection of customs duty on the import of coffee/tea stood at Rs 1.20 billion against Rs 1.27 billion collected in the same period of the last fiscal year, reflecting, a decrease of one percent, the data added.


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## Neo

ISLAMABAD (April 28 2006): 

Pakistan and China on Thursday signed an umbrella memorandum of understanding (MoU), which said Islamabad will facilitate Beijing as energy corridor to help in streamlining its petroleum products import.

The MoU will provide a framework to both the sides to lay down a pipeline from Gwadar to Chinese border to supply crude oil from Saudi Arabia. Islamabad and Beijing had been working on a project to construct a coastal highway to establish a road link from Gwadar Port to the Chinese border to facilitate exports through land route.

Planning Commission Deputy Chairman Dr Akram Shaikh and visiting Chinese Minister for Federation of Industry and Commerce, Hu Deping, signed the MoU on behalf of their respective governments.

President General, Pervez Musharraf witnessed the signing ceremony held at the Presidency. Under the MoU, Islamabad will offer special incentives to the Chinese investors to allure them for more investment in key areas such as oil and gas, power and other export-oriented projects.

It said that Pakistan would set up special industrial zones in different parts of the country along with highways, coastal areas where Chinese investors will be provided all the basic facilities for setting up their industrial units or joint ventures with the Pakistani investors for mega projects.

After the signing ceremony, Dr Akram Shaikh while talking to _Business Recorder _said that the MoU was a significant development that would help Pakistan in facilitating China as energy corridor.

He said Pakistan and China were entering into a new regime to help each other grow in today's challenging world.

He added that the Chinese investors would identify areas in Pakistan for setting up new industrial units.

He said an understanding has been reached that China would help Pakistan in exploring its potential in different areas and increase exports by producing surplus stuff.

The visiting Chinese energy delegation also met President Musharraf and expressed their willingness to invest in Pakistan's oil and gas sector.

The representatives of local oil and gas sector companies were also invited for the meeting.

The president informed the delegation that the Government of Pakistan would provide them all-out support and facilities to carry out their business and industrial activities in a cordial atmosphere.

He said the government and the people of Pakistan have great respect for their Chinese brethren and they want Pak-China co-operation to grow further.


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## Neo

Friday April 28, 2006 

ISLAMABAD: Prime Minister Shaukat Aziz has said that governmentÃ¢â¬â¢s telecom deregulation policy, introduced over the last few years and privatization and opening up of the telecommunication sector has stimulated phenomenal growth in the sector. 
Talking to Dr. Walid Moncimne, Senior Vice President, Nokia at the Prime MinisterÃ¢â¬â¢s House today, the Prime Minister said that telecommunication sector is the fastest growing sector with 17% teledensity, which is fast growing, the country has 27 million cellular phone subscribes and the number is fast growth. 

He said the polices of liberization and deregulation in the telecom sector has attracted hug investment and created over 10,000 jobs and we are expecting more investments in the sector. 

The Prime Minister said that in todayÃ¢â¬â¢s world information and knowledge are the driving focus of world economics. The government is investing in human capital in priority areas to build a knowledge economy in Pakistan. 

He said that government targeting to achieve 25% teledensity with rural teledensity of 9% by the year 2009-10 increasing bandwidth usage through fixed and mobile from existing 800 Mega Bites (MB) to 6000 MB during the same period. Easy access to telephone service at affordable rates is a major step in promoting information society and laying the foundation for a more inclusive economy where telecom sector plays a catalytic role. 

The Prime Minister said that the availability of highly skilled manpower and the investment friendly policies of the government make Pakistan an ideal place to be a reforms hub for production and trade. 

Walid Moneimne said that his company is impressed with the dynamic policies of the government and tremendous development and growth taking place in Pakistan. He said Nokia want to invest in human resource development in Pakistan to employ then in their company. 

Walid Moneimne said Nokia will set up in Pakistan centre for expertise for Middle East and Africa. They will also set up telecom expertise facility in Pakistan. 

The meeting was attended among others by Minister of State for IT & Telecom Mr. Ishaq Khan Khakwani and senior officials.


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## Neo

Friday April 28, 2006 

ISLAMABAD: Federal Minister For Petroleum and Natural Resources Amanullah Khan Jadoon asked the delegation of Sichuan Petroleum to bring more rigs for expanding the oil and gas activities in country. 
He stated this while talking to 8 member delegation from Sichuan Petroleum, China headed by its Vice President Zhang Benquen who called on Federal Minister for Petroleum and Natural Resources Amanullah Khan Jadoon here Thursday and exchanged views on investment opportunities in the petroleum sector. 

He said government was encouraging and facilitating the investors in oil and gas sector and providing them attractive package of incentives in a level playing field. 

He said that there existed a lot of scope and opportunities for the investors in the oil and gas sector and invited the Chinese company to participate in the upcoming projects for the mutual advantage. 

During the meeting, Zhang Benquen briefed the Minister about the profile of his company being the largest Construction and Engineering Company of China involved in the oil and gas activities across the world. 

He informed that his company has 120 rigs and was already cooperating with OGDCL in the drilling activities by providing them four rigs. 

He said that one more rig has also arrived in Pakistan, which would help boost the exploration activities. 

Zhang Benquen greatly appreciated the GDP growth in Pakistan in last few years and expressed the desire of Sichuan Petroleum to invest in the upcoming mega projects in the oil and gas sector for the benefit of the two countries. 

Senior Joint Secretary (Development) Jahangir Khan, General Manager, OGDCL Aftab Ahmed and Chief Executive Officer of Petroleum Exploration Limited Zaheeruddin were also present during the meeting.


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## Neo

SADIQABAD (April 29 2006): Prime Minister Shaukat Aziz on Friday performed the ground-breaking of the $475 million Fatima Fertiliser plant, and expressed hope that more investment would come from the private sector to meet the growing demand of fertilisers in the country.

He said that there was increasing demand of fertilisers in the country in the wake of impressive growth in the agriculture sector.

He said the government was taking steps to ensure water and food security.

The Prime Minister said that development of agriculture sector "remains the focus" of government efforts as it is the backbone and main driving force behind the economic progress.

The agriculture sector contributes 25 percent of the country's Gross Domestic Product (GDP) and employs 42 percent of total labour force.

Emphasising the importance of promoting agriculture sector for poverty alleviation, he said about 65 percent of total population that lives in the rural areas look towards the agriculture sector for sustenance.

The Prime Minister said that development of agriculture sector would lead to overall progress of the country. He expressed hope that establishment of the new fertiliser plant in the private sector would attract more investment in this sector.

He said the government was trying to provide agricultural inputs to farmers at competitive rates that would help them to get better return for their produce.

Shaukat said that there was shortage of fertilisers in the country owing to increasing demand, and expressed hope that with the help of the private sector this demand-supply gap would be bridged.

He said the government has privatised all state-owned fertiliser facilities that had helped to attract more investment in the industry from the private sector.

He noted that Sadiqabad is a cotton growing area and setting up of a fertiliser plant here would help improve its crop and increase production of cotton.

Describing the $475 million investment in the project, he said it was part of foreign direct investment, which is likely to exceed 3 billion dollars mark this year owing to the government's economic policies.

He said the broad-based structural reforms, good governance and the policies of liberalisation, privatisation and de-regulation had enabled the country to post 8.4 percent GDP growth last year.

The Prime Minister expressed confidence 6 to 8 percent growth would be maintained by ensuring continuity and consistency in government policies. He said that Pakistan was negotiating import of gas from various countries in the wake of expanding economy and increasing demand of energy in the industrial sector.

He appreciated that the plant would be built in a way as to make it environment-friendly.

Minister of Food and Agriculture Sikandar Hayat Bosan gave an overview of the policies in the agriculture sector, which he said, "remains the main source" of livelihood for over 65 percent of the total population.

He said the government was also encouraging modern ideas and techniques and supporting training for farmers to increase agriculture yield. Minister of State for Environment Amin Aslam Khan and President of Fatima Fertiliser, Arif Habib, also spoke on the occasion.


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## Neo

ISLAMABAD (April 29 2006): Pakistan has decided to procure 45 more locomotives, of different horse powers, from China, as Dongfang Electric Corporation, the Chinese company, has expressed willingness to redesign the already delivered 30 faulty locomotives.

"We are procuring 45 more locomotives, of 2000 and 3000 HP, with strengthened under-frame and extended warranty of five years," Secretary, Railways, Shakil Durrani, told Business Recorder.

Earlier the government had decided to take up the issue with the Chinese company for modification of the locomotives under the guarantee and, in case the firm refused to reconsider the design, to consult an international lawyer to take the case to International Chamber of Commerce (ICC).

However, a committee constituted, under the chairmanship of Planning Commission Deputy Chairman Dr Akram Shaikh, and comprising Secretaries of Finance and Railways, recommended for redesigning of the 3000 HP locomotives to bring the weight down from 140 tons to 132 tons to sustain the permissible speed and the infrastructure.

In accordance with the decision of the committee, the supplier/manufacturer was approached to redesign the locomotives, reducing their weight from 140 to 132 tons.

However, the technical delegation of the Chinese firm, during its visit to Pakistan in the third week of February this year, confirmed to re-examine the design to reduce the axle load, but added that the weight could be reduced from 140 to 137.16 tons, which is permissible on Pakistan Railways.

An official said that the Chinese service engineers, after examination of the 'faulty' engines, observed that the faults could be removed under warrantee clause of the agreement.

The official said that the Railways Ministry had recently submitted two options to the government to resolve the issue, which were as follows:

1) The remaining 20 locomotives, of 3000 HP not yet delivered to Pakistan Railways, be procured according to the existing contract with strengthened under-frame and extended guarantee of five years. The weight of new locomotives should be reduced from 140 to 132 tons, preferably, or at least to Pakistan Railways permissible load.

2) No additional 3000 HP locomotives be procured and, instead, the number of 2000 HP locomotives be increased from 25, as per agreement, to 46 in the revised agreement.

The official said that the government has allowed the Ministry to procure 45 more engines (of 2000 and 3000 HP)--with modifications.


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## Neo

RAWALPINDI (April 29 2006): Rawalpindi Chamber of Commerce and Industry (RCCI) President Jalil Ahmad Malik has said that Pakistan and Thailand were enjoying cordial relations but the trade volume of dollars 332.47 million was insufficient.

"Trade volume of dollars 332.47 million is mere a peanut and business communities of two sides must speed up efforts to increase it manifold to benefit their people", Malik said while addressing the meeting of RCCI members with Thai Business Center Dhaka Minister Counsellor (Commercial) Kanyarat Vongskul here on Friday.

He stressed the need of co-operation between two sides saying that both countries were emerging as future economic powers and business communities of two sides should explore avenues of co-operation in trade and economic activities.

The Thai Business Center Dhaka Counsellor (Commercial) Kanyarat Vongskul said economic and trade relations had attained central place in world politics.


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## Neo

HANNOVER (April 29 2006): The Hannover Fair 2006 came to a resounding close on Friday, April 28, 2006, with Pakistani exhibitors expressing complete satisfaction over their participation. Numerous companies bagged business orders, and availed opportunities from European markets. Total 60 Pakistani exhibitors took part in the fair held here from April 24-28, 2006.

Being better prepared to do business in the international market this year, Pakistan's exhibitors displayed maturity and professional acumen, which resulted in the companies securing business orders and opportunities from Germany and other European countries.

Imtiaz A Rastgar, Vice-Chairman and CEO, Engineering Development Board (EDB), commenting on the success of Pakistan's exhibitors, said, "The engineering sector in Pakistan has proven that, given the opportunity, Pakistani companies can compete in the international markets and become part of the global supply chain.

We met Presidents of various world famous companies in the European Union, including the President of the Federation of German Industries, and have signed MOUs for technical agreements, joint ventures and technical collaborations."

Rumi Moiz, Managing Director, Research & Development Engineering Company, manufacturer of precision engineering parts in Pakistan, said the company was overwhelmed with the response it received this year. "It has been a dream come true. The company that we have been benchmarking since last tear to emulate came to us to do business with our company! We are also moving on to Holland to continue negotiations with three others companies and sign an MOU with one of them."

Farhan Junejo, Pakistan's Commercial Counsellor in Germany, said that the Pakistan delegation made a positive impact at the Hannover Messe 2006. "With this rate of success, there should be no looking back. We have to sustain our presence here and continue to take part progressively so that Pakistan's industry gets its deserved recognition in the engineering sector. I was happy to be part of the team that did an excellent job with the arrangements at the Pakistan pavilion."

Pakistan's leading manufacturers of CNG dispensing machines, Tesla Industries' Aamir Hussain said, "We, too, have received very good response from international companies.

It is quite visible that international organisations and European companies are beginning to recognise the potential for outsourcing engineering manufactured components, parts and equipment to Pakistani companies."

Nabeel Hashmi, Chairman of Business Development Group (BDG), in his closing remarks to the exhibitors at the final debriefing, said, "I would like to congratulate each and every exhibitor, as well as delegates, for projecting an excellent image of Pakistan here in Germany. We made a positive impact in the international business community and were able to secure substantial business orders and enquiries.

"Hannover is not a one-time attempt; we have to be here for years to make a difference; we have made a start and, Insha 'Allah, we will be one of the leading industrialised nations of the world in the near future. I would also like to thank all members of the organising committee for their hard work and sincere efforts."

The main Pakistan Pavilion made an overwhelming impact in the 'Subcontracting Hall'. Pakistani exhibitors were also present in the Power Generation and Factory Automation halls. Visitors poured in large numbers and conducted business in a professional environment.

They appreciated the hospitality of the Pakistani team at the pavilion.

Pakistan participated at the Hannover Messe 2006 with a delegation of 220 people from the engineering sector, including some members of academia and media. Led by Jahangir Khan Tareen, Minister for Industries, Production & Special Initiatives, Imtiaz Rastgar, Vice Chairman and CEO, Engineering Development Board (EDB), and Nabeel Hashmi, Chairman of the Business Development Group (BDG-EDB), the Pakistan delegation had several bilateral and joint venture partnership meetings with counterparts in Germany and from various international companies.-PR


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## Neo

By Mubarak Zeb Khan

ISLAMABAD, April 28: PakistanÃ¢â¬â¢s exports of non-textile products rose by 17.6 per cent to $4.871 billion during nine months (July-March) of the current fiscal year as against $4.142 billion in the same period last year.

Official figures showed that the growth was mainly due to over 22 per cent increase in export of primary commodities during the period under review.

The statistics showed that the export of rice rose by 33.68 per cent to $835.199 million as against $624.952 million in the corresponding period last year. Of these, the export of basmati rise rose by 24.20 per cent.

Among the primary commodities, exports of fish and fish foods increased by 30.20 per cent, fruits 20.64 per cent, vegetables 20.02 per cent and spices by 68.57 per cent. However, exports of raw cotton declined by 44.29 per cent, tobacco 37.05 per cent and oil seeds, nuts and kernals by 56.30 per cent.

Exports of surgical goods and medicinal instruments also declined by 14.06 per cent, jewellery 40.94 per cent, furniture 10.04 per cent and molasses by 48.65 per cent during the July-March period.

The export of engineering goods has increased by 10.29 per cent to $135.368 million as against $122.759 million in the same period last year. Of these, exports of electric fans declined by 2.24 per cent and transport equipment by 29.99 per cent. However, exports of other electrical machinery increased by 11.23 per cent, auto parts 55.79 per cent and machinery for specialized industries by 36.96 per cent.

The export of sports goods increased by 5.68 per cent to $228.364 million during the period under review as against $216.090 million in the same period last year. Of these, the export of footballs rose by 23.74 per cent. However, the export of gloves declined by 52.20 per cent.

The export of footwear products increased by 7.44 per cent to $95.064 million during the July-March period of the current fiscal year as against $88.480 million in the same period last year. Of these, the export of leather footwear increased by 14.44 per cent. However, exports of canvas footwear declined by 43.72 per cent and other footwear by 13.18 per cent.

The export of leather products increased by 44.04 per cent to $540.548 million during the period under review as against $375.271m in the same period of last year. Of these, exports of leather garments rose by 58.48 per cent and other leather products by 160.33 per cent. However, the export of leather gloves declined by 5.06 per cent.

The statistics showed that exports of carpets, rugs and mats increased by 0.83 per cent, gems 21.02 per cent, cutlery 8.44pc, onyx-manufactured 41.09pc and chemical and pharmaceutical products by 6.05 per cent.


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## Neo

KARACHI, April 27: The personal computer (PC) shipments to Pakistan grew 16.6 per cent in 2005 to reach just under half million mark with 494,000 units due to growing IT awareness and increased focus from multinational IT vendors.

Springboard Research vice-president Dane Anderson said that although the earthquake in October 2005 held shipments back marginally in the fourth quarter due to delayed government buying and general economic disruption, it was not expected to impact the market materially in 2006 and beyond.

Due to political and social disruptions as well as general perception challenges, he said that Pakistani market had traditionally been neglected by international IT vendors, says a press release.


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## Neo

Saturday, April 29, 2006 

* Iranian minister says India is welcome to join project at any time

By Fida Hussain 

ISLAMABAD: Iranian Deputy Oil Minister Mohammad Hadi Nejad Hosseinian said on Friday that Iran and Pakistan would implement the proposed Iran-Pakistan-India (IPI) gas pipeline project bilaterally if India failed to take a decision by the end of next month. 

Talking to reporters on his arrival at the Islamabad airport, Hosseinian said that Iran was discussing the issue with Indian authorities. Ã¢â¬ÅIndia is keen to be part of the multi-billion dollar project. So far, we have not received any indication that India is stepping out of the project. We will implement it with Pakistan if India does not take any decision by May end,Ã¢â¬Â Hosseinian said, as predicted by Daily Times in its April 28 edition that a gas pipeline paper deal between Iran and Pakistan was on the cards during HosseinianÃ¢â¬â¢s visit to Pakistan. Hosseinian said that India would be welcomed whenever it wanted to join the project.

Senior Pakistani Petroleum Ministry officials and Iranian Ambassador Mohammad Ibrahim Taheryan received Hosseinian and his eight-member delegation at the Islamabad airport. The delegation later held technical talks with Petroleum Secretary Dr Ahmad Waqar and other officials. Ã¢â¬ÅWe have discussed pricing formula in talks. The issue will be discussed in oil ministersÃ¢â¬â¢ meeting in Tehran most likely in June if we fail to reach an agreement here,Ã¢â¬Â Waqar said. He said Pakistan had sent a draft pricing formula to Iran. Ã¢â¬ÅI am hopeful that Iran, Pakistan and India will finalise all aspects in two months,Ã¢â¬Â Waqar told reporters after talks at the Ministry of Petroleum and Natural Resources. He said Pakistan would take the decision its national interest. The negotiations on price and pipeline structure will continue for another two days. HosseinianÃ¢â¬â¢s visit comes a few days after a telephonic talk between President Musharraf and Mahmoud Ahmadinejad. Both leaders vowed to take the project forward. 

NNI reported that next trilateral secretary-level talks on the project are likely to be held in Islamabad from May 22 to 24.


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## Neo

Saturday, April 29, 2006 

ISLAMABAD: David Collin, the Canadian High Commissioner in Pakistan, has said FTA and PTA negotiations between the two countries are in an advance stage of planning and when the two countries will sign these trade agreements, bilateral trade will see further heights.

The Canadian high commissioner called on Abdul Rauf, president of the Islamabad Chamber Commerce and Industry (ICCI), on Friday and met traders and industrialists. The Canadian Commercial Attachee was also present.

Mr Collin said that Pakistan and Canada are partners in the war against terrorism and there is direct relation between the economies of the two countries. He said that Pakistan has achieved a good GDP growth rate and investment opportunities are also available amid better investment friendly circumstances. He informed that Free Trade Agreement (FTA) and Preferential Trade Agreement (PTA) are in the last stage of planning. He further said that there is no difficulty for traders to get Canadian business visa and related complaints should brought to his notice.

Abdul Rauf said that global trade paradigm has shifted and the trade barriers have shrunk due to WTO implementation. He said Canada is a partner of Pakistan in the war against terrorism and the Canadian government showed great enthusiasm after the 28th October earthquake catastrophe in Pakistan. He further said that Pak-Canada trade balance is in favour of Pakistan and Pakistan exports textile, bed linen, yarn, garments and towels to Canada which is 75% of the total export, but there is need to further enhance the bilateral trade in other sectors too. He also pointed out low investment activities of Canada in Pakistan and proposed the exchange of business delegations and organization of single country exhibitions to strengthen the trade relations. He stressed the need to ease the visa process for Pakistani traders.


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## Owais

President asks CAA to further improve ground, air travel facilities 


*RAWALPINDI *_(updated on: April 29, 2006, 21:48 PST_): New airports at Islamabad and Gwadar will have state-of-the-art facilities while Pakistan International Airlines is to have a fleet of new aircraft as part of the government policy to promote tourism, trade and investment.

This was informed at two presentations made to President General Pervez Musharraf by Civil Aviation Authority and Pakistan International Airlines on Saturday.

Both the airports will have modern facilities at their terminals, runways, parking bays and other allied facilities and services like communication and other infrastructure.

In addition, the Multan Airport will also be modernised at a cost of Rs 2.5 billion with a new terminal and extensive cold storage and cargo facilities. The refurbished Multan airport would be able to handle large passenger aircraft.

"The design of new Islamabad airport will be finalised by mid-May while construction work is expected to get underway by the end of the year," Director General Air Marshal (Retd) Pervez Nawaz told media persons, after the presentations.

The new Islamabad international airport will be greenfield, having best international standards. It would be completed in three years time at the estimated cost of Rs 18 billion. The land for the project has already been acquired.

The CAA is expected to secure possession of the land for the new Rs three billion Gwadar airport by the middle of next month. The Authority has invited reputed international companies for the design of the new airport and project management.

According to the Director General CAA, Gwadar will have open sky policy in the beginning aimed at attracting foreign investors and bolstering tourism for rapid development of Gwadar city.

Chairman PIA Tariq Kirmani, in his presentation, informed that the national flag carrier has shown remarkable improvement in its performance and revenues in the last few years.

He pointed out that despite soaring international oil prices, the PIA has increased its revenues by 11 per cent.

The fuel cost has impacted the PIA to the tune of Rs 8 billion in the last one year, rocketing from Rs 18 to 26 billion.

On improvement in quality of service, the Chairman said the complaints have reduced significantly lately.

The PIA plans to induct 29 new aircraft to replace the ageing fleet.

These include 12 latest 777 Boeing aircraft. Five of these wide-bodied, fuel-efficient and long-distance, aircraft have already been inducted and seven more will be included in the fleet in the next three years.

Besides, seven ATR, an airbus subsidiary, will also be part of the PIA fleet for domestic routes.

In his remarks, President General Pervez Musharraf emphasised that all stakeholders including passengers, employees and shareholders should benefit from improvement in PIA's performance.

He directed the Pakistan International Airlines to further improve its efficiency and services of the national carrier to make it more competitive and profitable.

The President particularly urged the PIA management to raise the standard of services for passengers in order to capture greater market share in this era of intense international competition.

He also urged the national carrier and the Ministry of Religious Affairs to offer better facilities to pilgrims proceeding to Saudi Arabia for Haj and Umra.

Minister for Defence Rao Sikander Iqbal and Minister for Religious Affairs Muhammad Ejaz ul Haq attended the presentations.

About provision of facilities at the airports, the President said these must be of international standards for efficient handling of growing domestic and international traffic.

The President was briefed about the construction of a new international airport for the capital and plans for building Gwadar airport.

President Musharraf said the new airports should be constructed futuristically and equipped with the latest technology to bolster tourism and trade.

"Pakistan is set to see an upsurge in both investment and tourism fields upon completion of new Gwadar deep sea port-therefore, our efforts must be to extend best facilities to local and foreign investors," he said.


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## Owais

*THE RUPEE: sharp fall against euro in open market* 
*RECORDER REPORT* KARACHI (April 29 2006): The rupee showed fell sharply versus the euro as the single European currency crossed an important mark of Rs 75 on the back of dollar's slide in the international markets, moneychangers at the open market said on Friday.

The local currency continued to be weak versus the euro for buying and selling at Rs 74.95 and Rs 75.05, they said.

The rupee gained three paisa against the dollar for buying at 60.20 and 60.25, they said.

According to the Reuters, the dollar was holding near a seven-month low against the euro after Fed chief Ben Bernanke gave the clearest sign yet the central bank's two-year campaign of raising interest rates may be coming to an end.

*INTERBANK MARKET: *Firmness prevailed as the rupee held its overnight levels versus the dollar for buying and selling at 60.05 and 60.06, respectively.

Steady supply of dollars helped the rupee to gain ground versus the greenback, they said. 
================================Buying Rs 60.20Selling Rs 60.25================================


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## Neo

30 April 2006 

ISLAMABAD Ã¢â¬â Several industries require big increases in capacity expansion and are attracting foreign and domestic investment.

This was is confirmed by the State Bank of Pakistan (SBP) in its Parliament-mandated second report, covering the first half of 2006 Ã¢â¬â July-December, 2005. It reviews the performance of all sectors of the economy, and projects future trends.

SBP said, "The economy remains on a high growth trajectory in fiscal 2006, but the real GDP growth rate for the year seems increasingly likely to be lower than 7.0 per cent." This can range between 6.3 to 6.8 per cent, compared to the government-claimed growth of 8.4 per cent in full fiscal 2005. It attributes part of the slowdown to below par farm production, especially of cotton and sugarcane. This will be partially offset by an anticipated above-target performance of the services sector. Its flags rising inflation, expanding monetary growth, widening trade deficit, large government borrowing from SBP which is inflationary, and the need to increase tax collection, as "the challenges to the economy".

Rising demand calls for capacity expansion and creation of new units in several sectors, including cement, chemicals, fertilisers, paper and board, and automobiles. A wide range of consumer goods, and industrial materials, for which other resources and skills already exist within the country, have a strong potential to attract foreign direct investment.

Despite the rising demand, there is evidence that large scale manufacturing (LSM) growth has decelerated in July-January period of fiscal 2006, compared to the corresponding period of 2005, the report says. But there are plus points, though.

Textiles, the largest group in LSM, recorded a 7.7 per cent growth year-on-year (Y0Y) during the first seven months of 2006, on the back of strong external demand.

The growth of the cement industry slowed down to 8.8 per cent because of capacity constraints, although the demand is soaring, mostly as a result of large scale reconstruction work in the areas hit by devastating Oct. 8 earthquake. "In the longer run, demand will be augmented by the government's decision to build a number of large water reservoirs," SBP said.

The chemical industry recorded a deceleration, posting only 4.4 per cent year-on-year growth in output during July-January, primarily due to capacity constraints. Capacity utilisation, for instance, in caustic soda units is 130 per cent. The Fertiliser industry is also facing capacity constraints and recorded only a 16.4 per cent growth year-on-year, as compared with 42.7 growth in the same period last year. 

Large quantities of chemicals and fertilisers were imported to meet the growing demand Ã¢â¬â indicating that new units could have profitable business prospects. In order to meet the demand, 1.6 million metric tonnes of fertilisers were imported during the seven months that ended January, 2006.

Capacity has been hiked for some of the industries, but new units, established with FDI and domestic resources, are still needed to meet soaring demand. This is the case with for automobiles, consumer durables, household electronics and cellular phones, among other products.

Auto production showed a 28.2 per cent growth, over the 27.9 per cent year-on-year rise in 2005. Continued strong domestic demand, supported by credit availability and auto leasing contributed to this extraordinary growth.


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## Neo

By Khaleeq Kiani

ISLAMABAD, April 29: Pakistan requires $100 billion investment in power sector in the next decade for its current high economic growth rate and hence needs a careful balance between economic stability and growth.

This was stated by Dr A R Kemal, a renowned economist, planning commissionÃ¢â¬â¢s advisor and a former chief economist who pointed out some repercussions of an uncontrolled GDP growth.

Speaking at a seminar organised by South Asia Free Media Association (SAFMA) on Saturday, he said the leading South Asian countries were registering high growth rates but said: Ã¢â¬ÅWe have to be realistic whether there are sufficient resources to move into the capital intensive high-tech industries and infrastructure requirements which also require capital intensive energy needs.Ã¢â¬Â

His word of caution was that Ã¢â¬Ådo not move faster than your capacity otherwise the balance of payment problems would automatically begin to slow down GDP growth in an undesirable fashion.Ã¢â¬Â

For example, he said Pakistan would require about $100 billion investment in the power sector alone to maintain growth rates of seven-eight per cent. Hence, such growth rates could also create balance of payment problems like the one Pakistan has already started witnessing during the current year.

He said most of the Asian countries had similar stabilisation policies under the International Monetary Fund (IMF) programmes and hence they have a lot of common lessons to feed into the possibility of a regional cooperation in the next 10 years as they move towards regional economic integration.

He said there should be trade off between the high growth rates and economic stability, create exchange rate equilibrium and distribute incomes in an efficient and just manner.

Dr Kemal, who also led Pakistan Institute of Development Economics for many years, said since most of the South Asian nations were trying to maintain high growth rates, they should coordinate with each other and scale down growths.

He said that the regional countries looked into the question whether they should have a common strategy to attract foreign direct investments or compete for the FDI to the benefit of foreign investors.

He was also critical of some of the so-called prudential regulations which ensured credit only to the rich because these did not allow the poor, who were more efficient to save, invest and produce more, to access capital without collateral.

Dr Ponna Wignaraja from India said the availability of data in the south Asian region was inadequate as the governments underplayed poverty situation while multilateral agencies underplayed policy choices and hence there was a need for coherence for a policy change.

He said the definition of poverty as one dollar income per day was not true because this meant starvation while caloric definition was also faulty.

He called for decentralisation and devolution of political democracy and economic democracy to avoid violence in the region.

He believed that poverty could be reduced through sustained political process, a process that involves caring and sharing which already exist in the culture and not through micro-credits.

Another delegate Nephil Maskay called for integration of SAARC countries into an economic union as level of regional trade in these countries stood at just five per cent compared with 50pc of the European countries.

He said the finance ministers and central bank chiefs of the Saarc members should meet every year to promote economic cooperation for regional integration and there should be regional institutionalised arrangements as to what should be the economic priorities of the region.

A separate panel of experts recommended setting up of a regional power grid, a regional gas grid for import of gas and transmission to needing economies, exchange of hydropower and joint development of technology.

The group said all the countries of the region had introduced reforms in the energy and water sector and all had failed in some way to produce desired results and hence it was time that all should exchange their experiences for a common benefit.

http://www.dawn.com/2006/04/30/ebr6.htm


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## Neo

Sunday, April 30, 2006 

RAWALPINDI: The new Islamabad and Gwadar airports will be equipped with state-of-the-art facilities and the Pakistan International Airlines (PIA) shall receive a fleet of new aircrafts as part of the government policy to promote tourism, trade and investment. These measures were announced during two presentations made to President General Pervez Musharraf by the Civil Aviation Authority (CAA) and PIA on Saturday.

Both airports will be fully equipped with the latest facilities at all terminals, runways and parking bays. Other allied facilities and services such as communication equipment and infrastructure shall also be up dated, APP reported.

Meanwhile, the Multan Airport will be modernised at an estimated cost of Rs 2.5 billion with a new terminal and cold storage and cargo facilities. The airport, once refurbished will be able to receive large passenger aircrafts. Ã¢â¬ÅThe design of the new Islamabad airport will be finalised by mid-May while construction work is expected to commence by the end of the year,Ã¢â¬Â Pervez Nawaz, director general of Civil Aviation Authority (CAA), told journalists after the presentations.

The new Islamabad international airport will be built according to international standards. The airport is expected to take three years for completion with an estimated cost of Rs 18 billion. 

The CAA is expected to secure the possession of land for the new Rs 3 billion Gwadar airport by the middle of next month. The authority has invited international companies to submit designs for the new airport.

According to the CAA director general, the Gwadar airport will have an open sky policy in the beginning aimed at attracting foreign investors and tourists. PIA Chairman Tariq Kirmani, in his presentation, said that the national flag carrier had shown remarkable improvement in its performance and revenues in the last few years.

Staff report adds: Pervez Nawaz on Saturday informed President General Pervez Musharraf that the design of the new Islamabad airport would be finalised by mid-May, while construction work was expected to get underway by the end of this year. 

Ã¢â¬ÅThe new Islamabad international airport will have the best international standards. It will be completed within three years at the estimated cost of Rs 18 billion,Ã¢â¬Â Nawaz said.

In his remarks, president General Pervez Musharraf emphasised that all stakeholders including passengers, employees and shareholders should benefit from the improvement in PIAÃ¢â¬â¢s performance. He directed the PIA to further improve its efficiency and services to make it more competitive and profitable. The president urged the PIA management to raise the standard of services offered to passengers in order to capture a greater market share. 

He also urged PIA as well as the Ministry of Religious Affairs to offer better facilities to Haj pilgrims. The president said that facilities offered at the airports must be of international standards to ensure efficient handling of growing domestic and international traffic. 

President Musharraf said the new airports should be based on futuristic designs and equipped with the latest technology to boost tourism and trade. Tariq Kirmani said PIA had increased its revenues by 11 percent.


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## Neo

ISLAMABAD (April 30 2006): The Central Board of Revenue (CBR) has so far collected Rs 536.4 billion in the July-April (2005-06) period, against Rs 451.1 billion collected in the same period of last fiscal year, reflecting an increase of 18.9 percent.

According to the provisional figures issued on Saturday, direct tax collection amounted to Rs 162.95 billion against Rs 132.95 billion, showing an increase of 22.6 percent. Indirect taxes collection stood at Rs 373.45 billion against Rs 318.17 billion, showing an increase of Rs 55.282 billion.

The CBR has to collect Rs 153.6 billion in the remaining two months-May and June--to achieve the target of Rs 690 billion, ie Rs 76.8 billion in each.

Sales tax collection amounted to Rs 226.01 billion during this period against Rs 186.81 billion of last year, showing a growth of 21 percent.

GST collection at import stage was Rs 133.8 billion against Rs 118.5 billion, showing an increase of Rs 15.3 billion. Sales tax collection on domestic consumption was Rs 92.2 billion against Rs 68.3 billion with a growth of Rs 23.9 billion.

The collection of customs duty was Rs 104 billion in July-April 2005-2006 against Rs 89.75 billion collected in the same period of last year, indicating a growth of 15.9 percent.

The collection of Federal Excise Duty (FED) was Rs 43.4 billion against Rs 41.6 billion, showing an improvement of 4.3 percent.

Latest tax-wise details show that the CBR paid Rs 69.91 billion as refund/rebate to exporters during the period, against Rs 83.11 billion of last fiscal year, showing an increase of Rs 13.2 billion.

The Board paid Rs 29.04 billion as GST refund in July-April 2005-2006 against Rs 47.86 billion with a decrease of Rs 18.82 billion. The payment of sales tax refund at the import stage was Rs 85 million against Rs 46 million reflecting an increase of Rs 39 million. The domestic refund stood at Rs 28.96 billion against Rs 47.81 billion paid in the same period last fiscal year.

The customs department paid Rs 15.67 billion as rebate/duty drawback against Rs 13.14 billion showing an increase of Rs 2.53 billion.

Direct taxes refund totalled Rs 24.95 billion during the ten months of current fiscal year, against Rs 22.06 billion. The collection during April so far has been Rs 46.5 billion (excluding last day collection).

Following is the monthly break-up of individual taxes: Sales tax Rs 23.6 billion; customs duty Rs 9 billion; direct taxes Rs 10.2; and FED Rs 3.7 billion. During April, the CBR paid refund/rebates of Rs 4.5 billion including Rs 2.22 billion as sales tax refund.


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## Neo

Sunday, April 30, 2006 


* Govt to spend Rs 20b on converting the Pakistan Maritime Academy into university with HEC 
* 5,000 cadets to be produced each year

KARACHI: The University of Engineering, Science and Technology Pakistan (UESTP) was inaugurated on Saturday as part of the Higher Education Commission and the Pakistan Maritime AcademyÃ¢â¬â¢s (PMA) efforts to set up an engineering university at the PMA campus. 

UESTPÃ¢â¬â¢s first vice chancellor and professors will be French. 

The government will spend Rs 20 billion on the PMA to convert it into the UESTP over 140 acres of land. Admission to this university will start from 2007 and it will produce 5,000 cadets.

Prime Minister Shaukat Aziz was present for the MoU signing ceremony where Minister for Ports & Shipping Babar Khan Ghauri said that the ministry had decided to revive earlier plans of upgrading the PMA to a maritime university. It was decided to dovetail it with the HEC project to establish an engineering varsity.

The needs of the maritime sector would be met through the faculty of Maritime Studies, which will be part of the engineering varsity. The university would be set up with local funding from the government and its recurring expenses would met with funds raised through its own resources. The admissions would be strictly on merit. 

Pakistan has invited educationists and professors from Germany, France and Switzerland amongst other countries to help promote education, the PM said.

There is a big job market for merchant officers and cadets worldwide as countries are inducting large ships to their fleets. About 3,000 foreign nationals were working in telecommunications in Pakistan due to a shortage of trained manpower.

The government would spend Rs 160 billion in the next ten years to establish six world-class engineering and three technical universities in the country in collaboration with Germany, France, Switzerland, Malaysia in information system, electrical and mechanical engineering, electronics, marine sciences.


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## Neo

By Anwar Iqbal

WASHINGTON, April 29: As a UN member, Pakistan would have to honour any sanctions imposed on Iran but such restrictions could do more harm than good, Foreign Secretary Riaz Mohammed Khan told journalists in Washington.

Briefing the Pakistani media on the first round of the US-Pakistan strategic dialogue, Mr Khan said if the Security Council did impose sanctions, Ã¢â¬Åthey are binding on all members of the UN, so weÃ¢â¬â¢ll have to respectÃ¢â¬Â them. But he also felt that itÃ¢â¬â¢s too early to take this kind of action against Iran because such sanctions could Ã¢â¬Ådo more harm than good.Ã¢â¬Â

At the same time, he said Pakistan believes Iran must abide by international nuclear obligations, but the world also must Ã¢â¬Åexhaust all (diplomatic) possibilitiesÃ¢â¬Â before imposing sanctions that could provoke Ã¢â¬Åundesirable consequencesÃ¢â¬Â.

Ã¢â¬ÅIt is a grave issue, a source of concern for us as well,Ã¢â¬Â he added. Mr Khan acknowledged that there were Ã¢â¬Åinternational obligationsÃ¢â¬Â that Iran must meet but he also noted that Ã¢â¬ÅTehran says its programme is not directed towards weaponisation.Ã¢â¬Â

The foreign secretary, who was in Washington for the first round of US-Pakistan strategic dialogue, said the Bush administration again turned down IslamabadÃ¢â¬â¢s request for a nuclear energy deal like the one it signed with India but Pakistan would continue cooperating with China in this field.

Ã¢â¬ÅWe have discussions Ã¢â¬Â¦ and cooperation with China in this area. We already have two projects and will continue to have this type of cooperation with China.Ã¢â¬Â

Mr Khan recalled that in 1998, before Pakistan responded to IndiaÃ¢â¬â¢s nuclear tests, New Delhi had adopted a very aggressive posture towards Islamabad, claiming that by testing its devices Ã¢â¬ÅIndia had called PakistanÃ¢â¬â¢s bluffÃ¢â¬Â.

Ã¢â¬ÅWe do not wish to go back to that situation and thatÃ¢â¬â¢s why we believe in maintaining the current nuclear deterrence,Ã¢â¬Â he said. Ã¢â¬ÅIt is a reality that now both India and Pakistan are nuclear weapon states.Ã¢â¬Â Mr Khan said that the nuclear status also brought some responsibilities with it and thatÃ¢â¬â¢s why it was necessary for both India and Pakistan to have an agreement to Ã¢â¬Åavoid accidentsÃ¢â¬Â.

The foreign secretary said that during his meetings in Washington he urged the US to encourage India to resolve the Kashmir conflict because Ã¢â¬ÅitÃ¢â¬â¢s in the interest of both India and Pakistan to do so.Ã¢â¬Â

Describing US, Pakistan cooperation in bilateral and international fields as Ã¢â¬Ågood, sound and robust,Ã¢â¬Â the foreign secretary hoped that the strategic dialogue Ã¢â¬â which he described as Ã¢â¬Åstructured talksÃ¢â¬Â aimed at providing a forum for regular consultations Ã¢â¬â would further strengthen bilateral ties.

Mr Khan said that both sides have identified four fields Ã¢â¬â economy, energy, education and science and technology Ã¢â¬â for bilateral cooperation.

Pakistan, he said, has already appointed four coordinators who will work with the US for identifying areas and means of cooperation in these fields. These included minister for science and technology, adviser for energy, secretary education and secretary finance.

Ã¢â¬ÅWe agreed that these groups are going to meet in the next two months,Ã¢â¬Â he said. Ã¢â¬ÅWe have already given them papers- some preliminary ideas, what our side would like to discuss within the framework of these groups for bilateral cooperation.Ã¢â¬Â

The groups will hold four meetings, two each in Washington and Islamabad while Undersecretary of State Nicholas Burns, who headed the US delegation in the strategic talks, will also visit Islamabad soon.


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## Neo

Sunday, April 30, 2006 

PESHAWAR: Arshad Javed Gorwara, a member of the Pak-India Forum (PIF), has appealed to the government to repatriate Afghan refugees, because their investment in local markets was denying opportunities for Pakistani businessmen. Gorwara said that Afghan refugees had invested in all major markets including Peshawar, Bannu, Lahore, Karachi, Quetta and Chaman which had damaged the businesses of Pakistani businessmen. He has appealed to the federal interior minister and the foreign minister to expel Ã¢â¬Åbillionaire AfghansÃ¢â¬Â who had captured the markets with their large investments.


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## Neo

April 28, 2006

By developing trade with Pakistan, we can gain more because we have a much bigger and much more competitive manufacturing base.

Historically, the most effective way of establishing peace between rival nations is that of trade and commerce. The worst enmity during the Second World War was between the Allied forces led by the UK and the US, on the one hand, and the Axis powers, led by Germany, on the other. 

Bitter memories of the atrocities committed by Nazis were vivid among people, especially in countries like Holland, Poland and Russia.

Since France had surrendered and had a Nazi-tolerant puppet Vichy regime under Marshal Petain, the French did not suffer as much as the Dutch. The Germans were never able to occupy any part of Great Britain. Yet it took some decades after the war for the British to warm up to the Germans.

But all the prejudices and bitterness among European nations were diluted with the formation of the European Common Market, which benefited people in all countries. 

With Germany emerging as the largest economy on the continent, it offered significant opportunities for manufacturers and service providers from other European countries to trade profitably with Germany.

As the next generation came of age by the 1970s, the enmities and atrocities of World War II gradually receded in the minds of most people, even in Holland.

In a similar manner, a real breakthrough in the peace process between India and Pakistan can come only through the establishment of trade and commerce between the two countries. 

At the moment, the obstacles to bilateral trade are unbelievably severe - worse than between enemy nations. Since I am an Indian and addressing an Indian readership, let us start with the obstacles, which our country places in the way of a Pakistani businessman who wants to buy things from India.

I am basing my views on the experience of a company in Bangalore. This company has a rather sophisticated product for electrical energy management. Since India, as the country of origin, had some negative connotations in several countries, our company established a wholly-owned subsidiary in Dubai to service the market in West Asia, the Central Asian republics, North Africa, etc.

Since its products now originated from the UAE, the company could export its products to Pakistan. The customers in Pakistan were pleased with the products, as they were significantly less expensive than what they were importing from Europe.

Secondly, communication between the subsidiary in Dubai and the main dealers and customers in Pakistan was much easier, as we spoke the same language and the market dynamics, customer expectations, etc. were very similar. 

As part of the growing interaction between the company and the customers in Pakistan, they arranged to invite a few dealers from Pakistan to visit its facilities and R&D centre in Bangalore. The site in Bangalore, although not very large, is impressive and so are the R&D team members.

But the experience of the Pakistani visitors with our government bureaucracy was so horrendous that it was a real study in 'How to repulse visitors'- the opposite of marketing. Let me outline the bureaucratic hurdles:

A Pakistani citizen has to get a separate visa for each city that he is scheduled to visit in India. If he arrives in Delhi, he will need a separate visa for Delhi. If he wants to visit the Taj, he will need another visa for Agra, and of course a third visa for going to Bangalore. Without such city-specific visas he cannot go to any city in India. This is a big departure from all international visa procedures. If I as an Indian go to the US, I do not need separate visas for New York, Boston, San Francisco, etc. Similarly, visitors to India from any country other than Pakistan do not need separate visas for each Indian city.

The visitor from Pakistan has to report to the police station nearest to his hotel -within 24 hours of his arrival in each city. This can literally make the man run from one police station to another, as happened to our visitors in Bangalore. The hotel in which they stayed did not know which police station had jurisdiction over that hotel, as most hotels have very little to do with police stations. So our Pakistani visitors had to visit five police stations before they could establish which particular station had jurisdiction over their hotel! This itself took a couple of days, despite the best efforts of the host company. You can imagine the frustration of having to go from pillar to post, especially when the pillar and the post are uninviting police stations that are also citadels of suspicion and rudeness.

Each of these visitors had to get a residential permit from each police station on his arrival and again report to the station to obtain a departure certificate 24 hours before departure. And this procedure had to be repeated at each city. Every time copies of documents like passport, hotel declaration and residential permit had to be submitted to each police station. 

Despite these humiliating procedures, our Pakistani visitors were impressed by the technological progress made by India and the company they visited. Our bureaucracy and politicians could explain by saying that Indians are subject to a similar set of humiliating procedures when they go to Pakistan! This is indeed true.

But we have to bear in mind that by facilitating and developing trade with Pakistan, we as a country have more to gain in terms of trade and commerce because we have a much bigger and much more competitive manufacturing base than they have. We will gain access to a market of 140 million people.

There are bonuses to such opening up of trade with Pakistan: (i) If we are able to route our trade through Pakistan, we will have easier access to countries further west of Pakistan, like Afghanistan and Iran; (ii) increased trading relations with Pakistan will add far greater security for the proposed Iran-Pakistan-India gas pipeline; (iii) as trading volumes grow and both parts of Kashmir become part of this seamless trade zone, the line of control (LoC) could become a mere legal border with no need for massive military protection.

The time has come for our government to take some bold steps to make this vision a reality. The combination of Manmohan Singh and Sonia Gandhi has the stature and wisdom to take the initiative. If they pluck enough courage to do so, it will be a glorious chapter in Indian history. Furthermore, it will enhance the prestige and standing of India in the comity of nations.

Today, we are not recognised as the dominant force in South Asia (which in fact we are) because of the combative relationship we have with Pakistan. Once that handicap is removed, India will be accorded by the world with the stature that we truly deserve.


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## Neo

Friday, April 28, 2006 

MULTAN: Up to 11,000 graduate and post-graduate teachers will be hired on contract soon in the province, said Asif Saeed Manais, Punjab Public Accounts Committee chairman, on Thursday.

He said the government was planning to set up Ã¢â¬Ëeducation townÃ¢â¬â¢ for the welfare of teachers. He said this would be a joint project of public and private sector in which houses would be given to teachers on soft loans, adding that a handsome salary package would be offered to them.

He said a record number of 1.7 million students were enrolled in schools across the province last year and it had been acknowledged a landmark achievement by the donor organisations. He added that Rs 54 billion would be spent for increasing enrolment, literacy and up-gradation of education standard in the next three years under the Literate Punjab Programme. He said Rs 150 million had already been released to each district to provide water, electricity and furniture in 40,000 schools. To promote sports culture in the province, he said a two-percent quota for admission to colleges and universities had been reserved for sportsmen.

PPP to set up protest camps: The Pakistan PeopleÃ¢â¬â¢s Party has planned to observe May Day with fervour and set up camps to protest against unemployment, poverty, exploitation, corruption and injustice from May 1st to 7th in Punjab. Addressing a press conference on Thursday, Khurshid Ahmed Khan, PPP city president, Salimur Rehman Mayo, Asif Zardari Committee chief organiser, M Salim Raja and Tariq Raza Khan said the PPP would also launch its membership drive from May 1st in addition to making preparations for the reception of Benazir Bhutto. They said workersÃ¢â¬â¢ convention would be held today (April 28) in zone 1, May 12 in zone 2, May 21 in zone 3 and June 2nd in zone 4. They said the meeting between Nawaz Sharif and Benazir Bhutto had shaken the ruling party.

FPCCI candidate: Khawaja Muhammad Abdullah, Multan Chamber of Commerce and Industry president, said the Alliance of Recognised Chambers and Associations of Southern Punjab (ARCA) has unanimously nominated Mian Tanveer Ahmed Shaikh for the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) president slot and formed a committee to monitor the election campaign.

Khawaja Abdullah said Mian Tanveer Ahmed Shaikh had served in the past as FPCCI senior vice president and MCCI president. He appealed to industrialists and traders to elect a young industrialist for the office, who helps promote businesses, exports and industry in southern Punjab.

PIA transported 48,000 tonnes exports: Pakistan International Airlines (PIA) is providing facilities to exporters particularly for perishable goods and exported 48,000 tonnes of goods during last year, said Shahid Rafiq, PIA general manager cargo. Addressing exporters at the Multan Chamber of Commerce and Industry on Thursday, he said the government had promised to give compensation to the airline for charging low freight rates. He said PIA did not increase cargo freight rates on the assurance of the government, but it did not fulfil its commitment and the national carrier incurred a loss. He said the airline was negotiating with the Export Development Bureau for the resettlement of freight.

Shahid Rafiq said freight for mangos and citrus fruit might be increased, which was unavoidable. He said PIA had introduced Pakistani fruits abroad and explored new markets. Commenting on the complains regarding off-loading goods from Multan in Karachi and Lahore and not providing sufficient space, Shahid Rafiq assured that PIA would try to provide maximum facilities. Multan exporters demanded that maximum space should be provided to them in Lahore, as they would have to pay more transpiration cost if they send goods to Karachi. Khawaja Muhammad Yousaf, Pakistan Tanners Association (PTA) central chairman, drew the attention of PIA general manager towards the rude attitude of PIA cargo staff at foreign airports. staff report


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## Neo

ISLAMABAD (AFP) - A proposed gas pipeline from Iran to Pakistan and India will not be affected if the United Nations imposes sanctions on Tehran over its controversial nuclear programme, an Iranian minister has said. 


"I don't think anybody could put sanctions on the oil industry and gas industry," Deputy Oil Minister Mohammad-Hadi Nejad-Hosseinian told a press conference in Islamabad after three days of talks on the project.

"Due to the sensitivity of the oil market any action like that will increase oil prices very high and I believe that the UN and any other body will not put any sanctions on oil or the oil industry," Nejad-Hosseinian said Sunday, when asked about the future of the project if sanctions were imposed.

The International Atomic Energy Agency Friday confirmed that Iran had not complied with a UN Security Council demand to freeze uranium enrichment, which can be used to make the explosive core of nuclear bombs.

The United States and European powers are now poised to seek a Security Council resolution legally obliging it to meet IAEA and Council demands.

If Iran still refuses, such a resolution could pave the way for economic sanctions or even military action, although Tehran's major trading partners, Russia and China -- which have a veto on the Council -- oppose any such move.

Iran insists its nuclear programme is a peaceful effort to generate electricity and therefore entirely legal.

The 2,600-kilometre (1,600-mile) pipeline from Iran's southern Pars field is estimated to cost more than seven billion dollars. Talks between India, Iran and Pakistan on the project ended in March in Tehran without any agreement

The United States objects to the project and is pushing for another pipeline to South Asian countries from Turkmenistan via Afghanistan. Washington accuses Tehran of supporting terrorism and attempting to make a nuclear bomb.

Pakistan, despite being a key US ally in its global "war on terror", has said it would go ahead with the Iranian pipeline project as it needs energy to fuel its economic growth.

"Pakistan is viewing this project keeping in view its energy requirements," petroleum secretary Ahmad Waqar told reporters.

Pakistani and Iranian officials discussed gas pricing and agreed to enhance off-take volumes of gas from 2.1 billion cubic feet per day (bcfd) to 2.8 bcfd in case India does not join the project, Waqar said.

The officials would meet again on May 25 in Islamabad and the petroleum ministers of the two countries would sign a joint declaration on the project in Tehran in June, he said.


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## Neo

ISLAMABAD (May 01 2006): Pakistan and Iran have reached an agreement about the basic principles of pricing formula of the gas from Iran as the two countries have decided to work on bilateral (Iran-Pakistan) gas pipeline project, regardless whether India participates in it or not.

A joint statement issued here on Sunday on the conclusion of the Seventh meeting of the Joint Working Group of the two countries said that the JWG examined in detail various financial, commercial, technical and legal aspects of the $2.5 billion project.

"Major issues discussed included gas pricing formula, project structure, project feasibility, gas off-take volumes and gas sales and purchase agreement," the statement said.

The next JWG meeting will be held in Islamabad on May 25, 2006. Petroleum Ministers of both countries would meet in Tehran in June, 2006, on mutually agreed date to sign Joint Declaration of the Project.

Addressing a joint press conference, Secretary, Petroleum, Ahmad Waqar, and leader of Iranian delegation, deputy oil minister Mohammad Hadi Nejad Hosseinian, said that during the three-day talks Pakistan and Iran reached agreement on basic principles of pricing formula of the gas from Iran, as the two countries decided to work on bi-lateral Iran-Pakistan (IP) gas pipeline, regardless of the outcome of the trilateral project that also includes India.

Waqar said that the two sides reached a broad based agreement on pricing formula. However, Pakistan and Iran would further examine each other's proposal on pricing.

He said that Iran would provide 'Gas Sales/Purchase Agreement' (GSPA) to Pakistan in a week's time, "and we will reciprocate to it as early as possible."

He said that both sides agreed to a project structure wherein gas would be delivered at Iran-Pakistan border under a supply agreement, and the pipeline route would be Bhong area in Rahim Yar Khan district.

He said it was also agreed to enhance off-take volumes from 2.1 billion cubic feet per day (Bcfd) to 2.8 Bcfd in case the project was implemented bilaterally.

The two sides also agreed to develop a joint declaration document signifying the commitment of the two governments to the project for signature in the joint ministerial meeting in June at Tehran.

Pakistan and Iran will make immediate efforts for concluding the bilateral arrangements as the two sides resolved that contracts and agreements for the projects would be developed and finalised expeditiously.

The Iranian deputy oil minister, Mohammad Hadi Nejad Husseinian, dispelled the impression that its gas pipeline to Pakistan and India, and the country's oil and gas sector, would be affected by the 'possible' UN sanctions against Tehran due to its nuclear program.

He said: "Due to the sensitivity of the oil market, sanctions against Iran extending to its energy sector will push the oil prices further up in the international market," and added that "the world cannot afford such a hike in oil prices," when asked about the future of the project, if UN imposed sanctions on Iran. Waqar also played down the threat of sanctions, and said that Pakistan was dealing with the project in view of its energy requirements. "Pakistan is viewing this project keeping in view its national interests. We need energy for sustaining economic growth," he added.

He said that construction cost of Pakistan was likely to be between 2 and 2.5 billion dollars, but detailed study would be conducted. He said the gas would be received on Iran-Pakistan border and later the pipeline would be coming to the town of Bhong near Rahim Yar Khan.

Asked if China could benefit from the project, he said that the great vision of the President and Prime Minister was that Pakistan was going to become an energy corridor for China and, "obviously, it would be an important element in our future strategy". 

He said there could also be a possibility of laying two parallel pipelines to meet India's and Pakistan's energy requirements. "Things still have to be sorted out at bilateral level," he added.

Hosseinian said that Iran gas reserved for IPI was enough to meet the energy requirements of Pakistan and India. If there was any shortage of gas, Iran could reserve gas for the project in other fields.


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## Neo

WASHINGTON (May 01 2006): Pakistan Foreign Secretary Riaz Muhammad Khan concluded his visit on Saturday as leader of the six-member Foreign Office delegation at the two-day (April 26-27) inaugural session of Pakistan-US strategic dialogue which, he told newsmen, had specified co-ordinators in the four fields of co-operation.

Hoping that it would lead to "more intensified co-operation" in the identified areas.

The areas identified are energy, education, science and technology and economy.

He told newsmen that "this is basically a bilateral endeavour--structured, supposed to continue on regular basis--hopefully, in the years to come in which there would be regular review of bilateral co-operation in these four particular areas, and also there would be exchange of views on whatever the regional and global issues."

US Under Secretary Nicholas Burns led the American side at the strategic dialogue.

Riaz said: "We discussed, for example, the relations between Pakistan and India, and the issue of Kashmir."

In this context, he referred to the statement by Burns in which he said that the United States "would continue to encourage" the process for resolution of this dispute. He said this at a detailed briefing to Pakistani newsmen at the Embassy on Friday.

On energy, he said the American view was that "they want to help us in other areas of energy, and they would see as how to extend help. They have kept the nuclear area separate. Our stand is broad--it has a broad sweep access to nuclear power generation. That access should also be available to Pakistan."

He said: "We have energy needs; our economy is expanding; and, we have plans to expand energy in all sectors: thermal energy, hydro power; and also, nuclear energy."

The Foreign Secretary said: "We have plans for producing 8800 megawatts in the next 20 years. So, we are saying that the kind of access which would become available to India, the same access should be available to Pakistan for nuclear power generation. There are apprehensions, and experts are debating it."

He referred to Jimmy Carter's statement that India could turn it into 50 nuclear warheads, and that the US side says that there is no such threat. Experts say that since India will have access to nuclear fuel from outside, therefore, it may be possible for India to divert its own nuclear fuel, which is available to it domestically, for military purposes.

Pakistan, he said, was not interested in arms race. "In fact, we are against arms race. We do not want to destabilise the strategic balance that has been achieved. But, if there is any development which disturbs this strategic balance, like in 1974, when it was disturbed; 1998 was a different situation when we had to respond.

"But, if strategic balance is disturbed then, naturally, we will make sure that our deterrence--which is important--remains credible, remains viable. For that, whatever measures we will have to take we would take."

The strategic dialogue, which had been inaugurated, he said, would hopefully, "lead to more intensified co-operation in the four identified areas."

To a follow-up on establishment of Pakistan-US strategic dialogue, Riaz said, this relationship with Pakistan, and this description was not unique to Pakistan.

"And, I am sure, it is not unique to India. There are many other countries with which US has strategic partnership. And, maybe, the character of co-operation between United States and those countries is different from United States and India, or Pakistan and United States or, say, United States and Israel. But, I am sure, that is in a qualitative manner."

About gas pipeline, he said: "We have a clear position, and that is a very important project in the context of energy," and added: "Yes, of course, the United States has its own view about this kind of co-operation." In reply to a hypothetical question that if there would be sanctions against Iran, what would happen. "So, naturally, when there are sanctions, it would have to be taken into consideration. But, at present, there are none. Therefore, we are going ahead with the negotiations, with the talks on Iran-Pakistan-India gas pipeline."


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## Neo

FAISALABAD (May 01 2006): The sixth Pakistan Development Forum 2006 will be held on 10-11 May at the Jinnah Convention Center, Islamabad. The title of conference is 'Drivers of Economic Growth- Unleashing the Potential of Private Sector'. Previous PDFs were used to outline to Pakistan's development partners the wide-ranging reform programme initiated by the government.

According to official sources, PDF-2006 specifically seeks to highlight the government's pro-growth, pro-investment and pro-poor policies.

In addition to the inaugural sessions, there will be nine sessions devoted to specific sectors: the private sector, the SME sector, second-generation reforms, environmental sustainability, social protection, infrastructure, MDGs, devolved services and aid effectiveness.


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## Neo

LAHORE (May 01 2006): Railway Minister Sheikh Rashid Ahmed has said that Rs 2 billion will be spent on publicity of Pakistan Railways (PR), in order to improve its image.

"I have been given the task by the government to improve PR financial health and I am confident I will prove equal to the task," he told reporters at a news conference at a local hotel on Sunday.

No one had magic stick to change things overnight, but he vowed to improve the image of the railway and turn it into a profit-earning public entity in one year, he said. The minister said he had also given 30 days to the railway authorities to improve their performance, and after that they will be taken to task. After expiry of this deadline, the PR general manager and the divisional heads will be held responsible for any wrongdoing., he warned them.

To improve the financial health of the department and take it out of deficit, a number of projects will be undertaken, including offering four Down and Up railway tracks to well-reputed international parties to run trains, he said, adding: "We will welcome the parties from the private sector to run their fast trains on our tracks and offer them all necessary facilities for this purpose."

Expressing his dissatisfaction over the performance of Pakistan Railways, Sh. Rashid said it was ironical that its signal system was very outdated, but he will take all necessary steps to update the signals.

The minister said that he would chair a meeting at PR headquarters on May 4 to discuss this issue and take decisions in this respect. Before this, on May 2, he will take a briefing on all the affairs of Railways at the PR headquarters.

Sheikh Rashid Ahmed said that PR was a huge ministry, adding, "it was a state within the state, but its performance was very dismal." As many as 40 million people travel through railway annually and he will leave no stone unturned to make this most popular means of communication more comfortable for the general public.

The minister also said that special emphasis will also be laid on improving meal service in trains.

"I have also issued directives to the PR authorities that no equipment/machinery will be imported if it could be prepared/developed indigenously", he said, adding that he asked the PR authorities concerned to provide him details about the revenue generated through sale of assets and other income of the department.

Talking about other uplift initiatives, Sheikh Rashid said that laying of rail track up to Gwadar and from Quetta to Kandahar was also on agenda of the government. Moreover, he said President Musharraf had also approved linking Pakistan with China through rail track.


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## Neo

*By Engr Hussain Ahmad Siddiqui*
_The government has failed to give any convincing argument in support of the hasty decision it took to sell off the Pakistan Steel complex at such a low price. The Privatisation Commission (PC) had itself earlier indicated a price of $3 billion._

THE divestment of Pakistan Steel Mills Corporation, commonly known as Pakistan Steel Karachi, has exposed the government to sharp criticism. The giant integrated steel-making complexÃ¢â¬ânow a profit making state enterpriseÃ¢â¬âhas been sold at a throw away price of $362 million compared to its assets worth about $5 billion.

And the government has failed to give any convincing argument in support of the hasty decision it took to sell off the complex at such a low price, which was earlier indicated by the Privatisation Commission (PC) itself to fetch Rs3 billion dollars.

Interestingly, the highest bid received for Pak-American Fertilizer at Iskanderabad was of about Rs20 billion but the Pakistani investor withdrew his offer after learning that Pakistan Steel was being sold almost at the same price(Rs22 billion). The fertilizer factory, located in a remote area, was established in 1959 and revamped recently, and has no comparison whatsoever with Pakistan Steel. Likewise, Karachi Electric Supply Co (KESC) was divested at Rs20.24 billion.

The new buyers have already made 25 per cent payment and have signed the agreement, on April 24, for transfer of its strategic 75 per cent shares. In response to the expression of interest (EOI) issued by the PC, in all 19 foreign and domestic companies showed their interest in the proposal, by the due date October 8, 2005.

Out of these, only 13 submitted the request for statement of qualification (RSOD), which included investors from Kuwait, UAE, Switzerland, China and Czech, besides the winning consortium from Saudi Arabia and Russia. Finally, the PC pre-qualified six companies for bidding, which was re-scheduled many a times.

In a belated move however, these pre-qualified companies formed two consortia to participate in the bidding. This was against all ethics, norms, procedures and precedents, and should have not been allowed by the PC in the first instance. The rumours are that the two consortia manipulated the bidding. Thus the consortium of Tuwairqi Steel Mills of Saudi Arabia, Magnitogorsk Iron & Steel Works of Russia and Arif Habib Securities of Pakistan won the bid for Pakistan Steel.

The question is, why the PC allowed this arrangement that restricted competition and was in violation of rules and regulations? Furthermore, the PC had the option to offer 51 to 75 per cent shares, as indicated in the EoI notice. Why then did it offer optimum shares to the winning consortium?

It is reported that Pakistan Steel covers an area of 4,545 acres that would be transferred to the new owners, and not the total 18,660 acres owned by the government. It is not factual. The company documents reflect that the complex is, spread over an area of 10, 390 acres and the other 8,270 acres were reserved for future expansion.

The core plant facilities, consisting of sinter plant, iron-making plant, steel-making plant, billet mill, hot strip mill, cold rolling mill, galvanising unit, refractories plant and oxygen plant cover an area of 4,545 acres.

The non-core activities, like unloading facilities for imported bulk material, raw material handling facilities, coal handling plant, by-products plant and allied equipment, industrial water network and other services are located in the remaining area of 5,845 acres.

The water reservoir of 110 million-gallon capacity covers an area of 200 acres. What would be status of the remaining land, on which these auxiliary services and ancillary facilities exist, one may ask? Will the government manage and maintain the vast area at its own expense to providing services to Pakistan Steel, or will sell off later the additional land to the same group clandestinely?

Likewise, its leasehold rights of 7,520 acres for quarries of limestone and dolomite in District Thatta (Makli and Jhampir) are of great value and, apparently, have not accounted for.

Again, not many of us know that current assets of Pakistan Steel also include besides real estate in residential and commercial centres of Islamabad and Lahore, those of another estate enterprise namely Spinning Machinery Company at Lahore. The factory, which was a going concern when acquired by Pakistan Steel in 2002, is located at prime industrial area of Kot Lakhpat. What will be the status of this factory and who owns it?

It is said that Pakistan Steel technology being obsolete, its divestment to private sector was not attractive. If this was the situation, how as many as 13 companies, mostly foreign key players in steel business, could be interested in the deal? It may be recalled that the government, in January 1998, had decided to enter into a joint venture agreement with the Chinese for the up-gradation, expansion and management of Pakistan Steel.

A draft agreement was concluded between the two sides, according to which the Chinese had agreed to become joint venture partner in Pakistan Steel, with equity participation in the existing complex and also the 3-million ton production expansion scheme. The agreement however was not signed. The offer was repeatedly extended by the Chinese, again in March 2003, to the then Minister for Industries and Production Liaqat Jatoi.

The steel process technologies adopted the world over are (i) open-hearth furnace, (ii) blast furnace (BF)/basic oxygen furnace (BOF) and (iii) electric arc furnace based on steel scrap. Pakistan Steel employs the most common steel-making technology-BF/BOF, as the worldÃ¢â¬â¢s maximum production of steel is through this process. The other technologies, such as of coke oven, raw material preparation, billet mill, hot strip mill and cold rolling mill are basically the same as being practised throughout the world. The fact is that Pakistan Steel is a well-maintained plant.

For the last four years or so Pakistan Steel had implemented, besides the capital repair work, the BMR programme, which included modifications, additions and revamping of different sections of hot strip mills and cold rolling mills, and adjustments at billet mill.

In order to get a complete picture of the deal. One may consider these additional facts:

Within a week of acceptance of the bid, Pakistan Steel increased prices of its various products, by about five per cent.

Employees of Pakistan Steel have been offered the most attractive Voluntary Separation Scheme (VSS) package ever, that is 1:4 salary for its 15,000 employees, which would cost the government Rs15.75 billion.

Pakistan Steel carried an inventory of finished goods, spares and stores valuing Rs12 billion, that of raw material Rs7 billion and cash balance in the bank was Rs7 billion.

The government has picked up the loan liabilities, including that of Rs 700 million annual interest, till the year 2013.

The Central Board of Revenue (CBR) has waived off outstanding tax liabilities of Pakistan Steel. In a nutshell, the government has presented the Pakistan Steel complex to its new owners practically as a gift.


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## Neo

Islamabad, April 30: Pakistan and Iran on Sunday reached broad agreement on various financial and technical aspects of laying a Pakistan-specific bilateral gas pipeline with 33 per cent higher supplies to Islamabad, clearly indicating that India could not become part of it due to capacity constraints.

They, however, said a second parallel pipeline would be required for a trilateral project if India decided to join it that would further improve economics of the trans-national pipeline to the benefit of the three countries.

Ã¢â¬ÅIt is a breakthroughÃ¢â¬Â, Petroleum Secretary Ahmad Waqar told Dawn after the three-day talks with an Iranian oil ministry delegation. Tehran has agreed to enhance gas supplies to Islamabad through the Iran-Pakistan pipeline from the originally envisaged 2.1 BCFD (billion cubic feet per day) to 2.8 BCFD. Ã¢â¬ÅAbout 700 mmcfd of additional gas means a lot for PakistanÃ¢â¬â¢s growing energy needs,Ã¢â¬Â he said.

Asked where did India fit in the project having a total capacity of 3.2 BCFD of gas when Pakistan alone would be supplied 2.8 BCFD and another 400 mmcfd (million cubic feet per day) would utilised by Iran in its eastern provinces, the head of Iranian delegation said the three sides would discuss the possibility of a second pipeline to meet energy requirements of the two countries, including India.

For the first time, the two sides clearly used the term Iran-Pakistan (IP) for the project instead of IPI (Iran-Pakistan-India) when they jointly Ã¢â¬Ådecided to work on bilateral IP gas pipeline regardless of the outcome of the trilateral IPI projectÃ¢â¬Â.

Ã¢â¬ÅBoth sides (also) agreed to make immediate efforts for concluding bilateral arrangementsÃ¢â¬Â, they said and added that it was resolved that the contracts and agreements for the project would be developed and finalised expeditiously.

At a joint news conference on the conclusion of the joint working group (JWG) talks, both the countries seemed defiant to the US opposition to the project although Islamabad was non-committal in its response to possible UN sanctions against Iran.

Islamabad is certain to implement the project because its needs energy for economic growth. Ã¢â¬ÅSo we have decided to implement the project bilaterally,Ã¢â¬Â said Mr Waqar, who led the Pakistani side to the JWG.

Asked about the prospects of the project in the light of Foreign Secretary Riaz KhanÃ¢â¬â¢s statement in Washington that Pakistan would honour any sanctions imposed on Iran, Mr Waqar said the two sides agreed on technical aspects of the pipeline and he could not comment on political issues.

Iranian Deputy Oil Minister Dr Hadi Nejad Hosseinian, however, said he did not believe the United Nations would impose sanctions against Iran because such a move would increase oil prices.

Ã¢â¬ÅAny action like that will increase oil prices very high and I believe that the UN or its bodies will not put any sanctions on oil or the oil industry,Ã¢â¬Â he said. He said the world could not afford to put sanctions on these sectors as it will substantially increase oil prices. Iran is the second largest oil producer with a production of about four million barrels per day.

Mr Waqar said the two sides broadly agreed to the principles of gas price mechanism for the pipeline. Iran proposed a gas price formula and Pakistan presented its formula and the two sides agreed to examine each othersÃ¢â¬â¢ position to reach an agreement during the bilateral JWG meeting in Islamabad on May 25. This JWG would be followed by a trilateral JWG meeting in Islamabad also involving India.

The two sides also agreed on a joint declaration to be signed by oil ministers of Pakistan and Iran in June in Tehran. They also broadly agreed on the project structure under which Iran would deliver gas to Pakistan at a border point to be disclosed later after working out details. However, the termination point of bilateral pipeline in Pakistan would be Bhong, near Rahimyar Khan. The gas pipeline segment from Pak-Iran border to Bhong would cost about $2.5 billion, Mr Waqar said.

Mr Waqar said the two sides agreed to finalise a gas sales and purchase agreement (GSPA) at the earliest. The Iranian side promised to send the draft GSPA within a week to Pakistan, which would be responded to before the next meeting of JWG on May 25.

The two sides also agreed to start a detailed feasibility study of the project. Iran will provide technical data for the study. It was also agreed that the petroleum ministers of both the countries would meet in Tehran in June 2006, on dates to be finalised later, to sign joint declaration for the project.

In response to a question about total reserves of South Pars field for supplies to India and Pakistan, Mr Hosseinian said Iran possessed about 500 TCF of gas.

A part of this would be dedicated to the Iran-Pakistan pipeline and in case India joined, Iran may divert reserves from North Pars gas field as well.


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## Neo

Sunday, April 30, 2006 

HANNOVER: It is difficult to distinguish between the Indian and Pakistani pavilions in adjacent halls at the Hannover Messe. 

If India had SMEs showcasing products ranging from auto components to forgings, Pakistan too had similar stuff on offer. 

However, for India, display of ISRO's prowess, Bhel's heavy engineering might, TVS bikes and investment options in states made the difference. 

India had an edge partly because of being a partner country as also due to the longstanding relationship that firms had with the organisers of the fair. 

The name of the game is the same Ã¢â¬â be it tax waivers in Pakistan's special economic zones or export parks or turning Lahore, Karachi and Faisalabad into textile cities with units ranging from weaving and spinning to large processing units. 

It all sounds familiar. Pakistan is amongst the fastest growing economies, with 6.7% growth expected in '06-'07, Karachi Stock Exchange is booming and government will have a consistent economic policy. 

But the officials selling Pakistan as an investment destination are facing one hurdle Ã¢â¬â law and order situation. 

"There have been a lot of queries and our industry is also preparing to become a sourcing hub but law and order is one concern which we have to address,"a senior Pakistan government official said. 

There are also questions over the stability of government and continuity in its policies. But all this has not deterred Pakistan from wooing international investors. Officials claim that Porche is on its way to set up a manufacturing facility and BMW may follow soon. 

Why are investors flocking Pakistan? "We are doing well and they want to reap the benefits of our growth,"quips the official.


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## Neo

Monday May 01, 2006 

LAHORE: Commerce Minister Humayun Akhtar Khan has said steps beneficial to common man will be visible from the next budget. 
He was speaking at a pre-budget seminar held here Sunday under an Urdu daily. Chief editor of daily Pakistan, Mujib ur Rehman Shami, former speaker of NA, Syed Fakhar Imam, PML-N information secretary, Ehsan Iqbal, advisor to the Prime Minister on economic affairs, Dr Suleman Shah and others also addressed the seminar. 

Humayun Akhtar underscored that some vital steps of public interest are being made part of the budget for the fiscal year 2006-07. These measures will help improve quality of life of people and provide relief to them. It will be elaborated in trade policy how to boost trade. The structural reforms and positive steps pursued by the incumbent government have led to alleviate poverty. 

He noted that the whole world had supported the policies and reforms launched by the President General Pervez Musharraf. Our exports stood at $9.7 billion some years back and it was our ambition exports should reach the mark of $10 billion and now these have reached the level of $17 billion. Next year we with the grace of Almighty Allah will surpass the target of $20 billion. 

He went on to say that prosperity has come to the country as compared to the past. Where telephone connection was not available and the people used to supplicate ministers to obtain this connection but now a street vendor is seen roaming with mobile phone glued to his ear, he added. 

The poverty incidence was recorded 17 percent during the period from 1980 to 1990 and within few years it reached the level of 34 percent. The credit goes to incumbent government that it has not only contained poverty incidence but also reduced it. There should be legislation on conflicting interest. I am in support of it. Proposal in writing should be presented for law enactment. Indirect taxes should also be abolished. All surcharges be withdrawn from fuel and electricity bills and direct taxes be levied. If you impose half percent tax on agriculture sector you will then see what reaction comes in the assembly. 

Speaking on the occasion, Dr Suleman Shah advisor to the Prime Minister on economic affairs said tax rate will be lowered in next budget. Improvement in education, health care and social sectors and development process is the top priority of government. 

He informed that federal bureau of statistics was being abolished and an independent and autonomous institution for statistics would be set up. Monopoly control authority is being abolished and a competent authority is being established. 

The entire world supported and admired the economic reforms of the country, he said adding earlier no one was ready to lend us money and now name of the country is held in high esteem. Launching of Euro bond provides excellent example in this regard. These bonds were issued for five years and it is now being considered to increase its period viewing the growing confidence of investors. 

He stressed that economic restructuring is the need of hour, which is vital for economic development of the country.


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## Neo

Monday, May 01, 2006 

* FM says dispute resolution with India is stagnant
* SAFMA think-tank envisions South Asian Union
* Calls for conglomeration of regional resources

By Mohammad Kamran

ISLAMABAD: Pakistan is self-sufficient in the nuclear field and has ample nuclear resources, so it is not afraid of US nuclear cooperation with India, said Khurshid Mehmood Kasuri, the foreign minister, on Sunday.

Ã¢â¬ÅWe have 50 years of experience in nuclear science. We do not need external nuclear cooperation but discrimination between India and Pakistan is not judicious,Ã¢â¬Â he told reporters after the conclusion of a South Asian Journal Conference organised by the South Asian Free Media Association (SAFMA).

Over 55 delegates, including journalist, scholars and academicians from across the South Asia attended the conference. Pakistan believes it should get the same treatment as India, he added.

Kasuri said Pakistan would be the fourth largest nation in 2030 and the quantum of carbon dioxide emissions would be so high so as to change the world climate. Ã¢â¬ÅThat is why we are pursuing our stance that the Pakistan factor should not be ignored while envisioning the future nuclear regime,Ã¢â¬Â he said. Kasuri said Pakistan wanted a peaceful solution to the Iran issue, adding that moderate forces would receive a setback and extremist forces would be strengthened in case Iran were attacked. Ã¢â¬ÅAn attack on Iran will be considered by many quarters an attack on an Islamic country and not on a proliferating state.Ã¢â¬Â 

Participants in the conference stressed the need for conglomeration of resources for the development of the region into a South Asian Union with a regional parliament and independent central bank.

The participants linked the social progress and establishment of peace in the region with concerted efforts for conflict resolution and confidence-building measures including free trade, an open visa regime and cooperation in the energy sector among South Asian states. The conference, with the help of its 14 research groups, formulated recommendations on various challenges facing the governments and people of the region.

The 60-page draft, to be made public on May 3, gives a number of recommendations and proposals on trade and tariff in South Asia, custom laws, poverty alleviation, economic cooperation, water and energy issues, nuclear stabilisation and security and conflict resolution mechanisms. Speaking at the concluding session, Kasuri said work was underway on exempting senior citizens, judges, parliamentarians and accredited journalists from obtaining visas to visit regional states. The minister was replying to a demand by the conference for free movement of journalists and scholars within South Asian Association for Regional Cooperation states.

Kasuri said he did not see any animosity, hate or hostility in the region, adding that two rounds of talks between Pakistan and India on confidence-building measures (CBMs) and dispute resolution had concluded and the upcoming third round would be successful and result-oriented. He said dispute resolution with India had been stagnant whereas much progress had been made on the implementation of CBMs. 

Earlier, M Ziauddin, the president of SAFMAÃ¢â¬â¢s Pakistan chapter, said it was a great achievement of the conference that over 55 research papers had been consolidated into a draft. The draft would help policy makers and other stakeholders in fulfilling the cherished dream of a prosperous South Asia, he added.

Imtiaz Alam, the SAFMA secretary general, regretted that the Pakistani government denied visas to many scholars from a religious background invited to the conference.

http://www.dailytimes.com.pk/defaul...1-5-2006_pg7_12


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## Neo

RAWALPINDI (updated on: May 02, 2006, 21:37 PST): President General Pervez Musharraf on Tuesday said the ongoing development process in Balochistan was on track and directed that necessary steps be taken to ensure it gathers further momentum.

He was chairing a high level meeting here which reviewed the development projects in the province.

The President said a number of projects are being implemented in Balochistan for the prosperity of the people and to bring the province at par with other parts of the country.

He said these projects will also bring about an enormous change in the lives of the people resulting in their socio-economic uplift through creation of greater job opportunities.

The meeting also reviewed various measures for politico-economic empowerment of the people and resolution of their problems.

General Pervez Musharraf also directed the participants to take appropriate measures for the speedy resolution of the problems of the masses and facilitate them in every field of life including health and education.


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## Neo

ISLAMABAD (May 02 2006):

Prime Minister Shaukat Aziz on Monday called for a "sense of openness" among the South Asian countries for sustainable peace and to swap the "trust deficit" with a sense of co-operation leading to the socio-economic development of the masses.

Addressing delegates from the Saarc member states attending the South Asian Free Media Association (Safma) moot here at a breakfast meeting at the Prime Minister House, he urged the leadership of the region to resolve disputes and work together for building a better future of the one-fifth of world's poorest.

He said sustainable peace in South Asia can only be achieved if the voice of the people was given due respect, there was no interference in the internal affairs of others and a sense of mutual respect prevailed."

He said "Pakistan believes in energy co-operation and the Iran-Pakistan-India (IPI) gas pipeline will be an acid test, leading to broader co-operation."

Shaukat said Pakistan wants good ties with all its neighbours. He said unlike the issue of trade with India, it "unbundled" the issue of sharing of gas, and offered an energy corridor for natural gas from Iran and Turkmenistan.

He said Pakistan has linked progress on trade with India to the progress on the issue of resolution of the Kashmir dispute.

Referring to the Baglihar and Krishanganga disputes with India over water distribution rights, the Prime Minister said Pakistan had to seek legal remedy, as it felt these projects violated the Indus Water Basin Treaty of 1960.

"As lower riparian, we have to protect our rights," he said and expressed the hope that the resolution of the water security aspect will help reduce the trust deficit with India.

The PM said resolution of the core dispute of Kashmir was vital for lasting peace in the region. He recalled the amassing of around one million troops along the Pakistan border in 2001-02 and said the two countries almost reached the flash point, but the issue was resolved by their leadership and "friends."

Shaukat stressed involvement of all the three stakeholders in the dispute and said without the involvement of governments of Pakistan, India and the people of Kashmir, the issue cannot be resolved.

He also pointed at the human rights violations in the Indian occupied Kashmir and said it was important that there was an end to such practices so as to take forward the peace process.

The Prime Minister said five points along the Line of Control have opened and hoped that trade through these openings will contribute to the overall improvement of atmospherics between the two countries.

The Prime Minister said Pakistan believed in open and free trade, however, with India it was restricted because of the overall disputes, on which progress has to be made.

He acknowledged that the private sectors of the two countries felt that the non-tariff barriers were a cause of concern, but said "lack of progress on the Kashmir dispute has kept this issue alive."

PM termed the 12th Saarc summit at Islamabad a turning point in the relations between the two countries and for the overall benefit of the entire region.

"Through a very interesting back channel diplomacy both the countries expressed the desire to carry forward the peace process."

He said both President Pervez Musharraf and the then Indian Prime Minister Atal Behari Vajpayee shared their passion to move forward the process. He pointed at the several confidence building measures that have so far been agreed upon.

"But we need to think about dispute resolution, instead of dispute management," he said.

Shaukat said Pakistan was also for a stronger and more effective Saarc as the region had tremendous potential. He called for a SWOT analysis to study the strengths and weaknesses of the member states and called for strengthening the secretariat of the organisation.

"The region today is mired in conflict and trust deficit and we all need to do a lot more to leverage the full potential of our people," he said.

He said the organisation must meet regularly and take advantage of the support of the Asian Development Bank and the United Nations to help under take projects for welfare of their people.

About Pakistan's defence, the Prime Minister said country's defence budget had decreased in terms of the GDP, as it did not believe in an arms race, had no aggressive designs and was strictly adhering to the policy of minimum credible deterrence.

"We have conventional and strategic capabilities, but these are only for our defence as we wish to live with peace with all our neighbours," he added.

On Pakistan's relations with its neighbours, Prime Minister said the country believed in non-interference in affairs of other countries. On Iran, he hoped that the situation on the nuclear issue, did not get out of hand.

"We believe Iran should not proliferate, but it has the right to pursue nuclear energy under the IAEA safeguards," he added. He also spoke of Pakistan's desire in a strong and stable Afghanistan and its "strategic and multi-faceted" ties with China. He said both the countries were co-operating on economic, political, social, defence and people to people level seamlessly.

He informed the participants about Pakistan's success story on economic front and said it was in the top-ten reformers of the world. He said Pakistan has now a Fiscal Responsibility Bill to prevent over - borrowing and to restrict less spending on the social sector. He said the country was now spending a record high amount on development, while the poverty levels were on the decline and per capita income increased to over US $800.


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## Neo

FAISALABAD (May 02 2006): The World Bank is currently preparing a new CAS to cover FY06-09, which is expected to be presented to the bank's board in June 2006, while IDA credit, in an amount equivalent to $300 million, will be disbursed in one tranche upon effectiveness for Poverty Reduction Support Credit (PRSC II).

In an update report, Ms Manuela Ferro, leading economist, The World Bank South Asia Poverty Reduction and Economic Management disclosed that the elements of the draft CAS focus on three pillars, aligned with the strategic priorities of the government's PRSP (Poverty Reduction Strategy Paper): (i) sustaining growth and improving competitiveness; (ii) improving government effectiveness and service delivery; and (iii) improving lives and protecting the vulnerable.

She said that the implementation of the PRSC's ambitious, multi-sectoral reform programme requires effective co-ordination between government ministries and agencies. The PRSP secretariat in the ministry of finance will remain the focal point for the PRSC and will oversee the implementation of reforms. Progress toward PRSP objectives is being supported by improvements in government systems to collect, analyse and disseminate data.

The secretariat also collates information from various sources, identifies information and data gaps, and produces progress reports, based on a set of indicators agreed upon by federal and provincial governments as well as the international donor and domestic community. Since PRSP's completion in December 2003, the government has regularly prepared annual and quarterly PRSP progress reports, which are available on the web site.

Progress reports track and analyse pro-poor public expenditures and their sectoral composition and provincial patterns within the context of the macroeconomic situation in the country, she added.

In addition, she mentioned that the reports also monitor PRSP intermediate indicators, PRSP and social sector performance, employment, non-budgetary expenditures, and special programmes for poverty reduction. Pakistan's economic and social performance is improving.

Macroeconomic balances have improved, economic growth has picked up, social indicators are starting to improve, and structural reforms are continuing to advance. However, poverty is widespread and sustaining growth in the context of macroeconomic stability has proved challenging in the past, she added.

Ms Manuela Ferro said that the proposed operation is the second Poverty Reduction Support Credit (PRSC II) to support the implementation of Pakistan's poverty reduction strategy.

This strategy is summarised in the government of Pakistan's 2003 Poverty Reduction Strategy Paper (PRSP), entitled "Accelerating Economic Growth and Reducing Poverty: The Road Ahead."

It emphasises sustained, rapid growth as the main vehicle for poverty reduction and is grounded on four pillars: (i) achieving sustained high and broad-based economic growth, while maintaining macroeconomic stability; (ii) improving governance and consolidating devolution, both as a means of delivering better development results and ensuring social and economic justice; (iii) investing in human capital, with a renewed emphasis on effective delivery of basic social services; and (iv) targeting the poor and vulnerable, to bring the marginalised sections of the population and backward regions into the mainstream of development, and to make marked progress in reducing existing inequalities. The government is currently in the process of preparing a second PRSP.

This strategy is expected to draw upon outcomes and data that have become available since the 2003 PRSP was prepared, and also take into account developments on the economic front that require an adjustment in the macroeconomic framework. A strategy for recovery of earthquake-affected areas is expected to be part of PRSP II, she explained.

Ms Manuela Ferro further stated that Pakistan's PRSCs are one-tranche programmatic operations to support the next phase of the government of Pakistan's medium-term reform programme, laid out in the PRSP. The PRSC programme would monitor the key areas of the PRSP, and each credit under the PRSC programme would be disbursed against a selected set of prior actions.

She disclosed that the PRSC II supports selective reforms by the government that will contribute to sustain rapid growth by: (i) maintaining macroeconomic stability; (ii) improving the management and effectiveness of public expenditures; (iii) implementing the government's power sector action plan; (iv) supporting the privatisation programme and improving the regulatory framework for competition; (v) enhancing female labour force participation and labour market flexibility; and (vi) improving the management of water resources. The PRSC II will also support improved governance through reforms to improve financial reporting and budget execution.

Service delivery of public health and education is largely a provincial and local government mandate. However, the proposed credit will support accelerated progress in human development by (i) creating additional public resources for education and health, (ii) strengthening the health and education national sector policies and (iii) piloting innovative education and health programmes, focusing on the poor, to enhance demand for these services.

The PRSC II also supports improved support to the poorest and most vulnerable segments of the population, through targeted programmes aimed at addressing poverty and vulnerability directly, she added.

Ms Manuela Ferro said that the World Bank supported the first phase of implementation of the PRSP with a first PRSC, which was approved by the bank's board and disbursed in September 2004. The first year of the PRSC programme overlapped with and complemented the last year of implementation of the macro stabilisation programme supported by the IMF with a PRGF, which ended in December 2004.


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## Neo

ISLAMABAD: Iran and Pakistan yesterday vowed to work on a bilateral gas pipeline project if India fails to join them.

The original plan called for a $7 billion pipeline to pump Iranian gas to India through Pakistani territory, and officials had said they aimed to sign a deal in June.

The cost and timing of a bilateral deal for a shorter pipeline has yet to determined.

Ahmed Waqar, permanent secretary at Pakistan's Petroleum Ministry, said Pakistan and Iran had agreed to go ahead with the bilateral pipeline regardless of the outcome of the trilateral project.

"Both sides agreed to make immediate efforts for concluding the bilateral arrangements," said a statement issued after three days of talks between senior petroleum officials of the two countries.

Iran's deputy oil minister, Mohammad Hadi Nejad-Hosseinian, on Friday urged Pakistan and India to press ahead with the project or face the prospect of buying 1 million barrels a day of imported oil.

The United States, which suspects Iran of trying to develop nuclear weapons, has been urging Pakistan and India not to do business with Tehran.

Instead Washington wants them to focus their efforts on another gas pipeline project that is planned to run from Turkmenistan through Afghanistan.

The US has offered to provide technical know-how for India's civil nuclear programme as part of a strategy to forge strong links with the fast-rising Indian economy. Officials of Pakistan, Iran and India next plan to meet in late May to discuss the project.


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## Neo

IANS: Tuesday, MAY 02, 2006 

ISLAMABAD: Pakistan's per capita income has reached $750 per annum, which is now next to Sri Lanka's in South Asia. 

According to A R Kamal, former director of the Pakistan Institute of Development Economics (PIDE), the country has not progressed in this regard as compared to some fast developing nations in the region like Singapore and South Korea. 

Kamal said that the low per capita income was triggered by Pakistan's high population growth rate. The per capita income could be raised by continuing with the economic policies, he added.

http://economictimes.indiatimes.com...how/1512134.cms


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## Neo

Tuesday May 02, 2006 

ISLAMABAD: Prime Minister Shaukat Aziz on Monday said Pakistan has never linked cooperation in energy sector with any issue including Kashmir and the country believes in energy cooperation sans frontiers. 
He was talking to the participants of the South Asia General Conference organized by South Asia Free Media Association (SAFMA) and South Asian Free Trade Association (SAFTA) at breakfast here. 

The Prime Minister said that Pakistan believed in cooperation in energy sector and would go beyond borders in this regard. " We do not want to link energy cooperation with any issue including Kashmir," he noted. 

He said Pakistan would get electricity from Iran to meet its energy needs. He said Islamabad had also invited New Delhi to join trilateral peace gas line, which the latter had accepted. " Work on the proposed gas line is underway," he added. We are also engaged in talks with Turkmenistan pertaining to gas pipeline project via Afghanistan. 

Shaukat Aziz said that Pakistan was a peace loving country and did not want to join arms race in the region; however, he made it clear that Islamabad would maintain minimum deterrence. Referring to PakistanÃ¢â¬â¢s nuclear test he said, "Pakistan was forced to respond to Indian nuclear test otherwise Islamabad had no such intensions". We were left with no other option other than that, he added. 

Pakistan, he said, was reducing its defence expenditures as compared to other regional countries while increasing its expenses in social sectors. 

Pointing to the Indo-Pak relations, the Prime Minister said that both the countries were enjoying cordial ties. "In past, the two countries were striving to improve relations through backdoor diplomacy but President Musharraf and Vajpayee meeting during last SAARC conference played vital role in bringing situation to normality," he observed. 

He said numerous Confidence Building Measures (CBMs) have so far been taken between the two countries and contacts at massesÃ¢â¬â¢ level have been increased. 

The Prime Minister said that Kashmir was a core issue and talks on Siachen, Sir Creek and other fundamental issues were underway; however, he said resolution of all issues could be possible from SAARC platform. "Pakistan wants Kashmir resolution, which will be in line with the wishes of Kashmiri people and no major breakthrough between Indo-Pak relations is possible until Kashmir issue is resolved," he noted. 

Shaukat Aziz said that the leadership in South Asia should show flexibility, courage and tolerance for resolution of various issues. He said we would have to shun interference in one anotherÃ¢â¬â¢s country. " Only by this way the peace process can go ahead," he added. 

He regretted that SAARC had failed to cope with the expectations for which the body was formed. He said although the SAARC platform has been established in South Asia to link people with one another yet there is no coherence among the brains and hearts of the masses. 

He suggested that SAARC conferences at ministers and governments level should be held annually to make the Association an effective body. 

Mr. Aziz said that Pakistan wanted cordial ties with all neighbouring countries. Referring to Iran, he said, Pakistan wanted to improve its relations with Iran in energy, economy and other sectors. He said Pakistan wanted peaceful resolution of Iranian nuclear issue; however, getting energy resources for peaceful purposes was the right of Iran. 

Pointing to another neighbouring country Afghanistan, the Prime Minister said that relations between Pakistan and Afghanistan were getting strength. He said trade between the two countries was increasing and it has so far reached 2.5 billions dollars. 

He said China was reliable friend of Pakistan. " We have strategic ties with China and relations in trade, economy, security and defence are on rise," he asserted. 

The Prime Minister said that there was conducive atmosphere in Pakistan for investors where equal investment opportunities to national and foreign investors were available. " PakistanÃ¢â¬â¢s economy is increasing and annual income has reached eight hundreds billion dollars," Aziz added. 

He said we jointly should work for interfaith harmony. He said Pakistan was sincerely fighting against terrorism to restore peace in the world.


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## Neo

Tuesday May 02, 2006 

LAHORE: Commerce Minister Humayun Akhtar Khan has said steps beneficial to common man will be visible from the next budget. 
He was speaking at a pre-budget seminar held here Sunday under an Urdu daily. Chief editor of daily Pakistan, Mujib ur Rehman Shami, former speaker of NA, Syed Fakhar Imam, PML-N information secretary, Ehsan Iqbal, advisor to the Prime Minister on economic affairs, Dr Suleman Shah and others also addressed the seminar. 

Humayun Akhtar underscored that some vital steps of public interest are being made part of the budget for the fiscal year 2006-07. These measures will help improve quality of life of people and provide relief to them. It will be elaborated in trade policy how to boost trade. The structural reforms and positive steps pursued by the incumbent government have led to alleviate poverty. 

He noted that the whole world had supported the policies and reforms launched by the President General Pervez Musharraf. Our exports stood at $9.7 billion some years back and it was our ambition exports should reach the mark of $10 billion and now these have reached the level of $17 billion. Next year we with the grace of Almighty Allah will surpass the target of $20 billion. 

He went on to say that prosperity has come to the country as compared to the past. Where telephone connection was not available and the people used to supplicate ministers to obtain this connection but now a street vendor is seen roaming with mobile phone glued to his ear, he added. 

The poverty incidence was recorded 17 percent during the period from 1980 to 1990 and within few years it reached the level of 34 percent. The credit goes to incumbent government that it has not only contained poverty incidence but also reduced it. There should be legislation on conflicting interest. I am in support of it. Proposal in writing should be presented for law enactment. Indirect taxes should also be abolished. All surcharges be withdrawn from fuel and electricity bills and direct taxes be levied. If you impose half percent tax on agriculture sector you will then see what reaction comes in the assembly. 

Speaking on the occasion, Dr Suleman Shah advisor to the Prime Minister on economic affairs said tax rate will be lowered in next budget. Improvement in education, health care and social sectors and development process is the top priority of government. 

He informed that federal bureau of statistics was being abolished and an independent and autonomous institution for statistics would be set up. Monopoly control authority is being abolished and a competent authority is being established. 

The entire world supported and admired the economic reforms of the country, he said adding earlier no one was ready to lend us money and now name of the country is held in high esteem. Launching of Euro bond provides excellent example in this regard. These bonds were issued for five years and it is now being considered to increase its period viewing the growing confidence of investors. 

He stressed that economic restructuring is the need of hour, which is vital for economic development of the country.


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## Neo

Tuesday, May 02, 2006 


* PM says non-tariff barriers also impediment to trade 
* Urges greater energy cooperation among SAARC states

ISLAMABAD: Prime Minister Shaukat Aziz said on Monday that free trade with India was not possible without resolving political disputes. 

Ã¢â¬ÅOur trade relations with India are restricted due to the overall paradigm of our relations,Ã¢â¬Â the prime minister said to a South Asia Free Media Association (SAFMA) delegation. He said non-tariff barriers were also a big impediment to trade between the two countries. Ã¢â¬ÅWe cannot move towards free trade with India without resolving political issuesÃ¢â¬Â.

Aziz said that the Islamabad SAARC summit was a turning point in Ã¢â¬Åour relations (with India) and we are moving forward to further improve these relationsÃ¢â¬Â. He said a dialogue process with India was underway, but it was currently too slow and needed to be speeded up. 

He said both countries should now also move towards dispute resolution rather than dispute management. He said Kashmir was a core issue which should be resolved according to the aspirations of the Kashmiri people and with the acceptance of both India and Pakistan. The prime minister said Pakistan wanted a Kashmir resolution and that is why it had proposed demilitarisation and self-rule in Kashmir.

Energy cooperation between South Asian countries is of vital importance and could be a key driver of development, he said. Pakistan invited India to join the Pakistan-Iran gas pipeline project, which Ã¢â¬Åwe call a peace pipeline and we unbundled it from all other issuesÃ¢â¬Â. He said Pakistan was also exploring a gas pipeline from Turkmenistan and had invited India to join it. Ã¢â¬ÅWe are also working with Kyrgyzstan and Tajikistan to build an energy grid for Pakistan,Ã¢â¬Â he said. To a question, he said there was also a need to settle the water issue with India and stressed the need to abide by the Indus Waters Treaty. He said that anybody was free to invest in Pakistan.

He said a trust deficit and conflicts had prevented South Asia from exploiting its human capital. SAARC had the potential to resolve these issues but it was not working very well, he said.

Aziz said SAARC needed to be energised and its secretariat strengthened. SAARC could be an excellent platform to meet the challenges of globalisation, he added. The prime minister said Pakistan enjoyed close relations with Iran, Afghanistan, the Gulf states, Bangladesh and other SAARC member countries. Ã¢â¬ÅOur relations with China are multi-faceted and are expanding in all fields including economy, diplomacy, civil, political, defence and security. We are proud of our seamless relations with China.Ã¢â¬Â

He said Pakistan had a vibrant economy that was growing fast. Due to Ã¢â¬Åour reforms agenda a middle class is emerging and we are on our way to improving living standards by ensuring macro and micro economic stabilityÃ¢â¬Â. 

To a question, Aziz said Pakistan was not interested in an arms race but Ã¢â¬Åwe have a strategy to ensure minimum nuclear deterrence to deter any aggressionÃ¢â¬Â. He said sanctions after Pakistan tested nuclear weapons in 1998 had helped it become self-reliant in defence. 

He said Pakistan was gradually decreasing its defence expenditure and enhancing allocations for social sector improvement and poverty reduction. He said Pakistan was committed to fighting terror and had done more than any country to curb terror. To a question, he said Islam was a religion of peace, harmony and tolerance. He said Islam abhorred terrorism and Ã¢â¬Åwe are proud of our faithÃ¢â¬Â. He said there was a need to promote inter-faith harmony.

To another question, he said Pakistan had made successful efforts to improve its image by reforming its economy, transparent leadership and promoting the true image of Islam and still Ã¢â¬Åwe are making our best efforts to build inter-faith harmonyÃ¢â¬Â.He said the insurgency in Sri Lanka was an internal issue, Ã¢â¬Åbut if the Sri Lankan government seeks our assistance, we will think about itÃ¢â¬Â. However, he said, Pakistan hoped that the issue would be resolved through dialogue.Ã¢â¬Â


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## Neo

Tuesday, May 02, 2006 

ISLAMABAD: Pakistan and Uzbekistan will sign several agreements on increasing trade, investment and agriculture during the Uzbek President Islam KarimovÃ¢â¬â¢s visit to Pakistan, which is starting today (Tuesday), said the Foreign Office on Monday.

A Foreign Ministry statement said that President Pervez Musharraf and his Uzbek counterpart would witness the signing ceremony after formal talks. Ã¢â¬ÅKarimov will also meet Prime Minister Shaukat Aziz,Ã¢â¬Â it said, adding that the Uzbek president would be accompanied by ministers for foreign affairs, justice, finance and foreign trade and the head of the Central Bank of Uzbekistan. KarimovÃ¢â¬â¢s visit offers the opportunity to reinforce existing ties between Pakistan and Uzbekistan, said the ministryÃ¢â¬â¢s statement.


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## Neo

Tuesday, May 02, 2006 

LAHORE: President General Pervez Musharraf should stay in uniform till 2017 for the effective implementation of his water vision, said Tehrik-e-Istiqlal (TI) Central President Rehmat Khan Wardag at the Lahore Press Club on Sunday. 

Wardag said the president had achieved a milestone by laying the foundation stone for the Basha Dam on April 26, also announcing the construction of five major dams including Kalabagh by 2016. He said Musharraf was right in saying that water reservoirs were imperative for PakistanÃ¢â¬â¢s survival in addition to the elimination of unemployment and poverty. 

The new dams would bring about an economic revolution and create employment opportunities, ensuring development in Pakistan, he said, adding that the new dams would help cultivate around 20 million acres of barren land. 

The central president said that more agricultural land would guarantee high production and improve the countryÃ¢â¬â¢s exports. 

He said Pakistan was progressing in various sectors because of the presidentÃ¢â¬â¢s policies. PakistanÃ¢â¬â¢s foreign exchange reserves were $12 billion, Stock Exchange Index points 12,000, inflation rate 8 percent, GDP growth rate7 percent, banksÃ¢â¬â¢ interest rate 12 per cent and the dollar rate Rs 60, he said while comparing the stats with the ones before October 12 (1999), when the countryÃ¢â¬â¢s foreign reserves were only $680 million, Stock Exchange Index points 1,800, inflation rate 16 percent, GDP growth rate 2.75 percent, banksÃ¢â¬â¢ interest rate 25 percent and the dollar rate Rs 70.


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## Neo

By Ahmed Hassan

ISLAMABAD, May 1: Prime Minister Shaukat Aziz said here on Monday that Pakistan neither had any aggressive designs against anyone nor its 160 million people were interested in the arms race, adding that its defence expenditures were gradually decreasing.

Speaking and responding to queries by visiting delegates of the South Asia Free Media Association (SAFMA) at the Prime MinisterÃ¢â¬â¢s House, the premier said Pakistan believed and pursued policy of minimum credible deterrence necessary for defence of its sovereignty.

He said in our case social sector development expenditures were growing rapidly and we have passed a landmark fiscal responsibility law which guarantees increased spending on education, health and infrastructure sectors.

He said Pakistan was willing to open up its trade links with India as it was open to the world market but it desired resolution of disputes, especially the issue of Kashmir, go in tandem with the ongoing process of normalisation in other spheres.

To a query about export tariff barriers, Mr Aziz said Indian trade and industry was engaged in questing on a way out but everything was ultimately linked with overall conflict reduction. Ã¢â¬ÅWe need to find a level playing field when it comes to bilateral trade between the two countries,Ã¢â¬Â he said.

About Iran he said that Pakistan did not support nuclear proliferation nor favoured that Iran should go nuclear but it believed that Iran has all the right to use civil nuclear facility for development of its energy sector.

FOREIGN POLICY: Mr Aziz said Pakistan was pursuing a policy of peaceful co-existence with all its neighbours.

He said India and Pakistan had taken a number of confidence building measures.

He asserted that President Pervez MusharrafÃ¢â¬â¢s and former Indian premier VajpayeeÃ¢â¬â¢s initiative had greatly helped resolve their conflict as a result of which one million Indian troops deployed on the borders were withdrawn.

He stressed that Pakistan-India relations were central to the overall atmosphere of the entire South Asia region.

Mr Aziz said Pakistan was eager to involve India in the Iran-Pakistan-India (IPI) pipeline and also wanted to enter other energy procurement agreements with the Central Asian Republics.

When asked whether Pakistan could play a mediatory role in the ongoing LTTE-Sri Lanka government conflict, he said Pakistan had good relations with Sri Lanka but it could not interfere in its internal affairs.

He said Pakistan had highly cordial and close relations with China in areas of defence, construction, trade and economics which it was working to increase.

The prime minister called upon the leadership of Saarc to show courage and flexibility to make it a vibrant and energetic body which would be able to help turn South Asia into a region of peace, stability and prosperity.

He said Pakistan was ready to work with member countries to re-energise Saarc which was working far below its potential, and added that its members even differed on holding regular meetings.

He called for upgrading the Saarc secretariat by appointing a secretary-general of the level of a cabinet member for which the World Bank and other international monitory bodies were ready to provide funds.

He said we need to strengthen Saarc in the larger interest of the peoples of its member countries, and added that for doing so their differences on certain matters should be kept aside.

PAKISTANÃ¢â¬â¢S ECONOMY: He claimed that Pakistan had come out of the danger of being declared a failed state hovering over it seven years ago by introducing economic reforms which put it among the top 10 nations of Asia. He said latest surveys have revealed about reduction of poverty in Pakistan while its annual GDP growth remains between 6 and 8 per cent and per capita income is expected to reach $800.

He said economic reforms, including policy of deregulation, privatisation and transparency, had earned the country bigger foreign direct investment opportunities which have climbed to $3 billion this year.

PAKISTANÃ¢â¬â¢S IMAGE ABROAD: Responding to a query, the prime minister said the image of Pakistan had improved as far as its economic, political and foreign policy was concerned.

However, he admitted that following 9/11 and 7/7 the linkage of Islam with acts of terrorism had somewhat created problems which the leadership was conscious of and efforts were being made to project the true face of Islam, which preached peace and inter-faith harmony.

AFGHANISTAN: Premier Aziz said Pakistan believed a strong and peaceful Afghanistan was in its own interest and had been extending all cooperation to achieve this objective.

He said that Pakistan had hosted the largest Afghan refugee population and hoped that the remaining refugees would also leave for their homes soon.

TERRORISM: He said Pakistan was in the frontline of the international war on terrorism and had a substantial role to play towards elimination of terrorism over the years.


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## Neo

ISLAMABAD, May 1: The government has decided not to provide gas to the cement sector in future and divert additional gas supplies away from Wapda, KESC and independent power producers (IPPs) after 2011, owing to gas shortfalls.

This is part of the new fuel policy approved by Prime Minister Shaukat Aziz a few days ago. The policy will be formally announced soon to enable investors to make their plans accordingly, a senior official of the petroleum ministry told Dawn.

As a result, the government will now give top priority to develop power plants based on hydel, coal and nuclear resources to meet energy requirements of a growing economy.

Moreover, if the gas import plans cannot be implemented and gas supplies remain limited to LNG imports in the next five years, the new thermal power plants will be based on furnace oil with the provision that these could be switched over to gas at a later stage. This will, however, put additional foreign exchange burden on the import of fuel.

The policy has also clearly defined the order of priority for all sectors for additional gas supplies. The policy has been prepared on the basis of an integrated analysis of Wapda and KESC systems, scheduled development of hydel, coal and nuclear energy projects and expected low water availability during dry period.

The economic analysis of various competing fuels indicate that natural gas and LNG will cost $6 per mmbtu (million British thermal unit) against the current rate of about $3.5 per mmbtu, while fuel oil will cost $8.1 per mmbtu. The cost of Naptha and high-speed diesel has been estimated at $1.4 and $12.6 per mmbtu.

As such, domestic and commercial consumers will get top priority for gas supplies, followed by fertiliser and related industrial consumption.

Third priority has been given to IPPs and the power plants of Wapda and KESC already having firm gas supply commitments under the gas supply agreements while CNG-stations, captive power for export oriented textile units and general industrial sector have been placed at the fourth priority.

The 5th preference will be given to Wapda and KESCÃ¢â¬â¢s power plants other than those with existing firm commitments. The last priority has been given to the cement sector, which means that gas will not be provided to this sector in future.

The policy envisages that after meeting existing supply commitments and other priority sectors, natural gas for new IPPs will not be available after 2011.

This situation will remain intact even after materialisation of 500 MMCFD (Million cubic feet per day) liquefied natural gas (LNG) import by 2010 and hence additional supplies would be diverted to other priority sectors. Further, the gas supplies to Wapda and KESC plants above the existing commitments will also be diverted to other sectors after 2010.

Moreover, CNG stations, captive power and general industrial sector will start running short of gas from fiscal year 2015.


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## Neo

LAHORE - Chief Minister Ch Pervaiz Elahi called on President General Pervez Musharraf at Army Guesthouse, Lahore here Monday, and discussed with him matters pertaining to development projects, reform process in various provincial departments and national issues. The meeting lasted around two hours.

An official handout issued here on Monday quoted President Musharraf as having said that results of public welfare-oriented projects had started becoming visible in Punjab as the reform process was being implemented expeditiously. Ã¢â¬ÅConstruction of the Bhasha Dam will fetch investment of $6.5 billion. Moreover, the agriculture sector will be strengthened, and fulfill the energy requirements of the country,Ã¢â¬Â he added. 

The president said the government was implementing a number of programmes of public welfare. He appreciated the briefing given by Chief Minister Pervaiz Elahi to foreign ambassadors regarding development programmes in the province. Musharraf said that it would help create awareness about the development activities abroad, which would, in turn, attract foreign investment in the province resulting in beginning of a new era of prosperity in Punjab.

The chief minister gave a detailed briefing to the president regarding political situation, law and order and ongoing uplift programmes in the province. He said that due to economic policies of President Pervez Musharraf abundant resources have become available to the provinces and these funds are being used for development activities in Punjab without any discrimination. 
He said that uplift schemes especially mega projects were being completed expeditiously in the province for raising the standard of living of the common man and available resources are being used in a transparent manner. He said that a comprehensive programme of infrastructure development was being given a practical shape while solid measures are being taken for the improvement of communication system and road network in the province. The CM said that mega project of construction of Ring Road and the link roads would be completed by 2007 for solving traffic problems and accelerating development process.

Pervaiz Elahi said that an industrial estate was being set up at Faisalabad, which will result in rapid industrialisation and generation of a large number of job opportunities. He said that huge resources are being spent for providing modem health facilities to the masses. He said that construction of a cardiac centre in Multan has been completed and services of heart specialists of international repute have also been acquired for this centre. 

The CM said that cardiac centres were also being set up in Faisalabad and Wazirabad, and attractive salaries and residential facilities were being offered to doctors working at rural health centres. He said that development projects were being completed in accordance with international standard of management.

Pervaiz Elahi congratulated President Pervez Musharraf on laying the foundation stone of Bhasha-Diamir Dam and said that construction of water reservoirs will result in development of agriculture sector besides generation of cheap electricity, which will further strengthen national economy.


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## Neo

M. ZAMAN MALIK

PakistanÃ¢â¬â¢s economy is thriving at a rapid pace. The real GDP increased from 5.1 per cent in 2002-03 to 6.4 per cent in 2003-04 and was 8.4 per cent in 2004-05. Why is the disparity between rich and poor increasing in leaps and bounds, is a reality most puzzling. 

Wealth is praiseworthy in the highest degree, if it is acquired by individualÃ¢â¬â¢s own efforts and the grace of God in commerce, agriculture, art and industry, and if it is expended for the welfare of the down trodden. The glaring absence of equilibrium between rich and impoverished, at times, tends to cause unrest in minds of the multitude. 

One shudders to call it the harbinger of a revolution. On top of that, the harangue of the governors at all levels, adds fuel to the fire. How can a common man afford to pay Rs Eighty or ninety per kilogram, for ordinary pulses, and for how long? 

Even if Pakistan, some time in future, happens to get the agreed quantity of natural gas from Iran, it will still be short of its requirement by 50 per cent. Qatar is not yet ready to lay the pipeline. 

The pipeline, from CARs is resting only in minds. PakistanÃ¢â¬â¢s economy is growing rapidly. Though, it has proved of no use to the 75 per cent of the population, which is crying for drinking water, basic health facilities, law and order and basic human rights. Agro-industries need urgent attention. Agriculture, however, is not capable of absorbing the large number of unemployed. Public sector will have to be set up. 

Only a genuine representative of government, emerging after free and fare elections, having the confidence of the people can succeed. Those who enriched themselves by sucking the blood of their poor countrymen will automatically be discarded. 

The armed forces have done well, but their hands are already more than full. So far, so good, but it was time to see the government of the people, by the people and for the people. It is hoped that they have learnt from their mean indulgence at the cost of stateÃ¢â¬â¢s exchequer. The most urgent task of the future government should be to some how get the civil servants on the right track. 

According to SSGC calculations, Pakistan would face a short fall of 350-mmcfd from the year 2010 and up to 1,691 mmcfd in 2015 and 3,156 mmcfd in 2020. The demand for gas is increasing by 7-8 per cent per annum and further delay in completion of pipeline projects would create supply problems for Pakistan. 

Pipeline from Iran will be 1638 kilometers in length; it will bring 1.6 billion cubic feet of gas from Assalyye in Iran to Gadani near Karachi. Pipeline from Qatar will be 1670 kilometers in length; it will be taken from Qatar North field and bring 1.6 billion cubic feet of natural gas through Oman following a sub-sea route to Karachi. Pipeline from Turkmenistan will be 1400 kilometers with 48-inch diameter; it will fetch 2 billion cubic meters of gas from Daulatabad gas field to Multan, in Pakistan.

Both large-scale hydel power projects and nuclear energy are inappropriate to meet future energy needs. The issues attached to it like Kalabagh Dam and other such massive projects have political implications. Any urgency on the part of GoP in this context can prove harmful to the federation of Pakistan. The President has done well in laying the foundation of another Dam. Natural gas will get us electricity at cheaper and affordable rates.


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## Neo

Tuesday, May 02, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\05\02\story_2-5-2006_pg5_4

_By Arshad Hussain_

KARACHI: Two more European car manufacturers will introduce their latest model cars in Pakistan by the end of this calendar year. 

The government of Pakistan has already allowed the two companies to import their complete build units (CBU) initially.

French company Renault will introduce to the Pakistanis its Logon models. 

The government has also allowed a consortium of four investors, including an Arab and three Pakistani investors, to introduce European Black Cap car in Pakistan.

Ã¢â¬ÅThe federal government is working on an auto policy that would be announced in the next few weeks,Ã¢â¬Â an industry source told the Daily Times here on Monday. Ã¢â¬ÅThe government is likely to announce a number of incentives for these two European carmakers.Ã¢â¬Â 

Ã¢â¬ÅThe incentives to be announced by the federal government will help the carmakers to set up their plants anywhere in the country,Ã¢â¬Â the source said.

French Renault carmakers had already introduced their vehicles in India and now they are looking towards the Pakistani auto market.

Ã¢â¬ÅThe company has promised to the Pakistani government to initially invest Rs two billion in Pakistani auto industry and it would import 1000cc to 1300cc cars into the market,Ã¢â¬Â the source said.

The company has demanded a further reduction in customs duty from 35 to 15 percent in the coming budget and exemption from all taxes for the next five year, the source said.

Similarly, a Pakistani consortium, SPL, has been allocated several acres of land in Dhabeji, a place close to Karachi.

The consortium with an initial investment of Rs 2.5 billion would set up a Black Cap car-manufacturing plant in Pakistan and it would introduce 800cc to 1300cc cars. The ministry of finance has allowed the consortium to import 300-400 CBU cars in Pakistan.

Ã¢â¬ÅBoth the new investors are looking towards the governmentÃ¢â¬â¢s auto policy, which is to be announced,Ã¢â¬Â the official said. 

Two European cars, BMW and Mercedes, are already plying in Pakistan and considered prestigious despite being highly expensive. 

Ã¢â¬ÅThe new comers are introducing vehicles below 1300cc power engines and they should be so priced that they should compete with other vehicles like Suzuki, Toyota and Honda,Ã¢â¬Â an analyst said. According to sources, the government has set up a committee, headed by Prime Minister Shaukat Aziz, to listen to complaints of the local auto industry.

The government has refused to give any new incentive to the local auto industry, an industry official said.


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Tuesday, May 02, 2006 

ISLAMABAD: Minister of State for Finance Omar Ayub Monday said the prices of petroleum in Pakistan were still lower than India after the government paid Rs 2 billion from the exchequer to pass on the minimum increase in the international market to the general public.

In a statement here, he said the petroleum prices have registered unprecedented rise in the international market and the government has not passed on the full burden to the consumers.

"That is why the government gave a subsidy of Rs 2 billion and passed on only the 50 percent increase to the public," he said.

He said Pakistan imports 82 percent of its total petroleum needs from the international market and any rise in the prices there have a direct effect on country's domestic prices, Omar added.

"People are well aware of the fact that the increase in the petroleum prices is not the result of internal policies. Rather it is due to the circumstances beyond government's control."

He said since May 2004, whenever there has been an increase in the prices in international market, the government has given subsidy to the general public.

"The government has so far paid Rs 66 billion in subsidy. That is why the price of petrol in India today is Rs 65 per liter while in Pakistan it is Rs 57," Omar said. "In this era of globalisation, no country can save itself from the changes in economic fundamentals at the international level. Therefore the government sometimes is compelled to take hard decisions," he added.


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ASHKABAD (updated on: May 03, 2006, 18:49 PST): Turkmenistan on Wednesday reassured Pakistan of its total commitment towards the multi-billion gas pipeline project and said it has enough reserves to meet current and potential buyers in the region. The assurance came from Foreign Minister of Turkmenistan Rashid Meredov in a meeting at Ashkabad with Foreign Minister Khurshid Kasuri.

The Foreign Minister while on his way to Baku to participate in the 16th ECO Board of Foreign Ministers meeting made a technical stopover at Ashkabad.

Pakistan is seeking supply of natural gas from the Daulatabad fields to meet its growing energy needs and was working with Turkmenistan for construction of a pipeline, passing through Afghanistan. A series of meetings between the energy ministers of the three countries have been held to finalise details.

The Turkmen Foreign Minister citing a recent pre-feasibility study by the Asian Development Bank said his country has "more than enough reserves to meet the demands of current and potential buyers."

He said his country attaches highest importance to the Turkmenistan-Afghanistan-Pakistan gas pipeline project and would like to conclude it at the earliest.

Foreign Minister Kasuri reciprocated the views and said Pakistan attaches highest importance to TAP and sees it as of "a major strategic value. "He said the project will bring the three countries closer and strengthen their economies."

Pakistan has also offered India to join the project. It has also made a similar offer for the natural gas it plans to acquire from Iran. Kasuri said Pakistan will be happy for India, if it decides to join the project.

The Turkmen Foreign Minister said the energy ministers from India, Afghanistan and Pakistan have recently visited the Daultabad gas fields and independently verified the reserves, enough to meet their energy requirements.

Foreign Minsiter Kasuri also sought Turkmenistan's support for Pakistan for a seat on the Human Rights Commission. Rashid Meredov assured that his country's support in this regard.

About the Economic Cooperation Organisation (ECO), Meredov said his country was fully committed to the ten-member forum and has already built a road and railway infrastructure as its part of the ECO transport scheme.

He said progress was being made in bringing the ECO members together and his country was working to maximise the benefits of the member states meet their energy needs. He said Turkmenistan regards Pakistan as an important country and values its relationship.

Foreign Minister Kasuri invited his Turkmen counterpart to visit Pakistan, an offer which he accepted. The dates of the visit will be agreed upon through diplomatic channels. The Foreign Minister, also on behalf of President General Pervez Musharraf extended an invitation to President of Turkmenistan for an official visit.

Foreign Minister Kasuri thanked his counterpart for making his brief stopover significant, enabling them to discuss regional and international situation, the progress on the TAP project and bilateral affairs during their hour-long meeting at Ashkabad airport.


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ISLAMABAD (May 03 2006): Pakistan and Uzbekistan on Tuesday signed agreements and memorandums of understanding (MoUs) to promote co-operation and interaction in various fields to further enhance bilateral relations and strengthen trade and economic ties.

These agreements and MoUs were signed here at the Aiwan-e-Sadr following talks between President General Pervez Musharraf and Uzbekistan President Islam Karimov.

Both the presidents witnessed the signing of these agreements and MoUs on intensifying bilateral co-operation in a number of fields, including trade and economic relations and fighting international terrorism.

Both the countries also signed a joint statement, expressing the common resolve to reinforce bilateral ties.

The agreements and MoUs signed between Pakistan and Uzbekistan included: agreement on co-operation in the sphere of support of small and private entrepreneurship, agreement on co-operation in the field of plant quarantine, protocol of exchange of instrument of ratification of the agreement between the two countries on co-operation in the fight against international terrorism, memorandum of understanding on trade, economic and investment co-operation, MoU between Ministry of Agriculture and Water Resources of Uzbekistan and Pakistan Agricultural Research Council, Ministry of Food, Agriculture and Livestock of Pakistan, MoU between State Customs Committee of Uzbekistan and Central Board of Revenue on methodological instruments for exchange of information on bilateral trade, MoU between National Bank of Uzbekistan and National Bank of Pakistan, MoU between National Bank of Uzbekistan and Habib Bank of Pakistan and MoU on establishing of Joint Business Council between the Chamber of Commerce and Industry of Uzbekistan and Federation of Pakistan Chambers of Commerce and Industry.

These agreements and MoUs were signed by the concerned ministers of both the countries.

Earlier, President General Pervez Musharraf and his Uzbek counterpart Islam Karimov vowed to expand bilateral commerce and economic relations with the visiting leader also voicing support for Pakistan's gaining full membership of the Shanghai Co-operation Organisation (SCO).

Both the leaders told newsmen in a post-talk interaction that Pakistan and Uzbekistan had also agreed to co-ordinate their efforts in fighting terror for the common goal of sustainable peace, security and development in the region.

President Musharraf said Pakistan would develop rail and road links with the Central Asian states as part of its efforts to take bilateral trade to new levels and also provide access to Uzbekistan to the world through its ports.

"We expressed the mutual desire to develop road and rail links and Pakistan has offered Uzbekistan to use our seaports for developing commerce with other regions and the world," he said at a joint press conference at the Aiwan-e-Sadr.

In the context of establishing durable peace in the region for promoting regional trade, both the sides shared the desire for peace and stability in Afghanistan.

To a question on co-operation in counter-terrorism, President Musharraf said the two sides could share intelligence "so that we can deal with the financial linkages of terrorists".

On fighting extremism, he said each country had to fight the malaise in accordance with its own peculiar environment, adding that Pakistan had adopted a holistic strategy to address it effectively on long-term basis. Musharraf thanked the Uzbek leader for expressing support to Pakistan in securing full SCO membership.

President Karimov said Uzbekistan fully supported President Musharraf's vision of enlightened moderation as a way out of international turmoil.

He also backed President Musharraf's efforts aimed at making the Organisation of Islamic Conference (OIC) a dynamic body.

He expressed the hope that the agreements and memorandums of understanding signed between the two sides would lend a new momentum and help them in making the most of the vast existing trade potential.

He particularly referred to Pakistan's key geo-strategic location and said development of communication links between them and stability in Afghanistan would enable that landlocked country to have access to other regions through Pakistani ports of Gwadar and Karachi.

Earlier, the two leaders also discussed regional and international issues of common concern. Later, the senior aides joined the two leaders at the delegation-level talks.


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ISLAMABAD (May 03 2006): The revenue collection target for 2006-07 would range between Rs 825 billion and Rs 850 billion, taking into account 20 percent estimated growth in revenue during the next financial year.

Official sources told Business Recorder on Tuesday that 20 percent growth in revenue collection would include taxation measures to be taken in the coming budget.

Every year, the growth in revenue collection is about 16-20 percent. It has been estimated that current fiscal year collection would exceed Rs 708 billion. Keeping in view the revenue growth, worked out on the basis of this figure, next year's target would be between Rs 825 billion and Rs 850 billion, they said.

However, the exact figure would be known on budget proposals finalisation.

Sources said that total positive revenue impact was Rs 18 billion, whereas the negative implications were Rs 14 billion, due to the taxation measures taken in the 2005-06 budget, showing a net positive impact of Rs 4 billion.

The taxation measures on the customs side have positive impact of Rs 1.2 billion, whereas its negative impact was Rs 7.3 billion. On the other hand, taxation measures on sales tax and federal excise will yield Rs 7.8 billion, while negative implications will be around Rs 2.1 billion. The changes on the income tax sides have positive revenue impact of Rs 9 billion, whereas negative impact was Rs 4.1 billion.

Officials said that the 20 percent estimated growth in revenue collection showed that next year's revenue collection target would be substantially high as compared to this year's target of Rs 690 billion.

The CBR has so far collected Rs 536.4 billion in July-April (2005-06) against Rs 451.1 billion collected in the same period of last year, reflecting an increase of 18.9 percent.


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ISLAMABAD (May 03 2006): Finance Ministry is not expecting immediate returns from the equity-based investment made by resident Pakistanis abroad. "Investment made by resident Pakistanis abroad is unlikely to generate major profit repatriation to Pakistan as the sponsors may retain their earnings in the concerned countries for business requirements," official sources quoted Finance Ministry as saying in a recent report submitted to the government.

The government had allowed resident Pakistanis to invest abroad in May 2001, subject to fulfilment of specific conditions. The State Bank of Pakistan (SBP) approves investment proposals of up to $5 million, while higher amounts are referred to the ECC.

Sources said that from May 2001 to December 2005, SBP and ECC approved investment transactions amounting to $307 million, of which the ECC and the central bank cleared proposals of $186 and $121 million, respectively.

Investment worth $90 million were later abandoned, which included Engro Chemicals investment in Oman ($77 million), which was shelved because the project turned out to be financially unfeasible, and Lakson Tobacco Company's project of $5 million, among others, which did not materialise.

The major sectors in which investment was made were manufacturing ventures (29 percent), information technology (22.3 percent), chemicals and pharmaceutical (16.2 percent), financial services (14.2 percent) and services sector (12.4 percent).

One-fourth of total investment was made in Oman; another 15.6 percent in Morocco, and 14 percent in Bermuda, whereas other important destinations were US, Bangladesh, UAE and Sudan. Remaining investments were dispersed across the globe.

The Finance Ministry, in its report, said that investments (deducting the projects shelved) were low, close to $217 million, and given the leads and lags in setting up establishments so far, only $155 million have been actually disbursed.

The investments by and large were in a number of sectors driven by the niche and industry-specific interests. Also, geographical coverage was across the board, the ministry said, adding that it seemed that small investments abroad had been made by Pakistani businessmen to largely set foot in new markets and extend their market reach, cross boundaries, internationalise Pakistan brand (like Hotel PC) brand or investments of Packages Limited and to explore opportunities to attract investment inflows in Pakistan.

In some cases, like Fauji Fertiliser, the strategic decision for investment was driven mainly by the need to secure supplies (phosphoric acid) for local fertiliser plants. In the financial sector, some investments were driven by needs of overall branch network and minimum regulatory requirements of host countries.

"Payback of the projects is likely to take some time, after the opertionalisation and after the initial phases," the ministry added.


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ISLAMABAD (May 03 2006): Prime Minister Shaukat Aziz has said that Pakistan attaches great importance to relations with the Netherlands, which is not only one of our important trade partners but also the 7th largest foreign investor in Pakistan, and a major partner in the area of development co-operation.

Talking to Bernard Bot, Foreign Minister of Netherlands, at the Prime Minister's House Tuesday, the Prime Minister said Pakistan has a strong interest in further strengthening relations with Netherlands, a press release said.

Matters relating to bilateral co-operation, national and international issues, Pakistan's role for peace in the region, defence and security matters and investment friendly climate in Pakistan came under discussion. On the Iranian nuclear issue, the Prime Minister said Pakistan is opposed to nuclear proliferation. However, Iran has a right to use nuclear energy for peaceful purposes under the IAEA safeguards.

He said Pakistan is in favour of a peaceful resolution of the issue through dialogue and is opposed to any coercive measures against Iran. The use of force against Iran will be catastrophic, the Prime Minister added.

The Prime Minister reiterated Pakistan's commitment to peace process with India through a process of composite dialogue. He said Pakistan's suggestions of demilitarisation and self-governance in Kashmir can form the basis of a meaningful dialogue and concrete progress on the Kashmir issue. About defence and security issues, the Prime Minister said Pakistan wants to have minimum credible deterrence to maintain balance of power in the region.


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BEIJING (May 03 2006): Pak-China border for land route trade via Karakoram Highway was reopened Tuesday. Chinese official sources told APP in Beijing that the Customs authorities have started work at Taxkorgan-Sust customs point for facilitating import-export between two countries.

The customs check-point, which was opened to Pakistan in 1982, is normally closed for trade and tourism during winter season from December 30 to May 1. It located in the western suburbs of the Tajik autonomous country of Taxkorgan and about 3,200 meters above sea level.

The border trade and tourism are likely to get impetus in June as the governments of both countries had decided to run a bus service between Gilgit and Kashgar thrice a week. It will be for the first time that Pakistan's Northern Areas will be connected with China's Western region through a regular bus service.

According to formal protocol concluded by the two countries last March, one bus will be operated from each side on daily basis that will travel between Sust and Tashkorgan. Each side will launch another bus service thrice a week between Kashgar, Sust, Khunjrab and Gilgit.

The two countries will also start goods transportation service via Khunjrab Pass from this month. Pakistani vehicles carrying goods will have direct access up to Kashgar. They would not be required to reload their goods at the border point.

Whereas the Chinese containers and trucks will have direct access up to Pakistani ports. This will be in line with the policy of Pakistan government to develop its ports as hub of trade activities for the regional countries.

It was also agreed that each side would issue 3,000 permits to their registered transporters to carry goods between the two countries. Each permit will be valid for one-round trip and the vehicles will be operated from the designated points. The number of permits could be gradually increased according to the demand of the transporters.

The protocol is an important step forward to channelise the existing road network arrangement between the two countries. It will go a long way promoting their commercial links and strengthening people-to-people contacts, the sources added.

Meanwhile, an official of the Chinese government hoped that the Preferential Trade Agreement (PTA) that came into effect from January this year would also help strengthen the Sino-Pak economic bilateral trade through land route.

The Preferential Trade Agreement, he said, would open greater opportunities for Pak products to access to the Chinese market.

As per agreement, China allows tariff concession to Pakistan on more than 800 items, whereas Pakistani side will give concession to China on about 200 items.


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RAWALPINDI (May 03 2006): President General Pervez Musharraf has said the ongoing development process in Balochistan province was on the track and directed that necessary steps should be taken to ensure it gathers further momentum.

He was chairing a high level meeting here on Tuesday, which reviewed the development projects in the province. The meeting was attended by PML President Chaudhry Shujaat Hussain, PML Secretary General Mushahid Hussain Sayed, Balochistan Governor Awais Ahmed Ghani, Chief Minister Jam Muhammad Yousaf, Federal Minister Zubaida Jalal, Deputy Chairman Senate Jan Muhammad Jamali, Ministers of State, Parliamentarians belonging to Balochistan from both Senate and National Assembly, provincial Ministers and senior officials.


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LAHORE (May 03 2006): Punjab government has set May 10 as cut-off date for getting additional funds by different departments for various ongoing schemes under Annual Development Programme (ADP) 2005-06, while the provincial departments have already been instructed to surrender its unutilised ADP funds by May 3.

Sources disclosed this to Business Recorder here on Tuesday.

They said that during the recent meeting of Planning and Development Board Punjab, the progress of ADP during the third quarter of FY20005-06 ending on March was reviewed.

The provincial departments were also asked to submit cases for additional funds for the ongoing ADP schemes. The Finance Department would not entertain such requests after May 10. "Only the Punjab Health department has surrendered Rs 59.6 million; and also submitted a request for additional funds of the same amount, while the rest of the provincial departments were yet to respond," they added.

According to them, although the ADP has been reviewed but breakup report was yet to be compiled, which would be possible only after all the provincial departments submit the figure they surrender and demand for additional funds.

However, the review of the third quarter revealed that 63 percent of the Rs 59 billion Annual Development Programme (ADP) has been utilised, which was marginally below the figure of 72 percent.

Eight percent per month utilisation of ADP is an ideal figure and by this standard the Punjab government should have utilised 72 percent of the ADP, but fell short by nine percent.


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ISLAMABAD (May 03 2006): Pakistan among top 10 recipients of the world business awards, which showcase the best practices of the business sector in alleviating poverty and boosting development to reach the millennium development goals (MDGs), were announced on Tuesday by the International Chamber of Commerce (ICC).

This year's awardees include business-sponsored projects that provide low-income housing in Mexico, comprehensive HIV/AIDS treatment in Botswana, venture capital for small business in India, and health education in Turkey's primary schools.

On May 9, at the United Nations headquarters, the winners will present their projects to the 14th meeting of the UN commission on sustainable development.

The statement said that media representatives had been invited to attend both events.

The statement added that the event was being organised by the ICC in association with the United Nations Development Programme (UNDP) and the Prince of Wales International Business Leaders Forum (IBLF).

The world business awards are the first world-wide business awards to recognise the crucial role of the private sector in implementing the UN's millennium development goals of reducing poverty by half around the world by 2015, as agreed to in 2000.

THE 10 WINNING INITIATIVE ARE: 

-- Aaviskaar India Micro Venture Capital Fund: Lends to poverty-reducing small and medium-sized enterprises in India.

-- Africa Comprehensive HIV/AIDS Partnership (ACHAP), Merck - Addresses the disease in hard-hit Botwana.

-- EcoLogic Finance: Finances conservation in fragile areas of Africa and Latin America.

-- Global Alliance for the Elimination of Lymphatic Filariasis (GAELF), GlaxoSmithKline, Global Community Partnership: Connects health ministries with 40 partners to fight elephantiasis.

-- Health Care Logistic, VidaGas, Village Reach: Supplies propane for health facilities in rural Mozambique.

-- Patrimonio Hoy, Cenex Mexico -Helps CEME: Provide low-income housing in Mexico.

-- Siwa Sustainable Development Initiative, Environmental Quality International (EQI): Invests in projects safeguarding Siwan heritage in Egypt.

-- SOLO, Eezacibasi Georgia - Pacific/Ipek kagit: Promotes personal hygiene in Turkish primary schools to ward off diseases.

-- Sustainable Development in Banking, Banco Real/ ABN Amro: Integrates the MDGs into ABN Amro's operations in Brazil.

-- Tetra Pak Food for Development: Tetra Pak delivers meals to schoolchildren in developing countries and nations in transition.

The eight millennium development goals offer an integrated framework to the challenges that afflict individuals, countries and the global community with quantitative and measurable targets to be achieved by 2015 to alleviate hunger, disease and make tangible improvements in education, health care, shelter and environmental protection.

http://www.brecorder.com/index.php?...&term=&supDate=


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ISLAMABAD (May 03 2006): Renowned Pakistani businessman in UK, Sir Anwar Pervez, has been ranked as the 12th richest Asian in Great Britain. He is the first Pakistani who has achieved this distinction.

According to 'Sunday Times,' Sir Pervez is the richest of all of the Pakistani Diaspora in UK with assets valued at 390 million pounds. After a comprehensive research, 'Sunday Times' published the list of 50 richest Asian businessmen in the UK wherein Sir Anwar Pervez is positioned at No 12 among top 15 richest Asians in the UK, says a press release.

The 'Sunday Times' report states that Sir Pervez owns the second largest cash and carry wholesale network in Britain and has illuminated the name of Pakistan by sheer hard work, dedication and honesty.

He was the first ever Pakistani knighted by Her Majesty the Queen of Britain.

Bestway is one of the fastest growing business groups in UK operating in diverse sectors from Cash and Carry business, real estate to banking. Sir Anwar Pervez founded the Group in 1976 by establishing a modest store and with his hard work and vision, he has taken Bestway Group to the heights of fame and stability. Bestway is currently, establishing one of the most sophisticated cement plants in Pakistan.

Recognising his services for his country and community, Government of Pakistan had awarded him the Hilal-e-Pakistan.


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ISLAMABAD (May 03 2006): President General Pervez Musharraf said on Tuesday Pakistan's newly developed modern deep seaport at Gwadar offers Central Asian States the shortest route to the Arabian Sea for commerce with the world and added that under the Economic Co-operation Organisation the region can benefit enormously from trade through Pakistan.

"The fruition of ECO agreements on trade and tariff would bring a qualitative change in the regional trade milieu," he stated at a banquet, he hosted in honour of the visiting Uzbek leader Islam Karimov. Prime Minister Shaukat Aziz, members of the federal cabinet, services chiefs, diplomats and senior government functionaries attended the banquet.

Noting a recent increase in Pakistan-Uzbekistan trade, the President said the two ECO members must continue to diligently move forward to unlock the true potential of trade ties.

President Musharraf expressed gratitude to Tashkent for its wholehearted support for Pakistan's bid to gain full membership of the Shanghai Co-operation Organisation and added that he would be attending the Summit meeting of the organisation being held in China.

Speaking about Pakistan's critical role in counter-terror, the President said the country is in the vanguard of the global drive to uproot the menace. However, he reiterated his emphasis that for the achievement of lasting success, it is essential the root out causes of extremism. He said disputes long left to fester by the international community through neglect or sheer callousness must be resolved soon.

"The world must also realise that denomination of a faith is no substitute for a meaningful dialogue."

About the ongoing composite dialogue process with India, President Musharraf said Pakistan is earnestly pursuing a serious dialogue with New Delhi.

"We earnestly desire to resolve the core dispute of Jammu and Kashmir, which is necessary for durable peace in the region."


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By Khaleeq Kiani

ISLAMABAD, May 2: As the budget-making exercise enters a crucial stage, the government has decided to constitute a 21-member planning and development policy board headed by the prime minister to enhance the role of the Planning Commission in formulating a long-term policy for development and economic growth.

The government has also decided that the prime minister would be chairman of the Planning Commission from now onwards instead of the finance minister, reveals official documents available with Dawn.

These decisions have been taken to restructure, revamp and strengthen the Planning CommissionÃ¢â¬â¢s capacity to meet countryÃ¢â¬â¢s future planning and development needs.

The commission is currently in a bad shape due to retirement of about 70 per cent of its section heads, as no recruitments could take place in the countryÃ¢â¬â¢s planning agency during the last 30 years.

Historically, the finance minister used to be the chairman of the planning and development division as it was part of the finance ministry. The deputy chairman of the Planning Commission used to be its functional head, while its secretary performed the role of principal accounting officer.

Now, the Planning Commission would be separated from the finance ministry and would be headed by the prime minister.

Under the prime minister, a full-time policy board, again headed by the prime minister, would work as a policy-making forum and the deputy chairman would perform his duties under this board.

Under the decision, the number of Planning Commission members has also been enhanced to nine instead of three members and all of them would be given special MP-1 (management post) grades. In the past, there were only three members for infrastructure, production and management and social sectors.

The full-time members would be appointed for infrastructure, energy, science and technology, food and agriculture, social sector, implementation and monitoring, besides member coordination, director Pakistan Institute of Development Economics (PIDE) and chief economist.

Even before the notification of restructuring, three members have already been inducted in the Planning Commission without any selection process. They include: Dr Asad Ali Shah, a relative of Dr Salman Shah, adviser to the prime minister on finance; Dr S.H. Khan, a former official of the Pakistan Atomic Energy Commission; and Dr Kokab.

All these members would be assisted by nine respective task forces on each sector to recommend sectoral policy initiatives. The members would then act as think-tanks to take up policy measures with the policy board for approval and implementation.

The prime minister would also be the chairman of a newly-created policy board of the Planning Commission. The board will comprise 20 members, including 10 ministers and nine full-time members, besides deputy chairman of the Planning Commission.

Sources said the decision to revamp the Planning Commission had been taken due to deteriorating capacity of various wings of the commission. They said almost 70 per cent of these wings have lost their top-tier officers, commonly known as chief and deputy chiefs, due to retirement as no direct recruitments through the normal selection process of the Public Service Commission could be made during the last 30 years.

The number of chiefs and deputy chiefs has already declined from about 80 to 24 during the last few years. The existing operational role of the Planning Commission that includes formulation of annual plan and preparation for the Public Sector Development Programme and its implementation and monitoring would continue to be performed by the existing planning and development division.

The restructured Planning Commission would now assist in defining the national vision and undertaking strategic planning, assessing material, capital and human resources of the country, formulating proposals for augmenting such resources and building capacity of the agencies involved in the development process.


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By Aamir Shafaat Khan

KARACHI, May 2: Consumers continue to show their desire for imported used cars, jeeps, vans, pickups etc., and it is visible from 280 per cent jump in import of such vehicles under various schemes to 27,917 units in July-April 2005-2006 as compared to 7,337 units the same period last year.

The government has netted Rs7.5 billion in customs duty, Rs3 billion in sales tax and Rs1.4 billion in income tax during the period under review as against Rs3 billion in customs duty, Rs1 billion in sales tax and Rs546m in income tax the same period of last fiscal, figures compiled by Appraisement Collectorate revealed.

The collectorate has now computerised the import procedure for used cars by registering importersÃ¢â¬â¢ names, passport number and vehicle chassis number.

The collectorate under SRO 179 has also collected Rs55 million from the importers of used cars as a fine who could not fulfil the requirement for their goods declaration on time.

Import of automobiles has already exceeded the $1 billion mark during the last nine months and it is expected to cross $1.5 billion by the end of current fiscal. Auto imports constitute almost 20 per cent of the machinery import group.

As the government is now giving final touches to the budgetary measures for next fiscal (2006-07) to be announced on June 5, car dealers have expedited their efforts in pressurising the government to further liberalise car imports with new incentives and concessions or at least maintain the current policy.

On the other hand, local car assemblers/manufacturers have been lobbying the government to reverse the decision on used car imports and come out with a long- term policy which will encourage the auto makers to further invest in their expansion plans, increase employment and enhance liberalisation.

The import of used cars and other vehicles has been flourishing from August 2005 after the government liberalised import of used vehicles under personal baggage, transfer of residence and gift schemes in the budget in order to curtail the demand and supply gap, high premiums and late delivery problems with locally assembled cars.

As far as premium is concerned massive import of cars has finally resulted in bottoming out premiums on locally assembled cars. The demand and supply gap has remained almost same as market people say it is still 30,000-40,000 units per annum. However, delivery period for high demanding cars still range between three to six months.

No matter how the trade deficit has swelled owing to rising import of used cars and what is its long-term effect on the local assemblers, consumers have got a variety of choices now as previously their wishes to own new car were confined to few models produced locally.

On the other hand, it was presumed that the import of used cars would give a severe blow to the financial viability of the local car assemblers but so far no prominent damage had been done.

For instance, Pak Suzuki sold 86,602 vehicles in 2005 as compared to 65,120 units in 2004. The companyÃ¢â¬â¢s profit after tax rose to Rs2.237 billion from Rs1.4 billion in 2004. From January 2005, plant capacity had been increased to 80,000 units from 60,000 units. From January 2006, the capacity had been jacked up to 120,000 units. Since December 2003, capacity has increased by 140 per cent. Pak Suzuki has invested Rs3.4 billion in the last two years on expansion, modernisation and balancing.

The board of directors of Pak Suzuki had approved capital expenditure budget of Rs4 billion for 2006.

Sales of Honda Atlas Cars surged to Rs25.6 billion for the year ended March 31, 2006 as compared to Rs16.5 billion in the same period last year. Profit before tax rose to Rs1.1 billion from Rs264 million while the profit after tax surged to Rs705 million from Rs162 million.

The local car assemblers were of the view that used cars were being imported by dealers rather than overseas Pakistanis. The car dealers were not sales tax registered and there was no parts and service availability for used vehicles.

Not only used cars are arriving, some local assemblers have also been in the forefront in bringing costlier cars. For instance, Pakistan would soon witness arrival of Rolls Royce (by the dint of Dewan Farooqui Motors) and one can assume the financial strength of its buyers. The company has also brought GermanÃ¢â¬â¢s BMW and Hyundai luxurious models.

GermanÃ¢â¬â¢s Porsche has already been introduced in Pakistan. Indus Motors and Pak Suzuki have also started distribution business by importing luxurious cars, jeeps and commercial vehicles of higher engine capacity.


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ISLAMABAD, May 2: The Board of Investment (BoI) will be reorganized and restructured to transform it into a more vibrant organisation providing one-window operation for expeditious finalisation of local and foreign investment projects.

This was stated by Prime Minister Shaukat Aziz while chairing a meeting at the Prime MinisterÃ¢â¬â¢s House here on Tuesday. The prime minister took important decisions to further streamline the working of the BoI. He gave instructions for the reorganisation of the board to make it a more focused organisation to encourage, promote and facilitate both domestic and foreign investments.

Mr Aziz said it was heartening to note that during the last four years, the amount of foreign direct investment (FDI) increased about five times. Ã¢â¬ÅDuring the first nine months of current financial year, the country received $2.2 billion as FDI, which will lead to further growth, employment opportunities and overall economic uplift.Ã¢â¬Â

He said the BoI should develop a marketing plan which should dovetail with the overall investment and reform strategy of the government. Ã¢â¬ÅThe marketing plan should clearly identify the potential areas of investment and incentives provided by the government. It should also identify 8-10 countries which should be generally focused. The plan should also identify specific countries for each potential areas/industry,Ã¢â¬Â Mr Aziz added.

The prime minister said the marketing plan should also include a clear and comprehensive strategy to achieve the targets set, create awareness at local and foreign level about the investment potential of Pakistan and to sell the investment potential of the country more affectively.

Noting that different parts of the world have different requirements, the prime minister asked the board to develop geographical expertise. They should do research about the interests of investors in Pakistan and prepare country-specific plans and policies to guide different categories of investors more effectively.

Ã¢â¬ÅThe BoI should study peculiarities of major countries to work as an affective organisation,Ã¢â¬Â the prime minister said.

He asked the board to consistently guide foreign missions and federal and provincial government departments about investment policies and potential areas of investment.

Mr Aziz identified IT and telecom, real estate, engineering, construction business, agribusiness and manufacturing as major potential areas for investment. The premier also asked the BoI to focus more on preparation of promotional and marketing material for the guidance and facilitation of potential investors. He said the existing facilities at various offices of the BoI would be upgraded and modernised.

The meeting was attended among others by Privatisation and Investment Minister Zahid Hamid, Minister of State for Privatisation and Investment Umar Ahmad Chuman and senior officials.


----------



## Neo

Wednesday May 03, 2006 

ISLAMABAD: Prime Minister Shaukat Aziz has said that Pakistan attaches great importance to relations with the Netherlands, which is not only one of our important trade partners but also the 7th largest foreign investor in Pakistan, and a major partner in the area of development cooperation. 
Talking to Mr. Bernard Bot, Foreign Minister of Netherlands, at the Prime MinisterÃ¢â¬â¢s House Tuesday, the Prime Minister said Pakistan has a strong interest in further strengthening relations with Netherlands. 

Matters relating to bilateral cooperation, national and international issues, PakistanÃ¢â¬â¢s role for peace in the region, defence and security matters and investment friendly climate in Pakistan came under discussion. 

On Afghanistan, the Prime Minister said Pakistan wants to see peace and prosperity in Afghanistan. A strong, peaceful, stable and vibrant Afghanistan is in favour of its people and important for Pakistan, the region and the world. 

On the Iranian nuclear issue, the Prime Minister said Pakistan is opposed to nuclear proliferation. However, Iran has a right to use nuclear energy for peaceful purposes under the IAEA safeguards. He said Pakistan is in favor of a peaceful resolution of the issue through dialogue and is opposed to any coercive measures against Iran. The use of force against Iran will be catastrophic, the Prime Minister added. 

The Prime Minister reiterated PakistanÃ¢â¬â¢s commitment to peace process with India through a process of composite dialogue. He said PakistanÃ¢â¬â¢s suggestions of demilitarization and self governance in Kashmir can form the basis of meaningful dialogue and concrete progress on the Kashmir issue. 

Talking of the defense and security issues, the Prime Minister said Pakistan wants to have minimum credible deterrence to maintain balance of power in the region. 

"Pakistan does not have aggressive designs against any country and our defence policy is designed to maintain our sovereignty and integrity," the Prime Minister added. 

Observing that gaps between various faiths is widening, the Prime Minister emphasized the need to work harder for promoting interfaith harmony to "ensure a better future for the coming generations." 

"All of us need to open our minds, think more rationally and create tolerance to avoid potentially conflict situations which can destroy peace and hamper prosperity," the Prime Minister said. 

Commenting on the internal political situation, the Prime Minister said that the country today has a functioning democracy, active parliament and free press. All parliamentary institutions and systems are gaining maturity and strength, he added. 

Talking about the economic recovery achieved by Pakistani Prime Minister said that the reforms agenda undertaken by the government was one of the most broad based, comprehensive reforms process ever undertaken by any country. 

He said Pakistan has been consistently achieving high growth rates since the last few years. Last year its GDP growth was the second highest in Asia. All sectors of economy are showing an upward trend. Pakistan has over 150 million consumers with growing incomes, a growing middle class and Per capita income is expected to rise to $800 this year. 

Talking of investment opportunities available in Pakistan, the Prime Minister said Pakistan has the most liberal investment policy in South Asia. GovernmentÃ¢â¬â¢s policies of liberalization deregulation, privatization coupled with consistency, continuity and transparency of policies have made Pakistan an ideal destination for foreign investments. 

The Foreign Minister of Netherlands, Mr. Bernard Bot agreed with Prime Minister Shaukat Aziz on the need to work harder for promoting interfaith harmony and apprised the Prime Minister of the steps taken by Netherlands to promote interfaith dialogue. 

Mr. Bernard Bot emphasized the need to enhance trade and commercial ties between Pakistan and Netherlands particularly in the fields of food processing, agriculture and horticulture. 

He said Netherlands wants to strengthen cooperation between the two countries in various fields of education and has approved a grant of 30 million Euros for educational purposes. 

He said the world wants to see stability and peace in Afghanistan and Netherlands will be sending more troops to Afghanistan. He emphasized the need for better coordination and intelligence sharing between all parties involved in maintaining peace in Afghanistan. 

Mr. Bernard Bot said Netherlands favors a peaceful resolution of the Iranian nuclear issue through diplomatic efforts and is opposed to the use of force against Iran. 

The meeting was attended among others by Secretary Foreign Affairs, Ambassador of Netherlands in Pakistan and senior officials.


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## Neo

Wednesday May 03, 2006 

RAWALPINDI: Expressing hope that Holland can play matchless role to help access of Pakistani exports to European markets, President General Pervez Musharraf underlined the need Pak-Holland should bolster ties in various areas with special reference in defence sector. 
President Musharraf expressed these remarks in meeting with Holland foreign minister Bernard R. Bot who called on him here Tuesday. 

"Holland is enjoying important position among European states. The Holland should extend full cooperation in access of Pakistani exports to European markets," Musharraf added. 

Terming Pak-Holland cooperation against the nasty game of terrorism, Musharraf said that Pak-Holland closer cooperation would help ensure international peace.


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## Neo

Wednesday, May 03, 2006 

LAHORE: A growth 6-8 percent in GDP would prove a wishful thinking in the absence of foreign direct investment in the country, says leading economist Dr A R Kamal. 

Talking to the Daily Times on the sidelines of the Second Annual Conference on The Management of the Pakistan Economy at Lahore School of Economics on Tuesday, Dr Kamal, who is also Director of the Pakistan Institute of Development Economics, Islamabad, said the future outlook for the country would depend upon the rate of foreign investment in the country. 

Ã¢â¬ÅThe future outlook could be deteriorating in case the country fails to attract foreign investment in near future,Ã¢â¬Â he said.

Dr Kamal said the privatization proceeds are not enough to project the portfolio of foreign direct investment, as these proceeds could be helpful in retiring debt and thatÃ¢â¬â¢s all.

Ã¢â¬ÅInvestment in the private sector should increase in proportion to the privatization proceeds, as handing over the public sector resources to the private sector without any major breakthrough in direct investment in the private sector may hit hard the GDP growth,Ã¢â¬Â he said.

According to him, the private sector investment could get boost only when both the government and the opposition make some joint statements to ensure the investors that no major change would take place in key investment areas.

Talking about law and order, Dr Kamal said: Ã¢â¬ÅIt is more of an issue of perception than reality.Ã¢â¬Â

He also deplored the governmentÃ¢â¬â¢s focus on agriculture sector saying it is not up to the mark, as no adequate allocations have so far been made to develop the sector.

He disagreed with the impression that the per capita income of $800 does not reflect the ground reality and stressed that the economy possesses more potential than the present levels.

He, however, added in the same breath that an increase in per capita income from $450 to $800 has failed to show up in the lives of common people and income inequalities have increased sharply.


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## Neo

Wednesday, May 03, 2006 

KARACHI: Profit after taxation of listed banks during the first three months of the current year 2006 has improved by 58 percent mainly on the back of improving margins that is spread between lending and borrowing rate compared with the corresponding period of previous year 2005.

PakistanÃ¢â¬â¢s commercial banking sector was the most profitable sector for the year 2005 among 34 listed sectors at the Karachi Stock Exchange (KSE). Listed banksÃ¢â¬â¢ profitability grew by 99 percent and reached Rs 47.5 billion in the year 2005. The momentum of bankÃ¢â¬â¢s profitability growth, which started in 2003, is continuing in 2006 as well. 

Currently out of 38 commercial banks in the country, 21 are listed. The 20 listed banksÃ¢â¬â¢ profitability in the first quarter of 2006 went up by 58 percent to Rs 14 billion mainly on the back of improving margins that is spread between lending and borrowing rates. 

Of the Rs 14 billion earnings, National Bank of Pakistan (NBP) topped the list with Rs 3.6 billion followed by MCB Bank with Rs 3 billion and United BankÃ¢â¬â¢s Rs 2.2 billion. Of 20 banks, five banks, Askari, Faysal, Bank Alfalah, NIB and Bank of Khyber, posted decline in profits during the period under review and only one bank, Crescent Commercial Bank, incurred losses in this period.

Muhammad Imran, an analyst at Jahangir Siddiqui Capital Markets, said contrary to common perception, where local investors multiply quarterly earnings by four to estimate full yearÃ¢â¬â¢s profits, banks normally earn less in the initial months of the year. By historically analyzing the first quarter profitability of the banking sector we find out that in 2004, listed banks earnings were 18 percent of full year and in 2005 it was 19 percent. This is because of the reason that banksÃ¢â¬â¢ lending and deposits activities are sluggish in first three months of the calendar year. 

He said during the period major contributor to the earning growth of the banks was their improving net interest income (NII) in the outgoing quarter. The growth in NII was due to the rising yield on earning assets. During the first quarter of 2006, banksÃ¢â¬â¢ advances increased by 2.1 percent or Rs 19 billion only as compared with the advancesÃ¢â¬â¢ growth of six percent or Rs 98 billion in the corresponding period of last year. This less growth in advances was, however, compensated by the rising spread of the sector. The average spread of the sector for the first three months of the current year was recorded at 7.32 percent, which was 223 basis points higher than the average spread of the first three months of 2005.


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## Neo

Wednesday May 03, 2006 

KARACHI : The Adviser to Chief Minister on Environment, Alternative Energy and Information Technology, Mohammad Noman Saigol, on Tuesday stressed the need for using alternate means of energy, specifically wind energy. He emphasized physically starting the windmill project after resolving concerned issues with immediate effect. This, he said, would resolve the electricity needs in the country and Sindh. 

Cities like Karachi, Hyderabad and Sukkur were major sufferers in Sindh due to shortfall in electric supply, which had affected industrial units at large, he added. 

He also stressed using alternate means of energy to enhance industrial growth in Pakistan. 

Insisting on the PPA, he requested the authorities to do it on war footings to enable investors to stay back, Ã¢â¬Åotherwise we dread they might pull out because of further delayÃ¢â¬Â. 

He feared that if the wind energy project was ruined, other relevant means of alternative energy would also suffer by going through the same experiences. 

He said the Sindh government was also working on solar energy, high tide, and biogas projects, besides suggesting that ethanol could also become a source of alternative energy and be used in vehicles. 

Meanwhile, he also appreciated the support given by the Sindh Governor to expedite the IT project, specifically e-Policing.


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## Neo

Wednesday May 03, 2006 

ISLAMABAD : Minister for Information Technology Awais Ahmad Khan Leghari has said his ministry had decided to set up career placement offices in about 25 top universities to pick up talented IT graduates for their placement in the industry. 

"These youths will undergo extensive training-***-internship at the leading IT companies for a period of three years and the ministry would provide 50 per cent of the total cost that would include a monthly stipend." 

He said this in his address to the two-day Nascon 2006, all Pakistan IT, Engineering and Business Gala that concluded here at the National University of Computer and Emerging Sciences Fast Islamabad. He said the objective of setting up career placement centres in the universities was to harness the talent possessed by youths in the far-flung areas. 

"These career placement offices will be run and managed by Pakistan Software Export Board and the selection of candidates will be made strictly on merit and performance." he said. The program - to be funded by the National ICT Research & Development Fund will start in the next five to six weeks and it would include 5,000 to 6,000 internships at best IT companies of the country. 

The minister pointed out that about 80 to 85 per cent of the human resource employed by the industry came from four to five tier-one universities, which house around 2,000 seats in the IT discipline. "Our aim is to bring up 15 to 20 tier-two universities to the tier-one level and the ministry has decided to pump resources into this crucial area along with complete support and assurance from the IT industry for 100 per cent absorption of the human resource," he added. 

The minister lauded the FAST University for offering quality education in the fields of IT, telecom, and business management and announced 200 scholarships in the IT discipline. 

He said the government had already taken lead in sending 65 boys and girls abroad last year to top international universities to pursue M S / Ph D programme. "The cost of these 65 scholarships was Rs 200 million, which was borne by the National ICT Research & Development Fund of the ministry," he said adding the foreign scholarship programme would continue in future as well. 

Earlier, FAST Rector Dr Amir Mohammad in his address stressed the need for a greater university-industry liaison to strike linkages between academia and the industry. Later, Awais Ahmad Khan Leghari gave prizes and trophies to successful participants. 

A total of 100 teams comprising 540 students from all over the country participated in the Nascon 2006. Hamid Mukhtar and Majid Khan of NIIT won the first prize. Anam Ghaffar and Misbah Mubarak from Nust won the second prize. Lums and PUCIT shared the third prize. 

In the category of Engineering Project (hardware) EME - Nust got the first and second prizes, while the third prize went to the University of Faisalabad. In Harvard Case Simulation CIIT Abbottabad won the first prize. MAJU Islamabad and Fast-NU Islamabad Campus shared the second position.


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## Neo

Wednesday, May 03, 2006 

By Hamid Waleed

LAHORE: Taufiq Hussain, Deputy Governor of the State Bank of Pakistan (SBP), has said Pakistan is not facing a Mexico-like financial crisis and emphasized that the SBP has capped banksÃ¢â¬â¢ exposure to the stock market and real estate to avoid any such situation.

Shahid Javed Burki, a former World Bank vice-president, had told State Bank of Pakistan Governor Shamshad Akhtar on April 22 at Washington Forum that Pakistan was facing symptoms that preceded the Mexican financial crisis more than 10 years back. 

Talking to newsmen after speaking at the Second Annual Conference on The Management of the Pakistan Economy at Lahore School of Economics Tuesday, Mr Hussain said: Ã¢â¬ÅMr Burki can reply better as to why he is carrying such an impression about Pakistan banking while sitting in Washington.Ã¢â¬Â

Ã¢â¬ÅSo far as the SBP is concerned, we have capped banksÃ¢â¬â¢ exposure to the stock market about two and a half years ago through a circular that no bank will allowed to invest more than 20 percent of their paid-up capital,Ã¢â¬Â he added.

He said Mr Burki has commented on the situation after some two and a half years after this decision, especially when the SBP has resisted large hue and cry against the decision successfully.

Similarly, he said, banks have been restricted from lending on purchase of vacant land in order to control the element of speculation and banks are allowed to extend loans only for construction purposes. He further said that there is no need for devaluation owing to the unprecedented rise in oil prices.

Ã¢â¬ÅThere is no need for devaluation,Ã¢â¬Â he said.

Earlier, speaking at the conference, the SBP deputy governor said evidence clearly suggests that in recent years speculative hoarding and collusive price setting have been significant contributors to domestic inflationary pressures in markets for many key commodities. Such pressures, he argued, respond more to legal and administrative measures and are less sensitive to monetary tightening.

He said Pakistan needs to continue with sound macroeconomic policies, which are the lynchpin of restoring both domestic and foreign investor confidence. 

He said macroeconomic management today is complicated by PakistanÃ¢â¬â¢s need to continue growing which requires it to stretch its resource base and the country would have to carefully gauge its priorities to meet these challenges. 

While welcoming decline in inflation, he said the external balance has deteriorated significantly in FY06. He said although remittances are expected to show reasonable growth and exports are likely to remain strong, the current account deficit is expected to increase to 4.7 percent of GDP by end-FY06. 

Ã¢â¬ÅWhile this is not low, it is quite sustainable in the short run. In the longer run, however, larger current account deficits cannot be sustained, as these would create a vicious cycle of debt creation, exchange rate depreciation and inflation. He said the SBP would continue to retain the tight monetary policy. However, he added, it is important to note that monetary policy alone will not be able to contain the entire rise in inflationary pressures. In particular, there is urgent need for the government to supplement its praiseworthy supply-side measures with policies to address market structure problems.

Sartaj Aziz, former federal finance minister, Dr A R Kamal, Director of the Pakistan Institute of Development Economics, Islamabad, Dr M Tariq Siddiqi, former secretary, Sakib Sherani, chief economist ABN-AMRO Bank, Dr Rashid Amjad, ILO, Geneva, Prof F A Fareedy, of Lahore School of Economics, and Dr Shahid Amjad Chaudhary, LSE Rector also spoke.


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## Neo

Wednesday, May 03, 2006 

ISLAMABAD: The government will set up seismic centres in the countryÃ¢â¬â¢s earthquake-prone areas for accurate monitoring of tectonic movements, said Dr Ishfaq Ahmed, special adviser to the prime minister, while inaugurating the two-day international workshop on the use of seismic and GPS technology for monitoring tectonic plates on Tuesday.

He said that the prime minister was evaluating all aspects of the October 8 earthquake and how to avoid similar catastrophes in the future, for which a seismic centre would be established at the Quaid-e-Azam University. He stressed the need to be aware of tectonic developments and gather seismic and geological data. Ã¢â¬ÅWe need data on seismic zones and need to measure the earthÃ¢â¬â¢s resistance and the flow of underground water, as large areas of Pakistan fall within the Himalayan region, which has frequent movement of tectonic plates,Ã¢â¬Â he said.

He said that in view of the recent occurrences of natural disasters, there was a need to address issues relating to natural disasters at both national and international levels, adding that the issue needed to be taken up globally so that strategies to cope with natural disasters could be evolved. He said that substantial research was needed in the subject of seismology and added that further research was required in inter-disciplinary subjects such as Geology, Physics, Engineering, Mathematics and Meteorology.

Pervaiz Butt, the secretary of the ministry of Science and Technology, said the government had established a number of seismic stations in the country to monitor the movements of tectonic plates, adding that the government had taken a number of steps including the provision of state-of-the-art equipment to help scientists and engineers.


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## Neo

Wednesday, May 03, 2006 

KARACHI: Kodak Limited Pakistan, the countryÃ¢â¬â¢s premier photographic company Tuesday announced to enhance its prolific role in the country by doubling the number of photographic labs. 

According to a press release currently, Kodak operates more than 350 labs spread across the country. Kodak would enhance more than 700 labs in 150 cities by the middle of 2007. 

Official Syed Awais Ahmed said Kodak also announced the appointment of EM-AEY as its non-exclusive distributor.


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## Neo

Wednesday, May 03, 2006 

ISLAMABAD: The Senate Standing Committee on Labour, Manpower and Overseas Pakistanis was informed on Tuesday that Pakistani labour was in great demand in the Middle East and Malaysia. Ã¢â¬ÅIt is for the first time that the ministry will be sending 2,000 unskilled workers (labourers) to Malaysia through the Overseas Employment Corporation (OEC). The demand is expected to rise further and Pakistan has signed agreements with international organisations in this regard,Ã¢â¬Â Malik Asif Hayat, the secretary for Labour and Manpower, told the committee in its meeting on Tuesday. The committee also urged the Labour and Manpower Division to chalk out viable policies to resolve the problems of expatriates and encourage them to sent remittances to Pakistan. He said that laws were being consolidated to and focus was being laid on the development of human resources.


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## Neo

Wednesday, May 03, 2006 

ISLAMABAD: Visiting Uzbek President Islam Karimov has said that his country will support PakistanÃ¢â¬â¢s bid for full membership of the Shanghai Cooperation Organisation (SCO).

He said this while addressing a joint press conference with President Pervez Musharraf following talks between the two leaders. The Uzbekistan president arrived in Pakistan earlier in the day.

The two countries also signed agreements and memoranda of understanding (MoUs) on Tuesday evening for the promotion of cooperation in trade and economic relations. The agreements were signed at the Aiwan-e-Sadr following talks between the two leaders. Both countries also signed a joint statement expressing common resolve to Ã¢â¬Åreinforce bilateral tiesÃ¢â¬Â.

Agreements were signed on cooperation in private entrepreneurship, plant quarantine and the ratification of the agreement to fight international terrorism. MoUs were signed between the two countries on cooperation in agriculture, exchange of information on custom statistics of bilateral trade, and the establishment of a Joint Business Council between the two statesÃ¢â¬â¢ Chambers of Commerce and Industry. Both leaders said that the two countries had also agreed to coordinate their efforts to fight terror for the common goal of sustainable peace, security and development in the region.

Musharraf said that Pakistan will develop rail and road links with the Central Asian state as part of its efforts to Ã¢â¬Åtake bilateral trade to new levelsÃ¢â¬Â and provide the world access to Uzbekistan through its ports. Ã¢â¬ÅWe expressed the mutual desire to develop links, and Pakistan has offered Uzbekistan the use of its seaports to develop trade with other regions of the world,Ã¢â¬Â Musharraf said. The two leaders also expressed the desire for peace and stability in Afghanistan.

About cooperation in counter-terrorism, President Musharraf said that the two sides can share intelligence to Ã¢â¬Ådeal with the financial linkages of terroristsÃ¢â¬Â.

Karimov said that Uzbekistan fully supports MusharrafÃ¢â¬â¢s vision of enlightened moderation Ã¢â¬Åas a way out of international turmoilÃ¢â¬Â. He also backed President MusharrafÃ¢â¬â¢s efforts to make the Organisation of Islamic Conference Ã¢â¬Åa dynamic bodyÃ¢â¬Â.

The Uzbekistan president hoped that the agreements between the two countries would help them Ã¢â¬Åmake the most of the vast existing trade potentialÃ¢â¬Â. He said that the development of communication links between Pakistan and Uzbekistan and stability in Afghanistan would enable his landlocked country to have access to other regions through the Gwadar and Karachi ports.


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## Neo

May 2, 2006 

The fuel that drives knowledge-based approach to economic development comprises elements derived from government and industry, as well as education. I myself held positions as a corporate manager, a university professor, a government official, and now, the university Vice Chancellor. My perspective, therefore, incorporates the roles of all three sectors - industry, government, and the academia formally known as the university; each one of them is vital to a dynamic, technology-driven economy. 

The role of education obviously is of acute concern to me as the Vice Chancellor of BUITMS, a public sector university, which is striving to build its strength as an institution that not only educates, but also develops and examines ideas across disciplines, and, relates them to the world of practice. 

A well-educated population is the sine qua non of economic development and there are three postulates upon which a university helps contribute to a successful technology-driven knowledge economy 

ÃÂ· First, universities function to educate scientists, engineers, technologists, and technological leaders for industry, government, and education. 

ÃÂ· Second, the basic scientific research conducted in the university is critical for innovation, emergence of new technologies, and economic development. 

ÃÂ· Third, universities can and must foster entrepreneurship, the process not only of translating new knowledge to application, but commercializing those new applications as new business ventures. 


I would like to elaborate these three postulates one by one. My first point was that the universities function to educate. The education phenomenon itself, further has three elements; the student, the academic environment and the faculty. 

We believe that higher education is fundamentally a public good and whoever is capable to acquire higher education must not be denied the access to education. It is as important for the state to provide education to its citizens as other basic necessities of life i.e. food, cloth and shelter and security. We as a public sector university are categorically against the concept of education for a fee. The concept that education is a commodity that can be purchased for a fee has given rise to the mushrooming of so called universities churning young people into graduates without any academic exit standards and which are largely good for nothing. The critical element here is Ã¢â¬Åthe provision of education to those who are capable to pursueÃ¢â¬Â. As such, it is essential for the universities to very carefully develop their student population rather than every one who can pay a fee to enter the university. The students are the most fundamental and important assets of a university and certainly they are at the Balochistan University of Information Technology and Management Sciences 

The second important element of educating is the academic environment which is a very inclusive term comprising the classrooms, the laboratories, the library, students and faculty interaction places, playgrounds, auditoriums, cafeterias, hostels, and other places of mental, physical and emotional development. I can very responsibly say that most of our public sector universities have those environmental elements. The only missing link is putting them to effective use. While in most of our private sector universities with few exceptions these environmental elements are missing. I am glad to state that we are in the process of creating state of the art facilities, which one can find at the finest institutions of the world. 

The next important element of educating is the faculty. I would group two distinct aspects under the faculty i.e., the teacher and the curriculum/material he/she teaches. In information technology discipline globally, there is a shortage of faculty. The situation is not very different in Pakistan. In public as well as private institutions, both the availability and quality of faculty is questionable. Generally the institutions resort to part-time faculty. After 25 years of affiliation with the academic environment, I can say that a part time instructor is not a true substitute to a full time teacher. This part-time syndrome has given rise to yet another problem the deficiency or absence of research by the faculty. In emerging sciences a very small number of academicians posses some credible research on their credit. The result is a bookish knowledge passed on to young folks. On top of that most of public universities and so-called private universities are forced to teach what could be taught instead of what should be taught. 

The education Working Group at MIT asserted Ã¢â¬ÅComputer Science remains a rapidly evolving discipline, which places considerable pressure on the CS&E curriculum. The emergence of new tools, techniques and paradigms forces a continued re-evaluation of the topics covered and the pedagogical approaches used. Often the CS&E curriculum and its faculty become out-dated as the core ideas in the discipline and its technology advances. The group continues to state that the issues include: the balance between research and teaching, faculty currency in the discipline, sufficient considerations for the needs of the industry, integration of topics in the theory of computing with the practical topics in the curriculum, the management of large classes, acceptance of professional education by the academy, the development of teaching methods, lab materials and technologies that appeal to a wide range of student interests and values and regular updating of service courses for the non-majors 

In the Computer Science & Engineering discipline IEEE-ACM prepared curriculum in 1965 and revised in 1968, 1978, 1991 and now in the year 2001 and this exercise is still on. All our universities must carefully watch on these developments and adopt the worldÃ¢â¬â¢s most acceptable body of knowledge defined for various levels of study. Apart from this body of knowledge, the university must keep an eye on the ABET accreditation guidelines. I am glade to say that at Balochistan University of Information Technology and Management Sciences we are exactly doing that Ã¢â¬â carefully watching the IEEE-ACM curriculum and compare and weigh ourselves on the ABET accreditation guidelines. Apart from this we always look at the curriculum in the finest institutions around the glob and its suitability to our programs and necessary adjustments accordingly. 

At the Balochistan University of Information Technology and Management Sciences we are fully geared to educate, we have fully functional academic facility, competent faculty and the students. We have started our second admissions spree. During the month of January we are recruiting another undergraduate lot in Computer Science, Computer Engineering and Management Sciences, and our first graduate lot of students in Computer Science as well as in Management Science. We expect that INSHALLAH our student strength would reach 250-300 after the successful commissioning of admissions. I am sure you know our policy that the top students study free. The new development is that our university staff and faculty who want to improve their qualifications and are admitted in any program would also study free. We are also discussing Human Resource Development Initiative with the Government of Balochistan. Although the deliberations are at the initial stage, we are ready to GO for all practical purposes. We are continuously in search of world-class faculty. 

Now I come to the second postulate, which is the research, conducted at the universities. Here, I remember the efforts of Dr. Usmani and the Dr. Mahboob Ul Haq. These two gentlemen (may Allah bless them in eternal peace) initiated schemes in early 60s and 80s respectively. The scientists prepared under Dr. UsmaniÃ¢â¬â¢s initiatives were indeed behind our most impressive defense and energy programs. The people prepared by Dr. HaqÃ¢â¬â¢s program of S&T Scholarship are behind whatever works is being done in various scientific disciplines today; information technology is not an exception. I myself am the product of Dr. HaqÃ¢â¬â¢s HR development initiative under which I completed my Masters and Doctorate from the George Washington University. Had those schemes continued we would have been in much better shape than what we are today? 

These two gentlemen remind me of Dr. Vannevar Bush, the founder of National Science Foundation in USA, half a century ago. He noted in his report "Science Ã¢â¬â the Endless Frontier" "Scientific progress is one essential key to our security as a nation, to our better health, to more jobs, to a higher standard of living, and to our cultural progress." Further he said, "Basic scientific research is scientific capital." 

An important ingredient and outcome of Dr. Bush`s work was the notion of the research university, which would partner with government and industry to ensure continued global preeminence of the United States Ã¢â¬â he asserts, "The publicly and privately supported colleges, universities, and research institutes are the centers of basic research. They are the wellsprings of knowledge and understanding. As long as they are vigorous and healthy and their scientists are free to pursue the truth wherever it may lead, there will be a flow of new scientific knowledge to those who can apply it to practical problems in government, in industry, or elsewhere."


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## Neo

The result of that investment in S&T manpower is that today America is the de fecto leader in technology world. In economic terms, between 1995 and 1998, the "Internet economy" grew at a compounded rate of 174.5%. Despite having the largest pool of educated and trained human resources, even today, American technology-based industries cannot meet their employment needs. The shortage of 346,000 information technology workers in 1998 has grown to over half a million and is still growing. And, according to Department of Labor projections, 60 percent of American jobs in the coming years will require skills that only 20 percent of Americans have. We also created Pakistan Science Foundation almost during the same era and the difference is visible. 

It is the "innovative ability, in addition to the technical ability that plays an ever-increasing role in economic success. An industry depends upon specialized expertise to design innovative products and processes. The capacity to translate knowledge into high-value, sometimes unique, products and services is imperative for a nation to become competitive in global economy. This capacity arises in numerous domains, including design, manufacturing, marketing, and management of products and services. The ability of a nation to develop individuals with such innovative abilities depends upon an educational system which provides a high quality cognitive skill base from which all enterprises can draw." 

The universities will have to act as long-term visionary research and development resource places. In Information Technology, their portfolio of high tech products and concepts ranges from the more traditional microprocessor and memory type computer chip to the emerging areas of biochips, micro- and nano-systems, ultra-high frequency communication devices and associated equipment. There are dozens of research universities around the globe where nano-technology research centers are functional which are glaring examples of academia-industry collaboration. 

Universities are conducting research on novel materials, which reveal properties different from the natural materials from which they are made. In the coming decades, the researchers plan to build microscopic nanomachines. These may include computers with a thousand-fold increase in power that draw only a millionth the amount of electricity, materials far stronger than steel but with only 10 percent the weight, and sensors that can detect tumors when they are only clusters of a few cells. 

The advances in computational capabilities, with concomitant advances in communications technologies are simply phenomenal. Computer Assisted Tomography Ã¢â¬â CAT, Magnetic Resonance Imaging (MRI), The application of quantum science at the sub-microscopic level, Global Positioning System - an array of 24 satellites, orbiting the Earth every 12 hours, Deciphering DNA structure Ã¢â¬â also known as double helix, Robotic manipulation and multiple mobile robotics, Networking and pervasive computing, Multiscale computation, and Next generation computer chips to name the few. 

At our universities we also have to understand the need for sharply defining a clear focus on areas of inquiry most vital for today`s global society. At BUITMS we have begun Institution-wide initiatives in management science and information technology. We have selected specific focal areas that build on our unique strengths. What we are doing is consistent with international trends. Apart from efforts for creating multidisciplinary research laboratories for electronics, telecom, and high power computing. We have already set-up Dr. Atta Ur Rehman Center for Information Technology and Telecommunications, under which we have submitted research proposals to donor agencies. We have initiated the process of establishing UNESCO Chair in Mechtronics, and another UNESCO Chair in Balochistan Development Studies. We have also requested to PTCL to sponsor a PTCL Chair in IT and Telecommunications Research. 

The next important postulate in the education is fostering entrepreneurship. Technological entrepreneurship is the ability to translate discoveries made in the course of scientific research into practical application i.e. the process by which innovation is transformed into business ventures. For us entrepreneurship also means putting to use the unique resources bestowed to us in the shape of minerals, vast stretches of lands and 100s of miles of seashores. Understanding the principles, practices, and importance of entrepreneurship, therefore, is vital to the economic health and well being of ours. We believe that the spirit of entrepreneurship is absolutely critical for the university education in today`s knowledge-driven economy. 

As such we have created BBI - Balochistan Business Incubator, where the university will pamper the student run entrepreneurial activities. And gentlemen, our hostel is not the hostel; we want to term it as entrepreneurÃ¢â¬â¢s dorm. We have students from across Balochistan and across the country from Turbat, Pangur, Gawader, Loralai, Zhob, and Lahore, Islamabad, Peshawar and Karachi. For the encouragement of student entrepreneurs, we also intend to create the Student Business Plan Competition and creating Student Venture Funding at appropriate times. 

Another dimension of our entrepreneurship is the establishment of System Sciences/Management Sciences Expert Advisory Cell, which would be providing professional services to the government and industry. We are discussing possible ventures with different government agencies. A team of professionals has been assigned to produce model e-government applications targeted for Balochistan. 

It is no accident, of course, that I have focused on BUITMS, We envision that our graduates & alumni are remembered in the decades to come as the persons who came up with new innovations, initiated and managed projects which would be still standing in the next century, founded the corporations which would be active around the globe and would be among the world leaders of tomorrow in their respective spheres of life. There are countless names in our history and in the history of others, where the creators are not there but their creations physical or conceptual are still alive and would remain so for the times to come. 

Last but not the least, the universities have a key responsibility to play in the development of a general technological awareness and literacy in all citizens of a given nation, in order to create understanding and acceptance of technology, and to create a favorable climate for technological developments. Universities cannot do it alone. Academic institutions, corporate sector and government offices and labs play a vital role in this process. I can quote virtually 100s of examples of successful collaborations. I strongly urge the government, the industry and businesses to come forward for technological alliance; we are here to research the solutions to your problems. 

Dr. Muhammad Abbas Choudhary


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THE government has traditionally adopted an ambiguous stance on its defence budget. While it has reaffirmed on different occasions that it will not enter into an arms race with India, it has also not been very categorical about committing itself to cutting down its defence expenditure. From this point of view, Prime Minister Shaukat AzizÃ¢â¬â¢s statement to a visiting delegation of South Asian media persons that the countryÃ¢â¬â¢s defence spending is gradually decreasing will be well received. Mr Aziz also pointed out that the governmentÃ¢â¬â¢s social sector development spending was growing rapidly. His statement is significant because it indicates that the national leadership is becoming aware of the heavy burden of defence that has been imposed on the country to provide security to the people of Pakistan. This has had a big impact on the national economy since nearly 27 per cent of the federal budget goes towards meeting the defence needs. It also seems that the government has come to see the wisdom of channelling more funds into the social sectors that address the need for developing human resources. Investment in health and education yields greater benefits than military hardware. An educated, skilled and healthy society ensures economic progress, political stability and the social development of the people, which guarantee security better than an oversized arsenal.

Given its limited resources, the government can raise its social sector spending only by diverting a sizeable part of the allocations from defence to other areas of national life. Spending on defence accounts for 4.4 per cent of GDP while education gets only 1.8 per cent and health even less at 1.1 per cent. One hopes that this ratio will change in the next few years as the balance shifts in favour of human resource development. While no one disputes the need to educate the people and give them a better life, it is also felt that the factors that had fuelled PakistanÃ¢â¬â¢s defence drive are gradually melting away. With the national defence being India-centred, it was natural for the size of our arms budget being contingent on the state of relations with India. When the two countries were locked in a state of mutual hostility, they were inevitably drawn into an arms race. Now that the two countries are engaged in a composite dialogue and tensions between them have been abated, it is felt that they can lower the level of their military preparedness. Islamabad has said a number of times that its military strategy is founded on the doctrine of minimum deterrence. This is a sensible approach since a country does not need a big stock of nuclear weapons for defence purposes. Even a few of them give a country an overkill capacity that is not really needed.

It is also important that governments should develop their foreign policy strategy in such a way that they do not have to take recourse to war and military weapons for security. Through skilful diplomacy and economic and trade relations states are known to better protect their strategic and geopolitical interests. The main disadvantage of using force or adopting the technique of sabre-rattling and brinkmanship is that a government can lose control over events destabilising an entire region. This is a dangerous scenario especially if it is remembered that weapons of mass destruction are not the preserve of a handful of nations. That is why it is felt that there is no need to develop such weapons on a big scale except for deterring a potential enemy.


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BAKU (updated on: May 04, 2006, 15:25 PST): Prime Minister Shaukat Aziz on Thursday said Pakistan was set to make the Economic Cooperation Organisation (ECO) more effective.

Talking to newsmen here soon after his arrival the Prime Minister said the ECO has lot of potential, but pointed that it has to be made more effective, particularly in areas of energy, transport and trade.

When asked if he has brought some proposals to make ECO more effective, he replied in affirmative and said Pakistan was playing an effective role in strengthening the organisation and to make it more vibrant. 

He said Pakistan provided the closest link to many of the member states to the sea providing the easiest route for increased trade.

The Prime Minister who is on a two-day official visit to Baku to represent Pakistan at the 9th ECO summit said "The ECO can build the necessary linkages and dependencies required for turning it into a more effective organisation."

The Prime Minister was earlier warmly received by Deputy Prime Minister Ayub Yakoobov at Baku Heyder International.

The Prime Minister soon after arrival is scheduled to hold a meeting with Azerbaijani President Ilham Aliyev at the Presidential Palace. Bilateral matters and regional and international issues are likely to figure in the meeting, foreign office sources said.

Prime Minister Shaukat Aziz is also scheduled to meet Iranian President Mahmoud Ahmadinejad, where they are likely to discuss the Iran Pakistan India gas pipeline project, the Iranian nuclear issue, besides measures to boost economic and political ties.

He will attend the ECO summit on Friday and is scheduled to meet Turkish Prime Minister Recep Tayyip Erdogan, before leaving for Islamabad.


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KARACHI (May 04 2006): How wrong clubbing of data plays havoc with the balance sheet was a case of inquiry for the central bank when it found an abnormal bulge in the banking system's deposits and 'other assets' on 8th April.

The wrong clubbing occurred in the case of a huge chunk of foreign exchange, received by the PC from a strategic buyer and paid to a major domestic bank for credit to the government account.

The best position would have been to immediately transfer the foreign exchange received to the State Bank. In that case, the balance sheet of SBP would have reported it as its holdings of foreign exchange which in all probability would have raised the liquid foreign exchange reserves of the country to over $13 billion.

That would have been a landmark achievement by the country but could not be realised because of late receipt and placement in a wrong head of account instead. It also delayed the government debt repayment to the SBP of about Rs 40 billion also meaning loss to the exchequer of the amount of interest due on it for one week.

Let us see what happened to the balance sheets of the banking system for the relevant dates. On 1st April banks' deposits etc amounted to Rs 2,665 billion which rose to Rs 2692 billion on the 8th - indicating an increase of Rs 27 billion in a week apparently an abnormal increase during a normal week.

In all such abnormalities, whether these occur in the case of deposits, loans or other items, the central bank looks at the individual balance sheets of banks locating where the abnormality occurred and then seeks a plausible explanation from the bank concerned.

When the mistake was rectified next week, deposits came tumbling down to Rs 2654 billion on the 15th - a decline of about Rs 38 billion in a week. Visibly, if the State Bank had not caught the mistake at the very beginning, inquisitive analysts would have been asking what happened to the banks' deposits in just one week? This mishap distorted the money supply figures, pushing it up in one week without any genuine reason and then taking a nosedive the next week without any justification.

On the asset side of the banking system it propped up 'other assets' of the banking system from Rs 180 billion on 1st April to Rs 219 billion on the 8th- an increase of about Rs 39 billion which was roughly the rupee counterpart of the foreign exchange deposited by a government department. On rectification, the 'other assets' on 15th April stood reduced to Rs 181 billion a position that was roughly obtained on the 1st. (Report by research.dept@aaj.tv)


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PESHAWAR (May 04 2006): The visiting Netherlands Foreign Minister, Bernard Bot, called on NWFP Governor Khalil-ur-Rehman at the Governor House here on Wednesday. He was also accompanied by Dutch Ambassador in Pakistan W Andreae.

The Governor highlighted the geographical importance of the province and the adjoining Federally Administered Tribal Areas and the system of governance, with special reference to the prospects of economic uplift there.

He thanked the government and people of Netherlands for their help and co-operation in mitigating the miseries of the earthquake affected people of the province.

The Governor apprised the guests about the prospects of economic uplift in FATA and said that the area is highly rich in mineral resources and technical assistance and foreign investment towards its scientific exploitation would definitely be welcome.

Khalil said that some foreign entrepreneurs have already expressed intentions to invest in the mineral sector. He particularly mentioned the deposits of marbles and said that an Italian firm was already in touch with the respective quarters to establish a tiles manufacturing unit in the area which, on materialisation, would definitely prove a significant source of earning foreign exchange.


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LAHORE (May 04 2006): Punjab Planning and Development Board Chairman Salman Ghani has disclosed that Gross Domestic Product (GDP) growth rate was expected to be around 7 percent in the FY 2005-06.

While addressing a press conference held to brief the newsmen on the forthcoming Punjab Development Forum (PDF) 2006 here on Wednesday, Salman said the figures would be included in the Punjab Economic Report 2006. He added the Punjab Chief Minister Chaudhry Pervaiz Elahi would make the report public on the Punjab Budget day.

"Unfortunately this year we could not present the report in the PDF because it was still in the preparation stage," he added.

According to him, for rural areas, in particular of southern Punjab, they were investing in education and health, and building infrastructure so that on farm jobs could be created. The government has also invested Rs 11 billion in irrigation to facilitate the farmers.

He admitted that development fund and non-development funds ratio was not at a reasonable level that stood at 25:75, however they were planning to change the ratio to 40:60 by 2008. He said the government thrust would now be on urban development, and in that connection an urban desk had been established in the P&D office. He revealed that government was also planning to conduct a service sector survey for the first time.

On PDF, he said that third Punjab Development Forum 2006 was scheduled for May 5 and 6 at the Chief Minister's Secretariat. He further said the main objective of the Forum was to provide an opportunity to policy makers, stakeholders from international development partners in Pakistan, representatives of business community, academia and members of the civil society, amongst others, to engage in wide ranging dialogue and discussion on the development priorities of the Punjab government.

It also aims to help the provincial government in evolving more participatory development strategy for the medium term.

According to him, the Punjab Chief Minister would inaugurate the Forum on Friday (May 5) while Punjab Governor Lieutenant General Khalid Maqbool (Retd) would preside over the closing session. Prominent among invited are State Minister for Economic Affairs Hina Rabbani Khar, Advisor to PM on Finance Dr Salman Shah, State Bank of Pakistan Governor Shamshad Akhtar, National Commission of Governance Reforms Chairman Dr Ishrat Hussain, Robert L Floyd Country Programme Co-ordinator World Bank (Pakistan and Bangladesh), John Wall head of the World Bank Mission in Pakistan, Peter Fedon Country Director Asian Development Bank, Yousuf Samiullah of DfID and head of other donor agencies in Pakistan.

"Moreover, a large number of invitee from academia, private sector and the civil society are expected to attend in addition to policy makers and representatives of government. Each of the five technical sessions would be chaired by the leading experts," he added.

For the first time a panel discussion of leading NGO's and members of civil society on 'Role of Government on Pro-poor Development' has also been scheduled in PDF. He also said that in the Forum exclusive session (Technical Session-I) for international development partners had been planned wherein focused discussions would be held on development priorities of the province.

Representatives of Asian Development Bank, World Bank and DfID would make presentations to share the views of international development partners. Special invitations have been issued to leading industrialists and investors in Punjab to encourage private sector investment in the province.

On the occasion, the Chairman presented two reports, 'District Wise Socio-Economic Indicators Coverage and MDGs (MICS 2003-04) and Poverty Focused Investment Strategy for the Punjab', which would also be tabled in the PDF in addition to Punjab Planning Manual for the local governments that serves as a guide on local governance.


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ISLAMABAD (May 04 2006): The Minister for Industries and Production, Jahangir Khan Tareen, said on Wednesday that South Asian Free Trade Agreement (Safta) would act as a binding force for mutual growth and economic co-operation in the region.

"If Safta, which is a binding force for regional economic cooperation, is successfully implemented, it will transform South Asia into an engine of economic growth for the World," he said while addressing the inaugural session of a two-day 'Regional Roundtable' on trade liberalisation in Saarc. ' The conference is being organised jointly by Saarc Chamber of Commerce and Industry (SCCI) and Commonwealth Business Council (CBC).

The themes of the roundtable are: Safta challenges and opportunities; regional market synergies; tariffs and non-tariff barriers liberalisation; impact of regional and bilateral FTAs on Safta; how multinational companies view Safta services and investment; and Safta as pathway to economic union.

The roundtable is being attended by public and private sector representatives from all over the region, including Sri Lankan Commerce Minister.

Tareen said that the intra-regional trade in South Asia was still only about five percent of the region's combined trade with the rest of the world, whereas Foreign Direct Investment (FDI) accounts for a mere one percent of the globe.

"South Asia needs to accelerate its growth process, with emphasis on human development and strengthening economic competitiveness to deal with daunting challenges," he said.

The Industries Minister described poverty as one of the major challenges being faced by the region, but expressed hope that Safta would be instrumental in economic progress, prosperity and overcoming poverty, which is so endemic in the region.

He said that it could prove to be the herald of sustainable growth by synergising the complementary economic strengths of member countries, expanding market availability to entrepreneurs, and making local industry more competitive in the global context.

SCCI President Dasho Ugen Tsechup Dorji in his address said that SCCI has drawn up a regional framework on arbitration, besides preparing a draft agreement on movement of goods and services.

He complimented Pakistan and India for making Safta possible, but added that a lot more was needed to be done to create mutually beneficial economic ties among member states.

He stressed for harmonising of standards, simplification of customs clearance procedures, simplification of banking procedures for import financing, transit facilities for intra-Saarc trade, removal of barriers to intra-Saarc investment, development of communication systems and transport infrastructure and simplification of procedures for business visas.

Saeed Ahmed, President of the Federation of Chambers of Commerce and Industry, said that Saarc member countries should evolve a comprehensive strategy to meet energy requirements and establish a system for inter-connectivity.

He said that there should be no political influence on trade, and the member countries should not only prepare common standards for their goods but should also establish a Saarc bank to facilitate trade.

He said that Saarc members countries should also prepare 'social charter' and give priority to education, health, environment, empowerment of women and poverty alleviation.

Peter Wilson, Political Counsellor, British High Commission, said that the world community was closely watching progress on Safta, and added that political governments should not create hurdles in forging economic relations.

"It will be the government's mistake to hold the economy hostage on political reasons," he added.

He lauded the efforts of President Pervez Musharraf and Indian leadership which they made to improve relations.

He asked the participants to send a strong message to their politicians that they should not interfere in economic links.

Naseem Saigal, representing Commonwealth Business Council, said that Safta was a great achievement of the member states and the region would become an economic tiger. He added that observer status to China and Japan was evidence of Saarc's importance.

In the technical sessions, challenges and opportunities of Safta were discussed in detail.

In a presentation, Dr Zafar Moin Nasir, of PIDE, said that South Asia region has great potential to diversify its industrial and agricultural production and take benefit of mutual trade.

He, however, said that unlike other regional treaties, such as Asean or European Union, which have 90 percent of their trade within the region, South Asia has very meagre intra-region trade.

He showed that cost of non-co-operation in the region had been almost $266 billion, and India and Pakistan had been the main losers.

He said that due to less investments the region lacked diversification in tradable products and trade supporting infrastructure. "If trade is liberalised under the Safta," he said, smaller economies in the region may get more benefit."

Amir Khusro Chowdhury, Advisor, Ministry of Commerce, Bangladesh, highlighted the importance of Safta for less developed countries of the region. He emphasised that issues such as rules of origin and compensation against revenue losses must be resolved as soon as possible. He said that the Negative List should not include most competitive products of member countries, otherwise there would be no tangible trade.

The participants expressed fears that recent enhanced FDI figures of member countries also included assets of privatised units and because of similar comparative advantage, member countries would only be able to trade between deficits and surpluses.


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ISLAMABAD (May 04 2006): Uzbekistan has shown interest in exporting sugar and cotton to Pakistan, in addition to further cementing relations in the fields of science, technology, telecommunication, trade and water sector. These offers were made by the visiting Uzbekistan President Islam Karimove at a meeting with Minister for Water and Power Liaquat Ali Jatoi.

Jatoi, who is also co-chairman of Joint Ministerial Commission (JMC) of the two countries, welcoming the Uzbek President said that Pakistan's economy has made significant progress over the past few years. He told the Uzbek President about Pakistan's massive upsurge in economic activity not witnessed here before in many decades.

He said that confidence of domestic as well foreign investors was gaining new heights on the back of a stable macroeconomic environment.

The Uzbek President appreciated the dynamic leadership and economic vision of President Pervez Musharraf, which has resulted in achieving phenomenal economic growth.

He also emphasised for restoration of peace in the region, particularly in Afghanistan, that could facilitate the trade between the two countries. He emphasised the need for joint ventures in various fields to boost trade and economic relations between the two countries.

Both sides appreciated the need to organise mutual visits of business delegations, co-operation between the chambers of commerce and industry, co-operation in the fields of food and agriculture, tourism, culture, information technology and telecommunication. With a view to creating favourable conditions for bilateral trade, both sides recognised the need to develop co-operation between banking and financial institutions of the two states.

Jatoi stressed the need for direct air links between Tashkent-Karachi-Islamabad to facilitate business activities and tourism between the two countries.


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ISLAMABAD (May 04 2006): The government wants accelerated work on the ongoing development projects in Balochistan, Senator Mir Mohabat Khan Marri said while talking to PTV on Tuesday. He said that in a high level meeting on Tuesday, Balochistan's development projects were evaluated and discussed.

He further said that the senators belonging to Balochistan and the members of provincial assembly also attended the meeting. Detailed discussion was held in the meeting and focus was towards the development of the province, he added.

Mir Mohabat Khan said special directives were given that work on ongoing projects would be accelerated in the province so that within short span of time, prosperity could be brought in to the province, he added. Senator Mir Mohabat said it was also decided in the meeting that more funds would be allocated for the development of the province.


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PESHAWAR (May 04 2006): NWFP Minister for Industries, Labour, Law and Parliamentary Affairs, Malik Zafar Azam said that as a result of International Investment Conference 2005, investment of Rs 20 billion had been made and employment opportunities for about 60,000 workers had been generated in the province.

He said this while presiding over a meeting of industries and other attached departments at his office, Civil Secretariat on Wednesday.

Secretary industries, director labour and officers of technical education and social security institute also attended the meeting. The minister said the MMA government was taking keen interest in the rapid industrial growth, hence, as a part of the government machinery it was incumbent upon the Industries Department to redouble its efforts to achieve goals.

He called upon the concerned quarters to have a regular inspection of industrial units so that along with industrial development, the interests of the working class could also be secured.

Referring to the Technical Education Sector, Malik Zafar Azam directed the concerned authorities to improve their performance so that provision of skilled manpower could be ensured at local level. The meeting also discussed the administrative and financial matters of the departments.


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KARACHI (May 04 2006): Cement share prices recorded appreciable gains on Wednesday, ranging from Re 0.65 to Rs 5.75, on reports that India might impose a ban on cement export as prices in its domestic market have gone up by almost 40 percent.

According to a news report from New Delhi, the Indian government is considering to ban cement exports to curb prices in its domestic market. The cement prices there have gone up from around Rs 135 a bag in January to Rs 210 a bag now. The price rise in the western and northern parts of the country has been described as 'abnormal'. The industry is attributing the increase to higher input costs.

Ajay Dua, Secretary in the Department of Industrial Policy and Promotion, said that as per estimates, cement prices had increased by nearly 40 percent since November 2005, while input costs had increased by 15 percent.

"The cement companies have made an additional profit of Rs 1,000 crore (Rs 10 billion) between October-March 2005-06, compared with the first two quarters of last fiscal year. We have told them that it's a free economy, but the government may have to step in since cement is a crucial input for infrastructure," Dua said.

The share prices of cement are in the buying chart at the Karachi Stock Exchange for the last couple of years and higher demand and expansion plan has resulted in sudden upsurge in their prices locally. However, the prices received heavy erosion last month following the government's decision to allow subsidy of Rs 60 per 50 kg bag. The prices of notable companies, including D G Khan, Cherat, Pakistan, Lucky, Maple Leaf and Fauji Cement had plunged by 18 percent, 16 percent, 15 percent, 14 percent, 12 percent and 11 percent, respectively.

However, on the development in the neighbouring country, once again buying in cement spurted and equities rebounded sharply where Lucky Cement and D G Khan Cement advanced by 10 percent each, Cherat Cement 9 percent, Fauji Cement and Maple Leaf 8 percent each, and Pakistan Cement 7 percent.

A leading analyst said that if the Indian government imposed restriction on export of cement, the import of cement from China or any other Far Eastern country would not be feasible, and the share of local manufacturers would remain intact.

Anwar Ahmad Khan, research analyst at Capital One Equities, said that the government's decision to give subsidy to import cement, apparently worked well as the cement prices started coming down, and currently were moving around Rs 300 - Rs 330 per bag, against Rs 400/bag nearly a month ago.

"We believe that the cement prices may settle around Rs 300/bag because imported cement is likely to retail around Rs 255/bag - Rs 285/bag at the prevailing per ton CIF prices of US $65 - US $75. These prices are quoted by suppliers from China, Russia and Middle East via sea. Since local cement is better in terms of quality and freshness, it is likely to be priced Rs 20 - Rs 25 higher than the imported cement. Therefore, local prices are likely to range from Rs 280 - Rs 310 per bag."

Cement demand is increasing at an average rate of 16 percent per annum, whereas reconstruction of northern Pakistan and construction of dams are yet to add to the overall demand of the commodity.

"We are of the opinion that importing cement is not the solution for rising cement prices. It is primarily a demand-supply mechanism playing in the market. In our view, allowing cement imports at the time when new production capacities are about to come online may draw a bad impact on the economy."


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RAWALPINDI (May 04 2006): Engineering Development Board (EDB) Chairman Wasim Haqqie has said that under the dynamic leadership of President Musharraf, the country was heading towards economic prosperity and progress.

Addressing the opening ceremony of "Open House Job Fair 2006" here on Wednesday, he pointed out that six years before, the economy of the country was in bad shape and by the President's vision and leadership, the GDP growth rate had been increasing now by every passing day. He said they lived in a global village and there were numerous challenges before them.

"We have to tackle these challenges with the help of latest technology, scientific advancement and efficiency," Haqqie said adding that Pakistan had got into growth mode then and to sustain that they needed good governing, institutional growth, strengthening private sector and financial transparency.

He described the education a must for economic progress and said they needed quality education to achieve a respectable place in the comity of nations.

It may be recalled that Open House Job Fair 2006 was held under the auspices of the College of Electrical and Mechanical Engineering (CEME) with the purpose to provide direct link between industry and academia. Students of the college demonstrated various projects in the fair. Industrialists and company managers visited the fair and interviewed several students for appointing them in their respective companies.


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PTI, NEW DELHI

May 3: Iran yesterday said India had not been "ousted" from the proposed 7-billion dollar tri-nation pipeline, even as it set an August deadline for New Delhi to sign an agreement on the project. 

"I want to clarify that contrary to reports, India has not been edged out of the Iran-Pakistan-India pipeline. We continue to engage in discussions leading to tri-nation ministerial meeting next month," Iran's Deputy Oil Minister Hadi Nejad- Hosseinian told reporters after meeting Petroleum Minister Murli Deora here. 

He said against the capacity of 110 million standard cubic metres per day, Pakistan has sought between 30-60 mmscmd of gas and India wants 90 mmscmd. Besides, 30-35 mmscmd of gas would be transported through the proposed pipeline from gigantic South Pars gas field to eastern regions of Iran. "The demand figures mentioned ramp up over a period of five years. Initially, a single pipeline (meeting requirements of eastern Iran, Pakistan and India on pro-rata basis) would suffice and a parallel line can be laid as demand rises," he said. 

Deora said India favoured implementation of a single pipeline first and upon its successful operation a second line could be laid. He also ruled out any pressure from US for pulling out of the project. "Not at all. I don't think the US is pressurising. I don't think America can pressurise us." 

The Iranian Minister said India has to agree on the pipeline by August, failing which Tehran would proceed with bilateral exports to Pakistan. 

"We have approval to expedite laying a pipeline to the eastern part of Iran... So if India delays joining the project, we would go ahead," Hosseinian said. The Iranian Minister, however, categorically ruled out building separate pipelines to supply gas to India and Pakistan. "There will be a single pipeline meeting demand of all and if need be a second pipeline would be laid, which too would meet all incremental demand in the three countries," he said. He said oil secretaries of the three countries would meet in Islamabad on May 22-23 to sort out pricing of the gas and culminate discussions into a tripartite ministerial meeting in Tehran in June.


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KARACHI, May 3: State Bank Governor Dr Shamshad Akhtar has said that the banking industry in Pakistan has witnessed a brisk growth in assets in recent years which now stand at over $60 billion.

Delivering a speech at the Global Transaction Banking seminar here on Wednesday, Dr Akhtar said Pakistan offered a promising ground for financial experimentation and innovation. Ã¢â¬ÅPakistanÃ¢â¬â¢s banking industry has seen a brisk growth in assets which today stand at over $60 billion. BankÃ¢â¬â¢s profitability is at an all-time high and unprecedented, reaching close to Rs93 billion by 2005,Ã¢â¬Â she said.

Ã¢â¬ÅAside from higher efficiency, gains in the industry attributable to benefits arising from significant banking sector restructuring and reforms, and high profitability of banks has been achieved because of high interest margins,Ã¢â¬Â said Dr Akhtar.

The SBP governor said that in the period ahead, the financial industry, however, had to be positioned for a more competitive environment and had to cater for more diverse and complex requirements of PakistanÃ¢â¬â¢s consumers and infrastructure. Pakistan, like the rest of Asia, is growing fast and a rise in per capita income, emergence of the middle income group and relative wealth increases all together bring with them new demands for the retail banking industry.

Ã¢â¬ÅBeside real sector developments and requirements, the financial industry of Pakistan has to catch up fast with the global developments and achieve better financial diversification and strengthen its risk management systems,Ã¢â¬Â said the SBP governor.

Ã¢â¬ÅIn PakistanÃ¢â¬â¢s context, it has to be recognized that while large banks will continue to thrive on volumes of business, which they have traditionally captured given their reach across the country, it is the foreign banks with their competitive edge in global transaction banking that can offer unique and new financial solutions,Ã¢â¬Â she added.

PakistanÃ¢â¬â¢s real time inter-bank settlement mechanism is at an advanced stage of installation and is expected to be lived by the 3rd quarter of 2006, Dr Akhtar said.

The coverage of online branches as a percentage of total branches (7,245 branches) has now reached 45 per cent. At this pace, the whole branches network of the banking system will be online in the very near future, which will substantially improve efficiency of the payment system.

Usage of cards at POS (Point of Sales) is expanding with the passage of time. This channel recorded remarkable growth of 62 per cent in number of transactions to 13 million transactions in FY05 from 8 million in the previous year. Value of transactions grew by 56pc to Rs42.8 billion in FY05 from Rs27.4 billion in FY04.

Ã¢â¬ÅThe Global Transaction Banking concept, though newer to Pakistani banks, will help service the ever-growing need for PakistanÃ¢â¬â¢s trade and finance and facilitate investorsÃ¢â¬â¢ awareness about the growing Pakistani economy and markets. We see inter-exchanges like this would further strengthen the transaction banking business in Pakistan,Ã¢â¬Â Dr Akhtar concluded.


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## Neo

Thursday, May 04, 2006 

KARACHI: US company Boeing has placed electronics manufacturing orders worth $100 million with Precision Engineering Company and Pakistan Aeronautical Complex.

This was stated by Director Boeing Company Seattle, USA Miguel R Santos at a seminar on Ã¢â¬ÅElectronics and Electrical Contract ManufacturingÃ¢â¬Â, held recently.

According to EPB, the objective of the seminar was to sensitize the related Pakistani industry and obtain feedback on the subject.

He said that in next two to three years, BoeingÃ¢â¬â¢s outsourcing could surpass $1 billion mark for electronics and electrical manufacturing companies.

Ã¢â¬ÅBoeing is not only placing the orders but also providing the technical know-how by deputing their engineers to train Pakistani counterpartsÃ¢â¬Â, Santos added.

He pointed out that US aircraft manufacturing company has even supplied the machinery needed to prepare these parts used in their 777 aircraft model series.

The United States of America alone was out-sourcing annually over $ 600 billion worth of products to the developing countries and growing rapidly, he noted.

This unique opportunity provides increased employment and growth in Pakistan from the production and enhanced exports when such goods are exported back to the buyer.

Vice President, Boeing Glen A. Green and a Pakistani-American entrepreneur Pervaiz Lodhi also spoke. Ã¢â¬ÅThe Next Industrial RevolutionÃ¢â¬Â which is outsourcing and contract manufacturing of electronics and electrical parts by the developed countries to the developing nations like Pakistan.

They said the world market is very large and growing fast as cost of production increases in developed countries and technical capabilities improve in the developing ones.

After the Seminar the chief executive and chairman of Philips-Pakistan, Shahid Zaki, director, Boeing Company Miguel Santos and vice president Boeing Glen A. Green, had a meeting with Chairman Export Promotion Bureau Tariq Ikram to discuss this opportunity and outline the way forward.

The EPB chairman constituted an action team comprising persons which are experts in their related fields to chalk out plans to capture opportunities for securing outsourcing assignments for Pakistan.

Pervaiz Lodhi, President, LED Tronics based in Torrance, California. Miguel R. Santos, Director, Boeing Company based in Seattle, Washington, Sultan ul Arfeen, Arfeen Group of Companies, Shahid Zaki, Chairman & ECO, Philips-Pakistan, Zubyr Soomro, CEO, Citygroup-Pakistan Operations, Mohsin Ali, Secretary General American Business Council of Pakistan, Riaz Khan Executive Director Marketing, Export Promotion Bureau are in the committee. It was decided to set up an electrical and electronic contract manufacturing city for this purpose.

In the meantime, Export Promotion Bureau will contract International Trade Center to get their technical expertise in order to launch the project.


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## Neo

Islamabad, May 4, 2006

Barely a week after President Pervez Musharraf laid the foundation stone for Diamer Basha dam in Pakistan controlled Northern areas, the government is planning to change the site after a report that shifting it 30 kms away would save Chilas town. 
A German company has proposed to the government to change the site of the dam, saying it will not only save the city but also increase the dam's storage capacity and reduce the cost of the project.

A representative of the German company, Leamher, which prepared the feasibility report in collaboration with a Pakistani company, NDC, suggested that shifting the site would reduce the number of affected people and save the town from submerging, Pakistan's Online news agency reported.

The new location of the dam, proposed in the report, is surrounded by mountains from three sides and a wall will have to be constructed only on one side, thus reducing the cost of the project.

President Musharraf laid the foundation stone for the controversial dam on April 26. Costing around $6.4 billion, Diamer Basha dam would be built on the Indus river near Chilas, about 165 km from Gilgit, the capital of Northern areas.

The Indian government as well as the local people protested over the construction of the dam which would displace about 23,000 people and inundate large tracts.

As per official statistics the dam would submerge 30 villages and 25,000 acres of land, including about 100 km of Korakuram Highway connecting Pakistan with China through the Khyberpass.


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## Neo

ISLAMABAD, May 3: The centre would transfer about Rs321 billion to the provinces during the next fiscal year (2006-07) as their share of the federal divisible pool, about 34 per cent higher than current yearÃ¢â¬â¢s budgeted estimate of Rs240 billion, it is learnt.

The total size of the net proceeds of the divisible pool has been estimated at about Rs700 bn for the next year, after estimated deductions of collection charges and direct fiscal transfers to the district governments under 2.5 per cent general sales tax in lieu of octroi and zila tax, sources in the finance ministry told Dawn on Wednesday.

The sources said the federal government has conveyed to the provinces the size of their share of net proceeds of the divisible pool for the next year at Rs321 bn and has asked them to prepare their budgets on the basis of these estimates. This does not include project aid to the provinces.

The share of Rs321 bn also includes Rs27 bn subventions to be provided to the provinces. Balochistan would be the highest recipient of the subvention pool with a grant of about Rs9 bn, these sources said.

The sources declined to divulge the province-wise details but said the provinces would get a sizable increase in their shares than last year under the revised national finance commission announced by the president a few months ago.

BalochistanÃ¢â¬â¢s share would go up to about Rs32 bn including subventions and share of the general sales tax directly going to the districts, compared with its current year share of about Rs18 bn.

They said the figures have been worked out by the federal and provincial governments during a series of recent meetings of the provincial finance secretaries with federal secretary general and secretary finance. The last meeting of this series took place on Wednesday. The provincial governors and chief ministers also held meetings on the subject with the president and the prime minister in recent weeks.

For the current fiscal year (2005-06), the provincial share out of net proceeds of the FDP was estimated at Rs240 bn, which may slightly go up at the end of the year on the basis actual revenue collection. Net provincial transfers including grants, project aid etc were, however, estimated at Rs315.5 bn in the current fiscal year.

The budget 2004-05 had estimated Rs200.9 bn share to the provinces out of federal divisible pool which was later revised to Rs204.8 bn.


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## Owais

Lead managers for OGDCL GDRs appointed 


*KARACHI *_(updated on: May 04, 2006, 18:41 PST_): The government appointed Citigroup, Goldman Sachs and BMA Capital Management on Thursday to manage a sale of up to 15 percent of Oil and Gas Development Co. Ltd. (OGDCL) through an issue of global depositary receipts and a domestic offering.

The PC plans in June to sell between 10 and 15 percent, representing between 430 million and 645 million shares in OGDCL, the country's largest listed firm, with a market capitalisation of around $12 billion.

"Citigroup and Goldman Sachs will act as joint global co-ordinators and joint bookrunners and BMA Capital Management will act as domestic joint lead manager," the Privatisation Commission said in a statement.

The government holds a 95 percent stake in OGDCL, while the remaining 5 percent is listed on the Karachi Stock Exchange.

OGDCL shares closed 70 paisas down at 164.25 on Thursday, in a broader market which ended down 0.32 percent.


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## Owais

*Global banking transaction concept to unlock trapped capital: Shamshad addresses Deutsche Bank seminar* 
*RECORDER REPORT* 

KARACHI (May 04 2006): The Global Transaction Banking Concept will unlock working capital trapped in inefficient order-to-cash and purchase-to-pay cycles and enable businesses to achieve greater integration of the supply chain.

This was stated by State Bank of Pakistan (SBP) Governor Dr Shamshad Akhtar while addressing the Deutsche Bank Annual Global Transaction Banking Seminar held at a hotel here on Wednesday.

The SBP Governor said: "Today, Pakistan offers a promising ground for financial experimentation and innovation. Pakistan's banking industry has seen brisk growth in banking assets which today stands at over $60 billion. The banks' profitability is at an all time high and unprecedented, reaching close to Rs 93 billion by 2005. Aside from higher efficiency gains in the industry attributable to benefits arising from significant banking sector restructuring and reforms, high profitability of banks has been achieved because of high interest margins."

She said that in the period ahead, however, the financial industry has to be positioned for a more competitive environment and has to cater for more diverse and complex requirements of Pakistan's consumers and infrastructure. Pakistan, like the rest of Asia, is growing fast and the rise in per capita income, emergence of the middle income group and relative wealth increases all together bring with them new demands for the retail banking industry.

Beside these real sector developments and requirements, she said, financial industry of Pakistan has to catch up fast with the global developments and achieve better financial diversification and strengthen its risk management systems.

She said that in Pakistan's context it has to be recognised that while large banks will continue to thrive on volumes of business, which they have traditionally captured, given their reach across the country. It is the foreign banks, with their competitive edge in global transaction banking, that can offer unique and new financial solutions and lead the way for the rest of the banking industry to provide to customers an integrated solution that caters for emerging consumer and industry requirements, she added.

About global changes in financial industry, the SBP Governor said that compulsions to go this route are mounting. World-wide financial landscape has changed driven by:

-- Changing macroeconomic factors such as economic growth and demography and institutional development as capital markets have matured and population demands for retirement funding and insurance has grown.

-- The phenomenal growth in financial markets and cross-border flows.

-- The ability of the financial industry to take advantage of the opportunities provided by the lending and mortgage markets, and development of credit risk transfer instruments which involves structuring and trading of credit derivatives and asset backed securities that allows risk inherent in a loan to be repackaged into two or three tradable components to offer optimal allocation of risks it is particularly relevant in the context of developing financial markets where the risk profiles of banks are still dominated by credit risk predominantly of the issuance of loans even though there are moves towards corporate bonds or transactions in over-the-counter markets, which involve the risk of a counterparty defaulting.

-- Adoption and adaptation of technological advancements in communication and information technology that has seen the explosion of financial innovation with service providers now offering multiple and diverse solutions that enhance efficiency and reach of products across boundaries and across national jurisdictions.

-- Need to globally integrate financial systems and encourage end-to-end straight through processing capabilities and development of payment, clearing and settlement systems to overcome time zone and currency constraints.

-- With globalisation of markets & businesses, there is greater need for global transaction solutions for effective cash management, trade finance, trust & securities services, and Continuous Linked Settlement (CLS).

Finally, there are now mounting regulatory pressures to seeking greater IT solutions to tracking money laundering as well as adopting the new risk management framework including the Basle II.

About the role of the central bank, SBP Governor said that recognising that Pakistan banking industry after its restructuring is now positioned to move to the next level of development, SBP has been focusing on promoting gradual migration from a predominantly cash and paper based system to electronic payments.

Regarding Clearing and Settlement Systems in Pakistan, she told the seminar that as a custodian of the Payment System of the country, SBP has nurtured and supervised the operation of the Clearing House for the member banks operating within its jurisdiction. Automated clearing services are now provided by National Institutional Facilitation Technologies (NIFT) under the supervision of SBP in nine major cities of Pakistan. The Local US dollar clearing system provides a low-cost and efficient clearing system for US dollar denominated local instruments. The new system has reduced the clearing time of US dollar cheques from three weeks to only four days and has reduced the cost to the account holders.

She said that Pakistan's Real time Interbank Settlement Mechanism (PRISM) is at an advanced stage of installation and is expected to be live by the Third quarter of 2006. It will automate the current interbank settlement systems for large value payments at SBP and will minimise the risks, like credit, liquidity and settlement risk, inherent in the end of the day settlement system. Its implementation will make the payments systems much more efficient and resilient, offering transactional features, which are hard to achieve under the current settlement systems.

She said PRISM will not only automate the InterBank funds transfer but will also facilitate the settlement of government securities transactions in Primary and Secondary Markets. After the implementation of PRISM, settlement of securities between the participants will be on Delivery vs Payment basis, thus reducing the risk in securities trading by minimising the settlement lag. SBP will also be able to settle the open market operation transaction through PRISM.

The SBP Governor said that to facilitate nation-wide RTGS and electronic fund transfer, Pakistan has now drafted 'Payments System and Electronic Funds Transfers Act 2005' that ensures conformance with industry demands and Bank for International Settlements Core Principals for Systemically Important Payment Systems. The proposed Act addresses issues like operation of payment systems, including the clearing and settlement obligations of the parties involved, supervisory role of SBP, documentation requirements by the participants, liabilities of parties in payment systems and legal proceedings in case of any conflict, finality and irrevocability of settled transactions etc. The Act also gives necessary legal coverage to PRISM. SBP is also framing the requisite rules and regulations for the smooth operations and participation in PRISM.

About the progress in of Electronic Payment System, she said there has been substantial improvement in payment system infrastructure and consumers' payment patterns over last few years, particularly in urban areas, which is evident from the exponential growth in Automated Teller Machines (ATM) Cards, Debit & Credit Cards, ATM outlets, Points of Sales (POS) accepting payments through cards and number of online branches of commercial banks providing SWIFT interbank account to account funds transfer facilities and the interconnectivity of the two ATM switches viz. the MNet and 1-Link. With strategic focus of SBP to develop a well functioning and efficient payment system in the country coupled with rapid technological changes, the pace of growth in payment system infrastructure will further accelerate in the medium term and its outreach will extend to even smaller towns.

She said that the online branch network is also expanding at a fast pace and reached up to 3,265 at the end of December 2005 from 2,475 at the end of the preceding year, indicating an impressive increase of 32 percent or 790 branches. The addition of 315 branches into the online network in the fourth quarter is signalling further acceleration in the pace of growth of the online branches. The coverage of online branches as a percentage of total branches (7,245 branches) has now reached 45 percent. At this pace, the whole branches network of the banking system will be online in the very near future, which will substantially improve efficiency of the payment system.

Dr Shamshad said that usage of cards at POS is expanding with the passage of time. This channel recorded remarkable growth of 62 percent in the number of transactions to 13 million transactions in FY05 from 8 million in the previous year. Value of transactions grew by 56 percent to Rs 42.8 billion in FY05 from Rs27.4 billion in FY04.5.3: Number of Cardholders

She said the Global Transaction Banking (GTB) concept, though new to Pakistani banks, will help service the ever-growing need for Pakistan's trade & finance and facilitate investors' awareness to the growing Pakistan's economy and markets. "We see inter-exchanges like this would further strengthen the transaction banking business in Pakistan. SBP is conscious of the need to further strengthen the payments and settlement systems in Pakistan to reduce inherent settlement risk and bringing efficiency to the financial system. We look forward to global banks, like DB, in performing their due role to facilitate in providing awareness and expertise in further strengthen the financial system."


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## Owais

*CONTINUE:*
The Governor said that the GTB will help in providing fully integrated risk mitigation, settlement, financing and information solutions, which help unlock working capital trapped in inefficient order-to-cash and purchase-to-pay cycles. It will also assist businesses to achieve greater integration of the supply chain, which facilitates greater efficiencies and streamlined work flows, whilst reducing operating costs and accelerating payment cycles. More efficient trade processes also mitigate risk exposure and help the businesses optimise returns from trade assets.

Werner Steinmueller, Managing Director, Head of Global Transaction Banking, Stefan Schneider, Director, Chief International Economist and Head of Macro-Trends, Paul Camp, Managing Director, Global Head of Cash Management Financial Institutions, Shahzad Dada, Managing Director, CCO and Head of Global Banking Pakistan, Nadim Nizam, Managing Director, Global Transaction Banking Head - MENA Region, Ahmed Jabran, Vice President, Cash Management FI MENA Region and Daniel Smaller, Managing Director, Asset Management Head - MENA also spoke on this occasion.


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## Owais

*OGDCL's GDRs to be listed at London Stock Exchange* 

ISLAMABAD (May 04 2006): The government on Wednesday decided to list Oil and Gas Development Company Limited's (OGDCL) global depository receipts' (GDRs) at London Stock Exchange for floating 10 to 15 percent shares with 15 percent green shoe option.

The green shoe option will be used only in case of over subscription.

The authorities discussed the issue at a meeting held here with Privatisation Minister Zahid Hamid in the chair. The senior officials of Privatisation Commission, OGDCL, Law Division and lead manager's representatives attended the meeting.

Sources said OGDCL officials gave a comprehensive presentation and informed the participants that they were ready to facilitate GDRs' offering in the local as well as international market.

The meeting was apprised that a two-pronged strategy would be followed to attract international investors for the offering. It will include organising of road shows in UK, Singapore, New York and other countries. The first one will be held in London.

The meeting also endorsed a proposal to list GDRs at London Stock Exchange. The road shows will be held before summer break in the UK, US and the other countries listed for the presentations.

The ministry of petroleum and Privatisation Commission will organise the country road shows. The organisers will give detailed presentation at the road shows on Pakistan's overall economic growth, measures taken by the government to liberalise the economy and the major programmes initiated during the last few years for achieving the targets of economic growth.

The country road shows will be followed by the company road shows at the same destinations. The OGDCL will give presentations to the investors at these road shows about its role in developing Pakistan's oil and gas sector, besides its future exploration and production plan.

The sources said that the meeting also endorsed offering of 2 percent shares in the local market. The offering at home and international market will be made simultaneously.

In order to attract maximum investors, the IPO will be discounted. However, the rate of shares will be slightly less than the actual value at that point in time when the offering will be made.

It may be noted that in 2005, the government had offered the OGDCL shares through initial public offering (IPO) at 50 percent subsidised rates.

The sources said the meeting also discussed the time-frame for the offering and discussed various options. However, the final time-frame will be set after taking all the aspects of the transaction into account.

The government wants to complete the transaction before the closing of the fiscal year basically to plug the current account deficit from the money raised through the offering. However, the lead manager, a consortium comprising Citigroup, Goldman Sachs and BMA Capital, has suggested some delay to take full advantage. The lead manager views that June was not a proper time for such a big transaction as at that point in time all the countries, which were being targeted, go on holidays.


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## Owais

*Local governments asked to generate own resources* 
*RECORDER REPORT* ISLAMABAD (May 04 2006): Prime Minister Shaukat Aziz on Wednesday said Local Governments (LBs) should generate their own resources rather than relying on transfers from federal and provincial governments.

"They (local governments) need to raise as much resources as possible through various avenues available to them rather than only relying on transfers from federal and provincial governments," he said this while speaking at an International Conference on Fiscal Decentralisation organised by the National Reconstruction Bureau (NRB) in collaboration with the World Bank.

He said Pakistan was facing challenges in devolution and fiscal decentralisation of resources, better fiscal management and expanding tax base at lower levels without hurting the economy, especially the user charges to reduce exclusive reliance on higher level of transfer.

Aziz underlined that the local governments depend primarily upon fiscal transfers from provincial governments for meeting their expenditure requirements and local revenue mobilisation is an important activity for the sustainability of the local governments.

"Changing international economic conditions, structural adjustment programmes designed to improve public sector performance and growing services demands are forcing the central governments to rely more on local governments, untapped resources available at that level" he added.

In general terms fiscal decentralisation means empowerment of government at various levels to levy taxes, set the rate of taxes and to generate a substantial portion of their revenues themselves. In Pakistan, it refers to the complete financial system including distribution of resources, transfer of funds, taxation, budgeting, accounting and auditing.

"We have covered a lot of ground in fiscal decentralisation, a lot more is needed to be done. Our economic philosophy based on deregulation, liberalisation and privatisation accompanied by deep and wide-ranging reforms has put Pakistan on a high growth trajectory. Substantial improvement in our revenue stream is enabling us to accelerate our development pace and increase fiscal transfers to sub-national and local levels," he said.

Pointing out challenges in devolution and fiscal decentralisation, the Prime Minister said that resolving overlaps in expenditure responsibilities between various levels of government and de-facto assumption of government because of weak capacity at the lower level was a challenge to be tackled.

Besides, he said addressing the complexities in inter-governmental relations because of uniqueness of provinces was still a challenge. Because, one of them is larger in terms of population, other is huge in area, the third is relatively backward, and fourth has high economic activities and relatively higher per capita income.

Developing the right mix of indicators for incorporating in distributive formula and associated weights, both vertical and horizontal transfers, while taking into account the fiscal capacity and infrastructure endowment in each district was another challenge which the government is trying to address, Prime Minister concluded.


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## Owais

*CBR to obtain real estate buyers' CNIC numbers* 
*RECORDER REPORT* ISLAMABAD (May 04 2006): The Central Board of Revenue (CBR) has decided to obtain the Computerised National Identity Card Numbers (CNICs) of real estate purchasers for compilation of a national database.

The CBR on Wednesday issued instructions to all Regional Commissioners of Income Tax (RCITs) to ensure collecting CNICs of the persons engaged in buying and selling of property during the tax year.

According to the directive, information regarding investment, inclusive of NIC/CNIC of the purchasers, is to be obtained for a consolidated database at CBR level.

Official sources told _Business Recorder _that CNICs of the persons engaged in real estate investment are a prerequisite for maintaining authentic database. The income tax database, called 'National Tax Number (NTN) Master Index', only recognises CNICs as identifier numbers allocated to the taxpayers.

The CBR will use CNICs for allocation of NTN to taxpayers on the basis of information available with the 'Master Index'.

They said that the CBR directive to obtain CNICs of property purchasers has many complications. It is an uphill task for an income tax officer to obtain the CNICs from provincial registrars, who maintain manual record. The computerisation of property transactions is necessary for obtaining data on property. The provincial governments have issued instructions to registrars of land revenue departments to cooperate with the income tax department. But manual maintenance of record in Urdu language creates serious problems in obtaining the requisite record, officials added.


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## Neo

Thursday May 04, 2006 

HYDERABAD: Economic cooperation between India and Pakistan has "huge potential", said a Pakistani official here Wednesday. 
The advisor to Pakistan Prime Minister Shaukat Aziz on finance, revenue, and economic affairs, Salman Shah, said the two countries should have an agreed vision and lay a roadmap to intensify cooperation. 

Shah, who was in Hyderabad to attend an informal meeting of South Asian finance ministers on the sidelines of the Asian Development BankÃ¢â¬â¢s (ADB) annual meeting, also expressed satisfaction over the economic growth of Pakistan, which recorded a growth rate of 8.4 percent last year. 

He said the focus was now on stabilizing macro economic parameters and ensuring that it is translated into benefits for the common people. "The goal is to remove poverty," Shah said. 

"The meeting (of the finance ministers of South Asian countries) will discuss what should be the future agenda and the projects on which countries can agree," he said.


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## Neo

Thursday, May 04, 2006 

KARACHI: Dewan Motors, the importer for BMW Group brands in Pakistan, BMW, MINI and Rolls Royce, opened the first MINI display center in the country. Dewan Mohammad Yousuf Farooqui, CEO of Dewan Musthaq Group Ã¢â¬â Automotive Operations, inaugurated the display centre at Zamzama, Karachi on Sunday April 30, 2006.

According to the press statement, Dewan Motors is currently the most successful premium car importer in Pakistan. Sales and after sales is the companyÃ¢â¬â¢s top priority and Dewan Motors has invested in a skilled and experienced team to ensure premium service, as benefits the BMW Group brands.


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## Neo

Thursday, May 04, 2006 

ISLAMABAD: Sultan Ahmed Bin Sulayem, Chairman of the Dubai Ports World/Nakheel Group of Companies of UAE, arrived here on Wednesday leading a seven-member delegation to discuss their investment plans in Pakistan, said an official statement issued by the Board of Investment. 

During their stay in Pakistan, the delegation will meet President General Pervez Musharraf, Sindh Governor Dr Ishratul Ibad, Sindh Chief Minister Arbab Ghulam Rahim and Minister for Ports and Shipping Babar Khan Ghauri. 

The Nakheel Group is one of the leading real estate developers dealing in free-hand property in Dubai. Its real estate development ranges into residential, tourist, commercial and retail property. The group is also involved in infrastructure projects as it is one of the subsidiaries of Dubai World (DW), which is a state-owned enterprise. The DW is involed in a wide range of commercial activities having business interests in the fields of ports and logistics and real estate management of free zones. Another subsidiary of the DW is Dubari Ports, which is one of the largest port operators.


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## Owais

*Increase in exports to help curb extremism: Musharraf gives away FPCCI awards* 

ISLAMABAD (May 05 2006): President General Pervez Musharraf on Thursday encouraged entrepreneurs to maximise exports through best use of Pakistan's enormous potential and said their contribution to economic development will be vitally helpful in reducing poverty and stemming the malaise of extremism.

He also called upon the businessmen to diversify their exports, focus on value-addition and improve the quality of their products to help Pakistan in continuing its socio-economic development and scale new heights of exports from this years unparalleled level of more than $17 billion.

"By increasing exports, the business community not only alleviates poverty through employment generation, but also helps in curbing extremism in the society and terrorism from the country, " he said.

President Musharraf was addressing the 29th Exports Awards ceremony organised by the Federation of Pakistan Chambers of Commerce and Industry (FPCCI).

The president, who also gave away trophies and medals to outstanding entrepreneurs of the last financial year, also pledged to make Pakistan a hub of energy and trade corridor among Central Asia, the Gulf region, South Asia and fast growing Western parts of China.

"Any trade or energy link between these regions has to take place through Pakistan - and we are fully focused on utilising Pakistan's key geo-strategic location for our un-stinted high growth and sustained development," he said.

Speaking about exponential increase in the economic activity, the president pointed to the recent upward trend in the import of machinery mainly in the industrial sector and said it bespeaks of Pakistan's shift to industrial sector.

"We are not worried about the figures of external balance of payment - the deficit is short-lived - as import of chemicals and industrial machinery and equipment means new companies are coming up, the businesses are expanding and the people are getting more employment - this will certainly bolster our exports," he said.

He said record inflow of foreign direct investment (FDI), vibrant growth and continuous raise in exports clearly signify that Pakistan's economy is on sound footing and set to sustain high economic growth in the years ahead.

Commerce Minister Humayun Akhtar, Export Promotion Bureau Chairman Tariq Ikram and leading entrepreneurs attended the awards ceremony. The president recalled key steps the government took in the last six years to evolve an enabling environment and said in the first place it set about exploring new markets for its entrepreneurs and also diversifying the export base.

"We realised that we were focused towards the West and anchored in export of agriculture - this was despite the fact that textiles made up just 6 percent of the global trade, while engineering goods accounted for 60 percent of it.

"So we began to explore new markets in Latin America, Eastern Europe, China and South East Asia and that has resulted in leaping our exports from less than $8 billion in 1999-2000 to more than $17 billion in this fiscal year."

Listing achievements of the last six years, he said, Pakistan's per capita income has advanced from $440 to $800, while its GDP has doubled from $64 billion to $125 billion. The gap between demand and supply, continued growth in the industrial sector and attractive profitability prospects have made the country a desirable place for investment, he said.

He emphasised that in order to sustain its high growth rate, Pakistan must succeed in three areas - trade, joint ventures and investment.

President Musharraf also underlined the importance of tax collection and said it has increased from Rs 300 billion to Rs 800 billion in the last six years.

"This has made it possible for us to boost allocations for Public Sector Development Programmes from Rs 100 billion to Rs 300 billion."

He encouraged the entrepreneurs to pay taxes as they expand their business and promised to provide them improved infrastructure for further expansion of their businesses.

President Musharraf said the government would encourage food and fruit processing industry, as this would impart a new vigour to the value-added agrarian exports. He quoted the example of high quality of Pakistani mangoes and apples and said these could not be exported in the past due to apathy of the previous regimes. Now Pakistani mangoes are on sale at prominent stores like Harrods in London, he said.

Similarly, he said dairy products in the form of cheese and milk can bring about a white revolution, as Pakistan is the fifth largest milk producing country.

The president also cited the example of precious gemstones found in the country, adding that the government is setting up a dazzle park in Karachi to provide cutting and polishing facilities. The export of gemstones in finished form would invigorate activity in the sector, he added. He said the annual and numerous other industrial export being held in Karachi and also due to start in Lahore in near future would provide a befitting platform to small and medium enterprises as they would be able to showcase their products to the world and market them properly.

Musharraf said Pakistan's debt to GDP ratio has been brought down considerably from over 100 percent to around 59 percent - below that benchmark set by some of the highly developed economies - and vowed that debt would not climb back.

Later, He awarded trophies and gold medals to business leaders and the government officials who contributed significantly to increasing Pakistani exports.

The recipients of special gold medals included Commerce Minister Humayun Akhtar, former investment minister Dr Abdul Hafeez Shaikh, former State Bank of Pakistan (SBP) governor Dr Ishrat Husain and Central Board of Revenue (CBR) Chairman M. Abdullah Yousuf.

Nishat Mills Limited won the President of Pakistan Export Award, while Businessman of the Year Gold Medals went to Zafar Fabrics Ltd, Faisalabad, Pakistan International Container Terminal Ltd, Karachi and Kalia Group, Karachi.

The Best Lady Exporter Award was bagged by head of M. M. Commodities Karachi. More than 100 entrepreneurs from across the country received Best Export Performance Award at the ceremony. Earlier, Commerce Minister Humayun Akhtar paid tributes to vision and policies of President Musharraf for recent economic strides and expressed a strong hope that he would be able to invite the president to a ceremony marking $20 billion export target in the next financial year. The FPCCI president in his address of welcome said that President Musharraf's sustained emphasis on economic growth has been a source of inspiration for the business community, adding that the entrepreneurs would do their utmost to spur further growth in exports.


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## Owais

TCP issues 50,000 tonnes sugar tender 
*KARACHI *_(updated on: May 05, 2006, 11:32 PST_): The Trading Corporation of Pakistan (TCP) on Friday issued a tender to buy 50,000 tonnes of refined sugar, with shipment due in July and bids to be submitted by 0630 GMT on May 19, a company spokesman said.

Only 18 pre-qualified foreign firms would be allowed to participate in the tender, and the winning bidder would have to make shipments within four weeks of the opening of a letter of credit.

Last week, the TCP had issued another tender for the import of a similar quantity of sugar from worldwide sources. Bids for that tender are due by 0630 GMT on Saturday.

The corporation has been regularly buying sugar from the international market, and the latest is the eighth tender it had issued since February after the government estimated that at least 800,000 tonnes of imports would be needed in 2006.

Pakistan's sugar output has declined to 2.6 million tonnes this year, as farmers switched to crops with higher returns, from 3.2 million tonnes the previous year. Pakistan's annual consumption is 3.8 million tonnes.

The TCP bought a total of 325,000 tonnes of refined sugar in earlier tenders.


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## Owais

*Decision on IPI gas line within three months: Ahmadinejad tells Shaukat* BAKU (May 05 2006): Prime Minister Shaukat Aziz on Thursday held in-depth discussions with Iranian President Mahmoud Ahmadinejad covering the gas pipeline project, Iran's nuclear issue, situation in the region and bilateral matters.

Both the leaders, who are in Baku to attend the ninth session of the Economic Co-operation Organisation (ECO) Summit, in more than an hour long meeting focused on the Iran-Pakistan-India (IPI) gas pipeline project and Iran's nuclear issues.

The Iranian president said a final decision on the $7.2 billion gas pipeline would be taken within 90 days and hoped some positive outcome within the stipulated time. He also informed Shaukat about his recent talks with Indian Prime Minister Manmohan Singh and said a positive decision was expected within three months.

Pakistan, which had already agreed to the project in principle, is seeking early initiation and has indicated that it would go ahead with the project, even if India does not join. Shaukat said Pakistan, owing to it rapidly growing economy, is looking forward to an early completion of the project. He said the demand for natural gas was on the rise with the existing industries switching over to natural gas and addition of new cement and heavy industrial plants. Both the leaders also discussed bilateral ties, the challenges in the region and ways to further strengthen their relations in all areas.

The prime minister said both the countries were tied in strong historical and cultural bonds and there was a need to spell these into equally stronger economic relations.

On the nuclear issue, Shaukat said that it was a very important issue and Pakistan has a very clear position on the matter. There is no change in our position, he added.

Pakistan has been voicing its concern over use of any force against Iran and has urged the international community to resolve the issue through negotiations.

Pakistan also supports Iran's use of nuclear technology for peaceful purposes, under the International Atomic Energy Agency (IAEA) safeguards. Pakistan is, however, opposed to proliferation of nuclear weapons


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## Owais

*Dubai group keen to operate Gwadar Port* 
ISLAMABAD (May 05 2006): A delegation of Dubai-based investment group called on President General Pervez Musharraf on Thursday and conveyed to him its willingness to operate Gwadar Port. A delegation of the Nakheel Group Investment of which Dubai Ports World is a part is nowadays visiting Pakistan.

The meeting was part of the group's efforts to operate and manage the country's multibillion port that is often termed energy and trade corridor for China and Central Asia.

The first phase of Pakistan's largest deep-sea port at Gwadar along with the coastal belt of Balochistan is about to complete within the next few months.

Prime Minister Shaukat Aziz has time and again been saying that the government would like some international operators to run Gwadar Port after its completion.

"We have told the President (Musharraf) that we want both operational and managerial control of the port," Dubai Ports World Chairman Sultan Ahmed bin Sulayem told media.

"Pakistan's economy is growing...we want to participate in the development of the country and it is the best time to be here (in Pakistan)," Sultan said.

About the modus operandi of the deal the group wanted to have with the Government of Pakistan, he said, there was nothing specific at the moment.

"We have just started negotiations. Talks are at the initial stage and will take some time to mature," Sultan said, but another member of his delegation added the group would like to operate Gwadar under a deal at least for 50-60 years.

Planning Commission Deputy Chairman Akram Sheikh said the government would prefer a Built, Operate and Transfer (BOT) basis for the second phase of Gwadar Port.

Sultan said the group also wanted to invest in various other sectors in Pakistan, including real estate, transportation and logistics.

Minister of State for Privatisation and Investment Umar Ahmed Ghuman said the government would sign an umbrella memorandum of understanding (MoU) with the group for the investment it wanted to make in Pakistan.

The group also includes representatives from Dubai Islamic Bank Limited, the UAE and Jebel Ali Free Zone.


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## Owais

*SHC quashes duty-free tractors import scheme* 

ISLAMABAD (May 05 2006): The Sindh High Court (SHC) has quashed the federal government's duty-free tractors import scheme, saying that entire proceedings suffer from lack of transparency, smack of subjective decision, arbitrariness and excess of jurisdiction as well as favouritism.

The decision was taken by a two-member bench, comprising Justice Muhammad Mujibullah Siddiqui and Justice Syed Zawar Hussain Jafari on two constitutional petitions filed by the Shahzad Riaz Trade Links and the Fecto Belarus Tractors Limited.

"The entire proceedings initiated with the advertisements inviting proposals for import of agriculture tractors are not in accordance with the decision of the Economic Co-ordination Committee (ECC) of the Cabinet", the court observed.

The industries and production ministry had allowed three parties, Dewan Automotive Engineering Limited, Universal Tractors Pakistan (Pvt) Limited, and Agro Tractors Limited to import 7,500 tractors, out of total of 10,000 tractors under the approved scheme.

The ministry had completed all the paper work to allocate 2,500 tractors to the Hero Tractors Limited, but the decision was withheld after SHC stayed duty-free tractor scheme.

Initially, the firm had submitted deletion programme of the Belarus Tractors to the Engineering Development Board (EDB), but later replaced with agreement of the Ukranian company.

The firm, however, imported parts of millions of rupees on behalf of agreement with the Belarus Tractors, which was a clear violation of criteria set by the federal government.

The court has directed members of the committee constituted by the ECC headed by the Prime Minister, to devise a detailed scheme containing modalities for the proper implementation of the ECC decision.

The committee should prescribe the criteria in line with the ECC decision as well as measures which are to be adopted for achieving the purpose of tractors supply to the farmers at reasonable rates and put in place safety-valves to prevent the misuse of duty-free tractors scheme, the court further observed.

After devising the detailed scheme, giving the parameters, conditions, requirements, timeframe and other necessary guidelines, the scheme should be re-advertised, invite proposals and thereafter recommend import of tractors to those companies/investors found eligible and most suited, the court added.

The ECC in its original and modified decision allowed import at zero tariff to tractors in CBU condition, but the CBR has issued exemption notification under section 20 of the Customs Act, extending the benefit to the import in CKD condition also.

The court observed that it was not known as to how the import in CKD was included in the facility and no decision of ECC has been produced before the court to show that the facility was also meant for the CKD.

The two-member bench also struck down the exemption notification issued by the CBR to the extent of import in CKD condition being beyond the purview of the ECC decision, while the exemption to import by the approved parties in CBU condition would remain intact, but fresh notification should be issued after the new allocations.

"The existing notifications are not to be acted upon," the court said.

At the conclusion of arguments, Mehmood A. Shaikh, the counsel for the Agro Tractors Limited contended that his client has already imported 156 tractors which are not in CBU condition and has to bear heavy demurrages, praying that the party should be allowed to get the tractors released at zero tariff.

The court observed: "we are not inclined to allow this relief because we have held that the exemption granted by the CBR to import in CKD condition is beyond the purview of the ECC decision, and we have struck down the exemption notification to that extent. The party should get released imported tractors on payment of normal duties and taxes."

The court was of the opinion that the committee constituted by the ECC also ought to have devised necessary ways and means to ensure that the benefit of duty-free tractors scheme is actually availed by the farmers and the amount saved on zero-rated import is not siphoned off by the companies.


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## Owais

*Cement companies profit up by Rs 4.1 billion in 9 months* 
*RECORDER REPORT* KARACHI (May 05 2006): The performance of cement companies during the last nine months of the current fiscal year was highly commendable as their earnings in this period recorded an increase of Rs 4.1 billion because of demand for cement.

Cementing exceptional local demand with better profitability owing to improved margins, the cement sector seems to be the flavour of the month these days. The recently announced nine-month results of the cement sector show astonishingly improved gross margins with healthy profitability following the volumetric boost in sales. Some 19 companies have been picked up, representing 91 percent of the sector out of the 21 listed companies leaving Pakistan Cement (formerly Chakwal Cement) and Mustehkam Cement.

Khurram Shehzad, research analyst from Investcapital Securities, said the cement sector's bottom line grew by a whopping 83 percent during 9MFY06 YoY. In absolute terms, total profit of the cement sample totalled Rs 9 billion compared to Rs 4.9 billion in 9MFY05.

Leading the profitability track, the share of DG Khan Cement alone was 19 percent in the total profitability of this sector, with Lucky following with 15 percent. Maple Leaf and Fauji Cement came next each taking up around 9 percent of the total profitability.

*THE REASON BEHIND THIS REMARKABLE GROWTH IN PROFITS WAS TWO-FOLD: *Volumetric growth in sales with increased ex-factory and thus improved retention prices - 20 percent and 25 percent respectively. Also, relatively lower cost of sales led to unprecedented increase in gross margins, which in turn contributed well enough to the companies' bottom line.

Dispatches of our sample companies have increased from 9.70 million tons in 9MFY05 to 11.29 million tons in 9MFY06, showing a demand growth of around 16 percent. This made up 84 percent of the total industry dispatches; here the total industry demand grew by 14 percent during the same period.

Yet again the top three producers were DG Khan Cement, Lucky Cement and Maple Leaf Cement. However, this was not the only reason behind this drastic growth in profitability.

Gross margins of the cement sector ascended to 38 percent in 9MFY06 compared to 30 percent in 9MFY05. This was due to a burgeoning of retention prices as compared to the increase in COGS.

Average retention price per ton increased by 25 percent from Rs 2,920 per ton to Rs 3,660 per ton. On the other hand, COGS per ton increased by 11 percent from Rs 2,044 per ton to Rs 2,276 per ton.

The report said that financial charges have increased by 72 percent in 9MFY06 for dual reasons; high financial leverage for aggressive expansions taken by the companies and soaring interest rates in the economy.

Moreover, operating expenses were used effectively that reflect in the improved net margins, from 17 percent in 9MFY05 to 22 percent in 9MFY06.

Going forward, the brokerage expect gross margin to come down significantly from current levels, since the cement import scenario is still bleak and local ex-factory prices are still hovering around Rs 290-300 level. Expansions of the cement manufacturers are in full swing and most of major capacities are expected to come online by next year.

On the other hand, India has contemplated to stamp a ban on its cement export. As far as demand is concerned, we expect full-year demand growth of around 13-14 percent, which will take cement sales to 18.5-18.6 million tons for FY06.

An analyst from Al Habib Capital Markets said that in order to meet the demand for cement, its manufacturers have entered into the aggressive phase of expansions. For this purpose, manufacturers have acquired heavy debts for financing these projects, which is resulting in higher financial charges in addition to rising interest rates.

"In future, when industry's capacity utilisation will be low with the downward trend of prices, we expect that rise in financial charges will hurt the bottom line growth", he added.


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## Owais

*Move to import Indian cement not to be reversed* 
*RECORDER REPORT* ISLAMABAD (May 05 2006): The federal government has no plan to reverse its decision regarding import of cement from India. "ECC took the decision after detailed discussion and it will not be reversed before the prices come down at Rs 270 to Rs 272 per bag," said, Dr Ashfaque Hasan Khan, Economic Advisor to the Finance Ministry while talking to _Business Recorder _on Thursday.

Some of the manufacturers met the official of industries ministry a couple of days ago for reversal of the decision regarding import of cement from India, but their demand was rejected, said an official in the ministry.

The export of cement to Afghanistan has already been suspended by the Prime Minister, until prices come down below Rs 300 per bag, although industries ministry wanted to resume export after April 30.

Dr Khan was of the view that Indian cement has not yet reached the domestic market, therefore, it was out of question to put any bar on it. "As long as cement prices touch Rs 270-272 per bag on sustained basis, there will be no change in import policy," he added.

He was of the view that when the government felt that prices have come down to the expected level, import policy would be reviewed for further action.

The ministry of industries and production has estimated a monthly shortfall of 200,000 tons, which would continue till September, suggesting that import of cement should continue till December.

The sources said that Earthquake Rehabilitation and Reconstruction Authority (Erra) has also been allowed to import cement from India for its reconstruction activities in AJK and NWFP.

When contacted, an official of commerce ministry told that import of cement from India would continue till prices come down to a benchmark set by the ECC, in its previous meeting.


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## Owais

*Pakistan on path of sustainable democracy: President* ISLAMABAD (May 05 2006): President General Pervez Musharraf on Thursday said that Pakistan has been put on the path of sustainable democracy and economic stability and pledged to transfer benefits of economic progress across the country.

The president stated this during his meeting with the parliamentarians at his chamber at the Parliament House. He said that the government is on course to bring about socio-economic uplift at the grass roots level with the participation of elected representatives.

He said that today Pakistan is a vibrant country where all democratic institutions are functioning and the media enjoys freedom of expression. "The local government system is working successfully and taking roots for development of people at the local level and all tiers of governance are functioning in harmony," he added.

The president said that the political empowerment of women and minorities has led to their participation in the mainstream development of the country.

About the economic upsurge, he said, it is visible in the form of tremendous investment activities in a number of areas.

The government, he said, will provide all basic facilities, including education, health and energy for continued development. "We are fully conscious that human capital is our greatest asset, therefore, we are focussing on its development."

Pakistan, he said, has all the resources to progress as a modern democratic and enlightened society. The elected representatives, who called on the president included Hamid Nasir Chattha, Ijazul Haq and Mian Manzoor Ahmad Wattoo.

They discussed with the president the political environment and the efforts for socio-economic well being of the people in their respective areas.


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## Owais

*PTCL privatisation hits telecom deregulation policy* 

KARACHI (May 05 2006): The government deal of handing over Pakistan Telecommunication Company Limited (PTCL) to Etisalat has started hurting the "telecom deregulation policy 2004" that supported the phenomenal increase of telecom sector and grabbed potential foreign investment in the country.

This step has raised some serious concerns in the telecom sector and its allied industries over the restrictions on "open licensing regime" for the next few years and secondly unjustified broadband bandwidth tariff structure.

The PTCL is the country's only and largest service provider of all kinds of telecom and allied services to the consumers and the allied sector.

Sources told _Business Recorder _that the allied telecom industry had concerns about the working of telecom watchdog agency (Pakistan Telecommunication Authority) as a regulator considering its marginalised role in finalising the privatisation deal of the country's largest phone utility.

The PTCL's privatisation deal was handled at the highest "government level" in which the power corridors had to accept a number of terms and conditions from its buyer (Etisalat), which could also seriously hurt the growth of various telecom services in the country.

Experts believed that such undisclosed deal further left the country's consumers at the mercy of a new "monopolistic regime" that was also a clear-cut negation of telecom deregulation policy.

The worst sufferers are those allied industries that use the PTCL infrastructure and service like internet service providers (ISPs), information technology & enable services (ITeS), business process outsourcing (BPO), call centres and software exports.

The experts said, in Pakistan the internet and data communication industry was deregulated in 1994 much earlier than in India where such step was taken in 1999.

"Unfortunately, we are unable to nurture such a time span of five years than India, and we are far behind from their service level, overhead cost and growth of broadband services," they said.

The unfriendly aspect is the continuos non-professional approach of the government officials, dealing and planning such broadband policies and above all high tariffs that kept the growth at a very slow pace.

The Ministry of Information Technology and Telecom announced the Broadband Policy 2004, which defines that the broadband access is widely recognised as a catalyst for the economic and social development of a country.

Broadband rollout has a more powerful impact than the spread of basic telephony.

The policy further says that the country should achieve DSL user base to 100,000 by December 2006, but the tariff is considered a major factor in the slow growth of such services.

"Presently," the sources said, "there are only 15,000 DSL broadband connections activated in the country after the announcement of the policy. It means that at the current speed of deployment the conservative target for 100,000 DSL users set by the government will be achieved by 2013."

According to Internet Service Provider Association of Pakistan (ISPAK), the tariffs for Japan, South Korea, Hong Kong, Singapore, Malaysia and India reveal that India is most uncompetitive in international and domestic bandwidth pricing.

The ISPAK did a price comparison with the least competitive country in international and domestic bandwidth pricing ie India and defines that in Pakistan, "We are 240 percent higher in DS3 (45Mbps) international IPLC price, 226 percent higher in STM-1 (155Mbps).

"A 155-mbps circuit of 1000KM will cost 94,000 dollars per month in Pakistan whereas in India, it will cost only at 38,000 dollars," said the ISPAK.

The ISPAK also observed that there were some serious disparities in tariffs in Pakistan. For example, a full circuit of 155-mbps will cost 76,000 dollars per month, whereas 155Mbps 1/2 circuit (IPLC) will cost 185,000 dollars.

Another interesting fact in tariff disparity is that an international full circuit of 155-mbps from Pakistan to United Kingdom is priced at 76,000 dollars, whereas the same capacity between Karachi and Islamabad costs 123,500 dollars per month.

The ISPAK further said no action had been taken by the Ministry or the PTA to address this great anomaly in tariffs, which was the greatest impediment in the proliferation of broadband services in Pakistan.

By January this year, 96 percent internet users were using broadband in South Korea; 47.75 percent in China; 14 percent in India; seven percent in Malaysia; and only 0.63 percent in Pakistan.


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## Owais

*Kinnow exports set all time record* 

KARACHI (May 05 2006): An all time record in the exports of kinnow has been set by sending 162,873.81 tonnes till April 22 (2005-06 Kinnow export season), according to latest figures provided by the Pakistan Horticulture Development and Export Board (PHDEB).

In 2004-05, the total exports stood at 96.755 tonnes and the previous export record was 149,000 tonnes. A spokesman of PHDEB told _Business Recorder _here on Thursday that the figure pertained only to exports that took place via Karachi. Since the exports by road via Afghanistan to Russia have not been reflected in this figure, exporters maintain that citrus export, in fact, had crossed 200,000 tonnes during the 2005-2006 season and the process still continues.

Export to the Central Asian States and other neighbouring countries skipped normal customs procedures and did not form part of these figures, he said.

According to PHDEB Chief Executive Officer (CEO) Shamoon Sadiq, the feat has been accomplished without Indonesia that has been Pakistan's traditional market and used to consume some 40 percent of total citrus exports from Pakistan.

The Indonesian authorities had raised duty on Pakistan citrus by 20 percent and drove it out of the local market, he said.

Had the Indonesian market still been available, the exports would have easily touched 250,000 tonnes, he added.

Figures available here show that Russia had been the biggest buyer of Pakistan's citrus this season by importing 31,282 tonnes till April 15. This was followed by the UAE 34,539 tonnes and the Philippines 17,271 tonnes. Iran, which resumed kinnow imports from Pakistan last year after 25 years, bought 21,319 tonnes and more deals were in process. Indonesia had imported only 6,893 tonnes and Saudi Arabia 13,153 tonnes.

Shamoon Sadiq, expressing his views in the PHDEB newsletter, said that the momentum for kinnow export had now been set. "China has also recently cleared seven Pakistani companies for citrus export and so has Philippines. The government is also negotiating Early Harvest Programme (EHP) with the Indonesian authorities and, hopefully, good news may be heard soon," he said.

Citrus export duty remained key in talks with Indonesia, he said, adding that from next year the Iranian market would expand further throwing new opportunities for Pakistani citrus fruit exporters.

All these trends show that citrus exports were well set on their way to grow.

"If everything goes well, the country would be able to touch a figure of 250,000 tonnes next year," he said.

The PHDEB plans to celebrate the new kinnow export record, achieved as a result of an enabling environment provided by the government and efforts of all the market players, including exporters, growers and service providers.

The board feels that the "gigantic efforts" of the players need to be appreciated. Acknowledging their efforts would help maintain kinnow export tempo and enlarge exports of horticulture produce from the country.

A national kinnow gala is scheduled to be held in Lahore some time this month in this connection. The date for the gala is being finalised keeping in view the convenience of all private and public stakeholders of kinnow trade.

Meanwhile, Philippines has cleared seven Pakistani firms for kinnow export. The board was informed about this development in the first week of April.

In a letter, received by the board, the Bureau of Plant Industry has said that seven companies, ie Chase International, JMB Traders, Mateela Kinnow factory, Zahid Kinnow and Grading Plant, National Kinnow Factory, Iftikhar Ahmed & Company and Sadurddin Co, are entitled to export kinnow to the Philippines, as they now meet the import criteria.

The Philippines, already a big market for Pakistani kinnow, has so far imported over 15,000 tonnes of fruit, and the shipments are still continuing. The clearance accorded to seven firms would give a big boost to exports and Filipinos may become major consumers of Pakistani kinnow.

The Bureau of Plant Industry, Philippines has also promised to finalise its recommendations and send the same to both the governments for inclusion in the memorandum of understanding (MoU) that the two countries intend to sign soon.

The requirements for company accreditation included conformity to international standards in product handling, segregation, storage, and cold treatment, packaging, labelling and documentation procedures.


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## Owais

*MCB Bank rating upgraded to 'AA+'* 
*RECORDER REPORT* KARACHI (May 05 2006): The Pakistan Credit Rating Agency (PACRA) has upgraded the long-term entity rating of MCB Bank Limited to "AA+" (Double A plus), while maintaining the short-term rating at "A1+" (A one plus).

The rating of unsecured subordinated TFC issue of Rs 1,600 million has also been upgraded to "AA" (Double A). These ratings denote a very low expectation of credit risk, emanating from a very strong capacity for timely payment of financial commitments.

MCB's ratings reflect the bank's very strong risk absorption capacity, emanating from its strengthened capital structure supplemented by a sound asset quality.

The ratings also take into account the management's demonstrated ability of aligning the operations in line with the changing dynamics of the sector, enabling the bank to remain well positioned to face competitive pressures.

MCB Bank issued unsecured subordinated TFC of Rs 1,600 million during August 2002 for a tenor of 51/2 years at a floating rate of latest cut-off yield on five-year PIB plus 1.50 percent with a floor of 11.75 percent and a cap of 15.75 percent. Major principal redemption will be in three unequal instalments, commencing February next.

A number of distinguished corporate groups, led by Nishat Group, jointly own majority stake in MCB since its privatisation in 1991. MCB continues to derive substantial benefits from the resourcefulness, financial strength and business acumen of the members of the board of directors.

The President and Chief Executive Mohammad Aftab Manzoor has extensive banking experience locally and abroad and has been in this position for the last six years.


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## Owais

*KSE equities suffer erosion* 
*RECORDER REPORT* KARACHI (May 05 2006): The equities suffered erosion on Thursday under the lead oil, gas and banking sectors as some of individuals stay away from the market which reduced the daily turnover.

The KSE-100 Index closed at 11690 levels down 37.88 points from previous closing of 11727. The volume in the ready market was 268 million shares almost 87 million less than recorded on previous trading session. However, volumes in futures market were 91 million shares against 119 million shares recorded on Wednesday.

The market opened on a positive note, but the bull-run couldn't continue due to selling pressure by investors. One of the major reasons for the dull activity was the PIB auction that was announced on Wednesday evening by the State Bank of Pakistan, said Junaid Iqbal, research analyst at Jahangir Siddiqui Capital Markets. The coupon rate for this auction has been increased to almost 200-300 basis point. With the increase in coupon rate, investors are also expecting an increase in National Saving Scheme rates (NSS).

International oil prices also came down, therefore, less activity was observed in the oil sector. Relatively, low volumes and heavy tilt towards companies registering a negative close (192 companies showed declines versus 116 advancers), representing investors' lack of interest in the market at current level.

Noor Hameed at Elixir Securities, said the oil exploration sector remained under selling pressure where heavy weights, OGDCL, PPL and POL, closing in the negative territory pulling down the KSE-100 index.

Lucky's expansion which is expected by end of May/early June managed to keep the investors' interest alive at lower levels and caused the stock to close in the green.

PTCL which took a heavy battering for several trading sessions after posting disappointing nine-month results finally registered good gains on Thursday despite an overall weak market behaviour. "We feel the market will remain choppy and it is advisable to book profits when and where available", he said.

Hettish Karmani from Atlas Investment Bank said that after trading in the greens for the couple of days banking and cement sector ended in the red amid profitability. Cement scrips failed to pick up even though the possible embargo by Indian government on cement export to neighbouring countries.


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## Owais

*Equities ease on LSE* 
*RECORDER REPORT* LAHORE (May 05 2006): Share prices stayed easier on Lahore Stock Exchange (LSE), as profit-taking in key shares, including fertiliser, petroleum and banking stocks offset the two-day winning streak.

The LSE-25 index closed at 5403.14 points compared with 5412.96 of Wednesday, depicting a slight fall of 9.82 points. Volume also drifted lower to 49.563 million shares from 65.274 million of the previous session, marking a decrease of 15.711 million shares.

Trading began with a positive note, but after staying in positive column, the market turned depressed following profit-taking in key chips. The market showed an outstanding performance during the last two sessions; and almost all key sector shares made hefty gains, therefore, it took a breather to consolidate itself, brokers said.

According to them, there was no change in fundamentals of the market; and room for further improvement was still there.

Analysts said that news that the government had decided to list OGDCL's global depository receipts (GDRs) at London Stock Exchange was a positive development, which would boost overall sentiment of the market. "I foresee a very positive outlook of the market ahead, especially for the genuine investors' point of view; and all those with capacity to hold their stocks," an analyst commented on the future prospects of equities. However, small investors are advised to be in limits and not to go for overtrading to avoid losses, he added. Bank and Pakistan Telecommunication were the top gainers while Engro Chemical Pakistan Petroleum, were the major losers of the day.

The sentiment was positive at the open, but subsequently the market underwent profit-taking, dragging the index in minus column, Javed Iqbal, chief executive of Javed Iqbal Securities Ltd, said. He, however, pointed out that the market will soon start behaving normal as there was nothing negative in the background. Cement sector, which, after the government decision to allow its duty free import was depressed, is likely to take the lead once again, amid the reports that India had declined to export cement to Pakistan, he observed.

In all, 108 scrips changed hands on the floor, of which 5 improved, 43 showed negative vibes while 60 were unchanged. In positive column, National Bank gained Rs 2.05, PTCL Rs 1.10, Punjab Modaraba 1st Rs 0.85, PSO Rs 0.80 and PICIC Commercial Bank Rs 0.30. Among major losers, Engro Chemical dipped Rs 10.10, PPL Rs 4.35, UBL Rs 3.00, Pakistan Oilfields Rs 3.00 and Adamjee Insurance Rs 1.95. OGDC topped the volume leaders column with 5.779 million shares followed by DG Khan Cement with 5.637 million shares.


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## Owais

*Bears tighten grip on ISE* 
*RECORDER REPORT* ISLAMABAD (May 05 2006): Bears continued to show minus signs at the Islamabad Stock Exchange (ISE) where equities failed to show recovery signs amid increase in index. ISE Ten index showed a decrease of 11.38 points as the index moved from 3,297.82 to 3,286.44 points.

The overall turnover amounted to 882,200 shares as compared to previous volume of 846,200 shares. A total of 144 companies participated in buying and selling activity. Majority of stocks (92) landed in minus column, 51 showed healthy signs, whereas one company remained pegged to its previous level.

The volume of PTCL was 502,800 shares as compared to previous turnover of 186,900 shares. The turnover of OGDCL was 266,700 shares as compared to previous volume of 370,800 shares. The volume of FFBQL was 61,500 shares.


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## Owais

*Musharraf summons meeting of Sindh leaders today * KARACHI: President Musharraf has called a meeting of the government and political leaders of Sindh today (Friday) at the Aiwan-i-Sadr to discuss political affairs of the province.

Chief Minister Sindh , provincial cabinet members, parliament members and leaders of Muslim League and Chaudhry Shujaat will also be present at the meeting.

The meeting would discuss the political situation of the country, upcoming general elections and different issues related to Muslim League and chalk out future strategy especially for Sindh.


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## Owais

*Foreign reserves cross $ 13 bln mark: SBP * KARACHI: Pakistan's liquid foreign reserve, continuing upward movement, at last crossed the much awaited $ 13 billion mark last week ended on April 29, State Bank of Pakistan announced here Thursday.

The total liquid foreign reserves that were $ 12910.2 million on April 22, rose to $ 13.016 billion on April 29, 2006. Out of this amount, SBP held $ 10,645.3 million and $ 2,370.7 million were with other banks on the said date.


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## Owais

*Govt mopped up Rs 55 billion to meet budget deficit: SBP  KARACHI: The government of Pakistan mopped up Rs 55 billion during the current fiscal year from the market to fill the yawing budget deficit gap.

According to statistical data released by State Bank of Pakistan (SBP), the government has set Rs 98 billion debt borrowing limit to meet budget deficit of the country during fiscal year of 2005-06.

During the current fiscal year, the Government of Pakistan returned Rs 37 billion borrowed from banks as debt for commodity operation, according to SBP.

During the same period, country&#8217;s private sector Rs 339 billion which were up Rs 9 billion from the set target limit for the current fiscal year. Whereas, commercial banks released Rs 353 billion debt. *


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## Owais

*Pak-Iran parleys on ferry service from May 8 * Islamabad: Pakistan and Iran have been scheduled to hold parleys on ferry service between Gwadar and Iranian port &#8216;Chah Bahar&#8217;.

Joint Secretary for Port and Shipping, Hasan Zaidi informed media that Pakistan and Iran would hold two-days meeting starting from 8th May to mull over the proposal of starting the service. 

The agreement of Joint Search and Rescue Operation between the two countries would also be expected to take place, he added


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## Owais

*Gwadar port operation: DP World asked to furnish future business plans: Ghauri * KARACHI: Federal Minister for Ports and Shipping Babar Ghauri said Thursday that before finalizing terms of reference for handing over Gwadar port to an international port operator, the government has asked DP World, a new and dynamic global port operator, to submit its future business plans.

DP World was the second among the global port operators, which were short-listed for operation of Gwadar port, but, the concerned committee had recommend that the port should be handed over to Hutchison port operator, he said while talking to Geo News. 

However, he said, the negotiations were underway with DP world on terms of reference as the Hutchison did not take interest in operating Gwadar port.

Gwadar port was ready for transshipments and there was no technical barrier in the way of its operation in next month, he said.


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## Neo

ZIA M KHAN 

ISLAMABAD (May 05 2006): A delegation of Dubai-based investment group called on President General Pervez Musharraf on Thursday and conveyed to him its willingness to operate Gwadar Port. A delegation of the Nakheel Group Investment of which Dubai Ports World is a part is nowadays visiting Pakistan.

The meeting was part of the group's efforts to operate and manage the country's multibillion port that is often termed energy and trade corridor for China and Central Asia.

The first phase of Pakistan's largest deep-sea port at Gwadar along with the coastal belt of Balochistan is about to complete within the next few months.

Prime Minister Shaukat Aziz has time and again been saying that the government would like some international operators to run Gwadar Port after its completion.

"We have told the President (Musharraf) that we want both operational and managerial control of the port," Dubai Ports World Chairman Sultan Ahmed bin Sulayem told media.

"Pakistan's economy is growing...we want to participate in the development of the country and it is the best time to be here (in Pakistan)," Sultan said.

About the modus operandi of the deal the group wanted to have with the Government of Pakistan, he said, there was nothing specific at the moment.

"We have just started negotiations. Talks are at the initial stage and will take some time to mature," Sultan said, but another member of his delegation added the group would like to operate Gwadar under a deal at least for 50-60 years.

Planning Commission Deputy Chairman Akram Sheikh said the government would prefer a Built, Operate and Transfer (BOT) basis for the second phase of Gwadar Port.

Sultan said the group also wanted to invest in various other sectors in Pakistan, including real estate, transportation and logistics.

Minister of State for Privatisation and Investment Umar Ahmed Ghuman said the government would sign an umbrella memorandum of understanding (MoU) with the group for the investment it wanted to make in Pakistan.

The group also includes representatives from Dubai Islamic Bank Limited, the UAE and Jebel Ali Free Zone.


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## Neo

KARACHI (May 05 2006): The performance of cement companies during the last nine months of the current fiscal year was highly commendable as their earnings in this period recorded an increase of Rs 4.1 billion because of demand for cement.

Cementing exceptional local demand with better profitability owing to improved margins, the cement sector seems to be the flavour of the month these days. The recently announced nine-month results of the cement sector show astonishingly improved gross margins with healthy profitability following the volumetric boost in sales. Some 19 companies have been picked up, representing 91 percent of the sector out of the 21 listed companies leaving Pakistan Cement (formerly Chakwal Cement) and Mustehkam Cement.

Khurram Shehzad, research analyst from Investcapital Securities, said the cement sector's bottom line grew by a whopping 83 percent during 9MFY06 YoY. In absolute terms, total profit of the cement sample totalled Rs 9 billion compared to Rs 4.9 billion in 9MFY05.

Leading the profitability track, the share of DG Khan Cement alone was 19 percent in the total profitability of this sector, with Lucky following with 15 percent. Maple Leaf and Fauji Cement came next each taking up around 9 percent of the total profitability.

THE REASON BEHIND THIS REMARKABLE GROWTH IN PROFITS WAS TWO-FOLD: Volumetric growth in sales with increased ex-factory and thus improved retention prices - 20 percent and 25 percent respectively. Also, relatively lower cost of sales led to unprecedented increase in gross margins, which in turn contributed well enough to the companies' bottom line.

Dispatches of our sample companies have increased from 9.70 million tons in 9MFY05 to 11.29 million tons in 9MFY06, showing a demand growth of around 16 percent. This made up 84 percent of the total industry dispatches; here the total industry demand grew by 14 percent during the same period.

Yet again the top three producers were DG Khan Cement, Lucky Cement and Maple Leaf Cement. However, this was not the only reason behind this drastic growth in profitability.

Gross margins of the cement sector ascended to 38 percent in 9MFY06 compared to 30 percent in 9MFY05. This was due to a burgeoning of retention prices as compared to the increase in COGS.

Average retention price per ton increased by 25 percent from Rs 2,920 per ton to Rs 3,660 per ton. On the other hand, COGS per ton increased by 11 percent from Rs 2,044 per ton to Rs 2,276 per ton.

The report said that financial charges have increased by 72 percent in 9MFY06 for dual reasons; high financial leverage for aggressive expansions taken by the companies and soaring interest rates in the economy.

Moreover, operating expenses were used effectively that reflect in the improved net margins, from 17 percent in 9MFY05 to 22 percent in 9MFY06.

Going forward, the brokerage expect gross margin to come down significantly from current levels, since the cement import scenario is still bleak and local ex-factory prices are still hovering around Rs 290-300 level. Expansions of the cement manufacturers are in full swing and most of major capacities are expected to come online by next year.

On the other hand, India has contemplated to stamp a ban on its cement export. As far as demand is concerned, we expect full-year demand growth of around 13-14 percent, which will take cement sales to 18.5-18.6 million tons for FY06.

An analyst from Al Habib Capital Markets said that in order to meet the demand for cement, its manufacturers have entered into the aggressive phase of expansions. For this purpose, manufacturers have acquired heavy debts for financing these projects, which is resulting in higher financial charges in addition to rising interest rates.

"In future, when industry's capacity utilisation will be low with the downward trend of prices, we expect that rise in financial charges will hurt the bottom line growth", he added.


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## Neo

BEIJING (May 05 2006): Pakistan and China will initiate talks next week in Islamabad to prepare a five-year plan of economic Co-operation, particularly in the fields of trade, energy, road construction, urban development, telecommunication and agriculture.

The delegation led by Chinese Assistant Commerce Minister Fu Ziying duo on Monday. During the first round of talks, the two sides will exchange their respective proposals and decide parameters of economic collaboration in the economic sector during the next five years.

Official sources told APP here Thursday that it was decided during the recent visit of President's Pervez Musharraf to Beijing that the two countries will work out a five-plan, giving clear-cut direction to their bilateral Co-operation in the economic sector. It was hoped that a long-term plan would promote consistency in the economic Co-operation and help to increase trade volume, bringing it in conformity with their excellent diplomatic ties.

According to the sources, the two sides will identify new areas of Co-operation and lay down business and investment targets for the next five years. The proposed plan will also help to sort out and remove certain difficulties and anomalies, being faced by the business communities in bringing their mutually beneficial economic partnership to a higher level.

The two sides also decided to expedite the process of on-going negotiations for signing of Free Trade Agreement (FTA) by the end of this year. They also agreed to set up a joint investment company (JIC) this year, with an initial capital of about $500 million.

Such steps are aimed at pushing forward China's participation in the economic development of Pakistan on a regular and long-term basis. The officials of their relevant departments are also expected to meet soon to discuss and finalise legal and financial framework of the company.

Pakistan has already worked out similar arrangements with other countries for financing development projects. Such as establishment of Saudi-Pak Investment Company, Pak-Kuwait Investment Company, Pak-Libya Investment Company, Pak-Oman Investment Company.


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## Neo

FAISALABAD (May 05 2006): Punjab Chief Minister Chaudhry Pervaiz Elahi has said that development projects worth Rs 5 billion have been completed in Faisalabad while other uplift schemes of rupees four billion are under completion.

During the inspection of under construction development work in industrial city, the chief minister announced construction of a ring road in Faisalabad at a cost of Rs 6 billion.

He said district government system was running successfully under the leadership and guidance of President General Pervez Musharraf and it had proved to be an excellent source of solution of people's problems at local level.

Punjab Acting Governor, Muhammad Afzal Sahi, Federal Textile Minister Mushtaq Ali Cheema, Provincial Minister for Communications & Works and General Secretary Muslim League Punjab, Chaudhry Zaheer-ud-Din, District Nazim Rana Zahid Tauseef, President Muslim League Faisalabad and MNA Asim Nazir were also present on the occasion.

Addressing nazims and councillors, he announced that union council showing best performance would be given Rs 6 million each for development schemes. The chief minister further said that a target of 3 million tonnes of wheat procurement had been fixed this year and would be purchased from cultivators. He said that wheat would be procured from small farmers on priority basis so that they could get due return for their labour.

He said that master plan for Faisalabad costing Rs 30 million would be revived. He said that a sum of Rs 260 million would be spent on the improvement of Millat Road while Rs 240 million would be utilised on service road on both sides of RB Canal.

He also announced remodelling of Sargodha Road at a cost of Rs 200 million for widening it from four lanes to five lanes.

Muhammad Afzal Sahi said that changes of fundamental nature had been made in the irrigation network in the province and now due to better management, water was available to farmers at the tale end.

Federal Textile Minister Mushtaq Ali Cheema, Provincial Minister for C&W, Chaudhry Zaheer-ud-Din, District Nazim Rana Zahid Tauseef and PML Faisalabad President, MNA Asim Nazir also spoke on the occasion.


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## Neo

ISLAMABAD (May 05 2006): A Singapore has agreed to help develop the master plan and design concept for the Korangi Creek Industrial Park (KCIP) project. An agreement was signed between National Industrial Parks Development and Management Company (NIP) and Jurong Consultants (Pte). Limited on April 26 in Singapore, according to a press release issued here on Wednesday.

Jurong over the past 35 years has gained considerable experience in the master planning, engineering design and development of industrial parks. They helped complete projects in China, Philippines, India, Vietnam, Indonesia, Malaysia, Thailand, UAE and Yemen.

A team of architects, engineers and planning specialists from Jurong is expected to visit the project site and conduct discussions on design parameters for the KCIP during the second week of the current month. This will provide an excellent opportunity for transfer of technology to the local specialists for development of industrial parks all over the country.


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## Neo

FAISALABAD (May 05 2006): Punjab Chief Minister Chaudhry Pervaiz Elahi has said the concept of public-private sector partnership and community participation is being given a practical shape in the establishment of industrialisation in Faisalabad, which will play a key role in overcoming joblessness and promoting economic growth.

Addressing the leading industrialists, business tycoons and members of the Faisalabad Chamber of Commerce and Industry (FCCI) at Circuit House, he underlined the role of business community in strengthening national economy. The government will also ensure conducive climate through its prudent and pragmatic policies, he said.

The chief minister said the Punjab government will provide land and funding for the establishment of a state-of-the-art training institute at Faisalabad, adding it will also provide Property Rights to the small powerloom owners.

He said that an Expo Trade Centre will be established in Faisalabad with the co-operation of the federal government.

FCCI President Mian Muhammad Hanif, in his address of welcome, said the oldest industry of Faisalabad which is still surviving is the powerloom industry which is on the verge of collapse due to high inputs costs, multiplicity and other problems.

This industry is scattered over most of the city and millions of people are earning their livelihood in this SME sector, he added.

He said the owners of powerlooms are under threat of abandoning their industry while most of them do not have ownership of the land which they occupied.

The FCCI chief demanded that the legal ownership rights of the land should be granted so that they can earn their livelihood with peace of mind and satisfaction. At present, he said this situation was created in Kausarabad, Lakkar Mandi, Marzi Pura, Faizabad, Kanak Basti and Saeedabad (Chak No 124RB).

During the meeting with the industrialists, Chaudhry Pervez Ellahi has also agreed to provide land and funds for the Skilled Workers Training Institute, Faisalabad, to meet the challenges of new world trade order.

Responding to a proposal of Rana Arif Tauseef, chairman, Pakistan Textile Exporters Association (PTEA), he said that a state-of-the-art training institute will be established in Faisalabad to cater to the future needs of skilled manpower.

The chief minister appreciated the proposal of PTEA chief Rana Arif Tauseef that his organisation was trying to establish an institute to provide training to the highly skilled industrial workers in addition to providing marketing staff capable of facing the challenges of world trade order. Arif Tauseef said that a number of new and highly sophisticated units have already been installed. However, the industrialists were facing problems in getting skilled manpower.

He said that more units are in the pipeline, which would be set up in value-addition city and M-3 industrial city.

Chaudhry Pervaiz Elahi unveiled the plaque of foundation-stone of the Faisalabad Cardiology Centre, and expressed his satisfaction over the development work.

Federal Textile Industry Minister Mushtaq Ali Cheema, Health Secretary Muhammad Javed Malik and Communication and Work Secretary Ahmad Yar were also present on the occasion.

The chief minister said the Faisalabad Cardiology Centre is being constructed over 15 acres of land at a cost of Rs 1 billion, adding that all modern health facilities and latest equipment would be made available at the Cardiology Centre.

Chaudhry Pervaiz Elahi also appreciated the performance of the Faisalabad police and announced a cash award of Rs 5 million. He also announced Gallantry Award for District Police Officer (DPO) Captain Muhammad Amin Wiance (Retd) in recognition of his services.


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## Neo

ISLAMABAD (May 05 2006): Oil and Gas Development Company Limited (OGDCL) has struck a new discovery of oil and gas at Sono, 25 kilometres near Hyderabad. OGDCL officials said the daily output of oil from the new discovery would be 1,500 barrels per day. According to an initial estimates it is the largest discovery by the OGDCL so far, private news channel reported.

It was also informed that per day gas exploration from the discovery would be known after further investigations. OGDCL is the largest company, given the target of drilling 57 wells in 2005 by the government. Earlier, oil and gas reserves were discovered near Tando Allahyar however, in Sono area this was the first breakthrough.


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## Neo

Dubai: Dubai World, a holding company whose subsidiaries include Nakheel, Istithmar, Jebel Ali Free Zone and DP World, said yesterday it was ready to undertake large infrastructure projects in Pakistan.

It plans to develop real estate and industrial projects in Karachi, Lahore and Islamabad, Dubai World Chairman Sultan Ahmad Bin Sulayem told Gulf News yesterday.

"These projects could be similar to what we are doing here," he said, adding the planned investments in Pakistan were part of an overseas expansion drive.

"Under DP World's acquisition of P&O, we also acquired Port Qasim in Pakistan. We are interested in countries where we have ports," Bin Sulayem said.

Several areas of cooperation were discussed during talks between Pakistan President General Pervez Musharraf and Bin Sulayem in Islamabad yesterday.

Pakistan Minister of State for Privatisation and Investment Umar Ahmad Ghumman said that Pakistan is looking forward to cooperating with Dubai Ports World and Nakheel to benefit from their experience.

He said an MoU would be signed between the Pakistan government, DP World and Nakheel, adding that Musharraf plans to invite His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, to attend the signing.

Dubai World's plans could include building industrial parks, free zones, development and operation of public sector infrastructure projects, oil and gas related projects, and management of airports and ports, the company said in a statement.

DP World is also bidding to acquire Pakistan's strategic port of Gwadar.

Ghumman said the Pakistani government is planning to increase the depth of the port, while building a new city, oil refineries, a pipe line, and a road network to connect the port to China and Central Asia.

However, Pakistan's Dawn newspaper reported recently that the Dubai port firm had set conditions for managing Gwadar Port that were "so harsh and in favour of the operator that it would tantamount to handing over the county's most strategically located port on a silver platter."

Bin Sulayem said his talks with Musharraf did not cover specific details of projects. "We are doing a full study of opportunities in Pakistan and hope to release the precise details later." 

Nakheel will explore investments in the residential, commercial and leisure real estate sectors in several urban centres in the country.

Ghumman said this comes as part of the government's plan to build five cities to deal with the country's booming population.

Pakistan's Board of Investment was instrumental in facilitating the "extensive ground work, which culminated in the two parties agreeing to the framework under which Dubai World plans to undertake investments in Pakistan," the statement said.

Projects: From parks to port

Dubai World's plans could include building industrial parks, free zones, development and operation of public sector infrastructure projects, oil and gas related projects, and management of airports and ports, the company said in a statement.

DP World is also bidding to acquire Pakistan's strategic port of Gwadar on the Arabian Sea.


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## Neo

ISLAMABAD, May 4: Minister for Petroleum and Natural Resources Amanullah Khan Jadoon on Thursday said the government was providing a competitive environment and level-playing field to investors in downstream petroleum sector.

He was talking to the Chief Executive Officer of Total Petroleum company of France, Emmanuel Laurenty who called on him here.

During the meeting both sides discussed investment prospects in the petroleum sector.

The minister said that as a result of deregulation, liberalisation and investor-friendly policies introduced by the government, the downstream petroleum industry had witnessed a tremendous growth in the last few years.

Ã¢â¬ÅThe government would encourage and facilitate investors in the upstream and downstream oil and gas sectors for mutual advantage.

Jadoon said that escalating oil prices in the international market were not only effecting the growth of economy of the developing countries but was also a great upset for the promotion of downstream petroleum industry.

He said the French Total company, which has modern techniques in LNG field could also participate in PakistanÃ¢â¬â¢s LNG projects for the mutual benefit.

The CEO of Total Petroleum briefed the minister about his CompanyÃ¢â¬â¢s activities in the downstream oil sector.

He said Total was playing its due role for boosting the oil industry in Pakistan for the mutual advantage. His company could cooperate with Pakistan in LNG projects.


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## Neo

SINGAPORE, May 4: Singapore Telecommunications Ltd, Southeast AsiaÃ¢â¬â¢s largest phone company, said on Thursday it remained keen on acquisitions in Pakistan and South Asia.

Ã¢â¬ÅOur investment focus remains in Asia. Pakistan, South Asia and Asia in general continue to be the universe for our investments,Ã¢â¬Â SingTel Chief Financial Officer Chua Sock Koong told reporters at a briefing.

SingTel has said it would continue to explore opportunities for new acquisitions and to raise stakes in its regional mobile investments to drive future growth.Ã¢â¬âReuters


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## Neo

SINGAPORE, May 4: Pakistan is turning to India to satisfy its sugar cravings and cover a shortfall in domestic supplies, while Vietnam is in the market to buy 150,000 tons of sweetener for shipment no later than August.

But Indonesia, Southeast AsiaÃ¢â¬â¢s largest consumer, is likely to avoid the market this year because of expectations of increased sugarcane output, industry officials said on Thursday.

Ã¢â¬ÅHigh prices have encouraged farmers to grow sugarcane and expand their plantations,Ã¢â¬Â said Adig Suwandi, corporate secretary at the state plantation firm PTPN XI.

Indonesia has scrapped a plan to issue more permits to buy white sugar this year due to ample stocks, and some officials said it might even hold back on purchases in 2007. Jakarta issued a total of 300,000 tons of white sugar import permits last October.

Ã¢â¬ÅIf it has to buy sugar at all, then the amount wonÃ¢â¬â¢t be more than 150,000 tons,Ã¢â¬Â Suwandi told Reuters in Jakarta, adding that the sweetener would only be used as a buffer before the crushing season begins in April or May next year.

IndonesiaÃ¢â¬â¢s white sugar production is likely to rise to 2.48 million tons this year from 2.24 million tons in 2005 as strong global prices lead to increased sugarcane production.

Raw sugar prices rose over 60 per cent last year and spiked to a 25-year high of 19.73 cents per lb in February. IndonesiaÃ¢â¬â¢s annual consumption is estimated at 2.6 million to 2.7 million tons in 2006, steady from last year.

Dealers said India was more than happy to sell sugar to Pakistan because it will likely have an annual surplus of around three million tons over the next few years as a result of healthy crops boosted by monsoon rains.

India is expected to export more than one million tons of sugar in the crop year to September 2006, with half of the shipments going to Pakistan, said dealers.

Pakistan, which devours 3.8 million tons of sugar a year, has been a steady buyer in the international market after output dropped to 2.6 million tons in this production year from 3.2 million tons previously as farmers switched to other crops with better returns.

A government estimate shows Pakistan will need at least 800,000 tons of imports in 2006 to meet domestic demand.

A total of 325,000 tons of sugar, mainly from Indian mills, were booked during January to March by Pakistani traders, said Raees Ashraf Tar Mohammad, a Karachi-based commodity importer.

Ã¢â¬ÅThe prices were between $470 and $485 per ton, cost and freight Karachi. A number of cargoes have reached Karachi while many are due to arrive in May and June,Ã¢â¬Â he said.Ã¢â¬âReuters


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## Neo

By Mubarak Zeb Khan

ISLAMABAD, May 4: India has formally asked Islamabad for trading through a negative list concept as agreed under the South Asia Free Trade Area (Safta) for increasing formal trade between the two countries.

Talking to Dawn after the conclusion of a two-day roundtable on Safta here on Thursday, Indian High Commissioner to Pakistan Shive Shanker Menon said that the Indian authorities had raised the issue with their Pakistani counterparts in a meeting of Saarc commerce minister held in Saarc secretariat recently.

He said Pakistani side agreed to look into the Indian demand.

When asked whether India would take the issue to Saarc Dispute Settlement Committee, the Indian envoy replied that they wanted trade not disputes.

Ã¢â¬ÅWe in India hope that from July 1, 2006 all of us in Saarc will have only negative lists and that the movement restrictions, which go against the very essence of Safta, are also abolished. If these two conditions are not met, then Safta has little operational meaning,Ã¢â¬Â the envoy said while addressing the roundtable, which was organized jointly by Saarc Chamber of Commerce and Industry and the Commonwealth Business Council (CBC).

Mr Menon said if these conditions were met it could bring about trade diversification and help to formalise informal trade.

For Safta to realise its potential, he said it would be logical to extend its scope to services sector and investments.

Secretary Commerce Syed Asif Shah told the gathering that reduction in tariffs alone could not achieve sufficient benefits from the free trade in the region. Ã¢â¬ÅMany Saarc countries including India, the biggest economy of the region, have a number of non-tariff barriers (NTBs) with an aim to restricting importsÃ¢â¬Â, Mr Shah added.

The secretary said that granting of MFN status to India was a bilateral issue and it was part of the composite dialogue.

Mr Shah said under the positive list of import from India, no India specific tariff or NTBs were in place. Every commodity, he said which was importable from India, in accordance with the current import policy order, attracted rates of duty, which were applied on MFN basis. There would be tariff reduction under Safta on items currently importable from India, he added.

The secretary said during the last 10 years, the list of importable items from India had expanded manifold and the process was ongoing.

Akhtar Mahmood, an expert on international trade, said that Saarc could not develop into a full free trade area if it excluded for too long more than 50 per cent of its GDP from its free trade rules.

The Sri Lankan commerce minister Jeyaraj Fernandopulee also called for complete elimination of NTBs to get maximum benefits from the free trade regime.

Former finance minister of Nepal Madhukar Shumshere J. B. Rana also proposed for inclusion of services sector under the ambit of Safta. He was of the opinion that trade in services would increase people to people contact in the region.


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## Neo

By Saleem Shahid

QUETTA, May 4: Canadian High Commissioner David B. Collins has said that oil and gas, minerals and telecommunications sectors in Pakistan offer a promising outlook to Canadian investors.

Speaking to business leaders and traders of Balochistan at the Quetta Chamber of Commerce and Industry on Thursday, he said that during the last two years Canadian companies had become more active in pursuing business opportunities in Pakistan.

Ã¢â¬ÅThe result is this decade is witnessing a shift in emphasis in Canada- Pakistan relations from aid to trade,Ã¢â¬Â he said.

Pakistan, the envoy said, now ranked much higher amongst CanadaÃ¢â¬â¢s trading partners with a two-way bilateral trade exceeding $550 million from a meagre $200 million a few years ago.

He, however, emphasised the need for an improved security situation in the region, including Pakistan, to attract ample foreign investment. Ã¢â¬ÅIn this region, I mention Ã¢â¬ËsecurityÃ¢â¬â¢ as an issue. Canadians believe that to do business either as importer or exporter requires a reliable security framework and the rule of law, both civil and criminal.Ã¢â¬Â

Highlighting some major joint ventures between Canadian and Pakistani companies, he said that Barrick Gold of Canada was investing about 120 million Canadian dollars in the copper-gold mines in the Chagai district. The site, he pointed out, offered one of the largest copper and gold mines in the world and the two companies had already started a 75 million dollars programme.

He also mentioned some other projects involving the Canadian companies.

However, he said that Pakistani exports to Canada had been gradually declining in recent years and urged the Export Promotion Bureau to look into the causes as CanadaÃ¢â¬â¢s consumption had not registered any decline.

Referring to reports that Canada might negotiate a free trade agreement with Pakistan, the high commissioner said that since Canada currently had a full agenda of FTA negotiations it cannot pursue FTA with Pakistan at this time.

He said the volume of trade between Asia and North America would continue to grow at a fast pace and added that Pakistan could and should play a greater role in AsiaÃ¢â¬â¢s evolution.

Ã¢â¬ÅThis is why Canada is keen to strengthen its presence in Asia and Pakistan,Ã¢â¬Â he urged.

Ã¢â¬ÅWith each (passing) day we invest more in the people of Pakistan. In healthcare, education and training, especially for women, Canada is helping its Pakistani partners to be competitive in the new global marketplace,Ã¢â¬Â he said.

The high commissioner said Canada had relieved $293 million of PakistanÃ¢â¬â¢s debt and added that the creation of a Ã¢â¬Ërupee counterpart fundÃ¢â¬â¢ would help focus on improvements to PakistanÃ¢â¬â¢s education system.

He called for increasing bilateral trade and foster longer-term sustainable and mutually beneficial linkages between the business communities of the two countries.

Answering a question, he said a Canadian trade delegation was expected to visit Pakistan in autumn.

Earlier, Quetta Chamber of Commerce and Industry president Mohammad Saddique Kakar highlighted the fields in which Canadian investors could invest.


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## Neo

May 4, 2006. 05:38 PM

Barrick Gold Corp. (TSX: ABX), the worldÃ¢â¬â¢s biggest gold producer, says itÃ¢â¬â¢s open to further expansion in Pakistan Ã¢â¬â which it considers more politically stable than some countries in South America. 
Ã¢â¬ÅPakistan ... from a mining point of view, from a business point of view, is among the better countries (to invest in),Ã¢â¬Â founder and chairman Peter Munk told shareholders during the Canadian companyÃ¢â¬â¢s annual meeting Thursday. 

Ã¢â¬ÅIf I had the choice to put my money in one of the Latin American countries run by (Bolivian president) Evo Morales or (Venezuelan President Hugo) Chavez Ã¢â¬â I know where IÃ¢â¬â¢d put my buck,Ã¢â¬Â he said, referring to moves to nationalize resources in those two countries, to the detriment of foreign investors. 

VenezuelaÃ¢â¬â¢s congress formally approved new joint ventures that bring 32 oil fields in the country under state control Thursday, instead of letting them continue to be run independently under contract by private oil companies. 

Earlier this week, Morales sent troops to occupy foreign-run gas installations in Bolivia. 

Barrick bought a stake in the Reko Dig copper-gold project in Pakistan for $100 million (U.S.) in February from Antofagasta PLC, a Chilean mining group. 

When CEO Greg Wilkins went to Pakistan in connection with that project, Munk said, he was received by both Prime Minister Shaukat Aziz and President Pervez Musharraf. 

Ã¢â¬ÅIf a country has time to have its president, whoÃ¢â¬â¢s in the middle of a politically, highly charged region, courted by Soviets, China, Muslims and America ... sit down ... with Greg to encourage him to invest money and invite a Canadian company to come in to develop the countryÃ¢â¬â¢s resources, it shows you what a great country it is,Ã¢â¬Â Munk said. 

Although the companyÃ¢â¬â¢s assessment of opportunities in that country is still in the early days, Wilkins said Barrick would be ``very interestedÃ¢â¬Â in more projects in the area, despite challenges posed by the presence of Al Qaeda in its various regions. 

Ã¢â¬ÅWe have a $20-million joint exploration program for (Reko Dig) alone and the Tethyan belt itself Ã¢â¬â which is actually geological belt that runs from Turkey all the way to Iran and into Pakistan is really quite prospective,Ã¢â¬Â he said. 

Ã¢â¬ÅSo weÃ¢â¬â¢ll be looking to take advantage if we can (and) see what opportunities exist for us.Ã¢â¬Â 

Kerry Smith, an analyst with Haywood Securities, said Pakistan is attractive to Barrick because it would provide the company with a large deposit that will have a long life. 

Ã¢â¬ÅTheyÃ¢â¬â¢ve got a quality partner, a big project and the entry cost was quite reasonable,Ã¢â¬Â he said. 

But Barrick isnÃ¢â¬â¢t completely turning its back on Latin America just yet, because while a growing leftist trend is raising concerns, some countries are fighting to address those issues and remain attractive to investors, Wilkins said. 

A senior Argentine official, for instance, has offered to make a presentation to BarrickÃ¢â¬â¢s board to Ã¢â¬Ågive us the assurance that Argentina isnÃ¢â¬â¢t going that way,Ã¢â¬Â Wilkins said. 

Ã¢â¬ÅThe extremism of what Mr. Morales has done is going to knock those other guys back and perhaps off that agenda.Ã¢â¬Â 

Barrick, a Toronto-based miner, has about 22,000 employees around the world. The company reported a jump in first-quarter profit to $224 million US from a year-earlier $66 million (U.S.) late Wednesday, boosted by strong metal prices and gains made from the acquisition of Vancouver-based Placer Dome. 

The gold companyÃ¢â¬â¢s earnings, reported in U.S. dollars, translated to 29 cents a share, up from 12 cents per share in the same period last year, beating analysts expectations. 

Michael Jalonen, and analyst with Merrill Lynch, said he was expecting earnings to come in at 19 cents per share. 

Ã¢â¬ÅWe attribute the variance to our assumption the company would deliver production to lower-priced hedge positions during the quarter, thus recognizing a lower gold price than actual for Q1 2006,Ã¢â¬Â he said in a note to clients. 

Barrick bought Placer Dome in a $12.1-billion-Cdn deal completed March 15. Barrick expects to close the deal to sell some of PlacerÃ¢â¬â¢s assets to Goldcorp Inc. in May. 

The company reiterated its 2006 gold production forecast of 8.6 to 8.9 million ounces at $275 to $290 US per ounce. 

On the Toronto stock market Thursday, Barrick shares closed up over six per cent, or $2.16, at $36.56 Cdn, with over 9.3 million shares changing hands.


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## Neo

BAKU (May 06 2006): Prime Minister Shaukat Aziz on Friday called for the establishment of an ECO free trade area and intra-regional oil and gas pipelines, saying an energy grid could create inter-linkages necessary for making the Economic Co-operation Organisation (ECO) more effective.

Addressing the ninth ECO Summit, the prime minister urged closer co-ordination of policies among the member states and said, "For the ECO to become a coherent, effective and seamless organisation, it must create inter-dependencies and synergies, especially, in the areas of energy, security, transportation linkages and trade promotion." He said efforts must be made to establish intra-regional oil and gas pipelines as well as power grids from energy rich to energy deficient countries.

The prime minister said that the ECO region was well placed to become a major hub of energy supply. "We can take the initial step of diversifying supplies within the region," he said, and termed the launch of the feasibility study on interconnection of power systems as a welcome development.

While sharing Pakistan's vision for the ECO, he said establishment of a regional power grid would contribute to the economic integration of our region.

He also called for establishment of an ECO free trade area and urged finalisation of the Optional Protocol on fast track through an early consensus.

He said Pakistan has assumed the role of the co-ordinating country for Ecota and it believed that its establishment was well within the realm of possibility, provided the member states gave it the highest priority.

He said transportation linkages needed to be enhanced to provide corridors for co-operation, people-to-people contacts, tourism, cultural exchanges and free flow of ideas. The prime minister said improved transportation linkages would also facilitate greater flow of intra-regional trade enabling better regional specialisation while promoting complimentarities in the economies for common advantage of all member states.

He cited the example of Pakistan's trade with Afghanistan and said it has risen from less than $100 million only four years ago to over $1.2 billion, at present, while the projection for 2006 was $1.5 billion. He said free trade opens the door to wider markets.

Shaukat added that the ECO represents best hope to foster trade and economic linkages in the region. He referred to the Transit Transport Framework Agreement, which would come into force this month. He said the ECO Trade and Development Bank has also set up its board of governors, while several important annexes to Ecota had been concluded, generating confidence in its future.

He, however, said that the region has been facing "multiple new challenges" ranging from disease and malnutrition to environmental degradation and natural disasters. He attributed inordinate delays in undertaking key activities as one of the reasons impeding ECO's growth, adding that it still had a long way to go to achieve the goal of regional integration.

Shaukat said the ECO had also taken positive initiatives, including plans to deal with avian influenza and develop a regional centre for risk management of natural disasters.

He said the devastating earthquake in Pakistan in October had underscored the need for such plans for disaster mitigation. He expressed his profound gratitude to member states and the ECO Secretariat for a generous response in the aftermath of the October 8 earthquake.

He said Pakistan could play a pivotal role in the region owing to its location and to bridge the regions of Central, South and West Asia while providing the shortest route for the landlocked Central Asian countries through sea.

He said work on a deep-sea port at Gwadar would be completed soon, while construction of road and rail transportation networks was also underway to complement Pakistan's air links with these vital regions.

He informed the meeting about the ongoing talks for the Iran-Pakistan-India and the Turkmenistan-Afghanistan-Pakistan gas pipelines, which he said, would help in bringing the energy resources of the ECO region to South Asia.

Talking about establishing a power grid from Tajikistan to Pakistan, he said that there was also the potential to establish such pipelines through Pakistan to Western China.

Shaukat said Pakistan respected Iran's legitimate rights under the NPT, including the right to peaceful use of nuclear technology under appropriate safeguards. About the Kashmir dispute, he said it "lies at the heart of tensions between Pakistan and India."

About Afghanistan, he said its peace and stability was in Pakistan's national interest and vital for regional security and development.

He said Pakistan would continue to support the Government of President Hamid Karzai and contribute to its reconstruction.

On the issue of terrorism, he said it threatened the entire international community. "No country is immune from this menace. Pakistan has long been its victim. We oppose terrorism in all its forms and manifestations," he added.

He said that a lasting solution to that problem required elimination of its root causes.

He also urged the member states to raise their voice, as Muslims, against the linkage that was being drawn in some societies between Islam and terrorism.

He said Islam is a religion of peace, tolerance and harmony, which abhors violence. He called for measures to promote better understanding of Islamic values and said there was a need for a dialogue between the Muslim world and the West.

Meanwhile, Shaukat extended full support to the territorial integrity of Azerbaijan, saying Pakistan was against occupation of its land by Armenia.

He said Pakistan was against the occupation of territory of Azerbaijan by Armenia, and demanded vacation of its territory.

Shaukat said: "We fully and completely support the stand of Azerbaijan as it is just and fair, and we will continue to do so.

Earlier, leaders from Pakistan, Afghanistan, Iran, Turkey, Azerbaijan, Kyrgyzstan, Tajikistan, Uzbekistan, Kazakhstan and Turkmenistan discuss economic development in the region, which is rich in resources but largely underdeveloped.

Top officials and heads of state from the 10-member Economic Co-operation Organisation (ECO) discussed cross-border trade, transport infrastructure projects and regional security.


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## Neo

ISLAMABAD (May 06 2006): Visiting US Under-secretary of State for International Trade and Commerce Franklin Lavin on Friday refused to comment on the issue of Iran-Pakistan-India (IPI) gas pipeline project prior to a meeting with Prime Minister Shaukat Aziz, scheduled to be held on Saturday.

"I will not comment on the IPI project. I do not want to make public what I would discuss with the prime minister, who was also my boss in the Citibank," he said, while replying to questions at a press conference at the US Embassy.

The questioners had sought his comments over the commitment made by Iranian President Ahmadinejad in Baku with Prime Minister Shaukat Aziz that the decision on IPI gas pipeline would be taken within 90 days.

When asked, since one of the US magazines has ranked Pakistan as a failed state, but he was stressing American companies to explore investment opportunities here, Lavin said, he did not read the article but media was independent in the United States. However, the views expressed in the article have nothing to do with the official policy of his government.

"On the basis of my interaction with Pakistan and the American business community, I can say with confidence that Pakistan is opposite to the failed state," he said, adding that Pakistan's economy was booming and performing well on all fronts.

He said that there were some challenges, but Pakistan has the capability, leadership and necessary policies to keep the economy moving ahead.

"Pakistan's economic growth is among the top nations of the world and it is serving the people very well," he said.

Lavin, whose visit was the follow up of US President Bush's visit, said that his country had contributed a lot for the rehabilitation of earthquake victims, which somehow changed perception about America, but admitted that there were anti-America sentiments in the Pakistani society.

He said he has discussed bilateral economic issues, including Bilateral Investment Treaty (BIT), arbitration mechanism, Intellectual Property Rights (IPR), WTO in the light of Doha round, adding that the government has taken several steps to discourage IPR violations, but a lot has to be done to stop this practice in pharmaceutical and optical discs.

To a question regarding Pakistan's role in Central Asia, he said that there were a lot of investment opportunities in the newly independent states and Pakistan could invest there as the US companies were also exploring the same possibilities.

"My advice to the American entrepreneurs would be that if they are serious global companies they must be serious about Pakistan as the country is on a strong path of economic development, trade barriers are being eliminated and deregulation, privatisation and liberalisation are keeping the economy moving," he said. Lavin said that there was enormous potential for the US investment in Pakistan and they need to develop a strategy to participate in marketing.

When asked that on the one hand, the US government issues different advisories to its citizens, barring them to visit Pakistan and on the other, he was asking the companies to invest in Pakistan, he said, "There are security issues in Pakistan, but there are also enormous economic opportunities."

"The people who invest in Pakistan want protection and I have discussed this issue with the Pakistani officials today," he said.

He said that the American administration is introducing legislation in the Congress to pave the way for establishment of economic zones in the tribal areas of Pakistan. Goods produced in these zones would enjoy duty-free access to the US market.

He said there was no timeframe for signing of the BIT and presently both the countries were resolving some of the issues. Signing of the treaty would convey to the world that investment in Pakistan enjoy best possible treatment and legal protection, he added.

He said that Pakistan's exports enjoy open access to the United States. Pakistan's exports to the US grew from $2.9 billion in 2004 to $3.3 billion in 2005, showing 10 percent increase. He said that last year the United States had a trade deficit of $2 billion with Pakistan.

He said the Pakistan-US economic and trade ties are moving in the right direction.

When asked to comment on Pakistan's desire to become a trade corridor for Central Asia and China, he said, it is in the interest of both Pakistan and the United States to have closer economic linkages with the Central Asian Republics. Pakistan offers constructive platform for economic activity in Central Asia, he added.


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## Neo

KARACHI (May 06 2006): The Iran-Pakistan-India (IPI) pipeline will provide 2.8 billion cubic feet gas per day to the country at a cost of $2-3 billion/annum and the focus is to integrate it with the system by 2011 as, after 2010, local production will start to decline.

This was stated by Inter State Gas (Pvt) Limited Managing Director Hasan Nawab during an interview with 'AAJ Markets'. Pakistan and Iran have agreed to work on bilateral (Iran-Pakistan) gas pipeline project, regardless whether India participates in it or not. The estimated cost of the project is around 2.5 billion dollars for Pakistan whether India joins the project or not.

Hasan said that whether India joins or not, Pakistan can not delay the project, although if India joins, the project would be more feasible.

About security measures of the project, he said it was a natural, normal requirement and was certainly under consideration. There would be an element of cost related to the issue but it would not have any major impact on the overall project. The royalty issue is also under consideration and it will be negotiated according to international norms. He said that nothing has been decided on this part.

Gas pricing formula is another area that needs to be finalised, though gas prices are somehow link with crude oil, which is not only volatile but also difficult to predict. The government motive is to design a system, which can limit price volatility, he added.

For gas distribution he said two companies, SSGC and SNGPL, cater distribution in Pakistan, and distribution of this new facility would be under them, even if they got privatised.

The two companies are distributing 2.8 billion cubic feet and the new facility of 2.8 billion cubic feet would further increase their distribution capacity.

He said that available gas reserves in the country are far less than the country's requirement.


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## Neo

M ISRAR KHAN 

ISLAMABAD (May 06 2006): The government has proposed Rs 350 billion outlay of Public Sector Development Programme (PSDP) for FY 2006-07, which is about 14.4 percent more than Rs 306 billion of the current year.

Sources told Business Recorder that allocations proposed for federal development programs were likely to be around Rs 225 billion, with top priority to water and power and infrastructure sectors development.

This would represent an increase of more than 10 percent over the current federal PSDP allocation of Rs 204 billion.

The provincial development PSDP allocation might range from Rs 70 to Rs 80 billion, against this year's allocation of Rs 68 billion, they said.

It is worth mentioning that social sector was not on government's top priority list. However, their allocations would be increased accordingly in the next year. There will be more jobs creation through the enhanced allocations for PSDP and it would indirectly have positive impact on the economic and social life of the people.

Increase in the PSDP allocation has also been proposed keeping in view the United Nations Millennium Development Goals (MDGs) upon which Pakistan wants to make a considerable progress.

The proposed outlay is Rs 350 billion, of which federal PSDP allocation is estimated at Rs 225 billion and some other new budgetary measures would now be discussed in the Annual Plan Co-ordination Committee (APCC) meeting on May 21, where these may be revised and later submitted to the National Economic Council (NEC) for approval before the end of this month.

PSDP outlay also includes more financial resources for Water and Power Development Authority (Wapda) and National Highway Authority (NHA), actually outside budgeted PSDP, which is estimated to range between Rs 316 billion and Rs 320 billion, sources added.

They said that for only water sector, the Ministry of Water and Power has actually demanded Rs 90 billion. However, now the proposed amount for this sector is about Rs 70 billion, which is about 60 percent or near Rs 27 billion more than Rs 43.62 billion allocated for this year. Power sector would also get a sizeable share in the development funds in the next fiscal, they added.

The expansion in the allocations for water sector has been proposed keeping in view the construction of big dams already planned.

The initial work on Bhasha and Munda could start next year and if the government announced the construction of Kalabagh Dam, there would definitely be need for more financial resources.

According to sources, water and power sector would be followed by transport and communication where most of the allocations would be made for National Trade Corridor (NTC), which is of great significance for the economic and social development of the economy. Some funds have been allocated for Northern Areas, Federally Administered Tribal Areas (FATA) and special programs


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## Neo

ISLAMABAD (May 06 2006): Under Secretary for International Trade, the US Department of Commerce, Frank Lavin called on Minister for Health, Muhammad Nasir Khan, here on Friday.

While briefing the delegation about business friendly environment of the country for investors in pharmaceutical industry, he said Pakistan is the best place for investment owing to its easy access to Central Asian Countries, Middle East, Africa and S countries.

The results of which is evident from the fact that Pakistan has exported pharmaceutical products amounting to $61.8 million to more than 80 countries world-wide during last year.

The Minister also discussed the Intellectual Property Rights (IPR) issues and measures of drugs and medicines in the country and said necessary legislation in respect of Data Exclusivity are under review in consultation with stakeholders including overseas investors.

Frank Lavin appreciated the investment policy of the government and urged the foreign investors to take advantage of it.


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## Neo

KARACHI (May 06 2006): The private sector carrier, Airblue would soon add socio-economic routes to its system to be able to stand alongside national carrier, Pakistan International Airlines (PIA), on domestic operations.

Airblue Chief Executive Officer (CEO) Shahid Khanqan Abbasi told the Business Recorder here on Friday that the airline was ready to launch its inaugural flight to Gwadar by the end of this month.

Exact date and timings would be announced sometime next week.

He said that two 19-seater Beach Craft 1900 aircraft would be pressed into service to provide air travelling facility to the people of Balochistan to enable them enjoy the benefits which had, hitherto, eluded them.

To begin with, there will be two flights a day to Gwadar. Subsequently, the service would be extended to cover Turbat, Nawabshah and Sukkur by the end of the year, he said.

Until last year, socio-economic routes were on Airblue's network and the airline had started operating on some of these routes, but A-320 operations on these routes were found unfeasible because enough traffic was not available and had to be suspended.

However, during the period, Airblues' operations remained suspended on socio-economic routes, it paid regularly the amount due for not operating on these routes to the Civil Aviation Authority (CAA).

While granting additional routes/frequencies to private airlines in July last year, the CAA had mandated that private airlines should continue operations on socio-economic routes or pay for every flight at the rate of Rs 62,500 per flight not operated on these routes as required. Any default on the regular payment of royalty to the CAA shall subject private airlines to penalty/debarring from operating additional international frequencies/routes. The National Aviation Policy (NAP) - 2006, which is awaiting cabinet approval, has laid down certain conditions for domestic operations.

To ensure that domestic operations are adequately spread and people of remote areas have reasonable access to air services, the following minimum requirement of operations on different domestic routes by Pakistani airlines should be mandatory:

-- Minimum 10 weekly frequencies on trunk routes.

-- Minimum two weekly frequencies on primary routes.

-- Minimum two weekly frequencies on secondary routes.

For operations on secondary routes, new airlines should have a moratorium of three years from the date of starting operations and all fares would remain deregulated.

Trunk routes include Karachi, Lahore, Islamabad, Peshawar and Quetta. Primary routes (jet operable) include Multan, Faisalabad, Sukkur, D.G.Khan, Rahimyar Khan, Bahawalpur, Nawabshah, Skardu, Pasni and Jacobabad, and Secondary routes include Moenjodaro, Zhob, Saidu Sharif, Dalbadin, Bannu, Parachanar, Sehwan Sharif, D.I.Khan, Hyderabad, Ormara, Khuzdar, Rawalakot, Muzaffarabad, Chitral, Gilgit, Gwadar, Panjgur, Turbat and Jiwani.

About UK operations, Shahid Khaqan Abbasi said the Airblue's plan to start operating to the United Kingdom had, however, been delayed due to non-availability of suitable aircraft.

The government of Pakistan has already written to the UK government, nominating Airblue as the second carrier to fly to that country under the multiple designation of airlines, which is already available.

Shahid Khaqan Abbasi said that Airblue was looking for A-330-200 aircraft for the UK operations and are in touch with several leasing companies in this connection.

He expressed the hope that by winter, the airline might be able to add the new aircraft to its existing fleet and soon thereafter start flying to the UK.


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## Neo

Saturday May 06, 2006

ISLAMABAD: Federal Minister for Commerce Humayun Akhtar Khan has said that Pakistan wishes to have seamless connection with the US and the world economy for movement of goods, services and capital. 
He stated this while discussing bilateral trade and economic relations with US Under Secretary of State for Trade and Commerce Mr. Franklin L Lavin who called on him at his office Friday. 

The Minister also discussed the issues regarding the next meeting of Trade and Investment Framework Agreement (TIFA) ,early conclusion of Bilateral Investment Treaty(BIT) , Free Trade Agreement and intellectual Property rights. 

The Minister said that it was important to conclude BIT early. He said Pakistan had shown considerable flexibility in accepting the USA draft text. 

BITÃ¢â¬â¢s successful conclusion rested on one or two outstanding issues, and hoped that the US would also show the same flexibility so that a convergence of interests might occur, he added. The Minister said Pakistan had a very keen desire to sign an FTA with the US. 

He said that FTA with US would send a positive signal about PakistanÃ¢â¬â¢s policy environment. On the issue of intellectual property right, Mr. Khan reiterated PakistanÃ¢â¬â¢s commitment to improve Intellectual Property Rights(IPR) environment. 

He mentioned that last year PakistanÃ¢â¬â¢s Federal Investigation Agency was given additional legal cover for enforcement of IPR laws and Pakistan was successful in almost eliminating optical media piracy -- a fact that was recognized in the USA by moving Pakistan from priority watch list country to watch list status. The Minister assured Mr. Lavin that Pakistan would take all necessary steps to address IPR issue in pharma sector. 

The Minister also expressed his desire for early implementation of reconstruction opportunity zones in the tribal areas of Pakistan as announced by the US President in his recent visit to Pakistan. Mr. Lavin suggested that Government of Pakistan meet all US companies working in Pakistan at a proper forum in order to know their concerns regarding making investment in Pakistan and subsequently devise a mechanism to address their concerns as it would go a long way in attracting foreign investment in Pakistan. 

Similarly, he said that Government of Pakistan should identify and negotiate with the major US companies who were not presently working in Pakistan and try to address their investment related concerns so that they might also invest in Pakistan. The Commerce Minister agreed to the proposal. Mr. Lavin appreciated PakistanÃ¢â¬â¢s trade and investment policies as liberal and attractive. PakistanÃ¢â¬â¢s exports to the US over the last three years have been increasing. 

From US$2245.6 million in 2000-01, these stood at $3446.593 million in 2004-05. Exports from US to Pakistan have also increased from US$565.47 million in 2001-02 to US$1562.27 million in 2004-05. The balance of trade is in favor of Pakistan. Mr. Khan said that he was looking forward to working with the newly appointed United States Trade Representative (USTR) Ms Susan Schwab. Both the sides agreed to develop deeper appreciation of the potential for the bilateral trade relations to grow in future.


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## Neo

ISLAMABAD, May 5: Pakistan will seek next week support of multilateral and bilateral lenders to fund its over $40 billion programmes relating to infrastructure development, energy and economic growth so that it could become multiple corridor for energy, trade and transportation for the region.

The government in collaboration with the World Bank has convened the sixth annual meeting of the Pakistan Development Forum (PDF-2006) on May 10-11 to get commitments from its development partners for the next yearÃ¢â¬â¢s development programme.

The PDF, formerly Aid-to-Pakistan Consortium, is an annual feature ahead of federal budget aimed at presenting the countryÃ¢â¬â¢s economic performance and development needs to the international lenders. The PDF meeting sets the stage for multilateral funding arrangements and individual loan commitments.

The theme of this yearÃ¢â¬â¢s PDF is Ã¢â¬ÅDrivers of Economic Growth - Unleashing the Potential of the Private SectorÃ¢â¬Â. President Pervez Musharraf and Prime Minister Shaukat Aziz are also expected to attend the conference.

Previous PDFs were used to outline PakistanÃ¢â¬â¢s development partners the wide-ranging reform programme initiated by the government. The PDF 2006 specifically seeks to highlight its pro-growth, pro-investment and pro-poor policies at nine sessions devoted to specific sectors.

These include: the private sector, the SME sector, second-generation reforms, environmental sustainability, social protection, infrastructure, Millennium Development Goals, devolved services and aid effectiveness.

The government will be attempting to showcase PakistanÃ¢â¬â¢s achievements to date, as well as the challenges it faces in pursuit of these policies and its future strategy.

The forum will also be an opportunity to gauge the nature of the partnership requirements with PakistanÃ¢â¬â¢s development partners in not only helping to meet those challenges but also in contributing to a reformed social, economic and political landscape.

Two sessions would be dedicated to economic growth, specifically to the role of the private sector and small and medium enterprises (SMEs) respectively and improving competitiveness through private sector. Another session will relate to environmental sustainability and social security and safety nets for poverty reduction.

The most crucial sectors where the lenders support is required would be infrastructure development for economic growth. In this sector, broad parameters of strategy for energy, water and national trade corridor will be presented as governmentÃ¢â¬â¢s top priority.

Focus will also be on second generation reforms including agriculture, power, banking, civil service as well as on-going legal reforms and the challenges it faces.

The penultimate session Ã¢â¬ÅImproving Aid Effectiveness through Implementation of Paris DeclarationÃ¢â¬Â will also look at where the government and development partners stand on their respective commitments and lay out a roadmap for the coming year.


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## Neo

ISLAMABAD, May 5: US Under-Secretary of State for Trade and Commerce Franklin L. Lavin has urged Pakistan for early addressing the concerns of US companies in order to attract further investment.

He was talking to Commerce Minister Humayun Akhtar Khan here on Friday. During the meeting, issues regarding the next meeting of Trade and Investment Framework Agreement (TIFA), early conclusion of bilateral investment treaty (BIT), free trade agreement (FTA) and intellectual property rights (IPRs) were discussed.

Mr Lavin suggested that Islamabad should arrange a meeting of all US companies working here at a proper forum in order to know their concerns regarding making investment in Pakistan and subsequently devise a mechanism to address their concerns, as it would go a long way in attracting foreign investment in Pakistan.

Similarly, he said Pakistan should identify and negotiate with major US companies that were not presently working in Pakistan and try to address their investment related concerns so that they might also invest in Pakistan. The commerce minister agreed to the proposal.

Mr Khan said Pakistan wished to have seamless connection with the US and the world economy for movement of goods, services and capital. He said it was important to conclude the BIT early, adding that Pakistan had shown considerable flexibility in accepting the USA draft text. Ã¢â¬ÅBITÃ¢â¬â¢s successful conclusion rests on one or two outstanding issues, and the US will also show same flexibility so that a convergence of interests may occur,Ã¢â¬Â he added.

The minister said Pakistan had a very keen desire to sign an FTA with the US. He said the FTA with the US would send a positive signal about PakistanÃ¢â¬â¢s policy environment.

On the issue of IPRs, Mr Khan reiterated PakistanÃ¢â¬â¢s commitment to improve IPR environment. He mentioned that last year PakistanÃ¢â¬â¢s Federal Investigation Agency (FIA) was given additional legal cover for the enforcement of IPR laws and Pakistan was successful in almost eliminating optical media piracy Ã¢â¬â a fact that was recognised in the US by moving Pakistan from priority watch list country to watch list status.

The minister assured Mr Lavin that Pakistan would take all necessary steps to address the IPR issue in the pharmaceutical sector. The minister also expressed his desire for early implementation of reconstruction opportunity zones in the tribal areas of Pakistan.


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## Neo

TEHRAN &#8211; A Pakistani official said on Friday they would negotiate with relevant Iranian officials next month over establishing a sea route between Gwadar and the Iranian port of Chabahar.

&#8220;We will also talk about shipping ties and joint sea rescue operations in the area,&#8221; Hasan Zaidi, Joint Secretary for Pakistan&#8217;s Ports and Shipping Ministry, told the local Geo TV. &#8220;This is expected to reduce illegal trade through the borders of Iran and Pakistan,&#8221; he added, noting that both sides aim to boost legal trade. An informed Iranian official had earlier told IRNA that some 1-2 million liters of gasoline is smuggled to Pakistan every day. The smugglers receive banana, tangerine, and mango from Pakistanis instead, the official had claimed. The official value of trade between Iran and Pakistan now surpasses 400 million dollars.

Annual seafood production in Golestan to hit 71,000 tons

http://www.tehrantimes.com/Descript...06&Cat=9&Num=16


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## Neo

Saturday, May 06, 2006 

Govt considering exempting expertsÃ¢â¬â¢ fee from 15% IT

By Sajid Chaudhry

ISLAMABAD: The government is examining to grant exemption on technical fee paid to international experts on renewable energy projects, especially wind power, from 15% income tax in the forthcoming budget 2006-07, a senior tax official told the Daily Times on Friday.

The exemption from income tax on technical fee paid by investors to international experts of wind energy would help reducing the cost of wind power projects as well as tariff to be negotiated and agreed with the national as well as international investors. 

The government has set a target of 700megawatt power generation through wind energy by the year 2010. The government has made a significant progress in this regard and a total of 34 Letters of Intent have been issued to national and international private investors for the development of 50MW wind power generation project each.

The Alternative Energy Development Board (AEDB) has been mandated with the development and promotion of renewable energy technologies in Pakistan with special emphasis on wind energy. Renewable energy, especially wind power generation, is new to the country. Pakistan has no indigenous manufacturing facilities for wind energy equipment. All equipment and other related accessories are being imported. The government, through SRO 575 (i) 2005, has exempted the import of equipment and spares for wind power generation projects through renewable energy technologies from customs duty and sales tax. 

Pakistan has no technical experts on wind energy. In order to proceed with technical analysis and documentation of the projects for feasibility studies, private sector investors have to acquire the services of international experts on wind energy. The technical fee of these international experts, paid by private investors, is being incorporated into the project cost of the respective projects, which is reflected in the tariff for public consumers of electricity. A tax of 15% is also applicable on these technical fees as per the Income Tax Ordinance of 2001. All these extra monetary expenditures incurred by the private sector investors add to tariff.

In view of above, AEDB has requested the Central Board of Revenue (CBR) to exempt the technical fees of renewable energy projects from taxation. The AEDB has asked the CBR that necessary amendments to the income tax ordinance may also be made. Private investors require this grant of exemption as soon as possible in order to finalize their security package and further the development of wind power in the country.

According to the estimates of the government, the country would require 5,000MW additional power to meet national demands by the year 2012. To meet the electricity requirements of industrial and commercial consumers, the government as immediate step has approved an incentive package for Independent Power Producers to facilitate them to generate 26,50MW additional power by the year 2007-08. 

The PPIB is also processing power generation projects proposals in the hydel sector also to enable the country to meet the shortfall in power generation.


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## Neo

Saturday, May 06, 2006 

By Tanveer Ahmed 

KARACHI: A strong demand for cuttlefish and squid species of seafood in European countries and China is fetching better prices for seafood products of the country, which added $30 million in the overall seafood export in the last two months.

While there is a worldwide shortage of these two species because of short supply by India and West Africa, which usually meet the requirements of Europe and China, Pakistani seafood exporters grabbed the opportunity and fetched a better price by half a dollar more than normal prices during this season.

Ã¢â¬ÅThis season Europe and China are placing orders with Pakistani seafood processors with huge orders of these species, which contributed to a rise the price of raw material by 50 percentÃ¢â¬Â, said a seafood exporter on Friday.

Terming it a good sign for fishermen, who were crying because of low prices all through the season, he said that it has made up their losses to some extent, caused by high voyage cost.

The landing of cuttlefish and squid also saw high volume by 40 percent in March and April period compared with same months of last year, which also improved the raw material supply to seafood processing plants, which had been operating below their capacity for the last many months.

Seafood exporters said that although these species would be in abundance in June and July, which could further add to increase in seafood export, the Sindh government ban on trawling during the upcoming two months will stop fishing of this species, which were now in good demand.

They demanded of the government to reconsider its decision of slapping a ban this season to take advantage of the opportunity. 

Vice-president of the Pakistan Seafood Industries Association Faisal Iftikhar said the increasing demand in China and Europe for these two species coupled with the huge catch this season enhanced substantially the seafood export. 

Ã¢â¬ÅThe seafood export figures for the first nine months of this fiscal has given a bright picture as around 30 percent increase has been recorded compared with the corresponding period of last yearÃ¢â¬Â, he pointed out and hoped that the total export target of $160 million would be easily met by the end of this fiscal.

He, however, sought greater incentives in the coming budget to steer this industry out of difficulties, which is a major source of livelihood for coastal population of the country.
__________________


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## Neo

Saturday, May 06, 2006 

KARACHI: During the first nine months of the current financial year the demand for petroleum products saw a decline in contrast to the surge in economic activities in the country. 

Analysts said the decline in demand seems to be due to higher prices during the period under review. Despite booming economy and growing energy needs, the demand for POL products saw a decline of 6.2 percent in the first nine months of financial year 2006. Ã¢â¬ÅIt seems that the fall in POL use has to do with the rising domestic POL prices,Ã¢â¬Â said Farhan Mahmood, an analyst at Jahangir Siddiqui Capital Markets. In nine months ended March 2006, POL sales volume was down by 6.2 percent to 10.7 million tons versus 11.4 million tons previously. In the third quarter of the financial year 2006 alone, oil sales remained mute, only up by one percent to 3.6 million tons. The decline in overall sales volumes during July-March was due to a fall in the demand for high-speed diesel and furnace oil. Sales of high-speed diesel and furnace oil, having 30 percent and 50 percent weights in total sales, were down by 3.4 percent and 13.5 percent, respectively.

Consumption of white oil, including high-speed diesel, gasoline, kerosene and jet fuel, 68 percent share, was down by two percent to 7.3 million tons. Whereas sales volume of black oil or furnace oil having 30 percent share witnessed a 14 percent decline to 3.2 million tons. 

Ã¢â¬ÅAll productsÃ¢â¬â¢ sales declining except for jet fuel,Ã¢â¬Â he said and added high-speed diesel and furnace oil occupy the major share of 80 percent in overall petroleum product sales. In nine months of financial year 2006, while high-speed dieselÃ¢â¬â¢s share improved to 50 percent from 49 percent previously, furnace oil lost its share to 30 percent from 32 percent. High-speed diesel sales at 5.3 million a ton was down by 3.4 percent amid a 41 percent increase in its price, while the earthquake also affected the upcountry transportation activities. Demand for petrol also dropped with sales down by 11.3 percent to 0.88 million tons. Aviation jet fuel JP-1 has depicted a 21 percent growth in demand to 0.85 million tons. The rise in JP-1 demand was due to the booming aviation industry.


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## Neo

ISLAMABAD (May 07 2006): President Pervez Musharraf on Saturday said there is a need to enhance economic relations between Pakistan and Switzerland and called for greater trade access to Pakistani goods in the Swiss market. He stated this during a meeting with Swiss Foreign Minister, Madam Micheiline Calmy-Rey, who is also the Vice President of the Swiss Confederation.

Musharraf said Pakistan is a rising economy with a great potential and Swiss investors could invest in infrastructure, information technology and other important areas in Pakistan. Issues relating to bilateral and multilateral were discussed during the meeting.

The President thanked Foreign Minister Calmy-Rey for Switzerland's commitment of 40 million dollar for reconstruction and rehabilitation following the October 8 earthquake.

He appreciated the technical co-operation extended by Swiss Development Co-operation Agency in various projects in the Frontier province. President apprised the Foreign Minister about Pakistan's efforts in fighting terrorism and maintained that a holistic approach by the international community would be required to defeat the menace of terrorism that would combine the political and diplomatic efforts with development co-operation aimed at reforming and strengthening institutions of civil society and economy.

He emphasised that in this era of globalisation and connectivity, through technological means, it was indeed imperative that there should be greater cultural harmony, religious tolerance and respect for each others beliefs and religious symbols. President Musharraf underlined the need for promoting interfaith harmony.

The Swiss Foreign Minister agreed with the President's views and said that maintaining religious and cultural harmony was essential for having a progressive society.

She said that the resolution of the Palestinian conflict was essential to bring peace and stability in Middle East and stressed that the issues of dis-empowerment and economic exclusion are generating extremism within the societies.

The Swiss Foreign Minister lauded the role played by Pakistan in international fight against terrorism as well as toward promoting stability in Afghanistan. Switzerland, she said, is keen to expand relations with Pakistan, especially in commercial and development Corporation. In this regard she briefed the President on the projects being undertaken by the Swiss Development Co-operation Agency in Pakistan.

The President appreciated the role of SDC in Pakistan and maintained that it has undertaken many constructive projects in Pakistan and was happy to note that Swiss Foreign Minister visit coincided with the 40th anniversary of Pakistan and SDC Corporation.


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## Neo

ISLAMABAD (May 07 2006): Sales tax collection from ten major revenue spinners during July-March 2005-06 amounted to Rs 76.9 billion against Rs 66.3 billion in the corresponding period of last fiscal year, showing a growth of 16.1 percent.

Except sugar, all major commodities showed upward trend during these nine months.

Sugar contributed Rs 5.9 billion as sales tax on domestic consumption, against Rs 6.1 billion, showing a decrease of 3.1 percent.

The GST collection from other commodities was Rs 31 billion against Rs 37.2 billion reflecting a decrease of 16.4 percent. Thus, the overall sales tax collection on all major domestic commodities stood at Rs 108 billion during July-March 2005-06 against Rs 103.5 billion depicting an increase of 4 percent.

According to CBR analysis of GST collected on domestic consumption, the telecommunication sector contributed Rs 18.8 billion as sales tax against Rs 13.9 billion collected in the corresponding period last fiscal year, reflecting an increase of 36 percent.

The sales tax collection from POL products was Rs 18 billion against Rs 16.3 billion showing a growth of 10.9 percent; electricity Rs 10.3 billion against Rs 10.1 billion (2.5 percent); natural gas Rs 9.3 billion against Rs 7.9 billion (18.3 percent); cigarettes Rs 3.7 billion against Rs 3.7 billion; cement Rs 3.5 billion against Rs 2.5 billion (37.2 percent); services (other than telecom) Rs 3 billion against Rs 2.6 billion (15.8 percent); LPG Rs 2.2 billion against Rs 1.8 billion (26.2 percent); and sales tax collection from motor cars was Rs 2.1 billion against Rs 1.5 billion collected in the same period of last fiscal year with a growth of 41.8 percent.


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## Neo

ISLAMABAD (May 07 2006): Canada's world renowned mining company considers Pakistan an attractive place for investment because of the country's stability and fast-growing economy as well as its helpful policies, Canadian newspaper Toronto Star reported.

The mining giant, Barrick Gold Corp is already operating in Pakistan and plans an expansion, the report published on Friday said. "Pakistan...from a mining point of view, from a business point of view, is among the better countries (to invest in)," founder and chairman Peter Munk told the company's annual shareholders meeting.

Barrick had bought a stake in the Reko Dig copper-gold project in Pakistan for US dollars 100 million in February from Antofasta PLC, a Chilean mining group. The company will spend 20 million dollar this year, exploring for new gold and copper deposits with partners in Balochistan.

When its CEO Greg Wilkins went to Pakistan in connection with that project, he was received by both President Pervez Musharraf and Prime Minister Shaukat Aziz.

"If a country has time to have its president, who's in the middle of a politically, highly charged region... sit down with Greg to encourage him to invest and invite a Canadian company to come in to develop the country's resources, it shows you what a great country it is," the report quoted Munk as saying.

Greg Wilkins told the newspaper: "Barrick Gold Corp would rather do business in Pakistan than in some parts of South America, despite fears of al Qaeda, because big miners don't have to share their profits to operate there."


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## Neo

KASUR (May 07 2006): The sagacious policies of the present government led by President Musharraf have raised the country's image in the world and ensured foreign reserves up to dollars 14 billion, NA standing committee on Railways chairman Tufail Ahmed Khan said.

He was addressing the PML workers convention near Kot Radha Kishan, attended by a large number of party activists, Punjab parliamentary secretary Ahmed Saeed and local nazims.

He underlined many positive steps taken by the government in various sectors including foreign relations, economic growth, agriculture, industry, IT, provision of healthcare, education and all utilities to masses in urban as well as rural areas.

He said people were aware of the work done by the PML, and expressed confidence that they would elect the party that had worked effectively for national and public interests. He assured party workers of all possible support, and reviewed party affairs and targets vis-ÃÂ -vis the coming general elections.


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## Neo

ISLAMABAD (May 07 2006): The Adviser to the Prime Minister on Finance, Dr Salman Shah, on Saturday said globalisation was not a threat to Pakistan's fast growing economy and those who were scared of it can not foresee its hidden benefits to Pakistan.

The adviser expressed these views while concluding a two-day workshop held here on PRSP-II. The theme of the workshop was globalisation, unemployment, gender inequality and environment. Babar Ayaz, a known journalist and expert on economy, conducted the proceedings of the show.

Dr Salman Shah said the government would take all steps to make the forthcoming budget pro-poor and deliver goods to underprivileged section of the society. He hinted at major reforms in many areas to achieve the target set for Budget 2006-07.

These were up-gradation of vocational institutions to make them modern and advance centres to provide required standard of skill to the youth, focusing on livestock to increase the income of rural community, effective monitoring of the funds being spent on social sector uplift and imparting quality education to the students to help them compete internationally, he added.

UNDP chief to Pakistan assured all out financial support for Pakistan's initiatives meant to bring less developed areas. He appreciated the idea of consultations for PRSP programme by holding such workshops.

The experts from the government and non-government organisations (NGOs) and civil society organisations gave recommendations for improvement in key areas to deal with issues like poverty and unemployment.

It proposed to streamline and integrate various social security programs to enhance their effectiveness. It also proposed effective monitoring of the social sector programmes for full utilisation.

The workshop termed New Murree Housing Scheme as a fraud and recommended that it should be banned immediately. It was also seen as a serious threat to regional environment. It also recommended review of fishing policy with specific focus on promoting and protecting the local small fishing industry.


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## Neo

ISLAMABAD (May 07 2006): Former Ambassador Mushtaq Ahmed Mehr said on Saturday that Economic Co-operation Organisation (ECO) would emerge as a major regional body in future and Pakistan play major role in it. Speaking in a PTV programme, he said the organisation covered an important region with 380 million populations and huge natural resources.

He said the organisation was in its transitional stage as the region was confronting a number of issues, particularly, the situation in Afghanistan.

Once these issues are settled the organisation would emerge as a major economic power and the member states would achieve rapid progress, he said.

He said Pakistan, Turkey and Iran were the three countries in organisation which promised transit trade route between the Central Asia and rest of the world adding that on completion of the infrastructure associated with Gwadar port and return of peace in Afghanistan, Pakistan would be in the driving seat.

To a question, he said the ECO Summit meetings provided a platform to the leadership of member countries to evolve joint strategy for solution of problems in the region. Present era was of collective approach for the solution of internal as well as inter-state problems, he added.

To a question, he said in 1990 the trade volume between the ECO states was dollars 10 billion which now had enhanced to dollars 16 billion but there still existed huge potential for further expansion to which the member states particularly Pakistan was committed to explore.

He said the guarantee for expansion of trade activities between the member states was political stability in the region and the process in that regard was moving in the positive direction.


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## Neo

FAISALABAD (May 07 2006): British High Commissioner Mark Lyall has said that recent meetings of British Prime Minister Tony Blair with President General Pervez Musharraf and Prime Minister Shaukat Aziz has resulted in mutual understanding between the two countries to prosper.

Addressing members of Faisalabad Chamber of Commerce and Industry (FCCI) here on Friday, he said that recent Senate and local government elections and reforms in Pakistan reflected the internal economic stability.

Lyall disclosed that the UK was willing to eliminate the causes of unemployment, poverty and illiteracy from Pakistan and for this purpose, the British government had approves 236 million pounds as grant.

He said: "We are starting soon some millennium development projects along with the City District Government of Faisalabad." These development projects would be costing Rs 236 millions.

He said it was learnt that due to investment-friendly policies of President Musharraf government, the economy of Pakistan was grooming.

The High Commissioner said the British Embassy was the biggest visa-processing embassy in Pakistan in 2005. It processed 16,5000 applications, while the US Embassy processed only 50,000 visa applications, he added.

Responding to a question, Lyall said that Britain was now giving attention to virtual catalogue industrial exhibitions through electronic devices like internet rather than catalogue exhibition, and added: "We will try our best to encourage the businessmen platforms of Pakistan like FCCI."

Earlier, FCCI President Mian Muhammad Hanif, in his welcome speech, said that trade between Pakistan and the UK had been on increase and likely to touch the level of two billion dollars.

He said that many industrialists were interested to invest in the UK, and similarly many investors from the UK were keen to invest in Pakistan because of the investment-friendly policies of the government.

Later talking to newsmen, the British High Commissioner said that US nuclear pact with India was the need of time, but no such agreement could be signed with Pakistan.

He said that India and Pakistan were two different countries with different needs. They must be treated according to their strategic importance, he added.

Mark Lyall said that for economic stability in South Asia, Pakistan and India should resolve their disputes, including core issue of Kashmir.


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## Neo

ISLAMABAD (May 07 2006): Minister for Communications Shamim Siddiqui has said that the National Highway Authority (NHA) has embarked upon a six billion dollars road network development programme to provide excellent communication network to meet growing needs.

He was inaugurating a day-long seminar on Bridges Development in Islamabad on Saturday. The minister said on the direction of President Pervez Musharraf a comprehensive strategy has been chalked out to construct new roads besides rehabilitating, widening and improvement of existing road infrastructure throughout the country.

He said as the country is heading towards speedy economic growth, the existing road network is unable to meet the future requirements of providing a corridor for international trade.

He said China is keen to expand its trade and economic relations with Pakistan and has expressed willingness to strengthen road network up to Gwadar.

In this context, China has agreed to provide three hundred and fifty million dollars for improvement and widening of Karakurram Highway from Thakot to Khunjerab Pass. He said the NHA will work on top priority to dualise Hasanabdal-Mansehra road and improvement of KKH up to Thakot.

Shamim Siddiqui said the National Highway Authority is also working on widening and rehabilitation program of Peshawar-Karachi National Highway and Indus Highway which reduces distance between Karachi and Peshawar up to four hundred kilometers.

He said it has also been decided to construct an alternative road network between Gwadar and Khushab.

The minister said that on the directive of Prime Minister Shaukat Aziz the authority is on its way to launch remaining sections of Motorway to link it with Gwadar and Karachi simultaneously.

The minister referring the bridge construction in Pakistan said that NHA is covering over six thousand bridges on its road network in which quality of work has been ensured. He said it was quality of work that not a single bridge built by NHA was damage in the recent earthquake.

World renowned bridge construction expert Dr V.K. Raina who is also Advisor to the Bahrain government will deliver three special lectures in the day-long deliberations on its professional expertise in the field particularly on the world longest bridge connecting Qatar and Bahrain and new trends in constructing fly-overs.


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## Neo

ISLAMABAD, May 6: The Privatisation Commission (PC) has received 19 Expressions of Interest (EoIs) for acquiring 90 per cent shares of Heavy Mechanical Complex (HMC) with management control on an Ã¢â¬Åas is where isÃ¢â¬Â basis.

According to a PC handout issued here on Saturday following parties had submitted EoIs (i) ABM International (ii) Aqeel Karim Dhedhi Securities (iii) Bulk Management (Pakistan) Private Limited (iv) CSK Limited (v) Descon Engineering Limited (vi) Dewan Mushtaq Group (vii) Gharibwal Cement Limited (viii) Ittehad Steel Industries (ix) Kohat Cement Company Ltd (x) MCC Resources Development Company (Pvt) Ltd (xi) Niagara Mills (Pvt) Ltd (xii) Pak Gulf Construction (Pvt) Ltd (xiii) Shinsei Sangyo Co Ltd (xiv) Start Consult (xv) Shafi Associates (xvi) Sapphire Group (xvii) Techno Engineering Services (Pvt) Limited (xviii) Thal Industries Corporation Limited and (xix) Umer Group of Companies.

The HMC is countryÃ¢â¬â¢s heavy engineering concern having capability for designing, engineering and manufacturing of capital machinery, industrial plant equipment and other engineering goods. It is located in the prime industrial hub at Taxila.

The mechanical works commenced commercial operations in 1971 whereas foundry and forge works started production in 1978. Both the works were, however, merged in 1989. The facilities include fabrication, machining, foundries, forging and heat treatment, galvanising and auxiliary shops.

A well-established design centre with CAD/CAE facilities is also available. The products of HMC conform to international quality standards.

The HMC has been authorised to use four ASME stamp codes for boilers, pressure vessels, piping etc. The company is ISO-9001 certified.

The companyÃ¢â¬â¢s product mix covers sugar and cement plants, chemical/petroleum, oil/gas processing plants, thermal power plant equipment, mini and micro hydel power plant equipment, road construction vessels, heat exchangers, heavy to medium electric travelling cranes, boilers, pressure vessels, heat exchangers, heavy to medium iron and steel castings, steel billets, heavy to medium free well as closed die forgings.


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## Neo

Sunday, May 07, 2006 

LAHORE: Punjab Agriculture Minister Arshad Khan Lodhi has called upon cotton growers to adopt latest technologies and recommendations of agriculture experts while cultivating cotton crop to get maximum yield. 

He said the federal government has fixed the cultivation target of 2.56 million hectares for Punjab to achieve 10.58 million bales. 

The minister, after presiding over a meeting at Multan on Saturday, reporters informed of the decisions taken at the meeting. Secretary Agriculture Fayyaz Bashir, DG Pest Warning & Quality Contorl Dr Ijaz Pervaiz, Secretary Cotton Crop Management Group Islam Gill, a representative of the irrigation department, farmers and pesticide dealers attended the meeting. 

Mr Lodhi told the aggregate target for four provinces has been fixed as 13.82 million hectares area. Giving the break-up, he said the federal government has fixed 0.64 million hectares for Sindh, 0.04 million hectors for Balochistan, 0.01 million hectares for the NWFP and 2.56 million hectares for Punjab. The minister explained that the production target for Punjab has been fixed as 10.58 million bales, 3.13 million bales for Sindh, 0.10 million bales for Balochistan and 0.01 million bales for the NWFP. 

The representative of the irrigation department presented their plans about releasing canal water for the cotton growing area. 

The minister directed the pesticide dealers to keep sufficient stocks to meet any emergency situation. He further directed the chairman of the Task Force of Agriculture Department Capt Atta (retd) and DG Pests Warning Dr Ijaz Pervaiz to keep an eye on the market and accelerate their checking so that the manufacture and sale of substandard and adulterated pesticides can be checked. The minister asked the director Agricultural Infor-mation, Rafiq Akhtar, to ensure that all necessary information are disseminated timely to the cotton growers. Earlier, Secretary Agriculture Fayyaz Bashir and Secretary CCMG Islam Gill briefed the meeting about the cotton plan.


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## Neo

Sunday, May 07, 2006 

* Govt trying to maintain GDP growth rate at 6-8% to generate employment

By Sajid Chaudhry

ISLAMABAD: Dr Salman Shah, Adviser to the Prime Minister on Finance and Economic Affairs, has said we want to maintain GDP growth rate at 6-8% during the next 15-20 years so that employment opportunities can be generated for reduction in poverty. 

Poverty level of 25% is still very high and we want to cut it further down by 50% by end of 2015 to meet the targets of Millennium Development Goals (MGDs). MGDs costing gap will be filled and the government will finance all initiatves for reduction in poverty levels. We will take globalization as opportunity so that benefits of it can be availed. All important recommendation received at consultative process would be incorporated in the final PRSP II document so that desired result are achieved. 

He was speaking at the concluding session of the third consultative workshop on PRSP II here on Saturday evening. Earlier, the Third Consultative Workshop on Poverty Reduction Strategy Paper II finalized some key recommendations for incorporation in the final poverty document to be implemented during 2006-2009 on Saturday. Economic experts suggested key initiatives to meet the challenges of income inequality, globalization, unemployment, gender inequality and environment in the proposed PRSP II. 

Strategies to reduce income inequalities: There should be accountability in the social sector spending of the government where there have been instances of mismanagement and underutilization of allocated funds.

Social security system: It was proposed that there was need to streamline and integrate / various social security programmes being managed by the government. Their effectiveness can be enhanced if all dispersed programmes run by different ministries of the government are brought under one umbrella. 

Development of livestock: To raise the income level of the rural poor it was felt that an aggressive livestock development policy should be launched by the govt. The government should provide subsidies on live stock insurance, easy availability of credit to small farmers for purchase of better quality livestock, improved facilities and guidance to livestock farmers.

Human resource development: To arrest growing inequality it was proposed that the poor should be provided access to quality education by improving sector institutions, fellowships/vouchers for quality education in the private sector, enhanced technical and vocational training facilities by updating labs, syllabi and teachers training. 

Rural industrialization: Industrialization of rural areas should focus on utilization of local resources and labour force. 

Land Reforms: Improvements must be made in areas such as updating of land record and the records should be transparent to check whether previous land reforms have been flouted and tenancy laws and other legal framework should be looked into. If there is any distribution of state land, gender perspective should be taken into consideration to balance land ownership between men and women. 

Easy availability of credit: Credit schemes focusing on needs of the poor with reasonable interest rates should be made easily available.

Unemployment: A duty on remittances should be levied similar to the export development cess to set up a Manpower Development fund. Skill-based training should be provided to the workforce meant for export. Some of the existing training centres and vocational centres should be privatized to upgrade them to meet the demand of foreign markets. Training programmes should be developed in collaboration with highly credible institutions from the UK or Singapore. There should be criteria to classify a project for the poor.

Reducing gender gap: It was proposed that a system should be developed to establish linkages between educational institutions and the employment market to check the rising unemployment among the educated youth. It was proposed that economic emancipation of women is important to change the present mind-set about women, hence future agricultural and housing and allotments should have a quota for women as at present they have very little assets in their name. Mapping of informal sector can go a long way in visibility and recognition of womenÃ¢â¬â¢s contribution to the economy since women are mostly employed in the informal sector. Measures for monetization of womenÃ¢â¬â¢s work at home should be incorporated in the PRSP ll. Women-specific loan schemes have to be improved by not only increasing the amount of loans available to women, but also by making terms and conditions more simple and by providing advisory services on how to utilize that loan in a productive manner.

The PRSP ll should focus on generating employment specific to women and womenÃ¢â¬â¢s health and education, as it will lead to narrowing down of gender gap. WomenÃ¢â¬â¢s quota in public-sector employment should be increased to 50%.

Globalization and its impact on poverty in Pakistan: Manpower planning should be part of the PRSP ll for promoting skill development so that Pakistani labour can meet the challenges posed by globalization. Manpower training strategy should take into consideration the trends and needs in international and domestic markets. Restriction on export of female labour force from Pakistan should be removed. Protection of vulnerable groups through social security safety nets should be ensured. The PRSP ll should explore the possibility of instituting social security insurance. The PRSP ll should have a clear strategy to protect the interests of consumers as globalization affects the provision and prices of services and goods. It should take into account the impact of import substitution on domestic production and how it is affecting the domestic employment scenario.

Environment: The environmental cost of development should be kept in mind while preparing development plans. Pakistan should sign the international conventions and agreements on environments. The PRSP 11 should clearly mention the strategy for the construction of big dams and mega projects such as the LBOD that are likely to have great impact on environment. It was suggested that Pakistan should have a clear policy for the setting up of micro-hydro plants, which has a total capacity of 40,000 megawatts in China. The practice of giving license to bring trawlers for fishing into Pakistani waters should be stopped since it is adversely affecting poor fishermen. There is need to develop environmentally-friendly beach development since the development of the 750-kilometer long coastline would have grave consequences for poor fishermen in the area.

http://www.dailytimes.com.pk/defaul..._7-5-2006_pg5_9


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## Neo

Amina Jilani
Power and glory are coming our way by 2016 Ã¢â¬â at least that is what has been promised to those of us who may still be around in ten years time. President General Pervez Musharraf is very confident about it all and will hopefully be on the spot to perform the various mammoth inaugurations and grand openings the coming entails. Until then, we must hold our horses and soldier on with what little we have.

The Prime Minister, investment banker Shaukat Aziz, last week made the stupendous announcement that side by side with the latest rise in fuel prices the per capita income of Pakistan has doubled. Well, his own personal per capita income and that of his clientele may well have doubled (or even trebled) taking into account his investment prowess, but that of the man riding the Mandi Bahauddin omnibus certainly has not Ã¢â¬â and the same goes for my chowkidar. What is the point in spouting such statements? Self-gratification?

Last week also, following the power and glory promises and the per capita boasts, Ã¢â¬ËForeign PolicyÃ¢â¬â¢, the US publication which is known for its extensive and accurate research and which is usually pretty much on the mark, came up with its latest list of Ã¢â¬Ëfailed states.Ã¢â¬â¢ The Islamic Republic of Pakistan, whatever be the reasons, has the distinction of having fallen dramatically from 34th on the list to its present status at No.9, sandwiched between Haiti at No.8 and Afghanistan at No.10

Now, it would be far more appropriate for both President and Prime Minister, rather than star-gazing to admit to the people that all is not in the pink (apart from the motor car and 4x4 market) and outline the reasons Ã¢â¬â earthquakes, rampant Al-Qaeda and Taliban activity in the NWFP, the revolt of the Baloch sardars, the sectarian terrorism, the total absence of law and order, or whatever. They should level with us.

Having said that, one must admit that it is rather silly, as no politico of Pakistan has ever been big enough to do any truthful leveling. General Musharraf makes waves internationally, listed on TimeÃ¢â¬â¢s 100 world movers and shakers, but on the home front itÃ¢â¬â¢s all a bit different. Since time memorial in the Republic, all who breathe in the heady air of Islamabad, and sit in the high chairs on the Plateau of Potohar, are tainted with the ugly aroma of the arrogance of power when it comes to this country and its people.

The shaky edifice of our federal and provincial governments may well be slowly dissolving in the stew of their own staggering incompetence, but our dear leaders continue to merrily do their own thing. Last Sunday the President General took one of his frequent trips to Lahore to parley and party with the beloved of his Q League, those hard core professional politicians who he so often in the past has openly professed to despise. How he can countenance them is beyond rational thought, but there he was in a press photograph, happily sandwiched, with a beaming Mushahid Sahib at his side, between the two Chaudhrys of Gujrat, the grim and the smirking, at a dinner held in honour of the grim one who heads his party. Times have changed. The General now thinks nothing of schlepping off to Lahore or wherever to break bread with the weavers of political schemes.

The two troublesome provinces are on hold as it appears that our dear leaders have not yet resolved as to how to deal with them, or they have simply decided that with more important survival matters on the agenda they canÃ¢â¬â¢t be bothered with relevant solutions. The ruling province is busy chopping trees and building underpasses and generally getting on with sustaining or furthering the mess. As for Sindh, lawless and alone, its rocky coalition continues to do its best to befuddle us.

Last Sunday, in the press was one of those things that should be banned when it comes to governments and the public sector Ã¢â¬â an Ã¢â¬Ëadvertising supplementÃ¢â¬â¢ of eight pages of bumph, misleading and propagating nothing but untruths and hypocrisy. It was funded by the people, in the guise of various district and town governments and their nazims, by the Civil Hospital, by the ever greedy and prosperous Defence Housing Authority, by PIA, by the Information Department (which listed its Ã¢â¬ËachievementsÃ¢â¬â¢) and the chief minister himself. Ã¢â¬ËMy Province SindhÃ¢â¬â¢ was the title and the first banner headline proclaimed Ã¢â¬ËLaw and order is top priorityÃ¢â¬â¢ Ã¢â¬â or so says the helpless home minister, Rauf Siddiqui who obviously, judging by the conditions in Sindh, has no concept of either law or order Ã¢â¬â and the same goes for the rest of the ruling clique, civil and military.

For the edification of the dear leaders, a quote from The Times (London) from columnist Anatole Kaletsky, writing last week on Ã¢â¬Ëthe most vital issue of government.Ã¢â¬â¢

Ã¢â¬ÅThroughout the 5,000 years of recorded history, if you asked any subject of any civilization on any continent, from China to Egypt to Peru, to name the one duty which governments must fulfill above all others, you would probably get the same answer. The first responsibility of any government is to protects its subjects from unlawful killings, robbery and violenceÃ¢â¬Â¦.. nobody has every disputed that a governmentÃ¢â¬â¢s main raison dÃ¢â¬â¢etre was to deter and punish criminals and to try to maintain the rule of law.Ã¢â¬Â
Put that in your collective pipes and smoke it.


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## Neo

ISLAMABAD (updated on: May 07, 2006, 19:11 PST): Pakistan faces a possible drought with no significant rain expected in the next two months, the country's top meteorologist warned on Sunday.

'There are all indications of emerging drought conditions in the country,' director general of the Meteorological Department, Qamaruz Zaman, told AFP.

He said a moderate drought had already developed in Balochistan and was likely to worsen during the coming months and possibly spread to other parts of the country.

Zaman said rainfall last winter was 40 percent less than average, and snowfall in catchment areas was 20-25 percent less.

"During the next two months no significant rains are expected which can improve the water situation in the country," Zaman said.

Pakistan was hit by a devastating drought several years ago that inflicted heavy losses in agriculture and livestock, particularly in Balochistan and the southern province of Sindh.


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## Neo

Sunday, May 7th, 2006


Islamabad - Pakistan and Iran have agreed to work on a bilateral gas pipeline project regardless of whether India wants to join an eventual Iran-Pakistan-India (IPI) project.

Hasan Nawab, managing director of Inter State Gas (Pvt) Ltd, said the estimated cost of the project for Pakistan would be around $2.5 billion.

Ã¢â¬ËWhether India joins or not, Pakistan cannot delay the project. (But) if India joins, the project would be more feasible,Ã¢â¬â¢ Hasan told IANS.

The IPI project is estimated to fetch Pakistan 2.8 billion cubic feet gas per day at a cost of $2-3 billion per annum. Pakistan would focus on integrating the gas pipeline with the countryÃ¢â¬â¢s energy system by 2011 as Ã¢â¬Ëafter 2010 local production will start to declineÃ¢â¬â¢, he said.

On the security measures for the project, he said it was a natural, normal requirement and was under consideration. Ã¢â¬ËThere would be an element of cost related to the issue but it would not have any major impact on the overall project. 

Ã¢â¬ËThe royalty issue is also under consideration and it will be negotiated according to international norms,Ã¢â¬â¢ he said. Ã¢â¬ËNothing has been decided on this part.

Ã¢â¬ËThe gas pricing formula is another area that needs to be finalised though gas prices are somehow linked with crude oil, which is not only volatile but also difficult to predict. The government motive is to design a system, which can limit price volatility,Ã¢â¬â¢ Hasan said.

Two companies, SSGC and SNGPL, cater to gas distribution in Pakistan. Ã¢â¬ËThe distribution of the new facility would be under them, even if they get privatised,Ã¢â¬â¢ he said.

The two companies are distributing 2.8 billion cubic feet gas and the new facility of 2.8 billion cubic feet would further increase their distribution capacity.

According to Hasan, the available gas reserves in the country are far less than the countryÃ¢â¬â¢s requirement.


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## Neo

KARACHI (May 08 2006): The trade deficit in the first nine months of FY 2006, according to Federal Bureau of Statistics, is $8.6 billion. No! says the State Bank of Pakistan. Its foreign exchange record shows it at $5.9 billion.

According to FBS, exports in July-March 2006 were $12.1 billion. SBP estimates these at $11.7 billion. The divergence in import figures is even sharper. FBS places imports for the same period at $20.7 billion. On the basis of the figures derived from the Balance of Payment position, SBP estimates them much lower--at $17.5 billion.

Why such huge variance in the two data sets? FBS gets its trade data from the Central Board of Revenue (CBR).

They work on data from different sources. The Board compiles the goods declaration forms filed with Pakistan Customs. SBP obtains its data from transmission of foreign currency undertaken on behalf of banks.

Imports reported by banks are a mixed 'Free on Board' (FOB) and Cost, Insurance & Freight (CIF) basis. SBP has the value of freight and insurance from the exchange record - FBS deducts a flat 9 percent as cost of freight and insurance.

The Minister of State for Finance, Omar Ayub, had held a meeting to rationalise these differences in FBS and SBP figures, and ordered that this problem be fixed in 15 days. But the minutes of that meeting were circulated after 45 days.

LSM: Prices and trade data are compiled on monthly basis. The third set of monthly compilation was large-scale manufacturing. However, this year there has been a complete breakdown in the compilation of LSM. FBS has not provided any figures since September 2005.

Agriculture sector data is compiled in three stages. The first estimate is of the area sown. The second set of data provides initial estimate of crop, and the final estimate comes after harvesting of major crops.

The FBS does not provide any quarterly or half-yearly details about the services sector. So, the real sector estimates are compiled only once--for the national income accounts committee.

It may be recalled, however, that two years ago, the government had announced that it would issue quarterly GDP estimates, as well as unemployment rate.

Monetary estimates, prices and revenue figures are being compiled with regularity in the country; expenditure data also comes, with a time lag, though. With so much divergence between trade data and a large portion of the real sector unassessed, economists wonder how a policy framework is to be designed.

The General Statistics Act 1975 provides the legal framework for collection of data at both the Federal and the Provincial levels. The law aims to create a National and a Provincial Statistical Council, and constitutes authorities for the collection and co-ordination of statistics to facilitate economic and other planning.

The 1975 Act envisages authority for FBS to call for returns and information; gives the right of access to record or documents from the private sector; and guarantees secrecy of answers, information and returns. The same Act empowers the FBS and provincial authorities to punish those delaying or falsifying answers, information and returns, and sanctions for prosecution for any act of omission or commission.

Both the law and the institutions that have been created for this purpose are in place. It is their activation that has been awaited these 30 years.


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## Neo

LAHORE (May 08 2006): Dr Salman Shah, Advisor to Prime Minister on Finance, in a pre-budget seminar here on Sunday said that stalemate on dams had to be broken.

He said decision on future water reservoirs had to be made on economic basis and a decision in this regard would immensely help the country's development endeavours and would make productivity efforts competitive which was the vital need of the hour, he added.

He termed the coming 2006-07 Federal Budget as people-friendly and said that health, education and other important sectors would get due consideration in it.

Shah said it was the priority objective of the government to bring down poverty by half by 2015 from the existing level.

He said that the country has sufficient foreign exchange reserves for six months import, and added that future development needs level would be maintained.

He said that increased revenue collection by CBR would lead to speedy pace of development in the country. "We have fiscal space because of the revenue generation. So development drive is there," he pointed out.

He said Pakistan had shown improvement in its GDP over the last three to four years as compared to sustained growth level by China in last 30 years period. He hoped that with positive indicators showing, benefits in increase in GDP would be passed on to masses.

He termed the decrease in financial deficit and increase in GDP as an important achievement of the government. He lamented the elements who gave attention to recent false report indicating Pakistan as a failed state and said that country's economic indicators and respect shown by international investors in the national economy all belied this report.

He said that diversification of economy was vital for development and the government had embarked in this direction vociferously.

The Advisor said that with government giving importance on supply side of things, situation in food items prices had improved. He said that the government was very watchful on the aspect of inflation.

He said that Prime Minister Shaukat Aziz had approved to establish 'Independent Statistical Authority' in the country.

He said that healthy indicators were now visible in the stock market. Severely criticising Ahsan Iqbal of PML-N for comments against government economic policies, he said the previous government had ruined the banking sector and introduced crony capitalism in the country.

He said that the government had undertaken a number of steps to improve the standard of technical and other education in the country and in this direction persons in order to obtain doctorate degrees had been sent abroad.

He said that the Government was negotiating with Japan to impart vocational training here.

Sartaj Aziz asked the Government to give production-related subsidies. He said no step should be taken in planning of the Budget 2006-07 that would result in increasing cost of production. He said controlling inflation was a better measure than taking the decision of going for devaluation. He asked the government to eliminate sales tax on consumer items in the forthcoming budget.

Ahsan Iqbal rejected the notion that on October 12, 1999, the country was faced with any default in payments. He asked for debate on Defence Budget in the Parliament.

Punjab Finance Minister Hasnain Bahadur Dareshak said that introduction of medium term budgetary framework (MTBF) was one of its important achievements.


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## Neo

LAHORE (May 08 2006): The European Union (EU) remains the largest trading partner of Pakistan receiving 27.4 percent of Pakistan's export providing 17 percent of its total imports as a result of sound economic policies of the present government, says an EU Journal.

"Overall volume of trade between the EU and Pakistan has grown substantially over the year from Euro 1.5 billion in 1980 to Euro 3.1 billion in 1990 and was worth Euro 5.06 billion, equivalent to Rs 303 billion in 2002 with a trade surplus of Euro 765 million (Rs 46 billion) in Pakistan's favour", it added

Pakistan's trade with EU is mainly composed of textiles, which account for over 60 percent of total Pakistani exports to the EU, followed by leather products, which account for 13 percent of Pakistani exports, it said.

EU imports to Pakistan mainly comprise finished products like mechanical and electrical machinery that accounts for over 35 percent followed by chemical and pharmaceutical 10 percent of the total EU imports to Pakistan.

A general trade increase with Pakistan's main partners, including the EU, is a part of Pakistan's economic revival agenda, which is a goal supported by the European Commission.

"In this regard, there is a scope for more mutually beneficial commercial activity between the EU and Pakistan. A further integration of Pakistan in the global economy is supported by the EU and is being articulated as a part of the EU overall strategy for the WTO Doha Development Agenda, where developing countries' needs and constraints need to be fully assessed", it added.


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## Neo

By Engr Abdul Waheed Bhutto

PAKISTAN is experiencing a rising tide of violence against natural gas installations located in Balochistan where the majority of the energy-starved countryÃ¢â¬â¢s natural gas facilities are located. The province derives its strategic importance mainly due to its large reserves of oil and gas.

Pakistan has 26.8 trillion cubic feet (Tcf) of proven gas reserves, and currently produces around 2061 million cubic feet per day (mm cfpd). The share of gas in primary energy supply had increased from 37 to 41 per cent in the last five years.

The natural gas demand grew at an annual consumption growth rate (ACGR) of six per cent against a total energy demand growth at an ACGR of 4.8 per cent and is expected to grow at a similar rate upto 2010.

By the year 2015, countryÃ¢â¬â¢s total gas demand would go up to 4,452 (mm cfpd) from the present level of 2061 mm cfpd with bulk of it going to power generation and fertilizer sector. Against this, the supply would stand at 2439 mm cfpd which will leave a huge gap of 2013 mm cfpd.

There would be a deficit of gas unless supplies are substantially raised from new discoveries. In case, the gap is not met through indigenous supply, it is necessary that requisite infrastructure is developed in a timely manner for import. Islamabad is working on plans to build a pipeline that spans from IranÃ¢â¬â¢s massive reserves to Indian markets across Pakistani territory.

BalochistanÃ¢â¬â¢s natural gas production is critical to PakistanÃ¢â¬â¢s economy. The Sui-Gas field in Bugti tribal area produces approximately 45 per cent of the countryÃ¢â¬â¢s total gas production. Pakistan Petroleum Limited is producing 720-750 million cubic feet of gas daily from more than 80 wells in the field. Other natural gas fields in the province include Uch, Pirkoh, Loti, Gundran and Zarghoon near Quetta. Balochistan has 19 trillion cubic feet of natural gas reserves and six trillion barrels of oil reserves on- and off-shore.

But these riches did little for the local Baloch tribesmen. Despite the provinceÃ¢â¬â¢s wealth of natural resources, Balochistan is the poorest and a restive province; 45 per cent of its population live below the poverty line.

Local population lacks basic necessities like health, water, food and education. The wWhole of the Quetta city, the provincial capital of Balochistan, except cantonment area, is using brackish groundwater.

An ordinary Baloch in Quetta is of the view that he has been facing a step-motherly treatment from the Islamabad rulers ever since the formation of Pakistan. Baloch have been deprived of political, social, cultural and economic rights. They have little educational facilities and have been kept in a state of backwardness.

The present regime aggravated situation by sidelining the mainstream parties of Balochistan in favour of Islamists. There are no Baloch in the top bureaucracy.

The locals are also concerned over the settlement of Punjabi and Pashtun ex-servicemen in key areas of Balochistan to reduce the Balochs to a minority in their historic homeland.

Though BalochistanÃ¢â¬â¢s natural gas generates $1.4 billion in revenue annually, Islamabad remits only $116 million in royalties to the province. Over the years, Balochistan did not get a fair share of the oil and gas wealth. Balochistan is getting merely Rs22 per thousands cubic feet of gas extracted while Sindh is getting Rs126 and Punjab Rs180 for some of the wells.

The targeted attacks on the infrastructure is affecting the foreign investment. More than ten oil and gas exploration blocks had been awarded to over 20 local (both public and private) and international firms over the past 10 years but they could not start operations due to law and order problems.

A Chinese company BGP had stopped oil exploration work in Bugti tribal area in June 2001 for security reasons. In July 2004 a U.S. company involved in offshore drilling abandoned its two test wells between Gwadar and Pasni because of security concerns.

During a visit to Pakistan on March 13 and 14, 2006, Mr Samuel W. Bodman, the US Energy Secretary, told the Pakistani journalists that the security situation in Balochistan was an impediment to foreign investment in Pakistan.

In January, the corporate brokerage house Taurus Securities issued its Ã¢â¬ÅKey risks and challenges 2006Ã¢â¬Â report observed that the ongoing violence in Balochistan will have Ã¢â¬Åa detrimental impact on the reserves of natural resources and disrupt gas supplies,Ã¢â¬Â adding that the military operations were worsening the situation.

On the other side, most powerful Sardar Nawab Akbar Bugti has said thatÃ¢â¬Â we own the natural resources, but these are being exploited for the benefit of others. We will not allow others to steal our wealth. Your sensitive installations will remain insecure, because you have pilfered, what belongs to our people.Ã¢â¬Â

The government has opted the military solution at the time when there are efforts going on to materialize the proposed plans to build a $7 billion gas pipeline project from Iran to India, via Pakistan.

Pipeline that spans from IranÃ¢â¬â¢s massive reserves to Indian markets across Pakistani territory. The 475 miles of the pipeline will pass through Balochistan. This would not only supply gas, guarantee a source of income, but also increase stability in the region, according to official point of view.

But the pipeline attacks with increasing intensity are unsettling. Despite the heavy patrolling by US forces, oil pipelines come under attack in Iraq. Pipelines run over hundred of miles and across some of the most difficult areas to access. Due to their length, they are very difficult to protect that makes pipelines potential targets. Instead of military operations, the situation should be defused through dialogue.

The main grievance of Balochistan is that the provinceÃ¢â¬â¢s minerals and other natural resources are being exploited without any benefit to the local population. To resolve the present situation the Parliamentary Committee on Balochistan has reportedly given two key proposals: 1) substantial increase in the royalty of the province on oil and gas, and 2) empowering the provinces to sign petroleum exploration and sale agreements with local and foreign firms.

These proposals were expected to encourage regional political leaders to open up their provinces to petroleum exploration and development activities to give the provinces a sense of ownership making them directly responsible for the security of vital installations.

However, an increase in the rate of royalty is being opposed by the establishment. They have also opposed proposal that allow the provincial governments to sign petroleum agreements with private firms, on the ground that petroleum is purely a federal subject under the Constitution and yields over Rs70 billion per year in taxes to the national exchequer.

Meanwhile, a number of economic incentives have been promised such as, increased job quota for the Baloch in the government service, preference for locals for recruitment in local development projects etc. However, it seems that the situation has not changed because in the past too, similar promises were made, but they remained unfulfilled.

The local Baloch demand abrogation of the plans for the construction of new army cantonments, the de-militarization of the province and restriction of land ownership in Gawadar for the Balochis only. They are also demanding the right to vote should also be restricted to locals only. They also want employment of locals in petroleum exploration and development companies.

Mr Baloch nationalists consider the issue of provincial autonomy as the core issue for the province.

The security in Baloch territory can be assured only by the Baloch tribes, who have to have their due share of the, royalty, transit fee and other benefits of their gas resources and the pipeline. The policy of creating local stakeholders by bringing the local people on board must be followed, as the local stakeholders can only ensure the steady and speedy development process.

At present, the bulk of natural gas is consumed by for power and fertilizer sector. On average the fertilizer sector has consumed 23.4 per cent of gas during the last 14 years from 1990-91 to 2003-04. Natural gas is being sold to the fertilizer industry at subsidized rate at a time when the demand for gas is quite competitive since it serves as a major input to electricity generation and provides the preferred fuel input to many other industrial processes. According to an estimation, government suffer losses of around Rs15 billion every year as subsidy to the fertilizer sector, which never reaches the farmer.


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## Neo

By Muhammad Rehan Ghazi

AIDED by growing IT awareness in the country and increased focus from multinational IT vendors, the PakistanÃ¢â¬â¢s PC shipments grew 16.6 per cent annually in 2005 to reach just under the half-million mark with the shipment of 494,000 units.

Additional market accelerators include strong economic growth, the governmentÃ¢â¬â¢s drive to privatize the economy and efforts to develop the ICT sector.

Although the earthquake in October held shipments back marginally in Q4 due to delayed government-buying and general economic disruption, it is not expected to impact the market materially in 2006 and beyond. Similarly, although social unrest and a degree of political instability are risks for the market, they are not expected to derail the marketÃ¢â¬â¢s strong overall momentum over the next several years.

Due to political and social disruptions as well as general perception challenges, the Pakistani market has traditionally been neglected by the international IT vendors; however, the marketÃ¢â¬â¢s explosive growth over the past several years has led it to a scale that is drawing increased attention. It is not an exaggeration to call Pakistan one of the most promising and dynamic PC markets in the world.

The Pakistan PC market continues to be highly price-conscious, and remains dominated by locally-assembled machines, which hold over 75 per cent of the total shipment market share. Local brands are also major players, and are increasingly offering formidable competition to international giants in Pakistan.

Desktops, which represent the largest portion of the market, registered shipments in excess of 469,200 in 2005. Amongst all the product sectors, the portable market-led growths in 2005 with 21.3 per cent expansion, followed by X86 servers and desktops. Portable PCs are expected to remain a particularly hot market segment throughout the forecast period as prices fall and the need for mobility rises. The position of notebook PCs as status symbols will also play a secondary role in driving sales.

From a usage perspective, the public sector and NGOs currently provide the dominant segment of the market. However, large corporations Ã¢â¬â particularly in the finance and telecommunications sectors Ã¢â¬â are also key customers driving market growth.

Although Small and Medium Businesses (SMBs) represent a large share of the countryÃ¢â¬â¢s total number of companies, they do not represent a commensurate share of the PC market. In total, SMBs represented 21 per cent of total 2005 PC shipments in the country.

The SMB market represents a notable portion of shipments in Pakistan, but it is receiving secondary focus from IT vendors due to the substantial opportunities in the public and large enterprise sectors.

In spite of social and political risks, Springboard expects PC market growth to rebound to 24.7 per cent in 2006 driven by a release of pent-up demand from earthquake-related delays in Q4, strong economic growth and IT vendor investments in sales and marketing activities.


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## Neo

KARACHI, May 7: The government has approved a Rs75 billion plan to connect Gwadar port by rail to streamline cargo movement, says federal Minister for Railways Shaikh Rashid.

Addressing a press conference here on Sunday, Shaikh Rashid said the government would invite private sector to participate in the mega project.

Referring to the revival of the Karachi Circular Railway, he said that the system would be revived and the government also wanted to run circular trains in eight other major cities.

TRAIN FARES: The minister said that there was a possibility of a reasonable increase in train fares in the wake of increases in diesel prices but it would be done in a way to ensure poor people were not affected, adding that it would also not affect people travelling on routes ranging between 50 and 100 miles.

Shaikh Rashid said: Ã¢â¬ÅWe are examining (ways) to increase train fares in such a way that the burden is shifted to people travelling in air-conditioned and upper class compartments.Ã¢â¬Â

He said the railways would be transformed into Ã¢â¬ËAwami trainÃ¢â¬â¢. He said he had started touring all seven divisions of railways to get first-hand information about areas needing immediate improvement

KHOKHRAPAR SERVICE: The minister announced the launching of a daily train service between Khokhrapar and Mirpurkhas to provide an additional facility to people of rural areas in Sindh.

Ã¢â¬ÅPakistan Railways will be revolutionised at a rapid pace through optimum utilisation of available resources and creation of new ones by adopting a practical approach,Ã¢â¬Â he said.

Shaikh Rashid said that the schedule of Sukkur Express had been revised according to peopleÃ¢â¬â¢s demands.

Referring to additional resource generation, he said that private companies would be allowed to run four new trains, adding that they would pay Ã¢â¬Ëtrack access chargesÃ¢â¬â¢.

About railway commutersÃ¢â¬â¢ security, he said that a fibre optic line would be laid for a number of purposes, including installation of surveillance cameras, adding that it would provide additional protection to national assets.

Shaikh Rashid said railway signals would be upgraded while orders had been issued for computerising the domestic ticketing system.

He also said that the frequency of freight trains would be increased from eight to 10 in Karachi.

He said that talks were being held with all chambers of commerce on ways on maximising the use of freight trains.

Ã¢â¬ÅWe are adopting a pragmatic approach to take the railways out of the red and to provide maximum facilities to passengers,Ã¢â¬Â he said.

LOSS CONTROL: Effort would be made to overcome the huge losses incurred by the Pakistan Railways within a year, the minister said.

Ã¢â¬ÅThe deficit is fairly huge and we can overcome this through cargo trains. (But) there is an acute shortage of freight wagons and locomotives,Ã¢â¬Â he said.

Shaikh Rashid said that a study in this respect is being carried out.


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## Neo

ISLAMABAD, May 7: The World Bank is persuading Pakistan to import electricity and gas from Central Asian states to attract international financial support as an alternative to a gas pipeline from Iran, it is learnt.

On the initiative of the World Bank, the energy ministers of Pakistan, Afghanistan, Tajikistan and Kyrgyzstan are meeting here on Monday to discuss electricity trade among them. Besides the energy ministers, deputy prime minister of Tajikistan Asadullo Gulmov is also attending the meeting.

The two-day conference of Central Asia-South Asia electricity trade would also be attended by the officials of the World Bank, its commercial investment arm International Finance Commission, Islamic Development Bank and the Asian Development Bank to brain-storm on technical and financial aspects of the regional power trade. Federal Minister Liaqat Ali Jatoi would preside over the two-day conference.

Informed sources told Dawn on Sunday that the World Bank has been promoting the idea of regional energy grid at the Economic Cooperation Organisation (ECO) level for a long time and has now reinvigorated the campaign to initially link energy resources of Tajikistan and Kyrgyzstan with Pakistan through Afghanistan and later to India.

Given the availability of vast hydel energy resources in the Central Asia particularly in the close proximity of Afghanistan and rising demand in Pakistan and India which may like to adopt the concept at a later stage, the possibility of international financial support would be forthcoming subject to improvement of security situation in Afghanistan where the United States would provide a lot of support, the sources said.

The United States had declined to provide any support to Pakistan for nuclear energy and opposed gas import from Iran but had promised to assist Islamabad in alternate sources of energy to meet its growing energy needs.

The sources said Pakistan had proposed to invite Iran to participate in the conference given its importance in the energy resources but a consensus could not be achieved on the subject.

The sources said the conference is expected to approve launching of feasibility studies for the transmission line from the Central Asia to Pakistan for importing 2000-3000 mw of electricity.

The presence of major multilateral financial institutions like the IFC, the ADB and the IDB has been ensured by the World Bank to get financial commitments to the project at the very beginning to cost estimation for fast track implementation, the sources said.

The World Bank, said the sources, was convincing Pakistan that it may attract western criticism for pursuing a major gas import project with Iran and lack financial support as the major multilateral would stay away from a risky and legally difficult investment owing to US opposition.

As an alternate energy supply chain from Central Asian region, on the other hand, would not only get financial and political support from the West and the US, it would also be seen as a positive move to encourage land-locked central Asian states to start trade through Pakistani ports.

The sources said Pakistan has been discussing on bilateral basis with Central Asian republics for energy cooperation and it would be for the first time that a larger perspective of the regional energy import would get special importance.

Pakistan and Tajikistan had already signed a memorandum of understanding last year and had even launched a feasibility study through National Engineering Services of Pakistan (Nespak) to import 1000-mw of hydropower from Tajikistan. The electricity import from Tajikistan has initially been found technically feasible.


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## Neo

ISLAMABAD, May 7: WorldÃ¢â¬â¢s renowned gold-mining company Barrick Gold Corp considers Pakistan an attractive place for investment because of the countryÃ¢â¬â¢s fast-growing economy and investment-friendly policies, Canadian newspaper Toronto Star reported.

The Canada-based mining giant is already operating in Pakistan and plans further expansion of its enterprise in this country, the report published on Friday said.

Ã¢â¬ÅPakistan, from a business point of view, is a better country to invest in,Ã¢â¬Â founder and chairman Peter Munk told the companyÃ¢â¬â¢s annual shareholders meeting.

Barrick had bought a stake in the Reko Dig copper-gold project in Pakistan for $100 million in February from Antofasta PLC, a Chilean mining group. The company will spend $20 million this year on exploration of new gold and copper deposits in Balochistan.

When its CEO Greg Wilkins came to Pakistan in connection with the said project, he was received by both President Pervez Musharraf and Prime Minister Shaukat Aziz.

Ã¢â¬ÅIf a country has time to have its president, whoÃ¢â¬â¢s in the middle of a politically charged region, sit down with Greg to encourage him to invest and invite a Canadian company to come in to develop the countryÃ¢â¬â¢s resources, it shows you what a great country it is,Ã¢â¬Â the report quoted Munk as saying. Greg Wilkins told the newspaper: Ã¢â¬ÅBarrick Gold Corp would rather do business in Pakistan than in some parts of South America, despite fears of Al Qaeda, because big miners donÃ¢â¬â¢t have to share their profits to operate there.Ã¢â¬Â

At the shareholders meeting in Toronto on Thursday, he said the company was Ã¢â¬Åeager to further invest in and explore PakistanÃ¢â¬â¢s prospective geological belt along the Afghan border.Ã¢â¬Â

Wilkins said the government of Pakistan was building roads and a shipping port (at Gwadar), besides bringing water and electricity to the area.


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## Neo

Monday May 08, 2006 

ISLAMABAD: Advisor to Prime Minister on Finance and Revenue Dr. Salman Shah has said that government has prepared a comprehensive plan to achieve the millennium development goals before 2015 that would result in reducing the poverty in the country. 
"Poverty has been reduced due to government policies from 32 percent to 25.6 percent according to the survey 2005," he stated while addressing a workshop on "consultation on PRSP11" here on Friday. 

He said that according to the survey conducted in 2001, as many as 32 percent people were living below the poverty line but in the survey held in 2005, 25.6 percent people are living below the poverty line. 

"Pakistan has endorsed Millennium Development Goals and is bound to bring down to poverty to half level by 2015 and we have chalked out a comprehensive plan in this regard," he said adding that we will achieve the targets before 2015. 

He said that it was not possible to escape from the globalization and we should make plan to benefit the globalization that would enable the access of Pakistani products to the world market. 

"We shall equip the people with the skill to enhance the human resource development that will result in producing the competitive products," he said adding that we will utilize the water and energy resources to accelerate the economy in the country. 

He said that we would incorporate the recommendations forwarded in the consultation workshop and chalked out a comprehensive plan to implement it so that the poverty could be reduced. 

He informed that government had set the target of the GDP from 6-8 percent in the next twenty years and added that with the enhancement of economy in the country the employment would be generated for millions of people. 

"Government is focusing on generating the income resources for the women and women can play their full role to accelerate the economy of the country," he added. 

He observed that government had already started the development programmes in NWFP, Punjab, Balochistan, Sindh, and these programmes were moving ahead successfully. 

"Government is focusing on the livestock sector and government as well as private sector can play important role," he said adding that the performance of all organizations pertaining to livestock will be enhanced. 

Country director UNDP Holing said that we would continue the consultation process on the PRSP11 and it was the big challenge to achieve the set targets.


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## Neo

ISLAMABAD (updated on: May 09, 2006, 18:24 PST): Pakistan is eyeing enhancement of co-operation with Kuwait in oil and petroleum sector during upcoming 'important' visit of Amir of Kuwait, Sheikh Sabah Al Ahmed Al Jaber Al Sabah, this month.

"It would be an honour for us to receive the Amir of Kuwait and we welcome him with open arms", Amanullah Khan Jadoon, Federal Petroleum Minister, told Kuwait news agency Kuna on Tuesday in Islamabad.

The Amir, heading a high-level delegation, is expected to arrive here on a three-day visit on May 19 for talks with President Pervez Musharraf and Prime Minister Shaukat Aziz, which would be followed by delegation level talks.

Amanullah Jadoon said co-operation in oil and petroleum sector would be focus in talks. Kuwait showed special interest in Pakistan's South-western Gawadar port city that links it to central and East Asian countries.

Talks on building of an oil refinery in Gawadar is top of visit agenda, he added. Economic Co-ordination Committee of Cabinet last month approved setting up of US$2 billion mega oil refinery at Khalifa Point in Hub, Lasbela.

The refinery to be commissioned by 2010 would have a maximum refining capacity of 13 million tons of petroleum products which would be higher than the country's total existing capacity of 12.8 million tons.

Kuwaiti and Saudi companies will participate in bidding through international competitive bidding on Build On and Operate (BOO) basis.

The Minister hoped the visit will give impetus to co-operation between two countries in trade, economics, oil, and other sectors.

Kuwait and Pakistan share history of close and cordial relations that have seen steady growth over the years.

Pakistan's major suppliers are Kuwait, Saudi Arabia, & UAE and total oil imports amount to around $3 billion.

Two Kuwaiti companies, Bakri and Kuwait Petroleum Company (KPC), together provide around 90 percent of total oil imports.

Total oil imports range around 20 million tons, of which KPC meets 75 percent of high speed diesel and 25 percent of furnace oil. The remaining requirement is met through imports from Saudi Arabia, Kuna said.


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## Neo

ISLAMABAD (May 09 2006): Pakistan, Afghanistan, Tajikistan and Kyrgyzstan have agreed to trade electricity, but Kabul insists for finalisation of diversification of power import and wheeling charges against transit facility before processing further.

At a two-day energy ministers' conference, the international lender community, including the World Bank, ADB and IFC, also supported the regional electricity connectivity through Afghanistan, while a couple of electric companies showed interest to take part in the project.

The World Bank and United States Energy Association (USEA) were apparently very active to materialise any such deal, but they did not favour inclusion of Iran in the group.

"Afghanistan is ready to allow the transit of power through its territory, if allowed to tap in it and is given the wheeling charges," Dr Mohammad Jalil Shams, Afghanistan's deputy minister for energy and water, told the opening session of the conference.

Tajikistan and Kyrgyzstan confirmed that they have surplus electricity during summer season, and Pakistan said it required higher amount of electricity in this season.

The participants agreed to prepare a project structure and set up an entity comprising officials of the four countries to speed up the project and negotiate other technical and financial arrangements of the project.

Central and South Asian countries also expressed interest in electricity trade and installation of transmission system from both Tajikistan and Kyrgyzstan to Pakistan through Afghanistan to meet the increasing demand of power in Pakistan and Afghanistan. They agreed to chalk out a mechanism to implement the MoU already signed between Pakistan and Tajikistan regarding import of 1000 MW electricity to Pakistan.

International donors like World Bank, Asian Development Bank, Islamic Development Bank and USAID also supported the electricity trade between these countries and extended their full support for funding the transmission line from CAR to Pakistan through Afghanistan.

The conference has been organised by the Ministry of Water and Power. Federal Minister for Water and Power, Liaquat Ali Jatoi, chaired the conference. Deputy Prime Minister, Tajikistan, Assadullo Ghulomov, Omarov, Advisor to Prime Minister, Kyrgyz Republic, and Deputy Minister Administration Mohammad Jalil Shams of Islamic Republic of Afghanistan and representatives of international donors participated in the conference.

In his inaugural speech, Jatoi said that Pakistan government was fully committed to make all-out efforts to meet its power requirements and to provide cheaper electricity to all consumers. The Government recognises the importance of economical and surplus electricity from Central Asian Republics (CAR) is a viable option to meet the growing demand of electricity, which is presently registering an annual demand growth of over 10 percent.

While welcoming the delegates, Jatoi said that besides the deep-rooted friendship between the four countries, "we are bound together with common religious, social and cultural ties. Now time has come to fuel this relationship further with inter-trade activities."

He said that Pakistan was aggressively developing indigenous power potential, especially the hydel, which is economical. He acknowledged that the interest of the power surplus Central Asian countries to export electricity to Pakistan through Afghanistan as a great opportunity, and said that the conference would yield positive results and further provide opportunity to enhance regional bilateral and trilateral relations among these countries.

He apprised the participants that under the dynamic leadership of President Pervez Musharraf and economic vision of Prime Minister Shaukat Aziz, "Pakistan is on the path of rapid and unprecedented economic growth".

The Minister said that in the present international scenario, where the donors and foreign investors were eagerly willing to fund the regional electricity market development, he optimistically expects the success of regional electricity trade efforts. He said that a number of on-going hydel projects, having estimated capacity of 826 MW, are scheduled to be completed in 2008-09. Likewise, a number of other proposed hydel projects of 1993 MW are also under active consideration for 'Vision-2005', he added.

He hoped for a concrete roadmap and a policy framework for electricity trade as a result of this conference. Deputy Prime Minister of Tajikistan thanked the Government of Pakistan for holding the conference and extended fullest support to Pakistan for supplying cheaper energy through Afghanistan.

He said that this would provide a great opportunity to materialise supply of electricity to Pakistan as his country has great potential for producing sufficient electricity and is capable to export surplus electricity to Pakistan, and that both countries would get benefit of this trade.

Omorov Janybek, Advisor to Kyrgyz Republic PM, said that his country had unique opportunity to generate cheaper energy and to get a chance of making more investment in providing electricity to Pakistan, which would indeed enhance trade relations between the two countries.

Dr Shams, Minister of Afghanistan, thanked Pakistan for extending its utmost support for rebuilding of Afghanistan.

He said that his country was in need of electricity from Central Asian Countries and supported the idea of supplying electricity from CAR through Afghanistan. He viewed that the conference would yield positive results to make it possible to import electricity to Pakistan through his country. He also hoped for continuous support from Pakistan.

The representatives of the donors also supported the project and assured all-out technical and financial assistance for electricity trade among the Central and South Asian countries.


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## Neo

ISLAMABAD (May 09 2006): Prime Minister Shaukat Aziz on Monday said that the government is making focused efforts to encourage small and medium size industries in the rural and less developed areas of the country to provide economic opportunities and to improve the living standard of the people at the grassroots level.

Talking to Dr Senta Maria Anna Siller, who has been running a social welfare project in a Pakistani village, the Prime Minister said the government is promoting "one village one product" to encourage people to specialise in the production of goods most suitable to these areas. The Prime Minister said government has initiated a number of micro-finance facilities to help the people start small-scale ventures promoting handicraft, cottage industry and local skills.

He said such programmes are transforming the lives of people and added that women can particularly benefit from such schemes.

Dr Senta Maria Anna Biller informed the Prime Minister that she has been working at Thatta Ghulamka Dhiroka, District Okara since 1993 and has set up a small factory in the village to manufacture dolls and embroidered cards, which are sold domestically and exported to a number of European countries. She said the village has been completely transformed as a result of the income generated through the production and sale of these products.

Dr Senta Maria Anna Biller informed the Prime Minister that presently 120 women of Thatta Ghulamka Dhiroka District Okara and adjoining villages are employed in her factory. Shaukat Aziz appreciated Dr Senta Maria Anna Biller for her programme, assured her of government's support and said such programmes should be replicated in other villages also.


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## Neo

LAHORE (May 09 2006): Mecan Selmon, US Economic Commercial Officer, said that here on Monday that the United States was giving special attention to the promotion of SMEs sector in Pakistan, as this would give the required boost to the overall economy of the country.

She said this while talking to LCCI President, Shafqat Ali, here, according to LCCI's spokesman. The LCCI President Shafqat Ali, Senior Vice President Abdul Basit, Executive Committee Member Majid Abdullah, Secretary LCCI Mohammad Younas and Director Research and Development Department Dr Ghalib Atta were also present on the occasion.

The US Economic Officer said that her country always accords high priority to its trade relations with Pakistan and is finalising the 'Bilateral Investment Treaty' (BIT) to provide institutional framework for comprehensive economic partnership. "The BIT would also open the door for Free Trade Agreement between the two countries. The finalisation of BIT would enhance the volume of two-way trade. Hence, more employment and business activities would be generated," she added.

The LCCI President said that Pakistan and United States enjoy impressive trade ties. "Pakistan's exports to United States for the fiscal year 2004-05 were $3.4 billion as against $2.9 billion in 2003-04. Similarly, Pakistan's imports from the US also registered an increase from $0.7 billion in 2003-04 to $1.6 billion in 2004-05. The increase in mutual trade is an encouraging sign," he added.

LUNCH: Meanwhile, Regional Commissioner of Income Tax, Haji Ahmad, hosted a lunch for LCCI office-bearers and Executive Committee. Member CBR (Legal) Mumtaz Ahmad, LCCI President Shafqat Ali, Senior Vice-President Abdul Basit and Vice- President Aftab Ahmad Vohra were present on the occasion.

The Regional Commissioner urged the LCCI to help identify non-filers and be a part of CBR's campaign for widening the tax net. He that the Universal Assessment Scheme has started yielding results, as there is a quantum jump in the revenue collection.

The LCCI President said that Lahore Chamber would leave no stone unturned for helping CBR in its drive for revenue collection. While appreciating the change in the mindset of tax collectors, he said that the liaison of CBR officials with the business community is matchless and with the same level of co-operation, the remaining issues would also be resolved soon.


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## Neo

* 
ISLAMABAD (May 09 2006): Pakistan exports $250 million fans during the current year to different countries, which has exceeded the set target for the ongoing year. The industry is exploring the international market to increase its market share.

Demand of Pakistani fans to Middle East, Saudi Arabia, Australia, Iraq, Bangladesh and Russian have increased, PTV reported. England and Africa had also shown interest in Pakistani fans, the report added.

Presently, the fan industry is not only fulfilling the local demand but it has also increased its international market share due to its better quality.

Thousands of fan manufacturing units are operating in the country. About 90 percent of those are in Gujrat providing thousands of job opportunities to the people. President of Fan Industry Gujrat Anjum Rafique said the business-friendly policies of the government had helped the growth of the industry.
*
ISLAMABAD (May 09 2006): Pakistan exports $250 million fans during the current year to different countries, which has exceeded the set target for the ongoing year. The industry is exploring the international market to increase its market share.

Demand of Pakistani fans to Middle East, Saudi Arabia, Australia, Iraq, Bangladesh and Russian have increased, PTV reported. England and Africa had also shown interest in Pakistani fans, the report added.

Presently, the fan industry is not only fulfilling the local demand but it has also increased its international market share due to its better quality.

Thousands of fan manufacturing units are operating in the country. About 90 percent of those are in Gujrat providing thousands of job opportunities to the people. President of Fan Industry Gujrat Anjum Rafique said the business-friendly policies of the government had helped the growth of the industry.


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## Neo

BEIJING (May 09 2006): China will provide substantial support to Pakistan bringing the life in the quake-hit areas to normal, by rehabilitating and up-grading the 700-kilometre Karakoram Highway (KKH) as early as possible.

The necessary funding for undertaking this gigantic task has already been committed by the Chinese government said a senior official of the Chinese Commerce Ministry.

"We know the urgency of the matter, since the earthquake caused massive landsliding at various places on the KKH that provides main communication link promoting socio-economic activities in the area," the official said adding "there will be no delay on our part in starting the work."

Talking to APP here on Monday, he said "The Chinese side is actively working with the relevant authorities in Pakistan for preparing the feasibility report and other necessary infrastructure data".

Meanwhile, Pakistan's Ambassador to China, Salman Bashir said Pakistan is in the process of finalising the technical studies to upgrade the highway. He said, "we also envisage building tourist resorts, motels and fuelling stations to enable tourists to enjoy the natural splendour of the Northern Areas of Pakistan".

In an interview with China Highway Cultural magazine, he said the estimated cost of the up-gradation is over 400 million dollars. "We want to upgrade the KKH to serve both China and Pakistan in line with our vision for enhanced economic, trade and energy co-operation in the 21st Century and realise the goal of greater regional co-operation," the ambassador added.

Recently, he said both Pakistan and China have decided to enhance traffic on the KKH by starting a regular bus service with effect from June 1. A regular freight container service has already started from this month.

The KKH is the greatest symbol of Sino-Pak friendship also needed immediate up-gradation to cater traffic especially from China, Kazakhstan and Kyrgystan. The KKH has assumed great significance after the construction of Gwadar seaport, since all traffic to the Central Asia to be routed through it.


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## Neo

Tuesday May 09, 2006 

ISLAMABAD: Federal Minister for Water and Power Liaqet Jatoi has said that demand for electricity is increasing more than 10 per cent annually due to industrial progress in Pakistan. 
He was addressing two-day Central and Southern Asian Electric Trade Conference here on Monday. 

Delegates from Kirghizstan, Tajikistan and Afghanistan besides World Bank attended the conference. 

Jatoi said that cement, fertilizer and other industries were rapidly progressing in the country due to which power demand has increased over 10 per cent annually. 

We have opportunities to import electricity from Central Asian states Kyrghytan, Tajikistan and Afghanistan to meet increasing power need in the country, he added. 

Jatoi went on to say that electricity will be supplied every where in the country by 2007 under Roshan Pakistan program. 

He asked World Bank, Asia Bank and Islamic Bank to provide capital for the investment in hydropower sector in Pakistan because there are great opportunities of generating electricity through hydropower in the country. 

The Minister said that Diamir Bhasha Dam has been inaugurated in this regard, which will generate 4500 MW. 

He noted that Central Asian states can get transit trade benefit after the completion of Gwadar Port. 

Jatoi observed that countryÃ¢â¬â¢s economy was rapidly progressing and GDP reaches 8 per cent due to governmentÃ¢â¬â¢s successful policies.


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## Neo

Tuesday, May 09, 2006 

KARACHI: Lap joint modification work on the first Boeing 737 aircraft is underway at Pakistan International Airlines (PIA) engineering department. 

According to a press release on Monday, due to indigenous efforts, PIA would save an amount in terms of labour cost per aircraft $100000, while approximate 15 days saving and a total saving per aircraft will come around $300000. After completion of this modification, PIA will be able to sell this expertise to other airlines of the world and earn valuable foreign exchange, it added. 

Boeing during their continual in-service research for development discovered invisible cracks on the Lap-Joint areas of aircraft B-737. Boeing has necessitated modification to the areas identified critical prior to accumulation of 50,000 Flight cycles on all B-737 aircraft worldwide. 

Boeing 737 aircraft were inducted in PIA fleet 1985 as a regional commuter. Due to short hop flights, frequent take off, and landings, the aircraft accumulates a high number of flight cycles. Currently PIA B737 aircraft are approaching 50,000 flight cycles.


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## Neo

Tuesday, May 09, 2006 

By Maryam Hussain

ISLAMABAD: Pakistan suffered an exchange loss of over Rs 60 billion in the post nuclear test period from May 1998 upto June 2001 on account of open market operations including currency swaps, says the Auditor General of Pakistan. This needs to be explained, the AG will say before the Public Accounts Committee (PAC) of Parliament in testimony today (Tuesday).

The AGP claims that the State Bank of Pakistan (SBP) has made a startling disclosure after 8 years before the PAC that the nuclear tests of May 28, 1998, cost the taxpayers of Pakistan about Rs 22 billion on account of purchase of dollars from the open market at much higher than the then market rates. The SBP admits that following Prime Minister Nawaz SharifÃ¢â¬â¢s decision to freeze foreign currency accounts and subsequent economic sanctions of G-7 countries, the Finance Ministry under Sartaj Aziz approved the buying of dollars at much higher rates than those prevailing in the market to maintain reserves and pay foreign debt to avoid default on debt payments.

Sources told Daily Times that top SBP bosses have for the first time ever confessed in writing to the PAC that about $14billion were purchased at much higher than market rates during 1998-2004 which resulted in a collective loss of about Rs20 billion. Reportedly, upto Rs 2 per dollar were paid over and above the market rate of a dollar.

These dollars were purchased from some powerful industrial and business groups of Karachi, private banks and Dubai-based parties, and they were paid about Rs 20 billion in addition to the conversion rate of dollars purchased. Even after so many years, SBP is still reluctant to disclose the names of these groups and dealers, say insiders.

The policy of Nawaz Sharif to start buying dollars from the open market at much higher than market rates is said to have continued until 2004. While Shaukat Aziz was the finance minister, the SBP also purchased $12 billion from the market on higher than market rates, says the AGP Ã¢â¬â only about $2 billion were purchased from the market at above market rates during the Nawaz government, says the AGP.

To justify the buying of dollars at higher rates, the SBP bosses have claimed that Nawaz SharifÃ¢â¬â¢s decision to freeze foreign currency bank accounts led to a drastic fall in remittances after the G-7 slapped sanctions on Pakistan. To maintain the required level of foreign reserves, the Finance Ministry approved buying dollars from the open market by paying a Rs 20 billion premium on these dollar purchases.


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## Neo

MANGO occupies second position after citrus in terms of area and production. Its output is low at 9-10 tons/ha, considerably less than the potential 20 tons/ha yield.

The problems of post-harvest losses include improper handling, immature fruit harvesting, and inadequate transport and storage facilities. Mango faces extreme price fluctuation due to seasonal and the perishable nature of fruit. Being highly perishable, it has to be sold and consumed in a shorter period of time.

It is found that the majority 75 per cent contractors harvest the fruit with long sticks in a Ã¢â¬ËJholiÃ¢â¬â¢ - locally-made bag. Through this method, there are a lot of chances of fruit getting dropped on the ground. While 25 per cent use a similar bag with a cutting blade.

Handling operations are carried out immediately after harvesting as a practice rather than keeping the fruit for 24 to 48 hours prior to packing. Immediate handling after harvest gives a longer period for marketing and subsequent retailing and provides consumer better quality fruit. About five labourers are needed for handling one truckload in a day. The daily average cost of labour ranges from Rs80 to 100 depending on the availability and work efficiency of labour.

Grading: All respondents (according to a survey) do the grading to fetch better price of their produce. Results also show that the majority of contractors, 74 per cent made three grades: Special, Ã¢â¬ËAÃ¢â¬â¢ and Ã¢â¬ËBÃ¢â¬â¢ grades. For Special grade, top quality mangoes are selected and packed separately. This quality of mango is normally bought by exporters.

The other two grades Ã¢â¬ËAÃ¢â¬â¢ and Ã¢â¬ËBÃ¢â¬â¢ are usually sold in open auction in wholesale and terminal markets and supplied to inter-regional markets. It is observed during the survey that whenever un-graded mangoes of any variety are presented for sale, these could not achieve a higher price than grade Ã¢â¬ËBÃ¢â¬â¢ mangoes. Contractors report that about two experienced labourers are needed for grading one truckload in a day. The daily cost of labour ranges from Rs120 to 150.

Packing: Careful packing of mango is necessary to keep the fruit in place with minimum shaking. The fruit is normally packed in layers in crates and in each layer fruit is packed alternately placing the beak of one mango in between the shoulders of two mangoes. This method of packing is easy and quick to follow. This also provides enough room to each individual fruit without compressing it.

About 95 per cent respondents in the survey reported that they use traditional wooden crates in packing. The average weight per crate of mango is about 12 to 13kg, but the number of fruits per crate varies by grade and from variety to variety. It is observed that five per cent contractors bring mango in gunny bags of 100kg weight and unload these bags like wheat grain on auction floor thus damaging the fruit with high wastage rate.

Ripening: Mango storage for ripening should be done in a room with special features. It should be air-tight and warm. This helps in ripening the fruit uniformly and quickly. Contractors pack mango in crates and use chemical locally called Ã¢â¬ËKarpetÃ¢â¬â¢ for quick ripening.

Mostly chemical is used when the fruit is supplied at long distance markets. In local markets, the wholesalers purchase mango and pack again with chemical for ripening. Wholesalers use traditional method for ripening, pack in mud pitcher locally called Ã¢â¬ËMuttÃ¢â¬â¢. Through this method, wholesalers save money on crates for packing time to time because mud pitcher can be used several times and even in subsequent seasons. Mangoes are mostly ripened with four to five days.

Information collected from the contractors and analysis helped in assessing the post-harvest losses of mango on per acre basis. According to estimates, the total post-harvest losses are recorded at 27.51 crates per acre during the mango season 2004-05, including 12.78 crates in harvesting, 2.38 in handling, 0.44 in packing, 1.11 in loading, 6.63 in transportation, 2.30 in unloading and 1.87 in late auction.

The value of post-harvest losses is calculated on per acre basis. Total losses are recorded at Rs4,183 per acre including Rs1,943/acre in harvesting, Rs362/acre in handling, Rs67/acre in packing, Rs169/acre in loading, Rs1,008/acre in transportation, Rs350/acre in unloading and Rs284/acre in late auction (table 1).

Value of post-harvest loss in Sindh: The post-harvest loss of mango in Sindh during 2004-05 is estimated at 27.5 crates per acre.

Conclusion and recommendations: The main purpose of this study was to estimate post-harvest losses of mango during the 2004-05 seasons. In all 100 contractors were interviewed. The study findings reveal that contractors usually harvest immature fruit in the early season and over-mature at the end of the season to obtain higher prices.

In both the circumstances external appearance of the fruit is made attractive by forced ripening in early season, whereas it is delayed by excessive irrigation in late season.

Careless harvesting and rough handling bruise and scar the skin, thus reducing quality and market price. Such damage does not attract international buyer thus bringing less profit in export proceeds and also earns bad name for the country.

Post-harvest losses of mango are estimated at 6.94 per cent of the total production. The highest loss accounted 3.22 per cent in harvesting followed by 1.67 per cent in transportation, 0.60 per cent in handling, 0.58 per cent in unloading, 0.47 per cent in late auction, 0.28 per cent in unloading and 0.11 per cent in packing.

However, it is estimated that an average contractor lost Rs4,183 per acre during 2004-05. The value of post-harvest losses of mango is estimated at Rs486.506 million in Sindh and Rs1,064.939 million in Pakistan.

The main constraints identified are lack of infrastructural facilities, knowledge and information among farmers. Infrastructural development is normally a government issue, while the problem of lack of information and knowledge can be overcome by various forms of training programmes and information availability. Information on various post-harvest technologies is complemented by prioritized research and development.

About 46 per cent of the total post-harvest losses occur due to traditional method of harvesting. These losses may be overcome through adoption of modern technology for mango harvesting.

However farmers consider that the post-harvest losses of mango are inevitable. In this connection the Agriculture Department should take concrete steps to inform farmers about the benefit of reducing the post-harvest losses and help them understand that there are effective ways to reduce loss and increase income.

There is need to improve the existing harvesting, grading and packing and the presentation method. In addition, the government needs to provide basic infrastructure like storage, handling, grading, packing, transport and marketing facilities and technical expertise. This could be carried out by the public and private sectors.


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## Neo

QUETTA, May 8: Balochistan Chief Minister Jam Mir Mohammad Yousuf has urged local and foreign investors to avail tremendous opportunities offered by the province in various sectors.

Speaking at the opening session of the two-day international seminar on Ã¢â¬ÅEconomic development strategies for Balochistan,Ã¢â¬Â the chief minister identified health, education, mineral, livestock, agriculture etc., as potential sectors for making investment and said that the government would extend every help in this regard.

Ã¢â¬ÅWe are paying full attention to the health, education and developing infrastructure to pave the way for foreign and local investment in the province,Ã¢â¬Â Yousuf added.

The seminar was jointly organised by Balochistan University of Information Technology & Management Sciences and Hanns Seidel Foundation, Islamabad. Renowned economic experts and scholars from Germany, China, Iran, Oman, Russia and Pakistan were participating in the seminar.

Mr Yousuf said that the government was giving top priority to mega projects and socio-economic development of the province and was also implementing comprehensive policies to explore natural resources of the province.

He said that Balochistan, bordering with Iran and Afghanistan, was enjoying great importance due to its geo-political strategic location and having long coastline all across the Arabian Sea would prove a gateway of industrial and economic activities in future. Ã¢â¬ÅIt would also become a corridor for central Asian states to access the warm waters of the Indian Ocean,Ã¢â¬Â he added.

Referring to the mega projects launched by the federal government, he said that with the completion of Gwadar port, the province would prove to be the futureÃ¢â¬â¢s main gateway of Pakistan for boosting trade and economic ties with central Asian states and other countries of the region.

Ã¢â¬ÅGwadar Port would prove a multidimensional centre and would play a vital role in trade linking between South and Central Asia and rest of the world,Ã¢â¬Â Jam Yousuf said and added that it would also help in development of the entire region.

Jam Yousuf said that government always welcomed healthy and positive criticism believing that difference of opinion was part of the democracy but the elements chosen path of violence for the achievement of their goals could not be accepted.

BUITMS Vice-Chancellor Dr Mohammad Abbas Chaudhary in his welcome address highlighted the significance of mega projects in the economic development of the province and said that besides Gwadar port, Pakistan should have built more such ports along with the coastline of Balochistan.


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## Neo

RAWALPINDI: May 09, 2006

President General Pervez Musharraf on Tuesday pledge bring about socio-economic development in the tribal areas through introduction of political and administrative reforms, aimed at opening up economic opportunities curbing extremism and mainstreaming the region.

Chairing a meeting, convened on an all-encompassing approach for paving the way for long-term development of the federally administered tribal areas, the President also reiterated the governments commitment to reforming and revitalising the administrative system.

Prime Minister Shaukat Aziz also attended the meeting, which deliberated on a host of measures to address extremism and terrorism through fast-track economic development of the people.

The meeting reviewed measures aimed at strengthening the administrative system, political structure and development of the areas.

The holistic strategy encompasses a three-pronged approach, including administrative, political and economic.

"The majority of people in the tribal areas are moderate and pro- development - but they have been held hostage by a handful of extremists we to encourage the progressive people to come forward through employment generation, better education and health facilities that is the way forward sustainable progress," said the President.

He particularly highlighted the importance of special economic opportunity zones and these would help generate employment and economic activities at the grassroot level.


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## Neo

ISLAMABAD (May 09 2006): The government is likely to club three Chinese companies for the award of 969 MW Neelam-Jhelum hydropower project, which has already been delayed due to the slackness of Water and Power Ministry.

Sources told Business Recorder that three Chinese firms, CWE (NJ) and the CGGC-CMEC consortium, which were both in competition to take the project, had approached the government's top leadership in this regard.

"The government has decided to award the Neelam-Jhelum project contract to those three companies, which have already submitted their bids," said a top Wapda official.

The project was initially approved by Ecnec on December 31, 1989 with the cost of Rs 15.012 billion, which was later revised to Rs 84.5 billion, with Foreign exchange component (FEC) of Rs 46,667.70 million. Local component of the cost was to be met from Wapda's own resources and FEC through foreign aid.

The estimate was again revised to Rs 95.36 billion. Wapda invited expressions of interest in June 2002. But the process was abandoned because of unsatisfactory response.

Subsequently, Wapda started entertaining unsolicited proposals, as a result of which, 13 companies submitted their documents, out of which Wapda short-listed four Chinese companies.

The early completion of the Neelam-Jhelum hydropower project is very necessary, as otherwise India might take lead in using the Indus water if it completes the Kinshanganga project, under Indus Waters Treaty 1960, prior to Pakistan.

In February last year, the Economic Co-ordination Committee (ECC) of the Cabinet, had authorised the Finance Division to issue sovereign guarantee for raising the supplier's credit, as a special case, to expedite implementation of the project.

Sources said that CGGC-CMEC consortium had not submitted tender security and was also deficient in other areas. However, CWE (NJ), a joint venture, while providing tender security, has based its tender on buyer's credit to meet the foreign currency exchange requirement of the project instead of supplier's credit.

On the recommendations of the Ministry of Water and Power, the ECC changed the financing terms, from the supplier's credit to bidder's credit.

However, at a later stage, Wapda, Ministry of Water and Power and Nespak rejected the bid documents as per provision of the tender terms.

Sources said that the government is now ready to award the contract jointly to the three companies, for which a Memorandum of Understanding (MoU) is likely to be signed during the forthcoming visit of President Pervez Musharraf to Beijing.

They said that a French firm, Vincy, was also interested in getting the project, for which tender date was extended twice to accommodate it. They added that the company was seeking amendments in the bidding documents, especially with reference to the 'arbitration clause', but did not apply by due date. "The project is of a sensitive nature for Pakistan, as India is constructing 330MW Kinshanganga hydroelectric power project on river Neelum in occupied Kashmir, and any further delay would be considered as criminal negligence," sources said.


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## Neo

*ISLAMABAD : Prime Minister Shaukat Aziz has reiterated the governmentÃ¢â¬â¢s commitment to bring about a meaningful change in the life of people of Balochistan. *


He was talking with former prime minister Mir Zafarullah Khan Jamali, who called on him here on Sunday at the Prime MinisterÃ¢â¬â¢s House. They also discussed the domestic political situation and the partyÃ¢â¬â¢s internal matters. 


Highlighting the importance of development projects in Balochistan, Prime Minister Aziz said that the government was investing Rs140 billion in mega projects in the province, adding that the government had allocated 56 per cent of the Khushaal Programme Fund for benefiting the people at the grassroots level. 


The province would be totally transformed after the completion of the Gwadar port, he said. 


The PML, Mr Aziz said, had a democratic ethos and it would emerge as a more united, stronger, coherent and democratic party after party elections scheduled to be held in August. 


He said that real democracy in the country was impossible if political parties themselves did not go implement democracy in their own ranks. 

Stressing the need for re-organising the ruling PML, he said that the party polls would enable the party to contest the electoral arena in 2007 with confidence, adding that it was equally important to streamline and expand the partyÃ¢â¬â¢s membership. 


Mir Zafarullah welcomed the prime ministerÃ¢â¬â¢s decision to incorporate the partyÃ¢â¬â¢s inputs in the next budget and said it would make the exercise of budget making more realistic, people-friendly and balanced. Prime Minister Aziz said Sunday that the government was keen to promote democratic culture in cooperation with the opposition. 


He was talking to federal Minister for Political Affairs Amir Muqaam here on Sunday at the Prime MinisterÃ¢â¬â¢s House. 

The Prime Minister said the government expected the opposition and the media to help the government to strengthen democratic institutions and promote politics of tolerance. 


He directed Amir Muqaam to closely monitor the performance of federal government departments in the NWFP, making them more efficient and responsive to public needs. 

The federal Minister for Information and Broadcasting Mohammad Ali Durrani also attended the meeting.


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## Neo

*Panel set up for 1000mw Tajikistan-Pakistan grid* 
ISLAMABAD (May 10 2006): Pakistan, Afghanistan, Tajikistan and Kyrgyztan have agreed to form a working group for materialising transmission of 1000 MW electricity from Tajikistan to Pakistan through private sector, but Water and Power Minister Liaquat Ali Jatoi said that security of 900 km transmission line in Afghanistan was a valid concern.

The two-day Central Asia and South Asia electricity trade conference, which concluded on Tuesday, was closely monitored by US State Department, USAID and United States Energy Association (USEA).

The conference was also attended by delegates from Asian Development Bank, World Bank, Islamic Development Bank, International Finance Corporation, Japan Bank for International Co-operation and the private sector (Rao, UES and AES).

The transmission line should be routed through Pul-e-Khumri (Jalalabad) via Kabul to Pakistan. An official statement, which was changed several times on the insistence of the donors and participating countries, said that the conference deliberated upon the demand-supply situation, infrastructure needed for transmission of electricity from Central Asian to South Asian states, commercial arrangements, elements of electricity pricing, financing structure, possible risks and risk management.

The first phase of the trade pertains to 1000 MW power import from Tajikistan to Pakistan through Afghanistan and develop the necessary physical infrastructure, such as the transmission line, institutional and legal framework in the shortest possible time, the statement said.

It was also agreed that surplus power, from Kyrgyz Republic could also be transmitted through this transmission line by suitable interconnections. However, this proposal could not be finalised.

For this purpose, the working group, comprising Shabbir Chaudhary, CEO, NTDC (Pakistan), Sulimonov Akram Rahimovich, Deputy Minister of Energy and Saidov Siroziddin, Deputy Chairman of Barki, Tajik (Tajikistan), Engineer Ghulam Rabani, Advisor Ministry of Energy and Water, Afghanistan, Ilias Dadarov, Head of National Grid Company, Kyrgyz Republic was formed.

According to the statement, IFIs will provide support to hire a consultant with suitable experience of handling such energy trade projects to help identify the required studies, (technical, financial, social, environment, legal, etc.

The IFIs will also prepare draft 'Terms of Reference' (ToRs) for different feasibility studies, recommend institutional structure, and propose an action plan.

The World Bank has been nominated by IFIs as focal institution, whereas the IFIs would finance the expert consultant who would be hired by June 15, 2006.

"The offer of USAID/SARI and US State Department to support cross-border energy trade initiatives was greatly acknowledged and it was agreed that it would be phased in and co-ordinated with the working group," the statement said.

At the conclusion of the conference, Jatoi did not give the timeframe for the completion of the project, but said that the project would be completed as early as possible.

He said that the donors and private sector discussed the project from every aspect, including security of transmission line, and added that it was feasible only after Afghan government gave concrete assurance pertaining to the security of the transmission line.


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## Neo

ISLAMABAD (May 10 2006): Pakistan would seek supply of oil from Kuwait at "subsidised" rates during the upcoming three-day visit of the Kuwaiti Amir Sheikh Sabah Al-Ahmed Al Jaber Al-Sabah, beginning from May 19.

Kuwait and three other oil-rich Gulf states - Saudi Arabia, UAE and Qatar had assured oil subsidies following the October 8 earthquake in Pakistan, private TV News channel reported.

Pakistan's total crude oil requirement is about 240,000 barrels per day. Of this, around 177,000 barrels are imported and the rest is produced locally. Saudi Arabia is the major oil supplier to Pakistan, with about 110,000 barrels of crude oil supply per day, while Dubai and Qatar export 60,000 barrels.


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## Neo

ISLAMABAD (May 10 2006): Pakistan will rely on the mounting foreign direct investment (FDI) and privatisation proceeds to settle the soaring current account deficit, expected to touch $7 billion by the end of the current fiscal year, and avoid buying dollars from the open market to control further devaluation of the rupee.

Besides, the government will also use $800 million raised from the Eurobond it floated in the international capital market and several World Bank (WB) and Asian Development Bank (ADB) disbursement for this purpose, Finance Ministry sources said on Tuesday.

At the Public Accounts Committee (PAC) meeting here on Tuesday, the Ministry admitted that the surging current account deficit was emerging as a nightmare for the country's economy. But a top official of the Ministry claimed that it had sufficient resources to settle the deficit and "there is nothing serious to be worried about".

"We are very comfortable with the cash flow...I don't see any reason for buying dollars from the open market (to bridge current account deficit)," Finance Ministry Secretary Tanveer Ali Agha told the PAC.

He said that FDI, privatisation proceeds and $800 million Pakistan had recently raised from Eurobond it floated in the world capital market would be utilised for bridging this gap.

He, however, did not mention whether these components-FDI, privatisation receipts and other resources-would be enough to bridge such a huge gap.

And, another question to be asked here was that whether the government could use privatisation proceeds for any purpose other than external debt retirement and poverty reduction.

Agha was responding to a member's query who asked as to how the government was planning to settle the surging current account deficit expected to go beyond $7 billion record level this fiscal.

Experts believe the government will have to do some thing 'out of the box' to bridge the gap if it wants to save the economy from external pressure and arrest currency devaluation.

Pakistan People's Party Parliamentarians (PPPP) MNA Qurban Ali Shah said: "What will happen (to the currency) if the government has to buy dollars (from the open market)?" The question put Agha in a bit of bother.

But the Finance Ministry Secretary was quick to reject the reservation, and replied: "There is absolutely no need of buying dollars."

*TRADE DEFICIT: *About trade deficit that is also climbing at a wild pace and is expected to go beyond imagination this year, Agha was optimistic that it was due to transition from an agrarian to industrial base the country's economy had undergone recently.The major component responsible for such a rapid rise in the trade deficit, Agha said, was high international oil prices that had forced Pakistan to pay $7 billion, instead of anticipated $3 billion.

And second largest chunk was the import of the machinery, followed by raw material, that the Secretary hoped would in turn gear up the development and generate employment. He added that only a small element in Pakistan's import was of consumer goods and it was nothing anyone should bother about.

*MLY PENSIONS OUT OF CIVILIAN BUDGET: *The Secretary Finance told the meeting that pensions to retired military officials were being paid out of the civilian budget since 2001-02.

Agha said Rs 28 billion, that was paid as military officials' pensions in 2001-02, had risen to Rs 35.6 billion this year.

He, however, rebutted a report that the Defence Ministry had asked for an additional Rs 61 billion against its budgetary allocations of Rs 324 billion for this fiscal year.


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## Neo

ISLAMABAD (May 10 2006): The government intends to allocate Rs 319 billion in the medium term development framework (MTDF) in the next fiscal year (2006-07), with major focus on social sector and infrastructure development.

According to official sources, the government has launched a number of projects for the welfare of people and improve their living conditions. The government, they said, was focusing on education, health and social sector development and would increase allocations under MTDF in the next financial year.

The sources added that the government had also launched various development projects in water, road, ports and airports sectors. They added that these projects would help achieve higher economic growth and create more employment opportunities for the people.

"We are nearer to seven percent gross domestic product (GDP) growth during the current financial year", they added. On water sector, they added that the Mangla raising project, launched at a cost of Rs 62 billion, would be completed by September 2007 and under the project, the level of the dam would be raised to 30 feet.

Karachi Water Supply Project (K-3), launched at a cost of rupees six billion, would be completed and operational by the end of this month, they added.

They said that lining of over 85,000 water courses at a cost of more than Rs 60 billion would benefit a larger number of farmers and help enhance agriculture productivity and increase the GDP growth.

The sources added that the government had decided to invest more on the road infrastructure and allocated Rs 24 billion for road projects and so far Rs 18 billion had been spent on the projects.

They further said that the government would ensure that Gwadar was linked with other parts of the country. The railways container yard would be completed by June 2007, they added.

About the priority projects, they said that Lyari Express Way, Karachi Northern Bye-pass, Makran costal Highway, Gwadar-Khuzdar Noumoredaro road, Lowari tunnel, greater water supply scheme, Mirani dam, greater Thal canal, Kachhi canal, and Diamer-Basha dam were some of the priority projects. The work on Lowari tunnel had started and the project would be completed by 2008.

Under the greater water scheme at a cost of rupees eight billion clean drinking water would be provided to people across the country in two years. The utilisation of PSDP allocations until December 2005 stood at Rs 76.178 billion (37.3 percent), which shows improvement in the implementation of development portfolio.

The size of the Federal PSDP, which used be around Rs 90 billion to Rs 100 billion only a few years back, had taken a massive jump during the last three years with Rs 204 billion allocated under the PSDP in 2005-06 financial year.

They said the PSDP-GDP ratio had increased from the previous 2.5 percent - 2.6 percent to current 3.8 percent, as the availability of funds improved owing to better revenue position and the economic momentum, which indicated that the economy was moving in the right direction. The utilisation of PSDP allocations during the last two fiscal years, ie 2003-04 and 2004-05, was 100 percent, they added. An amount of rupees five billion Khushhal Pakistan Fund, aimed at focussing on less developed areas, would be taken to the level of one billion-dollar fund, in which the DFID-UK and the World Bank are expected to contribute significantly.


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## Neo

ISLAMABAD (May 10 2006): The government is targeting 1 billion dollar pharmaceutical exports for next fiscal, which would be 15 times more against 61 million dollar of current fiscal year. Pakistan is currently exporting 61 million dollar pharmaceutical products that were only 39 million dollar in 2004-05.

"We are setting a target of 1 billion dollar for our pharmaceutical exports in upcoming fiscal and we hope we achieve it," Federal Health Minister, Muhammad Nasir Khan told a news conference here at the Ministry of Health.

He was flanked by secretary health, Syed Anwer Mehmood, Balochistan Health Minister, Hafiz Hamdullah and other senior officials of the ministry.

Briefing about the 'ambitious' target, the minister said country's pharmaceutical exports were zero few years back but the government with its 'commitment' has increased it from 39 million dollars last year to 61 million dollars this fiscal.

However, Nasir Khan did not explain how the government could meet this gigantic task in one year.

He said the government would soon put before the National Assembly three draft bills for legislation, one regarding control over the use of traditional medicines that will help in increasing country's pharmaceutical exports.

Briefing about the countrywide polio campaign, Nasir Khan said the government has kicked off three-day immunisation campaign from May 9 to target 16.5 million children that he hoped would make Pakistan a polio-free country this year.

As compared to last year in which 28 polio cases were reported, Khan said only two cases have so far been reported in 2006, one in Killa Abdullah (Balochistan) and the other in Dera Ismail Khan.

He said the campaign would be conducted in 49 districts, focusing on high risk districts where the chances of disease are greater. Nearly 60,033 polio teams will go door to door in the campaign to vaccinate children under the age of five year. The minister said the immunisation campaign would be launched in tribal areas as well and added they had no difficulty in conducting vaccination campaign in troubled areas.

Adding to Khan's remarks, the provincial minister said Balochistan was a polio-free area and religious leaders are on board with the government. "No matter if children have fever or diarrhea, they need to be given these polio drops during every round," Khan stressed and assured there was no risk of over dosing.

The minister categorically ruled out transmission of bird flu virus into humans. He said blood samples of 109 persons with apparent symptoms of avian influenza were collected and all of them have been found clear of pandemic. Khan said there was no official directive not to serve chicken dishes either in Presidency or Prime Minister Secretariat.


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## Neo

By Nasir Jamal

LAHORE, May 9: The high cost of bank credit is fast compelling the textile industry to shelve or put-on-hold plans for making further investment in import of machinery for capacity expansion. This would hurt PakistanÃ¢â¬â¢s ambitions to increase its share in the world textile trade which is expected to grow to a whopping $800 billion in 2014 from the existing $350 billion.

Ã¢â¬ÅThe local agents of foreign suppliers of textile machinery have not received any fresh orders for quite some time. Even large textile groups havenÃ¢â¬â¢t placed any new orders because of increasing cost of credit. The situation is retarding capital formation in this sector,Ã¢â¬Â a local representative of a foreign textile machinery supplier told Dawn on Tuesday.

It may be recalled that the countryÃ¢â¬â¢s textile industry has made an investment of $5 billion for expanding its production capacity in the last five years while the interest rates were as low as three to four per cent. However, more than 200 per cent increase in the credit cost, which consequently increased the financial charges of the mills, has now forced the industry to stop further investment.

A study conducted recently by the Lahore chamber of commerce and industryÃ¢â¬â¢s cell on WTO affairs reveals that Pakistan needs investment in new textile machinery in the range of $2 billion a year if it wishes to increase its share in the global textile trade to four per cent ($32 billion in an $800 billion export market) by 2014 from the current 2.7 per cent ($9.4 billion) in $350 billion export market).

The study says that the Indian textile planners are working to boost their share in the world textile trade to nine per cent ($72 billion) in $800 billion export market by 2014 from the current four per cent in $350 billion export market.

As the global textile export market is expected to expand to $800 billion in 2014, AsiaÃ¢â¬â¢s share is projected to rise to 75 per cent or $600 billion from the existing 54 per cent or $189 billion in current global trade of $350 billion.

Ã¢â¬ÅThis situation offers an excellent opportunity to the Pakistani textile sector to enhance its share in the global market to between four and five per cent in 2014,Ã¢â¬Â the study contends.

However, this does not appear to be happening because of slowdown in further investments in the sector owing to high cost of bank loans. Ã¢â¬ÅThere has been a reduction of 6.4 per cent in investment in textile machinery in terms of dollars this year as compared to the corresponding period last year. If inflation is also factored in, the drop in fresh investment in machinery will in the vicinity of 10-12 per cent,Ã¢â¬Â the study says. The scenario in the near future seems even bleaker with nobody placing fresh orders for the import of machinery.

Ã¢â¬ÅIf Pakistan is to attain its rightful position in the global textile export market, the present trend of continuous reduction in investment in new machinery will have to be reversed,Ã¢â¬Â the study says. Ã¢â¬ÅBut this negative trend cannot be reversed unless the government offers some incentives on the pattern of India,Ã¢â¬Â the industry sources said.

There is no denying the fact that the Pakistani textile industry is becoming uncompetitive vis-ÃÂ -vis India and Bangladesh because of their very low credit cost. While effective lending rate in Bangladesh is around seven per cent (five per cent base rate and two per cent bank spread), the effective interest rate in Pakistan is calculated to be 12.70 per cent (9.5 per cent KIBOR and 3.20 per cent bank spread).

Ã¢â¬ÅThe low interest rates in Bangladesh are encouraging their businessmen to start setting up basic textile (spinning and weaving) units to support their value added knitting and garments sectors despite the fact they do not produce cotton at all,Ã¢â¬Â said a leader of Pakistan Readymade Garments Manufacturers and Exporters Association (Prgmea).

The situation for the textile industry in India is even better than Bangladesh. Although the interest rate in India is eight per cent (six per cent base rate and two per cent bank spread), their effective cost of credit is only three per cent. It is because the Indian government reimburses five percentage points of the normal interest charged by the lending banks and other financial institutions on rupee-term loans back to the industry as an incentive under the Technology Up-gradation Fund Scheme (TUFS). The TUFS also offers an alternate option of five per cent fluctuation (interest and repayment) from the base rate on foreign currency loans,Ã¢â¬Â the textile industry sources said.

The Indian textile industry has made an investment of (Indian) Rs370 billion so far under the TUFS, which is projected to rise to Rs1,400 billion by 2010 with the export growing to $40 billion during the same period. Under the scheme, the Indian government has disbursed only Rs9.163 billion back to the industry.

The increased lending rates in Pakistan have already rendered the knitwear sector, sick. Many units have already closed down because of increased cost. The only way to save the rest of the industry, make it viable and competitive in the export market is to provide loans to the industry on reduced cost through the establishment of a time-bound fund on the lines of IndiaÃ¢â¬â¢s Technology Up-gradation Fund Scheme . This will help modernisation of the industry through technology up-gradation making the textile sector competitive in the global export market.


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## Neo

By Farhan Bokhari, Special to Gulf News

This week's meeting of energy ministers from Tajikistan, Kyrgyzstan, Afghanistan and Pakistan, could not have come at a better time for Islamabad's plans to oversee the supply of urgently needed new electricity supplies. 

Pakistan hopes that the two central Asian states would supply their surplus electricity via new transmission lines in Afghanistan exclusively by Pakistani consumers. 

The plan is chalked out on probable consumption of around four thousand megawatts of additional electricity by pakistan in the coming years. This can be attributed as an outcome of its economic recovery. Afghanistan will also benefit from this new transmission line in form of revenue through transit fees.

The plan is not exactly new. Policy makers in Pakistan for years have been playing around with the idea. 

However, this initiative could not take off in the past as the government was concerned of internal security conditions in Afghanistan. 

The issue remains unresolved even today. The truth remains that, there is considerable US interest backing this project as Washington is keen to bolster Afghanistan's political and economic outlook.

In the long run, such a cooperative venture would result in the consolidation of Afghanistan's outlook. This economic cooperation is bound to give hope for political cooperation as well. 

The challenge however is to make certain that this project gives impetus to this plan that has more than one good result. 

Change

First of all, it is crucial for security conditions to continue to improve in Afghanistan so that there is no threat to the transmission lines put in place. 

This requires the building up of an adequate security apparatus inside the war- torn country so that the infrastructure around the new project is adequately protected.

Secondly, it is important that Afghanistan's ruling regime work towards resolving some of the conflicts which undermine internal politics. 

It has been quite some time since the Afghan regime has had a reputation of being in position largely by virtue of its backing from the US. 

This in turn has created the impression of Afghanistan remaining a US driven country. 

US driven

Consequently, sections of Afghanistan's population rising in dissent against their very own regime is not a surprising outcome. 

Stability in Afghanistan has to come with freedom for political participation a necessary step to begin promoting 

vital security interests including matters such as the environment necessary to 

surround the new power transmission project.

In the long run, the success of the 

power transmission project can not be seen in isolation from other important matters. Promoting the need to develop new and stronger business ties between central Asian states, Afghanistan and Pakistan. 

The consolidation of such ties must hold the key to diverting the attention of these states more towards promotion of economic interests rather than dogmatic politics.

Last but not least, an important element to the transmission line project should not be ignored as discussions continued in Islamabad this week. 

There were reports of Pakistan seeking to build at least one other transmission line which would link Kyrgyzstan to Pakistan via China. 

This is a route that can not be ignored, especially as China is emerging as the world's leading economic giant.


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## Neo

Wednesday, May 10, 2006 

ISLAMABAD: Abacus International is set to bring the convenience of electronic ticketing (e-ticketing) to travellers and agents in the Pakistan. Beginning today, authorised Abacus-connected travel agencies in Pakistan will be able to issue e-tickets for their customers on board Pakistan International Airlines (PIA).

PIA will save as much as Rs 927 per ticket by adopting e-ticketing over the conventional way of printed and hand-written ticket-issuance. In addition, e-ticketing offers travellers with the ease of convenience and security while offering travel agents a more effective management of their customersÃ¢â¬â¢ schedules at the same time.

The roll-out of e-ticketing is an important step in the evolution and development of tourism in the region and will assist us to make significant headway into the Pakistan travel market. Ã¢â¬ÅWeÃ¢â¬â¢re proud to be the exclusive agent for PIA and with the added commitment of our travel partners, PakistanÃ¢â¬â¢s tourism industry is set to continue to grow,Ã¢â¬Â said Low. 

Ã¢â¬ÅAs e-ticketing continues to gain in popularity in Asia, airlines are increasingly seeing the direct benefits that this tool can offer them in terms of reaching out to the modern

traveller, whilst travellers are showing preference for the convenience of paperless travel.Ã¢â¬Â

E-ticketing is a real-time paperless method for airlines and travel agents to issue tickets. Individual ticket information is stored within the airlineÃ¢â¬â¢s reservation system and can be

retrieved electronically, reducing the amount of paper ticket inventory and hassle in re-issuance of misplaced printed tickets.

PIA senior vice president, marketing, Kamran Hasan said, Ã¢â¬ÅOver the past two years, we have been working closely with Abacus to implement e-ticketing, with this partnership representing another milestone for PIA. Switching to the e-ticketing system will strengthen PIAÃ¢â¬â¢s presence locally and internationally and we look forward to the positive feedback from agents and travelers alike.Ã¢â¬Â

Travel agents have also welcomed PIAÃ¢â¬â¢s move to e-ticketing. Ã¢â¬ÅThis is a major step forward in our vision of a paperless future,Ã¢â¬Â said Quality InternationalÃ¢â¬â¢s General Manager, Zaki Niazi.


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## Neo

*Countrywide hot spell enhances water situation in reservoirs*



Wednesday May 10, 2006 (0246 PST)








ISLAMABAD: An aerial view of the semi-dried Rawal Dam. Reservoirs in the country are drying up, as temperatures are soaring and there is little chance of significant rain for at least the next few months as predicated by the Met office.
http://www.pakistaniforces.com/forums/http://www.paktribune.com/news/topstories.phphttp://www.paktribune.com/news/print.php?id=143250http://www.paktribune.com/mypaktrib... spell enhances water situation in reservoirs
*ISLAMABAD: The current hot spell in the country has proved blessing in disguise for the nation as water situation in reservoirs has improved considerably. *


Indus River System Authority (IRSA) has claimed that inflow at the rim station has improved to 241000 Cusecs on May 8, 2006 therefore provinces are expected to receive their indented supplies, which is specified 1,10,000 Cusecs for Punjab, 76000 Cusecs for Sindh, 2700 Cusecs for NWFP and 3400 Cusecs for Balochistan. 
Moreover, it is expected that almost 32000 Cusecs water will be stored in Tarbela and Mangla reservoirs. The water situation was also reviewed in a meeting chaired by Mr. Liaquat Ali Jatoi, Federal Minister for Water and Power who urged on the provinces to keep in mind importance of national resource conversation while placing their indents with IRSA.


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## Neo

Wednesday May 10, 2006 

RAWALPINDI: Governor Punjab, Lt. Gen. (retd), Khalid Maqbool has underscored the need that agricultural scientist must find more ways, using techniques of biotechnology to develop inexpensive inputs and minimizing yield fluctuation caused by weather aberrations and pest epidemics while our drive for increased production must be based on providing rural based industry ultimately hinged upon development of skilled labour. 
He was addressing the 7th Convocation of University of Arid Agriculture, Rawalpindi (UAAR) on Tuesday. Among others Vice Chancellor of the University Prof. Dr. Khalid Mehmud Khan, faculty members, students, parents and elite of the city were present on the occasions. 

The Governor said that agriculture is very extensive low input industry in Pakistan having thinly spread marginal outputs. The new technologies must ensure that the demand for skilled labor increases faster than its supply and that food supply increases faster than its demand, making it a competitive entrepreneur. He further said that we have excellent opportunities today to achieve the goal of food, health, literacy and work for all in rural areas, provided we take advantage of power of both grass roots-level democratic institutions and the tools of information age. He said that a poor is poor because he is poor, he does not have assets, land or skills, hence he work as unskilled labour. Asset building and technological information and organization empowerment are therefore essential to add value to the time and work of the poor, adding that other universities must follow UAAR in this respect. 

The Governor stated that the recipe for poverty alleviation proposed by international organization is micro-enterprises supported by micro-credit. In this regard, the effort of UAAR in introducing micro-credit scheme as a non-banking organization has proved a great success and is acknowledged. This micro-credit has to go and grow further. There is no level playing field between skilled micro-entrepreneurship compared to just lending the money which yields low investment and high risk. For greater achievement in micro-credit scheme, as you so well know, the skill enhancement programme and making it self-sustaining is a key to success, he added. 

Recounting the achievements of the Punjab Government, the Governor informed that in Punjab the admissions in the universities has risen from 32000 to one lakh and the Ph.D. degree holders from 641 to 3000. Similarly, the Governor stated that the budget for higher education ha been enhanced from Rs. 1.8 billion to Rs. 9 billions while the number of computers in the universities has gone up from 666 to 13000 at present. The credit for farmers has increased from Rs. 30 billion to 100 billion. The Governor further informed that UAAR is to open its two sub campuses at Talagung and Koshab which is the manifestation of the Government to give more importance to agriculture sector by producing more agricultural scientists from the universities. 

Lt. Gen (retd), Khalid Maqbool stated that we have created an interactive environment among the educational institutions and being Chancellor he is personally interfacing with all the universities and the Higher Education Commission on regular basis. He further stated that we have taken all the stakeholders on board with a view to improve the quality of our education. The Governor said that he has strong faith in quality and hoped that our system will not only provide us with a deeper knowledge base but it will also be a source of greater employability and acceptability at international level. He congratulated the graduate students, proud parents and their teachers for this eve of success.


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## Neo

RAWALPINDI, May 9: President General Pervez Musharraf on Tuesday promised that Ã¢â¬ËfeasibleÃ¢â¬â¢ parts of Federally Administered Tribal Areas (Fata) would be made hub of economic activities. Chairing a meeting on matters relating to Fata here, he said economic zones would be built in the region at a cost of Rs10 billion.

Ã¢â¬ÅElements opposing development schemes will not be tolerated. We are determined to banish terrorism and militancy from our soil so that people of the tribal area can lead a prosperous life,Ã¢â¬Â the president said, adding that more uplift projects would be initiated in the region.

Prime Minister Shaukat Aziz, NWFP Governor Khalilur Rehman and Interior Minister Aftab Ahmad Khan Sherpao also attended the meeting.

Head of Fata Task Force Sahibzada Imtiaz briefed the meeting about political and administrative reorganisation of Fata. He identified feasible locations for building economic zones there. The prime minister promised sanction of required resources for construction of economic zones.

Ã¢â¬ÅThe process of reforms in country will go on and these will bring economic prosperity,Ã¢â¬Â President Musharraf remarked.

He said that development funds had been disbursed among Fata legislators on equal basis, adding that provision of gas, electricity, health, education and infrastructure would help trigger an era of progress and development in the region.

Ã¢â¬ÅPeople of Fata want progress of their neglected region. However, unfortunately, some elements are suppressing tribal (people) forcefully. The government will sternly deal with elements obstructing development projects,Ã¢â¬Â he warned.

He said the action to flush out foreign terrorists in South Waziristan Agency would continue.

INEXPENSIVE JUSTICE: Later, addressing a dinner hosted at the Aiwan-i-Sadr to mark the Supreme CourtÃ¢â¬â¢s golden jubilee celebrations, Gen Musharraf said the government was committed to providing inexpensive and timely justice to people at the grass-roots level and assured that judiciary and legal fraternity would be facilitated in the discharge of this responsibility.

Ã¢â¬ÅUltimately, improvement in governance and socio-economic development means people having access to justice which is easy, quick and inexpensive,Ã¢â¬Â he emphasised.

The president said the government had taken a number of steps to strengthen the institution of judiciary and provide the people with access to justice, including introduction of independent prosecution service and review of civil and criminal laws. He hoped these steps would help avert delay and remove procedural impediments in the way of speedy justice.

He also counted initiatives taken in recent years such as enactment of consumer protection laws, setting up of consumer courts, capacity building of judiciary and lawyers, encouragement of women to join judicial and legal profession and automation plan to facilitate communication.


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## Neo

From SHAIQ HUSSAIN

ISLAMABAD - With inauguration of Gwadar seaport scheduled for early June, top Saudi and Kuwaiti firms have started intensified lobbying for the construction of two billion dollars mega oil refinery near the port.
PakistanÃ¢â¬â¢s economic managers approved the setting up of oil refinery in Balochistan, last month. This mega project will be built in Hub district adjacent to the Gwadar seaport.

Ã¢â¬ÅGwadar seaport is expected to be inaugurated early next month but it has already become the hub of great economic activity with leading Saudi and Kuwaiti firms contending for the construction of mega oil refinery there,Ã¢â¬Â said the official sources here.

The sources said the Saudi and Kuwaiti firms would participate in the bidding through international competitive bidding on Build On and Operate (BOO) basis. Top Saudi leaders including King Abdullah had talked to Pakistani leadership as for their profound interest in Gwadar Port whereas Kuwaiti amir, who will reach Pakistan on May 19 on a three-day visit, would also discuss the matter in detail with President Pervez Musharraf, the sources said.
He said the refinery to be commissioned by 2010 would have a refining capacity of 13 million tons of petroleum products, which would be higher than the countryÃ¢â¬â¢s total existing capacity of 12.8 million tons.

Apart from keen interest shown by the Saudi and Kuwaiti firms in oil refinery, several companies from Dubai and China have also conveyed their keenness to Pakistani government in the operating rights of the Gwadar port, according to the official sources.

The sources said a Dubai-based firm is actively pursuing its dialogue with the government in this regard as it considers itself most suitable because of its understanding of operating the worldÃ¢â¬â¢s busy ports. However, he declined to name the firm.

On the other hand, China, the major financial contributor in the construction of Gwadar Port, was also keen that some Chinese company should have the rights of operating the new port, he added.

The sources said that many companies have submitted their bids for operations rights and the biding would be held in a free, fair and transparent manner.

To a question, the official said that Gwadar Port would begin handling commercial vessels in June. He added that the terminal facilities for container, general cargo and bulk cargo handling have already been established there.

The inauguration of Gwadar Port was delayed in the past due to precarious law and order in Balochistan but this time around the government was determined to go for it.


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## Neo

By Ihtasham ul Haque

ISLAMABAD, May 9: Budget planners have urged the government to offer increased wages and distribute land among deserving people from the next financial year to alleviate poverty. Sources said that planners also called for promoting small-scale enterprises and human development to effectively tackle poverty.

The Planning Commission outlined a number of new measures to ensure better income distribution and improved employment generation.

During various meetings recently chaired by President Pervez Musharraf and Prime Minister Shaukat Aziz, poverty had been one of the major topics of discussion, with both the leaders conceding that the issue had not been effectively tackled over the past six years.

They termed poverty and growing price hike a Ã¢â¬Åserious challengesÃ¢â¬Â and said it warranted a comprehensive strategy to achieve the desired results.

According to the Planning Commission, poverty was fast becoming an urban phenomena and needed to be checked to avoid pressure on national economy.

Ã¢â¬ÅWith increasing urbanisation expected in the coming decades, the number of poor in urban areas, mainly the unemployed and those engaged in the informal sector, will grow faster and thus turn poverty into an urban (phenomenon),Ã¢â¬Â says its new study.

Generally, it said, poverty was a result of many factors, including lack of productive resources to generate material wealth, illiteracy, prevalence of diseases, natural calamities such as floods, drought and man-made calamities.

The commission was of the view that poverty alleviation should be one of the major goals in the next 25 years. Experiences of various countries showed that poverty below 10 per cent Ã¢â¬Åbecomes a challenge and pockets of poverty remain because of social and cultural rigidities which can be reduced through integrated programmesÃ¢â¬Â.

Ã¢â¬ÅThe trend of worsening income distribution ought to be reversed and the Vision 2030 should, therefore, aim to further improve (the situation).Ã¢â¬Â

The share in the national income of poorest 20 per cent of the population ranged from six to 8.5 per cent in the past 50 years which needed to be increased to around eight to 10 per cent.

At the international level, an unequal economic and political partnership, as reflected in unfavourable terms of trade and other transactions for developing countries is also a major cause of poverty in developing countries.

Some cases of poverty are not direct, for example, traditions and norms which hinder effective utilisation and participation in income generating activities.

The study said that various poverty related targets need to be debated and made consistent with overall growth and investment, including social sector spending) targets to be finalised.

Alleviation of poverty by 2030 was the major gaol and experiences of various countries showed that poverty should be reduced through targeted programmes, it added.

The commission has termed it an Ã¢â¬ÅimperativeÃ¢â¬Â to manage more productive employment for nearly 30 million illiterate youth and bring them into the economic loop.


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## Neo

By Khaleeq Kiani

ISLAMABAD, May 9: The United States on Tuesday supported a proposed accord under which Pakistan will buy 4,000 megawatts of electricity from Tajikistan and Kygyzystan, using the Kabul route for the $500-800 million transmission line.

Officials of the USAID and the US embassy in Islamabad said the US State Department had already allocated funds and staff to promote electricity sales from the central Asian states to Pakistan and Afghanistan because the project would generate jobs and investment opportunities for people and companies and promote peace and stability in the region.

Ã¢â¬ÅThis kind of project (is a) good way for helping us achieve policy goals, to help Pakistan achieve its energy goals. I think it is a win-win situation for everyone involved,Ã¢â¬Â said Christian DeAngelis, deputy economic counsellor of the US embassy in Islamabad.

He said the project Ã¢â¬Åfits very well with the US foreign policy, which is to help build regional integration particularly between South and Central AsiaÃ¢â¬Â.

International financial institutions, including the World Bank, Asian Development Bank, Islamic Development Bank, Japan Bank for International Cooperation, International Finance Corporation and USAID also expressed their Ã¢â¬Åstrong desire to supportÃ¢â¬Â the project either through direct financing or guarantees and other risk management instruments, including insurance coverage.

The participants of the two-day Central Asia-South Asia (Casa) electricity trade constituted a working group comprising the four member states and the IFIs to institutionalise progress on political, legal, technical and financial aspects of the 765-kilometre transmission line from Central Asian States to Pakistan via Afghanistan.

The inclusion of US energy firm, AES Corporation, and Russian giant Rao-UES in the working group and future technical meetings was opposed by Pakistan and Afghanistan on the ground that the project should be carried out in a transparent manner and on international competitive basis and their involvement could give them an edge over other competing investors.

The security situation in Afghanistan and its financial capability to pay for the imported electricity was, however, the cause of common concern for all stakeholders, including the IFIs and private sector companies.

Afghan deputy minister for administration Jalil Shams, however, put the responsibility of security on participating countries by saying that a special security force could be put in place as part of the project to protect the transmission line and that Pakistan and Tajikistan would have their own interest to ensure peace and stability in Afghanistan.

In fact, he said, Kabul should be worried whether it would be paid the transit fee, adding that its bills for utilising imported electricity could be deducted from the transit fee.

Raghuveer Sharma, the World BankÃ¢â¬â¢s team leader for South Asia, on the other hand proposed that a part of financial assistance pledged by the international community for Afghanistan could be set aside in the trust fund of the World Bank to pay for KabulÃ¢â¬â¢s electricity consumption.

The power plants in Tajikistan and Kyrgyzstan from where the electricity is to be supplied are still to become a reality. When asked about the status of these plants, federal minister Liaquat Ali Jatoi said Tajikistan was waiting for funds but added: Ã¢â¬ÅLet me assure you the project would be implemented as soon as possibleÃ¢â¬Â.

A joint draft report prepared by the participants said that under the first phase of the trade 1,000-MW of electricity would be imported by Pakistan from Tajikistan via Kabul and Jalalabad.

Robyn McGuckin of the USAID said the agency had a regional programme Ã¢â¬Åset up by the State Department with precisely the mandate of promoting regional energy tradeÃ¢â¬Â.


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## Neo

ISLAMABAD (May 11 2006): Prime Minister Shaukat Aziz on Wednesday said Pakistan "is all set to become" a leading regional economic hub with a specific role as trade and energy corridor for China and Central Asian countries.

He listed reforms, continuity in policies, opening up of different sectors to private sector and location advantage as driving forces, which helped Pakistan turn into a successful economy from selective default state during last few years.

He was addressing Pakistan Development Forum 2006 as chief guest here on Wednesday. The forum was attended by almost all multinational donors and Pakistan's bilateral trade partners.

The prime minister said that PDF provides the government an opportunity to exchange ideas and experiences and share successes and challenges, retool thinking and sharpen the policies to take the country forward. He said that as Pakistan moved into the third millennium, PDF 2006 would lead it to a greater understanding of ways and means to expedite its pace for development and sustainable growth.

He recalled that last year Pakistan had faced one of the worst disasters of its history. He said that the earthquake of October 8, 2005 wreaked widespread devastation and enormous loss of life and property with extensive damage to economic assets, infrastructure and social service delivery.

Hundreds of schools, hospitals, government offices, roads and bridges were destroyed and more than 73000 people lost their lives. Over 120,000 were injured and nearly three million went shelterless, hundreds of post-earthquake tremors multiplied the shock and trauma.

The Prime Minister said that people took the catastrophe with grace and forbearance and demonstrated tremendous courage and resilience. The galvanised nation stepped forward and reflected the highest values of caring and sharing and provided help to their fellow citizens.

He said the government's 12-point national strategy for relief and reconstruction, compassion and generosity of the people of Pakistan, both at home and abroad, and invaluable support of countries across the globe, international community as well as development partners, especially the multinationals helped in smooth transition from relief to reconstruction, which has already begun.

He said that Pakistan commends and appreciates donors' steadfast support in measuring up to the challenges unfolded by the earthquake. He said the government was committed for permanent rehabilitation of the affected people and to provide them opportunities to live a happy life. He said what the donors and Pakistan did before can make the difference for the future.

He said that before turning to the forum, it was important to recall the government strive for progress and development that began some seven years ago.

He said some that seven years back, Pakistan's economy was fragile; balance of payments were highly vulnerable to external shocks; debt situation had worsened; foreign exchange reserves were not sufficient to finance even a few weeks of imports, and Pakistan's financial sovereignty and international rating agencies downgraded Pakistan to a selective default level.

He said that Pakistan worked extremely hard over the past seven years to implement deep and wide ranging reforms covering all elements of statecraft, unparalleled in any developing country, and achieved national renewal. He said that Pakistan's unwavering resolve to reform is manifested in Poverty Reduction Strategy Paper, Medium Term Development Framework (MTDF) and Vision 2030 for moving towards knowledge-based economy.

The Prime Minister said that Pakistan was engaged in painstaking effort to secure economic stability; strengthen democratic institutions; empower vulnerable segments of the society; engender development and decision-making process; stem rising tide for extremism and ensure better standards of living to the people to realise the Quaid Azam's vision of Pakistan as a prosperous, moderate, democratic, Islamic state.

He said persistent reforms and greater self-reliance had made Pakistan a fast growing economy in Asia, after China. He added that Pakistan's economic philosophy, based on deregulation, liberalisation, and privatisation; consistency, continuity and transparency of the policies and dynamism of the private sector had set Pakistan on a high growth trajectory. He said that stable fiscal and financial environment with price stability was raising investors' confidence.

He said that today Pakistan was fast emerging choice for the investors. He said the government was expecting highest ever foreign direct investment (FDI) despite devastating October 8 earthquake and the oil price surge. He said Pakistan was anticipating 6 to 8 percent growth for the next five to seven years.

The Prime Minister said the government's policies' focal point was massive social sector uplift to improve living standard of underprivileged class.

He said Pakistan's all social and economic indicators were showing positive trend, and poverty was on the decline from 32.1 percent to 25.4 percent, gross primary enrolment increased to 86 percent, immunisation of children moved to 83 percent, water supply coverage expanded to 39 percent and per capita income was expected to move up to $800 by end-June.

He said the critical lessons Pakistan learnt in the journey of success were overriding importance of holistic home-grown reforms and good governance.

He said that the extraordinary potential of the people and their efforts for a better tomorrow were matchless. He said that Pakistan's fully market-oriented economy was showing results as the government witnessed a major transformation during the last few years.

He said change was taking place all around and it was not only in physical structures such as infrastructure, logistics, supply chain, housing and the use of information and communication technology but also in the outlook, thought process, entrepreneurial regime and increasing professionalism.

He said that sobering array of challenges that confront Pakistan would sustain acceleration in growth within a band of 6 to 8 percent over 5 to 10 years, supply of assured and reasonably priced energy, adequate water resources and their distributional management, food security, bridging the skill gap, higher productivity and job creation.

He said the government's social challenges included more schools children, access to clean drinking water, sanitation and better health services, mainstreaming gender as equal partner in the development, and improving quality of life.

He said Pakistan realises that current century was not merely a chronological change but a new era of technological advancement. He said the scientific and technological process was profoundly influencing economics, politics, culture and the way of life and ushering the new paradigm that differ it from others by transitioning towards knowledge-based economies requiring global skills for the work force.

He said Pakistanis were not deterred by the enormity of the task, rather moving ahead step-by-step, brick-by-brick and were well on the way to meet the challenges upfront. He said Pakistan had moved beyond statements of intent on many fronts for leveraging locational advantage. He said Pakistan was located at confluence of three vital regions--South Asia, Central Asia, and West Asia --providing shortest access to the sea to the landlocked Central Asian countries and Western China.

He said it was uniquely positioned to bridgehead multiple corridors of co-operation between all three regions for energy, trade, transportation and tourism.

He added that Pakistan was developing Gwadar not only as a transhipment port but also as an energy port by establishing mega refineries and laying gas pipelines and pursuing multi-directional plan including harnessing alternative energy sources to ensure secure and reliable supplies for meeting Pakistan's growing energy needs.

He said Pakistan was undertaking construction of new water reservoirs to sustain high agriculture growth, ensure water supply for drinking and commercial use, generate hydropower and prepare ourselves for the challenges of global warming.


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Ground breaking of Diamer Basha Dam is the first step and work on other dams will commence soon. He said Pakistan would seek donors' assistance for mega water projects to achieve water security.

The Prime Minister noted that Pakistan was working on developing new technologies to increase productivity of land, sustainable use of genetic resources, production diversification and good agriculture practices to ensure sufficient food supplies for the people.

He said rapid movement of goods across north-south corridor at reasonable freight was essential for accelerated economic growth and to make the country more competitive in the international markets as well as providing access to Central Asia. infrastructure upgradation establishing state-of-the-art end-to-end supply chain and providing modern logistics along this corridor facilitating port-to-premises delivery are already underway improving our competitiveness.

He said the government has increased investment manifold in human capital, the most valuable asset, to equip them with global skills and to provide them appropriate education and healthcare. He said women were getting due place and importance in political and economic decision-making.

He said in the past the governments were judged on what they owned and how much they spent rather than the services they delivered, but today paradigm has changed and the government recognises the private sector as the main engine of growth and primary source of employment generation, and the government's role is restricted to formulation of policies and facilitate private sector.

He said it was government conviction that public-private sector partnerships were a cornerstone in delivering public services and for healthy competition all sectors of the economy were being opened up for investment and trade. He said the partnership was a success story as considerable progress has been made in key areas such as oil and gas, power generation. steel production, telecommunication, banking, information technology, micro finance.

He said Pakistan was gearing up its efforts to maximise contribution to infrastructure development and other avenues and now it was for the private sector to exploit the opportunities. He said the government understands that small and medium enterprises in the private sector were pivotal to push up growth, create employment and poverty alleviation.

The Prime Minister added that unleashing local growth capital can create a pool of resources for local entrepreneurs to set up small business and diversify the economic base. He aid micro finance, the new pillar of development, is yet another instrument to unleash the ideas and energies of local entrepreneurs with a potential to grow, to forge linkages with other business to drive the national economy forward.

Shaukat said development was a national responsibility which was being carried out with dignity and transparency. He said the government recognises the contributions of the civil society and NGOs in development.

He said: "Together we can rise by unleashing the potential of the private sector. Together we can build a smarter, peaceful, more vibrant and progressive Pakistan. It is our belief that Pakistan of today and tomorrow is not the Pakistan of yesterday. Pakistan of tomorrow will be the land of the hope and opportunities."

In his opening remarks, Dr Salman Shah said that Pakistan had truly laid the foundation for a robust and vibrant market economy, driven by a resurgent private sector, besides establishing and strengthening institutions required for a competitive and free market economy. The Adviser added that in the current fiscal year the government consolidated gains made over the last three years, and addressed challenges of economic recovery.

Accordingly, he added, the real GDP was targeted to grow by 7.0 percent, supported by 4.2 percent growth in agriculture, 12.0 percent growth in manufacturing and 6.5 percent growth in all other sectors. Salman said that the government's integrated policy and strategy was geared towards high growth, infrastructure and private sector development, improvement in service delivery, and good governance aligned with the MDGs.

He said the government was looking forward to achievement of a sound and stable economic and human development. He said that "we are also committed to fulfilling our goal" of providing quality education for all, ensuring access to safe and effective health services, reducing maternal and infant mortality rate, providing access to water and sanitation and achievement of the targets that were defined in the MDGs, PRSP and MTDF.

He said that major achievements included a strong economic recovery supported by a robust performance in industry, agriculture and services, extraordinary strengthening of domestic demand, reduction in fiscal deficit, a high double-digit growth in exports and imports, increased workers' remittances, stability in exchange rate, foreign exchange reserves, a sharp reduction in the public and external debt burden, accelerated privatisation programme, capital market strengthening and improved social and human development indicators.

He said the government had made considerable progress in rebuilding the lives of the quake affectees and was grateful to the development partners and others "who stood by us in this time of crisis". The emergency phase of the quake relief effort was changing to reconstruction and rehabilitation.

The Adviser said that the government was striving to further broaden the country's tax base in order to provide increased revenue for investment in infrastructure, health, and education. "Our industry and the manufacturing sector are performing better; construction and service sectors are making substantial contributions; and trend in foreign direct investment is quite positive in Pakistan, especially in the areas of oil and gas, telecommunications, financial services and information technology.


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ISLAMABAD (May 11 2006): Pakistan has witnessed $4.38 billion current account deficit during the third quarter of FY 2005-06 against $1.16 billion during the same period of the last fiscal year, depicting an increase of 277 percent or $3.22 billion, the State Bank of Pakistan (SBP) reported on Wednesday.

Owing to higher than expected trade deficit, the Finance Ministry after revising the current account deficit target set it at $5.137 billion (4.2 percent of the GDP) against budgeted target of $2.7 billion (2.19 percent of the GDP) for the current year. Notable point is that some two months ago the Finance Ministry revised the target at $5.137 billion. And now after a short span of time, the ministry on Wednesday at the Public Accounts Committee (PAC) meeting openly admitted that the deficit by the end of June would go beyond $7 billion mark, which indicates that the external pressure on the economy is mounting to an alarming level.

Economic managers on the other hand were not much perturbed, saying that Pakistan has sufficient resources in terms of foreign direct investment (FDI) inflow, privatisation proceeds, foreign donors aid and other heads to finance the soaring current account deficit. Provisional data released by the SBP showed that the trade deficit (in goods) jumped to $6.232 billion during July-March 2006 from just $3.326 billion during the same period of the last fiscal year. The trade deficit figures have been determined by using free-on-board value of imports and exports.

During the first nine months of FY 2006, goods imports stood at $18.24 billion, whereas exports amounted to $12.01 billion, thus, leaving a trade imbalance of $6.232 billion. During the same period of the last fiscal year, imports had valued $14.023 billion and exports stood at $10.697 billion, depicting a trade deficit of $3.326 billion.

The import bill during the period under review shot up not only because of higher prices of petroleum products, but also because of high import of food items, machinery and automobiles.

The services account also witnessed a large imbalance of $3.374 billion as inflows under this account stood at $2.71 billion, whereas outflows amounted to $6.084 billion.

Imbalance in services account was also witnessed at $2.417 billion during the period under review as compared to the same period of the last fiscal year, as inflows under this account stood at $2.465 billion and outflows at $4.88 billion.

The factors responsible for this huge deficit included higher outflows on account of transportation, travel, insurance, construction services, royalties and licence fees.

The combine imbalances in the trade and services were so large ($9.606 billion) in July-March 2006 that the current account turned negative despite a strong build-up in the current transfers.

Net current transfers during the period rose to $7.187 billion, from $6.362 billion in the corresponding period of the last fiscal year.

The data also revealed that the current transfers during the third quarter of this fiscal went up as Pakistan received $3.228 billion in workers' remittances during the period July-March 2006, up from $3.05 billion in the same period a year ago.

A big increase in foreign currency deposits held by the resident deposit holders also boosted current transfers. However, it declined to $198 million during the period under review as compared to $426 million in the corresponding period of the last fiscal year primarily because of stable rupee.

The rupee kept its value stable against the US dollar during the period providing less incentive to those willing to maintain foreign currency deposits.


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ISLAMABAD (May 11 2006): Prime Minister Shaukat Aziz has expressed satisfaction over the overall economic situation in the country and growing strength of the economy during the current fiscal year.

The prime minister was chairing the Fiscal Monetary Board meeting at the Prime Minister House here on Wednesday. The Board was informed that economy is likely to grow in the range of 6.5 percent to 7 percent during 2005-06.

It was also informed that the declining trend in inflation is likely to continue in May with inflation expected to be around 6 percent on year-on-year basis. The average inflation for the year is likely to be slightly less than 8 percent.

The Board reviewed recent development in external sector at length and expressed satisfaction, but at the same time asked the concerned authorities to remain vigilant.

In particular, the Board was informed that during the first nine months (July-March) of the current fiscal year, trade deficit stood at $8.62 billion as against $4.26 billion in the same period of the last year.

The trade deficit increased by $3.36 billion in the first nine months of the year. The Board was informed that 41.5 percent contribution to the rise in trade deficit came from the petroleum group followed by 21.5 percent from Machinery group, and 11.9 percent from Iron, steel and scrap.

Almost 75 percent contribution to the rise in trade deficit came from these three groups. Consumer durable, including road motor vehicles accounted for only 9.2 percent to the rise in trade deficit this year.

The Board was informed that the government has continued to maintain fiscal discipline, a press release issued here said.

The overall fiscal deficit during the first nine months (July-March) of the current fiscal year remained at 3 percent of the GDP.

The Board highly appreciated the successful floatation of 10- and 30-year Bond worth $800 million at highly competitive areas. This shows the confidence of the international investors on the current and future prospects of Pakistan's economy.

Commerce Minister, Adviser to Prime Minister on Finance, Secretary General, Ministry of Finance, Governor of the State Bank of Pakistan, Deputy Chairman, Planning Commission, Principle Secretary to the Prime Minister, Secretary, Finance and Economic Adviser, Ministry of Finance attended the meeting.


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ISLAMABAD (May 11 2006): Pakistan's GDP and other national accounts from now onwards will be released on quarterly basis in accordance with the International Monetary Fund (IMF)'s General Data Dissemination System and Special Data Dissemination Standard.

State Bank of Pakistan (SBP) Statistics Department's joint director, Dr Ishaque Ahmad Ansari said on Wednesday while talking to a private TV channel.

He said that the work was underway for the release of gross domestic product (GDP) on quarterly basis, which would help provide country's economic picture in a better way.

Foreign investment in Pakistan was fast picking up since SBP went on collecting and presenting economic data in accordance with the IMF standards, he added.

He said that presently the compilers of data and its users were not working in co-ordination. However, SBP was now endeavouring for establishing a liaison between the data compilers and data users, he added.

He said the SBP was releasing data as per special data dissemination standard and this was for the first time that a data reserve template had been made.


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RAWALPINDI (May 11 2006): President General Pervez Musharraf on Wednesday emphasised on fast track facilitation of foreign investment and early removal of impediments in the way of higher levels of international investment to ensure Pakistan's rapid industrial development.

"We must set a shortest timeframe between an investor's expression of interest and the government's response in terms of facilitation for commencement of the project", he said at a meeting here.

Prime Minister Shaukat Aziz and senior government functionaries attended the meeting, which reviewed the progress on decisions taken at a similar meeting held on February 16, as part of the government's efforts to evolve an enabling environment for investors.

"Pakistan offers a lot to international investors not only in respect of meeting local requirements but also as the country destined to serve as a trade corridor and an industrial base for export to regional countries including Central Asia, South Asia, the Gulf, and China".

He noted with satisfaction that foreign direct investment (FDI) this year would touch $3 billion, but underscored that regular follow-ups on implementation of the policies was imperative to set the pace for industrial development.

"We must make the most of the growing international confidence in our economic growth and policies. A sustained inflow of investment will help Pakistan maintain its higher growth as well as stem poverty through massive employment generation," he stated.

"While, we will continue to strive for higher growth in the agrarian sector, we must go for fast track industrialisation", he said, identifying communication, transportation, telecommunication, construction, information technology, energy exploration and supply etc, as some of the most promising sectors for investment.

Prime Minister Shaukat Aziz said the government has offered level playing field to local and foreign entrepreneurs and has also ensured legal protection to their business.

He said the upward trend in the volume of FDI speaks of growing international confidence in Pakistan's business climate and consistency and continuity of its economic and fiscal policies.

Later, Minister for Investment Umar Ahmed Ghumman, told newsmen that during the meeting the President said that in view of the tremendous interest being shown by foreign entrepreneurs it was imperative that all related government departments geared up and strived for a prompt response.

"The President was clear in his message that response should be efficient, effective and constructive so that foreign entrepreneurs do not face any delay".

He said that a mechanism was being evolved for timely facilitation of foreign investors so that Pakistan not only should meet its growing requirements but also serve as a gateway between the Gulf countries and Western parts of China and the region.

Ghumman said that the Board of Investment is responsible for attracting more investment into the country, and added that top entrepreneurs from Gulf countries, including Dubai Ports World, would shortly be visiting Pakistan.

Pakistan, he said, "is looking forward to enhance oil refining capacity" by setting up refining facilities in Gwadar. "There would be oil and gas pipelines, a network of communications, to make Pakistan and energy corridor, and today's meeting reflects Pakistan's commitment to facilitating investors at the highest level."

The meeting was attended by Minster for Industries and Special Initiatives Jahangir Khan Tareen, Minister of State for Investment Umar Ahmed Ghumman, Deputy Chairman Planning Commission, Chairman Central Board of Revenue Abdullah Yousaf and other senior officials.


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LAHORE (May 11 2006): The budget 2006-07 would be growth-oriented, pro-business and poor-friendly, as the government has evolved a solid strategy to tackle all the major issues, including inflation, high mark-up rates and poverty.

Senator Kamil Ali Agha, Minister of State for Parliamentary Affairs, expressed these views while speaking at the Lahore Chamber of Commerce and Industries (LCCI) on Wednesday.

Senator Zafar Iqbal, LCCI President Mian Shafqat Ali, Senior Vice President Abdul Basit, Vice President Aftab A Vohra, President Punjab Economic Forum Mian Anjum Nisar and former LCCI President Mian Misbahur Rehman were also present on the occasion.

Kamil maintained that the federal government has a lot of trust in the Lahore Chamber and the budget proposals forwarded by the LCCI would be given due consideration.

He averred that the present government was ensuring consistency in policies and for the first time in history of the country, the government has a matchless liaison with business community.

Senator Zafar Iqbal said that the LCCI Standing Committees would be linked up with the Senate Committees to make them more result-oriented.

He said that the level of interaction between the government and business community is enough to show the government's seriousness towards solution of business problems.

LCCI President Mian Shafqat Ali said that there is a need to keep the momentum of growth go on, it is equally important to trickle-down the fruits of development to the general masses. "Poverty, unemployment and inflation continue to affect the poor segments of the society," he added.

According to him, the incidence of poverty has dropped to 25.6 percent this year from 32 percent in 2001. However, the current rate of poverty is still very high, as 35 to 40 million people are still living below the poverty line.


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ISLAMABAD (May 11 2006): Word Bank Vice President for South Asia Praful Patel on Wednesday said that increasing cost of doing business is a serious threat to Pakistan's economic growth. He suggested that Pakistan should take immediate steps for improvement in key areas to catch this unhealthy trend and make its products and exports competitive in the international market.

Patel expressed these views, while addressing the Pakistan Development Forum (PDF) 2006. The two-day forum started here for reviewing the economic growth and gave its true picture to the international donors and bilateral trade partners.

Patel narrated some of his experiences of the last four days to the participants. He said he himself saw tremendous progress in Pakistan, besides sobering by some of the great challenges that it was facing.

He said the World Bank's team had a view of the eastern coastal zone of the Indus Delta in Sindh where those challenges stark for a number of people who have not benefited from the vast irrigation networks upstream.

They are indeed the tail of the tail-enders and represent some of Pakistan's most vulnerable people. He said it was heartening to see that the farmer organisations in Sindh and Punjab are beginning to take command of their water management. And at the Taunsa Barrage, for which the bank is providing assistance for rehabilitation, the team saw the sort of cutting-edge engineering that is needed to meet Pakistan's infrastructure needs for the 21st Century. But on the riverbanks, we heard voices of discontent among fisherfolk who had not been among the 160 families resettled into new homes.

Patel said that for Pakistan's infrastructure agenda to be achieved, it is the likes of the delta tail-enders and the poorest of the fisherfolk who will have to be brought along too.

The WB vice president said he wanted to share this immediate snapshot, as it captures much of what Pakistan confronts today - social change and a growing hunger for development.

He said the WB delegation was most impressed by the remarkable economic recovery that is taking place in Pakistan as its growth rate has been consistently above 6 percent over the last four years, exports expanded strongly, and investment picked up.

He said that this success was largely due to the economic reforms of the last seven years, which unlike so many other attempts at reform around the world, were truly homegrown -designed and implemented in Pakistan by an economic team of Pakistanis.

He said the earthquake of October 8 last year hit Pakistan badly. The calamity presented the people of Pakistan a demanding test of character and they responded with great generosity and hospitality for which Pakistanis were famous. He said the government should be lauded for its outstanding response and for shielding hundreds of thousands of families from the harsh Himalayan winter. The recovery process is now well underway though much remains to be done even as reconstruction costs are rising.

The donor community pledged generously to the tune of $6 billion in November. For us the challenge is to now translate these pledges - especially grants and concessional credits - into disbursements, through effective and viable actions to restore public services and infrastructure, and to help the people in rebuilding homes and livelihoods.


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ISLAMABAD (May 11 2006): The lukewarm response by Karzai government has diminished the hopes for laying 110 million dollar rail track between Pakistan and Afghanistan. Bilateral relations between neighbouring countries have soured after fresh volley of allegations over border infiltration.

Pakistan and Afghanistan had agreed to build a railway track of about 107 kilometers from Chaman to Kandahar to enhance people-to-people contact and to promote trade between the two sides.

Islamabad had promised to provide all out technical assistance to Kabul for construction of the rail link and a feasibility study was carried out a few months back.

"We have completed our feasibility report and it has now been handed over to Kabul for its final decision," an official of the Railways Ministry told Business Recorder.

He conceded the railway authorities were awaiting the response from Afghanistan for over half a year. It is learnt that both sides had agreed to approach donor agencies to generate around 110 million dollar funds. However, the cold response from Kabul, especially in issuing No Objection Certificate (NOC) for construction has dimmed the chances of the rail link project.

Pakistan government desperately wants the project to get underway as it would not only strengthen bilateral trade with Afghanistan, but would also open up opportunities to expand the rail network to Central Asian states.

"We plan to extend the rail track in the second phase of the project from Kandahar to Khushka (Turkmenistan)," the official said. He believed that the Chaman-Kandahar rail link was imperative to get access to Central Asian states where a vast railway network already exists. "We have requested Afghan government several times to take the project seriously but there is no positive response so far," he added.


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ISLAMABAD May 10: Prime Minister Shaukat Aziz on Wednesday invited the Islamic Development Bank (IDB) to participate in a consortium being formed to finance the construction of water reservoirs in Pakistan.

Talking to Islamic Development Bank President Ahmed Muhammad Ali, the prime minister said Pakistan valued the support provided by the IDB to Pakistan in its development process.

According to an official handout, the IDB president assured the prime minister of bankÃ¢â¬â¢s support in the construction of water reservoirs, adding that the bank was also considering financing projects in railways and energy sector.

He apprised Mr Aziz of IDBÃ¢â¬â¢s restructuring and reorganisation plans.

The prime minister assured Mr Ali of PakistanÃ¢â¬â¢s support in the restructuring plans which would enable the bank to face challenges of the rapidly changing world.

The prime minister said Pakistan was promoting Islamic banking and Islamic insurance systems, adding that the share of Islamic banking in the overall banking system was increasing.

Talking of the economic recovery achieved by the country, the prime minister said that all economic indicators were showing an upward trend, index of human development was improving, poverty was declining and inflation rates were decreasing.

The prime minister informed the IDB president that the World Economic Forum would be held in Pakistan in September this year and sought his bankÃ¢â¬â¢s support to make the meeting a real success.

The prime minister also thanked the IDB president for the support and assistance provided by the bank for reconstruction and rehabilitation of earthquake affected areas. The IDB is providing $500 million for these areas.


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ISLAMABAD, May 10: The Fiscal Monetary Board (FMB) was informed on Wednesday that the economy was likely to grow at 6.5-7 per cent during the current fiscal year.

The board in its meeting, chaired by Prime Minister Shaukat Aziz, reviewed the recent development in the external sector and asked the concerned authorities to remain vigilant.

According to a press release the premier expressed his satisfaction over the economic situation in the country and the growing strength of the economy during the current fiscal year.

The board was informed that the declining trend in inflation was likely to continue as it was expected to be around 6.0 per cent on year-on-year basis. The average inflation for the year was likely to be slightly less than 8.0 per cent.

It was also informed that the trade deficit rose to $8.62 billion during the first nine months of the current fiscal as against $4.26 billion the same period last year.

The meeting was further informed that almost 75 per cent contribution to the rising trade deficit came from Petroleum group (41.5 per cent), Machinery group (21.5pc) and Iron, steel and scrap group (11.9pc). Consumer durable including road motor vehicles accounted for only 9.2 per cent to the rise in trade deficit.

The overall fiscal deficit during the period had remained at 3.0 per cent of the GDP.

The meeting was attended by commerce minister, adviser to the prime minister on finance, secretary general ministry of finance, governor State Bank of Pakistan, deputy chairman Planning Commission, principal secretary to the prime minister, secretary finance and economic adviser to the ministry of finance.


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ISLAMABAD, May 10: The Asian Development Bank has assured its technical and financial support for major water and power sector projects to help Pakistan in meeting its growing needs.

This was stated by head of a five-member ADB delegation Juan Miranda in a meeting with Minister for Water and Power Liaquat Ali Jatoi here on Wednesday.

Mr Juan also appreciated the PresidentÃ¢â¬â¢s Water Vision and said that it would bring revolution in Pakistan and the economy would rapidly grow.

He said that the import of electricity from Central Asian States through Afghanistan would also be a good initiative. He said that the ADB was providing financial assistance to various projects in Pakistan and would continue its support for major projects in potential sectors.

The minister said that the economy had made significant progress over the last few years. Pakistan was witnessing massive upsurge in economic activity, not seen before in many decades, he added.

Jaoti said that the confidence of the domestic as well foreign investors was gaining new heights on the back of a stable macroeconomic environment.

He said that the economy was now more stable, economic policies were transparent and predictable, confidence of the private sector was restored to a large extent, expatriate Pakistanis were bringing their capital back, stock market was buoyant and the credit ratings of the country in international capital markets had significantly improved.


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KARACHI: President General Pervez Musharraf said on Wednesday Pakistan is an ideal destination for foreign investment and the impressions portrayed of extremism, and terrorism are absolutely false about Pakistan. 
Addressing the inauguration of PakistanÃ¢â¬â¢s biggest export exhibition Expo-2006 here at the trading hub and seaport of Pakistan, he said no one can deny the strategic position of Pakistan in the region as the country stands at the intersection of trading routes to Central Asia, Gulf, Afghanistan and China. 

"The world investors cannot ignore Pakistan due to its strategic edge that country has", he said, adding Pakistan is a modern and open-minded society and the negative travel advisory propagated by some is far from reality. 

He admitted that 1979 Soviet invasion of Afghanistan and subsequent Afghan War, the 1989 movement in Kashmir all had an impact on the Pakistani society but still the enlightened and forward looking mentality of the nation has prevailed. 

"The world should rest assure that the few extremist present in the country would be hunt down soon", he resolved. 

President Musharraf urged foreign investors to invest in the country and establish new industries that he believe will help in poverty alleviation and will pull the unemployed youth of the country from unemployment. 

He said that uprooting poverty and massive unemployment would in turn eliminate extremism. 

President said Pakistan lies at the crossroads of trade routes to Gulf, Central Asia, Afghanistan, Gulf and China and no trade activity is possible in these regions without Pakistan. 

He mentioned that the reconstruction and rehabilitation projects worth $ 12.4 billion in Afghanistan are being carried out via Pakistan. 

"Development projects estimated to be of $ 150 billion are in place for the western china and investors can access the region only through Pakistan", he added. 

He mentioned that for the current fiscal year the trade target has been fixed at $ 18 billion out of which $ 9.3 billion has already been achieved. 

He informed countryÃ¢â¬â¢s currently share of agriculture and textile in world trade is 6 percent while that of heavy industry and engineering is 61 percent adding that government was conscious of prevailing trend and it has focused its concentration to further bolster national export. 

He said Pakistan was the 5th largest country in dairy production but regretted that our inability to export various different dairy products. He underscored the need of deliberating on the issue of exporting various dairy products. 

Citing to national economic progress, he went on to say that per capita income as well as purchasing power of the individuals had been enhanced due to investment oriented economic policies of the current government. He said during current fiscal year 500 percent record investment growth had been achieved. Pakistan, he added achieved the target of $ 3 billion investment which he thought was still below the required mark. 

It is worth mentioning that above 10,000 participants from 57 countries set stalls in Expo-2006 which is nevertheless a big achievement on the part of government and organizers of Expo 2006.


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Wednesday May 10, 2006 


PESHAWAR : The vice chancellor of the NWFP University of Engineering and Technology (UET), Syed Imtiaz Hussain Gilani, has said that higher education is an important factor in enhancing the production capacity of a nation. 

Ã¢â¬ÅHuman capital is a fuel for economic progress of a developing country like Pakistan,Ã¢â¬Â Mr Gillani told an International Conference on Higher Education for Development held at the Higher Education Commission (HEC)Ã¢â¬â¢s auditorium here on Monday. 


The conference is being held under the auspices of the UET in collaboration with the Higher Education Commission and Campus Consultancy Services, UK, according to a press release. 


Mr Gillani said that as there were some sources of production which were essential for economic development of countries, of which higher education played a vital role. 


Ã¢â¬ÅUniversities owe an obligation to society,Ã¢â¬Â he said, adding that it was their duty to find creative solutions for problems faced by society. Ã¢â¬ÅTherefore, it is important that universities remain free of any outside influence,Ã¢â¬Â he added. 


Under the dynamic leadership of Dr Attaur Rahman, he said, the country is witnessing positive changes in the higher education sector. The HEC is focusing on increasing access for higher education, providing quality education and making higher education relevant to national needs. 


He said there is a debate going on in some circles that the present government is investing two per cent of its national budget on higher education. But if we compare this with other developing countries like China and India, he said, the investment ratio is three times greater than Pakistan. 


He cited the example of China and India whose economies are booming due to investment in higher education, particularly in IT sector. 


Earlier, in his inaugural address, HEC planning member Dr Mukhtar Ahmad said that higher education was facing numerous challenges all over the world including management, curriculum development and globalisation. 


He said that HEC in Pakistan was focusing on strengthening human resources in the field of science and technology. In this connection, he said, HEC is planning to establish six world-class engineering in Pakistan in collaboration with Sweden, Germany, Netherlands and France. 


The HEC would like to establish another university in collaboration with Britain. 


He congratulated Munir Lone, MD Campus Consultancy Services and Syed Imtiaz Hussain Gilani, for gathering the UK academia to share their experiences with the Pakistani leadership so that a uniform policy could be devised to implement higher education for development in an efficient manner. 


This conference is the first of its kind of a series under the overarching concept of higher education for development. 


International speakers will share their experience and best practices of how HE was used for development and indeed, regeneration and revitalisation of economically-deprived regions within countries. 


Prof Barry Winn, pro-vice chancellor at the University of Hull, Dr M.K. Khan of Bradford University, also spoke on the occasion. 


The conference was attended by a large number of vice chancellors, deans, academia and higher officials. The conference aims at sharing to create a forum for exchange of views between university leadership in Pakistan and the UK development practitioners and other stakeholders.


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## Neo

Thursday, May 11, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\05\11\story_11-5-2006_pg1_1
Aziz for tech-transfer to developing nations
_* Sees GDP growth of 6-8% this year
* IDB president says reforms should deliver
* WB says cost of doing business in Pakistan too high

By Sajid Chaudhry_

ISLAMABAD: Prime Minister Shaukat Aziz on Wednesday urged the developed world to support entrepreneurs from developing countries in acquiring technology, skills and knowledge and help bridge the digital divide.

Ã¢â¬ÅTogether we can rise by unleashing the potential of the private sector. Together we can build a smarter, peaceful, more vibrant and progressive Pakistan. It is our belief that Pakistan of today and tomorrow is not the Pakistan of yesterday. TomorrowÃ¢â¬â¢s Pakistan will be the land of hope and opportunities,Ã¢â¬Â Aziz said while addressing donors at the inaugural session of the 5th Pakistan Development Forum (PDF) 2006 titled Ã¢â¬ËDrivers of Economic Growth Unleashing the Potential of Private SectorÃ¢â¬â¢.

Aziz said public-private partnerships were a cornerstone in delivering public services in the 21st century. Ã¢â¬ÅWe believe that development is a national responsibility which must be carried out with dignity and transparency. While we recognise the contributions of civil society and non-governmental organisations in development, we must fight unemployment and ensure accountability with measurable goals and targets. Our message is to help us help ourselves.Ã¢â¬Â

Ã¢â¬ÅWe have crossed the bridge when our economy was fragile,Ã¢â¬Â he said. Ã¢â¬ÅNotwithstanding the earthquake and oil shocks, we anticipate the growth within our target range of 6 to 8 percent annual growth a year,Ã¢â¬Â he said.

Aziz stressed the need for continuous efforts to establish an improved competitive environment to meet global challenges through sustained investment in infrastructure, science and technology, education and healthcare. 

The prime minister emphasised the forging of links between multinational corporations and local businesses to make them more competitive in the world market, thereby increasing their productivity, earnings and eventually raising the living standards of the people. He said that Pakistan was developing Gwadar not only as a trans-shipment port but also as an energy port by setting up refineries and negotiating on gas pipelines and alternate energy sources to ensure reliable supplies to meet PakistanÃ¢â¬â¢s energy needs. 

Ahmed Muhammad Ali, the Islamic Development Bank president, said that PakistanÃ¢â¬â¢s reforms should deliver fruits of economic growth to the common man and should have a positive impact on poverty reduction. Ã¢â¬ÅThe country should mobilise local savings for national development, use remittances in important sectors and develop Sharia-compliant banking to attract savings,Ã¢â¬Â he said while pledging that the IDB would take a lead role in PakistanÃ¢â¬â¢s national development. 

Praful C Patel, the World Bank vice president for South Asia, said that despite trade, banking and regulatory reforms in the past seven years, the costs of doing business in Pakistan were still too high. He said that second-generation institutional and policy reforms and investments in infrastructure were needed. He stressed the need to develop energy, transport, and irrigation infrastructure.


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## Neo

Thursday, May 11, 2006 

* Says Pakistan should avoid overvaluing its currency

By Sajid Chaudhry

ISLAMABAD: The World Bank has suggested to Pakistan to further strengthen the macroeconomic framework and avoid overvaluing its currency, India and Pakistan need to move towards the Most-Favoured Nation (MFN) based trade soon and this will require Pakistan to extend MFN status to India.

The World BankÃ¢â¬â¢s Poverty Reduction and Economic Management Sector Unit South Asia Region has prepared Ã¢â¬ÅPakistan Growth and Export CompetitivenessÃ¢â¬Â strategy that was formally handed over to Pakistan at the Pakistan Development Forum (PDF) 2006 inaugurated here on Wednesday.

The WB report also includes the options for a growth-supporting trade policy strategy that says that accelerating economic growth to the 7-8% range during the next decade, the key pillar of PakistanÃ¢â¬â¢s poverty reduction strategy requires sustained macroeconomic stability and the creation of an investment-friendly environment. At the same time, recognizing that a major source of sustained higher growth is a dynamic economy function in an export-oriented policy environment.

The report focuses on the goals of economic growth accelerating PakistanÃ¢â¬â¢s economic growth and on the related challenge of strengthening export competitiveness. The remedial measures it identified aims at reducing the cost of doing business and increasing market competition, stepping up the factor of productivity through efficiency gains and through lowering production costs throughout supply chain, strengthening export competitiveness and the economyÃ¢â¬â¢s base for export diversification. 

It has highlighted that success in these efforts, which will help accelerate growth and employment generation, will depend on the consistency of government actions. Steady improvement in the quality of the business environment would encourage domestic and foreign private investment. 

The findings of the WB report also pointed out to a number of high priority areas where early actions might have high payoffs. It suggested that the government further strengthen the macroeconomic framework and avoid overvaluing of the Pak rupee. 

Address electricity pricing and structural issues in the power sector, improving SMEs access to finances, serious commitment to human capital development, improvement in the efficiency of duty drawback and sales tax rebate system for new and small exporters and improving transport/trade logistic and enhanced food quality and safety standards capacity. 

The options for growth supporting trade policy strategy in the WB report suggests in the area of South Asia Free Trade Area (SAFTA) Agreement these measures: minimize sectoral and product exceptions, have clear rules against tariff rate quotas, have Ã¢â¬ÅRules of OriginÃ¢â¬Â that are very liberal simple, transparent and remain the same for all products, India and Pakistan need to move to MFN-based trade immediately, and this will require Pakistan extending MFN status to India and extend SAFTA agreement to services trade and investment. The regional countries should also cooperate in the areas of infrastructure, trade facilitation, harmonization of technical and sanitary and phytosanitary (SPS) standards in line with the major export markets. 

About Free Trade Agreements or Preferential Trade Agreements, the WB report recommended that economic costs and benefits of engaging into too many bilateral FTAs negotiations, particularly with small countries, will need to be taken into account. 

While showing interest in a potential FTA with a very large trading partner such as the US, may have an economic rationale, but FTAs with small countries will simply end up in costly complications in the tariff system without much gains to show.


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## Neo

Thursday May 11, 2006 

KARACHI : Warid Telecom is all set to inject $1 billion as fresh investment into its network in Pakistan by the end of the year 2006-07, while the company has also obtained licence for the launch of its 'roaming operations' in Bangladesh," Naveed Saeed, General Manager, Sales and Marketing Warid Telecom, told reporters at a press conference held to commemorate its first anniversary at a hotel here on Wednesday. 

"We intend to invest one billion US dollars during 2006-07 for expansion and upgradation of our network across the country," he said, adding that Warid Telecom has acquired licence for the launch of its roaming operations in Bangladesh recently. 


Naveed said that the company was following an aggressive marketing and expansion strategy under which it would expand its roaming services to African countries as well because it wants to show its presence on the global front. 


"Our seriousness towards telecom sector is evident from the fact that our sister concern companies, Wateen Telecom and Wateen STN, are supporting and working to enhance the capabilities of Warid's cellular network all over the country," he said. 


"Wateen Telecom is currently engaged in laying the biggest optical fibre cable in the country that would cost around $70 million and the cable would cover the area, with 5000 km in length," he added. Naveed said that the company is interested to expand its roaming services to India, and dialogues "are currently underway" to check the security concerns, besides other issues. 


He said that Warid Telecom has recently acquired world class technology for data transmission and soon the data transfer speed in the company's network would be 3.5 GHz per second, while the subscribers would get the speed of 1MB per second. 


Regarding the current status of the development of Mobile Number Portability (MNP), he said that the facility would have to be implemented. However, all cellular companies are working on the proposals. 


The Warid official said that the number of subscribers of Warid Telecom has significantly increased and reached up to 4 million, out of 27 million aggregate subscribers. However, the company was eyeing to achieve the target of 10 million subscribers by the end of 2006. 


"We have so far attracted 4 million subscribers towards Warid's network due to improved and quality service, and we are currently enjoying the market share of over 10 percent," he said. 


On this occasion, Manager Public Relations, Farah Hussain, said, "Warid Rewards would give Warid post-paid and prepaid customers a one-off chance to win world's most luxurious cars through a lucky draw that would be held on its first anniversary ie on May 23, 2006."


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## Neo

ISLAMABAD (updated on: May 11, 2006, 18:56 PST): Pakistan's consumer price index (CPI), a key indicator of inflation, rose 6.16 percent in April from a year earlier and was up 1.02 percent over March, the Federal Bureau of Statistics said on Thursday.

The year-on-year rise was lower the 6.91 percent in March, but analysts said the CPI was rising a year earlier, so a base effect was in play. Annual inflation in Pakistan peaked in April 2005, when it hit a near 8-year high of 11.1 percent.

"The month-on-month rise shows that the underlying pressures are still there," said Asif Qureshi, head of research at Invisor Securities.

"Petroleum prices have been increased in May. Plus, prices of other commodities are also moving up," he said.

"So for May, the year-on-year CPI rise is expected to move up to around 7.0 percent," he said.

Using 2000/01 as the base year, the CPI index stood at 134.33 against 132.97 in March.

Meanwhile, the wholesale price index (WPI) rose 8.10 percent in April from a year earlier and was up 1.23 percent over March, the data showed.

Using 2000/01 as the base year, the WPI index stood at 139.83 against 138.13 in March.


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## Neo

KARACHI (updated on: May 12, 2006, 12:12 PST): Country's foreign exchange reserves rose by $38 million in the week ending May 6 to an all-time high of $13.054 billion, the State Bank of Pakistan (SBP) said on Friday.

Reserves held by the SBP rose to $10.655 billion from $10.645 billion a week earlier and those held by commercial banks also rose to $2.399 billion from $2.371 billion, the SBP said in a statement.

A previous all-time high of $13.016 billion was in the week ending April 29.

The bank did not give any reason for the increase in reserves.

Pakistan's forex reserves have been increasing steadily over the past few years mainly due to higher remittances from expatriate Pakistanis, inflows from privatisation proceeds and rising foreign direct investment.


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## Neo

ISLAMABAD (May 12 2006): The National Electric Power Regulatory Authority (Nepra) has announced a 20-year upfront tariff of 9.5 cent per kWh for wind power projects to be established in Gharo-Keti Bandar corridor.

The tariff has been calculated on a 97 percent plant availability, which would be established on BOO (Built Own and Operate) basis. The sponsors would select appropriate type/size of wind turbines and optimise their setting to ensure maximum power output and minimum losses.

The interested prospective Independent Power Producers (IPPs) who wish to opt for upfront tariff have been asked to convey acceptance to Nepra and Alternative Energy Development Board (AEDB) by December 31 after obtaining the consent from the power purchaser and finalising interconnection arrangements.

The IPPs should apply to the regulator for formal approval of tariff and grant of generation licence. The IPPs which are not interested in upfront tariff may file a tariff petition with the Nepra under the relevant rules for tariff determination subject to the condition that no reference will be made to upfront tariff or its components in such cases.

The government would give 5 percent exemption in customs duty on the imported plant and equipment not manufactured in Pakistan, but it has been accounted for in the capital cost as per the Power Policy 2002.

Wind turbine generation system would be designed, manufactured and tested in accordance with the latest international standards. All the plants equipment should be new, unused and of the latest model. The IPPs would be responsible for the correct assessment of the benchmark of wind speed in the proposed wind farm and duly approved by the power purchaser.

The IPPs would install monitoring masts with properly calibrated automatic computerised wind speed recording metres at the same height as that of the turbine generators and a compatible communication system.

The sources said the AEDB, who is handling wind power projects, had complained to the prime minister that the Water and Power Ministry was creating hurdles in smooth progress of the policy.

They also said that the ministry, in a recent letter to the prime minister, while clarifying its position, said that it has no such intention and would extend all-out co-operation to the AEDB.


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## Neo

ISLAMABAD (May 12 2006): The World Bank (WB) feared that Pakistan might fail to sustain 6-8 percent growth due to inadequate infrastructure services and power generation along with a wide gap between public and private sectors share in infrastructure investment.

World Bank Country Director John Wall expressed the concern, while addressing the concluding session of two-day Pakistan Development Forum (PDF) here on Thursday.

John Wall said, "Sustained rapid growth takes us a long way, though we have to still worry about droughts and other natural phenomena; and worry about the equity of rapid growth."

He said, "Reforming the power sector has proved to be full of political constraints and is moving very slowly and requires very large public subsidies."

Currently, the government is financing power sector by providing about Rs 100 billion subsidy annually, which the bank wants to be reduced to relieve national kitty of unnecessary burden.

When the bank inquired that how the government plans to finance the power subsidy, Water and Power Minister Liaquat Ali Jatoi explained that the government is phasing it out through power sector privatisation.

He said that Pakistan has nine power distribution companies, out of which about 73 percent of Karachi Electric Supply Corporation (KESC) had already been privatised. Besides, the Faisalabad Electric Supply Company (Fesco) and the Jamshoro Electric Supply Corporation (Jesco) were ready for privatisation.

He also said that currently Pakistan faces higher quality problems, the problem of success. Demand has risen faster than supply, which has shown up in high inflation and a zooming trade deficit.

The "tight fiscal, easy money" formula to get growth going needs to be "tight fiscal, tight money and credit" to sustain rapid growth, he said.

Idle domestic production capacity allowed rising demand to be accommodated by rising capacity utilisation in cement, steel, fertiliser, textiles, automobiles and motorcycles.

He also said that capacity is more than fully utilised, resulting in backlogs and imports.

He said, "The problem I see is not comparing last year and this year; my horizon is first looking back over the last three-four years and then looking ahead to the coming three-four years. What I see is a macro imbalance that, unless rectified, will prove to be unsustainable in terms of foreign trade, inflation, exchange rate stability and foreign exchange reserves."


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## Neo

KARACHI (May 12 2006): Port Qasim Authority (PQA) has received Expressions of Interest (EoIs) from more than 12 foreign investors for various projects costing around two billion dollars following floatation of tenders on its website and in foreign newspapers.

Incredible indeed, within a span of four months, January to April 2006, 11 foreign investors visited Port Qasim and desired to be involved in various projects launched by PQA.

Sources involved in ports and shipping business say that the turnaround is the result of the fast-track policy initiated by Federal Minister for Ports and Shipping, Babar Khan Ghouri and the vision envisaged by the new Chairman, PQA, Vice-Admiral, Asad Qureshi. The dynamism showed by the duo has generated a lot of interest among the foreign investors.

Mitsui and Co Ltd of Japan alone has shown interest in setting up a LNG terminal at a cost of One billion dollars. Among the other important projects include LNG terminal now being developed by Malaysian firm PROGAS on BOT basis at a cost of 25 million dollars. The terminal with handling capacity of 0.5 million tonnes per annum, will accommodate 30,000 DWT class vessels.

Setting up of a dedicated Liquid Cargo Terminal at an estimated cost of 11.4 million dollars by FQA Enterprises (Pvt) Ltd, a joint venture of Felda Malaysia and Westbury Pakistan. Since Qasim International Container Terminal (QICT) has reached the capacity mark of 0.5 million tonnes, second terminal at a cost of 211 million dollars with handling capacity of one million TEUs is planned in private sector on BOT basis to handle increased volume of container traffic.

To avoid huge recurrent maintenance and capital dredging, PQA plans to purchase a 6000 *** Suction Hopper Dredger. The project has approval of the Government of Pakistan. PQA is currently seeking soft loan through financial institutions for purchase of the dredger at an estimated cost of around Rs 2500 million.

Grain/Fertiliser Terminal with handling capacity of four million tonnes, on BOT basis, is planned to be developed at the Port at a cost of $50 million.

Two desalination plants at a cost of $160 million each with a capacity of 25 MGD are planned to be completed by the end of 2007. An agreement was signed in August 2005 with California Enviro-Management Inc, USA for allotment of 2x2 acres for the establishment of proposed plants.

The Textile City to be established in Eastern Zone of PQA will provide all infrastructure facilities necessary for optimal operations of textile companies. The expected project cost is Rs 3.6 billion excluding power plant & wastewater treatment plant that would cost Rs 5.1 billion.

The projects in the pipeline are: establishment of 2nd iron, ore and coal berth at an estimated cost of $50 million, 2nd oil jetty at an estimated cost of $20 million, Clinker/cement terminal at an estimated cost of $30 million, marine workshop and dry dock facilities at an estimated cost of $10 million. All these projects will be developed on BOT basis.

Some of the major establishments at the port are: Industries: ICI-PTA plant, Indus Motors, FJFC fertiliser plant, LPG & storage facilities, Engro Asahi, and BOC gases.

Terminals: FACTO, QICT, EVTL, IOCB, and MPT. Refinery: Awam Palm Oil Refinery. Container freight station: Shaheen freight station, Qasin Container Freight Station. Warehouses: Marine Pride, International House Limited, Fazal Sons, Transpak, Mansoor Jamal, etc Power plant: KESC thermal power plant, and University: National Textile University.

So far 91 units are operational while 49 units are under completion phase. PQA's mission statement is- to develop Port Qasim into premier port of Pakistan with integrated industrial and commercial facilities by being customer service oriented and financially healthy organisation operating under landlord concept.


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## Neo

FAISALABAD (May 12 2006): Punjab is home to more than 65 percent or 1.9 million businesses in Pakistan. According to the Smeda update report, this is even true that at the sub-sector level such as agriculture, mining, manufacturing, construction etc except for electricity, gas and water sector.

Where NWFP is leading with a share of 87 percent, Punjab is followed by Sindh, NWFP and Balochistan with a share of 18 percent, 14 percent and 2 percent respectively. Unlike large enterprises in the formal sector, small and medium enterprises are constrained by financial and other resources.

Their capital base remains lean and nearly 100 percent of all reported business investment, excluding land and business, remained less than a million rupees. Sales data for businesses in Pakistan segregated on firm size was not available although according to the most recent economic census report, 84 percent of enterprises have sales below Rs 0.5 million and 93 percent report sales below Rs 1 million.

According to report, SME sector in Pakistan is primarily a less formally organised sector. More than 96 percent businesses are owned and managed by an individual as a sole proprietary concern.

While 2 percent are partnerships, there are hardly any corporate entities in the SME sector, implying that the inclusion of professional people in business management process is yet to be witnessed. SMEs in an ideal situation should serve as the breeding ground for future corporate sector but this really does not seem to be happening in Pakistan.

These characteristics of SME sector suggest that most of the businesses are in a low growth trap, dealing in traditional products and unable to climb up the technology ladder. They often become vulnerable to various shocks and disappear from the scene.

This view gets credence from the fact that 19 percent SMEs are less than 5 years old and only 4 percent are able to survive beyond 25 years. The encouraging sign however, is their mushroom growth, which makes it imperative that there should be a mechanism through which they could get support in terms of resources such as capital, finance, trained human resource or services like advice on technology up-gradation, marketing or quality management etc.

The Economic Census of Pakistan-2005 lists 3.2 million business enterprises nation-wide and SMEs constitute over 99 percent of all.

Their share in industrial employment according to an estimate is 78 percent and in value addition approximately 35 percent. Nearly 53 percent of all SME activity is in retail trade, wholesale, restaurants and the hotel business whereas the contribution of industrial establishments and those involved in service provision is 20 percent and 22 percent respectively.

Among the SMEs involved in retail, wholesale etc, 98 percent employ less than 5 persons and 99 percent less than 10 persons. Even within the manufacturing sector the trend is not different and nearly 87 percent employ less than 5 persons and 98 percent less than 10 persons.

Similar pattern of employment distribution can be traced among other sectors except for mining where SMEs tend to employ more people. In the mining sector, it averages around 56 percent employing between 6 to 50 persons. On the whole, the percentage of large firms is very small.

According to report, SMEs play a key role in providing additional employment and facilitating transformation of economy from low to middle income group. Their allocative efficiencies in resource utilisation such as labour, capital and technology synergies the economic development in a socially equitable manner. SMEs do allow a large number of entrepreneurs and self-employed to survive and exist.

It is also understood that sectors dominated by SMEs are better able to exploit dynamic economies of scale. More importantly there has been no successful transformation evidence available in the world without the active participation of SME sector in the economic development.


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## Neo

ISLAMABAD (May 12 2006): Minister for Labour, Manpower and Overseas Pakistanis, Ghulam Sarwar Khan on Thursday said the country has witnessed 1.2 percent decline in unemployment rate in the 1st half of the current fiscal year.

The minister revealed this while giving details of the labour survey for the current fiscal year 2005-06. He said a record increase of 5.49 million has been observed in labour force for the first half of current fiscal year as compared to the same period 2003-2004.

According to him, the share of increased labour force for rural population was recorded 4.35 million whereas urban areas contributed 1.14 million labour force.

He said that sustained efforts of the government have brought down unemployment level at 6.5 percent as compared to 7.7 percent for the last year. It shows the commitment on the part of the government to bring prosperity to the masses.

Ghulam Sarwar said that unemployed labour force was estimated 3.50 million in 2003-04, which has now decreased up to 3.33 million, so there has occurred 0.17 million reduction in the unemployed labour force.


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## Neo

KARACHI, May 10: PakistanÃ¢â¬â¢s major summer crops, including cotton and rice, are expected to largely survive a drought scare, officials said.

The Meteorological Department said this week that water levels in major reservoirs were critically low as the country had received 40 per cent less winter rains than normal and up to 25 per cent less snowfall.

But Agriculture Minister Sikandar Hayat Khan Bosan said crops should largely come through. Ã¢â¬ÅWe are definitely in a crisis, but we expect that none of our crops would face a major threat,Ã¢â¬Â Mr Bosan told Reuters.

Shafqat Masood, chairman of the Indus River System Authority, which manages water distribution in the country, said water levels were improving and a shortage of water in irrigation canals was likely to ease.

Ã¢â¬ÅWater levels in the rivers are also improving,Ã¢â¬Â Mr Masood said.

Ã¢â¬ÅWe are very close to our estimate for this period as hot weather has started melting snow,Ã¢â¬Â he said. Ã¢â¬ÅSoon there will be enough water to feed the irrigation canals.Ã¢â¬Â

The government had initially estimated a 10 to 15 per cent irrigation water shortage during the sowing period for cotton and rice summer crops, but the actual shortage was much higher.

Ã¢â¬ÅThe next few weeks are very vital for the sugar cane and for preparing the ground for sowing cotton and rice crops,Ã¢â¬Â Mr Bosan said.

Ã¢â¬ÅSowing of cotton has just started and will continue for two more months and by the end of June a clear picture on the crop size will emerge.Ã¢â¬Â

Pakistan expects its cotton crop to increase by over six per cent to 13.82 million bales in the 2006-07 crop year.Ã¢â¬âReuters


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## Neo

ISLAMABAD, May 11: Pakistan has signed the New York Convention under which arbitration decisions of the courts of foreign countries in terms of investment disputes would be implemented by the Pakistan courts.

Water and power secretary Ashfaq Mahmood told participants of the Pakistan Development Forum on Thursday that Pakistan had recently signed and ratified the New York Convention to provide comfort level to foreign investors in case of any dispute with a local company or government entity.

He later explained to Dawn that a court in the United States or the United Kingdom or for that matter by any member country of the convention, or by the International Commission for Settlement of Investment Disputes (ICSID) would have to settle investment disputes in accordance with Pakistani laws.

The decisions of the foreign courts made under the Pakistani law would be required to be executed by the respective courts in Pakistan. When asked if the Pakistani courts would also enjoy similar jurisdiction over their counterpart courts abroad, he said it would depend on how Ã¢â¬Åwe proceedÃ¢â¬Â, but added a clear comment on the subject should come from the ministry of law or the attorney general of Pakistan.

He said the New York Convention had already been signed by about 75-78 countries. The western countries have repeatedly been asking the Pakistan government to include the clause of international arbitration under their respective laws and courts in bilateral investment treaties but have so far been resisted by the successive governments.

In the past, many foreign investors had got decisions in their favour from the courts of their respective countries but they could not be implemented because of lack of their jurisdiction in Pakistan.


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## Neo

Friday May 12, 2006 

ISLAMABAD: Federal Minister for Information Technology Awais Ahmad Khan Leghari Thursday said the government was committed to promoting a healthy competition in the domestic and international connectivity infrastructure so that the users can benefit from enhanced choice and better services. 
He was talking to the senior management of Saif group, who are major partners in the consortium laying down PakistanÃ¢â¬â¢s first private sector undersea cable from Karachi to the UAE, in his office here. 

The submarine cable system called the TWA 1, expected to come into service in June 2006, will be the third such cable landing into the country and will supplement the SMW3 and the recently inaugurated SMW4 cable systems of PTCL. 

He said that reliable and robust infrastructure for cost effective international and domestic connectivity plays a major role in strengthening the base of the market for software export, IT enabled services and business process outsourcing as well as the contemporary telecom services. 

He said the commissioning of the new cable will not only improve the redundancy and reliability of international connectivity, it will also introduce competition in the market segment which was hitherto served only by PTCL, hence bringing down prices for high quality international bandwidth services. 

The minister further said that the government was working on formulation of policy whereby all the submarine cables landing into the country will complement each other and provide restoration capabilities, through mutual interconnection, in case of failure of anyone cable. 

Awais said that another key market segment which will directly benefit from improved international connectivity is the broadband industry. "The government is working on all the fronts to facilitate proliferation of broadband internet in the country and coordinating with PTA to remove further bring down bandwidth rates and improve quality of service and to remove barriers to market entry," he said. 

He added that a process was also under way whereby PTA will work with incumbents to improve the quality of the last mile copper and formulate a roadmap for improving Quality of Service (QOS). PTA is also being asked to get the incumbent interconnect offer and have the co-location provisions revisited to facilitate Fiber based access to broadband services, he said. 

Emerging wireless broadband technologies like WIMAX, he said, will play a major role in the proliferation of broadband in the country due to ease of deployment. In this regard work is underway and PTA and FAB are being asked to make the appropriate frequencies available, he added. 

He clarified that the frequencies that have already been auctioned for the WLL/broadband services and have not been used until now for provision of any service even after passing of initial rollout deadline will be reclaimed after due process and made available for the purpose of broadband provisioning through a transparent mechanism. 

Government is striving through a dynamic policy process to make improvements in all the segments of the Telecom and ICT value chain to ensure proportionate growth for consumer benefit as well as ensuring profitable business and increased opportunities for the players involved in provision of all ICT related services, he added.


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## Neo

Friday, May 12, 2006 

*Electricity demand will increase to 50,505 MWs in 16 years

By Sajid Chaudhry

ISLAMABAD: The government on Thursday informed all donors that the country required $25 billion to secure its energy requirements in the next 10 years.

Pakistan needs $18.45 billion to construct five big dams by 2016, including Kalabagh Dam, to ensure a water storage capacity of 20.7 million acres feet (MAF), Water and Power Ministry Secretary Ashfaq Mehmood told participants at the 5th Pakistan Development Forum (PDF) on Thursday.

Ã¢â¬ÅHowever, the total requirement for agriculture and generating electricity is $25 million in the next 10 years,Ã¢â¬Â said Mehmood. The overall investment of $25 billion would be required for constructing new big dams, canals, drainage system, flood control programme and improvements in the water and electricity sector, he added.

The secretary said the countryÃ¢â¬â¢s installed capacity in electricity stood at 19,590 megawatts (MWs) and total demand was 14,091 MWs. Ã¢â¬ÅDemand will rise to 20,161 MWs by 2010, 44,653 MWs by 2020 and 64,595 MWs by 2025,Ã¢â¬Â he said. Pakistan falls short by nine MAF water for its current agriculture needs, the shortage would increase to 20 MAF by year 2020 and 25 MAF by 2025, he added. Ã¢â¬ÅThe country needs to irrigate an additional 18 million acres of land to produce sufficient food.Ã¢â¬Â

Ã¢â¬ÅThe government is also constructing three medium-sized dams (Mirani Dam, Subak Zai Dam and Gomal Zam Dam) and 35 small dams,Ã¢â¬Â said Mehmood. The Mangla Dam would improve the countryÃ¢â¬â¢s water storage capacity by 2.9 MAF on completion, he said. Ã¢â¬ÅAll documentation for the constriction of Kalabagh Dam has been completed and the damÃ¢â¬â¢s construction will be started after the provinces reach a consensus, he added.

The secretary told donors that the Economic Internal Rate of Return upon investment in Kalabagh Dam was the highest, standing at 23.6 percent as compared to 23.4 percent in Bhasha Dam. He said the country would be able to store water for the Rabi season from 80 percent river flows of the Kharif season after the five major dams were constructed. He added that water seepage level was between 40 to 45 percent and needed to be reduced through the construction and maintenance of the canal system.


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## Neo

Friday, May 12, 2006 

By Sajid Chaudhry 

ISLAMABAD: Pakistan has asked the donor community that it requires foreign direct investment in oil and gas sector, project financing for major gas pipelines and technical assistance to ensure its energy security.

Ahmad Waqar, Secretary Petroleum and Natural Resources, in his presentation at the Pakistan Development Forum (PDF) 2006 on future requirement of energy by 2030, explained on Thursday the share of sources in energy mix as 18.5% in oil, 45% in gas, 19% in coal, 10.8% in hydro electricity and 4.2% in nuclear energy and renewable energy 2.5%. 

The country requires 55.5 million tons of oil and petroleum products each year and rising oil prices in the international market are leaving negative effects on our foreign exchange reserves, he added. 

He said to maintain 6% -8% GDP growth rate in the next five years Pakistan will face acute energy shortages by 2010-2012 and wants to exercise immediately one of the gas import options available with the country that include Iran-Pakistan-India Gas Pipeline (IPI), Turkmenistan-Afghanistan-Pakistan (TAP) and Qatar Gas Pipeline (GUSA). 

The negotiations on IPI are at an advanced stage and if India does not join, then Pakistan and Iran will execute this project. India is expected to join the TAP project, and if it joins the project, then the project would be called (TAPI). The Qatar Gas Pipeline is also one of the options and negotiations are under way. A trilateral meeting on the IPI project is scheduled on May 22-24 at Islamabad. This project will be completed in four years after reaching an agreement. 

He, however, said that the state of negotiations with Iran on IPI cannot be disclosed due to national interests. He made it clear that at the end of day Pakistan will have to exercise all these gas import options for its energy security. 

He said the strategy that the government is pursuing at the moment is to increase oil, gas and coal exploration and production activities, develop more hydropower, increase the share of coal and alternative energy in the energy mix, promote private sector investment and develop regional cooperation and strategic partnership. 

He informed the donors that this year oil import bill is expected to reach $6.5 billion against $4.6 billion in the last fiscal year. 

He said the government is doing its best to enhance oil and gas production. The government cannot achieve this task alone, so the private sector is being encouraged to complete the task. 

He informed that to encourage the private sector in oil and gas sector, a paper on LPG Policy will be submitted for approval before the ECC at its next meeting, summary for approval of the CNG Policy will be submitted before the federal cabinet at its next meeting and the government is also in the process of revising Oil and Gas Exploration and Production Policy by hiring a consultant of international repute.


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## Neo

RAWALPINDI (May 13 2006): President General Pervez Musharraf has directed the Petroleum and Natural Resources Ministry to ensure supply of natural gas to most districts and Tehsils across the country by December 2007 with the help of private sector as part of a strategy to meet domestic and industrial energy requirements.

He asked the ministry at a meeting on Friday to encourage private sector's participation in the supply of gas to far-flung and hilly areas, where laying long pipelines is difficult and expensive.

The private sector should be facilitated in transporting energy through liquefied natural gas (LNG) projects and alternative sources like windmill, solar, etc, he said. He particularly directed that work on projects like LNG in Karachi be accelerated so that industry gets continuous supply of fuel for sustained higher growth.

"The people should get gas easily. The provision of gas in hilly areas will stem deforestation and help in improving environment," he said at a meeting that reviewed progress in the goals set out on March 22. President Musharraf said Pakistan would also import gas from regional countries to meet its galloping energy needs in the industrial and agricultural sectors.

He expressed satisfaction over the progress vis-ÃÂ -vis projects for import of gas from Iran and Turkmenistan. Pakistan, he said, would encourage exploration in oil and gas sectors and asked the ministry to tap maximum available energy resources.

The meeting was informed that Pakistan expects about $1 billion investment in the oil and gas exploration sector in the next few years. Later, Petroleum and Natural Resources Minister Amanullah Khan Jadoon expressed the hope that gas supply would be increased from the current 22 percent to maximum population in a few years.

"We embarked upon a roadmap under the president's vision to take gas to all districts and Tehsil headquarters across the country," he told newsmen.

The Sui Southern Gas Company (SSGC) informed the meeting that over 500 towns and villages in Sindh and Balochistan would be supplied gas in a couple of years.

The Sui Northern Gas Pipelines Limited (SNGPL) said that barring a few remote districts, all districts of Punjab and NWFP would be provided natural gas by 2007 with an investment of Rs 15 billion.

The two companies, in line with the directives of the president, also expressed the resolve to improve their customer services and minimise possibility of dispatching inflated bills.


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## Neo

ISLAMABAD (May 13 2006): Pakistan has racked up a record high foreign trade deficit of $9.427 billion for 10 months of the current fiscal year, which is about 8.6 percent of the country's gross domestic product (GDP), and a steep increase over 4.86 percent of GDP just a year ago.

This huge deficit during July-April 2005-06, according to Federal Bureau of Statistics (FBS) release on Friday, is a 93.65 percent higher than 2005 record deficit of $4.868 billion, and the gap is still widening steadily.

During this period, the country's total imports and exports stood at $22.95 billion and $13.52 billion, respectively, which indicate that Pakistan spent more on importing petroleum products, machinery, sugar, raw material and other goods and services. Everybody paid more for oil, while Pakistan's businesses sold far less exportable products overseas.

The alarming gap has forced many economists to trash their forecasts and pencil in lower estimates of the economy's strength in the coming months.

More worrisome, several economists say, is the possibility that the swelling trade deficit will eventually cause a steep drop in rupee value against dollar and other currencies. Local importers would demand more for dollars in the coming months to finance their surplus imports. It would also bring a rapid rise in interest rates and lower the living standards.

The government has projected exports at $17 billion, and imports at $21 billion, allowing a trade deficit of $4 billion for the FY 2005-06. However, the figures show that trade deficit has surpassed the target by 135.6 percent (or $5.427 billion) in just ten months.

Besides, the data show that in ten months, total imports exeeded the government's expectations by $1.95 billion. However, in achieving exports target it still lags behind.

President Pervez Musharraf recently claimed that by the end of the fiscal year, Pakistan would achieve export target of $18 billion. Here the question arise: how it is possible, as in ten months the country's total exports have reached only $13.52 billion and, most importantly, it also shows a negative growth of 4.62 percent in April 2006 as compared to previous month.

A glance at the trade data shows consistent rise in the country's imports, which is disturbing for the trade officials, as the exports-imports gap would be much wider than the estimated $4 billion.

Independent economists observe that if this trend sustains, it would be hard for the government to check the soaring deficit from crossing $12 billion mark by the end the year.

They fear, and expect, weaker economic growth in the coming months as trade provides an additional drag on recovery that may be faltering under the weight of high energy prices, stalling job creation and tepid consumer spending. According to government, this imbalance was caused by the sharp rise in imported petroleum products (in quantity and price), machinery, manufactured goods and food.

The data show that Pakistan's economy pulled in 40.38 percent more imports during ten months of the current fiscal year than $16.35 billion recorded during the same period of last year. However, the exports of Pakistani goods showed an increase of 17.80 percent against $11.48 billion of last year.

The burgeoning deficit has put pressure on the rupee, which could also create inflationary pressure, as Pakistan pays more for imported goods. It suggests that the rupee may still need a fall to help the narrowing the gap. But, there is a risk of pushing higher the inflation, if it does.

The FBS trade bulletin further depicts that during April 2006, goods worth $1.45 billion were exported, recording an increase of 11.79 percent against $1.29 billion of last year. Imports have been recorded at $2.26 billion during April 2006, which reflect a growth of 18.73 percent as compared to $1.90 billion in April 2005.

The figures show that the trade deficit in April has widened by $807.92 million, or 33.61 percent, against $604.67 million of April 2005. However, comparing exports of April 2006 with March, the bulletin says the figures registered a decline of 4.62 percent, which stood at $1.52 billion. The imports during the same month were also down by 15.88 percent as compared to $2.68 billion in March.


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## Neo

ISLAMABAD (May 13 2006): The 'Fuhralander' of Germany and 'Access Energy Inc' of US have signed an agreement to manufacture wind turbines in Pakistan to help establish wind power projects.

Under the Memorandum of Understanding (MoU) signed by the two companies, the US-based Access Energy who would set up a 50 MW wind power plant along the general wind corridor in Gharo, would finance the project, whereas the German Company, Fuhrlander, would transfer the technology to Pakistan for manufacturing of wind turbines along with its accessories to set up a minimum of 1000 mega watts (MW) power plants.

Sources said the government has already issued Letter of Intent (LOI) to the investors to start projects for producing alternative energy through wind.

These projects would be set up between Garo and Keti Bandar, for which the Sindh government has promised 1,000 acres land for each project. The provincial government has already allotted 10,000 acres, whereas the allotment for remaining 20,000 is under process.

Speaking on the occasion, AEDB Chairman Air Marshal Shahid Hamid said that the signing of the MoU was a big step towards manufacturing wind turbines locally.

He reiterated AEDB's commitment to promote alternative renewable energy in the country and assured full facilitation to all those interested in undertaking alternative renewable energy projects in Pakistan.

Shahid said that in pursuance to the mandate of the Alternative Energy Development Board (AEDB), the Board had been able to bring together the German wind turbine manufacturers and American investor to produce these turbines in Pakistan.


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## Neo

ISLAMABAD (May 13 2006): With an increase of 15 percent over last year, total outlay of the federal budget for 2006-07 would be around Rs 1.159 trillion, against Rs 1.009 trillion of 2005-06.

Sources said that total outlay and sector-wise allocations of the next budget was discussed at a meeting held at the Prime Minister Secretariat the other day. Prime Minister Shaukat Aziz was in the chair. It was the first meeting on the forthcoming budget at this level.

Sources said that the Prime Minister was given a detailed presentation on revenue target, social sector spending, defence budget and other major heads, for which the funds would be allocated in the 2006-07 budget.

They said that the meeting was informed that, on the basis of substantial increase in collection in the current fiscal year, the government is likely to fix revenue target for Central Board of Revenue (CBR) at around Rs 860 billion, against the current fiscal year's target of Rs 690 billion. The meeting noted with satisfaction that revenue collection was exceeding the target this year.

The meeting was told that the government would make substantial increase in the allocations for the social sector in the next fiscal year to expedite work on people-centric development schemes and programmes.

The meeting was also informed that the government was considering to enhance the amount of Public Sector Development Programme (PSDP) to around Rs 342 billion. The government had allocated Rs 304 billion for PSDP this year, and undertook a number of mega schemes and programmes of general public importance.

According to sources, the provinces would have around 50 percent increase in their share in PSDP under the 7th NFC award. This would provide Rs 34 billion extra, over last year's allocations, to take the provinces net share in PSDP to Rs 102 billion. This share was Rs 68 billion in the outgoing year.

Sources said the meeting was also informed that in terms of GDP-to-income ratio the government would keep the defence budget unchanged. However, in terms of total volume it would increase by 10 percent. The increase in total defence budget would cover inflationary effect as well as extra spending in the forces' expenditures.

Sources said the Prime Minister directed the officials engaged in budgetary work that they should give top priority to those schemes and programmes which would directly benefit the people, and improve their living standard.


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## Neo

ISLAMABAD (May 13 2006): In a bid to develop public-private partnership culture and accelerate the process of second-generation reforms in the country, the Asian Development Bank (ADB) on Friday agreed to provide $600 million loan to Pakistan.

The bank would provide $300 million programme loan for second-generation reforms in infrastructure, utilities and basic public sector services and $300 million multi-tranche financing facility for public-private infrastructure projects.

The donors on Thursday during deliberations of the Pakistan Development Forum (PDF) also called for greater role of the private sector in economic development, in general, and infrastructure, in particular, through public-private partnership and cautioned that without augmenting share of private sector in the economic activities, it will be difficult to sustain high economic growth.

The understanding was reached at a meeting held between, Central and West Asia Department of the ADB Director General Juan Miranda and Adviser to the Prime Minister on Finance and Revenue Dr Salman Shah here, on Friday.

The ADB team included Noy Siackhachanh, Director, Governance, Finance and Trade Division, Peter Feldon, Country Director and Rainer Hartel, Senior Finance and Infrastructure Specialist. Aijaz Ahmad, Chief Executive Officer (CEO), Infrastructure Project Development Facility and representatives from the Economic Affairs Division (EAD) accompanied Salman Shah.

Two special purpose vehicles will undertake the implementation. The first vehicle is the recently incorporated Infrastructure Project Development Facility (IPDF) that will serve as the Co-ordination Cell for the public-private partnership.

The second vehicle, the Infrastructure Project Financing Facility (IPFF), will provide "viability gap financing" as explicit targeted subsidy for capital or operational expenses to the projects where cost recovery tariffs may not be affordable for certain segments of the population.


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## Spring Onion

Good work Neo.
Hey Mods Neo is doing great work by updating economy news daily as i had noted it so why not you people think over making him the incharge of the economy thread as no one else bother to post or comment,its only him who daily update it.
Sorry Neo i havnt asked u but i said whatever i felt is right.
Jana


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## Neo

KARACHI (May 13 2006): Teamwork together with dedication and commitment of all employees will further take PIA to new heights. PIA Chairman and CEO Tariq Kirmani stated this, while addressing the cockpit crew at the PIA Head Office in continuation of a series of communication meetings with the airline employees.

He said that the initiatives taken so far have resulted in accomplishing remarkable progress in the airline and it has registered a growth and upward trend in all areas of its operations.

The performance indicators of the airline such as seat factor, yield, passenger traffic, market share, aircraft utilisation and share values have shown a significant increase in 2005.

The seat factor increased to 73.1 percent in 2005 as compared to 69.1 percent in 2004. With a 10 percent growth in passenger traffic, the share of domestic market was up by 65.6 percent and international market share was up by 50 percent in March 2006. Fleet utilisation was higher than in 2004 and even better than the industry average. PIA recorded the highest punctuality rate in the last 26 years of its history that averaged 87 percent. In fact, on May 8, 2006, punctuality of the airline touched 100 percent, an event unprecedented in the history of the airline.

Emphasising upon the importance of service standards, he said that the airline's focus must be on customer satisfaction as a single disgruntled passenger can shun away 20 passengers.

Appreciating the improvement in service standards, he said, the feedback received from the passengers in 2004 was 160 per week and out of this number of complaints were a massive 43 percent. The situation has totally changed and the PIA is now receiving around 1,600 inputs with a decline in number of complaints.-PR


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## Neo

New Delhi, May 11, 2006

India is seriously considering joining a Central Asian gas pipeline that originates from Turkmenistan by the end of this month, but the decision to join the new project will not detract from its commitment to the Iran-Pakistan-India pipeline.

"We are serious about joining the Turkmenistan-Afghanistan-Pakistan (TAP) gas pipeline project. Hopefully, it should happen this month," official sources said.

"But this does not mean that we have given up on the Iran-Pakistan-India (IPI) pipeline. On the contrary, all three countries have stepped up efforts to make it real," the sources added.

The government Thursday admitted that it was keen to join the $3.3 billion TAP project as it "offered the possibility of an alternative source of gas supply to India".

Foreign Secretary Shyam Saran wrote a letter to MS Srinivasan, secretary in the ministry of petroleum and natural gas April 24 in which he sent the external affairs ministry's comments on the TAP project contained in an annexure.

"These are comments on a draft cabinet note prepared by the ministry of petroleum and natural gas concerning a proposal for India to participate in the Turkmenistan-Afghanistan-Pakistan natural gas pipeline project," external affairs ministry spokesperson Navtej Sarna clarified on Thursday.

The annexure lists out issues that need to be considered before a final decision on joining the project is taken, Sarna said, while underlining the point that the annexure should be seen as not containing recommendations, but different options the government has to meet India's burgeoning energy needs.

"In view of the continuing tension over Iran on the nuclear issue, the IPI project may not be easy to implement even if the economies are mutually acceptable," the annexure says.

Sarna clarified that these comments, which form part of the annexure, were erroneously attributed to Saran by a daily.

The petroleum ministry plans to approach the Cabinet to get its nod for a formal request by the end of the month on becoming an official member of the project. In mid-February, the steering committee had given India three months to submit a formal request.

India was accepted as an observer at the TAP committee last year.

However, an array of crucial issues, including the availability of adequate gas reserves in Turkmenistan, third party certification of reserves, project structure/security and gas pricing, remain to be resolved before India takes a final decision on joining the project.


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## Spring Onion

Good work Neo.
Hey Mods Neo is doing great work by updating economy news daily as i had noted it so why not you people think over making him the incharge of the economy thread as no one else bother to post or comment,its only him who daily update it.
Sorry Neo i havnt asked u but i said whatever i felt is right.
Jana


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## Neo

Saturday May 13, 2006 

ISLAMABAD: Advisor to Prime Minister on Finance Dr Salman Shah here on Friday in a meeting with an 11-member team from National War College USA emphasized that Pakistan needed duty free access to the US and EU markets for its products to give future boost to economy and help it cope with the fallout of Afghan war on countryÃ¢â¬â¢s economy. 
Referring to the bilateral Investment Treaty he hoped that it would ultimately lead to a free trade agreement between the two allied countries. 

Welcoming members of the delegation comprising senior military and civil officials from various US government organizations who called on him, he gave an overall review of the economic performance of the country which had witnessed rapid growth and transformation over the last six years. 

Appreciating the policies of President General Pervez Musharraf and Prime Minister Shaukat Aziz he said the government has taken bold steps by launching structural reforms in the country. 

Mentioning of present setups successes he said deregulations, privatization and liberalization along with revenue generation reforms had been the hallmark of the present government economic policies be cause of which macro-economic imbalances had been removed and economic growth has considerably increased. 

Mentioning of future goals he said we want to sustain GDP between 6 to 8 percent. 

He told that recently Steel Mill and KESC had also been privatized. 

He claimed that the steps taken by the government had fetched huge foreign investment. 

Dr Salman Shah said that the countryÃ¢â¬â¢s economy is now driven by the private sector and the role of bureaucracy in running the businesses had been eliminated. 

Replying a question the advisor told the government is committed towards rural development and poverty alleviation. 

The Advisor told the government has introduced economic reform programmes including Khushal Pakistan Fund and Community Development Projects to ensure availability of basic amenities of life to the rural population. 

He said Pakistan is engaged in dialogue with Iran and Central Asian States for development of energy pipelines and building up railway links and roads.


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## Neo

Saturday, May 13, 2006 

ISLAMABAD: The fundamental strength of PakistanÃ¢â¬â¢s economic recovery was demonstrated this past year when it became clear that OctoberÃ¢â¬â¢s devastating earthquake had not derailed PakistanÃ¢â¬â¢s robust economic growth trends. 

This was said by the representative of United States delegation in a written statement at the concluding remarks at Pakistan Development Forum Friday.

He said the United States government thanks the government of Pakistan for organizing this sixth Pakistan Development Forum. Ã¢â¬ÅEach year this Forum provides our government and other donors the opportunity to exchange views and coordinate priorities, while in turn strengthening partnerships among all those committed to development in PakistanÃ¢â¬Â, he added.

In the spirit of this yearÃ¢â¬â¢s Forum theme, he said, Ã¢â¬Åwe applaud the government for taking aggressive steps to promote private sector-led development. We share the vision and commitment to building a progressive, modern, prosperous and democratic stateÃ¢â¬Â. He said that the fundamental strength of PakistanÃ¢â¬â¢s economic recovery was demonstrated this past year when it became clear that OctoberÃ¢â¬â¢s devastating earthquake had not derailed PakistanÃ¢â¬â¢s robust economic growth trends. 

The earthquake was the most lethal to ever occur in South Asia, he remarked. The government reached and quickly and responsibly, and the international community responded generously. 

The earthquake relief effort was an excellent example of true collaboration and partnership among donors, governments and NGOs. We should all take satisfaction in the results achieved.

The United States government was proud to work with our Pakistan government partners at the federal and local levels in a largely successful emergency relief effort, he added. The representative said that at the November earthquake reconstruction conference the United States Government pledged $ 510 million in grant aid.

That included approximately $ 200 million in earthquake emergency relief assistance. Ã¢â¬ÅWe have pledged to provide another $ 200 million of assistance over the next several years to help in the transition and reconstruction of the earthquake-affected areasÃ¢â¬Â, he added. 

American companies, voluntary organizations and individuals have already contributed over $ 151 million in assistance, he added. He further said since USAIDÃ¢â¬â¢s return to Pakistan in 2002 Ã¢â¬Åwe have focused our development assistance on four major areas: education, health, economic growth and democracy/ governanceÃ¢â¬Â. 

This year, he said, Ã¢â¬ÅWe are providing approximately $ 150 million in project aid to those four areas. In addition, we provide $ 200 million each year in budget support that is associated with our shared objectives of macro- economic stability, private sector development and poverty reductionÃ¢â¬Â.


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## Neo

Saturday, May 13, 2006 

ISLAMABAD: Pakistan is attracting more foreign oil explorers than India, mainly because of the countryÃ¢â¬â¢s easier procedure of acquiring acreage for exploration wells by the foreign companies.

Ã¢â¬ÅWhen it comes to attracting foreign oil explorers, there is no doubt Islamabad beats Delhi,Ã¢â¬Â it was observed by an Indian Magazine `PatrowatchÃ¢â¬â¢ in its recent edition. Ã¢â¬ÅIn Pakistan itÃ¢â¬â¢s much easier to acquire acreage because you do not get into a head-to-head bidding war with someone who has bid a ridiculous amount of exploration wells,Ã¢â¬Â the Magazine quoted one operator.

Pakistan wants overseas companies to get involved so that they can meet their energy requirements. In India you sometimes get the feeling that we are not wanted, that they can do it on their own,Ã¢â¬Â agrees another operator.

Ã¢â¬ÅPakistanÃ¢â¬â¢s system is far more organized than you would expect. They have had the courage to see they cannot do it alone and have outsourced it.Ã¢â¬Â

India will probably insist on doing it alone. This is fine but you need the will and drive to make it happen,Ã¢â¬Â the Magazine remarked.

The Magazine also quoted Atif Khan, head of LMK Resources, who set up a national data repository in Pakistan ten years ago that Pakistan has 19 operators, most of them foreigner.

Khan admits early problems in setting up a national data repository. Ã¢â¬ÅItÃ¢â¬â¢s not a difficult thing to implement,Ã¢â¬Â he says. Atif Khan said setting up a national data repository in Pakistan is cost-effective. The beauty of this system is that it costs the government nothing,Ã¢â¬Â he added.


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## Neo

Saturday, May 13, 2006 

KARACHI: The board of the national flag carrier, Pakistan International Airline (PIA) will hedge fuel up to 20 percent of the total fuel quantity needed by the airline, said Tariq Kiramani, chairman and chief executive officer of PIA.

While addressing the cockpit crew at PIA head office here on Friday, the Chairman said, Ã¢â¬ÅTeam work, together with dedication and commitment of all employees, with further take PIA to new heights.Ã¢â¬Â 

He said that initiatives taken so far have resulted in accomplishing remarkable progress in the airline and registered a growth and upward trend in all areas of its operations. 

The airline performance indicators such as seat factor, yield, passenger traffic, market share, aircraft utilization and share value have shown a significant increase in 2005, he said.

Seat factor increased to 73.1 percent in 2005 as compared to 69.1 percent in 2004, with a 10 percent growth in passenger traffic, domestic market share was up by 65.6 percent and international market share at 50 percent in March 2006, fleet utilization was higher haen in 2004 and even better than industry average. 

PIA recorded the highest punctuality rate in the last 26 years of its history that averaged 87 percent.


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## Neo

ISLAMABAD, May 12: The government has decided to allocate about Rs12 billion for Diamer-Basha dam in the next yearÃ¢â¬â¢s development programme to complete infrastructure required for the construction of dam.

A senior government official said on Friday that the allocated amount would be utilised for the preliminary construction works, including a bridge and a road besides residential buildings.

He said the idea was to ensure that the required infrastructure was fully in place before its construction work started after two to three years.

He said there would be no major allocation for any other major dams in the next yearÃ¢â¬â¢s budget. But, he said, some funds would be made available in the next yearÃ¢â¬â¢s Public Sector Development Programme (PSDP) for the construction of about Rs100 billion Neelum-Jhelum hydroelectric power project in the Azad Kashmir.

The estimated cost of the Diamer-Basha dam is $6.7 billion, including an updated feasibility report.


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## Neo

Saturday, May 13, 2006 

CHITRAL: The government has dropped its plan to import electricity from Tajikistan through the Wakhan-Boroghil Pass-Chitral route, sources told Daily Times on Friday.

Sources said that the plan had been dropped despite a number of surveys by the National Engineering Services of Pakistan (NESPAK), which had recommended that the Wakhan-Chitral route was the safest for the import of electricity from Central Asian states.

The decision was taken at a two-day energy ministersÃ¢â¬â¢ conference in Islamabad, in which Kabul told Islamabad that the Wakhan route was non-viable. Ã¢â¬ÅThere is no road access, it remains closed for six months in winter, is financially uneconomical due to mountainous terrain and is very vulnerable to sabotage,Ã¢â¬Â sources quoted an Afghan minister as telling Pakistani authorities. The minister said that his government would support the Kabul route.


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## Neo

LAHORE (May 14 2006): Between 2006 and 2009 the Asian Development Bank (ADB) has committed $700 million for various identified projects and programmes, tailor made for Punjab, in the areas of water resources, renewable energy, public resource management, rural and urban development, social sectors and justice support.

Sources disclosed this here on Saturday. They said that from ADB, Punjab would also benefit from a number of national programmes in micro finance, power transmission and distribution, rural modernisation, and private sector development.

According to them, at present the ADB's country strategy and programme is based on three pillars: good governance, sustainable pro-poor growth and inclusive social development, while the ADB's proposed future areas of assistance include economic infrastructure, public resource management and governance, and inclusive social development.

Under the economic infrastructure, various areas have been identified for assistance. In water sector and irrigation, Punjab Irrigated Agriculture Development Sector Project has been formulated, which would provide support for irrigation system rehabilitation and modernisation, integrating farm water management and agriculture activities with canal rehabilitation, and promoting integrated water resource management for surface water, ground water, and drainage.

The Punjab Road Sector Development was another domain, in which assistance would be provided for improving important provincial highways and rural area roads that increase access for rural population to markets and social services, and facilitate trade and provides access to income and employment opportunities.

In power sector, efforts would be made to develop renewable energy, under which the use of renewable energy sources for power generation to meet Pakistan's target of the 10-percent of the energy mix from renewable sources by 2015 would be promoted. This would also include construction of five small to medium hydropower stations in Punjab.

Finally, the ADB also proposes to assist in urban development, specifically developing basic urban services in the southern Punjab, which would include reducing urban poverty, improving community health, and reducing environmental degradation in 21 project towns by improving the water supply, sanitation, solid waste management, and roads for low-income communities.


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## Neo

PESHAWAR (May 14 2006): NWFP Governor Khalil-ur-Rehman has said that development process for socio-economic uplift of the people in Fata is progressing at the tremendous speed which can be gauged from the ratio of funds utilisation in the area over the past almost five years.

In fact, he added, allocations for this purpose under the regular annual development programme as well as the special development packages has not only been increased almost ten times over the period of five years but the achievements with regard to their physical consumption on development schemes is also unprecedented in the entire country.

Talking to a group of students of Mass Communication Department of the Islamabad based Margalla F.G. Degree College for Women, who called on him at Governor's House here on Saturday, the governor said, even during the current financial year, almost more than 93 percent of the total allocations have already been consumed which neither have any example in the history of the area nor in the entire country in this respect and Insha Allah by the end of the year, 100 percent achievements would be accrued.

Secretary to Governor, Arbab Muhammad Arif and Additional Secretary Information & Public Relations, NWFP, Muhammad Afzal Khan were also present on this occasion while a known journalist, Sheikh Hafeez-ur-Rehman accompanied the delegation.

Responding to a volley of questions from the budding journalists, the governor said, indeed, the development activities are in progress throughout Fata including those areas where accessibility of the government institutions has been made possible over the past five years.

In this connection, he added, construction of road network together with the establishment of educational and health institutions are being given top most priority and fortunately the response from the respective people is highly encouraging and appreciable.

Talking on another point the governor also admitted that definitely the government is confronting the problem of shortage of staff particularly to manage the health and educational institutions. However, he added, we have been trying to tackle the problem through making appointments on contract basis even from amongst the candidates hailing from outside the Fata. As far as provision of educational facilities are concerned, the governor said, special emphasis is being given towards the promotion of female education which is also receiving great enthusiasm and support from the respective people as well.

Talking on a point regarding law and order in Fata, the governor said, barring certain areas of North and South Waziristan agencies, the situation has always remained quite normal where the occurrence of the untoward incidences during the recent past was too the outcome of the circumstances prevailed across the borders. In fact, he said, the general crime rate in Fata has always been found very negligible and the writ of the government is established under the prevailing laws.

Earlier, during a briefing, Shahzaman Khan, Director General (Media) of Governor's Secretariat highlighted the salient features of the pace of development in Fata as well as the historical background of the administrative system.

In the education sector, he said, the number of degree colleges have already been increased from 7 to 32 out of which 12 are meant for women whereas 1,042 new educational institutions in the school sector have been added in the existing network over the period of past five years.

Similar is the case with regard to the communication sector wherein too, he said, apart from the construction of road network to ensure accessibility of the respective people to the rest of the country, the government has planned to establish one radio station in each agency and out of which four radio station are already working - one each at Wana, Miranshah, Razmak and Jamrud. Besides, he added, written material is also being published under the aegis of the Media Cell to disseminate knowledge amongst the respective circles.


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## Neo

By Farhan Bokhari, Special to Gulf News

Islamabad: The latest figures reporting a rising in Pakistan's annual trade deficit last month on a year on year basis provides no comfort for the future of the South Asian country's economic recovery. 

The cumulative trade deficit during the first nine months of the financial year (July-June) rose to about $9.5 billion, up from less than $5 billion for the same period a year ago.

This is indeed an alarming trend, though one which has so far received little attention from Pakistan's leaders. 

General Pervez Musharraf, the military ruler, and prime minister Shaukat Aziz, still claim publicly that a rising import bill which has principally forced up the deficit is a sign of a healthy and prospering economy. 

If imports rise sharply, that must be partially due to increased demand from a recovering industry, goes the official argument.

In this background, the warnings from some participants in the annual Pakistan Development Forum an annual gathering of primarily western donors, who met in Islamabad during the past week, could not have been more timely. 

Oil import bill

Representatives of donors have just left Pakistan after calling upon the government to enforce tight controls so that key economic indicators remain well within control. 

For Pakistan's friends and donors, the reality of what many describe as an overheated economy is a dangerous development for the country, irrespective of the spin put across by its leaders.

The trade deficit may in part be driven by such realities beyond Pakistan's control as high international oil prices which have added to the woes of many other countries too. 

Sharply rising oil import bills may have been beneficial for the world's few large oil exporting economics. But they have added to financial pressures over the much larger community of oil importers.

However, there are many other realities which are hitting Pakistan badly. The so called economic recovery so far appears to have been largely based on a sharp growth in trading activities. 

For instance, the fast rising sale of new cars is one trend that is often portrayed by government leaders as a sign of recovery.

However, this is just a sign of increasing consumption and not a parallel fast paced increase in jobs for the large community of Pakistan's unemployed. 

Ultimately, Pakistanis have only witnessed a widening gap between the rich and the poor, the haves and the have nots. As Pakistan's roads have choked with a rise in the number of cars, its community of impoverished remain significantly large to cause the danger of havoc for any country. 

The Pakistani government claims that the number of Pakistanis below the poverty line has fallen from 33 per cent of the population to a range of 25-26 per cent. This is a figure which is disputed by many.

But even if this statistic was acceptable, it still poses a formidable challenge. Even a quarter of Pakistan's population of about 160 million living below the poverty line is an alarming figure. 

Bottom line

The government's resolve to put such priorities on a fast track such as provision of basic needs and social services to the poorest of the poor, remains weak. 

Pakistan, notwithstanding claims of reform from its leaders, continues to be a country where the elite enjoy far better access to resources and economic opportunities than the poor.

The bottom line is indeed far too profound to be easily ignored. The rising trade deficit represents an unhealthy trend for at least two equally related reasons. 

On the one hand, it represents an economic trend which underlines the reality of a society with its elite continuing to be consumption oriented. 

On the other hand, the trade deficit like many other important indicators does not provide any guidance on precisely how Pakistan would ultimately tackle some of its acutest and most difficult challenges.

In the long run, Pakistan lives with the danger of having its economy succumb to the failure of its government and the state of beginning to address the large social divide between its rich and the poor. 

In sharp contrast, there may well be far more emphasis on backing the kind of economic recovery which only promotes the status quo. What lies behind the trade deficit is a direction that Pakistan is best left not to take.


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## Neo

Sunday, May 14, 2006 

ISLAMABAD: Pakistan has asked the Asian Development Bank (ADB) to take a critical look at the financial and non-financial costs to its clients, since these largely influence their borrowing decisions. 

Competitive lending charges, with the least possible burden of policy baggage and non-financial costs, facilitated by simplified procedures and innovative lending products, need to be put in place. 

PakistanÃ¢â¬â¢s representative attending 39th Annual General Meeting of the ADB, held at Hyderabad, India, last week, said in his address that competing sources of infrastructure financing are available to the major borrowers from the ADBÃ¢â¬â¢s ordinary capital resources (OCR) and their public infrastructure entities. These sources are not confined to the multilateral development banks (MDBs) and bilateral agencies. The ADB will need to compete with these alternative sources of financing, including those in the commercial sector, in order to increase its business. Competitive lending charges, with the least possible burden of policy baggage and non-financial costs, facilitated by simplified procedures and innovative lending products, need to be put in place. Reduced costs of doing business with DMCs will play a critical role as they determine the relevance of the ADB. The ADB needs to become more relevant, more responsive, and more result oriented. This challenge requires strong commitments from the ADB and its stakeholders.

PakistanÃ¢â¬â¢s economy has continued to perform strongly in recent years with economic

growth accelerating to 8.4% in 200405, the fastest pace in two decades. The strong economic recovery since 2002-03, accompanied by macroeconomic stability, has been underpinned by prudent macroeconomic policies, wideranging structural reforms, fiscal discipline and consistency and continuity in polices. These policies have contributed to a marked improvement in productivity and in consumer and investor confidence. This has led to growing domestic demand, which should support growth at a robust level over the medium term.

However, PakistanÃ¢â¬â¢s economy has faced headwinds from rising energy prices. The price of oil touched an all-time high at over $70 per barrel from the beginning of the current fiscal year. Pakistan was then struck by the massive earthquake of 8 October, causing widespread destruction of areas and human lives.


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ISLAMABAD (updated on: May 15, 2006, 17:38 PST): Advisor to the Prime Minister on Finance Dr. Salman Shah has said the government is implementing a comprehensive strategy to sustain current economic growth rate during the next ten years.

He was inaugurating a two-day regional conference on Competitiveness and Economic Growth in Asia in Islamabad on Monday.

The conference has been organised by The Competitiveness Institute (TCI) in collaboration with USAID.

Dr. Salman Shah said we have been able to experience substantial economic growth during the last three years, which has resulted in poverty reduction and improved employment generation. He said, we intend to continue this reformation process for another ten years with an objective to double our economic growth.

To sustain this economic growth, the government, he said, is concentrating on improving human capital through enhancing vocational training, ensuring provision of energy on affordable prices, improvement of mega cities, improvement in basic infrastructure of rural areas, provision of world class network of rail, roads and ports, promoting public private partnership and above all reinforcing public confidence in Pakistan's economic future.

He said, now we are focusing on promoting competitiveness to enhance productivity and create knowledge-based economy.

This practice would go a long way in further improving our economy and create more opportunities for employment besides poverty reduction and upgrading living standards of the masses, he added.

Dr. Salman Shah said, that competitiveness support fund is being launched with the partnership of USAID and European Union costing fifty million dollars.

He said the United States would provide twelve million dollars while European Union will provide ten million dollars and Pakistan government will provide matching amount for this project.

The fund will provide technical and financial assistance to the entrepreneurs in private sector to improve productivity and enhance competitiveness which would help access of Pakistani goods in international market, he maintained.

Speaking on the occasion, US Ambassador Ryon C. Crocker appreciated Pakistan's economic policies and said these are truly impressive, which has resulted in sustainable economic growth despite earthquake devastation.

He said, due to these policies, Pakistani exports have appreciated, foreign direct investment enhanced and poverty has been reduced.

The United States and Pakistan are strong allies and friends, he said, and his country will continue Pakistan for further strengthening its economy and enhance competitiveness.

United States will provide 1.5 billion dollars to assist Pakistan in developing education, health, governance and economic sectors during the next five years, he said. USAID is also providing assistance to Pakistan in improving Dairy sector, Gem and Jewellery, Marble and Granite industry for value addition, he added.

Experts from twenty-two countries are participating in the two-day conference, which is first of its kind in the region.


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## Neo

ISLAMABAD (May 15 2006): Pakistan is likely to allow import of 100 more items from India, from next fiscal year, out of the 286 items passed on by New Delhi through diplomatic channels and during the third round of Joint Study Group (JSG) held at the end of March.

In the joint statement issued at the end of JSG meeting, Pakistan had agreed to consider increase in importable items from India, in consultation with the stakeholders and fulfilment of legal requirements.

Sources in the government here told Business Recorder that Commerce Ministry had received a list of 286 items from India (271 through diplomatic channels and 15 at the JSG), whereas local business community had demanded permission to import 900 items.

After detailed comparison of both lists and keeping in view the interests of local industry, the Ministry identified 100 items, which would be included in the positive list, for the time being.

According to sources, preference would be given to those items on which duty is about 5 percent and are not locally manufactured.

They said that the list would be finalised at an inter-ministerial meeting to be held after the budget, after seeking approval from the Prime Minister and the Cabinet.

They further said that with the inclusion of 100 more items, the positive list would reach up to 882 items as the decision to import cement from India could be withdrawn after what the Economic Advisor to Finance Ministry, Dr Ashfaque Hasan Khan, said the prices of cement in the local market would come down in the Rs 270-272 range on sustained basis.

Presently, the trade volume between the two countries stands at less than $1 billion, and is very much in favour of India.


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## Neo

KARACHI (May 15 2006): The burgeoning economy, booming financial sector and the ongoing reforms would provide further impetus to the non-life (general) insurance industry of Pakistan and expected that in next five years gross premium of the listed companies would be Rs 63 billion from Rs 25 billion in 2005.

Despite 20 percent annual increase in gross premium during last four years, the penetration of non-life insurance is still very low at 0.4 percent, far lower than regional countries, according to the detailed report on the sector issued by JS Capital Markets.

The brokerage says: "we recommend 'Overweight' stance on the under-researched non-life insurance sector as there is high probability that this sector will perform better than the broader market."

Rising industrialisation, improving per capita income, higher investment in infrastructure projects, soaring trade activities, privatisation of public entities and competition amongst the insurance companies is likely to result in a gross premium Cagr (compounded annual growth rate) of 25 percent for the next five-year as per the said report.

The gross premium of listed (inclusive of state owned NIC) non-life insurers, according to JS analyst, was Rs 25 billion in 2005 and is likely to reach Rs 63 billion by 2010. This will help in enhancing the non-life gross premium to GDP ratio to 0.5 percent.

Due to minimum paid-up capital requirement of Rs 80 million for non-life insurance firms the number of non-life insurers has dropped. "Total paid-up capital and equity of our sample non-life insurance companies has improved to Rs 5.7 billion and Rs 25.4 billion from Rs 4.2 billion and Rs 13.2 billion in 2001, respectively", said the report.

Profitability of these insurers has reached Rs 5.7 billion in 2005 from Rs 1.2 billion in 2001, a CAGR of 47 percent. In 2005 alone, earnings jumped by 95 percent.

Very interesting point mentioned in the JS Capital Markets report was that contrary to common perception, contribution of investment income in total income for Pakistan companies was in the range of 55-65 percent in last three years compared to 75-85 percent of leading international non-life insurance companies.

Writing on the key insurance firms the analysis says that Adamjee is Pakistan's largest non-life insurer with 27 percent share in 2005 gross premium. The new management led by Mansha (Nishat) Group, in last two years has tried to improve company's financial health. With its aggressive plans, the company can take full advantage of the rising insurance market and can regain its lost market share. Besides this, Adamjee's equity base and balance sheet footing is getting stronger due to its equity portfolio. On FY06E and FY07E earnings, Adamjee is trading at PE of 8.3x and 6.8x with PBV (on cost basis) of 4.4x and 3.0x, respectively.


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## Neo

FAISALABAD (May 15 2006): Dr Salman Shah, Adviser to the Prime Minister on Finance and Revenue has announced that the forthcoming Federal Budget 2006-07 will be business friendly and prosperity oriented, which will not only strengthen the national economy but also further reduced the poverty.

Addressing the Pre-Budget Seminar 2006-07, arranged by the Faisalabad Chamber of Commerce and Industry, he emphasised the need for unity of business community over the "National Issues" and all chambers from Karachi to Khyber should jointly convinced the agitating lobby about the national benefits of construction of dams, which are dire need of our country.

Salman Shah said that the development challenges for Pakistan include sustaining an accelerated economic growth, reducing poverty, providing essential social and economic services and infrastructure to poor, creating job opportunities and improving governance.

Social sector progress in Pakistan during the preceding four years has been considerable. There is still a lot more to accomplish for reducing the gender gaps in literacy and enrolments, providing better health facilities and access to safe drinking water. The process of land distribution to the landless households also needs to be accelerated to shore up efforts in alleviation of rural poverty in Pakistan, he added.

Dr Salman said that the second generation reforms are aimed at strengthening institutions, improving the competitiveness of our industries, building a robust financial system in an environment of global financial restructuring, further strengthening of tax administration, improving our legal, police and judicial system, restructuring our civil services and promoting transparency in economic policy-making and strengthening the country's physical and human infrastructure needed to support high growth trajectory.

We are focused on meeting the twin objectives of achieving and sustaining the high economic growth and ensuring that this growth translates into human development. For this we are committed to the development of the social sectors, in particular health and education", he added.

The Adviser said that the government recognises Pakistan's private sector as the main engine of growth and the primacy source of employment generation. The private sector can produce, distribute and trade more efficiently and at a lower cost than the government, he added.

Salman Shah said that the interest in privatisation programme and the response to incentives given to local and foreign investors in sectors as diverse as tourism, housing, oil and gas, telecommunication, information technology, and textiles is clearly indicative of our interest in broadening the recovery base.

The role of the government will be that of a facilitator and catalyst in creating a conducive environment in which the private sector can play its effective role, he added.

Pakistan Government recognises that public private partnerships for service delivery are not just a necessity but also a compulsion for achieving efficiency and effectiveness.

Pakistan now has a comprehensive public-private partnerships programme in place."

He said, this programme includes the provision of a policy and legislative framework for public-private partnerships; an infrastructure project development facility that will support and build capacity for viable and sustainable infrastructure projects and an infrastructure project financing facility for providing residual financing and targeted subsidies.

Salman Shah mentioned that Pakistan's economy has continued to perform strongly over the last several years with economic growth accelerating to 8.4 percent in 2004-05, its fastest pace in two decades.

The strong economic recovery since 2002-03 accompanied by macroeconomic stability, he said, has been underpinned by prudent macroeconomic policies, wide-ranging structural reforms, fiscal discipline and consistency and continuity in policies.

He said, "we have made substantial progress in not only reviving overall growth but also have been successful in drastically reducing internal and external macro-imbalances, bringing public and external debt ratios to sustainable levels; maintaining market determined interest rates and exchange rates leading to upgraded creditworthiness for Pakistan in international capital markets culminating in the floating of 30 years Pakistan dollar bonds.

This is an unprecedented achievement for a country that just graduated from an IMF PRGF programme in 2004, he remarked.

"Our major achievements include a strong economic recovery supported by a robust performance in industry, agriculture and services; extra-ordinary strengthening of domestic demand; reduction in fiscal deficit; a high double-digit-growth in exports and imports; increased workers' remittances; stability in exchange rate; foreign exchange reserves; a sharp reduction in the public and external debt burden; accelerated privatisation programme; capital market strengthening and improved social and human development indicators," he added.

Dr Salman Shah mentioned that the achievements notwithstanding, the country is also faced with some major challenges that emerge from the strong economic recovery. These relate mostly to the incline in the price levels and widening of trade and current account deficits, he added.

Dr Salman Shah informed the participants that for the first time since the initiation of the PRSP process in 2001-2002, the results of a representative household survey, PSLM 2004-05, on the incidence of poverty, are available.

The survey results estimate that poverty has declined significantly by 6.7 percent point from 32.1 percent in 2001 to 25.4 percent in 2004-05.

The most recent Pakistan labour survey indicates a substantial decrease in the unemployment rate with the creation of 5.5 million new employment opportunities in the last two years, he added.

He said, the policies of privatisation, liberalisation and deregulation have contributed to a marked improvement in productivity and in consumer and investor confidence, leading to strong growth driven by domestic demand and exports. "We have truly laid the foundations of a robust and vibrant market economy driven by a resurgent private sector." The Adviser, however, stressed that "the real issue facing us is to ensure that we can sustain the stability and growth well into the next decade and beyond."

"This growth and stability will be sustainable if we are successful in achieving the goals of equity, poverty reduction and human development embedded in the MTDF, PRSP and MDGs," he added. He said, in the current fiscal year the government's effort was to consolidate the gains made over the last three years and also to address the challenges of economic recovery.


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## Neo

Accordingly, the real GDP was targeted to grow by 7 percent, supported by a 4.2 percent growth in agriculture, 12 percent growth in manufacturing and a 6.5 percent growth in all other sectors.

Fiscal deficit was targeted at 3.8 percent of GDP, exports and imports were targeted to grow by 16.4 percent and 16.2 percent, respectively and remittances were targeted at $4.3 billion. "We are well on our way in generally achieving our targets with the latest inflation data showing April 2005 to April 2006 CPI down to 6.13 percent", he maintained.

The Adviser said, "Our mid-term targets given in the PRSP 2003 are to be completed in June 2006. To avoid vacuum we evaluated our strategy in 2005 and started working on second generation PRSP II based on a board based consultative process. The first draft of this is in the process of being completed."

Dr Salman Shah said, the government's integrated policy and strategy as espoused by the PRSP is geared towards high growth, infrastructure and private sector development, improvement in service delivery, and good governance aligned with the MDGs.

"The growth strategy rests on seven pillars: water security, energy security, infrastructure development, human capital development, and second-generation reforms."

"We are looking forward to achievement of a sound and stable economic development and achievement of human development." He said, the government is committed to fulfilling its goal of providing quality education for all, ensuring access to safe and effective health services, reduce maternal and infant mortality rate, providing access to water and sanitation and achievement of targets that have been defined in the MDGs, PRSP and MTDF. "We stay committed and responsive to our citizens and to our development partners in maintaining macroeconomic stability, implementation of reforms and in removing the constraints and challenges that we are faced with vis-a-vis capacity, implementation and continuity, he added.

In particular, he reiterated that the human development challenges we face are immense and that Pakistan is slowly but steadily making progress towards achieving its human development goals. Dr Salman Shah said, the government is striving to further broaden the country's tax base in order to provide increased revenue for investment in improved infrastructure, health, and education.

He said that our industry and the manufacturing sector are performing better, construction and service sectors are making substantial contributions, trends in foreign direct investment, investor interest in Pakistan, especially in the areas of oil and gas, telecommunication, financial services and information technology are improving. These positive tends will further strengthen the recovery."

He said that the government is striving to ensure water security, increase the availability of energy resources to help sustain the high growth of economy especially in the fields of industry and agriculture. "Growth and competitiveness is another focus area for the government."

Earlier presenting welcome address, President FCCI, Mian Muhammad Hanif said that our economic policies should be long-term and consistent for better results.

He emphasised on investors to invest in their own homeland.

He also stressed to promote different other industries like soap, ghee and edible oil, foundry and engineering etc.

Muhammad Shaheen Tabassum, Chairman FCCI committee on Budget/Trade Policy proposals said our challenge is thus to evolve a dynamic and vibrant trade policy to support overall economic growth and development of trade and industry. The strategic approach is that the government, while acting as regulator should also be a facilitator to maintain healthy trend in our trade regime. The policy should aim at to bring it at par with deep insight of the policies prevalent with high-speed economies in the area, he added.

Shaheen Tabassum said that the developing countries including Pakistan will have to reorganise their own potential in the import and export sector keeping in view the challenges of globalisation and WTO. These should be through enhanced capacity building, human resource development, diversification, innovation and novelty in industrial base. Technical and legal infrastructure should be developed to meet the current demands of Uruguay Round Agreement such as Technical Barriers to Trade (TBT), Sanitary and Phytosanitary (SPS) Measures, Trade Related Investment Measures (TRIMS) and Intellectual property rights (IPR) laws.

Efforts should be made by the government and the private sector to develop an industrial culture, having capacity to comply with core labour and environment standards, he suggested.

Shaheen Tabassum said that the business community should be helped to get more and more awareness, implications of trade barriers particularly the Non-Tariff Barriers (NTBs). Pakistani commercial counsellors/attachies abroad should provide full feedback on the NTBs and advocate towards exporters' problems in the importing countries. There is an earnest need to hold negotiations with the developed countries, he added.

Commenting over the "Environmental and Social Standards", Shaheen Tabassum said that the fate of our industrial and agriculture products hangs in balance and is highly dependent on implementation of the regulations and adoption of required environmental and social standards. He demanded that collective effluent treatment plant be set up with the government financial support, as it will be difficult for industries owing to mega cost involved.

Mian Muhammad Latif, Chairman, FIEDMC, Mian Muhammad Idress former President FCCI and Chief Executive Sitara Chemicals, Mian Javed Iqbal, Sitara Energy, Suleman Zahid Jamil, Rashid Jan Mohammad and General Abdul Qayyum (Retd), Deputy Chief CPLC also addressed the pre-budget seminar.


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## Neo

LAHORE (May 15 2006): Punjab Chief Minister Chaudhry Pervaiz Elahi has said that a comprehensive programme was being chalked out for urban development and to remove backwardness from the province.

Presiding over a high-level meeting at CM House here on Sunday, he said that a revolutionary programme was being implemented to enhance financial resources of the common man.

The Chief Minister said mega projects were being completed with a fast pace, adding that federal, provincial and district governments were effectively implementing the reform agenda, ensuring tangible results in various sectors. The mega projects would further strengthen the economy of the province, he added.

Pervaiz Elahi added that livestock sector could play a crucial role in poverty alleviation, strengthening rural economy and improving livelihood of the people, adding that government had taken special measures in that regard. Now, people are being provided loans for purchasing and keeping buffaloes, cows, sheep and goat, he said and asserted that that programme would be further expanded to improve rural economy.

Pervaiz Elahi said that effective planning was being made for the promotion of technical education, so that masses could find maximum job opportunities.

He said that health sector was also very much in focus and hefty grants had been allocated to ensure better and modern facilities to the patients. He added that availability of medicines and paramedical staff at healthcare units has been ensured. Government has planned establishment of a cancer hospital at Lahore, while trauma centres and burn units are being established throughout the province, he maintained. He said that agri marketing sector was being strengthened for better marketing of agri products and to ensure due prices of produces to the growers.


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## Neo

ISLAMABAD (May 15 2006): A US organisation, 'Family Entertainment', will invest $130 million in Pakistan, its senior vice president Zafar Tahir said. Talking to a private TV channel, he said that entertainment parks would be established in Lahore and Islamabad. A family entertainment complex will be set up at Karachi beach, he said.

A total investment of $80 million would be made in Defence Housing Society Karachi.


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## Neo

MIRPUR (May 15 2006): An integrated plan of Rs 500 billion is being evolved by the government to spread the network of motorways in various parts of the country. This was stated by Federal Communication Minister Shamim Siddique while taking to APP after attending convention of AJK MQM workers held here on Saturday.

The minister said the network of motorways will be completed by 2015 under the broad-based phased programme.

The motorways will be constructed by the National Highway Authority (NHA), the minister said. The mega project included M-4 (Faisalabad to Multan) M-5 (Multan to Dera Ghazi Khan), M-6, M-7, M-8 and M-9, respectively.

The minister said the project will also cover the onward areas from DG Khan to Ratto Dhero, Hyderabad, Karachi and Balochistan.


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## Neo

FAISALABAD (May 15 2006): Tourism industry is being developed on modern scientific lines to earn foreign exchange and promote the soft image of Pakistan abroad.

This was stated by Major Shah Nawaz Badar Secretary Tourism Punjab, while addressing the first convocation of the Institute of Tourism and Hotel Management (ITHM), at University of Agriculture.

He said that tourism has emerged as a major global industry of 20th century. Realising its importance, government was fully concentrating on its promotion, he said and added that Punjab has a large number of historic and recreational sites and we must exploit this potential to earn precious foreign exchange.

He said that tourism corporation was working in collaboration with private sector to provide trained and skilled manpower in this important sector of national economy.

Irfan Ali, Managing Director, Punjab Tourism Development Corporation said that experiment of public and private co-operation for the promotion of tourism has yield best results and now government was considering opening new institutes in other cities like Faisalabad with the co-operation of private sector.

He said that government was also contemplating to start degree courses in tourism and hotel management by seeking affiliation from foreign universities.

Earlier, programme director Ms. Qurrat-ul-Ain presented address of welcome.


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## Neo

ISLAMABAD (May 14 2006): Work on the basin study would be completed in 28 months which will help to attract both foreign and domestic investment in oil and gas exploration.

In a presentation at the Ministry of Petroleum and Natural Resources here on Saturday, Director General Petroleum Concession, Naeem Malik briefed the meeting that government is providing conducive environment to the investors for enhancing the exploration and production activities with the objective to add new oil and gas reserves.

He further informed that all these efforts would not only reduce foreign exchange burden but also ensure security of energy supply. Since July last, 25 licenses were awarded for oil and gas exploration and eight to ten more licenses would be awarded by the end of next month, the DG added.

With aggressive oil and gas exploration and production activities, Naeem Malik hoped that present daily indigenous production of four billion cubic feet of gas and 68,500 barrels of oil would be increased in the days ahead.

Addressing the meeting, Federal Minister for Petroleum and Natural Resources, Amanullah Khan Jadoon said that Petroleum Policy 2006 would attract huge investment in the onshore and offshore oil and gas exploration in the country.

The minister underscored the need to mobilise all means for enhancing oil and gas production to cater for the energy requirements of the country. Jadoon also directed to expedite the basin study to attract investors with a view to find out the prospects of oil and gas in the country.

Additional Secretary Petroleum, Shaukat Hayat Durrani and senior officials of the ministry also attended the meeting.


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## Neo

THE United States is set to achieve its major policy objective of encouraging exports of electricity and gas from the Central Asia to South Asia through Afghanistan.

With the prospect of peace returning to Afghanistan sooner or later, the US is eying oil and gas reserves of the Caspian Sea region with considerable interest.

While contributing to the reconstruction of Afghanistan, the US is also seeking to create safer and cheaper routes to exploit the Caspian sea wealth to its own advantage. And Pakistan is to serve as the main bridgehead.

The World Bank has started persuading Pakistan to import 4,000-mw electricity from Tajikistan and Kyrgyzstan through war-ravaged Afghanistan, to attract maximum international financial support: perhaps as an alternate both to nuclear energy and a gas pipeline from Iran.

Besides, the regional energy network, is to provide substantial finances to Karzai Administration for reconstruction through the transit trade fees to be paid by energy end-users. It is also to create PakistanÃ¢â¬â¢s stakes in central Asian countries and to go an extra-mile to ensure peace and stability in Afghanistan.

At the very outset of this move, AES Corporation of the US has been involved in the project along with Russian giant Rao-UES. The two firms are likely to set up a joint venture to pursue the $1billion project based on inside information. The two firms enjoy good working relationship in many parts of the world.

AES has recently opened its offices in Dushanbe. It has a couple of power plants in Pakistan and Kazakhstan and generates about 30 per cent of electricity in Asia on a whole.

Similarly, the US firm UNOCAL engaged Taliban government in Afghanistan to lay Turkmenistan to Pakistan gas pipeline via Afghanistan in the early 1990s. It put together a consortium of companies and even signed a gas sales agreement with Islamabad but later left the consortium, expressing concerns over security situation.

Richard Darman, the former director of the Office of Management and Budget in President George H. W. Bush senior government, is now the chairman of the AES Corporation. He also remained associated with Washington based Carlyle Group as senior advisor on whose board of directors Bush Senior and former British Prime Minister John Major remained members for a long time.

The officials representing the USAid and the US embassy in Islamabad said early this week that the US State Department had already allocated funds and staff to promote electricity sales from central Asian states to Pakistan and Afghanistan as the project would ensure jobs and investments for its people and companies and bring peace and stability in the region.

Ã¢â¬ÅThis kind of project goes a long way for helping us achieve policy goals, to help Pakistan achieve its energy goals and I think it is a win-win situation for everyone involvedÃ¢â¬Â, said Deputy Economic Counsellor of the US embassy in Islamabad, Christian DeAngelis.

He said the project Ã¢â¬Åfits very well with US foreign policy which is to help build regional integration particularly between South and Central AsiaÃ¢â¬Â. According to Robyn McGuckin of the USAid, the Agency has a regional programme Ã¢â¬Åset-up by the State Department with precisely the mandate of promoting regional energy trade.Ã¢â¬Â Ã¢â¬ÅWe stand ready to assist directly,Ã¢â¬Â she told the energy ministers from the four countries.

The USAID draws revenues from the US tax-payers to promote the objectives of democracy and peace. It has, in collaboration with the US Energy Agency (USEA), already launched an aggressive campaign Ã¢â¬ÅSouth Asia Regional Initiatives (SARI)Ã¢â¬Â to promote regional energy cooperation.

A lot of funds have already been invested through this initiative to bring closer the energy sector regulators, officials and media persons in the South Asian region including Pakistan and get support for the initiative.

Under active persuasion of the US agencies, the energy ministers from Tajikistan, Kyrgyzstan, Afghanistan and Pakistan and lenders like the World Bank, Asian Development Bank, Islamic Development Bank, Japan Bank for International Cooperation and International Finance Corporation agreed last week to lay a 650- km power transmission line through Kabul.

They also constituted the Central Asia-South Asia (CASA) working group on electricity to institutionalise further progress on political, legal, technical and financial aspects of the transmission line from Central Asian States to Pakistan and Afghanistan. The World Bank had been authorised to hire a consultant for the project to identify various studies and prepare project structure for implementation.

The international financial institutions and the USAID also expressed their strong desire to support the project through either through direct financing or guarantees and other risk management instruments including insurance coverage.

Pakistan had proposed that Iran be invited to participate in the conference given its importance in the energy resources but was opposed. Some of the influential IFIs are convincing Pakistan that it may attract western criticism for pursuing a major gas import project with Iran and lack financial support in a risky investment owing to US opposition.

The US has organised a similar conference in Istanbul next month to promote the idea of regional energy cooperation among the Asian countries.

The World Bank is not ready, however, to support another regional energy cooperation project i.e. Iran to Pakistan or Iran to India gas pipeline. Ã¢â¬ÅWe donÃ¢â¬â¢t have an official position on the (IPI gas) pipelineÃ¢â¬Â, Vladislav Vucetic, the World BankÃ¢â¬â¢s lead energy specialist for South Asia Energy and Infrastructure.

Given the availability of vast but yet to be developed hydro energy resources in Tajikistan and Kyrgyzstan and rising demand in Pakistan and India, which may adopt the concept at a later stage, the international financial support would be forthcoming.. The United States had declined to provide any support to Pakistan for nuclear energy and opposed gas import from Iran but had promised to assist Islamabad in alternate sources of energy to meet its growing energy needs.

An alternate energy supply chain from central Asian region would also be seen as a positive move to encourage land-locked central Asian states to start trade through Pakistani ports as Islamabad presents its under-construction Gwadar Port as trans-shipment and energy port. This, on one hand, could provide energy corridor to India through Pakistan and make Afghanistan as transit trade and energy corridor to central Asian states, on the other.

Pakistan, on the other hand, has failed so far to tap over 40,000-mw of its own hydro resources due to bureaucratic and political wrangling and is now looking at importing hydropower from central Asia.

It has virtually blocked development of hydro power projects by insisting tariffs which were economically never viable and in violation of its own power policies that forced many companies to wind up their offices even before starting business.

Instead of promoting hydro power projects in a planned and phased manner, it waited and waited until power shut downs and load shedding re-emerged after about a decade. Now, once again, it has been forced to develop additional power generation capacity in an emergency situation through costly oil based projects.

The average power tariff for gas based projects has now increased to eight cents, fuel oil to 10 cents and diesel projects to 13 cents against 4.7 cents of hydro power.

Wapda has stopped setting up hydro projects on its own due to lack of finances and there has been no hydro project in the last 10 years. The government has now partially revived the 1994 power policy, with an upfront tariff for new thermal independent power producers (IPPs) ranging between 5.9 and 13.8 cents per unit to develop up to 1400-mw electricity on emergent basis.

The 1994 power policy remained under criticism for over a decade mainly because of an upfront tariff that led to installation of thermal power projects in excess of required capacity and higher consumer tariffs. The 1994 policy was based on 7-8 per cent economic growth rate which could not be sustained in the subsequent years. The upfront tariff now is based again on 7-8 per cent GDP growth.

While the government plans to tap all possible energy resources including nuclear, coal, hydro, oil and gas and wind under the energy security plan, it is time it should look back and hold accountable those who blocked tapping of natural resources over the last decade.


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## Neo

Monday, May 15th, 2006

Islamabad, May 15 (DPA) The US has asked Pakistan to abandon the seven billion dollar gas pipeline planned to Pakistan and India ahead of next weekÃ¢â¬â¢s visit by a high-level Iranian delegation, a newspaper reported Monday.

Ã¢â¬ËThe US has asked Pakistan to distance itself from the pipeline, but the leadership is adamant in its refusal to the constant US demands,Ã¢â¬â¢ The Nation quoted a senior government official as saying.

Iran and Pakistan have said the project would forge ahead despite US reservations. Pakistan said the project is vital to meet the countryÃ¢â¬â¢s growing energy needs.

The US appeal came before Iranian Foreign Minister Manouchehr Mottaki was slated to arrive May 24 in Islamabad for consultations with Pakistani leaders on key issues including the international standoff over TehranÃ¢â¬â¢s nuclear programme and the pipeline. 

A day later, Iranian First Vice President Parviz Dawoudi is also set to arrive.

Meanwhile, the joint working group of Iran, Pakistan and India was also scheduled to meet in the Pakistani capital May 22 to 24 for technical discussions on the proposed 2,670 km pipeline from IranÃ¢â¬â¢s southern Pars field. 

Those discussions are to be followed by ministerial-level talks next month in Tehran.

Pakistani officials said the project should take three to four years to complete after the three countries strike a final deal.


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## Neo

ATHENS (May 16 2006): Pakistan and Greece on Monday agreed on enhanced co-operation in defence and security, combating terrorism, increasing trade and investment and to revive the Joint Economic Commission between the two countries for stronger economic ties.

The agreement came at a meeting here at the Prime Minister House between Prime Minister Shaukat Aziz and his Greek counterpart, Kostas Karamanlis, covering a wide-range of issues including measures to enhance co-operation in the fight against terrorism.

"It (terrorism) is a scourge we must fight together," Prime Minister Shaukat said at a joint press stakeout after his hour-long meeting with his Greek counterpart.

"We have agreed to share our knowledge in this regard," he said, elaborating on the areas of co-operation they identified during the talks. He said he also pointed to the need of addressing the root-causes that lead to such extreme acts.

He called for clear distinction between the acts of terrorism and its false linking with Islam. He said there was need for greater understanding among the people of all faiths so as to have greater inter-faith, inter-civilisation and inter-cultural harmony.

Aziz described the talks with his Greek counterparts as "productive and substantive", and said that the two countries had agreed on reviving the Joint Economic Commission to boost business ties between their private sectors for increasing bilateral trade and closer people-to-people contacts.

He said that the two countries enjoy a multi-faceted relationship and in his meetings with the Greek President and the Prime Minister there was mutual understanding to improve these ties further.

He said that Pakistan has very close links with the European Union and wants to further enhance these ties. He said his visit to Greece was also in this connection as it was an important member of the grouping.

Aziz said Pakistan has sought technical assistance from Greece in areas of agriculture, agro-business, olive production, fisheries and shipping.

He said that during the meeting the two sides discussed the situation in the region and Pakistan's relations with Afghanistan, Iran and India.

The Greek Prime Minister noted Pakistan's strategic role in the region and the efforts for achieving peace and stability.

He said that Pakistan desired a peaceful solution of the Kashmir dispute with India through dialogue. He also apprised him of the Composite dialogue process going on with India and the confidence-building measures the two countries have embarked upon to improve their ties.

About Afghanistan, he said that Pakistan believes in a strong and stable Afghanistan. He, however, stressed that all countries involved needed to have a clear-cut exit strategy in collaboration with all neighbours.

He said both Pakistan and Greece were committed to peace and would continue to cooperate in this regard.

About the over 50,000 Pakistanis living in Greece he said they were economic migrants and were appreciative of the opportunities being provided by Greece and said they were serving as a bridge between the two countries.

The Greek Prime Minister said that both countries had vowed to boost their trade and investment ties, besides increasing co-operation in tourism. He said his country would also cooperate with Pakistan in the growth of the Kalash tribe in the country's northern areas, which is said to have come from Greece.

The Greek Prime Minister said he apprised Prime Minister Aziz about his country's position on Balkans and the Cyprus issues. Prime Minister Aziz said Pakistan desired that the issue should be resolved peacefully through negotiations.

Prime Minister Shaukat Aziz also invited his Greek counterpart to visit Pakistan at his earliest, and the invitation was accepted.

He also extended an invitation on behalf of President Pervez Musharraf to the Greek President, who also accepted it.

Prime Minister Aziz thanked the Greek government for its assistance in the aftermath of the October 8 earthquake. Earlier, the two Prime Ministers witnessed the signing of an agreement to boost tourism between the two countries.

OUR CORESPONDENT ADDS: Prime Minister Shaukat Aziz commenced his official visit, the first by a Pakistani leader, to Greece by calling on Karolos Papoulias, President of the Hellenic Republic.

The PM, while briefing the media travelling with him, said that he mentioned to the President that the cultural ties between the two countries went back to 750 BC.

The PM in this regard drew on the research of Zain Ul Wahab, Curator of Chakdara Museum, who is accompanying him. Both leaders agreed that the potential for tourism between the two countries, as a result, is immense. The Greek President highly appreciated the way Pakistan is handling the massive challenges that it is faced with.

Shaukat Aziz then went on to lay a wreath at the Memorial of the Unknown Soldier and inspected a guard of honour in 'Constitution Square'. It was only after this that the substantive part of the visit started at Maximos Mansion, which is Greek Prime Minister Kostas Karamanlis's office.

First was a tÃÂªte-ÃÂ -tÃÂªte between just the two Prime Ministers, and later they were joined by their delegations.

The talks, which went on for nearly an hour and a half, were followed by the signing of an agreement on co-operation in the field of tourism.

Later, the two addressed a joint press conference, at which no questions were entertained.


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## Neo

ISLAMABAD (updated on: May 16, 2006, 21:17 PST): The Government of Pakistan signed a Loan agreement with World Bank here on Tuesday to the tune of US$65 million as additional financing for the Rehabilitation of Highways in the country.

The agreement was inked by the Secretary Economic Affairs Division (EAD) Khalid Saeed on behalf of the government while Country Director of World Bank John Wall signed the agreement on behalf of his organisation.

The Project Agreement for the execution of the loan was signed by Maj. General Farrukh Javed, Chairman National Highways Authority and John W. Wall, Country Director World Bank.

According to details, the Project for the Rehabilitation of Highways was launched in 2004 with an initial amount of US$ 200 million provided by World Bank with an objective to help NHA in national highways network conservation and NHA policy support in institutional development.

According to the agreement the objective of the additional financing for the Highways rehabilitation Project was to assist the Government with sustainable delivery of a productive and efficient national highway network in order to lower transportation costs.

This objective will be achieved by implementing the Project for Rehabilitation of Highways under the said loan in:

(i) phased rehabilitation and safety and capacity improvement of about 550 kilometers of highway;

(ii) resurfacing and pavement strengthening of an additional 306 kilometers of highways; (iii) safety improvement works at about 20 selected locations;

(iv) relocation of utility lines;

(v) planting of trees and (vi) resettlement program to compensate, resettle and/or rehabilitate persons affected by the project.

The signing ceremony was attended by Additional Secretary, EAD and officials from EAD, World Bank and NHA.

Speaking on the occasion Khalid Saeed thanked the world bank for its continuous support in providing the loans for infrastructure upgradation programme of the country.

He said the World Bank is providing an additional loan of US$65 million to Pakistan for the ongoing project of highway rehabilitation for which the bank has earlier provided a loan of US$200 million for the project.

Saeed said the loan would help Pakistan in improving condition of roads and upgrading the highway infrastructure.

Khalid Saeed said that government is placing a lot of emphasis on the improvement the infrastructure in the country and that remains one of our top priorities.

"This project is very much in line with the national priorities", he added.

The Country Director World Bank John Wall assured Pakistan of the support of the bank for the improvement of the road infrastructure for the benefit of the people.

He added the project would help Pakistan in improving the road infrastructure for reducing the transportation costs for its product to become competitive in world markets.

Chairman NHA Maj General Farrukh said this agreement would help the completion of our ongoing road improvement projects.

"We will resurface and rehabilitate the 856 KM GT road", he added.

The Chairman said that 550 km road will be resurfaced while 306 km road will be rehabilitated.

He said the under the earlier loan agreement signed between Pakistan and Bank was US $ 200 million while US$61 million was the combined effort of Government of Pakistan and NHA.

He added that when NHA started the work on the project was started we faced paucity of funds and we again requested the World Bank to fund particularly for two projects of using modern technology (Cold recycling) and Islamabad to Kharian and Okara to Sahiwal.

"We asked the Bank that we will require another US$65 million for the completion of these projects and today's loan agreement signing is part of this project", he remarked.

He expressed the hope that NHA would able to timely complete the road improvement project.


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## Neo

ISLAMABAD (updated on: May 16, 2006, 22:37 PST): Minister for Commerce Humayun Akhtar told the Upper House on Tuesday that Pakistan's exports to India registered 207 per cent increase during last fiscal year.

In written reply to a question from Professor Muhammad Ibrahim Khan he said that out of total bilateral trade of $ 476.047 million in 2003-04 Pakistan's exports stood at $ 93.680 million while imports were worth $ 382.367 million.

He said that during last fiscal total trade with India stood at 835.6 million. Pakistan exports remained worth $ 288.134 million while imports from India stood at $547.458 million.

While responding to supplementary questions he said that although New Delhi has given Pakistan Most Favoured Nation (MFN) status, some non-tariff barriers are hindering Pakistan exports to India. He said that Pakistan will take up the issue of non-tariff barriers. He made it clear that without substantial progress in political talks, Pakistan will not grant MFN to India.

He made it clear that at present there was no fear of Indian goods flooding Pakistani markets as the government has allowed import of only 760 items from India.


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## Neo

KARACHI (May 16 2006): The Ministry of Finance is considering a proposal to slash high taxes on airline tickets to enable the Pakistan International Airlines (PIA) maintain the fares at reasonable limits, an official source told Business Recorder here on Monday.

The Ministry of Defence has forwarded the proposal in view of the negative impact of increasing fuel prices and intermittent raise in airline fares covering domestic and international sectors.

For some time, the domestic fares have remained stable in view of tough competition among the private sector airlines and PIA. The international tariff was reviewed upwards by PIA late last week on the plea of meeting the cost of ever-increasing fuel prices. The actual burden in fact falls on the ticket-holder and it is he who, per force, co-shares the cost.

If the government taxes are reduced, the impact of increase in fuel prices may also be less and travelling public saved from the agony of paying unbearable fares.

Aviation experts suggest that PIA could contain its losses to a considerable extent, if it were to follow International Air Transport Association's (IATA's) Fuel Action programme.

IATA has launched a Fuel Action Campaign (FAC) to supplement its existing fuel activities to assist airlines combat the severe impact of rising fuel prices.

IATA believes: "While we cannot influence the commodity price of oil, we can take measures to reduce the amount of fuel consumed, simplify business practices, reduce duties, fees and taxes and improve market conditions." IATA is working with industry partners world-wide to reduce the industry's fuel requirements and associated environmental emissions.

In addition, it is working with individual airlines to ensure that they have a robust internal "fuel conservation programme" in place. "Opening of new more direct routes, realignment of inefficient routes and improved ground traffic flows can reduce industry costs by 2.5 billion dollars per year," it estimates.

Further airlines individual efforts to improve their own operating efficiencies can yield significant savings. Each percent improvement in fuel efficiency across the industry can lower fuel costs by 700 million dollars per year.

Greater priority is being given to ongoing initiatives to increase competition among fuel suppliers at local levels and to challenge unreasonable and potentially illegal duties, fees and taxes where they exist.

To simplify the business, IATA is working with airlines and industry partners to establish and adopt industry data standards, make fuel management technology more effective, affordable and easier to deploy, and take advantage of shared services where permissible.

To help airlines better control fuel costs, it is also working with leading global banks to expand credit and reduce costs associated with hedging activities.


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## Neo

KARACHI (May 16 2006): Uzbekistan has offered Pakistan's textile manufacturers 2.5 million surplus cotton bales at 20 percent subsidised rates over Liverpool cotton rates, sources told Business Recorder here on Monday. They said that a delegation of industrialists would leave for Uzbekistan shortly to negotiate the offer, eliminating some intricacies.

"We may face hurdles in opening LCs," said a leading industrialist, and added that "there is no direct link between banks of the two countries".

He said that the Uzbek government has asked for 15 percent down payment, and this issue would also come under discussion in the meeting.

He said that an official of Uzbek textile ministry had recently approached some leading textile exporters here to get Uzbek cotton at subsidised rates.

"We will offload our stocks at Bandar Abbas (Iran) and are considering to acquire a warehouse at Export Processing Zone (EPZ) in Karachi, where we will bring the commodity from Bandar Abbas," the Uzbek official told industrialists during a meeting recently.

However, the industrialists who are interested to avail this opportunity would suggest to the Uzbek officials to bring this commodity directly to Multan or any other warehouse near Lahore, since there is no duty on importing cotton.

"Some 300 units are situated in Punjab against 80 in Sindh. So, the industrialists are trying to get the Uzbek cotton to Punjab directly," sources said.

"If the Uzbek cotton is brought to EPZ warehouse, then the transportation cost from Karachi to Punjab would cost Rs 50 per maund," sources said, adding that if the consignments reached Pakistan through Bandar Abbas, then the estimated time of arrival could be two months.

"Therefore, we would suggest to them to acquire a warehouse in the Punjab region and would offer them our support to resolve this issue in the forthcoming meeting," industry sources said.

Leading exporters are of the view that locally produced cotton contains moisture rate of around 9 percent to 12 percent, while the Uzbek cotton has the moisture rate of 5 percent, maximum.

"Due to less moisture rate and modern ginning process, their (Uzbek) crop size and quality is of world class and contains very little trash, as compared to our country's crop," an exporter commented.

Since cotton arrivals for the current season could be delayed due to inadequate water supply, some industrialists are considering Uzbekistan's offer seriously.


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## Neo

ISLAMABAD (May 16 2006): The government is pursuing a seven-point strategy to sustain the high economic growth rate and increasing the competitiveness of national economy, Adviser to Prime Minister on Finance Dr Salman Shah said on Monday.

Addressing a TCI regional conference on "Competitiveness and Economic Growth in Asia" held here, he said the strategy being pursued included human resource development, energy independence, maximum utilisation of water resources, development of infrastructure in rural areas, world class road and railway network, second generation reforms and reinforcement of bright future of the country among the people.

Dr Salman said the country has gone through massive economic growth last year and we are setting sights on another year of strong growth.

He said it is also a gigantic task to maintain the high growth rate for which the government is taking concrete steps keeping in view the present opportunities and challenges in the global market place.

Salman said the government is giving top priority to improve the competitiveness and the second-generation reforms aim at achieving this target generating more opportunities of the Pakistani products in the world market. He said the CSF has been jointly established by the government and USAID to enhance public-private partnership in the country.

Dr Salman Shah said various educational institutional will be engaged to develop knowledge-driven economy which will help generate industry clusters in the country. US Ambassador to Pakistan Ryan C. Crocker said it is quite encouraging that Pakistan is going to have another year of massive growth rate despite devastating October 8 earthquake.

He said exports in the country are up with poverty gradually going downward and economic indicators showing positive signs. Crocker said the US will provide more than US $1.5 billion to Pakistan in the next five years to help improve competitiveness in the fields of education, health and governance.

He said assistance has also been provided in improving the competitiveness in different spheres, which include dairy, gems, jewellery and marble granite.


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## Neo

EDITORIAL (May 15 2006): At a two-day meeting of the Pakistan Development Forum (PDF), previously known as Aid-to-Pakistan Consortium, the representatives of government of Pakistan and other participants emphasised their views almost in a way as if they were talking about two different economies.

While Prime Minister Shaukat Aziz and his advisor, Salman Shah, commended the performance of the economy in a highly positive tone, the representatives from international organisations and private sector expressed serious reservations about some of the recent developments.

All social and economic indicators of Pakistan, according to the Prime Minister, were showing positive trends. The country would sustain acceleration in growth within a band of 6 to 8 percent over the next 5 to 10 years despite so many challenges likely to be confronted.

Poverty had declined from 32.1 percent to 25.4 percent and per capita income was expected to reach 800 dollars by the end of June this year. Gross primary enrolment had increased to 86 percent, immunisation of children had gone up to 83 percent, water supply had been assured to 39 percent of the population and Pakistan was fast emerging as a good choice for investors.

The country, the Prime Minister asserted, "is all set to become" a regional economic hub with a specific role as trade and energy corridor for China and Central Asian countries.

He listed reforms, continuity in policies, opening up of different avenues to the private sector and locational advantage as the driving forces of the economy. Salman Shah said that Pakistan had truly laid the foundation for a robust and vibrant market economy.

Major achievements included a strong recovery supported by a robust performance in industry, agriculture and services, extraordinary strengthening of domestic demand, reduction in fiscal deficit, a high double-digit growth in exports and imports, increased workers' remittances, stability in the public and external debt burden, accelerated privatisation programme, capital market strengthening and improved social and human development indicators.

Non-government participants were quite blunt in their criticism of some aspects of the economic performance though they did not directly argue against the statements from the government side.

According to Praful Patel, World Bank's Vice President for South Asia, Pakistan had a history of "boom-bust cycles" and "now is the time to sharpen the watch on macro-economic situation". Pakistan's economy had started showing signs of 'overheating' as imports were swelling at a faster rate than exports. The root causes of growing external imbalances needed to be addressed through co-ordinating monetary and fiscal policy reforms to avoid "pain and disruption of a hard landing".

An inequitable distribution of assets was depriving the common people of due share of the benefits of growth. Patel added that despite seven years of trade, regulatory and banking reforms, the cost of doing business in Pakistan was still too high. Ahmad Mohammad Ali, President of Islamic Development Bank, said that unless the fruits of growth produced a credible impact on the lives of common people, ground realities would not change.

Another challenge was how to mobilise domestic savings for investment, notwithstanding the importance of international resources. Ahmad Ali also urged the government to provide alternatives to encourage more of its migrant workers to channel their remittances into infrastructure and other development projects. The European Union delegate advised the government to pay more attention to growing inequality as economic growth alone could not reduce poverty. He also sought repeal of 'discriminatory' stipulations of the Hudood Ordinance, blasphemy law and Qisas and Diyat laws.

According to the ILO Director, unemployment of the educated class had increased in the past few years. Private sector representatives expressed worries about rising trade deficit, lack of trained workforce, low educational standards, looming energy shortage and higher cost of doing business that together hampered Pakistan's ability to compete in the international market.

The observations of various delegates at the Forum, in our view, mirrored a classic approach of presenting social and economic developments in a partisan way.

Government officials, including the Prime Minister, painted a perfectly rosy picture of the economy and spoke about its bright prospects in a very eloquent manner while more objective analysts generally pointed to the emerging weaknesses of the economy that would frustrate the government's efforts to improve the overall situation in the country in the coming years. Seen closely, both the viewpoints may not be very much wide off the mark but merely show the degree of difference in emphasis placed on various economic parameters. The government, in our view, should be more serious, however, about addressing the shortcomings pointed out frequently by various experts, within and outside the country.

Government representatives are probably right when they assert that the worst is over. It was not long ago that per capita income was almost stagnant due to very low growth rate, the country had almost lost its financial sovereignty and international rating agencies had downgraded it to a selective default level. Pakistan has surely crossed the bridge from stage when the economy was fragile, the balance of payments vulnerable, the debt situation had worsened and foreign exchange reserves were not sufficient even for a few weeks of imports.

A turnaround in some of the major aggregates does not, however, mean that the economy would henceforth always show a healthy trend and the weaknesses are a thing of the past. There is obviously no paradise on this earth and Pakistan cannot always remain immune to the shocks.

Most of the downside risks pointed out by the participants are real and need to be addressed properly and effectively before matters get out of hand. Certainly, the economy is showing signs of overheating as reflected in the external trade profile of the country, bank borrowings by the private sector and a high inflation rate. Inequitable distribution of assets is accentuating disparities in income and standard of living.

The most formidable challenge as pointed out by Dr Ali is the huge gap between domestic savings and investment, which sooner rather than later could act as a brake to our development effort. Unfortunately, the government is putting all the emphasis on foreign investment to sustain the development process, which is not the way for a self-reliant and stable growth. Large-scale unemployment of educated people in the urban areas, endemic poverty and increasing disparities in incomes lead to a deadly combination.

The Prime Minister has said that poverty has declined by 6.7 percent. This would be very welcome news if only backed by ground realities at the grass roots level and supported by proper statistics that are beyond any doubt. We know that PDF is organised every year before the budget to seek assistance from the donors, it would therefore be fit and proper if the concerns of the donors as expressed forcefully and clearly this time by them are also given due attention in the overall policy formulation of the government to the promote long-term economic agenda of the country.


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## Neo

ISLAMABAD, May 15: Pakistan could be left out from the World Economic ForumÃ¢â¬â¢s Global Competitiveness Report (GCR) this year as the countryÃ¢â¬â¢s private sector has not yet submitted to the forum its executive opinion survey forms.

The GCR is based on survey responses, which are kept confidential, from 120 member countries and is widely recognised as the world leading cross-country comparison of factor affecting economic competitiveness and growth.

Arthur Bayhan, chief executive officer of the United States Agency for International Development (USAID), addressing at a regional conference on Ã¢â¬ÅCompetitiveness and Economic growth in AsiaÃ¢â¬Â, held here on Monday said that the WEF was very much concerned as people associated with the Pakistani private sector had not yet submitted the survey forms despite the fact that its May 27 deadline was approaching fast.

This yearÃ¢â¬â¢s GCR would be released in October, however, so far the forum had not received any survey forms filled by the Pakistani private companies, financial institutions and business and industry.

Pakistan is required to submit at least 70 survey forms to the WEF in order to stay in the ranking process.

First released in 1979, GCR provided a comprehensive assessment of economic competitiveness of over 120 countries. In the GCR for 2005, Pakistan had been ranked at 83rd among the group of 117 nations, Mr Bayhan said.

He said the next GCR would show where Pakistan would be standing as far as its economic competitiveness was concerned.

He said the survey forms could not be filled by the public sector.

He said the WEF had two main concerns for the PakistanÃ¢â¬â¢s private sector: the private companies were not focussed and were dealing with everything and had no mid-term or long-term policies.

Last year, he said, PakistanÃ¢â¬â¢s public sector was ranked at 103 among 177 countries, a very lower rank. The main reasons for the low ranking were the lack of professionalism and transparency in PakistanÃ¢â¬â¢s public sector.


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## Neo

KARACHI, May 15: The Sindh government has signed a memorandum of understanding (MoU) with a Ukraine-Canadian consortiumÃ¢â¬âCathay Oil and GasÃ¢â¬â for extracting methane gas along with water from under the coal layers in Thar coal reserves.

Ã¢â¬ÅThe consortium has the technology to pump out water along with methane extraction,Ã¢â¬Â said minister for mines and mineral development Irfanullah Khan Marwat while talking to APP here on Monday.

He pointed out that methane was a coal-based gas which can be converted into diesel, petrol, chemicals and plastic, and jet fuel and America, Canada and Chile were already processing this gas.

According to an estimate 21 trillion cubic feet gas was available underneath the Thar coal reserves and the consortium will start its extraction when an exploration licence is issued to them.

The minister said that so far the government had allocated three blocks for coal exploration in Thar area - one block of 45 sq km to the Chinese Shinuha Group, second to American AES, which is already operating two power plants in Punjab, and the third block to Associated Group, a Pakistani, Canadian and American consortium.

This consortium has been issued LPG import licence and they have a LPG unit at Jamshoro.

Besides, Thar coal reserves, Irfanullah Marwat said an agreement had been signed for mining in Lakhra with Fateh Group which has collaboration with Ukraine.

He said the group would set up a coal washing plant for which the machinery will arrive shortly. The main boring machine had already reached the site and started functioning.

The group, he said, will indulge in mining and washing and will set up a 250 MW power plant.

The minister said that the washing plant would be the first in Pakistan as Pakistani coal is lignite in nature having high sulphur and ash contents.

Marwat said because of this reason Pakistani cement industry had to import coal to an extent of 2.5 million tons.

He said the Fateh group had been allocated an area of 8,000 acres for coal exploration, while their washing plant will have the capacity of one million tons.

To a question, the minister said that the group would first develop the mines which will take two to two and a half years after which the installation of power plant will start.

He said that CMC of China would start work on mining and power plant from September 1, for which they have been allocated an area of 10-12 thousand acres in Sondha Jherak. They also plan to setup a 200 MW power plant.

He said Dadabhoy Energy had also been allocated an area where they had started exploration work with Chinese collaboration. They would set up a 200 MW power plant here.

To a question, the mineral development minister said that the Chinese Shinuha group, which has been allocated a block in Thar area, had a tariff issue with WAPDA which had not been settled. He said that since NEPRA had changed the policy, this issue too will be resolved within the policy framework.

Shinuha has already carried out feasibility and hydrological study of mining of coal and setting up a 600 MW power plant.

He said that after the settlement of tariff issue, hopefully within two months, Shinuha will start mining.Ã¢â¬âAPP


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## Neo

Tuesday May 16, 2006 

ISLAMABAD: Prime MinisterÃ¢â¬â¢s advisor for financial affairs Dr. Salman Shah has lauded the economic policies of the present regime as conducive for containing poverty and unemployment. 
Speaking at the inaugural session of CTI Conference, he announced an 8.4 % increase in GDP, over the previous year. This has produced a dynamic effect on the economic development of the country, creating new opportunities for employment, and elimination of poverty. 

He said that private sector has been given incentives and all benefits, and people have started to trust the future planning and projects of the regime. 

Dr Salman Shah said that a competitiveness support fund has been established with the help of USA, according to which USAID has so far disbursed Rs. 1.20 crore. Asian Development Bank and World Bank have been contacted for more funds. 

Speaking on the occasion US ambassador to Pakistan Ryan. C. Crocker lauded the economic development policies as initiated by President General Pervez Musharraf and Prime Minister Shaukat Aziz. He announced a package of US$1.5 billion for various projects in coming five years. He said US$ 1.50 billion will be spend on health and education sectors through USAID platform. Other sectors include dairy, marble, jewellery, and rehabilitation of quake affected areas. 

He also said that both sides have also decided to establish reconstruction opportunities zones on Afghan border as well as earthquake affected areas of Pakistan. 

State Minister for Finance Omar Ayub, who also addressed the occasion, said that PakistanÃ¢â¬â¢s speeding economic development has increased its needs of energy requirements, and to fulfill these, four mega Dams, including the Kalabagh Dam would be constructed, during the next ten years, which would help produce electricity up to 4000 MWs, and would earn the exchequer a revenue of US$ 4 billion annually. 

He cited the work on Basha Dam, which ahs commenced, while Akhori, Munda and Kalabagh Dam would be constructed in near future. He said after 2000, a stable and persistent economic policy of the regime has brought conducive results, and during the past four years 10 textile projects have invested about U$ 5 billion. Livestock is being upgraded and 4% of GDP is to be spent on health and education. 

All exclusive powers have been taken away from income tax officers, and bank reserves, which were empty, have become flooded due to conducive privatization 66 % of banks belong to the private sector. 

He said that 6 years before the overall economic weightings amounted to U$62 billion, which has currently swelled to U$125 billion.


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## Neo

Monday May 15, 2006 

ISLAMABAD: World Bank has offered the Indus River System Authority (IRSA) to provide financial and technical help for all projects including the telemetry system," it is learnt. 
The offer was made by the two-member delegation of the World Bank comprising Advisor of World Bank to South Asia on Water David and representative of world Bank in Pakistan Usman Qamar who visited IRSA on Friday (May 12). 

During the visit, the delegation held meeting with chairman IRSA Shafqat Masood, federal and provincial members of IRSA. 

Sources said that delegation of World Bank assured the IRSA authorities that they were ready to provide financial and technical help to address the problems of IRSA on water vision. 

Sources said that the authorities of IRSA gave the briefing to the delegation of World Bank about the telemetry system, dam fillings and other issues relating the projects of IRSA. 

They said that IRSA showed reservations regarding the telemetry system that was launched by WAPDA and said that the project was started to regulate the water among the four provinces of the country with the cost of Rs 40 million but it could not usher in the desired results. 

IRSA said while briefing about the project that the project had been handed over back as it could not brought the desired results and now it was being repaired. So far as the project "telemetry system is not functional, IRSA will not own the project," the IRSA authorities informed the delegation of World Bank. 

However, the delegation of World Bank assured the IRSA after being briefed about the problems of it that they were ready to provide all kinds of financial and technical and financial help to address all the issues.


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## Neo

Tuesday, May 16, 2006 

By Sajid Chaudhry

ISLAMABAD: Syed Asif Shah, Secretary Commerce, has said there is no provision in the South Asia Free Trade Area (SAFTA) agreement that binds Pakistan to grant Most Favored Nation (MFN) status to India. 

Promotion of bilateral trade is liked with positive outcome of the Comprehensive Pakistan-India Composite Dialogue and a level playing field in trade for Pakistan by India. Pakistan is pursuing a policy of promoting regional trade through multilateral and bilateral trading agreements and will continue its efforts. 

He was speaking at the launching ceremony of a report Ã¢â¬ÅThe Challenges and Potential of Pakistan-India TradeÃ¢â¬Â prepared by World BankÃ¢â¬â¢s Zareen F Naqvi and Philip Schuler here on Monday. Johan Wall, Country Director of the World Bank, Secretary Agriculture Nasim Qureshi, Dr A R Kamal and representatives of business community participated in the ceremony. 

The report calls Pakistan to grant MFN status to India, and if it is not possible due to political reasons, Pakistan should scrap its positive list for India and develop a new short negative list and allow import of all items from India that are not mentioned in the proposed negative list for India. 

Pakistan and India account for 90% of South AsiaÃ¢â¬â¢s GDP and regional trade is just 0.4 percent of the world trade. Less trade is hindering the economic growth of this region mainly due to less trade between the two major countries, Pakistan and India. 

The repot says that due to the improvement in the political relations between the two countries, the benefit of it should be gained through increase in trade. 

The secretary commerce, however, clarified at the start of his speech that Pakistan would allow tariff benefits to India under SAFTA only on items mentioned in the Positive List contained in the Import Policy Order 2005. 

He said that this impression is not correct that items not mentioned in PakistanÃ¢â¬â¢s negative for SAFTA agreement would be allowed for import into Pakistan and will attract tariff concession for India. 

He said that Pakistan is applying import tariffs on imports from India that are much below as compared with PakistanÃ¢â¬â¢s WTO-bound tariffs and if any addition is made in PakistanÃ¢â¬â¢s positive list for India, these tariffs will also apply on additional items. There are no tariff or non-tariff barriers in Pakistan for Indian Imports. 

He said two rounds of Comprehensive Dialogue on economic and commercial relations have been held between Pakistan and India and the Indian side has handed over a list of items that it wants to be included in PakistanÃ¢â¬â¢s positive list for India.

Pakistan is at present examining the said list of items and will take a decision after completing its consultation with stakeholders and by completing other legal formalities. Pakistan wants to enlarge its positive list for India and does not block any such move. 

He said there is enormous potential of Pakistan-India bilateral as well as regional trade and Pakistan is trying to benefit from it through many measures it is at present taking or implementing. 

Johan Wall in his remarks said that trade is road to development, so Pakistan should increase its trade with its neighbours as well with the region. 

Regional trade has a vast potential, especially Pakistan can benefit from increasing trade with India and China that will help it to continue its growth momentum further. 

Shahid Bashir, Joint Secretary in the Ministry of Commerce, in his comments on the report said that each section of the report that mention granting MFN status to India do so without taking into account the ground realities. 

Pakistan wants sustained trade relations with India on reciprocal basis and equal terms or a level playing field. India always discourage imports from Pakistan taking the plea of those being substandard. 

India have already placed all items of PakistanÃ¢â¬â¢s interest such as textiles and leather on its negative list under the SAFTA agreement leaving no space for us to increase our exports to it. 

Pakistan is interested in promotion of agricultural commodities trade with India, but the Indian side is reluctant in this trade. He mentioned that granting MFN status to India is no guarantee for success of the SAFTA agreement. 

We want to move ahead step by step in trade with India. He said that the Trade Liberalization Programme of SAFTA will be completed during the next seven years, when the situation would be the same as it is today.


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## Neo

Tuesday, May 16, 2006 

ISLAMABAD: Pakistan will improve its world ranking of competitiveness from existing 89th in the world to 60th during next three to four years through 2nd Generation Reforms. 

The government will improve its world raking through utilizing the valuable contributions of Competitiveness Support Fund (CSF) and by meeting the challenges of energy deficiency, infrastructure development and human resource development. 

PakistanÃ¢â¬â¢s economy grew due to first phase of reforms during last seven to eight years from $62 billion to $125 billion and will continue to grow due to its reforms of second phase. The construction of each big dam will contribute $4 billion each year to national economy (five big dams when completed will contribute additional $20 billion in national economy each year). 

This was stated by Adviser to the Prime Minister on Finance, Revenue, Economic Affairs and Statistics, Dr. Salman Shah and Umer Ayub Khan, Minister of State for Finance and Revenue at a two day regional conference on Competativeness and Economic Growth in Asia Ã¢â¬ÅBenchmarking PakistanÃ¢â¬â¢s Global CompetitivenessÃ¢â¬Â here on Monday. 

The Adviser said that as part of our efforts, we had supported the creation of the Competitiveness Support Fund (CSF) to serve as an umbrella for many of our competitiveness initiatives. 

The CSF was a joint imitative of the Government of Pakistan and the United States agency for International Development (USAID). USAID had contributed around US $12 million, and other donors had indicated strong interest to join with similar amounts. 

Dr Shah said that CSF would also support governmentÃ¢â¬â¢sefforts to track its competitiveness through an annual competitiveness report and by helping to foster a broad and deep private-public dialogue on the constraints to growth and the priorities for further policy reform adding that CSF would also help analyze the competitiveness of various industry clusters in Pakistan that might have competitive advantage to grow. 

He said that it would also identify specific projects at universities and research institutes that had the potential to be commercialized. Ã¢â¬ÅIn order to contribute to better understanding of competitiveness by the public, the CSF has already sponsored an innovation journalism programme associated with Standard UniversityÃ¢â¬Â, the Adviser stressed.

Later, Mr. Omar Ayub Khan, Minister of State for Finance presented the existing state of PakistanÃ¢â¬â¢s vision for competitiveness and expressed the hope that the conference participants would help Pakistan refine and promote this vision, which was so vital to the countryÃ¢â¬â¢s economic future. He also hoped that the conference would also help identify competitiveness obstacles and opportunities that would help us in formulating strategies for building competitiveness, enriched by the examples and experiences of many other countries.


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## Neo

Tuesday, May 16, 2006 

By Fida Hussain 

ISLAMABAD: The recent forecast of a drought-like situation during the next two months has put the government in a fix as far as its GDP growth rate projections for the 2006-07 fiscal are concerned.

A senior official, who belongs to a foreign country but has been working closely with the economic managers of Pakistan for quite some time, said growth target was likely to be fixed at 8 percent in the fiscal 2006-07. 

However, the government officials in the finance ministry and planning and development division are of the view that growth target could be flexible and it might be ranging between 6.5 and 7.5 percent for the next financial year. 

The real issue the government is confronting is the latest forecast about rainfall during the next two months, which could hit the cotton sowing areas in southern Punjab and Sindh. Cotton is the crop, which plays a pivotal role not only in the agricultural growth but the overall GDP growth, said a government official. 

It was actually the increase of around 46 percent in the production of cotton, which had helped the agriculture to grow at 7.5 percent and GDP at 8.4 percent in the last fiscal year. 

The cotton production stood at 14.6 million bales in 2004-05 against 10 million bales achieved production in 2003-04. 

The finance and planning divisions are pressing for fixing realistic targets, the official said. Fixing an ambitious target of 8 percent in the GDP in the next fiscal will hardly be achieved because of recent Met office forecast. Cotton sowing usually starts by the end of May. And the scarcity of water has really put a question mark on the cotton sowing as the food and agriculture authorities have already set a target of 13.8 million bales from an area of 3.247 million hectares for the next fiscal.

Other than cotton, the drought-like situation could also affect the livestock sector, which is also important sector in the agricultural growth.

Besides, the expected shortage of water is not a good news for rice and sugarcane crops, which have been targeted at 5.6 million tons and 50.5 million, respectively, during the next fiscal. 

However, secretary food, agriculture and livestock Ismail Qureshi played down the forecast of a dry spell. Ministry of food, agriculture and livestock (MINFAL) will go for achieving growth target in agriculture, which has been projected at around 5 percent in the Medium Term Development Framework (MTDF) 2005-10. 

The secretaryÃ¢â¬â¢s optimism was largely based on diversion plan of water. He said that the diversion plan would ensure water availability for cotton sowing areas during the sowing season. 

Ã¢â¬ÅThen we will have water for rice and sugarcane. We will need water for cotton sowing period. Cotton crop needs not too much water for almost two months after sowing,Ã¢â¬Â according to him. 

However, he admitted, a dry spell will have serious repercussions for sugarcane crop. Mr Qureshi was also of the view the high temperature in the Northern Areas is resulting in more snow melting and this would further improve water availability in canal system.


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## Neo

KARACHI (updated on: May 17, 2006, 17:09 PST): The country received US$3.629 billion as workers' remittances during first ten months of current fiscal year (July 2005 - April, 2006) as against $3,451.51 million received in corresponding period of last fiscal year registering increase of $178.17 million or 5.16 percent.

The amount of $3,629.68 million includes $10.81 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs), The State Bank of Pakistan (SBP) said on Wednesday.

Pakistani workers remitted $401.47 million during last month as against $401.00 million in April, 2005 depicting slight increase of $0.47 million or 0.12 percent.

The inflow of remittances during first ten months of current fiscal year from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar & Oman), UK & EU countries amounted to $994.78 million, $584.64 million, $555.84 million, $477.30 million, $346.40 million and $97.06 million respectively as compared to $1,076.22 million, $506.22 million, $580.87 million, $425.95 million, $309.99 million and $83.25 million in corresponding period of last fiscal year.

Remittances received from Canada, Australia, Norway, Switzerland, Japan and other countries during July 2005 - April, 2006 amounted to $562.85 million as compared to $457.27 million in corresponding period of last fiscal.

The monthly average remittances for period July, 2005 - April, 2006 comes out to $362.97 million as compared to $345.15 million in same period of last fiscal.

The inflow of remittances into Pakistan from most countries of the world increased last month as compared to April, 2005. According to break up, Pakistan received workers remittances during April, 2006 from USA ($101.24 million), Saudi Arabia ($69.05million), UAE ($64.59 million), GCC countries including Bahrain, Kuwait, Qatar and Oman ($47.98 million), UK ($41.05 million) and EU countries ($9.44 million) as compared to corresponding receipts from respective countries in same month of last fiscal year i.e. $121.04 million, $57.26 million, $73.04 million, $43.80 million, $39.61 million and $11.16 million.

Remittances received from Canada, Australia, Norway, Switzerland, Japan and other countries in April, 2006 amounted to $68.00 million as compared to $47.7 million in same month of last fiscal year.


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## Neo

KARACHI (May 17 2006): According to Transport Sector Development Initiative (TSDI), Pakistani ports are responsible for loss of Rs 15 billion due to their inefficient working. The ports sector essentially holds a monopoly over international trade, as over 95 percent is channelled through the two main ports-Karachi and Port Qasim.

The growth in port traffic in the last 10 years has been around 6 percent per annum. The berth capacity of these ports is considered adequate for the next 20 years, but the approach channels need improvements. None of the two existing ports (KPT and PQA) have the required container handling facilities. There is still wide scope of containerisation in the two ports.

On the land side, the main problem is the excessive handling charges and low labour productivity. As a result, the cash flow of the Karachi Port has dropped by 50 percent between l996 and l999.

For cargo, the Karachi port is reported to be 1.5 times more expensive than Bombay, 4.5 times Colombo and 19 times Dubai. As a result, the shippers pay about Rs 15 billion "extra" per year to the two ports - a cost which is passed on to the users.

Both ports still have direct involvement in day-to-day operation. Experience has shown that the most desired course is the landlord concept in which the basic ports facility are provided by the public sector while all operational tasks such as stevedoring, piloting, etc are handled by the private sector.

There is serious lack of co-ordination among the two ports. Currently, both ports tend to operate in competition with each other. With the creation of additional port in Gwadar, according to experts, the situation would be further aggravated. The problem can be overcome by converting the Directorate General of Port and Shipping into regulatory body with full autonomy to bring the three ports under its policy control, while still maintaining day-to-day operational independence.


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## Neo

UNITED NATIONS (May 17 2006): The United Nations launched on Tuesday a year-long $300 million plan to begin rebuilding areas of northern Pakistan devastated by an earthquake seven months ago. More than 73,000 people died and about 3 million became homeless in the powerful quake that hit Azad Kashmir and adjoining NWFP on October 8.

The latest phase of the UN-led recovery campaign aims to ensure there will be enough schools, teachers, safe water, food, seeds and fertiliser for the hundreds of thousands now returning home after fleeing to distant camps to escape the harsh winter months, said Jan Vandemoortele, the UN humanitarian co-ordinator for Pakistan.

Helicopters would also be needed to help deliver the aid because many of the area's roads remained unusable, he said.

The new plan's overall goal was "to make sure that there is no gap between the end of relief and the beginning of full-fledged reconstruction," Vandemoortele told a news conference. The world body was not seeking additional funds from international donors but asking them only to redirect to the new campaign some of the money they had already pledged.

Donors have already promised $6.2 billion to help rebuild the stricken area, and $200 million of the $300 million needed for the new campaign has already been redirected, Vandemoortele said, praising Pakistan's government and the international community for their close co-operation and co-ordination in the recovery effort to date.

About 300,000 people had been forced to spend the winter away from their hometowns, he said.

At least 200,000 of these have already returned home but the rest would need help to come back, whether to resolve land disputes, rebuild housing or overcome other obstacles, he said.


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## Neo

ISLAMABAD (May 17 2006): Pakistan has retired $1.656 billion external debt and liabilities during the first six months of the current fiscal year, which stood at $35.245 billion at the end December 2005, the State Bank reported on Tuesday.

More importantly, during July-December 2005, the government also retired $90 million principal debt and $10 million in the shape of interest on the total debt ($1.492 billion) of the International Monetary Fund (IMF).

During this period, Pakistan's external liabilities-external debt plus foreign exchange liabilities-totalled $35.245 billion. Of this, the external debt amounted to $33.523 billion.

The State Bank of Pakistan (SBP) said that the government had mostly retired debt from the reserves available with the central bank.

According to the Bank's provisional data issued on Tuesday, the country's public and publicly guaranteed debt (comprising medium and long-term and short-term debt) has been on the rise for the last four years. And now, during the period, the bank said, the country has repaid $825 million principal amount and $388 million interest on total debt of $30.742 billion.

Of this, the medium and long-term debt (longer than one year) of $30.399 billion the government refunded $1.112 billion ($729 million principal and $383 million interest). Of the multilateral debt which amounted to $15.672 billion the government repaid $426 million ($314 principal and $112 million interest).

Of the Paris Club $12.473 billion debt, the government repaid the principal amount of $159 million and $179 interest. Euro bond / Saindak bonds stood at $1.109 billion. Of this, $156 million were repaid in principal and $55 million in interest.

Other bilateral debt, which was $842 million ($32 million principal and $26 million interest) was repaid. On commercial loans/credit of $166 million $16 million were repaid in principal and $3 million in interest.

During the period, military debt stood at $137 million. However, the government repaid its $52 million principal amount and $8 million in the shape of interest.

The short-term loans (less than one year), mostly taken from Islamic Development Bank (IDB), stood at $343 million; of which, the government repaid $96 million in principal and five million dollars in interest.

The private non-guaranteed debts (more than one year) during the period stood at $1.289 billion. Its $164 million principal amount was repaid, besides, $42 million interest.

The government also retired $100 million ($90 million principal debt and $10 million in the shape of interest) of the International Monetary Fund (IMF), which stood at $1.492 billion up to December 2005.

The foreign exchange liabilities, excluding foreign exchange bearer certificates, foreign currency bearer certificates and dollar bearer certificates, which stand at $8 million, were $1.722 billion and during the period under study, the bank retired its $130 million in the shape of principal and interest on the debt.


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## Neo

SIALKOT (May 17 2006): The Punjab government has initiated an action plan for the development of small and medium industries to ensure strong industrial base in the province.

Official sources told Business Recorder here on Tuesday that the step had been taken to further accelerate the pace of export activities in the province.

Under the plan, a new industrial estate would be developed over 1,000 acres of land on Kamoki-Eminabad Road near Gujranwala. An industrial estate would also be established in Narowal district, they said.

The proposed industrial estates would be developed on the patterns of Sunder Industrial State (Lahore) where all modern facilities would be ensured, the sources added.

According to the sources, special attention had also been accorded to bring about the industrial revolution through setting up large-scale industries, including agro-based industries in the province.

The government had set aside rupees eight billion for extending loan facilities to the small and medium enterprises (SMEs) and newcomers for upgrading and setting up their industrial units in Punjab, said the sources.

In addition to this, they said, special attention had been focused on the "women entrepreneurship" and many steps had already been taken for facilitating the businesswomen in Punjab.

Adequate step had also been taken to diminish the financial problems being faced by the businessmen engaged in small and medium industries as well as for removing the hitches, which were hindering the process of setting up of new industrial projects.

Under the plan, the sources said, the government would provide all facilities, including financial assistance, to the willing persons for manufacturing non-traditional products.

They said the government was mobilising all available resources to motivate and attract overseas Pakistanis and foreign investors to invest in the export processing zones, especially in Sialkot and Gujranwala.

The provincial government had developed an investment-friendly climate to further accelerate the industrial development in the province, they added.


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## Neo

ISTANBUL (May 17 2006): Turkish Airlines wanted to expand co-operation with PIA to increase passenger and cargo business. This was stated by the executive vice president Turkish Airlines Haul Tokel while talking to visiting journalists from Pakistan at airlines head office.

Executive vice president technical Dr Ismail Demir was also present on the occasion. He said that his airline was considering starting another flight between Istanbul and Islamabad and later to Lahore. He pointed out that his airline had already signed agreement with PIA for providing right to fly to Pakistani airline and sharing passengers for different destinations.

To a question, he said Turkish Airlines would seriously consider operating freighter service for Pakistan to carry its export of perishable items for fast delivery to various destinations in Europe.

"We can buy freighter to take Pakistani export cargo," he added.

Tokel said there would not be any visa restrictions between the Islamic countries particularly for Pakistan and Turkey if they wanted to boost trade within Islamic block.

He said that that issue would be raised at various forums to relax visa restrictions between Islamic countries. He told newsmen that during the last three years, Turkish Airline had doubled its fleet, rising from 56 to 90 and then 105 in coming August this year.

Tokel said Turkish Airline had grown very fast and posted a net profit of dollars 100 million in 2005 with a turnover of dollars 2.4 billion. In 2006, they expected to grow by 40 per cent, he noted.

He said airline business in the world was growing at a rate of 15 to 20 per cent, but airlines of Turkey and China were growing at much faster rate.

He said passenger traffic on Turkish Airline had grown from nine million three years ago to 18 million this year. Tokel pointed out that Turkish government would further off- load 25 per cent of its share in the airline in next days, making a total of 50 per cent of its share in the hands of public.


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## Neo

KARACHI, May 15: The Pakistan Steel held a cheque presentation ceremony in which a debt worth Rs7.7 billion, scheduled to be paid from year 2013 to 2020, was paid much ahead of time, says a press release. Addressing the ceremony Chairman Pakistan Steel Lt. Gen Abdul Qayyum said that despite the challenges of the unprecedented nature created by the sudden collapse of coke oven and bye product plant, shortage of raw material, abnormal increase in prices of imported coal and iron ore, the PS workforce stood like a rock and the management had cleared every penny of its debt.

The cheques were received by Zakir Mahmud, president Habib Bank Limited (Rs1.941 billion); Aftab Manzoor, president Muslim Commercial Bank (Rs1.165 billion); Shahid Anwar, senior executive vice president National Bank of Pakistan (Rs1.942 billion); Hasan Raza, executive vice president United Bank Limited (Rs1.942 billion); and Junaid Alam, senior vice president Allied Bank Limited (Rs0.777 billion).


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## Neo

Wednesday May 17, 2006 

ISLAMABAD: Federal Minister for Trade and Commerce Humayun Akhtar Khan said on Tuesday the balance of trade was tilted in favor of India and Pakistan would be in a position to achieve export target of US$ 17 billion adding that there was no threat of dumping of goods from the Indian side. 
Speaking at the question hour in Senate session, he said India has permitted export of 6 thousand Pakistani goods to India adding further he clarified that Pakistan has not given India Most Favored Nations (MFN) status. 

Federal Minister told that our goods are not reaching there (India) and presently India is benefiting more from the trade activity between the two states because of better system of tariffs. 

We are trying are best to increase our exports to India and currently an increase of 57% to 207% in Pakistan exports to India has been recorded. 

Pakistan is importing chemicals, iron, steel, coloring material and chemical machinery from India currently 

Similarly, we are importing sugar from India as before and around 5 and half lac ton sugar has been imported from all across the globe through tender. 

He said that we are assessing as to which sectors in India can we exports our goods. 

With the abolishment of tariff barriers there will be a rise in exports and Pakistan will export vegetables, fruits and cotton to India. 

We will have a surplus wheat production of 5 lac tons adding the Federal Minister claimed that we would be able to achieve export target of $ 17 billion. 

He said though imports are increasing at a greater pace as compared to imports but there is no such grave risk of trade deficit.


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## Neo

Wednesday, May 17, 2006 

ISLAMABAD: Over four million new jobs have been created in the current financial year so far and it is expected that the figure could reach five million by the end of this fiscal in which the government is targeting to provide 1.2 million new jobs, a senior government official told the Daily Times on Tuesday. 

According to a recent government study, 4.2 million new jobs were created in the public and private sectors by December 31, 2005. The robust economic activity, credible enhancement in government spending on development schemes and banksÃ¢â¬â¢ lending to the private sector have been termed the basic factors to have increased employment in the country.

According to the study, agriculture remained the top sector to have contributed largely in employment generation. Agri-cultureÃ¢â¬â¢s share has increased from 18.6 percent a year ago to 20.3 percent in 2005-06. Around 2.4 million workforce is currently involved in agriculture directly and indirectly. 

The manufacturing side employs around half a million after its expansion, which is still under process in some industrial units. 

The other major factor is the considerable increase in the Public Sector Development Programme (PSDP) size. The allocation of PSDP has increased from Rs 202 billion to Rs 272 billion in the current fiscal. The official said the actual contribution of the PSDP to employment generation is yet to be ascertained. However, it is considered to be a major factor. BanksÃ¢â¬â¢ lending is another factor in increasing employment generation, according to the study. 

However, independent analysts have reservations on the employment generation in the current fiscal. They believe that the ministries are giving exaggerated figures whenever they provide data on employment generation. The recent study has not been prepared by an independent organization. More or less these are the same ministries that give different figures at different levels while holding meetings for different purposes. 

The government also claims that employment generation must have substantially reduced poverty. But the independent analysts are not ready to accept the governmentÃ¢â¬â¢s claims on poverty reduction. 

The official said the study was being consolidated by June 30, 2006 and the actual position would be known after the compilation of the study, which would be made a public document. The initial parts of the study might be included in the budget document. Independent observers are of the opinion that employment figures should be prepared by an independent body and not by government organizations, Ã¢â¬Åwhich give unrealistic picture to please the sitting government. The government uses it as political stunt,Ã¢â¬Â they believe. 

They say that mark-up rate on banks credit has witnessed an upward trend. Furthermore, banks give a marginal profit to depositors. This is a negative development that must stop. According to observers, the government would use this employment generation figures as a political slogan to attract voters in the coming elections. Therefore the data on employment generation compiled by the government should be verified by independent organizations, said an analyst.


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## Neo

Wednesday, May 17, 2006 

KARACHI: Savola Group of Saudi Arabia showed interest in making investment up to $1 billion in refining and marketing of edible oil and sugar in Pakistan.

Abderrahim Maaraf, director Business Development of Savola Edible Oils International, Jeddah said this during a meeting with Abdul Shakoor Khatri, chairman, Federation of Pakistan Chamber of Commerce and Industry (FPCCI) standing committee on foreign investment on Tuesday.

He said they are on a fact-finding mission to Pakistan in order to know about the prospects of investment in the field of their interest and to search for a joint venture partners. 

He said the group has market capitalization of over $ 20 billion has refining and marketing facilities in Arabian Gulf, Jordan, Syria, Egypt, Iran, Sudan, Morocco and North Africa. 

He said the group is importing edible oil from China, corn oil from Ukraine and palm oil from Malaysia. The groupÃ¢â¬â¢s facility for refining of sugar was located in Egypt. Mr Maaraf said the groupÃ¢â¬â¢s interest in investing in Pakistan has come about from the fact that Pakistan is an important developing country. 

Chairman FPCCI standing committee hoped that the Savola visit of Pakistan would reinforce their interest. He pointed out that Pakistan followed a liberal investment policy and foreign investors enjoyed full guarantee for repatriation of profit and even the invested amount.

He said that while soap can be a bye-product of oil refining facility, raw materials for various chemicals could be produced from sugar industry.


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## Neo

Wednesday May 17, 2006 

PESHAWAR : The NWFP government agreed in principle to provide Rs 101 million for the 15 projects in the Science Technology and Information Technology (STIT) sectors for the financial year 2006-07 which is double against Rs 55 million of the last financial year. 

Similarly the STIT department ensured 100 percent utilisation of the allocated amount meant for the IT projects in the last fiscal year. This was disclosed to the Provincial Minister for Information Technology Hussain Ahmad Kanju by Secretary STIT Umar Afridi and Director IT Sarwar Gondal in a presentation at Peshawar on Tuesday. 


Appreciating the good performance of his department, the minister IT directed the authorities concerned to maintain the same tradition in future also. The minister was told that the department proposed the establishment of science museum, food items testing and evaluation lab and wind mills for generating low cost electricity in the science and technology sector. 


Similarly, computerisation of the Information department, Public Service Commission, Prisons, Land Revenue and Registration Deeds were also in the proposed IT projects. 


He was informed, besides automation of the office of the Chief Secretary NWFP and STIT department, establishment of IT labs in two government schools in every district one each for male and female, appointment of virtual teachers to teach science subjects through CDs in the remote areas and replication of Online Hospital Management to Khyber Teaching Hospital and Hayat Medical Complex after Lady Reading Hospital (LRH) Peshawar. 


He was further informed that computerisation of the police stations in Swat and LRH Peshawar was completed and in the implementation stage while more than 200 personnel had been trained. 


Kanju on this occasion directed the authorities concerned to accelerate the process of appointments in the department by strictly following the merit policy of the government to accommodate maximum jobless IT professionals. 


He said that the IT department reviewed the process of Patwar system in Punjab province and a delegation in his leadership would soon visit India to view its computerised Patwar system for implementation adding that the people of the province would soon get rid of the corrupt system in the province.


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## Neo

Tuesday, May 16, 2006 


ISLAMABAD: France should realise Pakistan's need for civil nuclear energy, President Pervez Musharraf said on Tuesday, Online news agency reported. 

A French delegation led by Claude Birraux, president of the France-Pakistan Parliamentary Friendship Group, called on Musharraf to discuss a wide range of bilateral and international issues. 

The president briefed the five-member delegation on the progress achieved in instituting sustainable democracy in Pakistan. 

He also raised the issue of civilian nuclear energy cooperation in the wake of the US-India nuclear energy cooperation agreement. 

Musharraf said Pakistan attaches great value to relations with France and held its leadership in high esteem. 

Birraux appreciated the progress achieved by Pakistan in the area of women empowerment. He said there were more women, in percentage terms, in the National Assembly of Pakistan than in the French National Assembly. 

The French delegation appreciated Pakistan's role in the fight against terrorism


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## Neo

Wednesday, May 17, 2006 

ISLAMABAD: President Pervez Musharraf said on Tuesday that the government would subsidise essential kitchen items and would make sure that they were available to the public at half the price.

Sources privy to the meeting quoted Musharraf as telling Pakistan Muslim League (PML) MNAs from Lahore and Kasur that items such as wheat, rice, sugar, ghee and pulses would be subsidised.

Musharraf also said he would announce his Ã¢â¬ÅPakistan VisionÃ¢â¬Â right before or right after the upcoming federal budget, proposing measures for the publicÃ¢â¬â¢s benefit. He said the vision would also focus on large development projects in the country.

The MNAs said the government must control the increase in the prices of essential commodities in the country. The meeting also proposed appointing magistrates under district coordination officers to check the increase in prices.

Sources said Musharraf made it clear that Shujaat would continue as PML president and lead the party in the 2007 general elections. Ã¢â¬ÅNobody should doubts his leadership,Ã¢â¬Â he added.

He said differences within the PML must end so that the party could be successful in the elections. He told Shujaat to listen to the grievances of other PML leaders, if there were any.

Musharraf also asked the MNAs about the possibility of electoral alliances with other political parties in the general elections, sources said, adding that the MNAs told the president that it was too early to talk about electoral alliances. However, they said the PML would win the elections without electoral alliances.

Musharraf said he would go on a countrywide tour to tell people about the development projects and initiatives taken by the federal government.

He also criticised former prime ministers Benazir Bhutto and Nawaz Sharif, saying they were still ignoring the people and were more interested in their personal interests.

He said the Ã¢â¬ËCharter of DemocracyÃ¢â¬â¢ was another political gimmick to fool the nation. He said he would not allow anybody to play with the peopleÃ¢â¬â¢s destiny. Musharraf told Mushahid to examine the Ã¢â¬ÅCharter of DemocracyÃ¢â¬Â and prepare a comprehensive reply in light of the democratic and political reforms taken by the government. Sources said the president admitted that he had not read the contents of the charter.

He said there was no room for Nawaz or Benazir in the general elections.

PML chief Chaudhry Shujaat Hussain, Punjab Chief Minister Pervaiz Elahi, Mushahid Hussain and MNAs Humayun Akhtar Khan, Farooq Amjad Mir, Sardar Tufail, Sardar Talib Nakai, Sardar Asif Nakai and Habibullah Warraich were at the meeting.

Later, Musharraf met a delegation of senators from the Federally Administered Tribal Areas (FATA), and renewed the governmentÃ¢â¬â¢s commitment to develop the tribal areas. He also said elected representatives had an important role to play in this regard, APP reported. Musharraf also said foreign elements hiding in the tribal areas would be flushed out.


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## Neo

KARACHI (May 18 2006): There are indications that the slowdown in economic activity is starting to dampen measured inflation's high slope trajectory. This was stated by Ahsan Javed Chishty, Chief Economist, BMA Capital, in his presentation at MBA Pakistan Investor Forum on 'Pakistan's Economy & Outlook for Interest Rates', held at a local hotel on Wednesday.

However, Ahsan Javed said that higher commodity quotes and a rising fiscal deficit have the potential to feed into care inflation. The State Bank of Pakistan (SBP) is cognizant of the danger, he added.

The SBP has also established a preference for maintaining the exchange rate in a stable band, he said, adding that the balance of risks mitigates the probability of monetary easing for the remainder of the year. In fact, probability remains tilted towards further monetary tightening.

He said that Pakistan's GDP grew 8.4 percent in FY 2005. However, GDP growth is expected to slowdown this year to 6.4 to 6.6 percent. Higher consumption spending continues to lead the demand side components though net exports are starting to appreciably drag growth.

Investment in fixed capital has grown steadily over the past four years and should continue into the future as growing aggregate demand outstrips available supply.

He said that as a result of the explosion in private consumption all sectors of the economy have shown robust growth over the past three years. But some sectors are now starting to lag.

Agriculture had a bumper year in FY05, growing 7.5 percent. However, expectations for FY06 appear much lower at slightly over 2 percent.

He said that estimates indicate that cotton crop for FY06 is likely to decline by 14.5 percent due to adverse effects of sowing delays, climatic conditions and pest infestation. Wheat might also be lower as area under cultivation drops to 74 percent of targeted amount. Reasons for less land under wheat includes delays in cotton picking, slow harvesting of rice, slow lifting of sugarcane, as well as disorder caused by earthquake.

Ahsan said that at 24 percent of GDP the industrial sector had grown sharply in response to private consumption demand, growing 10.2 percent in FY05. But manufacturing, which accounts for over 90 percent of the industrial sector, appeared to be slowing down in FY06.

The slowdown in manufacturing seems to be because of capacity constraints and not low demand and key sectors, such as textile, fertilisers, refinery, cement and autos are already at capacity.

He said that SBP, vigilant about inflation, has been keeping monetary policy tight and in it review, the central bank highlighted that though tight monetary policy has reduced measured inflation magnitude aggregate demand continued to remain robust. The central bank vowed to reduce incipient inflation pressure and ensure a clear downward trend in prices even if it meant tightening interest rates further. The SBP also highlighted the need to address emerging macro imbalances while they are still small and unthreatening.

SBP has been using frequent open market operations with flexible tenors since the beginning of FY06. This has reduced volatility in short-term rates significantly.

Ahsan said that measured inflation is exhibiting sporadic instances of weakness with real interest rates positive for the first time since January 2003. However, the extent of the deceleration is not visible in all measures. Strong credit expansion is squeezing bank liquidity as the banking sector advance-to-deposit ratio (ADR) moves into 'full capacity' levels.

He said that government revenue/expenditure indicators have moved adversely in the last one year, and, due to limited recourse to other revenue sources, the government had been borrowing extensively from the SBP to meet outlays. However, this fiscal dominance is now showing signs of abating.


----------



## Neo

GUJRANWALA (May 18 2006): Export Promotion Bureau (EPB) Chairman Tariq Ikram has said that $17 billion export target set for the current fiscal year would not only be achieved but it may be surpassed.

While addressing a seminar on 'Warehouses' at Gujranwala Chamber of Commerce and Industry (GCCI), he said that exports worth $13.5 billion had already been made till April 2006, which is 18 percent higher than the exports in corresponding period of last year.

The EPB chairman said that the government was keen to overcome trade deficit and were adopting effective strategy for boosting up exports and added that besides restructuring the EPB, the government would constitute Export Development Authority to evolve ways for the purpose.

Tariq Ikram maintained that warehouses would be built at Kenyan cities, Mombasa and Nairobi, and exporters from Pakistan could store their goods in those warehouses for 90 days free of cost. This will also help the exporters greatly to capture African market, he added.

For availing the facility of warehouses, the exporters might apply to steering committee with necessary particulars of goods to be stored, he said and added that the exporters would be responsible for quality and quantity and have to obey Kenyan Laws about bonded and non-bonded items.

The project of warehouses was assigned to a company having 25 years experience in this field, the EPB chief pointed out.

Tariq Ikram advised the exporters to concentrate on exports to African counties where Pakistani products are in heavy demand. He further said that exports of non-traditional items, including fisheries, food, marble, jewellery, engineering goods and meat have considerably increased during last eight years, and suggested to introduce more non-traditional items and use of warehouses facility.

Giving break-up of exports, Tariq Ikram told the gathering that goods worth 400 million dollars were exported to African countries as compared to 326 million dollars to Eastern Europe. He observed that exports could further be increased to these markets through using marketing skills.

The EPB chief observed that rice; furniture and engineering items could be exported to Iraq and Jordan. As to steps for boosting exports, he said that business support units would be set up in about 60 countries to work in aid of Pakistani exporters.

About marble industry and its made-ups, Tariq Ikram said that these have earned 40 million dollars in foreign exchange. He admitted although there was already 300 percent increase in export of marble but there was much room for further increase and the same could exceed 300 million dollars.

To a query of an exporter about indifferent attitude of commercial attachÃÂ© at Pakistani embassies, the EPB chairman assured to look into the matter.


----------



## Neo

MULTAN (May 18 2006): The Export Promotion Bureau has planned to explore more international markets for Pakistani goods, encouraging the untraditional goods and value added items instead of raw material to earn maximum foreign exchange.

A spokesman of the EPB talking to newsmen here on Wednesday said that export targets would be achieved conveniently by setting up warehouses in Kenya to capture the African market.

He said the government had hired an experienced company for constructing Pakistani warehouses in the Kenyan cities of Mombasa and Nairobi. He said the efficient use of these warehouses would boost the export.

"The exporters will store their goods in the warehouses for the importers in Kenya and other countries. The stores will provide an easy access to the African market," he added.

The EPB spokesman said to use these warehouses the exporters would apply to the Warehouse Steering Committee and provide the details of their products to be stored there.

The exporters would use these stores for 90 days free of cost, he added. "In order to cover up this deficit, the government will constitute an export development authority and adopt special strategy," he said.

He also suggested that Iraq could be a suitable country for export from Pakistan.

Earlier, GCCI president Ikhlaq Butt presented a welcome address and gave various suggestions for increasing the export.


----------



## Neo

MULTAN (May 18 2006): The Export Promotion Bureau has planned to explore more international markets for Pakistani goods, encouraging the untraditional goods and value added items instead of raw material to earn maximum foreign exchange.

A spokesman of the EPB talking to newsmen here on Wednesday said that export targets would be achieved conveniently by setting up warehouses in Kenya to capture the African market.

He said the government had hired an experienced company for constructing Pakistani warehouses in the Kenyan cities of Mombasa and Nairobi. He said the efficient use of these warehouses would boost the export.

"The exporters will store their goods in the warehouses for the importers in Kenya and other countries. The stores will provide an easy access to the African market," he added.

The EPB spokesman said to use these warehouses the exporters would apply to the Warehouse Steering Committee and provide the details of their products to be stored there.

The exporters would use these stores for 90 days free of cost, he added. "In order to cover up this deficit, the government will constitute an export development authority and adopt special strategy," he said.

He also suggested that Iraq could be a suitable country for export from Pakistan.

Earlier, GCCI president Ikhlaq Butt presented a welcome address and gave various suggestions for increasing the export.


----------



## Neo

ISLAMABAD (May 18 2006): A Rs 14 billion Khushhal Pakistan Programme (KPP) is being worked out for 2006-07, against Rs 7.5 billion of the current fiscal year, it was learnt here on Wednesday.

Sources said that almost 100 percent-enhanced KPP over the last fiscal year would be presented before the Annual Plan Co-ordination Committee (APCC), scheduled to meet here on May 22, with Planning Commission deputy chairman Dr Akram Shaikh in the chair. The government is increasing KPP allocations substantially for the next fiscal year to ensure adequate funds for the on-going schemes undertaken in less-developed areas and to launch the new projects in other areas.

The sources said that KPP's bulk allocation for 2006-07, will be finalised in the said APCC meeting, however, the schemes can be undertaken at any time in next fiscal year.

KPP's funds provide additional resources to the government to undertake development projects and schemes of public importance when and where needed in the specific time-frame.

Its allocations are also utilised for the development projects and schemes, announced by President or Prime Minister, during their visit to different parts of the country.

In 2005-06, Balochistan had been the KPP's major beneficiary. The federal government undertook various uplift projects in different districts of the province.

The sources added that the APCC meeting will also review the progress report of Public Sector Development Programme (PSDP) 2005-06, besides approving allocations for 2006-07. The government is mulling Rs 342 billion PSDP for the next fiscal year.

The next year PSDP will provide the provinces additional financial resources under 7th National Finance Commission (NFC) award. The provinces' shares in the last year's PSDP stood at Rs 68 billion. However, under the new NFC their share in PSDP for upcoming year will be over Rs 100 billion.

APCC's recommendations will be presented before the National Economic Council (NEC), meeting to be held on May 31, presided over by Prime Minister Shaukat Aziz.


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## Neo

KARACHI (May 18 2006): State Bank of Pakistan (SBP) Governor Dr Shamshad Akhtar has advised the business community to suggest amendments in long-term machinery finance scheme and locally made machinery finance (LMM) scheme for their better utilisation.

Addressing the members of Site Association of Industry (SAI) on Wednesday, she said that these schemes had remained under-utilised and business community seemed reluctant to get benefits of these schemes.

She noted that long-term machinery finance scheme provides finance for import of machinery at 7 percent mark-up. This scheme had an allocation of Rs 23 billion, out of which only Rs 5.3 billion had been utilised.

Likewise, LMM is a scheme to finance locally made machinery, at 11.5 percent mark-up. Under this scheme, there is a limit of financing up to Rs 2 billion. This scheme remained unutilised, she added.

She advised the banking sector to process all applications received for financing under these schemes.

She said that if these schemes were no longer required they should be abandoned.

Dr Shamshad Akhtar said that tight monetary policy would continue until inflation came down, and the mark-up rates came down. As long as inflation was higher, interest rates would remain higher.

About devaluation of Pak rupee, the SPB governor said that there was no proposal, under consideration, to devalue the rupee against foreign currencies.

She said that devaluation "plays no role in boosting export, but creates other problems". However, she added that devaluation policy might be changed, depending on future economic conditions.

She said that recently the dollar had depreciated against other currencies that might help boost Pakistan's exports.

Commenting on trade deficit, she said that trade deficit figures, provided by Federal Bureau of Statistic (FBS), did not match with the figures of SBP. FBS statistic claim trade deficit at 8 billion dollars, whereas SBP figures indicate it at 6.2 billion dollars. as per July-March 2006 report. SBP figures are more accurate than FBS, she claimed.

She said that by the end of 2005-06, trade deficit figures were likely to touch $7 to 8 billion. The State Bank Governor said that higher rate of deficit was a cause of concern. "We have enough resources to face the trade deficit", she added.

She said that Pakistan has around $13 billion reserves, besides remittances, privatisation proceeds, bonds etc which may be used to bridge trade deficit.

Dr Akhtar advised the business community to boost exports, "which is the only way to bridge trade deficit".

About export refinance rates, she said that export refinance rates scheme was introduced in 1970. Highest utilise of 67 percent was textile sector. Then came to rice and other food items exporters.

She said that export refinance rates at 9 percent was not high as compared to other countries. Indian export refinance rates are 10.75 percent.

She said that in the past the business community had misused export refinance scheme.

Criticising the business community for placing demand of reducing taxes, interest rates, utility charges etc, and said that she served 6 years as World Bank Consultant in India and saw that business community of India did not make demands. "They just concentrate on their business activities. They have no time to hold meetings with ministers." She expressed surprise over business community having time to spend in meetings and other non-business activities.

Welcoming the guests, SAI Chairman Ameen Bandukda said industrial growth had already weakened during the first quarter of the year, registering a growth of only 6.1 percent, compared to 19 percent in the corresponding period of last year. There has been a distinct slowdown in large-scale manufacturing, which only grew by 8.7 percent in the first quarter compared to 24.9 percent in the corresponding period of last year.

He said that in 2004-05, GDP grew by 8.4 percent but this year it is expected to slow down substantially.


----------



## Neo

ISLAMABAD, May 16: Commerce Minister Humayun Akhtar Khan on Tuesday informed the upper house that the export of edible items increased by 42 per cent during the July-Nov period of the current fiscal year over the last year.

The minister stated this in a written reply to a question of Senator Ms Afia Zia who sought clarification from the ministry about the export promotion of edible items.

Mr Khan informed the Senate that major edible items exported included meat, fish, dairy product, vegetables, fruits, cereals, malt, fats and oils, prepared meat, sugars and confectionary, beverages and vinegar and salt.

He said exports of edible items were encouraged to participate in delegation and international exhibitions. Ã¢â¬ÅWe are providing them all support with reference to market access issues such as registration of processing units, slaughter houses and farms with the importing countries authorities,Ã¢â¬Â he added.

The government is also creating awareness on the upcoming challenges through seminars and workshops on international certifications like EUREPGAP, HACCP and ISO. Ã¢â¬ÅWe are subsidising the certification by cost sharing to support the exporter,Ã¢â¬Â he added.

CURRENCY NOTES: Minister of State for Finance Omar Ayub Khan on Tuesday informed the Senate that the total value of currency notes in circulation in the country as on March 31, 2006 was Rs785.09 billion.

The information was provided by the state minister to the Senate in a written reply to a question of Senator Dr Mohammad Saeed.

Giving further information, the minister told the upper house that the value of currency notes issued from July 1, 2005 to March 31, 2006 was Rs194.08 billion. Similarly, he said, the value of coins of Re1, Rs2 and Rs5 issued during the same period was Rs1.11 billion.

Giving a denomination-wise break-up, the state minister said the value of Rs1,000 currency notes issued from July 1, 2005 to March 31, 2006 was Rs114 billion, the value of Rs500 currency notes was Rs35.5 billion, the value of Rs100 currency notes was Rs30.2 billion, the value of Rs50 notes was Rs6.3 billion, the value of Rs20 notes was Rs3.12 billion and the value of Rs10 was Rs4.96 billion.


----------



## Neo

By Landon Thomas Jr. The New York Times

THURSDAY, MAY 18, 2006

NEW YORK Simon Nocera runs a hedge fund that invests in emerging markets, and so, perhaps not surprisingly, prides himself on having a keen appetite for risk.

But even he had to draw the line when his broker tried to get him into Zambian Treasury bills.

"It was pure, baseless speculation," said Nocera, who has been investing in developing markets for more than 15 years. "If I am going to play the casinos, I would rather go to Las Vegas."

Nocera did not make the trade, but some of his even more adventuresome peers did. Propelled by a boom in copper prices, Zambian government bonds, denominated in kwachas and yielding 25 percent for five-year paper, returned more than 40 percent this spring for those who could stomach the risk.

Four years into what has become the longest bull run in the brief history of emerging-market investing, players from hedge funds to mutual funds to public and private pension funds have shown willingness to take on increased risk in developing markets.

Benchmark stocks in the largest markets - like Brazil, Russia, India and China, collectively labeled BRIC - have experienced gravity-defying rises, prompting return-starved investors to look farther afield. Now in vogue are banks in the former Soviet republic of Georgia, airline companies in Kenya, oil refineries in the central Russian republic of Bashkortostan and start-up stockbrokers in India that go by the name of Indiabulls.

How short memories can be.

This week, a round of mini-devaluations in Turkey, South Africa and Indonesia was a reminder that emerging markets, despite their improving economies and stabilizing currencies, remain volatile and unpredictable.

Seasoned investors note that while the Mexican devaluation of 1994, the Asian currency crisis in 1997 and Russia's default on its debt in 1998 were ultimately spawned by faulty policies in those nations, the pandemic nature of these blowups was deepened by the panicked selling of unsophisticated investors.

Now, in the eyes of some, the record capital inflows and signs that investors are once again buying indiscriminately spell trouble.

For James Trainor, a portfolio manager at Newgate Capital in Greenwich, Connecticut, a leading emerging-markets hedge fund, the sign that the fever for emerging market stocks was running too high came this month when he overheard the short-order cook at his local diner debating which oil stocks in Venezuela he should be buying.

Trainor, who survived the market meltdowns of the previous decade and manages more than $3 billion in assets, sees other warning signs.

"Brazilian banks are trading at five time earnings," he said. "Russian debt has become investment grade.

"The risks associated with international investing have been pushed aside because of the returns," he added, speaking from Mexico City.

Despite the market turmoil this week, there is no indication yet that developing markets are prepared to collapse. Dollar reserves are at historic highs, and the broad macroeconomic health of many of these countries has vastly improved, helped by soaring commodities prices and robust exports.

Indeed, these economies have undergone startling transformations. Not only do China and South Korea hold more than $1 trillion in reserves between them, but companies like Gazprom in Russia and Samsung in South Korea have become influential conglomerates that are among the world's largest companies.

"The center of gravity has shifted," said Antoine van Agtmael, the longtime investor in developing economies who coined the term emerging markets. "These countries have become creditors instead of debtors. Current account deficits have become surpluses."

The rush of funds into these markets as well as the push for more exotic and risky investments suggest that memories of past crises may have dimmed. Last week, funds that invest in emerging markets took in one of their highest weekly sums ever, bringing the figure this year to $33 billion, already outpacing the record $20 billion last year, according to EmergingPortfolio.com.

Hedge funds, always on the lookout for the next investment fad, see an opportunity not to be missed - 153 funds were formed last year to invest in emerging markets, according to Hedge Fund Research.

Much anecdotal evidence shows how investing in emerging markets has evolved from a niche area for hardened globetrotters and steel-nerved investors.

In India, for example, a market that has shot up 141 percent over the last two years, some of the largest shareholders of top local enterprises are American mutual fund companies like Janus, known more for its momentum style of investing than for its emerging markets expertise.

Just as technology stocks were good to Janus in the late 1990s, so have Indian stocks been this time around. In the foreign large-growth mutual fund category, according to Morningstar, the three best-performing funds over a one-year period were all from Janus. And all three funds held Reliance Industries and Tata Steel, two Indian companies that have gone up 166 percent and 71 percent, respectively, as their top two holdings.

In Russia, where the stock market is up 150 percent over the last two years, investors have been piling into commodity-based stocks.

It is not just foreign money that is pushing up stocks worldwide. In Pakistan, where suicide bombings remain a frequent occurrence in Karachi, the country's commercial center, an aggressive economic overhaul has drawn billions of dollars from Pakistanis at home and abroad into the stock market. Since 2001, the stock market capitalization has exploded from $10 billion to its current $55 billion, and only in the last six months have foreign investors started to wade back into the market.

Perhaps the broadest indicator of how comfortable investors have become with emerging market risk is the narrow interest rate spread that separates the government bonds of countries like Indonesia, Mexico, Turkey and Pakistan from U.S. Treasury bonds, long the paragon of risk-free investment.

In the past, the gap separating the paper of emerging economies has been wide, reflecting the higher economic and political risk associated with these countries.

But as these countries have turned their economies around, narrowing budget deficits and accumulating current account surpluses, their credit ratings have improved. In a curious reversal, many of these countries, in Asia especially, are now the largest buyers of the Treasury securities that the U.S. government has been selling as its own budget deficit has widened.

"For the first time in modern history, poor countries are financing the rich," said Marc Faber, a global investment analyst noted for his gloomy prognostications. "I would not rule out one day that Brazil will have a better credit rating than the U.S."

But with spreads widening, seasoned investors like Trainor worry that the sudden influx of new money, especially from hedge funds, many of which now are among the largest shareholders of companies in Turkey, Argentina and Mexico, may not have the patience or experience to withstand the volatility of these markets.

"Shining returns have attracted all walks of investors like mosquitoes around a lamp post," Trainor said in an e-mail message. "For an asset class best left to dedicated investors, those that aren't afraid to kick the tires in some of the most remote parts of the world, these mosquitoes better be careful or they might just get zapped."


----------



## Neo

NEW YORK Simon Nocera runs a hedge fund that invests in emerging markets, and so, perhaps not surprisingly, prides himself on having a keen appetite for risk.

But even he had to draw the line when his broker tried to get him into Zambian Treasury bills.

"It was pure, baseless speculation," said Nocera, who has been investing in developing markets for more than 15 years. "If I am going to play the casinos, I would rather go to Las Vegas."

Nocera did not make the trade, but some of his even more adventuresome peers did. Propelled by a boom in copper prices, Zambian government bonds, denominated in kwachas and yielding 25 percent for five-year paper, returned more than 40 percent this spring for those who could stomach the risk.

Four years into what has become the longest bull run in the brief history of emerging-market investing, players from hedge funds to mutual funds to public and private pension funds have shown willingness to take on increased risk in developing markets.

Benchmark stocks in the largest markets - like Brazil, Russia, India and China, collectively labeled BRIC - have experienced gravity-defying rises, prompting return-starved investors to look farther afield. Now in vogue are banks in the former Soviet republic of Georgia, airline companies in Kenya, oil refineries in the central Russian republic of Bashkortostan and start-up stockbrokers in India that go by the name of Indiabulls.

How short memories can be.

This week, a round of mini-devaluations in Turkey, South Africa and Indonesia was a reminder that emerging markets, despite their improving economies and stabilizing currencies, remain volatile and unpredictable.

Seasoned investors note that while the Mexican devaluation of 1994, the Asian currency crisis in 1997 and Russia's default on its debt in 1998 were ultimately spawned by faulty policies in those nations, the pandemic nature of these blowups was deepened by the panicked selling of unsophisticated investors.

Now, in the eyes of some, the record capital inflows and signs that investors are once again buying indiscriminately spell trouble.

For James Trainor, a portfolio manager at Newgate Capital in Greenwich, Connecticut, a leading emerging-markets hedge fund, the sign that the fever for emerging market stocks was running too high came this month when he overheard the short-order cook at his local diner debating which oil stocks in Venezuela he should be buying.

Trainor, who survived the market meltdowns of the previous decade and manages more than $3 billion in assets, sees other warning signs.

"Brazilian banks are trading at five time earnings," he said. "Russian debt has become investment grade.

"The risks associated with international investing have been pushed aside because of the returns," he added, speaking from Mexico City.

Despite the market turmoil this week, there is no indication yet that developing markets are prepared to collapse. Dollar reserves are at historic highs, and the broad macroeconomic health of many of these countries has vastly improved, helped by soaring commodities prices and robust exports.

Indeed, these economies have undergone startling transformations. Not only do China and South Korea hold more than $1 trillion in reserves between them, but companies like Gazprom in Russia and Samsung in South Korea have become influential conglomerates that are among the world's largest companies.

"The center of gravity has shifted," said Antoine van Agtmael, the longtime investor in developing economies who coined the term emerging markets. "These countries have become creditors instead of debtors. Current account deficits have become surpluses."

The rush of funds into these markets as well as the push for more exotic and risky investments suggest that memories of past crises may have dimmed. Last week, funds that invest in emerging markets took in one of their highest weekly sums ever, bringing the figure this year to $33 billion, already outpacing the record $20 billion last year, according to EmergingPortfolio.com.

Hedge funds, always on the lookout for the next investment fad, see an opportunity not to be missed - 153 funds were formed last year to invest in emerging markets, according to Hedge Fund Research.

Much anecdotal evidence shows how investing in emerging markets has evolved from a niche area for hardened globetrotters and steel-nerved investors.

In India, for example, a market that has shot up 141 percent over the last two years, some of the largest shareholders of top local enterprises are American mutual fund companies like Janus, known more for its momentum style of investing than for its emerging markets expertise.

Just as technology stocks were good to Janus in the late 1990s, so have Indian stocks been this time around. In the foreign large-growth mutual fund category, according to Morningstar, the three best-performing funds over a one-year period were all from Janus. And all three funds held Reliance Industries and Tata Steel, two Indian companies that have gone up 166 percent and 71 percent, respectively, as their top two holdings.

In Russia, where the stock market is up 150 percent over the last two years, investors have been piling into commodity-based stocks.

It is not just foreign money that is pushing up stocks worldwide. In Pakistan, where suicide bombings remain a frequent occurrence in Karachi, the country's commercial center, an aggressive economic overhaul has drawn billions of dollars from Pakistanis at home and abroad into the stock market. Since 2001, the stock market capitalization has exploded from $10 billion to its current $55 billion, and only in the last six months have foreign investors started to wade back into the market.

Perhaps the broadest indicator of how comfortable investors have become with emerging market risk is the narrow interest rate spread that separates the government bonds of countries like Indonesia, Mexico, Turkey and Pakistan from U.S. Treasury bonds, long the paragon of risk-free investment.

In the past, the gap separating the paper of emerging economies has been wide, reflecting the higher economic and political risk associated with these countries.

But as these countries have turned their economies around, narrowing budget deficits and accumulating current account surpluses, their credit ratings have improved. In a curious reversal, many of these countries, in Asia especially, are now the largest buyers of the Treasury securities that the U.S. government has been selling as its own budget deficit has widened.

"For the first time in modern history, poor countries are financing the rich," said Marc Faber, a global investment analyst noted for his gloomy prognostications. "I would not rule out one day that Brazil will have a better credit rating than the U.S."

But with spreads widening, seasoned investors like Trainor worry that the sudden influx of new money, especially from hedge funds, many of which now are among the largest shareholders of companies in Turkey, Argentina and Mexico, may not have the patience or experience to withstand the volatility of these markets.

"Shining returns have attracted all walks of investors like mosquitoes around a lamp post," Trainor said in an e-mail message. "For an asset class best left to dedicated investors, those that aren't afraid to kick the tires in some of the most remote parts of the world, these mosquitoes better be careful or they might just get zapped." 

http://www.iht.com/articles/2006/05...ness/emerge.php


----------



## Neo

KARACHI, May 17: Remittances from overseas Pakistanis increased by over 5 per cent during the first 10 months of the current financial year but the inflow during April 2006 slowed down to almost at the same level of April 2005.

The State Bank on Wednesday issued the latest figures of remittances which reached $3,629.68 million during the first 10 months of the current fiscal year (JulyÃ¢â¬âApril) as against $3,451.51 million the same period last year, showing an increase of 5.16pc.

The remittances include $10.81m received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

Pakistani workers remitted $401.47m during April 2006 as against $401.00m in April 2005.

The inflow of remittances during the July-April period from the USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $994.78m, $584.64m, $555.84m, $477.30m, $346.40m and $97.06m respectively as compared to $1,076.22m, $506.22m, $580.87m, $425.95m, $309.99m and $83.25m during the corresponding period of the last fiscal year.

While remittances received from Canada, Australia, Norway, Switzerland, Japan and other countries during the period under review totalled $562.85m as compared to $457.27m the same period last year.

The inflow of remittances into Pakistan from most countries of the world increased last month as compared to April 2005. According to the break up, Pakistan received workers remittances during April 2006 from USA ($101.24m), Saudi Arabia ($69.05m), UAE ($64.59mn), GCC countries including Bahrain, Kuwait, Qatar and Oman ($47.98mn), UK ($41.05mn) and EU countries ($9.44m) as compared to $121.04m, $57.26m, $73.04m, $43.80m, $39.61m and $11.16m received from the respective countries in April 2005.

Remittances received from Canada, Australia, Norway, Switzerland, Japan and other countries during April 2006 totalled $68.00m as compared to $47.7m the same month last year.


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## Neo

ISLAMABAD, May 17: Enbridge Pipeline Company of Canada has shown its keen interest to participate in the privatisation of Sui Northern Gas Pipeline Company (SNGP).

Vice-presidents Lan Macfeely and Tom Schewartz of the Canadian company expressed the desire in a meeting with Federal Minister for Petroleum and Natural Resources Amanullah Khan Jadoon here on Wednesday.

The minister apprised the visiting officials that a lot of investment potential existed in the upcoming oil and gas projects like setting up LNG terminals, oil and gas exploration and sell-off of SNGPL and SSGC.

He informed them that that the government had deregulated the petroleum sector and was offering lucrative incentives to the prospective investors and facilitating them.

The minister further said that the government was taking concrete steps to bridge the demand and supply gap and actively working on Iran-Pakistan-Indian (IPI) and Turkmenistan-Afghanistan (TAP) gas pipeline projects besides import of LNG.

He also briefed them about the upcoming projects including the privatisation process of the state-owned oil and gas companies.

The vice-presidents said that they were visiting Pakistan to acquaint themselves with the investment potential in the oil and gas sector. Ã¢â¬ÅWe have a keen desire to participate in the privatisation of oil and gas units particularly the SNGPLÃ¢â¬Â, they added.

SNGP Managing Director Rashid Lone briefed them about the profile of the company.


----------



## Neo

Thursday, May 18, 2006 

KARACHI: As many as 100 licences have been issued to different international companies for oil and gas exploration in Pakistan, mainly especially in Balochistan. 

This was stated by Balochistan governor Owais Ahmed Ghani at the inaugural session of Ã¢â¬Å4th Pakistan Oil, Gas & Energy Exhibition & Conference, POGEE 2006, co-locating International Fire & Security ExhibitionÃ¢â¬Â at the Expo Centre on Wednesday. 

The ceremony was attended by a number of key officials and people from private and public sector local and foreign organizations. 

The governor said the government fully supported the foreign companies investing in oil and gas sector of Pakistan. Ã¢â¬ÅBalochistan is rich in oil, gas and minerals deposits and a lot of work regarding exploration of the two is going on in the province,Ã¢â¬Â he said. 

Recently Mari Gas company discovered some reservoirs in the northern parts of Balochistan, he said and added that a joint venture of two Canadian companies in cooperation with Balochistan government was in process to discover more deposits. He disclosed that the project is the 7th largest copper project in the world.

About the exhibition, he said it was an important event to showcase latest technologies in Pakistan as well as in the region and promote investment in respective sectors of the country. 

Earlier, Aasim A. Siddiqui, Managing Director of Pegasus Consultancy said Pakistan poised to become one of the largest producers of natural gas in the world. Later, Owais Ahmed Ghani formally inaugurated the exhibition.


----------



## Neo

Thursday, May 18, 2006 

ISLAMABAD: The government has informed the Asian Development Bank that its ministry of finance is planning to hold an international conference on capital market development to thoroughly discuss the role of innovation and new instruments in the areas of derivatives, futures, pensionsÃ¢â¬â¢ fund, bonds markets, private equity and real estate investment trust (REIT) products in boosting national growth and economy. 

The conference will focus on issues such as provision of a roadmap for future plan of action. The proposed conference would be held after the announcement of the budget.

An Asian Development Bank team headed by. Rainer Hartel, senior financial specialist, called on the Adviser to the Prime Minister on Finance, Revenue, Economic Affairs and Statistics Dr. Salman Shah here on Wednesday. Minister of State for Finance Omar Ayub Khan and senior ministry officials were also present. Dr. Salman Shah said the convening of the conference would greatly help in making an objective assessment of the progress achieved so far by the capital markets in the country.

During the meeting, the role of the small and medium enterprises bank was reviewed. The meeting decided that effective measures should be taken for the privatization of SME bank.

The meeting also decided that reforms should be introduced for the release of second tranche of $ 30 million of SME reform programme from the ADB.

The meeting discussed the scope of effective labour protection and labour inspection policies. The ADB team was informed that the matter would be taken up with the Ministry of Labour and Manpower and the ADB will be apprised of the outcome after due consultation.

The meeting also discussed issues about the lowering of stamp duty on loan bonds. The ADB team was informed that the anti-money laundering law was under consideration of the Parliament.


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## Neo

Thursday, May 18, 2006 

KARACHI: State Bank of Pakistan governor Dr Shamshad Akhtar Wednesday said the central bank presently had no plans to devalue Pakistani rupee against dollar.

Addressing the members of SITE Association of Industry at a luncheon meeting, she said Ã¢â¬Åhowever, adjustments are possible in future if the national economic situation calls forÃ¢â¬Â.

She said price of dollar was declining in the international market. Therefore, she added, the Pakistan business community should take benefit of the development. She clarified that the trade deficit over the current fiscal year was $6.2 billion, which could reach $8 billion by the end of June 2006 against the apprehended figure of $12 billion. 

This could be made up through remittances, privatization proceeds and foreign reserves. But it would not be good for the country's economy in future, she said.

She explained that there was no need for a worry about the increasing trade deficit as this had reflected the increase in demand of various items especially the essential ones like sugar and cement in the country which was good omen for national economy.

She said 8.4 percent growth in gross domestic product (GDP) in last fiscal year owed to the issuance of huge amount of loans for investment, not because of low interest rates.

She said the inflation rate was coming down in the country and now it was 6.1 percent. This could be reduced further through strict monitoring policy already adopted by SBP. She said the rate of interest was directly linked to the rate of inflation. Ã¢â¬ÅThis could not be reduced till the demand/inflationary pressures were high," she said.


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## Neo

Thursday, May 18, 2006 

KARACHI: Master Plan 2020 has entered its final stage and is expected to be ready in the next three months or so, declared EDO Master Plan Iftikhar Qaimkhani while talking to Daily Times Wednesday on the sidelines of a seminar on the project. 

Twelve committees for education, water, power, transport, health, housing, recreation, etc. headed by experts and technocrats and engineers have been helping with the project. Furthermore, the city government has been in contact with the cityÃ¢â¬â¢s seven cantonment boards, DHA and other authorities. The city nazim directed that the maps of utility services should be incorporated in the Master Plan 2020. 

Meanwhile Naved Zaheer, who represents the consultants preparing the plan, briefed the participants of the seminar that the survey of all parts of the city have been completed.

PPI adds: It is expected to be the first such plan with legal cover. The master plans prepared in the past were confined to books, but now the City Council is authorised to approve the plan under SLGO 2001 and therefore it would have legal safeguard.

During the last 80 years, five master plans have been prepared for Karachi. A E Miram prepared Ã¢â¬ÅReport on Development of KarachiÃ¢â¬Â in 1923, Lt Col Swaine Thomas made Ã¢â¬ÅKarachi Physical PlanÃ¢â¬Â in 1945, consultants of a Swedish firm prepared Ã¢â¬ÅMRV PlanÃ¢â¬Â in 1949, the defunct KDA with the financial assistance of the UNDP devised the Ã¢â¬ÅKarachi Development Plan 1974-85Ã¢â¬Â in 1974, and again in 1991, the Ã¢â¬ÅKarachi Development Plan 2000Ã¢â¬Â.

The Karachi Development Plan 2000 lost its validity at the end of the year 2000. Although this plan provided a complete framework for the growth of the metropolis up to 2000, it had neither been accorded official approval nor institutional arrangements necessary for its implementation.

Political vicissitudes also restricted the possibility of its implementation. As a result, its recommendations were continuously violated with impunity. During this period, illegal construction sprouted all over the city and squatter settlements formed and consolidated along major arterial roads and expressways. 

The project for formulation of Master Plan 2020 is being undertaken by the CDGK as one of the components of the Tameeer-i-Karachi Programme (TKP) package.

APP adds: The consultancy services have been awarded to the local M/s ECIL, in collaboration with foreign consultants M/s PADCO.

The plan seeks to: Strengthen urban planning process, plan to provide sufficient and affordable serviced lands to cater to the housing needs of all income groups with greater emphasis on low income housing, provide planned alternatives to katchi abadis in view of E-IA of the locality, provide an adequate supply of potable water, provide modern garbage collection and disposal facilities, provide adequate educational, health and recreational facilities, provide adequate transport facilities, adequate and reliable drainage and sewerage system, growth of industrial areas and free trade zones, effective road networks and other means of communication.

The consultants are tasked with the: Evaluation of all previous Development Master Plans of Karachi; initiating development potential within and around the Karachi City District; profiling population, size, structure, and spatial distribution (Union Council-wise); reviewing housing polices and programmes.


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## Neo

Thursday May 18, 2006 

QUETTA: Minister for Water and Power Liaquat Ali Jatoi on Tuesday assured the government would improve the power supply system in Balochistan to resolve the problems of load-shedding and power fluctuation in the province. 

Addressing a meeting, co-chaired by him and Chief Minister Balochistan Jam Muhammad Yousuf here on Tuesday, the minister said that different projects worth Rs 1 billion were being launched to provide electricity to 700 villages, besides improving the power supply system and enhancing the capacity of the grid stations in the province. 


In order to end the problems of power fluctuation and load-shedding, he also announced to provide 13 new transformers with a cost Rs 330 million to the province. 


The minister said that his ministry would not allow anyone to create hurdles in provision of funds to improve the power supply system in Balochistan. 


Jatoi announced to launch power supply projects through the alternative sources of energy, including windmills and solar energy in the areas where it is not possible to provide electricity through transmission lines. 


The meeting decided that the Qesco would ensure daily 20 hours supply to the agricultural consumers by improving power supply system while the agricultural consumers would pay outstanding dues of Qesco. Moreover, all illegal connections of tube-wells would be legalised by the Qesco according to the rules and regulations. 


The minister informed the meeting that funds had been released for installation of the Dadu-Khuzdar transmission line and the work on the project would be started soon. This would help overcome the issues regarding power supply in Kalat, Khuzdar, Awaran and Punjgur districts. 


He said that PC-I of the projects for installing Dera Ismal Khan-Zhob and Kot Addu-Loralai had been prepared, and the work on them would be started immediately after formal approval from the NEC meeting to be held next week. 


The minister maintained that new grid stations in Wadh and Duki had been completed while grid stations of Nal and Zehri would be completed within two months. He also announced to build a grid station in Basima. The minister said that approval had been accorded to the construction of big dams in Windar, Nolang, Splinji and Bingol. 


Jatoi regretted attacks on the electricity installations by saboteurs, saying that it was causing losses to the growers, agriculturists and common people. He announced 50 per cent relaxation to agriculturists in power dues. 


Speaking on the occasion, Chief Minister Jam Muhammad Yousuf said that major issues confronting the province were the load-shedding and power fluctuation, affecting the development process in Balochistan besides inflicting billions of rupees loss to growers. The common people are also facing immense problems in getting the drinking water, he said and added that the people were forced to lodge protest. 


APP adds: Balochistan Information Minister Syed Matiullah Agha called on Federal Minister for Water and Power Liaqat Ali Jatoi here on Tuesday and informed him about load-shedding and low-voltage problems facing the province. He stressed the need for alternative or additional sources of energy to meet the growing needs of electricity in Balochistan. 


He also presented certain proposals to the federal minister in this regard which included early completion of Khuzdar-Dadu transmission line and establishment of grid station at Khuzdar, laying of 220 KV Muzaffargarh-Loralai transmission line, 132 KV Zhob-Dera Ismail Khan and setting up power houses in Quetta and Pishin. Jatoi assured the minister of considering his proposals and taking steps on priority basis to resolve the electricity problems of the province. 


Separately, at a briefing by Qesco Chief Executive Officer Brig Syed Tassaduq Hussain Shah, Jatoi directed the Qesco authorities to take steps for improving power supply in the province and carry out physical checking of the tube-wells. Ã¢â¬ÅIt will not only help control power loss, but also collecting accurate data about tube-wells,Ã¢â¬Â he said. He also issued directive for reducing line losses to eliminate monetary burden on the company. 


Also, Jatoi inaugurated a complaint cell being set up for providing immediate remedy to the consumers. On the occasion, the minister was told that the cell had taken action on 114 out of a total of 118 complaints before the inauguration.


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## Neo

Thursday May 18, 2006 

ISLAMABAD: The Chinese economy is rapidly progressing and their economic reforms are role model for Pakistan whereas Pak-China bilateral trade will further enhance by signing FTA, this was stated by Abdul Rauf President Islamabad Chamber of Commerce and Industry while presiding a meeting here in Chamber House on Wednesday. 
He said that in the current international trade scenario, regional trade agreements are signed and implemented including European Union, ASEAN and SAFTA, considering the importance of FTAs negotiation on the Free Trade Agreement between Pakistan and China is in last session. 

He said that China is trustworthy economic partner and friend of Pakistan. Chinese economy is fastest growing economy sweating the developed economies of the world and currently China is dominating the international market; Pakistani entrepreneurs should also follow the economic reforms of China, he said. 

China has invested in Pakistan in various mega projects including Gawadar Port, Chashma Nuclear Plant, Mashaq jet making, Tank Rebuild Factory, Heavy Mechanical Factory and Sandak, he informed. ICCI Chief said that Pak-China link road remains blocked for three months in a year affecting the bilateral trade, this route needs to be upgraded.


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## Neo

Thursday May 18, 2006 

KARACHI : As many as 200,000 jobs would be created in the next three years in the IT sector in Pakistan which is the fastest growing country in the telecommunication sector in Asia after China. 

The Federal Minister for Information Technology, Awais Ahmed Khan Leghari, stated this while speaking as chief guest at a seminar organised at a local hotel on Wednesday by the Pakistan Telecommunication Authority (PTA). "We are planning to create 200,000 jobs in the IT sector in the next three years", he declared. 


Awais Leghari announced that the Ministry of IT and telecommunications is declaring 25 more existing universities into tier one specifically for the IT discipline. 


The career placement officers of the Pakistan Software Export Board (PSEB) will be deployed in these institutions. 


The Minister said that on an average 100 to 200 students per university would be picked up depending upon the availability of the students for the internship programme and would be placed in the top 10 or 13 IT and IT enabled services companies. 


He also announced that unlimited amount of training resources would be offered to all the PSEB member IT and IT enabled service companies to add on the work force. Awais Leghari reiterated that the Ministry would be embarking on an aggressive programme for job creation in the IT sector. 


"My message through this conference is that please look again towards the IT discipline as it has a huge potential and my strong opinion is that if you are a good IT graduate there is no way a Pakistan company would not pick you up," he remarked adding that all good IT graduates are hired and employed and that we are supplementing the efforts to further increase the quality of IT graduates in the country. 


Awais Leghari said that the task of laying of the third submarine cable would commence by next month.


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## Neo

Thursday, May 18, 2006 

ISLAMABAD: The government on Wednesday said that poverty was decreasing in the country and prices of essential items in Pakistan were the lowest in the region.

Omar Ayub Khan, the minister of state for finance, told the Senate that the government will bring the inflation down to eight percent but did not mention when it would do so.

He said that the country was producing 65 percent of its electricity from oil, 82 percent of which was imported. The high price of oil in the international market had affected all sectors of the economy, but the government had been trying to absorb most of the effect to place a minimal burden on the public, he said.

He said that industry was rapidly growing in the country, and the demand for motorcycles, trucks and tractors had increased. The minister said that Pakistan had the lowest prices of flour, pulses, rice and other essential items in the region. He said that the government had banned the export of cement to reduce its price in the country. He said that 5.5 million jobs had been created in the last few years, which he said was a result of the governmentÃ¢â¬â¢s effective economic policy.

Senator Ishaq Dar of the Pakistan Muslim League-Nawaz said that the government must ensure that the new budget was not Ã¢â¬Åpro-eliteÃ¢â¬Â and the recommendations of the Finance Committee must be incorporated in the budget. He said that the prices of commodities had increased by 100 percent during the tenure of President Pervez Musharraf. Compared to 1998, flour prices had recorded a 112-percent increase and the prices of pulses had risen by 140 percent, he said. Senator Javed Shah demanded that the government grant India the Most Favoured Nation (MFN) status, saying that it was the only way to Ã¢â¬Åabolish the monopoly of a few elementsÃ¢â¬Â.

Members of the Alliance for the Restoration of Democracy staged a token walkout from the House to protest against the speaker for not considering their adjournment motions.


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## Neo

ISLAMABAD (May 19 2006): President General Pervez Musharraf assured on Thursday the government's full support to promoting technical and vocational training across the country as he okayed a roadmap to substantially improve quality and number of workforce per annum to meet demands of fast-paced industrial development.

He was speaking at a meeting of National Vocational and Technical Education Commission, which has been tasked to revamp existing vocational infrastructure and set up training centers in all parts of the country.

President Musharraf set a five-year timeframe for improvement in the vocational and technical education system and stressed that its impact on the national economy should be visible within a year.

"We must improve curricula at these institutes and ramp up the capacity to produce skilled workforce of international quality as it will not only open opportunities for people at the grass roots level but also raise their profile and demand as workers in advanced and industrialised countries," he stated.

On short-term and long-term objectives of better vocational and technical education, he said a trained manpower would bolster value addition in traditional sectors of the Pakistani economy as well as fulfil the needs of fast-expanding industries and engineering sector.

Currently, the number of skilled workers are being produced at various institutions but the number falls short of the industry's requirements, which has been growing rapidly in recent years in sectors, including information technology, tourism services, commercial support, livestock, transport, medical transcription workers etc.

"We must harmonise skills of our younger generation in accordance with their local economic potential and at the same time be conscious of the need to meet the demand of international investors, who see Pakistan as a favourable destination for using it as base for export to regional countries," the president said.

Later, NAVTEC Chairman Altaf M Saleem told newsmen that revamping of technical and vocational training would be carried out in the form of providing better training facilities, trained faculty and equipment at these institutions.

He said, in addition to the government financial support for improvement in the sector would come from private sector, industry and foreign sources.

"The government has assured of full support and the president has also highlighted the importance of participation of the industry and private sector in improving the standard and production capacity of vocational and technical education," he said.

The meeting was attended by ministers for Education, Industries and Special Initiatives, Labour Manpower and Overseas Pakistan, Adviser to PM on Finance and Deputy Chairman Planning Commission.


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## Neo

LAHORE (May 19 2006): In the Punjab Budget 2006-07, education sector is likely to get an increase in its Annual Development Programme (ADP) allocation from Rs 9200 million (2005-06) to Rs 12,760 million (12.760 billion), an increase of Rs 3560 million or 38.69 per cent.

Sources disclosed this to Business Recorder here on Thursday. They said the government had remained focused on improving the state of education in the province and its main emphasis in the forthcoming budget would be education, hence it would witness a hefty gain in the ADP allocation.

They further disclosed that among other social sectors, the health sector would see a gain of Rs 795 million, from Rs 3300 million to Rs 4095 million, an increase of 24 per cent. "Water supply, sanitation and urban development was another area of focus for the government for past few years, thus its ADP allocation also expected to increase from Rs 5000 million to Rs 6209 million, an increase of 24.18 per cent," they added.

According to them, on the economic side, agriculture sector would gain most of the increase in the ADP allocation from Rs 925 million in 2005-06 to Rs 1575 million in 2006-07, an increase of 70.3 per cent. Among other economic sectors, the second major gainer was industries, TEVTA and mine and minerals; its funding would enhance from Rs 760 million to Rs 1173 million, an increase of 54.34 per cent.

Irrigation sector was also expected to receive 20 per cent additional funds of Rs 1400 million, from Rs 7000 million to Rs 8400 million. Meanwhile, ADP allocation for roads would decrease from Rs 12,500 million to Rs 11,870 million, a decline by 5.04 per cent.

The sources said that in terms of percentage of the total ADP of 2006-07, the education sector would take a big share of it, ie 20.25 per cent. In comparison, the health sector would only get 6.5 per cent of the ADP funding. Interestingly, this critical sector would only witness an increase of 0.27 per cent in the share of total ADP outlay. "This sorry state reflects in the existing health facilities in the province," they added.

According to them, water, sanitation and urban development share would constitute 9.86 per cent of ADP, agriculture 2.5 per cent, roads 18.84 per cent, irrigation 13.33 per cent, and industries, TEVTA and mine and minerals 1.86 per cent.

They averred that those ADP allocations were part of the Medium Term Development Framework (MTDF), which was formulated in 2005 for four years.


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## Neo

TRIPOLI (May 19 2006): Federal Minister for Ports and Shipping Babar Khan Ghauri on Thursday said the shipping industry of Greece has shown interest to import manpower in this field from Pakistan.

Talking to APP, in Tripoli, where he is accompanied with Prime Minister Shaukat Aziz in his visit to Greece, Libya, and Morocco, Babar Ghauri said the representatives of Ministry of Shipping and Ports of Greece and private sector would soon visit Pakistan to finalise the import of manpower.

Referring to his meeting with the Minister of Ports and Shipping of Greece, Babar Ghauri said the talent of Pakistanis working in the ports and shipping industry was highly appreciated in the meeting by the Greece minister.

He said aspects of joint ventures in shipping and ports were also discussed in the meeting. Babar Ghauri said Pakistan has trained manpower in the shipping and efforts are being made to send this trained manpower to other countries and main concentration is Greece because this industry has achieved success in this country.

He said the Greece officials have also appreciated the introduction of Machine Readable Passports by Pakistan.

Replying to a question Babar Ghauri said the Minister of Shipping of Greece has assured his full help and co-operation to get the insurance claim of Tasman Spirit case. The minister also held meetings with the representative of Greece Shipping Association to promote business activities between the two countries.

Federal Minister for Privatisation and Investment Zahid Hamid said the business community of Greece has shown interest to invest in shipping, petroleum, refinery, construction, mega projects, oil and gas sector, agriculture and tourism.

He said during his meeting with the minister of investment of Greece, both the countries agreed to start negotiation for joint ventures in these departments.

Appreciating the decision of America to lift economic restrictions on Libya, the minister said, it would promote development in Libya. During his meeting with Minister of Economic Affairs of Libya, the Federal Minister Zahid Hamid also discussed the matters of enhancing trade and economic ties.

Libya has started privatisation process, and showed the interest to seek guidance and co-operation from Pakistan in this regard particularly in the banking sector.


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## Neo

KARACHI (May 19 2006): Pakistan possesses vast resources of natural gas and recent discoveries are enough to meet the country's growing needs for next 25 to 30 years at least. The country is well positioned to take advantage of the growing demand of gas by using Liquefied Natural Gas (LNG).

These views were shared by the foreign experts at third "Pakistan Oil, Gas and Energy Conference (POGEE) on the theme of "Global Energy Requirements; Innovating for Regional Development" organised by Pegasus Consultancy, here on Thursday.

With the gas demand in Pakistan forecast to increase significantly over the next decade and indigenous production unlikely to keep pace, Pakistan is currently considering various gas import options to meet this demand.

While several gas import proposals are being considered, the experts pointed out, the LNG imports would play a major role in improving Pakistan's energy security through the diversification of its sources of gas supply for its growing economy.

The country has vast resources of natural gas and recent discoveries of gas reservoirs, which are enough to meet its needs for at least next 25 to 30 years. Therefore, there is a huge potential to reduce dependence on imported oil and improve the balance of payments and encourage the substitution of natural gas for conventional liquid fuels, the experts added.

As far as LPG sector is concerned, they cautioned that if current regulations get hold, investment in the LPG sector of the country would start drying up particularly in production.

"Industry de-regulation in 2000 led to inward investment of about $150 million in the LPG sector and more steps in this regard would result in a further $200 million of inward investment," they said. Despite all the problems in the LPG market today caused by pricing anomalies, the stage has been set for a take off in this sector.

Pakistan is experiencing the beginning of an exciting and dynamic period in the growth of the LPG industry and this growth is a harbinger of a better and more productive and prosperous period in the country's energy sector.

Earlier, Adviser to the Sindh Chief Minister for Alternative Energy and Environment Noman Sehgal inaugurated the conference. He said provincial government was taking various steps to facilitate the investors in the oil and gas sector.

"Pakistan is the second largest country having deposits of minerals, oil and gas. The energy sector plays a vital role in the growth of GDP of any country. The federal government also encourages foreign investment in this sector," he added.


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## Neo

Friday, May 19, 2006 

ISLAMABAD: A German company, Rohde & Schwarz, is interested in increasing its investment in Pakistan in the areas of radio communication, radio monitoring, encryption, and test and measurement and broadcasting equipment. 

Said Manfred Fleischmann, President and CEO of the company, at a meeting with Commerce Minister Humayun Akhtar Khan here Thursday. The company has already made an investment of Rs 500 million in Pakistan. Mr Fleischmann also expressed his interest in transfer of technology to Pakistan as well as development of local expertise. 

The company has its offices at Islamabad and Karachi.

Mr Khan appreciated the company for showing confidence in the encouraging business environment in Pakistan and their inclination to transfer of technology and development of local expertise. He said Pakistan has the best investment opportunities in the region and that it has liberalized its trade regime. He said there is no restriction on foreign equity, remittance of profits or even the capital. He assured the company of support for their future plans of investing in highly specialized fields of radio communication systems


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## Neo

Friday, May 19, 2006 

KARACHI: The total annual trade volume between Pakistan and South Korea topped almost $1 billion in year 2005 (January- December) for the first time in trading between the two countries.

This was stated by South Korean Consul-General Sukchul Chang while speaking at vendorsÃ¢â¬â¢ convention of Dewan Farooque Motors Ltd here on Thursday.

He said South Korea invested more than $21 million in PakistanÃ¢â¬â¢s industrial, construction and transport sectors, including joint ventures with Pakistani entrepreneurs.

Mr Chang praised the efforts of the Pakistan government to encourage foreign investment. He felt that in order to promote more economic relations between the two countries steps be taken to attract more South Korean investors by enhancing infrastructure and upgrading investment and industrial sites in Pakistan.

Pakistan is a country with lot of potential in business for foreign companies. Ã¢â¬ËÃ¢â¬ËI believe there is a lot of scope for South Korean businessmen and I am confident our mutually beneficial cooperation will expand with more exchanges and both countries will establish new avenues to further broaden cooperation.Ã¢â¬Â

He described visit of President Pervez Musharraf to South Korea in November 2003 as a landmark in the history of bilateral relations, following which economic and trade ties between the two countries are accelerating in all fields.

Furthermore, official visit of Prime Minister Shaukat Aziz to Seoul last year also served to enhance in exploring new avenues for bilateral collaboration in various fields, Mr Chang added.


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## Neo

Friday, May 19, 2006 

KARACHI: Minister for Information Technology, Awais Ahmad Khan Leghari on Thursday said the government is aggressively working to provide 1.5 million internet broadband connections under Universal Service Fund (USF) within the next two years.

The government is also using the USF to take basic telephony and internet connectivity to the far-flung areas of the country, he said this at signing of Memorandum of Understanding (MoU) ceremony among the ministry of Information Technology, Intel, NBP and Bearing Point.

Under the MoU, a multi-billion programme has been launched to provide affordable, high-quality Personal Computers (PCs) to all government employees in the country. He emphasized the need for fastest internet connectivity and expressed his dismay over a slow speed of the service and asked the regulators to keep a vigil on the Internet Service Providers (ISPs) to ensure a smooth and continued service. 

Under the terms of the MoU, NBP employees and government employees across Pakistan will have access to financing options to purchase desktop PCs and notebooks. The programme also aims to help bridge the digital divide and build the Information and Communication Technology (ICT) enabled knowledge society in Pakistan.

Mr Leghari said the ministry would follow up the Pak-PC programme with another massive programme whereby Urdu desktop and applications would be developed to enable the 85 per cent Urdu-literate population of the country to benefit from the Internet facility. 

He said one of the main initiatives taken by the ministry in recent weeks was the setting up of career placement offices at 25 reputed universities of the country for the purpose of picking up promising IT graduates for their further placement in the IT sector.


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## Neo

RAWALPINDI (updated on: May 19, 2006, 19:35 PST): The United States has a long-term commitment to participation in Pakistan's socio-economic development and will assist the country in developing its human resource for its continued progress.

This was stated by Administrator for USAID Ambassador Randall Tobias during a call on President General Pervez Musharraf here on Friday.

Tobias, who is Director US Foreign Assistance, said America greatly values its wide-ranging relationship with Pakistan and will extend co-operation for improvement in a host of areas including health, education at both basic and higher levels.

He informed the President about the award of scholarship to Pakistani students and expressed the hope that their expertise would be extremely beneficial for the country in the years ahead.

President Musharraf thanked the US official for assisting Pakistan through various programmes under USAID. He informed the visiting official about Pakistan's efforts aimed at improving the quality of higher education as well as equipping the schools and colleges with better facilities.

"We are resolved to equip the younger generation with modern skills as part of our focus on human resource development, which, we believe, lies at the core of sustained development," he said.

Speaking about the recently established National Vocational and Technical Education Commission, the President said it will produce skilled workforce, necessary for the country's rapid industrial development.

The NAVTECH, he said, would set up vocational institutes all over the country to train the local talent in consonance with the economic potential of their areas.

On the objectives of the higher education, he said it is engaged in a process of establishing high quality and state-of-the-art engineering and science and technology universities with the help of industrialised nations to synergies education with demands of fast-paced advancement in the era of knowledge-based economies.

In this respect, the President looked forward to the US co-operation and particularly pointed out that Pakistan students could greatly benefit from the US expertise in the field of water management and technical assistance for water dams.

Advisor to Prime Minister on Finance, Dr Salman Shah and US Ambassador to Pakistan Ryan C Crocker were also present.


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## Owais

*Purchase of new cars: CBR to again propose 6 percent withholding tax* 

ISLAMABAD (May 20 2006): The Central Board of Revenue (CBR) will again propose to the government, in the upcoming budget, to levy six percent withholding tax on the purchase of new cars of 800cc and above. It is learnt that the proposal is likely to be submitted to the Federal Cabinet, because it would generate over Rs 1.2 billion revenue in 2006-07.

Last year, the proposal came under discussion in the Cabinet meeting for approval of taxation measures. Most of the ministers opposed it, taking the plea that they were already facing criticism from the public and media on high prices of cars.

According to CBR Chairman directive to Income Tax Department to examine six percent withholding tax on the purchase of cars, it was decided to bring the levy at par on imported cars.

The CBR opines that section 114 of Income Tax Ordinance, 2001, requires every person, who owns a motor vehicle, to file income tax return. In order to expand the tax base and improve upon the compliance of the Income Tax Ordinance, an adjustable withholding tax at the rate of 6 percent may be levied on purchase of new cars, which shall be collected by the manufacturers.

This will bring local purchases at par with imports, which are already subject to 6 percent withholding tax, the Board added.


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## Owais

*Banks need more time to study SECP's CFS Mk-II plan* 
*RECORDER REPORT* KARACHI (May 20 2006): Banks have asked for more time to reflect on the eligibility criteria laid down by the Securities and Exchange Commission of Pakistan for participating in direct lending to investors on bourses and also to work out the modalities as the lending risk will be dependent on stock exchanges' risk management system.

In a meeting called by the State Bank of Pakistan on Friday, to elicit views on the Continuous Funding-Phase II proposal, around two dozen bank chiefs told the SBP Governor, Dr Shamshad Akhtar, that the scheme received by them from SECP is slightly different from that outlined in earlier discussions held with them on eligibility for operating as authorised financiers to stock exchanges. As such they required more time to reflect on it. However, it was felt that the minimum commitment of Rs 2 billion sought from a participating bank was too high for most of them.

Secondly, it was not clear to them who is the true obligor since neither the financier nor the finance will know the identity of the other party until default takes place. Moreover, banks also need to ponder whether it is prudent to outsource the risk management function to KSE.

SBP Governor Akhtar was more concerned about the regulating framework relating to exposure of the banks to the capital market.

SBP wants to assess the existing exposure of the banks to the capital market and would like to consolidate the running finance provided to brokers, CFS funding and revise REPO transactions. At present, banks can lend up to 30 percent of their equity towards share financing.

"I wanted to meet the bankers and directly elicit their views and ascertain the reservations, if any, directly; and ascertain how they felt about the exposure to the capital market," the Governor said.

According to a participant, while absorbing different viewpoints, the Governor also amplified her thought process on the subject.

In the end, a committee within Pakistan Banks Association was given the task to study the revised draft of SECP on CFS-Mk II, and return to SBP for discussion on May 30, 2006.


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## Owais

*Quota for USC: PSMA turns down government demand* 
ISLAMABAD (May 20 2006): The Pakistan Sugar Mills Association (PSMA) has finally turned down the government demand to provide 10 percent quota of sugar produced during 2005-06 for disposal through the Utility Store Corporation (USC).

In its letter addressed to Adviser to the Prime Minister on Finance and Revenue Dr Salman Shah, the PSMA said it had long consultations with its members to consider the proposal and added that during the meetings at zonal and centre level, the members expressed reservations and did not agree on meeting the demand.

According to the association, the dissident members were of the view that high prices of sugarcane had raised sugar prices to such an extent ie Rs 40 per kg.

The PSMA reminded that low prices in the open market will put the industry at losing end and they will not be able to recover losses that it would incur on subsidising the sale for disposal at USC, especially when open market prices were declining.

It claimed that the mills suffered losses due to low utilisation of capacity despite high sugar prices. It said that the mills utilisation remained below 50 percent in most of the cases, whereas in NWFP the major chunk of the sugarcane worth producing 200,000 tonnes of sugar was diverted to the tax-free production and export of gur to Afghanistan.

The association also wanted the government's intervention to stop what it called in the letter media 'trial of the industry'. It said: "blaming the sugar industry and opening up of the cases against its members by Monopoly Control Authority (MCA) and the Public Accounts Committee (PAC) action appears a vicious campaign launched to destroy it."

However, it conditionally offered 5 percent of the mills stock as on April 30, 2006 for USC at Rs 31 per kg (exclusive of zero rate sale tax).

It demanded that the offer is subject to TCP market intervention not below Rs 39 per kg (inclusive sale tax) ex-Karachi. According to other conditions the government should ensure that imported sugar was not sold below Rs 39 per kg (sales tax and all related cost inclusive) and implementation should be through a tripartite agreement among each sugar mill, the government and the PSMA.

The government had demanded 10 percent quota from the mills of their total production for USC and PSMA had agreed in principle to the demand in March. Now backing out after one and half months showed that PSMA played a trick with the government to subside pressure it was facing for selling sugar at irrationally higher rates.


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## Owais

*Human resource development: President assured of US assistance* RAWALPINDI (May 20 2006): The United States has a long-term commitment to participation in Pakistan's socio-economic development and will assist the country in developing its human resource for continued progress.

This was stated by Administrator for USAID, Ambassador Randall Tobias during a meeting with President General Pervez Musharraf here on Friday. Tobias, who is Director US Foreign Assistance, said America greatly values its wide-ranging relationship with Pakistan and will extend co-operation for improvement in a host of areas including health, education at both basic and higher levels.

He informed the President about the award of scholarships to Pakistani students and expressed the hope that their expertise would be extremely beneficial for the country in the years ahead.

President Musharraf thanked the US official for assisting Pakistan through various programmes under USAID.

He informed the visiting official about Pakistan's efforts aimed at improving the quality of higher education as well as equipping the schools and colleges with better facilities.

"We are resolved to equip the younger generation with modern skills as part of our focus on human resource development, which, we believe, lies at the core of sustained development," President said.

Speaking about the recently established National Vocational and Technical Education Commission, the President said it would produce skilled workforce, necessary for the country's rapid industrial development.

The NAVTECH, he said, would set up vocational institutes all over the country to train the local talent in consonance with the economic potential of their areas.

On the objectives of the higher education, he said it is engaged in a process of establishing high quality engineering, science and technology universities with the help of industrialised nations to synergise education with demands of fast-paced advancement in the era of knowledge-based economies.

In this respect, the President looked forward to the US co-operation and particularly pointed out that Pakistani students could greatly benefit from the US expertise in the field of water management and technical assistance for water dams. Advisor to Prime Minister on Finance, Dr Salman Shah and US Ambassador to Pakistan Ryan C Crocker were also present.


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## Owais

*Prime Minister arrives in Egypt* 

SHARM-UL-SHEIHK (May 20 2006): Prime Minister Shaukat Aziz arrived here on Friday to represent Pakistan at the World Economic Forum on the Middle East. The prime Minister would also hold meetings with Egyptian President Muhammad Hosni Mubarak, Prime Minister Ahmed Mahmoud Nazif and other world leaders attending the summit.


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## Owais

*SECP releases draft to remove cap on CFS* 
*RECORDER REPORT* KARACHI (May 20 2006): The Securities and Exchange Commission of Pakistan (SECP) has planned to introduce new funding system called CFS Mk11 which would eradicate the risk factor in the local bourses and improve the much needed liquidity, removing the cap of Rs 25 billion imposed in August last.

The SECP has circulated a draft of the new product and wants members of the stock exchange to send their opinion and views over the new product in writing latest by May 25.

"Having studied the existing funding system, SECP is of the firm view that the proposed new product should be implemented at the earliest. It would remove a large risk factor from the market and will promote healthy growth of stock market in a transparent and orderly manner", the proposal of the stock market regulator said.

Based on the indisputable advantages which CFS Mk II will afford to the market, following is being proposed: Implement CFS Mk II as proposed; current CFS be scrapped, Ban Kerb Badla market and strict penalties be imposed on violators; and Immediately enhance the CFS cap substantially and eventually remove the CFS cap of Rs25.0billion.

Consider banning share Repo or FAS where these products are being used to provide short-term liquidity to a Broker. Alternatively banks financing brokers through other modes of financing to provide details of Bank finance provided namely: amount of finance, shares financed, average rate of interest charged, value of margin held as collateral so that complete market information on funding is disclosed on a daily basis.

The SECP added that there are number of advantages and explained here is under: the CFS market would remain open during market hours, enabling investing public to lock in the financing on taking a position and to liquidate same if he has changed his mind with ease and simplicity.

The financier does not need to develop its own computer system or back office procedures to manage the financing. A trained automated trading system operator is all that is required.

Small brokers gain access to funding lines, currently they are dependent on big brokers. All CFS transactions shall be carried out on a matching-trade basis on exchange's automated trading system to ensure transparency, wide availability and equitable distribution of available finances.

Competition between Financiers to achieve full disbursement of commitments will exert downward pressure on financing cost, thus, providing leverage at affordable prices.

Reduced financier risk in CFS MkII plus ease of doing business, when compared to alternative products currently in vogue will cause, quantum of funding available to CFS market to increase substantially. Financier's risk upon broker default will be mitigated by new Financier Protection Fund.

The 90-day commitment of financing will eliminate risk of arbitrary and manipulative financial withdrawal. Number of shares eligible for CFS finance can be increased to cater to all types of investors and financiers. Pricing mechanism will price risk inherent in the scrip itself.

The market systemic risk due to netting across markets will be removed, as Ready and CFS markets will be separated and no netting will be allowed.

It would provide a level playing field to all market participants. A steady and certain source of liquidity at competitive rates will be available to market players which will be pro market and shall cause the market activity to increase. The small investor and small broker that need leverage will be greatly benefited. Rate of interest per share and quantum of funding available per share will be visible on exchange's automated trading system during market hours enabling them to cover their positions at any time during the day in a transparent manner.

Enable SECP to eventually remove Rs25 billion cap placed on the CFS trade, as market risks associated with current CFS will have been adequately covered or be removed.

The regulator also earmarked some of the disadvantages of the new ruling: There is a possibility of the market shouldering another blow of March 2005 proportions is a potential hazard.

Profit-driven and with several alternatives, should FIs incur a loss they might lose interest and refuse to fund the market after 90 days. Counter party risk is assumed by the Clearing Houses/Exchanges as all trades are guaranteed by the Exchange. It negates the principles of T+3 rolling settlement system as recommended by IOSCO. Ready open position can be kept open indefinitely. Settlement risk consequently increases. It fuels excessive speculation as liquidity is readily available due diligence of the eventual finance is not carried out by the Financier - provides a platform for leverage trading by weak holders. An active CFS MkII market may impede growth of a derivative market with a single stock future, index futures, options warrants etc.


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## Owais

*Minfal refuses to authorise tractor makers to fix price*

ISLAMABAD (May 20 2006): The Ministry of Food, Agriculture and Livestock (Minfal) has refused to authorise manufacturers to fix tractors price without prior approval of the government.

On May 12, Minfal minister held a meeting with the representatives of Millat Tractors Limited, Al-Ghazi Tractors Limited and Universal Tractors Limited on the issue of prices but did not invite any official of the industries ministry, which wanted to deregulate tractor prices.

Minfal ministry officials held an internal meeting a day earlier to deliberate upon the proposal of industries ministry and consider the viewpoint of manufacturers.

After a threadbare discussion, Minfal turned down the proposal regarding deregulation of tractor prices, saying that this would further escalate already high prices.

When contacted for comments, Minfal secretary Ismail Qureshi told this scribe that the ministry did not support deregulation of tractor prices, as this mechanism would increase the prices substantially.

Another official confided that the industries ministry had proposed that SRO No 839(1) 98 should be amended, deleting the requirement for the companies to seek government's concurrence regarding price fixation.

According to the SRO, the federal government has also exempted input tax on tractors subject to the condition that the tractors should be sold at zero sales tax at the price agreed with the federal government.

"The government's concurrence is necessary to ensure availability of tractors at reasonable prices and this problem is being addressed through import of tractors at zero tariff. In case of any subsequent demand-supply gap, the same option can be exercised in future," the industries ministry recommended.

The sources quoted Abdul Karim Chaudhry, Director General Federal Water Management Cell (FWMC) as saying that the Minfal has strongly recommended to the Prime Minister that the companies should not be given free-hand to increase tractor prices, which are already too high.

The sources added that Universal Tractors limited, a Karachi-based company, was making efforts to get registration in the name of GM Tractors, with Zarai Tarqiati Bank Limited (ZTBL), but the move was being opposed at certain fora.

They said that the company was also involved in over-charging for its model U-530, with only changed name, adding that ZTBL was also considering de-listing the companies from its board, which are involved in such practices.

The company had seized tractors of nearly 55 farmers despite receiving full payments from them, however, the issue was resolved after the involvement of ZTBL.

The sources further said that the Chief Executive of Universal Tractors is holding a meeting with the ZTBL President on Saturday to discuss the thorny issues.


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## Owais

*Inflation shows declining trend: SBP* 
*RECORDER REPORT* 

KARACHI (May 20 2006): The inflationary pressure still exists in the economy, although a declining trend has been noted. According to State Bank of Pakistan (SBP) monthly publication 'Inflation Monitor' for April, CPI inflation on monthly basis (ie April 6 over March 6) was one percent as compared to monthly inflation of 0.3 and 0.2 percent during February and March 2006, respectively.

However, annualised inflation measured as year-on-year percent change in CPI declined sharply to 6.2 percent during April, 2006 - the lowest level since May 2004. Such a decline in annualised inflation amid recent increase in oil prices and high inflation in prices of commodities like sugar, milk, and cement may primarily be attributed to base effect as inflation during April 2005 was the highest in the past five years.

A similar trend has been witnessed in other price indices also, viz. wholesale price index (WPI) and sensitive price indicator (SPI): the WPI inflation declined to 8.1 percent, year-on-year, during the month, after having peaked off at 11.9 percent in September 2005, and inflation in sensitive price indicator was 6.8 percent in April 2006, which was significantly lower than 13.4 percent inflation recorded during the corresponding month of last year.

The food group was the major contributor to the recent decline in overall inflation, which showed sharp deceleration both in CPI and WPI during April 2006 due to the strong base of last year as well as YoY decline in the prices of a number of important food items.

Inflation in non-food components of both CPI and WPI, on the other hand, showed firmness due to recent increase in fuel prices and a check on earlier decelerating house rent index inflation on the back of high prices of cement and other building material, according to the 'Inflation Monitor'.

Core inflation, measured both by excluding food and energy components from CPI basket and by trimming 20 percent of CPI items showing extreme changes, also continued to decline during the month of April, 2006.

Wages of five construction workers (mason, labourer, plumber, and electrician) increased by 15.1 percent in April 2006, slightly down from 15.2 percent of last month. While inflation in wages of skilled workers remained stable at the previous month's level, the same of unskilled workers declined during April, 2006, the 'Inflation Monitor' added.


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## Owais

*Claiming tax relief: 'certificate of Residence' to be mandatory for foreigners* 
*RECORDER REPORT* 

ISLAMABAD (May 20 2006): The government will make it mandatory for foreign nationals working in Pakistan to submit the 'Certificate of Residence' for claiming tax relief in their respective countries under the agreement on avoidance of double taxation and fiscal evasion.

Accordingly, amendment has been proposed in the Income Tax Rules 2002, after obtaining viewpoint of all stakeholders. The revised rules would be announced in the upcoming budget.

Sources told _Business Recorder _that foreign nationals working in Pakistan, who earn taxable income and pay taxes, would be entitled to tax credit in their countries under the agreement on avoidance of double taxation.

Similarly, overseas Pakistanis, paying taxes in other countries, could also claim tax credit/fiscal relief in Pakistan.

Earlier, foreign nationals were claiming exemption in their country, but there was no provision regarding 'Certificate of Residence' in the law.

Foreign nationals have to submit the supportive documents of proof of income earned in Pakistan, tax paid and proof of residence in other country to the board. The Board would issue the 'Certificate of Residence' to the non-resident person who could claim exemption of the same amount in his country.

In case the CBR decides not to issue a certificate for 'tax sparing credit', it will communicate the decision, along with the reasons of rejection to the applicant, within 60 days of the submission of application at the available address in Pakistan.


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## Owais

*Bamakhrama appointed PTCL president* 

KARACHI (May 20 2006): The Board of Directors of Pakistan Telecommunication Company Limited (PTCL) has appointed Mohamed Abdulla Bamakhrama, nominee of Etisalat International Pakistan, as the new President & Chief Executive Officer of the company, following the resignation of Junaid Iqbal Khan from the post.

Sources told _Business Recorder _late on Friday night after meeting of the PTCL's BoD.

The board of directors also approved nominations of Abdulrahim Al Nooryani as Chairman of Pakistan Telecom Mobile Limited (PTML) Board of Directors, commonly known as Ufone, and Fadhil Erhama Al Ansari as Chairman of Paknet Board of Directors.

The appointment of Salim Ali Al Akbary as PTCL's Senior Executive Vice President (SEVP) of Human Resources and Administration in view of the resignation of Shahzad Sadan was also approved.

The meeting of the board was held under the chairmanship of the Secretary, Ministry of Information Technology & Telecom, Farrakh Qayyum.

The board approved the rollout of converged Voice, Broadband Internet and Interactive Internet Protocol Television (IPTV) across the country. The company would be the first operator to provide such converged services on a mass scale. All these services would be available to customers on their existing telephone lines under a single bill.

To augment the domestic network, the expansion of the Dense Wavelength Division Multiplexing (DWDM) backbone capacity was also approved. This expansion will cater to the needs of high bandwidth services for the entire mobile, fixed-line and Information Technology sectors in the country.

In addition, the PTCL would also accelerate the process of migrating to IT-based automated processes within the company to improve its response time to customers.

The management also approved the 'Mobile Number Portability' (MNP) project which would benefit the entire telecom sector.

In another major move, the company removed the distance and time slabs from its tariffs and shifted to a flat, consumer-friendly one rate tariff with calls at any time within the PTCL and fixed to mobile networks, the sources said, adding that these proposed tariffs are subject to Pakistan Telecommunication Authority's (PTA) approval.

The board also approved significant tariff reductions for services related to Internet, data and corporate sector connectivity. These services include bandwidth and international and domestic leased lines. This would benefit sectors such as banking, Internet Service Providers (ISPs), telecom and data operators, multinational corporations and Call Centers.

The key services such as Internet Protocol (IP) and International Private Leased Circuit (IPLC) connectivity at E-l was lowered from $2000 to $1600 per month and from $3500 to $2400 respectively. These reductions would be applicable from 1st June, the source said.

Junaid Iqbal had earlier offered his resignation to the new Board of Directors on April 12, when it met for the first time after taking over the charge of the company, but the board then had asked him to continue till the new management got suitable replacement.

Minister for Information Technology, Awais Ahmad Khan Leghari, has lauded the services of the out-going PTCL president for playing professional and constructive role in making the privatisation of PTCL a success.


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## Owais

*'Black cabs' again on ECC agenda'* 
*RECORDER REPORT* ISLAMABAD (May 20 2006): The reason for dropping and again including 'black cabs' import in the agenda of Economic Co-ordination Committee (ECC) of the Cabinet meeting to be held on Monday is that the investor had raised objections on some of the conditionalities imposed by the Ministry of Industries.

The summary of Industries and Production Ministry had been made the part of the ECC agenda issued on May 12 by the Cabinet Division and received in the ministries on Monday, May 15, but two days later the proposal was dropped in the light of telephonic directives from Prime Minister's secretariat.

However, one of the seniors officials in the federal government told _Business Recorder _that the summary was being revised by a special subcommittee, after which it would be included in the agenda.

Meanwhile, it is leant that the Cabinet Division has revised the agenda for the third time to make the proposal of 'black cabs' import part of the final agenda.

"The overhauled summary of black cabs is very much on the revised agenda of ECC," said an official. It may be mentioned here that at a joint meeting on 'investment initiatives', President Pervez Musharraf and Prime Minister Shaukat Aziz had decided to allow import of black cabs on the analogy of tractors, subject to payment of customs duty at the same rates for CKD and CBU units 'for taxi operation only'.

A subcommittee, constituted by the Prime Minister under the chairmanship of Secretary Industries Kamran Rasool, has also approved the criteria for the intending companies.


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## Owais

*10,000 tons duty-free tea to be imported from Bangladesh* 

ISLAMABAD (May 20 2006): Pakistan will import duty-free tea from Bangladesh under Tariff Rate Quota (TRQ), it is learnt. An official of Minfal told _Business Recorder _on Friday that Pakistan would import 10,000 tons duty-free tea from Bangladesh under the TRQ.

The ministry has no reservations over duty-free import of tea from Bangladesh, rather it would help bring down its price, the official added. A 15-member Bangladeshi delegation, which is currently visiting Pakistan, would sign the agreement with Pakistan to implement the offer, he said.


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## Neo

KARACHI (May 20 2006): The total liquid foreign exchange reserves held by the country rose $16 million to $13.70 billion for the week ended May 13. The foreign exchange reserves during the preceding week was at $13.054 billion.

The break-up of the foreign reserves position is as these foreign reserves held by the State Bank of Pakistan $10,677.3 million, net foreign reserves held by banks (other than SBP) $2,393.5 million.


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## Neo

KARACHI (May 20 2006): The World Bank (WB) ranked Pakistan in 10th position for better economic and investment country in the world. This was stated by the Secretary General Finance, Ministry of Finance, Nawid Ahsan as Chief Guest while addressing the audience at the joint venture of 21st Business and Economic Club and Overseas Universities Alumni Club (OUAC) here late on Thursday night.

He said the hallmark of the government of the last six years was to promote business and economic environment in the Pakistan. The government was taking all necessary steps in this regard, he added.

The federal government was also considering the 'New Competition Policy' to promote market based economy. In this connection, consultations have been made with all the stakeholders and it would be presented for their approval in the near future.

In post WTO scenario, weak industries in terms of quality and would not able to survive and these are the challenges faced by industrialist of Pakistan, he said, adding the world has to face such challenges and only those who would be ready to meet such a criteria would ultimately attain success in future business.

Nawid Ahsan said the government was looking for private/public partnership in order to develop infrastructure in the country as public-private partnerships have proved itself successful internationally.

Now the Government of Pakistan was also keen in developing infrastructure through such partnerships, he added.

Commenting about forthcoming budget, Nawid Ahsan said that he noted the suggestion given by the speakers and he personally wished to see a good package in hospital, health and education in the upcoming budget.

Earlier, the founder president of the OUAC, Syed S. Haider said the OUAC members are comparatively more aware, better flexibility, determination to bring changes, sense of good and bad, diversity of thoughts and ideas, excellent education and quick grasp of facts. By this they were contributing more positively in the development of the country, he added.

Four awards were also given on the occasion includes; Nadeem Mustafa Khan, Director General and Chief Executive Officer of Aga Khan University Hospital, Syed Tariq Hussain, Chief Executive, Emirates Global Islamic Bank Limited, Sarmad Ali, Executive Director of Jang Group and Ayaz Dawood, Director, First Dawood Investment Bank Limited.


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## Neo

SIALKOT (May 20 2006): Provincial Industries, Investment and Commerce Minister Muhammad Ajmal Cheema has said that strenuous efforts were being made for bringing industrial revolution and tracking the industrial sector on scientific lines.

Addressing a memorandum signing ceremony of Sialkot Display Centre held at Sialkot Chamber of Commerce and Industry (SCCI) on Friday he added that government had adopted a liberal and business-friendly policy enabling the newcomers and foreign investors to set up new industrial units in the Punjab.

The minister revealed that Punjab Chief Minister Chaudhry Pervaiz Elahi would perform formal stone laying ceremony of Sialkot Expo Centre shortly.

The industries minister said that provincial chief minister had already announced the construction of Sialkot-Lahore motorway the prime concept to facilitate the business community of Sialkot. The completion of Sialkot-Lahore motorway would play an instrumental role in further accelerating the pace of trade and commerce activities in this export-oriented city and hub of cottage industry of the country he said.

Ajmal Cheema said that the proposed Sialkot-Lahore motorway would be accomplished at a cost of Rs 20 billion and would this mega project would be carried out soon.

The Punjab government he said had already released Rs 90 million for Sialkot Engineering University and the completion of the university would play a pivotal role in catering the need of local industry but also provide an opportunity to the students of Sialkot its adjoining districts in getting higher education at local level.

Ajmal Cheema said the setting up of Sialkot Expo Centre would be an addition in this export-oriented city where all type of products produced in the city would be exhibited.

In his address of welcome President Sialkot Chamber of Commerce and Industry (SCCI) Dr Nouman Idris Butt said the proposed Sialkot Expo Centre would be accomplished at a cost of Rs 1.42 million. He disclosed the executive body of SCCI had already set aside Rs 20 million for the Expo Centre.


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## Neo

Saturday, May 20, 2006 

ISLAMABAD: The government has decided to launch a plan to enhance cotton production to the level of 20.70 million bales by the year 2015.

Having considered various options for production enhancement, it is realized that a production level of 20.7 million bales could be achieved by 2015 with a modest increase of 25,000 acres annually in potential cotton growing areas of Balochistan and NWFP coupled with an average of 5 percent growth in per hectare yield. The area under the crop would thus increase to 3.32 million hectares as against the estimates of 3.22 million hectares for 2005-06, with an increase of 3 percent. The hectare yield would thus improve to 1,060 kgs from the provisionally estimated yield of 686 kgs for the current season. 

The plan titled "Cotton Vision 2015 Targets" has been initiated after taking into account the future prospects for a sustained growth in cotton sector and the possible improvement in the quality of raw cotton. The plan has been designed to achieve higher production of clean cotton to obtain advantages of assured supply of cleaner, uniform, graded and contamination free cotton to the domestic textile industry.

The textile industry places the current consumption of raw cotton at around 15 million bales based on certain assumptions, whereas the Textile CommissionerÃ¢â¬â¢s Organization have estimated it at 12.5 million bales for 2004-05. 

However, cotton consumption in the country during the last decade registered a growth rate of about 4 percent annually on average. Based on a similar growth pattern in years to come the mill consumption requirements are estimated to be 18.5 million bales, 42 percent higher than the current level of consumption. 

The likely consumption by 2015 may also be considered on the basis of growth in the working spindles during the last 10 years, which is averaged at 3.16 percent annually. 

Taking this growth rate into consideration and a maximum of 1.5 bales consumption per spindle, the requirements by 2015 to be 17 million bales. 

The working group constituted by the MINFAL for projecting the demand of raw cotton by the domestic textile industry, which has also envisaged the minimum mill consumption of raw cotton by 2015 at 18.5 million bales.


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## Neo

Saturday, May 20, 2006 

KARACHI: IATA has nominated PIA, Saudi Airlines, Air France, Emirates, Gulf Air, Lufthansa, Malaysian Airlines and Thai Airways as panel members. Shahid Latif, general manager cargo PIA has been appointed as chairman with Syed Intizamullah, manager cargo Saudi Airlines as vice chairman and Muhammad Ilyas of PIA as secretary.

According to PIA press release on Friday, the IATA Cargo Advisory Panel (ICAP) for Pakistan has been formed to assist IATA (International Aviation Transport Agency) in processing applications for dealing with registration, retention, and financial aspects of Air Cargo Agents in Pakistan.


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## Neo

KARACHI, May 19: While proposing increase in exchange of trade delegations, the visiting Chinese delegation has showed interest in forming joint trade and investment companies to further strengthen trade ties.

Ã¢â¬ÅPeople of China and Pakistan are too close to each other and similar in so many ways, coupled with time tested friendship and brotherhood but the trade ties hardly match to this situation,Ã¢â¬Â said leader of the delegation Zhao Qingmao, Economic and Commercial Counsellor, Embassy of China, here on Friday during a visit to the Export Promotion Bureau.

Mr Zhao told EPB vice-chairman Zafar Mahmood and director Nusrat Jamshaid that the trade between China and Pakistan was not reflective of good political, historical and cultural ties that the people of two countries were enjoying.

Ã¢â¬ÅBilateral trade should be increased manifold for which there should be frequent exchange of delegations, participation of importers and exporters in exhibitions and fairs organised in each other countriesÃ¢â¬Â, he suggested.

He said he would advance similar suggestion to the Chinese counterpart of the EPB for making efforts to increase the number of visits of trade delegations to Pakistan and the EPB should also make an effort to increase the number of trade delegations visiting China.

He said he had only two points in his mind for bringing the two countries closer to each other by joining hands in import and export business and make some joint companies to make investment in China and Pakistan. Ã¢â¬ÅWe had done such experiments successfully with couple of other countriesÃ¢â¬Â, he added.

He said he was impressed by the progress and development of Karachi where he had come after 12 years and said, like Pakistan, China was also developing on higher pace and registering impressive growth rate.

He also appreciated the display centre of the EPB and took keen interest in hand-knotted carpets and garments besides other peculiar items like camel skin lampshade etc.

Mr Zhao said he expected extra ordinary heavy trade activity between Pakistan and China which was just across the mountain and shares so many aspects of social, religious and cultural values.

He also informed that he had visited the Karachi Chamber of Commerce and Industry on Thursday and had open discussions with the businessmen and office- bearers of the KCCI.

The Chinese delegation, currently on a seven-day visit to Pakistan, had already visited Islamabad and Lahore before coming to Karachi.

The EPB vice-chairman welcoming the delegation said there existed great potential of trade and investment between the two countries and elaborated the political and social ties between the people and the governments of the two countries.


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## Neo

ISLAMABAD, May 19: Pakistan has good industrial potentials for penetrating into the international market and should make research studies to pinpoint better quality and cheap products for making inroads.

These observations were made by Johann Klomfass, German commercial and development counsellor, during a meeting with Imtiaz Rastgar, vice-chairman and CEO of the Engineering Development Board (EDB), says a press release.

Imtiaz Rastgar said the EDB wanted to build a Pakistan-German automotive supply network, providing opportunities to Pakistani automotive vendor enterprises to benefit from the German know-how and technology to improve quality, productivity, developing and marketing of value-added products.

It also aimed to enter into project specific alliance with German automotive vendor enterprises for trading and joint venture projects, he said, adding that as a first step in this direction, the EDB had planned mapping study of the automotive sector to address the issues like supply industry, technology, production and demand levels, geographically distribution of the industry, key uncertainties, skill level, industryÃ¢â¬â¢s strengths and weaknesses, deficiencies of suppliers and their core competence key success factors and regulatory environment.

Mr Rastgar said that this would be an in-depth analysis of the current situation and would highlight the factors that were likely to shape the future of automotive manufacturing in Pakistan. In addition, the study is required to attract players from Germany as well as from other countries to develop business with the Pakistani counterparts, the German diplomat was told.

Specialists from Germany would be conducting this study and would also present it to the German automotive industry. Ways and means of Pakistan-German cooperation for conducting the study were also discussed.

The German diplomat was also briefed about PakistanÃ¢â¬â¢s participation in the Hannover Fair 2006.


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## Neo

Saturday, May 20, 2006 

PESHAWAR: NWFP Chief Minister Akram Khan Durrani has said that the governmentÃ¢â¬â¢s plans to alleviate the crippling poverty in NWFP required international and domestic financial assistance. He labelled hydropower as essential to the development of vast natural resources available to the province.

Talking to the country director of the Asian Development Bank (ADB) and a delegation from UKÃ¢â¬â¢s Department For International Development (DFID) at the NWFP Development Forum, the chief minister said that NWFP had geographical importance since it provided a gateway to Afghanistan and Central Asian Republics. Ã¢â¬ÅIt can serve as a link for business and commercial activity but it needed domestic and foreign investment to fulfill its potential,Ã¢â¬Â he added.

Durrani said that meeting the provinceÃ¢â¬â¢s irrigation needs was a key element in the struggle for poverty-reduction since vast tracts of land in the southern districts remained barren due to water-shortage. Ã¢â¬ÅThe government has planned to construct first, second and third Chashma Lift Irrigation Channels, Tank Zam and 20 small dams that would irrigate thousands of acres of land so that we have sufficient food supply in the province besides being able to export to Afghanistan,Ã¢â¬Â the chief minister said. Durrani praised President Musharraf for announcing Basha and Munda dams, adding that this would reinforce national integration.

Highlighting the need to construct more dams Durrani said that NWFP possessed 75 percent of the water resources available to Pakistan. He emphasised the need to construct dams at Punchkorha, Kalam, Chitral and Kohistan. He said that Malakand-III would produce 82-Megawatts of electricity of which 10 Megawatts would be provided to the local industrial plants at subsidised rate. He said that the province earned Rs 500 million as its share of royalty in natural gas deposits and with more discoveries expected, the royalty would increase.

The chief minister said that the government had distributed Rs 10 billion among the earthquake victims and planned to donate another Rs 25 billion by the end of June. The government had also developed the road infrastructures in areas of potential tourist interest.

The chief minister expressed the hope that the frontier government would succeed in raising the standard of living with assistance from foreign donors. He praised the MMA governmentÃ¢â¬â¢s success in purging the administrative institutions of corruption.

The country director of Asian Development Bank and the DFID delegation apprised the chief minister of the investments being made by the institutions in the province. The ADB provides concessional loans to the province, while the DFID has pledged numerous grants for the social sector.


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## Neo

Saturday, May 20, 2006 

RAWALPINDI: The United States has made a long-term commitment to help in PakistanÃ¢â¬â¢s socio-economic development and will assist the country in developing its human resource.

This was stated by USAID administrator Randall Tobias during a meeting with President General Pervez Musharraf on Friday. Tobias, who is also the director of US Foreign Assistance, said that America greatly valued its multi-faceted relationship with Pakistan and will extend cooperation in the development of a number of sectors including health and education.

He informed the president about the US scholarships for Pakistani students. President Musharraf thanked the US official for assisting Pakistan through various development programmes initiated by USAID. The president informed the visiting official about PakistanÃ¢â¬â¢s efforts aimed at improving the quality of higher education as well as equipping schools and colleges with better facilities.

Ã¢â¬ÅWe are determined to educate the young generation in modern skills as part of our focus on human resource development, which, we believe lies at the core of sustained development,Ã¢â¬Â he said.

Referring to the recently established National Vocational and Technical Education Commission (NAVTEC), the president said the commission would produce a skilled workforce, which was necessary for a rapid industrial development. He said that NAVTEC would set up vocational institutes all over the country to train the local residents according to the economic potential of their areas.

The president said that efforts were being made to establish high quality and state-of-the-art universities with the help of developed nations to provide education that meets the demands of a knowledge-based economy.

The president said that he looked forward to US assistance and added that Pakistani students could benefit from the US expertise in the fields of water resource management. Dr Salman Shah, finance advisor to the prime minister, and Ryan C Crocker, the US ambassador to Pakistan, were also present at the meeting.


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The UN wants people to be ready for next winter

*The United Nations has launched a $300m (ÃÂ£159m) rebuilding plan to help tens of thousands of Pakistanis displaced by last October's devastating earthquake.* 
The 12-month plan aims to ensure that the services quake victims received in camps over the last few months return with them to the villages and hamlets. 
The UN already has $100m and is urging countries who pledged donations to redirect their funds to this effort. 
More than 73,000 people were killed and three million displaced by the quake. 
The recovery programme was drafted with the help of the Pakistan government and voluntary organisations. 






*We want to make sure that the services people have had access to in the camps will follow them home*






Jan Vandemoortele
UN humanitarian co-ordinator for Pakistan


"We believe we had a successful relief phase behind us," said the UN's humanitarian co-ordinator in Pakistan, Jan Vandemoortele. 
"We want to sustain the success into the early recovery and reconstruction phase." 
The UN has begun training teachers and health workers, as well as builders who can help reconstruct some of the 600,000 destroyed homes. 
*Helicopters needed* 
Other priorities include ensuring there is enough water and sanitation, food, seeds, fertiliser and small livestock to help restore people's livelihoods. 
"We want to make sure that the services people have had access to in the camps will follow them home," Mr Vandemoortele said. 
He said he was confident that the countries which promised $6.2bn last November to help rebuild the stricken area would help fund the remaining $200m of the plan. 
The additional funds will provide helicopters to help deliver aid to the areas still inaccessible by roads, he said. 
Of the 300,000 people who were forced to spend last winter in camps in Pakistan, at least 200,000 had now returned home. 
The remaining 100,000 still in camps are either from urban centres that were completely flattened by the quake, or are from rural areas and are facing land disputes, physical disabilities or other problems. 
"This plan will help tremendously in getting people back on their feet again, so that when winter comes - and it's only six months away - they are ready to face it," Mr Vandemoortele said. 
"If not, we will see the same mass movement of people again, and have another emergency on our hands."


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ISLAMABAD (updated on: May 21, 2006, 17:10 PST): Pakistani and Iranian experts on Sunday opened talks here for the second time in less than a month to review progress on the $7.1 billion Iran-Pakistan-India gas pipeline project.

The Pakistan-Iran Joint Working Group is discussing technical and financial issues, focusing on the finalisation of a pricing formula, the officials said.

Pakistan had sent a draft gas pricing formula to Iran based on domestic gas pricing mechanism and the two sides are discussing the formula.

Iran Deputy Oil Minister Mohammad-Hadi Nejad-Hosseinian, who arrived here early Sunday, is leading the high-level delegation of experts in the talks and Pakistan side is leaded by Secretary of Petroleum Ahmed Waqar.

Officials say that the two sides will hold further discussion on the infrastructure and propose route for the 2,670-km pipeline in the four-day talks.

If implemented the 2,670-km pipeline will comprise 1,115 kilometres in Iran, 705 kilometres in Pakistan and 850 kilometres in India.

The two sides met in late April in Islamabad and had a wide-ranging discussion on the project.


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ISLAMABAD (May 21 2006): The Central Development Working Party (CDWP) on Saturday approved 65 projects costing over Rs 100 billion, of which 25 projects were recommended for approval of the Executive Committee of National Economic Council (Ecnec).

The projects approved in CDWP meeting held here with Deputy Chairman Planning Commission Dr Akram Sheikh are related to transport and communications, water resources, energy, commerce, health, population, education and mass media etc.

A large number of projects related to water resources and energy including Pehur High Canal Project (ADB loan), increasing capacity of Barani Dam and PC-I for Balochistan small scale irrigation were approved.

Dr Akram Sheikh observed that Wapda and provincial government should acquire land for Kurram Tangi Dam on priority. Wapda informed the meeting that 1,300 villages will be electrified during the current year and 1,500 more villages will be electrified next year under Roshan Pakistan Programme.

Advanced CAD/CAM training centres costing Rs 485 million were approved relating to industries and production division. A number of projects relating to health also came under discussions. Strengthening of National Control Authority for biological and its independent laboratory at a cost of Rs 231 million, up-gradation of existing facilities at National Institute of Heart Disease at Rawalpindi, Liver Transplant Centre project at Sheikh Zayed Postgraduate Medical Institute, Lahore at a cost of Rs 170 million and establishment of Institute of Cardiology at Peshawar at a cost of Rs 1,462 million were approved.

The deputy chairman, planning commission directed the officials of population ministry to take some concrete steps to control population growth. The officials of population ministry assured the deputy chairman that their ministry had changed its strategy in motivating the people and concerned Moulanas of the mosques are being involved.

The ministry of information and broadcasting gave a presentation on the establishment of 26 stories Media Tower to be built in Islamabad at a cost of Rs 1,150 million. The main purpose of the tower is to provide infrastructure facilities to media people.


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SHARM EL SHEIKH (May 21 2006): Prime Minister Shaukat Aziz said here on Saturday that home-grown leaderships, with a clear vision and decision-taking powers can help the Muslim world make rapid advancement towards the goal of more stronger economies.

Chairing an interactive session on 'Who is leading the Way', he elaborated on the role and responsibilities of a leader, the forces that are driving political change and economic development and how the region can share common values to bring about a positive change in the lives of its people.

"Decisions and leaders imposed from abroad are not long lasting and neither there should be any interference," he said.

He, however, regretted that the Muslim world lacked the unity it needed to meet the growing challenges. The Prime Minister said there was leadership deficit in the world and there was need to have leaders who have a clear vision, can take tough decisions, have the ability of problem solving and can take the people along by convincing them.

The Prime Minister said the Middle Eastern region has achieved a lot in the past few years and there was need to undertake vigorous reforms in economic, political and all other related areas to ensure progress and advancement in all spheres.

In reply to a number of questions about how the country managed a remarkable economic turnaround, he said the government was ensuring that Pakistan was never again trapped in debt and does not compromise its sovereignty.

The Prime Minister referred to the 'Fiscal Responsibility' law that was passed by his country's legislature, and added that any country's economy was based on economic policies and leave behind a deep impact on country's foreign and political process. He said the law will go a long way to ensure that Pakistan is never trapped again in debt and does not compromise its sovereignty.

During the interactive session, participants held a frank and open discussion and identified that there were many commonalties as all countries faced similar opposition to change.

They also termed the economic turnaround in Pakistan as a success story and said it could be emulated by all. The panellists agreed that the Arab countries needed to follow Pakistan's example, which undertook dedicated efforts needed to reform its financial sector.

Aziz also spoke of the need of political reform and said that the reform process could not be undertaken in isolation and needed to take into account other areas of governance.

He said that institutionalised reforms brought the country from the brink of bankruptcy to be among top 10 reformers.

He spoke of the reforms initiated by his government to bring about a positive change. He said it was very difficult, and added that the only constant in a modern world was the word 'change'. He said the five driving factors were: de-regulation, privatisation, good governance and transparency.

He referred to Pakistan's telecom sector that was now adding a million subscribers a month. He said the biggest hindrance was from within, but added that with concerted efforts and bringing about a series of changes, gradually things improved.

He also spoke of the reforms in the Income Tax department and said the department was known for indulging in malpractice's, followed by tax lawyers and tax payers who opposed change as it suited everyone.

The Session was participated by Bassem I Awadallah, representative of the Jordanian government, N Shafik Gabr, Chairman and Managing Director, Artoc Group for Investment & Development, Egypt; Chairman of Arab Business Council; Co-Chair of the World Economic Forum on the Middle East and Gamal H. Mubarak, Head, Policy Secretariat, National Democratic Party, Egypt.

The World Economic Forum on Middle East is focusing on several challenges faced by Middle East and to shape the regional agenda towards bold decisions that would provide hope and opportunity for young people.

Earlier, Egyptian President Hosni Mubarak opened the World Economic Forum on Middle East with a call to the international community to work together to resolve regional conflicts. "Peace and development are indivisible," the President told more than 1,200 government, business and civil society leaders from 46 countries meeting in Sharm El Sheikh. Bassem I Awadallah, representative of the Jordanian government, said that Pakistan could take justifiable pride in the reform agenda and celebrate its "fantastic economic success".

Participants, drawn from the highest level of government and business, as well as top experts and civil society representatives, will also be focussing on creation of new job opportunities besides looking into the labour market issues. The other sub-themes would cover the rule of law, peace, security and international relations, and issues of youth, culture and identity.


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KARACHI (May 21 2006): Air Marshal Shahid Hamid (Retd), Chairman, Alternative Energy Development Board (AEDB), said that firm letters of commitment have been given by 13 leading investors for installation of wind power turbines and as a result 650 megawatts (MW) of power would be injected to the national grid by the end of 2007.

He stated this at a meeting with Acting President, FPCCI Sheikh Muhammad Aslam and members of FPCCI in Federation House, Karachi that the mid-term development plan of the Alternative Energy Development Board included development of wind and solar energy to meet at least 5% of the total installed capacity ie 9,700 MW by 2030.

AEDB will facilitate installation of 700 MW of wind energy near Gharo, Sindh by 2010. It will also facilitate development of solar products like solar lights, solar fans, solar cooker, solar geyser through the private sector, he added.

The AEDB Chairman said that as a result of the analysis of three years data of general area Gharo-Keti Bandar provided by the MET Office, AEDB has identified a potential of 50,000 MW wind power.

He said that the Board was in liaison with the Government of Sindh for identification and acquisition of land in the area and has so far acquired 18,000 acres of land. Giving details of the pilot project for development and installation of micro wind turbines, he said that 85 micro turbines had been installed in Mirpur Sakro, District Thatta to provide electricity to 356 homes, 15 turbines are installed in Kund Malir, District Lasbella providing electricity to 111 homes, 40 turbines to government of Balochistan and one turbine is to be installed in AJK on trial basis.

Air Marshal Shahid Hamid said that AEDB was also exploiting solar energy and has executed a project to provide 100 solar homes in each province. These villages where the project has been executed include Allah Baksh, Bazar Dadar, District Kech, Balochistan; Bharo Mal, District Thar, Sindh; Janak, district Kohat, NWFP; and Lakhi Bher, district D.G.Khan, Punjab.

He said that Northern areas has immediate potential of more than 300MW and the canal network in Punjab has a potential of more than 350 MW through micro hydro power projects. A 40KW Kaplan type micro hydel turbine has been indigenously manufactured which has been installed at that Khanpur Dan canal near the village of Mohra Morado, Taxila, providing electricity to the village. On the proposal of Tariq Sayeed, former President, FPCCI Air Marshal Shahid promised to recommend to the Prime Minister to include a representative of FPCCI on AEDB. He also agreed to hold consultative meetings with FPCCI members every two months to interact with the entrepreneurs.


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KARACHI (May 21 2006): The country's towel exports is likely to cross $1 billion mark by end of the current fiscal despite seeing a decline in the towel made-ups exports, sources told Business Recorder here on Saturday.

Industry sources believed that the increased demand and launching of new products in the international market would help the figures to breach the fence of US $1 billion by the end of the current fiscal year 2005-06.

The statistics shows that the towels' exports were recorded at $421.1 million as on March 06, compared to $376 million during the corresponding period last year, depicting a growth of 11.97 percent. Similarly, exports made-up of towels from the country stood at $309.2 million until March 31, this year compared to $357.6 million, portraying a downslide of 13.52 percent.

"Despite increase in towel exports, the aggregate figure of towels and its made-up exports are showing a nominal decline of 0.45 percent as it stood at $730,35 billion on March 31, this year against $733,68 billion during the same period last year," said a leading exporter.

"Even with, low export figures, we are eyeing a target of $1 billion and are pretty optimistic that we would achieve it," he added. Citing the reason of the declining trend in the made-up towel exports, another exporter pointed out, "Since the value-addition of towel made-up is lowered, a number of people have switched their units to towel exports."

On the other hand, he said, the industry should focus to explore and capture other markets of the world, specially the African and Far East markets.

"The towel industry of the country is facing less global competition than the garments or any other sector, nevertheless, to boost exports, we must penetrate into the African and Far East markets where our exports are still negligible," exporters said.

Commenting on the newly launched products that have succeeded in attracting foreign buyers, a leading exporter said, "We have been exporting cotton towels, but this time we have recently started exporting 'micro fibre towels' and used 'bamboo yarn' in some of our products."

"Our buyers have appreciated this effort (new products) as we have proven that we can be updated and modernised with the changing world," he added.

The towel exporters have shown satisfaction over the pace of growth and highlighted that the average annual growth rate of their exports is ranging between 12 percent to 15 percent.

According to the statistics of 2004, China was the world's biggest towel exporter with 24 percent of the market share, followed by Turkey and Pakistan with 13 percent apiece.

India stood in fourth place with a market share of nine percent, followed by Portugal with seven percent, Brazil with six percent and Belgium with four percent.

"However, Bangladesh, that has emerged on the global front by enhancing its textile exports, is striving hard to penetrate into the world markets as its share in world towel exports is almost insignificant," stated a Karachi-based exporter.


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KARACHI (May 21 2006): The Export Promotion Bureau (EPB) is planning to establish "Electronics & Electrical Contract Manufacturing City" (EECM-City) in Karachi to help increase exports in value added engineering sector and to create job opportunities and skill development in the country.

In this regard the EPB would request the Sindh Government to provide a 100- acre piece of land for this purpose and it is expected that the Chairman EPB Tariq Ikram would discuss this matter with the governor and chief minister of Sindh in the near future. After completing of the said city in Karachi, the EPB would establish such cities in the other cities in the country.

A high level meeting, Chaired by EPB Chairman Tariq Ikram, was held here a few days back in which this issue was discussed thoroughly. Tariq Ikram said on this occasion that this opportunity be taken up very seriously as it not only helps increase exports in value added engineering sector but also creates job opportunities and skill development in the country.

He constituted an action team comprising of persons who are experts in their fields. The members of the team are Pervaiz Lodhie, President, LED Tronics based in Torrance, California, Miguel R. Santos, Director Boeing Company based in Seattle, Washington, Sultanul Arfeen, Arfeen Group of Companies, Shahid Zaki, Chairman and CEO, Philips-Pakistan, Zubyr Soomro, CEO, Citigroup Pakistan Operations, Mohsin Ali, Secretary General, the American Business Council of Pakistan and Riaz Khan, Executive Director Marketing EPB.

The line of action agreed was to first do a concept paper on the nature and size of opportunity and broadly how Pakistan could exploit this opportunity and the export and employment opportunity that could be expected. Thereafter to identity the sectors where outsourcing would be possible for Pakistan to cater to in the short and medium term. Thirdly, to develop a paper on the 'Case for Pakistan' and this would identify the benefits that a company abroad could expect if they outsource to Pakistan.

He also suggested that State Bank of Pakistan should also include this contract manufacturing industry in the Long Term Export Project Financing Scheme, which had been developed by SBP on the request of EPB to support innovative and new export initiatives.

In the meantime, EPB will contact International Trade Centre to get their technical expertise in order to launch the project. All the members of the American Business Council of Pakistan are fully supporting this project and have assured EPB to help the local electrical and electronics manufacturers in helping them to get order from USA.


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ISLAMABAD (May 21 2006): The Federal government has approved development schemes of worth over four billion rupees for Azad Jammu and Kashmir which include development of roads network and provision of clean drinking water.

These schemes were approved during a meeting, chaired by Deputy Chairman Planning commission Dr Akram Sheikh, while Secretary Kashmir Affairs Rasool Bux Baloch, Additional Chief Secretary AJK Mohammad Yousaf and Commissioner Mangla Dam Affairs Chaudhry Amir Afzal attended the meeting.

Development schemes approved by Central Development Working Party include construction of a bridge at Ratoah Haryam with a cost of 1.37 billion rupees and Greater Water Supply and Sewage development schemes for Mirpur city.


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KARACHI (May 21 2006): Site Association of Industry (SAI) has proposed that all machinery used for export industries including textile machinery be allowed to be imported at zero rate of customs duty.

In its budget proposal for the year 2006-07, the association noted that the requisite raw material (cotton) and skilled manpower are available in Pakistan and the only thing required at this stage is to have the necessary plant and machinery etc, in order to make our products competitive in the international market.

The association pointed out that Pakistan's survival in the international market would depend on only one factor ie how competitive cost effective and efficient our industry is. For this purpose there is constant need of undertaking massive BMR. The price of textile machinery in international market is exorbitant and, as such, we have to import second-hand machinery.

The present rate of customs duty viz. five percent is still high. It should be zero-rated in order to avoid hindrance in BMR and modernisation.

SAI also suggested that custom duty on spare parts should not exceed five percent.

The association noted that the present rate of custom duty on spare parts range from five percent to 25 percent, which is very high. In order to ensure that our textile processing industry remains competitive in the international market, the reduction in rate of custom duty is imperative.

The association pointed pout that the tax to GDP ratio is only nine percent in Pakistan and concern has been expressed at various forums on this.

SAI pointed out that in order to raise the tax to GDP ratio, what needs to be understood is that various segments that are part of the total GDP are outside the purview of taxes. Giving example of agriculture is 25 percent of our GDP but its share in taxes is zero.

The association pleaded that tax to GDP ratio will remain low until this anomaly is addressed. Similarly, in our total population of 160 million only about 1.3 million people are taxed. The same group is squeezed more and more to generate revenue.

At present, it is only these captive-tax-payers that alone have to bear the brunt of targeted-tax. A very big segment of the highly placed people owning enormous wealth, lucrative occupations and enjoying highly luxurious living - such as high profile professionals (doctors, lawyers, architects, artists etc), corrupt bureaucrats and state functionaries; feudal and agriculturists; individuals who have made huge profits on speculative real estate and stock market deals are all mostly out of the tax net. Some segments of the services industry such as wholesale and retail trade and the transportation sector play a large role in the GDP but have minimal contribution to taxes.

The association recommended that wherever income is generated it should be taxed in order to have a level playing field. The associated pleaded that emphases in this budget should be to increase the total numbers of direct taxpayers to 2.0 million people and then gradually increase it to 3.0 million taxpayers by 2009.

The association proposed that General Sales Tax (GST) be reduced from 15 percent to seven percent. The association pleaded that GST rate of 15 percent is abnormally high and is counter productive. It is instrumental in tax evasion and is promoting a smuggling regime. The rate of GST itself must be brought down to seven percent to eight percent and imposed across the board with better administration, except for the zero-rated export sector, if its base is to be expanded successfully.

Moreover, the GST is an indirect tax and the incidence of this is mostly on the poor section of the society and it increases their cost of living. The association recommend that withholding tax on all exports be brought down to 0.5 percent as the exports are getting very competitive and Pakistan is losing market share in value added goods.

SAI proposed that custom duties on industrial raw material should be completely abolished to promote local industry and make it more competitive. The association suggested that custom duties should only be levied on finished products / items / machinery.


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RAWALPINDI (May 21 2006): Industrialisation and skill-oriented education were imperative for eradication of poverty and unemployment, in this regard public and private sector should join hands to set up industries and provide vocational training to youths.

Islamic Relief Policy and Research's head Willem van Eekelen said here on Friday while talking to Rawalpindi Chamber of Commerce and Industry (RCCI) President Jalil Ahmed Malik.

He said, "Islamic Relief is conducting a survey to check the potential of industrialisation and establishment of vocational institutions to the give technical education to youth." He said that establishment of a trade centre, small industrial units and vocational training institutions was the topmost agenda of Islamic Relief.


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KARACHI (May 21 2006): Meinhardt - a Singapore-based company - would bring foreign investment worth $160 million into the country by commencing its construction projects in the country."

"We are coming with $160 million," company's Managing Director, Shahid Nasim told mediamen during a press conference held to launch ceremony of its project 'Creek Marina Phase II' on Saturday. He said that his company intends to set a new benchmark of luxury living and for this purpose a world-class project is under way in the DHA Karachi.

"We have come up with the state-of-the-art technology for the first time in Pakistan besides senior consultants and building materials," he said, adding that the seriousness of the company is evident from the fact that it has hired consultants, contractors and engineers from abroad only.

"Senior consultants would vigilantly observe the pace of work and the project would be completed on or before deadline of three and half years," he added.

Elaborating the infrastructure quality of the project, Nasim said, "The project has been designed to incorporate the highest level of building safety and security."

"The building structure is also designed to withstand winds and earthquakes of much higher intensity than those specified in the building codes," he remarked.

He pointed out that the interior designs have been specially created by the world's famous hotel designers - Hirsch Bedner Associates of USA.

"The construction of superstructure, finishes and all the mechanical and electrical systems will be carried out by international contractors," he added.

Nasim said that customer mortgage financing would be exclusively provided by Askari Commercial Bank.

"Once completed, Creek Marina will be the first 6-star residential development in the country," he said and added that the foundation construction is progressing faster than scheduled.


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ISLAMABAD (May 20 2006): Chairman Kuwaiti ZETECH Group Sheikh Hamood Al-Sabah accompanied by Chairman of Kuwait-Pakistan Investment Group, Abdul Azeem Al-Shomali called on Minister of State for Petroleum and Natural Resource Muhammad Naseer Mengal here on Friday and expressed his group's interest to set up an oil refinery in Pakistan.

The Chairman ZETECH Group commended the speedy growth of Pakistan's economy and vast investment potential in the oil and gas sector.

He said his Group would invest in setting up oil refinery, besides participating in privatisation activities.

Welcoming the delegation, the minister said there existed a huge potential for the prospective investors in Pakistan's oil and gas sector and Government would welcome as well as facilitate Kuwaiti Group in setting up oil refinery.

He said Government was offering lucrative incentives to the investors.

Naseer Mengal said Government was also exploiting the untapped oil and gas resources to met growing energy need of the country.

Investors would be encouraged to set up oil refineries in Pakistan to enhance refining capacity form 6 million tons to 13 million tons annually.

The minister also briefed the delegation on the upcoming projects in oil and gas like Iran-Pakistan-India (IPI), Turkmenistan-Afghanistan-Pakistan (TAP) gas pipeline projects and import of LNG from neighbouring countries.

He said those projects would prove a milestone for increasing the volume of economic and trade activities in the region.

Naseer Mengal explained salient feature of the privatisation process of the state-owned oil and gas units and invited the Kuwaiti Group to participate in it for the mutual advantage.


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PTI, KARACHI 

May 20: The normalisation and liberalisation of trade between India and Pakistan would help both countries to tap the potential for economic integration, according the World Bank economists. 

"The time has come to capture 'peace dividend' and this opportunity should not be lost," Philip Schuler, a World Bank panelist, was quoted as saying by the local media at a seminar titled 'Opportunities and Challenges of Pakistan-India Trade'. 

Zarine Naqvi, another economist of the World Bank, said a team of the World Bank had conducted a one-and-a-half year study on India-Pakistan trade. 

Pakistan's Ministry of Commerce had asked the World Bank to evaluate options for expanding trade with India, she said. 

Schuler said free trade agreements like SAFTA could spur economic growth and reduce poverty in the countries involved. The members of SAFTA should minimise the use of sensitive list and restrict use of anti-dumping measures. 

SAARC should also negotiate trade agreements with other large markets like ASEAN, he said. 

Minister of State and Export Promotion Bureau (EPB) Chairman Tariq Ikram rejected apprehensions that free trade between Pakistan and India would harm certain industries here. 

However, he said, it would be better if private sectors from both countries enter maximum joint ventures to complement each other's economy, the official APP news agency reported. 

"India was very surplus in raw materials than Pakistan. We see huge confidence in private sectors on both sides," he said at the seminar. 

The World Bank economists said the normalisation and liberalisation of bilateral trade would help the two sides to tap potential for economic integration.

The economists said progress on political front was very important for trade between the two countries to grow. They said Pakistan should continue expanding the positive list, grant Most Favoured Nation status to India and ensure a level playing field for trade with India, 'The News' reported. 

Pakistan could negotiate on agriculture subsidies given by Indian government, high specific textile taxes and non-tariff barriers, they said, adding that the Indian firms saw many barriers on the Pakistani side. 

Informal trade between the two countries was estimated at USD 545 million in 2005, of which Pakistan's exports were hardly USD 10 million. Informal trade takes place for those goods that are not on Pakistan's positive list or have high tariff in any of the two countries. 

A case study of wheat and sugar, which was conducted by Lahore University of Management Sciences and made part of the report, concluded that liberalisation of trade of sugar and wheat could help both governments manage their deficits, because huge subsidies were usually paid on these items. 

Another case study of the textiles sector found that FTA could induce specialisation and trade in intermediate inputs like cotton yarn. One more case study suggested that liberalisation of trade in fans would benefit Pakistan and in bicycles would benefit India. 

The EPB Chief said the liberalised trade between Pakistan- India would help bring socio-economic uplift of people of both the countries. 

He agreed that it would be more proper for Pakistan to import industrial raw materials from India for value-addition instead of finished goods.


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QUETTA: Balochistan is a vast province, almost half of Pakistan in terms of territory, with limited resources to build its huge infrastructure. The National Finance Commission Award is based on distribution of resources on a population basis and it has merely 5.11 per cent of the countryÃ¢â¬â¢s population. Its revenue base is narrow at around five per cent of revenue expenditure in a fiscal year.

The narrow tax base is because the central government retains all powers to levy taxes. Under the law, provinces are barred from imposing a significant tax generating sizable revenue for the provincial exchequer. The federal government is collecting all taxes which are later on transferred to the provinces. The share of the federal revenue is around 95 per cent, mostly transfers from the central government or share from the divisible pool of central resources. In case of transfer of resources, all deductions are made at source.

Interestingly, there were outstanding dues of the Balochistan government on Wapda for supplying natural gas to its power-houses, the central government refused to deduct the outstanding dues of Balochistan at source from the revenue transfer of Wapda. But in case of electricity bills, debt-servicing or other deductions are made at source in case of transfer of resources to the Balochistan government.

In case of provincial taxes, the provincial government revenue is based on property tax and motor vehicle tax. Income tax on agriculture is negligible and the government is collecting more tax on advertisements published in newspapers in Balochistan than the income tax of feudal lords and huge landowners dominating the politics of Balochistan or the country.

The provincial government is handicapped in terms of developing a tax culture or creating reliable tax collecting machinery and is heavily depending on the central government to collect all the taxes, deduct collection charges that are exorbitant by all standards, and transfer it to the provincial government.

There is no plan to tap the revenue for the provincial government by mobilising resources and motivating the people to pay taxes for meeting the expenditure of the government or accelerating the pace of economic development by improving services, quality of life, quality of available manpower and building the basic infrastructure for development.

The federal list of taxes include: tax on income; capital value tax; customs duty; sales tax; GST (central excise mode); federal excise duty and royalty; federal GST (2.5 per cent) and workers welfare tax.

The provincial taxes are: urban immovable property tax; transfer of property tax (registration fee); land revenue; tax on professional trades and callings; provincial excise; stamp duty.

The biggest collection is from the provincial excise and the government is collecting over Rs248 million per annum at the moment. The Islamic alliance in the provincial coalition is mounting pressure on the government to do away with this revenueÃ¢â¬â Rs248 million a yearÃ¢â¬â in place like Balochistan. Recently, the motor vehicle tax has surpassed the provincial excise and now the yearly collection is around Rs.264 million.

These taxes are followed by stamp duty around Rs160 million, land revenue Rs.58 million and urban immovable property Rs45 million.

Off and on, government leaders from Balochistan are making visits to Islamabad seeking more resources and more funds to meet the revenue expenditure of the administration and also to finance the modest public sector development programme.

They had meetings with the president, prime minister and others seeking their intervention in getting more resources. The prime minister once told the chief minister to widen the tax base and if Balochistan add Rs1 billion to its provincial revenue, the central government would provide Rs2 billion in addition.

It was the challenge for the provincial government to boost its revenues. According to informed sources the provincial government has proposed to restructure the taxation base and widen it substantially. The revenue of the province is expected to double during the next fiscal year from Rs1.2 billion to Rs2.5 billion, official sources said.

Ã¢â¬ÅWe are making efforts to increase the provincial revenue,Ã¢â¬Â a senior official of the finance department said and added that the department had succeeded to some extent in enhancing the resources by adopting various measures and had recovered Rs570 million from the federal government.

The provincial government spent this amount on early construction of the Bolan Medical Collage Complex, which was a federal government project, but Islamabad did not return back this money. Ã¢â¬ÅIn routine checking we detected this wrong payment and took up the issue with Islamabad for recovery of this huge amount,Ã¢â¬Â he told Dawn.

Independent economists here believe that a billion or two will not help solve the problem of pre-dated backwardness of Balochistan.

Balochistan has a huge landmass and a small population and it is doubly disadvantaged to retain pre-dated poverty, hunger, backwardness and illiteracy, Professor Siddiq Ahmed Khan, an independent economist, stated.

The president of Balochistan Chamber of Commerce and Industry (BCCI), Sadiqullah Khan Kakar, was also in favour of increasing provincial taxes. He was of the view that without boosting industry in the province the revenue could not be increased.

Ã¢â¬ÅIn my opinion, industry can stable the economy of the province and it would help in widening the tax base,Ã¢â¬Â Mr Kakar said. He said that Punjab was generating a lot of revenue by establishing small and big industry. Ã¢â¬ÅPunjabÃ¢â¬â¢s revenue is around Rs50 billion,Ã¢â¬Â he said.

Another independent economist and president of Balochistan Economic Forum Sardar Shaukat Aziz Popalzai said that the tax base could be increased by exploiting natural resources. As Balochistan is rich in natural resources and government should provide incentives and facilities to the people for utilizing these resources to generate revenue.

Sardar Popalzai said that abolishing taxes would make Balochistan more dependent on Islamabad. Ã¢â¬ÅTax holiday given in Balochistan did not help to develop industry. The investors abandoned their units in Hub and other areas after 10 yearsÃ¢â¬â¢ tax holiday,Ã¢â¬Â he said and added that the government should increase local tax on mineral.

However, Balochistan Traders Organisation president Mohammad Rahim Kakar holds a different opinion regarding provincial taxes. He said the government should not impose new taxes on poor people who are already facing price-hike and increase in utility bills. He said that government should promote tax culture by brining big landlords and others into the tax net.


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## Neo

Sunday May 21, 2006

ISLAMABAD: Chairman Senate Mohammedmian Soomro underlined the need for using advancements in Information Technology for promotion of national unity, tolerance and enlightened moderation and spread of modern knowledge. 
He was speaking as chief guest at prize distribution ceremony of the All Pakistan Website Development Competition "Know My Pakistan" organized by National University of Modern Languages (NUML) here. 

He said we are living in the age of globalization which has brought more competition and more challenges for us and called upon the youth to strive hard to excel at the global level. He said that it is matter of pride for us that there was great talent and enthusiasm among the youth of Pakistan to compete at any level. 

Mr. Soomro said Internet offers limitless opportunities and has surpassed geographical barriers and made acquisition of modern knowledge easy and a cost-effective phenomenon. Terming students as the asset of the nation he asked them to work for creating awareness through Internet & other means of Information Technology. 

Earlier, in his welcome address, Rector NUML Dr Aziz Ahmed Khan said that the students of today will be the custodians of the nation tomorrow. He said that the aim of this website development competition was to promote IT education and awareness about Pakistan. 

He said that students of Matric,F.A.,F.Sc and A/O Level were eligible to take part in the competition. Dr. Aziz said that out of 108 entries, 48 qualified for the competition. Later, the chief guest distributed prizes among the winners of completion.


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## Neo

Sunday May 21, 2006

ISLAMABAD: Foreign assistance and administrator of USAID Randall L. Tobias has said that the successful devolution process at the district level in Pakistan will help ensure the high quality health services for the people would provide more than $ 1.5 billion for the development projects. 
He stated this during the visit at rural health center Mandra and ambassador to Pakistan Ryan C. Crooker was present at the occasion. 

He noted the programme Ã¢â¬â¢PAMAN" launched by USAID would help to raise awareness about the problems of mothers and the new borns and added that the women are hesitant to talk the stranger about their problems. 

"This programme will result in giving them awareness to address their problems," he said. 

He also acknowledged the importance of the district managers and said that they were the vanguard of district administrators that would ultimately make the devolution process succeed in Pakistan. 

"As responsibility and authority decentralized to the district level, you will be able to ensure efficient high quality health services for the people served by Mandra RHC and for all communities in Rawalpindi," he said while addressing the district managers. 

He maintained that the USA, through USAID, would provide more than $ 1.5 billion for the development projects to Pakistan over the next five years to improve education, health, governance and economic growth in the country. 

"In addition, the United States has pledged a total of $ 510 million in earthquake relief and reconstruction efforts to assist the people of Pakistan and support Pakistan government efforts," he added.


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## Neo

ON BOARD PM'S AIRCRAFT (updated on: May 22, 2006, 12:30 PST): Prime Minister Shaukat Aziz on Monday said his four-nation visit has achieved the desired objectives of providing access to non-traditional markets, joint ventures between the private sectors and identification of new areas of co-operation with Africa and Europe.

The major accomplishment, however, has been the positive change in perceptions about Pakistan and there is now a better understanding of its status and position on global issues," Prime Minister Shaukat Aziz told the accompanying media team at the conclusion of his visit to Greece, Morocco, Libya and Egypt.

Prime Minister Shaukat Aziz in his weeklong visit has had an extensive interaction with the leaders of the four countries, besides number of others who were attending the World Economic Forum summit on Middle East in Egypt.

Prime Minister during his meetings with the leaders discussed the situation in Iran, Iraq, Afghanistan and Palestine. He apprised them of Pakistan's position on those major international issues, nuclear non-proliferation and the need of resolving disputes peacefully through talks.

He also spoke of the Composite Dialogue Process with India, and Pakistan's desire to seek a peaceful resolution of all outstanding disputes between both the countries. He said there was a clear understanding of Pakistan's position and the leaders appreciated country's quest for lasting peace in the region.

Aziz during his discussions also called for an inter civilisation, inter cultural and inter faith harmony and for a dialogue between people of different faiths to achieve greater harmony and understanding. He dismissed any linkage of Islam with terrorism and said that on the contrary the religion spoke of tolerance, brotherhood and peace.

The large business delegation and several ministers who accompanied the Prime Minister held several meetings with their counterparts in the four countries. The Chambers of Commerce of Pakistan inked agreements for increasing co-operation between the private sectors with Greece and Libya.

Prime Minister's visit to Libya, Morocco and Egypt was part of the government's initiative to strengthen relations with African States and explore fresh avenues of bilateral co-operation particularly in economic and trade sectors.

The visit, Aziz said also helped revive the Joint Ministerial Commissions with Greece, Libya and Morocco that were lying dormant for years. He said there was much appreciation of the success of the economic reforms Pakistan had undertaken over the years.

He said leaders of all the four countries noted and praised Pakistan for the remarkable economic turnaround and evinced interest in emulating the Pakistan experience. They also sought Pakistan's assistance for improvement of their banking sectors.

He said in his visit to Greece, the first by any Pakistani head of the Government, there was a visible change in perceptions and the country now viewed Pakistan more favourably.

"The change in perceptions will lead to an overall improvement in ties and increased co-operation on many new areas," he added.

The Prime Minister said Morocco had already signed Free Trade Agreement with the United States and talks were underway with Pakistan for an agreement on Preferential Trade Agreement (PTA). He added that in the presence of PTA with Greece, Pakistani exporters and manufacturers could gain duty free access to the US markets through Greece.

During Prime Minister's visit three agreements were signed for co-operation in industrial sector, avoidance of double taxation and culture, and vowed to accelerate the pace of talks on the Preferential Trade Agreement to increase the quantum of trade between the two countries.

The Prime Minister also impressed upon the Moroccan leadership for speeding up the work on PTA.

He said Pakistan had also sought assistance from Morocco to improve its tourism sector. He said the country needed to gain from the Moroccan experience, which received millions of visitors from across the world.

The Prime Minister said that with the opening up of Libyan economy there was a vast scope for joint ventures between the private sectors as many new mega projects were being opened. He also discussed export of manpower from Pakistan to Libya, besides co-operation in defence, security and energy sectors.

He said in his meetings with the Leader of Revolution Colonel Qaddafi and his Libyan counterpart they discussed ways to increase co-operation in all areas and said Pakistan had offered its expertise and manpower for building portions of Railways tracks and signals.

Aziz in his meetings with the Egyptian leaders discussed co-operation in agriculture and tourism and said the private sectors of the two countries would further increase interaction. He said that the investors from both the countries already were working on several projects in Pakistan and Egypt.

The Prime Minister also had an extensive interaction with local media and was most sought after by major newspapers, television networks and wireless services.

Prime Minister also addressed Pakistani communities at Greece and Libya and urged them to work hard with a commitment and to bring a good name to their country.

During the talk the Prime Minister was accompanied by member of his entourage including Minister for Railways Sheikh Rashid Ahmed, Minister for Ports and Shipping Babar Khan Ghouri, Minister for Science and Technology Nouraiz Shakoor, Minister for Privatisation Zahid Hamid, Ministers of State for Economic Affairs Hina Rabbani Khar, Foreign Affairs Khusro Bakhtiar and Industries Hamid Yar Hiraj, besides MNAs and businessmen.


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## Neo

KARACHI (May 22 2006): President Pervez Musharraf said here on Sunday that now when the country's economy has stabilised on strong footing it was now poised to focus on three important issues, viz, poverty alleviation, jobs creation, and control on inflation.

"I am going to give my 'Vision Pakistan' in an address to the nation soon," the President declared amid big applause while inaugurating the Rs 5 billion K-III additional 100-MGD water supply project for Karachi at an impressive ceremony at Dhabeji Pumping Station near here.

The President recalled that there was a time when there used to be only Rs 92 to Rs 95 billion in PSDP, which has now grown to Rs 250 billion, which would be spent on mega development projects to lead the people of Pakistan to the path of progress and prosperity.

Musharraf pointed out that besides poverty alleviation, jobs creation and control on inflation, which would be focused under his 'Vision Pakistan' by December 2007, each house would be receiving electricity, safe drinking water, and gas.

"I can say with great pride today that the projects, which I had launched in 2000 are now reaching the stage of completion, and their fruits are starting to reach the people at the grassroots level," he said.

The President said that to achieve this objective, a strategy was formulated which was not an easy task, but he worked 15-16 hours daily, whereafter he could know the real problem on which work was started and their fruits were now ripening.

He said, "By December 2007, each village having ten houses will get electricity, and this is my promise to the nation."

The President referred to the supply of unhygienic and contaminated water to the people in Hyderabad and other areas of Sindh. He said this had happened because of disposal of effluent into Manchar Lake.

He said that when the people raised hue and cry, this polluted water was thrown into River Indus during period 1998-1999.

The President said to rid the people of such tragedies, the present government initiated projects of RBOD and LBOD. He announced that by December 2007, with the co-operation of federal, provincial and district governments, water filtration plants would be installed in villages having population of 1000, whereafter every citizen would get mineral-like water.

Musharraf said that in areas where gas cannot be carried through pipes, gas tanks would be installed and filled through Bowsers for onward supply to people.

Similarly, he said, equal attention would be paid to the provision of education and health facilities.

He said that when the rural areas of Sindh would get abundant quantity of gas and electricity, they would enjoy prosperity, "and this is what our future is".

He said, "My 'Vision Pakistan' will take the country forward and make prosperity reach the grassroots level, and I will do that."

The President said that he was very delighted for inaugurating the 100-MGD K-III project, which has been completed three months ahead of schedule.

He congratulated Sindh Governor Dr Ishratul Ibad, Chief Minister Dr Arbab Ghulam Rahim, and Karachi City Nazim Mustafa Kamal and those associated with the project.

The President also congratulated the people of Karachi who, he said, had started receiving "this water from today". The President noted with delight that the City Government had plugged leakages resulting in saving 33 percent of water wastage and now rooting out the tanker mafia which was exploiting the situation and minting money due to water shortage and drawing water through these leakages.

He described the K-III project an ideal example of co-operation between federal, provincial and city governments in its implementation.

The President, referring to the address by Nazim Mustafa Kamal assured that whatever the requirements of Karachi would be met.

He said that earlier his plan was to meet the City Nazim and hold a meeting with him at his office to know about his requirements, but he informed the audience that he had changed his schedule of inaugurating this project which was on May 23 and decided to be here on Sunday in view of the Nazim's important visit to China "for which he is leaving tonight".

He said that he did not want the Nazim to delay his visit to China because of inauguration of this project.

The President said that on his next visit to Karachi he would meet the Nazim at his office and whatever federal assistance would be required for Karachi would be provided.

He pointed out that the overall federal assistance for mega projects of Karachi, including Lyari Expressway, Northern By-pass and K-III project stood at Rs 20 billion.

"I want improvement in Karachi, as Karachi and Lahore are two main cities of Pakistan; and I want to see that both cities should develop," he said.

Musharraf made a special reference to a number of mega projects launched by him including Gwadar Port started in the year 2001 and said now it is going to be an international port.

The President said that after working on poverty alleviation, jobs creation and inflation control, the work at micro level to strengthen the hands of district governments besides construction of farm to market roads along with promotion of education, lining of canals and construction of watercourses would b taken up.

Speaking on the occasion, Governor Ishratul Ibad thanked the President for inaugurating this mega project and said he is witness to the fact that on many occasions during the last 2-3 years, whenever problems came in the way, immediate response was received from the President to have them removed.

He said that every one would orally say that Karachi is the heart of Pakistan, but it was President Pervez Musharraf who practically proved it.

Chief Minister Dr Arbab Ghulam Rahim also thanked the President for sparing time from his busy schedule to inaugurate this most important project of Karachi and said the credit for it goes to the President who took personal interest in the project and kept monitoring it till its completion.

Arbab pointed out that Musharraf is taking personal interest in all the projects for Karachi and said he is keen for fast national progress, particularly industrialisation, and prosperity of people. The chief minister appealed to the President on behalf of people to seek re-election and continue working for the cause of Pakistan and Muslim Ummah.

Also present on the occasion were federal and provincial ministers, Corps Commander Lt General Ahsan Hayat, KWSB Managing Director Brigadier Iftekhar Haider, advisers, senior officials of Sindh and City governments.


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## Neo

KARACHI (May 22 2006): The year 2006 brings a major milestone in the relationship. The first Kuwait Petroleum Corporation (KPC) tanker "Stamenis" arrived at Keamari port Karachi on the 10th of March 1976.

This event marked the beginning of a dependable and durable relationship between KPC and the government of Pakistan. KPC has maintained uninterrupted supplies of finished petroleum products, which included high-speed diesel oil (gas oil), kerosene oil and furnace oil (fuel oil).

The KPC commitment to Pakistan reached unmatched heights when during a major turmoil in the shape of war (Iran-Iraq) around Arabian Gulf, the supplies to Pakistan were never delayed. The corporation assigned a fleet of their tankers under flags of other countries to meet the committed volumes.

The periodic supply contracts are reviewed on a biannual basis to ensure that Pakistan continues to receive the required finished products at the most competitive rates.

In order to cope with the increasing demand of the Middle Distillates in the country, KPC participated in building a sizeable tankage at Parco - Korangi facility, thus bringing about an improvement in the overall ullage situation of the country.

In 2001, deregulation policy was implemented by the government of Pakistan. At their request, the supply contract was assigned to Pakistan State Oil Company Ltd (PSO). KPC is happy with this new and strategic partnership. Their vast marketing network and efficient handling indeed justifies the role of an industry leader.

Kuwait Petroleum Corporation reaffirms its pledge to continue in the service of Pakistan through uninterrupted supplies of finished products - helping keep homes, agriculture & transport running smoothly, reflecting the lasting trust between the brotherly people of Kuwait and Pakistan.


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## Neo

ISLAMABAD (May 22 2006): Federal Minister for Petroleum and Natural Resources, Amanullah Khan Jadoon has said that the government has evolved a programme to provide natural gas to the most parts of the country by the end of next year.

Most parts of the country would be provided natural gas by the end of next year to meet fast growing domestic and industrial energy needs of the country, under a road map approved by President Pervez Musharraf.

Minister for Petroleum and Natural Resources in an interview, said for Pakistan's fast expanding economy and rapid industrial and agricultural growth drilling and exploration activities have been expanded.

He said energy would also be imported from the regional countries including Iran, Turkmenistan and Qatar.

He said about fifteen foreign companies have invested substantially in exploration activities supplemented by public sector companies.

About the Iran-Pakistan-India gas pipeline project Amanullah said the Petroleum Ministries of the three countries are in the process of finalising the multi billion dollar project.


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## Neo

KARACHI (May 22 2006): The vast coal reserves in Sindh would be utilised to produce electricity and many such power plants would be set up in next five years, said Sindh Chief Minister Dr Arbab Ghulam Rahim here on Sunday.

Presiding over a high-level meeting at the Chief Minister's House here to discuss the coming budget, he said that the province of Sindh, by the grace of Allah, was rich in natural sources, which would be harnessed to improve the national economy. He said that coal-based power plants would help ending electricity shortage. He said that royalty of natural resources would strengthen economy of the province and help in eliminating poverty.

He said that some European companies were setting up oil refineries in Sindh near Port Qasim and Dhabeji. He said that European investors were also keen to set up power plants at Jamshoro and Keti Bander.

He said illegal encroachments from Karachi and Super Highway would be removed. The meeting was told that 25,000 acres of government land at the Super Highway had been recovered from land grabbers, while bogus allotment of 86,000 acres of land in Thatta had been cancelled.

Dr Arbab stressed on improving standard of education in the province. He asked officials to conduct survey of small villages that were still without primary schools.

He said that in Sindh some 2 million children were presently not going to schools. He asked the officials to take steps to improve condition of 41,215 government primary schools in Sindh. He asked them to increase the number of middle schools. He said that dream of a prosperous Sindh could not be materialised till improving standard of education.

The Sindh chief minister said that hefty fees of private schools were a permanent headache for parents. He asked education department officials to set up a joint committee of parents and educationalists to keep a close eye on fees of private schools. He said that model English schools would be opened in each Taluka of the province and funds for them would be allocated in the coming budget. He asked to prepare a plan for capacity building of teachers of the government schools.

He said that if the EDOs education of all 23 districts of Sindh took sincere efforts there was no reason why education standard in Sindh could not be raised. He said that by improving standard of 45,487 government primary, middle and high schools in the province, the future of Sindh could be brightened.

He said that stern action must be taken against use of unfair means in examinations. He said that he wanted total elimination of 'copy culture' from the province.

Dr Arbab said that laying a network of uplift projects in the whole province was his mission. He directed officials to earmark funds for setting up model villages for fishermen at Manchar Lake, Keenjhar Lake and Zero Point in Badin. He said that funds should also be tagged in the coming budgets for purchase of small launches and boats for fishermen. He announced that a bridge would be constructed over the Indus River between Thatta and Tando Muhammad Khan to provide better travel facilities to area people.

The meeting was attended by Sindh chief secretary, senior member board of revenue, additional chief secretary (planning and development), secretaries of irrigation, agriculture, education, mineral development, local bodies, livestock, health and other departments.


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## Neo

Monday May 22, 2006 

KARACHI: " After achieving the economic stability our next focus is on mega projects, infrastructure development, poverty alleviation, job creation and inflation control , said President General Pervez Musharraf. 
He was speaking at the inauguration ceremony of KIII Project that will supply 100 MGD additional water to Karachi and is completed before stipulated time with comparatively lesser than estimated costs. 

He termed the project as a landmark achievement to meet the development needs of Karachi and an idea example of co-operation between federal, provincial and city government. 

Speaking on the occasion, President General Pervez Musharraf said that Karachi is the economic hub of Pakistan and is essentially instrumental to national development and economic growth in Pakistan. Due to this reason, he said federal government is taking keen interest in its development and has ventured into projects like Northern Bypass, four underpasses, Lyari Expressway and KIII. 

President Pervez Musharraf said that it is a moment of pride for me to see the timely completion of the projects started by this government. Mentioning about other mega projects, he said that Mirani Dam will be inaugurated in September this year and will irrigate 3500 Acres of land thus will contribute towards the development of the Province. Mangla Dam Upraising Project is also started that will provide 3MAF additional water. 

Four underpasses are already launched by the government in Karachi and will be completed in next four months, added President General Pervez Musharraf. 

President Pervez Musharraf reiterated his promise of providing electricity and clean drinking water to every household of the country by the end of 2007. 

He further said that for the prosperity and development of any country political will and resources are essential and fortunately present government is equipped with both with Rs. 350 billion in its PSDP. 

Appreciating the performance of Provincial and city government President Musharraf expressed the hope for continuation of efforts and said that the areas of focus for Sindh should be Road infrastructure, Water & Sewerage System, Electricity and cleanliness to further develop the province that plays the most important part in the economic development of country. 

Governor Sindh Dr. Ishrat ul Ibad, Chief Minister Sindh Dr. Arbab Ghulam and City Nazim Karachi, Syed Mustafa Kamal also spoke on the occasion.


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## Neo

Monday, May 22, 2006 

* Inaugurates Rs 5.95b water project
* Will announce Vision Pakistan on

KARACHI: President General Pervez Musharraf said on Sunday that the countryÃ¢â¬â¢s economy had stabilised and he was poised to focus on the major issues of reducing poverty, creating jobs and controlling inflation.

Ã¢â¬ÅI am going to give my vision for Pakistan in an address to the nation soon,Ã¢â¬Â declared the president while inaugurating the Rs 5.954 billion K-III additional 100-MGD water supply project for Karachi.

The president termed terrorism and extremism as Ã¢â¬ÅPakistanÃ¢â¬â¢s biggest enemiesÃ¢â¬Â. Ã¢â¬ÅBoth these menaces are harmful for Pakistan and need to be eliminated,Ã¢â¬Â he said. He also condoled the Nishtar Park tragedy.

Musharraf said the Pakistan Public Sector Development Programme used to be only Rs 92 to Rs 95 billion and had grown to Rs 250 billion. Ã¢â¬ÅThe money will be spent on development projects to lead the people to prosperity,Ã¢â¬Â he said. Every house would have electricity, drinking water and natural gas by December 2007 under Vision Pakistan, he added. Ã¢â¬ÅI can say with great pride that the projects which I launched in 2000 are now reaching completion and their fruits are reaching the people at the grassroots level.Ã¢â¬Â

The president said that a strategy had been formulated to achieve this objective, and he was working 15 to 16 hours daily to ensure work. Ã¢â¬ÅThe government initiated projects of Left Bank Outfall Drain (LBOD) and RBOD to tackle water problems,Ã¢â¬Â he said. Water filtration plants would be installed in every village with a population of around 1,000 people by December 2007, he added. 

Musharraf said people living in SindhÃ¢â¬â¢s rural areas would get an abundant supply of gas and electricity. He also praised Sindh Governor Dr Ishratul Ebad Khan, Chief Minister Dr Arbab Ghulam Rahim and Karachi Nazim Syed Mustafa Kamal for their cooperation in the water project. He highlighted that the city government had plugged leaks and saved 33 percent of water previously being wasted. The government would root out the Ã¢â¬Åtanker mafiaÃ¢â¬Â which was exploiting the situation and making money because of the water shortage, he added.

Musharraf said that work on Mirani Dam had been launched four years back and would be inaugurated by him in September, 2006. Ã¢â¬ÅThe Mirani Dam will irrigate 35,000 acres of land besides helping in fish production and bring prosperity to the area,Ã¢â¬Â he said. Mangla Dam was also being raised by 30 feet at a cost of Rs 50 to 60 billion and would store 2.9 million acres feet of water which would equal half of Tarbela DamÃ¢â¬â¢s storage capacity, he added. 

The president will inaugurate the Marble City Project in Hub today (Monday). Hub Marble City will include setting up new industrial units meant to cut and polish marble to make it import quality.


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## Neo

ISLAMABAD (updated on: May 23, 2006, 21:45 PST): Prime Minister Shaukat Aziz on Tuesday said Pakistan and China were working towards further expansion of co-operation in the peaceful use of nuclear technology for electricity generation.

"A significant area of co-operation between Pakistan and China has been the harnessing of nuclear technology for peaceful purposes under international safeguards - for the production of electricity," he said while inaugurating a day-long seminar organised by Institute of Strategic Studies to mark the 55 years of Pakistan-China relations.

Referring to Chasma-1 and Chashma-11 power plants as a symbol of such co-operation, Prime Minister Aziz said that the two countries were working towards further expanding co-operation in this area.

In his addressed, the Prime Minister traced the historical ties between Pakistan and China, which have stood the test of time and weathered geo-strategic changes at both the global as well as regional level.

"Over the past 55 years, our all-weather and time-tested friendship has become higher than the highest mountains and deeper than the deepest oceans."

"The friendship between our two countries is rooted in our hearts and minds - it is a model for relations between any two countries," he told a distinguished gathering of Pakistani and Chinese scholars and Islamabad-based diplomats of various countries.

Prime Minister Aziz described Pakistan-China defence co-operation as factor for stability in the region.

He recalled the framework agreement on defence co-operation the two countries had signed in February last year that is designed to carry forward traditional co-operation in this area.

This agreement will contribute towards the modernisation of armed forces of the two countries, he added.

Prime Minister Aziz particularly mentioned the co-production of JF-17 fighter aircraft and various tanks as the examples of the tangible output of defence co-operation between the two countries.

"A lesser-known but equally important aspect of this co-operation is in the important field of research and development which will lay the groundwork for future co-operation in this field," he added.

The Prime Minister said, Pakistan and China have always pursued their friendship with the objective of mutual benefit and never at the cost of any other country.

"We have not sought hegemony nor shall we accept hegemony from any quarter," he added.

Pak-China friendship, he added, is designed to promote security and co-operation with their neighbours as well as their global partners.

The Prime Minister underlined the need for both the countries to redouble their efforts for the protection and promotion of international peace and security in a multi-polar system confronted with serious challenges such as terrorism, nuclear proliferation, regional conflicts, the energy crisis, environmental degradation.

"As in the past, our present efforts can contribute towards greater security and stability around the world," he said and assured that Pakistan would always stand united with China and that it could continue to count on its steadfast support.

In the political realm, Prime Minister Aziz said Pakistan and China were committed to pursuing relations between each other and with other countries on the basis of the principles

of peaceful co-existence, sovereign equality and non-interference, "We seek mutually beneficial co-operation with all countries and are committed to the peaceful settlement of all disputes and conflicts," he added.

The Prime Minister stated that Pak-China friendship was not designed to be used against any third country.

"We also do not subscribe to the concepts such as balance of power, pre-emption and unilateralism," he said while adding, "we believe in strengthening the United Nations system to address and resolve all regional and global issues, peacefully".

Prime Minister Aziz also foresaw further strengthening of economic co-operation between the two countries in coming years as the two-way trade volume has already surpassed $4 billion mark.

Pakistan and China have already concluded the Early Harvest Programme which is a first step towards the Free Trade Agreement (FTA), which the Prime Minister said the two countries would be signing soon.

"These efforts to promote Chinese investments as well as bilateral trade will give a tremendous boost to our bilateral co-operation," he added.

He said the trade volume between the two countries was rising very impressively and reflected the growth and increasing market size of their economies.

The Prime Minister told the audience that the two countries would soon be undertaking up-gradation of the Karakorum highway that had been built with the Chinese assistance.

The up-gradation will convert the highway into an all-weather corridor to facilitate bilateral trade.

Furthermore, the Prime Minister said, Pakistan was also exploring the feasibility of construction oil and gas pipelines on its coastline to western China that will considerably shorten the distance and time for oil and gas transportation from Gulf to China.

"Setting up of a mega-refinery at Gwadar would further facilitate China's oil imports from our region," he added.

The Prime Minister called for learning from China in the sphere of space technology.

The bilateral agreement in this respect, he added, would greatly benefit Pakistan's capability for the use of space for peaceful purposes. He said China's Schenzou Space Programme provides tremendous opportunities for Pakistan's entry into the realm of outer space.

Prime Minister reiterated Pakistan's strong commitment to re-dedicating to a future partnership between the two countries, even stronger than in the past. "I believe that today there are even greater complementarities and inter-dependencies and energy linkages between an emerging global power like China and a revitalised and repositioned Pakistan," he added.

Prime Minister Aziz expressed the confidence that Pak-China relations would reach even greater heights in the future.


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## Neo

KARACHI (updated on: May 23, 2006, 22:00 PST): Foreign Direct Investment (FDI) in Pakistan reached $3.02 billion in the first 10 months of the 2005/06 fiscal, led by inflows into the communications and energy industries and the financial sector, official figures show.

Data released by State Bank of Pakistan on Tuesday showed FDI for the July-April period rose from $891.5 million in the same period of the 2004/05 (July-June) fiscal year.

The communications sector attracted the most foreign investment in the period, $1.7 billion, followed by $310 million invested in the power industry, $290 million in the financial sector and $243 million in oil and gas exploration.

The sharp rise in investment in communications has mainly stemmed from the sale of a 26 percent stake in Pakistan Telecommunication Co. Ltd. to Dubai-based Emirates Telecommunications (Etislat).

The United Arab Emirates led the list of foreign investors with investment of $1.285 billion in the first 10 months of the year, followed by the United States with $419 million and Saudi Arabia with $274 million.

Inflows from foreign portfolio investment during the period were recorded at $356 million, up from $135.5 million in the first 10 months of 2004/05.


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## Neo

ISLAMABAD (May 23 2006): The Annual Plan Co-ordination Committee (APCC) on late Monday night approved Rs 345 billion Public Sector Development Programme (PSDP) for 2006-07 and recommended it to the National Economic Committee NEC for its nod, at its meeting scheduled for May 31.

According to APCC, Rs 10 billion have been allocated for acquiring land for the new big dams. The provinces will get over Rs 100 billion as their share from NFC award for social sector development.

Planning Commission, Deputy Chairman, Dr Akram Shaikh chaired APCC marathon meeting that lasted for around 12 hours. The representatives of the federal ministries/divisions and provinces presented their requirements from PSDP for the next fiscal year.

A reliable sources told Business Recorder at 12.30 am when the meeting was still in progress that APCC discussed social sector projects of the federal and provincial governments in depth and took a number of key decisions to enhance budget for social sector schemes, besides allocating funds for each ministry, division.

The meeting was told that the major thrust of the next year PSDP would be on water related major schemes, new dams, education, skilled labour and infrastructure related projects to sustain economic growth in the future.

The meeting was presented a province-wise summary of PSDP utilisation for 2004-2005 and 2005-2006. It showed that this year the provinces were released Rs 68 billion, against Rs 54 billion of last year.

The break-up showed that this year Punjab got Rs 32.4 billion against Rs 25.9 billion of last year from PSDP, Sindh was released Rs 14.1 billion, against its share of Rs 9.2 billion in last year PSDP.

NWFP and Balochistan were released Rs 14.5 billion and Rs 7 billion against their share of Rs 11.4 billion and Rs 7.6 billion respectively. Balochistan, in addition to its share of Rs 7 billion from PSFP, was released Rs 3 billion under Khushal Pakistan Programme (KPP) Fund.

The meeting was told that PSDP utilisation for the first nine months of the current fiscal year stood around 65 percent. Historically, PSDP utilisation in the past was very low.

Sources said that the highest ever utilisation and timely release of funds for development schemes made the current PSDP different from the previous programmes.

They said that this time the executing agencies were asked to monitor progress of work of their respective schemes for 2005-2006, very closely to ensure that funds were utilised judiciously and without any hassle.

APCCW was informed that a well-thought tight monitoring policy had made the current PSFP different from the previous ones and the same approach would be followed in the future to further improve the utilisation of public sector funds. Sources said that availability of enhanced financial resources prompted the policy makers to go for substantial increase in 2006-2007 PSDP.

They were of the view that more allocations would help the Centre and provinces to go more aggressively for major social sector development programmes and provide the people better facilities to improve their living standards.


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## Neo

ISLAMABAD (May 23 2006): Prime Minister Shaukat Aziz assured on Monday of taking adequate measures for the welfare of the government employees, pensioners, common men and elimination of poverty while compiling the upcoming budget.

"Remarkable raise will be made in the salaries of government employees and pensions and no new tax will be levied on the low salaried class," noted Prime Minister Shaukat Aziz while briefing the central executive committee of the ruling Party Pakistan Muslim League about the outlines of the budget 2006-07.

The government, he said, was cognisant about the price-hike in the country and added that a comprehensive strategy to check menace of the inflation would be unfurled in the budget.

"Any proposal irking a common person has not been entertained while preparing the budget," Shaukat made it clear. The Prime Minister told Leaguers that on the directive of the president price management mechanism would be followed to check the prices further increase and maintain them at one level.

Special measures had been taken in education sector and provision of portable water to the people while compiling the budgetary, the he informed his party men.

Referring to the allocation for the defence, he said the decision to this effect would be taken keeping in view the national security and national interests.

Shaukat said that special funds would be allocated for the rehabilitation of the October 8, 2005 earthquake affectees and reconstruction of the wrecked areas in the ensuing budget. The prime minister felt proudly that government was successful to keep the pace of economic development despite massive natural calamity which hit the northern part of the country.


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## Neo

ISLAMABAD (May 23 2006): The government is likely to increase the minimum wages of unskilled workers from Rs 3000 to Rs 4000, and old age pension from Rs 1000 to 1300 per month, in the next budget.

The amendments to this effect will be made in the 'Minimum Wages for Unskilled Workers Ordinance' and 'Employees Old Age-Benefit Act, respectively through Finance Bill 2006.

Sources told Business Recorder on Monday that the Ministry of Labour and Manpower has forwarded a summary to the Prime Minister Secretariat, proposing the raise in the minimum wages of the unskilled workers and old age pension, keeping in view the unprecedented price hike and inflation.

It is also learnt that the Prime Minster Secretariat has forwarded the proposals to Finance Ministry for incorporating in the Finance Bill 2006.

The proposed increase in the rates of minimum wages as well as minimum pension will give relief to the downtrodden workers and pensioners, who are badly suffered due to the unprecedented increase in the prices of essential commodities.


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## Neo

LAHORE (May 23 2006): The Punjab government is likely to allocate Rs 70 billion for the Annual Development Programme (ADP) of the financial year 2006-07, which will be 32 percent higher than the current year budget of Rs 53 billion.

Well-informed sources told Business Recorder here on Monday that the overall volume of forthcoming budget may cross the figure of Rs 260 billion. In the fiscal year 2006-07, the health sector will be the priority area with the allocation of Rs 5 billion whereas the education sector was given priority in current financial year (2005-06).

According to the sources, in the forthcoming budget, emphasis would be laid on three sectors ie health, education and roads with the allocation of Rs 5 billion for health sector, Rs 15 billion for education sector and Rs 16 billion for roads.

In the coming budget, Rs 4 billion would be reserved for regional development, while local government and rural development will get Rs 2,200 million. The irrigation department will get Rs 10 billion in coming budget, while the agriculture department will have an allocation of Rs 2 billion against the current year allocation of Rs 925 million.

The overall utilisation of funds released under the Annual Development Programme (ADP) 2005-06 was recorded 61.80 percent till March 2006 of total released amount of Rs 44,641.506 million. The highest utilization of ADP was recorded in district governments whereas zero percent utilization was reported in eight departments, including tourism and resort development, food, mines and minerals, transport, urban development, sports and religious affairs, Punjab emergency service, and the Auqaf department till March 2006.

Out of a total allocation of Rs 2,300 million for capacity building of public servants, priority programme and un-funded schemes, not a single penny was utilised and the whole amount was lapsed in March.

In remaining departments, utilisation of ADP was 69.57 percent in agriculture, 28.09 percent in forestry, 47.40 percent in livestock, 60.73 percent in industries, 59.05 percent in Tevta, 64.71 percent in irrigation, 61.49 percent in roads, 92.89 percent in water supply, 56.43 percent in environmental planning, 80.81 percent in buildings, 31.77 percent in access to justice, 79.82 percent in education and training, 24.33 percent in information technology, 17.83 percent in information and culture, 50.98 percent in health, 57.69 percent in social welfare, 37.56 percent in labour and human resources, 16.16 percent in planning and development and 50.88 percent in local government and rural development.

The planning and development surrendered Rs 3 billion from departments and sectors, including agriculture, sports, food, social welfare and mines and minerals where utilisation was low. This amount was re-allocated to various authorities ie Water and Sanitation Agency (Wasa) Lahore, Faisalabad and Multan and Teshil Municipal Administration for the provision of clean drinking water and sewerage facilities to avoid the lapse of funds, sources said.

Sources said that good utilisation of ADP was witnessed in regional planning with 88.15 percent in Abad, 82.62 percent in Bahawalpur and 80.62 percent in Dera Ghazi Khan rural development.


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## Neo

EDITORIAL (May 23 2006): The federal cabinet's decision to earmark funds in the next year's PSDP to acquire land for five mega water projects, including the Kalabagh Dam, demonstrates the government's firm resolve to go ahead with the dams' construction, consensus or no consensus.

The President has already inaugurated the construction of Diamer-Bhasha Dam. The government is now planning to seek funding for the mega projects as part of its "2016 Water Vision" strategy. The cabinet members are rightly of the view that the projects have already been delayed for too long. Their decision to allocate funds represents the critical next step towards realisation of the goal of building additional water reservoirs in the country.

The government plans to provide constitutional, judicial and administrative guarantees to the opponents of the projects, to allay their reservations and win their support.

Incidentally, the provincial assemblies of Sindh, NWFP, and Balochistan have already passed strongly worded resolutions, voicing their opposition to Kalabagh Dam, the construction of which has been sensibly delayed. The powerful anti-dam lobby in the three smaller provinces had seen the renewed debate as a shrewd move to gauge the depth of their sentiment.

It cannot be denied that Pakistan is caught up in a tightening water and energy squeeze, because of non-construction of additional water reservoirs. As a result, some 35 million acre feet (maf) of water flows down into the sea unutilised each year, which represents a colossal national loss.

This has also frustrated the plans for tapping the country's vast hydel potential. With our GDP growth target set at between 6.5 to 7 percent, increased availability of water and electricity is absolutely essential. And this can be achieved only through construction of additional water reservoirs.

Massive silting at the existing big dams has sharply curtailed their water storage, and hence power generation capacity.

The country's annual energy deficit is projected to be at least 1,000 megawatts from 2007 onwards, while our demand for electricity is growing by six to seven percent per annum under the pressure of rapid industrialisation, and by the year 2012 we will need an additional 5,000 megawatts of electricity. With the steep rise in oil prices, the thermal option has become prohibitive.

This leaves us with the only viable option of hydel power, which is the cheapest source of energy. Solar parks and windmills, etc can act only as supplementary props.

The other major option is coal, which anyway is too cumbersome. Unfortunately, the issue of dams has become so politically charged as to become something like the proverbial "red rag" for the smaller provinces. The reason why successive governments have failed to build a consensus on construction of big water reservoirs, particularly Kalabagh dam, is that they have at times tried to use the divisive potential of the issue to their political advantage, prompting the smaller provinces to further harden their position.

Alternatively, instead of trying to build a consensus through parliament, the ruling elite has sometimes tended to bulldoze it by fiat. This has deepened provincial alienation. The perceived denial to smaller provinces of their rightful share in the federal divisible pool etc is another cause of mounting tension between Punjab and the smaller federating units.

The present government, like its predecessors, has tended to treat the issue of dams purely as a technical matter, deliberately downplaying its political aspect.

This has only fanned inter-provincial antipathy. Instead of bulldozing decisions, the government should take the issue to the parliament, hold a threadbare debate to resolve the differences through compromise, and evolve a national consensus before rushing ahead into the implementation phase.

This is basically a political issue that needs to be handled politically through addressing the smaller federating units' concerns and reservations. Nobody can deny that the dams have to be built for the sake of the country's well-being. Why not do it through national consensus?


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## Neo

Editorial;

By M. Ziauddin

THE next federal budget is likely to propose measures aimed at further fine tuning the monetary and fiscal policies to sustain the high growth trajectory while at the same time keeping the inflationary fires well under control.

It is also likely to propose juxtaposing these measures in order to rationalize the expanding deficits in trade and current account while at the same time keeping flows of industrial input imports unhindered and the revenue incomes increasing.

Finally, since the next general election according to an announcement made recently by the President himself is about two budgets away from today and since both the President and the ruling coalition seem to have already started their poll campaign, there is this further pressure on the policy makers of the incoming budget as well as the one that would be announced in June next year to play to the gallery as well.

They have to come up with measures that would continue to feed the facade of Ã¢â¬ËPakistan shinningÃ¢â¬â¢ while at the same time allow the rich who have completely taken over the economic policy making and implementation processes and corporatised the entire economic activity, to continue to fill their coffers at the cost of the poor masses. But then they would need a magic wand to accomplish these inherently ambitious goals because very little attention has been paid to the problems that confront our real economy.

Savings and investment: The foreign-aided boom seems to be tapering off. The official economic managers take a lot of pride in what they call the on- going economic reform and structural adjustment process and to which they attribute all the positive economic indicators achieved in recent years, like the all round higher growth rates, the dramatic increases in revenue collection and exports.

But what they have so far failed to explain is why all these reforms and adjustments have not been able to improve our savings and investment rates and the rate of our incremental capital out- put ratio (ICOR).

The domestic saving rates continue to stagnate at around 13-14 per cent of the GDP on an annual average and the rates of investment have not gone beyond 15-16 per cent, on annual average, during the last seven years. The ICOR has remained between 4-5 all these years.

This is amazing because countries like China and India with each having almost ten times the population of Pakistan and where reforms are still in an infancy stage have a lot better record on this front. China saves almost 50 per cent of its GDP and then invests almost as much annually. In the case of India, these rates are also on the higher side of 25 per cent.

And their ICORs too have improved dramatically. So, for Pakistan to achieve a sustained growth rate of over eight per cent, it needs to target an investment rate of over 30 per cent of the GDP annually over the next 15 years and a savings rate of nearly as much otherwise, the gap between the savings and investment rate would have to be filled with costly loans as foreign private investment appears to be still very shy in the case of Pakistan.

Revenues: The high rate of increases in revenue collection in recent years is attributable to the price driven incomes from the petroleum and gas development surcharges and customs duties.

The other chunk in the quantum jump in the collection comes from the coercive system of withholding tax (mostly under the head of sales tax). And while all the indirect taxes whose rates and incidence keep on jumping, have been allowed to impact severely on the poor despite all the reforms, no attempt has so far been made by the CBR either to expand the tax base or the income tax net. It has not even succeeded in persuading the rich to declare correct amounts of their incomes.

If one goes through the list of various categories of income tax payers, he will be shocked to know that the richest earn no more Rs.25,000 per month!

This incongruity is evidenced by the sale last month of over 40 pieces of German sports car costing an average of Rs6 million a piece. And a couple of our rich have also brought Porsche Cayman S for over Rs10 million a piece.

During this very month, the efficient economic managers pushed an essential food item like sugar out of the reach of the poor by letting the so-called Ã¢â¬Ëmarket forcesÃ¢â¬â¢ to escalate the prices of this commodity beyond Rs40 per kilo. But in the process it has also allowed the mill owners, many of whom sit in the cabinet making economic policies to pocket billions of unearned incomes, which will not come under the purview of taxable income.

Poverty: During the last drought cycle and when the government was still focusing on reducing the budgetary deficit by tightening the leash on expenditure under pressure from the IMF, almost 35 per cent of the population had fallen below the poverty line.

In the interim period following the injection of massive concessional assistance from outside, there has been a statistical improvement of five per cent or so in the situation. Still the level of poverty continues to hover around 30 per cent and not 25 per cent as has been claimed by the government in recent weeks.

The reason for this discrepancy is the governmentÃ¢â¬â¢s own attempts at fudging the poverty figures. It had used a figure of 32 per cent for the base year (2001) instead of the actual 35 per cent and now therefore it is forced to come up with an unrealistic figure of 25 per cent.

An exaggerated estimate of livestock population has also been used by this government year after year to window dress its overall growth figures, which it is likely to repeat again this year as the agriculture sector is likely to show a growth rate of no more than zero per cent.

Poverty has been variously defined. But those who do not have any landed asset, lack education (knowledge) and no access to the other assets do remain perpetually poor. In Pakistan, at least about 80 per cent of the population falls into this category.

So, no matter what you do to lessen poverty, you simply cannot succeed if you do not do realistic land reforms, promote the culture of lawful housing mortgage system, provide universal primary education to your population and disarm the warlords.

Pakistan spends far less than its South Asian neighbours on education do. Its annual education budget is only 2.3 per cent of the GDP while most low income countries spend on an average about 3.4 per cent.


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## Neo

The budgets for education and other social sectors has not only remained abysmally low all these years, but the rate of budgetary releases by the finance ministry to the relevant agencies of these sectors too has been very slow. The rate of utilisation by these agencies too has been too laggard.

Casino culture: If you are not saving and investing enough and if your incremental capital output ratio has also not improved and your real income from revenues is stagnating then how is it that you have continued to show very high growth rates in recent years? The answer is simple. All the existing productive capacities have been used in this period helped mostly by the financial space created by the bounties of 9/11 and the surplus output has been consumed by the expanded market space made available in the rich markets because of the same reason.

One would have thought that the fiscal space which was made available to the present government and the expanded markets given to our exporters during this period would have been utilized sensibly by the official economic managers to present budgets aimed at expanding the real economy and its ability to generate increased savings to not only accelerate investment but also reduce dependence on foreign assistance. This seems to have not happened. Instead, the successive budgets have encouraged the casino culture.

Stock and land prices have been skyrocketing adding artificial wealth to the GDP and allowing the casino ownersÃ¢â¬âthe stock brokersÃ¢â¬âto make a killing both when there is a bull run or when the bears take over the market.

In the last seven years these brokers have floated their own investment banks and have also gone and purchased state-owned enterprises. The element of conflict of interest in this does not appear to bother the official economic managers.

Privatisation: The shortfall in income against expenditure is now being attempted to be covered by selling the family silver. Here the term family silver is being used for those enterprises which were originally floated by the state itself and not nationlised units.

Take for instance, the privatization of the PTCL. This utility has been sold by one government to another (as the Etisalat is owned by the UAE government and the process is called privatisation.

The Steel Mills, the mother of all the industries has been sold to a consortium in which the major share- holders are foreigners and the Pakistani shareholder is a stockbroker.

The majority shareholder among the new owners of KESC is a foreigner. Two of the major banks, the UBL and the HBL have been sold, again to foreigners. This amounts to undermining PakistanÃ¢â¬â¢s economic sovereignty itself and making the countryÃ¢â¬â¢s economy vulnerable to the whims of the foreign investors.

Not only this, the governmentÃ¢â¬â¢s policy of privatisation and selling off its family silver without first putting proper regulatory bodies in place has encouraged emergence of cartels (sugar, cement etc.) pushing up the prices and adding an unnecessary and uncalled for component to the rate of inflation.

The liberalisation of oil market without subjecting it to a regulatory system has also given rise to an oil cartel, which alleged to have pocketed Rs4.5 billion of unearned profit in the last couple of years.

Trade and current account deficits: And there is also the challenge of expanding trade and current account deficit which the budget makers will be facing this year. The exporters have made the most of the all the market access that we have so far received from the rich countries by way of a pay-off for joining them in the war against terror. And in the process, they have also exhausted all the idle manufacturing capacity. Now, in order to increase exports further, they would need to install new capacities and also find new markets.

But there is no sign of such a thing happening. And the expanding trade gap is being presently attempted to be covered by the using the $5 billion or so annual flows of remittances and the proceeds from privatisation. And what would happen once all the family silver is sold?

Luxury imports: There is certainly a lot of room to bring imports under control. But the appetite of the rich for expensive consumerism seems to have become inexhaustible and since they belong to the ruling elite who make economic policies, there is hardly any possibility of curbing expensive imports, especially of costly cars and fancy cell phones.

Shockingly, a number of plans are on anvil to Ã¢â¬Ëset upÃ¢â¬â¢ manufacturing units of new models of cars like Renault, Chrysler Daimler and Black Cabs etc.

But all of these brands are likely to be imported in assembled form or knocked down condition (CKDs of any model can be assembled in the available facilities that can be rented at economic rates) for at least three years on the plea that it would take as many years to put up a requisite plant.

And for setting up these plants, the well-connected sponsors are being allotted huge plots of land (at least about ten times more in size than the actual requirement) at throwaway prices. This is called foreign investment.

Foreign investment: So far, not a single penny has been received by way of foreign investment which, could help add to our export capacity. The government seems all set to sign a Bilateral Investment Treaty with the US hoping that the American private investor would bring in billions once such a treaty is signed. This is highly doubtful. But even if they do bring in some millions, the attached conditions would perhaps be too costly.

According to one of the conditions under these terms if an investment fails because of the failure to do business with the local private sector partner or the under the rules and laws of the land, the government of Pakistan would be required to pay to the foreign investor for the loss of potential profits! So look before you leap.


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## Neo

WHAT was unthinkable in the 1990s is happening in Punjab these days. Awash with surplus money, the provincial financial managers are considering enhancing development spending under the annual development plan (ADP) to a record Rs80 billion or even more in the budget 2006-2007. This is a sharp jump from the Rs53 billion provincial ADP 2005-06.

Funds are pouring in from all sides Ã¢â¬â in the form of increased federal transfers as well as in the shape of soft loans from multilateral donors like the Asian Development Bank and the World Bank.

Ã¢â¬ÅWe are thinking on the lines of raising ADP spending to between Rs80 billion and Rs90 billion, if possible. Besides, the budgetary allocation for maintenance of the existing infrastructure, which is part of the revenue expenditure, will also rise substantially. We believe that the money spent on the maintenance of the infrastructure is part of development expenditure. Thus, total development spending is going to get an unprecedented boost in the budget for the next fiscal,Ã¢â¬Â senior Punjab finance department officials say.

Compared with total annual development expenditure hovering around Rs9-10 billion during the better part of the 1990s, financed mostly through expensive loans from the central government, the province has finally come to a stage where it can allocate huge resources for development from its own pocket or soft loans obtained from international donors for budgetary support.

A comparative study of the ADB allocations shows that development expenditure in the province has grown from 16.73 per cent as percentage of the total provincial revenue receipts of Rs120.313 billion in 2001-02 to 23.62 per cent as percentage of the total revenue receipts of Rs224.409 billion during current fiscal. The size of the provincial ADP has increased from Rs20.130 billion to a hefty Rs53 billion.

The first major push to development spending was given in 2003-04 when the allocation for provincial ADP was raised to Rs30.5 billion or 20.42 per cent of the total revenue receipts of Rs149.346 billion from Rs20.750 billion or 15.87 per cent of the revenue receipts the previous year.

The second push came in the budget for current fiscal year as the provincial ADP grew in size to Rs53 billion or by around 47 per cent from Rs34.440 billion or 18.94 per cent of total revenue receipts of Rs181.826 billion in 2004-05. Officials say the actual provincial development spending last fiscal stood at slightly over Rs42 billion, and it is likely to touch the figure of Rs62 billion or so by the end of this fiscal year.

Two factors have contributed to the phenomenal growth in the provincial development spending from Rs17 billion in 2000-01 to the projected Rs80 billion or more during the next financial year: a) continuing increase in the total federal transfers Ã¢â¬â share in the divisible pool, straight transfers and other federal grants, over the last five years or more; the size of federal transfers is expected to grow to Rs165.513 billion during the outgoing year from Rs99.977 billion in 2001-02; b) willingness of the multilateral donors to lend to the province soft-term credit for budgetary support instead of advancing project-based loansÃ¢â¬â for carrying out governance reforms in social, financial and economic sectors; these loans have so far been used by the provincial government to retire a major chunk of its costly federal loans that is said to have created fiscal space for diverting greater resources to development.

As the things stand, the provincial share in the federal divisible pool and other federal transfers will be upped further during the next fiscal year under the interim National Finance Commission (NFC) Award announced by the President towards the end of 2005, allowing the province to allocate more funds for its development programme.

Besides, the provincial government is considering the option of obtaining more soft loans from the ADB and the World Bank for financing large infrastructure projects in its major urban centres under its public private partnership initiative.

Hence, the provincial authorities are not worried about the availability of resources for their development programme at least for the time being.

Ã¢â¬ÅToday the economy is doing exceptionally well. Tax collection by the Central Board of Revenue (CBR) is exceeding the budgetary targets each year, making greater financial resources available to the provinces from the divisible pool. But what will happen if, God forbid, the CBRÃ¢â¬â¢s tax collection falls short of the targets in any given year as was the case during the 1980s and 1990s? The provincial share (from the divisible pool) would drop again. And the first casualty of such a happening is going to be the development budgets of the provinces,Ã¢â¬Â the officials say.

In what is termed to be a highly centralised tax structure, the federating units are heavily dependent on federal transfers under the NFC award. Compared to other three provinces, Punjab is in an even more precarious situation because a major part of federal funds coming to it comprise transfers from the divisible pool.

Ã¢â¬ÅOther provinces can make up for the loss in their share from the divisible pool with funds given to them in the form of straight transfers, subventions and other grants. In case of Punjab, the share of funds coming in the shape of straight transfers and other grants is minimal. So if the size of the divisible pool shrinks, Punjab will be hit the most,Ã¢â¬Â the officials say.

What is the solution to such a scenario? Ã¢â¬ÅSubstantial increase in the provinceÃ¢â¬â¢s own tax resources,Ã¢â¬Â the officials reply.

Historically, the share of provincial own taxes in PunjabÃ¢â¬â¢s total revenue receipts has been hovering between 9-11 per cent. Compared to this the funds received by the province in the form of federal transfers have normally formed 80 per cent of its total revenue receipts.

The outgoing year has been a little different from the previous ones as federal transfers, unlike past years, form 73.75 per cent of the provinceÃ¢â¬â¢s total revenue receipts. However, this is more because of a quantum jump in non-tax revenue (estimated to stand around Rs33.124 billion as compared to Rs15.673 billion the previous year) the province has managed to generate rather than due to increase in provincial tax revenues.

On the other hand, tax receipts of Rs25.771 billion for the outgoing fiscal year are estimated to make just 11.48 per cent of the total revenue receipts of Rs224.409 billion of the province. It shows that provinceÃ¢â¬â¢s own tax revenue as percentage of its total revenue receipts has increased slightly by 1.7 per cent over the budgetary estimates of the fiscal 2001-02. In terms of rupees, there has been an increase of Rs14 billion in the provincial own tax revenue during the same period.

Over the years, the desperation of the provincial authorities to raise the share of the provinceÃ¢â¬â¢s own tax revenue has resulted in the multiplicity of inefficient and low-revenue generating taxes. This multiplicity of taxes not only failed to improve revenue generation, but also engendered problems for taxpayers who had to deal with numerous departments and tax officials and government inspectors that hit the growth of private sector in the province.

At one point in time, there were 36 different provincial taxes and levies. The number was slashed to nine in 2001-02 with a view to facilitating the taxpayers as well as to improving the efficiency of tax collectors.

Still, the provincial finance managers strongly believe that Punjab can bring down the number of existing taxes, especially of indirect, inefficient taxes, to just 2-3 and raise revenues substantially provided the federal government allows the provinces to impose sales tax on services.

Ã¢â¬ÅThe salvation of provinces lies in the levy of sales tax on services. It is going to be the most robust tax in the future. The services sector is the single largest sector. In case of Punjab it contributes over 52 per cent to the provincial GDP of around $60 billion. So you can imagine the huge potential of generating revenues by taxing this sector,Ã¢â¬Â the officials say.

Both Punjab and Sindh, having largest services sector base in the country, are trying to convince Islamabad to let them tax the services because it would not only boost their own revenues to new levels but also help simplify their tax regimes and make them far more efficient and taxpayer friendly.

At present, the provinces are allowed to tax only six services like hotels, marriage halls, laundries, etc at different rates, which generate very little revenue after a lot of effort.

All the major, revenue generating services like telecommunication, banking, carriage of goods by rail or air, etc remain with the central government which has imposed central excise duty (CED), a federal levy which is shared by the provinces as part of the federal divisible pool, on them.

As a consequence of CED on these services, the provinces cannot impose sales tax on them as the law prohibits taxing goods and services already under excise. Ã¢â¬ÅThe centreÃ¢â¬â¢s reluctance to allow the provinces tax their services sectors is nothing but a manifestation of the rigid and highly centralized federal system in Pakistan.

The issue of provincial sales tax on services, IÃ¢â¬â¢d say, is an issue of provincial autonomy,Ã¢â¬Â says an economist. As the federal government is adamant on keeping the Ã¢â¬ÅrightÃ¢â¬Â of taxing the services sector to itself on one pretext or the other despite its being the provincial prerogative, it remains a formidable challenge for Punjab and Sindh to substantially enhance their own tax resource, and decrease their dependence on what many dub as federal dole for development and other expenditure.


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## Neo

Editorial;

By Sultan Ahmad

THIS is the ideal time for the policymakers in a developing country like Pakistan to formulate the next yearÃ¢â¬â¢s budget. The fiscal environment is so helpful.

A high economic growth rate of 8.4 per cent achieved last year has been followed by expected between 6-7 per cent this year. The substantial increase in investment and production makes the tax target easy and tax paying in moderation less painful.

When the industry is expanding fast, exports are soaring and the service sector flourishing with new products and services for the well-to-do, that is the time for larger tax collection.

And when tax payment is being made less vexatious and smoother through the Ã¢â¬Ëuniversal self-assessmentÃ¢â¬â¢ that is the time to expect larger revenue. When the stock exchange is booming and real estate price is hitting the skies along with the vastly expanding services, that is the environment for higher tax collection.

But there is one snag in the rosy tax revenue scenario. The next year is an election year and president Musharraf does not want to displease the voters. In fact, he wants to make as many concessions to the voters as possible through his promise of water, power and gas for all by 2008 and if possible by the end of next year.

So, it is said, there are to be no new taxes and instead there will be moderate tax relief, particularly for the salaried class who have not been enjoying any tax reduction at the lower level for some years.

Simultaneously, there are reports saying that the tax collectors have been directed to explore avenues for new taxes and how to collect them to finance the development plans. That may mean the tax sources identified like the capital gains tax and a tax on real estate profits may not be enforced next year.

The taxpaying is to be made easy through the working of the Ã¢â¬Ëuniversal self-assessmentÃ¢â¬â¢ scheme and by setting up 12 more taxation offices.

The issue is not of identifying large and new sources for mobilising revenues, but a decision to tax the obvious sources, for example, agriculture whose support prices are raised constantly. It is a political decision to be taken on a political level, says the chairman of the Central Board of Revenue Abdullah Yousaf.

He has been silent at various seminars on having a substantial share of very large profits in the stock exchange or profiting by the capital gains on the stock exchange as the law giving exemption from the tax is valid until 2007. When it comes to the large fortunes made through the real estate, all he is doing is to document the transactions and make a proper database.

The CBR chief is confident of adding 20 per cent more to the number of taxpayers and collecting at least 20 per cent more revenues. In fact, the figure of 22 per cent is now being mentioned. He wants to make the tax-GDP ratio respectable instead of at 10.1 per cent of the GDP, the lowest in the region.

But when it comes to giving tax relief to the salaried class, the revenue loss will be low, and there can be a large loss in the number of taxpayers, which is now about 1.3 million. That has stood in the way of tax concessions for the salaried at the base level.

One of the objectives of the government is lowering the cost of business, something that the World Bank, Asian Development Bank and foreign investors have been urging. This is imperative to encourage foreign and domestic investment.

The new budget has to provide for two or three large increases in spending. The defence expenditure may rise to 10 to 15 per cent over the current years to Rs223.5 billion, primarily to acquire more sophisticated equipment like F-16Ã¢â¬ËS from the US and JF-17 from China. The second increase is to be to provide for higher pensions including military pension.

The allocation for education is to be raised to four per cent of the GDP from over two per cent.

There has been speculation in regard to pay increases along with reduction in the taxes on salaries and a flat tax on salaries. What will ultimately come through the budget remains to be seen.

Mr Abdullah Yousaf is confident the current yearÃ¢â¬â¢s budgeted target of Rs690 billion tax revenues would be met which encourages him to set the next yearÃ¢â¬â¢s target at a around Rs840 billion.

All that has encouraged the government to fix Rs342 billion as the target for the public sector development programme. Of course, without adequate infrastructure, the progress of other development schemes will be slow.

The enhanced PSDP allocation will take the public sector development expenditure to four per cent of the GDP from 3.8 per cent, which is still low for a country of 160 million people.

Meanwhile, we are given some optimistic projections. Inflation, which was 11.2 per cent last year, is stated to be at eight per cent now and will be 6.5 per cent next year and six per cent thereafter. Normally, inflation projections do not reflect ground realities or the figure is under-stated.

The unemployment is stated to be 6.5 per cent compared to 7.7 percent. Official claims that the total number of unemployed in the country now is 3.3 million, which makes us far better than many European countries.

But the biggest challenge is from having to mobilise $25 billion for the five dams, which have been approved. The money has to be found long before 2015 when they are expected to be ready and are able to produce power as well.

While the poor are promised better times after the budget and relief for the low income groups, and flat tax for the salaried, they are immediately hit hard by the 100 per cent rise in sugar and the soaring price of lentil.

And they are afflicted in cities like Karachi with endless breakdown of electricity supply and frequent load shedding. They find it difficult to believe that the budget would change all that.

Even if the governmentÃ¢â¬â¢s policies change and fiscal levies become liberal, the primitive distribution system will neutralise the benefits of the change in official policies and procedures. Imagine that in spite of all the vegetable supplies supposed to have come from India, a kilo of green lemons cost Rs30. And a medium size candle costs Rs10 each. The whole system has to be reorganised if the common man has to have any relief through the budget. The budget would not be a magic wand despite the alluring promises made for political reasons.

Inflation is sought be contained through a rather tight monetary policy. Commercial banks have given loans of Rs366 billion to the private sector in the first 10 months of this financial year against Rs363.7 billion in the same period last year.

Simultaneously, the home remittances of overseas Pakistanis increased by five per cent in the first 10 months of the year and reached $3.6 billion. And during the recent Pakistan Development Forum meeting in Islamabad, foreign delegates voiced their unhappiness over the manner the large remittances were spent on large non-productive items.

Clearly, too much money is afloat and the consumption is increasing and people with surplus money are pushing up the consumption. And home remittances are not taxable either so the government has to think of other ways of combating the inflation.

While it is easy to frame a budget in such economic conditions, politically the task is made more complex with too many claimants wanting too much of a share of the modest resources.


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ISLAMABAD, May 22: The export of textile products increased by 18.89 per cent to $8.022 billion during the July-April period of the current fiscal year compared to $6.747 billion the same period last year. The Federal Bureau of Statistics (FBS) figures on Monday showed that the export of textile products rose by 16.20 per cent to $821.401 million in April 2006 as against $706.901 million the same month last year.

Similarly, the export of readymade garments surged 29.30 per cent to $1.098 billion during the July-April period compared to $0.849 billion the same period last year.

The export of cotton yarn and cotton cloth rose by 32.09pc and 16.31pc to $1.122 billion and $1.746 billion respectively during the July-April period as against $0.849 billion and $1.501 billion the same period of last year.

Knitwear and bedwear exports increased by 5.10pc and 50.88pc to $1.396 billion and $1.657 billion respectively during the period compared to $1.328 billion and $1.098 billion the same period last year. The export of towels showed an increase of 12.02 per cent to $472.713 million.

However, the export of made-up articles including other textile declined by 12.21 per cent to $341.919 million during the period under review; art, silk and synthetic textile down by 34.45pc to $164.763 million, canvas and tarpulin declined by 60.91 per cent to $22.385 million over the same period of last year.

The export of auto parts increased by 39.93pc, footwear 7.65pc, chemical and pharmaceutical products by 4.23pc, gems 7.40pc and engineering goods 13.92pc during the period under review over the same period last year. However, the export of molasses also fell by 34.44pc, furniture 16.70pc and jewellery 40.12pc.

The export of primary commodities registered an overall growth of 18.89 per cent during the July-April period over the same period last year. These included export of rice which surged 26.40pc, fish and fish preparations 35.31pc, spices 63.46pc.


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GADANI, May 22: Inaugurating a Ã¢â¬Ëmarble cityÃ¢â¬â¢ here on Monday President General Pervez Musharraf assured the manufacturers that the marble industry would be fully promoted. Ã¢â¬ÅMining of marble be undertaken by utilising the latest techniques to avoid wastages,Ã¢â¬Â the president said while speaking at the ceremony, which was also attended by the Balochistan Governor Owais Ahmed Ghani, Chief Minister Jam Muhammad Yousuf, Sindh Chief Minister Dr Arbab Ghulam Rahim, and federal and provincial ministers, senators, MNAs, MPAs and elite of the area.

Ã¢â¬ÅMarble is our asset and by developing it we can earn money and foreign exchange as well by exporting it,Ã¢â¬Â he said adding that the promotion of the industry would not only be beneficial for the area and this province but would also lead to economic uplift of the poor.

The president noted that four units were in production at the facility and said the expatriate Pakistanis from USA, Japan, Spain and the UAE had shown the spirit of patriotism and had come here to serve the country and its people. They are contributing to the socio-economic development of the local population, he added.

Gen Musharraf said that about 300 units would be established in the marble city and some 600 acres of land had been allotted. He said the establishment of 300 units would help create jobs for thousands of people, reduce poverty and lead to progress.

He noted that the usage of old techniques of mining resulted in some 70 per cent of wastage as the explosives were used for the purpose. He called for using modern techniques in mining of marble.

The president emphasized that the cutting and polishing of marble should also be done in the best possible manner.

He assured the marble unitsÃ¢â¬â¢ owners that the government would extend its full assistance in this respect and the ministry of industries was also contemplating certain steps to help the marble industry

The president further assured that the equipment would also be imported as there was no dearth of money in the governmentÃ¢â¬â¢s exchequer.

He said it was not like the past when the exchequer was empty and those, who were then in the government, were fooling people by raising in empty slogans.

President Musharraf said that the present government had the will, the commitment and the determination to carryout the policies and it had the required money in t

The president made it clear that the job would have to be performed by the people in the industry and the government would serve as a facilitator.


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Tuesday May 23, 2006 

ISLAMABAD : Wapda Chairman Tariq Hamid on Thursday briefed the National Assembly standing committee on water and power about the restoration of power supply to the quake-hit areas. 

The committee met at the Parliament House under the chairmanship of MNA Ghulam Murtaza Maitla. 


The Wapda chairman said restoration of electricity to the affected areas was a difficult task, but with extreme efforts of Wapda personnel power was restored within three days after the October 8 catastrophe. 


Responding to a query about the village electrification programme throughout the country, the chairman assured the committee that all the villages would have the facility of electricity by the end of 2007. 


He also informed the committee about the policy of converting illegal connections into legal ones in Khuzdar district, Balochistan.


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Tuesday, May 23, 2006 


ISLAMABAD: The Annual Plan Coordination Committtee (APCC) has estimated that GDP growth is expected to touch seven percent by the end of the current financial year, as compared to growth of 8.4 percent in the last fiscal, an official said on Monday. 

The estimates of APCC, which met here, are based on initial projections of different sectors. The APCC is also expected to fix a floating growth target from 6 to 8 percent for the next five years including 2006-07, a senior government official told Daily Times. 

The performance of different sectors during the current financial year is under review of the APCC. The meeting would continue till late Monday night, the official said. The APCC estimates are nearly the projected target of 7.2, which is the actual growth target for the current fiscal. Last year, the performance of agriculture sector remained outstanding and it had registered growth of 7.5 percent in 2004-05. 

He said this fiscal, the agriculture growth could hardly be near four percent owing to decrease in cotton and wheat production. The large scale manufacturing (LSM), which registered a growth of over 12 percent in the last fiscal, has been estimated to grow at less than 10 percent this fiscal.


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ISLAMABAD (May 24 2006): Pakistan is keen to finalise the 'Bilateral Investment Treaty' (BIT) with the United States at an early date, Prime Minister Shaukat Aziz told the visiting Under-Secretary of State for Economic, Business & Agriculture, Ms Josette Shiner, who called on him here on Tuesday.

He said that finalisation of the BIT would enhance the volume of trade between the two countries and, as a result, more employment opportunities and business activities would be generated.

The Prime Minister appreciated the plan to set up 'Reconstruction Opportunity Zones' (ROZs) by US in Pakistan, and said that ROZs would contribute to the overall economic uplift of the commercially depressed zones and less developed areas, as the infrastructure of these areas would be strengthened to set up these zones, and the population of the areas would get more jobs and better facilities of life.

The Prime Minister also appreciated the proposal that the goods manufactured in the ROZs would be exported to US markets on preferential terms.

Shaukat said that despite pressures created as a result of high oil prices and the losses caused by earthquake, the country had achieved the growth target of 6 to 8 percent, inflation was settling down and the overall inflation during the fiscal year 2005-06 remained less than 8 percent. He said that foreign direct investment (FDI) was expected at about $3 billion, highest in the history of the country.

About the energy policy, he said that to sustain the accelerated growth within the range of 6 to 8 percent and to remain competitive in the rapidly globalizing world, Pakistan was focusing on energy and water security. He said that Pakistan was focusing on both enhancing the indigenous capabilities in oil and gas sector and on importing gas from neighbouring countries.

He said that Pakistan, located at the confluence of South Asia, Central Asia, and West Asia, provided the shortest access to the sea for all landlocked countries of Central Asia and Western Asia. Pakistan, he said, is playing an important role in facilitating the regional trade.

UN reforms and restructuring proposals also came under discussion. The Prime Minister made many suggestions to transform the UN into a more vibrant and effective organisation, geared to meet the new challenges.

Shiner appreciated the recommendations made by the Prime Minister, saying that his recommendations were practical and valuable.

She said that US is keen to see more development and prosperity in Pakistan, and ROZs would help in creating more economic opportunities. She appreciated the economic recovery achieved by Pakistan and noted that, according to a World Bank ranking, Pakistan is among the top 12 reformers of the world. Josette Shiner also appreciated the investment-friendly policies of Pakistan.

She said that during her stay in Pakistan she would review the working of UN organisations in Pakistan to determine the changes required to make UN a more vibrant organisation.

The meeting was attended, among others, by Adviser to the Prime Minister on Finance Dr Salman Shah, Minister of State for Economic Affairs Ms Hina Rabbani Khar, Ambassador of US in Pakistan Ryan C Crocker and some senior officials.

MEETING WITH SALMAN SHAH: The visiting US team led by Under Secretary for Economic, Business and Agricultural Affairs, Josette Sheeran Shiner had a meeting with Advisor to the PM on Finance and Economic Affairs, Dr Salman Shah here to launch the strategic economic dialogue between the two countries.

US Under Secretary was accompanied by Ryan Crocker, US Ambassador to Pakistan, Chris Moore, Dy. Assistant Secretary and senior officials of US Embassy and USAID.

Pakistan side included Secretary General Finance, Secretary Finance, Secretary EAD and functionaries of other ministries.

The US Under Secretary appreciated the efforts being made by the Pakistan government for the revival of its economy and stressed the need for greater co-operation between Pakistan and USA to enhance trade and business activities.

US Under Secretary of State stressed the need for preparing a comprehensive working paper encompassing the requirements for improving bilateral trade and business for thorough discussions and deliberations in the next meeting to be held in July in Washington.

The meeting was also attended by senior officials of the Ministry of Finance, BoI, Health, Planning and Development, Water and Power, Commerce, Education, Communication, Foreign Affairs, NEC, Industries and Production, NHA, Railway and SBP.


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KARACHI (May 24 2006): All Aero Asia and Shaheen Air International (SAI) aircraft remained grounded for the second day on Tuesday as no agreement could be reached between the airlines and the Civil Aviation Authority (CAA) on payment of CAA dues.

Officials of CAA remained engaged in meetings, separately, with the representatives of the two defaulting airlines, without any result.

CAA is reported to have stood firmly on its decision that either the private carriers should clear their dues, or be prepared for rolling back their operations.

CAA presented its proposals regarding the mode of payments and Aero Asia and SAI came up with theirs, but till the close of office hours none of the airlines turned up to say that they were ready to accept CAA's formula for clearance of the dues.

In the morning, a CAA spokesman told Business Recorder: "Enough is enough. They can not take us for a ride any longer. After all, the airlines will not be paying anything from their own kitty. It is public money which they have collected through the sale of tickets and have no right to use that money somewhere else and deprive CAA of its revenues."

Private carriers had been promoted and pampered for too long. Now they should learn to stand on their feet and walk without the help of crutches, he said.

Till late in the evening, no official statement was available from CAA whether the issue had been resolved or not.


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ISLAMABAD (May 24 2006): The federal Cabinet will ratify the agreement between Pakistan and Brunei Darussalam for establishment of joint investment company. The authorised capital of the JV Company would be $25 million in the equivalent of Pak rupees and the parties capital contribution will be as follows.

Official sources told Business Recorder that $12.5 million capital contribution would be made by the BIA, the value of the shares being payable in dollars, and $12.5 million, capital contribution by Pakistan, the value of the shares being payable in rupees.

The main purpose of the company was to consolidate joint efforts to promote economic co-operation between the two countries for investing in the industrial, manufacturing and non-manufacturing sectors, financial services and marketing of their products in Pakistan and abroad.

Pakistan has already facilitated establishment of four joint investment companies with brotherly Muslim countries, namely, Pak-Libya Holding Company (PLHC), Pak-Kuwait Investment Company (PKIC), Saudi Pak Industrial and Agricultural Investment Company (Sapico), and Pak-Oman Investment Company (Poic).

These joint ventures have been established on equal-sharing basis for project financing in various fields in Pakistan, the sources said, adding they have been functioning successfully and earning substantial profits.

It may be mentioned here that a memorandum of understanding (MoU) was signed during the visit of Prime Minister Shaukat Aziz on May 7, last year, but the formal approval was given at JEC on March 17, 2006.

The duration of the agreement would be 20 years renewable for a further period as mutually agreed upon. Within 90 days of the signing, the parties shall establish Pak-Brunei Joint Investment Company in accordance with the laws of Pakistan.

The head office or registered office of the company would be situated anywhere in Pakistan and its board of directors may establish branches, offices or agencies in Pakistan or abroad.

In addition, the agreement on establishment of Pak-Iran Joint Investment Company was signed on February 23 last year after ratification by the cabinet, steps are being taken for establishment of the company in consultation with Iranian counterparts.


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ISLAMABAD (May 24 2006): United Kingdom is one of the biggest investors with over 200 registered companies operating in various sectors, said UK ambassador to Pakistan, Mark Lyall Grant here on Tuesday.

Speaking at the launching ceremony of the UK land investment group in Islamabad, Grant said that UK investors in Pakistan have the opportunity to invest in prime, underdeveloped land in the UK with a view to achieving high returns in a stable economic market with the added security of official freehold ownership.

For the first time Pakistani investors are being provided with the opportunity to diversify their investment portfolio through an international company based locally and one that understands the needs of this fast moving market, he disclosed.

The United Kingdom Land Investment Group is proud to announce its first joint venture consortium in Pakistan with National Construction (Private) Limited, Gandhara Consultants (Private) Limited and the Orient Group.

The Consortium has already launched an aggressive bid for one of Pakistan's latest mixed development ventures.

The United Kingdom Land Investment Group Pakistan operation will be expanding into other major cities including Lahore, Karachi, Sialkot and Faisalabad.

With a comprehensive national marketing campaign to be launched this week this promises to be an existing period in the world of investment in Pakistan and United Kingdom Land Investment Group has established its firm foundations and is here to stay.


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ISLAMABAD (May 24 2006): Bilateral trade between Pakistan and China is expected to reach 8 billion dollars by 2008. This was stated by Director East-Asia Institute of Strategic Studies Islamabad (ISSI) Fazal-ur-Rehman who was speaking on Pak-China Economic Co-operation here on Tuesday.

There is need for the involvement of private sector for rapid economic growth of both the countries. This was general consensus of the participants of the daylong seminar on 55 Years of Pak-China Relations held by ISSI.

The two sides acknowledged the fact that in order to sustain a comprehensive co-operative relationship, substantive economic co-operation, matching the level of political and strategic co-operation was absolutely essential.

The economic dimension in Pak-China relations has come to the forefront and began to show signs of improvement, in terms of trade and investments.

The trade between the two countries has seen considerable rise from 2001 till today. In 2001 the trade volume was 1.4 billion dollar, 2004 it was 3 billion dollar, 2005 it reached 4.25 million dollar and presently it is estimated to touch 5 billion dollar.

The current status of Chinese investment is more than 4.0 billion dollar and 114 Chinese projects are underway.

According to the Chinese Custom Authority, Pakistan export to China showed an upward trend, registering an increase of about 39.2 percent in 2005. It enhanced from 594 dollar to 832 dollar in the same periods of 2004 and 2005.

It was expected that Pakistani economy would continue its growth at the same rate and bilateral trade would reach 8 billion dollar by 2008.

At present Gawadar Port, upgradation of Karakoram Highway, Thar Coal Mining, upgradation of Pakistan Railways and Power Generation Projects - both nuclear and non-nuclear are some of the notable projects expanding economic co-operation.

The participants in the seminar were of the opinion that though the two-way trade has increased, the volume of trade is heavily in favour of China. Pakistan's exports to China lack diversity. Diversification of exports from Pakistan in the non-traditional items will help reduce the trade imbalance.

The main imbalance of trade is due to import of machinery, engineering equipment besides complete transfer of plants and equipment from China. The Pakistan has very few complimentaries in all sectors of trade. The trade imbalance deficit ratio of Pakistan and China is 1:5.

The figures depicted may be little different if there was no under invoicing and other illegalities, which are part of Pak-China, trade as was discussed in the seminar.

Professor Zhan Yunling chairing the session commented in his concluding remarks that Pakistan would have to enhance its capacity for the Chinese products for economic growth rate sustainability.

He said that China is desirous to promote economic relations in the South Asian countries as it has great regard for regional level co-operation and wants to see the role of Saarc more effective, he added.


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ISLAMABAD (May 24 2006): Export Promotion Bureau (EPB) Director M Saleem Ahmad Ranjha said on Tuesday that due to policies of the government, the export would be doubled in next three years.

Talking to PTV, he said during last three years, a lot of work was done in diversifying markets and for new productions also.

He said export to Afghanistan had increased to one billion dollars, adding that Pakistan was touching closer markets like Bangladesh, Gulf, India and Iran.

Export of fruits also increased this year and Pakistan exported 0.2 million tonne fruit, he added.

He said Pakistan had explored new market for oranges and 304,000 tonne orange was exported to Russia, adding that the export of mango would also be increased.

He said the EPB had introduced a scheme, according to which every Pakistani company, which had three retail sales outlets in the country or its export was almost one million dollar and desired to open outlet abroad, the 50 percent annual rent of the first year, 25 percent of second year and 10 percent of third year would be recovered by Pakistan government.

Companies were giving good response in this regard, he added


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ISLAMABAD (May 24 2006): The only way to progress for developing countries is to develop a knowledge economy, as highly skilled and trained human resource has now become the single most important factor in the process of socio-economic development, Dr Atta-ur-Rahman, Federal Minister and Chairman Higher Education Commission said on Tuesday.

He was speaking at an international symposium on science and technology in Muslim countries, which was organised by the world's leading scientific journal Nature at Rockefeller Foundation's Conference and Study Centre in Belliagio, Italy, said a message received here.

Dr Atta-ur-Rahman's presentation was titled, "Science and Technology in OIC Member Countries- Challenges and Opportunities".

"For developing countries, international collaborations can bring new thinking to help solve old problems. Muslim countries find themselves near the bottom of global tables in terms of the number of research articles published annually.

This is illustrated by the fact that the total number of international publications from the entire Islamic world taken together each year is less than those from a small European country such as Switzerland, said Dr Atta-ur-Rahman.

This was largely because of the lack of vision in the leadership of the Islamic world who has miserably failed to invest in science. Thus the oil-rich Arab countries presently spend up to 7 percent of their GNPs on defence but only 0.2 percent on research and development.

The gap between the Muslim world and the West therefore continues to widen with each passing day. He stressed the need for Muslim countries to lay more emphasis on research with relevance to national needs as well as creation of genuine world class Centres of Excellence.

Professor Atta gave a presentation on the work of Committee of Ministers of Science and Technology in OIC member countries (Comstech) in promoting scientific co-operation in Muslim States, which was greatly appreciated. He also shared his experiences of rebuilding higher education, science and technological infrastructure of Pakistan.

The aim of the symposium was to exchange best practices with a view to encourage more high quality research in predominantly Muslim countries. The conference brought together leaders from science, government and civil society in the Muslim countries as well as the advanced countries and provided a stimulating opportunity for the gathered individuals to debate as to how to strengthen their science and technology bases and promote greater international collaboration.


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KARACHI (May 24 2006): The permission to import used cars was a temporary measure to meet the demand-supply gap, which is now closing, as the industry has increased capacity.

Standing Committee on Production Chairman MNA Malik Niaz Ahmad Jakhar has said this while presiding over a meeting at the Indus Motor Company (IMC) here to discuss the issues pertaining to the local automobile industry.

He reiterated that instead of imports, focus should be on local car production by providing conducive environment for investment in the sector that would also promote the business activity as well as the vendors.

The committee recommended that the local automobile industry to be given protection to further boost the industry and its vendors. In this connection, a long-term policy and restriction on import of used cars was necessary, the committee suggested. Malik Niaz Ahmed Jakhar said Pakistan's automobile industry had developed substantially in recent years and would continue growth at the same pace.

He appreciated the IMC's performance and said the development in this sector resulted in enhanced employment, investment and transfer of technology.

Appreciating the plant and its efficient workers, he said in the last four years, IMC had enhanced its production from 57 cars per day in 2002 to about 200 cars per day, and delivery period had reduced considerably.


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ISLAMABAD (May 24 2006): A seminar on 'Railways Vision' is being organised here on Friday to focus on economic well-being of Railways to meet the international standards. The Prime Minister Shaukat Aziz is likely to be the chief guest at the inauguration. Minister for Railways Sheikh Rashid Ahmed talking to APP said steps were being taken to reinvigorate the Railways by putting it on improved track.

He said a number of proposals would be given due consideration at the seminar, including replacement of existing railway tracks, besides engaging private entrepreneurs for the running of new locomotives and coaches thus offering more facilities and comforts to the passengers.

The minister said the Railways was actively working for the up-gradation of the existing signalling system as an effort to make it more fool-proof and error free through computerisation.


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ISLAMABAD (May 24 2006): The Cabinet is likely to approve restructuring of the country's federal statistical system by merging Federal Bureau of Statistics (FBS), Population Census Organisation (PCO), Agricultural Census Organisation (ACO) and the technical wing of Statistics Division into an autonomous body, called 'Pakistan Bureau of Statistics' (PBS).

It has been proposed that FBS and ACO should be merged immediately, while PCO should be made part of the new entity after Census in 2008.

The Cabinet, which would meet on Wednesday, would also take stock of the law and order situation, besides discussing other issues.

Official sources told Business Recorder that the purpose behind the re-organisation of the country's statistical system is to make it more responsive to national requirements, with increased autonomy and credibility, through better co-ordination and integration of different data collecting agencies.

They said that the restructuring plan has been prepared by consultants from Norway and World Bank, after analysing the existing statistical organisations. With the recommended merger of FBS, PCO, ACO and the technical wing of Statistics Division into PBS, with functional members, the new body would be headed by Chief Statistician.

The organisation is to be restructured on the pattern of CBR, for which a new law is also to be enacted to give shape to the new organisation.

The proposed structure of new body would as follows:

i) Three organisations FBS, PCO, ACO and technical wing of Statistics Division will be merged on the model of CBR, and named as Pakistan Bureau of Statistics (PBS).

FBS and ACO will be merged immediately, while PCO will be merged after the National Census in 2008.

ii) The government would undertake steps to improve the performance and promote professionalism in the PBS.

iii) Unified law merging the existing laws and covering the new requirements would be subsequently drafted and submitted for approval of the Cabinet.

iv) Seniority of individual officials in the new set-up would be decided in accordance with the general seniority rules of the government.

v) New composition and Terms of Reference (ToR) of the 'governing council', 'management committee' and the 'statistics users council' will be issued after approval by the Cabinet.

vi) The 'Chief Statistician' and the 5 'Members', approved by the Prime Minister, would be in MP-1 and MP-2, respectively, to be hired on contract basis for a term of 3 years, by open competition.

vii) Since restructuring will involve considerable administrative work, the present Statistics Division will continue for the time being. Once the PBS takes final shape, the need for continuation, or otherwise, of the Statistics Division will be reviewed.

Sources said that Prime Minister Shaukat Aziz has already cleared the proposed sketch of the new body.


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ISLAMABAD (May 24 2006): The trilateral Joint Working Group of Iran-Pakistan-India gas pipeline project at the two-day talks concluded here on Tuesday decided to continue discussions on gas pricing, and the three sides agreed to hold the next meeting in July in India.

Pakistan delegation was led by Petroleum Secretary Ahmad Waqar, Iranian delegation by Deputy Oil Minister M H Nejad Hosseinian, and Indian delegation by Secretary Petroleum M S Srinivasan.

Briefing newsmen after the meeting, along with Iranian and Indian delegation heads, Ahmad Waqar said that the meeting had agreed that gas would be delivered to Pakistan at Iran-Pakistan border, the pipeline would be connected to Bhong, near Rahim Yar Khan, and then to India, on Pakistan-India border.

On gas pricing, he said it was agreed that the pricing mechanism required more deliberations and expressed hope that agreement would be reached on the issue in the next trilateral meeting to be held in India.

In addition, he said, it was also agreed that a project co-ordinator would be appointed to oversee implementation of the project.

Replying to a question about US pressure, Waqar said that President Musharraf and Prime Minister Shaukat Aziz had mentioned on a number of occasions that they would pursue this project keeping in view national interests.

"Pakistan's economy is growing, and to sustain six to eight percent growth rate, the country needs energy, and Iran is one of the major sources of energy", he added.

He said that the Turkmenistan-Pakistan-India gas pipeline project was also being pursued, as energy is needed from both sources.

In reply to a question about US pressure the Indian delegation head said that "there is no pressure from anyone. This project is necessary and important to fulfil our energy needs".

About the UN sanctions, Indian Petroleum Secretary said, "We have crossed the bridge to meet our energy needs".

Pakistan Secretary said, "It is quite hypothetical." And the Iranian head said that Iran was not under such pressure.

Waqar said that essentially the project is trilateral, but if India quits, then it would be bilateral. "We are pursuing it parallel in bilateral or trilateral ways," he added.


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Wednesday May 24, 2006

ISLAMABAD: Federal Minister for Commerce Mr. Humayun Akhtar Khan said that while Pakistan is working towards attaining full dialogue partnership with ASEAN, it continues to engage bilaterally with key ASEAN economies. 
Mr. Humayun Akhtar Khan was talking to local journalists in Singapore after meeting with Singapore President. 

The two discussed matters of mutual interest with the focus on trade and commercial relations between Pakistan and Singapore. 

Humayun Akhtar explained that while Pakistan is working towards attaining full dialogue partnership with ASEAN, it continues to engage bilaterally with key ASEAN economies. He said Pakistan is negotiating Free Trade Agreements with China, Singapore and Malaysia, Early Harvest Programme which China is already in place. Till this time that Free Trade is not fully practiced, preferential Trade Agreements will play a great role for Pakistan, the Commerce Minister added. 

The Minister said that Government of Pakistan is working hard to offer a preferential playing field and it is for the exporters to reach out. Similarly, the investors have to come out and access the opportunities made available to them in Pakistan. 

The Minister for Commerce is visiting the state city of Singapore to attend the Conference of Regional Envoys of Pakistan being held to brain storm and evolve a strategy for promotion, trade diplomacy and investment promotion. The focus of this Conference is on ASEAN and on China.


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Wednesday May 24, 2006 

KARACHI: Indus Motor Company (IMC) has assured the standing committee that the production of company has been increased and further production capacity enhancement plans are being made. Delivery times of several cars have already come down to 30-45 days. 
The meeting of Standing Committee on Production held on Tuesday in Indus Motor Company Limited under the Chairmanship of Malik Niaz Ahmad MNA to discuss the issue pertaining to Local Automobile Industry in Pakistan. 

MNAs Rifftat Javed, Saeed Ahmad, Nasim Gul Afridi, Sher Muhammad Baloch, Fehmida Mirza Azhar Ahmad and Muhammad Aslam Bodla were present in the meeting. 

The Management of Indus Motor Company Limited briefed the Committee about the process of the manufacturing of cars and highlighted issue of Local Automobile Industries in Pakistan. The committee assured the management to consider the issue regarding imports of used cars sympathetically to sustain the local Automobile Industry. 

The committee recommended that the local Automobile Industry might be encouraged to boost up the production and to meet the local demands.


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## Neo

Wednesday May 24, 2006 

ISLAMABAD : The Annual Plan Coordination Committee (APCC) on Monday decided to forward next yearÃ¢â¬â¢s Public Sector Development Programme (PSDP 2006-07) of Rs350 billion for approval by the National Economic Council along with a request to boost its size to meet some provincial demands. 

In addition, an amount of Rs15 billion would be set aside to set up the Khushal Pakistan Fund and Rs10 billion more for the first and second phase of the Khushal Pakistan Programme, swelling the size of the KPP to Rs25 billion for district level schemes. 


But Dr Akram Sheikh, deputy chairman of the Planning Commission said that PSDPÃ¢â¬â¢s size would become clear on Tuesday when final calculations would be made after prioritising various schemes cleared at the APCC meeting, keeping in mind overall resource availability. 


It was the first time that the APCC did not discuss the current yearÃ¢â¬â¢s annual plan or next yearÃ¢â¬â¢s projections for macroeconomic framework, including growth rates, although both were leading items on its agenda. 


Dr Sheikh said the annual plan and the macroeconomic framework would be finalised by the National Accounts Committee before being presented to the National Economic Council (NEC) for approval. 


Of the Rs350 billion, Rs100 billion would be allocated for ongoing provincial projects. 


The sources said the final size of the PSDP might be as high as Rs400 billion as some of the projects had been included in the development programme on recommendations of the president and the prime minister at the NEC level. 


The APCC also approved Rs42 billion for water sector projects, including Rs5 billion for acquisition of land for five major dams. 


Dr Sheikh refused to allow inclusion of additional segments of the Subakzai dam and said the project was being deliberately delayed and he would brief the president and the prime minister on it so that people responsible for delaying the project could be taken to task. 


Dr Sheikh said that he had urged the meeting participants to seek smaller allocations for new projects because new projects took a lot of time to take off, adding that new projectsÃ¢â¬â¢ utilisation rate was only 18 per cent in the first year against 50 per cent of ongoing projects. 


NWFP Minister for Finance Sirajul Haq protested over deletion of 11 road projects of the National Highway Authority from the next yearÃ¢â¬â¢s PSDP. 


He said that the deputy chairman had agreed to accommodate NWFP road projects in the next yearÃ¢â¬â¢s development programme. 


M.A. Jalil, Sindh Chief MinisterÃ¢â¬â¢s Adviser on Finance, said the centre would no longer provide funds for provincial projects, adding that the funds would be diverted for development of big reservoirs and centreÃ¢â¬â¢s direct projects in the provinces. 


He said the centre used to fund provincial projects on 50:50 basis. However, the ongoing provincial projects and those already approved by the ECNEC and CDWP would continue to be funded by the federal government. 


He said he had taken the stand that provincial projects announced by the president and prime minister from time to time should be fully funded by the federal government because the province did not have enough fiscal space to provide funds for federal projects. The centre agreed, he said. 


He said he criticised the National Highway Authority for not initiating any new road development projects while having collected toll tax for many years. He said the Planning CommissionÃ¢â¬â¢s deputy chairman had agreed that funds for approved projects should be provided without any delay. 


Sources said that Sindh and Punjab had criticised Wapda and the Ministry of Water and Power over power breakdowns and for not taking them into confidence about village electrification. 


Dr Akram Sheikh directed Wapda and the power ministry to assess village electrification needs in consultation with provincial governments. 


Wapda authorities informed the APCC that there would be no addition in power generation capacity over the next five years and the country currently faced a shortage of six per cent and 12 per cent in domestic and industrial power supply, respectively. 


SindhÃ¢â¬â¢s representatives also criticised Wapda for discouraging a Chinese company from investing in the Thar coal project as it did not agree to pay more than 5.4 cents per unit power generation against a demand of 5.7 cents but later agreed to over seven cents per unit for wind energy. 


Dr Akram Sheikh said he had been disappointed by the water and power ministryÃ¢â¬â¢s attitude towards alternate sources of energy and asked Sindh to prepare a case which he would personally take up at the higher forum for punitive action. 


Dr Sheikh also criticised the petroleum ministry when a senior joint secretary of the ministry failed to inform the APCC about separate survey needed for identification of mineral deposits. 


At this, he said the project for satellite geological survey, an aerial magnetic survey and other surveys for mineral exploration should be launched immediately to attract international investors and said a case be submitted for the NEC in which he would seek punitive action against the petroleum ministryÃ¢â¬â¢s inefficiency.


----------



## Neo

Wednesday May 24, 2006 

RAWALPINDI : The rail services between Rawalpindi and Lahore have now been further expanded with the addition of a new non-stop express train between the two cities. The new train named Ã¢â¬ËMargalla ExpressÃ¢â¬â¢ was inaugurated by Federal Minister for Railways Sheikh Rashid Ahmad at the Rawalpindi Railway Station on Monday. 

The minister pledged to enhance and improve travelling facilities for the passengers. He said the government was making efforts to create better working conditions for the railway staff. 


Margalla Express, having the latest Chinese coaches, will cover a distance of 280km between Rawalpindi and Lahore in approximately four hours. 


According to schedule, the train will depart from Rawalpindi at 7am every morning to reach Lahore at 11am and leave Lahore at 6pm to reach Rawalpindi at 10pm. 


There are now four train services available between Rawalpindi and Lahore in a day. Out of these, two trains are non- stop and the other two have stopover at designated stations, said an official of Pakistan Railways.


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## Neo

Wednesday, May 24, 2006 

* Aziz says oil refinery at Gwadar, pipeline to Western China, would quicken oil import for Beijing 
* Says nuclear energy technology cooperation expanding

ISLAMABAD: Pakistan and China are considering a feasibility study for an oil pipeline from Gwadar port to Western China to transport ChinaÃ¢â¬â¢s oil imports from the Gulf, Prime Minister Shaukat Aziz said on Tuesday.

The Gwadar and Karachi ports offer the shortest access to the Arabian Sea for Western China, as well as Central Asia, Aziz said at a seminar on 55 years of Pakistan-China relations, organised by the Institute of Strategic Studies.

An oil pipeline from Gwadar to Western China would greatly reduce the time and distance for oil transport from the Gulf to China, he said. A major oil refinery at Gwadar would further facilitate ChinaÃ¢â¬â¢s oil imports.

Pakistan is now in a position to exploit its strategic location at the crossroads of South Asia, Central Asia and West Asia to promote Ã¢â¬Åcorridors of cooperationÃ¢â¬Â including oil and gas pipelines, electricity grids, and transit trade, the prime minister said. He said the Karakorum Highway would soon be upgraded so it could remain open all year round. 

The prime minister said the two countries were also expanding cooperation in nuclear energy and space technology. Ã¢â¬ÅA significant area of cooperation between Pakistan and China has been the harnessing of nuclear technology for peaceful purposes under international safeguards - for the production of electricity,Ã¢â¬Â Aziz said. Ã¢â¬ÅThe two countries are working towards further expanding cooperation in this area.Ã¢â¬Â

Pakistan and China have always pursued their friendship for mutual benefit and never at the cost of any other country, Aziz said. Ã¢â¬ÅWe have not sought hegemony nor shall we accept hegemony from any quarter. Our relationship is designed to promote security and cooperation with out neighbours as well as with our global partners,Ã¢â¬Â he said.

Ã¢â¬ÅOur relations are not designed to be used against any third country. We do not subscribe to concepts such as balance of power, pre-emption and unilateralism. We believe in strengthening the United Nations system to address and resolve all regional and global issues,Ã¢â¬Â he said.

Aziz said both countries seek a level playing field without trade barriers and tariff walls and Pakistan would welcome greater Chinese investment in its economy, particularly in infrastructure, telecommunication, energy, IT, construction, mining and textiles.

Answering questions, the prime minister said the biggest challenge facing the Sino-Pak relationship was to create new areas of cooperation and sustain their friendly relations.

He said Central and South Asian cooperation was imperative for the economic growth of the two regions. Stability in Afghanistan was vital to enhancing ties between the two regions vital. Pakistan is already negotiating with some Central Asian countries to create links for electricity import, he said.


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## Neo

Wednesday, May 24, 2006 

* Overseas remittances of $3.269b received in the same period, showing an increase of 5.6%

By Arshad Hussain

KARACHI: The government has achieved its full-year foreign direct investment (FDI) target in 10 months, touching a new record level of $3.376 billion in April 2005-06. 

The total FDI is up by 228 percent compared with the same period last year.

Despite the huge inflows on account of the FDI, privatization proceeds, earthquake relief fund, the level of foreign exchange reserves is not going up, a senior banker said. 

The countryÃ¢â¬â¢s total foreign exchange reserves now stand at $13.2 billion, equivalent to only three monthsÃ¢â¬â¢ import bills. 

A web site of the State Bank said here on Tuesday: Ã¢â¬ÅThe country has received a direct investment of $3.020 billion and portfolio investment of $355 million during the current fiscal. In the same period last year, the total FDI had stood at $1.027 billion, including portfolio investment of $136 million.

Ã¢â¬ÅThe government has raised around $1.1 billion from the sell-off of Pakistan Telecommunication Company (PTCL) and $800 million from Global Bonds sale during the current fiscal,Ã¢â¬Â market experts said. 

The portfolio investment has also gone up by 162 percent or $220 million to $255.8 million in July-April 2005-06 against $135.5 million in the same period last year.

Investments in all the local bourses have been on a declining trend since March this year, a market expert said. The Netherlands and Switzerland have pulled back their investments from the countryÃ¢â¬â¢s stock markets, he added.

Ã¢â¬ÅThe local bourses are receiving an average inflow of $40 - $50 million per month,Ã¢â¬Â the analyst said. The inflow coming from the USA was continuously soaring up till April this year. The portfolio investment from the USA stood at $331.5 million in first 10 months compared with $24.5 million in the same period last year, the SBP data said.

The portfolio investment from the USA has gone up in the bourses only, while the United Kingdom, Germany, Japan, Netherlands, Switzerland, and others European countries have pulled their investment back in last few months.

The direct investment has jumped over 238 percent in the first 10 months of the current fiscal to $3.020 billion in 2005-06, compared with $891 million in the same period last year, the data said. 

Direct investment of the USA in Pakistan has gone up by 109 percent to $4.19 million in the July-April this year against $201 million in the same period last year, while the same investment of the UK went up by 0.5 percent to $151.4 million in first 10 months from $150.9 million.

The direct investment of the UAE shot up to $1.284 billion in the first 10 months of the current fiscal owing to the inflows of the privatization proceeds. Last year the investment of the UAE stood at only $69 million.

The investment from Saudi Arabia has jumped to $273 million in July April this year compared with only $13.5 million in 10 months last year.

Direct investment of the UK, Australia, Saudi Arabia, the UAE, the USA, the Netherlands, South Korea, Singapore, China, Australia and Switzerland has surged in Pakistan. The overseas Pakistanis remitted an amount of $3.629 billion to the country during the first 10 months of the current fiscal, up 5.16 percent compared with the July-April 2004-05.

The countryÃ¢â¬â¢s trade deficit has gone up to $9.42 billion in first 10 months of the current fiscal, which is an alarming situation.


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## Neo

Wednesday, May 24, 2006 

To okay PakistanÃ¢â¬â¢s participation in Global Mapping Project:

Federal cabinet may ratify Montreal Convention today

* The Convention is an accord that establishes a liability regime for international air transportation of commercial goods

By Sajid Chaudhry

ISLAMABAD: The federal cabinet is expected to ratify the Montreal Convention and will approve PakistanÃ¢â¬â¢s participation in the Global Mapping Project on Wednesday, an official told the Daily Times on Tuesday.

The cabinet will meet under the chairmanship of Prime Minister Shaukat Aziz and will take up an 18-point agenda. 

The National Transport and Trade Facilitation Committee of the Ministry of Commerce is in the process of completion of adoption of international legislations on trade and transport. To meet the Montreal ConventionÃ¢â¬â¢s international obligations, the federal cabinet had already approved the Carriage by Air Act for the country to streamline the national legislation in line with the said convention. 

An official said on November 4, 2003 rules for the Convention for the Unification of Certain Rules for International Carriage by Air were notified and the Montreal Convention was signed in Montreal in 1999. The Montreal Convention came into force in Canada through amendments to the Carriage by Air Act.

The Montreal Convention is an international agreement that establishes a liability regime for international air transportation of commercial goods and streamlines documentation procedures for air cargo by encouraging the use of automated information systems.

The Montreal Convention updates and modernizes the Warsaw Convention of 1929, a widely recognized set of international rules governing the liability of an air carrier in the event of the death or injury of a passenger, loss of baggage or cargo or delay during international air transport.

The Montreal Convention preserves many aspects of the Warsaw Convention, but features a new two-tier system of determining carrier liability for the death or injury of passengers in the event of an accident. This will allow for faster and less costly resolution of legal actions should an accident occur.

Under the first tier of the two-tier system, the carrier assumes absolute liability for all claims valued up to 100,000 Special Drawing Rights (SDR) - a currency conversion measure used by the International Monetary Fund, where one SDR is equivalent to approximately $.52. However, under the second tier, carriers can mount a legal defence against any claims above 100,000 SDR.

The coming into force of the Montreal Convention also means that: carriers must maintain adequate insurance to cover their potential liability, legal action for damages can be initiated in Canada for Canadians involved in accidents while travelling outside of Canada, as long as the carrier in question is active in Canada, and carriers are authorized to simplify and modernize documents such as electronic tickets for passengers and waybills for cargo. 

The cabinet will also approve PakistanÃ¢â¬â¢s participation in the Global Mapping Project that calls for an action programme for addressing global environment challenges to support sustainable economic development as resolved at the United Nations Conference on Environment and Development held in 1992. 

The Global Mapping Project Steering Committee had clearly announced that geographically-specific spatial information is critical to understand the current status of global environment and monitoring changes. To this end, in 1992, JapanÃ¢â¬â¢s Ministry of Land, Infrastructure and Transport began to advocate the Global Mapping concept. The fundamental basis of this concept is to develop global-scale geographic information through international cooperation.

PakistanÃ¢â¬â¢s participation in the said project will enable the country to improve the enviornmental conditions for economic development on sustainable basis.


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## Neo

Wednesday, May 24, 2006 

KARACHI: Consortium partners, the successful bidders in the privatization of Pakistan Steel Mills (PSM) agreed to go ahead with the investment plan of around $250 million for revamping and expansion of the mills upto 1.5 million tones per annum.

The consortium members, Al-Tuwairqi group (ATG), Magnitogorsk Iron and Steel Works (MMK) and Arif Habib group at a meeting on Tuesday decided to complete phase I of the investment plan within a maximum period of two years. 

They said Dr Hilal Hussain Al Tuwairqi, chairman ATG would be the first chairman of the board of directors of Pakistan Steel post privatization.

They decided the composition of the board of directors of PSM, management structure and feasibility of various options to take production capacity of company together with Tuwairqi Steel Mills Limited upto five million tones per annum in phase II and phase III.


----------



## Neo

SINGAPORE: Pakistan, looking to export wheat for the first time in more than two years, is confident it will sell some of its surplus grain to its long-time rival, India.

A revival in commodities trade between the two neighbours got a boost last year after Pakistan opened its door for Indian sugar for the first time in many years.

And now with Pakistan gearing up to harvest a larger wheat crop than last year, Islamabad is hopeful that it might succeed in striking export sales to India, which is looking to import the grain for the first time in six years to rein in its domestic prices.

Ã¢â¬ÅWe will have exportable surplus this year and India is in need of wheat. We will also bid for it,Ã¢â¬Â Fahim Akhtar Khan, managing director for the state-run Pakistan Agricultural Storage and Services Corporation Ltd, told Reuters in an interview.

The views of Khan found support from traders and analysts who said that India might consider buying from a variety countries as suppliers in Australia and the United States say Indian specifications for wheat were too stringent.

Ã¢â¬ÅI know the two countries are talking to do some business,Ã¢â¬Â said one Singapore-based industry official.

India has floated a tender to import three million tonnes of wheat but it has received only eight bids totalling 2.68 million tonnes.

Khan added the Pakistani government would decide by the middle of next month how much grain the country would be able to offer for overseas sales.

Ã¢â¬ÅWe are expecting a good crop this year and we also have more than two million tonnes of carryover stocks. After meeting domestic demand, we will still have some surplus,Ã¢â¬Â he said.

Pakistani farm ministry officials earlier this year said that the country would harvest 20.5 million tonnes of wheat but Khan said favourable weather conditions and water availability might help the country harvest a crop close to 22 million tonnes.

Pakistan produced 21.5 million tonnes of wheat last year. Pakistan banned wheat exports in May 2004. Before the ban, it found markets in the Middle East and Africa, exporting 1.7 million tonnes in the fiscal year ending in June 2003.

Ã¢â¬ÅWe will also be eyeing the Middle East to export some wheat,Ã¢â¬Â Khan said. Ã¢â¬ÅItÃ¢â¬â¢s difficult to say now at what levels we might be able to offer in international markets.Ã¢â¬Â

On Monday, wheat futures at the Chicago Board of Trade touched 3-1/2-year highs after the Kansas City wheat market hit its highest price in a decade on hot and dry weather on the U.S. Plains. 

The July contract rose 10 cents to close at $4.26 per bushel, after reaching $4.28, above the previous contract high of $4.27.


----------



## Neo

RAWALPINDI (updated on: May 25, 2006, 21:50 PST): President General Pervez Musharraf on Thursday underlined the importance of public sector development programmes in setting pace for rapid socio-economic uplift of common man across the country, saying sustained increase in allocations for the PSDP would provide employment to people and improve quality of life.

The President stated this during a meeting with Prime Minister Shaukat Aziz, who called on him and discussed various national and international issues including socio-economic development, and measures to offset price-hike impact on the common man in the forthcoming financial year. Describing PSDP as a vital factor in terms of transferring benefits of economic growth, President Musharraf said increased allocations for the public sector projects have been possible due to sustained improvement in all areas of the national economy in the last six years.

In this respect, he referred to substantial increase in the annual PSDP allocations and observed that a series of mega projects, commenced since then in water, energy, communication and health sectors, are nearing completion.

These projects are poised to play an important role in maintaining the country's high economic growth by providing employment and reducing poverty, he added.

"We have to maintain that upward trend through sustained focus on both mega projects as well as local development schemes - these would accrue benefits at grass roots level and greatly help in developing our human resource potential through better quality of health, education, energy and communication facilities," he said, reiterating his commitment to provision of safe drinking water, electricity and natural gas to the entire populace.

The President and Prime Minister expressed satisfaction at the state of the national economy and said improvement in revenue generation; increase in exports and a record inflow of foreign direct investment speak of continuing momentum of growth.

The President and the Prime Minister also discussed ways to offset inflationary impact on common man and observed that inflation is a result of gap in demand and supply due to high economic growth soaring international oil prices.

Prime Minister Shaukat Aziz briefed the President about his recently concluded visits to Indonesia, Greece, Morocco, Libya and Egypt, his participation in multilateral forums including D-8 conference and World Economic Forum and his bilateral meeting with foreign leaders.


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## Neo

ISLAMABAD (updated on: May 25, 2006, 20:19 PST): Pakistan and Iran on Thursday decided to establish a Joint Investment Company to be based in Karachi with a capital of US$ 25 million to promote trade and economic relations between the two countries.

Foreign Minister Khurshid Mahmood Kasuri and his Iranian counterpart Manouchehr Mottaki took the decision during a meeting here at the Foreign Office.

The Iranian Foreign Minister conveyed his country's determination to join Pakistan in the expansion of the road and railway infrastructure between the two countries. He said that Iran had decided to establish a branch of Iranian Melli Bank in Karachi.

The two Foreign Ministers also discussed other aspects of bilateral relations and reviewed regional developments, including the situation in Iraq and Afghanistan, as well as other international issues of mutual concern.

They discussed further measures to promote regional co-operation within the Economic Co-operation Organisation (ECO), of which both countries are founding members.

The Iranian Foreign Minister is leading a delegation to the 16th session of the Iran-Pakistan Joint Economic Commission in Islamabad.

Mottaki conveyed to Kasuri the Iranian decision to ratify the Preferential Trade Agreement (PTA) which was signed by the two countries in 2005.

The PTA will contribute to expansion of bilateral trade and enable the two countries to meet the target of US$ 1 billion in annual turnover.

Foreign Minister Kasuri welcomed the Iranian decision and felt that it would go a long way in achieving the old vision of RCD, which has now been adopted by the ECO.

On the Iranian nuclear issue, Foreign Minister Kasuri said that Iran has rights and obligations, being a signatory to the NPT. He said Pakistan has adopted a principled position on this issue.

He reiterated Pakistan's established position, saying that the issue should be resolved through diplomatic means alone. He added that resort to coercive methods would only endanger regional security and stability.

Kasuri underlined the need for flexibility by all sides to achieve a mutually acceptable solution to the issue.

Mottaki invited Foreign Minister Kasuri to visit Iran and he accepted the invitation.


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## Neo

ISLAMABAD (updated on: May 25, 2006, 23:23 PST): Visiting Iran's Foreign Minister Manouchehr Mottaki on Thursday in talks with Petroleum Minister Amanullah Khan Jadoon reviewed progress on ongoing negotiations on Iran-Pakistan-India (IPI) Gas Pipeline Project.

Both sides agreed there existed immense potential and scope for further collaboration in oil and gas sectors for mutual advantage, a Petroleum Ministry statement said.

They appreciated progress and understanding achieved by Joint Working Group on $7 billion IPI gas pipeline project in last couple of months.

It was felt this multi-billion dollar IPI project would bring two brotherly countries further closer. Both sides reiterated their leadership was looking forward to early implementation of mutually beneficial project.

They hoped modalities pertaining to gas pricing issue will be worked out to arrive at mutually acceptable formula which is pre-requisite to make the project economically viable.

Jadoon said to meet ever increasing energy demand in Pakistan, import of natural gas and LNG from neighbouring countries was only viable option for the government to cope with the situation. He invited Iran's investors to participate in Pakistan's LNG and coastal refinery projects.


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## Neo

KARACHI (May 25 2006): While Aero Asia aircraft remained grounded for the third day on Wednesday, Shaheen Air International (SAI) was cleared by Civil Aviation Authority (CAA) to resume its domestic and international operations from 1500 hours.

The clearance letter was issued by CAA following receipt of the cheque from SAI towards payment of the outstanding dues to the satisfaction of CAA.

Aero Asia, on the other hand, was insisting that domestic private carriers should be treated at par with the national carrier, PIA, a position not acceptable to CAA.

Aero Asia's stand is that since PIA is allowed a 45 days' credit facility, the same period be allowed to other private carriers as well, instead of the suggested 15 days' time period.

CAA's argument is clear. It says that PIA is owned to the extent of 88 percent by the government, which also provides guarantee, whereas, in the case of private carriers, no such guarantee is available. It, therefore, can not be treated equally on this count with PIA. The government does not provide any such guarantee in the case of private airlines, a CAA spokesman told Business Recorder here on Wednesday.

CAA believes that some private airlines purposely allow their outstanding amount to pile up and when the amount becomes too large they ask for easy instalments pay off their dues.

But, this time they were caught on the wrong foot. The tone and temper displayed by CAA negotiators indicated that they meant business and were in no mood to show any leniency in recovering the due amount, said an insider. SAI representatives were, however, quick in realising the gravity of the situation and made the payment as desired by CAA.

Aero Asia, it appeared, was waiting for the return of defence secretary from abroad to plead its case before him. According to CAA spokesman, SAI's initiative in making the payment had weakened the case of Aero Asia and the defence secretary may find it difficult to be convinced of its arguments.

Needless to mention, it was the defence secretary who in July last year had shown good gesture in allowing the private carriers to operate on foreign routes of their choice, but so far they have failed to oblige him. Their failure confirms the belief that they lacked the resources to accept the challenge.


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## Neo

KARACHI (May 25 2006): Sindh Senior Minister for Excise and Taxation Syed Sardar Ahmed has said that law and order situation in Sindh was better than before. He stated this while talking to a Japanese delegation led by Deputy Consul General S Kawai and vice-consul (Political and Economy) T Koyama, which met him here on Wednesday.

He said due to improved law and order, foreign investors were showing interest for investment in Sindh. The Japanese delegation assured of pursuing the Japanese investors for making investment in Sindh.

In order to attract investors, he informed the government was providing them land and other incentives. He assured that Japanese investors would be provided all facilities and protection, whether at the federal or provincial level.

Speaking about political situation in Sindh, Sardar Ahmed informed there had been coalition governments here previously also and in every government coalition partners do have their own reservations as well as differences. He said that differences were removed through dialogue and in present political situation also, the dialogue process was going on.

Regarding MQM, the Senior Minister said that it was the party of the poor and common man. In the party, discipline was given special consideration while the Rabita Committee took decisions about the public reservations.

He told the visitors that Nazims and Naib Nazims in Karachi and Hyderabad belonged to MQMs common men. In both cities, mega projects were in final stages of completion under their supervision. Similarly, MQM ministers too were working day and night for accomplishment of various projects.

He said MQM's all out efforts were aimed at conveying basic facilities to the people in Sindh and at national level and it is for that reason of its popularity among the masses.


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## Neo

ISLAMABAD (May 25 2006): Japanese government extended a grant of 44.3 million dollar approximately for two projects, improvement of Kararo-Wadh Section of National Highway N-25 in Balochistan and Enhancement of Training Capabilities of Construction Machinery Training Institute (CMTI).

A press release of Japanese Embassy stated that Japan would remain a strong development partner as long as Pakistan strives towards the goal of a democratically free society and economy.

For the improvement of Kararo-Wadh Section of National Highway N-25, the Japanese Government will extend about 36.3 million dollar. National Highway N-25 is an important 813km link-road connecting Karachi to Chaman via Quetta.

The N-25 is growing in importance as an international highway linking Afghanistan and neighbouring inland countries to the port of Karachi by the shortest route.

The current plan is to improve 96 km section between Kararo and Wadh which is very narrow, has poor visibility, steep inclines and sharp curves that drastically slow down the progress of large vehicles.

The project involves widening of the road to 7.3m, formation of road shoulders extending 2m on both sides as per Asian Highway Standards, construction of cross drainage structures/bridges with proper installation of traffic signs, guard rails and other road safety measures.

The project will ensure a safe and smooth thoroughfare in the concerned section by averting obstruction of traffic due to accidents or the collapse of antiquated infrastructures.

The second grant for training of CMTI is approximately 8 million dollar that is part of Japan's Country Assistance Programme for Pakistan on priority, aimed to support Pakistan's efforts to develop human resources in pursuit of reviving the economy and reducing poverty.

Japan plans to accomplish this project with facilitating in three areas. It will deliver the project's main components that include construction machinery for training purposes such as bulldozers, hydraulic excavators, motor graders and crane simulators.

Besides this, the equipment for implementing training courses like computers for CAD/CAM and for general purpose would be provided. Construction of infrastructure facilities such as building of a new campus, accommodation for trainees and a canteen are also part of the project.

These projects will not help in the economic uplift only of the targeted area but are expected to bring enormous long term economic benefits to the entire country. Japan is also termed as the largest bilateral donor to Pakistan.


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## Neo

ISLAMABAD, May 23: Five British trade missions will visit Pakistan this year to explore business opportunities in Pakistan, British High Commissioner in Pakistan Mark Lyall Grant said here on Tuesday.

Speaking at the launching ceremony of the UK land investments group here, he pointed out that the trade missions that visited Pakistan last year also had the representation from the group.

He said the United Kingdom was the single largest investor in Pakistan, with 80 British companies operating in the country.

The British envoy said the opening of the UK land investments group in Islamabad was a sign of excellent bilateral relations between the two countries.

The business development director of the group for Asia Majid Khan said the group operations would be expanded to other major cities of Pakistan, including Lahore, Karachi, Sialkot, and Faisalabad.

He said the group would offer individual investors in Pakistan the opportunity to invest in prime, undeveloped land in the UK with a view to achieving high returns in a stable economic market with the added security of a legal freehold ownership.

The group was established three years ago and was today the UKÃ¢â¬â¢s largest land investment company with thousands of acres of land under its direct ownership and careful management satisfying a growing international client-base of 25,000 investors.

For the first time the Pakistani investors were being provided with the opportunity to diversify their investment portfolio through an international company based locally, the group director added.

He said that the group would not stop at only offering investment opportunities in the UK, but had formulated a dynamic second phase expansion to its latest Asia office by earmarking an initial investment of 10 million pounds in local mixed development projects.

He said that a joint venture consortium established by the group here had already launched an aggressive bid for one of PakistanÃ¢â¬â¢s latest mixed development venture.


----------



## Neo

The expected rise in Pakistan's development spending when the next budget gets announced in less than two weeks, marks nothing of a substantial nature in changing Pakistan's economic future.

For years, the country has seen developmental spending rise every year amid much fanfare and a renewal of official commitment to give more to the poor and the needy. But each time such an announcement is made, there's another stark reality which has usually come to surface. 

Typically, the developmental spending for financial year just ending has usually been below target.

Pakistan's poor and the needy have unfortunately become the victims of a grave distortion. On the one hand, there is much evidence of brick, mortar and concrete being poured to create new structures such as buildings for schools, hospitals and other social facilities. But on the other hand, such structures have often been run badly, giving little joy to the end users.

As neglect has become all too pervasive across such structures which are meant to serve the needs of the poor and the needy, a parallel structure has emerged which is backed by the private sector. 

Expensive schools, hospitals and other facilities offered by private developers and promotes however are much too extravagant to remain out of reach of those among the lowest earning members of the Pakistani society. 

Ultimately, what has emerged is a growing gap between the rich and the poor, the haves and the have nots. In a sense, Pakistan has fast become a land of two lands one for the rich, the other for the poor and the needy.

New facilities

Its nor surprising that such an increasingly distorted economic and social divide gives way to grounds for militancy and the spread of continuing uncertainty. 

As Pakistan's planners head towards unveiling another budget, amid fanfare frequently seen before, the medium to long term consequences on the way that Pakistan is being developed can not be easily ignored.

Alternatively, Pakistan can be far better served if its leaders and planners could reconcile themselves with a reality never acknowledged before. 

For a change, the country's interests could be served much better if there were fewer plans for the development of new facilities and precious resources poured in to reforming existing structures for social services.

Rejuvenation

In the long run, rather than brick and mortar, Pakistan and Pakistanis would have reason to celebrate a rejuvenation of what exists in Pakistan but has always been under utilised and badly run. 

Such a rejuvenation can eventually work towards filling the gap by way of social services that has so far been filled only with half success by service providers from the private sector. 

Pakistan's new budget may not be as relevant as a badly needed change in mindset which is long overdue.

Ultimately, its this kind of rejuvenation which can help to lift the prospects for business and industry by not only helping to fulfill their needs for badly needed human resources. 

Much more relevant is indeed the issue that a country where basic needs are provided must eventually turn away from militant trends which is so central to overall stability.


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## Neo

ISLAMABAD, May 24: Reduction in major cropsÃ¢â¬â¢ output and lower than expected industrial performance overshadowed PakistanÃ¢â¬â¢s modest 6.6 per cent gross domestic product (GDP) growth rate during the current year, below the target of seven per cent.

Services sector, with its impressive 8.8 per cent growth, lifted the otherwise faltering economy on the back of massive profits of the banking industry that offered nothing to depositors but earned billions of rupees in interest on depositorsÃ¢â¬â¢ money. Last year, the GDP had grown by 8.4 per cent.

Official data showed that financial and insurance sectors recorded a monumental 23 per cent growth rate against the yearÃ¢â¬â¢s target of just 6.7 per cent. The services sectorÃ¢â¬â¢s performance was the best since 2003-04.

Next yearÃ¢â¬â¢s targeted growth in GDP and other macroeconomic indicators was finalised at a meeting of the National Accounts Committee, attended by federal and provincial government officials here on Wednesday, sources in the finance ministry told Dawn.

The agriculture sector, with a GDP share of about 23 per cent, grew by a nominal 2.5 per cent against a target of 4.8 per cent for the current year and against 7.5 per cent agricultural growth achieved last year.

Major cropsÃ¢â¬â¢ output posted a reduction of 2.3 per cent against a target of 6.6 per cent growth fixed for the current year and against 17.5 per cent growth achieved last year.

The depressing performance of industrial sector, with a GDP share of about 18 per cent, was broad-based during the current year.

The industrial sector grew by six per cent during the current fiscal year against a target of 9.5 per cent and last yearÃ¢â¬â¢s actual growth rate of 10.2 per cent.

The overall manufacturing sector grew by a lowly 8.6 per cent during the current year and much lower than targeted 11 per cent perhaps because of capacity constraints. Last year, the large-scale manufacturing (LSM) had posted a growth of 12.5 per cent.

The LSM posted a growth of just nine per cent during the current year against a target of 13 per cent and last yearÃ¢â¬â¢s growth of 15.4.

Small-scale and household manufacturing sector grew by an impressive 9.3 per cent in 2006-07 against a target of 7.4 per cent for the year. The performance of the sector was better than last yearÃ¢â¬â¢s 7.3 per cent.

The construction sector also posted a higher growth rate of 9.2 per cent during the current year against a target of 7.5 per cent and last yearÃ¢â¬â¢s growth of 6.2 per cent.

The services sector, with a GDP share of 52 per cent, has registered a broad-based growth of 8.8 per cent during the current year, against a target of 6.8 per cent and last yearÃ¢â¬â¢s increase of 7.9 per cent. Earthquake rehabilitation activities also contributed to the sectorÃ¢â¬â¢s growth.

The transport and communication sector grew by 7.2 per cent against a target of 5.8 per cent and last yearÃ¢â¬â¢s growth of 5.6 per cent.

Similarly, the wholesale and retail trade posted a growth of 10 per cent during the year against a budgeted target of 9.3 per cent but lower than last yearÃ¢â¬â¢s growth of 12 per cent.


----------



## Neo

ISLAMABAD 

May 24: Pakistan is the fifth largest milk producing country in the world as it produces 32 billion liters of milk annually, Pakistan's state-run news agency APP reported yesterday. 

According to official sources, the dairy sector represents 10.8 per cent of the GDP and 48.6 per cent of the country's agricultural GDP. 

The sources further said that whereas Pakistan was ranked the fifth largest milk producing country, only a small proportion of the total production of the milk was marketed and just 2 per cent of the total milk produced in the country was processed at the dairy plants in the country. 

They maintained that inadequate chilling facilities, increased energy costs, inefficient processing, costly packing and distribution were the main impediments to growth of the industry. 

They added that with the reduction or even elimination of subsidies to the agriculture sector by the West, the prices of milk products in the world are expected to rise and that Pakistan should make best use of the changed environment. 

However, for carving out a share in the world market in the milk-based industry, they said, Pakistan should have to follow an integrated approach from the improvements in the productivity per animal up to the domestic and final consumers. 

To achieve this objective, they said, the main focus should be on the quality controls, standardization of products, credible certification, and promotion of milk chilling at the village level.


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## Neo

WASHINGTON, May 24: Pakistan appears to have failed to benefit from economic benefits offered after the September 11, 2001 terrorist attacks which could have been used to build a solid economic base for the country, experts say.

PakistanÃ¢â¬â¢s strategic location often brings economic assistance for the country but so far no government seems to have benefited from these opportunities, speakers told a seminar in Washington.

One speaker, Manuela Ferro of the World Bank, described this as the Ã¢â¬Ëboom-to-bustÃ¢â¬â¢ pattern and wondered why Ã¢â¬ÅthereÃ¢â¬â¢s no corrective mechanism to prevent the re-emergencesÃ¢â¬Â of the imbalances that often push the country from Ã¢â¬Ëboom to bust.Ã¢â¬â¢

The main speaker, Mushtaq Khan, set the pattern for the discussion by examining the factors that led to a boom in the Pakistani economy after 9/11 and showed how PakistanÃ¢â¬â¢s economic planners once again failed to sustain this boom.

Mr Khan, Woodrow Wilson CentreÃ¢â¬â¢s Pakistan scholar for 2006 and CitibankÃ¢â¬â¢s country strategist, urged PakistanÃ¢â¬â¢s economic planners to Ã¢â¬Åstart easing off, control things a bit more and letÃ¢â¬â¢s just be a little cautious.Ã¢â¬Â

Shahid Javed Burki, a former finance minister and senior World Bank official, said economic policies of the present government made him Ã¢â¬Ëvery nervous.Ã¢â¬â¢

Andy Baukol of the US Department of Treasury expressed concern about the quality of spending in the Pakistani budget, Ã¢â¬Åtoo much going into spending and too little on education.Ã¢â¬Â

Mr Khan began his presentation with some historical details about PakistanÃ¢â¬â¢s Ã¢â¬Ëcheckered relationsÃ¢â¬â¢ with the IMF and how after the coup the Musharraf government dealt successfully with Ã¢â¬Ëa very strictÃ¢â¬â¢ IMF programme.

Ã¢â¬ÅWe delivered in a manner that perhaps we have never done before, very strong conditions but very useful,Ã¢â¬Â he said.

Then 9/11 happened, Pakistan received certain benefits in terms of debt scheduling, debt write-off, also some logistical support from the US government.

This, according to Mr Khan, led to Ã¢â¬Ëa very sharpÃ¢â¬â¢ change in monetary policies, which started in November 2002 and continues. Ã¢â¬ÅThe pace of credit expansion has been very rapid since then and it has not eased,Ã¢â¬Â he said. Explaining the implications of such a policy, he said: Ã¢â¬ÅOnce you have a lot of spending power in the economy, it leads to growth but there are also implications in terms of external deficit: the more you spend, the more you import Ã¢â¬â in PakistanÃ¢â¬â¢s case most of the increase in the external deficit is domestically driven.Ã¢â¬Â

The country, he said, was now dealing with another imbalance which is the credit or the liquidity money that has been injected into the system and is seen in places like real estate and stock market. Ã¢â¬ÅIf you want to take corrective actions now, it will be expensive in terms of financial and economic costs,Ã¢â¬Â he added.

Mr Khan warned that further increase in oil prices could have a very negative impact on the Pakistani economy because adequate arrangements have not been made to protect the economy against external shocks.

He felt that if something happened to increase the price of oil, Pakistan government will not be able to shelter retail consumers. Ã¢â¬ÅIf that happens then there are issues in terms of consumer demand and purchasing power,Ã¢â¬Â he warned.

Commenting on Mr KhanÃ¢â¬â¢s presentation, Mr Baukol of the US Treasury Department agreed that 9/11 brought cash inflow from remittances by affecting the Hundi system and this inflow allowed Pakistan to avoid some of the difficult choices they were facing.

After Pakistan joined the US-led war against terrorism, international monetary institutions like the IMF also softened their attitudes, Ã¢â¬Årequiring less of Pakistan than in the past.Ã¢â¬Â

He, however, pointed out that there were some weaknesses in the Pakistani economic system that did not get resolved. Ã¢â¬ÅOne of the key issues is the level of credit growth Ã¢â¬â which is higher than normal GDP growth Ã¢â¬â since credit growth is very, very rapid, so is the risk, especially if there is an external factor.Ã¢â¬Â

Mr Burki said that he felt Ã¢â¬Ëa fair amount of nervousnessÃ¢â¬â¢ about the quality of assets banks in Pakistan have acquired, such as automobiles, houses and credit cards. Ã¢â¬ÅThe central bank needs to watch the situation very carefully,Ã¢â¬Â he said.

Mr Burki said it was difficult to predict which way the country was heading. Ã¢â¬ÅThe Pakistani economy takes off when foreign assistance is available but the money is always used for consumption and not for creating assets Ã¢â¬â this government could have done better but did not Ã¢â¬â thereÃ¢â¬â¢s a reasonable probability that we are heading down again.Ã¢â¬Â

He said he was also nervous about the use of privatisation to fill the external gap. Ã¢â¬ÅIf investment came to the country by selling government assets then this should produce exports otherwise this will be a contingent liability for the government,Ã¢â¬Â he warned. Ã¢â¬ÅThereÃ¢â¬â¢s enough to worry about.Ã¢â¬Â


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## Neo

Thursday May 25, 2006 

KARACHI : A United Arab Emirates (UAE) based information technology (IT) firm is keen to invest Rs 600 million in the Internet solution project in Sindh province. A statement issued here on Wednesday said that the firm intends to come up with a massive investment in IT sector in Sindh. 

It said that in the first phase the company would invest Rs 600 million. The project would enhance the speed of Internet by 50 percent in Pakistan. The Managing Director of 'Eye2Eye' firm of Dubai, Faisal M Saleem, accompanied by company's Director Tahir Qureshi met with the Advisor to Sindh Chief Minister, Muhammad Noman Saigal in the latter's office. 


Noman said the government was according priority to promotion of information technology. "That is why many of the investors from the world have shown keen interest to invest in the IT sector in Sindh.


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## Owais

*Raise in PSDP allocation to create more jobs: Musharraf, Shaukat warn Kabul against accusations* 

RAWALPINDI (May 26 2006): President General Pervez Musharraf on Thursday underlined the importance of public sector development programmes (PSDP) in setting pace for rapid socio-economic uplift of common man across the country, saying sustained increase in allocations for the PSDP would provide employment to people and improve quality of life.

The President stated this during a meeting with Prime Minister Shaukat Aziz, who called on him and discussed various national and international issues including socio-economic development, and measures to offset price-hike impact on the common man in the forthcoming financial year.

Describing PSDP as a vital factor in terms of transferring benefits of economic growth, President Musharraf said increased allocations for the public sector projects have been possible due to sustained improvement in all areas of the national economy in the last six years.

In this respect, he referred to substantial increase in the annual PSDP allocations and observed that a series of mega projects, commenced since then in water, energy, communication and health sectors, are nearing completion.

These projects are poised to play an important role in maintaining the country's high economic growth by providing employment and reducing poverty, he added. "We have to maintain that upward trend through sustained focus on both mega projects as well as local development schemes - these would accrue benefits at grass roots level and greatly help in developing our human resource potential through better quality of health, education, energy and communication facilities," he said, reiterating his commitment to provision of safe drinking water, electricity and natural gas to the entire populace.

The President and Prime Minister expressed satisfaction at the state of the national economy and said improvement in revenue generation; increase in exports and a record inflow of foreign direct investment speak of continuing momentum of growth.

The President and the Prime Minister also discussed ways to offset inflationary impact on common man and observed that inflation is a result of gap in demand and supply due to high economic growth, soaring international oil prices.

Prime Minister Shaukat Aziz briefed the President about his recently concluded visits to Indonesia, Greece, Morocco, Libya and Egypt, his participation in multilateral forums including D8 conference and World Economic Forum and his bilateral meeting with foreign leaders.

*BR CORESPONDENT ADDS: *Country's top leadership also warned Kabul against accusing Pakistan of interference in Afghanistan's internal affairs saying the move could negatively impact the co-operative efforts against international terrorism.

The warning came jointly from President Pervez Musharraf and Prime Minister Shaukat Aziz as they met here for in-depth consultations that are said to have covered a number of other issues as well including the forthcoming federal budget.

Pakistan is bitter about Afghan President Hamid Karazai's recent assertion, followed by his ministers' that the Afghan Taleban keep returning to their country after receiving training in camps run by Pakistani agencies.

They also discussed various aspects of the ongoing talks with India and visits here by Iranian leaders.

The two, however, remained focussed most of the time on the forthcoming federal budget, which President Musharraf said should be people-friendly.

The Prime Minister Aziz is said to have informed the president of various proposals including raise in salaries of government servants and lowering of taxes and duties that he said would help a large segment of the middle class.

The president is said to have asked him to fix 20 billion dollars as the target for exports for the next financial year.


----------



## Owais

*CED on bank advances likely* 

ISLAMABAD (May 26 2006): The government is likely to impose central excise duty (CED) on the bank advances, including consumer loans, car and house financing to generate maximum revenue under the head of indirect taxes in the next financial year.

Sources told _Business Recorder _on Thursday that the Central Board of Revenue (CBR) has directed the Sales Tax Budget Wing to examine the possibility of levying excise duty on 'bank advances'.

Under the on-going exercise, the Board is also analysing the international practice regarding applicability of excise duty in different countries.

When contacted, tax experts said that UK and New Zealand are charging excise duty on the 'bank advances'. The 'bank advances' included working capital loans, term financing, consumer lending, car and house financing and credit cards. The proposal would increase substantial revenue on account of federal excise, as all the banks are now concentrating on personal financing in the shape of home loans, equipment loan, credit cards, car/home finances.

Particularly, the sector of consumer finances is growing at a very fast pace. It is easy for the CBR to administer the documented banking sector as compared to other non-documented sectors.

Experts claimed that if the government agrees with the proposal, the CBR might exempt the export-related financing from the federal excise duty (FED) levy. They were of the view the CBR is empowered to levy FED on services under the Federal Excise Act, 2005 without consulting the provinces.


----------



## Owais

*Manufacturers not willing to print rates on cement bags* 

ISLAMABAD (May 26 2006): The cement manufacturers, who earned all-time high profit during the previous months due to under-invoicing, are hesitant to print ex-factory price on bags, fearing that this step would open the doors for CBR to launch investigation against them.

Sources told _Business Recorder _that printing of ex-factory price on cement bags was the central point at the meeting between Industries Minister Jahangir Khan Tareen and the All Pakistan Cement Manufacturers Association (Apcma) held on May 18.

The cement manufacturers themselves had manipulated the prices, but shifted blame onto the middleman for high prices and now if they print ex-factory price on bags as was being demanded by the federal government, the CBR would tax them over the printed price, the sources added.

"Cement manufacturers were very touchy on the issue of printing price on bags, which they fear can open a new chapter of confrontation with the CBR," the sources maintained.

Apcma, however, had agreed to convey agreeable sale price to the industries ministry after consultations with other member factories, but till Thursday, they did not approach in this regard, the sources said.

Sources said the cement manufacturers were practically crying in the meeting over a timely action by one of the importers, who booked the order on telephone and intercepted a ship near Karachi, carrying cement for another country and got unloaded a substantial amount of the commodity.

They said there was a division among the Apcma ranks over price fixation as some of the members were willing to print price on bags while other differ with the suggestion.

Meanwhile, the industries ministry has formally included a clause in the Price Control Act, empowering provincial and district governments to check hoarding in their respective areas. According to the Act, the sources said, the hoarders would have to face three years imprisonment or Rs 100,000 fine in case of violating the law.

The government would not resume rebate on cement export to Afghanistan until cement manufacturers fix their price between Rs 285.00 and Rs 295.00 per bag in written on sustained basis, the sources added. When contacted for comments, the spokesman for the industries ministry, Tariq Bajwa, said that prices in different parts of the country have come to about Rs 300 per bag except, Karachi where construction activities were in full swing.

He, however, hoped that price in Karachi would further come down, as two ships, carrying imported cement have already berthed. Asked, why Apcma did not convey the agreed price to the industries ministry so far, the spokesman said the government's main purpose was to bring down prices below Rs 300 per bag which has been achieved through subsidised import and withdrawal of rebate on export.

Replying to another question, Tariq Bajwa confirmed that Apcma had expressed reservations over printing of price on bags fearing that it would create tax problems with the CBR. The price of cement in the twin cities of Rawalpindi and Islamabad was Rs 300 per bag on Thursday.


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## Owais

*Pakistan Steel privatisation completely transparent, PC submits before Supreme Court* 

ISLAMABAD (May 26 2006): The Privatisation Commission (PC) has submitted before the Supreme Court that the process of privatisation of Pakistan Steel Mills Corporation (PSMC) has been completely transparent and in accordance with the Ordinance and Rules framed in this regard and to the satisfaction of PSMC employees.

In a concise statement filed with the court by Syed Sharifuddin Pirzada, Senior Advocate, Supreme Court, the PC said that Pakistan Steel engaged in the manufacture of standard grades of steel and meets less than 25 percent of the domestic demand. The machinery installed at the plant is outdated and is operating at 50 percent of the design capacity and requires US $100 million injection for balancing, modernisation and replacement.

*PRE-QUALIFICATION: *The four parties who were disqualified did not meet the criteria in the Request for Statement of Qualification. These parties were given an opportunity to address the deficiencies in their SOQs. However despite the additional time given to them, they failed to comply with the requirements and hence were disqualified, say the respondents.

The PC claims to have followed a rigorous valuation process. It engaged an international investment bank, Citigroup Global Market Limited as the Financial Advisor (FA). The FA together with other advisors, that included a firm of chartered accountants A.F. Fergusons & Co an affiliate firm of PriceWaterhouseCoopers (accounting and tax consultants), Orr Dignam & Co (legal consultants) and Corns Consulting Ltd (technical consultants), carried out a detailed due diligence of PSMC. The due diligence findings were used to develop a comprehensive financial and valuation model.

*"VALUATION APPROACH: *Valuation of Pakistan Steel Mills Corporation (Pvt) Limited (PSMC) was conducted using the following valuation methodologies:

-- Discounted cash flow, using technical assumptions provided by consultants and discussions with PSMC management

-- Relative multiples valuation estimates, comparable company analysis

-- Precedent transaction analysis for steel sector companies on a global basis.

The above three are the standard and globally recognised methodologies to value businesses and companies as going concerns. Going concern essentially means that that a company will continue to operate indefinitely, and will not go out of business and liquidate its assets.

For this to happen, the company must be able to generate and/or raise enough resources to stay operational. The going concern has been the basis principle for valuing PSMC in line with international best practices and precedent privatisations in Pakistan.

Hence, the break-up value of PSMC's assets has not been used to determine the reference price. Valuing assets (such as land) on an individual basis to arrive at a consolidated value is relevant only if the intention is to break up PSMC and liquidate its assets. If the objective of privatising PSMC is to shut down PSMC, dismantle the plant and undertake an asset sale, then yes possibly valuation approach needs to be altered.

Only in such a situation would it be pertinent to look at the value of land and other assets separately. If such an approach is adopted, then one would also need to take into account all its direct and contingent liabilities and obligations as well.

More importantly, this approach would require that the social, economic and other financial costs associated with closing down the steel mill (displacement of 13,000 workers, loss of domestic production and increased reliance on imports for finished goods, closure of the only metallurgical institute in the country, cost of dismantling the plant, environmental clean-up etc) are also factored in.

PC is privatising PSMC on a going concern basis and therefore there is a need to value the worth of the business, which is essentially measured by its profitability. Therefore, valuing the land or assets separately is not appropriate.

Concerns that the new owner of PSMC would misuse the land and sell it as real estate are misplaced. First of all, the successful bidder comprises of companies such as Magnitogorsk Iron & Steel Works of Russia and Al-Tuwairiq Group of Saudi Arabia, who are both international steel companies. Hence, the sale of PSMC has been to strategic investors.

It is important to note that all non-core/excess land has been unbundled and 100 percent of retained land is in use by PSMC. In fact, bidders during the pre-bid meeting had highlighted that the land been retained within PSMC is not adequate to allow for an expansion.

It was decided that additional land required by PSMC for expansion would be considered at the appropriate time. Also, the Successful Bidder in the Share Purchase Agreement has committed to continue to operate PSMC's facilities and ensure that PSMC's facilities and operations are brought in line with prudent practices in the steel industry."

*"DISCOUNTED CASH FLOWS ("DCF"): *This is the most widely used valuation methodology particularly relevant when detailed technical/operational assumptions are available to derive cash flows.

The FA conducted valuation using Free Cash Flows to Firm ("FCFF"). Arriving at the FCFF estimates entailed forecasting the future profitability and cash generation capability of the company. The FCFF forecasts for FY2006 to FY2015 were discounted at the Weighted Average Cost of Capital ("WACC").

The FA developed a detailed financial model, which had an explicit forecast horizon of 10 years. For this 10-year period the FA developed a Profit and Loss account, Balance Sheet and a Cashflow statement.

*In developing the forecast the FA took into account the following key inputs:*

-- A global steel price forecast (sourced from reputable third parties including Corns Consulting and World Steel Dynamics) was used to develop the domestic Pakistani steel price forecast.

-- Forecasted international input prices of all PSMC raw materials (including iron ore and coal) were provided Corns Consulting and also sourced from World Steel Dynamics and other internationally recognised research. This international price set was then adjusted to reflect import incidentals cost and PSMC's shipping contracts after taking into account efficiencies that may be brought about by the new buyers.

-- The forecast also includes any major capital expenditure that is required over the forecast horizon to maintain the plant operations at design capacity. In case of PSMC it requires a minimum immediate capital investment of around US $100m for critical repairs.

This capital investment is estimated by Corns Consulting. It is important to highlight that PSMC's Coke Oven Batteries Plant (COBP) has broken down due to which the PSMC has operated at below 50 percent of its design capacity in the first six months of FY2006. These investments are necessary if the plant is to operate at full capacity on a sustainable basis.

-- Based on these investments, Corns Consulting have forecasted future operations/production which reflects the efficiencies PSMC would be able to enjoy in the future.

The FA valuation reflects that PSMC will be able to operate at 100 percent capacity in the future (something that PSMC has never been able to achieve) once it undertakes necessary capital repairs and that its product mix will improve further in favour of flat products (vs. long products).

-- The FA's forecast also takes into account the impact of repayment of GOP guaranteed and extended loans (totalling Rs 8.5 billion). PSMC has been over the years supported by the GOP as GOP has guaranteed its debt obligations, picked up its debt servicing costs and extended interest-free loans. The FA model reflects the repayment of these loans ahead of the privatisation through PSMC's existing cash balances.

-- Impact of the incentive package offered to PSMC employees is also factored in. As per the incentive package, there will be a one time, upfront cost of around Rs 2 billion on PSMC, with possibly an annual recurring cost of Rs 200 million.

The DCF valuation takes into account the profitability and cash flow generation into perpetuity. With an explicit forecast horizon of 10 years, the FA DCF valuation also reflected the terminal value, which is the value of the company from year 11 into perpetuity.

Based on DCF valuation, the FA arrived at a value range of US $407 to 464 million for a 100 percent equity stake in PSMC. This implies a US $305 to 348 million value range for a 75 percent equity stake in PSMC (Rs 14.20 to 16.17 per share)."

*"COMPARABLE COMPANY ANALYSIS: *This methodology uses the public market valuations (stock market valuations) of similar companies to draw estimated range of valuation for the target company. For PSMC the FA analysed a broad group of steel manufacturers to select comparable companies as a valuation reference.

The FA selected a sample of steel manufacturers with sizeable operations in the emerging markets, as well as several comparable steel manufacturers in the developed countries.

Based on this approach, FA arrived at an average range of USS 307 to 406 million for a 100 percent equity stake or USS 230 to 305 million for a 75 percent stake (Rs 10.70 to 14.15 per share)."

*"PRECEDENT TRANSACTION ANALYSIS: *This methodology involves looking at recent global transactions of similar assets. Based on the price paid relative to the profitability of the company and price paid per tonne of capacity in relevant transactions, the precedent transaction valuation range was US $389 to 501 million for a 100 percent stake, which equates to US $292 to 376 million for a 75 percent stake (Rs 13.55 to 17.47 per share)."


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## Owais

*"REFERENCE PRICE: *The CCOP considered all valuation ranges based on all three valuation methodologies used by the FA. The Comparable Companies Analysis and the Precedent Transactions Analysis is used primarily for scoping purposes and is not recommended as the preferred valuation methodology since it is difficult to find truly comparable companies and transactions.

CCOP recognising that DCF is the most robust valuation methodology (since it captures the peculiarities associated with this particular asset better than any other methodology) fixed the Reference Price as US $348 million for 75 percent equity stake (or Rs 16.6 per share), which was the high end of the FA's DCF range.

In view of the above submission the petition is liable to be dismissed, say the respondents in their prayer before the Supreme Court.


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## Neo

ISLAMABAD (May 26 2006): The International Finance Corporation (IFC), a private sector arm of the World Bank Group, has signed a $25 million financing package for Rally Energy Corp to support upstream oil and gas projects in Pakistan and Egypt. With its investment, IFC will help strengthen energy production to meet increasing domestic demand.

"Companies like Rally are important participants in the hydrocarbon sectors of developing countries as they help develop domestic resources to satisfy growing demand. Importantly, they also bring revenues to governments and create employment as well as opportunities for local suppliers of goods and services," said Somit Varma, IFC's Associate Director for Oil and Gas.

In Pakistan, Rally's joint venture will strengthen domestic natural gas supplies in a market where increasing demand may lead to a shortfall in domestic supply and to potential gas imports.

The firm has a 22.5 percent non-operating interest in the Safed Koh block in Punjab, which is operated by its partner Dewan Petroleum Pvt Ltd. The block includes the Salsabil gas and condensate field that will be developed as a part of the project.

Rally and its partners will also explore prospects for additional gas reserves in the block. Natural gas from the project will strengthen fuel supplies to industrial and urban markets in the region.

"We welcome Rally's participation in the energy sectors of Egypt and Pakistan. It is IFC's strategic priority to support vital economic sectors in the region and help address increasing energy demand," said a press release of IFC, quoting Michael Essex, IFC's Director for the Middle East and North Africa region.

In Egypt, the mining and hydrocarbon sector plays a significant role in the country's economy, generating about 15 percent of GDP, 37 percent of export earnings, and the bulk of foreign investment. However, oil exports from Egypt have been under pressure as production at mature oil fields has fallen and domestic consumption has increased.

Rally's project in Egypt's Ras Issaran concession area helps to address this decline. Through a wholly owned subsidiary, Scimitar Production Egypt Ltd, Rally has 100 percent working interest in a heavy oil development petroleum services agreement related to the Ras Issaran concession area on the western shore of the Gulf of Suez. The area is estimated to have significant heavy oil reserves.

Scimitar Egypt is currently implementing a three-year development programme there that aims to step up oil recovery rates by employing a range of established oil recovery techniques.

The IFC's financing consists of revolving credit facilities of $20 million in two tranches, and a $5 million term loan with attached equity share warrants, the press release said, adding that IFC investment would support Rally's three-year capital expenditure plan and working capital needs for its projects in Egypt and Pakistan.

Abby Badwi, President and Chief Executive Officer of Rally Energy Corp, in his remarks said that the IFC credit facility has been put in place to give Rally maximum flexibility to supplement expected cash flow from its planned 2006 and 2007 work programmes, and to enable us to accelerate the thermal development project in the Issaran Field in Egypt.

In addition, this strategic long-term investment by the IFC, as lender and potential equity partner, will provide Rally with continued access to competitive and sustainable financing arrangements to fund planned and future growth opportunities in both countries.


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## Neo

ISLAMABAD (May 26 2006): Pakistan has achieved economic stability and progress despite devastating earthquake of October 8 last year, Advisor to Finance Ministry Dr Ashfaque Hasan Khan said on Thursday. He said "the economic achievements of Pakistan has been acknowledged by every international organisation".

He expressed the confidence that despite the devastation caused by the earthquake Pakistan is posed to achieve the economic growth of 6 to 7 percent.

He added that 5.56 million jobs had been created since the financial year 2003-04.

Pakistan has also succeeded in reducing poverty from 32.1 percent in 2000-01 to 25.4 percent in 2004-05. "We have reduced our budget deficit as well as debt burden", Dr Ashfaque remarked. He added that public debt burden has declined from 100 percent of GDP to 57 percent of the GDP of the country.

Both exports and imports are growing at double-digit level and the Central Board of Revenue (CBR) is collecting taxes from more than the targets, he remarked.

About inflation, he said, the inflation which reached as high 11 percent in April 2005 has come down to 6.2 percent in April 2006.

The advisor Finance Ministry said that Pakistan has for the first time of its history launched sovereign bonds of 10 year and 30 year in the international capital market.


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## Neo

LAHORE (May 26 2006): Asian Development Bank (ADB) has given a dollars 42 million worth loan to Pakistan to help improve the living conditions of the people in Pakistan's Federally Administered Tribal Areas (Fata) by promoting sustainable and productive use of the areas' natural resources.

According to sources here on Thursday, the project would be undertaken in three of the northern districts of Bajaur, Khyber and Mohmand, where dry and rocky land is mostly not suitable for farming, and the poorest families used to earn their living as sharecroppers or through agricultural labour. The project is projected to increase the productivity of about 52,500 hectares of rain-fed lands and benefit about 37,500 households.

They said that ADB's loan, from its concessional Asian Development Fund, carries a 32-year term, a grace period of eight years, and interest @ 01 percent per annum during the grace period and 1.5 percent thereafter. "The Pakistani government would contribute dollars 15.4 million towards the project's total estimated cost of dollars 60.4 million, while the beneficiaries would shoulder the balance of dollars three million. The Ministry of States and Frontier Regions is the executing agency for the project, which is due for completion in June 2011," they added.

"To address these issues, the project would promote integrated resource management to improve productivity and arrest the degradation of the environment in the tribal areas. It would help improve farming and livestock rearing practices by selecting appropriate technologies and would promote effective forestry and range management.


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## Neo

ISLAMABAD (May 26 2006): Addressing a meeting of the Board of the Privatisation Commission here on Thursday Zahid Hamid Federal Minister for Privatisation and Investment said that privatisation proceeds had reached an all time high during the current financial year.

Up till April 2006, nine transactions had been completed for total sale price of Rs 218 billion, out of which a sum of Rs 118 billion had already been realised. Last year, 2004-05, eleven transactions were completed for a total sum of Rs 43 billion, he stated.

Zahid Hamid said that Pakistan State Oil (PSO) and National Investment Trust Limited (NITL) were also likely to be privatised before June 30, 2006, which would increase the proceeds further. All these proceeds would of course be utilised for poverty alleviation and debt retirement in accordance with law, he added.

The minister further stated that all prescribed rules, regulations and formalities would be observed and nothing would be sold in undue haste in order to ensure open, fair and transparent transactions and to maximise sale proceeds for our national assets.Zahid Hamid said that the economic reforms introduced in Pakistan by Shaukat Aziz as Finance Minister and continued by him as Prime Minister under the guidance of President Pervez Musharraf, which comprised three main pillars of Deregulation, Liberalisation and Privatisation were appreciated the world over and were cited as role models for the region at the World Economic Forum held on May 20-21 at Sharm-el-Shaikh, Egypt.

He said that the economic reforms had been institutionalised by The government through the Fiscal Responsibility and Debt Limitation Act 2005.

The minister said that the fiscal debt, which averaged nearly seven percent of GDP in the 1990s, had declined to only 3.3 percent in 2004-05. Moreover, public debt to GDP ratio had reduced from disastrous 90 to 100 percent approximately in the 1990s to 61.7 percent in 2004-05 and was expected to further reduce to under 60 percent this year, he stated.

The PC board approved the recommendations of the pre-qualification committees relating to pre-qualification of parties for the privatisation of National Investment Trust Limited (NITL), Faisalabad Electric Supply Company (FESCO) and National Power Construction Company (NPCC).

The meeting also reviewed the progress of the privatisation process of Lyallpur Chemical and Fertilisers Ltd, and Lasbella Textile Mills.

The meeting also formulated its recommendations for the Cabinet Committee on Privatisation (CCOP) regarding various ongoing entities. Shaikh Ikramullah Secretary Privatisation Commission, Members of the board of the Privatisation Commission, senior officials of the respective ministries and departments attended the meeting.


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## Neo

LAHORE (May 26 2006): The UK High Commission has launched Students Support Programme (SSP) for Pakistani students so that they could attain quality education with maximum ease. Alex Pond, Director UK Visa, announced this while addressing the LCCI members, here on Thursday.

LCCI President Mian Shafqat Ali, Senior Vice-President Abdul Basit, Vice-President Aftab Ahmad Vohra and former senior vice-president Sohail Lashari were also present on the occasion.

Alex Pond asked the Pakistani students to avail the opportunity available in the Britain which has the best educational system in the world. The British High Commission has already softened its policy of granting visas to the students. She said that the United Kingdom is home to the Pakistanis more than the people of any other nationality are thus they would find easy to adjust there. "The High Commission is now offering round the clock services that would help the students in getting visa in the quickest possible time," she added.

Speaking on the occasion, the LCCI president said that the Pakistani immigrants in United Kingdom have played their role in the economic development of the country. "However, the post July 7 London bombings scenario had raised some concerns with respect to the Pakistani immigrants and the business community that visit frequently to the UK. We appreciate the UK's policy to address these concerns in the most benefiting manner. Pak-UK bilateral relations have grown over the years," he added.

According to him, the exchange of business delegations plays an important role to introduce and explore new markets of exportable products in the world. Exhibitions are also now recognised as a powerful marketing tool and are no longer positioned outside the marketing mix but are rather an integral part of any company's business decision making.


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## Neo

SIALKOT (May 26 2006): Over 55.8 million footballs, amounting to more than Rs 8.5 billion, have so far been exported on the eve of FIFA Football World Cup 2006. The local exporters and manufacturers are utilising all channels to fulfil the demand of their foreign buyers and speedy and timely delivery of the football consignments.

About 85 percent of total production of soccer balls of the world comes from Sialkot, while all international brands are sourcing their supply of footballs from this export-oriented city and nucleus of cottage industry of the country.

Pakistan enjoys a unique position in the global trade with reference to sports goods and its main forte is hand-stitched inflatable balls and such masterpieces are being produced and exported for around 100 years from now.

Over 40 million balls, worth 210 million dollars, were produced annually by highly skilled workers of Sialkot. These balls are produced by a workforce of more than 60,000 and exported to the world market by 1,000-plus entrepreneurs, while the industry had totally been purged from the menace of child labour.

Currently, the soccer ball manufacturers and exporters are facing challenge in the form of "thermo bonded," which is not similar to its previous versions, threatening the future of hand-stitched balls.

The international competitors have been making strenuous efforts for over a decade to produce a soccer ball, which has the "playability" properties of hand-stitched ball and can be manufactured on machines.

In 2002, a leading international brand claimed that it had produced and tested such balls in UEFA EURO-2004. This new ball threatened the local industry with the same fate as happened to wooden rackets some 30 years back.

Anyhow, the local soccer ball manufacturers and exporters are utilising their century-old manufacturing techniques in producing hand-stitched balls to compete in the global market, besides they are making hectic efforts to obtain the techniques of machine-made soccer balls.

The business activity is at its peak in and around city while great rush of cargo agents has also been witnessed at Sialkot Dry port for clearing and dispatching the exportable soccer ball consignments well before the commencement of Football World Cup. The Collectorate of Customs, Sambrial, has extended the working hours of export section and PRAL to facilitate the exporter community.

The Sialkot Dry Port has also made adequate arrangements for transportation of soccer ball consignments promptly.

The success story of Sialkot-based industries can be attributed to unmatched skill of local workers and their craftsmanship. The world trotters have introduced Sialkot as total export-oriented city of Pakistan. Since this place possesses century-old industrial heritage and it has developed as an incredible export culture over the period and contributing 800 million dollars to the national exchequer annually.

Still, the exporters community is trying its utmost for doubling the export volume despite of tough competition in the world market for fetching valuable foreign exchange for the country. The development of cottage industries in Sialkot has assumed a model status for the developing world.

The city is sprinkled with thousands of small and medium enterprises, which are engaged in honouring their global commitments for the export of value-added quality goods such as sports goods, surgical instruments, leather goods, gloves, badges and musical instruments etc.


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## Neo

KARACHI (May 26 2006): European Aviation Safety Agency (Easa) has extended the Part-145 Maintenance Organisation Approval (MOA) of PIA Engineering & Maintenance till the year 2008. Additionally, Easa has also approved extension in the scope of approval, which now covers Boeing 777-200 and Boeing 737-400 aircraft for heavy maintenance jobs.

The re-approval audit for Part-145 Maintenance Organisation Approval of PIA Engineering & Maintenance was conducted in February 2006. The Easa Part-145 Approval was initially granted in 2004 after successfully going through two initial approval audits. To-date, the Engineering & Maintenance Department of national flag carrier has successfully been able to maintain the approval by clearing three surveillance and one re-approval audit over intervals of six months each. All these audits are conducted by GSAC France (French Aviation Authority) on Easa 's behalf.

Chairman & CEO PIA, Tariq Kirmani commended the efforts shown by Senior Management and the Internal Quality Audit Team who have played the most significant role in maintenance of the approval along with the hard work put in by employees in every cadre.


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## Neo

ISLAMABAD (May 26 2006): The government will launch Rs 500 billion plan to revamp road infrastructure and to expand motorways within next 10-year from next fiscal year.

In order to improve the performance of the authority and timely completion of projects, the government has also decided to restructure the National Highway Authority (NHA). Federal Communication Minister Shamim Siddiqui said this while speaking at a news conference here on Thursday at Press Information Department.

"A 10-year plan worth Rs 400 to Rs 500 billion is being launched to expand country's road network and to bring it at par with the international standards," he added. In this regard, Siddiqui said the government would allocate nearly Rs 35 billion to Rs 40 billion in the upcoming budget for the improvement of road infrastructure.

He said the authorities would especially focus on highways that connect Bhasha dam. In this connection, he said a 350-kilometer long road from Hassanabdal to Sazin would be upgraded.

Shamim continued that in the next phase, highway from Sazin to Raykot and then up to Khunjerab, linking China would be upgraded.

Siddiqui said that Chinese government was providing soft loan of dollars 350 million to Pakistan for the rehabilitation of Karakoram highway that would pave the way for Chinese exports through Gwadar Port.

Speaking about the Indus highway, the minister said 1,400-kilometer long highway from Karachi to Peshawar would be completely upgraded. He said the network of motorway would be further extended, as the authorities were negotiating with a Malaysian firm to construct motorway from Faisalabad to Khanewal (M-4).

He hoped the construction work would be started next year at a cost of Rs 22 billion and it would be completed in four years.

The minister told reporters that, similarly, negotiations were going on for awarding construction work of motorway from Khanewal to Rajanpur (M-5) and Rajanpur to Rattodero (M-6) to a Malaysian firm as well. M-7 will connect Rattodero to Karachi, completing a network of motorways in the country. Siddiqui was of the view that road network was also imperative for Gwadar port that would be launched in December this year.

"We have international pressure to complete our road network that should be at par with the international standards," he added.

Speaking on the steps being taken to end the overloading practices, the minister said they had decided to hand over all weigh stations to Motorway Police in that connection. "The government faces a loss of Rs 6 billion annually for road maintenance," he regretted.

Shamim Siddiqui informed newsmen that they had decided to restructure the National Highway Authority (NHA) in order to improve its performance.

He said the restructuring and revamping of NHA was being made on the directives of Prime Minister Shaukat Aziz, as the government would hire engineers from international markets.


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## Neo

LAHORE (May 26 2006): Energy consumption in Pakistan is likely to touch the mark of 150 million tons oil equivalent (MTOE) by the year 2020, while the net supply from indigenous sources would be 103 MTOE. Currently, the total supply of energy from all sources is about 34 MTOE against a total consumption of 32 MTOE.

According to the latest report of State Bank of Pakistan (SBP), there is need for concerted efforts to increase the supply of energy from diversified sources, particularly, from the most neglected source, i e coal.

Traditionally, oil has been the largest source of energy, but its share in total consumption has declined from 42 percent of the total consumption in 1960 to 32 percent in 2005.

The share of electricity has also declined significantly in the total fuel consumption in the economy. In this scenarios natural gas has emerged as the most popular source of energy, almost doubling its consumption share during this period.

The report said the pattern of energy consumption has changed over time in favour of natural gas, primarily due to its enhanced availability and the upward changes in the relative price of other fuel sources, especially oil.


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## Neo

Friday May 26, 2006 

ISLAMABAD: Pakistan has received only US $ 614 million so far out of the total amount above US $ 6 billion pledged by the international community during the donor conference held in Islamabad last year for the rehabilitation and reconstruction of earthquake victims ," minister state for economic affairs Hina Rabbani Khar informed to the media men here on Thursday. 
Minister said; However, Pakistan has not accepted the amount pledged to the tune of US $ 375 million by the IMF during the donor conference and considered only the pledged amount by the international community in term of soft loan. 

She said that the government had negotiated with the international community and the donor institutions on the pledged amount to US 2.8 billion so far and will accept the pledged amount that would be in term of soft loan. 

"Islamic Development Bank (IDB) has given as many as US $ 80 million and World Bank to the tune of US $ 50 million in term of grant for the earthquake victims," she added. 

She further said that PakistanÃ¢â¬â¢s economy had geared up for the last few years and this is why the Asian Development Bank (ADB) and World Bank were ready to give the loan as these banks meant for giving the loan in line with the economic performance. 

"However, it is likely that the Gross Domestic products (GDP) of Pakistan will fall by 58 percent due to the earthquake in Oct 8, 2005 in Pakistan," she added. 

She said that loan of international community on Pakistan had also fallen during the current year as it stood at US$ 37.6 billion in 1990 and now it stands at US $ 35.2 billion. 

Meanwhile, addressing a press conference, she said that meeting of high level panel on UN system-wide coherence in areas of development, humanitarian assistance and the environment had concluded presenting recommendations to make effective the UN system. 

She further said that six countries including Pakistan, China, India had participated in the meeting , one from government and one from donors. 

Minister of State for Environment Malik Amin Aslam said that the government was giving the top priority for the provision of clean drinking water to the masses throughout the country. 

"As many as 150 filtration plants for the provision of clean drinking water to the masses have been made operational in the first phase whereas an overall 6000 filtration plants will be installed," minister added. 

Minister further said in the current high level panel dialogue , it was focused also how to implement the global agreement regarding the environment. 

Robert Greenhill Canadian president of Canadian International Development Agency, Ruth Jacoby Sweden director general for development cooperation, Josette S. Shiner USA under secretary for Economic, business and agricultural affairs were also present on the occasion.


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## Neo

Move aimed at enhancing quality of human resource in IT industry

KARACHI: The National Information Communication and Technology Research and Development Fund of the Ministry of IT and Telecom on Thursday took up three projects worth over Rs1 billion and recommended them for a peer review for the purpose of final approval.

The projects aimed at enhancing the quality of human resource in the IT industry and bridging the gap between the industry and academia, are likely to be launched within the next couple of weeks, said a ministry statement.

Awais Ahmad Khan Leghari, Federal Minister for IT and Telecom, who chaired the meeting said the three projects were aimed at establishing career placement centres in 25 universities of the country besides launching internship as well as apprenticeship programmes to add value to the human resource needed in the IT industry.

He said the working papers of the projects had been sent for the peer review which would take a couple of weeks before they could be launched in a formal fashion. Ã¢â¬ÅThese are very important projects and the purpose behind them is to attract and develop capacity of talented IT graduates and enhance career opportunities in the IT and telecom disciplines,Ã¢â¬Â he said.

Giving details of the projects, Leghari said the ministry had planned to launch an outreach scholarship programme worth over Rs250 million to pick up talented college students from remote and backward areas and then train them in the boot camps before their admission to four tier-one universities of the country.

Ã¢â¬ÅUp to 200 students who are admitted to IT and telecom disciplines by these universities, would be offered fully funded scholarships to complete their degrees in a congenial and competitive academic atmosphere,Ã¢â¬Â the statement quoted minister as saying.

He said the ministry had also developed an internship programme for the countryÃ¢â¬â¢s IT industry at an estimated cost of over Rs450 million to offer internship to 10,000 IT graduates who would be offered 6-month-long internship each at a leading IT company for which they would be paid Rs6,000 monthly stipend.

He said the internship project was being launched in the backdrop of an acute shortage of high-end IT professionals within the IT industry which needed 8,000 such professionals for the next year alone.

Ã¢â¬ÅWe hope the internship programme would generate jobs, help companies get required trained human resource besides leading to an overall upgradation of the IT and telecom disciplines in the higher-education institutions,Ã¢â¬Â he said.

The minister said the third major project which had been taken up by the research and development fund was the IT industry apprenticeship programme which would be launched at an estimated cost of over Rs220 million to subsidise IT companies to recruit graduates possessing the basic skills and knowledge to provide IT-enabled services. He said the IT companies roped in through this project would be offered Rs15,000 a month subsidy per person for a period of one year and in all about 1,000 jobs would be generated through this programme.

Ã¢â¬ÅThe companies would have the complete freedom and discretion to hire any person through this programme, but they will have to provide a training programme with course details and content, including minimum training for 400 content hours,Ã¢â¬Â he said.

Meanwhile, addressing the launching ceremony of the first Regional Cisco Networking Academy Programme for Women in Pakistan, Leghari called for companies to act as socially responsible corporate players to create a knowledge-based economy and society.

He said Pakistan being a 150-milion country had the potential to emerge as an interesting place for international companies looking for businesses. He said the policies of the government shaped by the vision of the president had already brought about a turnaround in various sectors with telecommunication being a prime example.

Ã¢â¬ÅThe growth in the telecom sector has been phenomenal which is corroborated by the fact that two years ago we had merely 2.8 million mobile phone subscribers who have gone beyond 30 million now which reflects on the strength of the policies introduced in the sector,Ã¢â¬Â he said.

He said the amount of job creation in the telecom sector had also been between 100,000-150,000 and this had been possible despite the fact that the industry was not being able to find enough human resource available in the country. 

Ã¢â¬ÅIt is an established fact that the human resource we possess is not enabling the industry to grow at the rate it can, given its huge potential,Ã¢â¬Â he said.

He said the government was spending heavily on areas such as e-government and broadband internet. He said the ministry had planned to use the Universal Service Fund (USF) to provide 1.5 million broadband connections within the next two years.

He said e-government was yet another area in which the government had invested heavily in an attempt to introduce a paper-less economy.


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## Neo

KARACHI: The infrastructure development programme of Karachi Textile City project is likely to kick-start within couple of weeks over a 700-acre piece of land out of 1,250 acres that had been agreed to be provided near Port Qasim.

However, the Ministry of Ports & Shipping is yet to hand over possession of some 550 acres near Port Qasim for the said project.

Ã¢â¬ÅThe project may be redesigned in order to avoid further delay, as possession of remaining piece of land is the only bottleneck in initiating the project timely,Ã¢â¬Â Chief Executive Officer of Karachi Textile City Zaheer Hussain told The News. 

He said that topographical survey of 1,250 acres of land, demarcated for the project, has been completed, land-utilisation plan has been approved and utilities-requirement plan has been finalised. 

He said that under the land-utilisation plan, 807 acres (or 65 per cent of the total area) have been earmarked for industries, 47 acres (4 per cent) for amenities, 70 acres (5 per cent) for utilities, and 326 acres (26 per cent) for roads.

Ã¢â¬ÅThe layout plan visualises 279 industrial plots of land of different sizes upon completion of the project,Ã¢â¬Â he said and added that there would be 86 plots of land of 5.2 to 7.5 acres each, 117 of 2 acres each, 28 of one acre each and 48 of half-an-acre each. These plots of land would be sold to investors to set up textile-related industries.

Moreover, he said that Sindh Governor Dr Ishratul Ebad, at a meeting had confirmed that Karachi Water & Sewerage Board would provide 20 million gallons a day of water to the Textile City from the K-III project via a 23 km 48-inch diameter pipeline from Fore-Bay.

He apprised that pipelineÃ¢â¬â¢s construction cost is estimated at Rs700 million, and this amount would be provided by federal and provincial governments. 

In addition he said that Sui Southern Gas Company (SSGC) has agreed to supply 150 million cubic feet (MMCFD) of gas a day to the Textile City - 125 MMCFD for process heat and 25 MMCFD for power generation. SSGC has also agreed to supply 15 MMCFD of gas to the Textile City project during the construction phase. 

Whereas Karachi Electric Supply Corporation has also agreed to supply 100 megawatts (MW) of power to the Textile City by June 2007. It has also agreed to supply 5 MW of power to the project during the construction phase.

A public-private joint stock company has already been set up with an initial capital of Rs1.10 billion. 

The federal government is sharing Rs500 million, Port Qasim Authority Rs100 million, the Government of Sindh Rs100 million, National Bank of Pakistan Rs50 million, Pak-Kuwait Investment Company Rs50 million, Pak-Oman Investment Company Rs50 million, Saudi-Pak Investment Company Rs50 million, Pakistan Industrial Credit and Investment Corporation Rs50 million, Pak-Libya Holding Company Rs50 million besides Pakistan Industrial Development Corporation Rs100 million, and Export Processing Zone Authority will share Rs100 million, the CEO of Textile City told. 

He also told that City District Government Karachi (CDGK) is interested in taking Rs100 million-equity stake in Pakistan Textile City Limited, however, in the presence of Sindh Governments stake in the project CDGK has apologised.

Ã¢â¬ÅThe 11-member board of the Pakistan Textile City in August 2005 signed an agreement with the National Engineering Service Pakistan (NESPAK) to build Rs10 billion infrastructure in the whole 1,250-acre land project,Ã¢â¬Â he said.

Textile City project near Port Qasim was envisaged in 2004 with 23-kilometre dedicated water pipeline, 24-hour supply of gas, water and electricity and a smooth system of sewerage. The textile industry is PakistanÃ¢â¬â¢s largest industry and accounts for more than 60 per cent of the countryÃ¢â¬â¢s total exports. 

Few months back during a meeting a high official of the ministry of ports and shipping had pleaded for an alternative 3,000-acre piece of land for PQA from Sindh Government regarding expansion of port installations in future. 

However, new plea taken by ministry of ports and shipping forced textile ministry to approach Prime Minister Shaukat Aziz for intervention and PM clearly asked both the PQA and the federal ministry of ports and shipping not to show any reluctance in transferring the land. 

Ã¢â¬ÅDevelopment of Textile City would increase the business volume of Port Qasim which is poised to handle flows of imports and exports for many years to come,Ã¢â¬Â he said adding that Bin-Qasim Textile City is expected to generate some 80,000 job opportunities. 

He said the Textile City project is the first of its kind in Pakistan, as it would have a desalination plant, a self-power generation plant and all the other modern facilities required for industrial production.


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## Neo

Friday May 26, 2006 

RAWALPINDI: President General Pervez Musharraf Thursday reaffirmed his commitment for using PakistanÃ¢â¬â¢s economic turnaround for poverty alleviation and sustainable socio-economic development of the common man. 
Addressing a presentation on public sector development programme in Rawalpindi, which was also attended by Prime Minister Shaukat Aziz; the president directed optimal utilization of all resources for visible improvement in the life of common man through initiation of development projects attended the presentation. 

The President said we must utilize to sources available to bring a qualitative change in the lives of people and ensure wider distribution of economic benefits. He expressed the hope that the government would touch a growth rate of seven per cent this year. 

He was informed that in view of economic growth and inflow of investment the country is expected to materialize one point five million job opportunities each year. 

President Musharraf said: "the federal Government would act as a catalyst in facilitating the provinces for generation of more and more job opportunities." He said we must strive for creating additional employment opportunities during the next financial year and added that mega projects, local development schemes and micro finance banks would help create more job opportunities. 

He said while mega projects like construction of water reservoirs would produce tremendous business activity and create jobs, we must also encourage self employment in both rural and urban areas to step up socio-economic development at local level. The President directed for speedy progress on provision of safe drinking water, cost-effective energy, better health and education facilities all over the country. 

He said improvement in these sectors will reduce poverty and bring people of remote areas into the mainstream of national development. He stressed the importance of equipping the youth with technical skills. 

For this purpose, he directed to allocate higher financial resources for technical and vocational sector from the overall budget of education. for improved health facilities, the President said the basic health units and local hospitals must be provided adequate medicine and other facilities.


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## Neo

David Meyer, ZDNet UK, 
May 24, 2006


Pakistan plans to roll out the largest mobile WiMax network yet, Motorola announced Tuesday. 

Motorola is providing the country's Wateen Telecom with an 802.16e-based Motowi4 network. An initial uptake of a million subscribers is expected, with a nationwide rollout to follow. 

As a developing country, Pakistan has until now lacked the infrastructure for widespread broadband. 

The deployment is a milestone in the spread of WiMax, a superfast wireless technology that has a range of up to 30 miles and can deliver broadband at a theoretical maximum of 75 megabits per second. The 802.16-2004 standard, which is used in fixed WiMax networks, is being skipped in favor of a large-scale introduction of 802.16e, which was only recently agreed upon by the WiMax Forum. 

"We made the decision 18 months ago to jump over (802.16-2004) and go straight to 802.16e," Paul Sergeant, Motorola's marketing director for Motowi4, told ZDNet UK on Tuesday. "We've been working on it for a while, which is how we're able to ship so soon after agreement." 

"802.16e leads to a much larger market as it addresses mobility needs, but we also felt it could be just as good a solution for fixed broadband," he added. 

Some analysts said the Pakistan deal is proof that major players in the industry are throwing their weight behind mobile WiMax in a way they haven't with the fixed version. 

"The really interesting thing is that Motorola is really focusing on the mobile version, as are Alcatel and Siemens," Julien Grivolas, a telecom analyst at Ovum, said. 

"Mobile WiMax is going to be something for the big players, as opposed to fixed WiMax, where (they) set up OEM (original equipment manufacturer) agreements with smaller vendors," Grivolas said. 

On Tuesday, Motorola also made its first public demonstration of third-party interoperability of its WiMax products. At the WiMax World Europe Conference in Vienna, it showed off a third-party PCMCIA card that incorporates a mobile WiMax chip from Beceem Communications. 

"The market is looking for carrier class (802.16e) solutions that either support mobility from the beginning or can be upgraded," Sergeant said.


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## Neo

ISLAMABAD (May 27 2006): President General Pervez Musharraf on Friday said that the next year Public Sector Development programme (PSDP) will have an unprecedented allocation of Rs 415 billion and indicated subsidies on essential items in the upcoming budget to provide relief to the common man.

Musharraf listed five priorities of the government, which included de-Talebanization of the NWFP, stabilisation in Balochistan, curb on extremism and terrorism from society and sustainable democracy and to give a quantum jump to the country's economy.

The President was addressing the 18th annual APNS meeting at a local hotel here. He also replied to the various issues raised by APNS chief Mir Shakilur Rahman regarding press freedom, access to information and the oft-repeated "national interest" put forwarded by the government to cover up its failures and his doubts about economic achievements regarding lowering of poverty, rise in per capita income which according to APNS chief benefited only 15 percent upper crust of the society.

Reinforcing the government plan of high economic growth, the President dwelt on a record Rs 415 billion Public Sector Development Program (PSDP), which never exceeded Rs 100 billion generally; over six percent growth for the current fiscal and seven percent growth projection for next year.

Stating that he looked with optimism country's economic growth, the President said that he had no doubt that GDP would grow between six to eight percent in the coming years. And eventually eight percent growth would be ensured because of the heavy development programmes for the coming years.

He disclosed that his government has deliberated on all issues under the sun in regard to country's future progress and suitable strategies are in place.

In this connection, he saw great development in agri-based industry and spoke of "white revolution" because of Pakistan's prime position in milk production.

In the same vein he said that with the construction of Gwadar Port a new energy corridor with China, the proposed new gas pipeline would be the ninth wonder of the world as Karakoram Highway turned out to be the eight one.

He reaffirmed that Gwadar would soon become energy-***-trade corridor for the whole region.

Admitting that poverty and inflation were grave issues, he said that there has been considerable decrease in poverty level which he said has now come down to 24.2 percent.

"This is bad enough but it is palpably wrong to state that poverty is on the increase in the country," he contended adding that fruits of development are reaching a large segment of society.

The Millennium Development Goal of Poverty Reduction to 13 percent would be achieved in Pakistan much before 2025, he asserted.

The President disclosed that the government is working out on a strategy to curb the ill effects of inflation and give relief to the common man in the form of reduction in the prices of essential items, giving subsidies on others and capping the prices of certain items.

Speaking of economic gains, the President stated that Foreign Direct Investment in the country would be more than $3 billion as against $1.5 billion last year.

"A lot many investors are coming to Pakistan and discussing avenues of new investment with me," he said. In this connection, he referred to the discovery of one of the biggest copper and gold mine in Balochistan for which entrepreneurs from Chile and Canada are having talks. He also spoke of installation of new textile machinery of over $5.5 billion which will give new impetus to exports. He visualised overall exports of $20 billion for next year.

Speaking about the de-Talebanization of the NWFP, he said a strategy is being worked out under which the role of political agents, backed by constabularies and levies, would be reinvigorated.

Besides, a sum of Rs 10 billion would go for the development in the Federally Administered Tribal Areas (Fata) of NWFP.

Regarding political stability in Balochistan, he said the credit should go to the governor and the Balochistan government as now it is a win-win situation and the rebellious sections of Bugtis and Marris are being quelled.

"The situation there has changed, it is for any one to see," the President said.

Referring to his government priority to curb extremism and terrorism, President Musharraf said that a multi-pronged strategy is being worked out which includes improvement of seminaries, syllabi of schools and use of loud speakers in mosques.

Speaking about the ticklish issue of what constitutes national interest about which APNS president made veiled remarks, the President said that the press should not play up the failures of the government and try to dispel misperceptions about the country.For instance, he said, that rape cases in Pakistan are brought to lime light giving a bad image to the country. Against this he said that in India the custom of Sati was still rampant in certain states but the media never highlight it.

Similarly, thousands of Indians sleep on the pavements but there is no such thing in Pakistan. Yet the press goes wild about the incident of poverty and joblessness in Pakistan.

Nonetheless, he added "we have to improve the quality of life for the people and give them better facilities" and invited the press to highlight the government's shortcomings in implementing development policies. Referring to the complaints of the lack of access to the information, the President said that he is all for free press and he has always told his information ministers to keep the press abreast of all developments.

He said he has directed the new information minister to arrange regular press briefings of all ministries.


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## Neo

ISLAMABAD (May 27 2006): Prime Minister Shaukat Aziz has directed the Commerce Ministry to place before the Cabinet the details of trade growth, which has materialised so far as a result of 'Early Harvest Program' (EHPs), Preferential Trade Agreements (PTAs) and Free Trade Agreements (FTAs) with different countries, sources told Business Recorder on Friday.

They said that these directions were issued in the May 24 Cabinet meeting during discussions about the proposed EHP with Syria, which the Commerce Ministry said would substantially increase trade between the two countries.

"The Commerce Ministry has been asked to submit a summary, and brief the Cabinet in its next meeting, if any increase in trade had come about as a result of EHPs, PTAs and FTAs," sources added.

Pakistan has entered into EHP with Malaysia, Indonesia and China while negotiations are in progress with several other countries for similar pacts. However, Sri Lanka is the only country, which has signed FTA.

Sources said that it was the second time when Commerce Ministry officials had briefed the Cabinet about the concept of EHP and FTA, saying that FTA required detailed negotiations on a large portfolio of items, whereas EHP incorporated trade items which were non-contentious and are easily agreed upon.

"Early Harvest Program can be concluded on fast track and in a shorter period of time," sources quoted Commerce Ministry officials as saying.

The Ministry was of the view that the proposed EHP would help promote trade with Syria immediately and pave the way for finalisation of FTA.

One of the contentious issues the Cabinet noted was export of mangoes to China, which was part of EHP, but no substantial progress had been made in this regard.

"Due to insufficient returns to growers and various diseases, many orchards in Sindh are being cut down as Minfal is least interested in helping them," sources quoted one of the minister as saying in the meeting.

Minfal Secretary Ismail Qureshi, sources said, was grilled for not devising strategy to export mangoes to China and other countries. Sources said that Minfal had convened a meeting on Friday to finalise the 'mango export strategy' on war footing to be submitted to the Cabinet in its next meeting.

The Cabinet, sources said, was informed that a significant increase is expected in the export of kinno and mangoes to different countries, including China, during the next season. China has short-listed 12 kinno and two mango grading factories for export purposes.


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## Neo

KARACHI (May 27 2006): When the SBP started daily monitoring of Special Convertible Rupee Accounts (SCRAs) from November 1, 2005, balances in these accounts stood at a rather low level of $204 million.

These were $241 million on November 16 and $257 million on November 23. The balances rose to over $330 million by December 16, 2005. From mid-January 2006, however, balances in SCRAs started surging in a consistent manner, reaching $416 million on January 27, to $445 million on February 16, and then to the record level of $472 million on February 28.

Thereafter, the balances started declining and never bounced back to the record level, though there were numerous spells of short-lived recoveries. In recent months, the balances in these accounts dipped to two-month low of $387 million on April 4 and then to the 3-month low of $374 million on April 18. Since then, the balances, according to available details, have tended to move within the range of the low of $350 million to high of $360 million.

These were $359 million on April 19, $357 million on April 25, $356 million on April 26 and 28, $360 million on May 2, $355 million on May 12, $357 million on May 16, $352 million on May 18, and $359 million on May 22, 2006.

It is worth recalling that a total of 22 countries maintain SCRAs in Pakistan. One country, namely, Bahamas has remained a dormant player throughout FY06 so far. Among the partly active up to February 28, eight countries, namely, France, Japan, Liberia, Kuwait, Netherlands, Philippines, Sri Lanka and Saudi Arabia remained inactive between February 28 and May 22--the date for which latest update was available. They neither withdrew any amount nor brought in any fresh funds.

Of the remaining 13 countries, the largest withdrawals occurred in the case of five most active countries, namely, USA $74 million, UK $22 million, Hong Kong $14.5 million, UAE $13 million, and Switzerland $12 million.

Bahrain, BV Island and Singapore were the exceptions, which brought in, instead, $21.6 million, $3.3 million and $2.6 million, respectively, during this period.

Oman also brought in negligible amount.

Minor inflow took place in the case of Guernsey ($0.8 million), while minor withdrawal took place in the case of Germany ($0.7 million).

Qatar and Luxembourg resorted to negligible withdrawal.

As on May 22, the total balance of all countries stood at $359 million, with US investors enjoying the largest balance ($290 million), followed by UK ($32 million), Hong Kong ($29 million) and Bahrain ($21.6 million).


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## Neo

KARACHI (May 27 2006): the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has constituted a committee on venture capital and private equity. The committee is aimed at bridging the gap between the local business houses and visiting as well as existing venture capital and private equity firms desirous of investing in Pakistan.

It will assist businesses to develop themselves in line with the requirements of VC & PE firms and to form global joint ventures. Arjumand A. Qazi has been nominated as the founder chairperson of the committee. She brings with her 20 years of rich experience in investment banking, business, social sector development and consulting.

In addition to business and professional services, she initiated several social sector projects successfully that are now operational. In her capacity as the vice-chairperson for FPCCI Standing Committee on Health, she initiated the project of burns centre at Civil Hospital, Karachi, a 66-bed state-of-the-art facility.

Another project, the heart centre at Sindh Government Hospital, Liaquatabad, is providing emergency heartcare facilities.

As the founder Chairperson of the FPCCI-Standing Committee on Women Entrepreneurs, she provided a platform for women entrepreneurs to interact with the mainstream businesses and strengthened it by collaborating with the Export Promotion Bureau (EPB), Small and Medium Enterprises Development Authority (Smeda) and other institutions to provide maximum facilities for women in business.


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## Neo

KARACHI (May 27 2006): With a good mix of professional cabin crew having diverse backgrounds enriched with relevant experiences, PIA's in-flight services are poised to become second to none with national carrier's in-flight hospitality flying high in the sky.

This was stated by Syed Farooq Hussein Shah, Deputy Managing Director, PIA, at the passing out ceremony of first batch of 19 foreign flight stewardesses (airhostesses) hired from Malaysia and Thailand at PIA Training Center, Karachi.

This was in the line with PIA's vision to become a truly world class carrier catering to a global passenger base in addition to the ethnic ones, he pointed out.

He said this would help attract international passengers by overcoming the language barrier and create welcoming atmosphere with native flight stewardesses on board while simultaneously portraying a progressive and global face of the airline.

The foreign flight stewardesses are now being hired by PIA after a period of almost twenty years, he added. The national carrier has started a campaign to hire fight stewardesses (airhostesses) from numerous international destinations where the PIA flights operate.

Accordingly, interviews have been conducted in various countries for hiring native flight stewardesses, including Thailand, Malaysia, Japan, Kenya, Norway, Greece and Germany with other countries in the pipeline.

The second batch, comprising Japanese flight stewardesses, currently under training, was also present at the ceremony along with other senior officials of PIA. Farooq Shah later distributed certificates among passing out batch of air stewardesses.


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## Neo

Saturday, May 27, 2006 


KARACHI: In the recent review under a new methodology, PakistanÃ¢â¬â¢s foreign-currency ceiling has been raised by two notches from B2 to Ba3, by international credit rating institution MoodyÃ¢â¬â¢s. 

The new outlook on PakistanÃ¢â¬â¢s Ba3 foreign currency debt is Ã¢â¬ÅStable.Ã¢â¬Â On Thursday, MoodyÃ¢â¬â¢s Investors Service raised its foreign-currency country ceilings for bonds following the change in its approach. This has resulted in the upward revision of 70 countriesÃ¢â¬â¢ ratings, while no countryÃ¢â¬â¢s ceiling has been downgraded. PakistanÃ¢â¬â¢s rating has been raised by two notches under the revised methodology. 

Under the new methodology, the countryÃ¢â¬â¢s foreign-currency ceiling will reflect the reduced probability that a government would impose restriction on foreign-currency debt repayment. This has resulted in improved foreign-currency ceiling of a number of countries thereby raising the ratings of those countries. In fact, it was observed that due to this new approach, ceilings of the majority of countries rated by Moodys were upgraded by at least one notch. Countries having US dollar as their default currency have not been affected by the change in methodology, as their risk profile remains intact. 

Previously, for assessing countries the rating agency assumed that a foreign-currency bond default by the government would be accompanied by foreign-currency payment restrictions. 

PakistanÃ¢â¬â¢s foreign-currency ceiling has been raised and outlook on PakistanÃ¢â¬â¢s foreign currency debt is Ã¢â¬ÅStable.Ã¢â¬Â Under previous rating of B2 for its foreign currency debt, Pakistan had Ã¢â¬ÅPositiveÃ¢â¬â¢ outlook. This has made Pakistan closer to Investment Grade, as now it is only three notches down, while previously it was five notches below, from the entitlement of Investment Grade. Neighbouring India has got an improvement of one notch from Baa3 to Baa2 with stable outlook. 

Ã¢â¬ÅDespite the interventionist nature of the Pakistani government, we believe that the risk of imposing a moratorium is lower than such a policy tradition would indicate. Also, we have the recent example in which the Pakistani government defaulted on its foreign-currency bonds, but did not impose a moratorium on private sector bonds and notes,Ã¢â¬Â these are comments of Moodys on PakistanÃ¢â¬â¢s moratorium risk.

On the other hand, in last seven years PakistanÃ¢â¬â¢s foreign currency rating by Standard & PoorÃ¢â¬â¢s Ratings Services has been upgraded by seven notches to B+ from SD. The last revision in ratings was done in November 2004 by S&P, where it raised PakistanÃ¢â¬â¢s long-term sovereign credit ratings by one notch to Ã¢â¬ËB+Ã¢â¬â¢ from Ã¢â¬ËBÃ¢â¬â¢ for foreign currency. In December 2005, S&P revised its outlook on the foreign currency rating to Ã¢â¬ÅPositiveÃ¢â¬Â from stable and reaffirmed its B+ foreign currency.


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## Neo

Saturday, May 27, 2006 

* Subcommittee chairman says mistakes were made Ã¢â¬Ëin good faithÃ¢â¬â¢

By Mohammad Imran

ISLAMABAD: A subcommittee of the Public Accounts Committee (PAC) exonerated three retired army generals on Friday of charges of Ã¢â¬Åserious misconductÃ¢â¬Â in a $100 million deal for the purchase of locomotives for the Pakistan Railways, on the grounds that the Ã¢â¬ÅmistakeÃ¢â¬Â had been made Ã¢â¬Åin good faithÃ¢â¬Â.

Railways Secretary Shakeel Durrani told a meeting of the subcommittee, headed by Col (r) Ghulam Rasool Sahi, that Ã¢â¬Åserious violationsÃ¢â¬Â had been committed in the procurement of the freight trains. Ã¢â¬ÅIf I had been the Pakistan Railways chairman, I would not have gone for such a deal,Ã¢â¬Â he said.

The Railways secretary named former Railways minister Lt Gen (r) Javed Ashraf Qazi, former Railways chairman Lt Gen (r) Saeeduzzafar and former Railways Administration general manager Lt Gen (r) Butt as the officials responsible for making the deal.

However, Durrani said that the deal had been made Ã¢â¬Åin good faithÃ¢â¬Â.

He noted that foreign funding had dried up following PakistanÃ¢â¬â¢s 1998 nuclear tests, and that China had at the time been the only country willing to offer the country financial support. Pakistan Railways had thus decided to purchase 69 locomotives on credit from China, he said.

Ã¢â¬ÅThe Railways would have collapsed had it not purchased the locomotives,Ã¢â¬Â Durrani told the subcommittee. He said that the Railways administration had the made the deal Ã¢â¬Åto save the departmentÃ¢â¬Â.

Sahi concluded that the misconduct, Ã¢â¬Åalthough serious, was in good faith. Therefore, this issue is settledÃ¢â¬Â.

Durrani had earlier told the committee that the government had decided to stop the payment instalments for the locomotives after signing a promissory note with the Chinese government. Ã¢â¬ÅBut the attorney general of Pakistan had said that the National Bank of Pakistan would be blacklisted in the world market in case of non-payment, as it was the governmentÃ¢â¬â¢s guarantor in the agreement,Ã¢â¬Â he said.

The Railways secretary also told the committee that the authority had continued buying more locomotives from China in spite of apparent defects in them. However, their performance was now satisfactory, he said.


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## Neo

KARACHI, May 26: The poultry industry is reported to have suffered a loss of Rs18-20 billion in the last three months owing to outbreak of bird flu at some farms in the Northern Areas in February followed by detection of the virus at poultry farms in Islamabad in the third week of April. The industry suffered a loss of Rs10 billion by the end of last month.

However, the industry is now on a recovery path from the second week of this month, with poultry farm owners raising prices to recover losses. In Karachi, poultry farm owners have increased the price by Rs20 to Rs68 per kg from Rs48 on May 10.

The real jerk to the industry was experienced because of shifting of three persons infected with virus to the hospital in Islamabad last month.

Ã¢â¬ÅWe are preparing a comprehensive report to asses the losses suffered by the industry from the third week of February on account of bird flu,Ã¢â¬Â Pakistan Poultry Association (PPA) central chairman Raza Mehmood Khursan told Dawn from Lahore on Friday.

Ã¢â¬ÅWe will present the report to the government. The bird flu scare has affected 90 per cent small and medium sized poultry farm owners,Ã¢â¬Â he said, adding that out of this as many as 50 per cent have been wiped out or have changed their business. The remaining 50 per cent farmers would survive because they had poultry bird and eggs in their hands and made flock replacement on time, Mr Khursan added.

The PPA is trying to assess as to how many people have closed down their businesses and how many have lost their jobs in the last three months. As many as 1.2 million people were associated with the poultry industry (directly and indirectly) prior to the bird flu scare in February.

Ã¢â¬ÅI think around 600,000 people, directly and indirectly involved with the industry, might have lost their jobs in the last three months owing to closure of many farms,Ã¢â¬Â the PPA chief said.

He ruled out the revival of industry in a short span of time. Ã¢â¬ÅMuch depends on prices and perception of the consumers in future. If both remain satisfactory then there is a chance of revival in six months to one year,Ã¢â¬Â Mr Khursan said.

Ã¢â¬ÅI can say that the perception of 80-90 per cent people is now clear about the bird flu scare,Ã¢â¬Â he claimed, adding that this would help revive the industry.

He also claimed that chicken has returned to the menu list in all government departments, leading restaurants and hotels and armed forces.

Karachi Wholesale Poultry Association general-secretary Kamal Akhtar Siddiqui said the perception of people had changed and sales were satisfactory these days.

He said many farm owners had closed down their business in the last three months, adding that a day-old chicksÃ¢â¬â¢ price is now ruling at Rs12 from Rs2-3 last month.


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## Neo

ISLAMABAD (IRNA) Ã¢â¬â Iran on Thursday agreed to open Taftan/Mir Javeh land route for export of Pakistani agricultural products, with both sides showing determination to enhance the volume of bilateral trade.

In this respect, Hossein Yusefi, deputy Iranian Minister of Agricultural Jihad and Pakistan's Secretary for Food, Agriculture and Livestock Muhammad Ishamil Qureshi signed the Agreed Minutes of the Pak-Iran Joint Working Group's deliberations held at Islamabad on May 23-24, 2006.

A high level delegation of Iran led by Hossein Yusefi called on Secretary, Ministry of Food, Agriculture and Livestock here on Thursday.

Both sides discussed and agreed on modified Work Plan for cooperation in agriculture especially in Horticulture, Plant, Animal Health and Food Safety.

The Iranian side appreciated Pakistan for warm welcome, hospitality and cordial atmosphere during the deliberations.

Ishamil Qureshi hoped that the visit of Hossein Yusefi will provide another opportunity to explore further areas of cooperation in the field of agriculture.

During the meeting, progress on the implementation status of decision taken in the 15th session of Joint Economic Commission of Iran and Pakistan, held on February 21-23, 2005, in Tehran, was reviewed.

The fresh proposals for the 16th Session of Pak-Iran (JEC) held in Islamabad on May 24-25, 2006, were also discussed.


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## Neo

HYDERABAD: The Karachi Electric Supply Company (KESC) has completed a Rs3 billion project aimed at improving its services and President Pervez Musharraf will inaugurate the project soon, said Federal Water and Power Minister Liaquat Ali Jatoi on Friday.

He said that the Water and Power Development Authority (WAPDA) was making huge investments to upgrade and improve electricity supply under the directives of President and Prime Minister.

According to a spokesman for Hyderabad Electricity Supply Company (HESCO), the minister made these remarks while inaugurating a grid station of 132 KV in New Jatoi Taluka of District Naushero Feroz.

The grid station has been completed at a cost of Rs90 million in which 16 transformers and 32 towers have been installed for the provision of electricity to citizens of adjoining areas.

Chief Executive National Transmission and Distribution Company (NTDC) Haji Shabbir, Chief Executive HESCO Maqbool Khwaja and other officers concerned including District Nazim Aquib Jatoi were also present on the occasion.

The minister said, Ã¢â¬Åwe have completed 18 grid stations and Rs32 billion are being invested for the improvement of grid and electricity lines for the first time in the history.Ã¢â¬Â

He said Dadu-Khuzdar line would be completed at a cost of Rs3 billion and other projects including Gwadar Port and Textile City were also underway for the development of the country.

Jatoi said Pakistan had also signed an agreement with Iran to purchase power for Gwadar Port and electricity would be available at 5.25 cents per unit for consumption at Gwadar.

The minister made it clear there was no loadshedding in the country, adding power failures in interior Sindh were occurring because of theft of wires.

He said a meeting would be convened next week with chief minister Sindh to discuss law and order situation and cases of electricity wire theft to provide uninterrupted power supply to citizens.

The minister said another project for provision of electricity to Gorakh Hill Station had been completed which would be shortly inaugurated by President Musharraf.

He warned all the high officials of WAPDA and HESCO that stern action would be taken against the officers found involved in forced loadshedding anywhere in the country. The minister also suspended two officials of HESCO for prolonged power failures.

Speaking on the occasion, Member Power WAPDA Anwar Khalid said 15,000 villages would be electrified across the country, including 2,500 in Sindh. He said 400 megawatts surplus electricity was available with the WAPDA.


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## Neo

LAHORE: The Technology Upgradation and Skill Development Company (TUSDEC) has planned to spend Rs4.5 billion on 19 projects within the next couple of years through public-private sector partnerships in order to produce over 15,000 skilled workers per annum for country's industrial sector.

Often heard complaining vociferously about the dearth of skilled labour in the country, various chambers of commerce and trade association in the country have now reportedly been offered by the TUSDEC management to oversee these 19 projects at all stages of their completion, though the initial blue-prints of these initiatives have already been prepared in line with recommendations from the private sector.

According to the Ministry of Industries, Production and Special Initiatives, which governs the affairs of TUSDEC, the Rs450 million Karachi Tools, Dyes and Moulds Centre will be ready for all operational purposes by December 2006, while another Rs500 million facility of similar nature for Gujranwala Division is on the anvil.

The Ministry officials said while the work on the Gujranwala Tools, Dyes and Moulds Centre will commence by the end of this year, the government is in quite a hurry to set the ball rolling for the establishment of eight skill development centres in the earth-quake hit areas of the country.

The brick-laying on the project sites of these eight skill development centres, located in towns rocked by the October 8, 2005 earth-quake, will start from June 22 this year and will cost Rs200 million. 

These centres, being financially supported by the Pakistan Industrial Development Corporation (PIDC) TUSDEC management says it is focused on bringing the level of technological infrastructure and skill development in Pakistan at par with the requirements of the international market by helping industry Ã¢â¬ËJump the CurveÃ¢â¬â¢.

With two thirds of its board members hailing from the private sector and one third from the public sector, TUSDEC is engaged in stimulating, nurturing and sustaining technological development through shared resources, skill enhancement and quality consciousness, besides aiming at triggering off Pakistan Industrial Development Corporation (PIDC), TUSDEC is currently being headed by local engineering wizard and former Lahore Chamber of Commerce and Industry Executive Committee Member Syed Almas Hyder.

Almas Hyder, who was also the brain-child behind managing the affairs of the Kot Lakhpat Industrial Estate in Lahore on modern lines for some time, is now operating with a team of eminent engineers and technology experts at TUSDEC to help the industrial sector upgrade, develop and adopt new technologies.


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## Neo

ReutersMay 27, 2006


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## Neo

EDITORIAL (May 27 2006): In a major policy initiative to revamp the vocational and technical training infrastructure, President Musharraf has approved a roadmap to improve the quality and quantum of workforce being produced in the country in order to synergies the availability of skilled manpower with the demands of a rapidly expanding industrial base.

The escalating shortage of skilled manpower in various sectors of the economy has precipitated the current crunch. Speaking at a meeting of NAVTEC, the President rightly said that we must harmonise the skills of our younger generation with their economic potential in the environment they belong to.

The steady depletion of trained workforce in the country, occasioned by a tendency among skilled workers to migrate to greener pastures abroad, has adversely impacted the pace of industrial expansion and productivity in the country - a trend that can only be reversed by initiating new training programmes for workers.

The government plans to train around one million people in public and private sector institutions by 2010 to meet the rapidly expanding demand for skilled labour. The total annual cost of enhancing professional capacity of 142,000 to 300,000 people within three years has been estimated at Rs 2.960 billion, but it will be an investment worth making.

Under the roadmap unveiled by the President, the revamping of technical and vocational training would be carried out by providing better training facilities, competent faculty and equipment at these institutions.

The extent of exodus of trained Pakistani manpower can be gauged from the fact that as many as 173,824 workers went abroad to seek employment in 2004 while another 142,135 left the country in 2005.

This means that the country lost 315,959 productive and skilled workers in just two years! The exodus of educated and trained manpower has already generated a dangerous void in Pakistan's labour market, thereby adversely impacting the long-term prospects of our economic recovery. The role of foreign remittances as a short-term stabiliser of economy cannot be denied, but these short-term gains are more than neutralised when viewed in the long-term perspective of the country's industrial growth.

The dark underside of manpower export is the brain drain that has exacted a horrendous price in terms of national productivity. It goes to the credit of visionary leaderships of economic powerhouses of the world that they had focused on creating an educated and trained manpower, and then made its fullest use to develop their industrial base.

China and India today are reckoned as the rising industrial giants, posing a formidable challenge even to the industrialised West. Japan has created for itself a highly respectable place in the world of the 21st century. With the advent of a globalise market economy, the role of a sound industrial base and skilled and educated manpower has assumed unprecedented importance.

Compared to other countries, Pakistan ranks way below in human resource development. This has been due largely to the short-term and self-serving priorities of Pakistan's power brokers. Instead of laying foundations of a viable industrial base for achieving long-term economic goals, we have been pursuing a policy of short-term, and short-sighted, gains.

This policy of adhocism and our leaders' quest for such "quick fixes" as manpower export and foreign aid as a substitute for enhanced industrial productivity, has indeed kept us afloat, but at the cost of our long-term economic interests.

However, it is better late than never. The President's policy decision to revamp the vocational and technical training infrastructure to improve the quality and quantum of workforce being produced in the country is a commendable move that needs to be appreciated. The government should also enhance the overall budgetary allocation for education, as education is the gateway to all progress and development.


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## Neo

Per capita income rises to record $846: Shaukat 

ISLAMABAD (May 28 2006): Prime Minister, Shaukat Aziz said on Saturday that with the country getting economic strength and realising higher economic growth rates due to prudent economic policies over the last five years, the latest data shows per capita income has risen to all-time high $846.

He stated this while briefing a delegation of All Pakistan Newspapers Society (APNS) about the country's economic performance, achievements and other economic related matters including the prices of consumer items here at the PM House.

Shaukat Aziz said the government intends to provide relief to the common man through a number of budgetary and non-budgetary measures in the forthcoming budget for the fiscal year 2006-07. He said the government has already taken some bold steps to check the prices of sugar and cement.

Underlining some reasons behind the hike in prices, the Prime Minister said it was owing to the shortfall in domestic production of sugarcane last year as well as the price trends in international market, mainly driven by the increase in oil prices at global level.

He, however, added with the import of one million tonnes of sugar last year and adequate orders already placed for the import of commodity this year, the situation has improved to some extent and will improve further in the days and months ahead.

Shaukat Aziz informed the delegation that due to the economic reforms, the country's debt has come down from over 100 percent of GDP in 1999 to less than 60 percent at present.

He said the government also intends to take some measures to check the prices of pulses, including gram, masoor, mash and moong.

Regarding the privatisation programme, the Prime Minister said the privatisation process of various public sector entities, cleared by the Cabinet Committee on Privatisation (CCOP), was clear and transparent.

He said the income tax reforms, which made the entire system transparent and taxpayers-friendly, have started to bring results with sustained growth in tax collections.

To a question, the Prime minister said oil and gas sector reforms, spearheaded over the last few years with transparent regulatory and price mechanisms in place, have also brought about improvement in this sector.

He said the prices of petroleum products have been linked with the international market, adding, however the government has made adjustment in the domestic petroleum prices only once during the last six months.

The Prime Minister said that despite the devastating October 8, 2005 earthquake and the unprecedented increase in oil prices, the government has been successful in maintaining the growth rates.

To a question about the Karachi Stock Exchange, the Prime Minister said, "we are proud of our capital market, as there was a lot of interest of investors from home and abroad. Foreign portfolio shows the confidence of investors in our capital market and economy."

He said the government has the regulatory role in the market and price fluctuations are driven by market forces. Price fluctuations are recorded everywhere, even in the Wall Street, he added.

But, he said, "we have had a world-class systematic reforms in our capital market, with all stakeholders including regulators, managers, brokers and investors playing their role in their respective areas."

Minister for Information and Broadcasting Mohammad Ali Durrani, State Minister for Information and Broadcasting Tariq Azeem, Secretary Information and Broadcasting Shahid Rafi and senior officials of the ministry were also present in the meeting.

Later, the Prime Minister met a delegation of Broadcasters Association, headed by Mir Shakeelur Rehman, who apprised him of the problems, being faced by the electronic media.

Shaukat Aziz asked the information ministry to have detailed meetings with the association to help resolve their problems.

http://www.brecorder.com/index.php?...&term=&supDate=


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## Neo

RAWALPINDI (May 28 2006): President General Pervez Musharraf on Saturday directed adherence to top international standards in realisation of facilities at the Gwadar deep-sea port, saying that the important national asset would be a vital factor in turning Pakistan into a hub of regional trade.

Speaking at a meeting that reviewed progress on the development of the port, the President underlined that timely completion of the port on modern lines, would accrue tremendous benefits both to the local populace and the national economy.

Prime Minister Shaukat Aziz also attended the meeting.

"We must put in place high quality of shipping services and connect the port to the upper parts of the country with an elaborate network of road and railway infrastructure. At the same time, we should ensure better allied infrastructure in the form of information technology, housing, hotel and business facilities at the port," the President said.

He said the region's countries look up to Pakistan to serve as a trade and energy corridor between Central Asia, South Asia, the Gulf and the rapidly progressing western parts of China.

President Musharraf particularly outlined the impact of large-scale economic activity the port is to witness, and directed the Ministry of Ports to encourage maximum employment of local people.

"The local people should be trained to acquire skills necessary for running the operations of the port on modern lines to ensure that the multibillion rupees project reduces poverty and opens up new avenues of growth for the people of Balochistan," the President stressed.

Prime Minister Shaukat Aziz said the government would facilitate the private sector in starting off business activity at Gwadar, and added that a number of incentives were being offered to investors.

He said the construction of Gwadar airport on modern lines would help facilitate foreign and local entrepreneurs in making use of investment opportunities in the region.

Minister for Shipping and Ports Babar Khan Ghauri said that work on realisation of the state-of-the-art facilities at Gwadar port was underway on fast track basis.

He said a number of foreign and local investors have shown keen interest in business opportunities at the port and in the development of allied communication infrastructure.


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## Neo

ISLAMABAD (May 28 2006): The Ministry of Food, Agriculture and Livestock (Minfal) is planning to launch two separate programmes, worth Rs 18.6 billion, to improve the agri sector from next fiscal year.

Sources in the Ministry told Business Recorder on Saturday that the programmes, pertaining to commercialisation of livestock sector, high efficiency in irrigation system and high-value crop production, would be launched from next year.

The Ministry would spend Rs 15 billion for promotion of efficiency in irrigation system and high-value crop production, they said.

The irrigation system would include drip and sprinkler method while high-value crop production of horticulture would be the main beneficiary of this project, sources said.

The Minfal will also launch two major initiatives for milk and meat development, with an estimated cost of Rs 3.6 billion from next fiscal year. Two private companies, namely Livestock and Dairy Development Board, and Pakistan Dairy Development Company, have been established to increase the pace of development in the livestock sector, sources said.

The Ministry has also prepared an up-scaled 'Crop Maximisation Programme, which would cover 1,000 villages in all four provinces and AJK, FATA and NAs, they said. It would enhance crop productivity of small farmers at village level, supporting them to start income generation activities in the areas of livestock, fisheries and high-value crops on sustainable basis, it is hoped.

On-going projects: Agriculture Support Loan Programme-II is an investment and reform programme supported by $350 million assistance from the Asian Development Bank.

On-Farm Water Management Programme with a cost of Rs 66 billion is meant to renovate 87,000 watercourses, but this year the programme is likely to repair 15,000 instead of 10,000 watercourses with an investment of Rs 7 billion.

The ministry is also executing a programme with the support of ADB for the improvement of horticulture and livestock related businesses at an estimated cost of Rs 4.1 billion.


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## Neo

KARACHI (May 28 2006): Port Qasim Authority (PQA) has to-date attracted 1.463 billion-dollar (Rs 88 billion) foreign direct investment (FDI) in projects established at the port.

According to the progress report on "port industrial complex - development status, performance and framework for future growth," issued by the PQA, the FDI relates to projects established with investments from following countries.

-- PTA plant-UK, fertiliser plant-Morocco, thermal power plant-Japan/Italy, automobile plant-Japan, oil terminal-Hong Kong, polymer plant-Japan, chemical plant-Holland, container terminal-Australia, edible oil refinery-Singapore, industrial gases manufacturing-UK, BOPP films-Japan and petrochemicals-Malaysia.

-- The framework for future development includes deepening of navigational channel with all weather 13.5-metre draught at a cost of 100 million dollars and acquisition of tugs at a cost of 10 million dollars. Both these are public sector projects.

-- The private sector projects include LPG terminal, liquid cargo terminal, coal and clinker/cement terminal, grain and fertiliser terminal, second oil terminal, second container terminal and LNG terminal, which alone will be established at a cost of 500 million dollars.

-- Other mega projects include Textile City in public-private sector at a cost of rupees four billion.

-- The projects in private sector include world trade centre at a cost of 300 million dollars, waterfront developments-diamond bar island city 2.1 billion dollars, two desalination plants 320 million dollars, MAPAL oil refinery 20 million dollars, and Tawoos Pakistan (Pvt) Limited, costing Rs 40 million.

The PQA has also drawn-up plans for the infrastructure development, ie roads, sewerage, storm water drainage, pump houses and power supply, dualisation of PQA access road, and construction of flyover, reclamation, re-alignment of roads and other projects at a cost of over Rs 5,000 million.

The average annual growth rate in cargo handling over the last five years has been recorded at 8.5 percent per annum and in shipping around 10 percent per annum.

The PQA's share in sea-borne trade of Pakistan was 40 percent. Cargo handling, during 2004-2005 increased by 36 percent and cargo volume expected during 2005-2006 has been estimated at 23.3 million tonnes.

The PQA, which is catering for various development projects, has projected capital expenditure of over rupees nine billion during 2005-2006 to 2009-2010.

As a result of investor-friendly and transparent land allotment policy, industrial and commercial projects are emerging progressively. The pace of industrialisation could be judged from the fact that from June 2003 to April 2006, a total of 90 units have been established and 53 are under construction.

The LPG terminal would be commissioned shortly, while ground breaking of liquid cargo terminal and World Trade Centre would be held in next two months.

The PQA's contribution to national exchequer is reflected in collections made by the customs. The Collectorate of Customs collected Rs 62 billion in the form of duties and taxes on imports passing through Port Qasim during 2004-2005. During the current financial year ie July 2005 to April 2006, the customs receipts in terms of duties and taxes is more than Rs 59 billion.

The PQA's future strategy includes reduction in cost of doing business by improving logistics to international standards, focus on cost recovery rather than profit maximisation, enhancement of port efficiency to international standards, accommodation of larger ships to benefit from economies of scale, time-efficient and cost effective maintenance dredging and promotion of investments through institutional reforms.


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## Neo

ISLAMABAD (May 28 2006): The Sensitive Price Indicator (SPI) year-on-year of 53 daily use items for week ending on May 25, has shown 7.98 percent increase as compared to the corresponding week of the last year.

The weekly bulletin of Federal Bureau of Statistics (FBS) shows that on year-on-year, the rise in the prices of some necessities and kitchen items had been excessive. These items are sugar, gur, pulses, potatoes, diesel, petrol, gas, kerosene oil, LPG, firewood, which hit the low-income group.

The bulletin on SPI, based on data of 53 items from 17 urban centres, showed that 13 items registered increase, and 11 items showed decline, while prices of 29 items remained unchanged with reference to the last week prices.

However, further analysis of the data showed that year-on-year basis, 13 items show double-digit increase. These include gram pulse (washed) by 47 percent, moong pulse (washed) 64 percent, mash pulse (washed) 79 percent, gur 42 percent, sugar 36 percent, potatoes 14 percent, beef 14 percent, fresh milk 11 percent, curd 10 percent firewood, 25 percent, petrol 27 percent, diesel 33 percent, LPG 71 percent, kerosene 25 percent, and gas increased by almost 10 percent.

Among these items, in a short span of one week, the prices of LPG (11 kg cylinder) increased by 2.24 percent, chicken 11.00 percent, bananas 4.90 percent, gur 1.55 percent and eggs 4.60 percent over previous week.

The FBS figures further showed that though the prices of 29 items posted no change during the week, several items are now costlier when compared to the corresponding week of the last year. For example, diesel increased by 33 percent, petrol 27 percent, match box 8 percent, ladies sandals (Bata) 20 percent, Kerosene 25 percent, tea prepared 12 percent and salt (powdered) by 22 percent.

The bulletin further indicates that though the prices of 11 items decreased to the last week prices, showed increase from last year. They are garlic, which is dearer by 20 percent, gram pulse (washed) 47 percent, moong pulse (washed) 64 percent, potatoes 14 percent, sugar 37 percent and lawn (cloth) 7 percent.

Further analysis of the report, 11 percent rise has been observed in the chicken price and 4.6 percent in the eggs from last week suggests that the bird flu fear is diminishing. The report, which is based on average results from 17 cities, reveals that the chicken rates of Hyderabad, Sukkur, Larkana in interior Sindh, and Quetta and Khuzdar in Balochistan are quite high, averaging Rs 70 per kg, whereas it touches Rs 76 per kg in Bannu, NWFP.

The rates of chicken in other cities have still not seen much change.

Meanwhile, there has been unprecedented rise in prices of pulses except Masoor (washed), which has fallen slightly. The price increases, range from 47 percent to as high as 79 percent from the corresponding week of previous year. The high rates of sugar and other items is hurting the low income group badly.

According to the FBS bulletin people in lowest income slab of up to Rs 3000, the SPI is close to 8.7 percent and Rs 3000 - 5000 income group, it is above 8 percent the average SPI increases for all income groups is 7.9 percent.


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## Neo

WASHINGTON (May 28 2006): US Under Secretary for Economic, Business and Agricultural Affairs Josette Sheeran Shiner has said that the US government wants to find ways to support Pakistan's own efforts to ease poverty and create new economic opportunities for its citizens.

Ms Shiner concluded her four-day (May 22-25) five-nation visit, with a trip to Pakistan. She said, "More and more, we find that Pakistan is a respected advocate for economic reform and liberalisation, not just in the region but in the wider world."

This was stated in a media note issued by the office of the Spokesman of US State Department on Friday. Pakistan, the Under Secretary added, has been taking steps "to enhance its global competitiveness."

The American businessmen she met within Pakistan, she added "were impressed with the vastly improved business climate in Pakistan, and with the government's efforts to create jobs and economic growth." The visit of Under Secretary Shiner helped move US-Pakistani economic partnership to "new level."

The government of the United States has extended significant co-operation to the government of Pakistan in recent years. Economic Support Funds make up $300 million annually of President Bush's five-year, $3 billion commitment to Pakistan (fiscal years 2005 to 2009).

Economic Support Funds are broken down into $200 million annually for budget support and $100 million for programme support. This five year commitment followed United States government debt relief of approximately $1 billion in 2003 and $500 million in 2004. In addition, the United States government pledged $510 million for earthquake relief and reconstruction. During her visit to Pakistan, the senior US official met with Prime Minister Shaukat Aziz.

The Under Secretary "engaged in a strategic economic dialogue with leading Pakistani economic officials, visited a US earthquake relief project in a mountain village in the Siran Valley, and participated in a meeting of the high level panel on UN reform co-chaired by Prime Minister Aziz."

During Under Secretary's meeting with Prime Minister Aziz, "the Prime Minister announced his intention to complete negotiations on a Bilateral Investment Treaty (BIT) as soon as possible."

"A BIT would form an important part of the multifaceted US-Pakistan relationship, and would help attract US investment to Pakistan's rapidly growing economy," the press note stated.

Under Secretary remarked on the "win-win nature" of such an agreement for both countries, and lauded the additional protections that would be afforded to US investors in Pakistan "under a BIT."

While in Islamabad, the Under Secretary engaged in an economic dialogue with leading Pakistani economic officials, led by Finance Advisor Salman Shah, "to share views on domestic and international economic policies, and identify areas for strategic co-operation."

The Pakistani officials explained how they plan to sustain Pakistan's recent high growth rates by implementing a range of their second-generation microeconomic reforms.

The Under Secretary elaborated on President Bush's Regional Opportunity Zone (ROZ) initiative and next steps in outlining the parameters of the ambitious project.

She also confirmed US government support for Pakistan "as a southern hub" for transportation, energy, and commercial linkages "that would enhance" regional economic integration between South Asia and Central Asia.


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## Neo

PESHAWAR (May 28 2006): NWFP Finance Minister Siraj-ul-Haq has said that government employees can benefit in the real sense if 100 percent increase is made in their salaries because of the soaring prices in the country.

Hence, he said, the federal government can give a gift to the entire poor nation if, in the new budget, the prices are brought down to the level when the military government took over, as the prices have increased manifold since then, and this has made life of the poor more miserable.

He was addressing a seminar on 'price hike, privatisation and social insecurity' under the auspices of Wapda Paigham Union at Press Club, Peshawar, on Saturday. The seminar, besides labour leaders, was also addressed by Tila Muhammad Taizai, chairman of Paigham Union, Merajuddin; President of National Labour Federation, and Sabir Hussain Awan MNA who highlighted the problems of the labour community, including Wapda employees.

Strongly opposing the privatisation of Pesco and other organs and installations of Wapda, Siraj said that such unwise steps meant failure and inability of the concerned ministries and authorities and if it continued and national institutions of water and power, telephone, gas and railways were sold at throwaway prices then the entire country would go under threats.

He said that MMA would oppose such steps and would send few hundred ruling families home after their accountability "through peaceful Islamic revolution". He said that Islam guarantees equality, social security and human welfare that was practically demonstrated by the Holy Prophet (PBUH). Labour was termed friend of Allah Almighty, and asked the people to pay wages to the labourers before their sweat dried and even made clear that working class was the real heir of the world by kissing their forehead.

The Minister said that dictatorship was the basic cause of all evils including price hike, poverty, and backwardness in the country.

A number of resolutions, were also passed in the seminar including giving up privatisation of Wapda, fixing compensation of Rs 0.5 million for Wapda employee on death during duty, and abolishing obscenity on official electronic media.


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## Neo

ISLAMABAD (May 28 2006): The government spent an unprecedented amount of over Rs one trillion on poverty alleviation and social sector-related programmes during the last four years, which caused decline in poverty from 32.1 percent in 2000-01 to 25.4 percent in 2004-05.

"Rural poverty has declined from 39 percent to 31.8 percent and urban poverty from 22.7 percent to 17.1 percent", Advisor to the Ministry of Finance, Dr Ashfaque Hasan Khan told APP in an exclusive interview here on Saturday.

He said, the real GDP grew at an average of rate of almost 6 percent per annum in the last four years as against 3.3 percent in the preceding four years and is poised to be between 6 to 7 percent during the current fiscal year, showing a strong economic recovery in the country.

He said the growth recovered from 1.8 percent in 2000-01 to 8.4 percent last year. "If we take a longer term view, growth recovered from an average of 3 percent during last six years prior to 2001-02 to an average of over 6.5 percent during last three years (2002-03 - 2004-05)", he remarked.

Dr Ashfaque said that due to strong domestic consumption and investment, the demand is picking momentum and the real private sector consumption grew by 8.2 percent in 2003-04 and 16.8 percent in 2004-05.

Higher consumption spending, feeding back into economic activity is likely to support the ongoing growth momentum, he said adding, it suggests the emergence of a strong middle class with buying powers.

The advisor said that unemployment has reduced from 8.3 percent in 2001-02 to 6.2 percent in the second quarter of 2005-06 and the pace of job creation has increased.

"During 1999-2000 to 2001-02, 2.23 million jobs were created while in 2001-02 to 2003-04, 2.96 million jobs were created and during 2003-04 and the first half of the current fiscal year (2005-06), we succeeded in creating 5.8 million jobs", he remarked.

About reduction in poverty, he said that poverty in Pakistan has declined from 32.1 percent in 2000-01 to 25.4 percent in 2004-05. Rural poverty has declined from 39.0 to 31.8 percent and urban poverty from 22.7 percent to 17.1 percent, he added.

Giving reasons for decline in poverty, he said, the real GDP grew at an average rate of almost 6 percent per annum in the last 4 years (2000-01 to 2004-05) as against 3.3 percent in the preceding 4 years.

Dr Ashfaque said the agriculture sector registered a strong growth of 7.5 percent in 2004-05 and the GDP grew due to large increase in public sector spending.

He further said that Non-Interest and Non-Defence (NIND) spending in real terms grew by an average rate of 8.2 percent during 2000-06 against a decline of 1.2 percent in the 1990s. There was a four times increase in remittances and significant reduction in fiscal deficit, he said and added it reduced from an average of 7.0 percent of GDP in the 1990s to around 3.0 percent in recent years.

The advisor to finance ministry said that


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## Neo

BEIJING (May 28 2006): China has agreed to help in development of Karachi's master plan, its basic infrastructure, road and train network and solid-waste management system. This was stated here on Saturday by Karachi City Nazim Syed Mustafa Kamal at the end of his weeklong visit to China.

It was decided that Karachi and Shanghai would strengthen their interaction and co-operative partnership as sister-cities. He termed his meeting with his counterpart in Shanghai Han Zheng as highly productive. Han Zheng assured him that he will send a team of planners to Karachi next month to help in preparing the master plan and promoting other facilities.

This will be in line with the strategy they adopted making Shanghai as one of most modern cities in the world. In an interview with APP, Mustafa Kamal said they were agreed to maintain close interaction to help in executing development projects. Pakistan, he said wished to learn from the Chinese experience and expertise for improving the basic civic amenities.

Both sides, he said would set up a secretariat of dedicated staff to carry forward their working relationship on regular basis. Mustafa Kamal said, the Karachi's elected representatives were in process of developing mega projects to improve the living conditions of their people. He hoped that the support from their Chinese friends would help to realise the future target.

The Shanghai's mayor also assured that the city's major entrepreneurs would be encouraged to participate in the Karachi's development projects. The two port cities have the potential to undertake joint ventures for socio-economic uplift, he added. Mustafa Kamal said mayor of Shanghai accepted his invitation to visit Karachi soon.

The meeting was also attended by the deputy mayor of Shanghai Tang Deng Jie and Pakistan's Consul General in Shanghai Zafaruddin Mahmood.


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## Neo

ISLAMABAD (May 28 2006): Ambassador of Azerbaijan Dr Enyulla Maddatli on Saturday called on Minister for Petroleum and Natural Resources, Amanullah Khan Jadoon and discussed with him matters of mutual interest and bilateral co-operation in the field of oil and gas.

Both sides agreed that there existed a lot of potential and scopes for further promoting co-operation in diversified field particularly oil and gas to their mutual advantage.

The minister said the government attaches top priority to strengthening and expanding bilateral ties with the Central Asian States and they could benefit from each other's experience in the vital energy sector.

The envoy informed the minister that Azeri government was looking forward to his visit to Baku in near future at the meeting of Pak-Azerbaijan Joint Ministerial Commission and hoped that it would open up new vistas of co-operation in the economic field.

He also indicated the Azeri companies' willingness to undertake joint ventures with Pakistani oil and gas companies and underlined the need for exchange of experts' level delegation. The minister invited Azeri companies for gas pipeline projects, LNG, oil and gas exploration projects in Pakistan.


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## Neo

PESHAWAR (May 28 2006): NWFP Chief Minister Akram Khan Durrani has said that delay in the execution of future plans for generating hydro power may harm the overall development and the process of stabilising economy of the Frontier province, and asked the officials concerned to ensure speedy work on the ongoing projects.

He was presiding over the 21st meeting of the Board of Directors of Sarhad Hydel Development Organisation (SHDO) at Frontier House, Peshawar, on Saturday.

The meeting was attended by members of SHDO, NWFP Chief Secretary Ejaz Ahmad Qureshi, Additional Chief Secretary Ghulam Dastgir and Secretaries of Finance, Law, Irrigation and Power.

The chief minister said that with public-private partnership, small and medium size hydro power projects would be initiated, as his government was endeavouring to upgrade water resources in the province to generate sufficient hydel power to cope with growing requirements of electricity in the province.

He said his government had planned to facilitate such plans, and resources would be generated to make possible the ongoing and future plans of hydro electric projects.

Durrani said that Malakand-III Hydro Project was playing key role in improving economic, industrial and agricultural position of the province, and stressed the need for evolving a comprehensive strategy to identify such more beneficial projects.

He directed the officials to keep vigilance on the performance of contractors against causing unjust delay in the projects. The chief minister said that 10 MW electricity would be provided to local industrial units, and added that Rs 1.5 billion profits would be annually generated and more than 20,000 acres land would be irrigated from these projects.

Akram said these projects would create jobs and would help develop backward and underprivileged areas of the province. The chief minister was briefed on various projects of SHDO. According to the briefing, Malakand-III Hydro Project would be completed by December this year. Pehur and Shishi Hydro Power Projects would be completed by December 2007. These projects would produce 81MW, 81 MW and 2 MW electricity, respectively.

The meeting was told that installation of an additional 1.4 MW unit in Roshan Hydro Power House would be completed by June 2006. New projects of SHDO include establishment of Dral Khwar (Swat) Hydro Power Project, Ranolia Hydro Power House, (Kohistan) and Mardan Hydro Power Projects. These new project would produce 35 MW, 12 MW and 2.5 MW, respectively.

The meeting was told that these projects would be completed with the help of Asian Development Bank (ADB). The meeting was informed that Malakand Hydro Project would cost Rs 6.3 billion, and expressed hope that all these expenses would be returned in the shape of income within five years.


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## Neo

Sunday, May 28, 2006 

ISLAMABAD: The government spent an unprecedented amount of over Rs one trillion on poverty alleviation and social sector related programmes during the last four years, which caused decline in poverty from 32.1 percent in 2000-01 to 25.4 percent in 2004-05. Ã¢â¬ÅRural poverty has declined from 39 percent to 31.8 percent and urban poverty from 22.7 percent to 17.1 percent,Ã¢â¬Â Advisor to the Ministry of Finance, Dr. Ashfaque Hasan Khan told APP in an exclusive interview here on Saturday.

He said, the real GDP grew at an average of rate of almost 6 percent per annum in the last four years as against 3.3 percent in the preceding four years and is poised to be between 6 to 7 percent during the current fiscal year, showing a strong economic recovery in the country.

He said the growth recovered from 1.8 percent in 2000-01 to 8.4 percent last year. Ã¢â¬ÅIf we take a longer term view, growth recovered from an average of 3 percent during last six years prior to 2001-02 to an average of over 6.5 percent during last three years (2002-03 - 2004-05),Ã¢â¬Â he remarked.

Dr. Ashfaque said that due to strong domestic consumption and investment, the demand is picking momentum and the real private sector consumption grew by 8.2 percent in 2003/04 and 16.8 percent in 2004/05. Higher consumption spending, feeding back into economic activity is likely to support the ongoing growth momentum, he said adding, it suggests the emergence of a strong middle class with buying powers.

The Advisor said that unemployment has reduced from 8.3 percent in 2001-02 to 6.2 percent in the Second Quarter of 2005-06 and the pace of job creation has increased. Ã¢â¬ÅDuring 1999-2000 to 2001-02, 2.23 million jobs were created while in 2001-02 to 2003-04, 2.96 million jobs were created and during 2003-04 and the first half of the current fiscal year (2005-06), we succeeded in creating 5.8 million jobs,Ã¢â¬Â he remarked.

About reduction in poverty, he said that poverty in Pakistan has declined from 32.1 percent in 2000-01 to 25.4 percent in 2004/05; Rural Poverty has declined from 39.0 to 31.8 percent and Urban Poverty from 22.7 percent to 17.1 percent, he added. Giving reasons for decline in poverty, he said, the real GDP grew at an average rate of almost 6 percent per annum in the last 4 years (2000-01 to 2004-05) as against 3.3 percent in the preceding 4 years.

Dr. Ashfaque said the agriculture sector registered a strong growth of 7.5 percent in 2004-05 and the GDP grew due to large increase in public sector spending.

He further said that Non-interest and Non-Defense (NIND) spending in real terms grew by an average rate of 8.2 percent during 2000-06 against a decline of 1.2 percent in the 1990s. There was a four times increase in remittances and significant reduction in fiscal deficit, he said and added it reduced from an average of 7.0 percent of GDP in the 1990s to around 3.0 percent in recent years.

The Advisor to Finance Ministry said that due to prudent economic policies, a high double-digit growth in exports and imports was witnessed: Dr. Ashfaque Hasan Khan who is also Director General Debt Office said there was sharp reduction in country's debt burden from over 100% of GDP to 61.7% last year. Foreign Investment recovered from an average of US $ 400 million to over US $3.0 billion this year, he added.

About Tax collection, he said collections have more than doubled in 7 years and it took 10 years to add Rs.200 billion in tax collection but it took just 7 years to add Rs.400 billion. "Pakistan has said goodbye to the IMF", he remarked.

He added that owing to stable economic positions and sound policies, Pakistan has re-entered the International capital markets and successfully brought stability in exchange rate.

About the objectives of FY 2006-07, he said that government will consolidate the gains made during the last three/four years to accelerate the pace of progress in the country.

The Advisor to Finance Ministry said "We faced head-winds right after the beginning of the current fiscal year". The Oil prices began to rise following devastating earthquake of October 8, and it went up to US $ 70/brl. The economy continues to gather momentum, he said, adding, notwithstanding head-winds the economy continues to grow strongly.

About Inflation, he said, it came down from 11.1 percent in April 2005 to 6.2 percent in April this year while the trade deficit has widened because of three or four items. Higher oil bill has contributed almost 42 percent in the widening of trade gap followed by the rise in imports of machinery (22%), import of iron and steel (12%); and increase in imports of consumer durables (including cars) contributed to only 9.2 percent. 

Thus, over 85 percent increase in trade gap is contributed by these four items, he said and added most importantly, contrary to the general perception, imports of cars, TV, fridge, air conditioners etc; have contributed only 9.2 percent to the widening of trade gap.

About the future outlook, he said, a strong foundation has been laid to sustain a growth momentum of 6-8 percent p.a. Dr. Ashfaque said the government will continue its efforts to maintain a stable macroeconomic environment as it is committed to improving the lives of the common man.

Financial discipline and political and regional stability are vital ingredients for sustaining growth momentum and therefore, creating more jobs and further reducing poverty, he added.

Highlighting the significance of the forthcoming Budget (2006-07), he said that the forthcoming Budget would be people friendly and various measures will be taken to provide relief to low and fixed income groups. He said that consistency and continuity of policies would be maintained to promote investment and growth with a view to creating more jobs in the country.


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## Neo

Sunday, May 28, 2006 

WASHINGTON: The State Department has described the just-concluded visit of a senior US official to Pakistan as having helped move US-Pakistan economic partnership to a Ã¢â¬Ånew level.Ã¢â¬Â

US Under Secretary of State Josette Sheeran Shiner, who is in charge of economic, business and agriculture affairs, visited Pakistan from 22 to 25 May, where she met Prime Minister Shaukat Aziz, engaged in a strategic economic dialogue with leading Pakistani economic officials, visited a US earthquake relief project in a mountain village in the Siran Valley, Azad Kashmir, and participated in a meeting of the High Level Panel on UN reform co-chaired by the Pakistani prime minister. 

The State Department said that during ShinerÃ¢â¬â¢s meeting with Aziz, the latter announced his intention to complete negotiations on a Bilateral Investment Treaty as soon as possible. Such a treaty would form Ã¢â¬Åan important part of the multi-faceted US-Pakistan relationship, and would help attract US investment to PakistanÃ¢â¬â¢s rapidly growing economy,Ã¢â¬Â according to the Department. Shiner has emphasised the Ã¢â¬Åwin-win natureÃ¢â¬Â of the agreement for both countries, and lauded the additional protections that US investors would receive in Pakistan under the arrangement. 

The State Department said, Ã¢â¬ÅWhile in Islamabad, the under secretary engaged in an economic dialogue with leading Pakistani economic officials, led by Finance Advisor Salman Shah, to share views on domestic and international economic policies, and identify areas for strategic cooperation. The Pakistani officials explained how they plan to sustain PakistanÃ¢â¬â¢s recent high growth rates by implementing a range of their Ã¢â¬Ësecond generationÃ¢â¬â¢ microeconomic reforms. The under secretary elaborated on President BushÃ¢â¬â¢s Regional Opportunity Zone (ROZ) initiative and next steps in outlining the parameters of the ambitious project. She also confirmed US government support for Pakistan as a southern hub for transportation, energy, and commercial linkages that would enhance regional economic integration between South Asia and Central Asia.Ã¢â¬Â

Shiner was quoted as saying, Ã¢â¬ÅMore and more, we find that Pakistan is a respected advocate for economic reform and liberalisation, not just in the region but in the wider world. Pakistan has been taking steps to enhance its global competitiveness. The American businessmen I met with in Pakistan were impressed with the vastly improved business climate in Pakistan, and with the governmentÃ¢â¬â¢s efforts to create jobs and economic growth. The US government wants to find ways to support PakistanÃ¢â¬â¢s own efforts to ease poverty and create new economic opportunities for its citizens.Ã¢â¬Â


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## Owais

Bangladesh response awaited to rice sell offer 




*DHAKA *_(updated on: May 29, 2006, 13:48 PST_): Pakistan on Monday said it was waiting for a response to its offer to sell 500,000 tonnes of rice to Bangladesh in a state-to-state deal, a official said on Monday.

'We are waiting for Bangladesh's response as we offered to sell half a million tonnes of rice to them,' Roubina Taufiq Shah, commercial secretary of the Pakistani High Commission, told Reuters.

Pakistan made the offer when Prime Minister Begum Khaleda Zia visited Islamabad in February this year, a food ministry official said, adding that no decision has been taken yet.

"Bangladesh government informed us that they were making assessment of their requirements," Roubina said.

The food ministry launched a drive in April to procure 1.2 million tonnes of rice from the domestic market to build a food stockpile for emergencies and so far collected 172,000 tonnes, the ministry officials said.

The drive will continue till end of August, 2006, they said.

Bangladesh, where rice is the main staple food for a population of 140 million, produced 25.3 million tonnes of rice in 2004-05 fiscal year to last June, officials said


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## Owais

*25 containers of yellow peas stuck up at Karachi port: Regulatory Duty on pulses export* 

KARACHI (May 29 2006): Some 25 containers of yellow split peas, worth $0.2 million have been stuck up at Karachi port due to sudden imposition of 35 percent regulatory duty on export of pulses, sources told _Business Recorder _on Sunday.

They said that some 25 containers holding around 625 metric tons of pulses were stuck up suddenly when the said consignment reached Karachi port on May 18 for examination and shipment to different countries, as the government had slapped 35 percent regulatory duty on their export.

"We had already signed contracts of yellow split peas (pulses) of approximately 15,000 tons worth nearly $4.5 million with different countries, including United Arab Emirates (UAE), India, Bangladesh and Sri Lanka," said an exporter.

The exporters are perplexed over the situation in which the containers are stuck up at the port, as some of the exporters have received advance payment and some have already shipped 50 percent of the orders and their payments would be cleared only when the remaining consignments would be dispatched.

"We have also received Letters of Credit (LCs) from our buyers and now we are bound to dispatch the already booked consignments," he added.

Another exporter whose containers are also piled up at the port, said, "If we do not ship the commodity, then the orders would not be cancelled, but we would have to pay additional Rs 6 per kg."

The people associated with export of pulses are confused over the situation as they believe that the government should have informed them prior to any imposition and should have allowed exporters to ship their already booked orders.

"In our trade, orders are not cancelled," said an exporter, adding that the exporters have to send the consignments at any cost and, in the current scenario, they (exporters) fear that they would have to pay additional amount for getting the consignments dispatched.

He regrettably said that the image of the country would also be portrayed as 'bad' if anyone does not fulfil the export orders within the specified time.

Karachi Wholesale Grocers' Group (KWGG) has also argued with the government over the regulatory duty issue and has demanded that the government should allow exporters to ship their already booked orders.

"Whenever any policy is announced, it must have 'flexibility' and 'cushion'. Nevertheless, this time the government issued an SRO and slapped 35 percent regulatory duty on export of pulses with immediate effect which has badly affected those who had committed their buyers for the supply pulses," said Anis Majeed, advisor to KWGG.

He dispelled the impression that prices of pulses in the country have touched the peak and in this situation exporters are unfair with the masses by exporting the commodity to other countries.

"Actually, we used to import whole yellow peas from Canada and then by passing it through different processes; we prepare yellow split peas (pulse) for export to different countries. Therefore, the allegation of exporting precious commodity is baseless," he said.

"Whole yellow peas is the product of Canada and it is not produced in our country," he said and added: "We used to import whole yellow peas at the rate of $200 per ton to $225 per ton and then exported to other countries at $325 per ton. In this way, we contributed a handsome value-addition to the national exchequer."

Exporters have claimed that 95 percent of the pulses export is of yellow split peas, and other pulses, which are commonly used in the country, are hardly 5 percent, which may not be allowed to be exported.

While giving reference to the international conference on pulses 'CICILS/IPTIC', held in Goa (India) on May 18-19, Anis Majeed said that production of pulses had declined not only in Pakistan but also in other countries around the globe.

"Non-availability of water and untimely downpour mainly hit the crop this year all over the world," he said, adding that "Pakistan is now importing moong pulse, which it has been exporting for the last five years.


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## Owais

*ECC may discuss cement price issue today* 

ISLAMABAD (May 29 2006): The Ministry of Industries and Production has opposed any relaxation to cement manufacturers till such time as they set ex-factory price at Rs 275 per bag and advertise retail price in the newspapers, official sources told _Business Recorder _on Sunday.

The Economic Co-ordination Committee (ECC) of the Cabinet in its meeting on Monday is likely to discuss the impact of earlier decision taken to stabilise the prices of this commodity in the local market.

"Cement prices have stabilised and continue to decline gradually in the wake of government decision, and are expected to further come down due to import in the ensuing months and reduction in ex-factory rates," sources remarked.

They said that the Industries Ministry had made it clear to All Pakistan Cement Manufacturers Association (APCMA), at a meeting on May 18, that in order to provide relief to the common man the government wanted the cement prices at the level of Rs 280 per bag, which was the rate prevailing in February.

The ministry and cement manufacturers, after detailed deliberations on cement price took the following decisions:

i) The APCMA shall ensure availability of cement in the domestic market on the retail price ranging between Rs 285 and Rs 295 per bag, besides fixing ex-factory price at Rs 275.

ii) The cement manufacturers shall advertise the retail price in leading newspapers in order to avoid black marketing by dealers and retailers.

iii) The government shall consider the request of cement manufacturers to impose (quantity) limit on import and restoration of duty drawback on export of a limited quantity of 100,000 tons of cement per month on first-come-first-served basis.

But it has been suggested to ECC that as soon as the conditions regarding restoring of duty drawback on export and placing limit upon imports qualifying for freight subsidy are met, the ministry would come up with appropriate proposals, sources said.

They said that cement manufacturers had expressed grave concern over ban on its export, which according to them would bring a glut in the market by September.

The APCMA was also of the view that Pakistan would not only lose the hard-won export market in Afghanistan to India or Central Asian States due to ban on export, but the investors too would remain shy to make further investment.

"If the present policies continue, the future of cement industry in Pakistan seems bleak," cement manufacturers said, according to sources.

The APCMA had agreed to convey agreeable sale price to the Industries Ministry after consultations with member factories but they did not fulfil the commitment.

It is pertinent to mention that the Industries Ministry has formally included a clause in the Price Control Act, empowering provincial and district governments to check hoarding in their respective areas.

According to the Act, sources said, the hoarders would have to face three years imprisonment or Rs 100,000 fine in case of violating the law.

The government would not resume rebate on cement export to Afghanistan until cement manufacturers fix their price between Rs 285-295 per bag in writing on sustained basis.


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## Owais

*Presumptive tax system for exporters to continue* 

ISLAMABAD (May 29 2006): While turning down a proposal to bring exports into general assessment scheme, the government has decided to continue with he presumptive tax regime for exporters during 2006-07, it is learnt.

Sources said that the decision to continue with the presumptive tax regime for exports was taken a meeting presided over by President Pervez Musharraf.

They said that the President did not agree with those officials who supported the proposal of bringing exports into general assessment regime for taxation. He directed the officials to facilitate the exporters to help them compete in the international market and capture maximum share by increasing exports.

Donor agencies had suggested to the government to do away with presumptive tax for exporters in the coming budget.

It is learnt that the Textile Ministry had strongly opposed any change in presumptive tax regime, saying that introduction of general assessment scheme would adversely affect the country's exports and would make them uncompetitive in the world markets.

In the presumptive tax system the exporters are required to pay tax at fixed ratio, without having any contact with the taxmen.

The proposed change was also contradictory to the government policy of minimising taxman and taxpayer contact.

Sources said that one reason for turning down the proposal was that it was felt that the outcome of bringing exports into general assessment regime would open another outlet for corruption.

The presumptive tax for exports varies from 0.75 percent to 1.50 percent of total value of exports, and taxmen are required to take it as final. Under presumptive tax regime, the taxmen can not question the value of the consignment or the tax amount paid by any particular exporter on any consignment. In this regime, the exporters feel easy to pay final tax liability on export proceeds through banks as it is a transparent process of payment of taxes.

It also saves time of both parties--the exporters and the taxmen. In the presumptive tax regime, exporters submit tax deduction certificate issued by the bank. Under presumptive tax regime, exports are exempted from 3 percent Workers Welfare Fund (WWF).


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## Owais

*Action against sugar mills: government unmoved on PAC directive* 

ISLAMABAD (May 29 2006): The government is unresponsive to the Public Accounts Committee (PAC) directive for taking action against 17 sugar mills that held back more than 25 percent of their stocks this season, which caused steep rise in its prices by creating artificial shortage.

The committee in its meeting on May 10 had ordered the concerned departments to act against the mill owners involved in hoarding the commodity for earning undue profit.

Being the highest parliamentary body with powers of taking suo motu action of anything wrong happening in the country, the PAC directives are constitutionally binding on the government.

But sources told _Business Recorder _on Sunday that there was no movement in any government ministry or department in this regard, and the PAC initiative was likely to go up in smoke.

The reason behind this static approach, they added, was that those who owned guilty sugar mills were highly influential and powerful, and some of them are in the Cabinet.

"How do you expect action against so powerful individuals on PAC directive? You see, what happens when the National Accountability Bureau (NAB) initiated probe into their wrongdoings," an official commented.

Most of these 17 sugar mills belong to the ruling PML top leadership, including its President, Shujaat Hussain, Commerce Minister Hamayun Akhtar, Industries Minister Jahangir Tareen and MNA Nasrullah Drashek.

Former exiled Prime Minister Nawaz Sharif and his brother Shahbaz Sharif are also among those whose mills did not float their stocks into the market and made huge profits.

The newly appointed chairman of the Earthquake Reconstruction and Rehabilitation Authority (Erra), Salim Altaf is another one who also would have received his share out of the feast.

Prime Minister Shaukat Aziz directed the Finance and Food ministries early this year to make sure that none out of 78 sugar mills in the country held back more than 25 percent of its total stocks. But 17 sugar mills were so daring that they did not pay any attention to the directive and hoarded much of their stocks, in some cases more than 70 percent, to cash on an anticipated rise in the sweetener's prices.

When the PAC took up the matter it was being anticipated that the guilty sugar mills would be punished. But the way things are moving it doesn't seem that anything would happen, sources said.


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## Owais

*TDA likely to replace EPB next week* 

KARACHI (May 29 2006): The establishment of proposed Trade Development Authority (TDA), to replace the Export Promotion Bureau (EPB), is likely to be announced in the first week of June, 2006.

Source told _Business Recorder _on Sunday that formal approval for the establishment of TDA would be given in a meeting on Monday in Islamabad.

"The establishment of TDA is on the cards, and this would be announced very soon", an official said here.

The officials in favour of establishment of TDA, to replace EPB, said that the objectives and benefits to be achieved by TDA includes ensuring timely availability of a product or service desired by the world in most competitive environments, produced and delivered in an environment and manner acceptable under the evolving new world trading order and to be able to "market it" successfully around the world.

It would also benefit from higher professional level of expertise, pro and reactive, responding promptly and efficiently to stakeholders prime needs, to use world class management and marketing tools and techniques and IT for organisational maximum efficiency and productivity.

They said that it would be a truly result-oriented and a state-of-the-art model-based professional organisation, and overall objective is to at least double exports every five years.

*THE OPERATIONAL OBJECTIVES OF ESTABLISHING TDA ARE: *export development vision; strategy, plans and initiatives for products and services and result-oriented execution; support of export effort at national level and forging effective liaison with stakeholders to learn from experience and avoid duplication of effort; export policy issues emanating from the provinces which have export implications; export promotion and development; research and related studies within and outside Pakistan with respect to exports; planning, organisation, and execution of exhibitions, delegations to and from Pakistan; local, international and inter-provincial export promotional conferences, workshops, seminars etc; foreign trade promotion, advertising through all means and media as required; overseas trade offices, within and outside Pakistan missions, including display centers, warehousing, etc; liaison with trade bodies abroad including overseas Pakistani foundation; supply chain development and co-ordination with federal and provincial governments and related organisations through Cabinet Export Committee and export facilitation.

With regard to export development and promotion, the TDA would be beneficial in implementation of export development plans; overseas and local marketing promotions and related activities, facilities and infrastructure such as warehouses, display centres etc; buyer seller match making; exporters and buyers facilitation; management of expo centres in Pakistan or abroad; promotion of national and product branding and ensuring institutional linkages with stakeholders local and abroad.

It is said that TDA would also be beneficial in export facilitation, training and development of SMEs, exporters and all other stakeholders and also helpful to strengthen the national export culture, Pakistan business image management, SME and export training and development, exporters skill development, close interaction with private sector and ensuring institutional linkages with stakeholders local and abroad.

The business community of the country is seeing a very positive change for increasing country's export after establishment of the TDA. The EPB was only to focus to promote the country's exports, while the TDA would focus on trade including exports, industries and their requirements.

Federal Commerce Minister would be the chairman of this new establishment and it would be run by a chief executive officer. It would have one chief operating officer who would be a grade 21 officer from the government. Twenty directors would be appointed out of them 70 percent would be taken from private sector.

It is learnt that about 200 highly qualified and experienced professionals would be appointed from private sector to run this new organisation in a very moderate manner and according to the demands of the global market.

All economic and commercial counsellors in various Pakistani missions world-wide would be directly under the TDA, which would be given tasks to increase the country's exports.

EPB Chairman Tariq Ikram played a very active role for establishing the TDA. He always gave his firm support to establish such an organisation, which could work more independently. He advocated that until and unless working independently and without inducting more professionals in the organisation, the country's exports would not increase.


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## Owais

*MONEY WEEK: government borrows Rs 27 billion for wheat procurement in three weeks* 

*RECORDER REVIEW* 

KARACHI (May 29 2006): The two most important features of the monetary accounts of the country during the last about two months to May 13, 2006 had been the gradually increasing government borrowing for commodity operations (wheat procurement) and a phenomenal growth in money supply on account of a build-up of about $1.8 billion worth of foreign reserves.

The government commodity operations, which on April 22 showed a credit retirement of about Rs 36 billion, showed an additional borrowing of Rs 27 billion during the last three weeks to May 13 reducing net retirement under the head to just Rs 9 billion. Actual borrowing for the purpose could be still higher if the normal retirement of old loans under commodity operations is also taken into account.

Meanwhile, according to a news item, actual wheat procurement during the current season, for which most of the money was borrowed from banks, reached 3.8 million tonnes as against the target of 5 million tonnes (Punjab: 2.1 million tonnes against 3 million tonnes; Sindh: about 0.7 million tonnes against 0.7 million tonnes; and Pasco: 1 million tonnes against 1.3 million tonnes of target).

Similarly, foreign assets of the banking system which stood depleted to the extent of Rs 94 billion up to March 18 started improving thereafter as a result of the floatation of sovereign dollar bonds and privatisation proceeds and on May 13 reached a net addition of Rs 44 billion over the level attained on June 30 last year.

Thus, the build-up of foreign reserves of the country in the last about two months contributed some Rs 138 billion to the incremental money supply during the intervening period. On another plane, since the increase in money supply on this account was because of the sale of foreign exchange to the central bank by the government, it also generated revenue for the government in the equal amount.

The impact was that at one stage (April 22) the net government borrowing from banks stood reduced to about Rs 7 billion after having reached Rs 161 billion on March 11. It stood at Rs 60 billion on May 13 mainly because of commodity operations. Among other developments, the private sector borrowing decelerated to Rs 340 billion on May 13 from Rs 346 million on May 6. It means that banks fresh loaning to the private sector is becoming difficult as cash received against retired loans was recycled to investments in government securities to avoid visits to the discount window.

The credit to PSEs, in the meanwhile, rose from Rs 3 billion on May 6 to Rs 5.4 billion on May 13. However, contraction impact of other items (net) or OINS increased by another Rs 4 billion to Rs 93 billion over the week.

Read with the foregoing developments in the foreign and domestic assets of the banking system, the money supply as a whole increased by Rs 15.6 billion to Rs 354 billion over the week. Of the total increase during the week, Rs 11 billion was the result of increase in net domestic assets or domestic credit expansion, while the remaining about Rs 5 billion was the result of the increase in foreign assets (or FE reserves) of the banking system.

As mentioned in the previous review, the increase in NFA of the banking system during the last three weeks kept pushing up the liquid foreign exchange reserves of the country: crossing the $13 billion mark on April 29, rising to $13,054 million on May 6 and holding on to the record level at $13,071 million on May 13. Advance information on liquid foreign exchange reserves for May 20 indicated that though reserves declined over the week by about $24 million they resisted to break the $13 billion barrier downward so that reserves still stood at $13,047.1 million ($10,658.1 million with the SBP and $2,389 million with the scheduled banks).


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## Owais

*Pakistan asks non-aligned movement to support dialogue process with India* PUTRAJAYA (May 29 2006): Pakistan has said that it wanted members of the non-aligned movement (NAM) to support its ongoing dialogue process with India to resolve bilateral issues, including Kashmir.

"We want the NAM countries to support the peace process and to see it as a result-oriented and meaningful dialogue," Pakistan's Additional Foreign Secretary Tariq Osman Hyder was quoted as saying by Malaysia's Bernama news agency on Sunday.

"It is definitely our objective that something good should come out of discussions and it is also desired by our leadership," he said.

Hyder is here to attend the senior officials' meeting preceding the Non-Aligned Movement Co-ordinating Bureau (NAM-Cob) ministerial meeting beginning on Monday.


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## Owais

*Indian home secretary due today* 


NEW DELHI (May 29 2006): Indian Home Secretary V.K. Duggal is leaving for Islamabad on Monday for talks with Pakistan. The talks, which are part of the composite dialogue between India and Pakistan, will be held on June 30 and 31.

The main purpose of the talks is to discuss issues pertaining to terrorism and the need for increased co-operation on drugs and narcotics control.

The emphasis during the talks will be on continuing the peace process and increasing people-to-people contact between the two countries. Interior Secretary Syed Kamal Shah will lead the Pakistan side.


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## Owais

*KSE hits 10-week low* 
*RECORDER REVIEW* 


KARACHI (May 29 2006): Political uncertainties clubbed with the Sindh government and rumours that the government would tax share business in the forthcoming budget hampered any fresh investment.

The market was in roller-coaster mode yet again, as the KSE-100 Index swelled by 256 points in the first three trading sessions, and then plunged by 457 points in the next two to end the week at 10660 points.

Rumours regarding budget proposals also created negative sentiments in the market due to which equity prices lost significant ground. One of the rumours was regarding the imposition of capital gains tax on the stocks, which would have affected the liquidity in the market.

As if this wasn't enough, the political situation is not really comfortable at this point in time. To add more difficulties, one more gossip was in the market regarding the introduction of CED on advances of the commercial banks. Finally, the stay order issued against the privatisation of the Pakistan Steel Mill by the Supreme Court of Pakistan also shattered the confidence of investors.

It was yet another bearish week at Pakistan's equity market as key the KSE Index eroded 1.8 percent (201 points) to post a 10-week low closing of 10,660. Uncertainty regarding political set-up in Sindh and unconfirmed reports about taxes in upcoming Budget FY07 forced investors and punters to remain on the sideline.

Moreover, as the privatisation of the Pakistan Steel and the PTCL is now being challenged in the local courts, market players are worried about this also. On the other hand, positive news regarding the sell-off of state-owned mutual fund, NIT, and oil marketing giant, PSO, failed to provide the much needed support to local stocks.

The dullness of the market can also be judged from low volumes on the sock market. Last week, the average daily turnover was only 195 million shares. In fact, on Tuesday, the ready market volume hit a 9-month low of 123 million shares.

Ahsan Mehanti, CEO of Shezhzad Chamdia Securities Company, said that uncertainties linked to announcement of federal budget, substantial decline at the international bourses and swapping of May to June future contracts. "With share values reached attractive levels at banking, cement and oil counters, we foresee some recovery this week and expecting some fresh liquidity arriving from the mutual funds, endorsing some recovery", he added.

Farheen Saquib, research analyst from Alfalah Securities said last week, the market behaviour was quite directionless with activity remaining quite dull amidst low volumes. Though the index oscillated between positive and negative zone giving some intra-day opportunity to the jobbers, but overall most of the investors' preferred to stay sidelined.

"We would advise a cautious stance on the market with buying in selective fundamentally strong scrips. Also the market investors are still reluctant due to the uncertainty about the upcoming budget, therefore, the proper direction of the market would be easier to predict after the FY07 Budget announcement", said Khalid Iqbal Siddiqui, head of research at Investment Capital Securities.

Historically speaking activity in the stock market do remain lifeless in the pre-budget sessions on account of uncertainty in the upcoming budget. At current levels sentiments do seem mixed amidst low volumes.

The jobbers should adopt a cautious strategy; however, selective cherry picking is advisable for long-term investors in good valued fundamental stocks.

Last week, MSCI AsiaxJP came down by 4.6 percent with MSCI EM Index declining by 4.5 percent amid rising interest rates. India's BSE Sensex amid volatility also declined by 1 percent during the week. Though the role of foreign fund managers in Pakistan market is not as strong as in regional markets, there is concern that offshore funds that bought shares in Pakistan worth $355 million (net inflow) in the first 10 months of FY06 may also sale their holdings in Pakistan. And that is why for the last few weeks Pakistan stocks are also under pressure.


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## Neo

ISLAMABAD (May 29 2006): The Asian Development Bank (ADB) has approved $10 million technical assistance loan for Karachi's mega-city development project that will help in addressing the long-term and holistic development needs of the city.

Karachi, the hub of retail and wholesale trade, the centre of head offices of banking and insurance sectors and the gateway of the country generating about 20 percent of the national output.

The execution of the project would further help in boosting the national income and contribute to a sustainable improvement in the quality of life of its residents.

The bank's loan will cover 75 percent of the project's total estimated cost of $13.33 million. The loan comes from ADB's concessional Asian Development Fund (ADF) and carries a 32-year term, including a grace period of 8 years. Interest would be charged at one percent per annum during the grace period and 1.5 percent per annum thereafter.

The government will contribute the balance of $3.33 million. The finance department of the government of Sindh would be the executing agency for the project, which is due for completion in January 2010.

But while the economy and population of Karachi have expanded significantly, few investments have been made in the city's urban infrastructure over the past two decades, resulting in haphazard development, a polluted urban environment, and, for many, a poor quality of life.

Infrastructure and services that are inadequate and unreliable are adding to business and household costs, harming Karachi's urban and natural environments, and decreasing the city's global competitiveness compared with alternative Asian mega cities.

The project will provide resources for the City District Government of Karachi, the town municipal administrations, and utilities to improve their city planning, management, and financing, as well as in applying commercial principles in the provision of infrastructure and services.

It will then help prepare projects for expanding and improving the mega city's infrastructure and services that may be funded by ADB in its lending programme for Karachi over the next four years. Priority projects to be prepared cover water, sewerage, and drainage, solid waste management, roads and transport, and upgrading of informal settlements.


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## Neo

LAHORE (May 29 2006): The incompetence of the Punjab financial planners is likely to pave the way for gross misuse of funds which are likely to come in plenty in the coming financial year.

The provincial financial wizards are struggling hard to finalise such development schemes for the fiscal year 2006-07 so as to justify unprecedented flow of funds about Rs 83.7 billion for the development sector.

"Apparently, there is no panic scene but the development and planning department is experiencing problem-of-plenty this time around," sources closely associated with budget making process, quoted senior officials as saying.

The federal government had indicated in December last year that under the interim National Finance Commission Award provinces and federally controlled areas would get an enhanced allocation of funds. But it was only in March this year that the provinces were conveyed about the exact size of funds meant for the development sectors.

Never in Punjab's financial history the annual allocation of development funds had gone beyond Rs 48 billion.

Sources said there had been about 860 to 900 schemes, which enjoyed the status as approved, but allocation of funds was not made against them in previous years for want of finances.

This time around, the sources said things were other way round. "Fund are hugely surplus, but schemes have not been carved out so for to absorb available money," they added.

Under these conditions, the finance department may suggest buffer or advance allocations of funds, which could be utilised later when more schemes would be available.

Such practices in the past, the sources pointed out had led to massive embezzlement of money as once the provincial assembly passed budget, things move away from the public view. Since the public sector accountability process is not strong, it becomes easy to misappropriate public money, sources said expressing the fear that since next financial year would also see holding of general elections, the gulping of funds, lying idle, at the behest of weak political governments could not be ruled out.


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## Neo

FAISALABAD (May 29 2006): The Faisalabad Development Authority would develop the FDA City on modern and scientific lines to bring about a positive cultural change in this textile capital of the world, said City District Nazim Rana Zahid Tausif.

Addressing a function of computerised balloting of plots in this housing colony sprawling over 1,208 acres of land near Motorway (M-2) on Sargodha Road, he asked the authority to develop this city to cater to the needs of the coming generations with all basic amenities of life.

Criticising developers of private colonies, he added they have fully conned people without giving them fundamental amenities. "Still 106 private colonies are without electricity," he claimed.

FDA Director General Raja Safdar Hussain said work to add two lanes to the Sargodha Road would be started from July this year, which would enhance value and importance of the FDA City."

The authority would keep its management after its development and a project management unit would be created to undertake this while rules and regulations are being prepared for this, he added and also claimed the base level of buildings in this city would be strictly adhered to rules to maintain symmetry and beauty.

FDA would also provide 840 contracted residences to retired provincial government employees through Punjab Housing Foundation, he maintained.

Earlier, 1601 plots of one-Kanal, 1840 of 10-Marla and 1816 of five-Marla were allotted to people through the ballot.


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## Neo

ISLAMABAD (May 28 2006): Federal Commerce Minister Humayun Akhtar has said that Pakistan would take benefit from the economic progress of China and other countries of the region.

In an interview with BBC he said that Pakistan is sharing a free trade agreement with China, adding that negotiations are also in progress with a number of Asian nations.

Humayun said, "We have signed a South Asia free trade agreement for the South Asian countries. We have gone through major reforms within our economy despite major challenges that we face. Our economy grows at 8.4 percent. All these indicate towards healthy atmosphere."

To a question the Commerce Minister said that country is moving quite fast and has made huge improvement in telecom infrastructure, saying, "We have deregulated, we have privatised the monopoly and there are lots of foreign companies coming into Pakistan." He further said that Pakistan was also making good progress in training manpower for IT adding that the country is moving towards right direction.

To another query the minister disagreed that the people of Pakistan don't like the United States. He said the US played important role in the relief and rehabilitation activities after October earthquake. He said that the US sent the Chinook helicopters for providing relief items to the hilly and far-flung areas hit by earthquake. Similarly, he said that it had also established field hospitals in the hit areas where a huge number of quake victims were treated.

Humayun said that the United States and Pakistan have a long-term relationship and we are trying to base it on solid foundations, economic foundations and it has every reason to grow.

To another question that the European Union should make a move in accepting the G-20s offer on agriculture market access and the United States should make counter offer on domestic support which would result in actual cutting of their spending.


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## Neo

Sunday May 28, 2006 

KARACHI: Pakistan Gems and Jewelry Industry is totally reinventing itself as a quality producer of able to compete globally through skills and technology up-gradation, better quality control and innovative branding. 
This was a joint statement by the Pakistan Gems and Jewelry Strategy Working Group (SWOG) at a local hotel in Karachi on Sunday. 

The event attracted more than 100 participants from the gems and jewelry industry to celebrate the launch of a monthly trade magazine, "Zar-o-Jawahir Pakistan", intended to broadcast to Pakistan and the global market place that PakistanÃ¢â¬â¢s Gems and Jewelry sector is ready to claim in rightful place in the US$80 billion plus international market for gems and jewelry. 

Others in the region are exporting into the billions of dollars, and PakistanÃ¢â¬â¢s industry has now come together to gain significant market share. 

The "Pakistan Initiative for Strategic Development and Competitiveness" (PISDAC) is a United States Agency for International Development (USAID) funded activity managed by J.E. Austin Associates Inc. and is aimed at increasing the competitiveness of Pakistani Small and Medium sized enterprises. 

The sectors currently covered under the project are Gems & Jewelry, Dairy, Marble & Granite, Furniture and Horticulture/Food Processing. 

The project worked with several prominent Pakistani industries and helped form three Strategic Working Groups (commonly referred to as SWOGs), which develop sector-specific strategies. 

SWOGs include industry leaders, government officials, academia, and relevant NGOs that are working together to develop strategies and implement policy and regulatory changes through public-private dialogue. 

These strategies are aimed at upgrading production, improving marketing and understanding and meeting consumer demand. The Strategic Working Groups identify priority investments in human resources, infrastructure, technology, and, management required to produce higher-quality products. 

The strategy developed by the Gems and Jewellery SWOG is aimed at facilitating growth throughout the value chain. The SWOG envisioned working together across regions and activities for establishing Pakistan as a high value added, internationally competitive, world-class hub for precious stone cutting and jewelry manufacturing. strategic initiatives are intended to close the benchmarking gap between Pakistan and other countries with a strong Gems & Jewellery sector. 

SWOG members anticipate that the proposed initiatives will result in an increase in jobs, particularly in skilled labor. Only recently has the Gems and Jewelry sector been officially recognized and granted industry status by the Government of Pakistan. 

The Small and Medium Enterprise Development Authority (SMEDA) and the Export Promotion Bureau (EPB) have been two key partners along with the USAID PISDAC project. They have helped the industry to move forward, and are committed to help the industry achieve its ambitious goal to increase exports to US$500 million or even more by 2010. Industry hopes to develop its value chain quickly so that its performance will go well beyond this goal. 

The Magazine is intended to share latest updated research and information throughout all stakeholders the entire Gems and Jewelry value chain, from mine to market.


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## Neo

Monday, May 29, 2006 

ISLAMABAD: The government spent over Rs one trillion on poverty alleviation and social sector related programmes during the last four years, which resulted in poverty decline from 32.1 percent in 2000-01 to 25.4 percent in 2004-05. 

Ã¢â¬ÅRural poverty has declined from 39 percent to 31.8 percent and urban poverty from 22.7 percent to 17.1 percentÃ¢â¬Â, Dr Ashfaque Hasan Khan, the advisor to the Finance Ministry, told APP on Sunday.

He said the real Gross Domestic Product (GDP) grew at an average rate of almost 6 percent per annum in the last four years as against 3.3 percent in the preceding four years. It is set to be between 6 to 7 percent during the current fiscal year which showed strong economic recovery, he added. 

He said the growth rate increased to 8.4 percent in 2003 as compared to 1.8 percent in 2000-01. Ã¢â¬ÅIf we take a longer term view, growth recovered from an average of 3 percent during the last six years prior to 2001-02 to an average of over 6.5 percent during the last three years (2002-03 to 2004-05),Ã¢â¬Â he said. 

He said that due to strong domestic consumption and investment, real private sector consumption grew by 8.2 percent in 2003/04 and 16.8 percent in 2004/05.

He said that higher consumption, feeding back into economic activity was likely to support the ongoing growth momentum, adding that it suggested the emergence of a strong middle class with buying power.

He said that poverty in Pakistan had declined from 32.1 percent in 2000-01 to 25.4 percent in 2004/05, rural poverty had declined from 39 to 31.8 percent and urban poverty from 22.7 percent to 17.1 percent, he added.

He said this was because real GDP grew at an average rate of almost 6 percent per annum in the last 4 years (2000-01 to 2004-05) as against 3.3 percent in the preceding 4 years. The advisor said that unemployment had gone down from 8.3 percent in 2001-02 to 6.2 percent in the second quarter of 2005-06 and the pace of job creation had increased.


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## Neo

ISLAMABAD (updated on: May 29, 2006, 19:24 PST): The country is expected to achieve 6.6 percent GDP growth rate during the outgoing year and the next budget will be pro-poor and caring for the masses. This was stated by the Advisor on Finance Dr. Salman Shah at a joint pre-budget briefing here on Monday along with Minister for Information and Broadcasting, Muhammad Ali Durrani and Minister of State for Finance, Umar Ayub Khan.

Giving an overview of the current financial year, the Advisor on Finance said the GDP may slightly be higher than estimated 6.6 percent with the availability of more data.

This year the overall fiscal deficit is estimated to be four point two percent of GDP including expenditure related to earthquake. He said the fiscal deficit without the earthquake would have been three point five percent which is better than fiscal deficit of three point eight percent of GDP last year.

He said the inflation target for the year was eight percent and hoped it will be less than eight percent. He said the target of inflation for next year will be six point six percent.

He said the last labour survey shows that five point five eight million jobs were created over the last two years and the unemployment rate has declined. Pakistan living standard measure survey shows substantial reduction in poverty from thirty two point four percent to twenty five point six percent.

Dr. Salman Shah said the balance of payment is surplus inspite of record imports. Foreign exchange reserves stand at thirteen billion dollars and hoped to close the year with a healthy situation.

About the next year's budget, he said it would aim at maintaining growth rate between six to eight percent at an average of seven percent, increase per capita income, maintain fiscal discipline, going forward with an overall deficit of four point two percent inclusive of earthquake, keep inflation at six point five percent, maintain external finance stability with increase in reserves, continue to improve credit rating in international capital market, improve competitiveness of the economy for the exports and domestic markets.

The Advisor on Finance said other measures will include strong growth of public sector development programme including mega projects, substantial increase in the funding of Khushhal Pakistan Projects for community projects, provide relief to low income groups, salaried persons and pensioners, brings stability to critical food items for low income groups by ensuring supply at affordable prices, continue to provide subsidy for power, fertiliser, fuel, and other food items.

Dr. Salman Shah said for major emphasis on human development and social sector, provinces will be provided significant transfers in line with the fifth NFC Award.

He assured that the budget will be a caring one and effort will be made to uplift the under privileged segments of the society. It will be pro-poor and focus on employment generation through economic growth, major up-scaling of PSDPs, special community development programmes would be launched having good impact on employment in depressed areas in the rural community.

It will provide the people opportunities to exploit their potential through skilled development, education, and health programmes. He said the budget will also start putting Pakistan on a road that the potential of agriculture, industry and services sectors can be achieved through reduction in cost of business, rationalisation of taxes and duties and improvement of productivity through focussed programmes.

He, however, pointed out that there are also risks involved in going forward and the government will have to remain very vigilant and ensure that it maintains macro-economic stability. He said these risks emanate from continued high oil prices and tension in the region which can have economic impact in Pakistan. He said we need to make sure that we take prompt action to off set any risk which hits Pakistan.

He said for the new budget, we will have to maintain fiscal discipline and don't go back with the begging bowl, raise our resources in the optimal manner and the development programmes and expenditures are met through our own resources.

The Minister of State for Finance, Umar Ayub Khan said emphasis in the next budget will be on Khushhal Pakistan Programme and Khushhal Pakistan Fund. Projects at micro level and village level will be launched like farm-to-market roads, rural markets, village electrification programme.

He said this year thirteen thousand villages will be electrified. Additional resources will be provided for safe drinking water supply to every one.

Replying to questions, the Advisor on Finance said in the overall context, the defence expenditures over the last five years have come down from around six point five percent of GDP to almost three point five percent. He said there is almost freeze in the increases in defence and even not kept up with inflation. He, however, said that Pakistan cannot be oblivious to its security and whatever is needed to modernise our armed forces, we will provide the resources.

He said the defence expenditure will be kept within the growth in the economy. Referring to the programme of purchases for defence to modernise the armed forces, he said these are multi-year programmes and implementation is extended over a long period of time.

To another question, he said large scale manufacturing growth is expected to be nine percent this year. Overall investment to GDP ratio has gone up to twenty percent this year which is a very good indicator. He said FDI trends, privatisation and bank credit trends indicate that investment in the economy is strong and broad-based.

He announced that a Pakistan Statistical Authority will be established by the end of next month to keep accurate data and Monopoly Control Authority is being transformed into a Competition Commission which will be effective from the next financial year.

The Competition Commission is aimed at promoting competition in various sectors of the economy, will have legal authority and teeth so that when it acts, it makes a difference.

Referring to the price hike, he said necessary legal measures will be taken to ensure that no one indulges in profiteering and hoarding.

Earlier, the Minister for Information Muhammad Ali Durrani said that efforts of the government will be to ensure maximum participation of all segments of the society in the development of the country. 

He said the Information Ministry in co-ordination with the Finance Ministry has taken the initiative to provide access to the media to the Finance Ministry about the budgetary process. He said media is a point of connectivity between the government and the people.


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## Neo

Source: Pajhwok Afghan News, Kabul


ISLAMABAD - Pakistan has said that it will decrease route fares on goods bound for Afghanistan from Karachi port under the transit trade agreement.

In an interview with Pajhwok Afghan News on Sunday, Pakistan's Minister for Railways Shaikh Rashid Ahmad said Afghan traders transporting their goods to Peshawar from Karachi through railway would be given 50 per cent discount in rout fares.

"We have talked to the traders and listened to their problems. We want to address the difficulties faced by them," said Shaikh Rashid Ahmad. To ensure speedy movement of goods through railway, the number of bogeys had been increased to 24,000, he added.

Both Pakistani and Afghan traders have welcomed the announcement. A traders' leader engineer Mohammad Shafi said if implemented, the decision it would prove a blessing for traders.

He said Pakistani authorities some time create problems for Afghan traders by delaying transfer of their goods from Karachi. This was why, he said, a number of Afghan traders were now importing their goods through Iran's Bandar (port) Abbas.

Haji Zarghoon, an Afghan trader in Islamabad, said reduction in rout fares was a good news for them.


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## Neo

By Khalid Qayum and Haslinda Amin Bloomberg News

MONDAY, MAY 29, 2006


ISLAMABAD Pakistan's economy will probably grow at an annual pace of as much as 8 percent over the next five years, matching neighboring India, on record foreign investment and rising consumer spending, Prime Minister Shaukat Aziz said.

"We are creating gradually a middle class, which is driving consumption," Aziz, a former Citibank executive, said in an interview last week. "It's a very viable economy and it is growing. We have reduced poverty by about 8 to 10 percentage points."

Pakistan's $118 billion economy expanded 8.4 percent in the year to June, the fastest pace in two decades, as consumers spent more on cars, motorcycles and mobile phones.

The return of overseas investors who had sidelined the country, which borders Afghanistan, due to security concerns after the terrorist attacks on the United States may help Pakistan match the pace of growth in India, the second- fastest expanding major economy, after China.

Aziz said Pakistan's economy would grow between 6 percent and 8 percent this year, which would help the nation's annual per-capita income surpass the $800 mark.

"Growth is based on strong macroeconomic fundamentals and a structural-reform agenda that has been broad- based and deep," said Aziz, who will complete his first term as prime minister in October next year.

"Reforms are based on a philosophy which is deregulation, liberalization, privatization, transparency and good governance."

Pakistan's Privatization Commission is set to sell a 51 percent stake in Pakistan State Oil by June 30, the asset sale agency said Thursday. It will also sell management rights in National Investment Trust, the largest mutual fund company, next month, the agency said. In June it sold a 26 percent stake in Pakistan Telecommunication, the biggest phone company, to Emirates Telecommunications for $2.59 billion.

"There are no sweetheart deals in Pakistan anymore," Aziz, who was elected prime minister by the Parliament in 2004, said. "Today, Pakistan offers a level playing field to all investors. We are one of the few countries where no sectors" are off limits to local or foreign investors.

Aziz was appointed finance minister by President Pervez Musharraf in 1999 to help turn around the economy that at the time had barely one month of foreign-exchange reserves and where the government had almost defaulted on its foreign debt repayments.

Now Pakistan has foreign-exchange reserves of $13 billion, helped by record overseas direct investment of $3 billion in the 10 months to April 30.

Two loan packages from the International Monetary Fund have also helped the country raise $1.9 billion in three foreign-currency debt offerings since 2004.

Pakistan estimates it will get $3 billion of foreign investment annually to sustain its economic growth rate, Aziz said. Companies from China, Singapore and the Middle East are investing in Pakistan, while Japanese companies such as Toyota Motor make cars in the country, he added.

Temasek Holdings, Singapore's state- owned investment company, this year bought a 72.6 percent stake in Pakistan's NIB Bank and it also plans to start an asset-management company.

Still, a faster pace of expansion in Pakistan's gross domestic product may not be sustainable without further changes to improve economic efficiency, said economists including Sakib Sherani from ABN AMRO Bank in Islamabad.

"The government needs to be more realistic about GDP growth targets," Sherani said. "Growing at 7 to 8 percent on a sustainable basis is beyond Pakistan's capacity without real institutional strengthening."

Pakistan's long-term foreign-currency rating was raised in November 2004 by a level to B+, or the fourth non- investment grade, by Standard & Poor's, after lowering to within two levels of default status in October 1998 after the country tested nuclear weapons and attracted sanctions including a ban on aid and loans from countries in Europe and the United States.

The resumption of aid and loans after the country began supporting the U.S.- led war on terrorism in 2001 has helped Pakistan's benchmark stock exchange index to climb tenfold, reaching a record April 17.

Pakistan's 8.4 percent economic growth rate last year compares with an average 4 percent pace in the decade starting 1990, when according to the government the poverty rate in the country almost doubled to 33 percent.

India's economy is expected to expand at an 8 percent pace this year, matching the rate of expansion of the previous three years, Finance Minister Palaniappan Chidambaram said last week. The $775 billion economy expanded 7.6 percent in the three months to Dec. 31 from a year earlier.

Pakistan's government is boosting farm production, which accounts for a quarter of the country's gross domestic product, to reduce poverty in rural areas, Aziz said. Agricultural reforms have made the "farmer better off today," he said.

Peace with India will also help to reduce poverty in the region, he said. A peace treaty offered by Prime Minister Manmohan Singh of India this year "must be driven by dispute resolution," he said.

"We remain cautiously optimistic" about peace talks with India, Aziz said.

"We have tied trade and business relations with India with the resolution of Kashmir dispute," he said. "So progress on Kashmir will determine the progress on trade and investment ties with India." 

ISLAMABAD Pakistan's economy will probably grow at an annual pace of as much as 8 percent over the next five years, matching neighboring India, on record foreign investment and rising consumer spending, Prime Minister Shaukat Aziz said.

"We are creating gradually a middle class, which is driving consumption," Aziz, a former Citibank executive, said in an interview last week. "It's a very viable economy and it is growing. We have reduced poverty by about 8 to 10 percentage points."


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## Neo

Pakistan's $118 billion economy expanded 8.4 percent in the year to June, the fastest pace in two decades, as consumers spent more on cars, motorcycles and mobile phones.

The return of overseas investors who had sidelined the country, which borders Afghanistan, due to security concerns after the terrorist attacks on the United States may help Pakistan match the pace of growth in India, the second- fastest expanding major economy, after China.

Aziz said Pakistan's economy would grow between 6 percent and 8 percent this year, which would help the nation's annual per-capita income surpass the $800 mark.

"Growth is based on strong macroeconomic fundamentals and a structural-reform agenda that has been broad- based and deep," said Aziz, who will complete his first term as prime minister in October next year.

"Reforms are based on a philosophy which is deregulation, liberalization, privatization, transparency and good governance."

Pakistan's Privatization Commission is set to sell a 51 percent stake in Pakistan State Oil by June 30, the asset sale agency said Thursday. It will also sell management rights in National Investment Trust, the largest mutual fund company, next month, the agency said. In June it sold a 26 percent stake in Pakistan Telecommunication, the biggest phone company, to Emirates Telecommunications for $2.59 billion.

"There are no sweetheart deals in Pakistan anymore," Aziz, who was elected prime minister by the Parliament in 2004, said. "Today, Pakistan offers a level playing field to all investors. We are one of the few countries where no sectors" are off limits to local or foreign investors.

Aziz was appointed finance minister by President Pervez Musharraf in 1999 to help turn around the economy that at the time had barely one month of foreign-exchange reserves and where the government had almost defaulted on its foreign debt repayments.

Now Pakistan has foreign-exchange reserves of $13 billion, helped by record overseas direct investment of $3 billion in the 10 months to April 30.

Two loan packages from the International Monetary Fund have also helped the country raise $1.9 billion in three foreign-currency debt offerings since 2004.

Pakistan estimates it will get $3 billion of foreign investment annually to sustain its economic growth rate, Aziz said. Companies from China, Singapore and the Middle East are investing in Pakistan, while Japanese companies such as Toyota Motor make cars in the country, he added.

Temasek Holdings, Singapore's state- owned investment company, this year bought a 72.6 percent stake in Pakistan's NIB Bank and it also plans to start an asset-management company.

Still, a faster pace of expansion in Pakistan's gross domestic product may not be sustainable without further changes to improve economic efficiency, said economists including Sakib Sherani from ABN AMRO Bank in Islamabad.

"The government needs to be more realistic about GDP growth targets," Sherani said. "Growing at 7 to 8 percent on a sustainable basis is beyond Pakistan's capacity without real institutional strengthening."

Pakistan's long-term foreign-currency rating was raised in November 2004 by a level to B+, or the fourth non- investment grade, by Standard & Poor's, after lowering to within two levels of default status in October 1998 after the country tested nuclear weapons and attracted sanctions including a ban on aid and loans from countries in Europe and the United States.

The resumption of aid and loans after the country began supporting the U.S.- led war on terrorism in 2001 has helped Pakistan's benchmark stock exchange index to climb tenfold, reaching a record April 17.

Pakistan's 8.4 percent economic growth rate last year compares with an average 4 percent pace in the decade starting 1990, when according to the government the poverty rate in the country almost doubled to 33 percent.

India's economy is expected to expand at an 8 percent pace this year, matching the rate of expansion of the previous three years, Finance Minister Palaniappan Chidambaram said last week. The $775 billion economy expanded 7.6 percent in the three months to Dec. 31 from a year earlier.

Pakistan's government is boosting farm production, which accounts for a quarter of the country's gross domestic product, to reduce poverty in rural areas, Aziz said. Agricultural reforms have made the "farmer better off today," he said.

Peace with India will also help to reduce poverty in the region, he said. A peace treaty offered by Prime Minister Manmohan Singh of India this year "must be driven by dispute resolution," he said.

"We remain cautiously optimistic" about peace talks with India, Aziz said.

"We have tied trade and business relations with India with the resolution of Kashmir dispute," he said. "So progress on Kashmir will determine the progress on trade and investment ties with India." 

http://www.iht.com/articles/2006/05...mberg/sxpak.php


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## Neo

ISLAMABAD (May 30 2006): The government has decided to allocate Rs 270 billion for federal Public Sector Development Programme (PSDP) for 2006-07, which also includes foreign aid component of Rs 38.5 billion and operational shortfall of Rs 20 billion.

However, provincial allocations of Rs 115 billion, and Rs 50 billion meant for earthquake reconstruction would take the total of PSDP to Rs 415 billion.

Official documents obtained exclusively by Business Recorder from Planning Commission and to be discussed by the National Economic Council (NEC) at its meeting on Wednesday show that of the total Rs 270 billion PSDP, Rs 132.5 billion (49.1 percent) would be allocated for infrastructure projects, Rs 130.8 billion (48.4 percent) for social sector and Rs 6.7 billion (2.5 percent) for others.

However, the net financing has been calculated at Rs 250 billion, deducting Rs 20 billion as operational shortfall.

The documents suggest that the provincial share of PSDP would be around Rs 115 billion, to be spent by the provinces through their own Annual Development Programs (ADPs).

The Water and Power Development Authority (Wapda) is likely to spend Rs 30 billion, from its own resources outside PSDP, while the National Highways Authority (NHA) has also agreed to raise additional Rs 6 billion through securitisation of toll revenues and other receipts.

In addition, earthquake reconstruction expenditure would be Rs 50 billion. Thus, the actual total investment including outside PSDP by Wapda and NHA would be Rs 451 billion, Planning Commission claims in the documents.

The distribution of federal PSDP of Rs 270 billion shows that Rs 170.2 billion would be allocated to federal ministries, Rs 16.2 billion for special areas, Rs 35.4 billion for special programs and Rs 48.2 billion for corporations. However, putting aside Rs 20 billion as operational shortfall, the net financing would stand at Rs 250 billion.

With the share of provinces amounting to Rs 115 billion and inclusion of Rs 50 billion in the PSDP, meant for earthquake reconstruction, the total financing would stand at Rs 415 billion, as was mentioned by President Pervez Musharraf two days back.

The total demand for the development programme, which Planning Commission received from the various federal ministries/agencies was Rs 454 billion (ie Rs 250 billion more than the current year's PSDP of Rs 204 billion) which had to be adjusted and rationalised with the proposed programme size of Rs 270 billion (ie only Rs 66 billion more than the current year). However, Planning Commission is of the view that any increase beyond this level would be fiscally untenable.

Despite this constraint, all the on-going projects/programs have been protected and the commitments for major projects, such as Chashma Nuclear Power Plant, raising of Mangla dam, lining of water canals and watercourses have been met, the documents show.

SALIENT FEATURES OF PSDP 2006-O7 ARE: 

i) Emphasis has been placed on completion of major water projects with an increase of allocation from Rs 41.7 billion during the current fiscal to Rs 55.3 billion, which is 20 percent of the PSDP. This would help reduce poverty, accelerate agriculture growth in the medium term and create construction-related additional jobs during implementation.

ii) Major investment of Rs 6 billion is programmed for the improvement of watercourses, which would contribute to optimal and productive use of the scarce water resources.

iii) Sufficient allocation has been made for roads linking Gwadar port with upcountry, which would also contribute to a better investment climate and trade.

iv) Adequate funds have been proposed to provide air and rail links of Gwadar with the upcountry, Iran and with the corridors leading towards Central Asian States.

v) NHA has been allocated Rs 25 billion, while the Authority has further agreed to raise at least Rs 6 billion through securitisation of its toll receipts and other revenues to complete the development projects in time. The total NHA outlay of Rs 31 billion during 2006-07 would facilitate speedier completion of the projects.

vi) To complete five mega dams by 2016, significant investment would be required in this sector. To begin with, Rs 10 billion has been proposed for land acquisition.

vii) Allocations for education and training have been increased by 29 percent, which would provide qualified human resources to match the highly competitive world market.

viii) Allocation for health sector has been increased by 20 percent, reflecting continuing emphasis on improving the productivity of human capital and general quality of life.

ix) The Information Technology and Science and Technology sectors would receive an increased allocation of 24 percent and 39 percent, respectively, to spur research, development and expand employment opportunities in emerging areas.

x) Sufficient allocations are being made for reforms relating to governance including access to justice programme.

xi) To reduce poverty and bring synergy in the communities, a new programme, 'Participatory development through social mobilisation', is proposed to be launched with an initial allocation of Rs 500 million.

xii) To alleviate poverty and generate employment, the Khushhal Pakistan Fund (KPF), established during 2005-06, has been proposed to be enhanced to Rs 10 billion. This fund would be in addition to the allocation of Rs 24.4 billion being proposed for KPP I &II.

xiii) Allocations for Special Areas (AJK, Northern Areas and FATA) would be enhanced by 15 percent with a view to accelerating development in less developed areas.

xiv) To provide clean/safe drinking water at union council level, an investment of at least Rs 4 billion would be made during the next fiscal year.

xv) Intensive work on National Trade Corridor is being initiated during 2006-07, which would facilitate trade flows and help reduce the cost of doing business.

According to the documents, NEC would be requested to authorise the Planning Commission to make adjustments, if needed, within the same size of the programme to accommodate important projects on the basis of quarterly review of projects' progress.

It is also being asked that PC should be authorised fast-track adjustments as a result of quarterly reviews within the same size of the approved PSDP. These adjustments should be exempted from complicated procedural formalities and funds should be released expeditiously to reach the project directors.

It may be mentioned here that the actual PSDP expenditure during July-April was Rs 149 billion (73.1 percent) including foreign aid of Rs 26.7 billion, which was higher than the development expenditure of 63 percent incurred during the corresponding period of previous year.

With the introduction of cash plans by the PC, the releases had somewhat improved, the documents said. However, measures are still needed to ensure timely availability of funds to the projects for their completion on schedule, the PC documents said.


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## Neo

Fiscal year 2007 targets: GDP 7 percent; inflation 6.5 percent; trade gap $6.3 billion; current account deficit $7.6 billion 


ISLAMABAD (May 30 2006): The National Economic Council (NEC), headed by the Prime Minister, is likely to set 7 percent target for GDP (Gross Domestic Growth), 6.5 percent for inflation, 10-11 percent for monetary expansion, $7.6 billion trade deficit, and $6.288 billion current account (CA) deficit (amounting to 4.3 percent of GDP) for fiscal year 2006-07.

The Medium Term Development Framework (MTDF) had projected GDP growth rates of 7 percent and 7.3 percent for 2005-06 and 2006-07, respectively, but the present assessment for 2005-06 growth is 6.6 percent.

"Since there is no significant deviation from the target in the first year, the second year projections are relatively valid. Thus, the next year GDP growth can safely be assumed at 7 percent," the Planning Commission says in its summary to the NEC, titled 'Review of annual plan 2005-06 and prospects for 2006-07'.

Official documents available with Business Recorder suggest that 4.5 percent growth has been assumed for agriculture sector, and 13 percent for large-scale manufacturing.

The services sector is likely to grow around 7.1 percent, whereas per capita GNP would be $935, based on current prices, which would be higher by 11 percent from 2005-06 level.

SAVING AND INVESTMENT: To attain 7 percent GDP, total investment of Rs 1895 billion is being envisaged, of which, about one-third would come from public sector and two-thirds from the private sector. As regards its financing, it has been projected that 79.8 percent would be financed through national savings and remaining 20.2 percent through foreign resources.

A corollary of this financing is the requirement that domestic savings increase to 15.5 per cent of GDP in 2006-07 against 13.9 per cent estimated for 2005-06.

INFLATION Inflation in the current year had shown an improvement as it came down to around 8 percent as compared to 9.3 percent previous year. Efforts would be made to sustain the said improvement, that may result in bringing it further down to 6.5 percent. Since during the current year, higher contribution to the observed inflation of 8.0 percent emanated from food group (2.8 percentage point), this trend is definitely needed to be reversed, as the weight of food items in poor households' expenditure basket is about half. This requires ensuring adequate supply of edibles through higher domestic production plus imports.

MONETARY POLICY With real GDP growth of 7 percent and inflation projected at 6.5 percent, it will require targeting money supply growth around 10-11 percent. The basic objective of the monetary policy would be to ensure price stability combined with adequate provision of credit to private sector.

In this regard, the Planning Commission says that it should be ensured that the bulk of the credit to private sector is utilised for investment purposes.

FISCAL POLICY In the context of economic development, fiscal policy is generally considered to act as a catalyst for private investment in the economy. It implies that an integral part of the policy should be to raise the ratio of development expenditure to GDP, so that it facilitate achieving higher level of overall investment and thereby GDP growth.

FOR 2006-07: Public Sector Development Expenditure (PSDP) as a ratio to GDP has been planned at 5.1 percent as against 3.8 percent of GDP in 2005-06. Since it may entail larger budget deficit, the fiscal policy should simultaneously ensure raising adequate revenues. This sets another objective of the fiscal policy to enhance tax/GDP ratio through improved tax collection and broadening the tax base.

BALANCE OF PAYMENTS 

TRADE ACCOUNT: During 2006-07, exports (fob) are projected to grow by 18.0 percent to $19797 million against $16777 million (estimate) 2005-06. Projections of exports are based on (i) increase in agricultural production and manufacturing output and (ii) greater market access through bilateral arrangements, preferential and free trade agreements with regional and other countries and improvement in the overall competitiveness for the external sector by reducing the cost of key manufacturing inputs including electricity.

Imports are anticipated to increase by 16.0 percent mainly due to payments on account of POL, capital goods and edible oils. As a result, the trade account is projected to be deficit equivalent to $7613 million in 2006-07 against a deficit of $6852 million estimated for 2005-06.

INVISIBLE ACCOUNT: Prospects for the invisible balance will continue to be governed mainly by the behaviour of the workers' remittances. For 2006-07, remittances have been projected at $4500 million against $4300 million estimated for 2005-06. Allowing for other invisible receipts and payments, the surplus on invisible account is anticipated to stand at $1325 million compared to $1498 million estimated for 2005-06.

CURRENT ACCOUNT BALANCE: With a deficit of $7613 million on the trade account and a surplus of $1325 million on the invisible account, the current account deficit is likely to increase to $6288 million in 2006-07 (4.3 percent of GDP).

CAPITAL ACCOUNT: Gross disbursements are expected to be $2737 million in 2006-07, less by $168 million from 2005-06. After allowing for other capital movements, surplus of $1887 million is likely to occur in the overall balance.

However, taking into consideration transactions of the banking system, there will be a build-up of $1571 million in foreign exchange reserves which will take the total gross reserves at $13,977 million by the end of 2006-07.

http://www.brecorder.com/index.php?...&term=&supDate=


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## Neo

ISLAMABAD (May 30 2006): The World Bank (WB) anticipated Pakistan's economy growing at a balanced rate for another couple of years due to a calculated slowing down of consumers' demand that can lower inflation.

The bank, however, cautioned that as high oil prices have not been passed through fully there remain latent inflationary pressures from this source.

These facts were highlighted by a 215-page Global Development Finance (GDF) 2006 report of the World Bank, which is annual review of global financial conditions facing developing countries.

The bank says that explicit and implicit subsidies (through state oil companies) are imposing a heavy burden on the government purse and have increased government's fiscal deficit by as much as 0.5 percent of GDP in Pakistan between 2002 and 2005.

In the current context, and especially with significant portions of high oil prices yet to be passed through consumer prices, a tightening of monetary and fiscal policy is in order, if overheating and a hard landing are to be avoided.

It further projects prolonged exports' growth due to continued supportive external environment and expansion of Pakistan's textile and other manufacturing sectors. Besides, the bank expects rise in investment, due in part to the reconstruction efforts following the October 2005 earthquake.

The report has warned South Asian region that in future, managing the very strong growth of the past few years and ensuring that an inflationary spiral does not develop represents a serious challenge.

Rapid increases in domestic demand (notably consumption) and low interest rates have played a role in large swings in food prices that contributed to the surge in regional inflation.

It foresees that economic activity in the region would remain slow in 2006 through to 2008 as private consumption demand eases to a more sustainable pace in response to a tightening of monetary and fiscal policies.

Weaker global demand would slow export growth and although consumer demand is expected to decelerate, continued robust investment demand should keep imports expanding faster than exports.

The report further says that in India and Pakistan, more restrictive macro-policies, combined with tighter international credit conditions, and an easing of external demand (in the US), are projected to slow growth by about one percentage point in 2006.


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## Neo

ISLAMABAD, May 29: Prime Minister Shaukat Aziz on Monday launched a $300 million buyout fund by two private equity firms and said it would facilitate up to $1 billion investment in PakistanÃ¢â¬â¢s various industries in four years.

Speaking to the media persons on the occasion, the prime minister said the launching of the fund by Abraaj and BMA Capital was an historic occasion as this was the largest fund Pakistan would have through private investors.

He said these funds would be raised from investors all over the Middle East. Abraaj has its presence in the Middle East, North America and Asia while BMA-Capital is a local equity firm.

The prime minister said the per capita income in Pakistan had increased to $846 and the countryÃ¢â¬â¢s privatisation plan was on track and the government was committed to transparency and continuity of economic policies for boosting investment.

Ã¢â¬ÅIt is a private sector venture where the government has nothing to do except providing an enabling environment to attract investmentÃ¢â¬Â, the prime minister said.

He expressed satisfaction that every major name in the Middle East business circles was coming to Pakistan voluntarily and the increasing investment would further boost growth, create more jobs and contribute towards stronger and prosperous Pakistan.

The premier confirmed that the economic growth rate this year would be 6.6 per cent.


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## Neo

ISLAMABAD, May 29: Prime Minister Shaukat Aziz on Monday stressed the need to check population growth which he said was undermining governmentÃ¢â¬â¢s efforts to provide better living conditions to the people.

Speaking at the inaugural session of a follow-up meeting of the council on Islamabad Declaration on Population and Development (IDPD) made by an international Ulema conference held in May last year, he said sustainable development was directly related to population stabilization.

Being appreciative of the IDPD, he acknowledged that the effort was playing an important role in lowering population growth in the country.

Besides insuring macroeconomic stabilization in the country, the government is also focussing on social sector development which has already started showing considerable improvement.

Ã¢â¬ÅI am sure that the advent of a consultative process between scholars and development partners during the follow-up meeting will open new opportunities for the countryÃ¢â¬â¢s population welfare programme,Ã¢â¬Â Mr Aziz said.

Speaking on the occasion, Federal Minister for Population Welfare Chaudhry Shahbaz Hussain said with the ongoing population growth rate of 1.86 per cent, the population of the country would double in next 38 years putting unbearable pressure on its socio- economic indicators.

However, the government claims to achieve replacement level fertility by 2020 with total population of the country touching 195 million. Pakistan with a population of 156.26 million as of mid-2006 is the sixth most populous country in the world. However, now the demographic transition has set in and the fertility indicators are showing a positive trend, the minister said.

Ã¢â¬ÅThe population growth rate which was over 3 per cent in the Ã¢â¬Ë80s has declined to 1.86 per cent. Total fertility rate has come down to 4 and contraceptive prevalence rate (CPR) has gone upwards to 37 per cent during the current year,Ã¢â¬Â Mr Hussain said.

Following the IDPD, the ministry has initiated various programmes, stressing empowerment and involvement of women in decision making in their reproductive health issues, the minister said.


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## Neo

PAKISTANI officials rejoice over the fact that direct foreign investment during the first ten months of this financial year has exceeded $3 billion as they had projected.

The bulk of that investment has come from the neighbouring Gulf States, the UAE and Saudi Arabia in particular and a major part of which has gone into the telecommunication sector. Far more investment is expected in this industry after Warid, a UAE company, has won over four million customers within its first year operations.

All that has encouraged the prime minister to promise an investor-friendly budget next month. And the Board of Investment (BoI) in its budget proposals has called for a reduction in the various corporate taxes and to cut withholding tax to three per cent. The BoI says that a great deal of money gets accumulated with the CBR and getting refunds take a long time, which creates liquidity problems for the companies.

The Securities and Exchange Commission has also come up with a useful guide for investment.

The BoI says that advanced tax should be abolished. It urges that multiplicity of taxes should be avoided and that if all kinds of taxes are taken in to consideration, the total tax rate on companies come to a high 42 per cent.

The board wants the tax and dividend to be reduced from ten to five per cent and the initial depreciation allowance to be raised to 90 per cent for new companies. It wants these proposals to be considered if the grant of tax holiday is not possible.

At a time when Pakistan is seeking more and more foreign investment, foreign missions are coming here seeking Pakistani investment in their countries, particularly in the real estate.

Delegations have been here seeking Pakistani investment in the Dubai real estate, in the new buildings and apartment blocks springing up there. The latest delegation to come is from the UK to sell prime land to Pakistanis who own quite a bit of property there.

And the State Bank of Pakistan has warned investors not to patronise phoney ventures abroad. Earlier, such warnings had been given by Prime Minister Shaukat Aziz.

But foreign companies from Singapore have come here and are developing real estate and offer s****y apartments by the seacoast with Askari Bank funding the buyers. It is getting to be a two-way investment now.

Much of the investment from the Gulf has gone into the telecom sector followed by the power sector (KESC) and Pakistan Steel. The investment in the telecom sector alone has been to the extent $1.7 billion.

We have now to see who gets the PSO, the Pakistan Petroleum, the Sui Northern Gas company and Sui Southern Gas company. If any of them gets sold before the end of this fiscal year, the over all earnings from privatisation will take a big jump.

These are not new employment creating and manufacturing enterprises. But they have certainly added to the employment and productive capacity of the industry.

What matters far more now is how much more they will invest to expand their enterprises, which cry for such expansion. The KESC and the PTCL and other mobile phone companies have indicated they propose to invest large additional sums and the new Saudi owners of Pakistan Steel have said they propose to invest $200 million more in the industry.

In fact, some of those enterprises like the KESC have to make the additional investment very quick and make the investment large enough to render the utility truly useful and satisfy the customers instead of outraging them with frequent load-shedding or breakdowns.

The fact is that the cost of doing business is still very high, not only the foreign investors and Pakistani businessmen say that, but also the World Bank and the Asian Development Bank. Multiplicity of taxes is one of the major problems. Corruption is a very significant deterrent.

Smuggling is another factor, which the manufacturers complain against. The red tape delays are galore and provoke the investors and feeble administration of justice and the failure of the system to execute the decrees passed by the courts is another deterrent.

Law and order continues to be a major problem. The police is often the offender instead of the protector and are often avoided by the victims. Above all that is the gross inadequacy of the infrastructure, specially power and water. The repeated failure of the KESC in recent times and the violence it provokes provides the best or the worst example.

Normally, trade should lead to more foreign investment. How much progress have we made in solving problems of trade with our Muslim neighbours?

After nearly 60 years, Pakistan and Iran have again agreed to remove trade barriers and achieve a $2 billion bilateral trade. This is how slow we have been in solving our trade problems or how problems solved reoccur again.

And for all the big talk about the excellence of Gwadar Port and how it will be made a well-equipped world port, we are now told that Gwadar port lacks modern equipment. It is also seen as a destination for foreign investment.

Because of such inadequacies, the ministries of commerce and textiles have recommended to the budget-makers to treat locally made machinery as exportable goods tax-free. But the government has invariably preferred to refund the duty after much delays rather than make the exports of machinery tax-free.

At the same time, speakers at a seminar in Washington say that Pakistan is now facing major economic risks. The economic policies of the present government make him very nervous, said Shahid Javed Burki, a former finance minister of Pakistan. It was also said that Pakistan had missed many of the opportunities offered by 9/11 while availing of a few of them. This is not the ideal climate for large-scale foreign investment when law and order is a significant deterrent.

With a large trade and balance of payments deficits, workers remittances and rising foreign investment totalling nearly $8-9 billion by the end of the year is financing the annual oil bill estimated at $5.5 billion.

But there is more than money in foreign direct investment; there is some more employment and technology transfer. And we need all of that instead of merely change of ownership of the public sector assets.

Direct foreign investment on new projects is always far better than the investment, which comes through privatisation. But in the kind of circumstances we are, we have to accept the Gulf capital for privatisation as it comes along.


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## Neo

TUESDAY, MAY 30, 2006


KARACHI The government of Pakistan plans to sell a 10 percent stake in Habib Bank on the stock exchange as part of its plan to accelerate asset disposals and reduce its role in the financial industry.

The initial offer, which will reduce the government's stake to 39 percent, is likely in the next few months, Habib Bank's president, Zakir Mahmood, said in an interview.

"We're a very well-known brand and there's been a lot of clamor for Habib to be listed," Mahmood said. The government will probably divest its entire 49 percent stake in the bank - the country's second-biggest lender - in five to seven years, he said.

Pakistan is selling state assets to help repay $36.7 billion of overseas debt, under a divestment program expected to raise a record $3.6 billion in the year ending June. The Habib IPO is also one of the last steps in a World Bank-funded revamp of Pakistan's banking industry, in which the government has managed to slash its holdings.

As part of the revamp, banks have pared bad loans, invested in technology to improve efficiency and cut costs by reducing the number of branches and employees.

Habib Bank has shut 400 branches and more than halved its workforce to 16,000 from 33,000 since the revamp began in 1997.

"The banking sector is one of Pakistan's success stories," said Agost Benard, a credit analyst at Standard & Poor's in Singapore. "It's something other countries in the region could learn from."

Habib was valued at $757.5 million when the government in February 2004 sold 51 percent of the bank to the Aga Khan Foundation, raising $390 million. Stock-market investors have since been anticipating an IPO.

Habib Bank's profit has surged almost 20 times since Mahmood took the helm in 2000 after spending 23 years at Bank of America and Credit Agricole Indosuez. Habib had net income of 8.9 billion rupees, or $148 million, in 2004, compared with 493 million rupees in 2000.

Pakistan's economic expansion has contributed to profit growth at the nation's 38 banks. The $118 billion economy expanded 8.4 percent in the year to June 30, 2005, the fastest in two decades, and is poised to grow at an annual pace of as much as 8 percent over the next five years, Prime Minister Shaukat Aziz has predicted.

"Banking is one of the most attractive sectors on the market," said Habib ur Rahman, chief executive officer of Atlas Asset Management Company, "At the right price, Habib's IPO will be very well received." 

KARACHI The government of Pakistan plans to sell a 10 percent stake in Habib Bank on the stock exchange as part of its plan to accelerate asset disposals and reduce its role in the financial industry.

The initial offer, which will reduce the government's stake to 39 percent, is likely in the next few months, Habib Bank's president, Zakir Mahmood, said in an interview.

"We're a very well-known brand and there's been a lot of clamor for Habib to be listed," Mahmood said. The government will probably divest its entire 49 percent stake in the bank - the country's second-biggest lender - in five to seven years, he said.

Pakistan is selling state assets to help repay $36.7 billion of overseas debt, under a divestment program expected to raise a record $3.6 billion in the year ending June. The Habib IPO is also one of the last steps in a World Bank-funded revamp of Pakistan's banking industry, in which the government has managed to slash its holdings.

As part of the revamp, banks have pared bad loans, invested in technology to improve efficiency and cut costs by reducing the number of branches and employees.

Habib Bank has shut 400 branches and more than halved its workforce to 16,000 from 33,000 since the revamp began in 1997.

"The banking sector is one of Pakistan's success stories," said Agost Benard, a credit analyst at Standard & Poor's in Singapore. "It's something other countries in the region could learn from."

Habib was valued at $757.5 million when the government in February 2004 sold 51 percent of the bank to the Aga Khan Foundation, raising $390 million. Stock-market investors have since been anticipating an IPO.

Habib Bank's profit has surged almost 20 times since Mahmood took the helm in 2000 after spending 23 years at Bank of America and Credit Agricole Indosuez. Habib had net income of 8.9 billion rupees, or $148 million, in 2004, compared with 493 million rupees in 2000.

Pakistan's economic expansion has contributed to profit growth at the nation's 38 banks. The $118 billion economy expanded 8.4 percent in the year to June 30, 2005, the fastest in two decades, and is poised to grow at an annual pace of as much as 8 percent over the next five years, Prime Minister Shaukat Aziz has predicted.

"Banking is one of the most attractive sectors on the market," said Habib ur Rahman, chief executive officer of Atlas Asset Management Company, "At the right price, Habib's IPO will be very well received."


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## Neo

Tuesday, May 30, 2006 

LAHORE: Kinnow exports from Pakistan have touched the 200,000 tonnes mark this year, with the opening up of new markets like Russia and Iran.

"Exports may reach 250,000 tonnes next year when Pakistan's kinnow will also have access to China's market," said Shamoon Sadiq, chief executive officer (CEO) Pakistan Horticulture Development and Export Board (PHDEB). Hopefully the ongoing problems in the Indonesian market would also be resolved by that time, he said in an interview with APP. He said, there was also great potential for Pakistani citrus fruit in Poland, the Czech Republic, Australia and South Africa. Sadiq said, the major destinations of Pakistani kinnow this year were the United Arab Emirates, Russia, Iran, Singapore, Saudi Arabia, Philippines, Sri Lanka, Holland, Ukraine and Mauritius.


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## Neo

Tuesday, May 30, 2006 

ISLAMABAD: The GST/CED collection from telecom sector has reached Rs. 18.9 billion mark during the first three quarters of 2005-06 which is Rs. 5.1 billion higher as compared to the same period last year.

According to Pakistan Telecommunication Authority (PTA), 70 percent of the General Sales Tax and Central Excise Duty contribution came from mobile sector during the period.

The regulatory Authority in its quarterly telecom review said the telecom sector is increasingly contributing in the national exchequer and the GST/CED collection from this vital area during Jan-Mar 2006 reached Rs 7.1 billion as compared to Rs 4.1 billion in the corresponding quarter of last year.

During the quarter, Telecard and Link Direct International have deposited Rs. 119 million under the head of GST/CED, it added.

The PTA further said with the expansion of Long Distance International (LDI) operations, the GST/CED contribution from LDI operators is also increasing. 

Regarding Universal Service Fund (USF), which has been introduced to meet the needs for basic telecommunication and ICT services in un-served and under-served areas throughout the length and breadth of the country, the review said around Rs. 2.084 billion have been collected in this account during the first nine months of current fiscal year.

Prior to deregulation of telecommunication sector, the only contributor to universal services obligation was PTCL. However, with the new licensing regime in place, all the telecom licence holders including Local Loop (LL), LDI and Mobile will contribute in the USF.

It is expected that access to the USF fund would provide sufficient incentive on its own to trigger investment in geographic service extension. 

So far, LDI operators have deposited the revenues from incoming International traffic terminated on cellular mobile networks into the Universal Service Fund account, maintained by the Authority.


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## Neo

Close to buying PaktelÃ¢â¬â¢s parent company

By Imran Ayub

KARACHI: China Mobile is likely to enter PakistanÃ¢â¬â¢s cellular industry as the Asian telecom giant is close to acquiring Luxembourg-based Millicom International - the parent company of Paktel and one of six cellular operators in Pakistan.

Telecom sources said Millicom International, which operates both AMPS and GSM cellular services through Paktel in Pakistan, was wrapping up its operations amid rising competition and declining profits.

Ã¢â¬ÅThere have been talks between the two (China Mobile and Millicom) groups and now it seems the deal between them is a matter of days,Ã¢â¬Â said a source close to MillicomÃ¢â¬â¢s Pakistan operations.

Millicom entered into Pakistan in early 90s, introducing cellular services in the country. Earlier, the company owned two cellular companies in Pakistan in partnership with local telecom operators but later it offloaded shares in one of the companies to local partner.

He said currently Millicom owned Paktel, which offered both GSM (global system for mobile communications) and AMPS (advanced mobile phone system) cellular services across the country and the transfer of PakistanÃ¢â¬â¢s operations to China Mobile would be part of the deal.

Millicom reported around 16 per cent rise in subscribers in the first quarter of 2006, with profit of $33.4 million compared to a loss of $11.3 million a year earlier. The company, with over 10 million subscribers, registered a 20 per cent increase in revenue to $322 million in the first quarter compared with the same period last year.

Millicom authorities in November 2005 announced they were discussing the sale of one of its Pakistani units. In January 2006, following a high number of unsolicited approaches Millicom International announced its board of directors had decided to conduct a review of strategic options for the company and appointed Morgan Stanley as financial advisers.

Sources said the size of Millicom-China Mobile deal had not been disclosed by any party but it would be over $5 billion, the biggest-ever overseas acquisition by the Chinese company. With more than 250 million wireless customers as of last month, China Mobile is by far the worldÃ¢â¬â¢s biggest wireless carrier and controls about two-thirds of the mobile market in China.

Ã¢â¬ÅThe move may trigger a new kind of competition in the emerging telecom markets, including Pakistan,Ã¢â¬Â said the source. Ã¢â¬ÅChina Mobile has built one of the most extensive national cellular networks in the world, covering all of mainland China and the companyÃ¢â¬â¢s strategy clearly shows its target market is Asia and other emerging telecom markets.Ã¢â¬Â

He said though MillicomÃ¢â¬â¢s Pakistan operations were not in a very attractive position, still the country offered one of the best business opportunities to telecom operators, as most of the rural areas were without basic telecom facilities.

Ã¢â¬ÅBy March 2006, Paktel enjoyed 1.004 million subscribers, which ranked the company fifth in terms of market share among six cellular operators with a total 27.34 million cell phone users across the country,Ã¢â¬Â added the source. 

He said for China Mobile Pakistan was among emerging markets, which represented a particularly attractive destination for telecom companies as western markets became saturated. Ã¢â¬ÅIn many developing nations, fixed-line infrastructure is poor and limited in its range, so cellular networks, which are cheaper to roll out than traditional lines, are used as the primary means of communication,Ã¢â¬Â added the source.


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## Neo

KARACHI: The Microsoft intends to come up with investment in the IT sector in Sindh. This was stated by the members of a delegation of Microsoft, which called on the Adviser to the Sindh Chief Minister on Information Technology, Muhammad Noman Saigal, in his office here on Monday. Country Chief of Microsoft Pakistan, Jawad Rahman also accompanied the delegation. 

On the occasion, Saigal said that Sindh IT Department is making efforts for the grant of scholarships abroad to students and those who possess expertise in the IT. Members of the delegation informed the adviser that not only that Microsoft intends to come up with investment in the IT sector here but is also asking other international IT firms to do so as well. 

They said that in accordance with a comprehensive plan, the IT experts and students who want to utilise their skills would be extended scholarships abroad for pursuing further education in this discipline. 

It was pointed out that the assistance of the Sindh government would be required for the purpose. The members of the delegation further said that Microsoft would extend assistance in the ongoing IT projects in the province. The adviser said that MicrosoftÃ¢â¬â¢s plan would help provide job opportunities in the IT sector in Pakistan.


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## Neo

Tuesday, May 30, 2006 

* Reconstruction in quake-hit areas and smuggling of imported items to Afghanistan said to be the reason behind increasing imports

By Tanveer Ahmed

KARACHI: The rising demand for iron and steel in the country due to large-scale reconstruction and development activities has resulted in massive growth of 57 percent in iron and steel import bill in July-April of current fiscal over the same period of last year.

The total import of iron and steel stood at $1.101 billion in the first 10 months of fiscal 2005-06, compared with $703 million in the corresponding period of 2004-05.

The importers of iron & steel attributed this unprecedented surge in import of the commodity mainly to earthquake-related construction activities, industrial expansion and export of these items to Afghanistan through illegal channels. The steel consumption figures hover between 4-5 million tons annually. Last year steel consumption stood at about 4.2 million tons, in which the Pakistan Steel Mills contributed about 25 percent by production 1-1.1 million tons while the rest was imported to meet the demand.

The rising import bill of steel & iron has further burdened the forex reserves of the country, which is already under pressure due to soaring trade deficit, mainly because of rising oil and machinery imports.

A quick glance at the import figures of July-April of 2005-06 shows the metal group, in which iron & steel makes a big part, is among the top few import groups.

Senior Vice-President of the Karachi Iron & Steel Merchants Association (KISMA) Shamoon Bakir Ali, counting various reasons for this surge in import of iron & steel, said that whenever construction and expansion takes place, the consumption of iron & steel is bound to increase, and also because the countryÃ¢â¬â¢s domestic production is far below the consumption.

Because of the earthquake, Mr Shamoon said, the whole housing industry in the NWFP and AJK has been badly affected. 

Ã¢â¬ÅAs you are aware that the houses built in these areas are all without RCC and are based on structures and corrugated steel sheets on the roof. An average house consumes a minimum of about 50 sheets of 10 X 4 feet, and each sheets weights about 14 kgs, thus consuming about 700 kg per house, he pointed out, saying that if one million houses are to be made, the ultimate consumption will rise by 25%.

Referring to industrial growth, he said that an increase in industrial growth in any sector increases the demand for steel. Even if a textile mill makes a building for expansion or a new garment unit is set up, the consumption of steel will increase.

The whole industrial sector and the textile industry in particular went for expansion, which is still under way, Mr Shamoon pointed out, saying that this also contributed to the increasing demand for iron & steel in the country. Citing the export of steel bars to neighbouring Afghanis-tan, he said as there is no steel mill neither any steel rolling plants in Afghanistan, all their basic steel requirements are fed by Pakistan, either through legal or illegal channels.

He predicted that overall steel consumption would be hovering between 6-7 million tons by the end of this year in view of further demand, which is evident from the orders being placed with the iron and steel traders.


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## Neo

Cutting edge

I Hassan

It seems that people in Pakistan have suddenly woken up with a fright to the reality that there is hardly any water for the burgeoning population and something has to be done about it. This addiction to somnambulance is not new. We have this habit of putting everything off till tomorrow and then suddenly that tomorrow arrives.

Years ago, it was apparent that potable water and for that matter water for all purposes, particularly for irrigating, was a finite gift from God and unless something was done about it, it would run out.

When Pakistan was born, its population was about 40 million, around a quarter of what it is today. This means that you have to grow more food to feed this increased horde. For that one needs more water to irrigate extra land. You need more water to drink, wash and more so for sewerage purposes.

Fifty years ago, the population did not have the benefit of being able to use a drainage and sewerage system. Karachi was the only place which had this luxury. The rest of the country had a primitive system of a sweeper visiting once a day to collect all the human waste in a basket and carry it away on head to God knows where. Over the years, almost all the towns and cities have adopted a water-borne sewerage system with the consequent increase in use of water. And yet, it is far from complete because in all our rural areas, people still grace the fields to relieve themselves. But gradually people are learning and adopting non-traditional ways of fulfilling this function. This means that there is a need for more and more water. Traditionally, our people bathed once a week on Fridays but now they are having to do so daily with the result that more and more water is required and the requirement will continue to grow.

Not only will the requirement continue to grow but so will the population. It stands at 150 million today. It is estimated that at the current rate of increase, by 2125 the population will be 300 million. With the source and supply of water limited, it is difficult enough to cope with the requirements of the existing population. Hence it will be impossible to cater to that increased population.

Unless we begin to plan now, we face a complete disaster. The first and foremost step to take is to limit the rate of population growth. Many years ago, the Chinese decided to do just that and a draconian law was passed that each couple was to have just one child only. Through this measure, the Chinese have been able to cope -- and are coping -- with the situation. Unless we try something similar we do not have the slightest hope of survival.

Our resource of water is limited to two sources. The first is rain, which, as we all know, is extremely limited. The other is snow-fed rivers like the Indus, Jhelum and Chenab. That again is limited for water in the rivers depends on the snow that falls on the high mountains and then melts during the summer. Even if we build more dams and create more storage facilities, the resource will remain limited. Since we cannot increase either rainfall or snowfall, however much may we store water, our total supply will remain the same whilst the need would continue to multiply.

The only way to overcome this difficulty is to find new sources. We are fortunate that we have such a source -- the Arabian Sea. Seawater is being used by the waterless Arabian states. They are doing that most successfully. To us, with our population already at 160 million, it would be a stupendous undertaking but one we can't do without. 

Of course, the water would have to be de-salinated. Not only would it have to be de-salinated but it will have to be pumped up all the way up to the Northern Areas and the cities in between. 

This would be a mammoth project vastly expensive but a man in the middle of a desert does not and cannot quibble over the price of a glass of water. Either you pay what is being demanded or you perish. The world is changing so fast that the price of a glass of water will beat the price of gold in a cocked hat.


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## Neo

ISLAMABAD (May 31 2006): A Rs 1.5 trillion federal budget for 2006-07 will set a solid foundation to sustain the current growth rate, besides addressing the key issues confronting the common man. This was the crust of the pre-budget briefing jointly held by advisor to prime minister on Finance, Dr Salman Shah, and state minister for Finance, Omer Ayub Khan, for print media here on Tuesday.

Dr Salman listed priority areas for next year's budget. These included social sector development, poverty alleviation, employment generation, price hike, expansion of industrial base and competitiveness of local products at home and abroad.

The GDP has been estimated for next year at $145 billion, fiscal deficit 5.2 percent and inflation 6.5 percent and growth rate 7 percent of GDP. Salman said the government was stood for bringing all potential areas into tax net to generate maximum income through local resources for spending more on developmental projects.

He was asked whether the government plans to bring real estate sector into tax net in the next budget. The advisor deplored that as a nation the country was yet to decide what was in the national interest and what was not, and added that how one could expect any miracle in the given situation.

He asserted that the cost of doing business would not come down as long as the nation remained misdirected and indecisive on issues like dams.

The advisor quoted Singapore and Malaysia as models for rapid progress and stressed the need for working out a national approach for tackling the thorny issues. He said that Pakistan's case can not be seen in isolation and instead of painting bleak picture, the critics should guide the government to help address the basic issues.

He said that the government was taking a number of initiatives in the 2006-07 budget to create jobs for the unemployed and expanding industrial base. He said that employment generation and poverty reduction were some of the few focal points of the next year's PSDP.

He told a questioner that PSDP's reasonable portion would be spent on vocational training programme to improve professional skill of labour and less educated people.

The advisor also highlighted the importance of an independent authority to collect reliable data for official consumption and work out a workable policy framework.

He conceded that cartelisation in different areas such as cement, sugar and petroleum sector was an outcome of poor monitoring system. However, he hinted at setting up a 'competitive authority' to address such issues of monopoly and protect the consumers against profiteering.

The advisor also hinted at increasing pensions and salaries of government employees, in the budget, for immediate relief. He said the government would spend billions of rupee in the next fiscal year for safe drinking water scheme and other basic facilities to improve the living standard of the common man.

He said that in terms of GDP ratio defence budget for the next year would not be increased. However, the government would remain committed to meet all needs of the armed forces to acquire modern technology to ensure the national security.


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## Neo

ISLAMABAD (May 31 2006): The government has admitted that 38.7 million people are still living below poverty line but at the same time it claims that per capita income has risen to $845 from $732, showing an increase of $103 in one year.

The Planning Commission quoted 'Pakistan Standards Living Measures' (PSLM) latest survey as depicting that population below poverty line had come down from 32.1 to 25.4 percent in 2005, but still 38.7 million people in the country were living below poverty line.

The Planning Commission has warned against decline in domestic savings, saying that its ratio to GDP tabulated to 13.9 percent against 14.5 percent of last year, indicating 0.6 percent decline.

"One aspect of the monetary policy in recent years, which needed continuous attention, had been the spread between the banks' lending and deposit rates. The spread, though was down to 7.24 percent in February, was still high and needed to be further reduced with a view to encouraging domestic savings," the Commission said in its Annual Plan (2005-06) review.

The Annual Plan further said that the country's two major sectors, agriculture and industry, which contribute a lot to the GDP, had failed to show growth as per the government targets set for the current fiscal year.

In the 2005-06 budget, the government had fixed 4.8 percent growth target for the agriculture sector, and 9.5 percent for industry, but the latest available statistics indicate that agriculture growth would not cross 2.5 percent while industrial growth would touch 5.9 percent, which respectively is 2.3 percent and 3.6 percent below the targets.

However, an impressive improvement was registered in the livestock sector where growth has been estimated at 8 percent, against the target of 3.5 percent, while the construction sector also surpassed the target.

The Annual Plan claims that the services sector has shown a robust growth of 8.8 percent, of which the main contributors are finance and insurance (23 percent) followed by wholesale and retail trade (9.9 percent), and transport, storage and communication registered 7.2 percent growth.

Based on July-March data, large-scale manufacturing sector growth rate worked out to be 9 percent, which is lower than the growth of 15.6 percent in 2004-05 and the target of 13 percent for the current year.

Major increase has been recorded in the production of jeeps, cars and light commercial vehicles (29 percent), vegetable ghee (13.2 percent), cotton yarn (11.2 percent), cement (9.7 percent), phosphatic fertiliser (12 percent) and cigarettes (4.7 percent).

To achieve 7 percent GDP growth for 2005-06, the government had projected total investment at Rs 1369.2 billion (18.1 percent of GDP) at the current market prices. Of this, fixed investment was targeted at Rs 1,248.2 billion, consisting of Rs 393.4 billion and Rs 854.8 billion for public and private sectors, respectively. Of the total investment, 87.9 percent was to be financed through national savings, and the remaining 12.1 percent from external resource inflows.

According to provisional estimates, total investment is expected to be Rs 1,544 billion during the current fiscal year, which is about 30 percent higher than last year's level. In terms of ratio to GDP, it stood at 19.6 percent, about 2 percentage points higher than the ratio for 2004-05.

Of the total investment, about 79 percent was financed through national savings, while the remaining 21 percent was from external resources inflows. As ratio to GDP, domestic saving works out to be 13.9 percent against 14.5 percent of last year.

The latest information available on employment position in the country shows additional employment generation of 5.64 million during two years 2005 and 2006. The employment level, which was 42 million for 2004-05, rose to 47.6 million in 2005-06, reflecting reduction in unemployment rate from 7.7 percent to 6.5.


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## Neo

KARACHI (May 31 2006): As per a feasibility report shrimp fanning on 100,000 acres can generate 1.6 billion dollar annually. This was stated by Chairman All Pakistan Seafood Industry Association (APSIA) Sardar Hanif Khan during an interview with AAJ markets.

He further added that according to United Nation's Food and Agriculture Organisation (UN-FOA) Pakistan has approximately 1 million acres of land suitable for shrimp fanning.

He said seafood industry was prioritised during the last budget but there is nothing significant witnessed from the government, it is in focus for coming year but until some thing practically done prospect for growth will be limited. Pakistan seafood export averages l5O million dollar a year but for the year it is expected to fetch 1 80-200million dollar due to tuna catching. Tuna was scare in Pakistani sea due to over exploitation in 1993 but lately it has returned back.

Hanif was off the view that this industry is a gold mine. It can easily achieve 1 billion dollar export target set by the government and has potential to create employment in the country, which will help in fighting poverty but for that, government will have to address issues like creek fishing, illegal netting, dumping industrial pollution in the sea and deep sea fishing.

He said law is already there for proper education, better opportunities. Law implementation would solve the problem and government will have to address these issues.

The biggest issue for the seafood industry at the moment is raw material availability, he suggested fish fanning can solve this problem. Besides he said 3 percent export financing rate was the only incentive seafood industry had, which is also not there as the vary rates we at 9 percent.


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## Neo

LAHORE (May 31 2006): Net private capital flows to developing countries reached a record high of US $491 billion in 2005, driven by privatisation's, mergers and acquisitions, external debt refinancing, as well as strong investor interest in local-currency bond markets in Asia and Latin America.

This was disclosed by the World Bank's annual 2006 Global Development Finance report, which was made public on Tuesday. It further states that the surging flows, including record bank lending and bond issuance, among others, coincided with 6.4-percent economic growth in the developing world last year, more than double the 2.8-percent growth in developed countries.

According to the report, sharp rise in private flows to developing countries came despite uncertainties caused by high oil prices, rising global interest rates and growing global payments imbalances. Private debt flows to developing countries rose to an estimated US $192 billion, up from US $85 billion in 2003, driven by abundant global liquidity, steady improvement in developing country credit quality, lower yields in rich countries, and expansion of investor interest in emerging market assets.

Many developing countries have received credit-rating upgrades to accompany record-low spreads on their bonds, enabling them to raise a record US $131 billion in bond issues in 2005, up from US $102 billion in 2004.

"These gains reflect estimated GDP growth of 6.4-percent in low and middle income countries in 2005, buoyed by China and India, whose output grew, respectively, by 9.9 and 8-percent. Excluding these two countries, growth in other oil-importing developing countries was 4.3-percent, down from 5.7-percent in 2004. Growth is expected to exceed five percent through 2008 in Africa, Asia and Eastern Europe, and close to four percent in Latin America," it observed.

The report revealed that the surge in capital flows also reflects rising trade flows and financial integration among developing countries.

South-South trade rose to US $562 billion in 2004, up from US $222 billion in 1995, and in 2004 accounted for 26-percent of developing countries' total trade. South-South foreign direct investment (FDI) also rose, reaching US $47 billion in 2003, up from US $14 billion in 1995, and in 2003, accounted for 37-percent of developing countries' total FDI, it added.

According to it, while these South-South flows are a relatively small share of total private flows, they have the potential to change the face of development finance, particularly if growth in developing countries continues to outpace that in the developed countries.

Much South-South FDI originates with middle income country firms, and is invested in the same region, for example, Russian and Hungarian firms investing in Eastern Europe and Central Asia, and South African companies investing elsewhere in southern Africa. About half of China's FDI, however, went to natural resources projects in Latin America.

The report pointed out that amid the encouraging trend of increased capital flows to developing countries, a gap in access to international credit persists among these countries. One group has issued bonds regularly since 2002. It includes "stars" such as China, Chile, Hungary, Malaysia, Mexico, Poland, Russia and Thailand, which are rated investment-grade, and enjoy lower bond spreads than the overall developing-country bond issuers' average.

A second group has access to bank lending because of well-defined revenue streams such as exports, remittances or extractive industries, but lacks access to bond markets. A third group of low income countries has no access to private capital except short-term trade finance or FDI, and depend mainly on official financing for their long-term capital needs.

"This last group benefited from gains in development aid and debt relief. Donors increased official development assistance (ODA) to 0.33-percent of their gross national income (GNI) in 2005, up from 0.22-percent in 2001, and just below the early-1990s high of 0.34-percent. Most of the record US $27-billion increase is due to debt relief provided to just two countries, Iraq and Nigeria. Still, the trend indicates that donors are enhancing their aid effort.

ODA likely would decline in 2006-7 from its record level of US $106.5 billion in 2005, as debt relief falls, but rise again gradually to reach 0.36-percent of GNI in 2010. Donors plan to allocate at least half of the US $50 billion increase in ODA by 2010 to Sub-Saharan Africa, doubling aid to the region. In addition, debt relief provided under the Heavily-Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Reduction Initiative (MDRI) would significantly reduce the debt service of poor countries that qualify, providing additional finances needed to support progress on the Millennium Development Goals," the report analysed.


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## Neo

Published: 05/31/2006 12:00 AM (UAE)

Kuwait City: Pakistan's budget for the next fiscal year will boost spending by tens of percentage points, partly due to a substantial increase in social expenditure, the country's economy minister said yesterday.

Pakistan will announce its budget for the year to end-June 2007 on June 5.

"The budget is going to be much more than before, especially spending on social sectors," Hina Rabbani Khar said on the sidelines of a meeting of the Islamic Development Bank in Kuwait. "[The increase will be] at least in the tens of percentages."

The current year's total budget is Rs1,098 billion ($18.23 billion). Its deficit target was 3.8 per cent of GDP, but the actual figures are yet to be announced.

Ratings agency Standard & Poor's said last year that Pakistan's expansionary budget for the current year threatened to delay an improvement in the country's credit ratings.

Khar said yesterday that the new budget would not introduce new taxes.

She said Pakistan would go back to international debt markets during the next fiscal year and would forge ahead with its privatisation programme.

"We will continue to tap international markets," she said. "The decisions about how much are usually made fairly on the spot but it will probably be similar to last year."

Privatisation

Khar said Pakistan would continue privatising one or two companies a month, with a number of sales pla-nned in the services sector.

"There are two or three big ones that have not yet been announced," she said, but did not give details.

Khar said the current account deficit had stayed within its target of 4 per cent of gross domestic product over the past year.

"We have no problems with [the current account deficit]," she said. "It's under 4 per cent, which is the target we set."


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## Neo

Wednesday 31 May 2006, 


DUBAI, May 31 (Reuters) - United Arab Emirates firm Emaar Properties (EMAR.DU: Quote, Profile, Research) has signed an $18 billion deal with Pakistan's Port Qasim Authority to develop land in Karachi. 

A Emaar statement on the Dubai bourse Web site said on Wednesday that the development would include apartments, commercial and retail space as well as hotels and other leisure facilities. 

An Emaar official said the deal was signed in Pakistan. 

http://today.reuters.com/business/n...ryID=nL31559572


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## Neo

Wednesday, May 31, 2006 

By Fida Hussain

ISLAMABAD: The National Economic Council (NEC), which is to meet on Wednesday, is likely to approve an all-time high Rs 451 billion as total outlay of the Public Sector Development Programme (PSDP) for 2006-07 fiscal in which the water sector has been tipped for the proposed allocation of around Rs 55 billion, a senior government official told the Daily Times on Tuesday. 

It is the first time that the overall size of the PSDP allocation proposed by the Annual Plan Coordination Committee (APCC) after consultation with the president is very close to the demand of Rs 454 billion made by the ministries and autonomous and semi- autonomous organizations and corporations for their ongoing and new projects during the fiscal 2006-07, the official said.

The proposed total outlay of PSDP allocation is 47 percent higher over the total outlay of Rs 306 billion in the current financial year, according to the official. The Water and Power Development Authority (WAPDA) and the National Highway Authority (NHA) will spend Rs 30 billion and Rs six billion, respectively, outside the actual budgeted PSDP. WAPDA and the NHA had raised Rs 34 billion and Rs five billion, respectively, from their own resources and have spent the same on the implementation of some of their development schemes in 2005-06. 

The budgeted PSDP has been proposed at Rs 415 billion for the next fiscal, which is an increase of around 52 percent over this fiscal allocation of Rs 272 billion. In the proposed allocations, the federal PSDP is Rs 270 billion that shows an increase of 32 percent over this fiscal allocation of Rs 204 billion for the federal development programmes. 

Provinces will get Rs 115 billion in the next fiscal for their development programmes that show an increase of 76 percent over the current fiscal allocation of Rs 65 billion. The corporations will get Rs 48.2 billion for their development programmes during the next fiscal. The proposed allocation for special areas to be looked into by the NEC with Prime Minister Shaukat Aziz in the chair has been proposed at Rs 16.2 billion. The special programmes are expected to get Rs 35.4 billion during the year 2006-07. A special allocation of Rs 50 billion has been proposed for the rehabilitation and reconstruction of earthquake-affected areas. 

According to sector wise allocation, the allocation for the infrastructure sector has been proposed at Rs 132.5 billion, which is 49 percent of the total PSDP allocation. The social sector will get Rs 130.8 billion, which is 48.4 percent of the proposed allocation. Other sectors, which include the production sector, are expected to get Rs 6.7 billion that is 2.5 percent of the total allocation. The allocation under the head Ã¢â¬Åoperational shortfallÃ¢â¬Â has been proposed at Rs 20 billion. 

The allocation for Basha Diamer project, whose ground-breaking ceremony was performed by President General Pervez Musharraf a few months ago, has been proposed at Rs 500 million while the allocation for Neelam Jhelum Project is Rs five billion. The installation of Ã¢â¬ÅcontroversialÃ¢â¬Â telemetry system is expected to get Rs 20 million in the next fiscal. 

The Planning and Development Division (P&D) has informed that during the first 10 months of the current fiscal actual utilization of PSDP was Rs 149 billion which is 10 percent higher than the amount utilized during the same period of the last fiscal. The P&D has said that there is dire need to streamline the procedure of funds releases to the development schemes.


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## Neo

Wednesday, May 31, 2006 

Emaar Properties, the leading property developer has announced three real estate developments in the cities of Islamabad and Karachi in Pakistan. The projects, with a total investment of AED 8.8 billion (US$2.4 billion), will include a series of master planned communities that will set new benchmarks in commercial, residential and retail property within Pakistan.

The nationÃ¢â¬â¢s capital, Islamabad, is home to two Emaar Pakistan projects: the Highlands and Canyon Views. With 1,500 acres between them the Islamabad communities offer 9,000 luxury single-family town homes and villas in a range of architectural styles with easy access to amenities including retail centres, community club houses, parks, lakes, schools and mosques. 

Karachi will be home to Crescent Bay, a 75-acre development featuring high- and mid-rise towers for residential and commercial use, a shopping centre and five-star beachfront hotel. The towers will contain approximately 4,000 residential apartments. Mohamed Ali Alabbar, Chairman, Emaar Properties said Pakistan represented a vital link in EmaarÃ¢â¬â¢s global and regional plans. Ã¢â¬ÅThese current projects are only a small and initial part of our commitment to providing world-class living and infrastructure in Pakistan,Ã¢â¬Â Alabbar said. 

He added: Ã¢â¬ÅPakistan will play an important role in the development of EmaarÃ¢â¬â¢s reputation in Asia, and remains one of our most significant commitments outside of the UAE.Ã¢â¬Â 

The Highlands development is located within the Defense Housing Authority Islamabad (DHAI) Phase 1 extension and Canyon Views is within the DHAI Phase 2 extension. Offering approximately 50 separate community districts with its own individual identity, a spectrum of architectural styles ranging from Mediterranean, Tuscan, Mughal, Arabic and Spanish, will be available to select from. 

Crescent Bay, located within KarachiÃ¢â¬â¢s DHA Phase 8 and in close proximity to the DHA golf course, will also offer individual architectural styles for each tower within the development. All three projects are expected to be completed in the next four to five years.

Mohammed Al Falasi, Managing Director of Emaar Pakistan said: Ã¢â¬ÅOur goal is to create a series of exciting developments that set new standards for commercial and residential property. Highlands, Canyon Views and Crescent Bay will set these standards and are the first of many projects that we have planned for other cities in Pakistan, which we will be developing over the next few years.Ã¢â¬Â World famous master planners on the Crescent Bay development are Halcrow International with architects Norr and Holford while master planners WATG, RNL and JZMK are working on Highlands and Canyon Views projects.

Architects for the Islamabad projects are Mazen N. Issa, Alexandra Hayes, Bassenian Lagoni and Saunders & Wiant. The master planners have brought inspiration from the worldÃ¢â¬â¢s best designed residential communities to Pakistan Ã¢â¬â offering another Emaar signature landmark to the region.

Al Falasi added: Ã¢â¬ÅFurthermore, we are aiming to preserve 20 per cent of the project area as green space, offering a haven of peace and natural beauty in the middle of a thriving community.Ã¢â¬Â

EmaarÃ¢â¬â¢s innovative offering of self-contained, amenities-rich communities have created lifestyle options that have been the first choice for many residents around the world. The integration of schools, health facilities, parks, landscaped grounds and retail centres into master-planned golf, equestrian and marina-themed lifestyles has proved a winning combination.

With joint ventures and projects covering Saudi Arabia, Syria, Morocco, Egypt, Tunisia, Turkey and India, Emaar is taking its winning formula first conceived in its home base Dubai to the rest of the world. 

http://www.strategiy.com/realestate...=20060531104257


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## Neo

By Ron Synovitz




Mottaki speaking to the press in Tehran in January(Fars)
PRAGUE, May 25, 2006 (RFE/RL) -- Iranian Foreign Minister Manuchehr Mottaki met in Islamabad today with Pakistani Prime Minister Shaukat Aziz. Mottaki said the goal of his two-day visit to Pakistan is to improve communications and bilateral relations -- particularly in the area of trade.


"We should remove all the obstacles from the legitimate point of the views -- or any other obstacles which are there -- to make the relations between our two countries transparent," he told journalists.
*The Nuclear Program* 
The international controversy over Iran's nuclear program is one issue that complicates that relationship.
Islamabad has been under pressure from the United States and other Western governments since the UN's nuclear watchdog confirmed that a black-market network linked to Pakistan's top nuclear scientist, Abdul Qadeer Khan, provided Iran with uranium-enrichment technology.
After meeting with Mottaki today, Aziz said Iran has the right to develop nuclear technology for peaceful purposes and under the guidelines of the International Atomic Energy Agency.
Aziz added that the international dispute over Iran's nuclear program should be settled through dialogue rather than military action.
With those positions enunciated, Mottaki's talks then moved on to details about how trade relations between Iran and Pakistan can be improved.
*Iran-Pakistan-India* 
A top item on the agenda is a proposed multibillion-dollar Iran-Pakistan natural-gas pipeline that could be extended to India. Plans call for a link from Iran's abundant gas reserves to provide India's booming economy with about 150 million cubic meters of natural gas per day for 25 years.
Energy officials from Iran, Pakistan, and India met earlier this week in Islamabad to discuss the plan.
The project is opposed by the United States. 
Ahmed Waqar, the permanent secretary at Pakistan's Petroleum Ministry, says Islamabad's decision about whether to go ahead with the proposed pipeline depends upon Pakistan's own needs and interests.
"We need energy," Waqar said. "And Iran is one of [the] sources of energy. And any decision in this regard, I would repeat, has to be taken keeping in view the national interest."
Pakistan and India also have long disputes of their own to resolve before the proposed pipeline can be extended into India from a regional distribution hub in Pakistan.
*Outstanding Issues* 
One dispute is over a coastal strip of marshland between India's Gujarat state and Pakistan's Sindh Province. The exact demarcation of the border there has been disputed by both sides since 1947 when Pakistan and India gained independence from British rule.
Talks between India and Pakistan on that border issue began today in Islamabad as part of the composite peace dialogue.



Indian Petroleum Secretary MS Srinivasan says the pipeline -- which could pass through the marshy border region -- is vital to India's national interests:
"We consider that this project is necessary and important to us in order to meet our growing energy needs and our requirements," Srinivasan said. "And our national interest will determine the progress of the project."
Another unresolved issue is how much Islamabad would charge for the transit of Iranian gas deliveries to India. Officials from all three countries plan to meet in New Delhi in July to try to reach agreement on a gas pricing mechanism.


http://www.rferl.org/featuresarticle/2006/05/82df390b-c121-4a0f-af53-59f56e1d51b4.html


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## Neo

ISLAMABAD (updated on: June 01, 2006, 16:39 PST): Prime Minister Sahaukat Aziz has said the government is determined to secure national integrity, solidarity and people besides ensuring economic sovereignty and geo-political stability with national pride and dignity.

He said this while addressing 30th convocation of the National Defence College here on Thursday.

The Prime Minister said our vision for Pakistan is to have a developed, industrialized, just and prosperous country through accelerated and sustainable development by developing knowledge inputs.

To accomplish this vision, he said, the government is working on enhancing economic competitiveness, ensuring minimum credible deterrence capability in defence, innovations, improving peoples skills besides building their faith in government and strengthening communities and civil society.

Shaukat Aziz said the government under the leadership President Pervez Musharraf is striving hard with dedication and honesty to achieve the goals of a prosperous Pakistan and now benefits of economic successes made by the government are giving meaningful gains to all segments of the society.

He said we believe in development in dignity and development in equity.

He said the government is pursuing on a policy to accelerate development in all fields and for this purpose a development programme of four hundred fifteen billion rupees will be launched during the next financial year with major thrust on infrastructure to ensure energy, water and food security and improve social sector.

Turning to national defence he said Pakistan has not any ambition to have the status of great power nor wish to engage in arms race with any other country but it cannot ignore its defence requirements which is vital for peace and stability in the region.

He said besides ensuring minimum credible deterrence Pakistan is also in favour of regional strategic restraint regime in strategic and conventional weapons. At the same time he said Pakistan also believes in use of nuclear technology for peaceful purpose and meet energy requirement through it under IAEA safeguards.

On foreign relations, Shaukat Aziz said Pakistan is keen to promote peace and cooperation with its neighbours by resolving all outstanding issues. For this purpose, he said, Pakistan is engaged with India in composite dialogue process with a particular focus to resolve the core issue of Kashmir according to the wishes of the Kashmiri people.

He said with Afghanistan we share ties of history, culture and religion and we are committed for promoting peace and security in that country as peace and stability in that country is in the strategic interest of Pakistan.

He said Pakistan's position on Iranian nuclear issue is very clear that it should be resolved only through diplomacy.

Shaukat Aziz said Pakistan enjoys very close and friendly ties with China and we are proud on our relations with that country. He said we intend to provide energy and trade corridor to China and India to meet their energy requirements.

He also expressed satisfaction over Pakistan's relations with the United States, European Union as well as Russia and Japan and said these relations are beneficial bilaterally and are contributing towards ensuring regional stability and security.

Congratulating the passing out graduates, Shaukat Aziz described participation of the foreign military officers as a good omen and a source of strength for promoting interfaith and inter-culture harmony the world over.

In his welcome address Commandant National Defence College Lt. General Raza Muhammad Khan highlighted the activities of the College regarding training facilities to the higher leadership of military, civil bureaucracy and politicians besides officers of the friendly countries.

Overall one hundred and forty one graduates from Pakistan and friendly countries including Bangladesh, China, Germany, Saudi Arabia, United States, UK and Middle East were awarded Master's degrees in defence and strategic studies and war studies.


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## Neo

ISLAMABAD (June 01 2006): The National Economic Council (NEC) on Wednesday approved provision of Rs 415 billion for Public Sector Development Programme (PSDP) for 2006-07, which would include Rs 270 billion federal and Rs 115 billion provincial PSDP and Rs 50 billion to be spent on reconstruction and rehabilitation of earthquake-hit areas of NWFP and Azad Kashmir. The NEC meeting was presided over by Prime Minister Shaukat Aziz.

The federal PSDP has an operational shortfall of Rs 20 billion. Prime Minister's advisor on Finance, Dr Salman Shah, State Minister for Finance Omer Ayub Khan, Planning Commission Deputy Chairman Dr Akram Shaikh, provincial chief ministers, finance ministers and federal and provincial finance secretaries attended the meeting.

Dr Akram Shaikh, briefed the media men about NEC's decisions. He said the government has introduced a new concept of development with dignity and equity and it would increase dependence on local resources for financing the developmental projects.

He said that Rs 132.5 billion has been allocated for infrastructure; Rs 130.8 billion for social sector; and Rs 6.7 billion for other areas. He said that the NEC has allocated Rs 10 billion for initial work on five dams announced by President Pervez Musharraf. These are Munda, Basha, Kalabagh, Akhori and Sakurdu Katzara dams.

Akram said that the 2005-06 PSDP utilisation was around Rs 193 billion, and the government was now strengthening its system to even better PSDP utilisation in the future. According to the PC deputy chairman, 260 of 1512 projects and schemes were completed during the outgoing fiscal year. He said with Rs 115 billion PSDP provinces would have more resources to undertake developmental projects and schemes in 2006-07.

The overall size of the proposed PSDP is 35.6 percent higher than the current year and the federal PSDP reflects an increase of 29 percent in education, 20 percent in health, 25 percent in IT, 39 percent in Science and Technology, 15 percent for special areas and 100 percent in Khushhal Pakistan Fund (KPF).

He said that economic growth consecutively for the fourth year has reduced poverty from 34.46 percent in 2000-01, to 23.9 percent in 2004-05; urban poverty declined from 22.7 to 14.9 percent and rural poverty from 39.26 to 28.1 percent.

Dr Akram said that per capita income has risen to $847, registering a growth of 14.1 percent. He said the government spent Rs 1332 billion on poverty related sectors over the past five years and 5.82 million new jobs were created in the past 18 months, which brought unemployment rate down from 8.3 percent in 2001-02 to 6.5 percent in 2005.

He said that government policies in livestock sector registered a healthy growth of 8 percent, growth in large scale manufacturing showed an increase at 9 percent, services sector showed at 8.8 percent with major contribution from finance and insurance (23 percent), private sector investment grew by 31.6 percent and public sector investment by 46.7 percent. Exports increased by 17.8 percent and imports by 40.4 percent during 10 months of the current fiscal year. Foreign private investment reached $3.376 billion which was the highest ever in Pakistan's history so far.

According to Dr Shaikh, inflation was slightly below 8 percent as on April 30; public debt as percentage of GDP declined from 100 percent in 1999-2000 to 54.7 percent in 2005-06, well below the target set in the Fiscal Responsibility Law. Workers remittances stood at $3.63 billion, showing an increase of 5.2 percent over last year corresponding period and foreign exchange reserves at $13.1 billion as on May 13.


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## Neo

ISLAMABAD (June 01 2006): Pakistan's budget deficit has expanded to Rs 201.35 billion (2.70 percent of GDP), up by 0.60 percentage point, in the third quarter (July-March) as compared to Rs 131 billion (2.1 percent) in the corresponding period of last fiscal year.

This big increase in the budget deficit in absolute and percentage terms would leave little room to allocate enough resources for public welfare programs in the budget for 2006-07 to be announced on Monday. It would also force the government to expand its external and domestic borrowing to bridge the deficit.

According to the latest data released by the Ministry of Finance on 'Consolidated federal and provincial budgetary operations' for July-March 2005-06, the government's total expenditures stood at Rs 935.66 billion, including unidentified expenses of Rs 55.72 billion, whereas its revenue receipts totalled at Rs 734.30 billion.

It is pertinent to note that out of the total expenses, the government spent only Rs 204.15 billion or 21.82 percent for the Public Sector Development Programme (PSDP). A huge sum of Rs 787.295 billion, or more than 84 percent was consumed by current expenditures. The Defence expenditures were Rs 175.82 billion during this period.

After analysing and comparing the fiscal data of three quarters with that of a year ago, two important things emerged. First, the budget deficit is higher than what it was-2.7 percent--against 2.1 percent of the GDP. Secondly, the amount of unidentified expense is much larger than what it was--Rs 55.72 billion--against Rs 23 billion.

On the positive side, the expenditure on 9-month PSDP during the period of this fiscal year is higher than the same period of last fiscal year. This indicates a change for better in the government's policies but much depends on actual utilisation of PSDP allocations. The actual utilisation of the PSDP in the first ten months of this fiscal year was about only 73 per cent.

CURRENT EXPENSES: Of the current expenses of Rs 787.295 billion in July-March 2005-06, Rs 314.25 billion went to general public services of the federal government, including Rs 139.58 billion on domestic debt servicing and Rs29.21 billion on foreign debt servicing.

The defence sector devoured Rs 175.82 billion, expenses on public order and safety affairs ate up Rs 13.93 billion, and economic affairs consumed Rs 41.46 billion. The government somehow managed to spend Rs 11.67 billion on education affairs and services, but the most vital health sector received only Rs 3.33 billion. Worse still, the government spent only Rs 1.204 billion on social protections (direct relief to the poor) and a negligible sum of Rs 73 million on environmental protection. The Rs 3.33 billion spending on the health sector meant that this sector's share in the overall current expenses was 0.4 percent in the first three-quarters of this fiscal year. Similarly, Rs 73 million spending on environmental protection comes to 0.009 percent of total current expenses.

According to the data the federal revenue collection during nine months was Rs 734.30 billion. Rs 518.38 billion was tax collection and Rs 31.58 billion were collected in lieu of petroleum and gas surcharges that include Rs 15.88 billion as petroleum development surcharge and Rs 15.70 billion from gas development surcharge. The non-tax revenues stood at Rs 184.34 billion during the July-March period of current fiscal.

The data further say that the federal government had transferred Rs 198.03 billion to the four federating units (Punjab, Sindh, NWFP and Balochistan) as provincial share in federal revenues under the 5th National Finance Commission (NFC) Award, during the first nine months of the current fiscal.

The provincial revenues of the government of Punjab amounted to Rs 144.15 billion against the expenditures of Rs 156.1 billion during the first nine months (July-December period) of the current fiscal year. Punjab received Rs 97.89 billion as revenue share from federal taxes as NFC Award share during these three-quarters of 2005-06.

The total revenue of the government of Sindh stood at Rs 84.61 billion and the total expenditures of the province remained at Rs 79.71 billion during the period. It received Rs 63.60 billion as NFC Award share in the federal taxes from the federal government.

The total revenues of the NWFP amounted to Rs 42.49 billion and total expenditures of the province stood at Rs 52.88 billion. The NWFP government received Rs 21.45 billion from the federal government during the said period.

The total revenue of the government of Balochistan stood at Rs 23.38 billion and the total expenditure of the province remained at Rs 27.1 billion during this period of the current fiscal year. The provincial government received a sum of Rs 15.093 billion from the federal government.


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## Neo

ISLAMABAD (June 01 2006): The Central Board of Revenue (CBR) has collected Rs 600.63 billion in 11 months from July to May 2005-06, against Rs 500.54 billion collected in the same period of last fiscal year, reflecting an increase of 20 percent.

According to the provisional figures issued on Wednesday, direct tax collection was Rs 178.125 billion, against Rs 146.409 billion of last year, showing an increase of 21.7 percent. The indirect taxes stood at Rs 422.509 billion, against Rs 354.135 billion of last year, showing an increase of 19.3 percent.

As a result of the collection made so far, the CBR now has to collect Rs 89.37 billion in June, the last month of the current fiscal year to achieve the target of Rs 690 billion. Sales tax collection has been Rs 256.1 billion against Rs 207.8 billion of last year, showing a growth of 23.2 percent.

The GST collection at the import stage is Rs 150.75 billion against Rs 131.5 billion, showing increase of Rs 19.25 billion. The sales tax collection on domestic consumption is Rs 105.3 billion against Rs 76.3 billion with a growth of 38 percent.

The collection of customs duty is Rs 116.734 billion in July-May 2005-06 against Rs 99.329 billion of last year, depicting a growth of 17.5 percent. The collection of federal excise duty (FED) is Rs 49.74 billion against Rs 47.05 billion, showing an improvement of 5.7 percent.

Latest tax-wise details show Rs 75.77 billion paid as refund/rebate to exporters during this period, against Rs 92.45 billion of last year, showing a decrease of Rs 16.68 billion.

The Board paid Rs 30.36 billion as GST refund in July-May 2005-06 against Rs 53.11 billion of last fiscal year, showing a decrease of Rs 22.75 billion. The payment of sales tax refund at the import stage was Rs 89 million against Rs 50 million reflecting an increase of Rs 39 million. The domestic refund stood at Rs 30.26 billion against Rs 53.06 billion paid in the same period last fiscal year, showing a decrease of Rs 22.8 billion. The customs department paid Rs 17.11 billion as rebate/duty drawback against Rs 14.56 billion showing an increase of Rs 2.55 billion.

Direct taxes refund totalled Rs 28.07 billion during eleven months against Rs 24.72 billion in the same period of 2004-05, reflecting a growth of Rs 3.35 billion.

The collection during May was Rs 53.655 billion. Following is the monthly break-up of individual taxes: Sales tax collection Rs 27.49 billion; customs duty Rs 11.23 billion; direct taxes Rs 10.54; and FED Rs 4.4 billion. During this month, CBR paid refund/rebates of Rs 3.92 billion, including Rs 1.14 billion as sales tax refund.


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## Neo

WASHINGTON (June 01 2006): Moody's has upgraded Pakistan's foreign currency ceiling by two notches from B2 to Ba3, which experts interpret as an acknowledgement of Pakistan's improved economic parameters.

This is in the light of new methodology adopted by Moody's in its ratings procedure.

The new rating for Pakistan is above average. It has not only been raised but the new outlook on Pakistan's Ba3 foreign currency debt is described as 'stable'.

Moody's has implemented a new approach to foreign currency country ceilings for bonds and notes that better reflects the risk that a foreign-currency government bond default would be accompanied by a moratorium on foreign currency external payments.

In respect of foreign currency bonds, the rating reflects positively on the prudent economic policy of Pakistan in choosing to honour domestic savers.

On Pakistan's moratorium risk, the Moody's report talks of traditional "interventionist nature" of policies pursued by Pakistan in the matter of economy. It is appreciative of the present government, saying, "We believe that the risk of imposing a moratorium is lower than such a policy tradition would indicate."

http://www.brecorder.com/index.php?...&term=&supDate=


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## Neo

ISLAMABAD (June 01 2006): Two public sector corporations suffered losses or failed to meet their revenue targets because of higher oil prices at international level while Pakistan Steel Mills registered profit during the third quarter (January-March) of the current financial year.

This is the gist of quarterly statistics released by the Ministry of Finance on Wednesday on three major corporations, namely, Pakistan International Airlines, Pakistan Railways, and Pakistan Steel Mills. It did not include the financial operations of Wapda, or Karachi Electric Supply Corporation (KESC), which has been privatised.

The data suggest that actual deficit of Pakistan Railways increased by Rs 1,236 million due to decrease in operating revenue by Rs 832 million and increase in expenditure by Rs 404 million.

Railway revenue receipts were less Rs 832 million than the projected targets, mainly because of Rs 68 million and Rs 465 million decrease in earnings from passengers and cargo, respectively, and decrease in military traffic and sundry earnings by Rs 34 million and Rs 286 million, respectively.

The shortfall in freight earning was due to less offering of oil traffic. As far as sundry earning is concerned, various agreements are in the pipeline and the expected earning in this regard has not yet been finalised.

Revenue expenditure was more than the target by Rs 404 million due to increase in fuel prices since July, 2005 and revision of pay scales of government employees from July 2005.

The increase in fuel cost also adversely affected the profitability of PIA, as against the target of Rs 207 million, the airline sustained a huge loss of Rs 2.09 billion. PIA generated Rs 16,840 million revenue against the target of Rs 18,550 million. PIA is making efforts to achieve the target in future.

The airline's expenditure was Rs 19,836 million against the target of Rs 18,757 million, showing an increase of 5.75 percent, which was mainly due to upward trend in fuel prices. The increase in expenditure was due to sharp increase in fuel cost, increase in traffic/ramp handling, catering, cockpit crew salaries, crew layover, aircraft rental and interest payments.

The Pakistan Steel Mills had projected a net profit of Rs 531 million for the third quarter of 2005-06. However, it earned only an amount of Rs 18 million, which was much less than Rs 531 million projected profit.

The PSM set a target at 90 percent capacity utilisation during the 3rd quarter (January-March, 2006), but it attained 68 percent utilisation, which was 22 percent less than the projected capacity utilisation.

The company said that capital repair for various operational units of the Mills, including coke oven batteries, has not yet been completed. Therefore, the targets set for the production during the quarter had not been achieved.

Total sales and the other income were projected at Rs 8264 million for the quarter January to March, 2006, whereas the mills sold its items valued Rs 6978 million, which is Rs 1286 million, less than that of its target.

The cost of production for the 3rd quarter was projected at Rs 7446 million, and the mills incurred the expenditure of Rs 7438 million, which is slightly less than that of the target fixed for this purpose.

The major variations appear in the spending on purchase of raw material, which is 40 percent less than that of the projected amount, and other spending, regarding the making of adjustments of Rs 1505 million, against the projected amount of Rs 195 million.


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## Neo

KARACHI (June 01 2006): Pakistan is an exciting strategic new market for The Body Shop and offers us a great opportunity to enter the Indian Subcontinent. In a statement issued here on Wednesday, the regional director of 'The Body Shop' for Europe, Middle East and Africa, Alastair Kerr said.

"We believe our unique combination of naturally inspired products and commitment to our five core Values will prove compelling for Pakistan consumers, while our newly branded shop look will create a fresh and inspiring shopping environment".

"Furthermore we believe the successful existing partnership between The Body Shop and Cosmetics Trading LLC in the United Arab Emirates provides a strong foundation for developing The Body Shop brand in Pakistan. Cosmetics Trading LLC has the expertise, infrastructure and resources to allow us to establish our brand in this part of the world". Managing Director, of Cosmetics Trading Company Pvt Ltd, Andrew Knappett said "We believe The Body Shop will stand out from other cosmetics brands and retailers in Pakistan and will secure a strong profile in this developing cosmetics market".

"We are very pleased to have the opportunity to work with The Body Shop in such a promising market", he added. Director, of The Forum Shopping Mall, Yameen Sheikh said, "We are always looking to offer our customers the best shopping experience possible and we believe 'The Body Shop' store exceeds this".

The Body Shop International Plc. has launch its unique skincare and cosmetics brand in Pakistan. The Body Shop brand in Pakistan under the name Cosmetics Trading Company Private Limited.


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## Neo

ISLAMABAD (May 31 2006): Pakistan and the United Arab Emirates on Tuesday vowed to further strengthen ties in all spheres with particular focus on boosting relations in economy and trade, and defence and security, besides investing in mega infrastructure development projects.

The two countries also signed three Memorandums of Understanding (MoUs) for co-operation in development of mega infrastructure projects and permission to the Dubai Islamic Bank to operate 50 branches in Pakistan.

The signing of the MoUs was witnessed by Vice President and Prime Minister of United Arab Emirates Sheikh Mohammad Bin Rashid Al-Maktoum and Prime Minister Shaukat Aziz here at Prime Minister House. The two leaders earlier had an exclusive meeting.

It was followed by a second round, in which their aides joined and discussed wide-ranging issues. The first MOU was signed between the Ministry of Ports and Shipping and Emmar Properties for development, improvement and modernisation of infrastructure here.

Under the agreement, Emmar Properties would participate in joint ventures for development of mega residential, commercial, leisure and real estate projects, industrial parks, free zones and port terminals. The MoU was signed by Minister for Ports and Shipping Babar Khan Ghauri and Emmar Properties Chairman Muhammad Ali Abbar.

The second MOU was signed for development of Karachi Beach Front and was signed by Minister for Ports and Shipping Babar Khan Ghauri and Sultan Ahmed Bin Sulayem of 'Dubai World'.

The third MCJU pertained to investment in mega infrastructure projects, and was signed by Umar Ahmed Ghuman, Minister of State for Privatisation and Investment, and Sultan Ahmed Bin Sulayem of 'Dubai World'.

The UAE ruler, who was on a day-long visit, discussed the whole gamut of their relations and decided to further strengthen co-operation in diplomatic, economic, political, defence and security fields.

The Prime Minister invited the investors and businessmen from the UAE to tap the tremendous real estate potential in Pakistan and bid for various infrastructure projects in Pakistan including roads, rail and ports.

UAE is the largest investor in Pakistan and has shares in Pakistan Telecommunication Company Ltd (PTCL), airlines, financial business, real estate and tractors. It has invested over $2.5 billion in different projects in the country.

The UAE side expressed desire to further increase its investments in the country to build a world-class infrastructure.

The Prime Minister said that Pakistan was "delighted" that Dubai Islamic Bank was expanding its operations in Pakistan, and said that it would further strengthen business ties between the two countries.

Trade between the two countries totalled $2.76 billion last year, with the balance in "favour of the UAE' due to Pakistan's import of oil and oil products.

Vice President and Prime Minister of United Arab Emirates Sheikh Mohammad Bin Rashid Al-Maktoum and Prime Minister Shaukat Aziz earlier also had an exclusive meeting where they discussed the situation in the region, challenges "facing the Ummah and bilateral relations".

Prime Minister Aziz said the two countries enjoyed common faith, culture and history and expressed resolve to further strengthen ties between the two countries.

The two leaders also agreed that the OIC provides an ideal platform to project the true image of Islam and also to promote its message of interfaith, inter cultural and inter civilisation harmony.

They underscored the need to dispel the misgivings and misperception about Islam through concerted and united efforts by the Ummah. Shaukat apprised the Ruler of Dubai of the regional situation in the context of Pakistan's relations with India, Afghanistan and Iran.

He said that the composite dialogue with India was going apace and added that Pakistan wants the process of dispute management to move to dispute resolution to arrive at an early settlement of the Kashmir dispute.

He said that Pakistan desired a resolution in keeping with the wishes of the Kashmiri people to establish sustainable peace in South Asia.

The Prime Minister said that Pakistan is a peaceful country, committed to promoting peace and prosperity in the region by maintaining minimum credible deterrence.

About Iran's nuclear issue, the Prime Minister said Pakistan desires a settlement through dialogue and is against use of force. He said Pakistan recognises Iran's right to use nuclear technology for power generation under IAEA's safeguards, but made it clear that Pakistan was opposed to its acquisition of nuclear weapons. The Prime Minister said Pakistan would continue to support the Afghan government and believes in a strong and stable Afghanistan. He said Pakistan is keen to expand its trade and economic ties with Afghanistan and countries of Central Asia. He said Pakistan's trade with Afghanistan was growing rapidly and has risen to $1.5 billion.

The Prime Minister said Pakistan's energy requirements were growing and it was exploring the possibility of constructing gas pipelines from Iran to Pakistan and onward to India besides one from Turkmenistan via Afghanistan, Pakistan and India.

The Prime Minister congratulated Sheikh Mohammad Bin Rashid Al Mukhtoum on his assumption of the office of the Prime Minister and ruler of Dubai.

He also paid tributes to late Sheikh Makhtoum Bin Rashid Al Makhtoum and said that people of Pakistan look with admiration the tremendous progress made by Dubai under his wise leadership.

The UAE Prime Minister said that Pakistan, its leadership and the people of Pakistan were held in high esteem in the UAE and that Pakistan was the first country outside the GOD to be visited by him.

The UAE Prime Minister said the large numbers of Pakistanis working in Dubai were hardworking and making useful contribution to "the growth and development of Dubai.

Shaukat Aziz also hosted a banquet for the UAE Prime Minister.

The UAE leader said he had useful discussions both with President General Pervez Musharraf and the Prime Minister, and there was commonality of views on several matters.

He said Pakistan was open for investment and appreciated the investment friendly policies of the country. He said this would create more employment opportunities for Pakistanis.

Prime Minister Aziz said the signing of the MoUs would go a long way in strengthening economies of the two countries and said closer ties between the two private sectors would generate economic activity and create more jobs.

The UAE Prime Minister was given a warm welcome, when he arrived here at the PM House. National anthems of the two countries were played and a contingent of the armed forces presented him a guard of honour. The UAE dignitary also planted a sapling at Shakarparian.


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## Neo

KARACHI, May 31: Mobile users are likely to have many more choices in near future as some new foreign players are planning to enter the rapidly growing Pakistan mobile market shortly.

The local mobile phone industry is abuzz with reports that China Mobile is locked in talks with the parent company of Paktel while an unidentified foreign investor is said to be negotiating with Arfeen Group, the operator of Instaphone.

China Mobile Communications is close to finalise $5 billion deal to acquire Millicom International Cellular SA of Luxembourg, which is the parent company of Paktel.

Sources in the telecom industry said that the management of Instaphone was now searching for new investors so that the service could be re-launched with renewed vigour in next few months.

The Pakistan Telecommunication Authority (PTA), the watchdog of the telecom sector, was reported to have approved the deal between Arfeen Group and Millicom under which Arfeen Group had become 100 per cent owner of Instaphone by acquiring remaining 65 per cent share.

Sources said that the group was in talks with various foreign companies and it is likely to strike a deal with investors this month. However, sources added that Instaphone was likely to be re-launched in September or October this year.

Instaphone will shift from Time Division Multiple Access (TDMA), almost equal to Global System Mobile (GSM) or second generation (2G) mobile technology to third generation mobile technology (3G) or Code Division Multiple Access (CDMA), the sources said.

They said that the aggressive media campaign of Instaphone had already been suspended for the last few months as the management had seized the marketing budget.

Besides, the company faced severe competition coupled with declining profits with the entry of Telenor and Warid Telecom besides Mobilink and Ufone as many customers had shifted to these companies.

However, Instaphone still has around 40,000 retail outlets all over the country but the number of new phone subscribers has definitely shrunk owing to frequent changes in the package, calls rates and various deals being offered by new and old mobile phone operators.

The real decline in Instaphone service users had started in 2004 owing to obsolete technology being used by the operator. It was the first cellular company which entered the Pakistani market in 1990s, but now has the lowest customer-base around 500,000 users and of these 50 per cent belong to Karachi only.

Millicom had entered Pakistan in early 1990s. It had owned two cell phone operators Ã¢â¬â Paktel and Instaphone Ã¢â¬â with local telecom partners but it had offloaded its share of Instaphone to Arfeen Group.

Reports say that talks are still going on for buying Millicom by China Mobile, which would be biggest overseas acquisition by a Chinese company.

According to reports available here the state-run China Mobile has built one of the most extensive national cellular networks in the world, covering all of mainland China. With more than 250m wireless customer accounts, the company is by far the worldÃ¢â¬â¢s biggest wireless carrier and controls about two-thirds of the mobile market in China. Millicom has nine million customers in 16 countries of Asia, Latin America and Africa.

Pakistanis are well of aware of Chinese electrical and electronic equipments, toys, motorcycles, computers, stationary items, children garments, etc. A year back Chinese mobile phones have caught the attention of price conscious customers owing to their cheaper prices. Pakistani market has already leading players like Nokia, Sony Ericcson, Samsung, Motorola, LG, Siemens, etc.

It may be noted that Paktel has slowed down its media campaign about its product and packages which had gained momentum few months back probably due to the upcoming change in the ownership.

Commenting on the upcoming changes in the mobile market, Warid Telecom CEO Hamid Farooq said Paktel may get a new life with the takeover of Millicom by China Mobile.

He said that the new player from Asia would think of injecting new capital ranging between $200-300 million in upgrading its existing network and infrastructural setup. Ã¢â¬ÅI think China Mobile will take at least one year to compete with existing and new players in the local market,Ã¢â¬Â Hamid said.

He said that the 2007 would be a tough year for the mobile phone operators as there was a possibility that the new player with new market sentiments would further offer price cuts to lure customers.

However he said that price drop from a certain level would prove counter- productive to the health and growth of the industry. He was of the view that five operators were enough to handle the situation in view of the market size.

Out of 150-160 million Pakistan populations, only 27 million people have mobile phones and by 2008 the number of subscribers will touch 50 million.


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## Neo

Emaar to put Dh79b in Pakistan 


Dubai: 06/01/2006 

Dubai: Emaar Properties, the Dubai-based real estate developer, yesterday announced four major projects involving a Dh78.86 billion ($20.39 billion) investment in Pakistan, making it the largest UAE investor in South Asia.

These include a Dh66 billion ($18 billion) mixed use development in Karachi as well as three real estate developments in Islamabad and Karachi, involving Dh8.8 billion ($2.4 billion) in investment. 

The projects will include master-planned communities that will set new benchmarks in commercial, residential and retail property within Pakistan.

It is the largest influx of foreign money into Pakistan and makes the company the largest UAE investor in the country.

An Etisalat-Dubai Islamic Bank consortium is investing $2.59 billion for a 26 per cent stake in PTCL, Pakistan's largest telecom service provider.

Emaar yesterday signed a memorandum of understanding with Pakistan's Port Qasim Authority for the $18 billion mixed-use development in Karachi. It was signed by Emaar Chairman Mohammad Ali Al Abbar and Senator Babar Khan Ghauri, Minister for Ports and Shipping, in Islamabad in the presence of His Highness Shaikh Mohammad Bin Rashid Al Maktoum, UAE Vice-President and Prime Minister and Ruler of Dubai, and Pakistan President Pervez Musharraf and Prime Minister Shaukat Aziz.

This is Emaar's largest investment outside the UAE. The company is also involved in masterplanning the Dh100 billion King Abdullah City in Jeddah, being developed by Saudi government's investment arm Saudi Arabian General Investment Authority.

It has also made considerable investments in Morocco, India, Syria, Jordan, Turkey and Tunisia.

Pakistan's capital, Islamabad, is home to two Emaar Pakistan projects the Highlands and Canyon Views. 

With 1,500 acres between them, the Islamabad communities offer 9,000 luxury single-family town homes and villas in a range of architectural styles with easy access to amenities including retail centres, community club houses, parks, lakes, schools and mosques. 

The Highlands development is located in the Defence Housing Authority Islamabad (DHAI) Phase 1 extension and Canyon Views is in the DHAI Phase 2 extension.

Offering approximately 50 separate community districts with own identities, a spectrum of architectural styles ranging from Mediterranean, Tuscan, Mughal, Arabic and Spanish, will be available for buyers to select from. 

"These current projects are only a small and initial part of our commitment to providing world-class living and infrastructure in Pakistan," Al Abbar said in a statement.

"Pakistan will play an important role in the development of Emaar's reputation in Asia, and remains one of our most significant commitments outside the UAE." 

Karachi will be home to Crescent Bay, a 75-acre development featuring high- and mid-rise towers for residential and commercial use, a shopping centre and five-star beachfront hotel. The towers will contain approximately 4,000 residential apartments. 

All three projects are expected to be completed in four to five years.

http://www.gulfnews.com/business/Re...y/10043951.html


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## Neo

Wednesday 31 May 2006 

DUBAI, May 31 (Reuters) - United Arab Emirates firm Emaar Properties (EMAR.DU: Quote, Profile, Research) has signed an $18 billion deal with Pakistan's Port Qasim Authority to develop land in Karachi. 

A Emaar statement on the Dubai bourse Web site said on Wednesday that the development would include apartments, commercial and retail space as well as hotels and other leisure facilities. 

An Emaar official said the deal was signed in Pakistan. 

http://today.reuters.com/business/n...ryID=nL31559572


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## Neo

ISLAMABAD, May 31: The National Economic Council (NEC) on Wednesday set seven per cent economic growth rate target and an estimated Rs435 billion development expenditure for the next financial year.

On a traditional basis, the size of the Public Sector Development Programme was approved at Rs385 billion, including Rs270 billion for federal programme and Rs115 billion for provincially self-financed projects.

However, the gross PSDP size was jacked up to Rs435 by including Rs50 billion for earthquake rehabilitation, instead of placing it in the non-development budget. The Rs270 billion federal programme would have Ã¢â¬Åan operational shortfall of Rs20 billionÃ¢â¬Â, said Dr Akram Sheikh, deputy chairman of the planning commission, after the NEC meeting.

Thus, the next yearÃ¢â¬â¢s PSDP would be Rs365 billion compared with current yearÃ¢â¬â¢s Rs272 billion, showing an increase of over 34 per cent. In addition to this, Rs180 billion would be invested from their own resources by public sector corporations, including those having governmentÃ¢â¬â¢s majority shareholding like the PTCL, he said.

Briefing journalists along with secretary for planning Akram Malik, the planning commission deputy chairman said the development strategy for the next year would be food security, energy security and water security, enabling environment for investment and human resource and skill development by taking advantage of PakistanÃ¢â¬â¢s strategic geo-political situation.

He said the challenges would be to sustain the development and growth momentum, stabilise prices, generate employments and remove mismatch between skills and growing needs of a knowledge-based economy.

He said the infrastructure sector would be provided highest share of Rs132.5 billion (49.1 per cent) in the federal PSDP, followed by Rs130.8 billion (48.4 per cent) for social sectors and Rs6.7 billion (2.5 peer cent) for other sectors.

Dr Sheikh said water security had been given top priority and allocation for the sector had been increased by 32 per cent to ensure completion of projects on schedule such as raising the Mangla dam, Kachhi, greater Thal and Rainee canals, lining of irrigation channels and the National Drainage Programme.

Moreover, Rs10 billion had been allocated for land acquisition for five mega dams, including the Kalabagh dam, as announced by the president, he said.

He said adequate funds had been included in the PSDP for providing air and rail links of Gwadar with up-country, Iran and with corridors leading towards Central Asian states to leverage PakistanÃ¢â¬â¢s strategic location. Intensive work on the National Trade Corridor would also be initiated during 2006-07 to facilitate trade flows and help reduce the cost of doing business.

He said the NEC had directed relevant authorities, including the planning commission, to further improve implementation of development projects within approved cost and on time so that objectives could be achieved.

Dr Sheikh said the size of the Khushal Pakistan Fund established in 2005-06 with Rs5 billion had been increased to Rs10 billion. This will be in addition to Rs24.4 billion allocation for the Khushal Pakistan Programme I & II.

He said the next yearÃ¢â¬â¢s growth target had been set at seven per cent against current yearÃ¢â¬â¢s provisional estimates of 6.6 per cent. This will be achieved through a 4.5 per cent growth in agriculture, 10.9 per cent in industry, including 13 per cent large-scale manufacturing, and about 7.1 per cent of services sector growth.

He said the GNP per capita income would increase to $935 next year compared with current yearÃ¢â¬â¢s $847. A total of 1,885 projects are part of the next yearÃ¢â¬â¢s PSDP against current yearÃ¢â¬â¢s 1,512 projects, of which 302 projects have been completed during the year.

He said the total expenditure during the first 10 months (July-April) of the current year under the PSDP stood at Rs149 billion or 73 per cent of the Rs204 billion federal programme and by the end of the year Rs194 billion or 95 per cent would be utilised.


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## Neo

Thursday June 01, 2006 

ISLAMABAD: The government on Wednesday granted four exploration licences and petroleum concessions agreement to Oil and Gas development Company Limited (OGDCL) to explore oil and gas in Punjab and NWFP. The company will carry out work on these blocks to the tune of US $ 5.805 million. 
In this regard, a signing ceremony was held here in the ministry of Petroleum and natural resources offices, which was witnessed by Federal Minister for Petroleum and Natural Resources Amanullah Khan Jadoon. 

The Licences and Petroleum concession Agreement was signed by Secretary Petroleum Ahmed Waqar on behalf of the President of Islamic Republic of Pakistan, Muhammad Naeem Malik, Director General Petroleum Concessions and Arshad Nisar, Chairman/Chief Executive Officer of OGDCL. 

OGDCL will explore oil and gas in Block No. 3371-8 Soghri, comprising District Kohat NWFP and District Attock Punjab; Block No. 3271-3, Mianwali, comprising District Mianwali, Chakwal, Khushab, and Lakki Marwat NWFP; Block No. 3270-6 Wali, comprising South Waziristan Agency, Bannu and Lakki Marwat in NWFP and Block No. 3272-13 Chakral, comprising Rawalpindi, Jhelum and Chakwal in Punjab. 

OGDCL is currently operator of 36 exploration licences and 39 leases besides having interest in 32 non-operated leases. Currently they are producing 32,323 barrels of oil, 857 million cubic feet of gas, 268 million tones of LPG and 68 million tones of Sulphur per day.


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## Neo

Thursday June 01, 2006 

ISLAMABAD: CBR has surpassed the revenue target of the first eleven months of FY 2005-06, it is claimed in a statement issued here Wednesday. 
The provisional collection so far has been Rs. 600.6 billion which indicates an overall growth of 20.0% over July-May 2004-05. It is expected that this collection will increase further when the revenue figures for the month of May 2006, are finalized in the next few days. 

The tax-wise details confirm that direct tax revenue has increased by 21.7% during the period reaching Rs. 178.1 billion against Rs. 146.4 billion last year. The growth of sales tax has been 23.2%. The overall sales tax collection, during the first eleven months has reached Rs. 256 billion as against Rs. 207.8 billion last year. 

During this period the sales tax at import stage has increased from Rs. 131.5 billion to Rs. 150.7 billion, showing an increase of 14.7%. Similarly, the sales tax on domestic production and sales has gone up from Rs. 76.3 billion to Rs. 105.3 billion, indicating a growth of 38%. The collection on account of customs duties has reached Rs. 116.7 billion against Rs. 99.3 billion during last year, indicating a growth of 17.5%. Finally, the federal excise duty collection has increased by 5.7% during July- May, 2006 and reached Rs. 49.7 billion. 

The provisional collection of May, 2006 (excluding the collection of last day) stands at Rs. 53.6 billion; with the break up of Rs. 27.5 billion as sales tax, Rs. 11.2 billion as customs, Rs. 4.4 billion as federal excise, and Rs. 10.5 billion as direct taxes.


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## Neo

Thursday June 01, 2006

KARACHI: National Reconstruction Bureau (NRB) is collecting land data across the country so that the poor and people of rural areas could be facilitated in getting loans from Banks through their assets. 
This was stated by Chairman NRB, Danial Aziz, while briefing the newsmen after a meeting with the representatives of private banks regarding the computerization of lands record and Electronic Passbook Programme. 

NRB Chairman said hopefully the transaction process of the programme would be initiated from Islamabad before next yeaÃ¢â¬â¢s fiscal budget. 

He said that the poor people had greater role in economic development. 

He observed that earlier the poor had neither any role in economic development nor they were provided any facility by accepting their common assets and a certain section of society was developing. 

"Now by computerizing lands record and through Electronic Passbook Programme the poor people and unprivileged section of the society are also being included in economic development," he noted. 

About the programme, he said that under the programme an ordinary man could get loan from banks through it national identity card accordance with it assets. 

He further said that the amount received through the constituted system at gross root level would be used in disbursement of salaries from Patwari to EDO Revenue. 

Danial Aziz said that the computerized record and Electronic Passbook System would be helpful in rooting out the menace of corruption and nepotism. 

He informed that property record all over the country was being computerized, adding later the records would be transformed into an authentic record by merging them.


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## Neo

Thursday June 01, 2006

BUREWALA : State Minister for Information Technology and Telecommunication, Muhammad Ishaq Khan Khakwani said that Pakistan had made a lot of progress in the field of information technology within a short span of period. 

He was addressing an inaugural ceremony of newly established digital telephone exchange at Zaman Kot Mauza Sulera near here on Wednesday. With the establishment of 300-line telephone exchange, the area people would benefit a great deal, he added. The minister said that development work worth millions of rupees had been completed in his constituency on priority basis. 


He said that President Pervez Musharraf had decided to enhance development budget from Rs215 billion to Rs415 billion in the next financial year, which would help in raising the living standard of the people of backward areas. He urged nazims to prepare development schemes for their respective areas so that funds could be allocated for this purpose. 


Director Telegraph, Multan Region, Atta Muhammad, Divisional Engineer Development Abdul Majid, Divisional Engineer Vehari Nawaz Ahmed Joya and local representatives were also present on the occasion.


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## Neo

Thursday June 01, 2006 

ISLAMABAD: Prime Minister Shaukat Aziz has said the next budget will leave positive impact rather than negative on the people adding subsidy will not be withdrawn, however, the rich will reap no benefit from subsidy. 
"The budget for the fiscal year 2006-7 will leave no negative impact on the common man. He will reap benefit upon benefit", Shaukat Aziz said this while talking to the senior journalists and editors of the newspapers here Wednesday in Prime Minister house. 

Prime Minister informed National Economic Council (NEC) has approved development program amounting to Rs 415 billion. There is continuity in our policies and we are moving forward in line with a strategy. 

" We have taken no U-turn from our vision. We are going side by side with globalization so that we could capitalize on the challenges", he remarked. 

He announced GDP growth rate would hover between 6 to 8 percent. We will take advantage of our strategic importance", he added. 

Talks are underway with Iran and Turkmenistan to lay gas pipeline. Negotiations are in progress with China as well in this respect. We will import more electricity from Iran and we will also purchase electricity from Central Asian Republics. We will build dams to ensure energy, water and food security. We will make allocations in next budget for this purpose. 

He went on to say government is focusing on development of agriculture sector so that poverty could be eliminated from rural areas. 

He disclosed that for the first time the foreign investment has touched the mark of $3.3 billion. It will further grow. Pakistan is open for business. We are active in ECO, SAARC, AASIAN and other international economic institution so that we could seek access to market and our exports get boost. 

He held that the effects of development are visible but the challenges are still there. We are enhancing resources for the development of social sector. We will ensure stability in the prices. 

He told that the inflation rate would stay 6.6 percent in next fiscal year. Investment activities have increased by 31 percent in private sector. The import of machinery has registered increase. 

He reiterated that incentives would be announced in the next budget to overcome inflation and rationalize prices. 

Citing to foreign debts he pointed out these have now reached 54.7 percent of GDP. The loans pose serious threat to the sovereignty of the country. We have got rid of IMF. WE will not allow national security and sovereignty to be hurt by any one. Therefore we have enacted Fiscal responsibility and debt limitations law. Loans have annihilated us. 

He hinted that huge amount has been earmarked in the next year budget for water projects. The existing oil prices in the country are still less than neighboring country. Cement price was enhanced unjustly. Government has taken notice of it, therefore, the prices have come down. Legal and economic steps will be initiated to keep the prices under check, he declared. 

Price regime will be put in place for essential commodities, he said adding sugar has been imported in substantial quantity and we are ensuring its smooth supply. 

Subsidy system will not go. We want its benefit reaches common man rather than upper class, he underlined. We will give subsidy in the next budget, he told,. We are giving subsidy on electricity at present. 

He held we have attained wheat out put equal to 217 million tonns. We are bringing back to the country Pakistani agriculture scientists from abroad. The largest research institution of Asia is being set up here. 

He pointed out that Monopoly control authority will be restructured and run under Khalid Mirza. 

To a question he said that level of direct tax recovery has increased. Because we have done away with policeman culture. 

He reiterated government wants peace in Balochistan Due to integration of pe0pel in the process, development graph is ascending. The prevailing problem will be resolved through reconciliation. However law and order situation will be ensured at every cost. 

He told no other tax except sales tax is imposed on diesel . We will curtail its prices if these go down in international market, he announced. 

Responding to a question Prime Minister said he had got briefing from the administration of KESC on power crisis in Karachi. Development works in large number are in process in Karachi. Load shedding is caused due to certain technical problems as well, Modern system is being introduced in KESC and it will help improve the situation. 

Information minister Muhammad Ali Durrani, state minister for information Tariq Azeem, secretary Shahid Rafi and PIO Ishfaq Gondal were also present on the occasion.


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## Neo

Thursday, June 01, 2006 

KARACHI: Four cellular mobile phone operators working in Pakistan have shown willingness to obtain permanent licences for Azad Jammu & Kashmir (AJ&K) and Northern Areas (NAs) in response to the Pakistan Telecommunication Authority (PTA) invitation to offer licences.

According to a statement of the PTA on Wednesday, meeting the requirements, four mobile operators, M/s Mobilink, M/s Warid Telecom, M/s Telenor Pakistan and M/s Ufone, have deposited Rs 1.2 billion in aggregate as initial licence fee. 

The PTA has fixed $10 million for grant of a cellular mobile licence for AJ&K and NAs of which 50 percent is to be deposited as initial license fee at the time of submitting applications. 

Each operator has deposited an amount equivalent to $5 million. The licence-awarding ceremony is scheduled in the second week of June in Muzzafarabad. After completion of award of mobile phone licences, deregulation of the fixed line sector will be carried out. In the wake of October 8 earthquake, the PTA had allowed all its licensees to start their services on temporary basis so that people of the region could be benefited from this decision.

http://www.dailytimes.com.pk/defaul...1-6-2006_pg5_10


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## Neo

Sunday May 28, 2006 

ISLAMABAD: Prime Minister Shaukat Aziz has said that government will set up Software Technology Parks at key locations in Islamabad, Lahore and Karachi to facilitate and expedite the development of software industry and IT enabled services in Pakistan.The Prime Minister was chairing a meeting at the Prime MinisterÃ¢â¬â¢s House Saturday morning to review the IT industry growth and the short, long and medium term office space requirement for IT industry. 
Ministry of Information Technology in their presentation said that IT industry growth and human resource expansion has created lot of demand for more office space. The Ministry submitted a strategy to address the demand for IT enabled office space to IT companies. The strategy was based on surveys conducted by the Ministry. 

The Prime Minister gave approval for setting up of two IT parks at Islamabad, one each at sector I-9 and National Park Area, Islamabad and asked the Ministry to expedite plans for the construction of parks at these two locations. The Prime Minister was informed that the construction of the I-9 Park will begin in August this year. 

The Prime Minister reviewed various land options in Lahore and Karachi and the proposal to set up Software Technology Parks at Lahore and Karachi Airports and asked the Ministry to review various available options and submit a comprehensive plan in 30 days. 

The Prime Minister appreciated growth in Telecom sector saying that telecom sector is one of the fastest growing sector.He said the growth has been made possible as a result of the governmentÃ¢â¬â¢s policies of deregulation, privatization and opening up of the sector. He asked the Ministry to take steps to expedite export of software and IT enabled services. 

IT Ministry presented profile PakistanÃ¢â¬â¢s IT industry, current human resources & growth, availability of skills and growth of IT companies. 

The meeting was attended among others by Awais Ahmed Khan Leghari, Minister for Information Technology, Mr. Ishaq Khan Khakwani, MOS for IT and senior officials.


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## Neo

*IMF report on Pakistan GDP pc* 
Country Subject Description Units Scale 2003 2004 2005 2006 2007 
Pakistan Gross domestic product per capita, current prices US dollars Units 

2003-605.776 
2004-684.497 
2005-769.421 
2006-853.600





2007-920.321 

http://www.imf.org/external/pubs/ft...CMP=0&x=67&y=13


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## Neo

LAHORE (updated on: June 02, 2006, 18:22 PST): Advisor to Prime Minister on Finance and Economic Affairs, Dr. Salman Shah has said currently Pakistan's foreign debt is to the tune of approximately US $35 billion, which is coming down gradually over the years.

"The government has got enacted new laws on getting the foreign loans, which will be taken in future for development schemes only."

Dr. Salman Shah stated this while speaking at the pre-budget seminar held under the auspices of Press Information Department (PID), Ministry of Information and Broadcasting in a local hotel on Friday.

State Minister for Information and Broadcasting, Senator Tariq Azeem, PIO Ashfaq Gondal and PID Director Aijaz Ahmed were also present.

The Advisor said that the government would ensure utmost the fiscal responsibility, adding that it has already retired expensive foreign debts and would soon get rid of the debt of donors like World Bank, Asian Development Bank etc.

It may be mentioned here that the World Bank in its latest report had termed the inflation as alarming and stated Pakistan's current foreign loan to the tune of US $ 35.7 billion. The WB had also warned against the backlash of tight monetary policy in the shape of stemming inflation.

Dr. Shah said the foreign investors confidence has been restored over the last few years due to the investment-friendly policies of the government and the direct foreign investment has touched new record with pouring more than US$ 3 billion. He said that the government's floated Euro Bonds in the international market got overwhelming response as 30 years long period bond worth $ 300 million were sold at once.

Besides, the credit rating of the country has also been improved. The Moody's has enhanced credit rating from B to D-2 and D-3 while the standards and Poors was yet to ascertain, he added.

Although Dr. Shah has predicted some relief to different segments of the society in the upcoming budget, yet he said that if oil prices remained surged in the international market the impact would be very little.


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## Neo

RAWALPINDI (June 02 2006): President General Pervez Musharraf on Thursday said the government was committed to facilitating all investors and would ensure provision of every possible assistance and incentives to them.

He was talking to General Electric International (USA) Chief Executive Officer Ferdinando Beccalli-Falco, who called on him here. The President welcomed the US entrepreneur and appreciated his move for investment in Pakistan.

Ferdinando lauded the far-reaching economic reforms introduced by the Pakistan Government, which have not only helped stabilise economy but also served as a tremendous incentive to attract valuable foreign investment.

He said there was an excellent investment-friendly environment in Pakistan and thanked the Pakistan Government for facilitating his group.

He informed the President that the General Electric, which is one of the largest companies in the world by market capitalisation, is carrying out market study for investment opportunities in various sectors in Pakistan, including infrastructure development in energy, oil & gas, railway, and health care.

He thanked the President for the opportunity to call on him. Minister of State for Privatisation Umar Ahmed Ghuman and senior government functionaries were present during the call.


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## Neo

WASHINGTON (June 02 2006): The World Bank on Thursday approved a $6.5 billion lending strategy for Pakistan through 2009, including increased spending for infrastructure. "We will substantially ramp up support to Pakistan and focus on the areas that are most critical for the country's poor and most vulnerable," John Wall, the bank's country director for Pakistan, said in a statement.


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## Neo

KARACHI (June 02 2006): Shortage of efficient cargo vessels fleet is telling upon national exchequer as the country has paid an amount of $2 billion as freight bill to foreign shipping lines. The annual national carriage reached the mark of 47 million tonnes amid growth in exports and imports.

With more than 95 percent of the country's trade through sea, the availability of suitable number of ships in national flag carrier is inevitable as the existing fleet is unable to cater for the growing demands of national trade.

Sources told Business Recorder on Thursday, in last three decades, Pakistan's merchant fleet strength declined from 74 ships in 1974 which was lifting about 27 percent of the national carriage to only 15 vessels in 2005 with a capacity to handle about 22 percent which includes both dry and liquid cargo.

With the on-going rapid economic development, country's annual volume of trade is likely to increase from 47 million tonnes in 2005 to 70 million tonnes by 2010 that would further increase the freight charges by foreign carriers burdening further the national exchequer.

The national flag carrier owned an ageing fleet that requires frequent repairs and maintenance that entails huge expenditure. The requirement to meet strict International Maritime Organisation (IMO) standards in future would be another blow to country's old fleet of merchant vessels.

Due to fleet shortage of the national flag carrier translates, in economic terms to around $2 billion that has to be spent as freight charges in foreign exchange to ensure smooth flow of trade through foreign shipping companies.

There is a dire need to revitalise the shipping sector and to formulate a dynamic development programme in the country.

During the last four years, the annual national carriage hovers around 37 to 39 million tonnes with a freight bill of about $1.5 billion but during 2005, the growth registered a phenomenal increase in the imports and exports.

Pakistan needs to increase its merchant fleet to enhance its present share of cargo handling to 40 percent and capitalising on the transit trade requirements of Afghanistan and the Central Asian States.

Sources further said, besides attracting investment in ship owning sector, the planners have to encourage ship building industry, which at present is lacking altogether.

The ability to build and repair ships greatly affects its sea trade and in return strengthens country's economy.

There is a great potential market of shipbuilding and repair due to Pakistan's regional location. It is located where the world's most important sea lines of communication operating.

Half of the international trade passes through our territorial waters and the neighbouring Indian Ocean which reveals that about 360 ships per day out of which 50 percent are oil tankers use this route.


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## Neo

ISLAMABAD (June 02 2006): The Central Board of Revenue (CBR) has informed a high-level meeting held here that total revenue collection in the current fiscal year will be Rs 706 billion against the target of Rs 690 billion.

The CBR authorities presented this estimated revenue collection figure during the meeting, jointly chaired by President General Pervez Musharraf and Prime Minister Shaukat Aziz, early this week to give the government's economic team engaged in preparing federal budget 2006-07 a clear picture of earnings through taxes during the current fiscal year and to set a reasonable target for the next year.

Sources said the CBR calculated the net figure of revenue collection for 2005-06, on the basis of deemed collection in June. The bureau collected Rs 600.63 billion in the first 11 months of the current fiscal year that showed considerable increase in all areas of tax collection. Historically, the revenue collection in June surpasses other months and tax authorities are confident that the same trend will continue.

CBR officials told the meeting that it was expecting around Rs 106 billion revenue by June 30, against the target of Rs 89. 37 billion, which will help in surpassing an ambitious target of Rs 690 billion for 2005-06.

The sources said the meeting appreciated the CBR's performance and recommended a number of steps to check tax evasion. Among the measures were bringing more potential areas into tax net in 2006-07, besides rationalising duty and taxes on those areas which contributed substantially in 2005-06, to meet the country's highest-ever revenue collection target. The sources added that the meeting was also informed by CBR authorities that they have undertaken various programmes to facilitate the taxpayers and at the same time increase tax net for further improving revenue collection in 2006-07.

The government is considering substantial increase in revenue target for the next fiscal year.


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## Neo

ISLAMABAD (June 02 2006): Middle East is emerging as a major source of foreign investment in Pakistan, owing to lot of economic potential, geographical proximity and a large number of Pakistani community in this region

This was stated by Commerce Minister, Humayun Akhtar Khan while inaugurating the envoys conference in Abu Dhabi on Thursday, according to a message received here.

He said, the post 9/11 scenario has totally changed outlook of investment in the Middle East countries, as they are now retrieving back their money from the West and looking for new countries to invest in.

The condition is getting quite conducive to attract foreign investment in Pakistan,, he said and added this conference is very significant in the emerging scenario for this region as well as for Pakistan. The Commerce Minister said, the economic policies introduced by the present government have yielded good resu1ts~ with per capita income increasing considerably during last three years.

He said, the gains from the economic growth are sure to trickle down to common man in the short to medium periods. The minister further emphasised that this is the policy of the government to arrange such regional envoy conferences earlier in Latin America, South Africa, Far East such conferences have been arranged.

These conferences have yielded good results, the recommendations and suggestions put forwarded are quite useful because well-thought long term and short-term strategies are being chalked out to boost the economy and attract foreign direct investment.

He said, the objective of these envoys conferences is to share our thoughts, experiences, and capabilities to identify opportunities and to devise strategies for capitalising on the economic opportunities in the region. The Middle East in general and Gulf Co-operation Council (GCC) countries in particular are important to us due to its economic potential and the multi-dimensional nature of our relationship with these countries.

"GCC is our significant economic partner which is expected to emerge as a hub of services industry. GCC countries constitute huge consumer market because of their GNP, per capita and large disposable incomes", he added.

In terms of foreign direct investment and workers remittances, GCC is even more important for our economy, the Commerce Minister added.


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KARACHI (June 02 2006): The National Assembly's Standing Committee on Production has expressed its satisfaction over the performance of Pak Suzuki Motor Company in meeting the demand of vehicles, achieving localisation and the contributions to the national exchequer.

The committee, led by its Chairman MNA Malik Niaz Ahmad Jakhar, visited Pak Suzuki Motor Company Limited plant to observe the manufacturing facilities and to discuss the issues pertaining to the local auto industry.

Malik Niaz Jakhar appreciated the role of Pak Suzuki in developing local auto industry on a solid basis, which led to the transfer of technology and human resource development.

Responding to the concern of Pak Suzuki Management for liberal import of used cars, he said that the committee would strongly recommend to the government to take appropriate measures so that the local industry was not adversely affected. Regarding the recently announced policy for the new entrants in the auto industry, the committee agreed to the recommendations of Pak Suzuki.-PR


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ISLAMABAD (June 02 2006): Minister for Petroleum and Natural Resources Amanullah Khan Jadoon on Thursday said the government was taking cognisant measures to curb menace of oil smuggling that inflicted annual loss of Rs five billion to the exchequer.

Talking to a five-member delegation from All Pakistan Lubricant Manufacturers Association led by its Chairman Mian Zahid Hussain here, the Minister said the government had already directed the respective authorities to keep strict vigil on the elements involved in such criminal activities and take them to task.

He said smuggling of petroleum products was not only depriving oil marketing companies of their due share but also causing heavy loss to the automotive industry due to substandard products.

All Pakistan Lubricant Manufacturers Association Chairman briefed the Minister about their problems. He said the lubricant manufacturers had so far invested Rs five billion in that sector and producing 357 million tons lubricant oil and 2O,OOO ton grease per annum providing employment to more than three million people.

The delegation proposed the government might review reduction in the taxes on lubricant products to attract investment in the country. Secretary Petroleum Ahmed Waqar and Director General (Oil) Sabir Hussain were also present in the meeting.


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Abu Dhabi: Pakistan's Minister of Commerce Humayun Akhtar Khan said yesterday in Abu Dhabi his country had changed significantly over the past few years with more focus on economic fundamentals.

"We're being viewed as an investment destination and since the reform process continues I am very confident that Pakistan in the next five or ten years will further improve. The president himself directly gets involved in assisting investors who come to Pakistan," he said.

The objective of the conference was to frame a strategy for Gulf and Middle East countries with an emphasis on market access, trade promotion and attracting investment.

The ambassadors of Pakistan, Jordan, Lebanon, Syria, Yemen, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE participated in the two-day conference.

Khan said Pakistan was not only working hard at reforms, but it is outpacing its main competitor India. 

"I think the reform process in Pakistan is ahead of India's. We certainly don't mind healthy competition. We know India is attracting attention and I think Pakistan has some further advantages in the region because we have a channel to Western China, Afghan-istan and Central Asia," Khan said. 

"We are trying hard to establish trade corridors to these regions that I have referred to, to lay the legal framework for a free flow of goods and services through Pakistan into these regions."

Khan said Pakistan drew roughly $3 billion in foreign direct investment (FDI) from around the world in 2005, including $648 million from the UAE.

"Now, in addition to the US, Europe and the Far East, we are focusing on the Middle East as a major source of FDI into Pakistan," he said.

Already Emaar has announced four major projects worth $20.39 billion in Pakistan the largest investment in the country ever along side a $10 billion investment by Dubai Ports World. 

Islamabad offers equity to investors

Dubai: Islamic Bank also said it planned to open 70 branches in the country over the next 18 months.

There are also many opportunities to enter the country through its privatisation programme, Khan said.

"There are future plans for a lot of companies and fields to be privatised," he said. "The Pakistan State Oil is on the list to be privatised. Oil and Gas Developing Company of Pakistan is up for privatisation too. Major companies in the oil and gas sectors will be privatised and we expect a lot of interest of Middle Eastern companies in those privatisations."

Karachi (Bloomberg) Pakistan plans to sell shares in state-owned companies on global markets, counting on the South Asian nation's economic growth to entice investors and raise funds to plug a widening deficit.

The government will make multiple offerings of global depositary receipts every year, said Ashfaque H. Khan, head of the Pakistan Debt Office and chief government economist.

"We want to bombard investors with the Pakistan story,'' Khan said in Islamabad. "Establishing a relationship with the international equity markets is the best way to tell that story.''

Pakistan is trying to attract foreign investment to fuel a $118 billion economy that Prime Minister Shaukat Aziz predicts will expand at an annual pace of as much as 8 per cent over the next five years. The government is moving to equity markets to market Pakistan to global investors and finance its deficit after selling $1.9 billion of bonds overseas since 2004.

The country's current account deficit is wide-ning as imports rise on a higher oil bill and domestic demand.

The import-export deficit in the July-April period rose to $9.4 billion, from $4.9 billion a year earlier.

"Pakistan is a small part of Asian portfolios but it is a premium growth economy in Asia and there will be increasing appetite for Pakistan paper if economic reform and privatisation continue,'' said Tristan Clube, who runs Tethys Advisors, an company that advises offshore funds and fund managers in emerging markets.


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Friday, June 02, 2006 

KARACHI: The countryÃ¢â¬â¢s domestic debt surged to Rs 2.249 trillion in July-March 2006, up by Rs 116 billion or 5.4 percent compared with June 30, 2005. 

During the said period, the permanent debt of the country soared up by Rs 17.617 billion to Rs 483.257 billion compared with Rs 500.874 billion, the data of the State Bank of Pakistan (SBP) said here on Thursday.

According to the data, the countryÃ¢â¬â¢s domestic debt surged to Rs 116.097 billion in first nine months of this fiscal, despite outflows of Rs 45.275 billion from the Special Saving Certificates (bearer), Rs 11.439 billion of regular income certificates.

On June 30, 2005, the domestic debt of the country stood at Rs 2.133 trillion, the data said. 

The Central Board of Revenue has claimed that it has collected Rs 600.63 billion taxes in 11 months of the current fiscal, showing an increase of 20 percent. The tax collection target for the current fiscal was set at Rs 690 billion.

The federal and provincial governments had borrowed an amount of Rs 56.271 billion from the State Bank and the commercial banks till May 20, 2006, the SBP data said. 

The debt profile of the federal government has been increasing in the current fiscal owing to the earthquake relief work in AJK and the countryÃ¢â¬â¢s higher import bills. 

Ã¢â¬ÅThe federal and provincial governments are borrowing money from the SBP and the banks to fulfill their budgetary support,Ã¢â¬Â the analyst said. They said the GDP growth has come down this year because of heavy borrowing from the central bank.

Permanent borrowing of the federal government has declined by 3.5 percent in the nine months to Rs 483.2 billion compared with Rs 500.874 billion despite the outflows in special government bonds, federal government bonds, special government bonds for the SLIC and Pakistan Investment Bonds (PIBs). Major outflows were recorded in the Special Government Bonds for the SLIC (Capitalization) of Rs 1.448 billion. 

The unfunded debt of the country has gone up by Rs 5.609 billion to Rs 859.6 billion till March 31 this fiscal compared with Rs 854.044 billion on June 30, 2005.

The countryÃ¢â¬â¢s floating debt stood at Rs 906.267 billion up by Rs 128.104 billion on March 31. On June 30, 2005, it stood at Rs 778.163.

External Debt and Liabilities: The countryÃ¢â¬â¢s overall external debt has shot up by 4.11 percent or $1.380 billion in the third quarter of the current fiscal, despite the inflows of over $4 billion.

The medium-and long-term debt of Paris Club, Euro bonds/ Saindak Bonds, multilateral and other bilateral debts of Pakistan has gone up during the third quarter of this fiscal.


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MANILA (updated on: June 03, 2006, 21:55 PST): Australian government through Australian Agency for International Development (AusAID) has made A$20 million contribution to Asian Development Bank's (ADB) Pakistan Earthquake Fund (PEF).

"We are very grateful for this contribution from Government of Australia, which will be used for much needed reconstruction of education and health facilities in Azad Jammu & Kashmir damaged by earthquake," says Werner Liepach, Principal Director of ADB's Office of Co-financing Operations.

Half of contribution will be used to partly finance reconstruction of at least 150 identified priority middle schools in four administrative districts of Azad Jammu and Kashmir - Muzaffarabad, Neelum, Poonch & Bagh.

While the other half will focus on reconstruction of a rural health centre and 29 basic health units in Poonch.


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ISLAMABAD (updated on: June 03, 2006, 21:54 PST): Engro Chemical on Saturday donated twenty five metric tons of maize hybrid seed to the October 8 earth quake affectees.

The seed were formally donated to Federal Minister for Food, Agriculture and Livestock Development Sikandar Hayat Khan Bosan at a ceremony here.

The seed will bring as much as two thousand five hundred acres of land under maize which is the major crop of the area for which sowing has been started.

The seed will be distributed among farmer free of cost.


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ISLAMABAD (June 03 2006): President General Pervez Musharraf on Friday approved a two-pronged strategy to pass on the benefits of Rs 200 billion subsidy to the common man through the Prime Minister's relief package.

The strategy includes greater role of Utility Stores Corporation (USC) to cater the needs of essential items to maximum number of the people at subsidised rates and cut down imported kitchen and other essential items' prices at the ports.

The USC outlets and number of mobile units will be increased substantially in 2006-07, to ensure availability of essential items at reduced rates to maximum number of people for immediate relief.

Sources said the relief package would cover all important essential items such as flour (atta), sugar, vegetable ghee and oil, pulses, dry milk, etc. However, the rate of subsidy will vary from item to item.

Musharraf also directed the government to put in place an anti-hoarding mechanism to check market exploitation and protect the vulnerable people from profiteering.

The relief package was discussed in detail at a meeting chaired by the President here. Prime minister Shaukat Aziz, was also present. Musharraf said the government should take all possible measures to gear up economic activities such as construction of mega projects as well as foreign investment ventures in prospective sectors, self-employment schemes and micro-finance facilitation to create maximum jobs.

He said the best way to transfer economic gains to common man was to pass on their benefit to all segments of the society. The President said young people in both rural and urban areas should be equipped with necessary skills to enable them reap fruits of tremendous economic activity underway in agrarian and industrial sectors.

Musharraf said the government after achieving economic turnaround should now launch far-reaching projects for tangible and visible improvement in all key areas to improve living standard of the common man.

Prime Minister Shaukat Aziz observed that poverty reduction and employment generation are inter-linked. He said the government would encourage public-private partnership in meeting the goal of more employment opportunities for common man and also offer incentives to the private organisations for return on their investment.

The meeting was also attended by Information Minister Muhammad Ali Durrani, Minister for Political Affairs Engineer Amir Muqam, Minister for Women Development Sumaira Malik, PML Secretary General Senator Mushahid Hussain Sayed, Chief Minster Sindh Arbab Ghulam Rahim, Chief Minister Balochistan Jan Muhammad Yousaf, Punjab Minister for Law Raja Basharat, Deputy Chairman Planning Commission and senior officials.


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ISLAMABAD (June 03 2006): Prime Minister Shaukat Aziz has said that the World Bank's decision to provide $6.5 billion in loans to Pakistan over a period of four years, comprising soft loan of $3.1 billion under IDA, and $3.4 billion under regular IBRD credit, was a historic and a clear vote of confidence in Pakistan's economic recovery, its reform agenda and the leadership.

The Prime Minister was talking to newsmen at Prime Minister House on Friday evening. "The decision is truly historic, as no other country has ever been given this mammoth amount for a period of four years," he said.

He said that the decision would give a major boost to Pakistan's economy by providing resources for infrastructure development, and facilities of health, education and human resource development.

The unusually high amount committed by the World Bank would enable the government to achieve its objectives of food, water and energy security and to invest in developing energy, transportation and trade corridors between Pakistan and Central Asian States, the Prime Minister added.

He said that the amount would also contribute towards job creation, lead to further higher growth and result in poverty alleviation. He said, "We are also pleased that IFC will upscale its investment to $500 to 600 million over a period of six years in the private sector, which will be a catalyst in attracting equity investment and give a further boost to our economy."

Shaukat said that the World Bank's decision, coming a little before the announcement of the budget, would inspire more confidence in international lenders and investors in Pakistan's economic potential and its development strategy.


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ISLAMABAD (June 03 2006): The World Bank has approved $340 million for four development projects in social and infrastructure sectors, to help boost Pakistan's economy. The bank would finance these projects from its two wings-International Bank for Reconstruction and Development (IBRD) and concessionary lending arm International Development Association (IDA).

These projects, which were approved by the World Bank's Board of Executive Directors late Thursday are; NWFP First Development Policy Credit ($90 million), Punjab Education Development Policy Credit ($100 million), Punjab-Irrigation Sector Development Policy Loan ($100 million) and the Punjab Municipal Services Improvement Loan ($50 million). The NWFP First Development Policy Credit would support the implementation of the provincial government's medium-term reform programme which is based on four pillars: reforms to accelerate human development and improve basic social service delivery; promoting growth and private sector development; fiscal reforms; and governance reforms in public financial management, procurement, civil service, and administrative devolution.

The Punjab Education Development Policy Credit would help the provincial government to implement wide-ranging reforms in the education sector. The credit is the last in a series of three development policy credits supporting the Punjab government's three-year Education Sector Reforms Programme (PESRP), designed to enhance access, improve quality of education and gender parity. Since the launch of the reform programme, more than one million more children have been enrolled in Punjab schools.

For these two projects, the amount would be provided by the International Development Association (IDA) carries 0.75 percent service fee, 10-year grace period and a maturity period of 35 years.

Other two projects Punjab Irrigation Sector Development Policy Loan and Punjab Municipal Services Improvement Project, financed by the International Bank for Reconstruction and Development (IBRD), are fixed spread loans, payable in 20 years, including 8 years grace period.

For the Punjab-Irrigation Sector Development Policy Loan, the bank would provide financing to a major provincial reform agenda to improve fiscal management and service delivery.


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Economic Survey on June 5 

ISLAMABAD (June 03 2006): Economic Survey of the financial year 2005-06, presenting overview of the national economy will be released here on June 5, 2006 (Monday). Advisor to Prime Minister on Finance Dr Salman Shah and Advisor to Ministry of Finance Dr Ashfaque Hasan Khan will jointly release the survey at a press conference.

The economy of the country has shown positive trend during the current financial year despite the devastating earthquake of October 8, 2005 which hit many parts of Azad Jammu and Kashmir and NWFP. The economy is likely to register more than 6.6% growth rate against the target of 7 percent.


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RAWALPINDI (June 02 2006): President General Pervez Musharraf on Thursday said the government was committed to facilitating all investors and would ensure provision of every possible assistance and incentives to them.

He was talking to General Electric International (USA) Chief Executive Officer Ferdinando Beccalli-Falco, who called on him here. The President welcomed the US entrepreneur and appreciated his move for investment in Pakistan.

Ferdinando lauded the far-reaching economic reforms introduced by the Pakistan Government, which have not only helped stabilise economy but also served as a tremendous incentive to attract valuable foreign investment.

He said there was an excellent investment-friendly environment in Pakistan and thanked the Pakistan Government for facilitating his group.

He informed the President that the General Electric, which is one of the largest companies in the world by market capitalisation, is carrying out market study for investment opportunities in various sectors in Pakistan, including infrastructure development in energy, oil & gas, railway, and health care.

He thanked the President for the opportunity to call on him. Minister of State for Privatisation Umar Ahmed Ghuman and senior government functionaries were present during the call.


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ISLAMABAD (June 03 2006): The Asian Development Bank (ADB) has projected that Pakistan's Gross Domestic Product (GDP) growth would remain at 6 to 6.5 percent by the end this fiscal year. However, the growing imbalance in the external sector is a risk to economic growth and poverty reduction efforts.

The Bank cautioned that the budget deficit was expected to surpass the target of 3.8 percent and touch 4.2 percent of GDP, while with robust economic growth and a sharp increase in imports, the target for revenues was also likely to be surpassed.

"Continued policy action would be required to deal with the external imbalance and monetary overhang. In the longer run, levels of investment in the economy need to be enhanced to facilitate growth and poverty reduction efforts."

The 'Pakistan Economic Update (July-March 2005-06)', prepared by Pakistan Resident Mission (PRM) of ADB gives analysis of economic trends and presents an outlook of the economy for the whole year, which is encouraging.

It says that the growth in agriculture sector is expected to be sluggish due to the below target production of cotton and sugarcane crops along with poor growth of the livestock sub-sector. However, the large-scale manufacturing sector is projected to grow at a robust rate of 10.0 percent, as indicated by the sharp increase in imports of raw materials and rapid growth in private sector credit. In the services sector, telecom services, banking and trade are expected to sustain high growth in 2005-06.

Imports are projected to increase by 30.0 percent, because of high oil prices and continued strong domestic demand. The end of the quota regime since January 2005 and the robust growth in world trade will boost exports, which are expected to increase by 14.0 percent. The trade deficit is projected to increase to over $8.0 billion, and the current account deficit to $6.0-6.5 billion.

ADB Country Director Peter Fedon said: "The medium-term outlook for the economy looks good and although economic growth decelerated in the first half of 2005-06 the economy is expected to still post robust growth for the full year."

The 'Update' notes the significant recent decline in poverty as estimated by the government. The government continued to pursue an expansionary fiscal policy and the fiscal deficit increased.

The increase in government spending was mainly due to a sharp increase in development expenditure and payments for relief operations for victims of the October 2005 earthquake.

The 'Update' further notes that the annualised overall inflation declined by one percentage point to 8.3 percent in the first ten months of 2005-06. External trade continued to expand rapidly in the first three quarters of 2005-06, with imports increasing by 43.2 percent and exports by 18.6 percent.

The growth of imports was led by petroleum and petroleum products, which together increased by 64.5 percent to $4.6 billion. Textile and clothing was the largest contributor to export growth.

There was an almost three-fold increase in foreign direct investment, partly because of higher privatisation proceeds. The foreign exchange reserves held by SBP increased by $477 million to $10.3 billion, which are sufficient to finance 4.2 months of projected imports in the current year.

The deficit in the current account of the balance of payments almost quadrupled to $4.7 billion in the first three quarters of 2005/06, as imports grew rapidly. The increase in the current account deficit was largely offset by a sharp turnaround in the financial account.

It says that Pakistan's external debt declined by $589 million to $35.2 billion in the first half of 2005/6. In March 2006, the Government issued sovereign bonds for $500 million with tenures of 10 and 30 years. The bonds were heavily oversubscribed.


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ISLAMABAD (June 03 2006): Supporting Pakistan Government's priorities for sustaining growth and poverty reduction, the World Bank (WB) has substantially increased its lending for infrastructure-mainly in energy, water, and transport-and human resource development.

The World Bank on Thursday announced a new country strategy for Pakistan for 2006-09, envisaging lending up to $6.5 billion (partly reported in Business Recorder on Friday).

The Bank's strategy is aligned to Pakistan's Poverty Reduction Strategy (PRSP) and is designed around three main pillars: ie sustaining growth and improving competitiveness, strengthening governance and service delivery and improving lives and protection of the vulnerable.

The principal focus of 'Sustained Growth and Improved Competitiveness' will be to support investments and reforms needed to sustain rapid, private sector-led growth, for which the Bank will provide support to key sectors such as agriculture and infrastructure, and help the government strengthen macroeconomic management through improving public expenditures and supporting ongoing tax reforms.

As priorities in the areas of strengthening governance and service delivery, the Bank would support further reforms and investment to increase efficiency, transparency, and accountability in the use of public resources.

The Bank will focus on increased investment to education and health sectors, which are necessary to build the skilled, healthy workforce necessary to sustain recent growth performance.

According to strategy in Pakistan, IFC will increase investments with a target range of $500-600 million during the FY06-09 period. IFC activity will focus on three main sectors: financial, Small and Medium Enterprise (SME), and infrastructure. IFC has also initiated a substantial Technical Assistance program in Pakistan to build capacity and address constraints of the SME, infrastructure, and financial sectors.

The World Bank Group's assistance program will be aligned with the respective responsibilities of national and provincial governments and tailored to meet the needs of the individual provinces. Around half of the lending will be channeled to the provinces which bear most the responsibility for delivering public services such as irrigation, education, health, and water supply and sanitation.

Preparation of the CAS benefited from consultations with Federal and Provincial governments, the private sector, donors, and civil society. Consultations were carried out using a two-stage process consisting of a client survey to solicit input on Pakistan's development challenges and the role of the World Bank in Pakistan, and stakeholder consultations workshops.

"This strategy is designed to help Pakistan prosper, said John Wall, World Bank Country Director for Pakistan. The country has moved from crisis to growth, laying the groundwork for sustained economic growth and significant poverty reduction. We will substantially ramp up support to Pakistan and focus on the areas that are most critical for the country's poor and most vulnerable."

Since 2000, Pakistan has managed a remarkable turnaround. During the 1990s, Pakistan's economic growth slowed, and progress in improving social indicators stagnated. Beginning in 2000, the government initiated a more wide-ranging and ambitious reform program resulting in a dramatic turnaround. Economic growth accelerated from the average of 3.3 percent during 1997-2002 to 8.4 percent in 2004/05.

Improved fiscal performance, generous external support, and improved revenue administration have enabled the government to exceed targets for social spending.

"Pakistan's recent growth performance is encouraging, but its continuation is by no means assured," said Praful Patel, World Bank Vice President for the South Asia region. "Sustained growth will require continued sound macroeconomic management along with further improvements in the investment climate and faster progress in improving the quality of life for all Pakistani citizens, especially women."

Pakistan's infrastructure needs significant investment in order to support the country's growth and service delivery goals. Infrastructure services, including electricity, paved roads, municipal services, and telecommunications reach a relatively low proportion of the population. Moreover, inefficient operations in key sectors, like power and transport, adversely affect competitiveness.

For the poor to participate and benefit from growth, Pakistan needs to accelerate human development. While progress is being made, analysis suggests that it will be difficult to achieve the Millennium Development Goals for infant mortality, child malnutrition, primary education completion, and elimination of the gender gap in primary school enrolment.


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LAHORE (June 03 2006): Sundar Industrial Estate (SIE), after its completion, would receive investment worth over Rs 30 billion in the shape of buildings, plants and equipment, and would create 60,000 direct and indirect jobs within next three years.

Punjab Industrial Estates Development and Management Company (PIE) Chairman Mohsin Syed revealed this while addressing a press conference here on Friday. PIE Director Nabeel Hashmi was also present on the occasion.

Mohsin maintained that 74 percent work on road construction and drainage and sewerage, and 51 percent work on water supply had been completed in the SIE. Besides, 90 percent work on boundary wall, and 61 percent work on underground electrification had also been completed, he added.

He further said that 500 MW electricity would be available in the industrial estate, which would enable three industrial units to start their production within this month. 'We would purchase electricity in bulk from Lesco to provide the same to the industrial units. We are in the process of setting up of 225 MW power plant which would supply electricity to the industrial units at the same tariff prevailing outside the estate', he added.

The Punjab government had provided Rs one billion while the public sector contributed Rs 2.3 billion for setting up of the industrial estate. The Bank of Punjab financed the setting up of industrial units and 75 cases worth Rs 300 million were under process at present. As many as 594 plots of different size had been allotted at the SIE. The plots had been allotted for setting up units of pharmaceutical, garments, food processing, textile, steel, carpet, engineering auto parts, plastic, chemicals, paper and packaging and electronics and electrical.

Mohsin further said that 70 percent development at the estate had put the PIE into driving seat. PIE had approved building plans for 36 industrial units with another 20 industrial units under construction, he added. About the gas supply, he said that PIE had already paid Rs 460 million to Sui Northern Gas Pipeline Limited which assured for supply of gas to the industry as and when it went for production, he added.

About the Multan Industrial Estate, the PIE chief said that the sale of plots would take place on June 6 while its second phase would be started soon. To a question, he said that if any allottee of SIE did not start construction by the end of this year, his plot would be cancelled.


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ISLAMABAD (June 03 2006): President General Pervez Musharraf will deliver a keynote address to the OPEN Silicon Valley's annual business moot 2006 being held in California through a video conference late Saturday evening.

The theme of the 2006 conference, to be arranged by Organisation of Pakistani Entrepreneurs, is "Rising Tide" with a focus on growing optimism, energy and possibilities in the global tech economy.


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AFP, KARACHI

June 2: Pakistan will spend a record 415 billion rupees (6.92 billion dollars) on development this year to fight poverty and maintain a growth rate of more than six per cent, officials said. 

The national budget for fiscal 2006-2007 starting July 1, to be unveiled in parliament on Monday will "focus on human and infrastructure development," minister of state for finance Omar Ayub said. Development will be allocated 415 billion rupees (6.92 billion dollars) compared to 4.5 billion dollars in the previous budget. Ayub did not divulge the size of the budget but other officials estimate it at 25 billion dollars, against the outgoing year's revised budget of 20 billion.

"The new budget would help create more job opportunities, promote developmental activities besides protecting the interest of weak segments of the society," Ayub said.

The budget comes amid resentment among the salaried class and low-income groups with inflation running at 13 per cent and unemployment at nine per cent, economists said. More than 25 per cent of Pakistan's 150-million people live below the poverty line.

In a pre-budget briefing Ayub told reporters on Wednesday that the government plans to bring down inflation to less than eight per cent. He said gross domestic product (GDP) growth was around 6.6 per cent. However the fiscal deficit rose this year from 3.5 per cent to 4.2 per cent of GDP, due to the massive earthquake in October that killed more than 73,000 people in Pakistani Kashmir and North West Frontier Province, he said. The government hopes to meet the gap through taxes and borrowing. Officials hope revenue collection will rise to 14.7 billion dollars from 11.5 billion this year.

Ayub said unemployment was declining as 5.58 million new jobs had been created over the past two years and poverty reduced to 25.6 per cent from 32.4 per cent in previous years. President Pervez Musharraf this week said Pakistan would be able to achieve the UN-set poverty ratio of 13 per cent by 2015. "Investment is flowing into Pakistan from all over the world and in every sector," Musharraf said.

"More jobs are available today - but we have to create more jobs - and we are determined to reduce poverty through employment generation." Direct foreign investment in the first 10 months of 2005-06 was three billion dollars, compared to 1.5 billion dollars the previous year. 

"This is new Pakistan moving forward and we will lift the country to new heights of economic progress," Musharraf said. Officials said Islamabad would not slash its defence budget despite the devastating earthquake.

"We have fixed the allocation of the defence expenditure to three per cent of the GDP and this would remain so in the coming budget too," Prime Minister Shaukat Aziz's economic advisor, Ashfaq Hasan Khan, told AFP. Analysts criticised the heavy defence spending, especially in view of receding tensions with India. "It seems quite unwise to allocate a huge sum for defence now when tension with India is easing off," said Abid Sulehri, research fellow at Sustainable Development Policy Institute.


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ISLAMABAD, June 2: The chief executive of Frontier Holdings limited, a subsidiary of Proprietary Industries of Canada, Nigel McCue accompanied by its president Grahem Gamer called on the Minister for Petroleum and Natural Resources Amanullah Khan Jadoon here on Friday.

During the meeting they briefed the minister about their companyÃ¢â¬â¢s $230 million investment plan in PakistanÃ¢â¬Ës energy sector in collaboration with a local company M/s Petroleum Exploration limited (PEL).

Mr Nigel informed the minister that his company had entered into a partnership with PEL, which has resulted in acquiring working interests in six concession areas namely Ã¢â¬â Mirpur Mathelo, Kandra Development and Production Lease, Badin IV South, Badin IV North, Salaam and Karsal blocks while the PEL would remain the operator.

He said that the joint venture had drawn up plans to invest $120 million in oil and gas sector. They will drill 25 exploratory and development wells in three years in addition to undertaking over 650 km of seismic acquisition. The two sides will also collaborate on the establishment of a 120 MW plant, utilising the natural gas of Kandra gas field. This alone entails an additional joint investment of over $110 million.

The visiting dignitaries appreciated the investorsÃ¢â¬â¢ friendly policies of the government in oil and gas sector particularly the onshore and offshore exploration activities.

The minister welcomed the Frontier HoldingsÃ¢â¬Ë partnership with PEL and termed it an important development for the countryÃ¢â¬â¢s energy sector, as the company was not only bringing in a huge amount of foreign investment, but also state- of-the-art technology and expertise in the country.

He spoke of the vision and resolve with which the government was pursuing the goal of attracting investment in the energy sector.

Mr Jadoon said entry of the Canadian company in PakistanÃ¢â¬Ës oil and gas sector would help attract other multi-national oil companies, thus having a far-reaching effect on the national economy in particular in the growth of the petroleum sector. He also appreciated the efforts of PEL in the development of oil and gas sector.

Secretary Petroleum, director general Petroleum Concessions, Khurshid Anwer, managing director, Government Holdings Private limited and Zaheeruddin, chairman PEL were also present during the meeting.


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ISLAMABAD, June 2: Pakistan and the Gulf Cooperation Council (GCC) will sign a Free Trade Agreement (FTA) by the end of this year to remove existing tariff and non-tariff barriers.

The aim is to boost foreign direct investment, joint ventures and greater economic cooperation with the GCC members, Gulf Times online reported on Friday.

Federal Minister for Commerce Humayun Akhtar Khan while talking to reporters in Abu Dhabi after inaugurating a two-day conference of Pakistani envoys to the Gulf and Middle East said, Ã¢â¬ÅWe are in a process of negotiating the FTA with the GCC and an agreement is expected to be concluded by the year-end.Ã¢â¬Â

He said that an understanding had also been reached through regular channels for an Early Harvest Programme (EHP) leading to an FTA with Syria, and a Preferential Trade Agreement (PTA) with Yemen.


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## Neo

Published: 06/03/2006 

Karachi: Pakistan's budget to be unveiled on Monday will include the highest level of development spending ever, as the government draws on several years of good growth for programmes aimed at millions still mired in poverty.

But with no plans for significant budget cuts, and deficit targets remaining steady, the government may struggle to fully pay for its ambitious plans from economic growth alone, some analysts said.

"The government will face a stiff challenge in increasing the tax-to-GDP ratio," said Asif Qureshi, head of research at brokers Invisor Securities.

"It will have to take measures to broaden the tax base."

Pakistan will boost development spending by 52 per cent in 2006-07 with the focus on roads and other infrastructure as well as rebuilding areas hit by last year's devastating earthquake, a senior official said.

Minister of State for Finance Omar Ayub Khan will announce full details of the 2006-07 budget in parliament on Monday.

The government will allocate Rs415 billion ($7 billion) for development, including Rs50 billion for earthquake rehabilitation, in the new fiscal year starting on July 1, said Ashfaque Hasan Khan, economic adviser at the Finance Ministry.

This compares with an allocation of Rs270 billion for the current fiscal year.

"This will be the highest ever size of development spending in the country's history," Khan told Reuters in a telephone interview.

"This will be equivalent to around 4.7 per cent of GDP, compared with 4.2 per cent last year," he said.

The total budget outlay would be around Rs1,500 billion, up from Rs1,098 billion last year, he said. 

Of the total, Rs310 billion will go to defence from Rs223.5 billion in the current fiscal year, the Dawn newspaper reported.

Pakistan will be aiming for gross domestic product (GDP) growth of 7 per cent in 2006-07, following expected growth of 6.6 per cent this year.

The government has also revised upward the growth rate for 2004-05 to 8.6 per cent from 8.4 per cent.

The government said this week it is aiming for a consumer price index at about 6.5 per cent for the next financial year. Inflation is expected to be about 8 per cent this year.

The government was expecting a budget deficit target of around 4.2 per cent of GDP for the fiscal year ending June 30, he said. 

"But if we took out the impact of the earthquake, the deficit would be around 3.5-3.6 per cent, which is lower than the original target of 3.8 per cent," he said. 

Analysts said the increased spending would help the government maintain the momentum of economic growth, but added it would require better revenue generation.


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## Neo

LAHORE: The government will announce a Ã¢â¬Ëcaring budgetÃ¢â¬â¢, focusing on under-privileged as heavy subsidy would be given to low-income groups.

This was stated by Dr Salman Shah, Advisor to Prime Minister on Finance and Economic Affairs who was addressing a pre-budget seminar here at a local hotel on Friday. 

The marathon session, organised by Press Information Department (PID) continued for over two hours comprising cross-questions on various monetary and fiscal issues by several participants and ensuing extensive explanation by the government representatives. 

Dr Salman Shah informed that Rs200 billion subsidies were being given in power and petroleum sector for the betterment of low-income group. Ã¢â¬ÅPublic sector servants and pensioners would be given increase in remuneration while payment criteria of old pensioners would particularly be revised to give a raise to their stagnant pay,Ã¢â¬Â he said. 

He added that teachers would get salary increase coupled with entitlement of special allowance besides tax exemption.

He maintained that GDP target had been set at 7 per cent for next fiscal. Ã¢â¬ÅGrowth rate would be maintained between 6-8 per cent in next four years with the aim to create millions of jobs and subsequent reduction in poverty,Ã¢â¬Â he observed. 

Although Dr Salman had predicted relief to different segments of society in the upcoming budget, he warned against possible rise in POL prices, terming it beyond the control of the government. He said government would have to take immediate steps if POL prices continued to rise in future. 

Referring to various stumbling blocks in robust growth of economy, Dr Salman said, relief and rehabilitation work has caused negative impact on fiscal deficit as it rose to 4.2 per cent in current fiscal. Ã¢â¬ÅHad Kashmir and NWFP not been hit by quake, fiscal deficit would have been at 3.5 per cent,Ã¢â¬Â he observed.

Ã¢â¬ÅForeign direct investment is taking place at impressive rate while privatisation process is also continuing with a success,Ã¢â¬Â he observed adding that foreign currency reserves have touched $13 billion mark. Like current fiscal, he said government would continue to give special incentive of zero sales tax to various sectors including textile, leather, surgical, carpet and sports goods. 

The local industry, agriculture and services sector would be made competitive in years to come. He expressed the hope that internal rifts on construction of dam would be resolved and all dams would be constructed on River Indus.

Advisor to Prime Minister on Finance said currently PakistanÃ¢â¬â¢s foreign debt is to the tune of approximately $35 billion, which is coming down gradually over the years. 

Dr Shah said the foreign investors confidence has been restored over the last few years due to the investment-friendly policies of the government and direct foreign investment has touched new record with pouring more than US$3 billion. 

He said that the governmentÃ¢â¬â¢s floated Euro Bonds in the international market got overwhelming response as 30 years long period bond worth $300 million were sold at once.

He said Rs50 billion would be earmarked in PSDP every year for reconstruction in the earthquake-affected areas. He said Rs415 billion development programme would be carried out across the country, equally focusing in rural and urban areas.

Among others Imtiaz Ahmad, Ibrahim Mughal, Razzak Ahmad, Waqar Ahmad, Ashraf Mehtab and Uzma Shahid spoke on the occasion. State Minister for Information and Broadcasting, Senator Tariq Azeem, PIO Ashfaq Gondal and PID Director Aijaz Ahmed were also present.


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## Neo

WASHINGTON: World cotton demand in 2006-07 is projected to increase by three per cent to a record 25.7 million tonnes and production is expected to remain stable at 25 million tonnes, an international farm group said on Monday. 

The International Cotton Advisory Committee Secretariat (ICAC) said in its monthly report that world cotton stocks are also expected to decline, driving prices higher. 

Overall the 2005-06 world price is projected to be 56 cents per lb, eight per cent higher than last season, Ã¢â¬Ëand market fundamentals suggest that cotton prices may increase further in 2006-07,Ã¢â¬â¢ the group said. 

World cotton plantings are expected to increase slightly in the 2006-07 growing season, reaching 34.6 million hectares. Production is expected to increase six per cent in China and five per cent in India, assuming increases in both area and yield. 

In other growing areas, production is forecast to increase by eight per cent in both Pakistan and in the African zone due to mainly an expected rebound in yields. Turkey is forecast to see a 14 per cent boost because of a projected increase in cotton plantings. 

Mill use in China, India and Pakistan is projected to increase six per cent to 16.7 million tonnes in 2006-07, accounting for 65 per cent of global mill use. 

Outside of those countries, cotton mill use is expected to fall slightly to nine million tonnes, a two per cent decrease. 

Meanwhile cotton production in the United States is expected to decline by 14 per cent, ICAC said.


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## Neo

KARACHI: The World Bank has marked Pakistan as one of the growing consumption-led econ-omies in the world on lax fiscal and monetary policy, the international donor said in a latest report.

Ã¢â¬ÅIn both India and Pakistan, the two largest economies in the region, growth was consumption-led, reflecting higher farm incomes on the one hand and a relaxation of fiscal policy in Pakistan, plus an already lax fiscal and monetary policy stance in India,Ã¢â¬Â the Bank said in its report titled Global Development Finance 2006. 

Ã¢â¬ÅThe boost to private consumption represented almost three quarters of the increase in Indian GDP and more than all of the increase in Pakistan.Ã¢â¬Â

It said in India, investment and exports continued to grow rapidly, but in Pakistan investment grew an anaemic 1.5 per cent and exports were up 7.8 per cent. The acceleration of domestic demand in Pakistan was not met by domestic production and, as a result, imports rose by much more than exports.

Even in India, the bank said, industrial production growth slowed from 8.5 per cent in 2004 to 7.8 per cent and import growth outstripped exports by a significant marginÃÂ³suggesting that supply was unable to keep up with demand.

In India and Pakistan, more restrictive macro policies, combined with tighter international credit conditions, and an easing of external demand (in the United States), were projected to slow growth by about 1 percentage point in 2006.

Ã¢â¬ÅIndia is expected to continue benefiting from strong services sector growth, including foreign demand for IT services, and rising private investment, given improving business confidence and progress in market reformsÃ¢â¬â¢ said the report.

Ã¢â¬ÅThe govtÃ¢â¬â¢s recently announced four-year Ã¢â¬ËBuild IndiaÃ¢â¬â¢ infrastructure programme (equivalent to a total package of about 5 per cent of GDP) will provide an additional fillip to growth starting in 2006.Ã¢â¬Â

The World Bank assessed growth in Pakistan was projected to become more balanced as consumer demand slows to more sustainable rates. A continued supportive external environment and expansion of PakistanÃ¢â¬â¢s textile and other manufacturing sectors should maintain export growth, while investment is expected to rise, due in part to the reconstruction efforts following the October 2005 earthquake in Kashmir, it added.

Analysts believe the World Bank report reflects the reality emerged following monetary expansion, which on one hand increase positively affect the spending potency of the people but on the other negatively increase the inflation rate due to higher consumption.

Ã¢â¬ÅIn growing economies like Pakistan, consumption always witnesses phenomenal increase on monetary expansion,Ã¢â¬Â said Faisal Shaji, head of research at Capital One Equities. Ã¢â¬ÅBut in case like Pakistan, monetary expansion more served to consumer financing rather than farming or other productive sectors.Ã¢â¬Â


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## Neo

KARACHI: Pakistan Islamic Medical Association (PIMA) has demanded the government to allocate three per cent of countryÃ¢â¬â¢s GNP and 10 per cent of next financial yearÃ¢â¬â¢s budget for health and medicine.

The pre-budget proposals were presented by President PIMA Karachi Dr Misbah ul Aziz at a press conference at the Karachi Press Club on Friday. Other PIMA office bearers were also present.

Dr Misbah said the governmentÃ¢â¬â¢s budget expenditure on healthcare in the current year is only 0.7 per cent of the countryÃ¢â¬â¢s GNP and Rs240 were allocated for healthcare of each Pakistani in the last budget.

He claimed that the allocation of federal health budget is less than the Rs38 billion per annum taxes and duties collected from tobacco companies.

He revealed more than 45 per cent of total allocation for healthcare in Pakistan is provided to PIMS Islamabad and NICVD Karachi and only 10 per cent is spent on prevention of diseases.

Ã¢â¬ÅOnly Rs15 million are spent for prevention and treatment of tuberculosis (TB), Rs20 million on Hepatitis and for the prevention of other diseases the government solely depends on running media campaigns, he deplored adding that there was no government programme for prevention of stroke and rehabilitation of its patients.

He suggested the government to provide life-saving drugs and antibiotics on highly subsidized rates, free vaccination, regulation of medicinesÃ¢â¬â¢ prices, quality control over vaccines and local production of variety of vaccines.

Dr Misbha proposed the allocation of at least Rs30 billion for vaccination against Hepatitis and Tetanus, Rs1 billion for prevention of TB and Malaria, start of National Stroke Program and availability of clean drinking water to each and every citizen.


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## Neo

KARACHI: A little bit of both - development of consumerism and rising income - is making Pakistan a desired destination for some of the most popular brand names, including those which value their principles over the quality of products.

The Body Shop (TBS) is one of them. Its Managing Director speaks more on the use of natural ingredients in cosmetics and toiletries and commitment against animal testing than claim the fame for quality in specific terms.

Ã¢â¬ÅWe donÃ¢â¬â¢t believe in spending money on advertisements and media campaign,Ã¢â¬Â Andrew Knappett said in an interview with The News. He said the company intends to connect with its customers through community welfare programmes.

But considering the already existing popularity of the brand among women, this cannot be termed a case of compromising market. Moreover, the particular class of society, the company is targeting, cares less about the price of products, which will cost in tandem with international rates.

Andrew insists TBS is a brand that stands Ã¢â¬Ëjust below the premiumÃ¢â¬â¢ class of cosmetic line of products and therefore the first shop opening at Ã¢â¬ËThe ForumÃ¢â¬â¢ with a range of over thousand products for both men and women will cater to the desires of general masses.

The company has evolved a peculiar system for development of indigenous colonies called community trading. This is a way to indirectly employ local people from places, which produce raw material for TBS products.

When asked if Pakistani herbs and natural ingredients could be used in their products, the MD said they were conducting a feasibility study on its possibilities. Ã¢â¬ÅI cannot comment on it,Ã¢â¬Â he said without elaborating which local ingredients have been identified but added: Ã¢â¬Å...it will be good for locals.Ã¢â¬Â

He said the fast pace of changing environment drove TBS here. Ã¢â¬ÅEvery time I visit, there are new changes to see. A lot of Pakistanis in UAE (United Arab Emirates), where we have a strong consumer base, asked us to open retail shops here.Ã¢â¬Â 

The arrival of TBS in Karachi, after two years of research, also reflects that at least some people, other than those who always had money to make couple of foreign trips a year, have earned enough to go for popular brands. Ã¢â¬ÅPurchasing power of a particular class has definitely increased,Ã¢â¬Â independent economist Akbar Zaidi said.


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## Neo

KARACHI: Federal Minister for IT and Telecom, Awais Ahmad Khan Leghari said on Friday the country was expected to have more than 1.5 million broadband users by 2010, and Wi-Max - the latest wireless technology - would prove to be the driving force behind this revolution.

The minister stated this following signing of a contract between Wateen Telecom and Motorola for deployment of Wi-Max network in Pakistan, a statement said.

Wateen Telecom, a subsidiary of Warid Telecom, and Motorola have signed the contract worth $60 million for the deployment of Wi-Max network in the length and breadth of Pakistan. 

After the implementation of the project, Pakistan will become the first country in the world to have 802.16e Wi-Max technology for wireless local loop application serving residential and corporate customers for data and voice alike at unprecedented rates.

Ã¢â¬ÅThe contract reflects on PakistanÃ¢â¬â¢s improved image in the world as one of the serious and high-growth markets, ahead of anyone else including India,Ã¢â¬Â the statement quoted the minister as saying.

He said it was encouraging to note this was the first ever commercial contract for nationwide Wi-Max deployment in the world, making it a historical milestone for PakistanÃ¢â¬â¢s ICT (information and communication technologies) sector, he said.

The minister reiterated the governmentÃ¢â¬â¢s support for the proliferation of broadband services in the country.

Ã¢â¬ÅThe government is making all-out efforts to encourage initiatives aimed at broadband penetration and national Ã¢â¬ËBroadband PakistanÃ¢â¬â¢ programme is a major step in connecting the unconnected and bridging the digital divide,Ã¢â¬Â he said.

The Wi-Max technology uses IMS (Internet Protocol Multimedia System) core architecture, making it the first 4th Generation network.

The initial deployment of the wireless broadband voice and data network will be completed by the end of the year using MotorolaÃ¢â¬â¢s access network, subscriber units, IP multimedia sub-system core and services based on the 802.16e mobile Wi-Max standard.

MotorolaÃ¢â¬â¢s carrier-class Wi-Max network supports both the 2.5GHz and 3.5GHz frequency spectrums and uses special antenna techniques to provide greater coverage range and penetration.


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## Neo

Saturday, June 03, 2006 

ISLAMABAD: An IMF research paper has revealed that workersÃ¢â¬â¢ remittances contribute 4% to the GDP of Pakistan and are equivalent to about 22 percent of annual exports of goods and services. 

These flows have historically been an important component of PakistanÃ¢â¬â¢s balance of payments and have also contributed to the strengthening of the Pakistani rupee. Therefore, remittances play an important role in the countryÃ¢â¬â¢s external position and influence the conduct of monetary and exchange rate policy.

IMF Working Paper Ã¢â¬ÅAltruism and WorkersÃ¢â¬Â Remittances: Evidence from Selected Countries in the Middle East and Central AsiaÃ¢â¬Â prepared by Jacques Bouhga-Hagbe1 revealed this. 

According to the analysis of the paper, people working outside their home country regularly transfer money home. These flows play an increasingly important role in the external positions of the recipient countries. During the period 2000-04, workersÃ¢â¬â¢ remittances amounted to about 3.5 percent of GDP in Egypt, 20 percent in Jordan, eight percent in Morocco, four percent in Pakistan, and five percent in Tunisia. These inflows compare to a trade deficit of about 7.5 percent of GDP in Egypt, 24 percent in Jordan, 10 percent in Morocco, 1.5 percent in Pakistan, and 10 percent in Tunisia. Moreover, remittance flows to these countries have been larger than foreign direct investment flows. 

The paper suggests that a sudden drop or reversal of remittance flows to the countries we consider is unlikely in a foreseeable future, as many of those who are receiving this assistance are likely to continue to depend on it in the coming years. Therefore, remittances are likely to continue to be an important element mitigating the external vulnerabilities of the countries considered. 

In the above countries, the stability of remittance flows is an important policy issue that is relevant to the analysis of their external vulnerabilities. This issue becomes even more important given the fact that all these countries, with the exception of Egypt, are net importers of oil, and therefore are likely to experience the negative impact on their external positions of the current high oil prices. Remittances and tourism for some countries tend to mitigate the impact of unfavorable shocks on their balance of payments. Remittances also affect the liquidity in their banking systems and, therefore, indirectly influence the conduct of monetary policy. Assessing the stability of such flows could thus also be useful to understanding the challenges these countries face in the conduct of monetary and exchange rate policy.


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## Neo

Saturday, June 03, 2006 

ISLAMABAD: Mobilink, a private sector cellular phone operator, on Friday announced that it would invest $1 billion in the next financial year.

The announcement was made by the companyÃ¢â¬â¢s chief executive, Zouhair A Khaliq, in a press statement. He said the company would increase its subscriber base to over 20 million by the end of 2006.

Ã¢â¬ÅCurrently, the company is leading the market with a lionÃ¢â¬â¢s share of over 56 percent subscribers which sums up to more than 15 million customers across Pakistan,Ã¢â¬Â he added.


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## Neo

Saturday, June 03, 2006 

ISLAMABAD: The Asian Development Bank (ADB) said on Friday in the medium term PakistanÃ¢â¬â¢s economy looks good, and although economic growth decelerated in the first half, the economy is expected to still post a robust growth for the full year. 

The Bank has predicted that economic growth, although less than the last fiscal year, will remain at a healthy rate of 6%-6.5% in 2005-06. 

PakistanÃ¢â¬â¢s Economic Update prepared by the Pakistan Resident Mission (PRM) of the ADB provides an analysis of economic trends in Pakistan during the first three quarters of fiscal year 205-06 and presents an outlook of the economy for the whole year. 

ADB Country Director Peter Fedon said: Ã¢â¬ÅThe medium-term outlook for the economy looks good and although economic growth decelerated in the first half of 2005/6, the economy is expected to still post robust growth for the full year.Ã¢â¬Â

The update notes the significant recent decline in poverty as estimated by the government based on a sound methodology. The report also discusses recent poverty trends in the country and reviews poverty reducing public expend aura during the first halt of 2005-06. The government continued to pursue an expansionary fiscal policy and the fiscal deficit increased. The increase in government spending was mainly due to a sharp increase in development expenditure and payments for relief operations for victims of the October 2005 earthquake.

In agriculture, the cotton and sugarcane crops are estimated to be smaller than last year. The growth in most manufacturing items in the first seven months of the year was also lower. Construction, however, continued to expand at a rapid pace in the services sector, telecom services, financial sector, and wholesale and retail trade continued to show a robust growth. A significant deceleration in food inflation was largely offset by a sharp increase in oil prices. Annualized overall inflation declined by one percentage point to 8.3 percent in the first 10 months of 2005/06. External trade continued to expand rapidly in the first three quarters of 2005106, with imports increasing by 43.2 percent and exports by 18.6 percent. The growth of imports was led by petroleum and petroleum products, which together increased by 64.5 percent to $4.6 billion. Textile and clothing was the largest contributor to export growth.

There was an almost three-told increase in foreign direct investment, partly because of higher privatization proceeds. The foreign exchange reserves held by the SBP increased by $477 million to $10.3 billion, which are sufficient to finance 42 months of projected imports in the current year. The deficit in the current account of the balance of payments almost quadrupled to $4.7 billion in the first three quarters of 2005-06, as imports grew rapidly. The increase in the current account deficit was largely offset by a sharp turnaround in the financial account. PakistanÃ¢â¬â¢s external debt declined by $589 million to $352 billion in the first half of 2005/6. In March 2005, the government issued sovereign bonds for $500 million with tenures of 10 and 30 years. The bonds were heavily oversubscribed.

The ADB report highlights that the outlook for the economy is encouraging. Economic growth, although less then last year, will remain at a healthy rate of 6-6.5% in 2005/6. The growth in agriculture sector is expected to be sluggish, due to the smaller cotton and sugarcane crops as is the growth of the livestock sub-sector.

However, the large-scale manufacturing sector is projected to grow at a robust rate of 10 percent, as indicated by the sharp increase in imports of raw materialÃ¢â¬â¢s and rapid growth in private sector credit In the services sector, telecom services, banking and trade ere expected to sustain high growth in 2005/06.

With robust economic growth and a sharp increase in imports, the target for revenue is likely to be surpassed, expenditures are also projected to exceed the budget estimate. As a result, the budget deficit in 2005/6 could rise to 4.2 percent of GDP compared with the target of 3.8 percent. Imports ere projected to increase by 30 percent, because of high oil prices and continued strong domestic demand. The end of the quota regime since January 2006 and the robust growth in world trade will boost exports, which are expected to increase by 14 percent. The trade deficit is projected to increase to over $8.0 billion and the current account deficit to $ 6.0-6.5 billion.

The substantial public sector investment in irrigation and private investment in agriculture in the last four years will boost the agriculture sector. 

The end of the quota regime for textile and clothing exports and large investment in textile industry. In the past 4-5 years will continue to energize the manufacturing sector. The growing imbalance in the external sector, however, poses a risk. Continued policy action would be required to deal with the external imbalance and monetary overhang. In the longer run, levels of investment in the economy need to be enhanced.


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## Neo

Saturday, June 03, 2006 


PESHAWAR: Pakistan, with most of its land classified as arid or semi arid, is extremely vulnerable to the growing threat of desertification through drought and soil degradation. 

Ã¢â¬ÅIt has one of the lowest percentages of area under forests and with little slowing down of the trend of deforestation - one of the major causes of desertification. The situation demands extraordinary measures to be undertaken on an emergency basis,Ã¢â¬Â said a news release issued by The World Conservation Union here on Friday in connection with the World Environment Day 2006 to be commemorated on June 5 with the slogan Ã¢â¬ÅDonÃ¢â¬â¢t desert dry landsÃ¢â¬Â. The day emphasises the importance of protecting dry lands, which cover more than 40 percent of the planetÃ¢â¬â¢s surface. Algiers will hold main events in connection with the environment day. 

The UN commemorates the World Environment Day each year to stimulate worldwide awareness regarding environment. The dayÃ¢â¬â¢s agenda is to give a human face to environmental issues; empower people to become active agents of sustainable and equitable development; promote an understanding that communities are pivotal to changing attitudes towards environmental issues and advocate partnership to ensure that all nations and people enjoy a safer and more prosperous future. 

The news release says that dry land ecosystems receive very erratic rainfall, and as a result, are very fragile. The transformation of habitats for human use, mostly agricultural, and overexploitation, including overgrazing, has led to the degradation of up to 20 percent of dry lands ecosystems, with stark results: desertification and drought, the endangerment of 2,311 species, the loss of over 40 billion dollars a year in lost agricultural production and the resulting rise of social, economic and political tensions. 

Poverty has forced populations, which are dependent on natural resources, to overexploit already marginal lands in order to sustain their livelihoods. 

A major portion of PakistanÃ¢â¬â¢s area, especially in Sindh and Balochistan, falls under this category and is especially vulnerable to the mounting threat of desertification from a variety of human activities. Nearly 60 percent of PakistanÃ¢â¬â¢s area consists of rangelands that receive less than 200 mm of rainfall annually, and are considered arid. They support 93.5 million heads of livestock and a very large number of pastoral people. However, the release says, continuous shortage of fodder and water due to the recent drought has caused heavy losses of livestock and very adversely affected the life of the pastoral communities.


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## Neo

Saturday, June 03, 2006 

LAHORE: Pakistan was expected to have more than 1.5 million broadband users by 2010, Information Technology Minister Awais Ahmad Khan Leghari said in a statement on Friday.

Referring to the recent contract between Wateen Telecom and Motorola for the deployment of the wireless Wi-Max network in Pakistan, he said that the contract reflected PakistanÃ¢â¬â¢s improved image in the world as Ã¢â¬Åone of the most rapidly growing markets of the worldÃ¢â¬Â.

Ã¢â¬ÅIt is encouraging to note that this is the first-ever commercial contract for nationwide Wi-max deployment in the world, making it a historical milestone for PakistanÃ¢â¬â¢s IT (information technology) sector,Ã¢â¬Â he said.

Wateen Telecom, a subsidiary of Warid Telecom, and Motorola signed the $60-million contract on May 23 for the deployment of Wi-max across the country. When the project is implemented, Pakistan will become the first country in the world to have the 802.16e Wi-Max technology for wireless local loop application, serving residential and corporate customers for data and voice at unprecedented data rates.

The minister predicted that Wi-Max would prove to be the Ã¢â¬Ådriving forceÃ¢â¬Â behind this revolution. Ã¢â¬ÅThe government is trying to encourage initiatives aimed at broadband penetration, and the Ã¢â¬ËBroadband PakistanÃ¢â¬â¢ programme is a major step in connecting the unconnected and bridging the digital divide,Ã¢â¬Â he said.

The Wi-Max technology uses Internet Protocol Multimedia System (IMS) core architecture, making it the first fourth generation network. The initial deployment of the wireless broadband voice and data network will be completed by the end of the year, using MotorolaÃ¢â¬â¢s access network, subscriber units, IMS core and services based on the 802.16e mobile Wi-Max standard. MotorolaÃ¢â¬â¢s carrier-class Wi-Max network supports both the 2.5-GigaHertz (GHz) and 3.5-GHz frequency spectrums, and uses special antenna techniques to provide greater coverage range and building penetration.


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## Neo

Saturday, June 03, 2006 

* Now it is $165m against the fiscal yearÃ¢â¬â¢s target of $160m

By Tanveer Ahmed

KARACHI: The countryÃ¢â¬â¢s seafood export has crossed the full yearÃ¢â¬â¢s target of $160 million in 11 months of the current fiscal, as now it is around $165 million.

Ã¢â¬ÅThe seafood export sector is well poised to be exporting between $175-180 million by the end of this fiscal year, which would be a significant achievement following years of stagnant export performanceÃ¢â¬Â, Vice Chairman of the Pakistan Seafood Industries Association (PSIA) Faisal Iftikhar told the Daily Times on Friday.

Despite several problems confronting this industry, the export figures rose on the back of huge catch of tuna fish through long-liner tuna vessels.

Ã¢â¬ÅTuna fish remained the main contributor and helped the seafood exports to rise by over 30 percent in 11 months of this fiscal compared with previous yearÃ¢â¬Â, he said, adding that as far as the conventional sector is concerned, its performance declined slightly due to problems faced by local fishermen.

Over 20 long-liner vessels are operating in the deep-sea catching huge quantity of fish and shrimp and they are directly exporting instead of local catch, which finds its way into the local processing plants, for its onward export to foreign destinations.

He said that increase in export of seafood is a welcome sign for this struggling industry, which is facing a critical situation because of high cost of voyage caused by rise in diesel prices.

However, he suggested that we limit ourselves to current growth but strive more to boost the seafood export, which has immense potential, but unfortunately could not be tapped due to apathy of the government to extend incentives to this sector.

For instance, we have a great potential of aquaculture, he said, which if developed could take the seafood export to over one billion dollars annually.

This is not a difficult task because there are examples of enlarged seafood exports, when some countries went for aquaculture and enhanced their export manifolds. He said the government should develop the required infrastructure and ensure security in coastal areas of the city for the development of aquaculture.

Another seafood exporter, Captain Ikhlaq Hussain, said that the fishing sector of Pakistan this year have done very well and is hoping for an increase in exports to nearly 170-180 million dollars record from a mere 130 million dollars last year.

However, he said that no one knows if government would acknowledge this and offer some incentives, which have been always for other sectors and this sector remained ignored.

Ã¢â¬ÅWith proper planning to arrange continuous raw material by aquaculture and other conservation methods this industry has the potential of earning up to one billion dollarsÃ¢â¬Â, he said.

He pointed out that the biggest damage that has been caused to its operation is by non-professionals and an example of this was witnessed recently in national newspapers about one department blaming another and a tussle between the federal ministry of food, agriculture and livestock and the Sindh fisheries departments and its allied departments.


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## Neo

ISLAMABAD (updated on: June 04, 2006, 19:36 PST): The government is set to achieve sustained economic growth of 6 to 8 percent in coming years, which will help reduce unacceptable levels of poverty, a government adviser said on Sunday.

The percentage of the population living below the poverty line has fallen to 23.9 percent in 2004/05 from 34.5 percent in 2000/01, but it was still too high, said Salman Shah, a government adviser on finance and economic affairs.

"Despite the reduction, poverty is still at an unacceptable level," Shah told a news conference at which he released the government's annual Economic Survey.

The government is due on Monday to announce its budget for the 2006/07 financial year, which begins on July 1. It is expected to include measures to alleviate poverty through increased development spending.

"The current budget and the government policy will ensure that these people are pulled out of the poverty trap by increasing opportunities through employment measures and through a growing economy," Shah said.

"We will not rest until we have made a major dent in poverty.

Pakistan has seen strong economic growth over the past few years and the government expects 6.6 percent gross domestic product (GDP) growth in the 2005/06 fiscal year, ending on June 30.

The previous year saw growth of 8.6 percent, the highest in more than 20 years.

The target for 2006/07 is expected to be set at 7.0 percent when the budget is announced on Monday.

RISING INVESTMENT 

But the government has faced criticism from some economists who say the growth has largely benefited the rich, while the poor have been hurt by higher prices.

Shah said he was confident the country would be able to sustain its growth in the medium- to long-term, backed by a rising investment-to-GDP ratio, increased foreign direct investment and a successful privatisation plan.

According to the economic survey for the financial year ending at the end of this month, the investment-to-GDP ratio stood at 20 percent in 2005/06, while average annual per capita income rose to $847 from $742 the previous year.

The manufacturing sector, accounting for 18.2 percent of GDP, grew by 8.6 percent during the year, while large-scale manufacturing grew by 9.0 percent.

The services sector also performed well with growth of 8.8 percent, while the construction sector, helped by activity in the private housing market as well reconstruction in areas hit by a big earthquake in October, grew 9.2 percent.

However, growth in agriculture, which accounts for 21.6 percent of GDP, was less than satisfactory, the survey said.

The sector grew by only 2.5 percent, with major crops and forestry contracting 3.6 percent and 9.7 percent respectively.

Shah said overall growth targets should be reached.

"We saw solid economic growth in 2005/06 and in spite of the major devastation of the earthquake and high global oil prices, the economy has managed to sustain its growth momentum," he said.

"If there are no major shocks we should be able to sustain 6 to 8 percent growth."


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## Neo

ISLAMABAD (June 04 2006): Assuring full protection and facilitation to international investment, President Pervez Musharraf on Saturday said high growth and friendly policies make Pakistan an ideal destination for world entrepreneurs and stressed that the country's economic reality is far better than "distorted perceptions."

In a keynote address to OPEN Silicon Valley's annual business moot in California through video conference, President Musharraf said that the country is shaping up through construction of Gwadar Port and a network of infrastructure to serve as trade and energy corridor for landlocked Central Asia, South Asia, the Gulf region and China.

"Pakistan today is in an altogether different league economically - it has been put firmly on the path of high economic growth with its GDP having more than doubled to US dollars 135 billion and all macro economic indicators including exports, revenue collection, foreign investment, forex reserves staying positive," he said.

He rejected negative travel advisories issued against Pakistan and added that these did not reflect prevailing ground realities.

"I think we suffer from distorted perceptions - but in reality we are much better as evident from the fact that none of the foreign companies doing business in Pakistan has ever been harmed due to policies or internal situation," he emphasised to a gathering of American and Pakistani entrepreneurs at OPEN 2006 moot.

President Musharraf said the government is striving to improve the image of Pakistan but also urged the Pakistani expatriates to contribute to these efforts through personal example and effective countering of misperceptions about the country.

In the widely applauded address, the President referred to an international report that described Information Technology progress as Pakistan's best kept secret and said the country offered a host of opportunities in fast-developing sectors.

"We have put in place an elaborate IT infrastructure, connected cities and towns to the Internet and three submarine cables are to further enrich the IT scenario - on top of it, we have talented English speaking graduates, which are an asset for the country and international investors."

President Musharraf informed the appreciative gathering of Pakistani and American entrepreneurs and top professionals that the country is synergising education with expanding demands of industrial development. "We are establishing nine high-tech engineering and science and technology universities of international standards with the help of advanced countries - these will produce professionals of high calibre to push industrial development on fast-track basis," he said.

The President also spoke about the National Vocational and Technical Education Commission and said it would set up an infrastructure for equipping the young people with skills commensurate with technical and industrial advancement.

"We are creating synergy between education and rapid industrial growth," he said, adding that the budget for higher education has been increased from Rs 0.6 billion about five years to Rs 22 billion this year.

On meeting Pakistan's growing energy requirements, the President said the government is working on import of natural gas from Iran and Turkmenistan and electricity from Central Asia.

He said the country has been able to reduce dependence on costly oil and is constructing large dams and canals to produce cost-effective hydro power.

President Musharraf asked the Pakistani expatriates to live as peaceful and useful citizens of their adopted countries, foster unity in their ranks and not be divided along political lines.


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## Neo

ISLAMABAD (June 04 2006): As previous Surveys have declared the tax machinery corrupt and inefficient, the Central Board of Revenue (CBR) will shortly launch a 'perception survey' in collaboration with Gallop Pakistan to obtain the viewpoint of taxpayers and government departments about the integrity of CBR employees.

According to a CBR report issued on Saturday, a survey was conducted in 1999 to obtain the taxpayers' opinion on the country's taxation system. The questionnaire was mailed to 128,000 taxpayers, tax advisors/accountants, randomly selected from the CBR database. Of this, 126,000 letters were sent to taxpayers with varying tax payments and 2000 to tax advisors/accountants.

Surprisingly, only 6000 taxpayers responded highlighting that taxation system fell short of their expectations. The survey results showed that laws were complicated; rules and regulations were stringent; the staff (tax machinery) was inefficient and corrupt; and the tax administration was non-responsive to dynamics of fiscal and commercial environment. Level of courtesy was low and connivance between the taxpayers and the tax collectors was high.

The report pointed out that another survey was conducted by the Task Force on Tax Administration. The results showed that all respondents including taxpayers, tax collectors, and representatives of civil society were equally worried about corruption.

The respondents believed that corruption was not simply restricted to CBR alone, rather many other government departments were also engaged in such unhealthy practices.

In fact, when they were asked to rank government departments according to the perceived level of corruption, many of these departments were ranked higher than CBR. The problem of 'speed money' in the case of customs clearance, and seeking refund payments was also calculated and highlighted in the report.

Now a new survey would be conducted to update the tax officials about the level of taxpayers' facilitation, change in attitude of tax officials and improving the overall fiscal environment.

The report stated that different categories of stakeholders are identified including income and corporate taxpayers, salaried individuals; non-salaried cases, wholesale/retail traders, exporters, turnover Taxpayers, manufacturers, service providers and importers. Other stakeholders included CBR employees, employees of other government agencies with specific interests in CBR activities, courts and prosecutors and officials of the Ministry of Finance.

Coverage and Sample Selection: In view of the high cost and time involved in recording responses from the entire population of the identified stakeholders, selection of a representative sample is the preferred option. Careful selection of the sample will ensure the validity of the findings of any research.

Thus, a representative sample, both in terms of type of respondents and regional spread will be drawn. In certain cases 'biases' might have to be introduced in sample selection to capture marginalised groups, the report added.


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## Neo

KARACHI (June 04 2006): The movements in Special Convertible Rupee Accounts (SCRAs), an instrument used for portfolio investment in Pakistan, remained largely range-bound, oscillating between $350 million and $360 million during the period from April 19 ($359 million) to Mat 22 ($359 million).

On May 18, these were $352 million. On May 25, the balances in SCRAs crossed the $360 million mark for the first time during the last about 5 weeks to reach $365 million but the level retreated to $362 million the following day. These were still $358 million and $354 million on May 30 and 31, respectively, but suddenly dipped to $324 million, indicating a massive withdrawal of about $30 million in the first two days of June. The entire withdrawal occurred on June 1 as there was a net inflow of $0 14 million on June 2.

Further details showed that as on June 2, the single largest withdrawal of about $33 million took place in the case of investors from USA, reducing their cumulative net flow during the year up to June 2 to $253.7 million.

Compared to February 28, when the balances in USA accounts touched the record high at $364 million, the cumulative withdrawals so far have amounted to $111 million. A minor withdrawal also took place in the case of Singapore whose cumulative net flow stood at $2.3 million as on June 2. The contraction impact of these withdrawals was partially offset by inflows of $1 million from UK, $1.3 million from Switzerland and $0.5 million from Hong Kong between May 31 and June 2, raising their cumulative net flows during the year so far to $33.8 million, (-) $9 million and $28.2 million, respectively.

Relatively smaller inflows were also observed in the case of Liberia and UAE. Among other countries BV Island, Bahamas, Bahrain, France, Germany, Guernsey, Japan, Kuwait, Luxembourg, Netherlands, Oman, Philippines, Qatar, Sri Lanka and Saudi Arabia neither withdrew any amount nor brought in any fresh funds during June so far.

It may be of interest to note that by May-end, not only KSE 100 Index failed to maintain the 11,000 baffler but also failed to maintain the 10,000 points barrier, with the Index closing at 9,801 level on May 31, down 318 points from the previous day closing of 10,119. It was clearly a disappointing signal for SCRA holders.


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## Neo

KARACHI (June 04 2006): Pakistan rice export, for the first time in the country's history, has crossed $1.1 billion mark as over 2.8 million tonnes of rice has been exported to different countries up to June 3.

According to figures available here the formal export of Basmati rice, setting a new record, has reached to 802,511 metric tonnes during this period while the land rout trade of Basmati via Balochistan and Peshawar was 0.1 million tonnes. The formal and informal border trade of Irri-6 variety of rice has crossed 1.9 million metric tonnes up to June 03, 2006.

Haji Abdul Majeed, Chairman Rice Exporters Association of Pakistan (REAP) while talking to Business Recorder here on Saturday said that the value of both varieties exported up to June 03, 2006 was $1.100 billion.

He said that it is expected that the export of Basmati rice would reach 0.9 million and the total rice export would cross $1.2 billion target, set by the REAP, by the end of this month.

He said that due to a bumper crop, value addition and exploration of new markets for Pakistani rice by the rice exporters, the export of this commodity crossed the $1 billion mark this year.

He added that this is a tremendous achievement of the rice exporters who made it possible. The positive economic policies of the present government and hard work by the ministry of commerce and the commerce minister are some other reasons to increase the country's exports. He also lauded the co-operation of the Export Promotion Bureau and other concerned government departments for their co-operation with the exporters.

Pakistan's total rice export was recorded at $933 million during the last fiscal year of 2004-05. The total rice production was over 5.5 million tonnes in the country in the current crop season, out of which around 2.7 million tonnes was Irri-6 variety while the same quantity of Basmati variety of rice was produced in the country.


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## Neo

QUETTA (June 04 2006): Balochistan Chief Minister Jam Mohammad Yousaf on Saturday said that operational management at Gwadar port has been given to a UAE company, Dubai Port World. Talking to reporters in his chamber at the Balochistan Assembly session here, he said five border points have been opened with Iran to promote trade via Gwadar port.

He said the port would take time to start generating revenue and denied a statement by the provincial finance minister that the Balochistan government had sent a proposal to the federal government regarding fixation of a specific percentage in the revenue for the province.

Jam Yousaf said the province has to bear a loss of Rs 1.5 billion under the head of gas royalty due to sabotage activities by miscreants and damage to gas pipelines. He said efforts were being made to ensure security of the gas pipelines stretching over 100 miles.

Referring to boycott of the provincial assembly session by coalition partner, MMA, the chief minister said that most of the points on which the MMA has expressed its concern and reservations are related to the federal government. The MMA leadership are, however, engaged in talks in Islamabad with the government regarding their grievances, he added.

About MMA allegation of non-release of funds to its provincial legislators, Jam Yousuf said the position of funds was well-known and the provincial PSDP is in the hands of the MMA. "We have no grievances against our coalition partner. If the MMA has any, it should resolve it through negotiations", he said.

To a question about the issue of the Madressah Sanad, the chief minister said that talks between the MMA and the federal government were in progress in this connection. Jam Yousaf expressed his satisfaction at the present NFC Award and said that Balochistan would get considerable share in coming years.

He said the federal government has already allocated 35 percent of its PSDP to Balochistan, which is a unique precedent. "Balochistan will also get a considerable share from unemployment project, worked out by the federal government, would be implemented shortly in the country at a cost of Rs 20 billion," he said.

Jam Yousaf termed the waiving of Rs 5 billion loans of Balochistan growers and fishermen a great benefaction of the President, saying it would help the growers and fishermen a lot to improve their economic condition.

Referring to law and order situation in the province, the chief minister expressed his satisfaction and said that police and other law-enforcement agencies are performing their duties diligently.

He said police have recovered a big cache of arms and ammunition and also arrested an alleged sectarian killer from Quetta during the last two days, which shows their good performance.

"I have also directed the provincial Police chief to adopt effective measures to check kidnapping of children from the provincial capital and destroy the network of the elements involved in this heinous crime," he said, and added that a high-level meeting would also be called soon in this regard.

About the committee formed by the provincial assembly to play a role in resolving issues, Jam Yousaf said it could not make progress as elders of some parties refused to accept the committee.


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## Neo

ISLAMABAD (June 04 2006): As Pakistan's economy showed second-fastest growth in the world after China in 2005, the pace of privatisation has picked up from a jog to a sprint in the country under Prime Minister Shaukat Aziz, says an in-depth television and online feature in the BBC.

"The Prime Minister is the chief architect of privatisation and is widely respected among foreign investors," the report said. The report quoted Prime Minister Aziz as saying that well-run companies were being packaged and offered to investors from around the world.

"Pakistan has had the most broad-based structural reforms of any country in Asia. Last year, we were the second-fastest growing economy in the world after China. We grew at 6.4 percent," said the Prime Minister in the BBC feature, adding that he estimated privatisation would bring in more than dollars three billion in foreign investment this year, the highest in the country's history.

The BBC feature also focused on the latest company to be sold off to foreign bidders: Pakistan Steel, the country's only steel company which had been bought by a Russian-led consortium backed by a Saudi Arabia steel mill and a Pakistani brokerage company.

The report said Pakistan Steel achieved record production levels, sales and profits in 2005, after years of under-performing, sending steel prices soaring which, in turn, created more demand and led to higher prices, enabling the company to invest more and reduce debt, lowering interest payments to banks.

According to the report, the current Chairman of Pakistan Steel Lieutenant General Abdul Qayyum was credited with helping transform its fortunes during his two-and-a-half year tenure.


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## Neo

Sunday, June 04, 2006 

ISLAMABAD: The country is to miss the exports target of $17 billion by around $500 million at the end of outgoing fiscal year 2005-06, a commerce ministry official told the Daily Times on Saturday.

After the downward revised projections that were developed after taking into account all the factors, the exports are projected at $16.5 billion by June 30, the official added.

To meet the annual export target of $17 billion the country requires exports of $3.477 billion in the remaining two months of May and June with an average of $1.738 billion a month. 

The exports trend shows that the per month exports were $1.352 billion during July-April period of current fiscal year 2005-06 and the exports required to meet the annual target are $1.738 billion. 

This task is difficult and will lead to a shortfall in the countryÃ¢â¬â¢s exports by around $500 million by end of current fiscal year. 

Elaborating the factors that contributed in less exports in the last 10 months were less availability of export surpluses for exports due to a decrease in the industrial production. 

The local industries were unable even to meet the national requirements that also contributed to higher imports in the said period as compared with the last fiscal year when the share of local industries in exports was more in terms of quantity and earnings. 

Non-availability of workers at ports and industries due to continuous strikes after Nishter Park incident at Karachi and the impact of rising oil prices in the international markets resulted in increasing the cost of production in the country, the official said. 

The country has exported goods worth $13.523 billion during July-April period of current fiscal year as compared with the exports of $11.480 billion in the same period of last fiscal year. 

The exports in April 2006 stood at $1.450 billion against the exports of $1.297 billion in April 2005. 

The area of concern is that the exports made in April 2006 witnessed a decrease and these exports remained at $1.450 billion in April 2006 as compared with the exports of $1.521 billion in March 2006. 

The official said that the decrease in the exports against the annual target would contribute further to trade deficit of the country that stands at $9.427 billion in July-April period. 

The deficit is now to move ahead of the already projected figure of $12 billion and may touch $13 billion by end-June.


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## Neo

Sunday, June 04, 2006 

CBR to launch national perception survey

ISLAMABAD: The Central Board of Revenue will undertake a perception survey across the country to know to what degree it (CBR) has achieved its objectives, particularly those concerning taxpayers facilitation, change in attitudes and improving the overall fiscal environment. 

The survey is to be launched shortly in collaboration with Gallup, Pakistan. The CBR also wishes to have a feedback from the taxpayers and the general public at large on integrity of the employees of CBR. A brief description of this ambitions undertaking is presented below: 

The perception survey will seek views of stakeholders on each tax. Sample size and content will reflect the taxpayer profile of each tax and a decision will be made at the outset as to the frequency of data collection. 

Four categories of stakeholders are identified: Income and Corporate Taxpayers, Salaried Individuals, Non-Salaried Cases, Sales Tax, Federal Excise and Customs Duty Payers, Wholesalers and Retail Traders, Exporters, Turnover Taxpayers, Manufacturers, Service Providers, and Importers, Employees of CBR and its Field Offices, Employees of other Government Agencies with specific interest in CBR activities, Courts and Prosecutors, Officials of the Ministry of Finance.

Coverage and Sample Selection: In view of the excessive cost and time involvement in recording responses from the entire population of the identified stakeholders, selection of a representative sample is the preferred option. Careful selection of the sample will ensure the validity of the findings of any research. Thus a representative sample, both in terms of type of respondents and regional spread, will be drawn. In certain cases Ã¢â¬ÅbiasesÃ¢â¬Â might have to be introduced in sample selection to capture marginalized groups.

Conclusion: The CBR has learned the hard lesson that an inward looking policy has failed miserably. Rather than pursuing the hiding-behind-the-desk approach, a new approach of openness has been adopted where stakeholdersÃ¢â¬â¢ participation in decision-making takes the central position. This new policy of the CBR has significantly improved the image of the organization in the eyes of the taxpayers, the general public and CBR employees. The comprehensive nationwide survey will be another milestone towards a collaborative effort to design future strategies for the organization. The perception survey has been outsourced with the objective to get fair and free opinion of the stakeholders so that the reform initiatives are evaluated in a transparent manner. 

The CBR would be in a better position to take corrective action for any deficiencies that might be detected through the survey findings. Since the sincerity of the purpose is quite clear, the CBR has high expectations from the taxpayers, employees, general public and the opinion leaders to cooperate in this effort by providing candid and fair opinion about the organization and its operations.


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## Neo

KARACHI: Internet service providers and telecom operators are expecting a major cut in Internet bandwidth rates by the Pakistan Telecommunication Company Ltd next week in line with the regulatorÃ¢â¬â¢s directives to support broadband service proliferation.

A senior official said on Saturday the Pakistan Telecommunication Authority (PTA) had called a consultative meeting of all telecom operators on June 6, which was likely to end up with a major cut in bandwidth rates.

Ã¢â¬ÅThe meeting will review overall broadband services across the country,Ã¢â¬Â PTA Chairman Major General (Retd) Shahzada Alam Malik told a group of journalists on the sidelines of C-Future Telecom Exhibition.

Ã¢â¬ÅCurrently, these services are not meeting standards and June 6 talks will consider reasons including bandwidth prices, hindering the broadband growth.Ã¢â¬Â

He said the meeting was expected to suggest cut in bandwidth prices to the recently-privatised PTCL, but it was too early to give the size of such an incentive. However, the chairman said, the watchdog would definitely play its role in bringing bandwidth rates down.

Broadband technology entered the country a few years ago with a bang but later failed to thrive due to higher cost and poor service quality. DSL (digital subscriber line) based broadband is a modern technology that converts existing twisted pair of telephone lines into access path for high-speed communication of various sorts. By using the technology, regular telephone lines can be converted into a high-speed broadband digital link.

DSL is faster than both ISDN (integrated services digital network) and leased line, yet it is more cost-effective. With DSL, Internet connection is Ã¢â¬Ëalways onÃ¢â¬â¢, and the users have unlimited access to the Internet. The downloading speed can be ten times higher compared to regular downloading speed of an analogue modem. In addition, with one line users can be connected to both telephone and the Internet.

The government announced broadband Internet policy in 2004 but the services have not witnessed any growth as the operators claim bandwidth prices charged by the PTCL remain the main hurdle. 

The telecom giant is the only Internet backbone provider across the country.

Ã¢â¬ÅThe PTCL announced the price of $1,600 a month for two megabit bandwidth for the operators,Ã¢â¬Â said a broadband operator who was due to attend June 6 meeting. Ã¢â¬ÅSimilarly, for 34 megabit it has fixed $19,200 per month and for 155 megabit $60,000. We are expecting 50 per cent cut in these rates.Ã¢â¬Â

He said though the deregulation of telecom broke over five-decade monopoly of the PTCL, practically there was no such competitor to offer Internet bandwidth across the country, which allowed the company to regulate the industry as it wanted.

Ã¢â¬ÅThe only problem in the way of proliferation of broadband services is prices,Ã¢â¬Â he said. Ã¢â¬ÅIf the authorities really want to give a push to broadband services, they would have to bring the prices to lower level.Ã¢â¬Â

The PTA chief agreed with the claims to some extent, saying the telecom watchdog Ã¢â¬Åis there to create a level-playing field for industry players, which is the only way to increase Internet growth at affordable prices.Ã¢â¬Â

Ã¢â¬ÅFor that matter, we are playing our role to reduce bandwidth prices and June 6 meeting with the operators would make a comprehensive strategy to put the country among the best broadband services operators,Ã¢â¬Â said Malik.

He said the PTA had already conducted a detailed study to assess demand, potential and market dynamics of broadband Internet and wireless local loop services in the country and received a positive feedback.


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## Neo

KARACHI: Ishaq Khakwani, State Minister for IT and Telecom said on Saturday three IT Towers would be established in mega cities of the country in an attempt to facilitate the IT companies and accelerate the pace of growth of IT-enabled services.

Ã¢â¬ÅIT towers will facilitate the IT companies in the rapid growth of their business and IT-related products through which more job opportunities will be created in this sector,Ã¢â¬Â he told Telecom Excellence Awards ceremony.

He lauded the efforts of Pakistan Telecommunication Company and hoped new management of the company would also provide latest technologies to its customer in a much befitting manner.

Chairman Pakistan Telecommunication Authority Shahzada Alam Malik, speaking at the occasion said the telecom watchdog would introduce the MNP (Mobile Number Portability) by October this year and for this purpose initial work had been completed.

He said during 2004-05, foreign direct investment inflow of $494.4 million was registered in telecom sector, which was almost one third of the total FDI in the country during the period. Ã¢â¬ÅThis trend is continued and during July 2005 to February 2006, $398 million FDI inflows came in the telecom and by March 2006 this figure crossed the mark of $1 billion,Ã¢â¬Â he added.

Saalim Ali Al-Akbari, Senior Executive Vice President PTCL said Etisalat had taken over the control of PTCL and customer need was prime focus of the new management.

Ã¢â¬ÅWe believe the company with new management will usher into new era of telecom revolution,Ã¢â¬Â he said. Ã¢â¬ÅThe PTCL customers would continuously receive the flawless telecom services in Pakistan.Ã¢â¬Â


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## Neo

Sunday, June 04, 2006 

ISLAMABAD: President General Pervez Musharraf said on Saturday that high growth and friendly policies had made Pakistan an ideal destination for world entrepreneurs.

He said that the countryÃ¢â¬â¢s economic reality was far better than Ã¢â¬Ådistorted perceptionsÃ¢â¬Â. In a keynote address to OPEN Silicon ValleyÃ¢â¬â¢s annual business moot in California through videoconference, Musharraf said the country was shaping up through the construction of Gwadar Port. He said that a network of infrastructure was in place to serve as trade and energy corridor for the landlocked Central Asia, South Asia, the Gulf region and China. 

Ã¢â¬ÅPakistan today is in an altogether different league economically. It has been put firmly on path of high economic growth with its GDP having more than doubled to $135 billion and all macro-economic indicators including exports, revenue collection, foreign investment, forex reserves staying positive,Ã¢â¬Â he said. 

The president rejected negative travel advisories issued against Pakistan and added that these did not reflect prevailing ground realities. Ã¢â¬ÅI think we suffer from distorted perceptions but in reality we are much better as evident from the fact that none of the foreign companies doing business in Pakistan has ever been harmed due to policies or internal situation,Ã¢â¬Â he told a gathering of American and Pakistani entrepreneurs at the OPEN 2006 moot. 

Musharraf said the government was working hard to improve PakistanÃ¢â¬â¢s image. He urged Pakistani expatriates to contribute to these efforts through personal example and effective countering of misperceptions about the country. 

In the widely applauded address, the president referred to an international report that described information technology progress as PakistanÃ¢â¬â¢s best kept secret and said the country offered a host of opportunities in fast-developing sectors. Ã¢â¬ÅWe have put in place an elaborate IT infrastructure, connected cities and towns to the Internet and three submarine cables are to further enrich the IT scenario. On top of it, we have talented English speaking graduates, which are an asset for the country and international investors.Ã¢â¬Â

He said that Pakistan was setting up nine high-tech engineering and science and technology universities of international standard with the help of advanced countries that would produce professionals of high calibre to push industrial development on fast-track basis. 

The president also spoke about the National Vocational and Technical Education Commission and said it would set up an infrastructure for equipping the young people with skills commensurate with technical and industrial advancement. He said the government was working on the import of natural gas from Iran and Turkmenistan and electricity from Central Asia.


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## Neo

*Low farm output hits GDP: Ã¢â¬Â¢Services sector growth 8.8pc Ã¢â¬Â¢FDI up by 238pc Ã¢â¬Â¢$8.6bn trade deficit*


*By Khaleeq Kiani*
ISLAMABAD, June 4: A lower than expected industrial and agricultural production in 2005-06 marred PakistanÃ¢â¬â¢s real gross domestic product growth rate, which remained at 6.6 per cent, missing the yearÃ¢â¬â¢s target of seven per cent remaining much below previous yearÃ¢â¬â¢s growth rate of 8.6 per cent, according to the Economic Survey launched here on Sunday.

The services sector, with 52 per cent share in overall economy, however, rescued the sluggish economic growth by posting a robust increase of 8.8 per cent, much higher than the 6.8 per cent target.

The survey said foreign direct investment increased by over 238 per cent, attracting $3.1 billion against $891.5 billion during the same period last year while the countryÃ¢â¬â¢s foreign exchange reserves swelled to over $13 billion or equivalent to over six-month coverage of imports.

According to the survey, issued by Dr Salman Shah, Adviser to the Prime Minister on Finance, here on Sunday, the public debt to GDP ratio declined by almost 30 per cent to 54 per cent in 2005-06 against 85 per cent in 1999-2000, while as a percentage of GDP, it declined from 61.4 per cent to 54.7 per cent, recording a 6.7 per cent decline in a single year.

Dr Shah said 2005-06 was another year of solid economic growth despite two major shocks Ã¢â¬â an unprecedented surge in oil prices and last yearÃ¢â¬â¢s devastating earthquake.

He agreed that the services sectorÃ¢â¬â¢s growth was mainly boosted by growth in the banking sector through a large gap between higher interest rates and low return on deposits but said it was necessary for the governmentÃ¢â¬â¢s development agenda. The banking and insurance sector grew by a mammoth 23 per cent against a target of 6.7 per cent.

Ã¢â¬ÅThree or four years of strong economic growth has positioned Pakistan among the fastest (growing) economies in the Asian region like, China, India and Brazil,Ã¢â¬Â said Dr Salman Shah.

*AGRICULTURE*: Ã¢â¬ÅThe performance of agricultural sector remained weak this year as major crops registered a negative growth of 3.6 per cent,Ã¢â¬Â said the economic survey. Ã¢â¬ÅThis decline was on the back of poor showing of major crops and forestry, and weaker perform ance of minor crops and fishery.Ã¢â¬Â

The sector, with about 23 per cent share in the GDP, grew by a nominal 2.5 per cent against a target of 4.8 per cent for the current year and against 6.7 per cent farm growth achieved last year.

Major corps registered a decline of 3.6 per cent as production of two of the four major crops Ã¢â¬â cotton and sugarcane Ã¢â¬â was significantly lower than past year. Livestock performed well as the sector grew by 8 per cent on the back of substantial increase in cattle population and milk.

*INDUSTRY*: The depressing performance of industrial sector, with a GDP share of about 18 per cent, was broad-based during the current year except for the construction and small-scale and household sector that grew by leaps and bounds and was supported by consumer finance. The construction sector also posted an higher growth rate of 9.2 per cent during the current year against last yearÃ¢â¬â¢s extraordinary growth of 18.6 per cent.

*SERVICES SECTOR*: The services sector registered convincing and broad based growth of 8.8 per cent during the current year, against a target of 6.8 per cent and last yearÃ¢â¬â¢s increase of 7.9 per cent.

Transport and communication sector grew by 7.1 per cent against a target of 5.8 per cent and last yearÃ¢â¬â¢s growth of 3.5 per cent. Similarly, the wholesale and retail trade rose by 10 per cent against a budgeted target of 9.3 per cent but lower than last yearÃ¢â¬â¢s growth of 12 per cent.

*PER CAPITA REAL GDP*: Per capita income in dollar terms registered an increase of 14.1 per cent over the last year, rising from $742 to $847.

*FOREIGN DIRECT INVESTMENT*: The country attracted $3.1 billion of FDI against $891.5 million during the same period last year, showing an increase of 238.7 per cent. Over 90 per cent of FDI has come into power, telecom, chemicals, pharmaceutical and fertiliser, oil and gas and banking and finance sectors.

*INVESTMENT*: The gross fixed capital formation or domestic fixed investment grew by 30.7 per cent against a rise of 28.6 per cent last year. Private sector investment grew by 31.6 per cent against 29.1 per cent last year.

National savings as per cent age of GDP stood at 16.4 per cent this year, slightly lower than last yearÃ¢â¬â¢s 16.5 per cent growth. Domestic savings stood at 14.4 per cent of GDP this year, nominally lower than 14.5 per cent.

*INFLATION*: For the first ten months of the current year, the inflation as measured by the consumer price index (CPI) declined to eight per cent from 9.3 per cent last year. Food price inflation average at seven per cent against 12.8 per cent last year.

The overall fiscal deficit that had reduced to 2.3 per cent in 2003-04 has increased to 4.2 per cent during the outgoing financial year as against the target of 3.8 per cent of the GDP.

*REMITTANCES*: Against the full year target of $4 billion, workersÃ¢â¬â¢ remittances totalled $3.63 billion during the first 10 months of the current fiscal year against $3.4 billion in the same period last year. It is likely that workers remittances may touch $4.4 billion in 2005-06.

*TRADE DEFICIT*: Exports in nine months of the year rose by 18.6 per cent to $12 billion while imports grew by 43.2 per cent to $20.7 billion, leaving a trade deficit of $8.6 billion.

*CURRENT ACCOUNT DEFICIT*: The current account deficit, excluding official transfers, stood at $4.7 billion in first nine months of the year against just $1.18 billion last year, showing an increase of 300 per cent.

*PUBLIC DEBT*: The public debt to GDP ratio, which was 85 per cent in 1999-2000, declined sharply to 54.7 per cent in 2005-06 Ã¢â¬â almost 30 percentage points reduction in debt burden.

During the year, public debt as per cent age of GDP declined from 61.4 per cent to 54.7 per cent Ã¢â¬â a 6.7 per cent decline in a single year is one of the stellar events of the current year.

Public debt was 448.9 per cent of the total revenue last year but declined to 414.9 per cent this year, a decline of 34 per cent age points. The overall stock of public debt, however, increased from 35.8 billion last year to $36.557 billion, excluding earthquake-related loans, which have not yet started coming in.

http://www.dawn.com/2006/06/05/top1.htm


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Growth target missed due to shortfall in farm, LSM sectors: Economic Survey shows 14.1 percent rise in per capita income 

MUSHTAQ GHUMMAN 

ISLAMABAD (June 05 2006): Although Pakistan's economy grew at an average rate of almost 7.5 percent per annum during the past three years, it missed its 7 percent growth target set for the current fiscal year, growing only by 6.6 percent.

According to the 'Economic Survey 2005-06', released here on Sunday, two of the major components of GDP--agriculture and large-scale manufacturing (LSM)--remained below the target while other sectors, which included construction, industry, services, and investment performed, as per government expectation, above the estimates.

The country's per capita income also increased by 14.1 percent during the current year from $742 to $847 per annum. However, during the past four years, overall growth in per capita income registered at 13.9 percent per annum.

The sector-wise details are as follows;

GROWTH AND INVESTMENT: The real GDP grew by 6.6 percent in 2005-06 as against 8.6 percent of last year and fell short of the target of 7.0 percent. With economic growth at 6.6 percent in 2005-06, Pakistan's economy grew at an average rate of almost 7.0 percent per annum during the last four years, and over 7.5 percent in the last three years, thus enabling it to join the 'exclusive club' of the fastest growing economies of the Asian region, the government claims.

POVERTY AND UNEMPLOYMENT: The strong economic growth created employment opportunities and therefore reduced unemployment.

According to Labour Force Survey 2005 (First two quarters), since 2003-04 and until the first half of 2005-06, 5.82 million new jobs were created as against an average job creation of 1.0-1.2 million per annum. Consequently, unemployment rate, which stood at 8.3 percent in 2001-02, declined to 7.7 percent in 2003-04 and stood at 6.5 percent during July-December 2005. The rising pace of job creation is bound to increase the income levels of the people. The IT sector alone has created 114,737 new jobs in 2005-06.

The government spent Rs 1332 billion during the last five years on poverty-related and social sector program to cater to the needs of poor and vulnerable sections of the society.

The government is of the view that percentage of population living below the poverty line has fallen from 34.46 percent in 2000-01 to 23.9 percent in 2004-05, a decline of 10.6 percentage points. The percentage of population living below the poverty line in rural areas has declined from 39.26 percent to 28.10 percent while in urban areas it has declined from 22.69 percent 14.9 percent in this period.

AGRICULTURE: Agriculture and particularly its crop sector could not perform up to the expectations, especially major crops registered a negative growth of 3.6 percent. Livestock with 8.0 percent growth, a major component of agriculture, exhibited strong showing and pulled the overall growth in agriculture to 2.5 percent as against the target of 4.2 percent. Livestock has been the only saving grace sector as far as the performance of agriculture is concerned this year.

MANUFACTURING: Overall manufacturing, accounting for 18.2 percent of GDP, registered a robust growth of 8.6 percent against the target of 11.0 percent and last year's achievement of 12.6 percent.

LARGER SCALE MANUFACTURING (LSM): According to the survey, LSM grew weaker-than-the expected at 9.0 percent as against 15.6 percent of last year and 14.5 percent target for the year, exhibiting signs of moderation on account of higher capacity utilisation, on the one hand, and strong base effect along with several other factors, on the other hand.

CONSTRUCTION: Construction continued its strong showing, partly helped by activity in private housing market, spending on physical infrastructure, and reconstruction activities in earthquake affected areas. The construction sector is estimated to grow by 9.2 percent in 2005-06 as against extraordinary growth of 18.6 percent last year.

PER CAPITA INCOME: Pakistan's per capita real GDP has risen at a faster pace during the last three years (5.6 percent per annum on average in rupee terms) leading to a rise in average income of the people. Such increases in real per capita income have led to a sharp increase in consumer spending during the last three years. Per capita income, defined as Gross National Product at market price in dollar term divided by the country's population, grew by an average rate of 13.9 percent per annum during the last four years - rising from $579 in 2002-03 to $847 in 2005-06. Per capita income in dollar term registered an increase of 14.1 percent in 2005-06 over last year, rising from $742 to $847.

PRIVATE CONSUMPTION EXPENDITURE: The survey further shows that as opposed to an average annual increase of 1.4 percent during 2000-03, real private consumption expenditure grew by 13.1 percent in 2004-05 and further by 8.1 percent in 2005-06.

INVESTMENT: During the fiscal year 2005-06, gross fixed capital formation or domestic fixed investment grew by 30.7 percent as against a rise of 28.6 percent last year.

The survey says that the private sector investment grew by 31.6 percent this year as against last year's growth of 29.1 percent. Public sector investment on the other hand registered massive growth of 46.7 percent as against a 32.9 percent increase last year.

Total investment increased from 18.1 percent of GDP last year to 20.0 percent of GDP in 2005-06 - highest in the last 12 years. Fixed investment as percentage of GDP is estimated at 18.4 percent as against 16.5 percent last year. Both public sector investment and private sector investment as percentage of GDP have increased to 4.8 percent and 13.6 percent, respectively, up from 4.4 percent and 12.1 percent of last year.

Almost 2.0 percentage points jump in investment is consistent with the rise in credit to private sector this year. This also reflects the confidence of the private sector on the improving macroeconomic conditions in the country.


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MONETARY POLICY: Large expansion of private sector credit was Rs 345 billion in 10 months of the current fiscal year and the extremely buoyant attitude of the private sector can be viewed from the fact that the cumulative borrowing by this sector during the last three years amounted to over Rs 1100 billion as against the cumulative borrowing by this of Rs 921 billion in the previous 19 years (1984-2003). More importantly, credit to private sector as percentage of GDP surged from almost 20 percent in 1999-2000 to over 26 percent in 2005-06 - almost 6 percentage points increase in the last six years.

INFLATION: Inflation during the first ten months (July-April) of the current fiscal year was estimated at 8.0 percent as against 9.3 percent in the same period last year. Food inflation was estimated at 7.0 percent as against 12.8 percent in the same period last year whereas non-food inflation, at 8.8 percent, was on higher side compared with 6.9 percent in the same period of last year.

The core inflation, which excludes food and energy costs from the headline CPI, moved up and was estimated at 7.7 percent as against 7.0 percent in the same period last year.

House rent index also played an important role in building inflationary pressure this year. With second largest weight in the CPI (23.4 percent) after food (40.3percent), the house rent component of the CPI registered a decline to 10.3 percent as against 11.1 percent in the same period last year.

When viewed in the context of year-on-year performance of inflation, the current fiscal year exhibits significant abatement of price pressure and declaration in overall inflation as well as its sub-indices. The current fiscal year started with an inflation rate of 9.0 percent in July 2005, but continued to decelerate, reaching 23-month low at 6.2 percent in April 2006. Food inflation was close to 9.7 percent at the beginning of the current fiscal year but decelerated sharply to 3.6 percent in April 2006-the lowest in the last 31 months.

In order to keep the prices of essential commodities under control, the government has been taking various measures throughout the year. These measures included a liberal import regime for food items including zero rating of the imports of these commodities.

FISCAL POLICY: The overall fiscal deficit, that averaged nearly 7.0 percent of the GDP in the 1990s, had reduced to 2.3 percent in 2003-04 but increased to 3.4 percent in 2005-06 as against the target of 3.8 percent of GDP, mainly on account of better than expected revenue performance. The fiscal deficit, including earthquake spending, is estimated at 4.2 percent of GDP in the current fiscal year.

The Central Board of Revenue (CBR) is targeted to collect Rs 690 billion but it is likely to collect Rs710 billion - Rs 20 billion more than the target and 20.6 percent more than last year.

Public Debt Burden: Public debt burden continued to decline rather sharply over the last six years with significant improvement in fiscal situation.

The public debt-to-GDP ratio, which stood at 85 percent in 1999-2000, has declined sharply to 54.7 percent in 2005-06 - almost 30 percentage points reduction in debt burden in just six years is one of the significant achievements of the government.

The public debt as percentage of GDP declined from 61.4 percent to 54.7 percent - a 6.7 percentage decline in one year is other stellar occurrences of the current year.

Since public debt is a charge on the budget, its burden must be viewed in relation to government revenue. Public debt was 448.9 percent of total revenue last year but declined to 414.9 percent this year - a decline of 34 percentage points is not a mean achievement.

The 'Survey' says that exports were targeted to grow by 18.1 percent in 2005-06 - rising from $14.4 billion last year to $17.0 billion this year.

During the first nine months of the current fiscal year exports were up by 18.6 percent, rising to $12.1 billion from $10.2 billion in the same period last year. Given the performance of the first nine months, exports are likely to touch $17 billion mark by the end of this fiscal year.

The imports were targeted to grow by 26.0 percent in the current fiscal year - rising from $14.4 billion to $20.7 billion. During the first nine months were up by 43.2 percent in the first nine months of the current fiscal year - rising from $14.4 billion to $20.7 billion, showing an increase of almost $6.0 billion this year.

Major contributions to this year's additional import bill have come from machinery, chemical and petroleum groups. Over one-half of the increases have come from machinery and petroleum group and over 22.3 percent has come from petroleum group.

In particular, import of machinery, raw material and consumer durable groups are up by 30.8 percent, 36.1 percent and 41.8 percent, respectively as domestic investment has come back to life owing to stronger domestic and external demand.

TRADE BALANCE: During the first nine months of current fiscal, trade deficit amounted to $8620.3 million and was up sharply from $4263.3 million in the same period last year (During the first ten months (July-April) of the current fiscal year, trade deficit stood at $9427.1 million as against $4868.0 million in the same period last year). the major contribution to trade deficit came from petroleum group (41.5 percent), machinery group (21.5 percent), iron and steel scrap (11.9 percent) and consumer durables (9.2 percent).

WORKERS REMITTANCES: The government had fixed $4 billion target for workers remittances but total $3.63 billion has been received during the first ten months (July - April) of the current fiscal year, as against $3.4 billion in the same period last year, showing an increase of 5.2 percent. However, the prevalent trend shows that remittances may touch $4.4 billion by the end of the fiscal year.

CURRENT ACCOUNT BALANCE: The current account deficit, excluding official transfers, stood at $4696 million (3.7 percent of GDP) during July-March, 2005-06 as against a deficit of $1181 million in the same period last year.

FFOREIGN DIRECT INVESTMENT: Pakistan has succeeded in attracting $3020.2 million in FDI during July-April, 2005-06 -the highest ever in the country's history, as against $891.5 million in the same period last year, showing an increase of 238.7 percent. By the end of the current fiscal year, FDI is expected to reach $3.5 billion mark, or close to 3.0 percent of GDP.

Over 90 percent of FDI has come to power sector, telecom sector, chemicals, pharmaceutical and fertiliser, oil and gas, and banking and finance. Almost 75 percent of FDI has come from USA, UK, Switzerland, Japan, UAE and Netherlands.

EXTERNAL DEBT: The 'Survey' says that a few years ago, Pakistan was facing serious difficulties in meeting its external debt obligations. Following a credible strategy of debt reduction, Pakistan has succeeded in reducing the rising trend in external debt and foreign exchange liabilities.

Pakistan's external debt and liabilities have declined by $2.3 billion - down from $38.9 billion by end June 1999 to $36.6 billion by end-March, 2006.

The country's debt burden, defined as a ratio of external debt and liabilities to GDP, stood at around 52 percent in end-June 2000, declined to 32.3 percent in end-June 2005 and further to 28.3 percent by end-March 2006.

The country's debt burden, also defined as 'external debt and liabilities as percentage of foreign exchange earnings', was 297 percent in 1999-2000, declined to 134.3 percent in 2004-05 and further to 127.6 percent by end-March 2006.

It may also be pointed out that Pakistan's external debt and liabilities were 22 times of its foreign exchange reserves in 1998-99 but declined sharply to 2.9 times in just six years. These statistics suggest that Pakistan's external debt burden has declined at a much faster pace than anticipated and that it is now on a solid downward footing.

On March 23, 2006, Pakistan successfully issued $500 million new 10-year Eurobond and US $300 million new 30-year Bonds in the international debt capital markets lead managed by J. P Morgan, Citi Group and Deutsche Bank. This transaction, which represented the first international 144A bond issued by Pakistan since 1999, raised significant interest amongst US QIBs and international Institutional investors.

The 10-year notes were priced with a coupon of 7.125 percent to yield 7.125 percent, framing a spread of 240 bps over the relevant 10-year US Treasury benchmark. The 30-year bonds were priced with a coupon of 7.875 percent to yield 7.875 percent, framing a spread of 302 bps over the relevant 30-year US Treasury benchmark.

Pakistan was able to achieve spreads on both the new 10- and 30-year bonds that were tighter than its previous 5-year issues. By issuing 10- and 30-year bonds, Pakistan completed its primary objective of establishing a full Pakistani international yield curve in record time.

http://www.brecorder.com/index.php?...&term=&supDate=


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KARACHI (June 05 2006): The country's textile and its made-ups have failed to actualise its exports target of 32 percent market share in the post-quota regime and had hardly bagged 21 percent, depicting a decline of 11 percent, industry sources said.

The official statistics show that albeit the country's exports had increased in terms of its worth, the number of dispatched units or items had shrunk due to the increased input costs during the last one year and less access in the world's markets, mainly in the European region.

The statistics up to April (10 months of FY06) show that the country's aggregate exports stood at $13.52 billion as against $11.48 billion, illustrating a surge of $2.04 billion or around 18 percent.

Similarly, the textile exports from country during the 10 months were recorded at $8.022 billion as compared to $6.747 billion during the same corresponding period of last year, an increase of 19 percent.

This figure of $8.022 billion should have been $8.163 billion, because the current figure shows 19 percent increase in exports, but also explain that the rise in exports figures is basically high cost of doing business, which has interestingly increased to 19 percent as well, a textile miller commented.

Citing the example of a cotton bale, an exporter said that the industry last year had procured cotton at an average rate of Rs 1900 per maund, which has now increased to Rs 2300 per maund, showing Rs 400 per maund or 19 percent rise.

The rising costs are passed on to the foreign buyers, he said, adding that this practice had made the domestic industry price incompetitive in the international front.

Kingpins of textile industry said that Bangladesh and China had explored a number of avenues in the world market as both are price-competitive and are following aggressive international marketing strategy for promotion of their textile goods.

"India has set up Textile Upgradation Fund (TUFS) with Rs 370 billion to boost its exports," said an office-bearer of All Pakistan Textile Mills Association (Aptma), adding that the Indian government also intends to inject Rs 1400 billion by 2010 into the TUFS to compete with its regional and emerging giants in the markets of Europe and United States.

He pointed out that during a few years Bangladesh has installed 5 million spindles as compared to Pakistan which now has 10 million spindles.

Source termed the situation as 'alarming' for the country's exports as they expressed fear that the country could also not succeeded in exploring new avenues and markets in the next fiscal year FY07.

The country at present possesses 3 percent of total international textile trade of $300 billion. However, the gurus of textile industry believe that the country would face complexities and hardships in getting the $32 billion trade share by 2014.

"Our capacity utilisation stands at 50 percent, which must be 100 percent besides setting up of new units," another Aptma member said, adding that if the government wished to get boost to exports and bring it to $32 billion by 2014, it must give level playing field to the investors besides luring $2 billion fresh investments every year into the textile sector.

When asked to explain the rising cost of doing business in the country, a kin-pin of the textile industry remarked, "Other than gas, power, raw material, machinery and its spare parts, there are some hidden costs as well which are not yet recognised, like social security, EOBI, Export Development Fund (EDF), workers participation fund at the rate of 5 percent of the profits and workers welfare fund at the rate of 2 percent of taxable income."

"The taxes alone work out to 43 percent, against the misconception of 35 percent."

The country's textile industry employs 38 percent of the workforce and contributes 11 percent towards GDP. It is not only paying a number of taxes and hidden costs, but is facing an acute shortage of skilled workers, human resource and infrastructure further intensifies the situation.

Aptma, while drawing attention of the government towards emerging regional giants including India, Bangladesh, Sri Lanka and China, sought help from the government to cut rising input costs and taxes besides allocation of huge funds for the upgradation and modernisation of the industry so that a colossal growth be witnessed in the exports in the coming years.


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KARACHI (June 05 2006): Foreign Direct Investment (FDI) in the first ten months (July-April) of the current fiscal year has reached $3.02 billion - the highest ever in the country's history, as against $0.89 billion in the same period last year, thus, registering an increase of 238.7 percent.

According to Economic Survey 2005-06 FDI is expected to reach $3.5 billion or 2.7 percent of GDP by the end of the current fiscal year.

FDI has become an important source of private external finance for developing countries. It is different from other major types of external private capital flows in that it is motivated largely by the investors' long-term prospects for making profits in production activities in the host countries.

Almost 75.0 percent of FDI have come from six countries, namely, the UAE, US, Saudi Arabia, Switzerland, UK and the Netherlands. The UAE with 42.5 percent ($1284.6 million) has topped the list of foreign investors followed by the US (13.9% or $419.1 million), Saudi Arabia (9.06% or $273.7 million), Switzerland (5.34% or $161.5 million), UK (5.0% or $151.4 million) and the Netherlands (2.9% or $87.1 million).

Telecom, energy (oil, gas and power), financial services, trade, construction, chemicals, food and personal services have been the major recipient of FDI, accounting for almost 94 percent or $2.082 billion. Telecom sector has been the single largest recipient of FDI with $1.0 billion followed by the energy sector ($304 million), financial services ($265.5 million), trade ($81.9 million), construction ($54.4 million), food ($52.7 million), personal services ($45.2 million) and cement ($33.6 million).


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ISLAMABAD (June 05 2006): Inflation, which impacts the poor disproportionately, has come down by 1.3 percentage points to 8 percent during ten months (July-April) of the current fiscal year , the government said on Sunday.

According to the Economic Survey 2005-06, released here at a news conference, the inflation, as measured by Consumer Price Index (CPI), averaged 8 percent during 2005-06 (July-April), against 9.3 percent in the corresponding period of 2004-05.

On current trends, and barring any adverse shocks, it says that the government is expecting that inflation would be within the target of 8.0 percent set by the government for full year.

During the period under review, food inflation was estimated at 7.0 percent as against 12.8 percent in the same period last year. Non-food inflation at 8.8 percent was on higher side compared with 6.9 percent in the same period last year. The core inflation, which excludes food and energy costs from the headline CPI, moved up and estimated at 7.7 percent as against 7.0 percent in the same period last year.

House rent index also played an important role in building inflationary pressure this year. With second largest weight in the CPI (23.4 percent) after food (40.3 percent), the house rent component of the CPI registered a marginal decline to 10.3 percent as against 11.1 percent in the same period last year.

The survey says that in terms of generating inflation, the phenomenal rise in aggregate demand in the economy, on the one hand, was compounded by supply shocks, on the other. Besides, it says that the eight per cent inflation is also due to various internal and external factors.

The adverse external developments, which impacted the price levels for the fiscal year under review included a continuation of the surge in international oil price to an all-time record of nearly US $75 per barrel in April this year, before pulling back somewhat, coupled with an unprecedented rise in world prices of commodities due to demand from fast-growing economies such as China and India.

Besides, decline in the size of sugarcane crop resulting in relatively less production of sugar within the country as well as significant rise in international prices of sugar owing to diversion of large portion of sugarcane into ethanol (a petroleum substitute) by the world's largest producer, Brazil, also impacted price development.


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ISLAMABAD (June 05 2006): Adviser to the Prime Minister on Finance Dr Salman Shah on Sunday unveiled a plan to expand capital market, besides strengthening the banking system in the next fiscal year.

The plan included issuing of the new mutual funds, TFCs and bonds in the next fiscal year and continuing the reforms programme for the banking sector enabling it to take up the enhanced role to facilitate the capital market.

Salman Shah was responding to a questioner while releasing Economic Survey 2005-06 here.

The adviser said in the past weak banking system provided an opportunity to the influential and political elite to plunder billions of rupees of public money and the same unhealthy practice would have continued if the government had not reformed entire banking system to help it function independently.

He said the banks were operating under a strict monetary regulation system, which does not allow them cartelisation. The reforms in banking sector helped it come out of gray area and now the banks were performing very well in the private as well as the public sector, he added.

Salman Shah said that in the past influential and political elite made the entire banking system vulnerable to risks. He said a very big portion of the bank loans was turning into bad debt every year as long as they were being run by the public sector and added that the policy of handing over the banking business to the private sector did a marvellous job in their proper functioning and reduced the percentage of bad debt.

He said that our privatisation programme is the best in the world and hiring of reputed international financial adviser was indicative of its credibility. He said the Supreme Court''s review of Pakistan Steel Mills sell-off case would vindicate the Privatisation Commission''s decision.

Regarding debt retirement and the current debt level, Salman Shah said the government was strictly following Fiscal Discipline Law and maintaining debt level to a restricted level. He said Pakistan''s total debt in term of Pak rupee was Rs 4217 billion.

The adviser denied that any change has been done in the methodology to assess poverty and that the figures quoted by the official document were fudged. He added that the international donors and experts have certified the poverty figures and reduction in its percentage.


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*Economic Survey 2005-06: overview of the economy* 
Economic Survey 2005-06: overview of the economy 

Read the link: http://www.brecorder.com/index.php?...&term=&supDate=


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ISLAMABAD (June 05 2006): High international commodity prices have inflated Pakistan's imports by over 2.3 billion dollars, including 1.915 billion dollars for oil import alone, during the outgoing fiscal 2005-06.

Economic Survey 2005-06 released here on Sunday says that during the first nine months (July-March) 2005-06, the country had to bear additional cost of 1.915 billion dollars against corresponding period of the last fiscal year owing to high international oil prices.

During the first three quarters of the current fiscal year, the consumption of petroleum products in households, agriculture, transport and power sectors, exhibited sharp decline to the extent of 35.3 percent, 47.4 percent, 8 percent and 16.8 percent, respectively, the survey said.


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KARACHI (June 05 2006): Airblue is set to induct 4 new aircraft and will be the first Pakistani private airline to operate long haul flights to United Kingdom in its third year of operations, said Shahid Khaqan Abbasi, Chief Operating Officer Airblue, in Lahore on Sunday.

He was addressing 40 corporate managers from Airblue's domestic and international network attending the airlines second Management Conference, "Blue-II Expanding Horizons" concluded here.

Abbasi emphasised that continued expansion was essential for the airline to continue surviving in the prevailing environment.

He said Airblue would be acquiring two Airbus A330s for UK operation, which are scheduled to be launched in December 2006.

Airblue will also be acquiring two Airbus A321s to further consolidate its domestic and regional schedule, he said, adding that in its third year of operation the airline would have a fleet of nine next-generation jet aircraft operating on a network of nearly one dozen destinations.

He pointed out that Airblue would be introducing a turbo prop operation on the socio-economic routes starting with a daily flight to Gwadar.


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ISLAMABAD (June 05 2006): Despite two percent increase of energy supply, the electricity generation showed only a marginal increase of 0.3 percent, while the number of consumers increased to 15.6 million from 14.9 million, says Economic Survey 2005-06.

The survey, which covers the first nine months of the outgoing fiscal year, further said the oil production also showed a decrease of 1.23 percent, while gas showed 4.4 percent production growth.

In the first three quarters of the outgoing fiscal year, the consumption of petroleum products in household, agriculture, transport and the power sector showed a declining trend, while energy supply registered an increase of two percent.

The Economic Survey data also said the decline in the use of petroleum products in households, agriculture, transport and power sectors, was due mainly to the availability of alternative and relatively cheaper fuels, low demand of LDO in agriculture and lastly, the massive increase of CNG and natural gas in transport and power sectors.

The consumption of gas in cement industry increased by 25 percent, while the power sector consumption grew by 9.9 percent followed by the fertiliser industry (8.0 percent), industrial sector (7.9 percent) and household sector (0.7 percent), it said, adding that a substantial increase in the consumption of electricity has also been witnessed during the first nine months of the current fiscal year.

The energy supplies increased to 42.449 million TOE from 41.617 million TOE, which is an increase of two percent, mainly due to appropriate and timely measures taken by the government to provide an investment-friendly environment for the energy sector to attract more local and foreign investors, the survey said.

The average crude oil production during July-March 2005-06 was 65,385 barrels per day as against 66,199 barrels per day during the corresponding period last year, showing a decrease of 1.23 percent and is due mainly to lower production by 10 percent from southern region oil fields.

The average production of natural gas during July-March 2005-06 was 3,826 million cubic feet per day (mmcfd) as against 3,663 mmcfd during the corresponding period last year, showing an increase of 4.4 percent.

The total installed capacity of electricity generation increased to 19,439 MW in 2005-06 from 19,389 MW last year, showing a marginal increase of 0.3 percent.

The number of electricity consumers has increased over the years due to rapid extension of electric supply to villages and fast urbanisation. The number of consumers has increased to 15.6 million, up to March 2006, from 14.9 million in 2004-05, showing an increase of 5 percent over the last year and a growth of 64 percent since 1995-96.

The NTDC and Discos have reduced power losses thus increasing the revenue by adopting measures such as renovation, rehabilitation, capacitor installation and strengthening consumer-end distribution supply network. It decreased the power losses from 24.2 to 22.8 percent during the first nine months.

The government has approved the recommendations under the Energy Security Action Plan, which include development of wind and solar energy to ensure that at least five percent of total power generation capacity is met through these resources by 2030 ie (9700 MW), it said.

The Alternative Energy Development Board to ensure the installation of 100 MW wind power by June 2006 at Keti Bandar and Gharo in Sindh and 700 MW by 2010, the survey added.

Due to the import of high cost energy resources, the government will enhance the share of coal in the overall energy mix from 5 percent to 18 percent up to 2018.

The Energy Security Action Plan has also set a target of generating about 20,000 MW power from coal by 2030 and 50 percent by 2050, the Economic Survey added.


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KARACHI (June 05 2006): Pakistan is ironically dependent on the import of crude oil to meet the demand gap, as the country was meeting only 18 percent of its oil needs from indigenous production and it had to import the remaining 82 percent and pay international prices.

The crude oil and petroleum products import for the year 2004-05 amounted to about 8.3 million tonnes and 5.7 million tonnes, respectively with actual amount of payments worth $2,606 million and $1,998 million, respectively. The total annual oil import bill stood at $4,604 million during 2004-05.

According to Economic Survey 2005-06, the production levels may still be insufficient, our country is undoubtedly thriving with potential.

Pakistan has an interesting geo-dynamic history of large and prospective basin (onshore and offshore) with sedimentary area of 827,268 square kilometres.

So far about 844 million barrels of crude oil reserves have been discovered, of which 535 million barrels have already been produced.

Prognostic potential of total endowment of hydrocarbons has been estimated as 27 billion barrels of oil and 282 trillion cubic feet of gas in Pakistan.

Until recently, over 620 exploratory wells have been drilled by various national and international exploration and production companies, resulting in over 177 oil and gas discoveries.

In addition, indigenous production of crude oil during the year 2004-05 was 66,095 barrels per day. Similarly, 50 percent of the indigenous gas contributed a substantial portion of the energy requirements of the country.

Considering this, the government is making great efforts to attract local and foreign investors.

As a result of these financial and structural reforms, the energy sector has already become one of the most attractive sectors in the country.

Recently, the government had signed a number of agreements worth $42 million, with various international companies to carry out exploration activities in the oil and gas sector.

It is expected that the energy supply position will be better after the implementation of plans for pipeline projects from Iran and the Central Asian countries.

Similar pipelines are also being negotiated with Qatar and Turkmenistan. These energy development projects in the country would help battle future energy shortage in the country and pave the way for enhanced economic activities, reduction of poverty and bring Pakistan's backward areas at par with the developed areas.

As for energy in Pakistan, power, gas, petroleum and coal are the main components of this sector.

During 2004-05, the primary commercial energy supplies increased by 9.2 percent to 55.5 million tonnes of oil equivalent (MTOE), as compared to 50.8 (MTOE), in 2003-04. The major increases derived from natural gas (2.7 MTOE) oil (1.2 MTOE) and coal (0.9 MTOE).

In comparison to the previous year, the supplies from nuclear and LPG have also illustrated a slight increase, while those from hydel have decreased.

The share of natural gas in primary energy supplies, during 2004-05, has also reached up to 50.4 percent, followed by oil (29.4 percent), hydro electricity (11.0 percent), coal (7.6 percent), nuclear electricity (1.2 percent) and lastly, LPG (0.4 percent). The drilling activity, particularly exploratory drilling has slowed down during the last two years ie 2004-05 and 2003-04; only 19 exploratory wells were drilled during 2004-05 as compared to 29 during 2003-04 and 32 during 2002-03. The number of development wells drilled during 2004-05 was 28 as against 24 during 2003-04 and 45 during 2002-03.

Oil and gas production showed positive growth during 2004-05 and the oil production increased by seven percent from 61,774 barrels per day, in 2003-04, to 66,095 barrels per day in 2004-05.

At the same time, the natural gas production increased by 11.8 percent from 3,295 to 3,685 million cubic feet per day (MCFD) during the same period.

As far as consumption is concern, during the period of last 10 years (1995-96 to 2004-05), the consumption of petroleum products has increased by an average rate of 0.9 percent per annum. The consumption of gas, electricity and coal have also increased at an average rate of 7.9 percent, 4.6 percent and 9.1 percent per annum, respectively.

It is important to note that a structural shift is taking place in energy consumption in Pakistan, since 2000-01. While consumption of petroleum products is declining except in 2004-05, the consumption of other components of energy is rising. The average consumption of petroleum products has in fact, registered a decline of 3.3 percent per annum since 2000-01.


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## Neo

KARACHI (June 05 2006): The government has decided to enhance the share of coal in the overall energy mix from five percent to 18 percent up to 2018, due to the import of high cost energy resources. The coalfield in the Sindh province has huge coal resources of about 175 billion tonnes.

According to Economic Survey 2005-06, in view of the anticipated shortfall of electricity and other energy resources during the next 10 years, the maximum utilisation of coal would be required in power generation and gasification.

The Approved Energy Security Action Plan has set a target of generating about 20,000 Megawatt (MW) of power from coal by 2030 and 50 percent by 2050.

As a result of the government endeavours, about 80 percent of the cement industry have now switched over to indigenous coal from furnace oil that has saved considerable foreign exchange being spent on the import of furnace oil.

The conversion of the whole cement industry to coal would generate demand for 2.5 million tonnes of coal per annum.

To ascertain commercial viability of mining coal from Thar, the German consultant Rheinbraun Engineering has completed a mining feasibility on a specific block in Thar coalfield.

The same block has been assigned to a firm from the United States for commissioning of integrated coal mining and 1000-MW power generation project.

The government has also decided to establish a coal mining and power generation company on the pattern of WAPDA for harnessing the Thar coal resource.

As a part of the promotional activities to increase the share of coal, the Government of Sindh has leased out a coal block to Fatteh Group of Hyderabad to commission a coal-based power plant of 250-MW.

In addition, the government has also allowed a Chinese company namely, China National Chemical Engineering Group Corporation (CNCEC) to conduct a feasibility study on a coal block in Sonda Jherrick coalfields in the Sindh province for an integrated mining project of one million tonnes and commission a 250-MW coal based power plant.

In pursuit of a Presidential directive, the Sui Northern Gas Pipeline Limited (SNGPL) is in the process of preparing pre-feasibility for the commissioning of town gas plant at Bakar (Punjab), by utilising Makarwal coal.

The total national coal production from operational coal-mines during 2004-05 remained around 4.60 millions and about 80 percent of it was consumed by the brick kiln industry.


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## Neo

Inaugurating the Ã¢â¬Ëmarble cityÃ¢â¬â¢ at Gaddani in Balochistan, the President General Pervez Musharraf assured the manufacturers that the government would serve as a facilitator to promote the marble industry and its mining will be undertaken by utilizing the latest technologies to avoid wastages.

About 300 units have been planned for the marble city on some 600 acres of land. Four units are currently in production at the facility and investment has been made by expatriate Pakistanis from USA, Japan, Spain and the UAE. The President also assured some other measures to help the marble industry.

The industry has failed to benefit from the marble boom. Disorganized and mismanaged and possessing poor technology, the industry has been shy of sizeable investment.

Pakistan is currently mining 40 types of natural colour marble and also dying the marble in various colours which is processed by 150 different units. Only now utilization of modern machines has started to produce qualitative products in bigger quantities.

The efficiency of marble processing industry depends on the quarry products. Development of the skills of the local quarry masters can improve the quality and raise productivity to meet international standards and demand. Private sector can be encouraged to establish a large number of marble enterprises in Balochistan, which would carry out the quarrying, processing and trading of marble products.

The use of out-dated technology in the mining results in some 70 per cent of wastage, as the explosives are used for the purpose. Obsolete methods are still in practice and a lot of breakage occurs.

The government needs to develop processing centres with automatic tiling plants in the Gaddani marble city and the president has assured that the equipment would be imported for the purpose.

Marble is largely used in construction and handicrafts sectors. Amongst the building stones, marble occupies a unique position. Marble slabs and handicrafts have great demand in national and international market. The ministry of industries and production has set a marble export target of $500 million.

Marble is an export-oriented sector. There is a big demand for this mineral in the Middle East, Far East and European countries, where almost 50 per cent of the worldÃ¢â¬â¢s marble output is consumed. Pakistan earned $15.8 million foreign exchange with the export of marble in FY 2001-02.

The 40 per cent export was in the shape of handicraft, while the rest of 60 per cent in slabs and bricks form. Marble is exported to the USA, Dubai, Korea and Bangladesh while Europe is considered a potential market. What is needed is the tapping of the world markets and improving quality, value addition and bringing down the extraction losses.

Marble in commercial quantities is found at a number of places including Lasbela, Khuzdar and Chaghi districts. Commercial marble is defined as Ã¢â¬Åany crystalline rock capable of taking a polish and suitable for decorative and structural purposesÃ¢â¬Â.

Marble in Chaghi district is of onyx variety and is being mined since 1950Ã¢â¬â¢s. The term Ã¢â¬ËonyxÃ¢â¬â¢ signifies a banded variety of quartz, highly prized as an ornamental stone.

The onyx is largely used for beads, brooches, ring-stones and other small ornamental objects, while the larger pieces are occasionally wrought in the form of cups, howls, vases etc. Onyx is the favourite stone for cameo work because its layers can be cut to show a colour contrast between the design and the background.

For its vast applications and uses, onyx marble is in great demand in the international market. The onyx marble from Chaghi can meet the international standards and demands if it is processed efficiently.

A marble policy should envisage the sanction of mining leases to private firms in Balochistan. Prospecting license may also be granted to firms for unexplored areas and the local private sector should be extended incentives for making investment in the marble sector. The marble city is a step in the right direction.


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## Neo

Dubai: DP World, the world's third largest container port operator and a unit of holding company Dubai World, said on Sunday it was discussing with the Pakistani government the terms of reference for taking over the strategic Arabian Sea port of Gwadar.

"We have been confirmed as the preferred bidder by the Gwadar Port Implementation Authority. We are currently in discussions to finalise the terms of reference for the concession," a company spokesperson told Gulf News.

A Pakistani official earlier said that operational management at the deep-sea port, built with Chin-ese assistance and located about 120 kilometres from the Iranian border, has been given to the Dubai firm.

Balochistan Chief Minister Jam Mohammad Yousaf on Saturday also said five border points have been opened with Iran to promote trade via Gwadar port, according to an agency report.

DP World emerged as the favourite for operating Gwadar after the world's number one port management firm Hutchison Port Holdings of Hong Kong withdrew a bid for the facility.


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## Neo

Monday, June 05, 2006 

ISLAMABAD: Over three million people in the labour force were unemployed in the first six months (July to December 2005) of fiscal 2005-06 and the unemployment during this period was 6.50 percent, according to the Economic Survey 2005-06 released on Sunday. 

Agriculture employment increased from 43 percent in fiscal year 2003-04 to almost 45 percent in the first six months of 2005-06. In Pakistan, labour force participation is estimated on the basis of Crude Activity Rate (CAR) and Refined Activity Rate (RAR). CAR and RAR were 32.8pc and 46.9pc respectively during the first half of 2005-06, up from 30.4 percent and 43.7 percent in the same period in 2003-04. The survey said 5.82 million jobs were created from 2003-04 to December 2005, 4.4 million in rural areas.

The employed labour force shows an increase in womenÃ¢â¬â¢s number in most sectors. The increase in rural female employment was mainly in the category of unpaid family helpers. The largest increase in female employment was in agriculture and allied industries, supporting the view that employment gains are concentrated in female unpaid workers.


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## Neo

Monday, June 05, 2006 

* Government may announce 50% rebate on power charges for tube-wells 

ISLAMABAD: The government will present PakistanÃ¢â¬â¢s highest-ever federal budget of Rs 1.141 trillion in the National Assembly today (Monday) for the fiscal year 2006-07. 

A senior official told Daily Times that the federal and provincial consolidated budgets outlay was expected to be Rs 1.5 trillion, which would include Rs 1.141 trillion for the federal budget and Rs 344 billion for the provinces.

The federal cabinet will approve budget proposals for the next fiscal year in its special budget meeting in the morning, and State Finance Minister Umer Ayub Khan will present the budget in the evening. The fiscal deficit is estimated to be 5.1 percent of GDP or around Rs 401.8 billion, while the current account deficit has been estimated at 4.3 percent of GDP in the next fiscal year. The budget deficit will be financed through foreign borrowing of Rs 228.9 billion, domestic borrowing of Rs 119.9 billion and projected privatisation proceeds of Rs 75 billion. 

The defence budget allocation is expected to be increased from last yearÃ¢â¬â¢s Rs 223.5 billion (later revised to Rs 240 billion) to Rs 248.25 billion for the next fiscal year with an increased foreign exchange component to finance defence imports. The budget aims for seven percent economic growth in the next fiscal year with a political objective to win public support for the 2007 general elections by providing maximum relief to government employees and low-income groups. 

The budgetÃ¢â¬â¢s main features are: an increase in the pay of government employees, increase in the pension of retired employees, and continuing Rs 200 billion subsidies and grants on food and public services such as utilities, electricity, fuel and fertilisers. The government will also announce special measures to stop inflation. A special price regime is also expected to be announced to control the price of food items. The revenue collection target is expected to be Rs 838 billion, aimed at expanding the tax base by including sectors that were outside the tax net or contributing less than their actual potential. 

The government will also announce a new Wealth Tax Law, allowing people to legalise hidden wealth by paying tax ranging from two percent to 10 percent. The services sector will be taxed on the basis of rates prescribed in the first schedule of the Income Tax Ordinance. The government will introduce new income tax forms and they will include a new section relating to income from the sale and purchase of property. 

Agriculture: The government will announce a 50 percent rebate on electricity charges on tube-wells used for irrigation because of the shortfall in the availability of water in the canal system, sources told Online.

The Food, Agriculture and Livestock Ministry had asked the government for the rebate, said sources. A National Assembly standing committee had backed the idea, they said. WAPDA has been told to facilitate the government in this regard, they added. Sources said the government would also remove the general sales tax (GST) on fertilisers and pesticides. Ã¢â¬ÅThe government also plans to reduce the interest rate on farm loans from nine percent to four percent,Ã¢â¬Â they added.


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## Neo

Monday, 5 June 2006
*Perfect Pakistan*


by Stuart Wilson
 

Dr. Aamir Matin, the newly appointed general manager of Cisco Pakistan*Sizing up*


Vendors, distributors and resellers are waking up to the huge potential that exists in the Pakistani market. With a population in excess of 150 million people, a buoyant enterprise IT spending environment and strong cultural and economic ties to the Middle East, Pakistan is a market on the up.

It is easy to underestimate the size and potential of the Pakistani IT market. IDC estimated that full year PC unit sales during 2005 hit the 500,000 mark, but many players operating on the ground inside Pakistan believe this figure falls well short of the actual market size. The analysts and the local channel do agree on one point: the conditions are perfect for rapid market expansion in the next few years as local assemblers and A-brand vendors tap into the wave of demand expected to materialise. IDC predicts that total PC unit sales per annum in Pakistan will exceed one million units by 2010. 

Ã¢â¬ÅIn Pakistan, encouraging government-led policies and structural liberalisation in the financial and telecommunications sector helped to lift the PC market,Ã¢â¬Â explained Andrew Wong, personal systems research manager for emerging Asia countries at IDC.

Local assemblers are staking a claim to the growing PC market inside Pakistan. Brands such as In-Box, Raffles and Softwise are building significant brand equity and grabbing significant market share. With many A-brand vendors yet to deploy full-scale operations within Pakistan, local assemblers realise that the next few years will be critical in cementing their long-term future in the market. 

At present, the local assembly market remains highly fragmented with PakistanÃ¢â¬â¢s number one brand, In-Box, taking just 5.8% market share in 2005, according to IDC, driven in part by success in the government and education space. The market is ripe for local assembly consolidation and the emergence of a top-tier.




Venu Menon, divisional director at Online Distribution*Local heroes*


Hafeez Khawaja, senior regional director Middle East, Africa and South Asia at storage giant WD, believes that the local assemblers are more than capable of giving the A-brands a run for their money. 

Ã¢â¬ÅThere are some very professional local assemblers in Pakistan,Ã¢â¬Â he said. Ã¢â¬ÅI was amazed by the quality of the facilities that players such as In-Box and Raffles now have. They have employed Pakistanis that used to work for global vendors such as HP and Dell in the US who decided that they wanted to come back. Their technology is state of the art and their product marketing is top class.Ã¢â¬Â

Estimating the size of the total IT market in Pakistan remains a tricky task. One person well placed to assess the data is Dr. Aamir Matin, the newly appointed general manager of Cisco Pakistan. Prior to his appointment, Matin worked at the Pakistani Ministry of IT where he led various successful initiatives to boost exports of IT and IT-enabled services. Ã¢â¬ÅThe overall IT market is growing at 50% year-on-year,Ã¢â¬Â said Matin. Ã¢â¬ÅYou talk to the major hardware and software vendors and this is the growth in numbers that they are seeing. The actual size of the market Ã¢â¬â excluding the telecommunications sector Ã¢â¬â is around the US$1 billion mark and this includes hardware, software and services.Ã¢â¬Â

Matin estimates that at least 50% of this total is currently derived from hardware sales with software and services accounting for approximately 25% each. As the market grows and matures, the channel also has to evolve and develop in order to keep pace. Specialisation and focus is the name of the game as the Pakistani market reaches a critical mass. For Cisco, making sure that its channel has the breadth and depth of skills and reach to take on all the opportunities that exist in the market is an ongoing challenge.

Ã¢â¬ÅThere is still a challenge inasmuch as the channel remains very fragmented,Ã¢â¬Â conceded Matin. Ã¢â¬ÅThere are not that many large partners capable of handling some of the bigger projects that are coming up in the country. The situation is changing but it will take time. What we are now doing is looking to work with some of CiscoÃ¢â¬â¢s large global partners to address these opportunities in the market.Ã¢â¬Â




Mobeen Ul Haq, manager at Pakistani networking and storage distributor Silicon Technologies*Skill sets*


In the enterprise IT segment, the telecommunications sector has played a pivotal role in driving the growth of IT spending. For value-added distributor Tech Access, which represents Sun Microsystems, Symantec and Mercury in Pakistan, building a highly focused partner base capable of dealing with the largest companies has been the secret of its success.

Ã¢â¬ÅYou have to be very focused to develop an effective enterprise channel in Pakistan,Ã¢â¬Â explained Dimuth Wijeratne, partner sales manager for Pakistan at Tech Access. Ã¢â¬ÅThe telecoms sector still accounts for 70% of spending and we have built a strong partner network to address this opportunity. We are now looking to replicate this in the financial services vertical.Ã¢â¬Â

Ã¢â¬ÅThe market in Pakistan has matured a great deal over the past couple of years and this has allowed systems integrators and solution providers to start focusing on specific verticals. It is important to remember that this is a market of more than 150 million people Ã¢â¬â that is the scale of the opportunity that exists in Pakistan. We have also found that IT managers are extremely knowledgeable when it comes to purchasing decisions. They are working on limited budgets and project failure is not an option,Ã¢â¬Â he added.

Tech Access is not the only distributor looking to serve Pakistan from a Dubai hub. Broadline distributors such as Tech Data and eSys have also invested in building up an in-country presence within the Pakistani market Ã¢â¬â a move that reflects both the size and the significance of the opportunity. From a networking perspective, Online Distribution is also working hard to tap into the Pakistani channel. 

Venu Menon, divisional director at Online Distribution, commented: Ã¢â¬ÅPakistan is growing at a tremendous rate and it is now a market that we have a strategic focus on. More and more vendors want to serve Pakistan from their Middle East and Africa operations. The Pakistan channel community likes to purchase product from Dubai Ã¢â¬â and I think vendors are waking up to the fact.Ã¢â¬Â

Online represents both Zebra and Symbol in Pakistan and already has a database of 100 in-country resellers purchasing product. Ã¢â¬ÅThere is a massive amount of IT spending happening in Pakistan and the country is also serving as a gateway for product that is eventually destined for Afghanistan. In terms of skill sets, the Pakistan channel is very well developed Ã¢â¬â there are significant software development skills within the country and the cost of labour remains relatively low,Ã¢â¬Â Menon continued.




Hafeez Khawaja, senior regional director Middle East, Africa and South Asia at storage giant WD*Top tier players*


Wijeratne at Tech Access agrees that the Pakistan channel is comfortable dealing with vendors and distributors operating out of Dubai. Ã¢â¬ÅOur sales in Pakistan are more than doubling year-on-year,Ã¢â¬Â he added. Ã¢â¬ÅThe market now accounts for 20% of Tech AccessÃ¢â¬â¢ total sales. There has been a great deal of investment into Pakistan from the Middle East and the cultural ties are very strong. It makes more sense for vendors to handle Pakistan from the Middle East as opposed to handling the market from Singapore.Ã¢â¬Â

Vendors are starting to realise the importance of in-country channel coverage within Pakistan. Ã¢â¬ÅWe are convinced that the long-term growth opportunities are massive.Ã¢â¬Â Said Khawaja at WD, Ã¢â¬ÅThat is why we have just appointed Pakistan Office Products (POP) as a second distributor alongside Roma. POP has offices in multiple cities and that is very important for the long-term development of our channel strategy.Ã¢â¬Â


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## Neo

Ã¢â¬ÅPakistan is a vast country almost twice the size of France and the infrastructure for moving product around from one place to another is limited. Appointing a second distributor does not meant that they will fight each other Ã¢â¬â it means that we have broader channel coverage and reach.Ã¢â¬Â

A top tier of in-country distributors is starting to emerge within the Pakistan channel. POP, Marsons and Roma are becoming familiar names to the bevy of vendor channel managers attempting to work out the best way to develop in-country routes-to-market. Other local distributors such as Silicon Technologies are also carving out reputations as focused distributors working in specific product segments.

Mobeen Ul Haq, manager at Pakistani networking and storage distributor Silicon Technologies, commented: Ã¢â¬ÅWe have a distribution portfolio of products that now includes US Robotics, D-Link, 3Com, Adaptec, Tandberg Data and Moxa. Our main office is in Karachi with 40 people but we also have an operation of 12 people in Lahore and have just launched another office in Islamabad.Ã¢â¬Â




Consumer demand for IT products is also starting to grow in Pakistan*Fake fears*


Adding more vendors to the portfolio is not the top priority for Ul Haq. Instead, his energies are concentrated on expanding the companyÃ¢â¬â¢s channel breadth. In the cities where Silicon has points of presence, the distributor has built an expansive reseller customer base. In other cities, the company has developed a network of select resellers that effectively take on the role of sub-distributor and actively help to develop the channel breadth in their specific area of geographic focus.

Challenges do still remain in the Pakistani IT channel. Ã¢â¬ÅThree years ago, grey market product was the major threat,Ã¢â¬Â continued Ul Haq. Ã¢â¬ÅToday grey is less of a problem but the amount of fake and counterfeit product in the market is growing. Most of it comes from China through a variety of routes. Pakistan has relatively soft borders and the fake product can come in by air, land or sea.Ã¢â¬Â

The surge in enterprise IT spending is filtering down to the consumer market. As the population becomes more tech-savvy, demand for IT products is soaring. As one of the fastest growing markets in the world for mobile phones, PakistanÃ¢â¬â¢s future growth looks assured. The window of opportunity is now and vendors moving in-country first and deploying people on the ground have the opportunity to carve out a significant first-mover advantage. The conditions in Pakistan are perfect for growth. 

Ã¢â¬ÅVendors are realising that the Pakistani market has been neglected and they are now investing more in the market,Ã¢â¬Â said Matin. Ã¢â¬ÅIt is important that this investment results in real benefits for the country as a whole.Ã¢â¬Â
http://www.itp.net/features/details.php?id=4497


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## Neo

ISLAMABAD (updated on: June 04, 2006, 19:36 PST): The government is set to achieve sustained economic growth of 6 to 8 percent in coming years, which will help reduce unacceptable levels of poverty, a government adviser said on Sunday.

The percentage of the population living below the poverty line has fallen to 23.9 percent in 2004/05 from 34.5 percent in 2000/01, but it was still too high, said Salman Shah, a government adviser on finance and economic affairs.

"Despite the reduction, poverty is still at an unacceptable level," Shah told a news conference at which he released the government's annual Economic Survey.

The government is due on Monday to announce its budget for the 2006/07 financial year, which begins on July 1. It is expected to include measures to alleviate poverty through increased development spending.

"The current budget and the government policy will ensure that these people are pulled out of the poverty trap by increasing opportunities through employment measures and through a growing economy," Shah said.

"We will not rest until we have made a major dent in poverty.

Pakistan has seen strong economic growth over the past few years and the government expects 6.6 percent gross domestic product (GDP) growth in the 2005/06 fiscal year, ending on June 30.

The previous year saw growth of 8.6 percent, the highest in more than 20 years.

The target for 2006/07 is expected to be set at 7.0 percent when the budget is announced on Monday.

RISING INVESTMENT 

But the government has faced criticism from some economists who say the growth has largely benefited the rich, while the poor have been hurt by higher prices.

Shah said he was confident the country would be able to sustain its growth in the medium- to long-term, backed by a rising investment-to-GDP ratio, increased foreign direct investment and a successful privatisation plan.

According to the economic survey for the financial year ending at the end of this month, the investment-to-GDP ratio stood at 20 percent in 2005/06, while average annual per capita income rose to $847 from $742 the previous year.

The manufacturing sector, accounting for 18.2 percent of GDP, grew by 8.6 percent during the year, while large-scale manufacturing grew by 9.0 percent.

The services sector also performed well with growth of 8.8 percent, while the construction sector, helped by activity in the private housing market as well reconstruction in areas hit by a big earthquake in October, grew 9.2 percent.

However, growth in agriculture, which accounts for 21.6 percent of GDP, was less than satisfactory, the survey said.

The sector grew by only 2.5 percent, with major crops and forestry contracting 3.6 percent and 9.7 percent respectively.

Shah said overall growth targets should be reached.

"We saw solid economic growth in 2005/06 and in spite of the major devastation of the earthquake and high global oil prices, the economy has managed to sustain its growth momentum," he said.

"If there are no major shocks we should be able to sustain 6 to 8 percent growth."


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## Neo

ISLAMABAD (June 04 2006): Assuring full protection and facilitation to international investment, President Pervez Musharraf on Saturday said high growth and friendly policies make Pakistan an ideal destination for world entrepreneurs and stressed that the country's economic reality is far better than "distorted perceptions."

In a keynote address to OPEN Silicon Valley's annual business moot in California through video conference, President Musharraf said that the country is shaping up through construction of Gwadar Port and a network of infrastructure to serve as trade and energy corridor for landlocked Central Asia, South Asia, the Gulf region and China.

"Pakistan today is in an altogether different league economically - it has been put firmly on the path of high economic growth with its GDP having more than doubled to US dollars 135 billion and all macro economic indicators including exports, revenue collection, foreign investment, forex reserves staying positive," he said.

He rejected negative travel advisories issued against Pakistan and added that these did not reflect prevailing ground realities.

"I think we suffer from distorted perceptions - but in reality we are much better as evident from the fact that none of the foreign companies doing business in Pakistan has ever been harmed due to policies or internal situation," he emphasised to a gathering of American and Pakistani entrepreneurs at OPEN 2006 moot.

President Musharraf said the government is striving to improve the image of Pakistan but also urged the Pakistani expatriates to contribute to these efforts through personal example and effective countering of misperceptions about the country.

In the widely applauded address, the President referred to an international report that described Information Technology progress as Pakistan's best kept secret and said the country offered a host of opportunities in fast-developing sectors.

"We have put in place an elaborate IT infrastructure, connected cities and towns to the Internet and three submarine cables are to further enrich the IT scenario - on top of it, we have talented English speaking graduates, which are an asset for the country and international investors."

President Musharraf informed the appreciative gathering of Pakistani and American entrepreneurs and top professionals that the country is synergising education with expanding demands of industrial development. "We are establishing nine high-tech engineering and science and technology universities of international standards with the help of advanced countries - these will produce professionals of high calibre to push industrial development on fast-track basis," he said.

The President also spoke about the National Vocational and Technical Education Commission and said it would set up an infrastructure for equipping the young people with skills commensurate with technical and industrial advancement.

"We are creating synergy between education and rapid industrial growth," he said, adding that the budget for higher education has been increased from Rs 0.6 billion about five years to Rs 22 billion this year.

On meeting Pakistan's growing energy requirements, the President said the government is working on import of natural gas from Iran and Turkmenistan and electricity from Central Asia.

He said the country has been able to reduce dependence on costly oil and is constructing large dams and canals to produce cost-effective hydro power.

President Musharraf asked the Pakistani expatriates to live as peaceful and useful citizens of their adopted countries, foster unity in their ranks and not be divided along political lines.


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## Neo

ISLAMABAD (June 04 2006): As previous Surveys have declared the tax machinery corrupt and inefficient, the Central Board of Revenue (CBR) will shortly launch a 'perception survey' in collaboration with Gallop Pakistan to obtain the viewpoint of taxpayers and government departments about the integrity of CBR employees.

According to a CBR report issued on Saturday, a survey was conducted in 1999 to obtain the taxpayers' opinion on the country's taxation system. The questionnaire was mailed to 128,000 taxpayers, tax advisors/accountants, randomly selected from the CBR database. Of this, 126,000 letters were sent to taxpayers with varying tax payments and 2000 to tax advisors/accountants.

Surprisingly, only 6000 taxpayers responded highlighting that taxation system fell short of their expectations. The survey results showed that laws were complicated; rules and regulations were stringent; the staff (tax machinery) was inefficient and corrupt; and the tax administration was non-responsive to dynamics of fiscal and commercial environment. Level of courtesy was low and connivance between the taxpayers and the tax collectors was high.

The report pointed out that another survey was conducted by the Task Force on Tax Administration. The results showed that all respondents including taxpayers, tax collectors, and representatives of civil society were equally worried about corruption.

The respondents believed that corruption was not simply restricted to CBR alone, rather many other government departments were also engaged in such unhealthy practices.

In fact, when they were asked to rank government departments according to the perceived level of corruption, many of these departments were ranked higher than CBR. The problem of 'speed money' in the case of customs clearance, and seeking refund payments was also calculated and highlighted in the report.

Now a new survey would be conducted to update the tax officials about the level of taxpayers' facilitation, change in attitude of tax officials and improving the overall fiscal environment.

The report stated that different categories of stakeholders are identified including income and corporate taxpayers, salaried individuals; non-salaried cases, wholesale/retail traders, exporters, turnover Taxpayers, manufacturers, service providers and importers. Other stakeholders included CBR employees, employees of other government agencies with specific interests in CBR activities, courts and prosecutors and officials of the Ministry of Finance.

Coverage and Sample Selection: In view of the high cost and time involved in recording responses from the entire population of the identified stakeholders, selection of a representative sample is the preferred option. Careful selection of the sample will ensure the validity of the findings of any research.

Thus, a representative sample, both in terms of type of respondents and regional spread will be drawn. In certain cases 'biases' might have to be introduced in sample selection to capture marginalised groups, the report added.


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## Neo

KARACHI (June 04 2006): The movements in Special Convertible Rupee Accounts (SCRAs), an instrument used for portfolio investment in Pakistan, remained largely range-bound, oscillating between $350 million and $360 million during the period from April 19 ($359 million) to Mat 22 ($359 million).

On May 18, these were $352 million. On May 25, the balances in SCRAs crossed the $360 million mark for the first time during the last about 5 weeks to reach $365 million but the level retreated to $362 million the following day. These were still $358 million and $354 million on May 30 and 31, respectively, but suddenly dipped to $324 million, indicating a massive withdrawal of about $30 million in the first two days of June. The entire withdrawal occurred on June 1 as there was a net inflow of $0 14 million on June 2.

Further details showed that as on June 2, the single largest withdrawal of about $33 million took place in the case of investors from USA, reducing their cumulative net flow during the year up to June 2 to $253.7 million.

Compared to February 28, when the balances in USA accounts touched the record high at $364 million, the cumulative withdrawals so far have amounted to $111 million. A minor withdrawal also took place in the case of Singapore whose cumulative net flow stood at $2.3 million as on June 2. The contraction impact of these withdrawals was partially offset by inflows of $1 million from UK, $1.3 million from Switzerland and $0.5 million from Hong Kong between May 31 and June 2, raising their cumulative net flows during the year so far to $33.8 million, (-) $9 million and $28.2 million, respectively.

Relatively smaller inflows were also observed in the case of Liberia and UAE. Among other countries BV Island, Bahamas, Bahrain, France, Germany, Guernsey, Japan, Kuwait, Luxembourg, Netherlands, Oman, Philippines, Qatar, Sri Lanka and Saudi Arabia neither withdrew any amount nor brought in any fresh funds during June so far.

It may be of interest to note that by May-end, not only KSE 100 Index failed to maintain the 11,000 baffler but also failed to maintain the 10,000 points barrier, with the Index closing at 9,801 level on May 31, down 318 points from the previous day closing of 10,119. It was clearly a disappointing signal for SCRA holders.


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## Neo

KARACHI (June 04 2006): Pakistan rice export, for the first time in the country's history, has crossed $1.1 billion mark as over 2.8 million tonnes of rice has been exported to different countries up to June 3.

According to figures available here the formal export of Basmati rice, setting a new record, has reached to 802,511 metric tonnes during this period while the land rout trade of Basmati via Balochistan and Peshawar was 0.1 million tonnes. The formal and informal border trade of Irri-6 variety of rice has crossed 1.9 million metric tonnes up to June 03, 2006.

Haji Abdul Majeed, Chairman Rice Exporters Association of Pakistan (REAP) while talking to Business Recorder here on Saturday said that the value of both varieties exported up to June 03, 2006 was $1.100 billion.

He said that it is expected that the export of Basmati rice would reach 0.9 million and the total rice export would cross $1.2 billion target, set by the REAP, by the end of this month.

He said that due to a bumper crop, value addition and exploration of new markets for Pakistani rice by the rice exporters, the export of this commodity crossed the $1 billion mark this year.

He added that this is a tremendous achievement of the rice exporters who made it possible. The positive economic policies of the present government and hard work by the ministry of commerce and the commerce minister are some other reasons to increase the country's exports. He also lauded the co-operation of the Export Promotion Bureau and other concerned government departments for their co-operation with the exporters.

Pakistan's total rice export was recorded at $933 million during the last fiscal year of 2004-05. The total rice production was over 5.5 million tonnes in the country in the current crop season, out of which around 2.7 million tonnes was Irri-6 variety while the same quantity of Basmati variety of rice was produced in the country.


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## Neo

QUETTA (June 04 2006): Balochistan Chief Minister Jam Mohammad Yousaf on Saturday said that operational management at Gwadar port has been given to a UAE company, Dubai Port World. Talking to reporters in his chamber at the Balochistan Assembly session here, he said five border points have been opened with Iran to promote trade via Gwadar port.

He said the port would take time to start generating revenue and denied a statement by the provincial finance minister that the Balochistan government had sent a proposal to the federal government regarding fixation of a specific percentage in the revenue for the province.

Jam Yousaf said the province has to bear a loss of Rs 1.5 billion under the head of gas royalty due to sabotage activities by miscreants and damage to gas pipelines. He said efforts were being made to ensure security of the gas pipelines stretching over 100 miles.

Referring to boycott of the provincial assembly session by coalition partner, MMA, the chief minister said that most of the points on which the MMA has expressed its concern and reservations are related to the federal government. The MMA leadership are, however, engaged in talks in Islamabad with the government regarding their grievances, he added.

About MMA allegation of non-release of funds to its provincial legislators, Jam Yousuf said the position of funds was well-known and the provincial PSDP is in the hands of the MMA. "We have no grievances against our coalition partner. If the MMA has any, it should resolve it through negotiations", he said.

To a question about the issue of the Madressah Sanad, the chief minister said that talks between the MMA and the federal government were in progress in this connection. Jam Yousaf expressed his satisfaction at the present NFC Award and said that Balochistan would get considerable share in coming years.

He said the federal government has already allocated 35 percent of its PSDP to Balochistan, which is a unique precedent. "Balochistan will also get a considerable share from unemployment project, worked out by the federal government, would be implemented shortly in the country at a cost of Rs 20 billion," he said.

Jam Yousaf termed the waiving of Rs 5 billion loans of Balochistan growers and fishermen a great benefaction of the President, saying it would help the growers and fishermen a lot to improve their economic condition.

Referring to law and order situation in the province, the chief minister expressed his satisfaction and said that police and other law-enforcement agencies are performing their duties diligently.

He said police have recovered a big cache of arms and ammunition and also arrested an alleged sectarian killer from Quetta during the last two days, which shows their good performance.

"I have also directed the provincial Police chief to adopt effective measures to check kidnapping of children from the provincial capital and destroy the network of the elements involved in this heinous crime," he said, and added that a high-level meeting would also be called soon in this regard.

About the committee formed by the provincial assembly to play a role in resolving issues, Jam Yousaf said it could not make progress as elders of some parties refused to accept the committee.


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## Neo

ISLAMABAD (June 04 2006): As Pakistan's economy showed second-fastest growth in the world after China in 2005, the pace of privatisation has picked up from a jog to a sprint in the country under Prime Minister Shaukat Aziz, says an in-depth television and online feature in the BBC.

"The Prime Minister is the chief architect of privatisation and is widely respected among foreign investors," the report said. The report quoted Prime Minister Aziz as saying that well-run companies were being packaged and offered to investors from around the world.

"Pakistan has had the most broad-based structural reforms of any country in Asia. Last year, we were the second-fastest growing economy in the world after China. We grew at 6.4 percent," said the Prime Minister in the BBC feature, adding that he estimated privatisation would bring in more than dollars three billion in foreign investment this year, the highest in the country's history.

The BBC feature also focused on the latest company to be sold off to foreign bidders: Pakistan Steel, the country's only steel company which had been bought by a Russian-led consortium backed by a Saudi Arabia steel mill and a Pakistani brokerage company.

The report said Pakistan Steel achieved record production levels, sales and profits in 2005, after years of under-performing, sending steel prices soaring which, in turn, created more demand and led to higher prices, enabling the company to invest more and reduce debt, lowering interest payments to banks.

According to the report, the current Chairman of Pakistan Steel Lieutenant General Abdul Qayyum was credited with helping transform its fortunes during his two-and-a-half year tenure.


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## Neo

Sunday, June 04, 2006 

ISLAMABAD: The country is to miss the exports target of $17 billion by around $500 million at the end of outgoing fiscal year 2005-06, a commerce ministry official told the Daily Times on Saturday.

After the downward revised projections that were developed after taking into account all the factors, the exports are projected at $16.5 billion by June 30, the official added.

To meet the annual export target of $17 billion the country requires exports of $3.477 billion in the remaining two months of May and June with an average of $1.738 billion a month. 

The exports trend shows that the per month exports were $1.352 billion during July-April period of current fiscal year 2005-06 and the exports required to meet the annual target are $1.738 billion. 

This task is difficult and will lead to a shortfall in the countryÃ¢â¬â¢s exports by around $500 million by end of current fiscal year. 

Elaborating the factors that contributed in less exports in the last 10 months were less availability of export surpluses for exports due to a decrease in the industrial production. 

The local industries were unable even to meet the national requirements that also contributed to higher imports in the said period as compared with the last fiscal year when the share of local industries in exports was more in terms of quantity and earnings. 

Non-availability of workers at ports and industries due to continuous strikes after Nishter Park incident at Karachi and the impact of rising oil prices in the international markets resulted in increasing the cost of production in the country, the official said. 

The country has exported goods worth $13.523 billion during July-April period of current fiscal year as compared with the exports of $11.480 billion in the same period of last fiscal year. 

The exports in April 2006 stood at $1.450 billion against the exports of $1.297 billion in April 2005. 

The area of concern is that the exports made in April 2006 witnessed a decrease and these exports remained at $1.450 billion in April 2006 as compared with the exports of $1.521 billion in March 2006. 

The official said that the decrease in the exports against the annual target would contribute further to trade deficit of the country that stands at $9.427 billion in July-April period. 

The deficit is now to move ahead of the already projected figure of $12 billion and may touch $13 billion by end-June.


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## Neo

Sunday, June 04, 2006 

CBR to launch national perception survey

ISLAMABAD: The Central Board of Revenue will undertake a perception survey across the country to know to what degree it (CBR) has achieved its objectives, particularly those concerning taxpayers facilitation, change in attitudes and improving the overall fiscal environment. 

The survey is to be launched shortly in collaboration with Gallup, Pakistan. The CBR also wishes to have a feedback from the taxpayers and the general public at large on integrity of the employees of CBR. A brief description of this ambitions undertaking is presented below: 

The perception survey will seek views of stakeholders on each tax. Sample size and content will reflect the taxpayer profile of each tax and a decision will be made at the outset as to the frequency of data collection. 

Four categories of stakeholders are identified: Income and Corporate Taxpayers, Salaried Individuals, Non-Salaried Cases, Sales Tax, Federal Excise and Customs Duty Payers, Wholesalers and Retail Traders, Exporters, Turnover Taxpayers, Manufacturers, Service Providers, and Importers, Employees of CBR and its Field Offices, Employees of other Government Agencies with specific interest in CBR activities, Courts and Prosecutors, Officials of the Ministry of Finance.

Coverage and Sample Selection: In view of the excessive cost and time involvement in recording responses from the entire population of the identified stakeholders, selection of a representative sample is the preferred option. Careful selection of the sample will ensure the validity of the findings of any research. Thus a representative sample, both in terms of type of respondents and regional spread, will be drawn. In certain cases Ã¢â¬ÅbiasesÃ¢â¬Â might have to be introduced in sample selection to capture marginalized groups.

Conclusion: The CBR has learned the hard lesson that an inward looking policy has failed miserably. Rather than pursuing the hiding-behind-the-desk approach, a new approach of openness has been adopted where stakeholdersÃ¢â¬â¢ participation in decision-making takes the central position. This new policy of the CBR has significantly improved the image of the organization in the eyes of the taxpayers, the general public and CBR employees. The comprehensive nationwide survey will be another milestone towards a collaborative effort to design future strategies for the organization. The perception survey has been outsourced with the objective to get fair and free opinion of the stakeholders so that the reform initiatives are evaluated in a transparent manner. 

The CBR would be in a better position to take corrective action for any deficiencies that might be detected through the survey findings. Since the sincerity of the purpose is quite clear, the CBR has high expectations from the taxpayers, employees, general public and the opinion leaders to cooperate in this effort by providing candid and fair opinion about the organization and its operations.


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## Neo

KARACHI: Internet service providers and telecom operators are expecting a major cut in Internet bandwidth rates by the Pakistan Telecommunication Company Ltd next week in line with the regulatorÃ¢â¬â¢s directives to support broadband service proliferation.

A senior official said on Saturday the Pakistan Telecommunication Authority (PTA) had called a consultative meeting of all telecom operators on June 6, which was likely to end up with a major cut in bandwidth rates.

Ã¢â¬ÅThe meeting will review overall broadband services across the country,Ã¢â¬Â PTA Chairman Major General (Retd) Shahzada Alam Malik told a group of journalists on the sidelines of C-Future Telecom Exhibition.

Ã¢â¬ÅCurrently, these services are not meeting standards and June 6 talks will consider reasons including bandwidth prices, hindering the broadband growth.Ã¢â¬Â

He said the meeting was expected to suggest cut in bandwidth prices to the recently-privatised PTCL, but it was too early to give the size of such an incentive. However, the chairman said, the watchdog would definitely play its role in bringing bandwidth rates down.

Broadband technology entered the country a few years ago with a bang but later failed to thrive due to higher cost and poor service quality. DSL (digital subscriber line) based broadband is a modern technology that converts existing twisted pair of telephone lines into access path for high-speed communication of various sorts. By using the technology, regular telephone lines can be converted into a high-speed broadband digital link.

DSL is faster than both ISDN (integrated services digital network) and leased line, yet it is more cost-effective. With DSL, Internet connection is Ã¢â¬Ëalways onÃ¢â¬â¢, and the users have unlimited access to the Internet. The downloading speed can be ten times higher compared to regular downloading speed of an analogue modem. In addition, with one line users can be connected to both telephone and the Internet.

The government announced broadband Internet policy in 2004 but the services have not witnessed any growth as the operators claim bandwidth prices charged by the PTCL remain the main hurdle. 

The telecom giant is the only Internet backbone provider across the country.

Ã¢â¬ÅThe PTCL announced the price of $1,600 a month for two megabit bandwidth for the operators,Ã¢â¬Â said a broadband operator who was due to attend June 6 meeting. Ã¢â¬ÅSimilarly, for 34 megabit it has fixed $19,200 per month and for 155 megabit $60,000. We are expecting 50 per cent cut in these rates.Ã¢â¬Â

He said though the deregulation of telecom broke over five-decade monopoly of the PTCL, practically there was no such competitor to offer Internet bandwidth across the country, which allowed the company to regulate the industry as it wanted.

Ã¢â¬ÅThe only problem in the way of proliferation of broadband services is prices,Ã¢â¬Â he said. Ã¢â¬ÅIf the authorities really want to give a push to broadband services, they would have to bring the prices to lower level.Ã¢â¬Â

The PTA chief agreed with the claims to some extent, saying the telecom watchdog Ã¢â¬Åis there to create a level-playing field for industry players, which is the only way to increase Internet growth at affordable prices.Ã¢â¬Â

Ã¢â¬ÅFor that matter, we are playing our role to reduce bandwidth prices and June 6 meeting with the operators would make a comprehensive strategy to put the country among the best broadband services operators,Ã¢â¬Â said Malik.

He said the PTA had already conducted a detailed study to assess demand, potential and market dynamics of broadband Internet and wireless local loop services in the country and received a positive feedback.


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## Neo

KARACHI: Ishaq Khakwani, State Minister for IT and Telecom said on Saturday three IT Towers would be established in mega cities of the country in an attempt to facilitate the IT companies and accelerate the pace of growth of IT-enabled services.

Ã¢â¬ÅIT towers will facilitate the IT companies in the rapid growth of their business and IT-related products through which more job opportunities will be created in this sector,Ã¢â¬Â he told Telecom Excellence Awards ceremony.

He lauded the efforts of Pakistan Telecommunication Company and hoped new management of the company would also provide latest technologies to its customer in a much befitting manner.

Chairman Pakistan Telecommunication Authority Shahzada Alam Malik, speaking at the occasion said the telecom watchdog would introduce the MNP (Mobile Number Portability) by October this year and for this purpose initial work had been completed.

He said during 2004-05, foreign direct investment inflow of $494.4 million was registered in telecom sector, which was almost one third of the total FDI in the country during the period. Ã¢â¬ÅThis trend is continued and during July 2005 to February 2006, $398 million FDI inflows came in the telecom and by March 2006 this figure crossed the mark of $1 billion,Ã¢â¬Â he added.

Saalim Ali Al-Akbari, Senior Executive Vice President PTCL said Etisalat had taken over the control of PTCL and customer need was prime focus of the new management.

Ã¢â¬ÅWe believe the company with new management will usher into new era of telecom revolution,Ã¢â¬Â he said. Ã¢â¬ÅThe PTCL customers would continuously receive the flawless telecom services in Pakistan.Ã¢â¬Â


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## Neo

Sunday, June 04, 2006 

ISLAMABAD: President General Pervez Musharraf said on Saturday that high growth and friendly policies had made Pakistan an ideal destination for world entrepreneurs.

He said that the countryÃ¢â¬â¢s economic reality was far better than Ã¢â¬Ådistorted perceptionsÃ¢â¬Â. In a keynote address to OPEN Silicon ValleyÃ¢â¬â¢s annual business moot in California through videoconference, Musharraf said the country was shaping up through the construction of Gwadar Port. He said that a network of infrastructure was in place to serve as trade and energy corridor for the landlocked Central Asia, South Asia, the Gulf region and China. 

Ã¢â¬ÅPakistan today is in an altogether different league economically. It has been put firmly on path of high economic growth with its GDP having more than doubled to $135 billion and all macro-economic indicators including exports, revenue collection, foreign investment, forex reserves staying positive,Ã¢â¬Â he said. 

The president rejected negative travel advisories issued against Pakistan and added that these did not reflect prevailing ground realities. Ã¢â¬ÅI think we suffer from distorted perceptions but in reality we are much better as evident from the fact that none of the foreign companies doing business in Pakistan has ever been harmed due to policies or internal situation,Ã¢â¬Â he told a gathering of American and Pakistani entrepreneurs at the OPEN 2006 moot. 

Musharraf said the government was working hard to improve PakistanÃ¢â¬â¢s image. He urged Pakistani expatriates to contribute to these efforts through personal example and effective countering of misperceptions about the country. 

In the widely applauded address, the president referred to an international report that described information technology progress as PakistanÃ¢â¬â¢s best kept secret and said the country offered a host of opportunities in fast-developing sectors. Ã¢â¬ÅWe have put in place an elaborate IT infrastructure, connected cities and towns to the Internet and three submarine cables are to further enrich the IT scenario. On top of it, we have talented English speaking graduates, which are an asset for the country and international investors.Ã¢â¬Â

He said that Pakistan was setting up nine high-tech engineering and science and technology universities of international standard with the help of advanced countries that would produce professionals of high calibre to push industrial development on fast-track basis. 

The president also spoke about the National Vocational and Technical Education Commission and said it would set up an infrastructure for equipping the young people with skills commensurate with technical and industrial advancement. He said the government was working on the import of natural gas from Iran and Turkmenistan and electricity from Central Asia.


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## Neo

Islamabad: The US will extend financial and technical assistance to Pakistan to import electricity from Central Asia, a media report said Wednesday.

The visiting US under-secretary of state for economic, business and agricultural affairs, Josette Sheeran Shiner, said the US had decided to help Pakistan overcome its energy problems, the Dawn newspaper reported.

She said Pakistan and the US have launched a strategic dialogue to reinforce cooperation in the fields of trade and investment. 

A decision has been taken to extend maximum support to Pakistan for further improving its economy, meeting its energy requirements and creating more investment opportunities in Pakistan, the US official added.

Pakistan, which plans to produce at least 8,800 MW of electricity through nuclear energy, has already decided to intensify cooperation with China in peaceful uses of such energy especially after Washington refused to cooperate with Islamabad in the area. 

The US, which signed a nuclear deal with India early this year, has already refused to enter into similar arrangement with Pakistan. 

US President George W. Bush said during his visit to Pakistan last March that India and Pakistan were two different countries with different histories and requirements.

China helped Pakistan develop a 300 MW nuclear power plant, known as CHASHNUPP-1 at Chashma town, 280 km southwest of Islamabad. A second plant of comparable capacity is also being built at the site.

Shiner said special efforts were being made to develop links in energy, communications and transport sectors between Pakistan and the Central Asia.

"Some companies have also shown interest to invest in projects coming through Central Asia in Pakistan," she said. 

The US is spending $40 million to build a road between Tajikistan and Afghanistan, which she said would help Pakistan import energy from Central Asia.


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## Neo

Growth target missed due to shortfall in farm, LSM sectors: Economic Survey shows 14.1 percent rise in per capita income 

MUSHTAQ GHUMMAN 

ISLAMABAD (June 05 2006): Although Pakistan's economy grew at an average rate of almost 7.5 percent per annum during the past three years, it missed its 7 percent growth target set for the current fiscal year, growing only by 6.6 percent.

According to the 'Economic Survey 2005-06', released here on Sunday, two of the major components of GDP--agriculture and large-scale manufacturing (LSM)--remained below the target while other sectors, which included construction, industry, services, and investment performed, as per government expectation, above the estimates.

The country's per capita income also increased by 14.1 percent during the current year from $742 to $847 per annum. However, during the past four years, overall growth in per capita income registered at 13.9 percent per annum.

The sector-wise details are as follows;

GROWTH AND INVESTMENT: The real GDP grew by 6.6 percent in 2005-06 as against 8.6 percent of last year and fell short of the target of 7.0 percent. With economic growth at 6.6 percent in 2005-06, Pakistan's economy grew at an average rate of almost 7.0 percent per annum during the last four years, and over 7.5 percent in the last three years, thus enabling it to join the 'exclusive club' of the fastest growing economies of the Asian region, the government claims.

POVERTY AND UNEMPLOYMENT: The strong economic growth created employment opportunities and therefore reduced unemployment.

According to Labour Force Survey 2005 (First two quarters), since 2003-04 and until the first half of 2005-06, 5.82 million new jobs were created as against an average job creation of 1.0-1.2 million per annum. Consequently, unemployment rate, which stood at 8.3 percent in 2001-02, declined to 7.7 percent in 2003-04 and stood at 6.5 percent during July-December 2005. The rising pace of job creation is bound to increase the income levels of the people. The IT sector alone has created 114,737 new jobs in 2005-06.

The government spent Rs 1332 billion during the last five years on poverty-related and social sector program to cater to the needs of poor and vulnerable sections of the society.

The government is of the view that percentage of population living below the poverty line has fallen from 34.46 percent in 2000-01 to 23.9 percent in 2004-05, a decline of 10.6 percentage points. The percentage of population living below the poverty line in rural areas has declined from 39.26 percent to 28.10 percent while in urban areas it has declined from 22.69 percent 14.9 percent in this period.

AGRICULTURE: Agriculture and particularly its crop sector could not perform up to the expectations, especially major crops registered a negative growth of 3.6 percent. Livestock with 8.0 percent growth, a major component of agriculture, exhibited strong showing and pulled the overall growth in agriculture to 2.5 percent as against the target of 4.2 percent. Livestock has been the only saving grace sector as far as the performance of agriculture is concerned this year.

MANUFACTURING: Overall manufacturing, accounting for 18.2 percent of GDP, registered a robust growth of 8.6 percent against the target of 11.0 percent and last year's achievement of 12.6 percent.

LARGER SCALE MANUFACTURING (LSM): According to the survey, LSM grew weaker-than-the expected at 9.0 percent as against 15.6 percent of last year and 14.5 percent target for the year, exhibiting signs of moderation on account of higher capacity utilisation, on the one hand, and strong base effect along with several other factors, on the other hand.

CONSTRUCTION: Construction continued its strong showing, partly helped by activity in private housing market, spending on physical infrastructure, and reconstruction activities in earthquake affected areas. The construction sector is estimated to grow by 9.2 percent in 2005-06 as against extraordinary growth of 18.6 percent last year.

PER CAPITA INCOME: Pakistan's per capita real GDP has risen at a faster pace during the last three years (5.6 percent per annum on average in rupee terms) leading to a rise in average income of the people. Such increases in real per capita income have led to a sharp increase in consumer spending during the last three years. Per capita income, defined as Gross National Product at market price in dollar term divided by the country's population, grew by an average rate of 13.9 percent per annum during the last four years - rising from $579 in 2002-03 to $847 in 2005-06. Per capita income in dollar term registered an increase of 14.1 percent in 2005-06 over last year, rising from $742 to $847.

PRIVATE CONSUMPTION EXPENDITURE: The survey further shows that as opposed to an average annual increase of 1.4 percent during 2000-03, real private consumption expenditure grew by 13.1 percent in 2004-05 and further by 8.1 percent in 2005-06.

INVESTMENT: During the fiscal year 2005-06, gross fixed capital formation or domestic fixed investment grew by 30.7 percent as against a rise of 28.6 percent last year.

The survey says that the private sector investment grew by 31.6 percent this year as against last year's growth of 29.1 percent. Public sector investment on the other hand registered massive growth of 46.7 percent as against a 32.9 percent increase last year.

Total investment increased from 18.1 percent of GDP last year to 20.0 percent of GDP in 2005-06 - highest in the last 12 years. Fixed investment as percentage of GDP is estimated at 18.4 percent as against 16.5 percent last year. Both public sector investment and private sector investment as percentage of GDP have increased to 4.8 percent and 13.6 percent, respectively, up from 4.4 percent and 12.1 percent of last year.

Almost 2.0 percentage points jump in investment is consistent with the rise in credit to private sector this year. This also reflects the confidence of the private sector on the improving macroeconomic conditions in the country.

MONETARY POLICY: Large expansion of private sector credit was Rs 345 billion in 10 months of the current fiscal year and the extremely buoyant attitude of the private sector can be viewed from the fact that the cumulative borrowing by this sector during the last three years amounted to over Rs 1100 billion as against the cumulative borrowing by this of Rs 921 billion in the previous 19 years (1984-2003). More importantly, credit to private sector as percentage of GDP surged from almost 20 percent in 1999-2000 to over 26 percent in 2005-06 - almost 6 percentage points increase in the last six years.

INFLATION: Inflation during the first ten months (July-April) of the current fiscal year was estimated at 8.0 percent as against 9.3 percent in the same period last year. Food inflation was estimated at 7.0 percent as against 12.8 percent in the same period last year whereas non-food inflation, at 8.8 percent, was on higher side compared with 6.9 percent in the same period of last year.

The core inflation, which excludes food and energy costs from the headline CPI, moved up and was estimated at 7.7 percent as against 7.0 percent in the same period last year.

House rent index also played an important role in building inflationary pressure this year. With second largest weight in the CPI (23.4 percent) after food (40.3percent), the house rent component of the CPI registered a decline to 10.3 percent as against 11.1 percent in the same period last year.

When viewed in the context of year-on-year performance of inflation, the current fiscal year exhibits significant abatement of price pressure and declaration in overall inflation as well as its sub-indices. The current fiscal year started with an inflation rate of 9.0 percent in July 2005, but continued to decelerate, reaching 23-month low at 6.2 percent in April 2006. Food inflation was close to 9.7 percent at the beginning of the current fiscal year but decelerated sharply to 3.6 percent in April 2006-the lowest in the last 31 months.

In order to keep the prices of essential commodities under control, the government has been taking various measures throughout the year. These measures included a liberal import regime for food items including zero rating of the imports of these commodities.


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## Neo

FISCAL POLICY: The overall fiscal deficit, that averaged nearly 7.0 percent of the GDP in the 1990s, had reduced to 2.3 percent in 2003-04 but increased to 3.4 percent in 2005-06 as against the target of 3.8 percent of GDP, mainly on account of better than expected revenue performance. The fiscal deficit, including earthquake spending, is estimated at 4.2 percent of GDP in the current fiscal year.

The Central Board of Revenue (CBR) is targeted to collect Rs 690 billion but it is likely to collect Rs710 billion - Rs 20 billion more than the target and 20.6 percent more than last year.

Public Debt Burden: Public debt burden continued to decline rather sharply over the last six years with significant improvement in fiscal situation.

The public debt-to-GDP ratio, which stood at 85 percent in 1999-2000, has declined sharply to 54.7 percent in 2005-06 - almost 30 percentage points reduction in debt burden in just six years is one of the significant achievements of the government.

The public debt as percentage of GDP declined from 61.4 percent to 54.7 percent - a 6.7 percentage decline in one year is other stellar occurrences of the current year.

Since public debt is a charge on the budget, its burden must be viewed in relation to government revenue. Public debt was 448.9 percent of total revenue last year but declined to 414.9 percent this year - a decline of 34 percentage points is not a mean achievement.

The 'Survey' says that exports were targeted to grow by 18.1 percent in 2005-06 - rising from $14.4 billion last year to $17.0 billion this year.

During the first nine months of the current fiscal year exports were up by 18.6 percent, rising to $12.1 billion from $10.2 billion in the same period last year. Given the performance of the first nine months, exports are likely to touch $17 billion mark by the end of this fiscal year.

The imports were targeted to grow by 26.0 percent in the current fiscal year - rising from $14.4 billion to $20.7 billion. During the first nine months were up by 43.2 percent in the first nine months of the current fiscal year - rising from $14.4 billion to $20.7 billion, showing an increase of almost $6.0 billion this year.

Major contributions to this year's additional import bill have come from machinery, chemical and petroleum groups. Over one-half of the increases have come from machinery and petroleum group and over 22.3 percent has come from petroleum group.

In particular, import of machinery, raw material and consumer durable groups are up by 30.8 percent, 36.1 percent and 41.8 percent, respectively as domestic investment has come back to life owing to stronger domestic and external demand.

TRADE BALANCE: During the first nine months of current fiscal, trade deficit amounted to $8620.3 million and was up sharply from $4263.3 million in the same period last year (During the first ten months (July-April) of the current fiscal year, trade deficit stood at $9427.1 million as against $4868.0 million in the same period last year). the major contribution to trade deficit came from petroleum group (41.5 percent), machinery group (21.5 percent), iron and steel scrap (11.9 percent) and consumer durables (9.2 percent).

WORKERS REMITTANCES: The government had fixed $4 billion target for workers remittances but total $3.63 billion has been received during the first ten months (July - April) of the current fiscal year, as against $3.4 billion in the same period last year, showing an increase of 5.2 percent. However, the prevalent trend shows that remittances may touch $4.4 billion by the end of the fiscal year.

CURRENT ACCOUNT BALANCE: The current account deficit, excluding official transfers, stood at $4696 million (3.7 percent of GDP) during July-March, 2005-06 as against a deficit of $1181 million in the same period last year.

FFOREIGN DIRECT INVESTMENT: Pakistan has succeeded in attracting $3020.2 million in FDI during July-April, 2005-06 -the highest ever in the country's history, as against $891.5 million in the same period last year, showing an increase of 238.7 percent. By the end of the current fiscal year, FDI is expected to reach $3.5 billion mark, or close to 3.0 percent of GDP.

Over 90 percent of FDI has come to power sector, telecom sector, chemicals, pharmaceutical and fertiliser, oil and gas, and banking and finance. Almost 75 percent of FDI has come from USA, UK, Switzerland, Japan, UAE and Netherlands.

EXTERNAL DEBT: The 'Survey' says that a few years ago, Pakistan was facing serious difficulties in meeting its external debt obligations. Following a credible strategy of debt reduction, Pakistan has succeeded in reducing the rising trend in external debt and foreign exchange liabilities.

Pakistan's external debt and liabilities have declined by $2.3 billion - down from $38.9 billion by end June 1999 to $36.6 billion by end-March, 2006.

The country's debt burden, defined as a ratio of external debt and liabilities to GDP, stood at around 52 percent in end-June 2000, declined to 32.3 percent in end-June 2005 and further to 28.3 percent by end-March 2006.

The country's debt burden, also defined as 'external debt and liabilities as percentage of foreign exchange earnings', was 297 percent in 1999-2000, declined to 134.3 percent in 2004-05 and further to 127.6 percent by end-March 2006.

It may also be pointed out that Pakistan's external debt and liabilities were 22 times of its foreign exchange reserves in 1998-99 but declined sharply to 2.9 times in just six years. These statistics suggest that Pakistan's external debt burden has declined at a much faster pace than anticipated and that it is now on a solid downward footing.

On March 23, 2006, Pakistan successfully issued $500 million new 10-year Eurobond and US $300 million new 30-year Bonds in the international debt capital markets lead managed by J. P Morgan, Citi Group and Deutsche Bank. This transaction, which represented the first international 144A bond issued by Pakistan since 1999, raised significant interest amongst US QIBs and international Institutional investors.

The 10-year notes were priced with a coupon of 7.125 percent to yield 7.125 percent, framing a spread of 240 bps over the relevant 10-year US Treasury benchmark. The 30-year bonds were priced with a coupon of 7.875 percent to yield 7.875 percent, framing a spread of 302 bps over the relevant 30-year US Treasury benchmark.

Pakistan was able to achieve spreads on both the new 10- and 30-year bonds that were tighter than its previous 5-year issues. By issuing 10- and 30-year bonds, Pakistan completed its primary objective of establishing a full Pakistani international yield curve in record time.

http://www.brecorder.com/index.php?...&term=&supDate=


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## Neo

KARACHI (June 05 2006): The country's textile and its made-ups have failed to actualise its exports target of 32 percent market share in the post-quota regime and had hardly bagged 21 percent, depicting a decline of 11 percent, industry sources said.

The official statistics show that albeit the country's exports had increased in terms of its worth, the number of dispatched units or items had shrunk due to the increased input costs during the last one year and less access in the world's markets, mainly in the European region.

The statistics up to April (10 months of FY06) show that the country's aggregate exports stood at $13.52 billion as against $11.48 billion, illustrating a surge of $2.04 billion or around 18 percent.

Similarly, the textile exports from country during the 10 months were recorded at $8.022 billion as compared to $6.747 billion during the same corresponding period of last year, an increase of 19 percent.

This figure of $8.022 billion should have been $8.163 billion, because the current figure shows 19 percent increase in exports, but also explain that the rise in exports figures is basically high cost of doing business, which has interestingly increased to 19 percent as well, a textile miller commented.

Citing the example of a cotton bale, an exporter said that the industry last year had procured cotton at an average rate of Rs 1900 per maund, which has now increased to Rs 2300 per maund, showing Rs 400 per maund or 19 percent rise.

The rising costs are passed on to the foreign buyers, he said, adding that this practice had made the domestic industry price incompetitive in the international front.

Kingpins of textile industry said that Bangladesh and China had explored a number of avenues in the world market as both are price-competitive and are following aggressive international marketing strategy for promotion of their textile goods.

"India has set up Textile Upgradation Fund (TUFS) with Rs 370 billion to boost its exports," said an office-bearer of All Pakistan Textile Mills Association (Aptma), adding that the Indian government also intends to inject Rs 1400 billion by 2010 into the TUFS to compete with its regional and emerging giants in the markets of Europe and United States.

He pointed out that during a few years Bangladesh has installed 5 million spindles as compared to Pakistan which now has 10 million spindles.

Source termed the situation as 'alarming' for the country's exports as they expressed fear that the country could also not succeeded in exploring new avenues and markets in the next fiscal year FY07.

The country at present possesses 3 percent of total international textile trade of $300 billion. However, the gurus of textile industry believe that the country would face complexities and hardships in getting the $32 billion trade share by 2014.

"Our capacity utilisation stands at 50 percent, which must be 100 percent besides setting up of new units," another Aptma member said, adding that if the government wished to get boost to exports and bring it to $32 billion by 2014, it must give level playing field to the investors besides luring $2 billion fresh investments every year into the textile sector.

When asked to explain the rising cost of doing business in the country, a kin-pin of the textile industry remarked, "Other than gas, power, raw material, machinery and its spare parts, there are some hidden costs as well which are not yet recognised, like social security, EOBI, Export Development Fund (EDF), workers participation fund at the rate of 5 percent of the profits and workers welfare fund at the rate of 2 percent of taxable income."

"The taxes alone work out to 43 percent, against the misconception of 35 percent."

The country's textile industry employs 38 percent of the workforce and contributes 11 percent towards GDP. It is not only paying a number of taxes and hidden costs, but is facing an acute shortage of skilled workers, human resource and infrastructure further intensifies the situation.

Aptma, while drawing attention of the government towards emerging regional giants including India, Bangladesh, Sri Lanka and China, sought help from the government to cut rising input costs and taxes besides allocation of huge funds for the upgradation and modernisation of the industry so that a colossal growth be witnessed in the exports in the coming years.


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## Neo

KARACHI (June 05 2006): Foreign Direct Investment (FDI) in the first ten months (July-April) of the current fiscal year has reached $3.02 billion - the highest ever in the country's history, as against $0.89 billion in the same period last year, thus, registering an increase of 238.7 percent.

According to Economic Survey 2005-06 FDI is expected to reach $3.5 billion or 2.7 percent of GDP by the end of the current fiscal year.

FDI has become an important source of private external finance for developing countries. It is different from other major types of external private capital flows in that it is motivated largely by the investors' long-term prospects for making profits in production activities in the host countries.

Almost 75.0 percent of FDI have come from six countries, namely, the UAE, US, Saudi Arabia, Switzerland, UK and the Netherlands. The UAE with 42.5 percent ($1284.6 million) has topped the list of foreign investors followed by the US (13.9% or $419.1 million), Saudi Arabia (9.06% or $273.7 million), Switzerland (5.34% or $161.5 million), UK (5.0% or $151.4 million) and the Netherlands (2.9% or $87.1 million).

Telecom, energy (oil, gas and power), financial services, trade, construction, chemicals, food and personal services have been the major recipient of FDI, accounting for almost 94 percent or $2.082 billion. Telecom sector has been the single largest recipient of FDI with $1.0 billion followed by the energy sector ($304 million), financial services ($265.5 million), trade ($81.9 million), construction ($54.4 million), food ($52.7 million), personal services ($45.2 million) and cement ($33.6 million).


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## Neo

ISLAMABAD (June 05 2006): Inflation, which impacts the poor disproportionately, has come down by 1.3 percentage points to 8 percent during ten months (July-April) of the current fiscal year , the government said on Sunday.

According to the Economic Survey 2005-06, released here at a news conference, the inflation, as measured by Consumer Price Index (CPI), averaged 8 percent during 2005-06 (July-April), against 9.3 percent in the corresponding period of 2004-05.

On current trends, and barring any adverse shocks, it says that the government is expecting that inflation would be within the target of 8.0 percent set by the government for full year.

During the period under review, food inflation was estimated at 7.0 percent as against 12.8 percent in the same period last year. Non-food inflation at 8.8 percent was on higher side compared with 6.9 percent in the same period last year. The core inflation, which excludes food and energy costs from the headline CPI, moved up and estimated at 7.7 percent as against 7.0 percent in the same period last year.

House rent index also played an important role in building inflationary pressure this year. With second largest weight in the CPI (23.4 percent) after food (40.3 percent), the house rent component of the CPI registered a marginal decline to 10.3 percent as against 11.1 percent in the same period last year.

The survey says that in terms of generating inflation, the phenomenal rise in aggregate demand in the economy, on the one hand, was compounded by supply shocks, on the other. Besides, it says that the eight per cent inflation is also due to various internal and external factors.

The adverse external developments, which impacted the price levels for the fiscal year under review included a continuation of the surge in international oil price to an all-time record of nearly US $75 per barrel in April this year, before pulling back somewhat, coupled with an unprecedented rise in world prices of commodities due to demand from fast-growing economies such as China and India.

Besides, decline in the size of sugarcane crop resulting in relatively less production of sugar within the country as well as significant rise in international prices of sugar owing to diversion of large portion of sugarcane into ethanol (a petroleum substitute) by the world's largest producer, Brazil, also impacted price development


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## Neo

ISLAMABAD (June 05 2006): Adviser to the Prime Minister on Finance Dr Salman Shah on Sunday unveiled a plan to expand capital market, besides strengthening the banking system in the next fiscal year.

The plan included issuing of the new mutual funds, TFCs and bonds in the next fiscal year and continuing the reforms programme for the banking sector enabling it to take up the enhanced role to facilitate the capital market.

Salman Shah was responding to a questioner while releasing Economic Survey 2005-06 here.

The adviser said in the past weak banking system provided an opportunity to the influential and political elite to plunder billions of rupees of public money and the same unhealthy practice would have continued if the government had not reformed entire banking system to help it function independently.

He said the banks were operating under a strict monetary regulation system, which does not allow them cartelisation. The reforms in banking sector helped it come out of gray area and now the banks were performing very well in the private as well as the public sector, he added.

Salman Shah said that in the past influential and political elite made the entire banking system vulnerable to risks. He said a very big portion of the bank loans was turning into bad debt every year as long as they were being run by the public sector and added that the policy of handing over the banking business to the private sector did a marvellous job in their proper functioning and reduced the percentage of bad debt.

He said that our privatisation programme is the best in the world and hiring of reputed international financial adviser was indicative of its credibility. He said the Supreme Court''s review of Pakistan Steel Mills sell-off case would vindicate the Privatisation Commission''s decision.

Regarding debt retirement and the current debt level, Salman Shah said the government was strictly following Fiscal Discipline Law and maintaining debt level to a restricted level. He said Pakistan''s total debt in term of Pak rupee was Rs 4217 billion.

The adviser denied that any change has been done in the methodology to assess poverty and that the figures quoted by the official document were fudged. He added that the international donors and experts have certified the poverty figures and reduction in its percentage.


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## Neo

Economic Survey 2005-06: overview of the economy 

Read the link: http://www.brecorder.com/index.php?...&term=&supDate=


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## Neo

ISLAMABAD (June 05 2006): High international commodity prices have inflated Pakistan's imports by over 2.3 billion dollars, including 1.915 billion dollars for oil import alone, during the outgoing fiscal 2005-06.

Economic Survey 2005-06 released here on Sunday says that during the first nine months (July-March) 2005-06, the country had to bear additional cost of 1.915 billion dollars against corresponding period of the last fiscal year owing to high international oil prices.

During the first three quarters of the current fiscal year, the consumption of petroleum products in households, agriculture, transport and power sectors, exhibited sharp decline to the extent of 35.3 percent, 47.4 percent, 8 percent and 16.8 percent, respectively, the survey said.


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## Neo

KARACHI (June 05 2006): Airblue is set to induct 4 new aircraft and will be the first Pakistani private airline to operate long haul flights to United Kingdom in its third year of operations, said Shahid Khaqan Abbasi, Chief Operating Officer Airblue, in Lahore on Sunday.

He was addressing 40 corporate managers from Airblue's domestic and international network attending the airlines second Management Conference, "Blue-II Expanding Horizons" concluded here.

Abbasi emphasised that continued expansion was essential for the airline to continue surviving in the prevailing environment.

He said Airblue would be acquiring two Airbus A330s for UK operation, which are scheduled to be launched in December 2006.

Airblue will also be acquiring two Airbus A321s to further consolidate its domestic and regional schedule, he said, adding that in its third year of operation the airline would have a fleet of nine next-generation jet aircraft operating on a network of nearly one dozen destinations.

He pointed out that Airblue would be introducing a turbo prop operation on the socio-economic routes starting with a daily flight to Gwadar.


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## Neo

ISLAMABAD (June 05 2006): Despite two percent increase of energy supply, the electricity generation showed only a marginal increase of 0.3 percent, while the number of consumers increased to 15.6 million from 14.9 million, says Economic Survey 2005-06.

The survey, which covers the first nine months of the outgoing fiscal year, further said the oil production also showed a decrease of 1.23 percent, while gas showed 4.4 percent production growth.

In the first three quarters of the outgoing fiscal year, the consumption of petroleum products in household, agriculture, transport and the power sector showed a declining trend, while energy supply registered an increase of two percent.

The Economic Survey data also said the decline in the use of petroleum products in households, agriculture, transport and power sectors, was due mainly to the availability of alternative and relatively cheaper fuels, low demand of LDO in agriculture and lastly, the massive increase of CNG and natural gas in transport and power sectors.

The consumption of gas in cement industry increased by 25 percent, while the power sector consumption grew by 9.9 percent followed by the fertiliser industry (8.0 percent), industrial sector (7.9 percent) and household sector (0.7 percent), it said, adding that a substantial increase in the consumption of electricity has also been witnessed during the first nine months of the current fiscal year.

The energy supplies increased to 42.449 million TOE from 41.617 million TOE, which is an increase of two percent, mainly due to appropriate and timely measures taken by the government to provide an investment-friendly environment for the energy sector to attract more local and foreign investors, the survey said.

The average crude oil production during July-March 2005-06 was 65,385 barrels per day as against 66,199 barrels per day during the corresponding period last year, showing a decrease of 1.23 percent and is due mainly to lower production by 10 percent from southern region oil fields.

The average production of natural gas during July-March 2005-06 was 3,826 million cubic feet per day (mmcfd) as against 3,663 mmcfd during the corresponding period last year, showing an increase of 4.4 percent.

The total installed capacity of electricity generation increased to 19,439 MW in 2005-06 from 19,389 MW last year, showing a marginal increase of 0.3 percent.

The number of electricity consumers has increased over the years due to rapid extension of electric supply to villages and fast urbanisation. The number of consumers has increased to 15.6 million, up to March 2006, from 14.9 million in 2004-05, showing an increase of 5 percent over the last year and a growth of 64 percent since 1995-96.

The NTDC and Discos have reduced power losses thus increasing the revenue by adopting measures such as renovation, rehabilitation, capacitor installation and strengthening consumer-end distribution supply network. It decreased the power losses from 24.2 to 22.8 percent during the first nine months.

The government has approved the recommendations under the Energy Security Action Plan, which include development of wind and solar energy to ensure that at least five percent of total power generation capacity is met through these resources by 2030 ie (9700 MW), it said.

The Alternative Energy Development Board to ensure the installation of 100 MW wind power by June 2006 at Keti Bandar and Gharo in Sindh and 700 MW by 2010, the survey added.

Due to the import of high cost energy resources, the government will enhance the share of coal in the overall energy mix from 5 percent to 18 percent up to 2018.

The Energy Security Action Plan has also set a target of generating about 20,000 MW power from coal by 2030 and 50 percent by 2050, the Economic Survey added.


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## Neo

KARACHI (June 05 2006): Pakistan is ironically dependent on the import of crude oil to meet the demand gap, as the country was meeting only 18 percent of its oil needs from indigenous production and it had to import the remaining 82 percent and pay international prices.

The crude oil and petroleum products import for the year 2004-05 amounted to about 8.3 million tonnes and 5.7 million tonnes, respectively with actual amount of payments worth $2,606 million and $1,998 million, respectively. The total annual oil import bill stood at $4,604 million during 2004-05.

According to Economic Survey 2005-06, the production levels may still be insufficient, our country is undoubtedly thriving with potential.

Pakistan has an interesting geo-dynamic history of large and prospective basin (onshore and offshore) with sedimentary area of 827,268 square kilometres.

So far about 844 million barrels of crude oil reserves have been discovered, of which 535 million barrels have already been produced.

Prognostic potential of total endowment of hydrocarbons has been estimated as 27 billion barrels of oil and 282 trillion cubic feet of gas in Pakistan.

Until recently, over 620 exploratory wells have been drilled by various national and international exploration and production companies, resulting in over 177 oil and gas discoveries.

In addition, indigenous production of crude oil during the year 2004-05 was 66,095 barrels per day. Similarly, 50 percent of the indigenous gas contributed a substantial portion of the energy requirements of the country.

Considering this, the government is making great efforts to attract local and foreign investors.

As a result of these financial and structural reforms, the energy sector has already become one of the most attractive sectors in the country.

Recently, the government had signed a number of agreements worth $42 million, with various international companies to carry out exploration activities in the oil and gas sector.

It is expected that the energy supply position will be better after the implementation of plans for pipeline projects from Iran and the Central Asian countries.

Similar pipelines are also being negotiated with Qatar and Turkmenistan. These energy development projects in the country would help battle future energy shortage in the country and pave the way for enhanced economic activities, reduction of poverty and bring Pakistan's backward areas at par with the developed areas.

As for energy in Pakistan, power, gas, petroleum and coal are the main components of this sector.

During 2004-05, the primary commercial energy supplies increased by 9.2 percent to 55.5 million tonnes of oil equivalent (MTOE), as compared to 50.8 (MTOE), in 2003-04. The major increases derived from natural gas (2.7 MTOE) oil (1.2 MTOE) and coal (0.9 MTOE).

In comparison to the previous year, the supplies from nuclear and LPG have also illustrated a slight increase, while those from hydel have decreased.

The share of natural gas in primary energy supplies, during 2004-05, has also reached up to 50.4 percent, followed by oil (29.4 percent), hydro electricity (11.0 percent), coal (7.6 percent), nuclear electricity (1.2 percent) and lastly, LPG (0.4 percent). The drilling activity, particularly exploratory drilling has slowed down during the last two years ie 2004-05 and 2003-04; only 19 exploratory wells were drilled during 2004-05 as compared to 29 during 2003-04 and 32 during 2002-03. The number of development wells drilled during 2004-05 was 28 as against 24 during 2003-04 and 45 during 2002-03.

Oil and gas production showed positive growth during 2004-05 and the oil production increased by seven percent from 61,774 barrels per day, in 2003-04, to 66,095 barrels per day in 2004-05.

At the same time, the natural gas production increased by 11.8 percent from 3,295 to 3,685 million cubic feet per day (MCFD) during the same period.

As far as consumption is concern, during the period of last 10 years (1995-96 to 2004-05), the consumption of petroleum products has increased by an average rate of 0.9 percent per annum. The consumption of gas, electricity and coal have also increased at an average rate of 7.9 percent, 4.6 percent and 9.1 percent per annum, respectively.

It is important to note that a structural shift is taking place in energy consumption in Pakistan, since 2000-01. While consumption of petroleum products is declining except in 2004-05, the consumption of other components of energy is rising. The average consumption of petroleum products has in fact, registered a decline of 3.3 percent per annum since 2000-01.


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## Neo

KARACHI (June 05 2006): The government has decided to enhance the share of coal in the overall energy mix from five percent to 18 percent up to 2018, due to the import of high cost energy resources. The coalfield in the Sindh province has huge coal resources of about 175 billion tonnes.

According to Economic Survey 2005-06, in view of the anticipated shortfall of electricity and other energy resources during the next 10 years, the maximum utilisation of coal would be required in power generation and gasification.

The Approved Energy Security Action Plan has set a target of generating about 20,000 Megawatt (MW) of power from coal by 2030 and 50 percent by 2050.

As a result of the government endeavours, about 80 percent of the cement industry have now switched over to indigenous coal from furnace oil that has saved considerable foreign exchange being spent on the import of furnace oil.

The conversion of the whole cement industry to coal would generate demand for 2.5 million tonnes of coal per annum.

To ascertain commercial viability of mining coal from Thar, the German consultant Rheinbraun Engineering has completed a mining feasibility on a specific block in Thar coalfield.

The same block has been assigned to a firm from the United States for commissioning of integrated coal mining and 1000-MW power generation project.

The government has also decided to establish a coal mining and power generation company on the pattern of WAPDA for harnessing the Thar coal resource.

As a part of the promotional activities to increase the share of coal, the Government of Sindh has leased out a coal block to Fatteh Group of Hyderabad to commission a coal-based power plant of 250-MW.

In addition, the government has also allowed a Chinese company namely, China National Chemical Engineering Group Corporation (CNCEC) to conduct a feasibility study on a coal block in Sonda Jherrick coalfields in the Sindh province for an integrated mining project of one million tonnes and commission a 250-MW coal based power plant.

In pursuit of a Presidential directive, the Sui Northern Gas Pipeline Limited (SNGPL) is in the process of preparing pre-feasibility for the commissioning of town gas plant at Bakar (Punjab), by utilising Makarwal coal.

The total national coal production from operational coal-mines during 2004-05 remained around 4.60 millions and about 80 percent of it was consumed by the brick kiln industry.


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## Neo

Inaugurating the Ã¢â¬Ëmarble cityÃ¢â¬â¢ at Gaddani in Balochistan, the President General Pervez Musharraf assured the manufacturers that the government would serve as a facilitator to promote the marble industry and its mining will be undertaken by utilizing the latest technologies to avoid wastages.

About 300 units have been planned for the marble city on some 600 acres of land. Four units are currently in production at the facility and investment has been made by expatriate Pakistanis from USA, Japan, Spain and the UAE. The President also assured some other measures to help the marble industry.

The industry has failed to benefit from the marble boom. Disorganized and mismanaged and possessing poor technology, the industry has been shy of sizeable investment.

Pakistan is currently mining 40 types of natural colour marble and also dying the marble in various colours which is processed by 150 different units. Only now utilization of modern machines has started to produce qualitative products in bigger quantities.

The efficiency of marble processing industry depends on the quarry products. Development of the skills of the local quarry masters can improve the quality and raise productivity to meet international standards and demand. Private sector can be encouraged to establish a large number of marble enterprises in Balochistan, which would carry out the quarrying, processing and trading of marble products.

The use of out-dated technology in the mining results in some 70 per cent of wastage, as the explosives are used for the purpose. Obsolete methods are still in practice and a lot of breakage occurs.

The government needs to develop processing centres with automatic tiling plants in the Gaddani marble city and the president has assured that the equipment would be imported for the purpose.

Marble is largely used in construction and handicrafts sectors. Amongst the building stones, marble occupies a unique position. Marble slabs and handicrafts have great demand in national and international market. The ministry of industries and production has set a marble export target of $500 million.

Marble is an export-oriented sector. There is a big demand for this mineral in the Middle East, Far East and European countries, where almost 50 per cent of the worldÃ¢â¬â¢s marble output is consumed. Pakistan earned $15.8 million foreign exchange with the export of marble in FY 2001-02.

The 40 per cent export was in the shape of handicraft, while the rest of 60 per cent in slabs and bricks form. Marble is exported to the USA, Dubai, Korea and Bangladesh while Europe is considered a potential market. What is needed is the tapping of the world markets and improving quality, value addition and bringing down the extraction losses.

Marble in commercial quantities is found at a number of places including Lasbela, Khuzdar and Chaghi districts. Commercial marble is defined as Ã¢â¬Åany crystalline rock capable of taking a polish and suitable for decorative and structural purposesÃ¢â¬Â.

Marble in Chaghi district is of onyx variety and is being mined since 1950Ã¢â¬â¢s. The term Ã¢â¬ËonyxÃ¢â¬â¢ signifies a banded variety of quartz, highly prized as an ornamental stone.

The onyx is largely used for beads, brooches, ring-stones and other small ornamental objects, while the larger pieces are occasionally wrought in the form of cups, howls, vases etc. Onyx is the favourite stone for cameo work because its layers can be cut to show a colour contrast between the design and the background.

For its vast applications and uses, onyx marble is in great demand in the international market. The onyx marble from Chaghi can meet the international standards and demands if it is processed efficiently.

A marble policy should envisage the sanction of mining leases to private firms in Balochistan. Prospecting license may also be granted to firms for unexplored areas and the local private sector should be extended incentives for making investment in the marble sector. The marble city is a step in the right direction.


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## Neo

Dubai: DP World, the world's third largest container port operator and a unit of holding company Dubai World, said on Sunday it was discussing with the Pakistani government the terms of reference for taking over the strategic Arabian Sea port of Gwadar.

"We have been confirmed as the preferred bidder by the Gwadar Port Implementation Authority. We are currently in discussions to finalise the terms of reference for the concession," a company spokesperson told Gulf News.

A Pakistani official earlier said that operational management at the deep-sea port, built with Chin-ese assistance and located about 120 kilometres from the Iranian border, has been given to the Dubai firm.

Balochistan Chief Minister Jam Mohammad Yousaf on Saturday also said five border points have been opened with Iran to promote trade via Gwadar port, according to an agency report.

DP World emerged as the favourite for operating Gwadar after the world's number one port management firm Hutchison Port Holdings of Hong Kong withdrew a bid for the facility.


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## Neo

Monday, June 05, 2006 

ISLAMABAD: Over three million people in the labour force were unemployed in the first six months (July to December 2005) of fiscal 2005-06 and the unemployment during this period was 6.50 percent, according to the Economic Survey 2005-06 released on Sunday. 

Agriculture employment increased from 43 percent in fiscal year 2003-04 to almost 45 percent in the first six months of 2005-06. In Pakistan, labour force participation is estimated on the basis of Crude Activity Rate (CAR) and Refined Activity Rate (RAR). CAR and RAR were 32.8pc and 46.9pc respectively during the first half of 2005-06, up from 30.4 percent and 43.7 percent in the same period in 2003-04. The survey said 5.82 million jobs were created from 2003-04 to December 2005, 4.4 million in rural areas.

The employed labour force shows an increase in womenÃ¢â¬â¢s number in most sectors. The increase in rural female employment was mainly in the category of unpaid family helpers. The largest increase in female employment was in agriculture and allied industries, supporting the view that employment gains are concentrated in female unpaid workers.


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## Neo

ISLAMABAD (updated on: June 06, 2006, 04:19 PST): The government will inject Rs 105 billion in the form of subsidy into different sectors of the economy for providing some relief to the common man in the next fiscal year.

According to official figures released here on Monday, the government will provide Rs 55 billion subsidy to power sector, Rs 10 billion to fuel sector, Rs 12 billion to food sector, Rs 13 billion to fertiliser, Rs 10 billion for pay/pension relief and Rs 5 billion for safety net (Bait-ul-Maal).

PETROLEUM: The government will provide Rs 10 billion subsidy in the form of Petroleum Development Levy (PDL) to the fuel sector. In the past, the PDL was a major source of revenue. However, from 2006-07 the government has decided not to use it as a source of budget revenue. Instead, it will be utilised to fund as subsidy (Price Differential Claims) for petroleum products.

CEMENT: An amount of Rs 720 million has been earmarked in the budget to arrest hike in cement prices. It has also allowed import of cement till the stabilisation of prices at Rs 285-Rs 290 per bag.

FERTILIZER: The government has allocated Rs 12.3 billion to subsidize urea and other fertilisers.

Nearly Rs 7 billion has been earmarked to overcome the on-going sugar crisis. In this connection, the government has allowed duty-free import and has also entrusted the Trading Corporation of Pakistan (TCP) to import 200,000 tons per month sugar to ensure its availability at utility stores.

PULSES: The government has allocated Rs 2.5 billion to meet the pulses shortage that has created enormous price hike. The nation consumes 800,000 tons pulses, out of which 600,000 tons is daal chana alone. The government has also imposed export duty to discourage the commodity's export.

Besides, the government will also import 300,000 tons daal chana to ensure its availability at Rs 25 per kg. In addition, 10,000 tons daal mash is also being imported.

The government has announced that all types of pulses would be available at Utility Stores Corporation at 10 percent below the market price.

PAY/PENSION RELIEF AND SAFETY NET: An amount of Rs 10 billion has been earmarked for raise in the salaries and pensions, whereas Rs 5 billion has been kept for Safety Net (Bait-ul-Maal).


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## Neo

ISLAMABAD (updated on: June 06, 2006, 04:12 PST): The government has fixed Rs 835 billion revenue target for financial year 2006-07, which is Rs 120 billion higher as compared to the revised target of Rs 715 billion for the 2005-06. However, it is Rs 145 billion more than the original target of Rs 690 billion set for fiscal 2005-06.

Direct taxes receipts have been projected at Rs 270 billion, higher by Rs 36 billion than the revised target of Rs 234 billion for the ongoing fiscal.

The share of indirect taxes has been projected at Rs 565 billion, Rs 85 billion higher than the previous year's figures of Rs 480 billion.

The government has fixed income tax collection target at Rs 257 billion against 2005-06 revised target of Rs 215 billion.

According to the break-up, customs duty estimates have been projected at Rs 157 billion, as compared to Rs 136 billion revised estimates for the year 2005-06. The customs officials have been given assignment to generate Rs 21 billion more during the next financial year.

Sales tax target has been enhanced to Rs 341 billion, from Rs 286 billion. This indicates that the sales tax wing will have to collect Rs 55 billion more.

The share of federal excise duty (CED) has been fixed at Rs 68 billion against Rs 56 billion. The Board will have to collect Rs 12 billion more in 2006-07 from excisable commodities.

Out of total direct taxes target of Rs 272 billion, the target of capital value tax (CVT) has been projected at Rs 2900 million against last year's estimates of Rs 4000 million.

The estimate of worker's welfare tax (WWT) has been projected at Rs 1000 million against last year's revised projection of Rs 5500 million.

The target of Worker's Participation Tax (WPT), has been fixed at Rs 6500 million as compared to the revised target of Rs 7000 million.

The share of foreign travel tax has been projected at Rs 3713 million as compared to previous target of Rs 2739 million.

It has been estimated that the target of customs duty of Rs 157 billion for the next fiscal would be achieved through the import of chemicals and their products; dyes, colours, paints and varnishes; iron, steel; machinery; metals; minerals, fuel oils (POL); rubber and other products like plastic resins; vehicles; wood pulp and papers; yarn and fabrics; medical and photographic equipment and other items.

As far as excisable commodities are concerned, it has been estimated that Rs 4478 million would be generated from the beverage in 2006-2007; beverage concentrate, Rs 1777 million; cement Rs 13339 million; cigarette and tobacco Rs 25047 million; natural gas Rs 5990 million; perfumery/cosmetics Rs 599 million; petroleum gases Rs 28.900 million; POL products Rs 3878.900 million; insurance Rs 774.600 million; imported goods Rs 4272 million; recovery of excisable arrears Rs 594.900 and Rs 7567 million would be collected under the head of miscellaneous products.


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## Neo

ISLAMABAD (updated on: June 05, 2006, 20:56 PST): The Government unveiled a new budget on Monday with a big increase in spending to tackle poverty but analysts say much more must be done to spread prosperity despite robust growth in recent years.

Delivering the budget statement in parliament, Minister of State for Finance Omar Ayub Khan said "revolutionary" steps should be taken to remove bottlenecks in various sectors and sustain growth.

"A co-ordinated strategy and a plan of action are needed to eliminate poverty so that our economic growth continues to grow at the rate of 6 to 8 percent," Khan said.

The budget for the next fiscal year totalled 1,315 billion rupees ($21.86 billion), up 19.7 percent from 1,098 billion rupees last year with a deficit of 4.2 percent of gross domestic product (GDP).

The government has already announced it was aiming for growth of 7 percent in gross domestic product (GDP) in the fiscal year beginning on July 1, compared with 6.6 percent for the current year.

"To attain this, it is necessary that the investment to GDP ratio, which for the first time in the history of the country has reached 20 percent, should be increased," Khan said.

"For this, the production sectors of the economy which include agriculture, manufacturing and services need to be cleared of all bottlenecks ... Revolutionary steps are being taken to remove these bottlenecks."

Development spending, which is channelled into a range of sectors including education, health, infrastructure, agriculture and irrigation, was increased by 52.57 percent to 415 billion rupees.

The government announced a modest 3.78 percent increase in defence spending over last year's actual spending of 241.06 billion rupees, as tension with old rival India eased.

But critics say that despite strong growth in recent years the poor have seen few benefits and poverty remains a huge problem.

The proportion of the population living below the poverty line has fallen to 23.9 percent in 2004/05 from 34.5 percent in 2000/01. But that still means about a quarter of the country's 160 million people live in poverty.

"I think the government's poverty numbers are ambitious, and there seems to be no direct co-relation between them and the actual poverty level," said Arshad Arif, research director at KASB Group.

"A lot more still needs to be done to reduce poverty.

POLITICAL, ECONOMIC STABILITY

President Pervez Musharraf promotes a vision of "enlightened moderation" and says tackling poverty and ignorance must be part of the campaign against religious militancy.

But analysts say the government has yet to take concrete measures to spread the benefits of growth.

"A reduction of poverty is obviously very crucial to political as well as economic stability," said Sakib Sherani, chief economist at ABN AMRO Bank.

"However, the government's claim that unemployment is being reduced is hard to swallow. I think there is a clear disconnect."

The middle and lower middle classes have been hit by high inflation that stood at 8 percent in the first 10 months of the current fiscal year.

But some relief measures were announced on Monday.

Tax rates for salaried workers are to be reduced to between 0.25 percent and 20 percent from 3.5 percent to 30 percent.

Government workers' salaries are to be increased by 15 percent and pension payments to be increased by 15 to 20 percent.

Growth in the agriculture sector is vital for reducing poverty and the government said it would spend 68 billion rupees on improving the country's water supply system.

A total of 10 billion rupees will be allocated for the construction of big dams.


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## Neo

ISLAMABAD (updated on: June 06, 2006, 04:08 PST): The government will spend Rs 1.219 billion from next year budget for development of Gwadar deep-sea port, including deepening of the channel and construction of road network linking with main highways.

The country's multi-billion rupees project is already embroiling in controversies, as its inauguration - scheduled for June this year - has been delayed further till December. The major reason behind the inordinate delay is non-completion of civil works, including road and rail linkages with the port.

ACCORDING TO PUBLIC SECTOR DEVELOPMENT PROGRAM 2006-07 for shipping sector, Rs 1.2 billion would be spent on completion of the on-going projects and Rs 19.9 million has been allocated for new development projects.

Though there is no foreign loan involved in the new projects, the government will take Rs 500 million loan for the deepening of the channel of Gwadar port worth Rs 1 billion.

Moreover, Rs 200 million would be spent on linking East bay Expressway with the national road network and acquisition of land for the project to make the linkages possible.

Two new development projects include establishing project management unit at a cost of Rs 14.9 million and development of the internal roads, water supply, drainage and the related amenities for the industrial estate at Gwadar to the tune of Rs 5 million.

These projects have been included in the PSDP 2006-07.


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## Neo

ISLAMABAD (updated on: June 04, 2006, 13:22 PST): The country's education sector is likely to get a fraction of defence spending when a new budget is unveiled on Monday, much to the disappointment of analysts who say more needs to be spent on the young.

The allocation for defence is expected to shoot up 38.6 percent to 310 billion rupees ($5.16 billion) for the 2006/07 fiscal year, starting on July 1, newspapers have reported.

Education spending is difficult to pin down as funds are channelled through federal and provincial governments, but it has been about half that of defence for the last five years.

"If the world calls Pakistan a failed state, it's because of the indicators," said Asad Sayeed, an economist and director of the private Collective for Social Science Research.

"One indicator is that we are one of the highest spenders on defence, as a proportion of GDP (gross domestic product), while spending on education is among the lowest.

"Third World average spending on education is 4.5 percent of GDP, while ours is 2.8 percent. For defence, the Third World average is 2.5-3.0 percent, while, including pensions, we're more than 5 percent," he said.

Some economists and political analysts have long been demanding a cut in defence spending and more funds diverted to education as the government tries to neutralise religious militancy and modernise the education system.

President Pervez Musharraf, who is also army chief, espouses a vision of "enlightened moderation", but critics say he is failing to take advantage of a peace process with India, slow though it may be, to boost education.

"Our relationship with India has been never so cordial as today," Sayeed said. "People want to see an impact of a peace dividend on defence expenditure."

In the 2004/05 financial year, the government spent 212 billion rupees on defence, compared with 117 billion on education. In the first half of this financial year, defence spending was 119 billion, while 58 billion went on education.

"EMERGENCY"

Cricketer-turned-politician Imran Khan, a critic of Musharraf, said the education sector needed emergency help, for the sake of the country's future.

"The whole progress of the country depends on education and the Musharraf regime is responsible for the worst cuts in educational spending," Khan told Reuters.

"There is an emergency situation in Pakistan as far as education is concerned, and the issue should be tackled on an emergency basis," said Khan, who heads the Pakistan Tehreek-e-Insaf party.

"At least people are getting a free education in these madrasas," he said.

Pakistan's rulers had to realise the country needed an educated population to compete, said Mutahir Ahmed, professor of International Relations at the University of Karachi.

"In the context of South Asia, and in Pakistan, the rulers have always thought defence and weaponry is the most vital thing to survive," said the professor.

"But we need some balance. We need trained and qualified people to compete and survive in this world. If that isn't done, we'll be left behind.


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## Neo

APP, ISLAMABAD

June 5: Minister for Information Technology, Awais Ahmad Khan Leghari yesterday said IT sector in the country was contributing significantly to creation of employment opportunities and has already created 250,000 jobs within the last two years. 

He said the IT industry was going from strength to strength and every month it required an additional 8000-10000 work force which was not being met efficiently due to a lack of quality education at the top level. 

He was addressing the annual prize distribution ceremony of Ghazali College for Women, Islamabad. 

He called for strengthening linkages between industry and academia to pave way for the production of top quality human resource that formed the core of a knowledge-based economy. 

"We no longer live in the industrialization age it is the information age and any country that does not build a knowledge- based economy would fail to make headway into the next information age," he said. 

The Minister said no developed country could afford to have undeveloped human resource. "Everything now revolves around people and if their potential can be harnessed well, nobody can stop them from attaining a position of eminence in the polity of nations," he said. 

He said Pakistan's success in the telecom sector had established the fact that with right kind of policies and patronage at the highest political level, any sector could produce miraculous turnarounds. 

"IT thrives on the quality human resource and the government is working aggressively in collaboration with universities to produce top-notch graduates in IT and telecommunication," he added. 

He said his ministry had planned to launch an outreach scholarship programme worth over Rs. 250 million to pick up talented college students from remote and backward areas and then train them in the boot camps before their admission to four tier- one universities of the country. 

"Up to 200 students who are admitted to IT and telecom disciplines by these universities, would be offered fully funded scholarships to complete their degrees in a congenial and competitive academic atmosphere," he said. 

He said the ministry had also developed an internship programme for the country's IT industry to offer internship to 10,000 IT graduates who would be offered 6-month-long internship each at a leading IT company for which they would be paid Rs 6,000 monthly stipend. 

He said the internship project was being launched in the backdrop of an acute shortage of high-end IT professionals within the IT industry which needed 8,000 such professionals for the next year alone.

"We hope the internship programme would generate jobs, help companies get required trained human resource besides leading to an overall upgradation of the IT and telecom disciplines in the higher-education institutions," he said. 

He said the government had also launched a multi-million Venture Capital Fund to promote managerial and entrepreneurial skills, finance new businesses and start-up companies keen on producing service-based IT solutions. "We would also focus on academic institutions as the ministry wants to work with them to develop interesting ideas and specific entrepreneurial skills," he added.


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## Neo

By Robert Ditcham, Staff Reporter

Dubai: Limitless, the Dubai-based real estate developer, will invest more than Dh73 billion in a new mega project in Karachi, Pakistan's commercial capital. 

The company will spearhead the Karachi Waterfront, a 25,000-hectare collection of residential, commercial, recreational and entertainment facilities, and represents its first international project since being officially launched by Dubai World in April.

Phase one of the project will involve an investment of Dh73.4 billion over the next ten years for developing over 2,000 hectares of waterfront property.

The new city will be home to special economic zones, creating a hub for trading, manufacturing and services industries.

Subsequent phases are expected to involve much larger investments.

The project is part of the Pakistani government's initiative to relieve pressure on Karachi and attract investment into the country.

Dubai World Chairman Sultan Ahmad Bin Sulayem revealed details of the project after a ceremony held in Islamabad which was attended by His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, and Pakistan's Prime Minister Shaukat Aziz.

"This is a major project involving phased development of the 25,000 hectare site west of Karachi. It will be a new Karachi," said Bin Sulayem.

"Limitless' focus on creating balanced developments for large urban communities will ensure that the development meets the economic and social needs of the government and people of Pakistan," he said.

Company sources said several other projects are in the pipeline, some planned for Dubai, which will be announced shortly.

"In the coming months we hope to reveal more details of other projects, but only when we are confident we have found the best solution to address the needs of each community," Limitless CEO Saeed Ahmad Saeed said. 

Limitless is part of Dubai World, the holding company that includes Nakheel, Istithmar, the Ports, Customs and Free Zone Corporation as well as DP World. 

Its announcement follows strong Middle East interest in Pakistan. Emaar recently unveiled four major Pakistan projects worth almost Dh75 billion, while Dubai Islamic Bank said it plans to open 70 branches in the next 18 months.

http://www.gulfnews.com/business/Re...y/10045051.html


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## Neo

Tuesday, June 06, 2006 

* Auto sector disappointed, happy

By Arshad Hussain

KARACHI: Economic analysts have welcomed the federal budget 2006-07 saying it is people-friendly and will give a boost to the agriculture and the measures announced will reduce inflation.

After the budget speech 2006-07 telecast on television, leading analysts claimed that the budget would improve the countryÃ¢â¬â¢s economy, but have a slight negative impact on the bourses.

Ã¢â¬ÅOverall, the budget is good for the economy and supportive of the low-income group,Ã¢â¬Â said Mohammad Sohail, director research at Jahangir Siddiqui and Co. The main focus of the budget is the agriculture sector and tax relaxation for the agriculture sector will further help bring down the cost of agricultural production, he added.

He said the government is trying to control inflation and have set the inflation target at 6.6 percent in the budget.

Khalid Iqbal Siddiqui, of Invest Capital and Securities, a local brokerage house, said: Ã¢â¬ÅThe finance ministry has enhanced the Capital Value Tax (CVT) from 0.01 percent to 0.02 percent, but it will have slight impact on trading at the bourses.Ã¢â¬Â Later, the market will be on the normal track

However, he said, five percent Central Excise Duty (CED) levied on non-fund base in the banking sector will affect the banksÃ¢â¬â¢ profit. Ã¢â¬ÅOverall, the budget is good for the poor class,Ã¢â¬Â he added.

Murad Ansari of KASB Securities said: The Ã¢â¬Åincrease in government employeesÃ¢â¬â¢ salaries, pensions, tax relaxation on the import of tractors, subsidy on fertilizer would have positive impact on the countryÃ¢â¬â¢s economy.Ã¢â¬Â

Auto sector: Welcoming the budget 2006-07, H M Shahzad, chairman of the All Pakistan Motor Dealers Association, said that the government has kept the previous import policy unchanged in the budget, but it has proposed to ban import of above five-year old vehicles, which will negatively affect the CBR earnings.

In the current budget, the old vehicle importers have paid above Rs 20 billion to the Central Board of Revenue under the head of customs duties and other taxes. So far, he said, investors have imported more than 35,000 old vehicles in the current fiscal.

The government has reduced the duty slabs on the import of commercial vehicles from 60 percent to 30 percent on completely built units (CBU).

Kanwar Idrees, Chairman of the Pakistan Auto Mobile Manufacturing, said: Ã¢â¬ÅThe import of commercial vehicles will not be a major threat to domestic vehiclesÃ¢â¬â¢ manufacturers.Ã¢â¬Â He said the government has not changed the previous auto import policy, which they were expecting.

He said: Ã¢â¬ÅI donÃ¢â¬â¢t see any threat to the local industry in the budget and we donÃ¢â¬â¢t expect any large import of commercial vehicles. There is no change in depreciation.Ã¢â¬Â He said the zero percent exemption on the import of tractors would help the agriculture sector, but the minister did not say how long this exemption would continue. He said an investor needed two to three years to set up an industry

He said the production figures of two tractor-manufacturing companies, Millat and Ghazi, had touched 50,000, three times over last three years.


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## Neo

Tuesday, June 06, 2006 

By Khalid Hasan

WASHINGTON: Pakistan, according to one commentator, is poised to join China and India as one of Asia's new Ã¢â¬ÅtigerÃ¢â¬Â economies.

A commentary released by United Press International (UPI) said Pakistan has enjoyed US financial support that has paved the way for new private investment and is turning the country's period of military rule into an economic success story. Ã¢â¬ÅThe publication Monday of the Pakistan government's budget demonstrates this dramatic change in the country's financial fortunes, with surging growth and new investment plans that suggest the world's second most populous Islamic nation is poised to join China and India as one of Asia's new Ã¢â¬ËtigerÃ¢â¬â¢ economies.

The Persian Gulf sheikhdom of Dubai is to invest an initial $10 billion in Pakistan's boom, mainly in property, port and transport development, a sum that may triple to $30 billion if current negotiations succeed,Ã¢â¬Â the commentary said.

The World Bank, UPI pointed out, is now doubling its own investment loans to $6.5 billion. The government is also to increase its own development budget by 50 percent. It quoted Salman Shah, economic adviser to the Prime Minister, as having announced at a press conference on Sunday that the country's gross domestic product has grown at an annual rate of 6.6 percent in the latest fiscal year. The commentary noted that Pakistan's growth rate has averaged an annual 7 percent over the past four years, helping lift almost 20 million of Pakistan's 150 million people out of poverty. The proportion of Pakistanis officially calculated as living below the population has fallen from over a third to less than a quarter in the past five years, it quoted Shah as saying.

The commentary said, Ã¢â¬ÅPakistan's take-off began with the War on Terror, starting with the war to topple the Taliban regime in Afghanistan in 2001. That triggered a big US aid program, starting with $91 million in the first year and rising steadily to $706 million in 2005. US and international funds were joined by private investment from the Arab world and the Gulf states as the military government of President Gen. Pervez Musharraf launched a programme of economic reform and privatisation. Pakistan Telecom was privatised last year, with the bulk of the shares being bought by companies based in the United Arab Emirates. 

Dubai Ports World is bidding for the management contract to run the new Chinese-built port of Gwadar and other Gulf companies are investing in the new road and rail links from Gwadar to China and Central Asia. UPI said President Musharraf is now seeking to emulate India's success in the high-tech and IT sectors, telling the annual OPEN Silicon Valley conference Saturday that Ã¢â¬Åa network of infrastructure is in place to serve as trade and energy corridor for the landlocked Central Asia, South Asia, the Gulf region and China.Ã¢â¬Â However, the commentary pointed out that Pakistan's future prospects are far from guaranteed. Political instability, violent spillovers from the Taliban insurgency in Afghanistan, a new surge in the oil price or new tensions with India could all jeopardize the country's future growth.


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## Neo

TOPI (updated on: June 07, 2006, 20:52 PST): President General Pervez Musharraf said on Wednesday that Pakistan has made remarkable upsurge in economic development over the last few years and to sustain high economic growth the government has greatly enhanced spending on higher education for human resource development.

Addressing the 10th convocation of the Ghulam Ishaq Khan Institute of Engineering Sciences and Technology here, the President underscored the need for further cementing the linkages between human resource development and economic progress and outlined his vision to achieve the desired goals. 

"We have to do a lot of work to produce highly qualified manpower and will seek assistance of the foreign countries towards this end," he said.

The President said, "Pakistan is no more in the economic stagnation of 1990s and higher education budget which was Rs.600 million in the past has now been raised to over 22 billion rupees."

He expressed the hope that the Higher Education Commission would fulfil its national obligations of improving the higher education under the stewardship of Dr.Atta Ur Rehman. Referring to the situation in the region, the President said despite the turbulent events Pakistan would maintain the pace of economic development. 

"We are not facing any external threat; the threat is from within the country in the shape of extremism and terrorism," he said, adding that the government was not scared and would successfully deal with the problem.

The President condemned the elements exploiting religion for their political ends and said that Islam is not only a religion but a complete code of life. Islam teaches unity and cohesion and it is progressive and not retrogressive religion, he added.

He said the GDP of the country has risen from Rs.63 billion to 132 billion over the past five years, which needs to be further enhanced. It is comparatively good in the Muslim Ummah but far below than that of even a small European country with a population of less than 5 million.

The President cited lack of knowledge-based economy as a prime factor for low GDP. The present government, he said, has adopted a holistic approach to meet the challenges and is focusing on promoting literacy rate, primary and secondary education with special reference to engineering sciences.

He called for further strengthening the trilateral bond among the industries, technical institutes and development research.

President Musharraf said, "we need to enhance productive capacity of the economy by fully utilising the human resources."

The President said that nine world class science and technology universities would be set up in the country which would become functional by 2008 with the assistance of Italy, South Korea, Japan, France, Sweden, Netherland, Austria and Japan. 

These would have linkages with the local industries which would help attract sizeable investment.

He told the audience that to improve the technical education system the government had decided to establish high standard national vocational and technical education centres. 

The President said the government would take care of the external debt liability of the GIKI for the next four years and also announced Rs.50 million for the institute. 

He also announced to double the cash award for the gold medallist students. Congratulating the passing out graduates for obtaining Bachelors, Masters and Ph.D degrees in different disciplines of engineering sciences. 

The president conferred degrees on 196 BS graduates, 40 MS graduates and five Ph.D scholars. He also awarded gold medals to the outstanding students. The Rector of the institute Dr Abdullah Sadiq, in his welcome address, said that the NWFP and Balochistan governments, the institute's alumni and some of its friends, and more recently the Government of the Punjab, were supporting the studies of deserving students at GIKI. 

The Institute has succeeded in its endeavour to impart quality education to the students, he said. "Over the years the Institute has been able to attract from abroad highly qualified professionals, both Pakistani and foreigners. Many of them are now serving in leading positions in the country."


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## Neo

ISLAMABAD (June 07 2006): Big revenue spinners in the new financial year (2006-07) would be 15 percent excise duty on international air travel (Rs 3.5 billion), fixed tax on income from property (Rs 3 billion), 7 percent increase in cigarettes' retail price (Rs 3 billion).

GST on computer hardware (Rs 2.5 billion), excise duty on banking services (Rs 2.2 billion) and increase in withholding tax from 0.1 percent to 0.2 percent on cash withdrawals of above Rs 25,000 from banks (Rs 2.3 billion).

The data prepared by the Central Board of Revenue (CBR) shows that total taxation measures projected for 2006-07 would amount to Rs 25.1 billion. The relief measures announced in budget would cost CBR Rs 16.7 billion. The net additional revenue from changes made in the budget would be in the vicinity of Rs 8.4 billion.

The break-up of relief measures introduced in the budget showed that the government would suffer revenue loss of Rs 6.7 billion due to change in customs duty structure. The relief on the sales tax side would cost Rs 1.2 billion, and relief measures on the income tax side would cost Rs 8.8 billion.

Major relief measures on the customs side are: duty-free import of agriculture tractors would result in a revenue loss of Rs 500 million; exemption of 5 percent customs duty on import of computer hardware/parts Rs 500 million; duty exemption on medicines and life saving drugs Rs 400 million; poultry industry Rs 670 million; special incentives for dairy industry Rs 250 million; horticulture Rs 250 million; duty reduction on broadcasting equipment Rs 300 million; and duty reduction on import of raw materials for the growth of industrial sector would cost Rs 1600 million.

On the other hand, the revenue generation target under the head of 'customs duty' is nil.

The revenue measures on sales tax side would bring in Rs 14.3 billion and relief measures would cause loss of Rs 1.2 billion. 

Cost of relief measures: The zero-rating of sales tax for the dairy industry and other sectors would cost one billion rupees and zero-rating on import/supply of trucks and dumpers would cost Rs 200 million.

Major revenue generation measures: The GST on import and local supply of computer hardware would generate Rs 2.5 billion; 15 percent excise duty on international air travel Rs 3.5 billion; banking services Rs 2.2 billion; 5 percent excise duty on 'franchise' services Rs 1 billion; cable TV operators to pay Rs 25 per connection per month as excise duty Rs 500 million; increase in retail price of cigarettes Rs 3 billion; enhancing excise duty from 3 to 5 percent on insurance service Rs 700 million; and Rs 100 per metric ton (PMT) tax on coal would generate additional revenue of Rs 200 million.

On the income tax side, the revenue measures would generate Rs 10.8 billion, whereas relief measures would cost the government Rs 8.8 billion.

Revenue Gains: Flat tax at the rate of 5 percent on gross rent would generate an amount of Rs 3 billion; 2 percent capital value tax (CVT) on immovable property Rs 800 million; and CVT on shares transactions on stock exchanges would generate an amount of Rs 3.6 billion. Only Karachi Stock Exchange (KSE) is likely to deposit an amount of Rs 3.5 billion by the end of current fiscal year.

The increase in withholding tax from 0.1 percent to 0.2 percent on cash withdrawal above Rs 25,000 from banks is likely to generate Rs 2.3 billion in 2006-07. The Board has so far collected Rs 1.7 billion during July-March 2005-06 against the target of Rs 5 billion set for the outgoing fiscal year. According to CBR's estimates, the collection from the levy would be Rs 2.3 billion in the next fiscal year.


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## Neo

KARACHI (June 07 2006): A Malaysian conglomerate - IRIS-RIST Group, intends to come up with an investment of 500 million dollars over the next 16 months in the IT, environment and power sectors in Sindh. IRIS representatives Omer Iqbal Wahla stated this while talking to APP here on Tuesday.

He said a delegation of the conglomerate called on the Sindh Governor Dr Ishrat ul Ibad Khan. The meeting was held at the Governor House here on Tuesday. The Adviser to the Sindh Chief Minister on Information Technology Muhammad Noman Saigal was also present on the occasion.

The delegation made a presentation to the governor on three projects in IT, environment and power sectors. It was pointed out that those projects would entail an investment of about dollars 500 million and create over 5,000 technical jobs in Sindh.

In each of these projects, Pakistani work force will be trained as per international standards. The projects will be on 'build-own-operate' (BOO), not requiring any funding from the government; it was further pointed out.

The IT project, which is in the process of being implemented is the vehicle registration and driving licence project on smart cards on 900 basis to provide world standard chip-based biometric enabled security documents. It will make available many facilities and services to the public on one smart card, increase security, prevent crimes especially the car and motor cycle thefts.

The IRIS Corporation - it was pointed out, is a global security solution provider with core expertise in the area of securing government security documents i e national ID and chip based, International Civil Aviation organisation compliant e-passport.

In the environment sector, an urban air quality management and vehicle testing project has been started by IRIS-RIST on BOO basis. This project will see many international quality inspection and testing stations across the province to provide clean air quality for the citizens, prevent accidents of unfit vehicles as well as providing safety for the public.

In the power sector, MSC Power will set up a 10 MW to 75 MW alternative energy solar wind water power plants at the national, provincial, district and tehsil / town levels to help mitigate the rising fuel costs.

The Sindh Governor Dr Ishrat ul Ibad Khan appreciated the investment for the province. He stressed that the solutions should be people centric with maximum possible facilities on the same smart card so that there was great value addition for citizens.

The Governor stated that the vehicle testing should be implemented in a phased manner. Solution to the power crisis is also a need of the hour. The delegation included IRIS Corporation Director Michael Choong, MSC Power CEO Steven Mok and Puspakom CEO Wan Haji Salamat.


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## Neo

ISLAMABAD (June 07 2006): Rs 5.5 billion will be provided to the Science and Technology sector in 2006-07, under the Public Sector Development Programme as against Rs 3.9 billion provided last year, say the Planning Commission.

Science and Technology as well as R&D are important determinants of innovation and knowledge generation and are now being given greater emphasis after years of neglect. While university education is being strengthened, preparations are underway to overhaul R&D across the complete spectrum, from infrastructure to human resources, to international linkages, all within the envelope of much increased funding.

Proportion of R&D expenditure to GDP is however still low (0.4%) compared with some countries that have successfully built indigenous capability to innovate, produce new technology as well as design new products.

The major constraint was always the numbers and quality of manpower. S&T and R&D efforts were partly constrained by the lack of a critical mass of scientists and engineers. In 2000, Pakistan had 100 scientists and engineers per million populations, compared with 500 in Malaysia, 350 in China, and 149 in India.

During the financial year 2005-06, an amount of Rs 3892.00 million was allocated for Science & Technology Sector.

Out of this, Rs 3071.000 million were earmarked for Ministry of Science & Technology, Rs 596 million for Pakistan Atomic Energy Commission (PAEC), Rs 111 million for Pakistan Space & Upper Atmosphere Research Commission (SUPARCO), Rs 75 million for National Engineering Science Commission (NESCOM), Rs 55 million for Pakistan Meteorological Department and Rs 11 million for Pakistan Nuclear Regulatory Authority (PNRA).

The allocation for Ministry of Science & Technology was reduced to Rs 2264.183 million in the 3rd quarter review. It is expected that 90% of the total allocation would be utilised by June 2006.

During 2005-2006, the Ministry of Science & Technology had assembled a portfolio of 120 projects with an outlay of Rs 16.00 billion. Some important projects have been the TROSS programme (93 scholars placed in various centers of excellence abroad).

Under Water Quality Monitoring Projects, executed during 2005-06, some 33,000 field tests were undertaken by the PCRWR. Pakistan's water standards have been revised by the PSQCA, in consultations with all the stakeholders. In Cholistan desert, nearly 100,000 persons with 2.0 million cattle heads have been stabilised by provision of drinking water around the year.

In Balochistan, concept of Leaky Dams has been successfully tested to improve water supply during lean season.

Energy continues to be in great demand, and Pakistan is currently implementing several projects, which make use of cleaner alternative energy sources. The Meteorology Department has established a potential to generate 1,100MW electricity through wind measurements in a 10,000sq km area in coastal belt of Sindh, and nearly 700MW of wind energy will be generated in the next couple of years through several 'wind farms' being set up by the private sector.

The AEDB has also been tasked to provide electricity to 400 remote villages through solar PV and micro-wind turbines. Additionally, scores of micro hydro-power stations have been installed in remote areas of the NWFP and Northern Areas where WAPDA network does not exist.

So far, 4 laboratories of the PCSIR, out of 7 in the country, have attained the prestigious ISO 17025 certification as another is due to graduate soon. Services were rendered to some 6,600 business/industrial units. The NPSL laboratories at Islamabad have been granted ISO 17025 and the 'Newton Tree' through the EU, a unique distinction that testifies to the R&D quality system being established by the realigned PCSIR.

CAMB at Lahore imparted crucial forensic training to police investigation units, while land-levellers have been successfully developed through PAEC and are being marketed with extreme success.

A strategic study for 12 leading sectors of the economy was undertaken in consultation with principal stake-holders in public-private sector for HEC, and for eventual incorporation in the MTDF. Pakistan has established 28 bilateral Agreements/MOUs for S&T cooperation since 1972.

Only 08 were funded in the PSDP 2005-06. The construction of Head Offices of PCSIR and PSF at Constitution Avenue, and the PCRWR laboratories at H-8, have been completed. Likewise construction of Ministry's own office-complex on Constitution Avenue is underway.

These programmes have will continue during 2006-07, with an amount of Rs 5498.8 million allocated for Science & Technology Sector. This includes Rs 4431.2 million for Ministry of Science & Technology, Rs 646.1 million for Pakistan Atomic Energy Commission, Rs 375 million for SUPARCO, Rs 38.0 million for NESCOM and Rs 8.5 million for Pakistan Met Department.

The progress in S&T sector is mainly dependent on quality technical manpower, modern equipment, requisite infrastructure and institutional facilities in existence.


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## Neo

Advancement in scientific knowledge and development of a technological base are essentially required for rapid industrial growth. This emphasises availability of information about the latest technical developments world-wide. It has, therefore, been planned to establish a Technology Information and Dissemination Unit at PCST to facilitate the industrial sector.

Establishments of accredited laboratories and trained manpower are required to provide testing, certification services for maintaining quality standards. PNAC is planning to help in lab accreditation. The issue of intellectual property rights (IPR) is of great importance for R&D with regard to industrial technology development.

A strong IPR regime encourages R&D and foreign investments on international level. The IPR system is being administered by the TRIPs Agreement of WTO. This agreement is however, not favourable to the economies with a low knowledge base. Awareness about the various aspects of IPR, especially the patents and industrial design, the fundamental outputs of R&D efforts is required.

The Pakistan Council for Scientific and Industrial Research (PCSIR) is undergoing some major refurbishment and capacity building so that it can effectively carry out the important task of industrial oriented research and develop technologies, processes and products which can be used for the technological up-gradation of the industry and improving product quality.

The Council's services in testing, calibration, certification and patenting etc for the industrial products and processes will be important determinants towards quality assurance in industry.

While agricultural research continues to be supported, new emerging areas such as biotechnology and nanotechnology are seeing good growth because of the good work initiated by the National Commission set up to promote these fields. Pakistan Council for Renewable Energy Technologies (PCRET), is expanding its silicon PV activities, which will supplement the activities of the Alternate Energy Development Board (AEDB).

The Pakistan Council of Research in Water Resources (PCRWR) has established water quality testing and monitoring labs network to support the programme for safe and clean drinking water recently started by the government.

National Institute of Oceanography (NIO) Karachi is finally being revamped and reinvigorated to undertake the next phase of demarcation of our EEZ. Participation in the International Seabed Authority (ISBA) meetings and Antarctic Research Programme are continuing.

Raising the Knowledge Content in Agriculture, Manufacturing and Service Sectors.

It is necessary to bridge the gap among industry, academic and R&D institutes. While the larger industries, businesses and farmers have access to finance and technology, the smaller entrepreneurs and manufacturers face greater paucity in all areas.

Focus will be on facilitation for transfer of technology, resource planning (and acquisition of certified seed, fertiliser and other technical inputs in case of agriculture) and business skills. SME's and industries will be encouraged to move along the value chain into knowledge-intensive activities, for exploiting the huge unprocessed resources in agriculture.

A key factor in modern economies is the widespread 'off-shoring' of services, since distances become irrelevant in the presence of fast electronic communications.

Back-office/call centres, digital transformations and archiving through CAD are some typical activities which are growing fast in Pakistan because of lower costs per 'seat'; the bandwidths will be increased and costs reduced to attract more businesses in this area.

A major opportunity exists in design services in textiles, publishing, electronics, and precision mechanical parts. This will benefit from enhancement in education and skills coupled with improved communication services.

INSTITUTIONAL ARRANGEMENTS The Planning Commission has been reformed and restructured in recent weeks which will help co-ordinate and facilitate the implementation of knowledge economy. Its multi-sector membership, which includes representatives from other line departments, business and industry, and the academia, enable it to oversee the implementation of the MTDF. Which of course will be implemented by relevant ministries and agencies.

Planning Commission will forge partnerships and networking among different players through the creation of technical working groups to steer and oversee particular DKE programmes and projects. It will act as the think tank and resource bank for the government, with forecasting through policy research units, which will be strengthened and augmented. Indicator will be prepared for monitoring implementation and progress of projects and facilitation mechanisms.

The Government will continue to intensify efforts towards innovation and technology-led development to meet the requirements of a knowledge-based economy. To complement the efforts of the Government, the private sector will need to keep pace with the technology advancements in the global environment as well as expand their capacity in R&D.

The challenge lies in developing a competitive edge at the global level. This will be determined by our ability to create, acquire and use knowledge for socio-economic development.

Ministry of Science & Technology and Higher Education Commission have to play a critically important role in the transition towards a "Knowledge-Economy". Only by arming with the right knowledge and skills, transmitted across an efficient and cheap communication system, that we can improve our living standards and provide a decent future to our children.


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## Neo

ISLAMABAD (June 07 2006): The private sector is pleased with the budgetary steps and it termed the budget 2006-07 a well-thought-of official document worked out to protect the common man from price hike and exempt different areas from duties and taxes to help them play more active role to boost the economy.

In his comments on the budget, Federation of Pakistan Chambers of Commerce and Industry (FPCCI) former president and chairman Pak-US Business Council Iftikhar Ali Malik said the government took a number of bold decisions to strengthen the economy and improve living standard of the people.

He termed agriculture and livestock sector in particular a potential area that could take Pakistan's economic growth to new height. He said exploitation of livestock sector, which was granted incentives in the form of exemption in duties and taxes on import of farming machinery, pesticides and soft loans, could turn it an income-generating area for the rural population and contribute toward the national kitty in the form of different taxes.

He said the private sector was confident that budgetary measures will make livestock and other sectors directly related to agriculture and industry an attraction for investors and subsequently make it strong enough to deliver good to the economy.

He was of the view that budgetary incentives will help the livestock sector grow at a faster pace in coming years and meet domestic demand of meat, milk and other dairy products, besides generating surplus to export and earn foreign exchange.

The government has exempted livestock sector from duty and sales tax in the budget 2006-07. He was confident the livestock exploitation would help the government stop ongoing migration from rural to urban areas and address other related issues.

He also appreciated the government's step to expand Utility Store Corporation (USC) network and increase mobile units number to outreach a large number of people to supply essential items at concessional rates for immediate relief to the poor and low income groups.

He said essential items prices were already showing a downward trend and the same trend would continue in the future to stabilise essential items prices in the open market.

He termed taxing real estate business an important step, saying levy of capital value tax (CVT) on this sector would help the government generate more revenue and spend more on the social sector development in coming years.

Saarc Chamber of Commerce and industry vice-president Jamil Magoo said the Self-Employment Scheme and increase in the government employees' salaries and pensions were good steps and these should be appreciated by all.

He said political parties should not criticise the government just for the sake of criticism and rather support its good decisions particularly meant for relief of low income groups and the poor.

He said huge PSDP of Rs 415 billion for the next fiscal year was of great significance as it will improve life standard of the general public as well as generate more jobs for the unemployed.

He said the people should reduce dependence on imported goods. He said the culture of promoting home-made items will help the government cut down import bill and encourage local industry to invest more and expand domestic industrial base.


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## Neo

ISLAMABAD (June 07 2006): Chairman Alternative Energy Development Board (AEDB) Air Marshall Shahid Hamid (Retd) has said 600 megawatts of electricity costing 9.5 paisas per unit would be generated through wind turbines by the end of 2007.

He told a private TV channel that tariff for alternative energy generation was settled with two companies. He said negotiations were continuing with various other companies for tariff fixing. The wind turbines would be set up along the coastal areas, he added. Besides, a plant was being installed in Landhi, Karachi with the collaboration of New Zealand for producing 25 megawatts electricity from cattle dung and trash.

He said a plan for providing agricultural tools run by solar energy to the poor people in rural areas of Sindh and Balochistan was underway.


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## Neo

KARACHI: Pakistan has planned to float eurobonds to the tune of Rs30.25 billion in 2006-07, showed the budget documents, but did not give the timeframe for the issuance of bonds.

In the outgoing year (2005-06), a record amount of Rs47.92 billion was raised through bonds to finance budgetary needs of the country.

In the new fiscal year beginning in July, the country will retire interest liabilities worth Rs20.41 billion against swapped eurobonds issued earlier.

During FY06, compared to the target of Rs2.05 billion, the government retired interest liabilities of Rs1.01 billion against swapped eurobonds.

The amount received as privatisation proceeds stood at Rs90 billion in FY 2005-06 against the target of Rs20 billion while for the new fiscal year, the target for privatisation proceeds has been fixed at Rs75 billion.

So far, the privatisation process has yielded Rs3,554 billion. Under the law, some percentage of privatisation proceeds has to be spent on social services but so far successive governments have failed to issue balance sheet of the privatisation fund for the information of taxpayers.

It is expected that the new federal minister for privatisation will issue a fact sheet giving details of the utilisation of privatisation proceeds.

The budget documents showed the contribution of State Bank of Pakistan to federal revenues would jump to record Rs35 billion in FY 2006-07.

The central bank, after making usual provisions for reserve fund and paying dividend, transfers surplus profit to the federal government. The SBP also pays dividend on share capital of the federal government. In FY06, the central bank contributed Rs18 billion.

The documents showed the central bank would auction Rs15 billion worth of market treasury bills in FY07, which was Rs3 billion less than the amount raised in FY06. The SBP mopped up Rs18 billion in FY06 against the target of Rs17 billion.


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## Neo

Wednesday June 07, 2006 

Peshawar: Provincial Earthquake Reconstruction and Rehabilitation Authority (PERRA), NWFP government officials and UN representatives have launched $296 million ERRA-UN Early Recovery Plan which is to bridge the transition period from relief to reconstruction. 
The Early Recovery Plan covers activities over a 12-month period starting in May 2006 a critical year to lay the groundwork for successful longer-term reconstruction. 

It presents proposals for programmes in priority sectors for donor partners to turn pledges into concrete contributions. 

The objective is to ensure the availability of essential services at the areas of origin for the tens of thousands of families that have returned. It is a needs driven plan identifying the priorities of the beneficiaries in NWFP and AJK. 

Chief among them is the need to restore and set the basis for improvements in the standards of living of the stricken community in both urban and rural areas. There is also a need to re-establish basic education and primary and secondary health care services, and to ensure access to safe water. 

Damaged rural housing and urban centres need to be rebuilt using earthquake resistant techniques. Balance will be maintained in the implementation of projects between the NWFP and AJK. 

United Nations Resident Coordinator, Jan Vandemoortele said that the plan emphasizes on training and capacity development of human resources of the local governments in the affected areas. 

"The UN plans to set up 150 pre-fabricated basic health units and more than 32 schools during this year. The provision of seeds, farming tools and livestock will be one of the priorities for restoring livelihoods, especially for women in the affected areas." 

The provincial and local authorities are the drivers that will implement recovery activities outlined in the Action Plan. Every effort will be made to ensure that communities are provided with a meaningful voice in the planning and implementation processes. 

The design of the Action Plan encourages transparency and accountability in the use of resources. Monitoring activities will include on-site surveillance, regular reporting, and financial expenditure tracking. 

The Action Plan offers a platform for the Government and partners to integrate planning, implementation, and monitoring of activities at the field level. 

It is essential to translate the Early Recovery strategy into real action so as to sustain effective interventions. The plan is flexible and will be reviewed regularly. 

Some of the major challenges foreseen in the coming months are landslides in monsoons, the rebuilding of roads and bridges, ensuring of necessary provisions for the residual caseload and contingency planning for the next winter. 

Furthermore, there is an urgent need to address issues such as rubble removal and urban/ rural planning, including land tenure, house deeds, and compulsory sale. 

Getting the transition right will be essential for successful reconstruction. The purpose of the Early Recovery Plan is to make that happen. 

Earlier the ERRA-UN early recovery plan was successfully launched at New York Geneva, Islamabad and Muzaffarabad. The plan has been presented to the donors by the Government of Pakistan, ERRA and the UN.


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## Neo

Wednesday June 07, 2006 


KARACHI: The worldÃ¢â¬â¢s leading satellite mobile phone service provider THURAYAÃ¢â¬â¢s regional Head of Gulf and South East Asia Ahmed-Al-Sharief has said that due to good policies of Pakistan government in telecom sector his company has succeeded in introducing best satellite mobile phone services in the country. 
Addressing a conference here on Tuesday, he appreciated the government for its investor friendly policies and vowed to introduce state of the art services for the people of Pakistan. 

"I have come here to take further initiatives for the betterment of our services" Mr Shaeirf said. 

He said that government of United Arab Emirates (UAE) was investing a lot in Pakistan. 

"The investment made by Etisilat and THURAYA have helped in further strengthening the relation between the two brotherly countries", he said 

He noted that Pakistan is one of those counties where people are getting cheaper telecom services. 

For further lowering the rates in Pakistan, we have planned to introduce satellite public call offices throughout the country that would be available any time every where in the country, he added.


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## Owais

*Two percent CVT coverage extended to suburban areas property* 

ISLAMABAD (June 08 2006): The Federal Cabinet has extended the coverage of 2 percent CVT on immovable property to the suburban areas of the country, it is reliably learnt. The Cabinet meeting, held on Monday last to approve Finance Bill, asked the CBR not to restrict the CVT coverage to urban areas but also bring property deals in suburban areas (smaller towns) into documentation.

Official sources told _Business Recorder _on Wednesday that the Cabinet in its meeting on June 5 held to approve the 2006-07 budget had approved the CBR proposal regarding imposition of CVT on property, besides extending its coverage to suburban areas.

"CVT should be imposed at 2 percent on purchase of urban and suburban immovable properties exceeding 500 sq yards, one kanal and above. In case, the value is not recorded, CVT should be collected at Rs 50 per sq yard," sources quoted the Cabinet as directing CBR.

In another move, the Cabinet asked the State Bank of Pakistan to look into complaints received from politicians and lawyers that the leasing cos and credit card issuing banks were denying these two banking products to them.

Sources said that the SBP has also been directed to introduce student loan scheme, adding that special incentive package for setting up universities, technical training and research institute, would also cover schools, colleges, vocational and all training institutes.

The Cabinet also asked for collection of utility bills through one-window in all banks, and in one of the clarifications SBP Governor said that all banks have been instructed to accept 'basic accounts' free of charge.

They said the Federal Cabinet rejected CBR proposal in which Rs 500 as fixed GST had been proposed on old and used computer monitors, adding that some Cabinet members said that with the imposition of GST monitors prices would increase.

According to sources, this idea was floated by CBR on the proposal of television manufacturers who said that sale of used monitors negatively impacted their business.

Sources said that the Cabinet decided that petroleum development levy (PDL), a major source of budgetary revenue in the past, would no longer form part of government revenue, which the Cabinet believes is change in the policy.

According to sources, the share of provinces in divisible taxes was raised from 37.5 percent to 41.5 percent, which would gradually increase to 46.26 percent within five years, adding that total transfers to the provinces were estimated at Rs 406 billion.It was also proposed that purchase of transformers for agriculture tubewells from the open market be allowed.


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## Owais

*Expansionary stance in budget may cause fiscal slippage: S&P* 
*RECORDER REPORT* KARACHI (June 08 2006): Standard & Poor's Ratings Services has said that the expansionary stance, adopted by Pakistan while announcing the budgetary measures, raises concerns over the country's fiscal position and its existing weaknesses.

Although the budget has no immediate impact on the sovereign credit ratings, signs of further fiscal slippage could warrant a downward revision of the outlook.

"By relegating fiscal consolidation as a policy objective, the proposed budget will prolong vulnerabilities stemming from Pakistan's high debt and debt-service burden, while its impact on aggregate demand is set to extend pressures on inflation and contribute to rising external imbalances," said Standard & Poor's credit analyst Agost Benard, in a report released on Wednesday in Singapore, reaching here from sources in the capital market.

The 2006-2007 budget continues the government's greater emphasis on spending and growth objectives for the second year in a row since 2004-2005 fiscal. The proposed budget aims for a deficit target of 4.2 percent of the gross domestic product (GDP), 0.4 of a percentage point above the planned target (before the October 2005 earthquake) for the current fiscal year.

It is also 0.2 of a percentage point above the upper ceiling imposed by the Fiscal Responsibility Act of 2005, although the excess shortfall is justified by earthquake-related spending.

Much like the current fiscal year's budget, it, however, clearly prioritises growth over deficit and debt reduction, which is manifested in the planned 19 percent increase in total expenditure, including a 52.6 percent ramp up of development spending.

Spending plans focus on several key areas of human and infrastructure capital, including health care, education, and public utilities. Pakistan's spending needs in these areas are certainly significant, given its low ranking of 135 out of 177 on the UNDP Human Development Index. Yet the budget also clearly has an eye on next year's parliamentary elections, with Rs 109 billion (1.2 percent of GDP) relief package that entails a 15 percent increase in the wages of government workers, 15pc-20pc rise in pension payments, and subsidies targeted at petroleum, cement, fertiliser, and food stuffs.

On the revenue side, the attempt to expand the tax base through casting the net wider and improving compliance is a notable development, although it is unambitious in scope.

Measures such as an excise tax on financial services, real estate businesses, and franchise operations, and expanding retail sales taxes to a broader category of goods, are expected to yield additional revenue of Rs 25 billion (0.3 percent of GDP).

Among several noteworthy proposed administrative measures for enhancing compliance are the introduction of a Common Taxpayer Identification Number, and the enabling of sales-tax collectors to obtain third-party information. Even with the new taxes, however, the expected tax collection for 2006-07 would remain below 10 percent of the GDP, and the planned 16.7 percent rise in tax revenues appears somewhat optimistic given that it exceeds the 10 percent average growth for the past six years.

The deficit could rise if the planned revenue increase fails to materialise, as any shortfall will be more difficult to offset with spending cuts given scheduled parliamentary elections in 2007.

With its expansionary slant, the budget will also lend further strength to domestic demand, the managing of which has, for the past two years, been falling disproportionately on monetary policy.

The ongoing fiscal stimulus is thus likely to sustain pressure on inflation, and contribute to deteriorating external balances. Inflation has dropped to 6.2 percent, from last year's peak of 11.1 percent.

Nevertheless, both food and Wholesale Price Index inflation numbers remain stubbornly high at over eight percent, suggesting that supply and demand side pressures will prevail.

The State Bank of Pakistan, which successfully reduced annual private sector credit growth to about 20 percent currently from 30 percent a year ago, also now appears to lean more toward growth objectives and is reluctant to tighten monetary policy further. Therefore, the risk of inflation being reignited remains given strong domestic demand and more so if the State Bank is again enlisted to finance the deficit.

Strong domestic consumption is also feeding into booming imports, more than 60 percent of which are consumer goods. The current account deficit is expected to be 4.3 percent of the GDP for 2006-07 fiscal, up from 1.5 percent the previous year. Based on current trends, the deficit will be closer to five percent of the GDP in 2006-07 fiscal.

Financing the deficit does not appear to be a problem at present, with strong inflows of foreign direct investments reaching three billion dollars for the first 10 months of the current fiscal year. Nevertheless, curtailing excess consumption import demand through tighter monetary policy would be prudent to avoid higher risk to external liquidity.

"The 2006-07 fiscal budget, with its expansionary emphasis, therefore, poses the threat of rising imbalances and increases the chances of having to take more drastic action in the future, should external balances and price stability deteriorate," said Benard.


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## Owais

*State bank disagrees* 

KARACHI (June 08 2006): The ratio of fiscal deficit and Gross Domestic Product (GDP) increased due to rise in development funds. This was stated by Governor, State Bank of Pakistan, Dr Shamshad Akhtar, while talking to the _'AAJ' TV _channel 'Budget Programme' here on Wednesday.

She said that the International Credit Rating Agency, S&P has not correctly extracted and presented the statistics. In fact, revenue deficit has been converted into profit. The governor said that rates of export refinancing would not be increased despite the rise in the rates of T-Bills.

She said that the six months T-bills yield is now 8.40 percent but to increase exports, the rate of export refinance will not exceed 7.50 percent. She added there was a wrong impression that exporters to India and Bangladesh were being offered loans at low mark-up rates.


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## Owais

*SBP raises 3-, 6-month treasury bills rates* 
*RECORDER REPORT* 

KARACHI (June 08 2006): The State Bank of Pakistan (SBP), after almost nine months, on Wednesday raised the rates on three-month and six-month treasury bills by 22 basis points and 15 basis points, respectively.

The rates are near five-year high level. The move hints that the government would rely on borrowing in order to reduce the fiscal deficit and to encourage investment flows from banks and institutions in these tenors.

The SBP held an auction on Wednesday of all three maturities of Treasury Bills--3-month, 6-month and 12-month--for settlement on June 8, 2006. The pre-auction target announced by the SBP on June 5 was Rs 21 billion.

Total bids of Rs 31.835 billion were tendered by primary dealers, from which the SBP picked up Rs 27.835 billion. The SBP opted to increase the cut-off yields for 3- and 6-month T-bills by 0.2256 percent and 0.1523 percent bringing the yields to 8.3256 percent and 8.4433 percent, respectively, versus previous levels of 8.10 percent and 8.2910 percent. The 12-month T-bill cut-off yield remained at its previous level of 8.7907 percent.

Maturities flowing into the market on June 8, 2006 amount to approximately Rs 37.44 billion from maturing Treasury Bills. Outflows include the settlement value of the T-bills auctioned ie Rs 25.71 billion. The net inflow, after accounting for the settlement value of the auction, amounts to Rs 11.73 billion on June 8, 2006. During the current week, the overnight market has remained near 9 percent and discounting to the tune of Rs 2 billion has already been witnessed.

The point-to-point differential as it stands now between the three tenures of T-Bills is 0.1177 percent for going from 3 months to 6 months and 0.3474 percent for going from 6 months to 12 months along the T-Bill yield curve.

Salman Jafri, fixed income dealer at Jahangir Siddiqui Capital Markets, said that after a protracted period of ignoring the secondary market's signals, the SBP finally moved up the cut-off yields on the 3- and 6-month T-bills. The move is characteristically lacking in finesse. That said, there is nothing inherently wrong in the move itself. The alignment of shorter maturity T-bill cut-off yields with the secondary market yields on the same instruments.

For instance, the 3-month secondary market yield has remained (for the most part) above 8.10 percent (previous cut-off) since mid-September 2005 while the 6 month secondary market yield has remained above 8.2910 percent (previous cut-off) since early October 2005 (there have been a few sporadic instances when the secondary m ay ask Market yields fell below the cut-offs but these number 5 to 7 occurrences during the entire period).

And while we're looking back, here's an interesting factoid: the 6-month T-bill yield has risen to a four-and-a-half year high (last high was 8.3998 percent set on 15 November 2001). More interesting factoids: The secondary market yield on the 3- and 6-month T-bills has averaged 8.36 percent and 8.52 percent, respectively, since January 2006 with medians at 8.28 percent and 8.47 percent (3-month low/high = 8.06/8.74, and 6-month low/high = 8.31/8.76).

The 12-month T-bill remains well-anchored at 8.7907 percent and a no-change situation is perhaps the most significant feature of the auction since it indicates the same no-change stance for the Discount Rate.

The move appears to be targeted at encouraging subscriptions of 3- and 6-month T-bills which have been less attractive, when compared to the 12-month instrument's yield. The 12 month T-bill has seen decent subscription volumes throughout the period and remains the favoured offspring while its shorter maturity siblings have mostly been neglected.

It is uncertain at this point whether the increases will result in better subscriptions of the shorter term instruments. Those looking for the carryover trade will still resort to buying and funding the 12-month instrument rather than the shorter ones. The carry spread favours the 12 month T-bill purchase financed via 3 month repo rather than a 3-month T-bill purchase financed by a 1-month repo. Of course the longer carry trade presupposes a static Discount Rate. Given the expansionary nature of the budget FY07, this assumption of a static discount may well be put to the test but we suggest sticking it out for the near term and re-evaluating the stance in Q2FY07 (September-December 2006).


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## Owais

*Education expanding raised for HRD, says Musharraf* 

TOPI (June 08 2006): President General Pervez Musharraf said here on Wednesday that Pakistan has made remarkable upsurge in economic development over the past few years and to sustain high economic growth the government has greatly enhanced spending on higher education for human resource development.

Addressing the 10th Convocation of the Ghulam Ishaq Khan Institute of Engineering Sciences and Technology here he underscored the need for further cementing the linkages between human resource development and economic progress, and outlined his vision to achieve the desired goals.

"We have to do a lot of work to produce highly qualified manpower and will seek assistance of foreign countries towards this end", he said. The President said: "Pakistan is no more in the economic stagnation of the 1990s and higher education budget, which was Rs 600 million in the past, has now been raised to over 22 billion rupees."

He expressed hope that the Higher Education Commission (HEC) would fulfil its national obligations of improving higher education under the stewardship of Dr Atta-ur-Rehman. Referring to the situation in the region, he said that despite the turbulent events Pakistan would maintain the pace of economic development.

"We are not facing any external threat; the threat is from within the country in the shape of extremism and terrorism," he said, adding that the government was not scared, and would successfully deal with the problem.

He said that Pakistan had attained paramount status among Muslim Ummah and its progress would have direct bearing on the Ummah. The President condemned the elements exploiting religion for their political ends and said that Islam "is not only a religion but a complete code of life". Islam teaches unity and cohesion, and it is progressive and not retrogressive religion, he added.

He said the GDP of the country had risen from Rs 65 billion to 132 billion over the past five years, which needed to be further enhanced. It is comparatively better in the Muslim Ummah, but far below even a small European country with a population of less than 5 million people.

The President cited lack of knowledge-based economy as prime factor for low GDP. The present government, he said, has adopted a holistic approach to meet the challenges and is focusing on promoting literacy rate, primary and secondary education with special reference to engineering sciences. He called for further strengthening the trilateral bond among industries, technical institutes and development research.

Laying stress on promotion of knowledge-based economy, Musharraf said, "We need to enhance productive capacity of the economy by fully utilising the human resources." The Higher Education Commission (HEC) led by Dr Atta-ur-Rehman, is fully alive to its responsibility of meeting the present-day challenges vis-&#224;-vis higher technical education, he said.

The President said that nine world class science and technology universities would be set up in the country, which would become functional by 2008 with the assistance of Italy, South Korea, Japan France, Sweden, Netherlands, Austria and Japan. These would have linkages with local industries, which would help attract sizeable investment.

He told the audience that to improve the technical education system the government had decided to establish high standard national vocational and technical education centres. He said the nation has all capabilities and talent to excel in technical education, and the world community is also aware of this fact.

The President said the government would take care of external debt liability of GIKI for the next four years, and announced Rs 50 million for the Institute. He also announced to double the cash award for gold medallist students.

Congratulating the passing-out graduates for obtaining Bachelors, Masters and Ph D degrees in different disciplines of engineering sciences, the President said the nation "has great expectations from you for the development and prosperity" of the country.

The President conferred degrees on 196 BS graduates, 40 MS graduates and five Ph D scholars. He also awarded gold medals to the outstanding students.

The Rector of the institute, Dr Abdullah Sadiq, in his address, said that the NWFP and Balochistan governments, the Institute's alumni and some of its friends, and more recently the Government of the Punjab, were supporting the studies of deserving students at GIKI.

The Institute has succeeded in its endeavour to impart quality education to the students, he said. "Over the years the Institute has been able to attract from abroad highly qualified professionals, both Pakistani and foreigners. Many of them are now serving in leading positions in the country. Shams-ul-Mulk, Chairman of Board of Governors of GIKI, read out the special message of late President Ghulam Ishaq Khan.

The Ph D degrees were awarded to Sirajul Islam, Asifullah Khan, Abdul Majid, Hassan Fawad Junejo and Muhammad Siddique. Sana Arif and Bilal Riaz bagged the Ghulam Ishaq Khan Medal and the Quaid-i-Azam Medal, respectively, for distinction in academics and overall best performance.

Faculty-based gold medals for BS programme went to Murtaza Shabhir Safri (Computer Science Engineering), Sana Arif (Electronic Engineering), Shakeeb Bin Hassan (Engineering Sciences) Ta1ha Qamar Yazdani (Mechanical Engineering) and Muhammad Salman Saif (Metallurgy and Materials Engineering).

In MS programme, the gold medals were won by Muhammad Umar (Computer Science), Gulzaib Rafiq (Electronic Engineering), Fazal Harj (Engineering Sciences) and Muhammad Bashir (Metallurgy and Materials Engineering).

Earlier, the President inaugurated Hostel No 8 of the Institute. NWFP Governor Ali Muhammad Jan Orakzai and Chief Minister Akram Khan Durrani, Chairman, Higher Education Commission, Dr Atta-ur-Rehman, parents of students and various officials attended the Convocation.


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## Owais

*SHC summons Pakistan Petroleum Limited* 

KARACHI (June 08 2006): Sindh High Court has issued notice to Pakistan Petroleum Limited (PPL) for June 8, 2006, in a declaratory and damages suit of a petroleum gas company against termination of contract by PPL.

Wak Ltd, a bottling liquefied petroleum gas company, under the name of 'Wakgas', submitted in its petition that it had entered into an agreement with PPL in 1990, which expired in 2000 but was subsequently renewed on same terms and conditions.

The plaintiff 's counsel, Nafees Siddiqui, said that the defendant on March 9, 2006 without discussing with the plaintiff sent a draft agreement for renewal of the contract for three years on profit sharing basis, and subsequently the plaintiff agreed to accept the terms and conditions of the profit sharing basis.

However, on May 11, 2006, the counsel submitted, a letter was sent by PPL to the plaintiff stating that plaintiff's agreement could not be renewed whereas the signed agreement was already delivered by PPL on May 12, 2006.

He said that an advertisement was given in national dailies by PPL inviting offers from licensed LPG companies for the quota within ten days of publication, but surprisingly on May 13 the supplies of plaintiff were disconnected and the same was being supplied to other companies without even waiting for 10 days after advertisement.

The counsel said that the defendant with ulterior motive and mala fide intention did not renew that agreement and the same was given to other company without merit and transparency.

He further submitted that PPL despite being subject to compulsory and overriding provisions on public procurement contained in the Public Procurement Rules and PPRA Ordinance did not follow prescribed criteria for open and competitive tendering in seeking to award plaintiff's portion of gas to another bidder without following due process and rules.

He requested that contract be renewed for three years as per agreement and for issuing decree against defendant in sum of Rs20,000,000 for the time its supplies remained disconnected. The SHC single bench comprising Justice Zia Pervaiz, after preliminary hearing of the suit issued notice to PPL for June 8.


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## Owais

*Azgard 9 seeks more time for PAFL bid money* 

ISLAMABAD (June 08 2006): Azgard 9-led consortium has approached the Privatisation Commission to seek more time for the payment of bid money for Pak-American Fertiliser Limited (PAFL).

Sources told this correspondent on Wednesday that the Commission was inclined to accept the request. However, since it's a default case, the Cabinet Committee on Privatisation (CCoP) will be the right forum to take decision on Azgard 9's request.

The sources added that the Privatisation Commission is preparing a case for presentation at its board meeting here on June 12, and subject to its approval the case will be referred to the CCoP for endorsement.

An official of the Privatisation Commission said, " We have received a request from Azgard 9 for extension in deadline for payment of bid money for PAFL but since it had failed to meet the first deadline now the CCoP only can decide the issue. The Commission will follow the CcoP guideline."

The sources said the CCoP is likely to soon decide the fate of Pak American Fertiliser Limited (PAFL) privatisation.

After Ibrahim Fibers' default on payment of bid money, Azgard 9 led consortium, the second highest bidder, had showed willingness to buy the PAFL on offer of Rs 16.11 billion. It had paid the earnest money and then the first instalment of 25 percent of the bid money (Rs 4 billion) as per schedule in April. However, it could not pay the remaining amount on time.

As per schedule, the consortium was required to pay 75 percent amount of the bid money by May 17, 2006.

The sources said Azgard 9 representative has conveyed to the Privatisation Commission that the consortium was making all-out efforts to raise money from the banks for payment of bid money and guaranteed to meet the extended deadline.

The third highest offer of Tariq Saigal's group has already expired on May 28, 2006.


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## Owais

*Pakistan gives $3 million for Hamas government* 

ISLAMABAD (June 08 2006): Foreign Minister Khurshid M Kasuri on Wednesday while reiterating Pakistan's full support to the Palestinian cause and the need for its resolution offered a dollars three million donation to help mitigate the sufferings of the Palestinian people.

Talking to Palestinian Foreign Minister Dr Mahmoud Al Zahar - who is here on a two-day visit, Foreign Minister Kasuri hoped the new Palestine government would enter into a constructive dialogue with all stakeholders to move the peace process forward.

Kasuri said Pakistan continued to extend unstinting support to all recent efforts aimed at resolving the Palestinian issue including the relevant UN Resolutions, the Quartet Roadmap and the Abdullah Peace Plan adopted by the Arab League Summit on March 2002 in Beirut.

Pakistan has consistently extended diplomatic, political and moral support to the Palestinian people since the inception of the conflict, which would be maintained till its resolution, the Foreign Minister added.

In the formal delegation level talks, Foreign Minister Kasuri expressed Pakistan's total solidarity with the people of Palestine in their quest for statehood. He said the government and people of Pakistan continued to follow the events in the region with concern.

"We attach great importance to an early negotiated settlement of the conflict. The leadership in Pakistan has repeatedly raised the Palestinian issue at the international fora, urging the international community to co-ordinate efforts to finalise the Middle East Peace Process," Foreign Minister said.

Dr Mahmoud Al Zahar comprehensively briefed Foreign Minister Kasuri and the Pakistani side on the current economic hardships being faced by the Palestinian people as a result of the withholding of international financial assistance.

Foreign Minister Kasuri announced a donation of dollars three million by the Government of Pakistan to mitigate the plight of the Palestinian people.

Dr Mahmoud Al Zahar expressed his gratitude for this timely and friendly gesture.


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## Owais

*Five percent excise duty not to crimp banks earnings* 

KARACHI (June 08 2006): Imposition of 5 percent excise duty on fee income is likely to be passed on to the consumers and, in the worst case, if the banks take the hit on their books then, on an average, banks' profits will be affected by average 2 percent listed at the Karachi Stock Exchange.

Depending on the size or balance sheet of the listed banks, in the worst scenario, which is unlikely because the five percent excise duty would certainly pass on to the consumers, would range from 0.5 percent to 4.5 percent, based on listed banks' 2005 results.

Tax on cash withdrawals is to document the economy, and analysts do not see a major impact of these cash withdrawal on banking deposits. An aggressive bank borrowing target bodes well for the banks as it is likely that higher interest rates (6-month T-Bill of 8.3 percent & 6-month KIBOR of 9.6 percent) will be maintained in the next 12 months.

Banking sector has been one of the best performing sectors of 2005, in which growth in profitability of the sector was recorded at 99 percent and market cap reached Rs 60 billion. In recently announced Budget FY07, some neutral to positive measures have been taken for the banking sector.

As expected, banking sector corporate tax has been reduced to 35 percent from 38 percent in the current budget, in line with the tax rate on other corporate entities.

Mohammad Imran, research analyst at Jahangir Siddiqui Capital Markets Ltd, said that many incentives have been announced in the Budget FY07 for the development of agriculture and SMEs. This may further increase lending of commercial banks in these areas. Five percent withholding tax has been imposed on the fee, commission and brokerage income of the banks.

Reduction in corporate tax rate is likely to result in after-tax profitability growth of 5 percent, keeping other things constant.

Measures to promote agriculture and SMEs are likely to result in increased credit demand from these sectors. Increase in NSS rates is not likely to result in a massive transfer of fund from the sector, as most commercial banks have also started to offer double-digit rates on their deposit schemes. Moreover, the superior service quality of banks will also strengthen the assumption that the deposits growth would not hurt from the rise in NSS rates.

Imran said: "Our 'Overweight' stance is maintained on banking sector. Bank's profitability is likely to grow by 44 percent in 2006 and 20 percent annually for next 4 years. The spread of banking sector is likely to remain favourable (that is, above 7 percent) in the year 2006. After this, we expect the spread to squeeze mainly due to rising competition for deposits and advances. However, large commercial banks will be affected less from it as they have excess liquidity with them and their costs of deposits is also on the lower side.


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## Neo

Friday, June 09, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\06\09\story_9-6-2006_pg13_7

_* Some reservations over civilian quota and money refund
* DHA invites applications through open ballot for the first time
* Submissions till tomorrow

By Noshad Ali_

LAHORE: People submitted applications for the open balloting of Defence Housing AuthorityÃ¢â¬â¢s (DHA), Lahore, Phase-VII enthusiastically, hoping to get a kanal (4,500 square feet) plot for the relatively cheap price of Rs 80,000, learnt Daily Times on Thursday.

DHA Lahore has invited applications for Phase-VII through open balloting for the first time, and several queues were seen in and outside different private declared banks.

A businessman, Jahangir Bhatti, submitting his application with a private bank said he was applying in an attempt to avail the fiscal opportunity. Ã¢â¬ÅI would lose Rs 5,000 if my application is not picked, however that is not a significant loss considering the plot of land I might get will be worth over Rs 3 million,Ã¢â¬Â said Bhatti. 

He said he could easily afford the Rs 75,000 development charges as an investment because they would be refunded by September Ã¢â¬â if he did not get the land. 

Ã¢â¬ÅThere is no harm in taking a risk over the processing fee if I can get a kanal plot in DHA by investing just Rs 80,000,Ã¢â¬Â said a police constable, asking not to be named. He said that civilians had been allowed to enter the balloting directly for the first time and people should avail the opportunity.

Karamat Ali, a retired government official, said that he had reservations about the civilian quota and return of money but would take his chances with the balloting. Ã¢â¬ÅI have communicated my reservations to the DHA administration but have not received a satisfactory answer,Ã¢â¬Â he said.

All serving civilian gazetted officers, semi-government officers, public representatives of federal and provincial legislative bodies, overseas Pakistanis below 65 years of age and above 18 years of age, senior civilian and armed forces personnel and recognised journalists can apply till June 10, 2006 (tomorrow).

The DHA has established 15 categories for application with the first ten categories (A to J) directly or indirectly related to Pakistan Army officials and the remaining categories (K to O) for other Pakistani citizens. 

DHA Marketing Director Rukham Khan said that DHA was among the countryÃ¢â¬â¢s best housing societies, which was why its land sold like hot cakes. Ã¢â¬ÅPeople have their reservations because they fail to understand how the authority works,Ã¢â¬Â he said. Most of the beneficiaries were civilians - not armed forces personnel, he added. 

Khan said the DHA did not buy or sell land but bartered it from the landowner. Ã¢â¬ÅThe DHA has used around 56 percent of the total land on developing infrastructure and the remaining has been given to land owners, who are usually civilians,Ã¢â¬Â he said. The DHA administration barters an acre of land and gives two kanals to the previous landowner, two kanals to the authority and the rest is used to develop infrastructure, he explained. The DHA marketing director said the number of army officials living in the DHA was a small percentage of the authorityÃ¢â¬â¢s total population. Ã¢â¬ÅThe DHA offers several services which is why people want to live here,Ã¢â¬Â he said. The high prices of land plots were not the authorityÃ¢â¬â¢s doing, but caused by market forces, he said, adding that the DHA had no role in pricing its land plots and just charged development costs without any mark-up for profit. Ã¢â¬ÅI cannot reveal the exact number of land plots available in Phase-VII, but it is bigger that Phase-VI and that had 12,000 1-kanal plots.Ã¢â¬Â

DHA Secretary Colonel Amir Ayub said the DHA specified categories to facilitate civilians. Ã¢â¬ÅThe total number of plots is confidential,Ã¢â¬Â he said, while assuring that all applicants would be treated equally.

DHA Spokesman Tajamal Hussain Anjum said no quotas had been assigned for any category and such details would depend on the number of applications. 

However, queries about quota made to DHA Islamabad (when it invited similar applications for land plots last year) were reportedly not entertained. Finally, a question was asked in the Senate on September 16, 2005. It transpired that 52 percent of the plots were reserved for serving army officers and 10 percent for retired army officers. Serving Pakistan Air Force and Navy officers were allotted five percent of the plots. Civilian employees of all grades, members of parliament and journalists had five percent each while senior citizens above 65 years had a quota of three percent.


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## Neo

QUETTA (June 08 2006): Governor Balochistan Awais Ahmed Ghani said the provincial government had obtained a grant of dollars 205 million from the Asian Development Bank (ADB) on soft conditions for which it was eligible to be felicitated.

The grant will be spent on improvement of social infrastructure including education, health and potable water in the province, he said. Speaking at the opening session of two-day consultation workshop under ADB here on Wednesday, he said the schemes designed under the loan would be implemented through the district governments for which the Nazims' role was very important. He called upon the Nazims to implement the schemes with diligently and honestly.

Referring to the local government system, he said the system was moving ahead successfully and gray areas of that system would be removed with the passage of time. He said the federal government had recently distributed Rs three billion under the Prime Minister Fund among the district governments in the province and urged the heads of the district governments to spend those on welfare of the people indiscriminately.


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## Neo

ISLAMABAD (June 08 2006): As many as 3,300 Pakistani workers would be sent to South Korea in next 12 months after inclusion of Pakistan in the list of its source countries, said Minister for Labour, Manpower and Overseas Pakistanis Ghulam Sarwar Khan while addressing a press conference here on Wednesday.

State minister for Overseas Pakistanis Raza Hayat Hiraj and Secretary Labour Asif Hayat Malik were also present. He said Pakistan had received demand from Saudi Arabia and Bahrain for the professional services of doctors, nurses and skilled manpower.

The minister said that a poly-technical institute in every district and vocational institute at every tehsil would be set up following the directions of President General Pervez Musharraf and Prime Minister Shaukat Aziz.

He said the professional training institute would be opened in the country with the technical assistance of National Technical and Vocational Training Commission (NVTC).

In the first stage, a technical training institute is being established with an amount of Rs 14 million in Kashmore, he added. He said that five remittances cards (silver card, silver plus card, gold card, gold plus card and platinum card) having different benefits would be issued to overseas Pakistanis. "Silver and golden cards will be for one year while silver plus, golden plus and platinum cards will be for the period of three years," he added.

The Minister said protection of labourers' interests as well as measures to protect industry was imperative for industrial promotion. He said under Companies Profit Workers Participation Act, the organisation, which had not so far established Trusts would be given an opportunity. "If they establish trust in the stipulated time frame, they would be exempted from fines and the interest of Trust Fund," he added.

Ghulam Sarwar Khan said the volume of investment was being increased from Rs two million to Rs five million for new companies while the limit of fixed assets was being increased from Rs four million to Rs 20 million. Such companies would be exempted from Workers Participation Act, he added.


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## Neo

ISLAMABAD (June 07 2006): The government will provide Rs 55 billion subsidy during 2006-07, against Rs 44 billion in 2005-06, to keep electricity prices at affordable level.

According to the 'budget brief', distributed among journalists in the post-budget press conference on Tuesday, the subsidy would be provided from budget allocations. But it was not clear if the subsidy would be given to Wapda only, or KESC would also be given its share.

An official told Business Recorder that the government's decision to keep electricity prices at affordable level was being considered for the last few months on Wapda's proposal.

He said that Wapda's distribution companies had sought Rs 4 to Rs 4.5 per unit increase in tariff, but Nepra allowed only Rs 2 to Rs 2.25 per unit raise.

According to him, the government has also approved a subsidy of Rs 1.2 billion for KESC to keep the tariff frozen, but the mechanism would be finalised by a committee, the notification of which would be issued by Prime Minister Secretariat.

Other sources said the government might extend Rs 10 billion subsidy for the three financially weak companies--Hyderabad Electric Supply Company (Hesco), Quetta Electric Supply Company (Qesco) and Pershawar Electric Supply Company (Pesco)--for improvement in their transmission system.

Wapda had asked the federal government to take up the deficit of Rs 36 billion and convert it into equity, in addition to sale of Wapda's rest of the shares in Kot Addu Power Company (Kapco) and extension of Rs 6 billion subsidy.

Sources quoted Wapda Chairman Tariq Hameed as saying recently that the utility had sought a financial package from the government to offset the soaring gap piled up due to high furnace oil prices and heavy purchase of power from the independent power producers.

However, the World Bank was stressing for the issuance of tariff notifications for the Discos which, the bank said, were the key sector reform steps which have yet not been completed and uniform tariffs applicable since November 2003 were still in force.


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## Neo

Thursday, June 08, 2006 

KARACHI: TMT Ventures, Pakistan's pioneering venture capital and private equity company, signed on Wednesday an agreement to jointly launch and manage a $100 million private equity fund with SEAF, a Washington DC-based global investment management firm. 

The new fund will provide growth capital, operational support and global market access to select Pakistani companies with high growth potential. 

Speaking at the signing ceremony, Sohaib Umar, CEO of TMT Ventures, said: "The joint venture signifies the interest of foreign investors in Pakistan as an emerging market with tremendous latent growth. For the last five years we have invested in Pakistan's budding entrepreneurs through our flagship Incubation Fund and now it is time to merge our learning and SEAF's global experience to unlock value in promising local ventures with strong management teams operating in traditional but high growth sectors". 

Present at the signing ceremony was Hubertus van der Vaart, President and CEO of SEAF. "Pakistan is at the threshold of an economic growth curve that favours the entry of focused private equity funds. By combining TMT's extensive local experience with SEAF's global best practices in managing investments hands-on in over 20 countries, I believe we have formed a formidable partnership for the future success of the fund," said Mr van der Vaart. "The keen interest of international financial institutions in the TMT/SEAF Private Equity fund is a clear indication that the investment community is taking notice of the economic potential of Pakistani companies and entrepreneurs. 

He said: "Pakistan will be an important addition to SEAF's international network of 15 offices in Central and Eastern Europe, Asia and Latin America. A senior SEAF professional will be based in Pakistan to augment the excellent local team of TMT Ventures." Private equity in its purest form operates on Islamic Shariah principles of partnership with sharing of risk and reward. "It is our intention to make the fund Shariah-compliant", said Sohaib Umar.


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## Neo

Thursday, June 08, 2006 

RAWALPINDI: Flexible economic policies of Pakistan have opened way of foreign investment in the country besides making it investment friendly country.

President Rawalpindi Chamber of Commerce and Industry (RCCI), Jalil Ahmad Malik said Pakistan has great economic potential and as a result of attractive industrial and agriculture growth, economic relations between UAE and Pakistan are increasing with every passing day. There are many Pakistani businessmen in UAE who are playing active role in socio-economic development of the Emirates, he added. 

RCCI president said the private sector of two countries has a great role to play to enhance the trade volume of the two sides. Naveed Janjua invited Pakistani investors to invest in Rais Al Khaimah. Ã¢â¬ÅRas Al Khaimah (RAK) is one of the seven emirates forming the United Arab Emirates (UAE) and there are no personal Income taxes, corporate income taxes and taxes on exports in Ras Al KhaimahÃ¢â¬Â, he added.


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## Neo

Thursday, June 08, 2006 

KARACHI: PakistanÃ¢â¬â¢s global IT revenue should reach almost $9 billion by the end of the 2009-2010. 

According to a spokesman of Pakistan Software Export Board (PSEB) on Wednesday the body is launching two projects, which will contribute to the governmentÃ¢â¬â¢s objective of providing quality human resources to the industry.

Over the last couple of years, the IT sector has been growing at a pace, with an average growth rate of around 50 percent per annum (Export 60 percent and Domestic 33 percent). 

The basic aim of these projects is to help IT companies expand their operations by simultaneously employing more people, and maintain a reduced financial burden on the hiring companies. This will, in turn, help companies recruit more human resources. He said in order to sustain and improve this growth, IT companies need around 232,000 professionals in the IT industry by the end of 2009-2010.

Currently, this number is little above 50,000. The industry needs to add around 180,000 more professionals within the next four years. He said in order to resolve these issues, PSEB will work as a proactive match-maker between educational institutes and the IT industry and will help to provide practical work experience to graduates and students, as expressed on many occasions by the minister of Information Technology, Sardar Awais Ahmad Khan Leghari. 

The first phase of PSEBÃ¢â¬â¢s IT industry internship project started in 2002. Till date PSEB has placed around 2500 IT graduates throughout the industry for a three month paid internship. Out of these 2500, 80 percent graduates secured jobs based on this experience. 

Minister of Information Technology, Sardar Awais Ahmad Khan Leghari would likely to launch the second phase of this program.

In the second phase of this project, PSEB intends to develop a talented human resources pool for the IT, IT-enabled services and computer graphics, animation and games development industry. PSEB aims to play a facilitating role by placing 10,000 students and fresh graduates from educational institutes within the local software industry, IT-enabled service companies, and the IT departments of public and private sector organizations. 

In continuation of PSEBÃ¢â¬â¢s Internship program, PSEBÃ¢â¬â¢s IT industry Apprenticeship program will financially subsidize the IT companies to recruit graduates possessing the basic skills and knowledge in Information Technology and other related disciplines to provide IT/ITeS services. PSEB will subsidize 1,000 employees from export oriented companies.


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## Neo

KARACHI: Computer dealers fear that removal of 15 per cent sales tax - proposed in federal budget 2006-07 - may increase the machineÃ¢â¬â¢s price by over 30 per cent at retail level and the decision has gathered them in Islamabad to hold talks with the authorities concerned.

Market sources say the Customs authorities had formally informed the importers about the decision and as per the new measure the new consignments would face 15 per cent general sales tax, which would be ultimately passed on at retail level.

Ã¢â¬ÅWe are moving to approach CBR (Central Board of Revenue) to convince them that the decision would hurt overall sentiment in computer trade,Ã¢â¬Â said Abdul Ghafoor of Pakistan Office Products, one of the biggest importers of computers and accessories in the country.

Ã¢â¬ÅThe meeting is not yet decided but people are in Islamabad to meet the CBR high-ups.Ã¢â¬Â

He said it was early to suggest the price increase ratio but the rates would go up by over 25 per cent. A single computer required over 140 components and the budget 2006-07 levied slabs on each component.

The federal government in the budget 2006-07 removed sales tax exemption on computer hardware and its accessories, but all the products have been offered exemption from customs duty. The country imports over Rs30 billion worth of both new and used personal computers and its related products.

On the other hand local assemblers find themselves trapped as they set up assembling units but eventually cost of their business is going to increase manifold.

Ã¢â¬ÅThe decision would affect each and every stakeholder either purchaser or seller of computers,Ã¢â¬Â said Ghias Khan, Chief Executive Officer of Inbox Computers, a local computer assembling company.

He said the duty would increase production cost of locally assembled computers, which he said would ultimately be borne by customers.

Ã¢â¬ÅWe are still trying to convince the authorities both in IT ministry and CBR,Ã¢â¬Â Khan added.

However, the importers and local traders in a desperate attempt have gathered in the capital to avoid the fresh slab as they did after budget proposals of 2004-05 when government imposed 5 per cent import duty on computers but later withdrew on industryÃ¢â¬â¢s demand.

Retailers of countryÃ¢â¬â¢s biggest computer paradise housed in twin Unis - Uni Centre and Uni Plaza - situated at I I Chundrigar Road, deal in new computers and accessories are puzzled after new levy imposed in budget 2006-07.

Ã¢â¬ÅWe have just heard that but have not formally received the orders, but the same would affect prices up to 30 per cent,Ã¢â¬Â said Nadeem Malik, Chairman IT, Karachi Electronic Dealers Association.

Presently, he said, new computers were available in the local market with prices ranging from Rs20,000 to Rs70,000 which could be inflated to Rs26,000 to Rs85,000.

"It is not the cae only of importers or traders,ÃÂ® said Malik. ÃÂ¬If the government imposes general sales tax, it would also encourage smuggling, which I believe definitely is not required by the government."


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## Neo

Thursday June 08, 2006 

ISLAMABAD: The government will once again face a trade deficit of 7.613 billion dollars as it has set the import target of 27.410 billion dollars in comparison with 19.797 billion dollars export target in the fiscal year 2006-07. 
According to the statistics issued by Planning Commission on Wednesday the revised export target was 16.777 billion dollars whereas the import target was 23.629 billion dollars and the trade deficit was shown 6.852 billion dollars. 

In the next fiscal year, the government will get 1324 million dollars by exporting rice and cotton besides getting 11603 million dollars from the exports of yarn, cloth, readymade garments, tents, canvas, hosiery, towels and bed wear whereas from export of fish, leather, carpets and synthetic textile it will get 1015 million dollars. 

Whereas it will spend 27.410 billion dollars on imports expenditures and from the total imports outlay 7.053 billion will be spent on import of oil products, 792 million dollars on import of vegetable oil, 551 million dollars on urea fertilizer, 8.9 billion dollars on capital goods and on miscellaneous import items 12.634 billion dollars will be spent.


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## Neo

Wednesday June 07, 2006 

SIALKOT : Sialkot International Airport, costing rupees two billion, would be operational likely on Aug. 14. According to Airport sources, the country's longest runway, measuring 3.6 kilometres, had been completed, which would provide landing and take off facilities to Boeing 747 and other aircraft in bad weather like mist. 

The sources said cargo terminal, apron and external roads of the airport had also been completed and terminal for domestic passengers was nearing completion. 


According to a rough estimate, over 10,000 exporters of Sialkot, besides a large number of exporters and other passengers of Gujrat, Narowal, Hafizabad, Mandi Bahauddin, Wazirabad, Jehlum and Mirpur (Azad Kashmir) would be benefited with this mega project. 


The regular functioning of the airport would not only accelerate the pace of trade and commerce activities, but would also help enhance the export volume to manifold while generate wide employment opportunities in the area. The Sialkot International Airport is being developed on "build, own and operate (BOO)" basis and it would be a landmark not only in the history of this export-oriented city and hub of cottage industries, but would also for the country. 


This mega project had a great significance because it was being totally financed by the private sector. 


The Sialkot International Airport would fully cater to the needs of golden industrial triangle of Sialkot, Gujranwala and Gujrat. Undoubtedly, the airport will bring a revolutionary change in the socio-economic development of the region. 


With the merging of Dry Port, Export Processing Zone and airport at Sialkot, the importance of the area will further enhance, which will ultimately help substantial increase in the exports from the area in future. 


The Sialkot Airport is being developed over 1,004 acres of land, where best facilities would be available, besides sufficient space has also been reserved for airlines offices, aircraft catering units, ground handling services, cargo warehouses, restaurant and car parking etc. 


According to a rough estimate, 60 percent of aircraft movement will be for domestic, while 40 percent will be for the international carriers. The potential traffic forecast for the Sialkot International Airport is scaled down at the time of opening to 472,000 passengers a year, while estimated cargo tonnage at the time of opening is expected to be 24,000 tons. This means that by the end of year 2012, about 53,000 tones of cargo will be lifted from the SIA.


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## Neo

Monday June 05, 2006

ISLAMABAD : The Private Power Infrastructure Board (PPIB) has decided to implement a 60 megawatts power project in Khuzdar district. 

The $50 million project would be developed and implemented in the private sector on international competitive basis to ensure transparency and fair competition, a meeting presided over by Minister for Water and Power Liaqat Ali Jatoi decided on Thursday. 


The project based on reciprocating engine technology, using residual furnace oil as fuel, will be located between Khuzdar and Baghbana.


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## Neo

AMSTERDAM (updated on: June 09, 2006, 21:17 PST): Pakistan and Iran will have agreed all important elements of a planned gas pipeline by the end of this year, a government adviser involved in the negotiations said on Friday.

A plan to pump Iranian gas to India through Pakistan was first proposed more than a decade ago, but progress has been slow because of tensions between India and Pakistan and, more recently, US opposition to Iran because of its nuclear programme.

"Certainly within this year, we should have firmed up arrangements ... all the critical parameters will have been addressed," Mukhtar Ahmed told reporters on the sidelines of the World Gas Conference.

Ahmed said the pipeline was economic even without a proposed extension to India, but added Indian officials had expressed eagerness to participate.

In April, the oil ministers of Iran, India and Pakistan held talks in Qatar and said they were close to a deal on the gas pipeline, which could possibly be signed in June.

But while attending as an observer the OPEC meeting in Caracas on June 1, Iranian Oil Minister Kazem Vaziri said that despite good progress, there were issues to resolve, such as the price.

The government's energy advisor said a proposed pipeline from Turkmenistan was less certain because it was unclear if there was sufficient gas available for the project.

Separately, Ahmed said he expected progress on the privatisation of Pakistan Petroleum Limited (PPL) "imminently".

The government listed 10 percent of PPL on the Karachi Stock Exchange in 2004 and last August shortlisted four potential bidders for a 51 percent stake.


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## Neo

RAWALPINDI (June 09 2006): President General Pervez Musharraf on Thursday expressed his strong commitment to socio-economic uplift of the people in Federally Administered Tribal Areas (Fata) through an effective system of governance and provision of economic opportunities in the region.

He was chairing a high-level meeting, which reviewed administrative reforms, development and law and order in the Fata. Prime Minister Shaukat Aziz also attended the meeting. President Musharraf emphasised that stepping up of economic activities at grassroots level would not only stem poverty but also bring prosperity to the masses. "A sustained focus on socioeconomic wellbeing of the local people, better education and health facilities will improve the quality of life for the people in the area," he stated after receiving a briefing from the NWFP governor on Fata.

The President expressed the hope that increased financial allocations would lead to a visible change and usher in an era of development in the tribal areas. He noted that construction of an elaborate road network, hospitals and schools would bring the tribal areas into the mainstream of development.

In his remarks, the Prime Minister said the government has allocated resources for the development of the tribal areas in the budget and added huge allocations would help alleviate poverty in the area and set the pace for fast-track development.

NWFP governor Ali Muhammad Jan Orakzai, chief minister Akram Khan Durrani, information minister Muhammad Ali Durrani, interior minister Aftab Ahmed Khan Sherpao, Adviser to prime minister on Fata Imtiaz Ahmed Sahibzada and senior officials also attended the meeting.

The meeting was part of a formal review of law and order situation, political reforms and development projects in the tribal region. The agenda of meeting includes local participation in development projects, creation of job opportunities, changing political agents, bringing border security forces under the control of political agents and strengthening of levies force to withdraw army from various parts of the tribal belt.


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## Neo

LAHORE (June 09 2006): UK Trade and Investment Director Hamish Daniel has said that Britain, being the largest investor in Pakistan, wants to multiply its investment here and is taking all necessary steps in this regard.

He expressed these views while speaking at the Lahore Chamber of Commerce and Industry (LCCI) on Thursday.

LCCI President Mian Shafqat Ali, Senior Vice-President Abdul Basit, Vice-President Aftab Ahmad Vohra and former LCCI president Mian Misbahur Rehman were also present on the occasion.

Hamish Daniel said that a number of projects were in the pipeline, as the consistent economic policies of the present government had impressed the potential British investors, who had shown their desire to shift their operations to Pakistan, which is not only a corridor to Central Asian states, but also fast getting the status of regional economic leader.

He said the British government would continue to facilitate Pakistani businessmen for the promotion of trade between the two countries. The relations between Pakistan and UK are developing very positively, as a lot of high-ranking visits are expected this year, he added.

Speaking on the occasion, the LCCI chief thanked the British government for getting anti-dumping duty on the export of bed-linen reduced from 9.9 percent to 5.8 percent by the European Union.

Although the trade between Pakistan and UK has been gradually growing from $1.1 billion in 2002-03 to $1.4 billion in 2004-05, showing an increase of 27 percent, but it still leaves much to be desired at in view of the historical relationship between the two countries, he added.

"The participation of Pakistani exporters in the international trade fairs in the UK and vice versa could also expand trade between the two countries", he added.

Shafqat Ali said that Pakistan offers good scope for investors in information technology, telecommunication, infrastructure, textiles (value-addition), oil and gas, water and power, food and food processing, SMEs, engineering, and tourism and services. "We are particularly keen in British investments that could provide transfer of technology to Pakistan", he added.


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## Neo

SIALKOT (June 09 2006): Punjab Chief Minister Pervaiz Elahi has approved the road network project, amounting to Rs 1.42 billion, said Sialkot District Nazim Muhammad Akmal Cheema.

Addressing a press conference here on Thursday, he said under the programme, special attention would be accorded on repair and construction of farm-to-market roads and highways in the district.

Apart from this, the District Nazim said that Sialkot-Gujranwala would be converted into dual carriageway at a cost of Rs 1. 20 billion, while Sialkot-Eminabad road would be constructed, costing more than Rs 720 million, and work on both the mega projects would be carried out in near future, he disclosed. The District Nazim said that modern traffic system would be implemented in the city during the next financial year.

Under the directives of the Chief Minister, Sialkot district government had fixed the priorities for ensuring the facilities of health, education, road network, farm-to-market roads, agriculture and sports in the district, he said.

Cheema said that extra-ordinary efforts were being made for controlling the price hike, and added that a district price control committee was being made effective.

Special efforts were being made for maintaining law and order situation, aimed at protecting life and property of innocent citizen.

The Punjab government would provide more funds during the next financial year for undertaking development projects pertaining to people's welfare and to provide basic facilities to the common man, Cheema said.

Akmal Cheema vowed that all resources and means would be mobilised for converting Sialkot district into a model district as well as utilisation of development funds would be crystal clear.


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## Neo

ISLAMABAD, June 8: The Securities and Exchange Commission of Pakistan (SECP) registered 1,135 companies last month, which is the highest number of new companies registered with the commission during a single month.

With the new incorporations up to May 31, 2006, the total portfolio of registered companies with the SECP has reached 50,001, shows SECP statistics.

Of the 1,135 companies, 1,118 were companies limited by shares having a paid-up capital of Rs1.2814billion. These comprise 11 public unlisted companies, 1,082 private companies and 25 single-member companies.

Besides, seven foreign companies, eight associations not-for-profit and two trade organizations were also registered.

The Company Registration Office (CRO) at Karachi registered the highest number of 297 companies, while Lahore, Islamabad and Peshawar CROs registered 279, 180 and 151 companies, respectively.

The CROs at Multan, Quetta, Faisalabad and Sukkur registered 92, 76, 58 and two companies, respectively.

As per the sector-wise registration, 479 companies were registered in the services sector, 299 in tourism, 64 in trading, 41 in finance and banking, and 33 in the communication sector.

Some 5,478 companies were registered during the period from July 1, 2005 to May 31, 2006 as compared to 3,078 incorporations during the financial year 2004-05.

The increase in company incorporation could be attributed to the pro-business policies adopted by the government and steps taken by the SECP to promote growth in the corporate sector, stated an official announcement.


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## Neo

KARACHI, June 8: JS Air and AirblueÃ¢â¬â¢s collaborated first flight would take off on June 17. Destination: Gwadar. At a press briefing held jointly by JS Air and Airblue on Thursday, Air Commodore (retd) Munawar Alam Siddiqui, Chairman of JS Air, said the event would mark a milestone in the history of aviation in Pakistan, since it was the first-ever joint venture between any two airline operators in Pakistan.

The JS Air chairman was flanked by Shahid Khakan Abbasi, chief operating officer of Airblue, Air Cdr (retd) Rizwan Yusuf, chief executive of JS Air and Nadia Siddiqui, group head of corporate communications at JS Group.

Mr Siddiqui said the joint venture partners planned to start operations from the first Ã¢â¬Ësocio-economic routeÃ¢â¬â¢ i.e. Gwadar-Karachi. Ã¢â¬ÅThe volume of flights would soon be increased, with the addition of several other short haul destinations,Ã¢â¬Â he said, adding that the shared vision of the joint partners was to connect socio-economic areas to bigger cities in the country.

It was observed that JS Air was a recently-launched charter aircraft company by the JS (Jahangir Siddiqui) Group that operates in diversified fields. The group core is JS Finance which runs companies in asset management, investment banking, insurance and trade finance, apart from five vertical businesses.

Airblue, designated by the government as the second national carrier, has been operating since 2004 and has a fleet of five Airbus A-320 and A-321 aircraft.

The three airmen sitting on the dais answered reportersÃ¢â¬â¢ queries. It was stated that JS Air was entering the aviation industry with two Ã¢â¬ËBeach craft 1900 aircraft acquired from the US. The 19-seater (all windows and aisles) aircraft would initially undertake six flights a week on Karachi-Gwadar-Karachi route.

The joint venture with Airblue would synergize operations. Such flights called Ã¢â¬Åcommuter operationsÃ¢â¬Â, though an unfamiliar term in Pakistan was said to be popular all over the world, with some 450 planes operating in the US alone, as Ã¢â¬Åcommuter operatorsÃ¢â¬Â. The joint venture partners planned to add more aircraft in the fleet in August. One month after the commencement of operations on the Gwadar sector, they planned to introduce a second frequency on the Gwadar route to operate in the afternoon.

Rizwan Yusuf said: Ã¢â¬ÅJS Air is a regional air charter business established to serve relatively low passenger-volume routes for commercial airlines as well as providing executive charter services to the oil and gas industry and other leading businesses.Ã¢â¬Â

About Airblue, Shahid Abbasi observed that the airline operated 24 flights daily, serving Karachi, Islamabad, Lahore, Quetta, Peshawar and Faisalabad within Pakistan. In 2005, it commenced short-haul international operations to Dubai and the airline was now finalizing plans to operate additional long-haul routes. Ã¢â¬ÅAirblue recently placed a $790 million order with Airbus to purchase 10 additional aircraft with deliveries commencing in 2008,Ã¢â¬Â Mr Abbasi said.


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## Neo

Sanjay Dutta
Thursday, June 08, 2006 

NEW DELHI: India is slipping on oil diplomacy. While New Delhi serenades Beijing with MoUs for cooperation, the dragon is choosing to dance with Pakistan for an energy corridor through Gwadar port, creating a shorter route to the Arabian Sea and West Asian oil and gas that lie beyond. 

A RAW report says China and Pakistan are examining a joint investment company to finance a slew of projects, including a 21-million-tonne refinery and an oil pipeline, as part of a plan to develop an 'energy zone' around Gwadar port. 

This means India's rivalry with China now spreads beyond oilfield acquisitions to transnational pipelines from Iran and Turkmenistan. Pakistan is cultivating Beijing as an alternative to India, which holds the key to economic viability of these projects. 

If India walks out of, say the Iran pipeline, Beijing can step in. Beijing has built an oil pipeline from Kazakhstan across the inhospitable terrain of the Tibetan plateau and can tap into a gas pipeline coming into Pakistan from Iran or Turkmenistan. 

The plans are expected to be finalised when president Pervez Musharraf travels to Shanghai on June 13 for the fifth Shanghai Cooperation Organisation summit. Oil minister Murli Deora is to represent India at the grouping of hydrocarbons-rich Central Asian countries and China. 

Deora's visit comes at a crucial time as India's quest for Central Asian hydrocarbons treasure has failed to make headway, particularly with oilfield deals doddering in Kazakhstan. In contrast, China's Gwadar plan will help bring Central Asia sail closer into its fold.


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## Neo

Abu Dhabi: Pakistan International Airlines yesterday announced that flights between the UAE and Bal-ochistan are to resume after a gap of more than four years.

According to Tanvir Ahmad Khan, Pakistan International Airlines (PIA) Gulf, Middle East and Africa Manager, based in Dubai, the airline has introduced two weekly flights on Thursday and Sundays between Sharjah and Turbat in the Makran division of Pakistan's Balochistan province.

The UAE has a strong Baloch community of about 100,000 members, mainly from Makran.

The first flight, an ATR-5 48-seater, is scheduled to take off from Sharjah International Airport at 10.45am on Sunday.

"We have already informed travel agencies about our new destination from the UAE. We are offering a special price of Dh780, including local airport and fuel taxes, for a return ticket," Khan said.

He added passengers would be allowed a 20kg baggage allowance with a charge of Dh17 per each additional kilogram of baggage. 

He said tickets would be available at all PIA ticketing offices and travel agencies throughout the country.

"My advice to passengers is to avoid carrying excess baggage because we have a small aircraft on the route."

A Sharjah-based private company, Orbit Aviation, was scheduled to start its air services between Sharjah and Turbat via Gwadar on May 12. 

The company had to cancel the service at the eleventh hour at the request of Pakistan's Civil Aviation Authority. 

An official from the company said yesterday they would start the three weekly flights between the two destinations as soon as they sorted out insurance procedures with the Pakistani authorities.

DUBIOUS 
Community members reserve judgment

The Baloch community here did not receive the news of the resumption of the air service with excitement.

According to community members, they have been promised this for years but nothing has materialised. 

Haji Lal Mohammad, a resident of Al Ain, said: "We have been demanding this service for years. Every time we were promised the service would be resumed this month or the next, but nothing ever happened. Since then we have lost hope, I don't believe the first flight will take off as announced."

Another community member, Mohammad Mir, said he has been hearing this for years. He said: "However, it is a good news if it really happens. The airline should also operate international flights to and from Quetta, which is the capital of the province. It is the only provincial capital of a Pakistani province that does not have an international air link," he added. 

Ali Mohammad, Baloch, Pak Baloch and Sindhi Welfare Association Secretary-General, said: "We are grateful to PIA for the support. We hope the new service will succeed. The community will cooperate with the airline to make this service a success so it is expanded in the future."


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## Neo

Friday, June 09, 2006 

ISLAMABAD: The ministry of defence is facing several objections on the overall price of land to be acquired for a new international airport in Gwadar as the proposed price is more than 180 percent higher than the amount paid by the Pakistan Railways (PR) for land acquisition in the same area in the recent past, a senior government official told the Daily Times on Thursday. 

The ministry of defence has proposed that price of land should stand at over Rs 155,000 per acre for the new airport in Gwadar. The proposed cost is more than 180 percent over the land acquisition cost of Rs 55,000 per acre paid in the recent past by the PR. 

The Gwadar airport has been proposed to be built in an area of 6,600 acres about 26 kilometers in the northeast of Gwadar city. The governement anticipates Gwadar to become a regional economic hub and in preparation for this has issued a directive for the development of the new Gwadar international airport. The airport will be given international status and it is expected to operate under the open skies policy. In the meantime, there are plans to improve facilities at the existing airport to facilitate the movement of wide-bodied aircraft, the official said. 

The ministry of finance, the Planning and Development Division (P&D) and other authorities concerned have raised objections over the increased cost proposed for land, which is to be acquired for the new international airport. The authorities concerned have objected to the proposed price of land and said that this issue must be looked into separately from the overall project, which has been approved by the P&D in principle. The ministry of defence defended the proposed price and said that it had been calculated by the Military Land Cantonments Department and it is according to land value, which is in practice in the area. The nature of the project was such that the P&D had granted approval to the overall project, but the cost of the scheme could be revised after the report of the special committee, constituted by the Central Development Working Party (CDWP). 

The committee, which includes officials from the ministry of finance, ministry of defence and government of Balochistan, will present its report on the issue to the P&D before the next meeting of the CDWP, which is to meet some time this month. 

The official said that the ministry of finance and the P&D have agreed on almost all the criteria of the project implementation. However, the ministries are only looking into the land price issue separately due to recent land acquisition by the PR in the same locality. The land acquired by the PR is part of the government's overall strategy to connect Gwadar with the rest of the country and the world through rail, land and air routes as Pakistan sees the underconstruction Gwadar Port to be great hub of economic of activity of the region. Pakistan wants to provide facilities of international standards in and around Gwadar so that foreign traders and investors could get hassle-free access to and from the commercial hub of the country, the official said.


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## Neo

Friday, June 09, 2006 

PESHAWAR: All Pakistan Commercial Exporters Association (APCEA) has held the budget documents 2006-07 as balanced and welfare oriented that would certainly help mitigate worries of the common man especially the salaried class.

Faqir Hussain, chairman APCEA in a statement on Thursday welcomed increase in pension and salaries of government employees. However, he said that exporters should have been given sufficient relief, especially exemption in income tax for five years.

He asked the government to review its decision about increase on duty on banksÃ¢â¬â¢ cheques and property tax.

He demanded restoration of 2004 Order regarding import duty on precious and semi precious stones, which was revoked in 2005. 

He called for giving free package to the exporters however he expressed the confidence that the government would announce the same at the time of trade policy.


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## Neo

KARACHI: Paktel, a cellular service operator, has broken new ground by launching Ã¢â¬ËTalk FreeÃ¢â¬â¢ package. Ã¢â¬ÅWith this package, Paktel has set new standards in the industry, keeping in mind the customerÃ¢â¬â¢s cellular needs,Ã¢â¬Â a Paktel statement said. Ã¢â¬ÅTalk Free package allows Paktel GSM prepaid customers to not only enjoy Ã¢â¬ËfreeÃ¢â¬â¢ Paktel to Paktel calls, but also send SMS to all networks in Pakistan for 10 paisa only. All this only for Rs500 per month.Ã¢â¬Â


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## Neo

KARACHI (June 10 2006): The corporate sector of Pakistan has become quite matured during the last few years and is now acceptable to the international community as a developed sector.

These views were shared by president of BASF Market and Business Development Asia Pacific Dr Wolfgang Hapke while speaking at the launching of Product Booklet titled "Help Our Customers To Be More Successful" and 'CDs' here on Friday. "The corporate level in Pakistan has risen many folds internationally," he remarked.

He said: "We are converting *the status of Pakistan from an agricultural country to a supplier and mid-manufacturing country*. This would help in setting up more industries and ultimately in the generation of more and more employment opportunities."

Dr Wolfgang Hapke further said Pakistan is well positioned geographically and manufacturing sector places this country on a great exposure. Commenting on his first visit to Pakistan, he said it is an honour for me to be in this beautiful country.

Earlier, BASF Pakistan managing-director Qazi Sajid Ali said the company believes in relationship that turn into permanent relation. "We don't want to be market leader but want to be at par with the needs of businesses," he added.

"We want to be a reliable partner to all industries offering BASF's intelligent system solutions and high-value products, agricultural products and fine chemicals to crude oil and natural gas," he added.

"As far as welfare work is concerned," he said, "we followed a noble idea and the company placed an order of 32,000 footballs to Sialkot, which distributed among the BASF community at one dollar each. The amount generated was given to victims of earthquake-hit areas." The money we generated was a little amount but the cause was huge and the idea was not to forget quake victims of Northern Area's.


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## Neo

KARACHI (June 10 2006): Global Investment House KSC, based in Kuwait, has acquired 42.8 percent stake in Jahangir Siddiqui Capital Markets for 2.25 billion rupees ($37.4 million). Global Investment has bought 10.35 million shares at 217 rupees each, Jahangir Siddiqui said in a faxed statement to Karachi Stock Exchange.

Global, having established several new companies to capitalise opportunities in the regional market, has yet again set the company to capture a significant opportunity for luxury serviced residences in Middle East and has joined hands with Fraser, one of the world's leading dedicated serviced residence operators, in order to manage the company's planned serviced residences.

In last three years, Global has successfully established five real estate companies in Kuwait, UAE, Qatar and Bahrain, of which one is listed on Kuwait Stock Exchange. The Company will significantly benefit from Global's expertise and experience in setting up successful operations and achieving accelerated development of seven properties.

Global had successfully launched two new companies in the first quarter 2005, with a capital of KD60 million (Kuwaiti dinar). One was First Bahrain Real Estate Development Company with a capital of KD30 million. The second was Al-Soor Financing & Leasing Company KSCC (Al-Soor), a conventional consumer finance company.

Currently, Global is managing private placement for three companies--Al-Nawadi Holding Company, National International Holding Company, and Al-Waseela Real Estate Development Company.

Global has managed private placement for 24 companies to over KD405 million, established 16 companies with a total capital of KD340 million, in addition to listing around 13 companies at the Kuwait Stock Exchange. The Global also launched its Global Small Cap Fund, the first of its invests in small capitalisation companies listed on the Kuwait Stock Exchange.

The market studies conducted by Global revealed that historically, small cap companies at Kuwait Stock Exchange continuously outperformed the market indices and other sectors overall. This latest addition to Global's list of unique investments funds is ideal for investors diversify their portfolio, and gain exposure to the potential growth of small cap Kuwaiti market.

Currently Global manages more than 25 investment funds with various strategy, recorded a performance above market indices that won them local and international appreciation's. Recently Eurekahedge ranked Global Distress Fund, third best the world, while Barclay Group ranked it 7th best hedge fund in the world sharpe ratio.


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## Neo

ISLAMABAD (June 10 2006): China will set up alternative renewable energy plants and would also help to manufacture wind turbines and solar cells through joint ventures with Pakistan.

According to the agreed projects between the two countries during the three-day Pak-China Forum include setting up wind farm, waste to energy and hydropower plants along with manufacturing solar and wind turbines.

China would help in setting up various projects of renewable resources in Punjab and Sindh, says a copy of Pak-China Forum, which was made available to Business Recorder.

Two 50-megawatt plants for producing energy from waste would be set up in Lahore and Karachi. Similarly, four 50MW wind farms would be established through joint venture in Sindh and Punjab.

China would also help construct two hydropower plants at the headworks in Punjab. CWE of China and Kingdom Hydro of Pakistan will construct 10-12 MW mini hydro power plant at Marala headworks and 20MW at CJ link canal.

China Poly Group Corporation and Trillium Pakistan through joint ventures would develop solar cells, which would later culminate to manufacture them in the country. CWE China, Xinjiang Wind Energy Liability, China and AEDB, Pakistan will carry out a feasibility for wind turbines manufacturing in Pakistan.

Poly Technologies China Inc and Army Welfare Trust (AWT) would materialise biomass/waste to energy projects in Pakistan.


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## Neo

ISLAMABAD (June 10 2006): Prime Minister Shaukat Aziz has said the government is working to maintain the tempo of growth achieved during the last few years and its vision is to achieve higher growth with dignity and equity.

Talking to a group of MNAs, who called on him at his chamber at the parliament house Friday evening, the Prime Minister said the record high amount allocated for development projects in the budget 2006-07 will lead to improvement in quality and standard of life of people, employment generation and poverty alleviation.

The Prime Minister said the government will spend a substantial amount on providing subsidies and to provide these commodities to the people at affordable rates. He said in addition to providing these commodities through the utility stores, the government is also taking steps to ensure their availability on subsidised rates in the open market.

Parliamentarians discussed with the Prime Minister issues of their respective constituencies. The Prime Minister asked them to ensure timely completion of development projects in their respective areas so that benefits of growth reach the common man.

Among others who met the Prime Minister included privatisation and investment minister Zahid Hamid and minister of state for petroleum and natural resources Mir Muhammad Naseer Khan Mangel.


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## Neo

ISLAMABAD (June 10 2006): The United States will provide $3 billion assistance to Pakistan for economic development, US ambassador Ryan C. Crocker said on Friday. He was addressing at the signing ceremony of Memorandum of Understanding (MoU) between the Gems and Gemological Institute of Pakistan (GGIP), Peshawar and Asian Institute of Gemological Sciences (AIGS), Bangkok at Islamabad Chamber of Commerce and Industry (ICCI).

An official told Business Recorder, "The figure is $3 billion over a five-year time period (FY2005-09), $600 million per year, $300 million in economic assistance and $300 million in military assistance. There is an additional $510 million US assistance for earthquake relief and reconstruction."

Crocker said the United States Agency for International Development (USAID) was funding AIGS to assist the new partnership under the Pakistan Initiative for Strategic Development and Competitiveness (PSIDC) to make it a world-class institute.

He said new affiliation between GGIP and AIGS would help upgrade the skill level in gemology in Pakistan, increase productivity of gems and jewellery industry and generate employment opportunities as well as increase exports.

Speaking after the MoU signing ceremony, industries minister Jehangir Khan Tareen said the government was making efforts to enhance exports of gems and jewellery to $500 million following the Bangkok Gems and Jewellery fair 2005, in which Pakistani companies received orders worth more than $4 million.

Later, talking to newsmen, Jehangir Tareen said the government is not reviving the ration depots' era of 1970, as utility stores are aimed at providing essential commodities at subsidised rates.

He was of the view these stores are being set up across the country to bring stability in the prices of essential commodities and rationalise prices of these commodities in the market.

The minister said prices of essential commodities have escalated because of rapid economic growth that has increased the purchasing power of people. As a result, the demand-supply gap had widened, he added. Under the MoU, GGIP will be offered all courses available at AIGS, Bangkok, with certificate and diplomas. These certificates and diplomas will be internationally recognised and will be based on completion of coursework meeting AIGS standards.


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## Neo

ISLAMABAD (June 10 2006): Pakistan's recent economic turnaround and its effective handling of last year's earthquake catastrophe have raised the country's profile, say Pakistani expatriates in their emails sent to President Pervez Musharraf's website.

In a number of emails, the Pakistanis living in various countries around the world, have praised the country's growing regional and international importance and government's efforts aimed at internal consolidation and economic stability.

They have questioned the unscientific approach and conclusions derived from sketchy newspaper reports that have led to a foreign organisation's bracketing Pakistan with some weak and "failing states" and described its inclusion in the list as preposterous in view of improved ground and economic realities.

The emailers particularly note the country's sustained turnaround and an attractive investment climate, and emphasise that this fact has been repeatedly and duly recognised by leading world financial institutions and economy-rating organisations.

A Paris-based Pakistani expatriate, Iqbal Latif while commenting on the rating of states by Foreign Policy and the Fund for Peace, tersely points out that a state winning international confidence in the form of tremendous sales of various international bonds cannot be counted as not delivering.

"Some e-mailers take into account indicators used in the ranking of states like mounting demographic pressures, movement of refugees and other internal factors and assert that "Pakistan just does not fit the criterion."

Counting a series of achievements, the e-mailers contrast Pakistan's ground realities with some of the regional countries, contending strongly that Pakistan is gaining strength as it attracts investment and opens up economic opportunities for its people.

In their detailed comments, they also note that some regional countries face instability while others are home to one of the world's largest population living below poverty line but they have been ranked better than Pakistan.

"The exceptional management of the earthquake disaster alone should have propelled Pakistan to much higher ranking. The Economist wrote this week the earthquake that struck Kashmir and northern parts of the country, killed 73,000 people, displaced three million and left the local government in pieces. It was feared that the Himalayan winter would bring another wave of death. That it did not, can be explained by two things, the Herculean labours of Pakistan Army and outsiders' generosity," concludes Latif.


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## Neo

ISLAMABAD (June 10 2006): Minister for Communication, Muhammad Shamim Siddiqui said on Friday that Rs 400-500 billion would be spent on roads network in the country during the next ten years and the process is going on smoothly.

Speaking in a PTV programme he said that last year an amount of Rs 20 billion was initially allocated for roads network under Public Sector Development Programme (PSDP) while a grant of Rs 4 billion was given in the last quarter. By including the income of toll money and other sources the Ministry spent an amount of Rs 30-31 billion He said that this year the overall expenditures on the road network is expected to remain about Rs 40 billion.

He said the improvement and expansion of highways and construction of motorways from Karachi to Peshawar and onwards to China, Iran and Afghanistan is part of the ten years plan.

He said, a Malaysian firm has been assigned the project of M-4 from Faisalabad to Khanewal on BOT basis while the World Bank and Asian Development Bank have arranged funding for M-5 from Khanewal to Rajanpur.

KÃÂ¡rakurram highway is being upgraded rapidly and the reconstruction of Thahkot bridge would be completed within two years. Once constructed, the bridge would help expedite the construction work on KK highway.

To a question he said, total length of roads in country is 2,60,000 kilometer out of which 10,000 kilometers are under the control of central government. To another question he said that Super Highway between Karachi and Hyderabad is being made into a six-lane road.


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## Neo

Saturday June 10, 2006 

ISLAMABAD: Chairman Pakistan Telecommunication Authority (PTA) Shahzada Alam has said 3-G technology will be introduced in 2007 in the country adding that 80 percent work on mobile number portability system has been completed and it will be implemented till October. 
He said this while addressing the concluding session of training course for engineers organized by Com Global here Friday. 

He held that world is witnessing new technology with every passing day. It is incumbent on us that we should continue to keep our engineers updated on modern technology. 

He went on to say that m0bile phone sector is progressing on fast track basis in the country. We have gone ahead other countries in terms of development in the region. 

He informed the state of the art 3-G technology would be put in place in 2007. However, we donÃ¢â¬â¢t want to take any hasty step presently in this connection, as 6 mobile phone companies operating in Pakistan are engaged with reference to other packages. 

He told that work is underway on fast paced on mobile phone number portability system. 80 percent work has been completed and soft ware, hard ware have been secured. But still reservations of some operators are there which will soon be alleviated. System will be implemented in October and Pakistan will become the first country in the region in introducing this system.


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## Neo

Saturday June 10, 2006 

LAHORE: ThurayaÃ¢â¬â¢s regional head of Gulf and South East Asia, Ahmed-Al-Sharief, has said Thuraya is the largest satellite mobile phone service provider globally. "We are providing our services in 120 different countries all over the world", he said while addressing a press conference here on Friday. 
Mr. Sharief appreciated the policies of Pakistan government that has provided friendly market to the international investors. "We are decreasing the satellite broadband tariff for different cities of Punjab due to which common citizens of the province can enjoy the latest and cheapest services of Thuraya", he stressed. 

With the help of Punjab government, we are establishing regional offices that would be setup in different cities of Punjab especially in Rahim Yar Khan and Multan and we would set up IT and Telecom institutes so that young talent can get the latest knowledge, he added. 

He claimed that this cooperation will be fruitful for both countries in future as the UAE government has already invested a lot here. He emphasized that satellite mobile phone is very important and we are trying to provide its services to far flung areas by reducing the tariffs. 

"We are planning to introduce monitoring system for water reservoirs that would enable the irrigation department to monitor the water level and for this the government of Punjab has asked our consultancy", he said. 

The government has also demanded the monitoring system for the movement of cars with latest technology. "For this, we are in contact with different companies of Lahore and it would lead to eliminate the car smuggling within the country". 

At the occasion, Chief Operating officer, Thuraya Mr. Sheheryar Hasan and Senior Project Manager, Thuraya, Mr. Junaid Hashmat also expressed their views.


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## Neo

Saturday, June 10, 2006 

KARACHI: The pioneer in Islamic banking, Dubai Islamic Bank (DIB), has committed to invest $100 million in its Pakistan operations with a plan to substantially increase its branch network over the next 18 months. 

According to a press release here on Friday, a letter of intent was handed over to Dr Shamshad Akhtar, Governor of the State Bank of Pakistan, by Saad Abdul Razzak, Group CEO, Dubai Islamic Bank, in the presence of Shaukat Aziz, Prime Minister of Pakistan, and Sheikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and ruler of Dubai during his recent visit to Pakistan.

Sharing the expansion plans of the Bank, Saad Zaman, CEO Dubai Islamic Bank Pakistan, said: Ã¢â¬ÅAs a first step, we will be submitting a detailed 18-month branch network expansion plan to the SBP for approval. 

Our flagship branch in Karachi is fully operational and we will now be opening branches in Lahore, Islamabad, Faisalabad and Rawalpindi by June 15. We are targeting more branches by end of this year to reach our customers.Ã¢â¬Â

The CEO also highlighted the product portfolio of DIB, saying: Ã¢â¬ÅThe DIB will offer cutting-edge financial solutions through a world-class banking service, the Islamic way. This will include a full suit ranging from entire consumer banking products to wealth management solutions and corporate & investment banking products. Dubai Islamic Bank also plans to expand in private equity business. 

Dubai Islamic Bank has been very active in attracting foreign direct investment in Pakistan and is working closely with Dubai World and other large business corporations in identifying opportunities and channeling hard currency flows into the country.

In addition, the DIB is working closely with the ministry of finance, State Bank of Pakistan, Securities and Exchange Commission of Pakistan and other relevant agencies in developing and promoting Islamic capital market products in the country, it said.


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## Neo

KARACHI, June 9: TMT Ventures, Pakistan's pioneering venture capital and private equity company, Thursday signed an agreement to jointly launch and manage a 100-million dollar private equity fund with SEAF, a Washington D.C. based global investment management firm.

The new fund will provide growth capital, operational support and global market access to select Pakistan companies with high growth potential.

Speaking at the signing ceremony, Sohaib Umer, CEO of TMT Ventures, said the joint venture signified the interest of foreign investors in Pakistan as an emerging market with tremendous latent growth.

Ã¢â¬ÅFor the last five years we have invested in Pakistan's budding entrepreneurs through our flagship Incubation Fund. Now it is time to merge our learning and SEAF's global experience to unlock value in promising local ventures, with strong management teams operating in traditional but high growth sectors.Ã¢â¬Â

The ceremony was also attended by Hubertus Van der Vaart, President and CEO of SEAF. He said Pakistan was at the threshold of an economic growth curve that favoured the entry of focussed private equity funds.

Ã¢â¬ÅBy combining TMT's extensive local experience with SEAF's global best practices in managing investments hands-on in over 20 countries, I believe we have formed a formidable partnership for the future success of the fund,Ã¢â¬Â said Van der Vaart.

He said the keen interest of international financial institutions in the TMT/SEAF private equity fund was a clear indication that the investment community was taking notice of the economic potential of Pakistani companies and entrepreneurs.

Private equity in its purest form operates on Islamic Shariah principles of partnership with sharing of risk and reward. Ã¢â¬ÅIt is our intention to make the fund Shariah compliant,Ã¢â¬Â said Sohaib Umar


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## Neo

Pradeep Kumar
Business Reporter

Global Investment House (Global) has acquired a 42.8 per cent stake in the Karachi-based Jahangir Siddiqui Capital Markets Limited (JSCM). The Kuwait-based investment company informed the stock exchanges in Kuwait and Bahrain, where its shares are listed, that it paid $37.5 million to purchase 10,350,000 shares of JSCM.
Brokerage firm JSCM is a subsidiary company of Jahangir Siddiqui and Company, one of the biggest investment firms in Pakistan.
Ã¢â¬ÅGlobal acquired the stake through a special issue of shares by JSCM,Ã¢â¬Â a senior official of the Karachi firm told Bahrain Tribune over telephone. The official said that Jahangir Siddiqui and Company owned 75 per cent shares of JSCM before the deal. He, however, claimed ignorance of the new shareholding pattern after the Global deal.
The official, who did not want to be named, said: Ã¢â¬ÅGlobal would infuse fresh capital into the company. The money would be used to further strengthen our brokerage services and investment banking business.Ã¢â¬Â
The official added: Ã¢â¬ÅIn investment banking, we would want to focus more on corporate financing and underwriting businesses.Ã¢â¬Â
Global told the stock exchanges that it is waiting for the Pakistani market regulators to officially approve the deal. Ã¢â¬ÅWe expect to close the deal, including getting all regulatory approvals, by September this year,Ã¢â¬Â the JSCM official told the Tribune.
Global, in April, had said it acquired 22 per cent stake in the Jordan-based bank Societe Generale De Banque Ã¢â¬â Jordanie.
Ã¢â¬ÅWe are currently looking into expanding into key emerging markets, and this comes as one of the many steps taken by Global to achieve its expansionary goals,Ã¢â¬Â GlobalÃ¢â¬â¢s Vice Chairman and Managing Director, Maha K. Al Ghunaim said after acquiring the stake in Societe Generale De Banque Ã¢â¬â Jordanie.
Pakistan is now considered among the top destinations for investment by many of the regionÃ¢â¬â¢s companies. According to reports, the country registered 6.6 per cent economic growth during 2005-06.
Earlier this month, Dubai-based property developer Emaar and DP World announced projects worth $30 billion in the South Asian country. Dubai Islamic Bank recently said that it will open 70 branches in Pakistan in the next 18 months.


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## Neo

By Sher Baz Khan

ISLAMABAD, June 8: The ministry of food, agriculture and livestock (Minfal) on Thursday set this yearÃ¢â¬â¢s cotton production target at 13.8 million bales, 1.4 million bales more as compared to 12.4 million achieved last year.

The cotton production fell by 1.9 million bales last year as against the bumper crop of 14.3 million bales in 2004-05 because of adverse weather conditions and unavailability of cheap inputs to farmers, particularly fertilisers and pesticides.

A 13 per cent decrease in the cotton production along with 6.2 per cent negative growth in sugarcane badly hampered the overall GDP growth last year, as the agriculture sector could only grew by 2.5 per cent as compared to 6.7 per cent the year before.

The cotton target was fixed at a meeting here presided over by Food, Agriculture and Livestock Minister Sikandar Hayat Bosan. Senior officials of the commerce ministry, Trading Corporation of Pakistan, provincial and federal governments and representatives of the All Pakistan Textile Mills Association, Karachi Cotton Association, Pakistan Cotton GinnersÃ¢â¬â¢ Association and growers also attended the meeting.

It was decided that in order not to miss this yearÃ¢â¬â¢s target, the government had to provide inputs to the farmers well on time with special focus on pesticides and fertilisers. An action plan intimating the responsibilities of stakeholders from various public and private sectors was also finalised to achieve the cotton target and avoid untoward situations during sowing, growth and marketing of the crop.

The minister also directed the organizations and departments concerned to keep a close eye on the day to day situation of cotton crop and ensure availability of inputs, including fertilisers and pesticides.

The meeting was informed that the government had already enhanced the seed cotton intervention price to Rs1,025 per 40kg from Rs975 last year in order to safeguard the interest of growers.

Mr Bosan said the TCP would be inducted in the process whenever required to ensure that farmers received these rates.

Official sources told Dawn that the meeting was also informed that farmers in southern Punjab were not getting the Rs415 per 40kg minimum price announced by the government for the procurement of wheat and allegations of kickbacks and commissions by food department officials allegedly in connivance with landlords.

They said representatives of the provinces informed Minfal that the production of cotton fell last year because in some areas farmers were not given reasonable rates for their produce. This year, wheat growers were not getting the minimum prices for their crop which had increased the possibility of reduction in the wheat sowing area next year.

Mr Bosan informed the meeting that the inter-ministerial committee would regularly monitor the market price and payment of premium price to those who grew high quality of cotton.

The meeting was told that in order to encourage the production of clean and contamination-free cotton, the ministry of textile industry would launch a special campaign in collaboration with the TCP and Pakistan Cotton Standard Institute, provincial governments and stakeholders from the private sector to ensure that premium on better grade cottonseed was passed on to the farmers.

The question of middlemen was also raised at the meeting by the representatives of growers, who said usually the money meant for the farmers went to the pockets of the middleman, compelling them to stay away from quality cotton production which cost them more.

The meeting also reviewed the cotton situation at the global level. It was informed that the worldÃ¢â¬â¢s consumption of cotton was likely to surpass production by about three per cent that would likely to push up price by 10 per cent in 2006-07.

Cotton sowing in the country was reportedly being done at a high pace and that there were good prospects for achieving the target. Salient features of the Cotton Vision 2015 were also discussed to firm up the cotton production targets and methodology for its achievement with identified roles of all public and private sector stakeholders.


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## Neo

Saturday, June 10, 2006 

QUETTA: Exhibiting unprecedented unity, members of the treasury and opposition benches in the Balochistan Assembly on Friday unanimously passed a resolution, seeking royalty for the province in the multi-billion dollar Iran-Pakistan-India (IPI) gas pipeline project.

The house unanimously approved Leader of the Opposition Kachkol BalochÃ¢â¬â¢s adjournment motion as a resolution that the government must provide Balochistan its share of royalty in the proposed 2,600-km IPI gas pipeline project. 

Baloch, who initiated the two-hour debate on the IPI project in the session with Speaker Jamal Shah Kakar in chair, said since the proposed $7 billion pipeline would be laid down on the territory of the Balochistan, the province was justified in demanding its due share of royalty. Ã¢â¬ÅThe people of Balochistan, irrespective of their political and lingual differences, are convinced that the benefits of the project must firstly reach the indigenous people of the province. The successive governments in the past deprived Balochistan of its due share in federal resources. Now it is the time the injustices with the provinces are halted,Ã¢â¬Â he said.

Kachkol demanded the provision of free gas and job opportunities to the youth of the area from where the gas pipeline would pass. Ã¢â¬ÅThe pipeline will enter Pakistan at Jawani in Mekran while coming from the Iranian Balochistan province. Article 172 of the Constitution agrees to the right of due share to the place from where the project will pass. Getting royalty from the IPI project is the legal, constitutional and ethical right of the Baloch people,Ã¢â¬Â he added.

Regretting that the Balochistan government had not been consulted in negotiations, the opposition leader said it was the responsibility of the provincial government to draw the federal governmentÃ¢â¬â¢s attention towards the provinceÃ¢â¬â¢s rights. He said the current logjam in the province was the outcome of injustices done by Islamabad with the province. Ã¢â¬ÅIf the people of the province are not provided royalty in the project, not only would the Baloch sense of deprivation, alienation and frustration increase, it would also fan the present cycle of violent movement,Ã¢â¬Â he said.

Balochistan Finance Minister Syed Ehsan Shah supported the motion, saying the government welcomed positive steps taken by the opposition for the rights of the province. Balochistan Chief Minister Jam Mohammad Yousaf also supported the resolution. The assembly agreed that the project was a golden opportunity for the federal government to restore BalochistanÃ¢â¬â¢s confidence and redress its economic woes.


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## Neo

KARACHI: The Chairman Policy and Planning Cell of the Ministry of Labour, Manpower and Overseas Pakistanis, Sabur Ghayur, has assured that the new employment policy being introduced in the country will be the outcome of thorough research and consultation with the partners and will meet the need of the country amidst current day challenges. 

He was addressing the discussion event on employment generation opportunities and challenges organised by the Workers Employers Bilateral Council of Pakistan with the support of Solidarity Centre. 

It may be pointed out that the policy and planning cell among others, has been assigned the task to formulate the National Employment policy. 

Sabur estimated the annual flow of unemployed between 12 to 15lakh along with a backlog of 35lakh. He also estimated the underemployment to be about 20%. 

Speaking on the occasion, the Chairman of WEBCOP Ehsanullah Khan expressed lot of hopes in the personal capabilities of Sabur Ghayur and the policy and planning cell believed that these deliberations will result in the development of an employment policy which could serve the countryÃ¢â¬â¢s interest. He, however, expressed dissatisfaction over the working of Employees Old Age Benefit Institution and for not taking WEBCOP in confidence over the newly raised minimum wages.


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## Neo

KARACHI (June 11 2006): The United States cut foreign aid to Pakistan by $350 million from the current fiscal year, a private TV channel reported on Saturday. According to details, the House of Representatives passed the appropriations bill that would reduce foreign aid, citing Pakistan's failure to do enough "to improve democracy and human rights".

The reduction aimed at registering protest against increasing lack of respect for human rights, especially women's rights, and lack of progress toward true democratic governance and rule of law.

The representatives were dismayed at unsatisfactory response from the Pakistani government of accusations cited in the bill and urged it to take remedial measures in this regard.


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## Neo

ISLAMABAD (June 11 2006): Trade deficit widened to a provisional $1.159 billion in May from $807.9 million in April and $641.6 million in May 2005, official data showed on Saturday. The cumulative trade deficit for the July-May period was $10.63 billion against $5.50 billion a year earlier, the data from the Federal Bureau of Statistics showed.

Country's exports during July-May period of current fiscal year 2005-06 were recorded at $14.952 billion showing 16.4 percent increase over exports worth $12.659 billion realised in the same period of the last fiscal year.

According to the provisional trade figures released here on Saturday, the exports during the month of May 2006 totalled at $1.489 billion as against $1.378 billion achieved in the like period of previous fiscal year, showing 6 percent increase.

The exports worth $1.489 billion realised in the month of May are also up by 2.6 percent when compared with the exports worth $1.451 billion achieved in April.

During the first eleven months of current fiscal year (July-May), imports also witnessed 39.4 percent growth to $25.598 billion from $18.368 billion of the same period of last financial year.

The country's imports in May were recorded at $2.646 billion, witnessing an increase of 31.1 percent over imports worth $2.020 billion realised in the corresponding month of the last fiscal year.

Imports worth 2.648 billion realised in the month of May are also up by 17.2 percent when compared with $2.259 billion imports achieved in April this year.


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## Neo

FAISALABAD (June 12 2006): The automobile sector of Pakistan has shown significant growth in the last couple of years, if an average annual growth of 30 percent per annum is maintained, Pakistan's market will cross the milestone of 500,000 units by the year 2010.

According to an official update study report, since 2001-02 the automobile market is growing rapidly by over 40 percent per annum and if an average annual growth of 30 percent per annum is maintained, Pakistan's market will cross the milestone of 500,000 units by the year 2010.

Long-term investment friendly policies of the government and up-gradation of production facilities are considered as pre-requisite by experts for achieving the automobile vision 2010 of 500,000 units, said official sources.

According to official report, Auto Industry is globally considered as the mother of all industries. The automobile industry is the largest segment in world trade. The annual size of the automotive exports has grown over US $600 billion, which accounts for about 10 percent of world exports.

In today's world, changing models, improving fuel efficiency, cutting costs and enhancing user comfort without compromising on quality are the most important challenges of the industry. The auto industry in Pakistan is fast growing and may soon begin to achieve economies of scale. This mechanical revolution has been aided in part to sound macro economic policies pursued during the last seven years.

Furthermore e-pass scheme for electronic goods, unchanged auto policy over the last few years, liberal adjustment of tax regime to lower duties on raw materials and intermediate products have also helped in rapid expansion of the auto sector.

The tremendous rise in automobile demand has resulted in increased production, giving a healthy impetus to the industrial output and generating over 150, 000 direct employment opportunities besides contributing tax revenue to the national exchequer.

Notwithstanding a manifold increase in car production in Pakistan during the last few years, Pakistan still stands relatively low in terms of motorization when compared globally and even to its neighbours. The automakers need to take into account, as the demand is lot greater then the supply. The graph below illustrates the comparison of motorization in Pakistan with some developed and developing countries of the world.

Major automobile companies in Pakistan have set up as joint ventures with foreign multinational companies, thus encouraging the inflows of FDI in Pakistan.

In view of the rising gap in supply and demand and with an outlook to lessen the hardship being faced by the tail-end buyers or users, the government allowed import of new and used cars at a reduced rate of duty.

Recently the government has allowed overseas Pakistanis to gift cars to their kin under gift baggage or transfer of residence scheme as well. Latest figures of the market share of each player in the car-manufacturing segment are given below. Pak Suzuki takes the lead with a share of 49 percent followed by Indus Motor at 25 percent. The rest is being shared by Honda Atlas Cars and Dewan Motors at 21 percent and 5 percent respectively.

Sales performance of different segments is given below. Production of cars in first nine months of 2005-06 increased from 87,104 to 112,478 units. Another 16,885 different types of vehicles were imported during July-Feb, FY06 under transfer of residence, baggage and gift schemes as compared to only 5,177 units in the same period last year, showing an increase of 230 percent. Production of cars in first nine months 112,478 units. Another 16, 885 different types of vehicles were imported residence, baggage and gift schemes as compared to only 5,177 units increase of 230 percent.

Despite ongoing import of cars units from other countries and increase in the production of cars in the country, the demand of cars in market is increasing day by day. The production of cars has registered a staggering increase of 127738 units as compared to last year's figure of 100213 (27.5%).

Production of truck units also increased to 3746 from 1999 (87.4%) in 2005-06 (July-April).

Production of motor cycles increased by 10.4 percent during July-April 2005-06 reaching to an all time high of 426,607. The production and sale of motorcycles is taken as an indirect measure to ascertain the standard of living of the middle class of Pakistan.

The production of motorcycles remained more or less stable during the late nineties but has sky rocketed since 2000-01 and further projections show it to be increasing even at a faster rate. Since production and sale of motor cycles have been taken as being synonymous with the standard of living of the middle class, we can safely say that the outstanding growth and economic stability achieved by the country during the last couple of years has slowly but steadily started trickling down to the masses.


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## Neo

LAHORE (June 12 2006): PM's Adviser on Finance Dr Salman Shah said the current account and the budget deficit could be reduced, but as this would be at the cost of effecting current growth rate in economy, as the government does not want to embark upon such exercise.

He was speaking in a post-budget seminar here on Sunday. He said it was a big achievement that development trend had shown an upward path, despite earthquake and rise in prices of oil here.

Speaking about supply of commodities through Utility Stores, Salman Shah said the chain would be extended to the level of union council in the country. About bank borrowing target for the next fiscal year, he said it would be Rs 140 billion as compared to Rs 66 billion this fiscal year.

Speaking about effectiveness of 'Khushhal Pakistan Program', the adviser averred that its quantum would be doubled in future.

Salman Shah said that in order to curb artificial increase in prices, law pertinent to establishing 'Competition Authority' had been made and would be presented in the parliament shortly.

He said the government is also planning to announce support price of pulses soon, adding that Rs 100 billion subsidy announced in the budget was aimed to support downtrodden people in the country.

About the construction of five mega dams till 2015, he said these projects are necessary for maintaining compatibility of national productivity endeavour at the world level. Referring to a study of World Bank, the adviser said that effective utilisation of water in the sub-continent particularly India and Pakistan could be the most effective source to poverty alleviation.

Speaking about shortage of electricity in Karachi, he said this could only be dealt by increasing production level of energy here.

Speakers, including Dr Shahid Hasan Siddique, Dr A.R. Kamal addressing the seminar criticised the government for the increase in poverty level in the country. They said that despite tall claims of doing wonders, this level had shown a drop.

They said steps like supply of pulses at Utility Stores would make not much difference to end the plight of people in general, and asked the government to put more tax on rich in the future.


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## Neo

KARAHCI, June 10: The import of second-hand cars, jeeps, sports utility vehicles (SUVs), etc., under various schemes saw a big jump of 225 per cent to 34,723 units during July-May 2005-06 as compared to 10,658 units in the same period last year.

Over 13,000 cars up to 1,000cc landed in Pakistan in the last 11 months under the Transfer of Residence, Gift and Personal Baggage Scheme as compared to around 525 cars in the same period last fiscal year. The import of jeeps (4x4) under various schemes touched 5,543 as compared to 552 units in July-May 2004-05. Around 3,500 vans were imported as against 375 vans in 11 months of the last fiscal year.

Some 3,390 cars (1,300 to 1,500cc) arrived in the country as compared to 55 cars, while in the 1,000-1,300cc category, 1,702 cars arrived as compared to 140 cars, Appraisement Collectorate figures revealed.

The figures show the passion among cash-rich buyers who are even not worried about the availability of costlier parts of these imported cars in the local market.

Auto parts dealers said there was no problem these days in getting parts and accessories of the imported cars but their prices are too high. Shaikh Mohammad Arman Hussain, Sindh circle chairman of the Pakistan Automobile Spare Parts Importers and Dealers Association, claimed that imported parts were now available in the local market, adding that six months back these parts were not available in the market.

Ã¢â¬ÅThere are a few shops (12 or more) at the M.A. Jinnah Road Parts Market where imported parts are available,Ã¢â¬Â he said, adding that there might be some problem for those vehicles whose volume of imports had been slow. Parts availability of imported cars and other vehicles depend on the volume of imports, he adds.

Against a vehicle population of nine million units by December 2004, the market needs parts worth over Rs80 billion annually, but legal imports stand at Rs10 billion per annum while the rest are smuggled. The local industry covered only five per cent requirement annually, he said.

Due to higher rate of 35 per cent customs duty, importers were bringing only those parts which were in high demand, he added.

Pakistani roads, already loaded with locally-assembled and decades- old used cars, now bear the brunt of imported cars on the back of consumersÃ¢â¬â¢ enthusiasm towards costlier cars, thanks to car financing schemes under which over 70 per cent cars are being sold (both locally-assembled and imported used cars).

The government netted Rs8.6 billion in the shape of customs duty during July-May 2005-06 from the import of 34,723 vehicles whose import value comes to Rs15 billion. In the same period last fiscal year, the customs duty collection was recorded at Rs3.7 billion from the import value of Rs5.6 billion of 10,658 vehicles.

However, the Appraisement Collectorate Group-V, after the computerisation of import procedure for used cars, has frustrated an attempt of illegal imports of two used Toyota Corolla, Suzuki van, Mini Pajero, Mazda truck and Toyota Vitz. The Appraisement Intelligence Branch has arrested three persons and started investigations.

A customs source said the Appraisement Collectorate had approached the insurance investigators and Interpol in Dubai, the UK and Japan after reports that stolen cars were finding their way into Pakistan.

The import of automobiles already exceeded the $1 billion mark during July-May 2005-06 and it may cross $1.5 billion by the end of the current fiscal year. Auto imports constitute almost 20 per cent of the machinery import group.

The countryÃ¢â¬â¢s auto scenario marked the changes from August 2005, triggered by the liberalisation of car imports under various schemes to bridge the demand and supply gap.


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## Neo

TOTAL investment in the country rose to a record 20 per cent of the GDP in the current year from the 18.1 percent last year, breaking a bad log jam of low investment for years.

The investment has been at the 16-17 per cent of the GDP level for too long, beginning with 17.2 per cent in 2000.

The main reason for the low investment has been the low national savings, beginning with poor domestic savings which have been declining since 2001-2002 when they were 18.1 per cent of the GDP.

As a result, the large scale manufacturing has a share of only 12.7 per cent in the GDP now with the small scale industry have a tiny share of 4.3 per cent. And embarrassingly for a poor developing country, the service sector has a share of 52.3 per cent in the GDP. And the share of agriculture in a largely agricultural country has shrunk to 21.6 from 25 per cent within a few years, in spite of the investment made in that sector.

So, the large scale industry recorded a growth of only nine per cent in the current year after a growth of 15.6 last year and 18.1 per cent, the year before, which is too disturbing, and the small scale sector recorded a growth of 9.3 per cent.

The biggest sector of large scale industry is the textiles. After $5 billion investment in recent years and its demands $5 billion more of investment for further expansion, the performance of the large scale industry should not be so unimpressive.

However, a new textile policy is under preparation and what miracles it would produce remains to be seen. Along with that a new cotton vision is being formulated and the two will go in tandem promising great results.

What is remarkable about the record 20 per cent investment is that it has happened in spite of the poor national and domestic savings, which have been falling despite of the high incomes.

The national savings this year is 16.4 per cent of the GDP, while it was 16.5 last year. Since 2000 Ã¢â¬â 2001, it has been 16.5, 18.6, 20.8, 17.9, 16.5 and 16.4 per cent. And the domestic savings since 2000-2001 has been 17.8, 18.1, 17.6, 15.7, 14.5 and 14.4 per cent.

The domestic savings have been following the same trend since 2001-02 despite the improvement in per capita income which has now reached $847 from $503 in 2001-02. Evidently, much of the apparent prosperity in the country is a result of bank borrowing through consumer credit or the outcome of speculation in the real estate or the stock exchange.

Evidently, the gap between the investment and the national savings has been filled by foreign debt, foreign investment or foreign savings like the home remittances of Pakistanis overseas.

Pakistan has even otherwise the lowest savings rate in the region and among many developing countries and it ought to improve it quick to lend real monetary muscles to its economic growth.

Some of the money which went into investment are the privatisation funds, but the foreign funds are not direct foreign investment as they have only replaced the Pakistani investment. Only the funds invested including the locally raised, for new projects, can be called real investment. So there is some overlapping here which must be separated for statistical purposes.

We need far larger savings to cushion well the investment, otherwise some of the money can be pulled out easily and some of the enterprises left dangling.

Already, we have a few cases of Pakistanis bidding for the privatisation projects and not paying up when the time comes. So, evidently our bidders are not resourceful enough or they are bidding for more than they can afford.

There are many reasons why national and domestic savings are low in Pakistan. High and sustained inflation, far exceeding the official figures erode the savings. The poor return on savings deters the savings.

The small facilities for savings in Pakistan handicap the savers. Dishonest practices in the national savings organisation discourage the savers. So they opt for subscribing to phoney schemes and get cheated in the process. If there can be a massive scandal in the city court post office resulting in loss of crores of rupees, despite the fact the post office received the savings of the lawyers, the kind of cheating in other post offices is easily understandable.

Muslims societies are supposed to be high living and high spending societies. And local cheats promise large rewards and dupe widows and other gullible persons so the government has to make special efforts to protect the savers from spurious schemes. And insure the deposits as well.

Banks usually give low returns on loans, while charging high interest on loans and that discourages the savers. And the stock exchange has proved to be too risky a place for the small investors. Hence they have to rely on mutual funds which carry their own risks.

The government has done well to increase the deposit rates of the national savings organisations and the interest on prize bonds. But it is making no effort to make the banks enhance their deposit rates.

The government is to come up with a cotton vision 2015 next month to raise the output of cotton to 20 billion bales by the year 2015. The target has a span of ten years to achieve. It is also coming up with a new textile policy with value addition as its key objective. Officials say the textile exports alone have the potential to reach $24 billion in an international trade volume of $300 billion.

The poor performance of the large scale industry particularly textiles demand a totally new approach to the industry and make the textile industry realise its full potential along with the revitalisation of the cotton sector.


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## Neo

Editorial...

BUDGET 2006-07 has been announced at a time when PakistanÃ¢â¬â¢s macro-economic picture continues to reflect robust growth in most sectors of the economy.

With an average GDP growth of 7.5 per cent in the last three years, the economy continues to expand at a rapid pace despite catastrophic earthquake, sky-rocketing oil prices and adverse weather conditions slowing down the agriculture production.

Based on the overall performance post 9/11, there are signs that the economy has achieved a fundamental transformation and there are grounds for optimism that the current growth momentum is likely to sustain over the medium to long-term.

Nevertheless, there are down side risks to sustainability of the current growth momentum that need to be addressed. This review contains a brief analysis of the economic successes achieved so far, some key risks and challenges that lie ahead and the fiscal policies announced with the budget to address them.

State of the economy: As per the Economic Survey 2005-06, the economic growth has been 6.6 per cent, which is slightly lower than the targeted seven per cent. However, considering that the economy had grown by a record 8.6 per cent last year, this is quite an impressive performance.

The most important drivers of the current yearÃ¢â¬â¢s economic growth are extremely vibrant services and manufacturing sectors that have sustained the pace of economic growth despite set back in the agriculture sector. Continuing surge in foreign trade, an exuberant banking sector and enhanced foreign direct investment partly arising from privatization of some major public sector entities, are the key drivers of current yearÃ¢â¬â¢s growth.

Another key indicator that reflects sustained improvement, is the per capita income, up steeply from around $500 in 2001-02 to $847 in 2005-06. The factors responsible for sharp increase in per capita income include acceleration in real GDP growth, relatively low increase in population compared to the past and stable exchange rate over the past four years.

Reasons for better performance of the economy include: * Record increase in foreign trade reflecting continuing acceleration in demand in domestic as well as the global economies. A massive upsurge in imports is partly owing to drastic increase in oil prices and partly due to continuing rise in investment in plant and machinery as well insatiable demand for consumption goods. * On the external side, the global economy continues its broadÃ¢â¬âbased expansion with growth reaching close to five percent in 2006 with similar expansion projected for the next year Ã¢â¬â which will be the fifth successive year of growth by more than four per cent. This has helped world trade to expand and at the same time the rapid expansion of global trade has been a key driving force for growth in almost every part of the world. * The growth in the region and more specifically in the countries surrounding Pakistan is beginning to have greater impact on the growth momentum. * Surrounded by fast growing economies such as China (nine per cent growth) in the North East, India (eight per cent growth) in the East, Afghanistan (which is growing at a very fast pace) and Middle Eastern countries in the West that are flushed with liquidity arising from over $300 billion annual oil revenue.

* Massive credit expansion, estimated at around Rs345 billion, clearly reflects the continuing appetite of the private sector. The demand can be gauged from the fact that the cumulative credit flow to the private sector in the last three years amounted to Rs931 billion as compared to total of Rs580 billion in the previous ten years.

* The total investment has reached 20 per cent of the GDP, owing to steep rise in private as well as public sector investment. The major factors for increase in investment are steep rise in foreign direct investment that is expected to cross $3 billion mainly on account of privatization of some large public sector entities and rapid expansion in public sector development programme.

Risks and challenges: Despite the superb economic performance of the economy, there are serious impediments and risks to growth momentum in future years. Many analysts assert that there has been overheating of the economy that has resulted in higher rate of inflation, asset price bubble and excessive consumerism. Some of these risks are summarized below:

Rising inflation: A major adverse indicator that has somewhat marred last two yearsÃ¢â¬â¢ performance is the steep rise in the inflation. While the growth may have brought riches to the few, the overwhelmingly large number of people living below the poverty line and lower middle income people have been rendered poorer owing to growing inflation that, even as per the governmentÃ¢â¬â¢s own admission, is estimated to be eight per cent. This rate, when seen in the perspective of previous yearÃ¢â¬â¢s inflation rate 9.3 per cent, clearly reflects continuing escalation in cost of living compared to most other emerging markets.

More specifically, steep rise in sugar, cement, petroleum and house rents have made it extremely difficult for the common man to make his both ends meet.

Sustainability of agricultural growth: Despite some changes in the contribution profile of various sectors to GDP in the recent years, the agricultural sector continues to lead the way by contributing nearly twenty-two percent of total output (GDP). It also contributes substantially to exports.

Unfortunately, there has not been adequate investment to generate productivity gains from use of technology and modern agricultural practices and our yield remains low and dependent mostly on favourable weather. In the absence of major focus and large investment required, the growth of this sector is likely to remain cyclical.

Foreign direct investment: Although FDI during the year is expected to exceed $3 billion, bulk of it has been generated from sale of large public sector enterprises like PTCL, KESC and Pakistan Steel.

If we exclude privatization proceeds, the FDI would be reduced to around $1 billion, which is one of the lowest when compared to over $400 billion foreign direct investment that has gone to the emerging markets this year. This shows that Pakistan is still to appear on the radar screen of foreign investors.

A major reason for low FDI despite good economic performance remains the image of Pakistan abroad, law and order situation and continuing unrest in Balochistan and NWFP. Unsustainable trade deficit: Unlike most other emerging markets, PakistanÃ¢â¬â¢s growth is largely generated by increase in consumption that has accelerated its imports to $28 billion in 2005-06, and the increase in exports estimated at $17 billion, which is far too low when compared to imports. The resulting trade deficit of $11 billion and the consequential current account deficit of over $5 billion, which have been met partly through FDI, privatization of major public sector entities and remittances, may not be sustainable in the foreseeable future.

Also, as the privatization of major public sector entities nears exhaustion in about a yearÃ¢â¬â¢s time, not only this source of additional funding will dry-up, there is apparently no alternative major source of foreign currency inflows to meet the potential increase in outflows in the form of dividends / returns to the foreign investors from such entities.

Infrastructure and savings rate: Although there has been a major effort to increase the Public Sector Development Programme to build the infrastructure that is essential to sustain economic growth on a sustained basis, the actual utilization of the planned programmes invariably remains low. There is serious shortfall of energy, as is evident from escalating load shedding, and the investment and time required to add additional energy may be a major impediment to growth over the next few years.

Also, the rate of savings remains low when compared to the required investment. These factors pose significant risks and are likely to significantly hinder sustaining economic growth of around seven per cent over the next 3-4 years.

IT software outsourcing: Compared to the tremendous opportunity in this area, and unlike our neighbouring country India, unfortunately Pakistan has not been able to achieve even a small share of this global market. Last year, IndiaÃ¢â¬â¢s software and services exports amounted to massive $46 billion for the fiscal year to March 31, 2005, up by 71 per cent from previous year and it is expected to cross $60 billion in current year.

The expected growth of Indian export of services over the next few years is likely remain above 30 per cent. As against this, PakistanÃ¢â¬â¢s export of software and other services is so small that it is not even disclosed separately in the exports.


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## Neo

The lopsidedness of the fiscal policies is also evident from the fact that the export of goods is virtually exempt from income tax but no such exemption exists for services, other than some IT enabled services. This is the key area that needs greatest attention of the government for sustaining future economic growth and balancing our trade and current accounts.

Budget features and impact: The budget 2006-07 clearly appears to be an election process with an unusually large public sector development programme of Rs415 billion, and consequently, includes a higher fiscal deficit target of Rs373 billion or 4.5 per cent of GDP compared to 4.2 per cent of GDP in the revised estimates for current year.

This is in contrast to the policy of fiscal discipline of the previous years. The proposed bank financing to meet this deficit is pitched at Rs140 billion.

In contrast to the past, this budget has proposed a number of incentives for weaker sections of the society that are likely to help in alleviation of poverty, albeit many of them may turn out to be intentions that are hard to implement. These include: * A number of incentives to agriculture sector, including exemption on duty on tractors and special incentives for livestock and dairy industry. * Rozgar (employment) programme that is planned to be subsidised by the federal government. * Relief to government employees through dearness allowance of 15 per cent, * Minimum wages increased to Rs4000 * Reduction in tax rates for salaried employees and individual tax payers, including increase in basic exemption, applicable on gross salary. * Subsidies to reduce sugar price and expansion in the number of Utility Stores.

An important feature of this yearÃ¢â¬â¢s budget and economic survey announcements is, almost unbelievable results of Pakistan Integrated Household Survey (PIHS), as per which, it is claimed that the population living below poverty line has declined from 34 per cent in 2001 to around 24 per cent in 2005. Looking at ground realities, the results of this survey need further corroboration.

Sustaining growth: Several incentives and policies announced in the budget appear to be pro-poor but may not be adequate. Also, like in the past, implementation of policy announcements has been far from satisfactory, and there is no reason to expect a major change, given the same quality and level of administrative machinery.

Furthermore, there seems to be no serious effort for enhancing the competitiveness of the economy that is critical for sustaining the progress made in recent years mainly owing to changed external environment. The tax burden is extremely high and substantial relief required to reduce the cost of doing business has not been given.

The effective income tax rate which approaches 48 per cent (35 per cent income taxes+7 per cent WPPF and WWF+ 5.8 per cent income tax on dividends {(100-35-7)*10 per cent} acts as a strong disincentive to investment in the formal sector.

With the improvement of revenues, it was expected that over all corporate tax rate would be lowered by at least five per cent. Further, the rate of indirect tax in the form of sales tax at 15 per cent, which is a tax on poor and creates inflation, remains very high. It should be reduced to a maximum of 10 per cent.

Currently, the biggest challenge is whether the textiles will be able to compete in an era of quota free regime after the expiry of Multi Fiber Agreement last year. The initial period indicates falling prices as the competition for the textile markets begins to intensify.

While the exports have shown a growing trend mainly through larger volumes, the growth of imports have been much bigger. Unfortunately, Pakistan has not made substantial efforts that were required to enhance its competitiveness in the value- added products, by lowering the cost of production.

Most of the irritants such as high cost inputs like electricity, business disruptions, and law and order remain unresolved. While the government policies, including improvement in governance and policies aimed at achieving macro-economic stability have provided dividends, much more needs to be done to ensure sustainability of economic growth, which should be export-led and not import-based.

Nearly 60 per cent of our exports are cotton based and around 75 per cent are based on five products cotton, leather, rice, synthetic textiles and sports goods. In geographical terms, our exports are concentrated in few markets including USA, Germany, UK, U.A.E, Japan, Hong Kong and Saudi Arabia. Only USA takes around 24 per cent of our exports. Such a situation shows a serious vulnerability of our economy to a catastrophic event such as cotton crop failure.

The diversification of exports thus should be the primary objective of the government and the most viable sectors in which we could compete are the export of services such as IT software and other back office services, business process outsourcing and off shoring. Why canÃ¢â¬â¢t Pakistan emulate India? Without such diversification, and specially focused strategy on export of services etc. through enhancing the number of qualified and skilled people in these sectors, it will be extremely difficult, in the long run, to sustain the successes achieved in recent years.

For this purpose, the primary investment in future will need to be in our human resources-on education (including higher education), skill development and health. Looking at the budget and the medium-term macro-economic framework, both the investment as well as focus on human development is significantly less than what is essential to achieve and sustain the targeted growth.


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## Neo

Sunday, June 11, 2006 


KARACHI: The first flight of newly inducted 48-seat-plane ATR 42-500 of Pakistan International Airlines (PIA) flied to Gwadar on Saturday and from there it would take off for Muscat.

Tariq Kirmani, chairman and CEO of PIA, saw off the passengers of the inaugural flight at Karachi. The plane will return back through the same route. 

PIA has signed an agreement to buy seven new ATR42-500 aircraft from Avions de Transport Regional (ATR). 

The first ATR42-500 aircraft delivered to PIA arrived in Pakistan on June 2, whereas delivery of the remaining six aircraft will be completed by May 2007.

ATR is a joint venture between France-based European Aeronautic Defence and Space Company (EADS) and ItalyÃ¢â¬â¢s Alenia Aeronautica, with each having a 50 percent share in the ATR program.

The ATR 42-500Ã¢â¬â¢s are replacing the Fokker Friendship Aircraft, which served PIA for over four decades before it was decided to phase it out of service.

Tariq Kirmani said: Ã¢â¬ÅAfter the induction of seven ATRs, PIA will acquire two additional ATRs having a capacity of 76 seats. Three 777 aircraft will also join the PIA fleet in December 2006 and later on in January and February 2007, respectively.Ã¢â¬Â 

Like its predecessor, ATR is also a twin-engine turbo prop, but incorporates latest avionics and is powered by PW127E engines made by Pratt and Whitney, Canada. PIAÃ¢â¬â¢s ATR fleet will be configured in two class with 10 economy plus seats and 38 economy class seats. PIA selected ATR42-500 after evaluating all the aircraft types available in similar category and made its choice after taking into consideration passenger comfort and operating economics as well as its performance for flying to/from the hot and high airfields. 

The first ATR42-500 aircraft will be based in Karachi and PIA plans to operate it to the Mekran coast, southern Punjab and Gulf (Sharjah and Muscat from Gwadar).


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## Neo

ISLAMABAD (June 13 2006): There is no change in the US foreign policy towards Pakistan because of $150 million cut in aid by Congress since the Foreign Operation Appropriation Bill 2007 is still under consideration of the US Senate, foreign office spokesperson Tasneem Aslam said here on Monday.

In her weekly briefing the spokesperson informed about the implementation of the Camp David Agreement 2003, under which president Bush announced $3 billion in economic and military assistance to Pakistan to be provided over a period of five years from 2005 to 2009 in instalment of $600 million a year.

"($)1.5 billion of this amount was meant for Economic Support Fund (ESF) and $1.5 billion was to be provided for Fund Military Support (FMS)," she elaborated.

She said that under this package, the US provided $701 million in financial year 2005; this included $300 million each for ESF and FMS and $101 million assistance for fighting narcotics, education support and other social welfare programmes.

In 2006, the US provided $695 million, including $350 million for ESF and $300 for FMS, she added.

In 2007, US Administration proposed $738 million including $300 million for FMS, $350 million for ESF, $50 million as announced in the Islamabad donors conference besides seeking additional $126 million as part of the $500 million US package for earthquake victims rehabilitation and reconstruction.

She said that during consideration in the House of Representatives, the US administration's request for $23.7 billion for US foreign operations for 2007 has been reduced to $21.3 billion with cuts of 2.4 billion in the Appropriation Bill 2007.

In case of Pakistan, the Congress has made a cut of $150 million, $100 million in MFS and $50 million in the ESF while raising the issues of human rights, women rights, democratic governance and rule of law on which the government has made its position clear on numerous occasions, she added.

She said that on its part, the US Senate is considering the bill and is yet to pronounce itself on what US Administration has requested.

"We have on our part raised the proposed cuts with the US Administration and we understand that the Administration would work to ensure that the original amount proposed by President Bush is restored" she added.

The spokesperson recalled that on previous two occasions, cuts were been made but later on the original proposed amounts were restored.

KASHMIR: THE CORE ISSUE Refuting the former Indian Foreign Minister Sinha's recent assertion that there was no documentary proof that India recognised Jammu and Kashmir as the core issue between Pakistan and India, the spokesperson said that the Simla agreement and the Tashkent agreement clearly talked about and recognised the final settlement of Jammu and Kashmir dispute, and these two documents haven't mentioned any other issue.

She said that any one who has read the history of Pakistan-India relations and followed subsequent events and tensions, cannot escape the conclusion that it is indeed the Jammu and Kashmir dispute that lies at the heart of problems and tensions between our two countries.

"Pakistan considers J&K as the core issue because of its gravity, because of its implications for the political environment, because of its implications for the Pakistan India relations, and most importantly J&K dispute relates to the fundamental rights of the Kashmiris and their sufferings" she emphasised.

She said that Pakistan had already proposed the ideas like self-governance, demilitarisation and joint management and the Kashmiris have welcomed these proposals, therefore, we can proceed further on the basis of these ideas.

About the role of Kashmiri leadership in the peace process, Tasneem Aslam said that our position is that Kashmiris should be part of the process, and they should be able to sit at the negotiation table.

"Since it is not acceptable to India, we are quite comfortable with other means, for instance Kashmiri leaders on both sides of the LOC are interacting with each other, they are interacting with the government of Pakistan and they are interacting with the Indian government", she added.

However, she emphasised that the three parties would have to be on board for any durable resolution of the Kashmir problem.

GAWADAR SEAPORT IS PURELY FOR COMMERCIAL PURPOSES In reply to a question the spokesperson said that Gawadar seaport is being constructed for purely commercial purposes and it would be opened to all international companies.

She said that the 'disinformation' that it would be used by China for military purposes, surfaces from time to time to create misunderstandings.

Gawadar seaport is opened to all Pakistanis who can go and see that it is indeed being developed solely for commerce and trade.

PRESIDENT'S VISIT TO SHINGAI She said that the President's China visit is taking place in connection with SCO, naturally when the President is there he will meet the Chinese leadership as well as leadership of other countries that would be present there in addition to meeting businessmen delegation and addressing think tank.


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## Neo

ISLAMABAD (June 13 2006): Pakistan still awaits Indian response on shipping protocol designed to improve maritime relationships between the two countries and enable them to lift third country's cargo from each others ports. The lukewarm response by New Delhi has further delayed the finalisation of the protocol that was expected to be enforced in March this year.

While both the countries have been engaged for quite some time in confidence building measures and have taken a number of steps to improve their relations, the protocol for improvement in maritime relations has failed to draw Indian government's attention.

The two neighbours had pledged to revise the shipping protocol some four months ago, opening up their ports for lifting third country's cargo. It was believed that the revision of 30-year old agreement would pave the way for both the countries to enter into a bilateral maritime shipping agreement that will ultimately help in softening restrictions and liberalisation of trade through sea route. At the moment, there are various restrictions on lifting of third country's cargo by the flag vessels of both the countries from each others ports.

Interestingly, the Indian maritime authorities during their technical level talks with Pakistani counterparts last December had handed over a draft of maritime shipping agreement for consideration. It is to be mentioned here that now when the Pakistan cabinet has given its consent, the Indian side is mum over the issue and taking too long to finalise all the arrangements.


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## Neo

KARACHI (June 13 2006): Total car production during the first 11 months recorded an increase of 28 percent, while sales depicted an increase of 23 percent, which bode well for local manufacturers, analysts said.

According to the latest available statistics, auto assemblers sold 140,100 cars in July-May FY06 as compared to 113,600 units in the same period last year, representing a 23 percent increase in July-May FY06 as compared in the period last year. Moreover, total car production soared by 27.8 percent from 112,600 units in July-May FY05 to 143,900 units in Jul-May FY06.

On MoM basis, May 2006 was a good month for local car manufacturers, as compared to April 2006, in which 14,900 units were sold and 16,200 units were produced compared to 14,100 and 15,300 units sold and produced in the same period last year, respectively.

Pak Suzuki sold 72,600 units in July-May FY06, which is a 26.4 percent increase compared to 57,500 units sold in the same period last year. The company sold 32,800 units of its Mehran model, which indicates 16.9 percent growth as compared to 28,000 units in July-May FY05. Suzuki Alto's sales, another vehicle that makes up a huge portion of the overall car sales, increased by 47.4 percent from 10,300 units to 15,200 units in 11 months of FY06.

Different variants of Honda City, one of the cars which has shown significant growth, indicated an increase in sales of 48.9 percent from 10,000 units in Jul-May FY05 to 14,900 units in Jul-May FY06. While Honda Atlas's other model, ie Civic's sales also improved by 4.4 percent in July-May FY06, from 11,200 units in July-May FY05 to 11,700 units. On the other hand, Corolla's sales have also improved to 27,600 units from 21,200 units in 11MFY06 from 11MFY05. Santro, one of the popular models of Dewan Farooque Motors, saw its sales improved by 16.1 percent from 5,500 units in 11MFY05 to 6,400 units in 11MFY06.

Abdul Azeem, research analyst at Investcapital Securities, said that the high engine capacities' cars are still on top in terms of market share in 11MFY06. This segment constitutes 43 percent of total car sales as against 42 percent during 11MFY05. Similarly, the 1000cc category's share improved from 26.2 percent to 28.7 percent in total car sales in 11 months of FY06. In contrast, 800cc cars share shrunk 28.2 percent from 31.6 percent in 11MFY06 as compared to same period last year.

Moreover, considering company-wise market share Pak Suzuki, the largest car producer, holds 51.9 percent share of total car sales against 50.6 percent in the same period last year.

Indus Motor has seen a decline in its market share from 25.5 percent to 24.5 percent in 11MFY06 as compared to the same period last year. Honda Atlas's market share stood at the same level of 19 percent in 11MFY06. Dewan Farooque Motor has also lost its market to 4.6 percent from 5.2 percent.

Azeem said that the outlook for auto sales remains robust for FY07 as well. Even though the leasing rates have started to edge up due to rising interest rates, the demand-supply gap has also started narrowing owing to import and capacity expansions, but still car assemblers have posted impressive sales performance in FY06.

"We expect locally assembled car sales to close out FY06 at around 155,00-156,000 cars sold, showing a healthy growth of 22-23 percent", said Azeem.


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## Neo

KARACHI (June 13 2006): Airblue will add another four, two wide body and two narrow body aircraft, to its existing fleet of five aircraft to take its fleet size to nine within the next twelve months.

Shahid Khaqan Abbasi, Chief Executive Officer (CEO), Airblue told Business Recorder here on Monday that the new aircraft would include wide body A330-200 and A340-300 and narrow body A320-200 and A321-200. These aircraft would be acquired on dry lease of five to seven years. Negotiations with leasing companies in the United States, Europe and Singapore are in an advanced stage, he said.

With the induction of these four aircraft the seat factor would improve and passenger comfort enhanced. The entire fleet age would be eight years. The wide body aircraft would be used on the UK sector whereas narrow body would be pressed into service on the domestic and regional routes.

The Airblue CEO said that the airline was also evaluating the feasibility of acquiring a couple of Regional Jet (RJ) aircraft. The operating cost of RJ is low and fits in well in the Airblue plan to bring air travel within the reach of common man and low-income group people, he said.

Abbasi said that Airblue was the fastest growing airline in the private sector and during the last two years of its operations, it has shown lots of grit and determination in serving the people of Pakistan. The airline came into being on June 18, 2004 and would be celebrating its two years of successful operations on June 18, 2006.

He was of the view that the government should facilitate private sector carriers entering the markets, which are presently totally monopolised by national carrier PIA. For instance India and Saudi Arabia operations should be shared by private sector airlines, he said.

He said: "during the last two years of our operations, we have done well and nobody can point his accusing finger towards our capabilities and performance."

There is need for re-negotiating Air Services Agreements (ASAs) with Saudi Arabia and India, he said adding that liberalisation of visa policy between Pakistan and India also required immediate attention. He said, undoubtedly, India is a big market and "we are capable to make our presence felt provided the impediments mentioned above are removed," he said.

In July last year Civil Aviation Authority (CAA) had announced that ASAs talks aimed at expanding the existing bilateral frameworks with countries where private airlines wish to commence operations shall be conducted at fast track. By December 31, 2005, it was calculated that Pakistan side should be able to hold talks with most of the countries. Process for the talks with India, South Africa and Kenya shall be initiated immediately.

In fact this assurance was part of the announcement made on July 27, 2005 regarding grant of additional routes/frequencies to Pakistan private airlines. It is now almost one year but nothing is known so far about the progress made by CAA towards re-negotiating the ASAs. Even where multiple designation is available a formal clearance is required from the government before private airlines start their operations.


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## Neo

KARACHI (June 13 2006): Aero Asia International Airlines has been taken over by a multinational group that is based in England. An agreement to this effect was signed last week at the head office of Aero Asia International by Zahoor Ahmed, chairman of regal group and Yaqoob Tabani of Aero Asia.

The spokesman of the airlines, in a press release issued here on Monday said, Aero Asia International is expected to commence operation during the current week.


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## Neo

KARACHI (June 12 2006): A group of four Malaysian companies have announced to invest US $500 million jointly in Information Technology, Alternate Energy and Environment sectors in Sindh.

The announcement was made by a delegation of the companies to Noman Saigal, Advisor to Sindh Chief Minister for IT, Environment and alternate Energy, during a presentation on their proposed projects at his office, an official handout said on Sunday.

The delegation consisted of Michael Choong, Director, IRIS Corporation, Steven Mok, CEO, MSC Power, Wan Haji Salamat, CEO, Puspakom, Iqbal Wahla and Umer Wahla. Director General, Sindh environmental Protection Agency, Iqbal Saeed, and other officers were also present.

The delegation had earlier made presentation on IT, environment and power sector projects to the Governor of Sindh.

The IT project includes Vehicle Registration and Driving License on Smart Cards to provide world standard chip-based biometric enabled security document as well as to make available many facilities and services to the public.


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## Neo

Software exports jump 50 per cent

By Imran Ayub

KARACHI: The countryÃ¢â¬â¢s software exports have for the first time crossed $70 million during 2005-06, registering a growth of 50 per cent as more and more western firms are turning towards Pakistan for IT-enabled services to cut costs and raise profits.

Officials and industry players believe the rising export figures indicate Pakistan is fast catching up with rapidly developing software industry and at such rate, the countryÃ¢â¬â¢s global IT revenue may touch $9 billion by the end of 2009-10.

Ã¢â¬ÅThe $72 million exports are those recorded by the State Bank,Ã¢â¬Â said Yousaf Hasan, Managing Director Pakistan Software Export Board - a federal body set up to promote outsourcing and software exports. Ã¢â¬ÅIf you count such numbers independently, which are not documented, these will be far ahead and may be more than double the exports registered every year.Ã¢â¬Â

He said the latest data compiled by the State Bank of Pakistan suggested software exports and service outsourcing reached $72 million during 2005-06 and could hit $80 million or above by the close of fiscal year on June 30.

Ã¢â¬ÅIt shows software export growth at 50 per cent,Ã¢â¬Â said Hasan. Ã¢â¬ÅWe managed to surpass growth rate of 2004-05 as in that year exports of software and IT-enabled services reached $48.5 million against $32.88 million during 2003-04.Ã¢â¬Â

The IT industry has emerged as the fastest growing sector this fiscal, mainly supported by phenomenal rise in call centresÃ¢â¬â¢ operations during the last two years. More than 140 centres are currently operating mainly in Lahore, Karachi and Islamabad offering employment to around 5,000 people.

Defined as a unit, the call centres have adequate telecom facilities, trained manpower and access to database providing information to customers. The advancement in telecom technology has made it possible that the person handling a call could be anywhere provided that communication and interaction is properly handled.

Growth in business from western companies has inspired local investors to explore new opportunities. Though Pakistan remains far behind India, operators believe they are on the right path now.

Ã¢â¬ÅThe good thing is that western companies are looking at Pakistan to outsource services,Ã¢â¬Â said Jehan Ara, President Pakistan Software Houses Association. Ã¢â¬ÅItÃ¢â¬â¢s an important development as after 9/11 local companies faced a tough time in terms of winning business from these companies.Ã¢â¬Â

She said the growth on one hand boosted exports while on the other proved a boon for local skilled workers and professionals, who once had no option but to fly abroad mainly to the United States and Canada to build careers.

Ã¢â¬ÅIt also saved brain drain to some extent,Ã¢â¬Â said Jehan Ara. Ã¢â¬ÅBut the potential is much more than what we are getting. So itÃ¢â¬â¢s time to plan a comprehensive strategy, which involves operators, regulators and professionals.Ã¢â¬Â

The authorities appeared aware of the approaching opportunities and claimed to spend Rs115.2 million during fiscal year 2004-05, for subsidising various activities of immediate relevance to the industry, like participation in international exhibitions and acquiring quality certifications.

The PSEB says it plans to continue projects it initiated during the last two years and plans more in the new fiscal for the growth of software exports and call centre operations. Industry players say jump in business has also triggered competition among local operators, who now plan more for better marketing and some have designed aggressive plans to win contracts from foreign firms. Ã¢â¬ÅSome of our members have set up front offices in the US and other countries to win deals,Ã¢â¬Â said Farrukh Aslam, Coordinator Call Centers Association of Pakistan.


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## Neo

LAHORE: Water and Power Development Authority (WAPDA) has signed a MoU with the Iranian power generation authority for the import of 100 MW of electricity from Iran to electrify Gawadar.

The agreement was reached on the special instructions of Prime Minister Shaukat Aziz to meet the emerging needs of Gawadar. Sources in WAPDA said the decision of importing electricity from Iran was taken under the Ã¢â¬ËEnergy Security PlanÃ¢â¬â¢ formulated in February 2005.

Besides this, the WAPDA was also preparing a feasibility report for importing electricity from Tajikistan. Sources in WAPDA revealed that the MoU was signed on May 25, 2006 in which both the sides agreed on power tariff. The price offered by the Iranian side was 6.9 US cents/unit whereas WAPDA offered 5.5 US cents/unit. After discussions, it was agreed by both parties that a reasonable tariff for electricity supply to Gwadar shall be 6.25 US cents/unit, sources disclosed.

Sources said the tariff will be applicable for the first year of the commercial operation date and both the sides further agreed to finance the cost of construction of the relevant transmission facilities including sub-stations within their respective jurisdiction. Anwar Khalid Member (Power) WAPDA and Majid Farmad, Manager for Generation Expansion Planning, Iran signed the MoU.

Sources said at present WAPDA was getting about 39 MW of electricity from Iran for different cities of Balochistan. Sources said the NESPAK was carrying out the feasibility report of importing 1000 MW from Tajikistan, but the situation in Afghanistan was the main hindrance in the project and that was why the government has directed the authority to accelerate its pace on importing electricity from Iran to meet the demand. Import of electricity from Iran would help provide electricity to remote areas and eliminate load shedding in Balochistan, Anwar Khalid, Member (Power) WAPDA said while talking with The News. He said presently the authority was purchasing electricity from Iran at the rate of 5 cent per unit.

Answering another question, the Member (Power) said the components of the tariff and the formulas for their indexation will be mutually agreed in the terms of electricity sale to Gawadar contract, which will be signed by the end of September 2006. He said the initial agreement was presented to the competent authorities of both the sides for final approval.

Giving technical details of the project, he said a total 170 kilometer transmission line will be constructed for the project. Iran will construct about 70 kilometer portion in Iranian territory while WAPDA will constructed the remaining 100 kilometer line in their jurisdiction.

Talking about the gap in demand and supply, he said the authority was utilizing its own hydropower and thermal power plants on priority. This has minimized purchase of electricity from the IPPs resulting in saving a good amount of money, he said.

The electricity demand was rising by over 12 per cent per annum as the number of consumers has increased due to rapid urbanization, extension of electricity grid supply to un-electrified areas and village electrification, Member (Power) said. 

Presently the total installed electricity generation capacity in the country was 19,404 MW out of which 6,489 MW was hydel, 6,012 MW was IPPs, 6,441 MW was WAPDAÃ¢â¬â¢s own thermal power plants and 462 MW were Nuclear. The authority was working on different hydropower and other projects to enhance electricity generation capacity to meet with the rising demand, he concluded.


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## Neo

ISLAMABAD: Pakistan has formally apprised the International Atomic Energy Agency and Nuclear Suppliers Group of its dialogue with China for the acquisition of a nuclear power plant.

Ã¢â¬ÅPakistan has informed IAEA and the 44-member NSG of our intent to acquire a nuclear power plant of 600 megawatts which is commercially more viable than the two power plants of 300 MW,Ã¢â¬Â an official source said yesterday.

He said the nuclear power plant would be set up in Karachi where the countryÃ¢â¬â¢s first nuclear power plant, 138 MW Karachi Nuclear Power Plant (Kanupp) was established in 1972 with the Canadian assistance.

He said President General Pervez Musharraf, who yesterday left for China, will push forward the dialogue process with Beijing on nuclear energy cooperation.

Earlier, there were reports that Pakistan has sought two more nuclear power plants of 300 MW worth $1.2bn from China.

The official said Pakistan already has two such power plants and believed that the ever-growing energy needs could be met conveniently through a bigger power plant of 600 MW that generated more electricity in case of shut-downs as compared to smaller ones.

Pakistan is also deliberating upon the nuclear energy cooperation with the US but at the moment the Bush administration is reluctant to extend any such assistance to its close allied nation in the global war on terror.

Ã¢â¬ÅNuclear energy cooperation talks are also on with the European Union but presently, itÃ¢â¬â¢s only China which has come up with a positive response to PakistanÃ¢â¬â¢s request,Ã¢â¬Â he said.


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## Neo

Tuesday June 13, 2006 

KARACHI : Karachi City Nazim Syed Mustafa Kamal has said after the completion of Pakistan's tallest building there would be 30,000 jobs available in 10,000 call centres. 

He made this announcement in his address late on Saturday at the launching ceremony of the Karachi Electronics and Electrical Fair (KEEF) 2006. The fair is programmed from September 14 to 16 at the Karachi Expo Centre. 


He said the tallest IT building would be completed in 12-14 months and it was totally a private investment project. 


The Nazim said without public-private partnership no country could achieve its development goals. He praised the private sector's initiative towards the city's development process. 


He maintained that a revolution always come from the private sector while the government's job was to provide facilities. 


About KEEF 2006, he said the type of activities should continue because not only cities but also the country derives benefit from it. 


Syed Mustafa Kamal said business environment was now friendlier then ever before. This was just the grassroots co-ordination between Pakistan's President and the common man towards the development process. 


He said that there was no conflict between the Sindh government and the district government and consolidated efforts have brought about healthy business environment in Karachi. 


He informed that due to normalcy returning to the city six months direct investment crossed Rs 55 billion. 


The city Nazim said Pakistan's soft image came out from Karachi and growing business activities and foreigners confidence in the government sent a productive message to the international community. On the request of a leading businessman, Mian Pervez Akhter, the city Nazim announced a school for vocational training handing over on Monday. 


He said should the school become a success then in all 18 towns these vocational schools would be opened. 


In his speech senior Sindh minister, Syed Sardar Ahmed said the exhibition should be arranged in other cities of the province. 


He said in the last few years Information Technology has revolutionised the country but the real benefit was not transferred to the country as India has done. 


On the behalf of the Sindh government he said the provincial government was able to provide 12 to 15 vocational schools and it would be financed by the Sindh government. Dr Mirza Ikhtiar Baig, Honorary Consulate General Republic of Yemen, said the city has proven its worth in regard to international fairs. 


He said electronics and electrical sector was getting growth and particularly in the manufacturing side. Now the growth in electronics and electrical manufacturing almost equals that of the automobile industry, he added. 


He urged to build up the vender industry in the country, because it was the backbone of business and did not manage not grow in the past. In his welcome address Karachi Electronics Dealers Association (KEDA) president, Abdul Waheed Memon said the leading manufacturers of the world and business community were at the ceremony with their latest designed products to be displayed at the show. 


He said the opportunity would be equally beneficial for both the manufacturers and suppliers' representatives of the world and local businessmen and importers as well. He said KEEF 2006 would bring foreign investment and the business activities would get a momentum. 


Microsoft Pakistan Corporate Manager, Jawwad-ur-Rehman appreciating the launching of KEEF 2006 and said this kind of events was very necessary. 


He urged companies to come forward and provide opportunities to the youth of the city. 


Shah Faisal Khan Afridi, CEO Haier Pakistan, Sarfrazuddin, Chairman Pakistan Electronics Manufacturer Association also spoke on the event. Vote of thanks presented by Syed Faisal Raza Abidi, General Secretary KEDA followed by KEEF 2006 monuments distribution ceremony.


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## Neo

FAISALABAD (June 15 2006): The mining and quarrying sector grew by 9.6 percent in 2005-06 as against 3.8 percent growth last year. However, the sector contributed only 2.6 percent to the gross domestic product (GDP) in 2005-06, which is slightly lower than last year's 2.7 percent contribution.

According to an update report, the main contribution to the growth of mining and quarrying sector came from mining of aragonite marble, fire clay, limestone, coal and the extraction of natural gas, which grew by 70 percent, 24 percent, 7.7 percent, eight percent and 4.5 percent, respectively, in the first nine months of 2005-06.

As much of the country's mining reserves exist in remote areas, infrastructure improvements are necessary to attract higher investment in this sector.

Since 2000, the government has implemented a mining policy under which imports of machinery have been allowed free of tariffs and restrictions on repatriation of profits by foreign investors have been removed. These measures have been successful in attracting foreign investment in the mining and quarrying sector.

Pakistan has economically exploitable reserves of coal, rock salt, limestone and onyx marble, china clay, dolomite, fire clay, gypsum, silica sand and granite, as well as precious and semi-precious stones. Mineral deposits, which may have sizeable reserves, require greater exploration.

The reserves include gold, copper, tin, silver, antimony, the platinum group of elements, tungsten, lead, bauxite and fluorite.

Mining and quarrying represent an important activity in Pakistan's economy, contributing around 0.5 percent to the GDP since 1990.

Moreover, as mining has a high presence in the poor areas of Pakistan, employment and income generation in less developed areas would accompany the development of the industry.

Deposits are found mostly in NWFP and Balochistan. According to industry sources, there are around 1,600 processing units in the country with as many as 932 marble processing factories in NWFP alone. Most of the processing units in NWFP are micro units with 1-3 cutters with the bulk of processing for export taking place in Karachi.

Marble and granite is the sixth largest mineral extracted in Pakistan, others being coal, rock salt, limestone and china clay. According to the industry estimates, 1.37 million tonnes of marble and granite were produced while 97 percent of it was consumed locally.

Little efforts were made in the past to identify and estimate marble and granite reserves in the country. Some of the reserves of marble and granite were, however, calculated with the efforts made by development projects and concerned departments.

According to estimates, there are 160.2 million tonnes of marble reserves in the country, out of which 98 percent are in NWFP. Granite reserves, only at one place in Northern areas show a total of 414 million tonnes while other reserves of granite are spread all over NWFP, Balochistan and Sindh.

In 1999, granite accounted for 65,000 dollars in foreign exchange earnings, which was approximately 0.1 percent of international granite exports. The share reached a high of 0.3 percent in 1998 when Pakistan exports were 208,000 dollars, other than that exports were in the range of 61,000-87,000 dollars.

Pakistan is also a regular importer of granite and sandstone.

Pakistan's export price per tonne was in the range of 106-162 dollars per tonne, while import price reached a high of 493 dollars and a low of 80 dollars per tonne in the previous five years.

Marble exports can be distinguished in three categories, ie, raw marble, rough worked and finished marble. All of these have a comparable share in total exports in Pakistan, but finished marble has had the lion's share of about 50 percent throughout the previous six years.

All have experienced negative growth, but raw marble has increased its share in total marble exports from 19 percent to 24 percent in the previous six years. Pakistan only exports raw marble, and in 1999 it accounted for 5.1 million dollars in foreign exchange earnings, which was approximately 0.28 percent of international marble exports.

The share has increased from 0.17 percent (in 1995), while in value the exports have increased by 69 percent in previous five years. Pakistan raw marble export price per tonne was in the range of 234-338 dollars per tonne, while imports reached a high of 387 and a low of 28.67 dollars per tonne in the previous six years.

Pakistan also imported rough worked marble in previous six years. Some of the leading importers from Pakistan include the US, which imported 52 percent by value of Pakistan's marble in 1999, while Taiwan is another major importer sharing 15.12 percent of Pakistani exports of marble.

The quality of raw marble extracted from Pakistan is of the highest international standard with great potential to bring top end prices. However, only a small number of mines have enough capacity to produce significant orders for the international market.

Most mines are micro operations, where the extracted marble is used for producing tiles and handicrafts with a few slabs suitable for high value goods like larger furniture and decorative pieces.

On a per capita basis, Pakistani industry is larger than India's but the percent of extraction, level of productivity, technology and trade orientation are far behind.

Despite reserves of high quality marble, over 90 percent of all Pakistan's marble is sold in the domestic market or in Afghanistan compared with India, which exports more than half of production. While growth of production has been high at over 20 percent per annum over the past decade, and exports have quadrupled between 1997 and 2004, in recent years, the construction needs in Afghanistan has led to a doubling of production over the past two years.

Even so, Pakistan marble exports account for only about 0.5 percent of global trade at around 20 million dollars.

Moreover, marble producers sell in predominantly low value-added segments of the market with marble chips and powder dominating sales to Bangladesh, raw or roughly cut marble sale to markets in Italy, Taiwan and increasingly to china.

Yet the bulk of exports are in the form of raw blocks of unprocessed stone. Though the Afghanistan construction boom is temporarily sustaining a production boom in Pakistan, sustained global competitiveness in processed marble products will depend on increased outward orientation or higher value added products, based on the use of rapidly advancing technologies throughout the industry.


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KARACHI (June 15 2006): The growth of large-scale manufacturing (LSM) sector, which accounted for 70 percent of total manufacturing output and 52 percent of total output of industrial sector in FY05 and was responsible for 27 percent of the contribution of commodity producing sectors to overall real GDP in that year, decelerated to about 9 percent in first 9 months of FY06 (July-March).

This compared with the overall annual growth rate of 15.6 percent achieved by the LSM sector in FY05. This transpired from the data released by the State Bank of Pakistan on June 14 covering about 75 percent of manufacturing activity of the sector.

At this stage, it appeared well nigh impossible for the overall LSM sector to have grown by another six/seven percent in the span of the remaining three months to catch up to the annual growth rate of last year. [The LSM posted a growth of just 9 percent during the current year, against the target of 13 percent, and last year's growth of 15.4 percent.]

Among the two heavyweights accounting for over 50 percent of the manufacturing activity covered, 'textile' (weight 24.492) scored a growth rate of only 3.98 percent during July-March period while 'food, beverages and tobacco' (weight 14.352) achieved a growth rate of 6.95 percent during the same period. Within 'textile', the largest growth rates of 11.16 percent and 0.07 percent were scored by 'cotton yarn' and 'cotton cloth', respectively accounting for nearly 84 percent of overall textile manufacturing activity.

Data on 'cotton ginned', representing about 14 percent of the activity in the sub-sector, showed a decline in production of about 11 percent, being a reflection of lower cotton output during FY06.

According to statistics finalised in the National Accounts Committee meeting on May 24, cotton production declined by 12.95 percent to 6.336 million tons against previous year's production of 7.279 million tons as the area under cultivation declined by 3 percent to 3,096,000 hectares against 3,192,600 hectares of past year.

The largest scorers within 'food, beverages and tobacco' were 'cooking oil' (17.60 percent), 'vegetable ghee' (13.16 percent) and 'cigarettes' (4.74 percent) together accounting for nearly 64 percent of production activity in the sub-sector. Output of another heavyweight (viz sugar), which accounted for nearly one-third of total manufacturing activity of this sub-sector, went down by 2.4 percent during the year up to end March 2006, being again a reflection of lower sugarcane output. Sugarcane production was reported to have declined by 6.2 percent to 44.312 million tons, against 47.244 million tons produced last year with area under cultivation posting a decline of by 6.1 percent to 907,000 hectares during the year against 966,300 hectares cultivated during FY05.

Other significant growth rates were achieved by 'pharmaceuticals' (14.17 percent with output of injections increasing by 30 percent), 'tyres and tubes' (12.20 percent), 'paper and board' (11.85 percent), 'electronics' (11.78 percent with 'air conditioners', 'TV sets' and 'refrigerators' posting growths of 19.63 percent, 12.25 percent and 11.27 percent respectively), 'leather products' (10.84 percent), 'chemicals' (9.89 percent with soda ash and caustic soda growing by 6.68 percent and 5.85 percent respectively), 'fertilisers' (9.78 percent), and 'non-metallic minerals' (9.49 percent). These manufacturing sub-sectors together accounted for some 31 percent of the covered LSM sector.

'Automobiles'--a sub-sector enjoying a weight of 3.995 within a total of 100--posted an increase of about 28 percent in output while two other sectors enjoying rather insignificant weights, namely, 'wood products' and 'engineering items' grew by hefty 47 percent and 40 percent respectively. Together, the two were responsible for less than even 0.5 percent of the total LSM activity. These hefty growth rates, indeed, cannot contribute much to the overall growth rate of the LSM sector.

Sub-sector 'metal industries', enjoying a weight of 3.504, was the biggest failure during FY06 so far recording a decline in output of 0.75 percent with production of pig iron, coke, billets, HR/coils and plates and CR coils etc posting major declines.

Within other sectors, a major decline was also reported in the case of 'buses' whose output within 'automobiles' declined by about 62 percent.


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LAHORE (June 15 2006): Punjab Finance Minister Hasnain Bahadur Dareshak on Wednesday unveiled in the Provincial Assembly Rs 274 billion tax-free provincial budget for 2006-07, showing revenue surplus of Rs 82 billion. The budget, which is 22.13 percent more than the current year''s budgetary estimates, carries an allocation of Rs 100 billion for development expenditure in the province.

Dareshak is the first Punjab finance minister in the history to present budget four times in a row. Late Makhdoom Altaf was the other finance minister who presented four budgets in the assembly in the past.

The finance minister said that the share of federal divisible pool taxes constituted 66 percent of total revenues. Straight transfers, subventions, grants contribute 13 percent, while province''s own sources revenues form 21 percent of total revenues.

He said that Revenue Expenditure remains at Rs 191 billion in the proposed budget estimates. Major allocations in current expenditure in the proposed budget are: Local Government Rs 87.3 billion; Police Rs 20.3 billion; General Administration Rs 13.8 billion; Education Rs 13.7 billion; Interest Rs 11.9 billion; Pensions Rs 11.00 billion; Irrigation Rs 6.1 billion; Health Rs 6.00 billion; Public Health Rs 5.5 billion; Agriculture Rs 2.5 billion; and Industries Rs 2.00 billion.

Dilating on Rs 100 billion development expenditure to be undertaken in the coming fiscal year, Dareshak said that Rs 12 billion, showing an increase of Rs 2 billion from the current budget, had been earmarked for Local Government development projects in the coming fiscal year. He said that Rs 65 billion of expenditure in year 2006-07 would occur on Core Provincial Development Programme.

Highlighting the Annual Development Programme (ADP) in different sectors in the proposed budget, he said that Rs 12.48 billion had been allocated for education. He said that 200 schools'' upgradation; training of 121,857 teachers and managers; establishment of 3,251 libraries and 70 colleges would take place under this programme.

Boosting of provincial government unparalleled efforts in Special Education, he said that Rs 600 million would be pooled there out of Education portfolio development fund. Similarly, under education development head Rs 300 million would be spent on literacy promotion and Rs 5.00 billion on Education Sector Reforms.

In health sector development Dareshak told the House that Rs 4.30 billion were earmarked for Health Sector Reforms (HRS). In development of emergency services for other cities in the proposed budget 2006-07, an amount of Rs 900 million had been kept under health sector development, he added.

About development efforts in 2006-07 on Annual Development Programme, he said that Rs1.80 billion was meant for Local Government & Rural Development; Rs 5.2 billion (Water Supply Sanitation); Roads (Rs 14.00 billion); Special Infrastructure (Rs 23 billion); Irrigation (Rs8.50 billion); Agriculture (Rs 1.10 billion); Livestock (Rs 600 million); Industries, TEVTA, Mines & Minerals (Rs 1.05 billion); Access to Justice (Rs 600 million); Public Buildings (Rs 3.20 billion).

Earlier, opposition legislators on a point of order criticised the government for hurting the sanctity of budget by passing on information to the press. The journalists of press gallery, agitating against a government department action against ''On-Line'', a leading news agency, boycotted the assembly session. They later, on the assurance of Provincial Law Minister Muhammad Basharat for holding a judicial inquiry of the incident, came back. The session, that commenced at 11:20 am, was chaired by Afzal Sahi.


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LAHORE (June 15 2006): Punjab government's Rs 100 billion annual development programme (ADP) of 2006-07, which is 58.7-percent higher as compared to the last year's figure of Rs 63 billion, will mainly focus on social sectors - education, health, water supply & sanitation, besides services and urban sectors.

Out of Rs 100 billion ADP outlay, Rs 28,493.150 million will be spent on social sectors, Rs 25,700 million on infrastructure development, Rs 3,375 million on production sectors, Rs 1,360 million on services sector and Rs 4,255 million on miscellaneous sectors, including special infrastructure progarmme and district and TMA programme etc.

This year's ADP has been designed under the Medium Term Development Framework (MTDF) 2006-09. The development programme 2006-07 not only includes projected estimates for 2007-08, but also includes the summary and main components of the development schemes as well as major outcomes and targets.

The gross size of the development programme of Rs 100 billion includes provincial development progamme of Rs 65 billion, special infrastructure programme of Rs 23 billion and districts/TMAs programme of Rs 12 billion. According to the budget document, when compared with last years' development outlay, it is 59 percent higher. The core provincial progamme is 23 percent higher as against last year's size of Rs 53 billion.

The salient features of the progamme are as maximum funding of ongoing projects, full funding for projects to be completed ie, 70 percent ongoing and 30 percent new. Moreover, 60 percent of 2,430 schemes are to be completed and full funding for foreign aided and mega projects as per requirement. The progamme will also focus on rural areas (70 percent), infrastructural investments (35 percent) and allocation to pro-poor sectors (82 percent). Allocation per scheme will be Rs 27 billion.

As per sectoral analysis of the ADP, Education sector will get Rs 12,480 million, which constitutes 19.20 percent of the development programme 2006-07, which is 35 percent higher than the last year's allocation. It has, however, been envisaged that by the year 2008-09, the allocation for the education sector will be enhanced to 24 percent of the total development outlay in that year. 

According to the budget document, in order to attain millennium development goals (MDGs), the following objectives will be achieved: 100 percent participation rate at primary level by 2015 and participation enhancement at the elementary and secondary levels; provision of quality education at all levels, promotion of science and computer education at the secondary and tertiary levels; and reduction in gender and regional disparity in access to education. In addition, Rs 600 million and Rs 275 million have been allocated for special education and literacy.

HEALTH: As compared to Rs 3,300 million of the last year's figure, Rs 4,300 million budget is allocated for health sector, which is 30.3 percent higher.

The major objectives envisaged in the health care delivery programmes include measurable impact on MDGs through investment in the health delivery services with significant reduction in incidence of diseases, implementation of a standardised service delivery package in the devolved set-up; better health management system, a well thought-out strategy to be implemented for patient care, reduction in poverty as well as social protection for vulnerable population groups, greater focus on preventive health care, particularly in the rural areas, improved primary, secondary and tertiary health care through effective and quality referral system and optimal utilisation of facilities; enhanced capacity for planning, costing and budgeting and making community participation meaningful and to give public private partnership a purposeful dimension. 

In the ADP for water supply and sanitation, an amount of Rs 5,200 million has been provided as against Rs 4,500 million showing an increase of 15.6 percent, which would mainly focus on provision of water supply and sanitation coverage.

LOCAL GOVERNMENTS: In the ADP, 2006-07 Rs 1,800 million have been earmarked for local governments and rural development, which is 50 percent higher as compared to last year's figure of Rs 1,200 million. The major objectives include improving quality of life in 425 low-income areas of 21 towns in 6 districts of southern Punjab by providing drinking water, water treatment plants and construction/rehabilitation of slaughterhouses etc. 

Moreover, it aims at training of elected councillors on holding their offices to acquaint them with official business and other allied skills; to accommodate and facilitate women councillors and local government functionaries, a separate block is gong to be set up in the existing local government academy at Lalamusa. Besides, it aims at providing basic infrastructure and deficient facilities in the selected villages to upgrade them to the level of model villages.

In line with the government policy, the development of the road infrastructure is being given due importance in the mid term budgetary framework i.e. 2006-07 and 2008-09. The revised allocation during 2005-06 was around Rs 13,500 million. In order to maintain the present tempo of infrastructure development the proposed allocation to the road sector in MTDC is Rs 14,000 million for 2006-07; Rs 16500 million for 2007-08 and Rs 18,000 for 2008-09.

AGRICULTURE SECTOR: An amount of Rs 1,100 million has been set aside for the agriculture which is 18.9 percent higher against the last year's budget of Rs 925 million. The focus will be on enhancing crop productivity through use of improved agronomical practices and high yielding and hybrid varieties besides strengthening agriculture research and extension services to adequately respond to the challenges and opportunities offered by WTO regime.

Moreover, the government has allocated Rs 1,050 million for promotion of industries, TEVTA and Mines & Minerals in the province and this amount is 38.2 percent higher as compared to the last year's figure of Rs 760 million. Similarly, forestry, wildlife and fisheries will get Rs 575 million, food Rs 50 million, livestock development Rs 600 million, information technology Rs 800 million, services Rs 500 million, labour, human resource development Rs 60 million, environment Rs 550 million, information, culture and youth affairs Rs 210 million, religious affairs and auqaf Rs 50 million, access to justice Rs 600 million, regional planning Rs 2,200 million, social welfare Rs 330 million, tourism Rs 90 million, emergency services Rs 900 million and sports Rs 400 million.


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LAHORE (June 15 2006): The Punjab government has enhanced the budgetary allocations for education and health sectors by 35.7 percent and 30.3 percent to Rs 12,480 million and Rs 4,300 million, respectively for the year 2006-07, as compared to Rs 9,200 and Rs 3,300 million allocated in 2005-06.

The allocation for education constitutes 19.20-percent of the Annual Development Programme (ADP) 2006-07. According to ADP, school education budget increased by 65.3 percent to Rs 3,305 million as compared to Rs 2,000 million of year 2005-06 while Rs 2,900 million have been allocated for higher education against Rs 1200 million of 2005-06 thus denoting an increase of 141.7 percent.

Similarly, allocations for special education and sports have been increased to Rs 275 million and Rs 400 million, respectively, as compared to Rs 200 million and Rs 300 million in 2005-06. The government also enhanced literacy budget from Rs 200 million to Rs 275 million.

However, allocation for Education Sector Reform Programme remained unchanged at Rs 5000 million. The enhancement in allocation is aimed at achieving the objectives of Millennium Development Goals (MDGs), which include 100 percent participation rate at primary level by 2015 and participation enhancement at the elementary and secondary level, to provide quality education at all levels, promotion of science and computer education at the secondary and tertiary levels and reduction in gender and regional disparity in access to education.

The salient features of strategic intervention to achieve the goals include:- training of 121,857 teachers and managers, establishment of 3251 libraries, provision of edible oil to the tune of 3.077 metric tons, setting up of 386 IT labs, and 100 public college education besides establishment and up-gradation of 70 colleges during the year 2006-07.

HEALTH SECTOR: The health sector budget has been increased by over 30 percent to Rs 4300 million to achieve major objectives envisaged in the Health Care Delivery Programme. This includes measurable impact on MDGs through improvement in the health delivery services with significant reduction in incidence of diseases, implementation of a standardised service delivery package in the devolved set up, better health management system, a well thought-out strategy to be implemented for patient care, reduction in poverty as well as social protection for vulnerable population groups, greater focus on preventive health care particularly in the rural areas, improved primary secondary and tertiary health care through effective quality referral system and optimal utilisation of facilities, enhanced capacity for planning, improved capacity for data analysis research as well as evidence and outcome based planning, and to make community participation meaningful and to give public private partnership a purposeful dimension. Out of Rs 4300 million, Rs 860 million have been allocated for preventive healthcare, which is 20-percent of the total health budget. The allocation also includes an amount of Rs 2100 million for Chief Minister's Health Sector Reform Programme (HSRP) while Rs 1082 million have been made available for tertiary care hospitals. The government has also allocated Rs 215 million for the medical education, and Rs 43 million for research and development.

The HSRP was launched with a comprehensive set of interventions to overcome the inadequacies in primary and secondary health care services, widespread prevalence of communicable diseases, urban-rural imbalances, professional and managerial deficiencies in District Health System, basic nutrition gaps in target population, deficient health education system, addiction and mental health as well as unregulated private sector.

It may be mentioned that HRSP is one of the major components of the Medium Term Development Framework 2006-09 (MTDF) for health sector with different strategies for identification of various policies, projects and programmes.


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ISLAMABAD (June 14 2006): The Oil and Gas Development Company Limited (OGDCL) has hit three major discoveries--Chanda-2, Kunar and Maila-1 in NWFP, Sindh and Punjab, respectively. Source said that Chanda-2 has been drilled to 4990 metres in Kingriali formation in district Kohat of NWFP and the company is actively drilling at three more formations-Datta, Lumshiwal and Lockhart--in the same area.

On the basis of log data, the company's drilling experts have termed the initial reports from these formations as very encouraging. They are pretty confident that the drilling of these formations will add substantially to oil and gas production from Chanda field in near future.

Chanda field is a joint venture of OGDCL, Government Holdings of Private Limited (GHPL) and Zavor Petroleum with 72 percent, 12.5 percent and 10.5 percent shares respectively. Its first deep discovery- Chanda-1- has already been declared as a big discovery and as on June 13, it was producing 2570 barrel oil and 5 mmcfd gas per day.

The OGDCL report submitted to Director General of Petroleum Concessions of the Ministry of Petroleum on June 9, indicated that testing at Chanda-2 proved as a great discovery, having initial production of 1560 barrel of oil and 2 mmcfd gas at half inch choke. The report said its production would double once its testing reaches the required level at one-inch choke.

The report said: "OGDCL has discovered oil and gas in its development well Chanda No 2. The discovery has been made from a new formation. The surface co-ordinates of the well are 33-13-55.316 (latitude) and 71 -30-98 (Longitude). The location of Chanda Well No 02 was delineated in Chanda D & P Licence area, drilled and tested by OGDCL in-house expertise."

It added that potential of Datta sandstone would be tested shortly and it was expected to add to hydrocarbon potential. Kunar field is another productive area in Sindh where joint venture led by OGDCL hit another discovery. It has also been reported to DGPC.

Kunar's testing report indicated that its one zone Kunar-1 was tested that proved production of 470 barrel oil per day and 24 mmcfd gas. Its two zones were under drilling. Kunar-1's report was submitted to the ministry on May 20 last.

Sources said Maila-1 has also been an encouraging discovery having substantial quantity of gas and oil but OGDCL is yet to submit its test report to DGPC.

An official said Maila-1 is at the final testing stage and, keeping in view its encouraging initial test reports, the Ministry is expecting highly promising results from Maila-1. OGDCL, PPL and GHPL are in the joint venture partner for Maila field.


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ISLAMABAD (June 14 2006): The SHV Energy, a Dutch company will invest Rs 400 million to increase its Liquefied Petroleum Gas (LPG) storage capacity to 1,450 tonnes to bridge the demand-supply gap.

In a meeting with State Minister for Petroleum and Natural Resources, Mir Muhammad Naseer Mengal here on Tuesday, Company Chief Executive, Patrick J Gregory said that the company is planning to further invest Rs 400 million in LPG activities, which would improve its supply.

After this investment, its storage capacity would be increased from 200 tonnes to 1,450 tonnes at Port Qasim, which would definitely meet the demand, Gregory informed.

The SHV is the largest LPG marketing company world-wide with operation in 26 countries. It launched its operations in Pakistan in 1998 and was now the largest LPG marketing company with a market share of 20 percent.

Welcoming the Dutch company's investment plan, the Minister of State said that the government would facilitate and co-operate with them in this regard.

The government had deregulated the petroleum sector with a view to bring healthy competition in an investor-friendly atmosphere. He hoped that SHV would continue to avail the investment opportunities in the LPG sector for the mutual advantage.

Additional Secretary, Shaukat Hayat Durrani and SHV General Manager Corporate Affairs Parvez Akhtar were also present during the meeting.


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KARACHI (updated on: June 15, 2006, 21:55 PST): A record Rs 171.224 billion Sindh Budget for 2006-2007 with no new tax levied was presented in Sindh Assembly by Senior Minister Syed Sardar Ahmed here on Thursday.

The budget incorporates a record development outlay of Rs 50 billion which includes Provincial ADP of Rs 24 billion and District ADP of Rs 8 billion.

Other components of the development outlay are FPA Rs 5.3 billion, Federally Assisted Projects Rs 10.5 billion, DERA Rs 250 million and SDSSP Rs 1.95 billion.

The General Revenue Receipts including the Federal Transfers and Provincial Receipts are estimated at Rs 147.613 billion as against the overall Revised Receipts of Rs 126.962 billion.

According to the break-up the Divisible Pool Tax Transfers are estimated at Rs 63.468 billion; Federal grant-in-aid being given as per new Order 2006 is estimated at Rs 5.83 billion, Straight Transfers Rs 37.90 billion, District Support Grant Rs 18.606 billion, Province's Own Receipts Rs 22.808 billion.

The General Revenue Expenditure for 2006-2007 is estimated at Rs 139.224 billion against revised estimates of Rs 126.184 billion for 2005-2006 - showing an increase of 10.3 percent over the revised estimates.

The Current Capital Receipts are estimated at Rs 9.248 billion and the Capital Expenditure is expected to be Rs 11.727 billion with a deficit of Rs 2.47 billion.

For 2006-07, combined share of Local Government is estimated at Rs 56.754 billion as against revised estimates of Rs 52.833 billion for 2005-2006 with an increase of Rs 7.4 percent.

The Rs 50 billion development outlay is 19 percent higher than the current year.

Delivering the budget speech, Senior Minister Sardar Ahmed said the ADP for next financial year has been planned at Rs 32 billion which includes Rs 8 billion for district governments and Rs 24 billion as Provincial component.

He said the ADP 2006-07 registers an increase of 33 percent over the year 2005-06. 

Sardar said the Provincial component of ADP will be entirely funded by the Provincial Government whereas the district governments will fund their component from the "Single Line Transfers" which will be administered from July 2006 onwards based on the PFC Award.

He said in terms of priority, the Government has assigned Rs 20.83 billion allocations to following sectors:

Special Packages Rs 5.5 billion (KR Rs 2 bln, HS Rs 1.5 bln, Rural Package Rs 2 bln)

Communication Rs 4.5 billion 

Water and Power Rs 1.5 billion 

Education Rs 1.5 billion 

Agr and Livestock Rs 1.36 billion 

PP&H Rs 1.29 billion 

Mines and Minerals Rs 1.1 billion 

MPAs Program Rs 1.08 billion 

Health Rs 850 million 

Industries Rs 600 million


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ISLAMABAD (updated on: June 15, 2006, 18:24 PST): Pakistan and United States on Thursday inked an agreement to provide US $200 million in direct U.S budget support for Pakistan's federal Public Sector Development Programme (PSDP), 2006-2007. 

The bilateral agreement was signed by Minister of State for Economic Affairs Hina Rabbani Khar and Secretary for Economic Affairs Division Khalid Saeed, and U.S. Ambassador to Pakistan Ryan C.Crocker, U.S Agency for International Development (USAID) Director Jonathan Addleton. 

The agreement is the second tranche of the five annual $200 million instalments, of U.S economic assistance to support Pakistan in health, education and sanitation. 

The $200 million is part of the 3 billion U.S. dollars pledge for assistance to Pakistan made by President Bush to President Musharraf at Camp David in 2003. 

Minister Hina Rabbani Khar in her brief comments said the two countries were bound in long-standing relations and there was a sense of renewed co-operation in all areas. 

She appreciated the US assistance to support Pakistan's initiatives in health, education and sanitation through the budgetary assistance and said these will help government's strategic goals in poverty reduction. 

She said the US assistance needed to be emulated by other donors to help the country improve its social sectors. She said despite the challenges, the country has managed to achieve macro- economic stability. 

The budget 2006-07, she said clearly indicated that Pakistan was spending more on development and there was a need for more spending to improve the effectiveness and quality of the programmes that were being undertaken. 

The US ambassador Ryan C Crocker said the US assistance represented the "depth and strength" of relations between the two countries and reflected support to the government. 

He said the US 200 million dollar assistance was part of the US 3 billion package for Pakistan and his government was meeting its commitments for the second consecutive year. 

He said the government was engaged with the US Congress on funding for the next year. He said the US government was "totally committed to providing full assistance it pledged to Pakistan." He said his government provided the funds for last year and will do it in the years to come. 

Crocker hoped the funding will help Pakistan in social sectors and bring about a meaningful change in health, education and clean drinking water. 

He said the USAID through its development assistance was also targeting the earthquake reconstruction. He said additional agreements providing $40 million for earthquake reconstruction and another $147 million in project support will be provided within the next several months, bringing total USAID assistance this year to Pakistan to $403 million. 

Ambassador Crocker said the funds will assist the Government of Pakistan to sustain the strong economic growth of the past several years. 

The agreement provides almost twelve billion rupees in direct budget support to government's Public Sector Development Program (PSDP), 2006-2007 and will be used to fund health, education, and water and sanitation programs in the federal government's budget. 

Under the funding, two-thirds of it will go for the federal PSDP basic education budget; over half of PSDP's health budget; and 38% of the Water and Sanitation budget. 

The fund for education will lead to building of schools, providing scholarships and training teachers. Health programmes are aimed at fighting communicable disease, train and equip midwives, and improve child health. Clean water assistance will benefit people throughout Pakistan. 

Apart from the budget support assistance, USAID is providing project assistance to Pakistan in education, health, economic growth, democracy and governance, and earthquake reconstruction. 

The support includes $1.5 billion in economic assistance and $ 1.5 billion in military assistance. The United States has also pledged to provide over $510 million in earthquake relief and reconstruction assistance. 

Ambassador Crocker said the assistance to Pakistan was aimed supporting peace and stability in South Asia over the long term. 

He said continued economic growth and stability in Pakistan was also creating conditions for continued joint success in the fight against terrorism.


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*http://www.dailytimes.com.pk/default.asp?page=2006\06\15\story_15-6-2006_pg1_3 
*
Thursday, June 15, 2006 

ISLAMABAD: The government has decided that it will pay for the education up to age 18 of single-child families, Population Minister Chaudhry Shahbaz Hussain told a PTVprogramme on Wednesday. Shahbaz said that the budget offered a lot of incentives for the parents who followed the population welfare policies of the government. He said he would visit the Northern Areas, AJK and FATA from July 15 to make the ongoing population welfare campaign more effective and result-oriented. He said that the government had a political commitment to control population and provide a better standard of living, adding that the high population growth was seriously affecting government efforts to provide people with health cover, education, housing, jobs and foodstuff. He said the government was committed to bridging the gap between resources and the population. Ã¢â¬ÅWe should educate and teach people that a small family can prosper in a better way.Ã¢â¬Â 

http://www.dailytimes.com.pk/defaul...15-6-2006_pg1_3


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Thursday, June 15, 2006 

KARACHI: The trade volume between Pakistan and India moved to $ 835 million in 2004-05 from $ 476 million in 2003-04 because of recent thaw in the relations.

According to a press release of Karachi Chamber of Commerce and Industry (KCCI) on Wednesday it said, Ã¢â¬ÅIndia and Pakistan are the biggest economies in South Asian region, but unfortunately, the vast bilateral trade potential could not be actualized, which is benefiting the third countries and vested interestÃ¢â¬Â.

During visit of a delegation of South Asia Free Media Association (SAFMA) to KCCI it suggested the trade between two countries through third country or illegal channels is still much bigger and is estimated at $ 3 billion annually.

The data shared by leaders of business community of Karachi, suggests that with the elimination of non-tariff barriers and reduction in customs tariff, there would be manifold increase in legal trade.

Ã¢â¬ÅThe recorded trade between India and Pakistan is low side, but several tariff and non-barriers are major impediments in growth in bilateral trade,Ã¢â¬Â it stated.

Pakistan mainly exports fruits, vegetables, crude vegetables materials, cotton yarn and fabrics with the addition of petroleum products in recent times while the imports from India are chemicals, dyes, iron ore, steel products, tyres and tubes, cotton, spices etc.

It said Pakistan can export with advantages to vast SAFTA market products such as textile, leather, surgical instruments, processed food and agricultural products to meet regional shortfalls. The business community opines that liberalizing the visa restrictions would facilitate the opportunities for cross border investment, joint ventures as well as technology transfer and upgradation.

Identifying various bottlenecks in bilateral trade between the two countries, according to press release there are bright prospects for collaboration in different sectors of economy, but it would be possible only through the promotion of regional trade.

The volume of trade between SAARC countries, disappointedly is just around five percent while in the case of ASEAN and European Union, it stands at 25 percent and 70 percent respectively.

High hopes were pinned in SAARC accord, but unfortunately, it has not yet achieved the prospects and benefits, which were expected from this agreement. There is a vital scope for joint ventures between India and Pakistan, which ultimately would lead to expansion of two-way trade. It will be in mutual interest of the two countries to complement each other in the textile sector, instead of being competitors with each other.


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## Neo

Thursday, June 15, 2006 

* Says Sino-Pak agreement on free trade will be finalised this year

SHANGHAI: Pakistan can be an energy corridor for China and it wants the Iran-Pakistan-India (IPI) gas pipeline extended up to China, President General Pervez Musharraf told a group of Chinese traders during a meeting on Wednesday. 

Ã¢â¬ÅThe Sino-Pak agreement on free trade will be finalised this year,Ã¢â¬Â Musharraf said, noting that the Karakorum Highway linking Pakistan and China could help boost trade between the two countries. He proposed a rail track along the Karakorum Highway to enhance trade between Pakistan and China. He said that Pakistan was setting up modern industrial parks in its major cities, and invited Chinese investors to these parks.

Talking to a delegation of the Chinese Industry and Trade Federation, President Musharraf asked the private sector to come forward to enhance trade and investment between the two countries. 

Addressing Chinese think tanks at the Shanghai Institute of International Studies, President Musharraf called for the promotion of a strong system for the United Nations, resolution of longstanding political conflicts and sustained efforts against terrorism and extremism. He said that concerted efforts were needed to end conflicts in Kashmir, Palestine, Iraq and Afghanistan and the Iranian nuclear crisis. He urged six-party talks on North Korea. 

President Musharraf said that Islamabad was doing all it could for the political and economic rehabilitation of Afghanistan. He said that Pakistan was engaged in dialogue with India and its success depended on Ã¢â¬Åsincerity, flexibility and courage from both sidesÃ¢â¬Â.

Later in an interview to RussiaÃ¢â¬â¢s official news agency Itar-Tass, President Musharraf underlined the need for enhanced Islamabad-Moscow cooperation against terrorism.

President Musharraf said that it was important to find out the causes of terrorism and extremism. Ã¢â¬ÅThe military approach cannot become the absolute solution to the phenomenon of terrorism,Ã¢â¬Â he said. Ã¢â¬ÅNo one must be misled into thinking that all problems can be solved by force.Ã¢â¬Â 

Ã¢â¬ÅRegrettably, our counteraction to terrorism now boils down to fighting its consequences,Ã¢â¬Â he said, adding that the root causes of the problem lie Ã¢â¬Åin political differences into which Muslims are drawn in Kashmir, Bosnia, Kosovo, Iraq and AfghanistanÃ¢â¬Â.

President Musharraf will attend the Shanghai Cooperation Organisation (SCO) summit, where Pakistan has observer status, today (Thursday). He is also expected to meet the heads of SCO member states on the sidelines of the summit.

http://www.dailytimes.com.pk/defaul...15-6-2006_pg1_1


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## Neo

ISLAMABAD (June 16 2006): The United States government on Thursday provided $200 million economic assistance for Pakistan's Federal Public Sector Development Programme (PSDP) 2006-07, to finance projects relating to education, health and water.

Under the assistance during 2006-07, US would fund 64 percent of the federal Education budget, 54 percent of the Health and 38 percent of the clean drinking water schemes.

US Ambassador to Pakistan, Ryan C. Crocker and US Agency for International Development (USAID) Director Jonathan Addleton and Minister of State for Economic Affairs Hina Rabbani Khar, and Secretary for Economic Affairs Division Khalid Saeed signed this bilateral agreement.

It is worth mentioning that during President Musharraf's visit to US in June 2003, both Musharraf and Bush reached an agreement that United States will provide Pakistan with $3.0 billion in assistance over the five-year period from 2005-2009.

This support includes $1.5 billion in economic assistance (including this $200 million), and $1.5 billion in military assistance. The agreement is the second of five annual, $200 million instalments of US economic assistance to support Pakistan's investment in human capital.

At the signing ceremony US Ambassador Crocker commented, "This assistance demonstrates the strong support of the American people for Pakistan's efforts to address its development challenges. By providing this funding directly to the Pakistani government budget, as Pakistan has requested, we can ensure maximum impact. The American people are delighted to know that their assistance will be used to finance half of Pakistan's federal budget for education, health and water and sanitation this year."

"The goal of US assistance to Pakistan is to support peace and stability in South Asia over the long term. Continued economic growth and stability in Pakistan creates the conditions for our continued joint success in the fight against terrorism," Crocker added.

The Ambassador remarked "Providing US financial assistance of this magnitude is a vote of confidence in Pakistan's development plans. Eradicating poverty and meeting the social needs of the population are important objectives that our two government share".

Minister of State, Hina Rabbani Khar, added that, "Co-operation between the United States and Pakistan is making both countries stronger. These funds supports the Government of Pakistan's strategic goals in poverty reduction".

The education funds will make a difference by building schools, providing scholarships and training teachers. Health programmes will fight communicable disease, train and equip midwives and improve child health. Clean water assistance will benefit people throughout Pakistan.


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## Neo

ISLAMABAD (June 16 2006): Prime Minister Shaukat Aziz on Thursday assured the currency would not be devalued and promised more concessions for the agricultural sector in coming years. While addressing the National Assembly, the Prime Minster said the present government had paid special attention to the development of agricultural sector and would continue to do so in future.

He said due to sustainable economic policies of the present government, there was no room for devaluation of the currency. Referring to the October 8 earthquake and international oil prices, he said availability of over $13 billion foreign exchange reserves and sustainable policies of the government were major factors, which helped in overcoming these shocks without devaluation of currency.

The Prime Minister said his government has presented a pro-poor budget and counted incentives given to lower classes, including increment in salaries, pensions, allowances, subsidies on kitchen items, increase in the marriage allowance, etc.

The Khushal Pakistan Programme (KPP), he said, has direct link with the poor, particularly the rural population, which would address basic problems of water, electricity, sanitation, health and education. He said about 58 percent KPP funds were being spent in Balochistan, saying it was its right due to its backwardness.

The government would provide electricity to 13,000 villages during the current year which, he said, had not been provided during the whole decade of 90s. He again reiterated the present government has broken the begging bowl.

Due to the pragmatic economic policies, international community, including US, European Union and Arab countries invested in Pakistan investment bonds for next 30 years, he informed.

We even turned down the offer made by the International Monetary Fund for $350 million loan for the earthquake reconstruction, he said and added we would not mortgage the country and its sovereignty against any loan for which the present government enacted the "Fiscal Responsibility Law", under which loan would be taken after approval of the parliament.

He said defence should be the top priority of the government and it would not curtail its budget, as nations with weak defence capabilities can not survive.

Earlier, Pakistan Muslim League (PML) president Chaudhry Shujaat Hussain informed the house the President's uniform and election issue would be resolved according to the Constitution. He said his party has done a lot to bring a sustainable democracy in the country.

He further said his party wanted to form a national government by involving all political parties in 2002, since not a single party had achieved majority, but, he said, the idea was rejected by Pakistan Peoples' Party and MMA.

He said his party also offered deputy prime minister's slot to Maulana Fazlur Rehman and Makhdoom Amin Fahim with Senate chairmanship, but they did not accept the offer.


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## Neo

SHANGHAI (June 16 2006): President General Pervez Musharraf on Thursday underscored Pakistan's strong credentials for securing full membership of the Shanghai Co-operation Organisation (SCO) and said the country is most suitably positioned to contribute to realising the SCO objectives.

He stated in his address at the 6th summit meeting of the SCO that Pakistan is prepared to work closely with this important regional organisation and contribute constructively toward its goals.

Strongly pleading Pakistan's genuine desire to associate itself with the SCO, the President referred to Pakistan's importance in geo-political, geo-strategic and geo-economic terms for playing an effective role as per its charter.

Amidst the gathering of state leaders from China, Russia and four Central Asian states - Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan - as well as Iran, Afghanistan and Mongolia, Musharraf highlighted the leading role that Pakistan has been playing in recent years for peace and development.

Pakistan, he said, would strengthen SCO's endeavours toward peace, security and overall harmony in the region. Besides playing a critical role in countering terrorism and extremism, Pakistan could also contribute effectively against drug and arms trafficking.

The President also saw Pakistan's contributory role in the social sector toward promoting education, tourism and cultural exchanges leading to enhanced people to people contact.

While hoping examination of Pakistan's case for full membership positively, the President suggested firming up more substantive participation of observer states in the SCO processes. Arguing for full membership, the President further said, Pakistan is most suitably positioned to promote the interests of the SCO.

"Pakistan provides the natural link between the SCO states to connect the Eurasian heartland with the Arabian Sea and South Asia. "We offer the critical overland routes and connectivity for mutually beneficial trade and energy transactions intra-regionally and inter-regionally," he pointed out.

The President noted the SCO represents hopes and aspirations of a quarter of humanity. "It has the potential to emerge as a most potent force of stability in the region," he said, adding he has no doubt that in the years to come, the SCO would make further progress in diverse fields, particularly security and development in the Eurasian region.

Pakistan with its strong commitment to SCO charter, principles and purposes would spare no effort to promote objectives espoused by the organisation. While expressing feelings of friendship with the SCO member countries, President Musharraf also spoke about the existing deep-rooted Sino-Pak friendship, saying: "We greatly values and cherish this long relationship."


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## Neo

MOSCOW (June 16 2006): Russia's gas monopoly Gazprom is prepared to take part in a pipeline project to link Iran's reserves to the growing Indian market, Russian news agencies quoted President Vladimir Putin as saying on Thursday. Putin said state-controlled Gazprom's role could include attracting finance for the gas pipeline, which would pass through Pakistan.

The project has been under discussion for over a decade but progress has been slow. "Gazprom is ready to participate, including in terms of financing, in implementing this project, especially as a project like this can pay for itself," Itar-Tass news agency quoted Putin as saying in Shanghai.


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## Neo

ISLAMABAD (June 16 2006): The government on Thursday claimed that the country is poised to attract the highest ever 36 billion dollars investment in diverse fields during next five years.

Minister of State for Privatisation and Investment Umar Ahmad Ghumman said the planned investment includes the London Taxi (black cabs), equipped with modern gadgets like satellite tracking, which will be plying on roads of Karachi, Lahore and Islamabad by next month.

The minister when told admitted that the London Taxi International (LTI) was shrinking its business in the UK due to heavy costs. The government has allowed duty-free import of 300 taxis (CBUs), while the Prime Transport Limited, a company owned by a US-based Pakistani, will invest one billion dollars for setting up an assembly plant of LTI at Gharo, Sindh, he told a press conference.

Minister of State for Foreign Affairs Khusro Bakhtiar, State Minister for Finance Omar Ayub Khan, State Minister for Environment Malik Amin Aslam, MNAs Donia Aziz and Waqas Akram were also present on the occasion.

Ghumman said that President General Pervez Musharraf will inaugurate the London Taxi terminal at Karachi Airport by the end of next month, while Prime Minister Shaukat Aziz will perform the ground-breaking of LTI assembly plant, for which 300 acres of land has already been allocated.

He said the company would offer affordable fare package (Rs 11.20 per kilometre), adding that LTI plant would assemble 18,000 taxicabs annually out of which 9000 would be exported.

The export of 9000 taxis will fetch around $2.8 billion every year, Ghumman said and added that 2400cc (2.4 litres diesel engine) London Taxi which is priced at 42,000 pounds in UK will be available at around 20,000 pounds in Pakistan.

The minister said that Dubai World (DW) of the UAE, Daimler Chrysler, Dubai Islamic Bank, and certain other organisations of international repute would also invest in Pakistan.

DW will construct new modern cities at Clifton, Sandspit, Manora, Hawks Bay and Cape Monte in Karachi with the investment of $15 billion, he said.

It will also build housing units in Lahore and Islamabad which will not only help overcome the six million shortfall in the country but will also put a check on the property prices, Ghumman added.

The State Minister for Privatisation and Investment said Daimler Chrysler would establish its assembly plant near Sheikhupura for the production of Mercedes-Benz trucks, buses and cars. Ghuman said Volkswagen, Renault and Jetta would set up their car manufacturing plants in Pakistan with billions of dollar investment.


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## Neo

SIALKOT (June 16 2006): Under Vision-2010, a fast track has been prepared to increase export volume of Silakot's surgical industry. This was stated by Surgical Instrument Manufacturers Association of Pakistan (Sima) Chairman Naeem Anwar Qureshi, while talking to newsmen here on Thursday.

He said under "Surgical Instrument Cluster Developing Vision 2010", adequate efforts would be made for increasing export volume of surgical instrument from 180 million dollars to 500 million dollars annually.

The surgical industry would work on a specific "road map" as identified in the Vision-2010 for overcoming the multifarious problems being faced by the industry, he said.

Naeem Anwar said that implementation of Vision-2010 would certainly help address the chronic problems being faced by the industry as well as help bring out the industry of "price war". Under the said programme, efforts would be made for setting up "Surgical Training Institute" for producing maximum trained and skilled workforce for the industry, he disclosed.

Naeem said that extra-ordinary efforts would be made for setting up a common facility centre and upgradation of Metal Industry Development Centre for facilitating the surgical industry, and added that in the absence of surgical training school, the industry was suffering adversely because of non-availability of trade and skilled force. He pledged that with the consultation of the members of the Sima, collective effort would be made for developing a cluster park for the surgical industry.

The Sima would play its pivotal role to help boost the export of surgical instruments and track the industry on modern manufacturing lines, he vowed. The Sima Chairman said that before implementing the Vision-2010, priorities would be fixed for initiating the mission in surgical industry.

Naeem was confident that the implementation of Vision-2010 would surely help in bringing out the industry from multifarious problems and would be supportive for tracking it on modern lines.


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## Neo

Daimler-Chrysler to invest $5.8bn


ISLAMABAD, June 15: Daimler-Chrysler and Coastal Group has decided to invest $5.85 billion in Pakistan by starting production of Mercedes-Benz trucks, both commercial and military, buses and Mercedes cars of various types to create a vendor industry.

The group would set up their plant on 1,200 acres of land near Shaikhupura provided by the government. The investment would create 5,000 jobs directly and indirectly, said Umar Ahmed Ghumman, minister of state for Privatisation and Investment and chairman Board of Investment (BoI) at a news conference at the Parliament House here on Thursday.

Coastal Group would make all the financial investment in the project, while Daimler-Chrysler would provide technology transfer.

It is to mention here that on May 7, 1998 two of the world's leading car manufactures, the German Daimler-Benz AG and the USA-based Chrysler Corporation, announced the largest industrial merger in history. The new company, called Daimler-Chrysler, became the world's fifth largest car maker with combined revenues of around $130 billion, a combined operating profit of around $7 billion, and a combined workforce of more than 420,000 employees.

The minister said the group would export products to neighbouring countries as well as to the Gulf region, which would earn billions of dollars in foreign exchange for Pakistan. A training institute conforming to the international standards would also be established in Pakistan to update the technical knowledge in the country.

An industrial estate for vendor industry would also be set up to locally produce spare parts as per European standards for local and export purposes, Mr Ghumman said.

Black cabs: Responding to a question about the reported violation of rules in import of black cabs from the United Kingdom, Mr Ghumman said: "We are importing duty-free 300 black cabs for testing purposes. The government had to give this facility in order to invite $1 billion investment from Prime Transport Limited to assemble, manufacture and operate London taxis in Pakistan under joint venture partnership with LTI of UK and ST Electronics of Singapore."

The minister said 150 of the black cabs would be tested in Karachi, 100 in Lahore and 50 in Islamabad so that to keep in mind the local conditions while manufacturing the cabs locally. He said no rules of the Public Procurement Regulatory Authority (PPRA) had been violated as the matter did not involve any investment by the government and the investment did not create any scam.

"I have no personal connection with the person who has invested the money. He is a Pakistani and his name is Dawood Khan. He belongs to Karachi. He wanted to introduce a secure and safe taxi system in Pakistan after a 15-year-old girl from his family was raped and killed by a taxi driver," he said.

The minister said no one was ready to provide such an investment for the purpose-built black cabs, but still, Ã¢â¬Åwe invited the tenders through various newspapers to ensure transparency," he added.

The minister said that as per the agreement, the London taxis would charge Rs11 per km which was reasonable. To a question, he said the manufacturing plant of black cabs was being set up in Gharo, near Karachi on 300 acres. The plant had to be shifted to Pakistan because the manufacturing of a single black cab required 43,000 sterling pounds in the UK compared to the 22,000 sterling pounds in Pakistan.

He said the government wanted to change the culture of taxis in Pakistan by revolutionising, introducing and implementing the most economical, dependable, comfortable and safe satellite-controlled taxi service in the country.

http://www.dawn.com/2006/06/16/ebr2.htm


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## Owais

*Historic raise in workers' remittances in May* 


KARACHI (June 17 2006): Workers' remittances registered the highest ever increase in Pakistan's history when a record amount of $506.57 million was remitted by the overseas Pakistanis in May, 2006 as against $358.30 million received during the same month of the last fiscal year depicting an impressive increase of $148.27 million or 41.38 per cent.

Pakistani workers have remitted $313.14 million, $348.41 million, $341.10 million, $372.50 million, $308.81 million, $371.24 million, $391.32 million, $358.13 million, $423.56 million and $401.47 million in July, August, September, October, November & December, 2005 and January, February, March & April, 2006 respectively.

During 11 months of the current fiscal year (July 2005 - May, 2006), Pakistan received an amount of $4,136.25 million as workers' remittances as against $3,809.81 million received in the corresponding period of the last fiscal year registering an increase of $326.44 million or 8.57 per cent. The amount of $4,136.25 million includes $11.10 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

The inflow of remittances during 11 months of the current fiscal year from USA, Saudia Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $1,119.34 million, $670.93 million, $635.54 million, $537.39 million, $400.00 million and $109.92 million respectively as compared to $1,184.93 million, $567.54 million, $652.11 million, $471.85 million, $338.21 million and $92.26 million during the corresponding period of the last fiscal year.

Remittances received from Canada, Australia, Norway, Switzerland, Japan and other countries during July 2005 - May 2006 amounted to $652.03 million as compared to $487.76 million in the corresponding period of the last fiscal year.

The monthly average remittances for the period July 2005 - May 2006 comes out to $376.02 million as compared to $346.35 million during the same period of the last fiscal year.

The inflow of remittances into Pakistan from almost all countries of the world increased last month as compared to May 2005.

According to the break up, Pakistan received workers remittances during May, 2006 from USA ($124.56 million), Saudi Arabia ($86.29 million), UAE ($79.70 million), GCC countries including Bahrain, Kuwait, Qatar and Oman ($60.09 million), UK ($53.60 million) and EU countries ($12.86 million) as compared to the corresponding receipts from the respective countries during the same month of the last fiscal year ie $108.71 million, $61.32 million, $71.24 million, $45.90 million, $28.22 million and $9.01 million. Remittances received from Canada, Australia, Norway, Switzerland, Japan and other countries during May 2006 amounted to $89.18 million as compared to $30.49 million during the same month of the last fiscal year.


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## Owais

*Pakistan and China vow to boost strategic partnership* 


SHANGHAI (June 17 2006): President General Pervez Musharraf and his Chinese counterpart Hu Jintao held an hour-long meeting here on Friday and reaffirmed their resolve to strengthen the existing partnership in its all dimensions, particularly in the economic sector.

Both the leaders agreed to continue co-ordinating their stated position on the regional and international issues at the UN and other levels, to serve the common interests of their people.

Expressing satisfaction over the pace of progress of their bilateral co-operation in the economic sector, they hoped that the negotiations between the two countries on the free trade agreement would be completed soon.

President Hu Jintao said his country agreed to work together to develop Pakistan as energy corridor through the Gwadar seaport. The Chinese President offered to enhance his country's support for undertaking reconstruction work in the areas that were hit by the devastating earthquake in Pakistan last year.

China is prepared to help in the construction of hospitals and schools in the affected region, he added. President Hu Jintao welcomed President Musharraf for the second time after a meeting early this year during the visit by the Pakistani leader to Beijing in February.

"I have great pleasure in receiving you again after four months," said the Chinese leader, adding that President Musharraf's presence at the SCO meeting was testimony to Pakistan's active participation in the regional grouping and a big support to China.

"We highly appreciate Pakistan's efforts for promotion of peace and development," he added. The Pakistani leader thanked his Chinese counterpart for supporting Pakistan in getting observer status on the six-nation grouping that comprises China, Russia, four Central Asian States, besides Iran, India and Mongolia as three other observer countries.

He sought China's support for Pakistan to become a full member of the regional grouping. President Musharraf noted with absolute satisfaction over the overall development of bilateral relations and interaction between the two countries at regional and international forums.

He expressed his strong hope that the strategic partnership between the time-tested allies would keep growing with the passage of time. Later, Chinese Foreign Minister Li Zhaoxing, while talking to APP, described the meeting as very successful and productive.

"It was a very successful and productive meeting to further enhance understanding and co-operation on wide-ranging issues of bilateral interests," the Foreign Minister said. He said, it was always great for the two countries to have interaction at the top level.

The two leaders met for the second time this year after President Musharraf's February visit to China during which the two countries signed about 12 accords and memorandum of understanding (MoUs), including the general framework agreement for expanding co-operation in the energy sector. The meeting assumed a special significance as the two countries are celebrating 55 years of establishment of their diplomatic relations.

Federal Information Minister Muhammad Ali Durrani, Co-ordination Minister Salim Saifullah Khan, Deputy Chairman Planning Commission Akram Sheikh, Chairman Export Promotion Bureau Tariq Ikram, Governor State Bank Shamshad Akhtar, Foreign Secretary Riaz Muhammad Khan and Pakistan's ambassador to China Salman Bashir accompanied the President during the meeting, held at the state guest house


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## Owais

*World Bank hires consultant for Tajik-Pak power line project* 
*RECORDER REPORT* 


ISLAMABAD (June 17 2006): The World Bank (WB) has hired the services of Harvey Salgo, an international consultant, to prepare technical, financial, social, environment and legal studies for transmission of 1000 MW electricity from Tajikistan to Pakistan, via Afghanistan, sources in Wapda told _Business Recorder _here on Friday.

Harvey Salgo is an economist and attorney, with over 25 years experience in energy industry, including power sector legislation and regulation, privatisation and finance, supply- and demand-side planning, procurement, competitive bidding, and contracts.

He has substantial international experience as a long-term advisor to the World Bank and others in developing countries such as India, Montenegro, Zimbabwe, and Ukraine regarding power sector reform, privatization, and market transformation.

"WB has engaged Harvey Salgo, one of the international consultant, with rich experience in regional electricity trade to lay 900-km transmission line for materialising 1000 MW electricity from Tajikistan to Pakistan," sources said.

They said that international financial institutions (IFIs) have not only nominated the World Bank as focal institution but also agreed to finance the expert consultant and set the deadline of June 15 to hire the services of the consultant.

The hiring of the consultant was a follow-up of the two-day energy Central Asia and South Asia electricity trade conference on May 8-9 in Islamabad mainly sponsored by US State Department, United States Energy Association (USEA), World Bank, Asian Development Bank, Islamic Development Bank, International Finance Corporation and private sector organisations like Rao, UES and AES.

Sources said that the World Bank had communicated the name of the consultant to GoP and other stakeholders within the deadline for formally taking their approval.

The countries participating in the project had formed a working group, comprising Shabbir Chaudhary, CEO, NTDC (Pakistan), Sulimonov Akram Rahimovich, Deputy Minister of Energy and Saidov Siroziddin, Deputy Chairman of Barki, Tajik (Tajikistan), Engineer Ghulam Rabani, Advisor Ministry of Energy and Water, Afghanistan and Ilias Dadarov, Head of National Grid Company, Kyrgyz Republic to materialise the project for which the US was very keen and considering it as alternative to Pak-Iran gas pipeline.

The Tajik transmission line would be routed through Pul-e-Khumri (Jalalabad) via Kabul to Pakistan. The official statement, which was changed several times on the insistence of the donors and participating countries, said that the conference deliberated upon the demand-supply situation, infrastructure needed for transmission of electricity from Central Asian to South Asian states, commercial arrangements, elements of electricity pricing, financing structure, possible risks and risk management.

The conference also agreed that surplus power from Kyrgyz Republic could also be transmitted through this line by suitable interconnections, but the proposal would be finalised after completion of Tajikistan-Pakistan electricity trade talks.

Sources said that Pakistan is likely to convey its consent to the World Bank in a couple of days for further action, but did not give the details of the fee to be paid to the consultant.


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## Owais

*Trade Policy may be announced on July 19: $19 billion export target likely* 



ISLAMBAD (June 17 2006): Commerce Minister Humayun Akhtar is likely to announce the 'Trade Policy 2006-07' on July 19, with more or less $19 billion export target. Sources told _Business Recorder _that Commerce Ministry officials were fully engaged in giving formal shape to proposals received from different trade bodies and associations.

They that the Commerce Minister would discuss the proposals formally and informally with the officials who have been given the task of framing the policy. But officials believe that the trade bodies and associations did not submit any feasible proposal this time, saying that most of the proposals were of "personal nature".

They said that Commerce Ministry officials were making hectic efforts to achieve the export target of $17 billion for the current year (2005-06), but it may not be possible to achieve $2.1 billion exports in one month. They expect $300-400 million shortfall in the target.

Sources said that the government was considering to include 100 more Indian items in the positive list from next fiscal year and also remove anomalies on the proposals of traders.

Trade analysts say that several export-related initiatives announced in 'Trade Policy 2005-06' did not materialise due to one reason or the other. For example, the Commerce Ministry had announced that trade lobbying firms and consultants would be hired to enhance exports and market access in the United States and the European Union (EU).

QuinngillespieAssociates, an American firm, had been hired for lobbying for Free Trade Agreement (FTA), Bilateral Investment Treaty and Trade and Investment Facilitation Agreement (TIFA), which was given a chart of tasks to be completed in one or two years.

However, the name of the marketing company has not been finalised which would be given the task for match-making and procurement of orders for Pakistan exporters in the EU member States, sources said, adding that Pakistan embassy had dispatched the names of three companies, but the matter is still undecided.

It was also announced that retail sale outlets would be established in major importing countries for introducing and exporting high quality and brand-name exports of Pakistan, but no one is ready to act on the scheme.

The Ministry had also promised that steps would be taken to reduce cost of transportation but there was no substantial reduction in freight forwarding.

The scheme of promotion of Pakistani trade marks announced in the policy has not attracted the exporters. In this scheme, it was announced that exporters who registered their trade marks abroad for export purposes would be provided subsidy equal to 50 percent of official registration fee, but none of the exporters was prepared to follow it.


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## Owais

*Government borrowings stand at 7.07 percent above target* 



ISLAMABAD (June 17 2006): The State Bank of Pakistan (SBP) on Friday reported that during the period from July 1, 2005, to June 6, 2006, the government's net borrowings for budgetary support stood at Rs 104.927 billion, which was about 7.07 percent above the 2005-06 target of Rs 98 billion. The widening budget deficit is pressing the government to borrow more from the central and scheduled banks for bridging the revenue/expenditures gap.

The deficit, which the government has to finance either from external or internal sources, indicates that in the coming months debt burden may further increase.

The notable point is that during July 1, 2005 to March 4, 2006, the government's borrowing had touched Rs 155.59 billion, which was 58.76 percent higher than FY 2006 limit. Afterwards, it sharply declined, but again started climbing and stood at Rs 104.927 billion on 6,6,06.

However, compared to the same period of last fiscal year, it rose by Rs 46.70 billion (80.21 percent). It should be noted that Pakistan's budget deficit has widened to Rs 201.35 billion (2.70 percent of GDP), up by 0.60 percentage point, in the third quarter (July-March) as compared to Rs 131 billion (2.1 percent of GDP) in the corresponding period of last fiscal year.

Economic experts believe that it would further increase. However, for financial year 2006-07, the government has estimated overall fiscal deficit at Rs 373.5 billion which is equivalent to 4.5 percent of the GDP.

According to the break-up of the data, the central government's net borrowing rose to Rs 126.95 billion between July 1, 2005 and June 6, 2006, from Rs 75.925 billion, borrowed from SBP and commercial banks in corresponding period of last year.

However, the provincial governments retired 22.25 billion rupees during the period under review against Rs 17.70 billion retired during the corresponding period last fiscal year.

The data further shows that the central government borrowed Rs 123.98 billion from SBP as against Rs 172.97 billion last year. From scheduled banks, it had borrowed Rs 2.98 billion against Rs 27.04 billion it retired in corresponding period of last fiscal year. The SBP says that the provincial governments borrowed Rs 224 million from scheduled banks against Rs12.37 billion repaid last fiscal year.

During the period under review, they retired Rs 22.25 billion of the central bank as compared to Rs 5.33 billion borrowed during the same period last fiscal year.


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## Owais

*Computerised refund system not pointing flaws in exporters' claims* 



ISLAMABAD (June 17 2006): The computerised 'risk-based refund analysis system' is not pointing out real flaws in the refund claims filed by exporters, resulting in blockage of refund payments.

Sources told _Business Recorder _on Friday that processing of refund claims is done through Sales Tax Automated Refund Repository computer system (Starr). Exporters' data is also checked through the 'risk-based analysis system'.

In certain cases, one system clears the application for issuance of refund, but the other raises serious objections, making it difficult for tax officials to sort out genuine cases.

Sources said that CBR has issued instructions to all collectors of sales tax to sanction sales tax refund in cases which are verified by the 'risk-based analysis system'. This system contains database of exporters including return, purchase invoices and invoice summary etc Starr system is operative for processing of refund claims for quite some time.

Keeping in view the Board's directive, the collectorates started issuance of refund after carrying out analysis of exporters' data available with the system, applying the Starr checks. The processing of refund claims under the 'risk-based system' has created many difficulties in processing of the claims. The collectors are not clear whether to issue refund or not in cases where the system raises objections.

Due to these objections the sales tax staff is unable to sanction or reject refund claims, which is increasing the overall pendency of refund claims at the level of collectorates. The collectors have communicated several ambiguities in the 'risk-based analysis system' for addressing.

Sources said that the system analyses the data only to the extent of 'purchase invoices'. No analysis is made regarding 'bill of entry' or 'shipping bill' filed by exporters under the system. Thus, the system raises objections pertaining to 'bill of entry'/'shipping bill'.

The system declares sales tax invoices as valid where the Starr refund program shows objection as 'blacklisted, non-filer, invoice summary not furnished, abnormal tax profile' and other such objections.

The refund claims due to these objections are inadmissible under the provisions of the Sales Tax Act, whereas the same are declared as admissible under the risk-based system, which is very confusing, sources added.

The system is also raising objections that an exporter has filed multiple sales tax returns resulting in blockage of refund. On the other hand, a registered taxpayer is entitled to file revised sales tax return to correct any omission or wrong declaration under section 26(3) of the Sales Tax Act, 1990.

The objection of 'multiple return' does not clarify whether a claimant is filing multiple return erroneously or revised sales tax return has been filed to correct the error.

The system also contains data of utility bills of the exporters. But it invariably shows objections as violations of different sections of the Sales Tax Act. This issue also needs to be addressed by the Board. The Board should clarify to the collectors whether only the risk-based analysis system is to be followed, or Starr objections be also taken into consideration, sources said.


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## Owais

*Mutual funds asked to extend outreach to remote areas* 

KARACHI (June 17 2006): Advisor to Prime Minister on Finance and Economic Affairs, Dr Salman Shah, has called upon the mutual funds industry to expand its outreach to tap the potential savings in remote cities, towns and rural areas of the country. Speaking at the Asia Finance Conference on 'Fund Managers: Pakistan's Capital Market' here on Friday.

He said that the financial sector in Pakistan was making very fast progress and it was necessary that all available savings within the country should be brought into the capital market. He said that Pakistan's capital market "is emerging one, and involves high risk".

He said that the risk could be mitigated by making long-term investment in mutual funds as the mutual fund managers would be doing all the research and taking precautions on behalf of the investors.

He said that the opportunities being offered by the stock market should be wide and should reach the general public throughout the country, whereas the mutual funds industry and brokerage houses were concentrated in a few cities. "They need to ensure equal distribution of the services and facilities throughout the country," he added.

He said the government was making sincere efforts to broaden the tax net, putting more money into infrastructure development, setting aside bigger amounts for development as the broader tax net would provide fiscal space for the government to lower the taxes further down.


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## Owais

*Rs 193.10 billion Sindh budget presented* 

KARACHI (June 16 2006): Sindh Finance Minister Syed Sardar Ahmed on Thursday presented before the provincial assembly a Rs 193.10 billion tax-free provincial budget for 2006-07 amid protests from the opposition on the law and order situation and the worst kind of pandemonium witnessed.

The Provincial Budget 2006-07 is a Rs 302.24 million surplus budget, as the total estimated receipts stand at Rs 193.40 billion. The opposition members led by Nisar Ahmed Khuhro staged walkout from the house following a worst nature of uproar created by them. They were chanting slogans against the deteriorating law and order situation, price hike, Kalabagh Dam and Thal Canal. The opposition members carrying placards kept on standing during their stay in the house.

Syed Sardar Ahmed delivering his budget speech said the general revenue receipts are Rs 147.63 billion, 16.265 percent higher as against the overall revised estimates of Rs 126.962 billion. Budget includes the highest-ever Rs 50 billion pitched in for the Development Programme comprising Rs 24 billion for the Provincial ADP, Rs eight billion for the District ADP (already dispatched), Rs 5.3 FPA, Rs 10.5 billion federally assisted projects, Rs 250 million Drought Emergency Relief Assistance (DERA) and Rs 1.95 billion for SDSSP.

The revenue receipts include Rs 63.468 billion Divisible Pool Tax transfers and Rs 5.83 billion federal grant-in-aid, being given as per new order 2006. It also includes straight transfers comprising royalty on oil and gas, excise duty and surcharges on gas of Rs 37.90 billion against the revised estimates of Rs 37.146 billion and district support grant estimates at Rs 18.606 billion.

The province's own receipts are pitched at Rs 22.808 billion against the revised estimates of Rs 18.381 billion. The current capital receipts are estimated at Rs 9.248 billion and the capital expenditure is expected to be Rs 11.727 billion with a deficit of Rs 2.47 billion.

For 2006-07, combined share of local governments is estimated at Rs 56.754 billion as against the revised estimates of Rs 52.833 billion for 2005-06 with an increase of 7.4 percent. Local governments are being provided with their funds in accordance with Provincial Finance Commission (PFC) formula. As per existing formula population, backwardness, and tax collection are the major criteria including some funds on transition basis and five percent on the basis of performance.

General revenue expenditure for 2006-07 is estimated at Rs 139.224 billion against the revised estimates of Rs 126.184 billion for 2005-06, an increase of 10.3 percent over the revised estimates. The major functional allocations include Rs 21.121 billion for general administration, Rs 17.763 billion for law and order, Rs 3.494 billion community services, Rs 19.367 billion social services, Rs 9.266 billion economic services, Rs 0.940 billion subsidies, Rs 10.326 billion Debt Servicing and Rs 56.948 billion for local governments and other unallocable.

"The Budget 2006-07 is a tax-free budget and no new taxes are envisaged. However, with a view to rationalise and simplify some of the existing tax instruments some of the rationalisation measures are being introduced through Finance Bill 2006," Sardar Ahmed said.

Explaining, he said that stamp duty paid on allotment order or transfer of allotment order issued by developer, builder etc is being abolished for all flats irrespective of their size, bungalows, residential houses and built up commercial premises. This is being done to simplify the process of allotment, he said.

He said that the stamp duty on articles of association and memorandum of association at the time of registration of new companies is being abolished to facilitate greater registration of new companies in the province.

Stamp duty on mortgage deed with and without possession are being reduced from five percent to three percent and from 4.2 percent to two percent respectively for bringing these at par with stamp duty on conveyance deed, Sardar Ahmed informed. With a view to streamline collection of motor vehicle tax, the categories of vehicles are being reduced from 40 to 11 to simplify collection. While stamp duty on power of attorney authorising the attorney to sell immovable property is being reduced from five percent to three percent to bring it at par with stamp duty on conveyance deed, he added.

The Sindh government has increased water sector allocation from Rs 888 million to Rs 1.5 billion for facilitating early completion of programmes. Sardar Ahmed informed the house that development budget for the agriculture sector for 2006-07 has been increased by 103 percent while that of forest, wildlife and the CDA sector has been raised by 23 percent.

For overcoming water constraints, the Sindh government is introducing new technologies of drip and sprinkler irrigation through a new project titled "High Efficiency Irrigation System" costing Rs 134.34 million, which would be made available to farmers at subsidised rates ie 80percent cost will be borne by the Sindh government and only 20 percent by the growers.

For the coming year the Sindh government would invest around Rs 6.5 billion in the road sector both through normal allocation of Rs 4.5 billion and Rs two billion through ADB assisted Sindh Road Sector Programme.

On the side of education, the Sindh government has enhanced the education budget by three times from Rs 4.1 billion to Rs 12.7 billion for improving service delivery. The existing incentive programmes will continue and will be further refined.

The minister said that the health development budget is being raised to Rs 850 million against the revised budget of Rs 750 million.

In order to bring the salary of the police staff in Sindh at par with those in Punjab, an amount of Rs 500 million has been allocated in the new budget.

"In pursuance of Government of Pakistan's announcement, the Sindh government would be increasing the pay of government employees with effect from July 2006.

Speaker Muzaffar Hussain Shah was in the chair. Immediately after the presentation of Finance Bill, he adjourned the session to meet again on Monday at 9:30 am.


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## Owais

*Rs 32 billion allocated for ADP* 


KARACHI (June 16 2006): Sindh Government has allocated Rs 32 billion for Annual Development Plan (ADP) for the fiscal year 2006-07, registering an increase of 33 percent over the current's year Rs 24 billion. According to Sindh budget for 2006-07, presented before Sindh Assembly here on Thursday, the development outlay includes Rs 08 billion for district governments.

The provincial component of the ADP will be entirely funded by the provincial government whereas the district governments will fund their component from the 'Singly Line Transfer', which will be administrated from July 2006 onwards based on the PFC Award.

In terms of priority, the government has assigned Rs 20.83 billion allocations to different sectors including Rs 5.5 billion as Special Packages (Rs 2 billion for Karachi, Rs 1.5 billion for Hyderabad and Rs 2 billion for Rural Package; Rs 4.5 billion for Communication; Rs 1.55 billion for Water & Power; Rs 1.5 billion for Education; Rs 1.36 for Agriculture & Livestock; Rs 1.29 for PP&H; Rs 1.1 billion for Mines & Minerals; Rs 1.08 for MPAs Programme; Rs 850 million for Health and Rs 600 million for Industries.

In water sector, the Sindh government has increased the allocation from Rs 888 million to Rs 1.5 billion for facilitating early completion of programmes. As many as 70 kms of canal will be extended and 50 new structures will be constructed.

The most important initiative undertaken by the government towards water management is setting up of a Small Dams Corporation for construction of small dams. Other than financing the on-going mega projects in water sector, the federal government has agreed to fund the Chotiari Phase-II project, as well as the long awaited' Makhi Farash Link Canal Project'.

Completion of these projects will go a long way in meeting the irrigation requirements of this province. The development budget of the Agriculture Sector for 2006-07 has been increased by 103 percent while that of Forest, Wildlife and CDA Sector has been raised by 23 percent.

The Sindh Government has approved different projects of desalination plants coupled with windmills and solar panels for production of energy and conversion of saline water into sweet water at various locations in the coastal belt at an estimated cost of Rs 200 million.

For improving the productivity of high value products like fruits, vegetables and flowers, an integrated programme has been launched under which, one export zone station at Karachi and seven satellite stations in different cities will be set up for storage, grading and packaging for high quality products for export.

The Sindh Government had earlier agreed to extend subsidy on the electricity bill of the private tube wells for lowering the cost of production and boosting agriculture in the province.

For this the Sindh Government allocated Rs 250 million in the budget and a proposal was also evolved for an effective implementation of the subsidy. This has been slightly delayed, however, governing is enhancing the subsidy to Rs 300 million and it would begin from July 2006.

Under the component of development of meat and milk production in Sindh the government has decided to establish cattle colonies at various places in the province and in the first phase these are being set up in Mithi, Thatta, Tando Allahyar, Shadadkot, etc.

These cattle colonies would be equipped with modern facilities of shades, water, drainage, feed mill, cold storage etc. A State-of-the-Art Dairy Village and Export Processing Zone is being set up at Ghagar Phatak, on public private participation basis.

The Sindh Government has decided to stop the licensing as well as contract system at Zero Point Badin with a view to provide relief to fishermen and encourage them to generate their revenue without any hindrance and without any middleman.

In addition, the government would be providing infrastructure facilities (like small jetties, cold storage, chillers etc) and training fishermen through development schemes in the next financial year. Similar facilities will also be established at Keenjhar and Manchhar Lake for the local fishermen community.

For overcoming extreme improvement in the coastal regions of Thatta and Badin, the Sindh Government would be launching the "Sindh Coastal & Inland Community Development Project" with the assistance of ASB at an estimated cost of Rs 2.4 billion from next year.

The Sindh Government has introduced new technologies of Drip and Sprinkler irrigation through a new project, titled "High Efficiency Irrigation System" costing Rs 134.34 million, which would be made available to farmers on subsidised rates ie 80 percent cost, will be borne by Sindh Government and only 20 percent by growers.

Under industrial infrastructure, Small Industrial Estates are being set up near Ghaghar Phattak and at Super Highway and SIE Larkana would be extended. For the coming year the Sindg Government would be investing around Rs 6.5 billion in the road sector both through normal allocation of Rs 4.5 billion and Rs 2 billion through the ADB assisted Sindh Road Sector Programme. With this allocation, over 400 kms of road would be improved and around 350 kms of new roads will be constructed.

The government has enhanced the education budget by three times from Rs 4.1 billion to Rs 12.7 billion for improving service delivery. The existing incentive programmes will continue and will be further refined. free textbooks will be provided to over 4.7 million children from class one to ten in all government schools and partnerships will be established with the district governments for various activities.

For girls' stipends, other than the Rs 1000 for all girls in class five to 10, a differential policy has been devised for low outcome districts/talukas for which Rs 500 million have been allocated for the Stipend Programme for the coming year.

With a view to bring the salary of the teachers in rural areas at par with those posted in urban areas the Sindh Government has decided to extend a Remote Area Allowance to the primary school teachers posted in rural areas at a cost of Rs 1.1 billion approximately for encouraging availability of teachers in rural areas.

Under health, with a view to gradually upgrade the overall condition of all the hospitals in the province, the Sindh Government has earmarked Rs 1 billion in the new budget for providing grants to all the hospitals for improvement.

The service structure of the paramedical staff in Sindh has been improved by upgrading their scales for facilitating better remuneration and benefits to them. This would have a budgetary implication of Rs 80 million approximately.

An amount of Rs 100 million has been provided in the budget to provide incentive to the doctors for posting in rural areas.

The Health Development Budget is being raised to Rs 850 million against revised budget of Rs 750 million. Under this portfolio major hospitals in the province are being equipped with modern machinery for improving the diagnostic capability of the public hospitals. Under this Lithography machines, Angiography and Angioplasty machinery, MRI and CT scanners are being provided at different teaching hospitals in the province.

A cancer hospital is being established with the help of Pakistan Atomic Energy Commission for which a plot at the cost of Rs 3.5 million has been procured and handed over to PAEC for establishing of a cancer hospital at Nawabshah.

Accident Emergency & Ancillary Services Complex is being set up at Civil Hospital Karachi thorough federal financing at a cost of Rs 1.43 billion. Similar units will be established in PMCH Nawabshah, Liaquat University Hospital & Gambat Institute of Medical Sciences through the ADP.

After the opening of Sukkur Medical College, the provincial government has decided to upgrade the Civil Hospital Sukkur to a Teaching Hospital. The provincial government has also decided to establish a medical collage at Mirpurkhas.

An allocation of Rs three billion was kept in the Social Security Fund last year. The procedure and the rules of operation of this fund are under preparation. A Rs three billion allocation has been provided for next year to provide relief to the people in distress.

In view to manage various employees benefit schemes scientifically through an integrated institutional framework the provincial government intends to undertake a study to evolve an integrated system for a more cohesive management of various employees benefits.


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## Neo

KIEV (June 17 2006): Pakistan and Ukraine in wide ranging discussions identified new areas of co-operation including oil and gas development, storage of liquefied gas, dairy products and heavy machinery.

In the second round of bilateral consultations between Pakistan's Athar Mahmood, Additional Secretary (Europe) Ministry of Foreign Affairs and Ambassador of Pakistan Major General Taj ul Haq (Retd) and Ukraine's Yuriy Kostenko, Deputy Foreign Minister consular issues and security related matters including scientific and technological co-operation were discussed.

Talks were held in a friendly and cordial atmosphere and covered whole gambit of Pak-Ukraine bilateral relations, a statement released by the Foreign Office said.

The two sides focused on further strengthening of political and economic relations. Ukraine was briefed on regional and international issues of mutual interest including Kashmir dispute, the ongoing composite dialogue with India, situation in Afghanistan, Iran's nuclear issue, Iraq and Pakistan's efforts in the fight against terrorism and prevention of drug trafficking.

The Ukrainian Deputy Foreign Minister expressed appreciation for President General Pervez Musharraf's role in the war against terrorism.

During talks, new areas of co-operation such as Ukrainian expertise in oil and gas development, storage of liquefied gas, dairy products, automobiles and heavy machinery were identified.


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## Neo

KARACHI (June 17 2006): A California-based Kuwaiti Oil Company, Z-teck, will set up a mega oil refinery in Karachi. This was announced in an official statement issued here on Friday. It said that a Memorandum of Understanding (MoU) was signed at the Chief Minister House.

Chief co-ordinator of the Kuwaiti firm, Zafar Ali and Sindh Secretary Labour, Nasir Hayat signed the MoU. Sindh Chief Minister Dr Arbab Ghulam Rahim, and the Director of Z-tech, Shaikh Mamoud Dawod Al-Sabah were present on the occasion of the signing ceremony.

The refinery would be set up at Port Qasim and will have a capacity of refining 150,000 barrel of oil. The Kuwaiti firm would come up with an investment to the tune of 1.2 billion dollars. Speaking on the occasion Arbab said that the government of Sindh would fully encourage the foreign investment in the province. The Chief Minister stated that the government of Sindh is determined to set up industrial zones in the province.


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## Neo

FRIDAY, JUNE 16, 

LONDON: South Asia, particularly India, is set to become the next big home and destination for fairly-traded products and the 'Fairtrade' brand. 

Speaking at a two-day 'Globalisation and Sustainable Development Forum' here on Thursday evening on the "enormous untapped potential" of countries like India and Pakistan, Harriet Lamb, Executive Director of the Fairtrade Foundation said the organisation planned to invest upto 50 million pounds in developing economies, some of the biggest being in South Asia. 

At the symposium organised by the Commonwealth Business Forum and the Royal Commonwealth Society and attended by an audience comprising leaders of business, government and civil-sector organisations, Lamb said he was certain both producers and consumers in India would buy into the Fairtrade concept with greater enthusiasm in the years to come. 

Among its line of products which can carry the brand Fairtrade counts footballs from Pakistan, 'Basmati' rice from the Himalayan foothills of India, cotton, cashew-nut and tea. 

In India, it aimed to work not only with farmers but also move into manufacturing, "next phase we'll be getting into processing companies that's where we add value," he said. 

Fairtrade also has interest in building a national market in India. "Barista is a popular chain. I think Fairtrade coffee will become quite popular." 

As de-regulation opens up the Indian market to further investment opportunities, producers have greater opportunities to sell their products abroad, and have a better sense of what their competition might be. 

Lamb said western companies often placed exhausting quality-control demands on third -world farmers, limiting their capability of selling to the west, and even if they could, they would have to at less than competitive rates. 

A 200 million pounds industry, Fairtrade promotes sustainable development based on trade, not aid which is unsustainable, and meets consumer demand while investing in the future communities. 

Working with local cooperatives and with trade unions, it builds on existing networks to lobby for competitive, equitable trade practice, and keeps market prices high enough to cover production costs, and stable enough to allow farmers the security to plan for and invest in the future.


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## Neo

KARACHI, June 16: Dr Salman Shah, adviser to the prime minister on finance and economic affairs, has said Pakistan will become major manufacturing country of the world with the high economic growth ranging from 6 to 8pc and it will slash the poverty significantly.

Speaking at the Asia Conferences, organised by the Dawn Group of Newspapers on Friday, the adviser said that economic scenario had changed during last six years.

The topic of the inaugural session was Ã¢â¬ÅFund Managers: PakistanÃ¢â¬â¢s Capital MarketÃ¢â¬Â and most of the speakers observed that Pakistan had great potential to invite the international funds flowing world over, however, a number of steps suggested for both the fund managers and regulators for stabilising the market.

Dr Shah said that six years before the profit of the Karachi Stock Exchange was Rs30bn and the KSE-100 index was just at 1,200-level and in April 2006 the index crossed the 11,000-barrier and the profits reached to Rs250bn.

He said the bank credits to the private sector had also multiplied and in the outgoing fiscal year Rs450bn were consumed by the private sector. The government had made record high allocation for infrastructure development to gear up the economy, he added.

He said the 6-8pc high economic growth would reduce the poverty to half in next 15 years. Discussing the share business, he said that we needed a lot of IPOs in the future.

The other speakers said that the country had enormous potential to grow in mutual fund sector. Kalim Aziz, senior analyst at Kairos Investment Management, London, said how outsiders look inside Pakistan was important. He said the demand economy of the country was very attractive for the investors.

He said the key driver of markets was the liquidity. Ã¢â¬ÅHow much liquidity is available is very important for the growth. If the interest rate is low more liquidity will be available while the higher interest rate will develop pressure on liquidity,Ã¢â¬Â he added. He said India was a good example of the demand economy. Ã¢â¬ÅAny company which claims that it has global operation has stakes in India and that is why asset management is vibrant in that country,Ã¢â¬Â he said and added that the performance of the emerging market was liquidity driven.

The CEO AKD Securities Nadeem Naqvi said that for the first time in the human history one third population of the world was involved in the industrialisation. Earlier the industrialisations were limited to few nations influencing much lesser population.

He said Pakistan required aligning with the two giants India and China. Ã¢â¬ÅThese countries are neighbor to Pakistan and the economic alignment will produce favorable results for the country. This should be taken seriously and we should not miss this trainÃ¢â¬Â.

He said that Pakistan had natural resources essential for growth of the economy but seriously lacked skilled people.

Ã¢â¬ÅWe will remain slaves of the knowledge-based economy if we fail to promote education and produce skilled workforce, he said.Mutual Fund Association of Pakistan chairman Najam Ali briefly discussed the performance of the mutual funds. He said the growth was satisfactory as the total fund reached Rs167 billion this year compared to Rs124bn in April 2005.

Earlier, Dawn Group of Newspapers CEO Hameed Haroon welcomed the participants and expressed hope that the series of Asia Conferences would help give a better understanding of the economy.


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## Neo

KARACHI: Pakistan, India and Bangladesh can make South Asia a well-built textile hub for the world if the three countries join hands for multilateral corporation and trade.

This was stated by Haroon Farooki, President Karachi Chamber of Commerce and Industry (KCCI) after inaugurating the Seventh SAARC Trade Fair 2006 here on Friday. Saeeda Malik, Sindh Minister for Women Development was also present.

Haroon Farooki said the Asian countries must collaborate with each other to survive in this era of globalisation. Ã¢â¬ÅWe (SAARC countries) should bolster each other instead seeking support of European countries. Exchanging of technologies, sharing of expertise and offering of available resources could strengthen the economics of Asian region,Ã¢â¬Â he added. Ã¢â¬ÅAlthough SAARC was formed 20 years back its objective could not be achieved by its member countries so far.Ã¢â¬Â

KCCI chief urged SAARC countries, particularly India and Bangladesh to not to create trade competition among the regional countries, saying the products of three countries do not have any level of competition.

Ã¢â¬ÅSome European and developed countries do not want the developing countries to overcome their economic plight and stand in the row of develop countries,Ã¢â¬Â he added.

Referring to the recent trade ties, KCCI chief said that Pakistan has signed Free Trade Agreement (FTA) with Sri Lanka and it would also ink same agreement with Bangladesh on July 26 whereas dialogues between Pakistan and India are in the pipeline in this regard which appear to be on positive note. Haroon Farooki said the regional countries have started realizing the importance of economic power which should be exempted from political relations.


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## Neo

KARACHI: The government is fully committed to implementing its approved privatisation programme with utmost transparency, through a fair, open and competitive process with a view to ensuring maximum sale proceeds for the assets.

Zahid Hamid, Federal Minister for Privatisation & Investment, stated this while addressing the Board of the Privatisation Commission on Friday.

Addressing the meeting, the minister said that privatisation, deregulation and liberalisation were part of the dynamic and highly successful economic reforms which had been initiated by then Finance Minister now Prime Minister Shaukat Aziz, which were being widely appreciated at home and abroad.

During the period October 1999 to May 2006, a huge amount of Rs337 billion had been realised from only 58 transactions. Moreover, as a result of the improvement in investment climate, Foreign Direct Investment had increased tenfold in five years, from US$322 million in 2000-01 to well over $3 billion in 2005-06, the highest level in PakistanÃ¢â¬â¢s history.

The minister also reviewed progress of transactions relating to Initial Public Offering (IPO) and the Secondary Public Offering of the shares of various entities.

The board was informed that the governmentÃ¢â¬â¢s highly successful Ã¢â¬ÅPrivatisation for the PeopleÃ¢â¬Â programme had helped in broadening, deepening and strengthening the capital market and in significantly increasing its capitalisation.

The number of stockholders had increased to more than a million and huge financial benefit had been passed on to ordinary small investors as a result of appreciation in share prices.

PC board members, senior officials of the respective ministries and transaction managers attended the meeting.


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## Owais

Pakistan, Japan ink agreement to reduce carbon emission MULTAN (updated on: June 18, 2006, 14:40 PST): Pakistan and Japan on Sunday signed an agreement to reduce carbon dioxide emission, generated from Nitric Acid production and make environment friendly to the people under Kyoto protocol.Mitsubishi Corporation's Chief Executive Officer Hajime Katsumura and Pak Arab Fertilisers (Pvt) Limited's Fawad Ahmed Mukhtar signed the agreement at a colourful ceremony here.Pak-Arab, a fertiliser manufacturer in Pakistan established in 1979, has entered into an agreement to participate in the first Clean Development Mechanism,(CDM) project in Pakistan under the Kyoto Protocol at an estimated cost of Rs.1.5 billion.This CDM Project is expected to reduce 1.15 million ton of carbon dioxide every year through the reduction of nitrous oxide (N2O), green house gas (GHG), generated from the Nitric Acid production.The CDM project undertaken by Pak-Arab will generate foreign exchange earnings of about Rs 1.00 billion per annum for the country.In his speech, Mitsubishi Corporation's CEO Hajime Katsumura said that it was a significant occasion that we are going to sign an agreement to make the atmosphere pollution free.The first CDM project was launched by. Prime Minister Shaukat Aziz on 28 April 2006 and the contract for its implementation was signed today by Hajime Katsumura and Fawad Ahmed Mukhtar.


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## Owais

Body to resolve natural resources disputes soon ISLAMABAD (June 18 2006): The government has decided to constitute a Dispute Resolution Committee (DRC) under the chairmanship of petroleum minister to resolve disputes amongst stakeholders over the country's natural resources, well-placed sources in the ministry told Business Recorder.Petroleum secretary, representative of defence Ministry and provincial secretaries for mines and minerals would be members of the committee, notification for which is yet to be issued, sources added.The decision was taken by the economic co-ordination committee (ECC) of the cabinet in its meeting on June 14, on a summary of the petroleum ministry to grant Coal Bed Methane (CBM) exploration and production licence to any American company and deal with possible dispute between the federal and provincial governments in this regard.Sources said Cathy Oil and Gas Limited (COGL), one of the American companies, had submitted a proposal for exploration and production of CBM and intends to first conduct reconnaissance survey covering an area of 40,000 square kilometres.Company's experts would fly over entire Indus Basin (minus areas where coal licences had already been issued and areas of potential surface minable resources) and apply USA's BellGeospace technology with the US government's approval and would use USGS aircraft for this purpose.Sources said the company had demanded exclusive rights for exploration and production of CBM in areas which are believed to have potential (as a result of the reconnaissance survey), adding the CBM would not be supplied in the local market being very expensive and would be used in their own petrochemical plants and sold at deregulated prices.According to sources, the firm had set several conditions prior to make an investment: one of which was unified regulatory control over the exploration and production operations to avoid serious conflict of interest among coal mining, coal gasification, coal seam water production and CBM.Sources further said the federal government had issued exclusive petroleum exploration and production rights to the E&P companies, which are not producing CBM, however, they may claim their legal rights on CBM in their licensed areas.Secondly, the Sindh government has taken up the matter with the federal government, claiming that CBM is the property of provinces and it should be regulated by them rather than the centre.The petroleum ministry, sources said, was of the view that CBM is hydrocarbon and covered under the definition of petroleum, which is the federal subject in accordance with the Constitution.The ministry had proposed the provincial government would regulate CBM ensuring that (a) provincial governments will not grant rights to explore and produce CBM over areas already awarded by the federal government for petroleum exploration without the consent of respective companies on case to case basis; (b) CBM operations do not hinder petroleum exploration and production activities; and (c) the federal government would have the right to issue licences for exploration and production in the CBM-licensed areas.It was also proposed that the E&P company needs to follow the procedure as given in the petroleum rules and exemptions or exclusivity can be granted to the company in any manifesto whatsoever and it would provide a level playing field to existing and new entrants.Sources said the petroleum ministry had referred the matter to the law ministry for comments, which observed that, in case CBM being the by-product of coal and is not categorised as petroleum, the question of transfer of any power by the federal government to the Sindh government under article 146 (1) of the constitution would be free from doubt.However, the law ministry agreed to the petroleum ministry's proposals but recommended that it would be appropriate to seek opinion of some experts of international repute on CBM as to whether or not the same is petroleum.Sources said though the ECC had approved the proposal, the Sindh government might approach the highest level for revision of the decision.


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## Owais

Rs 95.987 billion NWFP budget presented ...................................................PESHAWAR (June 18 2006): The NWFP government on Saturday presented Rs 95.987 billion tax-free budget for financial year 2006-07, with the current expenditure estimated at Rs54.5 billion and capital expenditure of Rs 14 billion. Presenting the budget in the provincial assembly.Finance Minister Siraj-ul-Haq said that the province would get Rs 36.994 billion from the federal divisible pool, which would be Rs 6.221 billion more than the outgoing financial year.The receipts from the federal divisible pool include Rs5.301 billion in the head of 2.5 percent GST and Rs 737 million in the head of 'royalty' on development surcharge on natural gas and oil while an amount of Rs 9.712 billion would be received in grant-in-aid from the federal government.The provincial government has also kept an amount of Rs 8 billion as net profit on hydropower generation from the federal government. The budget document said that only 8 percent of the provincial budget has been generated from the province's own sources. The province expects 15.7 percent increase in its resources from the federal government.The resources for the year have been estimated at Rs 67.542 billion and the running expenditure would require Rs 54.5 billion. This amount is 6.7 percent higher than Rs 51.062 billion of the current financial year.The budget has been divided into welfare, administrative and developmental sectors to disseminate clear and correct information about the sanctioned funds for each and every sector.An amount of Rs 42.255 billion has been earmarked for welfare sector; Rs 12.244 billion under administrative head; and Rs 26.618 million for annual development programme (ADP). The welfare budget is 52.8 percent, administrative 15.10 percent and developmental budget 32.82 percent of the total outlay.The developmental fund of Rs 26.62 billion is 26.8 percent more than the current financial year budget, which was Rs21 billion. The share of provincial government in the development programme is Rs 14.957 billion, which is 34 percent higher than 11.20 billion of the current financial year. The annual developmental programme for the next financial year also includes foreign assistance of Rs 7.679 billion.The provincial development programme comprises 1006 schemes, including 773 ongoing and 233 new projects. The budget also hints at Initial Public Offering (IPO) of the shares of the Islamic banking division of Bank of Khyber (BoK) in the capital market. The amount generated from the IPO would be adjusted in the equity of the Islamic banking division of the bank. Furthermore, 24 percent strategic shares of BoK would be selling to Islamic banks on merit basis. During next financial year the purchase and selling of wheat would be carried under Islamic banking.EDUCATION: An amount of Rs 18 billion has been earmarked for promotion of education in the province. The amount is 25 percent more than the current financial year education fund of Rs 15.61 billion, 61 percent of which would be spent on primary and 31 percent on higher education.Two new degree colleges would be established in the province with creation of 3181 new vacancies in the colleges, and both boys and girls up to class X would be provided free textbooks. Two each MA/MSc qualified teachers would be appointed in private schools and the provincial government would bear the expenses of their salaries.The self-finance scheme has been abolished in all colleges of the province from next financial year to establish supremacy of merit and elimination of the discrimination on the basis of rich and poor in the education sector.Health section of the welfare budget has been sanctioned Rs 4.5 billion in the next financial year, showing an increase of 15.4 percent as compared to current financial year. The increase concerns 15 percent increase in the salaries and creation of 123 new posts in the department.The provincial government during next financial year has planned to recruit 4000 nurses in this connection, 1400 nurses and 722 female technicians would be recruited in the first phase. Different hospitals and health facilities in Peshawar would be given a grant of Rs112 million and for encouraging free medical treatment in private hospitals a grant of Rs 100 million would be granted.The provincial government is also planning phase-wise provision of free food to patients of the public sector hospitals. The initiative is being taken from Lady Reading Hospital (LRH) at a cost of Rs 5 million.Rs 100 million for endowment fund, Rs7 0 million for emergency medicines and Rs 30 million for Cardiology Unit of LRH and Rs 10 million for Khyber Medical College.HYDEL POWER PROJECTS: Rs 300 million has been sanctioned for the launching of hydropower generation projects in the province. In this connection, Malakand-III Project, started at a cost of Rs 6.3 billion, would be completed in December this year. The project would generate 80 mega watt electricity. The government would start work on three new projects and start feasibility study of three more projects in the next financial year.Similarly, an estimated amount of Rs 824 million has been reserved for construction of 20 small dams in the province.INDUSTRIES AND MINERALS: This section has been given an amount of Rs 405 million for projects like establishment of 'Marble City' in Buner, establishment of industrial estates in Karak, Nowshera and Mardan, establishment of polytechnic institutes and vocational centres in Chitral, Kohistan, Karak, Shangla, Malakand and Dir Upper, female technical institutes in Mansehra, Peshawar, Haripur and Tank and establishment of furniture factories in Batagram and Dir.


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## Neo

ONBOARD SPECIAL AIRCRAFT (June 18 2006): President General Pervez Musharraf on Saturday expressed strong hope for Pakistan to get full membership of the Shanghai Co-operation Organisation (SCO), saying it would not only benefit the country, but will also help the regional grouping achieve its goal of peace, stability and promoting economic co-operation in the region.

He also held important meetings with presidents of China, Russia, Iran and Afghanistan on the margins of SCO summit on June 15, besides having interaction with the leading Chinese and SCO business leaders to project Pakistan as an ideal destination for investment.

"I am very hopeful and reasonably sure that we will get the full membership of the (SCO) grouping," President told reporters while flying back home after attending the SCO summit and a regional conference in Almaty, Kazakhstan.

The President said the six-nation grouping fully realises that Pakistan can play a very important role in the SCO, adding Pakistan currently has an observer status along with Iran, India and Mongolia that groups China, Russia and four Central Asian states as its full members.

"It is not just that we are seeking a full membership but Pakistan also has a role," he said, adding Pakistan was geo-strategically located to provide connectivity and linkages to the member states in the region.

He said the SCO charter has two important elements - countering terrorism and economic development - and in both Pakistan had an important role that everyone realised.

Pakistan will also have economic and political advantages from becoming a full member of the SCO, he added.

Earlier, speaking at the second summit of the Conference on Interaction and Confidence Building Measures in Asia (CICA) at Almaty, the President on Saturday said Pakistan favours negotiated and peaceful solution of controversy over Iran's nuclear issue. "The recent tension over the Iranian nuclear issue has been a source of deep concern to all of us. Therefore, we welcome the renewed diplomatic efforts to find a negotiated settlement as well as the US decision to directly engage with Iran," President Musharraf said.

"We have been supporting Iran-EU-3 dialogue and search for a diplomatic solution especially by Russia and China," he said.

Talking about the ongoing Pakistan-India dialogue process, he said the two countries have a unique peace opportunity in South Asia. He stated the implementation of a number of CBMs in diverse sectors has improved relations and security environment in South Asia.

The President also met President of Kazakhstan Nursultan Nazarbayev in Almaty on Saturday. The two leaders discussed bilateral issues, situation in the region and trade and economic relations between the two countries.

In separate interviews with Chinese media, the President said Pakistan which itself has been a victim to terrorism is in the forefront of the nations fighting this menace.

"All along Pakistan has been focused on preservation of international and regional peace, security and stability."

During his three-day stay here, the President had an extensive interaction with the local Chinese electronic and print-media, including China central television, Phoeix TV, Dragon TV Shanghai, China Radio International and the China Daily. The Chinese media, including the China Daily and the Shanghai Daily published special supplements on the eve of the President's visit.

The interviews covered wide-ranging subjects, including Pakistan's peace efforts to normalise relations with India.


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## Neo

KARACHI (June 18 2006): Airblue's flight ED 702 landed at Gwadar Airport on Saturday Morning with a full load of passengers to mark the launch of Pakistan's fastest growing airlines seventh domestic destination and the introduction of its operations on the socio-economic routes.

On board the first flight were Jalal Shah, Regional Director South, CAA, and Air Commodore (Retd) Munawar Siddiqui, Chairman JS Air, Shahid Khaqan Abbasi, Airblue's Chief Operating Officer and other dignitaries. The inaugural flight was received by members of the local administration headed by Ahmed Bux Zehri, Director General Gawadar Development Authority, Civil Aviation and Airport Security Force officials, and the newly appointed Airblue Gawadar team.


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## Neo

ISLAMABAD, Jun 17: A Norwegian company, NBT AS, will establish manufacturing facilities of Mega Watt Class wind turbines in Pakistan.

This was decided in a meeting held here on Saturday between managing director Karachi Shipyard, Vice Admiral Iftekhar Ahmed Rao and chairman NBT AS, Norway, Arne Myre.

The meeting was chaired by chairman Alternative Energy Development Board (AEDP), Air Marshal (retd) Shahid Hamid.

The firm reached an agreement with the Karachi Shipyard to manufacture wind turbines in Pakistan. The AEDP in pursuance of its mandate facilitated the agreement.

As per the agreement, the Norwegian firm would set up wind turbine manufacturing facility at Karachi Shipyard to manufacture wind turbines with a cumulative capacity of at least 1,000 MW within five years.

AEDB would also facilitate the Norwegian firm in setting up a number of wind power plants in Pakistan.

Speaking on the occasion, chairman AEDB Shahid Hamid stated that the agreement was a leap forward in achieving AEDB's goal of indigenous manufacturing of wind turbines.

He reiterated AEDB's commitment to promote alternative renewable energy in the country and ensured full support to all those interested in undertaking such nergy projects.


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## Neo

Sunday, June 18, 2006 

ISLAMABAD: To sustain and improve growth in information technology (IT), the industry will need around 232,000 trained professionals by the end of financial year 2009-2010, making it possible for Pakistan to earn global IT revenues of $9 billion, predicts the Pakistan Software Export Board (PSEB). 

The Board has based its assessment on the average growth rate of around 50 percent per annum (Export 60 percent and Domestic 33 percent) over the last couple of years, said a statement of the Board. The current demand for trained IT professionals is a little above 50,000. The industry needs to add around 180,000 more professionals within the next four years.

"The PSEB will work as a proactive match-maker between educational institutions and the IT industry and will help to provide practical work experience to graduates and students", Yousaf Hasan, PSEB MD, said while explaining the strategy of the Board to meet these targets. 

Federal Minister of Information Technology Awais Ahmad Khan Leghari recently announced that the PSEB would launch two projects that would contribute to the government's objective of providing quality human resources to the industry.

These projects have been designed to help IT companies expand their operations by simultaneously employing more people and maintaining a reduced financial burden on the hiring companies. This will, in turn, help companies recruit more human resources. 

The first phase of the PSEB's IT industry internship project started in 2002. Till date the PSEB has placed around 2,500 IT graduates throughout the industry for a three-month paid internship. Out of this number, 80 percent graduates secured jobs based on this experience. The project was well received in the IT industry and it urged the minister of information technology to initiate the second phase of the programme.

In the second phase of this project, the PSEB intends to develop talented human resources pool for the IT, IT-enabled services and computer graphics, animation and games development industry. 

The PSEB aims to play a facilitating role by placing 10,000 students/fresh graduates from educational institutions within the local software industry. 

The duration for the paid internship will be increased to six months. This initiative will result in restoring the industry's faith and confidence in the capabilities of homegrown talent.


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## Neo

Sunday, June 18, 2006 

ISLAMABAD: Minister for Commerce Humayun Akhtar Khan on Saturday said the countryÃ¢â¬â¢s exports in textile sector would surpass $10 billion mark and rice export to join $1 billion club in the current fiscal.

He told the National Assembly that export oriented policies have been adopted by the government and the exports for the current financial year are targeted at $17 billion. He recalled that six years back the countryÃ¢â¬â¢s exports were hovering around $7 billion and achieving the $10 billion mark was a dream. 

Referring to the Ã¢â¬ÅSuper BasmatiÃ¢â¬Â claim of India, he said the investigations are being carried out and if proved correct Pakistan would take up the matter with the WTO under Dispute Settlement mechanism. Ã¢â¬ÅWe will not wait for a minute to take up the matter with WTO if was proved correct,Ã¢â¬Â he said. On trade deficit, he said there was nothing to worry about because the countryÃ¢â¬â¢s foreign reserves are enough to meet with the situation. Ã¢â¬ÅWe have such a strong economy that loan can be sought from any country of the world,Ã¢â¬Â he said. On the situation of sugar, he said there is no shortage of the commodity nor such situation will be let to arise in future. He said government is making all out efforts to provide sugar at the fixed prices to the poor people through utility stores.

He dispelled the impression that the sugar was being hoarded and said 325,000 tones monthly of the commodity were released by the sugar mills.


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## Neo

The China energy corridor raises eyebrows in Washington

By Kamal Siddiqi Editor Reporting

KARACHI: China and Pakistan are looking at the possibility of an energy corridor through Gwadar Port. Under this arrangement, China will source its energy needs from third countries which will be routed through the Gwadar Port overland to China. This idea is watched with suspicion in Washington.

Earlier, there was a talk of such a corridor that would take oil from Saudi Arabia to China through Pakistan. The proposal makes perfect economic sense. It brings China closer to the Middle East and its energy resources. It allows Pakistan the opportunity to earn money in transit fees. It also strengthens the relations of Pakistan and China even further.

However, Washington is being increasingly wary of PakistanÃ¢â¬â¢s new energy politics. Despite repeated public disapproval from Washington, President MusharrafÃ¢â¬â¢s government has been proceeding with uncharacteristic speed on the Iran-Pakistan-India (IPI) gas pipeline project.

A lot of the paperwork has been done on this and even India has reluctantly come back into the talks after a period of dilly-dallying.

It is ironic, say many analysts, that India is currently more sensitive to US policies in the region as compared to Pakistan. In the words of one US senior diplomat in New Delhi, India is AmericaÃ¢â¬â¢s Ã¢â¬Ånewest best friend.Ã¢â¬Â Despite this, India also wants to be part of the action and has returned to the table for the IPI gas project. This is frustrating for the US government which wants to economically sanction Iran.

The dusty and sleepy town of Gwadar is gradually becoming the focal point of the high stake regional energy politics. For the US, the idea of a Chinese built harbour in Gwadar translates into Chinese presence in a sensitive part of the world. This is the shipping lane through which passes the bulk of the world oil tankers. It is strategic point where Washington is uneasy with the Chinese looking on.

The question for analysts is what does this mean for relations between Pakistan and the US. On the face of it, relations could not have been better.

However, cracks are emerging. The US has cut down on assistance to Pakistan. The Congress has started to show its concern on the human rights situation in the country.

There is also increasing impatience over the manner in which Pakistan is fighting militants in the tribal areas. Pressure is growing on General Musharraf to show results. In a no-win situation, the Pakistan government is now seeing the fallout of its actions in the tribal areas.

The growing influence of religious parties, of the Taliban variety, only puts into focus how hard it is becoming for Pakistan to win over support in the area. The religious elements are also becoming bolder in their attempts to take control and dictate administration. It seems that the writ is slipping from the hands of the government.

To add to Pakistan woes is the possibility of an armed confrontation between the US and Iran. If it does take place, Pakistan will be sucked into the sequence of events, no matter what. At the same time, it will affect the prospects of the IPI project, and this is something that cannot be viewed positively considering PakistanÃ¢â¬â¢s growing gas needs.

On the energy front, the US continues to plug for the Turkmenistan gas project, an unattractive alternative to what Iran is offering. Pakistan has said that the US should compensate financially if it were to choose Turkmenistan over Iran. The US has showed no such willingness.

It is rare for Pakistan to put its own economic interests ahead of the priorities of the powers that be. The fact that Pakistan is gradually moving out of the US fold in terms of following energy deals with countries to which the US has reservations is interesting. 

It may not be new for the US as allies have done this in the past, it seems like unchartered territory for Pakistan. The future promises to be eventful.


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## Neo

KARACHI: Ships might start calling at the Gwadar Port by the end of this year or early next year, Director General Gwadar Development Authority Ahmad Bux Lehri said here on Saturday.

Speaking at a seminar, organised by Jinnah City and Jang Cultural Wing, on Ã¢â¬ÅGwadar: The Future of PakistanÃ¢â¬Â, he said the government was looking for an experienced port operator with links in the shipping world who could market the port well.

Ã¢â¬ÅThe government does not want to hand over the port operations in a hurry, it is looking for an appropriate party,Ã¢â¬Â he said. Ã¢â¬ÅIf we offer the port operations to a new player and it fails to market and run the port efficiently, then our all efforts would go down the drain.Ã¢â¬Â

He said it was wrong to say that inauguration of the Gwadar Port was delayed many times, adding that the government had never fixed any date for its inauguration.

Lehri urged the investors buying lands in Gwadar to get the property transferred in their name and report the actual price to the respective department in order to keep their investment safe. He said a strategy had been formulated for the disputed lands in the city.

He informed the audience about the works going on for linking Gwadar with the rest of the country and foreign countries including roads network as well as railway line. He spoke at length about the development activities in Gwadar and said the private sector was very liberally engaged in this process. 

He said the investors coming to Gwadar from the rest of the country should prefer locals for jobs as it would improve their living conditions. Besides, Ã¢â¬Åif you hire people of other areas for jobs, they would take month-long leaves to see their families, which would affect your business,Ã¢â¬Â he added. Balochistan Minister for GDA Sher Jan Baloch said the Chinese government had agreed with Gen Pervez Musharraf that Gwadar Port would be deepened further. He said Mirani Dam would be completed and inaugurated by September this year.

He said currently two desalination plants - one for Gwadar Industrial Zone and the other for Sanghar Housing Scheme - were being established in Gwadar while two more have been approved.

Ã¢â¬ÅPrivate sector is handling all these projects and we are now giving NOCs for housing schemes only to those parties, who can set up their own desalination plant.Ã¢â¬Â

He said the Gwadar Port should have been developed decades ago as it always had the potential to become the backbone of the countryÃ¢â¬â¢s economy.

Chairman Gwadar Investors Forum Sarmad Jan said the policies with regard to sale/purchase and transfer of lands should be formulated on long-term basis because rapid changes shake the confidence of investors.

He said the government should ensure security of investment and appoint well-qualified officers in the government departments in order to attract more cash towards the city.

Ã¢â¬ÅAround 90 per cent of the remittances coming from the US may come to Gwadar, if governmentÃ¢â¬â¢s policies ensure the security of investment,Ã¢â¬Â he said.

Nazim Turbat Abdur Rauf Rind also spoke on the occasion.


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## Neo

KARACHI: The National Institute of Oceanography (NIO) will shortly start detailed mapping of offshore hydrocarbon reserves through a geological survey of 990-km coastal belt of Pakistan.

Initially, the research facility plans to take seismic record of offshore sedimentary basins laying 200 metres below sea level, Director General NIO Dr M M Rabbani informed The News on Saturday.

Ã¢â¬ÅI am confident PakistanÃ¢â¬â¢s offshore region contains massive oil and gas reserves,Ã¢â¬Â he said, supporting his claim in historical backdrop of sedimentary formations.

He believes that continues discharge of sedimentary deposits into Indus Basin over millions of years has preserved enough living organism to provide substantial quantity of crude oil.

Moreover, Rabbani has another reason to support his optimism. Ã¢â¬ÅRate of decay of microscopic organism is relatively higher in Indus (basin),Ã¢â¬Â he said, emphasising that low oxygen levels in coastal water has played a major role in this regard.

The survey of 260-km Indus basin along Sindh province and 730-km Makran basin of Balochistan will be completed in 2-5 years. Offshore oil and gas exploration has not met success but the government is actively pursuing local and foreign companies to make a breakthrough.

PakistanÃ¢â¬â¢s Exclusive Economic Zone - its share of sea water - spreads over 240,000 sq km or up to 200 nautical miles from seashore.

With the recently published economic survey underlining the need for diversifying energy sources, the NIO has identified twenty-two creeks along the coastal belt with a potential to produce 900 megawatts of electricity from tidal wave energy.

Tidal waves in these creeks can produce from one kilovolt to 467kvs of energy if a single-rotor turbine is used, Rabbani informed, explaining that production increases with increase in number of rotors.

The head of research facility admits that this project is relatively expensive but dwarfs the fact citing skyrocketing petroleum prices.


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## Neo

KARACHI (June 19 2006): The supply of oil and gas in the country increased by 4 percent in ten months of the current fiscal year, as per latest data released by Pakistan Petroleum Information Service (PPIS).

The domestic oil and gas production depicted an increase of 4 percent to 681,000 boepd (thousand barrels of oil equivalent per day) compared to Jul-Apr FY05 production of 655,000 boepd.

Rise in gas production was the main reason behind this growth as oil production during this period suffered a nominal decline. This was because the energy mix is largely skewed towards gas.

According to a report of JS Capital Markets Ltd, domestic gas production in Jul-Apr period increased by 4.6 percent, to 3.8 bcfpd (billion cubic feet per day) versus 3.7 bcfpd produced during similar period of last year.

The increase in gas production mainly derived from optimum production from existing fields.

On the other hand, indigenous oil production remained flat, showing a marginal decline of 1.3 percent to 65.5,000 bpd as against 66.4,000 bpd previously.

Combined oil and gas production of the E&P giant, OGDCL, remained flat at 165,000 boepd in Jul-Apr FY06, compared to 163,000 boepd recorded in similar period of last year. Oil production of the company stood at 38,300 bpd in this period--an increase of 2 percent from previous level of 37,500 bpd. Gas production during this period stood at 951 mmcfd versus 941 mmcfd previously.

Based on this, OGDCL market share in domestic oil and gas production came to 58 percent and 25 percent respectively. Recently, OGDCL through notice to KSE communicated that initial testing at Chanda-2, a development well, showed an additional production capacity of 1,564 bpd of oil and 2 mmcfd of gas.

The additional production from Chnda-2 is expected to start soon. OGDCL holds 72 percent stake in Chanda concession.

Currently, Chanda field is producing 2,500 bpd oil and 7.3 mmcfd gas.

Once again double-digit increase in POL's oil and gas production was observed with combined oil and gas production depicting an increase of 49 percent from 11,900 boepd to 17,700 boepd in Jul-Apr FY06. Oil production surged by 32 percent to 7,154 bpd compared to 5,410 bpd corresponding 10 months of last year. Gas production during the period increased to 47 mmcfd from 29 mmcfd thereby showing a growth of 62 percent. Increase in oil and gas production was due to increased production from Pindori, Pariwali and start of production from Tal Block.

PPL combined oil and gas production during Jul-Apr FY06 saw an increase of 6.5 percent to 175,000 boped from 164,000 boepd previously. Gas, being the mainstay for PPL, witnessed 6.4 percent increase with production recorded at 1,010 mmcfd as against 949 mmcfd during the same period of last year.

This mainly resulted from start of production from Manzalai-Tal and optimum production from other fields.

Oil production showed a growth of 11 percent to 1,823 bpd in Jul-Apr FY06 compared to 1,645 bpd previously.


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## Neo

ISLAMABAD (June 19 2006): Prime Minister Shaukat Aziz on Sunday said the multifaceted relationship between Pakistan and China reached a new heights as a result of President Musharraf's visit to China and the two countries have agreed to expand bilateral ties as well as regional co-operation in a broad spectrum of areas, including defence, security, energy, transportation, education culture, trade and economy.

Addressing the PML parliamentary party meeting at the Prime Minister house, he said the concept of building trade, transport and energy corridors between Pakistan, China and the Central Asian States presented by President Pervez Musharraf in his talks with the Chinese President as well as in his meetings on the sidelines of Shanghai Cooperation Organisation was greatly appreciated by them and the Chinese leadership agreed to further work on the implementation of these proposals.

The Prime Minister said the President during his visit to China and Almaty successfully presented Pakistan's position as a country strategically located at the confluence of three vital regions of the world - South Asia, Central Asia and West Asia. It provides the shortest access to sea for all landlocked countries of Central Asia as well as western China.

To facilitate this access Pakistan is building a deep sea port at Gwadar on the Persian Gulf and constructing rail and road links to connect the region, he said.

Pakistan in this way is fast emerging as the junction for multiple corridors of co-operation between the three regions involving energy, trade and transportation.

Talking about budget 2006-07, the Prime Minister said the development and welfare-oriented budget presented by the government is a manifestation of its commitment to improve the quality and standard of the life of people while maintaining the momentum of growth and the government will ensure its effective implementation.

The Prime Minister said it is heartening to note that the budget 2006-07 has been received well by all segments of the society and added the constructive and positive debate generated in the parliament both by the treasury and opposition benches is a sign of the political maturity in the country.

The Prime Minister said this year's PSDP allocation of Rs 435 billion is 35 percent higher than the last year's budgetary allocation which will open new avenues of development and prosperity in the country.

A sizeable amount of Rs 109 billion allocated for subsidies and relief will ease problems faced by less privileged sections of the society by bringing down prices of essential commodities, the Prime Minister observed.

He said the government will evolve a proper mechanism to keep a close check on price increase and profiteering and the provinces will play an important role in this effort.

The Prime Minister said the record high allocation for the development projects and a substantial amount for subsidies has been made possible due to the additional fiscal space created during the last four years as a result of the wide-ranging structural reforms, macroeconomic stability and consistency and continuity in policies.

The magnitude of the growth achieved during the last four years in a row has positioned Pakistan among the fastest growing economies of Asia, the Prime Minister added.

"The government is perusing an agenda of development with dignity and quality and we are trying to move the country toward more self reliance and more equitable distribution of resources," the Prime Minister said.

He said the country has moved out of a low investment, low growth syndrome that had marred its economic performance and aggravated the incidence of poverty during 1990s. Inflation is softening; there is stability in the exchange rate and sharp reduction in public and external debt burden.

The Prime Minister asked parliamentarians to play their due role in ensuring timely implementation of budget proposals by co-ordinating with all relevant departments.

The Prime Minister announced setting up of a judicial commission to probe the death of journalist Hayatullah Khan. He said Rs500,000 will be paid to the family of the journalist and the government will bear all expenditure on the education of his children. He said NWFP governor has also ordered inquiry into the death of Hayatullah Khan.

Addressing the meeting PML president Chaudhry Shujaat Hussain talked about the reorganisation of PML and party elections. He said PML believes in strengthening democratic traditions and the party elections are being held under that spirit.

He said the process of elections will be completed in August this year.

The parliamentary party unanimously congratulated the President on his successful visit to China and Almaty.

They said the record high amount allocated for the development projects will lead to employment generation, better facilities of health and education, better infrastructure, clean drinking water and provision of electricity to more villages.

It will contribute to government's efforts to ensure that benefits of growth trickle down to the grassroots level.


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## Owais

*Duty-free tractor import scheme heads for logical end* 



ISLAMABAD (June 19 2006): The duty-free tractor import scheme announced in budget 2005-06 is heading towards its logical end as two of the companies, who were granted 2,500 tractors quota each, have approached the government for refund of their bank guarantees.

The Industries and Production Ministry had allowed three parties - the Dewan Automotive Engineering Limited, the Universal Tractors Pakistan (Pvt) Limited, and the Agro Tractors Limited - to import 7,500 tractors, out of total of 10,000 tractors under the approved scheme against million of rupees as revolving bank guarantee.

However, a two-member bench of Sindh High Court (SHC) comprising Justice Muhammad Mujibullah Siddiqui and Justice Syed Zawar Hussain Jafari quashed the scheme on two constitutional petitions filed by the Shahzad Riaz Trade Links and the Fecto Belarus Tractors Limited.

The affected parties filed appeals in Supreme Court of Pakistan against the decision of the Sindh High Court, which is being heard by the apex court.

Meanwhile, the federal government announced another duty-free tractor scheme in the federal budget on June 5, providing a level playing field to all the parties who are interested in import.

Keeping in view the changing scenario, two companies - the Universal Tractors Pakistan Limited and the Dewan Automotive Engineering Limited - have approached the federal government for refund of their bank guarantees.

However, the federal government is of the view that bank guarantees would not be refunded to the parties till the final decision of the Supreme Court.

The court observed that it was not known as to how the import in CKD was included in the facility and no decision of the ECC has been produced before the court to show that the facility was also meant for the CKD.

The court had also struck down the exemption notification issued by the CBR to the extent of import in CKD condition being beyond the purview of the ECC decision, while the exemption to import by the approved parties in CBU condition would remain intact, but fresh notification should be issued after the new allocations.

"The existing notifications are not to be acted upon," the court said.

At the conclusion of arguments, Mehmood. A. Shaikh, the counsel for the Agro Tractors Limited, contended that his client had already imported 156 tractors, which are not in CBU condition, and his client had to bear heavy demurrages, praying that the party should be allowed to get the tractors released on zero tariff.

The court observed: "We are not inclined to allow this relief because we have held that the exemption granted by the CBR to import in CKD condition is beyond the purview of the ECC decision, and we have struck down the exemption notification to that extent. The party should get released imported tractors on payment of normal duties and taxes."

The sources said the companies were worried since the government had opened import of tractors for all the aspirants, why they should stuck their amount on the name of bank guarantees.

But, local tractor manufacturers were exerting pressure on the government for reversal of duty-free tractor import scheme, however, any decision in this regard would take a long time, the sources added.


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## Owais

*Finance ministry identifies five areas to focus on* 



ISLAMABAD (June 19 2006): The Finance Ministry has identified five major challenges to be focused during 2006-07, which include increase in tax-to-GDP ratio, improvement in provincial receipts, review of subsidies, strict monitoring of public sector expenditure, completion of privatisation transactions, and GDRs.

The summary of Finance Ministry on federal budget 2006-07, a copy of which was made available to _Business Recorder,_ suggests that one of the major failures of the government was 'slow improvement' in tax-to-GDP ratio at the federal and provincial levels.

While CBR's performance over the current year has been sterling, the primary challenge would continue to be a paradigm shift in the tax-GDP ratios which were, as stated, among the lowest in developing countries, the Ministry said.

It also observed that fiscal space for the kind of development agenda that the country needed could only be created by a significant and equitable increase in tax receipts to ensure the sustainability of the expenditures that were required for the future and to remain within the limits of the debt limitation and fiscal responsibility.

Regarding provincial taxation, the ministry said that for several years provinces' own receipts had stagnated at 0.9 percent of the GDP. It asked the provinces to make vigorous efforts to improve their revenue-GDP ratio. Despite this, large amounts were being transferred to the provinces from budget 2006-07.

"This will enable the federal government to focus and fund the critical national infrastructure including the mega dams," the ministry added.

The Finance Ministry is of the view that subsidy would continue to be carefully targeted and reviewed on need basis.

A case in point was the power and gas tariff, where industrial and commercial sectors cross-subsidise domestic consumers.

The ministry was also of the view that effectiveness of public sector expenditure would need to be monitored carefully to ensure that the government gets value for its monies.

"PSDP will need to be subject to a more vigorous result-based measurement, rather than being based largely on financial inputs and utilisation," the ministry said.

According to the summary, the ministry was disturbed for not meeting the deadlines of privatisation transactions, directing the Privatisation Commission (PC) to must ensure that the transactions planned for the next financial year, including GDRs, are completed well in time.


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## Owais

*Using wrong NTNs: CBR to issue 'correction notices' to 6000 importers* 



ISLAMABAD (June 19 2006): The Central Board of Revenue (CBR) has decided to issue correction notices to 6,000 importers, who have submitted wrong National Tax Numbers (NTNs) for clearance of consignments at ports.

Sources told _Business Recorder _on Sunday that over 6,000 importers had submitted NTNs, which did not match the NTN database maintained by the Board.

The Board is going to write letters to these importers, who are using wrong NTNs for the clearance of consignments under 'One Customs' project.

Sources said that the importers/exporters should verify the NTN from the CBR website for smooth clearance of consignments under one tax number declared with the sales tax as well as customs department. The taxpayers should update their business record declared with the tax departments.

During the exercise, the Board pinpointed only those 6,000 importers who are operating under wrong identification numbers, sources added.

The blocking and de-blocking of the consignments would be reviewed keeping in view the availability of correct particulars with the customs and sales tax departments.

After receiving the letter, the importers have to rectify the error in NTN or his consignment could be blocked at the port.

In case the NTN of the importer/exporter is incorrect at the CBR website, the concerned person could approach the nearest NTN center for correcting the same.

The clearance of consignments would be stopped under 'One Customs' in cases where data of a particular importer/exporter does not match with the database of customs as well as sales tax. In this regard, the NTN enforcement has been done at the ports.

The persons submitting defective data would not be able to carry out transaction unless or until authentic information is submitted to the department.

When asked whether it would be a 'notice' served on the importer, sources said that it would not be a notice, but a letter for the purposes of guidance.


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## Kaiser

Motorola to provide wireless network for Pakistan


Chicago-based telecommunications company Motorola has announced that it will provide wireless network managed services to Wateen Telecom-Pakistan, which is part of the Abu Dhabi Group's Warid Telecom International led by Sheikh Nahayan Mabarak Al Nahayan. 
The $75 million deal will see Motorola design and implement a MOTOwi4 broadband voice and data network in Pakistan, which under the managed services contract will also require the US company to take responsibility for the operations and maintenance of the network. 
The agreement is thought to be the world's largest nationwide commercial WIMAX 802.16e contract and will allow Wateen Telecom-Pakistan to offer corporate hosted VoIP, virtual private networks (VPNs) and residential internet access and voice services across Pakistan. 'This managed services agreement with Motorola will enable the combined team to realize Wateen's vision of 'Broadband Pakistan' quickly and efficiently,' said Sheikh Nahayan.


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## Kaiser

Pakistan Expects $3.5 Billion in ***

Pakistan is expecting US$3.5 billion in direct foreign investment (***) by the end of fiscal year 2006-07. The financial year in Pakistan ends on June 30.

Pakistani Prime Minister Shaukat Aziz claimed that wide-ranging structural reforms have transformed Pakistan into one of the ideal locations for foreign investment in the region.

Pakistan has been trying to introduce wide-ranging structural reforms over the last seven years coupled with macroeconomic stability and a rapid, strong and sustained economic recovery.

Talking to Gregory Hinckley, the president of Mentor Graphics, who called on the prime minister's official residence Saturday evening, Aziz said that Pakistan is investing in human resource development to prepare a massive pool of human capital in various disciplines of science and technology to build a knowledge-based economy in the country. Mentor Graphics is a U.S.-based multinational working in the area of electronic design automation (EDA).

"We are following the policy of deregulating in all public sectors, which has resulted in an inflow of substantial investment," Aziz said.

"We have a world-class infrastructure, cheap labor, highly qualified professionals, a level playing field provided to investors and simplification of procedures by the government, which has attracted substantial investments in the telecom sector," he added.

Pakistan is improving the communication system and building redundancy by providing a number of alternate international linkages for Internet traffic, Aziz told Hinckley. It will set up software technology parks at Islamabad, Lahore and Karachi to facilitate the software companies.

Hinckley presented a check for $50,000 to the prime minister to benefit victims of October's earthquake.

Mentor Graphics provides software tools for design, simulation and testing of large-scale integrated circuits. The company contributes to development by using local manpower. It has employed over 100 Pakistanis, a significant number of them high-end design engineers.

Hinckley appreciated the quality of the infrastructure- and investment-friendly policies of Pakistan. He said Pakistan is rich in human capital and that the talented professionals working in his company had impressed him.

But the level of lawlessness is not satisfactory in Pakistan. Travel advisories are routine. And Pakistan is facing an insurgency-like situation in Baluchistan and Waziristan.


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## Kaiser

Daimler-Chrysler to invest $5.8bn


By Sher Baz Khan

ISLAMABAD, June 15: Daimler-Chrysler and Coastal Group has decided to invest $5.85 billion in Pakistan by starting production of Mercedes-Benz trucks, both commercial and military, buses and Mercedes cars of various types to create a vendor industry.

The group would set up their plant on 1,200 acres of land near Shaikhupura provided by the government. The investment would create 5,000 jobs directly and indirectly, said Umar Ahmed Ghumman, minister of state for Privatisation and Investment and chairman Board of Investment (BoI) at a news conference at the Parliament House here on Thursday.

Coastal Group would make all the financial investment in the project, while Daimler-Chrysler would provide technology transfer.

It is to mention here that on May 7, 1998 two of the world's leading car manufactures, the German Daimler-Benz AG and the USA-based Chrysler Corporation, announced the largest industrial merger in history. The new company, called Daimler-Chrysler, became the world's fifth largest car maker with combined revenues of around $130 billion, a combined operating profit of around $7 billion, and a combined workforce of more than 420,000 employees.

The minister said the group would export products to neighbouring countries as well as to the Gulf region, which would earn billions of dollars in foreign exchange for Pakistan. A training institute conforming to the international standards would also be established in Pakistan to update the technical knowledge in the country.

An industrial estate for vendor industry would also be set up to locally produce spare parts as per European standards for local and export purposes, Mr Ghumman said.

Black cabs: Responding to a question about the reported violation of rules in import of black cabs from the United Kingdom, Mr Ghumman said: "We are importing duty-free 300 black cabs for testing purposes. The government had to give this facility in order to invite $1 billion investment from Prime Transport Limited to assemble, manufacture and operate London taxis in Pakistan under joint venture partnership with LTI of UK and ST Electronics of Singapore."

The minister said 150 of the black cabs would be tested in Karachi, 100 in Lahore and 50 in Islamabad so that to keep in mind the local conditions while manufacturing the cabs locally. He said no rules of the Public Procurement Regulatory Authority (PPRA) had been violated as the matter did not involve any investment by the government and the investment did not create any scam.

"I have no personal connection with the person who has invested the money. He is a Pakistani and his name is Dawood Khan. He belongs to Karachi. He wanted to introduce a secure and safe taxi system in Pakistan after a 15-year-old girl from his family was raped and killed by a taxi driver," he said.

The minister said no one was ready to provide such an investment for the purpose-built black cabs, but still, &#8220;we invited the tenders through various newspapers to ensure transparency," he added.

The minister said that as per the agreement, the London taxis would charge Rs11 per km which was reasonable. To a question, he said the manufacturing plant of black cabs was being set up in Gharo, near Karachi on 300 acres. The plant had to be shifted to Pakistan because the manufacturing of a single black cab required 43,000 sterling pounds in the UK compared to the 22,000 sterling pounds in Pakistan.

He said the government wanted to change the culture of taxis in Pakistan by revolutionising, introducing and implementing the most economical, dependable, comfortable and safe satellite-controlled taxi service in the country.



http://dawn.com/2006/06/16/ebr2.htm


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## Kaiser

*DAIMLER-CHRYSLER TO INVEST IN PAKISTAN

Friday June 16, 2006, 7:16 pm*


KARACHI, June 16 Asia Pulse - Daimler-Chrysler and Coastal Group of UAE has decided to invest US$5.85 billion in Pakistan by starting production of Mercedes-Benz trucks, both commercial and military, buses and Mercedes cars of various types to create a vendor industry.

The group will set up their plant on 1,200 acres of land near Shaikhupura provided by the government. The investment would create 5,000 jobs directly and indirectly, said Umar Ahmed Ghumman, minister of state for Privatisation and Investment and chairman Board of Investment (BoI) at a news conference at the Parliament House here on Thursday.

Coastal Group would make all the financial investment in the project, while Daimler-Chrysler would provide technology transfer.


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## Kaiser

Coastal to invest $5.8b in Pakistan automobile plant

A prominent foreign group has decided to invest $5.8 billion in Pakistan to manufacture Mercedes-Benz trucks, buses and cars.

Coastal Group would make all the financial investment in the project, while Daimler Chrysler would provide technology transfer.

Daimler Chrysler and Coastal Group are believed to be creating a big vendor industry in the process. The group would set up their plant on 1,200 acre plot near Shaikhopura, Lahore.

"This huge investment would create 5,000 jobs directly and indirectly," said Umar Ahmed Ghumman, minister of state for privatisation and investment and chairman Board of Investment (BoI) at a news conference yesterday.

It was on May 7,1998 that two of the world's leading car manufacturers, the German Daimler-Benz AG and the USA-based Chrysler Corporation, announced their merger. The new company called Daimler-Chrysler became the world's fifth-largest car maker with combined revenues of around $130 billion, operating profit of around $7billion, and a workforce of more than 420,000 employees.

The minister said the groups would export products to neighbouring countries as well as to the Gulf region, which would earn billions of dollars in foreign exchange for Pakistan. A training institute conforming to international standards would also be established in Pakistan.

An industrial estate (vendor industry) would also be set up to locally produce spare parts as per European standards for local and export purposes, Mr Ghumman said.

Responding to a question about the reported violation of rules in import of Black Cabs from the United Kingdom, Mr Ghumman said: "We are importing duty-free 300 Black Cabs for testing purposes. The government had to give this facility in order to invite $1billion investment from Prime Transport Limited to assemble, manufacture and operate London taxis in Pakistan under joint venture partnership with LTI of UK and ST Electronics of Singapore."

The minister said 150 of the Black Cabs would be tested in Karachi, 100 in Lahore and 50 in Islamabad to conform to the local conditions while manufacturing the cabs locally. He said no rules of the Public Procurement Regulatory Authority (PPRA) had been violated as the matter did not involve any investment by the government and the investment did not involve any scam. "I have no personal connection with the person who has invested the money. He is a Pakistani. His name is Dawood Khan and he belongs to Karachi. He wanted to introduce a secure and safe taxi system in Pakistan after a 15-year-old girl from his family was raped and killed by a taxi driver," he said.

The minister said no one was ready to provide such an investment for purpose-built Black Cabs, but still tenders were invited in various newspapers to ensure transparency, he said.

The minister said that as per the agreement, the London taxis would charge Rs11 per kilometre, which was reasonable. He added that the manufacturing plant for Black Cabs was being set up in Gharo, Sindh, on a 300 acre plot. The plant had to be shifted to Pakistan because the manufacturing of a single Black Cab required 43,000 sterling pounds in the UK compared to the 22,000 sterling pounds in Pakistan.


http://www.menafn.com/qn_news_story_s.asp?StoryId=1093116823


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## Kaiser

World's Youngest CEO To Set Up Office In Pakistan


BANGALORE, June 17 (Bernama) -- India's Suhash Gopinath who shot to fame as the world's youngest CEO at the age of 14, said he would avail of Pakistan's offer of land to set up an office of his Globals Inc firm, Press Trust of India (PTI) reports Friday.

However, Gopinath is aware of the threats from some Islamic organisations warning him not to do so.

"Pakistan Prime Minister Shaukat Aziz invited us to expand. We are opening our office in Karachi which will be sponsored by the Pakistan government," the 19-year-old said.

Gopinath was recognised as the youngest CEO when he founded his company as a teenager in the US because the law did not permit him to do so in India.

While being happy at Pakistan's response, Gopinath said some Islamic organisations sent emails and hacked his company's website warning him not to open an office in Pakistan.

He was speaking to reporters here after meeting H D Kumaraswamy and said the chief minister assured him the government would provide him a building here to shift his company headquarters from California to Bangalore.

Gopinath said his company would also be hosting a Young Leaders conference in Bangalore in September at which Aziz would address the gathering through videoconferencing.

The teenager said he had been invited by British Prime Minister Tony Blair to set up an Entrepreneurship Cell in Britain so that his "success story" could inspire youngsters there.

Globals Inc employs 600 persons across 13 countries including 25 in Global ITES Pvt Ltd in India.

-- BERNAMA


http://www.bernama.com.my/bernama/v3/news.php?id=203768


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## Kaiser

Record $506.57m workers&#8217; remittances in May
_Staff Report _

KARACHI: The country received record workers' remittances in May this year as overseas Pakistanis remitted an amount of $506.57 million against $358.30 million received in the same month of last fiscal year.

The growth in remittances in May depicted an impressive increase of $148.27 million, or 41.38 per cent over the corresponding period of previous year, the data provided by the State Bank of Pakistan (SBP) shows.

The remittances in July-May of 2005-06 also registered a growth as in 11 months of the current fiscal year Pakistan received $4,136.25 million as workers' remittances as against $3,809.81 million received in the corresponding period of the last fiscal year, registering an increase of $326.44 million, or 8.57 per cent.

The amount of $4,136.25 million includes $11.10 million received through encashment and profit earned on Foreign Exchange Bearer Certificates and Foreign Currency Bearer Certificates.

Despite the growth in remittances, which is the second largest source of foreign exchange inflows after exports, the huge increase in the current account deficit, caused by a widening trade gap is a source of worry for the economic managers of the country. 

According to analysts, the total remittances are likely to touch $5 billion this fiscal year against an estimated trade deficit of more than $11 billion for the whole fiscal, however they believe that remittances would cover only a nominal part of the trade deficit.

They said that trade deficit went on growing so rapidly since the beginning of this fiscal year that remittances from overseas Pakistanis that used to bridge the trade deficit gap to a large extent is now unable to do it because of huge deficit on the back of higher oil and machinery bills.

The first 10 months' data indicates that Pakistani workers remitted $313.14 million, $348.41 million, $341.10 million, $372.50 million, $308.81 million, $371.24 million, $391.32 million, $358.13 million, $423.56 million and $401.47 million in July, August, September, October, November & December, 2005 and January, February, March & April, 2006, respectively. The monthly average remittances in the period under review amounts to $376.02 million as compared with $346.35 million during the same period of last fiscal year.

The inflow of remittances during the 11 months of the current fiscal year from the USA, Saudi Arabia, the UAE, the GCC countries (including Bahrain, Kuwait, Qatar and Oman), the UK and EU countries amounted to $1,119.34 million, $670.93 million, $635.54 million, $537.39 million, $400.00 million and $109.92 million, respectively, as compared with $1,184.93 million, $567.54 million, $652.11 million, $471.85 million, $338.21 million and $92.26 million during the corresponding period of the last fiscal year. 

The accumulative remittances inflow from Canada, Australia, Norway, Switzerland, Japan and other countries during July-May 2005-06 amounted to $652.03 million as compared with $487.76 million in the corresponding period of last fiscal year.

Another healthier sign, the data says, is the increase in the inflow of remittances into Pakistan from almost all countries of the world increased last month as compared with May 2005. 

The country-wise break-up shows that Pakistan received workers' remittances during May 2006 from the USA ($124.56 million), Saudi Arabia ($86.29 million), the UAE ($79.70 million), the GCC countries, including Bahrain, Kuwait, Qatar and Oman ($60.09 million), the UK ($53.60 million) and EU countries ($12.86 million) as compared with the corresponding receipts from the respective countries during the same month of the last fiscal year, ie, $108.71 million, $61.32 million, $71.24 million, $45.90 million, $28.22 million and $9.01 million. 

The total remittances received from Canada, Australia, Norway, Switzerland, Japan and other countries during May 2006 amounted to $89.18 million as compared with $30.49 million during the same month of last fiscal year.


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## Kaiser

US-based Kuwait co to invest $1.2b in oil sector in Sindh

FROM OUR CORRESPONDENT
Karachi - US based Kuwait company would set up &#8216;mega oil refinery&#8217; in Sindh province, which would bring investment of 1.2 billion dollars.
Sindh Government and California-based Kuwait company Z-Tech on Friday signed Memorandum of Understanding at Chief Minister&#8217;s House. The refinery would refine around 150,000 barrels oil daily. Chief Minister Sindh, Dr. Arbab Ghulam Rahim on this occasion pointed out that the province was fulfilling around 70pc needs of oil and gas of the country. He declared that Sindh Government was determined to set up &#8216;industrial zones&#8217; in the province and would take every possible effort to promote local and foreign investment. He assured all cooperation and assistance to the possible investors.
The CM&#8217;s Advisor on Finance M.A. Jalil, Secretary Labour Nasir Hayat, Secretary Land Utilization Khalid Mehmood Soomro, Director Z-Tech company Sheikh Hamood Daud al-Saba, Chief Coordinator Zafar Ali and Chairman Investment Cell of the CM Muslim Abbasi and others were present during the ceremony. 

http://www.nation.com.pk/daily/june-2006/17/bnews5.php


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## Kaiser

http://www.dailytimes.com.pk/default.asp?p...0-5-2006_pg5_10

Kuwaiti group plans oil refinery in Pakistan

ISLAMABAD: Chairman Kuwaiti ZETECH Group Sheikh Hamood Al- Sabah accompanied by chairman of Kuwait-Pakistan Investment Group, Abdul Azeem Al-Shomali called on minister of state for Petroleum and Natural Resource, Muhammad Naseer Mengal on Friday and expressed his group&#8217;s interest to set up an oil refinery in Pakistan. 

The chairman ZETECH Group commended the speedy growth of Pakistan&#8217;s economy and vast investment potential in the oil and gas sector. He said his group would invest in setting up oil refinery, besides participating in privatization activities. The minister said there existed a huge potential for the prospective investors in Pakistan&#8217;s oil and gas sector and government would welcome as well as facilitate Kuwaiti Group in setting up oil refinery. 

He said government was offering lucrative incentives to the investors in an investors-friendly environment. Mr Mengal said government was also exploiting the untapped oil and gas resources to meet growing energy need of the country. Investors would be encouraged to set up oil refineries in Pakistan to enhance refining capacity form 6 million tons to 13 million tons annually. APP



Pakistan asks Kuwait to set up large-size oil refinery
01-10-01 Pakistan has asked Kuwait to set up a large-size oil refinery in the Hub coastal area to partially meet over 10 mm tons product deficit per annum starting next year. Sources close to Petroleum Minister Usman Aminuddin told that Kuwaiti authorities were given a green signal around a month ago to come up with a formal proposal to this effect. 
This comes amid reports that the $ 1.2 bn Iran-Pakistan Refinery Project that was to be constructed by Tehran near Hub is not forthcoming and Islamabad would be faced with large shortfalls after a year, these sources said. The federal government has planned to increase oil supply coverage to a level equivalent to 45 days' consumption to meet any future long-term strategic needs but at least two refineries were required to plug the supply-demand gap. 

The petroleum ministry was directed by economic coordination committee (ECC) of the cabinet last month to remain extra vigilant about demand and supply position of petroleum products and to further augment thereserves position. Kuwait, these sources said, wanted to bring in its own heavy crude for refining in the coastal areas. The authorities were now working on a detailed technical proposal to be submitted to the Pakistan government shortly. 
Pakistan's total consumption is expected to increase to 20.5 mm tons by 2002-03 and 23 mm tons by 2005-06. The existing refineries are currently producing around 10.5 mm tons that means the deficit will be 10 mm tons in 2002-03 and 16 mm tons in 2005-06. 

The Iran-Pakistan refinery was scheduled to be completed by 2005 at Khalifa Point in Balochistan to refine around 6 mm tpy oil but differences between the two governments on product specifications and certain other issues did not let the project moving, official sources said. "The Iran-Pakistan Refinery Project is now history," said a senior official. 


http://www.gasandoil.com/goc/news/nts14567.htm


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## Kaiser

Kuwait, Saudi firms vie for $2bn Pakistan refinery project 
[Tuesday, April 18, 2006 4:29:00 pm] 

Kuwaiti and Saudi firms are bidding to build a $2bn oil refinery in Pakistan's troubled province of Baluchistan, Kuwait Times reported. The refinery to be commissioned by 2010 would have a maximum refining capacity of 13 million tons of petroleum products, which would be higher than the country's total existing capacity of 12.8 million tons. Pakistan's major suppliers are Saudi Arabia, the UAE and Kuwait and total oil imports amount to around $3bn. 

http://www.strategiy.com/news_briefs_insid...60418122912&h=1


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## Kaiser

Kuwait to Invest Over $2bn in Pakistan
Azhar Masood, Arab News


ISLAMABAD, 19 June 2006 &#8212; Kuwait is set to invest over two billion dollars in Pakistan. This was revealed by Minister of State for Board of Investment and Special Initiatives Omar Ghuman prior to Kuwait Emir Sheikh Sabah Al-Ahmad Al-Sabah&#8217;s visit to Pakistan today.

Ghuman said two MOUs will be signed between Pakistan and Kuwait during the visit. One will deal with investment in real estate and hotel industry and the other with the establishment of an oil refinery at Gawadar with the refining capacity of 100,000 bpd.

Ghuman said Kuwait&#8217;s Noor Group of Financial Investment Company will be investing in real estate and hotel industry. He also disclosed that an investors&#8217; conference will be held in Islamabad on June 20 which will be jointly inaugurated by Prime Minister Shaukat Aziz and the Kuwaiti emir.

This will be the first visit to Pakistan by the Kuwaiti emir.

Foreign Office officials said Sheikh Sabah will hold talks with President Gen. Pervez Musharraf on a variety of subjects including the regional situation, bilateral relations and possibilities of Kuwait&#8217;s investment in Pakistan.

Officials said some bilateral agreements would also be signed between Pakistan and Kuwait during the visit.



http://story.irishsun.com/p.x/ct/9/id/2e97...d771c7290844e9/


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## Kaiser

http://www.nation.com.pk/daily/june-2006/16/bnews5.php


*$36b foreign investment likely in next 5 years*

From HAQ NAWAZ

ISLAMABAD-Pakistan projects to bring foreign investment worth US $ 36 billion in the different sectors of the economy in the next 5 years. 

Claiming this highest ever expected investment inflow into the country, the Minister of State for Privatisation and Investment Umar Ahmad Ghuman told a press conference here on Thursday in the Parliament house that likely investment would be attracted through a number of new ventures in the country. 

These projects include London Taxi International equipped with modern gadgets like satellite tracking will be plying on roads of Karachi, Lahore and Islamabad from July this year. 

When asked to explain the factors raising the FDI to record over US $ 3 billion, instead of replying to the questioner he advised him to consult the website of BOI.

&#8220;The data of FDI reflects 42.5 percent investment from UAE including PTCL privatisation proceeds, 13.9 percent from USA and 9.1 percent from Saudi Arabia are the main factors making the investment figure at over US 3 billion in 10 months,&#8221; the official data on website reports. 

According to the economic analysts, this record FDI is mainly due to the huge amount of Rs 218 billion privatisation proceeds during the current fiscal including selling of PTCL, KESC, PSMC, Pak-American Fertilizers limited etc. 

However, he admits the London Taxi International LTI) was shrinking its business in the UK due to heavy cost. &#8220;Yes, this company is fading out there,&#8221; he said. 

The government allowed duty-free import of 300 black-cabs (CBUs), while the Prime Transport Limited, a company owned by a US based Pakistani Daud Khan would invest $1 billion for setting up an assembly plant of LTI at Gharo in Sindh province.

A number of ministers including State Minister for Foreign Affairs Khusro Bakhtiar, State Minister for Finance, Umar Ayub Khan, State Minister for Environment, Malik Amin Aslam, MNAs, Dr Donya Aziz and Waqas 
Akram Sheikh were also present on the occasion.

He said that President General Pervez Musharraf will inaugurate the London Taxi terminal at Karachi Airport by the end of July, while Prime Minister Shaukat Aziz will inaugurate the ground breaking of LTI assembly plant at Gharo in the end of August, for which 300 acres of land has been allocated.

To a question, he replied the company would provide reasonable fare (Rs 11.20 per kilometer). Ghuman said that LTI plant would produce 18,000 cabs annually in Pakistan, out of which 9000 cabs would be exported. The export of 9000 cabs will fetch $ 2.8 billion every year, he added.

The 2400 cc (2.4 liters diesel engine) London Taxi, which is priced at 42,000 Pounds in UK, will be available at around 20,000 Pounds in Pakistan, he added. The minister also stated that these taxi cars would not be sold in the local market.

He said that Dubai World (DW) of the UAE, Daimler Chrysler, Dubai Islamic Bank, and certain other organization of international repute would invest in Pakistan. The total volume of investment will touch around 36 billion US dollars in the next five years. 

Dubai World will construct new modern cities at Clifton Beach, Sandspit & Manora, Hawks Bay & Cape Mont in Karachi with the investment of US $ 15 billion. 

He said the DW will build housing units in Karachi, Lahore and Islamabad which will not only overcome the 6 million shortfall of housing units in the country but will help check the property prices. 

He said Daimler Chrysler of USA would establish its assembly plant near Sheikhupura for the production of Mercedes-Benz trucks, buses and cars. Ghuman said, Volkswagen, Renault and Jetta would set up their car manufacturing plants in Pakistan with the investment of billions of dollars.


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## Neo

Dude..bro...mere bhai!
This is a daily update thread, all these news articles have been posted last couple of days.


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## Kaiser

Finance ministry identifies five areas to focus on


ISLAMABAD : The Finance Ministry has identified five major challenges to be focused during 2006-07, which include increase in tax-to-GDP ratio, improvement in provincial receipts, review of subsidies, strict monitoring of public sector expenditure, completion of privatisation transactions, and GDRs. 

The summary of Finance Ministry on federal budget 2006-07, a copy of which was made available to Business Recorder, suggests that one of the major failures of the government was 'slow improvement' in tax-to-GDP ratio at the federal and provincial levels. 

While CBR's performance over the current year has been sterling, the primary challenge would continue to be a paradigm shift in the tax-GDP ratios which were, as stated, among the lowest in developing countries, the Ministry said. 

It also observed that fiscal space for the kind of development agenda that the country needed could only be created by a significant and equitable increase in tax receipts to ensure the sustainability of the expenditures that were required for the future and to remain within the limits of the debt limitation and fiscal responsibility. 

Regarding provincial taxation, the ministry said that for several years provinces' own receipts had stagnated at 0.9 percent of the GDP. It asked the provinces to make vigorous efforts to improve their revenue-GDP ratio. Despite this, large amounts were being transferred to the provinces from budget 2006-07. 

"This will enable the federal government to focus and fund the critical national infrastructure including the mega dams," the ministry added. 

The Finance Ministry is of the view that subsidy would continue to be carefully targeted and reviewed on need basis. 

A case in point was the power and gas tariff, where industrial and commercial sectors cross-subsidise domestic consumers. 

The ministry was also of the view that effectiveness of public sector expenditure would need to be monitored carefully to ensure that the government gets value for its monies. 

"PSDP will need to be subject to a more vigorous result-based measurement, rather than being based largely on financial inputs and utilisation," the ministry said. 
According to the summary, the ministry was disturbed for not meeting the deadlines of privatisation transactions, directing the Privatisation Commission (PC) to must ensure that the transactions planned for the next financial year, including GDRs, are completed well in time.


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## Neo

KARACHI (June 20 2006): Not only the overseas Pakistanis remitted home a record amount of $4,136 million during 11 months of FY06, the competing Foreign Currency Deposits (FCDs) under FE-25 scheme also rose to a record $3,481 million by the end of May 2006 as against $3,105 million at the end of May 2005, and $3,282 million at end of June, 2005.

The surge was more pronounced in last five months of the fiscal year with outstanding balances averaging about $3,498 million compared with a similar average of $3,327 million in the first six months of the year. The outstanding balances stood at their highest of $3,567 million at the end of January 2006 and lowest of $3,302 million at the end of July 2005.

Earlier on, balances under FE-25 scheme had reached $2,671 million (resident: $1,954 million, non-resident: $343 million) at the end of FY04 and $2,296 million (resident: $2,340 million, and non-resident: $331 million) at the end of FY03.

It is worth recalling that the FE-25 Scheme was introduced, vide FE Circular No 25 of June 20, 1998, in the aftermath of Pakistan's nuclear explosions and the imposition of sanctions by most of the western countries leading to restrictions, vide FE Circular No 12 of 1998, on withdrawals in foreign currency from selected categories of foreign currency accounts existing as on May 28, 1998.

At the time of the issuance of the aforementioned FE Circular, the Government was under liability to make payments to the holders of FCDs in the amount of some $11 billion (History of SBP: 1988-2003), whereas the FE kitty of Pakistan had only left in it about $1 billion. To allay fears of any future freezing, separate ledgers were to be maintained by Authorised Dealers (ADs) for deposits under the new Scheme. Since these deposits are outside the State Bank's forward cover scheme, these are not required to be surrendered to the State Bank. The ADs, who are free to decide the return on such deposits, are also under no restriction to lend, invest and place on deposit such funds in Pakistan or abroad subject to the observance of the prescribed regulations.

As regards their utilisation as on the end of May 2006, $1,147 million was used for financing foreign trade ie exports both under pre-and post-shipment arrangements ($851 million) and imports ($295 million) while $1,529 million was placed under various arrangements including those with SBP ($181 million under CRR and $534 million under SCRR), banks within Pakistan ($26 million) and abroad ($787 million). An amount totalling $538 million was held as balances abroad ($356 million), cash in hand ($78 million) and as 'others' ($104 million).

Ever since the issuance of FE-12 in 1998, balances in the old FC accounts had been declining since these had to be converted into rupees or Special US Dollar Bonds by the holders at their option. Eight years after the disbanding of the old scheme viz., at the end of May 2006, the outstanding balances in these accounts stood reduced to only $104 million (resident:$76 million, non-resident:$28 million). Three years ago in May 2003, these balances stood higher at $330 million (resident:$266 million, non-resident:$64 million).


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## Neo

ISLAMABAD (updated on: June 19, 2006, 23:09 PST): Pakistan and Kuwait on Monday signed series of agreements and Memorandums of Understanding (MoU) for enhancing bilateral economic relations including an MoU for setting up an oil refinery at port Qasim.

President General Pervez Musharraf and Amir of Kuwait Sheikh Sabah Al-Ahmed Al-Jaber Al Sabah witnessed the signing ceremony. 

The two sides also concluded an agreement on augmenting economic and technical co-operation and an MoU on development of small and medium enterprises. 

Later, Minister of State for Privatisation Omar Ahmed Ghumman, who signed MoU on setting up of oil refinery, described it as major foreign investment in the years to come. 

"This will be a huge Kuwaiti investment, drawing US dollars 1.2 billion and contribute significantly to bolstering oil refining facilities in the country," he told newsmen. 

Pakistan and Kuwait also inked an executive program for the cultural, educational and information exchanges between the two countries.


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## Neo

RAWALPINDI (updated on: June 19, 2006, 22:26 PST): President General Musharraf on Monday said the projects including Gwadar deep sea port, construction of water reservoirs, coastal highway and road infrastructure in Balochistan would accrue tremendous benefits to the people.

He made this remarks after meeting with Governor Balochistan Owais Ahmed Ghani, who called on the President and briefed him about the pace of development projects in the province.

"The projects including Gwadar deep sea port, construction of water reservoirs, coastal highway and road infrastructure would accrue tremendous benefits to the people in Balochistan in both industrial and agricultural sectors," said the president.

The timely completion of these projects, he stressed, would speed up the process of transferring benefits of economic gains at grassroots level and strengthen the foundations for their sustained socio-economic progress.


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## Neo

ISLAMABAD (June 20 2006): During the ten months of 2005-06 from July to April, the communications sector topped the list for attracting foreign direct investment (FDI) worth $1.70 billion, which was more than 14 times high as compared to same period of last fiscal year ($112.3 million). On the other hand, the investors withdrew $108.3 million FDI from fertiliser industry.

The break-up of investment by sectors shows that as the communication sector attracted large chunk of FDI ie telecommunication sector $1.672 billion and Information technology $27.9 million, the investment in information technology included $22.4 million in IT services and 2 million dollars in postal and courier services.

The noticeable point in IT sector was that during the period software and hardware development fetched $4.6 million and $0.8 million, respectively, which was far less than what it was in corresponding period of last fiscal year--$6.5 million--in software and $3 million in hardware development.

Power sector (thermal and hydel) is the next with total FDI of $309.60 million with 400 percent growth, of which hydel share was meagre $0.6 million and thermal sector received $309.1 million.

A significant feature of the data is that during the period the financial businesses also attracted $289.7 million. It is also pertinent to note that during April it fetched $24.3 million. During July-April 2005-06, the oil and gas exploration sector also attracted $243.3 million, which was 47 percent higher than $165.4 million in corresponding period last fiscal year. This sector in the month of April, 2006 received $26.4 million direct investment that was 84 percent more than corresponding month of FY 2005.

The petroleum refining sector attracted $24.4 million, petro-chemical $7.9 million and mining and quarrying absorbed $5.2 million foreign investment during the period under review. Trade sector attracted $108.3 million against only $42.1 million during last fiscal year with growth of 157 percent (it received $26.5 million in April 2006); construction sector received $58.7 million compared to $33.8 million.

The inflow of direct investment in cement sector compared to corresponding period last year was very high. During the period under review it attracted $37.1 million against only $0.6 million last fiscal year depicting a growth of 6083 percent.

FDI inflow in food and food packing and textile sector was also sizeable. During the period food and food packing attracted $48.5 million and textiles $36.1 million as against $7.2 million and $27.4 million in corresponding period last year.

During this period (July-April) 2005-06, the overall inflow of FDI increased by 238.7 percent year-on-year to $3.020 billion from only $891.5 million.

FDI inflow is climbing north, and the economic managers of the government hope a further growth in its inflow for the current fiscal. They expect that the foreign investment in Pakistan is likely to reach near $4 billion by the year-end.

Comparing inflow of FDI in April 2006 with the same month of last year, it increased by 704 percent to 795.4 million (including $665.2 million privatisation proceeds), whereas it was $98.9 million during April 2005.

Economists believe that if the inflow of direct investment in the country remained strong, it would give a big boost to Pakistan's economy by improving per capita income and accelerating the government efforts in bringing down poverty rate. Besides, it would work as a cushion against the external shocks and would mute the pressure of climbing current account deficit.


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## Neo

ISLAMABAD (June 20 2006): The major thrust in NWFP's 2006-07 budget was to maintain the ongoing pace of development projects in education, health, roads and irrigation sectors, Minister for Health, Inayatullah Khan said on Monday.

Talking to PTV he said that within a period of three to four years 85 percent increase has been made in education allocations. While 102 percent more money would be spent in health sector. Mechanism was being devised to pay Rs 1,000 per month allowance to unemployed postgraduate degree holders. A pilot project would be launched in districts of Shangla and Kohistan to pay Rs 500 as allowance to senior citizens.

Later the project would be expanded across the province, he said. Unprecedented development activities were continuing in all districts of the province. The province is linked through various road networks. All the projects initiated simultaneously would be completed within next three years, he said.

Work was continuing on various roads including from Mardan-Bunair to Sawat. Noweshara-Charsadda-Chakardarra-Chitral and Dir. Financial autonomy has been given to police stations of the province.


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ISLAMABAD (June 20 2006): Amir of Kuwait, Sheikh Sabah Al-Ahmed Al-Jaber Al Sabah and President Pervez Musharraf vowed to augment bilateral trade and economic ties with the visiting leader stating that Kuwait would benefit from the skills and expertise of Pakistani manpower for promoting growth and development in the two countries.

Speaking at a banquet, hosted in his honour by President Musharraf at the Aiwan-e-Sadr, the Kuwaiti leader also appreciated President Musharraf's efforts for addressing vital issues confronting the Muslim world.

Prime Minister Shaukat Aziz also attended the banquet. "There are challenges and dangers which threaten security and stability of the region, require continuous co-ordination between the two brotherly countries to confront them," the Amir stated.

On resolving conflicts, Sheikh Sabah said, the conflicts wherever they occur should be resolved through peaceful means. "We look forward to forging closer co-operation in regional and international organisations to achieve the objectives of stability and security and sustainable development," he said.

He expressed Kuwait's commitment to fostering stronger bilateral ties in economic, trade and investment sectors.

"We would like to benefit from the skills and expertise of Pakistani manpower in order to promote growth and development in the two countries."

He lauded the economic and investment policies of Pakistan and vowed to benefit from the opportunities, which the country offers, especially the privatisation of major public sector enterprises.

President Musharraf, in his speech, pledged to transform Pakistan into a regional hub for trade, economic and communication activities that connect the Asia sub-regions with the Middle East. He said the presence of 125,000 Pakistani nationals in Kuwait is a testimony to their close and mutually collaborative relations and appreciated the patronage of the Kuwaiti government to the Pakistani expatriate community.

Speaking about Pakistan's efforts for peace in the region, he said Islamabad remains committed to peace process with India.

"Confidence building measures have already led to improvement of relations between the two countries. We believe that we should seize this moment to resolve the outstanding Kashmir dispute as our success will change the destiny of South Asia and the peoples of the two countries would be able to divert their energies and progress and mutual well being."

On Afghanistan, he said, Pakistan is for peace and stability in that country, which is in our vital interest and also essential for peace and development in the region. Turning to the Middle Eastern situation, he said, Pakistan attaches great importance to a secure and stable Middle East.


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## Neo

ISLAMABAD (June 20 2006): The Clean Development Mechanism (CDM) project of Mitsubishi Corporation in Pakistan expected to be completed by January 2007. The implementation of CDM project would benefit environmentally, socially and economically, informed visiting Group CEO of Mitsubishi Corporation Japan, Hajime Katsumura during a meeting with Minister for Privatisation and Investment, Zahid Hamid here on Monday.

The 14-member delegation led by Hajime Katsumura remained with the Minister for some time and discussed the matters pertaining to the upcoming investment opportunities and Pakistan's incentives for the investors.

Hajime Katsumura said their Group had entered into an agreement with Fattier Group, buyers of the privatised Pak Arab Fertilisers (PVC) Limited, to develop Clean Development Mechanism (CDM) project at the cost of Rs 1.8 billion. This project is first of its kind and new in the whole world.

Talking to the delegation, Zahid Hamid said Pakistan is open for investment in all sectors without any restrictions on bringing in or taking out capital. The Minister said the government was ready to facilitate investors to promote both foreign and domestic investment activity in the country. The investors were free to form joint ventures or establish their own businesses with 100 per cent equity.

More than 600 multinational companies were successfully operating and making profits in Pakistan which has become an attractive location for investors due to the liberal investment climate. Zahid Hamid said as a result of business friendly policies foreign investment had increased tenfold during the last five years and was expected to cross $3.5 billion by June 2006.

The Minister appreciated Mitsubishi's efforts to introduce new technology in the privatised entities for increasing their efficiency and production and assured that the government would fully support all such arrangements which bring in modern technology in various sectors.

Pakistan was a good market and partner, which was evident from Mitsubishi's operation in Pakistan since 1990, Hajime Katsumura said. Besides on-going four joint ventures, the company is working on seven more joint ventures, he said.

Tuesday, June 20, 2006 

*Mitsubishi to increase investment in Pakistan*

ISLAMABAD: Hajime Katsumura, CEO Mitsubishi Corporation, Japan, has said that his company is keen to invest in the agriculture sector of Pakistan as a joint venture and would like to provide modern technology in the dairy sector. 

At a meeting with Federal Minister for Food, Agriculture and Livestock Sikandar Hayat Bosan here on Monday, he said Mitsubishi Corporation has already started negotiating with the National Agriculture Research Council (NARC) for the establishment of a high security laboratory in which research and diagnosis of zoontic diseases such as avian influenza and Congo fever can be accomplished. 

According to an official statement, the minister said livestock plays an important role in the economy of the country. The livestock sector contributed 50 percent of the agriculture value added and 11 percent to national GDP during 2005-06. Its annual share in foreign exchange earnings is approximately eight percent.

The minister said that the government has taken a number of measures to improve the pace of development in agriculture sector with focus on value addition. The import of agro-based machinery/equipment not manufactured locally is allowed at zero tariffs. Import of high yielding animals and their semen/embryo are allowed. The government has established the Pakistan Dairy Development Company and Livestock & Dairy Development Board (LDDB) as a no-profit company, he added.

The minister further said that there is great potential for investment in establishment of model dairy farms, model milk procurement system, center of excellence for dairy technology, market & product development research and vaccine manufacturing units in Pakistan.

He urged the private sector to come forward and support the governmentÃ¢â¬â¢s efforts for development of the agriculture sector. In this connection he specifically indicated that it can play a very effective role in establishment of dairy farms and dairy processing units, cold chain facilities for storage and transportation of livestock products, packing and packaging material plants for processing and packing of oranges, mangoes, dates and apples, livestock feed mills and fisheries sector.

The government has very supportive attitude for investment. All kinds of incentive and facilitation are being provided to the investors. The government does not discriminate between local and foreign investors as the same criterion has been adopted for the both. 

Said Jahangir Khan Tareen, Federal Minister for Industries, Production and Special Initiatives, at a meeting with a delegation of Mitsubishi Corporation and Fatima Group. 

Hajime Katsumura, CEO Mitsubishi Corporation, apprised the minister about the investment plans of his company. He said that Mitsubishi has already launched four joint ventures with Angro Chemicals, Dewan Salman Fabrics, Packages and Sadiq Sons. The fifth project is being launched as a joint investment with Fatima Group. 

He said this fifth project, called Clean Development Mechanism (CDM), will be first of its kind in the world. Apart from Pakistan, a similar project is being launched in Japan as well, he said, adding that the project aims to reduce global warming by treating industrial emissions. He said that an investment of $30 million will be made in this project. Under the project, nitrous oxide emissions from Pak-Arab Fertilizers will be treated to create Carbon Credits (CRs) which will be sold in the carbon market. A lot of revenue will be generated through the project side by side creating employment for the local people. The project will be up and running by January next year, he said. 

Mr Tareen assured all kind of co-operation to the delegation for its investment plans. He told the meeting that agriculture is the mainstay of our economy and the government is committed to improving this sector. He urged the Mitsubishi Corporation to invest in the agriculture sector, especially in sub-sectors such as food processing and dairy. Pakistan is the fifth largest producer of milk in the world, so its potential in this sector needs to be utilized to the maximum. A company has already been set up for the development of this vital sector, said the minister. 

The minister said that the government is trying to diversify trade. We are moving towards the engineering sector and the Engineering Development board has been assigned the task to improve our engineering products. He told the delegation that investment by Mitsubishi in the automobile sector will also be highly encouraged as the government has adopted liberal policies to attract investment in this sector. 

Pakistan is open for investment in all sectors without any discrimination or restrictions on bringing in or taking out capital, said Zahid Hamid, Minister for Privatisation & Investment. 

He was talking to a visiting delegation of Mitsubishi Corporation Japan, led by Hajime Katsumura Group CEO.

Mr Katsumura informed the minister that they have entered into an agreement with Fatima Group, buyers of the privatized Pak-Arab Fertilizers (Pvt) Limited to develop Clean Development Mechanism (CDM) project at a cost of Rs 1.8 billion, first of its kind and new in the whole world. After implementation of the CDM project, which was scheduled to be commissioned by early 2007, would benefit environmentally, socially and economically, he added.

He observed that Pakistan was a good market and partner, which was evident form MitsubishiÃ¢â¬â¢s operation in Pakistan since 1990. Besides ongoing four joint ventures, the company was working on seven more joint ventures, he said.

The 14-member delegation remained with the minister for some time and discussed matters pertaining to the upcoming investment opportunities and PakistanÃ¢â¬â¢s incentives for investors.

The minister said that the government was ready to facilitate investors to promote both foreign and domestic investment activity in the country. Investors were free to form joint ventures or establish their own businesses with 100 % equity. More than 600 multinational companies were successfully operating and making profits in Pakistan, which had become an attractive location for investors and due to a liberal investment climate, the governmentÃ¢â¬â¢s business friendly policies, foreign investment had increased tenfold during the last five years and was expected to cross $3.5 billion by June 2006.

Mr Hamid appreciated MitsubishiÃ¢â¬â¢s efforts to introduce new technology in the privatized entities for increasing their efficiency and production and assured that the government would fully support all such arrangements, which brought in modern technology in various sectors.


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## Neo

ISLAMABAD, June 19: Pakistan is the fastest growing economy in South Asian region and Oracle will continue to invest in the country to further boost its Information Technology sector.

Oracle, one of the leading enterprise software company, has a very dominant presence in Pakistani market from the technology and database perspective and it wants to move into the future generations with more advanced technology, said visiting Vice-President of Oracle (Asia Pacific), Adrian Johnston.

Talking to APP here on Monday, he said during his visit he interacted with different subscriber groups and officials of the Ministry of Information Technology to explore ways and means to transforming Pakistan into a leading IT industry.He said the company had a lot of interest in the Pakistani market, and was looking forward towards its expansion.

He also mentioned launch of Oracle-Dell Competency Centre in Islamabad which would serve as a platform to provide technology and infrastructure free-of-cost to business partners and customers in Pakistan.

The centre, he said, would showcase multiple IT solutions that would cater to Pakistani companies in diverse industries, including financial organisations, telecom companies, government organisations and manufacturing firms.


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## Neo

KARACHI: Government will encourage growth of private airlines to provide more options to the passengers, Mir Khalid Ahmed Khan, Minister of State for Defence said speaking at the annual dinner of FENA, a flight engineers association.

He stated that private airlines were not a threat and pointed out that despite their presence, the number of passengers travelling by PIA has risen. He assured President FENA Malik Tariq Ali of his full cooperation for resolving their issues.

Malik Tariq Ali pointed out that human resource is the real asset of any organisation, particularly in a competitive business like aviation. He suggested opening of channels of communication, which is very important for any commercial organisation to get a proper feedback. 

The chief guest awarded shields to retired flight engineers Rauf A Khan, Jamshed Ishrat, PI Majid, Bandeh Ali and Ghulam Qadir Shah Jamote. A shield was awarded to Late Zia Qazi who died two days before his retirement.


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## Neo

Tuesday June 20, 2006 

ISLAMABAD: Pakistan has welcomed Russian announcement of its willingness to join the Iran-Pakistan-India (IPI) gas pipeline project. 
Foreign Office Spokesperson Tasneem Aslam while talking to state-run TV channel late Monday said that Islamabad would welcome any company or corporation interest in the IPI Pipeline Project. 

She said that Russian Gasprom was a renowned company and carries vast experience in the field adding that was the reason the offer would be seriously considered. 

In response to a query Foreign Office Spokesperson said that United Nations Secretary General Elections are under governmentÃ¢â¬â¢s review but any final decision has yet to be taken. 

She said, "its AsiaÃ¢â¬â¢s turn now and there have been three big Asian candidates for a longtime but now India too has joined them".


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## Neo

Tuesday June 20, 2006

ISLAMABAD: Minister for Information Technology Awais Ahmad Khan Leghari Monday said PakistanÃ¢â¬â¢s ICT sector was on a roll, registering 50 per cent annual growth and generating 150,000 jobs in the past three years. 
"The employment rate in the IT sector has been massive with the industry needing nearly 8000 workforce every month and going by this rate, we expect a growth of around half a million jobs in the IT sector within the next three years," he said in a keynote address to a seminar on Ã¢â¬â¢WiMax technologyÃ¢â¬â¢, organised by WiMax Forum Pakistan. 

WiMax is an acronym that stands for Worldwide Interoperability for Microwave Access. It is a standard-based technology that provides fixed, nomadic, portable, and eventually mobile wireless broadband connectivity without the need for direct line-of-sight to a base station. WiMax technology is known for its capacity to facilitate and improve internet access, electronic banking, online shopping/gaming, Voice over IP, movies and music on demand, telemedicine, e-learning, entertainment and video conferencing/streaming. 

The minister noted that while the employment opportunities in the IT sector were on a rise, there was a need to match it with a continued supply of top-quality human resource which was unfortunately not being produced in a sufficient number in the country. "Save a few top-tier universities, the rest are not producing the high-end human resource that has the potential to be absorbed by the industry," he said. 

However, he said his ministry was mindful the issue and it had already chalked out a comprehensive plan to upgrade IT and telecom disciplines in about 25 leading universities by setting up career placement centres and offering thousands of internships, apprenticeships and scholarships to the IT and telecom graduates. 

Awais noted that while the arrival of wireless technologies in Pakistan had led to a revolution in the telecom sector where the mobile phone subscribers alone had gone beyond 33 million mark, broadband services were still far from picking up despite the announcement of a well-received broadband policy and subsequent reductions in bandwidth rates. 

He said the broadband users in the country still stood around 100,000 users which had forced the government to invest heavily into this sector in the coming months. "The ministry has decided to use the Universal Service Fund to fuel broadband growth and we are determined to increase the broadband users up to 2 million within the next two to three years," he said. 

He said another area which the government had focused closely in recent days was the 3-G spectrum which would be made available within the next nine months through a transparent bidding process. "We shall properly consult all the stakeholders before giving away the spectrum in a transparent manner which has been the hallmark of previous policies introduced by the ministry," he said. 

Addressing the seminar, IT ministry member telecom Nooruddin Baqai ruled out transfer or trading of broadband licence or frequency though companies could enter mutually-beneficial inter-connect agreements. He also assured a complete continuity and consistency in the telecom policies announced by the government. Earlier, Keith Doucet, member WiMax Forum, gave a presentation on the scope of WiMax technology in the promotion of broadband services.


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## Neo

RAWALPINDI (updated on: June 24, 2006, 02:44 PST): President General Pervez Musharraf said on Wednesday that Pakistan has an excellent infrastructure in IT sector and environment is conducive for investment and development in this sector.

He said this during a presentation by an internationally renowned IT company here.

President General Pervez Musharraf said Pakistan has the necessary qualified manpower. IT Universities and educational institutions are producing substantial number of qualified people while other educated youth have command over the English language. 

He emphasised that this is a strong basis to take a leap in the development of IT and Pakistan needed to exploit this potential fully.

He referred to various initiatives taken by the government during the last six years for the promotion of computer literacy and for software export developed in Pakistan.

The President said the investors can benefit from the hardworking and trained manpower in Pakistan for its operations in other countries.

Welcoming the interest of foreign investors in Pakistan, the President said the government would extend fullest support to it and expressed the hope that they would expand their activities in Pakistan within the shortest possible time.

During presentation, the company gave a broader concept of establishment of IT cities and call centres in Pakistan emphasising that it would help in raising the IT profile of Pakistan through public-private partnership.

The Minister for Information Technology Owais Leghari and Minister of State for Investment Omer Ahmed Ghumman were also present on the occasion.


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QUETTA (June 21 2006): Balochistan minister for finance Syed Ehsan Shah presented the annual budget for the year 2006-07 here on Tuesday envisaging a total outlay of Rs 59.696 billion with Rs 37.453 billion as current expenditure, Rs 7 billion as provincial public sector development programme and capital expenditure of Rs 15.184 billion.

The total revenue receipts are estimated at Rs 35.144 billion and capital receipt at Rs 12.437 billion. Thus, there is a deficit of Rs 2.309 billion in case of current expenditure and Rs 1.747 billion in case of capital expenditure.

Adding the PSDP of Rs 7.060 billion, the deficit would go up further. This deficit is to be met from other resources like unfunded receipts and loans from the federal government. After these expected receipts, the total budget deficit would be Rs 12.115 billion.

The finance minister, referring to resource constraints in his budget speech, maintained this factor would hamper the growth and development objectives.

"We cannot come out of our resource constraints unless the federal government comes up with substantial financial package. We alone cannot improve our financial health without assistance of the federal government."

He maintained the budget has been prepared with the goal to improve the financial health of the province.

He said the provincial government is actively involved in improving financial management, improving social service delivery, creating economic opportunities and enhancing financial resources.

Referring to socio-economic indicators of the province, the finance minister said literacy rate in the province is 34 percent. Monthly per capita income is the lowest of all the four provinces at Rs762. Unemployment rate is soaring high at 33.48 percent with just 8 percent of the total road network in the country amply explains reason of the province's poor growth and under-utilisation of resources.

He announced to give ownership rights to kachhi abadies from the next fiscal year in line with the announcement made by President Pervez Musharraf during his recent visit to Gadani. Besides, the province also planned to revive the ship-breaking industries at Gadani.

The minister said desalination plants, one each at Gwadar and Gadani, are being installed with the assistance of the federal government to provide water to people.

As many as 1300 villages would be electrified. Kuwait Fund has been reactivated for village electrification under which Rs 1 billion would be spent on this programme.

The Balochistan government has included no new scheme except one related to poverty alleviation worth Rs 700 million in its public sector development programme (PSDP) for the fiscal year 2006-07.

Total amount that has been allocated under the PSDP in the budget is Rs 10,819 million including Rs 3,760 million as foreign assistance that will be spent on 1,071 ongoing development schemes in various sectors in the province.

According to details, Rs 262.104 million have been earmarked for 396 ongoing schemes in road, Rs 757.635 million for 143 schemes in education and Rs 253.356 million for 70 uplift schemes in health sector.

Besides, Rs 393.642 million have been allocated to complete 117 ongoing water supply schemes, Rs 127.323 million for 15 uplift schemes in agriculture, Rs 29.710 million for 16 schemes in livestock sectors and Rs 740.104 million for 93 uplift schemes being launched under the Balochistan Development Authority.

Rs 3.500 million have been allocated for one scheme being implemented by Gwadar Development Authority in Gwadar district, Rs 136.B40 million for 16 schemes in power sector and Rs 157.370 million for 52 schemes of public health and engineering.

Rs 59 million have been allocated for 4 schemes in industrial and Rs 70 million for seven uplift schemes in mineral sectors.

The provincial government, despite its acute financial constraints, has also allocated Rs 11 million for two ongoing schemes for women development and Rs 29.200 million for 16 schemes in sports sector.Balochistan minister for finance Syed Ehsan Shah has said the provincial government has allocated a sum of Rs 641.2956 million for flour subsidy in the next fiscal year.

Presenting the provincial budget for the year 2006-07 here in the provincial assembly on Tuesday, he said earlier the government was provided subsidy on wheat, but this year they have decided to replace wheat with flour for subsidy to ensure benefit to ultimate consumers.

We need sufficient quantity of wheat to meet our requirements and for this purpose we have to import 300,000 tons of wheat from outside the province while 50,000 tons is procured within the province, he said.

The government supplies wheat to owners of flour mills at the rate of Rsll,130 per metric ton, he said, and added a subsidy of Rs1,900 per metric ton is given in this regard.

The government provides wheat subsidy to the tune of Rs 665 million annually for alleviation of financial miseries of the poor, he maintained. The finance minister said the government has also decided to keep up the subsidy of Rs 2 billion on tube-wells in the wake of adverse effects of drought.


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KARACHI (June 20 2006): Not only the overseas Pakistanis remitted home a record amount of $4,136 million during 11 months of FY06, the competing Foreign Currency Deposits (FCDs) under FE-25 scheme also rose to a record $3,481 million by the end of May 2006 as against $3,105 million at the end of May 2005, and $3,282 million at end of June, 2005.

The surge was more pronounced in last five months of the fiscal year with outstanding balances averaging about $3,498 million compared with a similar average of $3,327 million in the first six months of the year. The outstanding balances stood at their highest of $3,567 million at the end of January 2006 and lowest of $3,302 million at the end of July 2005.

Earlier on, balances under FE-25 scheme had reached $2,671 million (resident: $1,954 million, non-resident: $343 million) at the end of FY04 and $2,296 million (resident: $2,340 million, and non-resident: $331 million) at the end of FY03.

It is worth recalling that the FE-25 Scheme was introduced, vide FE Circular No 25 of June 20, 1998, in the aftermath of Pakistan's nuclear explosions and the imposition of sanctions by most of the western countries leading to restrictions, vide FE Circular No 12 of 1998, on withdrawals in foreign currency from selected categories of foreign currency accounts existing as on May 28, 1998.

At the time of the issuance of the aforementioned FE Circular, the Government was under liability to make payments to the holders of FCDs in the amount of some $11 billion (History of SBP: 1988-2003), whereas the FE kitty of Pakistan had only left in it about $1 billion. To allay fears of any future freezing, separate ledgers were to be maintained by Authorised Dealers (ADs) for deposits under the new Scheme. Since these deposits are outside the State Bank's forward cover scheme, these are not required to be surrendered to the State Bank. The ADs, who are free to decide the return on such deposits, are also under no restriction to lend, invest and place on deposit such funds in Pakistan or abroad subject to the observance of the prescribed regulations.

As regards their utilisation as on the end of May 2006, $1,147 million was used for financing foreign trade ie exports both under pre-and post-shipment arrangements ($851 million) and imports ($295 million) while $1,529 million was placed under various arrangements including those with SBP ($181 million under CRR and $534 million under SCRR), banks within Pakistan ($26 million) and abroad ($787 million). An amount totalling $538 million was held as balances abroad ($356 million), cash in hand ($78 million) and as 'others' ($104 million).

Ever since the issuance of FE-12 in 1998, balances in the old FC accounts had been declining since these had to be converted into rupees or Special US Dollar Bonds by the holders at their option. Eight years after the disbanding of the old scheme viz., at the end of May 2006, the outstanding balances in these accounts stood reduced to only $104 million (resident:$76 million, non-resident:$28 million). Three years ago in May 2003, these balances stood higher at $330 million (resident:$266 million, non-resident:$64 million).


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## Neo

KARACHI (June 21 2006): The Prince of Dubai, Suhail Muhammad, has expressed interest for investment in the province of Sindh. A statement issued here on Tuesday said he expressed such a desire in a meeting with the Adviser to Sindh Chief Minister for Livestock and Fisheries, Faqir Muhammad Jadim Mangrio.

It said the meeting took place in the Adviser's office here.

Prince Suhail informed that he would soon announce his plans for investment.

He said he was very much impressed by the hospitality of the people of Sindh. The statement said during the meeting various projects for investment were discussed.

The Adviser pointed out that the environment in Sindh is very conducive for investment. He said the Prime Minister and the Chief Minister of Sindh desire more and more investment come to the province. Jadim Mangnio assured that the Sindh government would provide every possible facility for investment. He said Manchar and Keenjhar are among the big lakes of Asia and the government is working on various projects of their better use.

The Adviser was of the view that there is a need for steps for export of fish available in these lakes. He informed that in the budget an allocation has been made for the construction of cattle colonies in 27 cities of Sindh. Jadim Mangrio said dairy villages are being established at Super Highway and National Highway.


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## Neo

ISLAMABAD (June 21 2006): Zahid Hamid Federal Minister for Privatisation and investment appreciated the role of Pak-Kuwait investment Company and other Kuwaiti investors in promoting industrial activities in Pakistan. He said that Kuwaiti Business Groups would be facilitated to invest in any sector of their choice.

Business groups of both the countries should sit together to identify new avenues for enhancing the existing economic relations. Zahid Hamid stated this in a meeting with the visiting Finance Minister of Kuwait Bader Mishari Al-Humaidi here on Tuesday. The Minister briefed the envoy regarding privatisation, and its policy, process and programme.

Finance Minister of Kuwait Bader Mishari Al-Humaidi appreciated the economic performance of Pakistan and the investor friendly climate and said that Kuwaiti Business groups/companies were keen to explore opportunities for investment in various sectors.

A full-fledge team of Kuwaiti Business groups and investors would soon visit Pakistan to identify the areas of interest.

There was a need to increase the number of flights and carriers between Pakistan and Kuwait, he said.

Leaders of both countries were determined to bring the people and governments still closer and to strengthen their existing relations through accelerating the pace of economic cooperation and interaction, he added.


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## Neo

FAISALABAD (June 21 2006): The Punjab government has launched 'Municipal services improvement project' with the financial assistance ($50 million) of International Development Agency of World Bank.

The project will support in the capacity building of local government and Rural Development Department (LG&RDD); to enhance the Planning and Development Department (P&DD), including the newly established Urban Unit responsible for implementing the cultural heritage component; and support the Punjab Municipal Development Fund Company (PMDFC).

According to official sources, the objective of the project is to improve the viability and effectiveness of urban services provided by tehsil municipal administrations (TMAs) to make such improvements sustainable.

The project consists of the following components: 1) Capacity grants will finance needed improvements in TMAs in the fields of urban planning, financial management, including budget management, investment planning for service delivery, operation and maintenance. 2) To assist the Punjab government in a variety of ways.

In a project report, World Bank team leaders Jaehyang So and Shahnaz Arshad mentioned that the rapid urban transition in Pakistan could contribute even more to the pace of the country's economic growth and poverty reduction, if cities did not suffer from severe infrastructure bottlenecks, service deficiencies, poor local governance, and inefficiencies in land and housing markets.

The WB experts said that the shortfalls in urban services were not merely an outcome of aggregate resource constraints. The shortfalls are exacerbated by constraints in the institutional, governance, and financial arrangements that have defined local service delivery and financing.

They said that the government's devolution of power programme represents a unique opportunity to address key constraints that have plagued urban management and service delivery in Pakistan, as it has done away with some of the institutional fragmentation for urban service investment and operations.

In Punjab, the devolution programme resulted in the establishment of 144 tehsil municipal administrations (TMAs) and 5 city district governments in Lahore, Rawalpindi, Gujranwala, Faisalabad and Multan.

The country has made remarkably swift progress in establishing new legal and administrative structures at the local level, and in establishing the framework for devolving service functions.

According to the WB report, the Punjab Local Government Ordinance (PLGO), 2001 provides a comprehensive list of regulations for local governments in the province. The Ordinance covers the range of regulations from institutional responsibilities of the different levels of local government, including district government, town municipal administration, union councils, and citizen community boards (CCBs).

The broad framework of devolution, as outlined in the PLGO, gives responsibility to TMAs to provide a range of municipal services and the provincial government to monitor the TMAs in the provision of services.

This is a drastic transformation, both for the TMAs, which have to acquire the technical and management expertise needed to deliver services, and for the provincial government to change their outlook from provision to monitoring.

The WB experts observed that the implementation of the devolution plan was progressing slowly. Because the majority of TMAs had only been in operation for about four years, some newly created ones have not been able to discharge full responsibility for planning and financing.

Rather, TMAs have focused on the immediate day-to-day functions in the provision of municipal services such as water supply, sanitation, solid waste, roads, street lighting, parks and fire fighting. Many TMAs are struggling to keep the services going and do not have the capacity or resources to undertake strategic spatial, investment, and operational planning.

At the same time, the provincial governments have adopted themselves, with varying degrees of success, to the changed role they are expected to perform under the new system. Informally, the provincial government continues to influence the performance of the local governments by controlling the postings and transfers of the senior staff of the local governments, and by controlling fiscal transfers.

However, formal reporting mechanisms to enable provincial government to effectively monitor the performance and chart out a policy for performance management and capacity development have not been put in place. While the concept of performance monitoring is still seen as an objective, it has not yet been implemented at the local government level.

The government has worked with several donors to implement devolution.

Asian Development Bank Devolution Support Programme provides technical assistance to the Ministry of Finance and the Finance Departments of the provincial government. The ADB has recently announced an investment in a project focusing on TMAs.

Canadian International Development Agency (CIDA) is providing technical assistance to two TMAs in Punjab on urban planning. CIDA has also provided technical assistance to the LG&RDD on improving its capacity to manage TMAs, including investments in computer equipment and software development.

Japan International Co-operation Agency (JICA) is providing technical assistance on urban infrastructure to one TMA in Punjab.

The World Bank's devolution support programme comprises a range of instruments.

The Punjab big cities development policy loan is being proposed for FY08, to assist the large cities in Punjab to develop capacity in municipal finance, urban transportation and improving service delivery.

The WB has also provided devolution support through training courses targeted at both the national and provincial levels, including direct training to TMA staff in conjunction with PMSIP.

PMSIP will be co-ordinating with the other donor efforts in several ways: the project will not offer duplicate activities to those being financed by the other donors in the same TMAs. For example, PMSIP will not provide the type of classroom training, which is provided under the ADB provincial programme. Within the World Bank urban programme, the WB experts said, PMSIP and the big cities DPL have targeted different levels of the provincial government structure: PMSIP is targeting TMAs and the DPL is targeting city district governments.

Both projects will benefit from the specific work currently being conducted. PMDFC is committed to ensuring that financial management support and capacity building is provided to TMAs in a manner that is supportive and aligned with the government's work on the objectives of the WB-financed project to improve financial reporting and accounting, they added.


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## Neo

ISLAMABAD (June 21 2006): Pakistan and Kuwait have agreed to expand and strengthen the existing co-operation between the two countries in the oil and gas sector to their mutual advantage besides stepping up linkages and inter-dependencies for all round development of the petroleum sector.

It was decided in a meeting between the Federal Natural Resources Minister Amanullah Khan Jadoon and Kuwait's Energy Minister Shaikh Ahmad Fahad Al-Ahmad Al-Sabah on Tuesday. Both sides agreed to step up exchange of experts delegations to benefit from each other's experiences and know-how in the upstream and downstream oil and gas sector to their mutual advantage.

Welcoming the Kuwaiti minister, Jadoon said the setting up of an oil refinery at Port Qasim would not only strengthen the existing economic ties between the two countries, but also help meet the energy requirement of the country. The Kuwaiti companies should also take benefit of the abundant opportunities present in the oil and gas sector, he added.

Jadoon told the Kuwaiti minister that the government was contemplating to set up more refineries in the country with a view to increasing the refining capacity from the present 6 million tonnes to 13 million tonnes per annum to meet the growing energy requirement.

He also briefed him on the upcoming projects in the oil and gas upstream and downstream sector, saying the government would also welcome the Kuwaiti participation in the privatisation of state-owned oil and gas units.

The Kuwaiti energy minister said that Kuwait attaches great importance to its relations with Pakistan, and hoped that bonds of fraternity and brotherhood would continue to grow further in the days ahead for the benefit of the two brotherly Muslim countries.

He said that Pakistan could benefit from Kuwaiti experience in refining and exploration sectors. He expressed Kuwaiti companies' willingness to participate in the forthcoming privatisation of Pakistan's oil and gas companies.


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## Neo

ISLAMABAD (June 21 2006): Prime Minister Shaukat Aziz has approved the 2006-07 development programme for Oil and Gas Development Company Limited (OGDC) and set its oil and gas production target at 56,570 barrels per day and 1346 MMCFD, respectively.

The plan indicates that ODGC will drill 50 wells (34 exploratory and 16 developmental) in the next fiscal year, whereas it's going to complete 30 wells (24 exploratory and 6 developmental) by June 30, this year.

The OGDC Managing Director, Arshid Nasr, gave the Prime Minister a presentation on June 16, covering current production of oil and gas and projected estimates for the next fiscal year. He gave a clear picture of the company's financial strength, its potential, procedures to be followed in the award of contracts for development and exploration works.

The presentation also focused on Global Depository Receipts (GDRs) current status and the deadline for offering to the buyers through London Stock Exchange.

The presentation included projects coming up for production in the next two years. These were Uch-II (Power plant) with 200 MMCFD gas production; Qadirpur Compression 650 MMCFD gas by September 2008; Tando AllahYar gas 28 MMCFD and oil 2500 barrels per day by June 2007; Sinjhoro gas 28 MMCFD and oil 3500 barrels per day by June 2007; Dhodak Expansion gas 20 MMCFD and oil 1700 barrels per day by June 2007; Dakhani Expansion gas 12 MMCFD and oil 720 by March 2007; and Chanda gas 8,5 MMCFD and LPG 25 M.T/D by September 2006.

Financial strength of the first nine months of the current fiscal year showed that OGDC had earned Rs 69.94 billion, and its profit before tax was Rs 48.43 billion, and profit after tax stood at Rs 33.20 billion. It added that OGDC had declared 52.5 percent dividend and paid Rs 7.72 per share earning.

Sources said that the Prime Minister appreciated OGDC's new management vision to take it forward and explore oil and gas potential to an optimal level. He asked the Managing Director to strictly follow the rules and procedures in award of contracts for all development works in the future and make OGDC a world class company in true sense.

The Prime Minister was informed that the previous management had deviated from the rules and standard procedures in award of contracts for various key development projects. The Prime Minister was informed that an in-depth review had shown that the previous management took major deviations in a number of areas from laid down rules, regulations and procedures especially in issuance of Letters of Intent (LOI), tender process, award of contracts for major projects.

Shaukat directed Arshid Nasr to review the decisions taken by the previous management against rules and make corrections wherever and whenever necessary to ensure transparency and good governance in all operations of the company.

Regarding GDRs, Shaukat asked OGDC to closely work with the Privatisation Commission and the advisor appointed for the transaction to complete the entire process as per schedule.

The Prime Minister set the deadline of September 30 for GDR offering in the international market.

Arshid Nasr informed the Prime Minister that the company had established a strong business procedure and internal checks system for all operations to ensure accountability and transparency. He said that OGDC was making all-out efforts to attract foreign investment in the country's oil and gas sector. He in particular mentioned offshore initiatives and said that they would be used as an attraction to encourage foreign investors to invest in Pakistan oil and gas sector.

The presentation also focused on rationalisation of the company's human resources, develop in-house expertise for offshore projects and be a responsible corporate citizen. It also indicated a strategy to improve OGDC image at home and abroad.

According to the presentation, OGDC has 63 percent share of total local exploration. Its share in oil production, as on June 1, stood at 39,048 barrels per day against 65,080 total local production. For gas, OGDC share was 979 MMCFD against total local 3898 MMCFD production.

Total local oil and gas consumption stood at 365,000 barrels per day and 3317 MMCFD respectively. Pakistan meets entire gas consumption from indigenous resources but depends heavily on foreign resources for oil needs.

Arshid informed the Prime Minister that being a corporate citizen, OGDC spent Rs 196 million on construction of road in Balochistan, paid Rs 70 million for Earthquake relief fund, Rs 43 million for Tando Allahyar development project, Rs 15.50 million on construction of Trasuma centre in Ghotki, Sindh, Rs 15.50 million on construction of road at Tando Alam Oil Complex and Rs 10 million for free health care at OGDC dispensaries in 2005-06.

When this correspondent approached Arshid for comments on OGDC future development plan and his presentation to the Prime Minister, he said: " Being a firm believer that collective wisdom can work better, I have taken everybody in my organisation on board to achieve the targets set by the Prime Minister."

He said he was confident that teamwork would serve the purpose of making OGDC a vibrant entity in true sense and complete exploration and production work within the stipulated period.

Arshid said he also believed in merit and transparency. He said: "I have asked everybody, right from top to bottom in OGDC, that deviation in rules and procedures will not be allowed and as far as the past is concerned a committee has already been formed to check the deviations from the rules in award of contracts and issuance of Letter of Intent (LoI)."

He said that the review committee would complete its job on priority basis and submit the cases to the board wherein rules were not followed by previous management. Arshid added that in the future OGDC would advertise all contracts in the press and pick up the right party for the jobs involving huge public money.


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## Neo

Wednesday, June 21, 2006 

ISLAMABAD: China and Russia have assured Pakistan of full dialogue partnership in the Shanghai Cooperation Organisation (SCO), Information Minister Muhammad Ali Durrani said on Tuesday.

Addressing a press conference, he said that Russian President Vladimir Putin had told President Pervez Musharraf during a meeting on the sidelines of the SCO conference that the SCO charter would be amended to allow PakistanÃ¢â¬â¢s entry to the organisation. The information minister said that under existing rules of the SCO, no new country could be made a full member of the organisation. Russia and China would initiate the process of amending the rules for PakistanÃ¢â¬â¢s induction, he said.

He said that Pakistan had been given observer status to the body because of ChinaÃ¢â¬â¢s efforts. President MusharrafÃ¢â¬â¢s recent visit to China had been Ã¢â¬Åvery beneficial for the countryÃ¢â¬Â, he said. The information minister said that Pakistan and Russia had agreed to Ã¢â¬Åforget their past and usher in a new era of friendshipÃ¢â¬Â. The Russian president thanked Musharraf for supporting observer status for Russia in the Organisation of Islamic Conference (OIC). He said that Pakistan had offered Ã¢â¬Åan energy corridor and access to warm waters (Arabian Sea and the Gulf)Ã¢â¬Â to Russia, China and the landlocked Central Asian member states of the SCO.
​


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## Neo

ISLAMABAD: Chairman Pakistan Agricultural Research Council (PARC) has underlined the need for a fast-track approach between Pakistani and Chinese scientists working on developing high yield hybrid rice.

He was talking to a four-member delegation of Chinese agricultural scientists that called on him here on Tuesday.

The delegation, currently on a visit to Pakistan, is led by Dr Chang-xiang Mao, Chief of the International Project Office, Guangxi Academy of Agricultural Sciences (GXAAS).

Dr Tasneem, appreciating the efforts and achievements of the Chinese scientists said China was pioneer in hybrid rice that gives high yield with equally better quality.

He recalled that way back in 1986 Pakistani scientists started developing hybrid rice with Chinese technology but no tangible results have been produced.

Chairman PARC was of the view that it was time that the scientists of both the countries focused on other value-added crops relating to rice through more collaboration and joint ventures.

Chinese delegation offered long-term cooperation between GXAAS and PARC in developing hybrid and super hybrid rice in Pakistan, based on resource-sharing, exchange of expertise and training o f scientists.

It is noted that the Chinese delegation is visiting Pakistan under the 16th protocol.

The purpose of the visit is to exchange information regarding hybrid rice, R&D and to develop long term collaboration between China and Pakistan for the development of good grain quality hybrids to meet the requirement of South Asian and Middle Eastern markets.


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## Neo

Wednesday June 21, 2006 

ISLAMABAD: Owing to geo-strategic importance in the region, Pakistan has offered China, Russia and central Asian states access to warm waters. 
Talking at a press conference here Tuesday, Muhammad Ali Durrani, federal minister for information told that Pak-China eternal friendship was based on inter dependency, which would be taken forward to new heights. 

President General Pervez Musharraf in his recent China visit presented charter, which would usher an era of potential peace and prosperity in the region, he hoped. 

He expressed optimism that under Pak-China historic agenda, the cordial established relations in commerce, culture, trade, investment, cultural and exchange of youth delegations including cooperation in defence area would be taken forward. 

The leaderships of Pakistan and China had established deep-rooted ties under which both the countries would take practical steps to link both countries through railway and road links in addition to cooperation in gas pipeline. 

President Musharraf exchanged views with his Chinese counterpart to daulize Silk route and its up gradation would ensure easy access of Chinese goods into Pakistani markets. 

He went on to say under Pak-China fresh defence cooperation, JF-17 thunder aircraft and frigate preparation respectively for Pakistan Air Force and Pakistan Navy would prove a mile stone for strong defence. 

On relations with Russia, he said that recent meeting between President Musharraf and his Russian counterpart Vladmir Putin would help boost Pak-Russia ties in various areas. 

"The meeting between Pakistani and Russian leaderships is of immense importance in which they agreed to forget the past and initiate fresh steps to forge ties for prosperous future," he added. 

The Russian President also thanked Pakistani leadership for offering observer status in the OIC, he said adding that Pakistan has also offered that Iran could use Silk route as a trade route. 

He informed that Gwadar port could play greater role in access to warm waters adding that President Musharraf presented both the issues of Kashmir and Palestine effectively. 

Quoting President Musharraf, he said that Musharraf told the global community that disputes of Palestine, Kashmir and others should be resolved to control the menace of terrorism. 

He said that Musharraf invited Chinese investors to invest in PakistanÃ¢â¬â¢s energy, new dams, highways and establishment of new industries. 

He said that China had pledged $900 million to promote the cause of Shanghai Cooperation Organization (SCO). Musharraf meeting with Iranian President would help bolster Pak-Iran relations in the long-run, he concluded.


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## Neo

Wednesday June 21, 2006

KARACHI: America will provide $ 200 million aid to Pakistan for promotion of public health and education and alleviation of poverty. An agreement in this regard was signed by Pakistan and America. 
Chairman Pakistan American Business Council, Iftikhar Ali Malik, said that the aid, which would be provided under the agreement to Pakistan would help in construction of schools in Northern Areas including other part of the country. He said that the aid for health sector would help in controlling and combating many diseases. 

He said that the living standard of masses would be enhanced due to the steps taken for promotion of education and alleviation of poverty.


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## Neo

RAWALPINDI (updated on: June 22, 2006, 20:17 PST): President General Pervez Musharraf on Thursday said the government is committed to facilitating investment in infrastructure sector to ensure Pakistan's shift to industrial economy and expressed satisfaction at growing international confidence in the country's economic scenario.

He was addressing a meeting on the President's Investment Initiatives, which meets every month to review progress on implementation of decisions and initiatives for attracting investment in various sectors of the economy.

President Musharraf held out a firm assurance to provide protection and an equal playing field to foreign entrepreneurs and directed for removal of any bureaucratic hurdles in the way of investment.

President Musharraf particularly noted the tremendous prospects and foreign companies' interest in development of tourism, infrastructure, property development, housing, information technology and hotel industries.

"The development of a strong infrastructure will ensure that Pakistan offers high quality of services to businesses", he said, welcoming the keen interest of the Gulf, European and American companies in these sectors.


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## Neo

ISLAMABAD (updated on: June 22, 2006, 20:27 PST): Oil giant BP Plc will invest $20 million in oil and gas exploration off Pakistan in collaboration with Pakistan's Oil and Gas Development Corporation, the oil ministry said on Thursday.

BP aims to invest a minimum of $20 million in offshore exploration jointly with OGDCL, the ministry said. It gave no more details.

Senior manager Steve Peacock briefed Minister for Petroleum and Natural Resources Amanullah Khan Jadoon on BP's plans in talks in Islamabad, the ministry said.

BP is already producing 12,000 barrels per day of crude from Pakistan's Badin fields, it said.

Pakistan imports 85 percent of its energy needs, including about $4 billion worth of oil a year.

It is struggling to increase domestic oil production of about 63,000 barrels per day, which it hopes to raise to 100,000 bpd within five years.

The government estimates the country has 27 billion barrels reserves of oil and 280 trillion cubic feet of natural gas.


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## Neo

ISLAMABAD (June 22 2006): Pakistan's external liabilities - external debt plus foreign exchange liabilities - totalled $36.557 billion at the end of March 2006, indicating an increase of 3.72 percent or $1.312 billion since December 30, 2005, said the State Bank of Pakistan (SBP).

Of the total liabilities, the external debt of the country has surged by $1.38 billion (4.12 percent) to $34.90 billion during the third quarter of 2005-06 against $33.523 billion recorded at the end of December 2005.

During the first nine months (July-March) 2005-06, total external liabilities increased by $723 million against $35.834 billion recorded by end June 2005. Thus, the external debt increased by $866 million during the period under review.

According to the SBP provisional data, the country's public and publicly guaranteed debt has been on the rise for the last four years.

On June 30, 2005, it was $31.084 billion as compared to $29.875 billion of June 2004. And now, during the first nine months of this fiscal, it stands at $31.82 billion with an increase of $737 million compared to June 2005.

In public and publicly guaranteed debt, the medium and long-term debt (more than one year) during the period under review augmented by $800 million to $31.613 billion as it was $30.813 billion at the end of June 2005.

According to the break-up of the medium and long-term debt, the multilateral debt by end-March 2006 grew by $518 million to $15.876 billion; Euro bonds/Saindak bonds by $642 million to $1.908 billion; and bilateral debt up by $126 million to $931 million compared to June 2005 when it stood at $15.358 billion, $1.266 billion and $805 million, respectively.

While during the period under review, the volume of Paris Club debt declined by $418 million to $12.596 billion, military debt by $51 million to $137 million and commercial loan/credit declined by $17 million to $165 million as compared to $13.813 billion, $188 million and $182 million in June 2005.

The significant feature of the SBP data was that the short-term external debt (less than one-year) from Islamic Development Bank (IDB) also declined to $208 million during March 2005-06, as at the end of last fiscal year, it was $271 million.

The private non-guaranteed debts (more than one-year) during the period increased to $1.588 billion from $1.342 billion at the end of FY05.

The SBP data also depict a decline of about $117 million in the International Monetary Fund (IMF) debt. During the first three-quarters of FY06, as it was $1.494 billion compared to $1.611 billion in the final quarter of last FY05.

The foreign exchange liabilities, excluding foreign exchange bearer certificates, foreign currency bearer certificates and Dollar bearer certificates (which stand at $7 million) declined by $143 million during the period under study to $1.654 billion from $1.797 billion at the end June 2005.

Of this, during the period under review the special US dollar bonds declined by $121 million to $300 million, as it was $421 million at the end of FY05. Besides, foreign currency bonds (NHA/NC) declined by $22 million to $4,109 million from $131 million end June last fiscal year.

While the central bank deposits, NBP/BOC deposits and other liabilities (Swap) remained unchanged for the last three years at $700 million, $500 million and $45 million, respectively.


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## Neo

ISLAMABAD (June 22 2006): Mitsubishi Corporation, Japan will start Clean Development Mechanism (CDM) in Pakistan from January 2007 with $30 million investment. Hajime Katsumura, CEO Mitsubishi Corporation said that the Clean Development Mechanism (CDM), will be first of its kind in the world, private TV reported.

Apart from Pakistan, a similar project is being launched in Japan as well The project aims to reduce global warming by treating industrial emissions. An investment of $30 million would be made in this project. Under the project nitrous oxide emissions from Pak-Arab Fertilisers will be treated to create Carbon Credits (CRs), which will be sold in the carbon market.


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## Neo

TEHRAN (June 22 2006): Iran will not sell its gas at knock-down rates to Pakistan and India, a senior oil official said on Wednesday amid a pricing dispute in talks over a planned pipeline.

"The price suggested by Pakistan and India is almost half of the price we offered," Deputy Oil Minister Mohammad-Hadi Nejad-Hosseinian said on state radio. "If the two governments intend to subsidise their domestic gas, there is no reason for Iran to pay this subsidy," he added.

The Iran-Pakistan-India (IPI) gas project envisages a pipeline of about 2,600 kilometres (1,600 miles) that would help meet South Asia's growing energy needs.

The United States has voiced opposition to the project, reflecting concerns about Iran's nuclear ambitions - and the three parties engaged in the discussions have also been at odds over pricing.

Quoted by the Iranian Oil Ministry's Shana news agency, Nejad-Hosseinian said Iran was not desperate to sell its gas to Pakistan and India.

"The tripartite peace pipeline agreement is not an absolute obligation," he said.

He also warned Pakistan and India that if the nuclear issue was resolved, other countries "will be the first customers of our gas (and will pay) even better prices."

The official also said there was disagreement with Pakistan and India over the amount of gas to be exported - with Iran unwilling to sell a large chunk of its planned daily exports of 480 million cubic metres (17 billion cubic feet) to just two countries.

"We think it is better for us to have various customers," he said.

The three sides held their last round of talks on the project in May


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## Neo

LAHORE (June 22 2006): The Punjab government has asked the authorities concerned to ensure 100 percent completion of work on Ghazial, Khai and Domeli dams and 70 percent work on six other small dams in the districts of Chakwal, Jhelum, Attock and Rawalpindi in 2006-07.

Official sources told Business Recorder here on Tuesday that the provincial government is also going to start construction work on two hydropower projects through the public sector. 'There are 48 sites in the province where potential of generating more than 2 MW power exists. The provincial government has been working on the feasibility to undertake these projects in a phased manner', the sources said.

According to them, the provincial government has also finalised a regulatory framework for inviting the private sector to undertake the construction work on hydel projects on BooT/BoT basis.

During the period from 1960-1995, only 32 schemes of small dams in the Barani areas were taken up by various governments, while the sitting Punjab government has started construction work on 19 new dams. Two of these dams, Basal dam and Mial dam have been made operational, while work on eight other dams will be completed by the end of current financial year. The work on remaining nine dams will be completed by June 2007. On completion of these dams, an additional 31,110 acre land would be brought under cultivation, the sources said.

About Basal and Mial dams, the sources said Basal dam was constructed in district Attock at a cost of Rs 30 million. This has started irrigating about 400 acres of virgin land besides meeting drinking water needs. Mial dam was constructed in district Chakwal at a cost of Rs 60 million. This has started irrigating around 1,500 acres of virgin land apart from meeting drinking water needs, the sources added.

The sources further said that the provincial government is augmenting renewable energy resource base through installation of low-head hydel stations on canal falls, apart from implementing remediation measures and initiatives to reverse environmental degradation and groundwater mining.


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## Neo

ISLAMABAD, June 21: Average inflation measured by the Consumer Price Index (CPI) resurged in May and stood at 7.1 per cent year-on-year (YoY) as compared with 6.2 per cent in April 2006, thus hitting the lowest income group.

The average inflation during the July-May period of the current fiscal year stood at 7.9 per cent, which is significantly higher than 5.6 per cent inflation witnessed during the same period past five years.

Similarly, monthly inflation at 0.5 per cent in May 2006 was also higher than deflation observed in May 2005 as well as in the same month past five years, according to the State Bank of PakistanÃ¢â¬â¢s monthly publication titled `Inflation MonitorÃ¢â¬â¢ released on Wednesday.

The report also observed resurgence in other two measures of inflation -Ã¢â¬â the Wholesale Price Index and the Sensitive Price Index. Although both food and non-food inflation increased during the month, the food group remained the key contributor to the overall inflation.

The report says in contrast to the previous months, the lowest income group recorded above average inflation in May 2006. Since the current wave of inflation was mainly due to the food group and food has a relatively higher weight in the consumption basket of the low income segment of population, the incidence of inflation was higher as compared to those of other income groups during the month.

Food inflation increased to 5.6 per cent in May 2006, up from 3.6 per cent in April 2006. The reasons for this increase pointed out were mainly due to a weak base along with significant increase in prices of a number of important items, including milk, meat, sugar, potatoes, cold drinks, and pulses.

Price movements of individual items in the food group show that YoY rise in prices of wheat and its products, pulses, besan, milk, meat, and sugar overshadowed the impact of the YoY decline in prices of vegetable ghee, cooking oil, poultry, onion, and tomatoes, along with a subdued inflation in number of other items.

Moreover, wheat prices, which have been showing YoY deflation since October 2005, increased by about one per cent in May 2006, over the corresponding month last year. However, the wheat prices are still lower than those in the last six months of the current fiscal year. The average price of pulses also recorded more than 60 per cent increase, over May 2005. Price of sugar, though slightly lower as compared with the last month, is still 40 per cent higher than that during May 2005.

Other commodities showing double digit inflation are milk, meat, cold drinks, ice-cream, potatoes and bananas. In terms of percentage contribution to food inflation, sugar was the highest contributor during May 2006, followed by milk, beef and grams.

Non-food inflation rose to 8.2 per cent during May 2006 as compared to eight per cent recorded in April 2006 as well as in the corresponding month last year. The increase in this group during the month under review was mainly contributed by higher inflation in fuel and lighting, furniture and equipments, cleaning, laundry and personal appearance and education.

The increase in fuel and lighting resulted primarily due to significant increase in gas cylinder prices; higher prices of air-conditioners and fans caused rise in household furniture and equipment sub-group; record high gold and silver prices pushed up inflation in cleaning, laundering and personal appearance; and higher inflation in education was the result of an increase in university fees.

Core inflation (non-food non-energy) also witnessed an increase of 6.6 per cent in May 2006, after a continuous decline for the last several months. The increase in core inflation was mainly due to second round effect of the earlier increase in oil prices which has been reflected in the rising transportation cost and consequently in general price level.


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## Neo

Thursday June 22, 2006 

ISLAMABAD - UNDP has prepared projects in the development-planning framework besides institutional strengthening for the National Disaster Management Commission (NDMC) and the National Disaster Management Authority (NDMA). 

The projects will also support creation of similar mechanisms at provincial, regional, district and local levels, training programs for capacity development of the stakeholders concerned and development of disaster preparedness plans at local and national levels, said UNDP officials. 


Ã¢â¬ÅDisasters impede sustainable development thus the integration of disaster risk reduction into development strategies will compliment efforts in poverty reduction, rural and urban livelihoods, education, environment, equality, health services, local governance, political or policy advocacy, empowerment of women,Ã¢â¬Â said the official adding that the October 2005 earthquake exposed PakistanÃ¢â¬â¢s vulnerability to natural disasters and accentuated the need for preparedness. 


UNDP will play its role in the implementation of the ERRA-UN plan, particularly in the livelihoods, governance and disaster risk reduction sectors. UNDP is also seeking support for priority initiatives included in this plan that are critical to the transition from relief to rehabilitation and recovery. 


UNDP has designed three initiatives, one in support of local government institutions while the other two supporting the governmentÃ¢â¬â¢s capacity to coordinate recovery and reconstruction efforts. Ã¢â¬ÅThe first initiative will aim at developing capacities to plan and implement early recovery and to engage and mobilise all partners, including affected citizens and communities,Ã¢â¬Â the official said, adding that this project will especially focus on the most vulnerable population in the remote areas that are difficult to access. 


The second initiative will aim at strengthening the institutional and programmatic capacity of ERRA by supporting the establishment of planning, tracking and monitoring systems for recovery, reconstruction and rehabilitation in AJK and NWFP. 

The third initiative will provide capacity development for aid coordination to support coherent aid management, and promote accountability and transparency in the use of external resources. This initiative has two projects; one will focus on building governmentÃ¢â¬â¢s capacity for aid management through the establishment of an information management system within the Economic Affairs Division (EAD), Ministry of Finance. 


Official said that other project would strengthen an integrated UN Resident CoordinatorÃ¢â¬â¢s office to provide long-term strategic planning and development process in line with the existing development assistance frameworks, including the Millennium Development Goals.


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## Neo

KARACHI: Twenty-two creeks along the shoreline of Sindh province can electrify the whole of Karachi without the use of gas, furnace oil or any other fuel. 

ItÃ¢â¬â¢s a natureÃ¢â¬â¢s gift with no consequences. The more used the better. Only one-rotor wave-powered turbine at each of these identified water inlets can energize half of the metropolis for as long as sun rises from east and sets in the west. 

This out-of-the-box technology is not being commercially used anywhere in the world partly due to its high cost and because of mankindÃ¢â¬â¢s addiction to fossil fuels. And considering the developing status of Pakistan, it wonÃ¢â¬â¢t be fair to expect any breakthrough in this regard. 

But this very fact makes it all the more important for the country to push innovation vis-Ã¢â¬Â¡-vis energy production. Energy will be needed to feed industries, which in turn employ growing population in developing countries. 

The Economic Survey 2005-06 indicates the usage of gas that makes up more than half of the energy mix is increasing and demand will outstrip domestic production by next decade. 

To meet this shortfall government is pursuing various options including multinational gas pipelines, incentives for onshore and offshore hydrocarbon exploration, import of liquefied natural gas (LNG), and promotion of non-conventional energy resources.

Where it has also moved to ensure optimum utilization of indigenous gas reserves, the concept of inelastic nature of petroleum is too strong to ease its influence over emerging economies any time soon. 

But as the vulnerability of international oil prices continues to threaten the global economies, Pakistan has witnessed a structural shift in its energy consumption pattern. 

Since 2000-01, industries that used oil are now diverting towards other sources while average consumption of petroleum products has showed an annual decline of 3.3 percent in last five years, though it remains the darkest aspect of national trade deficit. 

Over a million vehicles are now running on compressed natural gas (CNG) but for how long remains to be seen. Power sector that consumes the biggest chunk of gas uses power generation machinery, which is outdated and wastes natural gas.

To offset the damage, government is encouraging cogeneration power plants but even with this damage control exercise, gas reserves of 32 trillion cubic feet are estimated to be enough for next 23 years only. 

On the other hand, the share of coal in electricity production has decreased over the years to a negligible level. However, the government has decided in principle to enhance the share of coal in energy mix to 18 percent in next twelve years. 

It has also announced to establish a coal mining and power generation company on pattern of WAPDA to harness the Sindh coal reserves, estimated at 175 billion tonnes.

The survey that was published before budget does not suggest the feasible price of imported gas. In case the cost of imported gas is more than that paid to exploration and production companies, it would discourage the activities in upstream oil and gas industry. 

This has placed a daunting challenge before official circles to maintain a balance between prices of piped gas and local production while also ensuring a fair consumer price. 

Until the prospects for alternate energy resources are properly explored and a final decision is not taken on import of gas, the way forward will be to promote energy conservation.


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## Neo

ISLAMABAD: Contrary to the governmentÃ¢â¬â¢s tall claims, countryÃ¢â¬â¢s exports to 83 countries where Pakistan was doing better in the past, have shown decline, according to export receipts data prepared by the State Bank of Pakistan for the period July 2005-January 2006.

The commerce ministry on trade policy had fixed the export target of $17 billion for the current fiscal year and so far exports have reached $15 billion, posing a gigantic task for ministry and Export Promotion Bureau to register the export of $2 billion by June 30, 2006 which seems remote keeping in view the exports trend in the last one and half months of fiscal years in the past.

Asif Shah, Secretary Commerce Ministry said the ministry would analyse exports after the fiscal year ends as the State Bank had calculated the trade figure of first six months. 

Shah said that by May 30, exports reached $14.9 billion and in June, the country needs to have export of $2.1 billion to meet the target of $17 billion. 

The disclosures of SBP show that out of 83 countries, exports to six countries were zero during July 2005-January-2006. They were Andorra, Antigua & Barbuda, Cayman Island, Guam, Nauru and Kiribati. 

However, exports during the period under review in last fiscal stood at $0.110 million for Andorra, $0.117 million for Antigua & Barbuda; $0.230 million for Cayman Island; $0.1 million for Guam; $0.17 million for Nauru and $0.112 million for Kiribati.

PakistanÃ¢â¬â¢s exports to UK have decreased by $122 million (71 per cent) in July 2006-January 2005 to just $522.126 million from $644.174 million in the same period of the last fiscal 2004-05. 

According to the data, export to Germany fell to $1.5 million to $391.557 million during the period under review from $393.091 million in the corresponding period of the last fiscal.


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## Neo

Thursday June 22, 2006, 6:29 pm


KARACHI, June 22 Asia Pulse - The National Engineering Services of Pakistan (Nespak) in association with Airport de Paris Ingenierie (ADPi) of France has been awarded the project management consultancy services for the US$1 billion expansion of Seeb and Salalah airports in Oman, the company said in a statement.

The expansion of these two airports is being carried out by the Oman's Ministry of Transport and Communication to meet the needs of growing air traffic in the country.

The traffic at Seeb International Airport in Muscat is expected to increase from 3 million passengers at present to 24 million by 2020.

The expansion of the airport will include a new passenger terminal building, a new VVIP (very very important persons) terminal, a cargo terminal and a new runway.

At Salalah Airport, a new passenger terminal, cargo terminal and associated infrastructure will be built.


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## Neo

RAWALPINDI (June 23 2006): President General Pervez Musharraf on Thursday said the government is committed to facilitating investment in infrastructure sector to ensure Pakistan's shift to industrial economy and expressed satisfaction at growing international confidence in the country's economic scenario.

He was addressing a meeting on the President's Investment Initiatives. President Musharraf held out a firm assurance to provide protection and a level playing field to foreign entrepreneurs and directed removal of any bureaucratic hurdles in the way of investment.

He particularly noted tremendous prospects and foreign companies' interest in development of tourism, infrastructure, property development, housing, information technology and hotel industries.

"The development of a strong infrastructure will ensure that Pakistan offers high quality of services to businesses," he said, welcoming keen interest of the Gulf, European and American companies in these sectors.

Industries and special initiatives minister Jehangir Khan Tareen and minister of state for privatisation Omar Ahmed Ghumman attended the meeting and briefed the President about progress vis-ÃÂ -vis decisions and implementations since the last meeting that took place on May 10, 2006.

The President, speaking at a presentation on alternate energy sources, said Pakistan would encourage investment in utilisation of alternate sources to fuel its economic growth through provision of cost-effective energy as well as reducing its dependence on expensive thermal power.

He directed earliest implementation of projects envisioned for making use of wind and solar energy.

"We must make the best use of untapped energy potential in the form of wind and solar energy to meet growing requirements in the long-term, as this has become all the more important in the face of soaring oil prices," he said.

Minister of state for privatisation Omar Ahmed Ghumman, Wapda chairman Tariq Hameed, Nepra chairman Lieutenant General Saeeduz Zafar (Retd), PPIB managing director Khalid Rehman, and alternate energy development board secretary Brigadier Dr Nasim A. Khan attended the meeting.


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## Neo

ISLAMABAD, June 22: The Chairman Central Board of Revenue (CBR) Abdullah Yousuf on Thursday said that the revenue collection would easily cross the Rs700 billion mark as against the target of Rs690 billion by end of the current month.

Addressing a press conference here on Thursday the chairman said that the tax authorities had so far realized around Rs661.5 billion as on June 21. "We would achieve our target easily", he added.

The chairman said that more than Rs25 billion of additional revenue would be collected due to the new taxation measures announced in the budget of 2006-07. However, an amount of Rs16.5 billion would be lost due to relief measures taken in the budget.

When asked about the taxation measures providing maximum relief to the high salaried class, the chairman said that his team did a lot to give maximum relief to all. However, he said that it was not possible to avoid it. He was of the view that the new taxation regime for the salaried class was to facilitate all taxpayers.

He said Member Direct Taxes Salman Nabi, the architect of the new system, defended it on the pretext that it was not possible to raise the rate for the higher salaried class, which was reduced in the budget due to which they were given maximum relief. The chairman was of the opinion that the general sales tax (GST) and income tax were the tax of the future. He said that the GST net was extended to all items, which was as per international standards, while the share of income tax collection did not increase to the extent as was expected.

"There is a room for improvement. We are working for collecting data in this regard," the chairman said.

Answering a question, he said that the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) had offered to help tax officials in reducing the menace of under-invoicing and over-invoicing causing harm to the national kitty.


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## Neo

Abu Dhabi: Asset managers from Pakistan, until now inactive, plan to lure investors from the Gulf into their country's capital markets, the chief of the Pakistan Business Council said yesterday.

S. Qaiser Anis, President of PBC, said he led a delegation from the UAE recently to Pakistan and held meetings with asset managers, bankers and others to apprise them of the potential in the UAE and neighbouring markets.

"Pakistan needs to attract fresh capital into the country through mutual funds, specifically offshore funds which is a better way of getting into the capital markets there," he told reporters.

"Asset managers and Asset Management Companies from Pakistan will be coming to the UAE shortly to raise funds and tap the potential here. The recent flow of investments from the UAE and GCC to Pakistan is indication that there is potential."

Rupert N. Bumfrey, a director with Alliott Management Consultancy, UAE, who was part of the delegation said Pakistan's asset managers have only onshore mutual funds and need to launch offshore funds.

"There are huge opportunities in that emerging market and the potential hasn't happened. Returns from the equity markets there are between 30-40 per cent average."

While equity holdings by funds are some $45 billion in Korea and $30 billion in China, India and Taiwan, it is nil in Pakistan. "The marketing and distribution of funds is poor and the managers need to be pro-active in attracting capital."

He said there are some 30 mutual fund players in Pakistan but didn't specify the size of the market.

The European market had over-subscribed the euro-bond issue by Pakistan recently. "UAE investors too should invest in Pakistan government's debt bonds," he urged.

OPPORTUNITIES 
Country 'needs to launch offshore funds'

Rupert N. Bumfrey, a director with Alliott Management Consultancy, UAE, who was part of the delegation to Pakistan, said the country's asset managers have only onshore mutual funds and need to launch offshore funds.


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## Neo

World Bank validates Pakistan's poverty estimates 

ISLAMABAD (June 23 2006): *The World Bank has validated the Pakistan's official poverty estimates as published recently in the Pakistan Survey 2005-06, World Bank sources said here on Thursday.* The government has maintained consistency with past measures using the same poverty line and inflation indices as used for the 2000-2001 estimates.

Using this same methodology, the latest government estimates show poverty to have fallen from 34.4 percent to 24 percent. *"It is clear that poverty has indeed fallen sharply between 2000-01 and 2004-05.* Of course, there are other ways to calculate poverty estimates useful for analytical purposes but using the same methodology for the official estimates is important to maintain comparatively over years," said *John Wall, World Bank Country Director for Pakistan.*












http://www.brecorder.com/index.php?...&term=&supDate=


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## Neo

Thursday June 22, 2006

ISLAMABAD: In order to end the control of federal government over Water and Power Development Authority (WAPDA) government has finally decided to restructure the department, said Liaqat Ali Jatoi, federal minister for Water and Power. 
Addressing a press conference in his chamber at the parliament house, Jatoi said under its new form Wapda will be run like a private company and the decisions will be taken at local level. Secretary Water and Power, Chairman IRSA and other senior officials of the department were also present on the occasion. 

Mr Jatoi said in order to save land losses and stop misuse of funds more measures would be taken pointing out that last year the land losses were 23.2 percent, which have further dropped down to 21.7 percent. We are also taking steps to bring these losses further down to single digit, he held. 

He also pointed out that black sheep of Wapda are dealt with sternly and so far disciplinary action has been taken against 5733 corrupt officials of the department. No corrupt element will be spared at any cost, he underscored. 

Federal minister also recalled that during last year 15.82 million new electricity connections were provided throughout the country and only Karachi bagged 1.8 million connections from the total figure. 

Liaqat Ali Jatoi said that last year 12200 tubewell connections were given to farmers. This year we had a plan of providing 15000 connections but after detailed discussions it has been decided that 16404 connections would be provided to the countrymen. 

"Under President Gen Pervez MusharrafÃ¢â¬â¢s vision, 9000 villages had been provided electricity last year and by the end of next year every house of the country will have electricity. Under Roshan Pakistan Program 15000 more villages will be provided electricity," he held. 

He also said that with a cost of Rs 9.83 billion 23 new grid stations will be built throughout the country besides expanding the main power transmission line to 609 kilometers. 

The federal minister also pointed out the good performance of NESPAK and National Power Construction CompanyÃ¢â¬â¢s performance as because of their good work Pakistan got a transmission line contract worth 335 million Saudi Riyal and this project will generate job opportunities for 600 Pakistani engineers and thousands of workers. 

Mr Jatoi also said that after the privatisation of Karachi Electric Supply Company (KESC) WAPDA was providing 35 percent electricity to KESC and in order to overcome the electricity shortage in the Ã¢â¬â¢city of lightsÃ¢â¬â¢ 73 percent electricity will be provided to KESC. 

Whereas for the work on Khuzdar Transmission Line for providing alternate energy to Balochistan a sum of Rs 3 billion is being spent, he said. 

He said under Public Sector Development Program Rs 52 billion will be spent on power sector while Rs 40 billion will be spent on water sector. An increase of 35 percent has been made in water and power sector, he held. 

Citing water situation in dams, he said glaciers have started melting and water reservoirs have sufficient amount of water. At present in Tarbela Dam 3.016 MAF water is present and there is no threat of water shortage and per day flow of water in River Indus is 200,000 cusecs. The water stored in reservoirs is sufficient for three months as per our requirement, whereas the work on Mangla Dam upraising project will be completed by next year and it will also provide extra 2.9 MAF water.


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## Neo

_By Mohd. Saleem Shaikh​_

Energy is considered as one of the most important input to economic growth and development. Its consumption is also one of the significant indicators of the level of development of any country.

According to recent reports, developed countries use more energy per unit of economic output and per capita than developing countries. Over a billion people in the industrialised countries use about 60 per cent of the worldÃ¢â¬â¢s total commercial energy supply. Moreover, according to the Economic Survey of Pakistan 2005, about 5 billion people living in the developing countries consume the remaining - with the majority of them being poor. It is estimated that about two billion people around the world have access to modern energy services and, as a result, struggle to meet their basic daily needs.

According to data kept by the US department of energy, PakistanÃ¢â¬â¢s energy consumption has nearly tripled in the last two decades. And the fact given that 7-8 per cent GDP growth per annum is targeted will further push up demand for energy.

Despite its best efforts, the country barely produces about 30 per cent of its required energy. The rest of the needs are met by importing oil which means spending huge amounts from foreign exchange reserves.

Since Washington nearly ruled out any nuclear-specific deal of the kind offered to New Delhi, Islamabad should alternatively consider the possibility of seeking assistance in exploring all sources of energy, especially hydroelectricity, natural gas, coal and solar energy.

According to reports, the countryÃ¢â¬â¢s large potential for hydropower continues to be under-utilised mainly because of the cost of transmitting the power generated in the mountains of the north - where most likely hydropower sites are located - to the urban centres down south. Here, perhaps the US could help with regards to funding and transfer of technology as well. As for the exploration of its sizeable gas reserves, the country would require assistance in expanding its existing reserves, particularly with the growing popularity of CNG as an alternative motor fuel. The option of aid for harnessing solar energy must also be mulled over, especially in view of the climate, which is well suited for this purpose.

Presently, the cost of producing energy and delivering it to the end user remains excessively high. Moreover, a huge amount of the energy is lost because of the transmission and distribution networks being obsolete and in dire need of a complete overhaul.

According to State Bank of PakistanÃ¢â¬â¢s (SBP) second quarterly report for 2006, Pakistan is caught in the grip of severe imbalances in energy demand and supply for the last couple of decades. During the early 1890s, domestic supply of energy was meeting nearly 86 per cent of the total domestic energy demand, while a gap of 14 per cent was being bridged through imports. However, the demand-supply gap set out widening since then and reached to almost 47 per cent by the year 2000.

The energy sector comprises power, gas, petroleum and coal. Oil and gas drilling activity remained slothful in 2003-04 as compared to 2002-03 and, accordingly, 29 exploratory wells and 24 development wells were drilled in 2003-04 as against 32 and 45 in 2002-03.

If energy consumption trends during the last quarter of the last century until now are analysed, oil has been the largest source of the countryÃ¢â¬â¢s energy. Nevertheless, its share in total consumption fell to 32 per cent in 2005, down from 42 per cent in 1980. The share of electricity has also dropped considerably in the total fuel consumption. In a parallel manner, natural gas has grown up to be the most popular source of energy, almost doubling its share in fuel consumption during this period.

Given this perspective for the last 30 years, one notes that energy consumption patterns have drastically changed over time in apparent favour of the natural gas. Energy experts believe the consumersÃ¢â¬â¢ inclination towards natural gas is due to its easy availability and the escalating prices of other fuel sources, especially oil.

According to the SBP report for the lsat quarter of the last year, there have been significant changes in the intra-sector pattern of the energy consumption. Since the inter-sectoral distribution of energy has not changed much, the industrial sector continues to be the largest energy consumer with 58 per cent share followed by the transport sector with a share of 22 per cent.
If the current growth tendency in the energy supply and demand goes on, then energy consumption in the country is estimated to be about 150 MTOE against the current 103 MTOE net supply from indigenous sources by the year 2020.


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## Neo

Therefore, the country would be facing a dearth of 31 per cent of energy in the foreseeable future with grave aftermath on the countryÃ¢â¬â¢s balance of payment position, making it harder for the economy to move any longer on the present growth trajectory, the report warns.

The emerging worrisome energy situation for the country, however, underlines need for effective initiatives for capacity-building to augment the supply of energy from all possible sources, mainly the most neglected energy sources, say, coal.

According to Economic Survey of Pakistan 2005, the coalfield in Sindh province is replete with huge coal resources of 175 billion tons. The huge coal resources can be utilised as an alternative energy resource to meet the countryÃ¢â¬â¢s soaring energy demand.

Moreover, there will be conversion of cement industries to coal and this would generate demand for 2.5 million tons of coal per annum by 2010. In view of anticipated shortfall of electricity and other energy resources during the next 10 years, maximum utilisation of the indigenous coal would be required in power generation and gasification.

Energy experts say in view of the big deficit in electricity and other energy sources during the next 10 years maximum utilisation of coal will be the most appropriate for power generation and gasification. The present share of coal in the overall energy mix is only about 5 per cent, which need to be increased to 25-30 per cent by 2020. It may be noted that in India the share of coal was as high as 54.5 per cent in the total energy mix in 2002. Power generation accounts for about 70 per cent of IndiaÃ¢â¬â¢s total coal consumption. Despite the fact that Indian coal is of poorer quality with low in caloric content and high in ash and located far from major consumption centres, its coal consumption is estimated to increase to 510 million short tons by 2020 from 393 short tons in 2002. China too, is producing more than half of her electricity through thermal power stations run by coal.

In 2003-04, some 11 new discoveries including 4 oil and 7 gas/condenses were made in Pakistan. Average oil production dropped from 64,268 barrels per day in 2002-03 to 61,817 barrels per day in 2003-04, while natural gas production increased to an annual average of 3,295 million cubic feet per day from 2,719 million cubic feet per day in 2002-03 showing an increase of 21.2 per cent.

Incentives given by the government for an investment-friendly environment resulted in Pakistan signing six agreements for US$42 million with various international companies.

Lately, the country has focused on achieving self-sufficiency in food production, meeting rising energy demands, slowing population growth and pushing up economic growth levels and curtailing pollution or other environmental risks.
The experience of the government with Independent Power Producers (IPPs) points to a need for hammering out new polices by keeping long-term scenarios of countryÃ¢â¬â¢s energy needs in mind. Although the 1994 power policy proved helpful in bridging countryÃ¢â¬â¢s much needed power shortages, it fell flat to deliver inexpensive power to the masses.

Electricity tariffs have witnessed an unchecked upward trend since 1994. The bulk power tariff again was a major incentive to attract foreign investment in this sector. However, it proved costly too in the medium-term for the consumers.

As the government moves ahead to further privatise the energy sector in Pakistan under the influence of various international lending agencies, there is a strong need to strengthen the regulatory mechanism in the country. Besides restructuring various government departments, the country needs to lay emphasis on the following initiatives in its future energy strategies:

*** The government must improve the functioning of the state utilities, namely: Water and Power Development Authority (WAPDA) and Karachi Electricity Supply Corporation (KESC).

*** Private and public partnership in exploration of oil, gas and coal reserves in the country should be launched to meet energy demands.

*** New projects should be launched to promote renewable energy resources in Pakistan. Renewable energy resources can prove vital in the electrification of remote areas in the provinces of Balochistan and Sindh, in particular, and in other areas, in general.

*** The government must also actively promote energy efficiency and conservation. A right step in this direction will be the enactment and implementation of laws that promote energy efficiency and conservation at all levels.

Given the mounting demand for energy in the country, both large-scale hydel power projects and nuclear energy are inappropriate to meet future energy needs. The issues attached to large-scale hydel power projects are not environmental and social in nature only. Projects like Kalabagh Dam and other such massive projects have political connotations as well. Any urgency on the part of the government in this regard can cause horrendous damages to the federation of the country.

Alternatively, the government should actively pursue coal, natural gas and renewable energy options in the country to meet future energy demands and at the same time, and also invest in public sector energy projects. The projects should be both in power and other energy sectors. This is important to ensure supply of energy be it natural gas or electricity at cheaper and affordable prices to its consumers.


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## Neo

WASHINGTON (June 24 2006): Ambassador to the US Mahmud Ali Durrani on Thursday said that Pakistan-US Bilateral Investment Treaty (BIT) was nearing finalisation. In his meeting with newsmen at the Pakistan Embassy, he said BIT was under final negotiation.

He said that Secretary Jehangir Bashar was here recently, and "minor apprehensions" on provisions of BIT were going to be overcome "Economic relations will be my focus," the new Ambassador said. "It's time to concentrate on economic co-operation, and development of national economy. "I think, the most strong binder between two countries is business, and money there would be no depth in bilateral relations."

He said "this depth in ties" would be added when Bilateral Investment Treaty was signed and implemented. So that, enhanced co-operation protocols are in place so that, our bilateral business gets a boost, and there are more exports Firstly, he said that we must get a space for exports and secondly it is imperative that our quality and price is competitive. Then, there comes our responsibility and those of our business community, and we need sympathetic consideration by the US authorities. Pakistan and the United States are scheduled to hold a high level meeting of energy co-operation on coming Monday in Washington.

The Pakistan team will be led by Mukhtar Ahmed, Energy Advisor to the Prime Minister of Pakistan, while the US team is to be headed by assistant secretary of state for energy Herbet Dobbs. The other members of Pakistan delegation will be Air Marshal Shahid Hamid, (Retd), chairman, Alternate Energy Development Board and Bilal Raza, director general, Pakistan Hydro Carbon Development Board, besides officials from the Pakistan Embassy dealing with energy issues.

In response to a question, Durrani said, "energy is an engine of progress."

Monday's meeting, he said was significant, both the sides have entered into an energy dialogue, and that Pakistan was seeking help and assistance of the United States in terms of technology-more than anything else and the support of their government to help us interact with their energy private sector."

"To fuel our growth, we need energy and we need their support it is very fundamental for us." Ambassador Durrani said Pakistan was looking for alternate fuel, use of coal to improve technology, to make safe energy out of coal reserves.


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## Neo

KARACHI (June 24 2006): Sindh Governor, Dr Ishrat-ul-Ebad Khan has said that availability of vast investment opportunities is becoming a source of attraction for investors world over. "Both local and foreign investors are showing practical interest due to full attention paid on simplification of rules and regulations as well as infrastructure".

He was talking to a delegation, led by Chairman of Al-Sandoofi Group of Companies, Dubai, Sohail Mohammed Al-Sandoofi, which called on him at Governor House on Friday along with Provincial Fisheries Minister, Fakir Mohammed Jadem Mangrio.

The Governor welcomed the delegation desire for investment in Karachi and interior of Sindh and highlighted the investment opportunities available in the mass transit, dairy farming and other fields. Fakir Jadem Mangrio informed about ongoing projects in the fishing sector and said modern techniques are being promoted in this regard.

Sohail Mohammed Al-Sandoofi said the group intends to make investment of billions of rupees in mass transit and dairy farming in the interior of Sindh. The Governor assured all possible co-operation in this regard and appreciated the efforts of Jadem Mangrio regarding improvement projects in the fishing sector.

Talking to a delegation of Asian Development Bank, Governor Ishrat-ul-Ebad said that provincial government is established with best configuration of urban and rural representation. He informed that government is working on a multi-faceted strategy to reduce rural and urban disparity and improve the living standard of common man.

The Asian Development Bank met the Governor under the leadership of Vice-President, Liqun Jin. The Provincial Advisor Finance, M.A. Jalil, Additional Chief Secretary, Ghulam Sarwar Khehro, Secretary Finance, Malik Israr and other officials were also present on the occasion. The Governor appreciated ADB's role in the development process for Sindh.

Vice-President ADB said Karachi is a mega city and it enjoys great importance in the world. It is an important hub for linkage in Middle, South and East Asia. The Governor and delegation had an exchange of views on development works regarding farm to market connections, water treatment and other fields.


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## Neo

ISLAMABAD (June 24 2006): Foreign Direct Investment (FDI) in Pakistan during July-May 2005-06 soared by 212 percent year-on-year to $3.212 billion and portfolio investment by 122 percent to 313.4 million dollars. However, withdrawal of capital from portfolio investment was on the rise, the State Bank of Pakistan (SBP) said on Friday.

During July-March 2005-06, FDI increased to $3.212 billion from $1.029 billion and portfolio investment to $313.4 million from $141.1 million.

It is worth mentioning that though the FDI swelled enormously, but it was at the cost of privatisation proceeds, which stood at $1.54 billion (half of total FDI). The question is that would the government be able to sustain this inflow without privatisation.

Things are rapidly moving towards a different situation ahead as the Supreme Court of Pakistan has declared the privatisation of Pakistan Steel Mills (PSM) null and void. The move would have a negative impact on the whole privatisation process. This might adversely affect the inflow of foreign direct investment in the future.

However, the notable feature of the data was that during the period under study, foreign investors withdrew about $138 million from portfolio investment.

Therefore, on balance, the total foreign private investment (FDI and portfolio investment) in 11 months increased by 201 percent to $3.525 billion from $1.171 billion of last year.

According to the break-up of investment by region, developed countries made a total investment of 1.517 billion including FDI $1.265 billion and portfolio investment of $253 million. The developing economies invested $1.88 billion (FDI $1.818 billion and $64.4 million portfolio investment).

Among developed countries, Western Europe made a total investment (FDI and Portfolio) of $695.3 million and European Union, $285.9 million against $422 million and $265 million in corresponding period last fiscal.

Besides, under unspecified head (investment by IFIs) was $124.4 million. This includes FDI of $128.5 million while in portfolio, it withdrew $4.1 million investment.

Among developing economies, Caribbean Islands invested $10.7 million in FDI and withdrew $9.4 million portfolio investment during the period under review. Africa, including Libya, Egypt, Mauritius, South Africa and other African countries invested $71.4 million.

Asian countries (west Asia, south, East and south East Asia) made total investment of $1.81 billion including $1.729 billion FDI and $76.3 million portfolio investment.

The break-up of investment further shows that United Arab Emirates (UAE) was the biggest investor in Pakistan totalling $1.415 billion with $1.357 billion FDI and $58 million portfolio investment, respectively.

United States was next with total investment of $744.6 million, including FDI of $451.4 million and portfolio investment of 293.3 million dollars. However, in terms of direct investment, Saudi Arabia was third ($275 million) following Norway with $248.6 million and Switzerland with 166.4 million dollars.

A significant feature of the data is that US portfolio investment during the period showed a high growth, it grew to $293.3 million from $30.8 million of the corresponding period last year, however, compared to previous months it is sharply declining.

Saudi Arabia's direct investment during the first 11 months of this fiscal jumped to $275.3 million, as it was only $15.3 million in corresponding period of last year.

Direct investment from UK slightly moved up to $166.4 million as against $164.1million of last year. While, it withdrew worth $22.2 million from portfolio investment against withdrawal of $9.5 million in the same period of last year.

FDI inflow from Netherlands increased by 164 percent to $91.1 million against $34.5 million in corresponding period last year. Its portfolio investment decreased considerably to minus 0.9 million as last fiscal it was 24.9 million dollars.

The United Arab Emirates (UAE) portfolio investment doubled to $58 million as against $49.2 million in corresponding period of last year.

It is pertinent to note that by end June 2004-05, total investment inflow had crossed $1.67 billion mark as against $0.921 billion in 2003-04. However, for the current fiscal year there was hope of further improvement in foreign investment, especially with better macro-economic indicators and infrastructure.

The government expects that the foreign investment in Pakistan is likely to cross $4 billion mark by end of this fiscal year. The rising trend of investment inflow since the beginning of this year also endorses the government's claim.

A significant feature of the data was that besides FDI, y-on-y basis inflow of portfolio investment increased enormously. It followed steep path right from the beginning of the new fiscal year.

However, the weak point of the data released by the State Bank was that, this time it has not given month-wise inflow of investment which does not show the extensive trend of the inflows.

Independent experts believe that the current inflow of foreign investment was not satisfactory taking into account the other countries of the region. During the last 15 years, Pakistan attracted nearly $10 billion, whereas it was $1.67 billion in 2004-05.

FDI in India since the onset of the liberalisation process was $36.28 billion (up to November 2005). During 2005-06 (April-November 2005), FDI inflows were $3.36 billion as compared to $2.25 billion during the corresponding period for the previous year.

China's FDI-led growth was a strong indicator where FDI inflows since 1978 totalled over one trillion dollars with $153 billion in 2004 alone.

It is worth mentioning that foreign investors are in direct control of their investment funds, also transfers in the latest technology and modern management practices resulted in economic gains largely from efficient, effective and economic utilisation of the funds.

While the present economic managers boast of over $1 billion FDI during the last fiscal year, the reality is that given the prevalence of poverty and unemployment, this is too negligible an amount to have had a worthwhile impact on our economy.


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## Neo

KARACHI (June 24 2006): The British Deputy High Commission in Karachi has assured its support to the Ecommerce Gateway for the events scheduled for August and September. This was announced by the President of the Ecommerce Gateway Pakistan, Dr Khurshid Nizam, here on Friday.

He said that there will be a British pavilion at the 6th ITCN Asia, third Health Asia, Second Build Asia, Second Food, Agriculture and Livestock Asia 2006 International exhibitions scheduled to be organised in August and September this year by the Ecommerce Gateway Pakistan.

The statement further pointed out that the British Deputy High Commissioner in Karachi, Hamish Daniel, expressed full support to form `British Pavilion' at these events.

He also expressed utmost desire to promote and circulate information of these international exhibitions to potential British entrepreneurs and leading companies through the electronic sales-lead system of British Deputy High Commission (BDHC).

He also assured co-operation with Ecommerce Gateway Pakistan to promote a good image of Pakistan in the international business community to make stronger economic co-operation between Britain and Pakistan.

The authorities in Britain are encouraging companies to increase trade ties with Pakistan, as changing political and economic conditions in Pakistan demand that on merit.

The statement said that the events are being organised in August and September at Karachi Expo Centre by Ecommerce Gateway Pakistan and Jamal's Yellow Pages of Pakistan with the support from Ministry of Privatisation and Investment, Ministry of IT and Telecom, Ministry of Health, Ministry of Housing and Works, Ministry of Communications, Ministry of Food, Agriculture and Livestock and Islamic Chamber of Commerce and Industry.


----------



## Neo

BEIJING (June 24 2006): A Chinese company has offered to undertake ferry service along 1,100-kilometre-long coastal region in Pakistan, bringing attraction for tourists.

The negotiation to this effect is in progress to operate the ferry service between Jiwani and Gadani, said provincial Minister for Tourism and chief of Gwadar Development Authority Syed Sher Jan Baloch, in an interview with APP here on Friday. The ferry service will provide a link between Karachi and the Gulf region, including Iran.

This project will be highly significant to develop communication network with the Gwadar seaport and generate enormous socio-economic benefits for the local people. The central government, he said, was providing maximum possible financial support to the province, developing the highly rich coastal region.

About the Gwadar seaport, Sher Jan Baloch said that its first phase had almost been completed. It would become fully functional after the inauguration, hopefully within the next three months.

Several countries, including China, the United Arab Emirates (UAE), Saudi Arabia and Singapore had shown interest in the port's operation, he said, adding an oil refinery project at the port's site was also under negotiation with the Chinese government.

The port comprises three berths with lengths of 602-metre, 4.5-kilometre dredged to 11.5-metre to 12.5-metre as well as one 100-metre service birth and related port infrastructure and port handling equipment, including pilot boat, tugs, survey vessel, etc.

The government, he said, also planned to establish a special economic zone to make Gwadar a hub of economic and industrial activities. About the 653-kilometre-long Makran Coastal Highway, he said this project was of great significance that would provide direct approach to Gwadar and other small ports.

The 248-kilometre-long Lyari-Ormara section of the Makran Coastal Highway and the work on Gwadar-Pasni section had also been completed, he added. About the Mirani dam, Sher Jan Baloch said it would be inaugurated for operation by September this year.

To a question regarding the second phase of Gwadar port, he said feasibility work to had already been initiated. To be built on BOO/BOT basis, the estimated cost of the second phase was about 600 million dollars, he said, and added it would comprise nine additional berths, including four container berths, one bulk cargo terminal to handle 10O,000 DWT ships, one grain terminal, one Ro-Ro terminal and two oil terminals to handle 200,000 DWT ships.

He lauded the Chinese support for the development of the coastal region, and said the Chinese engineers and workers were being provided complete security.

The minister said that a small anti-development group in Balochistan had failed to cause any harm to the ongoing projects. The development projects had turned the coastal areas into most prosperous parts in the country.

President Pervez Musharraf and Prime Minister Shaukat Aziz were taking personal interest to remove the economic deprivation and hardship that the people of the province had been facing for the last 57 years, he added.


----------



## Neo

WASHINGTON, June 23: Pakistan needs to take immediate steps to meet, what some speakers at a seminar in Washington on Friday described as a Ã¢â¬Ålooming energy crisis,Ã¢â¬Â but the focus has to be on developing sustainable sources of energy, said Mukhtar Ahmed, energy adviser to the prime minister.

The first session of this day-long seminar on Ã¢â¬ËFuelling the Future: Meeting Pakistan's Energy Needs in the 21st CenturyÃ¢â¬Â focused on defining the challenges confronting the country.

Mr Ahmed set the agenda for the discussion with a thought-provoking, 30-minute presentation, in which he acknowledged that the country was facing an energy crisis but the government was already taking steps to deal with it.

Ã¢â¬ÅNot to react to the crisis situation will be imprudent, but we are also looking at energy sector development on a sustainable basis,Ã¢â¬Â he said.

In the new strategy, he said, the government looks after the policy, the regulatory commission oversees regulation while the private sector is involved in implementation.

Mr Ahmed is in Washington for energy talks with the US administration which begin on Monday. Energy Secretary Samuel Bodman will lead the US side in the talks that follow an initiative announced during President BushÃ¢â¬â¢s visit to Pakistan in March this year.

Responding to a suggestion from one of the speakers at WashingtonÃ¢â¬â¢s Woodrow Wilson Centre, Mr Ahmed said although the country has the worldÃ¢â¬â¢s 8th largest reserve of coal, most of it was in inaccessible areas and cannot be utilised in the near future, he said.

He said that Pakistan also had the potential to produce hydro energy at a large-scale but political and technical constraints were delaying this as well.

While the country develops these sustainable sources of energy, Ã¢â¬Åthere has to be an infusion of imported energy to meet immediate needs,Ã¢â¬Â he added.

Mr Ahmed said that Pakistan was already negotiating various projects with countries like Iran, Turkmenistan and Qatar to import gas and was also looking at the possibility of importing electricity from Central Asia.

The country, he said, was spending a disproportionate amount on importing oil, and Ã¢â¬Åcannot afford to have millions and millions of cars floating around the country.Ã¢â¬Â

Mr Ahmed said that although environmentally benign technology for the production of energy was 20 to 30pc more expensive than regular technology, Pakistan was Ã¢â¬Åactively thinking of going for environment friendly options.Ã¢â¬Â

To ensure transparency, he said, energy sector projects will be run by independent board of directors who would be required to implement transparency mechanism.

Pakistan, he said, was developing wind, bio and solar energy sources and had an active programme for producing wind-powered energy in Sindh.

Shahid Javed Burki, a former finance minister and World Bank official, said he was not sure if the investment needed to implement these projects was available. Ã¢â¬ÅWith relatively low-level of investment, it will not be possible to generate the kind of resources needed to produce the kind of energy we want to,Ã¢â¬Â he said.

Mr Burki said the government was putting out a passive approach, reacting to the demands generated by a rapidly restructuring economyÃ¢â¬Â rather than working on a sustainable, long-term approach.

Robert Looney of the US Naval Postgraduate School spoke on Ã¢â¬Ëalternative energy and development scenarios in Pakistan to the year 2035, stressing the importance of scenario planning.

Bikash Pandey of Winrock International spoke on clean energy options for rural Pakistan: Lessons from South Asia, noting that half the country was not linked to the national grid. He underscored the need for developing renewable energy for the rural areas, and urged the government to ensure Ã¢â¬Åequity in access.Ã¢â¬Â


----------



## Neo

Saturday, June 24, 2006 


KARACHI: The country received an all-time high foreign direct investment (FDI) of $3.525 billion up by 201 percent in July-May 2005-06 compared with $1.171 billion received in 11 months of last fiscal.

The FDI received include privatization proceeds of $1.538 billion against the sell-off of government entities, including Pakistan Telecommunication Company (PTCL), Pakistan Steel Mill (PSM) and others.

Ã¢â¬ÅTotal FDI may touch $3.6 to $3.7 billion by the end of this fiscal,Ã¢â¬Â said Mohammad Sohail, director research and equity at Jahangir Siddiqui and Co. The government has set an FDI target of $4 billion for the next fiscal, he added. 

The central bank has received FDI of $3.212 billion in 11 months, while the bourses received portfolio investment of $313 million, data released by the State Bank of Pakistan (SBP) said here on Friday.

The analysts said the government has achieved full year FDI target of $3 billion in the current fiscal and if the privatization of PSO, PPL and other government entities continued in the next fiscal year, the government could achieve $4 billion target easily.

A senior banker said: Ã¢â¬ÅThe countryÃ¢â¬â¢s reserve are stuck at $13 billion despite the huge inflows on account of the FDI, privatization proceeds and earthquake relief fund. 

Ã¢â¬ÅThe country received a portfolio investment of $313 million up by 122 percent compared with $141 received in the same period last year. The FDI received from the United Arab Emirates stood at $1.357 billion, including $1.184 billion from the privatization proceeds, United States $451.4 million, Norway $248 million, Switzerland $166.4 million and Saudi Arabia $275 million.

The portfolio investments during the last few months have been on the declining at the local bourses. Investments have been declining since March this year.

Ã¢â¬ÅThe main reason for the declining portfolio investment is the rising interest rate in the money market globally,Ã¢â¬Â an analyst said. 

The investment in the local bourses stood at $293 million from the United States, $58 million from the United Arab Emirates and $33.8 million from Asian countries.

The SBP data shows that most countries pulled back their investment from the local bourses, including the European union, Western Europe, Bahrain, etc.

The local bourses are receiving an average inflow of $40 - $50 million per month, the analyst said.

The countryÃ¢â¬â¢s reserves now stand at $13.05 billion, equivalent to only three monthsÃ¢â¬â¢ import bills. 

The overseas Pakistanis remitted an amount of $3.809 billion to the country during 11 months of the current fiscal.

The countryÃ¢â¬â¢s trade deficit has gone up to $10.636 billion in the said period of the current fiscal, which is an alarming situation.


----------



## sigatoka

Neo said:


> The countryÃ¢â¬â¢s trade deficit has gone up to $10.636 billion in the said period of the current fiscal, which is an alarming situation.


 
I wonder what Current account deficit is which is more important statistic than the trade deficit.


----------



## Neo

sigatoka said:


> I wonder what Current account deficit is which is more important statistic than the trade deficit.


 
Sig,

CAD has been fluctuating between 4-5% for last two years. Its supposed to be around 4.7% now.



> *Current account deficit may rise to 4.7 percent of GDP*
> 
> KARACHI (April 20 2006): The country's current account deficit is expected to swell to 4.7 percent of GDP by the end of fiscal year 2005-06. According to State Bank of Pakistan (SBP) Second Quarterly Report for 2005-06, released on Wednesday, although the projected current deficit is not low but is quite sustainable in the short run.
> 
> In the longer run, however, large current account deficits cannot be sustained, as that would initiate a vicious circle of debt creation, exchange rate deprecation and inflation, the report noted.
> 
> According to the report, the current account deficit posted a deficit of $3.4 billion during July-January 06, worsening sharply from $0.96 billion in corresponding period of last year. More than 80 percent of this $2.4 billion increase in current account deficit stemmed from a steep $2.2 billion Y-o-Y rise in trade deficit during July-January 2006. However, this substantial deterioration of $2.4 billion was more than offset by a significant increase in the capital & financial account surplus, the report added.
> 
> The State Bank attributed this sharp deterioration in the current account principally to higher imports-related activities, including an exceptional 31 percent Y-o-Y rise in imports during July-January fiscal year 2006 (based on exchange record), which overshadowed a reasonably strong 13 percent YoY growth in exports and higher import freight payments, which increased the services account deficit.
> 
> The growth in imports, and therefore the current account deficit, could not be easily contained. Data suggests that much of the growth in imports comprised capital goods for input for industries, curtailing of which would directly have resulted in significant fall in economic activities, the SBP noted.
> 
> Moreover, further growth in imports was inevitable for the developing economy of Pakistan, particularly as it seeks to address infrastructural shortcomings, the report pointed out.
> 
> While mentioning that large current account deficit can be sustained in FY 06, the report said that some hard choice would have to be made in future years if it continued to persist.
> 
> The SBP suggested that a medium to long term policy options must therefore revolve around reducing the need for imports eg reducing energy imports by promoting energy efficiency and raising domestic production, promoting exports, and attracting non-debt creating flows (eg FDI).
> 
> Although the current account deficits could also be financed through a mix of privatisation receipts and higher debt or a draw-down of reserves, but these are less desirable options, it added.


 
http://www.brecorder.com/index.php?id=412794&currPageNo=1&query=&search=&term=&supDate=


----------



## sigatoka

Neo said:


> Sig,
> 
> CAD has been fluctuating between 4-5% for last two years. Its supposted to be around 4.7% now.


 
So it seems the report says that a lot of it is due to capital machinery imports by the private sector. 

There is nothing wrong with this like the report says. However its recommendation that in future it suggests expenditure switching to reduce the deficit doesnt seem to be too smart. 

It would be better that in future the government reduced its budget deficit and thus reduce foreign borrowings. If this doenst solve the CAD problem the government could introduce forced national savings scheme in the form of superannuation contribution. (such as Singapore, and Aust & NZ) this will reduce imports as people disposable incomes are reduced.


----------



## Neo

sigatoka said:


> So it seems the report says that a lot of it is due to capital machinery imports by the private sector.
> 
> There is nothing wrong with this like the report says. However its recommendation that in future it suggests expenditure switching to reduce the deficit doesnt seem to be too smart.
> 
> It would be better that in future the government reduced its budget deficit and thus reduce foreign borrowings. If this doenst solve the CAD problem the government could introduce forced national savings scheme in the form of superannuation contribution. (such as Singapore, and Aust & NZ) this will reduce imports as people disposable incomes are reduced.


 
You're right, CAD has to be reduced, even WB and IMF have shown concern about the current situation.
Can this be solved by issueing Eurobonds again like we did couple of months ago to raise $1 billion?


----------



## sigatoka

Neo said:


> You're right, CAD has to be reduced, even WB and IMF have shown concern about the current situation.
> Can this be solved by issueing Eurobonds again like we did couple of months ago to raise $1 billion?


 
I dont understand? issueing Eurobonds is increasing borrowings which means the CAD is increasing. 

Remember, increasing CAD means net borrowings by nation, Decreasing CAD means means reduction in borrowings. 

Net lending will show up as Current Account surplus.


----------



## Neo

What I meant is that immidiate decrease in imports of heavy machinery is unlikely due high demand in a rubust economy, imports are liekly to grow next year hence increase in CAD.


----------



## sigatoka

"Can this be solved by issueing Eurobonds again like we did couple of months ago to raise $1 billion?"

What do u mean by that? 

"What I meant is that immidiate decrease in imports of heavy machinery is unlikely due high demand in a rubust economy, imports are liekly to grow next year hence increase in CAD."

Yeah, thats true. Its very unusual for robust growth to occur with Current account surplus.


----------



## Neo

Correct me if I'm wrong but according to what I read is that a part of the Eurobond was sold domestically creating Governemts domestic debt which is not calculated in CAD.
Is this correct??
I was hoping you could explain so I asked the question. :what1:


----------



## Neo

ISLAMABAD (updated on: June 25, 2006, 01:08 PST): Prime Minister Shaukat Aziz on Saturday said the government's policy of deregulating the telecom sector has resulted in record high expansion and massive investment in the sector.

"Today, Pakistan has 32 million mobile phone subscribers and 20 percent teledensity which is highest in the region," he said.

The prime minister was talking to Sheikh Adil Almisehal, who called on him here at the PM House this evening.

Almisehal, a Saudi Arabia based company is one of the three shareholders of Wah Nabel, which is running three companies in Pakistan.

The prime minister said Pakistan owing to its investment-friendly policies, the level playing field provided to the investors and the reduced costs of doing business, is fast becoming a destination of choice for foreign investors, as the Foreign Direct Investment (FDI) is expected to reach $3.5 billion by the end of current fiscal year, highest in the country's history.

He said that the increased inflow of investments is driven by the wide-ranging structural reforms, sustained economic growth and consistency and continuity of the government policies.

The prime minister said the driving principals behind the reform agenda were deregulation, liberalisation and privatisation. These coupled with transparency are the hallmarks of the government polices, he added.

He emphasised the need for public private partnerships and said the role of government is to open the doors of opportunity and create an atmosphere, which ensures ease of doing business.

"The investors are our growth partners and the government is facilitating investments which will lead to more job opportunities, technology up-gradation and more exports from Pakistan", the prime minister said.

Sheikh Adil Almisehal, on the occasion, said Pakistan because of its economic landscape offers great opportunities to foreign investors.

He said his company is satisfied with the performance of its business and is planning to expand its area of operations.

He said Saudi Almisehal Group will be investing in telecom, engineering, communication, ship building and construction sectors in Pakistan.


----------



## Neo

QUETTA (updated on: June 25, 2006, 01:10 PST): Balochistan governor Owais Ahmed Ghani on Saturday said the survey on rail and road projects to link Gwadar with Afghanistan and Central Asian Republics (CARs) has been completed and the work on the projects would soon be launched.

Talking to a delegation of Chaman Chamber of Commerce and Industry, who called on him here, he said the government is taking concrete measures to promote legal trade with the neighbouring countries and to provide the traders with maximum facilities.

"The construction of Chaman border terminal by National Logistic Cell has already been started and its completion will resolve the traders problems to a great extent besides promoting international trade," he said.

Chaman would gain much importance in future in the perspective of construction of Gwadar port and trade with Central Asian states, he said, and maintained a project to make the border town a modern and model city is also under consideration, he added.

The delegation, on the occasion, informed the governor about their problems and requested him for establishment of export processing zone in Chaman besides provision of warehouse and cold storage facilities.


----------



## Neo

LAHORE (updated on: June 25, 2006, 01:11 PST): Advisor to Prime Minister on Finance, Dr. Salman Shah on Saturday urged Small and Medium businesses (SMEs) to adopt Information technology tools in their operations in a bid to become competitive.

"The competition at international level is becoming more stiff every day; SMEs should adopt business software solutions to get in line with international trends," he said while speaking at the launching ceremony of SAP Business One Solution software at a local hotel.

Dr. Salman Shah said the adoption of managerial excellence and good governance by the SMEs could give a new strength to Pakistan's industrial sector in particular and national economy in general.

"The difference between leaders and lagers in Pakistan's industry was on the basis of governance, management and procedures," he said.

Dr. Salman Shah hoped that SAP business software would help the SMEs to overcome their problems.

He congratulated AbacusConsulting on entering into a strategic alliance with SAP and hoped that these two firms together would make a positive contribution to Pakistan's corporate sector and the growth of economy.

Managing Director SAP, Eric McDonald said that SMEs were playing an important role in the economic development of the country.

He said induction of new IT tools could help SMEs become more competitive and efficient.


----------



## Neo

Saturday June 24, 2006 

RAWALPINDI: President General Pervez Musharraf and Prime Minister Shaukat Aziz on Friday expressed their commitment to developing marble and granite reserves, specially for the socio-economic uplift of the people in the under-development areas endowed with these resources. 
Speaking at a meeting on development of marble and granite reserves, President Musharraf said that the government would encourage exploitation of these recourses for the benefit of the local people "The development of these recourses would not only add to the volume of annual exports but also contribute meaningfully to socio-economic progress of people at grass roots level as they would acquire skills for better jobs in marble industry" he underlined. 

PakistanÃ¢â¬â¢s annual exports of marble and granite stands at US dollars 21 million, which could be increased manifold in the years ahead. 

Speaking on the occasion, Prime Minister Shaukat Aziz said that the government is resolved to bringing the people of far-flung areas into the mainstream of economic development. 

The government has set up Pakistan stone development company, as an affiliate of Pakistan industrial development corporation which has been tasked to established five marble cities, warehouses, and train the local people for proper utilization of these reserves. 

Later, Minister for Industries and Special Initiative Jahangir Khan Tareen, told media persons that the federal government and the provinces would collaborate to ensure ownership of the projects at local level.


----------



## Neo

Saturday, June 24, 2006 

ISLAMABAD: The government is committed to reducing the population growth rate from 1.8 percent to 1.3 percent by 2020 to ensure that benefits of the economic growth reach the common man, Prime Minister Shaukat Aziz told the International Group on Population and Development during a meeting at Prime MinisterÃ¢â¬â¢s House on Friday. Duff Gillespie, senior scholar at the Gates Institute in the United States, led the group. Later, local legislators and a delegation from the Muslim Council of Britain, led by its Secretary General Sir Iqbal Sacranie, also called on the prime minister and discussed various issues with him.


----------



## Neo

sigatoka said:


> "Can this be solved by issueing Eurobonds again like we did couple of months ago to raise $1 billion?"
> 
> What do u mean by that?
> 
> "What I meant is that immidiate decrease in imports of heavy machinery is unlikely due high demand in a rubust economy, imports are liekly to grow next year hence increase in CAD."
> 
> Yeah, thats true. Its very unusual for robust growth to occur with Current account surplus.


 
Sig,

Can you please activate your Pravate Messaging option?

Thanks,

Neo


----------



## sigatoka

Neo said:


> Correct me if I'm wrong but according to what I read is that a part of the Eurobond was sold domestically creating Governemts domestic debt which is not calculated in CAD.
> Is this correct??
> I was hoping you could explain so I asked the question. :what1:


 
A Euro bond is a debt denominated in Euros. So I think yes that you indeed may be right, it is possible for locals to purchase Pak. Euro Bonds. 

Government borrowing from locals does not factor in the CAD. (If the borrowings is in Euro's then both parties undertake exchange rate risk, but this doesnt affect the nation becaue what one party loses with the nation, the other gains.)

However there is a little catch, Government increasing local borrowings for fiscal stimulus can raise the domestic interest abov world rates, which leads to capital inflows, which leads to currency appreciation, which can lead to higher imports and lower exports and therefore can affect the CAD in a roundabout way. (The IS-LM-BP model.) This however is assuming flexible exchange rate, Pak. follows hybrid which means it does allow some exchange rate movement but the central bank acts against strong movemtns.)

Also even ignoring trade and exchange rates, domestic borrowings by Govt. while not contributing to CAD can infact not be very effective because it can squeeze out private investment. (Using AD-AS model, assuming AS curve slopes upward & becomes vertical and AD cut across the vertical portion.) Govt. borrows from the same pool that local businesses do, and it raises interest rates such that the increase in government borrowings raises interest rates such that investment goes down by such an amount that there is no economic change in output.


----------



## sigatoka

Neo said:


> Sig,
> 
> Can you please activate your Pravate Messaging option?
> 
> Thanks,
> 
> Neo


 
Dont know how to.


----------



## Neo

sigatoka said:


> A Euro bond is a debt denominated in Euros. So I think yes that you indeed may be right, it is possible for locals to purchase Pak. Euro Bonds.
> 
> Government borrowing from locals does not factor in the CAD. (If the borrowings is in Euro's then both parties undertake exchange rate risk, but this doesnt affect the nation becaue what one party loses with the nation, the other gains.)
> 
> However there is a little catch, Government increasing local borrowings for fiscal stimulus can raise the domestic interest abov world rates, which leads to capital inflows, which leads to currency appreciation, which can lead to higher imports and lower exports and therefore can affect the CAD in a roundabout way. (The IS-LM-BP model.) This however is assuming flexible exchange rate, Pak. follows hybrid which means it does allow some exchange rate movement but the central bank acts against strong movemtns.)
> 
> Also even ignoring trade and exchange rates, domestic borrowings by Govt. while not contributing to CAD can infact not be very effective because it can squeeze out private investment. (Using AD-AS model, assuming AS curve slopes upward & becomes vertical and AD cut across the vertical portion.) Govt. borrows from the same pool that local businesses do, and it raises interest rates such that the increase in government borrowings raises interest rates such that investment goes down by such an amount that there is no economic change in output.


 
Thats the answer I was hoping for, we share same opinion.
Tnanks!


----------



## Neo

sigatoka said:


> Dont know how to.


 
I'll send you instructions later today.


----------



## Neo

ISLAMABAD (June 25 2006): The World Bank (WB) has asked the government to liberalise the insurance industry through reforms in line with the banking sector, official sources told Business Recorder.

"Insurance penetration is very low, relative to other countries, at Pakistan's income level which requires further consolidation and liberalisation of the industry," sources quoted the bank's mission on Implementation Completion Report (ICR) as saying.

"The WB is of the view that the county's banking sector has gone through beneficial structural reforms, but the rest of the financial sector has not been subjected to reform process to the same extent."

The mission also met with the stakeholders in the private sectors including senior bankers in private and foreign banks, besides the Islamabad-based representatives of Asian Development Bank (ADB), International Monetary Fund (IMF) and the World Bank to discuss financial sector reforms.

The ICR mission said that there was general consensus that privatisation of the banking sector had been a success and they were happy the way privatisation had improved the performance of the banks after sell-off. As the financial practices in Pakistan have became more complex, there is a consensus that the human capital is not available to meet the requirements of financial sector.

They said that privatisation of public sector banks had enhanced the need for effective top management, and added that skill should be improved, especially in assessing the risk of consumers.

"There is also a general recognition of the need to develop the capital market and it is felt that current debt market is not very deep and effective. The practitioners expressed the need to develop this market further, especially the corporate bond and commercial paper market," sources quoted the mission as saying in the report.

Furthermore, it was felt that there was limited rationale for having a state-owned commercial bank and that one should work towards removing unfair advantage in terms of any tied-in business from the government. The stakeholders were also of the view that Pakistan was now in great need of an effective export credit agency.

Giving the background of loan, the report said that the proceeds/credit for the Banking Sector Development Policy Credit (BSDPC) were disbursed in record short time. The legal agreements were signed in January 13,2005 and the project was declared effective from January 18,2005. The bank obtained withdrawal applications for SDR 65 million and $200 under the credit and loan respectively on January 18 and funds were disbursed on January 20. The State Bank of Pakistan (SBP) received the funds on January 24 and credited the money to the consolidated account of the GoP the same day.


----------



## Neo

WASHINGTON (June 25 2006): The Adviser to Prime Minister on Energy, Mukhtar Ahmed, on Friday said Pakistan was 'moving ahead' with implementation of gas pipeline projects, import of LNG and import of power from Central Asia.

At the domestic levels, he said the government was determined to develop Thar coal while 'some movement is in place' on going ahead with five mega projects for hydel power generation, which would considerably enhance comparatively cheaper electric power resource.

Mukhtar Ahmed stated this while responding to questions at a day-long conference on 'Meeting Pakistan's Energy Needs in the 21st Century,' held under the aegis of the Asia Society at the Woodrow Wilson Centre for Scholars.

The conference was attended by experts, scholars and officials, and the consensus was that the blue print of the government's policy response was right, and let it be implemented.

Mukhtar Ahmed was the keynote speaker, who presented Pakistan's case for energy needs, with facts and figures and a power point presentation, followed by question-answer session. The conference had three sessions. He explained key elements of the policy response of the country to meet the energy requirements of an expanding economy, which had registered 8.4 and 6.5 percent growth rate during the past two years.

He said the key elements of an action plan to meet the energy requirements of the country in the long-term, to balance the risks associated with rising world energy prices and protect the economy against uncertainties in development of domestic resource base.

The adviser said the implementation of gas pipeline projects, LNG projects and projects for import of electricity from Central Asia was being pursued 'on a fast track basis'. He said the government expects the private sector and the foreign direct investment (FDI) to play a central role in development of the energy sector in the country.

Mukhtar Ahmed said production of oil and gas in the country is expected to improve slightly in the near term, but decline in the long-run, given the current onshore exploration activities and resource outlook, and a low likelihood of a major offshore discovery. Availability of coal, hydel, nuclear and renewable energy, he said, is projected to improve significantly in line with current resource development plans.

The availability of energy from these sources, however, will not be enough to meet the growing demand of the economy, he said, adding the energy deficit which stands at 15 MTOE (million tons oil equivalent) or 28 percent of the energy demand presently will increase to 122 MTOE by 2025, corresponding to 62 percent of the demand.

This outlook, he said, clearly indicates a need to place development of the indigenous resource base on a high priority, followed by long-term arrangements to acquire energy from external sources that are affordable and reliable.

Mukhtar Ahmed said as far as Turkmenistan was concerned, it was the gas availability factor, and transmission. "I have looked at numbers, which indicate that there is enough gas in the ground to support a 30 year project for Pakistan and India", he added.

The adviser said: "We have been assured in writing by Turkmenistan that the required amount of gas would be made available, so, now, gas availability is assured." "We have other issues to deal with, say for instance, transit issue. We recognise that many things need to be put in place. So, it is alive, and hopefully, someday, it will happen," he said on Turkmenistan project.

"We are in active discussion with Iran and Turkmenistan, while the Qatar alternative is on backburner, in a sense, because Qataris have told us that most of their gas is committed, and that they don't have gas for a 30 year commitment. These three things are under consideration. Some more active than others", he said.

He said Pakistan was also looking at power import in the country from Central Asia, adding: "We are looking at Tajikstan and Kyrghyzstan, as two possible sources of power.

The gas pipeline import project could deliver energy at competitive prices to meet energy requirements in residential sector and industrial sector. "So, this is an option that is being actively pursued." Responding to some of the points raised by the speakers, the adviser said the government was encouraging the private sector for investments.

He said the government following a two-pronged approach, "we are reacting, but at the same time, we are proactive, adding: "We are looking ahead, and development of energy sector on a sustainable track."

To a point, he said Pakistan was also supportive of regional co-operation at Saarc level in the energy sector, and added that "a lot of lessons" could be learnt, say for instance, from Bangladesh rural electrification programme."

Mukhtar Ahmed said Pakistan was giving due importance to biomass, which is a significant player in energy development. "We have announced plans about wind mills, while it believes in renewable energy resources." To a point, he said Pakistan already imported coal from Australia and Indonesia, while India is a potential source for coal.

In rural areas, which have access to agricultural waste like rice-husk the government was trying to promote use of that biomass for power generation. In urban centres, the government was moving towards utilisation of municipal waste for power generation. So, that is a two-pronged approach.

Solar power, he said, was again something the government was looking at in the context of rural electrification, adding: "We are trying to mainstream the energy." About nuclear energy, he said it was barely meeting one percent of energy requirements of Pakistan. On infrastructure, he said Pakistan has a well developed infrastructure for energy.

The gas transmission infrastructure connects to 4.26 million households and commercial establishments in addition to bulk of the industries and thermal power generating units in the country, and includes 9,060 km of high pressure transmission pipelines and over 225,000 HP of compression capacity. The power transmission and distribution network serves over 16.3 million residential and commercial and 0.23 million industrial customers, and includes 40,500 km of high voltage transmission lines.


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## Neo

ISLAMABAD, Jun 23: Underlining the importance of a strong and well-functioning financial and banking sector for sustained higher economic growth, Prime Minister Shaukat Aziz on Friday said the banking industry in Pakistan, which had been transformed from the state-owned sector into a vibrant private sector industry, had not only gained strength from the positive interplay of economic and political factors, but had also become an engine of growth for the economy.

The prime minister was talking to Niall Booker, regional head for Middle East of HSBC, who called on him here at the Prime Minister's House.

Mr Aziz said Pakistan, with its growing market, strong economy and an emerging middle class, offered immense opportunities for business and investments.

Niall Booker said HSBC was impressed by the economic turnaround achieved by Pakistan and had decided to open more branches and expand their area of business in Pakistan. He said HSBC had opened one branch in Islamabad and would be opening one each in Karachi and Faisalabad.

The prime minister said as a result of the economic and structural reforms, the economic landscape of Pakistan had changed altogether, adding that Pakistan's economy exhibited solid economic growth in 2005-06 despite the surge in oil prices and the devastating earthquake of October 8, 2005.

The prime minister said increase in per capita income to $847 and sharp pickup in overall investment were reaching new heights, adding that private sector investments were buoyant and a robust consumer spending was ably supporting the ongoing growth momentum.

Ã¢â¬ÅEnergy consumption continues to rise at a greater pace reflecting strong buoyancy in the economy,Ã¢â¬Â Mr Aziz added.

Referring to various reforms, the prime minister particularly mentioned the Fiscal Responsibility Law as an important step taken by the government to maintain fiscal discipline by putting restriction on borrowing beyond a certain point.

Mr Booker said his bank was satisfied with the level of ease of doing business in Pakistan. He also appreciated the quality of human capital available in the country and added that addition to opening more branches in Pakistan, the bank is also expending its areas of business. He said from the corporate sector, the bank would be moving on SMEs and other areas, including Islamic finance.


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## Neo

Sunday, June 25, 2006 

LAHORE: The country's citrus export has enhanced to 200,000 tonnes earning an estimated $45 million foreign exchange during the year 2005-06, while various steps are being taken to increase fruit and vegetable exports.

The steps include provision of facilities and searching for new markets for Pakistan's produce. This was observed at a meeting of Agricultural Marketing held Saturday to review export facilities for perishable products.

The meeting was apprised that 281,256,000 kg fruit was exported in the year 2004-05, earning foreign exchange of US$90 million, whereas 170,921,000 kg vegetables worth $50 million dollars were exported. 

According to a handout, a comprehensive strategy has been chalked out to increase the export of fruit, vegetables and flowers. 

A modernized Citrus Resource Centre is being set up in Bhalwal to improve the storage system of this produce so as to encourage exports.

The infrastructure of 30 fruit and vegetable markets is being improved and development work is being carried out at a cost of Rs 1.19 billion in market committees of the province.

The marketing process will also be improved to boost the export of flowers. 

Fruit and vegetable markets and market committees of the province will be computerized to ensure quick access to the latest market data.

Meanwhile. electronic display boards are being set up in major cities of the province on which prevailing market prices of commodities will be displayed for the public and stakeholders.


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## Neo

*PakistanÃ¢â¬â¢s dependence on imported energy will go up: official* 



WASHINGTON: A one-day conference on PakistanÃ¢â¬â¢s energy needs was told here on Friday that PakistanÃ¢â¬â¢s dependence on imported energy would increase considerably in the near to medium term as it was not possible to develop its sizeable coal and hydel resources in the short term owing to Ã¢â¬Åinherent restraintsÃ¢â¬Â. 

This was stated by Mukhtar Ahmed, adviser on energy to Prime Minister Shaukat Aziz, in a keynote address to the conference held at the Woodrow Wilson Centre. The conference was made possible through the financial help extended by the Fellowship Fund for Pakistan, set up in 2003 by a number of leading Pakistani financial and business institutions to Ã¢â¬Åprovide PakistanÃ¢â¬â¢s most eminent thinkers with opportunities to take part in international deliberations on current and future issues facing Pakistan.Ã¢â¬Â The Fund sponsors a Pakistani scholar to spend nine months at the Woodrow Wilson Centre to complete an approved research project relevant to PakistanÃ¢â¬â¢s needs. The scholar selected for 2006-07 is Khaled Ahmed of this newspaper and The Friday Times. 

The conference, spread over three sessions, was addressed by Shahid Javed Burki, Ziad Alahdad, Zaffar Khan, Asad Umar, John Hammond, Robert Hathaway, Dorothy Lele, Robert Looney, William Milam, Sanjeev Minocha, Bikash Pandey, Paul Simons, Vladislav Vucetic and Aram Zamgochian.

Mukhtar Ahmed said gas import pipelines could deliver energy at competitive prices in the near term to meet the demand of priority consumer segments such as the residential, industrial and power sectors. In the medium term, development of the vast Thar coal deposits in Sindh and nuclear power could secure the country against high energy prices in the global markets and risks associated with large-scale development of hydel resources. Development of indigenous coal cold be coupled with the inclusion of imported coal for greater diversity in the mix of imported fuels, he added. He said the key elements of an action plan to meet the energy needs of Pakistan in the long term, to balance the risks associated with rising world energy prices and to protect the economy against uncertainties in the development of a domestic resource base would include a number of steps. Gas pipeline and LNG projects and those involving the import of energy from Central Asian states should be implemented on a Ã¢â¬Åfast-track basisÃ¢â¬Â. Indigenous energy resources should be developed through enhanced oil and gas production and a detailed technical and economic assessment of coal mining and coal-based power generation, while an assessment should be made of advanced technology options for coal gasification and coal-bed methane. He also called for enhanced hydroelectric and nuclear power generation and the mainstreaming of renewable energy.

The prime ministerÃ¢â¬â¢s adviser told the conference that the Government of Pakistan expects the private sector and foreign direct investment to play a central role in the development of the energy sector. He informed the meeting that LNG consultants have been engaged to provide advice on technical, financial and commercial issues and firms were expected to be short-listed in the near future. As for gas import pipelines, the technical parameters had been defined through pre-feasibility studies and technical working groups. Joint working groups had also been set up to address technical, commercial and financing issues. Offers of Ã¢â¬Åexpression of interestÃ¢â¬Â had been invited for a 200,000 to 300,000 barrels per day coastal oil refinery near Karachi. He told the conference that Ã¢â¬Åfurther workÃ¢â¬Â had been initiated to evaluate the technical and economic aspects of electric power imports from Central Asian states and proposals had been invited from the private sector for seven hydroelectric power projects with a total capacity of 1,620 MW. The private sector was being involved in the preparation of feasibility studies for mining the Thar coal deposits and for power generation. 

Shahid Javed Burki, who was finance minister of Pakistan in 1996-97 and is a retired vice president of the World Bank, told the conference that PakistanÃ¢â¬â¢s present annual growth rate is Ã¢â¬Ånot sustainableÃ¢â¬Â because the economy simply does not have the resources to ensure the desired sustainability. He pointed out that investments that would ensure the sustainability of high growth rates were not forthcoming. He was also critical of the Ã¢â¬Åpassive approachÃ¢â¬Â adopted by the countryÃ¢â¬â¢s economic planners vis-ÃÂ -vis the energy sector. He proposed that Pakistan should treat energy as the Ã¢â¬Åprime sectorÃ¢â¬Â. It must also concentrate on the development and strengthening of its agriculture. The countryÃ¢â¬â¢s coal deposits must be developed Ã¢â¬ÅaggressivelyÃ¢â¬Â but what was most important was to Ã¢â¬Åtreat energy as the engine of economic growth and development in the coming years.Ã¢â¬Â He added that he did not see that happening and it was worrisome. He also told the conference that India would face enormous energy demand as it moved ahead, since it simply does not have enough energy resources to keep up with the economic development it seeks and expects. He also asked why Pakistan should not invite India to invest in its energy sector, especially coal, considering that India has been investing in other countries, including some in Africa. 

Ã¢â¬ÅPakistan has to think regionally and globally,Ã¢â¬Â Burki said. According to him, there is a serious East-West divide in Pakistan. The energy demand sectors exist primarily west of the Indus, while the sources of energy are located to the east of the Indus. Such a development pattern is uneven and it must be rationalised. He pointed out that the Ã¢â¬ÅrentÃ¢â¬Â from provincial energy resources is being Ã¢â¬ÅcapturedÃ¢â¬Â by the central government, which is wrong. The first right to those resources and the wealth they generate is that of the people of the region or the province where those sources are located. Burki also called for the establishment of a National Finance Commission Award, something he felt should not be put off any longer.


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## Neo

sigatoka said:


> Dont know how to.


Its very simple;

Go to your profile and click on 'User CP' (control pannel) and then click on 'Edit Options' on the leftside of your screen...its the fourth options from the top.

Enable PM and other options that you like and save changes.

You're done.


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## Neo

Text of report by Associated Press of Pakistan (APP) news agency 

Islamabad, 25 June: The government under a novel plan to try and bring down the country's population growth has offered free schooling to families that have only one child. 

The plan, the first of its kind in the country, is being launched with a survey starting on 1 July to determine the number of one- child families, said Minister for Population Welfare Chaudhry Shahbaz Hussain on Sunday [25 June]. 

The minister said at present, education is free in state schools only up to the primary level. 

Ch. Shahbaz said "I am sure the plan to offer free education to one-child families until the age of 18 will have an impact. Definitely, incentives will increase the acceptance of family planning."

"People will be aware that if they have small families, they will get a lot of benefits, their kids will have a better chance of education," he said. 

The minister said the government sees population growth as a major complication in its fight against poverty but he added a progress is being made in this regard. 

Parliamentary Secretary for Population Welfare Donia Aziz said the country has seen good economic growth in recent years. She said efforts are being made to win over ulema [scholars] regarding population control programmes.


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## Neo

ISLAMABAD, June 24: Pakistan is keen to invest in Afghanistan and is identifying areas for investment there, says Prime Minister Shaukat Aziz.

He was talking to Afghan Foreign Minister Dr Rangeen Dadfar Spanta, who called on him at the Prime MinisterÃ¢â¬â¢s House here on Saturday.

Highlighting growing trade links between the two countries, he said bilateral trade had already reached the $1.5 billion mark. Ã¢â¬ÅWe expect economic ties to expand as several new projects have been approved by the Joint Economic Commission,Ã¢â¬Â he said.

Prime Minister Aziz said Pakistan was committed to supporting President KarzaiÃ¢â¬â¢s government and was closely working with it.

Ã¢â¬ÅAfghanistan is the key element to the energy, trade and transportation corridor (that) Pakistan wants to establish with Central Asia. A stable Afghanistan is critical to these links,Ã¢â¬Â he said.

The prime minister emphasised the need for sustained efforts to promote integration between the two countriesÃ¢â¬â¢ economies.

He said that Pakistan was keen to enhance cooperation and coordination with Afghanistan, especially in diplomatic, economic, defence and security fields.

Agreeing that regular contacts would strengthen bilateral ties, Mr Spanta said Afghanistan was equally keen to improve relations with Pakistan.

Online adds: Prime Minister Shaukat Aziz has said that Pakistan will not allow anyone to use its soil for terrorist activities in Afghanistan and Afghanistan should also take similar measures.

Mr Aziz highlighted PakistanÃ¢â¬â¢s role in curbing terrorism and said it had deployed 80,000 troops on the Pakistan-Afghan border.

However, there was a need to allay misconceptions through the use diplomatic channels and intelligence links between the two countries, he said.

The Afghan foreign minister said that Pakistan should provide corridor for importing goods from India and other countries.


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## Neo

Washington/Islamabad, June 24 (ANI): On the lines of the Indo-US civilian energy cooperation, Pakistan would again demand for a nuclear deal from US when the two nations meet on Monday in Washington for the bilateral Energy dialogue. akistan Foreign Office spokesperson Tasneem Aslam on Saturday said Energy advisor Mukhtar Ahmed who would be le leading Pakistan during the forthcoming dialogue would discuss Pakistan's demand for a nuclear deal from US.

"Pakistan would hold talks with US on energy need as our position is clear regarding civil nuclear energy deal with US", she said.

"We are hopeful that Pak-US energy talks will bring positive results", she added.

Meanwhile, in Washington few Congress members have called for a similar deal with Pakistan which has been rejected by the White House altogether.

Democrat Congressman R. Owens was quoted by Dawn as saying, "Why can't we offer a similar deal to Pakistan as well".

During US President George W. Bush visit to the subcontinent earlier this year, Bush had openly rejected Pakistan's demand for a nuclear deal.

The Energy Cooperation signed in March this year only talked about "exploring ways to meet Pakistan's growing energy needs and strengthen its energy security".

The Energy-Dialogue between the two nations is also the result of that Joint Declaration.


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## sigatoka

Neo said:


> Its very simple;
> 
> Go to your profile and click on 'User CP' (control pannel) and then click on 'Edit Options' on the leftside of your screen...its the fourth options from the top.
> 
> Enable PM and other options that you like and save changes.
> 
> You're done.


 
Thanks i just did it, so did u want to send me a message?


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## Neo

KARACHI (June 26 2006): Monetary expansion has nearly reached the level it attained in early June in FY05. At Rs 396 billion, or 13.3 percent on June 10, 2006, monetary expansion closely followed the Rs 402 billion figure reached on June 11, 2005.

Looking at the weekly rate of increase in the last two weeks (viz Rs 12 billion per week), it appears that the actual monetary expansion at the end of the year might reach Rs 450 billion, depicting an increase of about 15 percent, compared with the target of Rs 380 billion, or 12.8 percent.

Last year, the increase in money supply during the last three weeks had roughly amounted to Rs 77 billion. A comforting factor, however, is that while last year the private sector credit was still increasing, this year it is either stationary at the existing level, as in the previous two weeks, or decelerating, as in the week under review.

The case with government sector is, however, different.

For many weeks since its borrowing first plummeted to its lowest to about Rs 10 billion in late March/ early April because of revenue effect generated by sovereign bonds/privatisation proceeds, it has generally been rising in big chunks and stood at Rs 132 billion on June 10, 2006.

A break-up of government borrowing showed that both budgetary borrowing and commodity operations increased by Rs 39 billion and Rs 4 billion, respectively, during the week ended on June 3 and by another Rs 16.5 billion and Rs 0.5 billion respectively during the week ended on June 10.

Break-up of budgetary borrowing during the week showed that the major borrowing occurred on account of provincial governments (up Rs 13 billion, entirely on account of SBP) while Federal Government's borrowing amounted to some Rs 3.5 billion, though entirely accounted for by scheduled banks (up Rs 4.9 billion) as borrowing from SBP squeezed by Rs 1.4 billion. Borrowing for commodity operations, which is mainly for on-going wheat procurement, increased by another Rs 0.5 billion to Rs 11.4 billion on June 10 implying that the off-take of credit for wheat procurement had since started decelerating. Originally, the government had thought that borrowing under commodity operation might reach Rs 20 billion by the end of the year.

Component-wise break-up of monetary expansion of Rs 395.5 billion showed that during the year, up to June 10, deposit money contributed Rs 290.9 billion of it while currency in circulation accounted for the remaining Rs 104.6 billion. Monetary expansion during the week ended on June 10 amounted to a little more than Rs 8 billion and was entirely represented by an increase in currency in circulation of about Rs 13 billion as deposit contracted by about Rs 5 billion.

The increase in currency in circulation was because of increase in government borrowing while decline in deposit money was because of deceleration in private sector credit.

Among other developments, the negative balance (liabilities being higher than assets) of other items (net) or OINs of the banking system stood reduced by over Rs 14 billion during the week, which brought about a net increase in domestic credit and hence monetary expansion between June 3 and 10. Net foreign assets (NFA) of the banking system, in the meanwhile, continued squeezing, as witnessed by the level of liquid foreign exchange as on June 10, and contributed to a net reduction in money supply of about Rs 11 billion during the week under review.

Depletion of reserves on the back of rising imports and maturing foreign liabilities continued during the week so that liquid foreign exchange reserves of the country stood lower at $12,969.7 million on June 10 losing the grip on the $13 billion mark for the first time since April 29. However, according to advance data on reserves, liquid foreign exchange reserves climbed again to $13,000.9 million as on 17th June.

The increase of over $31 million during the week was entirely on account of SBP whose reserves increased by $48.2 million while reserves held by scheduled banks shrank by $17 million.


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## Neo

SIALKOT (June 26 2006): Chairman, Task Force for Industry, Mian Muhammad Riaz has said that a strategy is being evolved for promoting non-traditional products for increasing the export volume to many fold in the province of Punjab.

Talking to Business Recorder here on Sunday, he said that Pakistan could earn handsome foreign exchange through the export of non-traditional products, which becoming much popular in the international market.

Besides, he said special attention would be accorded on bringing innovation in products being produced in the province.

Mian Riaz was of the opinion that in the absence of research and development the industrial cannot survive because of rapid change of global trends and standards. It is high time that business community should divert its attention on obtaining modern industrial technology for bringing innovation and quality products, he said.

He said that efforts would be made for developing sector-wise industrial research and development enabling the business community to cope with the world market challenges more easily.

The task force chairman vowed that all means would be mobilised for reducing the mark up rate for the larger interest of SMEs of the province.

The government was making strenuous efforts for brining industrial revolution aimed at ensuring a strong industrial base in Punjab, he said.

He said that with consultation of members of business community, chambers and other trade bodies a line of action would be chalked out to promote non-traditional products.

He said the diversification of products and export of non-traditional products would not only help enhancing the export volume but also help expanding the small-scale industries, which will generate large employment opportunities of the educated and skilled persons, he said.

Mian Riaz said that the government had already introduced business-friendly policies for attracting overseas Pakistanis and foreign investment resultantly a large number of foreign investors had showed their willingness for investing in different trade fields in Punjab.

He said the aim of setting up task force was to ascertain the problems and difficulties being faced by the business community and hindering the process of industrialisation.

Mian Riaz said that meetings would be arranged with all chambers and other trade bodies to identify the problems and redress the same.


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## Neo

ISLAMABAD (June 26 2006): Barring Peshawar-Charsadda section, Islamabad-Peshawar Motorway (M-1) will be opened for all kinds of traffic from Islamabad to Charsadda in August this year.

Talking to APP Member Motorways, National Highway Authority (NHA) Altaf Ahmed Chaudhry said on Sunday that Islamabad-Burhan section and Rashakai-Charsadda sections have already been opened for traffic.

He said two more sections; the Burhan-Swabi and the adjacent Swabi-Rashkai sections will also be opened for traffic in early August.

Altaf Chaudhry said the Islamabad-Peshawar Motorway (M-1) was one of the most important projects of NHA and its quality construction was its top priority.

He said the project would be completed accorting to schedule in January 2007 when the last section Peshawar-Charsadda will also be opened for traffic.

He said that one side of Indus Bridge has already been opened for traffic while the work on the other side is in full swing and it will be opened for traffic in July. About Kabul Bridge, he said it would be completed by December this year. To a question, Altaf Chaudhry said that 18 flyovers, two service areas, five rest areas and 556 culverts are also included in the project. He said that interchanges would be constructed at Burhan, Swabi, Rashakai, Charsadda, Fatehjang, Jhang Bahtar and Chhach.

He said that the 152-km Islamabad-Peshawar Motorway (M-1) would be a six-lane motorway similar to the Lahore-Islamabad Motorway (M-2), and would help promote inter-provincial harmony.


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## Neo

EDITORIAL (June 25 2006): The Finance Ministry's decise/ion to focus on five major challenging areas of the economy during 2006-07, ie an increase in the tax-to-GDP ratio, improved provincial receipts, review of various subsidies, strict monitoring of public sector expenditure and timely completion of privatisation transactions, are the challenges that the budget makers face in keeping fiscal deficit within manageable limits and maintaining fiscal discipline.

The leadership needs to worry about the "slow improvement" in the tax-to-GDP ratio at federal and provincial levels. The ratio at federal level at 10.1 percent is the lowest among developing countries. And, for several years provinces' own receipts have stagnated at 0.9 percent of the GDP. The Finance Ministry's summary submitted to the government contends that only significant and equitable increase in the tax receipts will ensure sustainability of expenditures.

And it exhorts the provinces to launch a serious endeavour to improve the tax receipts instead of depending on the federal government for their growing needs. Lower dependence of provinces will allow the federal government to focus on national infrastructure projects, including construction of mega dams.

The summary proposes that various subsidies be carefully targeted and reviewed on the basis of needs. It also calls for strict adherence to the deadlines set for privatisation of various public sector units.

The medium term budgetary framework commits the government to improvement of the tax to GDP ratio to 11 percent by 2008-09. This modest improvement in itself is a challenge as constitutional hurdles regarding taxing of income from agriculture, imposing GST on services, capital gains tax on properties lie outside of the purview of the Central Board of Revenue.

As identified by CBR, causes of a low tax-GDP ratio include a mismatch between sectoral shares, a narrow tax base, poor compliance by taxpayers, too many exemptions (for instance, agriculture), the presence of a large underground economy, leakage due to administrative weaknesses etc CBR itself has been working at cross purposes. Sometimes it feels that the presumptive tax regime (PTR) inhibits its ability to collect actual tax due on profits. At the same time, it continues to enlarge the scope (PTR) and keeps on pushing more and more categories of taxpayers into the Final Tax Regime, while treating withholding tax deduction as final tax payment.

The recent decline in tax-GDP ratio is believed to be due to debasing by the Ministry of Finance. A comparison of tax-to-GDP ratio, based on total revenue, federal taxes and the CBR revenue, depicts a decline of 0.4 percent. Analysts believe that CBR needs to emulate the tax models of Turkey and Korea, as these countries have achieved a double-digit growth in their tax-to-GDP ratio. (It is said that the ratio is 20 percent in US and around 34 percent in UK.)

Secondly, there is a need to rationalise property and vehicle taxes. It is not possible for the provinces to increase their revenues unless the federal government rethinks the existing fiscal policy, given the limited fiscal base of provincial taxes due to a lack of fiscal autonomy, pre-empted provincial fiscal bases by the federal government and the retention of highly buoyant sources of local origin by the federal government.

Further, in view of the large fiscal gap in revenue generation powers and expenditure responsibilities of provincial governments, it is no longer possible for the provinces to heavily depend on federal transfers.

Experts have suggested that the federal government retain two-thirds of the sales tax, and allow the provinces to levy the remaining third or alternatively to distribute one-third of the total sales tax on the basis of origin. Sales tax should be the exclusive provincial domain, and the revenue generated from GST on services should not be part of the divisible pool.

It is noteworthy that Pakistan has progressively reduced tariffs since 1998. The effort culminated in 2002 with the establishment of four maximum import tariff bands of 25%, 20%, 10% and 5%. The weighted average applied tariff is 16.7%, down from 56% in 1994.

Further, the classified areas have been put in the final tax liability. In fact, we will have to move away from the presumptive tax, and focus instead on actual income. In its summary, the Finance Ministry has set targets that will go a long way towards bringing about structural activation of the economy.


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## Neo

EDITORIAL (June 23 2006): The news that Foreign Currency Deposits (FCDs) under FE-25 scheme are showing a rising trend is somewhat disturbing. According to the latest data from the State Bank, the outstanding amount under this scheme rose to 3481 million dollars by the end of May, 2006 as against 3105 million dollars a year earlier and 3282 million dollars at the end of June, 2005.

The surge was more pronounced in the last five months of the current fiscal year with outstanding balances averaging around 3498 million dollars compared with a similar average of 3327 million dollars in the first six months of the year.

These balances stood at their highest level of 3567 million dollars at the end of January, 2006 and lowest level of 3302 million dollars at the end of July 2005. Earlier, balances under FE-25 scheme had reached 2296 million dollars at the end of FY03 and 2671 million dollars a year later.

It may be recalled that these deposits have a strange history. The FE-25 scheme was introduced in the aftermath of Pakistan's nuclear explosions and the imposition of sanctions by most of the western countries leading to restrictions on withdrawals from foreign currency accounts existing as on May 28, 1998 and was meant specifically to allay fears of any future "freezing".

Separate registers were to be maintained by Authorised Dealers (ADs) for deposits under the new scheme. Also, since FE-25 deposits are outside the State Bank's forward cover scheme, these are not required to be surrendered to the central bank.

The ADs, who are free to decide the return on such deposits, are under no restriction to lend, invest and place these funds in Pakistan or abroad, subject to the observance of the prescribed regulations. As regards their actual utilisation as at the end of May, 2006, 1147 million dollars were used for financing foreign trade, 1529 million dollars were placed under various arrangements including those with SBP and 538 million dollars were held as balances abroad.

The increasing level of deposits under FE-25 scheme is, in our view, a matter of concern for several reasons. It shows that citizens of the country, residing in Pakistan or abroad, have a lower level of confidence in their own currency than foreign currencies.

This is sad but understandable. Clearly, they think that, over time, the loss in interest income by swapping the currencies will be more than compensated by the depreciation of the Pak rupee which is sure to follow because of inflation differential and the deteriorating trend in the external sector of the country.

The authorities need to stop the dollarisation of the economy by making appropriate interest and exchange rate adjustments and reducing the inflation rate in the country, which to a large extent is responsible for the debasement of the Pak currency. It is better to delve into the reasons of the emerging situation and find suitable policy responses.

The Steel Mill case, as it is unravelling now, could also have its own consequences, whatever the verdict of the Apex court. The privatisation efforts of the government could receive a serious setback, which, in turn, would have severe implications for privatisation proceeds, leading to worsening of fiscal deficit and further deterioration of current account balance of the country.

Of course, the foreign exchange reserves held by the State Bank would be the first line of defence to meet the external deficit but in a crisis situation, the authorities may be tempted to try other options including the remote possibility of the use of FE-25 deposits.

Those who argue that freezing of foreign currency accounts during 1998 was the result of explosion of nuclear devices and accompanying sanctions are wrong because the actual reason was that foreign exchange balances of the depositors were eleven times higher than the total reserves of the country and there was no way one could meet these liabilities.

It needs to be remembered that foreign currency deposits are not free reserves of the country but involve an equal amount of liabilities in foreign exchange to be paid on the demand of the depositors. Nobody is saying that such a situation is again around the corner or even on the horizon, but it is better to learn from past experience and be careful when the going is still not that tough.


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## Neo

By Dr Saima M. Javed

THE recently released Economic Survey of Pakistan revealed that the methodology used for estimating the poverty levels in the year 2000-2001 was flawed.

The new methodology put the estimates of people living below the poverty line in 2000-2001 at 34 per cent as against the earlier estimates of 32 per cent. This figure, the survey states, had been reduced to 23.9 per cent in 2004-2005. Thus, in the four year period from 2000-2001 to 2004-2005, around 10 per cent of the population has been lifted out of poverty. Impressive figures!

Whatever the methodology and whatever the figures, one thing is clear, different methodologies can lead to very different conclusions. In any event, these indicators give us an idea of the direction that the economy is moving in. It would have been useful, if the estimation of current poverty level based on the previously used methodology, even if flawed, had been indicated in the Economic Survey. Since the details of the new methodology are not spelt out in the Survey either, some other facts make the analysis pretty easy.

According to the government figures, per capita income has risen from $429 to $736 during the same period i.e. 2000-2001 to 2004-2005. Since dollar to rupee ratio remained almost stable during these four years, one could conclude that per capita income has increased from Rs25,740 in 2000-2001 to Rs44,160 in 2004-2005.

Taking into account the official figures of inflation (21.45 per cent), the buying power of Rs25,740 of 2000-2001 equals that of Rs31,261 four years later. In other words, the finance ministry says that net increase in the average buying power over these four years has been around 41 per cent.

Given the facts that the unofficial estimates of inflation are much higher than the official ones, there does not seem to be a significant reduction in the poverty levels. One can put inflation figures to a simple litmus test. Salaries of the government servants during the period 2000-2001 to 2004-2005 were raised more than the official inflation figure of 21.45 per cent. How many government servants would agree that their economic condition was better in 2004-2005 than four years back. Surely, none.

The increase in the average per capita income, as stated by the ministry of finance in four years has been only 41 per cent. This increase has to be seen against the prosperity levels of the upper strata. Whether it is visit to a real estate office, a view of expensive flashy cars in Lahore, Karachi and Islamabad or a mehndi ceremony in a five-star hotel, just a glance leaves little doubt about an unprecedented increase in the wealth of the rich.

Why go through the small font statistical tables in the economic survey when the reality is visible so clearly and glamorously! With around eight per cent increase in the national per capita income, this hustle bustle must have been a drain on some other pockets.

The Economic Survey comes handy in understanding the point. The consumption expenditure of various economic strata grew during these four years proportionate to their wealth. Richer ones getting much more than the poorer ones. A typical feature of free market economies!

The consumption expenditure of the richest 20 per cent grew by some 22 per cent while that of the poorest 20 per cent by only 9.25 per cent. Not to forget that a one per cent increase in the income of an upper strata family implies a crucial reduction in the income of dozens of families at the lowest economic strata. Unlike the finance ministryÃ¢â¬â¢s complicated methodologies, this is simple logic.

Level of well-being of a person cannot be evaluated in vacuum. Poverty indicators based on income need to be seen against a host of other factors - availability of free or subsidised medical facilities, clean drinking water, education, insurance, access to roads, so on and so forth.

These factors affect the life of a common man, at times more than his income. The well being levels of two families with same income, one with and the other without all these facilities would be poles apart. Poverty as they say doesnÃ¢â¬â¢t exist in books or economic surveys. It haunts the nations as a reality in villages, towns and cities.

Again according to the Economic Survey, PakistanÃ¢â¬â¢s infant mortality rate stands at 74 per 1000 live births which is the highest in the region. Comparative figures for India, Bangladesh and Sri Lanka are 63, 13 and 46. Pakistan also tops the list of regional countries in terms of child mortality with a figure of 98 per 1000 live births as compared to 87 for India, 69 for Bangladesh and 15 for Sri Lanka. What other than poverty could one put the blame for these depressing figures. Lack of simple medicines, safe drinking water, food, what else? Who has the time to care for the luxuries like education!

Many dread the memories of October earthquake which took away 83,000 of our brothers and sisters. It is a nightmare. With a crude death rate of 8.1 per cent, a calculator would not take long to show that every year more than 300,000 children die before reaching their first birth rate. We are having a bigger earthquake than the October one, only for below one year children, every four months. Every morning 800 mothers get up to see the death of their infant child. All that goes unnoticed without becoming a news even in the inner pages of the newspaper.

All that in a nation that created an unbeatable example of brotherhood on October 8! Is it not frightening! What is still more frightening is that these figures do not take into account other equally deadly faces of poverty - similar fate of above one year children and adults. What is critically important for poverty alleviation is to pay due attention to the hitherto neglected health sector, both in terms of budgetary allocations as well as governance.

Economists are generally unanimous their view that market economies, unless coupled with specific and effective government policies for a fair income distribution, lead to income disparities. It is these government policies for a fair distribution that make market economies different from the law of jungle where only might is right.

Benefits of new technologies and markets under any free economy go to those who have the resources to make use of them or in other words cushion money to put at stake in the new technologies. Once they do so, the ones that do not have that kind of money, are weeded out of the market because of their obsolete technologies. The outcome for the poor is a slide downwards from bad to worse. Law of the jungle!

The green revolution of 1960s provides the best example. Newer varieties of seeds and fertilizers benefited the big landlords. The smaller units were economically weeded out. This was not a phenomenon specific to Pakistan. Today, with all the global emphasis on market economy and a potential increase in the markets, the phenomenon is of greater relevance than it was ever before in the past.

An important feature of any poverty alleviation programme, particularly when luckily the overall economy is improving, is the integration of the poor into the countryÃ¢â¬â¢s mainstream economy. The point needs elaboration.

Poor people in a remote village whose total income as well as spending is based on agriculture for their own consumption would not benefit from increased exports in manufacturing units in, say Karachi or Sialkot. They would benefit from an increase in national income only if their livelihood is in some way related to the main areas of economic activity.

To illustrate the point further, a village that is not connected to the rest of the country by road and transport network would not benefit from new technologies. Even if by some miracle it did, it would not be able to sell its increased produce to the market. Even if by another miracle, it succeeded in doing that too, its produce will not be cost effective because of the difficulties in transportation.

Profit sharing between the landlord or industrialist, the middle man and the worker is another determinant of poverty. In Pakistan, increased profits largely benefit the middle man and the capitalist. It is obvious to all. The worker gets inelastic wages which hover around his bare minimum requirements. This traditional pattern with no (or at least no effective) labour laws has been the most important contributory factor to poverty.

Then there is the role of taxes in increasing or decreasing the poverty levels. The greater the indirect taxes, the more hard hit are the poorer segments of the society. The greater the direct taxes, the greater is the impact on the well-to-do people. Compared with many other developing countries, the taxation in Pakistan is skewed towards indirect taxes. This skewed nature of taxation further accentuates poverty.

Last but not the least is the sociological context of poverty. I remember my Ã¢â¬Ågup shupÃ¢â¬Â with my maid whose husband owned a taxi and was earning more than Rs15,000 a month - statistically, well above the poverty line by any standards.

At the peak of her emotions, which appeared ready to be poured out, she told me that for the last six years, her husband had been trying to gather money for his daughterÃ¢â¬â¢s marriage. He failed because of the expenditures on his fatherÃ¢â¬â¢s illness.

Having married his daughters, he would start collecting money for his own old age sickness. On what side of the poverty line would this family fall. With no social securities available, the insecurities have reached a level where most of the poor people cannot think of comfort or luxuries, which for them includes education, even if they have the cushion money to do so. Poverty levels cannot be judged in vacuum!

http://www.dawn.com/2006/06/26/ebr9.htm


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## Neo

WASHINGTON, June 24: Pakistan is in active talks with Turkmenistan to build a pipeline that will bring natural gas from the Central Asian republic to energy-starved South Asia, says Mukhtar Ahmed, energy adviser to the prime minister.

His statement, given at a seminar in Washington, comes amid renewed doubts about the plausibility of another proposed pipeline for bringing natural gas from Iran.

On Friday President Musharraf told a private television channel in Pakistan that the Iran pipeline project had been held up due to disagreements over the pricing formula.

Gen Musharraf said Pakistan recognised that Iran should make a profit, but the price of piped gas should be less than that of importing liquefied natural gas. "We certainly are not asking for any subsidy, but at the same time we are not going to allow them to fleece us."

The United States has discouraged both India and Pakistan from entering into any

deal with Iran, because of concerns that Tehran intends to develop nuclear weapons. There is also a US law that forbids any major investment in IranÃ¢â¬â¢s oil and gas sector and requires mandatory sanctions against those violating the ban.

Hours after President Musharraf complained that Iran was asking too steep a price for its gas, Mr Ahmed told a conference in Washington that Pakistan was in active talks with Turkmenistan to build a pipeline that would run through war-torn Afghanistan.

Ã¢â¬ÅWe have been assured in writing by the Turkmen government that the required amount of gas will be made available notwithstanding (their) other commitments,Ã¢â¬Â Mr Ahmed said. Turkmenistan, he said, had enough gas reserves to support a 30-year project for Pakistan and India.

Turkmenistan is also pursuing export deals with Russia, Ukraine and China, raising questions whether it will have enough supplies for other customers.

Mr Ahmed, however, said that Pakistan was also pursuing the proposed project to build a $7.4-billion pipeline from Iran that would also supply India. Future demand would justify both the Iran and Turkmenistan projects being built, he added.

Officials from Pakistan, Iran and India will meet in New Delhi next month to negotiate gas pricing before finalizing a deal to pipe Iranian gas to India through Pakistan, he said.

Mr Ahmed said he hoped to convince the Bush administration that the Iran project was worth pursuing. The energy adviser is leading a high-level Pakistani delegation to Washington for the first round of US-Pakistan energy talks that begin here on Monday.

But a senior US State Department official, Paul Simons, told reporters that the Bush administration was against the proposed Iran-Pakistan-India gas pipeline project. The Turkmen gas pipeline, however, Ã¢â¬Ådeserves a close look,Ã¢â¬Â he added.

Ã¢â¬ÅThe government of Pakistan is well aware of the fact that we are not in favour of Pakistan moving ahead with this pipeline to Iran,Ã¢â¬Â he said.

Instead, Mr Simons said Pakistan should tap domestic natural gas supplies, build transmission lines to import power from neighbours like Kyrgyzstan and ship in LNG from places like Qatar, Indonesia and Nigeria.

But the prime ministerÃ¢â¬â¢s energy adviser said meeting PakistanÃ¢â¬â¢s rising demand through LNG Ã¢â¬Åis probably not a realistic assessment,Ã¢â¬Â he later said, because major world exporters like Qatar have committed future supplies elsewhere.


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## Neo

Monday June 26, 2006

ISLAMABAD: The country has registered the wheat production to 21.7 million tons in the Rabi season 2005-06 against the set target of the 22 million tons, it is learnt. 
However, MINFAL in April estimated 20.5 million tonnes of output against the earlier targert of 22 million tons claiming the heavy rains in Punjab had damaged the wheat crop. 

Official said that the wheat production in the province of Punjab stands at 16.8 million tons, Sindh 2.9 million tons, NWFP 1.3 million tons and the wheat production in the Balochistan province has been recorded as 0.7 million tons in the rabi season. 

Sources said that the targets of area, production and production targets of 2005-06 were at increase of 2.7 per cent in area and 9.5 per cent in production against the average achievements of the last three years. 

According to targets for the provinces were as Punjab to sow wheat on an area of 6,403 hectares to produce 17,655 tonnes, Sindh 900 hectares to produce 2,478 tonnes, NWFP 767 to produce 1,161 tonnes and Balochistan to sow on 345 to produce 706 tonnes of wheat in 2005-06. 

In Punjab, the average area sown with wheat during 2002-03, 2003-04 and 2004-05 was 6,233.9 hectares, producing 16,123 tonnes, Sindh cultivated wheat on 876.3 hectares to produce 2,263.1 tonnes, NWFP cultivated 746.9 hectares to produce 1,050.3 tonnes and Balochistan cultivated 335.9 hectares to produce 645 tonnes. 

Government has procured wheat amounting to 4.35 million tons so far against the target of 5 million tons during the current season," an official informed. 

He said that the Sindh had procured wheat to 0.7 million tons whereas Punjab had reached the figure amounting to 2.35 million tons so far during the current season. 

"PASCO has procured wheat from the growers to the tune of 1 million tons so far and we hope that we will succeed to achieve the target of 5 million tons set during the current season," he said adding PunjabÃ¢â¬â¢s wheat procurement target was three million tons.


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## Neo

Monday, June 26, 2006 

LAHORE: The Software Information Technology ParkÃ¢â¬â¢s construction will improve international communication in the IT sector, and generate economic activity worth billions of rupees, said Punjab Chief Minister Chaudhry Pervaiz Elahi while signing an agreement between Punjab IT Board and the Cooperative Business Society (CBS) at Chief MinisterÃ¢â¬â¢s secretariat. 

According to a statement on Sunday, Elahi said the park, being built on 4.38 acres of land at a cost of Rs 1.5 billion on Ferozepur Road, would boost foreign and local investment. He said that call centres and business process centres at the park would help improve global communication. 

According to the agreement signed on Sunday, the CBS would provide land for the park and the IT Board the resources. Consultants of a Singaporean company prepared the parkÃ¢â¬â¢s design. 

The chief minister said the parkÃ¢â¬â¢s construction would create 10,000 direct and indirect job opportunities for science graduates, software developers, network engineers and management graduates. The foundation stone ceremony of the project will be held on July 03, he added. 

He said it would be the most modern and hi-tech park of the country. Elahi said the project would be completed in a year. The project would put Punjab in a prominent place at the global level, he added.


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## Neo

RAWALPINDI: President General Pervaiz Musharraf has directed the railway ministry to build a railway track between Hawailian to ChinaÃ¢â¬â¢s Sinkiang.

In a meeting with a delegation of German locomotive company, which was also attended by Federal Minister for Railways Shaikh Rashid Ahmad, Musharraf directed the authorities to launch mass transit trains in seven big cities to ease rush on roads.

After the meeting, Shaikh Rashid told Geo News that president has welcomed the investment of German locomotive company in manufacturing of railway engines.

President also directed for construction of a railway track from Hawailian to Sinkiang in China to establish a rail link like the road link of Karakoram Highway to strengthen the closer ties between the two countries.

Federal Minister said that China would construct the rail track from Sinkiang to PakistanÃ¢â¬â¢s border and a high level Chinese delegation would visit Pakistan to prepare the feasibility of the project. 

President also stressed the swift completion of Quetta-Gwadar railway line to reduce the traffic load on roads countrywide. Musharraf also given instructions for launching of mass transit trains in Karachi, Multan, Lahore, Peshawar, Hyderabad, Rawalpindi and Islamabad, he added.


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## Neo

*Doubling per capita income in six years*


*By Aftab Ahmad*
http://www.dawn.com/2006/06/26/images/ebr15.jpg 


Pakistan has now a per capita income of $847 as compared to $441 in 1999-2000&#8211;the year the national accounts were re-based.

After re-basing, the per capita income for 1999-2000 was revised upward 20 per cent, to $526. It went up to $579 in 2002-03, after remaining stagnant for two years.

Since then, per capita income has been increasing and the current level at $847 is nearly 100 per cent higher than the per capita income of $441. In six years (1999-06), the per capita income has almost doubled. It may be interesting to study the factors behind this growth.

The first and the foremost factor in the per capita GNP was, no doubt, the re-basing of the national accounts from 1980-81 to 1999-2000. The exercise was quite normal, since structural changes do take place in an economy over a period of time. New products appear while old ones disappear. It becomes necessary to incorporate such changes in the national accounts to make income estimates realistic. The practice is followed all over the world.

In Pakistan, re-basing exercise was completed and approved in 2003. As a result, many new economic activities as well as products such as courier services, travel agencies, information technology (IT) and mobile phones etc became part of the national accounts. As a result, the size of the GDP in 1999-2000 increased by 19.5 per cent, industries by 18 per cent, agriculture by 18.5 per cent and services by 20.8 per cent, over the old base. Accordingly, the per capita income of $441 &#8211; relating to the old base &#8211; in 1999-2000 had also to be revised upward to $526.

Another factor behind rapid growth of per capita income was the higher GDP growth in recent years. On an average, the GDP growth has remained around seven per cent during the last four years (2002-03 to 2005-06).

Third, a higher GNP and per capita GNP are partly attributable to &#8216;net factor income from abroad&#8217; that had remained favourable in recent years despite the higher trade and current account deficits. This favourable development was attributed to higher workers remittances, increase in foreign investment and liberal external assistance. When the net factor income from abroad is positive, it adds to GNP. On the contrary, if the net factor income from abroad is negative or unfavourable, the same is deducted, to arrive at the GNP.

Next, exchange rate stability also played a significant role in taking per capita GNP to the present level. In the past, continuous devaluation of the rupee had kept our per capita income in terms of dollar at a lower level. During the last 6-7 years, however, exchange rate of rupee has shown relative stability, due to which higher GDP growth rates has translated into higher per capita income in dollar terms.

Yet another factor may be the decline in the population growth rate. The population growth has reportedly fallen from three to 1.9 per cent and it is likely to reduce further in the coming years. A slower population growth helps improve the growing per capita GNP

Last but not the least, is the element of inflation. The per capita GNP is calculated by dividing the GNP at &#8216;current&#8217; factor cost (and not the constant factor cost) with the current population. Thus, the per capita GNP contains the element of inflation together with the element of growth.

From 1999-2000 to 2003-04, the inflation remained at a comparatively lower level (between 3.1 and 4.6 per cent). However, during the last two years, that is, 2004-05 and 2005-06, the inflation rate &#8211; as measured by the consumer price index &#8211; stood at 9.3 per cent and eight per cent respectively. This higher inflation rate had inter-alia pushed up the per capita income in 2004-05 and 2005-06 to $742 and $847, respectively.

The per capita income in 2005-06 is reported to have increased by more than 14 per cent, which actually includes the inflation rate of eight per cent apart from the GDP growth rate of 6.6 per cent. Per capita incomes for past two years are inflation-driven as well as growth-driven.

To keep the per capita income moving upwards, the correct policy would be to maintain the higher GDP growth, bring down the trade and current account deficits in order to keep the net factor income from abroad on the positive side and ensure exchange rate stability. However, all possible efforts should be made to control inflation, which pushes up the income figure, without adding to the real income of the people.

A word or two about the quality of GDP growth may be appropriate here. In 2005-06, the 6.6 per cent GDP growth rate has been achieved through only a 4.3 per cent rise in the commodity producing sector, while the services sector surged by 8.8 per cent. The finance and insurance had registered an increase of 23 per cent. This pattern of growth may not be very helpful in fighting inflation.

To combat inflation effectively, the government will have to focus on the commodity producing sectors and try to substantially raise the availability of agricultural and industrial products. A situation marked by abundant availability of essential commodities may be of immense help in achieving price stability.

http://www.dawn.com/2006/06/26/ebr15.htm


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## sigatoka

Neo said:


> Text of report by Associated Press of Pakistan (APP) news agency
> 
> Islamabad, 25 June: The government under a novel plan to try and bring down the country's population growth has offered free schooling to families that have only one child.
> 
> The plan, the first of its kind in the country, is being launched with a survey starting on 1 July to determine the number of one- child families, said Minister for Population Welfare Chaudhry Shahbaz Hussain on Sunday [25 June].
> 
> The minister said at present, education is free in state schools only up to the primary level.
> 
> Ch. Shahbaz said "I am sure the plan to offer free education to one-child families until the age of 18 will have an impact. Definitely, incentives will increase the acceptance of family planning."


 
This is a dumbass idea.


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## Neo

sigatoka said:


> This is a dumbass idea.


Yep, sounds like a socialist idea which will become a burdon on the treasury in near future as the population growth is declining.
In the early eighties population grew by 3.00% and it has delined to 1.9% today and will settle around 1.3% by 2020.


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## Neo

ISLAMABAD (June 27 2006): The government has projected one million tons sugar shortfall during the next year, after receiving reports from the provinces that there was no substantial increase in sugarcane cultivation area, official sources told Business Recorder.

"We have estimated nearly one million tons sugar shortage in 2007 as the provincial governments have informed that there has been no change in sugarcane cultivation area," sources said.

They said the Trading Corporation of Pakistan (TCP) has awarded tenders for 0.815 tons of sugar so far, half of which would be imported by December this tear, which would be enough to meet the requirements for the current year. However, they added that TCP has been barred from floating new tenders for sugar import this year.

They said that $962,712,587 has been spent on import of 23,89,806 tons refined sugar from January 18, 2005 to May 27, 2006, of which 11,70,426 tons has arrived so far. According to sources, 186,345, 888 tons raw sugar import cost $8,70,348, of which 613, 152 tons has already arrived in the country.

Asked about likelihood of floating new tenders for sugar import, sources said that decision to this effect could be taken by the end of December or early January. An official said that sugarcane cultivation was slightly above last year's crop mainly because of good return ie Rs 70-80 per 40 kg.

However, he added that better yield would depend on water availability and protection from diseases. "If all goes well as per the projections, sugarcane production will be better than last year's target of 50 million tons, but even then the production will not be sufficient to meet the requirements," he said.

He said that the Prices Review Committee, headed by Dr Salman Shah, had decided that sugar situation would be reviewed on monthly basis. However, the Economic Co-ordination Committee (ECC) of the Cabinet would continue to review prices of essential commodities. Sources said that investigation against the sugar 'Mafia' was also under process and now the Central Board of Revenue (CBR) was verifying sales tax invoices.

Another official said that the Commerce Ministry has communicated the next year's projections to the concerned quarters to avoid any controversy that could raise questions over its efficiency in dealing with sugar crisis.


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## Neo

ISLAMABAD (June 27 2006): Prime Minister Shaukat Aziz on Monday sought the Asian Development Bank (ADB) support for hydel projects, North-South corridor and the energy, trade and transportation corridors between various Asian regions.

Talking to ADB vice-president Liquin Jin, who called on him at the Prime Minister house, he said Pakistan attaches great importance to its relationship with the Asian Development Bank as it has always stood by it in hour of need.

The Prime Minister also asked the bank to help in urban planning, mass transit projects as well as social sector development projects. The Prime Minister said Pakistan's economy maintained a solid pace of expansion in 2005-06 and achieved 6.6 percent growth despite an extraordinary surge in oil prices and losses caused by the October 8 earthquake.

He said the exchange rate is steady, inflation is going down and credit rating and balance of payment situation has improved. There is an appreciable increase of 20 percent in the country's exports and 22 percent in the revenue collection, he added.

He said Pakistan is fast becoming a destination of choice for foreign investors and this year the foreign direct investment has reached $3.5 billion, which is a record. He said after gaining economic strength the government is now focusing on transferring benefits of growth to the people and as a result there is improvement in the living standards of general public.

The per capita income has reached $847 and poverty is down from 34.46 percent in 2000-01 to 23.9 percent in 2004.05. He said the World Bank and the UNDP have endorsed the methodology adopted by the present government, he added.

Talking about the future, the Prime Minister said the record high amount of Rs 415 billion allocated for the PSDP in the current budget will open new avenues of development.

Liquin Jin termed the economic performance of Pakistan as "very impressive" and said success is mainly due to a strong leadership and efficient economic team of the present government. "A strong economic team under President Pervez Musharraf and Prime Minister Shaukat Aziz is doing a wonderful job," said Liquin Jin.

The magnitude of growth that Pakistan has achieved during the last four years in a row has positioned Pakistan as one of the fastest growing economies in the Asian region.

Liquin Jin said the ADB considers Pakistan as one of the most important countries in the region. Pakistan, he said, because of its geo-strategic location can play a very crucial role in promoting regional trade by acting as a bridge between Central Asia, South Asia and West Asia.

He said the ADB is keen to provide technical and financial assistance to Pakistan to build corridors being planned by it, as these will bring progress and prosperity to the region. Later on, Liquin Jin accompanied by adviser to V.P. Hong Wang and ADB country director Peter L. Fedon held a meeting with adviser to prime minister on finance Dr Salman Shah.

Salman was assisted by minister of state for economic affairs Hina Rabbani Khar, finance secretary Naveed Ahsan and senior officials of the finance ministry.

Dr Salman Shah informed the ADB team Pakistan had boosted its allocation of funds for strengthening basic infrastructure in the current PSDP. He said the country was keenly interested in the development of water and energy sectors, communication network and oil and gas pipelines for the socio-economic development of the country and generating employment opportunities for the people.

On this occasion, water and power secretary gave a presentation highlighting energy requirements of the country and strategic programmes chalked out to exploit indigenous energy resources including coal, wind, hydel, nuclear and oil to cater to national requirements of energy.

He also spotlighted constraints that blocked harnessing of these resources to the maximum extent and sought the ADB's help in the execution of prospective water projects. He also underscored the ADB's role and assistance in providing new technologies in flood control projects.

The ADB vice-president stressed the need for preparing a master plan identifying strategic areas as well as measures to be adopted for flood control and financial requirements for implementation of those programmes.

A presentation was also given by the communications secretary focusing on the requirements for the expansion of communication network including trans-Indus connectivity, National Trade corridor, Asian highway routs, North-South corridor connecting Central Asian states, dualization of Torkhum-Jalalabad road, rehabilitation of Karakoram highway, extension of Gwadar linkages and expansion of existing network. He asked for ADB's assistance in the construction of road and rehabilitation of the existing network.


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## Neo

ISLAMABAD (June 27 2006): Pakistan has signed MoU with South Korea on Monday to export manpower under Korean Employment Permit Scheme (EPS). The agreement was signed by Minister for Labour, Ghulam Sarwar Khan and Korean Minister for Labour, Lee Sang Soo, says a fax message received here from South Korea.

Ghulam Sarwar Khan who is on a four-day official visit to South Korea said that Pakistan would send its workers in manufacturing, construction, agriculture, services and other sectors where need of workers is created.

Managing Director, Overseas Employment Corporation (OEC) S M Junaid and Director, Zafar Ali accompanied him.

The minister said Overseas Employment Corporation (OEC) would shortly sign an Implementation Agreement with Human Resource Division of Korea, under which OEC will be exclusively exporting manpower to Korea. He said that after the signing of MoU, Pakistan has been included in the list of 10 source countries, which export workers.

He said according to MoU, Pakistan would be able to export more than 3300 workers to Korea in first year while the export of manpower would increase in the subsequent years.


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## Neo

ISLAMABAD (June 27 2006): A 10-member delegation of the International Development Committee of the UK Parliament headed by Malcolm Bruce met adviser to prime minister on finance, revenue, economic affairs and statistics Dr Salman Shah here, on Monday.

The International Development Committee of the UK Parliament is currently on a visit to Pakistan to conduct an enquiry into the humanitarian response extended to Pakistan in the disastrous earthquake and to investigate ways and means employed to handle earthquake aftermath. The UK delegation also wanted to apprise itself of the international response to the tragedy, improve international humanitarian system in similar calamities as well as effectiveness of the UK's efforts in assisting Pakistan in rescue and relief operations in the earthquake areas.

Welcoming members of the delegation, the adviser told the delegation that UK's support during the earthquake that hit Pakistan were highly laudable. He said the UK rescue team immediately arrived in Pakistan and started rescue and relief operations and their efforts in evacuating the earthquake victims were par excellence.

To a question from the delegation, the adviser said that the assistance provided by the UK rescue team was in line with the aspirations of the people of Pakistan. The adviser also thanked the UK for extending financial support to Pakistan at such a difficult time and rescuing several precious lives.

He said under foolproof arrangements, the government had so far disbursed about $40 million and not a single complaint had been received in this regard. In response to a question, the adviser said at the macro level, Pakistan's fiscal deficit is estimated to be at 4.2 percent of the GDP, which was projected to be around 3.7 percent, in view of the devastating earthquake.-


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## Neo

RAWALPINDI (June 27 2006): President Pervez Musharraf on Monday said Pakistan will develop its railways as an efficient mass transit service as well as an elaborate communication network for promoting regional commerce.

Speaking to a delegation of German investors in the field of locomotives and passenger coaches, the President said Pakistan Railways offers tremendous prospects for investment and the country would like to benefit from German expertise and technology.

He said in addition to launching mass transit service in eight major cities of the country. Pakistan is planning to establish rail linkages with the regional countries to bolster trade through its deep seaports including Gwadar with Central Asian states and China.

Pakistan is resolved to utilise its geo-strategic potential as a hub of regional trade and as an energy corridor and developing rail link with neighbouring countries including China is a vital component of our vision he stated, while welcoming German entrepreneurs keen desire to invest in the sector.

Federal Minister for Railways Sheikh Rashid Ahmed was also present during the meeting.

The President informed the German entrepreneurs about plans to commence mass transit service in Karachi, Lahore, Rawalpindi, Islamabad, Multan, Faisablabad, Hyderabad and Peshawar, saying it would facilitate travel of common people and minimise traffic problems. He said recognising the importance of railways as a cost-effective means of long-distance transportation, a number of steps have been taken since 1999 for modernisation of Pakistan Railways and in this respect referred to induction of new coaches, dualisation of tracks and improvement in standard of services.

He praised Pakistan Railway's efforts for providing quality services and efficient transportation to people across the country.

Federal Minister, Sheikh Rashid Ahmed said Pakistan Railways is striving for excellence both in terms of providing facilities to passengers and improving transportation of goods.


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## Neo

By Ivan Gale, Staff Reporter

As director of the Middle East and Central Asia unit for the IMF, Mohsin Khan is often privy to big deals brewing in Pakistan. A month ago, he heard rumours that Dubai companies might invest there. But when Emaar and Limitless announced real estate projects valued at $40 billion (Dh147 billion) in early June, even he was taken by surprise.

"Most people thought the Etisalat deal in 2005 was big, and it was," he said. "But when you hear deals ten times that size, that's pretty astounding."

A few years ago Pakistan wasn't a popular foreign investment choice for UAE companies. In 1998 the country defaulted on an international loan, and was generally regarded as a risky country to do business. According to statistics by the State Bank of Pakistan, foreign private investment from the UAE into Pakistan tallied a modest $17.3 million in 2001-02.

But after making impressive strides reforming its banking sector and standardising business practices, Pakistan is showing a big green light which Dubai companies are finding hard to ignore.

Recently there has been a succession of announcements for multi-billion projects in Pakistan. In June 2005, a consortium of Etisalat and Dubai Islamic Bank announced it would invest $2.6 billion for a 26 per cent ownership and management rights in Pakistan telecom PTCL. In May, Emaar said it would invest $20.4 billion in four real estate developments in Karachi and Islamabad. Limitless, Dubai World's international real-estate arm, followed with news of a $20 billion (Dh73.4 billion) plan to invest in a mixed-use Karachi real-estate project. At about the same time, the Pakistan government also authorised Dubai Islamic Bank to open 50 to 70 branches in Pakistan.

The scale of the deals dwarves all previous foreign investment in Pakistan. Last year foreign investors injected three billion dollars in the country, compared to the more than $40 billion that the Dubai projects will pump into the economy over the next few years equivalent to more than 10 per cent of Pakistan's GDP.

In truth, Dubai companies won't be spending tens of billions of dollars of their own money straight off. Most projects will build mixed-use residential and commercial units that they can pre-sell, using the proceeds to complete construction over a period of five to ten years. Still, Pakistan has emerged as the premier destination for UAE companies aggressively expanding their operations abroad.

Part of the reason lies at home. With the pace of new projects beginning to slow, Dubai is approaching a saturation point with high-profile residential projects. At the same time, companies are trying to diversify their assets. Increasingly, they're looking abroad.

Dominant force

Crude oil prices have nearly tripled since 2002, and the UAE is riding an oil boom that the IMF predicts will last for some time. It forecasts crude prices to remain over $60 a barrel for the next five years. 

"Where is the money going?" asks financial analyst Steve Brice of Standard Chartered Bank in Dubai. "Due to high oil prices, the answer is hardly surprising almost anywhere," he wrote in a recent paper. Asia remains the dominant force, he said. "Petrodollars are increasingly going to countries in the emerging world."

IMF director Khan said Dubai companies are ahead of the game by thinking regionally, and particularly likes the name of Dubai World's international real estate development arm, Limitless. "Everyone says 'so and so, limited,'" he said. "It really describes Dubai companies in terms of acquisitions."

This audacious investment plan is unfolding all over the Middle East, North Africa and Asia. Emaar is taking a lead role in the $27 billion (Dh100 billion) King Abdullah City development in Saudi Arabia, and is engaged in billion-dollar projects in Morocco and Egypt. Dubai World is also expanding boldly into ports in Djibouti, Vietnam and China.

But more than anywhere else, Dubai companies are showering Pakistan with new projects. An IMF success story, in 2004 the country passed through the latest of several structural adjustment programs. The same year, it raised $500 million through a Eurobond. In another progressive step, just months ago it adopted international arbitration standards in business disputes.

These efforts have invigorated the economy and created new business opportunities, says Professor Rodney Wilson, director of Durham University's Institute for Middle Eastern and Islamic Studies in the UK. He noted its GDP growth rate has surged six to eight per cent the last few years, creating a new dynamism in the region.

Pakistan is perceived as an under-served market and a friendly place for Dubai companies to do business. The country has undeveloped land suitable for large projects and a cheap labour market.

Business friendly

UAE companies are feeling more comfortable with the Pakistani economy, and cultural similarities with the Gulf all contributed to the deals, said Khan. Many Pakistanis also hold senior positions in Dubai firms and provide local expertise in the Pakistan business climate.

A burgeoning economy is creating a new affluent class among its 166 million residents, who will be capable of affording these higher-end real estate projects. Estimates by Limitless put the Pakistan housing shortage at six million dwellings.

The country isn't without its risks, of course. A weakening of the Pakistani rupee would lower the profits Emaar and other companies brought home to the UAE. Also uncertain is what would happen if the current business-friendly leadership were to change.

Nonetheless, most observers give the deals unequivocal thumbs-up, including Brice of Standard Chartered Bank. "Pakistan might not be the easiest place in the world to do business, but the returns should be relatively healthy."


----------



## Neo

By Ivan Gale, Staff Reporter

The timing was uncanny. In early June, as Dubai World vied for the contract to manage Gwadar, the planned deepwater Pakistani port near the Iran border, UAE companies unloaded a treasure trove of investment projects on the South Asian nation.

Limitless, a subsidiary of Dubai World, and Emaar said they would separately build mixed-use developments in Islamabad as well as reshape the port of Karachi with housing, warehouses, office space, recreational and entertainment facilities, and special economic zones.

Pakistan hasn't chosen a Gwadar operator yet, but Dubai World remains the preferred bidder, and with good reason. No other ports company can boast the backing of a billion-dollar real estate subsidiary such as Limitless ready to join in with complementary projects, plus other UAE developers like Emaar seemingly ready to do the same.

Intoxicating mix

The same is true in China, where Damac Properties recently announced it would build a Dh10 billion ($2.7 billion) commercial and residential development around Tianjin Port, which is being redeveloped by a DP World-led joint venture.

Taken together, the offerings present countries an intoxicating mix of development, dollars and expertise that would leave any nation utterly starstruck. The UAE has become an investment powerhouse and when it sets its eyes on a prize, such as Gwadar, it certainly knows how to make its presence felt.

Saeed Ahmad Saeed, CEO of Limitless, acknowledged Dubai World's strategy for establishing a "global footprint across multiple industries" and said Limitless will act as an incubator and master-planner for Dubai World's real estate projects. Imran Afzal Khan, manager of marketing and financial services at Arab Emirates Investment Bank, said each Pakistan project stands on its own merits as investments. But he added they could also be seen as "clearing the way for the jewel in the crown," namely Gwadar port.

UAE companies will undoubtedly sail on with their foreign investment adventuring. While no one knows the chart they'll set, one thing seems certain: where one goes, others follow.


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## Neo

Tuesday, June 27, 2006 

* Growth has to be accelerated and has to be more widely shared, says the report

ISLAMABAD: Building on recent strong growth, countries in South Asia can dramatically reduce poverty by embracing policies aimed at increasing investment and productivity and improving the quality of labor, while addressing pervasive income inequalities and poor service delivery, according to Economic Growth in South Asia, a World Bank report, released on Monday.

The report finds that while countries in the region are growing rapidly, evidence shows that expansion, due to its uneven nature, is deepening income inequality and may be hard to sustain in the longer term if the key constraints are not addressed.

South AsiaÃ¢â¬â¢s decade-long economic expansion has raised the possibility that the sub-continent could eliminate poverty in our lifetime, says Shantayanan Devarajan, co-author of the report and the World Bank chief economist for the South Asia region. But to realize this dream, South Asians must create conditions and incentives necessary to sustain and accelerate growth that benefits all. The economic well-being of several hundred millions of people depends on it.

A striking feature of the report is analysis showing that South Asian countries could see single-digit poverty rates in a decade if economic growth accelerates to 10 percent a year till 2015. This means the number of people living in poverty could go down by two-thirds in less than 10 years. Looking back at the remarkable economic performance of the past decade, the report suggests South Asian countries should aspire to this goal and emulate the East Asian growth rates of 7-10 percent that lifted millions of people out of poverty in relatively few years.

Impressive Progress so Far: Bangladesh, India and Pakistan have all grown at over five percent per year on average during the last five years. Growth in both Pakistan and India topped eight percent last year. Forecasts put South Asian economies on a steady 

path of expansion this year. Economic growth has already contributed to an impressive reduction in poverty. In the last decade, poverty in Bangladesh, India and Nepal fell by 9, 10 and 11 percent, respectively; in Sri Lanka it fell by six percent. Only in Pakistan did poverty increase by eight percentage points due to economic stagnation throughout the 1990s. The most recent evidence (2004-5 survey), however, suggests that with the resumption of high growth, poverty is again declining rapidly in Pakistan.

Translating growth into poverty reduction: But much remains to be done to achieve accelerated growth rates that increase economic prosperity across the board, the report says. First, economic growth in the past decade has resulted in growing income inequality, which may act as a constraint to higher growth in the future. Second, while conflict, corruption and high fiscal deficits may not have constrained growth in the past, their persistence may become obstacles in the future. Faster growth must also be more equitably shared, the report says. With nearly 400 million poor people, poverty in South Asia is not just endemic, but increasingly concentrated in lagging regions. Not only are these regions poorer, but their growth rates are substantially slower than the better-off regions. The phrase two Indias that describes the great divide between those who benefit from Indian economic growth and the 300 million poor people being left further behind is a vivid example of the current challenge, repeated across South Asian countries. Also key to reaching higher growth will be addressing rural and urban infrastructure deficits. The report says around $25 billion annually is needed for new infrastructure in the region.

While the policy agenda appears daunting, the dynamism and openness that characterizes South Asia today makes us optimistic that some, if not all, of these challenges can be met and the region could be substantially free of poverty in a few decades, says Ijaz Nabi, the reportÃ¢â¬â¢s co-author and Sector Manager for Economic Policy for the World Bank South Asia region. 

Measuring the quality of South Asia economic growth: A good way to measure South Asia's quality of growth and its potential impact on economic prosperity is to compare key economic indicators with those of East Asian countries growing at a similar pace. Even though recent increases in South Asian per capita incomes now match those in East Asia, data shows that East Asian levels of prosperity are associated with much higher Foreign Direct Investment (FDI), skills, infrastructure and perceptions of the business environment than those currently present in South Asia. For example, it takes 89 days to start a business in India, compared with 41 in China.

Although manufacturing in South Asia has registered healthy growth in recent years, it needs to grow much faster for the region to catch up with their eastern neighbors. Between 1968 and 2001, the share of manufacturing value added in GPD increased 400 percent in Malaysia, 300 percent in Thailand and over 200 percent in South Korea compared with an increase of only 20 in India and 30 percent in Pakistan. To catch up with East Asia, the report says, South Asian economies must save and invest a lot more. 

They must also increase the efficiency of investment and ensure that higher economic growth drives faster poverty reduction. The report further cites country-specific challenges that policy-makers would need to address to accelerate growth. These include reducing fiscal deficits and public debt in India, strengthening governance in Bangladesh, deepening human capital in Pakistan and addressing civil conflict in Sri Lanka and Nepal.

http://www.dailytimes.com.pk/defaul...7-6-2006_pg5_10


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## Neo

Tuesday June 27, 2006

ISLAMABAD: Appreciating the strategic and consistent role played by Asian Development Bank (ADB) in PakistanÃ¢â¬â¢s development process, prime minister Shaukat Aziz has asked the Bank to contribute in the construction of hydel projects, North-South Corridor and the energy, trade and transportation corridors between various Asian regions. 
Talking to Mr Liquin Jin, Vice president of ADB, who called on him at the prime minister house on Monday, the prime minister said Pakistan attaches great importance to its relationship with the Asian Development Bank as it has always stood by us. 

The prime minister also asked the Bank to participate in urban planning, mass transit projects as well as social sector uplift. 

Mr Liquin Jin termed the economic performance of Pakistan as "very impressive" and said the success is mainly due to a strong leadership and efficient economic team. 

"A strong economic team under President General Pervez Musharraf and Prime minister Shaukat Aziz is doing a wonderful job, said Mr Liquin Jin. 

Giving an overview of the economy, the prime minister said PakistanÃ¢â¬â¢s economy maintained a solid pace of expansion in 2005-2006 and achieved 6.6 % growth despite an extraordinary surge in the oil prices and the losses caused by the earthquake of October 8, 2005. the magnitude of growth that Pakistan has achieved during the last four years in row has positioned Pakistan as one of the fastest growing economies in the Asian region. 

The prime minister said the exchange rate is steady, inflation is reducing and credit rating and balance of payment situation has improved. There is an appreciable increase of 20 percent in countryÃ¢â¬â¢s exports and 22 percent in the revenue collection on the investment, the prime minister said. 

He said Pakistan is fast becoming a destination of choice for the foreign investors and this year the Foreign Direct Investment has reached $ 3.5 billion which is a record. 

He said after gaining the economic strength the government is now there on transferring the benefits of growth to the people and as a result there is improvement in the living standards. He said per capita income has reached $847 and poverty is down from 34.46 in 2000-01 to 23.9 in 2004-05. 

He said World Bank and UNDP have approved the methodology adopted by us. Talking of the future, the prime minister said the record high amount of Rs 415 billion allocated for PSDP in the current budget will open new avenues for development. 

Mr Liquin Jin said ADB considers Pakistan as one of the most important countries in the region. Pakistan, he said because of its geo-strategic location can play a very crucial role in promoting regional trade by acting as a bridge between Central Asia, South Asia and West Asia. 

He said ADB is keen to provide technical and financial assistance to Pakistan to build the corridors being planned by it as these will bring progress and prosperity to the region. 

Mr Liquin Jin said during his visit to earthquake affected areas he was impressed by the work being done for rehabilitation of these areas and said the level of progress made in reconstruction of these areas is a manifestation of the commitment of the government as well as the people of these areas. 

The meeting was attended among others by Adviser to the prime minister on Finance, Dr Salman Shah, Minister of State for Economic Affairs, Ms Hina Rabbani Khar and senior officials.

http://www.paktribune.com/news/index.php?id=148118


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## Neo

Washington: Pakistan has underlined the need for a civilian nuclear energy deal with the United States during talks here. 

The Pakistan delegation was led by the Advisor to the Prime Minister on Energy Mukhtar Ahmed, while the U.S. team is headed by Karen Herbert, Assistant Secretary in the Department of Energy. 

After four-hours talks with US officials Pakistan delegation head Mukhtar Ahmed in a press briefing at Pakistan Embassy Washington said the talks covered the country's expanding energy requirements over the next 20 years. 

The two sides decided to constitute a joint working group to boost cooperation in the energy sector. 

The leader of the Pakistan delegation said the country was meeting its 80 percent energy needs with oil and gas, while eight percent energy produced each from the nuclear technology and coal-based energy, while two percent energy requirements met by the hydro-electricity. 

Pakistan is seriously seeking alternate energy sources but highlighted the crucial need of the nuclear energy saying that Pakistan will continue its nuclear energy programme, he said. 

U.S.Energy Secretary Samuel Bodman met with the Pakistani officials after talks and discussed the energy related issues. 

The delegation also met with private sector energy company representatives at an event held under the auspices of the U.S. Chamber of Commerce.


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## Neo

Tuesday, June 27, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\06\27\story_27-6-2006_pg5_1

_* CDWP likely to approve the plan on Thursday
* It will also consider 24 other development schemes

By Fida Hussain _

ISLAMABAD: The government has decided to launch a nationwide mass awareness campaign for water conservation and development at a cost of Rs 194.22 million.

However, the launch of the scheme will take place after approval of the Central Development Working Party (CDWP) of the Planning and Development Division (P&D), which is likely to meet on Thursday to consider around 24 other development schemes with an estimated cost of Rs 7.6 billion, a senior government official told the Daily Times on Monday. 

Pakistan has become a water-deficient country and the ministry of science and technology is of the view that there is an urgent need that the general public should be informed about the conservation of important natural resource so that it can be judiciously utilized for improvement in agricultural productivity and other purposes by decreasing water losses through awareness. 

The two other important projects to be considered by the CDWP is GSM Expansion for Azad Jammu and Kashmir that will cost Rs 565 million and Rs 567 million scheme of establishing a national monument of Pakistan at Islamabad will also be considered by the planning body, which will be presided over by Deputy Chairman of the Planning Commission Engineer Dr Akram Sheikh. The total foreign exchange component (FEC) has been estimated at Rs 571.715 million. 

Other schemes likely to be considered are establishment of poultry and dairy animals training and research center at Pattoki, Punjab, costing Rs 464.988 million, establishment of faculty of veterinary and animal sciences at the University of Arid Agriculture, Rawalpindi costing Rs 470.87 million, strengthening of the existing earthquake engineering center at NWFP University of Engineering and Technology, Peshawar, costing Rs 487.219 million, merit scholarships for scholars worth Rs 284.523 million and development of infrastructure for improved educational facilities at Kohar University of Science and Technology costing RS 459.916 million. These schemes are to be taken up in the higher education sector. The CDWP will also take up the communication divisionÃ¢â¬â¢s schemes of establishing a construction machinery training centers at Quetta and Karachi at estimated of Rs 610.623 million each. In the energy sector, the installation of capacitators at 132/66 KV grid station under Hyderabad Electric Supply Company (HESCO) worth Rs 475.95 million. 

In the physical planning and housing sector, five development schemes including construction of administrative blocks, magazine quarter guard, barracks, horse stable and parade ground in Diplomatic Enclave at a cost of Rs 201.04 million, rehabilitation/ replacement of lifts installed at Pak Secretariat building, Islamabad, and construction of B-type police stations in various sectors of the federal capital at a cost of Rs 98.97 million are some of the projects which will be sponsored by the Interior Division.

A Rs 815.478 million scheme for the construction of second floor of Shaikh Zayed Hospital main building at Lahore of the Cabinet Division and upgradation of BMSI and laboratory services at the JPMC, Karachi, worth Rs 59 million of the Health Division will also be taken up by the CDWP, which will be its last meeting in the outgoing fiscal. 

The planning body will also consider a proposed scheme for support to good governance of the National Reconstruction Bureau worth Rs 235.4 million. Capacity building of the Pakistan Institute of Development Economics worth Rs 92.68 million and framework for institutional cooperation project of P&D will also come up for consideration.


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## Neo

*Economic task*http://www.thenews.com.pk/images/shim.gifhttp://www.thenews.com.pk/images/shim.gifhttp://www.thenews.com.pk/images/shim.gif

Both the prime minister and the president, of late, have spoken on the need to attract foreign investment into the country to sustain the current rate of economic growth. Foreign direct investment is said to have significantly increased during 2005-06 but much remains to be done. After achieving some semblance of macro-economic stability over the last four years, the government now needs to focus its attention on institutionalising reforms and ensure that the benefits of economic growth reaches the millions of Pakistanis who are poor and impoverished. 

Investment can be attracted by putting in place policies and procedures that are transparent and by giving investors recourse to legal redress to safeguard their investment. Of course, the decision by the Supreme Court to annul the sale of the Pakistan Steel Mills could have a dampening effect on foreign investment, had the privatisation process in this case been transparent and truly aboveboard, things would not have come to judicial intervention becoming inevitable. 

Crucial also for sustaining economic growth is a long-term plan that meets the economy's rising energy demand and also tackles the increasingly complex issue of water storage and conservation. The latter is especially important because the agricultural sector, despite impressive growth in recent years in the manufacturing and services sectors, remains crucial to the economy's well-being. The irony of the past has often been that the economic policies of one government were usually undone or drastically altered by its successor. Private sector-driven industrial growth was followed by a period of nationalisation. 

This was followed by a process of privatisation that started in the early nineties and has since continued. With the court's verdict, this process will need to be fine-tuned. With a rapidly growing private sector, the government will now have to step up and play the role of a regulator and look out for the interests of the consumers, something that it has effectively failed to do so far. As for the benefits of economic progress reaching those who truly need it, it is necessary that prices of basic necessities be monitored and prevented from rising too much. Larger allocations have been made for social sector development but in absolute terms the funding for both education and health, as a percentage of the GDP, is very low. Human development indicators are low by international standards and need to be improved considerably. But this will only happen when there is good governance, transparency and accountability, and not just hollow slogans or claims made that all is well.


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## Neo

_Mobilink to start first ever private sector undersea cable worth $60m

_By Imran Ayub

KARACHI: Pakistan Mobile Communication - Mobilink - eyes its $60 million undersea fibre cable project by the end of July 2006 as a first ever private sectorÃ¢â¬â¢s venture in the particular area, which would bring third submarine telecom into the country.

A top company official said the Trans World Associates (TWA) - a subsidiary of MobilinkÃ¢â¬â¢s parent company Orascom - was executing the project and it could take next few weeks to take off.

Ã¢â¬ÅWe have not yet set the exact timeframe for this project,Ã¢â¬Â Zouhair Khaliq, President and CEO Mobilink told The News when reached over telephone. Ã¢â¬ÅBut as we hope it would be ready by July end or may be early, as it is very near to its completion and then it would be operational after testing.Ã¢â¬Â

He said the undersea cable would cater the project offered distinct privileges to the company with own optic fibre backbone, the largest cellular network of over 16 million subscribers across the country.

The MobilinkÃ¢â¬â¢s undersea fibre cable project would add to other two such networks being operated by the Pakistan Telecommunication Company Ltd. The second $500 million undersea fibre cable called SEAMEWE-4 (South East Asia, Middle East and Western Europe) landed early 2006.

PakistanÃ¢â¬â¢s Internet and other telecom links with the rest of the world were severed in June 2005 by a fault in the only key submarine cable at that time, which took 11 days to repair. Millions of people were affected by the breakdown in the main fibre-optic link beneath the Arabian Sea 10 kilometres south of Karachi.

The Mobilink chief said the undersea fibre cable link and other projects were part of the companyÃ¢â¬â¢s future investment plan in Pakistan, for which it planned to issue a Rs3 billion bond to expand and upgrade its network.

Ã¢â¬ÅBut the two developments (fibre link and bond issue) donÃ¢â¬â¢t have any direct link as such,Ã¢â¬Â he added. Ã¢â¬ÅWe are issuing as our continued investment plan executed solely by Mobilink but the undersea project would provide cushion in line with network expansion and introducing value-added services.Ã¢â¬Â

The Mobilink, PakistanÃ¢â¬â¢s leading private cellphone service provider in terms of market share, plans to issue a Rs3 billion bond to expand and upgrade its network, an official associated with the transaction said on Monday.

Mobilink has planned to issue the seven-year bond with a green shoe option of Rs500 million. Jahangir Siddiqui Capital Markets, MCB Bank and KASB Securities are the three lead managers for the transaction. Analysts see the development showing continued growth and investment in telecom.

Ã¢â¬ÅThe continued growth in telecom is now pushing operators to improve service quality,Ã¢â¬Â said Anwaar Ahmed Khan, a telecom analyst at Capital One Equities. Ã¢â¬ÅBeing a largest cellular operator, Mobilink needs to upgrade and expand its network with quality service maintain top-level ranking amid rising competition.Ã¢â¬Â He said the company was likely to increase its subscriber base, once it got upgraded its network but improvement in quality would be the main objective to win such huge financing.


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## sigatoka

Neo said:


> By Dr Saima M. Javed


 
Ã¢â¬ÅNot to forget that a one per cent increase in the income of an upper strata family implies a crucial reduction in the income of dozens of families at the lowest economic strata.Ã¢â¬Â

Totally false, the wealth in society is not a zero sum game. That is, you canÃ¢â¬â¢t change the size of slices that people get without changing the size of cake. By taking 1% of income from the rich, you can give only 1-X% to the poor because X is a reduction caused by deadweight loss and administration. 


Ã¢â¬ÅPoverty indicators based on income need to be seen against a host of other factors - availability of free or subsidised medical facilities, clean drinking water, education, insurance, access to roads.Ã¢â¬Â

No, they donÃ¢â¬â¢t, two factors alone can explain poverty. That is average income AND Ginni coefficient. These two variables describe both the average and dispersion of wealth in society without being subjective which if the other factors are introduced will do. Secondly the average income includes these other factors because if there is under or over provision of public goods, it will lower income growth. Including it again creates the problem of double counting. 


Ã¢â¬ÅWhat is critically important for poverty alleviation is to pay due attention to the hitherto neglected health sector, both in terms of budgetary allocations as well as governance.Ã¢â¬Â

Could be true but no reasons given. 


Ã¢â¬ÅBenefits of new technologies and markets under any free economy go to those who have the resources to make use of them or in other words cushion money to put at stake in the new technologies. Once they do so, the ones that do not have that kind of money, are weeded out of the market because of their obsolete technologies. The outcome for the poor is a slide downwards from bad to worse.Ã¢â¬Â

Not true at all, since the industrial revolution since the 18th century, technological improvement has improved the lot of ALL people. Just look at Britian, the first nation to Industrialise. 

This misconception arises because it believes that labour and Capital are substitututes, when empirical evidence overwhelmingly suggests that in most cases they are complementary. That is, technological advances INCREASES not Decreases productivity of labour and their income. 

This assumes that poor people will not find other jobs (new jobs are created) and that they will not consume (the increase in production lowers prices.) 



Ã¢â¬ÅThe green revolution of 1960s provides the best example. Newer varieties of seeds and fertilizers benefited the big landlords. The smaller units were economically weeded out.Ã¢â¬Â

Indeed true, most improvements in the increase in productivity in land is captured by the owners not workers of the land. 

However, this assumes that the landowners donÃ¢â¬â¢t spend their extra money on other things that poor people produce (untrue, therefore some income trickle down to poor people) and secondly IGNORES that Food forms the biggest component of Poor peoples expenses. Therefore the green revolution increased food production, lowered prices and helped poor consumers. 

What about smaller units? Well they took a one off massive financial hit and the decrease in income in that sector would slowly force them to other more productive sectors, in the long run everyone is better off. 


Ã¢â¬ÅPoor people in a remote village whose total income as well as spending is based on agriculture for their own consumption would not benefit from increased exports in manufacturing units in, say Karachi or Sialkot. They would benefit from an increase in national income only if their livelihood is in some way related to the main areas of economic activity.Ã¢â¬Â

False, the increased exports in manufacturing units in Karachi increases incomes of people there who spend it and some of it will be spend on stuff the remote village produces. 


Ã¢â¬ÅProfit sharing between the landlord or industrialist, the middle man and the worker is another determinant of poverty. The worker gets inelastic wages which hover around his bare minimum requirements. This traditional pattern with no labour laws has been the most important contributory factor to povertyÃ¢â¬Â

Bullshit, increase in profits drives investment which provides employment and income growth, it takes time though. Pak. Has only been growing strongly for 6 years and was a desperately poor nation before. 

The wages of workers are rising, what is being said is lies. 

Labour laws can only increase unemployment and decrease national income in the long run and fuels inflation. (Sad but true) Because they lower profits, they will reduce investment in the nation and jobs will be off shored. 

I think charity and direct monthly cash payments is not only morally right, but is economically much better than distorting labour markets for income destruction. (Labour market laws not only redistribute wealth, (that is change the slices of the cakes) they also destroy wealth (make the cake smaller))


Ã¢â¬ÅThen there is the role of taxes in increasing or decreasing the poverty levels. The greater the indirect taxes, the more hard hit are the poorer segments of the society. The greater the direct taxes, the greater is the impact on the well-to-do people. Compared with many other developing countries, the taxation in Pakistan is skewed towards indirect taxes. This skewed nature of taxation further accentuates poverty.Ã¢â¬Â

A same rate uniform indirect tax ensures deadweight loss is minimum because it doesnÃ¢â¬â¢t distort between relative prices of goods. (It ensure the cake is bigger than under other taxes) 

Secondly an indirect tax help reduce CAD problem because it encourages savings. (that is the relative distortion in income taxing which double taxes savings is removed.) 

The impact of indirect taxes is higher on poor people because they have lower savings than rich people. However this effect can be removed by direct monthly cash payment to poorest 5% of Pak. Families which would retain the benefit of indirect tax as well as remove the effect on the poor. 


Ã¢â¬ÅHe failed because of the expenditures on his fatherÃ¢â¬â¢s illness.

Having married his daughters, he would start collecting money for his own old age sickness. On what side of the poverty line would this family fall.Ã¢â¬Â

His father *unexpectedly* fell sick. To protect against Uexpected things people should get insurance, however assuming Pak. Capital markets are not well developed the Govt. should levy small tax on wealth and income and act as a sort of insurance firm to pay for poor peoples medical bills.


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## Neo

ISLAMABAD (June 28 2006): US Secretary of State Condoleezza Rice on Tuesday expressed America's long-term commitment to economic development of Pakistan, while expressing full support for President Musharraf's vision of enlightened moderation and hailing Pakistan as a "friend and a fierce fighter" in the war against terrorism.

President Musharraf, talking to Dr Rice, who called on him at Aiwan-e-Sadr, renewed Pakistan's firm commitment to fight terrorism. Dr Rice praised Pakistan's for its key role in the counter-terrorism campaign and lauded the President's efforts for world peace.

President Musharraf and US secretary of state also agreed over the need for increasing operation in the area of intelligence sharing to make the anti-terrorism campaign more effective in the tribal areas bordering Afghanistan.

President Musharraf reiterated that Pakistan is for a secure and stable Afghanistan, which is in the interest of regional peace and development.

On economic relations, the President said Pakistan looked forward to an early conclusion of bilateral investment treaty, and stressed that a free trade agreement (FTA) between the two countries would greatly contribute to Pakistan's economic development.

"The US is a committed, strong partner and a friend," she said later at a joint press conference with foreign minister Khurshid Kasuri.

Her talks with Pakistan's top leadership, she added, covered ongoing counter-terrorism co-operation and review of progress on discussions for forging stronger co-operation in various fields including energy, education, science and technology and economic development.

Replying to a question, Rice said both Pakistan and Afghanistan are fighting terrorism in a region, which has been difficult for a long time.

"We are trying to commit as strongly as we can to activities, which make it awfully impossible for the Taleban and al Qaeda to operate on the border," she stated.

In response to another question, she said Washington is holding fruitful discussions to deal with Pakistan's growing energy requirements to support its economic growth.

The US secretary of state said Washington backs enlightened moderation, which also has earned world-wide support.

"Pakistan is currently going through tremendous transition and President Musharraf has adopted the course of enlightened moderation, which the US supports and which also has world-wide backing," Dr Rice said. Rice said she also discussed the importance of free and fair elections due in 2007.

The United States, she said, would not only contribute to development of the frontier regions but also to economic prosperity of Pakistan. "Pakistan is a friend and a strategic partner - that is the relationship which will go on for many years, the US remains committed to Pakistan and Pakistan's future," she said and added this is the message President Bush asked her to deliver to Pakistan.

Foreign minister Kasuri said Pakistan has beefed up its troop deployment on its western border with Afghanistan to further intensify its counter-terrorism campaign.

Pakistan army, he said, has offered valiant sacrifices in counter-terrorism and 650 of them have embraced martyrdom.

Kasuri said Pakistan is committed to the cause of peace and security in Afghanistan as a stable Afghanistan is imperative for Pakistan's objective of developing energy and trade linkages with Central Asia.

Referring to last week's visit by Afghan foreign minister, Kasuri said the two countries have agreed not to talk through media but to each other to remove any misunderstandings.

He noted difficult situation in the region and said Pakistan sympathises and empathises with Afghanistan as "which other country has greater stakes in stability of Afghanistan than Pakistan".

"It is a difficult situation - we are trying to talk to each other so that trust deficit does not increase - we are trying to build institutional structure."

Earlier, in his opening statement, the foreign minister said Pakistan and America have a mutually beneficial strategic partnership and described satisfaction with the progress achieved in a range of areas including defence, economic co-operation and energy dialogue.

Earlier, in his opening statement, foreign minister Khurshid Mehmud Kasuri, welcoming secretary of state Dr Condoleezza Rice to Islamabad, said: "She is a good friend of Pakistan."

She has played an important role in the positive evolution of Pakistan-US ties over the past five years - working toward a broad-based, long-term and sustainable relationship, he added. The minister also reaffirmed Pakistan's strong commitment to a stable, peaceful and prosperous Afghanistan.

The two sides also had fruitful exchange of views regarding the security situation along the border.

"Pakistan has taken important steps to strengthen security in that area. Enormous sacrifices have been rendered by our forces," the minister said while adding Pakistan agreed to maintain communication and co-ordination through the Tripartite Commission (TPC) that has been set up between Pakistan, United States and Afghanistan.

He recalled that Pakistan and the United States established a strategic partnership during President Bush's visit in March 2006.

Both sides, he added, were currently focused on implementation of the decisions taken during that visit. The minister expresses satisfaction with the progress made on various tracks since last March.

The minister said the dialogues on science & technology and education were due to take place in the coming weeks.

"It is, thus, clear that the architecture for building a multifaceted relationship created following President Bush's visit to Pakistan in March is progressing well," he added.


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## Neo

KARACHI (June 28 2006): The State Bank of Pakistan has prepared detailed instructions for adoption of various approaches for calculating capital adequacy requirements for credit, market and operational risks under Pillar I of Basel II Capital Accord.

According to SBP the timeframe for adoption of Basel II will be as the Standardised Approach for credit risk from January 01, 2008. Internal Ratings Based (IRB) approaches from January 01, 2010. Banks/DFIs interested in adopting any IRB Approach before January 01, 2010 may approach SBP for the purpose. Their requests will be considered on case-by-case basis.

For Operational Risk, Banks/DFIs can adopt either Basic Indicator Approach or Standardised Approach from January 01, 2008. However, the Advance Measurement Approach (AMA) is not being offered at present.

The decision on the timeline to adopt AMA will be taken in due course keeping in view the preparedness of banks/DFIs and after consulting with Pakistan Banks Association. However, the banks/DFIs are encouraged to follow the international best practices in this regard and prepare themselves for an early adoption.

For market risk, Internal Models Approach has also been allowed along with the standardised approach. However, Internal Models Approach will only be available to the banks/DFIs adopting Foundation or Advanced IRB Approaches. Banks/DFIs are advised to adopt a parallel run of one and a half year for Standardised Approach and two years for IRB Approach starting from July 01, 2006 and January 01, 2008 respectively. They are also advised to submit a quarterly statement on the calculation of their capital adequacy ratio based on the enclosed instructions within 30 days of the end of each calendar quarter.

First reporting, on the basis of Basel II parallel calculations, will be made for the quarter ending December 31, 2006 by January 30, 2007. During the parallel run period banks will calculate their Capital Adequacy Ratio (CAR) based on the instructions contained in this Circular as well as on the basis of guidelines issued vide BSD Circular No 12 dated August 25, 2004 and submit the results of both the calculations on quarterly basis.

Adoption of Foundation or Advanced IRB for Credit Risk and Internal Models Approach for Market Risk will be subject to the prior written approval of the State Bank. Therefore, banks/DFIs interested in adopting any of these approaches are advised to approach the State Bank for getting necessary approval.

Some products/exposure types and their treatment under various approaches have been elaborated in the enclosed instructions for facilitating the banks/DFIs to adopt Basel-II. This should not be construed as a permission to launch such products/conduct business in a particular manner. Therefore, banks/DFIs are advised to ensure compliance of all relevant provisions of law and SBP regulations while taking a decision to deal in a particular type of business/transaction. For instance, securitisation of assets will be conducted only after meeting the requirements of applicable laws and other SBP regulations, etc.

Banks / DFIs are also required to follow the instructions contained in BSD Circular No 6 dated October 28, 2005 regarding minimum paid-up capital requirement and CAR.

Other instructions on the subject shall, however, remain unchanged.


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## Neo

ISLAMABAD (June 28 2006): The World Bank (WB) has pinpointed 'deepening human capital' as a specific challenge to Pakistan's economy, and stressed policy makers to search avenues for addressing it to accelerate economic growth and reduce poverty.

Human capital is the education, health and skills embodied in the population in general, but the workforce in particular. Increased production not only requires more physical capital but also enhances human capital. Labour productivity, which is essential for sustained economic growth, requires an educated, healthy and skilled labour force.

According to economists, no nation has enjoyed prolonged economic growth unless its literacy level has crossed 70 percent and the population has been free from enervating diseases. Rapidly advancing technology also requires a high degree of skills.

The World Bank in its report titled 'Economic Growth and South Asia' says that economic growth has already contributed to an impressive reduction in poverty.

In the last decade--1990s--poverty in the region (Bangladesh, India, Sri Lanka and Nepal) fell by 6 to 11 percent. Only in Pakistan did poverty increase by 8 percentage points due to economic stagnation throughout the decade. The most recent evidence (2004-05 survey), however, suggests that with the resumption of high growth, poverty is again declining rapidly in Pakistan.

But much remains to be done to achieve accelerated growth rates that increase economic prosperity across the board, the report adds.

First, economic growth in the past decade has resulted in growing income inequality which may act as a constraint to higher growth in the future. Second, while conflict, corruption, and high fiscal deficits may not have constrained growth in the past, their persistence may become binding in the future.

The Bank has cited country-specific challenges to boosting economic growth that policy-makers would need to address to accelerate their growths. These include reducing fiscal deficits and public debt in India; strengthening governance in Bangladesh; deepening human capital in Pakistan, and addressing civil conflict in Sri Lanka and Nepal.

A striking feature of the report is analysis showing that South Asian countries could see single-digit poverty rates in a decade if economic growth accelerates to 10 percent a year until 2015. This means the number of people living in poverty could go down by two-thirds in less than ten years.

The report says that while the challenges facing the region are daunting, it is possible that South Asia can see poverty rates cut by two-thirds in a decade.

Shantayanan Devarajan, World Bank Chief Economist for the region and co-author of the report, says that growth rates in South Asia have been accelerating in the last 10 to 15 years.

"South Asia as a whole has been enjoying about five to six percent growth with some countries like India and Pakistan growing over seven percent in the last two years," he says.

"If this growth can be sustained and accelerated, South Asia--which is the region with the largest concentration of poor people in the world--has a significant chance of bringing poverty down to single digits in a decade."

A key need, Devarajan says, in the region is new infrastructure. "South Asia is suffering from infrastructure constraints. All of this growth has occurred without commensurate increases in investment in public infrastructure.

"If we can relax those constraints, for instance bring more water to people, more roads, ports and things like that, that can actually benefit the poor and accelerate growth."

He says: "What you can observe in South Asia is not only there is a need for infrastructure but there's also need to be able to manage the current stock of infrastructure better.

As Ijaz Nabi, the report's co-author, points out, the economic growth in the region has already seen poverty levels decline.

"Across the board, poverty has come down by six, seven, eight percentage points, as a result of this decade long growth rate," Nabi says. "The one country in the region that did not experience a reduction in poverty was Pakistan, because Pakistan's growth rate virtually stalled in that decade.

"But there, too, growth has now picked up and the most recent data from Pakistan shows a substantial reduction in poverty," says Nabi, who's the Bank's Sector Manager for Economic Policy for the South Asia region.

He says that part of the reason behind their forecast that poverty levels could be down to single digits in a decade is that countries in the region have already shown they're capable of growing despite what he calls 'binding constraints'.

Nabi says their preliminary estimates are that "one would need to spend something in the range of US $25 to $30 billion in order for India, Pakistan, Bangladesh, Sri Lanka and Nepal to have the kind of infrastructure to reduce internal logistics costs to make South Asian products internationally competitive."


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## Neo

KARACHI (June 28 2006): The President of the Netherlands-Pakistan Business Council, Martin J. Leushuis, has spoken of immense opportunities for collaboration between the two countries in the realms of business and industry. He is currently on a visit to Pakistan at the head of a three-member delegation.

In an interview with APP here, Martin pointed out that there are tremendous possibilities for the Dutch companies here. He said that in the Netherlands and Pakistan most of the people speak English and with the collaboration in the business and industry there can be a win-win situation for both the sides.

Martin informed that there are a lot of products, which cannot be produced in Holland because of the labour cost in comparatively much high there. However, he further stated, these can be produced in Pakistan pretty well.

Martin was of the view that both the sides can build a suitable, long-term network. " That is what we are looking for". He stated that we are looking for a collaboration between the Netherlands and Pakistan and the companies of the two countries.

Martin was of the opinion that the situation was conducive in Pakistan for doing business here and that is why he is here along with a delegation to explore the possibilities in this respect. The other members of the delegation were Harold Vreeman and Erik Jansen of the Menzing Industries of the Netherlands.


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## Neo

KARACHI (June 28 2006): A Dutch firm Menzing Industries will sign a memorandum of understanding (MoU) with a Karachi based firm-Research and Development Engineering Company. The MoU will be inked in Islamabad on Wednesday, says the leader of a three-member business delegation from the Netherlands, Martin J. Leushuis, while talking to APP here.

He said that the two countries would be working together. The initial test has already been performed. Martin was of the view that the first step has been taken and after making some progress. "We will see as to what the possibilities there are and we will look into the possibilities of investment and see what new products may come out as a result of such a collaboration", he added.

Martin, who is also the President of the Netherlands-Pakistan Business Council (NPBC), is also looking for the Dutch companies and those from Pakistan to work together.

He said that the NPBC plans to use Pakistan as a hub for other countries in the region. This would be an ideal situation for the export and the re-export to other countries from Pakistan. Martin was of the view that there are tremendous possibilities for the Dutch companies here.

Romy Moiz, Managing Director of Research and Development Engineering Company, located in Korangi Industrial Area here, said that Menzing has already sent material here for trial production.

He said that his firm and Menzing will sign an agreement in Islamabad on Wednesday under the sponsorship of Pakistan's Ministry of Industries and the Engineering Development Board.

Moiz said that we are signing this agreement with Menzing for co-operation and joint projects to be done in Pakistan in future. "This is a first step which would lead to further investment here from Holland in a collaborative manner", he remarked.

Moiz further said that Menzing is also offering technology and inviting our personnel for training so that the same standard of manufacturing could be achieved in Pakistan.

Omar Zaman, Technical Director of Research and Development Engineering Company, praised the initiatives the government of Pakistan is taking in the engineering industry. This, he added, would contribute towards promotion of exports in the engineering goods as has been desired by the government.

Omar said that his firm has sent a consignment of exports to Germany and the client there was of the view that the standard of the product was perfect. Harold Vreeman, Managing Director of Menzing, said that as a result of the signing of MoU there will also be a transfer of technology and know how.


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## Neo

ISLAMABAD (June 27 2006): The Pakistan Atomic Energy Commission (PAEC) by 2030 envisages production of 8800 MW electricity from nuclear sources for which the working plans are underway, PAEC Chairman Anwar Ali said here on Monday.

Addressing the inaugural session of 31st International Nathiagali Summer College, jointly organised by Pakistan Atomic Energy Commission and National Centre for Physics, he said that the country needs more nuclear power plants to meet the growing energy needs.

He said that PAEC would open 13 cancer hospitals and introduce mechanised farming, which would take care of water management, soil and crops by using modern techniques, according to a statement issued here. "In order to work out the vision and future roadmap for the development of science in Pakistan, all R&D organisations have to get together. As far as PAEC is concerned, we have already formed an Advisory Council which will consist of bright and imaginative scientists who will define the future vision and set the new directions for PAEC programmes", Anwar said, according to the statement.

Higher Education Commission Chairman Dr Attaur Rehman said that PAEC contributions in the domain of national defence, industrial development, nuclear energy, health and human resource development were laudable with its ever-increasing engagements in most advanced areas of knowledge.

He said that acquiring advancement in science and technology was the focus of the present government as knowledge alone would decide the haves and have-nots of the present-day world. "Our 100 million youth will be our chief asset as we are nurturing them in advanced areas of science and technology to transform the country into a prosperous and strong nation," he said.

About efforts in training and education of Pakistani youth, he said that the 1150 students had been sent abroad in the last two years and the cases of another 600 students were underway under 150 million dollars Fulbright scholarships. "We are getting good feedback from the sponsor universities abroad about the quality of our students, and we are encouraged to allocate Rs 15 billion to send 2000 more students in the near future."

Earlier, Director General, National Centre for Physics Dr Riazuddin said that during the past 30 years, over 525 eminent scientists, including six Nobel laureates had shared their knowledge and experience with over 900 scientists from as many as 72 countries. Nearly 6000 scientists, drawn from universities, colleges and R&D institutions from Pakistan had benefited from these colleges.

The first International Nathiagali Summer College was held in 1976 due to the inspiring vision of Dr Abdus Salam and is organised every year since then with remarkable regularity and ever-greater participation from national and international scientists and engineers. It has been an excellent forum for exchanging knowledge and establishment of personal contacts among participants.


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## Neo

KARACHI, June 27: With a hefty cash balance of Rs10 billion, an expected profit of Rs1.3 billion this fiscal year and a big fund source available in the form of land capital, the managers of Pakistan Steel are confident of investing $200-250 million from own source in revamping, modernisation and balancing and also maximising production capacity to 1.5 million tons from the existing 1.1 million tons over the next two years.

Ã¢â¬ÅWe are looking to Islamabad for guidance and advice,Ã¢â¬Â Pakistan Steel Chairman Lt-Gen (retd) Abdul Qayum informed Dawn on Tuesday when asked about future plans after the Supreme Court annulled the privatisation of Pakistan Steel last Friday. Ã¢â¬ÅIt is for the government and the cabinet headed by Shaukat Aziz to decide future course,Ã¢â¬Â he said but added that the plant was now in a `pathetic stateÃ¢â¬â¢ and needed immediate attention.

With virtually no maintenance, no major repair or any significant replacement in the last 25 years, the managers and engineers want a quick revamping, as wear and tear has already started telling on the plant.

The PS chairman refused to be dragged into controversy on valuation of Pakistan Steel or the procedure adopted in the privatisation but agreed to respond to questions on `financial healthÃ¢â¬â¢ and disclosed that in the current fiscal year ending June, Pakistan Steel was expected to show a profit of over Rs1.3 billion. After tax net profit, he said, would be around Rs720 million.

Ã¢â¬ÅWe operated on an average of 62 per cent production capacity because of the problems in coke oven battery. Its repair was due in 1997 which was not taken up. Again the repairs were given up in 2005 because of the privatisation plan,Ã¢â¬Â he said. At one time the plant operated on 36 per cent capacity but picked up gradually to average out at about 62 per cent.

Pakistan Steel has been consistently showing a profit for the last more than four years. In 2004-05, total profit was Rs10.19 billion while after tax profit was Rs6.7 billion. In 2003-04, the profit was Rs7 billion and after tax profit was Rs4.85 billion, and it was Rs1.23 billion in the year 2002-03.

Ã¢â¬ÅPakistan SteelÃ¢â¬â¢s turnaround is historic and a landmark event in Pakistan,Ã¢â¬Â Mr Qayum said, attributing it to the financial restructuring taken up in 1999-2000 by the Mushsrraf-Shaukat government. Ã¢â¬ÅWe have paid the outstanding principal amount of Rs11 billion and the government agreed to pick up Rs7 billion interest,Ã¢â¬Â he recalled while pointing out that Pakistan Steel will start servicing interest payment from 2013 to 2020. Ã¢â¬ÅWe have wiped off our all losses and now look tomorrow with hope and confidence because of cash balance, profitability, favorable international environment and above all a caring government,Ã¢â¬Â he said.

As for those who sought golden handshake after the March 31 privatisation, the PS chief said they should now forget it because Ã¢â¬Åwe all have to work togetherÃ¢â¬Â.

He indicated a rise in prices of steel products in the next few days because international prices are rising and market manipulators are taking undue advantage of this difference. Pakistan Steel on Monday increased price on a product and intends to raise prices of a few more products in next few days. He said prices of input were also on the rise and quoted that the price of coke imported from China went up from $160 a ton to $190.

Ã¢â¬ÅSoftening international prices and lower capacity utilization have resulted in operating loss of Rs1.4 billion in the first half of 2006,Ã¢â¬Â federal minister Awais Ahmad Leghari informed the legislators on April 8 to justify the disinvestment of Pakistan Steel. Mr Leghari took over the privatisation ministry after Dr Hafeez Sheikh quit the ministry. But in the same draft, the minister says Pakistan Steel earned a profit of Rs140 million on sales of Rs7.35 billion in the first half of the fiscal year 2005-06 when it operated on less than 50 per cent capacity.

Mr Leghari did concede Ã¢â¬ÅPakistan SteelÃ¢â¬â¢s improved financial performance over the last few yearsÃ¢â¬Â which he said was driven by the Ã¢â¬Åunprecedented increase in international steel prices and margins, as the steel industry has globally hit a historic peakÃ¢â¬Â. He referred to PC-1 of Pakistan Steel in October 2004 needing an investment of $200 million to address operational issues and also to increase capacity to 1.5 million tons.

According to financial profile, Pakistan SteelÃ¢â¬â¢s operating profit increased from Rs4 million in 2002 to Rs2.27 billion in 2003, Rs6.66 billion in 2004, Rs9.76 billion in 2005 and indicated loss of Rs1.38 billion in the first half of 2006. But the equity base of Pakistan Steel has expanded from Rs8.54 billion to Rs21.29 billion in 2006. Total assets were valued at Rs30.15 billion in 2002 which went up to Rs35.92 billion in 2006.


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## Neo

KARACHI: Manpower export from Pakistan has been declining over the years to the extent of missing its annual target and reducing scope of future remittances, a major source of bridging the trade deficit.

The latest figures compiled by the concerned authorities and overseas employment promoters show that during last two years manpower exports dropped by almost 50 per cent.

Ã¢â¬ÅDuring 2005 total 91,773 people flew abroad against 173,824 in 2004,Ã¢â¬Â said a source close to the Overseas Employment Corporation (OEC). Ã¢â¬ÅThis shows a negatives difference of 47.2 per cent in a single year and the gap has been on the rise during 2006.Ã¢â¬Â

He said the in 2004 the country also witnessed sharp decline in manpower exports as in 2003 total 214,039 left mainly for Arab countries to earn employment, which had not been the trend during the next couple of years.

Since early 70s hundreds of thousands of Pakistanis fly abroad every year to get better employment opportunities. The overseas Pakistanis have been instrumental in managing good foreign reserves during last three years and bridging trade deficit through remittance that they send home.

The country faced $8.6 billion trade deficit during first nine months 2005-06, which was offset to some extent through $3.63 billion worth of remittances from overseas Pakistanis during the first 10 months of the current financial year.

People involved in manpower export say that during the last few months Arab states ÃÂ± once the most favourite destination of jobseekers - have restricted foreignersÃ¢â¬â¢ influx to focus more on national and skilled workers.

Ã¢â¬ÅPakistan being a cordial exporter of manpower to Saudi Arabia naturally was affected by decline in demand for unskilled and semi-skilled labour due to completion of major infrastructure projects in the Kingdom,Ã¢â¬Â said Hanif Rinch, chairman Pakistan Overseas Employment Promoters Association (POEPA).

Ã¢â¬ÅCurrently the demand is for skilled labour, technicians and highly trained professional, but we lack technically trained manpower in Pakistan while our universities, colleges and other professional institutions are considered below standard by foreign employers.Ã¢â¬Â He said professionals from countries like Pakistan would have to undergo technical and electronic tests to win certificate for employment in Saudi Arabia.

Ã¢â¬ÅAnother important point is that overseas employment promoters donÃ¢â¬â¢t have sufficient pool of technically trained manpower,Ã¢â¬Â added Rinch. 

Ã¢â¬ÅSo we canÃ¢â¬â¢t run in search of required manpower on demand, which normally results in delayed dispatch of urgently needed persons and therefore the foreign employers have shifted their human resource hiring to other countries.Ã¢â¬Â

The least hiring of Pakistanis in Saudi Arabia and ban on Pakistani labour by some of Arab countries have emerged as threats to hit the permanent manpower export feature from the country.

However the promoters, who drive the manpower export, see Malaysia to become the biggest importer of Pakistani manpower after it announced to hire 100,000 Pakistanis, which would help in handling the approaching crisis.

Ã¢â¬ÅThe main problems at Malaysian front are smaller wages and slow process of visas making it less attractive than Arab countries,Ã¢â¬Â said Muhammad Faisal of Al-Faisal Promoters.

He said the manpower exports to Malaysia started a few months ago and was likely to gain some pace after Eid, when majority of the willing people plan to fly abroad.

Malaysia in February 2005 announced to recruit 100,000 male Pakistani workers amid an acute labour shortage caused by a crackdown that sent hundreds of thousands of illegal workers fleeing the Far Eastern country.

During the visit of Malaysia premier Dato Seri Abdullah Ahmad Badawi to Pakistan last year he announced to exempt Pakistanis from taking the induction courses, which are compulsory for other foreign workers.


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## Neo

KARACHI: PakistanÃ¢â¬â¢s total oil imports rose 6.8 per cent to 1.42 million tonnes in May from 1.33 million tonnes in April and analysts said on Tuesday water shortages to generate electricity could further boost imports.

Oil imports in April 2006 also rose 24.56 per cent when compared with the same month last year, according to the data issued on Tuesday by the Federal Bureau of Statistics.

Khalid Iqbal Siddiqui, head of research at brokers Invest Capital and Securities, said falling reservoir water levels forced state-run Water and Power Development Authority (WAPDA) to use larger amounts of imported oil to generate electricity. Water levels in major reservoirs are critically low after Pakistan got 40 per cent less than normal winter rain and up to 25 per cent less snowfall.

Ã¢â¬ÅFurnace oil consumption of WAPDA has increased considerably from January onwards after water shortages cut hydroelectric output,Ã¢â¬Â Siddiqui said. Ã¢â¬ÅThe demand is likely to remain high till the start of monsoon in July.Ã¢â¬Â

Analysts said there would be an increase in petroleum imports as the countryÃ¢â¬â¢s energy needs were high due to its fast economic growth.

PakistanÃ¢â¬â¢s economy grew by 8.6 per cent in fiscal 2004-05 (July-June) - its fastest for nearly two decades - and the government is expecting a growth of 6.6 per cent in 2005-06. In terms of value, PakistanÃ¢â¬â¢s crude and petroleum product imports rose to $713.92 million in May, compared with $615.41 million in April and $413.60 million in May 2005.

For the July-May period, the total bill was $5.958 billion, compared with $3.626 billion in the same period a year ago.


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## Neo

Wednesday June 28, 2006 

ISLAMABAD : The government is taking steps for expansion and promotion of engineering industry to diversify its base and get into production of value-added products. 

This was said by Prime Minister Shaukat Aziz while presiding over a meeting on Tuesday to review the performance of the Engineering Development Board (EDB) and development of engineering industry in the country. 


The prime minister said that the steps taken by the government had paved way for a dynamic engineering sector by facilitating capacity expansion and competitive production. 


Ã¢â¬ÅLast year automobile sector showed a growth of 30 per cent. Several parts manufacturing companies have set up plants in Pakistan,Ã¢â¬Â he said. 


The government was encouraging local production and technology upgradation both for import substitution and export enhancement, he said. 


He said that Pakistan was fast becoming a regional hub for production and trade activities because of its geo-strategic location, availability of skilled labour and business-friendly policies. 


He said that engineering sector should focus on modernization and innovative technologies to improve the quality and competitiveness of the locally manufactured products. 


The EDB officials made a presentation on its performance and submitted proposals to expand and further promote engineering sector. 


The prime minister was informed that economic recovery of the country had led to an increased demand for automobiles which was being met through enhanced production. 


Prime Minister Aziz was informed that the market for cars had expanded to 200,000 cars. Ã¢â¬ÅLocal production of cars has gone up to 160,000 in 2,006 from 80,000 cars in 1,999 and that of motorcycles from 90,000 motorcycles in 1,999 to 850,000.Ã¢â¬Â 


Mr Aziz was informed that expansion in automobile industry had led to a substantial increase in employment generation and presently 190,000 people were employed in it.


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## Neo

Wednesday June 28, 2006 

Islamabad: As many as 0.7 million motorcycle were produced during the year of 2005-06 and this volume is going to cross 1 million mark by year 2010. 
A delegation of delegation of Association of Pakistan Motorcycle Assemblers (APMA) expressed these views while talking to CEO of Engineering Development Board, Imtiaz Rastgar who called on him here on Tuesday and discussed the issue in depth. 

The delegation said the increasing volume has compelled the vendors industry to increase parts production manifold, as it is not only meeting the demand of OEMs but also the after sales market. 

They pointed out that crank case, crankshaft, transmission, shaft rocker arm, spindle, complete kick starter, spindle gear and spindle cam chain, guide sprocket were in short supply as the production capacities of vendors for these parts are very low. 

The gap between supply and demand is met by import. 

The situation can be judged from the fact that crankcase is manufactured mainly by only two companies but their production capacity is approx 6000 sets per month, they observed. 

It is pertinent to mention here that Honda is manufacturing the part in house for 70 cc motorcycles only. 

CEO advised them that they should not only encourage the existing vendors to increase their production but also provide impetus to investors to invest in this industry for rich dividends in short period. 

The scale of volumes involved was now enough for new entrants to come forward and start producing these parts to fill the gap between the supply and demand, he added. 

As evident from the current scenario, the gap between the supply and demand of the motorcycle parts is going to widen with the increase in production of motorcycles. 

This gap is an open invitation to the progressive businessmen for availing this opportunity and venturing in the manufacturing of crank case, crankshaft, transmission, shaft rocker arm, spindle, complete kick starter, spindle gear and spindle cam chain, guide sprocket, sheet metal parts and others.


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## Neo

KARACHI: Panic selling continued to scrap early gains and shrank overall turnover at the Karachi stock market as the index even breached through 9,500 level in reverse gear and closed very close to 9,000 pathetic mark.

Banking, oil and cement sectors witnessed a heavy battering. Accordingly, KSE 100-share index shed another 363.08 points to 9,041.62, therefore, the turnover remained pegged to low at 150.964 million shares on Tuesday.

Carrying forward a day earlier decline, the market plummeted further. So far the index has gone down by 1,130 points (11.5 per cent) in the three consecutive sessions.

Analysts observed that the equity market was getting upset, as it was passing through the rollover week that might witness more wreckage at the KSE to square up position in the leverages.

Moreover, the retail investors have set themselves aside of the local bourse and have no intentions to participate in the crumbing equity market. Market might witness another colossal loss to 8,500 level on Wednesday, said Usman Farooqi, Head of Research Department of Alfalah Securities.

He opined that market would continue in the red with range bout sessions till July 10, 2006, however, might recover on Thursday on the hope of good cash dividend be announced by NIT.

Haji Ghani Haji Usman, member director-KSE said that position in leverage work was halting progress at the stock market. He noted that there are three folds of the losses in the deteriorating market, as member commission gets reduce, Continuous Funding System minimises and sharesÃ¢â¬â¢ prices decline further.

He endorsed that the small investors sit in the pavilion and watching the ongoing show at the Karachi bourse.

Another analyst said that as the day of July 01 is coming near the investors getting distance from the local bourse. On July 01, the CVT on sharesÃ¢â¬â¢ transaction and withholding tax on the brokerage houses would get doubled. This particular reason compelled the day to day, jobbers, and retail investors to remain outside of the stock exchange.

Despite the ban on short selling, the market sank further, a detailed report issued by Live Securities said.

There were rumours of selling by a major mutual fund on account of huge redemptions. Retail selling was also visible as investors struggled to fulfill their margins. The Supreme CourtÃ¢â¬â¢s verdict on the Pakistan Steel Mill privatisation has further eroded investorsÃ¢â¬â¢ confidence, as no immediate progress seems likely in the countryÃ¢â¬â¢s privatisation programme.

Report added, Ã¢â¬ÅDespite the low quantum of leverage, the futures rollover is also taking its toll. It can be noticed that in two days, the addition of open interest in the July futures is higher than the decline in the June contract. Instead of reflecting an increase in genuine leverage, this probably reflects investorsÃ¢â¬â¢ hesitancy to completely rollover their positions in view of the unabated descent in share prices and the relatively higher futures spreads in July. Open interest in June presently stands at Rs7.2 billion and with just three days remaining for the contract to expire.Ã¢â¬Â

No change was witnessed in the trading volumes as they arrested at 150.964 million on both the trading days of the week. Across the board selling was witnessed as all the blue chips ended in the reds at lower circuit breakers.

The losers remain winners in terms of scripsÃ¢â¬â¢ number, as 252 advanced, 49 declined while the value of 24 scrips remained unchanged. Consequently, market capitalisation declined by another Rs97 billion to Rs2.544 trillion.

OGDC shed Rs6.30 at Rs119.70 on 22.439 million shares. TRG Pakistan enhanced by five paisa at Rs10.10 on 13.903 million shares.

National Bank plunged by Rs9.90 at Rs188.25 on 10.613 million shares. MCB Bank downed by Rs9.55 at Rs181.75 on 10.577 million shares.

Pak Petroleum declined by Rs9.60 at Rs183.05 on 9.053 million shares. PTCL deprived of Rs1.90 at Rs36.70 on 6.689 million shares. Fauji Cement, Pak Oilfields, DG Khan Cement, Pak PTA were the other which closed in the red at the bottom of the day top-ten volume leaders.

Forward Counter: OGDC led the list of actives on this counter, shed Rs6.31 at Rs120.04 on five million shares followed by NBP, which declined by Rs9.92 at Rs188.63 on three million shares, OGDC-July plunged by Rs6.36 at Rs120.99 on three million shares, MCB Bank deprived of Rs9.31 at Rs182.40 on two million shares, PPL dropped by Rs9.68 at Rs184.03 on two million shares.


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## Neo

KARACHI: State Bank of Pakistan on Tuesday allowed commercial banks to establish full-fledged and new micro finance bank.

A press note issued by the central bank said commercial banksÃ¢â¬â¢ entry into micro finance banking will be in four types.

Through existing branches micro finance counters are allowed to open.

Stand-alone or designated micro finance branches can be opened as new branches or present branches could be converted into specialized micro finance branches.

Micro finance banking could be started by establishing an independent subsidiary having its independent board of directors.

But this subsidiary will be governed by Microfinance Institutions Ordinance, 2001, which means they have to face dual control of ministry of finance as well as central bank of the country.

Finally developing linkage with microfinance banks, licensed by central bank and NGOs or Micro Finance Institutions that are not licensed by SBP to extend wholesale funds for onward lending.

Press note said the already promulgated prudential regulations for micro finance will be applicable to micro finance operations of commercial banks.

Press note has not mentioned about whether the newly established micro finance banks by commercial banks will be eligible to solicit deposits and will act as chequeing banks.

The combined outreach of micro finance banks and NGOs *** micro finance institutions is around 0.5 million borrower clients that is less than 10 percent of the potential market of 6.5 to 7 million poor households of the country.


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## Neo

UAE firms to invest $40bn

ISLAMABAD, June 27: Pakistan is an attractive place for United Arab Emirates investors as more and more companies are investing in various sectors. Director of the Middle East and Central Asia unit for the IMF, Mohsin Khan said on Tuesday that the UAE companies were feeling more comfortable with the Pakistani economy, and cultural similarities with the Gulf, all contributed to the deals.

The Gulf News online edition on Tuesday reported while quoting him saying that many Pakistanis also hold senior positions in Dubai firms and provide local expertise in the Pakistan business climate.

He said that he was surprised by the huge investment made by Dubai companies such as Emaar and Limitless which announced real estate projects valued at $40 billion (Dh147 billion) for Pakistan in early June.

He said, Ã¢â¬ÅA few years ago Pakistan was not a popular investment choice for the UAE companies. But after making impressive strides reforming its banking sector and standardising business practices, Pakistan is showing a big green light which Dubai companies are finding hard to ignore.Ã¢â¬Â

An IMF success story, in 2004, Pakistan passed through the latest of several structural adjustment programmes.

The same year, it raised $500 million through a Eurobond. In another progressive step, just months ago it adopted international arbitration standards in business disputes, he added.

http://www.dawn.com/2006/06/28/ebr10.htm


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## Neo

ISLAMABAD (June 29 2006): The Petroleum Ministry has announced incentives for setting up deep conversion grass-roots refinery of 200,000-300,000 barrels per day capacity at Khalifa Point (Hub), Balochistan, for which 2000 acres land would be offered to the successful investor through international competitive bidding (ICB).

The government is expecting $2 billion investment on 'Build-Own-Operate' (BOO) basis refinery, which should be completed by December 31, 2010. According to the terms, all facilities would be provided as per Export Promotion Zone Authority (EPZA) rules with the modification that land owned by State Petroleum Refining and Petrochemical (Perac) for setting up refinery would be provided free of cost to be used only for the refinery, and not as government equity.

There would be no restriction on import of crude oil which would be exempted from customs duty and taxes (all other incidental charges associated with import would, however, be applicable).

The government will facilitate installation of supporting infrastructure, including single-point mooring (SPM), submarine pipelines, product pipelines and electric power supply from national grid. Sales tax exemption will be allowed on the quantity of petroleum products exports while sales tax would be applicable on products marketed locally.

The Ministry has set following terms and conditions for setting up the new oil refinery:

i) The refinery will be designed and constructed in accordance with internationally accepted technical codes and standards.

ii) The refinery will have the capacity to produce at least 60 percent middle distillates.

iii) Product specifications for the refinery will be in accordance with EURO-III specifications for both domestic and export markets.

iv) There will be no guaranteed return for this new refinery.

v) The refinery will be required to optimise its own operations and thus be responsible for its margins.

vi) The refinery will be free to sell surplus products in the international market at internationally competitive prices.

vii) The proposed refinery location will be declared as EPZ and the criteria/incentives offered by the EPZA will be applicable.

viii) The 80/20 rule (which requires export of 80 percent of total production to foreign countries) applicable for industries established under EPZA rules will be relaxed for this project to attract investment.

The investment proposals would be evaluated on the basis of technical and financial soundness of development and operation of the proposed refinery.

Ministry of Industries and Central Board of Revenue (CBR) have locked horns with Petroleum Ministry for declaring the refinery location as EPZ, sources said.

They said that CBR was of the view that there was no provision to exempt crude oil imports from customs duty and other taxes, whereas Finance Ministry says that no subsidy be provided under the proposed pricing mechanism and that the proposed concessions should not impact the competitiveness of existing refineries and also that the land may be leased out at nominal rates for the life of the project.

The country's current demand of petroleum products is about 16 million tons per annum, of which, 82 percent is met through imports (crude and finished products) and the rest through indigenous resources.

Pakistan's present total refining capacity is about 12.8 million tons per annum.

It is pertinent to note that energy demand and supply projections indicate that by 2011-12, total deficit of petroleum products in the country would be over 9 million tons and 11 million tons, respectively.


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## Neo

ISLAMABAD (June 29 2006): The government is likely to allow import of second-hand construction machinery, airport handling machines, milk processing units and medical equipment, to be announced in the Trade Policy 2006-07 on July 19, the sources told Business Recorder.

"All the ministries and departments concerned have agreed to allow import of second hand machinery for construction sector, airport handling, milk processing and dialysis machines for the hospitals," they added.

Sources said the construction industry had approached the commerce ministry that its activities were in full swing throughout the country, but the ban on import of second hand machinery has increased the cost, proposing that the ban should be lifted.

They said the rationale behind the decision to allow import of second chillers (milk preserving unit) was that a substantial amount of milk collected from different parts of the country turns sour due to non-availability of preserving units. Since the government was endeavouring to develop dairy industry, it has been decided to allow import of second hand chillers, the sources added.

Sources said kidney patients were also facing problems in dialysis especially in the public sector hospitals where the machines were either old or faulty. Besides some private parties were also approaching the ministry for seeking permission to import second hand dialysis machines.

Keeping in view the hardships of patients, the government has decided to allow import of second hand dialysis machines from the new fiscal, the sources added.

They said that announcement to enhance trade with India was also expected to be made a part of the Trade Policy, and most probably the positive list would be enlarged, but did not give the details.

Sources also said that a technology fund would also be established in the Trade Policy, jointly sponsored by the commerce and industries ministries, adding that if any private sector company was interested in technology transfer that would not only be encouraged, but the Government of Pakistan would contribute its share by 50 percent.

The export refinance scheme and long-term financing were also made more business-friendly and Commerce Minister Humayun Akhtar Khan is expected to meet State Bank of Pakistan (SBP) Governor Dr Shamshad Akhtar shortly to finalise the proposals, the sources added.

They said that establishment of the Trade Development Authority of Pakistan (TDAP) would also be announced in the Trade Policy and in this regard Presidential Order would be issued on July 19, soon after the announcement of the Policy.

According to the sources, some of the controversial proposals in the draft TDAP, including empowering the inspectors for raiding the export and brokerage houses have been withdrawn as the commerce minister viewed the TDAP as trade promotion authority rather than a policeman.

However, one issue regarding remuneration of TDAP chief is yet to be resolved the incumbent chairman was seeking one million rupees monthly package, but the government was of the view that the package should be as per rules applicable to the civil servants, the sources claimed.

They said the EPB chairman was aspiring to enjoy the status of the state minister, but he has been told that it was the discretion of the President and the Prime Minister to give such status.

There was also still a controversy over the powers of the TDAP chief as the incumbent EPB chief was of the view that most of the powers should remain in his domain, but what the ministry says is that there should be balance of powers between the head of the organisation and the board members.


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## Neo

DUBAI (June 29 2006): Pakistan's exports to United Arab Emirates (UAE) doubled during the last five years from 727.49 million dollars in 2001-02 fiscal (July- June) to estimated 1.4 billion dollars in 2005-06 fiscal.

According to figures provided by the Pakistan Consulate in Dubai, total annual trade volume between the two countries also more than doubled in five years period from two billion dollars to 4.4 billion dollars.

The trade balance is in favour of the UAE, mainly due to import of petroleum, iron ore, plastic material, chemical products and semi-manufactured gold by Pakistan.

Pakistan's Commercial Counsellor Najeeb Abbasi said his country was able to double its exports after Pakistani businessmen created a foothold in the UAE, and added the exporters improved quality of their goods and increased participation in the UAE exhibitions.

The Pakistan government provided export incentives, resulting in aggressive marketing by traders and its embassy, while the World Trade Organisation (WTO) provided level field for textiles along with introduction of stiff reformative measures.

Abbasi said sharp rise in oil prices and higher imports of automobile machinery to meet demands of increased economic activity in Pakistan were reasons for increase in value of imports from the UAE.

Pakistan's major exports to the UAE include textiles, garments, tents, canvas, rice, leather, leather goods, footwear, surgical instruments, sports goods, carpets, rugs, engineering goods, jewellery, fish and fish preparations. Food and home textiles for hospitality were among new products.

He said under the co-operation agreement signed in September 2005 between Sharjah Chamber of Commerce and Industry and the Pakistan government, the Sharjah government had allocated 1,000 square metres of land to establish Pakistan Trade Centre in Sharjah.


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## Neo

Thursday, June 29, 2006 

* Government to give land for free

By Fida Hussain

ISLAMABAD: The government will provide free of cost land at Khalifa Point near Hub for setting up an state-of-the-art deep conversion grassroots oil refinery in Balochistan. The investor will get all facilities, which are provided as per the Export Promotion Zone Authority (EPZA) rules, a senior government official told the Daily Times on Wednesday. 

The land owned by State Petroleum Refining and Petrochemical will be provided free of cost as the government is interested in setting up a new oil refinery with a refining capacity of 200,000 to 300,000 barrels per day. According to the official, the incentive package has been prepared in a bid to attract investment in this very important sector. 

The new refinery will have no restriction on the import of crude oil. The imports of crude oil will be exempted from customs duties and taxes. However, all other incidental charges associated with this import will be applicable. The proposed refinery location will be declared as Export Processing Zone (EPZ). The condition of exporting 80 percent of the production under the EPZA rules, which are applicable to industries established in EPZ, will be relaxed for this project. 

According to the official, the refinery will be free to sell surplus products in the international market at the internationally competitive prices. 

Under this incentive package, the government will facilitate installation of supporting infrastructure including Single Point Mooring (SPM), sub-marine pipelines, product pipelines and electric power supply from the national grid. 

The government has also granted general sales tax (GST) exemption on the quantity of petroleum products exports. However, the GST will be applicable on the products to be marketed locally. 

The prospective investor will be required to produce products in accordance with the specifications listed in EURO III. 

Under this clause, petroleum products of the proposed refinery should be in accordance with the internationally accepted environmental standards, the official explained. The refinery will have the capacity for producing at 60 percent middle distillates. 

The official said there will be no guaranteed return for this new refinery, which is expected to be completed and commissioned by end of 2010. The investor will be required to optimize its operations. The company will be responsible for its margins of profit. As Pakistan imports oil, the new refinery will give priority to marketing its products locally.


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## Neo

Bloomberg 

KARACHI Ã¢â¬â MCB Bank, Pakistan's No 4 bank by deposits, plans to raise $100 million in the first overseas share sale by a lender from the South Asian nation, President and Chief Executive Officer Mohammad Aftab Manzoor, pictured, said.
The bank, formerly known as Muslim Commercial Bank, will make the offering of global depositary receipts between September and December and use the proceeds to fund expansion, Manzoor said in an interview on June 28.


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## Neo

Thursday June 29, 05:54 PM 
KARACHI, June 29 Asia Pulse - The textile industry is asking the government to announce a concession and incentive package of Rs50 billion (US$830 million) so that it can compete with India, China and Bangladesh in export market. For pleading this case, a leading exporter Mushtaq Cheema is locking horns on June 29 with the seasoned bureaucrats of the finance and commerce ministries and officials of the State Bank of Pakistan at a meeting to be chaired by Prime Minister Shaukat Aziz.

Prepared and designed by a 15-member committee of the textile industry leaders in April, the incentive package failed to evoke any sympathy from the finance and commerce ministries as the budget-makers ignored it completely in June. The prime minister, after getting a presentation on the package on May 30, is understood to have advised the textile industry leaders to "revisit and review" their proposals. Prime Minister's adviser on finance Dr Salman Shah snubbed textile industry leaders in a post-budget seminar held in mid-June in Karachi and wondered as to from where resources would come for social sectors if Rs50 billion in the budget are given to the textile sector.

Well placed business sources confided to Dawn that the prime minister has held an informal meeting with about half a dozen top leaders of the textile industry on June 28 so that he is well-equipped with facts and arguments for a formal meeting on June 29, which State Bank Governor Dr Shamshad is also expected to attend to respond to the proposals that seek concessions on interests on bank loans.

The break-up of Rs50 billion concessions and incentives makes an interesting reading. The textile leaders are seeking Rs10 billion concession on gas tariff, Rs7.30 billion on captive power, Rs8 billion on export refinance cost, Rs6.35 billion for reducing Kibor on all long- term loans disbursed on or after January 1, 2003, Rs1 billion on 10 per cent financial support for capital investment in textile industry, including second hand machinery, Rs0.6 billion by reducing customs duty to zero on import of all textile machinery, spares, generators for captive power and its spares, Rs5.40 billion by introducing a flat rate withholding tax of 0.25 per cent on exports of textiles instead of a multiple rate, Rs1.35 billion by discontinuing export development surcharge (EDS) at 0.25 per cent on all textiles, extension of 6 per cent research and development (R&D) facility to all processed fabrics, garments and made-ups, including home textiles, and Rs3 billion for garment exporters to help them in market access support programme at the rate of 5 per cent of the fob value.


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## Neo

KARACHI (June 30 2006): MCB Bank would soon pick Merrill Lynch Co, or Goldman Sachs Group Inc, to advise the lender to sell as much as $100 million worth of Global Depository Receipts in first quarter of the new fiscal year, it would be the first bank to sell GDRs. The bank is planning to raise $100m from the sale, and is considering to appoint Merrill Lynch & Co and Goldman Sachs Group Inc for that purpose.

In order to strengthen its position in the domestic market and to expand its deposit base, the bank is also eyeing the acquisition of a small domestic bank. The acquisition would allow the bank to further increase its market share in the local banking industry, as the industry moves towards consolidation.

In addition, the bank is also planning to aggressively expand its branch network, from the current level of 960 to around 1200. The increase in branch network also includes opening of several overseas branches in regions like Toronto, Kabul, Dubai and Mumbai. These branches will allow the bank to capture trade and remittances business.

MCB Bank, which is regarded as the fourth largest bank in terms of earning assets in the country (5-year historical CAGR: 12 percent; 5-year prospective CAGR: 16 percent) would reach overseas investors through offering of GDR. As per preliminary estimations, a special purpose vehicle (SPV) is likely to be formed, which would continue to hold these shares against the issuance of the GDR and at the time of maturity these share would again come back to MCB.

In this respect, MCB Bank also plans to shut down some of its local low performing branches and wants to open new branches at high growth areas of the world such as the UAE. This ostensibly provides them an opportunity to handle huge chunk of workers remittances, which is usually considered as the domain of National Bank of Pakistan (NBP), the country's largest bank.

The bank is setting an ambitious target of 150,00 customers in one-year time frame.

However, on the conservative side, Faisal Shaji, head of research at Capital One Equities said: "we have incorporated the figure of 30,000 in our financial model up to CY06, due to the fact that the impending issuance is coming in the middle of the calendar year."

Currently the bank maintains a market share of 10 percent of the industry deposits: "however, our preliminary assumptions depict that due to the above impending expansion plans, the size of the deposit base can increase. That is with a 5-year CAGR of 19 percent, as we expect the deposit base of the bank to go as high as 506 billion at the end of CY08 (CY05: Rs 229 billion), enunciating nearly 11.5 percent of the market share of the industry. This however helps the bank in maintaining risky lending base (5-year CAGR: 20%) assuming a conservative ADR of 65 percent."


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## Neo

ISLAMABAD (June 30 2006): More than anywhere else, Dubai companies are showering Pakistan with new projects, reports Gulf News. In its report published on June 27 on "A magnet for investment", contributed by staff reporter Ivan Gale, said that IMF success story, in 2004 the country passed through the latest of several structural adjustment programs.

The same year, it raised $500 million through a Eurobond. In another progressive step, just months ago it adopted international arbitration standards in business disputes, the Gulf News report added.

These efforts, the report said, have invigorated the economy and created new business opportunities, says Professor Rodney Wilson, director, Durham University's Institute for Middle Eastern and Islamic Studies in UK.

He noted its GDP growth rate has surged six to eight percent in the last few years, creating a new dynamism in the region, and its GDP growth rate has surged six to eight percent the last few years, creating a new dynamism in the region.

Pakistan, the report said, is perceived as an under-served market and a friendly place for Dubai companies to do business.

The country has undeveloped land suitable for large projects and a cheap labour market. It said that as director of the Middle East and Central Asia unit for the IMF, Mohsin Khan is often privy to big deals brewing in Pakistan.

A month ago, he heard rumours that Dubai companies might invest there. But when Emaar and Limitless announced real estate projects valued at $40 billion (Dh 147 billion) in early June, even he was taken by surprise, the report added.

"Most people thought the Etisalat deal in 2005 was big, and it was," he said, adding: "But when you hear deals 10 times that size, that's pretty astounding."

The Gulf News also reported that a few years ago Pakistan wasn't a popular foreign investment choice for UAE companies. In 1998, the country defaulted on an international loan, and was generally regarded as a risky country to do business, it added.

According to statistics by the State Bank of Pakistan, foreign private investment from UAE into Pakistan tallied a modest $17.3 million in 2001-02. But after making impressive strides reforming its banking sector and standardising business practices, Pakistan is showing a big green light which Dubai companies are finding hard to ignore, the report added. It said recently there has been a succession of announcements for multi-billion projects in Pakistan.

In June 2005, a consortium of Etisalat and the Dubai Islamic Bank announced it would invest $2.6 billion for a 26 percent ownership and management rights in Pakistan telecom, PTCL. In May 2006, Emaar said it would invest $20.4 billion in four real estate developments in Karachi and Islamabad.

Limitless, Dubai World's international real-estate arm, followed with news of a $20 billion (Dh 73.4 billion) plan to invest in a mixed-use Karachi real-estate project. At about the same time, the Pakistan government also authorised the Dubai Islamic Bank to open 50 to 70 branches in Pakistan, the report added. It also said that the scale of the deals dwarves all previous foreign investment in Pakistan.

Last year, foreign investors injected $3 billion in the country, compared to more than $40 billion that the Dubai projects will pump into the economy over the next few years equivalent to more than 10 percent of Pakistan's GDP, the Gulf News report said.

The report also said that in truth, Dubai companies won't be spending tens of billions of dollars of their own money straight off. Most projects will build mixed-use residential and commercial units that they can pre-sell, using the proceeds to complete construction over a period of five to 10 years.

Still, Pakistan has emerged as the premier destination for UAE companies aggressively expanding their operations abroad, the report said. The Gulf News report said that part of the reason lies at home.

With the pace of new projects beginning to slow, Dubai is approaching a saturation point with high-profile residential projects. At the same time, companies are trying to diversify their assets. Increasingly, they're looking abroad.

About the dominant force, the Gulf News report said that crude oil prices have nearly tripled since 2002, and the UAE is riding an oil boom that the IMF predicts will last for some time. It forecasts crude prices to remain over $60 a barrel for the next five years.

"Where is the money going?" asks financial analyst Steve Brice of Standard Chartered Bank in Dubai. "Due to high oil prices, the answer is hardly surprising almost anywhere," he wrote in a recent paper. Asia remains the dominant force, he said. "Petrodollars are increasingly going to countries in the emerging world", the report added.

According to the Gulf News report, the IMF Director Khan said that Dubai companies are ahead of the game by thinking regionally, and particularly likes the name of Dubai World's international real estate development arm, Limitless. "Everyone says 'so and so, limited,'" he said. "It really describes Dubai companies in terms of acquisitions." This audacious investment plan is unfolding all over the Middle East, North Africa and Asia.

Emaar is taking a lead role in the $27 billion (Dh1 00 billion) King Abdullah City development in Saudi Arabia, and is engaged in billion-dollar projects in Morocco and Egypt. Dubai World is also expanding boldly into ports in Djibouti, Vietnam and China, the report said.

About the business-friendly environment, the report said that UAE companies are feeling more comfortable with the Pakistani economy, and cultural similarities with the Gulf all contributed to the deals, said Khan. Many Pakistanis also hold senior positions in Dubai firms and provide local expertise in the Pakistan business climate, he added.

A burgeoning economy is creating a new affluent class among its 166 million residents, who will be capable of affording these higher-end real estate projects. Estimates by Limitless put the Pakistan housing shortage at six million dwellings, the report added.

Nonetheless, most observers give the deals unequivocal thumbs-up, including Brice of Standard Chartered Bank. "Pakistan might not be the easiest place in the world to do business, but the returns should be relatively healthy", the report added.

http://www.brecorder.com/index.php?...&term=&supDate=


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## Neo

World Bank launches new website on South Asia 

ISLAMABAD (June 30 2006): The World Bank (WB) has launched a new website on South Asia with free access to economic and development data and analysis on Pakistan, Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal and Sri Lanka.

Resources available include economic indicators - databases with gross domestic product projections - forecasts on poverty reduction for the next 10 years - interesting development of facts such as 25 percent of Indian teachers do not show up to work; road accidents in South Asia are expected to rise by over 140 percent by 2020.

The journalists can find latest news, media contacts and upcoming key analysis before it is released at http://www.worldbank.org/sarnews. Businesses, interested in consultancies and other opportunities with the World Bank, can consult http:// www.worldbank.org/sarprojects. Researchers and people interested in economic data can also consult http://www.worldbank.org/ sardata.
__________________


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## Neo

ISLAMABAD (July 01 2006): Surpassing the revenue collection target set for outgoing fiscal 2005-06, the Central Board of Revenue (CBR) so far has amassed Rs 700.3 billion by June 30, 2006 against the annual target of Rs 690 billion, reflecting an increase of Rs 10.3 billion.

According to provisional figures issued on Friday, the Board has bagged Rs 700.3 billion during 2005-06, against Rs 588.1 billion in 2004-05, showing a growth of Rs 112.2 billion.

The provisional collection in June, 2006 has been recorded at Rs 89.9 billion against Rs 87.362 billion June of last fiscal year, depicting an increase of Rs 2.538 billion.

The tax managers are confident that the collection would further increase on compilation of final figures in the next few days. It is expected that the final reconciled figures for 2005-06, after receipt of data from all branches of NBP and government treasuries, would cross Rs 710 billion.

According to tax-wise details, direct tax collection is Rs 217 billion, against Rs 183.4 billion last fiscal year, showing an increase of 18.4 percent. Sales tax collection is Rs 291.1 billion, against Rs 238.5 billion of last year, showing growth of Rs 52.6 billion.

The GST collection at the import stage is Rs 169.8 billion against Rs 144.8 billion, showing an increase of 17.2 percent. The sales tax collection on domestic consumption is Rs 121.3 billion against Rs 93.7 billion. The collection of customs duty is Rs 134.9 billion in 2005-06) against Rs 115.4 billion of last year, indicating a growth of 16.9 percent.

The collection of federal excise duty (FED) is Rs 57.5 billion against Rs 52.90 billion, showing an increment of Rs 4.6 billion. The provisional collection of June, 2006 is Rs 89.9 billion. Following is the month's break-up of individual taxes: sales tax Rs 31.9 billion; customs duty Rs 16.9 billion; direct taxes Rs 35.1 billion; and FED Rs 6 billion.


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## Neo

Real GDP depicts 6.6 percent growth in 2005-06: SBP report 

M ISRAR KHAN 

ISLAMABAD (July 01 2006): The real Gross Domestic Product (GDP) (inflation-adjusted) during financial year 2005-06 at constant factor cost of FY 1999-00 increased to Rs 4.879 trillion from 4.577 trillion during previous fiscal year, depicting 6.6 percent growth, on the back of impressive services sector growth, the State Bank of Pakistan (SBP) reported on Friday.

This inflation-adjusted measure reflects the value of all goods and services produced in the country in 2005-06, expressed in base-year prices of 1999-00. It referred to as 'constant-price', 'inflation-corrected' GDP.

The sector-wise provisional data released by SBP says that though, as a whole economy grew above six percent, the most worrisome flashback of the economy during the 2005-06 was the declining agricultural growth which was an alarm bell for future economic growth. The sector (agriculture) grew by only 2.5 percent (to Rs 1.055 trillion) against 7.5 percent during previous fiscal year.

It is worth mentioning that in agriculture sector, though the crops showed growth of 2.32 percent, the major crops production declined by 3.63 percent in monetary terms to Rs 371.14 billion against Rs 385.12 billion of previous fiscal year. Besides, forestry sector also declined to Rs 16.523 billion from Rs 18.304 billion with a decrease of 9.7 percent.

According to the data, only livestock sector showed a robust growth of eight percent to Rs 523.49 billion. However, its share in the total agriculture growth or GDP was minimal.

Another worrisome feature in agriculture was that the fishing sector for the last five years has been declining and hovering between Rs 15.163 billion in 1999-00 and Rs14.184 billion in 2005-06. During FY 2005-06, it grew only by 1.92 percent from Rs 13.916 billion previous fiscal year.

The industrial sector during FY 2005-06 grew by 5.87 percent to Rs 1.270 trillion against Rs 1.199 trillion previous fiscal year.

In industrial sector, the manufacturing, which accounts for 18.2 percent of GDP, registered 8.6 percent growth and stood at Rs 889.036 billion, whereas the original target was 11.0 percent against last year's achievement of 12.6 percent.

According to the data, Large Scale Manufacturing (LSM) grew weaker than expected at 8.99 percent to Rs 620.51 billion against Rs 569.325 billion previous fiscal year when it grew by 15.6 percent. Its growth was far below the original target of 14.5 percent set for the FY 2005-06. The small scale manufacturing increased by 7.63 percent to Rs 268.53 billion from Rs 249.48 billion.

Mining and quarrying registered growth of 3.8 percent and stood at Rs 126.81 billion against Rs 122.18 billion in FY 2004-05.

Construction continued its strong showing, partly helped by activity in private housing market, spending on physical infrastructure, and reconstruction activities in earthquake-affected areas. The construction sector grew by 9.2 percent to Rs 107.22 billion in 2005-06 against extraordinary growth of 18.6 percent in previous year (Rs 98.19 billion).

http://www.brecorder.com/index.php?...&term=&supDate=


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## Neo

KARACHI (July 01 2006): Foreign exchange reserves rose by $20 million to $13.021 billion in the week ending June 24, 2006 the State Bank of Pakistan (SBP) said on Friday. Reserves held by the SBP rose to $10.673 billion from $10.599 billion a week earlier, however, those held by commercial banks fell to $2.348 billion from $2.402 billion.


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## Neo

LAHORE (July 01 2006): Punjab Chief Minister Chaudhry Pervaiz Elahi has said the government is following an effective policy for ensuring that fruits of prosperity should also reach the lowest level and is giving top priority to elimination of poverty and socio-economic uplift of masses.

Addressing the assembly members from D. G Khan, Rajanpur and Muzaffargarh here on Thursday, the CM said that foolproof arrangements were being made to supply pulses, sugar and atta at subsidised rates in a transparent manner from July, which would provide much-needed relief to the citizens.

Elahi said six million people would benefit from the programme of provision of daily-use items on concessionary rates, adding that solid measures were being taken by the government for maintaining prices of essential items at a reasonable level and the role of market committees was being redefined for this purpose.

He said it would be mandatory upon chairmen of market committees to ensure quality and standard of essential items, adding that a committee headed by Provincial Minister for Food would monitor prices of essential commodities on daily basis.

He said the government was giving a subsidy of Rs two billion for supply of essential items to the citizens on concessionary rates. District Price Control Committees were also being activated to check the provision of essential commodities to the people at cheaper rates in their respective districts, he added. He stressed upon assembly members to take effective steps for stabilising the prices of essential commodities besides keeping a vigilant eye on profiteers, hoarders, as well as those involved in adulteration.

Talking to Minister of State for Parliamentary Affairs and Pakistan Muslim League Chief Election Co-ordinator Kamil Ali Agha, the CM said the first phase of PML elections would be conducted on July 10, whereas PML elections at district and provincial level would be completed by July 15 and 25 respectively.


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## Neo

KARACHI: The city is set to get two more technology parks, which are likely to be operational by the end of July 2006, officials said on Friday.

A senior official said the two new projects were part of the government plans to set up technology parks under public-private partnership and with the fresh initiative the number of such places would touch three.

Ã¢â¬ÅThe two parks would offer total 150,000 square feet to the companies,Ã¢â¬Â Nasir Afridi, Director Infrastructure Pakistan Software Export Board told The News. Ã¢â¬ÅIt took almost two months to finalise things and the projects are ready and most probably it would be operational by the end of July.Ã¢â¬Â

He, however, denied disclosing locations of the new parks saying the projects would be formally announced by the top notch within next couple of weeks.

Meanwhile, a source close to the board said the PSEB struck deal with an auto company to hire space in its building near Korangi Industrial Area. Similarly, he said, the second park was being established in one of the business centres at Tariq Road. Ã¢â¬ÅThe two parks would have all basic infrastructure required for software houses, call centres or any other IT company,Ã¢â¬Â said Afridi. Ã¢â¬ÅThe two parks would offer dedicated bandwidth, 24-hour power supply and uninterrupted telephone lines.Ã¢â¬Â

The latest addition of two more technology parks would lift the total number of such parks to eight across the country mainly in Karachi, Lahore and Islamabad. The metropolis has, however, currently a single such park situated along Shahra-e-Faisal.

The PSEB says it plans more in near future in the mega city and is in talks for the projects both in partnership with private sector and government institutions, with an aim to boost software export and explore new markets.

Ã¢â¬ÅFor this, we are in talks with **** (National Industrial Parks) and EPZ (Export Processing Zone) in Karachi,Ã¢â¬Â said Afridi.

He said currently six parks - operating in Karachi, Lahore and Islamabad - were fully occupied by the software houses, call centres and other firms offering IT-enabled services mainly offshore clients.

Ã¢â¬ÅSo there is a need and demand to establish more such parks,Ã¢â¬Â he added. Ã¢â¬ÅSoon we would be launching more projects in line with the local industry demands.Ã¢â¬Â

The countryÃ¢â¬â¢s software exports crossed $70 million during 2005-06 first time ever registering a 50 per cent growth, as western firms started turning more and more to Pakistan for IT-enabled services to cut costs and raise profits.

The country exported $72 million software during the first 11 months of 2005-06 as operators believe Pakistan is catching up very fast in software development and at such rate, the country global IT revenue should reach almost $9 billion by the end of 2009-10.

However, the industry players question the PSEB design in the way, which it acquires spaces on rent from private parties and declare that technology park.

Ã¢â¬ÅThere is a difference between space for few firms and a dedicated technology park,Ã¢â¬Â said Jehan Ara, President, Pakistan Software Houses Association (PASHA).


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## Neo

LAHORE: Punjab Minister for Information Technology Adbul Aleem Khan on Friday said that developmental budget of IT Department has been increased to Rs300 million for computerisation of more departments.

Talking to under-training IT experts, the minister said that targets have been set and policy of the Punjab Government would be implemented in the starting fiscal year.

He said that establishment of information technology labs and centres of excellence in 10 cities and commencement of work on Software Technology Park at Ferozepur Road Lahore would be major projects. He said that pilot projects for computerisation of land records in three districts would be completed while internet and data warehouses of Punjab Government would also be created in the annual development program 2006-07. 

The minister further said that digital connectivity through IT infrastructure would play a major role in capacity building of public sector which would ultimately enhance the credibility of the Government. He said that information technology is the backbone of developed world and Chief Minister Punjab Ch Pervaiz Elahi has given special emphasis to this sector.


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## Neo

ISLAMABAD (July 02 2006): The government has decided to give Rs 10 billion to Karachi Electric Supply Corporation (KESC) for improving transmission and distribution system, besides adding 100 MV to the present power supply immediately.

A meeting is scheduled for Monday to finalise the Financial Improvement Plan (FIP) for the power-hungry utility, and the amount for this purpose would be arranged out of Public Sector Development Plan (PSDP).

Sources told Business Recorder that according to the Implementation Agreement (IA) with the investors, the government had agreed to provide Rs 10 billion to KESC for improving the system, but ignored it in the PSDP. Now the amount is being arranged on war footings, keeping in view the emergency situation in Karachi.

Prime Minister Shaukat Aziz and Minister for Water and Power Liaquat Ali Jatoi held two meetings on Saturday to make additional power arrangements for the Karachiites who are badly suffering from the electricity crisis.

The Prime Minister, in a meeting, directed Wapda to increase power supply to KESC by 100 MW from 600 to 700 MW immediately to help alleviate the difficulties being faced by the people of Karachi due to frequent power breakdowns.

The meeting was attended by Sindh Governor Ishrat-ul-Ibad Khan, Chief Minister Arbab Ghulam Rahim, Federal Minister for Water and Power Liaquat Ali Jatoi, Karachi City Nazim Mustafa Kamal, Secretary Water and Power, Wapda Chairman and KESC officials.

The Prime Minister directed KESC to expedite procurement of additional power generation capacity, and added that the utility also needed to expand its transmission and distribution system to serve the increased demand of electricity in the mega city.

The KESC Chief Executive Officer informed the Prime Minister that the company was taking all necessary steps to raise its power generation capacity and to renovate and repair its transmission lines to prevent recurring outages. Besides, steps are also being taken to improve the customers' service, he said.

Following the instructions from the Prime Minister, Jatoi held a meeting in the Ministry and finalised arrangements for supply of 100 MW additional power for KESC from Wapda system.

He, however, said that to resolve the problems, the KESC would have to improve its distribution system for uninterrupted and stable power supply to the people of Karachi. The Minister further asked it to expedite its expansion plan to meet the growing power demand. He also asked the KESC to avoid unannounced load shedding and inform the consumers of shutdown due to maintenance work.

Earlier, KESC MD Frank Schemiet briefed the meeting regarding current electricity situation in Karachi. He was asked to arrange additional capacity on war footing through barges.

He told the meeting that 45 MW more power could be available within three months from the barge-mounted power station, being imported from Kenya. He said that as an improvement plan of its existing system, there would be availability of additional power of 200 MW from existing power plants, as 13 grid stations would be improved, 850 new capacitor would be installed additionally and 550 MW cable of 11 kV would be changed.

He said that 830 MW more power would be available by June 2008 to meet the growing demand under KESC power expansion plan. Out of this, 276 MW would be available by the end of May 2007 and 500 MW by August 2007.


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## Neo

KASHGAR (July 02 2006): A delegation of Rawalpindi Islamabad Chamber of Commerce led by its president Jalil Ahmad Malik held a meeting with Chen Ji, vice commissioner administrative office of Kashgar and discussed matters pertaining to trade and commerce between Pakistan and China.

The officials of Chinese departments of immigration and customs were also present in the meetings held on the sidelines of 2nd China Xinjiang Kashgar Central and South Asia Commodities Fair.

The week-long moot featuring diplomats, entrepreneurs and officials from 9 countries and 15 regions commenced on June 28 at Kashgar in China's Xinjiang province and would conclude on July 3rd.

Jalil Ahmad expressing gratitude to China for facilitating Pakistani businessmen at the fair, said some procedural formalities by the Chinese officials at Khunjrab Border were causing unnecessary delays in goods transportation. The Chinese-side assured of immediate redressal of all the problems being created at the border to boost trade and commerce between the two brotherly countries.

More than 450 Pakistani businessmen established various stalls and marketed indigenous products, which attracted attention of the visitors. The RCCI chief extended all out support to Chinese traders for `Kashgar Fair' being held at Lahore in September this year.


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## Neo

KARACHI (July 02 2006): Chang'an Motor Corp China is planning to build Chang'an vehicles assembly plants in Pakistan to speedup its overseas sale. Sources quoting Chang'an chief executive officer Xu Liuping said that Chang'an Motor Corp will expand in the overseas market with its own-brand vehicles.

The company will use global resources to make high-quality own-brand vehicles and provide them to customers at home and abroad at reasonable prices.

Returning after participating in an international business conference held in China and attended by dealers from 28 countries and regions, sources said besides the Middle East, Southeast Asia, South America and Africa, Chang'an is also exploring the US and European markets.

Chang'an aims to raise overall sales from 630,000 vehicles last year to 1.5 million units a year by 2010, with more than half under its own brands.

The company's overseas sales rocketed by 143 percent to 15,000 vehicles last year. The company aims to sell 25,000 vehicles overseas this year.


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## Neo

ISLAMABAD (July 01 2006): The country's external debt liabilities have virtually decreased substantially during the last seven years, State Minister for economic Affairs, Ms Hina Rabbani Khar said on Friday. Taking to a private TV, she said total external debt liabilities have been brought to $36.4 billion in June 2006 from $38.4 billion in 1999.

Tax to GDP ratio has also reduced significantly during the last seven years, adding the external debt liabilities were over 60 percent of GDP seven years ago. " Both external and domestic debt together stand at about 54 percent of GDP today," she said.

The decade of 80's was not suitable in terms of growth of debt as the debt liabilities on nation during the period were increased at the phenomenal ratio of 7.4 percent. Policy has been formulated to obtain concessional loaning only for development activities saying: We will continue to borrow from the international market for carrying out development activities." The average interest on international loans is less than one percent. In fact the real interest rate on most loans is negative, she said. Answering a question regarding payment on loans she said, "We actually prepaid domestic loans and not the external debts from the income generated from private proceeds."


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## Neo

By Farhan Bokhari, Special to Gulf News

Pakistan's new financial year which began yesterday with promises of a sharp rise in government spending on national development, could well give a boost to the country's construction industry, with one qualification. 

The rise in spending is predicated upon the government's revenues remaining on target, Pakistan's economic growth prospects remaining on track and the country going through yet another financial year without unexpected setbacks.

All three of these elements are enough to raise questions in Pakistan. Though the financial year which ended on Friday, closed with tax revenues for the year hovering above the official target, this has indeed not always been the case in the past. 

On matters related to prospects for future economic growth, there is indeed room for anxiety for a number of economies including Pakistan, driven mainly by the sharp rise in global oil prices which have subsequently hit the global outlook. 

As for unexpected setbacks, there is indeed no way to predict them. 

But in the past year, Pakistanis have been powerfully reminded of unexpected upsets in the wake of the devastating earthquake which rocked the country and cause huge economic losses, not to forget the loss of many precious human lives.

Now, in spite of such overwhelming challenges, the government is determined to press ahead with the rise in development expenditure, hoping to pump more funds which could then revive the overall outlook. 

Companies dealing with construction related material are bound to see a rise in sales. 

Plans for the construction of roads, dams and other bits of infrastructure which are placed at the heart of the government's agenda, are believed to be central to rejuvenating Pakistan's economic outlook. 

On the face of it, there's nothing in Pakistan's economic philosophy which would immediately trigger alarm bells. 

And yet, even without ringing immediate alarm bells, Pakistan's economic prospects indeed must offer grounds for caution if not outright scepticism.

First and foremost, there's every reason for there to be concern about the country's ability to keep up its economic growth which is an absolute must to keep on living with the responsibilities thrown forward by expenditures tied to the new projects. 

There are indeed examples of other countries too which invested heavily in the creation of valuable infrastructure, only to find that their investments got stuck when a subsequent economic slowdown also drew down the official revenue. 

In Pakistan's case, there's no way to predict exactly what would come out from the global fallout triggered by high oil prices. 

Corruption across daily life in some areas remains prevalent and Pakistan's ability to be able to cut wastage in government expenditure has therefore suffered.

The beginning of the new financial year, spearheaded by unprecedented large targets for expenditure, brings the added danger of people simply forgetting that Pakistan continues facing a large challenge, not just in consolidating its economic growth in the short term but more importantly, sustaining it together in the long run. 

Without the assurance of such sustainability, there's all the more danger of vast sums of money poured by Pakistani taxpayers, being wasted and even squandered.


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## Neo

Sunday July 02, 2006 

ISLAMABAD: Prime Minister Shaukat Aziz has said that WAPDA will raise the supply of electricity to KESC to 700 MW immediately to help alleviate the difficulties being faced by the people of Karachi due to frequent power breakdowns. 
These instructions were given to the Ministry of Water and Power at a high-level meeting chaired by the prime minister at the PM House which was attended by Governor Sindh Dr Ishrat ul Ibad, Chief Minister Sindh Dr Arbab Ghulam Rahim, Federal Minister for water and power Liaquat Ali Jatoi, City Nazim Karachi, Mustafa Kamal, Secretary Water and Power, Chairman WAPDA and KESC officials. 

The prime minister said that keeping in view the problems being faced by the people of Karachi and the fact that it is the hub of business and industry, all out efforts should be made to tackle the problem of electricity shortage both on long and short term basis. 

Mr Jatoi assured the prime minister that apart from increasing supply of additional power generation capacity. He said the KESC also needs to expand its transmission and distribution system to serve the increased demand of electricity in the mega city. 

The KESC CEO informed the Prime minister that the company is taking all necessary steps to raise its power generation capacity and renovate and repair its transmission lines to prevent recurring outages. Besides, steps are also being taken to improve their customersÃ¢â¬â¢ service, he said.


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## Neo

KARACHI: Overall cargo handling at the Karachi Port registered 13 per cent growth during the last fiscal year, crossing 32 million tons mark through 1,995 vessels against 1,768 vessels last year, said General Manager Port Operations Agha Danish at a press conference here on Saturday.

A massive 32.35 per cent growth was seen in dry cargo in 2005-06 as 21.60 million tons were handled compared to 16.32 million tons in 2004-05, he said. In this dry cargo, handling of bulk cargo increased by 41 per cent. This was mainly due to growing demand for fertiliser, coal, cement and sugar (0.8 million tons), he added.

Like the trend elsewhere, handling of containerised cargo was increasing at the Karachi Port, he said and added last fiscal year it recorded a growth of 25 per cent.

Liquid cargo handling remained low at 10.66 million tons compared to 12.29 million tons last year, Danish said. It would increase when white oil pipeline was connected to Karachi Port, he said admitting Ã¢â¬Åcurrently this business is captured by Port Qasim.Ã¢â¬Â

Due to increase in demand for imported vehicles, the KPT handled a phenomenal 57,352 vehicles last year compared to 18,699 previous year.

Coal imports handled in 2004-05 were 1.4 million tons, whereas 2005-06 witnessed a figure of 1.97 million tons, showing a growth of 41 per cent. He said it became possible because of effective utilisation of 224,000 square metres at Coal Yard and TPX. Many steps have been taken to minimise pollution created by coal handling. The KPT is planning to set up a coal handling terminal at a place distant from population.

Afghan cargo saw an increase of 64.48 per cent as 301,000 tons in transit cargo were handled by the port.

The KPT has inducted Backhoe Dredger Ali, with an average dredging capacity of 400 cubic metres per hour. It would start working within next two weeks and increase the depth of berths to 16 metres.

The KPT would be adding another dredger next year with much larger capacity for deepening the channel to 18 metres. This would allow the port to accommodate larger ships carrying more cargo. Deepening of berths and channel would take four to five years, he said.

The KPT had reduced its wet charges from July 1, 2006 in order to attract more business, he said. This is the second cut in wet charges in three years.

During the fiscal year 2005-06, the KPT also handled 2.158 million packages (70,000 metric tons) of earthquake relief goods, apart from 445 TEUs, free of charge from 72 ships. He said the amount of charges on this cargo came to Rs27 million.


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## Neo

KARACHI (updated on: July 03, 2006, 18:10 PST): Karachi Electric Supply Corporation Chief Executive Officer Frank Scherschmidt on Monday said that due to timely intervention of the president, prime minister and Sindh governor, they had managed to obtain additional 100 megawatt of electricity from the Wapda, 'which would reduce our 'misery' at least by half'.

Addressing a press conference at a local hotel, he said: "We are not in a position to bring any 'magical change' at the moment. However, we will be standing with our consumers and continue to work on correcting the situation, whenever our 'weak network' breaks down."

He said that the KESC was facing problems of deteriorated power generation systems, insufficient operations and maintenance procedures and overloaded transmission system leading to energy losses.

Further elaborating the problems the CEO said that other pressing problems were absence of modern control systems for transmission and distribution, lack of preventive maintenance over years, lack of capacitors to stabilise power supply, network sabotage and conductor theft, lack of breakdown reporting system and dissatisfied consumers protesting on streets.

Frank Scherschmidt said that the KESC had faced similar difficulties in previous years also, but this year the load demand was increased by 200 to 300 megawatts.

He said that the KESC had completed some relief work in March and April 2006 and were working on addition of new transformers, capacitors and cables. He said that they had improved their own power generation form 1150 to 1250 megawatts.

"We have also evaluated a 10-year plan for improvement in the city power supply system and Insha-Allah we will do it for the satisfaction of our customers," the CEO said.

"In the year 2015, nine years from now, we would be doubling the whole KESC in terms of power generation, transmission, distribution and human resources. By then instead of 2200 megawatt they would supply 4400 megawatt," he hoped.

He said the new owners of KESC are fully aware of this development and will be continuously investing every year to 'steadily' upgrade the system for more generation, improved transmission, distribution and better consumer service.

He said that action were being taken this summer to overcome problems faced by customers. These actions include "halt to further deterioration of the power supply network and increase in efficiency of operation and maintenance".

Frank Scherschmidt said that from their network calculation, they had find out that the system was overloaded, which resulted in overheating of cables, wires, switches and transformers. For this the customers face fluctuation, low voltage, tripping and load shedding, so the KESC concentrated most on these affected areas for quick communication and fast repair.

He sought co-operation from public to save electricity. "To lessen the demand, all our consumers together can improve the situation so there is less tripping and load shedding."


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## Neo

KARACHI (July 03 2006): Foreign private investment, which started increasing gradually since FY02, almost doubled to $820 million in FY03 and then reached $922 million after posting a modest increase in FY04. It posted another quantum jump in FY05 when it surged to $1,677 million recording an increase of about 82 percent over the previous year.

According to revised data format, adopted by the State Bank as from April last, and released for the month of May on June 23, the surge in current year (FY06) has been especially pronounced as it has already reached a record figure of $3,525 million during the period from July 2005 to May 2006, compared with $1,171 million in July-May FY05, depicting an increase of 201 percent over last year's figure.

Of the total investment, $3,212 million was in the form of foreign direct investment (FDI) and $313 million as portfolio investment.

The overall figure included $1,538 million as privatisation proceeds compared with $104 million of such proceeds in the corresponding 11 months of FY05.

The increase in privatisation proceeds during the year indicated the speed with which the government wanted to privatise various public sector enterprises. Privatization proceeds as sale proceeds of an existing enterprise, it may be noted, are as good a foreign private investment as fresh funds for a new establishment.

The only difference is that instead of establishing a new company with the dollars or Euros involved, investors buy an existing government, or even privately owned, domestic organisation catering the local or the export market and improve its efficiency and service standards using latest technology and innovation. In the process, additional funds become available for the owners of these establishments to invest in new enterprises.

The new format shows data on a regional and sub-regional basis such as Developed Countries (including Western Europe with a further sub-grouping of European Union and Other Western Europe, North America and Other Developed Countries), Developing Countries (including Caribbean Countries, Africa, Asia with a further sub-grouping of West Asia and South,East and South East Asia) and Unspecified (mainly the International Financial Institutions or IFIs).

Actual regional break-up of the 11-month total indicates that Developed Countries pumped in some $1,518 million, Developing Countries over $1,883 million and Unspecified/IFIs some $124 million compared with $754 million, $344 million and $72 million, respectively, in the corresponding period of FY05.

Within Developed Countries, Western Europe contributed $695 million including $286 million by European Union and $409 million by Other Western Europe; North America invested some $749 million while Other Developed Countries brought in $72 million.

Within Developing Economies, Africa invested $71 million, Asia $1806 million including $1,726 million by West Asia (mainly Middle East), and $80 million by South, East and south East Asia. Caribbean Islands, as part of developing countries, about $1 million.

It may be of interest to mention that foreign private investment, including direct and portfolio, in Pakistan is governed by Foreign Private Investment (Promotion and Protection) Act, 1976 as amended by Foreign Private Investment (Promotion and Protection) (Amendment) Act, 1990 which allows Pakistanis enjoying double citizenship the same facilities as are available to foreign investors but restricted them to deposit the entire amount of repatriable foreign investment in foreign exchange account in Pakistan for its subsequent use for the purchase of machinery and other fixed assets of the undertaking.

The Industrial Property Order, 1979 provides adequate safeguards to protect industrial property against compulsory acquisition in accordance with the provisions of the law. The other major law covering any left over aspects is Economic Reforms Act of 1992.

The Government of Pakistan's most recent Investment Policy (announced November 1997) allows foreign investment on repatriable basis in agriculture, services, infrastructure and social sectors in addition to the manufacturing sector.


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## Neo

KARACHI (July 03 2006): The fiscal year 2005-06 proved to be the honeymoon year for the Pakistan rice export, as the country became the member of $1 billion club, while the total exports touched $1.12 billion mark. Pakistani rice exporters with their tremendous efforts achieved the target of $1 billion one year earlier and set a new record of the country's rice export in one year.

Out of the total rice exports around 880,000 tonnes of Basmati variety of rice worth around $500 million was exported during the said period while the total export of Irri-6 variety was reached up to $620 million.

Around 733,502 tonnes of Basmati rice worth $418.746 million were exported only from Karachi while the total rice export from Lahore reached 13,432 tonnes worth $7.005 million.

The rice export from Quetta increased tremendously during the fiscal year 2005-06 as over 125,735 tonnes of Basmati rice worth $40.995 were exported only from Balochistan to neighbouring countries through land routes.

The Quetta-based rice exporters are exporting rice to Iran, Afghanistan, Central Asian republics and other neighbouring countries through land routes from Balochistan and the rice export from this province is increasing rapidly by the passage of time.

The Rice Exporters Association of Pakistan (Reap) while considering the efforts of Quetta-based rice exporters, has set up it regional office at Quetta to facilitate the rice traders for increasing country's rice export.

The rice exporters also played a very important role in value-addition of this commodity during the year and the Basmati rice was exported on the average price of $535 per tone. The highest rate was recorded $590 per tone from Karachi while the lowest price remained at $314 per tone from Quetta. The rice exporters also explored new markets and during the fiscal year 2005-06.


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## Neo

KARACHI (July 03 2006): Money supply during the week ended on June 17 decelerated by Rs 6 billion to Rs 389.5 billion, though it was a very small deceleration when compared with the huge descent of Rs 36 billion in government sector borrowing to Rs 96 billion within a week.

The reason was a sudden jump in the foreign sector forcing net foreign assets (NFA) of the banking system, and hence money supply, to surge by Rs 27 billion, which almost neutralised the contraction impact originating from the government sector. In the previous week, the NFA had declined by over Rs 11 billion.

Another reverse movement occurred in the private sector in which credit off-take by the sector increased by about Rs 7 billion over the week compared with a decline of Rs 4.5 billion in the previous week.

The foregoing movements in government, private and foreign sectors in a week should have resulted in a net contraction in money supply of Rs 2 billion, whereas the actual contraction amounted to Rs 6 billion. This was explained by the negative balance of other items (net) or OINs of the banking system, a factor which had been depressing money supply for the last many weeks, that increased by another Rs 4.5 billion over the week.

It would be of interest to note that at this time last year (viz to June 18, 2005), government borrowing showed an expansion of Rs 110 billion, private sector an expansion of Rs 360 million and NFA an expansion of Rs 24 billion, to be offset partly by the contraction of Rs 86 billion in the OINs of the banking system with monetary expansion ending up at Rs 408.5 billion.

Break-up of deceleration of Rs 6 billion in money supply during the week showed that reduction in money supply was shared by both components with currency in circulation going down by Rs 4 billion and deposit money declining by Rs 2 billion.

Within deposit money, demand deposits declined by Rs 1.4 billion, time deposits fell by Rs 2.4 billion and Resident Foreign Currency Deposits (RFCDs) increased by Rs 1.8 billion.

A break-up of decline in government borrowing of some Rs 36 billion showed that the entire decline occurred in budgetary borrowing which squeezed by over Rs 39 billion to Rs 81 billion during the week while borrowings under commodity operations increased by another Rs 3 billion to Rs 15 billion during the year so far, raising total wheat procurement loans to about Rs 51 billion since March 22.

As regards the mix of budgetary borrowing squeeze during the week, decline in borrowing occurred 'on account of' (oao) both the Federal Government (down Rs 25 billion, entirely oao SBP as borrowing from scheduled banks increased by about Rs 3 billion) as well as the provincial governments (down Rs 15 billion: Rs 8 billion oao SBP and Rs 7 billion oao scheduled banks).

Change in net foreign assets (NFA) of the banking system had a dual effect during the week.

On the one hand, it helped the government generate revenue from the build-up of NFA on its own account and used the proceeds to retire its borrowing from the central bank. As an effect of this, government deposits with the banking system increased by Rs 25 billion while their investment in government securities declined by about Rs 24 billion.

On the other hand, actual build-up of NFA of the banking system both on account of public and private sectors knocked out partly the impact of contraction in money supply originating from the government sector.

Depletion of reserves on the back of rising imports and maturing foreign liabilities stood effectively stalled during the week ended on June 17 with reserves climbing again to $13,000.9 million.

According to advance data on reserves, liquid foreign exchange reserves further increased by another $20 million during the week surging to $13,021.4 million on June 24.

The increase of over $20 million during the week was entirely on account of SBP whose reserves increased by $74.5 million while reserves held by scheduled banks fell by $54 million.


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## Neo

LAHORE (July 03 2006): Pakistan and Australia have a huge potential of bilateral trade and could initiate joint ventures in a number of sectors, including textiles, pharmaceuticals, wool, food items and coal.

This was the consensus developed during the LCCI Senior Vice President Abdul Basit's meetings with top Australian government functionaries and businessmen during his month-long visit to that country, said a press release issued on Sunday.

Talking to Philip Stone Howe of Australian Ministry of Trade and Consul General of Pakistan in Sidney Mohammad Azam, the LCCI senior vice president said that Pakistan was a land of opportunities with a high rate of return to all sorts of investments and the atmosphere is quite conducive for the foreign investors.

The LCCI leader particularly briefed them on the policy of industrialisation being pursued by the present government.

He informed them about the network of industrial estates being spread by Punjab Chief Minister Chaudhry Pervaiz Elahi.

The LCCI SVP urged them to arrange a sector specific delegation of Australian businessmen to Pakistan so that they could be able to take stock of the situation for themselves.

He informed them that at a time when the world has shrunk into a global village, the exchange of business delegations and single country exhibitions are the most effective tools to promote bilateral trade between the two countries.

He also promised them to bring an LCCI delegation to Australia so that the Pakistani business community could avail the business opportunities available in that country.

Meanwhile, addressing a gathering of businessmen, the LCCI senior vice president said that due to economic reforms initiated by the present government, Pakistan was fast attaining the status of economic leader in the region.

He said that Pakistan was a gateway to oil-rich Central Asian States that have a huge potential of investment.


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## Neo

KARACHI (July 03 2006): The overall sales volume of the oil marketing industry during the 11-month period of FY06 ending May 2006 witnessed a 1 percent increase to 14.1 million tonnes as against 13.9 million tonnes during the corresponding period last year.

The most remarkable feature of the sales volume has been the unprecedented growth in fuel oil sales which by the end of December 2005 (first six months of FY06) were down by 20 percent on a y-o-y basis are now higher by 5 percent to 4.5 million tonnes.

Fuel oil sales had begun picking up since March 2006 on the back of higher demand from thermal power units such as Wapda and Hubco due to lower water availability. Sales of jet fuel remained robust as it throughout the year, was rising by 21 percent during the period under review mainly on account of an increase in exports to Afghanistan and additional relief flights for the earthquake-hit areas in the northern parts of the country.

On the other hand, motor spirit and diesel sales thinned by 10 percent and 4 percent respectively. This has been the trend of domestic POL prices since April 2004 (over two years now). In order to give respite to the general public, the government took the burden on itself by way of completely eliminating the PDL to keep prices constant on many occasions.

Since April 2004, there have been a total of 53 fortnightly reviews out of which prices were kept unchanged 42 times, raised just 11 times and were never reduced. Prices on the whole during FY05 rose in the range of 17-25 percent and in FY06 they have risen by 23-33 percent.

The change in domestic POL pricing formula, which the government would significantly dent OMC profitability. A marginal improvement in sales volumes is not anticipated to do much good for the sector either.


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## Neo

ISLAMABAD (July 04 2006): Minister for Health, Muhammad Nasir Khan on Monday said country's exports of pharmaceuticals products have reached $1.35 billion from $800 million this year, showing a considerable growth.

National pharmaceutical industry is progressing well and ready to launch itself in the international market, he said while addressing a foundation stone laying ceremony of Filter Clinic being built by Indus Pharma at Pakistan Institute of Medical Sciences (Pims).

Nasir Khan said today national pharma industry, in terms of units, takes care of around 80 percent of the share of domestic pharma market. This itself is an indicator of confidence of medical profession on our pharma industry, he added.

Assuring full support to pharma industry, he said the government foresees a great potential for this industry in future.

The minister appreciated great contribution from Pims as well as pharma industry during the last year's earthquake and said this is in continuation of the situation that ministry of health felt the need for establishment of filter clinics in Pims to control and manage the ever increasing number of patients. He said the present government is giving priority to the health of people and has enhanced the budget for health to Rs 12 billion.

The minister said in all federal government hospitals of the country, kidney patients would be provided free of cost dialysis facility. The minister said government would launch a programme - Early Detection and Treatment of Breast Cancer in Pakistan. Speaking on the occasion, Managing Director, Indus Pharma, Zahid Saeed said the facility will serve around 1,200-1,500 patients daily.

The pre-fabricated building of filter clinic is expected to be completed within two months and would have 28 rooms in addition to laboratory, waiting room and canteen facility. Secretary Health, Syed Anwar Mahmood and Executive Director Pims, Dr Fazl-e-Hadi were also present on the occasion


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## Neo

SUST (updated on: July 04, 2006, 19:05 PST): President General Pervez Musharraf on Tuesday inaugurated the Sust dry port, saying the high-altitude facility near Pakistan-China border would bolster bilateral commerce to new levels and also facilitate in realising Pakistan's potential as hub of intra-regional trade.

"This landmark project is poised to impart further depth and strength to Pakistan-China economic and political ties as well as help expand Pakistan's commerce linkages with the regional countries including Central Asia states", he stated at the inaugural ceremony of the port, jointly built by Pakistan and China.

President Musharraf spoke of Pakistan's central geo-strategic location at the heart of regions including Western parts of China, Central Asian states, Afghanistan, Iran, India and the oil-rich Gulf countries and envisioned a pivotal role for Pakistan in augmenting trade between them.

"Such is Pakistan's geo-strategic strength-it would play a vital role in promoting trade between members of major regional groupings including SAARC, Economic Cooperation Organisation and Shanghai Cooperation Organisation --- trade interaction between the regional countries has to take place through Pakistan," he underlined.

Dwelling on the importance of the 10,000 ft-high Pakistan-China Sust Dry Port, the President said the state-of-the-art facility, an elaborate network of infrastructure being put in place across Pakistan and improvement in Korakoram Highway would provide China shortest access to the Middle East and other world markets through Pakistani deep sea ports including Gwadar.

Pakistan, he said, would become a trade and energy corridor for China and landlocked Central Asian countries.

"We are talking of Pakistan-China inter-connectivity in terms of energy and trade, improvement in the Korakoram Highway, development of railway link and gas and oil pipeline linkages and even fibre optics connectivity along the KKH under one project simultaneously will open up immense prospects of trade and economic growth," he said. 

The President said the completion of KKH was hailed as the eighth wonder of the world and added that "we are capable of creating 9th and 10th wonders in the form of railway and pipeline linkages between Pakistan and China." He also referred to strengthening of quadrilateral arrangement between Pakistan, China, Kazakhstan and Kyrgyzstan while stressing the country's importance in making use of regional opportunities for mutually beneficial economic growth.

In local perspective, President Musharraf said the Sust Dry Port would open new vistas of employment opportunities for the people and lead to their socio-economic development.

"The government is committed to the uplift of the people of these beautiful areas and I am sure that the construction of Bhasha-Diamer dam, the widening of KKH and the commencement of services at Sust Dry Port would fetch tremendous gains to the local people and bring them at part with the developed parts of the country," he said.

According to the officials, the dry port has the capacity to handle 40 Chinese containers a day and this would be increased to 400 containers per day in the future.

President Musharraf observed that the Sust port would not only enhance trade and economic linkages between Pakistan and China but through increased co-operation also help forge deeper links between their people.

Earlier, Dr Salman Shah told the gathering the construction of Sust Dry port makes it the first formal dry port linking the two countries and stated that it would prove to be an important step towards intensifying bilateral economic co-operation.

He said China's vast market offers great opportunities and Pakistan is centrally located to provide it trade route to the Middle East and other world markets.

The silk route dry port, he said, currently generates Rs 714 million per year with Pakistan importing Chinese goods worth Rs 2.4 billion and Pakistani exports amounting to Rs 180 million.


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## Neo

GENEVA (updated on: July 05, 2006, 20:02 PST): Pakistan plans major upgrades to its ports, roads and pipelines as it seeks to become a regional hub for energy shipments, Prime Minister Shaukat Aziz said on Wednesday.

Aziz said that the energy-importing South Asian country, which shares borders with major producer Iran as well as booming energy consumers India and China, hoped to take advantage of its geography and feed the region's fast-growing needs.

"We are fortunate that Pakistan is located near the energy reserves of the world in the Middle East, so we can tap those and share it with our neighbours," he told a news conference in Geneva, where he had attended meetings on United Nations reform.

"We are working on these corridors to improve the linkages between Central Asia, China, Pakistan and beyond," he said.

Negotiations are still ongoing on the tariffs for a $7 billion natural gas pipeline project running from Iran through Pakistan to India, Aziz said.

He said Pakistan was also talking with Turkmenistan about channelling gas through Afghanistan and into Pakistan and India, and cited early-stage talks with China on energy shipped through the Karachi sea port.

"With China, we are hoping to attract them to take some of their energy via a pipeline from Karachi to Western China, via the land border we have with them," Aziz said, adding: "It is still preliminary, but we are talking."

The Karachi port will "in the next few weeks" announce the construction of a deep water container terminal to serve major vessels and large container carriers used in international shipping, Aziz said.

"Karachi's new deep water container terminal will be a major mother port and hub for container traffic in the region, and can be accessed by countries in Central Asia, by Afghanistan and by Western China," Aziz said.

He said the deep water Gwadar port, close to the Iranian border, should be ready within a few months and would also boost Pakistan's emerging energy transit role.

"We are positioning it as an energy port, as an energy hub for storage and refining," he said. "We are building roads links to Afghanistan and Central Asia which will allow this port to be a major shipment and transit port for energy and other goods."

While offering few details, Aziz said he expected no barriers to foreign investment in the initiatives. "We think these are projects with great opportunity, and we will offer them to investors from anywhere in the world," he said.


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## Neo

SUST (July 05 2006): President General Pervez Musharraf on Tuesday, while inaugurating the Sust dry port, said that the high altitude facility near Pakistan-China border would bolster bilateral commerce to new levels and would facilitate the realisation of Pakistan's potential as the hub of intra-regional trade.

The President said: "This landmark project is poised to impart further depth and strength to Pakistan-China economic and political ties as well as help expand Pakistan's commerce linkages with the regional countries including Central Asian states." The port has been jointly built by Pakistan and China.

Musharraf spoke of Pakistan's central geo-strategic location at the heart of regions including western parts of China, Central Asian states, Afghanistan, Iran, India, and the oil-rich Gulf countries, and envisioned a pivotal role for Pakistan in augmenting trade among them.

"Such is Pakistan's geo-strategic strength. It would play a vital role in promoting trade between members of major regional groupings including Saarc, Economic Co-operation Organisation (ECO) and Shanghai Co-operation Organisation (SCO) as trade interaction between the regional countries has to take place through Pakistan," he said.

About the importance of the 10,000 ft high Pakistan-China Sust Dry Port, the President said that the state-of-the-art facility, an elaborate network of infrastructure being put in place across Pakistan and improvement in Karakoram Highway would provide to China shortest access to the Middle East and other world markets through Pakistan's deep-sea ports, including Gwadar.

Pakistan, he said, would become a trade and energy corridor for China and the landlocked Central Asian countries.

The President said: "We are talking of Pakistan-China inter-connectivity in terms of energy and trade, improvement in the Karakoram Highway (KKH), development of railway link and gas and oil pipeline linkages and even fibre-optics connectivity along the KKH under one project simultaneously will open up immense prospects of trade and economic growth."

He said that completion of KKH was hailed as the Eighth Wonder of the world, and added that "we are capable of creating the 9th and 10th wonders in the form of railway and pipeline linkages between Pakistan and China."

He also referred to strengthening of quadrilateral arrangement between Pakistan, China, Kazakhstan and Kyrgyzstan while stressing the country's importance in making use of regional opportunities for mutually beneficial economic growth.

The President was flanked by PML President Shujaat Hussain, Secretary General Mushahid Hussain, Minister for Kashmir and Northern Areas Tahir Iqbal, and Advisor to PM, Dr Salman Shah.

In local perspective, President Musharraf said that the Sust Dry Port would open new vistas of employment opportunities for the people, and would lead to their socio-economic development.

"The government is committed to the uplift of the people of these beautiful areas, and I am sure that the construction of Bhasha-Diamer dam, the widening of KKH, and commencement of services at Sust Dry Port would fetch tremendous gains to the local people and bring them at par with the developed parts of the country," he said.

According to the officials, the dry port has the capacity to handle 40 Chinese containers a day, and this would be increased to 400 containers per day in the future.

President Musharraf observed that the Sust port would not only enhance trade and economic linkages between Pakistan and China but, through increased co-operation, would also help forge deeper links between their peoples.

Earlier, Dr Salman Shah told the gathering that the construction of Sust Dry Port had made it the first formal dry port linking the two countries--Pakistan and China--and added that it would prove to be an important step towards intensifying bilateral economic co-operation.

He said that China's vast market offers great opportunities and Pakistan is centrally located to provide it a trade route to the Middle East and other world markets.

The silk route dry port, he said, currently generates Rs 714 million per year, with Pakistan importing Chinese goods worth Rs 2.4 billion and Pakistani exports amounting to Rs 180 million.

Welcoming the President, the Deputy Chief Executive of Northern Areas, Ghazanfar Ali Khan, said that the trading activity would multiply with the commencement of the new dry port facilities and added that the revenue generation would be Rs 20 billion per annum.

He drew President's attention to some of the problems faced by the local people in terms of their rapid economic growth, and demanded relief in SMEs and agro loans to be extended to them. The Chairman of Pakistan-China Sust Dry Port Company presented traditional a long coat (Chugha) and cap to the President on the occasion.


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## Neo

KARACHI (July 05 2006): The Credit Plan for FY07 proposed at the annual meeting of the National Credit Consultative Council (NCCC) envisages the broad money to grow by 13.5 percent (Rs 459.9 billion) based on GDP growth target of seven percent and the inflation target of 6.5 percent set for the current fiscal year.

The council meeting chaired by Dr Shamshad Akhtar, Governor, State Bank of Pakistan (SBP) also reviewed the monetary and credit developments during the last fiscal year and proposed the Credit Plan for FY07 here on Tuesday.

The State Bank presented the Credit Plan for FY07, which will be approved by the SBP Central Board of Directors at its meeting being held in Karachi on July 6, 2006.

Shamshad Akhtar pointed out that the targets under the Credit Plan for FY07 should be treated as minimum requirements to support economic growth.

The NDA of the banking system is expected to expand by Rs 450.1 billion this year. NFA of the banking system is projected to rise moderately by Rs 9.8 billion. In line with the budget, the government sector is estimated to absorb bank credit to the extent of Rs 130.1 billion (Rs 120.1 billion for budgetary support and Rs 10 billion for commodity operations). Credit to private sector is estimated at Rs 390 billion.

The Council expressed its concern that the liquidity position will remain tight due to large recourse of the government from the banking system, given the fiscal expansion anticipated for 2006-07.

Dr Akhtar informed the Council that the State Bank would strive to meet the challenge of maintaining price stability during the fiscal year 2007 and asked the Pakistan Banks Association for its assistance in bringing down the spread between the lending and deposit rates for the benefit of small depositors and also stretching the maturity of deposits to create room for long term project financing. She assured the participants that data on new bank borrowers would be provided to the NCCC participants.

The SBP governor has, in principle, agreed to (i) set up an Infrastructure Task Force to help improve the financing to meet the growing requirements of the economy; (ii) examine the feasibility of allowing the refinance facility on Islamic Banking principles.

The Council was of the view that provincial governments should lower the stamp duty, which is levied on corporate debt papers and securitisation. The council also proposed the provision of data on provincial distribution of industrial credit and recommended for enhancement of credit to SME sector in order to alleviate poverty.

Dr Shamshad Akhtar informed the council that NCCC had been constituted in September 1972 by the federal government to ensure optimal utilisation of bank credit through the process of directed credit to various sectors. Now that the on-going financial sector reforms have virtually led to the stoppage of all directed and subsidised credit and that the credit planning process is completely market-based, it is highly desirable to change the status of the NCCC consistent with forces of free market economy.

The governor, SBP, therefore, proposed that the NCCC be renamed as "Private Sector Credit Advisory Council" whose role should be to explore the credit needs of the private sector and ensure that those credit needs are appropriately met. The council endorsed the proposal of the governor SBP. This proposal will be presented to the SBP Board of Directors.

The meeting was attended among other by the, Riaz Riazuddin, Economic Adviser, Jameel Ahmed, Executive Director, Dr Aftab Nadeem, Director, Economic Policy Department, SBP, presidents of commercial banks, representative of the federal and provincial governments, chambers of commerce and industry and agriculture.


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## Neo

KARACHI (July 05 2006): MCB Bank Ltd, the second largest listed bank at the Karachi Stock Exchange (KSE) has planned to sell global depository receipts in the range of $100 million to $150 million, utilising funds for acquisition and gaining international recognition. The bank has appointed Merrill Lynch and KASB to help sell global depository receipts at the overseas market.

According to the experts depending upon the demand and pricing, the lender would sell GDRs soon aimed to utilise these funds for acquisition. Moreover, this would help gain recognition among the international investors, building a strong base for the group. It would help the group to sell more GDRs in future in other associated companies.

MCB Bank, first bank in the country is contemplating raising fresh equity capital in the form of GDRs, to be listed at the London Stock Exchange. A consortium of Merrill Lynch and KASB has been mandated to place the issue with institutional and retail investors outside Pakistan.

MCB Bank with an asset base of $5 billion and deposit base of over $3.8 billion. With a market capitalisation of over $1.7 billion. MCB Bank is one of the mostly actively traded stocks.

According to an analyst several investors heard rumours about floatation of GDRs by the MCB Bank since the last couple of weeks and despite the downturn at the stock market on several occasions, the lender received support from financial institutions and high net worth investors.

The MCB Bank for the last four consecutive sessions has either closed at the upper circuit or near to the upper level, with heavy volumes. The share price during Tuesday's trading climbed by Rs 9.45 to Rs 213.45 on a brisk business of 17.989 million shares.

"Based on its market position, potential for growth, profitability and management quality, MCB has been receiving the Euro money Award for Excellence for the "Best Bank in Pakistan" for five out of the past six years.

Since its privatisation in 1991, MCB's major shareholder has been the Nishat Group, the largest and one of the oldest business conglomerates in Pakistan, having substantial interests in cement, textiles, finance and insurance. MCB has been an active contributor and beneficiary of the economic and social development of the Pakistani nation. Its 9,000 employees operate through a network of 946 branches, servicing of institutional banking clients and 4.1 million account holders.

The capital of MCB Bank is around Rs 5.2 billion and funds raised through this GDRs would used as tier 1 capital and would be convertible into shares, after passing through primary resolution at general body meeting. Last year, Dr Mohmmad Taccob, former governor of State Bank of Pakistan has been elected as one of the board directors of the lender and would head the audit committee.


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## Neo

KARACHI (July 05 2006): The Pakistani ship owners are eyeing up to 500 million tonnes of annual freight market of India which would be open after the formal implementation of the amended bilateral shipping protocol between the two countries.

According to shipping circle, the main impediment in the private ship owning sector under Pakistani flag vessels. The early implementation of the shipping protocol between Pakistan and India was agreed at the federal secretaries level early this year, at the Directorate General of Ports and Shipping Office, Karachi.

Last January, The Director General Ports and Shipping, Captain Anwar Shah. While the Joint Secretary, Ministry of Shipping, Road Transport & Highways, Government of India, Susheel Kumar had announced their agreement in amending the 'restrictive clauses, three and five', allowing lifting for third country cargo from their ports by either flag vessels.

Pakistan and India agreed to amend the old 'Shipping Protocol 1975' for the enhancement of freight traffic and freedom of navigation and commercia1 activities between the two countries.

The ministry of ports and shipping of Pakistan pursued the matter at their end and Cabinet approval was sought for the amendment agreed that was graciously approved.

However, it is intriguing to note that the Indian side is dragging its feet for the past seven months and have not been able to get the same approved by their cabinet.

Although, it was the Indian government and their ship owners who had been trying to amend the shipping protocol for the past many years to enable the Indian flag vessels to lift containerised cargo from Pakistani ports. The owners and management of Sheryas Shipping had approached the director general ports and shipping many times for the amended shipping protocol.

It may recalled that Indian ministry of shipping allowed Pakistan National Shipping Corporation (PNSC) vessel to load a cargo of rice from Indian, Kandla port to Nigeria as a goodwill gesture on the request of Pakistan's DG ports and shipping during the year 2005, as a incentive of confidence building measures to amend the shipping protocol immediately.

The Pakistani foreign office must take up this issue with the Indian government for the early clearance of the protocol.

This we have learnt from shipping circles in Pakistan who eagerly are awaiting signing of the protocol similarly the Indian shipping companies are also keen for the expeditious signing of the protocol to enable regular service by the Indian flag vessels.

It is also learnt that the owners of Mega-I, a private Pakistani Shipping company, are keen to launch the Karachi-Mumbai ferry service but the only hitch is for the Indian government to sign the protocol.

Interestingly, the Indian merchant shipping fleet is lifting about 30 percent of the 450 to 500 million tonnes of their national carriage, which is considered to be an attractive market for Pakistani ship owners and operators. While the national flag carrier PNSC lifts only about 20 percent, from a total cargo of 55 million tonnes.

The sources said that the protocol would also encourage some Indian container line operators to look at the Pakistani market for container operations and reduce Pakistan's dependence on Far Eastern and Western container shipping lines as well as help reduce freight charges.


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## Neo

KARACHI (July 05 2006): The country's garments export target of $3.252 billion may fall short by $228 million as the exports reached only $2.753 billion during the first 11 months of the last fiscal due to higher cost of production and aggressive strategy of international competitors, sources said.

They said that the country's garments export target of $3.252 billion seems next-to-impossible to achieve as it has reached $2753 million in the first 11 months of the last fiscal (July05-May06) and the final figures would portray a decline of almost $228 million.

"Rough estimates show that the average exports of the country were around $250 million per month during the last fiscal, however, it should have been around $271 million every month," said a leading garment exporter. He added that the first 11 months figures of the last fiscal should have been nearly $2981 million instead of $2753 million.

Since the garment sector could be divided into two segments - readymade garments and knitwear garments, its targets were also set separately last year.

"The aggregate $3.252 billion target, the major chunk of the exports were of knitwear garments worth $1938 million, while the readymade garment exports target was set at $1314 million," the exporter said.

Elucidating the details, he said that during the past 11 months of FY06, readymade garments exports were recorded at $1189 million, showing that the country's exports would have to fill the remaining gap of $125 million in just one month (June06), which seems quite unlikely.

On the contrary, the knitwear exports had reached $1565 million during the under-discussed period and it has to achieved $373 million more in just one month to actualise the set target of $1938 million.

"The set targets were quite ambitious as the authorities should have realised that the exporters could face afflictions in attaining it amid higher input costs and rising competition on the international front," said a Karachi-based garments exporter who wished not to be identified.

Some of the exporters were of the view that the export figures could have declined even more, if the country did not explore more avenues and markets in the EU countries.

"We (Pakistani exporters) have recently explored new markets in Poland and Romania," said a Karachi-based exporter, terming it a 'good omen' for the country's readymade garment exports.

He said that since the EU countries are considered among the biggest markets of the world, Pakistan's exporters have been concentrating meticulously on that region and have been striving to get further trade access in that region.

Beside that, some 800 members of Pakistan Readymade Garments Manufacturers and Exporters Association (Prgmea) across the country are engaged in exporting locally manufactured garments mainly to European Union (EU) countries followed by United States, Canada, United Arab Emirates (UAE) and Japan.


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## Neo

ISLAMABAD (July 05 2006): The government believes that tourism industry is gaining momentum and more and more tourists are visiting Pakistan. Not only foreign tourists are coming to the country but also domestic tourism is showing upward trend, as luckily, the people are more aware and looking after natural beauty and rich cultural heritage.

The government has undertaken a number of steps to give boost to the tourism industry like facilitating tourists, easy procedures for obtaining visa and proper preservation of sites, but promotion of tourism to a large extent depends upon the private sector and friendly attitude of the people.

Pakistan is endowed with a rich and varied flora and fauna. High Himalayas, Karakoram and the Hindukush ranges with their alpine meadows and permanent snow line, coniferous forests down the sub-mountain scrub, the vast Indus plain merging into the great desert, the coastline and wetlands all offer a remarkably rich variety of vegetation and associated wildlife, including avifauna.

Country's Northern Areas are spread over 72,496 sq. kms. Amidst towering snow-clad peaks with heights varying from 1,000 meters to over 8,000 meters, the valleys of Gilgit, Ghizer, Hunza and Skardu recall Shangri-La.

The people with typical costumes, folk dances, music and sports like polo provide the tourists an unforgettable experience.

Nowhere in the world there is such a great concentration of high mountains, peaks, glaciers and passes except in Pakistan. Of the 14, over 8,000 peaks on earth, four occupy an amphitheatre at the head of Baltoro Glacier in the Karakoram Range.

The government, this year, has decided to celebrate Shandur Polo Festival with more enthusiasm and passion from July 7 to 9. Every year, Shandur (3,734 meters) invites visitors to experience a traditional polo tournament between the teams of Chitral and Gilgit from July 7 to 9.

This time, the Pakistan Tourism Development Corporation (PTDC) has been assigned the responsibility to organise the event with the media partnership of Aaj TV channel.

In this connection, PTDC Managing Director Salman Javed told Business Recorder and spelled out government's plan to hold festival on the world's highest polo ground. He said the government has almost completed all the necessary arrangements and event would be highlighted at the world level to attract maximum tourists.

The Pakistan State Oil (PSO) is the main sponsoring organisation of the event, whereas a number of other stakeholders have also joined hands with the government to make the gala a success.

Salman said they have added colours to the festival activities like folk dances and musical performances, trout fishing, mountaineering, trekking, hiking and horse riding. Paragliding and fireworks are also parts of the festival.

Crystal clear lakes, snow-covered mountains, alpine flowers and vast stretches of green grassy fields are added attractions, he said, adding a tourist village with restaurant facilities is being sprung up in the tournament.

Merchants from Peshawar, Chitral and Gilgit would set up souvenir and folk craft shops. The most exciting polo tournament of Northern Pakistan is played on top of 3,734 meters high Shandur Pass. "It is a place unique and exotic in itself, surrounded by some of the most spectacular mountain scenery in the world," PTDC chief said, adding they have extended invitations to all parliamentarians and diplomats who would hopefully make sure their presence in three-day festival.

Speaking about the required infrastructure, he said the government has made arrangements to provide electricity at the site and road infrastructure has been improved.

Talking about the media, Salman Javed said international media would cover the event and it would be helpful in projecting soft image globally and Shandur would be turned into a tourist resort.

Salman promised to hold such mega events in future as well and was of the view that holding such events would not only play a major role in providing recreational facilities for the local people, but it would also help in developing the area. The PTDC MD urged the private sector and people to come forward and join hands with the government for the promotion of tourism industry.


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## Neo

KARACHI (July 05 2006): Sindh Advisor for Alternate Energy, Noman Saigol has said that one US firm has expressed interest to transfer solar energy technology to Pakistan. Addressing a press conference here on Tuesday.

He said that the Orlando-Florida based firm, International Energy Smart Solutions that was already dealing in solar energy in the United States, had agreed to transfer the technology and their delegation would visit Pakistan in mid-July.

Noman said that in the first phase the parks and streetlights would be operated through soar energy and added that they were also considering running IT awareness centres through solar energy.

Giving details about his recent visit to Holland, USA, UK and Brazil, he said that ethanol was another alternate energy option, which was effectively being used in Brazil and apprised that approximately 80 percent of vehicles were using ethanol as a fuel.

"Ethanol is extracted from sugarcane and is an environment-friendly fuel. Now we have come to know that ethanol is also being prepared from wheat in the US where three to four million vehicles are using it as the fuel," Saigol said. He said that the main purpose of promoting alternate energy resources was environment pollution control.

He further said that the sugar industries would be contacted regarding production of ethanol and expressed hope that they would cooperate, which would save installation cost. Otherwise, separate plants would have to be set up, he added. Ethanol is not only environment-friendly but would also be 40 percent cheaper against petrol.

To a question, he said that the bureaucratic red-tape and low competency level were the main hurdles in the implementation of such projects and claimed that the past projects collapsed due to these factors. "Therefore, we are planning to involve the private sector for the execution of such projects and an alternate energy board is also under consideration," Nomad maintained. He further said that the private sector would be independent in its operations and there would be no interference on the part of government.

Talking about the low-competency level of officers, he said that two competent officers having sound technological and technical knowledge were needed for the Environment Protection Agency (EPA) and added that experts from the private sector would be hired for the alternate energy department.

Noman Saigol informed the press that he had proposed replacement of some officers, as they did not deserve the positions because of their incompetence and Director General EPA, Nazneen Ansari was on top of the list.

To a question, he said that an investment of $10 million would be required for the implementation of ethanol energy project while transfer of solar energy technology and its local generation would cost about $40 million.


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## Neo

ISTANBUL - Turkey's Zorlu Energy Group will build a wind power plant in Pakistan. 
The Group stated on Wednesday that a letter of intent was signed with the Pakistani party for construction of the plant. In accordance with the letter of intent signed in Islamabad yesterday by the Zorlu Energy Group and the Pakistani Alternative Energy Development Board (AEDB), the plant will be built within the Gharo-Keti Bandar power complex. 

The Zorlu Group will also generate electricity at the plant for the next two decades. 

The first phase of the project is 50 MW, but it will have an expansion option up to 300 MW. 

The project is expected to cost about 80-100 million USD.


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## Neo

Saudi Arabia likely to invest $8-10bn

By Ihtasham ul Haque

ISLAMABAD, July 4: Saudi Arabia has indicated to make long-term $8-10 billion investment in Pakistan in four major sectors of the economy with a view to greatly enhancing bilateral cooperation between the two countries.

Official sources told Dawn on Monday that the Saudi authorities had expressed their willingness to promote Saudi investment in Pakistan's capital intensive projects. In this regard, they have identified infrastructure, power, petro-chemicals and agriculture sector.

Pakistan was told that equity worth about $800 billion was available in the kingdom which could be utilised in Pakistan and other regional countries. However, the Saudi government expected that Pakistan would ensure improved security situation and consistency in policies.

Sources said that both the governments had authorised Saudi Pak Investment and Agricultural Company to hold a 2-day investment conference in November in Islamabad aimed at exceedingly Ã¢â¬Åfacilitating" Saudi investment in the country.

Prior to the conference being termed as a "major event", Saudi Pak officials will hold road shows during the month of October in various cities of the kingdom.

When contacted a senior government official said that the Saudi leadership had assured to help improve Pakistan's perception in the world by promoting substantial Saudi investment in the country.

Asked about the size of the Saudi investment, he claimed, there will be "several billion dollars investment" as was assured by Saudi King Abdullah when he visited Pakistan in February this year.

Responding to a question, he, however, conceded that Pakistan would have to further refine its image along with offering competitive business environment in the country for attracting adequate foreign investment.

He said that Saudi Arabia was also expected to invest in gas pipelines and new oil refineries projects in Pakistan. A top-level Saudi delegation, comprising prominent industrialists and businessmen, had visited Pakistan in May last on the instructions of King Abdullah to identify areas for making new investment in the country, he said.

Saudi businessmen, he said, were also expected to invest in privatisation, real estate, hotel and tourism, industry, telecommunications and information technology (IT).

"The world is witnessing an oil boom these days, which is providing new opportunities to the Saudi investors to invest outside their county. And today we see new avenues for billions of dollars new Saudi investment in Pakistan", the official said.

He pointed out that more Saudi capital would now be flowing into Pakistan due to increasing political and economic relations between the two countries.

Saudi investors, the official said, would be offered required incentives to readily invest in Pakistan. In this respect, he referred to the avoidance of double taxation agreement signed between the two countries recently.

He said that avoidance of double taxation agreement would help attract more Saudi investment in Pakistan. But he said that Pakistan was also interested in signing a Free Trade Agreement (FTA) with the Gulf Cooperation Council (GCC) -- a group in which Saudi Arabia is also represented. "If we sign that agreement, it will help us to attract substantial investment from the Middle East," he said adding that this will also help remove the existing 20-25 per cent duty in Saudi Arabia for Pakistani products.

The volume of trade between the two countries, he said, was largely expected to be enhanced in near future. Currently, the two-way trade is said to be about $4 billion, including the purchase of Saudi oil by Pakistan.

http://www.dawn.com/2006/07/05/ebr2.htm


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## Neo

Wednesday July 05, 2006 

Gilgit (Agencies) : President Gen Pervez Musharraf has launched 'Rozgar Pakistan Programme'. He said after the success of Khush-hal Pakistan Programme, the basic purpose of initiating Ã¢â¬ÅRozgar Pakistan ProgrammeÃ¢â¬Â is to provide respectful way of earning to the unemployed youth and billions of rupees would be allocated for the success of this programme. President Musharraf also vowed a crackdown on extremism. 

Addressing the first convocation of Karakoram International University here on Tuesday, he said that the dream of development and prosperity of country wouldnÃ¢â¬â¢t be realised without elimination of extremism and sectarianism. 

Seeking mass support to combat the evils of extremism and sectarianism, Musharraf stressed that the people should come forward to play their role in combating these evils and ensuring development process, integrity and stability of country. He said the government was making all-out efforts for promotion of quality education in the country. 


Musharraf said that soon the 57 universities of country would be inter-linked through fibre optic link. The digital libraries would also be set up in all the universities, he said. He announced a grant of Rs 50 million for the capacity building programme for universities, which has been extended for four years from two years. He said the employment programmme with budget worth billions of rupees would be launched after the success of Khushal Pakistan Programme. 


Musharraf said that extremism was a threat to Pakistani society and there was a need to check it with tolerance and by spreading education. 


He said Pakistan was rich in natural resources and it was important to develop human resource so that the country could move forward. 


He said that PakistanÃ¢â¬â¢s economy was an advancing and that the government had been making investments for ensuring a better future for the young generation. He underlined the importance of synergy between higher education and development and said the government had earmarked Rs 26 billion for higher education. He said the government believed in the policy of merit in all fields. 


Earlier, the president gave away Masters degree to 124 students of IT, social and natural sciences. 

Vice Chancellor Dr Azam, former dean Dr Saleem Khan and famous mountaineer Nazir Sabir were conferred special awards in recognition of their outstanding services. 


Meanwhile, President Musharraf also inaugurated the Sust dry port, saying the high-altitude facility near Pakistan-China border would bolster bilateral commerce to new levels and also facilitate in realising PakistanÃ¢â¬â¢s potential as hub of intra-regional trade. 


Ã¢â¬ÅThis landmark project is poised to impart further depth and strength to Pakistan-China economic and political ties as well as help expand PakistanÃ¢â¬â¢s commerce linkages with the regional countries including Central Asia states,Ã¢â¬Â he stated at the inaugural ceremony of the port, jointly built by Pakistan and China. 


President Musharraf spoke of PakistanÃ¢â¬â¢s central geo-strategic location at the heart of regions including Western parts of China, Central Asian states, Afghanistan, Iran, India and the oil-rich Gulf countries and envisioned a pivotal role for Pakistan in augmenting trade between them. 


Ã¢â¬ÅSuch is PakistanÃ¢â¬â¢s geo-strategic strength Ã¢â¬â it would play a vital role in promoting trade between members of major regional groupings including SAARC, Economic Cooperation Organisation and Shanghai Cooperation Organization Ã¢â¬â trade interaction between the regional countries has to take place through Pakistan,Ã¢â¬Â he underlined. 


Dwelling on the importance of the 10,000 ft-high Pakistan-China Sust Dry Port, the president said the state-of-the-art facility, an elaborate network of infrastructure being put in place across Pakistan and improvement in Korakoram Highway would provide China shortest access to the Middle East and other world markets through Pakistani deep sea ports including Gwadar. 


Pakistan, he said, would become a trade and energy corridor for China and landlocked Central Asian countries. 

Ã¢â¬ÅWe are talking of Pakistan-China inter-connectivity in terms of energy and trade, improvement in the Korakoram Highway, development of railway link and gas and oil pipeline linkages and even fibre optics connectivity along the KKH under one project simultaneously will open up immense prospects of trade and economic growth,Ã¢â¬Â he said. 


The president said the completion of KKH was hailed as the eighth wonder of the world and added that, Ã¢â¬Åwe are capable of creating 9th and 10th wonders in the form of railway and pipeline linkages between Pakistan and China.Ã¢â¬Â He also referred to strengthening of quadrilateral arrangement between Pakistan, China, Kazakhzstan and Kyrgyzstan while stressing the countryÃ¢â¬â¢s importance in making use of regional opportunities for mutually beneficial economic growth. 


The president was flanked by PML President Ch Shujaat Hussain, Secretary General Mushahid Hussain Sayed, Minister for Kashmir and Northern Areas Tahir Iqbal, and Advisor to PM Dr Salman Shah. 


In local perspective, President Musharraf said the Sust Dry Port would open new vistas of employment opportunities for the people and lead to their socio-economic development. 


Ã¢â¬ÅThe government is committed to the uplift of the people of these beautiful areas and I am sure that the construction of Bhasha Dam, the widening of KKH and the commencement of services at Sust Dry Port would fetch tremendous gains to the local people and bring them at part with the developed parts of the country,Ã¢â¬Â he said. 


According to the officials, the dry port has the capacity to handle 40 Chinese containers a day and this would be increased to 400 containers per day in the future. 


Meanwhile, Musharraf said that the Armed forces are being equipped with modern weapons to ensure a strong defence. 

The President was addressing army officers and Jawans at Domail in the Northern Areas. He said the countryÃ¢â¬â¢s defence is in safe hands and in this respect referred to the induction of fighter planes JF-Thunder-17 and the naval frigates. 


The President underlined the importance of defence preparedness and asked the officers and Jawans to maintain high professional standards. Referring to tribal areas, he said the miscreants would be weeded out and the writ of the government established. He said the role of the political agents would be strengthened in the tribal areas. He said the development projects would be completed in Balochistan. Later, the President also visited fairy meadows, a beautiful site in the Northern Areas. 


Addressing the local people, he said that the government is paying attention to the development of the Northern Areas. He said the government is working to promote of tourism in the Northern Areas. The president announced one million rupees for the area.


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## Neo

Tuesday July 04, 2006 

LAHORE: Chief Minister Chaudhry Pervaiz Elahi on Monday said the Software Technology Park (STP) would annually generate economic activity worth Rs 9 billion besides creating 10,000 jobs. 

At the ground-breaking ceremony of the STP2, he said the park would cost Rs 1.5 billion. He added that the latest facilities of international standards would be provided at the STP Ã¢â¬â the first of its kind in Pakistan. 


He said the services of renowned construction experts of Singapore had been acquired to build this 15-storeyed building on Ferozepur Road. He said it would play a pivotal role in promoting IT in the country. 


He said the project reflected the vision of President Pervez Musharraf to eradicate unemployment from the country. He said the STP would attract local and foreign investors in IT and Telecom sectors. He said the Punjab government would provide offices and shops to investors on lease at very low charges.


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ISLAMABAD (July 06 2006): The Asian Development Bank (ADB) has signed $42 million loan agreement with Pakistan for Federally-Administered Tribal Area (Fata) Rural Development Project designed to reduce incidence of poverty in the far-flung areas of the region.

Sources told _Business Recorder _here on Wednesday that the project has been under discussion since 2002 as there were differences on its design and execution among the Asian Bank, Fata Governor's Secretariat and Ministry of States and Frontier Regions (Safron) that delayed the project.

But, the most important hurdle was that both Fata Governor's Secretariat and Safron were pressing for the execution rights for the project. Previously, the Fata Governor's Secretariat was eager to execute the project independently without the involvement of Safron.

The Asian Bank then demanded of the Secretariat to make it clear that it is independent in terms of utilisation of aid given by the international financial institutions (IFIs) or donor agencies. Besides, it also expressed some reservations regarding the design and details of the project.

After a series of meetings with Fata administration, sources said the issue has been settled and the project's PC-I is in hand. And now they have agreed that the executing agency would be Safron, while the Fata Governor's Secretariat would be the implementing agency for the project, they added.

Sources said this is a soft loan to be extended from the Bank's Asian Development Fund (ADF). The project is to be launched in three northern agencies, Bajawar, Mohmand and Khyber and expected to be completed by end June 2011.

Objectives of the project are to improve the productive potential of participating watersheds and their associated natural resource base. It would strengthen the planning, implementation and management capacity of the communities in the project areas for participatory involvement in management and maintenance of assets emanating from local development programmes.

It would also contribute to the efforts being made for reducing incidence of poverty among the rural population by increasing income and employment opportunities through a mix of economic and social intervention, the sources said.

The project has three main components ie management of integrated resources; community infrastructure and the project planning and support.

*INTEGRATED RESOURCE MANAGEMENT: *Under this component, the project would help boost farming system and crop production through improved seed technology, training in integrated farm management and adaptive research; livestock and fodder development by providing training and knowledge transfer on animal nutrition and animal husbandry practices at the community level. Besides, it would enhance community forestry and range management through rehabilitation and development of denuded community land through improved vegetative cover and building of technical, social institutional and entrepreneurial capacity of small farmers, including women.

*COMMUNITY INFRASTRUCTURE: *This comprises four components, including building ground/surface water resources assessment and management plan. Drinking water supply schemes would also be executed by construction of around 212 spring-fed gravity flow system, 624 dug well-based schemes, provide 31 tube-wells-based water supply system, construction of 135 hand pumps and Shalman-Landi Kotal water supply schemes located in Khyber Agency. It would also enhance small irrigation systems by rehabilitating 72 existing irrigation structures and construct 36 new structures besides, providing training to farmers for its construction.

It would also construct 130 check dams and introduce small ponds and few small dams for reservoirs to create storage for irrigation, improve water recharge and ensure water availability for livestock and other non-drinking water of the local communities.

Besides, it would also support improvement and construction of roads through training to village organisations. Construction of 120-km of low cost link roads and up-gradation of 72-km of existing roads would also be carried out.

*PROJECT PLANNING, MANAGEMENT AND SUPPORT: *Under this component, the project would provide project planning, management and other support services to facilitate its timely implementation. This include establishment and implementation of MIS that would link project executing agency, implementing agency, project management unit (PMU) and project implementation units (PIUs).

The project's total cost is $62.9 million. Out of which, the Asian Bank would provide $42 million from its ADF, and the remaining amount will be arranged locally. Safron is now the executing agency, source added.


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## Neo

PARIS, July 5: France will help Pakistan in setting up a university of engineering and sciences in Karachi as the two countries have decided to enhance their bilateral economic, defence, scientific and educational cooperation.

Foreign Minister Khurshid M. Kasuri and his French counterpart Douste-Blazy, during their meeting in Paris on Tuesday, discussed the whole range of bilateral relations.

Expressing satisfaction over growing bilateral trade which has crossed $1 billion mark, Mr Douste-Blazy said that France was also encouraging its private sector to invest in Pakistan and leading French firms, including Carrefour, Alcatel and Renault were setting up or expanding their operations in Pakistan.

He congratulated Pakistan on its elections to the newly formed Human Rights Council and commended PakistanÃ¢â¬â¢s role in peacekeeping operations, under UNÃ¢â¬â¢s arrangements around the world.

Mr Kasuri recalled Mr Douste-BlazyÃ¢â¬â¢s visit to Pakistan to attend the International DonorÃ¢â¬â¢s Conference in November 2005 and the substantial French contribution to earthquake relief and reconstruction efforts.

The French minister said his country would work on concrete projects for rehabilitation of quake-hit people. He appreciated the expanding cooperation between Pakistan and France in the field of higher education and said that France would help Pakistan set up a university of engineering and sciences in Karachi.

It may be recalled that the number of Pakistani students coming to France for higher education has jumped to 150 in recent past.

The two foreign ministers held in-depth discussions on the latest developments in Afghanistan, Iran, Iraq and the Middle East as well as on proposed UN reforms. Mr Kasuri highlighted the need for a more representative United Nations Security Council and for a consensus-based approach on related issues.

The French foreign minister accepted Mr KasuriÃ¢â¬â¢s invitation to visit Pakistan at mutually convenient dates. The talks were held in cordial atmosphere.

*MEDIA BRIEFING: *Mr Kasuri held at a breakfast meeting with leading French media personalities including representatives of Le Figaro, Le Monde, Liberation, AFP, Reuters, Le Point, Le Journal du Dimanche, France-2 TV and Radio France Info.

He briefed media on the expanding relations between Pakistan and France in the areas of trade, investment, education, defence, and scientific and technical cooperation.

He also highlighted PakistanÃ¢â¬â¢s contributions to the stability and development in Afghanistan and expanding commercial and development cooperation between the two countries.

On Jammu and Kashmir dispute, the minister briefed the media on the composite dialogue and confidence building measures between Pakistan and India.

He emphasized the need for a meaningful dialogue to resolve core issues including Jammu and Kashmir dispute.

Kasuri also highlighted PakistanÃ¢â¬â¢s geo-economic importance as a regional hub for trade and commerce, particularly in the area of energy cooperation


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## Neo

ISLAMABAD (July 06 2006): The Commerce Ministry feels depressed for not achieving the export target of $17 billion for fiscal year 2005-06, despite hectic trade diplomacy, even at the level of President Pervez Musharraf and Prime Minister Shaukat Aziz.

Sources told Business Recorder that provisional foreign trade figures for the whole year, compiled by Central Board of Revenue (CBR), were showing exports of $16.2 billion--$800 million behind the target. "What we can say is that exports are $800 million behind the target, which is disappointing," sources said. They said that imports remained far ahead of expectations, but did not give detailed figures.

Commerce Minister Humayun Akhtar was optimistic of achieving the target and in the last Economic Co-ordination Committee (ECC) meeting, he had assured that the target would be met.

Even the President had said that exports would touch $18 billion mark during 2005-06, but it remained a dream. About the new year's exports sources said that the target above $18 billion for 2006-07 was not rational and the concerned officials should take into account all factors before finalising the target.

Sources said that consultations with provinces and other stakeholders about trade policy for 2006-07 were in progress and Commerce Minister, who has already met Balochistan Governor Awais Ghani, and Sindh Governor and Chief Minister, would also hold meetings with the leadership of Punjab and NWFP in this connection.

According to sources, duty is expected to be reduced on raw materials of cottage industry, tanneries, textile, leather and footwear.

They said the proposal was also under consideration to allow import of second-hand construction machinery, airport handling machines, milk processing units and medical equipment. They said that announcement for enhancing trade with India was also expected as part of trade policy and, most probably, the positive list would be enlarged. However, they did not give the details.

They further said that a technology fund would also be established jointly sponsored by the Ministries of Commerce and Industries, and added that if any private sector company was interested in technology transfer, it would not only be encouraged but GoP would also contribute 50 percent share in this regard.

Export refinance scheme and long-term financing would also be made more business-friendly, and Commerce Minister Humayun Akhtar is expected to meet State Bank of Pakistan (SBP) Governor Dr Shamshad Akhtar shortly to finalise the proposals.

Sources said that establishment of Trade Development Authority of Pakistan (TDAP) would also be announced in the trade policy and in this regard a Presidential Order would be issued on July 19, soon after the announcement of the policy.


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ISLAMABAD (July 06 2006): Prime Minister Shaukat Aziz has constituted a committee comprising Planning Commission Deputy Chairman Dr Akram Sheikh, Secretary Ministry of Industries and Production, Kamran Rasool, and Chairman Central Board of Revenue, Abdullah Yousaf, to prepare a 10-year plan for the growth of local auto sector, Business Recorder learnt on Wednesday.

Sources said that the primary thrust of Pakistan Automobile Industry Development Plan (PAIDP) would be to encourage local manufacturers to increase investment by 100 percent to meet local demand and grab international market share through enhancing capacity.

A meeting recently, held in Prime Minister Secretariat, and attended by top brass of Ministry of Industries and Planning Commission, discussed in detail the PAIDP prepared and submitted by the Engineering Development Board (EDB) that led to formation of the committee to further look into its viability.

Under the plan, manufacturers will be given a target of 0.5 million cars and one million motorcycles production by the end of 2010-11. The plan will also address issues like delay in delivery of cars and bikes and suggests abolishment of illegal premium, which is an abhorred practice in the sector. The government has ensured the industry all-out support and return on investment but it would be required to enhance its capacity.

Meanwhile, representatives of the industry were of the view during the meeting with the EDB that import of used cars scheme and new entrants policy was a major concern for the local industry.

Sources said that the government wanted the industry to enhance its capacity and competitiveness as huge imports of vehicles has been disturbing the country's balance of payment. The production and sale details since 1995 show that local production of automobile was not enough to fill the demand-supply gap in the local market and the trend continues to widen during recent years.

Total local production till May 2006 of local industry in cars stood at 143,921 against sale of 140,071, whereas production of motorcycles, according to the officials of EDB, was around 600,000.


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## Neo

KARACHI (July 06 2006): Pakistan and Poland have a long history of cordial relations and the trade volume of the two countries has almost doubled in the last two years and stands at $135 million in 2005 with the balance in Pakistan's favour.

This was stated by the Consul General of Poland in Karachi Ireneusz Makles while speaking at the launching ceremony of Pakistan-Poland Friendship Association (PPFA) at his residence here on Wednesday.

Ireneusz Makles said, "in my opinion there is a pressing need for such an organisation that can contribute to further develop and strengthen Pakistan and Poland's deep friendly ties". Such cordial ties already exist on the business and economic front in the form of Pakistan-Poland Business Forum, whose president is Fazal Karim Dadabhoy, he added.

He said Poland and Pakistan could benefit from each other due to their abundance of culture, customs and strategic geographical location. A beginning has already been made in trade relations.

"We have already established co-operation in the area of trade and commerce, energy, agriculture machinery, textile and many other sectors, he said and added that it is now time to take the friendship between the people of the two countries to a higher plain." "We wish to promote culture, education and tourism our countries among people of Pakistan and Poland,"

The Consul General said that Poland is the six greatest member of the European Union and for centuries culture and science have been the foundations of Polish-European presence. Poland has made big achievements in the field of culture and artistic events.

Polish music, literature, painting and film is well known not only in Europe but also world-wide. Poland has many historical monuments and is a land that has beautiful landscapes and the biggest and well-preserved lakes and forests. For us Poles - art and culture are just as important as the economy in building a society.

Simultaneously, he said, Pakistan also has many historical sites ranging from the ancient Gandhara civilisation to the monuments built by Mughals spread across the country. "Himalayas are very beautiful and many people from Poland would be interested to see", he added.

Speaking on the occasion, Chairman PPFA, Sharjeel Inam Memon said customs, manners, and traditional costumes reflect both eastern and western influences - including rich eastern ornamental styles and Islamic influences. Pakistan is famous for its rich culture. Pakistani culture can be called as mixed culture. Pakistani handicrafts are gaining popularity in the world market day by day, as Pakistani craftsmen are considered as the best in their craftsmanship. Pakistan is famous for its high standard items of glass, silver, wooden furniture, pottery, marble goods and things made of camel skin.

Many cultural practices, foods, monuments, and shrines have been inherited from the rule of Muslim Mughal and Afghan emperors in all of southern Asia.

Pakistan has in the' past been conquered and settled by many different peoples, including ElamoDravidians, Aryans, Greeks, White Huns, Persians, Scythians, Arabs, Turks, Afghans, Mongols and various Eurasian groups. There are regional differences in culture among the different ethnic groups in matters to bridge this gap between the Pakistani and polish culture.

He said the basic theme or this association is the promotion of all the cultural and artistic activities from both sides and to make the people of the both countries more closely.

To promote each other cultures, the PPFCA intends to arrange cultural programmes simultaneously that could be folk shows, cultural shows, language exchange programmes, exhibitions, dramas, theatre and tours etc. In this regard PPFA will send a delegation to Poland.

Fazal Karim Dadabhoy said on this occasion that the textile products are major exports from Pakistan to Poland, which are being exported through Turkey.

Meanwhile, the PPFA was formally launched and according to the announcement made by the Polish Consul General, Sharjeel Inam Memon would be the chairman of the association. Asif would be the Senior Vice Chairman, Imran Junejo and Mona Khalid, Vice Chairpersons, Nida Rasheed, General Secretary, Kamal Khan, Joint Secretary and Moghis Ishrat would be the Treasurer of the association.


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## Neo

ISLAMABAD (July 06 2006): The Asian Development Bank (ADB) has signed $42 million loan agreement with Pakistan for Federally-Administered Tribal Area (Fata) Rural Development Project designed to reduce incidence of poverty in the far-flung areas of the region.

Sources told Business Recorder here on Wednesday that the project has been under discussion since 2002 as there were differences on its design and execution among the Asian Bank, Fata Governor's Secretariat and Ministry of States and Frontier Regions (Safron) that delayed the project.

But, the most important hurdle was that both Fata Governor's Secretariat and Safron were pressing for the execution rights for the project. Previously, the Fata Governor's Secretariat was eager to execute the project independently without the involvement of Safron.

The Asian Bank then demanded of the Secretariat to make it clear that it is independent in terms of utilisation of aid given by the international financial institutions (IFIs) or donor agencies. Besides, it also expressed some reservations regarding the design and details of the project.

After a series of meetings with Fata administration, sources said the issue has been settled and the project's PC-I is in hand. And now they have agreed that the executing agency would be Safron, while the Fata Governor's Secretariat would be the implementing agency for the project, they added.

Sources said this is a soft loan to be extended from the Bank's Asian Development Fund (ADF). The project is to be launched in three northern agencies, Bajawar, Mohmand and Khyber and expected to be completed by end June 2011.

Objectives of the project are to improve the productive potential of participating watersheds and their associated natural resource base. It would strengthen the planning, implementation and management capacity of the communities in the project areas for participatory involvement in management and maintenance of assets emanating from local development programmes.

It would also contribute to the efforts being made for reducing incidence of poverty among the rural population by increasing income and employment opportunities through a mix of economic and social intervention, the sources said.

The project has three main components ie management of integrated resources; community infrastructure and the project planning and support.

INTEGRATED RESOURCE MANAGEMENT: Under this component, the project would help boost farming system and crop production through improved seed technology, training in integrated farm management and adaptive research; livestock and fodder development by providing training and knowledge transfer on animal nutrition and animal husbandry practices at the community level. Besides, it would enhance community forestry and range management through rehabilitation and development of denuded community land through improved vegetative cover and building of technical, social institutional and entrepreneurial capacity of small farmers, including women.

COMMUNITY INFRASTRUCTURE: This comprises four components, including building ground/surface water resources assessment and management plan. Drinking water supply schemes would also be executed by construction of around 212 spring-fed gravity flow system, 624 dug well-based schemes, provide 31 tube-wells-based water supply system, construction of 135 hand pumps and Shalman-Landi Kotal water supply schemes located in Khyber Agency. It would also enhance small irrigation systems by rehabilitating 72 existing irrigation structures and construct 36 new structures besides, providing training to farmers for its construction.

It would also construct 130 check dams and introduce small ponds and few small dams for reservoirs to create storage for irrigation, improve water recharge and ensure water availability for livestock and other non-drinking water of the local communities.

Besides, it would also support improvement and construction of roads through training to village organisations. Construction of 120-km of low cost link roads and up-gradation of 72-km of existing roads would also be carried out.

PROJECT PLANNING, MANAGEMENT AND SUPPORT: Under this component, the project would provide project planning, management and other support services to facilitate its timely implementation. This include establishment and implementation of MIS that would link project executing agency, implementing agency, project management unit (PMU) and project implementation units (PIUs).

The project's total cost is $62.9 million. Out of which, the Asian Bank would provide $42 million from its ADF, and the remaining amount will be arranged locally. Safron is now the executing agency, source added.


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## Neo

KARACHI (July 06 2006): The Chairman of Port Qasim Authority (PQA), Vice Admiral, Asad Qureshi has said that many mega projects are in the pipeline which attract an investment of at least $3 billion.

The PQA received an amount of $1.5 billion investment in various projects so far, he added. In a meeting with a four-member Japanese delegation from JETRO, JICA, Hiroyuki Miyakawa (DG JETRO) Kokyo Tamaki (Protect formation advisor JICA) and two consultants from IDCJ (International Development Centre of Japan), George Terahorca and Shigeki Kawahara visited Port Qasim here on Wednesday afternoon, stated in a statement.

The delegation evinced keen interest in infrastructure development related projects of PQA. Vice Admiral Asad Qureshi said, "PQA welcomes any foreign investment in the country and would facilitate all such investments at the port proximity".

The Port Qasim is undertaking development protects including deepening of navigational channel to maintain all-water 13.5 meters draft, LPG Terminal, Textile City, World Trade Centre, Waterfronts and Diamond Bar Island City. he said,, "To promote Industrialisation, the port has completed a major road network and other projects in its industrial area ninety-one industrial and commercial projects are already operative and 53 units are being constructed, he added. The share of Port Qasim Authority in sea borne trade increased from 33 percent to more than 42 percent in the financial year 2005-06.

As one of the largest revenue source, the PQA contributed more than Rs 71 billion in the form of duties and taxes, which contributed 10 percent of the total revenue receipts of the country.-PR


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## Neo

ISLAMABAD (July 06 2006): The government has decided to install new scanning machines at all the international airports for speedy clearance of incoming and outgoing passengers' baggage. Sources told Business Recorder on Wednesday that the new baggage scanning equipment would be installed at the international airports of Karachi, Lahore and Islamabad.

In some cases, spare-parts would be replaced for proper working of the new machines, whereas new machines would be installed wherever necessary. They said the government has approved the procurement of new machines for these airports. They admitted that very old baggage scanning machines create problems for both the passengers and the customs staff. The passengers get irritated due to manual checking of the baggage, which resulted in extraordinary delay.


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## Neo

Thursday, July 06, 2006 

ISLAMABAD: The government plans to export 250,000 motorcycles in the current financial year and the Engineering Development Board (EDB) has asked the government to finalize the duty drawback facility for motorbikesÃ¢â¬â¢ export and incorporate it in the Trade Policy 2006-07, EDB CEO Imtiaz Rasgar told the Daily Times on Wednesday. 

If the recommendation of the EDB was approved, large-scale export of motorcycles would begin from this fiscal.

The proposed export would earn foreign exchange of 150 million US dollars for the country, said the EDB vice chairman. 

He said that the EDB is demanding nothing extraordinary in the coming Trade Policy. We simply want the government to grant the sector duty drawback facility, which is actually the right of any sector playing a role in the countryÃ¢â¬â¢s exports. 

Mr Rastgar said that the proposed export of motorcycles would be the first step towards the opening up of engineering sector for exports. This will also help the government to diversify exports, which are dominated by textiles having a share of around 70 percent in the total exports. 

Ã¢â¬ÅThe government has been striving for diversification of exports. In this regard, the EDB has sent its recommendation for taking steps on behalf of the government to encourage motorbikesÃ¢â¬â¢ export in the current fiscal,Ã¢â¬Â he said. 

The motorbikesÃ¢â¬â¢ export will encourage other industry in the engineering sector to play their role in increasing the exports of the country. We need to enhance our exports. For this the government must encourage the engineering sector, he added. 

In the recommendation, the EDB has asked the Central Board of Revenue to return customs duties to the tune of 5-10 percent to the manufacturers on motorbikesÃ¢â¬â¢ export. They pay the customs duty on the import of raw material. This is a just demand of the manufacturers, an official said. 

The government has the facility of duty drawback for exporters in various sectors. The government has been providing compensatory duty drawback facility on textile exports. Under the compensatory facility, the textile sector is paid more than they pay in customs duty on the import of raw material, the official said. Ã¢â¬ÅIn other words, the government subsidizes the export of cotton goods,Ã¢â¬Â the official said. 

Pakistan produced more than 650,000 motorbikes in the last fiscal. In 2006-07, the motorcycle manufacturers are expected to manufacture over one million units as a result of expansion of the existing plants. According to a study of the EDB, Bangladesh, Afghanistan and the East African region could be potential markets for Pakistan-made motorbikes, the official said. 

MotorcyclesÃ¢â¬â¢ manufacturing is a success story in the country. The industry is fully capable of meeting the domestic requirements. It is also capable of competing in the international market as Pakistan-made 70CC motobikes are famous in the international market. This company has been in the export of motorcycles since long, the official said.


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## Neo

Thursday, July 06, 2006 



ISLAMABAD: The government of Pakistan has contacted the World Bank (WB) for $10 billion funding for the next 10 to 15 years to initiate hydroelectric projects. 

The government has decided to initiate an annual $2 billion investment plan in hydropower, keeping in view the fast-growing economy of the country. 

However, sources said it would be unlikely that the WB to would release such a large amount of funds. However, government officials are reported to be confident of success because the donor agency is impressed by PakistanÃ¢â¬â¢s fast economic growth.


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## Neo

PARIS (updated on: July 06, 2006, 20:06 PST): Pakistan and France on Thursday expressed similarity of views on key international issues and agreed to further enhance co-operation in economic, defence and education sectors.

Foreign Minister Khurshid Kasuri who is on his first official visit to France, on the invitation of his counterpart Douste-Blazy spoke of the significance of his visit which covered many areas of co-operation.

"Pakistan and France have a very strong defence relationship. We discussed at length the co-operation in the past and the need to continue and strengthen that further," he said without divulging more details.

Kasuri said despite the tragic terrorist attack at Karachi in which a number of French defence engineers associated with the Agosta submarine project were killed, the response of French authorities was very encouraging.

Apart from the French Air Force, the Pakistan Air Force had one of the largest concentration of Mirage aircraft. The two countries are currently engaged in joint production of Agosta submarines.

Expressing satisfaction over his visit the foreign minister said there was concurrence of views between the two countries on major international issues like Palestine, Afghanistan, Iran's nuclear issue.

"We look at the world with more or less the same point of view," he said.

The foreign minister said the French officials also noted the "vitally important stabilising role of Pakistan in the Muslim world and the region."

On Iran's nuclear issue, Kasuri said Pakistan does not want a military solution.

"We have sensitivities as Iran is a friendly country ... we suffered immensely because of problems on our border with Afghanistan and we do not wish our border with Iran to come under similar strain."

Kasuri said in his meetings with people from all sections of society and senior government officials he briefed them about Pakistan's role in the war against terrorism.

"I explained them the real difficulties in Afghanistan" adding "they now have a better understanding of the situation."

He termed it a timely interaction, keeping in view the situation in Afghanistan and said he discussed at "great length what needs to be done to improve the situation."

He said Pakistan favoured the Bonn process, supported over four million refugees for 25 years and even today around 3 million were in the country.

Kasuri said Pakistan desired gas pipelines and trade to Central Asia through Afghanistan and therefore had a stake in its peace and stability.

"We want to increase our trade further with Afghanistan, which has grown by 7000 per cent to US 1.5 billion in the past few years."

He said there was a lot of interest in the role Pakistan was playing in Afghanistan.

France would be doubling its over 800 troops as it assumes security control of Kabul in August. 

The foreign minister also emphasised on better intelligence sharing to control movement on Pakistan-Afghanistan border. 

On the Middle East, Kasuri said both the countries had a similarity of views.

"The reaction of the Israeli forces is far too great ... it is disproportionate," the foreign minister said.

He said Pakistan was in favour of a two-state solution - a viable and independent Palestinian State living in peace with Israel.

"It is exactly the attitude of the French and they agree with Pakistan that the Quartet needs to play a more proactive role in trying to reach a solution," he added.

The foreign minister thanked the French government in education sector and for admitting 150 Pakistani students in its universities.

He said the French government has also agreed on setting up a university of Science and Technology in Karachi.

Kasuri pointed that in the past Pakistan only produced around 30 Ph.Ds in various science subjects annually while now it has an ambitious plan to have up to 5000 candidates in next five years.

He said a large number of French private sector companies were investing in Pakistan while the two governments were providing an enabling environment.

He said the trade between the two countries has already crossed US one billion dollar mark and leading French firms; Carrefour, Alcatel and Renault were setting up and expanding operations in Pakistan. 

About President Musharraf's concept of Enlightened Moderation, the Foreign Minister said it envisages reformation within the Islamic world by attaining higher education in science and technology and gender issues, while the second prong calls for resolution of outstanding disputes like Palestine and Kashmir.

"They agreed for having a holistic approach to these problems," he added.

The French too, like Pakistan, believe on the need to address the root causes of terrorism, which he added was generally not found in some countries in Europe and West.

"The French feel the same way and it is a very sophisticated approach to foreign policy."

The foreign minister also met with President of the French Senate Christian Poncelet and discussed ways to reinforce the historical relationship between Pakistan and France. 

Kasuri briefed him on situation in Afghanistan, Pakistan-India peace process and Iran-Nuclear issue. 

In his discussions with the President of the National Assembly Jean-Louis Debre, foreign minister highlighted the great potential for upgrading the bilateral relationship to a strategic partnership.

Debre appreciated Pakistan's pivotal role in promoting stability in Afghanistan. 

In a luncheon meeting with Vice President of Foreign Relations Committee Paul Quiles of the French National Assembly Kasuri stressed promotion of greater inter-faith harmony. 

Quiles said France with its six million Muslims and Pakistan were uniquely placed to play an important role in this area.

The French parliamentarians also expressed keen appreciation of the need to address the problem of growing Islamophobia in the West. Kasuri said Pakistan and France were working together for promoting understanding between Islam and the West.

Foreign Minister addressed the prestigious French Institute of International Relations (IFRI).

Kasuri also invited his counterpart to Pakistan and said a French delegation will soon visit.


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## Neo

KARACHI, July 5: PakistanÃ¢â¬â¢s exports to Europe, including 15 EU countries, have shown a small and insignificant growth of five per cent in the year 2005-06 but it has maintained an impressive growth of 25 per cent to USA. Export earnings in other geographical regions are too small and insignificant but growth ratio on a small base looks deceptively impressive.

Bangladesh has emerged as a big competitor for Pakistan in the EU market, where it enjoys the duty advantage of 12 per cent under the GSP scheme. Official statistics show PakistanÃ¢â¬â¢s total exports at $2.63 billion in eleven months of 2005-06 as against $2.52 billion last year.

Ã¢â¬ÅWe get BangladeshÃ¢â¬â¢s spillover orders from our EU buyersÃ¢â¬Â, Majyd Aziz, a former chairman of SITE Association of Industry and a leading readymade garments dealer said. Textile leaders in Pakistan say that their counterparts in Bangladesh enjoy lot of advantage over them in utility cost, financial charges and labour wages. Low wages have caused a big labour unrest in Bangladesh, where 14 factories are said to have been burnt down in last few weeks.

But Pakistani exporters have shown an impressive growth of 25 per cent in USA market from where an amount of $2.68 billion were netted during July 2005 to May 2006 period as against $2.14 billion in same period last year. Exporters were able to maintain a growth in the US market because of political considerations. Yet, China, Bangladesh and India are reported to be doing far better than Pakistan.

In about 29 countries of East Europe, PakistanÃ¢â¬â¢s presence in export market is insignificant and on a very small base the growth is 35.61 per cent. Total export earnings being made from these countries amount to $160.69 million. Russian Federation remains the biggest market for Pakistan from where $37.66 million were netted.

In the UAE, PakistanÃ¢â¬â¢s exports in eleven months of 2005-06 amounted to $862.24 million that showed 24.31 per cent rise. China, India, Thailand and Malaysia have a clear edge over Pakistan in Dubai and other UAE countries which are home to the largest number of Pakistani expatriates.

There are 57 African countries that figure on PakistanÃ¢â¬â¢s trade map and collectively these absorb a total of $582 million worth of goods in July 2005 to May 2006 period. South Africa is the biggest market of Pakistani goods that bought a total of $142 million of goods, followed by $42,308 million in Togo, $39.62 million in Kenya, $37.26 million in Egypt, $35.87 million in Morocco, and $28.55 million in Nigeria.

PakistanÃ¢â¬â¢s position in 34 Asian countries, other than those in the Middle East, is relatively better. PakistanÃ¢â¬â¢s exports to these countries amounted to $2.29 billion, which is 26 per cent higher than last year. China, including Hong Kong, is the traditional buyer of Pakistani goods but the overall export amounts to $734.80 million. Afghanistan is an emerging market that absorbed Pakistani goods worth $643.58 million.

Export of cotton fabrics increased by about 20 per cent to $1.37 billion in the current fiscal year. Main markets were USA, Turkey, Hong Kong, Italy, Bangladesh, Sri Lanka and other countries. In Bangladesh, Turkey and Sri Lanka Pakistani fabrics were used to manufacture bed sheets for re-export to the EU and other countries.

An impressive growth of more than 30 per cent was seen in export of readymade garments, which fetched about $853 million. Main markets were USA and European countries. Knitwear exports increased marginally by 3 per cent to $1.13 billion. The main markets were USA, Italy, Netherlands, Canada and other EU countries.

In last eleven months exports met official targets in four months and remained below the targets in seven months. The official export target for 2005-06 was $17 billion against which $14.96 billion have been realised in eleven months leaving a gap of more than $2 billion to be earned in the month of June.

http://66.201.122.226/2006/07/06/ebr2.htm


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KARACHI, July 5: The Karachi Customs collected Rs144.700 billion revenues during the outgoing fiscal year 2005-06 as against Rs124.125 billion last year, showing an increase of 16.5 per cent, officials said here on Tuesday.

The increased economic activity resulting in a record rise in imports during the fiscal year 2005-06 helped the Karachi Customs record an all-around surge in revenue collection at the customs stage, including income tax, sales tax and federal excise duty.

During the period under review, the Karachi Appraisement collected Rs70.217 billion as customs duty against Rs57.582 billion collected last year, showing a rise of 23.67 per cent.

Despite the fact that duty slabs generally stood static, with maximum at 25 per cent and minimum at five per cent and a few others at higher level, the revenue collection primarily rose owing to higher imports and efficient working of the customs authorities who are now mostly functioning on automation by using computers in most of their departments.

The brisk industrial activity resulting in higher imports of raw materials and some capital goods is reported to be major factor for an increase in revenue collection at the customs stage.

The collection of sales tax surged by 12.54 per cent to Rs58.990 billion as compared to Rs52.413 billion last fiscal (2004-05). The income tax collection rose by 9.14 per cent to Rs14.770 billion. Similarly, the collection of federal excise duty increased by 20.47 per cent to Rs722 million from Rs599 million last fiscal year.

The officials said the Appraisement Collectorate, Karachi Customs, recorded a fabulous growth in revenue collection in the last month (June) of the outgoing fiscal 2005-06 by collecting Rs18.108 billion as against Rs13.307 billion in the corresponding period last year, showing a growth of 36.03 per cent.

The revenue collection on account of customs duty in June 2006 stood the highest at Rs10.454 billion or 41.11 per cent higher than Rs7.408 billion collected in the corresponding period last year. The sales tax collection ranked second on recording 37.85 per cent surge to Rs6.221 billion as compared to Rs4.512 billion in the same period last year.

However, the revenue collection under the head of income tax recorded a nominal growth of 2.67 per cent at Rs1.376 billion as compared to Rs1.340 billion last fiscal year (2004-05).

The federal excise duty collection rose by 23.03 per cent to Rs55.93 million in June this year from Rs45.48 million in the same month last year.

The customs authorities put their entire energy on the last day i.e. June 30 of the outgoing fiscal year in order to achieve higher revenue collection. The Appraisement Collectorate collected Rs2.867 billion on June 30, recording a growth of 79.79 per cent as against the corresponding period last year when collection stood at Rs1.595 billion.

Taking note of the Karachi Customs performance and achievement of record growth in revenue collection, the Central Board of Revenue gave awards to the officers and some staff members.

The CBR rewarded additional collectors Wasif Memon and Faiz Ahmed Rs50,000 each. Besides, assistant collector Yaseen Murtza and principal appraiser Shaheen Farooq have been rewarded Rs25,000 each. Collector Appraisement Musarat Jabeen has also recommended more names for special rewards.


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ISLAMABAD (July 07 2006): Prime Minister Shaukat Aziz has allowed the Water and Power Development Authority (Wapda) to set up 700-800MW capacity thermal power stations in Punjab to bridge demand and supply gap.

In August last year, when Wapda Chairman Tariq Hameed placed the same proposal before the prime minister, it was turned down on the grounds that no thermal power project would be set up in public sector in future, sources in the Private Power and Infrastructure Board (PPIB) told Business Recorder.

"Power is urgently needed in Gepco and Lesco areas and the utility cannot afford projects on ICB basis if we have to bring additional electricity in these two regions," the sources quoted Wapda chief as saying, in his presentation last year.

The prime minister, however, at a meeting on Thursday, directed the utility to use all possible options to increase power generation, including setting up new power projects and improving in its system to meet the growing energy requirements due to high economic growth achieved during the last few years.

Sources said some of the federal ministers also expressed their serious concern over the prevailing power crisis in a recent cabinet meeting, saying the present situation could go against them in the forthcoming general elections.

The prime minister took several important decisions for power production on fast track basis and directed Petroleum and Natural Resources Minister Aman Ullah Jadoon to make available gas for thermal power projects on priority basis.

The PPIB managing director, in his presentation, said the country would have an additional capacity of 2000 MW by the end of 2008, generated by the Independent Power Producers (IPPs). This will include power produced by capacity expansion from existing IPPs, capacity creation from new IPPs and the power produced by leading business houses, he added.

Sources said Prime Minister Shaukat Aziz was not happy with the working of the PPIB, which was ultimately resulting in delay of projects, adding that President Pervez Musharraf had also expressed annoyance a couple of days earlier at a meeting, saying that nothing has been done practically to meet future power requirements.

The water and power ministry, which is being blamed for power crisis in the country, has been asked to prepare a comprehensive plan to meet future power needs, says a press release issued by the Prime Minister House.

The prime minister directed the Wapda chief to interact with the Alternative Energy Development Board (AEDB) to look into the possibilities of setting up micro-hydel projects.

He said that ensuring security of water, energy and food are among the top priorities of the government. There is a surge in the electricity demand due mainly to the high growth rates and the government is consistently monitoring the power situation in order to maintain the growth momentum and provide uninterrupted electricity supply to domestic and industrial sectors.

The prime minister said over the years the middle class has expanded, the electrification of rural areas has increased and the irrigation and industrial energy demand is at an all-time high necessitating more electricity generation. The government is taking all necessary steps to meet the growing energy demand by creating adequate power generation capacity, he added.

The meeting was attended among others by Petroleum and Natural Resources Minister Amanullah Khan Jadoon, PM's Adviser on finance Dr Salman Shah and senior officials.


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ISLAMABAD (July 07 2006): The soaring "twin deficits", ie, current account and fiscal deficit is posing threat to the national economy simultaneously on both internal and external fronts, as the State Bank of Pakistan (SBP) on Thursday reported that the current account deficit during the first 11 months of FY06 reached a dangerous level of $5.227 billion (4.28 percent of GDP).

Sources in the finance ministry told Business Recorder though it was largely driven by the burgeoning trade deficit (which is currently at $11.47 billion), the lavish expenditure on foreign trips and huge import of luxury cars have also been causative factors augmenting the current account deficit to the worrisome level.

Country's current account deficit is the largest, both as a share of economy and in dollar terms.

Sources said that during last 11 months, the national exchequer spent near $1.5 billion on the import of vehicles, more than $1 billion on cellular phone sets, and about quarter of a billion dollars on foreign tours of the President, the Prime Minister and the cabinet members.

The current account deficit, excluding official transfers, during the period under review (July-May 2006) grew by more than 210 percent to $5.227 billion as against corresponding period FY05 ($1.683 billion).

It is also important to note that Finance Secretary Tanveer Ali Agha has also once in the Public Account Committee (PAC) meeting some two-month back confessed that current account deficit is expected to touch $7 billion by end this fiscal and to keep it in control, the government would rely on inflow of privatisation proceeds, FDI, remittances and foreign aid.

THE BUDGET DEFICIT: the other growing threat to economy-reached Rs 201.35 billion (2.70 percent of GDP), up by 0.6 percentage point, till the third quarter (July-March) as compared to Rs 131 billion (2.1 percent) in the corresponding period fiscal year 2005. It is also believed to reach 3.4 percent of GDP. That was the reason that the government's borrowing from the domestic sources ie scheduled and central banks is on the rise for budgetary support.

According to economic experts this external imbalance in the shape of "twin deficits" may have a significant impact on the value of the rupee-a matter attracting keen attention around the country. Besides, it would translate into a large increase in Pakistan's net foreign debt position. A large and growing public debt could also eventually put upward pressure on interest rates and crowd out private investment.

One dismaying aspect is that though the government could have easily controlled this extravagance, none bothered about it.

The economic managers kept on saying that Pakistan is enjoying an economic boom and the current account was manageable by borrowing from abroad, remittances, drawing down reserves and inflow of investment.

According to them, inflow of remittances, FDI, portfolio investment, foreign economic assistance and foreign exchange reserves are very encouraging. But, how long can trade deficit continue on that trajectory without disrupting the economy? And how much longer, can Pakistan continue to spend more than it earns and support the growth? And are the inflows sustainable in the long run?

The most depressing thing was that foreign trips remained almost fruitless as no improvement was seen or mentioned about enhancement of exports (for which, the government would miss the export target of $17 billion by huge margin) or increase in investment, sources said.


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ISLAMABAD (July 07 2006): Affairs Division (EAD), Ministry of Economic Affairs and Statistics, Government of Pakistan has approved and signed "Area Development Programme Balochistan, Phase II", which is a joint initiative of United Nations Development Programme (UNDP) and Government of Balochistan.

On behalf of UNDP Pakistan, Haoliang Xu, Country Director, signed the project document. Recognising the tremendous success achieved in the first phase, which benefited 130,000 people in 9 districts of Balochistan, UNDP and the government felt it beneficial to extend and expand this project as a second phase.

Through this initiative, UNDP in collaboration with the Government of Balochistan and World Food Programme (WFP) aims to target poverty alleviation through a variety of activities. Focus areas include community mobilisation and capacity building, local capital generation, improvements in agricultural and livestock productivity, creating income generation activities and improving access to markets and services. In addition, facilitation for access to social sector services will be provided and women's role in development will be strengthened.

Haoliang Xu, Country Director UNDP, was encouraged by the first phase of the project and said that "the success of Phase I is a great achievement of the government and UNDP. We are confident that in the second phase we will attain greater triumph and help even more lives break the chains of poverty."

Phase I of this project succeeded in development of 492 Community Organisations with memberships adding up to 8,369 individuals, covering 12,701 households. Furthermore, these communities saved Rs 3.58 million, constructing 26 drinking and recharge water ponds and rehabilitated 26 "Karazes".

Realising the problems of water shortages in the area, 10 diversion dams and valley dikes of 1.12 million cubic feet were also set up to harvest rainwater. Hence, a total of 1,744 acres of rangeland was rehabilitated. This project also focused on building capacity, training 8,726 people in various skills including natural resource management, livestock production and other income generation activities.

Phase II of the project will provide similar support to a larger community in the area. It will have a life of 4 years with a total budget amounting to US $14,329,800. Owing to the success of the previous phase, the Government of Balochistan has committed US $4.27 million, along with funding by UNDP of US $2.6 million, WFP of US $700,000 and the communities' share (cash / kind) of US $1.0 Million. The financing gap of US $5,929,800 will be mobilised from other donors.


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FAISALABAD (July 07 2006): Groundbrea-king ceremony of the M-3 Industrial City will be held in September 2006, said Mian Muhammad Latif, Chairman, Faisalabad Industrial Estate Development and Management Company (FIEDMC.

Talking to newsmen here on Thursday, he said the progressive vision of President Musharraf and Chief Minister Punjab has helped to turn Faisalabad into a 'land of opportunities' by launching ambitious projects like Value Addition City (VAC) and M-3 Industrial City.

He said the Punjab government had established FIEDMC with the induction of private sector to plan, implement and manage projects and to gear up the process of industrialisation in the wake of World Trade Order (WTO).

There are 16 private sector directors on the FIEDMC board, while five would represent the provincial and district governments, he said, adding that the main power would remain with the private sector to tailor these projects according to the needs of new investors.

He said the first FIEDMC project of VAC was almost completed. It has been developed over 181 acres of land near the industrial belt of Khurrianwala, with modern concept of linear buildings and all infrastructural facilities to meet WTO requirements.

The M-3 Industrial City to be developed over 4371 acres along Motorway from Sahianwala up to Millat Road, will also have water treatment plants and state of the art facilities to fulfil the environmental and social compliance of WTO.

The industrial city will accommodate new industries and will encourage the shifting of existing industrial units operating in congested commercial and residential areas of Faisalabad.

Mian Muhammad Latif said that two-road construction contracts involving Rs1.1 billion had already been awarded to two firms, one of which had started the groundwork while the other would commence work within the next couple of weeks.

These projects will not only gear up the pace of industrialisation in the province, they will also help create a million job opportunities for unemployed youth, he observed.


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ISLAMABAD (July 07 2006): Pakistan would seek international expertise and assistance in bringing railways at par with the international standards, said Minister for Railways, Sheikh Rashid Ahmed while talking to the Italian Ambassador to Pakistan, Roberto Mozotta who called on him here on Thursday.

The minister said Pakistan Railway was keenly interested to avail the modern technology of Europe in terms of locomotives, signalling system and rail track and would like to go into joint ventures with Italy in order to bring improvement in railway network and operation across the country.

The minister told the ambassador that the execution of work on doubling of rail track on Khanewal-Lahore section has been started in collaboration with Frontier Works Organisation (FWO) which will be completed in one year. The completion of the project would bring a revolutionary change in the culture of Pakistan Railways, says a press release.

This will prove not only a catalyst in improving the train timings but also enhance the dependence of trains in terms of communication besides bringing efficiency and strength in the railways", the minister added. Sheikh Rashid congratulated the Italian ambassador over the success to Italian football team for reaching into the final of the Football World Cup and wished for their victory.


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ISLAMABAD, July 6: The Privatisation Commission Board on Thursday decided to privatise a number of state sector enterprises including Pakistan State Oil (PSO), National Investment Trust (NIT), machinery of the Lasbela Textile Mills and finalising Global Depository Receipt (GDR) of the Oil and Gas Development Company Limited (OGDCL) by December 31, 2006.

Informed sources told Dawn that the meeting presided over by Minister for Privatisation and Investment Zahid Hamid directed the concerned officials to speed up the low pace of privatisation programme.

The Board members also called for privatising Sui Northern Gas Pipeline Company (SNGPL), Sui Southern Gas Company (SSGC), Pakistan Petroleum Limited (PPL) and the land of the Services International Hotel, Lahore by the second quarter of 2007.

Sources said that the privatisation minister told the meeting that time had come when various transactions which were delayed due to one reason or the other in the past "must be immediately brought forward to a bidding point".

He expressed the hope that all the pending transactions would further restore the confidence of the local and foreign investors.

He also asked the small investors to consider opening CDC accounts and obtain computerised National Identity Cards for participating in the upcoming public offerings of GoP shares in United Bank Limited (UBL), State Life Insurance Company Limited (SLIC) and OGDCL.

He directed the PC to simplify the application forms in this regard with necessary information in Urdu so as to facilitate the small investors and issue instructions to the respective bankers to guide them in completing requisite formalities.

The minister also asked the PC officials to plan a series of roadshows especially in smaller cities, towns and rural areas for creating awareness among the masses to benefit from the planned public offerings. The PC Board reviewed the status and progress of ongoing and upcoming transactions and directed that necessary steps be taken for their expeditious completion in an open fair and transparent manner after completing all prescribed rules and regulations.


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KARACHI (updated on: July 08, 2006, 05:27 PST): The Prime Minister Shaukat Aziz said on Friday the banking in Pakistan has been transformed from state-owned sector into a vibrant private sector industry, gaining strength from the positive interplay of economic and political factors, but becoming an engine of growth for the country. 

Talking to a delegation of Bankers at the Governor House here, the premier underlined the importance of a strong and well-functioning financial and banking sector for sustained higher economic growth.

Pakistan with its growing markets, strong economy and an emerging middle class offers immense opportunities for business and investment, he said.

Giving an overview of the economy, premier said Pakistan's economy maintained a solid pace of expansion in 2005-06 and achieved 6.6 growth despite an extraordinary surge in oil prices and the losses caused by last year's October 8 earthquake.

The magnitude of growth that Pakistan has achieved during the last four years in a row has positioned Pakistan as one of the fastest growing economies in the Asian region, PM said. 

The premier said the exchange rate is steady, inflation is reducing and credit rating and balance of payment situation has improved. There is an appreciable increase of 20 per cent in the country's exports and 22 per cent in revenue collection.

He said Pakistan is fast becoming a destination of choice for foreign Investors and this year the Foreign Direct Investment (FDI) has reached $ 3.5 billion, which is a record. Per capita income has reached $847 and poverty declined from 34.46 in 2000-01 to 23.9 in 2004-05. 

He appreciated the role of State Bank of Pakistan (SBP) in the success of reform agenda.

He further said growth trend is particularly positive in the manufacturing and services. The growth of services sector is a sign of maturity of the economic sector.

Further he said micro financing has a great potential in Pakistan. However, more serious players with a passion to help the country are required. The sector also needs more credit, he added. 

The Bankers held an in-depth discussion with the prime minister about the situation in the banking sector. They said the reform agenda of the government has led to positive changes and growth in the sector. 

They said many international banks are opening new branches in Pakistan and the banks already operating in Pakistan are expanding their operations.


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ISLAMABAD (July 08 2006): The Water and Power Development Authority (Wapda) has asked the federal government to make standby arrangements of Rs 2 billion for taking up initial civil work on the (NJHEP), in case no international firm comes forward to execute the project, sources told Business Recorder.

The Authority has extended the deadline for submission of tenders from June 15 to July 15 after some interested parties had sought more time to complete the documents, sources said, adding that the utility was still uncertain that any of the parties would be declared successful.

"Some international firms have submitted tenders to execute the project, but it will be clear after opening of the tenders whether any of the tenderers is capable of taking on the mega hydroelectric project," sources said.

The project was initially approved by Ecnec on December 31, 1989 at a cost of Rs 15.012 billion. The cost was later revised to Rs 84.5 billion with foreign exchange component (FEC) of Rs 46,667.70 million. Local component of the cost was to be met from Wapda's own resources and FEC through foreign aid. The estimate was again revised to Rs 95.36 billion. The gross head of the project is 420 feet and would generate 969 MW electricity through 17 km long tunnel by diverting water of Neelum River to Jhelum River.

Last year, Wapda had invited sealed tenders for starting construction of civil work, along with design supply, mechanical, electrical and hydraulic works, but did not find any potential party.

The Economic Co-ordination Committee (ECC) of the Cabinet had authorised the Finance Division to issue sovereign guarantee for raising supplier's credit, as a special case, to expedite implementation of the project.

CGGC-CMEC consortium of China, which was interested in undertaking the project, had been sidelined for not fulfilling the requirements. However, CWE (NJ), a joint venture, was providing tender security buyer's credit to meet the foreign currency exchange requirement of the project, instead of supplier's credit.

On the recommendations of the Ministry of Water and Power, the ECC changed the financing terms from 'supplier's credit' to 'bidder's credit'.

However, at a later stage, Wapda, Ministry of Water and Power and Nespak rejected the bid documents as per provision of the tender documents. They said that a French firm, Vincy, which had earlier proposed to conduct seismic study of the project site after the October earthquake before starting civil engineering work, was also among the tenderers.

The company was seeking amendments in the bidding documents, especially with reference to 'arbitration clause', but did not apply by the due date. "The project is of sensitive nature for Pakistan, as India is constructing 330MW Kishanganga hydroelectric power project on river Neelum in occupied Kashmir, and any further delay will be considered as a criminal negligence," sources said.


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ISLAMABAD (July 08 2006): The government will announce another 5 percent tariff concessions in January 2007 on imports from India and Sri Lanka as non-least developed countries (Non-LDCs), and Bangladesh, Bhutan, Nepal and Maldives being 'least developed countries' (LDCs) under South Asia Free Trade Area (Safta) agreement.

Official sources told Business Recorder on Friday that the existing tariff reduction under Safta notified through SRO 695(I)/2006 would be applicable only for July-December 31, 2006 period.

A new notification would be issued in December 2006, further reducing the customs duty on import of items from both NLDCs and LDCs under Safta to be applicable from January 1, 2007.

Officials said that the rates of customs duty would be zero to 5 percent by the end of this program. For the LDCs, the rate of the tariff would be curtailed 5 percent in the next three years, excluding items specified in the 'sensitive list'.

For the NLDCs, the rate of customs duty would be 0-5 percent in the next seven years. By 2013, the duty structure for NLDCs would be 0-5 percent.

The tariff reduction on trade among Bangladesh, Bhutan, Nepal and Maldives would be completed in two phases: Phase-I (2006-2008), under which existing tariff rates above 20 percent to be reduced to 20 percent within two years, and tariff below 20 percent to be reduced on margin of preference basis of 10 percent per year. Phase-II (2008-2013) requires tariff to be reduced to 0-5 percent within 5 years.

Explaining the applicability of tariff rates notified for India under Safta, officials said that the government had definitely notified reduced tariff rates for Safta applicable from July 1, 2006. But, the concession had to be seen keeping in view the conditions of import policy order by the Ministry of Commerce. The conditionality of import of any item would be decided by the Commerce Ministry.

Secondly, the statutory rate of duty is much higher on the import of these items as specified in Pakistan Customs Tariff (PCT). The tariff rates given in the PCT (2006-2007) are applicable for general imports by any person.

The CBR has notified the concessional rates under the relevant SRO for specific countries. For general import of these items, the rates specified in the PCT would be applicable, officials added.

Sometimes the concessional rates are applicable for a specific sector or industry. In other cases, concession is subject to the fulfilment of certain conditions under the consessional notification.

Therefore, the notification of reduced rates of customs duty on the import of items under the Safta SRO would be allowed following fulfilment of the relevant conditions of their import.


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BEIJING (July 08 2006): Pakistan's export to China registered 27 percent growth in the first five months this year, making considerable headway in overall economic interaction between the two countries, according to the Chinese Customs Authorities.

The country's export to China between January and May 2006 was amounted to US $381.25 million. It was $299.7 million in the corresponding period last year. Hence, the increase in Pakistan's exports to China in a period of five months was about $82 million.

The sources told APP here on Friday that there was a considerable jump in the export items like cotton yarn, cotton fabric, leather and seafood. The Early Harvest Programme (EHP) signed by the two countries last year will also gradually contribute to this upward trend, said Commercial Counsellor in Pakistan Embassy Shahid Mahmood.

The EHP is a mini-fast track and a prelude to the under-negotiation Free Trade Agreement, expected to be signed by the end of this year. Both Pakistan and China have increased market access for each other on items of significant commercial interests from January this year. It has provided duty free access to a large number of import-export products. Apart from this, a number of products are exportable by both counties at Margin of Preference in relation to MFN duty rate. In this way they enjoy concessionary duty rate in comparison to exports of same products from other countries.

When asked to comment on the future prospects of Pakistan's trade with China, Shahid Mahmood said, we are confident that the strong growth that we had in our exports to China last year would continue in the coming months.

Pakistan's export to China is likely to cross the $1 billion mark by the end of this year. The Chinese customs authorities had reported $832 million Pakistan's exports to China during the year 2005.

According to the sources, there is a great potential for enhancing the exports, particularly of valued-added textile products including cotton fabric, home textiles and towels. Chinese growing market also provides wide opportunities to Pakistani traders to enhance their export in non-traditional items like sports and engineering goods, handicrafts, marble, onyx, jewellery and agro-based products.

The trade volume will get a quantum jump in the coming months, when the list of export's items to China will also include sports goods, surgical instruments, rice, mango and some other agro-based products.

An official of the Chinese commerce ministry suggested that maximum number of Pakistani businessmen should visit China to explore new openings in the trade sector. Major exporters need to set up here their representative offices to introduce their products and find prospective buyers, he added.

The Chinese companies, he added enjoy official support at the government level to enhance economic interaction with their Pakistani counterparts.

"We welcome the Pakistani side to display their products at the annual trade fairs, used to take place in Chinese major cities," he added.


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LAHORE (July 08 2006): Provincial Minister for Mines and Minerals Muhammad Sibtain Khan has said that 101.92 million tonnes salt reserves have been discovered in two different places of Punjab and this salt is very suitable for domestic as well as commercial use.

While presiding over a meeting of Punjab Mineral Development Corporation (PUNJMIN) here on Friday, the minister said that estimated reserves of salt had been determined as 31.67 million tonnes at Mian Matha, Khushab and 70.25 million tonnes at Marmandi and Mianwali.

He said the scheme for exploration of salt reserves at Marmandi, Mianwali had been completed and production started and more than two thousand new jobs had been created.

He said that the exploration and research work on Mian Mitha, Khushab had been completed. He said that the quality of the salt was very good and it was very useful both as domestic and commercial.

The Minister was briefed in detail about the projects.


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KARACHI (July 08 2006): Al-Ghurair Giga Pakistan will invest more than 10 million dollars in various housing and commercial projects including supermarket chain and a five-star hotel in Pakistan in near future.

This was stated by the vice-chairman of the group, Haji Muhammad Rafiq Giga while talking to newsmen after the inauguration of international property conference IPEC 2006 at Karachi Expo Centre here on Friday.

He said that work on a large residential project in Islamabad has started while the work on supermarket will begin in September this year. Another mega housing project will be announced for Karachi in-next couple of months.

Rafiq Giga said that several memorandum of understanding (MoUs) have been signed with local partners for the start of housing schemes in various cities of Pakistan.

He said that Al-Ghurair Giga Pakistan, a joint venture between UAE and Pakistan, would start a supermarket chain in Pakistan. First outlet will be launched in Islamabad followed by other outlets in Karachi and other major cities of Pakistan.


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KARACHI, July 7: Exports of two major items -- grey cloth and bedwear -- are expected to cross $2 billion mark each during the fiscal year 2005-06 after achieving a record export growth during the first 11 months of the fiscal.

It will be the first time in the history of the country that export earnings from these commodities will be exceeding $2 billion each.

Another encouraging development is a surge in export of rice which has also joined the Ã¢â¬Ëone-billion-dollar clubÃ¢â¬â¢. Three other commodities -Ã¢â¬â cotton yarn, knitwear and garments -- are already in the club.

Bedwear exports made a leap jump of over $600 million in a single year, touching $2 billion in FY06, while grey cloth, which is a semi-finished product and by far lesser in value-addition, is also close to $2-billion exports.

According to official statistics, grey cloth exports during July-May FY06 stood at $1.943, only $57 million away from the $2-billion mark. Its export in 2004-05 touched $1.994 billion.

Bedwear exports, which stood at $1.408 billion in the fiscal year 2004-05, scrambled to $1.827 billion during July-May FY06, only $173 million short of the $2-billion mark, to be filled by exports in June 2006. It is a fabulous growth in exports of bedwear because no other items have touched the $600-million mark in a single year.

Rice exports, which stood at $933 million during the fiscal year 2004-05, just crossed the $1-billion mark and will add another couple of millions in June 2006 export figures.

Giving brief details about the bedwear industry and its exports, Pakistan Bedwear Exporters Association (PBEA) Chairman Shabir Ahmed said till late 1980s Pakistan was only exporting white bed-sheet to Europe as their domestic industry was producing printed and higher quality bedlinen. He said in the 1990s, the export growth remained slow despite the fact that the European market started importing printed and higher quality bedlinen from Pakistan.

Ã¢â¬ÅIt was exportersÃ¢â¬â¢ effort and determination which helped the bedwear industry grow and establish its products in the western world, as manufacturers kept upgrading and expanding their capacity,Ã¢â¬Â he maintained.

He said bedwear exports surged after the European Union gave a duty-free excess to Pakistani products and increased textile quota by 25 per cent in 2001-02. However, thereafter some problems cropped up, as the EU imposed punitive duty of 13.1 per cent on imports of bedlinen from Pakistan, just a year prior to start of the quota-free regime on January 1, 2005.

After a lot of negotiations, Mr Shabir said, the EU announced a partial review of the duty, as Pakistan argued that investigations carried out by the European Commission were not completed. The EC gradually reduced the duty from 13.1 per cent on three disclosures made and finally it was put at 4.8 per cent, which means that Pakistani bedlinen exporters will be paying around 2.3 per cent after deducting 2.5 per cent concession under the GSP.

He said further that even on entering the quota-free regime with punitive duty of 13.1 per cent, Pakistani bedwear exporters had somehow managed to retain their market share. Ã¢â¬ÅHad there been a level-playing field, bedwear exporters would have performed even better.Ã¢â¬Â


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KARACHI: PakistanÃ¢â¬â¢s current account showed a deficit of $4.76 billion in the first 11 months of the 2005-06 fiscal year (July-June), according to data released by the central bank on Friday.

The deficit was sharply higher than the $1.64 billion in the corresponding year-ago period. The 11-month deficit number is equivalent to around 3.7 per cent of the provisional estimate of $128 billion for PakistanÃ¢â¬â¢s gross domestic product (GDP) for 2005-06.

In a report issued in April, State Bank of Pakistan forecast a full-year current account deficit of 4.7 per cent of GDP, compared with an earlier forecast of 2.2 per cent of GDP. Analysts said the ballooning current account deficit was a result of the sharply widening trade gap, due to rising imports and higher global oil prices, and could result in a weaker rupee going forward.

According to the central bank, the trade deficit in July-May stood at $7.401 billion, compared with $4.168 billion in the year-ago period. Ã¢â¬ÅIn my opinion, the overall funding position is secure in the near future, but the rising deficit levels are a matter of increasing concern,Ã¢â¬Â said Asif Qureshi, head of research at brokers Invisor Securities.

Ã¢â¬ÅI certainly feel that some policy measures are now needed, such as exchange rate or interest rate adjustments, to counter the problem,Ã¢â¬Â he said. The central bank has itself said that while the current account deficit was sustainable in the short-run, it posed serious threats to the economy if the trend continues.

The central bank is scheduled to release its monetary policy statement for the July-December period later this month.

According to central bank data, exports during July-May amounted to $14.898 billion, while imports stood at $22.299 billion. In the corresponding year-ago period, PakistanÃ¢â¬â¢s exports and imports stood at $13.104 billon and $17.272 billion respectively, it said.


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Saturday, July 08, 2006 

ISLAMABAD: A World Bank assessment report envisages a three-fold increase in university enrolment by 2016 and allocation of four percent of GDP to education.

A four-member World Bank educationistsÃ¢â¬â¢ team, led by Benoit Millot, called on Dr Salman Shah, Adviser to the Prime Minister on Finance, here on Friday. Omar Ayub Khan, Minister of State for Finance, was also present at the meeting. 

The World Bank team presented to the adviser a copy of the report of Ã¢â¬ÅPakistan Higher Education Policy Note Ã¢â¬â An Assessment of the Medium-Term Development Framework.Ã¢â¬Â 

The report has been prepared by World Bank education specialists after thorough consultations with the Higher Education Commission and the federal and provincial ministries concerned. The team also conducted extensive study of the prevailing educational system being pursued by the public and private sector universities and the Higher Education Commission for meeting future needs of the country for highly qualified professionals and educationists in the technical and engineering fields and social sciences.

The report envisages the measures to be taken by the government and the private sector to improve the standard of education being imparted to students by the public and private sector universities. The report also visualizes the scope of future expansion of the universities as well as the enrolment of students in the coming future. The report also addresses the financial resources required for imparting quality education to the students in the universities. 

The adviser appreciated efforts of the World Bank team and asked them to give final shape to the report encompassing financial aspects and high standard of education and the methodology to be adopted by the Higher Education Commission for the implementation of the findings.


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## Neo

Saturday, July 08, 2006 

* Improved IPR enforcement in Pakistan clears the way

By Sajid Chaudhry

ISLAMABAD: Due to the improved intellectual property rights (IPR) enforcement in Pakistan, the United States has announced that Pakistan will continue to enjoy the benefits of duty- free exports to US markets under the Generalized System of Preferences Program. 

The Bush Administration had announced on June 30, 2006 the outcome of the 2005 Annual Review of the Generalized System of Preferences (GSP), a program created in 1974 under which 136 beneficiary developing countries currently export certain products duty-free to the United States. In the annual review, as required by regulations, the US administration evaluates the list of articles and countries eligible for duty-free treatment under the GSP using statutory criteria. The United States Trade Representative (USTR) office on July 7, 2006 has released further details on the results of the annual review in the US federal register. 

The United States had closed in January 2006 an ongoing review of an industry-initiated petition seeking termination of PakistanÃ¢â¬â¢s eligibility for the Generalized System of Preferences (GSP) program based on concerns over intellectual property rights. However, the United States had also announced that it would continue to monitor PakistanÃ¢â¬â¢s efforts to achieve continued IPR protection and enforcement through the section 301 process and ongoing bilateral consultations.

The 2006 Ã¢â¬ÅSpecial 301Ã¢â¬Â annual review initiated by US authorities in April 2006 reviewed in detail the adequacy and effectiveness of intellectual property rights in some 87 countries, including Pakistan. Before this review Pakistan was included in the Priority Watch list of US such countries as were not protecting properly the intellectual property rights. Under the 2006 Special 301 review, PakistanÃ¢â¬â¢s ranking was improved and its name was removed from Priority Watch List and was placed on the Simple Watch List of US authorities. This was due to better enforcement of intellectual property rights in Pakistan. 

During the 2005 review, the US administration had determined that certain imports from selected developing countries can compete effectively with imports that are subject to duties and, thus, should no longer be eligible for duty-free treatment under the GSP program. As a result, importers of those goods from affected countries would now pay duties at the normal tariff rates on those items. 

The US administration also extended or preserved benefits by continuing GSP benefits that would otherwise expire and restored benefits on some goods. In 2005, $26.7 billion in products were imported duty-free from eligible beneficiary countries under the GSP program, an 18 percent increase over 2004. The majority of products imported from beneficiary countries are eligible for GSP benefits, with a significant exception being textile and apparel products. 

As part of the annual review, the administration found that imports of certain products from specific developing countries now account for major shares of US imports of those products and are effectively competitive with imports from other countries, making them no longer eligible for duty-free status. Accordingly, the administration has acted to put those imports on a level playing field with other producers. This action also advances the US goal to administer the GSP program in the way Congress intended, by increasing the share of benefits for those countries that need it the most.

Earlier this year, the Bush Administration restored GSP eligibility to Liberia as a least- developed GSP beneficiary developing country and closed reviews of certain country practice petitions without removing GSP eligibility. These cases examined worker rights in Swaziland and intellectual property rights enforcement in Pakistan, Kazakhstan, and Brazil. Because of the steps taken by each country to address the pertinent concerns, the US administration determined to continue each countryÃ¢â¬â¢s GSP eligibility. 

The GSP program was created by the Trade Act of 1974. Under the program, 136 beneficiary developing countries currently export approximately 5,000 different products duty-free to the United States.


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## Neo

BEIJING (updated on: July 09, 2006, 00:31 PST): The China Road and Bridge Corp (CRBC) has singed a memo with the Pakistani highway administration to initiate the renovation project of the Karakoram highway.

The official Chinese media quoting sources with the state-owned Assets Supervision and Administration Commission said on Saturday that the memo, signed on June 30, paves the way for practical operation of the project.

According to the memo, the CRBC will be in charge of the design and reconstruction of the highway as the general contractor. At first stage, the 335-kilometer road between the Raikot bridge to the Khunjerab mountain pass will be rebuilt and upgraded.

The two sides agreed to complete the drawing of the blue print, listing the work items and signing commercial contracts by the end of October, and try to start working by the end of the year.

During President Musharraf's visit to China in February, the two sides reached an agreement in principle to upgrade the Karakoram highway.

According to the sources, width of the highway will be expanded from 10 meters to 30 meters, and its transport capacity will be enhanced three times. Heavy-laden vehicles will be able to run on the road after the upgradation.


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## Neo

ISLAMABAD (July 08 2006): According to a State Bank study, there is large scope for trade and investment between Pakistan and India. This is the gist of a 76-page SBP report titled 'Implications of Liberalising Trade and Investment with India'.

The potential sectors for mutual co-operation identified by SBP include agricultural products, tires, auto spare parts, minerals, chemicals, pharmaceuticals, leather, textiles, telecommunications, gas pipeline and electricity generation using coal and wind energy in Sindh.

With regard to trade potential, the report says, "compared to the actual trade worth $476 million in FY04, the potential of trade (exports plus imports) between the two countries as estimated by the SBP amounts to $5.2 billion".

The report notes that informal trade between Pakistan and India is estimated at $1.5 to $2 billion, which is being carried out through exchange of goods at the Indo-Pakistan border, the misuse of personal baggage scheme through 'green channel' facilities and Afghanistan. Trade through third countries or 'circular trade' is mainly conducted through agents operating in free ports like Dubai or Singapore and the Central Asian Republics (CAR).

It further says that of the total value of Pakistan's exports in FY04, 32 percent represented items that are also imported by India from the rest of the world, constituting one-third of total Indian imports. About 1,181 items, worth $3.9 billion, were common between Pakistan's exports and India's imports during FY04, covering 45 percent of the total items exported by Pakistan.

About 70.3 percent of the common items exported from Pakistan have unit values less or equal to the Indian import unit values. There is a large scope for export of these items simply by producing the quality required in India.

However, the bank expressed concern over liberalisation of trade of investment between the two countries, as it says that some studies conducted so far have identified three potential areas of Pakistan's economy, ie agriculture, textiles and engineering sector that would be affected following its trade liberalisation with India.

The benefits of trade with India must be weighed against the costs inherent in certain apprehensions about competition from India, which has been feared in the past for a number of reasons, the report adds.

It says that despite liberalisation, India's trade regime still remains more restricted than Pakistan in terms of both tariff and non-tariff barriers. Prohibitive non-tariff barriers in India have made Pakistan's exports to India unattractive.

The report notes that a large part of the resistance in Pakistan comes from the country's business community who feel that the higher cost of production in a relatively smaller economy in comparison with India would make them vulnerable to tough competition. Though low transport cost from India would provide the Pakistani consumers cheaper products, it is also likely to reduce the natural protection of Pakistan's domestic producers.

Relaxing trade links with India should have to be in stages, only opening up sectors first where Pakistani businesses and industries do not feel threatened on a large scale. There is a general apprehension in the business community in Pakistan that the opening up of trade with India would adversely affect the industries, particularly the textiles, automobile and some other industries, in which Pakistan is not so competitive in terms of prices.

It further says though Islamabad is interested to boost bilateral trade with New Delhi, a huge tariff and non-tariff barrier from Indian side not only would squeeze volumes of bilateral trade but would also hinder Pakistan's granting 'Most Favoured Nation' (MFN) status to India.

The relatively restrictive trade regulations of both countries have squeezed the volume of trade between India and Pakistan. India's trade restrictiveness measures 8 (on a scale from 1 to 10), while Pakistan's index stands at 6. Comparatively high trade restrictiveness is partly a regional feature, with the average of South Asian countries at 5.9, compared to an average of all Asian countries of 4.4.

India's tariff peaks are concentrated in the agricultural, automobile, textiles and garments sectors. Its average tariff stands higher at 22.2 percent against 14.9 percent for Pakistan and a developing country median of 11.2 percent.

Pointing out the non-tariff barriers, the Bank says that in India, significant non-tariff barriers include requirement of political or security clearance, sampling or customs inspection, requirement of technical or standard certification, labelling and marking rules, packaging rules specification, etc.

Government-mandated import monopolies in the areas of agricultural and petroleum products are also in place. In addition, India maintains tariff rate quotas in the agricultural sector, and uses technical barriers to trade in the form of technical standards and regulations, administered by the Bureau of Indian Standards.

India's share in Pakistan's total exports remained less than one percent, whereas in total imports, it fluctuated within a narrow range of 1.36 to 2.66 percent during the last five years (FY01-05). Pakistan's share in India's total exports averaged 0.45 percent whereas in imports it constituted only 0.11 percent during FY 1999-00 to FY04.


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## Neo

Islamabad, July 9: Japan has said Pakistan was not entitled to get international companies to build civilian nuclear power plants, rebuffing Islamabad's stance that it was ready to permit such investments in the country and allow the firms to take back unspent fuel.

"Given the current situation, Pakistan is not entitled to major investments in the power sector, especially for the setting up of nuclear reactors," Naoi Yosuke, director for Nuclear Non-Proliferation Affairs at the Japan Atomic Energy Agency (JAEA) said.

Yosuke said Japan understands that Pakistan was confronted with a serious energy crisis and, with the expansion in growth, might face a run-down situation.

But the present environment had serious implications for the world at large due to clandestine nuclear activities by Iran and North Korea as well as possible slipping away of nuclear know-how in the black market, he was quoted as saying by The Post daily today.

Yosuke's comments came days after Foreign Minister Khurshid M Kasuri said Pakistan was ready to permit foreign companies to invest in atomic power plants and that they can take back the unspent fuel to allay fears over proliferation.

"We are even prepared that they come and invest and take their unspent fuel back. Just give us the energy," Kasuri had said on Tuesday.

Yosuka said the Japanese model is the best when it comes to the peaceful use of nuclear energy.

"Japan has 55 light-water nuclear reactors and it produces 15 per cent of its total energy using nuclear capability," he said.

Pakistan had on Thursday agreed to work with Japan to step up campaign against nuclear proliferation.


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## Neo

Friday July 7

Honda Motor Opens $39.13 Million Motorcycle Production Plant in Pakistan 

TOKYO (AP) -- Honda Motor Co. said Friday that its joint venture in Pakistan opened a new motorcycle assembly plant to meet growing demand.
The new 4.5 billion yen ($39.13 million) plant in Lahore is the second motorcycle production plant for the joint venture by Honda in Pakistan, the Tokyo-based manufacturer said in a release.

Honda Motor President Takeo Fukui and Yusuf H. Shirazi, chairman of Atlas Honda Ltd., Honda's joint venture partner in Pakistan, were among people who attended Friday's opening ceremony in Lahore, the release said.

The new plant was constructed in the same compound where Atlas Honda's first plant is located, it said. Combined annual production will increase to 500,000 motorcycles from the current 400,000 motorcycles, the release said.

The new plant, which started operations Friday, is to meet with an increasing demand for motorcycles in Pakistan, Honda said.

Atlas Honda, set up in Karachi in 1962, is owned 35 percent by Honda, 51 percent by Pakistan's Shirazi Family and the remaining 14 percent by other interests, it said.

The motorcycle market in Pakistan is expected to grow to above 800,000 motorcycles in 2006 from around 500,000 in 2005, Honda said. In 2005, Honda sold 328,000 motorcycles, up 40 percent from the previous year, it said.


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## Neo

ISLAMABAD: The government on Thursday claimed that the country is poised to attract the highest ever 36 billion dollars investment in diverse fields during next five years.

Minister of State for Privatisation and Investment Umar Ahmad Ghumman said the planned investment includes the London Taxi (black cabs), equipped with modern gadgets like satellite tracking, which will be plying on roads of Karachi, Lahore and Islamabad by next month.

The minister when told admitted that the London Taxi International (LTI) was shrinking its business in the UK due to heavy costs. The government has allowed duty-free import of 300 taxis (CBUs), while the Prime Transport Limited, a company owned by a US-based Pakistani, will invest one billion dollars for setting up an assembly plant of LTI at Gharo, Sindh, he told a press conference.

Minister of State for Foreign Affairs Khusro Bakhtiar, State Minister for Finance Omar Ayub Khan, State Minister for Environment Malik Amin Aslam, MNAs Donia Aziz and Waqas Akram were also present on the occasion.

Ghumman said that President General Pervez Musharraf will inaugurate the London Taxi terminal at Karachi Airport by the end of next month, while Prime Minister Shaukat Aziz will perform the ground-breaking of LTI assembly plant, for which 300 acres of land has already been allocated.

He said the company would offer affordable fare package (Rs 11.20 per kilometre), adding that LTI plant would assemble 18,000 taxicabs annually out of which 9000 would be exported.

The export of 9000 taxis will fetch around $2.8 billion every year, Ghumman said and added that 2400cc (2.4 litres diesel engine) London Taxi which is priced at 42,000 pounds in UK will be available at around 20,000 pounds in Pakistan.

The minister said that Dubai World (DW) of the UAE, Daimler Chrysler, Dubai Islamic Bank, and certain other organisations of international repute would also invest in Pakistan.

DW will construct new modern cities at Clifton, Sandspit, Manora, Hawks Bay and Cape Monte in Karachi with the investment of $15 billion, he said.

It will also build housing units in Lahore and Islamabad which will not only help overcome the six million shortfall in the country but will also put a check on the property prices, Ghumman added.

The State Minister for Privatisation and Investment said Daimler Chrysler would establish its assembly plant near Sheikhupura for the production of Mercedes-Benz trucks, buses and cars. Ghuman said Volkswagen, Renault and Jetta would set up their car manufacturing plants in Pakistan with billions of dollar investment.


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## Neo

ISLAMABAD (July 09 2006): In a survey on Pakistan's economy, weekly international news and business publication, "The Economist," has praised President Pervez Musharraf for seven percent growth rate.

The paper reported that under the command of President Pervez Musharraf, the country had experienced seven percent average growth over the last three years, the stock exchange had also risen by 1,000 percent in seven years and the foreign reserves were up with public debt down.

"General Musharraf has generally proved much better at running the country - and more popular - than either of his elected predecessors," says James Astill, the survey's author. The paper also applauded Musharraf for the pledges that he had made to crack down on extremism and to promote "enlightened moderation."

James Astill stated that some liberal progress might emerge from President Musharraf's rule, as he had liberated the media, meaning that Pakistanis now had more access to information about the world outside Pakistan. He said television viewers could increasingly watch foreign channels.

Astill said that General Musharraf had done more for peace on the subcontinent than any of his predecessors. "Peace with India is now more likely than ever before - and would be a lasting legacy for the General." The Economist emphasised that what would be the best for Pakistan would be for outsiders to encourage Musharraf's flagging reforms with aid money and praise.


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## Neo

PESHAWAR (July 09 2006): Sindh CM's Adviser on Environment, Alternative Energy and Information Technology Mohammad Noman Saigal has said the Sindh government had required 3,500 acres land to install windmills for generating electricity through alternative sources and overcome the shortage of electricity in Karachi.

Addressing a press conference here on Saturday, he said that each windmill would generate 50 mw electricity, saying that 30 investors have already approached the provincial government and 22 of them have already given land.

He said that investors in contact with the provincial government are including both domestic and foreign investors from Europe, United States and Fareast.

Furthermore, Noman Saigal said the Sindh government is also bringing investors in the biogas sector to produce electricity and resolve the problem of power shortage looming large in Karachi.

He said that electricity generated through alternative sources would also be provided to NWFP and other parts of the country. The adviser said that Sindh is also facing the shortage of water and the provincial government has planned the replacement of old and leaking water pipes to overcome the problem. The completion of the scheme would overcome the water shortage problem into some extent.

Similarly, he said the Sindh government has included a number of new localities in the master plan of Karachi to provide them the basic facilities of water and electricity. "We are initiating development work after realising ground realities as all problems would not be resolved in a single day", Saigal added.

In response to a question, regarding electricity loadshedding in Karachi, he said due the efforts of MQM members of the parliament and provincial assembly the prime minister has taken initiatives for the resolution of the problems and was hopeful about early solution to the matter.

Saigal, who was in the city in connection with the organising of the party in NWFP, announced that very soon Peshawar would have office of the Muthahida Qaumi Movement (MQM), saying that a number of sincere and devoted political workers had joined the party. He said that after establishment of the party office in Peshawar, the activities would also be extended to other districts of the province.

Replying to a question, he said that the party would likely to field its candidates on both national and provincial assembly constituencies in next general elections. He said the MQM has recently completed organisational work in 30 districts of Punjab and would also extend it to NWFP.

About the mood of people towards the MQM, Saigal said the party programme was to serve the people of the whole country and the devastating earthquake of October 8, 2005 provided this opportunity.

He said although the local bodies' elections were in progress in the country, but MQM chief Altaf Hussain directed the party leaders to move to the affected areas and carry out relief work. The adviser said the MQM had distributed relief goods worth more than Rs 3 billion in the quake-hit areas of NWFP and Azad Kashmir.


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## Neo

ISLAMABAD, July 8: Prime Minister Shaukat Aziz on Saturday directed the Planning Commission to come up with a plan to increase country's exports from the current 13 per cent of the GDP to 15 per cent.

Chairing a meeting of the newly-constituted Export Promotion Board (EPB), the premier reiterated government's resolve to facilitate the private sector to enhance and diversify the export base.

Mr Aziz emphasised the need to take further steps to increase the volume of exports and said the Planning Commission should interact with all the relevant government ministries, departments and the private sector. Ã¢â¬ÅIt needs to study the best international practices and do benchmarking with other countries to achieve best results.Ã¢â¬Â

Commerce Minister Humayun Akhtar Khan gave a detail presentation on the salient features of the board functioning and its objectives to the premier. The board includes representatives both from public as well as private sectors. Commerce Secretary Syed Asif Shah made a presentation on export performance during the outgoing fiscal year.

The prime minister said the government was also in the process of finalising reconstruction opportunity zones (ROZs) to provide access for the goods produced in the commercially depressed areas to the United States on preferential basis.

Mr Aziz said exports were a major mechanism to drive the economy, earn foreign exchange and generate employment and the government wanted serious input from the private sector with a view to enhancing country's exports.

He said it was gratifying to note that the export of both rice and leather and leather goods had crossed the $1 billion mark. He congratulated the exporters of rice and leather and engineering goods.

The premier emphasised the need to tap the vast potential for export available in agri-business, leather goods, rice and engineering goods.

He said the government was making all-out efforts to arrange maximum market access for exporters to enable them to enhance and diversify their exports all over the world. "The government's job is to open access as exports are done by the private sector," he added.

Ã¢â¬ÅThe government has signed preferential trade agreements (PTAs) and free trade agreements (FTAs) with several countries and many more are in the pipeline to provide new markets for exports.Ã¢â¬Â

The premier said the finalisation of FTA was a time-consuming process and the government had therefore signed early harvest agreements with several countries, covering a limited number of items on which the agreement existed. This, he said, had been done to provide exporters immediate access to foreign markets.

Mr Aziz informed the meeting about the efforts being made by the government at the Doha round and the WTO to obtain better market access for exporters.

He called upon the private sector to increase its competitiveness and productivity and ensure quality and standardisation of products without which a quantum jump in exports was not possible.Similarly, the private sector needed to improve foreign market research and analysis capability to increase exports. "We believe in public-private partnership to establish Pakistan Inc," he added.

The government would be guided by the feedback from the private sector, which would enable it to devise a long-term policy to increase exports, he said and added: "We have totally revamped our visa policy by allowing issuance of visas to businessperson at airports."

Pakistan, he said, had the potential to become a regional hub for the export of agri-business, especially livestock, dairy products and horticulture.


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## Neo

*
*Sunday July 09, 2006 

ISLAMABAD: Reiterating the governments resolve to facilitate the private sector enhance and diversify exports, prime minister Shaukat Aziz has directed the Planning Commission to come up with a plan to increase countryÃ¢â¬â¢s exports from the present 13 % of the GDP to 15% of the GDP. 
The Prime Minister said this while chairing the newly constituted Export Promotion Board Saturday, which is the highest policy formulation forum that considers matters pertaining to PakistanÃ¢â¬â¢s exports. It includes representatives both from the public as well as the private sector. 

The Prime Minister said exports are a major mechanism to drive the economy, earn foreign exchange and generate employment and the government wants serious input from the private sector with a view to enhancing countryÃ¢â¬â¢s exports. 

He emphasized the need to take further steps to increase the volume of exports and said the Planning Commission should interact with all the relevant government ministries/departments and the private sector. It will study the best international practices and do benchmarking with other countries to achieve best results. 

The Prime Minister said it is gratifying to not that the export of both rice and leather and leather goods has crossed the $1 billion mark. He congratulated the exporters of rice and leather goods for doing us proud. 

Shaukat Aziz emphasized the need to tap the vast potential for export available in the agri-business leather goods, rice and engineering goods. 

The Prime Minister said that the government is making all-out efforts to arrange maximum market access for exporters to enable them to enhance and diversify their exports all over the world. 

He said: "the governmentÃ¢â¬â¢s job is to open market access as exports are done by the private sector." 

The government has signed Preferential Trade Agreements (PTAs) and Free Trade Agreements (FTAs) with several countries and many more are in the pipeline to provide new markets for exports, the Prime Minister said. 

The Prime Minister said that finalization of FTA is a time consuming process and the government has therefore signed early harvest agreements with several countries covering a limited number of items on, which the agreement exists. This, he said, has been done to provide exporters immediate access to foreign markets. 

The Prime Minister said that the government is also in the process of finalizing Reconstruction Opportunity Zones (ROZs) to provide access to the goods produced in the commercially depressed areas to the United States on preferential basis. 

The Prime Minister informed the meeting about the efforts being made by the government at the Doha Round and the WTO to obtain better market access for our exporters. 

He called upon the private sector to increase its competitiveness and productivity and ensure quality and standardization of products without, which a quantum jump in exports is not possible. 

The Prime Minister said that there is a need to tap the huge market available in China and Japan, which is mainly looked at as sources of importing machinery. 

Similarly the private sector needs to improve foreign market research and analysis capability to increase exports, the Prime Minister said. "We believe in public-private partnership to establish Pakistan Inc," he said. 

The government will be guided by the feedback from the private sector which will enable it to devise a long-term policy to increase exports, the Prime Minister said. 

The Prime Minister said we have totally revamped our visa policy by allowing issuance of visas to businesspersons at the airport. 

Pakistan, he said has potential to become a regional hub for the export of agri-business especially livestock dairy products and horticulture. 

Secretary Commerce made a presentation about PakistanÃ¢â¬â¢s export performance and informed the meeting that total exports of the country July to May 2005-06 stood at $14.9 billion during the previous fiscal year which is 16.35% increase over the previous year. Mentioning major export achievements of last year he said that during July-May 2005-06 exports increased by $2.1 billion and the momentum of export diversification strategy was successfully sustained. He said the growth in exports was driven mainly by substantial rise in volume during this period. The increase in quantity indicates greater market access in the international market. 

He said that during July-May 2005-06 increase in non-textile sector was mainly in rice, fish & fish preparations, petroleum products and leather. He said six product categories joined the US $1.0 billion club. These include Bed wear ($1.8 billion), Knitwear ($1.56 billion), Readymade Garments ($1.2 billion), Cotton Yarn ($1.2 billion), Cotton cloth ($1.94 billion) and Rice ($1.03 billion). 

Giving an overview of the import profile of the country Secretary Commerce said that during the last financial year imports were projected at $21.8 billion as against actual imports of $20.6 billion registered during 2004-05 envisaging a growth rate of 5.8%. The imports during July 2005 and May 2006 were recorded at $25.6 billion as against imports of $18.4 billion during the corresponding period last year showing an increase of 39.4%, he said. 

The representatives of the private sector made several suggestions and proposals to remove hurdles in enhancing exports. The Prime Minister said the government will give their suggestions a serious consideration.


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## Neo

Sunday, July 09, 2006 

KARACHI: Pakistan has become the fifth largest textile exporter to the US as its share in the textile import of US went up to 3.5 percent in Jan-April period of 2006 compared with three percent in the corresponding period of previous year.

US is the largest market for Pakistani exports, accounting for approx 27 percent of the countryÃ¢â¬â¢s total export of US$16.3bn, expected for whole fiscal year 2005-06. Textile, which contributes about 60% of total export is gaining popularity in the US market. 

According to trade data, textile export from Pakistan to US has grown by 16 percent in Jan-Apr 2006 and reached $ 1,020 million as compared to $ 877 million in Jan-Apr 2005. 

According to Muzzamil Mussani, analyst at Jahangir Siddiqui Capital Market, although in the period Jan-Apr 2006, PakistanÃ¢â¬â¢s textile export to US surged by 16 percent over the corresponding period last year, its overall textile export grew by only 7 percent. 

Ã¢â¬ÅThis represents the higher growth momentum for Pakistani textile products to US especially in the post WTO regimeÃ¢â¬Â, he believed. PakistanÃ¢â¬â¢s total textile export has increased by 18 percent in the first 11 months of financial year 2005-06.

Whereas, China even after witnessing a decline of 2 percent in its textile exports to US, it still tops, being the largest textile exporter to US. The restriction imposed on import of China-made textile by US could be the reason for declining exports. Following the end of global quota regime US put a 7.5 percent cap on annual rise of China-made textile import 

Whereas, neighboring India has also gained its market share significantly from 5.9 percent to 7.0 percent in Jan-Apr 2006. Textile export by India to US surged by 18 percent in this period, leading India to become the 3rd largest textile exporter for US.


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## Neo

Sunday, July 09, 2006 

ISLAMABAD: The Asian Development Bank (ADB) would provide $600 million for preparation and implementation of the Public-Private Partnership (PPP) Programme. 

A three-member ADB mission, comprising Rainer Hartel, Senior Financial Sector Specialist, Klaus Felsinger, economist, and Jurgen F. Conard, economist, called on Dr Salman Shah, Adviser to the Prime Minister on Finance, here on Saturday.

The ADB team briefed the adviser on the progress being made in its assistance to Pakistan in developing a robust Public-Private Partnership (PPP) Programme. 

The ADBÃ¢â¬â¢s overall PPP programme includes a Policy Reform Programme component of $300 million and a PPP Investment Programme Multitranche Financing Facility of another $300 million.

The Policy Reform Programme will help establish a PPP policy framework and institutional capacity, whereas the Multitranche Financing Facility will provide long-term infrastructure financing.

The governmentÃ¢â¬â¢s focal point for policy framework and institutional capacity will be the newly established Infrastructure Project Development Facility, whereas the long-term financing will be channelled through a proposed Infrastructure Project Financing Facility of which a business plan is being finalized with the ADB assistance.


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## Neo

Sunday, July 09, 2006 


Pia's first Atr-42-500 in new livery.

KARACHI: After breaking all records for last 26 years of PIA history, national flag carrier achieved an enviable regularity of 99 percent and punctuality of 89 percent for entire network- on domestic and international flights during January to June 2006.

The airline improved its punctuality due to on time departures and arrivals in domestic and international operations. PIC Chairman & CEO Tariq Kirmani stressed on further improvement in regularity and punctuality.


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## Neo

KARACHI, July 8: Textile leaders continue lobbying for getting tax relief, subsidised bank loans and a package of concessions and facilities to enable them to invest about $7.75 billion by 2010 when they expect to push PakistanÃ¢â¬â¢s textile exports to $14 billion a year and provide direct and indirect employments to about 6.2 million people.

While the original package designed by a group of textile leaders before the budget 2006-07 presentation demanded straight away Rs50 billion relief, incentives and concessions on taxes, bank credits and utilities, a revised document reviews the progress made in domestic textile production and export in the last five years in the light of future production and export plans of Bangladesh, India and China.

Mirza Ikhtiar Baig, a well-known textile leader, pleaded for his industry last Tuesday at the National Credit Consultative Council (NCCC) meeting before a gathering of top bankers and bureaucrats to convince them that the domestic textile industry did fairly well in production, employment generation and exports in the last five years mainly because the inflation rate remained under control, banksÃ¢â¬â¢ interest rates were affordable and all other economic factors were supportive.But now, the Baig committee argues the inflation rate has crept up, bank interest has spiralled to new heights, utility costs are high and what they believe the domestic labour cost is higher than Bangladesh, India and China and tough times are ahead for Pakistan and an expansion is imminent as the world textile export market is all set to expand.

The government is asking textile industry leaders to furnish official notifications on relief, concessions and incentives being offered to textile industries in Bangladesh, India and China. Ã¢â¬ÅThese are visible on computers and government agencies have been given addresses of al these sources,Ã¢â¬Â argues Mr Baig.

PakistanÃ¢â¬â¢s current textile exports are estimated at around $9 billion as against $14.50bn of India, $116bn of China and $6.60 billion of Bangladesh. In the next five years, Bangladesh is all set to push up its exports more than twice to $14.5bn as against PakistanÃ¢â¬â¢s projection of $14bn. India plans to increase its exports to $50 billion a year and China to $220 billion -- almost 80 per cent more than the existing exports.

According to the Baig com-

mittee, the Indian textile industry enjoyed a five per cent interest reimbursement under the Technology Upgaradation Fund Scheme (TUFS) that stipulated a total investment of $31 billion by 2010. The document reveals that $8 billion investment has been approved under the TUFS which offered $2 billion subsidy. All innovative taxes in India are zero rated for the textile industry. There is no education cess, duty on HSD and furnace oil factored in drawback calculation.

Export earning in India was exempted to the extent of 80 per cent in the year 2001-02, 70 per cent in 2002-03, 50 per cent in 2003-04 and 30 per cent in 2004-05.

In Bangladesh a five per cent cash subsidy is given on local procurement of yarn and fabrics, while duty drawbacks are given at 60 per cent on water, 80 per cent on electricity, 60 per cent on telephones, 100 per cent on insurance and clearing and forwarding agents. There is a deduction of 0.25 per cent at source on total export earning in Bangladesh of knitwear and readymade garments as final settlement of tax liability. There is no detail information available about China but the general belief is that labour is cheap and utility and transportation are highly subsidised. Large-scale production keeps the production cost relatively low.

The currency of Bangladesh has been devalued from 64 taka a dollar to 72 taka which gives an advantage in the export market.

Besides high interest rates, creeping inflation, high utility cost, the Pakistan textile industry, the Baig committee argues, is subjected to various innovative taxes, such as EOBI, social security, professional tax, surcharges and duties on utilities, cross subsidies and stamp duty.

Keeping in view the fast expanding textile market and growing unemployment at home, the textile industry proposes to invest $3.50 billion in the spinning sector in the next five years to increase its capacity by one million tons more from the existing two million tons. A sum of $300 million is proposed to be invested in the polyester fibre industry to raise its production capacity from the existing 600,000 tons to about one million tons. An investment of $1.63 billion in the weaving industry will add another 3.5 billion square metre capacity to the existing 6.5 billion square meter capacity; and $1.79 billion investment will enhance finishing capacity by a billion square metres to the existing capacity of 2.7 billion square metres. The knitting and value added sector needs an investment of $307 million and readymade garments $222 million.

Financial analysts and market watchers say since almost 80 per cent of banking in Pakistan is in private hands and the utilities are all set for privatization and disinvestment, the government has virtually no role in textile industry demand for subsidised loans and concessional utility tariffs. Whatever relief can be offered is from the budget which has given a total subsidy of Rs109 billion that cost budget a 4.2 per cent deficit. Further concessions and relief on duty and taxes can push up budget deficit to five per cent and even more that can trigger inflationary pressures. Expansion of bank credit is also fraught with consequences of monetary expansion getting out of control.


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## Owais

*Crisis looms over edible oil supply: truckers demand withholding tax raise adjustment* 

ISLAMABAD (July 10 2006): A serious crisis of edible oil supply is looming as the carriage contractors have set the deadline of July 10 for importers to accept their demand for adjustment of the increase in withholding tax or face the strike for indefinite period.

A letter written by All Pakistan Tanker Owners Association (APTOA), to Pakistan Vanaspati Manufacturers Association (PVMA) on July 6, sounded a clear warning to the edible importers. The letter, signed by APTOA president, said that it was difficult for carriage contractors to lift edible oil from the port for different parts of the country at the enhanced rates of withholding tax, especially in the given situation when they were already facing huge financial burden due to inflated rates of diesel oil and rising prices of tankers spare parts.

APTOA made it clear that the carriage contractors would only lift and transport edible oil when the importers will adjust the recent increase in withholding tax on their services in their cost.

It said "The increase of 4 percent in withholding tax on contractors services was a serious issue and it needs to be resolve on priority basis to ensure that the supply of edible oil to different parts of the country does not suffer".

The edible oil importers are resisting the contractors' demand. They argue and want that APTOA should withdraw the strike call and solve the issue with PVMA amicably.

The contractors and importers had entered into a severe controversy from the announcement by Central Board of Revenue (CBR) for 4 percent increase, in withholding tax on carriage charges for the contractors.

The contractors were paying two percent withholding tax by June 30.

The CBR had increased the tax to 6 percent in the budget and implemented it from July 1.

Increase in withholding tax on contractors' services is also emerging as a controversy among the stakeholders of other sectors.

One can name fertiliser, cement and many more areas where the transporters and owners have problems due to the increase in withholding tax on the contractors' services.


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## Owais

*Government committed to tap Northern Areas and Chitral tourism potential: Musharraf* 

SHANDUR (July 10 2006): President General Pervez Musharraf on Sunday expressed his firm commitment to the economic development and promotion of tourism in Chitral and Northern Areas, and called upon the masses to make proactive efforts in staving off extremism and terrorism as "the menaces retard progress".

He was addressing a mammoth gathering at the closing of a three-day Shandur Festival at the scenic polo ground on the foothills of Shandur in District Chitral.

The President also witnessed a polo match played between Gilgit and Chitral teams at the annual festival, which was attended, besides the local populace, by a large number of local and foreign tourists and a number of diplomats and their families.

"I urge you not to let terrorism and extremism come into this area, as these affect progress--stand up and be counted against those elements who want to spread the menace of terrorism and extremism," he stressed.

The President said that "the people of this area, which is one of the world's beautiful places", were fortunate to be living in this most scenic and pleasant environment with peace and brotherhood.

He said that the government was for promoting tremendous tourism potential in this area, and added that the role of local people in this respect would be of great importance. "You should welcome the tourists, show them hospitality and warmth, and do not let extremism affect the area."

President Musharraf recalled his 2002 visit to the area and said that he was very proud and happy to fulfil his promise by performing the ground breaking of the long-dreamt Lowari rail tunnel project. He said the completion of project would open up Chitral to the country and the whole world.

Amid rousing applause, he announced black-topping of Gilgit-Chitral road and a bridge on Mastug river. "This road will come up to Shandur. However, the beauty of Shandur pass would be preserved."

President Musharraf informed the gathering about his vision to link the country and region with Chitral and Northern Areas through best means of communications and said the Karakoram Highway (KKH) would be further widened along with the construction of Dir-Bajaur road.

He also pledged to initiate three public sector power generation projects in the area, besides encouraging the private power projects to meet the growing electricity demand of the area.


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## Owais

Cont...............................

The President said that the government had already written off Rs 200 million loans owed by some 6000 poor people of this area. Recounting the steps taken for the wellbeing of the local people, he said that the government had earlier opened two utility stores shops in Chitral within one week. He said now a chain of utility stores would be opened at the union council level in the area, in addition to mobile utility stores to provide the essential commodities to masses at lower and controlled rates in every village for the benefit of poor people.

President Musharraf also announced that mobile telephone facility would be extended to Chitral, adding that the number of mobile phone users in Pakistan has galloped to a record level of around 32.5 million at present as against a mere 600,000 users three years back.

Speaking of the government's initiatives to exploit natural resources of the areas, he said that marble industry would be modernised with the introduction of state-of-the-art technologies of mining, cutting, polishing, adding, it would bring about an era of prosperity in the area through increased job creation.

The President said that the government would consider and analyse the proposal of helicopter service in the area, as suggested by Minister for Tourism Nilofar Bakhtiar for promotion of tourism.

Referring to the proposed setting up of a 'Tourism Training Institute' in Swat, he said it was all due to economic turnaround in the country that the government was able to launch development projects.

President Musharraf said that during his visit to the Northern Areas, he has announced a development package for Gilgit, Hunza, Skardu, etc besides inaugurating Sust Dry Port and announcing a University in Gilgit.

He said Sust Dry Port along with the broadening of KKH would boost trade between Pakistan and China and establish trade links with the landlocked Central Asian States.

"The opening of Chitral and Northern Areas for trade up to the Central Asian States will greatly benefit the people of this area and realise their long-desired progress."

He also urged the local populace to take the women of this area along in the socio-economic development and progress through their education and increased participation in various fields of national life and economy.

Welcoming foreign tourists, diplomats and dignitaries participating in the event along with their families, the President asked them to inform the world about the tremendous tourism potential and beauty of the areas.

"We want to encourage tourism; we would like to encourage more of you coming here every year, and it is you who are going to spread the beauty of this place to other people."

He said that the Shandur Festival provides the opportunity to witness a unique and thrilling polo competition and the tourists can enjoy such a wonderful occasion every year.

The President also encouraged tourists from all over Pakistan to visit the area in large numbers, saying that their larger participation in the festival would attract more and more foreign tourists to the place and, therefore, would contribute vitally to tapping tourism potential to the enormous benefit of local people.

President Musharraf asked the countrymen to serve Pakistan and make all-out efforts for its progress. "If Pakistan achieves new heights of development with peace and prosperity, we all will also make progress."

Meanwhile, Chitral Polo Team defeated Gilgit Polo Team with 9-7 in the final day of the match.

President Musharraf announced Rs 50,000 and Rs 25,000 for winner and runner-up teams, respectively. He also awarded the Trophy to the winner team and cup to runner-up team.

NWFP Governor Ali Muhammad Jan Orakzai distributed prizes among the best players.

Earlier, Chitral Nazim, Federal Minister for Political Affairs Amir Muqam and Minister for Tourism Nilofar Bakhtiar also spoke on the occasion and highlighted various aspects of the Shandur Festival. They welcomed the guests and appreciated the policies of President Musharraf for the fast-paced progress of the country.


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## Owais

*PNSC seeking $135 million financing from foreign banks: plan to buy three oil tankers* 


KARACHI (July 10 2006): Pakistan National Shipping Corporation (PNSC) has started negotiations with two foreign banks for $135 million financing to buy two double-hull oil tankers of 'Aframax' class and one bulk carrier of 'Panamax' class.

Sources told _Business Recorder _that the national flag carrier is negotiating for deal with foreign banks which have given separate presentations to the Corporation in this regard.

They confirmed that PNSC was negotiating a $135 million financing for purchase of the vessels and the deal was likely to be finalised during this calendar year.

PNSC is planning to replace its ageing oil tankers as one of its oil tankers would be out of business under restrictions of International Maritime Organisation (IMO) and Safety of Life At Sea (SOLAS) in 2007, while another three tankers would fall under IMO/SOLAS in 2010.

Lack of adequate fresh tonnage (new ships) due to past financial constraints has resulted in gradual deterioration of the PNSC fleet in terms of age profile, and unless the trend was reversed, foreign vessels would grab a bigger chunk of the country's sea borne trade, sources said.

The age profile of the fleet, however, is gradually deteriorating as, in terms of dead-weight tonnage (dwt), over 62 percent of the fleet of 15 ships with about 645,466 dwt is over 26 years old, while remaining 38 percent is 23 to 18 years old.

With this age profile it has been estimated that over 60 percent of the fleet needs to be replaced within four to six years. The PNSC has decided to operate ships till the age of 30 years, except the oil tankers which would come under the restriction of IMO/SOLAS from next year. During the past three years, the Corporation paid $21.9 million for the purchase of three oil tankers--MT Shalamar, MT Swat and MT Johar--while MT Lalazar was purchased for $13.5 million and a bulk carrier MV Kaghan for $15 million.

With the help of these two oil tankers the country's liquid cargo import, especially crude oil handling, would be enhanced. These tankers are over 20 years old, as new tankers are very costly and financial constraints have forced the Corporation to opt for second-hand vessels. The requirement of double-hull tanker, against single hull, came in 1998, and those countries using old oil carriers have to replace them with the new version of tankers--double-hull.

PNSC is also looking for potential financing from local or foreign investors for construction of new vessels. At the same time, "we are also looking for economical ship building yard for building of new vessel," sources said, adding that the Corporation was working on a plan, and had discussed it with many foreign and local investors but it has yet to take concrete shape.

A new tanker of double hull of 'Aframax' class costs around $40 million to $60 million, but PNSC had purchased four oil tankers at a cost of about $35.4 million.

However, sources said that better maintained tankers have a longer life. "The purchase of these tankers was arranged from our own financial resources, without borrowing a single penny from any financial institution," they added.

At present, the Corporation is lifting only 20 percent of the country's total cargo, that stands at 55 million tonnes, due to high growth activity in national economy.

The national flag carrier has already secured a 10-year 'Contract of 'Affreightment' from January 20, 2003, for crude oil transportation with Pakistan Refinery Limited, National Refinery Limited and Pak-Arab Refining Company.

The corporation transported 90,900 tons crude oil from the Gulf to Colombo for Sri Lanka-based Ceylon Petroleum Corporation and also got itself registered with the company.

In mid-1990, the Corporation had availed a loan option of $50 million from National Bank of Pakistan (Bahrain) for the purchase of three small size gearless container vessels. These three vessels were used for feeder services and have a carrying capacity of about 1100 'twenty equivalent units' (TEUs).


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## Owais

*THE RUPEE: marginal fluctuations in currency market* 


KARACHI (July 10 2006): In the first session of the new fiscal year 2006-07, the rupee fell slightly versus dollar in the week ending on July 8, 2006, money experts said. In the interbank market, the rupee shed two paisa for buying at Rs 60.26 for a dollar and lost 3 paisa for selling at Rs 60.28, dealers said.

The rupee followed suit in the open market, and lost 5 paisa in terms of dollar for buying and selling at Rs 60.55 and Rs 60.60, respectively, while against euro it showed no big difference and held on to its previous week's level at Rs 77.19 and Rs 77.29, for buying and selling, they said.

Some market observers said that rising trend in import bills was likely to push up the demand for dollars. As recently, the State Bank of Pakistan (SBP) reported that soaring current account and fiscal deficits were signalling negatively, the demand for dollars might rise to meet foreign payments. This may push the rupee down, money experts said.

According to SBP, the current account deficit during 11 months of last fiscal year reached a dangerous level of 5.227 billion dollars (4.28 percent of the Gross Domestic Product).

*INTER-BANK MARKET RATES: *On July 3, the rupee started the new fiscal year 2006-07 on a negative note, showing 4 paisa loss against dollar for buying at Rs 60.24 and three paisa loss for selling at Rs 60.25.

On July 4, the rupee mostly held its overnight levels versus dollar at Rs 60.23 and Rs 60.25 for buying and selling, respectively.

On July 5, the rupee shed 3 paisa versus dollar for buying and selling at Rs 60.26 and Rs 60.28, respectively.

On July 6, the rupee held its overnight levels versus dollar for buying and selling at Rs 60.26 and Rs 60.28, respectively.

On July 7, the rupee shed one paisa versus dollar for buying and selling at Rs 60.27 and Rs 60.29, dealers said.

On July 8, the rupee picked up one paisa in relation to dollar for buying and selling at Rs 60.26 and Rs 60.28, respectively.

*INTERNATIONAL MARKETS: *In early sessions of the week, the dollar got hurt slightly against yen, but the Japanese currency could not sustain a rally triggered by an upbeat reading in the Bank of Japan's quarterly tankan business sentiment poll.

The euro held near an earlier three-week high, as stronger than expected eurozone manufacturing sector data supported the view that the European Central Bank could accelerate rate hikes.

In the middle sessions of the week, the euro held its overnight firmness versus leading currencies. The yen recovered from a fall against dollar and a record low versus euro after missile launch by North Korea provided only a limited distraction from interest rates.

At the weekend, weaker-than-expected US job report pushed the dollar down which shed more ground versus major currencies.

*OPEN MARKET RATES: *On Monday, the euro picked up nearly a rupee at Rs 77.20 and Rs 77.30 for buying and selling, respectively.

The rupee did not show any change versus dollar at 60.60 and 60.65 for buying and selling, dealers said.

On Tuesday, bullish sentiment prevailed as the rupee picked up 10 paisa versus dollar for buying and selling at 60.50 and 60.55, dealers said at the open market.

The rupee did not fluctuate sharply versus the euro for buying and selling at Rs 77.21 and Rs 77.31 in process of trading, dealers said.

On Wednesday, the rupee gained 10 paisa against dollar for buying and selling at 60.40 and 60.45, dealers said.

The rupee also rose by 27 paisa versus euro for buying and selling at Rs 76.94 and Rs 77.04, respectively.

On Thursday, the rupee lost 10 paisa against dollar for buying and selling at 60.50 and 60.55, dealers said.

The rupee, however, managed to recover six paisa versus the single European currency at Rs 76.88 and Rs 76.98, respectively.

On Friday, the rupee shed eight paisa against dollar for buying and selling at 60.58 and 60.63, respectively. The rupee also lost 28 paisa in relation to euro for buying and selling at Rs 77.16 and Rs 77.26 in process of trading, they said.


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## Owais

*Listed banks to reap rich harvest from NIT dividend* 


KARACHI (July 10 2006): The record dividend from National Investment Trust would provide rich harvest for National Bank of Pakistan, Faysal Bank, Bank of Punjab and Pakistan Re-Insurance Co, boosting their earnings for the quarter ending September 30, 2006.

NIT, the largest mutual fund, on Saturday announced dividend of Rs 5.8 per unit for FY06, the highest ever dividend by the Trust.

Among the listed companies holding NIT units, NBP, FABL, BOP, PAKRI and BOK are the major beneficiaries of the dividend announcement.

National Bank of Pakistan and Bank of Punjab's earning per share would improve by Rs 2.9 per share, Faysal Bank by 2.2 rupees, and Pakistan Re-Insurance by Rs 6.2 per share.

For the purpose of privatisation, NIT would be split into six parts, out of which three parts would be offered to Faysal Bank, Bank of Punjab and National Bank of Pakistan, according to their holdings, while the remaining parts would be offered to investors through auction.

This would probably be the last dividend announcement by the state-owned Trust with the single largest pool of funds before it breaks up into six parts and goes to private hands.

NIT has once again been able to provide superior return to its unit holders where its Net Asset Value increased from Rs 38.12 as of June 30, 2005 to Rs 48.87 as of June 30, 2006, which reflects a return of 28.20 percent for the year ended 2005-06.

The Trust earned a net income of Rs 9.23 billion, which is the highest net income so far earned in its existence. The net income depicts a growth of 62.54 percent, increasing it to Rs 9.23 billion in FY06 from Rs 5.68 billion in FY05. This translates into the record earning unit of Rs 6.19 in FY06 as compared to earning per unit of Rs 3.55 earned by the Trust in FY05. Thus, the earning per unit for the FY06 surpassed last year's highest earning per unit market by 78.31 percent.

The Trust has realised all time high capital gain of Rs 6.8 billion in FY06 as compared to Rs 2.66 billion recorded last year, which shows a tremendous growth of 155 percent in capital gain. This huge capital gain, realised by the Trust, is mainly attributable to the sale of a NIT holding in National Refinery Ltd, through Privatisation Commission as well as gains realised through normal trading activities despite all volatility in the stock market during the period under review.


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## Owais

*KSE index fails to breach 10,000 barrier* 



KARACHI (July 10 2006): The share market failed to breach the coveted 10,000 barrier during last week, as all efforts of bulls to restore the confidence of general investors went begging. During the outgoing week, which was the first week of the FY07, the market saw some consolidation with less volatile behaviour.

The market witnessed strong resistance at physiological level of 10,000 and closed the week at 9,836 points - down by 153 points or 1.5 percent from previous Friday.

The market opened the week under pressure due to implementation of double taxation in the form of CVT from Monday. However, expectations of good corporate results and higher dividends notably NIT helped the market rally back over the next couple of days with NBP, BoP and Faysal Bank all closing at their upper lock on Tuesday.

The profit-selling and uncertainty regarding former Securities and Exchange Commission of Pakistan (SCEP) chairman Tariq Hassan's disclosure before the NA standing committee on finance and revenue in Islamabad on Friday that both Adviser on finance Dr Salman Shah and Minister of State for Finance Omar Ayub had close links with the powerful brokers involved in the March 2005 stock market crash and pressurised him not to take action against them, prevented the market from sustaining its upward drive, forcing it to consolidate around 9,900 points.

A couple of developments during the week triggered some rally in individual stocks but was limited. The numbers released by APCMA, cement sales have registered 12.6 percent YoY growth in FY06 to 18.4 million tonnes with an exceptional growth of 23 percent Y-o-Y during the month of June alone. Local sales were up by 14 percent while exports (mainly to Afghanistan) were down by 4 percent Y-o-Y.

A drop in exports is indicative of supply hurdles and government's withdrawal of tax rebate, discouraging exports compared to local sales. With the peak demand growth phase already over, we expect cement demand to settle down at 1.5 percent of GDP growth in the long-term where an expected supply glut situation will make FY07 a crucial year for the cement sector.

According to another report, Privatisation and Investment Minister Zahid Hamid, chairing the Privatisation Commission Board meeting, urged the Privatisation Commission (PC) to speed up the privatisation programme.

The Privatisation Commission faces a heavy agenda with the privatisation of 21 entities scheduled by December 31, 2006. This includes the privatisation of PSO, NIT, and the finalisation of the OGDCL's GDR. The privatisation of SNGPL, SSGC and PPL has been delayed until the second quarter of 2007. The IPOs of UBL, Slic and OGDCL were also considered where the minister encouraged small investors to participate in these upcoming public offerings.

An analyst from KASB Equities said former SECP chief's disclosure before the NA standing committee on finance and revenue could determine the short-term direction of the market, adding: "We believe the market will continue its upward drive on the back of attractive valuations and excitement build up regarding upcoming results for the period ending June 30th.

The only threat to investors' confidence may be the implementation of the UIN next month, which could create some panic. Our top picks remain POL, FFBL, PTCL, NBP, BoP, NML, ICI, Packages and DGKC.


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## Neo

SIALKOT (July 10 2006): Sialkot Chamber of Commerce and Industry (SCCI) President, Dr Nouman Idris Butt said that a recent survey conducted by an International agency on business-friendly countries had ranked Pakistan 6th among 180 countries, included in the survey.

This was a clear proof that doing business in Pakistan had become easy and business could be executed without irritants, Dr Nouman said.

Talking to acting High Commissioner of Republic of South Africa to Pakistan MM Measatywa and reporters here on Saturday evening, he said that the government had taken tangible steps to encourage private sector and ensuring its minimum involvement in business.

The government was pursuing policies of fiscal and capital market reforms, deregulation and privatisation, liberal investment regime and improved good governance, he said.

The SCCI President said that the consistency and continuity of economic policies and high corporate profitability was turning Pakistan into a destination of choice for the investors from Middle East, Asean, Europe, Africa and North America.

Dr Nouman Butt further informed that there was a network of export processing zones and industrial estates and import of raw material for export manufacturing was zero-rated. He said it was high time that foreign investors, including South Africa would gain benefits from the exceptionally favourable investment policy of the Pakistan government.

The SCCI president also discussed the issue pertaining to visa with the High Commissioner.

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## Neo

BEIJING (July 10 2006): Transporting crude oil to China from Gwadar Port, across Balochistan and NWFP, and through the mountainous regions of the Northern Areas, over the Khunjerab Pass to north-western China is a feasible project, say Chinese experts.

Pakistan has suggested building a railway as one option. Another option suggested by Pakistan is to use an upgraded Karakoram Highway to transport the oil in tanker/lorries.

Acknowledging the proposal, Li Jiang, a senior official working with China National Petroleum Corporation (CNPC), said a feasibility study will be undertaken soon to exploit this new communication link for oil transportation.

He hoped that the Gwadar port could provide a shortest route to act as a transit facility giving China access to Central Asian markets and energy sources. The proposal was formally floated by President Pervez Musharraf during his recent talks with Chinese leadership, when he recently visited Beijing and Shanghai.

"We will be interested in studying the prospects of using Pakistan as energy corridor for China", he said, while talking to APP.

The two sides could work out a strategy to evaluate the future prospects of bilateral co-operation in the energy sector both on medium and long-term basis.

The Gwadar Port on the Arabian Sea coast in Balochistan through which crude oil imports from Iran and Africa can be transported to Northwest China's Xinjiang Uygur, an autonomous region by land. The route on which a feasibility study to be conducted is a short-cut compared with the one via the Strait of Malacca.

The port is strategically located as it is quite near the Strait of Hormuz, through which 40 percent of the world's oil passes, he noted.

Li Jiang said the Chinese crude oil importers will be looking forward to the results of the feasibility study on transporting crude oil via mountainous regions in Pakistan.

About Pakistan's offer of extending gas pipeline to China, Sun Shihai, a researcher with Chinese Academy of Social Science, said although the proposed pipeline is not a project that can be launched soon, it could work well in the long run.

"It will help maintain peace and stability in the region when the commercial interests of China, Pakistan and a third country are involved," he said.

Pakistan and China have recently emerged as a strong partner in the energy sector. Besides strengthening co-operation in hydropower sector, China also helped its traditional friend set up the Chashma Nuclear Power Plant Phase-I; and building on the 300 MW Phase-II started recently.

Pakistan, whose nuclear-power capacity is 437 MW, plans to increase the figure to 8,500 MW by 2030.
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## Owais

Pakistan, Iran, Turkey to set up ECO bank 

*ISLAMABAD *_(updated on: July 11, 2006, 03:26 PST_): Pakistan, Iran and Turkey will set up ECO trade and development bank a meeting of bank officials of the three countries decided in Ankara.

This was reported in a private TV News channel.

Head of Iran's Foreign Exchange Reserves, Muhammad Jafar Mojjarab said that ECO trade and development bank would play vital role in the economic development of the three countries.

The bank is likely to be set up in Istanbul in two and half months with its branches in Iran and Pakistan.


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## Owais

*Probe ordered* 

MULTAN (July 11 2006): PIA chairman Tariq Kirmani announced Rs 200,000 financial compensation for each family of victims of the Fokker plane crash. While addressing a press conference here on Monday, Kirmani said PIA has made all arrangements to transport families of victims to Multan and will arrange transportation of bodies of victims to their respective areas at PIA's expense.

He said manufacturers of Fokker planes and experts from Rolls Royce, the manufacturing company of Fokker plane engines, would be reaching Pakistan within a day or two to assist the inquiry teams in investigating the plane crash incident.

The PIA chairman said Fokker manufacturers have been called to help the joint inquiry team of PIA and CAA to find out causes behind the Monday's Fokker plane crash that claimed lives of 45 passengers at Multan.

Fokker planes would continue to operate and serve the passengers, he said.

Senior Vice President PIA Engineering wing Iftikhar Gull said that the experts from Fokker manufacturers and Rolls Royce would reach Multan within a day or two to help the inquiry team. The PIA chairman said, PIA now has six Fokker planes, five owned by PIA and one it got on lease.

Fokker planes would continue to operate and serve the passengers, he said.

PIA deputy managing-director Farooq Shah, while addressing a press conference along with flight operation director Captain Athar here at the PIA training centre in Karachi said the Fokker aircraft had lost its contact with the control tower soon after takeoff.

He said as soon as the captain's contact with control tower was lost, an emergency was declared. Refusing comment on possible causes of crash, Farooq Shah said senior executive vice-president Captain Shah Nawaz Dara would conduct the inquiry. Replying to a question, he said still no Fokker has been grounded.


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## Owais

*Five firms allowed to establish power plants* 



KARACHI (July 11 2006): The federal government has given approval to five business houses of the country to set up power plants at an estimated cost of around $1 billion, sources told _Business Recorder _on Monday. They said that the five business houses, which have been given 'green signal', include a Dubai-based firm which has been told to kick-off development work on the power plants on war-footing.

The licensees are now engaged in erecting their plants in Sindh and Punjab region. Sources said that the power generation capacity of each of the five independent power producers (IPPs) would be 200MW, totalling to 1000MW. These IPPs are: Fauji Al-Kubail (from Dubai), Orient Power, Nadeem Power, Saif Power and Muridke Power.

The estimated cost of each power plant would be $182-$200 million and the turbines would be run on gas. Officials have estimated that the new IPPs would operate at 60 percent capacity. However, if the demand increases, these plants would have the capacity to operate at 90 percent.

Source said that top officials of the five business houses had held a meeting with President General Pervez Musharraf in Islamabad a few days ago. The President lauded the efforts of the private sector in helping the government to overcome power shortage in the country, especially in Karachi.

Source said that the President had strongly urged the investors to start work on 24x7 basis, so that their projects could be operational within two years. Sources said that the new entrants have negotiated and fixed their production with Wapda at the rate of 4.5 cents per unit, which is about Rs 5.90 per unit.

They said that the investors would get 15 percent return on their investments and all sales will be made to Wapda, which has entered into the power supply contract for 30 years. "These five projects are from the first batch, while in the second batch four more power projects would be considered as standby projects," sources said.

However, they said, the standby power plants would use furnace oil and their generated power would be used if any mishap occurred. Sources said that the estimated cost of the standby power plants would be around $182-$215 million and their generation capacity would be 1000MW each.

About technology and machinery, sources said that the managements of all the five IPPs had contacted well known companies of United States, Sweden and Germany for importing large generators.

Sources believe that with the setting up of the five new IPPs and four in the standby position, the power crisis in the country would be managed to a great extent.


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## Owais

*Wheat procurement: Punjab and Passco fail to achieve targets* 



ISLAMABAD (July 11 2006): Punjab government and Passco have failed to achieve their wheat procurement targets, but Sindh slightly exceeded the target set for it, sources in the Ministry of Food, Agriculture and Livestock (Minfal) told _Business Recorder _here on Monday.

"The Prime Minister had enhanced the wheat procurement targets of the provinces and Passco to ensure enough availability at reasonable prices, but his directives have not been implemented in letter and spirit," sources said. They said that Punjab had initially fixed the procurement target of 2 million tons, which was raised to 3 million tons on the intervention by Prime Minister.

The province has huge carryover stock of 1.367 million tons from the previous crop and at the current pace it was unlikely to achieve the target of 3 million tons, sources said, adding that procurement by June 25 amounted to 2,553,916 tons, which is 85 percent of the fixed target, and by the end of season, Punjab is expected to have at least 3.9 million MT in its stocks.

In view of considerable financial and storage costs, the province was requesting the federal government to arrange export of at least 0.5 million tons wheat. Sindh's initial procurement target was 0.6 million tons, which was enhanced to 0.7 million tons on the intervention by Prime Minister.

According to sources, Passco was given wheat procurement target of 1.3 million tons against its own target of one million tons and officials believe that the organisation may fall short of the target by a small margin at the end of the season. In Sindh, Passco procured 50,000 tons out of the target of 100,000 tons, which is only 50 percent of the assigned target. Total wheat procurement by Punjab, Passco and Sindh came to 4,496,560 tons, as on June 25, against the target of 5 million tons, which was 89.95 percent of the target.

Sources said that the private sector participation in wheat procurement was seemingly less than last year. The stocks pledged last year by the private sector were 2.076 million tons besides the purchases from their own resources. But this year, the stocks pledged so far amount to 1.188 million tons only (up to June 10).

The private sector did not demonstrate keenness in procurement because of reduced possibility for speculation and high profits due to better supply and duty-free import of wheat and sufficient carryover stocks, besides high mark-up on bank loans, which discouraged the private sector, sources added.

On mismanagement of bardana distribution, sources quoted the Minfal as admitting that in many cases distribution was done through middlemen and the process remained less than satisfactory, as had been the case in the past as well.

"The procurement agencies have so far not been able to evolve an effective mechanism whereby bardana could be provided directly to the growers, so that full benefit of support price reaches the farmers," sources added.

At some places, they said, gaps in demand and supply created resentment among the farmers, although directions were sent to the provinces, well in advance and from no less a level than the Prime Minister, to make adequate arrangements in time.


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## Owais

*Prime Minister unhappy with MoC's exports performance* 



ISLAMABAD (July 11 2006): Prime Minister Shaukat Aziz has expressed displeasure over the performance of Commerce Ministry, particularly with regard to slow exports growth. Presiding over a meeting on Trade Policy 2006-07, scheduled now to be announced on July 17, the Prime Minister directed that stress should be laid on target markets to achieve the next year's target, sources said.

The Trade Policy was to be unveiled on July 19, but the date has been revised on the request of Commerce Minister who would be going abroad to attend a conference. Sources said that neither the export target for the next fiscal nor any specific proposal to enhance exports was discussed at the meeting.

"What was discussed were old proposals like 'Skill Development Board', role of Export Promotion Bureau, exhibitions and establishment of warehouses abroad," they said.

However, an official press release issued by Prime Minister House said that a meeting under the chairmanship of Prime Minister was held which conducted an in-depth review of the trade policy 2006-07.

Secretary, Commerce, Syed Asif Shah, made a detailed presentation on various aspects of the trade policy, and the participants gave several suggestions and provided their feedback on specific issues, but there was nothing new to mention, sources added.

This was the first meeting to formulate and finalise the trade policy. Several more meetings will be held before it is announced. The review process will go on until the trade policy is approved by the Federal Cabinet on July 17.

The meeting was attended, among others, by Humayun Akhtar, Minister for Commerce, Jahangir Khan Tareen, Minister for Industries, Sikandar Hayat Khan Bosan, Minister for Food and Agriculture, Muhammad Nasir Khan, Minister for Health, Mushtaq Ali Cheema, Minister for Textile Industry, Dr Salman Shah, Adviser to PM on Finance, Dr Shamshad Akhtar, Governor, State Bank, Dr Akram Sheikh, Deputy Chairman Planning Commission, Waseem Haqqie, Chairman, Engineering Development Board (EDB), Tariq Ikram, Chairman, Export Promotion Bureau (EPB), Secretary-General Finance, Secretary Health, Secretary Industries and senior officials.


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## Owais

*CSIBL fails to pay Rs 68.547 million of TFCs to fund holders* 

KARACHI (July 11 2006): Crescent Standard Investment Bank Limited (CSIBL) Term Finance Certificates (TFCs), amounting to Rs 68,547,000, which matured on July 4, have not yet been paid to the fund holders, it is learnt.

Anjum Saleem, CEO of CSIBL, when asked why the Fund holders have not been paid the amount on maturity date, said that they were not able to pay the amount because of liquidity crunch the bank was facing. He, however, assured that the amount would be paid in a few days' time. (The prospectus regarding the TFCs stipulates a 'Grace Period' of seven days for payment).

It is unheard of that TFCs are not paid in time by any financial institution. It is further learnt that Alman Aslam, consultant to the CSIBL, is preparing a merger plan of CBIBL with Crescent Leasing and Javaid Vohra & Company, all of the Crescent Group. The proposal in this regard will shortly be submitted to the Securities and Exchange Commission of Pakistan (SECP).

The SECP has not yet finalised the enquiry report on CSIBL which it is conducting since September 2005 on the basis of the report prepared by A Ferguson & Company, and SECP's own diligence officers.

According to sources, SECP has passed an order against Crescent Standard Business Management (Pvt) Limited (CSBM) and its directors, namely Mehmood Ahmed and Siyyid Tahir Nawazish, under Securities and Exchange Ordinance 1969 directing it to compensate a sum of Rs 182.435 million, which is equivalent to the cumulative sum of price per share of CSIBL and Javaid Vohra & Company.

The SECP authorities have directed CSBM to pay Rs 182.435 million to Javaid Vohra & Company, within 30 days of the order passed by Arif Mian, Executive Director, and Securities Market Division (SMD) of SECP. The order was passed on June 22.

The order, spread over 11 pages, said that the matter arose out of two Show-Cause Notices (SCNs) of April 5, 2006 issued by the SECP to members of the Board of Directors of CSBM, namely Mahmood Ahmed and Siyyid Tahir Nawazish. Mahmood Ahmed is also Chief Executive of CSBM.

Brief facts of the case are that on February 1, 2006, CSBM sold 20 million shares of CSIBL through First National Securities to Javed Omar Vohra & Co Ltd, (JOV) @ Rs 12.00 per share, and another 4.5 million shares to JOV on February 3, 2006, through Dossalani Securities @ Rs 11.98 per share. Both CSIBL and JOV are listed public companies. Moreover, CSIBL and CSBM are associated companies as Mahmood Ahmed is a director of both CSBM and CSIBL. He also held the position of chief executive in both these companies at the time of aforementioned transactions.

On October 3, 2005, the Commission commenced inspection of the books and accounts of CSIBL and, in November 2005, communicated to the Board of Directors of CSIBL of critical information regarding mismanagement of books and accounts and unauthorised transactions undertaken by CSIBL, and the poor financial condition of CSIBL, asking it to explain and clarify the same.

In the light of the foregoing SCNs issued to the Board of Directors of CSBM comprising of only two directors, namely, Mahmood Ahmed and Siyyid Tahir Nawazish, the allegations against CSBM were summed up in the following manner:

(a) CSBM sold securities of CSIBL while being associated with CSIBL through common director and in possession of material non-public information related to CSIBL.

(b) CSBM sold to JOV 24.5 million shares ar Rs 12.00 and Rs 11.98 per share on February 1 and 3, 2006, respectively, and the share price of CSIBL declined to Rs 8.00 per share on March 13, 2006; and CSBM, by acting on material non-public information, illegally caused JOV to deal in securities of CSIBL in violation of section 15A of the Ordinance, thus avoided a loss and inflicted loss on JOV and its share holders.

Except one director of JOV, namely Mustaq Chappra, who was abroad, the following appeared personally before the Executive Director, Securities Market Division, SECP:

Javed Omer Vohra, Chairman/Director, JOV, Nasir Ayub, Director, JOV, Faud Nazir Kehar, CEO/Director, JOV, Nadeem Javed, Director, JOV, and S.M.Yusaf, Director, JOV.

After detailed hearing and having perused the reply and written submissions made by the CSBM directors to the SCN, the Executive Director, SMD is of the considered view that both members of the Board of Directors of CSBM, who were issued separate SCNs, ie Mahmood Ahmed and Siyyid Tahir Nawazish, "have contravened the provisions of section 15A of the Ordinance.


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## Owais

*Tea import through legal channels declining* 

KARACHI (July 11 2006): The import of black tea through legal channels has been declining by around 10 percent every year as against import of this commodity under Afghan Transit Trade (ATT) is increasing rapidly.

Pakistan imported over 114.082 million kg black tea worth $193.282 million in the fiscal year 2005-06, while the import of this commodity was 130.071 million kg worth $206.922 million in the fiscal year 2004-05 through legal channels.

On the other hand tea import under Afghan Transit Trade Agreement (ATTA) has increased by 10 million kg in the first nine months of the fiscal year 2005-06. As many as 27.66 million kg black tea was imported under ATTA during the same period against 17.64 million kg black tea imported in the corresponding period in 2004-05 from Kenya.

Muhammad Altaf, Chairman, Pakistan Tea Association (PTA) in an exclusive interview with _Business Recorder _here said that the legal tea importers have to pay more than 33 percent as transportation expenses while these expenses for import of tea under ATTA is only 10 percent.

He said that Kenya was a major tea exporting country to Pakistan, as its share in total tea import was over 60 percent. He pointed out that at present there is a draught like situation in Kenya and other African countries and availability of tea in these countries has declined which has pushed the prices upwards by 50 percent to 80 percent as compared to the last year. The tea production deficit has reached 50 million kg in Kenya and after some correction it was still facing a shortage of 37 million-kg against its tea production of last year, he added.

This situation will encourage smugglers to import tea through illegal channels, which would destroy the legal tea trade in the country. Following the situation, Pakistani tea importers are going to import this commodity from countries like India, Indonesia, Sri Lanka, Bangladesh as well as other countries.

Pakistan as one of the five biggest tea-importing countries in the world including the Russian Federation, United Kingdom and Egypt has its importance regarding tea trade.

Pakistan has a market of over 170 million kg for black tea every year and imports this commodity from 19 different countries including Kenya, Indonesia, India, Bangladesh and Sri Lanka. Mohammad Altaf said that still it is time to correct the situation by taking fiscal measures, otherwise legal imports might drop at a rapid pace in the future.

He said that the Pakistan tea industry is taking urgent and pre-emptive action to secure tea supplies from Kenya, but unfortunately the situation is beyond its control. "We now fear not only a rapid escalation in tea prices if the duty remains the same, but it could also create a shortage like situation", he added.


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## Owais

*Saarc finance ministers meeting today* 

ISLAMABAD (July 11 2006): The First Saarc Finance Ministers meeting will be held here on Tuesday to formulate recommendations for establishing 'Saarc Poverty Alleviation Fund' (SPAF) under the 'Social Window' as an integral part of Saarc Development Fund (SDF).

The Fund will be managed and operated by the Governing Board of SDF, with an initial corpus of $300 million, to be raised from contributions from member states. The focus of lending under the Fund would be on poverty alleviating projects.

Prime Minister Shaukat Aziz is expected to inaugurate the meeting of Finance Ministers while Advisor to Prime Minister on Finance and Economic Affairs Dr Salman Shah will chair the working session of the meeting.

Delegates from the Saarc Secretariat and Saarc member countries, including India, Bangladesh, Sri Lanka, Nepal, Bhutan, Maldives and Pakistan will participate in the conference. It is hoped that the conference would add another potential dimension to the rapidly progressing regional co-operation among the Saarc member states.

The meeting follows up from the deliberations and decisions of the 13th Saarc Summit held in Dhaka in November 2005. Under the Dhaka Declaration the Heads of State/Government decided to establish a Saarc Poverty Alleviation Fund (SPAF) with voluntary and assessed contributions.

The Fund, with its own permanent Secretariat, would comprise three distinct 'Windows' namely, Social Window, Infrastructure Window and Economic Window. The three windows would offer concessional and non-concessional funds as well as grants to Saarc countries.

In this regard, they welcomed the offer of Pakistan to host the meeting of Finance Ministers. They agreed that South Asia Poverty Fund would function within the South Asia Development Fund, which would be reconstituted as 'Saarc Development Fund' (SDF) and would serve as umbrella financial institution for all Saarc projects and programs.

The first informal meeting of Saarc Finance Ministers was held in Hyderabad, India, on May 3, 2006, on the sidelines of the 39th annual meeting of the Asian Development Bank, in which all member states participated. It was attended by Advisor to the Prime Minister on Finance, Revenue, Economic Affairs and Statistics. The meeting reiterated the need for seizing the opportunity for furthering the process of regional economic co-operation in a significant manner.

The first meeting of finance experts from Saarc countries was held in September 2005, followed by the second meeting of finance experts in Katmandu in February 2006. These meetings came out with recommendations regarding the operationalisation of Saarc Poverty Alleviation Fund.


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## Owais

*Government fails to implement Rs 70 billion project: laying rail track from Gwadar* 
ISLAMABAD (July 11 2006): The government has failed to implement the Rs 70 billion project to connect Gwadar deep-sea port with the country's main rail network. Despite firm directives by President General Pervez Musharraf, the Ministry of Railways has only managed to prepare a feasibility report in over three years' time.

Pakistan Railways, being economically safe and suited for long haul traffic, was tasked to establish a railway line from Gwadar connecting it with the main network at Quetta-Kohi-Taftan section.

"We have so far prepared a feasibility report to lay a new track that will connect the port with the existing railway network. There are some problems that are being sorted out to start the construction work," an official in the Railways Ministry told _Business Recorder _on Monday.

It is learnt that officials were considering various alternatives like Gwadar-Mastung link. This would start from Gwadar and would pass through Turbat-Hushab-Panjgor-Nag-Besima-Surab, Kalat and Mastung.

The 961 kilometres route is considered to be the shortest in length covering scattered population in the area.

The official said that one of the major reasons behind the inordinate delay in construction work was the volatile law and order situation in Balochistan.

The route runs through the central portion of restive Balochistan where a number of new roads would be built in close proximity of railway stations.

On the other hand, the proposed alignment between Hushab-Panjgur and Surab-Kalat-Mastung is difficult as the area has steep grades and sharp curves.

The government has already missed the extended deadline of June 30 for the inauguration of the multi-billion dollars port due to poor performance of communications and railways ministries.

Neither the Communications Ministry has done its job by completing required road network nor Ministry of Railway has been able to lay the necessary rail tracks.

President Pervez Musharraf is very eager to open Gwadar port as soon as possible with access to neighbouring countries.

On the Iranian border, the official said, the railway line from Quetta to Kohi-Taftan continues on to Zahidan in Iran. But an additional 600 kilometres railway line would have to be built to link it to the main Iranian railway system at Kerman.

There is no railway infrastructure in Afghanistan and a line from Quetta terminates on the border at Chaman.


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## Owais

*NBP selected 'best foreign exchange bank in Pakistan, 2006'* 


KARACHI (July 11 2006): Global Finance, New York, one of the leading financial journals, has selected National Bank of Pakistan (NBP) as "The Best Foreign Exchange Bank in Pakistan-2006". This is the third consecutive year that NBP has won this prestigious award.

Another recognition of the bank announced by Global Finance is awarding NBP the "Best Emerging Market Bank in Pakistan-2006". The award giving ceremony will be held on September 18, 2006, in Singapore during the annual meeting of the IMF and World Bank.

NBP was the first to establish a foreign exchange company in February 2003 after the State Bank of Pakistan liberalised the foreign currency business. NBP Exchange Company offers a full range of foreign exchange services to individuals and companies through the extensive use of network of international correspondents covering over 100 countries. NBP Exchange Company has branches in Karachi, Rawalpindi, Mirpur AK and Islamabad. The operations will shortly be extended to Pershawar and Lahore.

The selection criteria for the "Best Emerging Market Bank in Pakistan-2006", besides transaction volume and market share, included customer service, competitive pricing and innovative products and technology.

NBP showed very strong financial performance during the year 2006. Pretax profits improved by 59 percent year-on-year and reached Rs 19 billion ($319 million). The bank continued to make substantial investment in technology and upgrading its human resource base. NBP's focus on marketing diversified asset products to its 10 million-plus account holders to maintain revenue momentum through higher fee and interest income was another factor in its selection for the award.


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## Owais

*SBP sells Rs 17,750 million treasury bills* 



KARACHI (July 11 2006): The State Bank of Pakistan (SBP) sold Rs 17,750 million of Treasury bills on Monday in a 10-day repo operation at 7.90 percent to mop up funds from the money market.


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## Owais

*KSE index tumbles by 331 points* 


KARACHI (July 11 2006): Bearish onslaught prevailed in all energy, banking and cement scrips at KSE on Monday as the market failed to convince leading investors and financial institutions to lend support. The KSE-100 index tumbled by 331 points, or 3.4 percent, to close at the 9504-point level.

The volume in the ready market was 127 million shares compared to 174 million shares of Friday. However, the volume in the futures market was 65 million shares, against 35 million shares.

Following the higher-than-expected dividend announcement by NIT, the market started positively. However, across-the-board hefty selling pressure plunged the index to mark the 9484 points intra-day low. The index suffered heavy losses in the absence of any significant support. All notable scrips closed at or near their lower circuit levels.

Despite higher dividend payout from NIT; NBP, BoP and Faysal Bank these received heavy battering and closed 5.6 percent, 5.4 percent and 6.1 percent lower from their intra-day highs. Picic Bank, which had closed limit up for the last three consecutive sessions, depicted 3.8 percent decline to close at Rs 28.00. Among energy scrips, OGDCL, PPL and POL decreased by Rs 6.35, Rs 9.90 and Rs 14.65, respectively, to close at Rs 123.65, Rs 200.85 and Rs 302.35.

Rumours regarding former SECP chairman disclosing names of brokers involved in March 2005 crisis also pushed the investors to offload their positions. Therefore, the market made an intra-day low level of 9484.

Hasnain Asghar from Aziz Fidahuesin said that the outcome of the presentation in the National Assembly created further unrest among market participants, as the blame game seemed to have increased nervousness. Raise in transaction cost had already reduced the number of participants. The ongoing tussle has forced the remaining to stay on the back foot.

The inability of the market to move on its technical and fundamentals hints that if the blame is transferred to the stakeholders it would invite a massive offloading. Technically, the index would continue to find support around 9470-9477, while immediate resistance stays at 9727-9733. It is, however, recommended to wait for the settlement of the issue as the sensitive market with low turnover and absence of buyers might not be able to digest any tough development.

An analyst from Al-Habib Capital Market said that the banking sector was mainly the beneficiary of NIT's healthy dividend opened at a positive note with good volumes in NBP, BOP and FABL, but the ongoing controversy between SECP and Finance Ministry changed the market sentiment. Investors preferred to stay outside the market, and with no interest from any quarter, the benchmark KSE-100 index continued downward trend. Forensic investigation, local auditors, and sending of data to Korean investigators for analysis, did the rest. Decline in volumes showed that market did not seem stable at these levels. "We do expect that the market may slide further in the short run, but a dip would definitely be an excellent buying opportunity for the long term."

Ahsan Mehanti, chief executive officer of Salim Chamdia Securities, said that the market needed intervention from the government and it should immediately clear the dust following the meeting of National Assembly Standing Committee last week. "The allegation war should be ended to boost the investors' confidence. The valuations are attractive and upcoming results, which are likely to be healthy ones, might help turn the tables."


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## Owais

*LSE index down 193.90 points* 



LAHORE (July 11 2006): The local share market nose-dived on Monday, following rising worries of market players after allegations levelled by a former SECP chief against brokers and government high-ups, holding them responsible for the March 2005 crisis.

The LSE-25 index retreated to 4104.99 points from 4298.89, registering a fall of 193.90 points. The volume plunged to 26.975 million shares from 40.536 million of Friday, showing a decline of 13.561 million shares.

Led by key banking stocks and petroleum shares, the market mostly stayed in the red zone as dark shadows caused by submissions of Dr Tariq Hassan, an ex-chairman of SECP, in the National Assembly's Standing Committee on Finance and Revenue, gripped the market. Dr Hassan has levelled allegations against big brokers and government high-ups for ill-practices in the stock market that led to March 2005 crisis causing heavy losses to investors.

The ongoing inquires also overshadowed the impact of good payouts declared by NIT on Saturday last, a broker said, adding that even the banks having stake in NIT also shed heavily. However, Askari Commercial Bank and UBL edged higher while National Bank, MCB and PPL were the key losers of the day.

The market was in the grip of uncertainty and panic after Dr Hassan opened his lips and held the government high-ups and brokers responsible for the March 2005 crisis, Javed Iqbal, chief executive of Javed Iqbal Securities Ltd said. "Both sides are making allegations and counter-allegations against each other, which has disturbed the entire market sentiment," he added. "Investors are on sidelines and awaiting the outcome of the inquiries. However, one thing is clear that this time the inquiries will make headway and the responsible persons will be taken to task," he added.

Investors had suffered heavily in the March 2005 crisis. Therefore, they want accountability of the responsible persons who sucked their blood, he said. "I believe this time the government will not let loose the culprits, and will bring them to book for the sake of future of the market," he remarked. The government reportedly has hired Korean experts to probe into the crisis, which is a good step and will boost investors' confidence in the market, he viewed. Koreans have also faced such types of crisis and have expertise in dealing such situations; therefore, the government has rightly chosen them to ascertain the actual causes of the March 2005 crisis.

Overall, 85 scrips hanged hands on the floor, of which 10 improved their worth, 40 landed in minus zone, and 35 were intact to their previous zone. Among most active scrips, Askari Commercial Bank gained Rs 0.95, UBL Rs 0.75, Dewan Farooq Motors Rs 0.35, and Southern Electric Power and Prime Commercial Bank Rs 0.30 each.

In minus, National Bank shed Rs 13.65, MCB Bank Rs 11.85, PPL Rs 11.00, Pakistan Oilfields Rs 10.00 and PSO Rs 7.00. Fauji Cement and National Bank were the volume leaders with 4.382 million and 3.748 million shares, respectively.


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## Owais

*Bears strengthen positions on ISE* 


ISLAMABAD (July 11 2006): Bears strengthened their positions on the Islamabad Stock Exchange (ISE) where equities continued to show negative signs under the lead of hot favourite amid decrease in index. ISE Ten index showed a decrease of 124.11 points, as the ten index moved from 2,552.49 to 2,428.38 points.

The horizon of trade contracted from 118 companies to 107 stocks. Majority of stocks (85) closed in negative territory, 22 showed positive signs, whereas zero companies remained pegged to their overnight levels.

The turnover of OGDCL was 78,700 shares as compared to previous volume of 88,000 shares. The volume of Pakistan Petroleum Ltd was 41,900 shares as compared to previous turnover of 22,300 shares. The volume of Fauji Fertiliser Bin Qasim was 16,000 shares.


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## Owais

*Malaysia to tech-assist Pakistan seafood exports * KARACHI: Malaysia will provide technical assistance to Pakistan for boosting its seafood exports.

Secretary General, Chinese Chambers of Commerce and Industry of Malaysia told newsmen in Kuala Lumpur that Malaysia was ready to provide modern technology to Pakistan for frozen food and packing.

Pakistani seafood industry delegation is on a visit to Malaysia these days, where they are engaged in meeting Malaysian traders for the boosting of seafood exports.

Pakistan during the outgoing fiscal year exported 647 tons of seafood.


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## Owais

*100 MW power supply to Gwadar from Iran likely in 2008 * GWADAR: Iran is expected to provide power up to 100 MW to Gwadar port from December 2008, the WAPDA sources told Geo News on Sunday.

Iran would charge 6.25 cents per unit for one year, the sources said and added that an Iranian company would launch a project worth $ 26 million for power supply to Gwadar.

Soon a delegation from Iran would visit Pakistan to negotiate power tariff with Pakistan authorities, the sources said.


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## Neo

KARACHI (updated on: July 11, 2006, 18:44 PST): The State bank of Pakistan (SBP) said on Tuesday the country could save up to $900 million a year if trade with India is liberalised.

The release of the SBP report focused on the benefits of increasing bilateral trade with India coincided with an inaugural meeting of finance ministers from the South Asian Association for Regional Cooperation (SAARC) being hosted by Islamabad.

"Expanding the current list of positive items will give Pakistan an average saving estimated between $400 million to $900 million," the report, based on data for fiscal 2004, said.

"Compared to the actual trade worth $476 million in FY04, the potential of bilateral trade based on FY04 data has been worked out at $5.2 billion," the report added.

Pakistan and India are the region's largest economies.

A peace process begun in early 2004 has seen a major improvement in relations, though the core dispute over the Himalayan region of Kashmir remains unresolved.

"Success of this peace process will help in improving the atmospherics and augurs well for the region in bringing new synergy to SAARC," Prime Minister Shaukat Aziz said at the start of the finance ministers meeting.

In 1996, India granted a Most-Favoured Nation (MFN) status to Pakistan, but Islamabad is yet to reciprocate.

Instead, it has gradually increased the number of items permissible for trade with New Delhi.

India and Pakistan have already signed the South Asia Free Trade Area (SAFTA) protocol, along with Bangladesh, Bhutan, Maldives, Nepal and Sri Lanka.

Under the first phase of the agreement, scheduled to last until December 2007, tariffs are to be reduced in two phases to 20 percent in the case of India, Pakistan and Sri Lanka and 30 percent in the case of Bhutan, Bangladesh, Maldives and Nepal.


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## Neo

KARACHI (July 11 2006): The federal government has given approval to five business houses of the country to set up power plants at an estimated cost of around $1 billion, sources told Business Recorder on Monday. They said that the five business houses, which have been given 'green signal', include a Dubai-based firm which has been told to kick-off development work on the power plants on war-footing.

The licensees are now engaged in erecting their plants in Sindh and Punjab region. Sources said that the power generation capacity of each of the five independent power producers (IPPs) would be 200MW, totalling to 1000MW. These IPPs are: Fauji Al-Kubail (from Dubai), Orient Power, Nadeem Power, Saif Power and Muridke Power.

The estimated cost of each power plant would be $182-$200 million and the turbines would be run on gas. Officials have estimated that the new IPPs would operate at 60 percent capacity. However, if the demand increases, these plants would have the capacity to operate at 90 percent.

Source said that top officials of the five business houses had held a meeting with President General Pervez Musharraf in Islamabad a few days ago. The President lauded the efforts of the private sector in helping the government to overcome power shortage in the country, especially in Karachi.

Source said that the President had strongly urged the investors to start work on 24x7 basis, so that their projects could be operational within two years. Sources said that the new entrants have negotiated and fixed their production with Wapda at the rate of 4.5 cents per unit, which is about Rs 5.90 per unit.

They said that the investors would get 15 percent return on their investments and all sales will be made to Wapda, which has entered into the power supply contract for 30 years. "These five projects are from the first batch, while in the second batch four more power projects would be considered as standby projects," sources said.

However, they said, the standby power plants would use furnace oil and their generated power would be used if any mishap occurred. Sources said that the estimated cost of the standby power plants would be around $182-$215 million and their generation capacity would be 1000MW each.

About technology and machinery, sources said that the managements of all the five IPPs had contacted well known companies of United States, Sweden and Germany for importing large generators.

Sources believe that with the setting up of the five new IPPs and four in the standby position, the power crisis in the country would be managed to a great extent.


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## Neo

KARACHI (July 11 2006): Pakistan Railways is going to offer its land in four major cities for the construction of five star hotels. Sources told Business Recorder that the railway is working on the plan to lease out the land in Karachi, Lahore, Multan and Rawalpindi. The land sites has been selected and would be finalise in a month's time.

About 60 percent of the revenue earned as a result will go to the railway and 40 percent to the provinces where these hotels will be constructed.


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## Neo

THE choice for Pakistan may appear to be between the high economic growth, higher inflation and moderate growth with low inflation. But low growth could mean less employment, low production and less exports.

So, the real option is high growth with policies tailored to keep the inflation low and employment high with considerations of equity prevailing.

High growth is often accompanied by high inflation and larger money supply. But the government has tried to tie both together by having a growth target of seven per cent this year along with an inflation rate of 6.5 per cent. But whether the two targets will move in tandem or not is to be seen.

But the State Bank of Pakistan (SBP) is trying to keep the increase in money supply restrained and the government is trying to improve the supply side so that the essential goods can be available at fair prices. However, the market following its persistent high profit policy, is not going along with the government willingly and the world price pattern, whether that be for oil which has touched $72 a barrel or for sugar which has hit world prices is not helpful to the government.

The government however has to try to make the best of a bad situation and hold down prices as best as it can, while the SBP has decided to continue with its rather tight monetary policy.

The National Credit Consultative Committee has approved a credit plan for the new fiscal year which will increase the broad money by 13.5 per cent or Rs460 billion to meet the demands created by targeted seven per cent economic growth and the inflation of 6.5 per cent as against the monetary growth of 12.8 per cent or Rs380 billion set for last year.

The net domestic assets of the banking system are expected to expand by Rs450 billion this year and the net foreign assets of the banking system are expected to expand by Rs9.8 billion. But the governmentÃ¢â¬â¢s need for bank credit is large indeed and it will absorb Rs130 billion. The last yearÃ¢â¬â¢s government borrowing for budgetary support too was Rs120 billion.

Credit to the private sector has been considerably increased and the NCC has estimated that at Rs390 billion as compared to the targeted Rs330 billion last year. But the actual private sector borrowing was far more.

Larger tax mobilisation this year along with the heavy borrowing of the government from the banking system would reduce the availability of credit to the private sector. But the public sector development programme has been suddenly expanded to Rs415 billion so the government has to borrow more from the banks.

The SBP governor has appealed to the bank management to reduce the large spread between the high lending rate and the low return on deposits. But businessmen complain that the lending rates of the banks have gone up from 4-5 per cent in 2002 and 2003 to 10-11 per cent. The export refinance rate has risen to a high nine per cent. Businessmen now complain that the financial cost of exports is now 3.79 per cent and there is in addition a 1.5 per cent levy on textile exports.

Businessmen now want not only larger credit, but also for longer terms and on lower interest rates. The fact is that they have not able to accomplish the export target of $17 billion, while the government was predicting that exports would rise to $18 billion. The businessmen complain that the competition to the export trade is increasing steadily around the world under the WTO regime and financial charges raise their cost of production.

The cost of power in many other countries is low and the supply is steady. But the power supply in Pakistan is unsteady and inadequate and subject too much disruption and is too costly. If the industrialists and exporters have to arrange for their own power production that increases the capital cost at a time when the interest rates for borrowing are rising.

So the SBP governor has appealed to the bank to stretch the maturity of the deposits to create room for long-term project lending. Their preference for short term-lending and promoting consumer credit has to give way to lending for long-term project financing. So that more industries could be established instead of more money going in to trade and the service sector.

Such appeals have had little effect on the banks that enjoyed a 99 per cent increase in the profit last year. The government and the SBP do not want to make new laws for such purposes in a market economy in which the private sector is the prime mover with the government taking the backstage. But the private sector while enjoying the benefits of the market economy is not ready to make the kind of concessions essential to make the free economy popular and a success.

The time has come for major decisions by the government and the private sector to modernise the economy. The government is talking of public-private partnership along with speedy privatisation of the public sector. Unless the people see the freedom for the private sector and the varied benefits given to it, including larger bank credit as benefiting the people as a whole, there will be little enthusiasm among the masses for the public- private partnership.

The private sector is still relying on the old monopoly and cartel system for fixing prices, whether that be of sugar or cement or other major items. There has to be a world of change in the private sector outlook if the nation and its people have to gain by the new freedom conferred on the private sector.

It is for the leaders of the private sector to play their part honestly and fully. Some of them have got in to the parliament and some have become ministers. Instead of exploiting such positions for their own advantage, they should strive for a larger and more open economy.

In spite of the rather tight monetary policy followed by the government, more money is coming in as foreign investment and workers remittances which together account for about $8 billion dollars. In addition, the market is also awash with money made quickly through the stock exchanges and the real estate deals.

In such an environment, the tight money policy of the SBP cannot be too helpful in stabilising prices and the effort of the government to raise the number of the utility stores and make them play a larger role in holding down prices has a limited, though useful role.

Hence the supply side of the economy deserves far more attention from the government. It is not enough if polices are made and announced or if the prime minister directs the chief ministers to hold down prices. What matters is achieving positive outcomes and bringing down the prices and keep them stabilsed so that the 6.5 per cent inflation becomes a reality and not yet another illusion.

http://www.dawn.com/2006/07/10/ebr15.htm


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## Neo

RAWALPINDI, July 10: Pakistan is likely to become the worldÃ¢â¬â¢s fourth most populous country in the year 2050 having a population of 305 million, with the current population growth rate of 2.1 per cent per annum, reveals the World Population Chart issued by the United Nations Population Division.

The country is already the sixth most populous country in the world with a population of 158 million, and the high annual population growth remains a cause of concern for government and its planners, as Pakistan joins the international community to commemorate World Population Day on July 11.

The Population Policy of Pakistan aims at achieving population stabilisation by 2020 through completion of the demographic transition including reductions in fertility and mortality rates.

Government officials have identified population as the single most pressing issue in the countryÃ¢â¬â¢s development. Pakistan still has an unacceptably high rate of growth compared to other developing countries, it says.

Latest official figures says while mortality has been decreasing and fertility has shown a significant decline over the recent years, the crude death rate (CDR) of Pakistan is estimated at 8.2 (per thousand) in 2005-06. The decline in mortality rate is due to the elimination of epidemic diseases and improvement in medical services, it says. However, despite a considerable decline in the total mortality, infant mortality still remained high at 77 per thousand live births in 2005. The major reasons for this high rate of infant and child mortality are diarrhoea and pneumonia. Maternal mortality ratio ranges from 350-400 per hundred thousand births per year leading to about 17,000 newborn babies being born motherless, the figures reveal.

The maternal health situation is cause of concern. The maternal mortality ratio is estimated to be 500 deaths per 100,000 births. Over 75 per cent of deliveries take place at home and skilled personnel attend only about 20 per cent of them. The development of the first National Maternal Health Policy is under way. At the same time, population and reproductive health issues have been given significant weight in PakistanÃ¢â¬â¢s Poverty Reduction Strategy Paper.

According to the Ministry of Population Welfare, over one- third of Pakistanis are living in poverty. The impact of population growth on poverty is obvious, since poorer families, especially women and marginalised groups bear the burden of a large number of children with much fewer resources further adding to the spiral of poverty and deterioration in the status of women.


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## Neo

ISLAMABAD: Pakistan would be benefited from the experiences of Argentina and Brazil in the fields of livestock and sugarcane production. 

This was stated by the Federal Minister for Food, Agriculture and Livestock, Sikandar Hayat Bosan during his meetings with Ambassadors of Argentina and Brazil here Monday. Matters relating to sunflower seed production and Soybean also came under discussion during the meetings. 

Ã¢â¬ÅPakistan expects to sign a number of MoUs with Argentina and Brazil especially in the fields of livestock development, sugarcane processing particularly Ethanol production, cooperative development for small farmers and Soybean production, during my forthcoming visit to these countries,Ã¢â¬Â said the minister. 

A delegation of industrialists and farmers is also expected to accompany the minister during the visit. The visit will open up channels of communications between the governments and private sectors for better interaction and cooperation for future investment and technical exchanges, hoped the minister. 

This visit is being organised on the request of private sector especially people belonging to sugar industry. In order to streamline the visit, the food minister discussed with the ambassadors of Argentina and Brazil the detail of his visit programme.


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## Neo

KARACHI: Emaar Properties, the leading real estate group, has been a key driver of DubaiÃ¢â¬â¢s fast-paced economic growth. It has redefined urban developments in the Middle East and Southern Asia by bringing in world-class standards, while encouraging inward investment and acting as a catalyst for DubaiÃ¢â¬â¢s property boom, says a company press release.

A Public Joint Stock Company listed on the Dubai Financial Market and part of the prestigious Dow Jones Arabia Titans Index, Emaar has experienced tremendous growth since its inception in 1997. 

EmaarÃ¢â¬â¢s net profits for the year ending 31 December, 2005 climbed 180 per cent, to a record $1.288 billion. In December 2005 Emaar was awarded the Euromoney Gulf Real Estate Award for Best Overall Developer in the UAE as well as Best Residential Developer in the UAE. 

The awards, voted for by industry peers, took into account factors such as most consistent providers of high quality, profitable real estate projects and innovation as well as individual developments, both recently completed and those at the planning stage.

Emaar has several real estate projects in its primary market of Dubai at various stages of completion. These include Dubai Marina - one of the worldÃ¢â¬â¢s largest master-planned waterfront developments, Arabian Ranches ÃÂ± a premium desert paradise spread over thousands of acres and Emirates Living - a collection of neighbouring Emaar properties that includes Emirates Hills, The Lakes, The Meadows, The Springs, The Greens and The Views and provide quality homes in beautiful settings with tranquil, scenic landscapes as well as a community lifestyle. 

In 2004 an exciting chapter in the history of Emaar and Dubai began with construction of the 500-acre Burj Dubai Downtown development -- EmaarÃ¢â¬â¢s most ambitious UAE project to date and one that will create a new vibrant downtown for Dubai. The development centres around the Burj Dubai, slated to become the worldÃ¢â¬â¢s tallest tower when completed in 2008.

Major international projects include: Cairo Heights and Smart Village, both in Egypt; Boulder Hills, a world-class leisure and residential community in Hyderabad, India; multiple resort projects in Morocco, including Amelkis II & III and Bahia Bay, luxury residential golfing communities; Eighth Gate project in Damascus, the cityÃ¢â¬â¢s first master planned community; and Lakeside in Istanbul, a landmark development for TurkeyÃ¢â¬â¢s cultural and commercial hub. In Saudi Arabia, Emaar is embarking on the creation of King Abdullah Economic City, a mixed use development covering 55 million square metres of green-field land with a 35 km shoreline close to the industrial city of Rabegh as well as Jeddah Hills, a 2,286 hectare residential community offering spectacular views over the surrounding landscape.

Emaar has also made rapid strides internationally with the acquisition of AmericaÃ¢â¬â¢s Ã¢â¬Åbest buildersÃ¢â¬Â John Laing Homes for $1 billion, a strategic move that has firmly perched Emaar in the international spotlight. The partnership with John Laing Homes is a reiteration of EmaarÃ¢â¬â¢s strategy of expanding its business on a global basis beyond Dubai.

In addition, Emaar has teamed up with Giorgio Armani SpA to build and manage 10 Armani hotels and resorts across the world; an Armani hotel will feature in EmaarÃ¢â¬â¢s flagship Burj Dubai tower and other locations will include Milan, London, Shanghai, New York and Tokyo. The joint venture will offer 160 guest rooms and suites, a variety of restaurants and a spa covering more than 40,000 square metres and is the flagship for a global collection of Armani designer hotels and resorts.

While continuing to actively pursue expansion in its core business of innovative, high quality real estate development, Emaar has diversified into related business lines to further build value for its 59,000 shareholders, which includes the Government of Dubai. 

Recently the award winning property developer announced plans to aggressively expand into the retail sector with investments of over $4 billion to develop approximately 100 malls in the mega emerging markets of the Middle East, North Africa (MENA) and the subcontinent. 

In March 2006 Emaar announced its plans to enter the healthcare sector in the MENA and South Asia markets. EmaarÃ¢â¬â¢s plan involves the construction of hospitals, clinics and medical centres and investing in the provision of world-class healthcare services. With a total investment outlay of around $5 billion over the next decade, EmaarÃ¢â¬â¢s plan is to develop and manage around 100 hospitals each with 200 bed capacities and super medical specialities added in key centres. 

In just eight years, Emaar has dominated the UAE property market and created new architectural benchmarks for global property developers while providing high quality homes for a booming population. With its reputation for experience and commitment, and a passion for improving peopleÃ¢â¬â¢s lives, Emaar sees a vision of the future, with an investment in today.


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## Neo

Tuesday July 11, 2006 

ISLAMABAD: Pakistan has initiated negotiations for signing an agreement with France for civil nuclear technology due to its growing energy needs. 
Addressing weekly press briefing on Monday, spokesperson of foreign office said due to growing economy of Pakistan the country needs more energy therefore we have started talks with France for obtaining civil nuclear technology. 

She said talks on civil nuclear technology agreement with France are in progress because France is the major country building Nuclear Power Plants and we have already informed Washington about this. 

When asked about the tragic incident of PIA fokker crash in Multan, she said I have no knowledge of casualty of a foreigner in the incident. Forty-five passengers on board PK-688 enroute from Multan to Lahore died in the crash near Multan. 

Citing deal of F-16 fighter jets with US, she made it clear that the technology of the F-16 will not be transferred to any other country. The matter is in the hand of US Congress and American administration has assured us that the deal will be finalized. 

US opposition has not opposed the sale of F-16s to Pakistan and we are hopeful US congress will finalize the deal within a month. 

When asked about the price of F-16, the spokesperson said she had no idea about it. 

Commenting on the upcoming meeting between the foreign ministers of Pakistan and India, she said Pakistan has not extended any agenda to India neither she has any knowledge about Indian Prime Minister Manmohan SinghÃ¢â¬â¢s visit to Pakistan. 

Citing concern over presence of Afghan refugees in Pakistan, she said Pakistan wants peaceful repatriation of Afghan refugees. She said Pakistan wants peace in Afghanistan because it is in the best interest of the region. 

Referring to election in Azad Jammu and Kashmir, she said there has been no interference from Islamabad in the polls. The election in AJK are held as per constitution of Azad Kashmir and if someone has some objection over it then they should talk about it with AJK government. 

Commenting on the visit of Foreign Minister Khurshid Mahmood Kasuri, she said foreign minister would hold talks with US Secretary of State Condoleeza Rice on several issues pertaining from bilateral, regional and international importance. Afghanistan situation will be focal point of their talks. 

On a query, the spokesperson said Pakistan condemns the Israeli attacks on innocent people of Ghaza because Israeli atrocities have augmented the miseries of the Palestinian people and international community must look into this humanitarian crisis. 

Responding to another question, she said the electoral process of UN Secretary General will begin from July 15 but so far nobody has come forward to contest the seat and Pakistan has not decided about its candidate. 

Commenting on Pakistan-Iraq relations, she said a ministerial delegation under Minister for Religious Affairs Ijaz ul Haq will visit Iraq to discuss promotion of relations with Iraqi government including the affairs of Holy Places with the Baghdad.


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## Neo

Tuesday July 11, 2006 

ISLAMABAD: The government of Pakistan Monday signed an agreement with the World Bank amounting to US$ 22 million for financing the project of Balochistan Education Support Program in the province of Balochistan in Economic Affairs Division. 
A statement issued by the Economic Affairs Division stated that the agreement was signed by Khalid Saeed, Secretary Economic Affairs Division on behalf of the government of Pakistan and Qayum Nazar Changezi, Additional Chief Secretary, government of Balochistan on behalf of the government of Balochistan while John W Wall, Country Director, World Bank signed the agreements on behalf of World Bank at Economic Affairs Division. The terms and conditions for the Credit will remain as per the World Bank standard i.e maturity period of the credit is 35 years having a grace period of 10 years. Government of Pakistan has to pay service charges @ 0.75 % and commitment charges @ 0.5 % per annum. 

The objectives of the proposed Balochistan Education Support Program (BESP) are to promote public-private and community partnerships to improve access to quality primary education, in particular for girls. The project design envisages Balochistan Education Foundation as an apex body working with Implementing Partners (Ips) to implement the project activities. Project components consists of (a) Establishment of Community Schools in Rural Areas (US$ 13.9 million), (b) Support to Private Schools (US$ 2.1 million); and (c) Capacity Building of BEF and Ips, Parent Education and Teachers (US$ 4.2 million). 

The project will support education service delivery models through partnerships with non government and low-cost private sector providers. It is different from traditional investment projects as GoB will provide the proceeds of the Credit to the Balochistan Education Foundation (BEF), a semi-autonomous apex financing body with the mandate of supporting public-private and community partnerships in education to improve service delivery and to improve access to quality education, in particular for girls.


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## Owais

*Wapda given Rs 29 billion more under PSDP* 

ISLAMABAD (July 12 2006): In a bid to help thwart ongoing power crisis, the Planning Commission has made available Rs 29 billion to the Water and Power Development Authority (Wapda) under the Public Sector Development Programme (PSDP) for upgradation of its system, besides establishing a 500mw thermal power project in Punjab on fast track basis.

These financial resources will be made available to Wapda in addition to its share in the PSDP for 2006-07. Sources said the commission has ensured all-out financial support to Wapda to help it revamp existing power production and distribution system, besides establishing more power plants to cater to ever-increasing energy needs in future.

Setting up a 500mw thermal power project in Punjab is part of Wapda's long-term policy. The project will cost Rs 18 billion and would be completed in June 2008.

Planning commission deputy chairman Dr Akram Shaikh met Wapda chairman Tariq Hameed in Lahore on Monday and informed him about the availability of additional financial resources.

Sources said the Wapda chairman gave a detail presentation to the planning commission deputy chairman, covering total power production capacity of Wapda and consumption in 2005-06 and future demand.

According to the presentation, Wapda's power consumption showed 11 percent increase in 2005-06 against only 6 percent in 2004-05. However, parity in power consumption and industrial growth showed discouraging trends in 2005-06.

The presentation indicated domestic and commercial use of power increased by 12 and 18 percent in 2005-06, respectively, whereas, industrial power use declined to 7 percent. A big jump of power use by domestic and commercial sectors is indicative of unproductive use of energy, as its contribution in industrial growth and subsequently in GDP is always very marginal. Sources said Wapda is studying different options to change the equation for optimal use of power for productive purposes.

Sources said Wapda is also undertaking a massive repair and maintenance programme of its existing facilities to enhance its efficiency and plug leakage. It will also install capacitors in Lahore, Gujranwala and Multan regions to enhance capacity of its system. The programme will be extended to other regions in the second phase. The first phase will cost $20 million and it will help the authority get 150mw additional power in a short span of six to nine months.

Sources said Wapda will submit detail programme to the planning commission for upgradation of its system, besides completing new thermal power plant projects on the fast track basis.


----------



## Owais

*300,000 tonnes shortfall likely in rice export* 

KARACHI (July 12 2006): The country's rice exports are likely to suffer a shortfall of over 300,000 tonnes due to the 30 percent expected decline in Sindh's rice production alone for the next crop season starting in September.

The prediction regarding less rain and shortage of irrigation water that accumulates to a 40 percent water shortage is likely to hit the rice crop in Sindh and a decline of 900,000 tonnes in the production is feared as compared to the last year.

These views were expressed by Haji Abdul Majeed, Chairman, Rice Exporters Association of Pakistan (REAP) in his presentation given during the meeting of Federal Export Promotion Board presided over by the Prime Minister Shaukat Aziz on Saturday.

He said that the old seeds of Irri-6 are producing less yield and the growers are facing heavy input cost due to the price hike of fertiliser, pesticides, diesel, electricity and seed cost.

He said that the middle traders are getting the benefit as they squeeze the farmers, millers and traders. The losers are farmers and exporters. Farmers and millers would get a better price if they work through intermediary or middlemen who make money while supplying input and taking away rice at lower rates. Chairman Reap said that the rice export sector is ignored completely and even in the budget for the year 2006-07.

He suggested that a central market should be established urgently where growers and millers bring paddy and white milled rice to Karachi where warehousing is urgently required. He said that the growers and millers could get a better price if they bring their rice to Karachi at a certain place by eliminating the middlemen.

He demanded of the government to allow import of parboiled plants without duty and sales tax. He also demanded for handing over the Rice Research Institute Dokri to the REAP for research work of rice and the provision of place for laboratory.

He also demanded for the provision of 500 acres of land for rice exporters to store rice in addition to warehouse as well as land to farmers and millers. He suggested that warehouses should be controlled/supervised by Zarai Tarqiati Bank as the lender.

He informed the meeting that the Reap has achieved the target of $one billion of rice exports as it has exported over $1.12 billion worth of rice including nearly 900,000 tonnes of basmati for first time in the history.


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## Owais

*Fate of Chinese cement still undecided* 

KARACHI (July 12 2006): Despite the elapse of a month, the fate of imported cement is still undecided as the Central Board of Revenue (CBR) has clearly conveyed to the importers that their detained Chinese cement would not be released. However, the importers are hoping that they would manage to convince the CBR over the quality issue of the cement.

The commercial importers are still confident that their imported commodity possesses good quality and was manufactured under the strict international standards. However, the stance of the custom authorities is also very clear that the samples of the cement imported from China do not conform to the specifications prescribed under the national standard PS: 232 of cement as applied in Pakistan, according to Pakistan Standards & Quality Control Authority (PSQCA).

The importers are also waiting for the announced subsidy of Rs 60 per 40 kg bag by the federal government in April last, which they say, has not been cleared despite submission of all the necessary documents.

"The issue of subsidy is in the process and we are hoping to get it shortly, however, we have sold all the stocks of the imported cement and preparing to place some more orders in China," said a leading importer on the condition of anonymity.

However, the public notification issued by the Ministry of Industries, Production and Special Initiatives (MoIP&SI) on April 28, reads, "As per ECC decision in case No ECC-69/4/2006, a freight subsidy of Rs 60 per 50kg bag on imported cement has been allowed in order to improve the supply of cement in the domestic market thereby reducing its price."

It said that the importers could lodge their claims, along with the documents including invoice, copy of contract/LC, bill of entry/GD form, truck/railway receipt, etc.

The notification said that the commercial bank would examine, process, recommend and forward, the claim within three working days of its receipt, to concerned State Bank of Pakistan, BSC Field office, for payment.

"State Bank of Pakistan, BSC Field offices, on the basis of the bank's certification, will debit relevant head of Government Account and will credit the bank's account within three working days of receipt of claim from the bank for onwards disbursement to the concerned importer immediately," it remarked. Sources said that a very few importers are still interested in bringing in the Chinese commodity, but also fear that the custom authorities may detained their cement despite having quarantine and other quality standard certificates.

"We have verbally placed some orders but still meticulously observing the current situation," an importer said, adding that once the detained commodity released, a few importers would make their deals on papers.

"I don't know why the customs authorities had detained the cement which is used by the countries like the United States, Afghanistan, Hong Kong as well as countries in the Far East and Middle East," he added.

According to sources in the Customs, the government is insisting on re-testing the samples. Efforts are being made to hush up the PSQCA's report as one of the importers commands vast influence in the corridors of power and is endeavouring hard to ensure that the consignment of cement, held up at Karachi port, is cleared, they said.

Some traders are of the view that the imported cement was quite expensive when compared to its quality, however, the importers stood firm and dispelled the impression, saying that the 50 kg bag of imported cement was tagged between Rs250-Rs270 per bag.

On the contrary, the private importers have also thrown allegations on the local cement manufacturers, saying that a strong lobby got activated the day when the government had announced to import cement from different countries, aimed to contain the skyrocketing domestic cement prices.

"On one hand, they (local cement manufacturers) do not only enhance their production capacity but also raise their products' prices for no reason," a cement importer regrettably said.

Market sources said the detention of the cement had adversely affected the import process. Because some ten ships which were ready for the departure from Chinese port Long Kou, were given an order to stop and offload as the Pakistani importers immediately cancelled their deals when they were informed that a ship MV Uthai Navy had been detained in Pakistan when reached here.

The commercial importers of cement earlier estimated the local market demand of around 600,000 tonnes and were mentally prepared to book the commodity at the rate of $65-$70 per tonne, however, when the customs detained the second consignment of Chinese cement, they all backed-off.


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## Owais

*Circular issued for computing income tax on salaried class* 


ISLAMABAD (July 12 2006): The Central Board of Revenue (CBR) has issued an explanatory circular for computing income tax payable by the salaried class for the 'tax year 2007', and deducting of advance tax from salary for the tax year starting from July 1, 2006.

The Board issued Income Tax Circular 3 of 2006 on Tuesday to explain the taxation on salaried persons including taxation on motor vehicle/accommodation provided by the employer, quoting different examples to explain the levy.

A salaried taxpayer means where salary constitutes more than 50 percent of the total income. All perquisites, allowances or benefits, (excepting those covered under Part-1 of the Second Schedule of the Ordinance) would be included in the salary and rate of tax prescribed in Part-1 of the First Schedule shall be applied for the tax year 2007 on the gross figure. Tax in the case of a salaried taxpayer shall be computed in accordance with sections 12,13 and 14 of Income Tax Ordinance 2001, read with rules 2 to 7 of Income Tax Rules 2002.

According to the Circular, the value of accommodation provided by the employer to the employee shall be taken as the amount which the employer would have paid to the employee in case the accommodation was not provided to him. In other words, for the purpose of calculation of value of the perquisite of housing, the amount of house rent that would have been paid by the employer (if the house was not provided) shall be included in the salary for tax purposes.

However, the value taken for this purpose will not be less than 45 percent of the minimum of the time scale of the basic salary or the basic salary where there is no time scale.

Explaining the basic exemption threshold, the Board has elaborated that the basic exemption for tax year 2006 is Rs 100,000. This has been enhanced to Rs 150,000 for the 'tax year 2007'.

The tax slabs have also been revised through Finance Act, 2006. These slabs shall be applicable for tax year 2007. For withholding purposes, these shall apply to salary paid from July 1, 2006.

According to the revised slabs, where the taxable income does not exceed Rs 150,000, the rate of tax would be zero percent;

-- where the taxable income exceeds Rs 150,000 but does not exceed Rs 200,000, 0.25 percent;

-- where the taxable income exceeds Rs 200,000 but does not exceed;

-- Rs 250,000, 0.50 percent; taxable income exceeds;

-- Rs 250,000 but does not exceed;

-- Rs 300,000, 0.75 percent; taxable income exceeds;

-- Rs 300,000 but does not exceed;

-- Rs 350,000, 1.50 percent; taxable income exceeds;

-- Rs 350,000 but does not exceed;

-- Rs 400,000, 2.50 percent; taxable income exceeds;

-- Rs 400,000 but does not exceed;

-- Rs 500,000, 3.50 percent; taxable income exceeds;

-- Rs 500,000 but does not exceed;

-- Rs 600,000, 4.50 percent; taxable income exceeds;

-- Rs 600,000 but does not exceed;

-- Rs 700,000, 6 percent; taxable income exceeds;

-- Rs 700,000 but does not exceed;

-- Rs 850,000, 7.50 percent; taxable income exceeds;

-- Rs 850,000 but does not exceed;

-- Rs 950,000, 9 percent; taxable income exceeds;

-- Rs 950,000 but does not exceed;

-- Rs 1,050,000, 10 percent; taxable income exceeds;

-- Rs 1050,000 but does not exceed;

-- Rs 1,200,000, 11 percent; taxable income exceeds;

-- Rs 1200,000 but does not exceed;


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## Owais

Cont..............

-- Rs 1,500,000, 12.50 percent; taxable income exceeds;

-- Rs 1500,000 but does not exceed;

-- Rs 1700,000, 14 percent; taxable income exceeds;

-- Rs 1700,000 but does not exceed;

-- Rs 2000,000, 15 percent; taxable income exceeds;

-- Rs 2000,000 but does not exceed;

-- Rs 3,150,000, 16 percent; taxable income exceeds;

-- Rs 3,150,000 but does not exceed;

-- Rs 3,700,000, 17.50 percent; taxable income exceeds;

-- Rs 3,700,000 but does not exceed;

-- Rs 4,450,000, 18.50 percent; taxable income exceeds;

-- Rs 4,450,000 but does not exceed;

-- Rs 8,400,000, 19 percent and where the taxable income exceeds;

-- Rs 8,400,000, the rate of tax would be 20 percent.

For the taxation of motor vehicle provided by the employer, the addition on account of motor vehicle provided by the employer to the employee shall be calculated in the following manner:

Where motor vehicle is used partly for personal and partly for business purposes: In case the motor vehicle provided by the employer is used partly for personal and partly for business purposes, the amount to be included in the salary on this account shall be 5 percent of cost to the employer for acquiring the motor vehicle or the fair market value of the motor vehicle at the commencement of the lease (if the motor vehicle is taken on lease by the employer).

Where motor vehicle is provided exclusively for personal or private use: In case motor vehicle provided by the employer is used exclusively for personal or private use, addition in income will be made as under: Where motor vehicle is owned by the employer, 10 percent of cost to the employer for acquiring the motor vehicle or where the motor vehicle is taken on lease by the employer, 10 percent of fair market value of the motor vehicle at the commencement of the lease.

The circular has clarified that any amount received as flying allowance by the pilots, flight engineers and navigators of Pakistan armed forces, Pakistani airline or Civil Aviation Authority (CAA) and Junior Commissioned Officers or other ranks of the armed forces shall be taxed at the rate of 2.5 percent as a separate block of income.

The circular has also issued procedure for the adjustment of tax liability of salaried taxpayers by employers being withholding agents.

In accordance with the guidance embodied in Circular No 18 of 2004 every employer, while deducting income tax payable on the income chargeable under the head 'Salary' of its employees, is allowed to make such adjustments, as may be necessary, for any excess deduction or deficiency arising out of any previous deduction or failure to make deduction during the 'tax year'.

A withholding agent is allowed to make adjustments on production of the documentary evidence by an employee regarding income tax withheld along with motor vehicle tax in respect of motor vehicle registered in employee's own name and telephone bill as subscriber of telephone.

The Circular added that a full-time teacher or a researcher, employed in a non-profit education or research institution recognised by Higher Education Commission (HEC), a board of education or a university was entitled to a benefit, under the Ordinance 2001 and his tax liability stood reduced by an amount equal to 75 percent of tax payable on his income from salary.

This concession has now been extended to full-time teachers and researchers employed in government training and research institutions also, the Circular added.

*Salary Circular 2006 *


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## Owais

*Forensic report on KSE crash in three months: Shaukat* 


ISLAMABAD (July 12 2006): Prime Minister Shaukat Aziz on Tuesday said that forensic accountants were investigating the March 2005 crash of Karachi Stock Exchange and would submit a report in three months. "Strict action will be taken against individuals or organisations found involved," Aziz said in an interview to a private television channel.

He said that market corrections were not a strange phenomenon in the stock exchanges as all international markets see ups and downs, since these were globally linked up.

He said the stock exchanges of Turkey fell by 20 percent, Dubai and Kuwait by 30 percent and India by 40 percent recently. The Prime Minister said Justice Saleem Akhtar had been appointed to head the Task Force to investigate the KSE's last year's crash.

He said that on his directives the report, submitted to the Securities and Exchange Commission of Pakistan (SECP), was published on the internet the same day on which it was released, and it did not mention any names.

"It is not justice to blame any person without any proof as the report does not name anyone and as soon as the forensic accountants complete their report, legal action will be taken against those found responsible," he said, and added "Let the facts speak for themselves."

When asked whether he had any investments in KSE, the Prime Minister said "I, as a matter of personal policy, do not invest in the country I work; this is my principle, and I have worked very hard and all my assets are known."

When asked why he did not invest in Pakistan, he said, "Had I done so, you would have said the Prime Minister was running his own business." He said, "I have no factories, no shares; everything I have has already been declared."

About the rumours that strong cartels were behind such scams, the Prime Minister said: "No one is above the law...if anyone violates, government will not make any distinction and they will face the music."

He said the government was pursuing the policy of de-regulation. However, he made it clear that it does not mean abdication. "The government will continue to make the policies; the independent regulator will monitor. and the private sector will do the business," he added.

About Supreme Court's decision on the sale of Pakistan Steel Mills, the Prime Minister said the government fully respects the decision and was waiting f or the detailed judgement. "We will only take a decision that is in national interest," he added.

He said the government was already working on the formation of the Council for Common Interests (CCI) and after Court's short order it was announced last week.

"The privatisation process will continue, under the guidance of the Supreme Court transparently," the Prime Minister said. He made it clear that the objective of privatisation was not to sell the industry, but to improve the working to bring about necessary improvement.

He cited the example of award of two cellular licences of US $290 million each through open bidding that was shown live on television. About the sugar crisis in the country, he said the high prices were linked to the increase in international market and dismissed the 'conspiracy theories' in this regard.

"It is basically a matter of demand and supply, we acquired more sugar, subsidised it and have been able to stabilise the prices." He said there were enough stocks of sugar in the country and were being sold through a network of 1000 Utility Stores and franchised stores.

He said the National Accountability Bureau investigates only in cases when some personal interests are involved, but this matter relates to demand and supply


----------



## Owais

*Company formed to channelise FDI: Qatari adviser meets Prime Minister* 

ISLAMABAD (July 12 2006): A new investment entity "Qatar Diar Pakistan Company" has been formed to channelise foreign direct investment to Pakistan, especially in energy, telecommunication, development of IT cities, mega real-estate development projects, construction of five-star hotels and medium to high quality housing schemes.

This was stated by Qatari adviser on investment Nasir Al Ausari during his meeting with Prime Minister Shaukat Aziz at the Prime Minister house here, on Tuesday.

Appreciating formation of this investment company, the Prime Minister invited Qatar to participate in Pakistan's privatisation programme, infrastructure development, construction of Islamabad airport and deep-water terminal at Karachi Port Trust.

He also invited Qatari investors to invest in sectors like cement manufacturing, life insurance, Islamic banking and livestock & dairy development.

He said Pakistan greatly values its relations with Qatar, which are based on common faith, values and a shared perception on international issues and are growing with the passage of time.

The Prime Minister said Pakistan is an ideal place for foreign investors due to its consistent growth rate ranging between 6-8 percent, expansion in middle-class and significant rise in per capita income.

"We offer a level playing field to both local and foreign investors and have introduced a number of reforms allowing foreign investors to transparently invest in Pakistan and repatriate their capital and profit without any restriction," he said. Ausari informed the Prime Minister that as a result of transparent and stable economic policies coupled with consistent growth in the economy, Qatar looks toward Pakistan as a destination for its investment.

He said Qatar is also interested in establishing power plants in Pakistan running on gas imported from Qatar.

He said Qatar would soon send a high-powered team to Islamabad to evaluate potential areas of investment in Pakistan.

He also showed interest in establishing an airline service within Pakistan.

In the backdrop of Qatar's deputy prime minister's recent meeting with President Musharraf and Prime Minister Shaukat Aziz, he said close links between the two countries would lead to Qatar's increased investment in Pakistan.

The meeting was attended by privatisation minister Zahid Hamid and senior government officials.


----------



## Owais

*Products quality: government to set up Asian Institute of Standards* 

ISLAMABAD (July 12 2006): The government has decided to establish Asian Institute of Standards (AIS) to maintain quality of products as per specified standard set by the regional countries and meet broader needs of the society, including consumers, sources in the science and technology ministry told _Business Recorder _here on Tuesday.

They said the ministry would initiate negotiations in this regard with the member countries of the Asia Co-operation Dialogue (ACD) after the approval of the federal cabinet, which is scheduled to meet on Wednesday (today) with Prime Minister Shaukat Aziz in the chair.

The fourth meeting of ACD countries held two months ago at Islamabad to discuss the vistas of co-operation in the field of standardisation and quality assurance among the members decided that ACD countries would increase efforts for the harmonisation of standards amongst the members of the organisation with a view to establishing AIS for development, manufacturing and supply of products and services more efficiently, safer and cleaner, the sources added.

The proposed AIS will act as an organisation in which a consensus could be developed on solutions that meet both the requirements of regional governments' local standards, businesses and boarder needs of the society consumers.

Sources said the science and technology ministry has prepared a Mutual Recognition Agreement (MRA) of co-operation amongst the member countries in the field of standardisation of quality.

They also said the ministry has obtained concurrence of foreign affairs and law ministries before the submission of the proposal to the federal cabinet.

"As the cabinet clears the proposal, the ministry will start negotiations with the ACD member countries on MRA and final agreement," the sources said, adding that after developing consensus the mutually prepared pact would be submitted to the cabinet again.

After the establishment of AIS under the umbrella of Pakistan Standard and Quality Control Authority (PSQCA), the quality of products would be strictly monitored, the sources said.


----------



## Owais

*Mango export may decline by 20 percent* 

KARACHI (July 12 2006): Pakistani mango export target set for the current season is in jeopardy as the country is consistently missing export orders due to a shortage of the crop's arrival from upcountry, sources said. The fruit, due to the deterioration of the crop this season, is likely to lose around 20 percent of its global export market.

The mango exporters of the country might not achieve last year's export figure of Rs 72 million and a shortfall of Rs 14 million is predicted in the export turnover of the fruit as compared to the previous year.

The total mango production in the year 2005 was 1674 thousand tonnes, while the production for the current year is estimated at 1350 thousand tonnes, said Mohammad Iqbal, Chief Operating Officer, Pakistan Horticulture Development and Export Board (PHDEB).

He said that the persistent cold wave at flowering time in Punjab damaged the florescence thus, adversely impacting the fruit production.

The relatively young orchards were more affected and the inclement weather further compounded the problem. "The extent of damage ranged from seven to 14 percent while the average damage is estimated at 20 to 25 percent in Punjab," Iqbal informed.

Alternate bearing is another reason, as last year an extraordinary crop was reaped that had an adverse impact on this year bearing and the resultant production.

A leading mango exporter and Director of Iftikhar Ahmad & Co, Waheed Ahmed said that about 60 percent of the mango crop had been destroyed in the country due to which the exporters were unable to meet the export orders.

At the start of the season the arrival of crop from Punjab and Sindh was not that low and the initial orders were met. Since only one and a half month is remaining, the exporters are faced with the shortage of the commodity and as the law of demand and supply operates, the shortage of supply against the demand has resulted has increased prices," he said.

Last year a bucket of 12-kg mango cost Rs 160 and now the price of same quantity of different varieties has gone up to Rs 320, he said and added that even a couple of days back the bucket's cost was just Rs 250, he added.

There has been a drastic decline in the export shipments in the past few days that have fallen by approximately over 50 percent.

"Now, we are able to ship only one container to the destinations, where we used to dispatch four containers a day just a week ago," Waheed said.

Another leading mango exporter, Mohammad Imtiaz said that severe weather conditions in the Punjab had hit the mango crop while in Sindh, the affect was quite nominal.

Mango is the second major fruit crop in Pakistan, which is grown on an area of around 94 thousand hectares and the production hovers around 1600 thousand tonnes.

Multan, Bhawalpur, Muzaffargarh and Rahim Yar Khan are the main mango producing districts of the Punjab while in Sindh it is mainly grown in Mirpurkhas, Hyderabad and Thatta districts.


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## Owais

*'Double pay' lower staff names not yet declared by CBR* 

ISLAMABAD (July 12 2006): The Human Resource Management (HRM) Wing of CBR, even after passage of two months has not notified the names of CBR employees (below Grade 17), who have been selected for specialised positions with double pay package.

Sources said that test and interviews of CBR staff were completed two months back under 'internal job posting' by the HRM Wing. It is a procedure to select the tax officers who are eligible to operate at the reformed units.

In case of tax officials (Grade 17 and above), notifications of double pay package were issued in few days after completion of all legal formalities. But no progress has been seen in case of lower staff. Even the staff working with the reformed wings was not given any extra benefit.

Sources said that the Board has not given double pay package to the staff working in the reformed wings despite approval by Finance Division. The President had sanctioned special allowance equal to 100 percent of the basic pay to officers/officials posted in Large Taxpayers Unit (LTU), Lahore and Medium Taxpayers Units (Rawalpindi, Karachi, Quetta, Peshawar and Faisalabad) and reformed sections of CBR (HQ), Islamabad.

These functions included Human Resource Management (HRM) Wing, CBR (including Sub-office ie Rawalpindi, Peshawar, Lahore and Karachi); Tax Policy and Reform (TP&R) Wing, CBR (including Regional Tax Offices); Information Management System (IMS) Wing, CBR; Fiscal Research and Statistics (FRS) Wing, CBR; Audit Wing, CBR and Facilitation and Taxpayer Education (FATE) Wing, CBR.


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## Owais

*KSE index gains 152 points* 

KARACHI (July 12 2006): Trimming in share values allowed several punters and players to execute fresh deals in choice scrips, helping the index to rebound sharply. The KSE-100 Index closed at 9,656 levels up 152 points from the previous closing of 9,504. Volumes in the ready market were 130 million shares compared to 127 million shares recorded yesterday.

However volumes in the future market were 64 million shares against 65 million shares recorded in previous trading session. The index opened on a negative note recovering soon after to touch its high at 9681. This was followed by another brief recessionary period whereby the market fell by almost 100 points from its peak making an intra-day low of 9438.

Buying prevailed in the market predominantly due to an oversold situation. Major activity took place in the banking, E&P and cement scrips. NBP, BOP and FABL reacted belatedly on NIT's dividend pay out and surged by Rs 7.75, Rs 2.15 and Rs 1.2 respectively. E&P sector also recovered where OGDC took the lead and contributed 25 points towards the market's climb.

Ahsan Mehanti, chief executive officer at Shahzad Chamdia Securities said that tremendous decline in share values prompted some fresh buying from financial institutions and leading investors.

Upcoming results hold promise of a handsome rally, confusion related to National Standing Committee outcome that if done away hurriedly would boost the sentiment. The values are attractive and PE is also cheaper, the market men needs comfortable environment to play long.

Hasnain Asghar from Aziz Fidahusein said that the value temptation allowed the index to find support after weak and low volume opening. Although turnover stayed low through out the session presence of support in main stocks invited an across the board buying interest towards the end.

Technically index will continue to find support around 9550-9557 while over head resistance stays at 9770-9777, rumours regarding the ongoing inquiry of March 05 crisis can however disallow the market to stabilise, it is therefore recommended to focus on main stocks likely to come up with healthy pay outs for both trading and placements.

Reduction of number of participants have led to a decrease in turnover, with institutions following the sentiment index is not likely to register an adventurous move, profit taking with a view to reduce cost is therefore not a bad option, while trading positions should not be kept for more that three sessions as the built in nervousness is likely to stay for a while.

Rabia Hussain from JS said that throughout the day market remained range bound with low volumes but activity was seen near the end of the trading session when bargain hunters entered the market and availed the opportunity. Market made an intra day high of 177 points. Mainly buying was seen in DGKC, Lucky Cement, MCB and National Bank. Major gainers were MCB closing at Rs 217.50 up Rs 9.90 and NBP closing at 223.00 up Rs 7.75. Today out of 317 stocks traded 159 closed on positive note.


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## Owais

*Equities move both ways on LSE* 

LAHORE (July 12 2006): Equities moved both the ways on the Lahore Stock Exchange (LSE) but finally settled in the positive zone amid ascending transaction volume mainly on account of institutional interest in selective shares.

The LSE-25 index improved by 89.34 points, closing at 4194.33 against 4104.99 of Monday while trading turnover increased to 30.549 million shares as compared to 26.975 million shares traded a day earlier. Shares of oil, gas, banking and cement sectors helped market recover its earlier losses while Kapco remained under pressure.

The market which opened on a depressed note remained uncertain due to lacking interest on the part of investors and institutions. However, during last trading hours, the market started improving its position due to institutional buying which helped market closure in plus column. The ongoing SECP-brokerage tussle forced the investors to stay away from the buying course. The institutions, particularly National Investment Trust (NIT) came forward to support the market and pushed the market upward.

The experts accounted the redemption from some mutual funds for the bearish move, said Ahmad Nabeel of Invest and Finance Securities while commenting on the market sentiments. There was resentment among the investors and brokers against the SECP investigation regarding March-crisis. What would it (SECP) dig out of the investigation and would it be able to compensate those who had suffered substantial losses, they questioned.

Nabeel was of the view that SECP should introduce long-term policies, otherwise new experiments would lead the market downward. The cement sector still seems to be good to yield margin to the investors because the Indian or Chinese cement has no threat to the local companies. Indian companies are running their units on 90-percent capacity against 85-percent of local companies.

He further said that oil sector is overall good for investment except Pak Oil Field whose book value may face loss on equity basis under the International Accounting Standard-28. However, its earning on enhanced capital is likely to stay at Rs 33, he said, adding that cement and oil sector would play vital role in market sentiments.

Advancing stocks were ahead of declining ones as out of a total of 94 active issues, 42 companies registered gains, 2 went down while 50 stayed glued to their previous levels. MCB Bank appreciated its value by Rs 12.75, National Bank gained Rs 9.40 while Pak Oil Field and PPL were up by Rs 8.00 and Rs 5.50, respectively. In the minus column, Kapco lost Rs 0.45.

National Bank was the market leader whose 5.130 million shares changed hands followed by Fauji Cement Company with total transaction of 4.868 million shares.


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## Owais

*ISE index stages recovery* 

ISLAMABAD (July 12 2006): Equities recovered under the lead of hot favourite at the Islamabad Stock Exchange (ISE) where bulls snatched the floor from the bears amid increase in index. ISE Ten index showed a recovery of 38.22 points, as the ten index moved from 2,428.38 to 2,466.60 points.

Total 109 companies participated in buying and selling activity. Majority of stocks (71) closed in positive territory, 38 showed minus signs, whereas zero companies remained pegged to their previous levels.

The turnover of OGDCL was 34,800 shares as compared to previous volume of 78,700 shares. The volume of Pakistan Petroleum was 18,800 shares as compared to previous turnover of 41,900 shares. The volume of Su Northern Gas was 6000 shares.


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## Neo

RAWALPINDI (July 12 2006): President General Pervez Musharraf has reiterated his resolve to overcome the prevailing energy crises by taking all possible measures on war-footing. The President called upon both national and multinational entrepreneurs to come forward and provide support to government efforts in overcoming the energy crises.

He was talking to a delegation comprising representatives of national and international power companies who called on him. The members of the delegation offered various solutions to the prevailing energy crisis in the country and discussed various emergency power supply projects with the President for ensuring supply of power in the country in emergency situations.

The President said that the government was well aware of the energy requirements and was striving to reduce the gap between the demand and supply of energy resources. He said that the government would welcome the private sector to meet the rapidly increasing energy requirements of the country. The delegation comprised David Wolter of Wolters Power International, John Canpaion of Alftom Power Rental, and Iqbal Z Ahmed of Associated Group.


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## Neo

WASHINGTON (July 12 2006): Foreign Minister Khurshid Kasuri on Monday evening said in his meetings with senior US officials, he expressed gratitude of Pakistan in respect of F16s, which has been notified to Congress. "This deal will go through," he said.

"It is quite a big package. It is between 4 and 5 billion dollars, details of which are being worked out." Responding to a newsman's query, Kasuri said the US administration "have been very positive, and they have notified to Congress. Some 36 aircraft are available: 18 new, and with an option to buy another 18 new aircraft; 26 old ones were part of this notification. They have to locate those, and they will have to be upgraded also".

"We are interested in a certain number of aircraft," he said without specifying, and added it covers munitions also valuing 4.3 million dollars. He said midlife upgradation is called for our existing fleet of 34 F16s. He stated that before the October 8 earthquake struck, "we were looking for a much larger package, we reduced the number."

The US is, however, prepared to sale "as many as we want".

The Foreign Minister disclosed that "now, we are working the financing arrangement. This is what we have been discussing today. We need some sort of financing arrangements, which we are discussing.

We are paying, what we need is financing arrangement, and this is what we need to look at and our finance people and the US side would be looking at". It is a government-to-government level discussion, he said. "So, we will work out on a lot of details. We are looking for the best financing arrangement for these aircraft."

"We explained that we had an earthquake and a lot of expenses have gone into that, and we need a more favourable arrangements for payment and we will be discussing the modes of payment," he said, adding "we discussed it with Secretary of State and National Security Advisor".

In the Congress, there is plurality of views, so there could be some objecting voices, may be, but he said that his impression is that it would get through. In his meetings with senior officials, he said, he gathered that they do not expect any hitches, though Congress has different people having their own points of view. "I think, they don't expect any difficulty in getting it through the Congress."


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## Neo

SIALKOT (July 12 2006): Technical Education and Vocational Training Authority is finalising necessary arrangements for the establishment of a full-fledged Institute of Surgical Technology costing Rs 180 million in Sialkot.

The official sources told Business Recorder here on Tuesday that the step was being taken for tracking the surgical industry on modern manufacturing lines.

The establishment of the proposed institute in this export-oriented city will help the industry in advancement and modernisation of surgical industry and supportive increasing the export. Besides, it will produce technical manpower in the field, which is direly needed at this juncture helping the capacity building of the industry.

The surgical industry is manufacturing about 100 million instruments annually besides the industry is also manufacturing disposable instruments, which constitutes 60 percent of exports and reusable instruments ie 40 percent of the exports.

The surgical industry represents manufacturers and exporters of surgical instruments, dental instruments, veterinary, pedicure and manicure items, tailor scissors, barber scissors and beauty saloon instruments.

The objective of setting up institute of surgical technology to develop the skill of young people as a qualified surgical instrument mechanic as well as to enable the manufacturers and exporters engaged with the industry to improve the standard of surgical instruments.

The step would not only help reduce unemployment graph but also supportive in increasing the overall production of surgical units as well as help in increasing the export volume.

There are about 1,200 small and medium surgical units functioning in and close to Sialkot and according a rough estimate more than 60,000 worker were engaged with the industry.

The Pakistani surgical instruments are most economical in the world coupled with unconditional guarantee of finest quality and world-renowned companies of surgical instruments are entering into joint ventures with Pakistani companies.

The world market for surgical instruments is over US 30 billion and Pakistan's exports currently stand with US 183 million dollars annually, sources revealed.

The surgical manufacturers and exporters were making strenuous efforts for improving the marketing and exploring new venues especially non-traditional markets aimed at doubling the surgical instruments exports, sources added.


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## Neo

ISLAMABAD, July 11: Minister for Industries, Production and Special Initiatives Jahangir Khan Tareen said on Tuesday the establishment of Pakistan Stone Development Company (Pasdec) was indeed a great step forward. It will set up marble cities in the country.

President Musharraf has extended unprecedented support to this initiative and his personal interest has made this company functional so soon, Tareen stated while chairing the first broad meeting of the Pasdec.

Secretary Industries Kamran Rasool, chief executive Smeda Shahab Khawaja, and chief executive PIDC Abdul Bari Khan also attended the meeting, says a press release.

The minister said that as running the affairs of the company would be a great responsibility, a professional organisation manned by competent professionals should be in place for the purpose.

As the focus of Pasdec would be on the NWFP and Balochistan, the company should first set up its outposts in these two provinces, said the minister.

He further said that the establishment of this company would go a long way in developing marble and granite sector in the country. The Pasdec will set up new Marble cities in Islamabad, Noshera and Karachi.

The Pasdec in its first board meeting elected Ehsanullah Khan, an entrepreneur from the NWFP, as its chairman, while Farrukh Munir, Abdul Hameed Sheikh, Faiz-ur-Rehman, Sikandar Jogezai, Farooq Rehmatullah, Kamran Rasool, Shahab Khawaja and Abdul Bari Khan will be members.

Sultan Tiwana, GM Smeda will serve as its secretary. Different committees were also formed to run the company's affairs.


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## Neo

Published: July 12, 2006


Najam Ali, who oversees $380 million in Pakistani stocks and bonds at Abamco and has brought investors double the return of the benchmark stock index, likens his investment strategy to cricket, his favorite sport.

"A really good game is not a one- day match but a five-day test match," said Ali, who manages the biggest private-sector fund in the south Asian nation and has a television by his desk just for watching cricket. "You have to be patient and you have to pick your moments."

You also need to be prepared to lose at times. Pakistan's stock market is the region's most erratic. In the last 12 months, it had the biggest price swings in Asia and was twice as volatile as the Morgan Stanley Capital International Emerging Markets Index. Ali says he should have sold more starting in April amid a rout in shares of developing countries.

Still, his buy-and-hold strategy has paid off. His stake in Pakistan International Container Terminal, operator of a container shipping facility in Karachi, almost quadrupled in the 12 months ended June 30. Shares of Adamjee Insurance, a general insurance company, more than doubled in the period.

The 3.45 billion-rupee, or $57 million, Unit Trust of Pakistan Aggressive Asset Allocation Fund, Ali's biggest open-end fund, returned 73 percent in the period. It outperformed the 34 percent return, including reinvested dividends, of the Karachi Stock Exchange 100 Index.

The Karachi 100 has slumped 19 percent from a record on April 17. The index climbed 54 percent in 2005, making it Asia's best performer after South Korea's Kospi index. It's 4 percent higher this year. The Karachi index recorded volatility of 32 percent in the year ended June 30 compared with 16 percent for the MSCI Emerging Markets Index, according to data compiled by Bloomberg. Volatility measures stock-price swings.

"The Pakistan market has given us superb returns no matter which way we look at it," said Ali, who was an executive director at the Securities & Exchange Commission of Pakistan before he took the helm at Abamco in 2004.

Ali runs six open-end and three closed- end funds open to both domestic and overseas investors. His top five holdings as of March 31 were Faysal Bank, Pakistan International Container Terminal, Pakistan Telecommunications, Attock Petroleum and Adamjee Insurance.

There are 47 mutual funds in Pakistan overseeing 168 billion rupees. That is the equivalent of about 6 percent of the 2.6 trillion rupees sitting in the nation's bank deposits, according to the Mutual Funds Association of Pakistan, which Ali also heads.

Less than 0.1 percent of the nation's 160 million people invest in mutual funds. The number of investors rose 19 percent to 182,663 in the 12 months ended March 31 from a year earlier, according to the association.

Prime Minister Shaukat Aziz said in a May 22 interview that the $118 billion economy would expand at an annual pace of as much as 8 percent over the next five years. The economy grew an estimated 6.6 percent last fiscal year and 8.6 percent in the year ended June 30, 2005, the fastest pace in two decades.

The government said last month it planned to sell shares in state-owned companies on global markets to acquaint Pakistan with international investors, finance the deficit and repay $35 billion of overseas debt.

"The volatility of Pakistan is on the high side among the emerging- market universe," said John Pollen, head of emerging-market stocks at Pioneer Investments Management in Dublin. "Excessive stock sales will have a damping effect on prices." 

Najam Ali, who oversees $380 million in Pakistani stocks and bonds at Abamco and has brought investors double the return of the benchmark stock index, likens his investment strategy to cricket, his favorite sport.

"A really good game is not a one- day match but a five-day test match," said Ali, who manages the biggest private-sector fund in the south Asian nation and has a television by his desk just for watching cricket. "You have to be patient and you have to pick your moments."

You also need to be prepared to lose at times. Pakistan's stock market is the region's most erratic. In the last 12 months, it had the biggest price swings in Asia and was twice as volatile as the Morgan Stanley Capital International Emerging Markets Index. Ali says he should have sold more starting in April amid a rout in shares of developing countries.

Still, his buy-and-hold strategy has paid off. His stake in Pakistan International Container Terminal, operator of a container shipping facility in Karachi, almost quadrupled in the 12 months ended June 30. Shares of Adamjee Insurance, a general insurance company, more than doubled in the period.

The 3.45 billion-rupee, or $57 million, Unit Trust of Pakistan Aggressive Asset Allocation Fund, Ali's biggest open-end fund, returned 73 percent in the period. It outperformed the 34 percent return, including reinvested dividends, of the Karachi Stock Exchange 100 Index.

The Karachi 100 has slumped 19 percent from a record on April 17. The index climbed 54 percent in 2005, making it Asia's best performer after South Korea's Kospi index. It's 4 percent higher this year. The Karachi index recorded volatility of 32 percent in the year ended June 30 compared with 16 percent for the MSCI Emerging Markets Index, according to data compiled by Bloomberg. Volatility measures stock-price swings.

"The Pakistan market has given us superb returns no matter which way we look at it," said Ali, who was an executive director at the Securities & Exchange Commission of Pakistan before he took the helm at Abamco in 2004.

Ali runs six open-end and three closed- end funds open to both domestic and overseas investors. His top five holdings as of March 31 were Faysal Bank, Pakistan International Container Terminal, Pakistan Telecommunications, Attock Petroleum and Adamjee Insurance.

There are 47 mutual funds in Pakistan overseeing 168 billion rupees. That is the equivalent of about 6 percent of the 2.6 trillion rupees sitting in the nation's bank deposits, according to the Mutual Funds Association of Pakistan, which Ali also heads.

Less than 0.1 percent of the nation's 160 million people invest in mutual funds. The number of investors rose 19 percent to 182,663 in the 12 months ended March 31 from a year earlier, according to the association.

Prime Minister Shaukat Aziz said in a May 22 interview that the $118 billion economy would expand at an annual pace of as much as 8 percent over the next five years. The economy grew an estimated 6.6 percent last fiscal year and 8.6 percent in the year ended June 30, 2005, the fastest pace in two decades.

The government said last month it planned to sell shares in state-owned companies on global markets to acquaint Pakistan with international investors, finance the deficit and repay $35 billion of overseas debt.

"The volatility of Pakistan is on the high side among the emerging- market universe," said John Pollen, head of emerging-market stocks at Pioneer Investments Management in Dublin. "Excessive stock sales will have a damping effect on prices."


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## Neo

WASHINGTON, July 11: US Secretary of State Condoleezza Rice underscored the importance of establishing an economic link between Central Asia and India through Pakistan and Afghanistan when she met Foreign Minister Khurshid Mahmud Kasuri, the State Department said.

Briefing journalists on MondayÃ¢â¬â¢s meeting between Mr Kasuri and Ms Rice, the departmentÃ¢â¬â¢s spokesman said both the countries Ã¢â¬Åhave an interest in building up those economic ties from Central Asia down through Afghanistan and Pakistan into IndiaÃ¢â¬Â and Ms Rice and Mr Kasuri Ã¢â¬Åtalked about the importance of developing that economic infrastructureÃ¢â¬Â.

Spokesman Sean McCormack said both Pakistan and Afghanistan also understand that for Ã¢â¬Årealizing the full potential of this economic integration,Ã¢â¬Â they must continue their common fight against terrorism.

The spokesman indicated that the Rice-Kasuri meeting primarily focused on growing tension between Kabul and Islamabad which is affecting the global war on terrorism.

Secretary Rice briefed Mr Kasuri on her recent meeting with Afghan President Hamid Karzai and told him that both Afghanistan and Pakistan have a shared interest in the stability and security and also in economic prosperity of each other, Mr McCormack said.

He said the US was working with Pakistan and Afghanistan to address their security concerns Ã¢â¬Åon trilateral basis,Ã¢â¬Â endorsing the Pakistani position that all issues concerning the war on terror should be discussed in a trilateral forum.

Asked if Ms Rice agrees that Afghanistan and Pakistan should not discuss their differences publicly, Mr McCormack said: Ã¢â¬ÅCertainly, we would encourage them, if they have any differences, to work them out and try to resolve them before they become a matter of public discussion.Ã¢â¬Â

He, however, acknowledged that Mr Kasuri and Afghan Foreign Minister Rangin Dadfar Spanta were Ã¢â¬Åministers in their own right and they are going to speak their mind in publicÃ¢â¬Â.


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## Neo

Tuesday July 11, 2006 

ISLAMABAD: US Ambassador to Pakistan Ryan C. Crocker announced Monday additional support for the Marble and Granite sector working group to build a training center to increase the capacities of its workforce. 
US Ambassador to Pakistan Ryan C. Crocker announced this while visiting representatives of the industry-wide Marble and Granite sector working group. The Ambassador Crocker was in Peshawar to inaugurate the opening of the new USAID office in Peshawar to manage programs in FATA and NWFP. This region has strong economic potential and is becoming a focal area for US Pakistan development. 

He said that now, the industry suffers from inefficient mining techniques which waste resources and do not allow for high quality marble and granite to e produced. As a result, much of the marble and granite produced in Pakistan is not competitively priced. 

The ambassador expressed high hopes for the development of the marble and granite industry in order to directly improve the quality of life of the thousands of people working in the industry in FATA. He said that " US is working to ensure that the FATA region develops through a range of activities that stimulate economic growth especially through provision of better training and worker health services. 

The ambassador also congratulated the marble and granite industry on uniting together to develop a comprehensive and feasible strategy under USAID support. 

Over the past years, the marble and granite SWOG supported by USAID has developed a comprehensive strategy that they presented to President Musharraf. This meeting resulted in $33 million in support from the President for the development of model quarries and the setting up the Ã¢â¬â¢Square BlockÃ¢â¬â¢ company, so named because with upgraded equipment the industry will be producing square block of granite and marble instead of the irregular shapes it produced before. 

SWOG strategy details a plan to reduce wastage from 85 percent to 57 percent and increase product quality. Industry revenues should be increased from the current $ 40 million to $ 2.6 billion by 2015. if this happens, more than 20,000 jobs would be created in FATA and NWFP. 

The working group, which is funded by the US Agency for International Development, is upgrading facilities to make the sector more competitive in the domestic and international markets. 

The ambassadorÃ¢â¬â¢s visit with members of marble and granite cluster took place at a marble plant in Hayatabad, Peshawar at the border of Khyber Agency. 

Chief Executive Officer, small and medium Enterprise Development Authority Shahab Khawaja also participated in the event and spoke to the businessman.


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## Neo

Wednesday July 12, 2006

RAWALPINDI - US Ambassador to Pakistan Ryan C. Crocker has said that Pakistan and United States enjoy deep strategic relations, share common positions on various regional and international issues and the understanding and relations between the two states was strengthening. 

Addressing an award signing ceremony of US State Department initiative of providing English language course for non-elite youth here at Sir Syed Public School for Girls and Boys Tipu Road on Tuesday, US Ambassador said that Pakistan was not only the key ally of United States on international war on terror and drugs but the two states were working with the firm commitment in improving education standards in this part of the world and the overall development in the region. 


The US $ 55,067 English Access Micro Scholarship Programme contract was inked between the Principal of the school Ms Khalida Parveen and US Ambassador Ryan C Crocker. 


Giving details about the programme US Ambassador said,Ã¢â¬Â The programme will not only enhance English language abilities of the participants on a personal level, it will also enable them to participate more successfully in the job market which values communication skills.Ã¢â¬Â 


Ryan C. Crocker said that they were working in close coordination with the government of Pakistan to improve the education standards especially in the backward areas of the country. 


He said that they have opened some 65 schools in the Tribal Areas to enable the children in these remote areas access to quality education. Under the Full-Bright Scholarship Programme hundreds of Pakistan students were benefiting every year he said and added that United States was already contributing around US $ 200 million dollars to the Federal education budget of the country. 


US Ambassador to Pakistan also expressed deep grief and shock over the plane crash near Multan in which some 45 precious lives were lost and said that he had also lost one of his close friend Muhammad Naseer Ahmad Khan Vice-Chancellor of Bahuddin Zakria University in the tragic incident. 


The English Access Micro Scholarship Programme is a US State Department initiative for non-elite youth in over 40 countries around the world. 


Under this programme the Sir Syed Public students will attend a two-hour English teaching class, five days a week, after regular school hours. 


The first access programme in Pakistan was started in 2004 in Lahore and in 2005 in Karachi and Peshawar.After the success of this programme it has been renewed in Lahore with new projects being started in Rawalpindi, Multan and Gawadar.


----------



## Neo

Wednesday, July 12, 2006 

KARACHI: PakistanÃ¢â¬â¢s headline annual inflation rate accelerated in June from May, official data issued on Tuesday showed. 

The consumer price index was up 7.65 percent on the year, compared with a 7.12 percent rise in May, data compiled by the state-run Federal Bureau of Statistics showed. The heavily weighted food and beverages component of the consumer price index rose 7.78% on the year in June, compared with a 5.59% increase in May. 

That component has a weighting of more than 40% in the index. 

House rents - another important component of the CPI - rose 7.90% on year in June, compared with an 8.31% increase in May. 

In the last fiscal year that ended June 30, consumer prices rose an average 7.92%, less than 9.28% a year earlier. 

Ã¢â¬ÅJuneÃ¢â¬â¢s inflation data show that inflationary pressures beginning to re-strengthen, which is a cause for concern,Ã¢â¬Â said Asif Qureshi, head of research at Invisor Securities. 

Analysts, and attributed the rise to increases in domestic energy and food prices. 

The data showed that the government has been to able to keep the inflation below the targeted 8.0% in the last fiscal year. 

Ã¢â¬ÅAlthough the government is able to meet the target, keeping inflation at the targeted 6.5% this year will be a tough task,Ã¢â¬Â Qureshi added. Since July last year, the Pakistan government has been allowing duty-free imports of essential items such as sugar and other commodities to improve supply-side situation and reduce domestic prices. 

In the fiscal 2006-07 federal budget announced last month, the government has also announced various administrative measures to check domestic prices of essential items. It included providing a PKR12.30 billion subsidy on the import of fertilizers and urea, PKR2.5 billion on lentils, PKR5.16 billion on importing sugar, PKR2 billion on the sale of wheat at reduced prices and PKR720 million on the import of cement. dow jones newswires.


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## Neo

KARACHI: The import of coal is on the rise in the country because of growing demand of the cement industry since it switched its plants from fuel oil to coal to reduce the cost of production.

The cement industry is expected to consume 2.8 million tonnes of coal in 2006. The industry used 1.78 million tonnes in 2004 and 2.2 million tonnes in 2005.

Pakistan imports coal mainly from Indonesia, South Africa and China. It has also imported coal from Australia and Russia, but only in little quantities.

Pakistan has coal reserves of around 178 billion tonnes. Coal reserves in Thar alone are estimated at 175 billion tonnes. Pakistan produces 3.2 million tonnes of coal every year, but mostly it is of inferior quality. Miners have to go 500-1,000 feet deep, which increases the cost of production. The cost also rises because of manual labour, which is usually short. There is little use of machinery in coal mining in the country. 

There are three countries in the world having reserves sufficient for next 250 years. These are Pakistan, India and China. But the coal Pakistan produces is of low quality, which has high sulphur content. Besides, the moisture is also high in coal because of which it can be used in power plants, but not cement factories.

Local suppliers of coal are unreliable for cement-makers as they usually fail to deliver the commodity within agreed time. Since cement-makers are pursuing capacity expansion, the consumption of coal in cement plants is likely to rise to 4.5 million tonnes in 2008.

Najeeb Balagamwala, a leading importer of coal for cement industries, said a coal washing plant was being set up in Dhabeji at a cost of Rs50 million with a capacity of purifying 2,000 tonnes per day.

Local coal and imported coal of cheap quality will be washed in this plant, which is expected to be operational by September this year. Work on setting up the plant, which had been imported from the UK, had begun in February.

The increasing dependence of cement plants on imported coal has necessitated the establishment of coal washing plants to produce coal of specific standard, meeting the requirements of cement plants.

The coal washing plant would provide coal with less impurities, reducing the production cost of cement industry. Cement makers have to use expensive imported coal because the locally available coal does not meet their requirement.

The local coal lacks the capability of producing required level of heat and has higher level of sulphur content as compared to imported coal.

Coal is the cheapest source of thermal energy used in industrial sector. It has the potential to replace other expensive fuels such as furnace oil. Cement industry was the first sector to switch over from oil to coal.


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## Neo

Wednesday July 12, 2006 

ISLAMABAD: Prime Minister Shaukat Aziz has claimed that Pakistan has been made a stable country in terms of economy thatÃ¢â¬â¢s why no one will cast evil eye on our country. 
"National kitty has been filled and IMF has also been bid adieu. Rulers in the past used to begging money to run the affairs of the country," Shaukat Aziz told these while addressing National Population Convention in coincidence with International Population Day here Tuesday. 

Minister for population Chaudhry Shahbaz Hussain also spoke on the occasion. 

"The fact is that once President Musharraf has assumed the power, the country has been put on track to economic and social development. The country is heading towards stability," he claimed. 

"Upto $13 billion dollars are reserved in national exchequer. Every year overseas Pakistanis are sending $4 billion in shape of remittances. The sitting government has filled the empty exchequer and now the flow of development will be diverted to masses," he added. 

He promised that special programmes were being chalked out for youths to explore more job opportunities for them. "We will not deprive youth," he remarked. 

He rued that population growth had touched the figure of 153. 54 figure adding that ministry of population was playing significant role to tame the rapidly growing population. 

Speaking on the occasion, the population minister informed that government message to control growing population was reaching to every citizen, which bear fruitful outcome.


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## Neo

KARACHI (July 13 2006): Outstanding balances in Special Convertible Rupee Accounts (SCRAs), a vehicle used to facilitate portfolio investment in Pakistan, during FY06 (July 2005-June 2006) ended up $358 million higher than the level achieved on June 30, 2005.

As always, the largest amount was brought in by US investors who, during FY06, added another $260 million to the level reached on June 30, 2005. Other major players included UK whose balances stood enhanced by $37 million, far less than USA. Hong Kong sprang up as the third positioner, bringing in fresh funds worth $29 million during FY06 and had been excelling UK on some occasions during the course of the year.

The next high balances were enjoyed by Bahrain with inflow of fresh funds amounting to $21.6 million. Other positive inflows ($4 million to $10 million) during FY06 were recorded in the case of Switzerland (up $9.8 million after adjusting outflows from net inflows of $20 million during June alone), followed by Singapore (up $5 million including $2.6 million received during June alone), Kuwait (up $4.6 million) and UAE (up $4 million after adjusting outflows from net inflows of $4.8 million during June alone though during the course of the year sometimes its inflows were second only to USA). Still minor inflows (negligible to $3 million) came in from Sri Lanka ($1.2 million), Guernsey ($0.4 million) and Qatar (less than even $0.1 million).

The largest withdrawals from these accounts, amounting to well over $6 million, occurred in the case of BV Island. Of these, withdrawals worth about $3 million took place during June 2006 alone. During most of the year, Saudi Arabia also withdrew some $4 million once during though otherwise it did not disturb much its accounts.

The only other major withdrawal occurred in the case of Japan--some $2 million--including $0.2 million in June this year. Other minor withdrawals took place in the case of Germany (down $1.5 million) followed by Luxembourg ($0.5 million), Liberia ($0.3 million) and Oman ($0.2 million). Philippines, France and Netherlands also withdrew negligible amounts.

In all, investors from some 20 countries remained relatively more active either by way of bringing in more fresh funds or by way of withdrawing from existing balances. Saudi Arabia was less active, while Bahamas did not disturb its account during FY06.

It is expected that portfolio investment, which stood at $313 million (including USA's $293 million) during July-May FY06 (compared with $141 million including USA's $31 million during July-May FY05) would end up higher, close to some $355 million, by the end of June 2006. Data would become available some time in the first week of August.


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## Neo

KARACHI (July 13 2006): The World Bank (WB) has asked the federal government to update the "National Ports Master Plan" to re-evaluate the role of existing ports in the country. Pakistan should develop a carefully managed strategy for increased competitiveness and enhance global integration aimed at accelerating industrialisation and growth.

According to documents made available to Business Recorder, the WB further said, the cost and service level provided by the internal and external transport systems is just one element of a country's competitiveness.

As tariff levels fall, the economic distance to market (defined as the sum of all time and cost expenditure for moving a consignment to a market, including freight rates, handling cost, transit time, delivery predictability, loss and damage, insurance costs, etc) plays a more critical role in determining competitiveness. While freight rates are still important in the final price of the product, the other elements of generalised costs, such as predictability and reliability, become increasingly important in the composition of total distribution cost.

Improving port infrastructure to international standards, both cargo handling capacities and port draft to accommodate larger size vessels.

An efficient, low-cost trade and transport system, offering high levels of reliability and service standard. This will not guarantee export success and the attraction of large-scale inward direct investment. But the obvious is likely to ensure that participation in modern high value, time-sensitive manufacturing will either be deterred entirely or confined.


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## Neo

ISLAMABAD (July 13 2006): The government is likely to announce Sunday as working day at the ports, rationalisation of port charges, procurement of new cargo handling system, testing/certifcation of commodities through latest equipment, and linkage of terminal operators/airports with Pakistan Automated Customs Clearance System (PACCS) for efficient clearance of consignments.

Sources said that the decisions have been taken in the last meeting of the Trade Facilitation Committee (TFC) constituted under the National Trade Corridor Improvement Programme.

The Ministry of Food and Agriculture will upgrade its laboratories for fast track testing and reporting of the international cargo at the ports. Three departments of the ministry ie animal quarantine, plant protection and seed certification are involved in issuance of certificates at ports.

Sources said that the Civil Aviation Authority (CAA) would purchase latest scanning machines and cargo handling system to expedite clearance process and strengthening security at airports.

It has been decided that the Ministry of Port and Shipping would approach port officials, trade/chambers, shipping lines/agents, terminal operators and freight forwarders to collect data on their present fee structure for rationalising the clearance charges.

On the recommendations of the CBR, the Ministry of Port and Shipping will explore the possibility of making Sunday a working day at ports in consultation with all stakeholders.

Sources said that clearance time under PACCS is already below 5 hours and soon the system would be rolled out to other ports. In this connection, all port officials, terminal operators will ensure compatibility of the IT network with the PACCS. For transfer of information among these organisations, the EDI (electronic data interface) would be developed in consonance with PACCS system.

The Ministry of Ports and Shipping said that ports free storage period has been reduced to 5 days and these arrangement were implemented from July 1, 2006. The port's wet charges (tonnage, pilotage) have been reduced by 15 percent, effective from July 1, by both Karachi Port Trust (KPT) and Port Qasim Authority (PQA).

The CBR Chairman was of the view that there was need to understand exactly what is charged by whom and for which actions/services. Once this information is available then the possibility of rationalisation of charges could be discussed reducing the cost of doing business. The reduction of charges should be effectively passed on to importers/exporters in a transparent way.

The CBR Chairman also suggested that IT networks of the ports should be synchronised with PACCS. The CBR will replicate the PACCS to other ports in the coming three months.


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## Neo

BEIJING (July 13 2006): President Pervez Musharraf underlined the need for translating the existing Sino-Pak deep-rooted diplomatic bonds of friendship into a strong and vibrant economic partnership.

Pakistan is currently engaged in preparing a comprehensive plan to attract Chinese investment in the country and giving boost to their bilateral trade ties, the President said in an interview published this week by the Shanghai-based World Market Magazine. In its cover-page report, the magazine highlighted the future prospects of Sino-Pak economic co-operation in various sectors.

The President spoke high of reinforcing Sino-Pak commercial interaction, stating, "Our economic and trade relations are not commensurate with the excellent political and strategic partnership".

Referring to a Framework Agreement singed during his visit to Beijing February this year, he said it provided a strong base for enhancing and deepening their economic and trade co-operation. He said Pakistan was actively working on a plan to set up Pak-China industrial and high technology zones in the country for attracting investment and joint ventures from China.


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## Neo

KARACHI (July 13 2006): A Pak-Iran investment company would shortly be established with a capital of 25 million dollars. This was informed by Consul General of the Islamic Republic of Iran in Karachi, Syed Musa Hosseini during a meeting with members of Korangi Association of Trade and Industry during his visit to the Association's office here, says Kati statement on Wednesday.

Kati Chairman, Gulzar Firoz on this occasion said Iran had a total area of 1.6 million square kilometers having a population of around 68 million. The per capita GDP of around 7,000 dollars with a GDP growth of 6 percent is remarkable. The total import trade volume was around 40.969 billion dollars and exports 60.102 billion dollars.

Gulzar further said it has been observed that for the last five years or so, Iran had emerged as a strong economy. He said the friendly business ties between the two countries were strengthening with the passage of time. The Kati chief pointed out that there was a long list of goods, which are presently being imported from Iran.

This in particular includes petroleum, oil from bituminous, dry fruits, chemicals, chickpeas, dried shelled and wet blue leather. Major items, which are exported from Pakistan to Iran, include rice, cotton products and leather goods, etc.

Gulzar said the latest statistics of trade between Iran and Pakistan available with Kati show a rapid growth both in exports and imports between the two countries. There is need to improve trade between the two countries and for that both the countries at all levels should work in close harmony, he added.

In order to improve the trade, Gulzar suggested frequent exchanges of business delegations between the two countries, increase in trade fairs and exhibitions.

He said the visa for multiple entries to Iran should also be given to genuine businessmen on the recommendation of Kati so that the members of Kati might travel to Iran with ease.

The Consul General of Islamic Republic of Iran in Karachi emphasised the need to improve trade relations between the two countries. He said efforts by both the sides had been initiated and four agreements were signed in 2005 between Pakistan and Iran to boost bilateral economic relations and it was agreed to set up a mechanism to ensure the trade of two countries to $1 billion.

Musa also stated that he would honour the recommendations of Kati for issuance of visa to businessmen. Commercial AttachÃÂ© of the Islamic Republic of Iran, Manochehar Razai, also expressed his views on the occasion. In the end a Kati crest was presented to the Consul General of Iran.


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## Neo

KARACHI, July 12: The mounting American pressure for filtration of wire transfer of the US dollar is causing blockade in transfer of money to Pakistan, as TTs (telegraphic transfers) take 10 to 15 days to reach the desired destinations or they are returned for detail information, market sources say.

Both banks and exchange companies find it difficult to transfer money for individuals as they think the TT should not take more than 72 hours. They fear that the extraordinary pressure on money transfers could divert the business from the official channel to the illegal mode of transfers -- Hundi system -- which was under strict vigil after the 9/11 incident.

They said around 70 per cent TTs were either blocked or returned with advice to provide further details.For obvious reasons bankers and exchange companiesÃ¢â¬â¢ operators were not ready to own their comments on the situation but accepted that the Americans had tighten their grip on money transfers, especially from the Middle East on the suspicion of terrorist connections.

Bankers said the return cost the customers $40 to $50 per TT because of lengthy recovery process.

Last week the State Bank asked all exchange companies to close their Nostro accounts with exchange companies abroad by 25th of this month. The SBP said foreign currencies of home remittances or against export of foreign currencies (other than US$) should either be received in exchange companiesÃ¢â¬â¢ Nostro accounts with the banks abroad or in foreign currency accounts maintained with the banks in Pakistan.

Ã¢â¬ÅSome exchange companies were misusing the TT facility and money was transferred with fake identity cards and it was revealed when investigated,Ã¢â¬Â said an owner of an exchange company. He said it was a good step taken by the SBP. But others believe that the decision was taken on American pressure. Exchange companies said their business would decline by 50 per cent after the closure of Nostro accounts and tight monitoring on money transfer.

The American check after the 9/11 has produced positive results for Pakistan as huge remittances started coming through the banking channel. However, the bankers said the recent blockade could hurt the legal system of transferring money. Ã¢â¬ÅBanks have opened their own exchange companies and now they would face the same problem as other exchange companies are facing.Ã¢â¬Â

Both inflows and outflows of money are under strict monitoring of the US authorities. A banker said banks and exchange companies would have to face their share of problems in handling remittances from the Middle East because most of the money came from this region and Pakistan was one of the major destinations of those outflows.

Ã¢â¬ÅTransfer of money through banks with all details is in favour of Pakistan, as the country will have all track records. Initially people may face problem but in the long run it will be beneficial,Ã¢â¬Â said Salman Jaffrey, chief dealer at Jahangir Siddiqui.

According to a recent report emanating from Dubai, money transfer agencies like Western Union had delayed or blocked thousands of cash deliveries on the suspicion of terrorist connections simply because senders or recipients had names like Mohammed or Ahmed.

Ã¢â¬ÅIf most common Muslim names Ã¢â¬â Mohammad and Ahmed Ã¢â¬â are suspicious then more than half of Pakistanis would avoid sending their money through legal channel and the Hundi system would flourish,Ã¢â¬Â said an exchange company manager.

Pakistan is expected to receive about $4.2 billion as remittances this year and most of them will come from the Middle East. Pakistanis have strong presence in the Middle East and the business with Dubai also increased substantially during the last 10 years. The frequent transfer of small amount among family members living in both the countries is common. Now a quick transfer will not be possible.

Ã¢â¬ÅThe details being asked for the transfer of money clearly indicate that the transfer should be made through a bank account that keeps complete information about the sender and the purpose of sending money,Ã¢â¬Â said Aamir Aziz, a businessman.

He said opening a foreign currency account in a local bank was very difficult as it also required a guarantee and was time-taking. Even after the opening of foreign currency account, the currency would be kept for at least two weeks in the account then there will be a possibility of transfer.


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## Owais

Neo said:


> WASHINGTON (July 12 2006): Foreign Minister Khurshid Kasuri on Monday evening said in his meetings with senior US officials, he expressed gratitude of Pakistan in respect of F16s, which has been notified to Congress. "This deal will go through," he said.
> 
> "It is quite a big package. It is between 4 and 5 billion dollars, details of which are being worked out." Responding to a newsman's query, Kasuri said the US administration "have been very positive, and they have notified to Congress. Some 36 aircraft are available: 18 new, and with an option to buy another 18 new aircraft; 26 old ones were part of this notification. They have to locate those, and they will have to be upgraded also".
> 
> "We are interested in a certain number of aircraft," he said without specifying, and added it covers munitions also valuing 4.3 million dollars. He said midlife upgradation is called for our existing fleet of 34 F16s. He stated that before the October 8 earthquake struck, "we were looking for a much larger package, we reduced the number."
> 
> The US is, however, prepared to sale "as many as we want".
> 
> The Foreign Minister disclosed that "now, we are working the financing arrangement. This is what we have been discussing today. We need some sort of financing arrangements, which we are discussing.
> 
> We are paying, what we need is financing arrangement, and this is what we need to look at and our finance people and the US side would be looking at". It is a government-to-government level discussion, he said. "So, we will work out on a lot of details. We are looking for the best financing arrangement for these aircraft."
> 
> "We explained that we had an earthquake and a lot of expenses have gone into that, and we need a more favourable arrangements for payment and we will be discussing the modes of payment," he said, adding "we discussed it with Secretary of State and National Security Advisor".
> 
> In the Congress, there is plurality of views, so there could be some objecting voices, may be, but he said that his impression is that it would get through. In his meetings with senior officials, he said, he gathered that they do not expect any hitches, though Congress has different people having their own points of view. "I think, they don't expect any difficulty in getting it through the Congress."


 
Neo, I already posted this news in F16 Thread.


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## Neo

Thursday, July 13, 2006 

KARACHI: The ministry of commerceÃ¢â¬â¢s decision to restrict the import of used vehicles to boost the local car industry is giving positive results. 

Market experts said the governmentÃ¢â¬â¢s decision to restrict the import of used cars has also encouraged authorized dealers and buyers, who indulge in speculation, of new cars.

Ã¢â¬ÅDespite rising import of cars and slight increase in the car-financing rate, sales of locally assembled and manufactured cars went up by 22.2 percent to 155,514 units during 2005-06,Ã¢â¬Â Abdul Azeem, a market analyst said.

The government had been encouraging importers of used cars for the last two years by increasing depreciation cost on imported used cars. But this year the ministry of commerce has banned import of above five-year-old cars and has also bound the importer under the baggage and residence schemes to show an earning certificate at the time of clearing the car.

Ã¢â¬ÅOn-money for locally assembled cars has now started moving up, which had come down during the last 15 months,Ã¢â¬Â H M Shahzad, chairman of the All Pakistan Motor Dealers Association (APMDA), said. In the last 11 days, On-money on most popular Mehran car has gone up to Rs 40,000 from Rs 22,000, Suzuki Alto to Rs 35,000 from Rs 25,000, Cultus Rs 61,000 from Rs 32,000. Similarly Toyota Corolla has gone up to Rs 70,000 from Rs 40,000, the Shahzad said.

Since the commerce ministry has banned the import of more than five-year-old used cars, people who had booked above five-year old cars/vehicles are looking towards the federal government.

Ã¢â¬ÅThe commerce ministryÃ¢â¬â¢s decision is being implemented from July 1 and it is causing confusion and uncertainty among the importers whose consignments were shipped in May and June and have yet not reached Karachi,Ã¢â¬Â the APMDA chairman said. 

Shahzad termed the implementation of the governmentÃ¢â¬â¢s decision from July 1 unfair

The PDMA has urged the government to clear the used cars over five years old that were shipped before July 1, he added.

Local industry: According to latest available figures released by the Pakistan Automotive Manufacturers Association (PAMA), car sales were recorded at 155,514 units in 2005-06 compared with the sales of 127,300 units in 2004-05, showing a growth of 22.2 percent.

Car production was also up at 160,642 in 2005-06 compared with 127,300 units in 2004-05, depicting a growth of 27.1 percent.

Toyota Corolla was the market leader in 1300-2000cc cars segment and its sales increased by 32.7 percent from 23,000 units in 2004-05 to 30,527 units in 2004-05. Production increased by 35.2 percent to 31,094 units in 2005-06 against 23,000 in 2004-05.

Honda City (37.7 percent sales growth) is also the momentum driver for the continuing increment in local car sales and production with sales of 16,100 and production of 18,173 units. Pak Suzuki replaced its Baleno model with Suzuki Liana whose sales are also improving on a consistent basis as per the released figures. 

Cars with engine capacities of 1300cc and above now constitute 43 percent of total car sales against 42 percent in 2004-05. In contrast, the 800cc categoryÃ¢â¬â¢s slice in the pie shrank from 31 to 28 percent. The share of 1000cc cars improved marginally from 27 to 29 percent.

In the 1300cc and above segment, which recorded a 24 percent growth, market share of Toyota Corolla rose from 43 to 46 percent. The 1000cc category recorded a growth of 33 percent. 

Suzuki Alto remained the star with a growth of 46 percent (its own market share in the category improving from 34 to 37 percent). Suzuki Cultus also showed above-industry growth of 37 percent. In this segment, Santro was the only brand whose sales grew by only two percent.

The 800cc segmentÃ¢â¬â¢s unit sales rose by 10.3 percent. Daihatsu CuoreÃ¢â¬â¢s market share in the segment declined from 22 to 18 percent, and that of Suzuki Mehran improved from 78 to 82 percent. 

Ã¢â¬ÅThe auto sales is likely to be robust in 02006-07 as well,Ã¢â¬Â said Mr Azeem. Ã¢â¬ÅEven though the leasing rates have started to edge up due to rising interest rates, the demand-supply gap still remains large enough for auto assemblers to post impressive sales performance in the current fiscal.Ã¢â¬Â


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## Neo

kARACHI: PakistanÃ¢â¬â¢s first liquefied natural gas (LNG) import terminal is expected to come online in the year 2010, coinciding with the period when the country is projected to feel the impact of its depleting oil and gas reserves.

The fast pace of economic growth in the last few years has also changed the energy consumption pattern with natural gas becoming the single largest source of fuel. However, where its consumption has increased so have the prices, the latest making headlines early this month.

While a transnational gas pipeline is unlikely to be built any time in this decade, the exploration and production companies continue to build pressure on the government for getting the wellhead gas pricing formula updated and linking it directly with expansion in exploration activities.

But even the prospects for the import of LNG are bitterly marred by the cost factor. Sui Southern Gas Company that is facilitating the implementation of the project has short-listed the names of interested companies and is now in the process of further evaluation.

Japan and South Korea have long dominated the LNG market but energy-starved booming economies like Chine and India are poised to become major players in coming years.

European countries, desperate to reduce dependence on Russian gas, are also eyeing LNG imports. In the region, Spain has already emerged as one of the fastest growing LNG importers.

This has made all the more challenging for Pakistan to secure long-term import contracts stretching over a period of 20 years as almost all the LNG importing countries have already entered into longer duration arrangements with the 13 exporting nations.

According to Energy Information Administration (EIA) of US Energy Department, the cost along the LNG supply chain has reduced over the past years and the market has expanded. 

However, heavy investment is still needed for building a terminal and associated facilities including re-gasification plant, storage infrastructure, etc.

In the case of Pakistan, the cost has been estimated at $500 million with Bundal Island, Port Qasim and KPT lower harbour cited as the ideal spots for the project.

It has been spelled out in LNG Policy 2006 that at least one party of the consortium carrying out the project must have experience along the supply chain. This move is particularly aimed at attracting such companies, which are operating liquefaction facilities in other countries.

In some cases, multinational companies operating liquefaction plant and terminals in one country, export LNG to their own import destinations in other countries.

The News has learnt that under such arrangement every party of a consortium is allocated surplus amount of LNG for their own clients, which helps in ensuring availability of supplies and diversification of market.

But as Japanese and Korean importers continue to pursue more flexible and short-term contracts, it will create problems for other countries wanting to import LNG.

Spot purchase of LNG, for Pakistan, is an unfeasible option. The importers wholly or mostly dependent on the liquefied gas will always be ready to pay more, thus leaving little bargain space for new comers.

However, the brotherly relations that Pakistan enjoys with Middle Eastern exporters like Qatar and Oman, gives it an upper hand over other countries in negotiating sustainable LNG supplies at relatively lower rates.


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## Owais

*Plan approved for OGDC GDRs offer by September 30* 


ISLAMABAD (July 13 2006): The Privatisation Commission and its consultants--Citigroup and Goldman Sachs--on Wednesday approved a plan to offer the Oil and Gas Development Company's (OGDC) 'global depository receipts' (GDRs) by September 30, it is learnt.

Sources said that a 20-member consultants' team for OGDC's GDRs, that arrived here late on Tuesday night, held a series of meetings with the Privatisation Commission and OGDC officials on Wednesday to discuss the strategy for the transaction.

The consultants' team was told by OGDC officials that the audited accounts of the company for last fiscal year would be available for its evaluation by August 15. The consultants will work out the value for GDRs on the basis of the audited accounts and other technical data including OGDC shares value in the domestic stock market.

Sources said the consultants' team raised various questions about the company's data, in particular, regarding future exploration and production plan and the net sales of its products in 2005-06.

A joint official team, representing Privatisation Commission, OGDC, and Petroleum Ministry, responded to the queries raised by the visiting team and apprised it that all basic data and information was available for GDRs assessment and offer it through London Stock Exchange (LSE).

After appointing CitiBank and Merry Lynch as consultants by Privatisation Commission, OGDC had provided them the necessary data for the transaction some time back and their visiting team was in Pakistan for its physical verification.

Sources said the visiting team was asked to complete the evaluation process on top priority and make sure to complete the transaction within the stipulated period.

The government of Pakistan is very ambitious about OGDC's GDRs offering and authorities working on the plan want to put in place a fool proof strategy to get desired results.

Sources said the official team also shared with the visiting team the government plan of organising country and company shows in different important countries to give a better understanding of the company's financial and technical position and get maximum response from the global investors. The two sides agreed that London and Washington were better destinations for holding shows for GDRs offering.


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## Owais

*Rs 350 million approved for export promotion schemes* 

ISLAMABAD (July 13 2006): The Export Development Fund (EDF) Board, which met here on Wednesday with Commerce Minister Humayun Akhtar in the chair, approved Rs 345 million for different ongoing schemes relating to the promotion of exports.

The Board reviewed progress of the ongoing schemes financed through by EDF, besides proposal for carrying out sectoral studies to pinpoint impediments and suggest remedies to the government.

The meeting was attended by EPB Chairman Tariq Ikram, Secretary, Ministry of Textile Industry, Masood Alam Rizvi, Vice Chairman, EPB, Zafar Mahmood, President of Federation of Pakistan Chambers of Commerce and Industry and representatives other prominent trade associations.


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## Owais

*Arrangements made for import of LNG: SSGC* 
*RECORDER REPORT* KARACHI (July 13 2006): The government has made arrangements to import liquid natural gas (LNG) by 2010 and there would not be an energy gap in demand and supply in the country.

Managing Director Sui Southern Gas Company (SSGC) Munawar Basir Ahmed stated this while giving a presentation regarding SSGC's vision/mission, Pakistan's National Energy Plan, SSGC's achievements and future plans at SSGC head office here on Wednesday.

He said that the SSGC has made short, medium and long-term programmes to cater for rising energy demands. The first LNG station would be set up by 2010 at one place either Karachi Port or Port Qasim or Bandel Island, he added.

The MD said that energy would deliver progress in future of Pakistan because all industries dependant on this sector. The government has realised and is making efforts to bring energy to Pakistan from several sources.

Ahmed said that the gas supply mainly coming from Sindh, which is 89 percent while only 11 percent from Balochistan. He said the company has the largest coverage in Sindh to provide gas to the industries.

*He said that gas prices have not risen as fuel prices have shot up. Only seven percent in gas prices went up while there was a 50 percent increase in oil prices. Despite the minimal raise in the gas prices the SSGC is still devising ways and means to bring down gas prices, he said.

Ahmed said that around 1.9 million people are SSGC valued customers and the company is striving to provide quality services to both residential and industrial users. In this regard the SSGC extended the network to the remotest areas of Sindh and Balochistan. In last three years the company had provided gas to 400 villages.

He said that the company had doubled the supply to 1200 million cubic feet from 1999, which was 600 million cubic feet. The substantial increase made gas available to 150 districts.

The MD stated the business community should come forward and provide a solution to the government and other utilities in regard to their shortfall. He said that the business community should also identify leakage in the power supply and as well as other utilities that would enable sufficient supply for industries and residents.

He said the SSGC has allocated Rs 43 billion for supply of non-stop gas and the company had spent Rs 20 billion till now. There was no support from the budget but the company resorted to self-revenue generation.

He gave a detailed scenario of company's performance and a project in human resource management, social reforms, disaster management programme and sports programmes. Azim Siddiqui, senior general manager of the SSGC presented the company's performance and corporate overview.

He said the company's vision is to be a model utility and to provide quality services. To meet energy requirement to be environment friendly is the company's mission. He said that company's network spreads to 3,079km, its distribution network is 27,679km and its compression capacity is 62,600BHP.

*HE ELABORATED THE CORPORATE STRATEGY OF THE COMPANY THAT IS: *

-- Consistence appreciation in shareholders value.

-- Focus on improved, friendly and efficient customer service.

-- Expansion of transmission and distribution network.

-- Security of assets and good house keeping.

-- Human resource development.

He said that the gas sales have substantially increased to 357.80bcf in 2006 from 234.55bcf of 2002. Transmission reached 3,079 km. Industrial connections were provided to 267 industrial units in 2006 as compared to 180 in 2002 while domestic connections were provided to 79,041 households in 2006 as compared to 60,603 in 2002.

Operational revenue is Rs 63.24 billion in 2006 as compared to 32.91 billion in 2002. Cash O&M percentage of revenue declined to 6.13 percent in 2006 as compared to 9.8 percent in 2001, he said. Naeem Rehman Ahmed, Senior General Manager of SSGC presented a live operation of the company's control through advanced technology.

On the occasion Salahuddin Haider, Founder President 21st Century Club and OUAC gave the opening remarks for the presentation. Later the audience visited different SSGC's departments.


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## Owais

*Azgard-9 to pay balance for PAFL on July 15* 


ISLAMABAD (July 13 2006): The new owner of Pak-American Fertiliser Ltd (PAFL), Azgard-9, will make the final payment of over Rs 15 billion to the Privatisation Commission for the strategic purchase of shares of the privatised plant on July 15th, PC sources told _Business Recorder _here on Wednesday.

They said that the PC has confiscated Rs 350 million earnest money of Ibrahim Fiber group as it failed to make 25 percent down payment.

Pak American Fertilisers Limited (PAFL), a subsidiary of National Fertiliser Corporation, is located at Iskanderabad in Mianwali district and its new plant is designed to produce 600 tons/day ammonia and 1,050 tons/day urea using natural gas as feedstock and fuel. The plants are latest in design. The project has over 11,481 kanals land, comprising 6,432 kanals for factory, 2,818 kanal for Housing Colony and 2,230 kanal for experimental farm. The buyers intend to make fresh investment for expansion of plant capacity and to increase production to bridge the shortfall in the demand and supply of urea.

They said that they were determined to work in order to create a win-win scenario for both the public and the private sectors and operate in a highly socially responsible manner, supporting the community, the environment and the workforce, and assured that anybody who wished to work on merit basis would be retained.


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## Owais

*First Investment Bank to launch Rs 500 million TFCs* 

KARACHI (July 13 2006): The First International Investment Bank Limited (Interbank) is issuing rated, secured and listed Term Finance Certificates (TFCs) of Rs 500 million during the current year. The announcement was publicised in the Abridged Prospectus published on June 30, 2006 in _Business Recorder._

According to a press release issued on Wednesday, The amount of Rs 500 million comprises of private placement (pre-IPO) of Rs 375 million and initial public offer (IPO) of Rs 125 million.

The TFCs offers to the general public and institutional investors will be in sets of ten TFCs, each set having an aggregate face value of Rs 5,000, or in multiples thereof or such other denomination as may be agreed between the Interbank and the Pre-IPO investors.

The proposed TFC issue is for a tenor of five years carrying a profit rate of 6 months KIBOR plus 225 bps (Basis Points). Principal redemption will be in eight equal semi annual instalments commencing from the 18th month after the issuance.

UBL is the market maker for the TFC and has agreed in the prospectus to offer a bid/offer quote to small investors, thus giving them an opportunity to buy and sell this TFC during its five-year life.

The instrument will be secured by way of first parri passu charge on present and future assets of the bank with a 25 percent margin. The Bank intends to utilise the proceeds of the TFCs to establish its asset management business, strengthen the brokerage function and further expand the investment portfolio.

The Pakistan Credit Rating Agency (Pacra) has assigned a rating of 'A+' (Single A plus) to TFC issue. The rating indicates a low expectation of credit risk and a strong capacity for timely payment of financial commitments.-PR


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## Owais

*SBP sells Rs 20,500 million treasury bills* 

KARACHI (July 13 2006): The State Bank of Pakistan (SBP) sold Rs 20,500 million of Treasury bills on Wednesday in a 8-day repo operation at 7.74 percent to mop up funds from the money market.


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## Owais

*Institutional support lifts share prices* 

KARACHI (July 13 2006): The share market for the second consecutive session closed on a positive note as buying from financial institutions and some offshore investors bloomed at the Karachi Stock Exchange, placing almost all the blue chips and trading stocks in the plus column. Green remained the colour of the day as prominent scrips managed to close in the positive zone.

The market steadily picked up its momentum and closed at 9920, up by 265 points compared to previous session's closing. Volumes picked up by 60 percent to 209 million as against 131m yesterday. NBP once again was the volume leader, contributing 29 million shares.

MCB followed suit and performed pretty well during most part of the day, however, came under pressure during the latter part. The E&P sector attracted punters. Both the heavyweights of the market, OGDC and PTC closed at their upper circuits and contributed 107 and 29 points respectively towards the index gain. POL and PPL, the other two E&P giants also managed to recover and closed up by Rs 11.2 and Rs 10.5 respectively.

Gainers outnumbered the losers and stood at 189 as against 75 companies that closed in red while 35 companies closed with no change. Rabia Hussain from JS Capital Market said that the market opened 10 points minus but immediately gained momentum and moved to the positive zone. Activity was seen across the board with most of the scrips giving a positive closing.

The main reason behind volume led bullish trend was the Prime Minister's positive statement on local TV channel that the task force report for March 2005 crisis did not mention any names of brokers/individuals and action will be taken only if proof will be found in the forensic report. The major gainers were OGDC, POL, Lucky and DGKC.

The sentiment was depressed earlier because of the reports that a team has arrived to conduct forensic investigations against the manipulations and price manoeuvring during 2005 market crash. However, fresh volley of buying surfaced from all quarters after active support from financial institutions and some offshore clients. Several traders said that a couple of brokers have received huge orders in OGDC, NBP, PPL, POL and MCB from their respective overseas investors, building a handsome rally.

The market also geared up on the rumours that some high official in an interview to a television channel (yet to be telecast) has categorically said that Dr Tariq Hasan, former chairman of the SECP is held responsible from March 2005 debacle. He was too slow to implement rules and regulations, resulting in sharp plunged in stock values.


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## Owais

*Upward trend continues on LSE* 

LAHORE (July 13 2006): The upward trend continued on Lahore Stock Exchange (LSE), where share values, led by petroleum sector, recorded more gains and eventually finished 3.49-percent up, on Wednesday.

The LSE-25 index surged to 4,340.84 points from 4194.33 of Tuesday, posting a net rise of 146.51 points (3.49-percent). Volume improved to 43.697 million shares from 30.549 million of the previous session, registering an improvement of 13.147 million shares (43-percent).

The market showed positive signs form the outset of trading and then maintained the tendency later in the day, with petroleum sector remaining atop. According to brokers, they witnessed good trading in the market where equities extended the overnight bullish spell following an aggressive buying in petroleum sector which, led by PPL and PSO, outperformed and added handsome gains to its worth.

Banking and cement sectors' shares also traded well and added to strength of the market, brokers pointed out. It appears the market is gradually resuscitating from the trauma it suffered after submissions of former SECP chairman Dr Tariq Hassan before the National Assembly standing committee and alleging high profiled government personalities for the March 2005 crisis, analysts said.

According to them, "tension caused by such allegations is defusing gradually and we might witness more good sessions ahead."

"In wake of train blasts in Mumbai, we were not expecting such a marvellous performance of the market on Wednesday, but what we witnessed pleased every one," Mirza Muhammad Irfan, equity research head of Capital Vision Securities Ltd, said. Even the Indian markets ignored the tragic blasts claiming scores of life and injuring many, and the Mumbai market ended with a gain of 315 points, he added.

"As we all know whenever the Indian markets underwent crisis, its impact was also seen over the KSE," he pointed out. Explaining reasons for the ongoing rally, he said due to high expectations of NIT and other corporate sector results sentiment was already bullish, but the SECP inquires against brokers and then allegations levelled by Dr Tariq Hassan against the high ups of government disturbed the pace.

On Wednesday petroleum sector led the market proceedings supported by cement stock and banking sector, he further said, adding fresh buying was also seen on low levels that helped the index propel up. Buying in petroleum sector, which was dead since many weeks, has started recovering.

On Wednesday OGDC ended with upper cap limits while Attock Refinery and PPL finished with upward locks on KSE, which is a very positive sign. About the possible impact of rising crude oil prices in international market Mirza Muhammad Irfan said because of recent heavy battering, the market on the whole was in positive mood and the current levels were attracting institutional investors.

Out of a total of 91 traded scrips, 45 were up, 7 stayed in red zone while 39 were intact to their previous levels. In positive column, PPL gained Rs 11.25, PSO Rs 10.00, Pakistan Oilfields Rs 9.10, OGDC Rs 6.50 and Lucky Cement Rs 4.90.

In minus zone, Prime Commercial Bank shed Rs 1.35, Worldcall Telecom and Askari Commercial Bank Rs 0.20 each and PICIC Energy Fund and Dewan Farooq Motors Rs 0.05 each. National Bank was the volume leader with 6.809 million shares followed by MCB Bank with 5.270 million shares.


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## Owais

*ISE equities show healthy signs* 

ISLAMABAD (July 13 2006): Equities showed healthy signs at the Islamabad Stock Exchange (ISE) where bulls strengthened their positions amid increase in index. ISE Ten index was plus by 103.34 points, as the index moved from 2,466.60 to 2,569.94 points.

Total 115 companies were quoted on the ready-board. Majority of stocks (87) closed in positive territory, 28 landed in minus column, whereas zero companies remained pegged to its overnight levels.

The turnover of OGDCL was 68,200 shares as compared to previous volume of 34,800 shares. The volume of Fauji Cement was 55,000 shares. The turnover of Pakistan Petroleum was 34,400 shares as compared to previous volume of 18,800 shares.


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## Owais

*28% of the revenue utilized for payment of foreign loans * RAWALPINDI: CBR acting chairman, Salman Nabi has said that 28 percent of the previous fiscal year&#8217;s revenue was utilized for the payment of foreign loans.

In a meeting with the office-bearers of Rawalpindi Chamber of Commerce and Industry, he said that the income tax recovery previous year was higher by 22 percent. He told that 24000 cases were sent for audit in the previous year, out of which, 12000 were settled through negotiations, while 6000 cases were shelved after the recovery of 20 percent additional taxes


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## Owais

*Motorola&#8217;s Pakistan market share surges * KARACHI: Mobile phone manufacturing company in Pakistan, Motorola&#8217;s market share has increased to 15 percent from 2 percent in a brief period of two years.

Motorola Marketing chief, Hashim Sheikh made this disclosure in a press conference here. He told that the cellular phone market in Pakistan has swelled from mere 2 million to a sizeable 20 million. 

He told that Motorola Pakistan has decided to provide customer care facilities, repair, maintenance and necessary information about the use of cell phones to the people residing in the rural area of Sindh and Punjab and two Moto-buses were being run in this regard. He told that one more Moto-bus would be sent to the Northern Areas next month in the second phase of this campaign.


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## Owais

*State Bank to reduce export refinance rate by 1.5 percent* 

KARACHI (July 14 2006): The State Bank of Pakistan will reduce the export refinance rate by 1.5 percent to counter the slowdown in export growth. At present, the SBP provides credit line to banks at 7.5 percent under its export refinance scheme. Banks lent to exporters at nine percent or less.

All indicators are showing a slowdown in Pakistan's textile exports due to stiff competition from India and Bangladesh. Both these countries are indirectly helping exports of various textile items through lowering of interest rate on machinery import, cash compensatory rebates and low tariff for fuel.

Pakistani textiles are priced 15 percent higher than India and 22 percent more than Bangladesh. In order to remain competitive, Pakistani exporters are demanding 3.75 percent reduction in export refinance rate and 10 percent subsidy on import of capital goods. The net impact of these two amounts to 2.75 percent cut in debt services cost.

Local exporters are pressing for 5 percent of f.o.b. value of export items as compensatory rebate to overcome denial of market access in North America and Europe and special tariff for natural gas usage of around 21 percent. This will lower the import cost by 3 percent.

Further, they want the scope of R&D presently available to knitted fabrics only to be expanded to all kinds of process fabrics. The SBP can only provide help in lowering of lending rates, the other issues relate to fiscal side and Islamabad has to act on them.

*KNITTING: *All of the above measures, say experts, will be of little help to the closed down knitting units. Six of the largest knitting establishments have reportedly closed down and unless banks restructure their outstanding, it would be difficult to restart them.

The SBP is collecting data from various textile associations and banks regarding import of machinery since 2004. Textile sector is asking for a concessional rate of 7 percent to import machinery between now and 2010 and also want the machinery imported after 2004 to be swapped into SBP's Long Term Finance-Export Oriented Industry (LTF-EOI) scheme.

Few exporters imported machinery worth Rs 6 billion under LTF-EOI scheme. Somehow bad communication between the SBP and banks led to discontinuation even though the allocation were set to be around Rs 24 billion for LTF-EOI.


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## Owais

*Gold imports halt after imposition of withholding tax* 


KARACHI (July 14 2006): Gold importers have stopped buying the yellow metal from the international market due to sudden imposition of one percent withholding tax at the import stage by the federal government and higher international gold rates, bullion traders said.

They said that that the commercial importers of gold have immediately cancelled the already booked orders and halted the import process from different countries with immediate effect from 1st of this month.

Senior traders said that even a single ounce has not been brought into the country during the current month, which has put the local and export-oriented industries in jeopardy.

"Not a single fresh order and import from July 1," said Haroon Rashid Chand, President All-Karachi Jewellers Association, adding that one could not place orders for such a commodity whose price varies by Rs 400 per 10-grams everyday.

He said that the gold is currently being tagged at around $654 per ounce on the international front and 1-tola gold is locally available at nearly Rs 15,000, showing that the trade is not viable any more.

Bullion market sources have commented that the sudden imposition of WHT would definitely hit the jewellery exports of the country, which they say, would remain 50 percent in the current fiscal (2006-07).

"The country had been importing around 50,000 tola per day about six month ago, however, the figure dropped to 20,000 tola per day since January this year," Haroon Chand remarked. He said that the yellow metal import has been halted despite a little demand in the country.

Traders highlighted that the investors who had earlier bought 24-caret gold biscuits are now offloading their holdings, as they are unable to predict the future of this commodity.

The gold traders have been moaning over the price spike of gold from the day it had started hitting its upper levels and now they are uncertain about their businesses as they have lost 50 percent of their customers.

"The rising gold prices have broken the backbone of a common man," one trader said, adding that people usually avoid making jewellery and giving away gold gifts. He said that the local scenario would further be worsened when the old stocks would be sold out.

Senior bullion traders said that they had been paid $1 per tola as tax which they government had decreased to 50 cents prior to one percent WHT imposition.

They have also anticipated that the recent imposition of WHT would encourage gold imports from illegal channels and the domestic demand of jewellery would be filled through smuggled metal.

The prices of gold reached new records and breached previous ones during the past nine months mainly due to rising international gold prices, increased genuine demand, heavy speculation, mistrust of investors in dollar and geo-political uncertainty across the globe mainly in the Central Asian region. It may be mentioned here that the private importers, prior to WHT imposition, used to import precious yellow metal mainly from London and Switzerland via Dubai.


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## Owais

*Prime Minister clears new Trade Policy sans exports target* 

ISLAMABAD (July 14 2006): Prime Minister Shaukat Aziz has cleared the Trade Policy, 2006-07 with certain directions to encourage free trade and diversify exports, but did not fix exports target. Sources privy to the meeting told _Business Recorder _that Commerce Minister Humayun Akhtar Khan told the meeting that exports for the FY06 stood at $16.5 billion, $500 million below the target.

However, final foreign trade figures yet to be released by the Statistics Division, were already cleared by the Central Board of Revenue (CBR). Replying to a question, the sources said that export target for 2006-07 has not been discussed in the meeting in detail, but it would be in the vicinity of $18 billion, keeping in view the current pace of exports growth.

"It was proposed that exports target for 2006-07 should be $17.8 billion or $18 billion, but the prime minister said he would settle the issue with the commerce minister personally," the sources added.

Answering another question, they said that expansion of positive list to be traded with India was not part of the discussion and it would be considered by the prime minister and the commerce minister separately, adding the government may add 133 more items which have already been cleared by the ministries concerned and the private sector as well.

Asked, if any specific proposal was discussed at the meeting to give push to exports, the sources said there was nothing special to mention as it was the follow-up of previous meeting held three days earlier, in which the prime minister had given some instructions to the commerce ministry for the preparation of Trade Policy. Another official said the meeting agreed to allow import of used fire vehicles and trucks for garbage disposal, dialysis machines and milk processing units.

According to a press release, the prime minister said: "The main objective of the Trade Policy is to encourage free trade in the country and also to enhance and diversify our exports. This will result in increased foreign exchange earnings and generate income and employment opportunities."

This was the second meeting chaired by the prime minister to finalise the trade policy before it is announced on July 17. A special meeting of the Cabinet will be held on July 17 to give approval to the Trade Policy.

The participants of the meeting gave several suggestions to fine-tune the Trade Policy based on the feedback received from the private sector and other stakeholders.

The meeting was attended among others by Commerce Minister Humayun Akhtar Khan, Industries and Production Minister Jahangir Khan Tareen, Food, Agriculture and Livestock Minister Sikandar Hayat Khan Bosan, Health Minister Muhammad Nasir Khan, Textile Industry Minister Mushtaq Ali Cheema, PM's Adviser on finance Dr Salman Shah, Planning Commission Deputy Chairman Dr Akram Shaikh, EDB chairman, CBR chairman, commerce secretary, health secretary, industries and production secretary, textile industry secretary, special secretary to prime minister, and senior officials.


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## Owais

*Body allows release of Chinese cement for sale* 

ISLAMABAD (July 14 2006): The prices committee on Thursday came to the importers' rescue by allowing clearance of imported Chinese cement for sale in the local market. Authorities at the Karachi Port have withheld five shipments of cement imported from China having 100,000 to 125,000 tons load after declaring it substandard. Since than importers were struggling for clearance of their shipments to avoid loss in the form of demurrage and other additional port charges.

Sources said, on the prices committee recommendations the government is going issue directive to port authorities on Friday for clearance of Chinese cement to be sold in the local market.

Talking to _Business Recorder_, one participant of the meeting said: "The committee considered the issue as a whole and decided to allow release of imported Chinese cement for sale in the local market."

The prices committee was informed five consignments of Chinese cement were waiting clearance at the Karachi Port for the last few weeks and further delay in their clearance will not only cause loss to importers but also reduce its quality.

The government had allowed duty-free import of cement from any destination sometimes back when locally produced cement rates went up to Rs400 per 50kg bag at retail level, hitting the construction industry very badly.

The objective was to improve supply in the open market; cut-down cement prices; and simultaneously, pressurise domestic manufacturers not to exploit the market for undue profit.

The meeting also reviewed prices of sugar and pulses in the open market. It showed satisfaction that prices of these commodities were showing downward trend. However, it considered ways and means for further reduction in their prices for.

The meeting also took stock of cultivation of sugarcane crop over the past five years and average ratio of input and output, per acre cost and benefit to growers compared with other cash crops such as cotton, wheat, sunflower and basmati paddy.​


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## Owais

*Pesticides dealers to pay sales tax on 15 percent fixed value addition* 

ISLAMABAD (July 14 2006): Registered pesticides dealers shall be required to pay sales tax on fixed value addition of 15 percent in the sales tax return for the tax period of June 2006 to be filed by July 15.

This would be applicable to the stocks of finished pesticides held on June 5, 2006 and the stocks of active ingredients listed in SRO 645(I)/2006 held on June 21, 2006.

According to a sales tax circular issued on Thursday, the Board has issued instructions to the collectors of sales tax to ensure smooth transition of sales tax regime for pesticides envisaged under SRO 645(I)/2006 and the previous notification SRO 553(I)/2006.

Under the new procedure, the registered persons shall make the stock declarations of finished pesticides and active ingredients to the concerned Collectorate of Sales Tax and Federal Excise along with the sales tax return for June 2006.

The formula for the calculation of due tax on fixed value addition of 15 percent shall be: (a) Customs duty paid value of imported pesticide/active ingredients, (b) Value addition for sales tax purpose = a x 15 percent and (c) Sales tax on value addition = b x 15 percent.


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## Owais

*Power Policy 2002 to be revamped* 

ISLAMABAD (July 14 2006): The federal government is to revamp Power Policy 2002, with more incentives for Independent Power Producers (IPPs) in the shape of reduction in performance guarantee amount by 100 percent and extension in financial close and Commercial Operation Date (COD).

Sources in the Private Power Infrastructure Board (PPIB) told _Business Recorder _on Thursday that a comprehensive incentives package, prepared in the light of prime minister's directives is being placed before the Economic Co-ordination Committee (ECC) of the Cabinet for approval, rescheduled to meet on Saturday (tomorrow).

The main objective of the revision was to remove bottlenecks, hindering fast track on-going and new projects to be commissioned in 2008, when power demand is believed to be unmanageable if new investment is not made, the sources added.

Sources quoted the prime minister as saying that IPPs specific problems should be addressed at the earliest and recommendations put up for approval to the competent forums.

They said there was still a dispute between the ministries of the petroleum and the water and power that which entity would bear the differential cost of alternative fuel, in case gas companies fail to supply the committed quantity of gas.

Sources said the amendments to the Power Policy - 2002 has been drafted in the light of deliberations among the ministries of the water and power, the petroleum, the Water and Power Development Authority (Wapda), National Electric Power Regulatory Authority (Nepra), Sui Northern Gas Pipeline Limited (SNGPL), PPIB, and the Prime Minister's Secretariat.

They said the PPIB has recommended that gas reservoir failure risk should be settled between the gas produce and the gas company rather than passing it on to the IPPs.

It has also been recommended that gas pipeline should be laid by the gas companies themselves and the Gas Supply Agreement (GSA) term (period) must match with the term of the PPA.

However, the impact of the cost of alternative fuel, in case adequate gas was not available after 2011, should not be borne by the gas companies as the Government of Pakistan has already reasonably covered the risk through appropriate clauses in the implementation agreement (IA).

The consequences for short supply of gas below the committed level be borne by the company concerned, ie cost differential of alternative fuel (HSD) should be borne by the gas company and commitments to IPPs must be honoured, the sources maintained.

Sources said it is proposed that minimum charge to be levied on the IPPs for gas supply contracts should be 50 percent as per the past practice, and this would be in lieu of their fixed costs, adding that it has also been agreed that the period of adjustment of over and under payment for gas supply should not exceed one year.

The tolerance in performance limits specified in the GSA should be on the pattern of the PPA as current negotiations were being conducted with IPPs based on zero tolerance.

For the fast-track projects, the PPIB has recommended that time allowed for financial close for fast-track projects should be enhanced to nine months as compared to six months and COD for fast-track projects which was June 2008 as per the ECC decision be extended to October 2008, said the sources.

As envisaged in the Policy for Power Generation Projects - 2002, the amount of bid bond may be maintained at $1,000/MW, while the amount of performance guarantee (PG) should be $5,000/MW, instead of the $10,000/MW approved by the ECC specifically, for the fast-track projects.

The ECC has already approved that an appropriate incentive through an increase in the Capacity Purchase Price (CPP) be allowed to incentivise the completion of power projects by leading business houses of Pakistan, earlier than the end of June 2008.

In view of the recommendations to extend COD to October 2008 for the fast - track projects, similar incentives would be given to all IPPs, which could be commissioned, wholly or partially before October 2008.

In case of delay in achieving the COD, the performance guarantee would be encashed on pro-rata basis - over a period of 90 days - depending upon the actual delay in the COD, the sources added.

Sources said the petroleum ministry does not support the proposal that fuel differential cost should be borne by the gas companies, saying that risk of cost differential of alternative fuel (HSD) for short supply of gas may be shared by Wapda and the gas company in the ratio of 50:50.

However, the water and power ministry is of the view that it should go entirely to the gas companies, as the IPPs were not in a position to control this risk, the sources said.

Furthermore, any risk taken by the power utility ie National Transmission and Dispatch Company (NTDC) and Central Power Purchase Agency (CPPA) would be absorbed by the GoP in the form of subsidy or passed on to the consumer, they also elaborated. "Such an arrangement will dilute 'pressure to perform' on the gas company and the water and power ministry does not agree with the petroleum ministry," the sources said.


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## Owais

*Oil hits record over $77* NEW YORK (July 14 2006): Oil surged more than 2 percent to a record high near $77 a barrel on Thursday on renewed worries over supply from major exporter Nigeria and as conflict between Israel and Lebanon heightened international tensions.

Prices also rose as the Iran nuclear dispute headed back to the UN Security Council, North Korea walked out of talks with South Korea and crude inventories in top consumer the United States fell more than expected.

"Geopolitical tensions have stepped up - we are moving on to a new phase in Iran and Israel," said Mike Wittner of investment bank Calyon. "In the end, geopolitical risk is about a current supply disruption getting worse or a new one happening."

Front-month US crude settled up $1.75 at $76.70 a barrel after hitting a record $76.85, while crude for March 2007 hit $80 a barrel. London Brent settled $2.30 higher at $76.69 after reaching a record $76.95.

In Nigeria, two suspected explosions at a crude pipeline operated by Agip, a unit of Italy's Eni, caused oil spills, Nigerian officials said. Eni denied reports of sabotage and extensive oil spills and said damage would be repaired soon. Royal Dutch Shell Plc has already had to shut down 473,000 barrels per day of Nigerian supply, almost a quarter of output in Africa's top oil supplier, due to attacks by rebels.

Adding to Middle East tension, Israel blockaded Lebanese ports and struck Beirut airport Thursday, expanding reprisals that have killed 53 civilians in Lebanon since Hizbollah guerrillas captured two Israeli soldiers a day earlier.

Later on Thursday, the Israeli army said a rocket fired by Hizbollah hit Israel's third-largest city, Haifa.

Israel's ambassador to the United States called the attack a "major, major escalation" but a Hizbollah spokesman denied the group was responsible. Israeli naval vessels also fired on fuel tanks at Beirut's international airport, according to airport sources.

Supply breaks and growing Middle East tension mean oil prices may rise further, investors say. The Middle East pumps about a quarter of world output, although neither Israel nor Lebanon are producers.

"The next stop is $80," said Mark Matthias, chief executive of investment specialist Dawnay Day Quantum. "That's what the market is looking at now."

*NO SHORTAGE: *

Qatari Oil Minister Abdullah al-Attiyah said there was no shortage of crude oil in world markets, blaming geopolitical tensions for the surge to record-high prices.

"The main thing is that we see that there is no shortage in the market at all," he told reporters. "Speculators are using the geopolitical situation to their benefit and we are seeing how the oil prices are reacting."

Qatar is the smallest producer in Opec. The 11-member group has been powerless to stem oil's rally as rising world demand has used up much of the group's reserve production capacity.

Oil in New York is up 25 percent in 2006 because of supply cuts in Nigeria, the dispute over Iran's nuclear work and a flow of investment money into commodities. North Korea's missile tests have added to global tensions.

Iranian President Mahmoud Ahmadinejad said Thursday the world's fourth-largest oil exporter would not abandon its right to nuclear technology after Tehran's case was referred back to the UN Security Council.

In Asia, North Korea blamed the South for the collapse of their first high-level talks since Pyongyang's missile tests sparked a regional crisis, saying Seoul would "pay a price" for the failure.

Oil has rallied from below $20 in January 2002 driven by rising demand led by the United States and China, the second-largest oil consumer. Robust US demand and falling inventories also supported oil's gain Thursday.

US crude inventories slid 6 million barrels last week as imports fell, a government report said Wednesday. The drop was five times larger than the 1.2 million barrels forecast among analysts polled by Reuters.

US motorists, who use over 40 percent of the world's gasoline, bought 1.7 percent more fuel in the past four weeks compared with a year ago. The data covered the Independence Day holiday weekend when annual gasoline demand peaks.


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## Owais

*Oil tanker loaded with poisonous chemicals being sold to local ship breakers* 

KARACHI (July 14 2006): An old oil tanker 'Alpha' loaded with poisonous chemicals is near Pakistani waters and its owners are negotiating with Pakistani ship breakers for sale of this ship for scrap, sources said.

According to details, MT Alpha is presently in the international waters near the Pakistan border and its owners, M/s Polembros Shipping Ltd are negotiating with Pakistani ship breakers.

The oil tanker is loaded with poisonous chemicals and is on the watch list of Greenpeace, which requires decontamination before scrapping.

Sources said that the same ship was sold to JV Bangladesh Limited, a Bangladeshi ship breaker, this year and arrived at Chittagong Port in April 2006. However, under heavy pressure from NGO's and on their litigation, High Court in Bangladesh in the light of the report of an inquiry commission barred its entry in Chittagong port.

The Bangladesh Environmental Lawyers Association (BELA) had filed a writ petition before the High Court for preventing the entry of scrap ship named MT Alpha loaded with poisonous chemicals at the outer anchorage of Chittagong port.

It may be mentioned here that there are five centres of ship breaking in the world, ie India, Pakistan, Bangladesh, China and Turkey.

The ship has sailed from Bangladesh and is now in international waters outside Pakistan. The owner of the ship is the same owner of the famous 'Tasman Spirit' oil tanker, which had polluted Pakistani beaches and is under sentence in Pakistan.

Alpha was constructed in 1979 having weight of 87,368 DWT and is a Bahamas flag bearer. Lundqvist Rederierna in Finland sold Alfa America in the year 2002. She was also renamed Alfaship. Lundqvist controls 11 vessels, most of them are oil tankers. Alfaship was built at Nagasaki, Japan. The new owner Polembros operates 34 vessels and has a large scrap record and it may be mentioned here that Polembros has sold 10 ships for scrap to Asian breakers since 2001.

Sources in the shipping industry added that Polembros Shipping was reportedly trying to change ownership papers and ship's name to hide from local authorities.

Sources said that if this ship is bought by any of Pakistani ship breakers, it will not only cause enormous damage to the beach environment but will also damage the ship breaking industry's reputation, which has recently started picking up pace.

It is pertinent to note here that there is no provision in the ship breaking rules regarding inspection of contamination of the ship brought for scrapping.


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## Owais

*MCB Bank's winning streak continues* 


KARACHI (July 14 2006): The MCB Bank has yet again received the esteemed European Award for the "Best Bank in Pakistan". It is the only bank to receive the European Award for Excellence for the sixth time in the past seven years.

According to a press release issued here on Thursday this has only been possible because of the confidence and trust reposed in the bank by million of its customers.

The prestigious banking award was conferred on MCB in a ceremony held in London, attended by distinguished representatives of leading banks and financial institutions of the world. MCB's chairman, Mian Muhammad Mansha was present on the occasion while Muhammad Aftab Manzoor, President and Chief Executive of the MCB Bank Limited received the award.

MCB continues to expand its retail and wholesale banking with diversified products and services portfolio. The bank continuously endeavours to achieve leadership in innovation and customer convenience. Its emphasis has always been on multi delivery channels. Along with its easily accessible branches, MCB provides the largest network of ATMs and the most comprehensive Internet banking solution. It is the leading issuer of plastic in the country and also has the largest share in ATM transactions.

MCB has made strong inroads in the corporate banking arena by materialised considerably large deals and transactions including advisory business apart from actively participating in various syndicated arrangements. It has also provided improvised cash management solutions and structured financing activities to almost all-reputable corporations in the country. It has ended the monopoly of select foreign banks in the areas of hedging and derivative products by offering innovative solutions to the corporate clients.

Along with the traditional mode of banking, MCB has not only been expanding its Islamic banking operations across the country but has also been active in debt and equity markets, contributing significantly in its profit growth.

The consistency with which MCB has been receiving international accolades shows that its banking stands parallel to international standards and makes it truly the best bank in Pakistan.-PR


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## Owais

*PPL starts drilling of Sarang Well* 

LAHORE (July 14 2006): Pakistan Petroleum Limited (PPL) has begun drilling of an exploratory well at Kot Sarang in Chakwal District of Punjab and planned to complete the work in 210 days, sources told _Business Recorder._ The civil construction work at the site has already been completed and spudding is in progress from the first week of this month, official sources said.

The contract for drilling of the well has been awarded to a French company Schulumberger which, according to the contract, will complete the work in seven months ie by December this year, the sources added. About the cost, the sources said that according to the contract the French firm will charge US $6,000 per day from PPL, the operator of the said block.

Kot Sarang, located in village Bhagwal in district Chakwal of Punjab in the prolific oil province of Potohar plateau, had been awarded to PPL in November 2002 with 100 percent working interest, covering an area of 665sq km. PPL later gave 25 percent working interest to MGCL last year while retaining 75 percent shares in the said block.

Earlier two wells Kot Sarang-1 and Kot Sarnag-2 had been drilled in the block by OGDC in 1966 and 1985, respectively. According to a report, the recent seismic interpretations indicated that that the well was off the structure. In Kot Sarang-2 potential reservoirs were tested but failed to produce any hydrocarbon and it was plugged and finally abandoned.

According to the report, based on interpretations of reprocessed seismic data, two leads were identified within the Kot Sarang Block at the Eocene level and 2D seismic of 144 line km was acquired over the larger eastern lead.

Based on the interpretation of seismic data and its integration with surrounding wells data the lead appeared as an economically viable project. So finding bright prospects of discovery, the joint venture partners resolved to drill an exploratory well namely "Kot Sarang X-1".

It may be pointed out that the joint venture has established a 25-bed hospital in the block costing Rs 5.18 million including Rs 1.18 million contributed by the Punjab government.


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## Owais

*SCRAs surge by $15 million* 

KARACHI (July 14 2006): The financial year 2007 is said to have begun on a positive note as far as Special Convertible Rupee Accounts (SCRAs) are concerned. The SCRAs, which is an indicator reflecting on foreigners' perception about portfolio investment in Pakistan, surged by $15 million during the first 12 days of FY2007 (July 01-July 12, 2006) as per data released by the SBP on July 12.

The surge occurred gradually rising from $1.6 million (USA up $2.7 million) on July 5 to $8 million (USA and Singapore up $5.3 million each) on July 7 and then to $9 million on July 10 with Singapore at $7.2 million leaving behind USA, whose accounts still indicated a balance of $5.3 million.

The overall surge of $15 million in 12 days was also led by Singapore, whose investors brought in over $11 million for investment in Pakistani equity and debt securities.

Relegated rather surprisingly to the second position for the period under report, USA brought in nearly $6 million. Funds originating from UK, which occupied the third position, amounted to some $2.4 million. Liberia, which exhausted its accounts by $0.3 million during FY2006, brought in fresh funds amounting to less than $0.1 million during the same period.

Switzerland made the largest withdrawal and drew back about $5 million between July 01 and July 12. Other negligible to minor withdrawals took place in the case of Hong Kong and Qatar. All in all, there were fresh arrivals of some $19.5 million while total withdrawals during the period amounted to some $4.8 million.

Other 15 countries including BV Island, Bahamas, Bahrain, Germany, Guernsey, France, Japan, Kuwait, Luxembourg, Oman, Philippine, Saudi Arabia, Sri Lanka, Netherlands and UAE did not disturb their accounts during the period.


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## Owais

*Revenue collection swells to Rs 710 billion in fiscal year 2006* 

ISLAMABAD (July 14 2006): The revenue collection has crossed Rs 710 billion in July-June (2005-06) against the annual target of Rs 690 billion, reflecting an increase of Rs 20 billion. Sources told _Business Recorder _on Thursday the collection has surpassed Rs 710 billion as per latest available data.

The reconciliation of revenue receipts between the CBR and the Accountant General of Pakistan Revenue may also improve revenue collection.According to the updated figures, the CBR has collected over Rs 710 billion during 2005-06 against Rs 588.1 billion in July-June (2004-05), showing an improvement of Rs 121.9 billion.

The updated collection in June 2006 has crossed Rs 99 billion against Rs 87.362 billion in the corresponding period last fiscal year, depicting an increase of Rs 11.638 billion.


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## Owais

*Pakistan foreign exchange reserves decline by $71 million* 

KARACHI (July 14 2006): Foreign exchange reserves declined by $71 million to $13.040 billion in the week ending July 08, 2006 the State Bank of Pakistan (SBP) said on Thursday. Reserves held by the SBP declined to $10.672 from $10.760 billion a week earlier, however those held by commercial banks rose to $2.368 from $2.350 billion.


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## Owais

*Palpa offers Ifalpa's services for Fokker crash probe* 


KARACHI (July 14 2006): The Pakistan Airline Pilots Association (Palpa) has offered the services of an International Federation of Air Line Pilots Association (Ifalpa), UK, Accident Analysis Team (AAT) for impartial investigation of the fatal F-27 accident at Multan.

Palpa President Captain Khalid Hamza, in a letter on June 12, has forwarded 10 observations of the professional body on the accident to the director general, Civil Aviation Authority (CAA), which, according to him, "may be of paramount importance during the investigation."

Copies of the letter have been sent to the President, other related departments, Ifalpa officials, Defence Secretary, Special Assistance to the Chairman PIAC, Secretary, National Security Council, Senate investigation committee, and others.

Since the Civil Aviation Authority, being the regulatory authority, is conducting the investigation, Palpa's observations may help in enhancing the flight safety in the country in general and airlines in particular by correctly pinpointing the fault.

*FOLLOWING OBSERVATIONS/QUESTIONS HAVE BEEN RAISED BY PALPA: *

(i) Was the captain of this flight asked to operate the flight after availing minimum rest of 10 hours? This 10 hours of rest is applicable for a subsequent flight and not for planning purposes flight.

(ii) Under what circumstances/ obligations/studies, minimum rest period of 12 hours as per Air Navigation Order (ANO)-3 of November 2, 2005 was reduced to 10 hours in the ANO-3A issued on May 25, 2006.

(iii) When was the weather reporting equipment at Multan checked/calibrated last?

(iv) If the weather reporting was correct, did the operator load the aircraft correctly, according to the temperature, etc?

(v) It is evident that the aircraft experienced engine fire/power loss/propeller feathered/after take off as per the preliminary investigation reports. If it was so, then why the aircraft did not sustain flight on remaining engine.

(vi) When was the said aircraft's, F-27 PK-688/100706, Aircraft Performance Deterioration (APD) factor revised last? ie fuel and performance. The said aircraft had a history of engine-related problems, according to Palpa.

(vii) A representative from Palpa should be included in the investigation team to make the report acceptable to the international standards. It is an international practice to include representatives of all the stakeholders in the investigation team.

(viii) Palpa said it has learnt through reliable sources that PIA had approached the CAA to reduce post and pre-flight rest for Long-Range (LR) flights, operating to/from North America/Canada.

(ix) The Association has also pointed out that, at present, PIA is operating LR flights according to the recommendations of Ifalpa, duly approved by the CAA Pakistan.

Palpa explained that Ifalpa sponsored AAT which, it has suggested is duly certified by the International Civil Aviation Organisation (ICAO), Federal Aviation Administration (FAA) and National Transport Safety Board (NTSB), USA.

*ON REST PERIOD, ANO 3 READS AS UNDER: *"Regular Air Transport (RPT) Air Operator shall provide each flight crew member of an aircraft with a minimum rest period before each flight duty period which shall not be less than twice the duration of the duty period of previous flight and not less than 12 hours, and shall provide a rest period of not less than 24 hours after availing his/her rest period of last flight in each period of seven consecutive days or shall provide rest periods as directed by the Director General CAA."

*THE NOTE TO ANO 3 READS: *"To avoid inconvenience to passenger on subsequent flight minimum rest period may be reduced to 12 hours with the consent of each flight crew member provided that the crew member does not feel fatigued and feels in good physical/mental condition to operate a flight."

*THE NOTE TO ANO-3A READS: *"To avoid inconvenience to passenger on subsequent flight minimum rest period may be reduced to 12 hours on international sectors and 10 hours on domestic sectors with the consent of each flight crew member provided that the crew member does not feel fatigued and feels in good physical/mental condition to operate a flight."


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## Owais

*Stock market ends on positive note* 

KARACHI (July 14 2006): The share market closed on a positive note on government's plan to sell OGDC share by September and President Pervez Musharraf's statement blaming former SECP chairman for the 2005 market crash that boosted sentiment.

The KSE-100 Index closed at 10014 levels up 94.00 points from the previous closing of 9,920. Volumes in the ready market were 243 million shares compared to 209 million shares recorded on Wednesday. However volumes in the future market were 59.50 million shares against 49.26mn shares recorded in the previous trading session.

The market opened on a positive note and remained positive throughout the day. The trend was led by the Oil Sector on the back of higher international oil prices and OGDC's GDR related news. Positive sentiment was further enhanced by President Musharraf's statement blaming former SECP chairman for the March 2005 crisis, in an interview with a local news channel and newspaper.

Ahsan Mehanti, chief executive officer of Shahzad Chamdia & CO., said that though the values at the up saw some profit taking, but the encouraging portent for the market was the improvement in volumes. The rise in business indicates that retail investors are entering the market. Investment in CFS is also gearing up which endorsed our view that interest has been ignited.

The upcoming results from the companies also bodes well and consolidation from this level might boost confidence of financial institutions and general investors at large.

Hasnain Asghar from Aziz Fidahuesin said that buying in Oil and Gas stocks led the show followed by Cement and Banking stocks. The under valued stocks inspired buying interest by the retailers as well, update on privatisation and issuance of OGDC GDR's allowed the sector to stage a recovery after major adjustment towards the end. The increasing Oil prices on going privatisation and upcoming corporate announcements will allow the sector to lead the show, a midday adjustment on Friday can however be awaited to take fresh positions.

Technically the index continues to find support around 9870-9877 while over head resistance stays at 10125-10132, ability of the index to close above 10053-10059 will allow the index to continue the upward drive.

The market managed to maintain its recovery drive for the third day in a row. The KSE-100 index closed above the psychological barrier of 10,000 points after 14 sessions. The market remained firm throughout the session with the index gaining 206 points to mark the 10126 point level intra-day high. However, the gain was trimmed due to profit taking in notable scrips. OGDCL, PPL and POL closed 1.7 percent, 1.8 percent and 1.04 percent lower from their intra-day highs. On the other hand, cements performed well with Fauji Cement and Maple Leaf Cement closing limit up for the second consecutive day while D.G. Khan Cement and Lucky Cement depicted 2.7 percent and 1.2 percent respective increments. Leading banking scrips closed in the red on profit taking as NBP, MCB, BoP and Faysal Bank posted 3.1 percent, 4.0 percent, 3.3 percent, and 2.1 percent declines from their intra-day highs.


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## Owais

*LSE pretty erratic* 

LAHORE (July 14 2006): Share prices moved erratically on Lahore Stock Exchange (LSE) on Thursday while last-minute profit-taking forced the index shed most of morning session gains to finish with a reduced gain.

The LSE-25 index ended at 4382.07 points as compared to previous day's 4340.84 points, posting a rise of 41.23 points (1-percent). Turnover also slightly improved to 46.826 million shares from 43.697 million, increasing by 3.129 million shares (7.16-percent).

There was no change in overnight trading pattern and the market played fairly well, under the lead of oil and gas sector. In first half of the session, people witnessed an aggressive buying, particularly in petroleum sector that lifted the index up to 200 points, at one stage. However, later profit-taking emerged which forced the index to end with a reduced gain, brokers said, adding the sentiment was bullish and the market tone was aggressive throughout the day. In last minutes, the market lightened weight; therefore, investors are expected to indulge in fresh buying on Friday. However, people may again opt for profit-taking in the last session due to weekend, they pointed out.

After two days' bullish spree, the market took a short-breather in second half of the session on Thursday following profit-taking, but managed a positive closing, analysts said. According to them, the market showed wild movement in last couple of days and totally ignored news of arrival of foreign experts to probe the KSE crash as well as Mumbai train blasts.

About movement in petroleum sector, they said that oil prices had reached US $76 per barrel in international market which brought a positive impact on the oil sector shares in the market. They further said that President Musharraf's statement on a private TV channel, in which he put the responsibility of the market crisis on ex-SECP chief Dr Tariq Hassan, pleased the brokers. Now brokers feel that the government has found a scapegoat in the form of Dr Hassan to hold him accountable for the market crisis, they pointed out.

Moreover people expectations are very high about the corporate results, especially they are expecting good result of cements and oil sector. Due to these reasons, the market may remain in positive column and the KSE index may touch 11,000 level by mid of August, they observed.

Of total 89 traded scrips 20 improved in worth, 26 landed in minus column while 43 stayed pegged to their previous levels. Among key gainers, Pakistan Oilfields was up Rs 6.00, PPL Rs 5.00, Adamjee Insurance Rs 3.75, OGDC Rs 1.50 and DG Khan Cement Rs 1.45.

Major losers included National Bank, which lost Rs 5.60, MCB Bank Rs 5.35, UBL Rs 2.90, PSO Rs 2.55 and Bank of Punjab Rs 1.60. National Bank and OGDC were the leaders in terms of volume with 8.032 million shares and 3.452 million shares, respectively.


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## Owais

*Bulls dominate ISE proceedings* 

ISLAMABAD (July 14 2006): Bulls dominated the proceedings at the Islamabad Stock Exchange (ISE) where major player and bargain hunters injected fresh investment in trend-setters amid increase in index. ISE Ten index showed an improvement of 67.84 points, as the index moved from 2,569.94 to 2,637.78 points.

The horizon of trade expanded from 115 stocks to 129 companies. 92 gainers outclassed 36 losers, while one company remained pegged to its overnight levels.

The turnover of OGDCL was 242,100 shares as compared to previous volume of 68,200 shares. The volume of Pakistan PTA was 200,000 shares. The turnover of Pakistan Petroleum was 41,700 shares as compared to previous volume of 34,400 shares.


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## Neo

BEIJING (July 14 2006): President Pervez Musharraf underlined the need of translating the existing Sino-Pak deep-rooted diplomatic bonds of friendship into a strong and vibrant economic partnership.

Pakistan is currently engaged in preparing a comprehensive plan to attract Chinese investment in the country and giving boost to their bilateral trade ties, the president said in an interview published this week by the Shanghai-based World Market Magazine.

In its cover-page report, the magazine highlighted the future prospects of Sino-Pak economic co-operation in various sectors.

The president stressed for reinforcing Sino-Pak commercial interactions, stating, "Our economic and trade relations are not commensurate with the excellent political and strategic partnership." He hoped that the private sector would work more aggressively, exploiting the available opportunities to serve the economic interests of their people.

Referring to a Framework agreement singed during his visit to Beijing in February this year, he said it provided a strong base for enhancing and deepening their economic and trade co-operation. He said Pakistan was actively working on a plan to set up Pak-China industrial and high technology zones in the country for attracting investment and joint ventures from China.

"We are also preparing an incentive package to make these zones as a center of win-win co-operative partnership for both the countries," he said.

President Musharraf stressed that Pakistan should be destination of choice for Chinese investments because of their great traditional friendship, close geographical proximity and Pakistan's strategic geo-political and geo-economic relevance. His government, he added, would also take steps to actively encourage relocation of Chinese manufacturing units in Pakistan, specially in the textile sector. To a question, the president hoped the on-going negotiation for Free Trade Agreement between the two countries would be completed by the end of this year. This would be a major step-forward expanding their trade ties, he added.


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## Neo

SIALKOT (July 14 2006): Economic and Commercial Officer of US Embassy to Pakistan, Megan Selmon said that adequate efforts were being made for to further accelerate pace of trade activities with Pakistan. Pakistan is an important country of the region and playing an instrumental role for peace and in weeding out terrorism she said.

Addressing the members of Sialkot Chamber of Commerce and Industry (SCCI) here on Thursday she said that under "Bilateral Investment Treaty" (BIT) both Pakistan and US could expand and enhance trade activities and under this programme more American investment would come to Pakistan.

The dialogues on energy, science and technology and education between the two countries were underway resultantly Pakistan will be benefited she added.

Megan Selmon said that aim of visit to this export-oriented city of Pakistan was to promote commercial and economic relations between Pakistan and US.

The Sialkot Chamber of Commerce and industry (SCCI) is most entrepreneurial chamber of Pakistan and render laudable services for the promotion and strengthening the relations with America she said.

President Bush had announced a five-year assistance programme for Pakistan for economic and military relations and under the programme US 300 million dollars economic aid would be provided in next five year Megan Selmon revealed.

The US Economic and Commercial Officer said that under reconstruction opportunities, US would extend all possible co-operation and assistance for the development and promotion of industrial sector in less developed areas like Balochistan, NWFP and Azad Kashmir areas.

President Sialkot Chamber of Commerce and Industry (SCCI) Faisal Mahmood Khan said on the occasion that exchange of trade delegations on regular basis, participation in trade fairs and exhibition in both countries including single country exhibition and regular exchange of information on foreign trade regime and other publications through the respective trade offices and other relevant organisations would be supportive for the improvement of trade between the two countries.

Faisal Khan on this occasion called upon the US investors to come forward and invest in Sialkot Export Processing Zone (SEPZ), which is second biggest zone of Pakistan.


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## Neo

ISLAMABAD (July 14 2006): President General Pervez Musharraf has said privatisation forms a core of Pakistan's economic strategy and an integral element of FDI, which along with exports and remittances helps balance out trade deficit.

He declared in an interview with Business Plus aired on Thursday evening that the privatisation of state-owned enterprises like PTCL has been transparent, fair and successful as privatised organisations including banks have been performing much better in the private sector.

"I want to assure the nation that privatisation process has been transparent and fair," he stated.

Musharraf pledged to turn the current trade deficit into surplus but remarked that increased import of machinery and equipment will ultimately benefit the economic growth and contribute to higher industrial growth.

The privatisation of loss-incurring companies would save billions of rupees to the national kitty, he remarked.

On the Supreme Court verdict on Pakistan Steel Mills sell-off, he said the SC is independent and "we must honour its observation and rectify."

At the same time, the President expressed the hope that it would not affect the privatisation process of the country as Pakistan wants greater inflow of investment into various sectors for its continued economic growth.

Musharraf said Nawaz Sharif was on board on Kargil plan and had attended a briefing on it by senior Army commanders on February 5, 1999 in Kel sector and rejected the former prime minister's claim as false that he came to know about it from his Indian counterpart.

The President also presented pictures during an interview, which showed Nawaz Sharif attending a briefing by the Corps Commander Lieutenant General Mahmood. Pictures also showed Sharif addressing the troops sitting on heaps of snow.

There was no purpose of visiting Kel which is south of Kargil Sector during such an adverse weather condition other than knowing the operational details first hand, Musharraf said.

These pictures, he said, belie Nawaz Sharif's claim that he had come to know about Kargil from his Indian counterpart Vajpayee.

Continuing his reply to the question, Musharraf said a prime minister is not worth his salt if he is being informed about such issues by his Indian counterpart.

Replying to a question about Karachi Stock Exchange crisis in March 2005, the President said having reviewed all aspects of the issue he has concluded that former chairman SECP, Tariq Hassan, is to blame for this.

"Because it was SECP which had the responsibility to regulate and Tariq Hassan was its chairman-why did he allow this to happen, so he is to blame and nobody else," he added.

He also referred the report of a committee constituted to look into the reasons of KSE crisis and added that the committee did not blame the government.

Musharraf strongly rejected allegations against Prime Minister Shaukat Aziz vis a vis the stock exchange crisis.

"The Prime Minister has no hand in the Karachi Stock Exchange crisis, I know it," he stated categorically.

The President added that he would be the last man to absolve a prime minister involved in something which damages the nation.

He said the opposition is trying to malign the prime minister and the government through such unsubstantiated allegations in view of next year's elections.

Musharraf expressed the hope that progressive forces will join to defeat retrogressive forces in the year 2007 "very important" elections, which he vowed would be fair, transparent and impartial.

"Let progressive forces join to defeat retrogressive forces," he stated when asked about his hope about the elections.

Commenting on the allegations levelled by the opposition vis a vis government policies, the President said he does not take dictation from any foreign quarter on Pakistan's national issues.

"All my policies are in accordance with Pakistan's interest-nobody is dictating me on democracy, nuclear or extremism and terrorism issues - everything we are doing is in Pakistan's interest - there is no pressure whatsoever on me."

Quite the contrary, foreign leaders express admiration for Pakistan's policies and its role internationally and are more interested in continuity of policies, he stated.

He categorically stated that no foreigner would be allowed to interrogate Dr A Q Khan and added that only Pakistani investigators look into any evidence brought to the country's notice.


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## Neo

LAHORE (July 14 2006): Federal Information Minister Mohammad Ali Durrani has said that the government is going to launch a mega 'self-employment project' under which 1.8 million people would get jobs in next five years while 400,000 people would be provided jobs in next financial year. He was speaking at the Lahore Chamber of Commerce and Industry (LCCI) on Thursday.

LCCI President Mian Shafqat Ali, Senior Vice-President Abdul Basit, Vice-President Aftab Ahmad Vohra, former LCCI President Iftikhar Ali Malik, Chairman PIAF Mian Abuzar Shad and former Senior Vice President Sohail Lashari were also present on the occasion.

The Federal Information Minister who spoke at length on various issues said that special initiatives are being taken to provide relief to the masses, as the government is well aware of the fact that the high utility prices are affecting the common man's life. He said that the price-control mechanism had already been activated and in coming days people would see the results for themselves. The government would use the media aggressively to control the escalating prices of essential items in the country, he added.

About load-shedding, Durrani said that a solid strategy had been evolved to cover up electricity shortage in the country and in this regard the government was seeking help of the private sector. "Now from onwards there would be no load-shedding and if need arises it would be made with the understanding of private sector," he added.

He further said that the private sector was playing a very crucial role for the economic well-being of the country for which the Federal government is highly indebted to the Lahore Chamber.

He said nobody would be allowed to disrupt the process of reforms initiated by President Pervez Musharraf, as continuity in policies was a key to the success. He said that there would be no Martial Law in future, as the democratic institutions have gained enough strength in the country. "No country could afford U-turn after a short period," he added.

He said in future the elections would be held in free and fair manner, and assured that all the future governments would complete their tenures of five years. He admitted that law and order situation was the biggest challenge and the government was taking necessary steps in this regard.

According to him, the government would establish first Media University of Islamic World in Pakistan; so that in future the country could play leading role in this region. He said the present government has ensured freedom of press and it has nothing to hide. Now every type of defence purchase is taking place after the approval of the Cabinet.

While talking to newsmen, the minister said that the world is facing the challenge of terrorism and Pakistan is also one of the affectees. He said that the challenge has to be tackled with comprehensive policies rather than pointing fingers on other countries.

On Wage Board Award, he said that the Information Ministry has planned a meeting with the APNS, which would be held soon. He claimed that the present government has taken steps for the welfare of workers.

Talking about the recent statements of the opposition leaders sitting outside Pakistan, he said that they are non-elected and irresponsible politicians, and are giving irresponsible statements, which is damaging their creditability among the people. The purpose of such statements was to draw media attraction, he added.

He further said that Maulana Fazl-ur-Rehman is an experienced politician and knows the weakness of the opposition leaders sitting abroad; it is right of him to play with their weakness.

About the political stability in the country, he said that under the leadership of Pervez Musharraf, Shaukat Aziz and Chaudhry Shujaat Hussain the country is politically stable and the system is working smoothly, which continue in future as well.

On Chaudhry Aitzaz Ahsan's statement of 'surprise', Durrani said that there is no room for surprise in politics; it only happens in novels, dramas and movies. However, they would get a surprise in the next elections, he added.

Speaking on the occasion, LCCI President Mian Shafqat Ali said that the government should take steps to reduce trade deficit which is now touching the figure of 12 billion dollar. He also urged the minister to help bring the prices of utilities down, as the same are leaving Pakistani goods non-competitive in the global market hence the country was losing its due share.

He said Pakistan's economy had posted a growth of 6.6 percent in its GDP during the year 2005-06 against the last year's growth of 8.6 percent. "The growth in agriculture was 2.5 percent against 6.7 percent, manufacturing 6 percent against 12.6 percent and in commodities producing sector 4.3 percent against 9.2 percent. The only sector, which posted higher growth in 2005-06, was the services sector, which grew by 8.8 percent against 8 percent last year.

This shows that the economy has not been able to sustain the momentum of growth experienced during 2004-05. The government should think seriously as to why manufacturing and agriculture sectors have missed their targets and come out with some package to achieve the growth next year," he added.

The LCCI President said that the rule of law is one of the most essential pre-requisites to keep the businesses flourishing in the country. "Unfortunately despite heavy investment by the government to improve the situation, there is no improvement in the law and order situation in the country," he pointed out.

Earlier, the Federal Minister inaugurated the LCCI Production House.


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## Neo

ISLAMABAD, July 13: The Central Board of Revenue (CBR) has issued new income tax rules for application of initiation of mutual agreement procedure (MAP) to facilitate Pakistani nationals residing abroad in case of having any complain against the host country taxation authority.

The new rules 19A were notified through an income tax notification SRO714 of 2006 issued here on Thursday by amending the Income Tax Rules 2002, which could only be applied in case of those countries with home Pakistan has signed an agreement for the avoidance of double taxation.

The CBR has also prescribed a form in this connection to make an application to the CBR seeking to invoke the provision of the MAP, if any, provided therein, in the Form prescribed in rule 19C. The application would be processed following having satisfaction that the taxpayer has reasonable grounds to justify CBR assistance; the application has been made within two years from the date of notification of the cause of grievance; and the double taxation or other impending grievance is more than a mere possibility; shall cause to take up the matter with the Competent Authority of the country concerned and endeavour to resolve the matter through consultative measures.

In case the CBR decides not to intervene in the matter, it will inform the taxpayer applicant, within 30 days of the receipt of the application, of its decision and grounds thereof in writing.

If during the course of mutual agreement proceedings, the competent authority of the other country requires any clarification, verification of facts, or guarantees, that shall be communicated to the applicant taxpayer, and after the receipt of the same shall be passed on to the competent authority of the other country.

At any time, if the terms and conditions of the impending resolution are not satisfactory to the taxpayer, he may withdraw from the MAP proceedings and pursue any right of appeal under the normal course available.

The CBR would communicate the outcome of the MAP proceedings taken up with the other country to the applicant taxpayer in writing.

Almost a similar kind of rules were notified through the same notification as 19B for taking action on an application received through the competent authority of a treaty partner country.

Where a reference is received from the competent authority of a country outside Pakistan under an agreement with that country with regard to any action taken by any income-tax authority in Pakistan, the CBR shall call for a report from the Commissioner concerned and, if required, examine the relevant records, and shall endeavour to arrive at a resolution of the case on unilateral basis in terms of the liberal interpretation of the legal provisions applicable.

But certain conditions were also notified in case of which no action would be taken on complaint received from the other country.


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## Neo

KARACHI, July 12: Except for 42 per cent decline in sales of buses, the entire auto sector gave a robust performance marked by increase in car sales by 22.2 per cent followed by rise in motorcycle sales 24 per cent, trucks 27.7 per cent, light commercial vehicles (LCVs) 27.4 per cent and farm tractors by 88 per cent in 2005-06 as compared to 2004-05.

According to figures compiled by Pakistan Automotive Manufacturers Association (PAMA), a total of 155,514 cars were sold in 2005-06 as compared to 127,309 units in 2004-05, thanks to sustainable Ã¢â¬ËartificialÃ¢â¬â¢ demand, triggered by the auto financing introduced by banks and leasing companies, despite rise in car financing rates.

The import of used cars stood at 45,479 units in July-June 2005-06 as compared to 11,877 units in 2004-05 but it has failed to give a real jerk to the high demand of locally assembled cars like Suzuki Alto, Suzuki Mehran, Suzuki Cultus, Toyota petrol version and Honda City. However, import of used cars, jeeps and sports utility vehicles (SUVs) had given a tough time to Toyota Altis, Toyota Diesel, Honda Civic, Daihatsu Cuore and Hyundai Santro in terms of very thin advance booking orders in the last six months.

Interestingly, the demand for both imported used cars and locally produced cars have remained very hot during the last fiscal. It means that there is a big vacuum in demand and supply estimated at 30,000-40,000 units.

However, the rising used car imports have led to bottoming out of high premiums being charged on locally made cars by the authorised dealers. Besides, delivery period has shrunk due to import of used cars coupled with rising production capacities by the car makers, but in high demand vehicles the delivery period still ranges between two to four months.

Abdul Azeem of Invest Cap says that interest rates, although slightly higher than before, are still low enough to encourage car financing. Introduction of new models and overall economic growth have also boosted the auto demand during 2005-06.

He says that the outlook for auto sales remains robust for 2006-07. Even though the leasing rates have started to edge up due to rising interest rates the demand and supply gap still remains large enough for auto assemblers to post impressive sales performance in the new fiscal.

Pak Suzuki holds 52 per cent market share followed by 29 per cent by Indus Motor Company, 18 per cent by Honda and five per cent by Dewan Farooqui Motors.

Sales of motorcycles by PAMA members have surged to 516,640 units from 417,066 units and if non-PAMA membersÃ¢â¬â¢ sales are included then the total figures crossed over 700,000 units in 2005-06.

The entry of Chinese bikes in the market has proved a sheer benefit for the low income people who appear crazier for the Chinese bikes because of price difference of Rs19,000--20,000 from Honda CDI 70cc bike. However, Honda still holds 50 per cent market share with sales of 360,000 units in 2005-06 out of total sales of 700,000 units. Now over 40 Chinese bike-makers compete with Honda in 70cc segment.

Motorcycle is still considered as the cheapest mode of transport, especially in rural areas for its price tag as well as for low petrol consumption.

Increased economic activity, resulting in cargo movement of both import and export items in the country, has pushed up sales of trucks (mainly Hino, Nissan, Isuzu and Master) to 4,273 units in 2005-06 from 3,345 units. However, sales of Dong Feng remained depressed as it could only sell 16 units as compared to 27 units in the last fiscal. Similarly, sales of LCVs surged to 31,922 units from 25,056 units.

Increase in import of used buses in the last fiscal year coupled with investorsÃ¢â¬â¢ least interest in buying locally assembled buses for urban transport scheme, made a dent in the sales of locally assembled buses (Hino, Nissan, Dong Feng, Master and Isuzu), falling to 927 units from 1,605 units in the last fiscal.

Farm tractorsÃ¢â¬â¢ sales (Fiat New Holland and Massey Ferguson Millat) rose to 48,802 units as compared to 43,578 units.


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## Neo

Friday, July 14, 2006 

* Govt signs agreement with ADB in this connection

ISLAMABAD: The Asian Development Bank and the government of Pakistan launched on Thursday a $24 million Agribusiness Support Fund (ASF) to develop agribusiness in Pakistan. 

The Fund is part of the ADB Agribusiness Development Project, which aims at corporatizing the agriculture sector and help formulate National Agribusiness Policy and Provincial Horticulture Policies to meet international agriculture productsÃ¢â¬â¢ standards. 

Peter Fedon, ADB Country Director in Pakistan, and Hashim Khan Hoti, on behalf of the government of Pakistan, signed the agreement. The ASF will provide farmers with technical and managerial services on a grant basis to improve their productivity and competitiveness in horticulture, livestock, dairy production, processing and marketing. 

Mr Fedon said improved agribusiness is essential to maintain and expand export markets for agricultural produce/products and it will certainly contribute to increased economic growth and rural employment. 

This agreement is part of the ADB Agribusiness Development Project, which focuses on increased agricultural productivity and improved marketing for the agriculture sector. 

The ASF is a non-profit company, which is being executed by the ministry of food, agriculture and livestock. It is a public-private partnership that is primarily financed by the ADB. The Fund will be based in Lahore and it is expected to begin granting funding by September this year. 

The project will cover all areas of Pakistan and about 2,000 agribusinesses in both formal and informal sectors are expected to benefit over the next five years. The ASF will help access to agribusiness finance and revise and update the agribusiness regulatory framework, update testing and certification facilities for seed, nurseries, crops and strengthen technical training. As a result of technical assistance provided, some financial institutions are expected to develop dedicated agribusiness financing functions. These could benefit an additional 10,000 agribusinesses, including 12,500 farmer entrepreneurs by improving access to finance and providing sufficient jobs and income-generating opportunities, conservatively estimated at 100,000 permanent jobs.

Agribusiness enterprises range from micro-scale village-based operations to large-scale nationally recognized companies. Such small and medium enterprises employ about 1.5 million people in rural areas.


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## Neo

KARACHI: Cell phone subscriber base grew by over 170 per cent during 2005-06 as continued popularity of mobile phones outperformed almost six-decade-old fixed telephone by more than 500 per cent in its 15 years of operations. Currently, there are six million fixed line users in the country.

Latest figures compiled by Pakistan Telecommunication Authority (PTA) suggest cellular phone connections stood at over 34 million by June 2006, which were around 12 million by the end of 2004-05.

Ã¢â¬ÅBy June 30, 2006 total number of cellular subscribers was registered at 34.50 million (34,506,557),Ã¢â¬Â said a senior PTA official. Ã¢â¬ÅBy the end of 2004-05, there were 12.48 million (12,489,173) subscribers in the country.Ã¢â¬Â

In 2005-06, he said, total 21.7 million (21,735,354) new cell phone connections were sold by the six mobile phone companies on the back of cheaper offers due to increased number of service providers.

Ã¢â¬ÅSo there is a growth of 170.20 per cent in cellular subscriber base during 2005-06 compared to 2004-05,Ã¢â¬Â said the PTA official. Ã¢â¬ÅAlmost all the four major companies ÃÂ± Mobilink, Ufone, Al Warid and Telenor ÃÂ± achieved comparatively better subscriber base from July 2005 to June 2006.Ã¢â¬Â

The figures gathered by the telecom watchdog show by June 2006 Mobilink led the market with 17.20 million subscribers, followed by Ufone, which was serving 7.48 million people across the country.

With the arrival of UAE-based Al Warid Telecom and Norwegian Telenor, both competition and subscriber base grew at a much faster pace, as the new entrants attracted 4.86 million and 3.57 million subscribers respectively by the end of 2005-06.

The PTA data says by June 2006 Paktel, which offers both AMPS (advanced mobile phone system) and GSM (global system for mobile communications) services, enjoyed 1.04 million subscribers and the only AMPS service Instaphone had a share of 336,696.

Ã¢â¬ÅThe increased number of subscribers has also pushed mobile density rate from 8.30 in 2004-05 to 22.21 in 2005-06,Ã¢â¬Â said the official.

He appeared optimistic the competition among cellular companies would result in further cut in tariff for the consumers during 2006-07, in order to attract major market share.

Analysts say the growth in cellular subscribers was in line with expectations, but add in the new fiscal the companies may not witness such a phenomenal jump in customer numbers, which have already reached a higher level.

Ã¢â¬ÅThe growth is likely to remain slow in percentage terms during 2006-07,Ã¢â¬Â said Anwaar Ahmed Khan, a telecom analyst at Capital One Equities. Ã¢â¬ÅThe companies may enter into those areas, where they have not yet initiated services and it will need network expansion and investment.Ã¢â¬Â

He said cut-throat competition was expected among the operators during the current fiscal, after mobile number portability (MNP) service, under the PTA regulation, was implemented by all the six cellular operators across the country.

Ã¢â¬ÅThe MNP will decide the real market leader,Ã¢â¬Â said Khan. Ã¢â¬ÅAfter the MNP implementation, the companies must have to improve their service quality to keep their subscribers intact.Ã¢â¬Â The MNP is a system, which enables a mobile phone subscriber to have the same number while switching the mobile operator. The project requires Rs600m investment.


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## Owais

*CBR to be made 'Federal Board of Revenue'* 

ISLAMABAD (July 15 2006): The government has decided to convert the Central Board of Revenue (CBR) into an independent entity as 'Federal Board of Revenue' (FBR), enhancing its financial and operational autonomy for smooth functioning, with additional powers to take decisions on taxation/reforms related matters, and to authorise it to demand taxpayer's related information from any department/bank/financial institution/housing society to maintain a 'national database'.

Sources told _Business Recorder _on Friday that the CBR has drafted 'Federal Board of Revenue (FBR) Act, 2006' which would repeal the 'Central Board of Revenue (CBR) Act, 1924'. The FBR would have provisions to override any other government law.

The 'FBR Act' would set up an 'Advisory Board' comprising Minister of Finance or Advisor to Prime Minister on Finance and Revenue; Chairman CBR and three other members from the public/private sector. The 'Advisory Board' would be a supervisory body to monitor the functioning of 'FBR' and independently make annual budget allocations.

*FOLLOWING ARE THE PRIMARY REASONS FOR CONVERTING CBR INTO 'FBR': *

1. The independent board would give legal sanctity to the ongoing reform process.

2. It will enhance operational and administrative autonomy of the CBR.

3. The 'Board' will take decisions with minimum interference from the Ministry of Finance.

4. It will meet human resource management (HRM) requirements needed for the reformed units.

5. It will help in meeting the international obligations under bilateral treaties/implement international regulatory frameworks.

6. The 'FBR' will meet the requirements of CBR's vision and mission to make it a modern tax-friendly organization.

7. It will give protection to the taxation structure/tax administration under the reform agenda.

8. It would collect taxpayer's information from any government department for compiling a 'national database'.

9. It will set up an 'employees welfare fund' with an initial capital of Rs 500 million.

10. The 'Federal Board of Revenue Act, 2006' will have provisions to override all other government laws.

Sources said that the tax officials would present the proposed 'Federal Board of Revenue Act, 2006' before the Ministry of Finance after analysing all legal aspects of the new structure.

The 'Federal Board of Revenue' would create database to ensure proper charge, levy and imposition of taxes, duties, fee, additional tax and surcharges to achieve fair distribution of burden of taxes. The information collected in the database would be kept confidential and would not be disclosed except for purposes authorised by or under any law.

The tax officials would be empowered to collect information about taxpayers from government divisions and attached departments or corporations, provincial government departments and corporations, State Bank of Pakistan (SBP), banks, investment companies, or other companies, commissions, regulatory bodies, societies including housing societies registered under any law for the time being in force, or any authority, including Wapda or its subsidiary companies, Nadra; utility companies, corporations and withholding agents, and from the tax and duty streams within or outside the purview of the 'Board'. It would also protect 'intellectual property rights'.

The 'Board' may prescribe any reasonable penalty for non-compliance by concerned department. The 'Board', on decision by the 'Board in Council', may provide information required by any public sector entity, to the extent that only would serve the purpose of the entity, and is in conformity with the mandate given to it.

The 'Federal Board of Revenue' may by notice call any person acquainted with the facts and circumstances of the case to appear before an authorised investigating officer. Such person would be examined orally and any statement made by him during the examination would be recorded in writing.

The 'Board' would be empowered to prosecute any person, who allegedly commits an offence under Customs Act 1969, Sales Tax Act 1990, Federal Excise Act 2005; or any other offence under Prevention of Corruption Act 1947 or National Accountability Ordinance.

The 'Board' may authorise any member or employee to take decisions pertaining to legal proceedings before a Tribunal, High Court or Supreme Court including decisions to withdraw any pending matter or to give a statement in the interest of the 'Board'.

The 'Board' would have the powers to implement through administrative, legislative or enforcement measures international commitments and obligations on the Government of Pakistan under bilateral treaties, multilateral treaties, applicable resolutions of international organisations, proposal of professional bodies etc. It would comply with international regulatory frameworks, safety measures etc as recommended by international bodies.

According to the draft 'FBR Act 2006', the CBR would continue to operate, without interruption, as 'Federal Board of Revenue' and regulate fiscal, investment and policy matters; administration management, imposition and collection of Federal taxes, duties, levies, on national level and for connected or ancillary matters.


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## Owais

*Cont......*

*ADVISORY BOARD: *There shall be 'Advisory Board' comprising Minister for Finance and Revenue or Advisor to Prime Minister on Finance and Revenue, as the Chairman; CBR Chairman and three more members from public and private sectors.

A member appointed by the federal government shall be a person who is known for his integrity, expertise, experience and eminence in any relevant field including, without limitation, finance, law, accountancy, taxation or economics. Chairman of the Advisory Board will also be member of 'FBR'.

The Advisory Board may be referred matters relating to fiscal policies, revenue targets, budget expenditure, human resources development and policy issues, goals, and targets, and matters relating to creating enabling environment to achieve vision and mission of the 'Board'.

The 'Board' may obtain approval of the Advisory Board in all matters relating to broader aspects of finance and administration.

The Advisory Board shall consider for advice only such matters as are referred to it by the 'FBR'. In its advisory capacity, the 'Board' may issue necessary advice from time to time. In case the Advisory Board is not formed or cannot function, for any reason, the Secretary Revenue Division will carry out the functions of the 'Board' with the assistance of Secretary Finance and Secretary Establishment Division.

*'FEDERAL BOARD OF REVENUE': *The draft stated that the 'Federal Board of Revenue' shall continue to operate without interruption. The head office of the 'Board' shall be in Islamabad. The 'Board' may establish and close down offices, re-locate the offices according to the stream of the taxes, at other places in Pakistan.

The federal government would appoint any suitable person as its chairman for a tenure of 3 years, which may be extended on eligibility for another 3 years. The chairman shall be the chief executive officer of the 'Board' and shall, together with other members, be responsible for administration of the affairs of the 'Board'.

*POWERS AND FUNCITONS OF 'FBR': *The 'Board' shall have all necessary powers as may be necessary to perform its duties and functions under 'FBR Act 2006'. It will prepare, with the advice of the Advisory Board, the revenue expenditure budget for each financial year.

It will give opinion on any policy matter referred to it by the federal government; perform such other functions as are conferred on the 'Board' by any other law as may be delegated to it after enforcement of the 'FBR Act, 2006'; oversee the performance of the 'Board' and its employees; appoint and prescribe terms and conditions of the employment of experts, specialists, trainers, consultants; allow additional allowance or pay on regular basis as remuneration for performance of such job and/or the office or to all the employees which shall be available to such employee or employees or the member or members of the 'Board'; take administrative/disciplinary actions against employees/members; specify fees, penalties and other charges chargeable by the 'Board'; regulating the issues of taxes, duties, levies, charges, fees, CVT, surcharges etc through implementation of rules/regulations; regulating and implementing the income tax, sales tax, customs and central excise and any other relevant legislation of this 'Act' relating to the tax and relevant appeals, and the disputes resolution methods; supervising and monitoring the activities of the tax departments and the 'FBR' would be empowered to conduct investigations relating to the taxation matters and the relevant departments.

The 'FBR Board' shall be responsible for the regulation, administration, assessment and collection of taxes, whether federal or provincial, if so provided by law. It will be empowered to conduct research and frame a code of conduct for employees to enforce accountability.

The 'Board' may in consultation with the Advisory Board, calculate taxes and duties, adopt streams of taxes and duties and/or make it identifiable as inland revenue and customs duties, or internal taxes and duties. It will identify matters to make policy decisions and may also make recommendations regarding policy to the federal government for its consideration.

The 'Board' may adopt best international practices followed in other countries for improving collecting of duties/taxes.

*POWER TO COLLECT REVENUE: *The 'Board' may, from time to time, and with the approval of the federal government, collect revenue from sources within Pakistan or from abroad as the case may be, as envisaged in the various legislation to the extent applicable.

*BUDGET ALLOCATION: *The Ministry of Finance will provide budget for revenue and/or current expenditure and lump sum funds, based on the requirement of the 'Board' to achieve its goals and targets. The 'Board' shall frame financial rules and implement the same on approval of the Finance Division.

*ANNUAL REPORT: *Within 90 days before the end of each fiscal year, the 'Board' shall prepare a report on its activities including investigations/inquiries and release it to the general public. The 'Board' shall, within 120 days before the end of each financial year, send the statement of accounts and its annual report to the Parliament.

*HUMAN RESOURCE MANAGEMENT: *The 'Board' may, with the approval of Advisory Board, formulate human resources development and management policies which may include career planning, evaluation for retention in service, and other job and service related matters like posting with the companies or trust formed by the 'Board'.

The 'Board' will prescribe selection criteria of employees for postings and transfers in general, and for postings against positions where additional allowances or pay is allowed on regular basis.

It will be empowered to appoint non-service persons having the requisite standards of honesty, integrity and skill in business administration, economics, business law, taxation, accountancy and management information system. Besides other powers, it can ask the CBR employees to disclose the assets owned directly or indirectly by them or their family members.


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## Owais

*Cont.....*

*ESTABLISHMENT AND MAINTENANCE OF COMPANIES OR SUBSIDIARIES: *The 'Board' may on need basis, get incorporated and maintain companies for training needs of the 'Board' and its employees, the field offices, organisations or institutions or for the stakeholders; research and development in the relevant fields; campaign to create, awareness and to educate the taxpayers; upgrade skills of the employees and automation purposes. It may transfer or post or place any of its employees to work for the company.

The management of such companies will be with the serving or retired members or officers of the 'Board'.

The CEO will be appointed from senior serving or retired officer with suitable qualification. The company will have principal office at Islamabad and branch office at Karachi. A committee of the members of the 'Board' shall supervise the functions of such companies.

*EMPLOYEES WELFARE FUND: *A fund called, 'FBR Employees Fund' will be set up for the welfare of 'Board' employees. The fund will be launched with an initial contribution of Rs 500 million. It will also get contribution from the employees of the 'Board' and federal government.

The fund will also collect a certain percentage of tax on concealed income, amount realised from sale or additional levies on confiscated goods, proceeds of auctions in recovery proceedings.

The fund will meet medical, transport and education and other welfare expenses, and also arrange recreational activities for the officers, employees and their families.

*REPRESENTATION BY PUBLIC: *Any person, organization or entity may make a representation to the 'Board' to point out any anomaly, tariff discrepancy, interpretation etc under relevant legislation. They may make a representation against any hardship or delay relating to the tax matters.

The 'Chairman' shall have the powers to issue orders keeping in view the taxpayer's grievances.

*RULES AND REGULATIONS: *The Federal Government may, by notification in the official Gazette, make rules for all or any of the matters in respect of which it is required to make rules to carry out the purposes of the 'FBR Act 2006'. It will be empowered to make rules in the matters relating to the imposition and levy of taxes, duties, and procedures.

This shall be subject to the condition of previous publication and before making any rules the draft shall be published in the official Gazette for eliciting public opinion within a period of 30 days from the date of publication.

*ASSISTANCE TO THE BOARD: *The federal divisions, attached departments, wings, offices, corporations and all the provincial government departments, attached departments, wings and FATA, NA administrations shall assist the 'Federal Board of Revenue' to carry out its functions smoothly.

*STATUS OF EXISTING AGREEMENTS WITH CBR: *All existing contracts and agreements made by CBR would continue even after promulgation of the 'FBR Act, 2006' and rules/regulations/SROs issued/adopted by CBR would remain intact.


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## Owais

*LMM merged with LTF-EOP scheme* 

KARACHI (July 15 2006): The existing scheme for financing locally manufactured machinery (LMM) is being merged with scheme for long term financing for the Export-Oriented Projects (LTF-EOP) to provide a level-playing field to exporters for setting up and balancing, modernisation and replacement (BMR) of Export Oriented Projects/Units.

The new proposed scheme titled as "Long Term Financing Scheme for Imported & Locally Manufactured Machinery" is being finalised and would be issued shortly replacing the existing LTF-EOP and LMM schemes, said the Governor, State Bank of Pakistan (SBP), Dr Shamshad Akhtar at a news conference here on Friday.

She said that in the meantime the LTF-EOP Scheme has also been modified. Giving the details she said that the SBP is lowering the spread on new scheme, which allows financing coverage for both imported & local machinery, by one percentage point, thereby reducing banks spread from three percent to two percent.

To meet the growing financing demand of the borrowers, the procedure for limits allocation is being revised, in particular more allocation is being provided to the Participating Financial Institutions (PFIs). Instead of present practice of allocating LTF-EOP limit as sub-limit of EFS, the PFIs will be allocated separate limits, which would be aligned, to their demand.

The utilisation of at least 50 percent of the total limits by PFIs for SME sector is being withdrawn. However, PFIs are advised to give preference to meet the financing needs of the SME borrowers.

Only SME borrowers, as defined in Prudential Regulations for SMEs, are allowed to purchase plant, machinery, equipment and accessories ffrom the commercial importers

To meet the energy requirements of the export oriented projects, the import of generators shall also be eligible for financing under the scheme.

Where sponsor(s) of the project have already invested share of equity in the project in the form of land, construction of building and procurement of local machinery etc, the same shall be treated as 'equity' of the sponsor and the condition of maintaining an escrow account may not be required provided overall prescribed debt/equity ratio of 80:20 is met. The lending PFI should place a certificate on record in this regard in the relevant credit file for subsequent inspection by our BID.

The Banks/DFIs are allowed to sanction and disburse the loan strictly in terms of criteria laid down in scheme directly and no prior approval of SBP will be required.

The borrowers may import plant & machinery required for their projects under the scheme irrespective of its being locally manufactured.

Dr Shamshad Akhtar announced a reduction in spread by 0.5 percent of banks and a reduction in the rate of refinance under EFS to 6.5 percent per annum. The final rate of EFS will not exceed '7.5 percent as against prevailing rate of 9 percent. With this adjustment, the refinance rate for EFS is now 2 percent below the T-bills rate of 6-months, which will remain the benchmark for EFS.

The end-user rate for EFS is now aligned to the regional competitors of Pakistan - in line with the exporters demand. The financing facilities under Part B (Export Sales) of the Scheme for financing Locally Manufactured Machinery will have the similar mark up rate structure, the Governor added.

The Governor underscored that this is a temporary measure and the EFS scheme will remain under regular review and banks have been instructed to enhance vigilance on use of export refinance to ensure effective use of funds.


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## Owais

*Shaukat rejects MoC's eight percent increase in exports target* 

ISLAMABAD (July 15 2006): Prime Minister Shaukat Aziz has rejected Commerce Ministry's projections showing only 8 percent increase over the last fiscal year, and directed the officials to fix a reasonable exports target for 2006-07.

Sources said that the Prime Minister was disturbed over Commerce Ministry's exports estimates and visibly expressed it during a meeting the other day to give him a presentation on upcoming trade policy to be announced on July 17.

The Prime Minister asked of Commerce Ministry's officials on what basis they were projecting only 8 percent increase in exports for 2006-07, when all other economic indicators were showing healthy trend. He counted overall economic growth, increase in remittances FDI, enhanced revenue target and several other factors.

He said that the Ministry should take into account all these factors before finalising the exports target for the current fiscal year.

Sources said that Commerce Ministry supported textile industry's demand for a special package of incentives, and strongly argued that such a treatment was inevitable for enhancing textile related items exports to subsequently push the net exports to the new height in 2006-07.

Sources said Commerce Ministry officials took the same position during the presentation and tried to persuade the Prime Minister that he should grant some special incentives for the textile industry.

Sources said the Prime Minister did not agree that the textile industry only could help the government achieve a reasonable exports target for 2006-07, if it got some special treatment in terms of incentives. He said the government would provide all possible measures to facilitate all sectors engaged in exports, but it was difficult for it to single out anyone of them for incentives.

It may be noted that the textile industry has been demanding a Rs 50 billion package. The government is yet to respond to the industry for the demand.


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## Owais

*Government worried over lack of growth in remittances* 

ISLAMABAD (July 15 2006): The government is worried over almost the stagnant trend in the remittances Pakistan receives from expatriates working abroad and is desperately looking for some remedial measures, sources said here on Friday.

With the persistent downtrend in Pakistan's manpower export during the past three years, fears are mounting that inflow of remittances might also decline further considerably.

Remittances from overseas Pakistanis are stagnant at around $4 billion per annum for the past three years. After a one-time boost when remittances touched all time high of $7 billion in 2002, a year after 9/11, there has been no upward movement.

At the heart of this stagnation is the decline in Pakistan's manpower export by more than 100 percent during past three years, from 225,000 in 2003 to just 91,000 in 2005.

The issue was discussed at the meeting of a subcommittee of the Public Accounts Committee (PAC) to review the audit report of Labour Ministry for 1990-91. Presided over by Khalid Younas, the panel was told that the matter was discussed during a recent meeting of Pakistan's ambassadors.

"We (government) did discuss with them (ambassadors) what the reason was behind this sluggish inflow of remittances," Overseas Pakistanis Division Secretary Aslam Sanjrani said.

The statement came within a week after Prime Minister Shaukat Aziz had decided to form a task force to streamline the transmission of remittances from those countries where Pakistani banks or foreign exchange companies do not operate.

Aslam said the issue was of a grave concern and the government at all levels must look into it seriously. He did not suggest any remedial measure, though.

Later, Labour Ministry Secretary Asif Hayat complained that the Finance Division did not release sufficient amount to his Ministry out of the collections from Workers Welfare Fund (WWF).

Asif said only Rs 3 billion, out of the total collection of Rs 7.63 billion, was released to the Ministry during last year. Industries across the country contribute to the WWF. Central Board of Revenue (CBR) acts as collection agency, and the money goes to federal consolidated fund. In the past, there had been reservations from the workers' bodies about government's policy of transferring WWF to the national consolidated fund and not handing it over to the Labour Ministry. At the moment, Rs 25 billion, collected under the head of WWF, is lying with the federal government.


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## Owais

*Efforts on for development in Balochistan: President* 

ISLAMABAD (July 15 2006): President General Pervez Musharraf asserted on Friday that the government would continue to make all-out efforts for accelerating pace of development activities in the whole of Balochistan province.

He categorically stated that no leniency would be shown towards such few miscreants who try to disrupt these development activities by creating law and order situation.

The President made these remarks during a meeting to review law and order situation and the ongoing development projects in Balochistan. Prime Minister Shaukat Aziz was also present on the occasion.

The President said that efforts would continue for accelerating development activities, mega and micro schemes in Balochistan, whether under the Federal Government, Khushal Pakistan Programme, or planned by senators, MNAs or district governments. During this review meeting, both the President and the Prime Minister were updated on matters pertaining to security of foreign workers and government installations, foreign direct investment (FDI) and status of ongoing development projects.

They were also informed that the government's timely and appropriate steps in parts of the two affected districts of Kohlu and Dera Bugti had started showing positive signs.

The residents of the affected areas have shown full support and confidence in government's commitment to develop the backward areas of Balochistan.

The President and the Prime Minister were also apprised of a number of projects that are being implemented in Balochistan for the prosperity of the people and to bring the province at par with other parts of the country.

These projects will bring about a quantum change in the lives of the people resulting in their socio-economic uplift through creation of greater job opportunities.

The President and the Prime Minister expressed satisfaction over the improvement of law and order in Balochistan and directed the officials to recruit more locals in police, Frontier Constabulary and other government departments. It was also a matter of satisfaction to view that more than 6000 personnel from Balochistan were in the army and the number was gradually increasing for which recruitment standards have been relaxed.

Minister for Information and Broadcasting Muhammad Ali Durrani, Balochistan Governor Owais Ahmed Ghani, Chief Minister Jam Muhammad Yousaf and Deputy Chairman Planning Commission Dr M. Akram Sheikh also attended the meeting.


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## Owais

*Importers begin placing orders for black matpe in Burma* 

KARACHI (July 15 2006): Commercial importers have started placing orders in Mianmar (Burma) for the import of black matpe (Mash whole), with shipment due in August, sources said.

Sources said that the private importers a last month, initiated correspondence with their respective parties in Burma and booked some 5,000 tonnes of the commodity, aimed to plug demand and supply gap in the country.

They said that the booked commodity would reach Karachi port sometime in August, which would then be processed and made into Mash pulse. "Some of the importers had placed fresh orders of around 200 containers or 5,000 tonnes of black matpe in Burma last month (June), which is due here in the month of August," said an importer.

He added that the black matpe is barely available in Burma because of crop shortage around the world. Commenting on the prices, one importer said that the commodity has been booked at an average price of $675 per tonne, adding that fluctuation in prices of black matpe could be seen due to shortage of this commodity and tremendous demand world over.

He said that the commodity was earlier tagged at around $600 per tonne, however when the importers of India and Pakistan approached the Burmese market, the commodity touched its peak at around $700 per tonne.

However, he said when the demand decreases, the prices went down by $25 per tonne, which made the trade viable for the local importers and they immediately booked 5,000 tonnes of black matpe. Traders pointed out that the imported commodity of $675 per tonne would be tagged at around Rs 54 per kg at the local wholesale market.

"The black matpe would cost around Rs 44 per kg when it would arrive at the Karachi port, however, Rs 10 per kg would be added in making it into Mash pulse," he added. Sources said that the importers have booked orders of black matpe despite rise in the international prices.

"Albeit, the international prices are higher, we had placed some orders in Burma after studying the local market trend where this commodity is being tagged at Rs58 per kg," importers said. The importers have also hinted of more placements of huge orders of black matpe in Burma. "Our market analysis indicates that the country still needs 55,000 tonnes of this commodity for consumption during the current fiscal (2006-07)," they added.

Senior traders said that the importers would place big orders for black matpe in October for the November crop through 'forward deals'. The country's black matpe consumption stands around 75,000 tonnes and its local production is estimated around 18,000 tonnes to 20,000 tonnes, while the remaining demand is filled through import of around 60,000 tonnes mainly from Burma


----------



## Owais

*Oil surges to record $78* 

NEW YORK (July 15 2006): Oil surged to record highs above $78 on Friday on fears the conflict between Israel and Hizbollah guerrillas could escalate and spread to more Middle East countries.

Iran's nuclear stand-off with the West, fears over oil supply in Nigeria due to militant attacks, an influx of fund buying and falling US crude supplies also buoyed the price of oil, which is up nearly 30 percent this year.

US crude soared to as high as $78.40 a barrel in intraday trading before settling up 33 cents at $77.03. Crude oil on the New York Mercantile Exchange rose $2.94, or 4 percent, this week. London Brent rose 58 cents to $77.27 a barrel, after jumping to a record of $78.03 a barrel earlier in the session.

"The speculators are out there panicking about Israel because they think it's going to spread through the Middle East," said Mike Barry, director at London's Energy Market Consultants.

Israel struck Hizbollah targets and devastated a wide array of Lebanese civilian installations on Friday. Israel has drawn world criticism of its tactics since the Shi'ite fighters seized two soldiers and killed eight.

Hizbollah, which wants to trade its captives for prisoners held in Israel, fired more rockets across the frontier. The group's chief, Sayyed Hassan Nasrallah, pledged open war on Israel after it bombed his Beirut home on Friday

Iranian President Mahmoud Ahmadinejad on Thursday warned that any Israeli strike on Syria would be considered an attack on the whole Islamic world that would provoke "a fierce response." Both Iran and Syria support Hizbollah.

Neither Israel nor Lebanon are oil producers. But both lie at the heart of the Middle East, which collectively pumps nearly a third of global output. The situation has made oil traders nervous.

"Rarely has this market been as jittery," said Anthony Sabino, professor at St. John's University in New York.

Opec sought to calm the market, saying there were sufficient supplies to meet global demand.

"The market remains well-supplied with crude," the cartel said in a statement. "Geopolitical developments, over which Opec has no influence, have been behind this sudden rise in volatility."

*EYES ON $80 OIL: *

Illustrating the market's sustained strength, prices for oil futures contracts to be delivered further ahead were trading above $80, from December 2006 to August 2007.

"There is nothing to stop prices at the moment with the stream of headlines that are coming in. All we need now is a big hurricane," Barry said.

In Iran, Ahmadinejad said on Thursday the world's fourth-largest oil exporter would not abandon its right to nuclear technology. Tehran's case was referred back to the Security Council after it delayed accepting incentives aimed at stopping it from developing nuclear weapons.

"With Israel and Nigeria, Iran completes the triumvirate of key tensions supporting prices," said Mark Pervan, a resources analyst at Daiwa Securities.

Analysts have expressed concerns about the effects of high energy prices on global economic growth. But US Energy Secretary Sam Bodman said on Friday the economy of the world's top energy consumer has held up against rising fuel costs.

"We have found that the US economy has been surprisingly resilient, surprisingly able to manage the increase in prices that we have already seen," Bodman said at a news conference with Canadian government energy officials. "I am hopeful that it will continue to do so."

Oil prices averaged $67.67 so far this year, but were still substantially below the inflation adjusted $87.65 average of 1980, hit during the second oil shock that followed the 1979 Iranian revolution.

Some experts noted that much of the money chasing oil was speculative, and said prices could easily fall if tensions ease.

"There's a lot of new financial investment coming into the market," said Michael Wittner of Calyon investment bank. "Some of that will be hot money, so profit-taking could take us below $75 in a heartbeat."


----------



## Owais

*Defaulting on re-lent loans: EAD to quiz Wapda officials today* 


ISLAMABAD (July 15 2006): The Economic Affairs Division (EAD) will quiz the Water and Power Development Authority (Wapda) for defaulting in payment of re-lending loans, due to be returned by June 30 last.

Sources in EAD told _Business Recorder _here on Friday that Wapda officials have been asked to reach Islamabad on July 15 and clarify why the organisation did not clear its re-lending loans of Rs 20.5 billion as per the schedule agreed with the federal government at the time of signing the agreements.

They said that the officials of Ministry of Water and Power, which is responsible to press the utility for debt servicing, and Finance Ministry, have also been invited in the meeting to settle the issue.

They said that Finance Ministry had directed the EAD to take up the matter with the Ministry of Water and Power and the Wapda for early payment of its re-lent loans, which the concerned Division had to return as per the agreement with the lending countries and financial institutions.

According to sources, EAD had asked Wapda to deposit the outstanding amount in the State Bank of Pakistan (SBP) account immediately, but nothing has been done by the loanee in this regard.

The GoP has already converted Wapda's Rs 4.2 billion loan into equity in February last, keeping in view its financial position, but delaying tactics in payment of re-lent loans is not acceptable, said an official.

The EAD has launched an internal inquiry to fix responsibility for leaking the information regarding Wapda's default in payment of re-lent loans, which is in progress.

Sources said that EAD would also charge additional interest on the loans whose payment has been delayed, but the actual amount to be charged would be finalised in the meeting.

The Economic Co-ordination Committee (ECC) of the Cabinet has already directed the EAD to revise the re-lending policy, after Wapda refused to avail loans due to higher interest rate.

"Wapda is of the view that it is better to borrow from the local market on prevalent rates rather than taking costly loans from the EAD," sources said.

According to the utility, the prevailing rate is 11 percent (Kibor 9.07 percent, plus exchange risk coverage 2 percent) while GoP's current re-lending rate is 17 percent, which is not acceptable.

The decision was taken in the backdrop of two project loans, namely upgradation of load dispatch system Phase II, and transmission arrangements for power dispersal of Ghazi -Barotha Hydropower Project (GBHP), which the government intends to re-lend to Wapda.

Sources said that loan and project agreements were signed between KWF, a German financial institution, GoP and National Transmission and Dispatch Company (NTDC), the project executing agency, on July 15, 2004 for Euro 51,129,188.12 for supply and erection of the 500 kV, 220 kV and 132 kV substation at Ghakkar (Gujranwala).

According to the agreement, the borrower would channel the loan to the project executing agency under a separate agreement, which must reflect prevailing market conditions in Pakistan, subject to approval of the ECC.

EAD had agreed with the proposal, but Planning Commission opined that re-lending terms could not be changed merely for one organisation.

According to sources, Planning Commission even said that if Wapda did not fulfil the terms and conditions, it was free to approach private banks.

The Ministry, however, argued that the much-delayed project should not be held up for want of a general decision, particularly when agreement has already been signed with the JBIC.

The ECC had directed the EAD in April to revise re-lending policy, and table it in the next meeting, but the decision has not been implemented.


----------



## Owais

*July-April domestic debt rises to Rs 2.233 trillion: Rs 67.72 billion withdrawn from NSS* 

ISLAMABAD (July 15 2006): Pakistan's total outstanding domestic debt rose from Rs 2.133 trillion at end June 2005 to Rs 2.233 trillion at end of April 2006, showing an increase of Rs 100.29 billion (4.70 percent), according to provisional data issued by the State Bank of Pakistan (SBP) on Wednesday.

However, compared to March 2006, when the total debt amounted to Rs 2.249 trillion, it declined by about Rs 16 billion to Rs 2.233 trillion in April, indicating that the government had retired some domestic debt, or it was the effect of withdrawal from some saving schemes which remained unattractive due to low rates of profits.

The increase in the domestic debt during the ten months of FY06 was mostly from rise in the stocks of floating and unfunded debt. The permanent debt declined rapidly during the period under review.

During these ten months, the floating debt increased by Rs 114.74 billion, and unfunded debt by Rs 5.24 billion, whereas the permanent debt declined by Rs 19.68 billion.

The permanent domestic debt, comprising medium and long-term market loans, federal government loans, special government loans, federal instruments and prize bonds, stands at Rs 481.2 billion, which was Rs 500.87 billion at the end of FY05.

The floating domestic debt, mainly comprising short-term debt instruments and market treasury bills, maintaining a rising trend, was recorded at Rs 778.16 billion at the end of June 2005. And, during the following ten months, it went up to Rs 892.90 billion.

The data further shows that the unfunded domestic debt comprising National Saving Schemes (NSS) stood at Rs 859.28 billion. It grew by Rs 5.24 billion from Rs 854.04 billion at the end June 2005.

However, it shows that the net mobilisation under all instruments of the NSS were once again negative during this period, except relatively new instruments ie Bahbood Saving Certificates, Postal Life Insurance and Pension Benefit Accounts and Mahana Amdani accounts, which increased.

Net investment in NSS fell primarily because their rates of return had become too low for investors to make fresh investment as a result of gradual slashing of profit during the last few years.

But, it is expected that as a result of government decision (in June 2006) of increasing profit rates on these instruments would attract depositors. Of these three most popular instruments of the NSS ie 10-year Defence Saving Certificates (DSCs), five-year Regular Income Certificates (RICs) and three-year Special Saving Certificates (SSCs), net withdrawals were Rs 67.72 billion in ten month of the fiscal year.

It also shows that the erstwhile popular instruments-DSCs, SSCs, and RICs-were less attractive for investors during the period under review. Besides, withdrawals from savings accounts, special savings accounts and general provident (GP) fund during the period under study were Rs 3.0 billion, Rs 983.1 million and Rs 309 million respectively during the period.

The SBP data shows that Bahbood Saving Certificates, Pensioners Benefit Accounts and Postal Life Insurance attracted net fresh investment of Rs 54.25 billion, Rs 15.05 billion and Rs 7.94 billion, respectively.


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## Owais

*EDB refuses to approve Hannover Messe expenses: setback to industries ministry* 

ISLAMABAD (July 15 2006): The Ministry of Industries and Production suffered a setback as the Engineering Development Board (EDB), which met recently, refused to give approval for the expenses incurred in connection with Hannover Messe.

Sources said that some Board members described participation in the exhibition as 'picnic party', and wanted to know the details of the orders which Pakistan's engineering sector had received so far, as a result of its participation.

The meeting expressed annoyance at the composition of the committee, headed by Nabeel Hashmi of private sector, which had approved the expenses while keeping the GM (Finance) out of the whole process. The meeting also changed the composition of the committee, and included GM (Finance), two members of the board, and one official of Export Promotion Bureau (EPB) as members of the committee.

The member representing Commerce Ministry in the board demanded that a note of dissent that composition of delegations to fairs involving government funds, as per rules of business, fall under the purview of Commerce Ministry. It may be recalled that a 220-member contingent was taken to Germany for participating in Hannover Messe 2006 for second successive year despite little response was received in 2005.

The delegation was headed by Jahangir Khan Tareen, Minister for Industries, Production, and Nabeel Hashmi, head of Business Development Committee.

Sources said that never before such a big delegation had attended the fair, and added that this would have allowed a joy ride to many participants. The contingent included dozens of officials of the Ministry of Industries and EDB, besides favourites from private sector. Last year, Pakistani participants in the fair had received no significant orders of engineering goods but again the officials spent over Rs 70 million--twice as compared to last year's Rs 35 million. Prior to last year's participation, private sector itself used to bear the expenses.

It is learnt that Rs 60 million was spent in Germany and Rs 11.3 million in Pakistan. Of the total expenditure abroad, the Ministry and EDB had paid Rs 25 million on acquiring 1100 sq metre space for private companies, Rs 3 million for pavilion utilities and Rs 2.4 million were paid to 22 translators/assistants and hostesses hired for the fair.

Besides, Rs 20 million had been spent on the construction of stands/decor and other contingencies and Rs 2.5 million on entertainment of the delegation during its stay in Hannover


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## Owais

*CBR to incur Rs 2.9 billion loss for cut in corporate tax rates* 

ISLAMABAD (July 15 2006): The Central Board of Revenue (CBR) will overall suffer a loss of Rs 2.9 billion due to reduction in the corporate tax rates in budget 2006-07. The withdrawal of capital value tax (CVT) on air tickets would cost Rs 750 million.

The withdrawal of minimum tax @ 0.5 percent on Murabaha turnover, covered under the Islamic Banking Transactions, would cause a loss of Rs 106 million in 2006-07.

Sources told _Business Recorder _on Thursday that the corporate tax rates for the banking companies would be 38 percent, for private companies 37 percent and public companies 35 percent for the 'tax year 2006'. The overall revenue implications would be Rs 2.9 billion following the applicability of these revised rates.

The simplification of salary taxation would cost Rs 1.07 billion, whereas the simplified tax regime for non-salaried taxpayers would result in revenue loss of Rs 1.64 billion in the fiscal 2006-07. Special tax concessions for women would result in revenue loss of Rs 40 million and rebate for teachers and researchers posted in government institutions would cost around Rs 20 million.

The amendments introduced in the Companies Profit (Workers Participation) Act, 1968 and Workers Welfare Fund Ordinance, 1971 would result in revenue loss of Rs 2 billion. The reduction in tax rate for Inter-Corporate Dividends would cost Rs 250 million, whereas the waiver from minimum tax in case of 'trading houses' would cost Rs 15 million to the national kitty.

Moreover, the income tax exemption on the import of Radio Navigational Aid Apparatus by airports would result in revenue loss of Rs 58 million.

On the other hand, the withholding tax on exempted and reduced rates imports would generate an amount of Rs 580 million, rationalisation of withholding tax on services Rs 470 million and withholding tax on commission and brokerage would generate around Rs 41 millions.


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## Owais

*SBP sells Rs 11,650 million treasury bills* 

KARACHI (July 15 2006): The State Bank of Pakistan (SBP) sold a total of Rs 11,650 million of Market Treasury bills on Friday in a one-day and six-day repo operation to mop up funds from the money market. Rs 2,000 million of Market Treasury Bills were sold in a one-day repo operation at 7.00 percent while Rs 9,650 million Market Treasury Bills were sold in a six-day repo operation at 7.50 percent.


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## Owais

*Banks, DFIs to disclose lending, deposit rates* 

KARACHI (July 15 2006): In order to create awareness and to facilitate the public in making informed decisions, it has been decided that henceforth banks/DFIs shall make complete disclosure of the lending and deposit rates of all consumer products offered by them.

This information would be posted on their website as well as prominently display on entrance/ or window of their branches. In order to facilitate comparison, banks/DFIs would also disclose annualised percentage rates on all consumer products.

In case of deposits, the expected rate of return under the PLS system will be clearly indicated for each tenure. For lending products, Banks/DFIs shall also clearly indicate whether the rate is fixed or floating. In case of floating rate, in addition to mentioning the existing rate, the information regarding the tenure of the benchmark (KIBOR or any other rate plus a pre-defined spread) used and periodicity of re-pricing should also be disclosed.

The banks/DFIs, in addition to the above, will also take adequate measures to inform their customers about the intricacies of ATM, Credit Card and their charges as well as the cardholders' obligations.-PR


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## Owais

*SPI registers increase* 

ISLAMABAD (July 15 2006): The Sensitive Price Indicator (SPI) for the week ended on July 13, 2006 for the lowest income group up to Rs 3000 has registered 0.35 percent increase over previous week. The SPI for the week under review in the above-mentioned group was recorded at 144.68 as against 144.17 recorded in the previous week, according to Federal Bureau of Statistics (FBS).

During the week under review, average prices of 6 items registered decrease, while those of 19 items increased with the remaining 28 items' prices unchanged.

The items, which recorded decrease in their average prices during the week under review, included tomatoes, bananas, LPG (11kg cylinder), egg (farm), red chillies powdered and masoor pulse washed.

The items, which registered increase in their prices, included gas charges up to 3.3719 MMBTU, chicken farm, onions, garlic, moong pulse washed, sugar, gram pulse washed, vegetable ghee (loose), shirting, mash pulse washed, rice Irri-6, gur, tea (packet), wheat flour (average quality), mutton, rice basmati broken, potatoes, coarse latha and milk powdered (Nido).

The items with no change in their average prices during the week under review included wheat, beef, bread plain med. size, milk fresh, curd, vegetable ghee (tin), mustard oil, cooking oil (tin), salt (powdered), tea (prepared), cooked beef (plate), cooked dal (plate), cigarettes K-2, lawn, voil printed, sandal gents (Bata), sandal ladies (Bata), Chappal Spng. (Bata), kerosene, firewood, Elec. bulb (60-Watts), match box, washing soap (nylon), bath soap (Lifebuoy), electricity charges 1-100, petrol, diesel and telephone charges.


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## Owais

*SBP amends rule regarding remittances* 

KARACHI (July 15 2006): The State Bank (SBP) on Friday amended the para 15 of Chapter XVI of FE Manual (8th Edition 2002) to benefit local business/professional entity with principals abroad for remittances on account of membership/affiliation fees.

Under the already existing regulations, authorised dealers are allowed to make remittances on behalf of individuals covering subscriptions or membership fee at actual to bona fide scientific, technical, professional and educational institutions aboard.

Now in addition to individuals, this facility will also be available to institutions/professional bodies in Pakistan with international affiliations.

"Consequently, authorised dealers may allow remittances on account of membership/affiliation fees payable by a local business/professional entity to principals abroad in line with the instructions contained in above-mentioned para of FE Manual".


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## Owais

*KSE finishes above 10,000 mark* 

KARACHI (July 15 2006): After hectic bouts of buying and selling during the last session of the week, the index finally closed above 10,000 level, which appeared to be a healthy sign for the trends to come. The benchmark Karachi Stock Exchange's 100-share index closed at 10,027 levels up 12 points from the previous closing of 10,015.

Volumes in the ready market were 190 million shares against 245 million shares recorded a day earlier. Whereas, volumes in future market were 38 million shares against 60 million shares recorded in the previous trading session.

The market opened on a positive note and moved in an index range of 9,953 and 10,080-point level yet for another day market witnessed strong resistance above 10,000 index levels. As volatility continued at local bourses as investors continued to remain cautious.

"Positive activity was observed in National Bank of Pakistan. The main reason behind this activity was news on a local channel regarding NBP expected sale of its investments in shares of Bank AlJazira in the coming next two months", Faiza Naz, research analyst at Jahangir Siddiqui Capital Markets Ltd, in Karachi said.

Ahsan Mehanti, chief executive officer of Shahzad Chamdia & Co, said oil stocks were in higher demand because of rise in crude prices internationally, moreover, market men expect that the OGRA might review prices on Saturday, resulting in sharp appreciation in PSO and PPL.

The market closed above 10,000 level and buying was observed in patches. Most of the investors are sitting with their portfolios amid the hope that the companies to announce healthy dividend for the fiscal year ended June 30.

A dreary trading session was witnessed, as the index remained range bound. The KSE-100 index closed marginally higher and managed to sustain the 10000 points mark. The market started on a positive note following the firming trend in international oil price to mark 10080 points intra-day high. Overall, the KSE-100 index gained 689 points during the week. Swings were evident during the entire session amidst low volumes. Fauji Cement was the star performer of the day as it closed limit up and remained the volume leader. Maple Leaf Cement also closed at the upper lock while Lucky Cement depicted 1.5 percent decline to Rs 108.50.

The banking sector too remained in the limelight led by MCB which rose by Rs 1.35 after its positive reception on being awarded the Euro Money best bank award. The apparent optimism was much sidelined later through the day and the market made an intra-day low of 9952.63. The rationale could be directed towards the veiled suspicions over Pakistan's involvement in the recent Indian bombings.

This underpinned the see saw movement in the market, which included FFC and LUCK losing PRs0.95 and PRs1.4 respectively. The depreciation in the fertiliser industry could also be on the basis of the introduction of 15 percent GST on value added pesticide imports.

Hasanin Asghar from Aziz Fidahusein said that technically, although the index has successfully registered a closing above 10000. The index to make a strong base at 10000 right away as consolidation is needed, while major resistance stays at 10250-10257. The changing geo-political environment would however have an impact on the local bourses, as further suspense would add to the built in nervousness. It is therefore recommended to keep in view the developments on international issues, while availability of main stocks at discounted levels continues to stay


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## Owais

*Lahore stocks range-bound* 

LAHORE (July 15 2006): There was a range-bound activity on Lahore Stock Exchange (LSE) on last trading day of the week, however, the market closed above 4400 mark, gaining 24 points. The LSE-25 index reached 4406.28 points compared with previous day's 4382.07, posting a rise of 24.21 points.

Overall turnover declined to 38.728 million shares from 46.826 million of the preceding session, descending by 8.098 million shares.

Although, the market sentiment was bullish, but activity was low due to main players' staying at distance. Analysts said the market remained bullish for three consecutive sessions, therefore, activity turned slow as investors distanced themselves, avoiding taking risk on the weekend. However, despite sluggish activity, oil sector kept rallying up following rising crude oil prices in the international market, they added. Banks and some cement stocks also performed better and gained strength. PSO and National Bank stayed on top in gainers column while UBL and PPL were the prime losers of the day.

The market gained around 200 points during the week, but on Friday the market remained range-bound, Ahmed Nabeel, head of operations, Invest and Finance Securities Ltd, said. There were few positive factors which contributed to the market sentiment and helped it stay stable. First of all, he added, rising trend of oil in the international market which touched $78 per barrel on Friday contributed to the petroleum sector, secondly President Musharraf's statement accusing ex-SECP chairman Dr Tariq Hassan for the KSE crash, which shows the government has managed to find out a scapegoat. "But in my opinion no doubt pressure is on one man but who were the beneficiaries of the poor management of ex-chairman of the SECP, is the question which needs to be answered."

There are numerous negative factors like trade deficit, high interest rate, law and order situation, political situation and above all "possible cracks in Pak-India relations after Mumbai train blasts, which could disturb the 'ECG and blood pressure' of the market." Attack on Lebanon by Israel may affect our market directly or indirectly, he viewed. Traders, therefore, must avoid trading while investors may go for investment cum trading as the market lacks confidence and is likely to remain jittery with fundamentals getting weaker gradually, he stated.

Out of a total of 89 traded scrips, 20 were up, 29 stayed in red zone while 40 were intact to their previous levels. Among prime gainers, PSO gained Rs 3.45, National Bank Rs 3.35, Nishat Mills Rs 3.25, Pakistan Industrial Credit Rs 2.50 and Pakistan Oilfields Rs 1.95. In negative column, UBL sunk by Rs 4.50, PPL Rs 3.25, Adamjee Insurance Rs 2.00, Kohat Cement Rs 1.45 and Lucky Cement Rs 1.35. Fauji Cement Company and National Bank were the volume leaders with 9.479 million shares and 5.353 million shares, respectively.


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## Neo

LAHORE (July 15 2006): Punjab Chief Secretary Salman Siddique has said that the province has become a hub of economic activities and the most attractive place for foreign investment. He was talking to a delegation from UK that called on him here on Friday, disclosed an official.

British MP Chaudhry Muhammad Sarwar headed the delegation. The Provincial Secretary Commerce, Communication and Works and Chairman PITB were also present during the meeting.

The Chief Secretary briefed the delegation about the mega development projects of Lahore and its future development plans. He said that Lahore was important being the provincial capital and besides that 50 percent of the total population of the province resides in its surrounding cities. The whole cluster was thus developing simultaneously, he added.

He said that the master plan of the city was on the anvil, keeping in view its 50 years' needs. He further said that since Lahore had become a centre of foreign investment, the hotel industry had, thus, very bright chances to flourish in the city.

The delegation members showed their interest in developing a 'theme park' in or around Lahore. The delegation also briefed the Chief Secretary about various aspects of the proposed park. The Chief Secretary assured the delegation to provide all out assistance in that regard.


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## Neo

ISLAMABAD (July 15 2006): Prime Minister Shaukat Aziz has rejected Commerce Ministry's projections showing only 8 percent increase over the last fiscal year, and directed the officials to fix a reasonable exports target for 2006-07.

Sources said that the Prime Minister was disturbed over Commerce Ministry's exports estimates and visibly expressed it during a meeting the other day to give him a presentation on upcoming trade policy to be announced on July 17.

The Prime Minister asked of Commerce Ministry's officials on what basis they were projecting only 8 percent increase in exports for 2006-07, when all other economic indicators were showing healthy trend. He counted overall economic growth, increase in remittances FDI, enhanced revenue target and several other factors.

He said that the Ministry should take into account all these factors before finalising the exports target for the current fiscal year.

Sources said that Commerce Ministry supported textile industry's demand for a special package of incentives, and strongly argued that such a treatment was inevitable for enhancing textile related items exports to subsequently push the net exports to the new height in 2006-07.

Sources said Commerce Ministry officials took the same position during the presentation and tried to persuade the Prime Minister that he should grant some special incentives for the textile industry.

Sources said the Prime Minister did not agree that the textile industry only could help the government achieve a reasonable exports target for 2006-07, if it got some special treatment in terms of incentives. He said the government would provide all possible measures to facilitate all sectors engaged in exports, but it was difficult for it to single out anyone of them for incentives.

It may be noted that the textile industry has been demanding a Rs 50 billion package. The government is yet to respond to the industry for the demand.


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## Neo

ISLAMABAD (July 15 2006): A delegation of the World Bank officials held a meeting with Dr Salman Shah, Adviser to the Prime Minster for Finance, to discuss the Bank's Support for National Trade Corridor Improvement programme, here on Friday.

The delegation expressed appreciation for the quality of the programme. The Bank will provide $300 million a year as support to the programme besides funding for investment.

The integrated programme is indigenously designed and will cover different sectors like railways, ports, trucking industry, highways, trade logistics and civil aviation.


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## Neo

ISLAMABAD (July 15 2006): Minister for Commerce Humayun Akhtar Khan has said the country will be able to achieve the exports target of 17 billion dollars set for the 2006-07 fiscal year. The minister stated this in an interview with a private business television channel.

He disclosed that Pakistan would sign a free trade agreement (FTA) with "Mercusor" countries on July 20, which, he hoped, would further increase the exports.

Humayun hoped that the trade deficit in the 2006-07 financial year would be reduced, adding the balance of payment position had also improved.

He said prosperity in the country led to the increase of import of vehicles, adding that under the scheme, 40,000 vehicles were imported and as a result, there was a significant reduction in the premium of vehicles. The minister said cellular phone industry also witnessed a significant growth in the country.

He said that Pakistan had also rectified South Asian Free Trade Agreement (Safta).

The Commerce Minister said that European Union (EU) imposed anti-dumping duties on Pakistan in March 2004, and due to the efforts of the government, those duties were reduced to 5.8 percent in 2006. The European countries were giving preference to Pakistani goods, he added.

He said his ministry was a trade promotion organisation and would exports those goods, which were produced in the country. "We are planning to enhance our production in collaboration with the related ministries to propel our exports into international markets", he added.

Besides other sectors, he also called for promoting agriculture and services sectors for boosting the exports of the country. He also stressed the need for promoting domestic commerce and utilisation of state land owned by various departments, including Pakistan Railways. Replying to another question, he said there was no duty on the import of cement except only the sales tax.

Humayun Akhtar Khan said that Pakistan could achieve prosperity and higher growth by increasing production and boosting exports. He said the government was making efforts to enhance market access to Pakistani goods at international and regional markets, adding that it had huge potential for its exports in regional and international markets and "we will tap them".

He said that Pakistan had already started dialogues for trade with Association of South East Asian Nations (Asean) countries. The Commerce Minister lauded President General Pervez Musharraf and Prime Minister Shaukat Aziz for their valuable contribution and guidance in the improvement of overall sectors and formulation of trade policy in the country.


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## Neo

ISLAMABAD (July 15 2006): President General Pervez Musharraf asserted on Friday that the government would continue to make all-out efforts for accelerating pace of development activities in the whole of Balochistan province.

He categorically stated that no leniency would be shown towards such few miscreants who try to disrupt these development activities by creating law and order situation.

The President made these remarks during a meeting to review law and order situation and the ongoing development projects in Balochistan. Prime Minister Shaukat Aziz was also present on the occasion.

The President said that efforts would continue for accelerating development activities, mega and micro schemes in Balochistan, whether under the Federal Government, Khushal Pakistan Programme, or planned by senators, MNAs or district governments. During this review meeting, both the President and the Prime Minister were updated on matters pertaining to security of foreign workers and government installations, foreign direct investment (FDI) and status of ongoing development projects.

They were also informed that the government's timely and appropriate steps in parts of the two affected districts of Kohlu and Dera Bugti had started showing positive signs.

The residents of the affected areas have shown full support and confidence in government's commitment to develop the backward areas of Balochistan.

The President and the Prime Minister were also apprised of a number of projects that are being implemented in Balochistan for the prosperity of the people and to bring the province at par with other parts of the country.

These projects will bring about a quantum change in the lives of the people resulting in their socio-economic uplift through creation of greater job opportunities.

The President and the Prime Minister expressed satisfaction over the improvement of law and order in Balochistan and directed the officials to recruit more locals in police, Frontier Constabulary and other government departments. It was also a matter of satisfaction to view that more than 6000 personnel from Balochistan were in the army and the number was gradually increasing for which recruitment standards have been relaxed.

Minister for Information and Broadcasting Muhammad Ali Durrani, Balochistan Governor Owais Ahmed Ghani, Chief Minister Jam Muhammad Yousaf and Deputy Chairman Planning Commission Dr M. Akram Sheikh also attended the meeting.


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## Neo

ISLAMABAD (July 15 2006): Prime Minister Shaukat Aziz has said that the government has adopted an holistic approach for development in Balochistan, and the economic and political initiatives are being made in tandem to expedite growth and development in the province.

Talking to Balochistan Chief Minister Mohammad Yousuf, who called on him at the PM House on Friday evening the Prime Minister said that the government was trying to leverage the true potential of Balochistan, and Rs 133 billion, allocated for development of Balochistan was a manifestation of the government's commitment to the development of the province.

He observed that PSDP allocation to Balochistan, which was Rs 7.1 billion in 1999, had reached Rs 30.6 billion this year, and deferment of loans of Rs two billion would enable the provincial government to divert more funds for the development projects to usher in a new era of prosperity in the province.

The Prime Minister said that his government was particularly focusing on strengthening infrastructure, and 35 percent of NHA budget was being spent on building a network of roads and highways in the province. "Development of mineral, agricultural and fisheries are also among the priority areas," the Prime Minister added.

He said that export promotion zones were being set up to boost the trade potential of the province and the area has been opened for investment. These measures, he said, would take Balochistan to the 21st century.

The Prime Minister said these development projects were at various stages of completion, and the federal and provincial governments needed to co-ordinate for timely completion of these projects.

He said that government was particularly focusing on providing job opportunities to the youth of Balochistan. He said that 35,000 new jobs had been created for the local people, and Ph D scholarships for students of Balochistan had been doubled.

He said that the development projects initiated under PSDP would create unprecedented opportunities in Balochistan.

The Prime Minister emphasised the need for maintaining peace in the province which, he said, was critical for maintaining the tempo of growth and development in the province and for attracting more investment. The Prime Minister said the writ of the government must be maintained, and the elements disrupting peace and harmony should be dealt with an iron hand.

The Balochistan Chief Minister briefed the Prime Minister on the law & order situation, implementation of development projects and party matters.

He thanked the Prime Minister for the support from the Federal government to Balochistan and said that the provincial government would redouble its efforts for the timely implementation of the development projects.

He also apprised the Prime Minister about the ongoing enrolment drive in the province. He said the membership of PML was increasing in Balochistan, which was a sign of the increasing popularity of the party and enhanced support and faith of the people in the initiatives taken by the federal government for the betterment of Balochistan.


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## Neo

LAHORE (July 15 2006): The US Ambassador Ryan C Crocker has announced additional support for the marble and granite sector's Strategic Working Group (SWOG) to help set up a training centre to increase the capacities of its workforce.

He made this announcement during a meeting with the representatives of the industry concerned along with chief executive officer of Small and Medium Enterprise Development Authority (Smeda) Shahab Khawaja that was held in Peshawar, says a USAID press release issued here on Friday.

The working group, which is funded by the US Agency for International Development is upgrading facilities to make the sector more competitive in the domestic and international markets.

The Ambassador expressed hopes for the development of the marble and granite industry in order to improve the life of thousands of people working in the industry in Fata.

"US is working to ensure that Fata region develops through a range of activities that stimulate economic growth, especially through the provision of better training and worker health services," he added. "The marble and granite programme is an example how the US through USAID is focused on making Pakistani industries competitive in the international market."


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## Neo

ISLAMABAD (July 15 2006): Federal communications minister Shamim Siddiqui has said revival of the National Highway Council would serve as a catalyst to expand road network to the far-flung areas of the country. Talking to media men at the parliamentary lodges here on Friday, he said the council, which was revived after a lapse of 10 years, would comprise seven members headed by the Federal Minister for Communications.

The council would meet in August but it has been made mandatory that three federal secretaries, federal minister and NHA chairman should attend the meeting after two months, he added.

To a question, Siddiqui said the Chinese President is likely to inaugurate Karakoram Highway (KKH) and Gwadar port in November during his visit to Pakistan. Citing corruption as one of the challenges of the ministry, Siddiqui said although it is a difficult job but he would try his best to root out this menace by making award of contract transparent and fair.

"I have written to the National Accountability Bureau (NAB), Public Accounts Committee (PAC), parliamentary standing committees, Prime Minister and President's secretariats about corruption in the National Highway Authority (NHA), but received no affirmative response," the minister said. "It is not an easy job and we cannot root out corruption single-handedly and we are trying to keep most of the things right and transparent," Siddiqui vowed.

When asked about promotion of one of the members, the minister said a notification of his promotion to grade 21 would be issued within a couple of days as his ACR was written with mala fide intention, but seeing his service record all adverse remarks were expunged, he added.


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## Neo

SATURDAY, JULY 15 

ISLAMABAD: The World Bank has agreed to provide $1.8 billion to Pakistan for a $6 billion programme to meet domestic transportation needs and provide transit facilities to Central Asia, western China, Afghanistan and Iran. 

A World Bank team met Salman Shah, adviser to the prime minister on finance, and committed that the bank would provide $300 million a year as support to the National Trade Corridor (NTC), reported the Dawn Saturday. 

The programme is the result of year-long consultations with various ministries, corporations and key international lenders including the World Bank, Asian Development Bank (ADB) and Japan Bank for International Cooperation (JBIC). 

It covers core areas like ports and shipping, trade facilitation, highways and modernizing of trucks, aviation and air transport, and railway network. 

According to an official statement, Shah said Pakistan attached high priority to the programme to bring a paradigm improvement in the country's competitiveness. 

The programme is spread over a period of six years and would be supported by other donors. 

The investment plan will be fully implemented in about five years, said Asad Shah, the Planning Commission member on infrastructure. 

"The existing infrastructure capacity cannot support 7-8 percent of sustained economic growth," said a Planning Commission report. 

The plan aims at improving Pakistan's share of world trade from 0.2 percent to 1 percent by 2030 and increase Pakistan's exports from $17 billion in 2006 to around $250 billion by 2030. 

It will "enhance regional connectivity through trade links, energy and transport corridors with China, Central Asian Republics, Afghanistan and Iran", said Shah.


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## Neo

ISLAMABAD, July 14: The World Bank has agreed to provide $1.8bn to Pakistan for its $6bn National Trade Corridor (NTC) improvement programme to meet domestic transportation requirements and provide transit facilities to Central Asia, Western China, Afghanistan and Iran.

A World Bank team that had a meeting with Adviser to the Prime Minister on Finance Dr Salman Shah here on Friday committed that the bank would provide $300m a year as support to the programme.

The programme has been prepared through a year-long consultation process with various ministries and corporations and key international lenders including the World Bank, Asian Development Bank and Japan Bank for International Cooperation (JBIC).

It covers six core areas like ports and shipping, trade facilitation, highways and trucking modernisation, railway improvement and aviation and air transport modernisation.

According to an official statement Dr Salman Shah during the meeting said the government attached high priority to the programme to bring a paradigm improvement in the countryÃ¢â¬â¢s competitiveness. The programme is spread over a period of six years and would be supported by other donors.

The investment plan will be fully implemented in about five years. This is estimated to save $5 to $7.5bn per annum to the country which is currently being lost due to low performance of railways, highways, trucking and ports and airports, says Dr Asad Shah, Planning CommissionÃ¢â¬â¢s member on infrastructure.

"The existing infrastructure capacity cannot support 7-8pc of sustained economic growth," says a Planning Commission report on the NTC improvement plan. "Investments estimated at over $6bn (next five to six years) will be sequenced strategically and kick-started through high priority projects".

A comprehensive incentive package has already been announced in the federal budget 2006-07 for the trucking industry through tax and duty free import of large trucks for replacing obsolete 2-axle and 3-axle rigid trucks with introduction of modern prime movers, multi-axle and Euro standard trucks to turn Pakistan into a regional hub for international trade.

The government plans to shortly start roadshows in major international cities to attract investments in these sectors. A door-to-door truck service would also be launched for delivery of goods from ports, airports and railway stations.

The plan aims at improving PakistanÃ¢â¬â¢s share of world trade from 0.2pc to 1pc by 2030 and increase PakistanÃ¢â¬â¢s exports from $17bn in 2006 to around $250bn by 2030. It will "enhance regional connectivity through trade links and energy and transport corridors with China, Central Asian Republics, Afghanistan and Iran," said Mr Shah.

To reduce port costs and improve logistics, the berth draft of Karachi Port and Port Qasim would be deepened to attract larger capacity vessels and vessel charges and terminal handling charges would be drastically reduced. This will save Pakistan about $450m per year.

The banking and insurance sectors would support trade logistics and freight forwarding would be developed to meet the requirements of World Trade Organisation, South Asia Free Trade Arrangement and Economic Cooperation Organisation. The trade facilitation is estimated to provide a saving of $1.3bn per annum.

Similarly, the capacity of North-South transportation and allied national highways would be improved through commercial management and introduction of electronic tolling system. The highways modernisation is estimated to save $2bn annually.

Likewise, the railway system would be restructured through creation of a freight business unit with dedicated locomotives and rolling stock to reduce travel time for Karachi-Lahore container service to 28 hours against existing 56 hours. For this purpose, 75 transportation locomotives and 150 passenger coaches would be procured next year. This is estimated to save $1bn per year.

For aviation and air-transport, the regulatory, commercial and operating functions would be bifurcated and private sector airlines would be encouraged to operate on international routes.


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## Neo

Saturday, July 15, 2006 

ISLAMABAD: The World Bank will provide $300 million a year for the $6 billion National Trade Corridor Improvement (NTCI) Program to be completed in the next six years. 

A delegation of World Bank held a meeting with Dr Salman Shah, Adviser to the Prime Minister on Finance, to discuss the World Bank support for the National Trade Corridor Improvement Program here on Friday. They expressed appreciation for the quality of the programme. The Bank will provide $300 million a year as support to the programme besides funding for investment. The integrated programme is indigenously designed and will cover different sectors such as railways, ports, trucking industry, highways, trade logistics and civil aviation.

The adviser emphasized that the governmentÃ¢â¬â¢s commitment to this high priority programme would bring a paradigm improvement in the countryÃ¢â¬â¢s competitiveness. The programme is spread over six years and would be supported by other donors. The total cost of the programme is estimated at six billion dollars. 

The Prime MinisterÃ¢â¬â¢s Task Force on National Trade Corridor Development Program had assessed that Pakistan would be able to save losses of $2.5 billion annually by improving railways, highways and by modernizing road transport only. The National Trade Corridor Development project also includes construction and improvement of 1,729 kilometers of national highways of N-5, construction and improvement of 1,265 kilometers of National Highways of N-55 and construction and improvement of 1840 kilometers of motorways and expresswaysÃ¢â¬â¢ network of the country.


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## Neo

Saturday, July 15, 2006 

ISLAMABAD: Pakistan was interested in international and in particular German expertise and assistance in improving the railway system, said Minister for Railways Sheikh Rashid Ahmed while talking to his German counterpart Dietrich Austermann.

The minister along with Railways General Manager (Operations) Saleem Akhund and other ministry officials is on a four-day tour of Germany, said a press release issued on Friday. 

Pakistan Railways was interested in acquiring German expertise in locomotives, signalling system, passenger and freight coaches and laying down rail tracks, Ahmed said. He said that Pakistan wanted to enter into joint ventures with Germany to improve its railway network and operations across the country.

Ahmed briefed Austermann on the projects undertaken by Pakistan Railways and said that work on the expansion of the track from Khanewal to Rawalpindi had begun. Ã¢â¬ÅThe expansion will not only help trains arrive on time but also encourage people to rely more on train travel because of their increased efficiency,Ã¢â¬Â he added.

Ahmed said that a project to install a Mass Transit Rail System had been initiated in eight major cities of Pakistan and asked the German minister to invest in the revival of the Karachi circular rail system. Special emphasis had been given to freight trains since they were a major source of revenue for the railways, the minister said. 

Ã¢â¬ÅPresently, 900 freight coaches are operating which we plan to increase to 1,000 while freight trains would be increased to 14 from eight,Ã¢â¬Â Ahmed said. The delegates also visited Voith and DWK factories which manufacture locomotives and passenger and freight coaches. 

The minister praised the quality of the coaches and expressed his interest in their procurement. The demand for freight trains has increased because of the economic growth in the country, Ahmed said. 

Pakistan Railway needs locomotives, freight coaches and new rail tracks, he added.


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## Neo

KARACHI: There is something new to worry the economic managers of our country. Money is going out of the country while the government is making all efforts to attract foreign investment. International real estate groups are here to take capital out into foreign lands.

There were quite a few stalls of groups, which help people invest money in UKÃ¢â¬â¢s lands, at the recently held International Property Exhibition and Conference. Although few people were seen visiting their stalls on the first two days, they managed to attract people on the third and the last day of the exhibition.

Already Pakistanis have been investing heavily in DubaiÃ¢â¬â¢s real estate sector, which causes flight of huge amounts outside the country. Developers assure investors that they would earn family visa and residency rights in the Gulf, which adds to the attraction of the investment. Besides, these investments are thought secure in an economy free of political influences and uncertainties. There are a number of real estate agencies in Pakistan, which help people invest their money in housing projects in Dubai. The authorities were perturbed over this flight of capital out of the country. And now another avenue has opened up.

Unlike Dubai there is no attraction of residency rights in buying land in UK because undeveloped land is offered to the investors. But usually the investors earn four to seven times the amount they had invested within a few years, the officials of these real estate groups claim. They say builders buy land from investors at much higher prices when permission to develop is granted.

An official of one of the groups, which had set up their stalls at the IPEC, claimed they already had around 3,000 investors from Pakistan before they set up their office in the country.

There are very few options for investment in the country. Setting up and running an industry is thought to be a troublesome work. Stock exchanges of the country are always unreliable with wild fluctuations every day shattering the confidence of investors.

Commercial banks offer very low rate of return to depositors. In this situation they find real estate and particularly the real estate out of the country most attractive option.

This capital flight causes depreciation of rupee in both inter-bank and the open currency market. Already the huge trade deficit last year has put the local currency under pressure.

Decline in supply of foreign currency against rupee depreciates local currency which also impacts interest rates and inflation.

The depreciation of local currency increases external debt burden and results in increased cost of imported raw material and consumer items causing inflation besides reducing per capita income.


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## Neo

ISLAMABAD: An aggressive plan has been chalked out by Private Power Infrastructure Board (PPIB) to produce 12,000 MW electricity within a period of four to five years.

Managing Director Private Power Infrastructure Board (PPIB) Khalid Irfan Rehman said existing Independent Power Producers (IPPs) have been persuaded to expand their production.

Various projects were continuing for enhancing electricity production. A project to produce around 2000 MW power would materialise in 2008. While 2500 MW production will be started in 2009. Another project for producing 7500 MW would start production in 2010.

Additionally, around 5500 MW more power would be produced from 2010 to 2015 through hydro source including from Diamer Bhasha and Munda dams.

Under another plan of producing 1550 MW cheap electricity would be materialised by 2012.

Likewise additional electricity would also be produced from Tarbella. Initial preparations in this regard were continuing, he added.


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## Neo

Saturday July 15, 2006

ISLAMABAD: The World Bank will provide $ 300 million a year as support to the programme besides funding for investment. 
The integrated programme is indigenously designed and will cover different sectors like railways, ports, trucking industry, highways, trade logistics and civil aviation. 

Delegation of the World Bank officials held a meeting with Dr. Salman Shah, Adviser to the Prime Minister for Finance to discuss the World Bank Support for National Trade Corridor Improvement programme here today. 

They expressed appreciation for the quality of the programme. 

The Adviser emphasized that the governmentÃ¢â¬â¢s commitment to this high priority programme which would bring a paradigm improvement in the countryÃ¢â¬â¢s competitiveness. 

The programme is spread over a period of six years and would be supported by other donors. The total cost of the programme is estimated at 6 billion dollars.


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## Neo

KARACHI (July 16 2006): Both the private sector credit off-take in FY06 and a discernible sluggishness in the import growth from February 2006 is pointing towards an economic slowdown, says the State Bank of Pakistan.

SBP's Third Quarterly Review of the economy, issued on Saturday, states that unlike most Asian central banks and departing from its own past practice, the monetary tightening in Pakistan was not achieved through raising the interest rate.

The discount rate remained unchanged through FY 06, and even in auction yields on benchmark 6-month T-bills the rate was almost unchanged, witnessing a rise of only 50 basis points during the period. Instead, SBP focused on draining excess liquidity from the interbank market through very frequent OMOs.

As a result, the short-term interbank interest rates remained fairly close to the discount rate and contributed to an increase of 202 basis points in weighted average lending rates during July to May 2006.

The report says that the rise in interest rates had a visible impact on credit growth. Consequently by June 10, 2006, the major monetary aggregates were showing significant weakening compared with FY05.

The deceleration in growth in money supply, M-2, to 13.3 percent during June to July 10, 2006 from 16.2 percent in the same period in FY05 was entirely primary due to slowdown in private sector credit offtake.

While government borrowing during July 1, 2005 to June 10, 2006 from the banking system rose from 4.1 to 4.4 percent, credit to non-governmental sector during the period came down from 14.3 to 11.3 percent.

Besides the rise in real lending rates being a factor in slowdown of credit off-take, sectoral distribution of credit showed a reduction in credit to textiles and tapering of demand from telecommunication industries. This slowdown was despite the larger increase in trade related loans and private sector commodity finance during July-May FY06 compared with the preceding year. "This slowdown in the credit market appears to be driven by both demand and supply side factors," says SBP.

The SBP review also underlines a significant slowdown in import growth from February 2006 onwards. "The detailed analysis of the data shows that growth in major heads is much lower in February-May 2006 compared to July-January 2006. Furthermore, almost 80 percent of the growth in the February-May period is being contributed by two categories, 'petroleum' and 'other inputs.' The share of machinery in imports growth has gone down from 29 percent in July-January 2006 to five percent in February-May 2006.


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## Neo

ISLAMABAD (July 16 2006): The economic co-ordination committee (ECC) of the cabinet on Saturday approved a package of Rs 22-25 billion for the textiles sector, but most of the recommendations made by the textiles committee to reduce cost of doing business, especially rationalisation of utility's rates, have not been entertained.

Presided over by Prime Minister Shaukat Aziz, the ECC also decided to continue Research and Development(R&D) support to garments and apparel sector, the impact of which would be Rs 15 billion.

Briefing journalists after the meeting, textiles and industry minister Mushtaq Cheema, flanked by textiles secretary Masood Alam Rizvi and economic adviser to the finance ministry Dr Ashfaque Hasan Khan, said this time R&D support of 3 percent would be extended to printed fabrics and home textiles whereas 5 percent would go to dyed, printed home textiles.

However, the garment sector, which includes woven garments and knitwear, would continue to enjoy 6 percent R&D support during 2006-07 but it would be reduced to 3 percent from 2007-08, he added.

Cheema said export quality scheme has been changed as there were complaints of fund lapse, adding now mark-up on three years loan would be 6 percent while for seven-and-half-year period loan, it would be 7 percent.

Clarifying the procedure, he said the State Bank (SBP) would extend loans to commercial banks at 6 percent interest, which would extend it to exporters along with 2 percent spread, one percent less than the last year. He said the amount of loan would also be increased keeping in view exporters requirements but did not give details.

Earlier, according to the textiles minister, the export quality loan had been divided equally for the SME and corporate sector, but now it has been clubbed, however, preference would be given to the SME sector.

He was of the view now the SME could enjoy this facility through the commercial importer, adding import of thermal power generators has also been included in the scheme.

Replying to a question, he said there was no need to have equity, escrow account and the SBP approval for the loan, as all these conditions have been abolished to facilitate the textiles sector. Answering another question, he said, earlier, only imported machinery was included in the scheme but now the loan could be used to procure local manufactured machinery.

Loans taken by the textiles industry at 6 percent interest, after which interest rates increased to 12 percent or above, would be swapped at 6 or 7 percent, he said, adding it was the longstanding demand of the textile sector but spinning would not be included in the scheme.

He said refinancing rates have been reduced by 1.5 percent from 9 to 7.5 percent of which 6 percent would be charged by the SBP from commercial banks and 1.5 percent by banks as spread.

He hoped with the implementation of this package, textile exports, which constitute 60 percent of total exports, would show a growth of 22 percent during 2006-07.

The Prime Minister informed the ECC Qatar would invest $2 billion in Pakistan to set up plants in cement and other sectors, according to the economic adviser, he did not give details of proposals submitted by the Qatar government.

The ECC approved a plan of the agriculture ministry regarding procurement of gram, moong and mash pulses through Passco at intervention price during 2006-07.

Dr Ashfaque said intervention price for gram has been fixed at Rs 750 per 40kg; moong (Rs 1200 per 40kg); and maash by Rs 1300 per 40kg.

As the government felt prices in the local market were declining, Passco would start procurement to stabilise prices, so that farmers could get better return of their yield.

Dr Ashfaque further said the ECC discussed another proposal to fix support price for the paddy, but it was deferred till Monday as some information on international trends was missing.

Minfal has been asked to submit additional information to the Prime Minister by Monday to take final decision, he continued. The ministry has proposed Rs 625.25 per 40kg intervention price for super basmati and basmati against Rs 560, showing an increase of 12 percent, basmati 385, Rs 520.45 against Rs 460 per 40kg, an increase of 13 percent; and Irri-6, Rs 303.41 against Rs 260 per 40kg. He said the issue of income tax exemption proposed for Rs 8 billion Wapda Sukuk bonds would be resolved by Wapda and CBR chairmen.

He further said a package has also been approved for the IPPs, including reduction in performance guarantee and extension in commercial operation date and financial close. The ECC has also approved setting up of a 100mw thermal power station at Khuzdar on International Competitive Basis (ICB).


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## Neo

KARACHI (July 16 2006): Gradually increasing weakness in fiscal indicators, and the widening of the current account deficit are of serious immediate concerns, requiring corrective policy measures to protect long-term growth prospects of the economy, says the State Bank of Pakistan.

The SBP's Third Quarterly Report for the year 2005-06, issued on Saturday, describes the 2007 Federal Budget as expansionary - aiming to give a fiscal stimulus. This will add to aggregate demand and, therefore, to inflationary pressure.

"The impact could be worsened if the government depends heavily on central bank borrowings to finance the deficit. The budget for FY07 envisages a receipt of Rs 35 billion from SBP profits, (a substantial portion of the central bank's profitability is from the interest earned on its holding of government securities mainly accruing through the financing of governmental fiscal deficits) which suggests this may be the case, and therefore the burden of containing inflationary pressures will fall disproportionately on monetary policy," cautions SBP.

A relative slowdown in aggregate demand has significantly reduced inflationary pressures. However, as the aggregate demand is still strong, and the economy will benefit from the expansionary fiscal stance, loosening of monetary policy is, therefore, clearly not advisable, says SBP.

Further, due to the current account deficit at 4.3 percent of GDP in FY06 and the availability of external financing, SBP has opted to keep the monetary policy tight to contain excessive volatility in the exchange rate and inflation.

SBP sees strong agri-growth in FY07, due to low base provided by relatively poor performance by major crops in FY06. "This in turn would support an improved performance in key industries such as textiles and sugar, thus supporting large-scale manufacturing."

Going forward, the impact of credit slowdown on inflation may be substantially augmented, by a continuing decline in food inflation following the implementation of the recently announced administrative measures and subsidies by the government, says the report.

The current account deficit at $6.3 billion is expected to be covered by privatisation receipts and strong aid inflows. "This, however, would primarily depend on the realisation of the anticipated moderation in import growth, as forecast in the annual plan and continued strong export growth."

In case the current account deficit proves to be substantially higher, it would be extremely difficult to sustain - without either raising external debt or a recourse to an undesirable drawdown in reserves, or strong measures to contain aggregate demand or a more focused policy of containing external demand, says SBP.

The pressure on the country's external accounts increased substantially during FY2006, as the current account deficit swelled to a historic peak of $4.1 billion by end of April 2006, sharply higher than $0.94 billion recorded in corresponding period of FY2005.

Even more significantly, as a percentage of GDP, the annual current account deficit is estimated to rise from an innocuous 1.4 percent in FY2005 to a more troubling 3.2 percent in FY2006, indicating a continued weakening would cause grave risks to hard-won macroeconomic stability achieved in recent years.

As in the previous year, the deterioration in the current account deficit during July-April FY2006 emanated essentially from the trade deficit, wherein gains from a robust 13 percent increase in exports was eclipsed by the exceptionally strong 28.5 percent increase in imports.

Within the current account, the trade deficit of $6.5 billion was accompanied by services account deficit of $3.5 billion, up 36 percent from last year (mainly due to higher transportation and other business charges associated with higher imports).

The income account also recorded a deficit of $2.1 billion. The rise in deficit in the trade, services and income account was partially offset by an increase in the current transfers, which rose from $7.1 billion in July-April 2005 to $8.1 billion in July-April 2006, largely on account of the overseas' Pakistanis' remittances and increases in official grants.

Pakistan was, however, successful in tapping the international markets to finance its deficit, attracting FDI (including for its privatisation program) and in obtaining financing for developmental projects. All of these, together with rising portfolio investment, are reflected in the country's substantial $5 billion financial account surplus during July-April FY2006, as compared to a surplus of only $24 million in the corresponding period of FY05.

As a result, the overall balance witnessed a surplus of $1.4 billion during July-April FY06.

This also helped sustain the relative stability of the exchange rate as the rupee depreciated only 0.88 percent against the US dollar during July-May FY2006 to Rs60.22/$, and sustaining the SBP reserves around $10.6 billion mark by the end of May 2006.


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## Neo

ISLAMABAD (July 16 2006): President General Pervez Musharraf has set export target for 2006-07, at $19.5 billion and asked concerned authorities to work out an effective strategy to show better performance on foreign trade front this time.

The President was not satisfied with the performance of the government economic team on many fronts. The downward trend in key sectors of the economy during the last fiscal year was a cause of serious concern to him. He directed the government economic managers to take critical view of their strategy to improve performance in weak areas for ensuring growth in double-digit in 2006-07.

One participant of the meeting told Business Recorder on Saturday, the President referred downward trend in growth in agriculture, large-scale manufacturing (LSM), exports in 2005-06 in his speech and told ministers of respective ministries in clear terms he will like to have better result in all these areas next year to make economic growth robust in real sense.

He noted single-digit growth will not help the government cope with serious problems being faced by the people such as poverty, unemployment and rising trend in prices of daily-use items.

The President also took big shortfall in exports in 2005-06 very seriously and sought reasons from commerce minister Humayun Akhtar Khan, who was among the participants of the meeting.

He asked the commerce minister to take everybody onboard to work out an effective strategy to achieve the export target for the current fiscal year. The President gave broader outline for the future export strategy based on an approach having diversified market to get more share to achieve enhanced exports target.

An official handout issued after the meeting quoted the President as saying growth target of 7 percent for 2006-07 was achievable through yield intensification in agriculture and higher productivity in the industrial sector.

He said new achievable targets for the industrial sector should be set, which registered a decline from 14.5 percent to 9 percent in the outgoing financial year and review of factors which caused the decline in exports.

The handout said the meeting was informed export target during the last year was set at $17 billion and there was a shortfall of $1 billion, however, exports registered an increase of 14 percent as compared to the previous year.

It was also informed new exports target for the current financial year would be achieved through higher growth in industrial and agriculture sectors, especially through value-addition in textile.

The President expressed satisfaction over foreign direct investment, which remained at $3.78 billion in the last financial year.

The Prime Minister, who also attended the meeting, assured the State Bank (SBP) will extend support to any sector of the economy requiring intervention on short-term basis and said it will provide temporary relief to the textile sector to enhance its competitiveness.

He said monthly review meetings would be held to evaluate achievements of targets and to take timely measure if required.

The meeting was attended by commerce minister Humayun Akhtar Khan and industries minister Jehangir Khan Tareen, adviser to prime minister on finance and revenue Dr Salman Shah, ministers of state Hina Rabbani Khar and Umar Ayub Khan, Dr M. Akram Sheikh, chairman, Export Promotion Bureau, governor, State Bank and senior officials of concerned ministries.


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## Neo

KARACHI (July 16 2006): Overseas Pakistanis' remittances touched the highest mark at $4,600.12 million during 2005-06), against $4,168.79 million received in the previous year (2004-05), registering an increase of $431.33 million or 10.35 percent.

According to the State Bank of Pakistan (SBP), the amount, $4,600.12 million, includes $12.09 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

The previous (second) highest amount of $4,236.85 million sent by overseas Pakistanis, was recorded during the fiscal year 2002-03. The inflow of remittances into Pakistan during the period under review from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $1,242.49 million, $750.44 million, $716.30 million, $596.46 million, $438.65 million and $119.62 million, respectively against $1,294.08 million, $627.19 million, $712.61 million, $512.14 million, $371.86 million and $101.51 million during 2004-05.

Remittances received from Canada, Switzerland, Norway, Australia, Japan and other countries during last fiscal year amounted to $724.07 million as compared to $532.90 million of 2004-05.

During last month (June 2006), workers remitted $463.87 million, against $358.98 million of June 2005, registering an increase of $104.89 million, or 29.22 percent.

The monthly average remittances for the year 2005-06 was $383.34 million as compared to $347.40 million of 2004-05, depicting an increase of $35.94 million, or 10.35 percent.

The inflow of remittances into Pakistan from all countries of the world increased last month as compared to June 2005. According to the break-up, Pakistan received remittances during June 2006 from USA $123.15 million, UAE 80.76 million, Saudi Arabia $79.51 million, GCC countries, including Bahrain, Kuwait, Qatar and Oman $59.07 million, UK $38.65 million, and EU countries $9.70 million as compared to the corresponding receipts from the respective countries during June 2005 ie $109.15 million, $60.50 million, $59.65 million, $40.29 million, $33.65 million and $9.25 million. Remittances received from Canada, Switzerland, Australia, Norway, Japan and other countries during June 2006 amounted to $72.04 million as compared to $45.14 million of June 2005.


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## Neo

LAHORE (July 16 2006): Federation of Pakistan Chamber of Commerce and Industry (FPCCI) held a farewell reception in the honour of outgoing Export Promotion Bureau (EPB) Vice Chairman Zafar Mahmood here on Saturday. FPCCI Vice President Azhar Saeed Butt, incoming EPB Vice Chairman Naveed Arif and other FPCCI office bearers and members were also present on the occasion.

While addressing the gathering, Zafar Mahmood said that part of a government role is to facilitate business community. He was of the view that role of private sector is vital in the national economy, thus it needs to be strengthened and facilitated at all level so that it could contribute effectively in the growth of the national economy.

"In the past the private sector in Pakistan was ignored, but in the recent that has changed, its participation is encouraged. Under this perspective, we make efforts to facilitate FPCCI and resolve issues of business community," he added.

According to him, in policy making, priorities should be clear, and among the priorities should be strengthening of the private sector so that it could play an effective role in the nation building.

He was against red tapism, which he viewed as a hurdle, which wastes precious time of the business community. Naveed Arif disclosed that work on the set up of a body on trade was in progress and its structure and working would be announced in the Trade Policy 2006-07 on July 17. It would prove an effective body for the traders, he added.

Later, the FPCCI praised the outgoing Vice Chairman for service to the EPB and the traders and acknowledged his efforts to accommodate requests of FPCCI relating concerns of the business community.


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## Neo

ISLAMABAD (July 16 2006): Prime Minister Shaukat Aziz on Saturday said that Qatar would invest $2 billion in cement and other fields in Pakistan. Presiding over a meeting of the Economic Co-ordination Committee (ECC) of the Cabinet, he said that 'Qatar-Pakistan Investment Company' would be established which would be owned by Doha.

Economic Advisor to Ministry of Finance, Dr Ashfaque Hasan Khan, later said that the ECC reviewed the prices of essential commodities and noted increase of 0.5 percent in sensitive price indicator during the week ended on July 13, 2006, as compared to previous week ended on July 6.

The ECC was informed that the Central Board of Revenue has so far collected Rs 710.2 billion for financial year 2005-06, against target of Rs 690 billion.


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## Owais

*Risk in reliance on real estate collaterals* 


KARACHI (July 16 2006): In July-April FY06 auto loans, housing finance and personal loans registered a slowdown while credit card financing increased by 177 percent over July-April FY05. In the same period, non-performing loans of most of the domestic banks (other than the five large network banks) increased, while NPLs of the big five registered a decline. NPL's as a percentage of net advances are still at a very low level.

The State Bank of Pakistan in its third quarterly review, issued on Saturday, says that 50 percent of the total increase in outstanding advances during July to December FY 06 were extended against real estate as collateral.

"A continuation of this trend would not be a welcome development as a high level of concentration in collaterals could prove detrimental for banks' soundness at the time of financial distress," warns SBP.

The exposure of banking sector to real estate can take any form including, (1) holding of real estate assets in banks' portfolios; (2) lending to customers for real estate purchases; (3) financing of real estate developers and construction companies; (4) lending to NBFIs, especially housing finance companies; (5) relying on real estate to collateralize other kind of lending.

In any case, risk to the banking sector is clear: if the property prices fall, the value of collateral starts declining and the risk of the banks increases. This decline in prices forbids banks to finance real estate, purchasing which further reduces the demand and thus the price of real estate. Hence higher exposure of banks in real estate worsens the impact of any price falls, says a SBP study.

Lending booms, real estate bubbles in East Asian crisis, in the nineties, show that well supervised and well-capitalised banks can absorb swings in the real estate market and not cause financial distress in the economy, says SBP. Although profitability of banks can be hampered significantly, their capital adequacy remains well above the minimum target.


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## Owais

*Money supply growth slows down* 

KARACHI (July 16 2006): As a result of tight monetary policy, monetary aggregates have weakened significantly as on June 10 for FY2006 compared with the corresponding period of last year. According to the State Bank (SBP) Third Quarterly Report issued here on Saturday, the growth in money supply (M2) has decelerated to 13.3 percent during July-June 10 FY2006 from 16.2 percent in the same period last year.

This slowdown was driven primarily by deceleration in the growth of both private sector credit and net foreign assets. The SBP maintained a tight monetary policy throughout FY2006 in order to contain inflationary pressures.

The instrument used for containing monetary growth was predominantly open market operations through which the SBP drained out excess liquidity from the interbank market without bringing any significant change in the benchmark six-month T-bills rate. The discount rate was also kept unchanged during the period.

The downtrend in the NFA of the banking system during most of July-June 10 FY2006 is driven by two apparently contradictory developments - sharp widening of country's current account deficit, and firming expectations of exchange rate stability.

Although receipts from the PTCL privatisation and the Eurobond issues prevented a net decline in the NFA of the banking system during the period, the growth is still significantly below of previous year's levels.

The NDA of the banking system showed a growth of 16 percent during the financial year 2006 compared with the growth of 19.6 percent during the same period of last year.

As in previous year, the current increase in NDA was driven principally by the growth in credit to the non-government sector. By end of February 2006, the government borrowing for budgetary support from the banking sector had exceeded Rs 98 billion annual target set for FY2006 by 64 percent, principally due to substantial borrowings from the SBP.

However, inflows under the PTCL privatisation and issuance of Eurobonds during March 2006 allowed the government to retire a large part of these borrowings.

As a result, cumulative government borrowings from the banking sector dropped to Rs 120 billion during July-June 10 FY2006, which remains higher than last year.

The growth in private sector credit during the period under review was a little higher than the annual credit plan estimates for the year, but was significantly lower than the increase during the same period of FY05.

This slowdown is despite larger increases in trade-related loans and the private sector commodity finance during July-May FY2006 compared with the preceding year. This slowdown in the credit market appears to be driven by both demand and supply side factors.


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## Owais

*Rules for used cars import relaxed* 


ISLAMABAD (July 16 2006): The government has decided to allow import of all those five years old vehicles which were laden on shipping vessels on or before June 30, 2006 (12 midnight) under the transfer of residence (TR) scheme. Sources told _Business Recorder _on Saturday.

The Central Board of Revenue (CBR) would soon issue instructions to all customs collectors to allow clearance of all those five years old vehicles, where shipping vessels have left their respective country up to June 30 midnight. In this regard, the department would see relevant shipping documents, including invoice and bill of lading showing pre-shipment of freight.

The board is drafting a directive for regional collectors to remove hardships in genuine cases where vehicles were shipped prior to the applicability of new amendment from July 1, 2006. In this connection, the board has consulted stakeholders.

Through an SRO.696(I)2006, the government had amended the Import Policy Order, 2005, under which vehicles more than five years old shall not be allowed to be imported under gift, personal baggage and transfer of residence scheme. This condition shall apply to vehicles arriving on or after July 1, 2006.

In the meantime, the CBR had categorically announced the board would charge 30 percent redemption fine in addition to duties and taxes on the import of more than five years old vehicles under the TR scheme arriving on or after July 1, 2006.

Meanwhile, the board received letters about relaxation of five years old condition in cases where vehicles were already laden on ships before the announcement of the amendment as applicable on July 1, 2006.

Once the directive is being dispatched to regional collectors, the restriction of five years on cars import by overseas Pakistanis under the TR scheme would not be applicable in the above-mentioned cases.

When asked whether the board has proposed any new amendment in the baggage rules in the Trade Policy, sources said no new amendment has been proposed and recently issued 'baggage rules' would remain intact.

Responding to another question, sources said submission of the "earning certificate" duly signed by the Pakistan Mission Aboard" by the importer of vehicle under the TR scheme would remain enforced. No new provision has been added in the relevant rules for demanding any additional 'source of income' from overseas Pakistanis. 'Earning certificate' specify the foreign exchange earning/savings by Pakistani nationals for import of vehicle under the TR scheme. The diplomatic mission of Pakistan also certifies the total legitimate income and net-saving after deduction of tax of concerned overseas Pakistani.


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## Owais

*THE RUPEE: 15 paisa gain versus euro* 

KARACHI (July 16 2006): Firmness prevailed in the interbank market on Saturday as the rupee did not move to any side in relation to dollar for buying and selling at Rs 60.29 and Rs 60.31, respectively. Market men said that the rupee was likely to maintain softer tone versus dollar in the coming days due to strong demand for the greenback.

In the international markets, the dollar gained marginally versus other currencies.

*OPEN MARKET RATES: *In the open market, too, the rupee retained overnight levels versus dollar for buying and selling at 60.70 and 60.75, dealers said. However, it picked up 15 paisa versus euro for buying and selling at Rs 76.53 and Rs 76.63, respectively.

================================Buying ($) Rs 60.70Selling ($) Rs 60.75================================


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## Owais

*SCRAs post marginal decline* 


KARACHI (July 16 2006): The Special Convertible Rupee Accounts (SCRAs), which amounted to around $15 million ($14.8 million to be exact) during the first 12 days of FY07, registered a marginal decline to $14.6 million on July13, according to the latest SBP update posted on the central bank's web on July 14.

USA, whose SCRAs receded by over $2 million from nearly $6 million ($5.7 million to be exact) on July 12 to $3.6 million on July 13, was mainly responsible for the decline. Minor additional withdrawal of $0.004 million also took place in the case of Hong Kong whose overall withdrawals increased, marginally, from $0.024 million on July 12 to $0.028 million on July 13.

The largest fresh inflow, of $l million, was reported in the case of Singapore, whose balance improved from $11.3 million on July 12 to $12.3 million on July 13. Singapore thus continued to hold the first position during FY07 so far.

Withdrawals by Swiss investors, which amounted to about $5 million ($4.7 million to be exact) on July 12, squeezed to $4 million on July 13, meaning a fresh inflow of about $0.7 million.

Other minor to moderate inflows were also reported in the case of UK (up $0.1 million over July l2) and UAE (up $0.08 million).

In the meanwhile, KSE 100 Index (November 1991=100) rose from 9,604 on July 3 to 9,921 on July 12 and continued rising to close above the 10,000 mark at 10,027 on July 14.

It may be recalled that earlier on, KSE 100 Index had plummeted to 8,767 on June 14 2006 amid allegations on stockbrokers of a foul play after having surged to 12,274 on April 17.

Comparably, the SBP General Index of Share Prices (2000-01=100), which covers all other shares, rose from 413 on July 3 to 421on July 13 after having dipped to 389 on June 14. Like KSE 100, SBP Index was also at its highest of 538 during FY06 on April 17.


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## Owais

*No gas sale to Pakistan and India at offered price: Iran* 

TABRIZ (July 16 2006): Iranian Oil Minister Kazem Vaziri-Hamaneh has said that his country will not sell its gas to India and Pakistan at their proposed price. Speaking to newsmen, Hamaneh said the price proposed by India and Pakistan is based on their domestic prices, IRNA reported. Vaziri-Hamaneh noted that the agreement with India about transferring gas has not been finalised yet.

"If the Indian side is not ready to buy our gas at its real price, we have no obligation to sell it at the price lower than the real one," he said. He said India and Pakistan should forget buying Iran's gas in the low price.


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## Neo

KARACHI, July 15: The performance of textile manufacture export was `remarkableÃ¢â¬â¢, rising by 18.4 per cent during July-March FY06 against nominal growth of 4.4 per cent realized during the same period last year, stated the State Bank of PakistanÃ¢â¬â¢s third quarterly report for 2005-06 released on Saturday, which presented a picture of Ã¢â¬Åthe state of PakistanÃ¢â¬â¢s economyÃ¢â¬Â.

The report noted that both low and high value-added products had contributed to this Ã¢â¬ËimpressiveÃ¢â¬â¢ textile export growth. The increase in textile exports in the post-Multi-Fiber Agreement (MFA) period was believed to be a good omen for the economy which remained heavily dependent on textile exports.

The SBP report makes what it terms an Ã¢â¬ËinterestingÃ¢â¬â¢ observation that textile exports had jumped by 18.4 per cent in the first nine months of the outgoing fiscal year, compared to a moderate 4.4 per cent rise in the same period last year, in spite of a slowdown in the production growth of textiles.

The central bank thought that the jump in exports might be a reflection of aggressive marketing by exporters in the post-MFA regime by utilizing inventories and significant growth in export-related production of small-scale textiles units.

On the production side, the report noted that similar to the petroleum industry, a slowdown was also seen in the textiles sub-sector which had the largest weight in LSM. During July-March FY06, the sector saw a production rise of four per cent, significantly lower than the 28.7 per cent growth seen in the same period last year. The SBP report reasoned that the deceleration in textiles mainly was due to low cotton harvest, high prices and disruption in gas supply during Dec-Feb FY06 by Sui Northern Gas Pipelines Limited (SNGPL) to about 40-42 captive power plants (CPP) in the areas of Sheikhupura, Faisalabad and Gujranwala where various textiles and chemical units are located.

More on textile exports, the SBP report recalled that in FY05, exports had suffered due to uncertainties surrounding the end of MFA in the middle of FY05. It said the growth, though, in the post-MFA period in FY05 was 9.3 per cent prior to that it was just 1.2 per cent. As a result FY05 growth was restrained to 4.9 per cent.

Within the low value-added group, cotton yarn and cotton fabrics showed 35.2 per cent and 15.5 per cent increase, respectively, during the period as against minus four per cent and 9.3 per cent growth in the same period last year. Along with an increase in quantum, the low base effect explains the jump in the group.

With regard to high value-

added products, bedwear and readymade garments were the major contributors, registering 46.5 and 27 per cent growth, respectively, during the period under review as against minus 0.3 per cent and 6.7 per cent in the same period last year. Almost the entire increase in bedwear was explained by the quantum impact, while increase in readymade garments was also caused by high unit values. Ã¢â¬ÅIt is hoped that the reduction in EU antidumping duty from 13.1 per cent to 5.8 per cent with effect from May 7, 2006 will have a favourable impact on the export growth of bedwear in the forthcoming months," the report stated.

On Saturday, when the SBP report was released, textile circles were also debating on what the Trade Policy 2006-07 to be announced on Monday would hold for the industry. Already on Friday, the State Bank governor announced a cut in export refinance rate by an effective 1.5 per cent, which the head of the central bank said was meant to lower the cost of production. The step was being seen as a follow-up of the prime ministerÃ¢â¬â¢s assurance to the industry at a meeting of the Export Promotion Bureau (EPB) in Islamabad last week, when he had pacified textile tycoons by saying that the SBP would look into the exportersÃ¢â¬â¢ demands.

Ã¢â¬ÅThe textile sector is asking the government for a concessionary and incentive package of Rs50 billion so that the industry can compete with India, China and Bangladesh,Ã¢â¬Â said Abdul Shakoor, a textile dealer. Those proposals are being pursued by the industry since April when they were first designed. But the governmentÃ¢â¬â¢s dilemma was that if they agreed to such a huge package of Rs50 billion, big cuts would have to be made from social sector spending, which would be, if nothing else, Ã¢â¬Ëpolitically incorrectÃ¢â¬â¢ decision.

Ã¢â¬ÅThe government will perhaps hit a middle-of-the-way road, where textile exporters can be given as much as to please them, without causing much hurt to others,Ã¢â¬Â said Mr Shakoor.

Saima Naz, analyst at Atlas Capital Markets, noted that Pakistan being the third largest player in Asia had a total of five per cent spinning capacity of the world. At present the cotton spinning sector comprises 458 textile units (50 composite and 408 spinning), with 8.8m spindles and 77,000 rotors in operation with capacity utilization of 87 and 49 per cent, respectively, for July-Feb 2005-06.

The analyst observed that Pakistan was gradually moving towards higher value-added in exports. The shares of bedwear, knitwear and towels had increased while those of cotton yarn and synthetic textiles declined during the past few years. The textile industry has made an investment of about $6 billion during the last six years in the form of BMR activities and capacity expansions. The share of total investment of $6 billion among different sectors of textile is 47 per cent in spinning, 27 per cent in weaving, 11 per cent in textile processing, eight per cent in made-ups, five per cent in synthetic textiles and five per cent in knitwear and garments.

The analyst quotes industry sources as saying that the textile sector proposes to make huge investment in the next five years, which would increase the spinning sector capacity by 1m tons to 3m tons, polyester fibre industryÃ¢â¬â¢s capacity from the existing 600,000 tons to about 1m tons, weaving industry to add another 3.5bn sq metre capacity to the existing 6.5bn sq metre and to enhance finished productsÃ¢â¬â¢ capacity by 1bn sq metre.


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## Neo

PESHAWAR, July 15: The NWFP government is over-optimistic about achieving higher Provincial Gross Domestic Product (PGDP) growth rate during the next four financial years, according to official sources.

The province in its fiscal management roadmap for next four years has anticipated the PGDP to grow at an annual rate of 12.8pc in the FY07 and 13.2pc in the FY08. And after touching 13.6pc in the FY09, the PGDP has been estimated to grow at 13.5pc in the FY2010.

The total size of the PGDP, that has been estimated to be Rs775bn in the current fiscal year, would rise to Rs877bn in the FY08 and to Rs996bn in the FY09, whereas, the PGDP in FY2010 would be around Rs1130bn.

In the absence of a proper mechanism to gauge and analyse the PGDP, according to official circles, the NWFP government has developed PGDP growth scenario by applying the situation analysis available from the national GDP drawn out every year by the federal government.

The NWFPÃ¢â¬â¢s GDP constitutes 10pc of the national GDP, said an official source, so on the basis of the national GDP growth rate targets the provincial government had drawn out a picture to determine PGDP for the next four financial years.

Though the PGDP situation analysis developed by the provincial government sets explicit goals to achieve higher Provincial Own Receipts (POR), lowering current expenditure, maintaining salary bill at a specific level through effective fiscal management, it appears to be silent about various important aspects pertaining to private sector.

"It does not provide an insight about the performance of different economic sectors including industries, agriculture, etc.," said an economic expert while commenting on the anticipated PGDP growth rates.Similarly, said the expert, it was also not clear that how much high growth rates would help in alleviating poverty and creating job opportunities during the next four years.

Provincial finance managers, when contacted, conceded that the exercise to draw out PGDP in itself did not help to get answers to many important questions.

They, however, said that based on the performance of the past couple of years, improved economic indicators reflected that the provincial economy was heading in the right direction.

"The government has been able to maintain its annual wage bill to remain 4pc of the PGDP, the PORs have grown and interest payment has decline, which shows the economy is on right track," said a finance manager of the province.

The Medium-Term Budgetary Framework (MTBF), said the official, projected the wage bill to remain 4pc of the PGDP in the FY07, 3.99pc in the FY08, 3.97pc in the FY09 and 3.96pc in FY2010.

The provincial government has been striving hard to keep its wage bill below 4pc to fulfil a condition of its loan agreement with the World Bank.

An official said that the progress in terms of improving PORs had also remained quite satisfactory because of changes in the taxation system and the province would maintain PORs at a ratio of 0.8pc of the PGDP.

Interest payments would decrease from 0.75pc of the PGDP in the FY07, 0.65pc in the FY08, 0.60pc in the FY09 and 0.55pc in the FY2010.


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## Neo

ISLAMABAD, July 15: The countryÃ¢â¬â¢s trade deficit widened 88pc during the fiscal year 2005-06 to its highest level as oil prices hit a new high and imports of petroleum products set a record.

Official provisional figures obtained by Dawn here on Saturday indicated the trade gap totalled over $11.64bn as against $6.216bn during the FY05.

The import bill reached to record $28.2 billion during the year as against $20.627 billion the previous year, an increase of 36.74pc.

While exports remained short of target by $440m at $16.56 billion during 2005-06 as against the target of $17 billion. However, it increased by 14.92 per cent when compared with the last yearÃ¢â¬â¢s exports proceeds of $14.41 billion.

The massive rise in trade deficit was attributed to robust increase in imports of machinery and food items Ã¢â¬â wheat, sugar, pulses. The import of cement and other products required for rebuilding of quake-hit areas also had an impact on the overall trade deficit during FY06.

The government had projected the trade deficit at $4bn for 2005-06. The statistics showed that the countryÃ¢â¬â¢s trade deficit remained in the range of $1 billion to $2 billion during the last six years.

The rising trade gap is going to have serious implications for PakistanÃ¢â¬â¢s balance of payments particularly on its current account and on the health of the rupee. The rupee had already depreciated by around 5pc against the dollar, which was not officially notified. But it also had a negative impact on the export proceeds.

A senior official said that despite large trade and current account deficit the overall balance of payment for the FY06 had ended in surplus thereby by adding about $0.5bn in foreign exchange reserves.

The current account showed a deficit of $4.76 billion in the first 11 months of FY06 as against $3.12 billion the same period last year, showing an increase of 52.56 per cent. The ballooning current account deficit was a result of the widening trade gap and could result in a weaker rupee.

The workersÃ¢â¬â¢ remittances, the second largest source of foreign exchange inflows after exports, totalled $4.612 billion during the FY06 as against $4.168 billion the last year. It would now cover only the nominal part of the deficit.

Efforts to privatise state-run enterprises also were aimed not only at making them more efficient but to get extra foreign exchange to fill in the holes in the balance of payments.

Foreign exchange received through privatisation of state-run entities forms part of foreign direct investment (FRI). The country received an all-time high FDI of $3.525 billion in July-May 2005-06 compared with $1.171 billion received the same period last year.


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## Neo

Sunday, July 16, 2006 

* President, PM review economyÃ¢â¬â¢s performance in FY 2005-06 
* New trade policy approved, to be announced on Monday


RAWALPINDI: Pakistan must improve agriculture and industrial production if it is to achieve this yearÃ¢â¬â¢s GDP growth target of seven percent, President General Pervez Musharraf said on Saturday.

The president, chairing a meeting to review the economic situation in the country, emphasised the need for a comprehensive strategy to raise the growth rate in various sectors this fiscal year. He expressed satisfaction on the overall state of the economy, despite the earthquake tragedy of October 8 last year and a shortage of water.

He said employing scientific methods of yield intensification would boost agricultural productivity. He said new achievable targets must be set for the industrial sector, whose growth rate declined to 9.5 percent for fiscal year 2005-06 from 14.5 percent the year before. He said the factors that have led to a less-than-expected growth in exports must also be reviewed.

The meeting was informed that exports in FY 2005-05 had fallen $1 billion short of its target of $17 billion. Exports grew by 14 percent over the previous year. The meeting was told that this yearÃ¢â¬â¢s export target would be achieved through higher growth in the industrial and agriculture sectors, especially through value addition in textile.

Gen Musharraf was satisfied with the $3.7 billion in foreign direct investment Pakistan received in FY 2005-06, and hoped it would increase further as a result of incentives offered to foreign entrepreneurs. The meeting noted that Pakistan was one of the fastest growing economies in the region and the benefits of this growth must reach the common man. It also noted the need to create jobs, lower poverty and control inflation to sustain PakistanÃ¢â¬â¢s high growth rate.

Prime Minister Shaukat Aziz said the State Bank would support any sector of the economy requiring intervention on a short-term basis and provide temporary relief to the textile sector to enhance its competitiveness. He said monthly review meetings would be held to evaluate the achievement of targets and take timely measures if required. He said consistency and continuity in economic policies, sustained productivity and a business-friendly had encouraged international investors to invest money in Pakistan. 

Online adds: The meeting also approved the basic outlines of a new trade policy for 2006-07 and Commerce Minister Humayun Akhtar Khan will announce the policy on Monday. 

Sources said that the commerce minister apprised the president of the outlines of the new trade policy, which would include incentives for all sectors including textiles. Garments cities would be set up in major cities across the country. A trade development authority would be established under the new policy. The export target would be over $19 billion and import target nearly $27 billion, the minister said. 

The president said the new trade policy must also encourage trade with Central Asia and China, to cement PakistanÃ¢â¬â¢s position as a trade corridor.


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## Neo

RAWALPINDI, July 15: President General Pervez Musharraf on Saturday said the growth target of 7 per cent set for the current fiscal year is achievable through yield intensification in the agriculture and higher productivity in the industrial sector.

Presiding over a meeting to review the overall economic scenario of the country the president emphasised the need for a comprehensive strategy during the current fiscal year to achieve higher targets in various sectors of the economy.

Prime Minister Shaukat Aziz also attended the meeting.

Gen Musharraf expressed his satisfaction on the overall state of the economy, despite the earthquake tragedy of Oct 8 last year and the shortage of water.

He said the growth target of seven per cent set for the current fiscal year is achievable through enhanced productivity and yield intensification by employing scientific methods in the agro sector.

The president called for adopting Ã¢â¬Åcorrective measuresÃ¢â¬Â wherever needed and targeted government intervention, where required on the basis of exception rather than a matter of routine.

He said that the new achievable targets for the industrial sector should be set, which registered a decline from 14.5 per cent to 9 per cent in the outgoing financial year and review of the factors which caused the decline in exports.

The meeting was informed that the export target during the last year was set at $17 billion and there was a shortfall of one billion dollars. However the exports registered an increase of 14 per cent as compared to the previous year.

The meeting was also informed that the new export targets for the current financial year would be achieved through higher growth in the industrial and agriculture sectors especially through value addition in textile.

Gen Musharraf expressed satisfaction over the Foreign Direct Investment which remained at the tune of $3.7 billion in the last financial year and hoped it will further increase as a result of the incentives the government is offering to foreign entrepreneurs.

The meeting noted that growth in all the sectors was vital to improve the lot of the common man. Pakistan with its growth rate was one of the fastest growing economies of the region and was bound to improve the quality of life of its people.

The meeting also vowed to sustain the high growth rate by increasing employment opportunities, lowering poverty and controlling inflationary trends and price hike.

Prime Minister Shaukat Aziz assured that the State Bank will extend support to any sector of the economy requiring intervention on short term basis and said it will provide temporary relief to the textile sector to enhance its competitiveness.

The meeting was attended by Minister for Commerce Hummayun Akhtar Khan and Minister for Industries and Special Initiatives Jehangir Khan Tareen, Adviser to the Prime Minister on Finance Dr Salman Shah, Ministers of State Hina Rabbani Khar and Umar Ayub Khan


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## Neo

Karachi: Pakistan's central bank said yesterday that a loosening of monetary policy was not advisable while inflation pressure remained and growth was strong.

"Arguments have been made that inflation is now on a downtrend, and therefore monetary policy can be safely loosened," the State Bank of Pakistan said in its quarterly economic review.

"However, given that aggregate demand is still strong, and the economy will benefit also from the expansionary fiscal stance, a loosening of the monetary posture is clearly not advisable," it said.

The central bank's assertion is broadly in line with market expectations, which is expecting a continuation of the current tight monetary stance in the coming months.

Pakistan's monetary policy was last adjusted in April 2005, when the central bank raised the key discount rate to 9.0 per cent from 7.5 per cent, and prompted a sharp rise in Treasury bill yields.

However, yields have stabilised over the past few months around the current levels. The cut-off yield for the benchmark six-month T-bills was set at 8.4869 per cent in the last auction on July 5.

The bank is scheduled to release its monetary policy statement for the first half of 2006-07 on July 29.

In Saturday's report, the central bank said that 6.5 per cent average inflation target for the 2006-07 (July-June) financial year was achieveable as the impact of the credit slowdown on inflation was likely to be augmented by a continuing decline in food inflation. But with oil prices at record highs, the risks to price stability and growth still existed, it said. 

"The broadest inflation measure, the GDP deflator, is estimated at 10.3 per cent for FY06, up sharply from 8.8 per cent in the preceding year, suggesting that inflationary pressures still persist in the economy," it added.

SBP expected a recovery in agriculture, given the low base provided by the poor performance of the sector last year, when it recorded a growth of only 2.5 per cent.


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## Neo

Overview, Executive Summary of SBPÃ¢â¬â¢s Q3 report for FY06 



KARACHI: The State Bank of Pakistan on Saturday released Third Quarterly Report for FY06. Following is the text of Overview and Executive Summary:

*Overview*

Provisional estimates show that the countryÃ¢â¬â¢s long-term growth momentum remains intact, with real GDP growth exceeding 6 per cent for the third successive year. While the 6.6 per cent real GDP growth estimated for FY06 is relatively weaker than the 8.6 per cent revised growth rate for FY05, this was not unexpected in light of historic trends and a high-base effect, as evident in the lower growth target (7 per cent) for FY06. It must also be kept in mind that a substantial portion of the losses in agriculture simply reflected bad luck, e.g., even if only the cotton harvest had not been hit by inclement weather, it is possible that the FY06 growth target may have been exceeded.

The strength of aggregate demand in the economy is quite encouraging, particularly given the impact of the global rise in energy costs. However, given that the fiscal stimulus from the recently announced budget for FY07 will add to demand and the emerging macroeconomic imbalances, there is a clear need for corrective policy measures to protect long-term growth prospects of the economy. The risks include the possibility of an increase in inflationary pressures, the gradual weakness in fiscal indicators, and the widening of the current account deficit.

The first of these may not be of serious immediate concern. The tight monetary policy being followed by the SBP clearly appears to be bearing fruit, with M2 growth falling to 13.3 per cent for Jul-Jun 10, FY06, down from 16.2 per cent in the corresponding period last year. This fall is led principally by a deceleration in private sector credit to 19.5 per cent in Jul-Jun 10 FY06 from 29.7 per cent in the corresponding period of FY05.

The resulting relative slowdown in aggregate demand, coupled with supply-side improvements through: (1) better harvests (for some crops, particularly wheat), and (2) administrative measures by the government (including the use of cheap imports to discouraging cartels, etc.) have helped significantly reduce inflationary pressures in the economy. CPI inflation has dropped from 11.1 per cent YoY in April 2005 to 7.1 in May 2006, and it is expected that the FY06 average inflation will fall within the 8 per cent target, despite the unexpectedly high oil prices that prevailed throughout the year.

The second issue (i.e. the fiscal deficit) is a concern more in terms of the trends and structural weaknesses (and therefore the probable future impacts). While the fiscal deficit has indeed widened in FY05 and FY06, in both years the underlying figures are low, at 3.3 per cent and 3.4 per cent of GDP respectively (the latter number jumps to 4.2 per cent of GDP only due to the impact of the earthquake relief efforts). The concern stems from the fact that the tax net has seen little broadening in recent years, and continues to exclude (or under-tax) a substantial portion of the economy. It is therefore not surprising that the growth in the economy is not matched by a corresponding increase in tax revenues. To put this in perspective, if the tax-to-GDP ratio had been maintained even at the low FY01-05 average of 10.8 per cent, the government would have had additional resources of Rs27.4 billion in FY06 alone.

The lack of buoyancy in the tax receipts needs to be addressed while the economy is still strong, as the costs of the re-distribution of the tax base are more palatable as long as sectoral profitability of hitherto under-taxed areas remains strong. Such measures would also strengthen the competitiveness of other sectors of the economy by allowing the government to reduce the tax burden in these sectors that currently carry a disproportionate share of the tax burden.

The third macroeconomic risk, the re-emergence and widening of the current account deficits from a surplus of US$1.8 billion in FY04 to a sizeable deficit of US$5.7 billion (annual estimate) in FY06 poses a more immediate policy dilemma. This phenomenon is inextricably linked with the strength of the domestic economy (as seen from the very substantial share of industrial inputs and machinery in the total import bill), the impact of liberalisation of the economy (as seen in the rising imports of media and telecom equipment, as well as the fall in the effective tariff rates) and a sharp rise in oil prices. 

The policy options are correspondingly complex, particularly given that (1) exports continue to rise strongly, suggesting that the problems could ease with time, as import growth reverts to (lower) historical norms, and (2) given that a heavy-handed, knee-jerk response could easily add disruptive volatility to the financial markets.

Accordingly, with the current account deficit still low, at 4.3 per cent of GDP (estimated) in FY06, and given the availability of external financing, the SBP opted to keep monetary policy tight to contain excessive volatility in the exchange rate and inflation.


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## Neo

*Looking Forward*

Despite a relative slowdown, all evidence indicates that the growth momentum of the economy remains strong, although growth is now more narrowly-based compared to the previous year. It is in light of this evident strenght in the economy that the government has set the GDP growth target of 7 per cent for FY07, which at first glance, does not seem unreasonable.

In particular, it is quite possible that FY07 will see a strong agri-growth given the low base provided by the relatively poor performance by major crops in FY06. This in turn, would support an improved performance in key industries such as textiles and sugar, thus supporting growth in the large-scale manufacturing. However, FY07 could also see the drag from high oil prices (though the government has signaled that it will keep domestic prices in check by eliminating substantial taxes on key fuels), and from a continued tight monetary policy. On the last, arguments have been made that inflation is now on a downtrend, and therefore monetary policy can be safely loosened. However, given that aggregate demand is still strong, and that the economy will benefit also from the expansionary fiscal stance, a loosening of the monetary posture is clearly not advisable.

Going forward, the impact of the credit slowdown on inflation may be substantially augmented by a continuing decline in food inflation following the implementation of the recently announced administrative measures and subsidies by the government. This suggests that the 6.5 per cent average inflation targeted for FY07 may not be unachieveable. However, there are some risks to this relatively benign picture. Oil prices are at historical highs, with attendant risks to price stability and growth. Moreover, the broadest inflation measure, the GDP deflator, is estimated at 10.3 per cent for FY06, up sharply from 8.8 per cent in the preceding year, suggesting that inflationary pressures still persist in the economy. The path of future monetary policy becomes further complicated by both, the proposed expansionary fiscal policy as well as the uncertainty on the degree of monetization of the fiscal deficit.

On the positive side, over half of the increase in government expenditure during FY07 is on account of development spending (which will add to the economyÃ¢â¬â¢s future growth), and there is also a substantial one-off element (Rs50 billion in earthquake related spending) to the proposed rise. However, it is troubling to note that even adjusting for the earthquake related spending, there is a gradual weakening in the underlying trend of the fiscal deficit. Although the CBR taxes have grown strongly in recent years, the tax-to-GDP ratio remains low, having declined from 11.5 in FY03 to 10.4 in FY06. It is in this backdrop that the governmentÃ¢â¬â¢s intention of keeping the fiscal deficit at 4.2 per cent of GDP has already drawn reproof from the rating agency Standard & Poors. The fiscal position would worsen if the 18.6 per cent growth target for FY07 tax revenues is not achieved. 

However, this possibility seems remote. On the one hand, measures to expand the tax base will support strong growth in receipts, while on the other hand, the government will also have the possibility of raising revenues from the Petroleum Development Levy (PDL). The FY07 budget does not envisage any revenues from this source, in contrast to the Rs20.2 billion collection (estimate) for FY06, but the government has the option to revise this decision in case of serious revenue shortfalls.

The expansionary fiscal stance will add to aggregate demand, and therefore to inflationary pressures. The impact could be worsened if the government depends heavily on central bank borrowings to finance the deficit. The budget for FY07 envisages a receipt of Rs35 billion from SBP profits, which suggests that this may be the case, and therefore the burden of containing inflationary pressures will fall disproportionately on monetary policy.

This is amply clear also from the trends in the external account, where strong aggregate demand, together with rising oil prices, has led to a sharp 39.4 per cent hike in imports during Jul-May FY06, substantially overshadowing the 16.7 per cent rise in exports in the same period. While the exceptional growth in imports is certain to moderate in FY07 (despite an anticipated rise in the oil import bill, especially following an anticipated dip in hydroelectricity generation), it is important that the export growth momentum be sustained. Indeed, while data shows that the exceptional growth in imports may already be slowing considerably, export growth is also weakening, suggesting the need for greater support for exporters in the forthcoming trade policy, and that the projects to improve domestic logistics chain and infrastructure be expedited. This also requires that the central bank remain vigilant against inflation, as price stability will be a key competitive advantage for the country.

The current account deficit is envisaged at US$ 6.3 billion or 4.3 percent of targeted GDP in the Annual Plan for FY07. While this deficit seems high, privatization receipts and strong aid inflows are anticipated to offset much of the impact during FY07. This, however, would primarily depend on the realization of the anticipated moderation in import growth, as foreseen in the annual plan, and continued strong export growth. If, as suggested by SBP projections, the current account deficit proves to be substantially higher, it would be extremely difficult to sustain without either substantially raising external debt, recourse to an undesirable drawdown in reserves, or strong measures to contain aggregate demand or a more focused policy of containing external demand.


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## Neo

Executive Summary

*Economic Growth*

According to provisional estimates of national income accounts, real GDP remained at its long-term growth path in FY06 with a growth rate of 6.6 percent. While this growth is marginally lower than the 7.0 percent annual target, this is quite impressive given the aftermath of the earthquake, the relatively poor harvests of key crops, the impact of high oil prices and rising domestic interest rates. The greater contribution to this high growth rate is by the services sector, which exhibited a remarkable 8.8 percent growth during FY06 as compared to the 4.3 percent growth of the commodity-producing sector in the same period. Within the services sector, the highest growth was seen in finance & insurance (23.0 percent) followed by wholesale & retail trade (9.9 percent).



*Agriculture*

The disappointing performance of key kharif cash crops (cotton and sugarcane) coupled with below-target production of wheat and minor crops, dragged down the agricultural growth to 2.5 percent during FY06 from 6.7 percent last year. The value addition by crops showed a decline of 2.3 percent during the year compared to previous year mainly due to lower production of cotton, sugarcane and grams. However, the livestock sub-sector posted strong growth of 8.0 percent in FY06.

It is encouraging that the off-take of fertilizers increased sharply (by 12.1 percent) despite rise in prices. Both urea and DAP witnessed higher growth rates of 11.1 percent and 15.7 percent during Jul-Apr FY06 respectively compared with corresponding figures of 5.0 percent and 7.7 percent in FY05. 

The growth in agriculture credit disbursement, on the other hand, decelerated to 25.7 percent YoY (Rs 116.96 billion) in Jul-May FY06 as against a robust growth of 50.4 percent YoY in the corresponding period of FY05 which probably reflects the rising interest rates in the economy. 

The growth in loan recoveries also decelerated, but this is smaller than that in disbursements and, as a result, recoveries as a percent of disbursements have increased during the year.



*Large-scale Manufacturing*

Provisional estimates indicate that LSM growth has fallen significantly from 15.6 percent in FY05 to 9.0 percent during the current fiscal year; and is lower than the FY06 target of 13.0 percent. Moreover, the data for Jul-Mar FY06 shows that the deceleration is quite broad based with most of the sub-groups showing growth below that in the previous year. The only sectors showing higher growth included food, leather, pharmaceutical, paper & board. 

The sector which has the largest weight in LSM, i.e., textiles, saw growth slow to 4.0 percent during Jul-Mar FY06 as compared with a 28.7 percent growth seen in the same period of FY05. A substantial contribution to this slowdown was from a deceleration in the production growth of cotton yarn & cotton cloth and a decline in the production of ginned cotton.

A sharp deceleration was also seen in the petroleum and lubricant (POL) and fertilizer industries, which recorded growth rates of 2.3 percent and 9.8 percent respectively during Jul-Mar FY06 as compared corresponding FY05 figures of 11.7 percent and 37.2 percent respectively. While the growth in the automobiles industry also declined, it remained a robust 27.7 percent during Jul-Mar FY06, only a little lower than the 31.5 percent for Jul-Mar FY05.

Capacity utilization in LSM declined by 1.3 percentage points in Jul-Mar FY06 as compared with a rise of 0.5 percentage points during the same period of FY05. However, this was essentially due to Pak Steel Mills, where production has dropped steeply due to a major technical fault. Excluding the impact of the latter, LSM capacity utilization was 1.1 percentage points higher than in the corresponding period of last year, even after capacity additions in some industries.



*Prices*

Inflationary pressures generally weakened throughout the current fiscal year due to tight monetary stance since April 2005, and administrative measures to improve the supply of key commodities.

Inflation measured by the Consumer Price Index (CPI) increased to 7.1 percent YoY in May 2006, which is significantly lower than the 9.8 percent inflation in May 2005. The deceleration in CPI inflation stemmed essentially from decelerating CPI food inflation, which declined to 5.6 percent in May 2006 down from 12.5 percent in the corresponding month last year. CPI non-food inflation, on the other hand, weakened modestly, remaining above 8 percent during Jul-May FY06.

After declining steadily through most of Jul-Apr FY06, WPI inflation jumped back to 9.1 percent YoY in May 2006 up from 8.1 percent in the preceding month, and significantly higher than the 6.0 percent recorded in May 2005. This increase has been contributed both by food and non-food groups of WPI. SPI inflation also witnessed an increase of 7.7 percent during May 2006 which is significantly higher than the inflation of 6.4 percent seen in the preceding month. 



*Money and Banking* 

State Bank of Pakistan maintained a tight monetary policy throughout FY06 in order to contain inflationary pressures in the economy. The instrument used for containing monetary growth was predominantly open market operations through which the SBP drained excess liquidity from the inter-bank market without bringing any significant change in the benchmark 6-month T-bill rate. The discount rate was also kept unchanged during the period. 

As a result of monetary tightening, monetary aggregates have been showing significant weakening by Jun 10 FY06 compared with the corresponding period of FY05. The growth in money supply (M2) decelerated to 13.3 percent during Jul-Jun 10 FY06 from 16.2 percent in the same period last year. This slowdown was driven primarily by the deceleration in the growth of both private sector credit and net foreign assets.

The downtrend in the NFA of the banking system during most of Jul-Jun 10 FY06 is driven by two apparently contradictory developments - the sharp widening of the countryÃ¢â¬â¢s current account deficit, and the firming expectations of exchange rate stability. Although the receipts from the PTCL privatization and the Eurobond issues prevented a net decline in the NFA of the banking system during the period, the growth is still significantly below the levels of the previous year.

The NDA of the banking system showed a growth of 16.0 percent during Jul-Jun 10 FY06 compared with the growth of 19.6 percent during the same period of FY05. As in the previous year, the current increase in NDA was driven principally by the growth in credit to the non-government sector.

By end-February 2006, government borrowing for budgetary support from the banking sector had exceeded the Rs98.0 billion FY06 annual target by 64 percent, principally due to substantial borrowings from SBP. However, the inflows under PTCL privatization and the issuance of Eurobonds during March 2006 allowed the government to retire a large part of these borrowings. 

As a result, the cumulative government borrowings from the banking sector dropped to Rs120 billion during 1st Jul-10th June FY06, which remains higher than that in the corresponding period of FY05.

The growth in private sector credit during 1st Jul-10th June FY06 was a little higher than the annual credit plan estimates for the year, but was significantly lower than the increase during the same period of FY05. This slowdown is despite the larger increases in trade-related loans and the private sector commodity finance during Jul-May FY06 compared with the preceding year. This slowdown in the credit market appears to be driven by both demand and supply side factors.



*Fiscal Sector*

Fiscal indicators weakened for the second successive year in FY06. Not only has the fiscal deficit widened, the revenue and primary balances have also declined, primarily due to the impact of the earthquake relief and rehabilitation expenditures. Adjusting for these, the fiscal picture improves somewhat, with the re-emergence of primary and revenue surpluses, but the fiscal deficit continues to show a marginal increase. However, to the extent that the higher fiscal deficit stems from rising developmental spending, the increase is less of a problem.

Total revenue is estimated to reach Rs1095.6 billion during FY06, up 21.7 percent YoY as compared to the growth of 13.8 percent YoY in FY05. Growth in both tax and non-tax revenue contributed to this achievement. In terms of individual taxes, the direct taxes and sales-tax surpassed their targets, while the collections on account of Federal Excise Duty (FED) and Customs duty remained below the respective targets.

Total expenditure in FY06 is estimated at Rs 1423.0 billion, up 27.4 percent YoY. Almost 55 percent of the total expenditure was accounted for by interest payments, defense, current subsidies and general administration. However, encouragingly, the growth in both the interest payments and defense expenditures was lower than in the previous year. 

The development expenditure increased 43.5 percent YoY to Rs 326.7 billion, mainly to expand infrastructure and on social development.

The overall budgetary deficit for FY06 works out to be Rs327.4 billion, which is financed by external resources to the extent of Rs118.3 billion and the rest is financed from internal resources. Of the internal resources, the government is likely to meet the financing gap from the banking sector (Rs96.7 billion), from the non-bank (Rs 22.4 billion), and privatization proceeds (Rs90 billion; of which Rs55.2 billon has already been realized by the end of the third quarter of FY06).


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## Neo

*Balance of Payments*

The pressure on the countryÃ¢â¬â¢s external account increased substantially during FY06, as the current account deficit swelled to a historic peak of US$ 4.1 billion by end-Apr FY06, sharply higher than the US$ 0.94 billion deficit recorded in the corresponding period of FY05. Even more significantly, as a percentage of GDP the annual current account deficit is estimated to rise from an innocuous 1.4 percent of GDP in FY05 to a more troubling 3.2 percent of GDP in FY06, indicating that a continued weakening would raise grave risks to the hard-won macroeconomic stability achieved in recent years.

As in the previous year, the deterioration in the current account deficit during Jul-Apr FY06 emanates essentially from the trade deficit, wherein the gains from a robust 13.0 percent increase in exports have been eclipsed by the exceptionally strong 28.5 percent increase in imports. Within the current account, the trade deficit of US$6.5 billion was accompanied by services account deficit of US$ 3.5 billion, up 36 percent from last year (mainly due to higher transportation and other business charges associated with higher imports). The Income account also recorded a deficit of US$ 2.1 billion. The rise in deficit in the trade, services and income account was partially offset by an increase in the current transfers, which rose from US$ 7.1 billion in Jul-Apr 2005 to US$ 8.1 billion in Jul-Apr 2006, largely on account of the worker remittances and increases in official grants.

Pakistan was however, successful in tapping the international markets to finance its deficit, attracting FDI (including for its privatisation program) and in obtaining financing for developmental projects. All of these, together with rising portfolio investment, are reflected in the countryÃ¢â¬â¢s substantial US$5.0 billion financial account surplus during Jul-Apr FY06, as compared to a surplus of only US$ 24 million in the corresponding period of FY05. As a result, the overall balance witnessed a surplus of US$ 1.4 billion during Jul-Apr FY06.

This also helped sustain the relative stability of the exchange rate ÃÂ± the rupee depreciated only 0.88 percent against the US dollar during Jul-May FY06 to Rs60.22/US$ and sustaining SBP reserves around the US$ 10.6 billion mark by end-May 2006.



*Trade Account*

The steadily widening trade deficit touched US$ 10.6 billion during Jul-May FY06, substantially higher than the US$5.5 billion recorded in the same period last year. The driving force behind the exceptionally high trade deficit remained the persistent surge in the import growth. During the period, the extraordinary import growth of 39.4 percent outstripped the otherwise healthy export growth of 16.7 percent.

The major contributors to the growth in imports were soaring international oil prices and machinery imports. In fact, the POL imports contributed almost one-third (32.2 percent) of the total import growth of 39.4 percent. Machinery imports contributed another 22.7 percent of the annual import growth.

However, there is a discernible slowdown in the import growth from February 2006 onwards. The detailed analysis of the data shows that the growth in major heads is much lower in Feb-May 2006 compared to that in Jul-Jan 2006. Furthermore, almost 80 percent of the growth in the Feb-May period is being contributed by just two broad categories; Ã¢â¬ËpetroleumÃ¢â¬â¢ and Ã¢â¬Ëother importsÃ¢â¬â¢. The share of machinery in imports growth has gone down from 29 percent in Jul-Jan 2006 to 5 percent in Feb-May 2006.

Export growth averaged a healthy 16.7 percent during Jul-May FY06, despite the increasing competition post-MFA (which has hit unit values in key export commodites), as well as punitive anti-dumping duties and loss of GSP benefits for textile exports to the EU region. 

However, a relative weakness in export growth in the latter half of FY06 is a matter of some concern, and it is hoped that with the recent reduction in antidumping duty by the European Union on PakistanÃ¢â¬â¢s bedwear exports (from 13.1 percent to 5.8 percent, effective May 7, 2006), and restoration of some GSP benefits (albeit at lower levels), export growth could revive in FY07. 







Table 1.1: Major Macroeconomic Indicators

Jul-to date

FY04 FY05 FY06

growth rates (percent) 

Large-scale manufacturing (Mar) 17.0 15.4 9.0

Exports-FBS (May) 11.8 16.2 16.7

Imports-FBS (May) 24.1 33.8 39.4

Tax revenues (CBR) (May) 12.4 13.6 22.0

CPI (12-m ma) (May) 4.0 9.3 8.0

PSC (CBs) (Jun 10) 29.6 29.7 19.5

Money supply (M2) (Jun 10) 17.1 16.2 13.3

million US Dollars 

Total liquid reserves1 (May) 12,438 12,359 12,990

Home remittances (May) 3,516.6 3,809.8 4,136.3

Foreign private investment (Apr) 629.1 1,027.0 3,376

percent of GDP2 

Fiscal deficit (full year) 2.9 3.3 4.2

Underlying (ex-earthquake) 3.4 3.7

Trade deficit (Apr) 2.1 4.4 7.5

Current a/c balance (Apr) 2.2 -0.8 -3.3

1 With SBP & scheduled banks. End-May.

2 Calculated by taking fiscal year GDP. Projected GDP for FY06 has been used.







Table 1.2: Major Economic Indicators

FY06 

FY05 FY07

Revised Original Prov. Targets/ 

targets estimates projections 

growth rates (percent)

GDP 8.6 7.0 6.6 7.0

Inflation 9.3 8.0 7.9 6.5

Monetary Assets (M2) 19.3 12.8 14.8 13.5

billion US$

Exports (fob-Customs record) 14.4 - 16.8 19.5

Imports (cif-Customs record) 20.6 - 28.4 34.1

WorkersÃÂ­ remittances 4.2 4.0 4.5 4.7

percent of GDP

Budgetary balance -3.3 -3.8 -4.2 -4.2

Current account balance

(excluding official transfers) -1.6 -2.1 -4.4 -5.7 
http://www.thenews.com.pk/daily_detail.asp?id=15799


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## Neo

KARACHI: City Nazim, Syed Mustafa Kamal, while emphasising on attaining knowledge of Information Technology (IT) and command over English language, has hinted 40,000 jobs in the next two years.

During a meeting at his office on Saturday, he said the City District Government Karachi (CDGK) has planned to generate better job opportunities for the educated youth. He commented that joblessness was a great concern for the educated youth.

ÃÂ¬Our youth are more competent than that of other nations in the world, but they donÃÂ­t have better opportunities,ÃÂ® Kamal observed. 

He said that this was the responsibility of the government to generate more job opportunities and to create conducive atmosphere, enabling the youth to use their capabilities for the development of the nation.

He informed that the foundation of the tallest building of Pakistan. Call centres set up in this building would generate 30,000 jobs and students who have passed their Intermediate examination would also be provided with a job opportunity in these call centres, Kamal said.


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## Neo

ISLAMABAD (July 17 2006): The government has accused the Water and Power Development Authority (Wapda) of providing 'unworthy' information on power shortage being faced by the country.

Sources in Islamabad Electric Supply Company (Iesco) told Business Recorder on Sunday that the Ministry of Water and Power has summoned all high-ups of Wapda and chief executives of the power distribution companies (Discos) on Tuesday for clarification on some of the information which the ministry says was 'not worthy'.

The country is facing up to 1500 MW power shortage but the utility has no concrete plan to deal with the situation which has not only slowed down the industrial activity, but also badly affected the agriculture sector when the rice season was in full swing.

Sources said that President Pervez Musharraf and Prime Minister Shaukat Aziz, at a recent meeting , snubbed Wapda officials for this crisis-like situation and directed that a 'short-term plan' be submitted to the federal government to finalise future strategy.

They said that Wapda had prepared a short-term power plan to meet the country's requirements but the information it provided to the government was 'not worthy' and what the utility had been asked to submit up to date information.

According to sources, the government raised a number of additional questions to be answered by Wapda Chairman and Chief Executives of power generation and distribution companies in the meeting on July 18.

Meanwhile, an official in the federal government told this scribe that the President has also convened a meeting on July 20 at camp office, Rawalpindi, to discuss the short-term power plan and seeking progress on guidelines given to the utility in this regard.

Sources said that Private Power Infrastructure Board (PPIB) was also under severe criticism for not making any progress on hydel or thermal power despite knowing that the country would face crisis-like situation in 2007-08, if new generation was inducted in the system.

In September last year, the Prime Minister had directed the Ministry of Water and Power and Wapda to ensure availability of energy to maintain the projected economic growth.

"Concentrated efforts be made to increase power generation capacity from hydel, thermal, alternative energy and nuclear power supply as well as required mix be ensured to meet peak and lows in demand, both seasonal and locational," sources quoted the Prime Minister as directing the concerned departments.

They said that the Ministry of Water and Power had been asked to submit recommendations, within two weeks, to meet the projected power shortage during the next two years, but the ministry did nothing substantial except routine paper work.

They said that a committee on power demand supply position, headed by the Secretary Water and Power, Ashfaq Mahmood had recommended that public sector Gencos should make investment for two 450 MW combined cycle power plants which would reduce the time spent on arranging financing and tariff negotiations. But at the same time it was also observed that it would be departure from the existing approach of the government for inducting private power units.

However, Wapda Chairman observed that the schedule proposed by the committee was tight and proposed commissioning dates of the units on open cycle by September 2007 and combined cycle by March 2008.

Later, Prime Minister Shaukat Aziz decided that no thermal power plant would be set up in the public sector but when it was felt that the situation was going worse, the earlier decision was declared nullified, the sources maintained.

Now, the President has taken a serious view of power crisis in the country and would discuss convey a strong message to the concerned high ups in the meeting scheduled to be held on July 20, sources said.


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## Neo

KARACHI (July 17 2006): The teledensity in the last fiscal year was more than double after consumers attracted towards cellular phones. The telecom sector is one of the fastest growing sectors in Pakistan. Indeed, the FY06 could be termed as a fabulous year for the telecom sector for its upbeat growth.

While the conventional land/fixed line segment posted flat trend, the other segments ie cellular and WLL have depicted excellent display of growth in FY06.

Against its level of 11.9 percent at the beginning of FY06, Pakistan's total teledensity has more than doubled to 26.3 percent by the end of the year.

It is pertinent to note that the growth in teledensity is mostly fuelled by cellular growth. The fixed line teledensity has improved marginally to 4.1 percent in FY06 from 3.6 percent in FY05, while cellular density increased to 22.2 percent by the end of FY06 from that of 8.3 percent a year earlier.

It is interesting to note that cellular users accounts for around 85 percent of the total telecom subscribers in Pakistan. The remaining 15 percent are using fixed line (wireline and wireless). In India, about 68 percent of the total subscribers are mobile users with teledensity of 13.5 percent as of May 2006.

As mentioned above, within the telecom sector the major growth was witnessed in cellular segment. As per data release by the Pakistan Telecommunication Authority (PTA), mobile subscribers have reached 34.5 million at end of FY06 against 12.7 million subscribers previously - a growth of 170 percent. This translates into mobile teledensity of 22.2 percent. On an average, cellular subscribers have grown by 1.8 million per month (60k per day) in FY06. It was observed that the later half of the year saw higher growth, where on average 2.1 million connections were added each month versus 1.4 million in the first half of the year.

To win the race, the cut throat competition was seen amongst the cellular operators and ultimately we saw a price war. This, in turn, has resulted in the fall of Arpu (average revenue per user). As per latest available figure by PTA, Arpu of cellular companies has declined to $4.05 in 2005 as compared to $6.06 in 2004.

The WLL, relatively a new phenomenon in Pakistan, has posted gigantic growth of 284 percent with 1.03 million subscribers by FY06 versus that of 0.27 million a year ago. The PTCL, the largest player in WLL, gained its market share from 61 percent in FY05 to 64 percent in FY06. While Telecard, the second largest player, has lost its market share to 22 percent from 37 percent in FY05. The PTA awarded two more licenses of LDI making total number of LDI operators to 14. Here also, increased competition was observed leading to price war-like situation amongst the players.

Currently, there are six mobile operators working in Pakistan. The Mobilink is the market leader with a share of 50 percent by FY06 (58 percent in FY05). The following shows the subscribers base of the cellular companies and their respective share.


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## Neo

KARACHI (July 17 2006): Listed companies results would start pouring in and analysts expect that banks, E&P and cement groups would show an average profitability growth in the range of 55 percent to 75 percent. Th result season is to arrive soon at the market. We expect from the last week of July 2006 companies at KSE to start announcing their results for the period ending June 2006.

The banking sector (21 percent weight in Index) would announce its half-year results of 2006 in the coming few weeks. This time analyst from Jahangir Siddiqui Capital Markets Ltd expects that banking sector to post an average growth of approximately 62 percent in 1H2006 as compared to corresponding period last year. The net interest income (NII) is likely to remain the major contributor.

Banks' advances and deposits growth has started gaining momentum in 2Q2006 and spread of the sector is also at its three-year high of 7 percent. More precisely, first five months average banking sector spread are recorded at 7.3 percent which is 210 basis points more than the corresponding period last year. Large commercial banks earnings growth (NBP, MCB and UBL) will surpass growth of medium and smaller banks, it is believed.

"We reiterate our 'overweight' stance on commercial banks and recommend 'buy' for NBP, UBL, FABL and BoP.

The exploration and production (E&P) having a share of 32 percent in the Index will announce its full year results for FY06. We expect the sector to post a growth of 55 percent approximately in FY06 as compared to last year. The reason behind growth is the increased production and a huge upsurge in international oil prices.

Average international oil prices (Saudi light) for FY06 was $58.55/barrel, which is 42 percent high from the average prices of last year, and we think this would be the main reason behind profitability. As per our analysis $1 increase in international oil prices improves earnings of E&P companies by 3 percent on an average.

"We remain 'over-weight' on these upstream oil companies and recommend 'buy' for POL, OGDC and PPL.

For the cement sector, having 4.3 percent weight in Index, we expect profitability growth of close to 75 percent. Thanks to double digits growth in sales of 12.6 percent in FY06 and regular increase in cement prices during the year. The last quarter ie Apr-June FY06 is expected to be the best quarter of the year for the cement companies as in this quarter cement dispatches, following their past trend, remained strong and cement prices touched all-time high in April 2006.

We maintain our 'market-weight' stance on the cement sector with DG Khan and Lucky Cement being our top picks.


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## Neo

FAISALABAD (July 17 2006): The overall performance of infrastructure industries measured by the composite index of seven infrastructure industries slightly weakened during the first nine months of FY06. According to official sources, these industries are electricity generation, natural gas, basic metals, petroleum products, crude oil, cement and coal.

The Infrastructure Industries Index registered an increase of 8.5 percent in Jul-Mar FY06 marginally less than 8.8 percent growth during the corresponding quarters of the previous year.

This deceleration was mainly attributed to a fall in the production of basic metal and crude oil during Jul-Mar FY06, which was partially offset by positive contributions by electricity generation, coal, natural gas, cement and petroleum products.

During the first three quarters of FY06, the User based Quantum Index (UBQI) registered a growth of 8.0 percent, which was significantly lower than the 15.4 percent growth witnessed in the corresponding period of last year.

According to official sources, the slowdown in all sub-indices (except of basic sub-group) of UBQI imitates the development seen in the LSM and mining & quarrying sub-sector.

The basic goods recorded the acceleration in output in Jul-Mar FY06, mainly due to acceleration in electricity generation and some industries of mining & quarrying, while the consumer goods, intermediate goods and capital goods industries witnessed a deceleration in growth compared to the corresponding period last year.

The biggest slowdown of 16.9 percentage points was observed in the capital goods industries during Jul-Mar FY06 over the same period of the previous year. The major contribution in the slowdown of capital goods stemmed from the decline in the production of buses, power looms and electric motors as well as deceleration in the production of tractors, LCVs, electric transformers and wheat thrashers during the first three-quarters of FY06.

Similar to capital goods, a deceleration was recorded in the growth of intermediate goods in Jul-Mar FY06. Most of the slowdown in the growth of output of intermediate goods came from the lower production of textile products, basic metal industry, petroleum products, fertilisers' products, etc.

Consumer goods group grew at a rate of 10.5 percent in Jul-Mar FY06 as against a growth of 17.6 percent during the corresponding period of the preceding year.

This slow growth is attributed to both durable as well as non-durable sub-groups.

The decline in the production of sugar, vegetable ghee & cooking oil, and in some items of the chemical group were the main reasons for the deceleration in the consumer non-durable group. Similarly, the deceleration in electronics products and rubber industry output slowed down the growth of consumer durable goods in Jul-Mar FY06.


----------



## Neo

FAISALABAD (July 17 2006): The pharmaceutical sector in the country presents accelerated growth, as 10 new pharmaceutical companies have been set up in Karachi, 45 in Punjab and 10 in the NWFP in recent times.

According to official sources, this industry has witnessed 14.2 percent growth. The high local demand (earthquake affected areas), increase in external demand, entry of new companies and expansion in production capacity by existing units are main factors for the growth of the pharmaceutical industry.

The growth in chemicals was mainly contributed by soap & detergents and toilets soap, which are the bi-products of vegetable ghee and cooking oil. While textiles-related chemicals such as caustic soda, sulphuric acid and hydrochloric acid had shown a deceleration trend as seen in the textiles sector.

The sources said the government was actively working for improving quality of drugs with special focus on export markets to ensure collection and destruction of expired drugs from the markets in the light of directions of Supreme Court of Pakistan and submission of a report on behalf of various pharmaceutical companies.

Secretary Health, Syed Anwar Mahmood, said the Ministry was going to arrange a convention in September this year and urged stakeholders to work together for the betterment of the country.

Meanwhile, on a proposal of drugs controller, a committee was constituted to resolve the issue unanimously with members included Dr Iqbal Soomro (PCDA), Riaz Hussain (Pharma Bureau), Mohammad Usman (PPMA), Shaukat Sindhu (PPIA), Naser Qureshi (Rawalpindi, Islamabad and Hattar Manufacturer Association) and Arshad Awan (PCDA). It was decided that the PCDA would collect evidence from their members and a meeting of the committee would be held next week, in the Ministry of Health to reach the final decision.

It was also decided that the stakeholders would submit their comments for future implementation within seven days positively.

A draft mechanism has also been proposed by the Ministry to put in rules for the recalls of substandard/ spurious/ adulterated/ misbranded and expired drugs to give legislative support without creating any dispute.

Manufacturers/ importers will establish their internal mechanism for quality assessment throughout the shelf life of drug after marketing. In case of detecting defects through their internal assessment, they will immediately recall/ withdraw said batch of drugs from the market directly or through the authorised agents.

Manufacturers will also immediately recall the unutilised quantity of drugs from the market, if any batch of said drug is declared spurious/ sub-standard/ adulterated or misbranded by the drug-testing laboratory. The manufacturers may utilise the recalled stocks if the drug is subsequently passed by appellate Laboratory.

In case, the Appellate laboratory also declares the drug substandard or adulterated, the recalled stocks will be destroyed by a committee constituted by the provincial or federal government.

Manufacturer or importer will collect drugs from the market before expiry date.

The officials further said that 100 percent compensations would be given to purchasers if intimation on prescribed form is given in writing to the manufacturers, indenters or importers directly or through their authorised agents, three months prior to expiry dates.

Similarly, 50 percent compensation will be given to the purchasers if intimation is given one month prior to the expiry date, while 25 percent compensation will be given if intimation is forwarded one day prior to the expiry date.

Retailer, distributors or wholesalers, who failed to intimate manufacturer or indenters directly in writing or through their authorised agents in the prescribed manner and possess any expired drugs, will be held responsible and liable to be proceeded in accordance with the law.


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## Neo

SIALKOT (July 17 2006): State Minister for Railway Ali Asjad Malhi has said that plan is under consideration for starting fast train between Sialkot and Lahore to facilitate the people in general and in particular business community of this export-oriented city and hub of cottage industry of the country.

Talking to Business Recorder here on Saturday afternoon he said that the step was being taken keeping in view the pressing demands of the exporter community and trade bodies of Sialkot. Pakistan Railway was also considering on plying fast cargo train service from Sialkot-Lahore and other major cities for ensuring speedy delivery of cargo within the country he disclosed.

Ali Asjad said that in order to provide better and comfortable travelling facilities to the passengers Pakistan Railway was utilising huge funds for inducting modern bogies, engines and improvement of railway track and initiating fast trains on different routes in the country. Special steps would also be taken of the repair and improvement of railway track between Sialkot-Narowal section he added.

Ali Asjad disclosed that feasibility report was being prepared for the construction of an overhead bridge and underpass in most busy areas of Sialkot city aimed ensuring muddle-free traffic and work on the projects would be undertaken after finalisation of feasibility report.

The State Railway Minister further said that both federal government was spending huge funds for providing basic facilities like telecommunication, electricity, Sui gas, health, education and hygienic drinking water in far-off and neglected areas of the country. The sole aim of the government was to bring ignore and remote parts at par with the developed areas of the country, he added.


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## Neo

ISLAMABAD (July 17 2006): The Asian Development Bank (ADB) has signed a $180 million loan agreement with Pakistan for improving National Highway Network to enhance its efficiency and increase private sector participation in the road sector.

Under the National Highway Development Sector Project (formerly Sub-Regional Connectivity and Trade Facilitation project), the government in October last year held negotiations in Manila for the first tranche of $180 million, which is part of a Multi-tranche Financing Facilities (MFF) of $773 million, official sources told Business Recorder on Saturday.

The Multi-tranche Financing Facilities, a new ADB financing arrangement, will support the government's national highway development plan intended to overcome critical bottlenecks in the country's road network, they added.

Sources said the Asian Bank would provide this amount from its Ordinary Capital Resources (OCR), whereas the communication ministry would be the implementing agency of the project.

They said the ADB approved this project on December 13, 2005, and about its break-up, the Bank would provide $770 million from its Ordinary Capital Resources (OCR) and $3 million from its concessional Asian Development Fund (ADF).

The project has been designed to achieve two specific objectives ie improvement in road sector and transport efficiency by facilitating the adoption of national transport policy, strengthening performance of NHA in its management of national highway network, improving road safety and road maintenance and funding, they said.

The second objective of the project is to increase the private sector participation in the road sector by increasing outsourcing of road works and exploring opportunities for private operation of NHA assets.

Sources said under the project, different locations on which improvement and rehabilitation work would be executed are National Highway; N-25, Hub-Uthal, Balochistan; N-70, Multan-Muzaffargarh, Punjab; N-50, Khanozai-Mughal Kot, Balochistan-NWFP; N-35, Hasan Abdal- Manshera, NWFP; N-65, Sukkur-Jacobabad, Sindh; N-80, Tarnol-Jand, Punjab; N-70, Qila Saifullah-Wiagum Rud, Balochistan. Besides, sources said, the proposed project also included institutional strengthening of NHA.

As country's ports and roads offer the most economical route to the landlocked Afghanistan, Central Asia and parts of Russia, the project will help Pakistan to a bridge between east and west Asia.

By alleviating physical, institutional and other constraints through this project, the country would take full advantage of its location and potential for increased trade through improved trade facilitation, rehabilitation of transport link, efficient cross-border movements and increased efficacy at ports.

Once the Gwadar Port is completed, the efficient and improved national highway system would contribute adequately to economy of the country by lowering transportation costs, the sources said.


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## Neo

Monday July 17, 2006 

ISLAMABAD: United States Assistant Secretary of State for Economics and Business Affairs, Daniel Sullivan is exploring the prospects of establishing Reconstruction Opportunity Zones in the earthquake affected region and along the border with Afghanistan. 
United States Assistant Secretary of State for Economics and Business Affairs, Daniel Sullivan travelled to Muzaffarabad, AJK, and Balakot, Mansera District, NWFP to see to see firsthand the effects of the October 8 earthquake. 

The goal of ROZs is to foster economic growth by providing tariff-free access to the US market for goods produced in areas that face significant development challenges. 

The United States Assistant Secretary of State for Economics and Business Affairs was also briefed on the United States GovernmentÃ¢â¬â¢s US $510 million of economic assistance to the earth-quake affected region and visited a US Agency for International Development program to remove rubble from MuzaffarabadÃ¢â¬â¢s central business district. 

The program is being implemented by the International Office for Migration (IOM).


----------



## Owais

*Trade Policy announcement today* 

ISLAMABAD (July 17 2006): Commerce Minister Humayun Akhtar will announce the 'Trade Policy 2006-07' on Monday evening, prepared much in line with the directions of President Pervez Musharraf communicated to the Commerce Ministry on Saturday.

Official sources told _Business Recorder _that a lot of changes had been made in the original draft of the trade policy in the light of the guidelines given by the President, who also set the export target of $19.5 billion for 2006-07.

"The President has given export target of $19.5 billion and the directions, which are being incorporated in the trade policy.

We have changed all sectoral export targets as per the new target but last-ditch efforts will be made to bring the exports down to $19 billion," said an official of Commerce Ministry on Sunday.

Commerce Ministry was expecting export target of more or less $18 billion, but it has been given a wishful target, which somehow the ministry has to accept, he said.

Another official said that Commerce Secretary gave a revised presentation to Commerce Minister on Sunday to finalise the summary for the Cabinet, which would accord 'ceremonial' approval to the policy.

He said that the Commerce Minister would announce a re-export scheme, according to which those exporters would be encouraged who would import goods for re-export purpose.

He said that measures would be announced to encourage cottage industry on recommendations of Sindh Chief Minister, while special export processing zones would be established in Balochistan.

"We have proposed to the Cabinet to import second-hand construction machinery, airport handling machines, chillers, medical equipment, fire fighting vehicles and garbage carrying vehicles," the official added.

However, import of cars under the baggage scheme would be more tightened through reduction in depreciation from two years to one year, he said.

According to foreign trade data of 2005-07, exports remained short of the target by $440 million--at $16.56 billion--against the target of $17 billion, showing a growth of 14.9 percent.

The country's imports jumped all time high to $28.2 billion, showing an increase of 36.7 percent when compared with $20.627 billion imports of last year.

The trade gap reached an alarming level of $11.64 billion during 2005-06, but, according to Commerce Minister, the import level might remain the same during the current fiscal year.

Sources said that Commerce Minister would also announce establishment of much-awaited Trade Development Authority of Pakistan (TDAP) which would replace Export Promotion Bureau (EPB), and added that several proposals of the initial draft have been withdrawn, including inspection of warehouses and brokerage houses.

It is expected that President would promulgate an ordinance to replace EPB with TDAP, as approval from the parliament would take time.

While reviewing the Trade Policy 2005-06, analysts say that several export-related initiatives, announced in Trade Policy 2005-06 did not materialise due to one reason or the other.

For example, Commerce Ministry announced that trade lobbying firms and consultants would be hired to enhance export and market access in the United States and the European Union (EU).

Quinngillespie Associates, an American firm, had been hired for lobbying for Free Trade Agreement (FTA), Bilateral Investment Treaty and Trade and Investment Facilitation Agreement (TIFA), which has been given a chart of tasks to be completed in one or two years.

However, the name of marketing company has not been finalised which would be given the task of match-making and procurement of orders for Pakistani exporters in the EU member states. Pakistani embassy has dispatched the names of three companies, but the matter is still undecided.

It was also announced that retail sale outlets would be established in major importing countries for introducing and exporting high quality and brand-name exports of Pakistan, but no one is ready to act one the scheme.

The Commerce Ministry had also promised that steps would be taken to reduce cost of transportation but there was no substantial reduction in freight forwarding.

The scheme of promotion of Pakistani trademarks announced in the policy did not attract the exporters.

In the scheme, it was announced that exporters who registered their trade marks abroad for export purposes would be provided subsidy equal to 50 percent of registration fee, sources said, adding that the scheme was announced but no exporter was prepared to follow it.


----------



## Owais

*SBP may set Rs 15 billion target for treasury bills auction* 

KARACHI (July 17 2006): The State Bank of Pakistan (SBP) is likely to set the target of Rs 15 billion in the upcoming auction of treasury bills where most of the participation is expected in three-month and one-year bills.

The money market week ended on a tight note with Rs 180 million worth of discounting taking place on July 14. The week started off liquid, with overnight repos trading as low as 3.5 percent during the week while the bulk of trading was witnessed in the 6.5 percent to 7.5 percent range.

The short term yield curve slipped slightly during the week with one-, three-, and 6-month repos trading at 8.08 percent, 8.28 percent, and 8.41 percent respectively, at the end of the week, against previous week's levels of 8.19 percent, 8.31 percent, and 8.52 percent, respectively.

The SBP conducted Open Market Operations (OMOs) on three occasions during the week in order to mop up excess liquidity.

Salman Jafri, fixed income dealer at JS Capital Ltd, said in a report that a large volume of OMO maturities would flow back into the market on July 20 totalling Rs 67.7 billion. In addition, Rs 14 billion of Treasury Bills would also mature on July 20, bringing total inflows on that date to approximately Rs 76.8 billion.

The SBP is expected to announce an auction of Treasury Bills on July 17 for settlement on July 20 and pick up the inflows via sales of Treasury Bills. The pre-auction target is likely to be in line with that of maturing T-bills ie Rs 14 to 15 billion.

Participation in the auction is likely to be heavy, keeping in view the excess liquidity situation prevalent in the market. "We expect the bulk of participation to target the 3-month and 12-month T-bills. Mop up OMOs of up to two weeks maturity are expected subsequent to the auction to dry up any excess liquidity."

The JS PGBI, which is the primary indicator of Pakistan Bond Markets, showed an increase of 0.0288 points over the week, bringing the index value to 89.2803 with a weighted index yield of 9.5713 percent on July 15, 2006. The JS PGBI has shown an overall decrease of 10.7197 percent since its inception on July 1, 2004 and has fallen 1.4018 percent since December 31, 2005.

Last week the 10-year yield fell to 9.82 percent from previous week's level of 9.85 percent; the 5-year yield fell to 9.64 percent from 9.66 percent, and the 3-year yield fell to 9.35 percent from previous week's level of 9.39 percent. The State Bank of Pakistan conducted the first successful auction of Pakistan Investment Bonds on May 18, 2006, after two years of non-issuance by the Government.

Cut-off yields for 3-, 5-, and 10-year PIBs rose to 9.4515 percent, 9.6674 percent, and 9.8746 percent, respectively, from levels of 4.3506 percent, 5.3492 percent, and 7.3698 percent.

In the period since the auction, trading volume has fallen off to negligible levels. This is due to the fact that a large portion of the freshly issued bond holders resides in corporate sector inventories and is unlikely to be traded since the corporate sector typically holds instruments to their maturity rather than actively trading in them.


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## Spring Onion

Enhancement of trade between Pakistan, Kazakhstan stressed

RAWALPINDI, July 17 (APP): The Economic Councilor, Embassy of 
Kazakhstan, Gali Shaimakov has stressed the need for enhancing trade volume between Pakistan and Kazakhstan, maintaining that the current volume between the two countries was very low.
Addressing business community here, Gali said, Kazakhstan and Pakistan 
had great potential for trade and stressed the need that economic cooperation should activate the development of mutually beneficial collaboration. 
He said, a high level Kazak delegation visited Karachi to look into 
present investment opportunities and invite Pak companies and businessmen to avail business opportunities in Kazakhstan.
He urged upon the business community of Rawalpindi to take active part 
in further strengthening the trade and economic relations between the two countries.
He said, Kazakh President, Nazarbayev has identified a strategic 
objective before the nation to join fifty most competitive countries in the world in near future. He said, the president stressed the need of enhancing trade relations with Pakistan.
Gali stressed the need of result-oriented cooperation between the 
Islamic countries and assured Pakistan of its full support on all international forums like Economic Cooperation Organization (ECO) and Organization of Islamic Countries (OIC).
Speaking on the occasion, President Rawalpindi Chamber of commerce and 
Industry (RCCI), Jalil Ahmad Malik maintained that there was great scope to expand economic and trade relations between the two countries.

APP


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## Neo

ISLAMABAD (updated on: July 17, 2006, 19:19 PST): The Federal Cabinet on Monday approved the trade policy 2006-07 and set an export target of $18.6 billion for the current fiscal year.

The cabinet also approved setting up of the Trade Development Authority of Pakistan (TDAP) to boost exports.

Chairing the Cabinet meeting, Prime Minister Shaukat Aziz said the consistency and continuity of policies are showing results in every sector of economy.

He noted that during the last financial year, exports were the highest in the country's history and the government also exceeded revenue collection target by Rs 21 billion.

The government has so far collected Rs 711 billion against the annual target of Rs 690 billion for the previous financial year. 

The figure is expected to rise further after final calculations, the prime minister said. 

Mr Aziz said that increase in the revenue collection reflects buoyancy in the economy which has doubled in size to $ 134 billion in the last seven years since President General Pervez Musharraf took the office.

The prime minister said that higher than targeted figures of imports during the last financial year were due to higher import of machinery and the surge in prices of oil in the international market. 

Last year's oil bill (2005-06) was $ 2.5 billion over and above than the previous year's bill which posed many challenges to the economy, he added. 

The prime minister said that the challenge of continuing increase in the price of oil has to be faced squarely.

The primer said that the reform agenda of the government which is based on the philosophy of deregulation, liberalisation and privatisation accompanied by transparency, consistency and continuity of policies have changed the entire landscape of the economy.

He said the TDAP will make focused efforts to enhance exports. He asked the newly created TDAP to increase and diversify the country's exports by exploring new markets and by identify new export products.

Prime Minister Aziz said in this era of globalisation, industries must focus on competitiveness and productivity. He said government is making an all out effort to facilitate the private sector in this regard.

The prime minister said the government is also focusing on trade and economic diplomacy. 

To increase market access for the goods produced in Pakistan, the government is vigorously pursuing signing of Free Trade Agreements (FTAs) and Preferential Trade Agreements (PTAs) with various countries.


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## Neo

ISLAMABAD: July 17, 2006

The government has fixed export target of $18.6 billion and import target of $28 billion for the current fiscal year.

Announcing the new trade policy on Monday, Commerce Minister Humayun Akhtar Khan said the export target represents an increase of around 13 percent on the export level, attained during last year.

He said the focus of the government would be on trade diplomacy, trade facilitation, domestic commerce and development of human and physical infrastructure to boost our exports.

He announced a strategy to facilitate annual exports of leather products, engineering goods, chemical and pharmaceuticals, towels, denim and services to a level in excess of a billion dollars within three years.

He said the prime minister has tasked the Deputy Chairman Planning Commission to develop sectorial strategies for traditional or core industrial sectors as well as the developmental ones with good potential.

He announced a number of initiatives and concessions for different sectors. 

*TRADE DEVELOPMENT AUTHORITY* 

In view of the rapidly changing international trading environment it has been decided to establish the Trade Development Authority of Pakistan replacing the Export Promotion Bureau to effectively exploit opportunities for increasing Pakistan's prosperity through enhanced trade.

*CARPET CITIES* 

Carpet cities are to be set up in Lahore and Karachi to make our carpets more competitive in terms of price as well as quality and other standards.

*EXPO CENTRES *

Three more expo centres would be set up in Islamabad, Quetta and Peshawar. Those in Quetta and Peshawar will have modern warehouse facilities and play an important part in promoting exports to Iran, Afghanistan and the Central Asian States.

*GEMS EXPORT* 

An integrated facility to be known as the Dazzle Park is being established near Karachi airport to facilitate export of gems and jewellery. A specialised SME Export House is to be established to act as a strong catalyst to SME exports.

*MODERN WARE HOUSE* 

It has also been decided to explore setting up the modern ware-house city in Karachi to ensure availability of adequate and modern warehouse facilities within the country.

*CEMENT* 

In order to facilitate the export of cement, a specialised coal, clinker and cement terminal is planned to be set up in Port Qasim.

*25 PERCENT FREIGHT SUBSIDY* 

Export of all items except those to be notified separately will now be able to avail a twenty-five percent freight subsidy provided they are exported to Africa, Pacific Islands and Eastern Europe.

Similarly, export of products falling in the developmental category will be entitled to twenty-five percent freight subsidy even if they are to the to twenty export destination.

*6 PERCENT COMPENSATORY REBATE* 

The six percent compensatory rebate to readymade garments and knitwear as research and development support would continue till end June next year at the same rate and at the rate of three percent till end June 2008.

Like textile garments, footwear sector would also get six percent research and development support to enable it to make improvements in its processes and products.

*HALAL MEAT EXPORT ZONES* 

Halal meat export zones would be established in Karachi, Lahore, Peshawar and Quetta with state of art infrastructure to target export markets in the Islamic world.

First six percent of the mark up rate for credit utilised in setting up cool chain facilities for the purpose will be picked up by the Export Development Fund.

Subsidy will also be provided for refrigerated transportation of such meat to export markets.

*POULTRY ZONES *

Similarly, specialised poultry export zones would also be set up in Karachi, Faisalabad and Hazara.

*LONG TERM FINANCING REVAMPED *

The commerce minister also announced revamping of the special long-term financing facility on concessionary terms with fixed interest rates. 

*IMPORT STRATEGY *

Mr. Humayun Akhtar Khan said it lays emphasis on import liberalisation with a view to ensuring an economical supply of machinery and raw material to our industry so that the exportable surpluses they produce are internationally competitive.

Similarly, import of those items is being facilitated which are required for enhancing public welfare at affordable cost.

Essential items especially food stuff are imported to ensure their availability to the public at reasonable prices.

He said country's imports during first eleven months of the last financial year were to the tune of 25.6 billion dollars mainly because of higher prices paid for higher imports and higher demand for machinery and raw materials.

*IMPORT OF USED MACHINERY* 

He announced permission for import of certain kinds of used machinery. These included used machinery and parts for construction, petroleum and mining sectors, used cargo handling equipment for airports and seaports, mobile cranes for industrial units, equipment needed by licensed call centres, waste disposal trucks and fire engines, mobile clinics and medical equipment, security and surveillance equipment and transportation of fruits, vegetables, meat and flowers.

*IMPORT OF NEW/USED AIRCRAFT *

Public and private limited companies will be able to import new or used aircraft subject to fulfilment of relevant licensing formalities.

Only vehicle assemblers registered with the Ministry of Industries will be allowed to import CKD kits.

About export performance during the last financial year, the Minister said our merchandise exports were around 16.5 billion, defence exports in additional 275 million dollars and services exports another 392 million dollars.

He pointed out that for the first time in Pakistan's history non-textile exports exceeded six billion dollars. Similarly the exports of rice have also exceeded one billion dollar mark.


----------



## Neo

By John Zarocostas
The Washington Times

GENEVA -- Pakistani Prime Minister Shaukat Aziz says Islamabad hopes to position itself as an energy corridor linking oil- and gas-rich countries in the Persian Gulf and Central Asia with the dynamic economies of India and China. 

With energy needs growing rapidly throughout Asia, Pakistan's strategic location puts it in a favorable position to tap this potential, Mr. Aziz said during a recent visit to Geneva. 

Brushing aside U.S. sensitivities over a proposed $7 billion gas pipeline running from Iran through Pakistan to India, Mr. Aziz told reporters that his government was engaged in negotiations with Tehran over transit fees for gas piped through Pakistan. 

The United States is pressing both Pakistan and India not to deal with Iran, a country Washington considers a sponsor of terrorism. 

"We have repeatedly expressed concerns about international participation in energy projects with Iran," a U.S. official told The Washington Times. 

"This concern reflects not only long-standing U.S. policy and law, but also the growing international recognition of the threat posed by Iran's policies, including its pursuit of nuclear weapons and support for terrorism." 

Energy analysts say the benefits to India and Pakistan in terms of energy security and profits are too great to be easily brushed aside. But the United States is adamant that a venture with Iran would not be a plus. 

"We question whether dependence on a gas pipeline link with Iran would enhance the energy security of either country," the U.S. official said. 

Extension of Iran-Pakistan-India pipeline under consideration
Mr. Aziz, a former Wall Street banker, said the Iran-Pakistan-India pipeline also could include a spur running to western China. Other possible projects include the transport of energy from Tajikistan via Afghanistan to Pakistan and on to India, he said. 

Mr. Aziz also said a new seaport at Gwadar, near the Iran-Pakistan border, "will be ready in a few months. We are positioning it as an energy port and hub for storage and refining." 

An energy security report from the United Nations prepared for the Group of Eight summit in St. Petersburg concluded that global security risks have "increased sharply because of steeply rising oil import demand in developing countries." 

Tightness in the supply situation and the heightened threat of supply disruptions due to war and terrorism are adding to the insecurity, said the report, which proposed the promotion of more investment in the energy sector to meet future needs. 

Mr. Aziz, noting rapid growth in the economies of both Pakistan and India, said moves to develop his country as a regional energy hub "would be win-win for all." 

Pakistan's economy is surging by 6 percent to 8 percent a year, India's by about 8 percent and China's by more than 9 percent a year.

http://wpherald.com/articles/355/1/...ghout-Asia.html


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## Neo

KARACHI, July 17: An impressive export performance of 17 per cent growth in the fiscal year 2004-05 gave enough confidence to Commerce Minister Humayun Akhtar Khan to announce in the Trade Policy in July last year an export target of $20 billion. In the final assessment, a caution prevailed and a more realistic export target of $17 billion was fixed. On Monday, the minister in his Trade Policy 2006-07 speech announced final export figures at $16.46 billion for the fiscal year 2005-06.

Export proceeds of a little more than $500 million from defence products and services were clubbed together to push up export figures near $17 billion. This may be good for self-consolation but issues confronting the trading sector cannot be wished away by such an exercise.

With PakistanÃ¢â¬â¢s import bill likely to close at $28 billion plus this end-June, the resultant trade gap of about $11.50 billion would not be easy to digest. The trade imbalance is almost equal to PakistanÃ¢â¬â¢s official foreign exchange reserves. This trade gap is further aggravated by the imbalance shown in insurance and shipping services and there had been more outflow than inward transfers. Remittances, foreign debts and privatisation proceeds provided some temporary cushion. This cushion may prove to be too fragile to withstand the pressure of widening trade gap in coming days.

What is moral of the whole story? PakistanÃ¢â¬â¢s international trade remains a gamble rather than a well designed and thought out strategy designed to respond to the fast changing situations. Even a cursory glance at month-wise tempo of exports during the fiscal year 2005-06 shows that there was a downslide since January this year.

In January 2006, exports were down by $206 million than the target. In February, the exports were short by $49 million. The export showed a small improvement of $37 million in March but then again went down by $69 million in April, $81 million in May and finally more than $200 million in June.

Even before January 2006, the tempo of exports during July-December 2005 was far from satisfactory. In four months, the exports were hardly close to proportionately monthly targets. What were export planners doing all these 12 months of 2005-06? Was this downslide taken notice of in the recent meeting of the Export Promotion Board chaired by Prime Minister Shaukat Aziz?

LetÃ¢â¬â¢s look at the export structure from another angle. Pakistan has signed a free trade agreement with Sri Lanka. The official export figures for Sri Lanka during July-February 2005-06 tell us that these came down to $102.32 million from $110.08 million in 2004-05. After an FTA it was expected that Sri Lanka would be a conduit for a variety of Pakistan goods for re-export to India. It did not happen. Why?

Another question that begs for an answer is tempo of PakistanÃ¢â¬â¢s trade with Saarc countries after the signing of Safta. The powerful lobby of super patriots in Islamabad is perhaps not yet ready for a normal and smooth flow of trade between the Saarc countries. Why cross-border trade possibilities with India in Punjab and Sindh are not being considered?

China remains PakistanÃ¢â¬â¢s big trade partner so far as imports from official and unofficial channels are concerned. But exports to China are very dismal despite an Early Harvest agreement. Total exports to China during the first eight months of 2005-06 amounted to hardly $300 million. A 45 per cent increase in exports during 2005-06 looks impressive but figures are far too unimpressive and insignificant. Hong Kong was a dumping ground for PakistanÃ¢â¬â¢s yarn for too long. It remained a god market for PakistanÃ¢â¬â¢s exports. In eight months of 2005-06, total exports are hardly $435 million.

Afghanistan is one country where exports had more than doubled to about $644 million in eight months of 2005-06. But this improvement in exports was at the cost of PakistanÃ¢â¬â¢s cement and wheat flour and eventually the government had to enforce a regulatory duty.

There is a lot of talk about export potential available in central Asian republics. EnvoysÃ¢â¬â¢ conferences were held. The end result is that during eight months of 2005-06, total exports to Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan were not even $15 million. Indian exports exceed billion dollars as it is main supplier of a variety of consumer items, hospital equipments and other goods.

Indonesia and Malaysia are the two brotherly Muslim countries with which Pakistan seeks FTA. PakistanÃ¢â¬â¢s exports to these two countries are showing downward trend in 2005-06. There are improvements in export to South America, Africa and East Europe in ratios but these are insignificant when it comes to hard cash.

On the import side, almost $6 billion have been claimed by petroleum and products. Increasing number of automobiles on roads has pushed up demand for oil. Automobiles worth more than $1.5 billion have been imported in completely built-up (CBU) by the importers and in semi knock down condition by the assemblers to meet the rising demand. What is the identity of this neo rich class? How many of them would be able to pay back their auto loans to banks and leasing companies?

The government never releases details of imports. But there are reasons to believe that quite a big chunk of imports is consumer items. These include edibleÃ¢â¬âcheese, butter, honey, juices, beverages, cosmetics, toiletries, apparels, home textile, furniture, jewellery and what not.

PakistanÃ¢â¬â¢s economy is coming under increasing pressure of a double-edge sword, the fiscal deficit and the current account deficit. The business and trade look for liberal loaning from banks that too are under pressure of a huge debt portfolio of more than one trillion rupees. A State Bank report has obliquely drawn governmentÃ¢â¬â¢s attention to vulnerable fiscal indicators. It is in this backdrop that the commerce minister wants to achieve $18.6 billion export in 2006-07 and bring down import from the $28 billion level.


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## Neo

Monday July 17, 2006


ISLAMABAD: United States Assistant Secretary of State for Economics and Business Affairs, Daniel Sullivan is exploring the prospects of establishing Reconstruction Opportunity Zones in the earthquake affected region and along the border with Afghanistan. 
United States Assistant Secretary of State for Economics and Business Affairs, Daniel Sullivan travelled to Muzaffarabad, AJK, and Balakot, Mansera District, NWFP to see to see firsthand the effects of the October 8 earthquake. 

The goal of ROZs is to foster economic growth by providing tariff-free access to the US market for goods produced in areas that face significant development challenges. 

The United States Assistant Secretary of State for Economics and Business Affairs was also briefed on the United States GovernmentÃ¢â¬â¢s US $510 million of economic assistance to the earth-quake affected region and visited a US Agency for International Development program to remove rubble from MuzaffarabadÃ¢â¬â¢s central business district. 

The program is being implemented by the International Office for Migration (IOM).


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## Owais

*Orient Petroleum to provide natural gas to SSGC * KARACHI: Orient Petroleum International will provide daily 90 to 100 million cubic feet of natural gas to Sui Southern Company Limited (SSGC) for a span of fifteen years.

The provision to Sui Southern Company Limited will be managed from Mirpur Khas block and Khapro block gas fields.

In this connection, two pacts of sale and purchase were signed between Orient Petroleum International and Sui Southern Company Limited.

On this occasion, Sui Southern Gas Company managing director Munawwar Baseer said this pact would serve to fulfil increasing demands from industrial sector.


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## Owais

*Textile sector production in 9 months rose by mere 4% * KARACHI: Textile sector production during the nine months of the previous year could be raised by merely 4 percent as compared to the 29 percent surge witnessed during the same period, 2004-05 fiscal year, which culminated into the largest single factor hitting large scale manufacturing sector performance.

State Bank&#8217;s report for the third quarter said that the agriculture sector and large industries production rise during the fiscal year 2005-06 remained much below the targets. 

However, services sector growth witnessed a significant boost to 8.8 percent as compared to 4.3 percent in fiscal year 2004-05, when finance and insurance sectors taking the lead showed a robust growth of 23 percent, while wholesale and retail trades grew by 9.9 percent.

Agriculture sector performance during the previous year turned out to be quite disappointing, as the targeted productions from cash crops including cotton and sugar could not be achieved and the agricultural production trailed behind to mere 2.5 percent as against 6.7 percent growth recorded in 2004-05.

Similarly, growth in the production of large industries as against 15.6 percent in 2004-05 also lagged behind to poor 9 percent during the previous fiscal year.


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## Owais

*Interest on one-day loans shoot up to its highest at 8.9% * KARACHI: The liquidity crunch in the banking system here shot up the interest on one-day loans to its highest peaking at 8.9 percent.

The banks were expected to seek resort at the discounting facility of the Central Bank in the wake of the acute liquidity crunch prevailing.

Analyst Shahid Iqbal here predicted this situation prevailing for at least next two days, as an inflow of Rs62 billion was expected on July 20 and only after that any contraction in the interest of the short-term loans was likely, he said.

The Central Bank was also expected to seek bids for the sale of T-Bills for 3 months, six months and one-year duration during this week


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## Owais

*'Preferential trade talks on with various countries'* 

ISLAMABAD (July 18 2006): Pakistan has initiated a series of preferential trade negotiations with different countries. Iran will soon offer tariff concessions on 309 items to Pakistan under the Preferential Trade Agreement (PTA) and Pakistan would sign an FTA framework agreement with the Mercosur countries (ie Brazil, Argentina, Paraguay and Uruguay) on July 20.

Moreover, Pakistan is in the process of multilateral negotiations with the Organisation of Islamic Conference (OIC) and Group of Developing Eight countries (D-8).

According to the Trade Policy (2006-07), Pakistan has recently concluded negotiations on a Preferential Trade Agreement (PTA) with Iran. Under the agreement, Iran has agreed to grant tariff concessions on 309 tariff lines, including seafood, fruits, vegetables, rice, marble and granite, textile machinery, wooden furniture, pharmaceuticals, minerals and certain textile items. This agreement is expected to become operational shortly.

"With Singapore and the Gulf Co-operation Council (GCC) countries, we expect to conclude our FTA negotiations by the end of the year. With the Mercosur countries ie Brazil, Argentina, Paraguay and Uruguay, I am scheduled to sign a framework agreement on July 20 in Buenos Aires, Argentina, on the occasion of the Mercosur Summit Meeting, said Commerce Minister Humayun Akhtar Khan.

The trade policy highlights that in recent years, the world trade scene has witnessed a proliferation of preferential trading arrangements, be they in the form of Regional Trading Arrangements (RTAs) Bilateral Free Trade Agreements (FTAs) or unilateral GSP type programmes.

As a consequence, Pakistani exporters were increasingly finding themselves at a disadvantage vis-a-vis their competitors, on account of the preferential access the latter enjoyed in certain markets.

The government has initiated a series of preferential trade negotiations designed to neutralise this disadvantage for Pakistani exporters. While negotiations with a number of countries are at various stages, some of them have either already begun to yield benefits or are on the verge of doing so.

The trade policy also specifies that Pakistan's first FTA is to become fully operational with Sri Lanka, and it has been effective since June 2005. As a result, Pakistani exports such as fruits, vegetables, footwear, engineering products, sanitary goods, chemicals, leather, rice and some textile items enjoy duty concessions in the Sri Lankan market.

Secondly, while negotiations for a full-fledged FTA with China are progressing well; an Early Harvest Program has already become effective since January 2006. As a result, Pakistani exports such as leather articles, some textile items, marble, sports goods, fruits, vegetables and mineral products will have reduced duties and all these items will be exported duty-free by January 2008.

Thirdly, while FTA negotiations with Malaysia are proceeding at a rapid pace, an early harvest program has become effective since January 2006. As a result, Malaysia has allowed export of Pakistani items such as fruits, vegetables, some textile items and jewellery at concessional rates of duty.

These negotiations will conclude by the end of this year. Moreover, the South Asia Free Trade Agreement (Safta) between Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka has been signed and ratified by all Saarc members. It has consequently become operational as of July 1, 2006.

Lastly, the government has initiated talks with several other countries for preferential market access arrangements. Bilateral negotiations in this regard are underway with Mauritius, Morocco, Russia, and Thailand.

Additionally, multilateral negotiations are taking place in the context of the Organisation of Islamic Conference (OIC), and Group of Developing Eight countries (D-8). Further a joint consultative study group for a potential PTA with Association of South East Asian Nations (Asean) has also been agreed.

While in recent years, there has been an intensification in trade diplomacy and preferential trade negotiations, our exporters need to be made more aware of the rapidly emerging new concessional opportunities.

The commerce ministry is taking a number of measures in this regard. These include the organising of informative seminars, dissemination of information through the ministry's website as well as through the print and electronic-media, Humayun Akhtar Khan added.


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## Owais

*MoC condition for temporary goods export withdrawn* 

ISLAMABAD (July 18 2006): The government has withdrawn the requirement of the Ministry of Commerce (MoC) 'sanction' for the temporary export of goods for exhibitions, repairs, testing and other business processes. The Trade Policy, 2006-07, reveals simplification of the temporary export procedure, establishment of modern border terminals at the Pak-Afghan border and implementation of the National Trade Corridor Improvement Program (NTCIP).

At present, specific sanction has to be obtained from the commerce ministry for temporary export and subsequent duty-free import of goods for exhibitions, repairs, testing and other business process requirements. The sanctioning process can sometimes be time-consuming and therefore onerous for exporters.

It has, therefore, been decided to dispense with the sanction requirement from the ministry, and instead temporary export-cum-import will be permissible on provision of an appropriate indemnity bond and undertaking to the customs authorities concerned.

To Improving the Border Infrastructure, the National Logistics Cell (NLC) will establish modern border terminals at Taftan, Chaman, Torkham and Wagah keeping in view the importance of the transit trade. These terminals will house all the required facilities like customs and immigration offices, quarantine facilities, warehouses and display centres, scanners and weighbridges. These terminals will also serve as hubs for multi-modal transport since railway and road transport modes will be integrated.

National Trade Corridor Improvement Program (NTCIP): Under this program, the commerce ministry is working on improving the cold chain infrastructure and has initiated feasibility studies for three projects to provide state-of-the-art cool chain facilities for fresh fruits and vegetables. Secondly, the ministry has initiated a feasibility study to ascertain new locations where facilities are needed for dispatch of exports via air cargo.

Thirdly, the ministry is working with other government agencies to arrange the early accession to the International Transport Carnet (TIR) and the ATA Carnet conventions, since this will greatly facilitate the achievement of benefits associated with developing this trade corridor.


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## Owais

*MoC asked to relax condition for five years old cars import* 

ISLAMABAD (July 18 2006): The CBR has asked the Ministry of Commerce to give relaxation for import to vehicles of five years old or above under the transfer of residence (TR) scheme in cases where shipments were made on or before June 5, 2006.

In this connection, the board on Monday issued an 'official memorandum' to the Ministry of Commerce regarding applicability of SRO 696(I)/2006 on the import of old cars under the TR scheme.

According to CBR instructions, the concerned ministry should accommodate the delayed arrival of the ships carrying vehicles shipped before June 5, 2006. The ministry should check the relevant documents including 'carrier bill of lading' and export general manifest (EGM) to ensure clearance in genuine cases only.

Explaining the decision, the CBR said that the board has given relaxation on the recommendation of the Commerce Ministry. In this regard, a proposal for five years capping restriction was submitted to the 'special cabinet meeting' held on June 6, 2006.

The proposal said that, "the scheme (SRO 696(I)/2006) has been made effective from July 1, 2006. This will allow the import and clearance of vehicles by June 30, which are in the pipeline. Any sudden change will create difficulties, which are proposed to be avoided."

The above proposal was approved by the cabinet which has been implemented by the Ministry of Commerce vide SRO 696(I)/2006. The July 1 date was suggested consciously to allow the import and clearance of those vehicles, which were in the pipeline. The budget was announced on June 5, 2006.

Thus, June 5-30 (25 days) considered reasonable time for this purpose. Accordingly, the change in policy was announced at the Parliament on June 5, 2006, the CBR added.


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## Neo

Guys,

Kindly request everyone who posts here to avoid reporting insignificant microeconomic news to keep the standard of this thread high and interesting and worth reading.

Please refrain from posting daily KSE/LHE/ISE stands or Oil / US $ / Rupee fluctuations.

Thanks!


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## Neo

ISLAMABAD (July 18 2006): Under the modified freight subsidy scheme, the government has announced that export of all items, except those which will be notified separately, to Africa, Pacific Islands, Eastern European countries, which are not in the jurisdiction of EU and Central Asian Republics will avail of a 25 percent freight subsidy.

According to incentives announced on Monday under the new trade policy, export of products falling in the developmental category will be entitled to 25 percent freight subsidy even if they are going to one of the top 20 export destinations. Any individual exporter, firm or company will not be entitled to a freight subsidy in excess of Rs 5 million in a single year.

Exports of all items except those which will be notified separately will now be able to avail of a 25 percent freight subsidy, provided goods are being exported to Africa, Pacific Islands, Eastern European countries.

The government had announced 25 percent freight subsidy on exports of new products and to new markets with the objective of achieving geographic and product diversification in exports during 2002-03.

THIS SUBSIDY WAS IN VOGUE DURING 2003-04 AND 2004-05 In 2005, a separate freight subsidy scheme was announced for leather garments up to December 31, 2005. The scheme has been overwhelmingly successful in attaining objectives of diversification in exports.

The scheme has now been continued in a modified form to cover products and countries for which the need for subsidy is pressing. Accordingly, certain changes are being made in this scheme to boost exports.


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## Neo

KARACHI, July 17: The business community on Monday offered a mixed reaction to the Trade Policy 2006-07. Some saw the export target of $18.6 billion positively within reach owing to the incentives announced for non-traditional sectors. Some others, however, were disappointed with rising cost of utilities (gas and power) and felt that the incentives announced were not attractive enough to neutralise the impact of the rising cost of doing business and, therefore, export target may prove to be too ambitious.

The new policy was considered to be carrying more incentives as compared to last year. The focus was also seemed to have changed from the textiles to agro-based non-traditional items.

President Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Chaudhry Mohammad Saeed thought that the direction of the policy was towards export-led-growth.

Ã¢â¬ÅThe 13 per cent increase in export target for 2006-07 is quite achievable as the policy is studded with new measures and incentives for a number of sectors,Ã¢â¬Â he said.

This year, the trade policy is not sector-specific but it has covered a large number of areas that needed urgent attention as compared to the last yearÃ¢â¬â¢s trade policy. Ã¢â¬ÅI do not see any negative aspect of the trade policy so far,Ã¢â¬Â Chaudhry Saeed said.

On the import policy, the FPCCI president said that the trade deficit of over $11 billion in 2005-06 might not swell in the new fiscal as the vacuum of demand and supply in some essential commodities had been filled or will be filled in coming months.

However, rising oil prices in world markets will make an impact on the countryÃ¢â¬â¢s import bill depending on the situation prevailing in the Middle East. In case political situation improves in the Middle East, which looks a temporary phase, then chances of increasing trade deficit owing to rising oil prices will remain slim in the current fiscal.

The government estimates that the import would be around $28 billion in 2006-07 as compared to $25.6 billion in July-May 2005-06 and $18.4 billion in 2004-05. The bulk of this increase was due to higher prices paid for oil imports and the higher demand for machinery and raw materials stemming from increased economic activity, he added.

Chaudhry Saeed welcomed the initiatives like skill development programme in textile sector, facilitation to SME exports, warehouse city, incentives for boosting fruits and vegetables exports, border infrastructure, national trade corridor improvement programme, incentives for freight forwarding sectors, setting up a Trade Development Authority, carpet cities, dazzle park, expo centres in Islamabad, Quetta and Peshawar, freight subsidy schemes and promotion of meat exports.

President Karachi Chamber of Commerce and Industry (KCCI) Haroon Farouki termed the trade policy as export-oriented in view of the incentives offered to various sectors, which fall in the category of non- traditional items. Ã¢â¬ÅIt is not a sector-specific trade policy but it covers other sectors that have the potential but were neglected for the past some years,Ã¢â¬Â he said.

Besides, it looks that the government has finally realised the importance of those sectors and export-oriented industries that can contribute a lot in boosting countryÃ¢â¬â¢s export.

However, he said that the export target was quite achievable but much depends on the power and gas rates as any further increase will give a severe jerk to the already increased cost of production and ultimately create problems in achieving the desired export target.

Haroon said that all the policies took few years to show results. The government should have changed the system and announce the trade policy for at least three years so that it could produce fruitful results as implementation of the policy eats up at least first six months and the remaining six months are not enough to get optimum results.

Former chairman Site Association of Industry Majyd Aziz described the policy loaded with too many long-term measures instead of any short-term measures. Like last year, there is a good vision in the policy but again a lot depends on the implementation which takes too much time. By the time the policy starts giving results the next policy becomes due.

He said that the new policy is Ã¢â¬Åa non-textile policyÃ¢â¬Â as some package was announced for the textile sector two days back. However the new policy has addressed those non-conventional sectors, which can do wonders in creating new markets abroad and enhance foreign exchange earnings.

He was of the view that the export target would not be achieved as the textile related sector is likely to remain under pressure for one more year owing to domestic and global problems. He said that rising oil prices would hit the economy very badly as increase in domestic oil prices has become due in coming months.


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## Neo

KARACHI, July 17: The apparel industry has rejected the textile package approved by the Economic Coordination Committee (ECC) of the cabinet. It feels that incentives announced in the form of research and development (R&D) are not supportive to the level and magnitude of the crisis being faced by the sector.

Talking to Dawn on Monday, textile industry leaders expressed their disappointment over the package and felt that it was too little to have any worth mentioning effect on the crisis-ridden industry where cost has gone as high as 28 to 30 per cent.

The textile industry after the quota-free era was inflicted on two accounts. It has lost per unit price up to 15-16 per cent and due to higher input cost its prices in the world market have gone up by 14-15 per cent, taking net impact to around 30 per cent.

Pakistan Readymade Garments Manufacturers and Exporters Association (Prgmea) Chairman Bilal Mulla said the package carried nothing for the value-added garment industry, adding that the three per cent subsidy on fabric exports would result in an increase in prices in the domestic market.

Ã¢â¬ÅThis will also be tantamount to give subsidy to our competitors in the world market and make Pakistan a raw material source for apparel industries of other countries, as they would get fabrics from Pakistan on three per cent reduced price,Ã¢â¬Â Mr Mulla observed.

As a result, apparel industries of India and Bangladesh will have a further edge of three per cent in the world market over Pakistani textile goods. The Prgmea chief pointed out that the domestic price level was determined on the basis of international supply factors, as exporters of fabrics would charge an additional amount equivalent to the subsidy which would increase fabric prices in the domestic market.

Mr Mulla said due to negative travel advisory by the western world, exporters of garments and other made-ups had to travel abroad more frequently which further increased the cost of production by around six per cent. Ã¢â¬ÅTherefore, the garment exporters have been requesting the government to give a five per cent travel support fund to pull them out of the current crisis.Ã¢â¬Â This suggestion, which was a part of the recommendations made by the Zubair Motiwala committee to the Federal Textile Board, was totally ignored by policymakers.

The Prgmea chief demanded of the government to provide the travel support fund to the garment exporters and put restriction on three per cent subsidy or R&D on export of fabrics to Saarc and those countries that had advantage of greater market access to the EU, US and Canadian markets over Pakistan.

Mr Mulla regretted that the most-affected readymade sector was totally ignored and the textile package in its present form would further bring the apparel industry under pressure and accelerate the process of closure of units. Ã¢â¬ÅIt would make Pakistan a raw material supplying nation and discourage value-addition, as the sectors producing finished products have been totally rendered unviable and uncompetitive in the world market.Ã¢â¬Â

Pakistan Hosiery ManufacturersÃ¢â¬â¢ Association (PHMA) Chairman Javed Bilwani has also rejected the textile package and said there was no new incentive for the apparel industry which was fast sinking and already a large number of units had been closed down.

He said had the six per cent R&D been sufficient, there would have been no large scale closures of knitwear units in the country. Ã¢â¬ÅThe package has totally disappointed the industry.Ã¢â¬Â

Mr Bilwani said many business houses involved in the knitwear industry were looking for other opportunities and soon there would be more closures. He added that the hosiery industry was recognised for its quality products but presently it had become unviable only because of high cost of inputs.

Iqbal Magarani, former chairman of the Pakistan Cloth MerchantsÃ¢â¬â¢ Association (PCMA), said instead of giving three per cent R&D to the fabric exports, the government should provide more incentives to those sectors which were producing high quality goods.

He said there was a major flaw in the textile package that ensured a five per cent R&D on bedlinen exports but this could only be availed by those units which had their own dying, processing and printing facilities. Ã¢â¬ÅThis means that 80 to 90 per cent exporters, particularly commercial, will be left out of this benefit.Ã¢â¬Â

Shabir Ahmed, Chairman of the Pakistan Bedwear Exporters Association (PBEA), said had there been a proper representation at the policymaking level, such flaws would have never occurred. He said only big representative bodies were given representation whereas small and medium exporters were left out and added that the interest of SMEs was not protected.

Mr Shabir said the textile package would give little help in boosting exports and the textile industry might further lose ground. He said under such change joblessness would go up.


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## Neo

Tuesday, July 18, 2006 

* Trade Development Authority of Pakistan set up 
* Import of used machinery allowed 
* Govt to set up Ã¢â¬Ëcarpet citiesÃ¢â¬â¢, export zones

By Sajid Chaudhry

ISLAMABAD: The government has announced its trade policy for fiscal year (FY) 2006-07 on Monday. Its main features are the setting up of the Trade Development Authority of Pakistan (TDAP) to enhance exports, and permission to local industry to import used machinery and equipment. 

The trade policy sets an export target of $18.6 billion for FY 2006-07, 13% higher than PakistanÃ¢â¬â¢s export performance in FY 2005-06. Projected imports for FY 2006-07 are estimated at $28 billion, with an estimated trade deficit of $9.4 billion. 

The federal cabinet, chaired by Prime Minister Shaukat Aziz, approved the policy earlier in the day. Commerce Minister Humayun Akhtar Khan gave details in his trade policy speech.

Export measures: The TDAP will be established and replace the Export Promotion Bureau (EPB) in six to 12 months. The cabinet has approved a draft TDAP Act. 

The government plans to set up Ã¢â¬Åcarpet citiesÃ¢â¬Â in Lahore and Karachi. An export processing zone called Ã¢â¬ËDazzle ParkÃ¢â¬â¢ will be set up over 16 acres near Karachi airport to promote the export of gems and jewellery. 

Expo centres will be set up in Islamabad, Quetta and Peshawar, with the latter two particularly to promote exports to Iran, Afghanistan and Central Asia. 

The export subsidy scheme is being modified so exporters of all items, except those which are notified separately, will be eligible for a 25 % freight subsidy, provided they are exporting to Africa, Pacific Islands or Eastern European countries that are not in the EU or Central Asia. Exported products in the developmental category will be entitled to a 25% freight subsidy even if they are going to one of the top 20 export destinations. Any individual exporter, firm or company will not be entitled to freight subsidy in excess of Rs 5 million a year. 

The Textile Skill Development Board will train workers producing terry towels and bed linen. The textile sector will continue to get a research and development support rebate until the end of June 2007 at the rate of 6%, and at 3% until end June 2008. The rebate will also be extended to the footwear sector.

The government will give 50% subsidy for the cost of obtaining four additional kinds of certifications: ISO-22000, Eco-labeling, Conformity Europea, and Organic Food Product certificate. 

Ministry of Commerce sanction will not be required for temporary export or import of goods sent abroad for exhibitions, repairs, testing and other business process requirements. 

Exhibitions showcasing Pakistani products will be organised in countries that are good potential markets during official visits by the president and prime minister. 

The government will establish a specialised SME Export House as a corporate entity in a public-private partnership and run by professional management. 

The possibility of a Ã¢â¬Åwarehouse cityÃ¢â¬Â in Karachi rub by a corporate entity in a public-private partnership and run by professional management will be explored. The government plans a specialised coal, clinker and cement terminal at Port Qasim to facilitate the export of 10 million tonnes of surplus cement. 

Halal meat export zones will be set up in Karachi, Lahore, Peshawar and Quetta to encourage meat exports. Similarly, specialised poultry export zones will be set up in Karachi, Faisalabad and Hazara. 

The first 6 percent of interest on credit obtained by export-oriented companies to set up cool chains and cold storages will be paid by the Export Development Fund (EDF). 

Long term financing for export-oriented projects has been modified, so banks will be entitled to a maximum spread of 2% instead of 3%, thereby reducing the cost of borrowing by 1%. 

Import measures: The government has allowed the import of used machinery and parts for the construction, mining and petroleum sectors provided it is not older than 10 years. 

Used cargo handling equipment for airports, seaports, land border stations or inland container depots; used electroplating, electrolysis and electrophoresis equipment; used mobile cranes; used spare parts for industrial units where production of new spare parts is no longer taking place; used equipment needed by call centres; used waste disposal trucks and fire engines for municipal bodies; used mobile clinics and medical equipment; used security and surveillance equipment; and used refrigeration lorries can also be imported. 

The policy will be reviewed next year.


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## Owais

*SBP revise CRR by 7% * Karachi: State Bank of Pakistan Tuesday decided to revise Cash Reserve Requirement (CRR) of 5% on weekly average basis (subject to daily minimum of 4%) and Statutory Liquidity Requirement (SLR) of 15% of their time and demand liabilities which banks are presently required to meet CRR. 

Both CRR & SLR are calculated on basis of total Time and Demand Liabilities, without making any distinction on basis of tenor of liabilities.

In exercise of powers conferred on SBP under Section 36 of SBP Act, 1956 and Section 29 of Banking Companies Ordinance, 1962, central bank has decided to revise reserve requirements with effect from July 22, 2006 as under:-

CRR a) Weekly average of 7% (subject to daily minimum of 4%) of total Demand Liabilities (including Time Deposits with tenor of less than 6 months); and b) Weekly average of 3% (subject to daily minimum of 1%) of total Time Liabilities (including Time Deposits with tenor of 6 months and above).

SLR 18% (excluding CRR) of total Time and Demand Liabilities. (In the event of premature withdrawal of Time Deposits of over 6 months, banks would be required to maintain, from date of withdrawal and for period for which they have availed benefit of lower CRR, an additional CRR equivalent to 4% of the amount of such pre-mature withdrawal).

Further, all Time & Demand Liabilities, except borrowings from SBP and interbank borrowings, shall be accounted for in calculation of Time and Demand Liabilities for purpose of CRR and SLR. 

The break-up of Time & Demand Liabilities to be used for calculating required CRR and SLR is given in enclosed annexure-A. 

Moreover, separate CRA and SCRA in US$ against FE-25 Deposits would continue to be maintained at prescribed rate.

All other instructions contained in above-mentioned Circulars shall, however, remain unchanged, a SBP circular said.


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## Owais

Trade deficit widens to $12.11 billion in 2005-06 
*ISLAMABAD *_(updated on: July 19, 2006, 04:17 PST_): Pakistan's trade deficit widened to a provisional $1.47 billion in June from $1.16 billion in May and $697 million in June 2005, official data showed on Tuesday.

The trade deficit for fiscal year 2005/06 that ended on June 30 widened to a provisional $12.11 billion from $6.21 billion in 2004/05.


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## Owais

*Banks CRR and SLR enhanced by 5 percent: Rs 120 billion to be drained, lending rates set to rise by 2 percent* 

KARACHI (July 19 2006): The State Bank of Pakistan (SBP) tightened its monetary stance and enhanced the Cash Reserve Requirement (CRR) and Statutory Liquidity Ratio (SLR) by five percent, thereby, reducing the lending ability of the banking system by around Rs 120 billion.

In a significant move, the SBP on Tuesday raised the CRR from five to seven percent and the SLR from 15 to 18 percent of the deposits with effect from July 22, 2006. With Rs 70 billion in Treasury Bills maturing in this week, banks will have to quickly raise another Rs 50 billion to meet the new requirements by Saturday.

According to informed sources, the rise in CRR would mean depositing additional Rs 40 billion with the SBP, in cash, on zero percent rate of return. And, enhancement of SLR would force banks to shift Rs 80 billion of T-bills towards the SLR, thereby, restricting their usage for borrowing and conducting repo deals on the interbank market.

As an incentive to banks to mobilise long-term deposits, the SBP has lowered the weekly CRR to three percent on time and demand deposits exceeding six months tenor. At present 13 percent of bank deposits exceed six months tenor, while 18 percent of deposits are kept in the government securities.

Business Recorder understands the SBP had discussed raising of SLR and CRR with key banks without getting into specific details. At present lending to deposit ratio of the banking system is around 72 percent. However, some banks have reportedly advanced 79/80 percent of their deposits.

By enhancing the SLR, the SBP is trying to force banks to invest more in T-bills. It will help the SBP to offload some of its own T-bills holding and also check banks from asking a premium on fresh purchase of short-term government paper. And, at the same time it will force banks to mobilise deposits by raising the return paid to depositors.

What is perplexing some bankers are conflicting signals emanating from the central bank. Since April 2005, the SBP has kept the discount rate at nine percent.

Through its daily OMO operations, the SBP has been draining out liquidity and consistently closing the gap between the T-bills yields and the discount rate. In the National Credit Plan, the SBP on July 3 kept monetary expansion target at 13.5 percent, equivalent to the nominal rise in the GDP.

Just last week, the SBP lowered the export refinance rate by 1.5 percent. All these moves amounted to an accommodative monetary policy to support government's growth objectives, whereas Tuesday's announcement signifies monetary tightening.

It is aimed at reducing expansion of private sector borrowings. This will definitely push the average lending rates (Kibor) by at least 100 to 200 basis points. Weak banks will also be forced to borrow at call rates on the interbank market by 2 to 4 percent more.

The arbitrage opportunity for exporters will also increase by five percent or more. Therefore, the SBP will have to be more vigilant to ensure that credit lines under ERR scheme are not misused by exporters for investing in real estate and the stock market.

The SBP's action is also expected to raise lending rates for consumer financing. At present, 23 percent of the bank advances constitute consumer portfolio.

According to an accountant's view, the SBP's cost on lowering of export refinance rate is around Rs 2 to 2.5 billion. The SBP's earning on enhancement of CRR is around Rs 3.6 billion.

With the SBP holding T-bills stock of around Rs 500 billion, the rise in T-bill yields along with a possible downward movement in rupee-dollar parity will enable the central bank to easily make the Rs 35 billion contribution pledged to the federal budget 2007.

Discounting the accountant view, economists feel the SBP has taken this decision after looking at all monetary aggregates and implications in feeding inflation.

July-August is normally a retirement period for bank advances. Hiking of CRR and SLR was a timely move and banks can halt further advances.

However, the time frame given by the SBP of four days to adjust CLR and SLR is too short. Banks would require at least two to three months to raise deposits by Rs 120 billion.

According to the SBP's web site, as of end of May 2006, total scheduled banks deposits are Rs 2.733 trillion; loans (Rs 2.115 trillion); and investment (Rs 821 billion). The end of June figures are expected to be Rs 50 billion higher. Thus far, June 30 data has not been posted since the SBP takes time to finalise its year-end balance sheet.

*The SBP circular issued on the Tuesday says:*"Presently banks are required to meet Cash Reserve Requirement (CRR) of 5% on weekly average basis (subject to daily minimum of 4%) and Statutory Liquidity Requirement (SLR) of 15% of their time and demand liabilities. Both CRR & SLR are calculated on the basis of total Time and Demand Liabilities, without making any distinction on the basis of tenor of liabilities.

In exercise of the powers conferred upon the State Bank of Pakistan under Section 36 of the State Bank of Pakistan Act, 1956 and Section 29 of the Banking Companies Ordinance, 1962, SBP has decided to revise the reserve requirements with effect from 22nd July, 2005 as under:

*CASH RESERVE REQUIREMENT (CRR) *Weekly average of 7% (subject to daily minimum of 4%) of total Demand Liabilities (including Time Deposits with tenor of less than 6 months); and

Weekly average of 3% (subject to daily minimum of 1%) of total Time Liabilities (including Time Deposits with tenor of 6 months and above).

*STATUTORY LIQUIDITY REQUIREMENT (SLR) *18% (excluding CRR) of total Time and Demand Liabilities.

(In the event of premature withdrawal of Time Deposits of over 6 months, banks would be required to maintain, from the date of withdrawal and for the period for which they have availed the benefit of lower CRR, an additional CRR equivalent to 4% of the amount of such pre-mature withdrawal).

Further, all Time and Demand Liabilities, except borrowings from SBP and interbank borrowings, shall be accounted for in the calculation of Time and Demand Liabilities for the purpose of CRR and SLR. The break-up of Time and Demand Liabilities to be used for calculating the required CRR and SLR is given in the enclosed annexure-A. Moreover, the separate CRA and SCRA in US dollar against FE-25 Deposits would continue to be maintained at the prescribed rate."


----------



## Owais

*$261 million rise in fiscal year 2006 FCDs* 

KARACHI (July 19 2006): Foreign Currency Deposits (FCDs) under FE-25 arrangement, which hit a record level of $3,567 million on January 30, 2006, closed the year with a figure closer to it, even though, on year-on-year basis, the figure itself also represented a record amount.

According to the latest SBP update, these deposits reached the level of $3,543 million (residents $3,174 million; non-residents $369 million) on June 30, 2006 with outstanding balances averaging about $3,505 million in the second half, and $3,327 million in the first half of the year, indicating an overall increase of $261 million over FY05.

Simultaneously, the competing home remittances also reached an all time record of $4.6 billion by the end of June 2006, averaging some $351 million per month during the first eight months, and $449 million in the last four months, including $507 million received in May 2006 alone.

Earlier on, balances under FE-25 scheme had reached $2,671 million (resident $1,954 million; non-resident $343 million) at the end of FY04, and $2,296 million (resident $2,340 million; and non-resident $331 million) at the end of FY03.

It is worth recalling that deposits under FE-25 Scheme, introduced under FE Circular No 25 of June 20, 1998, are outside the State Bank's forward cover scheme and are not required to be surrendered to the State Bank, except under reserve requirements. The Authorised Dealers (ADs), who are free to decide the return on such deposits, are also free to lend, invest and place such funds on deposit in Pakistan, or abroad, subject to observance of the prescribed rules.

During FY06, $1,186 million of these deposits were used for financing foreign trade, including exports, both under pre- and post-shipment arrangements ($864 million) and imports ($322 million), while $1,659 million were placed under various arrangements including those with SBP ($181 million under CRR and $532 million under SCRR), banks within Pakistan ($30 million) and abroad ($916 million).

An amount totalling $544 million was held as balances abroad ($358 million), cash in hand ($83 million) and as 'others' ($103 million).

Balances in the old FC accounts, in the meanwhile, reduced to only $103 million (resident $75 million, non-resident $28 million) on June 30, 2006. Three years ago, in June 2003, these balances stood higher at $293 million (resident $232 million; non-resident $62 million).


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## Owais

*OGDC to open technical bids of six short-listed parties* 

ISLAMABAD (July 19 2006): The Oil & Gas Development Company (OGDC) is going to open technical bids of the parties short-listed for Qadirpur compression project through selected inquiries, a process questioned by its two important departments--Projects and Supply Chain Management (SCM).

The reports of these two departments have been made available to _Business Recorder_, which indicate that they had recommended to the management to avoid a faulty process and issue press tender to ensure transparency in the award of contract.

OGDC deviated from the rules and regulations for selection of the parties for its $200 million Qadirpur compression project and issuance of tender inquiry to CPECC's against the rules and regulations was its ample proof. CPECC's entry into the process through backdoor channel endorsed internal departments' point of view.

Only five parties were in the race for the project. This number could have been much bigger if OGDC had followed a transparent process for short-listing the parties for the job.

OGDC hired IFL, a German consultant, for preparing bid document. It floated an international press tender to pick up the consultant, but did not follow the same routine of issuing press tender to get a right party for the project through a healthy process of competition.

This raised the question that if the selection of the consultant was the only problem, OGDC should have issued press tender to invite the parties for the project. It was the responsibility of OGDC to create competition and get the right party at competitive cost to ensure that national interest was fully protected. It left the responsibility on the consultant, which, instead of floating the international press tender, issued selected inquiries. This could not ensure competition among the parties.

An OGDC report indicated that CPECC made its entry into the process due to the blessing of the former Managing Director. He ordered issuance of tender inquiry by setting aside all norms for a development work, involving millions of dollars of public money.

CPECC's out of the box entry becomes more serious question to the OGDC management as it was facing serious charges of making cartel and offering co-operation fee to its competitor in Tando Allahyar and Singoro development contact. Now its entry in Qadirpur compression project case, against the rules, is enough to expose the weak working of OGDC.

OGDC is a public sector organisation, and its violation of rules and procedure to grant development works contract, is a serious question. Its procedure of granting contracts through selected inquiries ended up at cartel marking in many cases.

Legal Department's report in LPG plant relocation of LPG plant from Gari Hussu to Sadiq plant established formation of cartel by the parties. The report should have been taken seriously to work out a strategy to offer contracts for development works through prescribed rules and regulations, but it remained unnoticed.

It may be noted that $31 million was cost of relocation of the plant when the new plant would cost only $32 million. This is funny enough to expose that who was protecting whose interests.

The Public Procurement Regulatory Authority (PPRA) had made a serious attempt to ask OGDC to follow a transparent process in award of contracts to make sure that public money, which it spends on any project, does not go waste.

OGDC management held a series of meetings to discuss the project. One meeting was held on June 23. This was followed by another on June 27. But the report of Project Department was not placed before the meetings.

The Project Department had pinpointed a number of flaws in the process being followed for Qadirpur development project and recommended the management for the press tender for the project to ensure transparency in its award.

Sources said OGDC made the joint venture partners' demand an excuse to go ahead with a faulty process to award the contract. It claimed that the partners for the joint venture - PPL and Premier - demanded to carry on the process, arguing that tendering through the press may delay the project.

OGDC's point of view carried very little weightage for two reasons - the joint venture partners can not force the majority share holder with 75 percent stakes and operator for a faulty process for award of a big project.

PPL, again a public sector company like OGDC, is required to follow a transparent process and good governance in contracts award since they spend public money for the projects.

PPL protest over six parties' inclusion contradicted OGDC claims that it was following the IFL process to meet the joint venture partner's demand. The document made available to _Business Recorder _clearly mentioned that PPL had strongly protested over CPECC's inclusion and demanded its expulsion from the process. It had also shown its concern over addition of the sixth party and that, too, by the former OGDC managing director against the rules of the contract.

Another dark side of the story is that OGDC took the case with PPRA for its guideline, but later on questioned its jurisdiction through the Ministry of Petroleum. The document indicated that PPRA had advised OGDC to tender the project through the press to ensure transparency in its working.

Sources said OGDC issued selected tender inquiries for Qadirpur compression project in April this year. The nature of the project does not allow the management to call selective inquiry.

The departmental report indicated that a former MD, OGDC sought the advice of Public Procurement Regulatory Authority (PPRA) regarding pre-qualification of turnkey contractors either through press advertisement or through Consultant/OGDC, experience/ international publication. The report said the matter was discussed with Director (PPRA) on May 25, who directed OGDC to follow a transparent process of advertising the tender in the press to have healthy competition among bidders.

The report indicated that 6 LSTK contractors, who have already been pre-qualified and issued tender documents, need not go through the pre-qualification process again.

OGDC put aside all these instructions and opinions of different internal and external departments and preferred to go for opening of the bid documents of the parties picked up through a faulty process.


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## Owais

*China terms Gwadar as easy route to Middle East * BEIJING: Chinese Vice Foreign Minister Wu Dawei said his country was giving active consideration to the idea of using Pakistan as energy corridor and strengthening their communication links for common socio-economic uplift. 

Talking to a visiting Pakistani delegation at the Chinese Ministry Foreign Affairs, he hoped that Gwadar deep seaport could provide an easy communication link to China for transportation of crude oil from Middle East and other regions. 

"We will make their best efforts developing and promoting the Gwadar port as a hub of economic activities between the two countries," he said. 

Leader of Pakistani delegation, Secretary Ministry of Youth Affairs Saleem Mahmood Saleem thanked the Chinese leadership and the people for their consistent support to Pakistan for various projects. 

He also appreciated China's active role in Pakistan's socio-economic development


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## A.Rahman

Owais said:


> *Trade deficit widens*
> 
> ISLAMABAD (July 19 2006): Pakistan's trade deficit widened to a provisional $1.47 billion in June from $1.16 billion in May and $697 million in June 2005, official data showed on Tuesday. The trade deficit for fiscal year 2005/06 that ended on June 30 widened to a provisional $12.11 billion from $6.21 billion in 2004/05.


 

here is some inertesting piece of info:

Most economists do not believe that trade deficits are inherently good or bad; some even believe they should be ignored entirely. They do believe, however, that trade deficits are generally harmful when countries engage in currency controls such as fixed or pegged exchange rates. They argue that fixed exchange rates do not allow the market to naturally correct any current account Ã¢â¬ÅproblemsÃ¢â¬Â.
Milton Friedman has argued that many of the fears of trade deficits are unfair criticisms in an attempt to push macroeconomic policies favorable to export industries. He states that these deficits are not harmful to the country as the currency always comes back to the country of origin in some form or another (country A sells to country B, country B sells to country C who buys from country A, but the trade deficit only includes A and B). He continues by informing readers that the "worst case scenario" of the currency never returning to the country of origin is actually the best possible outcome; as the country just purchased goods by exchanging pieces of cheaply made paper. The same result would happen if the exporting country burned the dollars it earned, never returning it to market circulation.
If these current account "problems" become unstable and unsustainable, Friedman notes that the market will correct any "problems" as floating currency rates will rise or fall with time to encourage or discourage imports in favor of the exports, and then possibly reverse again in favor of imports as the currency gains strength.
Friedman and other economists also point out that a large trade deficit (importation of goods) signals that the currency of this country is strong and desirable. Citizens of such a country also receive the benefit of having the ability to choose between many competing consumables and lower prices than they would otherwise experience if the currency was weaker and the country was "enjoying" a trade surplus. To Milton Friedman, a trade deficit simply means that consumers get to purchase and enjoy more goods at lower prices; conversely, a trade surplus implies that a country exported goods that its own citizens did not get to consume and enjoy, while paying high prices for the goods that were consumed.


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## Neo

ISLAMABAD, July 18: Commerce Minister Humayun Akhtar Khan on Tuesday linked the highest ever trade deficit in the fiscal year 2005-06 to overall economic policies of the government, saying the trade policy was one part of it.

Addressing a post-trade policy press conference, the minister said trade deficit might record some reduction during the fiscal year 2006-07 as a result of certain measures taken and possible stability of oil prices in the international market.

Mr Khan said besides high import bill of oil, the increase in import of cars through bank credits also pushed up the import bill during 2005-06. He said $28 billion import bill was a realistic target.

When asked that this year the projected growth in exports was less than last year, the minister said there were some conservative elements due to which the growth target was set less than last year. However, the minister did not elaborate on those hindrances.

In reply to a query, Mr Khan said market forces determined the value of rupee. The minister was of the opinion that increasing interest rates resulted

in a surge in cost of doing business. It is believed that the commerce ministry is pushing for devaluation of the rupee to bridge the gap of widening trade deficit.

Answering another question, the minister said the expansion of positive list for trading with India was an ongoing process. The proposed lists would be taken to the ECC meeting for consideration. Mr Khan said there was no plan under consideration to add the import of used machinery or parts to the positive list.

The minister said an inter-ministerial committee headed by the deputy chairman of the Planning Commission had been constituted to prepare a strategy for enhancing competitiveness and production surplus to increase exports.

The committee, he said, would interact with all the relevant ministries and departments and formulate a short, medium and long-term industrial strategy. The minister said the committee had also been asked to exploit the efforts under Doha agenda negotiations made by the government to boost the agriculture sector and its competitiveness internationally.

In reply to a question, Mr Khan said the cost of production would be to some extent met through the revised refinance scheme, particularly capital cost announced recently.

The minister said a new organisation Trade Development Authority of Pakistan (TDAP) would be established through an act of parliament. He said the authority would be supervised by a policy board chaired by the commerce minister and its members would represent both public and private sectors.

The minister said the proposed expo centres would be established through funding received under the PSDP. He said the government would prepare draft legislation enabling the private sector to effectively participate in the national effort to achieve rapid economic growth.

The minister said Trade Ordinance, 1961 had been revised in consultation with various trade bodies and associations and added that his ministry would prepare the draft legislation.


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## Neo

KARACHI (Dow Jones)

Trade policy sees deficit of $9.4 billion in the current fiscal year

PakistanÃ¢â¬â¢s exports are forecast to grow 13% to $18.6 billion in the current fiscal year that began July 1 mainly due to efforts to explore new markets and bilateral trade agreements with new partner countries, Commerce Minister Humayun Akhtar Khan said yesterday.
Khan, unveiling the countryÃ¢â¬â¢s trade policy on state television, said the countryÃ¢â¬â¢s exports in the past fiscal year that ended June 30 totaled $16.468 billion, slightly lower than the $17 billion target.
Despite the expected rise in exports, the trade policy forecasts a deficit of $9.4 billion in the current fiscal year, narrower than around $11.64 billion last year.
Ã¢â¬ÅThis (last yearÃ¢â¬â¢s exports) is a reasonable achievement in view of the fact that over the last year we were all working in a very difficult environment,Ã¢â¬Â he said, referring to Oct. 8 devastating earthquake and high international oil prices.
He said further export growth Ã¢â¬Åis facing serious supply-side constraints,Ã¢â¬Â making it harder to achieve export growth targets. Khan said the large-scale manufacturing sector grew 9.0% last year while growth in agriculture remained less than 3%.
Ã¢â¬ÅThis means that we are facing a shortage of exportable surpluses and this is proving to be a major obstacle in the effort to rapidly increase our exports,Ã¢â¬Â he said. The government was aware of the problem, and was moving rapidly to address the causes of supply side constraints.
Khan said the government was trying to diversify the countryÃ¢â¬â¢s export portfolio.
More than 60% of PakistanÃ¢â¬â¢s total exports are from the textile and clothing sector.

Ã¢â¬ÅNon-textile exports have for the first time exceeded $6 billion,Ã¢â¬Â he said. Exports of rice in the last fiscal year exceeded $1 billion.

Ã¢â¬ÅUntil last year only five products enjoyed this distinction of being in the billion-dollar club, but they were all from the textile and clothing sector,Ã¢â¬Â he said.

Khan said the government was carrying out intense trade diplomacy to improve market access for domestic exporters.

He said the government has initiated talks with several other countries for preferential market access arrangements. Bilateral negotiations in this regard are currently underway with Mauritius, Morocco, Russia and Thailand.

Ã¢â¬ÅAdditionally multilateral negotiations are taking place in the context of the Organization of Islamic Countries, and Group of Developing Eight countries,Ã¢â¬Â he said. The government was also seeking a preferential accord with the Association of South East Asian Nations.

Talking about measures to boost exports, Khan said the government has decided to restructure and rename the state-run Export Promotion Bureau to an autonomous Trade Development Authority of Pakistan, or TDAP.

Ã¢â¬ÅTDAP will be equipped with the necessary resources and autonomy so that it can effectively exploit opportunities for increasing PakistanÃ¢â¬â¢s prosperity through enhanced trade,Ã¢â¬Â he said. The first phase of transition from EPB to TDAP will be completed in six to 12 months.

In addition, Khan announced the establishment of exclusive export zones for the carpet industry and gem and jewelry sector.

On the import side, Khan said the construction and petroleum sectors will be allowed to import certain types of used machinery, provided the equipment isnÃ¢â¬â¢t more than 10 years old.

-By Imran Maqbool, Dow Jones Newswires; +92300-9229939; imran.maqbool@dowjones.com

(END) Dow Jones Newswires


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## Neo

NEW DELHI: India has officially put Central Asia in the pipeline, with the oil ministry telling the Asian Development Bank it will join a $3.5-billion project for wheeling gas from Turkmenistan through Afghanistan and Pakistan (TAP) and suggested minor changes regarding gas usage inside Pakistan in the project agreement. 

The decision, conveyed last month, raises the bar for Tehran which has been playing hardball on gas pricing issue to keep Asia's biggest pipedream - the $7-billion energy lifeline from Iran via Pakistan - in limbo. 

Unlike the Iran pipeline, TAP is politically easier to implement as it has Washington's tacit backing by way of the ADB's participation. The project is free from funding fears, the bane of Iran pipeline, over US sanctions law. 

The ADB is okay with the "minor"changes suggested by India and is talking to TAP's three other promoter-governments on this. 

India has sought changes in the framework agreement regarding Pakistan's original plan to take Turkman gas to Gwadar port for liquefaction (LNG) and producing petrochemicals. Pakistan has drawn up a grand blueprint for a gas-based export hub in the area. 

India wants Pakistan should only feed to Gwadar its own share of gas or any surplus that may be left over after supplying each participating country's contracted quantity. The ministry has also told ADB it will not be party to plans for building a crude pipeline, road and fibre-optic network along TAP pipeline. 

The promoters are proceeding with the southern route passing through heavily-mined territories held by the Taliban in Afghanistan and Pakistan's Balochistan. 

India sees this as risky and feels more comfortable with the northern route passing through territories held by Ahmad Shah Masood's Northern Alliance, which New Delhi had supported. 

The northern route passes through Mazar-e-Sharif, Jalalabad, Peshawar, Attock, Islamabad and Lahore before entering India near Amritsar. 

The southern route traverses Herat, Kandahar, Dera Gazi and Multan to enter India near Fazilka. TAP is being seen as the southern companion to the new market access routes being put in place through Turkey for Central Asian gas.


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## Neo

Bloomberg News

Published: July 18, 2006

British bank mulls deal in Pakistan

Standard Chartered is in talks to buy a stake worth more than $500 million in Union Bank of Pakistan, according to Shaukat Tarin, president of the Pakistani lender.

Standard Chartered "has completed the due diligence and negotiations are going on," Tarin said. "I am sure the agreement will be signed in the next few weeks."

The deal, which would be Pakistan's biggest ever, would give Standard Chartered a bank that has 67 branches in a nation of 160 million people.

Filipino bank sees gains

Philippine National Bank said its second-quarter profit rose 43 percent to 235 million pesos, or $4.4 million, from 164 million pesos a year earlier. First-half profit rose 35 percent to 425 million pesos, the bank said, including a 900 million peso provision for possible losses.

Separately, the bank is in talks with seven potential investors to sell as much as 8 billion pesos of bad loans and 1.5 billion pesos of seized assets.

China broker posts fall

China International Capital, a Beijing-based brokerage one-third owned by Morgan Stanley, said its first-half profit fell 18 percent to 172.8 million yuan, or $21.6 million, in the first six months, from 212 million yuan a year earlier.

Underwriting revenue, the bank's main business, slumped 56.7 percent to 199.7 million yuan, from 461.4 million yuan.

Profit rise for Rinker

Rinker Group, Australia's biggest building materials maker, said net income for the quarter ended June 30 rose 14 percent to $206 million from $181 million a year ago.

Sales at Rinker, which makes 80 percent of its profit in the United States, increased 18 percent to $1.46 billion.

Mortgage firm on roll

Housing Development Finance, India's biggest mortgage lender, said its first-quarter profit rose 20 percent to 2.97 billion rupees, or $64 million, in the three months ended June 30, from 2.47 billion rupees a year earlier.

British bank mulls deal in Pakistan

Standard Chartered is in talks to buy a stake worth more than $500 million in Union Bank of Pakistan, according to Shaukat Tarin, president of the Pakistani lender.

Standard Chartered "has completed the due diligence and negotiations are going on," Tarin said. "I am sure the agreement will be signed in the next few weeks."

The deal, which would be Pakistan's biggest ever, would give Standard Chartered a bank that has 67 branches in a nation of 160 million people.

Filipino bank sees gains

Philippine National Bank said its second-quarter profit rose 43 percent to 235 million pesos, or $4.4 million, from 164 million pesos a year earlier. First-half profit rose 35 percent to 425 million pesos, the bank said, including a 900 million peso provision for possible losses.

Separately, the bank is in talks with seven potential investors to sell as much as 8 billion pesos of bad loans and 1.5 billion pesos of seized assets.

China broker posts fall

China International Capital, a Beijing-based brokerage one-third owned by Morgan Stanley, said its first-half profit fell 18 percent to 172.8 million yuan, or $21.6 million, in the first six months, from 212 million yuan a year earlier.

Underwriting revenue, the bank's main business, slumped 56.7 percent to 199.7 million yuan, from 461.4 million yuan.

Profit rise for Rinker

Rinker Group, Australia's biggest building materials maker, said net income for the quarter ended June 30 rose 14 percent to $206 million from $181 million a year ago.

Sales at Rinker, which makes 80 percent of its profit in the United States, increased 18 percent to $1.46 billion.

http://www.iht.com/articles/2006/07...rg/sxbriefs.php


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## Neo

Wednesday, July 19, 2006 

ISLAMABAD: Dan Sullivan, US Assistant Secretary for Economic and Business Affairs, has stressed the need to strengthen people-to-people contact for strengthening and broadening the bilateral economic relationship. 

Mr Sullivan, heading a delegation, called on Minister of State for Finance Omar Ayub Khan here on Tuesday. 

The minister briefed the US delegation about various economic policies of the government initiated by Prime Minister Shaukat Aziz as finance minister for achieving economic development through deregulation, privatization and liberalization. 

He said Pakistan is now one of the fastest growing economy in the region. Last year, the rate of GDP growth was 8.6 percent and this year it would be more than 6.6 percent. We have reduced poverty to 25 percent in the last five years from 32 percent. He said there is significant improvement and growth in each sector of the economy such as manufacturing, agriculture and services. 

The minister pointed out that there is a sizeable growth in the dairy sector and Pakistan has a well thought-out strategy through which it will become one of the top dairy producing countries in the world. 

The minister told the US delegation that the government is making heavy investment in human resource development, building of infrastructure and especially the energy sector where the demand is increasing at the rate of 13 percent per annum. 

He said there is a large potential for harnessing energy resources of the country. He particularly mentioned that Pakistan will become a corridor of regional trade. The North-South corridor will connect western China and the Central Asian Republics with Gawadar and Karachi. He said besides mega projects, infrastructure in rural areas is also being developed. 

He referred to the computerization of land record so that the facilities of credit and others can be extended to rural areas. He also informed the delegation about the financial sector reforms. 

He stressed upon the US delegation to extend access to Pakistani products through tariff rationalization and that it would be mutually beneficial to both countries. 

Earlier, the minister thanked the US delegation for the timely assistance provided by the US to the efforts of the government in the earthquake-hit areas, especially the provision of heavy helicopters. 

The US assistant secretary appreciated the growth of the Pakistan's economy. The meeting was attended by the secretary finance and other senior officers of the ministry of finance.


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## Neo

Wednesday, July 19, 2006 

ISLAMABAD: By setting an export target of 17.8 billion US dollars for the current financial year, the ministry of commerce has saved itself from big and concerted efforts to ensure a quantum jump in the countryÃ¢â¬â¢s exports, said an economic expert. 

In recent years PakistanÃ¢â¬â¢s GDP growth has exhibited an impressive growth of around six percent. This should have helped the country in achieving a better position in exports. But despite this fact, the ministry of commerce failed to achieve the export target for the last fiscal, he said. 

The actual increase, which has been suggested in the Trade Policy 2006-07, would be around one billion dollars as the government would bear the burden of subsidies, which are to be given by the government. These subsidies would be an extra burden on the national kitty as these were not projected in the 2006-07 federal budget. 

The prime minister and some other cabinet ministers, according to a well-placed source, failed to impress the minister for commerce on setting the export target at $19.5 billion. The export-to-GDP ratio remained at 12.9 percent in the last fiscal. The same would fall to 12.5 percent as far as the export target for the current fiscal is concerned, the source added. 

Ã¢â¬ÅIf we include the amount of subsidy, which will be given by the government, the export- to-GDP ratio will go further down,Ã¢â¬Â an expert said. The GDP has been estimated to grow at seven percent in the current fiscal against last yearÃ¢â¬â¢s 6.6 percent. This means that the government expects that the countryÃ¢â¬â¢s agriculture and industrial sectors would respond well in the current fiscal. Furthermore, the estimated exports will further widen the trade deficit, current account deficit and budget deficit, the expert said. 

The expert said the countryÃ¢â¬â¢s exports exhibited growth even in those years in which the industrial and agricultural outputs remained Ã¢â¬Ånot up to the mark.Ã¢â¬Â The government facilitates the import of raw material whenever there is shortage of them in the local market, he said. There is a need that the ministry of commerce finds new markets. There was no distortion in the international market in the last fiscal. And we do not see that there will be any kind of setback to exports in the current fiscal, the expert said. 

However, the ministry of commerce is of the view that the government should not make the export target an issue for the ministry will make allout efforts to increase exports. An official in the ministry of commerce said if there is potential, there would be more exports. The more the surplus production, the more will be exports. The only thing in the trade policy is that it has not set an ambitious export target, the official said.


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## Neo

ISLAMABAD (July 19 2006): Commerce Minister Humayun Akhtar has categorically said that trade with India will continue under bilateral arrangements, rather than South Asian Free Trade Agreement (Safta).

"All Saarc member countries have ratified Safta, which is operational from July 1, 2006, but Pakistan did not accord 'Most Favoured Nation' (MFN) status to India, and trade on the basis of positive list will continue," he said in reply to a question at the post-trade policy press conference here on Tuesday.

About expansion in the positive list, he said that in case of shortage of essential commodities on supply side, the government from time to time enlarges the positive list, but any change on permanent basis has to be made in consultation with all public and private sector stakeholders.

He said that the positive list had been approved by the Economic Co-ordination Committee (ECC) of the Cabinet, and the Ministry would again approach the ECC for making necessary amendments in the list.

However, an official told Business Recorder that a summary for inclusion of more than 200 items in the positive list was ready for ECC approval, but any announcement in this regard would be made keeping in view the timing.

Asked if there would be any change in trade relations between Pakistan and India after the Mumbai blasts, Humayun said that this incident would not negatively impact the existing ties, and expressed hope that business would continue at the same pace.

Regarding import of used machinery from India, he said that no decision had been taken to include any new item in the positive list, and added that if any item already exists on the list, it can be imported, otherwise import would not be allowed.

When asked, if the country had achieved 15 percent growth in exports during 2005-06 why exports growth had been estimated at 13 percent, he said that sluggish trend in trade had been witnessed during the last few months, and the new export target, of $18.6 billion, had been fixed keeping in view the future hardships. "We are anticipating problems in exports, and the new target has been set keeping in mind these factors," he added.

He said that exports registered nearly 24 percent growth during first five/six months of last year, but in later months it was 7 percent, "which is the fundamental assumption". He also mentioned several reasons which negatively impacted the exports growth.

He said there was need to balance the economic policies with monetary policy and exchange rate and other policies affecting GDP growth. However, he made it clear that the State Bank of Pakistan did not try to intervene to appreciate value of rupee and this was being done by market forces.

The Commerce Minister said that defence and services exports would be made part of overall exports, in future, and for this purpose the mechanism would be finalised, in consultations with other ministries.

He said that the Prime Minister had directed the Planning Commission to prepare short-term and long-term strategies to boost exports, and added that the PC would interact with other ministries in this regard. He said that capital cost has reduced to a reasonable level but there were still problems with regard to transport cost and gas and electricity charges.

He appreciated the efforts of Export Promotion Bureau (EPB) Chairman Tariq Ikram to increase exports from $7.8 billion to $16.6 billion, but no name "has been finalised to head the newly constituted Trade Development Authority of Pakistan (TDAP)". He said that all rules of Auditor General of Pakistan would apply on TDAP, while Commerce Ministry would be its administrative authority.


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## Neo

ISLAMABAD (July 19 2006): President Pervez Musharraf, has approved roadmap 2006-07, for Sui Northern Gas Company Limited (SNGPL) and Sui Southern Gas Pipeline Company (SSGC) for gas supply to the domestic sector, it was learnt here on Tuesday.

The roadmap attached priority to rural areas for supply of gas and makes population a criterion for the gas distribution companies. The Ministry of Petroleum has been given the role of implementation agency for the roadmap.

The roadmap indicated that the gas distribution companies will follow the principle of population of 1000 and above persons for supply of gas to rural areas.

Sources said the President took critical view of the roadmap during a presentation given to him sometime back. Petroleum Minister, Amanullah Khan Jadoon, Secretary Ahmed Waqar, SNGPL Managing Director, Rashid Lone, SSGC Managing Director, Munawar Basir, and public sector E&Ps heads were present during the presentation.

The presentation covered domestic gas production, capacity and efficiency of the system for its delivery to different categories of the consumers.

The president was apprised that domestic gas production was around 1450 mmcfd and SSNGPL and SSGC were delivery it to different categories judiciously.

However, a big shortfall exists in gas supply and demand. The government is presently working on different options to plug the gap and ensure supply of cheap fuel to different categories of consumers. Import of gas is one of the options.

The President was informed that the government was making all out efforts to increase domestic gas production. He was told that domestic gas production will increase considerably by the end of the current calendar year as few major oil and gas discoveries were expected in different parts of the country in next couple of months. The presentation also covered offshore plan of the government to explore the new areas to increase gas and oil production.

According to the roadmap, SNGPL and SSGC will carry out demographic survey and compile data with the help of Nadra to identify villages with population of 1000 or more persons and prepare implementation schemes accordingly.

Sources said the ministry and gas distribution companies will compliance report to the President on the progress on demographic data and gas supply plan on monthly basis that would be considered in the meetings for the future line of action.


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## Neo

KARACHI (July 19 2006): The sustainable growth rate of Pakistan's economy is on an upward trajectory but has not yet reached the point where 7-8 percent growth can be sustained.

These views were expressed by Dr Shaghil Ahmed, Acting Managing Director, Social Policy and Development Centre (SPDC) in his presentation while releasing the SPDC Annual Review of the State of the Economy in the light of the Pakistan Economic Survey 2005-06 and the Federal Budget 2006-07 here on Tuesday.

The Review presents an in-depth analysis of the economic situation and policies.

Dr Shaghil Ahmed acknowledged the improvements in economic performance and an increase in the economy's sustainable rate of growth over the past few years, which are in part a result of the improved macroeconomic policy environment.

Although economic activity has decelerated, growth is still occurring at a robust pace despite last October's devastating earthquake.

However, Dr Ahmed also pointed towards some worrisome factors present in the economic situation that result from the growing macroeconomic imbalances. These imbalances manifest themselves in the form of a level of domestic demand that is much higher than domestic production, a huge trade deficit, an increase in the fiscal deficit and a failure of inflation to recede to an acceptable level.

The imbalances pose serious downside risks to the economy and threaten the hard-earned macroeconomic stability and policy credibility. If not controlled, they could jeopardise the very objective of high long-term sustainable growth with price stability.

The SPDC Review also highlights both positive and negative aspects of the Federal Budget 2006-07. It accepts that the post-earthquake reconstruction expenditures and a large increase in the allocations for public sector development programmes largely drive the rise in the fiscal deficit.

The earthquake-related spending is essential and the development programmes are potentially a very pro-poor aspect of the budget and are to be lauded.

However, not enough has been done by way of expenditure switching and raising of tax revenues to finance these larger expenditures in a more sustainable way. As a result, the expansionary stance of fiscal policy has continued, which will make it much more difficult to control inflation.

The official figures released by the GoP recently imply a phenomenal decrease in poverty in just four years from 2001 to 2005. The stance of the SPDC Review on this issue is that non-availability to the public of the full Pakistan Social Living-Standards Measurement (PSLM) Survey data set on which the official figures are based makes an objective analysis of the situation difficult.

A significant reduction in poverty seems plausible given the strong growth and the increases in public development expenditures in recent years.

At the same time, the official figures are likely to represent a substantial overestimate of the extent of the poverty reduction in the presence of some clear offsetting factors. These include high inflation and growing income disparities and other inequalities, which is poverty increasing.

According to SPDC's analysis, there is a need to let domestic demand growth slow further, given that we are not quite yet at the point where 7-8 percent growth is sustainable, that capacity constraints have been reached and that inflation remains high. In his concluding remarks, Dr Shaghil Ahmed said that at the moment there is no trade-off between growth and inflation.

The choices are to let growth slow somewhat with less price pressures and smaller macroeconomic imbalances, or to try to grow faster than is possible with the result that growth will fall more abruptly and with more disruptive consequences. Some more details of SPDC's Annual Review of the State of the Economy are provided below:

*MACROECONOMIC ANALYSIS*: Economic growth slowed from 8.6 percent in FY05 to 6.6 percent in FY06. The performance across sectors has become much more uneven. In particular, agricultural growth has decreased from 6.7 percent to just 2.5 percent, while manufacturing growth has also slowed from 12.6 percent to 8.6 percent.

Services growth continued at a high pace of 8.5 percent, with the finance and insurance sub-sector should grow by 23 percent in FY07. SPDC's analysis suggests that the bumper cotton crop contributed significantly to the high overall as well as high agricultural growth in FY05 and the fall in cotton production took away from growth in FY06, partly explaining the deceleration.

On the expenditure side, growth in consumption and imports has slowed but remains high at nearly eight percent and 24 percent, respectively, in FY06. The investment picture appears to have improved, but there have been substantial data revisions for FY04 and FY05, which have not been well explained by the government. As such, the true investment picture remains unclear.

Growth of domestic demand at 8.1 percent continued to outpace the growth of domestic output at 6.2 percent (as measured by real GDP at market prices) in FY06. On the expenditure side, consumption remained the main driver of growth, while net exports shaved off nearly two percentage points of growth in FY06.

The relative price of investment has risen by about 30 percent since FY03, with the result that the fixed investment-to-GDP ratio was 18.4 percent in FY06 if measured by nominal values but only 14.3 percent if measured by real values.

Inflation, which had picked up sharply after FY04, receded somewhat in FY06 dropping to eight percent, based on data through May. However, core inflation - which excludes the food and energy components -rose slightly to 7.2 percent. By one statistical measure, the potential output growth of Pakistan's economy has increased from four percent in FY00 to about six percent in FY06, a creditable achievement.

However, with actual output growth being above potential output growth for the past few years, the output gap - the deviation of the level of actual output from the level of potential output - has become positive. This is a source of continued inflationary pressures and if growth of seven percent is targeted, the output gap will continue to grow and these pressures will not abate.

In the first nine months of FY06, imports surged 30 percent over the corresponding period of the previous year while exports rose 11 percent. This put the merchandise trade balance, measured at an annual rate, in the first nine months of FY06 at more than 6.5 times its value in FY04.

Moreover, the external deficit on services has now become 88 percent of the merchandise deficit. Thus, although net transfer payments (including remittances) have increased somewhat, they are now financing about 60 percent of the trade deficit on goods and services relative to nearly 85 percent before.

A disruptive correction of the trade deficit through sudden import compression caused either by a sharp slowdown in economic activity or a sharp depreciation of the currency is a significant downside risk, according to the SPDC report.


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## Neo

*FISCAL ANALYSIS*: The fiscal deficit is projected to increase to 4.5 percent of GDP in FY07, largely as a result of the increased allocation to the Public Sector Development Programme (PSDP), including allocations for the Earthquake Relief and Reconstruction Authority (ERRA).

External resources (including external borrowing) and privatisation receipts ended up financing a greater share of the deficit in FY06 than was anticipated. The share of bank borrowings was less than anticipated but still amounted to about 1/5th.

In FY07, bank borrowings are expected to increase 110 percent, which is not a good sign in the current environment of high inflation. Non-bank borrowings on the other hand are expected to decline 70 percent.

In addition to the pro-poor development expenditures, there are some other relief measures in the budget for FY07 as well, including a 25 percent increase in the minimum wage, an increase in the tax exempt level of income and a decrease in the effective tax rates of low-salaried workers.

There is also a substantial increase in food and other subsidies. However, the SPDC report cautions against overestimating the importance of the subsidy and relief measures in the budget.

Not counting the tax relief, the subsidies and relief amount to Rs 109 billion slated for FY07; as a share of projected GDP this amounts to 1.25 percent, which is only slightly higher than the 1.1 percent of GDP value for FY06.

The federal government's current expenditures are expected to fall about four percent in FY07 relative to the revised estimates of FY06. It is important to note, however, that the revised estimates represented a 12 percent overshooting of the original target, which continues the tendency year after year for current expenditures to substantially exceed their target.

The CBR tax receipts in FY06 were two percent above target, with indirect taxes being about on track and direct taxes exceeding the target by about five percent. However, this was partly due to inflation and, therefore, nominal income being higher than originally envisaged.

The SPDC Review points out the tax-to-GDP ratio hardly increased at all, from 9.0 percent in FY05 to 9.1 percent in FY06. Moreover, although tax revenue is projected to increase 18 percent in FY07 if we factor in the increase in nominal income from the government's growth and inflation targets, the tax-to-GDP ratio would increase only modestly to 9.6 percent in FY07 from 9.1 percent in FY06.

The initiatives for new taxes in FY07 fall well below expectations - all of the new taxes together will raise Rs25 billion, or only 0.3 percent of projected GDP. The changes in the existing income tax structure arc also inadequate as they will, on the whole, make the tax system less progressive.

The changes result in a substantial reduction in the effective tax rates of the high-salaried class, which will increase income inequality.

*POVERTY AND UNEMPLOYMENT*: According to the GoP, poverty declined from 34.5 percent in 2001 to 24 percent in 2005, which is a huge reduction of 10 percentage points or 31 percent in just four years. The government should release the PSLM Survey data, on which these figures are based, to the public immediately so that more informed debate on these figures can occur.

Empirically, there is an inverse relationship in Pakistan (as is true elsewhere as well) between changes in poverty and changes in economic growth.

Thus, some reduction in poverty is to be expected given the strong growth. But inflation is high and income inequality is also growing. During the period FYO2-FYO5, monthly real consumption of the richest 20 percent of the population grew almost four times more than the consumption of the poorest 20 percent.

Given these partially offsetting factors, the extent of the poverty reduction seems to be overestimated by the PSLM data.

Given that the Labour Force Survey (LFS) is being conducted for the first time on a quarterly basis, it is difficult to analyse the true employment picture.

The government claims a creation of 5.82 million new jobs from FY04 to December 2005, but this is based on a comparison of the new quarterly LFS with the older ones based on annual data. Such a comparison is not valid because of changes in the sampling framework and the presence of possible seasonal factors.

This is confirmed by some implausible results that emerge when we do compare the new quarterly LFS with the previous annual one using somewhat desegregated data as well.

These implausible results include that nearly 80 percent of the new jobs created were in rural areas, that the labour force in agriculture has increased while that in trade and services has declined and that female literacy rates have risen in rural areas but declined in urban areas.

Thus, SPDC cautions against any inferences being drawn about employment and other trends from a comparison of the new quarterly LFS with the previous annual ones.

http://www.brecorder.com/index.php?...&term=&supDate=


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## Neo

ISLAMABAD (July 19 2006): US Assistant Secretary for Economic and Business Affairs, Dan Sullivan, had a meeting with Minister of State for Finance, Omar Ayub Khan, here on Tuesday and discussed matters relating to increased economic co-operation and trade between the two countries.

Omar briefed the US delegation about various economic policies of the government initiated by Prime Minister Shaukat Aziz as Finance Minister for achieving economic development through deregulation, privatisation and liberalisation.

He said: "Pakistan is now one of the fastest growing economies in the region. Last year, its GDP growth rate was 8.6 percent, and this year it would be more than 6.6 percent.

"We have reduced the poverty to 25 percent in the last five years from 32 percent, as there was significant improvement and growth in each sector of the economy, such as manufacturing, agriculture and services" he added.

He said that there was a sizeable growth in the dairy sector, and Pakistan has a well thought-out strategy through which it would become one of the top dairy producing countries in the world.

The Minister told the US delegation that the government was making heavy investment in human resource development, building of infrastructure and especially the energy sector where the demand was increasing at the rate of 13 percent per annum but there was also a large potential of harnessing energy resources of the country.

He said that Pakistan would soon become a corridor of regional trade as North-South corridor would connect western China and the Central Asian Republics to Gwadar and Karachi.

He said that besides mega projects, the infrastructure in rural areas was also being developed, and referred to computerisation of land record so that the facilities of credit and others could be extended to the rural areas.

He asked the US delegation to extend access to Pakistani products through tariff rationalisation and that it would be beneficial for both countries.

Earlier, Omar thanked the US delegation for the timely assistance provided by the US for the recovery and rehabilitation efforts of the government in the earthquake-hit areas, and especially the provision of heavy lift helicopters.

The US Assistant Secretary for Economic and Business Affairs appreciated the growth of Pakistan's economy and laid stress on strengthening the people-to-people contact for strengthening and broadening the economic relationship.

The meeting was also attended by Finance Secretary and other officers of the Ministry of Finance.


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## Neo

ISLAMABAD (July 19 2006): The government has announced it will start constructing two new airports, one each in Islamabad and Gwadar, costing Rs 18 billion and Rs 8 billion respectively towards the end of current year by utilising indigenous resources.

At the Public Accounts Committee (PAC) meeting here on Tuesday, a top official said the expansion project of Multan airport at Rs 3 billion would also be initiated the same time.

Defence Secretary Lieutenant General Tariq Wasim (Retd) told the meeting the government and the Civil Aviation Authority (CAA) had enough resources to initiate and carry forward all three projects at least for two initial years. The secretary, however, said if need arose the government would go for borrowing to complete these projects after two years.

Whether the government would prefer borrowing from within the country or outside Tariq did not mention. "The CAA and the government together have enough resources to run these projects for two years and after that we will look for borrowing," Wasim said.

The government's new position on the construction of new airports is contrary to what has been the part of un-contradicted media reports in the past. Some officials in the recent past have been saying new airports would be constructed on Build Operate and Transfer (BOT) basis. The defence secretary said the government had acquired some 3,200 acres of land for Islamabad airport and had made payment to the owners.

Secretary Tariq revealed the government was in the process of selecting design consultants and short listing contractors to execute these projects. Out of the total of Rs 18 billion for Islamabad airport, the CAA was likely to invest Rs 12 billion while rest would come from the government and borrowing, he added.

Similarly, for Gwadar both Pakistan and Oman governments would provide finances along with the CAA, Tariq told the meeting.

And the government and the CAA would share 50 percent each of Rs 3 billion for the expansion project of the Multan airport, he said. About the financial health of the CAA, the secretary said the entity was likely to have a surplus of Rs 5 billion next year. During 2006, he added, the CAA had total revenue collection of Rs 10 billion against the expenditure of Rs 5.4 billion.


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## Owais

*Wapda to obtain US thermal power station * LAHORE: Wapda in its emergent efforts to surmount the dearth of power has decided to obtain on lease 150-megawatt thermal power station from the US.

Wapda sources told that this 150-MW thermal power station being taken on rent for three years would be installed near Multan and it would start working in next two/two and half months. Thus, this would be the maiden thermal power station to be taken on rent in PakistanÃ¢â¬â¢ history.

Sources told that the four 320 MW thermal power stations provided by UAE would go in operation by 2007.


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## Owais

*Interest on deposits may rise further by 200 basis points * KARACHI: Following the enhancements of Cash Reserve Requirement (CRR) and Statutory Liquidity Requirement (SLR), interest rates on bank loans as well as on deposits could further surge by 100 to 200 basis points.

Standard Chartered Bank&#8217;s CEO, Badar Kazmi told this here to Geo News. 

He said that the banks after the CRR and SLR enhancements would now focus on obtaining deposits mainly for over six months duration and the ongoing war for deposits would further heat up, which would benefit the depositors, especially those who wanted to keep their deposits with the banks for a period of over six months.

This step taken by the State Bank of Pakistan would bear out good results in the banking industry, as the scope of banking services would further widen, he told.

Badar Kazmi said that such banks that had indulged in much of their loan books&#8217; expansion could now offer more readily handsome profits for obtaining the deposits.


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## Neo

By Khalid Qayum Bloomberg News

Published: July 19, 2006

ISLAMABAD Oil & Gas Development plans to buy rights to find oil and gas in Oman and Yemen in a first attempt by Pakistan's biggest explorer to seek energy assets overseas, according to the company's chief executive officer, Arshad Nasar.

The state-controlled company wants to increase spending this year on exploration and development of wells within Pakistan by 150 percent to $890 million, Nasar, 61, said in an interview last week. The company has not decided how much money it will invest overseas, he said.

Pakistan needs to raise oil and gas output from domestic fields and secure overseas supplies to contain a rising import bill. Of the nation's total import bill of $25.6 billion in the July-May period, $5.95 billion was spent on oil imports.

We need "to enhance the country's energy security" said Nasar, who took charge of Oil & Gas Development in April after serving as chief executive at Caltex Pakistan Oil, a unit of Chevron. "Our plan is to accelerate exploration activities and boost production from existing wells."

The company plans to raise oil and gas production by 42 percent in the year to June 30, 2007, Nasar said.

Oil & Gas pumped about 39,000 barrels of oil a day and 979 million cubic feet of natural gas daily, or 25 percent of the country's total production, as of the quarter ended March 31.

"We have a vision to make Oil & Gas a leading oil producing company in the region and to be recognized for performance and partnership," said Nasar, who worked at Chevron for 36 years.

Oil & Gas Development, the biggest company on Pakistan's benchmark Karachi Stock Exchange 100 index, produces 60 percent of the country's oil. The company competes with Shell Pakistan, a unit of Royal Dutch Shell, and Pakistan Petroleum, the second-biggest explorer also controlled by the government.

The development of new wells and higher yields will help lift Oil & Gas Development's earnings 23 percent this fiscal year compared with a year earlier, Nasar said. Oil & Gas Development has not reported earnings for the year ended June 30.

The company's profit increased to 33.2 billion rupees, or $552 million, in the nine months to March 31 from 24.4 billion rupees a year ago.

Oil & Gas Development shares have risen 32 percent in the past year, lagging behind a 42 percent increase in the benchmark KSE 100 index.

Domestic exploration and development will focus on Mela and Kohat in the nation's Northwest Frontier province, Nasar said. The spending plan this year includes digging 50 new wells, nine of which will be in Baluchistan, depending on the security situation, he said.

Tribal militants in the southwestern province of Baluchistan in past years have attacked oil and gas pipelines, which run thousands of miles in the sparsely populated province. They are demanding greater royalties on the natural resources extracted from the province. In 2003, Pakistan's government deployed 3,000 troops to protect the pipelines.

The government's plan to sell Oil & Gas Development shares overseas will help introduce the company in foreign markets, Nasar said.

The government plans to sell as much as a 15 percent stake, or 645 million shares, in Oil & Gas Development to local and overseas investors through the global depositary receipts by Sept. 30 and list it on the London Stock Exchange, he said.

ISLAMABAD Oil & Gas Development plans to buy rights to find oil and gas in Oman and Yemen in a first attempt by Pakistan's biggest explorer to seek energy assets overseas, according to the company's chief executive officer, Arshad Nasar.

The state-controlled company wants to increase spending this year on exploration and development of wells within Pakistan by 150 percent to $890 million, Nasar, 61, said in an interview last week. The company has not decided how much money it will invest overseas, he said.

Pakistan needs to raise oil and gas output from domestic fields and secure overseas supplies to contain a rising import bill. Of the nation's total import bill of $25.6 billion in the July-May period, $5.95 billion was spent on oil imports.

We need "to enhance the country's energy security" said Nasar, who took charge of Oil & Gas Development in April after serving as chief executive at Caltex Pakistan Oil, a unit of Chevron. "Our plan is to accelerate exploration activities and boost production from existing wells."

The company plans to raise oil and gas production by 42 percent in the year to June 30, 2007, Nasar said.

Oil & Gas pumped about 39,000 barrels of oil a day and 979 million cubic feet of natural gas daily, or 25 percent of the country's total production, as of the quarter ended March 31.

"We have a vision to make Oil & Gas a leading oil producing company in the region and to be recognized for performance and partnership," said Nasar, who worked at Chevron for 36 years.

Oil & Gas Development, the biggest company on Pakistan's benchmark Karachi Stock Exchange 100 index, produces 60 percent of the country's oil. The company competes with Shell Pakistan, a unit of Royal Dutch Shell, and Pakistan Petroleum, the second-biggest explorer also controlled by the government.

The development of new wells and higher yields will help lift Oil & Gas Development's earnings 23 percent this fiscal year compared with a year earlier, Nasar said. Oil & Gas Development has not reported earnings for the year ended June 30.

The company's profit increased to 33.2 billion rupees, or $552 million, in the nine months to March 31 from 24.4 billion rupees a year ago.

Oil & Gas Development shares have risen 32 percent in the past year, lagging behind a 42 percent increase in the benchmark KSE 100 index.

Domestic exploration and development will focus on Mela and Kohat in the nation's Northwest Frontier province, Nasar said. The spending plan this year includes digging 50 new wells, nine of which will be in Baluchistan, depending on the security situation, he said.

Tribal militants in the southwestern province of Baluchistan in past years have attacked oil and gas pipelines, which run thousands of miles in the sparsely populated province. They are demanding greater royalties on the natural resources extracted from the province. In 2003, Pakistan's government deployed 3,000 troops to protect the pipelines.

The government's plan to sell Oil & Gas Development shares overseas will help introduce the company in foreign markets, Nasar said.

The government plans to sell as much as a 15 percent stake, or 645 million shares, in Oil & Gas Development to local and overseas investors through the global depositary receipts by Sept. 30 and list it on the London Stock Exchange, he said.

http://www.iht.com/articles/2006/07...rg/sxpakoil.php


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## Neo

Pakistan will be declared a poppy-free country in one year as cultivation of poppy has been reduced from 7,000 hectares to 3,000 hectare area and it will be reduced up to 1,000 hectare in one year, the country's narcotics control minister said on Wednesday. 

Ghous Bux Maher was talking to newsmen after arrival from Moscow, where he attended the regional conference on drug trafficking issues. 

"If the area of drug cultivation could be reduced up-to 1,000 hectare, Pakistan would be declared a poppy free country," the minister said. 

There are reports that poppy has been cultivated in some inaccessible parts of Pakistan's rugged tribal region in the North West Frontier Province. 

The minister said that over 247 heroin making laboratories have ben destroyed so far and there is not any lab of heroin working in Pakistan. 

He said a national survey on drug abuse shows that there are 3.01 million drug abusers in Pakistan, in which chronic heroin users in the age of 15-45 years are about 500,000. 

He disclosed that a total of 6,008 cases have been registered so far in which 3,864 were decided and 3,381 were convicted while acquitted cases were only 483. 

He said that 2,144 cases are still under trial. 

Bux Maher said the government is working to control the import of such chemical which is used in heroin making and for the purpose all importers were advised that they should submit a report about buyers and users of such chemicals to the Ministry of Narcotics Control to control its uses. 

He said the government is making efforts to provide alternative sources of livelihood for the people of poppy cultivation areas. 

A national plan has already been prepared and the government is working for providing tube wells and agricultural equipment free of cost to the people of such areas. 

He informed the media people that it was decided in the Moscow conference that joint efforts would be made to eliminate drug trafficking and poppy cultivation from the region and all regional states will cooperate with Pakistan for the purpose. 

He said the conference also lauded the efforts of Pakistani government in minimizing the poppy cultivation and drug trafficking from its border. 

http://www.irna.ir/en/news/view/men...95620182214.htm


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## Neo

19 July 2006 

ISLAMABAD Ã¢â¬â Pakistan government is urgently importing a used 150MW thermal power station from the United States in order to partially offset the current energy crisis.

However, the country would continue to face 800-1200mw power shortfalls at least for the next two years in peak summer.

A senior government official said the quickest way to start additional power production was to import pre-commissioned plant from the United States on a three-year rent. "It would be installed near Multan within 70 days and would be Pakistan's first ever rented power plant," he said.

The plant is estimated to produce electricity at a tariff of about 3.2 US cents per unit excluding fuel cost that would be borne by the Wapda and translate into an overall tariff of slightly over four cents per unit.

The energy crisis would, however, not be over until August 2008 because the next power plant to come on stream would be Wapda's thermal plant at Chichuki Malyan with 340mw production in August 2008 and another 160mw by December 2008.

A Wapda official said the electricity shortage had come down to almost zero in the last few days as result of higher hydel power generation from Tarbela and Mangla dams but has again risen to about 400-500mw on Monday mainly because of transmission problems after providing about 750mw to Karachi. The production from two dams has increased to 5,600mw from 4,900mw a week ago against an installed capacity of 6,100mw.

The source said the secretary water and power finalise a short-term strategy to overcome power crisis on Tuesday in consultation with the Wapda and KESC for presentation to the Prime Minister today. These sources said the commissioning of four second-hand thermal stations donated by the United Arab Emirates (UAE) of 320mw was expected to start by mid of next year. Of these, an 80mw plant would be installed at Shahdra near Lahore in Wapda's

jurisdiction and would take about 11 months from now on.

The plant was commissioned in the UAE in 1996. The whole dismantling, transportation to Pakistan and installation was being done by the UAE government as donation to the people of Pakistan. The remaining three plant of 80mw each of 1975 model would be donated to Karachi and would take more than 15 months to start production, these sources said.

The sources said the Wapda has operationalised a new 220KV line from Jamshoro to TM Road in Hyderabad on Sunday besides commissioning seven 220KV grid stations in the last few months at a cost of Rs14 billion.

These sources said the Wapda has been authorised by the government to install three furnace oil based thermal power stations in Faisalabad, Nandipur and Lahore with a total capacity of 600mw on supplier's credit. 

The Wapda has already advertised these plants for construction and provision of suppliers' credit.

These plants would come on stream in June 2008.

Similarly, Wisdom Associates, a local group has been asked to install a 117mw station in Aimanabad near Gujranwala with in a period of 15 months.


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## Owais

*Fiscal Year 2006 exports up 14.4 percent* 

ISLAMABAD (July 20 2006): The country's exports during July-June period of fiscal year 2005-06 were recorded at 16.469 billion dollar showing an increase of 14.4 percent over the corresponding period of the last fiscal year. According to the provisional trade figures released here on Wednesday, the exports during the FY 2004-05 totalled at 14.391 billion dollar.

The exports worth 1.515 billion realised in the month of June of previous fiscal year, registering a decrease of 1.1 percent in the corresponding period of the last year when it was recorded at 1.532 billion.

During the out going fiscal year (July-June 2005-06), the imports also witnessed 28.581 billion showing an increase of 38.8 percent over the corresponding period of last year.

The country's imports in June 2006 were recorded at 2.986 billion dollar, witnessing an increase of 33.9 percent over imports worth 2.23 billion dollar realised in the corresponding month of the last fiscal year.

The imports worth 2.986 billion dollar realised in the month of June 2006 also registered 12.8 percent increase when compared with 2.648 billion dollar imports achieved in May 2006.

The balance of trade during June-July period of FY 2005-06 has reached to 12.113 billion dollar from 8.207 billion dollar in FY 2004-05.


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## Neo

ISLAMABAD (July 20 2006): Prime Minister Shaukat Aziz has said that substantial progress has been made on re-designing of procedures and processes, strengthening of infrastructure ie roads, railways, airports and seaports which will facilitate trade and investment as well as will contribute to achieving the export target of $18.6 billion

"The benefits of faster and efficient movement of goods across the country will go directly to the consumers and reduce cost of business and increase productivity of goods", he added. The prime minister was chairing a meeting of the Task Force on the development of National Trade Corridor at the PM's House on the Wednesday morning to review the implementation status of the decisions earlier taken particularly the progress on matters related to trade facilitation, modernisation of railways, ports and shipping, motorways, trucking and aviation and air transportation sectors.

He said: "While we expand our logistics chain, it is important that the existing infrastructure is meticulously maintained and used by the business and industrialists community to ensure a seamless and fast movement of goods.

Shaukat Aziz said that Pakistan, situated at the confluence of three important regions - South Asia, Western Asia and Central Asia - enjoys a unique and strategic position to inter-link these regions.

He said because of its geo-strategic location Pakistan is in a position to play a vital role in promoting regional trade and achieve this objective we are building trade, energy and transportation corridors.

In addition to this, the prime minister said Pakistan provides the pre-requisites to become the regional hub of manufacturing and trade. The National Trade Corridor Plan, he said, will be instrumental in building of these corridors as well as in making Pakistan a regional hub of manufacturing and trade.

The Deputy Chairman Planning Commission, Secretary Communications, Secretary Ports and Shipping, Secretary Defence, Secretary Railways and Chairman CBR made presentations on the various sectors of the NTC. Federal Communication Minister Muhammad Shamim Siddiqui also attended the meeting.

The meeting was informed that a deep-water terminal is being built at Kemari and the Port Qasim will have more berths with the assistance of the private sector.

It was also informed that substantial progress has been made in trade facilitation by reducing the port dwell time and port charges; customs clearance has been reduced to an average of 5.57 hours at KICT from earlier average of 4.1 days; whereas for imports, the customs clearance time has been reduced to an average of 7.24 hours, the exports goods are cleared within an average time of 0.50 hours at KICT in Karachi.

While reviewing the performance of Pakistan Railways, the prime minister said railway is being converted into a corporation. He appreciated that railway is leveraging its land and other assets for optimal use. He was informed that freight revenues of railway have increased and the first version of railway business plan is ready.

The communication secretary informed the meeting that as a result of the substantial investment made by the government for the improvement in highways significant progress has been made in this sectors and motorway quality roads will be available throughout the country, all the way from Karachi to Torkhum.

"The construction of Torkhum-Peshawar Road, Peshwar Northern Bypass, M-4, Faisalabad-Khanweal, E-5, Sukkur-Shikarpur, E-6, Shikarpur-Ratodero, M-7 Dadu-Dureji-Hub, P.Bhattian-Wazirabad, Hasanabdal-Mansehra will be initiated in 2007 while M-1 linking Lahore-Peshawar will be completed in 2007 and the Karakoram Highway is being improved with the help of China", he added..

The defence secretary, in his presentation, said that progress has been made on planning of the construction of two new airports at Islamabad and Gwadar and expansion of Multan airport. The construction of Islamabad airport will begin by the end of the year and the National Aviation Policy has been prepared and is under discussion with all stakeholders, he added.

The prime minister expressed satisfaction at the progress so for made. He asked all departments concerned to continue the pace of progress and ensure timely completion of the projects.


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## Owais

*CRR and SLR increase pushes up Kibor* 

KARACHI (July 20 2006): Kibor-the benchmark for lending rates-moved upward on Wednesday by 53 basis points for six months and by 66 basis points for three months in the wake of enhancement of Cash Reserve Ratio and Statutory Liquidity Ratio by the State Bank of Pakistan.

In the auction for treasury bills, held on Wednesday, participation by banks was thinner, as some banks scrambled to readjust their portfolios to meet the new CRR-SLR requirements by Saturday.

However, the SBP still managed to sell the six-month paper worth Rs 15 billion (against maturity of Rs 14 billion) without changing the cut-off yield of the previous auction.

According to sources, the CRR obligations of scheduled banks have gone up from Rs 150 billion to Rs 190 billion; and SLR requirements also have increased from Rs 445 billion to Rs 530 billion due to the new classification. However, as banks are holding at least 40 to 50 percent more than the statutory requirement in government papers, there will be no acute pain to them in meeting the SLR demand.

At the same time, though, the new CRR demand will mean temporary problems for some banks, which have aggressively lent to customers, and their loan-to-deposit ratio is nearly 80 percent.

Most bankers appreciated the SBP's incentivization for encouraging deposits beyond six months tenor. The reduction in CRR from seven percent to three percent for tenor above six months would cost 0.5 percent less to the banks on annualised basis, which can be passed on to customers by raising the return on longer term deposits.

Surprisingly, banking stocks came under pressure on the bourses on Wednesday despite the fact that the rise in lending rates would far enhance their profits as rates on loans would go up immediately while the profit on deposits to customers would rise after a time lag.

The hike in CRR is, of course, expected to put pressure for raising the yields on T-bills, and the enhancement in SLR itself would nullify this pressure as it pushes the other way to lower the yields on T-bills.

While the SBP's Wednesday move gave a clear signal of liquidity tightening, most economists feel that using SLR and CRR instruments is an indirect method of curbing credit expansion. "A better way to attack inflation directly through a slowdown in credit availability would be hiking of interest rates."

Further, as a treasurer of a leading bank said, "Exporters are being pampered while the sectors responsible for growth in large-scale manufacturing (LSM) will now be affected as loans for consumer financing will start drying up." Auto loans, leasing of air-conditioners, refrigerators, deep-freezers, washing machine, and dryers would be more costly, thereby easing the demand for these consumer durables.

With T-bills worth Rs 77 billion maturing this week, and Rs 54 billion T-bill adjustments due to SLR change, followed by the sale of Rs 15 billion of T-bills in the Wednesday's auction, the interbank market should be able to easily square off liquidity-wise at the end of the week, said a treasurer.


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## Neo

ISLAMABAD (July 20 2006): The government is likely to enhance the revenue collection target for 2006-07 to Rs 850 billion, against the original projection of Rs 835.5 billion, keeping in view the extraordinary high collection of Rs 711 billion during 2005-06.

Sources told this correspondent on Wednesday that the revenue collection target of Rs 835.5 billion was fixed in the budget on the basis of Rs 704-706 billion collection in 2005-06. But the amount rose to Rs 711 billion, following reconciliation of final receipts.

"The Ministry of Finance may fix Rs 850 billion revenue target for 2006-07 based on the growth of receipts to Rs 711 billion by CBR in 2005-06," sources said. They said that the Finance Ministry has not yet conveyed the increased target to CBR, but it is expected that the target would be revised upward.

They said that if the target is enhanced to Rs 850 billion for the current financial year, CBR would have to generate an additional amount of Rs 14.5 billion. This amount should be utilised for the health and education sectors, as the Ministry of Finance has not yet allocated the additional amount for any specific expenditure.

They added that the government was expecting over 20 percent estimated growth in revenue collection. On the basis of continuos upbeat trend during last fiscal year, the CBR would be able to cross Rs 835.5 billion in 2006-07.


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## Neo

ISLAMABAD (July 20 2006): Chinese Vice Foreign Minister Wu Dawei said his country was giving active consideration to the idea of using Pakistan as energy corridor and strengthening their communication links for common socio-economic uplift.

Talking to a visiting Pakistani delegation at the Chinese Ministry of Foreign Affairs, he hoped that Gwadar deep seaport could provide an easy communication link to China for transportation of crude oil from Middle East and other regions. "We will make best efforts for developing and promoting the Gwadar port as a hub of economic activities between the two countries," he added.

Leader of Pakistani delegation, Secretary Ministry of Youth Affairs Saleem Mahmood Saleem thanked the Chinese leadership and the people for their consistent support to Pakistan in various projects.


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## Neo

KARACHI (July 20 2006): The country's export is expected to achieve the target of $18.6 billion set by the ministry of commerce for the current fiscal year 2006-07. This was stated by Tariq Ikram, Chairman, Export Promotion Bureau (EPB) while talking to Business Recorder after speaking at a reception in his honour hold by the EPB employees here on Wednesday.

Tariq Ikram said the country exports are increasing tremendously during the last few years and has touched the figure of over $17 billion in the last fiscal year.

He said that after establishment of Trade Development Authority of Pakistan to replace the EPB, the country's export would increase tremendously and the target of $18.6 billion is not a difficult target to achieve.

The new establishment would focus to improve supply chain management, marketing and research communication. The main focus would be to develop institution which would be a role model organisation in the country, he added.

Earlier, while speaking at the reception, he said that the performance of the department would be tremendously increased after establishment of Trade Development Authority of Pakistan (TDAP) to replace the EBP. This new establishment would work more independently than the EPB, he added.

Being a department of ministry of commerce, there were some delays had to face to implement the decisions, he said and added that now the establishment would be independent to take its decisions and to implement on it immediately.

The chairman EPB announced on this occasion that all the employees of the EPB from grade one to 15 would be given option to join the TDAP and nobody would be sacked from the organisation. All these employees would be provided proper training from reputable institutions for the skill development of them. After the training these employees would be adjust in various departments of the TDAP according to the ability of the employees.

Regarding Commerce and Trade (C&T) officers, Tariq Ikram said that all these officers would also be given the option to join the TDAP and they would go thorough the process of human resource audit. The audit would be conducted through a reputed independent private agency to assess the abilities of the C&T officers. These officers would be accommodated according to their abilities in various departments of TDA, he added.

He asked the employees to work hard to prove their ability and to make the TDAP as a role model organisation in the country.


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## Neo

ISLAMABAD (July 20 2006): Emaar Properties, 32 percent owned by Dubai government, would be launching joint ventures with Pakistani companies for development of mega residential, commercial and leisure real estate projects, industrial parks, tourist sites and port terminals.

Emaar Properties Chairman Muhammad Ali Al-Abbar, who is also advisor to the government of Dubai on economic affairs, informed Prime Minister Shaukat Aziz about the plan, when he along with an 11-member delegation called on the Prime Minister here on Tuesday evening. The visit of Muhammad Ali Al-Abbar is a follow up to the visit of UAE Prime Minister and ruler of Dubai Sheikh Mohammed bin Rashid Al-Maktoum.

Shaukat Aziz apprised him about wide ranging structural reforms coupled with macro-economic stability, aimed at reducing the cost of doing business, better governance and consistency and transparency in policies and procedures, transforming Pakistan into a destination of choice for investors resulting in record high foreign direct investment (FDI) during the last year.

The Prime Minister said the investments had led to employment generation, upgradation and modernisation of technologies and value-addition and contributed to enhancement at exports.

The Prime Minister said the government was providing a level playing field to local and foreign investors, and added that transparency was the hallmark of the government policies.

Giving an overview of the economy, the Prime Minister said the structural reforms of the government had changed the entire economic landscape of the country. The economy had expanded during the last four years, which enabled it to position itself as one of the fastest growing economies of the Asian region.

He said the size of the economy, which was 134 billion dollars today, had doubled during the last seven years. Per capita income had also doubled during this period and today stood at 847 dollars, and Pakistan offered tremendous opportunities to local and foreign investors, he added.

Muhammad Ali Al-Abbar said Pakistan had achieved impressive growth and his company was impressed with economic stability achieved by Pakistan.

He said joint ventures being launched by their company in Pakistan till led to major investments, job opportunities, increase in revenues, infrastructure strengthening, and improvement in education and healthcare facilities.

The meeting was attended among others by Minister for Communication Muhammad Shamim Siddiqui, Minister for Tourism Nilofar Bukhtiar, Minister of State for Finance Omar Ayub and senior officials.


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## Neo

KARACHI (July 20 2006): Porsche Pakistan is proud to announce the official launch of Porsche operations in the cosmopolitan hub of Pakistan, with the official inauguration of Porsche Centre Karachi here on Wednesday.

While sales & service activities have already been operational in Karachi since January 2006, the official opening of Porsche operations in Karachi signifies the serious commitment of the company towards the Pakistani market.

Abuzar Bokhari, Chairman of Autotechnik Pvt Ltd, stressed the significance of holding on to previously set targets: "Meeting targets is one way of assessing a company's professionalism and strong commitment to its business case. From this perspective, it is with utmost pleasure that I present to you the Porsche Centre in the business capital of Pakistan, Karachi. It is with this kind of work that Autotechnik proves its full commitment to spreading Porsche's culture of pure-bred sports car excellence throughout Pakistan."

On the other hand, Attique Ahmed, CEO of Autotechnik Pvt Ltd, detailed the progress on ground for Porsche in Pakistan: "Frantic activity in the past one year has resulted in great accomplishments. A Porsche showroom has already opened in Lahore, while another one is planned for Islamabad. Meanwhile, the construction of the state of the art Porsche Centre Lahore is about to commence. Currently, Autotechnik employs a staff of highly experienced and competent employees.

As usual, training is an integral part of the development programme all employees are subjected to." Announcing the official launch of Porsche operations in Karachi lays the foundations for a true sports car, and a class leading SUV experience like no other. Every Porsche driver deserves the best, and the company's strict corporate identity guidelines, to which every Porsche Centre adheres, definitely guarantee that.


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## Neo

Thursday, July 20, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\07\20\story_20-7-2006_pg5_1

_* Imports stood at 131.2% of the target 
* Petroleum import bill increased by 64.5% in nine months of previous fiscal 

_
ISLAMABAD: The government has managed to achieve only 96.9% of the export target of $17 billion during the July-June period of last fiscal year 2005-06 compared with the 105% achievement in the previous fiscal year 2004-05 with exports of $14.391 billion against the actual target of $13.7 billion. 

However, the imports were at 131.2% of the target and stood at 28.581 billion against the actual import target of $21.790 billion in the last fiscal year 2005-06. 

The imports were 123.3% and finished at $20.598 billion against the actual target of $16.7 billion in the fiscal year 2004-05. 

According to trade data released by the ministry of commerce here on Wednesday, the total exports during July-June period of last fiscal year 2005-06 stood at $16.496 billion against the exports of $14.391 billion in the previous fiscal year 2004-05, indicating an increase of 14.4%.

The imports during the July-June period of last fiscal year 2005-06 amounted to $28.581 billion compared with the imports of $20.598 billion in the previous fiscal year 2004-05, indicating an increase of 38.7%.

The trade deficit amounted to $12.112 billion in the July-June period of last fiscal year 205-06 compared with the deficit of $6.207 billion in the previous fiscal year, indicating an increase of 95.1%. 

The exports during June 2006 ended with $1.153 billion compared with the exports of $1.153 billion during June 2005 were less than 1.1%. The imports witnessed an increase of 33.9% during June and stood at $2.986 billion compared with the imports of $2.230 billion in June 2005. Trade deficit was $1.471 billion during June 2006 compared with the deficit of $697 million in June 2005, projecting an increase of 110.9%.

Non-availability of certain products, commodities and goods for exports such as sugar, wheat, poultry, livestock and less availability of industrial goods and agri-products also contributed to the decline in exports during last fiscal year 2005-06, an official explained to the Daily Times. 

The major negative factor in the past year was the rapid increase in the international oil prices to unprecedented levels of around $70- 75 per barrel. As a result, in the first nine months of last year the petroleum group import bill increased by 64.5 percent. This fact has had two unpleasant effects. 

First, it has resulted in a dramatic increase in our import bill and therefore our trade gap. Second, it has meant increase in the cost of production in particular and the cost of doing business in general, thereby adversely impacting the competitiveness of our exports.


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## Neo

Dubai: Pakistan hopes to sign a free trade agreement (FTA) soon with the GCC countries as it expects to complete negotiations by the end of this year, said a senior diplomat.

Pakistan had decided to sign a free trade agreement with the GCC as a trading bloc a year ago. 

"We have already completed one round of talks and a few more are to follow," said Bilal Pasha, Commercial Counsellor at the Pakistan Consulate General in Dubai. 

He said the FTA between Pakistan and the GCC would be comprehensive in nature, covering the overall economic relations between the contracting states including the UAE, Saudi Arabia, Qatar, Bahrain, Oman and Kuwait. 

Trade volume between Pakistan and GCC states stood around $4.5 billion in 2004-2005.

At present, Pakistan is importing raw materials, semi-finished goods and oil from the GCC countries and the FTA will reduce the cost of the imports. 

The agreement will provide an opportunity to Pakistani exporters to tap the demand for goods in the GCC countries under the reduced tariff in the first phase and without tariff in the long term. 

"It will help abolish or reduce the existing five per cent import duty imposed in GCC countries, which will ultimately help reduce prices of Pakistani products in the region," said Pasha. 

Talking to reporters yesterday in Dubai, the newly appointed commercial counsellor said that exports from Pakistan to UAE have increased up to 23.6 per cent in the first nine months of the last fiscal year. 

It has increased to $993 million (from July 2005 to March 2006) from $ 803 million (July 2004-March 2005). 

"We hope to touch $1.3 billion by the end of this fiscal year as compared to $1 billion achieved last year," he said. 

Explaining the new trade policy of Pakistan for the 2006-07 financial year, which was announced on Monday, Pasha said the export target this year has been fixed at $18.6 billion?13 per cent increase on the export levels attained last year. 

The trade policy, which seeks to further liberalise foreign trade, is expected to have an import bill of $28 billion, leaving a yawning trade deficit of $9.4 billion.

Pasha said the Pakistan government has decided to focus on the export promotion of a few selected product groups in order to increase exports and reduce the trade deficit. 

The product groups selected for this purpose include leather products, engineering goods, chemicals, pharmaceuticals, towels, denim and services. 

"This is being done to facilitate annual exports of each of these products to a level in excess of $1 billion within three years," Pasha said. 

He said the major initiative is to focus on export growth in regional Muslim countries.

Boosting trade

Export measures introduced in trade policy

- Establishment of Trade Development Authority of Pakistan
- Carpet cities in Lahore and Karachi
- Dazzle Park near Karachi Port
- Export Centres in Peshawar, Quetta, Lahore and Islamabad
- Cool Chains for Horticulture Exports
- Freight subsidy Scheme
- Skill development in textile sector
- Quality standard certification 
- Warehouse city
- Cement and clinker terminal in Karachi
- Promotion of meat exports
- Long term financing for export oriented projects


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## Owais

*Pakistan need US$ 6 billion investment in communication sector * ISLAMABAD: Pakistan&#8217;s transport and communication sectors need US$ 6 billion investments during next five years.

Deputy Chairman Planning Commission Akram Shaikh talking with members of the planning commission in Islamabad said that the country would need billions of rupees investment to achieve targets of roads, rail links, ports and airport development in Pakistan for improving the infrastructure in the country.

The country was making efforts to attract foreign investments and private assistance for these projects, he added.


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## Owais

*Interest on deposits may rise further by 200 basis points * KARACHI: Following the enhancements of Cash Reserve Requirement (CRR) and Statutory Liquidity Requirement (SLR), interest rates on bank loans as well as on deposits could further surge by 100 to 200 basis points.

Standard Chartered BankÃ¢â¬â¢s CEO, Badar Kazmi told this here to Geo News. 

He said that the banks after the CRR and SLR enhancements would now focus on obtaining deposits mainly for over six months duration and the ongoing war for deposits would further heat up, which would benefit the depositors, especially those who wanted to keep their deposits with the banks for a period of over six months.

This step taken by the State Bank of Pakistan would bear out good results in the banking industry, as the scope of banking services would further widen, he told.

Badar Kazmi said that such banks that had indulged in much of their loan booksÃ¢â¬â¢ expansion could now offer more readily handsome profits for obtaining the deposits.


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## Neo

ISLAMABAD: Commerce Minister, Humayun AKhtar Khan would be visiting Argentina and Brazil for signing the Framework Agreement on Trade between Pakistan and Mercosur and to participate in the Mercosur summit scheduled to be held on July 21, at Buenos Aires, Argentina. 

On the initiative of the President Pervez Musharraf during his visit to Latin America, negotiations were initiated for Free Trade Agreement (FTA) with Mercosur. 

It is worth mentioning here that India has already signed a Preferential Trade Agreement with Mercosur in 2004. Mercosur represents a combined market of 210 million people, with a GDP of over a trillion dollars.

The Mercosur countries produce 50 percent of Latin AmericaÃ¢â¬â¢s GDP and contain 43 percent of its population and 59 percent of its total landmass. The per capita GDP of its four countries is 30 percent higher than that of Latin America as a whole. Argentina and Brazil dominate Mercosur, accounting for over 90 percent of the trading blockÃ¢â¬â¢s GDP.

PakistanÃ¢â¬â¢s export diversification drive requires region specific strategies. There is a need to evolve a strategy comprising pragmatic and doable actions. 

An unexplored region Mercosur (Southern cone common market) which was set up in 1991 with the permanent members of Argentina, Brazil Paraguay & Uruguay with an objective to form a common market through coordinating fiscal and exchange rate policy, and accelerating economic development is the focal attention of Pakistan Government to get benefit from the successful experiences of Mercosur region.


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## Neo

BEIJING: China is giving active consideration to the proposals of using Pakistan as energy corridor and strengthening communication links for common socio-economic uplift, Chinese Vice Foreign Minister Wu Dawei said on Wednesday.

Talking to a youth delegation from Pakistan at the Chinese Ministry Foreign Affairs the Chinese minister hoped that Gwadar seaport could provide an easy communication link to China for transportation of crude oil from the Middle East and other regions.

Ã¢â¬ÅWe will make the best efforts in developing and promoting the port as hub of economic activities between the two countries,Ã¢â¬Â he said adding: Ã¢â¬ÅChina attaches great importance to its cooperation with Pakistan in the energy sector, and referred to the on-going joint ventures in the sector, especially the nuclear power plants. 

The minister hoped that the visit of the Youth delegation would help in carrying forward the State-to-State relationship. He noted that the Sino-Pak friendship turned into a strong strategic partnership, since the establishment of the diplomatic ties 55 years back and also contributed to peace and development in the region. 

He underlined the importance of exchanges of visits at the levels of youth, students, businessmen and the civil servants as these helped in developing greater understanding between the two countries. 

Earlier, the leader of Pakistan delegation, Secretary Ministry of Youth Affairs Saleem Mahmood Saleem thanked the Chinese leadership and the people for their consistent support to Pakistan.


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## Neo

During the British period, almost all gravity-flow canals were built wherever feasible, thus making the Indus basin the hub of one of the largest contiguous irrigation systems in the world. Numerous gravity flow irrigation systems were built on rivers right from Malakand Agency on the Swat river during the nineteenth century up to the last barrage in Sindh, at Kotri, on the Indus. Moreover, barrages on the Jhelum, the Chenab, the Ravi, the Sutlej and Beas rivers were also built to irrigate the Indus basin. 

Therefore, gravity flow irrigation schemes were initiated, executed and exhausted on the Swat river, the Panjkora river, Kabul river, Kunar river, Kurram river, Bara river, Kohat Toi, the Indus, the Jhelum, the Chenab, the Ravi, the Sutlej and the Beas. Thus gravity-flow irrigation schemes were almost exhausted in NWFP, Punjab and Sindh. Unfortunately, Balochistan was considered almost out of the reach of the Indus basin for gravity flow irrigation and was thus ignored by the British and then by Pakistan. 

No one ever thought of irrigating the Kachi plain by gravity flow from the Indus. The vast and fertile Kachi plain is a unique plane -- with an area of about 3.5 million acres it is a flat piece that can easily be irrigated by gravity flow from the Indus River at the Chashma barrage site on the Indus. No one, including Dr Pieter Lieftnick of the World Bank, thought of irrigating it by gravity flow through the proposed "all-Pakistan grand canal" (APGC) passing through all the four provinces. 

The APGC originates from Chashma barrage and passes through the town of Sibi, a distance of about 416 miles. Balochistan is the biggest but least irrigated province of Pakistan. Its vast, fertile and excellent virgin land has been ignored though it can easily be irrigated by gravity flow from Chashma barrage. The water needed for the irrigation of the whole of Kachi plane by traditional method is about 14,500 cusecs. But if irrigated by sprinkler and drip methods, only about 5,000 cusecs would be needed. The APGC can be extended to the farthest nooks of Sindh. 

The APGC was not considered at the time of building the Chashma Right Bank Canal from Chashma barrage. Its preliminary feasibility report was prepared by this writer and presented to the Federal Government in 1961. Under the present circumstances, a new barrage on the downstream of Chashma barrage shall have to be built to divert huge discharge through the lined APGC. The water surface level of the Indus at Chashma barrage site is about 642. The barrage pond level to divert water is about 660. Nearly the same would be the position of the new barrage if Chashma barrage is not used for taking-off APGC on the Right Bank of the Indus. The elevation of Sibi town that is the highest tip of the Kachi plain is at 440. The Sibi Town is at a distance of about 416 miles from Chashma barrage. Therefore, gravity flow canal is feasible to irrigate the whole of Kachi plain. 

The Kachi plain tail at an elevation of 390 is some 20 miles upstream of the Kirthar branch and 28 miles upstream of Usta Mohammad. APGC would irrigate the whole of Kachi plain besides the area of upper Sindh. It can also command the area already irrigated by the Guddu barrage. Water from this canal can be provided to the Thar desert if water management is finally undertaken. The detailed feasibility of the APGC may be carried out to confirm this proposal. 

The APGC can be designed to the desired discharge ranging from 15,000 cusecs to 60,000 cusecs to irrigate new areas as well supply water to the areas already under the command of Guddu barrage. This can be an alternative and efficient route for the supply of water. This will be a short route via Balochistan to irrigate land in upper Sindh. Moreover, Sindh will not be able to use Balochistan water from Guddu barrage as is generally complained by Balochistan. 

The Kachi canal under construction is designed for a discharge of 5100 cusecs off-taking from Taunsa barrage. It would hardly irrigate about 0.3 million acres that comes to about one-tenth of the Kachi plain area of 3.5 million acres. The proposed APGC would irrigate 10 times more area than the canal under construction from the lower level at Taunsa barrage. 

The APGC would open the Right Bank areas of the Indus for rapid development. The Kachi plain would serve as the mini Indus basin. The Grand Canal will also have an excellent road along the canal from Chashma to Sui to Sibi and onward to Karachi. This will be the shortest route to Peshawar, Rawalpindi, Islamabad and to the rest of the country reducing distances by hundreds of miles. 

The APGC would bring revolutionary economic development in the country and shall serve as the major source of poverty alleviation and the major source of food and fruit production. It would alleviate poverty from the poorest areas of NWFP, Punjab, Balochistan and Sindh. This is a unique gravity flow irrigation scheme that would benefit all the four provinces.


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## Neo

KARACHI: Governor State Bank of Pakistan Dr Shamshad Akhtar on Wednesday expressed optimism that Dubai Islamic Bank will set standards for other Islamic banks to follow.

Inaugurating the bankÃ¢â¬â¢s cloth market branch, she said we have observed phenomenal growth in Islamic banking in a short period of time. Islamic banking has evolved as an institution to help achieve financial sector growth in a Muslim country like Pakistan.

According to press release of the bank, CEO, Dubai Islamic Bank, Saad Zaman welcoming the governor central bank said the Pakistani Islamic banking market has a high potential of growth owing to investment friendly policies of the government.

He said the central bank of the country has created a positive economic environment for business.

He said this is the second branch and during next 18 months 70 branches will be opened in Pakistan.


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## Neo

KARACHI: Bosicor Oil Pakistan Limited (BOPL), a recently established company, is setting up a crude oil refinery having initial capacity of 120,000 barrels per day on the coast of Balochistan. 

Being set up 45 kilometres from Karachi, it will cost Rs18.8 billion and is expected to start production by the end of year 2009, said a press release issued here. 

The refinery will consist of a crude distillation unit, a gas separation unit, naphtha hydro-treating unit, platform unit, diesel hydro-treating unit and a vacuum distillation unit.

Bosicor Pakistan Limited will be setting up 13,000 barrels per day Penex-Molex (Isomerisation) unit alongside its existing refinery in close vicinity to the new one. 

The unit will be used by both companies for conversion of light naphtha product pool into low benzene, environmentally friendly motor gasoline. 

The investment of Rs18.8 billion includes Rs7.2 billion of equity, Rs3.5 billion suppliersÃ¢â¬â¢ credit, Rs2.7 billion working capital, for all which company has firm commitments. Habib Bank Limited is mandated as sole lead underwriter and manager for remaining Rs5.4 billion


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## Neo

Currency basket for debt management proposed

By Azhar Mahmood

KARACHI: A joint report of the World Bank and International Monetary Fund has suggested to the Ministry of Finance to create a currency basket for managing external debt.

The two organisations have also asked the Government of Pakistan that in order to attain fiscal sustainability, Ã¢â¬Åcurrency risk of national debt must be controlled.Ã¢â¬Â

Sources in the Ministry of Finance disclosed the detailed report, submitted recently, pointed out the biggest risk that might arise from the debt portfolio was related to currency because 48 per cent of the public debt was in foreign currencies.

In the short term, they observed, there was limited room to mitigate the risk as macroeconomic and market development constraints lessened the potential for substituting foreign currency debt.

However, in the medium term, a gradual development of the domestic market for government securities was critical to allow for an increase in the share of domestic debt without trading foreign currency for interest and refinancing risks.

An expanded range of options to manage debt would emerge as a result of the marketÃ¢â¬â¢s increased capacity to absorb long-term fixed securities in Pak rupees, they said.

The World Bank and IMF further observed the government of Pakistan would greatly benefit from evaluating the impact of possible rupee depreciation on debt servicing costs. Ã¢â¬ÅA quantitative analysis (of public debt) will also help in developing a benchmark for the currency structure of external debt.Ã¢â¬Â

The currency benchmark for external debt, they said, should take into account the part of foreign currency reserves that could be used as a natural hedge, and proposed a currency basket for external debt aimed at reducing the volatility in debt servicing relative to government revenues.

They suggested to the government to conduct a historical analysis of the current debt portfolio and describe the evolution of public debt structure indicating key changes in relevant market variables and explaining significant events affecting the composition of debt portfolio.

Ã¢â¬ÅA risk analysis of the current debt portfolio may be conducted and it should cover interest rate and refinancing risks indicating how these risks could impact on the debt burden and the governmentÃ¢â¬â¢s ability to timely meet its official obligations,Ã¢â¬Â the report said.

They further asked the government to project future debt management, including fiscal and debt projections, assumptions about exchange and interest rates and constraints on portfolio choice, including the prospect of market development.

They called on the government to set out a strategy, specifying ranges for key risk indicators of the debt portfolio and financing programmes. The strategy should also describe measures or projects that were designed to support the development of debt market.


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## Owais

*Rs 104 billion subsidy for essential items availability: Musharraf* 

ISLAMABAD (July 21 2006): While strongly endorsing the government claim that the national economy was on the move, President General Pervez Musharraf on Thursday unveiled a multi-pronged strategy to address the issues of poverty, unemployment, price-hike and power shortage. In his televised address to the nation.

The president said the government's strategy to create employment for youth through development and industrialisation and bring poverty down has been a great success.

He said the price hike was the outcome of the growing economy, however, the government was taking various steps to protect the downtrodden section of society from its effects. He said the government would spend Rs 104 billion for subsidising the prices of essential items to ensure their availability to a common man at lower rates.

The president added that Utility Store Corporation's (USC) network has been expanded to union council level, besides outsourcing its outlet in far flung areas to ensure that the poor get all essential items at subsidised rates.

He said the poverty figures showing reduction from 34 to 24 percent were verified and authenticated by the international donors and experts. But, to him even the exiting poverty ratio was not ideal for Pakistan.

He asked the government to take all possible steps to improve its performance in this area. The president said the government was providing jobs in different departments such as police, education and others. However, he added, the credit of making substantial reduction in poverty goes to the industrial sector, which provided jobs to a large number of people in the past few years.

The president also unfolded a self-employment scheme and announced that the government will provide concessional loans to the youth for self-employment.

He said the new scheme would benefit 1.9 million people. He termed the budget 2006-07, as pro-poor and noted that a Rs 415 billion for Public Sector Development Programme (PSDP) will expedite development process across the country, besides creating hundreds of thousands new jobs.

He said that the new budget was of extra ordinary importance in many ways and keeping in mind its features the Opposition could not find any thing in it for criticising the government.

Pervez Musharraf said the government would implement a 3-pronged strategy to bring power crisis to an end. It comprised short, medium and long term programme. He said in short term Wapda and KESC will generate 300MW power from trailer-mounted thermal plants in next six to eight months.

This will be followed by medium term plant to generate 8600MW electricity between 2008 and 2010, from different resources including wind energy, hydel and other alternative resource.

In third phase, additional 19150MW power will be produced by 2015 to meet its growing demand. He directed Wapda and KESC authorities that they should advertise load shedding schedule in advance to inform the people.

He said Fata and Balochistan were two prioritised areas and they will get special development funds. He added that the government would establish Fata Development Board for implementing the development projects of billions of rupee on fast track.

The president also assured all-out financial support for development in Balochistan. He vowed that the government would establish its writ in Balochistan, besides continuing action against Bughti, Marri and Mangal sardars who were against the development in their respective areas.

The president also directed the provincial government to take action against those who fan terrorism and sectarian violence by misusing loud speakers facility.

*SUSPENSION OF PEACE PROCESS SUCCESS OF TERRORISTS *President General Pervez Musharraf has said that suspension of Pakistan-India peace process would be success of terrorists who do not want normal and co-operative relations between the two countries.

Addressing the nation, the President said that instead of levelling unsubstantiated charges, India should provide information about the terrorists and Pakistan, being a frontline state in the international war against terrorism, would fully cooperate in unearthing and punishing the criminals.

He said the people and the government of Pakistan strongly condemn these gruesome terrorist acts and sympathise with the bereaved families. "Pakistan itself is a victim of terrorism and fighting the enemies of humanity in and outside the country," he added.

He said that it would a defeat to the peace loving people of India and Pakistan if the two countries suspend their peace process to solve their outstanding disputes and differences by dialogue and peaceful means.

With regard to Afghanistan, the President said that after breaking network of al Qaeda, and eliminating 600 to 700 its activists in Pakistan, the government has shifted its focus on Taliban who have reorganised themselves in Southern Afghanistan under the leadership of Mullah Omar.

"Some elements of Taliban in the tribal areas of Pakistan cross the Pak-Afghan porous border and join the Afghan Taliban in anti-government activities; but we are determined to foil their nefarious designs," he added.

He said that in Pakistan, Taliban propagate the negative backward culture and force people not to see TV programmes, listen to music and grow beards.

He said the government has now adopted a new strategy under which efficient officers would be appointed as Political Agents in Fata, the dormant institution of Tribal Maliks would be reinvigorated and strengthened to play its effective role and a grand jirga would be organised to solve the local problems.

He said that the new NWFP Governor has been given free hand to take all necessary steps to bring life to normalcy and withdrawal of the army from the area.

With regard to the international scene, the President said that the entire world is in turmoil as Israel has now launched a big attack on Lebanon. He said that there are dangers of involvement of Syria and Iran in the conflict, which would have a direct bearing on our national security. The President said that Pakistan could ensure its national security through internal unity and its maintenance of military strength. He said that the government was meeting defence needs of the Army, Navy and the Air Force to thwart any challenge.

*AFP ADDS: *President warned that terrorist attacks in India, Taliban unrest in Afghanistan and the crisis in the Middle East all risked causing instability in Pakistan.

He appealed for a cease-fire in the Middle East, and warned that the crisis could destabilise Pakistan. "I appeal to the world and Israel to end this crisis, move towards a cease-fire and resolve through dialogue," he said. "The conflict could have an impact on Pakistan. We need to ensure our own security and it is the national solidarity, which will ensure the country's security," he said.


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## Owais

*Headline inflation falls to 7.6 percent in June: SBP* 

KARACHI (July 21 2006): The headline inflation has fallen to 7.6 percent year-on-year in June 2006 that was one percentage-point less than the inflation recorded in the corresponding month of last year, although inflationary pressures persisted in the economy for the second year in a row.

The inflation containment was more visible in the last six months of FY06 as compared to first six months (July 05 to December 05): the average CPI inflation during the first half of the year was 8.4 percent which declined to 7.4 percent in the second half primarily due to fall in food inflation.

The wholesale price inflation was nine percent in June 2006 which was lower than average inflation of more than 11 percent during the first six months of FY06, according to the State Bank's monthly publication titled 'Inflation Monitor'.

The Inflation Monitor for the month of June, 2006 which was released on SBP website today says that the CPI food inflation was recorded at 7.8 percent in June 2006 that was significantly lower than 9.3 percent in the corresponding month last year.

The Inflation Monitor finds that prices of some key food items like pulses and sugar started declining though they are still very high as compared to the same period last year. The non-food inflation was recorded at 7.5 percent during June 2006 against 8.4 percent in June 2005.

Core inflation was recorded at 6.3 percent in June 2006 compared with 7.4 percent in June 2005. Although core inflation declined steadily during FY06, it seems the rate of decline fell by the end of the year. Despite a declining trend in different measures of inflation, the inflation is still very high in comparison with the average of the past five years, according to the Inflation Monitor which gives an objective analysis of inflationary trends and reviews different aspects of price movements in the country.

Wage inflation increased significantly during June 2006 with average wages of construction workers (carpenters, masons, labourers, plumbers, and electricians) rising by 18.2 per cent in June 2006. The real wage inflation also remained on a rising path and was recorded at 10.6 percent in June 2006 compared with three percent in the corresponding month of last year, the Inflation Monitor added.


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## Owais

*IMF gives thumbs up to CRR and SLR increase* 

ISLAMABAD (July 21 2006): The International Monetary Fund (IMF) has appreciated the State Bank's (SBP) decision to raise cash reserve requirement (CRR) and statutory liquidity ratio (SLR), saying these measures would help the government address serious issues such as inflation and widening external current account deficit.

In a statement issued here on Thursday, the IMF resident representative for Pakistan said the SBP action would withdraw excess liquidity from the banking system and help moderate credit expansion next month. Regional chief Migul Sarastano will lead the review mission.

An official of the resident representative office in Pakistan told _Business Recorder_, under Article 4 the IMF consultation mission will commence annual review of Pakistan's economy from third week of August.

The mission will meet economic managers to review implementation pace of ongoing reforms programme in different key areas of the economy such as energy, banking, education and police.

It will also meet privatisation commission authorities, Central Board of Revenue, agriculture and other important ministries/divisions to review the progress in these areas during 2005-06. Under the article, the IMF can review economic growth and suggest measures for economic policy making. After having close association with the IMF, Pakistan walked out of its programmes. Since Pakistan is IMF's member, its Article 4 allows it for annual review of the country's economy.

An IMF consultation mission had taken annual review of Pakistan's economy last year and suggested various measures for improvement in different areas. These were: improvement of power producing and distribution system, cutting down if not complete ending of possible subsidy-based gas pricing system, removal of bottlenecks impeding growth of the industrial sector and divestment of public sector entities such as OGDC, PPL, PTCL and many others on fast track basis.

The mission will review progress in these specific sectors and give its point of view for result-oriented progress.


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## Neo

KARACHI (July 21 2006): Leaders of the business community appreciated the concern of President General Pervez Musharraf over street crimes and his resolve to reform the police service. Commenting on the President's address to the nation, Karachi Chamber of Commerce and Industry (KCCI) president Haroon Farooki said the President's address was very significant in regard to elimination of prevailing confusion about Balochistan situation.

There were so much confusion and a statement right from the top should clear any doubt. He hoped now the local and foreign media would see the Balochistan crisis in its real perspective instead of highlighting one side of the story.

He said the end to the prevailing confusion over such national issues would have a positive impact on the economy of the country and would encourage the foreign investors.

KCCI former president Siraj Kassam Teli said reforms in police service would bring about far-reaching effects on curbing and control ever rising street crimes.

Khalid Firoz, hailing the President's address, said political opponents of the present government should express their opinion but avoid opposition for the sake of opposition. Amjad Rafi said issues taken up by the President are very important for economic as well as political environment of the country.


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## Neo

RAWALPINDI (July 21 2006): A German company TPR Fiber would invest one billion euros in a joint venture with Union Group of Companies (UGCs)to set up oil rigs assembly and water pipe plant in Rawalpindi employing over 500 people.

This was stated by Michael Stutzil, head of TPR Fiber, here on Thursday while briefing the reporters about the details of the joint venture. Zulfiqar Ali and Aamir Shahzad of Union Group of Companies (UCGs)were also present.

"We would also install plant in Multan in second phase", Michael told reporters adding that local and international oil companies in Pakistan would also benefit from these projects.

He said that Oil and Gas Development Corporation Limited (OGDCL) would get international standard oil rigs at cheaper rates. This would save precious foreign exchange, he added. Speaking on the occasion, Zulfiqar Ali said that water pipe industry would help the government provide safe and clean drinking water to people.


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## Neo

KARACHI (July 21 2006): Bosicor Oil Pakistan Ltd, a private local firm, plans to build a 312 million dollars refinery in the country's south-west with a daily capacity of 180,000 barrels, the company said on Thursday.

Located about 45-kilometre (28 miles) west of Karachi on the coast of Balochistan, the refinery would initially have a capacity of 120,000 barrels per day (bpd), Bosicor said in a statement.

The project would be completed in two stages, with the first phase expected to be completed by 2009. "The first stage taking capacity to 145,000 bpd and the second stage taking the capacity to 180,000 bpd," it said. Bosicor already has a 30,000-bpd refinery in Balochistan.

The company estimated the cost of the project at 18.8 billion rupees, which includes 7.2 billion of equity, 3.5 billion rupees of suppliers' credits and 2.7 billion rupees of working capital. Bosicor has appointed Habib Bank Limited, the second-largest bank in Pakistan in terms of assets and deposits, as the lead underwriter.

Pakistan, almost totally dependent on oil imports, has an installed refining capacity of 12.82 million tonnes a year (just over 250,000 bpd) from its existing five refineries, but last year its refineries produced 11.33 million tonnes, official figures show. Pakistan consumes around 15 million tonnes of oil products annually.

The oil import bill for the 2005/06 fiscal year (July-June) exceeded 6.5 billion dollars, compared with 4.4 billion dollars in the previous fiscal year. Another oil plant, Indus Refinery, is being built in Karachi. It will have the capacity to process 4.2 million tonnes of crude oil a year (around 84,000 bpd), and will be completed by December 2007 at a cost of around 250 million dollars.


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## Neo

Friday, July 21, 2006 

By Tanveer Ahmed

KARACHI: Steady growth was noticed in upstream drilling activity, particularly exploratory drilling, in the 2005-06 fiscal year compared with the previous year, however it fell short of the whole year target to drill 101 wells.

Against a target of 101 drills for the last fiscal year, 64 wells were drilled including 33 exploratory and 31 development wells. Drilling activity increased by 36 percent over the drilling activity in the 2004-05 financial year when 47 wells, including 19 exploratory and 28 development wells were drilled, according to figures obtained by Daily Times on Thursday.

The Oil and Gas Development Company Ltd. (OGDCL) grabbed a major share of upstream drilling activity in the last fiscal year. Out of the 64 wells drilled during the year, 30 wells were those of the OGDCL. These include 23 exploratory and 7 development wells against the target of 33 exploratory and 22 development wells. The remainder was carried out by other players by drilling 34 wells including 10 exploratory and 24 development wells against the target of 18 and 24 exploratory and development wells respectively.

While drilling activities were found to be on the higher side in the last fiscal year, analysts of the oil and gas sector said the success rate was below the historical average. In the 2005-06 fiscal year, there were six oil and gas discoveries in the country from 33 exploratory wells, which were drilled during the same year. Ã¢â¬ÅThis translates into a success rate of 1:5.5 wells (out of 5.5 wells drilled, 1 discovery was achieved). This compares unfavorably with PakistanÃ¢â¬â¢s average historical success ratio of 1:3.4 wells or 29%,Ã¢â¬Â Faraz Farooq, an analyst at Jahangir Siddiqui Capital Market (JSCM) believed.

Out of the six oil and gas discoveries that occurred during the last fiscal year, 4 discoveries were made by the OGDCL namely Kunar Deep-1, Nim-1, Dars Deep-1 and Bahu-1, which translates into a success rate of 1:5.8 wells on the basis of the 23 exploratory wells drilled by OGDCL in the said year, the results of 15 wells is still being awaited, which will hopefully improve the success ratio. 

Although, PakistanÃ¢â¬â¢s rising energy demand presents an excellent opportunity to E&P companies to raise exploration activities and cater to growing energy needs and to realise the potential in their asset portfolio, analysts said that falling short of target in drilling activity might be attributed to various domestic and international reasons.

They said the volatile law and order situation in potential areas with oil and gas had resulted in setbacks and thus hindered the achievement of targets. The increasing cost of drilling equipment particularly due to high prices of rigs in the international market is another factor. Ã¢â¬ÅThe increase in exploration and drilling activities in various parts of the world are the main reasons for the high prices of drilling equipment and machinery as well as the increased demand for oil and gas experts in other countriesÃ¢â¬Â, Abdul Rashid, an analyst at Foundation Securities said.

He said that so far drilling activities had been confined to Pothohar and Indus area whereas the other main oil and gas potential areas like Balochistan and areas of NWFP near the tribal belt could not be accorded priority by E&P companies because of the uncertain law and order situation in these areas. Rashid said that in order to boost exploration and drilling activities especially in the gas sector, the issue of domestic gas prices is a major issue, which prevents oil and gas exploration companies from undertaking more projects. Ã¢â¬ÅIf the government considers any review on that side in future, it


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## Neo

ISLAMABAD: The demand for IT in the Middle East and Pakistan will increase at a compound annual growth rate (CAGR) of more than 16.9 per cent by 2009, says an international manpower demand survey conducted by the International Data Corporation (IDC), the worldÃ¢â¬â¢s leading technology media and research.

Unless the networking skills shortage is addressed urgently, in only three years demand for networking skills in Pakistan will exceed supply by 45 per cent in 2009 and there will be a shortage of more than 20,600 skilled people required to help drive economic growth, said Cisco Systems commissioned manpower demand survey for Networking Skills in the Middle East and Pakistan.

In contrast, findings from the same study, carried out across Western and Eastern Europe, expected an average networking skills gap of 11.8 per cent by 2008.

According to the survey, the situation becomes even more alarming when certain technology areas are singled out. For example, the shortfall between supply and demand in advanced networking technology skills (IP telephony, security and wireless) will be 53 per cent in 2009. Again, this is in contrast to findings from Western and Eastern Europe that showed an expected average advanced networking skills gap of 15.8 per cent by 2008.

This has led to the unprecedented demand for general and more advanced networking skills. Insufficient training programmes also compound the situation and increased recruitment from local markets accentuates the need to address the issue through local training schemes. There is also scope for Internet growth in Middle East and Pakistan. 

Overwhelmingly 99 per cent of respondents in the region indicated they mostly use the network for email and Internet access. They all indicated that the importance of the networking would increase in the future. The potential for network expansion is therefore very big, requiring significantly more skills to support such an expansion.

Investments in hardware equipment are expected to increase at a CAGR by 19.6 per cent until 2009, while investments in software products will rise by 11.2 per cent and IT services by 10.8 per cent.

To put this in perspective, the Middle East and Pakistan regions are expanding at more than twice the Western European CAGR of 5.8 per cent. The economies of the Middle East and Pakistan are clearly expanding at a very fast rate, and as a result investment in IT is increasing across the board, says the study.

While there are a number of regional initiatives currently underway in Pakistan to promote further training in science and technology, the forecasted gaps highlight the need for more work to be done to provide the right training courses and to encourage student enrolment.


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## Owais

BP Pakistan awarded three offshore blocks in Indus Delta 
*KARACHI *_(updated on: July 21, 2006, 17:48 PST_): BP Pakistan, formerly known as Union Texas Pakistan, on Friday announced that it has been awarded three offshore blocks in Indus Delta.

At a singing ceremony at the Ministry of Petroleum the President BP Pakistan Tariq Khamisani said BP will explore blocks U, V and W covering an area of 21,000 kilometres for oil and gas reserves, with the right to operate any commercially viable discoveries.

"The offshore Indus Delta is a very exciting prospect for us, with a geology that our experience tells us has a strong potential for containing hydrocarbons resources", he said.

He also said any natural gas finds will be used to meet growing demand in Pakistan, which enjoys a sizeable and growing domestic market and a comprehensive distribution infrastructure.


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## master_fx

tats a great news for pakistan!!


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## Neo

ISLAMABAD (updated on: July 21, 2006, 18:41 PST): President General Pervez Musharraf on Friday announced immediate upgradation of posts of Staff and Head Nurse to BPS 16 and 17 respectively and said several measures were being taken to bring about a qualitative improvement in the country's health care system.

The president made the announcement here at the First National Nursing Convention, fulfilling a long standing demand of the nursing profession.

The president directed the Higher Education Commission to set up a post-graduate National Nursing Institute in Islamabad. 

President Musharraf also asked the Ministry of Health to retain all unemployed nurses on a stipend and to provide 500 scholarships to nurses for higher studies, both within the country and abroad. He said the government was also working on a special programme to train 1000 master trainers.

The country's first ever nursing convention was attended by thousands of nurses, lady health visitors and midwives from across the country.

The president said the focus of the government's health strategy was on providing primary and secondary health care to provide medical attention to the needy at their door steps.

He particularly mentioned the pilot project launched in 12 districts of Punjab to provide improve primary health care and said after its success it would be replicated in rest of the country.

Under the package the Basic Health Units were being upgraded, with more staff, medicines and services besides a better pay package.

He pointed at the high child and mother mortality ratio in the country and said the government had a major task ahead to build a healthier nation. 

He said health and education sectors had been ignored in the past, but rectifying measures were being taken to improve the situation.

The president said there was a need to provide incentives to the people who join this noble profession and called for improvement of nursing schools and colleges.

"We need to build the capacity of our teaching institutions both qualitatively and quantitatively to meet the growing demand," the president said.

He said the major chunk of foreign remittances in Philippines were from the nursing profession. The same can be achieved by the Pakistani women who can contribute to the national economy by seeking higher education and training in the specialised field of nursing, the President added.

President Musharraf specifically lauded the role played by the medical profession in the aftermath of the Oct 8 earthquake that killed over 75,000 people and rendered as many seriously injured.

He urged the young nurses to excel in their profession by working devotedly and learning the required skills, including good English.

President Musharraf said only those nations prosper, who give due respect to their women and said the women would be given their due rights.

"It is my strong desire to see that the woman of Pakistan are able to stand on their own feet and are not dependent on others," he added.

Minister for Health Mohammad Nasir Khan said Pakistani medical professionals in the aftermath of the Oct 8 earthquake played a key role in warding off the dreaded second wave of death that was being predicted by all.

He said there was a need to motivate the people engaged in the nursing profession and the dignity and honour of those working in this field would be ensured.

In a presentation the president was informed that there were only 37,000 registered nurses for 160 million population.

The President also distributed awards and medals amongst the outstanding nurses.


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## Neo

ISLAMABAD (updated on: July 22, 2006, 02:35 PST): Pakistan's exports achieved growth with average rate of 16.45 percent per annum over the last four years owing to consistency in the government's policies leading to strengthening of economy.

According to official sources here on Friday, the sound macroeconomic policies coupled with wide-ranging structural reforms, particularly in the areas of trade and tariff in last seven years, helped Pakistan double its exports besides increasing trade-to-GDP ratio from close to 26 percent in 1999-2000 to estimated 34 percent in 2005-06.

The exports were targeted at $17 billion, which is 18.1 percent higher than last year. But owing due to different reasons it could not be achieved and the final figures showed a meagre shortfall of $500 million during FY 2005-06.

The final figures of last three quarters of 2005-06 showed exports of primary commodities up by 22 percent; prominent are rice (33.6 percent), fish and fish preparation (30.2 percent) and fruits (20.6 percent).

Exports of textile manufactures grew by 19.2 percent; prominent are bedware (58.4 percent), ready-made garments (31.0 percent), cotton yarn (29.4 percent), cotton cloth (16.5 percent) and towels (12.0 percent).

Exports of other manufactures also registered a high double digit growth of 19.2 percent. Within this category, exports of petroleum products grew by 80.8 percent and leather manufactures up by 44.0 percent.

The survey said in recent years, Pakistan also entered in the exports of engineering goods.

The overall exports posted an increase of $1890.23 million in the first nine months of the current fiscal year over the same period of last year.

Of this increase, 61.4 percent or $1160.5 million has come from textile manufactures.

Exports this year have been largely quantity driven and with firming up of the price of exportables, Pakistan's exports may rise substantially in the medium terms.

During the first nine months (July-March) of the current fiscal year, over 88 percent increase in exports are driven by quantity (quantity effect) and the remaining 12 percent are due to the increase in unit values of exports.

The monthly exports for the period July-Mar, 2005-06 remained consistently above the corresponding months of last year, averaging $1341.4 million per month as against an average of $1131.4 million last year.

Pakistan's exports are highly concentrated in few items namely, cotton, leather, rice, synthetic textiles and sports goods. These five categories of exports account for 74.5 percent of total exports during the first nine months of 2005-06 with Cotton manufacturers alone contributing 58.4 percent.


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## Neo

KARACHI (July 22 2006): The Wapda is the main impediment in the way of setting up coal-fired power plants in Sindh, as it is avoiding to offer fair tariff due the pressure of some influential quarters in the centre, who do not want Sindh coal to be utilised by the Sindh Coal Authority (SCA).

These pressure groups want to remove SCA and replace it with the Federal Coal Authority (FCA) to deprive provincial government of its legal rights vis-ÃÂ -vis royalty, sources told Business Recorder.

Since the inception of the SCA in 1992, the project could not materialise only due to the stubbornness of Wapda, sources added. Because of Wapda's reluctance to offer fair tariff, has put the plans of M/s. Shenhua Group from China on hold. The group had planned to set up a 600MW power plant at an estimated cost of US $500 million in Thar, sources said. Wapda had offered 5.7 cents power per unit, which the Chinese are contesting.

Their stands is that since Wapda is paying eight to 13 cents per unit to gas-based, diesel based and fuel oil-based IPPs, it should increase the tariff for electricity produced by the coal-fired power plants. So far, Wapda has not responded to their demand.

The sources said that why should a company set up a $500 million plant when it has no surety of getting a good rate of return on its investment.

The source, however, expressed full confidence in General Musharraf and said that he is keen to utilise coal reserves of Sindh for the production of energy in the country and the province would not be deprived of its due right.

The issue was to be taken up at sites: Thar 175 billion tonnes, Lakhra 1.32 billion tonnes, Sonda-Jherruk 7.112 billion tonnes, Metting-Thatta 0.161 billion tonnes, and Badin 0.061 billion tonnes.

The Thar coalfield extends over an area of 9,000 sqkm out of which 356 sqkm has been studied in detail by the Geological Survey of Pakistan, proving nine billion tonnes coal in four blocks. The source said the moisture found in the coal at the Thar coalfield is 46.77 percent and heating value 5.774 percent (Btu) but when dried, its heating value jumps to 10.8 percent (Btu) making it the best coal in the world.

So is the case with Lakhra coalfield in Dadu district. Which covers approximately an area of about 1300 sqkm. It is well connected with Karachi and Hyderabad through roads and railway. Average annual production of coal from Lakhra is over one million tonnes. The Sonda-Jherruck coalfield is estimated to have a reserve of over seven billion tonnes lignite quality coal.

Several countries are producing electricity from coal while having world's fourth largest reserves Pakistan was far behind to cash in on coal for its power demands. The United States generates 52 percent electricity from coal, the United Kingdom 58 percent, Australia 77 percent, Germany 52.5 percent even India produces 77 percent power from coal while having enough reserves Pakistan could not even produce one percent from coal, the sources quoted figures to base the argument on.

Pakistan, at present is heavily dependent on power plants using gas and furnace oil, the sources said and added, gas is depleting at a fast rate and furnace oil cost the country a huge amount of foreign exchange while coal is the cheapest source available in the country. Realising coal's worth the government has signed six MoUs with different local and international companies but again WAPDA has not started work on the 500kv-transmission line that the government desperately needs to develop coal-fired power plants in Tharparker, the sources said.

Sizeable quantities of granite have been found in Nagarparkar area and efforts are under way for its exploration and exploitation, the sources pointed out.

The sources also explained that the infrastructure facilities such as roads, housing, potable water, electricity and telephone have been made available in Thar area, which will facilitate investors to carry out development activities expeditiously.


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## Neo

KARACHI (July 22 2006): MCB Bank Ltd is expected to sell $150 million worth Global Depository Receipts (GDRs) aimed at raising capital to either acquire new bank or expand its services in the country.

MCB Bank Ltd, formerly known as Muslim Commercial Bank, said in a statement to the Karachi Stock Exchange that it would seek shareholders' approval, on August 15, for the above-mentioned sale, first overseas move by a Pakistani lender. Pakistani banks need funds to meet demand for credit in an economy that Prime Minister Shaukat Aziz says will expand at an annual pace of as much as 8 percent over the next five years.

MCB Bank's share sale will draw investors in Karachi, said Mohammad Sohail, director of research at Jahangir Siddiqui Capital Markets Ltd. The sale of Global Depository Receipts "will open a new window for foreign investors,' Sohail said. Investors will have a chance of buying into Pakistan's "booming banking sector".'

MCB Bank plans to sell the GDRs between September and December, said a banking source. The lender may consider buying a small local bank or plan to expand its domestic and overseas branch network to propel growth in deposits and loans, he said.

The bank has hired Merrill Lynch & Co and KASB Securities Ltd to help sell the shares. The global depository receipts will be listed on the London Stock Exchange.

It would be the first sale of global depository receipts by a Pakistani company since 1995, when Chakwal Cement Co raised $100 million overseas. Pakistan Telecommunication Co, nation's biggest phone services provider, raised $898 million in 1994. Oil & Gas Development Co, Pakistan's biggest explorer, also plans to sell as much as 15 percent stake through global depository receipts by September 30.


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## Neo

ISLAMABAD (July 22 2006): Commerce Minister Humayun Akhtar and Foreign Ministers of Mercosur trade bloc comprising Argentina, Brazil, Paraguay and Uruguay, on Friday signed framework agreement on trade. With the signing of the agreement, Pakistan and Mercosur member states would initiate the process of negotiations to conclude a Preferential Trade Agreement (PTA), which would ultimately lead to Free Trade Agreement (FTA).

The volume of trade among Pakistan and members associate members of Mercosur, which is currently hovering around $250 million per annum, is bound to increase. The signing ceremony was part of the bi-annual Mercosur Summit.

Addressing the gathering of the Ministers and senior officials of the member and associate countries of Mercosur, Humayun highlighted Pakistan's achievements in the economic field, which have transformed it into a hub of trade with South and Central Asia.

Recalling that the idea of a FTA with Mercosur was part of President Musharraf's Latin America initiative, presented during his visit in 2004, the Commerce Minister underscored the importance of giving substance to the traditionally cordial relations between Pakistan and Mercosur countries. He referred to Pakistan's similar trade initiatives with Sri Lanka, China, Malaysia and Singapore and said that the agreement with Mercosur would further strengthen the South-South relations.

Earlier, Foreign Minister of Argentina, chairing the ministerial meeting, welcomed Pakistan's institutionalised association with the bloc. He paid rich tribute to Pakistan's significant contribution to the world economy and its role in addressing the international trade issues.

Humayun also held bilateral meetings with Foreign Ministers of Mexico and Peru and Argentina's Vice Minister for International Trade and Economic Relations. Ways to enhance bilateral economic and commercial relations and international issues of mutual interest were also discussed.


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## Neo

ISLAMABAD (July 22 2006): The government has decided to establish a 'Green Fund' of Rs 5 billion to encourage replacement of diesel buses and wagons by compressed natural gas (CNG) vehicles, sources in Petroleum Ministry told Business Recorder.

They said that the Ministry was also in the process of finalising action plan to encourage use of ethanol as fuel in vehicles, which would be submitted to the Prime Minister for approval in a couple of days. They said that the Cabinet had approved the proposal pertaining to replacement of diesel buses by CNG buses in its previous meeting, but had withheld the proposed incentives package until it was cleared by the State Bank.

An inter-provincial committee had recommended that to facilitate introduction of CNG buses, the government should incentives the scheme through fully or partially picking up interest on bank loans taken by prospective buyers of dedicated CNG buses/minibuses/wagons.

It was also suggested that the State Bank of Pakistan (SBP) may encourage the commercial banks to establish credit lines for procurement of CNG buses, minibuses or wagons and for setting up their manufacturing facilities in the country.

Sources said the Cabinet had approved the recommendations of the Petroleum Ministry but, with regard to incentives, it was decided that these should be finalised in consultation with the SBP and other stakeholders for which the Finance Ministry would co-ordinate with the federal and provincial governments.

According to sources, some Cabinet members were not satisfied with CNG price fixation procedure being implemented by the Oil and Gas Regulatory Authority (Ogra), and said that the regulatory body should ensure that any increase in the price of CNG should be strictly in proportion to increase in the price of natural gas.

Sources said that CNG equipment manufacturers and other investors would be motivated to explore the possibilities of technology transfer by setting up joint ventures with foreign manufacturers of CNG cylinders and compressors.

Testing facilities for CNG equipment would be fully developed at Hydrocarbon Development Institute of Pakistan (HDIP) at par with international quality standards.


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## Neo

ISLAMABAD (July 22 2006): First Gulf Bank (FGB) and National Bank of Abu Dhabi (NBAD) from the UAE will enter Pakistan's banking sector as they have approached the State Bank for licence to launch their services in Pakistan.

According to Khaleej Times, the two Abu Dhabi-based banks will begin operations in Pakistan as soon as the State Bank of Pakistan (SBP) completes the licensing procedures." "First Gulf Bank will operate in Pakistan under the name of First Gulf Commercial Bank while National Bank of Abu Dhabi (NBAD) will keep its original identity.

Already two Abu-Dhabi banks - Bank Al Falah and United Bank - which were acquired by the Abu Dhabi Group under Pakistan government's privatisation scheme, are operating here. Moreover, Dubai Islamic Bank was also operating in Pakistan and will increase the number of its branches from two to 72 soon. There are currently around 40 banks operating in Pakistan.


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## Neo

KARACHI (July 22 2006): The Kuwaiti Consul General at Karachi, Hasan Bbadar Al-Iqab, accompanied by a delegation of private sector Kuwaiti investors met City Nazim, Mustafa Kamal and showed interest for making investment in Karachi. DCO Karachi Fazlur Rehman and EDO Revenue Saleh Farooqi were also present in the meeting.

Talking to the delegation Kamal referred to availability of vast investment opportunities and informed that various countries were investing in different sectors here. He told the delegation that long-term plans were being worked out for Karachi, which, he said, was a manifestation of availability of a conducive investment climate here.

In the past, he pointed out, conspiracies were hatched to mar the image of Karachi so as to stall foreign investment flow and to weaken Pakistan's economy as a result. He said, Karachi has been made a heaven for foreign investors to induce them to come and establish business here for which they will be provided all guarantees. Mustafa Kamal said Pakistan would progress when Karachi will progress and development of Pakistan will ensure the development of its people.

He apprised the Consul General about Pakistan's tallest IT Tower and Call Center project and the agreement concluded with the consortium of Malaysian MM, Indian and Dubai companies and projects like elevated expressway.


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## Neo

LAHORE (July 22 2006): The government has decided to award contract to a German firm to prepare a feasibility report for laying of railway track from Havelian to Chinese border. Federal Railways Minister Sheikh Rashid stated this while addressing a press conference, here on Friday.

To a question, the minister averred that no action would be taken against protesting station masters; however, no body will be allowed to carry out any political activity in railways.

He further said that Rs 0.6 million penalty was being charged daily from offenders who do not buy tickets and travel unauthorised on trains. He said legislation was being made to give 48 hours imprisonment to a person not paying rail fares.

To another question, he said that track was being doubled to run a bullet train at the speed of 250km per-hour between Rawalpindi and Lahore. He said offers in this connection had been sought.

Talking about increase in bogies of Thar Express, he said the governments of India and Pakistan would take decision in this regard.

He said that the government had planned to run a train named 'Alexander' for the purpose of serving tourists. He added that Germany was willing to lease out 15 engines to Pakistan for a period of one-year. He said the government intended to make five locomotive engines in the country on annual basis. He further said that Punjab Chief Minister Pervaiz Elahi would inaugurate Punjab Express from provincial capital on July 24, 2006, while Sindh Express would also start operation, he added.


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## Neo

ISLAMABAD (July 22 2006): An ambitious plan has been evolved to enhance the exports of engineering products to $10 billion from $540 million within next four years, Engineering Development Board (EDB) Chairman Waseem Haqqi said on Friday. Talking to private TV channel, he said exports target of this year has been fixed at $750 million. It will be enhanced to $01 billion within next two years.

The major chunk of engineering products were exported to Afghanistan, USA, Dubai, UK and Germany. Exports to UAE and Saudi Arabia has also been initiated recently. Around 8,000 to 10,000 motorcycles have also been exported to Bangladesh, Nigeria and Sri Lanka. 2,500 tractors have been exported to Afghanistan, South Africa and Nigeria.

He said the country attracted around $3.520 billion as foreign direct investment (FDI) during this year including $1.6 billion through privatisation of PTCL, Habib Bank and KESC. The net FDI remained at $1.9 billion during the last year.

While motorcycle production has been increased to 800,000 from 150,000 within three to four years. Television production has been enhanced up to one million from 125,000, he said.


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## Neo

WASHINGTON, July 21: Pakistan has proposed a $1.3 billion 10-year education plan to the US to help improve the quality of higher education in the country and to promote science and technology.

This envisages an investment of $130 million each year, $90 million by the US and $40 million by Pakistan.

Ã¢â¬ÅWe are hopeful that this plan will be accepted,Ã¢â¬Â Higher Education Commission chairman Dr Attaur Rehman told a briefing.

Dr Rehman, who was here to attend the first meeting of the Pakistan-US joint committee on science and technology, said the plan involved setting up centres of excellence in Pakistan and training of Pakistani scientists and engineers in the US. The centres will be established in Karachi, Lahore, Faisalabad, Islamabad and in the NWFP.


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## Neo

Saturday, July 22, 2006 

KARACHI: The indigenous supply of oil and gas in the country posted an increase of four percent in the first 11 months of financial year 2005-06.

The domestic oil and gas production in this period stood at 680kboepd (thousand barrels of oil equivalent per day) compared with Jul-May FY05 production of 656kboepd, according to figures complied by the Pakistan Petroleum Information Services (PPIS). The data suggests that indigenous gas supply has increased by 4.3 percent to 3.8bcfpd (billion cubic feet per day) against 3.7bcfpd previously. Increase in gas production mainly arrived from optimum production from existing fields. Domestic production of oil remained flat, showing a marginal decline of 1.4 percent to 65.4kbpd against 66.3kbpd previously.


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## Neo

KARACHI: The Karachi Electric Supply Corporation is not resorting to load shedding in the industrial areas of Karachi despite the serious crisis the city is facing said Jamil Gul, Division Director, Customer Service KESC during a meeting with Akbar Abdullah, Vice-President, FPCCI at Federation House.

He said that if there is any power breakdown in any industrial area or factory it may be due to some fault in the respective grid station, but not due to load-shedding.

Gul further said that KESC has re-organised Customer Service Centre by increasing its strength in manpower and telephones to attend to the public complaints about power breakdowns.

He said that KESC has started a pilot project to check ÃÂ«Kunda SystemÃÂ­ or illegal electric connections in Karachi. Under the project the electric cables are being replaced with aerial bundle cables from which it will be difficult to put Kunda.

He said that the new management of KESC has placed order for 800 MW power generators, which will be received and installed by the end of 2007 and hoped that this will ease the power shortage to a great extent.


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## Owais

Neo said:


> KARACHI (July 22 2006): The Wapda is the main impediment in the way of setting up coal-fired power plants in Sindh, as it is avoiding to offer fair tariff due the pressure of some influential quarters in the centre, who do not want Sindh coal to be utilised by the Sindh Coal Authority (SCA).
> 
> These pressure groups want to remove SCA and replace it with the Federal Coal Authority (FCA) to deprive provincial government of its legal rights vis-ÃÂ -vis royalty, sources told Business Recorder.
> 
> Since the inception of the SCA in 1992, the project could not materialise only due to the stubbornness of Wapda, sources added. Because of Wapda's reluctance to offer fair tariff, has put the plans of M/s. Shenhua Group from China on hold. The group had planned to set up a 600MW power plant at an estimated cost of US $500 million in Thar, sources said. Wapda had offered 5.7 cents power per unit, which the Chinese are contesting.
> 
> Their stands is that since Wapda is paying eight to 13 cents per unit to gas-based, diesel based and fuel oil-based IPPs, it should increase the tariff for electricity produced by the coal-fired power plants. So far, Wapda has not responded to their demand.
> 
> The sources said that why should a company set up a $500 million plant when it has no surety of getting a good rate of return on its investment.
> 
> The source, however, expressed full confidence in General Musharraf and said that he is keen to utilise coal reserves of Sindh for the production of energy in the country and the province would not be deprived of its due right.
> 
> The issue was to be taken up at sites: Thar 175 billion tonnes, Lakhra 1.32 billion tonnes, Sonda-Jherruk 7.112 billion tonnes, Metting-Thatta 0.161 billion tonnes, and Badin 0.061 billion tonnes.
> 
> The Thar coalfield extends over an area of 9,000 sqkm out of which 356 sqkm has been studied in detail by the Geological Survey of Pakistan, proving nine billion tonnes coal in four blocks. The source said the moisture found in the coal at the Thar coalfield is 46.77 percent and heating value 5.774 percent (Btu) but when dried, its heating value jumps to 10.8 percent (Btu) making it the best coal in the world.
> 
> So is the case with Lakhra coalfield in Dadu district. Which covers approximately an area of about 1300 sqkm. It is well connected with Karachi and Hyderabad through roads and railway. Average annual production of coal from Lakhra is over one million tonnes. The Sonda-Jherruck coalfield is estimated to have a reserve of over seven billion tonnes lignite quality coal.
> 
> Several countries are producing electricity from coal while having world's fourth largest reserves Pakistan was far behind to cash in on coal for its power demands. The United States generates 52 percent electricity from coal, the United Kingdom 58 percent, Australia 77 percent, Germany 52.5 percent even India produces 77 percent power from coal while having enough reserves Pakistan could not even produce one percent from coal, the sources quoted figures to base the argument on.
> 
> Pakistan, at present is heavily dependent on power plants using gas and furnace oil, the sources said and added, gas is depleting at a fast rate and furnace oil cost the country a huge amount of foreign exchange while coal is the cheapest source available in the country. Realising coal's worth the government has signed six MoUs with different local and international companies but again WAPDA has not started work on the 500kv-transmission line that the government desperately needs to develop coal-fired power plants in Tharparker, the sources said.
> 
> Sizeable quantities of granite have been found in Nagarparkar area and efforts are under way for its exploration and exploitation, the sources pointed out.
> 
> The sources also explained that the infrastructure facilities such as roads, housing, potable water, electricity and telephone have been made available in Thar area, which will facilitate investors to carry out development activities expeditiously.


 
That Corrupt Damn Beaurucracy!!


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## Owais

*BP to explore offshore blocks for oil, gas reserves * ISLAMABAD: British Petroleum announced on Friday it has signed an agreement with the Ministry of Petroleum, accoriding to which the company will explore blocks of offshore Indus Delta, covering an area of 21,000 km for oil and gas reserves, with the right to operate any commercially viable discoveries.

"The offshore Indus Delta is a very exciting prospect for us, with a geology that our experience tells us has a strong potential for containing hydrocarbons resources," explained Tariq Khamisani, President, BP Pakistan.

Any natural gas finds will be used to meet growing demand in Pakistan, which enjoys a sizeable and growing domestic market and a comprehensive distribution infrastructure.

British Petroleum is one of the largest foreign investors in Pakistan and currently producing 22% of the country's oil and 6% of its gas. 

The company operates the Badin and Mehran Concessions in a joint venture with Oil and Gas Development Company Limited, Occidental Petroleum (Pakistan) Inc., and Government Holdings Private Limited.


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## Neo

*RAWALPINDI *_(updated on: July 23, 2006, 02:10 PST_): President General Pervez Musharraf on Saturday underscored the need for making the education curricula in the country in conformity with the advancements in modern-day science and technology.

The president made these remarks at a meeting here to review the draft curricula of major subjects from classes one to twelve.


The Federal Minister for Education, Lt Gen (Retired) Javed Ashraf Qazi briefed the president in detail about the salient features of the revised curricula.

The president said it was also important that the presentation of the subjects be made interesting and special care be exercised so that revised text are free from all sorts of syntax, typographical and other errors.

The education minister said that a team of experts had revised the major compulsory subjects.

He said the revised curricula would be sent to the provinces for their comments after which it would be finalised.


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## Neo

Bio-gas plant under study

By Fasahat Mohiuddin

KARACHI: The city has been facing acute power shortages these days and continued load-shedding has made life miserable for citizens. Under these circumstances, one should look for some alternate source of power, which should come through local resources.

City Nazim Mustafa Kamal is considering installing a Ã¢â¬Ëbio-gasÃ¢â¬â¢ plant in Cattle Colony, Landhi, where tons of buffalo manure is generated daily and is just drained in nullas.

Some New Zealand and US firms have started doing surveys in the Cattle Colony for installing a bio-gas plant in order to generate electricity through animal waste.

It is high time that some cheap source of electricity is found, so that power can be supplied to Karachi residents without any interruption. 

Natural gas currently accounts for more than 50 per cent of the countryÃ¢â¬â¢s primary energy supplies. With accelerating economic growth, the demand for gas is increasing sharply while the existing recoverable gas reserves are either declining or are incapable of meeting the rising demand. Hence, the country will face acute gas-energy shortages in the near future.Ã¢â¬Â 

In order to overcome the projected shortfall, energy experts have recommended the use of imported Liquefied Natural Gas up to 2010 and beyond. Facilitating the LNG importing companies, the government has granted a 10-year complete tax and duty holiday on the import of LNG.

The government also expects to meet further shortages through cross-border gas imports by laying transnational pipelines from Iran, Turkmenistan and Qatar.Ã¢â¬Â 

Besides these measures, the country needs to look for alternative energy sources such as bio-gas, wind power and solar energy to substitute natural gas.

Among these options, the most appropriate is said to be bio-gas, which can easily replace natural gas and can be generated from a variety of bio-mass material that is easily available all around Karachi.

The primary sources of bio-gas are buffalo dung, municipal solid waste and sewage sludge. The process of conversion to bio-gas is simple and yields a gaseous product consisting of 55-60 per cent methane and the remaining carbon-dioxide gas.

The heating value of bio-gas is approximately 600-800 btu/ft3. Bio-gas of this quality can be used to generate electricity and may also be used as fuel for steam boilers, space heaters and refrigeration equipment. Bio-gas is also combustible which can be used in cooking.

Last but not the least, bio-gas can be used in vehicles as fuel. Bio-gas production is possible virtually in every city and village of the country.

Electricity can be generated from bio-gas for on-farm use or for sale to the local electric power grid. The most common technology for generating electricity is an internal combustion engine with a generator.

In order to implement measures for replacing natural gas with renewable energy sources, ATCO International Inc, a Texas-based company owned by a Pakistani, has already begun a feasibility study on buffalo manure-based bio-gas plant to be located at Cattle Colony, Landhi. The 500,000 cattle heads in the area produce 5,000 metric tons of dung every day.

The buffalo manure emits large quantities of methane, carbon-dioxide and hydrogen sulfide into the atmosphere. This pollutes the air and atmosphere around Cattle Colony where pollution level has exceeded those laid down by NEQS (National Environmental Quality Standards).

Urgent action is required to tackle this problem because Pakistan is one of the earliest signatories to the Kyoto Protocol, which makes it necessary for the country to reduce the quantum of green house gases to levels laid down by the protocol dealing with climate change.

How is bio-gas made: Bio-gas is produced by anaerobic (in absence of oxygen) decomposition of organic matter (cattle dung). Decomposition of cattle dung is carried out by bacteria in two phases: In the first phase, bacteria decompose organic matter ie proteins and fats to form acidic compounds. In the second phase, methane-forming bacteria further decompose these acidic compounds to produce methane (CH4), carbon-dioxide (CO2), water vapours (H2O), ammonia (NH3) and hydrogen sulfide (H2S).

The smell and odour in animal dung comes from the emission of ammonia and hydrogen sulfide while all other components of bio-gas ie methane and carbon-dioxide are absolutely odourless and tasteless.

Methane produced from cattle dung can be recovered in a bio-gas plant and used for power generation. This will not only help meet power shortage but will also help in reducing green house gas emissions.

Pakistan has one of the worldÃ¢â¬â¢s largest animal populations. According to an estimate, around 1 million cattle are present in three different locations of Karachi. Brief data analysis shows that a 38MW power plant can be installed by using cow dung.


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## Neo

WASHINGTON: America will provide support to Pakistan to improve its trade sector, aimed at training the experts in Quality and Control and Standard sector, sources said Saturday.

This accord was reached in Pak-American negotiations on science and technology sector.

During the dialogue between chairman Higher Education Commission Dr. Ataur Rehman and US officials, America also assured scientists of its support for research and training in Pakistani educational institutions.

Both the countries also agreed upon the exchange of educationists and interaction between the centres of excellence of the both countries.

In biotechnology and water management sectors, Pakistan and America will finalise the bilateral memorandum of agreement for cooperation.

During the negotiations, chairman Higher Education Commission Dr. Ataur Rehman identified for cooperation the sectors of engineering and technology, agriculture, medical and higher education. 

The US delegation assured their counterparts to consider Pakistani proposals for cooperation in the science and technology sector.

The next round of dialogue will be held in Pakistan during the current year in October. Besides, in the beginning of next year in Washington, special session of joint committee for science and technology will be held. Which would be attended by heads of all eminent science and research institutions of America as well as individuals from the private sectors.


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## Neo

ISLAMABAD (July 23 2006): The Sensitive Price Indicator (SPI) year-on-year of 53 essential daily use items for week ending on July 20 has shown 8.55 percent increase as compared to corresponding week of last year. However, according to Federal Bureau of Statistics (FBS) bulletin, the SPI of this week remained unchanged as compared to last week.

The weekly bulletin of FBS shows that year-on-year, the rise in the prices of some necessities and kitchen items including sugar, gur, pulses, potatoes, curd, salt, tea, milk fresh, beef, diesel, petrol, gas, kerosene oil, LPG, and firewood, which directly hit the low-income group, had been excessive.

The bulletin on SPI, based on data of 53 items from 17 urban centres, showed that 21 items registered marginal increase, and 5 items showed decline, while prices of 27 items remained unchanged with reference to last week's prices.

However, further analysis of the data showed that year-on-year basis, 20 items show double-digit increase. These included gram pulse (washed) 29 percent, moong pulse (washed) 50 percent, mash pulse (washed) 67 percent, gur 22 percent, sugar 24 percent, curd near 10 percent, tomatoes 67 percent, potatoes 10 percent, mutton 15 percent, beef 13 percent, chicken farm 20 percent, fresh milk 10 percent, salt powdered 18 percent, match box 10 percent, firewood 23 percent, petrol 18 percent, diesel 22 percent, LPG 42 percent, kerosene 19 percent, and gas increased by almost 20 percent.

The FBS figures further showed that though the prices of 27 items posted no change during the week, several items were costlier when compared to the corresponding week of last year. For example, diesel 22 percent, petrol 18 percent, gas 20 percent, salt powdered 18 percent, kerosene 18 percent, firewood 23 percent, tea (packet) 7 percent and beef by 13 percent.

The bulletin further indicates that though the prices of 5 items decreased from last week, still they were on the higher side compared to last year's figures. Tomatoes, which decreased by 18 percent from last week were dearer by 67 percent, potatoes 10 percent, and LPG (11 kg cylinder) by 42 percent from last year's corresponding week, whereas masoor washed and eggs were substantially low by 10 and 35 percent, respectively, from last year.

According to this week's FBS report, for people in lowest income group of up to Rs 3000, the SPI was 8.9 percent, Rs 3001 to 5000 (8.54 percent), Rs 5001 to 12000 (8.75 percent), whereas for above Rs 12000 income group, it was 9.93 percent. The average SPI was 8.55 percent for the corresponding week of last year as compared to 8.83 shown this week.

The progression of SPI for the past few years 2003-04, 2004-05, and 2005-06 shows continuous increase ie 114.38, 127.59 and 136.56, respectively.

The bulletin also shows that cement prices were showing 2.56 percent increase from corresponding week of last year has fallen by 2.23 percent as compared to last week's prices, which is Rs 285.50 per bag. Karachi was observing maximum price of Rs 300, whereas Multan minimum Rs 275 per bag.


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## Neo

LAHORE (July 23 2006): German Ambassador Dr Gunter Mulack termed the city of Lahore as an important city having important historical and cultural bearing, and said there was a large potential for investment in the province. He said this during a meeting with Punjab Chief Minister Chaudhry Pervaiz Elahi here on Friday.

While talking to German Ambassador, the CM said trade relations between Germany and Pakistan were based on solid footings and would be cemented further in the times to come.

Speaking on the occasion, Elahi said that 150,000 samplings were being planted in the city during the current monsoon, adding the provincial government was implementing a master plan to check pollution.


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## Neo

ISLAMABAD (July 23 2006): Poverty in the country has declined sharply to 23.90 percent from 34.46 percent during the last four years due to prudent policies of the government, Adviser to the Finance Ministry Dr Ashfaq Hassan Khan said.

Talking to a private TV channel he said international organisations like World Bank and United Nations Development Programme (UNDP) has validated it in their recent reports.

He said the increased buying powers in rural areas showed that the poverty in rural areas has registered declining trend, as the increase in support price of wheat, cotton etc has enhanced their buying power. Tractor production has also registered tremendous increase. It forced the government to allow duty-free import of tractor to meet the growing demands.

Living standard of common man also increased due to the presence of more than 34 million mobile telephones in the country. Per capita income in the country has also increased to $847 from $438.


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## Neo

LAHORE (July 23 2006): With a view to providing essential items to people at reasonable rates, the government has asked the Utility Stores Corporation (USC) to open over 100 outlets of utility stores across the country by the end of the current month.

Sources in the USC told Business Recorder, here on Saturday that pursuant to directions of the government the number of Utility Stores would be enhanced up to 1,000 from existing 560 by the end of current calendar year.

According to sources, the government has asked the high-ups of Utility Stores Corporation (USC) to evolve a comprehensive strategy for ensuring provision of essential commodities at each union council level on low rates.

The USC management is working on a comprehensive plan to expand the network of utility stores at all the 6,279 union councils. The USC has planned to extend loaning facility under proposed 'Rozgar Pakistan Scheme' to open franchised and static stores at the union council level, the sources added.

According to them, the Utility Stores at Tehsil level would work as distribution centres for mobile franchised stores, while distribution centres would supply essential commodities to static stores. The infrastructure of USC would be completed within a period of six months, while franchised and other schemes would be completed in three phases. Educated youth would also be involved in the expansion programme.

The sources further said that the number of distribution centres of utility stores has already been increased up to 20 from 12 while 10 more distribution centres would be opened in far-flung areas of the country including Gwadar, Khuzdar, Quetta, Nawab Shah, Dera Ghazi Khan and Bahawalpur.


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## Neo

KARACHI (July 23 2006): China has shown keen interest in various development projects of Karachi Port Trust (KPT). The projects includes, construction of Pakistan Deep Water Container Projects and Cargo Village to be constructed at the Western Backwaters as an off dock facility.

In a statement issued here on Saturday, a Chinese delegation led by Gou Husheng, Vice President and Chief Economist of China International Engineering Consulting Corporation (CIECC), also accompanying Zhao Qingmao, Commercial Counsellor, Economic Commercial Office of the Consulate General of China, visited the KPT head office to explore investment opportunities. Husheng said that he was impressed with the vision of Karachi Port and its numerous development projects.


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## Neo

QUETTA, July 22: Balochistan Chief Minister Jam Mohammad Yousuf has said that the provincial government cannot complete work on its projects because of lack of funds and Prime Minister Shaukat Aziz will be requested for grant for the purpose.

Speaking at a briefing of the communication and works department on Saturday, he directed the departments concerned to prepare a report to be presented to the prime minister.

He said the provincial government had launched the projects from its resources but funds from the centre were needed for their completion.

He expressed the hope that the federal government would cooperate and ensure completion of the work.

He said the projects of Quetta College of Arts, College of Home Economics and Culture Complex had been planned to provide facilities to students near their homes.

During his visit to the GirlsÃ¢â¬â¢ Intermediate College, Brewery Road, the chief minister announced that it would be upgraded to degree level and directed the education department to appoint teaching staff in the institution.

LOCAL GOVTS: Balochistan Chief Secretary K. B. Rind, speaking to town and tehsil nazims here at the district council hall, said the government would take steps to redress their complaints.

He said the nazims must ensure maintenance of financial discipline.

Earlier, Chiltan Town Nazim Mir Ismail Lehri apprised the chief secretary of the problems faced by the nazims.


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## Neo

KARACHI, July 22: The final figure of trade deficit touched $12 billion for the fiscal year 2005-06, creating serious concerns for economic mangers of the country.

The figures posted on State Bank website showed that exports earned $16.468 billion while imports consumed $28.581 billion during the last fiscal year. It is a record trade deficit that puts immense pressure on countryÃ¢â¬â¢s foreign exchange reserves. The import was dominated by high oil prices that hit the economies of developing countries like Pakistan.

Food items and auto sector also got massive weight in the list of imports. The country also failed to achieve the export target of $17 billion, while the import target exceeded by over $6 billion.

The Trade Policy 2006-07 announced last week set an export target of $18.6 billion and the import target at $28 billion. The import surpassed the figure of $28 billion in 2005-06.

Experts and economists do not see any decline in oil prices in the international market in the near future which means that the government will not be able to limit its import target to $28 billion for the fiscal year 2006-07.

The huge trade deficit also put immense pressure on current account deficit which was financed by selling local units through privatisation, foreign direct investments and remittances sent by overseas Pakistanis.

Analysts said the sale of local units would be more difficult this year after the Supreme Court annulled the sale agreement of Pakistan Steel on June 24 this year. They believe that the privatisation could hardly bring foreign exchange for the country. The amount of PTCL sale had a major share in the FDI in 2005-06.

The telecommunication sector, which played a key role in the increase of FDI volume, has reached a saturation point and more investments in this sector are not in sight.

Ã¢â¬ÅThose telecom companies which came late in Pakistan are struggling to earn high profit despite growth in the sector,Ã¢â¬Â said Abid Anis, a telecom expert. He said only new innovations could bring some investment in this sector.

Analysts have been identifying the weakness in the policy and urging the government to improve the trade balance which could eat up the hard-earned foreign exchange reserves of the country.

The government has been relying on financing trade deficit instead of making strategy to bridge the gap.

Ã¢â¬ÅFinancing trade deficit is not sustainable, as the resources of the country are going to be exhaust in the next two years. After that the government will start borrowing to meet the rising trade deficit,Ã¢â¬Â said a researcher at a local brokerage house.

He said if the rising gap was not arrested, the country would again fall in debt trap and debt servicing would increase that would hit development expenditure. Ã¢â¬ÅThis is not an assumption that the country is heading towards debt trap. In reality, trade deficit has forced us to borrow from donors or the market,Ã¢â¬Â the researcher said.

The Trade Policy 2006-07 has already set a trade deficit of $9.4 billion. Even if the deficit is restricted to this figure, it would be difficult for the government to arrange financing if privatisation and FDI fail to respond.


----------



## Neo

By Farhan Bokhari, Special to Gulf News

In a week when the Pakistani government had cause for celebrating its victory over dissident tribesmen in the country's gas rich western Baluchistan province, events in the Middle East promise to undermine the south Asian country's economic outlook. 

On the one hand, its indeed a consolation for policy makers in Islamabad to see up to 500 well armed tribesmen surrender to government officials on Friday, after waging a fierce battle against government troops for almost two years. 

The clash had intensified worries over the future of efforts for not only continuity of gas supplies from Baluchistan but also efforts to develop new supplies from the region.

In the past two years, Pakistanis have tasted the consequences of disruption to gas supplies when Baluch dissidents attacked gas supply lines coming out of the embattled region. 

As a result, stoves and heaters across central Pakistan turned cold right at the peak of the winter months amid an unprecedented step by the authorities to manage the fall in supply, through offering gas flows to different regions and suspending it to others.

Now, events in the Middle East promise to inflict a similar pain upon Pakistan's economic prospects.

Futile war

In addition to the human cost of an otherwise futile war which has further pushed away the prospects for enduring peace, the conflict also promises to raise the price of oil globally and force economies such as Pakistan to brace for eventual consequences.

For Pakistan, there is no easy way out of what is clearly one of the most profound challenges faced once again by the muslim world.

There are set to be at least two direct consequences from the effects of the conflict. On the one hand, higher oil prices must translate into further inflation at a time when high oil prices of the past two years have already undermined the quality of life for many. 

On the other hand, the anti-US and anti-western sentiment which emanates from the conflict must further reinforce the view that countries like Pakistan and others in the region surrounding the Middle East, are perhaps going to become further insecure for high profile western investments.

By contrast, its also likely that investors from the Arab world including the many who chose to invest closer to home after the New York terrorist attacks triggered an anti-muslim sentiment in the US-led western world, would find further cause to remain wary of investing in the western world. 

Can Pakistan benefit from this trend and eventually have more success in wooing such investors to its soil? 

That question may well be central on the minds of at least some policy makers as turmoil in the Middle East forces new questions upon them.

In the short term, its indeed possible that affluent Arab investors may head increasingly towards countries such as Pakistan, armed not just with additional petrodollars earned through the ongoing conflict, but also driven by a sense of defiance of the US-led western world. 

However, its then up to countries which host such prospective investors to create the necessary environment which retains their interest for the long run. 

In Pakistan's case, dealing with a host of issues which are directly relevant to interests of investors, holds the key to the country's success in turning an immediate opportunity in to an avenue for long-term sustainable growth.

Immediate victory 

A case in point is indeed the follow up to events in Baluchistan where an immediate military victory now must be followed up by consolidation on the ground to create the basis for long-term growth and prosperity. 

The victory must be followed up with the creation of a host of comforting features such as a mechanism for law enforcement and policing, a network for the flow of important utilities such as electricity and gas, and creation of mechanisms for the fast-paced resolution of legal disputes. 

All these factors are fundamentally relevant to investors if their interest is to be retained over a long period of time.

This is all the more essential as the fallout from the conflict in the Middle East would not necessarily tilt the circumstances in favour of countries like Pakistan for the long run. 

Ultimately, investors may consider returning to the relative comfort of the mainstream western world once the conflict dies down, and a cold calculation leads many to believe that the returns in countries like Pakistan are not significantly ahead of the western economic environment.

http://www.gulfnews.com/business/Co...s/10054113.html


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## Neo

ISLAMABAD, July 22: Vice-president of British Petroleum (BP) lan Vann and vice-president Exploration Mike Daly called on Minister for Petroleum and Natural Resources Amanullah Khan Jadoon on Saturday and discussed with him matters pertaining to investment prospects in the oil and gas sector in Pakistan.

They exchanged views on further promoting cooperation in the oil and gas sector between Pakistan and British Petroleum for mutual advantage.

The minister briefed the BPÃ¢â¬â¢s executives on the investment opportunities in the upstream and downstream petroleum sector, including onshore and offshore exploration.

He said that the British company's expertise in offshore exploration would help Pakistan to tap hidden oil deposits in the sea.

He said that relations between Pakistan and BP spanned over a long time and appreciated the company's role in promoting oil and gas industry of the country.

The minister said that the government was providing a package of incentives and facilities to the prospective investors in oil and gas sector to attract investment.

He said that the execution of new production sharing agreements indicated government's clear and firm commitment to attract private investment, particularly foreign direct investment in the oil and gas sector to boost Pakistan's economy by substituting imported fuel oil.Vice-president British Petroleum, lan Vann said that his company would continue to avail the investment opportunities in Pakistan's oil and gas sector.

He said BP had been operating in Pakistan since 1977 with a focus in Badin where they had over 2,300 sq km area. He added the company had so far drilled 159 exploratory/appraisal wells resulting in 62 oil and gas discoveries with current production of 13,000 barrels of oil and 220 million cubic feet of gas per day.

He said BP Pakistan had so far made an investment of about $800 million in BadinÃ¢â¬â¢s joint venture. The company was renowned for its experience in offshore deep-water exploration and had best exploration records in the world.

After achieving leading position in Alaska, the North Sea and in North American gas production, the BP is now developing new fields in the deep-water off the Gulf of Mexico, Angola, Azerbaijan, and in Trinidad, he added.

Minister of State for Petroleum Mir Muhammad Naseer Mengal, Secretary Petroleum Ahmed Waqar, director general (Petroleum Concessions) Naeem Malik and BP president in Pakistan Tariq Khamisani were also present on the occasion.


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## Neo

Sunday, July 23, 2006 

KARACHI: A severe shortage of rain around the country this year has left 95 percent of the cotton belt hot and dry. 

Traders said on Saturday that showers were only reported in eastern lower Sindh during the second and third week of July. In Punjab, a few isolated monsoon showers have been forecast for Lahore, Jhelum and Sialkot in the forthcoming days, they added. There are reports that rain will also reach Hyderabad in lower Sindh. A small volume of new crop is now moving in the Mirpurkhas and Shahdadpur districts of lower Sindh. Ghulam Rabbani, a senior trader, said crop production would be adversely affected if forecasts turn out to be incorrect. 

He said a shortage of canal water was present throughout the cotton belt. In Sindh, the government has moved to install tube wells to aid farmers.

Rabbani added that the weather would play a pivotal role in shaping the future size of the cotton crop, as the last two months of the harvest remained crucial, he added. He said at present one could not say anything about the size of the 2006-07 crop, the rains will shape the future of the lint market. More rains will result in a bullish market.

He added that the Pakistani market was facing difficulties as the new harvest was sold at lower than expected rates. Rabbani expected seed cotton to become a precious commodity as an increase in supplies would result in ginners being unwilling to buy seed cotton at dear prices meaning that lint will need to be sold at cheaper rates.

He said in India, monsoon activity had now diminished over much of East India. Gujarat State is dry and it is likely to be dry for much of this week. The heaviest rains this week have been forecast for Madhya Pradesh, coastal Karnataka and the Madhya Maharashtra and Vidarbha areas of Maharashtra. Some concern is building over the sporadic nature of rain in Gujarat. The total rains in 2006 season were near normal but the volume of rainfall amounts was approximately half of last year's total at this date and could become an issue if this pattern continues. Rainfall is also proving disappointing in Andhra Pradesh.


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## Neo

Sunday, July 23, 2006 


LAHORE: Speakers at a seminar entitled "Mutual Funds - An Investment Tool for General Public" on Saturday said the prevailing interest mutual funds proved that the sector had immense growth potential. 

The seminar was organised by the Institute of Cost and Management Accountants of Pakistan (ICMAP), Lahore Branch Council. Provincial Minister for Finance Hasnain Bahadur Dreshakwas the chief guest at the seminar. 

Speakers said mutual funds provided investors with an opportunity to participate in the Pakistani capital market with the help of professional experts. Mutual fund operators are also becoming more competitive and flexible and are offering a wide range of funds. They stated that the growth of the mutual fund industry depended upon retail investors and concluded that it was important to target retailers. Educating retail investors about the risk factor and about different products available is also very important, they added.

Speakers pointed out that the Karachi Stock Exchange (KSE) share index and aggregate market capitalization (AMC) had increased by 41.1 percent and 48.3 percent respectively in 2005-06 and was one of the best performing markets in the world in the last two years. In the 2004-05 fiscal year, 15 new companies listed their shares, worth Rs 26.06 billion, on the KSE. Some mega offerings of Pakistan Petroleum, Kot Addu Power and United Bank were made through the privatisation process, they stated. Likewise, debt securities also witnessed 7 new listings worth Rs 9.13 billion. In spite of the high volatility experienced at the end of the third quarter of the 2004-05 fiscal year, the market gained momentum and remained one of the "best performing stock markets" among some of the top equity markets of the world in 2005. The said the Pakistani stock market had emerged as an important source of new capital for the industrial and commercial establishment. It has maintained its previous strong performance in the 2005-06 fiscal year and is achieving new heights. The KSE-100 index crossed the 12,000 barrier for the first time in the history of capital market and touched an all-time high on April 13. The KSE-100 index made further progress and reached 12,274 points on April 17 showing a growth of 64.7 percent over the level of une 2005.


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## Neo

Sunday, July 23, 2006 

LAHORE: A high-profile delegation of Australian information technology entrepreneurs is visiting Pakistan soon to explore business opportunities in the IT sector. 

Zia Qureshi, Chairman of Business Catalyst International, told a group of newsmen during his visit to the NetSol Technologies.

Mr Qureshi called on Salim Ghauri, Chief Executive Officer of NetSol Technologies and Chairman of the Corporate Affairs Computer Society of Pakistan, and shared his ideas on uplifting the IT sector in Pakistan. 

Mr Qureshi is on a short visit to Pakistan to assist the government of Pakistan and the IT sector in having its due share in the world IT business. His visit would be followed by a high-powered delegation from Australia soon. 

Speaking on the occasion, Mr Ghauri said Mr Qureshi is a known IT consultant worldwide and Pakistan is proud of individuals like him. He said the NetSol Technologies has assured Mr Qureshi of full support for the implementation of his innovative ideas and expressed the hope that Pakistan would soon take the desired quantum jump in the field of IT. 

Mr Qureshi pointed out that the aim of his visit is to explore the ideas as how PakistanÃ¢â¬â¢s IT sector can be developed to ensure substantial export revenue. An effort is being made to turn PakistanÃ¢â¬â¢s cottage IT industry into a big corporate environment to enable it to compete in the international market. Collaboration between the public and private sectors can ensure the desired results, he added. 

He said NetSol Technologies is known as a company that possess delivering capability and such companies may create miracles in countryÃ¢â¬â¢s exports if proper government support is ensured. This would be a win-win situation for all the stakeholders, he added.


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## Neo

Sunday, July 23, 2006 

ISLAMABAD: Saleem Saifullah Khan, Minister for Inter-Provincial Coordination, has said that Pakistan can export mangoes worth $400 million every year by ensuring international standards and improving methods of production, packaging and marketing skills. 

He was speaking as chief guest at the National Mangos and Summer Fruits Expo 2006 being held here from July 20 to 22. The expo has been arranged by the Export Promotion Bureau and the Horticulture Development and Export Board. 

He said that challenges of World Trade Organization's regime, international food standards and food safety measures are required for enhancing exports of our fruits and vegetables. 

He said that nature has gifted our country with all four seasons and best quality fruits and now it is up to us to increase their production and enhance their exports for the benefit of the country. He emphasized the need for better coordination among the chain, growers, processors, researchers, scientists, exporters, trade officials for promotion of exports of mango to all the destinations of the world. He said that role of ministry of commerce and the Export Promotion Bureau is of prime importance in enhancing mango exports as well as guiding the exporters and growers on latest research and export markets.

He disclosed that in the last federal cabinet meeting Prime Minister Shaukat Aziz also emphasized the need for promotion of exports of fruits, especially of mangoes through facilitation measures. 

Earlier Saleen Ranjha, EPB Director, said that Pakistan is the third largest exporter and fifth largets grower of mangos in the world. Exports of mangos are at present $40 million and the ministry of commerce and the EPB are struggling hard to enhance this level to the maximum in the minimum possible time. He said that Afghanistan, Central Asia, Iran, China, Europe and Gulf states are the new markets for our mangos exports. The government has allowed Rs 25 million freight subsidy on the export of mangoes through air and sea. Exporters can avail of this facility up to Oct 15 for enhancing exports of mangoes.

The minister also distributed awards among the participants of the expo. The best exporter award was given to M A Links Multan, and second best exporter award was given to Imtiaz Enterprises Karachi.

Awards in maximum varieties were given to Faiz-e-Aam Nurseries Multan, Malik Brothers Multan and the Horticulture Development and Export Board. Awards in the category of best stalls were given to Samza Fruit Stall, Sohail Brothers and Company Islamabad, and Shezan International. Improved varieties awards were received by Bukhari Fruit Farms Multan, Chaudhry Shehzad Fruit Farms Renala Khurd and Hamid International Multan. sajid chaudhry


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## Neo

KARACHI, July 22: While there is a complete consensus among the economists and the businessmen on the fact that PakistanÃ¢â¬â¢s rupee exchange parity is overvalued, there is sharp difference of opinion when it comes to issue of reviewing, readjusting or devaluing the national currency.

Almost all businessmen and economists are convinced that the rupee parity is overvalued by at least 10pc that is causing stress on the external sector. While a few businessmen and economists consider a devaluation of 10pc in one-go as the Ã¢â¬Åonly right recipeÃ¢â¬Â at this moment, there are others, who believe that this devaluation should be gradual and measured. But there are many who consider any idea of devaluation a recipe for destabilisation of whole system as it will set in motion a new wave of unprecedented inflationary wave.

Ã¢â¬ÅWith devaluation, there is a need for other supporting steps by the government particularly to rein in mounting demand and growing consumerism that is showing no signs of respite,Ã¢â¬Â is one of such ideas articulated in relaxed moments after sunset in an informal businessmen gathering.

Even in their relaxed moments after sunset, businessmen are unable to shed off the pressures that are coming from the implications of an unprecedented trade imbalance and a fiscal deficit in 2005-06. For the current fiscal year there are doubts if government would be able to mobilise resources indicated in the 2006-07 budget and contain expenditures in manageable limits.

Ã¢â¬ÅExporters have been consistently demanding a realistic readjustment of the rupee parity,Ã¢â¬Â Aziz Memon, a well-known readymade garment businessman, said while pleading a case for devaluation. Memon had been the Chairman of Textile Export Quota Management Directorate till end of 2004 and is said to have invested heavily in his business to keep his presence felt in the EU and USA markets after phasing out of textile export quota system.

Not ready to quantify the devaluation of the rupee, Memon insisted on a number of measures by the government that should cut the production cost down and enable the exporters to remain competitive in a market where a full fledged cut-throat price war was going on. He said that value added sector needed more support than others.

Ã¢â¬ÅI do not support devaluation,Ã¢â¬Â Iqbal Ibrahim, owner of a giant integrated textile mill in Karachi remarked. Ã¢â¬ÅWhatever benefit we will get from devaluation, we will be forced to pass on these to our buyers,Ã¢â¬Â he said. He conceded that Pakistan was getting only a residual share in textile exports to the EU and USA and was trailing behind India and China.

Mr Iqbal was of the view that rising imports manifested growing economy. Ã¢â¬ÅYou need more energy, more machines and parts and raw material when your economy is growing,Ã¢â¬Â he said. His suggestion was that the government should take steps to reduce production cost and the rest depend on the entrepreneurs. The businessmen should improve their management, production techniques, marketing and motivate their management team to respond to fast changing demands.

Majyd Aziz, a readymade garment dealer with a brand name in domestic market, was of the view that the government would not go for devaluation as Ã¢â¬Åit is an election or near election yearÃ¢â¬Â. Devaluation of rupee, he believes, will increase import bill, push up debt servicing cost and increase the debt burden. Now elections are not too far off, the government will take easy route of subsidies and imports rather than a full-scale surgery of the economic system that devaluation will demand.

Akbar Zaidi, a noted economist however, is all for devaluation. In last seven years, exports increased by almost 100pc from $8.2bn in 1999-2000 to about $17bn in 2005-06. Imports increased by more than three times to over $28bn in 2005-06 from about $9.5bn in 1999-2000. The trade imbalance in last seven years has swelled by more than seven times from $1.4bn in 1999-2000 to more than $11bn in 2005-06.

Devaluation, Mr Zaidi believes, will be a deterrent rather than pushing up imports because it will make import an expensive business.

Asad Saeed, another noted economist, however, believes that PakistanÃ¢â¬â¢s exports and imports are inelastic and are not affected by the devaluation. In the past too, devaluation did not bring any big improvement in the exports.

While opinions differ on devaluation and strategies for increasing exports there is a virtual consensus that Pakistan does not have much to offer as export surplus for the world market except textiles and that too in low value products. In last 60 years only one Pakistani exporter has ventured into brand name product who is marketing it in Far East through his outlet. Ã¢â¬ÅPakistan business houses do work for international houses and departmental stores but lack enough skill and initiative to go for launching their own brand products in the export market,Ã¢â¬Â said a top textile leader, adding that launching of a brand product in USA and EU cost anywhere from $20 to $25 million.

While individual businessmen and economists have conflicting views on devaluation issue, the State Bank and a reputed research institution Social Policy and Development Centre (SPDC) convey directly and in guarded language their reservations on exchange parity of the rupee. Ã¢â¬ÅThe inflation differential between Pakistan and its trading partners has made the relative price of Pakistani goods Ã¢â¬â or the Real Effective Exchange Rate (REER) Ã¢â¬â 10pc higher,Ã¢â¬Â observes the annual review report SPDC for the fiscal year 2005-06. It points out that since late 2004, the Pakistani rupee has depreciated only very modestly by a total of just one per cent. According to State Bank of PakistanÃ¢â¬â¢s third quarterly report for 2005-06 released recently the rupee depreciated only 0.88 per cent against US dollar during July to May to Rs60.22.

PakistanÃ¢â¬â¢s export performance in 2005-06 is not unimpressive but the imports have outgrown the expectations and projections of the government planners. The trade imbalance of more than $11bn plus about $5bn gap in services has been met largely from remittances, aid inflows and privatisation proceeds during 2005-06. Ã¢â¬ÅHowever, there is a risk of the sudden slippage of these flows in the future. This is specially so in the current environment of lower global appetite for risk, which is leading to withdrawal of assets from the emerging countries,Ã¢â¬Â warns SPDC annual review report.


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## Neo

KARACHI, July 21: A total of 20 centres fully equipped to check the vehicles polluting environment would be set up in Karachi by a Malaysian firm at a cost of $500 million.

This was stated by Adviser to the CM on Environment Noman Saigal, while speaking at a seminar on Ã¢â¬ËPreventing Environmental DegradationÃ¢â¬â¢ here on Friday. The seminar was organised by the Helpline Trust.

The adviser said that transport vehicles were responsible for about 75 per cent of the pollution in Karachi. Lack of resources, including financial and administrative, was the main hurdle in checking spread of pollution, he said, adding he felt that 30 per cent of the health budget should be allocated for improvement of environment.

Mahmood Akhtar Cheema of the IUCN-World Conservation Union, said that there were about 1.5 million vehicles on city roads emitting smoke which happened to be 25 times more than the average vehicular emission in other major cities of developed countries.

He said 40 per cent of urban population faced health problems due to the rising pollution.

Justice (r) Shaiq Usmani said despite various law reforms, like the Pakistan Environmental Protection Council, Environment Protection Orders, etc., nothing better could be seen in respect of environment.

Ronald deSouza of NGO Shehri, Ms Marcia A. Grant, of the Aga Khan University, Ghayasuddin Ahmed, CEO General Trading, and Ms Nargis Alavi, Principal of the Habib Girls Public School, said that air and water pollution levels in Karachi had crossed international environment quality levels. She pointed out that the vast slums, overflowing drains, broken roads, unchecked crime, chaotic traffic and unbearable air and noise pollution had devastated the cityÃ¢â¬â¢s environment.

The major causes of pollution are dust, industry, burning of solid waste and smoke-emitting vehicles, especially the two-stroke vehicles, diesel trucks, and buses. Use of low quality fuel in such vehicles aggravate the situation further.

Experts were of the view that air pollution through vehicular emission could be contained at different levels by installing pollution control devices and switching over to refined fuel and vehicles with modified design.

They suggested that registration of old buses and two stroke rickshaws and issuance of route permits to smoke-emitting vehicles be banned at the earliest. They called for the introduction of four-stroke rickshaws using CNG.

Karachi needs integrated policies and approach for sustainable environmental development, they said, stressing on enactment of laws and their effective implementation to check further damage to environment in the city.


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## Owais

*27 projects valued over Rs30 billion approved * ISLAMABAD: The Central Development Working Party (CDWP) meeting under the aegis of the Planning Commission here approved 27 projects worth over Rs30 billion.

The 27 projects approved in the meeting presided over by the Deputy Chairman Planning Commission included those related to higher education, education, health, transportation, communication, water, power, energy, physical planning and housing projects.

Azad Jammu and KashmirÃ¢â¬â¢s 3.2- megawatt hydropower installation and the construction of Rathwa Haryam Bridge on Mirpur road were also approved.

Sheikh Medical Complex in Lahore would also be upgraded with an expansion costing Rs20 million.


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## Owais

*Prime Minister orders availability of oil and gas at subsidised rates* 

ISLAMABAD (July 23 2006): Underlining the importance of energy security for the country and for growth and development, Prime Minister Shaukat Aziz on Saturday directed the Petroleum ministry to take steps to ensure availability of sustainable supply of oil and natural gas at affordable prices.

He made these remarks while chairing a meeting to review the goals and target of Petroleum and Natural Resources Ministry, here at the Prime Minister House.

The Prime Minister also asked the ministry to expedite the development of abundant natural resources such as coal and minerals in order to meet the energy requirements of the country.

He said ministry of inter-provincial co-ordination should also be involved in the exercise. Prime Minister Aziz asked the ministry to undertake intensive exploration of gas and focus on the setting up of coastal oil refinery, Thar coal project, and import of LNG and gas.

The Prime Minister said ministry should expedite work on the Thar coal project. He agreed to a proposal of the ministry to unbundle the project by separating mining and power generation.

Secretary petroleum in his presentation said the ministry has adopted an integrated approach for promoting exploration and fast track development of oil, natural gas and other natural resources.

It is working to deregulate, liberalise and privatise oil, gas and mineral sectors through structural reforms, to attract private investment.

The Prime Minister was informed that 60 new CNG stations have been set up in the country, gas allocation and management policy has been formulated and got approved from the cabinet.

Cabinet approval has been obtained for transfer of regulatory oil functions including pricing from MPNR to Ogra. The meeting was informed that the country has achieved observer status in Energy Charter Treaty (ECT).

The meeting was attended among others by Minister for Petroleum & Natural Resources Amanullah Jadoon, Minister of State for Petroleum and Natural Resources Naseer Khan Mengal and senior officials.


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## Owais

*Oil and gas firms to submit monthly reports to sales tax department* 
ISLAMABAD (July 23 2006): All petroleum exploration and production companies would have to submit details of production, supplies and purchases and a separate summary on purchases/sales to the Sales Tax Department on monthly basis.

The CBR has issued SRO 751(I)/2006 for petroleum exploration and production companies to submit the statements, as stipulated in SRO 543(I)/2006 and SRO 559(I)/2006 pertaining to a tax period, by 25th of the following month.

These companies would submit details about purchase invoices reflecting the number of invoices received and sales tax involved. They would also submit the details on 'debit and credit notes' and other details given in the statement of SRO 559(I)/2006.

It has been made mandatory for petroleum exploration and production companies to submit quantity of the taxable items produced/supplied and cleared under SRO. 543(I)/2006.

*DATE FOR FILING OF TAX RETURNS: *According to another SRO, No 749(I)/2006, 25th day of the month has been fixed as due date for furnishing a return under Federal Excise Act, 2005, by gas producing companies for clearance of natural gas and liquefied petroleum gas produced during the preceding month.

The existing SRO 88(I)/2002 prescribes 25th of a month as due date for sales tax returns. Now, the monthly return for both sales tax and federal excise is to be filed on 25th of a month, enabling the taxpayers to file the combined return for both taxes.

Another SRO, No 750(I)/2006, provides that payment of federal excise duty (FED) is to be made by the 25th of a month for natural gas and liquefied petroleum gas, whereas previously the same was to be made on the 30th of each month.


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## Owais

*Shaukat to be briefed on PCCC revamping* 

ISLAMABAD (July 23 2006): The Ministry of Food, Agriculture and Livestock (Minfal) would give presentation to the prime minister on restructuring plan of Pakistan Central Cotton Committee (PCCC) and cotton R&D Framework on July 31. The ministry would also give briefing on the overall cotton situation in the country, official sources said on Saturday.

The federal government has earmarked Rs 363 million for the up-gradation of the Cotton Research Institute, Multan, as international institute allocating Rs 30 million for the year 2006-07.

About the restructuring of the PCCC, the Minfal and Federal Industries, Production and Special Initiatives Minister Jehangir Khan Tareen are at logger heads to appoint PCCC head, as the latter wanted a private person from the sector to head the PCCC but the Minfal is opposing the move, the sources added.

Officials in the Minfal are of the view that the appointment of the PCCC head from the private sector would create mess in the institution, as some of the breeding lines of cotton are at the final stage and may be passed on to the private seed companies in contravention of the rules, as it happened in the past.

About the cotton research and development framework, it would be like an endowment fund, which would be utilised for cotton research and development activities, the sources said.

"We are already using cess levy for research and development of the cotton but this R&D will also be used for bringing improvement in the cotton production", they added. Minfal would also brief the prime minister about the estimated production, sowing area, cotton export and export destinations, sources said.

It would also hold its preparatory meeting to finalise the briefing on July 27 at the ministry in the chair of Federal Food, Agriculture and Livestock Minister Sikandar Hayat Khan Bosan.


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## Owais

*Tax practitioners will be allowed to work as electronic intermediary* 


ISLAMABAD (July 23 2006): The government would allow tax practitioners, chartered accountant firms and cost and management accountant firms to work as 'electronic intermediary' for filing of sales tax e-returns, on behalf of registered persons. The CBR on Saturday issued 'Sales Tax e-Intermediaries Rules, 2006', to elaborate the procedure for filing of e-returns through an intermediary.

The board has already introduced e-filing of returns without visiting tax offices or banks. Now, that the Sales Tax Act, 1990, has been amended through Finance Act, 2006 to allow the taxpayers to file returns, or other documents, through e-intermediaries enabling the taxpayers who do not have related expertise to file returns electronically, the Board is in the process of finalising the rules for the appointment of e-intermediaries. A draft of these rules is being circulated for comments from taxpayers, consultants and the general public.

The draft has also been placed on CBR website www.cbr.gov.pk. The comments can be sent to Secretary (Sales Tax-L&P), CBR, Islamabad, or to the CBR helpline through email (helpline@cbr.gov.pk).

The draft of procedure has elaborated the criteria for the appointment of electronic intermediary. A person having sufficient professional experience in the field of providing taxation services would be eligible to become 'electronic intermediary'.

Sufficient physical and information technology infrastructure, minimum requirement: One office having area of 200 sq ft, in the name or title of e-intermediary; at least four computers having capability of processing information; at least two scanners of reasonable quality and internet connectivity with an approved licence.

Professional experience of 'e-intermediary' includes that the firm or sole proprietorship should be approved by the Institute of Chartered Accountants of Pakistan or Institute of Cost and Management Accountants of Pakistan; a person or firm approved to practise as income tax practitioner; and any other person approved by the Board.

The administrator, on receipt of an application for appointment as an 'e-intermediary', shall verify that the applicant possesses suitable information technology, adequate knowledge, skills, infrastructure and professional experience required for successful transmission of data or return electronically and that the applicant has never been involved in a case of tax fraud or convicted by a court.

The administrator shall forward the application along with his recommendation to the Board for appointment of the applicant as 'e-intermediary'. Subsequently, the Board may appoint the applicant as an 'e-intermediary' and issue him a 'Unique User ID'. It is a unique identification number, or password, allotted by the Board to an 'e-intermediary' for his identification for electronically transmitting the return.

The Board is empowered to cancel the appointment of 'e-intermediary' in the following cases: The 'e-intermediary' has failed to comply with any of the conditions prescribed by the Board; acted in contravention of any of the provisions of the rules; failed to take adequate measures for security and confidentiality of the 'Unique User ID'; or convicted in an offence under the Sales Tax Act.

Under the rules, an 'e-intermediary' shall digitise the data of 'e-declaration', duly signed by the registered person and electronically transmit the same to the computerised system under the Sales Tax Special Procedure Rules, 2006, by using his 'Unique User ID'.

The computerised system shall issue a provisional acknowledgement to the 'e-intermediary' in token of the receipt and acceptance of the data transmitted. In case of non-acceptance of data by the computerised system at any stage, the 'e-intermediary' shall be informed to correct the data and resubmit the same.

The 'e-intermediary' user shall be responsible for accuracy of the 'e-declarations' transmitted by him. He would be responsible for security and confidentiality of the 'Unique User ID' allotted to him, and where any 'e-declaration' in transmission of that e-declaration shall be deemed to have been transmitted by the 'e-intermediary' to whom such 'Unique User ID' has been allotted.

The 'e-intermediary' shall retain the data relating to all e-declarations transmitted by him electronically on behalf of a registered person for a period of three years following the date of such declarations.

The concerned sales tax officer may examine records maintained by an 'e-intermediary', whether electronically or otherwise, in relation to a specific transaction or to verify adequacy or integrity if the system or media on which such records are created and stored.

*PROCEDURE FOR THE REGISTERED PERSONS: *A registered person desirous of furnishing e-declaration may authorise an 'e-intermediary', duly appointed by the Board, to furnish such e-declarations on his behalf, under intimation to the e-declaration administration having jurisdiction. Provided that the registered person may, at any time, revoke authorisation of an 'e-intermediary' under intimation to the e-declaration Administration having jurisdiction, and such revocation shall apply prospectively.


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## Owais

*SBP revises SLR and CRR for Islamic banking* 

KARACHI (July 23 2006): The State Bank of Pakistan (SBP) has raised the Cash Reserve Requirements (CRR) for Islamic Banks (IBs) and Islamic Banking Branches (IBBs) with effect from July 22 as under:

a) weekly average of 7 percent (subject to daily minimum of 4 percent) of total Demand Liabilities (including Time Deposits with tenor of less than 6 months); and

b) weekly average of 3 percent (subject to daily minimum of 1 percent) of total Time Liabilities (including Time Deposits with tenor of 6 months and above).

The decision to raise the CRR for IBs and IBBs has been taken following the raise in CRR for commercial banks.

However, IBs/IBBs would continue to meet the Statutory Liquidity Requirement (SLR) of 8 percent (excluding CRR) of their Time and Demand Liabilities in the prescribed manner as required under BSD Circular No 3 dated February 15, 2006.

All other instructions on the subject, including those issued under BSD Circular No 9 dated July 18, 2006, will remain unchanged.


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## Owais

*Government policies have open new vistas for investors: Prime Minister* 

ISLAMABAD (July 23 2006): Prime Minister Shaukat Aziz on Saturday said the policies of privatisation, liberalisation and deregulation have opened new vistas of opportunities for local and foreign investors, and urged the business community to avail these incentives.

Talking to a delegation of the Pakistan Business Council, which called on him at the Prime Minister's House on Saturday evening, he said the investors, while taking advantage of these policies, could expand their businesses and improve the productivity and competitiveness of their products in global terms.

The prime minister welcomed the formation of Pakistan Business Council, and hoped that it will develop itself into a credible outfit to impact the government policies in a positive manner to help the industrial sector grow.

He said that macro-economic stability, continuity and consistency of policies have restored the confidence of investors and helped the business flourish.

Shaukat Aziz said these policies have made Pakistan an investment-friendly place and during the last financial year a record Foreign Direct Investment (FDI) of $3.7 billion was received. The prime minister said the government is providing a level playing field to local and foreign investors.

He said foreign investors have shown keen interest in starting joint ventures with their Pakistan counterparts. He urged the Pakistani businessmen to join hands with foreign investors for expansion of business, import substitution and export enhancement.

The prime minister said transparency is the hallmark of government policies and all decisions are made in national interest, which has enhanced the credibility and stature of the government in the eyes of the international community. The privatisation process is on track and the government will continue to pursue the privatisation agenda, he added.

Giving an overview of the economy, Shaukat Aziz said the structural reform agenda of the government is one of the most broad-based comprehensive reform agenda ever undertaken by any government.

He said the country was able to achieve 6.4 percent growth rate during the last financial year despite the challenge caused by the surge in oil prices in the international market and the damages caused by the earthquake. The magnitude of the growth that Pakistan has achieved in last four years in a row has positioned Pakistan as one of the fastest growing economies of Asia, the prime minister said.

He said the size of the economy has doubled during the last about seven years and now it is $134 billion which is an achievement. The government is expecting better growth this year due to better performance in the agricultural sector and the enabling climate provided to industry, he added.

Shaukat Aziz said while the government is providing an enabling environment to the private sector, the business community should study the best international practices and prepare themselves to face the challenges of globalisation as well as to capture the opportunities offered by it and added that "you should learn to ride the tidal wave."

Razak Dawood, the head of the delegation, said that as the size of economy is growing fast there was a need for an organisation to provide positive inputs to the government policies.


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## Owais

*Rs 300.467 million allocated for Balochistan agriculture sector* 

QUETTA (July 23 2006): The government has allocated Rs 300.467 million for different schemes for development of agriculture sector in Balochistan, sources told newsmen here on Saturday.

Rs 42.168 million have been allocated for establishment of soil testing laboratories at district level in Balochistan, of which Rs 11.653 million have already been spent and the government has allocated Rs 1.5 million for the current fiscal year.

Rs 66.988 million have been allocated for strengthening of Balochistan Agriculture College Quetta, of which Rs 17.500 million have already been spent and the government has allocated Rs 18 million for the year 2006-07.

The sources said that Rs 11 million had been specified for promotion of cotton cultivation in Balochistan, of which 7.595 million have been spent and the government had allocated Rs 0.500 million for the current fiscal year.

Market squares are being constructed at Loralai, Qila Saifullah, Pishin, Lasbella, Panjgur and Khuzdar area at a total cost of Rs 100.057 million, of which three million rupees have been spent and the government has allocated Rs 20 million for the year 2006-07.

Apple processing plant at Kalat district is being constructed at a cost of three million rupees, of which two million rupees would be spent during this year. Dry land research centre is being constructed at a cost of Rs 44.344 million of which Rs 3.093 million have been spent and the government has allocated Rs two million for the current fiscal year.


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## Neo

ISLAMABAD (updated on: July 24, 2006, 14:35 PST): Prime Minister Shaukat Aziz on Monday said the government was committed to make decentralisation and devolution process in local bodies a success and fully empowered to sustain economic growth.

Addressing the inaugural session of two-day symposium on 'Strengthening Decentralisation in Pakistan and the Commonwealth' here at a local hotel, the

Prime Minister said, the decentralisation of powers had been designed on the principles of grassroots democracy, community participation and equal distribution of resources.

The symposium has been organised by National Reconstruction Bureau in collaboration with Commonwealth Local Government Forum and Commonwealth

Secretariat, USAID, UNDP and DFID.

The Prime Minister said the objectives of decentralisation was to improve quality of life through fast-pace development and access to social and physical

capital as well as speedy justice while accounting for diversity and potential of regions and districts.

Shaukat Aziz appreciating the role of Nazims and other elected representatives of the Local Government urged them to work with dedication and commitment to

fulfil the requirements of the people.

He said "ballot box" is the powerful tool in the democratic system, through which they have been elected and added that those who will not work according to the expectations of the people could be replaced through

ballot box.

The Prime Minister said, "We are moving forward to create communities that are strong, dynamic and equipped for the challenges of change in the 21st

century and to build a new trust and faith in our people".

Referring to the importance of the Local Government system, the Prime Minister said about 90 per cent issues relating to health, education, basic needs

of life, roads, and security could be resolved at local level.

He said Pakistan today has some 85,000 councillors including 28,000 women who are active stakeholders in governance, development and service delivery, shifting the governance paradigm down to the Union Council level

and placing the people of the country in the centre stage of local development.

The Prime Minister said the devolution of political, administrative and financial authority to the representative and accountable local governments in

the country was a major historic landmark.

He said, "We take pride in successful transition to a democratic system tailored to our needs and environment at all tiers of government." He said every

country has to make its own way to implement the policies of decentralisation.

The Prime Minister said, "We as a nation are transitioning towards a more vibrant, progressive and developed Pakistan."

He said high economic growth had accelerated pace of development even in the farthest corner of the country. 

He said it also included empowering women to become part of the dynamics of positive globalization and moving forward towards inclusive governance.

Referring to the challenges being faced by the government to reach the current level of decentralisation, the Prime Minister said, determination and political will made it happen. 

He said completion and enforcement of basic legislative framework, two rounds of local government elections, institutionalisation of fiscal decentralisation and establishment of an equalisation transfer mechanism to minimise bureaucratic and

political influence were the main some of the measures taken by the government.

The Prime Minister said the government had given autonomy to mobilize local resources and constituted Citizen Community Boards to ensure community

participation in local development programmes


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## Neo

KARACHI (July 24 2006): At least two local firms have received consent from the officials concerned for setting up edible oil refineries in Karachi, which would cost around $10 million, sources told Business Recorder on Sunday.

They said that an Islamabad-based party is also interested in establishing an edible oil refinery in Karachi, and its management is currently engaged in negotiations with the concerned officials. It is being anticipated that this party would succeed in getting its refinery in operation in the next six to eight months.

The two local parties, which are currently engaged in erecting their plants in Karachi, are Paracha Textile (ghee unit) and Hamza Edible Oil Refinery, Lahore. Of these, Paracha Textile (ghee unit) is being set up near Shershah (Site), while Hamza Edible Oil Refinery Lahore is busy in constructing its plant near Port Qasim.

Sources said that a Malaysian Group--Felda Group--has also established an edible oil refinery at Port Qasim, with production capacity of 800 tons per day.

"Felda's unit has been producing 800 tons edible oil per day for the last two months. However, its formal inauguration would be held on July 25," sources added.

"The other two units, each likely to cost around $5 million, are also almost ready to start production, but still may take about two months to start regular production," sources said.

According to sources, Hamza Edible Oil Refinery would have the capacity of 500 tons per day, while Paracha Textile Ghee unit would produce 300 tons edible oil per day.

These refineries are using crude palm oil imported from Malaysia and Indonesia.

About the technology used in these three edible oil refineries, sources said that they have procured the latest and world-class technology. "The technology which they (units) are using is 'Continuous Refinery' and has been imported from Sweden, in which the plants run smoothly without getting heated," sources said.

In this connection it would be pertinent to mention that currently the country's demand for edible oil is 1.5 million tons per month, which goes up to 3 million tons during Ramazan. Of this 3 million tons, around 0.6 million tons is supplied by some 128 small and big edible oil refineries across the country.


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## Neo

NEW DELHI (July 24 2006): An ambitious deal to build a 2,775 kilometres gas pipeline between India and Iran via Pakistan (IPI) has run into trouble, the Iranian Foreign Minister was quoted as saying on Sunday.

Oil ministers from India, Iran and Pakistan are scheduled to meet in Tehran early next month to discuss a pricing dispute and ways to actually build the pipeline across the rugged terrain and through heavily militarised frontiers.

"It's a little bit complicated because of the changing of circumstances from the time when the contract and agreement was signed," Iranian Foreign Minister Manouchehr Mottaki told New Delhi Television news channel.

"I think both sides found out that there are some specific difficulties to implementing the project agreement as it is now."


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## Neo

NEW YORK (July 24 2006): Minister for Privatisation Zahid Hamid has said that environment for foreign investment is conducive in Pakistan and invited Pakistanis living in USA to invest in different sectors. Talking to a delegation of prominent Pak-American businessmen here, the minister said a strategy has been evolved to resolve the problems being faced by Pakistanis living in USA regarding investment.

He said he will hold a conference on investment in New York. Zalar Naseem, Malik Sikandar Aziz, Mirza Khawar Beg and others attended the meeting.

He said due to the sagacious and dynamic leadership of President Pervez Musharraf and Prime Minster Shaukat Aziz the economy of the country has been stabilised.

The delegation apprised the minister about the investment in power and other sectors. The delegation said that a large number of Pak-Americans are interested to invest in Pakistan if concession was given to them. They said that they are ready to invest ten million dollars to hundred million dollars in Pakistan.

The minister said that the government respects the decision of Supreme Court regarding Pakistan Steel Mills. He said the decision will not cast negative impact on the privatisation process.


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## Neo

GUJRANWALA (July 24 2006): Government is doing its best to develop and promote both agricultural and industrial sectors for strengthening national economy and fill up the vast gap between imports and exports and add to foreign exchange reserves of the country.

Federal Minister of State for Law and Justice & Human Rights Shahid Akram Bhinder stated this while addressing at a seminar held on the role of Gujranwala region in building economy here on other day.

The seminar was attended by leading industrialists Sheikh Mohammad Aslam V P FPCCI Mohammad Anwar Aslam, Mirza Imtiaz Ahmad, Qamar Zaman Gill, Muhammad Aslam Khokhar, General Manager State Bank of Pakistan and prominent citizens among others.

The minister maintained that facilities offered by government for promotion of industrial products are conspicuously visible.

He said that districts of Gujranwala, Sialkot and Gujrat form Golden Triangle of economy and the motorway connecting Lahore and Sialkot would benefit the industry in these districts.

The motorway he said shall complete in three years at the cost of 5 billion rupees.

The minister also assured to resolve load shedding issue on permanent basis and said that two power plants were sanctioned for Gujranwala to met deficiency of power supply. These plants shall be installed soon he assured.

He said that emphasis was also being laid on imparting technical training and produce skilled hands.

Food Minister Punjab Muhammad Iqbal told that a lucrative package was given for industrial development of Gujranwala.


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## Neo

KASUR (July 24 2006): Punjab Minister for Management and Professional Development Sardar Hassan Akhatr Moakal has said that the government in collaboration with the private sector would provide one million jobs annually in the province.

Talking to Nazims, Naib Nazims and other elected representatives of the area here on Sunday, he said that incentives would be offered to foreign investors so that more industrial units could be set up in the province.

He said that the government would encourage housing, tourism, transport and communication sectors for the development of the province.

The minister said that law and order situation would be improved under " Mahfooz Punjab" programme for creating sense of security among the masses.

The minister said that Punjab government was taking maximum steps for enhancing literacy rate under education reforms programme.

The government has introduced new local government system only to resolve masses' problems at local level, the minister added.


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## Neo

RAWALPINDI (July 24 2006): The Parliamentary Secretary for Defence, Major Tanveer Hussain Syed (retd), has said the Civil Aviation Authority (CAA) will generate record revenue of Rs 10.2 billion in 2006.

He said the Authority had achieved remarkable progress in terms of revenue generation as its surplus had been raised from Rs 3 million in 2003 to Rs 8.55 million in 2004, Rs 2.4 billion in 2005 and Rs 4.6 billion in 2006.

In a statement here, he said the expenditures of the CAA for the current year were Rs 5.5 billion while its net surplus would be Rs 4.6 billion in the same year which would be a great leap forward in CAA's history.

About the financial health of the CAA, the parliamentary secretary said that earlier its financial condition was hardly satisfactory as was evident from its previous years financial performance. He sated that in 2003, the Authority generated a meagre surplus of Rs 3 million, but its current surplus revenue touched the figure of Rs 4.6 billion.

This significant financial achievement was the outcome of efficient financial management programme introduced by the present leadership of the Authority. Regarding the financial liabilities of the CAA, Tanveer Hussain said it had paid off all its loans (Rs 5.6 billion) and the liabilities were reduced to Rs 3.2 billion only from Rs 10.7 billion in 2003.

He went on to say that Rs 4 billion would be available during budget year 2007 to finance the development plans. He appreciated the excellent performance shown by the CAA and expressed optimism that the Authority would further increase its revenue in 2007.


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## Neo

BEIJING (July 24 2006): China will soon hold a feasibility study, exploring ways and means to expand its rail network up to Pakistan's border. A senior official of the Chinese Central government told APP here on Sunday that they were actively considering, strengthening their communication links with Pakistan through rail and road.

"We welcome Pakistan's proposals in this connection, and wish to extend support for optimism use of Gwadar seaport for developing bilateral trade."

The technical and financial matters involved in the construction of the Rail link up to Kashgar and the Sust check post, would be considered at the experts' levels.

The sources hoped that the rail link would open vast opportunities for Pakistan and China to deepen their trade and business interactions both at bilateral and regional levels.

They said, the China's Xinjiang autonomous region would soon undertake necessary spadework, connecting China with Pakistan through the rail.

Xinjiang Region Governor Ismail Tiliwaldi has stated that early this year, during his meeting with a delegation of Pakistan Muslim League, it was decided that his government would soon start necessary work to find out possibilities of operating a rail network between the two brotherly countries through Kashgar.

The two sides agreed that the China's western region has rich potential to emerge as hub of Sino-Pak business activities.

Pakistan and China have already started a regular bus service between Kashgar and Gilgit.

According to experts, the proposals of expanding the China's existing rail network up to Pakistan and Central Asian States are feasible and this gigantic task could be implemented to serve their common interest.

China enjoys rich potential and technical know-how to expand its rail link to the country's mountainous regions. It proved its worth, by connection China's Qinghai province with Tibet last month.

China solved three major difficulties to rewrite the world's history of railway construction. The three difficulties are frozen tundra, high altitude and plateau environmental protection, said Zhu Zhensheng, Vice Director of the Ministry of Railways office in charge of the new line.

About 550 kilometres of the tracks run on frozen earth, the longest in the world's plateau railways, posing great challenges for designing and construction, he said. The oxygen content along the railway is only 50-60 percent of that at sea level as 960 km of tracks are located at more than 4,000 metres above the sea level, Zhu said.

The annual average temperature on the Qinghai-Tibet Plateau is below zero degree Celsius with the minimum temperature at 45-degree Celsius below zero.

None of the hundreds of thousands of workers died of altitude sickness in the past five years, making a medical miracle, said Professor John West, associated with the School of Medicine, University of California, San Diego.

More than 600 doctors and nurses served for the construction project and there was one clinic every 10 kilometres along the line, making sure that any sick worker could get medical treatment within 30 minutes. However, when the country built a highway between Qinghai Province and Tibet in early 1950s, almost the construction of every one kilometre of the road would claim one death.

The 1,956-kilometre-long Qinghai-Tibet railway is the world's highest and longest plateau railroad and also the first railway connecting the Tibet Autonomous Region with other parts of China.


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## Neo

QUETTA (July 24 2006): The government is spending Rs 26980.390 million on 396 road projects across Balochistan in order to provide transportation facilities through improvement of roads for the people who are living in far-flung areas of the province, official sources told APP here on Sunday.

Rs 8505.814 million have already been spent on these projects in the province, the sources said and added that the government is also constructing bridges, widening various roads and improving road networks across the province.

The sources rejected the impression that the government is constructing roads only in particular district and said constructions of roads are in progress not only in Kohlu, but also in Sibi, Bolan, Killa Saifullah, Panjgur, Loralai, Barkhan, Khuzdar, Turbat, Kalat and other districts of the province.

Referring to Dera Bugti, the sources said, work on Lehri-Sangsila Dera Bugti Road is in progress. Rs 79.680 have been allocated for the road and so far Rs 59.400 have been spent. In this regard Rs 10 million has been granted from gas exploration for construction of the road. Completion of the road will facilitate the people of the province to visit direct to Dera Bugti instead of passing through Sindh and Punjab into the district.

The province is witnessing unprecedented progress. Road networks are being laid which would provide great transportation facilities to the people. Completion of the road networks will also promote and enhance trade activities in the province. The improvement of roads will not only reduce distances but also bring the people closer to each other and improve socio-economic conditions, the sources explained. The government is making sincere efforts to complete these projects within the stipulated time.


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## Neo

DUBAI (July 24 2006): Costain Oil, Gas and Process (Cogap) has been awarded a contract by Eni Pakistan Limited for the provision of engineering, procurement services and construction management support services for the Khirthar Concession in Sindh.

The work will involve a wide variety of projects and runs for three years.

The initial principal project, valued at over $40 million, will comprise the Badhra Tie-in Project for the Badhra and Bhit field expansion.

This will involve installation of additional capacity at the existing site and will tap into the Badhra reserve via a new 20-km pipeline.

The award follows on from the Front End Engineering Design (Feed) contract for this expansion, which was recently completed by Costain for Eni Pakistan and builds on Cogap's previous work with Eni for the original installation at Bhit of two Nitrogen Rejection Units (NRU's). Those units form part of the existing gas processing trains, which deliver around a third of Karachi's total natural gas demand.

The work will require a multi-disciplined team of engineers and comprise a range of activities, including Feed studies, detailed engineering design, and management services for both new facilities and existing plant upgrades.

Cogap Managing Director Charles Sweeney said: "We are extremely pleased to have been selected by Eni Pakistan for this contract, which will provide us with the longer term opportunity to demonstrate our unique overall skills in the design and delivery of projects for gas production, treatment, processing and compression."


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## Neo

LAHORE (July 24 2006): The Water and Power Development Authority (Wapda) will spend Rs 34.8 billion on the improvement of power transmission system, erection of transmission lines and construction of new grid stations to meet the ever increasing demand for electricity in the country.

Wapda Member (Power) Chaudhry Muhammad Anwar Khalid told APP here on Sunday that the Authority had already spent Rs 14.4 billion on 12 projects designed for augmentation system during the last one and half years across the kV transmission lines of 109-km and 255-km length.

He said seven grid stations of 220 kV each and one grid station of 500 kV capacity were constructed in the country.

He said these projects helped a lot in strengthening the power transmission and distribution system, adding another eight new grid stations of 132 kV capacity each were also added on the system and 27 grid stations were extended with the installation of heavy duty transformer while augmentation work was carried out in another 27 grid stations in different parts of the country.

Khalid said that during the period under review, 132 kV line of 296 length were also erected at a cost of Rs 1 billion, adding that Rs 34.8 billion will be spent on 15 identical projects in the next two years and sites for this purpose had already been identified.

He hoped that with the addition of new grid stations and erection of high voltage transmission line, overall power transmission system of Wapda will further improve.

Referring to a news item regarding the output of Wapda appeared in a section of the press recently, he said Authority's system, the largest in the country is fully capable enough of meeting power demands in future provided all resources were made available timely.


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## Owais

*Pakistan to send port personnel to US for training * KARACHI: Federal Minister for Ports and Shipping Babar Khan Ghauri has said that PakistanÃ¢â¬â¢s port and shipping personnel will be sent to United States for extensive training. 

Ghauri during his visit to United States met with high level authorities at US ports and discussed matters of mutual interest while exchanging notes on improvement of Port facilities in Pakistan by incorporating latest technologies.


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## Owais

*BOI confirms acquisition of 1,200 acres for car plant*
 

ISLAMABAD, July 23: The Board of Investment (BOI) on Sunday confirmed that the Punjab government was in the process of acquiring 1200 acres of (agricultural) land in Sheikhupura district for a Mercedes assembly plant.

It, however, said that the land acquisition was in keeping with the requirement of industry and its future expansion, including vehicle testing track, vendor industries, warehouse facilities and a residential colony with ancillary facilities for employees. Ã¢â¬ÅThere is no intention to establish a racing track, a golf course or a hotel as mentioned in the write-up (DawnÃ¢â¬â¢s Saturday issue),Ã¢â¬Â it said.

The BOI also claimed that the Land Acquisition Act 1894 did not Ã¢â¬Åprohibit acquisition of land for any public purpose or a companyÃ¢â¬Â in any locality and that Ã¢â¬Åthe affected people would be given fair compensation for any land that may be acquired for the projectÃ¢â¬Â.

The BOI had been approached by Dawn for its point of view on the project before the report was published.

The board did not say at that time that a hotel, golf course and racing track were not part of the project. It did not explain on Sunday why BOI Minister Umar Ghumman and the Coastal Limited were quoting different investment figures of $5.85 billion and $1 billion.

The District Officer (Revenue) Sheikhupura in a judgement had cited one of the objections as: Ã¢â¬ÅThat the area under acquisition was beyond the actual needs of the project in so far as it contains a golf course (57 acres), hotel (50.5 acres), a race track (478 acres and an area of 98.7 acres for future expansionÃ¢â¬Â.

And he wrote in response: Ã¢â¬ÅIt goes without saying that this leviathan project is being undertaken as a joint venture in collaboration with Mercedes, a foreign company of international fame. Definitely the project will run by and under the supervision of a large number of foreigners, resident and non-resident. The spot is away from the big city rendering it absolutely necessary to cater for the mandatory living requirements in one campÃ¢â¬Â.

It has not been explained as to why the company itself wants land not more than 600 acres and the BOI puts it at 1,200 acres. The BOI also did not explain why agricultural land was chosen for the industrial unit in a province where tens of thousands of barren or uncultivable land is in abundance.

The report was based on documentary evidence and all parties had been consulted before it was published.


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## Owais

*Rs 1500 to Rs 4000 excise duty levied on foreign travel tickets * KARACHI: Central Board of Revenue (CBR) has levied Rs 15000 excise duty on foreign air travel, replacing previously 15 per cent levied excise duty. 

According to statement issued from CBR, the excise duty has been levied on the foreign travel in context of business and economy class tickets. 

Rs 25000 excise duty has been levied on each business class ticket for travel to Saarc countries, Africa and Afghanistan, whereas Rs 1500 on each economy class ticket for travel to Europe, Far East, China, America, Canada, Australia and South Africa. Rs 4000 excise duty will be charged on each business class ticket, while Rs 2500 on each economy class ticket to rest of the countries.

However, Pilgrims, ambassadors and airlines personnel as well as passengers traveling to Pakistan from any country will be exempted, according to the CBR statement.


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## Owais

KESC to invest Rs 20 billion to curb loadshedding 
*KARACHI *_(updated on: July 24, 2006, 20:24 PST_): The Karachi Electric Supply Corporation (KESC) on Monday announced spending of over Rs 20 billion in this fiscal year for improving its power supply system to overcome load-shedding and unexpected power breakdowns.

This was stated by Chief Executive Officer (CEO) KESC Frank Scherschmidt at a news briefing here in his office.

Principal Officer Public Relation KESC Sultan Hassan was also present.

Scherschmidt said new KESC administration had not enough time after taking charge of the Corporation to improve power supply situation in this summer but assured that citizens of Karachi would not face the same situation during the coming summer.

He informed that a new power generation unit was under construction with a cost of Rs 14 billion, which would generate 500 MW electricity.

"After functioning of this unit, demand and supply situation will improve to a large extent and people would get relief", he added.

To him, from the day one after taking charge of KESC, the new administration was facing sabotage as well as other conspiracies aimed at tarnishing image and performance of the Corporation.

He admitted that KESC customer service centres' performance was poor adding that the KESC was taking steps to computerised all its centres and they would also be linked with each others.

"Currently, we are not satisfied from our staff's performance and trying to improve it", he said.

To a query, he said decision regarding closure of shopping centres and markets was taken by the government but it helped to save 70 to 90 MW electricity and termed it 'useful co-operation' from the government to control the power supply situation in the city.

On the occasion, Sultan Hassan informed that the KESC would introduce computerised meters to control electricity theft, adding that these meters would be replaced after every three year.

He said the KESC had made an emergency plan to cope with any unpleasant situation during rainy season. Besides establishing a central rain emergency centre, the KESC will also depute one engineer in each town who would work with in co-ordination with town administration, he added.

Giving details of current power supply situation, he informed that one hour load shedding was expected to be carried out on rotation basis on Monday evening and night in residential areas including Liaquatabad, Civic Centre, Nazimabad, Valika, Orangi, North Karachi, Federal A and B Area grid stations.

Briefing the power supply situation, he informed that electricity from NKI was still not available due to problem at WAPDA end.

At Bin Qasim, unit No 6 was out of service and was expected to be normalised by Tuesday morning, he added.

He said there was a short fall of around 250 to 300 MW on Monday and load was being shed for one hour in rotation with a repetition of three to four hours in each group.

He informed that Uthal and Bela grids that were affected since yesterday evening had been normalised after rectification of fault by transmission department. He also informed that due to system constraints load was being shed at Mauripur and Elander Road grids.


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## Owais

US gives Pakistan over $62 million for education 
*ISLAMABAD *_(updated on: July 24, 2006, 21:21 PST_): The government on Monday signed a $62.7 million agreement with the United States to improve primary and higher education in Pakistan in 2006.

The total includes $40 million in support for the basic education focusing on school administrator and teacher training, schools improvement through parental and community involvement in school, and school construction in FATA.

Over $22 million is supporting Fulbright Scholarships for post-graduate studies by Pakistani students in the Untied States and need-based scholarships to 11 universities throughout Pakistan.

The bilateral agreement was signed at the Federal Government High Middle School, National Health Colony Chak Shahzad by US Agency for International Development (USAID) Director Jonathan Addleton. Khalid Saeed, Secretary of Economic Affairs Division had previously signed the agreement.

US Ambassador to Pakistan Ryan C. Crocker and Sajid Hasan, Secretary of Education both witnessed the signing.

Ambassador Ryan C Crocker addressing on occasion said: "The high level of support the American people provide for USAID's Education programme shows our commitment to quality education for all Pakistanis and our hopes for a bright future. In education lies opportunity and we are helping Pakistanis create and seize opportunities".

"The main goal of our education assistance is to make education an issue of personal commitment among all Pakistanis. We aim to involve parents and communities in the quality of their children's education and we aim to make classrooms active places where teachers and students are closely engaged with one another" he added.

The dignitaries visited the multipurpose resource center at the Girls School which was built in a partnership between the USAID-sponsored Education Sector Reform Assistance (ESRA) program and the parents and teachers at schools.

The resource center which houses materials and computers with educational software, is the result of one of the 5000 School Improvement Grants distributed under the ESRA program.

Rebuilding and equipping schools and providing teacher training will also be key components of USAID's $200 million reconstruction program in the earthquake-hit areas over the next four years.

The US, through USAID is providing more than $1.5 billion in development assistance to Pakistan over the next five years to improve education, health, governance and economic growth


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## Neo

AT the peril of earning the ire of Commerce Minister Humayun Akhtar, it has to be said that in essence the trade policy 2006-07 looks more like the old wine in a new bottle.

It is difficult to dig out something different in the current policy from the earlier policies. The thrust remains the same: Promotion of exports through diversification of product base and markets.

It would have looked more credible to put the bar a little higher than the conservative targets of $18.6 billion of exports, $28 billion imports and $9.4 billion trade deficit.

Are these targets understated to glorify the governmentÃ¢â¬â¢s performance when the actual realization of both import and exports surpass targets in the election year?

The trade policy could be construed to reflect governmentÃ¢â¬â¢s resolve not to succumb to the pressure of powerful lobbies for unconditional support in the form of subsidies and blanket exemptions. That aside, the unjustifiable high bound rates have not been revised in the policy reflecting the old mindset in the ministry of commerce that does not hold on its priority list the importance of fetching a respectable place for Pakistan on international trade indexes.

As for the trade with our neighbours, seemingly the current political developments weighed in favour of anti-India lobby within the establishment. That section managed to put measures aimed at establishing closer trade ties with India on the back burner.

It was interesting to watch the commerce minister speak. He opted for a more direct and a professional approach in the policy. In contrast to the verbose politically charged budget speech that was made by the minister of state for finance Omer Ayub Khan, the trade policy speech, mercifully, spared listeners of rhetoricÃ¢â¬â¢s. It dealt directly with issues related to trade and commerce.

In his trade policy pronouncements, the commerce minister even hinted at weaknesses in the government efforts to deal with hitches in the way of rapid industrialization.

Ã¢â¬ÂWe are facing a shortage of exportable surpluses and this is proving to be a major obstacle in an effort to rapidly increase our exportsÃ¢â¬Â, Humayun Akhtar remarked. At another place in the speech he said, Ã¢â¬Å...the ministry of commerce by itself cannot ensure export growth or contain trade deficit within certain limits. This is because the ministry functions within the overall economic environment of the country and its performance is therefore constrained by the impact other economic policies of the government have, on trade. Here I am referring to monetary and exchange rate policies and of course other policies affecting our GDP growth rateÃ¢â¬Â.

The significant patches of the policy included announcement that numbers of trade in services will be disaggregated to plan more rigorously for promotion of trade in this sector. The minister also informed that a decision had been taken to integrate figures of defence and services sector in the overall trade data collected and processed by the Federal Bureau of Statistics. Up until now, trade figures pertain to merchandise exports and imports.

An expert on trade diplomacy who has also served the government termed the trade policy as Ã¢â¬ËcomprehensiveÃ¢â¬Â. Ã¢â¬ÅThe fact that the government is looking towards value-addition and exports diversification is commendableÃ¢â¬Â, he said and explained that several initiatives of clean cotton, horticulture development, domestic commerce, fashion design, skill development, long-term financing, were all in the right direction.

But an economist of some repute was not impressed by the policy at all and termed most targets unrealistic. He went as far as to call it all as Ã¢â¬Åwindow dressingÃ¢â¬Â. His argument was that ahead of announcing such super-sounding plans as dazzle city and carpet city the commerce minister should have explained how much has actually been achieved on the earlier announced projects of textile city and one village one product schemesÃ¢â¬Â.

Ã¢â¬ÅIt all depends on the commitment and willingness of the government to actually implement what it projectsÃ¢â¬Â, he commented.

A senior economist felt that the governmentÃ¢â¬â¢s declared import, export and trade deficit targets had been pitched a little bit too wayward. Ã¢â¬ÅI fail to understand how will the government contain the import bill at $28 billion when both demand and prices are moving in the same direction and that is towards north?Ã¢â¬Â

On the issue of subsidy and concessions, some businessmen with interests in textile were not happy as the textile package announced a few days before the trade policy was not up to their expectations. The private sector demanded a support of Rs50 billion that they felt was necessary for the sector to cope with the pressures of globalization. Some textile trade bodies started a public campaign through advertisements in local media to pursue their case for more subsidies.

Ã¢â¬ÅIt is not fair to blame government for our failings. It gave support for a very long time. Now it is about time that the private sector gears itself up to meet business related challenges on its ownÃ¢â¬Â, Chaudhry Mohammad Saeed, President the Federation of Pakistan Chamber of Commerce and Industry said from Muzaffarabad over telephone commenting on response of the corporate Pakistan to the trade policy.

Ã¢â¬ÅSome of our colleagues are not ready to grow. They are stuck in Ã¢â¬Ëexemption eraÃ¢â¬â¢. They have not done benchmarking. They have not channelised R&D subsidy in a prudent fashion. They have not gone for branding of their products. This has led to falling unit prices, which is very unfortunate. For reversal of the trend, they need to put their own act together instead of again leaning on the governmentÃ¢â¬Â, he commented.

The head of countryÃ¢â¬â¢s premier trade body thought the trade policy direction to be satisfactory with emphasis on logistic improvements for facilitation and improving the competitiveness. Chaudhry Saeed, however, felt the government needs to do more to simplify procedures to create atmosphere of trust and transparency in the country.

Shabbir Dhanji, President Indo-Pakistan business forum expressed disappointment as he was expecting some concrete measures aimed at enhancing level of trade with India. In the trade policy speech the Commerce Minister Humayun Akhtar did refer to South Asia Free Trade Agreement (Safta) when he was listing trade diplomacy initiatives of the government.

Ã¢â¬ÅWe were expecting inclusion of more items on the positive list if nothing else but unfortunately India did not get even a mention in the entire policy speechÃ¢â¬Â, he complained. Ã¢â¬ÅIf we improve trade relations it would not be a favour to the Indians; it would be the most logical move for the benefit of both nationsÃ¢â¬Â.

Dhanji with interest in auto sector saw scope for both Pakistan and India in establishing closer trade relations. He said and many other businessmen concurred with his view that political bickering had held back the two nations for too long. Ã¢â¬ÅWe must keep walkingÃ¢â¬Â, he added.


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THE degradation of natural resources which pollutes the environment is a big threat to biodiversity.

Natural resources have been damaged mainly because of the failure to adopt sustainable change, misuse of chemical and pesticides, resource degradation, ignored biodiversity, neglect of human resource management and development.

The research on sustainable agriculture development and technology transformation was not encouraged nor efforts were ever made to save the indigenous knowledge for securing biodiversity. However, lately a team of dedicated workers have carried out a research on the Ã¢â¬Åeconomics of ecological agricultureÃ¢â¬â¢ to tackle the problem.

The basic objective of this research was to find out ways for optimising land ,animal and plant output for preserving natural resources and energy flows and to enhance the biodiversity, with the help of farmers.

This research was conducted in the four ecological regions of the province, i.e. Upper Sindh, Lower Sindh, Central Sindh and the desert areas to compare the economics of ecological agriculture as against the existing practices and for which a continuous interaction between farmers and officials was maintained and certain crops were selected to achieve the desired results.

The study showed that farmers use Ã¢â¬Ëfarm yard manureÃ¢â¬â¢(FYM) as fertilizer for increasing soil fertility and prepare pesticides from plants such as Ã¢â¬ËneemÃ¢â¬â¢, Ã¢â¬ËtobaccoÃ¢â¬â¢ and Ã¢â¬ËtoohÃ¢â¬â¢ which are easily available in these areas. Such a practice on the part of farmers proves useful in maintaining the ecological plot, whereas the chemically treated plot are managed with the chemicals.

According to these findings, the average crop (rice/cotton)yield of ecological plot is 18.5 maunds (one maund is equal to 40 kg) while the yield of chemically treated plot is 24.5 munds, which is obviously quite high.

Similarly, the average input cost of ecological plot is Rs7490 while the average input cost of chemical plot is Rs14935. The average output of ecological plot is Rs18793 while the average output of chemical plot is Rs21945.

This very clearly indicates that the practices of ecological agriculture are economically more beneficial compared to the existing practices as the average net profit of ecological plot is Rs8303 and the average net profit of chemical plot Rs7020.

The ultimate result of all this is that the farmers recognize the importance of ecological agriculture which is not only economically viable but highly supportive for enhancing biodiversity.

Moreover, ecological agriculture is safer for farmers compared to chemicals which leave their toxic impacts and also pollute the environment. In short, farmers and officials have recognized the importance of ecological agriculture and now, there seems to be a dire need to plan strategies for the promotion of ecological agriculture at a micro level in order to reduce farmersÃ¢â¬â¢ poverty with sustainable development of agriculture.

See in my eyes you dwell, be aware It may hit youÃ¢â¬Â

Now it is our ethical and moral responsibility to adopt such practices which have symbiosis relationship and less expensive, to achieve these objectives we must take initiatives for the promotion of ecological agriculture at micro level to reduce the poverty of farming community and mobilize them for understanding & compilation order to optimize Land: animal: Plant interaction for energy flow to enhance bio-diversity. These objectives can be achieved through the formation of farmersÃ¢â¬â¢ groups, farmersÃ¢â¬â¢ clubs and farmerÃ¢â¬â¢s schools to facilitate them for wide adoptability of ecological agriculture.


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## Neo

BALOCHISTAN has formulated a Ã¢â¬Åmedium-term development strategyÃ¢â¬Â (MDS) to create an enabling environment for private investment, develop human resources and to improve the water management to boost agricultural production.

For implementation of the MDS, the provincial government needs Rs1.5 billion. The policy document has been submitted to the federal government for approval.

The core objective outlined in the strategy is empowerment of the people to tackle widespread poverty. The MDS recognizes the people as stakeholders in the decision-making process and places their interests at the top of the list of priorities.

The poverty in the province is attributed to several factors including its geography and quality of human capital that increase the cost of social services. Presently, the poor are recovering from the devastating drought that plagued the province for the last five years. The ground water is being rapidly depleted. Only six per cent of the land is cultivable and productivity is low because of the arid conditions. The multiple indicators related to income and wealth, housing, transport and communication, education, health, gender equality etc. indicate widespread poverty.

The Human Rights Commission of Pakistan (HRCP) has observed that development plans must be focused on building civil society, including establishing press clubs, bar associations and community radio and television networks. This would bring its population to the main stream.

Ã¢â¬ÅThe concern of the people of Balochistan over demographic balance in the province must be considered when making decisions. This is especially crucial with regard to mega projects, such as Gwadar port, and acquisition of land by those based outside the province,Ã¢â¬Â the Commission observes.

Water development: The provincial Poverty Reduction Strategy Paper (PRSP) recognises water as a threatened resource in the province which is blessed with extensive groundwater resource. According to the hydrological map of Pakistan, out of total three main units, two are located in Balochistan. These units are: Indus River basin, Kharan desert basin and Mekran coastal basin.

The strategy calls for managing groundwater on a sustainable-use basis, recognizing the need for a great deal of planning, besides evaluating current practices such as the use of delay action dams. It is also aimed at improving the management of deficient water resources by reducing the overall impact of the water crisis.

The groundwater tables are on decline due to mismanagement. Streams and other sources of water are facing risk of over exploitation. . The provincial government is planning to undertake a number of new projects. To begin with, it has firmed up Balochistan Small Scale Irrigation Project which covers the Pishin Lora Basin (PLB), and includes entire districts of Pishin, Quetta, Mastung and partial coverage of districts of Killa Abdullah and Kalat.

The long-term water management programme will meet a long felt need for adequate quantity of water for agriculture, especially the expanding acreage of fruit orchards. Fruits are major source of income in areas where water is scarce. Trickle irrigation system is now a recognised method of irrigation which provides maximum possible water efficiency, claimed up to 90 per cent.

Agriculture development: The objective of the strategy is to increase farm output and raise per capita income with focus on raising productivity and improving natural resource management which are Ã¢â¬ÅcriticalÃ¢â¬Â for redefining the future water needs of the province.

The agricultural development is linked to the development of water resources. The lands are canal irrigated, Karezat irrigated, tube well irrigated and rain fed(or barani). About 229,824 hectares of area in the province is irrigated by tub-wells. Except Naseerabad district, there is no perennial system of irrigation. The crops contribute about 62 per cent of gross agriculture income which employs 67 per cent of provinceÃ¢â¬â¢s total workforce. About 75 per cent of the population lives in the countrywide.

Farmers are presently facing difficult times as frequent load -shedding and power breakdowns have created an artificial drought-like situation. Many rural areas are facing 8-12 hours load-shedding. And fluctuation in power supply has inflicted additional losses to farmers.

The power shortage in rural areas has severally affected food crops like onions, potatoes, zeera, and garlic besides green vegetables. There are many districts and tehsils like Mastung, Kalat, Khad Kocha, Manguchar, Gidar, Naushki, Abad, Kanak, Dulai, Ahmadwal, Diringar, Mal, Dasht, and Spilinji, which are hard-hit by water crisis. Fruit crops in northern Balochistan are similarly affected.

In order to obtain maximum irrigation efficiency, new water management techniques need to be introduced. It is envisaged to determine the ground-water potential plus the availability of surface water to attain optimum water resource utilisation. This can be achieved by adopting trickle irrigation system and lining of water distribution network to minimise conveyance losses.

Human development: Human development indicators here are the weakest among the four provinces and improvements will need concerted efforts over the long- term. The predominantly patriarchal social structures are a traditional challenge to human development and gender equality. The rugged and inaccessible terrain, limited water resources for irrigation, large illiterate population, ethnic diversity, and traditional womenÃ¢â¬â¢s status are added challenges to economic growth and human development in the province.


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THE government faces the twin challenge of reducing poverty and at the same time reducing the high population growth rate. Though the macroeconomic situation has been improved and official poverty figures have come down from about 34 per cent in 2001 to about 24 per cent in 2005Ã¢â¬â a decline of 10 per cent in four yearsÃ¢â¬â the poverty rate is still very high.

This state of affairs is certainly unacceptable. Better performance is needed on this front. A sustained economic growth rate plus more state spending to alleviate poverty should obviously be the official goal. The problem is that the government is not able to collect enough taxes to be spent on meeting the poverty challenge.

The tax revenue has grown over the years. For the last financial year it was Rs700 billion. Economic growth and tax reforms have pushed up the collection by CBR Ã¢â¬â 81 per cent over the past half decade. But this is still not enough because notwithstanding the improved CBR collection over the last few years, the tax-GDP ratio at 10.4 per cent is much lower than the average 17 per cent for developing countries.

In other words, the government is not collecting enough taxes and is unable to meet its escalating expenditures. The budget deficit has touched 4.2 per cent of the GDP and government must create a more efficient taxation system to collects more taxes. Also, the rich must pay more taxes.

The issue of fair distribution of the tax burden among various segments of the economy is equally significant. All incomes regardless of source should be taxed. No exemptions be given for any segment as is the case now. For example, income from agriculture is not taxed adequately. The sheer wastage in state spending needs to be curtailed by improving the delivery system.

The amount of money spent on defence is very high and unsustainable. Last year it was Rs241 billion. If we add Rs35 billion of military pensions in the given figure, it goes up even higher. For that matter, even the amount for this year is higher.

Given the low level of development, more money needs to be spent in improving the quality of life of the people step by step by increasing health and educational facilities and by providing them gainful employment. Focus on an efficient and cost-effective physical and social infrastructure is also vital to sustain the growth momentum.

Although the Ã¢â¬Åtrickle down effectÃ¢â¬Â may well occur, the state has to inject money directly to help the poorest of the poor. They cannot wait for other slow moving government programme to yield the desired outcomes.

The many official welfare schemes are simply not enough to make an immediate and significant dent in poverty. The responsibility of providing assistance to the poor is that of the state and it cannot be allowed to shrug off its responsibility that easily. Another glaring failure of the government is that it is not able to reduce the high population growth rate.

PakistanÃ¢â¬â¢s population is 160 million. While the earlier growth rate was a high 3.1 per cent, it has come down and is now estimated about 2.3 per cent. The infant mortality rate was very highÃ¢â¬â 126.7 per thousand in 1984-1985Ã¢â¬â, has come down to 77 per thousand which is still a high figure. Measures are needed to control our population explosion.

Better job opportunities, proper education and health services plus population control measures have yet to deliver. In the two very significant areas of poverty reduction and population control, government has failed to deliver.


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HAVING achieved a record rise in remittances of overseas Pakistanis to $4.6 billion in the last fiscal year, Pakistan now faces a prospect of falling inflows because of a big drop in the number of workers going abroad for employment.

And that can hurt the country in a global environment when the world oil price has touched $78 a barrel and PakistanÃ¢â¬â¢s balance of trade last year ran a deficit of almost $11 billion. And it suffered a balance of payment deficit of $4.1 billion in the same year.

While the remittances have been steadily rising during the last five years, particularly after 9/11, the number of senders of the money is declining because of the shrinking numbers of overseas Pakistanis.

Disturbing too is the fact that the Ã¢â¬ËhawalaÃ¢â¬â¢ system of remittance which went down after 9/11, has assumed a new vigour.

The number of new departures for working abroad is said to have declined by 50 per cent over the last three years. The number has come down from 0.223 million departures in 2003 to just 91000 in 2005.

A number of factors have contributed to that, including substantial changes in the quality and the qualifications sought by overseas employers. And the Gulf states prefer to provide employment to their own people rather than employ expatriate workers.

The global war against terrorism has also affected overseas employment of Pakistanis, as the employing countries have become cautious about Muslims, sometimes too arbitrarily.

The remittances which had touched almost $3 billion in the 1980s when a great many construction workers from Pakistan went to the Gulf states ,had fallen to $1 billion by 2001-02, when they rose to $4.236 billion and stayed at that level for three years, touching the record $4.6 billion last year.

But soon to come for Pakistan is the decline in the number of workers going abroad. It is not only that the Gulf countries including Saudi Arabia are prefer their own workers because of the possible political consequences of having too many expatriate workers in countries with small populations, but also the complaints against Pakistani workers are increasing.

A Kuwaiti minister on a visit to Pakistan last month was asked by Prime Minister Shaukat Aziz to employ more Pakistanis. He said that Kuwait had not employed any Pakistani worker last year and was not preparing to do this year.

Recently there was a shocking instance in Malaysia of some Pakistanis mistaking the South African Deputy High Commissioner in Kuala Lumpur for a rich tourist, kidnapping him, looting him and holding him under restraint for a week.

There have been cases of Ã¢â¬Ëkaro kariÃ¢â¬â¢ murders in Denmark among Pakistanis resulting in large scale arrests and trials.

There have been karokari murders in Britain as well, where some Pakistanis behave as if they are back home and are free to do what they do at home to punish their relations. There have been cases of Pakistanis staying abroad with wrong passports.

Sometime back, Norway expatriated 20 Pakistanis who were living there as Afghan nationals. Sometime ago a Pakistani killed his wife at a railway station where she had sought refuge in a home for battered wives. He was also suspected of killing four of their six children.

Such crimes get a great deal of publicity in the local press if not in the national press abroad and that is not helpful to get more overseas employment for Pakistanis when too many Muslims are mistaken for terrorists.

The number of Pakistanis overseas in between three and four million which is a floating population, as those whose terms of contract expires usually return home, but some disappear from their address the moment their contract expires and the local police have to track them down and expatriate them.

And they are a very small part of the overall migrant workforce in the world which is 200 million in size or three per cent of the population of the world. Pakistanis remit a small part of the global remittances of $400-450 billion. The average earnings of the Pakistanis is very low as compared to the Pakistanis and other skilled workers.

The Pakistan government has appointed community welfare attachÃÂ© in world centers with large number of Pakistani workers to help them with their problems, but they are not always able to prevent them from committing crimes.

The international organisation for migration last week held a workshop attended by officials of ten Asian nations to discuss and share the experience and best practices of labour migration polices . They were discussing mostly the problems of migration between the European Union and the Asian states. Among the countries participating at the Islamabad workshop were Bangladesh, China, Indonesia, Pakistan, Philippines, Sri Lanka, Thailand and Vietnam. Pakistan is trying hard to check illegal immigration or overstay of Pakistani workers abroad who then face expulsion as from Oman in large numbers periodically.

But the government cannot be too vigilant and spend vast sums in checking such illegal migration and overstaying.

Meanwhile the prime minister wants a taskforce to find ways of bringing the earnings of Pakistanis from countries where there are no Pakistani banks and no Pakistani foreign exchange agencies. Such a step is regarded essential when the Ã¢â¬ËhawalaÃ¢â¬â¢ is tending to come back to full life.

The government is also increasing by about 700 items which the Pakistanis overseas can bring in with no or partial taxation. That should improve the supply position in the country substantially without adding to the foreign exchange liabilities.

Pakistan can ill- afford a reduction in the home remittances when the world price of oil rises to $78 a barrel and the trade deficit targeted this year is $9.6 billion. So, it has to redouble its efforts to send more Pakistani workers abroad and collect their remittances through formal channels.


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KARACHI (July 25 2006): Mapak Edible Oils (Private) Ltd (MEO), a $14 million (Rs 840 million) Pak-Malaysia joint venture, will be commissioned at Port Qasim on July 25. At the same time, unveiling ceremony of the plaque for construction of another Pak-Malaysia joint venture, $16 million (Rs 960 million) Liquid Cargo Terminal (LCT) will also be held at the same venue.

Felda Westbury Qasim Enterprises (Pvt) Limited (FWQ) will be handling the LCT at Port Qasim. Both companies the MEO and FWQ are headed by Datuk Abdullah Yusoff as Chairman while Pakistan's leading industrialist M Basheer Janmohammed is the Deputy Chairman and Abdul Rasheed Janmohammed is Chief Executive.

MEO's modern edible oil refinery has been put up at Port Qasim's backup area in the port's operational zone. The Malaysian joint venture partners in this project are Felda Group, of Kuala Lumpur, headed by Tan Sri Dr Mohammad Yusof Noor (an autonomous Malaysian government body) and K L Kepong, Berhad, Ipoh, Malaysia.

The joint venture partners have rich experience of operating refineries in Malaysia. Pakistani partners are Westbury Group of companies, Karachi, headed by Basheer Janmohammed. The company has brought foreign direct investment (FDI) by creating value-addition in the edible oil sector in the country.

The refinery project has been instrumental in bringing modern technology of processing edible oil through continuous oil refining, termed as 'physical refining process' as compared to the process of conventional batch refining known as 'chemical refining', which has its own demerits, particularly higher process loss and higher input of utility consumption besides comparatively poor quality of the end product. Therefore, the 'physical refinery' project would add to the industrial development in the country. The establishment of this refinery would help local vanaspati/oil industry by making fresh and good quality refined palm oil locally available at people's doorsteps and would ultimately replace the import of RBD palm oil.

The project, based on latest technology, comprises 'physical refining' unit for processing 800 tons per day of crude palm oil and 200 tons per day of other crude soft oils (like canola/rape seed/soya bean/cottonseed oils etc). The company has acquired the most modern continuous refining plant from the internationally recognised manufacturers Alfa Laval. Based on installed capacity, 240,000 tons crude palm oil would be processed annually, besides other refined soft oils. The project has recently been completed and is being commissioned for commercial production of refined oils, particularly RBD palm oil.

In the field of liquid cargo terminal, FWQ was incorporated under joint venture agreement with Malaysia specifically for handling the project of LCT at Port Qasim. The Malaysian joint venture partners are Felda Palm Industries Sdn Bhd, Kuala Lumpur (an autonomous public sector body), which has major equity share in the company. Here again, the local joint venture partners are Westbury Group of Companies, Karachi, headed by Basheer Janmohammed.

The company has been awarded the project of LCT to be constructed on BOT basis. The agreement for the project executed with Port Qasim Authority (PQA) is now being implemented. The civil contractor, STFA Marine Construction Co, of Turkey, has mobilised resources at the project site to commence construction work after the plaque unveiling ceremony.


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ISLAMABAD (July 24 2006): The proposed 'Federal Board of Revenue (FBR) Act, 2006' would be submitted to the World Bank (WB) and the Board-in-Council for studying the viability of creating an independent revenue organisation, with maximum financial and operational autonomy.

The proposal of establishing 'Federal Board of Revenue' (FBR) is under review, and top CBR officials have expressed serious reservations over the draft of the proposed law.

Most of the senior tax officials have opined that the proposed 'FBR Act, 2006' is sketchy and poorly drafted, with overlapping provisions. Therefore, no CBR Member bothered to comment on it.

The Board-in-Council would discuss the draft in its meeting on Monday, July 24, and may give its comments to ensure its smooth implementation.

The viewpoint of the WB would also be considered for putting in place an independent revenue collecting agency.

Information collected by this correspondent shows that the proposed FBR Act 2006 is merely a copy of CBR Revenue Authority Act, 1998 chalked out during the tenure of a former chairman, Moin-ud-Deen Khan, in the late 1980s. The CBR has several models of autonomous organisations, like Securities and Exchange Commission of Pakistan (SECP) and State Bank of Pakistan (SBP).

Sources said that CBR under the previous Act had been working smoothly since its promulgation. However, need to introduce a new 'Act' arose considering the reforms and automation.

Sources said that the draft of FBR law should not be a bulky compendium, but it should carry comprehensive and easy to implement rules to make the organisation efficient and taxpayer-friendly.

The 'FBR Act, 2006' was formulated before the 2006-07 budget for enforcement from new financial year. But it was not cleared by the Board-in-Council due to legal formality of presentation before the Parliament. 

Many provisions of 'FBR Act, 2006' are already available under the Income Tax Ordinance 2001, Sales Tax Act, 1990 and Customs Act, 1969.

Under the proposed 'FBR Act', the Board would be empowered to prosecute any person, who allegedly commits an offence under Customs Act 1969, Sales Tax Act 1990, Federal Excise Act 2005; or any other offence under Prevention of Corruption Act 1947 or National Accountability Ordinance.

The powers to take action against tax evaders are already available under the above said laws. Similarly, the powers of enforcement and investigation are also available to tax officials. But 'FBR Act' has incorporated new provisions to examine the taxpayer record and prosecution against delinquent taxpayers.

Sources said that 'FBR Act' is also against the new organisational structure duly approved by the World Bank and the Board-in-Council. Under the new organisational structure, 21 directors-general would head different taxes/departments under the tax administration reform plan. They would report to six members including Member Customs, Member Sales Tax, Member Direct Taxes, Member Revenue Services, Member Management Services, Member Policy and Reforms and Member Internal Audit. On the other hand, 'FBR Act' says that the Board would comprise at least seven members, without referring to the new organisational structure.

Tax officials have strongly objected to the provision of 'FBR Act' to create companies. According to 'FBR Act', the CBR would get incorporated and maintain companies for training needs of its employees; research and development; educate taxpayers; upgrade skills of the employees and automation purposes.

The FBR may transfer or post or place any of its employees to work for the company. The management of such companies will be with the serving or retired members or officers of the Board. The CEO will be appointed from senior serving or retired officers with suitable qualification.

Sources said that establishment of companies for appointment of experts from the private sector is not a feasible idea. The proposed 'FBR' would be a government organisation where the concept of outsourcing the functions is not acceptable.

In case of Pakistan Revenue Automation Limited (PRAL), the company is working with CBR on the basis of a contractual agreement, sources said.

They said that 'FBR' proposes to levy reasonable penalty on government departments which refuse to give information about taxpayers to the Board. The departments covered under 'FBR' are government's divisions and its attached departments or corporations; provincial governments departments and corporations; banks, investment companies, or the other companies; commissions, regulatory bodies; housing societies; Wapda; Nadra; utility companies; corporations and withholding agents.

The 'FBR Act' provision of penalising government departments is not appropriate. Certain departments have legal backing to maintain confidential data on Pakistan's citizens. The 'Federal Board of Revenue' would create a national database of taxpayers, which would require information from these government departments, sources said.


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KARACHI (July 25 2006): Pierres Siellan, French Consul General here, has said that French investors may set up joint ventures with their Pakistani counterparts in agricultural sector, hotels, etc.

Speaking at the Karachi Chamber of Commerce and Industry (KCCI) here on Saturday, he said that bilateral trade between the two countries has reached $1 billion. France has a liberal policy towards issuance of visas to businessmen, he added.

Responding to questions, the French diplomat said that four experts have been appointed to study the Pakistan market and the Consulate would soon be organising a seminar on textile machinery here and these experts would be invited to make presentations.

Pierres Siellan said that there exist vast opportunities for investment by foreign investors. If invited or given opportunity to visit Karachi, they could come without any reluctance, as the city is safe and peaceful.

Walid Otari, Commercial Counsellor of France, who was also present at the meeting, advised Pakistani industrialists, seeking water effluent treatment plant, to contact French companies' offices in Dubai.

Haroon Farooki, President, KCCI, in his address said that Pakistan is the genuine gateway to South Asia and Central Asian Republics as it is integrated with two regional arrangements, namely Saarc and ECO. France could take advantage of Gwadar port to establish production base in Pakistan and tap the huge, largely untapped market of South Asia, Central Asia and Middle East.

Abrar Ahmed, Chairman, Diplomatic Affairs Committee, KCCI, and Majyd Aziz also spoke on the occasion.


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## Neo

ISLAMABAD (July 25 2006): Overseas Pakistanis should make huge investments in the country to help the government compete with India economically. This was stated by the Federal Minister for Population Welfare Shahbaz Hussain during his visit to Derby to attend "Kashmir Awareness Movement".

He said that conducive environment will be provided to overseas Pakistanis to divert their investments for developing the country's industrial base. "We assure you and the international community that we are for peace in the subcontinent, but the atrocities in the Indian-occupied Kashmir are continuing".

The minister said Pakistan offered help in Mumbai bombing investigations. "We share the pain of the victims", he said. Shahbaz said Pakistan is looking forward towards Britain and America to play their role in peaceful solution of the Kashmir dispute.

He said that Pakistan had taken the initiative and offered a hand of friendship to India but recently the Indian government had halted the peace process.

Pakistan has taken all the confidence building measures seriously but in return Pakistan did not receive positive response from Indian side, he said. The minister said that the Kashmiris of British origin must not rely on British government alone to resolve Kashmir dispute. They should be granted their right to self-determination as per the United Nations resolutions, he said. He said that pressure must be exerted on India to come to the negotiation table and resolve the Kashmir dispute according to the UN resolutions.


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BEIJING (July 25 2006): China sees connecting rail link with Pakistan a feasible project to serve their common interest, stepping up trade and business activities between the two countries.

This project could also be of great importance to provide easy access of their goods to Central Asia, Middle East and African countries. China will soon hold a feasibility study, exploring ways and means to undertake this project.

According to the official sources in Beijing, the Chinese side is actively considering, strengthening their communication links with Pakistan through rail and road. " We welcome Pakistan's proposals in this connection, and wish to extend support for optimism use of Gwadar seaport developing bilateral trade," said a senior Chinese official while talking to APP.

The technical and financial matters involved in the construction of the rail link up to Kashgar and the Sust check post, will be considered at the experts' levels.

The sources hoped that the rail link would open vast opportunities for Pakistan and China to deepen their trade and business interactions both at bilateral and regional levels.

According to the sources, China welcomes joint ventures that help enhance their mutually beneficial co-operative partnership. This rail-link project could be another milestone in the development of their economic ties.

The China's Xinjiang autonomous region has already expressed its willingness to undertake necessary spadework, connecting China with Pakistan through rail. The Governor Xinjiang Region Ismail Tiliwaldi has stated early this year, during his meeting with a delegation of Pakistan Muslim League that his government will soon start necessary work to find out possibilities of operating a rail network between the two brotherly countries through Kashgar.

The two sides agreed that the China's western region has rich potential to emerge as hub of Sino-Pak business activities. Pakistan and China have already started a regular bus service between Kashgar and Gilgit.

China enjoys rich potential and technical know-how to expand its rail link to the country's mountainous regions. It proved its worth, by connecting China's Qinghai province with Tibet last month. In accomplishing this task, China solved three major difficulties to rewrite the world's history of railway construction. The difficulties were frozen tundra, high altitude and plateau environmental protection, said Zhu Zhensheng, vice director of the Ministry of Railways office in charge of the new line.

About 550 kilometres of the tracks run on frozen earth, the longest in the world's plateau railways, posing great challenges for designing and construction, he said.

The oxygen content along the railway is only 50-60 percent of that at sea level as 960 km of tracks are located at more than 4,000 meters above sea level, Zhu said.

The annual average temperature on the Qinghai-Tibet Plateau is below zero degree Celsius with the minimum temperature at 45 degree Celsius below zero.

None of the hundreds of thousands of workers died of altitude sickness in the past five years, making a medical miracle, said Professor John West with the School of Medicine, University of California, San Diego.

More than 600 doctors and nurses served for the construction project and there was one clinic every 10 kilometres along the line, making sure that any sick worker could get medical treatment within 30 minutes.

However, when the country built a highway between Qinghai province and Tibet in early 1950s, almost the construction of every one kilometre of the road would claim one death.

The 1,956-kilometre-long Qinghai-Tibet railway is the world's highest and longest plateau railroad and also the first railway connecting the Tibet Autonomous Region with other parts of China.


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LAHORE (July 25 2006): Punjab government will spend an amount of Rs 14 billion to expand the existing road network in the province during current fiscal 2006-07. The said amount will be utilised by district governments, official sources said, adding the government had embarked upon a strong road infrastructure developing plan focusing both on inter-city express ways and intra-city road network.

The main Sialkot-Lahore Motorway project, to be completed this financial year, would reduce the travel time between Lahore and Sialkot to 45 minutes.

Linkages would be provided to this Motorway from Gujrat, Wazirabad and Gujranwala to extend the benefits of this motorway to a large regional population. The said motorway would be connected to the Lahore Ring Road project, which has already been initiated by the government.

In Punjab, sources said, the communication by road was the predominant mode of transport. It carries more than 90 percent of the passengers and freight traffic with an average growth rate of 4.5 percent and 10.5 percent respectively.

In 2002, the Punjab's roads network was 40,000 kilometres, which increased to 67,000 kilometres by end 2005. Since 2003-04 the expenditure on road sector in the Punjab has been in excess to Rs 30 billion, benefiting the entire population of the province and creating project related temporary jobs in excess of 800,000.

To maintain the present tempo of infrastructure development, sources said, Rs 14,000 million would be used in running fiscal under the Medium Term Development Framework (MTDF).

The main features of government's road sector development policy are to sustain and promote economic activities, provide province wide north-south and east-west corridors linking national motorways to address emerging national and international travel and trade demands.


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## Neo

KARACHI (July 25 2006): The City District Government Karachi (CDGK) is going to install a biogas plant in collaboration with a New Zealand firm at an estimated cost of $135 million on a 3-acre plot in the metropolis.

District Co-ordination Officer (DCO) Fazl-ur-Rehman on behalf of CDGK singed the Memorandum of Understanding (MoU) with Tony Woods of Empower Consultants Limited of New Zealand, while the City Nazim Syed Mustafa Kamal was also present on the occasion here at the DCO Camp Office on Monday.

Later, addressing the press conference the City Nazim Syed Mustafa Kamal said that the proposed plant would have the capacity to generate 30MW to 35MW electricity besides generating CNG gas and 15 tonnes of fertiliser per day. Around 3000 jobs would also be created through the proposed project, he maintained.

The project would be installed in the cattle-colony on around a 3-acre plot, he said and added that the firm would undertake the installation job from now and would also bear all expenditures of the project.

He was of the view that the manure had been wasting and was being flushed into the sea, therefore it was felt necessary to utilise it for energy purposes, he said and added that fertiliser produced in the proposed plant would also be exported to other countries.

He said the plant would function as a model project for one-year, however its results would come out within six months.

Tony Woods apprised the newsmen of their continued strive for last 10 years and now in this CDGK they managed to get the approval for the project. He said Empower Consultants were providing services in 26 countries around the world.


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## Neo

ON July 18, the SBP finally adopted a regulatory measure to tighten monetary policy that many observers expected as early as June 2004. Better late than never!

It has come against the backdrop of monumental expansion in bank credit and currency in circulation witnessed during the past three years, and the credit overhang it gave rise to, which has accentuated the economyÃ¢â¬â¢s vulnerability to shocks.

Hike in cash reserve requirement (CRR) and statutory liquid ratio(SLR) (belatedly being supported by the IMF, as well) became necessary because banks seemed to disregard the SBP advice on areas including the credit growth (especially unsecured credit), equity trading, maintenance of liquidity, return on deposits and offering attractive term-deposit products to retain savings for commercial lending, project finance, mortgage lending, etc.

An impression was created that the SBP canÃ¢â¬â¢t Ã¢â¬ËdictateÃ¢â¬â¢ pricing mechanisms. Surely it didnÃ¢â¬â¢t, but it got around this Ã¢â¬Ëfree marketÃ¢â¬â¢ taboo without upsetting the applecart; rise in the reserve requirements was engineered to penalize banks with excessive holdings of volatile (and therefore unfairly priced deposits) and reward those that have built deposit bases of longer-term (and therefore fairly priced) deposits.

The distinguishing feature of the regulation is that the reserve requirements are based on deposit tenors rather than on their maturities. Even a six-month deposit that is not cashed prematurely will continue to attract right up to its maturity the lower cash reserve requirement of three per cent and not seven per cent that now applies to volatile deposits. The message is clear: banks should offer realistic profit rates on deposits so that they revive a savings culture.

The estimated level of bank deposits is Rs2.8 trillion of which only 13 per cent (Rs360) billion have maturities exceeding six months (shocking, isnÃ¢â¬â¢t it?) and the remaining 87 per cent (Rs2.440 trillion) have maturities of less than six months (even more shocking, isnÃ¢â¬â¢t it?). This maturity profile shows large tenor mismatches between loans and the liabilities funding them. It doesnÃ¢â¬â¢t inspire too much confidence in banksÃ¢â¬â¢ management of their internal liquidity.

We are now experiencing the consequences of de-regulating the financial services sector without putting in place mechanisms that promptly check mis-allocation of national savings to marginally or counter-productive sectors. An example thereof is consumer finance (a staggering 23 per cent of the total outstanding credit in a resource-starved country) that pushed up consumption, imports and trade deficit to a record level.

For any developing country, consumer lending to this level is inadvisable, especially if it leads to higher imports, a large part of which are funded by volatile bank deposits. In Pakistan, even the entire stock of long-term deposits (13 per cent of total) is well below the level of consumer credit that constitutes 23 per cent of total bank credit. This scenario depicts over-aggressive and risky lending that borders on lack of professional responsibility.

On July 22, increase in cash reserve requirement (CRR) will suck out Rs49 billion from the banking sector. Banks already hold enough approved securities to take care of the three per cent rise in the Statutory Liquidity Requirement (SLR). Therefore, the overall impact of rise in reserves on the market liquidity will be more or less that on account of the rise in the CRR, and will suck out what the banks hold in their un-utilized liquid asset portfolios.

One view is that the move will up interest rates by two per cent. Firstly, even if such a hike takes place, it shouldnÃ¢â¬â¢t apply to secured-commercial credit; it should apply to consumer and unsecured credit. Secondly, believing that demand for credit will stay at its current level is unrealistic. With fewer rupees to lend, banks will re-think their consumer and lending strategies. But the illogically high profits banks had gotten used to making will certainly be squeezed.

Logic suggests that consumer and unsecured credit will become dearer and would also be curtailed bringing down the demand for credit. This is necessary for containing un-productive imports at the expense of starving the local industry. But it does pose the risk of delinquency of these portfolios.

Surely, while extending these loans banks knew the consequences of a rate hike on their borrowers. It is too bad if they didnÃ¢â¬â¢t. Hopefully, we will not hear sad stories about the star performers of the recent years.

An important benefit would be banksÃ¢â¬â¢ partial liquidation of their equity investments, which had a role in distorting the countryÃ¢â¬â¢s stock markets of which the March 2005 meltdown has become a dangerously contested issue. Some banks got used to earning up to 70 per cent of their profits from stock trading, which was bad. This is another aspect that the SBP had hinted at but which banks decided to ignore. Now banks will have to re-think their niches in stock trading.

As far as the impact of a fractional rate hike on lending to industry is concerned, let us not forget that, recently, both the MoC and the SBP announced large packages of financial incentives, which should suffice for the moment. Industry must also realize, that the bill for the concessions it keeps demanding, is eventually footed by the ordinary Pakistanis, who have had a bad deal for decades at a stretch.

Hikes in reserve requirements are warranted by imbalances that continue to grow in spite of the central bankÃ¢â¬â¢s warnings. This is precisely what happened. During the past five years, the DFIs were unceremoniously wound up and development financing was shifted on to commercial banks but it didnÃ¢â¬â¢t arouse banks to the need for developing investment products to shore up term funds.

Banks are funding both medium-term industrial projects and mortgages out of short-term sources, which are increasing liquidity and systemic risks. This trend has to stop, the sooner the better.

Undoubtedly, the governmentÃ¢â¬â¢s refusal to float its term paper to set interest rate yardsticks is unfortunate but if banks are undertaking term-financing they canÃ¢â¬â¢t indefinitely wait for the government bonds to set the trend for floating their own debt paper. They must either float their bonds and collect term funds, or opt out of term financing activities. It may force the government to recommence floating term debt paper but no central bank can overlook for extended periods serious mismatches in asset/liability tenors.

The need for saving canÃ¢â¬â¢t be over-emphasized. Countries wherein bad lending practices encourage over-spending destroy the culture of saving and eventually fall in a bottomless pit. We simply cannot encourage wasteful consumption because it destroys the nationÃ¢â¬â¢s hard-earned wealth, which, in our case, has never been enough.

We seem to be developing the habit of living on borrowed money. The yawning trade, the BoP and current account deficits are growing at an alarming proportion. Rise in imports is shockingly high and has undeniably been nourished by easy availability of credit at almost throwaway prices. All this reflected an attitude of collective irresponsibility. Rise in interest rates will enforce cutting waste and unnecessary consumption, which we were becoming oblivious to.

New reserve requirements will hurt the big banks that have huge bases of the least fairly rewarded saving deposits. It is important that the SBP stands by its decision to up the reserve requirements, and not succumb to pressure for reverting back to the reservesÃ¢â¬â¢ 2003 levels. The country must rejuvenate a savings culture by forcing banks to offer fairer returns to their depositors. Only then will banks realize the sanctity of deposits, prevent their deployment in marginally useful imported goods and contain the need for external borrowings to pay for them.

To help banks in this endeavour, the SBP must seriously consider laying down the infrastructure (with requisite security checks) that can permit banks to issue negotiable Certificates of Deposit (CDs). It is the need of the hour because on the one hand it assures the CD issuing bank sustained liquidity and on the other gives the CD holder the assurance of ready liquidity. Admittedly, it is a risky project but it must be undertaken to strengthen a saving culture along sound lines.


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## Neo

Tuesday, July 25, 2006 

KARACHI: Pakistan is expecting a bumper crop of 13,800,000 bales (170 kgs each) in the 2006-07 season about one and a half million bales more than last yearÃ¢â¬â¢s crop.

Cotton growers and experts said on Monday that the local crop was progressing well and that a bumper crop was expected. The level of rainfall expected is also a concern for the standing crops as if rains are too heavy they might affect crop size and even the quality of the crop. A senior trader, Ghulam Rabbani, said if there would be no rains it would create a low moisture condition and dry weather result causing flower shedding or lower growth of plants which will be another loss for the crop.

He said according to the All Pakistan Textile Mills Association (APTMA)Ã¢â¬â¢s plea to the government to give more incentives to the countryÃ¢â¬â¢s largest industry, that provides 13 million direct and indirect jobs, and contribute to about 67 percent of export earnings. This is a huge investment portfolio as the industry has invested $7 billion up to now in the the Balancing Modernising and Reconstruction (BMR) programme introduced by the government in 2000. 

Ghulam Rabbani said the APTMA had appealed to the government to announce more incentives for the industry and to help them survive cut throat from competitors from India and China. He added that these countries had government partnerships which helped enhance the export business. 

Mr Rabbani said local cotton is vital for the domestic textile industry. However the high mark up low export refinancing was making the business environment difficult. 

He said USDA estimated that world produce was estimated at 24,899,000 tonnes and expected consumption was 26,509,000 tonnes while Cot-Look estimates stated that world production was expected to be 24,599,000 tonnes and consumption was estimated by at 26,736,000 tones.

The India Cotton Advisory Board announced a crop estimate of around 24,400,000 bales (About 4 million tones) in crop year for 2006-07 with a smart gain of around 2,600,000 bales (170 KGS each) which is a little higher than the estimate by the Indian Cotton Corporation which is 24,317,000 bales. 

He said the domestic requirement stands at 22 million bales. Ghulam Rabbani added that millers were very happy with the textile package introduced by the Indian government with a bundle of tax relief in the form of lower duties, lower mark ups and export refinancing at attractive rates. 

He said the China Cotton Association announced official estimates for the requirements of raw cotton for domestic industry which is said to be around 10 million tonnes while local production has been estimated to be 6 million tonnes and there will thus be a very large gap between production and the consumption in China this year. 

He said the Chinese local market was showing a return to the hand to mouth purchasing of previous days. Mills are maintaining low inventories. Recent references to the need for the market to function more transparently have attracted attention, ideas have subsequently been floated as to how the balance of commercial stocks (particularly of Xingjiang cottons) might be moved through marketing channels without impending the import process, he added. 

He said the United States Department of Agriculture (USDA) announced a production estimate of 4,463,000 tonnes of production of cotton for the 2006-07 year, about 738,000 tonnes less then the last crop which was 5,201,000 tonnes. According to the USDA, US domestic consumption stood at 4,788,000 tonnes and the rest will be available for export.

The crop progress report released by the USDA last week showed a negative trend overall and only Texas, the largest cotton production state, produced 3.5 million bales less than last yearÃ¢â¬â¢s crop. A CONAB official from an association of raw cotton in Brazil, announced crop estimates for the 2006-07 crop year which is said to be around 1,048,200 tonnes. 

He said Brazil was a totally export-oriented industry and was building its reputation ocer the last few years through what he called the committed quality/in-time shipments to its buyers around the world. The province of Mato-Grasso with its variety of medium and long staple cotton called Matto-Grasso is on top with supplies of export grade cotton approaching 37 percent of national cotton production.


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## Neo

Tuesday, July 25, 2006 

LAHORE: Pakistan PC/Server shipments grew 19.1% in Q1 2006 to 128,729 compared to the same quarter of previous year, said a report of Springboard Research, a leading innovator in the IT Market Research industry. 

The report further added that the government spending picked up again in the quarter after slowing down in Q4 2005 due to the October 8 earthquake. Government PC shipments registered growth of 35.3% as compared to Q4 2005 and continued to be the biggest buyer of computers with a 22.4% share. 

The Pakistan government continues to focus on increasing IT awareness and penetration in the country. Moreover, improved infrastructure, bandwidth connectivity, and telecommunications have accelerated the momentum in the IT market. 

The trend of increased PC purchases by households in smaller towns and cities as witnessed over the past several quarters, continued to be steadfast in Q1, 2006. In addition, the favourable developments in the South East Asia region will also have a positive affect on the economy of Pakistan. 

Ã¢â¬ÅPC/Server consumption in the country continues to be dominated by the government and large corporate sectors such as manufacturing, telecom, banking and financial services, and IT-enabled services,Ã¢â¬Â said Rehan Ghazi, Pakistan Market Analyst, Springboard Research. The growing trend of automation in the local industry, both in the public and private sectors generated substantial business opportunities for MNCs and local players in the same period. Aggressive pricing by the PC vendors also helped improving the PC penetration, especially in the households and the SMB segments.Ã¢â¬Â 

Among all the product segments, the portable segment experienced the highest growth of 22.4% year-to-year. The high growth in the portable market is mainly attributed to reduced prices and high consumption by the corporate sector, IT companies, financial institutions and government bodies. 

HP led the market with 5.2% share of total desktop shipments in Q1 2006, followed by Lenovo and Dell. The import of second hand computers, piracy and a lack of proper training of IT professionals are some of the major hurdles that continue to affect the strength of the growth of branded PCs in Pakistan. 

The governmentÃ¢â¬â¢s preferential treatment toward local vendors for IT procurement appears to be working towards local industry growth. In-box and Raffles, two local brands, ranked 5th and 6th respectively in Q1 with a total desktop market share of more than 5%.

Ã¢â¬ÅWith strong economic indicators and a strengthening IT landscape, we expect the PC/Server market to gain momentum in 2006. Our outlook on the country remains optimistic and we expect the market to generate 25% growth in unit shipments in 2006 and maintain a level exceeding 20% in 2007 and 2008,Ã¢â¬Â noted Dane Anderson, Vice President, Springboard Research. Ã¢â¬ÅWith the new fiscal budget for FY07 declared in June 2006, we expect to see an increase in government IT-related spending due to the continuous automation of both local and national level authoritiesÃ¢â¬Â he added.

Asia Emerging Countries Tracker is a Springboard Research service that tracks PC/Server market developments in Bangladesh, Brunei, Cambodia, Sri Lanka and Pakistan on a quarterly basis. The methodology employed for this service leverages interviews with IT resellers, vendors, component suppliers and end-users at the local and regional level.


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## Neo

KARACHI: The Chinese investors have expressed their interest in the development of Karachi Mass Transit Project Corridor-II and have said that work on this project would start soon. 
A delegation of Chinese investors called on the City Nazim Syed Mustafa Kamal at his office on Saturday. On the occasion, the DG Karachi Mass Transit Cell Malik Zaheerul Islam and EDO Revenue Salah Ahmed Farooqi were also present. 

The city nazim informed the Chinese investors about the development project continuing in the city and invited them to invest in the city as there was ample opportunities of the business, besides, the city government would also provide every possible help to them in this regard. 

The Chinese investors were briefed about the six corridors of Karachi Mass Transit Project and informed them that the proposals were already submitted for the development of light rail mass transit system on Corridor-I from Tower to Sohrab Goth and the it was under scrutiny. 

The investors had showed their interest in Corridor-II for the development of mass transit system from Orangi Town to Cantonment Station via Goliamar and Garden.


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## Owais

*Ban on jobs in Sindh goes* 

KARACHI (July 25 2006): The Sindh government has lifted ban on employment forthwith. This was stated by Chief Minister Dr Arbab Ghulam Rahim while presiding over a meeting at the CM House on Monday to review the development projects envisaged for fiscal year 2006-07.

He said that for the benefit of the people, decision to lift ban from jobs had been taken and emphasis on education had been increased. The chief minister added that prudential development policies of the provincial government have begun to attract foreign investment in Karachi. He said that more foreign investment would flow into Sindh when the ongoing infrastructure development projects, under last year's ADP, would be completed.

He said that new vegetable markets in Karachi, Mirpurkhas and Tando Allahyar, and meat, fish and vegetable markets in Qasimabad, Hyderabad, were being set up.

To give shape to President's 'white revolution' idea, cattle colonies and dairy villages were being set up under the supervision of district governments and in the private sector, he said.

At Kinjhar Lake, a modern organisation for fish seed development would be set up to provide advisory and technical support to fishermen living on both banks of Indus.

Rahim said that he would like to see in place a mechanism to ensure timely monitoring and evaluation of all ongoing development projects so that the quality of work and financial discipline could be maintained.

He said that under the advice of the President, emphasis on development work would bring prosperity in the province, and there would be more jobs and more civic facilities for the people.

He said that gone were the days when Sindh had overdraft/loan ranging from Rs 6 billion to Rs 7 billion. "We have cleared this loan, and the province has surplus to spend on the welfare of the people of the province," he added.

During the current financial year, the condition of more than 43,000 schools would be improved and 1,200 new schools would be opened. In addition, each Tehsil would have at least one English-medium school.

He said that irrigation system was being improved to ensure water supply to tail-enders also. The process of de-silting is in progress on fast track basis. The work would be completed on priority basis, he added. The chief minister said that there would be a new medical college and an institute of business management in Mirpurkhas.

Dr Arbab said that health facilities would be extended to health-deficit areas, and there would be either new health outlets or the existing ones would be improved to meet the requirement of the people.

Chief Secretary Fazlur Rehman briefed the chief minister on the ongoing projects nearing completion and on those that would be taken up during the current fiscal.

Among others, additional chief secretary development, senior member Sindh board of revenue, secretary finance, home, works and services, irrigation and power, fisheries and livestock, education, agriculture, industries, mines and minerals, principal secretary to chief minister and other concerned officers attended the meeting.


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## Owais

SBP set to reaffirm tight monetary stance 
*KARACHI *_(updated on: July 25, 2006, 15:18 PST_): The State Bank of Pakistan (SBP) is expected to reaffirm its tight monetary stance when it unveils its half-year policy statement on Saturday, analysts said.

The SBP is also likely to voice growing concerns over the country's rising external deficit, they said.

But analysts doubted whether the bank would opt for any significant depreciation of the rupee, although the carefully managed currency has been allowed to ease very gradually.

"It is very likely that the central bank will once again highlight its concerns regarding the growing external and fiscal imbalances," said Asif Qureshi, head of research at brokers Invisor Securities.

"But it is unlikely that it would allow a weakening of the rupee, as it apparently wants a stable exchange rate," he said.

The bank has raised concerns over a current account balance that has swung from a $1.8 billion surplus in 2003/04 to an estimated $5.7 billion deficit in 2005/06.

But despite the ballooning deficit, the rupee shepherded by the central bank, has held largely steady.

On Tuesday, it traded at 60.31/33 per dollar, less than one percent weaker than its exchange rate in January.

"In the short run, there is very little chance of a weakening in the rupee," said Mohammed Sohail, director of research at Jahangir Siddiqui Capital Markets.

"Maybe three months from now, the central bank may allow a two percent depreciation, but not at the moment," he said.

Invisor's Qureshi said the central bank was trying to facilitate exporters through interest rate concessions instead of a weaker rupee.

The central bank has already announced a reduction of 1.50 percentage points in its export refinance rate to 7.5 percent.

*NO LOOSENING EXPECTED *

Analysts said the central bank was unlikely to change its tight monetary policy stance despite a fall in headline inflation.

In 2005/06, inflation in Pakistan, as measured by the consumer price index, stood at an average of 7.92 percent, compared with 9.28 percent a year ago.

The government is targeting to reduce inflation to 6.5 percent in 2006/07.

Earlier this month, the central bank said in its quarterly economic review that a loosening of monetary policy was not advisable while inflation pressure remained and growth was strong.

A few days later, it raised the mandatory cash reserve requirement (CRR) for banks to 7.0 percent from 5.0 percent, in an attempt to check money supply and control private sector credit growth, and thereby counter inflation.

It also raised the statutory liquidity requirement (SLR) for banks to 18 percent from 15 percent.

"These moves are a clear signal that the central bank will continue its tight monetary stance despite the fact that headline inflation is coming down," said Sohail.


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## Neo

KARACHI (updated on: July 25, 2006, 23:02 PST): President Pervez Musharraf on Tuesday said Pakistan provides vital connectivity to all trade and energy linkages in the region.

"Pakistan is in the centre of the region and no commercial activity and energy linkages can be possible without its participation", he said while inaugurating $14 million MAPAK Edible Oil Refinery set up under a joint venture between Westbury Group of Company Pakistan and FELDA of Malaysia.

"Pakistan has a unique geo-strategic location. We are in the centre of the region which is surrounded by energy sources. It is looking for energy exports to the world and within itself. None of this is possible without Pakistan's participation", he noted.

The president noted that Pakistan is the hub of Middle East, Gulf, Central Asia, Afghanistan, China and India. Any economic and commercial activity, any energy linkages, Pakistan has to be involved, otherwise not possible, he added.

The president said that Pakistan will utilise its strength and added that communication infrastructure has to be developed to facilitate this interaction in the region and with outside world.

This included construction of ports, roads, railway and air terminals, he added.

The president asked Port Qasim Authority to come up and facilitate investment at the port. So much land is available here. This should be utilised for industrialisation, joint ventures, and investment by removing bottlenecks.

Commending the performance of Port Qasim and its chairman, he said that they should do more to further improve their performance.

Port Qasim can be the largest industrial estate in Karachi and Sindh if utilisation of land is fast for purpose of industrialisation, he added.

He said that security of investment and profitability are guaranteed in Pakistan due to rising demand and increase in purchasing power of Pakistanis.

"The future of investment is guaranteed in the policy of liberalisation, deregulation and privatisation is continued to be followed and we are determined that it will continue and investment will keep coming into Pakistan", he added.

Referring to tourism promotion, the president asked Karachiittes to visit historical places and tourist attraction in the country and promote tourism within country.

Appreciating Malaysian investment in Pakistan, he said that the bilateral relations are deeper and taken new dimension with the increased people to people contact.

"Pakistan cherishes and values its relations with Malaysia. These will remain strong for all times. They will remain ever green", he added.

Earlier, Minister for Port and Shipping Babar Khan Ghauri said that a UAE-based group will invest $3 billion in the construction of residential and commercial facilities on several island at Karachi coast.

He said that Port Qasim has attracted a foreign direct investment of $750 million in last few years. The reserves of PQA have surged from Rs 6 billion to Rs 11 billion while the number of operational units at the port rose to 91 while 71 units were underway.

He said that five new ships have been registered with Pakistani flags by the private sector and more were in the pipeline.

He criticised the opposition for merely labelling accusation and coming up with positive thinking for development.

Chairman Federal Land Development Authority (FELDA), Dr Mohammad Yousuf Noor in his welcome address said that his organisation was taking up three projects at a cost of $35 million including the completed edible oil refinery, jetty and cargo terminal.

He said the refinery has a capacity of refining 800 metric ton edible oil per day and 200 MT of soft oil per day.

Besides, his organisation will also provide training and job opportunity for locals.


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## Owais

*Planning Commission assigned role of think tank* 

ISLAMABAD (July 26 2006): Prime Minister Shaukat Aziz, chairing the second meeting of the Planning Commission here on Tuesday, assigned the Planning Commission the role of a think tank and tasked it to prepare 'Vision 2030' to make Pakistan a developed industrial state, having modern infrastructure and professional skills to face the challenges of globalisation upfront and take its economic benefits on long-term basis.

The Planning Commission's meeting was held after 22 years. The first meeting was held in 1984, during the Zia regime. Deputy Chairman Dr Akram Shaikh and other members briefed the Prime Minister on the functioning of different departments of the commission.

The Prime Minister said that the Planning Commission should take the lead and perform the role of a think-tank to provide inputs to the government for policy-making. He said its immediate assignment would be to study the situation on the ground on the economic front and prepare the short-, medium- and long-term strategies ranging from 5 to 25 years for all key sectors of the economy.

He directed the Deputy Chairman to take all necessary steps to make the Planning Commission a real brain, and prepare working papers for federal and provincial ministries and co-ordinate among them to ensure that various strategies remain in line with the laid down principles.

Shaukat said that the Planning Commission should also enhance sectoral expertise and follow an objective approach to help the government sustain growth rates between 6 and 8 percent for 10 years.

He also assigned it the role of facilitators to raise investment to 20 percent, exports to 15 percent to GDP, besides increasing literacy rate, through quality education, and health services, develop infrastructure compatible to globalisation needs, poverty alleviation, industrialisation with strong linkages to SMEs and developing global skills and creating job opportunities.

The Prime Minister said planning should based on vertical and horizontal integration to avoid overlapping and duplication that can result in waste of the national resources.

He said that the Planning Commission should guide the federal ministries to make project management more efficient and, over a period of time, help them to build their own capacities to get out of the micro management of projects.

The Prime Minister also wanted the Planning Commission to play a vibrant role for achieving food, energy and water security. Other areas where he wanted a proactive role of the commission were development of modern infrastructure and enhanced productivity to benefit from globalisation and transforming Pakistan into a knowledge-based economy.

The Prime Minister said that the Planning Commission should come up with short-, medium-, and long-term plans to deal with sewerage and drainage problems.

Talking to _Business Recorder _after the meeting, Dr Akram Shaikh said that the Planning Commission was well-equipped to take up the new role. He hinted at taking some structural changes to take on the assigned job of a facilitator and think-tank upfront.


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## Owais

*Consistent economic policies to ensure foreign investment: Musharraf inaugurates palm oil refinery* 

KARACHI (July 26 2006): President General Pervez Musharraf on Tuesday inaugurated the $14 million MAPAK Edible Oil Refinery set up under a joint venture between Westbury Group of Company, Pakistan and FELDA of Malaysia palm oil refinery in Karachi.

He held out a firm assurance that Pakistan would continue to maintain consistency in its economic policies to ensure an attractive environment for foreign investment. "The success of our economy is because of our over-arching policy of deregulation, liberalisation, and privatisation, he said at the facility.

He described the country's privatisation programme as the backbone of this policy. He said it has helped revive and reinvigorate the economy and turned the balance of payment from deficit to surplus.

The President assured that Pakistan would maintain consistency in its economic policies to woo foreign investment into the country. No investors will come unless they are not sure about the future of their investment, future of their money they are bringing in Pakistan. Referring to the talk of punitive action as reported in media, President Musharraf said that no one could dare taking such action against Pakistan.

No body dares take punitive action against Pakistan or cast an evil eye on it, the President firmly stated. He said the country's defence was strong, adding the power comes from strength and no body should be under any illusion.

He drew the participants attention to events in Lebanon while trying to underline the importance of national security. The President said security is a necessity and Pakistan would ensure it any cost. The President noted Pakistan provides vital connectivity to all trade and energy linkages in the region.

"Pakistan is in the centre of the region and no commercial activity and energy linkages can be possible without its participation," he said.

"Pakistan has a unique geo-strategic location. We are in the centre of the region, which is surrounded by energy sources. It is looking for energy exports to the world and within itself. None of this is possible without Pakistan's participation," he noted.

The President noted Pakistan is in the hub of Middle East, Gulf, Central Asia, Afghanistan, China and India. Any economic and commercial activity, any energy linkages without Pakistan's involvement is not possible," he added.

He said Pakistan will utilise its strength and added communication infrastructure has to be developed to facilitate this interaction in the region and with outside world.

This included construction of ports, roads, railway and air terminals, he added. The President asked the Port Qasim Authority to come up and facilitate investment at the port. So much land is available here. This should be utilised for industrialisation, joint ventures and investment by removing bottlenecks.

Commending performance of the Port Qasim and its chairman, he said they should do more to further improve their performance. Port Qasim can be the largest industrial estate in Karachi and Sindh if utilisation of land is fast for the purpose of industrialisation, he added.

He said security of investment and profitability are guaranteed in Pakistan due to rising demand and increase in purchasing power of Pakistanis. "The future of investment is guaranteed as liberalisation, deregulation and privatisation is continued and will be followed and we are determined that it will continue and investment will keep coming into Pakistan," he added.

Referring to tourism promotion, the President asked Karachiites to visit historical places and tourist attraction in the country and promote tourism within the country. Appreciating Malaysian investment in Pakistan, he said bilateral relations are deeper and taken new dimension with the increased people to people contact.

"Pakistan cherishes and values its relations with Malaysia. These will remain strong for all times. They will remain ever-green," he added. Earlier, ports and shipping minister Babar Khan Ghauri said a UAE-based group will invest $3 billion in the construction of residential and commercial facilities on several island at Karachi coast.

He said the Port Qasim has attracted a foreign direct investment of $750 million in last few years. The PQA reserves have surged from Rs 6 billion to Rs 11 billion while the number of operational units at the port rose to 91 while 71 units were underway. He said five new ships have been registered with Pakistani flags by the private sector and more were in the pipeline.

He criticised the opposition for merely labelling accusation and coming up with positive thinking for development.

The President recalled his recent telephonic talk with Prime Minister Badawi of Malaysia over the critical situation in Middle East and said the two countries remain in close contact over important issues.

The President called for value-addition in the industrial sector and said the establishment of a modern plant with latest technology will be a major asset for Pakistan. He said there has been an increase in imports mainly because of oil, followed by machinery, raw materials and chemicals and said these would eventually lead to increased exports and reduce the trade gap. Sindh governor Dr Ishratul Ibad and chief minister Dr Arbab Ghulam Rahim on the occasion.


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## Owais

*SCRAs plummet to $5 million* 

KARACHI (July 26 2006): Massive withdrawals by USA and UK, amounting to some $9.8 million, on July 24 forced the Special Convertible Rupee Accounts (SCRAs) to dip down to a little over $5 million. The SCRAs had earlier jumped to $19.4 million on July 18 after posting successive though gradual increases.

They had suffered the first major setback of the year on July 21 with balances dipping down to less than $16 million. Individually, USA investors withdrew some $7 million on July 24 reducing the balances to $-2.6 million. UK investors followed suit. They withdrew over $3 million as on that date reducing their balances to minus $2.5 million during FY07 so far.

Switzerland also withdrew about $0.8 million with its total withdrawals reaching close to $9 million during the first 24 days of the year. Investors from Hong Kong also withdrew a small amount of $0.2 million though they still have about $4 million in their SCRAs. Altogether the four countries withdrew $10.8 million from their accounts.

Other countries neither withdrew any amount nor brought in any. Singapore, thus, continued to be the leading investor in FY07 so far reaching $15.6 million on 19th July and sustaining the level through to July 24. Hong Kong still occupied the 2nd position.

The heightening of tensions between India and Pakistan might be one of the reasons behind the development besides the SBP's aspersions and dislike about the rising level of portfolio investment and the vulnerability connected with it as expressed in its latest quarterly report on the state of the economy (cf. BR July 18) followed by 5 percent increase in the CRR and its likely application to SCRAs. KSE 100 Index, in the meanwhile, advanced to 10,351 on 24th after posting gains of about 93 points over 10,258, the level obtaining on 21st July.


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## Owais

*Back date duty exemption: CBR to obtain law ministry ruling* 

ISLAMABAD (July 26 2006): The Central Board of Revenue (CBR) will obtain ruling from Ministry of Law on the powers of customs officials to issue exemption of duties/taxes with retrospective effect under section 20 of the Customs Act, 1969.

The issue came to the limelight on Tuesday when Auditor General of Pakistan challenged CBR officials' powers to grant exemption of customs duty with retrospective effect.

AG officials claimed that CBR has powers to grant exemption from duty in exceptional circumstances under section 20 of Customs Act. But this exemption could not be granted retrospectively.

Under section 20, the Board may exempt any goods from payment of whole or any part of customs duties chargeable thereon and may remit fine, penalty, charge or any other amount recoverable, the AG officials added.

Defending the Board's stance, Member Customs Shahid Rahim Shahikh told the Public Accounts Committee (PAC) that section 20 of the Customs Act empowers the Board to issue 'special exemption order'. In one case, there is a Supreme Court ruling that exemption could be granted under section 20 with retrospective effect. The benefit of exemption could be given retrospectively under section 20, but duty cannot be imposed retrospectively under the said provision.

On the other hand, general power to exempt customs duty through notification in the official Gazette is available under section 19 of the Customs Act. Taking into account the SC ruling, the benefit of exemption could be given from back date, Member Customs added.

Meanwhile, CBR Chairman Abdullah Yusuf said that the Board had issued a clarification on May 19, 2006 regarding section 20 in the light of SC's ruling. The retrospective exemption is covered under the SC ruling, and AG office viewpoint is not correct, tax officials said.

The AG office turned down CBR interpretation, saying that the legal issue should be clarified by the Law and Justice Division, as CBR is not competent authority for interpreting the legal provisions.

Giving observations over the issue, the PAC opined that the Ministry of Law and Justice is the only competent authority to clarify the legal issues. The CBR should approach the law ministry to obtain a clarification whether the SC ruling and section 20 are contradictory or similar for the settlement of the cases.

The PAC observed that there should be some check on officials empowered to give exemptions and waivers, as the department should have ample justification for giving exemption of duties/taxes.

Chairman CBR responded that the board is not empowered to give exemption to anybody without justification. There should be solid reasons as per laid down rules and regulations for obtaining exemption.


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## Owais

*Shaukat urges CBR to enhance efficiency* 

ISLAMABAD (July 26 2006): Prime Minister Shaukat Aziz on Tuesday appreciated the performance of Central Board of Revenue (CBR) for collecting Rs 712 billion revenue during 2005-06 against the target of Rs 690 billion, showing an increase of 22.6 percent over the previous year.

The Prime Minister was chairing a meeting to review goals and targets of the CBR at the Prime Minister house. He hoped the department would be able to meet the revenue collection target of Rs 835 billion for the current financial year.

The Prime Minister said, besides generating revenues for the government for its budgetary needs, the CBR should aim at improving organisational efficiency, reduce cost of doing business and improve its interaction with stakeholders.

He said efforts should be made to streamline working and improve the image of the customs directorate.

The CBR should take a proactive approach in improving its performance, especially at international airports and points from where bulk of cargo is being handled, he added.

He also asked the CBR to focus on human resource development of its officials enabling them to meet future challenges.

CBR chairman Abdullah Yousuf told the Prime Minister the pendency of cases related to disputes resolution has decreased by 90 percent during the previous fiscal year. He said the number of income taxpayers has increased by 40 percent over the last two years.

The CBR chairman told the Prime Minister the CBR plans to establish 13 regional tax offices in the country, which would bring all three internal taxes, ie, income tax, sales tax and excise services under one-roof.

He said this would be a revolutionary change for better services to taxpayers. He said three Large Taxpayer Units would be functional by December this year.

The Prime Minister was told big scanners have been installed at Port Qasim, Mughalpura and NLC dry ports in Lahore and Chunian dry port in Khyber agency.

The CBR chairman told the Prime Minister existing CARE system of electronic processing of customs goods at Karachi international container terminal at KPT would be replicated at the Pakistan International Container Terminal and Qasim International Container Terminal during the past few months for improved transparency and increased efficiency.


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## Owais

*Humayun woos Brazilian traders to invest in Pakistan* 

ISLAMABAD (July 26 2006): Commerce Minister Humayun Akhtar Khan on Tuesday met with the Vice President of Confederation of National Industries (CNI) of Brazil and discussed bilateral and regional trade issues, encompassing WTO and Mercosur.

According to a press release, Commerce Minister Humayun Akhtar also addressed the gathering of eminent Brazilian businessmen and briefed them on the reforms undertaken by the present government and the opportunities Pakistan offers to the world business community, besides discussing WTO issues with his Brazilian counterpart Luiz Fernando Furlan, minister for development, industry and foreign trade.

Both sides discussed trade balance in the first semester of 2006 during which exports and imports showed substantial growth particularly the leather and the textile sectors, ethanol technology, creating of a Fund being used for industrial expansion, CNG buses and Petro Brass (Brazil) investment in Pakistan.

Humayun Akhtar also called on Brazil's Acting Foreign Minister Ambassador Samuel Pinheiro Guimaraes Neto and discussed with him the Doha Development Agenda, and hoping that the present stalemate would be addressed in the foreseeable future. Such negotiations are always time-consuming and need to be dealt with patience, he said.

The two sides expressed satisfaction over the common stand as members of G-20 for a fair global trade order, and stressed the need for opening up the agricultural sector, the press release added.-PR


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## Owais

*OGDC&#8217;s GDR issuance road shows in September * ISLAMABAD: Road shows in connection with the issuance of the Global Depository Receipt (GDR) of the Oil and Gas Development Corporation (OGDC) will be held this year in September.

Advisor for economic affairs, Dr. Ashfaque Hassan told Geo News that the Advisor for finance to prime minister, Dr. Salman Shah, Federal Minister for privatization and investment, Zahid Hamid and GDR Financial Advisor were currently visiting US and Britain in this regard.

The government intends to sell 10 to 15 percent shares of OGDC to the foreign investors through floating GDR.


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## Owais

*$1.50 billion investments made in PQA * KARACHI: Port Qasim Authority (PQA) investments thus far amounted to $1.50 billion.

PQA chairman, Asad Quraishi told this to Geo News, following the inauguration of the edible oil refinery at Port Qasim. He told that such a mega-investment has thus far been done in PQA alone.

He said that the projects in Port Qasim Authority relating to the construction of different terminals, steel jetty, expo-city and diamond bar island would be drawing further $3 billion investments in next 3-4 years.


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## Owais

*China to open Guanzhou port for Pak-products&#8217; import * BEIJING: China has expressed its willingness to open the Guanzhou seaport for facilitating the import of Pakistani goods.

China through this seaport would be importing Pakistani farm products especially fruits etc. besides these goods would also be imported through Shenzhen seaport of Guangdong province.

Earlier, food products from Pakistan were imported from Shanghai, Nanjing, Qiangdao, Tianjin, Daliyan and Beijing only.

This region of South China has extraordinary consumption of imported goods and the decision of China in this regard would open up an excellent opportunity for Pakistan to boost up its exports.

China imports 40 percent of its food products&#8217; consumption every year, wherein, Pakistan could carve out for itself a major market share.


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## Owais

*EPB all set to achieve US$18 bln target: Tariq Ikram * LAHORE: Chairman Export Promotion Bureau (EPB) Tariq Ikram hoped that the export target of US$ 18.6 billion for the fiscal year of 2006-07 would be easily achieved.

Speaking at the Lahore Chamber of Commerce & Industry (LCCI) here on Tuesday, he said the target was set after taking into consideration all the ground realities and performance of productivity in the industrial sector during the last three years.


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## Owais

*Pakistan rules out FMN status to India under SAFTA * ISLAMABAD: Federal Secretary for Trade Syed Asif Shah said on Wednesday that Pakistan could not grant most favoured nation (MFN) status to India under the South Asian Free Trade Area (SAFTA) but the same was possible under WTO. 

He stated this while talking to Geo News. India could not demand MFN status under the SAFTA, he said adding that it could demand the same under WTO after fulfillment of some requirements.

Pak-India trade was underway through the positive list exchanged between the two countries, Mr. Shah said.


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## Owais

FDI more than doubles to $3.5 billion in FY 2005/06 
*KARACHI *_(updated on: July 26, 2006, 17:16 PST_): The Foreign direct investment (FDI) recorded more than double in the fiscal year 2005/06 to $3.52 billion, led by inflows into the communications and energy industries and the financial sector, official figures show.

Data released by the State Bank of Pakistan (SBP) on Wednesday showed FDI for the year ended June 30 rose from $1.524 billion a year ago.

The FDI figures for 2005/06 include $1.54 billion worth of privatisation inflows, compared with $363 million a year ago.

The communications sector attracted the most foreign investment during the year, $1.94 billion, followed by $329 million invested in the financial sector, $321 million in the power industry, and $313 million in oil and gas exploration.

The sharp rise in investment in communications has mainly stemmed from the sale of a 26 percent stake in Pakistan Telecommunication Co. Ltd. to Dubai-based Emirates Telecommunications (Etislat).

The telecommunications sector alone received $1.19 billion in the form of privatisation proceeds.

The United Arab Emirates led the list of foreign investors with investment of $1.42 billion during the year, followed by the United States with $517 million and Saudi Arabia with $278 million.

Inflows from foreign portfolio investment during 2005/06 were $351 million, up from $153 million in 2004/05.


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## Neo

Wednesday, July 26, 2006 

QUETTA: Managing Director Gwadar Port Authority Air Commodore Munir Wahid Tuesday said Gwadar deep water port will be completed by December this year. 

Briefing Balochistan Governor Owais Ahmed Ghani here, he said the federal government has allocated an amount of Rs 1111 million for the project in the ongoing financial year's budget.

"The work on master plan of Gwadar port at a cost of Rs 110 million is in full swing and this year the government will release Rs 61.5 million for the project", he said. He said Gwadar port's civic centre would also be constructed at a cost Rs 160 million and this year the government has allocated Rs 90 million for this project. 

The construction of Express Way at a cost of Rs 3700 million is also underway for which the government has allocated a fund of Rs 100 million in the current year's budget, he maintained. 

Earlier, Director General Gwadar Development Authority, Ahmed Bakhsh Lehri also briefed the governor about the ongoing projects in Gwadar and said they have received an amount of Rs 1715 million for these projects out of which Rs 1510 million have been provided by the federal government. 

"The projects include various roads, a sports complex housing cricket, football and golf grounds besides indoor games facilities, an hospital with fifty bed capacity and a central park", he informed. 

Gurab Housing Scheme for fishermen, jetties at Sur Bandar and Peshukan and another hospital with 350 beds are also included in these schemes. Massive recreational facilities to promote tourism would also be provided in the city, he added. 

The Governor lauded the schemes and directed for speeding up the pace of work on the projects to ensure their timely completion.

"The completion of these projects will transform Gwadar into an advanced city", he observed.


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## Neo

Wednesday, July 26, 2006 

ISLAMABAD: Federal Minister for Food, Agriculture and Livestock Sikandar Hayat Khan Bosan has said public sector investment in the agriculture sector has increased from Rs one billion to Rs 12 billion and this has a direct correlation with poverty alleviation in the country. 

Speaking at the concluding session of a two-day workshop on citrus research here on Tuesday, he said that the government was targeting an annual growth target of more than five percent in the agriculture sector. 

Citrus cultivation has increased in Pakistan, particularly due to its famous variety of kinnow. It is grown on 184,000 hectares with the production of nearly 1,944,000 tons. Area under different varieties of citrus indicates that about 70 percent of the citrus is covered by kinnow followed by orange 13 percent and Musambi 12 percent. Punjab produces over 95 percent of the citrus, especially kinnow, because of favourable growing conditions.

Pakistan during the last season had a record export of about 250,000 tons of citrus to different South Asian countries and some Gulf states. The ministry of food and agriculture and livestock (MINFAL) has also signed memorandums of understanding with China and Iran for its export. The newly- emerging markets are Central Asian states and some other countries such as Ukraine and Russia. 

The objective of the workshop, which was held under the auspices of Australia-Pakistan Agriculture Sector Linkages Programme (ASLP), was to strengthen the agriculture sector interaction between Australia and PakistanÃ¢â¬â¢s commercial, academic and research institutions through joint activities and institutional links. The ASLP is of four yearsÃ¢â¬â¢ duration and draws on the Australian government and technical institutionsÃ¢â¬â¢ capacities as well as commercial opportunities.

The workshop brought together researchers and stakeholders from Pakistan and Australia working in citrus research, extension and agri-business in order to build linkages by sharing and jointly evaluating results and experiences in citrus research and extension. The participants discussed future citrus research and development needs in partnership with relevant agencies for collaborative activities under the auspices of the ASLP and identified future capacity building and training needs in Pakistan citrus research, development and extension.

Mr Bosan said that agriculture sector which contributes 24 percent of the GDP plays an important role in the economic development of the country. He said the agriculture sector has demonstrated marked improvement during the last couple of years. Pakistan had a record cotton crop of 14.6 and 13 million bales besides a record 21.6 and 21.7 million tons of wheat crops in the last two years. Pakistan exported 3.6 million tons of rice amounting to 1.1 billion US dollars in the last fiscal. 

In order to attain this level, our focus is not only on productivity enhancement of major crops but also on horticulture, which is an integral part of agriculture. He said Pakistan now focuses on cash crops and high-value agriculture. In the medium and long-term development framework, horticulture development has been identified as one of the key areas for income generation in rural areas. He said the real benefit would come with improved processing facilities and compliance with international standards. 

Australian High Commissioner in Pakistan Ms Zorica McCarthy said that Australia wants to see Pakistan as a prosperous country in all sectors, including agriculture. She said the two countries enjoy good relations. She said Australian cooperation with Pakistan in the agriculture sector would enhance productivity and generate more employment opportunities in the rural areas. She said Australia would also facilitate Pakistan to exports its products.

The high commissioner said that the Australia announcement of offering 500 scholarships to Pakistani students in five years would further enhance relations between the two countries.


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## Neo

ISLAMABAD, July 25: Some ten million children were engaged in various kinds of labour, and the ever-increasing poverty was the main reason for this dismal state of affairs.

This was stated at a seminar on Ã¢â¬ÅChild Labour-The End of InnocenceÃ¢â¬Â organised by the Society for Human Rights and Prisoners Aid (SHARP)

Speakers challenged governmentÃ¢â¬â¢s poverty estimates and criticised it for funding figures.

They criticised the government for not following the national and international commitments and taking concrete steps to eliminate poverty, the route cause of forced labour.

Speaking on the occasion, Mr Saifullah Chaudhry of International Labour Organization (ILO) said, there was a pressing need to streamline the educational system according to the marketÃ¢â¬â¢s requirements.

Presently the education system only provided work force for the formal economy, and a yawing gap of informal economy was being filled through untrained child labourers.

He called for the need of setting up more vocational training centres which could provide labour according to the present needs of the market.

Tahira Abdullah, a human rights activist, said that the number of child labourers was much higher than the government claimed. She said that government and international agencies did not include informal, seasonal and transitional workers into the figures and surveys.

She said that the existing laws totally failed to protect the rights of children and prevent the child labour.

She appreciated th role of ILO and UNICEF for their service towards combating child labour. She lamented that child Labour was not on the agenda of the government in its millennium development goals. Mr Bashir Tahir of Asian Development Bank stated that not only a large number of local children were engaged in the child labour but a considerable number of Afghan refugee children were also part of child labour.

He said that these children were not counted in the surveys and figures being refugees in the country. He said that exploitation starts when a person was forced to leave his place/ country and then she/he has endless miseries. He said that approximately 90 per cent of workers at brick kilns were Afghan refugees who were badly exploited by the owners.

Speakers stressed the role of government and the society to work together for combating this evil. Speakers suggested proper survey to find real facts and figures of child labours, control of population growth, utilisation of reasons for elimination of child labour, better facilities of education and proper and effective implementation of constitutional and legal instruments.    

Earlier, Mr Syed Liaqat Banori Chairman (SHARP) welcomed the participants and highlighted the activities of his organization.


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## Owais

*CBR proposal to probe remittances source rejected* 

ISLAMABAD (July 27 2006): The federal government has turned down a proposal of the Central Board of Revenue (CBR) to empower the income tax officials to probe the source of the foreign investment/remittances sent to Pakistan through normal banking channels.

CBR Member (Direct Taxes) Salman Nabi told the sub-committee of the Public Accounts Committee (PAC) on Wednesday that the Board tried to introduce a provision for demanding the source of foreign remittances in budget (2006-07), but the government retained the related provision of the Income Tax Ordinance, 2001.

The PAC members - Colonel Ghulam Rasul Sahi (Retd), MNA, and Maulana Abdul Ghafoor Haidri, MNA - had suggested that the income tax officials should probe the source of income of purchasers of new cars and luxurious bungalows to broaden the tax-base.

Salman Nabi explained that the law has imposed many restrictions on the income tax officials, who wanted to probe the source of investment. In 80 percent cases, the people generally submit that they are earning agriculture income, he said, adding other persons have declared that the house was purchased/constructed from the foreign remittances. No question could be asked about an income earned in the federally-administered tribal areas (Fata) and provincially-administered tribal areas (Pata).

He said if the tax officials try to probe the source of investment, the people managed to submit the relevant documents in the courts where we cannot raise any question due to limitations of the law. The people use the loopholes in the law to evade taxes, and even income tax officials were suspended who tried to investigate the investment sources, he added.

When the PAC members asked about the legal position of demanding status of the overseas Pakistanis sending remittances, he said it is not difficult to show a transaction through normal banking channels to whiten the concealed income. Obviously, the officials could not raise questions where evidence of foreign remittances through banking channels is submitted, he added.

When asked about the legal proceedings in cases where stay orders were expired in courts, Salman Nabi said the process of attachment of property and arrest has been elaborated in the recovery rules, but the department has to be very cautious while taking extreme measures against the taxpayers. In one case, the department had sold a mill in Rawalpindi at a cost of Rs 5 million. The owner had repeatedly contested that the mill was sold at a very lower price as compared to the market value.

If a person is arrested or his property is sold in a case and the court judgement is reversed, then how you can justify his imprisonment. Therefore, the department has to be very careful before taking such harsh measures against the taxpayers, he maintained.

*NBP and SBP REVENUE REPORTING SYSTEM: *The CBR chairman said the National Bank of Pakistan (NBP) and the State Bank of Pakistan (SBP) have started computerised revenue reporting system.

The banks issue the 'computerised receipts' to the taxpayers and give report on daily basis to the CBR through online computerised system. The old system of issuing manual receipts by the banks is a closed chapter.

*LITIGATION: *CBR Member (Legal) Mumtaz Ahmed Sheikh told the PAC that the Board had disposed of 78,000 cases against total 80,000 pending in the last two years. Around 2,000 pending cases, including 1,200 tax appeals and 800 cases on indirect tax side were all fresh. Out of total 1,510 cases pending at the level of Supreme Court, 1,198 have been decided, while verdict on the remaining 312 cases is expected in August-September. The data reveals that 3,800 appeals are pending with the Lahore High Court and 2,000 at the Sindh High Court.

The CBR chief informed the committee the massive reduction in litigation cases has helped the board reduce the total number of commissioners (appeals) from 34 to 16. Four more appeal commissioners are likely to be reduced within one to two months, he added.

*DOCUMENATION and COLLECTION: *The CBR chief admitted that the Board is facing problems in the documentation of the national economy. There is more potential to collect sales tax at the retail stage as compared to the existing collection, while the Board ultimately zero-rated leading sectors, which was against the basic principle of Value Added Tax (VAT).

He said the government is pursuing a policy of gradual reduction in tax rates. The corporate tax rates for the banking companies are 38 percent, private companies, 37 percent, and public companies 35 percent for the tax year 2006. The gradual reduction would result in a uniform 35 percent rate for all the three categories of companies from tax year 2007.

He said the GST rates of 15 percent, 18 percent, 20 percent and 23 percent were replaced with a single uniform rate of 15 percent. Massive tariff rationalisation was done on the customs side. Highest rates of customs duty were brought down from 150 percent to 25 percent with few exceptions, he added.

He said the role of the federal government in collection of taxes has remained predominant as compared to provinces. The ratio of indirect taxes in the total revenue collection is 69 percent, while the ratio of direct taxes is 31 percent, he added.

*TAXES ON HOTELS: *The PAC asked about exemption of taxes to small hotels and restaurants, the CBR chief said the hotels having annual turnover below the exemption threshold of Rs 5 million are exempted from sales tax. If the turnover of hotel is above the exemption threshold, it is liable to pay taxes, he added.

*BENEFIT TO THE POOR PEOPLE: *Responding to a query, he said that most of the food items and medicines were exempted from sales tax. Only processed food items are liable to tax excluding "Atta" which is not liable to tax even after processing, the CBR chief added.


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## Owais

*FDI registers 131 percent increase* 

ISLAMABAD (July 27 2006): Foreign Direct Investment (FDI) in the country during 2005-06 soared by 131 percent to $3.521 billion as compared to $1.524 billion of 2004-05, and portfolio investment rose by 123 percent to $351.5 million against $157.6 million. However, withdrawal of capital from portfolio investment was on the rise, the State Bank of Pakistan (SBP) reported on Wednesday.

Therefore, on balance, total foreign private investment (FDI and portfolio investment) in the year increased by 131 percent to $3.872 billion from $1.67 billion of previous year. It is worth noting that the FDI swelled enormously at the cost of privatisation proceeds, which stood at $1.54 billion (43.7 percent of total FDI).

The central bank in its third quarterly report, released recently, also warned the government against surging portfolio investment because of its high volatile nature, as its sudden withdrawal not only depresses the stock prices but also reduces central bank's ability to maintain local currency value.

"The surge in portfolio investment is always seen with a concern due to the high degree of volatility attached with these flows since its sudden withdrawal depresses the stock prices", the State Bank report said.

The notable feature of current SBP data was that during the period under study foreign investors withdrew about $84 million from portfolio investment. However, USA was the only country, which invested about $303.8 million in portfolio investment.

Although US portfolio investment was a positive sign, yet there was an inherent danger that if it withdrew the volatile investment, at once, then the central bank would be in hot waters to manage currency value and stock prices.

The Bank in its report also expressed concern over the utilisation of privatisation proceeds for financing non-developmental items and its inclusion in Foreign Direct Investment (FDI), suggesting that the government should focus on non-privatisation FDI for bringing in new technology and market access to accelerate growth.

The break-up of investment by region shows that developed countries made total investment of $1.738 billion, including $1.455 billion FDI and $282 million portfolio investment, while the developing economies invested $1.996 billion ($1.924 billion FDI and $72.6 million portfolio investment).

Among the developed countries, western Europe made a total investment (FDI and portfolio) of $831.3 million and European Union, $396.5 million against $452 million and $294 million of previous fiscal year.

Besides, under unspecified head (investment by IFIs) was $138 million. This included FDI of $141.8 million while in portfolio it withdrew $3.8 million.

Among developing economies, Caribbean Islands invested $11.3 million in FDI and withdrew $9.3 million portfolio investment. Africa, including Libya, Egypt, Mauritius, South Africa and other African countries invested $93.2 million FDI and withdrew five million dollars portfolio investment.

Asian countries (West Asia, South, East and South East Asia) made total investment of $1.90 billion including $1.814 billion FDI and $85.7 million portfolio investment.

The break-up of investment further shows that United Arab Emirates (UAE) was the biggest investor in Pakistan totalling $1.487 billion with $1.424 billion FDI and $63.3 million portfolio investment, respectively.

United States was next with investment of $820.5 million, including FDI of $516.7 million and portfolio investment of 303.8 million dollars. However, in terms of direct investment, Saudi Arabia was third ($277.8 million) followed by Norway with $252.6 million, UK $244 million and Switzerland with 170.6 million dollars.


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## Owais

*$500 million to be spent on local government capacity building in five years'* 

ISLAMABAD (July 27 2006): National Reconstruction Bureau (NRB) Member Inamul Haq has said that around $500 million would be spent on the capacity building of the local government in the next four to five years. He was addressing the Consultation Workshop on Poverty Reduction Strategy Paper (PRSP-II) on 'Governance' here on Wednesday.

The Additional Secretary External Finance, Ministry of Finance, Asif Bajwa, chaired the workshop on the final day of a three-day workshop. Inamul Haq said the capacity building of Nazims, Naib-Nazims, councillors, and all others involved in the local bodies would be enhanced to ensure better service delivery.

The Federal Cabinet had approved the establishment of 'Schools of Local Governance' in November 2002, he said, adding the local body representatives should have a clear picture of their authority, responsibility, and job description to play their effective role.

He said the capacity of TMAs would also be enhanced through new manuals and training of relevant Tehsil/Town officers and employees with the collaboration of the NRB and the World Bank.

He emphasised that the objectives of good governance can best be achieved by introducing pro-poor policies. To focus on the process through which the poor in the society have access to savings and use credit to initiate new small-scale economic ventures are a priority, he added.

Inamul Haq said the NRB has developed a model to improve relationship between financial institutions and the poor as 18 million people from the rural areas are expected to benefit from this. The main factors of governance, which must be focused upon, are predictability, accountability/transparency, participation of all stakeholders, and service delivery, he said.

Inamul Haq reiterated that if governance reforms, including devolution process, access to justice, and civil service reforms are implemented successfully, then economic growth and poverty alleviation goals would be comprehensively achieved.

He said that local government bodies system is an effective system and capable of addressing the community's issues in the best way. However, corruption at all levels be monitored and checked. This is one of the big challenges, he cautioned.

He said the local governments would make procurement from the allocated budget independently without consulting the federal government, and this would increase its efficiency.

The Citizen Community Boards (CCBs), which have gained popularity on account of public participation, have absorbed 600,000 people, who are engaged in the development activities under 25,000 CCBs. There is a need to revise and simplify the rules to facilitate CCBs taking care of any corruption, he maintained.

Inamul Haq stated that Pakistan has taken the first right step to development by identifying governance, and hoped that devolution process would work as an engine of growth. Referring to the Local Government Ordinance (LGO), 2001, he said it recognises the right of the citizens to obtain information about the working and performance of the local governments, which could be best achieved through information technology (IT), he noted.

In this regard, the NRB has introduced Narims Software that will be made functional shortly and meet all requirements of all district government officers, elected representatives and citizens. He, however, said that some classified information would not be made public.

Establishment Secretary Syed Tariq Ali Bokhari, a panellist, said there is a need to reform the civil service structure. The needs of the society have not been catered for 50 years. The people who were meant to serve the public never considered it as their priority. The reform process suffered with the rush of daily routine, he added.

Allaying apprehensions of the participants on various issues, Inam said the process of devolution should continue, as under the system, he remarked, the money is distributed to every corner of the country. He said that India acknowledging Pakistan's reformative process has shown great interest in the joint venture.

Replying to another question, he said the authority of DCOs is limited to police order and the law and order only. It is imperative to assign power to the Nazims if they are to be made effective, he added.

The workshop document said that National Construction Bureau is working on various issues like district service, civil service reforms, provincial restructuring, federal to provincial devolution, computerisation of record-of-rights, media and governance, CCBs, fiscal decentralisation and inter-governmental transfers, taxation, strengthening of institutions, enforcement of local and special laws, municipal management, capacity building, police rules, financial intermediation for poverty reduction, and would finalise them in two to three years.

In his concluding remarks, Asif Bajwa said that all the recommendations and views expressed by the participants would be incorporated in the PRSP-II document.

He showed his concern that human resource, which is the main driving force behind all the activities, is under paid, whereas commodities are available at the market rate, and this should be given due consideration to meet the goals, he added.


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## Neo

LAHORE (July 27 2006): Establishment of Sunder Industrial Estate, execution of mega projects like Ring Road, light transit rail and Lahore-Sialkot Motorway and improvement of physical infrastructure in the city will offer world class facilities to foreign investors in Lahore.

District Nazim Mian Amer Mahmood stated this while talking to Japanese ambassador to Pakistan Feiji A Oyima, who called on him, here on Wednesday. Amer apprised the visiting envoy that the feasibility report for Light Transit Rail project had been prepared and tenders would soon be invited for its execution from well-reputed parties.

Talking about investment opportunities in Lahore, he said that Lahore would welcome foreign investment for installation of water treatment plants. He told that Lahore had been a seat of learning throughout its history. Maximum incentives would be provided for Japan's investment in the field of higher education, especially in industrial management, and other areas pertaining to commerce and industry, he assured.

By virtue of peaceful law and order situation, Lahore is a safe city with regard to foreign investment. In view of its geographical location, it has full potential to become a hub of commercial activity in the region. With further improvement of bilateral relations with our eastern neighbour, India, Lahore will become a gateway of trade goods between East Asian and Central Asian countries, he maintained.

Expressing his gratitude for providing machinery worth Rs 780 million for rehabilitation of drainage system of Lahore, Amer hoped that Japan would continue to extend its generous co-operation for the development of city. He informed that this machinery had been utilised for de-silting the city drains and eradicating hurdles in smooth flow of storm water.


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## Neo

FAISALABAD (July 27 2006): Asian Development Bank's "Technical assistance completion report" for capacity building for capital market development and corporate governance in Pakistan has stated that the main outputs, required from the technical assistance, are delivered and the objectives envisaged are met.

According to report, the implementation agency, Securities and Exchange Commission of Pakistan (SECP), expressed its overall satisfaction with the work of the consultants and the management and the supervision of the technical assistance (TA) by ADB were also considered to be effective.

The key recommendations of the TA were instrumental in initiating a number of initiatives such as the policy reforms associated with the non-bank financial governance framework, reflecting the long-term nature of the TA's impact and its sustainability. Overall, the TA can be rated as successful, said the report.

To further the process of capital market reform supported earlier through loans the 1576-PAK (programme) and 1577-PAK (TA), the government of Pakistan requested the ADB for additional technical assistance focusing specifically on enhancing corporate governance standards.

This initiative was considered to be very timely as the capital market in Pakistan was plagued with the narrow investor base, poor governance, continued weak risk management, and shortcomings in the enforcement of capital market rules and regulations.

In light of the same, strong measures were necessary to enhance governance standards and increase market transparency. Important measures in this regard included incorporating laws to protect shareholders rights, effective redressal of grievances, establishing disclosure standards, and enhancing the professional skill sets and supervisory capacity of the regulator.

To address these issues in a comprehensive manner, the TA focused on improving governance standards, knowledge creation of international best practices and capacity building.

THE FOLLOWING WERE THE OBJECTIVES OF THE TA: 

-- Assist in improving the efficiency of the capital market based on established governance standards by reviewing the existing system and recommending legal, regulatory, tax, institutional, and structural changes.

-- Advance stakeholders understanding of the dynamics of corporate governance through exposure to international best practices and knowledge sharing.

-- Strengthen the capacity of the regulator to effectively discharge its duties.

The TA was designed to include three components. The first component reviewed the broad framework of corporate governance in Pakistan's capital markets relative to best international practices and recommended a sequenced reform programme.

The recommendations with regard to the sequencing and pacing of reforms took into account the prevailing economic and political environment of the country.

The second component was designed to assess the operations of the capital market and identify gaps and constraints inhibiting good governance practices. A strategy was prepared, which recommended step-by-step measures to fill identified gaps and resolve constraints, in addition to addressing enforcement capacities.

The third component was aimed at enhancing capital market participants' knowledge and understanding of corporate governance and capital market development initiatives. Emphasis was also laid on the capacity of the regulator, Securities and Exchange Commission Pakistan (SECP), to effectively discharge its duties.

According to report, the key outputs of the technical assistance were a set of reform recommendations under each of the components. The consultant reports were of good quality and can form the basis of the future reform agenda in the financial sector.

The executing agency was satisfied with the TA outputs and the TA implementation was considered to be effective in achieving the desired objectives.

With regard to improving capital market efficiency and corporate governance, the key recommendations of the consultants were:

-- Establishment of a separate listing division and committee with each exchange to which all listing matters are delegated, developing standard listing regulations and requiring that all listing documents are made available for inspection for a period of 14 days prior to initial public offering, and developing risk weighted capital norms for investment houses.

-- Requiring brokerage houses to demonstrate that it is competent to conduct its business efficiently and effectively, establishing procedures for compliance reviews and audits, rules for allowing banks to participate in securities businesses and in the longer term requiring brokers to undertake continuous trainings:

-- Clarifying the role of SECP and codifying the take-over regime.

-- Suggesting what should constitute price sensitive information as well as how and when to disclose relevant information.

Further suggestions were provided to establish procedures and regulations for disclosure of information governing change in shareholding, disclosures by controlling shareholders and for monitoring the said disclosures.


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## Neo

ISLAMABAD (July 27 2006): Planning Commission Deputy Chairman Dr Akram Sheikh has said that the country is wasting annually about $12 to 14 billion of its natural resources by not properly utilising them for sustainable growth.

Giving the break-up of the losses, he said that these included $5 billion for water, $3 to 4 billion through poor transportation, $3 billion of industrial wastage and almost $1.5 billion on imbalance in use of fertiliser and huge wastage of perishable commodities.

He requested the committee members that they should play a role in creating awareness among the stakeholders and public at large to give them the idea of protecting national interests by proper use of natural resources.

He said that only cutting down of wastage could help Pakistan grow its economy and benefit the common man. He said that that Planning Commission has already initiated various projects to improve performance of different sectors and to enhance production in a short time. All these wastage of resources were mentioned in Medium Term Budgetary Framework (MTBF), he said.

The Deputy Chairman said that the government was trying to increase Public Sector Development Programme (PSDP) allocation from 4 percent to 7 percent of GDP in the coming years.

Out of the total PSDP outlay of $7 billion, Akram said, about 67 percent allocation would be utilised to develop infrastructure of power and energy sectors for robust growth. He said this before the National Assembly Standing Committee on Planning and Development here on Wednesday.

The meeting was attended by Rehman Naseer, Amjad Ali Warraich, Muhammad Hussain Mehanti, Gul Rehman, Razia Aziz, Habibullah Bughio and Shahid Bhutto.

The Deputy Chairman told the committee that the commission could not monitor all schemes being executed by various agencies. Out of total 1900 projects, it could only monitor 400 or 500 while the rest would be monitored by respective principal accounting officers, he added.

About operational control of Gwadar Sea Port, the Deputy Chairman said that the party, which would have an operational control of the port, would be named within a couple of weeks.

"There is no disparity of executing PSDP projects in all the four provinces. However, the allocation for dam construction would only be made for NWFP and, similarly, port allocation for Sindh," the Deputy Chairman said.

The Committee advised the Commission that the next PSDP allocation should be made more for education and health sectors.

The Commission also sought the input of the legislators for making the resources, allocated for the development, more transparent and vigilant.


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## Neo

SIALKOT (July 27 2006): The Punjab government has released funds, amounting to Rs 90 million, for the establishment of an ultra-modern engineering university in Sialkot.

The official sources told Business Recorder here on Wednesday that Sialkot Chamber of commerce and Industry (SCCI) had provided funds, amounting to 0.13 million Euro as a matching grant to Royal Institute of Technology as matching grant.

Apart from this, necessary arrangements for undertaking development work on this mega project are being finalised and work on the project would be executed shortly.

The proposed engineering university would be developed over 200 acres of land on Sialkot-Eminabad road and the Punjab government had already issued the notification of the allocation of land for the engineering university.

The proposed university would not only cater to the needs of Sialkot industrial sector, but would also produce skilled industrial force. Besides, it would also provide the opportunities to the students for acquiring the higher education at local level.

The proposed university would provide broadbased opportunities of industrial research and development to local industries like surgical instruments, sports goods and leather industry for resolving their problems pertaining to innovation of products.

The Royal Institute of Technology (Sweden) was extending financial assistance and co-operation in setting up an engineering university. The role of Swedish government would be instrumental in establishment of the proposed university and collaborate in providing the technical know-how. The Swedish government would also provide necessary assistance in formulation of faculties of the proposed engineering university of Sialkot.

At present, the local business community, engaged in surgical instruments manufacturing, sports goods and leather industries, was facing problems due to lack of the research and development facilities at local level. The surgical industry and sports goods industries of Sialkot had the potential and both the sectors could earn seven billion dollars and 10 billion dollars respectively.


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## Neo

KARACHI (July 27 2006): The city power demand dropped due to pleasant weather that help in saving over 100MW as the power utility was already facing such shortage in its network.

This was informed by the Principal Officer Public Relation of Karachi Electric Supply Corporation (KESC), Syed Sultan Hasan at a daily briefing of the city power supply situation to the media here on Wednesday.

He said, the Hubco-KESC link was down since Tuesday, 2 a. m and likely to synchronised by Friday morning due to problem at Wapda's end. The expected city power demand may touch 2140 mw and the available power is 2106 mw, on Wednesday. Both the 220 mw circuit of KDA-Jamshoro circuit are available.

On Tuesday evening from 5 p. m. onward the power demand and supply remained equal and during peak hours (8 pm to 10 pm), the power utility didn't resort to load shedding till morning. At about 0628 hours on Wednesday morning, the Unit No 3 of Bin Qasim Power Station (BQPS) was tripped and synchronised at 1347 hours.

At 1152 hours, 132KV KTPS-Korangi West Circuit and KTPS-Qayyumabad circuit No 2 tripped off due to flash on the 132KV-busbar-support insulator at Korangi west grid. Korangi west and east and PRL grid remained affected from 1152 to 1315 hours. However, transformer No 2 at Korangi west grid is still unavailable. Its load is taken on transformer No 1.

The load is being shed due to overloading of transformer No 1 and 2 expected to be normalised by 1600 hours. Due to system constraints the load is being shed at Elander road and Mauripur grid stations.

Moreover, three grid stations to be ready by December this year, at West Wharf, Mauripur and Old City (Mithadar), which include six transformers of 4MVA and 72 feeders at a cost of Rs 2.5 billion.


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## Neo

WASHINGTON, July 26: Adviser to the Prime Minister on Finance Dr Salman Shah briefed the World Bank on Wednesday on the economic performance of Pakistan. Macro indicators of the countryÃ¢â¬â¢s economy, like GDP growth, declining of public debt-to-GDP ratio, declining inflation and balance of payment surpluses were also discussed.

Global depository receipt issues of OGDC that will be listed on the London Stock Exchange came under discussion as well. GDR is a bank certificate issued in more than one country for shares in a foreign country.

World Bank Acting President Graham Wheeler led the bank team.

Ã¢â¬ÅThe World Bank team appreciated PakistanÃ¢â¬â¢s significance progress and consistency in economic and fiscal policies,Ã¢â¬Â Dr Shah later told reporters.

He said the World Bank assured Ã¢â¬Ëtotal supportÃ¢â¬â¢ for the development of Pakistan which was reflected in the countryÃ¢â¬â¢s programme for the next three years pitched at $6.5 billion.

The World Bank acting president assured that the bank would assist Pakistan in the efficient implementation of the bankÃ¢â¬â¢s enhanced programme in the country, Dr Shah said.

Mr Wheeler told the Pakistani delegation that the bank was selecting a new country team for Pakistan which would be in place before the end of this year.

The Pakistan delegation and the World Bank team also discussed national and transport corridor projects and the Indus river water and storage reservoir projects.

The bankÃ¢â¬â¢s report on the framework for the Indus River Waters Development will be presented to the government of Pakistan by the World Bank mission that will visit Pakistan shortly.

The World Bank acting president was assisted by the Vice-President South Asia, Director for Asia and Country Director for Pakistan, John Wall. Pakistan Ambassador Mahmud Ali Durrani was also present in the meeting.


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## Owais

Neo said:


> ISLAMABAD (July 27 2006): National Reconstruction Bureau (NRB) Member Inamul Haq has said that around $500 million would be spent on the capacity building of the local government in the next four to five years. He was addressing the Consultation Workshop on Poverty Reduction Strategy Paper (PRSP-II) on 'Governance' here on Wednesday.
> 
> The Additional Secretary External Finance, Ministry of Finance, Asif Bajwa, chaired the workshop on the final day of a three-day workshop. Inamul Haq said the capacity building of Nazims, Naib-Nazims, councillors, and all others involved in the local bodies would be enhanced to ensure better service delivery.
> 
> The Federal Cabinet had approved the establishment of 'Schools of Local Governance' in November 2002, he said, adding the local body representatives should have a clear picture of their authority, responsibility, and job description to play their effective role.
> 
> He said the capacity of TMAs would also be enhanced through new manuals and training of relevant Tehsil/Town officers and employees with the collaboration of the NRB and the World Bank.
> 
> He emphasised that the objectives of good governance can best be achieved by introducing pro-poor policies. To focus on the process through which the poor in the society have access to savings and use credit to initiate new small-scale economic ventures are a priority, he added.
> 
> Inamul Haq said the NRB has developed a model to improve relationship between financial institutions and the poor as 18 million people from the rural areas are expected to benefit from this. The main factors of governance, which must be focused upon, are predictability, accountability/transparency, participation of all stakeholders, and service delivery, he said.
> 
> Inamul Haq reiterated that if governance reforms, including devolution process, access to justice, and civil service reforms are implemented successfully, then economic growth and poverty alleviation goals would be comprehensively achieved.
> 
> He said that local government bodies system is an effective system and capable of addressing the community's issues in the best way. However, corruption at all levels be monitored and checked. This is one of the big challenges, he cautioned.
> 
> He said the local governments would make procurement from the allocated budget independently without consulting the federal government, and this would increase its efficiency.
> 
> The Citizen Community Boards (CCBs), which have gained popularity on account of public participation, have absorbed 600,000 people, who are engaged in the development activities under 25,000 CCBs. There is a need to revise and simplify the rules to facilitate CCBs taking care of any corruption, he maintained.
> 
> Inamul Haq stated that Pakistan has taken the first right step to development by identifying governance, and hoped that devolution process would work as an engine of growth. Referring to the Local Government Ordinance (LGO), 2001, he said it recognises the right of the citizens to obtain information about the working and performance of the local governments, which could be best achieved through information technology (IT), he noted.
> 
> In this regard, the NRB has introduced Narims Software that will be made functional shortly and meet all requirements of all district government officers, elected representatives and citizens. He, however, said that some classified information would not be made public.
> 
> Establishment Secretary Syed Tariq Ali Bokhari, a panellist, said there is a need to reform the civil service structure. The needs of the society have not been catered for 50 years. The people who were meant to serve the public never considered it as their priority. The reform process suffered with the rush of daily routine, he added.
> 
> Allaying apprehensions of the participants on various issues, Inam said the process of devolution should continue, as under the system, he remarked, the money is distributed to every corner of the country. He said that India acknowledging Pakistan's reformative process has shown great interest in the joint venture.
> 
> Replying to another question, he said the authority of DCOs is limited to police order and the law and order only. It is imperative to assign power to the Nazims if they are to be made effective, he added.
> 
> The workshop document said that National Construction Bureau is working on various issues like district service, civil service reforms, provincial restructuring, federal to provincial devolution, computerisation of record-of-rights, media and governance, CCBs, fiscal decentralisation and inter-governmental transfers, taxation, strengthening of institutions, enforcement of local and special laws, municipal management, capacity building, police rules, financial intermediation for poverty reduction, and would finalise them in two to three years.
> 
> In his concluding remarks, Asif Bajwa said that all the recommendations and views expressed by the participants would be incorporated in the PRSP-II document.
> 
> He showed his concern that human resource, which is the main driving force behind all the activities, is under paid, whereas commodities are available at the market rate, and this should be given due consideration to meet the goals, he added.


Neo, its a duplicate post. I already posted that news.


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## Neo

Sorry, my bad!
I'll delete the post, thanks for notifying.


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## Owais

*Production resumed at Akhurwal Coalmines * PESHAWAR: NWFP Governor Lt. Gen. (Rtd), Ali Muhammad Jan Aurakzai has called upon tribal people to resolve their disputes over mineral wealth, this, he said while inaugurating Akhurwal Coalmines, near Darra Adamkhel. 

The coal deposits in the area were discovered, as early as 1978 but due to tribal disputes over the ownership of these mines, production could not be started even after the passage of 28 long years. 

There are 42 coalmine sites, all identified in Akhurwal area, of which production has been started from seven sites after resolution of dispute.

The Governor was informed that the production from seven mines that started on July 12 has been increasing and it has now reached 15-20 metric tons a day.


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## Owais

*Al-Tawairqi Group signs power deal with Saudi firm * KARACHI: Saudi steel makers Al-Tuwairqi Group of Companies has signed an agreement with Saudi Electric Company (SEC) for setting up power supply station costing $ 75 million at Dammam.

According to the group here, this power station will supply 230 KV/250 MVA electricity to coming up Al-Tuwairqi steel plant at Dammam at a cost of $ 325 million to produce 2 million tons of steel per annum.

Al-Tuwairqi group is setting up a steel making plant to produce 1 million tons of steel annually at a cost of $ 300 million at Port Qasim, Karachi.

The agreement was signed by Regional Manager of the group Sami Bin Abdul Aziz and Director Al-Tuwairqi Steel Karachi Zaigham Adil Rizvi who is also the head of electrical division of Al-Tuwairqi Group.


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## Owais

*Musharraf stresses plan for enhanced power supply* 

KARACHI (July 28 2006): President Pervez Musharraf on Thursday stressed the need for evolving a plan on war-footing for increased power supply not only to Karachi, but also to the rest of the country. In this regard, he called for making short, middle and long-term planning with short-term plan to be implemented by June 2007, middle by 2008-09 and the long-term by 2011-15.

He was chairing a briefing held to review power situation in Karachi and the present and future plans of the Karachi Electric Supply Corporation (KESC) in this regard. The meeting held at Governor's House. Senate Chairman Mohammedmian Soomro, Sindh Governor Dr Ishratul Ibad Khan, Chief Minister Dr Arbab Ghulam Rahim, Federal Water and Power Minister Liaquat Ali Khan Jatoi, CBR Chairman Abdullah Yusuf, Karachi Nazim Mustafa Kamal, Karachi Naib-Nazim Nasreen Jalil, Abdul Aziz Al-Hamad Al-Jomaih, chairman, Al-Jomaih Group, which owns KESC, KESC CEO Frank Schemit and other concerned officials attended the meeting.

The President said he hopes and has confidence in the KESC that it will overcome the obtaining electricity problem and bring improvement in power supply in the city.

In this regard, he said if they would need additional support will be provided to them from Wapda. The President emphasised that a practical power improvement plan be prepared for up to June 2007 so that no problem is faced by 16 million people of this city by then. On the occasion, Abdul Aziz Al-Hamad thanked the President for this meeting and his support to the KESC.

He also thanked the governor and the chief minister of Sindh, City Nazim and related government departments for their support to the Corporation in overcoming the existing power problem. Frank Schemit briefed the meeting about Corporation's present and future plans to overcome the power supply situation through increased generation and improved distribution system.

He said the existing problem was caused by less power generation capacity, gas supply problem, and overloading of distribution network. He said the KESC will start producing additional 500 mw electricity by April 2007 and a total of 750 mw by April 2008, adding this will help overcome the problem of load-shedding while losses being faced, at present, will be overcome with voltage stabilisation.

Frank Schemit said the KESC will be investing Rs 25 billion for this purpose during the next two years and Rs 12 billion in the first year, and remaining in the second year.

The meeting was informed that the KESC is introducing a new software to improve the existing distribution system, while steps are under way for improving the operational system. The President was briefed that by 2008-09, the KESC distribution system will be brought at par with international standard.

It was pointed out that, at present, the KESC is generating 1,300 mw of electricity and deriving 600 to 700 mw by Wapda to meet the supply demand of 2200 mw. The shortfall is being met by IPPs.

As regards the demand for gas supply, the SSGC managing director said the Company will supply 180 mccf gas for additional generation by the KESC and additional 120 mccf will be imported for which Port Qasim Authorities have been approached for handling of imported gas.

The President directed the KESC authorities to plan their supplies to city on the basis of 500 mw supplied by Wapda, saying the people also need to be informed well about KESC planning. He said the people are sensible and understand their limitations and would fully co-operate with the Corporation. He assured the KESC that whatever support would be required, the government will provide them, saying the process of privatisation of the KESC will prove successful.

On reiteration of need for improved distribution system, the KESC CEO said that 20 new grid stations are being set up and by December 2009, the KESC distribution and generation system will be brought at par with international standard.


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## Owais

*First mutual fund launched abroad* 

KARACHI (July 28 2006): Pakistan on Thursday has made its first portfolio investment abroad by launching the Pakistan International Element Islamic Fund (PIIF) to be managed by the Arif Habib Investments. Arif Habib Investment Management Limited chief executive Nasim Beg announced this while briefing the press at a local hotel.

He said the investment symbolises a major step forward for the country's economy. A country which was in not too distant a past considered a basket case country has now acquired the confidence to take advantage of opportunities available in leading international financial markets.

It also demonstrates the vision of economic managers and regulators of the country as they take this major step toward liberalisation. The investment has been made in three different US-run Islamic mutual funds - one representing large-cap investment in US blue chip companies, second in diverse European companies and the third in leading Far Eastern (Japanese, Korean and Chinese) companies.

The mutual funds are of the Alfanar Fund series managed by the Permal group. The group has a 22 years of experience of managing funds and has over $22 billion of assets under its management.

He said PIIF is an open-end Shariah-compliant mutual fund launched about three months ago. The fund is the first to have a specific permission from the State Bank to invest outside the country.

While the fund is permitted to invest up to 30 percent of its assets abroad, the present investment represents 3 percent of the assets. Investing aboard will help fund managers provide a more diversified portfolio for their investors.

Earlier, PIIF's IPO also demonstrated the growing interest in mutual funds in Pakistan. Over 5,000 individual investors contributed about Rs 1.4 billion in the fund.

This fund adheres to stringent Shariah criteria monitored by a Shariah council under the supervision of former Justice Taqi Usmani. The Sharia council also includes Maulana Imran Usmani, Maulana Ashraf Usmani and Maulana Zahid. Arif Habib Investments now manages seven funds - five open-end and two closed-end.


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## Owais

*Cabinet approves new Trade Organisations Ordinance* 

ISLAMABAD (July 28 2006): The federal cabinet has approved new Trade Organisations Ordinance, in principle, to weed out fake trade bodies, prohibit grouping, block voting and campaigning, the sources in the commerce ministry told _Business Recorder _on Thursday. However, till the enactment and enforcement of the new law, the trade bodies would continue operating under the existing Ordinance, 1961, they added.

The new law would be drafted by a committee, headed by former Justice Saleem Akhtar, which had been earlier assigned to analyse the structure and working of the trade bodies besides, identification of the role of the FPCCI, the sources added.

The committee had also been asked to define the purpose, role, responsibility and operational framework for all the trade bodies and their membership criteria.

Sources said the new law would ensure good governance by putting in place establishing procedures that promote transparency, adding this would include development of code of ethics by the trade bodies, corporate and financial management.

Transparent election procedures, including resolution of disputes and prohibition of "grouping, block voting and campaigning" would be the main focus of the new law, the sources added.

According to the new law, the newly-registered trade bodies, holding valid licence, would be entitled to vote and contest elections after completion of two years of their affiliation with the apex body. The newly-enrolled members of the trade bodies would be entitled to vote and contest election after completion of two years of their valid enrolment.

Sources said the committee would also define circumstances and the mode of intervention by the regulator in the affairs of trade bodies. The trade organisations law would empower the regulator to frame rules for the enforcement of new law and achieve its objects.

The regulator would develop a detailed system to weed out fake trade bodies on the basis of new criteria after giving them opportunity of being heard and merger of trade bodies, and representation of women, commerce, trade, industry, and trade in services at the trade bodies, including the apex body.

The commerce ministry, in its summary to special cabinet meeting convened to approve Trade Policy 2006-07, had proposed that the committee may be mandated to prepare the draft law, rules required there under and model memorandum and articles of association by October 31, 2006, the sources added.

After enforcement of the new law, necessary measures would be taken to implement the reforms already being considered necessary by the ministry, they maintained.

Sources said all subsequent elections would be conducted under the new law/rules in the associations, chambers, and the FPCCI to ensure effective representation of commerce, trade industry, women, and agriculture.

They said the committee felt during discussion that rules for the purpose of enforcement of the Ordinance have been framed which allow unlimited discretion to the regulator, creating uncertainties for the trade bodies about their rights, privileges, and responsibilities.

The committee was of the view that the system is generally slow to respond to the modern day requirements of the trade bodies. The enforcement of law is selective and injudicious in application of most legal provisions, said the sources.


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## Owais

Government allows sale of blended fuel 
*ISLAMABAD *_(updated on: July 27, 2006, 23:29 PST_): Prime Minister Shaukat Aziz on Thursday approved the sale of blended fuel in the country in view of the rising fuel cost and to diversify the sources of energy.

The decision was taken by the prime minister while chairing a meeting held here at the prime minister House.

The prime minister said that introduction of blended fuel will help the government meet energy shortfall.

Initially it will be sold under a pilot project through Pakistan State Oil (PSO) petrol pumps at Lahore, Karachi and Islamabad. The pilot project will be launched in August this year.

Based on the results of the pilot project, the blended fuel will be made available throughout the country, the prime minister added.

This is for the first time that the concept of Ethanol blending with motor gasoline is being introduced in Pakistan.

The blended fuel will have up to 10 percent Ethanol and the remaining 90 percent will be gasoline.

The prime minister said that blended fuel is environment-friendly and cheaper as it contains higher percentage of octane.

Several countries including Brazil and India are already using it, he added.

The prime minister said the provinces will be directed to amend the rules to allow the sale of blended fuel.

He said marketing companies will be encouraged to come forward to market it, as blended fuel is less costly and promotes healthy environment. It will also encourage production of bio-fuel.

The prime minister appreciated Pakistan State Oil (PSO) and Hydro Carbon Institute of Pakistan (HDIP) for launching the project and said this will have a positive and long-term impact on government's plans to overcome energy shortfall in the country.

He said in view of the high fuel cost there is a need to pursue energy conservation.

The prime minister also directed that steps be taken for better traffic management and road infrastructure improvement as traffic jams cause fuel wastage and loss of foreign exchange.

The government is working for improvement of mass transit so that people have alternative means to commute, the prime minister added.

The meeting was attended among others by Minister of State for Petroleum and Natural Resources, Muhammad Nasir Khan Mengal, Deputy Chairman Planning Commission, Dr. M. Akram Sheikh, Secretary Ministry of Petroleum and Natural Resources, Secretary Industries and Production, Chairman Alternative Energy Development Board (AEDB) and MD PSO.


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## Neo

LAHORE (July 28 2006): Punjab Chief Minister Chaudhry Pervaiz Elahi has announced the Punjab Power Generation Policy 2006, under which power projects would be undertaken by public and private sectors individually or with mutual collaboration.

As many as 48 sites have been identified at different canals in the province where hydel power projects of 500 megawatts would be set up. He was presiding over a high-level meeting at Chief Minister's Secretariat, here on Thursday.

Provincial Minister for Power Armughan Subhani, Punjab Chief Secretary Salman Siddique, Chairman Planning & Development Suleman Ghani, Secretary Planning and Development Sohail Ahmad and Chief Engineer Power Muhammad Yaqub and other senior officers were present. Secretary Irrigation and Power, Arif Nadeem gave a detailed briefing regarding Power Generation Policy 2006.

The chief minister said that Punjab Power Development Board had been constituted which would be responsible for implementation of Punjab Power Policy. He said that local and foreign investment would be encouraged in power generation sector and implementation of Punjab Power Policy would not only help in the provision of low cost electricity to the masses but would also leave a positive impact on agriculture and industrial sectors.

The CM said that hydel power projects of international standard would be constructed. He added that Punjab government would give a practical shape to Khokhara Hydro Power Project near Mandi Bahauddin with a cost of Rs 260 million. He said that five hydro power generation projects at Okara, Pakpattan, Sheikhupura, Gujranawala and Marala (Sialkot) will be initiated with the co-operation of Asian Development Bank (ADB) which would produce 25 megawatt electricity. He said that under Punjab Power Generation Policy, the possibilities of generation of energy from thermal, solar and other sources would also be explored.

Arif Nadeem informed the meeting that Punjab Power Development Board would allocate different sites to private investors in a transparent manner for hydro power projects and Punjab development board, headed by chief minister Punjab, would provide all out facilities to private investors under one window operation.


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## Neo

WASHINGTON (July 28 2006): Advisor to Prime Minister for Finance and Economic Affairs Dr Salman Shah said that we have introduced Pakistan for the first time after almost 15 years and the international equity investors have shown "positive interest" in investing in the country.

While briefing the newsmen about the OGDCL GDR roadshow in Washington on Wednesday evening, he said the idea was that international investors should start investing in Pakistan's equities, and then, private sector companies should come forward for international enlisting. "This is an important link which is quite necessary for Pakistan, so that there should be our presence in the international equity markets."

He said there was a lot of interest in Pakistan, because of good economic performance of the country. "There were many investors, who have already invested much in Pakistani market," and from their perspective, "it was very good opportunity, and hence, there is a lot of interest."

He said that we are floating 10 percent shares of OGDC in London Stock Exchange in the shape of global depository receipts, and targeted investors of East Asia, Europe, and America.

Salman said that when the company would itself be marketed, then the prospective investors would give their commitments, as to how many shares they bid for and what price they offer. This process would be completed in September or October.

Subsequently, he said government wants to enlist more companies of Pakistan internationally. Banks, insurance companies, PTCL and others may also follow and be enlisted. The main idea is that international investors should start investing in Pakistan's equities. This, he stated, was "an important link", which is quite necessary for Pakistan.

Salman Shah said the delegation would now proceed to Boston on Thursday after Washington road show. Referring to the performance of the Karachi Stock Exchange (KSE), which he said, had performed remarkably than other stock markets.

He said Pakistan has the fastest growing economy in Asia, and growth rate has been at 7 percent average; and in the coming years, it has been projected at 7 to 8 percent.

In the 160 million population, 54 percent was below the age of 19, which means Pakistan's potential future market is sizeable and the country's manpower is also young.


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## Neo

ISLAMABAD (July 28 2006): The International Finance Corporation (IFC) on Thursday signed a $52 million financing package with Dewan Petroleum (Pvt) Ltd, to support its upstream oil and gas exploration, development and production project in Pakistan.

IFC, the private sector arm of the World Bank Group, is strengthening natural gas production in Pakistan to meet the country's increasing domestic demand by supporting a local oil and gas firm. "It is encouraging to see Pakistani companies like Dewan Petroleum participating in the hydrocarbon sector of their country," said Somit Varma, IFC's Associate Director for Oil, Gas, Mining and Chemicals.

"Not only do they help in developing domestic energy resources to satisfy growing demand, but they also generate revenues for governments, create jobs and business opportunities for local suppliers of goods and services."

Dewan Petroleum, associated with the well-established Dewan Mushtaq group in Pakistan, is a new Islamabad-based oil and gas firm that is committed to environmental and social sustainability.

Dewan Petroleum and an affiliate company, REPL, have a 60 percent combined working interest in the Safed Koh block in Punjab in central Pakistan, which includes the Salsabil gas and condensate field. Dewan Petroleum and its partners, which include Rally Energy Corp, a Canadian oil and gas company, will also explore prospects for additional gas reserves in the block.

The joint venture will strengthen domestic natural gas supplies in a market where increasing demand may lead to a shortfall in domestic supply, and hence they need for gas imports.


----------



## Neo

ISLAMABAD (July 28 2006): The power generation performance of all electricity establishments (thermal, hydel and nuclear) witnessed 5.7 percent growth to 88,379 million kWh during 2004-05. However, Wapda hydro power stations generated six percent less than in the year 2003-04, according to a report issued by the Federal Bureau of Statistics (FBS).

The electricity loss in transmission and distribution process was 21,603 million kWh in the year 2004-05 as against 21,117 million kWh in 2003-04. And electricity consumed in auxiliaries of power stations and system losses remained at the same level in 2004-05 (25.4 percent) as compared to previous year (25.3 percent).

The Census of Electricity Establishments (CEE) 2004-05, a report compiled by the FBS says that during the report year (2004-05), all the electricity establishments produced 88,379 million kWh of electricity against 83,607 million kWh in the year 2003-04.

While, Wapda hydro power stations, generated 25,588 million kWh during the year under review, shows a decrease of six percent (or 1784 million kWh) against the gross generation of 27,372 million kWh in the financial year 2003-04.

The CEE-2004-05 also says that the total installed capacity of all the establishments stands at 20,456 MW as compared to 20,360 MW in the year 2003-04 showing an increase of 0.5 percent.

Out of total installed capacity of 20,456 MW, the share of thermal was 66 percent whereas the hydel and nuclear stood at 32 percent and two percent, respectively.

The electricity generation of 88,379 million kWh during the year includes generation from Wapda, KESC, IPPs and captive units. The share of thermal power was 68 percent while the share of hydel and nuclear stood at 29 percent and three percent, respectively.

The report also says that the electricity consumption during year 2004-05 also increased by 6.7 percent to 63,298 million kWh as compared to 59,316 million kWh in the year 2003-04.

The pattern of consumption in the domestic sector for 2004-05 figured 43.6 percent of total electricity consumption. While consumption of commercial, industrial, agriculture and other sectors stood at 6.4 percent, 32.5 percent, 11.1 percent and 6.4 percent, respectively.

The total number of consumers/connections during the year 2004-05 was recorded at 16,718 thousand as compared to 15,841 thousand in the year 2003-04 showing an increase of 5.5 percent.

The electricity consumed in auxiliaries of power stations was 3,478 million kWh in 2004-05 as compared to 3,174 million kWh in 2003-04.

The value of electricity sold, ie, energy charges billed (revenue from sale of power and other charges) during the year 2004-05 stood at Rs 275.87 billion as against Rs 243.61 billion during the year 2003-04 showing an increase of 13 percent.

The industrial cost incurred during the year 2004-05 was Rs 137.2 billion as compared to Rs 108.6 billion during the year 2003-04. It showed an increase of 26 percent over the previous year. The share of natural gas and furnace oil in the total value of fuel used during 2004-05 was 53 percent and 39 percent, respectively.

The total value added during the year 2004-05 stood at 138.6 billion rupees as against 135.0 billion rupees in the year 2003-04, showing an increase of three percent. Value added for this year stands at Rs 138,640 million as compared to last year Rs 135,005 million, showing an increase of 2.7 percent.


----------



## Neo

KARACHI, July 27: How many of us know about Ã¢â¬ËchamakÃ¢â¬â¢ (light)? It is a business jargon used for the telegraphic transfer (TT) of dollars that an exchange company in Pakistan gets from an exchange company in Dubai or elsewhere. Also a funnier name Ã¢â¬â- kuchra (garbage) -- is given to all the foreign currencies other than the dollar. The US dollar is greenback or `subz pattaÃ¢â¬â¢.

Under the system, the exchange companies in Pakistan export `kuchraÃ¢â¬â¢ to the exchange companies abroad, mostly Dubai. All this `kuchraÃ¢â¬â¢ -- a mix of many currencies -- is monetised in dirham value in Dubai. These dirhams are then converted into dollars for which the present rate is 3.673 dirham to a dollar.

The annual turnover of exchange companiesÃ¢â¬â¢ business is estimated at around $3.5 billion. The exchange companies in Pakistan collect all foreign currencies from those who come to get Pakistani rupees. Mostly they are the Pakistanis who have come from abroad or they have received foreign currency from their relatives.

About three years ago when these exchange companies started business under a State Bank licence, they were allowed to open a Nostro account (Nostro, a Latin word that means my money with you), in an exchange company in Dubai or any foreign country. Except dollars, all foreign currencies are exportable that are transferred to the partner exchange company in Dubai or other place. The dollars are then remitted through chamak to the exchange companies in Pakistan.

On July 8, the State Bank of Pakistan instructed more than two dozens licensed exchange companies to close down their accounts with the exchange companies by July 25, and instead do business through accounts in foreign commercial banks or their foreign currency accounts in Pakistan. These companies have also been instructed to report on transaction-to-transaction basis, with relevant dates of export of foreign currencies, except the US dollar, date of receipt of credit, the name of branch and bank.

As the rupee parity is coming under severe strain because of the deteriorating terms of trade in the last five years, and it was worst in the fiscal year 2005-06, plus a host of other factors, the State Bank has instructed all the exchange companies to sell a minimum of 10 per cent of currencies exported and a minimum of 10 per cent of inward remittance of dollars in the inter-bank market.

Ã¢â¬ÅThis is a first step towards preparation for steep rise in the international oil price in coming days,Ã¢â¬Â a market analyst said. He pointed out that the oil import bill was mostly financed from the inter-bank market, which might exceed $7 billion in 2006-07 if the government failed to take any effective energy conservation method.

By asking the exchange

companies to carry out their currency business through accounts in foreign or Pakistan commercial banks, the State Bank wants a close and effective monitoring of the transactions that could plug leakages taken place previously in the business through accounts in the foreign exchange companies. By doing so, the State Bank is also complying with instructions of the US government that wants a close watch on all international monetary remissions.

Close watchers of the currency market and a few at the State Bank observed that in the last one year dirham was pegged at about Rs16.20 when foreign currencies were exported to Dubai but was assessed at Rs16.60 and Rs16.70 through inward remission of the dollar. The parity of dollar exceeded Rs61 plus. Ã¢â¬ÅWhy was this happening and who is plugging the gap of dollar sales than Rs61 when it was costing a company Rs61 plus?Ã¢â¬Â

Ã¢â¬ÅThere has been a massive over- and under-invoicing in the export and import trade in the past years and touched a record level in 2005-06,Ã¢â¬Â said an active money exchanger. He pointed out that accounts in the foreign exchange companies had become a big source of leakage of PakistanÃ¢â¬â¢s foreign exchange. Ã¢â¬ÅMany known Pakistani businessmen used to transfer their foreign exchange illegally to Dubai for buying property in the UAE,Ã¢â¬Â he added.

Munaf Kalia, secretary of the Exchange Companies Association of Pakistan (ECAP), has hinted at the possibility of State BankÃ¢â¬â¢s intervention by way of dollars injection sometimes early next week in the open currency market to check any volatility in the rupee parity with dollar.

On Thursday, the local currency market was abuzz with rumors of central bankÃ¢â¬â¢s intervention by way of injection of a few million dollars that was said to have brought down the dollar parity with rupee to Rs60.85 from Rs61.15 on Wednesday. Mr Munaf did not confirm the rumors but indicated that his association was working with the State Bank to keep a close watch on the market. Ã¢â¬ÅMay be on Monday or after a day or two, the situation may warrant injection of dollars,Ã¢â¬Â he observed.

Ã¢â¬ÅWe intervene in the market within the framework of a built-in mechanism of our exchange value system,Ã¢â¬Â a well-placed source at State Bank replied without being specific and not elaborating much. He explains that normal fluctuation in the rupee parity is taken in stride, but the central bank intervenes when there is volatility in the rupee parity.

Haji Haroon, president of the ECAP, does not see much of a problem in the currency market when the central bank intervened early this month to put in place a new system for remission of dollars from Dubai and other countries. Through a circular, the State Bank asked all the local exchange companies to close down their all Nostro accounts with foreign exchange companies by July 25. These exchange companies now remit inward and outward foreign exchange through their accounts in commercial banks abroad or through foreign currency accounts in Pakistan.


----------



## Neo

LONDON Jul 28(APP) British Pakistani expatriate family, on average is sending a little over ÃÂ£1000 remittances to Pakistan per year which is more than ÃÂ£870 being sent by other minorities living in the UK, said a survey. 

The survey was conducted with the cooperation of the British Department for International Development (DFID) by a company International Communication Marketing (ICM) to understand the characteristics of migrant remittances in order to help maximise their developmental impacts. 

Details of the the survey were revealed here on Thursday at a briefing at DFID's. The DFID's junior Minister Gareth Thomas in his remarks on the occasion said "This new survey fills this gap, and improving understanding will help banks, community groups and financial service providers offer more options to people wishing to send money home to relatives." 

A representative of ICM Martin Boon said there could be many reasons for Pakistanis for sending more money. One reason can be perhaps they remitted more money to help affected people of the devastating earthquake which struck the country in October last year. 

The key findings of the survey were that about 38 per cent of ethnic minority households who responded to the survey sent an average of ÃÂ£870 back home last year, the equivalent of an overseas holiday; of the 50 plus developing countries receiving money from the UK, the five largest recipients were Nigeria, India, Pakistan, Jamaica and Ghana. The average income of the senders was ÃÂ£22,000 and 70 per cent were between 25-44 years old.

In almost 50 per cent of cases people were sending money to their parents, another 25 per cent to other close relatives like cousins and 15 per cent were sending money to spouses and children. 

According to the survey 31 per cent of senders said the money would be used to buy food, 21 per cent said it would help with medical bills and 17 per cent reported the funds would help pay for schooling; and 80 per cent said the money would make a real difference in the lives of their relatives back home.


----------



## Owais

*First private undersea fibre optic cable system launched* 
*KARACHI *_(updated on: July 29, 2006, 02:51 PST_): Prime Minister Shaukat Aziz on Friday performed the inauguration of Pakistan's first private sector undersea fibre optic cable system.

The launching ceremony to this effect was held at a hotel here on Friday evening.

Speaking on the occasion, the prime minister described the occasion as a very important day for Pakistan as a very important undersea fibre optic cable system has been opened to connect Pakistan with the rest of the world.

The Transworld Associates Limited (TWI) is Pakistan's first private undersea fibre optic cable operator.

With direct cable landings in Karachi, Fujairah (UAE) and Al-Seeb (Oman) and through its connectivity with a number of international and regional undersea cable systems, TWI Network offers true end-to-end, direct broadband, high speed connectivity to Pakistan's growing number of telecom operators, internet service providers and corporate customers.

The TWI is a 1,250 kilometre long state of the art 1.28 Terabit per second DWDM system.


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## Owais

*National airline facing losses: Chairman PIA * KARACHI: Pakistan International Airlines (PIA) chairman, Tariq Kirmani has said that the PIA income was not breaking in any profit and the national airline was facing losses in the wake of surging prices of oil in the international market.

Addressing the maiden International Global Customer Care Conference here, Tariq Kirmani told that he has proposed to the government for the setting up of a fund for the stabilization of oil prices. He said that the soaring oil prices by 70 percent during the next few months have sent the expenditures swirling high manifold.

Tariq Kirmani told that the efforts were afoot for increasing the income and curtailment of expenditures.

PIA global network&#8217;s 40 employees also participated in this conference held in a local hotel here.


----------



## Owais

*ADB to provide Pakistan loans in local currency * ISLAMABAD: Asian Development Bank (ADB) intends to provide long-term loans to Pakistan in local currency. 

ADB Country Director, Peter Fedon told Geo News that the provision of local currency loans would be more beneficial for project financing, as these projects yield revenue in local currency.

He further said that the ADB was satisfied with the Pakistan&#8217;s economic indicators.


----------



## Neo

ISLAMABAD (July 29 2006): President General Pervez Musharraf has said concerted efforts need to be made to translate the geo-strategic importance into opportunities for economic growth of the country. He made these observations at a high-level meeting also attended by Prime Minster Shaukat Aziz.

The meeting reviewed initiatives being taken to convert Pakistan into a developed, industrialised and knowledge-based economy by utilising its geo-strategic location as an energy, transport and industrial corridor for the countries of the region, including Middle East, Central Asian Republics, China, South Asia and South-East Asia.

The President said Gwadar port can play a very major role to achieve the objective and emphasised the need for fast-track development of rail, road, fibre optics, oil and gas pipeline linkages with the rest of the country and the region. He said all ministries and departments concerned need closer interaction and co-ordination for achieving desired objectives.

The President said continuity of policies of last seven years have brought major dividends for the country in terms of macro-economic development, industrialisation and infrastructure development.

The President expressed his firm commitment that these policies will be ensured and sustained in the medium- and long-term so that the fast-paced economic growth was maintained.

He said the long-term vision of Gwadar port as an energy hub and gateway for the countries of the region is in line with our vision for economic prosperity of the country. The President and the Prime Minster said there was marked improvement in environment for investment and the foreign direct investment has shown a quantum increase. They said there is improved security environment and policies are investor's friendly.

The meeting decided that there will be a policy and supervisory board which will provide strategic vision, lay down policy guidelines, ensure timely decisions and regularly review and monitor progress on various infrastructure and other projects related to the Gwadar port.

There will also be a steering committee under the board, which will be headed by the planning commission deputy chairman and will be entrusted with the implementation of the entire process and finalisation of terms to achieve the objective. The meeting also decided to create special economic zones in Gwadar and other suitable areas to promote investment and industrialisation.


----------



## Neo

Affluent Pakistanis do not necessarily feel the compulsion any more of retaining a good part of their savings in foreign currencies a reversal of trends from the days when the economy was going through a so called 'dollarisation'.

More than five years of a sustained exchange rate of the rupee versus the US dollar which is the main foreign currency used by the country, has indeed raised the confidence in the Pakistani currency.

An increasing number of Pakistanis feel the confidence to save and spend in rupees while an increasing number are giving up on foreign currencies as a necessary hedge against devaluation. But is the exchange rate of the rupee going to remain similarly sustainable?

In the short term, the outlook for sustainability of the exchange rate probably remains in the affirmative. Analysts broadly expect the bank to adhere to its recently begun move of tightening the spread between lending and borrowing rates.

This follows a long proclaimed view of Dr Shamshad Akhtar, governor of the central bank, to force banks to narrow their spreads.

For many analysts, the policy push by the central bank is meant to raise interest rates on the one hand and curb inflationary pressures on the other.

The combination of these two objectives is bound to keep the rupee within stable limits.

However, a complicating factor in all such efforts is bound to be the continuing pressures emerging from an ever widening international trade deficit which this year has soared to about $12 billion.

There are many among the community of Pakistani analysts who vouch for a devaluation of the rupee, hoping that such a policy choice would spur exports and trim the trade deficit.

In the past, Pakistan has indeed taken the road to devaluation as a way to curb its recurring large global trade deficits, all with the aim of reducing the per unit cost of exportable items. This however has been more a temporary solution rather than a long term fix.

In many categories of Pakistani exports, the more relevant issues have to do with issues which drive up production costs as well as factors which undermine the quality of finished end goods.

Most of Pakistan's industrial producers would instantly complain of the back-breaking costs of inputs such as electricity which undermine their competitive positions.

This is the result of an inherently inefficient power generation and transmission system which sees a large chunk of the electricity entering the system, simply go waste in the name of losses during the transmission phase.

Besides, devaluation of the rupee must instantly also raise the cost of imports including the cost of imported fuels. In turn, the cost of locally generated thermal electricity is bound to rise as its directly linked to oil prices.

Barring an unexpected surprise, the conversion rate of the Pakistani rupee is likely to remain largely unchanged for now.

While the temptation to devalue may be shared by some analysts, the era of Pakistan's so called "dollarised" economy appears to be locked in history.

- The writer is a journalist based in Pakistan.


----------



## Neo

ISLAMABAD, July 28: President Pervez Musharraf on Friday called for fast-track efforts to translate the geo-strategic importance of Pakistan into economic opportunities for the country.

He was presiding over a high-level meeting which was also attended by Prime Minister Shaukat Aziz.

The meeting reviewed initiatives that were being taken to convert Pakistan into a developed, industrialised and knowledge-based economy by utilising its geo-strategic location as an energy, transport and industrial corridor for the countries of the region, including the Middle East, the Central Asian Republics, China, South Asia and South-East Asia.

President Musharraf said that the Gwadar Port can play a major role to achieve this objective and emphasized the need for fast-track development of rail, road, fibre optics, oil and gas pipeline linkages with the rest of the country and the region.

He said all ministries and departments concerned need closer interaction and coordination for achieving the desired objectives.

The president and the prime minister said continuity of policies of the last seven years had brought major dividends for the country in terms of macro-economic development, industrialisation and infrastructure development.

The president expressed firm commitment that these policies would be ensured and sustained in the medium and long term so that the fast-paced economic growth could be maintained.

He said the long-term vision of the Gwadar Port as an energy hub and gateway for the countries of the region was in line with the vision for economic prosperity of the country.

The president and the prime minister claimed that marked improvement had been noted in the environment for investment and increase in the quantum of foreign direct investment.

They said there was improved security environment and policies are investor-friendly.

The meeting decided that there would be a policy and supervisory board to provide strategic vision, lay down policy guidelines, ensure timely decisions and regularly review and monitor the progress on various infrastructure and other projects related to the Gwadar Port.

There will also be a steering committee under this Board which will be headed by the deputy chairman of the Planning Commission and will be entrusted with the implementation of the entire process and finalisation of terms to achieve the objective.

The meeting also decided to create special economic zones in Gwadar and other suitable areas to promote investment, industrialisation and job creation.

The meeting was also attended by the ministers for Industries and Water and Power, governor and chief minister Balochistan, ministers of state for Investment and Petroleum and Natural Resources, deputy chairman Planning Commission, secretary-general Finance, chairman Central Board of Revenue, foreign secretary, chairman National Highway Authority and advisor on Energy.


----------



## Neo

Recent growth performance of the economy has been among the reasons for optimism on the part of policy-makers. According to officials, sizable gains in per capita income (6.3 per cent in 2004-05 and 4.5 per cent in 2005-06) and enhanced consumer spending are the fruits of the measures taken by the government to put the economy on an even keel after the missteps of the past.

While lauding the economic turnaround in recent years, it is also advisable to take into account the risks that may hinder achievement of medium-term growth targets. Certain trends in the economy reveal that some slowing down from the fast paced growth of the last three years may well be necessary if we are to avoid exacerbating inflationary pressures and a balance of payments problem.

It is notable that PakistanÃ¢â¬â¢s growth on the back of a consumption driven boom has taken place against relatively low rates of capital formation. Comparing PakistanÃ¢â¬â¢s rate of investment vis-Ã¢â¬Â¡-vis other countries it is apparent we are under-investing in our infrastructure - roads, power grids, ports etc - as also our productive capacity. The following data shows that gross investment (which includes investment undertaken to replace worn out infrastructure) as a percentage of GDP in Pakistan has been lower than in other countries that have achieved similar or a higher average rate of growth in recent years. (An alternative explanation for a sustained period of higher growth that could occur despite lower capital investment in terms of what an economist would call greater Ã¢â¬Åtotal factor productivityÃ¢â¬Â - the greater efficiency in production of all inputs used including labour and capital - seems implausible in PakistanÃ¢â¬â¢s case.)

To some extent the relatively high rate of growth in Pakistan has occurred because of the past availability of underutilised industrial capacity. However, now that the economy has used up its excess capacity and because of inadequate expansion of industrial and infra-structural capacity in recent years, it is likely that greater consumer spending will spill over into higher inflation as well as increased imports. There are several risk factors of concern.

First, oil prices could well go higher before they go any lower since worldwide oil demand and supply are finely balanced and any disruptions in oil supply for whatever reason could send oil prices into the stratosphere. A further oil Ã¢â¬ÅshockÃ¢â¬Â would cascade throughout the supply chain and add to cost pressures not to mention the burgeoning deficit on the current account of the balance of payments.

Second, one of the major weaknesses of the present governmentÃ¢â¬â¢s economic performance is the lackluster growth of the agriculture sector. For the period 1999-00 through 2005-06, the compounded annual growth rate in agriculture sector value added was a meager 2.3 per cent - marginally higher than the rate of population growth. In sharp contrast, during the preceding 6 years (1992-93 / 1998-99) of relatively lower overall economic growth, the compounded annual growth rate of agriculture value added was significantly higher at 5 per cent.

What is disturbing is that total investment (public and private) in the agriculture sector over the last 6 years has been steadily falling not only as a percentage of agricultural value added but even in real (i.e., inflation adjusted) rupee terms. With a growing population and the possibility of weather or pest-related shortfalls in wheat and/or cotton production, we could well have a situation of rising food prices and/or a shortfall of raw cotton that could undermine our export prospects.

Why has agriculture been the laggard? In a rare moment of candor the author(s) of the latest Pakistan Economic Survey admits to the deficiencies in government policies towards agriculture in the following words: Ã¢â¬ÅThe exclusive concentration of the successive governments to four major crops, namely, wheat, cotton, sugarcane and rice and no or little effort to increase yield per acre or no policy support to diversification of agriculture sector are mainly responsible for the decline in the {GDP} share of this sector. These four major crops only account for one-third of agricultural value added while rest of the two-third has received almost no attention from all the governments.Ã¢â¬Â The author(s) might have added that had more attention been paid to the Ã¢â¬Årest of the two-thirdÃ¢â¬Â there would have been greater headway in reducing poverty levels as the majority of the poor in this country live in the rural areas.

Finally, the amount of liquidity sloshing around in the economy has contributed to inflationary pressures on the demand side. The State Bank of Pakistan data reveal that the (broad) money supply has been increasing by an annual average of 18 per cent over the last four yearsÃÂ³high by any standards. A sustained rise in the quantum of bank credit to households has undoubtedly stimulated purchases of all types of consumer goods but has also added to pressures on the current account of the balance of payments as many consumer durables manufactured/assembled in Pakistan depend on imported components (not to mention the additional oil imports required to meet the ballooning energy requirements of the growing number of motor vehicles as well as other consumer durables). With the level of foreign exchange reserves currently only around 6 months of projected imports, any further widening of the trade gap will exert downward pressure on the foreign exchange value of the rupee.

Cognizant of the growing imbalances in the economy, the State Bank of Pakistan has signaled its intention of reducing inflationary risks by recently raising commercial banksÃ¢â¬â¢ liquidity ratios; this will curtail their ability to lend and therefore reduce demand pressures. However, the governmentÃ¢â¬â¢s deficit spending may neutralise the central bankÃ¢â¬â¢s tightening and thus even sharply higher lending rates may not be sufficient to curb inflationary pressures and corresponding balance of payments problems. Hence the government needs to be vigilant on the fiscal front and should cut back on its non-development expenditure.By I Hussain

Recent growth performance of the economy has been among the reasons for optimism on the part of policy-makers. According to officials, sizable gains in per capita income (6.3 per cent in 2004-05 and 4.5 per cent in 2005-06) and enhanced consumer spending are the fruits of the measures taken by the government to put the economy on an even keel after the missteps of the past.

While lauding the economic turnaround in recent years, it is also advisable to take into account the risks that may hinder achievement of medium-term growth targets. Certain trends in the economy reveal that some slowing down from the fast paced growth of the last three years may well be necessary if we are to avoid exacerbating inflationary pressures and a balance of payments problem.

It is notable that PakistanÃ¢â¬â¢s growth on the back of a consumption driven boom has taken place against relatively low rates of capital formation. Comparing PakistanÃ¢â¬â¢s rate of investment vis-Ã¢â¬Â¡-vis other countries it is apparent we are under-investing in our infrastructure - roads, power grids, ports etc - as also our productive capacity. The following data shows that gross investment (which includes investment undertaken to replace worn out infrastructure) as a percentage of GDP in Pakistan has been lower than in other countries that have achieved similar or a higher average rate of growth in recent years. (An alternative explanation for a sustained period of higher growth that could occur despite lower capital investment in terms of what an economist would call greater Ã¢â¬Åtotal factor productivityÃ¢â¬Â - the greater efficiency in production of all inputs used including labour and capital - seems implausible in PakistanÃ¢â¬â¢s case.)

To some extent the relatively high rate of growth in Pakistan has occurred because of the past availability of underutilised industrial capacity. However, now that the economy has used up its excess capacity and because of inadequate expansion of industrial and infra-structural capacity in recent years, it is likely that greater consumer spending will spill over into higher inflation as well as increased imports. There are several risk factors of concern.

First, oil prices could well go higher before they go any lower since worldwide oil demand and supply are finely balanced and any disruptions in oil supply for whatever reason could send oil prices into the stratosphere. A further oil Ã¢â¬ÅshockÃ¢â¬Â would cascade throughout the supply chain and add to cost pressures not to mention the burgeoning deficit on the current account of the balance of payments.


----------



## Neo

Second, one of the major weaknesses of the present governmentÃ¢â¬â¢s economic performance is the lackluster growth of the agriculture sector. For the period 1999-00 through 2005-06, the compounded annual growth rate in agriculture sector value added was a meager 2.3 per cent - marginally higher than the rate of population growth. In sharp contrast, during the preceding 6 years (1992-93 / 1998-99) of relatively lower overall economic growth, the compounded annual growth rate of agriculture value added was significantly higher at 5 per cent.

What is disturbing is that total investment (public and private) in the agriculture sector over the last 6 years has been steadily falling not only as a percentage of agricultural value added but even in real (i.e., inflation adjusted) rupee terms. With a growing population and the possibility of weather or pest-related shortfalls in wheat and/or cotton production, we could well have a situation of rising food prices and/or a shortfall of raw cotton that could undermine our export prospects.

Why has agriculture been the laggard? In a rare moment of candor the author(s) of the latest Pakistan Economic Survey admits to the deficiencies in government policies towards agriculture in the following words: Ã¢â¬ÅThe exclusive concentration of the successive governments to four major crops, namely, wheat, cotton, sugarcane and rice and no or little effort to increase yield per acre or no policy support to diversification of agriculture sector are mainly responsible for the decline in the {GDP} share of this sector. These four major crops only account for one-third of agricultural value added while rest of the two-third has received almost no attention from all the governments.Ã¢â¬Â The author(s) might have added that had more attention been paid to the Ã¢â¬Årest of the two-thirdÃ¢â¬Â there would have been greater headway in reducing poverty levels as the majority of the poor in this country live in the rural areas.

Finally, the amount of liquidity sloshing around in the economy has contributed to inflationary pressures on the demand side. The State Bank of Pakistan data reveal that the (broad) money supply has been increasing by an annual average of 18 per cent over the last four yearsÃÂ³high by any standards. A sustained rise in the quantum of bank credit to households has undoubtedly stimulated purchases of all types of consumer goods but has also added to pressures on the current account of the balance of payments as many consumer durables manufactured/assembled in Pakistan depend on imported components (not to mention the additional oil imports required to meet the ballooning energy requirements of the growing number of motor vehicles as well as other consumer durables). With the level of foreign exchange reserves currently only around 6 months of projected imports, any further widening of the trade gap will exert downward pressure on the foreign exchange value of the rupee.

Cognizant of the growing imbalances in the economy, the State Bank of Pakistan has signaled its intention of reducing inflationary risks by recently raising commercial banksÃ¢â¬â¢ liquidity ratios; this will curtail their ability to lend and therefore reduce demand pressures. However, the governmentÃ¢â¬â¢s deficit spending may neutralise the central bankÃ¢â¬â¢s tightening and thus even sharply higher lending rates may not be sufficient to curb inflationary pressures and corresponding balance of payments problems. Hence the government needs to be vigilant on the fiscal front and should cut back on its non-development expenditure.

Country Gross Gross

Investment Investment

as % of GDP as % of GDP in 2000 in 2004

Pakistan 17.4 18.1

Bangladesh 23.0 24.0

China 36.3 45.3

India 22.6 22.9

Indonesia 22.2 22.8

Malaysia 27.3 22.5

South Korea 31.0 30.2

Singapore 32.5 18.3

Sri Lanka 28.0 25.0

Thailand 22.8 27.1

Source: Asian Development Bank

http://www.thenews.com.pk/daily_detail.asp?id=17578


----------



## Owais

*SBP declares a tight monetary policy* KARACHI: Governor State Bank of Pakistan Dr. Shamshaad Akhter has announced to tighten its monetary policy further.

This she announced here today at a press conference. 

During the press conference, she also announced 0.5 per cent rise in discount rate. After this increase, banks now could get loans from State Bank&#8217;s discount window at 9.5 per cent rate in place of 9 percent, she said.

&#8216;To rein the inflationary trend in the country, we cannot outgo the declared discount rate under the present circumstances,&#8217; she said adding, &#8216;the target of eight per cent inflation of previous year was achievable only by the tight monetary policy of SBP.&#8217; 

She also deemed the target of 6.5 per cent set for the current fiscal year quite attainable.

She briefed the press conference that measures like increasing statutory liquidity requirement (SLR) and cash reserve requirement (CRR) had been taken to control the inflation and further OMO operations were going to be executed.


----------



## Owais

*Construction of Pakistan&#8217;s first industrial park from Aug 14: PM* 

KARACHI: Prime Minister Shaukat Aziz said Saturday that the construction Pakistan&#8217;s first industrial park would begin from August 14.

He stated this while addressing a ceremony to unveil the foundation stones of two significantly important projects of establishment of Korangi National Industrial Park and KarachiTools, Dies and Moulds Center.

These projects would play a vibrant role in boosting economic activity, fast industrialization and bring it globally competitive and productive.

The Prime Minister said that economic transformation policies of the present government have already started producing dividends with poverty level coming down and making a dent in unemployment.

"We will ensure the continuity of the policies and there would be no u-turn", he declared amidst big applause.

Stressing on significance of greater public-private partnership, the Prime Minister said, "We are committed to transforming Pakistan and together this partnership will create a Pakistan which will be prosperous, which is helpful in improving the quality of life of people and helps us in meeting global challenges".

He said although we have brought poverty level down and made a dent in unemployment, yet there are still poor and unemployed people out there and we have to see these things by maintaining the course and continuity of policies with no u-turn.


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## Owais

*Rise in banks' figures termed 'window-dressing'* 

KARACHI (July 30 2006): The State Bank of Pakistan (SBP) estimates that the 44 percent increase in deposits and 50 percent rise in credit at the end of June FY06 over the June FY05 figures were mere "window-dressing of balance sheets" by banks to show improved performance.

Describing it as a deceptive practice, the SBP Statement of Monetary Policy, issued on Saturday, said that credit officers in a bank may encourage their clients to fully consume their credit lines; the amount would then be simultaneously credited to the clients' current account.

"This essentially is a book entry as the credit extended is not used to generate any economic activity. Similarly, a business officer in a bank may persuade his/her client to create temporary short-term deposits with the bank. Such deposits are withdrawn immediately after closing of accounts," said the SBP.

The increase of Rs 113.2 billion in deposit base of banks and of Rs 60 billion in credit did cause a surge in monetary growth before end-June. But after two weeks into July 6, Rs 49.6 billion in deposits were withdrawn and Rs 30 billion in credit to private sector were retired. The end-June increase in the stock of money supply (M2), however, did not reverse as it shifts to rise in money in circulation, the SBP noted.


----------



## Neo

ISLAMABAD (July 30 2006): President General Pervez Musharraf on Saturday approved a mass transit railway system for eight large cities, a Lahore-Rawalpindi high-speed rail link and a new track from Havelian to Khunjerab Pass to boost trade with China.

The President, speaking at a presentation on 'Modernisation and future plans of Pakistan Railways' at the Pakistan Railway Carriage Factory here, called for improving the signalling system, conversion to standard gauge rail track, and provision of rail track through Kohat Tunnel.

The President is the first head of state to visit the Carriage Factory. He said that the Gwadar deep-sea port would provide trade and economic linkages to regional countries through a modern communication infrastructure, including rail network.

Referring to Pakistan's geo-strategic location, he said that the country is a potential economic and trade hub for Central Asian Republics, Gulf, the Middle East, Western China and South Asia.

He said there was need to provide to the masses modern communication facilities through a fast and efficient network of roads, ports and rail tracks. Railways Minister Rashid Ahmed told reporters after the meeting that a number of important decisions were taken at the presentation for expansion of railway network and to provide better facilities to the travelling people.

The President gave approval for a fast train to run between Rawalpindi and Lahore, and Karachi, which would run at a speed of 250 km per hour, on a completely new alignment, between Shahdara and Rawalpindi, covering the 290 km distance in 90 minutes.

The President also approved proposals for carrying out pre-feasibility studies for laying a rail track between Havelian and Khunjerab Pass, and a track from Chaman to Spin Boldak on the Afghan border. Approval was also given to a pre-feasibility study for laying a track along the Kohat tunnel.

The President also directed preparation of feasibility reports for introducing mass transit trains in eight major cities. "Your focus and objective should be to provide better transit facilities to the people," the President said. He was appreciative of the Railways Minister, and said: "Well done, Sheikh Sahib".

The President was also informed in detail about the future expansion plans of Pakistan Railways. According to these plans, the Railways was conducting a feasibility study to link Gwadar sea-port with Quetta at an estimated cost of Rs 75 billion. New tracks would be laid between the two cities in the first phase, which would be extended later to Chaman and Kandhar in Afghanistan.

Pakistan has already offered China a rail linkage through Khunjarab Pass to Gwadar, providing it shortest route for expanding its trade with the Gulf and the regions beyond.

The pre-feasibility study will examine possibility of finding the most economical route to link Havelian with Khunjrab Pass and onward link through Chitral with Tajikistan.

The President was told that Pakistan Railways was acquiring 69 locomotives from China at a cost of Rs 5.89 billion, and 33 of these have been assembled at Pakistan Railway Carriage Factory, while 20 would be received from China next year.

The President was informed that 24 imported locomotives from China, that had developed cracks, had been repaired and were now operative. Rashid said that Pakistan Railways was also studying prospects of acquiring technology from Germany, USA and other countries to improve its rail infrastructure.

He said that under the track rehabilitation plan, 2,083 km track would be improved at a cost of Rs 9.4 billion, by December 31, 2007, and would also include upgradation of level crossings, rehabilitation of bridges and fences.

The President was informed that track from Lodhran to Khanewal would be dualised at a cost of Rs 3.29 billion, and was scheduled to be completed by the end of this year. It will also include modern signal equipment at a cost of Rs 1.2 billion.

The dualisation of 246 km Khanewal-Raiwind track would cost Rs 5.5 billion and would be completed by June next year. The Railways also plans to produce 600,000 sleepers per annum in collaboration with the private sector.

The Pakistan Railways is working on a plan to produce high capacity wagons for qualitative improvement in its cargo carrying ability. Around 1300 wagons are being assembled at Mughalpura Workshop, Lahore.

The President was informed that Pakistan Railways has also acquired 175 passengers carriages with a new design at a cost of Rs 7,776 million. Of these, 145 have been assembled, while work is on for 30 more. He was also informed about the measures adopted by Pakistan Railways to avert accidents.

Despite heavy rain and standing water at places, the President inaugurated the High Speed Coaches Workshop. He shook hands with the workers, including Chinese workers who waved and clapped as he inspected various sections of the facility. The President also inspected the passenger coaches acquired from China and the ones being built in Pakistan. He was appreciative of the quality and announced Rs 1000 cash for each of the 1200 workers, including the daily-wage earners. The President was presented models of a Chinese train and engines by Chinese engineers.


----------



## Neo

Sunday, July 30, 2006 

ISLAMABAD: The government is considering providing free of cost land to those investors who will be investing $200 million and more to set up industrial units at the Gwadar Export Processing Zone (G-EPZ), an official told the Daily Times on Saturday. 

The proposed incentive package that is being finalized for the Gwadar EPZ also includes this incentive for the investors who will be investing in the G-EPZ when it will be operational, the official added. 

The official further informed that at present the cost of land in export processing zones (EPZs) is out of the reach of investors. Increase in the price of land for the setting up of industrial unit has also increased the cost of doing business in the country. With the provision of land free of cost for the setting up of industrial units in G-EPZ will be a major incentive for investors. This will help the government attract local as well as foreign investors in this zone and will ultimately reduce the cost of setting up industrial units in the G-EPZ. 

The proposed incentive would be available to both local as well as foreign investors to encourage them to set up industrial units in the G-EPZ. The ministry of industries, production and special initiatives is at present finalizing the proposed incentive package to attract maximum foreign as well as local investment in the G-EPZ. After receipt of comments and proposals from all economic ministries and divisions, the ministry will finalize the package. 

The federal cabinet, under the chairmanship of Prime Minister Shaukat Aziz, will approve the package during this calendar year and later it will be announced. The Gwadar Port, which is nearing completion, would be a best destination for local as well as foreign investors for investment. The government is in the process of providing latest basic infrastructure at the G-EPZ so that setting up of industrial units at the zone is completed in the minimum possible timeframe. 

The economic ministries and other departments were directed at a high-level meeting held recently to have closer coordination for fast track development of the Gwadar Port, which would translate Pakistan's geo-strategic importance into economic opportunities. 

The meeting also decided that there would be a policy and supervisory board, which would be providing strategic vision, lay down policy guidelines, ensure timely decisions and regularly review and monitor the progress on various infrastructure and other projects related to the Gwadar Port. 

There will also be a steering committee under the Board that will be headed by the deputy chairman of the Planning Commission and will be entrusted with the implementation of the entire process and finalization of terms to achieve the objective. The government will also create special economic zones (G-EPZ) in Gwadar to promote investment and employment. 

The government is aiming to utilize the Gwadar Ports' geo-strategic location as an energy, transport and industrial corridor for the countries of the region, including the Middle East, Central Asian Republics, China, South Asia and Southeast Asia. The 

long-term vision of Gwadar Port as an energy hub and gateway to the countries of the region is in line with the vision for economic prosperity of the country.


----------



## Neo

Sunday, July 30, 2006 

KARACHI: Prime Minister Shaukat Aziz on Saturday unveiled the foundation stones of two significantly important projects of establishment of Korangi National Industrial Park and Karachi Tools, Dies and Moulds Center and said these would play a vibrant role in boosting economic activity and fast industrialization.

Addressing an impressive ceremony held at the Governor's House, he said that economic transformation policies of the present government have already started paying dividends with poverty level coming down and making a dent in unemployment.

The ceremony was attended, among others, by Sindh Governor Dr Ishratul Ibad Khan, Federal Minister for Industries Jehangir Tareen, Federal Minister Ghaus Bux Khan Mahar, City Nazim Syed Mustafa Kamal, the NIP chairman and the chairman of Karachi Tools, Dies and Moulds Center.

"We will ensure the continuity of the policies and there would be no U-turn", he declared amidst big applause. Stressing on significance of greater public-private partnership, the prime minister said: "We are committed to transforming Pakistan and together this partnership will create a Pakistan which will be prosperous, which is helpful in improving the quality of life of people and helps us in meeting global challenges."

He said although we have brought poverty level down and made a dent in unemployment, there are still poor and unemployed people out there and we have to see these things by maintaining the course and continuity of policies with no U-turn.

The prime minister pointed out that besides promoting industrial activity through these two important initiatives, the other objective is to promote an environment of creating investment.

Speaking about Industrial Park, the first in Pakistan being setup here, the prime minister told the gathering that one of the major challenges here is to start new business.

Sometime initiators go from pillar to post in finding a place, right environment, infrastructure which is very frustrating, he observed and said our effort is to minimize this running around to encourage the people, rather discouraging them and designing an environment which is attractive, modern and cost effective.

Mr Aziz said the country has a land bank and quite a few plots all over the country, which are lying there or encroached upon by the people. He said if prime property is not developed, one of the risks in Pakistan is that it will be encroached upon by someone.

So, he said, the government has decided that whatever plots are available in different cities with the federal government will be converted into productive use and that was the basic driver of this whole programme of establishment of Industrial parks. He appreciated KNIP Chairman Salman Burney who looked beyond Pakistan to get expertise from Singapore for the establishment of this industrial park here.

The prime minister emphasized that while giving out these plots, it should be mandated that building code, design code and standards must be adhere to, otherwise there will be total mismatch of what our vision is.


----------



## Owais

*SBP raises discount rate by 0.5 percent, calls for issuance of more PIBs* 

KARACHI (July 30 2006): While raising the discount rate by 50 basis points, ie, 9 to 9.5, on Saturday, the State Bank of Pakistan called upon the government to issue additional long-term papers (PIBs) to finance the fiscal gap in FY2007. (Discount rate is that at which banks borrow for 3 days from the SBP.)

The Monetary Policy statement issued by the central bank on Saturday, advocates reduction in the recourse to bank borrowing for budgetary support and instead shifting the burden to non-bank sources, ie, Pakistan Investment Bond and long-term saving certificates issued by the National Savings Centre.

The federal budget FY2007 envisages bank borrowings of Rs 140 billion to meet the fiscal gap and issuance of PIBs of Rs 3 billion only. _Business Recorder _understands that the SBP had proposed issuance of PIBs worth Rs 60 billion in the first half of FY2007, while the government wanted to issue PIBs worth Rs 40 billion for the whole year. With PIBs worth Rs 37 billion maturing in current financial year, fresh issue will be Rs 3 billion only.

The SBP says: "The right blend of non-inflationary borrowing mix from commercial banks, non-bank and external sources will facilitate achievement of monetary stability."

*EXTERNAL DEFICIT: *The SBP statement notes that strong demand pressures coupled with trade liberalisation measures are swelling the external pressures on the economy. Rising domestic demand is increasingly being met through imports. Robust gain of 13.3 percent in exports has been eclipsed by the exceptionally strong 30.6 percent increase in imports.

Ironically, the widening trade deficit, in the short run, has probably helped to offset part of the inflationary pressure that emerged due to capacity constraints by augmenting the supply of goods. But, "without matching large non-debt creating inflows, this strategy would eventually lead to a vicious circle of debt creation, exchange rate depreciation and inflation," says the SBP.

Further, the SBP thinks that use of privatisation receipts (through sale of assets to foreign investors) can be an option for financing current account deficit. This, however, is only a medium-run solution as there is a limited supply of marketable assets and profitably run privatised assets would generate dividend outflows in the medium term.

A similar risk, said the SBP, lies in financing the current account deficit through portfolio investment flows. In FY2006, privatisation proceeds and equity portfolio inflows totalled $1.9 billion, which underlines the risk to the economy.

The SBP says that the data shows that while exceptional growth in imports may already be slowing down considerably, export growth is also slowing at the same time. This calls for greater support for exporters and projects to improve logistic chains and infrastructure need to be expedited. This also requires the central bank to be more vigilant against inflation, as price stability will be a key competitive advantage for the country.

Exchange rate adjustment can in theory help in reducing imports and increasing exports, said the SBP. However, such adjustments yield only short-term gains. Moreover this could destabilise the interbank markets with heavy consequent costs, besides feeding into inflationary pressures.

"Large or abrupt exchange rate adjustment (ie devaluation of the rupee) is neither envisaged nor desirable," adds the SBP. With most central banks taking a tighter monetary stance, there is a clear risk of a global economic slowdown, said the SBP. Lower liquidity in global financial markets together with macro imbalances has increased the level of uncertainty for investors and capital will flow to less risky environments.

The rising sovereign spread between US T-bills and bonds from emerging economies suggests that the environment will be less favourable to emerging economies' borrowers in the near future, warns the SBP.


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## Owais

*EAD finalises 131 pacts with IFIs, foreign governments: transfer of Wapda loans to new entities* 


ISLAMABAD (July 31 2006): The Economic Affairs Division (EAD) has finalised 131 agreements with different international financial institutions and foreign governments for transferring of Wapda loans to the newly-created decentralised entities, official sources told _Business Recorder._

These include Subsidiary Loan Assumption Agreement (SLAAs), Loan Assumption Agreements (LAAs), and Loan Guarantee Agreements (LGAs). However, the World Bank (WB), which is one of the major lenders of water and power sector projects, has refused to sign the agreements on the format prepared by the EAD, saying that the Bank would only sign the pacts on its own format, they added.

Sources said that Wapda had so far submitted 243 agreements, including SLAAs, LAAs and LGAs to the EAD, of which 131 agreements have been signed by the Government of Pakistan (GoP), and sent back to the utility whereas the remaining 112 agreements are in the process for the signature of the EAD secretary.

They said that Wapda informed the EAD at a recent meeting that a draft has been prepared for the 20 UBS loans pending with the companies, which would be handed over to the EAD for vetting by the Debt Management Wing of the EAD and the law ministry.

"The EAD had forwarded one LAA and one LGA to the World Bank for signature by their authorised representative, but the Bank did not send back it to the GoP and rather said they want the agreements on their format," the sources added.

Sources also said the EAD additional secretary is expected to convene a meeting shortly to be attended by World Bank Sector Specialist (Power) Rashid and Pepco Executive Director (Finance) Chaudhary Abdul Qadeer to finalise the format and draft of LAAs and LGAs.

Sources quoted the EAD additional secretary as saying at the meeting that transferring of Wapda loans is now near to completion and noted that it was a tremendous task to get the lender's consent and then unbundle the loans of Wapda and transfer them to the newly-created entities.

"This was not only time consuming, but also nerve-wracking, as it involved many stakeholders who had to be convinced to agree on certain modalities," the sources maintained.

They also said all the stakeholders within the government and outside had their own limitations and viewpoints and they had posed various questions on the modalities of transferring of loans.

Sources said the Privatisation Commission (PC) had expressed displeasure over the slow working of the EAD in seeking lenders consent for transfer of loans from Wapda to the companies and even recommended to the government that all the relent and GoP guaranteed loans of power companies should be converted into equity to make them feasible for privatisation.

"The current debt to equity ratio of respective Discos, Gencos, and NTDC as per the balance-sheets as such that neither prudent financial institutions would venture to finance such entities nor prospective investors would be interested to buy them, including Fesco and JPC, which is in advance stage of privatisation," the sources quoted the Privatisation Commission as saying earlier in one of its summaries to the Economic Co-ordination Committee (ECC) of the Cabinet.

The ECC had converted Discos small loans of Rs 3.988 billion into equity few months ago, even then the Privatisation Commission is of the view that the assumption of small foreign relent loans was not enough to prepare them for privatisation, the sources maintained.

Sources said the Privatisation Commission had also suggested that the restructured power sector entities would not be able to attract investors until their all loans are not converted into equity where adequate deferred credit are not physically available with the Discos.

They said the ECC converted Rs 3.988 billion into equity was taken after the EAD failed to obtain consent from the lenders except Belgium, France, and Kuwait.

It is pertinent to note that upon restructuring and unbundling of Wapda, a number of foreign loans relent by the Government of Pakistan to the utility have been allocated to various successor companies on the principle of liabilities to follow the assets.


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## Owais

*Sales tax field audit suspension causes Rs 20 billion loss* 

ISLAMABAD (July 31 2006): The government has suffered a loss of over Rs 20 billion due to suspension of sales tax field audit since July 2004, which also contributed towards deterioration of the tax-to-GDP ratio during last two years.

Sources told _Business Recorder _on Sunday that the figure has been specified in a report of the Directorate-General of Inspection and Audit, Indirect Taxes, which has strongly criticised suspension of sales tax audit.

They said that the Board had scrapped the report because it contained 'anti-reforms material'. The Board did not agree with the findings of the report. As such the entire study has been quashed. That is why the annual report (2004-2005) of the Directorate General, Inspection and Audit, Indirect Taxes has not been released yet, they added.

Sources said that it has been decided that the report would not be issued as it contains highly objectionable remarks on the reform initiatives and suspension of sales tax audit.

About the suspension of sales tax audit, according to sources, the report said that "the revenue loss due to stoppage of audit is in no way less than Rs 10 billion per annum. Lack of accountability and payment of substandard emoluments were the main causes of rampant corruption by auditors besides harassment to taxpayers".

Sources were of the view that the figure of Rs 10 billion loss per year due to suspension of audit was based on annual detection and audit observations of Rs 10-15 billion in 2003-04.

The detection had led to recovery of billions of rupees in sales tax in 2003-04. If Rs 10-15 billion sales tax detection was made in the past year, then minimum loss due to suspension of field audit would definitely come to over Rs 10 billion per annum, sources added.

Referring to the report, they said that it had also specified that the corrupt auditors and their sponsors (some tax officials) have not been punished since the suspension of field audit. The net result is rampant evasion by unscrupulous persons either by not paying the due amount of tax or by fraudulently claiming refunds. This also contributed towards deterioration in the tax-to-GDP ratio, they said.


----------



## Owais

*SPA may be first choice for Gwadar port management* 

ISLAMABAD (July 31 2006): Singapore Port Authority (SPA) is likely to be the first choice of Government of Pakistan (GoPP) for Gwadar port management SPA's vast experience in handling big ports world-wide is its advantage over the other two parties in the run for the contract.

The officials in Islamabad are pretty confident that SPA can get good business for Pakistan by making Gwadar port an attraction for big shipping lines.

An official said "We are assessing the proposals of all three parties for getting the right group for this mega project but, frankly speaking, our first priority will be a party that can handle the port in an efficient manner, besides bringing maximum shipping lines to Gwadar port to secure maximum business for Pakistan, and SPA is in a better position to meet these requirements."

The other two parties are Dubai Port World of UAE, and China Harbour having a consortium with Cosco, China.

China Harbour's investment plan is also an attraction for Pakistan and the officials would take its all aspects into account before taking any final decision about the contract. China Harbour is interested in setting up a big refinery at Gwadar to supply oil to China, India, Afghanistan, Central Asian Republics and other countries of the region.

A meeting chaired by President General Pervez Musharraf was given a detailed presentation on Gwadar port. It also covered proposals with specific investment plans of the three parties.

The meeting was told that Pakistan was targeting 2011 for bringing Gwadar port in operation with complete infrastructure and best facilities for handling cargoes.

Gwadar will be the best port in the world having an advantage of 18-metre water depth to handle longest and biggest ships with the most modern facilities. Gwadar has natural advantage. Its 18-metre water depth is a natural advantage to Pakistan to build a big port for largest ships.

Gwadar port is seen as a catalyst to give a boost to Pakistan's economy. It will serve as a centre for different corridors to help Pakistan meet its growing demand in different key areas and provide the shortest and viable route to the entire region for supply of energy, quick transportation of goods, world-wide trade and industrialisation.

The officials working on the project are confident that Gwadar port alone will help Pakistan secure $10 billion foreign investment in the next four to five years and would subsequently push its growth rate in double digit by 2018. It would also generate huge business activity in Pakistan and serve as the best facility to other countries of the region to supply their goods to any country of the world in shortest possible time.

The official said the government would expand all kinds of network to provide basic infrastructure to set up industries at Gwadar port and other areas which would be linked to it through roads and train links.


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## Owais

*Setting up of power plant: KESC invites German firms to carry out study* 

KARACHI (July 31 2006): The Karachi Electric Supply Corporation (KESC) has invited some German companies to carry out study on setting up nuclear power plant in the metropolis. Nuclear power generation is a viable option that can help in catering to the future power demand of the country.

The Chief Executive Officer of KESC, Frank Scherschmidt, in an exclusive interview with _Business Recorder _said, "It can be too expansive and take a long in the planning. It may even be politically not acceptable. But we have to sit on it and discuss it. If there is any possibility, we will discuss it."

He said: "This (nuclear power generation) is essential due to climatic change in the world as carbon dioxide is affecting seriously, and we have started influencing our (world) climate."

He said: "A nuclear power station is costly: it is four times costlier than coal based power station. But in the long term it is cheaper in maintenance and production. On the other hand, the same magnitude of solar power system requires 180 square km land to generate power.

"The Karachi Electric Supply Corporation (KESC) is also planning another power generation plant after 2008, for which the corporation is working. In this regard, the power utility is considering other options for power generation like coal and nuclear."

The coal at Lakra is feasible for the corporation and, keeping in view the transmission losses, the power utility may lay its own line from that power station directly to the city, he added.

"The gas-based power generation is the cheapest and cleanest, but it is limited in the country and we have to plan beyond that and consider other means."

Most of electricity generation is based on water, coal, gas and oil and when a power generator runs out of one source, it could switch over to other source. "As far as wind energy is concern, if there is no wind what a producer can do? It could not be switch over to any other means."

He said: "Wind power is not a reliable medium for any power utility. It's considered as an additional source of electricity generation, but no one can rely on it."

Frank said: "We can save primary energy (coal, gas, oil) but we cannot do it as an alternative energy."

He said that nuclear based power generation is under consideration. "But first we are considering the coal based option. The newest technology of coal based power plants reducing the CO2, perhaps gasification of the coal reduces the sulphur and so on."

He said the other solution is the coal on the coast, as coal brought from the international market and shipped to the power station.

"We are in close contact for the future planning of the metropolis. It goes to the north-east of the city. So we need energy there and when we put (install) all at the coast like Korangi and Bin Qasim power plants," he said, adding that "One cannot do anything with electricity without transmission losses."

The KESC faces transmission losses from both Jamshoro link and Hubco link. "Alone if we take up this link Hubco, we have additional power of 20MW (less power losses) instead of Jamshoro link," he said.

He said the power stations should be close to the consumers so this is all to calculate and optimise.

"We have just started internal planning for additional load. When we bring back all pending cases (load) and those producing own electricity comes to corporation, we need more power. There are lots of projects coming that also need additional electricity," he added.

"We have three different plans--long, medium and short term plans--to overcome the on-going power crisis in the city," he added.

The KESC is installing power station at Korangi of 480MW, from which the city would get 120MW in mid-April next year, while 120MW more from that same station will be add in mid-May; another 120MW in June. And the project will be completed in mid-July. The corporation would further enhance its power plant capacity by 270MW later with additional gas based generators on the same system to use same gas.

The corporation would buy power from other producers like Kannup that provide additional 45MW; DHA's water-cum-power plant 80MW; and 11MW. By July 2007, about 605MW additional electricity will be added in the KESC supply system, he added.

Presently, the power demand is divided into many parts such as 1000MW consumed by the industry, 700MW by residential consumers, 400MW by commercial, 100MW by agriculture. On pending load side, 500MW produce by industry to meet their demands, 40MW is pending load to KESC while 200MW is the power shortage of the city which would be doubled (400MW) by 2007.

Frank said KESC is going to introduce merit and incentive based package to its employees soon to increase efficiency of power utility, but could not give the exact time for that package.


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## Neo

KARACHI (July 31 2006): An increase in the central bank's discount rate on Monday, along with earlier steps to restrict liquidity, is likely take some heat out of national economy without impacting growth too much, analysts said.

The State Bank of Pakistan (SBP) announced on Saturday its discount rate would go up to 9.5 percent from 9.0 percent from Monday.

Days earlier, it raised banks' mandatory cash reserve requirement to 7 percent from 5 percent, and their statutory liquidity requirement to 18 percent from 15 percent.

"I think the liquidity ratio rise and the hike in discount rate will significantly deflate demand in the economy," said Sakib Sherani, chief economist at ABN Amro Bank in Islamabad.

"As for inflation, food and oil are the big wild cards, but if we do not assume any worst case scenario, I think it will come around the 6.5 percent mark," said Sherani.

The government brought down average consumer price inflation to just under 8.0 percent in 2005-06, after it stood over 9.0 percent a year earlier. For 2006-07, the target is 6.5 percent.

Despite the dampening of consumption and demand, Sherani said the growth rate would lose little, as a better crop performance and capacity building in the industrial sector should keep the economy on track to meet a GDP growth target of 7.0 percent in 2006-07.

For those reasons, analysts foresaw the stock market taking the tighter monetary conditions in its stride.

"May be the stock market will fall 50-100 points around the opening, but we do not expect any major impact," said Mohammed Sohail, director of research at Jahangir Siddiqui Capital Markets.

The KSE-100 index closed at 10,353.52 on Friday, down 0.74 percent on the day, but it had risen through the week on expectations that corporate results out soon will bring good news.

"However, we do expect a 20-30 basis points increase in Treasury bill yields in the upcoming auction," Sohail said.

In the last auction on July 19, the cut-off yield for the benchmark six-month T-bill came at 8.4869 percent. The next auction is scheduled for August 2.

EXTERNAL IMBALANCES: 

And while the struggle to manage inflation continues, another major concern for the central bank is a current account balance that has swung from a $1.8 billion surplus in 2003-04 to an estimated $5.7 billion deficit in 2005-06.

"The central bank can play a role in rationalising the external imbalances by curbing aggregate demand, and it is on that track now," said Asif Qureshi, head of research at brokers, Invisor Securities.

It has already taken steps to make cash cheaper for exporters, while the rate hike has made borrowing more expensive for importers and consumers of imported goods.

"They have temporarily delinked the export sector from the T-bill yields and the overall level of interest rates, which is also a move in the same direction," he said.

Earlier this month, the central bank announced a reduction of 1.5 percentage points in its export refinance rate to 7.5 percent, ending its linkage with the six-month T-bills yield.

Qureshi said this was the right time for the central bank to adopt a slightly aggressive monetary posture, as economic growth is expected to be bolstered by a strong farm sector performance.


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## Neo

SHEIKHUPURA (July 31 2006): Frequent power shutdowns have caused as much as Rs 2.5 billion loss to Sheikhupura industry in three months, which in turn, will deprive the national exchequer of a substantive amount in terms of taxes.

As many as 900 industries, including paper mills, chemical, food, fertilisers, light and heavy engineering and heavy mechanical etc, are located in Sheikhupura district, of which, over 400 are situated on main Sheikhupura Road.

These industries are facing severe hardships due to unscheduled load shedding by Wapda, which has reduced the industrial output of the area by 25 percent, Shahzad Ali Nagina, Chairman, Sheikhupura Association of Industry, told Lahore-based journalists who visited the industrial area.

Wapda is resorting to 3-4 hours daily load shedding in the area and this practice has been going on for last three months, causing Rs 25 billion loss only to Sheikupura Road industry, he claimed. Despite contributing billions of rupees to the national exchequer in terms of taxes, Sheikhupara industrial area is facing multiple hardships and problems and suffering a lot due to the apathetic attitude of government functionaries, he complained.

Frequent power shutdowns, lack of facilities such as fire fighters, schools, hospitals were the main problems of this area, he pointed out. "We have internal arrangements to extinguish fire in factories, but there is no such facility from the government side," he pointed out.

Manzoor Malik, Convenor of the Association, who arranged the visit, said one of the reasons for piling up of their problems was that their association had no representation at any appropriate forum. Whenever the industrial and business community of the area raised their voice at government level, they were turned a deaf ear, mainly because of their non-representation at any platform.

"The existence of Sheikhupura Chamber of Commerce and Industry was just symbolic as no businessman or trader of the district was its member, nor the persons who run this so-called chamber ever offered its membership to any one," Manzoor Malik revealed.

It is ironic that this industrial estate, which is located in hearts of Gujranwala, Narowal, Faisalabad and Nankana, had lost its importance despite being abundant in industrial and other resources, he said. The significance of this area could be well-gauged by the fact that all Wapda grid stations and transmission lines and Sui gas lines passed through this area, but even then it was facing frequent power shutdowns, which was affecting their business adversely.

Unfortunately, law and order situation in this area was also very dismal and the area had become notorious for theft, dacoities and highway robberies. Except the main road, there was no allied communication links in the area. There was also no drainage system and dirty water was spreading diseases in the area, he said.

He also pointed out that there was no interchange on Motorway, although it passed through this area. The industrial community of the country was paying billions of rupees to the national exchequer, but in return, they were forced to stand in long queues to pay toll taxes and token tax on motorway and highways, which was the worst kind of example to disgracing and mentally torturing them.

About Sheikhupura dryport project, Manzoor Malik said it was delayed despite the fact that Pakistan Railways had enough land for its establishment. Narrating other problems, he said there was no playground and any other facility for promotion of recreational and healthy activities in the area. He also stressed the need of establishing vocational and technical training institutes in the area to ensure provisions of skilled labour to the industries.


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## Neo

QUETTA (July 31 2006): The government is spending Rs 19.750 million on development of tourism sector in Balochistan, official sources told APP on Sunday. Rs 12.012 million have already been spent on construction of Hut at Hanna lake a suburb of the provincial capital.

Besides, the government is also spending millions of rupees for preservation of cultural heritages in the province to attract tourists.

In this regard, Rs 61.498 million have been allocated for construction of two cultural complexes in Gwadar and Ormara, out of which Rs 23 million had already been spent.

"With the completion of Gwadar Port the province will be a transit route to Central Asia, Middle East and South-East Asia and the natural beauty of province will attract tourists."

The government has declared the year 2006 as 'Tourism Year' aimed at promoting the image of Pakistan favourable for tourists.

The government is promoting tourism sector, which will pave way to enhance better relations and understanding with the people of other countries. It will not only make possible people to people contact, which promotes foreign relations, but also generates revenue for the development of the country.

The province has colossal potential in tourism and there are great investment opportunities in this sector, sources explained.

Referring to the archeological site of Mahargarh sources said Balochistan is the forerunner of Civilization.

The 11000 years old Mahargarh signifies the importance of the province for the sector. Besides, the province has distinctive tourist attractions such as coastal highway linkages, beaches, religious sites, Juniper forest in Ziarat valley, Khojak Tunnel and several other recreationary and monumental places.

The province has international significance for tourism that possesses natural beauty, cultural heritage and ancient civilisation.


----------



## Owais

*Pakistan bourses&#8217; foreign investments* 

KARACHI: Pakistan stock markets&#8217; foreign investments during July 1-28 amounted to $9.821 million.

Among those withdrawing the investments from the bourses during the period under review, Switzerland with $9.86 topped the list, while the USA with $2.498 remained at 2nd position.

On the other hand, Singapore with $18.1 million investment in Pakistani bourses during this period remained at the top, while Britain with $2.833 million investment followed.


----------



## Owais

*President eyes foreign investment, privatisation key to sustainable growth 
**CHAKWAL *_(updated on: July 31, 2006, 18:19 PST_): President Gen Pervez Musharraf on Monday described foreign investment and privatisation as the key to the country's sustainable economic growth and said that the government would continue its policies of de-regulation and liberalisation in a transparent manner.

"It is extremely important that we privatise and draw foreign investment into Pakistan", he said at the inauguration of Bestway Cement Factory near Kalar Kahar built at a cost of $140 million.

The president also laid the foundation stone of second production facility of the Bestway cement that involves investment of $160 million and has capacity to produce 6000 tones of cement per day.

President Musharraf rejected criticism by certain elements of the government's privatisation process and said that it will continue in a transparent manner.

"There is no fraud in the privatisation process", he said and added the privatisation is the way forward for Pakistan's economy and it should and it would continue.

The president said that he was fully supportive of the privatisation process and would continue to facilitate foreign investors.

He said that the government policies were attracting foreign investors from all over the world.

The president said that foreign investment would help in the country's economic progress and in creating job opportunities and alleviating poverty.

The president however lamented that certain vested political interests were trying to create obstacles in the way of foreign investment and trying to discredit the country's privatisation policy.

"We are not like them who plundered the country. We are committed to the country's progress and are working with all sincerity".


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## Neo

ISLAMABAD (August 01 2006): The Central Board of Revenue (CBR) has collected Rs 7.68 billion customs duty in the first month of fiscal year 2006-07 against Rs 8.38 billion in the same period of 2004-05, showing a sharp decline of 8.3 percent. According to the provisional figures issued on Monday.

All other major taxes, including sales tax, income tax and federal excise duty (FED), have shown increase in July. The CBR said this decline in customs duty was due to 27.6 percent higher payments of refund/rebate in July 2006 than previous year. Overall revenue collection in July amounted to Rs 40.9 billion against the target of Rs 39.5 billion, reflecting a growth of Rs 10.432 billion.

The Board has collected Rs 40.9 billion in July against Rs 34.601 billion collected in July 2005, showing an increase of Rs 15.322 billion. Tax managers are confident that the revenue collection for July would increase further after compilation of final figures for the month in the coming days.

The break-up of July 2006 collection shows direct taxes collection as Rs 9.4 billion against Rs 7.62 billion in the corresponding period last fiscal, showing a growth of 22.8 percent.

The collection of indirect taxes is Rs 31.576 billion against Rs 26.98 billion, depicting an increase of 17 percent. Sales tax collection stands at Rs 21 billion against Rs 15.74 billion, indicating a growth of 33.4 percent. Sales tax collection at import stage is Rs 13.705 billion against Rs 11.082 billion, showing an increase of 23.7 percent.

GST collection on domestic consumption is Rs 7.291 billion against Rs 4.688 billion, reflecting a growth of 56.5 percent. The collection of federal excise duty is Rs 2.894 billion in July 2006 against Rs 2.858 billion, showing an increase of 1.2 percent.

Total payment of refund and rebates is Rs 7.545 billion including income tax refund of Rs 1.498 billion; sales tax Rs 4.345 billion and refund of customs duty Rs 1.702 billion.


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## Neo

Pakistan receives record $4.6b remittances

31 July 2006 

DUBAI Ã¢â¬â Pakistan collected record foreign exchange remittances from the Middle East region as it received $2.06 billion workers remittances during fiscal year 2005-06.

Saudi Arabia with $750.44 million tops the remittances list from the region followed by United Arab Emirates ($716.30), Kuwait ($246.75), Oman ($130.45 million), Qatar ($118.69 million) and Bahrain ($100.57 million). 

The UAE remained a second major contributor in remittances as Pakistani expatriates sent $716.30 million, a slight increase from $712.61 million in preceding fiscal year. Workers residing in the emirate of Dubai sent $540.24 million remittances, Abu Dhabi $147.89 million and Sharjah contributed $26.87 million remittances. The other emiratesÃ¢â¬â¢ share also slightly improved to $1.3 million during last financial year.

Pakistan has over half a million of its nationals living in the UAE. Majority of them are in Abu Dhabi and Al Ain, while remaining are in Dubai, Sharjah, Ajman etc. The latest available figures show an upward trend in line with post September 11 scenario.

Remittance inflows have stabilised since a sharp rise two years ago. More overseas Pakistanis started using banks to wire home their foreign currency following a crackdown on informal money exchanges after the September 11, 2001 attacks in the United States.

Single largest country: Although, the inflow of workersÃ¢â¬â¢ remittances from United States down 3.98 per cent to $1.242 billion in previous fiscal year but it remained on top of the list as a single largest country as far as inflow of remittances is concerned. However, Pakistan received 17.96 per cent more remittances from the United Kingdom as the expatriates sent $438.65 million during fiscal year 2005-06 as against $371.86 million in the previous financial year.

European Union countries ($119.62 million), Canada ($81.71 million) and other countries ($573.31 million) are the other major contributors in remittances.

Record remittances: As per latest available statistics from the central bank, Pakistan received record $4.6 billion in foreign exchange remittances during fiscal year 2005-06, up 10.35 per cent from the same period a year earlier. Remittances is the second major source of foreign exchange earnings in Pakistan after exports. 

Pakistan received $4.168 billion remittances during financial year 2004-05, up from $3.871 billion in the previous year. The government had set a $4 billion target for 2005-06 amid considering an upward trend in last two years. 

Ã¢â¬ÅThe monthly average for remittances between July 2005 and June 2006 was $383.34 million, compared with $347.40 million in the year-earlier period,Ã¢â¬Â a senior State Bank of Pakistan official told Khaleej Times yesterday. 

Ã¢â¬ÅDuring the last quarter (April-June 2006), the country received $1.267 billion remittances as against $1.118 billion in the same quarter of fiscal year 2004-05,Ã¢â¬Â he added.

Ã¢â¬ÅRemittances totalled $506.57 million in May 2006, which is the record amount of remittances in a single month,Ã¢â¬Â the official said. 

The central bank data reflect only legal remittances made through banks. Foreign exchange remittances and export proceeds make up the bulk of PakistanÃ¢â¬â¢s foreign exchange reserves, which also includes foreign currency deposits held at commercial banks in the country. 

Foreign exchange reserves: The latest central bank data show foreign exchange reserves declined to $12.913 billion in the week ended on July 22, from the record mark of $13.136 billion at the end of June 30 this year. The net reserves with State Bank of Pakistan totalled at $10.546 billion while commercial banks in the country hold $2.367 billion by July 22,2006.

The SBP official expressed his hope that upward trend in remittances will continue in future due to a narrow gap between inter-bank and open market exchange rates.

Ã¢â¬ÅThe narrow gap in exchange rates will serve as an incentive for overseas Pakistanis to use official channels for remitting foreign exchange back home,Ã¢â¬Â he observed.

Before September 11, 2001 the spread between the inter-bank and open market exchange rates had been more than Rs2 per dollar but it gradually slid to 10-20 paisa over a period of time.

Bankers say home remittances still have potential to grow if the spread between the inter-bank and open market exchange rates remains at the present level. However, they stress the need to introduce better services and incentives to lure more overseas Pakistanis to send remittances through official channels. 

http://www.khaleejtimes.com/Display...n=business&col=


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## Neo

ISLAMABAD, July 31: Fifty international investors have expressed their willingness to secure Global Depository Receipt (GDR) of Oil and Gas Development Company Limited (OGDCL), which will be disinvested by October this year, says Privatisation and Investment Minister Zahid Hamid.

"We have just successfully held road-shows in London and New York where 50 potential international investors have shown their interest in the GDR of OGDCL," he claimed.

He told Dawn that he himself led the delegation to London and New York to offer OGDCL's GDR to reputed international investors. "And there response was extremely good and we are very encouraged by that," the minister said.

Mr Hamid pointed out that the first leg of road-shows had been completed and within this week another delegation would be visiting Hong Kong and Singapore to offer GDR to the investors.

Later financial adviser to OGDCL -Ã¢â¬â Citibank group and Goldman Sachs Ã¢â¬â would work out various details to finalise the transaction by October 2006, he added.

The Privatisation Commission in July 2002 had offered 51 per cent shares of the company for privatisation with management control.

Later expressions of interest (EoIs) were invited from reputed and financially sound investors, acting solely or as part of consortium and having relevant upstream experience.

The government intended to finalise the privatisation process at a relatively fast pace, but there appeared some delay due to various reasons.

According to some reports, a number of overseas oil and gas exploration companies had expressed their keen interest in buying stakes in OGDCL, provided it was divided into various entities instead of offering the company as a whole.

They have reportedly said that specified fields of OGDCL, which were producing oil or gas or both and had sufficient reserves to last for years, were of interest to the foreign companies.

If the fields were offered separately, then the foreign companies would not have to indulge in the overall management of OGDCL, in which they foresee problems because of strong workers union of the company.

The company has the largest acreage position in Pakistan, with considerable exploration upside and significant scope for appraisal and development.

OGDCL, the largest oil/gas company of Pakistan, has also acquired state-of-the-art workstation facilities for interpretation and evaluation, which reportedly enabled delineation of 25 exploratory prospects in various OGDCL-operated concessions.

Under the strategic plan of OGDCL rationalisation, one of the options was not to relinquish the exploration leases portfolio and certain other assets to the private investor under the proposed privatisation plan.

The financial advisers had their own views on this. Also, the question of sale of OGDCL in one go or in parts had first arisen on submission of the initial report of the financial advisors appointed by the Privatisation Commission for OGDCL privatisation.


----------



## Neo

Higher level of domestic demand pushing imports

LAHORE: Pakistan is currently facing an Ã¢â¬Åenormously highÃ¢â¬Â trade deficit, according to the latest reported figures released a few days ago, commented Dr Shaghil Ahmed, the head of the Social Policy and Development Centre, at a seminar held in Lahore on Monday.

Dr Shaghil said that the merchandise trade deficit was estimated to be US$12 billion in 2005-06, which was about nine per cent of GDP. He added that the cause of the ballooning trade deficit over the past two years Ã¢â¬Åis not the liberalisation of trade that we have been witnessing in Pakistan over the past 15 years but a much higher level of domestic demand than the productive capacity of the economy.Ã¢â¬Â

He said that the demand was satisfied by importing more. Ã¢â¬ÅThis imbalance needs to be corrected to bring the trade deficit under control,Ã¢â¬Â said the economist. The SPDC was discussing different aspects of trade liberalisation in Pakistan in the light of its seventh Annual Review of Social Development in Pakistan 2005-06, titled Ã¢â¬ÅTrade Liberalisation, Growth and Poverty,Ã¢â¬Â released on May 20, 2006.

Dr Ishrat Husain, Chairman National Commission for Government Reforms and former Governor of the State Bank of Pakistan (SBP) presided the seminar and Inaamul Haq, Adviser on WTO to the Government of Punjab, Dr Shujaat Ali, Chief Economist, Planning and Development Board, Government of Punjab and Dr Abid Burki, Professor of Economics at the Lahore University of Management Sciences (LUMS) were among the discussants of the seminar.

Speaking on the occasion, Dr Ishrat Husain said, Ã¢â¬ÅWhile more and more strong empirical evidence is pouring in, such as the present study by SPDC demonstrating that trade liberalisation in a non-discriminatory multilateral framework is good for growth and poverty reduction, the current trends in international trade developments are moving in the wrong direction.Ã¢â¬Â

Dr Husain added that the Doha Development Round negotiations were stuck and Ã¢â¬Åare not moving forward.Ã¢â¬Â He commented that the loss in momentum, the declining support for trade liberalisation in Europe and the US, and the expiry of fast track authority by the US Congress in 2007 did not augur well for world trade and for developing countries such as Pakistan.

Dr Ishrat Husain added that the preferential and bilateralÃ¢â¬Â trade agreements were proliferating, making it difficult for exporters from the poor nations to participate in world trade on a level-playing field.

The former SBP Governor also said that the wage stagnation in the US in the wake of economic recovery since 2001 is strengthening the hands of politicians in favour of protectionism. Ã¢â¬ÅThese recent developments are most unfortunate and need to be reversed sooner rather than later,Ã¢â¬Â he noted.

While highlighting his views on whether trade liberalisation was good for Pakistan, Inaamul Haque said that a positive outcome would be possible only if there was macroeconomic stability in the economy. Ã¢â¬ÅMacroeconomic stability is and must remain the strategic foundation for PakistanÃ¢â¬â¢s enhanced growth and competitive prospects,Ã¢â¬Â he pointed out.

The WTO expert said that it was imperative to provide adjustment assistance Ã¢â¬Åto facilitate the acceptance of liberal trade. Without it, the benefit of trade liberalisation may be renounced and politically reversed,Ã¢â¬Â he warned.Ã¢â¬Â 

Haque said that trade liberalisation and unrestrained free trade was functionally an effective way to harness the value of open trade to principle and fairness. He said that the answer was the progressive reduction of barriers and not a one shot removal of barriers.

Haque commented that on the question whether trade liberalisation was good for Pakistan, the answer was Ã¢â¬Åneither an unequivocal Ã¢â¬ÅYesÃ¢â¬Â nor unqualified Ã¢â¬ÅNoÃ¢â¬Â, as trade liberalisation can be definitely beneficial for Pakistan provided other complementary measures and structural reforms are adopted.Ã¢â¬Â

He said that this would also mean that pro-poor dimensions were recognised and accommodated. The SPDC report documents that substantial trade liberalisation has taken place in Pakistan since the late 1980s at a pace that has been accelerating over time. Import taxes have been reduced, the Statutory Regulatory Orders (SROs) have now been mostly withdrawn and Non-Tariff Barriers (NTBs) have been largely dismantled. In particular, the average tariff rate has declined sharply from 77 per cent in 1985 to about 17 per cent.Ã¢â¬Â 

This process of liberalisation puts Pakistan in the middle of a group of developing economies in Asia in terms of self-imposed restrictions on trade through both tariff and NTBs. In this group, Pakistan restricts its imports about as much as China and less than India, Malaysia, the Philippines and Bangladesh, but more than Thailand, Turkey, Indonesia and Sri Lanka.

However, in terms of barriers imposed by other countries on a countryÃ¢â¬â¢s exports, Pakistan is the country allowed the least market access among the same group of developing countries in Asia.

Trade, as measured by the sum of imports and exports, has accelerated as a result of the process of greater openness of the economy, especially over the past five years. However, trade performance relative to many other developing Asian economies has not been that impressive. While the trade-to-GDP ratio has increased 0.4 percentage points per annum in Pakistan since 1990, it has increased by 0.8 percentage points per annum in India, 1 percentage point per annum in Korea, 1.2 percentage points per annum in Bangladesh and 3.5 percentage points per annum in Thailand, for example. The world average growth of trade as a share of GDP, at 1 per cent per annum, has also been higher than that of Pakistan.Ã¢â¬Â 

The SPDCÃ¢â¬â¢s Annual Review rigorously analyzes the empirical impact of trade liberalisation on growth, poverty and inequality in Pakistan.Ã¢â¬Â  The simulations using SPDCÃ¢â¬â¢s model trace a hypothetical path that the economy would have followed since 1990, had import tax incidence been at its 1980s average level of about 45 per cent instead of falling gradually to nine per cent as was actually observed. The results indicate that poverty and income inequality would have been higher without the trade liberalisation, although only slightly so, on balance. Thus, the results are not consistent with the seemingly popular notion that greater trade openness has increased poverty in Pakistan.Ã¢â¬Â 

Both positive and negative effects are involved in the channels of transmission. Trade liberalisation has had a poverty-reducing effect through enhanced growth, productivity and investment and through price stability. But it also has entailed some costs, in particular costs related to fiscal adjustment, which have been poverty-increasing. 

The axe of lower tax revenues resulting from lower import taxes and control of the fiscal deficit fell on developing expenditures. Not only are such expenditures directly pro-poor, but the employment opportunities that could have been created as a consequence of these expenditures were also foregone, adversely affecting the income of the poor.

With respect to income inequality, the evidence suggests that although trade liberalisation by itself leads to a slight reduction in inequality, a rise in Foreign Direct Investment (FDI) appears to increase it.Ã¢â¬Â 

The Annual Review argues that external shocks arising from the events of September 11, 2001 have contributed to a relaxation of balance of payments constraints for Pakistan and played a role in the recent strong performance of the economy. Policy changes and other structural changes in the economy have also played a major role. But ignoring the importance of external shocks runs the risk of becoming complacent about the economyÃ¢â¬â¢s long-term prospects for growth.

The findings of the SPDC report suggest that attracting FDI; further reducing trade barriers; improving the institutions related to governance, political stability, law and order, corruption and regulation; and improving market access for Pakistani exports including through greater development of nearer export markets would significantly improve PakistanÃ¢â¬â¢s export performance in the long run.

Specifically, if Pakistan were to reduce its trade barriers to those of the Philippines, it could potentially increase its exports-to-GDP ratio from 13 to about 18 per cent. If it could match the quality of its institutions to those of Malaysia, its exports-to-GDP ratio could potentially rise to 16.3 per cent. 

If it faced the less restrictive market access environment faced by China (and had the correspondingly higher FDI that is correlated with that), the rise in exports-to-GDP could potentially be even bigger. But FDI tends to increase income inequality which would have to be countered by other policies.


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## Owais

*Musharraf urges expatriates to remit part of earnings to home* 

ISLAMABAD (August 01 2006): President Pervez Musharraf has urged the overseas Pakistanis to step forward and remit a part of their earnings to motherland and help develop Pakistan's economy.

Speaking at the inauguration of Bestway Cement in Chakwal on Monday, the President hailed the Bestway Group's decision to direct their foreign investments to Pakistan. Noting the services and honour of prominent Pakistani, Sir Anwar Pervez, he said that Sir Pervez had set a worth following example for his compatriots living abroad.

Earlier, in his briefing, the Chief Executive Officer of the Bestway Group of UK, Zamir Chaudhry, said that Pakistan is fast emerging as an ideal place for investment in all industrial sectors. Bestway's investment in Pakistan has exceeded one billion dollar and the group is still exploring many other ventures to steadily expand the investments in other sectors, he said.

The Bestway Group has already contributed to establishing the University of Engineering and Technology, Chakwal Campus and also provided financial assistance to the District Government to reconstruct the Choa Saidan by-pass road into a dual carriageway for faster communications. The group has already established many educational and health facilities for the people of the surrounding areas to help improve their living standards.

It is not worth mentioning that Prime Minister Shaukat Aziz had performed the groundbreaking ceremony in April 2005 and the plant has been constructed according to the plans in record time. The commissioning of the project will make the Bestway Cement the second largest cement producer in Pakistan.

President Musharraf is also expected to perform the groundbreaking ceremony of the fourth cement plant to be built by the Group with an initial investment of 180 million dollar.

With an additional investment of 235 million dollar, the group is also entering the power sector and will soon establish three power plants with a total generation capacity of 264 megawatts at three locations.

Governor Punjab, Lieutenant General Khalid Maqbool (Retd); Punjab Chief Minister Chaudhary Pervez Ilahi; Federal Minister for Industries Jehangir Tareen and District Nazim Chakwal Sardar Ghulam Abbas also attended the ceremony.-PR


----------



## Owais

*OGDC&#8217;s GDRs road shows in Singapore, Hong Kong* 

KARACHI: Further two more road shows for the Oil and Gas Development Corporation (OGDC)&#8217;s Global Depository Receipts (GDRs) will be held during the current month in Singapore and Hong Kong, following Washington and London.

Participating in the Geo News program &#8216;Tezi Mnadi&#8217;, Finance Advisor to prime minister, Dr. Salman Shah told that the US and European investors in the recently held road shows expressed their keen interests in making investments in the Pakistan equity markets as well as in the Pakistani companies&#8217; GDRs and ADRs i.e. American Depository Receipts.

Salman Shah told that the holding of OGDC road shows in the Gulf countries after the holy month of Ramzan was also being mulled over.

He told that the listing process of OGDC&#8217;s GDRs in London Stock Exchange would be completed by December 2006.


----------



## Neo

ISLAMABAD, Aug 1 (APP): Pakistan and United States on Tuesday inked two agreements to promote knowledge-based economic development and ensure long term economic growth. 

The first agreement is part of the US governmentÃ¢â¬â¢s five year economic growth assistance package to Pakistan worth more than $ 73 million while the second one is to allow the Competitiveness Support Fund (CSF) to partner with the Higher Education Commission (HEC) in support of initiatives that promote knowledge-based economic development. This bilateral agreement commits $ 13.7 million for 2006 on the part of USAID. 

Addressing the signing ceremony held here at HEC Headquarters, US Ambassador to Pakistan, Ryan C Crocker said the funding will enable USAID to provide over 130,000 loans for micro and small businesses in the four provinces as well as FATA, and enable assistance to more than 50,000 farmers in drought- affected areas of Balochistan with new seeds, livestock and irrigation systems.

He said the collaboration between HEC and CSF will bring research in higher education and apply it to industrial and commercial development.

In his address, Chairman HEC and Adviser to the Prime Minister for Science and Technology, Dr. Atta-ur-Rahman expressed his pleasure at the realization, though a few decades belated, importance of innovation and entrepreneurship. 

He shared his excitement at the opportunity of unleashing of the creative talents of the countryÃ¢â¬â¢s 80 million youth through the wide ranging programmes offered by HEC for higher education. 

Dr. Atta mentioned the foreign scholarships through which 400-500 students were being sent abroad for studies while the indigenous scholarships programme was providing the opportunity to students to pursue their doctoral level trainings within Pakistan. 

He said to further enhance the strength of faculty in universities, the Foreign Faculty Programme was operating successfully in attracting faculty members working abroad to return to Pakistan and enrich the academic environment.

The Chairman HEC said further plans were afoot to develop major initiatives with US in the field of science and technology, apart from the largest Fulbright Programme which was in operation in Pakistan. 

He expressed his determination to expand the programme with CSF as the establishment of six engineering and three technological universities would complement the industry-academic linkage through it technological incubators and parks.

One of CSFÃ¢â¬â¢s main objectives is to develop and support linkages between academia and industry for knowledge-based enterprise development. 

The CSF will provide matching grants to the academic community for projects that commercialize their research. It will also help them partner with the business community to start and develop new enterprises and encourage the private sector and local governments to contribute financing to relevant research.

Explaining the steps of technical assistance in the working of CSF, Minister of State for Finance and Chairman CSF, Omar Ayub Khan said the CSF would provide matching grants, venture capitals and business incubators and screen the project for eligibility. 

He said the collaboration would unlock productivity and technical advancement in universities and result in increased productivity of economy. 

The Minister said as more technology was commercialized, there would be more impetus to protect intellectual property rights from infringement.

Speaking on the occasion, Executive Director HEC, Dr. Sohail Naqvi outlined the manner by which HEC was engaged in investing in building human capital. 

He termed research and development the key to development of any country according to its needs and challenges. 

He stressed on university-industry partnerships and promoting entrepreneurship to make an impact on the economy. 

Leveraging ICT was another area of importance where human resource needed to be enhanced and it remained one of HECÃ¢â¬â¢s major strengths, he said and added HEC had computerized universities all over Pakistan, the digital library programme provided 20,000 journals and 4000 e-books online.

He also launched the new HEC website and national research repository, a consolidated collection archiving of intellectual output of PhD theses written in Pakistan universities. 

At present, it has over 150 PhD theses available online in high quality digitized format while 250 are in the process of being uploaded. An additional 400 are in the process of digitization.

Chief Executive Officer (CEO) of Competitiveness Support Fund, Dr. Arthur Bayhan presented a report on Regional Conference on Competitiveness and Economic Growth.


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## Neo

1 August 2006 

ISLAMABAD Ã¢â¬â Pakistan government has decided to set up a $2 billion mega oil refinery at Khalifa Point in district hub of Balochistan.

The refinery, to be commissioned by 2010, would have a maximum refining capacity of 13 million tonnes of petroleum products, which would be higher than the countryÃ¢â¬â¢s total existing capacity of 12.8 million tonnes.

According to the official sources, the ministry of petroleum and natural resources has been directed to award the project contract to pre-qualified at short listed companies through international competitive bidding on build, on and operate (BOO) basis.

Pakistan currently consumes 16 million tonnes of petroleum products, of which 82 per cent requirement is met through imports. Total refining capacity in Pakistan currently stands at 12.8 million tonnes.

The government has also approved in principle a proposal for rationalisation of import tariff for the trucking industry to overcome shortage of trucks but this would be announced with the next yearÃ¢â¬â¢s budget.

In this regard, the Economic Coordination Committee of the Cabinet (ECC) has recently considered a policy of incentives for new entrants in the auto industry but constituted a committee to review this policy in detail. 

The committee led by the Prime Minister and comprising deputy chairman planning commission, commerce minister, secretary of the industries ministry, minister of state for investment and chairman central board of revenue, would take a decision shortly. The ECC allowed extension in the lease period of mining, production and development of three major fields of Pakistan Petroleum Limited for their full life to get better price during the sale of 51 per cent of its shares.

The ECC also approved about 67 per cent increase in the power tariff for import of 30-mw of electricity from Iran for border areas of Taftan and Mashakhail. The Wapda had been importing this electricity at three cents per unit under a three years contract which has now been increased to five cents per unit. The ECC rejected a proposal of the petroleum ministry for providing industry status to the CNG sector on the ground that petroleum sector was already under a deregulated regime. The ECC, however, approved a policy for the import of LNG which would be announced separately.


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## Owais

*SBP unveils criteria for strategic equity investment* 


KARACHI (August 02 2006): As the banks are required to cap their investment in shares at 20 percent of their equity, the strategic investment is excluded from the subject limit to enable banks to take exposure in these investments within overall permissible limits per company.

In order to give a more objective criteria for marking an investment as strategic, as well as replacing the condition for banks to obtain prior approval from the State Bank of Pakistan (SBP), the strategic investment will continue to be excluded from the 20 percent aggregate exposure limit in stocks. While the investment marked as such at the time of investment, shall be retained by the banks/DFIs for at least five years.

Strategic investment is defined to be as an investment which a bank/*** makes with the intention to hold it for a longer duration and should be marked as such at the time of investment and can only be disposed-off with the prior approval of SBP.

According to a SBP notification, if there is a series of purchases of any company's stocks, the minimum retention period of five years shall be counted from the date of last purchase while the banks/DFIs' investment in a company can be segregated to be categorised as strategic and non-strategic.

The banks' decision to make strategic investment carries great significance, keeping in view the implications of such investment in terms of liquidity management and long term outlook of the investee companies; thus, such decisions have to be undertaken with proper diligence, taking into account all relevant factors.

Accordingly, it is understood that a committee, clearly designated/empowered by the bank, should take the decision for strategic investment. All Record of transactions/decisions, taken by the committee, regarding strategic investment should be properly maintained and kept in a separate file, for provision of the same to the SBP Inspection Team during their visit to the bank.

The banks/DFIs may review their existing strategic investment portfolio in the light of the above criteria, and investments, not falling in strategic portfolio, may be shifted to the Trading Portfolio. However, if any such shifting results in an excess over the 20 percent limit, prescribed under Regulation R-6, the excess should be regularised and brought back within the 20 percent limit within 3 months.

The position of investment in strategic portfolio will be reported by the banks/DFls to the Banking Policy Department, within the 15 days from the date of issue of this Circular Letter, and within two working days from the date of investment in strategic portfolio.


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## Owais

*Ministry faces tough opposition over setting up of LPG terminal* 


ISLAMABAD (August 02 2006): The Petroleum and Natural Resources Ministry is facing tough opposition by the Defence Ministry and the Oil and Gas Regulatory Authority (Ogra) for establishing new liquefied petroleum gas (LPG) terminals at the Karachi Port under the administrative control of the ports and shipping ministry, official sources told _Business Recorder _on Tuesday.

Both the opponents ie the defence ministry and Ogra are of the view that storage, handling and transportation of LPG would pose dangers to the facilities situated at the port, but the petroleum ministry says that by adopting international best practices relating to safety standards, dangers and hazards involved could be averted, the sources added.

Giving the background, they said that Defence Committee of the Cabinet (DCC) in its meeting held on April 3, 1984 decided that ministries concerned should look into the additional tankage facility being created at Keamari and impose immediate restrictions on further construction of tankage in the area.

Any future construction had been linked to clearance by the relevant cell of Pakistan Navy. However, in view of the increasing demand for the petroleum products in the country, Parco, PRL and NRL were allowed construction of additional petroleum storage at Keamari in relaxation of ban.

The petroleum ministry, in its summary to the Cabinet, a copy of which was made available to _Business Recorder_, said the existing demand for LPG in the country is estimated to be 3,000 metric tonnes per day against the modest domestic supply of around 1600 metric tonnes.

The ministry argued that due to the shortage of LPG in the country, its price was always been under pressure on one hand and the government has also approved, in principle, use of LPG in motor vehicles on the other.

After the approval of the regulatory framework being prepared by Ogra, the LPG use in the auto sector would be regulated and would compete with the gasoline and compressed natural gas (CNG) as an alternative fuel usage which is expected to be increased where natural gas is not available.

Keeping in view the limited level of indigenous LPG production and incremental growth, the only option available to enhance the fuel's availability in the country is through imports, the ministry added.

While giving an overview of the current situation, the ministry said there was dearth of LPG storage at ports and only one import terminal is functional at the Port Qasim, owned by Engro Vopak Terminal Limited (EVTL) which is unable to meet the requirement of LPG storage demand.

The Progas is also in the final stages of completing its LPG import terminal at the Port Qasim, the ministry said, adding there should be more LPG terminal and storage at diverse locations.

"This will not only pave the way for healthy competition among the LPG storage terminals for the benefit of consumers, but will also secure supplies in case of closure of any location", the ministry added.

The ministry has suggested to the cabinet that the ports and shipping ministry/KPT may be authorised to allow establishment of LPG terminals at the Karachi port in relaxation of restrictions imposed by the DCC, subject to strict observance of international best practices in safety standards in order to avoid hazards and dangers involved in storage, handling, and transportation of the LPG.


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## Owais

*Goods export and import procedures notified* 

ISLAMABAD (August 02 2006): The commerce ministry on Tuesday notified the procedures for export and import of goods announced in the Trade Policy 2006-07. According to the import policy order, imports may be allowed against all modes of payment subject to procedures prescribed by the State Bank of Pakistan (SBP) whereas the importers have to reach commodity exchange arrangements with the suppliers.

For imports under loan, credits and bilateral assistance requiring contracts to be approved by the Economic Affairs Division (EAD) or some other agency of the government, letter of credit (L/C) to be opened with in 60 days of registration of contract with a bank designated by the SBP.

According to the policy order, relocation of complete projects has been allowed in all the industrial sectors, including high-tech and export-oriented sectors.

Licensed call centres would be allowed to import complete call centres, their parts, spares and components in second hand or used condition under re-location scheme exclusively for their own use and not for sale.

Complete laboratory projects for quality control and complete effluent treatment plants would be permissible to be re-located under this scheme. Spare-parts on the regular inventory list of projects being re-located may be new, old, used or second hand. Complete projects and spare-parts would be permissible for import under the relocation scheme even if their substitutes are being manufactured locally.

Relocation of project machinery and equipment would be subject to fitness certificate by any of the pre-shipment inspection companies subject to the condition that the machinery is in good working condition and the remaining life is not less than 10 years.

Construction, mining, oil and gas and petroleum sectors would be allowed to import second hand plants, machinery and equipment and their parts, actually required in Pakistan for their projects.

The units operating in the Export Processing Zones (EPZs) are allowed to import goods as well as tariff areas in accordance with the rules and procedures prescribed under the Customs Export Processing Zones Rules, 1981.

Units operating in the EPZs may sell defective goods, wastes, used packaging material, empty drums and cartons, to the tariff area subject to the condition that the total value of such sales during a year does not exceed three percent of their FOB exports. Besides, such sales would be subject to payment of normal duties and taxes.

The plant and machinery import for EPZs or already installed, would be allowed to be sold or shifted to tariff areas by approval of the EZP authority irrespective of that the machinery is old or new and whether it has remained installed in EPZ for any period its import is otherwise permissible into tariff area under the import policy.

The units established in the EPZ can sell only 20 percent of their total production to tariff areas in Pakistan, while 80 percent would be exported to foreign countries.

Admission of goods into Gwadar Special Economic Zone from abroad and from the tariff areas would be allowed in accordance with the rules and procedures to be notified by the government.

In the export order, the commerce ministry has notified that all items and commodities produced or manufactured in Pakistan, exported via land route or by air against irrevocable letters of credit, confirmed orders on realisation of export proceed through banking channels or advance payment, in convertible foreign currency, would be allowed (i) zero-rating of sales tax on taxable goods, (ii) rebate of central excise duty, and (iii) repayment or drawback of customs duty.

However, the exporters have to provide proof that goods exported from Pakistan have reached Afghanistan would be verified on the basis of copy of import clearance documents by Afghan customs authorities across the border.

The export would be allowed only through export land routes ie Torkham, Chaman, Ghulam Khan, (for export of cement only) and Qaman Uddine Karez (when it becomes operational).

The export from EPZ and manufacturing bonds, except vegetable ghee and cooking oil would be allowed, but these exports would not be entitled to zero-rating of sales tax on taxable goods, rebate of CED and repayment of drawback of customs duty, provided that exports made to International Security Assistance Force (ISAF) may be made on deferred payment basis without opening of L/Cs.

The notification also said that normal duty drawback would remain available for exports to the Central Asian Republics via Iran. However, export of acetic anhydride to Kabul would not be allowed till further orders.

The export of imported goods in their original and unprocessed form would not be allowed except parts obtained from ship breaking, scrapped battery cells, waste dental amalgam, waste exported X-ray films, old machinery provided no refund of import levies or duty-drawback would be made.


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## Owais

*Three companies to generate wind power at Ketti Bandar* 

ISLAMABAD (August 02 2006): The government has awarded licences to three investors for generating power through wind at Gharo-Ketti Bandar in Sindh, _Business Recorder _learnt on Tuesday. Sources said that as many as six companies had applied for licences after Alternative Energy Development Board (AEDB) identified a potential of 50,000 MW of wind power generation.

These companies included New Park Energy Limited, Tanaga Generasi Limited (Malaysia), Zaphyr Power Limited, Beacon Energy, Win Power Limited and Green Power.

The government has granted licences to New Park Energy, Zaphyr Power Limited, and Beacon Energy whereas the licences of remaining companies were in process. The National Electric Power Regulatory Authority (Nepra) was approached by these companies for granting licenses to set up plants for 50 mega watts power generation by each one.

Sources in the AEDB said that the major thrust was to assist and facilitate investors for meeting increasing power demand. To encourage the investors, they said the government has waived off custom duty and sale tax on equipment and machinery being imported for the installation of plants.

The AEDB was hopeful that all the procedural requirements including Power Purchase Agreement (PPA) and the tariff determination issue would be finalised in shortest possible time following the government instructions to expedite the whole process. The government wanted these projects to be operational at the earliest.

The AEDB and Sindh government had established a liaison and was working in close co-ordination for identification and allotment of land in the wind corridor. First piece of 890 acres of land was leased out at Mirpur Sakro in August and another 5,000 acres in November 2005. However, the demarcation of the land was still in progress.

The government has already directed the AEDB to accelerate the process of establishing two plants as early as possible.

It was further learnt that the PC-1 for laying of 60-kilometer transmission line to supply power at Thatta Grid Station had been submitted to the Ecnec for approval whereas the land had been allotted to six investors for setting up plants after completion of procedural requirements.


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## Owais

*CCI approves privatization of Pakistan Steel Mill* 

ISLAMABAD: The Council of Common Interests (CCI) in its first meeting after constitution of the council approved the privatization of Pakistan Steel Mill.

Prime Minister Shaukat Aziz presided over the one-point agenda meeting of the CCI. 

The Chief Ministers of all the four provinces, federal ministers, Saleem Saifullah, Yar Muhammad Rind and Ghaus Bux Mahar attended the meeting.

The CCI members held detailed discussions and deliberations over the issue on directives of the Supreme Court of Pakistan and took the decision in favour of privatization of the mill.


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## Neo

ISLAMABAD, Aug 1: The import bill of petroleum products, machinery and agriculture implements recorded a hefty growth during the last fiscal year. Official figures available with Dawn showed that the import bill of petroleum products alone rose by 66.59pc to $6.662bn during 2005-06 as against $3.999bn a year ago. The share of oil in total countryÃ¢â¬â¢s import bill rose to 23.30pc.

In total POL imports, the share of petroleum crude rose by 76.56pc to $3.793bn during the FY06 as against $2.148 billion in 2004-05.

This showed that the import bill of oil products almost doubled during 2005-06 due to record high oil prices above $75 per barrel in the intentional market.

With this raise in oil prices, the total import bill reached $28.581bn as against $20.598bn in FY05, indicating an increase of 38.76pc.

It had widened the trade deficit to $12.112bn during the year as against $6.207bn the previous year. The export remained at $16.468bn during FY06.

According to the Federal Bureau of Statistics (FBS), the second biggest component of the import bill was of machinery group which recorded a growth of 34.33pc to $7.949bn during 2005-06 as against $5.918bn the pervious year.

The import of road motor vehicles registered a robust growth of 50.94pc in value. The import bill of agriculture implements increased by 82.74pc, electrical machinery and apparatus 38.20pc, power generating machinery 22.95pc, construction and mining machinery 32.23pc and office machines by 3.78pc. However, the import of textile machinery declined by 16.92pc during the year under review.

The import of consumer goods rose by 37.15pc to $1.932bn during 2005-06 as against $1.408bn the last year.

The import of wheat rose by 42.76pc, sugar 496.39pc, dry fruits 35.73pc, milk products 62.63pc and pulses by 36.73pc. However, tea imports declined by 1.07pc.

The import of metal group increased by 47.82pc to $1.801bn and agriculture and chemicals up by 13.92pc to $4.106bn in the FY06 compared to the previous yearÃ¢â¬â¢s figures.


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## Neo

Wednesday, August 02, 2006 

ISLAMABAD: Pakistan and the United States on Tuesday signed two agreements to help Pakistan expand its economy. 

The first agreement is part of the U.S governmentÃ¢â¬â¢s five-year economic growth assistance package to Pakistan worth more than U.S $73 million. 

The second is a Memorandum of Understanding to allow the Competitiveness Support Fund to partner with the Higher Education Commission in support of initiatives that promote knowledge-based economic development and ensure long-term economic growth.

The bilateral agreement for USAIDÃ¢â¬â¢s Economic Growth commits $13.7 million in support for 2006. The funding will enable USAID to provide over 130,000 loans for micro and small businesses in all four provinces and FATA, continued support to promising industries throughout Pakistan, and enable assistance to more than 50,000 farmers in drought-affected areas of Balochistan with new seeds, livestock and irrigation systems. 

US Ambassador to Pakistan Ryan C. Crocker and Pakistan minister of state for finance Omar Ayub Khan witnessed the signing for their respective governments. Ambassador Crocker said, Ã¢â¬ÅThe people of the United States are excited to see a growing, vibrant Pakistani economy. By appealing to PakistanisÃ¢â¬â¢ entrepreneurial spirit, the United StatesÃ¢â¬â¢ Economic Growth programme in Pakistan will continue to help businesses grow and reduce poverty.Ã¢â¬Â

The second agreement, the Competitiveness Support Fund Ã¢â¬â led by the Ministry of Finance and supported by USAIDÃ¢â¬â¢s Economic Growth program Ã¢â¬â formed a breakthrough partnership with the Higher Education Commission. 

Ã¢â¬ÅThe main thrust of this initiative is to build linkages between business and academia,Ã¢â¬Â said Omar Ayub Khan, who is also Chairman of the Competitiveness Support Fund. Ã¢â¬ÅSuch linkages will spark the kind of information sharing that makes business more dynamic and supports the commercialization of innovations developed at our universities and research institutions.Ã¢â¬Â

Ã¢â¬ÅOur partnership with the Competitiveness Support Fund will bring a new dimension to the Higher Education Commission that should help our researchers attract better financing and shape their work to more directly meet the needs of society and the economy,Ã¢â¬Â said Prof. Dr. Atta-Ur-Rahman, Chairman of the Higher Education Commission. Ã¢â¬ÅCooperation of this type between business and academia has generated tremendous innovation in the countries that have developed it, not just in the United States and Europe, but also in places like India, Thailand and Turkey. Pakistan cannot afford to ignore these successes.Ã¢â¬Â

One of the Competitiveness Support FundÃ¢â¬â¢s main objectives is to develop and support linkages between academia and industry for knowledge-based enterprise development. The fund will work with the Higher Education Commission to provide technical assistance by engaging foreign experts to support projects promoting knowledge-based enterprises in Pakistan. The two will also work jointly to establish a forum for the identification of research-based projects that will further the development of a knowledge-based economy. 

The Memorandum of Understanding also states that the Competitiveness Support Fund will be able to provide matching grants to the Pakistani academic community for projects that commercialize their research. The fund will be able to help form partnerships between academia and the business community to start new enterprises and encourage the development of financing mechanisms for these ventures.

The Competitiveness Support Fund will also act as a bridge between local and foreign universities and research institutions, particularly those in the U.S. and Europe. 

These partnerships will advance international best practices promoting innovation and addressing workforce and technology development needs of local industry.


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## Neo

Wednesday, August 02, 2006 

KARACHI: China has allowed two more plants to export mango from Pakistan. It has also opened up its two more seaports for mango shipments from the neighbouring country, a senior official of Pakistani Horticulture Development & Export Board (PHDEB) told Daily Times on Tuesday.

The approval of these two plants Durrani Associates and Iftikhar & Co. came recently from China, which has taken the number of plants, eligible to export mango to China to three. Quespak was granted this permission previous year. The approval of these two plants has further brightened the chances of Pakistani mango to capture a big share in the huge Chinese market, Chief Operating Officer (CCO) PHDEB Mohammad Iqbal hoped.

Iqbal said the approval to these plants came following a visit of a team of Chinese concerned department to inspect the facilities, available for treatment of mango for export. Ã¢â¬ÅThe team was satisfied with the available facilities of treatment of mango for export purposes,Ã¢â¬Â he added.

Also, the opening up of two more seaports Ã¢â¬ËGohangzhou and SchenzhenÃ¢â¬â¢ by the Chinese authorities for the mango shipments from Pakistan would be an added advantage to the Pakistani exporters to penetrate in the potential Chinese market. 

Earlier the mango exports from Pakistan were allowed through six seaports of China and air and land routes. Iqbal said that export of mango to China through air is also enjoying 50 percent freight subsidy, which would be making the Pakistani fruit more competitive in the Chinese market. He pointed out that China is a new market for Pakistani mango.

The PHDEB official said though China is also a mango producing country, the country faced a serious supply-demand gap. Ã¢â¬ÅPakistani mango is well positioned to fill this gap because of its high quality,Ã¢â¬Â he noted.

About the overall production of mango during this season, Iqbal said production at the end of the season is likely to fall short compared to previous season because of short production in Punjab. 

The mango crop in Sindh was as per the expectation but it is expected to lag behind previous seasonÃ¢â¬â¢s in Punjab because of less flowering due to long chilly season in countryÃ¢â¬â¢s largest province.

Previous year, the total mango crop stood at 1.6 million tons whereas during the current season, it might come to 1.2 to 1.3 million tons. It is estimated that country would be able to export 80,000 tons of mango by the end of this season.

The big market for Pakistani mango is Middle East whereas a sizeable amount of export also finds way into Europe besides some other markets. 

PHDEB official said potential of Chinese market to Pakistani mango might not be realized greatly during the current season. Ã¢â¬ÅThe real impact of this new market would be seen in the next season when these plants would be exporting mango to China right from the beginning of the season,Ã¢â¬Â Iqbal added.


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## Neo

ISLAMABAD (August 02 2006): The Pakistan Poverty Alleviation Fund (PPAF) has committed an additional Rs 4.2 billion ($70 million) for poverty alleviation in Pakistan. PPAF sources said this financing was approved in the 40th meeting of the Pakistan Poverty Alleviation Fund board of directors in which it approved Rs 1.7 billion for rehabilitation and reconstruction in earthquake-affected areas.

Rs 309 million for micro-credit, Rs 255 million for community physical infrastructure, and Rs 115 million for capacity building, health, and education sectors. The PPAF board also approved an agreement with KfW (German Development Bank) for Rs 1.1 billion for reconstruction of rural housing and infrastructure in earthquake-affected areas of NWFP, and authorised Pakistan Poverty Alleviation Fund to enter into an agreement with "Committee to Encourage Corporate Philanthropy" of USA for Rs 732 million for building and operating health and education facilities in AJK and NWFP.

Sources said the Pakistan Poverty Alleviation Fund disbursed Rs 6.2 billion ($103 million ) among poor across the country during 2005-06 out of cumulative disbursement of Rs 15 billion ($250 million)

They said the PPAF represents an innovative model of public-private partnership, and is sponsored by the Government of Pakistan and funded by the World Bank, USAID, IFAD, KfW, USDA, and other international donors.

Sources said since commencement of operations in 2000, the PPAF has accessed more than 20,000 villages in 108 districts of the country by extending more than 840,000 micro-credit loans (with 100 percent recovery rate) initiated 11,000 infrastructure projects, and trained 1,40,000 individuals across the country.


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## Neo

KARACHI (August 02 2006): Automotive industry has shown tremendous achievement in the last six years and Pakistani market flooded with locally assembled light and heavy duty vehicles. Wasim Haqqie, Chairman Engineering Development Board and Special Initiatives, at a signing ceremony of light duty trucks between Sindh Engineering Board and Silver Seal International, stated this here on Tuesday.

Haqqie said that the automobile companies have confidence on Pakistani market and its positive results could be seen in terms of growth in auto sector share prices in the stock market.

Chinese and Koreans have provided consumer economical and affordable vehicles. People who were once crazy about Japanese vehicle are now give priority to buy locally assembled vehicles, he said.

He said that the locally manufactured cars have crossed 200,000 mark and the country is targeting 500,000 locally assembled cars annually.

Haqqie said that the country was now manufacturing parts and 70 percent components of 800cc were being manufactured locally same as 65 percent of 1000cc and 55 percent of 1300cc.

He said that China always proved itself the closest friend of Pakistan and provided expertise in all fields to fulfil our local demands. The assembling of light duty truck was also a Chinese origin.

Haqqie lauded private sector efforts towards Pakistan's growth. For the last six years private sector was involved in consultation to formulate national policy for the sector.

He said that Pakistani labour and skilled workers were able to produce more than Japanese workers, if they guided in the right direction.

Lieutenant Colonel Syed Akbar Hussain (Retd), Managing Director, Sindh Engineering Limited said that the government was trying to revive engineering production. The Sindh Engineering had built several projects but in the recent past its productivity was become very thin.

Anwar Iqbal, Chief Executive Officer, Silver Seal International said that his company has been engaged in numerous trading activities with China for the last ten years and now entered into local assembly of one tonne light duty commercial trucks.

Liu Bangyin, Managing Director Chongqing Maxwell Hi-Tech Developing Limited, Hautwell Group, Chongqing China, the Chinese partner for Silver Seal International informed that they are also introducing light and heavy duty commercial truck in CNG version and three wheeler CNG auto rickshaw in Pakistan very soon.


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## Owais

*CCI clears 28 privatisations: NWFP chief minister abstains, PTCL sell-off approved* 

ISLAMABAD (August 03 2006): The newly-constituted Council of Common Interests (CCI) has given ex-post facto approval for the 28 privatisations completed with the approval of the Cabinet Committee on Privatisation (CCoP).

The eight-member Council of Common Interests which met under the chairmanship of Prime Minister Shaukat Aziz here on Wednesday also, in principle, approved the privatisation of 10 more industrial units, including National Investment Trust Limited (NIT), Small and Medium Enterprises (SME) Bank, First Women's Bank, National Power Construction Co (NPCC), Services International Hotel, Lahore, and further disinvestments of shares of various banks.

The Council also discussed the privatisation of the Pakistan Steel Mill and reaffirmed the approval for privatisation, given by the previous CCI on May 29,1997. The Privatisation Commission as per privatisation law will decide the details of privatisation of each unit.

All members of the Council supported the three decisions except NWFP Chief Minister Akram Khan Durrani, who abstained on the basis of his party's stand that it was opposed to the privatisation of profit-making units.

Sources told _Business Recorder _that the Council approved the summary prepared by the Privatisation Commission, which was the only item on its agenda.

Federal Privatisation and Investment Minister Zahid Hamid informed the meeting that since 1991, some 159 privatisation transactions had been completed from which the government had received Rs 373 billion. Out of this amount, 85 percent or Rs 316 billion was realised from 57 privatisation transactions completed between 1999 and 2006, which shows that the privatisation process gained momentum during this period.

Addressing the meeting, the prime minister said that setting up of the CCI, which was a constitutional body, would help overcome differences and promote harmony and co-ordination among the provinces.

He said: "Liberalisation, deregulation, and privatisation were the corner-stones of the government's reform agenda, and our privatisation programme had been appreciated at the international level for being handled in a highly professional and efficient manner."

Shaukat Aziz said the present government is the first one to introduce a law to govern the privatisation process which stipulated 90 percent of the money received through the privatisation would be utilised to pay off the debt, while 10 percent will be used for the poverty alleviation.

All members, including Inter-Provincial Co-ordination Minister Salim Saifullah Khan, Narcotics Control Minister Ghous Bux Khan Maher, Safron Minister Sardar Yar Muhammad Rind, Punjab Chief Minister Chaudhry Pervaiz Elahi, Sindh Chief Minister Dr Arbab Ghulam Rahim, NWFP Chief Minister Akram Khan Durrani, Balochistan Chief Minister Jam Muhammad Yousaf, Privatisation and Investment Minister Zahid Hamid, and senior officials attended the meeting. Talking to newsmen, Salim Saifullah said the next meeting of the CCI would be held as and when decided by the prime minister.


----------



## Owais

*56 companies given LoIs for wind power generation* 


ISLAMABAD (August 03 2006): The Alternate Energy Development Board (AEDB) has issued Letters of Intent (LoIs) to 56 companies for the generation of 700 MW power through wind by 2010, and envisaging 9,700 MW production by 2030.

In an interview to _Business Recorder _here on Wednesday AEDB Director-General (International Co-operation) Mujahid Sadiq said the government is making efforts to meet at least 5 percent of total power requirements through alternate sources such as hydel, wind, solar, and biogas.

As far as wind energy is concerned, he said the two investors, one from Malaysia and one local, are in negotiations with the National Transmission and Dispatch Company (NTDC) for power purchase agreements, whereas the remaining four are fulfilling other requirements, such as power generation licenses and tariff determination.

About tariff determination, Mujahid Sadiq said the government through Nepra has offered 9.5 cents per kWh as upfront tariff for 20 years. This tariff facility is valid till December 31, 2006, only and may be reduced after that, he added.

He said this is amongst several steps the government has taken to attract local and foreign investors in alternate power generation.

"An estimated amount of $80 million is needed for installing a wind power plant of 50 MW", he said, adding the cost has gone up by 60 percent in the last two years from $50 million to $80 million, owing to increase in demand for wind power machinery globally.

Mujahid Sadiq said the high prices of oil across the world has left the governments with little option but to shift to alternate sources of power, which are cheaper as compared to thermal power generation.

He said the AEDB is striving for providing electricity to over 300 villages in Balochistan and 100 villages in Sindh through solar energy, adding the cost of this project is being met through Public Sector Development Programme (PSDP). The PC-I has been approved while the funding is awaited to initiate the project, he said.

The AEDB has recently got started the work on eight medium range power projects in NWFP and Punjab with the help of Asian Development Bank (ADB). The major funding, 75 percent, for these projects would be provided by the ADB while 25 percent expenses would be borne by the provincial governments. These projects would be operational in two years, he added.

Giving details of the wind energy projects, he said the AEDB has identified a very vast wind corridor at Gharo-Keti Bandar in Sindh, which has an actual potential of 50,000 MW. The Board has issued LoI to 41 national and 15 international companies for the generation of 700 MW by 2010.

The AEDB, which is facilitating the stakeholders of renewable energy sources, is offering land at very cheap rate of 6 euros per acre per year at wind corridor. The land has been sub-leased to 13 investors so far and they have submitted firm commitments to AEDB for the installation of wind power units, he added.

Replying to a question, Mujahid Sadiq said 1,000 to 1,200 acres of land is required to produce 50 MW. The investors could utilise the land for irrigation purposes along with the wind power generation, he maintained.

Speaking on the available data, he said the Pakistan Meteorological Department has provided the basic wind data, which is good but does not fulfil the requirements of financial institutions. However, the government has covered that risk of the investors in the shape of upfront tariff. Meanwhile, specific data is being collected to make the projects more viable for the investors.


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## Owais

*Customs appraisement group abolition from August 15* 

ISLAMABAD (August 03 2006): The Central Board of Revenue (CBR) will abolish the old system of 'Appraisement Group' in customs department replacing it with 'random selection of goods declaration (GD)' to end, from August 15, 2006, the monopolistic corruption of appraisers.

At present, appraisement group deals with specific items for the assessment of duties/taxes and clearance of imported consignments. During the quarterly conference of customs collectors held on Wednesday, the Secretary General, Revenue Division/Chairman, CBR Abdullah Yusuf, decided to do away with the centuries-old system of 'Appraisement Group'. The process of abolition will start from August 15 and continued till the end of September, 2006.

Under the new system, instead of assigning specific item, the appraisers would be given assessment task of randomly selected commodities, electronically, under 'One Customs'.

The conference unanimously opined that the new system would wipe out corruption from the customs department. While reviewing the performance of customs department regarding duty collection during 2005-06, it was noticed that net collection of customs duty was Rs 135 billion as compared to Rs 102.3 billion in 2004-05, showing a growth of 20 percent. The major revenue spinners included vehicles Rs 37.7 billion; edible oils Rs 16 billion; POL Rs 15 billion; machinery Rs 12 billion; iron and steel Rs 7 billion; and organic chemicals Rs 3.6 billion.

The conference was informed that on import of vehicles under different schemes ie transfer of residence (TR), personal baggage, gift and others the total customs duty collection was Rs 12 billion in 2005-06 against Rs 4.7 billion in 2004-05, reflecting an increase of Rs 7.3 billion.

While examining recovery of outstanding customs arrears, the chairman noticed that the pace was very slow, and advised the collectors to accelerate efforts and monitor monthly performance. The facilitation of passengers at the airports was also reviewed in the conference with the pledge to remove bottlenecks.

A comprehensive strategy was evolved to achieve the revenue targets for the current financial year, devising mechanism to constantly check on under-invoicing, effectively monitor assessments, vigorously recover outstanding arrears and quickly dispose goods ripe for auction etc.

Customs Collectors, in their presentations, highlighted the performance of their Collectorates. Project Director, CARE and PACCS, in his presentation, gave briefing on the share of business being dealt by Model Customs Collectorate, performance and achievements, the functionalities covered under PACCS, the role out plan and acknowledgement of the system at various national and international fora.

He said that Model Customs Collectorate is processing 27 percent of import and 32 percent of export consignments arriving at or going from Karachi port. He said that through business process re-engineering and introduction of PACCS, the customs processing time for imports through KICT has been reduced from seven days to less than four hours and dwell time reduced to less than 5 days. The cast of doing business has been reduced by expeditious clearance and corruption free environment.

He said that CARE will be replicated to PICT and QICT by September 30, 2006. The PACCS will start accepting carrier declaration electronically for both foregoing terminals and transit from August 14. The transhipment trade will be handled through the PACCS clearing such consignments within seconds.

The Project Director also explained that PACCS is not only gaining popularity within the country but its efficiency and effectiveness has also been acknowledged by international fora. He displayed a number of slides on this topic.

Chairman, CBR appreciating the PACCS said that all officers and staff must get training to operate the system effectively.


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## Owais

*Palm oil supply to upcountry halts* 

KARACHI (August 03 2006): Palm oil supply to upcountry refineries has halted completely for the last 5/6 days and the edible oil producers of the country are in a fix as two big contractors associations which supply imported palm oil from Karachi port to upcountry destinations are locked horns with each other, sources told _Business Recorder _on Wednesday.

Sources said that the two big imported palm oil transporters-the All Pakistan Oil Tankers Owners Associations (edible oil transporters) and Edible Oil Contractors Association have completely suspended their operations following a tussle which cropped up between them on certain domestic issues.

"We can not work too much for less salaries and under unnecessary strict vigilance," said an office-bearer of All Pakistan Oil Tankers Owners Associations (edible oil).

He alleged that the Edible Oil Contractors Association was holding back No Objection Certificates (NoC) of heavy vehicles' drivers, adding that the said association had resorted to hooliganism and compelled the drivers to work for longer hours.

"We wanted to get ourselves separated with the contractors association and intended to make direct contracts with the oil refineries, which the contractors simply dislike," the office-bearer said.

He said that there are 120 big contractors who possess 3,000 heavy vehicles for edible oil transportation and they have been enjoying market monopoly since long. Contrary to that, the supply of imported palm oil is suspended to the small and big refineries of the country (even in Karachi) and the refiners have are facing losses of around Rs 50.4 million since Friday last.

"They (transporters and contractors) have also closed down edible oil terminals at Kaemari and Port Qasim," said an owner of an edible oil refinery at Port Qasim.

He pointed out that the palm oil supply to refineries of SITE, Port Qasim and Korangi has been halted since Friday last and due to non-availability of transportation facility, the operations of edible oil refineries in the country have come to a standstill.

"Actually, we daily lift our imported commodity from the port after paying duties and we can not operate our plants without raw material," he remarked. Industry sources said that around 2,500 tons to 3,000 tons of imported palm oil is lifted by the transporters from the port and since the country mainly depends on imported commodity, the ongoing edible oil crisis could further aggravate with this new issue.

Palm oil is used by the refineries as raw material, which process it and finally dispatch their production to the markets. "The demand and supply mechanism is not stable and this could further worsen the ongoing crisis because the middlemen could take advantage of the situation and raise the edible oil prices," a refinery owner mentioned.

He demanded of the officials concerned to take cognisance of the matter and intervene immediately to resolve the rift between the two associations as it could put a negative impact on cooking oil prices during Ramazan.


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## Owais

*Musharraf for raising quality of human resources* 

ISLAMABAD (August 03 2006): President General Pervez Musharraf has emphasised the need for nurturing talent of younger generations and enhancing the quality of human resources in the knowledge-driven world to make Pakistan a powerful and developed country.

He was speaking at a function in Aiwan-e-Sadr on Wednesday held for the winners of All Pakistan Website Development Competition whose theme was 'Know my Pakistan'.

The President said there were two basic ingredients of power potential of a nation, namely the population, and the quality of its human resources. He said: "Pakistan is a nation of 150 million people, and we must enhance the quality of our human resources to have a prominent place in the economy driven world."

He said that knowledge was essential for development of the economy. In this connection he particularly mentioned information technology, saying that future of a country that wants to progress depends upon it. He added that "we must go for promoting information technology and for e-commerce and e-government".

The President said: "We can take Pakistan forward in every field through promoting science and technology which is key to development and economic stride of a nation."

He said that Pakistan is a great nation and everyone should be proud of it. "The need is to exploit all its potential". He said that the younger generation "needs to know more" about its own country which is unique in terms of diversity of temperature, history, culture and civilisation.

He said that the country's history "stretches back to 8,000 years", and referred to the civilisation of Taxila, Indus, Ghandara and Harrapa. He said that keeping in view the history, culture, civilisation and a variety of Pakistan's terrain Pakistan could attract maximum number of tourists.

Education Minister Javed Ashraf Qazi in his address said that it was an innovative competition organised by National University of Modern Languages. The competition, he said, was first launched within the provinces and, then among the provinces to select the best possible website.

The President gave away shields and cash prizes to the winners of the competition. St Mary Academy, Lalazar, Rawalpindi, got the First prize, Islamabad College of Girls, F-6/2 Sector, secured Second position, and Jameel Public School and College Mingora, Swat, stood Third.

The Fourth position went to St Bonaventure High School, Hyderabad. Earlier, the President was shown the websites developed by the position winners, their websites highlighting all information about Pakistan's culture, geography, history and varied nature of terrain.


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## Owais

*Rains to benefit cotton, 25pc growth expected in Sindh* 

KARACHI: The growers and agronomists see the current spell of rains will have a positive effect on cotton crop as well as other seeds, particularly in lower Sindh, which earlier faced shortage of irrigation water during the sowing of paddy crop.

&#8220;The shortfall in the paddy crop may come down from 60 per cent to 40 per cent in lower Sindh after the current monsoon rains,&#8221; a cotton expert Qamar-ul-Zaman Shah told Geo news.

&#8220;The conventional cotton crop in lower Sindh, which was at flowering stage, may face little harmful effects of rains, but it will not affect BT cotton," he added.

He disclosed that BT cotton had been cultivated over an area of 1.5 to 2 lakh acres in lower Sindh, including Badin, Thatta and Matli, where conventional cotton was not produced due to high moisture.

Following torrential rains in the province, water level has improved significantly in Dadu. &#8220;If favourable climatic conditions continue in coming months and crop remains safe from pest attack, then the country will harvest a good cotton crop in the current season,&#8221; the expert said.


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## Owais

*Govt plans London float for OGDCL by December, fresh sale of PSM *
*

**KARACHI *_(updated on: August 03, 2006, 21:35 PST_): The government plans to list the Oil and Gas Development Company Ltd (OGDCL) on the London Stock Exchange through an issue of global depositary receipts (GDR) by December, a government minister said on Thursday.

"We are going according to the advice of our financial advisers and we plan to float the GDR's by September and October and complete the process by December," Privatisation Minister Zahid Hamid told Reuters.

Pakistan plans to sell between 10 and 15 percent of OGDCL shares through GDRs and a domestic offering, Hamid said. OGDCL, the country's largest listed firm, has a market capitalisation of around $10.2 billion.

The government holds a 95 percent stake in OGDCL, while the remaining five percent is listed on the Karachi Stock Exchange.

In May, the government appointed Citigroup, Goldman Sachs and BMA Capital Management to manage the OGDCL sale.

Pakistan's second-largest listed bank, MCB Bank Ltd has also said it is planning to issue global depository receipts.

The private sector bank, formerly known as Muslim Commercial Bank Ltd, has an asset base of around $5.0 billion and deposits of over $3.8 billion.

On Thursday, OGDCL shares closed at 142.95 rupees, up 0.6 rupees, while Karachi Stock Exchange's top 100 index was up one percent at 10,671.09 points.

Hamid also said the privatisation process of Pakistan Steel Mills (PSM) would be held afresh and the sale to a Russian-based consortium in an auction held in March was null and void.

A constitutional body on Wednesday cleared the government to privatise Pakistan Steel Mills (PSM) after the country's Supreme Court blocked its sale in June.

The Supreme Court said there had been improprieties in the sale.


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## Owais

*India, Pakistan at odds with Iran over gas price, form committee* 
*NEW DELHI *_(updated on: August 03, 2006, 19:57 PST_): Differences persist between India and Iran over the price of gas that would flow through a proposed pipeline, with Tehran wanting a higher return, but both countries said they remained committed to the project.

After a round of talks in New Delhi, officials from India, Pakistan -- through which the pipeline will pass -- and Iran formed a nine-member committee to try to narrow their differences and arrive at a deal on Friday.

India and Iran have been discussing the $7-billion pipeline for months but pricing has proved the main sticking point.

"We are very confident. I am sure some way can be found and one of the approaches which we have agreed upon is that a team of experts composing people from all delegations will go through the proposal, basically on pricing," the top bureaucrat in India's petroleum ministry, M.S. Srinivasan said.

The pipeline was first proposed more than a decade ago, but progress has been slow because of hostility between India and Pakistan and, more recently, US opposition to Iran over its controversial nuclear programme.

An Indian oil ministry official said Iran had offered a formula of 10 percent of the average Brent crude price plus a fixed cost of $1.2 per million metric British thermal units, which India and Pakistan consider expensive.

*COSTLY GAS *

At present prices, the Iranian proposal would mean the two South Asian countries paying $8 per mmBtu, the official said. New Delhi has offered a far lower $4.25 per mmBtu.

"The price of the seller is about twice (that which) the buyer is asking for," Iran's Deputy Oil Minister Mohammad Hadi Nejad-Hosseinian said.

"The price we are asking is fair and just. We have a report saying that it is a good price for India and Pakistan.

Iran has the second-largest natural gas reserves in the world behind Russia -- about 940 trillion cubic feet -- while growing Asian economies, including India and Pakistan, are scrambling to find energy sources to feed industrial expansion.

The work on the pipeline, likely to begin in the middle of 2007, is expected to be completed by 2012 to meet growing demand from India and Pakistan, estimated at 50 billion cubic metres a year.

Pakistan officials said they agreed with India's view on pricing and found the Iranian offer expensive.

"Both of us as buyers of gas have similar views on what the realistic price should be," said Mukhtar Ahmed, energy adviser to Pakistan's prime minister, Shaukat Aziz.

India has had to tread a tightrope in the pipeline talks, trying to satisfy its appetite for hydrocarbons while not upsetting Washington. It faces a natural gas deficit of 200 million cubic metres a day in 20 years.

India has reached a civilian nuclear co-operation deal with the United States that is intended to boost the country's nuclear power capacity as a way to meet soaring energy needs.

The deal is currently being reviewed by US legislators amid criticism it would reward India with nuclear technology and fuel while the country refuses to sign the Nuclear Non-Proliferation Treaty and has conducted nuclear tests.

Experts say the agreement would allow India to produce nuclear weapons easily because it frees up domestic supplies for military use.


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## Neo

KARACHI, Aug 2: Cellphone operators in the country are investing nearly $100 million in order to meet the deadline of October 2006 given by the Pakistan Telecommunication Authority (PTA) for the implementation of mobile number portability (MNP), telecom sources said.

They said except for two newcomers that might not invest much because their system and technology had been updated and was MNP-compliant, the rest were investing heavily to upgrade their switches and exchanges.

The PTA last month asked all the cellphone operators and PTCL to speed up the process of upgrading their switches for the early implementation of MNP (a system which enables a mobile phone subscriber to carry the same number while changing the cellphone operator).

The PTA warned of stern legal and regulatory proceedings against those operators who failed to comply with the PTA deadlines and implement the MNP. The authority asked PTCL in particular to upgrade its switches by the end of September positively. Perhaps Pakistan will be the first country in the region to implement this system.

Dawn tried to find out investment plans of some cellphone operators and their efforts in meeting the deadline of October.

Telenor Pakistan chief executive officer Tore Johnson told Dawn from Islamabad that the company alone was roughly investing $7.5 million for implementing the MNP. Ã¢â¬ÅWe are ready to meet the deadline.Ã¢â¬Â

The mobile users will have ultimate choice with the implementation MNP. A customer will be free to decide which service he prefers and where he likes to be a customer.

When asked some leading cellphone operators and even PTCL have some reservations over the MNP, he said complex issues took time to resolve. At present the central database system is under implementation. This is a key step in the execution of MNP, as there is a need to upgrade all mobile operating systems and conduct technical and network enhancement to handle the MNP.

Ã¢â¬ÅThat is where all mobile operators have to work together to deliver results in a timely manner. PTCL will not be ready with their final solution and a temporary solution will be set up,Ã¢â¬Â Mr Johnson added.

In reply to a query that Telenor is behind in urging the government for the MNP, he said the introduction of the new system was defined in PakistanÃ¢â¬â¢s telecom policy which was in place even before Telenor was in the picture.

According to the policy, the MNP should have been in place by January 1, 2006.

When asked the MNP is only popular in Hong Kong and Scandinavian countries as compared to the US, the UK and other European countries, the Telenor CEO said since the MNP was defined in the telecom policy, it was only a matter of following the policy. Ã¢â¬ÅThe PTA understands that the new system is important in providing a level-playing field in the market and that it will eventually benefit the consumers. The introduction of MNP will set a good reputation for future investment and promotion of fair competition,Ã¢â¬Â he added.

Meanwhile, telecom sector sources said Ufone was roughly investing $20 million to upgrade its system and equipments for the execution of MNP by October. They said the company had already placed orders for equipments and was urging its vendors to deliver them on time.

Omar Manzur, head of public relations, Mobilink, said the company was making all-out efforts to achieve the MNP implementation deadline. Ã¢â¬ÅMobilink is investing a `sizeable amountÃ¢â¬â¢ for this purpose.Ã¢â¬Â Furthermore, the company is contributing equally along with other mobile operators in funding Pakistan MNP Database (Guarantee) Ltd -- the company which owns the central MNP database, responsible for facilitating the porting process among cellular operators.

In reply to market reports that Mobilink was against the idea of MNP in Pakistan, he said the company was working towards the achievement of MNP implementation. Ã¢â¬ÅWe are preparing for its implementation and the company has invested substantially into its systems to accommodate the new system,Ã¢â¬Â he added.

When asked that the MNP does not exist in India and its success rate is not satisfactory in European countries, Mr Manzur said the Pakistani market was different from South Asian or western markets. Ã¢â¬ÅThe success of MNP in Pakistan will depend on many factors, including customer behaviour and market trends.Ã¢â¬Â

On technical problems, he said various processes and procedures added to the success of MNP implementation which included technical and operational readiness of all parties concerned. Furthermore, due to technical complexities involved, call connectivity and accurate charging of calls to ported numbers will also play a significant role in the success or failure of MNP in Pakistan.

At present there are some 33-34 million mobile phone users in Pakistan. The share of Mobilink is over 16 million. Ufone has 7.5 million customers, Warid Telecom 4.5 million, Telenor three million, Paktel over one million and Instaphone has 350,000 subscribers.


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## Owais

*KS&EW sell-off plan shelved: revitalisation package approved* 

ISLAMABAD (August 04 2006): The federal government has shelved privatisation plan of Karachi Shipyard and Engineering Works (KS&EW) and instead approved a financial restructuring package worth billions of rupees for its revitalisation.

Besides, the administrative control of the KS&EW has been transferred from the defence ministry to the defence production ministry with new board of directors.

Official documents made available to _Business Recorder _suggest that Prime Minister Shaukat Aziz has endorsed the decision to stop privatisation of the KS&EW and its placement under the defence production ministry.

The financial restructuring plan had been deliberated at length at various forums after which the prime minister directed the defence and finance secretaries to work out a package for revitalisation of the KS&EW.

Accordingly, two meetings were chaired by the PM's principal secretary and attended by defence and finance secretaries to finalise the monetary package. The documents also said that advances and loans owed by the KS&EW of Pakistan Navy and GoP are Rs 1.534 billion, of which Rs 717.380 million pertains to Navy which would be converted into PN equity while Rs 816.628 million of GoP loans would be converted into GoP equity. However, non-interest-bearing liabilities of Rs 612.474 million would remain on the books of the KS&EW.

According to the documents, interest-bearing loans are of Rs 963.763 million of which Rs 116.712 million is bank loans, to be picked by Pakistan Navy through CNSDA and its contribution towards KS&EW's revitalisation. The GoP would convert the interest on provident liability of Rs 847 million into equity whereas the KS&EW would clear principal liability.

The documents said the federal government would arrange a total of Rs 3.22 billion from the commercial banks over three years on its own guarantee. The amount would be raised annually on a need basis in line with the financial restructuring plan. The KS&EW would repay principal amount, while the interest on loans would be picked by the GoP. The payment of interest would be counted towards GoP equity. The KS&EW would also construct fourth F22P frigate with the cost of $8.8 million to be arranged by the GoP.

The Karachi Shipyard and Engineering Works would also announce Voluntary Separation Scheme (VSS) for the employees for which Rs 500 million would be arranged through the defence budget in two years, whereas Rs 320 million would also be picked through defence budget to construct accommodation for the Chinese engineer who would work on the frigate project. It would work on the pattern of Pakistan Aeronautical Complex, Kamra, and cater to Pakistan Navy's requirements on similar lines as PAC does for PAF.

The PN dockyard would not overlap the work being done at the KS&EW. Hence, the PN would transfer ship building design, construction facilities and machinery to the KS&EW, the document added.

All domestic maritime sector organisations like Pakistan Navy, MSA, PNSC, KPT, PQA, and GPA to right give of first refusal or price preference to the KS&EW, for all their requirements, induction in line with commerce ministry's SRO 827(1) 2001 and relevant ministries to ensure its compliance.

The implementation of financial package and the viability of the KS&EW would remain under regular review of the government. The defence production ministry would also attempt to arrange partnerships between the KS&EW and other international shipyards, the documents added.


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## Owais

*Pakistani firms to be listed in UAE by year-end* 

DUBAI (August 04 2006): By the end of 2006, 10 Pakistani companies currently listed on Karachi Stock Exchange will be listed in the United Arab Emirates. Hanif Jakhura, chief executive of Pakistan's Central Depository Company, central securities depository, will be in Abu Dhabi on September 18.

To sign an Memorandum of Understanding (MoU) with officials from Abu Dhabi Securities Market, Bilal Khan Pasha, commercial secretary at Pakistani consulate in Dubai, said.

Jakhura will sign a similar MoU with Dubai Financial Market on September 20. "We expect listings to take place within two to three months of signing MoUs," Pasha said. Priority is being given to Pakistani companies in which UAE investors hold significant stakes.

So far, there are firm plans to list three companies-United Bank Limited, Pakistan Telecommunication Company Limited and Bank Al Falah Limited, Pasha said. Other seven companies will be finalised before MOUs are signed.

He said Enshaa, a joint venture between Al Futaim Group of UAE and Pakistani shareholders is in process of listing on Karachi Stock Exchange and could be among final 10.

Abu Dhabi Group owns Bank Al Falah and has 50 percent stake in United Bank Limited while Emirates Telecommunications Corporation, or Etisalat, recently acquired a 26 percent stake in PTCL with its management control.

"We have many companies that are interested in listing here. However, we are short-listing 10 from banking, telecom, service and real estate sectors," Pasha said.

Syed Qaiser Anis, president of Pakistan Business Council Abu Dhabi said Commercial section of Dubai Consulate and Pakistan Business Council played role of matchmaker between CDC and UAE financial markets. In addition to listing shares on UAE stock exchanges, Pakistan intends to listbonds, mutual funds, and open-and closed-ended funds in UAE.

Pakistan has now allowed companies dealing in funds to invest 30 percent of equity in non-Pakistani products, he said. This gives them chance to seek listing on UAE financial markets.

Anis said registering in Dubai International Financial Centre financial free-tradezone is also possibility. "If we register here, it will be a different ball game altogether. Companies would be able to list funds and bonds on other Gulf Co-operation Council markets, in addition to UAE exchanges." Pasha said UAE's large Pakistani population is largely untapped, and predicted listing of Pakistani companies here will change that. He said listings will be equally beneficial to UAE stock markets and Pakistani companies. "We have to tap surplus investment capital in UAE."


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## Neo

ISLAMABAD (August 04 2006): The Planning Commission has identified 10 major areas to cut down wastage through prudent use of natural resources and give a further boost to the economy. These were agriculture, water resources, industry, quality education, transportation, infrastructure (roads network), airports, ports and shipping facilities, railways, energy and social sector.

Medium Term Development Framework (MTDF) 2005-10 is serving as a catalyst for effective implementation of the strategy. MTDF, launched in July last year, mentioned that the national economy suffers $12 to 14 billion loss annually due to wastage in different key sectors. It clearly indicated that agriculture, manufacturing, water resources, transportation, education and health were some of the major loosing areas.

During a talk with Business Recorder on Thursday, a planning commission official said a multi-pronged strategy was being actively pursued for improvement in all identified areas by cutting down losses to the economy. Conservation of water resources is vital for quick economic growth and the strategy deals with the issue on emergency basis.

The official said to conserve water and reduce its losses, the government initiated a programme worth Rs 62 billion for lining of water courses and irrigation channels and canals were being streamlined to stop wastage of water.

Building up of five mega dams to stop water going into sea is also a major initiative and it will address the issue of water shortage on long-term basis.

To supplement these efforts, large number of small dams in NWFP and Balochistan were being funded by the federal government. These projects will save 16 million acre feet (MAF) water that is either simply going waste or running down into sea during the monsoon season. The official was of the view water conservation alone can give great boost to the national economy and its benefit to the people in terms of income could be around $5 billion.

Transport is another area where Pakistan is performing very poorly. The World Bank's study indicated poor transport system and dilapidated road network was causing huge loses to Pakistan's economy. The government has undertaken a programme at a cost of Rs 350 billion for improving national transport system.

Ports, highways, airports and railways modernisation are also important part of the strategy and the official are pretty confident that its effective implementation can reduce losses/cost of doing business considerably.

The industrial sector is also another area, which is a focal point of the strategy.

The official said industrial wastage are due to low productivity of labour and to address the issue, National Productivity Organisation (NPO) is taking various steps, including vocational training and skill development.

The investment in the higher education has been increased from Rs 0.9 billion in 2000-01 to Rs 16.3 billion for 2006-07. Policy-makers are stressing the need of quality education and knowledge-based economy and these objectives could only be achieved by investing in education.

MTDF speaks of its importance and shows the budget for higher education will go up to Rs 28 billion by 2010.

The strategy also indicates huge losses in the agriculture sector and gives top priority to cut down wastage in this area. The official said the planning commission's strategy is to reduce wastage in agriculture through better handling of crops, balanced use of fertiliser and certified seeds use. He said research findings have shown that balanced fertilisers can give additional benefit of Rs 125 billion in only four major crops (wheat, rice, maize, sugarcane).

A 25-year energy development plan has been launched to ensure supply of power to all consumers' categories and at the same time Wapda and KESC have initiated various programmes to reduce losses.

MTDF indicated the federal government will spend over Rs 600 billion on social sectors such as health and education to improve living standard of the people.


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## Neo

PESHAWAR (August 03 2006): The Pakistan Army is extensively engaged in well being of tribal people through the length and breadth of Fata. The development projects in Fata are aimed at improving the quality of life in tribal areas.

The emphasis on these development projects has been laid to improve existing communication infrastructure, health care, management and development of water resources, said a press release issued by ISPR.

In this regard, a comprehensive plan for Fata has been planned, while South and North Waziristan agencies have been accorded priority to bring them at par with other parts of Fata, it added.

The release said that Rs 3.1 billion has been allocated for development projects in seven Fata agencies, adding that 94.6 percent of the total allocation is for the communication infrastructure. The construction of road has been given top priority in the army development projects so far 1,650-km roads and tracks have been constructed out of the total planned 1,911-km roads in the tribal areas.

Recently, Corps Commander Lieutenant General Mohammad Hamid Khan has inaugurated Road Inzari-Kandao-Chota Frontier in Khyber Agency. To enhance literacy rate in the tribal area, 32 schools have been completed that include seven schools in Khyber, 4 in Kurram, 11 in Orakzai, 4 in North and 6 in South Waziristan agencies.

To encourage and boost education standards in Fata, 50 students are being imparted education in the Army Public School at Bannu Cantt, whereas 5 students have already joined the Chinar Army Public School, Murree.

President Musharraf has very graciously approved admission of 5 students from Fata to Military College, Jehlum. The admission of 4 Fata students have been arranged in Sargodhian Public School, and students will join the institution on August 14, 2006.

Another important aspect of these development and welfare projects is provision of the free health care and medical facilities at the doorstep of tribes men. Since 2001, the establishment of free medical camps, specialist's camp and eye camps have been the regular features of the Army Medical Corps (AMC). Some 144 medical specialists, 150 specialists and 8 free eye camps, including 22 permanent medical camps are working round the clock to provide quality medical care to the tribals at their doorsteps. A total of 450,728 patients have been treated during the said medical camps up to July 5, 2006, including about 90,000 female patients.

Moreover, financial assistance on account of medical treatment has also been provided to certain needy people of Fata. Medicines worth Rs 40 million have been provided free of cost to the patients visiting these camps.

For provision of clean drinking water, the army engineers have constructed 25 water supplies schemes, installed 796 hand pumps, 18 tube-wells, 20 dug wells and 12 submersible pumps. In order to provide electricity facilities in Fata, the army has completed installation of 12 micro-hydel power stations in Khyber and North Waziristan agencies. These small stations produce enough electricity to meet the lighting requirement of adjacent houses.

A number of development projects in Fata, which include 1 tube-well, 2 dug-wells in Mohmand Agency, 1 micro hydel power station, 1 tube-well, 2 dug-wells in Khyber Agency, 1 water supply scheme, 1 dug-well in Kurram Agency, 2 water supply schemes in Orakzai Agency, 1 Girls Primary School, 1 tube-well, 1 dug-well in North Waziristan Agency, 1 dug-well, in South Waziristan Agency have been completed and people of the area are deriving maximum benefit from these projects.

Lieutenant General Mohammad Hamid Khan has instructed all concerned to complete welfare/development projects in shortest possible time, while ensuring quality of work


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## Neo

ISLAMABAD (August 04 2006): For the first time in Pakistan, manufacturing unit of solar energy converter panels has come into operation at Akhter Solar Limited (ASL), Hattar, with the production capacity of 3 MW per year, enough to give some relief to about 40,000 village houses in remote areas.

Addressing the inaugural ceremony at the venue, as chief guest, Chairman, Alternate Energy Development Board, Air Marshal Shahid Hamid (Retd) said that the timely intervention by the Akhter Solar Limited in the energy sector is of great value to the country and would give confidence to other investors to enter in this field, which is wide open.

A breakthrough in the solar energy sector has emerged with the enterprising efforts of the two brothers, Babar Mughal and Hamayun Mughal, who have entered in the manufacturing of solar panels with complete installation package of the solar energy system.

He said that there are 40,000 villages in Pakistan without electricity, which could benefit from this abundant source. Government is keen to utilise its entire means to exploit the available sources like hydel, solar, and wind to meet the ever-increasing energy requirements. These are environment-friendly, and in abundance, he added. Apart from this, work on bio-gas and bio-mass is also being carried out. The trend for the solar energy is developing globally, he maintained.

He was of the view that the solar energy could also be used in offices, which are open in the daylight, when the sun is at its peak.

Shahid said, our first target is 4000 villages, out of this 600 would be in Balochistan. Comparing with the wind energy, he said that this source of energy is more feasible as its availability is more reliable throughout the year.

Earlier, briefing the media, Managing Director, ASL, Babar Mughal, said, tendency of utilising solar energy in the world is on the rise as 30 percent of power demand is met through solar energy. Pakistan is lagging far behind in this sector. There is need to tap this natural source, which would also help the country to come out of the energy crisis, and accelerate development in rural areas, he added.

Giving some details of his plant, he said that they have acquired German technology and photo-voltaic cells from Italy. Presently, the panels are being assembled but soon they would start developing cells also.

He expected that due to high demand of solar energy plants, the cost of the units would further rise for some years globally as already there is shortage of these units world-wide, he added.

So far, they have invested 3 million dollar but hope to invest 30 million dollar more in two years to expand their activities by inducting other manufacturing facilities separately, he added.

While talking to the Business Recorder, Babar Mughal said that government would share the expense of solar energy units with the consumers and facilitate them with its major contribution.

In reply to a question, he said that the minimum life of the panel is 25 years, whereas dry battery lasts for 7 years. No major maintenance cost is involved, he said.

Others present at the ceremony were Director General, Hydrocarbon Development Institute, Hilal Ahmad Raza, pioneer in the field of solar energy and former Director of Institute of Silicon Technology, Dr Atiq Mufti, Director General, Pakistan Council of Renewable Energy Technologies, Dr Pervez Akhter.


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## Neo

New Delhi: Iran's Deputy Oil Minister Mohammad Hadi Nejad Hosseinian said India and Pakistan were offering to pay only half the amount for Iranian gas that Tehran was seeking as part of efforts to agree a pipeline deal.

"The price of the seller is about twice [that which] the buyer is asking for," he said. The gas would be delivered through a proposed $7 billion pipeline to run through Pakistan.

In India for a two-day meeting with officials from the South Asian neighbours and rivals, Nejad Hosseinian said Iran's price tag would benefit all.

Iran has the second-largest natural gas reserves in the world behind Russia about 940 trillion cubic feet while growing Asian economies, including India and Pakistan, are scrambling to find energy sources to feed industrial expansion.


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## Neo

ISLAMABAD, Aug 3: Springboard Research, a leading innovator in the IT market research industry, on Thursday announced that Pakistan PC/Server shipments grew 19.1 per cent in Q1 2006 to 128,729 compared to the same quarter of previous year.

The government spending picked up again in the quarter after slowing down in Q4 2005 due to the October 8 earthquake.

The government PC shipments registered growth of 35.3 per cent as compared to Q4 2005 and continued to be the biggest buyer of computers with a 22.4 per cent share, says a press release.


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## Neo

KARACHI, Aug 3: Industrial activities in Karachi remained paralysed for the fifth consecutive day on Thursday, as the power supply to five major industrial areas remained cut off or was irregular that hampered the normal production activity. It has been so since last Sunday when rains started to lash the city.

All the industrial areas -Ã¢â¬â Site, Korangi, North Karachi, F.B. Area and Landhi, housing around 2,000 to 2,500 units each -- are involved in the production for exports. Power supply interruptions in particular affect such units, as they have deadlines to meet failing which they incur losses sometimes amounting to billions of rupees.

With each passing day industrial losses are rising, as most of the export-oriented industries are apprehending to lose their export contracts or cancellation of L/Cs. The situation will impact negatively on future prospects.

Ã¢â¬ÅWe have already missed shipping schedules but are still trying to renegotiate with our foreign buyers for rescheduling our L/Cs timeframe,Ã¢â¬Â asserted a leading textile exporter. He said Pakistan was facing a tough competition from exporters of Bangladesh, India and China and was losing markets owing to high input cost and this situation would further weaken the countryÃ¢â¬â¢s position in the world market.

Capt A Moiz Khan, patron-in-chief of the North Karachi Association of Trade and Industry, lamented that due to unabated power failure since Sunday, the entire industrial area of North Karachi remained affected.

He said shipments were being delayed, thereby causing colossal financial losses to exporters and estimated that around Rs2.5 billion loss had been suffered during the last five days of power breakdown.

There are around 2,500 small and medium sized industrial units in the North Karachi industrial area and many are export oriented. Mr Khan said that 35 per cent units belonged to garment manufacturing where mostly female workers were engaged. However, since the power breakdown the production activity almost came to a halt in these units.

He was highly critical about the KESC management and said some reports suggested that preference had been given to residential and commercial consumers for rectifying faults developed after heavy downpour. Mr Khan said this was against the interest of the country because by halting industrial activity not only exports suffered but industrial workers also lost their daily wages. He appealed to Sindh Chief Minister Dr Arbab Rahim and Governor Dr Ishratul Ibad to take serious notice of the situation and put things right before it was too late.

A similar situation was observed in the Korangi industrial area where around 2,000 industrial units of large and medium sized are located, including two oil refineries. This area earns around Rs250 million per day in taxes for the country and provides jobs to millions of industrial workers.

Korangi Association of Trade and Industry chairman Gulzar Feroz told Dawn that there had been no power supply to the entire industrial area since last Sunday. The power supply was restored to some parts on Thursday but yet many areas are without power.

Ã¢â¬ÅEven today most of the industries are running at 50 per cent capacity and some are still using generators to which there is a limit,Ã¢â¬Â he observed. Furthermore, he said even telephones were dead and roads were almost non-existence, as most of them swept under heavy rains.

Ã¢â¬ÅThere are around 170 tannery units, 300 textiles and a number of pharmaceuticals and chemical industries and the area industries have suffered a production loss to the tune of Rs3 billion during the last five days,Ã¢â¬Â he added.

Site Association chairman Ameen Bandukda said there was hardly any change in the situation on Thursday, as the power supply had not been restored so far. He said a meeting was held with high officials of KESC on Thursday afternoon and assurances were given to rectify the situation at the earliest.

Former Site Association chairman Majyd Aziz said the KESC distribution system was in a mess and could not bear even a little shower what to talk about four days continuous rains. He said his industrial units had been out of production since Sunday and KESC staff had been trying to restore the power supply.He said after finding fault in cables running between feeders, the utility staff was unable to find fault running between feeders and his industries. As a result of this situation, he said there was no water in the industry and telephones were also out of order.

In general almost all the industrial areas complain of non-existence of basic infrastructure, such as roads, sewerage, power and telephones. They feel that such factors add to their cost of production and also make their products of poor quality. They urged upon the authorities to work on war footings to provide these facilities if the country had to see progress and employment was to be created.


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## Neo

Friday, August 04, 2006 

QUETTA: Balochistan Governor Owais Ahmed Ghani said on Thursday that the province had huge potential in the banking sector and he added that the government would encourage the private sector to make partnership with the government to exploit opportunities in the province.

He was speaking during the opening ceremony of the Islamic banking branch of Askari Commercial Bank in the provincial capital. Owais said the introduction of Islamic banking by the Askari Commercial Bank was an achievement. The people of Balochistan, especially farmers, will be the largest beneficiaries of the interest-free banking system.

Ã¢â¬ÅThe establishment of a bank with Islamic banking system is the harbinger of a new era of stable economic system for the country,Ã¢â¬Â according to the governor.

He said President General Pervez Musharraf had earlier decided to write off loans of Balochistan farmers. The farmers in the province would benefit greatly from interest-free banking facilities offered by the ACB.

Askari Commercial Bank Chief Executive Sheryar Ahmed said the bank would open more branches across Balochistan in order to promote Islamic banking.


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## Neo

WASHINGTON (AFP) - Pakistan's commerce minister pressed for talks on a free trade agreement (FTA) with the United States, billing such a pact as a "powerful tool" in the battle against extremism. 

Humayun Akhtar Khan said that he hoped for progress towards talks on an FTA in the near future, framing Pakistan's drive for a deal in the context of its role in Washington's anti-terror war.

"We do not have a nod right now, we expect in the very near future we will have something positive," said Khan when asked by reporters whether he had been given a date when Washington was willing to open FTA talks.

"I expect in the very near future we will have something positive."

But Stephen Norton, a spokesman for US Trade Representative Susan Schwab, played down expectations of speedy talks with Pakistan on an FTA.

President George W. Bush's room for flexibility on trade deals looks set to be curtailed as his Trade Promotion Authority -- which lets the administration submit deals to a 'yes or no' vote in Congress -- expires next June.

"I would say there is probably not sufficient time to enter into and complete negotiations on an FTA before that time, given the number of free trade agreements that are already in the works," Norton said.

But he added: "We're in talks on a business and investment treaty. We're making some progress there and certainly the components of a business and investment treaty would be the basis for an FTA."

Khan said that a free trade pact with Washington could be crucial in easing dire poverty in Pakistan, and persuading people to turn away from extremism through the hope of new jobs and economic growth.

"An FTA between Pakistan and the United States would send a very good signal," said Khan, who has met Schwab and US Commerce Secretary Carlos Gutierrez on his trip to Washington.

"We are very grateful for the economic assistance that the United States has provided for us, (but) it is trade and not aid that is the long-term solution," he said.

"It is the way to help us in the fight against extremism that we have ... it is a powerful tool."

Just a one billion dollar rise in Pakistani textile exports to the United States, which currently reach about three billion dollars, would create 200,000 jobs in Pakistan, said Khan.

But any attempt to increase the amount of textiles imports would be sure to raise the ire of the politically powerful US textiles lobby, which guards its dwindling sector jealously.

Norton said Washington was broadly sympathetic to Pakistan's arguments regarding trade as an anti-terror tool.

"With new economic opportunities often comes political reform and greater respect for the rule of law," he said.

"The 9/11 commission report specifically recommended that trade be a component of our long-term policy in the Middle East, for precisely that reason, that trade and political freedom can go hand in hand."

According to Commerce Department figures, US trade with Pakistan last year totalled a meagre 4.5 billion dollars. Pakistan had a surplus of 2.0 billion.


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## Neo

NEW DELHI (AFP) - India, Iran and Pakistan agreed to appoint a consultant to try to resolve a row over the price of Iranian gas to be sold to the South Asian nations through a multi-billion-dollar pipeline. 

After two days of intense negotiations, Iran stuck to its demand for a price linked to crude oil, while the buyers jointly sought a price band with a floor and ceiling, the Press Trust of India reported on Friday.

"The three nations will jointly appoint an international consultant to study the pricing issue," India's Petroleum Secretary M S Srinivasan told reporters in the Indian capital.

Iranian deputy oil minister M.H. Nejad Hossenian said all sides were unanimous on the importance of the seven-billion-dollar project but "the buyers (India and Pakistan) were offering a price which was half the price the seller (Iran) wanted".

India's Petroleum Minister Murli Deora said the consultant would submit its report in four-to-five weeks after which the officials of the three countries would meet against in Tehran.

"This is the last time we are trying to revive the project," an unidentified official said, according to the news agency.

Pakistan Oil Secretary Ahmed Waqar said Pakistan and India were united on the cost issue and were looking at a price affordable and reasonable to their domestic markets.

"We are pursuing a bilateral (Iran-Pakistan) pipeline and a trilateral (Iran-Pakistan-India or IPI) pipeline parallely. If for any reason, India does not join the IPI project, Pakistan would go ahead with the bilateral project subject to the price being affordable," he said.

The Iranian minister said Iran and India had alternative markets for sale and sources of supply. While Iran can sell gas to European markets, India has possible gas sources in Turkmenistan and Qatar.

"Decisions (by) each side will be taken in their own national interest," he said.

Deora said India remained committed to the pipeline project.

Sources said an international consultant was needed because there were substantial differences between buyers and sellers on transportation and gas processing costs.

A tripartite expert committee, formed Thursday to look into the pricing issue, failed to resolve differences, with Iran insisting on a transmission cost of 1.2 dollars per million British thermal unit (mBtu), while India and Pakistan suggested one-fourth of this cost.

On gas processing, Iran said 0.4 dollars per mBtu would be charged, but the buyers felt 0.2 dollars was a more reasonable price, sources said.

Tehran has remained adamant on its crude oil price-linked formula, which at 60 dollars a barrel Brent crude price, translates into a price of 7.2 dollars per mBtu -- 60 per cent more than what India was willing to pay.

Sources quoted by PTI said Iran wanted a price equivalent to 10 per cent of the Brent crude oil price, plus a fixed cost of 1.2 dollars per mBtu. Added to this would be the cost of transporting the gas through Pakistan.

New Delhi, however, was willing to pay no more than 4.25 dollars per mBtu for gas delivered through the 2,100-km line at its border, they said.


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## Neo

EDITORIAL (August 03 2006): Despite the transparency and fiscal discipline the government claims it has introduced, the country continues to sustain a crippling annual loss of $12-14 billion on account of waste of precious resources through improper utilisation.

The Deputy Chairman of the Planning Commission, Dr Akram Sheikh has made this sad disclosure in his briefing to the Public Accounts Committee of Parliament. The break-up of the colossal annual loss provided by him includes $5 billion in water sector, $3 to 4 billion due to poor transportation, $3 billion on account of industrial waste and almost $1.5 billion due to unscientific use of fertiliser, as well as waste of perishable commodities.

A Recorder Report has quoted him as saying that only by curtailing this huge loss can Pakistan develop its economy. According to Dr Sheikh, the government is trying to increase PSDP allocation from 4 percent to 7 percent of GDP in the coming years, while about 67 percent of the current PSDP allocation of $7 billion will be utilised for developing infrastructure in the power and energy sector.

The Planning Commission could only monitor 400 to 500 out of a total of 1900 projects, which means that the aggregate annual loss to the economy could add up to a much higher figure. The Planning Commission chief has also disclosed that there is no disparity in the execution of PSDP projects in the four provinces, which is a healthy trend that needs to be kept up in the larger interest of inter-provincial harmony.

The PAC has, meanwhile, advised the Planning Commission to increase PSDP allocation for education and health, which continue to be low priority areas despite statements by government high-ups.

The problem of misuse or misallocation of national resources in Pakistan has arisen essentially from a lack of transparency in public sector planning, budgeting and allocation of funds. The development expenditure that includes infrastructure improvement, instead of increasing over the years, has actually declined in real terms.

For instance, according to available data, it decreased from Rs 65.3 billion in FY 1991 to Rs 47.6 billion in FY 2001. And the trend can be extrapolated to have a reasonably accurate measure of its current quantum. The bureaucracy's culture of compulsive secrecy has shielded the policymakers' shenanigans over the decades.

Incidentally, the development priorities in Pakistan are often determined not by the potential beneficiaries or the elected representatives of the people, but by a stand-offish bureaucracy and a ruling elite that is often not in touch with the needs and problems of the taxpayers. Secondly, the absence of a culture of public debate on resource allocation has resulted in numerous budgetary distortions that continue to warp governance in Pakistan.

As the data provided by the Deputy Chairman of the Planning Commission showed, the mismanagement in water sector accounts for the highest quantum of loss to the national economy annually, followed by transportation, which continues to be in an equally poor shape. Being essentially an agricultural country, our failure to build additional water reservoirs over the decades has had a highly adverse impact on the country's economy. Similarly, although substantial strides have been made in improving the transportation sector, things remain far from satisfactory.

Unscientific use of fertiliser, which has been adversely impacting the quality of soil, has also affected the crop yields. The waste in perishable commodities too has been a big drain on the economy, as is apparent from the figures provided by Dr Akram Sheikh. Developing air-conditioned storage capacity can reduce the quantum of waste in perishable commodities, and the expenditure incurred on it can be recovered through export of high quality agricultural produce and fruit.

Lack of sufficient storage capacity in the country has, in fact, impeded the growth of agriculture sector to its full potential. It is obvious, though, that investment made in such infrastructure projects will yield incremental benefit for the country.

Viewed at a larger plane, non-transparency in the management of public accounts has resulted in serious governance deficiencies that need to be expeditiously rectified. The tendency to safeguard the interests of specific groups at the expense of the larger public interest has also done great harm to the country by generating income disparities. The examples include the government's reluctance to impose agricultural income tax, and its tendency to grant concessions and exemptions in taxes and tariffs, which often benefit only powerful pressure groups.

Increased debt servicing and defence allocations (because of the worsening security situation) have resulted in a growing fiscal squeeze, the negative effects of which have been passed on to the lower social strata. A policy of equitable sharing of national resources will be the best guarantee for inter-provincial harmony and national security. The government should see to it that there is a judicious allocation of national resources, and that no waste of any kind takes place in any sector.


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## Owais

*USDA forecasts another bumper cotton crop* 

KARACHI (August 05 2006): The United States Department of Agriculture (USDA) has forecast that Pakistan would get another bumper cotton crop of 13.8 million bales during 2006-07, despite uneven weather conditions, it is learnt.

An extensive satellite survey carried out by USDA last week (July 28) assessed the crop conditions of the world's biggest cotton producers--Pakistan, India, United States, Brazil and China--and forecast that these countries would have bumper cotton crops this year despite unfavourable weather conditions.

"The USDA has anticipated that Pakistan's cotton output this year would be 1.1 million bales higher than last year's crop of 12.7 million bales, after calculating the entire sowing area and the growth of the crop," sources said.

The US Department of Agriculture (USDA) has also mentioned in its survey report that India's cotton crop would get smarter gains than last year's figures, with an increase of 2.6 million bales, to 24.4 million bales this year.

According to the official statistics of China Cotton Association, declared by USDA, China's cotton output could fall by 1.1 million tons to 6 million tons, compared to 7.1 million tons of last year.

Similarly, cotton crop estimates for United States are also calculated to be 4.463 million tons, 1.037 million tons less than last year's crop of 5.5 million tons.

Elaborating the USDA estimates, President of Lubbock Cotton Exchange, Texas USA, Richard L. Drachenberg said, "Texas is the largest cotton producer of United States. However, we are anticipating reduction in current cotton crop by 39 percent this year." Regarding Brazilian crop, the USDA quoted the Brazil's official crop assessment agency - CONAB, saying that the crop figures for this year would be inched up by 0.174 million tons to reach 1.197 million tons.

"Actually the recent rains in the cultivation areas across the country showed little pauses and wind kept on blowing even during the rains, therefore, the recent heavy rains did not leave any adverse affect on the crop," said Ghulam Rabbani, Chief Executive of Drachenberg Trading Company, Texas (USA).

He said that if there had been suffocation and sharp sunlight during the showers, the crop might have been destroyed because the saplings can not survive.

Rabbani said that USDA conducts such a comprehensive survey that it separately counts the entire sowing area, plants and flowers sown on each acre.

Senior cotton brokers were of the view that out of the total sowing area, the share of Punjab would be the biggest with 70 percent, followed by Sindh with 26 percent and 4 percent of Balochistan and NWFP. Provisional figures shows that cotton crop was sown on 3.29 million hectares this year as compared to 3.21 million hectares last year.


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## Owais

*$80 million exports loss due to six-day power failure* 

KARACHI (August 05 2006): The country sustained around $80 million exports losses in the past six days owing to industrial production activity remaining paralysed as power supply of five major industrial estates of the city remained cut off.

On Sunday, July 30, 2006 at 2 pm, power supply to Site, Korangi, North Karachi, Federal 'B' Area, and Landhi industrial estates was cut off on the plea of heavy rains. However, the utility company failed to resume normal power supply in many areas till Friday.

According to estimates, Site area alone suffered around 8.2 million dollars daily whereas the North Karachi industrial estate losses come to around $1 million a day. Korangi industrial estate lost 50 percent of its production of Rs 250 million daily.

Site Association of Industry (SAI) Chairman Amin Bandukda said that a day's closure of industrial units in Site area causes production losses of Rs 2 billion, and export losses of $8.2 million.

He said that around 80 percent of units in Site remained closed for five days owing to power failure. Only those units were in production which have their own power generating units, he added.

He said that on Thursday officials of Karachi Electric Supply Corporation (KESC) had assured that power would be fully restored by Friday morning but the promise remained unfruitful.

He said that on the sixth day on Friday power was restore in some parts of Site, but it again failed. He said that still around 60 percent units were closed in the area.

Korangi Association of Trade and Industry (KATI) Chairman Gulzar Firoz said that daily production in Korangi industrial area is estimated at Rs 250 million, out of which 50 percent is exported.

He said that on Friday power supply to some parts of Korangi Industrial area was restored and industries resumed production activity. However, the KESC staff was still working to normalise power supply in the remaining areas. He said that the condition of roads is still in very bad, which is creating problems in goods movement.

He urged the city administration to depute some staff to repair the roads in the industrial area and arrange water pumping to clear stagnant water from roads

Captain Moiz Khan, Pattern-in-chief of North Karachi Association of Trade and Industry (NKTI), said that a day's industrial production in the industrial estate comes to around Rs 200 million and exports to around $1 million.

He said that after five days power was restored but it again went off after some time. The industrial estate is in very bad condition. Around 80 percent of telephones are out of order and roads are presenting the look of a water pool. He said that there are around 2500 industrial medium size industrial units in this industrial and majority of them produce goods for export. He urged the government to take appropriate measure to restore power supply in the area, clear stagnant water and restore telephones.

Vice Chairman, Pakistan Chemicals and Dyes Merchant Association (PCDMA) Shaukat Riaz said that Jodia Bazar is without power for past 150 hours. Roads are ruined creating problems in movement, car driving and parking. He said that those who have generators are also facing problems due to continuous running. HE urged the KESC and city government to take measures to restore power supply in the area and clear the roads.


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## Owais

*Sindh inaction worsens edible oil crisis* 

ISLAMABAD (August 05 2006): Edible oil supply crisis is deepening as Sindh government has not yet intervened to ensure that All Pakistan Oil Tankers Owners Association (APOTOA) does not block lifting of edible oil for consumption of ghee industry. APOTOA is blocking lifting of imported edible oil since July 31.

Pakistan Vanaspati Manufacturers Association (PVMA) had raised the issue with Sindh government the other day, demanding safety and security to EOCCTA to help lift and transport edible oil to ghee industry in different parts of the country.

In a letter addressed to the Governor and Chief Minister of Sindh, it expressed apprehension that APOTOA action disallowing lifting of edible oil from the port for the mills could create serious ghee and cooking oil problem across the country.

It also brought the matter to the notice of Tanker Association of Pakistan (TAP) through a separate letter. The PVMA wanted quick action from Sindh government as stoppage of edible oil tankers' loading by APOTOA was a serious matter and its persistence for a long time could add to ghee/cooking oil prices hike and subsequently force the industry closure.

PVMA said that APOTOA was giving threats to EOCCA against lifting edible oil from the ports. It said: "PVMA likes to inform the Sindh government that continuation of the crisis could block the supply of vegetable ghee/cooking oil throughout the country and create a serious problem for the public at large."

It said that PVMA demands that APOTOA should be directed to allow EOCCA to fill tank trucks of imported edible oil of various PVMA member units without further delay.

PVMA appreciated ECCOTA co-operation and demanded that Sindh government should direct APOTOA to do the same in the best interests of all stakeholders of ghee sector.

The crisis in pushing ghee and cooking oil prices up in the open market and its persistence will hurt the end consumers. The timing of the crisis is also critical. APOTOA has forcibly stopped loading of tankers of imported edible oil for the whole country when holy month of Ramazan is around.


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## Owais

*Cement sector grows by 12.59 percent* 

KARACHI (August 05 2006): The cement sector growth has increased by 12.59 percent on year-on-year basis as a total of 18.4 million tonnes cement was produced in the country in FY06 as compared to 16.3 million tonnes in the corresponding period in FY05.

The performance of cement sector remained satisfactory during FY06 (July-June) as the sector managed to grow at a decent pace. Looking at break up in cement sales, export figures showed a negative growth due to additional demand in the country.

Capacity utilisation of the sector stood at 87 percent during FY06 compared to 91 percent recorded in FY05. The analyst said that they expect that the capacity utilisation of the cement sector to reduce further to 70 to 75 percent by the end of FY07 because of expansions in the sector. "We remain optimistic on cement sector as the government has started its drive to construct dams and mega projects as implicitly mentioned in the budget FY06-07", they added.

D.G. Khan Cement is expected to announce its financial results soon for the full year ending June 2006. Earnings of the company is expected to surge by 70 percent to Rs 2,865 million (EPS Rs 12.43) as against Rs 1,682 million (EPS Rs 7.30) during FY05.

Tariq Hussain Khan of the Atlas Capital Markets said that profitability is to grow mainly on the back of a 66 percent increase in the company's top-line to Rs 8,788 million compared to Rs 5,280 million previously, whereas cost of sales are expected to grow by only 33 percent leading to an increase in gross profits and margins by 124 percent to Rs 4,358 million and 49 percent respectively.

DGKC produced 2.13 million tonnes of cement during the period under review, which was up 17 percent from 1.8 million tonnes during FY05. However, amidst an increase in demand in the overall industry, the company marginally lost market share, which stood at 11.6 percent as a result of expansion by Lucky Cement.


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## Owais

*Pak-US trade likely to increase by 50 percent* 

Washington: A free-trade pact with the United States would create jobs and prosperity in Pakistan that would help a U.S. ally in a volatile region combat religious extremism, the country's commerce minister said on Thursday. 

Commerce Minister Humayun Akhtar Khan said in a speech in Washington that a bilateral free-trade agreement would "help Pakistan enormously" but also open the South Asian nuclear power's market of 150 million people to U.S. business. 

Pakistan President Pervez Musharraf, who first proposed the FTA in December 2004, believes that "the long-term solution to handling the extremism problem in Pakistan is to economically improve Pakistan," Khan said. 

"We believe that our future lies in being part of the international mainstream and getting our people prosperous and getting our people more educated and getting women in the right place in our society," he said. 

Khan told the Institute for International Economics (IIE) that $1 billion in Pakistani garment exports to the United States would create 200,000 jobs, affecting more than a million people in a country where families average six members. 

"You can imagine the impact that would have on our society and, in particular, the women in our society," he said. 

The Washington-based IIE issued a study on Thursday showing that an FTA would increase bilateral U.S.-Pakistan trade by forty to fifty percent, benefiting U.S. exporters of grain, processed foods and machinery, and Pakistan's textile sector. 

Pakistan, which is negotiating a bilateral investment treaty with the United States, remains committed to multilateral trade liberalization under the World Trade Organization, Khan said. 

But a proliferation of bilateral or regional free trade pacts, some of which diverted trade away from Pakistan, made it "essential for Pakistan to explore a very aggressive trade diplomacy policy," the minister said.


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## Neo

WASHINGTON (August 05 2006): Commerce Minister Humayun Akhtar Khan, who met the senior US officials and interacted with American business leaders, has reported "very good progress" vis-ÃÂ -vis efforts for negotiating a Pakistan-US free trade agreement (FTA).

"We have had good discussions with senior US officials and the response of the American think tanks and entrepreneurs to the roll out of the outcome of the study on Pakistan-US FTA was also heartening," he said on Thursday after holding several meetings with American officials.

During his meetings with officials, including US Commerce Secretary Carlos Gutierrez, US trade representative Susan Schwab and Under Secretary of State for Economic, Business and Agriculture Josette S Shiner, the Commerce Minister also discussed the Pakistan-US bilateral investment treaty and establishment of reconstruction opportunity zones in Pakistan.

"We discussed about the FTA negotiations, the bilateral investment treaty we intend to move very fast on the establishment of reconstruction opportunity zones and a US team would be on its way to Pakistan shortly to look into the issue in detail," he said about the outcome of his meetings.

Pakistan's Ambassador to the US Mahmood Ali Durrani was also present during the meetings with senior officials. About his interaction with the US business leaders at the Institute for International Commerce, Humayun said the roll out of the study spelled out enormous benefits of the FTA for both the countries.

The Minister also met Senator Lincoln D Chafee, a member of the Senate Foreign Relations Committee, and Senator Jay Rockefeller, member of the US Finance Committee as America's trade agreements have to go through the Senate Finance Committee.

"The study on FTA quantifies the problem it makes easier to reach American business and textile industry that we are not causing any harm to the US local textile industry and it also makes it easier for us to reach approval forums - various House and Senate Committees at the Hill as we are now able to substantiate our argument with sound facts and figures," he said.

Earlier, the Commerce Minister addressed a gathering of leading American entrepreneurs, and informed them about Pakistan's remarkable economic turnaround.

He said Pakistan was for increasing its trade with the international community as in line with President Pervez Musharraf's vision it wanted greater trade and not aid to sustain its growth.

Gary Hufbauer, representing Institute for International Commerce and Javed Burki, an economic expert, also addressed the gathering and spoke about the benefits of the FTA between the two nations.


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## Neo

LAHORE (August 05 2006): Provincial Industries and Investment Minister, Muhammad Ajmal Cheema has said that Sundar Industrial Estate (SIE) would be instrumental in increasing the provincial GDP (gross domestic production) and Rs 100 billion investment, was expected in next three years.

Talking to newsmen, Cheema appreciated the developmental work done by Punjab Industrial Estates Management Company at the estate. He said that production of cement had increased by 160 percent over the last few years, reflecting more and more economic activity. Chairman PIE, Mohsin M. Syed and Directors PIE, Mansoor Abbas and Saeed A. Khan were also present on the occasion.

The Minister hoped that total volume of investment at SIE would touch the mark of Rs100 billion within 3 years. The estate had so far attracted investment worth Rs8 billion.

About Punjab Government's efforts to replicate SIE model in other parts of the province, he said that Faisalabad Industrial Estates Development and Management Company (FIEDMC) had been set up. "Faisalabad will soon have a Garments city and Textile city on public-private partnership basis," he said. He said the IInd phase of Multan Industrial Estate (MIE) will also been launched with an objective to expedite the process of industrialisation in Southern Punjab.

To a question, Cheema said the annual loan disbursement by the Punjab Small Industries Corporation (PSIC) had touched the mark of Rs3 billion against Rs500 million few years ago.


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## Neo

ISLAMABAD, Aug 4: Four out of five major projects including gas import pipelines planned by the government to meet energy shortage are unlikely to be materialised, creating fears of severe energy crisis after three years.Informed sources told Dawn that Gwadar port, three gas import pipeline project - Qatar, Turkmenistan and Iran - and import of liquefied natural gas projects were planed for implementation by the ministry of petroleum and natural resources and Planning Commission between the period of 2006 to 2011.

According to a latest status report of the petroleum ministry, the import of gas from Qatar was no more a feasible option because of shortage of surplus gas in Qatar and hence out of discussions. Mr Ehsanullah Khan, the pointman who used to interact with Pakistan government on behalf of Crescent Petroleum of Sharjah for more than 15 years is currently working as PakistanÃ¢â¬â¢s ambassador in one of the countries in the Middle East. The multi-billion dollar Turkmenistan-Afghanistan-Pakistan (TAP) pipeline project is currently faced with seven major bottlenecks, says the petroleum ministry. These include non-confirmation of uncommitted gas volume by Turkmenistan regarding Daulatabad gas field, uncertainties or lack of clarity with regard to price of the gas to be demanded by Turkmenistan and security situation in Afghanistan.

Also there are significant difficulties in the expected implementation of security and risk mitigation measures proposed by the Asian Development BankÃ¢â¬â¢s consultant and usual delays of the Turkmen government in complying with the decisions taken by the tripartite steering committee.

The ministry has also identified as bottlenecks the third party guarantees for the required gas allocation by Turkmenistan government and internal political situation in Turkmenistan. Pakistan had planned under its 30-year Energy Security Plan to commence the project in 2007 and complete it in 2011 - both targets seem unachievable in the given conditions.

The Iran-Pakistan-India pipeline also is moving very slowly due to stalemate over the finalisation of gas pricing mechanism. The rituals like exchange of delegations among the three countries have been very frequent but there has been no progress on at least four issues - gas pricing, project structure, project framework agreement and joint declaration.

The three countries have now agreed to appoint a consultant to suggest a price for Iranian gas to be delivered to the two energy-deficient South Asian countries after their officials failed in New Delhi to agree on a gas tariff. Pakistan and India have proposed two consultants Ã¢â¬â Poten and Partners and Vicce Ã¢â¬â and have asked Iran to select between the two so that a report could be finalised within a month or so.

In this project, political interests of the three nations are at odds. One of the obstacles in this project is that Pakistan prefers to have this pipeline as a bilateral project with Iran to ensure maximum gas quantities but both India and Iran want its extension to India.

Similarly, India and Pakistan have a common interest in low gas prices of not more than $4.5 per Million British Thermal Units (MMBTU) but Iran wants a higher price of $7-8 per MMBTU. Both India and Pakistan are also concerned about IranÃ¢â¬â¢s complicated international decision making process and IranÃ¢â¬â¢s slow reaction and response to various issues and think that IranÃ¢â¬â¢s price tag was "unreasonable".

The three countries have also been failed to appoint a lead sponsor to conduct a feasibility study of the project despite discussing this issue for many months. The government of Pakistan had envisaged this project to start in 2007 and complete in 2011 but appeared far from becoming reality as scheduled.

The ambitious Gwadar port was another major initiative towards meeting energy requirements in addition to other transit trade activities but would largely depend on security situation in Balochistan where a full fledged operation was still in progress.The fifth and the only project that did not face any bottleneck at present is import of Liquefied Natural Gas Project but its in-built difficulties of high spot market rates would haunt the nation for long. This project envisaged import of 500 million cubic feet of gas per day (MMCFD) by 2010. The detailed feasibility study of the project would be undertaken by a private sector joint venture to be appointed by December 2006.


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## Neo

KARACHI (August 05 2006): The City District Government Karachi (CDGK) on Friday signed a memorandum of understanding (MoU) with Saudi Arabia, Kuwait, Qatar and Oman to construct seven-star hotel, world-class shopping plaza and multi-storied commercial and residential centres in the metropolis.

District Co-ordination Officer (DCO) Fazlur Rehman on behalf of the CDGK formally signed the MoU with consulate generals of Saudi Arabia, Kuwait, Qatar, and Oman, who reciprocated on parts of their respective governments, at a local hotel.

Addressing the signing ceremony, Sindh governor Dr Ishratul Ibad said city nazim Syed Mustafa Kamal was working for the development of Karachi with an apt vision.

"It is an important step toward the creation of mega city and, in fact, the development of Karachi is the development of Pakistan," he added.

City nazim Mustafa Kamal said with the help of other Islamic countries the first seven-star hotel in Pakistan, which would be amongst the top hotels in the world, would be constructed in the metropolis.

Due to economic-friendly policies, huge foreign investment has taken place in the country, and several other such projects on Build-Operate-Transfer (BOT) basis in the city are in the pipeline, he added. He hoped these projects would help boost livelihood of common citizen. He said the construction work on these projects would start by this year.


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## Neo

KARACHI: PakistanÃ¢â¬â¢s information technology (IT) industry has been able to achieve exports worth $72 million in the financial year 2005-06 compared to exports of $46 million in 2004-05, a Pakistan Software Export Board (PSEB) statement said on Friday.

Ã¢â¬ÅAccording to statistics released by the State Bank of Pakistan on July 24, 2006 to Pakistan Software Export Board, there is an overall 56 per cent annual increase in IT exports by Pakistani IT companies,Ã¢â¬Â the statement said.

It said Managing Director PSEB Yusuf Hussain appreciated the efforts of the ministry of IT and telecom and congratulated the growing industry on this achievement. He gave due credit to all the stakeholders for the success and promised them continued support from the government through PSEB, added the statement.

Ã¢â¬ÅThe government of Pakistan has been proactively developing the IT sector for the last few years,Ã¢â¬Â it said. Ã¢â¬ÅThe incentives include tax exemption till 2016, establishment of IT parks with low rent, foreign ownership of equity invested in IT and 100 per cent repatriation of profit allowed to IT companies.Ã¢â¬Â

It elaborated major spending had taken place in hardware consultancy services, software consultancy services, maintenance or repair of computers, export of computer software and other computer services.

The maximum contribution to these earnings had come from computer software export, accounting for 63 per cent of the total exports, with an overall increase of 44 per cent compared to computer software exports last year, it added.

Ã¢â¬ÅThe top five companies that have contributed the maximum share to IT exports are Netsol Technologies, Ovex Technologies, TRG Private Ltd, Systems Private Ltd and Elixir Technologies,Ã¢â¬Â said the PSEB statement.


----------



## sigatoka

Neo said:


> Ã¢â¬ÅThe government of Pakistan has been proactively developing the IT sector for the last few years,Ã¢â¬Â it said. Ã¢â¬ÅThe incentives include tax exemption till 2016, establishment of IT parks with low rent, foreign ownership of equity invested in IT and 100 per cent repatriation of profit allowed to IT companies.Ã¢â¬Â


 
Giving tax breaks and subsidising rents selectively for certain industries creates distortionary effects in the economy and does not contribute to maximising overall welfare of the nation. 

A lower tax rate for IT results in a higher tax rate for all other industries. Giving subsidies for rent to IT sector means taxing all other industries more. 

The different treatment of industries leads to competition for all industries to lobby for favourable treatment. This lobbying costs the economy resources which is a total waste. 

100% repatriation of profits should be a policy allowed for all investment within the nation. It will increase investment in the country across all industries. Secondly it will cut down on the wasteful costs that businesses and individuals engage in sending money outside the country illegally. This is also a deadweight loss. 

I personally have never understood the speacial treatment of the IT sector. I mean, helping the textile sector at least has the benefit of increasing employment greatest for tax dollor forgone. (Textile sector is extrememly labour intensive.) Secondly helping the textile sector at least has the positive impact on the poorest sections of society (usually women from poor background) while the IT sector is dominated by people who are already intelligent and middle class. All of us abhor the idea of taxing the poor more than the rich (% wise) and yet most do not oppose the helping of the rich mroe than the poor.


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## Owais

*Used car imports strike down resale value of local cars* 

KARACHI:At least 61,479 used vehicles have thus far been imported into the country since the government permitted import of used vehicles, which has not only struck down the &#8216;on-money&#8217; on locally manufactured new cars, but also made a significant difference in the resale value of these vehicles. 

The government had allowed import of used cars in the budget for the financial year 2004-2005 in view of the ever-increasing demand of vehicles in the country.

Dealers here told that the local made used cars, which were earlier available at Rs450000, could now easily be bought in the range of Rs350000 to Rs375000.

However, they were of the view that the slump in the demand of the locally made cars would be short-lived, as the non-availability of the spare parts of the imported used cars has already started proving to be a source of trouble for the buyers, which would again drive them back taking interest into the locally manufactured vehicles.

Meanwhile, following the ban on the import of more than five-year-old vehicles by the government in the current budget has resulted into the swelling of &#8216;on-money&#8217; on locally manufactured new cars, which has rocketed high by 100 percent during one-month only, market sources told.


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## Owais

*IFC to provide help in energy, communication sectors* 

ISLAMABAD: International Finance Corporation (IFC) is ready to provide financial assistance to Pakistan for the energy sector and National Highway Authority projects.

IFC Acting Country Director, Nadeem Siddiqui told this here in a meeting with the Advisor to prime minister for finance, Dr. Salman Shah. 

He told that the energy, electricity and communication sectors in Pakistan have immense potential for development and IFC wanted to extend financial cooperation in these sectors.

Pakistan infrastructure project development policy also came under discussions during the meeting.


----------



## Owais

*UBL expands overseas network* 

DUBAI (August 06 2006): United Bank Limited, Pakistan's third largest commercial bank owned by the Consortium of Abu Dhabi Group and Bestway Group of UK, announced its new strategic initiatives in the Middle East and its network expansion at a press conference here on Saturday.

Atif R Bokhari, President and Chief Executive Officer of UBL, said that commercial banking has proven to be the core strength of UBL in the Middle East.

The bank is focusing across the spectrum on contracting, real estate, trading, downstream oil and gas industry and participating in financing of infrastructure projects of national importance.

The bank has redefined product parameters and recently launched a highly competitive mortgage finance product in UAE. By next September, debit card facility will be introduced here, which will be followed by Qatar and Bahrain by the year-end. To enhance market reach, the bank is in the process of setting up various electronic banking service units across UAE. Moreover, it is also expanding its ATM network at airports, shopping malls and other prominent public places in the Middle East. The branches are being renovated and upgraded to state-of-the-art showroom outlets for maximum customer convenience. The franchise is underway to open a branch each in Doha and Aden during current year.

To expand its overseas franchise, the bank recently established representative office in Almaty, Kazakhstan. With average GDP growth rate of 9 percent per annum for the past five years and, being the second largest oil producing country on the Caspian Sea, there exists immense business opportunities in Kazakhstan, including the banking sector.

The Representative Office of UBL, which will act as a hub for operating in other CIS countries, will focus on capturing increasing trade flows between Kazakhstan and UBL franchise countries.

New initiatives from the bank include the signing of a Memorandum of Understanding (MoU) between UBL and China Development Bank to establish a co-operative partnership to promote bilateral trade between Middle East/Pakistan and China.

China Development Bank (COB) is the largest policy bank in China and in recent years has shown keen interest in enhancing China's active role in economic co-operation with the Middle East countries and Pakistan.

UBL and COB will work jointly to promote commercial ties between China and UBL network countries in the following areas of mutual co-operation:

Use of combined network of both banks to develop a platform to promote commercial ties among the Gulf investors and Chinese counterparts;

Correspondent banking relationship between UBL and CDB financing significant trade business between GCC and China;

Holding of 'mad shows' in China, United Arab Emirates and Qatar to enhance the awareness of investment opportunities in China among investors of Gulf countries, and vice versa

United Bank is also considering to set up its representative office in Beijing, for which approval from the State Bank or Pakistan has already been obtained.-PR


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## Owais

*Rules of business: top bureaucracy considering massive changes* 

ISLAMABAD (August 06 2006): The country's top bureaucracy is mulling for massive changes in the rules of business with the provision to make politicians accountable for wrongdoings. Official sources told Business Recorder that the Secretaries' Committee, comprising all Federal Secretaries, in its recent meeting observed that the bureaucracy acts on the directives of respective ministers.

But later the administrative Secretaries are made responsible for what the ministers did during their tenure.

"Minister Incharge of a ministry, instead of administrative incharge (Secretary), should be accountable to the subcommittees of National Assembly and Senate and Public Accounts Committee (PAC)," sources said quoting some of the committee members as suggesting.

They said that Prime Minister Shaukat Aziz has already agreed to incorporate changes in the law to protect the bureaucracy from National Accountability Bureau (NAB) and other agencies so that they could take decisions in the national interest.

The bureaucracy is of the view that the Principal Accounting Officer (PAO), who is usually the Secretary of the ministry, has no executive authority over the autonomous organisations; even then he is held responsible for their actions before the PAC, sources said.

"The prevalent procedure should be reviewed and a staff officer of sufficient seniority, with requisite manpower, be provided to each PAO," the committee opined, according to sources.

Sources said that the Secretaries' Committee showed particular concern over the shortage of human resource available to the government and the major reason for this was cited low salary package in the public sector as compared to private sector.

The committee observed that the well educated and outstanding youngsters were no longer joining government service and the government should review its package being offered to the newcomers and existing officers, sources said.

Former Governor of State Bank and Chairman, National Commission on Government Reforms (NCGR) briefed the meeting that the Commission would recommend attractive remuneration package for new entrants through open, transparent merit-based recruitment at all levels.

Performance-based promotions and career progression for all public sector employees, with compulsory training at post-induction, mid-career and senior management level would be made part of the reforms package, sources quoted him as saying.

"Grant of living wages and compensation package, including decent retirement benefits, would be offered to all civil servants," sources quoted Dr Ishrat as saying.

He said that NCGR would recommend to the government for creation of all Pakistan National Executive Service for senior management positions drawn through competitive process from the federal, provincial and district level civil servants and outside professionals.


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## Owais

*Pak-US investment treaty to be finalize in next round: Humayun* 

WASHINGTON: Commerce Minister Humayun Akhtar Khan said both Pakistan and the United States believe that a bilateral investment treaty is "doable" and expressed the hope that next round would be conclusive in reaching an agreement on it.

The Commerce Minister also told a Press Conference that his meetings with senior US officials and roll-out of a study on Pakistan-US free trade agreement have bolstered prospects to that end.

"Bilateral investment treaty is an investment arm of the FTA, and we hope to have conclusive next round on the issue - such a treaty would send a positive signal to US entrepreneurs that Pakistan is a favourable investment destination - and greater flow of investment is what we want to maintain our high growth." 

The Minister hoped that something would be on table before the US Congress vis a vis BIT early next year. 

He said during his several interactions with the business leaders and US lawmakers on the Hill, he quashed concerns that an FTA between the two countries would harm the local American textile industry.

"We are not seeking unilateral concessions or access, the US companies can also have access to Pakistani market through the free trade agreement.Ã¢â¬Â he added.


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## Neo

SIALKOT (August 06 2006): Small and Medium Enterprise Development Authority (Smeda) has prepared a multi-dimensional strategy for the modernisation of Sports goods industry especially the soccer ball manufacturing sector enabling it to cope with the new challenges of global market.

Official sources told Business Recorder here on Saturday that under the programme Sports Industries Development Centre (SIDC) costing Rs 273.11 million would be established shortly in Sialkot.

The Main concept of the project was to enable sports goods sector to adopt new technology of mechanised ball, which was threatening the current hand-stitched inflatable soccer ball.

The main benefits to amass from the project were to facilitate in sustainable Pakistan's position in international market of hand-stitched inflatable balls in general and soccer ball in particular, provide skilled workforce to the sector, help develop imported machinery locally through reverse engineering, develop an indigenous patent for mechanised soccer ball and get it registered internationally, provide assistance in setting up mechanised ball production lines in individual industrial units, developing proto type balls for the industry and developing quality vulcanisation and past molds.

The Sports Goods sector of Sialkot was the main export sector of the city with total exports of about $350 million per annum. The city caters to 85 percent of total world demand of hand stitched inflatable balls, which means around 40 million balls annually worth $210 million.

Sialkot globally known for production of value-added products and quality production of sports goods, surgical instruments, leather garments, musical instruments and sportswear etc and contributing $800 million annually to national exchequer.

The local soccer ball manufacturers were facing serious threats in the form of "Thermo-Molded Ball" that uses medium end technology to produce a ball having most of the characteristics of hand stitched ball.

Under the plan SIDC will introduce thermo-bonded ball technology in Sialkot industry. The SIDC would provide technical know how, trained labour force, reverse engineering prototype development and mold making services besides, the centre will also manufacture and sell thermo-molded balls to the exporters on order.

The capacity of the centre on single shift basis would be 5000 balls per day while the centre will generate employment opportunity for 432 persons.

According to a rough statistics the balls were stitched by a work force than 60,000 including female stitchers and exported to world market.


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## Neo

Sunday, August 06, 2006 

ISLAMABAD: Iran has sought transit facilities from Pakistan in order to increase its trade with China as the two countries are eying an increase in trade to $15 billion within the next few years, a senior government official told Daily Times on Saturday. 

Iran has sought transit facilities from Pakistan and we are negotiating the issue with Iranian authorities, the official said. 

Tehran-Beijing trade grew by 50 percent in 2005. Iran-China trade in 2005 was valued at $10 billion in 2005 compared with trade worth $200 million in the previous year. Iranian and Chinese experts say bilateral trade could reach $13 to $15 billion by the end of 2010, according to the official. Iranian exporters are seeking better access to the Chinese market and, therefore, the Iranian side has been seeking transit through Pakistan. If this was allowed by Islamabad, Tehran-Beijing trade will substantially increase. 

Iranian goods especially manufactured in north-eastern parts of the country will have easy access by road via PakistanÃ¢â¬â¢s border with the Peoples Republic of China.

This proposal was also discussed at the recent meeting of the Pak-Iran Joint Economic Commission (JEC). Iran has also taken up the issue with Pakistani authorities at a meeting of the Pak-Iran Joint Committee on Road Transportation held in Zahedan, Iran, the official added. 

At the same meeting, transport companies from the two countries agreed to cooperate on passenger transport. There were also discussions regarding the easing of visa restrictions for drivers and passengers. 

The official said Iran was keen for Islamabad to act quickly on the issue as currently bilateral trade between China and Iran was in ChinaÃ¢â¬â¢s favour. Iran wants easy access to Chinese market where Tehran believes it can compete with other manufacturers on quality. Iran, at different meetings with Chinese authorities, complained about what they called, the poor quality of some Chinese goods. 

The official said Pakistan has been under pressure from Afghanistan, India and Central Asian Republics to open the countryÃ¢â¬â¢s roads for trade. Afghan President Hamid Karzai has raised the issue with Pakistani authorities on several occasions for India and Afghanistan to be allowed to trade via Pakistan. However, Pakistan has not agreed to the terms being demanded by neighbouring countries. Iran is yet another country wanting Pakistani land routes to be used for trade with China. An official said Pakistan was still considering IranÃ¢â¬â¢s request. 

The official, however, was optimistic due to the recent statements made by President General Pervez Musharraf about the use of Gwadar Port as an energy corridor for China and other regional countries. However the official emphasized that the comments had to be assessed according to their context. China is eager to increase cooperation with Iran in the energy sector as ChinaÃ¢â¬â¢s growing economy needed more and more energy to maintain the pace of economic growth, the official added.


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## Neo

Sunday, August 06, 2006 

KARACHI: The countryÃ¢â¬â¢s trade deficit may cross $15 billion in the current fiscal year as the central bank has predicted that the countryÃ¢â¬â¢s imports would total $34 billion while exports would total $19 billion for the 2006-07 fiscal year.

Research Head at Invest Capital and Securities Khalid Iqbal Siddiqui said: Ã¢â¬ÅIn the wake of the huge trade deficit that the country is facing right now, we feel that there is a need to correct the imbalance prevailing in the economy.Ã¢â¬Â

Two weeks ago, the State Bank took steps to boost the countryÃ¢â¬â¢s exports by reducing the export finance rate to 7.5 percent from 9 percent. 

Ã¢â¬ÅThe recent measures taken by the State Bank will encourage exporters, but it will take time for the measures to produce results as the additional capacity is going to be built and then output will be received and exported,Ã¢â¬Â Mr Siddiqui said.

According to trade figures, the import of textile machinery (which produces PakistanÃ¢â¬â¢s major manufactured exports) is only 3 percent of the total $28.5 billion import bill. The analyst said there would be pressure on the balance of payments as imports continue to rise. These steps will ultimately have to focus on the promotion of exports and the curbing of imports.

Petroleum group: Imports under the petroleum category grew by 67 percent from $3.99 billion to $6.66 billion during 2005-06. The increase in the petroleum import bill represented $2.66 billion, or 33 percent of our incremental import bill.

The reason for this increase was not only high oil prices, but also the higher quantity of oil imported, especially during the latter half of the fiscal year. The analyst said more oil was needed to fulfill the energy needs of the country because of lower rainfalls last year. Lack of hydropower resulted in the higher use of thermal power plants, which contributed to the increase in the oil import bill.

Agriculture and Other Chemicals: The fertiliser deficit continued to widen as imports under this group grew by 14 percent from $3.6 billion to $4.1 billion. Manufactured fertiliser is one of the key contributors to the increase in agri imports.

Fertiliser: Fertiliser imports grew by 54 percent from $417 million to $643 million. These imports were due to a shortage of fertiliser in the country, which is due to aggressive lending to the agri sector. Imports of insecticides fell by 18 percent from $140 million to $115 million during the last fiscal year.

Metals group: The growth in the metals group shows that the economyÃ¢â¬â¢s fundamentals are improving as the consumption of steel is the barometer for industrialization in any economy, but the case in Pakistan is slightly different. 

Imports in the metals group soared as Pakistan Steel Mills developed a technical fault, and therefore steel had to be imported for normal consumption, as well as for the earthquake-affected areas.

Also the increase in the prices of steel contributed towards the higher import bill for the metals group. Imports under this group grew by 48 percent from $1.2bn to $1.8bn. The incremental amount of $0.58bn, or 7 percent of the increase in our import bill, could have been averted had Pakistan Steel Mills been functioning properly.


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## Neo

KARACHI: The US-based WYSE Technology Incorporation - a pioneer in thin computing - is considering making Pakistan a hub of its commercial activities in the South Asian region, industry sources said on Saturday.

Ã¢â¬ÅPresident and CEO of WYSE Technology Dr John Kish is due to visit Pakistan later this month,Ã¢â¬Â said a source in local IT industry close to the development.

Ã¢â¬ÅThe convergence of more powerful networks, dramatic growth in wireless devices and rapid adoption of new technologies in markets like India and China make this the right time for WYSE to expand its lead in the thin-client market and deliver entirely new computing benefits to customers around the world. IÃ¢â¬â¢m thrilled to take on that challenge,Ã¢â¬Â he quoted Dr John Kish as saying.

NC Incorporation Pakistan had already been appointed as authorised distributor and service centre of WYSE Technology in the region and had included MCB Bank, Allied Bank, EFU, Bank Alfalah, Ibrahim Fibre, Gul Ahmed and others in their clientele, he added.

Founded in 1981, WYSE Technology is a technology developing company headquartered in San Jose, California, USA, with offices worldwide. The company introduced economical, ergonomic and attractively designed terminal products of high quality and reliability.

Ã¢â¬ÅRecently, global technology analyst International Data Corporation announced in their fourth quarter 2005 report that WYSE remains the leader in all regions, with 44.2 per cent market share in the US, 37 per cent in Asia Pacific and 27.2 per cent in Western Europe,Ã¢â¬Â added the source.


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## Neo

*Pakistan to produce 0.5m cars and 1m motorcycles by 2010* 


ISLAMABAD (APP): Pakistan will be producing 0.5 million cars and 1 million motorcycles by the year 2010 said Chief Executive Officer (CEO) of Engineering Development Board (EDB) Imtiaz Rasgtar here on Saturday. He said that by the year 2010 CNC Machine Tool population requirements would increase to 152,460 as compared to current 9,413. The growth in domestic appliances manufacturing is also encouraging, he added. 

He stated this while speaking at a meeting of potential investors in the Machine Tools Assembly and officials of Engineering Development Board held here today. The meeting decided to form a task force for drawing a road map for development in the budget and trade policy. 

He said that it provides the base of strong and growing economics. CNC Machine Tool Assembly was also essential for industrial growth and enha-ncement of competitiveness, he said adding, its role in economical production of standardize product was vital. He said only production of 0.5 million cars will require machining of 65,000 tons of ferrous castings, 15,000 tons of forging, 40,000 tons of aluminum casting, production of 60,000 tons of plastic and 32,000 tons of rubber parts. 

While listing incentives by government of Pakistan, he said, the EDB realizing the need, recommended the initiative for promotion of CNC Tool Assembly in Pakistan and CBR in acknowledgement of these recommendations annou-nced 0% duty on raw material, sub-components, components and sub- assemblies in the current budget. The CNC machine tool assemblers have choice of foreign or own logo, joint ventures, technical collaboration and assembly by themselves. He recommended the last choice on account of various advantages. Giving the world's scenario, CEO said that China was the top importer for 2005 with a figure of $ 6.7 billion. USA followed it with a figure of &3.87 billion. 

Germany, Korea, Taiwan, Italy and France were the other main CNC Machine Tool importers. On the export side, Japan was leading with a figure of $ 6.46 billion. Germany was on 2nd position with a figure of $ 6.21 billion. Italy,Taiwan, Switzerland, Korea and USA were the other main exporters.


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## Neo

ISLAMABAD, Aug 5: Prime Minister Shaukat Aziz said on Saturday that the government was committed to bringing qualitative improvement in the life of people through income-generating activities and the network of micro finance had been expanded to ensure that benefits of growth trickled down to the grass-roots level.

Talking to National Rural Support Programme Chairman Shoaib Sultan, the prime minister said that the NRSP was an important facet of the governmentÃ¢â¬â¢s policy to get the people out of the poverty net and improve their standard of living by providing them better facilities. 

DRINKING WATER: Presiding over a meeting held to review the goals and targets of the environment ministry, the prime minister reiterated the governmentÃ¢â¬â¢s commitment to provide clean drinking water to every union council by 2007.

He asked the ministry to expedite implementation of the programme to ensure its timely completion.

He said water borne diseases were one of the major public health hazards and the government would spend about Rs7.5 billion on the Clean Drinking Water Programme.

The ministry was asked to focus on reduction of emissions of vehicles to bring them at par with the Euro Standards, operationalisation of the Clean Development Mechanism as per the Kyoto Protocol, preparation of an action plan for implementation of the National Environment Policy, reduction of industrial pollution and increasing forest cover through the National Afforestation Plan.

To keep the environment clean, all public transport will be converted to compressed natural gas and the environment ministry will prepare a plan in this respect.

The ministry was asked to expedite implementation of bio safety guidelines so that the country could benefit from the changes brought about by biotechnology, particularly in the health and agriculture sectors.

The Environment Protection Agency was directed to play a more effective role in the implementation of National Environment Policy and to increase coordination with other federal and provincial departments.

The meeting was informed that under phase-I of the Clean Drinking Water Programme, 554 water filtration plants had been installed in various parts of the country and 6,005 would be installed under phase II, for which a large number of sites had been selected.


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## Owais

*Proposal for PSM sell-off postponement turned down* 

ISLAMABAD (August 07 2006): The Ministry of Industries and Production has turned down a proposal of Pakistan Steel Mills (PSM) Chairman in which deferment of the privatisation process was pleaded. Sources in Privatisation Commission (PC) told _Business Recorder _that the PSM Chairman, in a letter to the Ministry on July 14.

He had asked for postponing privatisation of PSM and had sought a financial package for its expansion, but the Ministry in its letter of July 29 rejected the proposal, saying that it was not feasible.

Sources said that the Supreme Court, in its short order held that "the approval for privatisation of PSM by the Council of Common Interest (CCI) on May 29, 1997 continues to hold the field. But in view of the developments that have taken place during the intervening period and the stand taken by the counsel for the federal government that the referred order was never recalled and the stand taken by the counsel for the PSM that the matter of its privatisation had been dropped subsequently, by way of propriety, it would be in order if the matter is referred to the CCI for consideration."

According to sources, the Privatisation Commission was asked to indicate the factual position with regard to any decision to drop PSM from the privatisation list, while the Ministry has clarified that there was no such decision in its record.

The Ministry also provided statement indicating, in chronological order, the history of privatisation and decisions relating to restructuring of the mills.'

Sources said that the Privatisation Commission is of the view that PSM should remain on the privatisation list for the following reasons, beside other reasons:

-- The PSM plant is outdated and inefficient. It has never achieved its designed production capacity of 1.1 million tons per annum, which in any case is sub-optimal.

-- Huge investment (estimated $1 billion) is required to increase its capacity to 3 million tons per annum to make it more economical. This huge investment could be better made by the private sector, which will also introduce new technology, improve competitiveness and transform the PSM into a commercially viable unit in the long run.

As regard the need for critical repairs, the Prime Minister had directed the newly constituted PSM Board of Directors on February, 10, 2005, that critical maintenance could be undertaken side by side with the privatisation process to ensure that the plant runs smoothly.

Despite tariff protection, the PSM has incurred heavy losses ever since it commenced production in 1984. After restructuring, its financial performance improved significantly during the past four years due to high international steel prices and margins as the steel industry globally hit a historic peak.

The government's decision to directly pay interest/mark-up on its Rs 7.8 billion subordinated loan and allow its mark-up-free loan of Rs 825 million also contributed to its improved performance.

The PSM is neither a "strategic" industry nor it produces specialised steel used for any strategic purposes. It is not a dominant player in the steel market and has less than 25 percent market share. The steel demand is approximately 4.5 million tons per annum. Two million tons approximately is produced by a large number of small private sector units and the remaining demand of more than 1.5 million tons is met through imports.

As the CCI has approves PSM privatisation in its meeting a few days earlier, the Privatisation Commission would pursue necessary pre-qualification and valuation process and documentation in accordance with the rules and regulations as well as relevant observations of the apex court, the Ministry said, according to sources.


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## Owais

*Huge trade deficit poses threat to economy: SBP* 

ISLAMABAD (August 07 2006): Fuelled by a huge trade deficit, Pakistan's current account deficit during 2005-06 reached a worrisome 4.7 percent ($5.683 billion) of the gross domestic product (GDP), posing a threat to the economy simultaneously on both internal and external fronts.

The State Bank of Pakistan (SBP) on Sunday reported that the current account deficit was the largest, both as a share of economy and in dollar terms. During the period under review (July-May 2006), the current account deficit, excluding official transfers, grew by more than 218 percent to $5.683 billion, against $1.784 billion of previous fiscal year.

It is worth mentioning that owing to higher than expected trade deficit, the Finance Ministry revised the target for current account deficit and set it at $5.137 billion (4.2 percent of GDP) against budgeted target of $2.7 billion (2.19 percent of GDP) for FY06. But, at the end of the year, it breached the ministry's target by a sizeable margin.

According to independent economic experts, this external disequilibrium in the shape of current account deficit may have a significant impact on the value of the rupee--a matter attracting keen attention around the country. Besides, it would translate into a large increase in Pakistan's net foreign debt position. A large and growing public debt could also eventually put pressure on interest rates and crowd out private investment.

The government's economic managers, on the other hand, are of the view that Pakistan is enjoying an economic boom, and the current account was manageable by borrowing from abroad, remittances, drawing down reserves and inflow of investment.

The country has witnessed this current account imbalance as trade deficit (in goods and services) jumped to $12.84 billion during FY06 from just $7.81 billion in FY05. The trade deficit figures are arrived at using free-on-board value of imports and exports.

The central bank's data shows that goods imports stood at $24.984 billion whereas exports totalled $16.50 billion, thus leaving a trade imbalance of $8.44 billion. The services account also witnessed a large imbalance of $4.40 billion during Fy06 as inflows under this account stood at $3.748 billion and outflows totalled $8.15 billion. The factors responsible for this huge deficit were higher outflows on account of transportation, travels, insurance, construction services, royalties and licence fees.

Pakistan had to spend $2.856 billion on transportation account, whereas its earning under this head was only $1.06 billion. Thus, the net deficit in the services account due to chartering of vessels for imports, exports shipment was $1.79 billion.

Another factor responsible for big services' account deficit was a net outflow of $1.185 billion on account of overseas travelling. Pakistan had to spend $1.40 billion to finance personal and business-related travelling abroad of individuals and groups whereas it earned only $216 million under this account. Hence, the services account deficit in FY06. The same applies to spending on insurance and royalties and licence fees paid to international organisations and their employees operating in Pakistan.

The imbalances in trade and services were so large in FY06 that the current account turned negative despite a strong build-up in current transfers. Net current transfers rose to $10.62 billion during the period, from $8.768 billion in FY05.

Current transfers went up as Pakistan received $4.60 billion in workers' remittances or foreign exchange sent home by overseas Pakistanis, up from $4.17 billion in previous year.

A big increase in foreign currency deposits, held by resident deposit holders also boosted current transfers. However, it declined to $312 million against $521 million primarily because of the stable rupee.

Independent economists have also questioned time and again that how long the trade deficit would continue on that trajectory without disrupting the economy? And, how much longer can Pakistan continue to spend more than it earns, and support the growth? And, are the inflows sustainable in the long run?


----------



## Owais

*Solar energy a vital alternative source of power* 

LAHORE: Following international oil prices shooting sky-high, the resurgence of interest in the solar energy as an alternative source of power has significantly gained currency in the country.

Statistics available here shows that there are still some 40,000 villages in Pakistan deprived of electricity, while 7,000 of them are located at places 20-kilometres away from the nearby grid stations, where making the power facility available would be a difficult task.

In such a backdrop, the use of solar energy as an alternative source of power is being given due priority by the government for meeting the acute power shortage in the country these days.

Officials told that the costly imported appliances for harnessing solar energy were an impediment, which has now been removed by manufacturing local solar energy panel, which costs Rs52000 each working for 25 years, while the battery good enough for 2 years were being manufactured for Rs8000, which thus making a complete unit could give an output of 220 watts of electricity.

Besides domestic use, solar energy getting a boost here could also be used for cottage industries


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## Owais

*$150 billion investment required in energy sector in next 25 years* 

FAISALABAD (August 07 2006): The total investment requirements in the energy sector during the next 25 years were estimated at $150 billion ($50 billion in the public sector and $100 billion in the private sector).

This works out to an annual average of $6 billion ($2 billion in the public sector and $4 billion in the private sector) and calls for a doubling of the current investment levels, said official sources.

Energy was the lifeline of economic development. An Energy Security Action Plan (2005-30) had been developed to meet the requirements of Pakistan's Vision 2030 for reliable and quality energy supplies and to ensure that energy deficiency does not become a constraint in development.

The main objective of the energy sector development was to enhance energy supply through an optimal mix of all resources including hydropower, oil, gas, coal, nuclear and renewable energy such as wind and solar. It was planned to optimise utilisation of the country's indigenous resource to reduce dependence on imported fuel. In view of the public sector resource constraints, an important focus was also creating an environment conducive to the participation of the private sector, both international and domestic.

The total primary energy consumption was expected to rise 7 fold from 55 million tonnes of oil equivalent (MTOE) to 360 MTOE by 2030. The requirement for power generation would increase more over eight fold from 19,540 MW in 2005 to 162,590 MW in 2030. It was recognised that Pakistan was running out of useable and affordable energy and more efficient use of energy was absolutely vital. While improving efficiency, a major shift was planned towards coal, nuclear and renewable over the long-term period.

The share of coal in the energy mix was planned to be increased from the current about 6 percent to 19 percent by 2030. However, the energy mix can only be changed gradually over a longer period of time. In the mean time, there was an urgent need for import of gas, both through pipeline as well as Liquefied Natural Gas (LNG).

In the oil sector, it was planned that the number of exploratory and development wells to be drilled would be increased from at least 100 wells per year during 2005-10 to 330 wells per year during 2025-30. Plans were also being made to accelerate the exploration of indigenous coal. The import of coal was also being encouraged in the short term for use along with local coal for industrial purposes and for power generation. Based on energy demand supply gap, there was also an urgent need for import of gas.

Accordingly, various alternatives for import of gas (particularly from Iran and Turkmenistan) were under active consideration at the highest level for finalisation of an option to ensure that the 1st pipeline gas was available by 2010. Establishment of refineries and petrochemical plants in the private sector was also being emphasised.

For rapid economic growth, official sources stated, developing countries like Pakistan need cheap, abundant and an environment-friendly source of energy. Previously, Pakistan's economy has in fact, witnessed a visible and crucial structural shift since 1999-2000.


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## Neo

ISLAMABAD (August 06 2006): Water and Power Minister Liaquat Ali Jatoi on Saturday directed Wapda to speed up their work on the ongoing mega projects and ensure their early completion. Presiding over a meeting to review progress of ongoing mega hydel projects here, he underlined the importance of power sector and declared it as a backbone of economy of the country.

The minister directed Indus River System Authority (Irsa) and Private Power Infrastructure Board (PPIB) to resolve all issues within three weeks so that no negative impression, signal is conveyed to private investors of important hydro power plants. He was briefed about the progress on Munda dam.

The sponsor of the dam informed the minister the project entails a 200m high concrete Face Rock Fill dam, which will have water storage of 1.2 billion cubic meters and have capacity of generating 726MW power.

The project will cost about $1.02 billion, which is totally a private investment. The project is expected to start generation by 2014.

Flood emergency arrangements and Nullah Leh flood relief plan and preparedness arrangements also came under discussion in the meeting.

The minister was informed about damages caused by current flood in Nullah Leh. It was apprised that 57 families who were living along the banks had been shifted to relief centres.

He directed Wapda to streamline telemetry system within two weeks for the satisfaction of all stakeholders.


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## Neo

Editorial:

By Dr Mahnaz Fatima

WHILE support from the government is required to help boost exports, there is much that needs to be done internally to make the industry internationally competitive. This piece focuses on the quality of the internal environment to build competitive advantage in the international market place.

And competitive advantage is based not just on the quality of the product, cost competitiveness and ability to respond to the dynamic environment but also on all those internal factors that feed into the above bases of competitive advantage.

The criteria for international quality awards, therefore, include quality of human resource, of work climate, of management, and of leadership. Only then can quality be built into the products that will sell internationally and will help penetrate the global markets.

Efforts to build quality should graduate much beyond quality control of the inspection or the statistical process control type or even quality assurance through quality processes to building an organisation-wide quality philosophy through total quality management (TQM).

TQM is a company-wide effort supposed to build quality into outcomes and outputs through intense involvement of the workforce who should remain engaged in continuous improvement of products and processes due to the high level at which they should be operating in the needs hierarchy.

Managerial challenge, therefore, lies in enabling the workforce so that it operates at this high a level of motivation and fulfillment. Unless an organisation-wide effort is made to build and sustain competitive advantage, external players such as the government can do little to sustain growth in exports.

In Pakistan, the general belief is that acquisition of ISO-9000 & 14000 certification also certifies international competitiveness. This may not be true especially if the above is viewed as the only sure-fire source for international competitiveness. While the certification facilitates entry into the international marketplace, building competitiveness is a continuous process, especially when this is how the competitors compete in the world markets.

In one export-oriented industry that was surveyed, 90 per cent responding firms were ISO-9000 certified. However, the modal value that occurred most frequently for both the rates of rejection and rework was above five per cent of output. Only one-third respondents relied on modern technology.

And, while all relied on the basic quality control of the inspection type, only about one-third had even reached the stage of quality control of the statistical process control kind. Also, about one-third had reached the stage of quality assurance. Only about five per cent were striving to reach the TQM stage.

Another export-oriented industrial sector had only about 50 five per cent ISO-9000 certified firms and only about six per cent responding firms that were reaching the TQM stage. About 12 per cent responding firms were in the TQM stage in another export-oriented industrial sector surveyed that had only about 41 per cent firms that were ISO-9000 certified. In both these industrial sectors though, the modal value for the rate of rejection and rework was between 5&#8212;2 per cent of output.

With the world trying to approach or even better Motorola&#8217;s &#8220;Six Sigma&#8221; which means only one defect per million units produced and with Japan striving towards zero-defects, the above rates of rejection and rework in Pakistan&#8217;s export-oriented industry present an outlook that requires transformational remedial action.

For, these are not only an adverse reflection on the quality of process and output but these add to costs thereby further eroding competitive advantage.

In yet another export-oriented industrial sector surveyed that had almost two-third firms that were ISO-9000 certified, 57 per cent firms had graduated to quality assurance and about 27 per cent firms claimed to have even reached the TQM stage.

However, the modal value for both the rates of rejection and rework was between 5&#8212;2 per cent of the total output. So, it is not just the prima facie stage of quality management that matters but its effective translation into competitive advantage is what should matter and count.

The above indicates that the road to international competitiveness of export-oriented industry is a long and arduous one. While all players appreciate the significance of quality, the road to this goal is not too clear yet.

For, they started off with ISO-9000 certification viewing it mostly as an entry-level requirement when actually it is a recipe for improvement of quality of processes and products. The goal of ISO-9000 acquisition will remain unfulfilled for as long as the underlying quality philosophy is not internalised.

Then, they are introduced to the jargons of quality assurance and TQM again without absorbing their true meaning. For, some of those surveyed claim to be using TQM without appreciating the concept of &#8220;Kaizen&#8221; that means continuous improvement. Some others claim to be using &#8220;quality circles&#8221; without appreciating the meaning of TQM.

So, even though they try to improve quality through the deployment of jargon, it may not work not until the concepts are appreciated and acted out in the true sense. This essentially requires goal alignment. That is, congruence of personal goals with the goals that should be of the organisation and then getting them to see their long-term personal goal fulfillment through the attainment of organizational goals on a sustainable basis.

Emphasis needs to shift away from short-term financial goals as it obfuscates attempts at long-term organisational development.

And, emphasis needs to shift towards long-term business goals of customer satisfaction from which should flow financial results as a business outcome which relationship the export sector should be able to appreciate. For, long-term financial gain of the shareholders can only be secured through a strengthened competitive position. The above can be communicated through the following steps.

It is very important for export-oriented industries to get to see and understand what the international environment looks like and what Pakistan&#8217;s place is in the global arena.

In this knowledge economy, they also need to know the paths that the world leaders tread to achieve the competitive as well as financial position they have acquired over time.

These paths will demonstrate that there has to be a handle on both the external and the internal organisational environment. Focus has to be balanced between the external inducements and the internal strengths which must be strengthened and weaknesses that must be overcome.

A comparative study of successful global players in contrast with those not-so-successful should highlight the gaps we need to plug to make our internal micro-level operations strong. It is the minds that need to be opened up to be receptive towards another mode of internal operations and working with the key stakeholders of employees, suppliers, environment, government, and customers. This new mindset alone will make a difference.

It is this process of intellectual transformation that needs to be facilitated in a way that the industrial sectors begin to own it as a business purpose and mission. Industry should feel as they though they are doing it themselves. Only then will they take pride in the process of change which will be followed by strong commitment and delivery.


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## Neo

THE recent power outages in big cities including Karachi have brought into focus the need for additional power generation capacity together with revamping of transmission and distribution networks.

To improve energy supply, the government has been working on different options including Iran-Pakistan-India oil pipeline and import of electricity and gas from the Central Asian Region. Hydro power generation by planned large dams is also on the cards.

And the development of alternate energy resources is receiving more attention. The exploitation of the Thar coal mines for power generation is one of the important options.

The $12 billion trade deficit recorded last fiscal is a clear message for controlling big-ticket imports particularly fuel for power generation. Although the local gas is being used for power generation, the gas distribution companies are finding it difficult to make long-term commitments for supply to new power plants.

So, there a strong justification for exploiting Thar coal reserves (Sindh) estimated at 175 billion tons as the government has decided to raise the share of coal in overall energy mix from five to 18 per cent by 2018.

The Sindh government has so far reportedly invested over Rs4 billion on infrastructure development such as roads network, town planning, water, telephone, electricity and power supply systems and other schemes. Work is still continuing.

Wapda is working on 500-kv transmission line to connect the proposed coal-based power plants to the national grid. In addition, it would also construct Rainee-Thar canal to irrigate the region and to meet water requirements of the power projects.

Presently, two power projects are under process at Thar. The Chinese 600 MW power plant based on block-one is stuck due to disagreement on the tariff at which power will be sold in bulk to NTDC.

The American 1,000 MW power plant based on the block-two, initiated on the basis of a study prepared by German consultants, is under further detailed review due to investorsÃ¢â¬â¢ reservations on the availability of underground water required for cooling purposes and consequently for change of project site to a location with abundant water supply.

The prospective investors may assess the respective project parameters and the government might look into their reservations.

There have been reports of coal-based power plants or coal-washing facilities being considered by local entrepreneurs as well. Coal has been used as fuel for power generation in a number of developed counties but Thar coal is said to have a number of special characteristics. Heating value is said to be relatively low, while the level of moisture, ash, volatile matter and sulfur is slightly on the higher side.

These characteristics have implications for plant design as well as supply of coal, disposal of ash and management of environmental pollution. Such matters have also a bearing on the attractiveness of Thar coal for investors.

For the development of this field in the shortest possible time, the federal and the provincial governments might have to reduce investment uncertainties by appropriate measures aiming at good governance, improved law and order situation, construction of physical infrastructure and provision of level playing field to the local and foreign investors.

Some suggestions are offered here for consideration:

The Power Policy-2002 may not provide sufficient incentives to investors to address issues associated with exploitation of Thar and other fields for power generation.

The announcement of a special policy, namely Thar Coal Development & Power Generation Policy may perhaps expedite the project.

Important parameters such as policy on leasing, handling and transportation of coal to site, provision of water, power generation from coal burning, sale of bulk power to NTDC, handling of emission gases, disposal of ash, etc might be discussed and agreed among the major stakeholders.

Efficient use of such power generation while complying with environment considerations may require the use of advanced technologies which promise low emissions from coal-based electricity generation and may push up the tariff for the electricity genera acceptable balance has to be found.

The provincial policies might not be fully appropriate for protection and optimal exploitation of the natural resources in matters such as mine lease period, levying and collecting of royalty, minimizing damage to the landscape, saving the population from harmful pollutants, etc. These might be updated.

The potential investors are likely to adopt technologies which are reasonably modern and tested and at the same time acceptable, both technically and environmentally, to international lenders who are likely to be financing major cost of power projects based on Thar coal. PPIB, NEPRA and the Sindh government might engage at different levels experts who understand these modern technologies and would support it in the design of new policies.

Policy support for research and development of such new technologies with possible technology transfer to developing countries might also be arranged. Natural resources are precious and local population must benefit the most from their exploitation.

It is imperative to build capacity and properly motivate different cadres of the government officials associated in the work pertaining to enhancing capacity for power generation and the purchase of bulk power from the IPPs. Capacity building will not come easy or cheaply. Dedicated efforts and support over a long period are required. Liberal budget for capacity building may also be assured.

Sindh already has a 150 MW coal-based power plants (three units of 50MW each) based on fluidised bed combustion technology from China. The plant managed by Lakhara Power Generator Company, district Jamshoro is also coal-based. This plant, expected of becoming the harbinger of coal-based power generation activities, has been plagued with periodic technical or other problems. It might be revamped and made more reliable.

Wapda has been recently allowed to establish new gas-based power generation capacity. The government might consider allowing Wapda to undertake Thar coal-based power generation plants as well. This might expedite the Thar coal project.

A Thar coal research institute needs to be set up preferably in the mine area and it should be developed into a centre of excellence. It may initially require large financial and human resources which might be made available by the government. It should have the wherewithal to set up pilot power plants and operate them over extended periods to establish the most appropriate technologies for burning of coal, control and collection of gases being emitted, disposal and use of ash that remains after coal burning.

To show its commitment for the development of Thar coal, the government might consider becoming an investor (say with 5-10 per cent equity stake) in the plants to be set up in the private sector. Once the power plants are in commercial operation, the shareholding can be off-loaded, possibly at a profit.


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## Owais

*Exports of goods, services rise by $2.45 billion *

KARACHI: The exports of goods and services during the previous financial year witnessed a rise by $2.45billion.

State Bank of Pakistan (SBP) released figures here showed that Pakistan exported goods and services worth $20.25 billion during July 2005 to June 2006 as against goods and services exports in 2004-2005 amounting to $17.80.

On the other hand, imports of goods and services during the previous fiscal year remained at $33.9 billion, which was at $25.61 billion in 2004-2005.


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## Owais

*2005-06 trade gap surges to $12.112 billion* 

KARACHI (August 08 2006): The trade deficit during 2005-06 has surged to $12.112 billion with imports totalling at $28.581 billion against exports of $16.469 billion. According to provisional figures released by the Federal Bureau of Statistics on Monday, the deficit amounted to Rs 725.285 billion in terms of rupees.

Exports totalled Rs 985.901 billion, against Rs 854.088 billion during 2004-05, showing an increase of 15.43 percent.

Imports during 2005-06 totalled Rs 1.711 trillion, against Rs 1.223 trillion during 2004-05, showing an increase of 39.91 percent. The balance of trade in June, 2006 was (-) 88.508 billion in terms of rupees, and (-) 1.471 billion in US dollars.

Exports from Pakistan during June 2006 amounted to Rs 91,160 million against Rs 89.434 billion of May 2006, and Rs 91.424 billion of June, 2005, showing an increase of 1.93 percent over May 2006, but a decrease of 0.29 percent over June, 2005.

In terms of dollars, the exports increased by 1.77 percent in June 2006 to $1.515 billion, when compared with May, 2006 $1.489 billion, but decreased by 1.11 percent as compared to June, 2005 ($1.532 billion).

Main commodities of exports during June, 2006 were: cotton cloth (Rs 11,536 million); bedwear (Rs 10,575 million); knitwear (Rs 9,936 million); cotton yarn (Rs 8,580 million); readymade garments (Rs 7,904 million); petroleum products (Rs 5,163 million); towels (Rs 3,867 million); rice basmati (Rs 3,269 million); leather garments (Rs 2,379 million); and made-up articles (Rs 1,790 million).

Imports into Pakistan during June, 2006 amounted to Rs 179.668 billion, against Rs 159.086 billion in May, 2006, and Rs 133.036 billion in June, 2005, showing an increase of 12.94 percent over May, 2006 and 35.05 percent over June, 2005.

In terms of dollars, the imports increased by 12.76 percent in June, 2006 to $2.986 billion as compared to May, 2006 $2.648 billion, and by 33.94 percent as compared to June, 2005 ($2.23 billion).

Main commodities of imports during June, 2006 were: petroleum crude (Rs 23,264 million); petroleum products (Rs 19,032 million); road motor vehicles (Rs 9,416 million); iron & steel (Rs 7,082 million); sugar (Rs 5,202 million); [plastic materials (Rs 5,118 million); textile machinery (Rs 3,973 million); palm oil (Rs 3,795 million); fertiliser manufactured (Rs 3,521 million); and electrical machinery and apparatus (Rs 3,259 million).


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## Owais

*Planning Commission approves Rs 5 billion for KMTP* 

ISLAMABAD (August 08 2006): The Planning Commission has approved a Rs 5 billion mass transport plan for Karachi and allocated Rs 500 million as the first instalment to put the new transport system in place on priority basis. The programme has been included in the Public Sector Development Programme (PSDP).

After successful implementation of the mass transport system in Karachi, it will be extended to other major cities of the country.

An official who has been working with Sindh government to finalise modalities for Karachi mass transport system told _Business Recorder _here that the government would extend the project to Lahore, Rawalpindi-Islamabad and other major cities where traffic is a nuisance. According to the PC-1 submitted by Sindh government, the project will be a private-public partnership.

The project will cover the entire Karachi city, encompassing urban intra-city bus routes which operate under DRTA bus route permits. The regulatory and institutional frameworks, in the terms of the study, will encompass the relevant administrative and regulatory structures under Sindh government city district government Karachi (CDGK). The Planning Commission is sponsoring the project.

The PC-1 buses to be operated and maintained by private investors I operators, individually or in the form of syndicate I group I company under the government defined regulatory framework

It indicated that the government has allocated Rs 5 billion to induct 8,000 environment-friendly (CNG) buses under PSDP 5-year phase-wise program.

For 2006-07, Rs 500 million has already been earmarked. However, the provision would be made available to meet the interest part of the buses to be inducted on leasing from financial institutions. Besides, GoP has approved Rs 12 million for detailed study by private consultant in association with foreign input to facilitate the implementation of Bus Reform Program.

Project is included in 5-year plan under PSDP funding provision. It said Rs 400 million were provided in PSDP for 2005-06, which could not be utilised for want of necessary project formalities/studies. However, Rs 500 million has been allocated for 2006-07 for defraying part of interest on loan from financial institutions to be secured by private investor/operators individually or in the form of syndicate/group/company under the government-defined regulatory framework.

The main objective of the project is to establish an integrated, efficient, economically sustainable affordable and market-driven quality urban transport system, which PC-I showed that the plan will support rapid economic development/poverty alleviation.

Sindh government added that a strategy has been framed to provide an urban transport system under a reformed program of regulation aimed at maintaining a balance between the provision of fast, frequency, reliable, comfortable, safe and affordable service to the public.

The need for operators is to make a reasonable return keeping the environment-friendly standards of buses and road/service discipline.

In line with the above objectives and strategy, a project has been conceptualised to encourage private sector's interest in transport sector of the city and the country at large. The government has decided to provide additional comfort to private sector to bring new CNG city buses on leasing from financial institutions. It has agreed to pay interest portion to this effect. Besides, Sindh government and CDGK would ensure investment friendly environment to the private sector to ply safe, comfortable, reliable and affordable public transport on sustainable basis ensuring reasonable profit. The financial institution and the private investor/operator will mutually decide the terms & conditions of the payment and the repayment plan. The CDGK would, however, play its regulatory role to ensure that the interest of the operators remains intact in the scheme by payment of reasonable equity.

Lack of proper transport facility is one of the major obstacles for development in the countries where economy is progressing rapidly but infrastructure facilities are lacking. Pakistan is a glaring example of such conditions.

PC-1 said that in order to meet the pace of rapid economic development, comprehensive transport sector development projects need to be implemented and accordingly an efficient public transport network with all needful infrastructure facilities is required to keep the wheel of Karachi and country's economy as a whole well lubricated, besides, to ensure the health of the habitants, clean air and noise pollution free environment is quite essential.

It said Karachi has been facing enormous challenges with special reference to deteriorating environment due to outdated vehicles plying on the roads without any vehicle fitness check, import of diesel with higher sulphur contents and substandard illegal import of fuel from Iran, rapid growth of new vehicles on roads (400 +vehicles daily added on city roads). The city roads are not vehicle-worthy and lack of public awareness and education, and above all rapid growth of population are attributed to environmental degradation. In view of the existing situation, the government has rightly decided to promote use of CNG fuel in public transport. Besides several mega transport sector infrastructure development projects have been initiated including Lyari expressway, northern bypass, Elevated expressway at Shahrah-e-Faisal and construction of several flyovers/underpasses, bridges and road network improvement programs. Further, the government has geared up its efforts to implement mass transit project on city priority, corridors as recommended by the World Bank study.

The bus reform program in question is in line with the government strategy and plan to ensure friendly environment and better public transport facilities to city commuters by replacing old buses and removing congestion to introduce road discipline.

The induction of CNG buses in Karachi with catalytic converter (to protect NOX-emissions) with Euro-Ill compliant city standard buses would require huge investment in fuelling infrastructure. Fortunately, all oil companies including PSO, Shell, Caltex etc and other private sector working on CNG projects have already assured their interest in establishing CNG filling stations, independently or joining hand with GoP, GOS & CDGK, to facilitate bus reform program. Furthermore, the federal government has already agreed upon to provide duty/tax exemption on import of CNG (CBU/ CKD) buses and CNG kits which would definitely motivate private investors in transport sector and CDGK. Besides, GOS & CDGK are also working on providing a package of incentives for the bus operators to ensure relief in local taxes including registration fee.

The bus routes in Karachi have developed over decades without much strategic planning and currently no planning function exists. The routes are selected by private operators on their own criteria of financial viability by opting location routes without any social considerations, with little planning by the DRTA.

Presently, 207 routes have been identified under the operation of minibuses, coaches and large buses. The study has undertaken preliminary route network surveys, and a database has been established to analyse the operations. However, analysis has proved difficult due to the paucity of information in various departments (also due to the fact that many records are kept manually) and the actual 'on-road' status has been difficult to assess accurately.

However, analysis of the collected data gives a reasonable picture of the status of the present operation with sufficient information available to determine travel patterns and demands. It is evident that the present fleet, being mixture of large buses and minibuses, operates from all points to any destination without co-ordinated planning;

What is clear is that the task of route rationalisation cannot involve rearranging the present routes as the route design is haphazard, with little pattern or system approach evident. The whole network is a collection of single routes heading in all directions.

Attempting to rearrange and create order from the present situation would be time consuming and perhaps yield little benefit, as the whole network needs to be redesigned along a strategic planning approach, based on identified demands (also evident from major route orientation).


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## Owais

*Unemployment declines by 1.2 percent: PRSP third quarter report* 

ISLAMABAD (August 08 2006): Despite PRSP's progress in unemployment and poverty reduction, the government still faces challenges like high levels of rural poverty, rise in income inequality, gender gap in health and education, youth unemployment, sustainability in high economic growth and achievement of Millennium Development Goals (MDGs).

This is indicated in the Poverty Reduction Strategy Paper (PRSP-I) third quarterly progress report for FY2006, released by the finance ministry on Monday. "To sustain this growth momentum, more efforts and more growth critical reforms would be required," it added.

The report says unemployment level during July-December 2005-06 has declined by 1.2 percentage points to 6.5 percent as compared to 2003-04.

During July-December 2005-06, unemployed labour force stood at 3.32 million, of which 2 million unemployed were living in rural areas and 1.32 million in urban areas.

The gap between the rich and the poor (income inequality) has widened and the overall ratio has increased marginally from 3.76 percent in 2000-01 to 4.15 percent in 2004-05.

In urban areas, the gap between the rich and the poor has widened relatively more from 10.40 percent in 2000-01 to 12.02 percent in 2004-05 compared to the rural areas, where the gap remained more or less stagnant: 2.22 percent in 2000-01 and 2.19 percent in 2004-05.

As the PRSP-I has completed its three-year term in June 2006, the finance ministry has planned to prepare PRSP-II for 2006-09 period to address these challenges.

To formulate PRSP-II, ongoing process of dialogue is enriching the strategy with the input of civil society and the poor. The government has started a dialogue process with the poor, development partners, provincial governments and civil society representatives. This process will lead to ownership of PRSP-II by all segments of the society and will also help in implementing the strategy.

An effort was made to include diverse groups of participants, including small farmers, daily-wage labourers, employees of public and private sectors, unemployed, mustahiqeen of Zakat, people engaged in small enterprise, students etc.

Main considerations for PRSP-II would be building upon lessons learnt in PRSP-I, ensuring macroeconomic stability and sustained high and broad-based economic growth by taking advantage of opportunities offered by globalisation, while at the same time unleashing the potential of domestic commerce, reducing inequalities and maximising employment generation, direct public policy debate toward needs of the poor.

It would also aim at empowering the poor, especially the women and the most deprived, by increasing access to factors of production, particularly land and credit.

The ongoing PRSP process aims for a complete alignment with the MDGs and the Medium-term Development Framework (MTDF). While the MTDF provides a strategy for translating the 'Vision 2030' into action during 2005-10, its emphasis is on sustained long-term growth.

The PRSP on the other hand presents the strategy to ensure the growth is broad-based and leads to effective poverty reduction.

The report further says, "Pakistan is well ahead of its target on PRSP budgetary expenditures, which increased by 34.3 percent to Rs 258 billion during third quarter of FY2006 over FY2005 in the same period.

During the same period, as a percentage of GDP, these expenditures increased by 0.43 percentage points to 3.35 percent. Increase was also witnessed in micro-credit disbursement, a non-budgetary head of pro-poor expenditure."

Education sector is given the highest priority in terms of distribution of pro-poor expenditures as 37.4 percent of total PRSP expenditures were used for this sector during third quarter of FY2006.

Law and order stands second in priority, as expenditures made on this sector account for 15 percent of total pro-poor expenditures. Share of pro-poor expenditures made on irrigation increased from 11.1 percent during third quarter of FY2005 to 14 percent in FY2006 in the same period. Expenditures made on health and roads, highways and bridges account for 8.9 percent and eight percent, respectively, of the total PRSP expenditures during third quarter FY2006.

It also says the implementation of Tawana Pakistan project was sluggish in translating the envisaged targets. It is being redesigned and has been temporarily suspended. It is a nutrition target programme, which includes serving of meals and micro nutrient supplementation to schoolgirls. The programme has been launched in 5300 schools of 29 poor districts of Pakistan.


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## Owais

*Business community threatens to close down units against KESC inefficiency* 

KARACHI (August 08 2006): Business community of Karachi has warned the government that they will go to any extent if the government failed to make public the Karachi Electric Supply Corporation (KESC)'s privatisation agreement with present owners in next 24 hours.

They also wanted of KESC to announce what fault occurred in power supply due to rains and time period they required to ratifying the defects in next 24 hours.

Leaders of business community claimed that they enjoy full support of the community and they can close down their units if they give a call to do so.

Addressing a joint press conference at Karachi Press Club, Leader of Businessmen Group (BMG), Siraj Kassim Teli said that KESC was privatised to improve working of the utility but instead of improving, it deteriorated further.

Lashing out on the management of KESC, he said it is for the first time in the history of KESC that after rains, power failed and it could not be restored after passing of nine days.

Siraj Kassim Teli demanded of the government to public the privatisation condition documents of KESC within next 24 hours.

He also demanded of the KESC to reveal to the public about the details of faults occurred due to rain and its plan to rectified them and time period it required to do so.

He said that in case of failure to public the privatisation agreement and announcing plan to rectify defects, the business community will be free to decide its future course of action.

President, Karachi Chamber of Commerce and Industry (KCCI) Haroon Farooki said that all major markets including Jodia Bazar, Cloth Market, Sadar, Paper market etc, are without electricity after passing nine days, which hampering business activities adversely.

He urged the management of KESC to rectify the deficits without any wasting time.

Chairman, Site Association of Industry (SAI) Amin Bandookda said that over 40 percent industrial units are still without power in Site industrial area.

He said pointed out that a meeting was held with KESC officer who assured that power would be restored by Friday but these promises remain unfulfilled.

He said that due to power failure, Site area alone suffered around Rs 8 billion production and 100 million dollars exports losses in last 9 days.

He said that many industrialists of Site area have threaten to close down their units, lay off workers and stop payment of KESC bills.

He demanded of the government to allow more companies to establish their power supply units in the city to banish monopoly of KESC.

He also demanded that transmission and distribution be separated.

Former President of KCCI, Zubair Motiwala demanded that Karachi be declared calamity hit area and army engineering core be assign task to restore power supply in the city.

He demanded that payment of KESC bills should be differed for a month whose units remains closed for six days and fix charges should be waved.

Former Chairman SAI, Majied Aziz demanded that inquiry should be initiated against KESC management about utilisation of 100 million dollars grant given for improvement of KESC services.

He demand that a representative of KCCI be included on the board of directors of KESC, Sui Southern Gas Company and Karachi water and sewerage Board.


----------



## Owais

*Seafood production likely to surpass 0.7m tons* 

KARACHI: Seafood production is likely to surpass 0.7 million tons, said Planning Commission sources on Monday.

The seafood production during last fiscal year was recorded as 0.612 million tons and it was likely to surge up to 0.725 million tons.

The development ratio of fisheries sector will be 4.8 percent annually by 2010, the sources added.


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## Owais

*National Bank to sell Saudi bank stake* 


*KARACHI *_(updated on: August 08, 2006, 17:40 PST_): National Bank of Pakistan (NBP), the country's largest bank, hopes to divest its stake in Saudi-based Al Jazira Bank within three months and at a discounted price, a top official said on Tuesday.

The sale would cash in on a 10-fold rise in Al Jazira Bank's share price since 2004, and would complete NBP's exit from a stock it acquired 35 percent of in 1975, analysts said.

The bank said the sale would remove a legal obstacle from its plan to open an NBP branch in Riyadh next year, and that some of the proceeds may be returned to shareholders.

NBP holds around 6.5625 million shares in the Saudi bank, which at Tuesday's price would cost around $548 million.

Analysts said NBP held the stock at a cost of 8.8 Saudi riyals per share, after accounting for share splits and a bonus issue, compared with Tuesday's price of 313.25 riyals.

"Because it is not going to be an open market sale, the likelihood of getting a premium is out of question," said Syed Ali Raza, president of the NBP.

"It would probably be at a discount, and that has been the experience of other foreign banks as well," Raza told Reuters in an interview.

NBP plans to open up a branch in the Saudi capital city of Riyadh in the first quarter of next year, and according to Saudi laws, no institutions can have two kinds of presences in the kingdom, said Raza.

The law also prohibits an open market sale, and thus the NBP can only sell its share to designated institutional investors, mainly pension funds.

"I anticipate that we should be able to divest these shares within three months from now, roughly," Raza said

Raza said the Saudi Arabian Monetary Agency had not set a deadline for the completion of the transaction, but it has to be completed before NBP opens a branch in the oil-rich kingdom.

State-owned NBP has a market capitalisation of around $2.8 billion.

In the year to December 2005, NBP earned a net profit of 12.709 billion rupees, with earning per share of 17.87 rupees.

Raza expected that taxes of around 15-20 percent would be applicable on the deal.

Analysts say the sale would result in a one-off increase in earnings per share of NBP of around 30 rupees even if the stake was sold at a discount of 20 percent, and if 20 percent tax is also paid.

*ONE-OFF DIVIDEND?*

They also expect the resulting extra earning to be paid out as a one-off higher dividend. But Raza said this was yet to be decided.

"This is something we will have to decide, how much to retain, how much to give back to the shareholders," said Raza.

"We are already in the thinking process, but we have not made a decision yet.


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## Owais

*Standard Chartered to buy 81 percent UBL shares* 


*KARACHI *_(updated on: August 08, 2006, 17:26 PST_): Britain's Standard Chartered has finalised a deal to buy around 81 percent of Union Bank Ltd (UBL) for around $414 million, sources close to the deal said on Tuesday.

"The deal has been finalised," said one source.

"They will buy around 81 percent shares of Union Bank at a price of 91 rupees per share," said the source, requesting anonymity.

Another source said an agreement for the deal was likely to be signed in the next day or two.

At 91 rupees a share, the cost of 81 percent of UBL, or around 274 million shares, would be slightly over $414 million.

"As per the laws, there would also be a tender offer in the stock market once the deal is signed," said the first source.

In May, Standard Chartered began due diligence checks on UBL -- Pakistan's sixth-biggest listed lender with assets of over $2 billion and deposits of around 93 billion rupees ($1.54 billion).

Earlier in the day, Standard Chartered's chief executive Mervyn Davies told reporters in London that he was optimistic about sealing a major purchase in Pakistan. Standard Chartered declined further comment.

UBL's chairman, Saudi investor Abdullah Basodan, is the major shareholder with a 49.06 percent stake as of December 31.


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## Neo

Tuesday, August 08, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\08\08\story_8-8-2006_pg5_12

ISLAMABAD: The export earnings of Pak Suzuki Motor Company Ltd were 0.957 million US dollars during the 2005-06 financial year, according to figures supplied by the company to the Engineering Development Board (EDB).


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## Neo

Tuesday, August 08, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\08\08\story_8-8-2006_pg5_5

_* Inquiry committee to look into price of land

By Fida Hussain_

ISLAMABAD: The federal government has sanctioned an amount of Rs 1.2 billion for the purchase of land for the establishment of an airport in Gwadar, according to a senior government official. He added that matters relating to the purchase of land would be the responsibility of the Balochistan government and not the ministry of defence.

Ã¢â¬ÅIt will be the responsibility of the Balochistan government to purchase land for the new international airport at Gwadar,Ã¢â¬Â the official said. Ã¢â¬ÅThe provincial government will purchase land on the basis of a three-year average of the price of land in the locality adjacent to the proposed site. The Balochistan government has been asked to hand over the land to the ministry of defence for the building of the new airport.Ã¢â¬Â 

The ministry of defence has received several complaints about the cost of acquiring land for the new international airport. The is because the proposed price is said to be over 180 percent higher than the amount paid by Pakistan Railway (PR) for land in the same area in the recent past. 

The Planning and Development Division (P&D) has formed an inquiry committee to look into the issue and to recommend ways to resolve the issue. 

The ministry of defence put forward a price of Rs 155,000 per acre for the land for the new airport in Gwadar. The proposed cost is 180 percent more than the Rs 55,000 per acre paid by the PR in the recent past. The site proposed for the Gwadar airport is an area of 6,600 acres some 26 kilometers northeast from Gwadar. The government plans to make Gwadar into a regional economic hub and has thus issued a directive for the construction of an international airport in Gwadar. 

The airport will be given international status and is expected to operate under the open skies policy. In the meantime there are plans to improve facilities at the existing airport in Gwadar to facilitate the movement of wide-bodied aircraft, the official said. The authorities concerned had objected to the proposed price of the land and said that the issue must be looked into separately from the overall project. The ministry of defence defended the proposed price and it had informed the inquiry committee that the price of land had been calculated by the Military Land Cantonments Department. The committee, which includes officials from the ministry of finance, ministry of defence, and the government of Balochistan will present its report on the issue to the planning commission. 

The land acquired by the PR and the planned acquisition of land for the airport is part of the governmentÃ¢â¬â¢s overall strategy to connect Gwadar to the rest the world through rail, land and air routes as Pakistan hopes that the under construction Gwadar Port will be a great hub for economic activity in the region, the official added.


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## Neo

8th Aug, 2006

KARACHI : Al Habtoor Group Chairman, Sultan Al Habtoor said Pakistan offers best investment opportunities in the region under the dynamic leadership of General Pervez Musharraf and Prime Minister Shaukat Aziz.

According to a press release issued here on Monday, he said this while talking informally to leaders of the corporate world and financial sectors, gathered at a dinner hosted in his honour in Karachi by Saad Zaman, CEO Dubai Islamic Bank.

Al Habtoor Group, a known name in the UAE business community, has grown tremendously in the past thirty years, and while best known for construction, it is now recognised internationally through hotels, real estate, education, insurance, automobile dealership and publishing.

It is one of the UAE's most successful business corporations that also operate in the Middle East and the UK, the statement said. Commenting on the investment scenario in Pakistan, Sultan Al Habtoor said: "Investment from abroad and even within the country can only progress and prosper if continuity of policies is guaranteed both at the micro and macro levels." "Short-term benefits offered by any economy today, are the biggest impediment in the way of investments that are long-term oriented."


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## Neo

GUJRANWALA (August 08 2006): The government is determined to convert Gujranwala into a model Industrial City and under 'Made in Gujranwala Vision', it intends to establish a model Industrial Estate on the pattern of Sundar Industrial Estate, Lahore.

These views were expressed by Federal Minister for Industries, Production and Special Initiatives, Jahangir Khan Tareen at the ground breaking ceremony of Gujranwala Business Center to be established jointly by the Small and Medium Enterprise Development Authority (Smeda) and Gujranwala Chamber of Commerce and Industry (GCCI), here on Monday.

Kamran Rasool, Federal Secretary Industries, Shahab Khawaja, Chief Executive Officer, Smeda, Ikhlaq Ahmed Butt, President, GCCI and M Aslam Sheikh, Vice-President, FPPCI also spoke on the occasion. A large number of industrialists, traders and representatives of trade bodies attended the function.

Tareen maintained that the government's pragmatic economic policies had not only increased the profitability of entrepreneurs in the country, but also increased the government revenue. The government is undertaking development plans throughout the country and besides Gujranwala Business Center, it has decided to set-up modern Tools, Dies and Molds (TDM) center at a cost of Rs 14 billion at Gujranwala. He urged the GCCI office-bearers to set up a company for establishment and operation of the proposed TDM center.

Tareen announced that the government is considering to establish a modern Industrial Estate at Gujranwala. He asked the GCCI to form a four-member committee to identify the site for this project. He disclosed that Punjab government had assured to provide a piece of land for this purpose. He assured all out co-operation of the federal government in this regard.

He said that "Made in Gujranwala Vision" is the first location specific strategy which will be followed in other industrial cities of the country as well.

Shahab Khawaja, Chief Executive Officer Smeda gave a briefing on Gujranwala Business Center. He disclosed that the project involved a capital outlay of Rs 86.5 million including capital cost of Rs 60.84 million and an operating cost of Rs 20.66 million for three years. He assured that the project would be completed within stipulated period.

Kamran Rasool, Federal Secretary for Industries said that the Ministry of Industries, Production and Special Initiatives was committed to convert Gujranwala into a modern Industrial town. He assured that like Gujranwala Business Center, the other projects identified under "Made in Gujranwala Vision" would be materialised in the near future.

Earlier, GCCI Chief Ikhlaq Ahmed Butt, in his address of welcome hoped that the establishment of Gujranwala Business Center would help increase exports from Gujranwala. He was confident that this Center would help increase exports from US $620 million to US $1 billion in the near future.


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## Neo

LAHORE: Federal Minister for Science and Technology, Nouraiz Shakoor has said that brain drain is the biggest challenge facing the developing world and to cope with this phenomenon the government is going to offer a special salary package to scientists, researchers and professors in two to three months as a summary to this regard is with Prime Minister Shaukat Aziz for approval.

The minister expressed these views while speaking at two-day conference on Ã¢â¬ÅProposed Framework for a Model National Science and Technology PolicyÃ¢â¬Â at the Lahore Chamber of Commerce and Industry on Monday.

The minister appreciated the LCCI initiative on science and technology and said that his ministry would incorporate all the LCCI proposals in the national policy on science and technology to be announced shortly.

He admitted that lack of proper research adversely affecting the whole economy of the country. He said that the present government while realising this fact had already doubled the allocation for education and health sectors. About ongoing energy crisis, the minister said that the government is giving a special focus towards the renewable energy projects in collaboration with private sector.

Speaking on the occasion, the LCCI President Mian Shafqat Ali said that PakistanÃ¢â¬â¢s agriculture produce is among the best in the world but it has failed to fully exploit the traditional strength in agriculture, horticulture, livestock breeding & food processing because of lack of technology. 

He said that PakistanÃ¢â¬â¢s exports are rice, textiles and sports goods, which are not high in value addition. On the other hand, Pakistan continues to be the importers of machinery, petroleum products, chemicals, transport equipment, edible oil, iron & steel, fertilizers etc., which are highly value added items.

The latest developments in the region indicate a grim requirement to have a forward-looking policy on science and technology. The LCCI president said the fact is that unlike India, Pakistan has always neglected the education sector for quite a long time especially in the area of science and technology. 

Last year, IndiaÃ¢â¬â¢s IT exports were more than PakistanÃ¢â¬â¢s total exports. In his address, LCCIÃ¢â¬â¢s Senior Vice President Abdul Basit called for short-term and long-term policies to achieve desired results in education sector.

He also urged the federal minister to enhance the retirement age of scientists and professors at least by five years. He said that unfortunately, a National Science & Technology Policy, enforced in 1984, could not be implemented at all and thereafter no successive government ever thought to update and enforce it. Consequently, science and technological development in the country, which also covers engineering sectors, remained at very low level.


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## Neo

ISLAMABAD: The four federating units have, so far, failed in getting respite from the Centre in paying back the costly loans amounting to Rs 133.831 billion by borrowing from the banks on low interest rate, a senior government official at the Ministry of Finance told The News.

Ã¢â¬ÅThe provinces have since long been seeking permission for borrowing the loans from the open market, which is available at 4-5 per cent interest rate, to pay back the federal governmentÃ¢â¬â¢s costly cash development loans that hovers at Rs 133.831 billion as on July 1, 2006.Ã¢â¬Â

The provinces have taken the loans at high interest rates ranging from 8-9 to 16-17 per cent and want to pay back by borrowing from the open market, but the federal government is not paying heed to it.

It is pertinent to mention that under the Constitution, the provinces cannot borrow directly from the banking sector without permission from the Centre. According to the latest data of loans the provinces own to pay back to the Centre available with The News, Punjab owes to pay back Rs 64.862 billion as on July 1, 2006; Sindh needs to settle up Rs 33.917 billion; NWFP Rs 24.575 billion; and Balochistan Rs 10.477 billion.

When contacted over the issue, Adviser to prime Minister on Finance Dr Salman Shah said that refinancing of the loans by the provinces is not allowed, and the cash development loan should be returned on the same interest rates on which these were expected to the provinces.

However, he said the limited restructuring of these loans can be made on case-to-case basis. The official said if the of provinces demand gets entertained, then the provinces will have substantially fiscal space and will be able to concentrate on their respective development projects.

Ã¢â¬ÅThe provinces are of the view that cash development loans have become a liability, which is showing their respective economies,Ã¢â¬Â the official. However, the official of the ministry, to a question, said that as per the amended NFC Award, provinces will get additional 

Rs 80 billion form the dividable pool which will provide them substantial ease in this regard.


----------



## Neo

*PAKISTAN'S FISHERIES SECTOR BOOKS 42% RISE IN EXPORTS IN FY05-06
*Tuesday August 8, 2006, 5:00 pm

KARACHI, Aug 8 Asia Pulse - Pakistan's seafood exports hit a new record last financial year, climbing 41.17 per cent to US$196.15 million. This phenomenal growth in exports exceeded the financial year target of $160 million by 22.5 per cent. The country exported fish and fish preparations worth $16.466 million in June compared to $14.06 million in the corresponding month of last year, according to data released by Federal Bureau of Statistics. Furthermore, despite the problems faced by the fish processing industry, it managed to boost exports on the back of a huge tuna catch. Tuna remained the main contributor to the overall exports while the performance of the conventional sector declined slightly due to the problems faced by local fishermen. Amid fears of a ban on exports of seafood to the European Union, this growth is remarkable, as the sector has been struggling to maintain its share of the international market.


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## Neo

ISLAMABAD, Aug 7: The Asian Development Bank on Monday said it would consider financing the Bhasha dam whenever it received a request from Pakistan after finalising technical details of the project.

In an announcement, the ADB said it agreed with the government on the need to address the infrastructure deficit in the country for high-sustained growth and was committed to providing assistance for the purpose. Therefore, it said, the bank would consider the request for assistance for constructing large dams, including the Bhasha dam, which were important for meeting the countryÃ¢â¬â¢s water needs and ensuring energy security.

It said Pakistan was one of the ADBÃ¢â¬â¢s largest and most important partners in developing Asia. Its assistance has substantially increased in recent years and amounted to $1.5 billion in 2005.


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## Neo

QUETTA: Federal Minister for Communications Shamim Siddiqui has said that the federal government intends to spend more than Rs 100 billion on the development of infrastructure, including a roads network, in Balochistan over the next 10 years.

He told a news conference at the Quetta press club on Monday afternoon that the government was going to implement Rs 40 billion worth of development projects in the roads sector in the next 3 to 4 years.

Flanked by Chairman National Highways Authority (NHA) Maj-Gen Farrukh Javed, General Manager NHA Attique Ahmed and other senior officials of the authority, the minister, however, added that the total allocation for BalochistanÃ¢â¬â¢s roads projects was Rs 8.565 billion. Ã¢â¬ÅThis will definitely contribute a lot to the economic development of the province,Ã¢â¬Â he hoped.

Giving details of the under-construction projects in the roads sector, Shamim said work was in progress on a number of projects in the province. He added that construction work on the 400-kilometre-long Kuchlak-Mughal Kot road was under way. Ã¢â¬ÅThis will be completed by 2008,Ã¢â¬Â he added. After completion of the project the journey between Quetta and Peshawar/Islamabad would take only 10 hours as against the current 24 to 30 hours.

The minister added that the road would enable the Balochistan growers to have an easy and speedy access for their products to markets in the Punjab and the NWFP, which is sure to improve their socio-economic conditions.

Shamim said that the 50-kilometre N-5 road would be completed by 2008 at a cost of Rs 986.308 million. He also said that work was in progress on the Quetta Western Bypass (N-25) project, which would be completed by 2007 at a cost of Rs 290.846 million.

Besides, he said construction work on the Kalat-Quetta-Chaman road of N-25 as well as the Lak Pass Tunnel was also under way. The 250-kilometre-long Kalat-Quetta-Chaman road would cost Rs 7 billion and it would be completed in the last quarter of 2008. Similarly, work on the Lak Pass Tunnel has also been started. The 180-meter-long tunnel, with four flyovers and an interchange, would be completed by December 2007 at a cost of Rs 800 million.

He said the NHA was also working on improvement of a 200 kilometres portion of the Kalat-Dalbandin-Taftan road, which would be completed by 2008. He added that the Karachi-Quetta RCD Highway would be upgraded.

Shamim also said that work was under way to build an alternate road linking Gwadar to Iran. He hoped that construction of these and other roads would usher in a new era of economic prosperity in the province.

The minister said arrangements have been made to appoint Motorway Police on the Gwadar Coastal Highway. Vehicles and other necessary equipment, including surveillance cameras, have been arranged for the purpose, he added.

The Motorway Police would start functioning from next month. The Motorway Police would also be appointed on the Quetta-Karachi RCD Highway.

Shamim said the decision would help improve the law and order situation and road safety on the national highways. He added that the locals would be preferred for jobs in the Motorway Police.

Source: http://www.thenews.com.pk/daily_detail.asp?id=18981


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## Neo

LAHORE - PakistanÃ¢â¬â¢s foreign debt and liabilities have shown a hefty increase of 1.31 billion dollars in first three months of this calendar year, The Nation learnt on Monday. 

By March 31, 2006, the external debt and liabilities of the country have expanded to 36.55 billion dollars, from 35.24 billion dollars in December 2005. 
The total external debt of Pakistan has increased to 34.903 billion dollars while foreign exchange liabilities of the country amounted to 1.654 billion dollars by March this year. 

Details obtained by The Nation showed that this hefty increase in the external debt and liabilities of the country has negated the federal governmentÃ¢â¬â¢s claim of reduction in the foreign exchange debt and liabilities. Break-up of PakistanÃ¢â¬â¢s external debt and liabilities show that by March 31, 2006, the public and publicly guaranteed debt stood at 31.821 billion dollars, from 30.742 billion dollars in December 2005 while private non-guaranteed debts rose to 1.588 billion dollars as against 1.289 billion dollars during the comparative period. 

Official sources said that the foreign debt liabilities of the country would further increase as the government was not only floating international bonds to raise foreign exchange, but also seeking more loans from the donor agencies for earthquake rehabilitation and ensure sustainability of the current economic growth. 

Sources said that neither the State Bank of Pakistan nor the Finance Ministry had disclosed the latest quantum of foreign debt and liabilities of the country at the end of fiscal year 2005-06. They said that the central bank and the ministry were deliberately delaying the release of this data knowingly that its release would lead to a flurry of criticism against the government. Because the government had been claiming for the last two years that it had broken the Ã¢â¬ËkashkoalÃ¢â¬â¢ and increase in debt and liabilities would negate this claim of the rulers, said sources. 

In fact, the government had been borrowing more aggressively from the day it had broken the IMF Ã¢â¬ËkashkoalÃ¢â¬â¢ in December 2004, they added. In December 2004 the federal government had refused to receive last two tranches of the PRGF loan of the International Monetary Fund that involved a total loan of 1.4 billion dollars.


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## Neo

ISLAMABAD (updated on: August 08, 2006, 23:10 PST): Cellphone operators in Pakistan are investing nearly $100 million in order to meet the October 2006 deadline laid down by the Pakistan Telecommunication Authority (PTA) for the implementation of mobile number portability (MNP).

The PTA last month asked all the Cellphone operators and PTCL to speed up the process of upgrading their switches for the early implementation of MNP, a system which enables a mobile phone subscriber to carry the same number while changing the cell phone operators, Asia Plus reported.


----------



## Owais

*Iranian steel import stopped due to higher prices* 

KARACHI (August 09 2006): Importers of Iranian steel have again stopped bringing in Iran's material after a five-month break as the commodity exporters have refused to slash steel prices despite drastic decline on the international front, importers said.

They said that steel trade with Iran had come to a standstill and the importers had stopped importing Iran's steel as its exporters are still offering their hot-roll coils at $560 per ton, which can easily be bought at $480-$490 per ton from the international market.

"Not a single consignment has reached here from Iran during the last 60 days," said an importer, adding that steel import from Iran had completely halted, and the importers had once again turned to Ukrainian material.

"We have completely diverted towards Ukraine's material and orders for a handsome quantity had been placed during the last two months," the importer said.

He said that Ukraine material is being regularly imported as its rates are affordable.

Citing reasons behind the refusal of Iran, one importer said that Iran is one of the biggest steel suppliers to different countries and those countries could not compel Iran to cut its prices because they import 'prime quality' material.

"Dubai, India and Japan are among the biggest consumers of Iranian steel and importers of these countries mainly import 'prime quality' material. That is why they are still paying higher rates for superior quality product," he remarked.

"We, in fact, import both 'prime quality' and 'average quality' steel from several countries, of which the biggest chunk is of 'average quality'.

However, Pakistani importers are still looking towards Iran as they want to resume trade with Iran keeping in view the shorter transit time.

"In January this year, the trade got halted for the first time just because of this price factor and even in those days we had consistently insisted with Iranian exporters to bring their commodity prices at par with the international rates," the importer said, adding that the private importers are still waiting for Iran's green signal to resume trade.

"We are ready to import Iran's hot-rolled coils but for that the price should be decreased to below $500 per ton," the importer said.

Importers have dispelled the impression that Iran is being faced with any sort of trade restriction, saying that a number of countries are still placing orders in Iran as 'forward deals' which would be fulfilled after some time.


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## Owais

*Reko-Diq copper project: two foreign firms to invest over $1 billion* 

ISLAMABAD (August 09 2006): Two foreign companies will invest over $1 billion for developing Reko-Diq copper project in Balochistan. Sources in the Ministry of Petroleum and Natural Resources told _Business Recorder _on Tuesday that the Reko-Diq copper project has about one billion tons copper reserves, with heavy deposits of gold.

Chilean Mining Company had invested $75 million for the development of Reko-Diq copper project in Balochistan in training local people at the project site and in Chile, sources said.

They said that the company, after the initial investment, would make further investment of $500-700 million to develop the copper mines on fast track basis.

The other overseas company is Canadian, which would only develop gold mines with an investment of $500 million. Both these projects would create over 2000 jobs during the next 3 to 5 years.

The Reko-Diq, which is in the neighbourhood of Saindak, is four times bigger in copper ore deposits tonnage than Saindak and ranks among the biggest in the world, containing over 4.8 million tons copper and 9 million ounces gold, worth more than $11 billion at current metal prices.


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## Neo

KARACHI, Aug 8: Carrying an investment fund of Rs116 billion, the Employees Old Age Benefit Institution (EOBI) operators are desperately exploring new avenues of investment to improve their income levels to an extent that should ensure monthly insurance payment of Rs1,300 to about 2,54,000 retired employees who are 60 years of age and above. Most of them belong to low income and disadvantaged sections of the society.

Ã¢â¬ÅThe stock exchange carries a casino image where investors look for capital gains rather than companiesÃ¢â¬â¢ profitability and is, therefore, unpredictableÃ¢â¬Â, quipped a senior officer of the EOBI who said that National Saving Schemes are now a no go area for the institution and the only avenue is government securities that offer relatively low rate of return.

The EOBI was set up in 1976 under an act of Parliament by the PPP government of late Zulfikar Ali Bhutto as a social security net for the retired, old and poor workers that received a nominal amount as monthly pension. All business establishments with 10 and more employees under the law are liable to get registered with the EOBI and contribute five per cent of their employees wages to the Institution. Since 2002, this contribution of employers has been increased to six per cent and employees now too contribute one per cent.

Under section 9-A of the EOBI Act, the Government is committed to contribute every year the matching fund grant to the EOBI. This was, ironically stopped by late Zulfikar Ali BhuttoÃ¢â¬â¢s daughter Benazir government and since then the EOBI Fund thrived on National Saving Schemes, which offered a good return. The NSC schemes have since dried up and the EOBI operators are worried where to park their funds. Actuaries in the insurance market predict depletion of the EOBI funds in the foreseeable future if no remedial measures are taken.

Another change was brought about in the EOBI Act recently through Finance Bill 2006. In accordance with this change, the business establishments having 20 employees and more are now liable for registration with the EOBI, rendering hundreds of those in the business establishments with ten and more employees, vulnerable to deprivation after the age of 60 years. In fact, the business establishments manipulate their organisation structure in a way that even with 100 employees they show it as six and seven different organisations to circumvent the law.

Ã¢â¬ÅWe managed to earn about Rs16 billion in 2005-06,Ã¢â¬Â Akhtar Zamin informed Dawn on Tuesday to explain that this income was just enough to provide Rs1,300 monthly pension to about 2,54000 retired workers and also to meet the establishment cost of the institution. The income from investment increased by only Rs1 billion in 2005-06 and does not match the inflationary rate.

Bulk of the EOBIÃ¢â¬â¢s income came from investment in government securities where rate of return is fixed and too low. As much as more than 84 per cent of investment amounting to Rs94.20 billion was invested in government securities, which gave a return of less than Rs14 billion.

In the year 2003, the government allowed public sector institutions to invest in stock market. That was the time when rate of bank interest was low and stock brokers were wallowing in liquidity and making money in billions. The EOBI too joined the race and made handsome gains. But since at stake was the monthly pension of the old, retired and poor workers some caution was applied and the EOBI investment committee has put the condition of putting money only in those shares that showed 20 per cent return for two consecutive years. In the year 2005-06 EOBI invested about Rs14 billion and earned Rs1.89 billion income. Bulk of this incomeÃ¢â¬â-more than Rs1 billion--was from capital gains, while Rs851 million was earned from dividend income.

Real estate is one avenue where EOBI is targeting and has put Rs2.76 billion. Under the rules, the EOBI purchases land from the government only. It has put in place a subsidiary company to manage and run real estate business. The EOBI intends to make rich capital gains from real estate business.

The EOBI has now asked the government to bring privatised banks, other privatised entities, private banks and other business organisations within the registration net so that pension benefits can be extended to thousands of more employees. The private sector directors on the EOBI board have different ideas.

Nazim F Haji, who is one of the four employersÃ¢â¬â¢ directors on EOBI board says that many banks and private organisations offer a much better pension and provident scheme than EOBI. But officials of the EOBI argue that law provides registration of all institutions where pension scheme is being practiced. Ã¢â¬ÅLet there be a dual pension for the retired employeesÃ¢â¬â¢Ã¢â¬â¢ is one argument.

Brigadier Akhtar Zamin wants to bring seasonal factories (ginning, rice husking etc) within the fold of EOBI. He has an ambitious scheme for lady workers, who work for a period of seven to eight years before their marriage in some school, factories and offices before taking up household as a full-time responsibility. He wants all such lady employees be paid a lump sum amount that commensurate with their period of work and emoluments to help them establish their home after marriage.

Officials in EOBI claim of having brought a large number of establishments, factories, schools and offices mostly in Defense Housing area within their registration network in last one year.

Ã¢â¬ÅWe have now an ambition to do something for rural labour,Ã¢â¬Â Mushtaq Ahmad Samoon a senior executive of the EOBI said who added that efforts were underway to draw up a precise definition of an agricultural worker and determine a minimum wage calculated from his work in a mechanised farm. Ã¢â¬ÅIt is too difficult nay impossible to do it,Ã¢â¬Â he said adding that some one has to make a start some day, let this begin now from EOBI.

The EOBI has now 58,210 establishments registered with it which have about 2.5 million employees who are now a part of the pension scheme. The contribution of business organisations increased to Rs3.37 billion in 2005-06 from Rs1.94 billion in 2001-02. Out of the total Rs116 billion fund accumulated since 1976, the EOBI invested bulk of it Ã¢â¬â more than 84 per cent Ã¢â¬â amounting to Rs94.20 billion in government securities.


----------



## Neo

ISLAMABAD, Aug 8: The government has decided to develop close contact with top 300 international investors with a view to luring them to make new investments in Pakistan.

In this regard an Ã¢â¬ÅInvestors Relations DeskÃ¢â¬Â is being set up at the Debt Coordination Office to keep regular liaison with 250-300 top international investors who would also include reputed commercial banks and investment companies.

Ã¢â¬ÅThe purpose is to create awareness and update international investors about Pakistan and various new investment opportunities that exist today in our part of the world,Ã¢â¬Â Dr Ashfaque Hasan Khan, economic adviser to the ministry of finance, told Dawn on Tuesday.

He said he had just returned from London and Dubai where he had met a number of foreign investors, officials of international rating agencies, bankers and bond investors in order to apprise them of the latest Pakistan's economic situation.

Dr Khan said he held detailed meetings with individual investors, including those of Standard and PoorÃ¢â¬â¢s, JP Morgan, ABN Amro, Citibank and HSBC. All the details about them, he pointed out, would be kept in the Investors Relations Desk so that they could be provided instant information on any issue. This desk will be functional very shortly for which the staff has also been hired.

This desk, he said, would function in line with the similar desks that existed in many countries, including India and Italy, the purpose of which would be to keep the international investors informed and abreast with day-to-day economic and financial activities of the country.

Responding to a question, he said in case of any unfortunate incident like bomb blast or any natural calamity, foreign investors would be promptly approached and informed about the latest economic situation through the Investors Relations Desk. Ã¢â¬ÅThe objective is to ensure that there is no negative impact on the economy due to any unfortunate incident,Ã¢â¬Â he said.

Dr Khan also cited the example of recent bomb blasts in Mumbai where the Indian investors desk immediately took into confidence the international investors and told them that there was no danger to the country's key economic indicators.

In reply to another question, the economic adviser said the government would soon be issuing another Eurobond the details of which were currently being finalised.

The new bond, Dr Khan said, would be issued during 2006-07 and that its timing would be decided soon. He said since the launching of bonds had been a great success, the government planned to regularly issue such bonds -- almost during every financial year.

The adviser claimed that PakistanÃ¢â¬â¢s investment climate had greatly improved that was why foreign investors were approaching the government to invest in different fields, especially in oil and gas, infrastructure, communications, information technology, housing and construction sectors.


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## Neo

ISLAMABAD, Aug 8: PakistanÃ¢â¬â¢s exports of non-textile products rose by 11pc to $6.601 billion during the fiscal year 2006 as against $5.946 billion the previous year. Official figures showed that the growth was mainly due to increase in export of primary commodities, leather finished products followed by engineering products. However, export of sports, surgical, cutlery, chemical and pharmaceutical, jewellery and molasses recorded a negative growth during the year under review.

According to official analysis, a copy of which was made available to Dawn showed that the export of all varieties of rice rose by 19.29pc to $1.112bn as against $0.932bn the previous year. Of these, the export of basmati rise rose by 15.46 c.

Among the primary commodities, exports of fish and fish foods increased by 41.17pc, fruits 28.29pc, vegetables 19.08pc and spices by 63.01pc. However, exports of raw cotton declined by 38.70pc, tobacco 42.66pc and oil seeds, nuts and kernals by 48.05pc.

The export of surgical goods and medicinal instruments also declined by 12.47pc, followed by jewellery dipped by 33.34pc, furniture by 18.77pc and molasses by 37.50pc during the year.

The export of engineering goods, however, increased by 14.60pc to $206.555 million during the FY06 compared to $181.984 million the previous year. Of these, exports of electric fans increased by 4.55pc, other electrical machinery increased by 2.48pc, auto parts by 14.90pc and machinery for specialised industries by 20.17pc. However, export of transport equipment declined by 13.48pc during the year under review.

The export of sport goods rose by 13.80pc to $348.225 million during the year under review as against $307.130 million the previous year. Of these, the export of footballs up by 35.49pc and gloves saw a fall of 44.85pc.

The export of footwear items up by 0.21pc to $137.956 million during the FY06 as against $137.666 million the previous year. Of these, the export of leather footwear increased by three per cent. However, exports of canvas footwear declined by 44.18pc.

The export of leather products increased by 32.33pc to $697.057 million compared to $526.774m the previous year. Of these, exports of leather garments rose by 48.60pc and other leather products by 91.34pc. However, the export of leather gloves declined by 12.19pc.

The statistics showed that exports of carpets, rugs and mats decreased by 9.50pc and cutlery by 3.25pc. However, export of onyx-manufactured increased by 49.38pc and gems by 7.51pc.


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## Neo

KARACHI (updated on: August 09, 2006, 20:05 PST): President General Pervez Musharraf on Wednesday vowed by 2007 all villages in the Sindh province would be provided electricity.

Instructing to Wapda officials here in a meeting on electricity, water and gas at the Chief Minister House the president said that every village in the province, having ten or more houses must be provided electricity.

"Comprehensive plan to provide clean drinking water, electricity and natural gas in the Sindh villages at Tehsil and Town level by 2007 has been devise out," said the president.

Speaking of the Karachi energy crisis the president said the electricity demand in the city has increased by 40 percent and the new management of the Karachi Electric Supply Corporation (KESC) will be investing Rs 22 billion to overcome this situation.

He assured in next two years electricity production will be increased and by making better distribution infrastructure the KESC will overcome the problem."

The president also instructed officials of utility services to provide natural gas and clean water to every Tehsil and Zilai Headquarters of the province.

He urged the officials of utility services and government departments to work hard for the welfare, well-being and betterment of the people.

The president pointed out that the country's economy has revived and stressed that improvement in this vital area has to be translated into "public gain".

He said the focus should be on poverty alleviation, unemployment control as well as checking the prices and inflation. 

Musharraf said the standard of living of the people be enhanced and they be provided with utilities like electricity, gas and clean drinking water. 

He also laid stress on bringing about improvement in human resource through quality education and better health facilities. 

The president pointed out that the United Nations has also come up with Millennium Development Goals (MDGs) by 2015. 

He said we should try to remain ahead of the deadline set by the United Nations for achieving the MDGs. 

He said the briefings today in these sectors were also aimed at assessing the achievements as well as ground realities and the future plans in these areas.

Sindh Governor, Dr. Ishrat-ul- Ebad Khan, Chief Minister, Dr. Arbab Ghulam Rahim, federal and provincial ministers, advisers to Chief Minister, members of provincial assembly and nazims of various districts were present on the occasion.


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## Neo

LONDON (updated on: August 09, 2006, 22:52 PST): Asia-focused bank Standard Chartered will pay more than $500 million to buy Pakistan's Union Bank in the biggest purchase by a foreign bank in Pakistan, it said on Wednesday.

Standard Chartered has agreed to buy an 80.9 percent stake in Union Bank for $413 million, and under Pakistan law it is obliged to make a public offer for the remaining shares of Union Bank, which would take the total price to $511 million.

Badar Kazmi, Chief Executive Pakistan, Standard Chartered, told reporters in Karachi that the bank will make a public offer for the remaining shares next week.

"We will be looking for the maximum," he said, adding the legal merger of the two banks would take up to three months.

The London-headquartered bank had been expected to this week agree the deal for Union Bank, which is Pakistan's eighth biggest bank, with assets of over $2 billion.

A Reuters report on Tuesday said it would spend $414 million buying an 81 percent holding.

The deal will make Standard Chartered the sixth biggest bank in Pakistan by market share of assets and will make Pakistan the bank's 10th biggest market in terms of income.

Union Bank has about 400,000 retail customers through a network of 65 branches in 22 cities, which will be added to the 46 branches across 10 cities Standard Chartered already has. Union Bank also operates a small wholesale unit.

The London-headquartered bank said the combined group will deliver economies of scale, a more complete product set, a stronger operating platform and a wider distribution network.

Union Bank has grown strongly since being established in 1991, particularly in the retail and small and medium enterprise banking market, where it now holds strong market shares in mortgages, credit cards, personal and auto loans.

Standard Chartered said the deal will be financed through internal funding and it should be earnings accretive this year.

The tender offer should start around Aug. 12 and close by Sept. 1, and the deal is due to complete shortly after, it said.

The price paid represents about 10.9 times Union Bank's pre-tax profit last year of $47 million, which was up from $25 million in 2004. The price is 5.6 times Union Bank's reported net asset value as at the end of March.

Union Bank's shares rose 1.3 percent to close at 86.35 rupees. Standard Chartered's shares rose 2.2 percent to close at 13.03 pounds, reversing a dip following its half-year results on Tuesday and valuing the bank at just over 17 billion pounds.

The deal is the latest and largest of several deals involving Pakistani banks.

Last July, Singapore state investment agency Temasek tripled its stake in Pakistan's small commercial NIB Bank (NDLC-IFIC Bank) to 72.6 percent, which was then worth about $57 million. Temasek is also Standard Chartered's biggest shareholder.

In February, the Pakistan government said it planned to sell 20 percent of third-ranked lender United Bank Ltd , reducing its stake to 24.5 percent.


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## Neo

ISLAMABAD (August 09 2006): The World Bank's lending commitment to South Asian region reached $3.8 billion during the financial year 2006 ended on June. Pakistan was among the 10 major borrowers of the Bank, receiving $1.498 billion or 6.3 percent share of total $23.6 billion commitments world-wide during the year 2006.

The Bank's commitments for South Asia in FY06 accounts for 16 percent of all these loans, grants and credits by the Bank's two closely affiliated entities - the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA).

It is important to note that the Bank's total lending commitments to all its members increased to $23.6 billion during financial year 2006, up by six percent ($1.3 billion) as compared to the previous year. Overall, Mexico and Brazil were the largest borrowers, followed by Turkey, Pakistan, China, India, and Argentina.

India, which also falls in the top-10 ranking, received $1.416 billion or six percent of the total IBRD/IDA commitments.

The World Bank under its Global Environment Facility (GEF) operations provided only $6 million during FY06 to South Asian region. The GEF grants support projects related to bio-diversity, climate change, international waters, land degradation, the ozone layer, and persistent organic pollutants in its member countries.

The IDA was set up to provide interest-free credits and grants to countries with little or no capacity to borrow on their own. Its commitments in the 2006 financial year rose by 9 percent to $9.5 billion as compared to FY05 - the highest in the organisation's history.

The IBRD aims at reducing poverty in middle income and creditworthy poorer countries through loans, guarantees as well as analytical and advisory services, marked a new record during FY06 reaching $14.1 billion rose by 4 percent over FY05 - the highest volume in the past seven years.

The highest percentage of IBRD/IDA lending went to the Latin America and the Caribbean region. It received $5.9 billion or 26 percent of the total lending.

The figures show lending commitments to Africa rose by 23 percent in the past financial year. Africa had 20 percent of total lending commitments with $4.8 billion. Europe and Central Asia had 17 percent with $4 billion; South Asia 16 percent with $3.8 billion; East Asia and the Pacific had 14 percent with $3.4 billion, while the Middle East and North Africa region had 7 percent to $1.7 billion.


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## Neo

ISLAMABAD (August 09 2006): The government received Rs 149.05 billion through privatisation of public units during the last five years out of which 90 percent was paid to retire debt and the rest alleviate poverty.

The debt so retired amounted to Rs 7,450.664 billion, State Minister for Finance Omar Ayub told the Senate, adding: "The debt retired is far in excess of privatisation proceeds." The pro-poor expenditure incurred out of the privatisation receipts was Rs 1,402 billion.

In reply to another question, he said in financial year 2005-06 (July-March), the government obtained Rs 108.6 billion (net) as domestic loans and Rs 30 billion (net) as foreign loans to meet the budget deficit, and that the total loans taken during the year were "in line with the annual target."

The house was informed that during FY06 total foreign investment has been $3,872 million, including portfolio investment of $351 million and direct investment of $3,521 million. Main sectors in which *** was made are telecommunication (IT&T) $1,937.7 million, financial business $329.2 million, power $320.6 million, oil and gas $312.7 million, trade $118 million, and construction $89.5 million.

Asked to give figures of export and import from July 2005 to April 2006 against the estimated figures, the commerce minister said exports were $13.5 billion and imports $23 billion, adding the ministry does not compile month-wise figures.

Asked if the State Bank of Pakistan (SBP) had collected funds for beautification of I.I. Chundrigar Road in Karachi, the minister said 'yes', adding the SBP started to collect funds from the stakeholders from January 2005 and by March 2006 had collected Rs 171.5 million. The project was estimated at Rs 162 million, but it did not include cost of shifting the PTCL and the KESC utilities, he said.

He said the SBP was involved when the President directed in 2003 that various organisations should discharge their social obligation and the Bank was assigned the responsibility to take care of rehabilitation and beautification of I.I. Chundrigar Road.

Asked what amount was withheld by the Indus Bank and the number of depositors still deprived of their deposits, the minister said as of September 22, 2000, the Indus Bank Limited had 10,362 depositors with deposits of Rs 551.242 million. Out of the 10,362 depositors of the Indus Bank, 9,641 depositors have been paid in full, and remaining were allowed payment up to Rs 100,000, while 468 depositors having deposits of Rs 219,543,616 are still to be paid.

He said the Supreme Court through its order dated March 24, 2003, had restricted Joint Official Liquidators of the Indus Bank from withdrawing any money. As such any payment to IBL's remaining depositors will be made by the Joint Official Liquidators (JOLs) only after vacation of the above court order. As such no timeframe can be specified for repayment.

Replying to a question by Hameedullah Jan Afridi, Omar Ayub said that no amnesty scheme on cars entered illegally into the country has been announced. However, the Central Board of Revenue (CBR) has amended the SRO. 574(I)/2005 dated June 6, 2005, vide amending notification SRO. 179(I)/2006 dated March 2, 2006 giving powers to the adjudication officers of the Customs to release the smuggled vehicles on payment of 30 percent redemption fine in addition to duty and taxes.

The minister said such vehicles were earlier liable only to outright confiscation. Through this measure an opportunity to owners of the smuggled vehicles to get their vehicles released and get them registered legally has been provided. This initiative is aimed at collecting revenue on vehicles that earlier were being confiscated outright, he added.

A number of 5,227 vehicles (2,341 smuggled and 2,886 involving violation of prescribed import procedures) have been cleared through this measure from March 2, 2006 to date, he said, adding this measure has been notified through SRO.179(I)/2006 dated March 2, 2006 in the official Gazette and publicised in the media as well.

The discussion became a little interesting when Senator Raza Muhammad claimed that the smuggled cars exceed hundred thousands and their owners include many generals and even members of parliament, but the minister rejected the claim.

To another question, Omar Ayub said that a proposal for the waiver of house building and motorcycles advances outstanding against federal government employees is under consideration of the government.

In the unstarred questions listed for the day, the house was informed that there are 216 corporations/autonomous/semi-autonomous bodies under the control of various ministries/divisions.

According to the reply under the same category, at present, there are 37 federal ministers, 24 ministers of state, 2 advisers (appointed under Article 93 of the Constitution), 13 having the status of federal ministers and five with status of state ministers.

Privatisation Minister Zahid Hamid said, in reply to an unstarred question, during FY06 the Privatisation Commission engaged 26 legal counsels to defend privatisation cases in higher courts, while in some cases no fee was paid in others Rs 20.8 million was paid.


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## Neo

9 August 2006 

ISLAMABAD Ã¢â¬â The World Bank and the Asian Development Bank (ADB) will not finance development projects which are not economically and financially viable.

Informed sources said that both the donors have particularly urged the government to plan only economically and financially viable development projects, failing which it would be difficult to arrange funding for them.

Wapda has finalised a number of power projects which were not financially and economically viable and their foreign funding could not be arranged so far.

It was in that backdrop Wapda authorities urgently sought Rs2.9 billion from the Centre to start its rural electrification programme in NWFP to provide electricity to 3158 villages (175 villages per month).

"The government of Pakistan has still to arrange finances from foreign donors for this rural electrification project (July 2006 to December 2007 eighteen months programme)," Wapda informed the Planning and Development Division.

"The project is not financially viable when quantifiable financial/economic benefits are taken into account. However, the project is quite justified in terms of value added benefits at the national level," Wapda said, seeking Rs2.9 billion for its new rural electrification programme to be undertaken throughout the NWFP province.

According to the details, a total of 315,800 new power connections will be given in the province which included 284,220 general connections, 12,632 industrial and 18,948 tubewell connections. In 60 per cent of the cases, industrial connections are

proposed to be connected through PVC service connections only from General Sub-Station and the remaining 40 per cent would be provided with PVC service connections and independent sub-

stations. 

For every agricultural tubewell consumer, separate distribution sub-stations of 25 KVA will be installed.

Wapda informed the planning division that the project required the expansion of distribution network to meet the target of all types of connections including the construction of 5573 Km H.T and 5018 Km L.T lines.

The project is essentially required to raise the standard of life of rural population and to meet the increasing requirements of electricity for industrial and agricultural development in rural areas.

Wapda maintained that as electricity is the lifeline of the people, the benefits to the national economy due to additional availability of electricity in manufacturing as well as agriculture sector are also required to be evaluated in addition to direct financial/economical benefits attributed to the project. 

Wapda estimated that a unit of electricity in

industry gives value added of Rs6.736/KWh in the economic based on vale added in manufacturing sector in 1995-96 at 1980-81 constant price and in agriculture sector Rs2.672/KWh at 1996-97 price.


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## Owais

*Cars production jumps up by 15 percent* 

KARACHI: The production of cars in July current year as compared to previous year July increased by 15 percent to reach at 13243 units.

Pakistan Automotive Manufacturers Association sources told that the production of cars in July current year recorded a rise by 15 percent, while 11492 units were produced in July previous year.

Similarly, the sale of cars in July current year swelled by 5 percent as compared to previous yearÃ¢â¬â¢s same month and pegged up at 12124 units. In July previous year, 11503 units of cars were sold.


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## Owais

*Suzuki to manufacture 170,000 cars in Pakistan * Karachi: Suzuki Motor Corp plans to increase production in its Pakistani factory Pak-Suzuki from 110,000 vehicles to 170,000 vehicles in fiscal year 2009.

Suzuki -- which is also ramping up production in India and Hungary -- said it would invest 60 billion yen (520 million yen) to build the factory in central Shizuoka prefecture, with construction to begin this fall.

The plant will begin operating at the end of 2008, with annual production capacity of 240,000 compact vehicles.

"We had a large back-order situation overseas, with countries in Europe, North and Central America, and Southeast Asia demanding to increase production for our Swift and SX4-Grand Vitala," said Suzuki Motor chairman Osamu Suzuki.

The chairman of Japan's mini-vehicle giant said it was difficult to choose the site for the factory but said there were advantages to building close to existing Suzuki plants in Shizuoka.

Japanese automakers have cashed in handsomely on the global trend to fuel-efficient cars as oil prices keep rising.


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## Owais

*Galvanised steel prices shoot up* 

KARACHI (August 10 2006): The prices of galvanised steel coils have shot up by Rs 2,000 per ton during the last 15 days despite declining trend seen in the international market, traders here said on Wednesday. They said that galvanised steel coil prices have gone beyond Rs 59,000 per ton and currently this item is being sold at Rs 61,000 per ton for the last 15 days.

Traders said that it was expected that the prices would surge because international contracts had been booked at comparatively higher rates by local importers as in July the world market prices were in the range of $800-$810 per ton.

However, private steel importers were of the view that only routine demand was witnessed in the market, but delay in arrival of some of the imported material aggravated the domestic scenario, and the prices started climbing.

"Sometimes vessels do not meet their scheduled time and the material gets offloaded a few days late, while on the other hand, the demand remains same or increases, which triggers inflationary trend in prices," said a steel importer. "Some $25 per ton was increased on galvanised steel coils during the first week of July and when the expensive material arrived here, the prices underwent a substantial rise," he added.

He hinted about another price spike in the days to come, saying that the international prices had soared by another $25 per ton during the third week of July, for September shipments, and when the September shipments would land here the commodity would become more expensive. "As a result, local prices of imported galvanised coils would be tagged at around Rs 63,000 per ton next month," importers said.

On the contrary, recently, the international prices of galvanised coils have declined by $25-$30 per ton, as Chinese material is being offered at lower rates.

"Some fresh deals have been made during the last few days with Chinese exporters, who had offered us the commodity at $775 per ton, against $800 per ton which is still prevailing in international market," the importers said.

Importers said that the rise in galvanised steel coils was due mainly to consistent rise in the prices of its essential metal--zinc--and fluctuation in the euro. Market sources said that importers had approached China in April for import of this item as it was offering the cheapest rates among all commodity sellers.

Citing reasons why the importers had placed orders in China, one importer commented: "Actually, the Chinese products have the spangle, which is, in fact, our basic requirement. Therefore, we had stopped importing European products because their prices were very high and the product was without spangle."

Importers say that some 3.5 million tons of steel products are imported every year from South Africa, Japan, Taiwan, United States, Australia, Korea and some European countries. Galvanised coils or sheets are used in cottage industry where small household items are made, like bucket, ducting of air-conditioners, etc.


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## Owais

*Irregularities of Rs 7.5 billion detected in sales, income taxes accounts* 

ISLAMABAD (August 10 2006): The Auditor General of Pakistan has detected Rs 7.5 billion financial and procedural irregularities in sales tax and income tax accounts during 2003-04.

The audit report on the accounts of revenue receipts (Direct and Indirect taxes 2003-2004) presented in the National Assembly shows bungling of around Rs 2 billion relating to Direct Taxes and Rs 5.5 billion to Indirect Taxes.

However, the departments managed to recover Rs 1.61 billion on the objections raised by the AG office. Irregular refund claims and wrong adjustment of input tax was detected by the AG office involving an amount of Rs 197,928,851 from September 2003 to April 2004. The non-realisation of sales tax, additional tax and penalties caused a loss of Rs 69.445 million during the period under review. The short payment of Rs 4,052,301 sales tax was unearthed during 2003-04.

Some of the interesting instances quoted in the report show that customs officials failed to timely publish notification pertaining to increase in import duty on sugar from 10 to 20 percent during this period. The printing in the official Gazette was delayed for 33 days, which enabled the importers to clear the commodity at 10 percent customs duty, instead of 20 percent, causing a loss of Rs 15.665 million.

In another case, non-verification of documents on export of POL products caused a loss of Rs 137.048 million. According to Ministry of Commerce SRO 137(I) 2002 of March, 2002, export of indigenous products to Afghanistan against an advance payment convertible in foreign currency attracted zero-rating of Sales Tax rebate on excise duty and normal repayment/drawback of customs duty. The benefit of the SRO was contingent to corroboration within 90 days of export documents by Pakistan Embassy in Afghanistan, in order to confirm arrival of exported products at destination, as no banking channel exists between the two countries to authenticate export materialisation.

The Collectorate of Sales Tax and Central Excise, Rawalpindi, cleared high-speed diesel, premium motor gasoline and JP-I exempt from government taxes to the tune of Rs 137,047,978 for export to Afghanistan by Pakistan State Oil Company during financial year 2002-03.

The collectorate did not follow the law to procure Pakistan Embassy's testified export documents from the oil company, and also did not demand and effect recovery of duties and taxes of Rs 137,047,978, even after a lapse of 90 days, as required under the notification.

This observation was issued to the Collectorate in November, 2003, and to CBR in March, 2004. In January, 2005, the Collectorate enumerated that the goods were transported under bond from PSO, Sihala depot, to PSO, Taru Jabba depot, and exports turned up from Peshawar Collectorate. The DAC directed Peshawar Collectorate to substantiate the export documents to the audit, but the regional office did not respond till finalisation of this report.

The customs officials also cleared assembly kit for the automobile industry at concessional rate of customs duty not covered under the concessional notification, resulting in short realisation of customs duty of Rs 74.456 million. Under SRO 436(I) 2001, the manufacturers/assemblers of automobile industry were allowed to import components at 35 percent concessional rate of customs duty. But, the customs cleared certain items not permissible under the said notification.

The AG office noted that the income tax department had not properly monitoring the deduction of withholding tax from contractors and suppliers, causing loss of Rs 33.281 million.


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## Owais

*All villages to be provided electricity by 2007: Musharraf* 

KARACHI (August 10 2006): President General Pervez Musharraf has exhorted the officials of utility services and government departments to work hard for the welfare, well-being and betterment of the people, during briefings on supply of electricity, water and gas at the Chief Minister House here, on Wednesday.

Sindh Governor Dr Ishratul Ibad, Chief Minister Dr Arbab Ghulam Rahim, federal and provincial ministers, advisers to Chief Minister, members of provincial assembly and nazims of various districts were present on the occasion.

Expressing his views, the President said the purpose of such meetings is to create awareness about what is being done in these important sectors and have co-ordination so as to do more for the good of the masses.

Musharraf said the focus on providing electricity, gas and clean drinking water is to help improve the living conditions of the people, adding the briefings today in these sectors were also aimed at assessing the achievements as well as ground realities and the future plans in these areas.

President said he would like to know as to what is being done in the education and health sectors- the ground realities.

With regard to the target for provision of electricity, he said all villages with more than 10 households would have to be electrified by December 2007. As far as gas is concerned, the target is all district and tehsil headquarters. For clean drinking water, there should be a filtration plant at every union council by December 2007.

Musharraf pointed out that the country's economy has revived and stressed that improvement in this vital area has to be transformed into "public gain". He said the focus should be on poverty alleviation, unemployment control as well as checking prices and inflation.

Musharraf said the standard of living of the people should be enhanced and they be provided with basic utilities like electricity, gas and clean drinking water.

He also laid stress on bringing about improvement in human resource through quality education and better health facilities. The President pointed out that the United Nations has also come up with Millennium Development Goals (MDGs) by 2015 and added that we should try to remain ahead of the deadline set by the UN for achieving these MDGs.

Referring to the briefing by Chairman Water and Power Development Authority (Wapda), Tariq Hameed, he said the process of electrification has increased manifold. Musharraf appreciated the good work being done by Wapda in this respect.

He said for provision of electricity to all by the year 2007, first power should be made available to villages with 100 and 50 houses respectively and later to villages with 10 houses can be covered.

Referring to the briefing by Chief Executive Officer of Karachi Electric Supply Corporation (KESC), Frank Scherschmidt, the President said the total demand of electricity in the metropolis is 2,300 MW and deficiency at the moment is 100 to 200 MW. He said the problems pertain to generation as well as distribution.

He pointed out that there is a big industrial backlog and asked how the demand for 900-MW additional power will be met if by June next the demand increases from 2,300 MW to 3,200 MW. The President said we were striving for enhancement in the generation of electricity.

Musharraf said by June next the generation of electricity would be about 3,100-MW with the addition of 800-MW but the shortage would remain between 100 to 200 MW, However, the industrial backlog would be cleared by then to a great extent. He said by 2007-08 we would be able to meet the electricity demand.

Musharraf pointed out that KESC is planning to invest a sum of Rs 22 billion to streamline the system. He was of the view that KESC should be supported in its efforts and be encouraged.

The President also pointed out that the production of vehicles in the country has risen to about 200,000 units annually. He said with the boost in economy and seven to eight percent growth rate the people now have money and are purchasing cars and motorcycles.

Musharraf said the biggest indicator of development is the energy requirement whose demand is on an increase in the country and the government was taking steps to meet this demand.

He said Pakistan would acquire gas from Iran through pipeline and that the matter regarding the pricing formula is being sorted out.

He described Pakistan as the centre of "connectivity" in this region.

He said the Thar coal can be gasified and can be used for generation of electricity.

He was of the view that gas should be used for generation of electricity rather than oil and alternate sources like windmill might also be used for curtailing expenses. Nuclear option for generation of electricity also incurs same expenses as of gas or coal, Musharraf said, adding this would help save the consumption of oil which will also help curtail the import bill.

The President further said privatisation is the way forward. We were thinking of corporatisation of Wapda and later on privatisation of this organisation, he said.

The President said he would address the nation on August 14 and would spell out the vision ahead.

On the occasion President also discussed the Hudood Ordinance and said that we will have to understand it and see that amendments can be made according to the Islamic injunctions. He said the assemblies should discuss and make decision regarding this. Earlier, Sindh Chief Minister, Dr Arbab Ghulam Rahim, called on the President at the CM House.


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## Neo

ISLAMABAD, Aug 9: A Chinese telecommunication player is investing about $300 million in Total Telecom, a local company to re-launch Instaphone with CDMA technology, Dawn has learnt reliably.

Six million CDMA (Code Division Multiplier Access) lines will be available for the subscribers from early next year soon after its re-introduction.

Total Telecom has recently purchased all the shares of Instaphone (Millicom Group) in Pakcom Limited, a cellular operator in Pakistan. Total Telecom is also the owner of Tele Card, the first Pakistani company providing alternative, integrated service provider of telecommunication users through Long Distant International (LDI).

Launched in 1991, Instaphone is the pioneer of mobile telephony in Pakistan and has over 360,117 subscriber base across the country.

At present the company has a wide range of economical packages in both pre-paid and post-paid categories, having a network reach over 185 cities across Pakistan but currently operating on the TDMA network, an old digital technology.

Instaphone is also first mobile operator in Pakistan whose licence was renewed for 15 years after completion of its full tenure of operations.

Telecommunication experts believe that CDMA is the choice of the future since it offers better sound quality, handles more call volume than old technology and has the potential of providing television services.

Based on spread-spectrum communication technique, it can handle data transmissions better than other technologies.

CDMA networks are also built with standard IP packet data protocols, when other network requires costly upgrades to add new data equipment in the network for which they also need new data phones. Standard CDMA phones also have TCP/IP (Transmission Control Protocol/Internet Protocol) and PPP (Point to Point Protocol) built into them.

It is believed that China Telecom Limited has shown interest to invest and activate the Instaphone to compete in the growing mobile telecommunication sector of Pakistan.


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## Neo

KARACHI, Aug 9: The telecom sector in Asian has seen the highest growth rate in which China and India lead in terms of numbers but Pakistan excels in terms of growth rate where mobile phone subscribersÃ¢â¬â¢ base is increasing at the rate of two million subscribers per month.

This was stated by Ufone president and CEO Babar Khan at the inaugural ceremony of the sixth ITCN Asia 2006 at the Expo Centre here on Wednesday.

He said it took approximately 12 years to reach one billion GSM subscribers worldwide in 2004 but only the last two-and-a-half years witnessed a sudden growth to two billion. At this rate the overall GSM base is expected to cross 3.3 billion by 2010.

In a competitive business environment, he said it was now necessary to introduce differentiating offers by continuously introducing the latest technology, he said. Ufone has around 7.5 million subscribers.

Bilal Munir Shaikh, vice-president marketing, Mobilink, speaking at the ITCN Asia conference said cellular had emerged as the fastest growing sector in Pakistan by posting a growth of 149 per cent since 2002.

He said the telecom industry had stimulated PakistanÃ¢â¬â¢s economic growth by its contribution to foreign direct investment from a meagre 1.3pc in 2001-02 to 45.3pc in 2005-06.Telecom sectorÃ¢â¬â¢s contribution to the exchequer in the shape of duties and taxes had surged from $167 million in 2001-02 to $845 million in 2005-06, he said, adding that Mobilink had been in forefront with an investment of over $1.2 billion.

Motorola country-manager Nadeem Safdar said the company was investing further in developing new networks and handsets offering to address every segment of the market.

Ã¢â¬ÅThe company is helping transform mobile phone from a luxury item to one that is affordable and one that will boost overall economic development of Pakistan,Ã¢â¬Â he added.

APP adds: Earlier, former federal minister Dr Abdul Hafeez Sheikh formally inaugurated the sixth ITCN Asia 2006 international exhibition and conference at the Karachi Expo Centre on Wednesday.

Speaking on the occasion, he said a large number of foreign delegates were participating in the event which would highlight Pakistan's potential to the world.

Ã¢â¬ÅThis will have a positive impact on Pakistan's economy and further improve the image of the country as well as Karachi,Ã¢â¬Â Dr Sheikh noted.


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## Neo

KARACHI (August 10 2006): Frank Scherschmidt, Chief Executive Officer of Karachi Electric Supply Corporation, and leaders of business community have agreed that KESC will restore 95 percent power supply in the city by August 12.

This agreement was reached during a meeting held at Karachi Chamber of Commerce and Industry (KCCI) on Wednesday, which took place on the intervention of Governor Sindh Dr Ishratul Ibad and provincial Minister of Industries Adil Siddiqui.

The KESC CEO admitted that the power utility has no computerised system to monitor defects and only relies on the information provided by its staff. All this confusion had occurred due to misinformation given by the staff, he was of the view.

Scherschmidt agreed with a proposal of setting up a monitoring cell having six representatives from KCCI, Site Association of Industry (SAI) and two representatives from KESC.

After overcoming the present power crises the cell will identify those PMTs which are overloaded and assist the KESC in improving power supply in the city.

During the meeting it was pointed out that there are may industries in site who have expertise in power sector and can assist the KESC in rectifying as well as identifying defects. Scherschmidt appreciated the offer.

Taking to _Business Recorder_, KCCI President Haroon Farooki said that the CEO apologised on the statement of KESC spokesman, who termed the joint press conference of KCCI and SAI as a move to gain political mileage and concessions. Scherschmidt also apologised on poor performance of the KESC, he added. Farooki said that the KESC chief agreed for compensation to those families whose near and dear ones lost lives due to electrocution.

Replying to a question, the KCCI chief said that Scherschmidt informed the meeting that he is an employee of the KESC and had no knowledge about KESC privatisation agreement.


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## Neo

ISLAMABAD (August 10 2006): The government of Balochistan on Wednesday has signed a cost sharing agreement with United Nations Development Programme (UNDP) for "Area Development Programme Balochistan, Phase II", for which the latter would provide $2.6 million to help in poverty reduction.

This is a four-year $14 million project and would be executed in nine selected districts of the province. For this, the World Food Programme (WFP) would provide $0.70 million, communities (cash/kind) $1.0 Million while the provincial government would spend $4.2 million from its kitty on the project. There is a financing gap of six million dollars, which would be filled by other donors.

In a ceremony held here, the Additional Chief Secretary (Development) Balochistan, Qayyum Nazar Changezi and Jan Vandemoortele, Resident Representative UNDP Pakistan signed the agreement.

"I feel honoured to be representing the government of Balochistan at an occasion where the government is actively partnering financially and otherwise for the development of the people of Balochistan," said the Additional Chief Secretary while addressing the gathering. "This has been possible only because the project and its implementing partners have proved its viability and I am confident that through this initiative many more lives in my province will be saved from the grips of poverty."

The project would focus areas include community mobilisation and capacity building, local capital generation, improvements in agricultural and livestock productivity, creating income generation activities and improving access to markets and services. In addition, facilitation for access to social sector services will be provided and women's role in development will be strengthened. Vandemoortele said, "the success of Phase I is demonstrated in the visible development of the thousands of people that were supported through this initiative. I am confident that with this support provided by the government of Balochistan, the project can be up-scaled and will be even more successful," he further added.


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## Neo

Thursday, August 10, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\08\10\story_10-8-2006_pg5_1

ISLAMABAD: The Chinese petroleum industry has indicated an interest in shifting its excess capacity to Gwadar, bringing in estimated investment of $13 billion, a senior government official told Daily Times on Wednesday. 

The China Chamber of Petroleum Industry (CCPI) and All China Federation of Industry and Commerce (ACFIC) conveyed to Pakistani authorities during a recent visit that the Chinese petroleum industry is keen to invest in PakistanÃ¢â¬â¢s energy sector, the official said. 

The ACFIC and CCPI indicated that both the public and private sectors should cooperate in energy projects in Pakistan, with the Chinese private sector in particular seeing a lot of opportunities here, the official said. 

This cooperation will not be restricted to building an oil pipeline to set up an energy corridor to Gwadar, but also in shifting energy related industry to Pakistan. 

However, the government will need to provide strong support to lay down a framework for a safe financial, investment and security environment in Balochistan to attract this investment, the official said. 

He said the Chinese petroleum industry sees four potentially fruitful projects. Firstly, an oil pipeline linking Gwadar to Xinjiang in China to set up an energy corridor. The economic viability of such a project is yet to be worked out. Secondly, the development of Gwadar Port Energy Zone, where the Chinese could set up an oil refinery with a capacity of 21 million tonnes. 

China has been preparing a similar project along the Yangtze River in collaboration with Saudi Arabia for the last two years, but has now indicated it could shift the project to Pakistan, the official said. Other countries besides China will also be invited to invest in the project. 

Thirdly, the Gwadar energy zone could accommodate other energy sector industries. The Chinese business groups said that China has excess capacity in the petroleum services industry and planned to move the excess capacity to Dubai, but was now considering shifting it to Gwadar, the official added. According to their initial estimates, the Gwadar Port Energy Zone could attract investment of up to $13 billion. 

Fourthly, the Chinese petroleum industry also indicated an interest in oil and gas exploration projects in Pakistan, the official said. The Chinese business groups had proposed that a Pak-China energy and trade cooperation promotion association be established for such projects. 

The association would include members from the oil and gas sector and other industries in the power sector. They had also suggested that a Pak-China joint investment company be set up to finance these projects, the official said.


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## Neo

Total debt up by 4.8% in 2005-06

Thursday, August 10, 2006
javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\08\10\story_10-8-2006_pg5_2

KARACHI: PakistanÃ¢â¬â¢s total external debt has increased by 4.8 percent or $1.642 billion during the 2005-06 fiscal year to $35.679 billion compared with the $34.037 billion in debt in the 2004-05 fiscal year.

According to State Bank of Pakistan data, Ã¢â¬ÅPakistanÃ¢â¬â¢s total external liabilities stood at $37.265 billion at June 30, 2006 compared with the $35.834 billion on June 30, 2005.Ã¢â¬Â

The external debt during the second quarter of 2005-06 stood at $35.245 billion from the $35.675 billion in the corresponding period of the previous year, while total external debt stood at $33.523 billion from the $33.918 billion in the corresponding period of the previous year. 

Thus the external debt fell in the second quarter of the previous year but was still higher than the previous yearÃ¢â¬â¢s external debt.

On June 30, 2006, medium and long term (one year) debt increased by $1.594 billion to $32.407 billion from the $30.813 billion in 2004-05. 

This year, the debt owed to the Paris Club fell by $183 million or 1.4 percent to $12.831 billion, which stood at $13.014 billion on June 30, 2005. The countryÃ¢â¬â¢s multilateral debt increased to $1.169 billion in 2005-06 to $16.527 billion from the $15.358 billion in 2004-05.

The countryÃ¢â¬â¢s Private Non-guaranteed Debt shot up by $243 million or 18 percent to $1.585 billion from the $1.342 billion in the last fiscal year. 

This year, the debt owed to the International Monetary Fund (IMF) went down by $120 million or 7.4 percent to $1.491 billion from $1.611 billion in 2004-05, the SBPÃ¢â¬â¢s data said. The external liabilities of the country have increased to $37.267 billion from $35.834 billion. 

The debt of Special US Dollar Bonds stood at $247 million on June 30, 2006 after a decline of $174 million from the $421 million mark on June 30 2005. Foreign Currency Bonds (NHA/NC) fell to $109 million from $131 million.

National Debt Retirement Program, Central Bank Deposits, NBP/BOC Deposits and other liabilities (SWAP), however, remained unchanged during the 2005-06 fiscal year, according to the SBP data.

http://www.dailytimes.com.pk/default.asp?page=2006\08\10\story_10-8-2006_pg5_2


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## Neo

KARACHI: IndiaÃ¢â¬â¢s giant call centre industry stretches its footprint to Pakistan by setting up first ever operation in the country in partnership with a local firm, which involves around half a million dollars investment.

Sources in telecom industry said the fresh development marked TeleBrands India as first company from the neighbouring country to establish its inbound telesales call centre in collaboration with PakistanÃ¢â¬â¢s Phonecast Private Limited.

Ã¢â¬ÅThe operation of that centre is now on in Karachi,Ã¢â¬Â said a source. Ã¢â¬ÅInitially it offers 48-agent service and the two groups (TeleBrands India and Phonecast Private Limited) plan to increase that to 150 in near future.Ã¢â¬Â

He said talks for the newly-inaugurated call centre was initiated by ITES Consortium, countryÃ¢â¬â¢s premier call centre consulting consortium, after two successful international call centres in Pakistan.

Ã¢â¬ÅITES Consortium has already successfully implemented two international call centres in Pakistan namely Ensign CommuniquÃË, which is a project of Shaheen Foundation and Crestel of Crescent Standard Group, through its partner VELink USA and Phonecast,Ã¢â¬Â added the source.

Call centres industry in Pakistan has witnessed sharp growth during the last two years on the back of increased interest of western firm to outsource their businesses. The countryÃ¢â¬â¢s software service industry and an accompanying sector that runs call centres and back-office work conducted over high-speed telecoms are also growing at a faster pace.

The countryÃ¢â¬â¢s software exports crossed $70 million during 2005-06, first time ever, registering a 50 per cent growth, as western firms started turning more and more to Pakistan for IT-enabled services to cut costs and raise profits.

Operators believe that with increased interest of foreign investors in PakistanÃ¢â¬â¢s IT and telecom sectors the figures may grow manifold in days to come.

Ã¢â¬ÅThe world offers the best business opportunities to our growing call centre industry, which has potential to grow by many times,Ã¢â¬Â said Abdullah Butt, President Association of Call Centre Operators, who is also the CEO of Phonecast Private Limited.

Ã¢â¬ÅBut unfortunately we are not getting that due share. With the arrival of reputed and recognised call centre players, the country would be able to increase its software and IT-enabled services export manifold, as costs of outsourcing has reached all-time high, in the developing countries including India.Ã¢â¬Â

He said the two groups had already proved their commitments by initiating call centre project, which was first of its kind in the country.

Ã¢â¬ÅThe groups plan to invest $20 million in Sindh and with initiating call centre project it shared $2 million,Ã¢â¬Â added Butt.

TeleBrands is IndiaÃ¢â¬â¢s largest telemarketing company that specialises in direct response TV (DRTV) and call centres and the particular Indian company is planning to invest Rs200 million in IT and telecom sector in Pakistan by marketing its products via state-of-the-art call centre facility.

IndiaÃ¢â¬â¢s IT industry exports, based on strong English language skills and cheaper wages, crossed $10 billion and was growing at least 26 per cent a year up till last financial year.


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## Neo

* 

ISLAMABAD, Aug 10 (Reuters) - Pakistan's trade deficit narrowed to $1.23 billion in July from $1.47 billion in June, but was almost double the $726.9 million deficit posted in July 2005, according to provisional data released by the Bureau of Statistics on Thursday. 

The trade deficit for 2005/06 fiscal year, that ended on June 30, widened to a provisional $12.11 billion from $6.21 billion in 2004/05. Exports fell to $1.22 billion in July from $1.51 billion in June and were just below the July 2005 figure of $1.26 billion. Imports declined to a $2.46 billion in July from $2.98 billion in June and were up over 23 percent from the July 2005 figure of around $2 billion. 
*


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## Owais

*Around 6,000 ghost entities on sales tax roster detected* 

ISLAMABAD (August 11 2006): The Central Board of Revenue (CBR) has identified 6,000 firms/units registered with the Sales Tax Department, who have neither obtained the National Tax Numbers (NTNs) nor traceable at the declared business addresses.

Sources told _Business Recorder _on Thursday that the Board detected these entities during scrutiny of computer record to update database.

Around 6,000 entities have obtained the Sales Tax Registration Numbers (STRN), but operating without the NTNs. Even their record is not available in the 'NTN Master Index.'

When asked about these entities nature of businesses, sources said that it is not clear whether these units were actually carrying out businesses in the field or have obtained the STRNs for some other purposes.

The CBR has still to decide the fate of these ghost entities. One of the options is to de-register them. However, the latest data has been submitted to the CBR Sales Tax Wing, which is the competent authority to take action, officials said.

Sources also dispelled the impression of issuing fresh NTNs to these firms/units, as they have no contact with the regional collectorates. On the other hand, it has also been apprehended that some of these units might have obtained registration to claim fraudulent refunds.

The CBR is legally empowered to cancel the sales tax registration of people, who failed to file sales tax returns for the last six months.


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## Owais

*Long-term financing: SBP directive* 

KARACHI (August 11 2006): The State Bank of Pakistan (SBP) has directed all banks/DFIs to revise their rates of finance on the loans outstanding under Long Term Financing for the Export Oriented Projects (LTF-EOP) Scheme effective from July 14, 2006 so as to pass on the benefit of reduction in spread to the borrowers of export oriented project.

In this connection, the SBP said that instructions regarding reduction in spread of banks/DFIs on financing provided by them under the LTF-EOP Scheme are also applicable on the loans sanctioned/disbursed prior to the issuance of SMED circular No 15 dated July 15, 2006.


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## Owais

*PC declines to take PCP for privatisation* 

ISLAMABAD (August 11 2006): The Privatisation Commission on Thursday declined to take Printing Corporation of Pakistan (PCP) for sell-off, saying liquidation for this debt-ridden entity would be the best option.

Its authorities told the PC Board, which met here with Privatisation minister, Zahid Hamid, in the chair that PCP's assets were much less than its liabilities and it would be next to possible to attract any buyer for this entity.

Sources said PCP was almost a sick unit as its liabilities and assets sheet showed a difference of Rs 5.5 billion. It took loans from different banks and DFIs but did not honour its commitment and as on June 2006 it owed Rs 5.5 billion more than its total assets.

PCP also owed millions of rupees to different organisations as it could not fulfill its commitments for printing orders placed by different government ministries/divisions and corporations although it got substantial portion of the money in advance.

PCP's history has been very shaky. At least one of its former chief and many other officials are facing corruption charges and the officials of the Privatisation Commission were of the view during the meeting that the entity's bad reputation could be a major problem in its sell-off through bidding.

However, on the insistence of the Cabinet Division the Privatisation Commission agreed to refer the PCP's case to the Cabinet Committee on Privatisation (CCoP) but its officials categorically told the Board that they will take the same position before the CCoP and suggest to de-list PCP and take other route to get rid of it.

It may be noted that PCP is a subordinate organisation of Cabinet Division and for the same reason it advocated its reference to CCoP during the Board meeting.

The Board also approved an offer of Rs 156 million for machinery of Lasbella Textile Mills and referred it to the CCoP. The Privatisation Commission had offered Lasbella Textile Mills' machinery for sale.

The sources said the Board could not take-up Pakistan Steel Mills Corporation (PSMC) case for the reason that exactly at the time when the meeting was in progress the minister and other officials had to rush to Parliament House to brief Prime Minister Shaukat Aziz and some other members of the ruling party on the future of the sale.

After a detailed presentation to the Prime Minister on PSMC transaction Privatisation Minister spoke to the mediamen. He defended the government, saying the Supreme Court did not mention corruption in its detailed judgement and only pointed out procedural flaws which would be looked into for the future transactions.


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## Owais

*Palm oil imports decline significantly* 

KARACHI (August 11 2006): Palm oil and olien imports have declined significantly, almost 50 percent, during the last 25 days due to skyrocketing international prices and non-viability of trade, importers said on Thursday.

They said that prices of palm and olien oil keep rising on the international front and this situation has badly hit the import process, which they say, was going smoothly during the last first week of last month.

Commercial importers said they are currently monitoring the international trade meticulously on daily basis, however, the number of placement of fresh orders has slashed to almost 50 percent.

"Actually, we had been cautious when the prices broke $475 per ton fence, however, we (importers) kept bringing in the commodity as the trade was viable three weeks prior," said an importer.

"We are very carefully placing import orders now because it has been anticipated that the international prices of palm oil or olien oil might see declining trend to some extent in the next couple of weeks," said an importer.

He said that the international prices have gone up considerably during the last 25 days and this price-hike has directly hit those who are still engaged in importing palm oil or olien oil.

"An aggregate $55 per ton has been increased during the last 25 days," said a leading importer, adding the international palm oil or olien oil prices started rising from $475 per ton to $527 per ton during the period under review.

He said the importers are reluctant to import palm oil in bulk quantity as they are anticipating that an expensive commodity would raise the domestic prices and that situation could affect the sale of the imported commodity.

"Another factor, which has provided a justification to the importers to import lesser quantity, is the availability of sufficient imported commodity in the country and regular production," a trader said, adding that some fund managers are also playing with those, who are sitting on the stocks.

Another Karachi-based importer said that some previously booked contracts are being realised with the arrival of commodity, adding that import contracts that had been booked during May and June (2005), have been arrived during July and still arriving here.

"Deals of around 0.2 million tonnes of palm oil and olien oil are being actualised these days and an ample supply of refined edible oil would be available in the local market during the month of Ramazan," he added.

Meanwhile, it is pertinent to mention here that a number of countries had started setting up plants for the production of bio-diesel with palm fruits, including Singapore, Malaysia, China and some European countries. This situation has badly destabilised the world's scenario where the demand and supply gap is consistently widening and pushing the international and domestic markets' prices towards unprecedented levels.


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## Owais

*More banks eyeing Pakistan: Financial Times* 

ISLAMABAD (August 11 2006): After the Standard Chartered's agreement to buy a majority stake in Union Bank, there are prospects of other western banks entering the country's banking sector.

Analysts said there are talks of at least two other western banks looking to buy controlling stakes in Pakistani banks, according to a report published in the Financial Times on Thursday.

The report quoted Prime Minister Shaukat Aziz as saying that the Standard Chartered's buying major stake in Union Bank could be a precursor to other western banks entering the country.

According to the report, the prime minister said the agreement confirmed that the reforms initiated to turnaround the performance of banks were beginning to pay off.

"We understand there is interest from other global players (international banks), which we welcome. Pakistan is a country of 165 million with a growing economy," Shaukat said.


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## Owais

*First IC3 pilot project to be built at Port Qasim* 

KARACHI (August 11 2006): Pakistan is going to start construction of its first pilot project of Integrated Cargo Container Control (IC3) programme that would facilitate reduction of scanning cost of its cargoes destined to the United States and help control illegal transportation of arms, radioactive materials and narcotics.

Sources told _Business Recorder _on Thursday that the groundbreaking of country's first IC3 programme would start on Saturday in the proximity of Port Qasim Authority (PQA).

The PQA has allocated 10 acres land for IC3 programme, out of which five acres would be occupied for installation of scanning equipment and rest of the land to be reserved for container stacking yard.

By implementing this programme at PQA, Pakistan would have an edge over India for having trade security measures in place. The IC3 programme is implemented in 42 countries around the world.

This pilot project at PQA for scanning of commercial cargo would be operational in six-month period thus preventing to use containers for transportation of arms, radioactive materials and narcotics to the US.

The implementation of the IC3 at PQA will reduce the cost of country's exports to US. At present containers of Pakistani commercial cargo bound for US ports are being scanned at Hong Kong, Colombo and Salala causing extra financial burden on local exporters.

The facility of scanning of US bound containers at PQA will also save time for completing export orders of US buyers.

Pakistan is expecting further increase in exports to the US in future and the trade security measures to be implemented will help the country to safeguard its trade interests.

The US Customs will not subject the screened cargo to re-examination on arrival at US ports. The arrangements for implementing the IC3 Programme were earlier negotiated and finalised by senior customs officers of Pakistan and the US.

The IC3 programme envisages joint screening of US-bound containerised cargo from Pakistan via live video link by customs authorities of Pakistan and the US.

According to agreement, the government of Pakistan would safeguard its export's interests to US markets by ensuring the security arrangements of cargo containers at Pakistani ports.

The IC3 Programme will serve the purpose of Container Security Initiative (CSI) and Mega Port Initiative (MPI) of the US government to ensure secure cargo supply chain for the US in Pakistan.

The US authorities, after the terrorist attacks of September 11, had proposed its trading partners to comply with the Container Security Initiative (CSI) and Mega Port Initiative (MPI) for its internal security needs.

The implementation of the measures proposed in these two initiatives by the US government would enable Pakistan to have containerised cargo direct access to US ports.

The federal cabinet at its meeting held in mid-February this year had approved the Implementation of Integrated Cargo Container Control (IC3) Programme at Port Qasim.

In the first week of March this year, Pakistan and US had signed a Declaration of Principles on enhancing international maritime trade security under a bilateral initiative called the IC3 Programme.


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## Owais

*Pak-China Trade and Economic Development Forum established * PESHAWAR: To give boost to the trade between Pakistan and China, Pak-China Trade and Economic Development Forum has been established.

The forum President Ziaul Haq Sarhadi, talking to newsmen here Saturday, said that forum was built in collaboration with NWFP government so that traders of the province could come into direct contact with the Chinese traders.

This forum comprises various people from local business community including provincial secretary for trade and commerce, he said.

Ziaul Haq said the forum would take up initiatives for the exchange of traders&#8217; delegations from both countries.

An international trade fair would soon be held in Peshawar, he added.


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## Neo

LAHORE (August 11 2006): With the functioning of Sundar Industrial Estate (SIE), there will boom in industrial activities and Punjab's GDP is expected to increase by over 25-percent. Punjab Secretary Industries Anwar Ahmad Khan stated this during his visit to the Sundar Industrial Estate.

Mansoor Abbas, Director, Punjab Industrial Estates (PIE) and industrialists of Sundar Industrial Estate (SIE) were present on the occasion. Anwar maintained that industrial production volume is likely to increase with the functioning of industrial units in 47 different sectors at the Estate. Appreciating the efforts made by the management of SIE, he expressed the hope that the Estate would be functional within stipulated time.


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## Neo

KARACHI (August 11 2006): The growth of Pakistani auto industry, which is almost touching the figure of producing 200,000 four wheelers annually has resulted in an increased interest for making fresh investments by Japanese automobile industry, according to Japan External Trade Organisation (Jetro) here.

In a press release Jetro said that it had organised and dispatched an automotive study mission to Japan from July 22 to 29, consisting of eight chief executives of leading automotive vendors of Pakistan. The participants, while observing the latest die making and press processing methods, also exchanged views and ideas with members of Die making association of Japan.

The study tour provided Pakistani vendors with the opportunity for amplifying their public/personal relations with the Japanese members, who were briefed about the prevailing situation of auto vendors in Pakistan.

Numerous study missions of similar nature have been organised in the past by various organisations, however, to their long duration of more than two weeks, it was always difficult for the chief executives to accommodate such a schedule. Considering this situation, a tailor made special study programme of an appropriate duration of seven days was organised by Jetro to enable chief executives participate and observe the press processing, die making, particularly making casting dies, machine tool makers and press parts welding shops of automotive assemble plants.

Expectedly, the mission provided every participant a chance to discuss and exchange about all the concerned subjects with their counterparts. They also visited die-making organisations and discussed the possibilities of future technical exchanges between the two countries.


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## Neo

LAHORE (August 11 2006): Punjab Chief Minister Chaudhry Pervaiz Elahi has said that Lahore Mass Transit System project would be launched in July 2007 and its first phase would be completed by 2010. He said international investors are showing keen interest in the project costing Rs 155 billion.

He expressed these views while presiding over a high level meeting held to review Lahore Mass Transit System project, here on Thursday, disclosed an official.

Chaudhry Pervaiz Elahi said that this mega project would not only result in provision of modern travelling facilities but also leave a positive impact on the living standard of the masses. "A separate authority would also be constituted for the implementation of Lahore Mass Transit System. This project would be completed within next five years," he added.

According to him, this project of international standard would comprise an underground tube system and latest ground level rail system. Twenty-seven km long first phase of the project would be from Hamza Town to Shahdara and would comprise 22 stations out of which 12 would be underground.

This phase would be 12-km long at ground level from Hamza Town to Linear Park Model Town and 10-km underground from Linear Park to Data Darbar via Ferozepur Road, Fatima Jinnah Road, Mall Road, Lower Mall while 5-km will be from Data Darbar via Badshahi Mosque to Shahdara.

He said that the second phase would start from Thokar Niaz Beg and pass from Chauburji, GPO Chowk, McLeod Road, Railway Station and conclude at G.T. Road. "Implementation of this project would boost constructive activities and generate job opportunities at a large scale. This revolutionary project of communication would serve as link between different areas of Lahore besides improve the image of the city," he added.

He said that the government is taking solid measures for the provision of better communication facilities and elimination of environmental pollution. He said that Lahore Mass Transit System would operate through electricity that would greatly help maintain a clean environment. "Tourist activities would accelerate as a result of this scheme, which would also result in improvement of the socio-economic conditions of the people as well as economy of the province.

Later, Regional Director of international company MVA Asia Ltd, Mazhar Iqbal gave a briefing about the project.

Provincial Minister for Transport, Rana Shamshad Ahmed, Chief Secretary, Salman Siddique, Chairman P and D, Suleman Ghani, Secretary Transport, Agha Nadeem, Secretary Communication and Works, Ahmed Yar, DCO Lahore, Mian Ejaz, Special Secretary Finance, Azmat Ali Ranjha and other senior officers were present.


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## Owais

*$40 billion exports target projected by 2012-13* 

ISLAMABAD (August 12 2006): The Planning Commission has projected a $39-40 billion exports target by 2012-13to take the share to GDP from 12 to 15 percent. Sources said the plan, based on two-pronged strategy, was prepared by the Planning Commission to achieve the enhanced target of exports and its being placed before the stakeholders, in particular exporters, here on Saturday for their views.

Planning Commission Deputy Chairman Dr Akram Shaikh will chair the meeting which will be attended by policy makers, exporters and concerned ministries and divisions officials.

The Planning Commission is of the view that traditional strategy will not work to the expectations to get enhanced share in today's competitive world. It wants more vibrant role from the private sector to take targets to the new heights.

Pakistan's exports are on the rise for the last few years but the top brass are still not satisfied with the share to GDP that currently stands at 12 percent. Shortfall in exports in 2005-06 added to their concern. These feelings led to serious thinking to have a new approach to ensure a U-turn in exports.

The policy makers are of the view that main objective of setting up a long-term exports target is to have a clear destination with a clear objective. They say that the strategy will have to get enhanced exports target through diversification of the markets and exportable surplus.

The policy makers are also giving high priority to public sector, in particular the exporters, to get the job of increased exports done. They said that the government would really push forward the exporters by facilitating them to concentrate on non-traditional markets and items to get the exports target. The policy makers also want to listen to private sector representatives before finalising the exports strategy.

Sources said that President General Pervez Musharraf and Prime Minister Shaukat Aziz had tasked the Planning Commission to prepare an exports plan to increase the exports shares to GDP from existing 12 percent to 15 percent. The matter was discussed in more than one meetings during last few months and as a follow-up of the consultations the Planning Commission has worked an exports plan based on long-term strategy.


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## Owais

*Over Rs 2.907 billion funds misuse detected in NHA accounts* 

ISLAMABAD (August 12 2006): The Auditor General of Pakistan (AGP) has unearthed misappropriations of more than Rs 2.907 billion in National Highway Authority (NHA) accounts, exposing wasteful expenditures and overpayments by the Authority. According to the audit report, the NHA suffered a loss of Rs 1.142 billion due to non-competitive award of works.

The construction work of Lyari Expressway, Karachi, was awarded for Rs 4.892 billion to Frontier Works Organisation (FWO) without tendering, on negotiation basis, at 9.89 percent above engineers estimate in May 2002, whereas the work of Karachi Northern Bypass Project (Package-II) was awarded for Rs 645.175 million through open bidding to ECI the same month at 15.78 percent below engineers estimated cost.

Deviation from codal provisions regarding tendering procedure and acceptance of higher rates during negotiation caused unjustified expenditure of Rs 1142.831 million, the report said.

It said that the Authority caused a loss of Rs 478.777 million to national kitty due to wasteful expenditures. It was observed that the NHA did not plan the Additional Carriageway Chablat-Nowshera Project properly. That resulted in an abnormal delay of 10 years in its completion.

The Authority did not fulfil the prerequisites, like site clearance and availability of funds, and design of the project was deficient which called for frequent changes during execution. This hampered the progress of contractor and consequently, escalation claims of Rs 478.777 million had to be paid to the contractor.

In another case, the Authority suffered a loss of Rs 302.702 million due to payment of escalation for delay on the part of the contractor. The NHA paid price escalation beyond contract period of Islamabad-Murree Dual Carriageway although progress reports attributed the delay in completion to DITCO for deployment of inadequate and old machinery and less manpower. The audit report shows that NHA faced a hefty loss of Rs 187.503 million due to incorrect rates in Kohat Tunnel Project.

The NHA management did not derive new rates from composite schedule of rates 2000 for the items whose specifications were changed to NHA general specifications. Application of rates quoted on the basis of original contract specifications resulted in overpayment of Rs 187.503 million.

It was observed that Director Revenue NHA, Islamabad received less revenue in the account than actually realised by the contractor as was evident by the comparison of monthly statements of toll plazas. Non-depositing of actual revenue in NHA account resulted in less receipt of Rs 106.910 million. The institution also suffered a loss of Rs 91.557 million on Mansehra-Naran-Jalkhand project.

The report further says that NHA on Kohat Tunnel Project and Rahim Yar Khan-Trinda Muhammad Pannah-Bahawalpur Project paid Rs 28.947 million and Rs 13.514 million, respectively, on account of advances for relocations of utilities but no adjustment was made despite the fact that projects had been completed. Non-observance of provision of code resulted in non-adjustment of advances of Rs 42.461 million.


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## Owais

*President vows to launch manned flight into space* 

ISLAMABAD (August 12 2006): President General Pervez Musharraf has vowed to exploit space through advancement in science and technology. He was addressing the first commencement ceremony of the Institute of Space Technology (IST) at Rawat near Islamabad on Friday.

The President said the Space and Upper Atmospheric Research Council has been tasked to exploit space, which could bring enormous economic benefits to the people of Pakistan.

He asked space scientists to develop the capacity to indigenously produce and launch different types of satellites into orbit through indigenous launch vehicles. The President vowed to launch a manned flight into space and even to moon through indigenous efforts in coming years.

He said the country should also develop the capacity to send unmanned aerial vehicles into orbit as it has acquired the basic technological know-how to reach space and moon. The President said the establishment of the Institute of Space Technology is a milestone in the direction of taking Pakistan into space age.

The President said Suparco, which was neglected since its inception in 1961, has now been revived with new directions and goals to bring Pakistan on the world map of space-faring nations.

He said the premier space organisation has been brought under the umbrella of National Command Authority at par with other strategic organisations to achieve strategic objectives. He lauded support and efforts of the various organisations to making a premier educational institution in a short period of time.

The President announced Rs 500 million for Suparco in the first phase and said Rs 500 million would be provided to top space research organisation in the second phase. The President, who is also the chancellor of the IST, conferred degrees among first graduates of passing out from the institute. He also awarded goals medals to top achievers in various disciplines.


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## Owais

*Steel import from China increases* 

KARACHI (August 12 2006): Steel import from China has surged substantially by around 35 percent during the last three months due to low price factor and availability of the stocks of different products in bulk, market sources said on Friday.

They said that private importers had started placing steel import orders in China around three months back when they were quoted lesser rates there than the international market.

"The import of galvanised coils, hot-roll coils and cold-roll coils from China have grown smartly to around 35 percent as we (importers) get lesser rates of these products compared to European products which are still not viable for consistent and smooth trade," said a Karachi-based importer.

Commenting on the prices in China, he said that the international market including China's market is seeing a major fluctuation phase these days and the prices of different steel products varies everyday, therefore, it is difficult to declare any commodity's price now with certainty.

"However, we could say that the prices of galvanised coils in China are ranging between $780 to $800 per tonne, while hot-roll coils are being tagged around $470 to $500 per tonne," he said and added, "Similarly, cold-roll coils are currently being sold at around $530 per tonne."

Market sources have pointed out that steel prices in the European region are still higher and the major import orders are being placed in China and Ukraine by the local importers.

"Some factors which have diverted the importers from Europe to China, is the facility of chartered vessels and availability of the material in bulk," a senior trader said.

Citing reasons of decreasing trend in the Chinese steel prices, he said, "The steel production in China has witnessed a mammoth growth during the last two years, so they have sufficient stocks in hand."

He added that China has also widened its clientele and was receiving a number of big orders from different countries around the world.

"Around two years back, China was one of the consumers of international steel and used to import huge quantity of different steel varieties, however, now the enhanced production capacity has provided an edge to China in export of steel," said another importer.

He added that previously China's share in the total imports of the country was not countable due to similarity in the prices with different competitors, however, when China offered lesser rates the trade gained momentum. Some of the importers have hinted more decline in the existing rates in China and said that in the next two to three months the prices of steel products could fall further.

"Weather conditions mainly moisture in China usually affect the material and cause rusting during the months of November and December, therefore, we expect more decline in almost every commodity prices besides increase in import orders," said another trader.


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## Owais

*Switzerland, Hong Kong and UK pull out $1.5 million from SCRAs* 

KARACHI (August 12 2006): Switzerland, Hong Kong and UK pulled out on August 07 amounts worth about $1.5 million from their Special Convertible Rupee Accounts (SCRAs) maintained in Pakistan for portfolio investment.

Switzerland withdrew $1.1 million followed by Hong Kong and UK who withdrew $0.3 million and $0.1 million respectively. The overall impact of these withdrawals on the cumulative total was, however, limited to $0.6 million only because of fresh arrivals of $0.9 million from USA.

As a result of the foregoing developments, cumulative withdrawals of Switzerland during the year so far amounted to $10.2 million and those of Hong Kong to $1 million. UK's cumulative flows stood lower at $1.27 million on 7th August compared with $1.35 million on 4th. No other worth reporting development took place in the case of any other investor country. No update was available after 8th August, which provided figures for the 7th.

On the stock front, KSE 100 Index, which continued rising amid leaps, relatively smaller jumps and a couple of back-steps between 24th July and August 07 to reach 10,847 from a low of 10,350, slipped to 10,828 on 8th August. Profit taking was stated to be the major factor behind the decline. SBP General Index of Share Prices which stood at over 452 on 7th August also declined by few points to 450 on 8th. Aggregate market capitalisation, in the meanwhile, declined from Rs 2,992 billion on 7th August, a figure short of only a few billion rupees from the landmark Rs 3 trillion, to Rs 2,985 billion on 8th August.


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## Owais

*Micro-scholarship programme: US envoy awards $40,000 grant to RCDC Gwadar* 

GWADAR (August 12 2006): US Ambassador to Pakistan Ryan C Crocker signed an agreement on Friday to award a grant of 40,000 dollars to Rural Community Development Council (RCDC), Gwadar to run English Access Micro-scholarship Programme at Gwadar Grammar School for next two years.

The goal of the programme is to prepare bright students in both written and spoken English, so that they can more easily integrate into global marketplace and have access to the world.


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## Owais

*US ready to help Pakistan launching communications satellite * ISLAMABAD: The US was ready to help Pakistan in building and launching its communications satellite, said US Coordinator for International Communications and Information David A Gross here on Friday.

&#8220; We are ready to hold bilateral technical talks over launching Pakistan&#8217;s communications satellite,&#8221; David A Gross told a news conference.

Pakistan was going in right direction in terms of policies regarding economic development, David said adding that Pakistan had great potential for foreign investment.

Lauding the pace of development in telecommunication sector, David A Gross said the US investors were keen to take the benefit of investment opportunities in various sectors in Pakistan.


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## Owais

*Debate concerning PSM's privatisation at NA floor continues* 

ISLAMABAD: The National Assembly finally kicked off on Friday a debate on the Supreme Court&#8217;s judgment with regard to the privatisation of Pakistan Steel Mills.

The opposition demanded the resignation of Prime Minister Shaukat Aziz and warned that the apex court judgment could lead to the use of 58-2 (b) of the Constitution, leading to the National Assembly dissolution.

Opening the debate, Aitzaz Ahsan said if the prime minister does not step down, it would make the situation worse that could be used as an FIR for using Article 58-2 (b) of the Constitution.

Treasury member Farooq Amjad Mir termed the Supreme Court verdict a guideline for the government&#8217;s future programme of privatization. He reminded the fate of Supreme Court&#8217;s decisions during the governments of Benazir Bhutto and Nawaz Sharif.

As Aitzaz Ahsan spoke, there was pin-drop silence. Whenever he quoted paragraphs from the Supreme Court&#8217;s judgment, the opposition members raised the slogan of &#8216;Resign, Resign&#8217;. When Farooq Amjad Mir, during his speech, called Benazir Bhutto an absconder, rumpus started.

Earlier, at the speaker&#8217;s chamber, an agreement was reached between the opposition and government for debating the Supreme Court&#8217;s judgment till Friday next. Criticising the government&#8217;s privatisation policy, Aitzaz alleged that vital national assets are being sold without following set procedures, resulting in huge losses to the national exchequer. 

Aitzaz alleged the government was selling strategic assets of the country. The PSM is the largest steel producing industry of the country. &#8220;What the Supreme Court has said in its verdict falls under the definition of corruption,&#8221; he said, asserting action could be initiated under Clause 9 of the NAB Ordinance. He said the Supreme Court has raised objections to the cabinet privatisation committee.

He said no corruption case has been instituted against Javed Hashmi and Makhdoom Yousaf Raza Gillani, but they are kept behind the bars. The Supreme Court judgment is an FIR against Prime Minister Shaukat Aziz, Aitzaz said, adding, &#8220;The government failed to prove a single case against Benazir Bhutto despite the fact that NAB courts belonged to them.&#8221; He said if such a decision has been given against Indian and UK prime ministers, they would have quit.

&#8220;The allegations stand proved against Shaukat Aziz; therefore, he should resign and set a new tradition,&#8221; he said. Treasury member Farooq Amjad Mir said the government has always held the judiciary in highest esteem and gives due respect to the apex court&#8217;s decision.

He said during the previous governments, the process of privatisation was carried out through executive orders and there were no rules governing the process. He said the government would try to remove shortcomings, which have been pointed out by the Supreme Court and carry out the privatisation process of the PSM afresh. He recalled the attack on the Supreme Court during a previous government because it did not give the verdict of its liking. The debate will continue today.


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## Owais

*PM eyes wide scope for Pak-Iraq cooperation* 
*ISLAMABAD *_(updated on: August 12, 2006, 23:21 PST_): Prime Minister Shaukat Aziz on Saturday said Pakistan and Iraq have historic relations based on common faith and culture and the two countries need to enhance co-operation in the diplomatic, cultural, educational, trade, investment and economic fields.

Talking to Jaffar al Hakeem, President Democratic Alliance Iraq who called on him at the PM House this afternoon, the prime minister said that the people and government of Pakistan want to see development stability and prosperity in Iraq.

He said the government is willing to provide all possible help for the reconstruction of Iraq.

The prime minister said Iraq having rich human capital and natural resources has a vast potential to develop and succeed.

Peace, harmony, security, leadership qualities and unity will help Iraq leverage its true potential. He emphasised the role of Ulema and religious leaders belonging to different groups for creating a sense of nationhood to promote interfaith, inter-sectarian harmony in the country.

He said it is important that people of Iraq have a hope for a better future, but added that for this economic opportunities and avenues of development in the country should be created so that its people may control their destiny.

He said Pakistan respects the sovereignty and territorial integrity of Iraq.

Jaffar al Hakeem appreciated the support provided by Pakistan in the reconstruction of Iraq. He reaffirmed the views of Pakistan Prime Minister about the need to enhance co-operation between Pakistan and Iraq in economic, social, diplomatic fields.

Jaffar al Hakeem said only harmony and unity would enable Iraq overcome the challenges faced by the country.


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## Owais

*Pak-Russia trade hits 50 percent increase* 


*ISLAMABAD *_(updated on: August 12, 2006, 23:26 PST_): Fifty percent increase has been registered in trade between Pakistan and Russia said Consular in Pakistan Embassy in Russia Abdul Matin Khan on Saturday.

In an interview with Radio Moscow he expressed satisfaction over the progress in relations between the two countries.

He recalled the Shanghai Co-operation Organisation conference held in June in which leaders of the two countries President Putin and President Pervez Musharraf described the two countries' future relations as "bright".

Khan said that bilateral trade agreement is expected between the two countries soon.


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## Owais

*Preparation of mega projects: Planning Commission directives to provinces* 

ISLAMABAD (August 13 2006): The Planning Commission has directed all provinces/regions/territories to prepare mega projects according to their needs and environment.

The projects should include components of watershed management, fuel wood and timber plantations, farm/agro forestry, flood protection, irrigated plantations, recreational and tourism plantations, bio-diversity, rangelands (grazing), eco-tourism, NTFP, alternatives of fuel wood, timber and grazing for sustainable livelihoods.

New concepts like forests role in protection from tsunami, earthquake, climatic changes and contribution of various types of natural forests and plantation in the country must be considered, said minutes of the meeting, chaired by Deputy Chairman Planning Commission on forestry mega projects and future plan of action.

The meeting reviewed long-term multipurpose forestry mega projects to achieve the MTDF, MDGs and 'vision 2030' targets. It also discussed capacity building for sustainable forest and watershed management, initiating demand management practices, restoring degraded forests and establishing, planning, managing, networking and monitoring of forests.

Deputy Chairman Planning Commission, Dr Akram Sheikh, said that the government was giving special importance to environment and gradually environment integration was taking place in the development projects and programmes. The government has also taken several steps to ensure green environment conservation, he said.

In the MTDF, the government has allocated Rs 28.3 billion for environment sector. Out of this, Rs 8 billion is for green sector, Dr Sheikh said, adding that Federal PSDP for environment has been increased from Rs 500 million to Rs 6 billion in 2006-07.

The Deputy Chairman said that despite efforts by both federal and provincial governments, forest management and forestry services in Pakistan have not kept pace with the needs of rapidly growing population and rapid changes in socio-economic conditions.

"There is dire need that federal and provincial governments come forward to cope with the emerging challenges in this sector," said, and added that lack of technology was the main cause of backwardness. He stressed the participants to come with realistic forecast figures and propose ways and means to enhance forest cover.

Forests and plantations are degrading throughout the country: the former due to over-exploitation and land use change, and the latter due to shortage of irrigation water and mismanagement.

Reliable statistics regarding current and projected supply and demand of timber and non-timber produce are not available, said Member Food and Agriculture, Dr K Abdullah Malik.

Inspector-General of Forests informed the meeting, quoting FAO estimates, that the country was losing 2,700 hectares every year and, to achieve the target of 6 percent of forest areas, there was need to plant on about one million acres land. There is also need to fill up 22 percent barren natural designated forests. The representative of Erra on environment said that Erra was supporting only those projects where there had been physical damage.


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## Owais

*SCRAs bounce back to $15 million* 

KARACHI (August 13 2006): The Special Convertible Rupee Accounts (SCRAs) bounced back to reach $15 million, for the second time in FY07, on August 11. Earlier on, SCRAs, which are an indicator of foreigners' perception about portfolio investment in Pakistan, had surged to the same level on July 12.

In between, SCRAs, however, had reached a record balance of $19.4 million on July 18, but dipped to about $5 million on July 24 as USA and UK withdrew about $9 million in a single day.

Between August 7, for which the last update was available, and August 11, for which the latest update is available, the surge works out to a little over $5 million. But, considering that there was a net withdrawal of $2.9 million on August 11 alone, it appears that in between the SCRAs have surged to $17 million--maybe a day prior to scaling down to $15 million on August 11. But even prior to that Singapore's stakes under SCRAs reached had well over $32 million, indicating that Singapore had brought in fresh funds amounting to some $13 million after August 7, though it was not reported, and the actual cumulative balance was much higher than even $17 million.

The present surge, therefore, owes entirely to Singapore because cumulative withdrawals of Switzerland and USA, impacting overall balance negatively, amounted to about $16 million ($11.3 million by Switzerland and $5 million by USA) during the year so far including $0.8 million and $0.1 million withdrawn respectively on August 11.

Kuwait and Hong Kong also withdrew $1.4 million and $0.1 million on that date, leaving their debit balances at $0.9 million and $2 million, respectively. After August 7 and before August 11, UAE appears to have brought in some $0.11 million, improving its cumulative inflow on August 11 to $0.2 million, compared with $0.08 million on August 7. No other worth reporting development occurred respecting any other investor.

The generally representative KSE 100 Index, which stood at 10,847 on August 7 and has been declining since then to reach 10,525 on August 10, slipped further to 10,406 on August 11.

Besides earlier profit taking, rumours about political uncertainty, likely dissolution of a provincial assembly, and fears of retaliatory activities against recent arrests of some Pakistanis linked to alleged terrorist plot involving British planes were reported to be some of the factors behind the decline.

SBP General Index of Share Prices, a composite index covering all ordinary shares, which had earlier declined to 450 on August 8, stood lower at 446 and 443 on August 9 and 10, respectively.

Aggregate market capitalisation, which was expected to reach Rs 3 trillion on August 8 after surging to Rs 2,992 billion on August 7, stood much lower at Rs 2,941 billion on August 9, and at Rs 2,906 billion on August 10.


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## Owais

*CBR to set up panel on edible oil industry* 

KARACHI (August 13 2006): The Central Board of Revenue (CBR) will form a committee which would help eliminating the intricacies and problems being faced by the edible oil industry, Abdullah Yusuf, Chairman, Central Board of Revenue (CBR) and Secretary-General Revenue Division, told reporters after a seminar on 'Value Addition in Edible Oil Refining' organised by Pakistan Edible Oil Refiners Association (Peora) at a hotel here on Saturday.

He said that the government had welcomed the idea of forming a 'committee' proposed by Peora, and added that the committee would start functioning soon. "We both (CBR and Peora) had agreed during a meeting that there was dire need of such a committee which would highlight the genuine problems and obstacles faced by the edible oil industry, besides exploring new avenues for investments," he said. He said that the committee would have representatives of stakeholders and government officials who would jointly formulate their recommendations and suggestions regarding the core issues of the industry besides ideas for attracting fresh local and foreign investment.

He, however, advised PEORA to keep itself updated with the recent modernisation and technologies being adopted by the industry of the developed and modern countries.

He said: "It is the duty of the government to look around and monitor what exactly is being done by others in this sector, and if there is any improvement requires, we must adopt it to become world class palm oil refiners."

Citing the old days, he said that gone were the days when the country was totally dependent on imported crude and refined palm oil. However, inception of new players in the industry shed the dependency level to some extent, he added. Yusuf said that the government "is committed" to ensure conducive investment climate for local and foreign investors in the country and due to the government's economic policies the confidence of investors had been restored. "If the government had not continued its policies in a consistent way, the investors could be reluctant to invest in the country because every investors first wants to have a look at the economic policies of any government and its continuity and consistency," the CBR Chairman remarked.

In his address, Peora Vice Chairman A Rasheed Janmohammad said that duty structure for crude oil and palm olien should be equal now, which should be differentiated and curtailed to some extent.

"Currently, at the import stage, the duty structure of crude palm oil and palm olien is equal, and the authorities must differentiate the two types of oil," he said.

He said that without any differentiation between these two types (crude oil and palm olien) of oil, the value-addition would be difficult for the refiners, and added that if the government provides duty differential on imported oil, the refineries would be able to add value into the imported oil in the shape of fractionation. Isa Bin Mansur, MPOB Regional Manager for Pakistan and West Asia, said that palm fruits in Malaysia were planted on approximately 4.1 million hectares, from which 14.9 million tons crude palm oil is obtained.

"Malaysia's domestic consumption of crude palm oil stands at around 1.5 million tons, while the remaining 13.4 million tons is exported to some 140 countries across the globe," he elaborated.

He said that China is the biggest consumer of Malaysian oil with around 2.50 million tons, followed by European Union (EU) countries which consume nearly 2.27 million tons. "Among other countries, India imports 0.6 million tons, Pakistan 0.92 million tons, Asean countries 0.94 million tons and African countries import 0.92 million tons," he said. He said that Malaysia's annual soybean production stands at 30.6 million tons, while the country produces 14.8 million tons rapeseed oil and 9.4 million tons of sunflower oil.


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## Neo

ISLAMABAD (August 13 2006): Prime Minister Shaukat Aziz has said the mega development projects initiated by the government in Balochistan province will lead to reduction in poverty, creation of jobs and improvement of living standard of the people of Balochistan.

The Prime Minister expressed these views while talking to Governor Balochistan, Owais Ahmed Ghani who called on him at the Prime Minister House this afternoon.

Shaukat said that the government is making special efforts to bring the province at par with the more developed parts of the country and in this regard special allocation of development funds have been made for the province in the current budget.

He said that the government is endeavouring to develop the coastal belt as this will provide enhanced economic opportunities to the people living in these areas. Serious efforts are being made to explore and exploit the relatively untapped potential of the province in fields like agriculture, fisheries, livestock and minerals, he said.

The Prime Minister said that government is determined to establish the writ of the government in Balochistan and bring peace and stability to the province to provide security to the people. He added that the government would ensure that conducive atmosphere exists for the implementation of development programmes and for both local and foreign investment.

Shaukat said the completion of Gwadar Port will usher in a new era of development and prosperity. The road links established between Central Asia and Gwadar would open up new vistas of prosperity and progress for the people of Balochistan, he said.

Governor Balochistan briefed the Prime Minister about the ongoing development projects and the law and order situation in the province and said that the completion of these mega development projects will bring improvement in the socio-economic condition of the people of the province. He appreciated the keen interest shown by the federal government in raising the standard of living of the people of Balochistan. He said there is visible improvement in the law and order situation in the province and the government will continue its efforts to maintain peace and security in the province


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## Neo

SIALKOT (August 13 2006): The airfield light system, costing over Rs 170 million, has been installed at Sialkot International Airport (SIA) to enable the Boeing 747 planes land at the airport. Talking to reporters at Sialkot International Airport on Friday, SAI Chief Executive Khawar Anwar Khwaja said the installation of lighting system would enhance the chances of starting cargo flights this year.

Khawar Khwaja said the country's longest runway, measuring 3.6 kilometres, had been completed, providing landing and take-off facilities to Boeing 747 and other aircraft in bad weather, while the construction work on passengers terminal would be executed shortly.

Khawar said that according to a rough estimate, over 10,000 exporters of Sialkot besides a large number of exporters and other passengers of Gujrat, Narowal, Hafizabad, Mandi Bahauddin, Wazirabad, Jehlum and Mirpur (Azad Kashmir) would be benefited with the completion of this mega project.

The regular functioning of the airport would not only accelerate the pace of trade and commerce activities, but would also help enhance the export volume to manifold and likely to generate wide employment opportunities in the area, he foresees.

The SIA chief executive said that the airport would, undoubtedly, bring a revolutionary change in the socio-economic development of the region. With the merging of dry port, export processing zone and now airport at Sialkot, the importance of the area would further enhance, which would ultimately help substantial increase in the exports from the area in future, he added.

According to a rough estimate, 60 percent of aircraft movement will be for domestic purpose, while 40 percent would be for the international carriers.

The potential traffic forecast for SIA is scaled down at the time of opening to 472,000 passengers a year, while estimated cargo tonnage at the time of opening is expected to be 24,000 tons. By the end of year 2012, about 53,000 tones of cargo will be lifted from Sialkot International Airport.


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## Neo

KARACHI, Aug 12: The outflow of foreign exchange in the wake of privatisation has started taking a painful twist for the country and may prove counterproductive if foreign investors buy more local units.

The government has been making efforts to attract foreign investors to buy units which are included in its privatisation list. So far the foreign investors who have no restrictions to remit their profits and dividend have purchased five major units.

The estimated outflow in the form of dividends of the four units would be around $102 million (Rs6.149bn) in 2006. Assuming no more privatisation and same profit earnings at the current rate, the estimated total outflow in 2007 would be around $110 million and the next year it would be $119 million.

The 51 per cent shares off-loading of Habib Bank paid the government a total $390 million. The outflow of HBLÃ¢â¬â¢s dividends at the estimated rate of Rs2 per share would be around Rs704 million in 2006 and Rs880 million and Rs1,056 million in the year 2007 and 2008.

The outflow of United BankÃ¢â¬â¢s dividend at the estimated rate of Rs3.5 per share would be around Rs924 million, Rs1,188m and Rs1,452m in 2006, 2007 and 2008 respectively. UBLÃ¢â¬â¢s 51 per cent shares were sold.

In case of National Refinery, of which 51 per cent shares have been off-loaded, the outflow would be Rs542 million, Rs614 million and Rs674 million from 2006-08.

The biggest outflow will appear from the Pakistani Telecommunication Corporation (PTCL) of which only 26 per cent shares had been sold. PTCLÃ¢â¬â¢s 1,326 million shares were sold out and the estimated dividend is about Rs3 per share. The outflow is expected to be Rs3.978 billion in 2006 and would remain the same till 2008.

Karachi Electric Supply CorporationÃ¢â¬â¢s 73 per cent shares had been sold out but no dividend was expected in the next two years.

The simple calculation of a top research house said when all the shares of these four units would be sold out, the outflow would be double.

But the situation would not remain stagnant at this point as the government has been making effort to sell out Pakistan Steel, Sui Northern Gas and Sui Southern Gas companies. If the foreign investors also purchased these units, the outflow of foreign exchange in the form of profits would turn into a nightmare for the country.

The government wants more foreign exchange to finance its record trade and current account deficits and trying to manage the very high demand of foreign exchange through sale of local units.

Economists and analysts have been criticising the government for financing the deficits instead of improving the situation. The source of concern is that only few attractive units have been left to privatise and it could help the government during the current year or next year.

Ã¢â¬ÅJust after two years, the inflows of privatisation proceeds would be ended and the outflow of dividends would severely hit the countryÃ¢â¬â¢s shrinking ability to meet the trade and current account deficits,Ã¢â¬Â said an analyst.

He said the balance sheet of the foreign exchange account will change in next two years as imports and exports have lost the equilibrium. The disproportionate growth of exports and imports has pushed the economic managers to find some other way to meet the rising trade gap. The countryÃ¢â¬â¢s dependence on foreign direct investment and overseas workers remittances are not enough to meet the rising demand of foreign exchange.


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## Neo

ISLAMABAD, Aug 12: The average inflation measured through consumer price index (CPI) rose by 7.63 per cent year-on-year (YoY) during the first month of the fiscal year 2006-07 owing to high oil prices, transportation fares and food items.

Official figures released by Federal Bureau of Statistics (FBS) here on Saturday showed that the lowest income group recorded above average inflation in July 2006. Since the current wave of inflation was mainly due to the food group and food has a relatively higher weight in the consumption basket of the low income segment of population, the incidence of inflation was higher as compared to those of other income groups during the month.

The statistics also showed resurgence in other two measures of inflation--wholesale price index and sensitive price indicator. Although both food and non-food inflation increased during the month, the food group remained the key contributor to the overall inflation.

Food inflation increased to 7.44 per cent in July 2006. The reasons for this increase as pointed out were mainly due to a weak base along with significant increase in prices of a number of important items, including tomatoes, onions, chicken farm, vegetables, fruits, milk, meat, sugar, potatoes, cold drinks, and pulses.

The statistics showed that prices of tomatoes were up by (69.35pc), onions (19.34pc), chicken farm (13.80pc), vegetables (12.92pc), fresh fruits (8.27pc), beverages (2.36pc), besan (2.31pc), pulse moong (1.63pc), betel leaves and nuts (1.61pc), eggs (1.21pc), jam, tomato, pickles and vinegar(1.13pc), readymade food (1.02pc), potatoes and milk fresh (0.84pc), tea (0.62pc), milk products and gur (0.61pc), spices (0.60pc), wheat (0.57pc), sugar (0.56pc) and meat (0.54pc).

While the non-food inflation increased to over 6 per cent during the month of July 2006. The increase in this group during the month under review was mainly contributed by higher inflation in fuel and lighting, furniture and equipments, cleaning, laundry and personal appearance and education. Increase in fuel and lighting resulted primarily due to significant increase in gas cylinder prices; higher prices of air conditioners and fans caused rise in household furniture and equipment sub-group; record high gold and silver prices pushed up inflation in cleaning, laundering and personal appearance; and higher inflation in education was the result of an increase in university fees.

The statistics showed that the price of natural gas up 8.76pc, electric iron, fans and washing machine up (1.31pc), sewing machine, clock and needles (1.02pc), plastic products (0.85pc), utensils (0.72pc) and household servant (0.64pc), airfare (10.26pc), CNG filing charges (6.58pc) and tyre and tube (0.70pc), stationery (0.96pc), tuition fee (0.80 pc), jewellery (3.65pc), laundry charges (1.69pc), washing soap and detergent (0.75pc), and watches (0.65pc).


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## Neo

13 August 2006 


ISLAMABAD Ã¢â¬â President of Pakistan General Pervez Musharraf is expected to chair a high level meeting next week to decide a port operator for newly developed Gwadar Deep Sea Port. 
The inauguration of the port in Balochistan province was being delayed because of the government's "indecisiveness" over the issue. A high-level meeting was to decide the matter on August 8 under the chairmanship of President General Pervez Musharraf but was postponed at the last moment.
Three international companies including Dubai Port World (DPW) are competing to operate Gwadar Port. Hutchision Port Holding of Hong Kong and the PSA International of Singapore have also joined the race for the port.
Sources said if the next meeting goes ahead, the winner of the contract would be announced and the port would be inaugurated during this month.
When asked why the government was delaying the selection, a source said: "This has to be decided at the highest level and that is why it could not be decided so far."
The source conceded that the three leading competitors were being backed by their governments to help win the right to operate Gwadar port. However, the DPW was said to be the preferred bidder as it was being supported by Chief Minister Balochistan Jam Yousuf and some other senior federal government officials.
At one stage, he conceded, a decision had been taken to give DPW the operating rights but later the president intervened and said let there be a fair competition among all the three international companies.
Sources said some of the officials of the ministry of ports and shipping were of the view that the terms of reference of the three companies needed to be once again looked into to decide the issue.
Gwadar port located at Balochistan is being considered a future trading hub in the region because of being so close to Gulf. Initially, the port is expected to face competition from Port Salalah of Iran, however after the completion of phase-2 by 2010 at a cost of $840 million, it is likely to become one of the busiest ports in the region.
It will provide warehousing, transshipment and industrial facilities for trade with over 20 countries including Gulf countries, Iran, Central Asian States, India, China and East Africa.
Tax holiday: Sources also said that the government would soon be announcing a 15-year tax holiday in the proposed Export Processing Zone (EPZ) being planned near Gwadar port for local and foreign investors. There will be tax exemption on customs, sales tax and excise duty in the EPZ with a view to promote substantial investment in Gwadar, Balochistan.
A number of foreign investors have shown interest to establish mega refineries, building storage capacity and undertaking other businesses in Gwadar to help expedite the process of industrialisation in Balochistan province.
With the completion of both the phases of Gwadar port, a Special Industrial Development Zone (SIDZ) with an area of 4,000 hectare has also been proposed for setting up various industries. The SIDZ is located on the north of Gwadar town at a distance of about 30km from the port.


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## Neo

Friday August 11, 2006

*ISLAMABAD: A venture meant to generate 137.5 mega watts electricity, Gabral-Kalam Hydropower Project is under great threat of shutdown after Swat Hydropower Limited (SHL) contractors were recently told by the local villagers to wind up their business and leave the area instantly. *


Seeing at stake its $ 1.2 million investment made so far on the topographic survey and geotechnical investigation of the project, the company availed all the channels available to it to make villagers realise the significance of the project but to no avail. 

Initially, the villagers came up with a five-point charter of demands and the SHL agreed in principle to accept their "genuine" demands. 
But later on, the villagers made a u-turn and conveyed it to the company in categorical terms that they wanted immediate shelving of this project that they firmly believed did not serve well their interests. 

In such unfavourable circumstances, the contractors were left with no option but to remove their costly machinery from the site to save them from possible physical damage. The work on the project has been closed since June 8. According to its senior officials, the SHL secured a Letter of Interest from the Pakistan Power Infrastructure Board (PPIB) for Gabral-Kalam Hydropower Project on June 9 last year. As it was required to complete project&#8217;s feasibility study in 22 months, the SHL hired the services of a German company - Fischer GmbH and Co KG for the purpose against the payment of $1.3 million. 

On the advice of consultant, the SHL submitted a report about the project with an expected capacity of 137.5MW and 528Gwh energy per annum to the PPIB for approval. Soon after getting a go-ahead from the PPIB on February 15 this year, SHL awarded one contract worth $75,000 for topographic survey and the other worth $407,100 for geotechnical investigations for the project at Kalam site. 

The contractors mobilized their resources and shifted their machines to the site within two weeks of the contract signing for drilling bore holes at power house site at Kalam on the right bank of Gabral, a tributary of River Swat as well as weir site at Kanai Dhamaka Jheel at Azafiaabadi Kanai of village Utror. Also, the SHL paid the compensation amounts to the project affectees for their crops and land. But, then there came a notice like a bolt out of the blue for the contractors from the Utror elders on June 8 who wanted no drilling at the site. Even, the very next day, a mob pelted the site with bricks and stones, to damage machinery. 

This not only brought the work on the project to an immediate halt but also made the SHL to take up the matter with local elders. After five-day long talks, the elders agreed to form a 21-member committee to come up with a solution to the apprehensions of local tribesmen. A few days later during a visit to the area, Swat DCO Shahab Ali Shah agreed to convene a jirga on the matter at Mingora on June 25 but no jirga could be held on the stipulated day due to a dispute amongst Utror tribes. 

The intervention of Swat DCO, MNA Fazle Subhani and MPA Ameerzada brought about a settlement to the dispute. On July 8, the due jirga had a session at DCO Office where elders came up with a charter of demands like change of the project name, guarantee payment of compensation for land, property at market rate, keeping the height of dam at 12 meters at maximum, jobs for locals and power supply to the area at concessional rates. 

The SHL forwarded the demands along with its response to them to PPIB for approval on July 11 and the Board referred the matter to the NWFP chief secretary. But the villagers, sending a shocking surprise to the SHL, retraced their course by asking the geotechnical contractors to pack up and remove their machines from the site. "We want no dam, no hydropower project in our area as they do not serve our interests", was their contention. Even 18 local tribesmen employed by the contractors left their jobs after receiving threats of "dire consequences" from elders. SHL officials claimed that in the jirga held at Kalam on August 1, the villagers stuck to their demand of project shutdown even though they were not opposed to the height of reservoir, population displacement etc. 

Despite hectic efforts and continued talks with provincial and district governments, the work could not be started again. And the SHL sees the huge investment it had so far made in the project at risk and wants the federal government to ensure early restart of work on Gabral-Kalam Hydropower Project "by all means". If the reports coming from the area are to be believed, villagers are pressurized by local elders to oppose the project as they believe this would provide electricity to locals at cheaper rates, create better employment opportunities for youth and usher in a new era of development to imperil elders&#8217; prevailing firm away over decision-making in the region.


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## Neo

*Published: Sunday, 13 August, 2006*

*ISLAMABAD:* Pakistan Parliamentary Secretary for Defence Tanveer Hussain has informed the National Assembly that the United States is not allowing direct flights from Pakistan due to security concerns.
 
Replying to a supplementary question in the National Assembly, the parliamentary secretary said the US had asked Pakistani authorities to improve security arrangements and it had also provided some equipment in this regard.

Federal Minister for Defence Rao Sikandar said the total income of Pakistan International Airlines, during the financial year 2005, from international routes, excluding flights for Haj and Umrah was Rs 47.3bn.

He said the total income (revenue) from Haj flights during the same year was Rs4.7bn and it was Rs1.7bn from Umrah flights. 
He said the PIA did not generate any profit during the financial year 2005 from international Haj or Umrah flights due to the exorbitant increase in fuel price.

The minister said a proposal regarding revision of pay structures of the employees of the Airport Security Force and to bring at par with other well-paid federal government departments, including Motorway Police, was under consideration and on receipt of a well-conceived model, it would be taken up with the Finance Division.
He stated that the Civil Aviation Authority (CAA) was undertaking a project to expand the Multan airport at a cost of Rs2.66bn and the project would be completed in three years. 

In response to a supplementary question, the parliamentary secretary for defence said the inquiry report of the last month Fokker crash at Multan airport would be presented before the parliament in three months.


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## Owais

*$85 million ADB loan for Balochistan rural uplift soon* 

ISLAMABAD (August 14 2006): The Asian Development Bank (ADB) will shortly approve a loan of $85 million for 'Balochistan water resources and rural infrastructure development (formerly Balochistan Rural Dev and Drought Mitigation) to reduce rural poverty through investment in water resources infrastructure, command area development, catchment area conservation works and rural access roads.

Official sources told _Business Recorder _on Saturday that the loan aims at providing more sustainable and remunerative farming systems in 12 of the poorest districts of Balochistan--Awaran, Chaghai, Gwadar, Kharan, Khuzdar, Killa Saifullah, Lasbela, Loralai, Musakhel, Naushki, Washuk, and Zhob.

The project components include community development and support; community managed irrigation and water resources development; rural access roads; agricultural support services and project implementation support.

The executing agency of the project would be Irrigation and Power Department of Balochistan. The project would help in raising farm incomes and enhancing resilience during periods of drought through investments in irrigation infrastructure and rural access roads in the project area, sources said.

The project will also proactively assist rural communities in forming community organisations (COs) so that they are effectively operate and maintain the irrigation infrastructure.

According to sources, an estimated 120 irrigation sub-projects, comprising small storage dams, flood irrigation schemes, perennial irrigation schemes, and some rehabilitation of existing schemes would be developed under the project.

In rural communities that have received irrigation infrastructure, the project would also provide rural access roads linking them to the nearest main road, support to develop the command areas under their control and enhancing to improved agro-technologies and watershed conservation works to preserve the sustainability of the irrigation investments.

The project is targeted on the rural poor and seeks to elicit extensive community participation in subproject identification, implementation and operation and maintenance.

To achieve pro-poor economic growth, interventions in the areas of rural development, employment generation, and infrastructure are emphasised, as are support for sector-level policy reforms, particularly at the provincial level.

Crop agriculture, livestock, and wage employment (particularly in fruit orchards) are the main sources of rural income in Balochistan. Poor people, particularly tenants and the landless, lack wage employment opportunities.

A severe drought has aggravated the already limited natural resource base, decimated livestock number, and has pushed poverty levels up to 47 percent in the province (from about 35 percent in the mid-1990s). Particularly vulnerable to the drought are the poor in remote settlements where wage employment opportunities are virtually non-existent and where communities depend on unreliable rains to cultivate lands.


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## Owais

*Ban on hand luggage on foreign flights lifted* 

ISLAMABAD (August 14 2006): Pakistan has lifted a ban on hand baggage on international flights although passengers are still barred from carrying liquids, officials said on Sunday. "Passengers can carry only hand baggage but not any liquid," Hafiz Abbasi, a senior official of the Airport Security Force told AFP.

Extra armed police had been guarding major airports in Karachi, Islamabad and Lahore with passengers subject to baggage restrictions and extra screening.


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## Owais

*Prime Minister announces Rs 50 million grant for NWFP: damages caused by torrential rains* 

MARDAN (August 14 2006): Prime Minister Shaukat Aziz on Sunday announced an immediate grant of Rs 50 million for construction of houses damaged in the recent torrential rains in NWFP besides, a matching allocation to the provincial government for rehabilitation of the affected people.

Shaukat Aziz, who flew into Mardan to personally assess the damages, also distributed compensation cheques of Rs 100,000 each to the families of those killed in the flood at a gathering of flood affected people.

He said the Cabinet's Emergency Relief Cell has already despatched relief goods of Rs 55 million for the rain affected areas of the province.

"We will stand by you in your hour of trial and together we can face all challenges," the prime minister said.

The heavy torrential rains in the past few weeks in 14 districts of NWFP caused 194 deaths, damaged crops over 40,000 acres, thousands of houses were damaged, the farming community lost around 2,500 farm animals, while the total losses run in millions.

The prime minister said amidst the colossal damages it was inappropriate to politicise the matter as it was a humanitarian issue.

"The government is duty-bound to reach out to the people in need, without any discrimination and that is what it is doing."

He said the entire nation strongly faced the difficult situation in the aftermath of the devastating earthquake of October 8 last year, and this time, too, it will meet the challenge.

He regretted that bad weather hampered his visit to the area twice, saying he constantly remained in touch with NWFP Chief Minister Mohammad Akram Khan Durrani to monitor the situation. He was appreciative of Chief Minister Durrani for efficiently handling the situation.

Shaukat Aziz said Pakistan was created through numerous sacrifices and it was time the nation pays rich tributes to founding father Quaid-e-Azam Mohammad Ali Jinnah, when it celebrates its 60th independence day on Monday.

He also saluted the people of NWFP for their sacrifices for the creation of the country, and said the entire nation needs to work with devotion, commitment and sincerity to make Pakistan prosperous and strong.

The prime minister prayed for those who had lost lives in the aftermath of the heavy rains, and asked their families to bear the loss with equanimity.

He was appreciative of the co-ordinated efforts of the people, the police, the civil administration, and the army for their rescue and relief operations.

Shaukat Aziz was briefed by the NWFP chief secretary of the detailed loss of life and property soon after his arrival.

The prime minister was also informed that infrastructure, including damage to 330-km roads, 59 bridges, 169 water supply schemes in the province was estimated to be around Rs 321 million, while the total loss was estimated to be around Rs 1 billion.

He was informed that the provincial government had allocated Rs 50 million for restoration and rehabilitation of irrigation schemes, another Rs 50 million for roads and Rs 50 million for water pumps and earth moving machinery.

He was also briefed about the losses in federally-administered tribal areas (Fata), where 24 people were killed, while another 40 were rescued by the army.

Shaukat Aziz accompanied by Minister for Information Muhammad Ali Durrani, Minister for Inter-Provincial Co-ordination Salim Saifullah Khan, Minister for Political Affairs Engr. Amir Muqam, Minister for Religious Affairs Muhammad Ijaz-ul-Haq, State Minister for Information Tariq Azeem were received at the helipad by NWFP Governor Ali Muhammad Jan Orakzai and Chief Minister Muhammad Akram Khan Durrani.

The prime minister had an aerial view of the flood affected areas.

Before leaving for Mardan, he dispatched 10 truckloads of essential food items for the flood-affected people of NWFP.

The prime minister said the federal government was also sending relief goods for the flood-affected people of Punjab.

He said though the flash floods caused losses in some areas, the overall flood situation was under control due to the effective strategy of the federal and provincial governments in co-ordination with army. He said the concerned authorities were monitoring the situation to tackle any emergency.

The prime minister said the rains have improved the water storage and would be beneficial to the agriculture sector and power generation.


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## Owais

*CFS investment drops by Rs 2.2 billion* 


KARACHI (August 14 2006): The investment in CFS recorded a decline of Rs 2.2 billion at the close of the last week, following brisk selling from investors. The investment in CFS reached its peak during the last week, but selling pressure on account of numerous rumours covering political and corporate events, reduced the presence of weak hands, translating in decline in investment.

In a slightly unusual show of behaviour, open interest in the stock futures market at KSE increased significantly by 29 percent during the week to Rs 10.8 billion last Friday (August 11) from Rs 8.4 billion on the previous Friday (August 4). This seems a bit contradictory to the recent negative trend of the market, and may also be a slight cause of concern as the ban on short selling continues at the futures counter.

Weighted average futures spread remained slightly lower at around 10.4 percent, thus remaining pretty close to the level of 10.5 percent seen on the previous weekend.

CFS investment has declined to Rs 22.3 billion on the last Friday (August 11) compared to the cap of Rs 24.5 billion seen on the previous Friday (August 4), as some investors preferred to book profits at current levels to avoid further slump recently observed.

The weighted average CFS rate at KSE stood at 14.3 percent, lower than the previous Friday's 15.7 percent. CFS rates came down due to lower demand for funds and selling by the investors.


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## Neo

FAISALABAD (August 14 2006): The poverty line, after adjusting for inflation, has increased from Rs 723.4 per adult equivalent in 2000-01 to Rs 878.64 in 2004-05. According to an official review of Finance Division, the poverty estimate for the 2000-01 period has been revised from 32.1 percent to 34.5 percent, whereas the overall poverty level for 2004-05 has been estimated at 23.9 percent.

This indicates that percentage of population living below the poverty line has declined by 10.6 percentage points between 2000-01 and 2004-05 period.

In absolute numbers, the count of poor persons fell from 49.23 million in 2000-01 to 36.45 million in 2004-05.

The report has claimed that decline in poverty level has been witnessed in both urban and rural areas. However, this decline was more pronounced in rural areas than in urban areas, "which is very encouraging as poverty in Pakistan is considered primarily a rural phenomenon".

The poverty gap declined from 7.03 in 2000-01 to 4.76 in 2004-05, and severity of poverty declined from 2.13 in 2000-01 to 1.48 in 2004-05, indicating that most of the poor are bunched around the poverty line. Poverty gap and severity of poverty declined in urban as well as rural areas, the report said.

The percentage of population classified as extremely poor remained almost identical in the two periods. The proportion of 'ultra poor' and 'poor', and 'vulnerable poor' declined. At the higher end, the percentage of 'quasi non-poor' and 'non-poor' increased in 2004-05, relative to 2000-01. A strong growth in economy, rise in per capita income, a large inflow of remittances, increase in spending on poverty-related and social sector programmes were the factors behind reducing poverty between 2001 and 2005, claimed the report.

Commenting over the Inequality Trends, official sources stated that coefficient is commonly used to determine the inequality levels in a Gini society. This measure was applied on the household consumption data of PSLM 2004-05.

Results show that consumption inequality had increased marginally in Pakistan between 2000-01 and 2004-05. Consumption inequality increased in urban areas as well as rural areas during this period. However, the inequality in urban Pakistan is marginally higher than in rural areas, probably due to diversification of urban workforce in terms of skill and education, leading to differentials in household earnings and consumption.

Another measure of inequality is the ratio of highest to the lowest quintile, which measures the gap between the rich and the poor. This ratio also increased marginally from 3.76 in 2000-01 to 4.15 in 2004-05. In urban areas, gap between the rich and the poor widened relatively more from 10.40 in 2000-01 to 12.02 in 2004-05, compared to the rural areas where the gap between the rich and the poor remained more or less unchanged from 2.22 in 2000-01 and 2.19 in 2004-05.

Official sources said that the government is fully aware of this widening gap, and the PRSP aims to design policies to narrow this gap.

Unemployment level during July-December 2005-06 declined by 1.2 percentage points to 6.5 percent as compared to 2003-04, which can be attributed to high economic growth rates over the past four years. During July-December 2005-06, unemployed labour force stood at 3.32 million, of which 2 million unemployed were situated in rural areas and 1.32 million in urban areas.

Unemployment rates declined among both males and females during the period under consideration. Though the levels of unemployment were higher for females during both periods, decline of unemployment among females has been larger (3.1 percentage points) than males (0.9 percentage point). Larger decline in female unemployment rate can be partly the result of employment opportunities in private sector; for example, private schools, which have grown rapidly during the last decade, prefer females for teaching primary school children. It can be partly due to increased access to micro-credit for females to engage them in economic activities.

An analysis of unemployment rates by age group showed that unemployment levels increased and were high for the age group of 50 years and above during 2003-04 and July-December 2005-06, whereas unemployment rates declined for all other age groups (figure 3). Unemployment rates were low for 25 to 49 years old labour force. It showed the availability of employment opportunities for individuals in prime working age.

The highest level of unemployment, at 13.8 percent, stood for the age group of 60 years and above, of which a large proportion had never been previously employed. Poverty and high dependency burden on working age population has probably compelled the elderly population to struggle for family support and their higher proportion is still in the labour market.

*FAMILY REMAINS THE MOST IMPORTANT SOURCE OF SUPPORT FOR ELDERLY, BUT TWO TYPES OF CHANGE ARE UNDERMINING THIS TRADITIONAL SUPPORT: *first, the declining fertility and increasing life expectancy resulting in fewer family members to care for more elderly members and secondly, the shift from extended family system to a more nucleated system, which appears to have limited the decision making power of elderly persons regarding the use of household resources.

Unemployment rates were also high for the youth population, 10-24 years old, during the first half of 2005-06, as people of this age group are usually new entrants and lack skills to adjust in the labour market. To address the issue of educated unemployed 'Rozgar Scheme' has been announced in the budget 2006-07. It was planned to be launched in July 2006 by National Bank of Pakistan.

Educated persons in the age bracket of 18-40 years may get loans for self-employment under this scheme, which will create 400,000 jobs. The upper limit of the credit is fixed at Rs 100,000. Under the scheme, people can establish public call offices, mobile utility store, get franchise for utility stores and own transport (taxi etc).

Examining unemployment rate by gender shows that unemployment rate among males decreased considerably for the 10-34 age group. Again, this pattern indicated an increase in employment opportunities during the last three years.

Unemployment rates declined considerably among females of 10 to 49 years olds between the first half of 2005-06 and 2003-04. However, the highest unemployment rate exists for women of 60 years age and above. The unemployment level among elderly women is much higher than unemployment level found among males of the same age group.

It clearly indicates that unemployment problem of elderly population is primarily related to women. There is need to probe the causes of such high unemployment rate among females of this age group, the report said.


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## Neo

PESHAWAR (August 14 2006): Launching of mega Lowari Tunnel project reflects the vision of President Pervez Musharraf in bringing economic prosperity to the less developed areas of the country. This observation was made by Zia-ul-Haq Sarhadi, Member Executive Committee Sarhad Chamber of Commerce and Industry (SCCI).

In a press statement issued here on Sunday, Zia Sarhadi said that with completion of the project, the road link through Lowari Tunnel will serve as hub of trade activities between Pakistan, Tajikistan Uzbekistan and other Central Asian Republics via Wah Khan Corridor in Chitral.

The project, he said, was a demand of people of the district and would bring an economic revolution in the area.

Zia said Chitral has huge mineral resources and abundant production of delicious fruits. It has big deposits of Iron ore, lead, copper, gold, mica, orpiment, marble, granite and soapstone besides mines of Aquamarine gemstone.

The road links, he continued, will facilitate the large-scale production of these minerals. However the commercial production could not be carried out without the investment of Multinationals Corporation who will bring in sophisticated technology of mining and further processing of the available minerals.

The involvement of foreign companies will also ensure easy access for value added mineral products in the world market to earn foreign exchange.

Chitral produce different kinds of fruits, which includes apples, apricot, pear, grapes, pomegranate, fig and walnut. The non-availability of market outlets causes a 60 percent rot and waste of fresh fruits.

The Lowari Tunnel will enlarge the market and ensure better return to the fruit growers. The export of surplus production of fruits would need proper grading and packing. Moreover, the construction of cold storages will preserve the early varieties of fruits for export.


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## Neo

KARACHI (August 14 2006): The profit of the Oil and Gas Development Company in the year ended on June 30, 2006, is likely to show a growth of 45 percent over the preceding year due to higher gas and oil production and rising oil prices. OGDC is to announce financial results for 2005-06 on August 15 and, based on estimates, the company's EPS may reach Rs 11.09 for FY06.

The scrip trades at a price-to-earning multiple of 13.11x.

The cumulative earnings per share of OGDC during 9 months of FY06 was Rs 7.72 per share. The average crude oil prices surged at a level of $62.88 per barrel during April-June 2006, as compared to $58.105 per barrel in January-March 2006. However, the average annual price of crude oil, during FY'06 is calculated at a level of $57.98 per barrel from $41.58 per barrel in FY05.

Taimure Akhtar, research analyst at Alfalah Securities, said that the company had posted a cumulative earning of Rs 7.72 per share (translating in to net profit after tax of Rs 33.204 billion) as compared to Rs 5.68 per share in corresponding period of previous year. However, the cumulative earning of the company during 9 months was equal to full year earning of FY05 (EPS Rs 7.67).

He said that the production of crude oil during nine months of FY'06 reached the level of 14.385 million barrels (39,961 bopd) as compared to 14.162 million barrels (39,338 bopd). However, gas production reached the level of 354,600 mmcft (985 mmcfd) as compared to 336,600 (935 mmcfd). The comparative growth in between these two quarters was low due to no scheduled completion of any plan during that time frame.

"Our expected crude oil production level for FY'06 of 42,130 bopd (annual production of 15.166 million barrels) portrays the production per day growth of 7.67 percent over the production per day in FY'05.

However, the production of gas in FY'06 is expected to reach the level of 926.5 mmcfd (annual production of 333,523 mmcft). The expected growth in production is having the back of anticipated slight increase in utilisation ratio due to the pressure of government to increase exploration activities.

"Furthermore, we expect the top line to increase by 41.57 percent to Rs 121.828 billion in FY'06 from Rs 86.058 billion in FY'05.

*THE EXPECTED GROWTH MAY BE ATTRIBUTED TO THREE MAIN FACTORS: *expected increase in the rate utilization, hence increase in production; upward revision in the gas well-head price of Qadirpur gas field by 38.70 percent, which has a major role in the growth of top line; and rapid upsurge in the price of crude oil from $41.58 per barrel to $57.98 per barrel by the end of FY'06 (an increase of 39.44 percent).

"Though the earning of company is not much sensitive to crude oil prices, on the basis of above growth expectations for production, top line, and earning of the company our updated full year earning forecast is Rs 11.09 per share (translating into after tax profit of Rs 47.709 billion) for FY'06 and Rs 14.02 per share (translating in to after tax profit of Rs 60.294 billion). We expect the earning growth of 44.59 percent over the earnings of the company in FY'05.

"The company is likely to pay dividend of 3.25 to 3.50 rupees a share.

It has already paid a dividend of 5.25 rupees a share. In our view, OGDC is fast approaching a distinguished status among the E&P sector companies, where it possesses a large number of concessions, both in offshore and onshore areas.

The company has an exploration target of 50 wells for FY07, which has been rationalised due to realistic estimates of human resource challenges faced by the company in the area of geological and geophysical services.

"The recently adopted development plan of increasing drilling density in development fields has brought prudence to the decision making echelon, considering the fact that the company is a public sector entity controlled by the Government of Pakistan.

"The plan, as we have already mentioned elsewhere, comprises seven development fields, including Chanda, Qadirpur, Dhodak and Dakhni. These fields contain balance recoverable reserves of approximately 40.72 million barrels oil and 4.6 TCF (trillion cubic feet) gas in place.

Application of this plan means reduction of drilling dry holes to a considerable extent, due to the fact that such efforts would be expended in fields where oil/gas reserves have already been found. As per our estimates these fields will contribute to almost 90 percent of the revenues from this select portfolio of seven fields, and Qadirpur field would rank top, based on the prospects of increasing gas production from present 14,300 MMCFT to 22,464 MMCFT at the completion of an estimated project life of 2.25 years.

"We believe that OGDC will be able to raise its EPS in the next five years by approximately Rs 16.54, discounted at 10%. The fundamentals are largely skewed in favour of the company, and we believe that the development plan alone would build a potential upsurge for the bottom line."


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## Neo

*Ã¢â¬ËSubsidyÃ¢â¬â¢ for research and development*


*By Arsalan Ghani*
Research and development (R&D) is the main philosophy behind successful industries. From idea creation, developing product, marketing and enhancing operations, R&D plays important part in every step.

Without R&D, the industry becomes stagnant and looses its competitive advantage. ThatÃ¢â¬â¢s why it has become an important area of concern for developed countries. Although they have high cost of industrial operations and manufacturing, their industry still thrives because of the R&D culture.

Industrial R&D comprises following activities: development of new materials and products; increasing existing materials and products; development of new technologies; enhancing of the existing technologies; management and market research; industrial operations and supply chain research.

The R&D project starts with a precise description and includes enlisting resources, time, budget and milestones. After its completion, an audit is performed which evaluates the project. The outcome of a R&D project is a publication which details all the project activities, milestones and results. These publications are then used by peers (industry and academia) for critical analysis. By this a complete benefit of R&D activity is realised which, in turn, benefits the industry as a whole.

Pakistani government and its leaders have by now realised the importance of industrial R&D and the issue was on the agenda in economic policy making in last financial year and also in the current year of 2006 Ã¢â¬â 2007. Textile sector including garments and finished goods were included in the scheme and an export subsidy was given to these sub-sectors under the head of R&D subsidy.

However, for the implementation of a successful R&D process, necessary resources are required. Only one resource will not serve the purpose. Money in this case is available to companies for research through official subsidy. What about the other resources, i.e. researchers, machines, materials, previous research literature database, etc. which are important pre-requisites to start R&D activity.

As a matter of fact, no textile industrial unit would be willing to spare its machines and raw materials for R&D purpose. It is considered a huge loss to dedicate such resources for research as it decreases daily production efficiency and increases wastages. Attaining short-term goals is a top priority for managers, executives and share holders and they will not be confident to follow this line of action which requires long-term planning.

Researchers, who provide the intellectual content in the activity are few in numbers. There are hardly any managers in the industry dedicated to research and development. All of them devote their 100 per cent time to complete the core activity of the company i.e. production. Moreover, in existing textile institutes in the country, there is a huge shortage of professional researchers.

Under such circumstances, it is not clear how the government realises that the initiative for industrial R&D could be triggered through subsidising exports.

Besides, there are no details available as to how many R&D projects have been completed or are still in pipeline on the base of which the textile R&D subsidy is claimed in financial year 2005-2006 by exporters. Neither there are any details and publications on the R&D results to-date. In the absence of any R&D activity in the industry, this subsidy could only function as a normal export subsidy or industrial survival subsidy.

The way this subsidy is dragged to next financial year is also questionable. Despite of the absence of any industrial research policy, again millions of rupees are planned to disburse.

There should be a central controlling authority looking after industrial R&D and working in close partnership with research institutes. Close monitoring of R&D budget and it is spending in a proper way must be ensured. A pragmatic research is the core dogma, if applied can boost the value of textile products and industrial expansion.


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## Neo

*Managing threshhold inflation for growth*



THERE is considerable acceptance in the economic literature that some degree of inflation is inevitable for an economy to grow.

Traditional Philips Curve traces the inflation and unemployment nexus and proves that inflation has negative relationship with unemployment. Inflation is like a lubricant which is essential to sustains the momentum of economic growth and is harmful only when it rises beyond a certain threshold level that varies from economy to economy.

In Pakistan, inflation remained below the threshold level of five per cent during 2000 to 2004. In this period, the economic growth was also lower. The inflation data for fiscal year 2004-05 showed a weak response to monetary tightening whereas economy continued to grow strongly. Real GDP growth at 8.6 per cent was substantially higher in FY 2004-05 than the targeted 6.6 per cent, thereby, raising pressures on productive capacity of the economy and leading to a surge in imports.

The rising capacity utilization, high energy costs and shortages of foodstuff substantially added to inflationary pressures. All these factors originated from supply-side and thus CPI inflation averaged 9.3 per cent in FY2004-05, substantially above the five per cent target.

The gradual monetary tightening was warranted only to keep demand side pressure under control. However, a pro-active monetary tightening was least desirable option which could derail the growth momentum in the economy. The higher inflation of 2004-05 was only culmination of rise in support price of wheat and its sympathy effect.

In short, it was only petroleum and wheat and monetary tightening was not prescribed for containing prices of any one of them. It was smoothing of oil prices and better wheat supply management that brought inflation down by 1.4 percentage points. The evidence is sharp fall in food inflation.

The policy induced component of the inflation i.e core inflation remained stable in a narrow band of 6-8 per cent for the last three years. It means it is not monetary tightening but better supply management which brought inflation below target.

The government and the SBP have so far avoided heavy handed response to tame inflation that could derail the ongoing economic upturn. The SBP avoided a sledgehammer policy response in the wake of rising inflation during the last two years and preferred to strike a balance between sustaining the growth momentum and containing inflation.

Real GDP growth target of seven per cent for the current fiscal year 2006-07 demands investment rate of 20 per cent of GDP. The investment in capacity expansion and new capital spending would be discouraged by monetary tightening. This would be detrimental to growth.

At a time, when the government is providing fiscal stimulus for growth and investment, the monetary policy runs counter to fiscal policy targets. The government needs to finance its huge current account and fiscal deficits.

The worst affected by the interest rate hike would be the government. Inflation can only be controlled by administrative measures to curb extra market forces which exploit poor consumers. Competition law could take care of this problem.

The SBP itself admits that, Ã¢â¬ÅIn contrast, the distinct feature of restraining inflation to 6.5 per cent during FY07 together with accelerating GDP growth to seven per cent makes the conduct of monetary policy difficult. Moreover, growth promoting fiscal stance render the monetary policy environment even more challenging going forwardÃ¢â¬Â.

On the fiscal policy side, the government has shown greater tolerance to fiscal deficit for the last two years because of its higher spending on social and physical infrastructural development.

This would jeopardise the prudent public debt management of the government which received its first ever jerk on August 02 T-bill auction. In this auction, the commercial banks stayed away from the ring and the government was not able to mobilise desired level of resources.

Now, under the changed parameters, like higher financing requirement by the government, discount rate is adjusted upward by 50 basis points and CRR and SLR are also adjusted with the objective to provide relief to the depositors. However, this may adversely affect debt management objectives of the government.

The rising lending rates have yielded positive rate of return to the bankers but as they are rising after entry into double digit, it will impact negatively on access the credit.

On the other hand, the poor depositors are getting negative rate of return on their deposits. SBP should serve the interest, both of depositors and the banker because both stakeholders are important market players in the financial business. Being watch-dog of the banking sector, SBP has the responsibility of taking care of all stakeholders.

The current monetary stance would adversely affect the current growth momentum, prudence in public debt management and investment. This is definitely not the right time to check inflation when it is sliding downwards. The core inflation which is more relevant to the monetary policy is in the stable zone.

Monetary expansion is close to nominal GDP growth. It is not the right time to make impact of fiscal stimulus null and void. What the government wants to achieve through fiscal stimulus is likely to be lost by pro-active monetary stance. The SBP should make monetary policy supportive of growth and aligned with overall macroeconomic framework and fiscal expansionary context.

While the inflation is under control, credit to the private sector is slowing down, the economy badly needs investment in new capacity and public sector development programme is expansionary, the current monetary stance is likely to hurt the government finances more than any other sector.


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## Neo

*Insurgency related development issues in Balochistan*



OFFICIALS now claim that the fifth insurgency has been quelled by military operation launched by the government in December and its writ has been established in the tribal belt of Dera Bugti and Kohlu in Balochistan.

The military action has not been without its costs in terms of collateral damage, human sufferings and economic losses. The blowing up of railway, power and gas infrastructure or bombings carried out during last eight months were not without its economic costs. According to the Chief Minister Jam Yousuf, the provinceÃ¢â¬â¢s share in gas royalty has been reduced to Rs1.5 billion due to reduction in gas production hit by blasting of gas pipelines.

The current crisis embraces economics, social and political dimensions. The province has always been excluded from decision-making at the federal level, its pressing financial needs have always been ignored and its vast economic potentials have not been developed. The Sardari system has not been abolished but strengthened by successive regimes in Islamabad to keep its tight hold on Balochistan.

The prevailing socio-economic conditions in the province and the level of deprivation of masses negate any welfare planning by policy-makers.

In the post-military operation scenario, the sense of deprivation prevailing among the Baloch will continue to intensify( which may give rise to another insurgency in future) unless the local people get a fair treatment at the federal level and legitimate share in the various development schemes in the province.

At present, the people are reeling under extreme poverty. Over 50 per cent of the population lives below poverty line. The severe droughts in recent years have increased vulnerability of the poor. The province has the highest percentage of the highly deprived, both in terms of income and other indicators of poverty. Deprived of its legitimate resources, the provincial government is forced to run its affairs on loans. The federal government is getting Rs78 billion annually in revenue from gas fields in the province.

The ongoing development schemes are yet to make a dent in the prevailing poverty and fruits of development are yet to trickle down to local people. It is time to focus on restoration and improvement of law and order, abolition of sardari system and promotion of education with special emphasis on technical education.

The security environment is vitally linked to economic development. It is not merely the Dera Bugti and Kohlu that presents a challenging environment for maintenance of law and order, but the situation needs to be improved in whole of the province.

The incidents of waylaying and looting of vehicles on highways, daylight snatching of motor bikes and kidnapping of citizens for ransom have recorded an increase over the past five years. These incidents have become routine in many districts including the home district of former Prime Minister Zafarullah Jamali.

The tribal violence has not only destroyed peace but also hampered development works and projects in many districts. Armed tribal clashes between the rival tribes or between the sub-tribes have also contributed to backwardness and slow course of development.

A Sardar enjoys authoritarian position in tribal society. The hierarchy of tribe and sub-tribe is reflected in various forms of oppression within the society at various levels. A SardarÃ¢â¬â¢s power in the tribal system has three elements which comprise the inherited, acquired or purchased land, privileged source of income and the authority over succession of lower ranks in the tribal hierarchy.

Sardari was formally abolished in the System of Sardari (Abolition) Act, 1976, which prescribed three yearsÃ¢â¬â¢ punishment to anyone exercising the right of Sardar. The Act says in its preamble: Ã¢â¬â¢The system of Sardari, prevalent in certain parts of Pakistan, is the worst remnant of the oppressive feudal and tribal system which, being derogatory to human dignity and freedom, is repugnant to the spirit of democracy and equality as enunciated by Islam and enshrined in the Constitution of the Islamic Republic of Pakistan and opposed to the economic advancement of the peopleÃ¢â¬Â. But the 1976 Act was never enforced in letter and spirit since its approval by the National assembly during Z.A BhuttoÃ¢â¬â¢s regime.

However, the local people need sardarÃ¢â¬â¢s verification to get local certificate for their childrenÃ¢â¬â¢s future. This notification has in fact legalised a SardarÃ¢â¬â¢s position among the people who do not want to be a part of centuries old Sardari system. They are compelled to extend allegiance to a Sardar.

The importance of local/domicile certificate cannot be denied in seeking government employment or admission to some government institute or getting a national identity card. Such legal formalities that strengthen the Sardari need to be abolished. The Sardari Abolition Act,1976 remains unimplemented.

Social sector development is a prime need. Education achievement reflects the provinceÃ¢â¬â¢s overall low development indicators. Literacy level at 37 per cent lags far behind those of other provinces, and the national average of 53 per cent. According to an estimate, the rural literacy rate (23 per cent) is significantly lower than the urban rate (54 per cent), and literacy among rural females (10 per cent) is about one-third of rural males (37 per cent).

According to another estimate, there are a total of 15,000 settlements in the province. Out of these, 7,000 have schools giving formal education. In most of the districts in the province, the literacy rate among the female is even less than four per cent.

Balochistan government has a limited room to increase its social sector expenditures, partly because of its high debt-service burden. The expenditures mostly go to salaries, while non-salary expenditures are well below the norms for the effective functioning of the social sectors.

Of the budgeted revenue receipts for FY2005, close to 95 per cent had to come from federal government transfers. The provincial tax base is narrow and limited. The provincial government has a large stock of high-interest debt, and in FY2004, Rs2.6 billion, or 10.7 per cent of its total current expenditure, went to debt servicing.

The province is in dire need of bothÃ¢â¬â financial and technicalÃ¢â¬â support to improve primary enrolment and completion rates, reduce gender disparities, and encourage the non-governmental organizations and private sector to participate in the provision of education and health.


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## Neo

*Increased focus on employment*



THE government is working on a second five-year Poverty Reduction Strategy Paper(PRSP-II that places increased emphasis on employment and institutional-building. It is targeting an uplift programme requiring an investment of Rs1500 billion.

The strategy paper would draw upon the experience in implementing PRSP-1 which did not prove to be an unqualified success. It provided for a total expenditure of Rs1200 for a wide ranging projects and schemes aimed at reducing poverty.

Notwithstanding 10 percentage point poverty reduction - from 35 to 25 per cent - repeatedly being claimed by the government, concerned officials admit privately that Ã¢â¬Ånot much has been achieved during 2001-2005Ã¢â¬Â (PRSP-1 period) in terms of significantly reducing poverty and generating new jobs.

The international financial institutions (IFIs) are believed to have agreed to fund the PRSP-2. They are expected to provide about $8 billion (WB $6 billion, ADB $1.8 billion and UNDP $200 million) over the next five years.

However, all the three donors are believed to have made it clear to the government that the PRSP-2 must be backed with strong monitoring as well as capacity development, including data collection and analysis to assess the full impact of the programmes.

The system should have new institutional mechanisms for regular/period monitoring and evaluation of poverty reduction expenditures and corresponding outcomes indicators at the federal, provincial and district levels.

These institutional arrangements are presently being evolved and will be finalised after consultations with provincial governments. Key outcome indicators have also been suggested while final benchmarks and targets will be set after having discussed with national and provincial statistical agencies, federal line departments and provincial governments.

The PRSP-2 is being formulated in the light of the United Nations Millennium Development Goals (MDGs) and its objectives will be achieved by strengthening the private sector particularly services and industry sectors. In this behalf, sectoral analysis are being conducted to make the PRSP-II a success.

The UNDP has hired the services of former director of Pakistan Institute of Development Economics (PIDE) Dr A.R. Kamal to help prepare recommendations for effective monitoring outcomes which will be incorporated in the final draft of the PRSP-2.

The UNDP is believed to have proposed that the government to improve the quality of living standard surveys, with the help of independent economists and financial experts. The UNDP has also called for Ã¢â¬Åsustained reduction in poverty and inequality in the Pakistani societyÃ¢â¬Â by ensuring proper and adequate assets distribution among the less privileged.

The local officials of UNDP and Dr Kamal are currently meeting all the stakeholders including the four provincial governments to work out an improved strategy.

Since education plays an effective role in reducing poverty, the government has been advised by the lending agencies to earmark funds equal to four per cent of the GDP on education against 2.5 per cent currently being spent.

Ã¢â¬ÅWe hope that developed countries would fulfill their promise of offering 0.7 per cent of their GDPs to help cut the world wide poverty considerablyÃ¢â¬Â, a concerned official said, hoping that the government would allocate matching funds to meet PRSP-2 targets.

MDGs seek to cut poverty by half, net enrolment in education by 100 per cent, reduction of infant mortality by 80 per cent by 2015. Similarly, these goals include targets for reduction in TB, HIV, malaria, hepatitis, and for extending clean drinking water and sanitation to the people.

How would the government generate its part of the funding for PRSP-2 is an important question especially keeping in view the fall in tax-to-GDP ratio from 11 per cent to 10.6 per cent and rising fiscal deficit.

The government has been advised by the donor agencies to complete the restructuring of the Central Board of Revenue (CBR) as early possible so that leakages could be removed and fresh funds collected for spending on uplift programmes. Currently, various economic indicators are weakening.

The PRSP-2 is expected to demonstrate the need to closely monitor the effectiveness of government policies and track outcomes of programme for poverty reduction.


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## Neo

*Energy needs of a growing economy*



PAKISTAN has vast natural resources of natural gas and recent discoveries are enough to meet the countryÃ¢â¬â¢s growing needs for the next 25-30 years.

That was the consensus among major foreign oil and gas experts who met at the Pakistan Oil, Gas and Energy conference in Karachi convened by the Pegasus consultancy recently. The foreign experts also said the country was repositioned to take advantage of the growing demand for gas by using LNG.

They advised that because of this abundant natural resource over commitments to buy foreign gas in excess should be avoided. They cautioned that if the current unhelpful regulations continued these may result in the drying up of energy production.

They said, the LNG had a great role to play, but the current regulations and the pricing policy should be made more helpful to the industry. They also called for a liberal and realistic policy towards LNG to promote its optimum production.

It was said at the conference that after the deregulation of the LNG sector in the year 2000, an investment of $150 million was made in that area and with further encouragement from the government $200 million more will be invested. Experts were hopeful that despite the pricing and other problems, the LNG sector was about to take off.

Meanwhile, the government does not want to leave organised energy development to chance. It has come up with a Energy Security Plan for a 25-year period-2005-2030 at an investment cost of $150 billion. Its end will synchronise with the materialisation of Vision Pakistan-2030 which will get the country out of all major economic problems and set it on a high growth trajectory with absolute poverty abolished altogether.

But with political stability missing from the country, no one can foresee which government will complete that process and make vision Pakistan-2030 become real. We have not been lacking in long-term or prospective plans. The first perspective plan 1965-85 was for 20 years and right in the middle came a 15 year old perspective plan. Planning is one thing; making it a real success is a different story.

Out of $150 billion to be invested in the comprehensive energy development, $50 billion will be in the public sector and $100 billion will be in the private sector. On an average the investment will be $6 billion a year with $4 billion in the private sector and $2 billion in the public sector. The average investment will be the double of what is being made now. The money has to be found and productively invested.

The objective will be to ensure reliable, quality and environment-friendly energy as needed by the growing economy. And that will include hydro power from the five large new dams approved recentlyÃ¢â¬â oil, gas, coal, nuclear energy and renewable energy in many forms including wind and solar power.

Maximum use of the indigenous resources is to be made and the import of oil cut to the minimum. The world oil price which has already touched $78 a barrel, may peak to $100 a barrel in view of the Middle Eastern crisis. Hence the government has to hasten to accelerate its efforts to develop the energy sector fast. That also demands the government should have a liberal policy towards the private sector including the foreign investors and offer them enough incentives to attract them to make such large investments. The government has also to price the energy in all its forms in a realistic manner.

That is imperative as the energy demand is expected to rise during the planned period seven times-from 55 million oil equivalent to 360 million tones oil equivalent. And the need for electricity would rise eight fold-from 19540 million megawatt in 2005-to 162,590 megawatt in 2030. Along with that very efficient use of energy is to be promoted, with waste and over-use cut to the minimum. This has been the policy all along, but has seldom been practiced. Waste and theft of power have been excessive.

The number of oil wells drilled is to rise from 100 a year to 330 a year-almost one will be drilled everyday. There is to be a major move towards renewable energy including the use of ethanol mixed with petrol in cars.

There will be a striking shift towards a large use of coal which will rise from six per cent of the total energy used now to 19 per cent by 2030. Initially there will be some import of coal as well to mix with the local coal. Along with that, during the interregnum, Pakistan will try to get gas from Iran, Turkmenistan and Qatar. The first gas pipeline is to become operational in the year 2010.

At the moment, there is a gap in the price demanded by Iran and the price offered by Pakistan and India which is 2 to 1. Iran wants to raise the gas price to international levels. In view of the increasing gas resources which are becoming visible, foreign experts have cautioned the government against over commitment to buy gas from foreign countries.

Pakistan has also been negotiating the purchase of 1000 mw of electricity from Turkmenistan through Afghanistan. The negotiation started a long time ago- in the time of Nawaz Sharif as prime minister, but has made little headway because of the disturbed conditions in Afghanistan. India too is said to be interested in obtaining power through that grid.

Pakistan is now negotiating the purchase of 100 mw of power from Iran for use at the Gwadar Port. The deal has been struck at 6.25 cents per unit by the Wapda, but Nepra which has the exclusive authority to fix electricity rates in Pakistan, is objecting to that for not being consulted prior to fixing the rate. The Iranian side had wanted 6.9 cents per unit and Pakistan had initially offered 5.5 cents. Both were finally settled for 6.25 cents.

Iran is now offering electricity for the adjoining Pakistani districts at five cents per unit. But to provide 100 megawatts of power to Gwader, Iran has to build a transmission line of 70 km in its territories and Wapda will build a transmission line of a hundred kilometers in Pakistan. But conditions in Balochistan have to stabilise before work on the transmission line starts.

Establishment of petrochemical plants and refineries by the private sector is a part of the energy security plan. Clearly, while the government has to invest one third of the funds earmarked by the plan, it has to work very close with the private sector and be responsive to its genuine needs.


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## Neo

Expats 'making significant contribution to pakistan's economy' 

PAKISTANIS in Bahrain and around the world sent over $4 billion (BD1.51.bn) home last year. This is a "significant" contribution to their country's economy, said Pakistani Ambassador to Bahrain Iftikhar Hussain Kazmi. 
He paid tribute to the "hard work and productivity" of the Pakistani community in Bahrain, as Pakistan marks its Independence Day today.

"The Pakistan community in Bahrain is about 45,000 people, including families and they belong to a variety of professions and businesses - there are professionals, doctors, engineers, skilled workers and semi-skilled workers also," said Mr Kazmi. 

"They are very productive citizens and we are proud of them - they have done a lot of good work and they have contributed to the economic development of Bahrain and earned respect and goodwill for Pakistan in this country."
Key developments for Pakistani-Bahraini relations include an upcoming meeting of the Joint Economic Committee, an investment promotion and protection agreement between the two countries - and a Pakistan-GCC Free Trade Agreement.

Pakistan's economy and international trade is being fuelled by widespread political and economic reform, said Mr Kazmi.

"Pakistan has a vibrant, functioning democracy. We have a parliamentary system of government which is headed by Prime Minister Shaukat Aziz and a bicameral legislature and a multi-party political system," he said. 

"Our last parliamentary elections were held in 2002 and the next parliamentary elections are scheduled to be held next year - and this will be the second parliamentary election under President Pervez Musharraf. 
"In the field of economy the figures are very impressive - particularly in the last four or five years.

"Our workers' remittances, which they have been sending to Pakistan, totalled over $4bn (BD 1.51bn), which is quite significant," said Mr Kazmi. 

"Between Bahrain and Pakistan, the volume of trade is around $125 million each year, and our exports to Bahrain range between $40m to $45m.

"We mostly import petroleum products and some aluminium related items.
"At public sector level, we have a Joint Economic Committee (JEC) - its next session will be held in the first quarter of next year in Islamabad. 

"It's a good forum between our two countries that was established a long time ago and essentially it seeks economic, trading and investment co-operation between Pakistan and Bahrain.

"We're also going to shortly sign an agreement on the promotion and protection of investment between Pakistan and Bahrain - we're already negotiating that agreement. 

"Pakistan and the GCC countries are shortly also going to sign a Free Trade Agreement, which is being negotiated by the government of Pakistan and the GCC secretariat in Riyadh. 

"That will open up avenues and unleash forces of co-operation between Pakistan and the GCC countries in the fields of economy, trade and investment." 

On regional matters, Mr Kazmi said Pakistan condemned the Israeli aggression against Lebanon and Palestinians.

Key internal issues for Pakistan are a continued strong economic performance as well as job creation and poverty alleviation, said Mr Kazmi. 

"Pakistan has the highest per capita income in South Asia - our economy has done very well since the Prime Minister and President have brought about massive economic reforms, restructuring, opening up (the economy)," he said.
"With the result of these reforms the economy has taken a turn around and made remarkable progress in the last four to five years.

"Pakistan is now the highest performing Asian economy in the world after China - our exports registered 11.4 per cent increase, and they amounted to $16.5bn (BD 6.23bn). 

"In the next year, they are expected to increase to as much as $18.6bn (BD 7.03bn) which is quite a significant improvement, and Foreign Direct Investment (FDI) in Pakistan from external sources reached the figure of $3.5bn

"To summarise, Pakistan has very stable economic fundamentals - low inflation and rising GDP.
"Our foreign exchange reserves stood at $13 billion (BD 4.91bn) for 2005 and 2006.
"But there are challenges. 

"We are concerned that we have to address the issues of poverty and job creation in Pakistan. 

"Although, the incidence of poverty has decreased - it used to be 33 per cent, and now it is down to 25pc - we know that still a lot of work has to be done and we are doing that."

Mr Kazmi said Pakistan's foreign policy was essentially aimed at social and economic development at home and to strengthen stability in the region. 
"We are engaged in composite dialogue with India and it has made some progress in certain areas, like people-to-people contacts and in the field of trade and economy, drug trafficking, market access and transport and communications," he said. 

"Unfortunately there is slow progress on fundamental issues such as the Kashmir dispute and we have said that confidence building measures will be of little value if purpose-oriented and meaningful discussion are not held on the Kashmir dispute, which is a core dispute between Pakistan and India.
"We have been telling our friends in India and terrorists should not hijack the agenda for talks and negotiations between India and Pakistan.

"Pakistan is a frontline state in the global campaign against terror - a case in point is the recent co-operation which we extended to the UK and US in busting this international ring of terrorists, which were perhaps planning to attack trans Atlantic flight operations."


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## Neo

Monday, August 14, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\08\14\story_14-8-2006_pg12_1

_* NGOs oppose project and privatization of beaches

By Aziz Sanghur_

KARACHI: Construction on a controversial $1.5 billion private Waterfront Development Project is planned for mid-December but in the meanwhile, senior citizens and nearly a dozen NGOs are planning to oppose it and other similar projects.

The pressure group contends that this project and several others in the area will take over KarachiÃ¢â¬â¢s beachfront and prohibit the access to the general public. The multi-billion dollar Waterfront project comprising commercial complexes, a 600 foot high tower, amusement park, five-star hotel, amphitheatre complex and water sports facilities, is expected to take over about 14 kilometres of land from Sindbad (Old Casino) up to the Golf Course. 

According to sources in Defence Housing Authority (DHA), more than five foreign investors from Malaysia, the UAE, Saudi Arabia etc. have submitted proposals to qualify for the project. The land falls in DHA jurisdiction. The DHA Executive Board has approved the proposals.

One of the arguments in favour of these project, according to sources in DHA, is that they will create around 120,000 jobs with around 80,000 direct employment opportunities with DHA and the rest indirect job openings related to the project. Furthermore, the project is expected to make a profit of nearly half a billion US dollars every year.

Its master plan divides the 14-kilometre waterfront stretch into seven distinct zones (A to G) in harmony with its terrain and beach. Fifty percent of the land is planned to be allocated for parking facilities for 2,000 to 3,000 vehicles and a tramway terminal. 

The remaining land is to be used for a 50-storey high-rise commercial and residential building. A Monumental Tower, 600 feet high, will be erected with a revolving restaurant and observatory deck. The main structure will be supported by a low-rise complex with indoor games.

A Water Park with water sports, rides, swimming zones and a wave island is planned on 11 acres of land. An offshore amphitheatre with the capacity to accommodate 6,000 people at a time will be connected through a grand pier to the main land. A viewers deck, parks, a promenade and piazzas will be the main attractions. A performance deck has been planned for artists and public performances. 

A food court complex, amusement park on 24 acres, board walk, expo center and sculpture court amphitheatre will be part of the project along with a private beach with a lagoon for a hotel and residential blocks. The project also includes an underwater world with a Dolphin Park and aquarium.

The pressure group has, however, decided to launch a campaign against the privatization of KarachiÃ¢â¬â¢s beaches and has urged the government to cancel all allotments to private parties.

The Urban Resource Center (URC), Pakistan Institution of Labour Education and Research (PILER), Human Rights Commission of Pakistan (HRCP), Aurat Foundation, SHEHRI, Shirkat Gah, Orangi Pilot Project etc. will hold a discussion forum on Ã¢â¬ËClifton Beach and Sea View: Proposed plans and their impactÃ¢â¬â¢ at the URC head office on Wednesday, August 16 with senior urban planner URC chairman Arif Hasan in chair.

In addition to the Waterfront Project, DHA has planned a Creek City Project and Floating Kitchen with private parties. 

The pressure group points out that DHA established a number of clubs along Gizri beach and thus closed them off to the public. According to the Sindh Building Control Ordinance, beaches are reserved for recreational proposes and are not for sale or for housing schemes.

DHA spokesman Lt. Col. (retd) Rafat Naqvi took the stand that those who opposed these projects were against development and DHA has ordered that facilities will be provided to the public at these projects.


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## Owais

*DPW to build Port Qasim's second phase: Babar Ghauri* 

KARACHI: Dubai Port World (DPW) will take up the development works of Port Qasim's second phase, Minister Ports and Shipping Babar Khan Ghauri told Geo news correspondent Ali Imran.

In this regard, a DPW delegation would sign the contract papers in Prime Minister House on August 17, he said. "The project costs 375 million dollar."

He said the new phase would consist of two berths, whose length would be 750metre each. While the depth was approximated to be 14metre, which would help harbour huge ships, he added.


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## Owais

*Standard Chartered Bank decides to buy Union Bank * KARACHI: In view of collective economic conditions and the bright prospects of banking sector in Pakistan, Standard Chartered Bank has decided to purchase Union Bank.

Standard Chartered Bank Group Executive Director Richard Meddings, talking to Geo News, said that his bank believed in organic growth and the same strategy was adopted at the purchase of Union Bank.

Ã¢â¬ÅThe purchase of Union Bank was preferred as it could be organically merged with our bank,Ã¢â¬Â he said.

Richard Meddings said the Pakistan was now on path regular economic growth, adding that in his reckoning, over five to six years, the collective economic growth in Pakistan would remain above six percent.

He said the GDP rate progress was quite satisfactory in the country.


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## Owais

*$14.7m invested in national stock exchanges* 

KARACHI: In the stock exchanges of the country, the foreign financers have invested $14.7 million till the August 11, 2006.

According to the State Bank statistics, in the meantime Switzerland drew $11.3 million from the stock market and Singapore invested $32.2 million in the market.

Similarly, in August Hong Kong took its investment of $3.30 million from market, whereas Singapore invested $13.7 million in Pakistani Stock market


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## Owais

*Trade development Authority of Pakistan act approved* 

Lahore: Federal Minister and Chairman Export Promotion Bureau (EPB), Tariq Akram on Tuesday said that the Trade Development Authority of Pakistan act has been approved, which will come into effect within a month.

He announced this here today in a meeting of Lahore Carpet Manufactures Association.

He said that under the trade development authority of Pakistan act, vision 2010 and vision 2015 would be chalked out to boost exports of surgical instruments, sports goods and carpet industries.

Tariq Akram informed that the consultation programme from local and foreign experts would be arranged regarding preparation of the vision.


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## A.Rahman

US Information Technology to make Pakistan its Hub of activity
Tuesday August 15, 2006

KARACHI : The US-based WYSE Technology Incorporation-a pioneer in Thin computing is considering to make Pakistan a hub of its commercial activities in the South Asian region due to its investor-friendly atmosphere.

The president and Chief Executive Officer (CEO) of the WYSE Technology Inc, Dr John Kish, is likely to visit Pakistan in the third week of August, 2006.


Founded in 1981, the WYSE Technology Inc is a technology manufacturing company headquartered in San Jose, California, USA, with offices world-wide.


The company introduced economical, ergonomic, and attractively designed terminal products of high quality and reliability. The WYSE, world-wide customers include FedEx, AT&T, Abbott, Citibank, Xerox, DHL, Lockheed Martin, Bayer, UPS, Pfizer, Exxon and Marriott etc. Despite aggressive competitors entering the marketplace as early as the following year, the WYSE has continually maintained its Thin-client leadership.


Thin client is a simple programme or hardware device, which relies on most of the function of the system being in the server.


By the mid-1990s, the model of decentralised computing where each user has his own full-featured and independent microcomputer, seemed to have displaced a centralised model in which multiple users use thin clients (eg **** terminals) to work on a shared minicomputer or mainframe server, but the scenario is changing again.


The main objective is to provide better services to its customers. Especially, those who are suffering from the poor networking support of some operating systems.


Thin computing is a computing architecture that shifts complexity from the edge to the centre of the network. This architecture enables new ways to access information and eliminates the most frustrating corporate desktop issues faced by a company's Information Technology (IT) department, specifically security, manageability, reliability, and cost.


Thin computing is a model that can be used successfully by companies and institutions of all sizes to increase productivity and security while reducing IT costs.


Thin Computing delivers the access people need, at a much lower cost than traditional methods, all without compromising security or manageability. It makes it easier for the IT to manage systems and improve the reliability and security of information, which dramatically lowers IT costs.


Thin Computing still provides the access to applications and data that people need in order to move the business forward. All the while improving on the security, reliability, and availability of PCs. Problems that run up the cost to deploy PCs enterprise-wide.


It includes hardware services and software that work with the Thin Clients and PCs, as well as the wireless devices and other systems.


It gives everybody in an organisation secure access to the information and the applications they need, without requiring the desktop systems to store them.


Besides, the increased availability of high-bandwidth network connections allows Thin Computing solutions to run at near desktop speeds.


Which makes it easier and more acceptable for business professionals to use Thin Clients in mission-critical applications.


The WYSE software makes it easy to manage, update, and even service any Thin Client from one central location. After all, it's much easier and more cost-effective to manage several servers than thousands of individual desktop PCs.


And with no moving parts thanks to solid-state technology, the WYSE Thin Clients deliver greater reliability, availability, and lower cost of ownership than other solutions.


The WYSE&#174; Winterm&#8482; line of thin clients has led the industry for the seven years it has been tracked. When integrated with additional hardware, software, and services they become part of a complete solution to a business problem.


To stay productive in an environment of emerging protocols and standards, hardware-like terminals and other embedded operating system-based devices must be managed. WYSE&#8482; Rapport&#174; device management software is one of few products in the industry designed to support global enterprise installations of tens or hundreds of thousands of connected devices.


On June 14, 2006 WYSE announced its second wave of exclusive enhancements to Microsoft&#174; Windows&#174; CE 5.0 for its thin client customers. WYSE Feature Release 2 (WFR2) is the latest release of the WYSE-enhanced Windows CE and will be offered in new devices and as an upgrade for current WYSE customers.


"Driving forward on WYSE's promise of providing the latest thin client functionality, including support for performance-enhanced Citrix ICA 9, this new release brings an unprecedented level of functionality and flexibility to WYSE's Windows CE 5.0 based thin clients," said Ricardo Antuna, Vice-President of Business Line Management at WYSE.


The WYSE and its technology partners enable the largest companies in the world to achieve competitive advantage and deliver better service to their customers and employees by allowing them to utilise precious IT resources that many organisations expend on traditional distributed desktop environments.

paktribune


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## Owais

*Tractors production in the country rise* ISLAMABAD: In the first month of the current fiscal year, 4071 tractors were manufactured exceeding last year&#8217;s output during this period by 1328 units. 

Engineering Development Board&#8217;s chief executive officer, Imtiaz Rastgar told that 3743 tractors were manufactured in the first month of the previous fiscal year. He told that the local production of tractors by the end of the current fiscal year would mount to 50000 tractors, while 48887 tractors were manufactured in the previous fiscal year. 

Imtiaz Rastgar told that the government has permitted import of tractors in the backdrop of the rising demand of our agriculture sector. However, this would not be affecting the local manufacturers, he asserted.


----------



## Owais

*Asian countries for more oil refineries* 

KARACHI: All key Asian countries including Pakistan are now focusing to increase refining capabilities of crude oil in order to cope up with future energy requirements.

According to details issued by some companies working in the region, several new oil refineries are being established in Asia. 

China and India particularly focusing to increase number of oil refineries whereas Pakistan and other under developing countries enhancing current productivity level of their existing oil refineries. 

Interim details unveiled that work on Karachi Indus new plant and Baluchistan new plant underway although some details of Baluchistan new plant project yet to be finalized. 

Karachi Indus new plant would boost the production up to 84,000 barrels and it would expectedly be completed till next year.


----------



## Owais

*Food inflation up at 7.44 percent in July* 

ISLAMABAD (August 16 2006): Though, the general inflation measured by Consumer Price Index (CPI) is declining: yet, the rising food inflation is still snatching the purchasing power of the low-income group, which is a challenge for economic managers.

The State Bank of Pakistan (SBP) on Tuesday released the inflation indicators, which reveals during FY2005-06, average annualised CPI inflation was 7.92 percent and food inflation, 6.92 percent. While in the first month (July) of 2006-07, general inflation declined to 7.63 percent and food inflation increased by 0.52 percentage points to 7.44 percent.

Food inflation, having 40.34 percent weightage in CPI basket, unevenly affecting the purchasing power of the low-income group, increased by 2.62 percent during July 2006 over June 2006.

In one month, general inflation increased by 1.61 percent; food inflation by 2.62 percent; non-food inflation by 0.89 percent; and core inflation increased by 0.46 percent in July 2006 over the previous month.

Inflation indicators provided by the bank since 1998-99 reveals annualised CPI inflation was highest during FY2004-05 at 9.28 percent, of which the food inflation was highest (12.49 percent).

Majority of population consists of low- and middle-income groups and always suffered most by the increase in food inflation. When prices go up, it hit these groups and squeeze their purchasing power.

It is worth mentioning that non-food and core inflation (excluding certain sectors whose prices are most volatile specially food and energy) was on decline, though. It stood at 6.28 percent during July of the new fiscal year against the annual average of 7.11 percent in FY2005-06.

The other inflation indicators, ie, the Wholesale Price Index (WPI) was satisfactory and indicating decline not only in general but food and non-food groups in particular. This indicates and creates hope that in coming month prices of consumer items would go down and be in the grasp of a common man.

The WPI was at 10.10 percent during FY2005-06, in which the food inflation was seven percent and non-food inflation at 12.37 percent. In July 2006-07, it declined to 8.43 percent with food inflation at 5.39 percent and non-food (10.67 percent).


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## Owais

*Missing traders fraud: SOP for new tax law shortly* 

ISLAMABAD (August 16 2006): The Central Board of Revenue (CBR) will shortly issue Standard Operating Procedure (SOP) for implementing a new law--Missing Traders Fraud--under which all partners in the supply chain would be jointly liable to deposit the unpaid amount of tax not paid at any of the stages of supply.

Official sources told _Business Recorder _on Tuesday that the SOP would be finalised in consultation with the business community. The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and Karachi Chamber of Commerce and Industry (KCCI) are actively in touch with the Board to frame the most viable rules.

Sources said that the concept of the 'Missing Traders Fraud' has been made part of the Finance Act, 2006, but the SOP is yet to be chalked out keeping in view reservations of the taxpayers. All issues pertaining to the practical difficulties being faced by the taxpayers would be taken into account prior to issuance of the procedure.

In the 2006-07 budget, the Board has introduced several strict provisions in Sales Tax Act, 1990 to reject the fraudulent refund claims where the amount has not been actually deposited by the supplier in the national exchequer. Section 8 of Sales Tax Act was amended through Finance Bill 2006 to disallow refund or 'input tax adjustment' in case the tax claimed has not been deposited by the respective supplier.

Similarly, the Board has introduced a new system for checking the refunds claimed by persons whose suppliers have collected tax from them, but not deposited in the treasury. Officials said that the new law is in place, but it cannot be implemented till the finalisation of the SOP on the basis of traders' recommendations. Once the SOP is finalised, the Board would issue instructions to all collectors of sales tax for its enforcement.

When asked about demands of certain chambers to scrap the proposed law, sources said that the 'Missing Traders Fraud' law would not be abolished in toto but would accommodate the viewpoint of maximum number of traders and industrialists.

About the availability of online data of blacklisted units and fake companies, sources said that the list of such units is already available at the CBR website. The Board will ensure that updated data of blacklisted companies is made available to the registered units, they added.

Under the 'Missing Traders Fraud', both the buyer and the seller would be responsible for depositing the amount of due tax, if not deposited. Prior to this, the buyer was not held responsible, even if his supplier had not deposited the tax recovered from him.


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## Owais

*Petrol blending with ethanol likely to start this week* 


ISLAMABAD (August 16 2006): The Planing Commission has observed that ethanol blending as fuel would cut down petroleum prices to ensure energy security in the coming years when industrial sector's dependence on gas would increase manifold.

In its 'energy security plan' submitted before President Pervez Musharraf and Prime Minister Shaukat Aziz, the Planning Commission Deputy Chairman, Dr Akram Shaikh, has forcefully recommended blending of ethanol as fuel. He was of the view that ethanol blending could bring petrol prices substantially down and encourage its use as fuel for vehicles.

He listed the countries, which have successfully experimented the use of blended ethanol to cut down petroleum prices for the end-users, and advocated that Pakistan should take advantage of the locally produced ethanol by at least 10 percent blending.

With the growing petroleum prices in the international market for a long time now its use is shrinking, slowly and gradually. The vehicle owners prefer CNG use for low cost. The Planning Commission said it wanted a change in the proposition. It suggested that the government should make optimal use of energy to take the maximum benefit of its each kind of fuel, including ethanol, and leave gas as much as possible for industrial use.

Sources said that the President and Prime Minister agreed to Planning Commission's proposal that finally led to federal Cabinet's approval some time back.

The Cabinet had approved the proposal, putting aside Petroleum Ministry's strong opposition. The Petroleum Ministry had opposed the idea, saying that with the new kind of blended ethanol fuel the country would be left with more surplus petrol. However, it could not make the Cabinet change its plan.

Source said that the government was going for blending 10 percent ethanol as fuel to make petroleum cost effective as Prime Minister Shaukat Aziz plans to launch the new kind of fuel in next couple of days.

Sources said that arrangements were being made for the Prime Minister's visit to a petrol pump in the twin cities of Islamabad and Rawalpindi for launching of ethanol-blended fuel some time this week.

The ethanol blending with petrol is an old idea of the sugar industry. The Pakistan Sugar Mills Association (PSMA) had time and again approached the government with a proposal that it should allow at least 10 percent ethanol with petrol to cut down its prices for vehicles' use, but each time it met negative response. The Petroleum Ministry always had negative remarks to PSMA suggestion, sources added.


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## Owais

*US pushes for TAP gas line* 

ASHGABAT (August 16 2006): Washington is pushing for a new gas pipeline from Turkmenistan to Pakistan and "strongly opposes" a rival pipeline from Iran, US diplomat Steven Mann said on Tuesday after meeting with Turkmen President Saparmurat Niyazov.

Niyazov and Mann met for two hours on Monday to discuss a variety of possible gas pipeline projects from the gas-rich Central Asian state, including pipelines to China and across the Caspian Sea as well as through Afghanistan to energy-hungry Pakistan and India, Mann said.

"The demand is there, but the next step is to look for private-sector partners to develop this line", said Mann, who is the US State Department's principal deputy assistant secretary for South and Central Asian affairs.

Niyazov, a mercurial politician who has been president since Turkmenistan's independence in 1991, said after his meeting with Mann that the country supported "the policy of creating a diverse pipeline system," the Turkmen government news agency reported on Monday.

During the mid-1990s, the United States pushed for a gas pipeline to be built across the Caspian Sea from Turkmenistan to Western markets, but Niyazov eventually backed out of the project, which was opposed by Moscow.

The project to build a pipeline from Turkmenistan to Pakistan came a step closer to realisation recently with completion of a feasibility study sponsored by the Asian Development Bank, but remains in doubt due to ongoing instability along its route, particularly in Afghanistan.

Aside from security issues, building a pipeline through Afghanistan's mountains would be hugely expensive and technically difficult, probably requiring government subsidies, said Chris Weafer, an analyst at Russia's Alfa Bank.

Mann acknowledged that the route posed commercial difficulties, but insisted that "governments do not build successful pipelines ... These pipelines must be attractive to the private sector."

The US also has strategic interests in such a pipeline, Weafer said, including undermining the potential profitability of a pipeline Russian state monopoly Gazprom plans to build from Iran to Pakistan.

Mann on Tuesday said Washington opposed a pipeline from Iran, which it considers a state-sponsored terrorism, as "a matter both of US law and US policy."


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## Owais

*OGDCL earns Rs 46 billion after-tax profit* 

KARACHI (August 16 2006): The Oil & Gas Development Company Limited (OGDCL) has declared its income at Rs 46 billion, and earning per share (EPS) Rs 10.69 in FY06 against Rs 33 billion (EPS Rs 7.67) in FY05, depicting a growth of 39 percent.

The company declared a final cash dividend of Rs 3.75 per share taking the cumulative payout to Rs 9.00 per share for FY06. The OGDCL declared its annual FY06 result here on Tuesday and according to analysts the result was inline with the expectation.

Faraz Farooq, an analyst at Jahangir Siddiqui Capital Markets, said that with combined oil & gas production in FY06 showed a nominal increase of 4 percent, growth in earnings mainly derived from higher oil & gas prices.

The company derives about 40 percent of its income from oil sales. Saudi Light oil prices averaged $59/barrel in FY06, which is 43 percent higher than last year's average oil price.

The average wellhead price of Qadirpur Field (accounting for 39 percent of total gas production) surged by 37 percent to Rs 201.4.Due to this, net sales of the company grew by 31 percent and reached Rs 96.7 billion. Other income of the company, which mainly includes interest income, depicted massive increase in FY06 by virtue of its holding of huge cash balances (Rs 38 billion as of March 2006) in the wake of rising interest rates scenario


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## Neo

ISLAMABAD (August 16 2006): Investment in country has soared to record levels and foreign direct investment (FDI) hit a record of 3.5 billion dollars during 2005-06. This was stated by Pakistan's Board of Investment (BoI) Honorary Investment Counsellor in Bahrain Mohammed Sajid Shaikh, the Daily News Bahrain reported.

He said so far, 57 entities have been privatised, raising Rs 316 billion, since economic reforms were launched in 1999. This money has been used for debt reduction and poverty alleviation. Privatisation is the cornerstone of Pakistan's economic reforms, which have made a major contribution towards the country's excellent economic performance in recent years, he added.


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## Neo

ISLAMABAD (August 16 2006): Despite a devastating earthquake less than a year ago and an extraordinary surge in global oil prices, Pakistan's economy has delivered yet again. It registered economic growth at 6.6 percent, and its investment rate touched a new high at 20 percent of gross domestic product (GDP).

Real per capita GDP had grown by 4.7 per cent and per capita income in current dollar terms was up by 14.2 per cent to $847 during 2005-06. In 2005, the World Bank reported, "Pakistan was the top reformer in the region and the number 10 reformer globally."

According to Gulf News reports, Pakistan is now one of the emerging economies among growing nations such as China, India and Brazil. Pakistan is a developing country with the world's sixth largest population. At purchasing power parity, Pakistan's GDP in 2005 was estimated at about $384.9 billion. The economy averaged an impressive growth rate of 6 percent per year during the 1980s and early 1990s.

In recent times, wide-ranging reforms have accelerated economic growth. Pakistan's manufacturing and financial services sectors have experienced rapid expansion and there is great improvement in its foreign exchange position.

In May 2006, Pakistan's foreign exchange reserves were more than $13 billion. According to the State Bank of Pakistan (SBP), as per current estimates, the nation's long-term growth momentum remains intact, with real GDP growth exceeding six percent for the third successive year.

In its bid to further speed up the growth process, Pakistan has embarked on a profitable reform agenda based on deregulation, liberalisation and privatisation. The newly created Trade Development Authority of Pakistan (TDAP) plans to increase and diversify the country's exports by exploring new markets and identifying new export products.

To increase market access for goods produced in Pakistan, the government is vigorously pursuing signing of Free Trade Agreements (FTAs) and Preferential Trade Agreements (PTAs) with various countries. Islamabad also hopes to position itself as an energy corridor linking oil-and-gas-rich countries in the Gulf and Central Asia.

For 2006-07 Pakistan has set an export target of $18.6 billion. According to Prime Minister Shaukat Aziz Pakistan has exceeded the revenue collection target of Rs690 billion, and the economy has doubled in size to $134 billion in the last seven years.

The liberalisation in the international textile trade has benefited Pakistan's exports and it also expects to profit from freer trade in agriculture. As a large country, Pakistan hopes to take advantage of significant economies.

A perception of stability in Pakistan's monetary policies has contributed to a reduction in money-market interest rates, and a great expansion in the quantity of credit, changing consumption and investment patterns in the nation.

Pakistan's domestic natural gas production and its significant use of CNG in automobiles have cushioned the effect of the oil-price shock of 2004-05. Pakistan is also moving away from the doctrine of import substitution and is now pursuing an export-driven model of economic growth.

Construction sector in Pakistan is also booming. Recently, Dubai Ports World has announced that it would spend $10 billion on transport infrastructure and real estate in Pakistan.

Emaar Properties has also recently taken over three realty projects in Islamabad and Karachi. With an investment of $2.4 billion, it has embarked on a series of master planned communities that will set new benchmarks in commercial, residential and retail property in Pakistan.

President Musharraf believes that Pakistan's central geo-strategic location at the heart of critical regions, including Western parts of China, Central Asian states, Afghanistan, Iran, India and the oil-rich Gulf countries, gives the country a pivotal role. In a recent statement, he hoped that Pakistan would become a trade and energy corridor for China and landlocked Central Asian countries.


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## Neo

PESHAWAR, Aug 15: Planners underlying the countryÃ¢â¬â¢s marble and granite sectorÃ¢â¬â¢s development plan, being prepared with the support of the United States Agency for International Development (USAID), estimate that the sectorÃ¢â¬â¢s contribution to the GDP can be raised to 2.31 per cent by 2015 from the existing level of 0.38 per cent by streamlining it on modern lines.

The plan, being put in place under the USAID funded Ã¢â¬ËPakistan initiative for strategic development and competitivenessÃ¢â¬â¢, a project aimed at increasing the competitiveness of PakistanÃ¢â¬â¢s small and medium enterprises, eyes at increasing the marble and granite sectorÃ¢â¬â¢s share under the total exports of the country from 0.16 per cent in 2004 to 4.18 per cent in 2015.

The successful implementation on the plan, hoped an official, would help the federal government raise foreign exchange of $2.44 billion through marble and granite sector-related exports in 2015, much higher than what the country earned in 2004 when its total exports of marble and granite products stood at $23 million.

The marble and granite sector-related Ã¢â¬Ëstrategy working groupÃ¢â¬â¢ Ã¢â¬â established under the USAID funded activity Ã¢â¬â has estimated that modern technology and best practices vis-a-vis extraction of marble and granite deposits by miners as part of a strategy to organize the sector on modern lines would help increase the governmentÃ¢â¬â¢s revenue from Rs2.44 billion two years ago to Rs161 billion in 2015.

It would be possible as a result of increasing the sectorÃ¢â¬â¢s capacity to sell more in terms of square feet.

The plan envisages to increasing the sale level to 380 million square feet in 2015 against 100 million square-feet total sales recorded in 2004.

The working group has, in view of the massive deposits of marble and granite in the NWFP and Balochistan, underlined the need to exploit the countryÃ¢â¬â¢s strategic advantage in developing stone industry and making it locally and globally competitive by reducing extraction related losses and value addition.

Ã¢â¬ÅEconomic success of the stone industry will contribute to employment and income generation, rural development and poverty alleviation,Ã¢â¬Â hopes the working groupÃ¢â¬â¢s report.

The strategy aims at improving the value chain productivity by providing training to produce skilled manpower, upgrading prospecting/quarrying and processing technology, establishing standards for quality of products and aligning production with market needs.

In this respect, it also stresses improving market access for local manufacturers and traders, enhancing product awareness and providing testing and product related information to the market players.

According to experts and business circles, there was a tremendous scope of bringing about improvement in the marble and granite sector to take maximum advantage of the potential the country had in view of large deposits of marble and granite in the NWFP and Balochistan.

Of all the marble extracted every year some 73 per cent is lost due to aged old mining practices. The new strategy, said a source, aims at bring down the ratio of extraction related losses to about 45 per cent by 2015.

Ã¢â¬ÅOut of the total marble extracted every year, only three per cent is cut in square blocks for exports, however, during the process 50 per cent of the marble is lost leaving only half for exports,Ã¢â¬Â said an official document.

Whereas, out of 97 of the total extracted marble about 45 per cent is lost during the cutting process, five per cent is converted into slabs and some 50 per cent is converted into tiles, of which only two per cent are exported and 98 per cent are sold in the open market at quite a low price.


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## Neo

16 August 2006 


ISLAMABAD Ã¢â¬â Pakistan government has decided to prepare viable recommendations to revive private sector investment by further liberalising the ongoing policies, it is learnt. 
Informed sources said that President General Pervez Musharraf and Prime Minister Shaukat Aziz have also directed the officials of the ministries of finance, commerce and the Central Board of Revenue (CBR) to get the higher prices of utilities reduced especially that of power and gas with a view to encourage sizable private investment in the country.
Both the leaders have also called for removing "a plethora of administrative barriers to investment such as corruption, red tape and higher cost of inputs." 
The Planning Commission in one of its presentations given to the president and the prime minister recently has regretted that despite extending a host of tax concessions and incentives offered during the last 6 years, the private sector remained shy and failed to make considerable investment in the domestic economy.
The commission believed that a well defined and coherent policy package was required for the strengthening of competitive edge of the private sector which has to play its role as an engine of growth.
Also, the government needed to overcome its financial and technological constraints to achieve its long term economic objectives, the commission said stressing that the current low tax-to-GDP ratio should be improved substantially to overcome the scientific, technical and human resources constraints to raise
the present per capita income of $780 to $3,000 in next 25 years.
Sources said that the officials of the Planning Commission wanted to have consistent inputs from all stakeholders to promote private sector investment.
Pakistan has to make important strategic choices to ensure sustainable growth in the manufacturing sector in a rapidly changing and international competitive environment that requires massive structural changes rather than a marginal change.
The commission also informed both the president and the prime minister that raising productivity was essential not only for economic growth but even to remain competitive in the world economy and that exclusive reliance on factor accumulation would no longer suffice.
The manufacturing and industrial sector was suffering from various structural problems resulting in slow growth rate of output and exports, low level of investment, high concentration of the manufacturing industries, allocative technical inefficiencies, poor quality of products, low level of research and development activities, resulting into slow growth of
productivity making the Pakistani products uncompetitive in the world market.
The traditional industries such as foods and textiles still account for an overwhelming share of the manufacture output.


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## Neo

ISLAMABAD, Aug 15: The government is finalising an `export planÃ¢â¬â¢ to increase Pakistan's exports from $16.5 billion to $40 billion during the next five years. "A decision has been taken to enhance our exports from 13 per cent of GDP to 15 per cent in the next five years for which we are currently preparing blueprints for the export plan," said Dr Akram Sheikh, Deputy Chairman of the Planning Commission.

Talking to Dawn, he said the proposed plan would be ready in two months for approval by Prime Minister Shaukat Aziz and added that last week he held a first meeting with all stakeholders, including private sector representatives, exporters, lines ministries and other departments concerned with a view to working out what he termed "certain practical export plan".

Responding to a question, the deputy chairman said in next few meetings with the stakeholders a number of new products would be identified for their value addition and ultimately for their exports.

"We are conscious of the fact that without identifying new products we cannot achieve $40 billion target in the next five years," Dr Sheikh said, adding that the government needed to study potential and strength of its infrastructure, technologies and manpower with a view to increasing its exports to 15 per cent of GDP.

He said once the draft of export plan was finalised, the government would look into the issue of extending further incentives and concessions to the private sector for substantially enhancing country's exports. Ã¢â¬ÅSince the private sector has to become the real engine of growth, the government will very much like to facilitate it in a big way,Ã¢â¬Â he assured.

However, he said there was also a need to pinpoint various weaknesses and constraints which were becoming a hurdle in the way of significantly increasing Pakistan's exports. "We will evolve a consensus in our future meetings with the stakeholders with a view to achieving our objectives of enhancing exports."

He said Pakistan had to compete in the international market by exporting quality products and that without achieving international standards it would be difficult to enhance these exports.

In reply to another question, Dr Sheikh said the manufacturing and industrial sector was suffering from various structural problems resulting in slow growth rate of output and exports, low levels of investment, high concentration of manufacturing industries, technical inefficiencies, poor quality of products, low level of research and development activities, making Pakistani products uncompetitive in the world markets.

In this regard he referred to "strategic directions to achieve vision 2030" of the Planning Commission, according to which the share of medium and high technology in overall manufacturing value added was approximately 35 per cent of Pakistan compared with around 58 per cent for India and China, 61 per cent for Korea and 65 per cent for Malaysia. The share of high technology goods in manufactured exports remains low at one per cent compared with five per cent for India, 23 per cent for China, 32 per cent for Korea and 58 per cent for Malaysia.

The vision seeks to devise an export led industrial growth strategy and study threats to domestic businesses and industry from the point of identifying appropriate restructuring and business improvement required. It also called for examining the incentives and policies needed for pioneering industries, whether they are 'new' products, processes or technologies, so that the range of activities are expanded. "This should be clearly distinguished from the incentives for small and medium enterprises which relate to size, rather than growth of specialisation," the vision added.


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## Neo

Wednesday August 16, 2006 

ISLAMABAD: The Central Development Working Party (CDWP) of the Planning and Development Division will meet on August 17 (Thursday) to consider engineering designs of Akhori and Sabakzai dams in addition to 31 other development schemes estimated to cost around Rs 58.1 billion. 

A senior government official told Daily Times that the CDWP would consider the Rs 263.98 million project for Akhori damÃ¢â¬â¢s engineering design, and the Rs 1.8 billion Sabakzai damÃ¢â¬â¢s project proposed by the Water and Power Ministry. The meeting, to be presided over by the Planning Commission Deputy Chairman Dr Akram Sheikh, will also take up the Railways MinistryÃ¢â¬â¢s scheme to upgrade and convert 400 coaches worth Rs 3.98 billion. The Food, Agriculture and Livestock MinistryÃ¢â¬â¢s crop maximisation project (II) to cost Rs 7.821 billion will also be considered. 

The meeting will discuss the Textile Industry MinistryÃ¢â¬â¢s Rs 498.82 million project to establish the Faisalabad Garment City. 

The Information Technology And Telecommunication MinistryÃ¢â¬â¢s Rs 9.05 million project to introduce telemedicine is on the meetingÃ¢â¬â¢s agenda as well. The CWDP will consider the Education MinistryÃ¢â¬â¢s Rs 19.86 billion project to establish basic education community schools. 

The agenda includes the Science and Technology MinistryÃ¢â¬â¢s schemes for the provision of electricity to October 8 earthquake affected areas by installing 100 micro hydropower plants at a cost of Rs 132.26 million, the acquisition of an oceanographic research vessel for coastal surveys, improving facilities to produce silicon solar modules up to 80 kilowatts per year at a cost of Rs 183.986 million, and mass awareness for water conservation and development at a cost of Rs 194.22 million. In the transport and communication sector, the proposed schemes are improvement of Booni Mastui Shandoor RoadÃ¢â¬â¢s black topping in Chitral for Rs 575 million, and the construction of Surab-Basima-Nag-Panjgur-Hoshab Road at a cost of Rs 14.09 billion. 

A Rs 46.34 million scheme for feasibility studies of the Left Bank Outfall DrainÃ¢â¬â¢s (LBOD) redesign in stage I and II will also be brought up for the CDWPÃ¢â¬â¢s consideration. The energy sector schemes include a Rs 72 million power distribution enhancement project, the addition of a 3x200 MVA auto transformer to the 500 KV Lahore-Sheikhupura Grid Station, and the addition of a 4th auto transformer to the Gatti Grid Station in Faisalabad. 

A feasibility study of the Shushgai-Zhendoli hydropower project to cost Rs 108.42 million and a feasibility study of the Shogo-Sin hydropower project to cost Rs 99.47 million are also on the agenda. The Interior MinistryÃ¢â¬â¢s project to establish a 200-bed hospital for Lahore Pakistan Rangers at a cost of Rs 199 million will also come under discussion. 

The CDWP will also take up the presidentÃ¢â¬â¢s Rs 105 million special programmes for the provision of education facilities to 200 tribal students from FATA in areas outside the NWFP. The meeting is scheduled to discuss four development schemes of the Higher Education Commission (HEC). The HEC has plans to develop Hazara University at a cost of Rs 343.27 million, improve education and research facilities at Faisalabad University Of Agriculture at a cost of Rs 482 million, and develop infrastructure for improved educational facilities at Kohat University of Science and Technology at a cost of Rs 495.8 million and at Sialkot University of Engineering Science and Technology at a cost of Rs 488.39 million. 

Other schemes include the establishment of a unit for vegetable seeds and nursery production at a cost of Rs 732.56 million, and a special programme to cost 374.89 million for sanitary facilities and quality inspection services.


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## Neo

*Going strong;Pak economy delivers yet again: Gulf News* 
Tuesday August 15, 2006 

ISLAMABAD, Aug 15: Despite a devastating earthquake less than a year ago and an extraordinary surge in global oil prices, PakistanÃ¢â¬â¢s economy has delivered yet again.

*It registered economic growth at 6.6 per cent, and its investment rate touched a new high at 20 per cent of gross domestic product(GDP). *

Real per capita GDP had grown by 4.7 per cent and per capita income in current dollar terms was up by 14.2 per cent to $847 (about Dh3,111) during 2005-06. 

*In 2005, the World Bank reported, Ã¢â¬ÅPakistan was the top reformer in the region and the number 10 reformer globally.Ã¢â¬Â*

Pakistan is now one of the emerging economies among growing nations such as China, India and Brazil, Gulf News Reported. Pakistan is a developing country with the worldÃ¢â¬â¢s sixth-largest population. At purchasing power parity, PakistanÃ¢â¬â¢s GDP in 2005 was estimated at about $384.9 billion (about Dh1,414 billion). The economy averaged an impressive growth rate of six per cent per year during the 1980s and early 1990s. 

In recent times, wide-ranging reforms have accelerated economic growth. PakistanÃ¢â¬â¢s manufacturing and financial services sectors have experienced rapid expansion and there is great improvement in its foreign exchange position. 

In May 2006, PakistanÃ¢â¬â¢s foreign exchange reserves were more than $13 billion (about Dh48 billion). According to the State Bank of Pakistan (SBP), as per current estimates, the nationÃ¢â¬â¢s long-term growth momentum remains intact, with real GDP growth exceeding six per cent for the third successive year despite a few dips in agriculture.

In its bid to further speed up the growth process, Pakistan has embarked on a profitable reform agenda based on deregulation, liberalisation and privatisation. The newly created Trade Development Authority of Pakistan (TDAP) plans to increase and diversify the countryÃ¢â¬â¢s exports by exploring new markets and identifying new export products. 

*To increase market access for goods produced in Pakistan, the government is vigorously pursuing signing of Free Trade Agreements (FTAs) and Preferential Trade Agreements (PTAs) with various countries.* *Islamabad also hopes to position itself as an energy corridor linking oil-and-gas-rich countries in the Gulf and Central Asia with the growing economies of India and China. *

For 2006-07 Pakistan has set an export target of $18.6 billion (about Dh68 billion). According to Prime Minister Shaukat Aziz Pakistan has exceeded the revenue collection target of Rs690 billion (about Dh42 billion), *and the economy has doubled in size to $134 billion (about Dh492 billion) in the last seven years.* 

The liberalisation in the international textile trade has benefitted PakistanÃ¢â¬â¢s exports and it also expects to profit from freer trade in agriculture. As a large country, Pakistan hopes to take advantage of significant economies. 

*A perception of stability in PakistanÃ¢â¬â¢s monetary policies has contributed to a reduction in money-market interest rates, and a great expansion in the quantity of credit, changing consumption and investment patterns in the nation. *

PakistanÃ¢â¬â¢s domestic natural gas production and its significant use of CNG in automobiles have cushioned the effect of the oil-price shock of 2004-05. *Pakistan is also moving away from the doctrine of import substitution and is now pursuing an export-driven model of economic growth. *

*As a developing nation, Pakistan knows that its progress will depend on the equitable distribution of wealth. Towards this, the government spent more than Rs1 trillion (about Dh60 billion) on poverty alleviation programmes reducing poverty from 32.1 per cent in 2000-01 to 25.4 per cent in 2004-05. *

*Rural poverty has also declined from 39 per cent to 31.8 per cent and urban poverty from 22.7 per cent to 17.1 per cent*. Acknowledging the need for technology in the nationÃ¢â¬â¢s progress, Pakistan has granted numerous incentives to technology companies. 

As a result, there has been impressive growth in the IT sector; *IT exports grew 50 per cent from 2003-04 to 2004-05*, with total exports standing at $48.5 million (about Dh178 million).

This year the government has set an export goal of $72 million (about Dh264 million). 

*Pakistan had more than 20 million internet users as of 2005 and is said to have the potential to absorb up to 50 million mobile phone and internet users in the next five years. *In 2005, there were six cell phone companies operating in Pakistan with nearly 28 million mobile phone users. 

Wireless local loop and the landline telephony sector has also been liberalised increasing the teledensity rate from less than three per cent to more than 10 per cent in a span of two years. 

PakistanÃ¢â¬â¢s principal natural resources are arable land and water. About 25 per cent of PakistanÃ¢â¬â¢s total land area is under cultivation and is watered by one of the largest irrigation systems in the world. 

*Agriculture accounts for about 23 per cent of GDP and employs about 44 per cent of the labour force. In 2005, Pakistan produced 21,591,400 metric tonnes of wheat, more than all of Africa (20,304,585 metric tonnes) and nearly as much as all of South America (24,557,784 metric tonnes).*

*PakistanÃ¢â¬â¢s industrial sector accounts for about 24 per cent of GDP*. Cotton textile production and apparel manufacturing are PakistanÃ¢â¬â¢s largest industries, accounting for about 64 per cent of total exports. 

Other major industries include cement, fertiliser, edible oil, sugar, steel, tobacco, chemicals, machinery and food processing.

Construction in Pakistan is also booming. *Dubai Ports World announced on June 1 that it would spend $10 billion (about Dh37 billion) on transport infrastructure and real estate in Pakistan. *

Emaar Properties has also recently taken over three realty projects in Islamabad and Karachi. With an investment of $2.4 billion (about Dh9 billion), it has embarked on a series of master planned communities that will set new benchmarks in commercial, residential and retail property in Pakistan.

International funding is also pouring in. The Asian Development Bank (ADB) will provide close to $4 billion (about Dh15 billion) development assistance to Pakistan during 2006-08. 

The World Bank unveiled a lending programme of up to $6.5 billion (about Dh24 billion) under a new four-year, 2006-09, aid strategy aimed largely at beefing up the countryÃ¢â¬â¢s infrastructure.

Japan will also provide $500 million (about Dh1,836 million) annual economic aid to Pakistan. In addition to increased remittances from Pakistanis living abroad, the foreign direct investment (FDI) in Pakistan soared by 180.6 per cent year-on-year to $2.22 billion (about Dh8 billion) during the first nine months of fiscal 2006. 

According to the SBP, during July-March 2005-06, FDI year-on-year increased to $2.224 billion (about Dh8 billion) from only $792.6 million (about Dh2,911 million) and portfolio investment to $407.4 million (about Dh1,496 million), from $108.1 million (about Dh397 million) in the corresponding period last year. 

Exports from July 2005 to June 2006 were $13.52 billion (about Dh50 billion) marking an increase of 17.80 per cent compared to $11.48 billion (about Dh42 billion) in the corresponding period last fiscal. Export projections in the current fiscal are over $17 billion (about Dh62 billion).

Pakistan has sufficient momentum to sustain rapid growth in the coming decade. To help materialise this, the World Bank is working in partnership with the government in systemic reforms to improve governance and service delivery. 

The signing of the South Asia Free Trade Agreement (SAFTA) in January 2004 is an important step towards higher intra-regional trade in South Asia. The first phase of SAFTA tariff reductions was expected to come into effect from July.

President Musharraf believes that PakistanÃ¢â¬â¢s central geo-strategic location at the heart of critical regions, including Western parts of China, Central Asian states, Afghanistan, Iran, India and the oil-rich Gulf countries, gives the country a pivotal role. 

In a recent statement, he hoped that Pakistan would become a trade and energy corridor for China and landlocked Central Asian countries. 

*Ã¢â¬ÅWe are talking of Pakistan-China inter-connectivity in terms of energy and trade, improvement in the Korakoram Highway (KKH), development of railway link and gas and oil pipeline linkages and even fibre optics connectivity along the KKH under one project simultaneously,Ã¢â¬Â he said. *

He is also hopeful of a strengthening of a quadrilateral arrangement between Pakistan, China, Kazakhzstan and Kyrgyzstan for mutually beneficial economic growth. 

http://www.paktribune.com/news/index.shtml?152330


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## Neo

*KARACHI *_(updated on: August 16, 2006, 21:02 PST_): Pakistan received $377.01 million as workers' remittances during first month of current fiscal year registering increase of $63.87 million or 20.40 percent against $313.14 million in July, 2005, the State Bank of Pakistan (SBP) said on Wednesday.

The amount includes $0.68 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

The inflow of remittances into Pakistan from almost all countries of the world increased last month as compared to July, 2005, the SBP said.

According to break up, Pakistan received workers' remittances in July, 2006 from USA ($90.73 million), Saudi Arabia ($80.92 million), UAE ($59.62 million), GCC countries - including Bahrain, Kuwait, Qatar & Oman ($57.48 million), UK ($31.70 million) and EU countries ($10.53 million) as compared to corresponding receipts from respective countries during July, 2005 i.e. $91.30 million, $56.63 million, $43.31 million, $40.56 million, $33.72 million and $7.26 million.

Remittances received from Canada, Switzerland, Australia, Norway, Japan and other countries during July, 2006 amounted to $45.35 million as compared to $37.23 million during July, 2005.


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## Owais

*Govt fails in achieving 50 million tonnes wheat target* 

ISLAMABAD: A meeting of Economic Coordination Committee (ECC) on Wednesday was told that wheat stocks of 6.47 million tonnes were available in the country, while the target of 50 million tonnes for the current year could not be achieved.

Chiared by Prime Minister Shaukat Aziz, the meeting permitted import of transformers to power distribution companies for Wapda to overcome loadshedding in the country.

The committee has also directed the Fatima Fertilizer Company to carry out its setting up process within 90 days time, otherwise its financial close will be made on the pattern of IPPs. 

Fatima Fertilizer Company was allocated supply of 110 million cubic feet gas per day but 75 million cubic feet gas was given with the conditions that the company will be established within two years time.

The ECC noted that the company could not meet its target and failed to achieve any significance progress. The meeting directed the company to furnish bank guarantee of appropriate amount to be determined by a ministerial committee assuring that it would be established in set time frame.

It approved leasing out of two sleeper factories of Pakistan Railways located at Kotri and Kohat to the private sector, while decided levy of cotton cess at the rate of Rs.5 per bail to provide financial support to Pakistan Cotton Standardization Institute. 

The ECC has directed the National Highway Authority to encourage use of cement in the road construction for bringing about an improvement in the quality of construction.

It also approved acquiring of 150 MW power plant on rental basis at the rate of 3.133 cent excluding fuel price for three years time to be set up at Gujranwala, Faisalabad and Lahore.


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## Owais

*Several banks show interest in NWFP interest-free banking* 

PESHAWAR: Several banks have expressed their intention to start interest-free banking in NWFP.

NWFP Information Minister, Asif Iqbal Dawoodzai in a meeting here with the Meezan Bank&#8217;s Peshawar representative, Sadiqur Rahman told this.

He said that the NWFP government was endeavouring for the promotion of Islamic banking across the province and it would continue patronizing all such banks wanting to launch interest-free banking.


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## Owais

*PPL profit jumps 55.4 percent, Rs5.5 cash dividend announced* 

*KARACHI *_(updated on: August 17, 2006, 13:27 PST_): Pakistan Petroleum Ltd. (PPL) on Thursday reported a 55.4 percent jump in full-year net profit, thanks to rising oil and gas prices and higher production. PPL, which operates country's largest gas field at Sui in Balochistan, earned a net profit of 13.401 billion rupees ($222.2 million) in the year to June 30, it said in a statement to the Karachi Stock Exchange.

That compared with a net profit of 8.623 billion rupees for the 2004/05 financial year.

The result was in line with a range of between 13.2 billion and 14.2 billion rupees forecast by analysts.

At 0710 GMT, PPL shares were trading 3.05 rupees down at 253.25 rupees while the broader market was down 0.02 percent.

"Once again the hefty growth in PPL's bottomline has arrived from the phased increase in wellhead prices of major fields, that is Sui and Kandhkot," said Faraz Farooq, analyst at brokers Jahangir Siddiqui Capital Markets.

The average wellhead price of those two fields, which contribute 81 percent of PPL's gas production, went up by 37 percent during the year, he said.

In addition, the wellhead price of Qadirpur field, where PPL has a 7 percent share, was raised by 37 percent, while those for Sawan and Miano gas fields were increased by 14-16 percent, said Farooq. PPL reported earnings per share of 19.54 rupees for 2005/06, compared with 12.57 rupees a year earlier.

Gas prices in Pakistan are revised every January and July. Under a government pricing formula, PPL tariffs are expected to be increased by an average of 25 to 26 percent annually until 2007.

PPL has a 26 percent share in the country's total gas production.

Analysts said that rising oil prices also had a positive impact on PPL's profits. But it was very small compared with the impact of gas price rises, as only 2 percent of PPL's revenue was contributed by oil.

PPL did not release production figures with the financial results, but analysts said the company's oil and gas production were expected to have grown by 11 and 5 percent, respectively, in 2005/06.

They said the company also benefited from a sharp rise in interest income, given the 300-400 basis points increase in deposit rates during the year.

PPL, which is high on the government's privatisation agenda, also announced a final cash dividend of 5.5 rupees per share. The firm had already paid an interim dividend of 3.5 rupees during the year.

The firm was partly privatised in July 2004, when the government sold 102.8 million shares to the public at 55 rupees each.

The state still holds a 78.4 percent stake in the firm, while 6 percent is held by the World Bank's private sector arm, the International Finance Corp. The public holds 15 percent.

The government has yet to announce a bidding date for the sale of a 51 percent stake in PPL, but has pre-qualified four companies to enter the race.

PPL's stock carries a weighting of 6.53 percent on the KSE's benchmark 100-share index.


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## Owais

*Clean cotton plan unveiled* 


ISLAMABAD (August 17 2006): On the eve of cotton picking season, the Ministry of Textile Industry (Mintex) has announced the Clean Cotton Programme 2006-07 under which 100,000 bales of clean and standardised cotton would be produced (70,000 in Punjab and 30,000 in Sindh)

Sources told _Business Recorder _here on Wednesday that 20 modern ginning factories (Punjab 14 and Sindh 6) have been selected on the basis of the criteria set by Mintex and the two provincial agriculture departments in consultation with the Pakistan Cotton Ginners Association (PCGA), the All Pakistan Textile Mills-owners Association (Aptma) and the Trading Corporation of Pakistan (TCP) in the main cotton growing districts of Multan, Vehari, Khanewal, Muzaffargarh, DG Khan, Bahawalnagar, Rajanpur in Punjab and Khairpur, Naushehro Feroze and Mirpur Khas in Sindh.

According to the plan, growers/suppliers will be required to bring clean seed-cotton (phutti) to the selected factories and upon examination and clearance by the team headed by the Pakistan Cotton Standardisation Institution (PCSI) classer and comprising representatives of the TCP, provincial agriculture departments, and the ginner, that the seed-cotton is of minimum Grade-II and reasonably clear of non-lint contamination, the growers/suppliers of such cotton will be paid Rs 50 per maund by the TCP through crossed cheques as clean cotton premium.

Sources said that Rs 70 million is required to be paid as premium for the purchase of 100,000 bales (14 million maunds) of clean cotton, of which Rs 35 million will be contributed by the federal government and Rs 35 million by the two concerned provincial governments according to the share of their production. The Aptma members, who purchase these clean cotton bales, will pay Rs 30 per maund as premium to the ginner over and above the market rate.

They described quality of the clean cotton as of minimum Grade-II, micronaire 3.8 to 4.9 NCL, staple length 11/16 (min) moisture 8.5 percent (max), trash 5.6 percent (max) and non-lint contamination not more than 2.5 gms/bale.

Sources clarified that if the ginners did not sell such bales either to the spinners or in the open market, then the TCP will buy the clean cotton bales according to its laid down procedure at Rs 2,520 per maund for Grade-II and at Rs 2,591 per maund for Grade-I (including ginners premium at Rs 30 per maund and grade premium of Rs 90 and Rs 161/md for Grade-II and I, respectively)

They said the programme for production of clean and standardised cotton has been framed after taking all the stakeholders ie provincial governments, TCP, PCSI, PCGA, APTMA and growers on board.

The prime minister has also approved continuation of this programme up to 2008-09 with 300,000 clean cotton bales to be produced in 2007-08 season and 600,000 bales in 2008-09. Commissioner Crops, Ministry of Food and Agriculture, Dr Masood Amjad Rana told that despite some pest attacks, cotton crop is so far good and production target of 13 million bales plus would be achieved.


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## Owais

*UIN mandatory for overseas investors and brokers* 

KARACHI (August 17 2006): The Securities Exchange Commission of Pakistan (SECP) has made it mandatory for the overseas investors/brokers to place Unique Identification Number (UIN) following the buying and selling of shares.

According to a notice issued to all members by the Karachi Stock Exchange related to Unique Identification Number-foreign institutional investors. It says that the SECP held a meeting at the SECP Registration Office here on August 8, 2006, with the key personnel of some of the financial institutions dealing with stock market's foreign clients to discuss and clarify the issue and concern of foreign institutional investors with regards to the UIN.

In light of these discussions, the following decision was taken which is circulated for the information of members: "In case, an international broker dealer is placing trade order with the local broker the UIN would be of the international broker."

However, the SECP shall reserve the right to seek information relating to any investor/ultimate beneficial owner at any point in time if need be and the international broker dealer shall be bound to provide the said information.

Furthermore, the international broker dealer or the global custodian shall be requested to provide information relating to the investor/ultimate beneficial owner to SECP on its demand.


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## Owais

*Two defence pacts signed with China* 

RAWALPINDI (August 17 2006): Pakistan and China signed two agreements on defence co-operation and military assistance at the end of the 4th round of Defence and Security Talks held at Joint Staff Headquarters, Rawalpindi on Tuesday, an ISPR statement said on Wednesday.

The talks were led by General Ehsan Ul Haq, Chairman Joint Chiefs of Staff Committee from the Pakistani side while Lieutenant General Zhang Qin Sheng, Assistant to Chief of General Staff, People's Liberation Army (PLA) led the talks from the Chinese side.The two sides expressed satisfaction over the progress made so far and shared a commonality of perception on all important regional and international issues.

Following the parleys, Major General Tariq Salim Malik, Additional Secretary, Ministry of Defence Production and Major General Jia Xiaoning, Deputy Director General of Foreign Affairs Office, Ministry of National Defence, China signed the agreements on behalf of their respective governments.

The agreements would come into force from the date of the signing to include co-operation in the field of defence and security and military assistance to the armed forces of Pakistan.

The Pak-China Defence and Security Talks is the highest common forum between the two armed forces and are held alternatively in China and Pakistan in order to identify further areas of co-operation and mutual assistance.

The first round was held in March 2002 in Pakistan, when Chairman Joint Chiefs Staff Committee led the talks from the Pakistan side while the Deputy Chief General Staff of the People's Liberation Army led the Chinese side.

The next round of talks will be held in 2007 in China. Earlier, Lieutenant General Zhang Qin Sheng, the Assistant to Chief of General Staff of People's Liberation Army China also called on General Ehsan Ul Haq, Chairman Joint Chiefs of Staff Committee.


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## Owais

*Import of 340 items from India to be allowed at suitable time* 


ISLAMABAD (August 17 2006): Pakistan is anxiously waiting for a suitable time to allow import of 340 items from India, official sources told _Business Recorder _here on Wednesday. The sources said commerce ministry has finalised the list and the summary is ready for the Economic Co-ordination Committee (ECC) of the cabinet, and is expected to be considered in the next meeting.

"Pakistan is ready to expand positive list with India but we are waiting a suitable time to give a go ahead signal," the sources added. The sources said India had raised the issue at different forums that Pakistan was not implementing the South Asian Free Trade Area (Safta) agreement in letter and spirit and even demands expulsion of Islamabad from the organisation for non-compliance.

They added that the other members of Safta have also approached Pakistan asking for level playing field for all member countries.

However, Pakistan is of the view that since Pakistan did not accord Most Favoured Nation (MFN) status to India, it would continue trade as per bilateral arrangements.

The sources said Pakistan had agreed at the Joint Study Group (JSG) meeting a few months ago to consider increase in importable items from India after consultations with stakeholders and fulfilment of legal requirements.

The commerce ministry had received a list of 286 items from India (271 through diplomatic channels and 15 at the JSG) whereas local business community had demanded permission to import 900 items.

After detailed comparison of both the lists and keeping in view the interests of the local industry, the ministry has identified 340 items, which it plans to include in the positive list.

The sources said preference has been given to those items on which duty is about five percent and are not being manufactured locally. They said that with the inclusion of 340 more items, the positive list would cross 1000 items, as the decision to import cement from India could be withdrawn at any time.

Presently, the trade volume between both the countries stands at less than $1 billion and it is very much in favour of New Delhi. During 2004-05 it was $746.396 million against $476 million in 2003-4.

The share of Pakistan's total exports to India was 0.8 percent whereas share of imports from India was 2.5 percent during 2003-04.

The sources said Pakistan's share of exports to India increased to 2.8 percent during July-May 2004-05, while share of imports from India jumped to 8.6 percent when compared to the same period of the corresponding year.


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## Owais

*Lakhra power plant not yet leased out despite President's orders* 

ISLAMABAD (August 17 2006): The Water and Power Development Authority (Wapda) has defied President General Pervez Musharraf's orders by not finalising terms and conditions to lease out Lakhra Power Plant in Sindh to Associated Group, a Lahore-based private sector company.

Sources said the President endorsed leasing out of Wapda's Lakhra plant to Associated Group during a meeting held on March 22. The authority chairman was also among the participants.

The minutes of the meeting, made available to _Business Recorder_, showed that Musharraf gave a clear direction to Wapda for preparing terms and conditions for leasing out the plant to the private company within a week. The sole objective of the move was to get injected more money into it and raise its production up to 150 megawatts.

Despite lapse of almost five months, the orders were yet to be implemented. The delay in implementation of the decision in this case shows how seriously the government departments take the orders of high-ups.

Timely transfer of Lakhara Power Plant could result in providing some additional electricity to Wapda, which is at the moment facing acute shortage. The sources said Wapda authorities instead of implementing the President's directive were finding excuses to delay the transfer.

The proposal to lease out the plant to Associated Group has already been approved by the federal cabinet. As per original plan, the Group will get Lakhra Power Plant from Wapda on lease and invest $120 million in it in two phases to increase the production to 150-MW.

In the first phase, the company will invest $20 million on the basic infrastructure and capacity enhancement and this would be followed by another $100 million in one year to take its production to 150-MW.

Lakhra is a coal-fired power plant owned by Wapda and its existing production capacity is only 20-MW. After having failed to run the plant to an optimal production level, Wapda is now going for even a much bigger coal-fired power plant for Sindh. It recently floated international tender for setting up 1000-MW coal fired power plant close at Qasim Port.


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## Owais

*$377.01 million remittances received in July* 

KARACHI (August 17 2006): Pakistan has received $377.01 million as workers' remittances during July 2006, the first month of the current fiscal year as against $313.14 million during July 2005, registering an increase of $63.87 million or 20.40 percent.

The amount of $377.01 million includes $0.68 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

The figures issued by the State Bank of Pakistan (SBP), show that the inflow of remittances into Pakistan from almost all countries of the world increased last month as compared to July 2005.

According to the break-up, Pakistan received workers' remittances during July 2006 from the USA ($90.73 million), Saudi Arabia ($80.92 million), UAE ($59.62 million), GCC countries, including Bahrain, Kuwait, Qatar and Oman ($57.48 million), UK ($31.70 million) and EU countries ($10.53 million) as compared to the corresponding receipts from the respective countries during July 2005 ie $9 1.30 million, $56.63 million, $43.31 million, $40.56 million, $33.72 million, and $7.26 million.

Remittances received from Canada, Switzerland, Australia, Norway, Japan and other countries during July 2006 amounted to $45.35 million as compared to $37.23 million during July 2005.


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## Owais

*Palm products import drains out extra $1 billion in fiscal year 2006* 

KARACHI (August 17 2006): Palm products and oil seed imports have drained out in excess of $1 billion from the country during the last fiscal year (2005-06), trade sources told _Business Recorder _on Wednesday.

Sources said that commercial importers had imported around 1 million tonnes of oil seeds and 1.5 million tonnes of palm products during the last fiscal year, of which approximately, 1.2 million tonnes of RBD palm olien and 0.3 million tonnes of crude palm oil was brought in, respectively.

Senior traders said that the prices of palm products in the international market remained stagnant during the first 10 months (July05-April06) of the last financial year, however, it started climbing up during May and June 2006.

"The average price of RBD palm olien remained unchanged at $415 per ton to $425 per ton CNF Karachi during July05-April06, however, it witnessed a rise during May and June (2006) where it jumped by $25 per ton to $440-$450 per ton," said a leading importer.

He said that a number of countries have started setting up plants for the production of bio-diesel with palm fruits, including Singapore, Malaysia, China and some European countries, and this situation has helped the prices of palm products increase substantially.

Traders have pointed out that the government's attitude towards cultivation of sunflower seed in the country is non-serious as the country could save its precious foreign exchange and shed dependency on imported palm oil, if proper cultivation is done in the country.

"A study reveals that soil and weather conditions of Pakistan is favourable for sunflower seed cultivation," said a trader, adding that cultivation of sunflower seed is not on government's priority list.

"The country's annual seed production is still 150,000 tonnes from which nearly 75,000 tonnes of mustard oil is extracted after grinding," he added.

On the contrary, the country during the last fiscal year, imported around 0.8 million tonnes to 1 million tons, of which canola oil is extracted while the remaining stuff or seed waste is used for making poultry feed.

Gurus of this trade said that duty structure on imports of crude palm oil and palm olien has no difference and the importers have to pay Rs 9,000 per ton on account of import duty whether the imported commodity is crude palm oil or RBD palm olien.

The country's import of palm products depends on Malaysia and Indonesia, of which Malaysia enjoys the biggest chunk from where refined and crude products are being imported.

"The Malaysian government has slapped certain taxes on the export of crude palm oil and encourages the concept of value-addition," said a Karachi-based importer, adding: "That is why we (importers) prefer to import refined products from Malaysia. He also said that Indonesian suppliers mainly export crude palm oil because they are not bound to pay any tax.


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## Owais

*ABL profit jumps to Rs 4 billion* 

LAHORE (August 17 2006): The Board of Directors of the Allied Bank Limited (ABL) approved the accounts for half year ended June 30, 2006 in their meeting held on August 16, 2006 at Lahore. The operating profit jumped to Rs 4.06 billion, reflecting a growth of 90 percent as compared to the corresponding period of the last year.

The Bank has posted Profit After Tax of Rs 2.26 billion 117 percent from the corresponding period. The earning per share improved to Rs 5.04 from Rs 2.32 in the corresponding period. The equity increased by 16 percent to Rs 15.5 billion.

The deposits of the bank grew by 23 percent to Rs 198 billion, while loan book increased to Rs 143 billion by posting a growth of 19 percent during the half year, while the NPL portfolio decreased by two percent and the net NPLs to net loans ratio dropped from 3.6 percent to 2.5 percent.-PR


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## Neo

*ISLAMABAD *_(updated on: August 17, 2006, 20:16 PST_): Dubai Port World (DPW) will make an investment of 211 million dollars for establishment of 2nd Container Terminal at Port Qasim in Karachi and an agreement to this effect was signed here on Thursday.

The company has already invested 100 million dollars for construction of the Ist terminal and is likely to make further investment of 70 million dollars in dredging.

Together this would be the largest ever direct foreign investment in the port sector of the country.

Speaking on the occasion, Prime Minister Shaukat Aziz said that this is beginning of a new era in the infrastructure construction and development in Pakistan.

He said Pakistan is a growing economy and with growth we need to develop our infrastructure to meet the increasing demands for road, air and sea transportation.

The prime minister said as the trade is rising, Pakistan needs to have a logistic and supply chain of world class. In this connection, the country is looking at ports of Karachi and Port Qasim to expand and build new berths so that we can take larger and larger vessels, he added.

The prime minister said with Gwadar Port becoming operational by the end of the year, Pakistan will have three functional ports to allow for trade and transit and sea traffic from all over the world.

He said it is significant that the DPW would build the terminal and operate it. He said the principle of Build, Operate and Transfer is being used successfully in many countries and now private sector is managing ports rather than the port authority.

The prime minister expressed the confidence that the investment of 375 million dollars would help accelerate our logistic chain, reduce transit time, reduce delays in shipment and meet the growing demands of imports and exports.

The prime minister also referred to the strong and robust relations between Pakistan and UAE and said Pakistan is having more trade and investment from GCC countries especially Dubai.

He said as a result of the visit to Pakistan by the Prime Minister of UAE, many major companies from Dubai are now investing in different sectors of Pakistan.

The prime minister said the reason why companies are coming to Pakistan is that it is a growing economy, market of 160 million people, has an ideal location and its human capital is second to none. He said the Government is business friendly and takes quick and transparent decisions.

The prime minister said Dubai World's is the first of many investments from Dubai and the same company and assured them of the level playing field.

He expressed the confidence that the company would build and operate the terminal at globally competitive level.

The Chief Executive Officer of the DPW, Muhammad Sherrif said the policies of the Government of Pakistan encouraged them to make the substantial investment in the country.

He said the speed with which the negotiations for construction of the terminal were completed proved that the Government means business.

He said the company is looking forward to many other projects as well. In this connection, he said DPW would invest in Gwadar Port and industrial zones in Karachi and Gwadar.

Completion of the project in about three years would result in doubling of container handling capacity at Port Qasim. It will also generate a revenue of about sixty billions rupees to the Port Qasim Authority in thirty years.


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## Neo

ISLAMABAD (August 17 2006): Raziq Bugti spokesman government of Balochistan on Wednesday said that developmental process was smoothly going on in Balochistan and soon the area would be developed like other provinces. Talking to a private TV channel, he said every process takes time and tribal system could not be eliminated until there was social, political and economic development.

He said, in the past no one gave attention to Balochistan and there were no developmental projects, educational institutes and even no renowned universities.

The government realised it for the first time that to develop a backward area it was necessary there should be developmental projects, he added. Raziq Bugti said, mega projects were started there and although they would be fully developed within five years.


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## Neo

ISLAMABAD (August 17 2006): Federal Minister for Water and Power, Liaqat Ali Jatoi told The National Assembly on Wednesday that there are 1,00,775 villages out of 1,27,568, which have been electrified by June 2006.

He was replying to a question from MNA, Fauzia Wahab over the province-wise percentage of village electrification including Fata during the question hour session.

The minister said that 19 percent of the population residing in the rural areas of the country is deprived of electricity. Giving details of the provinces, he said that Balochistan is the most deprived where only 40 percent of the villages have been electrified, whereas NWFP including Fata enjoys the maximum with 91 percent, while in Punjab and Sindh 82 and 84 percent villages have been electrified respectively.


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## Neo

*ISLAMABAD *_(updated on: August 17, 2006, 22:35 PST_): Advisor to Prime Minister on Financial Affairs, Dr. Salman Shah on Thursday said that Pakistan's economy was among the fast emerging markets in the world at present and the prospects were bright for the future.

Speaking in a PTV programme he said, after passing through ups and downs during the past six decades, the economic policies gained stability and the process was moving in the right direction.

He said till the decade of 60s, there was a favourable growth rate in country's economy but due to nationalisation policy during the 70s, the chain was broken and the growth rate declined to its lowest in the subsequent years.

Consequently, the succeeding governments had to opt for privatisation of public sector organisations but the pace was miserably slow, he said.

He said the credit goes to the present government not only for expediting the privatisation process but for making necessary legislation to ensure the transparency of transactions.

Salman said that during the last 5-6 years local and foreign investment substantially increased and the fundamentals of the economy considerably improved.

He said the investors form Middle East, East Asia, Europe and America were investing in Pakistan, adding during the last fiscal year an investment worth $3.5 billion was made in the country.

Only six years before the size of overall investment in the country used to be around $300 million , he said.

He said Pakistan was presently pursuing very bold and rational economic policies which if sustained would bring revolutionary changes in economy.

He said in past, huge amounts were spent to cover the losses of public sector organisations thus curtailing the size of development budget.

For example he said, the subsidy amount to the Karachi Electric Supply Corporation (KESC) used to be more than the size of entire development budget of the Sindh province.

Pakistan Steel Mill was set up in 80s but up to 2003-04 it was running in losses, he added.

He said the government in realisation of the ground realities has decided to facilitate the private sector to do business rather than doing itself.

This will help improve the efficiency of the services providing organisations and rid the national exchequer of undue fiscal burden, he said.

To a question he said, all out efforts were being made to control the inflation and bring the poverty level further low, adding, however the overnight results were not possible.


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## Neo

Thursday, August 17, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\08\17\story_17-8-2006_pg5_11

LAHORE: A total of 82,059 metric tonnes of mangoes were exported by the country in the outgoing fiscal year earning foreign exchange of US$ 24 million dollars and capturing over 10.1 percent of the share of the world mango market, according to a meeting of the Agricultural Marketing on Wednesday. 

Provincial Minister for Agricultural Marketing Rana Qasim Noon said there was vast potential for the export of mangoes and he added that special efforts were being made to increase the exports of mangoes by seeking new markets in the USA, Netherlands and the UAE. 

Various measures to increase the export of mangoes were discussed such as efforts to initiate one window operation for mango exports at the countryÃ¢â¬â¢s major airports. The meeting also spoke of the need for more cargo space to help increase the quantity of mangoes exported to European countries. 

Training facilities are also being extended to stakeholders in the areas of proper packing, grading and transportation of fruits, the meeting added. The meeting was told that working groups were being formed which will represent farmers, traders, processors, exporters, cold storage owners and government representatives to help boost exports of mangoes.


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## Neo

Thursday, August 17, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\08\17\story_17-8-2006_pg7_8

ISLAMABAD: The government has sought a $1.2 billion dollar loan from international financial institutions to start work on 19 power generation schemes of the Water and Power Development Authority (WAPDA), on the president and the prime ministerÃ¢â¬â¢s directive. 

A senior government official told Daily Times that the Economic Affairs Division, WAPDA, Planning and Development Division, and the Finance Ministry made plans in this regard at a meeting. 

According to the governmentÃ¢â¬â¢s estimate, Pakistan requires a $6 billion investment for power generation over the next three to four years. Ã¢â¬ÅThis is our requirement, but we are seeking financial assistance for 19 projects,Ã¢â¬Â the official said. 

He said the Planning Commission had asked the Water and Power Ministry and WAPDA to finalise the PC-Is of the 19 schemes, before the next meeting of the Central Development Working Party (CDWP) of the P&D Division. The next meeting of the CDWP is likely to be held later this month or early next month, he added. 

The optimal utilisation of hydroelectric power has been prioritised in the power development programme, and the government has already approved hydroelectric projects in accordance with Vision 2025. WAPDA is scheduled to commission a number of other schemes in the current financial year. 

The optimal utilisation of hydroelectric power has been prioritised in the power development programme, and the government has already approved projects in accordance with Vision 2025. 

The official said that the 19 new schemes fell in the category of small or medium-sized projects, and they would have a capacity to generate up to 600 MW. He said that the ADB had indicated that it would consider PakistanÃ¢â¬â¢s proposal, but the bankÃ¢â¬â¢s initial response had been that it would give only $880 million. The ADB could give financial assistance under its soft-term loan programme, he said, adding that the government and the ADB were scheduled to hold talks shortly. 

The Planning Commission was willing to consider the projects on priority basis, the official said, adding that the power projects could be considered separately by planning bodies to allow their execution as soon as possible.


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## A.Rahman

> *Pak mangoes capture 10% of world market*


 
Yea, we get some here too


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## Neo

Me to, but the quality wasn't as good as last year due late arrival of the monsoon.
I ate them anyway...lots of them.


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## Owais

*Second container terminal at PQ: $211 million deal signed with Dubai Port World* 

ISLAMABAD (August 18 2006): Dubai Port World (DP-World) will invest $211 million for establishing second container terminal at Port Qasim, Karachi on Built-Operate-Transfer (BOT) basis.

DP-World CEO Mohammad Sharaf and Port Qasim Authority (PQA) chairman Vice Admiral M. Asad Qureshi signed an agreement to this effect here at the Prime Minister house on Thursday. Prime Minister Shaukat Aziz and minister for ports and shipping Babar Khan Ghauri were also present on the occasion.

The Prime Minister, speaking on the occasion, termed the agreement historic and said Pakistan, being a growing economy, needs better means of communication and good infrastructure to support its domestic, external and transit trade activities.

He said Pakistan, being at the crossroads of South Asia, Central Asia and the Middle East, offers greater trade and investment opportunities, including transit trade.

The Prime Minister said with two seaports already functioning and the completion of Gwadar deep-sea port by the end of this year, Pakistan would truly serve as transit trade corridor for the region.

He said Pakistan and the United Arab Emirates enjoy close trade and cultural relations with common faith and today's agreement was manifestation to the fact of growing interest and investment by Arab and Gulf Co-operation Council (GCC) countries.

DP-World CEO Mohammad Sharaf speaking on the occasion said the DP-World was encouraged by the visit of the Ruler of Dubai to Pakistan and decided to establish the second container terminal. He said the government has given us full backing and support in this project. He said the DP-World will also make investment in the development of an industrial zone near Gwadar.

The project, which is the highest ever foreign direct investment in port sector, and to be completed in three phases with an overall capacity of 1.15 million TEUs, will enhance the total TEUs capacity of PQA to about 1.75 million.

Apart from doubling the container handling capacity, the second container terminal will bring Rs 60 billion earning in direct revenue for the Port Qasim in 30 years.

Under the agreement, the first container terminal has also been converted into BOT from BOO, besides the rate of per move of royalty enhanced to $9.2 from the previous $4.

In addition to $211 million in second container terminal, the DP-World has an investment of $100 million for first container terminal. Further investment of $60-100 million is also expected for channel dredging


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## Owais

*US to give market access to goods made in ROZs* 

LAHORE (August 18 2006): Principal Officer, US Consulate, Bryan D. Hunt on Thursday said that United States would provide market access to the products produced in proposed Reconstruction Opportunity Zones (ROZs) to be set up in different less developed areas of Pakistan.

While addressing the members of the executive committee of Pakistan Tanners Association (PTA) at its North Zone office, Bryan said that there is huge potential of foreign direct investment in the less developed areas of Pakistan.

'We want to see more trade between Pakistan and United States and the US businessmen are keen to tap the potential available in Pakistan', he maintained. Talking about issuance of US visa, he said, after 9/11, situation has been changed due to which certain process has to be adopted for the issuance of visa, which usually takes few weeks to few months.

However, there might be delay in some cases, he said. The US is also facilitating free trade agreement and other measures to enhance trade between the two countries, he added.

In his welcome address, chairman PTA Khurshid Alam said that Punjab is holding more than 70-percent share in the total export of leather and leather products from Pakistan. Leather and leather products export to the US from Pakistan contributes to 30 percent which makes America to lead the top 20 countries of the world, he added.

In the preceding year, exports of leather products to US ie leather garments, gloves and sportswear has shown an increase of 10-percent whereas there is significant decline of 43-percent in the export of finished leather and footwear, he maintained.

He asked the US official to facilitate issuance of business visa to the genuine businessmen on the recommendation of PTA. He also called for enhancing trade between the two countries. He suggested that leading leather goods investors and footwear buyers may be asked to visit Pakistan with the business delegation of the US trade department and consider Pakistan as a supplier to the market. He also highlighted efforts being made by the association for setting up water treatment plants and other measures to check pollution.


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## Owais

*Govt gets Rs149b through privatization * KARACHI: The government of Pakistan, having privatized the national assets, has obtained more than Rs149 billion out of which 90 per cent amount was apportioned to pay off loans and 10 per cent amount spent on the projects for poverty alleviation.

Mr. Umer Ayub Khan, Minister of State for Finance said this at a Senate session today during the Question Hour.

He said during the fiscal year 2001-02, the privatization earned Pakistan an amount of Rs8.35 billion; in 2002-03, Rs11.33 billion; in 2003-04, Rs11.21 billion; in 2004-05, Rs28.33 billion and since then the amount of Rs89.83 billion has been received.

Umer Ayub said in last six years, an amount more than Rs7450 billion was spent to pay off foreign loans.


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## Owais

*New containers&#8217; terminal to be constructed at Port Qasim * KARACHI: Port Qasim Authority (PQA) has signed an agreement with the DP World regarding construction of new containers' terminal.

The agreement regarding the mega project, which will cost $ 211 million, was signed in Islamabad. 

Big ships will anchored here at the new containers' terminal at the Port Qasim, said, Federal Minister for Ports and Shipping Babar Ghauri.

The DP world will invest on the construction of new containers' terminal


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## Owais

*Ethanol-fueled cars could be made within six months: PAMA * KARACHI: Pakistan auto companies could get on ethanol-fueled cars make ready within six months, however, it hinges on the demand for such cars and the availability of ethanol in the country.

Pakistan Auto Manufacturers Association (PAMA)Ã¢â¬â¢s consultant, Majeed Ahmad Jhumra told Geo News that auto manufacturers were following Euro Emission Standards, under which, they want the promotion of ethanol-fueled cars and if the demand for such cars grows in the country, then the manufacturing of flexi-fuel-engines was of no problem and such cars could be brought into the market within six months, as Pakistani companies could obtain this technology from abroad through which some adjustments in the engine would be made. 

He told that the proposal of manufacturing of 10 percent ethanol-fueled cars every year was not difficult for the assemblers and if the government asks for it besides the demand existed, then the flexi-fuel-cars could be launched even in a greater than the proposed number.

He told that the price of ethanol-fueled cars would not be more than the existing ones besides their quality would also be not less in any way. Presently, these cars were being run on ethanol in the developed countries of the world, he told.


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## Owais

*$18.8 billion export target for fiscal year 2007 hard to achieve* 

ISLAMABAD (August 18 2006): With the start of the new fiscal year, the country's exports witnessed worrisome declining trend and the decrease made achievement of set target of $18.8 billion for 2006-07 difficult. It is worth mentioning that during 2005-06, the government had also missed its exports target of $17 billion by a sizeable margin of $531 million.

Although, the total imports declined by 17.6 percent during July 2006-07, the decrease in exports by 19.5 percent has also turned out to be a major concern for the government, Federal Bureau of Statistics (FBS) data reveals. The external trade data reveals that the escalating imports are offsetting export gains.

The FBS data carried out by the central bank mentioned that the total imports declined to $2.46 billion during the first month (July) of the current fiscal year from $2.98 billion in June last fiscal year. But the worrying aspect was that total exports also declined by a huge margin to $1.22 billion from $1.52 billion in previous month.

Economic managers say that Pakistan's economy is growing, therefore, the increase in imports is unavoidable, but unfortunately, the exports are not augmenting at the same rate. This poses threat in the shape of widening trade deficit, which, in turn, creates current account deficit, affecting economic health. During FY06, the trade deficit stood at $12.11 billion with total imports of $28.58 billion and exports at $16.469 billion, against the target of $17 billion.


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## Owais

*29 projects worth Rs 46.4 billion approved* 
1SLAMABAD (August 18 2006): Central Development Working Party (CDWP) meeting held here on Thursday approved 29 development projects involving expenditures of Rs 46.4 billion to improve the lot of life and step up pace of progress in the country.

Deputy Chairman Planning Commission Dr Muhammad Akram Sheikh chaired the meeting which was participated by the senior members of the Commission, Spokesman of the Planning Commission Muhammad Asif Sheikh told the newsmen at a briefing.

He said, "as many as 31 development schemes were put up for discussion of which 29 were approved while only two were deferred due to lack of necessary technical information."

The cost of Rs 46.4 billion included Rs 4.5 billion foreign funding for carrying out the developmental schemes. Elaborating the nature of schemes, the spokesman said 11 schemes with estimated cost of Rs 23 billion have been approved on all Pakistan basis, which relate to infrastructure, 16 to social sector and 2 are miscellaneous.

He added that six projects costing Rs 6.6 billion belong to Punjab, two projects having cost of Rs 250 million belong to Sindh, three projects costing Rs 1.1 billion belong to the NWFP and two projects involving cost of Rs 15.9 billion are in Balochistan.

In addition, the CDWP also approved one scheme for Fata, three schemes for the Northern Areas and one for Azad Jammu and Kashmir, he added. CDWP also gave approval of construction of Surab-Basima-Nag-Panjgur-Hoshab Road (454-km) with estimated cost of Rs 14 billion and construction of Sabakzai Dam project with cost of Rs 1.6 billion in Balochistan.

A project of "Community Infrastructure and Services Programme -Earthquake Additional Financing" costing Rs 2.4 billion was also approved by the CDWP meeting for Azad Jammu and Kashmir.


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## Owais

*190,000 tonnes cement exported to Afghanistan in July* 

ISLAMABAD (August 18 2006): The cement export to Afghanistan has touched 190,000 tonnes mark in July despite withdrawal of rebate for stabilising prices in the local market, official sources told _Business Recorder._

Sources said the All Pakistan Cement Manufacturers Association (APCMA) had raised serious concern over the withdrawal of rebate a few months ago, arguing that Pakistan would lose its hard-won export market in Afghanistan to India or Central Asian republics, but the current export trend negates their apprehensions.

They said the Industries and Production Ministry briefed the Economic Co-ordination Committee (ECC) of the Cabinet on Wednesday that the cement manufacturers once again have started capacity under-utilisation from July to stop further decline in prices.

The average capacity utilisation of cement plants during the fiscal year 2005-06 remained around 84 percent due to government pressure especially from March, but in July it was recorded at 77.3 percent, the sources added. At present, the import of cement is allowed at zero percent customs duty and withholding tax from all countries, including India.

Sources said the private sector was very active when the government announced duty-free import of cement, but it materialised 76,879 tonnes cement so far against the expected quantity of 217,824 tonnes for which letters of credit (L/Cs) have been opened.

They said the ECC was also informed that the retail price of locally-manufactured cement of different brands in major cities has dropped to Rs 265-300 per bag except Quetta where the rate is static at Rs 335. The international price (FOB) of cement is $38-44 per ton.

The ministry has also submitted a month-wise price comparison to the ECC, according to which in January 2006, prices registered 15.6 percent increase against the same month last year, February 15.5 percent, March 27.5 percent, April 38 percent, May 22.9 percent, June 9 percent and July slightly above 4 percent, the sources added.

They said in May last, the APCMA was of the view that by September there would be a glut in the market, but it also proved unfounded as there is no such situation and the cement manufacturers are earning a reasonable profit.

The ministry has apprised the ECC that there is adequate supply of cement and its prices in the country are stable, the sources said, adding the ECC expressed its satisfaction over the prevailing price situation.


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## Owais

*Karachi-Mumbai ferry service after signing of protocol: minister* 

KARACHI (August 18 2006): Minister for Ports and Shipping Babar Khan Ghauri said that ferry service between Karachi and Mumbai would start after signing of shipping protocol formally. He said, "Our federal cabinet has already approved the Pakistan-India shipping protocol and sent the draft to Indian government for their approval."

Speaking at the launching ceremony of first cruise liner 'The Gulf Dream' late Wednesday night, he said that the country's first cruise service for Dubai would commence its voyage from November 3.

He said, "It is people's desire to travel on cruise liner from Karachi to other destinations." Ghauri said the ministry has given licence to the operator within 24-hour. Gulf Dream Cruise has 550 rooms for 1250 passengers and would have 400 crewmembers.

The government is encouraging the private sector to participate in shipping area and expects that potential investment is likely to arrive in this sector, Ghauri added.

Gulf Dream Cruise Chief Executive Officer Rizwan Mohyuddin told _Business Recorder _that initially the cruise service would be operated on monthly basis. Later in mid-December, the service would be operated fortnightly.


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## Owais

*Ban on short selling removed* 

KARACHI (August 18 2006): The Karachi Stock Exchange (KSE) has removed ban on short selling in futures contract from September 2006 Futures Contract subject to the approval of Securities and Exchange Commission of Pakistan, according to a notification of the exchange.

A meeting was held on Thursday and the board of directors took several measures. It was decided the mechanism of lower circuit breaker of five percent or Re1 whichever is higher would continue until further orders.

The prohibition placed on short selling in futures contract shall stand withdrawn from September 2006 Futures Contract in accordance with the relevant regulations.

Deposit of 100 percent margin in the form of approved securities in futures contract would continue until further orders.

The CFS facility in 30 approved securities already eligible for futures contract would continue within the prescribed CFS limit. However, CFS outstanding positions in two scrips, namely Fauji cement and Pakistan PTA (not included in the list of futures eligible securities) shall remain open till September 17, 2006 and would be available to finances for release/settlement purpose only on daily basis. All unreleased open positions in these two scrips shall be forced to release for settlement on the above-mentioned date.

According to an analyst, these measures were taken after the stock market has consolidated. The SECP imposed ban on short selling following continuous decline in share prices, resulting in heavy casualties.


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## Owais

*ADB to provide $ 1 billion for development in Gawadar* 

ISLAMABAD: Asian Development Bank (ADB) will provide $ 1 billion for development of national corridor which will cost about $ 2.8 billion.

This was stated by Sean O' Sullivan, team leader of the National trade corridor investment programme of Asian Development Bank during a meeting with Advisor to Prime Minister on Finance Dr. Salman Shah here on Friday. 

He briefed the Advisor about the development of national corridor, which will link Karachi/Gawadar to Khunjrab and will cost about $ 2.8 billion.

He said "the ADB will provide $ 1 billion and the remaining cost will be borne by the World Bank and other financial institutions".

Advisor to Prime Minister on Finance Dr. Salman Shah speaking on the occasion said the commercial and industrial activities should be developed along the road and the revenue generated by the activities should contribute towards the cost of the corridor project to supplement traffic and transport generated resources. 

The advisor emphasized that strategic locations be selected for revenue generating activities. He appreciated the project and stressed that the motorway to be built should be commercially viable. 

The meeting was attended by senior officials of the National Highway Authority.


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## Neo

ISLAMABAD, Aug 17: The United States has given a Ã¢â¬Ånon paperÃ¢â¬Â to Pakistan that shows some flexibility for signing the much-delayed Bilateral Investment Treaty (BIT) between the two countries soon.

Sources told Dawn on Thursday that US Ambassador to Pakistan Ryan C. Crocker had proposed the exchange of non papers between the two sides before holding a final round of talks to conclude the treaty.

Mr Crocker believed that there was a need for holding `informal talksÃ¢â¬â¢ in which non papers should be exchanged with each other in order to work out differences over the draft of the treaty, earlier provided by the Bush administration.

Pakistan will submit its non paper within next few days to the United States. The sources said Prime Minister Shaukat Aziz while presiding over a high-level meeting recently had expressed his concern over the delay in signing the treaty. He said both the sides should hold their final round of talks to decide the issue. Foreign Secretary Riaz Mohammad Khan had proposed the holding of final round of talks during the meeting.

However, the sources said Attorney General Makhdoom Ali Khan was not in favour of concluding the treaty unless some of the harsh clauses contained in the draft submitted by the United States were not removed.

The US side was insisting to have more than one international forum to settle investorsÃ¢â¬â¢ disputes, while Pakistan wanted only International Centre for Settlement of Disputes (ICSD) to deal with arbitration clauses. Also, Pakistan wanted the US investors to exhaust the local remedy in Pakistani courts before opting for any international forum in case of any dispute.

The sources said the attorney general had been supported by prime minister's adviser Syed Sharifuddin Pirzada that the US should not be allowed to introduce "additional procedure" to sign the treaty.

The US side has linked the signing of BIT with the inking of free trade agreement which was being sought by Pakistan more vehemently in order to have new concessions for country's products into the United States. The proposed BIT would largely benefit the American investors wishing to invest in Pakistan.

Mr David Gross, US ambassador-at-large for the Bureau of Economic and Business Affairs, last week met senior Pakistani officials and discussed the signing of BIT preferably within next two months.

He was quoted as having said that Pakistan and the United States had sorted out most of the issues to sign the BIT in near future. Mr Gross said that a couple of issues had left which were being deliberated upon by both the sides for concluding the treaty shortly.


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## Neo

Friday, August 18, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\08\18\story_18-8-2006_pg5_3

_By Zahid Hameed_

ISLAMABAD: IT Minister Awais Khan Leghari said on Thursday that the $72 million, which was the official figure given for PakistanÃ¢â¬â¢s IT exports, did not reflect the true picture and that IT exports probably ran into hundreds of millions of dollars.

He told reporters that the IT Ministry would evolve a new mechanism in cooperation with the State Bank of Pakistan to gauge the actual annual income generated through IT exports. He said the IT industry had witnessed a 50 percent growth in the past couple of years and that the figures were expected to improve further in coming years. Earlier, the IT minister gave away the Capability Maturity Model Integration (CMMI) Level 5 award to Netsol Technologies Ltd Ã¢â¬â the first ever IT company to have been awarded the CMMI level 5 by the software engineering institute at Carnegie Melon university, under the Pakistan Software Export BoardÃ¢â¬â¢s programme (PSEB) called the Standardisation of PakistanÃ¢â¬â¢s IT industry.

PSEB launched the Rs 130 million project about three years ago to bring up more than 100 companies to ISO 9001:2000 levels and more than 20 companies at various levels of CMMI.

CMMI is the most renowned and globally accepted standard for software products and services. It provides an evolutionary improvement path for a company from an ad hoc, immature process to a mature, disciplined process and is divided into five levels, with Level 5 categorised as the most disciplined and mature.

Awais said the occasion was historic for the local IT industry, as achieving the CMMI level rating by a Pakistani company would improve the countryÃ¢â¬â¢s image abroad besides marketing its IT products and services in world markets. He said that so far PSEB had helped more than 100 companies achieve ISO certification while three companies excluding Netsol had been rated at various levels of CMMI. He also said 18 companies were in the process of implementing the CMMI Level 2 process.

He said the IT Ministry would roll out a project soon to ensure the security of information and assist the IT industry in achieving ISO 27001, which was the worldÃ¢â¬â¢s premier standard for information security. He also urged the local industry to adopt the concept of quality and improve business processes in line with international practices so as to penetrate world markets.


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## Neo

Friday, August 18, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\08\18\story_18-8-2006_pg5_11

ISLAMABAD: Dr Salman Shah, adviser to the prime minister on financial affairs, said on Thursday that PakistanÃ¢â¬â¢s economy was one of the worldÃ¢â¬â¢s fastest emerging markets and prospects of it further improving were high. He told PTV that after going through good and bad phases during the past 60 years, the economic policies of successive governments had stabilised and were moving in the right direction.

He said till the 1960s, the growth rate of PakistanÃ¢â¬â¢s economy was favourable, but the chain was broken during nationalisation in the 1970s and the growth rate declined to its lowest in subsequent years. He said that consequently successive governments had to privatise public sector organisations, but the pace was miserably slow. He said credit went to the Musharraf government for not only quickening the privatisation process, but also for passing necessary legislation to make sure all transactions were transparent.

Dr Shah said that during the past six years investment in the country had increased and the fundamentals of the economy had improved. He said people from the Middle East, East Asia, Europe and the US were investing in Pakistan and that $3.5 billion had been invested in the country in the last fiscal year. He said that six ago the size of overall investments in the country were around $300 million. He said Pakistan was pursuing bold and rational economic policies, which if sustained would bring about revolutionary changes in the economy. He said that in the past huge sums were spent to cover the losses of public sector organisations, thus curtailing the size of the development budget. Giving an example, he said subsidies given to the Karachi Electric Supply Corporation (KESC) were more than the size of the entire development budgets of Sindh.

He said Pakistan Steel Mills were set up in the 1980s and the mills were going in loss till 2003-4. He said the government, in realisation of ground realities, had decided to help the private sector do business rather than doing it itself. He said such a policy would help improve the efficiency of service providing organisations and get rid of undue fiscal burden on the national exchequer.

He also said efforts were being made to control inflation and decrease the levels of poverty in the country. Ã¢â¬ÅHowever, positive results will take some time to show,Ã¢â¬Â he added.


----------



## Owais

*Big energy deal with China in offing* 
*BEIJING *_(updated on: August 19, 2006, 19:40 PST_): Chinese private companies will soon finalise deals with their Pakistani partners to make investment in Petroleum and Natural resources sector, said sources with China Chamber of Commerce for Petroleum Industry (CCPI).

The CCPI will send a delegation to Pakistan later this year to finalise their ongoing negotiation in the energy sector. The sources told APP here on Saturday that the Chinese companies are encouraged by economic and investment policies of the present government in Islamabad and prepared to undertake joint ventures in the oil and coal mine sectors.

According to Wang Junjue, the secretary general of CCPI, the deals vary from joint oilfield development to coal mine investment. This will be a breakthrough for private domestic oil companies on the overseas market, he added.

Nearly 30 initial agreements were signed by China's private oil companies and their Pakistani counterparts during a forum held in Islamabad April this year. These agreements cover investment in oilfields, oil refineries, coal-fired power plants and hydropower projects.

The two sides also discussed a possible oil pipeline from Gwadar Port to Xinjiang and building up oil storage and refining facilities at the port. The oil pipeline proposal was made in a general co-operation agreement reached by the two governments during President Pervez Musharraf's official visit to Beijing in February.

The two countries have also proposed at the forum to establish an International Joint Fund to support the development of energy projects by Chinese private oil companies in Pakistan.

According to the informed sources, the Chinese petroleum industry has indicated an interest in shifting its excess capacity to Gwadar. The CCPI and All China Federation of Industry and Commerce (ACFIC) conveyed to Pakistani authorities during a recent visit that the Chinese petroleum industry is keen to invest in the local energy sector.

The ACFIC and CCPI indicated that both the public and private sectors are willing to co-operate in energy projects in Pakistan. This co-operation will not be restricted to building an oil pipeline to set up an energy corridor to Gwadar, but also in shifting energy related industry to Pakistan.

However, the government will need to provide strong support to lay down a framework for a safe financial, investment and security environment in Balochistan to attract this investment, the sources said.

The Chinese petroleum industry sees four potentially fruitful projects.

Firstly, an oil pipeline linking Gwadar to Xinjiang in China to set up an energy corridor. The economic viability of such a project is yet to be worked out. Secondly, the development of Gwadar Port Energy Zone, where the Chinese could set up an oil refinery with a capacity of 21 million tonnes.

Thirdly, the Gwadar energy zone could accommodate other energy sector industries.

The Chinese business groups said that China has excess capacity in the petroleum services industry and planned to move the excess capacity to Dubai, but was now considering shifting it to Gwadar, the official added.

According to their initial estimates, the Gwadar Port Energy Zone could attract investment of up to $13 billion.

Fourthly, the Chinese petroleum industry also indicated an interest in oil and gas exploration projects in Pakistan, the official said. The Chinese business groups had proposed that a Pak-China energy and trade co-operation promotion association be established for such projects.

The association would include members from the oil and gas sector and other industries in the power sector. They had also suggested that a Pak-China joint investment company be set up to finance these projects, the sources added.

A senior official of China Federation of Industry and Commerce (ACFIC) said that the Chinese companies are motivated for investment by the statements, given by President Musharraf during his recent visit to Shanghai that his government will extend all possible incentives to convert Pakistan into an energy corridor for China, through Gwadar seaport and developing new rail and road networks.


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## Owais

*Export rises by 16.45 percent per annum in four years* 

ISLAMABAD (August 20 2006): Pakistan's exports grew at an average rate of 16.45 percent per annum over the last four years owing to sound macroeconomic policies coupled with wide ranging structural reforms, particularly in the areas of trade and tariff.

The policies implemented over the last six or seven years have helped Pakistan doubled its exports in seven years and increased its trade-to-GDP ratio from close to 26 percent in 1999-2000 to estimated 34 percent in 2005-06.

The exports were targeted at $17 billion or 18.1 percent higher than last year. Export during the first nine months of the 2005-06 are up by 18.6 percent - rising from $10,183 million to $12,073 million in the same period last year.

According to official sources the exports of primary commodities are up by 22 percent, prominent among those are exports of rice (33.6 percent), fish and fish preparation (30.2 percent) and fruits (20.6 percent).

Exports of textile manufactures grew by 19.2 percent, prominent among those are exports of bedwear (58.4 percent), ready-made garments (31 percent), cotton yarn (29.4 percent), cotton cloth (16.5 percent) and towels (12 percent).

Exports of other manufactures also registered a high double-digit growth of 19.2 percent. Within this category, exports of petroleum products grew by 80.8 percent and leather manufactures are up by 44.0 percent.

The overall exports posted an increase of $1,890.23 million in the first nine months of the current fiscal year over the same period of last year.

Exports this year have been largely quantity driven and with firming up of the prices of exportable, Pakistan's exports may rise substantially in the medium terms.

Pakistan's exports are highly concentrated in few items namely, cotton, leather, rice, synthetic textiles and sports goods. These five categories of exports account for 74.5 percent of total exports during the first nine months of 2005-06 with cotton manufacturers alone contributing 58.4 percent.

Pakistan's export composition has changed significantly since 1990's. The major changes encompass sharp decline in the shares of primary and semi-manufactured exports whereas, increase in the share of manufactured goods.


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## Owais

*Efforts on to improve investment climate in country: Salman* 


LAHORE (August 20 2006): Prime Minister's Adviser on Finance Dr Salman Shah has said that in the event of decline in foreign direct investment (FDI) in the country, the current account deficit (CAD) would not become sustainable and thus the pace of economy would need to be slowed down; hence it was vital that the flow of FDI is either maintained at present level or increased.

He was addressing the members of the Lahore Chamber of Commerce and Industry (LCCI) on Saturday. LCCI President Mian Shafqat Ali, Senior Vice President Abdul Basit, and Vice President Aftab Ahmad Vohra were also present on the occasion.

The advisor, who spoke at length on various issues of economic importance, said that at present CAD has been sustained due to continued commitment to the privatisation programme and strategic sales and international investment.

"The country received $3.5 billion under the head of FDI, and there should be concerted efforts to attract more FDI in a bid to keep the country on the trajectory of development and manage the current account deficit. The country has potential to attract FDI between $6 billion and $7 billion in the coming time," said Salman.

The adviser said that CAD could be brought down significantly by raising the interest rate and savings. The foreign exchange reserves, at present, stood at $13 billion. About the origin of FDI, he said that of US $3.5 billion, UAE contributed $1.4 billion, followed by USA, Saudi Arabia, Norway and the United Kingdom.

He also said that FDI is vital for keeping the momentum of growth and in this regard the private sector would have to play its due role. He averred the government was increasing the role of private sector by privatising major public sector industries. He said Pakistan was well-positioned to benefit from the fast changing global scenario, but there is a need to increase exports as compared to other countries falling in the same income group.

Salman Shah said the government has decided to set up 'Competition Authority' in place of the Monopoly Control Authority (MCA) that has failed to yield desired results. The government has taken initiative by building safeguards into the system to ensure continuation of reforms process and future growth, he added.

"Pakistan made a successful return to the international bond markets in February 2004 when it issued a 5-year Eurobond. Since then, there have been forays in 2005 and 2006 with the most recent offerings being well received. The government is aiming for another issue in 2007", said Salman. On current trade deficit, he said this was due to import of oil/energy, industrial machinery, raw material and at a restricted import of food items, such as meat from India.

He averred that high quality of machinery relating to engineering, power, construction and textile was imported in the country, and this reflects the fact that investment was pouring in certain areas, which is a good omen. The cement industry is also going for expansion to meet export targets, especially to Iraq, Lebanon and Afghanistan where reconstruction process is underway, he added.

About the price-hike, he admitted that prices of food in Pakistan are all-time high, which is also true for the entire region. Only increased production would resolve the problem, and there are a lot of opportunities for the private sector to invest in this sector to fill the gap, especially in livestock, poultry, vegetables and fruits, he said.

"Increased supply of food would meet the existing demand that would ultimately deflate its prices, hence it is in the hand of the private sector and there is abundance of opportunities for them to exploit," he added.

Dr Salman Shah said the business community should explore new markets, and the government would extend full support. The government is also willing to listen to the problems of the business community and would remove irritants being faced by them.

Talking to newsmen, he said the government was planning to enlist 5-10 percent of the OGDC shares in the Global Depository Receipts, which would be traded in the London Stock Exchange.

The adviser said the government is also working on improving the investment climate in the country, so that foreign investors could feel secured to invest in the country. He averred that Pakistan's economy has grown and there was huge room for both international and local investments.

To a question, he said it is positive to see that a big foreign bank like the Standard Charter has come to Pakistan, carried out half billion acquisition and also increased its network; which reflects the international confidence in the country's economy, which is very vital.

"Moreover, such banks would encourage other local banks to improve their banking system and services; in fact, they would set a benchmark for others to follow," he added.

Dr Salman was of the view the financial sector that is growing at good rate now need to introduce innovation, new customer products and improved services. He pointed out that our saving rate is still low that need to be improved and the role of financial sector in this regard is very important.

On the allegation regarding market crash in 2005, he refuted the allegations levelled by former Securities and Exchange Commission of Pakistan (SECP) chairman Dr Tariq Hassan in a white paper that was presented before the standing committee. He said that Dr Tariq, in his white paper, mentioned that he and State Minister for Finance Omer Ayub interfered in the stock exchange in August and April, respectively, while the crash took place in March; this clearly shows they were not involved in the crash.

According to him, in August, the Ministry of Finance did intervene to end the deadlock between the stock exchanges and the SECP over the issue of Continuous Financing System (CFS) and removal of Carry over Transactions (CoT), which was resolved and the CFS was implemented. Dr Tariq, in his white paper, termed it a good settlement, then where is the inference. LCCI President Mian Shafqat Ali, Senior Vice President Abdul Basit, and Vice President Aftab Ahmad Vohra also spoke on the occasion.


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## Owais

*ADB to provide technical help in energy sector* 

MANILA: Asian Development Bank (ADB) would be providing $1 million technical assistance to its member countries for promoting energy sector.

ADB statement issued here said that this technical assistance would help develop environment friendly energy.

ADB said that the existing annual demand of oil in Asia at 2100 billion tons would double in 2025. The Bank said that the environment friendly fuel was the biggest challenge for Asia in future and, therefore, the promotion of other alternative energy sources including coal was imperative.

ADB was currently engaged in giving a final shape to plans worth $1 billion for the promotion of energy in Asia in next 2/3 years.


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## Owais

*Pakistani share in World service sector at only 0.1pc* 

PESHAWAR: In international trade, Pakistan service sector has a share of extremely low 0.1 per cent.

During a workshop here, the provincial head of SMEDA Mohammed Tariq said services sector constituted the 20 per cent of international trade i.e. Rs130 billion.

The chunk in services sector belongs to the US, Britain and Germany, whereas, Pakistan contributes only $130 billion.

Mohammed Tariq said the sector was extremely important and 2.3 million people were associated with it.

In many sectors including IT, health and accounting, Pakistan could increase its share in international service sector.


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## Owais

*SBP gets Rs7b at 8.5% interest rate* 

KARACHI: State Bank of Pakistan borrowed Saturday Rs7 billion for 12 days from the banking system for the management of additional amount.

State Bank obtained the money at 8.5 per cent interest rate.

Earlier, the central bank received the offers of Rs9.5 billion from banks.

According to money market analyst Salman Jaffery, these offers on the part of banks indicate the presence of appropriate liquidity in the market.


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## Owais

*Ethanol-fueled cars could be made within six months: PAMA* KARACHI: Pakistan auto companies could get on ethanol-fueled cars make ready within six months, however, it hinges on the demand for such cars and the availability of ethanol in the country.

Pakistan Auto Manufacturers Association (PAMA)&#8217;s consultant, Majeed Ahmad Jhumra told Geo News that auto manufacturers were following Euro Emission Standards, under which, they want the promotion of ethanol-fueled cars and if the demand for such cars grows in the country, then the manufacturing of flexi-fuel-engines was of no problem and such cars could be brought into the market within six months, as Pakistani companies could obtain this technology from abroad through which some adjustments in the engine would be made. 

He told that the proposal of manufacturing of 10 percent ethanol-fueled cars every year was not difficult for the assemblers and if the government asks for it besides the demand existed, then the flexi-fuel-cars could be launched even in a greater than the proposed number.

He told that the price of ethanol-fueled cars would not be more than the existing ones besides their quality would also be not less in any way. Presently, these cars were being run on ethanol in the developed countries of the world, he told.


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## Neo

KARACHI (August 20 2006): Recent rains have badly hit the industrial productions, which also resulted in suspension of exports, while industrialists see around 50 percent production losses due to shortage of labours, collapse of civic infrastructure and power failure.

The fresh spell of rains wreaked havoc on the city's entire communication infrastructure, which directly hit the industrial productions. Besides, labours and other related staff's shortage, the non-availability of crude material to industrial due to the collapsed civic infrastructure during rains to have been one of the core contributing factors in the decrease of production ratio.

The regular electricity breakdowns had also kept the production at zero level. According to industrialists, production losses have come to billions of rupees during last two days.

Karachi Chamber of Commerce and Industries (KCCI) President Haroon Farooqui told _Business Recorder _on Saturday that industries were functioning with around 50 percent capacity since the Thursday's rains havoc and due to several reasons, including improper power supply, shortage of labours, collapsed drainage system and dismantling of road communication system.

Regarding commercial activities in the city, he said the commercial activities in main markets were badly affected by rains and still presenting a deserted look due to knee-deep stagnant rainwater accumulated inside them.

"Rainwater is still inside the shops and their basements, which has badly caused the edible items, while commercial activities in all main markets particularly in Jodia Bazaar and commercial centers in Clifton have come to standstill as consumers could not turn out for rainwater accumulation inside commercial centers," he added.

Rains have definitely hit the productions and industries would have certainly met around Rs 2 billion to Rs 3 billion losses during last two days, he said.

On Saturday's business activities, The KCCI chief said it had got a slow momentum as around 90 percent industries again came to production, however, a clear picture could be seen on Monday if the rain did not continue.

About exports, Farooqui said due to deteriorated road communication system in the industrial areas of the metropolis which had completely suspended the freight traffic from industries. "The closure of Korangi Bridge after the Malir River surged during rains, has also put a negative impact on export cargo, which is carried through the Korangi Bridge by trucks to ports," he maintained.

Urging civic administrative institutions, he said a consolidated and co-ordinated programme should be visible between Karachi Port Trust, City District Government Karachi (CDGK), and Cantonment Board to cope with the rain emergency situation aptly, which unfortunately, lacked during recent monsoon season.

He said for better industrial production, business and commercial activities, and exports, a faultless road communication infrastructure, and improved drainage systems were needed in all industrial zones of the metropolis.

Site Association of Industry (SAI) Chairman Amin Bandukda estimated around Rs 1 billion losses in production and around $15 million to Rs 20 million losses in exports to have been caused by the fresh spell of rains on Thursday.

He said that around 40 percent industrial activities took place on Friday, which rather improved 90 percent on Saturday as rain was on a halt.

Calling for urgent relief activities, he said the short-term policy should be initiated by the CDGK and other civic institution in recent crisis emerged from rains to have nearly brought the industrial production to a halt, and urged the civic institutions to drain out accumulated rainwater from industrial areas.

He demanded that choked nullahs should be made clear to flow drain water smoothly, besides removal of encroachment made around and over them.


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## Neo

ISLAMABAD (August 20 2006): Our standards are world renowned and our project in Islamabad will exceed the standards of local authorities in the building and construction strength, Engineer Keith Sheppard, Structure Engineer, WS Atkins, said in a meeting with the media on Friday.

It should be noted that PGCL is constructing a mega-project in Islamabad that includes a 37-storey hotel, shopping mall, residential and commercial towers.

Revealing the structural details of the project, he said that Atkins, in association with Pak-Gulf Construction (Pvt) Ltd (PGCL), has worked hard in structure and engineering design of the project according to the Zone-IV standards of Islamabad, says a press release.


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## Neo

ISLAMABAD (August 20 2006): Director General Gwadar Development Authority (GDA), Ahmed Bux Lehri said on Saturday that efforts are in full swing to complete the relevant infrastructure of the port at the earliest.

In a telephonic interview to PTV, he said the port is being connected with other areas through a comprehensive roads and rails network and activities in this connection are at boost. He said the construction of a modern airport is also under process and land has been acquired for this purpose.

The town planners were given three years time for development projects in the area and they are working on target, he said. He said two big companies have been accorded NOCs for installation of water desalination plants, adding one of them would install 25 million gallons plant while the other of 10 million gallons.

Besides, he said, the housing schemes have also been asked to make their own arrangements for the provision of clean water and some of them have started the installation of desalination plants. He said, Water and Power Development Authority (Wapda) is presently providing 30-megawatt electricity, while they have promised to enhance this capacity to 100mw to meet the future requirements.


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## Neo

ISLAMABAD (August 19 2006): Underlining the importance of advancement in the industrial sector for development and prosperity, Prime Minister Shaukat Aziz said on Friday that the government is focusing on development of skills, strengthening of infrastructure, value addition, better productivity and competitiveness in the industrial sector for enhancing jobs and income generation opportunities.

Chairing a meeting to review the goals and targets of the ministry of industries, production and special initiatives here at the PM House on Friday evening, the Prime Minister said industrial sector remains the engine for development and the government is facilitating the private sector to fully tap industrial potential of the country.

The Prime Minister asked the ministry to focus on development of SMEs, engineering sector, setting up of export processing zones, finalisation of industrial policy, auto policy and industrial statistics.

He asked the ministry of industries and production to take industry specific initiatives and focus on horticulture, home appliances, sports & surgical goods and furniture industry.

The Prime Minister appreciated the launching of pilot projects in textile, silver, jewellery, ceramics and blue pottery under "one village one product programme" to augment incomes and job creation in the rural areas and remote parts of the country. "The objective is to increase non-farm income, reduce poverty and improve the living standard of the people in the rural areas", the Prime Minister added.

He said to make the programme a success, as the government is providing skills training and marketing facilities to the workers of rural areas. He said the programme would be extended to all parts of the country.

The Prime Minister emphasised that industrial strategy should be finalised soon as it will give a sense of direction and confidence to investors. He asked the ministry to finalise the auto policy.

The Prime Minister was informed that both the policies are under preparation and will be finalised by October this year.

The Prime Minister also asked the ministry to work with federal bureau of statistics to improve industrial statistics.

The Prime Minister said that government is following its privatisation policy and some more industrial units will be offered for privatisation. He said the privatisation of Pakistan Steel Mills would be carried out in the light of Supreme Court's judgement.

Minister for Industries and Production, Jehangir Khan Tareen informed the Prime Minister about the major achievements of the ministry. He mentioned merger of old state owned enterprises, reconstitution of their board of directors and creation of new companies, approval of strategies for marble & granite, gems & jewellery and dairy sectors. He said 21 sick units have been revived at Karachi export processing zone (EPZ).


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## Neo

RAWALPINDI, Aug 19: President General Pervez Musharraf on Saturday reiterated strong commitment for the socio-economic development of the people in Federally Administered Tribal Areas.

He was talking to a delegation of parliamentarians belonging to Fata.

President Musharraf said that preference would be given to dialogue process for resolution of problems in the tribal areas, particularly in North and South Waziristan.

He expressed the hope that strengthening of political and administrative systems would lead to better governance in the Fata.

The President stated that construction of road network, hospitals and schools would bring the tribal areas into the mainstream national development.

Federal Minister for Culture, Dr Ghazi Gulab Jamal, Federal Minister for Political Affairs, Engineer Amir Muqam, Governor NWFP, Lt-Gen (retd) Ali Mohammad Jan Aurakzai, PML Secretary-General, Senator Mushahid Hussain Syed, MNA Munir Khan Aurakzai, and MNA Dr Nasim Afridi attended the meeting.

President Musharraf said foreign terrorists would not be allowed to use Pakistani soil for ulterior motives at any cost, adding that these elements would have either to surrender or quit the area


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## Neo

*FDI to touch $7 billion mark in 2006-07*




LAHORE, Aug 19: Pakistan must continue to attract substantial foreign direct investment (FDI) in order to finance its ever-expanding current account deficit, failing which will result in slowdown of economic growth, Dr Salman Shah, adviser to the prime minister on economic and financial affairs said on Saturday. He said that devaluation by Re1 will cost Rs35bn to the national economy.

Ã¢â¬ÅIt is of critical importance for us to continue to lure considerable amount of FDI if we wish to maintain the current momentum of economic growth. Right now, there is no problem as we are getting sufficient FDI and considerable foreign exchange in the shape of remittances to bridge the current account deficit. But should we falter in attracting substantial FDI in future, we shall have to resort to the harder choices of either devaluing the currency or hiking the interest rates or using our foreign exchange reserves to cover the yawning current account deficit,Ã¢â¬Â he added.

PakistanÃ¢â¬â¢s current account deficit swelled to $5.5 billion in the FY06, and was financed through FDI of $3.5 billion, which included $1.5 billion privatisation proceeds and $2 billion green field foreign investment.

However, Dr Shah was hopeful that Pakistan would receive additional remittances this fiscal compared to the last year because of the ongoing oil boom in the Middle East as well as will manage to attract FDI to the tune of $6-7 billion in line with its potential, he told a small gathering of traders and businessmen at the Lahore Chamber of Commerce and Industry (LCCI).

Dr Shah, who visited the LCCI in order to sell the economic and financial policies of the government and to motivate them to invest in the economy, was given a cold shoulder by industrialists and exporters, who stayed away from the meeting. His presentation on investment was attended by only a few businessmen and small traders, and the LCCI management had to call in its employees to fill in the vacant chairs.

Ã¢â¬ÅDr Shah has nothing new to say or offer to us,Ã¢â¬Â a leading exporter of garments told Dawn over telephone when asked as to why his community had stayed away from the meeting. Ã¢â¬ÅMost businessmen, just like me, were well aware of what he was going to say. They (the government) donÃ¢â¬â¢t care a fig for us. That is precisely why exporters and manufacturers stayed away from the meeting, choosing to give their precious time to their business instead of wasting it in listening to Dr ShahÃ¢â¬â¢s sermons and claims.

In his presentation, prepared for briefing foreign investors on PakistanÃ¢â¬â¢s economic potential to lure them into investing in the GDRs (Global Depository Receipts) of OGDC--the government intends to list on the London Stock Exchange--Dr Shah gave an overview of the economic, financial and other reforms and policies framed in the last seven years, the success achieved, and future strategy for maintaining the present momentum of growth in the country.

While dilating on the economic successes of the government, the adviser also conceded that the country needed to quickly increase exports to 15 per cent of the GDP from the current 12-13 per cent, raise its revenues as percentage of GDP and enhance savings rate to 25 per cent from the present 16 per cent in order to strengthen the national economy.

The adviser told his audience that the government planned to issue GDRs of 5-10 per cent shares of OGDC for the international investors. He said Pakistan had never been active in the international equity market in the past. Ã¢â¬ÅBut if Pakistan has to grow at the pace at which it is growing now, we will soon be a major economy. This will require discarding the traditional sources of finances like the Asian Development Bank and the World Bank and look to international capital markets and investors for meeting our financial requirements,Ã¢â¬Â he said.

Urging the local businessmen and investors to invest in different sectors of the economy, he said local and foreign investment was needed to maintain the current GDP growth rate of 6-8 per cent, create millions of jobs and alleviate poverty. Ã¢â¬ÅAny future plan we have for the countryÃ¢â¬â¢s economy has to be driven and implemented by the private sector. The private sector has to be the engine of growth,Ã¢â¬Â he added.

He said Pakistan offered excellent opportunities of investment to both local and foreign investors. Ã¢â¬ÅWe are a big economy of 160 million people with GDP of $135 billion and per capita income of $846. Private consumption in Pakistan is leading the aggregate demand and a large consumer market is emerging, he said adding the country was fast becoming a regional trade, energy and transport corridor for Asia. There are lots of opportunities for the investors to invest and make money.

He said the acquisition of Union Bank Limited by Standard Chartered Bank was a welcome sign for the economy as it reflected a confidence of international financial institutions and investors in PakistanÃ¢â¬â¢s economy and would help improve the banking and financial services.

In response to demands for devaluation, Dr Shah said if the Pakistani currency was devalued by just Re1 against dollar, it would result in an additional burden of Rs35 billion on the economy as the countryÃ¢â¬â¢s total external debt stood at $35 billion. Ã¢â¬ÅDevaluation is not advisable if we want to maintain stability,Ã¢â¬Â he said. He advised the businessmen, particularly exporters, to enhance their competitiveness by increasing their productivity, becoming efficient, and cutting unnecessary costs instead of calling for depreciation of the currency.

Ã¢â¬ÅStop looking towards Islamabad, and start looking for markets and becoming more productive and efficient,Ã¢â¬Â he told the businessmen. http://www.dawn.com/2006/08/20/ebr1.htm


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## Neo

BEIJING, Aug 19: Chinese private companies will soon finalise deals with their Pakistani partners to make investment in the petroleum and natural resources sector, said sources with the China Chamber of Commerce for Petroleum Industry (CCPI).

The CCPI will send a delegation to Pakistan later this year to finalise their ongoing negotiations in the energy sector. The sources told APP here on Saturday that the Chinese companies were encouraged by economic and investment policies of the present government in Pakistan and prepared to undertake joint ventures in the oil and coalmine sectors.

According to Wang Junjue, secretary-general of the CCPI, the deals vary from joint oilfield development to coalmine investment. This would be a breakthrough for private domestic oil companies on the overseas market, he added.

Nearly 30 initial agreements were signed by China's private oil companies and their Pakistani counterparts during a forum held in Islamabad in April this year. These agreements cover investment in oilfields, oil refineries, coal-fired power plants and hydropower projects.

The two sides also discussed a possible oil pipeline from Gwadar Port to China's Xinjiang and building up oil storage and refining facilities at the port. The oil pipeline proposal was made in a general cooperation agreement reached by the two governments during President Pervez Musharraf's visit to Beijing in February.

The two countries have also proposed at the forum to establish an international joint fund to support the development of energy projects by Chinese private oil companies in Pakistan.

According to the sources, the Chinese petroleum industry had indicated an interest in shifting its excess capacity to Gwadar. The CCPI and the All China Federation of Industry and Commerce (ACFIC) conveyed to Pakistani authorities during a recent visit that the Chinese petroleum industry was keen to invest in Pakistan's energy sector.

The ACFIC and the CCPI indicated that both the public and private sectors were willing to cooperate in energy projects in Pakistan. This cooperation will not be restricted to building an oil pipeline to set up an energy corridor to Gwadar, but also in shifting energy related industry to Pakistan.

The government will need to provide strong support to lay down a framework for a safe financial, investment and security environment in Balochistan to attract this investment, the sources said.

The Chinese petroleum industry sees four potentially fruitful projects. Firstly, an oil pipeline linking Gwadar to Xinjiang in China to set up an energy corridor. The economic viability of such a project is yet to be worked out. Secondly, the development of Gwadar Port Energy Zone, where the Chinese could set up an oil refinery with a capacity of 21 million tons. Thirdly, the Gwadar energy zone could accommodate other energy sector industries.

The Chinese business groups said China had excess capacity in the petroleum services industry and planned to move the excess capacity to Dubai, but now considering shifting it to Gwadar, the official added. According to their initial estimates, the Gwadar Port Energy Zone could attract investment of up to $13bn.

Fourthly, the Chinese petroleum industry also indicated an interest in oil and gas exploration projects in Pakistan, the official said. The Chinese business groups had proposed that a Pakistan-China energy and trade cooperation promotion association be established for such projects.

The association would include members from the oil and gas sector and other industries in the power sector. They had also suggested that a Pakistan-China joint investment company be set up to finance these projects, the sources added.

A senior official of the China Federation of Industry and Commerce said the Chinese companies were motivated for investment by the statements given by President Musharraf during his recent visit to Shanghai that his government would extend all possible incentives to convert Pakistan into an energy corridor for China, through Gwadar seaport and developing new rail and road networks.


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## Neo

SRINAGAR: People's Democratic Party on Saturday suggested rechristening of the 'silk route' as 'gas route' and laying of gas pipelines throughout the region so as to strengthen cross-border relations. 

"The old silk route connecting the sub-continent with central Asia should be rechristened as gas route and gas pipelines should be laid throughout the region via Jammu and Kashmir," senior PDP leader Tariq Hamid Qarra said after attending the meeting of Prime Minister's Working Group. 

"This would not only develop the stakes of all countries in the region in peace in Jammu and Kashmir, but also boost the economic prosperity of the countries, including India and Pakistan," Qarra said. 

Qarra said, he suggested exchange visits by the legislators and other people's representatives, mediapersons, pilgrims, cultural troupes and students from both sides of LoC, which would help remove misconceptions and create an environment for building bridges of friendship. 

Stressing the need for expanding people-to-people contact, Qarra, a Minister in the coalition government, said movement along the Srinagar-Muzaffarabad and Poonch-Rawalakote roads should be made "more frequent and less cumbersome". 

"Due to various procedural bottlenecks, the movement across these routes is presently just symbolic," he said. 

The Minister said travel across the LoC should not be just confined to divided families. 

PDP also suggested opening of more traditional road links along the LoC, including Lipa valley, Tangdhar, Kargil and Suchetgarh to promote economic integration between two parts of the state, he said.


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## Neo

ISLAMABAD: Prime Minister Shaukat Aziz has directed the ministry of information technology to take urgent steps to start the construction of IT parks in Islamabad, Lahore and Karachi as IT-enabled office space is a critical requirement for the development of IT industry which is growing exponentially in the country. 

The prime minister was presiding over a meeting to review the growth of IT industry in the country at the PM House on Saturday. 

Minister for Information Technology Awais Ahmed Khan Leghari informed the prime minister that as per international standards, the total size of IT business in Pakistan has reached about $ 2 billion with a 50% growth per annum during the last three year. This includes domestic industry, hardware and export of software and IT-enabled services. 

The prime minister was informed that the export of IT services and products has reached $ 600 million and is expected to grow by 50% annually. The prime minister sad Pakistan has come a long way in developing the IT industry. It has a competitive and comparative advantage due to the availability of highly skilled human capital and a world-class infrastructure and reduced cost of doing business. In the outsourcing business, the prime minister said, Pakistan offers a viable destination for parsing out services in an environment with reliable infrastructure. He said the undersea cable provides redundancy. Now Pakistan has three international links and more links are in the planning phase. He said the government has provided a level playing field to local and foreign companies, which is resulting in increased investments and record growth in the sector. 

The ministry of information technology in their presentation said that Islamabad is growing as an IT hub. The industryÃ¢â¬â¢s growth and human resource expansion has created a 300% increase in office space requirement for IT companies in Islamabad.


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## Neo

BEIJING: Chinese private companies will soon finalise deals with their Pakistani partners to make investment in petroleum and natural resources sector, sources associated with China Chamber of Commerce for Petroleum Industry (CCPI) said. 

The CCPI will send a delegation to Pakistan later this year to finalise their ongoing negotiations in the energy sector. 

The Chinese companies are encouraged by economic and investment policies of the present government in Pakistan and prepared to undertake joint ventures in the oil and coalmine sectors. 

According to Wang Junjue, the secretary general of CCPI, the deals vary from joint oilfield development to coalmine investment. This will be a breakthrough for private domestic oil companies on the overseas market, he added. 

Nearly 30 initial agreements were signed by ChinaÃ¢â¬â¢s private oil companies and their Pakistani counterparts during a forum held in Islamabad in April this year. These agreements cover investment in oilfields, oil refineries, coal-fired power plants and hydropower projects. The two sides also discussed a possible oil pipeline from PakistanÃ¢â¬â¢s Gwadar Port to ChinaÃ¢â¬â¢s Xinjiang and building up oil storage and refining facilities at the port. 

The oil pipeline proposal was made in a general cooperation agreement reached by the two governments during President MusharrafÃ¢â¬â¢s official visit to Beijing in February. 

The two countries have also proposed at the forum to establish an international joint fund to support the development of energy projects by Chinese private oil companies in Pakistan. 

According to the informed sources, the Chinese petroleum industry has indicated an interest in shifting its excess capacity to Gwadar. 

The CCPI and All China Federation of Industry and Commerce (ACFIC) conveyed to Pakistani authorities during a recent visit that the Chinese petroleum industry is keen to invest in PakistanÃ¢â¬â¢s energy sector. The ACFIC and CCPI indicated that both the public and private sectors are willing to cooperate in energy projects in Pakistan. This cooperation will not be restricted to building an oil pipeline to set up an energy corridor to Gwadar, but also in shifting energy-related industry to Pakistan. However, the government will need to provide strong support to lay down a framework for a safe financial, investment and security environment in Balochistan to attract this investment, the sources said. 

The Chinese petroleum industry sees four potentially fruitful projects. Firstly, an oil pipeline linking Gwadar to Xinjiang in China to set up an energy corridor. The economic viability of such a project is yet to be worked out. 

Secondly, the development of Gwadar Port Energy Zone, where the Chinese could set up an oil refinery with a capacity of 21 million tonnes. 

Thirdly, the Gwadar energy zone could accommodate other energy sector industries. 

The Chinese business groups said that China had excess capacity in the petroleum services industry and planned to move the excess capacity to Dubai, but was now considering shifting it to Gwadar, the official added. According to their initial estimates, the Gwadar Port Energy Zone could attract investment of up to $13 billion. 

Fourthly, the Chinese petroleum industry also indicated an interest in oil and gas exploration projects in Pakistan, the official said. 

The Chinese business groups had proposed that a Pak-China energy and trade cooperation promotion association be established for such projects.


----------



## Neo

ISLAMABAD (August 19 2006): Pakistan intends to import 1000MW of electricity from Tajikistan, 100MW from Iran and generate domestically about 5000MW through a number of projects in public/private sector to meet future load requirements. Water and power minister Liaquat Ali Jatoi gave this information to the Senate on Friday while replying two different questions.

Although, he did not give the timeframe for the plan to import power from neighbouring countries but was almost categorical that all plants for local generation would be on stream by 2008. These include 1073MW to be produced by the KESC.

Jatoi said Pakistan is planning to import initially 100MW power from Tajikistan by means of an extra high voltage transmission line through Afghanistan. In this regard, regional electricity trade conference was held in Islamabad on May 8-9, 2006.

The minister said delegations at the level of minister from governments of Afghanistan, Kyrgyzstan, Tajikistan and Pakistan participated in the meeting and agreed on merits of electricity import from the Central Asian Republics, specially Tajikistan, to Pakistan.

They also agreed on the need to expedite work leading to realise such imports through an investment project which will encompass generation and transmission components, including extra high voltage transmission line from Tajikistan to Pakistan via Kabul. The proposal was also supported by international financial institutions such as the ADB, World Bank, IDB, IFC and JBJC. Initially, the World Bank is financing a feasibility study for which consultants are being appointed, said the minister.

As regards import of power from Iran, Jatoi said under the contract, the maximum power which is being imported from Iran at 3 points: from Jackigur (Iran) to Mand (Pakistan) at 132kV (35MW); from Mir Jawa (Iran) to Taftan (Pakistan) at 20kV (2MW); and from Sarawan (Iran) to Mashkhail (Pakistan) at 20kV (2MW). The contract was renewed by Iran in December 2005 with increase in tariff from three to five cents per kWh.

TAVANIR (Iran) has also further agreed in principle to supply 100MW power to Gwadar. For this purpose, a double circuit twin bundle 220kV line would be constructed from Polan in Iran to Gwadar in Pakistan. Both the sides agreed to finance themselves the cost of portion of transmission line (about 70km Iran and 100km in Pakistan) and grid stations (Polan and Gwadar) in their respective territories. Tariff is under final stages of negotiation.

Power to be imported from Tajikistan will be delivered to the national grid at Peshawar, and the power being imported from Iran will meet the demand of south-west coast of Balochistan consisting of Turbat, Gwadar, Panjgoor (Makran area) districts and border towns of Mashkhail and Taftan.

The minister said per day peak demand of Wapda is 13,847MW as against maximum production per day of 292.05MkWh. For KESC, the per day peak demand is 2,223MW against per day maximum production of 29MkWh.

The minister also enlisted 18 projects that have been planned in public/private sector, for some of which the expected year of commissioning is 2008 while for others it is 2009.

Spelling out the KESC action plan, the minister said the entity plans to create additional generation of 828MW from four gas turbine units and two combined cycle units, all to be on stream by June 2008.

Additionally, by the end of December 2006, the KESC would be producing 45MW from a barge-mounted unit and 220MW by the UAE turbine. No other details were supplied to the house about these plans.


----------



## Neo

ISLAMABAD (August 20 2006): Prime Minister Shaukat Aziz has directed the Ministry of Information Technology to take urgent steps to start the construction of IT parks in Islamabad, Lahore and Karachi as IT-enabled office space is a critical requirement for the development of IT industry, which is growing exponentially in the country.

The Prime Minister was chairing a meeting to review growth of the IT industry in the country here at the Prime Minister house. Information technology minister Awais Ahmed Khan Leghari informed the Prime Minister as per international standards, the total size of IT business in Pakistan has reached about $2 billion with 50 percent growth per annum during the last three years. This includes domestic industry, hardware and export of software and IT enabled services.

The Prime Minister was informed the export of IT services and products have reached $600 million and is also expected to grow by 50 percent annually.

The Prime Minister reviewed progress in setting up of IT parks at Islamabad, Lahore and Karachi. He was informed plans for land acquisition for the parks are being finalised and the construction of Islamabad IT park would begin in October this year.

The meeting was also attended by minister of state for information technology Ishaq Khan Khakwani, planning commission deputy chairman Dr Akram Sheikh and senior officials.


----------



## Neo

*Pakistan's OGDC to raise $1.5 bln in London-paper*

LONDON, Aug 20 (Reuters) - Pakistan's state oil firm, the Oil and Gas Development Company (OGDC), is preparing to raise up to $1.5 billion on the London Stock Exchange, valuing it at up to $10 billion, The Business newspaper reported on Sunday. 


The proposal to float at least 10 percent of the company on the London market as part of the government's ambitious privatisation programme to cut $35 billion in debt will be announced within the next month, the paper said. OGDC could not immediately be reached for comment


----------



## Owais

*NBP profit may rise to Rs 8.2 billion in six months* 


KARACHI (August 21 2006): The profit of the National Bank of Pakistan (NBP) in the six months ended June 30 would be between Rs 7.5 billion and Rs 8.2 billion, depicting an increase of as much as 87 percent because of growth in deposits and advances.

NBP board of directors met on Saturday and finalised the accounts for the first half ended June 2006. The financial results are expected to be made public on August 21, 2006.

"We anticipate NBP's earnings for the first half of the current fiscal to soar by 87 percent to Rs 8,225 million as against Rs 4,393 million during the corresponding period last year", said Faisal Khatri, research analyst at Live Securities.

This translates into an EPS at Rs 11.60 compared to Rs 6.20 during 1H/FY05. The growth in earnings is expected to result from higher mark-up income emanating from steady growth in advances. Net mark-up income is expected to depict 44 percent growth to Rs 14,231 million as against Rs 9,873 million previously. Advances of the bank are to grow by 4 percent to Rs 280 billion compared to Rs 269 billion by the end of 2005.

Furthermore, non-markup/interest income and expenses are to depict 15 percent and 11 percent respective increments to Rs 4,253 million and Rs 6,268 million as against Rs 3,708 million and Rs 5,630 million.

Fee, commission and brokerage income and dividend income are to lift non-markup income while non-markup expenses of the bank are expected to soar due to increased administrative expenses.

At current level, the NBP is trading at a P/BV multiple at 2.1x and we recommend a positive stance on the scrip.

"We expect the National Bank will post a 1HCY06 profit after-tax of Rs 7.52 billion (EPS: Rs 10.61) showing a growth of 71.2 percent", said an analyst from Alfalah Securities.

The 2QCY06 profit after-tax is expected to grow by 8.27 percent from the last quarter reaching at Rs 3.9 billion from Rs 3.61 billion.

Based on our forecast earning for CY06 of Rs 26.57 per share, the NBP is trading at a CY06 PE multiple of 8.76x. Furthermore, the NBP is trading at a PBV of 2.11; we recommend a buy on NBP as it is trading at a discount of 25 percent with our fair value of Rs 292.64.

The NBP is continuously diversifying its product base by offering many consumer-based products to enhance its clientele. One of the biggest advantages of the bank is its position itself as the premier institution for the corporate sector and SMEs.

A large branch network of the bank, particularly in every agriculture dominant area of the country facilitates its aggressive strategy to focus on the rapidly growing agriculture sector of the country. Furthermore, Saudi Arabian Monetary Agency (Sama) has granted permission to open a branch in the Kingdom of Saudi Arabia during 2005.

However, to avail this opportunity the NBP may have to disinvest its holding of Saudi-based Bank Al-Jazira. Recently, the bank has communicated its intention to divest Bank Al-Jazira's holding within three months at a discounted price to designated institutional investors.

According to the recent financials, NBP holds 5.83 percent or 6,526,000 shares (bonus and split adjusted) of Bank Al-Jazira. The after-tax per share impact of the sale is expected at Rs 23.13, if the sale is at a 40 percent discount to August 15, 2006 closing prices with 20 percent tax rate.

The brokerage expects NBP's full year FY06 earnings to rocket on the back of sale of Bank Al-Jazira's shares coupled with the exceptional dividend received from National Investment Trust (NIT) for the year ended June 2006.


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## Owais

*Lacunae at foreign missions cost Rs 144.68 million* 


ISLAMABAD (August 21 2006): The Auditor General of Pakistan has unearthed irregularities of more than Rs 144.68 million in the accounts of the Foreign Affairs Ministry. In a sheer violation of rules and regulations, authorities constructed the chancery building in Washington without completing the requisite code work and legal formalities.

The national kitty suffered a loss of nearly Rs 52.747 million due to payment of additional fee to the architect and construction manager and purchase of furniture for the said building by the Pakistan embassy at Washington DC.

The audit report on the ministry's accounts 2003-04 available with _Business Recorder _reveals the construction of the chancery building in Washington was approved by the Prime Minister on a $15 million loan obtained from the National Bank of Pakistan in 1997.

The building was completed at a total cost of $17.613 million on a piece of land measuring 46,982 sq. ft., purchased for $728,212 in 1998.

It was observed by the audit authorities the requisite code and legal formalities were not completed contrary to the assurance contained in the summary for the chief executive wherein the foreign affairs ministry had stated that all legal, procedural and other formalities for the construction of the building have been completed by the embassy in Washington DC.

During the course of execution of project, the report says, the head of the mission in Washington incurred an expenditure of $17.613 million (Rs 1.026 billion) on the recommendation of a supervisory committee without seeking formal sanction of the ministry.

According to rules and regulations, the head of mission is not empowered to incur such expenditures as no such dispensation was specifically made for the project by the finance ministry. These powers were vested with the foreign affairs ministry.

It was decided during the departmental audit committee meeting that the ministry will establish a committee headed by special secretary and comprising of Pakistan PWD director-general and financial adviser to verify facts and submit its report to the audit authorities for further discussion.

Furthermore, the embassy while approving design of the chancery building did not consider some important features, which were included at a subsequent stage.

This act of management not only increased the project cost but also resulted in additional fee of $360,215 and $75,296 to the architect and construction manager, respectively.

Some of the features which were not included in the original design but were later on included were fencing, gate, surveillance camera, intercoms, sprinkler fire protection system, fire alarm system, telephone and data system.

Authorities even made an irregular payment of $9,234 to M/s Daniel Mann Johnson Mendenhall (DMJM) for developing computer model for the building although the same was part of the original contract.

It is heartening to learn the authorities have suffered a loss of Rs 13.920 million due to faulty design of canopy (dome) of the chancery building.

The Auditor-General of Pakistan has further observed the architectural contract for the building was awarded to M/s DMJM in violation of the law, as tenders were not called for while pre-qualification of architects was also not done by the embassy.

The embassy awarded contract to M/s Washington Group Sales Inc, for supply of furniture for $469,713 (Rs 27.26 million) and according to the audit authorities observation the payment was made out of the project money in a non-transparent manner.

In contravention of the laid down procedure, the embassy incurred an expenditure on replacement of furniture without inviting tenders and seeking approval of the foreign affairs ministry.

The audit report further reveals two missions at Muscat and Madrid retained vacant buildings hired for residences and paid an amount of Rs 1.921 million on account of rent without any justification.

The expenditure incurred on retention of vacant buildings was unauthorised and resulted in unjustified loss to the government. This is one of the 'chronic' issues pointed out to the foreign affairs ministry every year but the problem persists with the 'same intensity'.

It was noticed the foreign affairs ministry at headquarters and missions abroad purchased various durable items valuing at Rs 16.293 million but these purchases were not accounted for in relevant stock registers.

Moreover, the management of eight missions-Doha, C.G. Dubai, Madrid, Abu Dhabi, C.G. Los Angeles, Tokyo and New Delhi-irregularly incurred an expenditure of Rs 14.900 million out of Pakistan Community Welfare and Education Fund (PCW&EF).

Ironically, authorities paid an amount of Rs 26.913 million on account of TA/DA, purchase of gifts, transportation charges and purchase of air tickets for 66 officials but advances had neither been adjusted nor recovered from officials.


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## Owais

*Indian court allows export of pulses to Pakistan* 

NEW DELHI (August 21 2006): Refusing to consider news reports on ban of export of pulses as government notification, the Delhi High Court has allowed Mumbai-based Agri Trade India Services Pvt Ltd to export 30,000 metric tonnes of chick pea pulses to Pakistan.

A division bench of Justices Mukul Mudgal and S Muralidhar held that the news item on TV channels could not be taken for granted as the notification of the government rules and regulations, Indian media reported on Sunday.

While rejecting the Centre's plea that the ban would be effective from the date it was reported in the media on June 22, the Court held that such change would be given effect only when it was officially notified in accordance with the Foreign Trade (Development and Regulation) Act, 1992.

The TV channels reported the ban on export of pulses by the government on June 22 due to soaring price of pulses in India. The government notified the ban under the Act on June 27 in the official gazette.

"There is no manner of doubt that the only acceptable mode of bringing about the change in policy is by a notification in the Official Gazette," the judges stated in the 56-page order.

The court observed that an element of public interest was also involved in getting our citizens to honour commitments in the course of international trade. "What is at stake is not merely the money involved in the trans-border transactions but the reputation of our traders that they will be able to deliver as assured."

Even though the power to amend the policy existed with the Centre, it could not restrict or prohibit the export of goods retrospectively as it would adversely affect already accrued contractual and property rights and obligations, the court said.

Agri Trade India, a subsidiary of Singapore-based Agrocorp International Pvt Ltd, had entered into a contract with the Trading Corporation of Pakistan (TCP) for supply of two 30,000 MT of chick pea pulse at 650 dollars per MT.

The company had furnished performance guarantee equivalent to five percent of the value of the contracted quantity through a bank in Singapore and TCP had opened two irrevocable letters of credit (LCs) in favour of Agri Trade on June 24.


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## Owais

*Armitage urges long-term ties with Pakistan* 

WASHINGTON (August 21 2006): Acknowl-edging Pakistan's economic turnaround and its vital counter-terrorism efforts for the world peace under President General Pervez Musharraf, former deputy secretary of state Richard Armitage has emphasised that America must foster long-term and wide-ranging relationship with the South Asian country, whose "success is key to stability in the region".

Co-writing an article with Kara L. Bue, a former deputy assistant secretary of state, the former US officials underlined Pakistan's importance in the region and urged Washington to expand its contacts with Pakistan for its socio-economic development.

"We should increase our senior-level interaction with Pakistan across the board, involving cabinet secretaries beyond those representing the state and defence departments and placing a new emphasis on trade issues," Armitage stressed in the New York Times' Sunday edition'.

He called for a long-term US-Pakistan relationship in view of Pakistan's importance in the region.

Comparing US interest in India for its economic promise, the writers observed "the success of Pakistan holds the key to stability in the region and perhaps throughout the Muslim world".

The writers, who served at the state department between 2001 and 2005, also noted challenges facing the country but appreciated President Musharraf's efforts in Pakistan's economic development as well as the country's fight against extremism and terrorism.

"President General Musharraf has shown that he understands the seriousness of dealing with the root causes of extremism, making real efforts to improve economic and educational opportunities. He solved the country's crippling debt crisis and loosened regulations on businesses, paving the way for an economic growth rate rivalling India's.

Advocating the need for broad-based US-Pakistan ties, Armitage pointed out that Washington could take more immediate steps on the ground. In this respect, he said the US could focus on increasing assistance for development of roads infrastructure, hospitals and electricity plants in rural areas.

The writers cited America's help in the aftermath of last year's devastating earthquake and said the US military and humanitarian groups could begin programmes to help 'Pakistani officials respond to future natural disasters on their own'.

In the education sector, the writers added, the US encourages Pakistan to concentrate on providing basic and vocational education for the masses.

"We need to sponsor large-scale teacher training programmes and help build elementary schools in communities where none exist".

Regarding Pakistan's pivotal role in the fight against terrorism, Armitage noted Pakistan has worked closely with the United States, sharing intelligence and capturing and handing over many terrorists, including top al Qaeda leaders.

"It has sent more than 70,000 troops to the Afghan border and conducted successful operations to flush out foreign fighters. Hundreds of Pakistani troops have been killed in these efforts.

"Americans must applaud the counter-terrorism steps that have been made so far, which have been taken at great personal risk to General Musharraf, who has faced several assassination attempts."

They appreciated President Musharraf's resolve to fight extremism and efforts to move toward enlightened moderation.

Armitage and co-writer Kara Bue lauded Pakistan's co-operation in thwarting London terror plot last week.

"With Pakistan's help, Britain and the United States were able to prevent a tragedy last week."


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## Owais

*Rains in Thar Desert stir hopes of easing economic plight* 

THAR: Natural phenomena has its own bewildering mystery that seems to have surfaced now in the water-starved Thar Desert, when the widespread rainfall across the province of Sindh including Thar, has given rise to a new hope and opportunity to the people over here making best use of this nature&#8217;s bounty for easing out to some extent their perennial economic misery.

The barren land drinking deep the rainwater has suddenly got a new lease of life turning healthy soothing green all over, as the Thar specific vegetable &#8216;khambi&#8217; that grows naturally over here is expected to be harvested this season substantially besides giving out a scenic picturesque view of a beautiful green valley out of this vast desert in Sindh. 

The tourist getting the aroma of this sea change in the environment are being drawn here from widespread areas and the local people serving them as guides are making a little living for themselves.

Local people told that the prices of cattle have also stabilized in the wake of rainfall, which would positively affect the economic condition of the Thar residents. Bajra, Mooth, Gwar and Moong are the key-crops here for which the barren land has been ploughed after several years and the cultivators equally aided by their women folk are seen busy in making purchases of seeds for sowing the crops.

These cultivators complained of price hikes in seeds manifold, as there are very few traders of seeds, who in collusion have raised the prices deliberately to reap huge profits in the presence of increasing demand. The traders told that if the government could come to their rescue by providing seeds at subsidized rates, then they could harvest good crops of grains this year.


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## A.Rahman

After no to Tata, Bangladesh woos Pakistan's Dawood Group

Indo-Asian News Service

Dhaka, August 21, 2006


Bangladesh is now wooing Pakistan's Dawood Group after keeping in abeyance proposals worth $3 billion from India's industrial giant Tata saying the current political climate was "not conducive".

Dawood Group's proposal for investments in fertiliser, energy and infrastructure development sectors is worth a tenth of Tata's at $300 million, The Independent newspaper said.

Bangladesh's Board of Investment (BoI) Executive Chairman Mahmudur Rahman, who is also the government's energy advisor, has left for Pakistan to work out the details, hoping to double the investment volume.

Rahman said the investment environment in Bangladesh was "now excellent".

Originally mooted at $2 billion, the Tata proposal was discussed for two years before the group was told that this being "election year" the situation did not permit decision-making by the political leadership. It was best left to the new government that would take office after the parliamentary polls due later this year.

Alan Rosling, who headed the Tata team for investment in Bangladesh, has since returned to Mumbai and taken charge of a project to be executed in Britain.

The Pakistani company has already submitted an investment proposal to the BOI, Rahman said.

Meanwhile, the BDNews news agency said Bangladesh and Pakistan were to discuss a free trade agreement (FTA).

The first meeting of the Bangladesh-Pakistan Joint Business Council, expected to kick off in Dhaka next week, would give priority to issues relating to signing of an FTA between the two countries.

"Signing of a free trade deal would top the agenda of the meeting to be held on Aug 27. Both the governments concerned have agreed to ink the deal by September," Mir Nasir Hossain, president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), was quoted as saying by The Independent.

The two countries are keeping to the deadline of September 30 set during the visit of Prime Minister Khaleda Zia to Pakistan in February this year.

Hossain said the council would discuss about selection of commodities that would come under the trade pact. "We would also talk about elimination of existing non-tariff barriers (NTBs)," he said.

The plans to raise bilateral trade target to $1 billion were being hampered by the absence of a direct shipping line between Chittagong and Karachi, Hossain said.


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## Neo

KARACHI (August 21 2006): The futures contract after remaining depressed for more than two months would see activity following the Karachi Stock Exchange's decision to remove ban on short-selling. Last week, the KSE in a board meeting decided to remove ban on short-selling subject to the approval of the Securities and Exchange Commission of Pakistan (SECP).

The CFS value during the week stood at Rs 24.5 billion as compared to Rs 22.3 billion last week, showing a growth of 10 percent. The borrowing cost at the CFS counter remained at 13.9 percent on Friday down from 14.3 percent last weekend. On the other hand, the open interest declined to Rs 9.4 billion at the end of week versus Rs 10.8 billion on previous Friday. The next week is roll over week. The position of Rs 9.4 billion would be outstanding at the start of September contract. This is on the lower side as compared to historical average.

The open interest for futures remained low at Rs 9.4 billion, while spreads were at 5.6 percent. "We may see a surge in open interest of futures as short-selling is allowed in September futures", said Samiullah Tariq, research analyst, Investcapital Securities.

He said the result season is halfway through and the oil giants have already shown their performances. We expect the market to enter into a lull season after the announcement of results for lack of news.

Also there are concerns about the PIB auction coming in 1HFY07, which will come at a higher rate according to our expectations. That higher rate is likely to result in an increase in the cost of equity (rise in risk free rate) by 50-100 basis points (bps). This step can downgrade the fair values by 5-10 percent.

The domestic political situation as it is the last year before elections is also a concern for the investors. On the international front, investors are keeping a close watch at our relations with India.

Higher remittances and the FDI can push the market towards north, while the privatisation can also add fire to the ongoing bull-run.

We, therefore, advise a cautious selection of undervalued scrips for investment. Our top picks are NML, NCL, ICI, FFBL, and PKGS.


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## Neo

WASHINGTON, Aug 20: A 48-member delegation of US investors will visit Pakistan next month to look for investment opportunities in the energy sector.

This was conveyed by US officials to a Pakistani delegation that participated in an energy conference in Washington this week to explore various options for meeting the growing energy needs of South Asia.

India, Afghanistan, Bangladesh, Sri Lanka and Nepal also participated in this conference.

Organisers of the conference, US Energy Council and US Agency for International Aid, emphasised the need for interaction among South Asian nations to deal with the energy affairs.

During the conference, US officials also tried to dissuade Pakistan and India from involving in the $7 billion gas pipeline connecting them via Iran, and advocated the ADB-funded Turkmenistan-Afghanistan-Pakistan gas pipeline and its possible extension to India.

The US delegates suggested that making Afghanistan a transit would bring a positive change to the South and Central Asian regions, preventing the emergence of another Taleban-like force.

Ã¢â¬ÅBesides promoting the South and Central Asian energy corridor, the Americans also advised us to focus on developing alternative sources of energy,Ã¢â¬Â said Parliamentary Secretary for Cabinet Division Dr Firdous Ashiq Awan, who represented Pakistan at the conference along with Senator Abdul Malik Qadri, Chairman of the Senate Standing Committee on Petroleum and Natural Resources.

Dr Awan felt that the US focus had shifted away from Pakistan to Afghanistan and Central Asia. Ã¢â¬ÅEven the Afghans had a strange, dismissive attitude towards Pakistan,Ã¢â¬Â she complained.

The Pakistani delegation emphasised the need for shifting from thermal to hydel energy for power generation and said that Pakistan could not continue to depend on an expensive commodity like oil for producing electricity.

Ã¢â¬ÅFrom October 2005 to June 2006, Pakistan spent more than Rs68 billion on power subsidies, and we told the conference that we cannot afford to continue like this for long,Ã¢â¬Â Dr Awan said.

Another suggestion was to develop wind and solar energy.

India has built windmills in Rajasthan with the help of USAID, and Pakistan is also seeking similar assistance in Sindh.

One more project discussed at the conference was blending of ethanol with oil to producer a cheaper fuel for vehicles.


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## Neo

LAST year in October, the government announced that it had firmed up a plan to attract nearly $30 billion worth of foreign direct investment (FDI) in the next five years.

And true enough, by June 30 this year, the highest ever inflow of the foreign direct investment of over $2 billion was recorded excluding the privatisation proceeds officially categorised as FDI which adds up to a total of $3.5 billion. For the inaugural year, this should not be taken as low an amount compared to what is being targeted to come in the remaining four years.

But of course, the task would surely be an uphill one from all counts. An optimist would surely expect the remaining period to witness a much larger average inflow of FDI, but with the final year (2010) contributing the largest share.

As a first step towards achieving this FDI target, the government is said to have already identified about 300 well known international investors and set up an Ã¢â¬ÅInvestment DeskÃ¢â¬Â to keep regular liaison with these investors to keep them updated and informed on Pakistan and investment opportunities that exist here.

With PakistanÃ¢â¬â¢s savings rate still stagnating at around 17-18 per cent and the investment needs growing at the rate of 24-25 per cent to achieve an annual average growth rate of at least eight per cent over the next 10 years for the trickle down theory to take effect to a visible extent, the country does need significantly thick and fast inflows of FDI. Therefore, the government is more than justified in making ambitious plans and also taking perceived to be suitable steps to attract accelerated inflows of FDI in the coming years.

But then making plans are easier than implementing them. And keeping such plans on target and in the right direction is a job even more challenging than coming up with out-of Ã¢â¬âthe box schemes.

Take for instance, the governmentÃ¢â¬â¢s efforts now spread over almost three years, to clinch a bilateral investment treaty (BIT) with the US under which it expects the officials in Washington to encourage the American private investors to increase their investment in Pakistan.

However for various reasons, many obvious and many not-so-obvious, the US government has been dragging its feet on the matter and after every fresh meeting between the experts from the two countries on the subject, one gets the feeling that the conditions imposed by Washington for governing such investment from the US are becoming ever more unacceptable.

There are many countries in the world including our neighbours, India and China which have received billions of dollars in direct investment from America, with the latter getting the bulk of it but without having any formal bilateral investment treaties with the US.

China pursues a political philosophy directly opposed to the one being followed by the US. Its economy is still overwhelmingly state controlled. And the language barrier is almost impossible to cross. And India is still a mixed economy with the public sector still serving as one of the two engines of growth. And the law and order situation in that country is far from perfect. And both China and India are still lagging far behind Pakistan on the matter of structural reforms.

But still, the US investors appear more inclined to go to India and China rather than to Pakistan. Our planner would do well to study how these two countries have accomplished this. The reasons for this must be found out to make Pakistan as attractive an investment destination as the two countries have become instead of wasting time on entering into a bilateral investment treaty with the US while its investors themselves are not too keen on investing in Pakistan.

Even the proposal to set up reconstruction opportunity zones (ROZs) in the least developed districts including the earthquake-hit areas of NWFP and Azad Kashmir with the help of the USAID for the export of duty free products to the United States is taking its own time to materialize. The list of the districts for setting up the ROZs has been finalized and the details of rules of origin, customs clearance and other logistic needs required for the zones have also been framed.

But not only the green signal is still being awaited from the USAID for launching the scheme but the most important part of the deal that of identifying the products that would be made in these zones for export have yet to be identified and agreed upon.

Besides, we seem to have lost the direction soon after having announced the grandiose five year investment plan. Quite a sizeable part of the FDI resources which came in during 2005-06 went into purchase of public sector units having no export bias. This would mean in the longer term the country would end up remitting more foreign exchange in the shape of repatriation of profits and dividends than what it had earned through the sales of these units.

A report published in this newspaper recently estimates that the outflow in the form of dividends of four major deals done last year would be around $102 million in 2006 which would go up to $119 million by 2008.

These four deals include sale of 51 per cent shares each of HBL, UBL and the National Refinery and 26 per cent share of PTCL. In the coming months the majority shares in Pakistan Steel Mills, the Sui Northern and the Sui Southern and the PSO are also expected to be sold most probably to foreign buyers. This will also bring in a lot of foreign exchange. And when in due course of time, all these foreign investors purchase the rest of the shares in their respective companies, Pakistan would surely be able to rack in at least at least a quarter of what is being targeted to be mobilized through FDI by 2010.

But by then, a hefty outflow of foreign exchange would also have started adding a considerable burden on our foreign exchange budget which has already begun to show an escalating deficit due to fast rising imports that outpace exports by a wide margin.

Of course, with remittances coming in at an annual average rate of $4-5 billion, this burden would surely be reduced to some extent, but if the gap continues to increase to more than what the remittances and the export proceeds can cover and if by that time we had exhausted all the units which could be sold to the foreign sponsors, then perhaps we would be facing a highly untenable current account situation. Also, PakistanÃ¢â¬â¢s external debt is seemingly creeping up. If not arrested this would certainly increase our debt servicing burden in the coming years putting more pressure on our foreign exchange budget.

If this overall trend continues over the next five years, we would ultimately end up with most of our strategic assets going into the hands of foreigners. The risks of such an eventuality are too obvious to be detailed here. It is, therefore, imperative at this juncture that the official economic managers take a closer look at their policies and redesign them to avert the looming risks.

For the last many years the successive governments in Islamabad have been promoting Pakistan as a potential trading hub of the region. More recently, this government has also started expressing its desire to turn Pakistan into a regional trade corridor. But without the required physical infrastructure like roads, railroads and bridges, sans the needed utilities like power, water and gas and grossly lacking in social infrastructure like educated and skilled manpower and health facilities, the country could become neither a hub nor a corridor.

And in order to acquire an adequate provision of all this, a lot of investment, especially foreign investment, is required. Also, we need foreign investment in export industries to take full advantage when and if we actually become the trade corridor of the region. So, it is for these investment opportunities that we need to attract the FDI and not for trading the family silver.


----------



## Neo

MEGA projects are again making headlines. Not only Pakistan but other countries are also approving gigantic projects. Malaysia recently built a whole new city Ã¢â¬ËputrajayaÃ¢â¬â¢ to function as its new administrative capital.

Canada is planning to build a thousand kilometer pipeline in its western region to export its oil. The Three Gorges Dam in China, another mega project, is near completion after 16 years of work. South American countries are planning a mega-pipeline, which will run from Caribbean Sea in the north to Argentina in the south.

Despite their low success rate, mega projects have always been popular with decision makers because these projects appear to be solution of many diverse problems. President Musharraf, for example, wants to built big dams to make more water available to farmers, reduce the possibility of floods, reduce electricity rates for industrial consumers, to increase exports, decrease poverty in the region where dam will be built.

Now, a major hurdle __ non-availability of large financingÃ¢â¬âwhich previously hampered many mega projects, has been removed. Due to the merger mania that swept the globe during the 1990s, now banks have become bigger and have the capacity to successfully finance these projects. Finally, advance in computer technology has helped the cause of mega projects. It is now possible for a project manager to have real-time information about millions of small things which can possibly derail the project.

The basic characteristics, which distinguish mega projects from other projects, are singularity, complexity and massive scale/ scope. Singularity points toward the uniqueness of each mega project. While ordinary projects can be exact replica of other projects completed in the past, mega projects are distinct and project managers donÃ¢â¬â¢t have much to draw lessons from. Therefore, management for mega projects is done with an open mind and emphasis is on learning while doing.

The Chinese company, Sino Hydro, which was contracted to built Gomal Zam dam in Frontier province had experience in building dams so its management thought Gomal Zam dam will be similar and ignored the peculiar circumstances (political volatility in the area). This was their undoing. Ignoring the singularity of the project and not taking precautionary measures, led to canceling of the contract.

Mega projects are also complex as they require different types of experts, professionals and organisations to work together in harmony. Building Gwadar project, for example, involves not only building a port but also two oil terminals, a grain terminal and procurement of port handling equipment costing millions of dollars.

Moreover, construction of coastal highway from Karachi, a railway line from Dalbandin, a transmission line from Turbat, a five star hotel and other residential facilities, although not officially part of the project, are crucial for the success of the Gwadar port.

The third distinguishing characteristic of mega projects is their scope and scale. They are spread over a large area, effect millions of people and are completed in many years.

A pertinent example will be the Ã¢â¬ËThree GorgesÃ¢â¬â¢ dam project. During the 16 years of its completion, around $100 billion have been spent and millions of people have been displaced. Its 600 km long reservoir, with 18 million acre feet capacity, is the largest in the world and this dam will be producing 85 billion kwh of electricity per year. Compare it with PakistanÃ¢â¬â¢s proposed Kalabagh dam, which will generate only 11.4 billion kwh annually.

Mega projects are a challenge to the discipline of project management. Since huge amount of man-hours, capital and expertise is involved, it is important that these projects succeed but unfortunately lot of them fail. This leads us to the crucial question Ã¢â¬ËWhat are the success factors for mega projects?Ã¢â¬â¢

The most important success factor in mega projects is related to how the goals are formulated and how much they are changed during the course of the project. As mega projects are colossal affairs, having many goals, it is very important to prioritize them at the start of the project. Many times, after the start of project, decisions cannot be made, as project goals appear contradictory.

Prioritisation of goals will make sure that the whole project management team is striving toward one goal. Another reason for the failure of mega projects is change of goals during the course of the project.

Since mega projects completion is spread over a number of years, governments, socio-economic scenario, international affairs are different from what they were when the project was conceived. Therefore, planners sometimes change the goals of the project to align it with the changing scenario. This change might lead to total failure of the project as it will make project management to change its focus, contracts, time-line and finances, leading to all kinds of disarray.

Coordination is also crucial for mega projects. Project managers have to coordinate different activities, different work cultures, procurement from different sources and work at different locations sometimes hundreds of miles apart for a long time, if they want their mega project to succeed.

Another success factor is how project managers deal with risk and uncertainty. Mega projects come with mega risks. Careful planning at the start is essential to avoid risks. A risk management system that identifies risks and then builds contingencies in the project plan is essential. But even after careful planning, due to mega projectsÃ¢â¬â¢ complexity and scale, things donÃ¢â¬â¢t go as planned.

Therefore, project managers should be comfortable with uncertainty and willing to make difficult decisions with whatever data they have. Timidity or waiting for all the necessary information to arrive have led to delay, cost escalation and failure of many mega projects.

Finally, formation, capacity and structure of the projects management organization are also important for the success of mega projects. A separate project management organization should be established at an early stage of the project so that it is involved in the decision-making and has complete control on the project. This organisation should have representation from the major stakeholders in the project. Capacity of this organization should be enhanced by a transparent merit-based recruitment policy.

But it is also important to give preference to local people and recruit at least most of the blue-collar workers from the area where the project is based. This will enhance the ownership and acceptability of the project, another factor necessary for projectÃ¢â¬â¢s success. Gwadar port project made a major mistake in this regard as it failed to even shift its office to the site, leading to protests from local people and escalating the costs of the project.

Experience has showed that structure of the project management organisation should be a balance between being hierarchical and flat or Ã¢â¬ËdemocraticÃ¢â¬â¢. A hierarchical structure makes decision-making easy and avoids delays but democratic structures make sure that mistakes are identified early and are not swept under the carpet to threaten the whole project later on.

Mega projects success is important for the fast growth of an economy. As Pakistani government starts its mega projects, it is important that the success factors are carefully taken into consideration and nothing is left to chance.


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## Neo

TO overcome the deepening power crisis, the government is planning to increase stable electric supply to Karachi and the rest of the country. One wishes that these actions were taken a couple of years ago.

A short-term plan is to be implemented by June 2007, mid-term plan by 2008-09 and a long-term plan by 2011-15. Other immediate measures include such as allowing Wapda to set up fast-track thermal power plants, releasing huge funds for on-going power transmission and distribution projects, expediting completion of under-construction hydro power projects and extending financial support to the KESC.

But will these measures be adapted earnestly, effectively and timely to bring in significant improvement in the power system within foreseeable future? Only time will tell.

There is, undoubtedly, a dire need to focus on implementing the short-term plan with elections scheduled for 2007. By that time, there would be power shortage of 1,300 MW.

In a recent move, Wapda, which hitherto had capped its thermal power generation capacity, has been allowed to establish new thermal power plants. Thus, Northern Power Generation Co Ltd., a company of WAPDA, has embarked upon installing a 400-500 MW capacity plant at Chichoki Mallian, District Sheikhupura, for which international tender for design, supply and installation has been issued. In addition, three combined cycle power plants of cumulative capacity of around 600 MW, based on reciprocating (diesel) engine technology will be installed.

Using natural gas and residual fuel oil (RFO) as primary fuels, these power plants, each of 200 MW capacity, are being established at Chichoki Mallian (District Sheikhupura), Nandipur (District Gujranwala) and Faisalabad. Feasibility studies of these projects were conducted by Wapda, selecting the site locations near load centres aiming at minimising the current huge line losses.

These projects are scheduled to be operational by June 2007. Is the time-frame achievable? It becomes questionable if Wapda has to follow, and apparently it would, its routine procedure of issuing international tenders and stringent procurement rules, which makes decision-making a lengthy and time-consuming process. Then, the procurement of plant machinery is desired on the basis of suppliersÃ¢â¬â¢ credit that may not attract good response to tenders, as it is no more buyersÃ¢â¬â¢ market globally.

A look at the international market shows that the equipment manufacturers/suppliers have made a cartel dictating their own terms for payment, price and delivery. Lately, Wapda has experienced that the suppliersÃ¢â¬â¢ credit was not being offered by any source other than China, say, for its hydro power projects.

So far, all the IPP thermal power projects coming up under Power Policy 2002 have incorporated General Electric (GE) gas turbines or Wartsila diesel engines, depending on the technology selected.

Though there are other reputed manufacturers of gas turbines too, like Siemens, Alstom and Mitsubishi, and of diesel engines like Caterpillar and MAN, it seems they all have left Pakistan market open to their competitors, as they have never offered equipment to the new IPPs. Now, Siemens is reported to be active for the supplies to be made for the forthcoming projects of KESC to which it is already a technical partner.

One observes with dismay that the human resources of WAPDA and its capacity and capability have depleted as a result of its on-going corporatisation and privatisation process, its thermal division having suffered most. Its top technical personnel have retired, having provided any replacement. Senior engineers have left Wapda due to uncertain future and despondency, having joined the new IPPs on hefty salary packages. There has been no induction of engineers since long, and it is only recently that fresh engineers are being employed, but on contract basis that does not promise career to them.

Thus, there may be serious reservations about project management capability of Northern Power Generation Co to strictly meet the schedules. Here, one is reminded that used four gas turbines of total capacity of 320 MW, which were gifted by the UAE government sometime in August 2004, have not yet been dismantled and transported to Pakistan by Wapda. One turbine of 80 MW capacity is to be installed at Shahdara (Lahore), while the other three of cumulative capacity of 240 MW are destined for Korangi (Karachi).

Also, Wapda would soon award contract for a 150-MW rental power facility to be located at its Piranghaib (Multan) Power Plant. Tender for the same has recently been advertised. Simultaneously, Wapda is at present negotiating with GE, USA to provide another rental facility consisting of 6x25 MW gas turbines to be located near Lahore.

The rented gas-fuelled power plants, to operate on Ã¢â¬ËBase LoadÃ¢â¬â¢ conditions, will be available for an initial period of two years, with the option to extend further to another two or three years.

The plants may be operational within five to six months according to international practices, in case arrangements for gas supply and power dispersal could be done by Wapda, in parallel. But will the power purchased be affordable? It is learnt, GE will charge three million dollars per month as fixed charges for the facility.

On the transmission and distribution side, action has been initiated by Wapda to import power transformers, circuit breakers and other equipment for various switchyards and grid stations. Additional auto transformers for 500/220 kV and 220/132 kV transmission are being procured for Tarbela and Mangla power stations costing millions of dollars. New grid stations in various regions are to be constructed.

Up-gradation of National Power Control Centre (NPCC) is on cards, which is to be financed under ODA loan. The project will also include installation of state-of-the-art supervisor control and data acquisition (SCADA) and energy management system (EMS).

Likewise, KESC will develop additional power generation capacity to the level of 600 MW on fast-track basis. Potential projects include extension of Korangi Thermal Power Station by 480 MW capacity, to be implemented in phases. First phase of 120 MW capacity is expected to be operational by April 2007, whereas the whole project will be completed by July 2007. The time estimates are too ambitious, to say the least, and can only be achievable if second-hand equipment is installed.

Perhaps, a barge-mounted power project is more reliable a solution under the circumstances, which needs due consideration by KESC, to meet immediate power shortage in Karachi. Revamping, modernisation and expansion of its transmission and distribution system is being undertaken by KESC simultaneously.

The government will be well advised to focus on timely implementation of projects under the revised short-term plan, particularly the IPP projects, and not to disturb medium-term and long-term plans at this stage. It may be recalled that Power Policy 2002, with the scope covering both private and public sectors, had drawn generation expansion plan consisting of short, medium and long- term periods, with indicative commissioning date for each project.

The plans were further updated subsequently when Wapda launched Hydropower Development PlanÃ¢â¬âVision 2025. It was only recently that the government approved National Energy Security Plan that provides periodic break-up of additional power generation capacity to be created at national level until 2015. What is then the sanctity, or reliability, of such a plan if it needs to be revised within a year of its launching?

In fact, the short-term plan had priority on developing hydroelectric power projects. Wapda had envisaged installing three hydel power projects, at Allai Khwar, Khan Khwar and Duber Khwar in the NWFP, with a cumulative capacity of 323 MW, which were to be operational by June 2006. Likewise, Gomal project of 130 MW and Raised Mangla project of 180 MW capacity were scheduled to go on stream by December 2006. All these projects, currently under construction, have been delayed for completion by almost two years.

In private sector, power projects at Mangla (New Bong Escape, 79 MW), Rajdhani (132 MW) and Gulpur (60MW), all to be located in Azad Jammu and Kashmir, were scheduled to go into operation by the year 2007.

None of the projects however has achieved any physical progress so far, though the first two projects were sanctioned under 1995 Hydro Policy. The case of New Bong Escape project is cited here, for which the sponsors signed power purchase agreement with the government in April 2004, but the project could not attain financial close as yet. Shockingly, even the project consultants have not been appointed.


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## Neo

Interestingly, the framework of 2002 Power Policy has mandated the Private Power Infrastructure Board (PPIB) Ã¢â¬Åto oversee implementation of the PolicyÃ¢â¬Â covering both private and public sector projects, through a committee headed by federal secretary, water and power. The board of directors chaired by the federal minister now assumes this role, though Wapda on-going projects have never been discussed at this forum.

Progress for development of all the private sector projects is regularly monitored at the PPIB and corrective measures adopted by the board. In case, there are long delays in project implementation, the investors somehow manage to avoid any punitive action against them, otherwise liable in accordance with the provisions of the policy, using their political connections.

Power Policy 2002, with recent amendments, is in place and provides for an effective mechanism for monitoring the progress of power sector projects. The problem lies with the attitude of the investors who have been exploiting the situation and are responsible, some directly and others indirectly, for creating prevailing power crisis.

BothÃ¢â¬â domestic as well as international investorsÃ¢â¬â are resourceful and have access to the Presidency and PM Secretariat to influence government decisions on tariffs and incentives.

Still, many of them have not started physical work on the respective projects that otherwise have achieved advanced processing status. Their demands are never-ending it seems. There are many examples to quote, if at all there is such a need.

On the demand of investors to save time, Nepra had to prescribe an up-front tariff for thermal power plants based on primary energy sources of gas and oil, besides carrying out negotiations for tariff in other cases. A number of amendments were made by the ECC of the Cabinet, September 2005 onward, extending additional fiscal and financial benefits to the prospective investors. This too did not yield positive results.

In a desperate move therefore, Prime Minister Shaukat Aziz approved on December 2, 2005 processing of fast-track projects of 540 MW cumulative capacity by leading Pakistani business-houses, such as Shirazi Group, Mansha Group, which were to be commissioned by June 2008. The government allowed curtailing project processing procedures and a tariff with built-in incentives in capacity purchase price for the proposed projects.

Likewise, the government had asked in January this year all the existing Independent Power Producers (IPPs) to bid for creating by June 30, 2008 an aggregate capacity expansion of up to 775 MW. Though seven IPPs, including KAPCO, AES, HUBCO, Japan Power and Kohinoor Energy, indicated their interest in the proposal, only one of them has taken concrete steps. KAPCO plan to set up a new plant of 400 MW but that too not before the year 2009.

To complicate the matters, a number of these IPPs, at present operating their installed power plants on RFO, insisted on obtaining long-term supply of natural gas instead, knowing well that it was not currently available.

None of the fast-track power projects is therefore in the processing pipeline. The demand is for an average levelised tariff in the range of, say, for oil-fuel based plant, cents 12.85 per kWh (on gas turbine technology) to cents 12.45 per kWh (on diesel engine technology), compared to available up-front tariff of cents 10.35 and cents 7.23 per kWh, respectively, which is considered already on higher side as fuel cost remains a pass-through item.

Nonetheless, the plan to augment power generation capacity through the private sector is being pursued vigorously by the PPIB. Additional 5,000 MW electricity is to be generated in the private sector within a period of four to five years. Five thermal power plants namely Orient Power of 225 MW capacity at Balloki, Sapphire Power of 200 MW capacity at Muridke, Star Thermal of 123 MW at Jarwar Sindh, Saif Power of 200 MW at Sahiwal and Attock Gen of 150 MW at Morgah would commence operations by end June 2008.

In addition, a number of hydroelectric power plants of cumulative capacity of 5,724 MW are scheduled for operations by 2010-2015 and a series of coal-based projects of 1,550 MW capacity are scheduled to come on stream in 2012.

Timely completion of these projects is of prime importance.


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## Neo

THE paperwork has been completed, the systems are in place, the staff has been trained, helpline desks created, bank branches selected and application forms printed and distributed in the designated branches for the aspirants who qualify to avail this facility. Yet, the Ã¢â¬ËRozgar (employment) SchemeÃ¢â¬â¢ has not been launched. Why? No one in Islamabad seems to have a clue or so they pose.

The minister of state for finance Omar Ayub Khan in his June budget speech before the parliament announced this new initiative and promised before the nation to launch the Rozgar Scheme from July 1, 2006.

After a lapse of nearly two months when contacted over telephone Omar Ayub declined to give even a probable date of the launch. Ã¢â¬ÅI am in my constituency at the moment and am not aware of the date of the launch of the schemeÃ¢â¬Â.

He mentioned the name of Sumera Malik, the federal minister for women development who he said was made responsible for the scheme and therefore would be in a better position to inform the press on the specific date of the launch. Several attempts to seek her comments on the issue from Islamabad proved futile.

It is not only the lady luck that seems to be dodging our underprivileged youth but the lady in-charge of the scheme is also too preoccupied to give attention to the plight of the unemployed young people of the country, at least so it seems.

Ashfaque Hasan Khan, advisor to the prime minister on economic affairs and official spokesperson of the government, who was referred to by the officials in the finance ministry, when contacted in Islamabad expressed his ignorance about the status of the scheme.

Ã¢â¬ÅOmar Ayub should be able to tell as he is the one who made this announcementÃ¢â¬Â, he said. However, he said, he would try to contact the people concerned and share the probable date of the launch of the scheme with the newspaper. He was probably not able to get the expected launching date for he did not inform the Dawn as agreed.

Some seniors in the finance ministry associated with the banking sector when approached tried to give the impression that it was the bank and not the government that was responsible for the delay in the launch.

Ã¢â¬ÅIt is a national scheme involving a lot of preparation on the part of the bank responsible. It would only be fair to allow the designated bank ample time to prepare for the challenge of successful launch of the President Rozgar SchemeÃ¢â¬Â, an additional secretary who declined to own his comments said. Ã¢â¬ÅWe will announce it in a due course of timeÃ¢â¬Â, he ended the conversation.

The Rozgar scheme envisages to create 400,000 jobs for people in the age bracket of 18-40 at the cost of Rs12 billions to the exchequer. Under the scheme small loans of Rs5,000-100,000 will be extended to qualifying candidates for: (a) community utility stores, (b) community transport scheme, and (c) community communication centers.

The National Bank of Pakistan has been asked to handle the scheme. The government pledged to provide the requisite support to the bank to manage the scheme professionally without compromising the commercial viability aspect.

The loan tenure of utility stores and transport scheme will be five years with three months grace period and that of communication centre will be two years with three months grace period. The mark-up, according to a source in the NBP will be at the rate of one year KIBOR+2 per cent that at the current rate comes to around 12 per cent.

The NBP President Ali Reza was not available for comments. Amir Siddiqui, the head of retail banking at NBP, who is responsible for the scheme within NBP, agreed to share some details of the scheme but was not able to reply to the pointed queries by Dawn before the deadline. The questions that were wire mailed included details of terms and conditions agreed between the bank and the government, the logic to select NBP for the management of the scheme, besides salient features of the scheme.

He, however, did confirm that the NBP was ready since last one month and was waiting for the government to fix the date for the launch. Another officer at the bank closely associated with this new tool appreciated the governmentÃ¢â¬â¢s swift response and cooperation of relevant departments in designing of the scheme. Ã¢â¬ÅI was pleasantly surprised at the pace and quality of the support that was extended to the bank. Normally files take much longer to move in IslamabadÃ¢â¬Â, he said.

Some branches of NBP visited confirmed that they have received application forms and have made internal arrangements to handle the Rozgar scheme at their level. Ã¢â¬ÅWe have the paraphernalia ready. The staff has also been briefed. Some officers are specially trained to assist the loan seekers and to carry out the initial scrutinyÃ¢â¬Â, a manger of a local branch told Dawn on the condition of anonymity.

However, a credible source in the banking sector said that the scheme will be launched shortly with fanfare by the President of Pakistan. Independent commentator and an expert on political economy of Pakistan felt that the geo- political situation was primarily responsible for the delay in the launch of the scheme.

Ã¢â¬ÅThe government needs all the public goodwill it could muster especially in wake of its declining graph of popularity. The Supreme Court decision in the Pakistan Steel case, commodity market scams one after the other, rising current account deficit, adverse balance of trade, souring of relations with India, strong anti- US sentiments for its support to Israel against Lebanon and partnership of Pakistan with US in so-called war against terror, continuing problems in Balochistan, internal strife in PML(Q), troubles in WANA, sweet/sour relationship with MQM. And list can go on and on. It would, therefore, be logical on the part of the government to time the launch of scheme in a way that it gets the maximum media coverageÃ¢â¬Â, she said.

For the government, the Rozgar Scheme may be a political whip to beat the opposition or a ploy to earn political support of masses. For unfortunate, frustrated unemployed youth it could mean hope and a future.

The prospective beneficiaries are waiting for the launch of the micro credit scheme for self employment. For them, it means more than politics. For some it could be an issue of life and death. At such a high rate of unemployment when according to an estimate every eighth person in the 18-40 age bracket is unemployed and the NBP is ready, it would be unadviseable to delay the launch of Rozgar scheme any longer.


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## Neo

WHILE the State Bank of Pakistan has been tightening its monetary instance, inflation continues to remain a threat. Despite a decline in the consumer price index (CPI) from 9.3 in 2004-05 to eight per cent in 2005-06, the GDP deflator Ã¢â¬â the broadest inflation measure Ã¢â¬â witnessed an increase of 10.3 per cent in 2005-06.

The wholesale price index (WPI) had, also, jumped to 9.1 on year on year (YOY) basis in May 2006 from 8.1 per cent in April 2006.

Weekly wholesale prices of selected items, reported in the press showed that prices of wheat, pulses and rice had continued to show an upward trend in July and August, while media reports had revealed that prices of a number of other items such as vegetable ghee, edible oils, meat, fruits and vegetables etc. had also gone up during the last few weeks.

The price increases are being attributed to the advent of the holy month of Ramadan, which is only a few weeks away. Besides, the monsoon rains and floods had also contributed to the upward trend in prices by causing interruption in supplies of items of daily use and pushing up the transportation cost in certain cases.

In addition, this is off season for sugar, since the new crushing season normally starts in October. This may be the reason for the higher prices of the item in the open market, despite liberal imports and sales at subsidised prices through the utility stores. This is the off season for rice also, which is harvested in December. As a result, prices of certain varieties of rice have registered an increase in the wholesale market. Another reason for the increase in the prices of rice is that the export of rice is expected to go up to a record $1.5 billion during the current year.

The situation can, no doubt, be remedied by boosting the production of wheat, rice, pulses, potatoes, onion and all other agricultural products and streamlining the distribution of items of daily use.

The distribution system can be improved by substantially increasing the number of utility stores. Under the Rozgar scheme, reportedly being launched from the next month, more utility stores can be opened by those granted loans loan for the purpose.

Although a multi-pronged strategy may be required to bring the inflationary pressure fully under control, the tightening of the monetary policy by the SBP is necessary to deal with the demand-pull inflation due rise in family incomes from home remittances and liberal credit policy of previous years.

After the announcement of its monetary policy for July-December, 2006, the Pakistani rupee has remained stable vis-ÃÂ -vis the dollar, both in the inter-bank and open market. A press report on August 16 said the food inflation had shown a decline of 0.34 percent in July 2006 as compared to June 2006. However, it is feared that prices may generally remain under pressure until the end of the current monsoon season and the holy month of Ramadan.

The trade deficit of $1.23 billion in July 2006 shows that the demand for imported goods continued to remain at a high level. It appears that the latest SBP measures would take some time Ã¢â¬â three to six months Ã¢â¬â to make their impact felt on the economy.

Tightening of the monetary policy Ã¢â¬â also called inflation targeting Ã¢â¬â has been followed around the world since long. To quote an instance, the US broad inflation rate exceeded 10 per cent in 1980-81. Paul A Volker, who was the Chairman of the US Federal Reserve at that time, raised the federal rate to as much as 19 per cent with the full backing of the then President Reagan. The policy worked and the inflation rate came down to three per cent by 1983.

Later, in the same way, Alan Greenspan Ã¢â¬â former Chairman of the US Federal Reserve Ã¢â¬â raised the federal rate to 9.75 per cent in February 1989 to bring down inflation from its higher level. The initiative worked, but the US economy slipped into a mild recession in July 1990, that lasted until March 1991. The action was taken by the US Federal Reserve, although the country dos not target formal inflation rates.

The reduction in the rate of inflation is necessary not only to protect the macro-economic stability but also to safeguard the long-term growth prospects of the economy.

To make the monetary policy work, the government should take necessary steps ensuring the success of the counter-inflationary measures introduced in the federal budget, 2006-07 (sale of items of daily use through the utility stores and appointment of price magistrates).

At the same time, the government should make all possible efforts to bring down the trade deficit from last yearÃ¢â¬â¢s over $12 billion to $9.4 billion as envisaged in the current yearÃ¢â¬â¢s trade policy, announced in July.

It would be desirable to be content with modest growth, while protecting the macro-economic stability and safeguarding the long-term growth prospects of the economy than to boost the short-term GDP growth through higher public and private spending, allowing inflation and fiscal and current account deficits to go up to a point, from where they could cause irreparable damage to the economy.


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## Neo

*How close are the millennium development goals?*




AS on other fronts, Pakistan is sanguine about its progress towards the millennium development goals (MDGs). The UN member countries had adopted eight MDGs in September 2000.

These include, a) halving the proportion of people living on less than $1 a day and those who suffer from hunger by 2015,b) ensure that all boys and girls complete primary school by 2015, c) eliminate gender disparities in primary and secondary education by 2005 and eliminate all gender disparities by 2015,d) reduce by two-thirds the mortality rate among children under five by 2015,e) cut by three-quarters the ratio of women dying in childbirth by 2015, f) reduce by half the proportion of people without access to safe drinking water by 2015.

The other MDGs seek significant reduction in HIV/AIDS and other diseases, improvement in the lives of slum dwellers, sustainable development, and a global partnership for development.

This article explores whether or not Pakistan is approaching the MDGs. It also explores whether MDGs can possibly be attained through the prescription of global partnership for development.

As for poverty, population below $1 a day in Pakistan was 17 per cent in 2001 as well as in 2002 according to the latest Word Development Report and World Development Indicators of 2006. Pakistan shows per force reduction in poverty on the basis of calorie intake which gauge too is disputed. How poverty on the basis of population below $1 a day will be halved actually and not statistically by 2015 is unclear.

One can only hope that this figure is not massaged in calculations to show the results on paper and then breath, ink, and time are wasted on contending, proving, and disproving it.

The target of all boys and girls completing school by 2015 cannot be gauged as data on enrollments is available but not on graduation. The drop out rate is high which is not captured in the indicator used to measure progress in education. Stock is taken of enrollments and performance on education is assessed thus. Although primary completion rate is available for most countries, it is not available for Pakistan. Even if we assume that this rate will be available by 2015, will all boys and girls be completing school by 2015?

Net enrollment ratio of children of official school age was 66 per cent in 2004 up from 33 per cent in 1991. In 13 years, it increased by 33 percentage points. In the next 11 years, it might increase by another 33 percentage points on an optimistic note. Even if primary school enrollment reaches 99 or even 100 per cent, the target of 100 per cent primary completion rate for boys and girls will still not have been achieved if the dropout rate continues to remain high and gender disparities persist. The dropout rate is intricately linked to the score on poverty, amongst other factors.

Poor parents are not inclined to send their children to school due to high opportunity cost. Poor children are less likely to perform in school due to a lack of enabling home environment. So, if primary school enrollment and completion rates do not converge but poverty is made to take a nosedive, officially stated poverty reduction will lack credibility.

Further gender parity ratio was 71 per cent in 2002/03 in primary and secondary schools. That is female gross enrollment rate to male gross enrollment rate ratio was 0.71. This shows girls trailing behind boys in terms of enrollment not disaggregated for the primary school level and not available for the official school age girls and boys. Non-availability of data will inhibit measurement on this score. GirlsÃ¢â¬â¢ secondary status on this count is well-known. Boys are given preferential treatment in both the areas of education and health.

However, the MDG to eliminate gender disparities in primary and secondary education by 2005 is missed as the ratio of 0.71 in 2002/03 could not have been increased to 1.0 in two yearsÃ¢â¬â¢ time only.

Secondary status of women is further evident from the adult literacy rate with womenÃ¢â¬â¢s significantly behind menÃ¢â¬â¢s. In 2002, male adult literacy rate was 62 per cent whereas that for women was only 35 per centÃ¢â¬âÃ¢â¬âslightly better than half of what it was for the male population.

Against this backdrop, elimination of all gender disparities by 2015, as required under the MDGs, is a dream not likely to be realised by 2015 in our male-dominated society where women too lack awareness about their own status and cannot stand up for their rights in individual capacity also leave alone organizing for the purpose.

The under-five mortality rate was brought down in Pakistan from 130 per 1000 in 1990 to 101 per 1000 in 2004 (World Development Indicators, 2006). That is, in 14 years, it did not even reduce by one-third. Can it go down by two-thirds in ensuing 11 years when health expenditure was as low as 2.4 per cent of GDP in 2003 and there were 0.7 physicians per 1000 people, 0.7 hospital beds per 1000 people, and 1.1 health worker density index, that is, medics and paramedics per 1000 people which figures are not likely to take a quantum jump any time soon?

Can maternal mortality reduce by three-quarters by 2015 when births attended by skilled health staff increased by a mere one-fifth in 13 years until 2003? As for access to drinking water, a proxy is used to measure performance by gauging access to an improved water source. Progress on this indicator is impressive as access to a better water source improved from 83 in 1990 to 90 per cent population by 2002.

But improved water source is not the same as safe drinking water and the definition of Ã¢â¬ÅaccessÃ¢â¬Â too is not clear. For, people should receive clean running water in their homes 24 hours a day which is a major problem even in the best of urban areas in Pakistan.

The MDGs are ambitious. They are difficult targets primarily because national governments are driven towards conventional economic indicators such as the GDP growth rate and per capita income. If these traditional economic indicators improve, governments have a reason to pat themselves on the back. However, they acknowledge the importance of MDGs. But, these are not integrated in national development goals and strategies which is why emphasis is on growth and per capita income but not on distribution.

Until such time that distributive aspects are woven into national economic strategies, MDGs will be viewed as add-ons rather than a logical outcome of the process of development. The approach will then be activity-centred seeking local-maximum rather than global-optimum. In the case of Pakistan, even the attainment of a local maximum appears like a distant possibility.

The UN attempts to help by advising governments to cooperate in the effort towards the attainment of MDGs. However, the advice is based on an Ã¢â¬Åopen trading and financial systemÃ¢â¬Â that the UN thinks will facilitate progress and commitment to the MDGs through good governance, development, and poverty reduction. The underlying premise is an opening up of the economies that will enable the attainment of the above goals. This may not necessarily be true if the international trading system already benefits the more developed more than the underdeveloped.

Further opening of trade has been working more in the interest of those who already are ahead in trade. Examples of East Asian countries are cited on the basis of their recent history alone and not fuller history which must be studied to know how these countries first achieved intra-country integration before aiming at integration with the global economy.

The MDG framework lays down the above paradigm that must be followed to achieve the MDGs. This paradigm is neo-liberal that focuses on growth and not on inclusive development. Other goals then fall on the wayside whose importance the MDG framework tries to restore but primarily through the same neo-liberal paradigm that does not place poverty, education, and health at the centre stage.

With national governments believing in the defunct Ã¢â¬Åtrickle-downÃ¢â¬Â and the global partnership aiming towards the MDGs through the neo-liberal outlook, these goals appear elusive at this stage.


----------



## Owais

*Auto industry offered tariff incentives* 

ISLAMABAD (August 22 2006): The government has offered the automobile industry an eight-year pre-announced tariff policy, including establishment of a fund worth Rs 6 billion for competitiveness, technology acquisition, research and development and two auto clusters in its plan to develop the sector on sustainable footings, sources told _Business Recorder _on Monday.

Informed sources said the non-tariff policy incentives included productive investment incentives, an auto industry development committee, establishment of funds for the auto industry competitiveness, research and development, technology acquisition and a policy that has incentives for export.

The pre-announced eight-year tariff policy for the CKD and CBU proposes constant duty structure for the first three years followed by a variable duty structure for the next five years depending on the engine power of cars to enable OEMs and vendors to make long-term investment.

It is also proposed the two auto industry clusters-one in Karachi and other in Lahore-would be established to enhance inter-firm co-operation and encourage innovation and specialisation in the production and supply chain.

Moreover, the proposed plan also offers Rs 6 billion fund on matching grants for the industry's competitiveness, research and development, and technology acquisition (TAF).

It is also proposed that government technical institutes should be attached with the automobile companies for practical training, similar to "house job concept" in medical profession.

It is also proposed the government may waive the tax liability on the cost of training, which will be based on quality and the number of persons trained by these institutes.

To take care of the road quality and safety standards, a Motor Vehicle Act, jointly managed by the private or private-public management, is also proposed. Similarly, the government will announce Emission Control Regulation that offers tax incentives for car manufacturers for producing hybrid vehicles or those operating with non-hydrocarbon fuels.

It includes a matching fuel policy (sulphur, benzene and lead-free fuel) along-with physical infrastructure and to encourage the use of catalytic converters.

The programme has been prepared keeping in view shortage of vehicles and also setting a year-wise target in 2006-07 for the production of 248,000 cars/light commercial vehicles (LCVs) and raise it to 276,000 units in 2007-08.

The target for 2008-09 is 348,000 units and for 2009-10, it is envisaged that the industry needs to enhance it production capacity to 413,000 cars. Similarly, the production target for 2010-11 and 2011-12 is set at 503,000 and 516,000 cars, respectively.


----------



## Owais

*SECP rescinds KSE decision* 

KARACHI (August 22 2006): The Securities Exchange Commission of Pakistan (SECP) has overturned the decision of Karachi Stock Exchange (KSE) removing ban on short selling in futures contract. According to a letter issued by the regulator to KSE.

It has been asked to furnish comprehensive rationale for each of the decision taken by the KSE board of directors in the subject meeting in relation to the temporary measures implemented earlier, through notice issued on August 14, 2006.

Detailed justification supported by necessary statistics for the measures recommended to be reversed and/or to be continued may be provided at the earliest to enable the commission to convey its decision on the said measures.

It is reiterated that the above decisions of the board shall not be implemented prior to the approval of the commission as the same inter alia amendments in the regulations of the exchange which necessitate the approval of the commission under the Securities and Exchange Ordinance 1969.


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## Owais

*CBR move to unearth tax evaders* 


ISLAMABAD (August 22 2006): A large-scale exercise has been started to identify tax evaders through cross-matching the capital value tax (CVT) data on income tax statements, which contains information about purchase of vehicles and transfer of property with the income tax returns.

Tax authorities have also chalked out new guidelines for provincial governments to standardise the procedure for collection and payment of the CVT on property transactions in districts across the country.

Sources told _Business Recorder _on Monday regional commissioners of income tax (RCITs) have launched the exercise on the directives of the Central Board of Revenue (CBR).

According to the decision, the RCITs are vigorously monitoring the implementation of filing of income tax statement on the transfer of immovable property in urban areas and collection of the CVT on such transactions.

In this connection, it has been decided the data pertaining to properties and vehicles would be cross-matched with the information available on the income tax returns to unearth cases of tax evasion.

It has also been decided to strictly deal with delinquent taxpayers, who were deliberately concealing vital information by not mentioning the same in their tax returns. On the other hand, statements have disclosed the same information, which was also required to be specified on the returns.

Tax authorities have also formulated new guidelines for provincial governments to standardise payment/collection of the CVT at the district level. For this purpose, income tax statement of the CVT would be amended keeping in view provincial governments recommendations.

The Faisalabad zone has been declared a pilot project area, which will keep a close liaison with registration authorities responsible for the collection of the CVT, sources added.


----------



## Owais

*Tenders for gas fields in Sindh cancelled* 


ISLAMABAD (August 22 2006): After formal approval by the board, the Oil and Gas Development Company (OGDC) has withdrawn its controversial tenders floated for Tando Allah Yar and Singoro gas fields and conveyed the decision to M/s Petrosin.

Sources said the OGDC informed M/s Petrosin in writing last week that it withdrew the tenders issued for Tando Allah Yar and Singoro gas fields due to some inevitable reasons and the Letter of Intent (LoI) issued to it sometimes back now stands null and void.

The OGDC board had taken up both the tenders in its meeting held on August 16, here and after in-depth discussion it directed the management to cancel the entire process of tenders, including the LoI issued to M/s Petrosin and float new tenders at an appropriate time through the press.

Sources said negotiations between M/s Petrosin CEO Saeed Wahla and ADOS International chief Jamal Ansari was the basic reason for the cancellation of tenders.

Saeed Wahla had prepared video and audio taps of his series of meetings with Jamal Ansari and presented its copy to President General Pervez Musharraf for investigation.

The matter, as was evident, could not go unnoticed. The President referred the matter to Prime Minister Shaukat Aziz for action. His directions were followed in letter and spirit and the matter was investigated at the appropriate level that proved the allegations.

The other side of the story is that former OGDC managing-director Raziuddin had overruled departmental procedures and issued LoI in favour of M/s Petrosin without taking the case to the board for approval on April 18, the last day in his office as managing-director.

The timing was critical and it linked other events to take them to the conclusion. He also did not take other joint venture partners-government holdings and OPI-into confidence. His solo flight made the entire process dubious.

The National Accountability Bureau (NAB) is already investigating various cases approved by Raziuddin, including Tando Allah Yar and Singoro fields. NAB authorities are also investigating the role of OGDC officials, who were directly or indirectly linked to the matter.

Since the rules were not followed in this case, his successor, Arshad Nasir, took the matter to Prime Minister Shaukat Aziz for guidance. He informed the Prime Minister in a presentation about the wrongs done in the process of Tando Allah Yar and Singoro tenders. The managing director told the Prime Minister that his predecessor did not follow rules and procedure in the issuance of LoI to M/s Petrosin.

The Prime Minister expressed his serious concern over the development and directed him to review the case and take all possible steps to ensure transparency in the OGDC working, in particular, awarding of tenders for development work to ensure competition.

The Prime Minister emphasised protecting the national interest in award of contracts for OGDC works at all costs.

The OGDC has gone through a tedious job before withdrawal of the tenders. It constituted a three-member committee to review all cases of development works, including Tando Allah Yar and Singoro projects to identify those wherein rules and procedures were not followed.

The committee took almost three months to complete the job. It submitted the report to higher authorities, which mentioned a number of wrongdoings in the projects' process.

The committee was of the view the OGDC has the right to stop the process for its any tender when and where required if necessary to protect its interests.

Then OGDC hired Khaleeq-uz-Zaman as legal consultant to seek his opinion before placing the tenders before the board for cancellation.

In a 50-page report, the legal consultant said the OGDC can withdraw its tenders floated for Tando Allah Yar and Singoro gas fields and re-tender them through the press with new terms and conditions.

The report said the OGDC has the right to cancel the process at any stage before signing the agreement for award of contracts. It added the Letter of Intent (LoI) issued to M/s Petrosin consortium was not mandatory for the OGDC to sign a final agreement. It added Petrosin can not make LoI a base for litigation with the OGDC.

The legal flaws pointed out by the consultants in Petrosin consortium's bid make a strong case for the OGDC to withdraw the controversial tenders.

The legal consultant opined that Petrosin consortium could not comply with section 4.5(b) of the instructions to bidders, which required one of the partners was to be nominated as being in-charge and his authorisation was to be evidenced by a power of attorney of legally authorised signatories of all partners and certified by a notary public.

According to the consultant, the OGDC can reduce or eliminate the likelihood and the extent of possible adverse consequences and challenges by withdrawing the invitations to tender, annulling the bidding process and rejecting all bids prior to award of contracts.

The consultant quoted section 9.1 of the tenders, which states that the OGDC reserves the right to cancel or withdraw tenders at any stage or at any time prior to award of the contracts/agreements.

Sources said the withdrawal of Tando Allah Yar and Singoro fields tenders will help the OGDC discourage underhand practices to give favour to any party in future.

They said the OGDC took the President and Prime Minister's orders to ensure transparency in its working to protect the national interest through openness and transparency.

The President and Prime Minister have been stressing the need of complete transparency to establish good governance in the working of all government departments.

The OGDC and its board's decision to withdraw tenders for Tando Allah Yar and Singoro will prove the organisation was taking the direction of the top brass in letter and spirit to save public money.

Sources said the OGDC plans to issue international tenders for these projects and it will invite many multinational companies to compete for the job through a transparent process.


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## Owais

*NBP profit swells by 83 percent* 


KARACHI (August 22 2006): The profit of the National Bank of Pakistan (NBP) recorded a tremendous growth of 83 percent in the six months ended June 30, 2006. The National Bank announced financial results for the first half of 2006.

It posted an EPS of Rs 11.31. In the first-half 2006, the PAT of the bank surged to Rs 8,016 million against Rs 4,394 million posted in the corresponding period last year, depicting an increase of 82.4 percent YoY.

In the 2Q'06 alone, the bank posted a PAT of Rs 4,404 million (EPS: Rs 6.21) as against Rs 2,509 million (EPS: Rs 3.54) reported in the same period last year, showing an increase of 75.5percent YoY.

The National Bank did not announce any cash dividend or bonus issue for shareholders. The growth in profitability is on the base of strong growth in the core mark-up/interest income. The net mark-up/interest income of the bank surged to Rs 14,373 million from Rs 9,873 million reported in the corresponding period last year, showing an increase of 45.6 percent.

Non mark-up income of the bank for the period under review was Rs 4,890 million as against Rs 3,708 million reported in the comparable period last year, depicting an increase of almost 32 percent.

Net mark-up income as percentage of total revenue surged by 190 bps from 72.7 percent in 1st HY05 to 74.6 percent in 1st HY06, indicating the healthy mark-up spread which as per our estimates rose to 725 bps-750 bps during the half year from 650 bps recorded in the entire FY05.

Non mark-up expenses, which comprise mainly administrative expense, recorded only a marginal increase of 9.5 percent. Provisioning against advances and investments recorded a minimal decline of 0.2 percent. Thus the controls on the 'expense side' also continued towards the healthy growth in profitability.

An analyst from Noman Abid & Co, said overall the bottom line of the NBP recorded an increase of 82.4 percent, surging to Rs 8,016 million (ESP: Rs 11.31) from Rs 4,394 million (EPS: Rs 6.20), reported in the same period last year. The reported PAT was only 0.79 percent lower than our estimated PAT of Rs 8,081 million (EPS: Rs 11.40).

Besides the rise in mark-up spreads, the other reasons behind the very significant jump in the bottom line include the following: decline of 0.2 percent in provisioning (for doubtful debts), disproportionately lower increase in administrative expenses, 338 basis points decline in effective tax rate. The effective tax rate declined to 34.7 percent from 37.7 percent in first half 2005.


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## Owais

*Pakistan requires world-class infrastructure: Prime Minister* 

ISLAMABAD (August 22 2006): Prime Minister Shaukat Aziz on Monday said with the growing economy and increased trade and investment activities, Pakistan requires a strong and world-class infrastructure in services sector including the hotels.

He was speaking at the groundbreaking ceremony of a 45-storey `Grand Hayatt' five-star hotel being constructed near the Convention Centre in federal capital with an investment of US $260 million.

The Prime Minister termed the hotel project 'very important and historic development' for Islamabad, which surrounded by beautiful mountains with lush green landscapes and good climatic conditions, has many reasons to become the hub of tourism and international conventions and conferences in the region.

He said, Pakistan being at the crossroads of South Asia, Central Asia and the Middle East, having six out of world's 12 peaks, rich culture and the growing economy offers lot of attractions for tourists as well as for investors.

The Prime Minister said, to become a true hub of international conferences and conventions there must be all world class facilities of a modern city.

He said, with several technical companies and IT parks operating in the federal capital, Islamabad is fast becoming an IT capital.

Prime Minister said, Islamabad will soon have an international standard airport, having connectivity with the Motorway, adding, we will allow operation to more airlines.

He said, the services sector has the largest potential of job opportunities and mentioned that the new hotel-to be opened by the end of 2009, will provide jobs to 2600 people directly, with several people getting indirect jobs as a fall-out of the project through supply, shops, allied businesses etc. The Prime Minister said, "We need several international hotels not only in Islamabad but in other major cities and metropolitans."


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## Owais

*Market treasury bills worth Rs 12,000 million sold* 


KARACHI (August 22 2006): The State Bank of Pakistan (SBP) sold a total of Rs 12,000 million of Market Treasury bills on Monday in a five-day and 10-day repo operation to mop up funds from the money market.

The Rs 8,000 million Market Treasury Bills were sold in a five-day repo operation at 8.49 percent, while Rs 4,000 million Market Treasury Bills were sold in a 10-day repo operation at 8.50 percent.


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## Owais

*Musharraf for accelerating installation of water plants* 

RAWALPINDI (August 22 2006): President General Pervez Musharraf on Monday directed the authorities to accelerate setting up of water purification plants utilising affordable, reliable and cost-effective modern technologies to ensure provision of safe drinking water to people across the country.

He made these observations while chairing a meeting to review progress on the safe drinking water initiative under which the first phase will be completed by the end of the current year. The government is aiming to provide clean drinking water by the end of 2007 under a comprehensive plan, where water purification plants will be installed right down to tehsil and union council levels.

While reviewing the progress, the meeting was informed that some 300 plants have already been installed in collaboration with the private sector while 110 such plants are in the process of being made operational.

Private sector and multinationals have also shown their keen interest to supplement this important initiative of the government by introducing latest technologies which will not only be cost effective but would also ensure the quality of water supply. Federal Minister for Environment, Syed Faisal Saleh Hayat, Minister of State for Environment, Malik Amin Aslam and senior government officials also attended the meeting.


----------



## Neo

PESHAWAR (August 22 2006): NWFP Senior Minister and MMA leader Siraj-ul-Haq has asked the Overseas Pakistani businessmen to avail the abundant investment opportunities in NWFP in backdrop of its geographical importance and vicinity with central Asian Republics.

Talking to a delegation of expatriate Pakistanis businessmen at London during his UK tour, Siraj said the Muttahida Majlis-i-Amal government was endeavouring for speedy social and economic progress of the province and prosperity of its poor masses.

He said the peace and security of life, honour and property of each and every citizen including the minorities and foreigners were ensured at the earliest while drastic steps were taken for exploiting the tourism, minerals and hydle power generation potentials of the province.

He invited the foreign and overseas investors to take benefit of these precious natural resources and cheap available manpower assured that a congenial atmosphere had been created for boosting trade and commerce activities in North West Frontier Province.

The senior minister Siraj-ul-Haq said the provincial government was faced with financial constraints and hence it could not develop the resources potentials alone to convert backwardness of the province into prosperity. However, Siraj-ul-Haq expressed the confidence that miracles were expected with joint efforts of the private sector and overseas investors.

Siraj-ul-Haq in respect of providing Gadoon like incentives and easing Pak-Afghan border trade, assured the delegation for its sympathetic consideration and approaching the centre for that purpose.


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## Neo

*Makran highway to boost trade* 

ISLAMABAD (August 22 2006): The fourth phase of Makran coastal highway is under construction, which would increase the trade between Pakistan and Iran. It is being constructed from Gwadar to Gupt which would also be linked to Gewani, PTV reported. It would cost more than Rs 3 billion and its construction is according to the international standards.

*Motorway 8 to bring prosperity in Balochistan* 

ISLAMABAD (August 22 2006): Motorway 8 (M-8) is an ambitious project, which would bring prosperity in the area. The M-8 project would connect Gwadar to Dapaderu by Turbet, and Shahdadkot, PTV reported. Under massive construction development programme in Balochistan, 1500-km roads had been constructed while work on 1000-km is under progress.

The strategically important roads would make Gwadar the hub of trade activities in the country.


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## Neo

Tuesday, August 22, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\08\22\story_22-8-2006_pg5_7

ISLAMABAD: Federal Minister for Information Technology and Telecommunications Awais Ahmed Khan Leghari said on Monday that the annual exports of the Information Technology sector were about $600 million. 

He said the IT export industry had created numerous job opportunities in the country. 

"We are trying to increase the current pace of growth in the IT sector in order to increase our international competitiveness". The minister said that during the last two years about 10,0000 to 20,0000 jobs had been generated by the IT sector and between 200,000 and 250,000 jobs had been created in the telecommunications sector.


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## Neo

KARACHI, Aug 21: Private sector credit off-take by the major sectors such as textile and communication has started declining which may make it difficult for the country to achieve 7 per cent economic growth target for the ongoing fiscal year.

Bankers said that the textile and communication sectors were not consuming credit the way they did last year. However, no bank has any data to assess the level of lower outflow of credit towards the manufacturing sector.

Bankers said that the credit outflow towards the textile and communication sectors had already slowed down from last year mainly because of lesser requirement for their expansion plans.

During July-March 2006 textile sector borrowed Rs69bn compared to Rs95bn in the corresponding period of last year, according to Economic Survey 2005-06.

Ã¢â¬ÅThe slower credit off-take was because shrinking demand of the textile and telecommunication sectors as they consumed maximum for expansion plans,Ã¢â¬Â said Abid, a researcher.

Ã¢â¬ÅIn FY2005 newly operated cellular companies borrowed heavily in order to start their operations and this phenomenon was not present during FY06.

The Economic Survey stated that during July-March 2005-06, communication sector (defined as transport, storage and communication) borrowed Rs5.7bn as compared to Rs20.8bn previously,Ã¢â¬Â said Mohammad Imran, another researcher.

The bankers said that the major manufacturing sector would borrow less than previous year as they had been operating at the highest capacity level.

Installed capacity of cement sector is 20.94 million tons while the utilised capacity is 18.4 million tons. Fertilizer is working with 100 per cent installed capacity of 4.96 million tons.

Auto sector is also reaching at the optimum level as its capacity is 222,000 units per year and it is manufacturing 192,000 units.

Ã¢â¬ÅUnless new expansion starts, the credit outflow would remain low,Ã¢â¬Â said a banker, adding that it would help the State Bank to keep the monetary growth within target.

Bankers do not believe that the higher lending rates were the reason for slower credit growth.

The production data also showed that the growth in both these sectors had come down. According to official data during July-March 2005-06, the textile sector, which has a weight of 24.4pc in the large-scale manufacturing sector, posted a growth of just 3.89 per cent.

Bankers and analysts said that tightening of monetary policy would not hurt the outflow of credit towards the manufacturing sector despite the interest rate hike.

The State Bank announced to keep tight monetary policy for July-December 2006 to bring down the inflation at 6.5 per cent.

The same policy was followed during fiscal 2005-06 but the credit off-take by the private sector reached Rs401 billion and monetary growth breached the target of 12.8 per cent.

The State Bank also increased the treasury bills rate and discount rate was increased by 50 basis points to 9.50 per cent.

This was a clear indication of higher interest rate, but the bankers said that demand was slowing down and the higher lending rates were not the reason for slow credit growth to textile or telecommunication sector.

Ã¢â¬ÅThe fiscal year has just started and the trend will take at least two to three months to appear more visible, however, the manufacturing sector performance may remain below expectation and that would hurt the economic growth.Ã¢â¬Â said Abid.

The government has set 7 per cent GDP growth target for the ongoing fiscal year and is relying mostly on services and industrial sectors growth.


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## Neo

ISLAMABAD: A delegation of investors from the UK called upon Managing Director of Pakistan Mineral Development Corporation (PMDC) Brig Muhammad Khalid S Khokhar to discuss the prospects of investment in coal sector.

According to a press release, Chairman of UK-based investment group introduced its Company Ã¢â¬ËPak Energy (Pvt) LtdÃ¢â¬â¢ as a pioneering & the first coal base energy company to emerge in Pakistan and to extend its services to support energy sector of Pakistan by upgradation of indigenous coal. The investors group is keen to venture in bringing Ã¢â¬ËClean Coal TechnologyÃ¢â¬â¢ in Pakistan.

As Phase-I of their investment plans in Pakistan the sponsors shall commission a coal washing & blending plant with a capacity to upgrade 6000 tonnes of coal per day. With this, the future scenario of industries using/consuming indigenous coal would drastically improve. The upgraded coal will be fit for use in cement plants, textile mills, brick making & also for purposes of heating & that too at a cost effective price.

The group intends to set up two more plants in Phase-2 & 3 as part of their plans for future investment in Pakistan. Chairman of Pak Energy, Azam Imam pointed out that in future with the group investment, coal will be sold out on heat value basis rather than on weight basis as per present practice in Pakistan.

Brig Khokhar thanked the team of Pak Energy for giving & apprising the management of PMDC about the scope/objectives of their investment in coal sector in Pakistan. He especially mentioned that the investment plans of Pak Energy are in line & conform to the Energy Vision of President Gen Musharraf to develop alternate energy resources most importantly coal.

He assured the visiting team of foreign investors for PMDCÃ¢â¬â¢s full support & facilitation in their investment venture for the greater benefit of Pakistan in building sustainable & alternate energy resource.


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## Neo

_Performs ground breaking of a five-star hotel_

By Muhammad Anis

ISLAMABAD: Prime Minister Shaukat Aziz Monday said the government has several plans to make Islamabad a hub of international activities for Central Asia, South Asia and the Middle East to hold conferences, conventions, seminars and other events and promote tourism.

The prime minister was addressing the ground breaking ceremony of a five-star hotel 'Grand Hyatt' here Monday. The hotel is being raised by local investors who hail from country's industrial city, Faisalabad.

The PM said Pakistan has ancient ruins of Gandhara and six top mountain peaks out of twelve are here, which have great attraction for tourists. He said that Islamabad was an ever expanding and most attractive city of the country saying the coming up five-star hotels and other high rise buildings would be impressive addition to it.

Shaukat Aziz said Pakistan's economy was growing and there was always need for world standard hospitality services. He pointed out that Islamabad was also an IT capital and many companies were opening offices here and IT parks coming up.

He said that the international activities in Islamabad and other parts of the country would take a boost with the construction of modern airport which would be connected with Motorway so that guests could come and go back with ease.

He observed that the construction of five-star hotel adjacent to Jinnah Convention Centre along with providing job opportunities to hundreds of people during its construction and on completion would also benefit a number of industries.

The prime minister expressed the hope that the project would be completed as soon as possible and would provide world-class facilities to the visitors. Interior Minister Aftab Ahmad Khan Sherpao expressed the hope that the Grand Hyatt would be a landmark for Islamabad's development.

He said a lot of high-rise buildings are being built in Islamabad including more five star hotels. Sherpao said that besides five-star hotels, a number of three-star and budget hotels would also be constructed in the federal capital.

Chief Executive of BNP Group, Abdul Hafeez Shaikh, said the hotel would provide all the necessary and expected amenities of world-class five-star hotel. He said the hotel would provide ample facilities to hold international conferences, conventions and other event and it would also be the first hotel of the Grant Hyatt chain of hotels in Pakistan.

He said Pakistan offers a very secure investment opportunities to the investors. The Grand Hyatt Hotel will be completed at a cost of $260 million and would be ready for opening at the end of 2009.

The project would be raised on a plot measuring 13.5 acres purchased from the Capital Development Authority for Rs4 billion and it would have 360 rooms and 200 service apartments.


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## Owais

*Sindh, Punjab cotton crops hit by recent rains* 

KARACHI: The recent rains have damaged cotton crops in Sindh spread over 0.1 million acres, while in the Punjab on 0.2 million acres.

Agriculture ministry&#8217;s cotton commissioner, Dr. Quadir Bakhsh told Geo News that the cotton this year in Punjab was sown on 6.6 million acres, while in Sindh on 1.5 million acres.

Dr. Quadir Bakhsh told that the cotton in lower Sindh planted on 0.5 million acres severely hit by rains lost 20 percent i.e. 0.1 million acres cultivated area. He told that the losses could be correctly estimated after the monsoon spell in Sindh, which was still continuing.


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## Owais

*Dhodak field expansion to increase gas production* 

Islamabad: The condensed gas production after the upgradation of Dhodak Gas Field would increase from 23,00 barrel to 4,000 barrel a year, reports said on Tuesday.

According to Pakistan's state oil firm, Oil and Gas Development Company (OGDC), the upgradation of Dhodak Gas Field will be completed till November.

The company also informed that the upgradation of the gas field would increase the production rate of condensed gas by 17,00 barrel per day, while LPG production will be soared by 55 lacs ton.


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## Owais

*Scheduled investment banks&#8217; total investment up* 

KARACHI: Scheduled investment banks&#8217; aggregate investment during the first seven months of the current calendar year surged by over Rs100 billion.

State Bank of Pakistan (SBP) sources told that the investment banks&#8217; total investment beginning January stood at Rs730 billion, which at the end of July 2006 soared to Rs831 billion, while the investment in the first month of the current fiscal year i.e. July 2006 alone rose by Rs36 billion. 

The aggregate volume of investment of the banks at the end of June 2006 valued at Rs794.5 billion, which shot up to Rs831 billion at the end of July, sources told.


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## Owais

*IMF proposes further liberalisation of economy* 


ISLAMABAD (August 23 2006): The International Monetary Fund (IMF) on Tuesday termed Pakistan's current pace of investment as 'insufficient' to keep its economic growth on track, and recommended it to further liberalise economy for attracting more foreign and domestic investment in the future.

The Fund also wanted Pakistan to become more aggressive to enhance its trade with international partners to achieve the target for the current fiscal year.

Sources said that the IMF review mission, currently visiting here, held meetings with different economic policy makers in Islamabad and got the details of economy gains during the last fiscal year.

The mission comprises Mohsin Khan, Miguel Savastano and Hend Lorie.

Sources said that the IMF delegation pointed out various areas, which were hampering local and foreign investment into Pakistan. Some of these were slow pace of reforms programmes initiated for almost all key areas of economy such as banking, judicial, energy in particular, gas and electricity distribution companies and bottlenecks that were yet to be removed to give key role to the private sector.

The mission suggested that the government should focus on all these areas, which can help attract more domestic and foreign investment besides enhancing its trade with major international partners to achieve $18.6 billions for 2006-07.

The mission's meetings with Governor State Bank of Pakistan (SBP) Dr Shamshad Akhtar, Commerce Minister Humayun Akhtar and National Reconstruction Bureau (NRB) chief Danial Aziz were of extraordinary importance.

The mission is in Islamabad for annual review of Pakistan's economy under consultations article IV of IMF. Under article IV of the consultations, the Fund can review economic growth of its member countries including Pakistan and give its suggestions for policy making. However, its suggestion are not binding for those members who are not beneficiary of its financial assistance.

It may be noted that after a long association for financial assistance Pakistan had walked out of IMF's funding facility some few years back.

One of the policy makers told _Business Recorder _after the meeting with IMF delegation that the government side gave the mission details of steps being taking to increase investment for different sectors. He said the visiting delegation was also briefed about the incentives granted to exporters to take exports to an optimal level.


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## Owais

*Textile made-up exporters may lose $42 million* 


KARACHI (August 23 2006): Pakistan's exporters of textile made-ups may lose up to $42 million following the filing of Chapter 11 bankruptcy by 'Best Manufacturing Group' (BMG) of Jersey City, New Jersey, USA, BMG's total imports of textile made-ups from world-wide sources stood at $25 million, of which one-third came from Pakistan, a leading Pakistani exporter of textile made-ups told _Business Recorder _here.

BMG, which is USA's largest manufacturer of table linen and napery for hospitality, healthcare and rental textile businesses, filed for Chapter 11 bankruptcy protection three days back, listing liabilities of over $100 million, and assets of about $153 million, according to reports reaching here on Tuesday.

The Pakistani exporter said that although the market for Pakistan's textile made-ups would remain intact, the new US importers, who would take the place of BMG, may have their own preferences for importing the items which were being imported by BMG from Pakistan. Besides, Pakistan's exporters will have to make renewed efforts to find some sound and reliable US importers with whom they could develop business relationship.

He said that some Pakistani exporters of textile related items "are now in USA" to study the situation arising out of these developments. He said that BMG was one of Pakistani exporters' important business partners with whom they had cordial relations and long association. They fear that since business is generally done on credit basis, their money may either be totally lost or they might face inordinate delay in receiving their payments because, in case of bankruptcy, creditors' settlement is processed in the last after meeting all other claims.

According to available details, the district court in New Jersey has designated the case as a 'complex Chapter 11 case', a distinction made when the case is extra large or there are significant number of creditors involved.

BMG said there are more than 2,000 creditors in the case, including vendors and employees. Also, the court has granted the company an additional 30 days to file its schedule of assets and liabilities.

Although the company maintains that it has sufficient liquidity to handle merchandise flow, it said that rapid growth through acquisition and softness in the market prompted the filing. The company's plan is to move more business to Cambodia, increase offshore sourcing, close the facilities in King of Prussa, Pa, and Mahwah, NJ, cut back on the manufacturing operation in Cordele, Ga, launch new hospitality apparel line, and consolidate healthcare and institutional into one division.

"We plan to take full advantage of the opportunities presented by this restructuring to address both our financial and operational issues in order to position our company for long-term success," chairman, Scott Korman was quoted having said.

When a related official in Export Promotion Bureau was asked to comment on the impact that BMG bankruptcy would have on exports of Pakistan's textile made-ups, he drew total blank about the development. He said that although he had no knowledge of the issue, he would certainly try to find out the details and revert to comment on the subject on Wednesday.


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## Owais

*SECP clarification on short selling* 

ISLAMABAD (August 23 2006): The Securities and Exchange Commission of Pakistan (SECP) has clarified the prohibition on the short-selling of shares in futures contracts at Karachi Stock Exchange (KSE).

The KSE board of directors, in its meeting held on August 17, 2006, had reviewed interim market measures taken on June 14, 2006, and recommended withdrawal of the prohibition placed on short-selling in futures contracts, effective September 2006, subject to the approval of SECP, while continuing other temporary measures, said an SECP press release issued on Tuesday.

The said decisions of the KSE Board came to the notice of the Commission through newspapers of August 18, 2006 and subsequently through a facsimile from KSE management later in the day, the SECP said.

Thereafter, the SECP Chairman had a meeting with KSE board of directors on August 19, 2006 to discuss the said matter, along with other pending issues. During the meeting it was mutually agreed that KSE would be furnishing comprehensive rationale for the Board decisions taken in relation to the temporary market measures as the same necessitated the approval of the Commission.

However, upon non-receipt of the requisite information, the SECP issued a letter to KSE on August 21, 2006 confirming SECP's understanding with KSE. "This press release is being issued to clarify and place on record the true facts and to contradict incorrect statements appearing in some sections of media in this respect", the Commission added.


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## Owais

*Ecnec to consider Rs 185 billion projects today* 


ISLAMABAD (August 23 2006): The Executive Committee of National Economic Council (Ecnec) will meet here on Wednesday to consider 34 development projects, costing about Rs 170 billion to 185 billion. According to sources, the agenda shows that a handsome amount of about Rs 127 billion would be allocated for 11 projects in the water sector alone.

The projects in this sector are: Construction of Fall Structures on Nara Canal; Re-sectioning of Ranto Canal of Jamroa Canal; Second flood protection sector project (FPSP-II); Remodelling of SMB Link and Bahawal Canal Lower; Chashma Right Bank Irrigation project (additional work and outstanding liabilities); Makhi-Farash Link Canal project' Pehur High Level Link Canal project; Taunsa Barrage Emergency Rehabilitation and Modernisation project (revised PC-1); Bazai Irrigation project; Rehabilitation of Irrigation System in NWFP; Punjab Barrages Rehabilitation and Modernisation project (emergency repair works; feasibility study and detailed design, revised PC-1) and Extension of RBOD from Sehwan to sea at Gharo (revised PC-1).

In energy sector, three projects of over Rs 30 billion are: setting up of Oil-Fired Thermal Power Station at Jamshoro units (revised PC-1); Feasibility study and detailed engineering design and preparation of tender documents for Kohala hydropower project; and 450 MW Combined Cycle Power Plant at Chichoki Mallian in the energy sector.

The Ecnec will also take up Milk Collection/Processing Dairy Production and Development programme and Livestock Production and Development of meat production in agriculture sector.

In the mass media sector, the most important project of establishing Islamabad Media Tower will also come up for consideration of the planning body. National Monument of Pakistan, in culture and Construction of Building for Pakistan School of Fashion Designing, Lahore (revised) in commerce sector are the projects to be considered for approval of the Ecnec.

In education sector, three schemes of Capacity Building for Teachers Training institutions of Ministry of Education in Islamabad Capital Territory (ICT); Federally Administered Northern Areas (FANA), AJK Punjab and NWFP would be tabled for consideration.

The Ecnec will also take up six development projects, which include Supply and installation and operation of water desalination plant of two MDG capacity for Gwadar Industrial Eastate, water supply schemes in district Peshawar under the President's directive, water supply scheme for Shalman to Landi Kotal, Khyber Agency, expansion of filtration plant and water supply network for supplying clean water to Hyderabad city under the Prime Minister's package, water supply and sewerage schemes for Mirpur City and other hamlets and construction of office building for National Accountability Bureau, Rawalpindi.

Establishment of nation-wide integrated trunk radio system for police in governance sector, construction of building of Gomal Medical College, D.I Khan, Establishment of Peshawar Institute of Cardiology (Phase-II), Upgradation of Saidu Group of Hospitals for teaching purpose of Saidu Medical College, Swat and Improvement/Standardisation of DHQ Hospital, Nowshera are the project in Health sector. Overseas scholarships for MS/M.Phil leading to PhD in selected fields Phase-II in Higher Education will be considered by the Ecnec.


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## Owais

*WYSE to shift software base from India to Pakistan* 


KARACHI (August 23 2006): The US-based WYSE Technology Inc plans to switch its software development base from India to Pakistan and initially it would start its operations with 100 local developers within the next three months.

CEO WYSE, Dr John Kish talking to _Business Recorder _on the sidelines of a seminar titled 'Thin computing for a flat world' said that they were planning to bring huge investments in the country starting with at least 100,000 dollars that would keep on growing with time to hit millions.

He said that India had become quite expensive as compared to Pakistan, while Pakistan having skilled human resource and encouraging government polices was a far better option for international IT and outsourcing firms to make investments.

About their plans, Dr Kish said that WYSE would set up sales support office along with R&D centre in Pakistan and added that they would also propose suggestions to local varsities about computer science and IT curriculum along with arranging internship programmes.

Dr Kish said that he was sure that they would find better personnel than India here, as about 85,000 IT graduates were generated in the country each year. "Although the number is lower than the requirement but still the situation is quite favourable," he added.

He said that keeping in view the current policies of Pakistan, WYSE Inc was considering making Pakistan a hub of its commercial activities in the South Asia.

"For the very reason we are conducting meetings with WYSE's customers and various government functionaries so as to evaluate future strategies," Dr Kish informed.

Earlier, speaking at the seminar, the WYSE chief said as the field of information technology was developing at a neck-breaking pace, it was impossible for any nation to remain aloof of such advancements. In this connection, Pakistan government must be appreciated for carrying out investor-friendly policies to keep up with other nations of the world particularly in IT.

"Playing fields are not just levelled, but have been flattened and it is all about communicating, collaborating and competing on a global level. It is about finding the most efficient ways to deliver access to the information people need in order to move things forward. WYSE's thin computing is designed for such a flat world," he observed.

He said that thin computing delivered the much-needed access, at a much lower cost than the traditional methods, all without compromising security or manageability.

"It gives everybody in an organisation secure access to the information and the applications they need, without requiring the desktop systems to store them," he added.

He said that the WYSE continued its dominance as the world-wide market-share leader for the 40th consecutive quarter. The need to comply with regulatory guidelines, the need to secure desktop data, and the resulting management costs were driving more organisations to purchase thin clients, he added.

Manish Sharma, WYSE's Regional Director for South Asia also spoke on the occasion. In Pakistan, WYSE is represented by Karachi-based NC Inc for the last 18 years. "Dr Kish's visit to our country is very strategic, as he has earlier established a research and development centre in China and a testing facility in India to support this region" said Sami Askari, CEO NC Inc.


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## Owais

*CBR examining sales tax profiles of 6000 untraceable units* 


ISLAMABAD (August 23 2006): The Central Board of Revenue (CBR) is examining tax profiles of 6000 untraceable firms/units registered with the sales tax department. Sources told _Business Recorder _on Tuesday that the Board a few weeks back had detected 6,000 units during scrutiny of tax record, who are operating without National Tax Numbers (NTNs).

Following detection of these cases, the Board directed the collectors of sales tax to check up tax paid by these untraceable registered units. Collectors are also examining the data to ascertain whether these units have claimed sales tax refund or not. Sources said that it is an extensive exercise, which needs thorough scrutiny of the profiles of these units.

It is pertinent to mention that around 6,000 taxpayers have obtained Sales Tax Registration Numbers (STRN), but their record is not available in 'NTN Master Index'.


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## Owais

*Australian team briefed on energy resources* 

ISLAMABAD (August 23 2006): Pakistan has 175 billion tons coal deposits in Thar, which it intends to utilise in the coming years, said the Minister for Petroleum and Natural Resources, Amanullah Khan Jadoon here on Tuesday.

During a meeting with a former prime minister of Australia R L L Bob Hawke, who is visiting Pakistan at the head of a three-member delegation to explore and discuss the investment opportunities in the oil and gas and other minerals sector.

The government in its effort to accelerate the economic growth at a faster pace is focusing on energy sector. It has already issued over 100 licences to local and foreign exploration and production companies and is still looking for more parties interested to invest in the sector, he told Bob Hawke.

He said that government is bent upon exploring the proven oil and gas reserves, both onshore and offshore, to tap 309 million barrels oil and 33 trillion cubic feet gas.

The Minister further said that Pakistan is ranked second largest country with 175 billion tons of coal deposits in the Thar desert, and added that the government is taking concrete steps to increase the coal share in the energy mix from 6 percent to 50 percent in future.

The former prime minister of Australia thanked the minister for the co-operation and extending warm hospitality to the delegation and said that his visit would be beneficial to explore investment opportunities in oil, gas and alternative energy sources.

Secretary Petroleum Ahmad Waqar, Director General, Hydrocarbon Development Institute of Pakistan Hilal A Raza and Chairman Saif Group of Companies Anwar Saifullah Khan were also present in the meeting.


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## Owais

*1.2 million cotton bales shortfall envisaged* 


ISLAMABAD (August 23 2006): The Punjab and Sindh have informed the centre that floods and monsoon rains had damaged 7.3 percent and 5 to 20 percent cotton crop in these provinces, respectively.

Similarly, both the provinces also informed the ministry of food, agriculture and livestock (Minfal) that the intensity of Cotton Leaf Curl Virus (CLCV) is low in these areas, sources in the ministry told _Business Recorder _on Tuesday.

The Punjab, the major cotton producing province, reported that about 198,478 acres of cropped area was damaged due to floods in seven districts. The crop damage ratio in Rajanpur, Layyah and D.G. Khan was 27 percent, 15.5 percent and 13.1 percent, respectively.

The only flood damage in major cotton growing areas ruined nearly 0.2 million bales of cotton, they anticipated. Last year, floods had damaged 350,000 acres of cropped area. While CLCV symptoms have been recorded on 61.95 percent spots as compared to 52.36 percent during the corresponding period of last year. Its intensity is low.

Contrary to the provincial claims of low intensity of CLCV, farmers told _Business Recorder _CLCV attack is higher and would cause a loss of nearly half a million bales.

Sindh, in its report to the Minfal, stated floods and monsoon rain-related damages were between 5 to 20 percent in 10 districts of the province while Sanghar district was severely hit with 25 to 35 percent damages. The total sowing area in the province was 573,870 acres against the target of 640,000 acres. The federal government has fixed a target of 13.8 million bales of cotton with sowing areas of 3.2 million acres. But due to floods and monsoon damages and CLCV attack, the target of 13.8 million bales of cotton is unlikely to be achieved and agri experts have anticipated loss of about 1.2 million bales of cotton.


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## Neo

*KARACHI *_(updated on: August 23, 2006, 18:07 PST_): Pakistan Refinery Ltd (PRL) said on Wednesday it plans to invest $182 million in the next three years to upgrade its refining facility.

The Karachi-based refinery, Pakistan's third-largest complex, with a capacity of 50,000 barrel per day (bpd), said the upgrade would help sustain the refinery's profitability.

"The board of directors of Pakistan Refinery Limited in their meeting held on August 22 approved an investment plan of approximately 11 billion rupees ($182.2 million) for upgrading the refinery," the company said in a statement.

Additional units that will be installed under the plan will include a diesel hydrotreater, visbreaker, hydrogen generation plant, deasphalting unit, sulphur recovery unit, amino treatment plant and vacuum distillation unit, it said.

Aftab Husain, PRL's commercial and supply general manager, said the refinery would produce low sulphur content diesel under EURO II specifications after completion of the upgrade.

"The company will finance around 80 percent of the project, while the remaining 20 percent will be financed through loans," Husain said, without giving any details.


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## Neo

*KARACHI *_(updated on: August 23, 2006, 18:09 PST_): The country's business group Jahangir Siddiqui (JS) has raised $70 million in a private equity fund to invest in high-growth potential sectors in the country, a company official said on Wednesday.

The closed-end JS Private Equity Fund I, which is the first of its kind in Pakistan and has a 10-year life, has attracted investments from four foreign institutions, including $20 million from the International Finance Corporation, an arm of the World Bank.

Ali Siddiqui, managing partner in JS Group, said the firm had closed its first fund on August 22 and hoped to attract another $130 million from foreign investors.

"We expect to have future closing in which the fund will grow larger in size ... eventually over $200 million," Siddiqui told a news conference in Karachi.

Siddiqui said the fund, which hopes to get equity partnership in companies, will target high-growth potential oil and gas, automobile and transport firms.

"We believe the timing is right to look closely at investment opportunities in Pakistan as a lot of firms in the country lack equity to grow into vibrant companies," he said.


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## Neo

*PPIB processing 52 projects of 14,000MW* 


ISLAMABAD (August 23 2006): The Private Power Infrastructure Board (PPIB) is processing 52 projects of 14,000MW which would attract $14 billion investment by 2016, starting from 2008, but did not mention if these projects would be materialised. This projection was given to the Minister for Water and Power Liaquat Ali Jatoi at the 64th meeting of the PPIB on Tuesday.

PPIB is also expecting 2000MW in 2008, which would bridge demand-supply gap to some extent but it expressed concern over the issues like non-availability of gas, but assured that all critical issues would be addressed for smooth implementation of the projects.

According to a press release, progress of 1550 MW power plants based on indigenous coal, which include 1000 MW plant based on coal from Thar, 200 MW on Jherruk coal, and 350 MW based on coal from Lakhra was discussed. Jatoi advised PPIB to continue its efforts to encourage coal-based projects and also Minister for Mines and Minerals Sindh, Irfan Marwat was asked to give a detailed presentation to the board in its next meeting with a view to help in the development of local coal and improve co-ordination amongst the various organisations.

The meeting decided that the board members would visit the Thar coal field in early September to be apprised of the ground realities and familiarise themselves of the location of this important coal field. In the same context, extension of Letter of Interest was given to two projects, which are 150 MW Habibullah Power Project and 200 MW Power Project to Fateh Group.

PPIB is also exploring the viability of 1000-1200 MW of imported coal-based power plants within 100-km of Karachi. This project would not only help meet the power requirements but will also reduce dependence on imported oil. The project would include the power plant, infrastructure required at the port for coal handling, and other logistics, the press release added.

The meeting also reviewed the preparation of the bidding documents being prepared by the Citibank who are the advisors to PPIB. The Minister directed that the preparations for ICB needs to be expedited.

The Board also formed a sub-committee to review the availability of gas for future IPPs and ensure that there are no bottlenecks in respect of projects currently under process. The board also informed that the bids for setting up 60-100 MW plant at Khuzdar would be invited through press by August 27. The board reviewed progress on fast track projects and decided that signing of the agreements with IPPs be expedited.


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## Neo

KARACHI, Aug 22: After having failed to achieve $5.7 billion export target of fabrics and readymade garments in 2005-06, the exporters are gearing up to fetch anywhere from $6 to $6.5 billion in the current fiscal year.

Final figures for the last fiscal year show that fabrics and readymade garments exports could fetch a little more than $5 billion which is slightly more than $4.7 billion earned from export the previous year.

Textile exporters are pinning hopes on an expected bumper cotton crop, a textile package that offers Rs25 billion in subsidy and rebate to garments, fabrics and the vigorous marketing drive in the USA, EU, African, South American and Far Eastern countries.

Exporters are involved a cut-throat price war in the European Union and USA markets and failed to make as much impact after phasing out of textile export quotas in January 2005 as China, India and Bangladesh did.

Ã¢â¬ÅThe marketing situation is gradually brightening up for us also,Ã¢â¬Â a leading garment export remarked in a cautious assessment.

He is waiting for the picking assessment of cotton crop and also how the spinners operate this season. He believes that initial euphoria of phasing out of textile export quota is gradually on decline and international textile market is gradually stabilising.

Spinning is the most capital-intensive textile sub-sector and the spinners is the super rich class that for decades thrived on a 50 per price subsidy on cotton and generous bank loaning.

But this season, the government has overlooked spinners while proposing a concession package of Rs25 billion for the knitwear, garment and fabric exporters.The performance of textile sector in 2006-07 will depend by and large on the spinnersÃ¢â¬â¢ relation with the ginners while buying cotton and then disposal of yarn that can keep the domestic value-added sector starved if some improvement is noted in international yarn prices.

In 2005-06 the textile exporters earned an overall $10 billion against a projected export earning of $10.62 billion showing a drop of about 5 per cent.

A big drop of more than 49pc has been noted in export of raw cotton which is hailed by the spinners, weavers and value-added sector.

Ã¢â¬ÅThe ideal situation would be total consumption of 15 million bales of cotton by spinners and utilization of yarn by weavers and towel manufacturers,Ã¢â¬Â a leading garment exporter said.

In 2005-06 yarn export fetched $1.46 billion against projected $1.28 billion mainly because of increase in volume as per unit value came down.

Fabrics export was expected to realise $2.49 billion against which $2.19 billion were fetched. This was despite a small increase in the average unit prices of fabrics.

Export of garments dragged behind by 6pc of the target as these could earn hardly $3 billion against $3.25 billion target. This was mainly because of more than 10pc decline in knitwear export which fetched $1.7bn against $1.93bn.

Textile business is pinning all hopes on a bumper cotton crop which should give them anywhere up to 14 million bales, which is enough to keep spinning sector busy till next September when cotton will start trickling in.

There is, however, a lurking fear that if monsoon extended beyond first 10 days of next month, the cotton crop may suffer a setback.

Reports gathered from various sources indicated that cotton crop prospects look bright so far and growers and ginners expect a good picking this autumn.


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## Neo

KARACHI, Aug 22: Export Promotion Bureau Chairman Tariq Ikram has said the export target of $40 billion within next five years is easily achievable if an export strategy is prepared targeting for the world market share of five per cent from the present three per cent.

For achieving this target, he said, the export strategy and roadmap had to be made by integrating all stakeholders belonging to the federal and provincial governments, as exports were not the responsibility of one single ministry or the EPB but of the entire nation and this required collective approach.

Speaking at the eighth Export Excellence Award of the Pakistan Readymade Garments Manufacturers and Exporters Association late on Monday evening, Mr Ikram refuted the notion that the textiles and garment sector had lost its importance in the government planning and exports.

On the contrary, he said textiles and garments were still backbone of countryÃ¢â¬â¢s economy and looking to the developing worldwide scenario on textiles and clothing by the year 2014, the volume would rise to $800 billion from the present level of around $400 billion.

During the last six years, he said countryÃ¢â¬â¢s textiles and clothing exports registered an 85 per cent growth as against average growth of about 16 per cent per annum in the past. However, Mr Ikram stressed upon the need for introducing technologies and improving upon manpower and manufacturing skills, as all these factors were essential for creating efficiency and containing cost of production.

The only way left for manufacturers and exporters was to contain cost of production through adopting such methods which could improve and enhance efficiency. Mr Ikram said at present 130 countries were producing textiles and clothing but only 30 countries were buyers.

He said there was a need for having a neutral body that could jointly work with all the stakeholders. Once the body is set up, Mr Ikram said, the export strategy with the help of all stakeholders could be made and even a target of $50 billion could be achieved in the next five years.

Citing some examples where there is big scope for exports, he said annually Pakistan lost millions of dollars by not taping tuna fish exports. Ã¢â¬ÅEvery year in October 60,000 to 100,000 tons of tuna fish travel from Pakistani waters to Iran but we do not explore this source for exports. If properly explored and value-addition was made, this fish could fetch $7 to $10 per lb.

Similarly, he said Pakistan had huge reserves of marble, granite and green onyx but it was only exporting them as raw materials. If required technology and techniques are adopted their annual exports could touch $2 to $4 billion.

Gems and jewels are also being exported as raw material at a through away price. This sector could also fetch billions of dollars, he added.

Chairman Senate Mohammadmian Soomro stressed upon the need to meet the economies of scale and said due to open competition and free market it had become the survival of the fittest.

Ã¢â¬ÅWe should focus on future challenges and a lot is needed to be done.Ã¢â¬Â He assured the private sector of full government support and said it had the potential to meet the challenges of the open market era.


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## Neo

News of an upcoming Pakistani move to launch an international bond on behalf of the country's oil and gas development corporation (OGDC) marks an important step forward for the country to gain a foothold in global capital markets. ​ 
Pakistan's return from being a near default country in the late 1990s to being a solvent country with a healthy rise in liquid foreign current reserves, is often cited by the country's leaders as an impressive success story. The turnaround means that Pakistan's ability to not only borrow from international financiers but also float new bonds, has sharply improved. This has helped improve Pakistan's profile.​ 
But the news of the expected bond offer also comes in a week when a mission from the International Monetary Fund (IMF) is visiting Islamabad to broadly discuss the pace of progress surrounding the Pakistani economy. ​ 
Though the IMF's clout over Pakistan has reduced sharply from the days when it had a much stronger ability to influence policy in return for a continued flow of loans, the Washington based outfit's assessment of any economy is important. No details of the IMF's discussions have been made public. ​ 
But senior western economists in Islamabad, familiar with the discussions, believe that the IMF is keen to look at areas such as the extent to which Pakistan's claims of a robust rise in its foreign direct investments, hold true. The Pakistani government has claimed a very significant rise in foreign direct investment (FDI) heading to the south Asian country in the fiscal year which ended in June this year. ​ 
But critics warn, the Pakistani estimates also include returns from the country's privatisation plans. Though in the short term, receipts from privatisations must help improve the inflows of foreign money heading in to the country, there are some compelling questions that must be asked on the extent to which such a sharply rising number also demonstrates a parallel rise in the extent to which foreign investors feel comfortable with the idea of heading to Pakistan.​ 
The answer is clearly one that can not be easily ignored. Pakistan is far from successfully overcoming the impediments for investors, centrally to do with the cost of doing business. Factors such as high global oil prices jeopardising investment prospects are beyond the capacity of any one country such as Pakistan, to tackle. 
But factors which are internal to Pakistan, ranging from elements within its notoriously poorly run electricity systems to the pathetic quality of government at grass roots level, amply demonstrate the many ordeals that investors have to face on a daily basis.​ 
By comparison, some of the more successful destinations for investors such as economies in the Far East, continue to offer more attractive prospects for investors. For any discerning observer, the choice of a destination other than Pakistan therefore becomes more promising.​ 
As Pakistan's new bond foray begins to be of interest across international financial markets, the realities faced by businesses within the country are much too glaring to be ignored. It is still possible that the bond offer about to be put out may attract much larger than expected interest, and the financial returns may be more than just impressive. ​ 
However, if indeed this was to be the benchmark of Pakistan's success in overseeing a turnaround which also attracts new investors, there are bound to be a number of lingering questions. ​ 
Pakistan's ability to translate its success from recent years must now depend on how far it can actually oversee a turnaround in the functioning of its key elements that are directly relevant to the interests of investors. Achieving that objective must be central to the extent that short term returns from privatisation efforts can actually be overtaken by a sustained flow of investments over a long term period.​


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## Owais

*30 projects worth Rs 130 billion approved* 


ISLAMABAD (August 24 2006): The Executive Committee of the National Economic Council (Ecnec) in its meeting on Wednesday, with Prime Minister Shaukat Aziz in the chair, approved 30 development projects worth Rs 130 billion including foreign exchange component (FEC) of Rs 42.08 billion.

Deputy Chairman of the Planning Commission Akram Sheikh during a news briefing following the meeting said that the Prime Minister has foreseen that country was heading towards middle-income from low-income economy.

He said that in total the Planing Commission considered 35 projects, out of which were 27 new while eight ongoing, whereas among the new ones five projects of Rs 5.3 billion in health sector were deferred due to absence of Health Minister Dr Nasir Khan from the meeting.

Giving sector-wise break up of the projects, he told the newsmen that 15 projects were approved of Rs 81.7 billion with FEC of Rs 26.90 billion in infrastructure sector, 12 projects worth Rs 44.2 billion (FEC Rs 15.20 billion) in social sector and 3 projects in other sectors costing Rs 3.5 billion without foreign assistance.

In infrastructure sector, 11 projects related to water resource development, 3 to energy and one to transport and communications sector.

*THE PROJECTS IN WATER SECTOR INCLUDED: *Construction of Fall Structures on Nara Canal, Re-sectioning of Ranto Canal and Jamroa Canal costing Rs 1.086 billion, Second Flood Protection Sector Project (FPSP-II) (Rs 4.614 billion), Remodelling of SMB Link and Bahawal Canal Lower (Rs 745.89 million), Chashma Right Bank Irrigation Project (additional work and outstanding liabilities) (Rs 865.83 million), Makhi-Farash Link Canal project (Chotiari Phase-II) (Rs 1.73 billion), Pehur High Canal project (Rs 6.615 billion), Taunsa Barrage Emergency Rehabilitation and Modernisation project (revised PC-I) (Rs 11.23 billion), Bazai Irrigation project (Rs 1.59 billion), Rehabilitation of Irrigation System in NWFP (Rs 8.48 billion), Punjab Barrages Rehabilitation project Revised PC-I (Rs 1.647 billion) and Extension of RBOD from Sehwan to sea at Gharo (revised PC-I) costing Rs 29.217 billion.

*IN ENERGY SECTOR: *three projects of over Rs 27.34 billion were approved ie Oil-Fired Thermal Power Station at Jamshoro units (revised PC-I) of Rs 8.75 billion, Feasibility study and detailed engineering design and preparation of tender documents for Kohala hydropower project of Rs 545.7 million and 450-MW Combined Cycle Power Plant at Chichoki Mallian costing Rs 18.05 billion.

*IN TRANSPORT AND COMMUNICATIONS: *a project costing Rs 1.394 billion for construction of Rothoa-Haryam Bridge and its approaches across Reservoir Channel on Mirpur-Islamgarh Road was approved.

*AMONG 11 PROJECTS IN SOCIAL SECTOR: *4 are from physical planning and housing that include supply and installation and operation of water desalination plant of I million gallons capacity for Gwadar Industrial Estate worth Rs 757.72 million, water supply schemes in District Peshawar of Rs 662.50 million, water supply scheme for Shalman to Landi Kotal, Khyber Agency, costing Rs 579.2 million, expansion of filtration plant and water supply network for supplying clean drinking water to Hyderabad city under the Prime Minister's package of Rs 998 million and water supply and sewerage schemes for Mirpur City and other hamlets costing Rs 3.573 billion were approved.

*IN THE MASS MEDIA SECTOR: *the most important project of establishing Islamabad Media Tower of Rs 1.28 billion has been approved with public-private partnership. The federal government will provide the land and construction cost will be borne by the private sector.

*IN EDUCATION SECTOR: *3 schemes for capacity building of teachers training institutions of Ministry of Education in Islamabad Capital Territory (ICT), Federally Administered Northern Areas (Fana), Fata and AJK costing Rs 669.56 million, capacity building of teachers training institutions in Punjab of Rs 3.174 billion, and capacity building of teachers training institutions in the NWFP costing Rs 1.035 billion were approved.

An amount of Rs 14.52 billion for overseas scholarships for MS/M.Phil leading to PhD in selected fields was approved in Higher Education. Establishment of nation-wide integrated trunk radio system for police for Rs 1.95 billion in governance sector was also approved.

Ecnec also approved Rs 1.58 billion Milk Collection/Processing Dairy Production and Development Programme and Livestock Production and Development of Meat Production Project of Rs 1.521 billion in agriculture sector.

National Monument of Pakistan worth Rs 574.38 million in cultural sector and Construction of Building for Pakistan School of Fashion Designing, Lahore, (revised) for Rs 669.37 million in commerce sector were also approved.


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## Owais

*Inflation almost same as in fiscal year 2006-end: SBP* 


KARACHI (August 24 2006): The current fiscal year 2006-07 commenced with almost the same headline inflation as witnessed during the last month of last fiscal year 2005-06. According to State Bank's monthly publication, 'Inflation Monitor', issued on Wednesday, the consumer price inflation remained at 7.6 percent year-on-year (YoY) in July 2006--the same as recorded in June, 2006.

However, it was significantly lower than 9 percent inflation during July, 2005. Although non-food inflation witnessed slight increase during July 2006, its impact on overall inflation was offset by decline in food inflation. Sensitive price indicator also maintained its last month's (June 2006) rate of increase. Wholesale price index, however, declined noticeably, which was supported mainly by decline in WPI food inflation.

After being recorded at 7.8 percent in June 2006, food inflation declined to 7.4 percent YoY in July 2006. Price movements of individual items in the CPI food group showed that prices of 26 food items, including eggs, pulse masur, wheat, apple, etc YoY declined during July 2006.

On the other hand, prices of 31 items exhibited double-digit YoY inflation, which, among others, included beef sugar, pulses gram, mash and moong, potato, tomato, etc. However, the rate of increase in prices of most of these items declined in July 2006 as compared to June 2006. The rest of the items, having a weight of 47 percent in food group, exhibited subdued or moderate inflation.

Non-food inflation increased slightly from 7.5 percent YoY in June 2006 to 7.8 percent in July, 2006 primarily due to rise in gas charges and train and air fares. However, the main component of non-food inflation, ie house rent index continued to decelerate. It declined from 30 percent in July, 2005 to 24 percent in July 2006.

Core inflation measured by non-food non-energy, that had been declining for the last several months, ceased to decline further in July 2006, while the core inflation, measured by trimmed mean, showed reversal in its past trend of decline.

The wage inflation was 17.0 percent in July 2006, compared with 18.2 percent in the previous month. However, it was significantly higher than 11.6 percent in July last year. Wages of skilled workers increased by 16.8 percent and those of labourers increased by 18.5 percent during July 2006. The average real wage inflation kept rising but with slower rate of 9.4 percent in July 2006, as compared with 10.6 percent in the preceding month.


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## Owais

*UK supports Pakistan for EU market access: Daniel* 


KARACHI (August 24 2006): The British Deputy High Commissioner, Hamish St Daniel, has said that Britain is a very strong supporter of Pakistan to provide it markets access in European countries. Addressing members of Site Association of Industries (SAI) here on Wednesday.

He said that Pakistan offers very attractive investment opportunities and, in the next couple on months, a number of British trade delegations would visit Pakistan and discuss business avenues.

He said that next week a delegation of Birmingham Chamber of Commerce would visit Pakistan, whereas a telecom delegation, an education delegation and a finance delegation would visit Pakistan soon. He said that travel advice did not restrict people from visiting a country. The visitors are advised only to take precautionary measures while visiting that country.

He said that during his tenure he visited several parts of Pakistan by car--from Islamabad to Northern areas, Sialkot, Faisalabad and many other cities--and faced no problem.

Danial said that business community could play a big role in improving the image of Pakistan abroad. He advised the business community to increase interaction with business communities abroad to improve Pakistan's image. "Visit trade bodies and brief them about Pakistan, its policies, and working environment," he said.

He noted that Pak-Britain two-way trade was around $1 billion and added that balance of trade was in Pakistan's favour. The UK Deputy High Commissioner appreciated steps taken by Pakistan government in respect of intellectual property rights. He said that these steps have played a vital role in reducing piracy of books, films, drugs, CD and VCD, etc.

About nuclear power generation, he said that it was a very sensitive issue. For power generation, other options should be utilised, including coal, solar, wind and hydroelectric. He said that it is a fact that oil prices have gone very high and gas reserves are depleting fast.

Danial said that British companies are interested to participate in restructuring and modernising Pakistan railways. Replying to a question about one-day cricket series, he said he was interested in cricket series' continuation and that justice should be done in the recent incident.

Welcoming the guests, SAI Chairman Ameen Bandukda said that the current scenario offered great potential for investment from British companies to form joint ventures and enter into agreement for transfer of technology. He said that potential exists in the fields of power generation, telecommunication, iron and steel, chemicals and food processing.


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## Owais

*JSG introduces equity fund worth $70m* 

ISLAMABAD: Jehangeer Siddiqui Group introduced Wednesday $70 million equity fund.

Managing partner of Jehangeer Siddiqui Group, Ali Siddiqui told that with the amount received from the first closed ended fund, the sectors of oil and gas, automobile and transport would be invested.

According to company officials, this is first closed ended fund of its kind, which will have ten-year term.

Besides the investment by foreign institutions, International Financial Corporation invested $20 million in the fund.

Company officials told that the fund soon would receive an added $130 million that will make it $200 fund.


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## Owais

*Banks disburse Rs134 billion loans* 

KARACHI: The banks during the first seven months of the current calendar year provided loans amounting to Rs134 billion.

State Bank of Pakistan (SBP) sources told that the banks&#8217; disbursed loans at the end of December valued at Rs2044 billion, which shot up to Rs2178 billion at the end of July.

The banks during July 2006 alone issued over Rs50.5 billion loans. Banks&#8217; loans by the end of June amounted to Rs2127 billion that reached Rs2178 billion at July ending.


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## Owais

*SMEDA, GCC sign agreement to build export centre* 

GUJRANWALA: Small & Medium Enterprises Development Authority (SMEDA) and Gujranwala Chamber of Commerce (GCC) signed an agreement to establish an export display centre in the city.

GCC President Akhlaq Butt and SMEDA General Manager Aftab Qadwai sign the contract papers. According to the contract, SMEDA has provided an amount of Rs 8 million to build a six-storey export display centre, which will be completed in 2007.


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## Neo

ISLAMABAD (August 24 2006): Prime Minister Shaukat Aziz on Wednesday said Pakistan is set on the path of reforms and growth with stability as macro economic improvements have enabled the country to attract foreign investment and absorb the oil shock.

He was talking to Mohsin Khan, the IMF Director who called on him along with a delegation. The IMF team is visiting Pakistan for the annual review of its economy.

The prime minister highlighted the efforts of the government to further reduce poverty by focusing on health care, education, women empowerment and job creation both in rural and urban areas. In rural areas, the major drive for growth continues to be agriculture and in urban areas manufacturing and services sectors, he added.

The prime minister also discussed the overall economic indicators and the initiatives taken in the monetary policy by the State Bank of Pakistan. He said the extra financial impact of the earthquake on government spendings and development programme was absorbed due to improved fiscal situation and increased revenue generation.

The earthquake necessitated tremendous rebuilding of the infrastructure and expenditure on relief and rehabilitation efforts in the earthquake affected areas, he added.

The prime minister said the investment climate in the country is improving and the trend is expected to continue and further accelerate as investors become aware of the medium and long term potential in Pakistan as an investment destination.

Mohsin Khan, Director IMF said that it is gratifying to note that he and his delegation are visiting Pakistan at a time when the prospect of its economy look good as Pakistan is set to achieve its growth target for the year 2006-07. He said that Pakistan's economy is in good health as the Prime Minister's economic team has its act together.

He also expressed the hope that Pakistan's economy will continue to show steady improvement in the coming years to bring about improvement in the life of its people. He said his discussions with the prime minister were fruitful and productive.


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## Neo

Thursday, August 24, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\08\24\story_24-8-2006_pg5_2

KARACHI: SITE Association of Industry Chairman Ameen Bandukda said on Wednesday that UK was the second largest investor in Pakistan after the USA and he added that more than 70 British companies were operating in Pakistan.

He was speaking during British Deputy High Commissioner Hamish DanielÃ¢â¬â¢s visit to the SITE Association of Trade and Industry.

The SITE chairman said investment in Pakistan by British businessmen and companies had increased in the last two years and a number of trade delegations had visited Pakistan.

He said trade between both countries was about one billion dollars and added that the volume of trade between the two countries was on the rise.

The SITE chairman stated that a lot needed to be done to meet the needs of industrialists and the business community in Karachi as the cityÃ¢â¬â¢s infrastructure needed to be upgraded.

When asked about efforts to project a positive image of Pakistan, he said exporters and importers could serve as effective Ã¢â¬Åindustrial messengersÃ¢â¬Â.

Hamish Daniel said companies from Britain were entering into mega projects in Pakistan regarding the modernization of railways and he added that there was great scope for cooperation in security sector reform. He said investors from UK could invest in the oil and gas, agro industry, information technology, textile machinery, gem mining and environmental technologies.


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## Neo

Thursday, August 24, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\08\24\story_24-8-2006_pg5_4

ISLAMABAD: The number of cellphone users has touched 38 million and 1.5 million users are being added each month, according to Planning Commission Deputy Chairman Akram Sheikh. 

He was speaking at a briefing after a meeting of the Executive Committee of the National Economic Council. The planning commission deputy chairman said the Minister for Information Technology and Telecommunica-ion Awais Ahmad Khan Leghari informed the meeting that the telecommunication sector was growing at a very fast pace. "This is a good sign. More and more people are using cellphones," he added.


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## Neo

Thursday, August 24, 2006http://javascript<b></b>:; http://www.dailytimes.com.pk/print.asp?page=2006\08\24\story_24-8-2006_pg5_5

LAHORE: Cement exports in the month of July this year were 45 percent higher than the 130,000 tonnes exported in July 2005. 

Industry sources said cement exports stood at 188,000 tonnes in July 2006 and added that the industry had already matched exports for the month of Aug 2005 by the middle of Aug 2006. They said exports at Aug 22, 2006 stood at 156,000 tonnes and expected exports to further increase in the last few days of the month.

Cement manufacturers had asked the government to restore the rebate on cement exports that had been temporarily withdrawn in order to halt the unprecedented rise in prices. The government had also allowed the import of cement at a subsidised rate of Rs60 per bag. However, a reduction in prices to the desired level has resulted in an extension of demand. The government is likely to discuss the matter at the next economic coordination committee meeting. 

According to information gathered by the Daily Times, Lucky Cement was the major cement exporter with about 100,000 tonnes of cement exports followed by other brands such as Bestway, Cahrat and Kohat. The leading destinations for Pakistani cement are Afghanistan and Dubai. 

Sector experts are of the view that increasing production capacity and stagnant market demand in the cement industry point to lower cement prices and difficult times for manufacturers.

The industryÃ¢â¬â¢s total production capacity rose to 26 million tonnes against the 18 million tonnes produced in June 2005. However, market demand has failed to match the increase in production capacity. Consumption figures at the end of June 2006 show only a slight increase in demand in the domestic market to 18.4 million tonnes against the demand of 18 million tonnes in June 2005. 

Competition among manufacturers has registered an increase putting downward pressure on prices and resulting in a fall in prices to Rs 250 per bag at wholesale level and Rs 260 per bag at retail level against a record price of Rs 435 per bag at the height of the crisis.

Market experts are of the view that restoration of rebate on cement exports will enable the industry to go for new markets in light of increasing production capacity.


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## Neo

ISLAMABAD, Aug 23: Pakistan and the United States have decided to conduct a number of studies on global competitiveness of selected economic sectors and as a first step the motorcycle industry of Pakistan has been selected for carrying out a policy analysis.

The Competitiveness Support Fund (CSF) -- a joint venture of the government of Pakistan, the ministry of finance and the US Agency for International Development (USAID) -- will examine where competitiveness already exists within targeted sectors and where it can be improved.

The CSF will use the studies to forward recommendations to the government of Pakistan on policy interventions it should take to make certain sectors more internationally competitive.

The first sector selected by the CSF is the growing motorcycle industry in Pakistan. Other analyses will follow on automotive and food processing sectors. Motorcycle industry estimates show that last year a total of over 700,000 motorcycles were produced in the country. The industry has been experiencing a healthy growth rate of around 30 per cent per year for the past four to five years. It is estimated that production will cross the million units mark by 2008.

To identify the prospects and problems/obstacles of the motorcycle industry, a high-level delegation from the CSF recently visited Karachi and met key stakeholders. A follow-up visit is scheduled for the first week of September to Lahore for an interaction with the stakeholders there as well.

At present there are 43 motorcycle assemblers in the country that have been licensed by the Engineering Development Board (EDB). Out of these, there are three Japanese assemblers (Honda, Yamaha and Suzuki), while the remaining 40 assemble Chinese motorcycles. These assemblers buy parts, sub-assemblies and assemblies from over 200 large, medium and small vendors located in Karachi and Lahore. The motorcycle industry employs more than 200,000 people directly and indirectly.

There are a number of government agencies that are involved in regulating, controlling and monitoring the motorcycle industry. These include the Engineering Development Board, the Pakistan Standards and Quality Control Authority (PSQCA), the ministry of industries and production and the Central Board of Revenue.

The primary objective of this study is to carry out a policy analysis of the competitive advantage of the local motorcycle industry, along with identification of the problems being faced by the sector. It will use its findings to recommend solutions at the policy and programme level on how to strengthen the supply chains and improve the value chains of this industry. The CSF is also facilitating the establishment of a policy expert group consisting of members from value chains of the motorcycle industry.

The Competitiveness Support Fund is based on international best practices (i.e. India, Thailand, Turkey, Ireland and Finland). It has been tailored to the current Pakistani economic environment to strengthen and make the private sector more competitive and improve the policy framework needed for innovation-based competitiveness. The fund is chaired by Omar Ayub Khan, Minister of State for Finance, and has a professional management team headed by Arthur Bayhan as CEO of the fund.

The CSF will support Pakistan's goal of a more competitive economy by providing input into policy decisions, working to improve regulatory and administrative frameworks and enhancing public-private partnerships within the country. The fund will also provide technical assistance and co-financing for initiatives related to entrepreneurship, business incubators and private sector led initiatives with research institutes and universities that contribute to creating a knowledge-driven economy.

The CSF activities will help all producers along the value chain that contribute to ultimate product quality. By obtaining better value and prices for quality products, and by improving cooperation throughout the Pakistani economy, the CSF will contribute to poverty alleviation by providing more income for producers and better employment prospects for employees.


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## Neo

Wednesday August 23, 2006 (1542 PST)

*ISLAMABAD: Prime minister Shaukat Aziz has said Pakistan is gradually heading towards becoming a middle level income country having reached a per capita income of $ 850, which is among the highest in South Asia. *


The prime minister made these remarks while addressing the first ECNEC meeting of the current financial year to consider 30 projects costing Rs 130.2 billion at the prime minister&#8217;s secretariat on Wednesday. 

The prime minister said that fundamental economic indicators continue to be strong with growth rate expected to range between 6 to 8 percent despite devastating earthquake and an unprecedented hike in the oil prices. The growth rate in the year 2005-06 was 6.6 percent that positions Pakistan as one of the faster growing economies in Asia, he added. 

The prime minister said that investment climate is continuously improving and as a result the total foreign investment in the country reached $3.8 billion last year- the highest in the country&#8217;s history. 

The prime minister said that exports registered last year an increase by 14.4% to reach $16.5 billions and revenue collection was at an all time high at Rs 713 billions-some Rs 23 billion more than the target. 

The prime minister said that it is heartening to note that the overall poverty figures have started showing significant decline to reach 23.99 % down from 34.46%, according to Pakistan Standard of Living Measurement Survey, 2004-05. in other words, we have succeeded in bringing 12.78 million out of poverty in the last four years. 

Notwithstanding our success there are still approximately 24% people living below the poverty line and we are making every effort to reduce poverty further and will continue to focus on fighting poverty by increasing allocations in social sectors and providing income generation opportunities. 

The prime minister emphasized the need for effective utilization of funds amounting to rs 130.2 billion for the 30 projects that relate to water, energy, housing, transport, food and agriculture, education, culture and mass media. 

He said the planning commission is monitoring project implementation to ensure timely and judicious use of funds. He said development of being encouraged in all provinces and areas in an equitable manner with special emphasis on lesser developed areas. He appreciated the efforts of the Planning Commission in streamlining the approval and implementation of projects.


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## Neo

*KARACHI:*_ August 24, 2006_: 

The Consul General of Japan Shoichi Nakano, on Thursday indicating that his country's investment would be tripled in 2007 as compared to that of 2004, said Pakistan was one of the best investment place with special opportunities available in Gwadar and Karachi.

In a meeting with the Diplomatic Affairs Sub-Committee of the Karachi Chamber of Commerce and Industry here, he said the opportunities being offered by Pakistani industry were quite attractive and assured that he would ask the Japanese investors to take the benefit of these opportunities.

"They should invest in Pakistan especially in Textile and enjoy the good returns in the steadily moving economy and flourishing industry", he remarked.

He said that the international media has a negative role in damaging the image of Pakistan and it should be effectively countered by projecting the ground realities and positive things about Pakistan and its investment friendly environment.

The consul general said that Japan has made high investments in the Textile and automobile sectors of Pakistan which is indicative of good friendly relations between the two countries.


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## Neo

PRIME MINISTER Shaukat Aziz has defined job creation and income generation as major objectives of his government. They are indeed imperative and urgent in a country with extensive unemployment where more than a fourth of the people live in absolute poverty.

He wants to achieve that through a rapid industrial expansion that is all-embracing and ranges from granite industries to silver jewellry making with textiles as the centrepiece. It is to cover large scale industry as well as large and medium enterprises in their full range.

A strategy is being drawn up for that purpose and it should be ready by October. It has taken a long time to formulate the strategy and let us hope the outcome will be worth the long wait. The strategy will promote the concept of Ã¢â¬Åone village-one industryÃ¢â¬Â which has been borrowed from Thailand where it has been a major success. The range of such industries is being expanded so that the talents and skills of each village can be promoted and full advantage taken of them.

The prime minister wants the ministry of industries and production to focus on the development of the small and medium enterprises, the engineering sector and on setting up of export processing zones. Port Qasim area is to have a textile city and an industrial park. He also wants the ministry to focus on horticulture, home appliances, sports goods and surgical goods and furniture-making. The export target for furniture last year was $22 million, but the performance fell short of the target by three million dollars.

The fact is that in the early years Pakistan was famous for its sports goods, surgical instruments and cutlery, but later there was more stress on the large-scale industry and these industries were neglected and suffered for want of adequate patronage, sufficient investment and modernisation. Now even Pakistanis prefer these items produced abroad and pay higher prices for them. So, the competitors of Pakistan in these areas improved their products and took over the markets.

The prime minister wants Ã¢â¬Åone village-one industryÃ¢â¬Â to specialise on a variety of items ranging from special textile, silver jewellry, ceramics and blue pottery depending on the talent available in each village and its tradition.

These industries can improve the non-farm income in the rural areas. But mere reliance on old talents and skills is not enough. There is need for greater research to develop new products; the workers in the rural areas are to be given training to acquire new skills and refine their talent. Having developed skills, the trained workers can become self-employed producers.

Meanwhile, the ministry of industries has come up with programmes to develop marble and granite industries, gems and jewellry making as well as to promote the diary industry. These industries can make a major contribution to the economy. The major focus should be on value addition. At a time when the exports are excessively dependent on imported inputs beginning with machinery, raw materials, energy and packaging materials, we have to make better and higher priced items even for domestic consumption.

Although domestic consumers prefer cheaper items, the fact remains that even such items are made by using imported raw materials. If such products have a brief life they will be discarded and we will have to import more and more raw materials to manufacture their substitutes. The best example is the water equipment made in Pakistan.

The ambitious plans for industrial expansion cannot be put into effect if adequate electric power is not available to run the industries, both small and large. Industrial production in Karachi has been disrupted in recent months by the failure of the KESC to ensure steady supply. The exports have suffered due to these setbacks. The government is now making extra efforts to increase the output of power, including production of more nuclear power as part of its Energy Security Plan 2005-2030.

It is also to have a few thermal units hired from the General Electric of the US and offer higher tax and other incentives to those who agree to produce nuclear power here under the supervision of the International Atomic Energy Commission, like the nuclear power plants at Chashma. The Chinese companies are interested in setting up such plants.

More and more funds are also being pledged by donors for the $6 billion national trade corridor which will take six years to complete. After the World Bank has committed $1.8 billion, the Asian development Bank has pledged dollar one billion. The NTC will provide transit facilities for trade with Central Asia, western China, Afghanistan and Iran. Initially it will connect Karachi-Gwadar and Kunjarab section which is estimated to cost $2.8 billion. It will develop the ports, rail and road systems and shipping facilities as well as the aviation system. Such infrastructural development is regarded essential to ensure a steady economic growth of 7-8 per cent.

Meanwhile, with Ramazan coming in a few weeks the usual apprehension that prices of essential goods particularly of those used more commonly in this month will rise. The government is arranging for easy availability through import of those items which are in short supply. The federal government has asked the provincial and local government to be very vigilant. Market committees are to be set up everywhere and price magistrates to be appointed with full powers.

The government is to ensure that the markets have enough supplies of items beginning with Atta. The Sindh government is releasing as much supplies of wheat as the flour mills need at Rs430 for 40 kilograms. Similarly adequate supply of sugar is to be ensured from the official stocks so that its price is brought down in Ramazan to around Rs30 from around Rs 40 at present.

The fact is that the shopkeepers procure enough stock well before the Ramazan begins and begin pushing up prices which reach their peak before eid. Thereafter, they do not really bring down prices to the pre-Ramazan level. The consumption of foodstuffs goes up in Ramazan by about 50 per cent.

Every year we are told that the government will not permit profiteering and exploitation of the faithful who fast. Initially there is some price check and a few arrests, and then they are let off after minor fines. Prices then go up and up as official intervention is seen ineffective. Even when there is no shortage and the supplies are adequate, the profiteers create a shortage through hoarding and manipulation.

Will it be any different this Ramazan? The prime minister wants to make a difference and so he is in touch with the businessmen to have the desired results. He is not relying on the sugar mill owners, also sitting in his cabinet, to bring down prices; instead he will import more and release the government stocks. He wants to succeed in this case as the general elections are due next year.

Meanwhile, the Utility stores are reported to be selling substandard Banaspati Ghee and oil repacked by it. The utility stores should not ruin their reputation. There were also reports that the Zakat fund continues to be misused. The auditor-general of Pakistan has reported irregularities to the extent of Rs165 million in the Zakat fund in his report to the National Assembly for 2004-05 . While more funds are being committed for poverty alleviation the funds collected from people in the name of Zakat should not be misused or wasted.


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## Owais

*Motorcycle import: under-invoicing and sales tax evasion probe initiated* 


ISLAMABAD (August 25 2006): The Central Board of Revenue (CBR) has launched an investigation against the massive under-invoicing of motorcycles and their parts, and non-payment of sales tax on their registration. Sources told _Business Recorder _on Thursday that the board has issued instructions to the regional collectors to investigate the matter on top priority basis.

The investigation has been started on the complaint of Atlas Group, Karachi, which pointed towards the under-invoicing of motorcycles and their parts in the unorganised sector.

According to the CBR instructions, the collectors should ensure that the vehicle registration authorities duly demand documents in case of import and sales tax invoice in case of locally-assembled vehicles at the time of first registration. The collectors should promptly complete the investigation and report to the board, the directive added.

Under the sales tax rules 2006, each manufacturer or importer who sells any vehicle through a dealer would issue sales tax invoice in the name of the dealer mentioning full particulars of such dealer and the dealer would issue sales tax invoice in the name of the customer.

Expressing serious reservations over the ongoing under-invoicing of motorcycles in the unorganised sector, the Atlas Group stated that the rampant under-invoicing has affected sale of the organised sector.

In this connection, Director General Valuation, Karachi, spotted some models of motorcycles and 16 parts, which were being under-invoiced and intimated to the collectorates of customs for taking action against the violators. The CBR is required to issue the necessary order, as the collectorates are not under the direct control of the DG.

*The DG Valuation has identified and verified the following parts of the 70CC motorcycles, which were being under-invoiced: *Carburetor, origin China, $13 per piece; Crank Case, China, $36/pc; Crank Case Cover R/L, China, $11.29 per set; Crank Shaft, China, $11.62/pc; Cylinder Head, China, $11.07/pc; Drum Gear Shift, China, $1.99/pc; Fender FT/RR, China, $2.30/pc; Frame Body, China, $10.00/pc; Front Shock Absorber 2-piece set, China, $6.80/set; Fuel Tank, China, $10.00/pc; Magneto, China, $6.70/pc; Rear Shock Absorber 2 piece set, China, $3.70/set; Piston, China, $1.55/pc; RR Fork Complete, China, $6.88/pc and speedometer movement of Taiwan $3.05 per piece.

The Group has informed the board that out of 700,000 units of motorcycles produced, the unorganised sector claims about 30 percent share ie over 200,000 units, which are not paying sales tax and heavily under-invoicing. The total amount comes to nearly Rs 2 billion if these units are produced and sold by the organised sector paying full taxes.

It is necessary to pay sales tax for the registration of motorcycles, which is not being done causing huge loss by the unorganised sector, whereas the organised sector is paying these taxes duly. No Chinese (unorganised sector) has entered due to tariff and non-tariff barriers in India, Thailand and Malaysia. Perhaps similar discipline is needed in Pakistan to develop the industry, Atlas Group added.


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## Owais

*US for resumption of rebate on cement export to Kabul* 


ISLAMABAD (August 25 2006): Pakistan is being pressurised by the United States for resumption of rebate on cement export to Afghanistan. The rebate was withdrawn by the federal government to stabilise prices in the local market a couple of months ago.

Sources in the federal government told _Business Recorder _on Thursday the US forces are planning to construct wall at some points along Durand Line to stop influx of al Qaeda terrorists from Pakistani-controlled tribal areas for which they need a huge quantity of cement.

They said the US has conveyed its demand to the foreign affairs ministry, which consulted the public sector stakeholders concerned, adding the comments of the defence ministry have also been sought on the proposal, before placing it before the Economic Co-ordination Committee (ECC) of the Cabinet for formal approval.

First, this proposal would be approved at the prime minister level then it would be submitted to the ECC through any of the ministry and most probably it would be the commerce ministry, the sources added.

The government had allowed Rs 1,250 per ton subsidy on cement export, which includes Rs 750 central excise duty (CED), 15 percent general sales tax (GST) and Rs 25 per ton on packaging material. It was later withdrawn in the light of ECC decision to discourage export, they said.

However, the cement export to Afghanistan is in full swing despite withdrawal of concessions by the government as figures touched to 190,000 tonnes in July, the sources added.

"There is no let-up in cement export to Afghanistan and the export figures collected by the Central Board of Revenue (CBR) revealed that the manufacturers exported 190,000 tonnes of cement to Kabul during the first month of the current fiscal year," they maintained.

Sources were of the view that when the cement manufacturers were fully engaged in export, it means they were still making reasonable profit despite withdrawal of concessions. They said the All Pakistan Cement Manufacturers Association (APCMA) had raised serious concern over the withdrawal of rebate a few months ago, arguing that Pakistan would lose its hard-won export market in Afghanistan to India or Central Asian Republics, but the current export trend negates their apprehensions.

The average capacity utilisation of cement plants during the FY06 remained around 84 percent due to the government pressure especially from March, but in July, it was recorded at 77.3 percent, the sources added.

At present, the import of cement is allowed at zero percent customs duty and withholding tax from all the countries, including India. The ECC, sources said, was also informed that the retail price of locally manufactured cement of different brands in major cities has dropped to Rs 265-300 per bag except Quetta where the rate is static at Rs 335. The international price (FOB) of cement is $38-44 per ton.

The ministry has also submitted a month-wise price comparison to the ECC, according to which in January 2006, prices registered 15.6 percent increase against the same month last year, February 15.5 percent, March 27.5 percent, April 38 percent, May 22.9 percent, June 9 percent and July slightly above 4 percent.

Sources said in May last, the APCMA was of the view that by September there would be a glut in the market, but it also proved unfounded as there is no such situation and the cement manufacturers are earning a reasonable profit.


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## Owais

*PC prepares checklist for privatisation* 

Islamabad (August 25 2006): The Privatisation Commission has prepared its checklist for future privatisation of the government-owned units in light of the Pakistan Steel Mills sell-off case, official sources told _Business Recorder _here on Thursday.

In its historic judgement of June 23, the Apex Court had directed that in accordance with the preamble of the Privatisation Commission Ordinance 2000, the Government/Privatisation Commission should adopt such ways and means which may fetch highest price of the privatised assets.

The sources said that for the purpose of evaluating the market share price of a public sector unit, the checklist includes a new "Terms of Reference (TOR) for the Valuer which shall include inter-alia a brief history of the entity, if any, the financial position, a description of produce line/services of the entity, a description of land, buildings, plant and machinery, the assets and liabilities and the current state of the industry."

It may be recalled that one of the grounds for cancellation of the PSM sell-off deal by the Supreme Court was that the PC had not included the price of the land while calculating the share price of the concern.

The court had pointed out that Section 2 of the PC Ordinance describes property as any right, title or interest in property, moveable or immovable in whole or in part or any means and instructions of production.

The court had further noted that historical value assets of a concern, ie according to the book value, which is always, based on depreciated price of the unit suits the buyer.

The sources said that the Apex Court has not held the Privatisation Commission Ordinance 2000 as ultra vires and the PC has got blanket approval of the units to be privatised in future from the revived Council of Common Interests (CCI)

They said that the checklist ensures transparent mechanism to get fair market price of the government-owned moveable and immovable property, natural resources and industrial assets. The sources added that shares of the units would also be offered to the public to ascertain their value.


----------



## Owais

*MCB earns Rs 8.7 billion pre-tax profit* 

KARACHI (August 25 2006): MCB Bank has earned a record pre-tax profit of Rs 8.7 billion for half year ended June 2006, which is more than double of Rs 4.2 billion in the corresponding period of the last year. Profit after tax is Rs 5.7 billion compared to Rs 3.0 billion in the corresponding period of the last year.

This translates into earning per share (EPS) of Rs 11.22 as compared to Rs 5.94 last year. The bank declared cash dividend at the rate of 20 percent. The Board of Directors meeting of the bank was held at Lahore on Thursday under the chairmanship of Mian Muhammad Mansha, Chairman of the board, and approved the financial statements of the first half-year ended June 30, 2006.

The loan to deposit ratio increased from 62 percent in the first half of 2005 to 73 percent during the half year ended June 2006. This improvement in ratio helped bank to increase its net markup income from Rs 6,046 million to Rs 10,103 million. The remarkable growth in earnings has been registered by leveraging the balance sheet focusing on increasing lending to different segments of the economy.

During the second half of 2006 MCB is proposing to increase its capital by issuing Global Depository Receipts (DGRs), which will be listed at the London Stock Exchange.

This listing would help the bank in growing further and bringing an international dimension to MCB's shareholder base. Taking benefit of strong capital base, continuing good credit metrics and firm cost control, the bank is well positioned in core business lines to seize opportunities to grow the balance sheet and further improve earnings.-PR


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## Owais

*Pakistan's foreign exchange reserves fall by $115 million* 


KARACHI (August 25 2006): Foreign exchange reserves fell by 115 million dollar to 12.630 billion dollar in the week ending on August 19, the State Bank of Pakistan (SBP) said on Thursday.

Reserves held by the SBP fell to 10.255 billion dollar from 10.353 billion dollar a week earlier, while those held by commercial banks also dipped marginally to 2.375 billion dollar from 2.392 billion dollar.


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## Owais

*Building a world class infrastructure* 

EDITORIAL (August 25 2006): Prime Minister Shaukat Aziz's speech at the groundbreaking ceremony of a five-star hotel in Islamabad on Monday was reflective both of the existing deficiencies and the promise of a better future when he observed that Pakistan requires a strong and world class infrastructure.

Pointing out that the country's location at the crossroads of Central Asia, South Asia and the Middle East offers a lot of attractions for tourists as well as investors, he talked of various up and coming connectivity projects. He claimed that with several technical companies and IT parks operating in Islamabad, the federal capital is fast turning into an IT capital as well.

The city, the Prime Minister went on, will soon have an international standard airport, which would be connected with the Motorway, and that more airlines would be allowed to operate in the country. However, all this is to happen sometime in the future.

Like provision of basic education healthcare facilities, the responsibility for infrastructure development falls squarely on the governmental shoulders. Connectivity whether via air, road or railway, telephone or internet, power lines or gas pipelines, as well as irrigation network is the key ingredient of any plan for socio-economic development.

There is a lot that remains to be done in this regard. To name but two examples, the railways and canal networks, on which depends so much of our agro-based economic activity, are much the same as they existed at the time of the country's independence 59 years ago.

Meanwhile, a place like Dubai, that possesses no worthwhile natural resources of its own, has come from far behind to emerge as a bustling hub of business and trade. Boasting the region's largest transport infrastructure, it has turned into a major re-export centre, supplying technical equipment, food stuffs and luxury items worth around $14 billion to its Middle Eastern neighbours as well as countries in South Asia and Central Asia and as far a field as South Africa.

More than 100 shipping lines call on its ports and an equal number of international airlines operate out of its airports. Small wonder then if it has become the envy of so many countries, including our own.

Pakistan has vibrant agriculture and manufacturing sectors, and is eager to serve as a business and commerce conduit between the land-locked, resource-rich Central Asian republics as well as China on one side and the Middle East, South Asia, and the region beyond on the other side.

China is also said to be interested in importing oil from Africa via Pakistan's proposed energy transportation channel, which is 20,000 km shorter than the alternative route, and can cut transportation expenses by 25 percent and time by more than one month.

Thus Pakistan can do even better than Dubai if it acts fast to back its ambitions with matching on-the-ground infrastructure facilities. Indeed, road, railway and sea port projects are afoot to link these regions via transport and energy corridors that this country is uniquely placed to offer.

Other infrastructure facilities such as uninterrupted power supplies, telephone and internet links, as well as airports must also qualify to be rated as world class. Only then can we hope to exploit the full potential of the opportunities that are there to be seized.


----------



## Owais

*Japanese firm keen to invest $15 million* 

KARACHI (August 25 2006): Consul General of Japan, Shoichi Nakano has termed Pakistan's investment environment and economic policies as most attractive for foreign investors. Speaking at the fifth meeting of diplomatic affairs sub committee of Karachi Chamber of Commerce and Industry (KCCI) on Thursday.

He informed the participants that a Japanese company was investing 15 million dollars to establish a unit at Export Processing Zone (EPZ) of Pakistan. He advised the business community to make efforts to improve Pakistan's image abroad in general and in Japan in particular to attract more and more foreign investment.

He said that the electronic media had played a negative role to portray Pakistan's image wrongly in the minds of foreigners.

He said that Pakistan's image could be improved but it would take long time and constant efforts. Chairman, Diplomatic Affairs Sub-Committee of KCCI, Mian Abrar Ahmed said that despite facing headwinds from rising energy prices at $70-75 per barrel and the catastrophe damage caused by the October earthquake, Pakistan economy had grown at an average rate of almost 7.0 percent per annum during the last four years and over 7.5 percent in the last three years, thus enabling it to maintain solid pace of expansion in the fiscal year 2005-06 with economic growth at 6.6 percent and foreign direct investment went to 3.5 billion dollars.

Welcoming the guests, KCCI President Haroon Farooki said Japan should take advantage of Gwadar Port to establish production base in Pakistan and tap the huge, largely untapped market of South Asian, Central Asia and Middle East. He said that Pakistan offers vast opportunities for entering into joint ventures with Japan in counter parts and transfer of technology.

Major sectors of investment of Japanese joint venture projects are automobiles, leasing, investment bank and power projects.


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## Owais

*NLC keen to build terminal for ATT cargo at Port Qasim* 


KARACHI (August 25 2006): The National Logistic Cell (NLC) has shown interest in building a terminal from its own resources to exclusively handle Afghan Transit Trade (ATT) cargo in the proximity of Port Qasim Authority (PQA).

The project would help facilitate the ATT cargoes and save demurrage and storage charges in case of non-clearance of cargo for long time

Sources told _Business Recorder _that the federal government is striving hard to grab the maximum transit cargo through country's (Pakistan) land route as compared with Iranian option for ATT. "The ATT cargoes would be given maximum facilities through the country," the source said, adding "It has been observed that shortage of railway wagons or any emergency-like situation could cause of delay in cargo transit."

"In such conditions the ATT handlers are seeking a different mechanism for waiver of demurrage, storage charges of ports and terminals on such consignments which are lying unclear." In a recent meeting officials of Planning Commission's Afghan Cell discussed the issues related to the ATT from ports, transport to bordering cities with all concerned stakeholders.

Sources said that the officials in ministry of ports and shipping, NLC and other concerned department would discuss the proposal regarding the mechanism, operation and construction of ATT terminal at PQA. In August 2005, both the country ports witnessed a sharp decline in their ATT cargo handling, which at present is only 30 percent from its peak of 80 percent.

From November 2005, 70 percent ATT cargo has been diverted to Iranian port of Bandar Abbas due to unavailability of adequate transportation facility at the ports in Karachi, causing huge losses to the national exchequer. Sensing the gravity of the situation, the federal government in November 2005 allowed transporting the ATT cargo through NLC trucks that ended a four-decade old monopoly of the Pakistan Railways.


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## Owais

*Bike manufacturers asked to raise exports to Africa, Bangladesh and Nepal* 


LAHORE (August 25 2006): Motorcycle industry should concentrate on increasing motorcycle export by penetrating in African, South African, Bangladeshi and Nepalese markets. Engineering Development Board (EDB) Chief Executive Officer Imtiaz Rastgar stated this while addressing senior officers of leading motorcycle-manufacturing company at their Sheikupura plant on Wednesday.

He also briefed them about restructuring of EDB, its performance and future plans. A briefing about activities of the group especially motorcycles manufacturing was also given to him.

He was told that the company had introduced the concept of 5S in which sale, spare parts, service, re-sale, financing and leasing services were provided under one roof through the network of the dealers. The company was in export business for the last seven years but the number was nominal, he was informed.

Imtiaz appreciated its vendor improvement programme (VIP), in which services of more than 300 vendors were evaluated and technical services provided to remove weaknesses. He also expressed satisfaction on achieving 92-percent deletion by the company.

Rastgar was informed that the company's CEO was currently in Japan to study the possibility of using world-wide network of the main company for providing services to the African countries. He was also informed that motorcycle industry had the capacity of manufacturing 1.5 million units annually, out of which its share was 700,000. Only 50 percent capacity of the industry was being used currently.


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## Owais

*'Pakistan to cooperate with China for poverty alleviation'* 

BEIJING (August 24 2006): Pakistan on Wednesday pledged to enhance its economic interaction with China and other regional countries for poverty alleviation. Addressing an international conference on anti-poverty and regional co-operation at Chengdu, Pakistan's representative Babar Amin assured his country's active support for tackling the issue on priority basis.

The conference was organised by Sichuan University, UNDP, World Bank and China State Council for Poverty Alleviation. Representatives from Bangladesh, India and Sri Lanka also spoke on the occasion.

Counsellor of Pakistan Embassy in Beijing Babar Amin said that Pakistan attached top priority to poverty alleviation and its ultimate eradication. The Government of Pakistan with the assistance of the World Bank and other leading donors has established Poverty Alleviation Fund (PPAF) with a resource base of US $633.17 million.

About regional co-operation for poverty alleviation, he asserted it should serve as the foundation for building a sound anti-poverty strategy at the global level.

He hoped the regional co-operation could create a "win-win" scenario for the rich and the poor in a region. For the poor it should offer a chance to grasp the opportunities and end the perpetual cycle of poverty while for the rich it may carry the possibilities of creating more markets for their products in their neighbourhood as a result of increased purchasing power of the erstwhile poor.

Babar Amin reiterated Pakistan's support to the aims and objectives of the Shanghai Co-operation Organisation including its efforts for regional economic co-operation. "We welcome China's Observer status of South Asian Association for Regional Co-operation," he added.

About Pakistan-China economic co-operation, he said there is enormous scope for further economic co-operation between two countries especially in the context of China's Western development strategy as Pakistan shares border with Western China.

Babar Amin lauded China's rapid economic progress and said being the world's fastest growing economy in the past two decades China has been able to alleviate poverty not only at home but has globally contributed to its mitigation.

China's sustained economic growth has served as a development engine for rest of the world, working both on supply and demand side of the economic spectrum. It was also instrumental in recovery of East Asia after economic crash of 1990s, he added.


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## Neo

ISLAMABAD, Aug 24: The International Monetary Fund (IMF) review mission, now in Pakistan wants the government to undertake "the very difficult" second generation reforms in order to adequately address governance and transparency related issues.

It also seeks further de-regulation of the economy to protect property rights and to create investment friendly environment in the country.

"The government will have to give serious consideration to achieve the objectives of second generation reforms which are, of course, very difficult and need to be undertaken to further strengthen the overall economy," said IMF Director for Middle East and Central Asia Department Mohsin S Khan, who also covers South Asia.

Mr Khan told Dawn on Thursday that the first generation reforms, which included tax and trade issues, were easy but the second generation reforms were tough and will have to be undertaken very carefully.

"Pakistan also has to take institutional reforms, especially civil service reforms and judicial reforms, which require more attention of the government," he said.

Mr Khan, who is visiting Pakistan along with a six-member IMF review mission, said that local and foreign investors were facing constraints for establishing their businesses in the country.

One of the most important challenges facing the government was to achieve long-term seven per cent plus growth rate to alleviate poverty and to create new employment opportunities, he said.

Responding to a question, he said poverty had definitely declined in Pakistan over the last few years but needed to be further reduced by increasing social sector spending.

"There is no doubt in my mind that poverty has reduced in Pakistan but I cannot say whether this reduction is 10 percentage point as was being stated by the government," he said adding IMF did not have technical expertise to measure the extent of poverty reduction in Pakistan.

Growth was the central point, he said adding if the country achieved up to 8.3 per cent GDP growth during the last three years, then poverty has certainly reduced. "No one can disagree with the government's claim that poverty has reduced in Pakistan."

However, the IMF director noted that there was not an ideal distribution of wealth between the rich and the poor in Pakistan, while maximum number of people should benefit from the country's improved GDP growth rate.

Mr Khan favoured government's decision to continue extending subsidies to the power and agriculture sectors as the improved budgetary provisions could now allow offering some benefits to the people. He said subsidy on diesel and kerosene oil was meant to help the poor classes.

It was good to see that the government was not offering across the board subsidies and was only catering to the requirements of low income groups.

"Pakistan needs to invest more in human and physical capital and the long-term fixed investment will have to be on education," the IMF director for Middle East and Central Asia said.

He expressed the hope that inflation will come down, which he thought to be around 7.5 per cent. That was not an encouraging situation.

"Some attention will have to be paid on further reducing inflation in Pakistan," he said adding that although it was not in the double digit as was experienced during 2005-06 but was coming down very slowly.

He said that Pakistan's current account deficit at $5.5 billion, was likely to be $6-7 billion during the current financial year.

But he did not see any problem over the issue because of the ongoing privatisation programme, increased foreign direct investment (FDI) and the government's foreign borrowings.

"This current account deficit seems to be the same, which was seen last year and the government was in a position to finance it," he added.

Mr. Khan said the current account deficit should not pose any major risk to the government. "But our policy advice would be to the government to be watchful about current account deficit and inflation."

Asked about the monetary policy and fiscal stance, he said the government was looking after them very carefully and as such it should not be a matter of any serious concern.

He said fiscal deficit at 4.2 per cent, despite last year's devastating earthquake, was not at all a serious issue for the country's economy.

"The important thing is that this fiscal deficit should be consistent with Fiscal Responsible Law at 2.5 per cent of the debt to GDP ratio," Mr Khan said.

He said 2006-07 was going to be the third consecutive good year like two previous years as far as macro economic fundamentals were concerned.

He was of the view that the government will achieve 7 per cent GDP growth in 2006-07 after 8.3 per cent growth rate achieved in 2004-05 and 6.6 per cent in 2005-06.

Mr. Khan did not believe that any future government will undo or slow down the reform process in Pakistan as it was meant to improve the overall economy.

Asked about the privatisation programme, the IMF director said, it was moving in the right direction aimed at improving efficiency of the business enterprises as well as ensuring more spending on social sectors.

"For us privatisation is proceeding well but we do not know how the issue of steel mills will eventually be resolved after the verdict by the Supreme Court," he added.

In reply to a question, he said he had read in the newspapers that Standard and Poors' was likely to downgrade Pakistan's positive out look.

"We would be happy to talk to the officials of the credit rating agency over the issue. But I do not see any particular reason as to why should they downgrade Pakistan's credit rating. Also, I do not know what is causing them to re-think about Pakistan's rating."


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## Neo

ISLAMABAD, Aug 24: The wind power projects to be set up in the Gharo and Keti Bandar corridor near Karachi would cost 9.5 US cents per unit levelised tariff to the consumers, compared with 4.7 cents per unit of hydel projects that currently face resistance.

Under directives from the government, the National Electric Power Regulatory Authority has given a deadline of December 31, 2006 to give their acceptance for an upfront tariff after making interconnection arrangements with Wapda. The tariff is, however, subject to an aggregated ceiling of 300mw, documents suggest.

The wind power projects have been allowed a tariff of 11.75 cents (about Rs7.05 per unit), for the first 10 years and 3.7 cents (Rs2.2) per unit for the next 10 years. As such the levelised tariff for 20 years of the project life comes to 9.5 cents (Rs5.7) per unit. The tariff has been assumed 97 per cent plant availability, about 12 per cent interest rate and debt-to-equity ratio of 80:20 per cent

Interestingly, the government is promoting much costly thermal power stations instead of much cheaper hydel projects despite the fact that the country has about 28,000mw of non-dam hydro power generation capacity that could be developed as run-of-the-river basis or minor storages. If the power from mega dams is also included, the total hydro power capacity surpasses 40,000mw.

On the other hand, the average power tariff for gas-based projects have now been offered a tariff of more than eight cents, 13 cents for furnace oil based plants and 15 cents for diesel based projects.

The government is now working out details to allow import of coal to generate up to 1200mw of electricity, although Pakistan has one of the WorldÃ¢â¬â¢s largest coal reserves in Thar where all efforts to generate electricity have not materialised as yet.

The government announced the hydel power policy in 1998 and offered a tariff of 4.7 cents per unit to hydel power producers but later asked them to sign agreements at 3.3 cents per unit. This forced many investors to close their offices in the country.

Resultantly, no hydel project could make reasonable progress till such time the country once again plunged into darkness this year. This forced the government to allow a number of thermal projects at a tariff as high as 15 cents per unit and once again invited hydel producers for a maximum tariff of 4.7 cents per unit.

The hydel producers now claim that 4.7 cent tariff was not feasible and they could start projects at a tariff not less than 6.5 cents which was far below the thermal tariff of 14 cents since natural gas was not available.


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## Neo

ISLAMABAD, Aug 24: Bahrain has shown its keen interest to make investment in power, housing and construction sectors of Pakistan. A three-member delegation of Strategic Acquisition and Investment and Kingdom Group of Bahrain led by Jasim Mohammad Al Malki, chairman Kingdom Group, held a meeting with Board of Investment (BoI) acting secretary Talat Miyan here on Thursday.

Mr Talat briefed the delegation about the investment opportunities available in the country. He said the shift in policies during the past five years had started yielding fruits.

He pointed out that Pakistan had great potential for investment and assured the delegation that their investment would be fully protected and they would enjoy unmatched facilities here as the country offered environment conducive to investment.

Mr Yusuf Abdullah Taqi, CEO of Strategic Acquisition and Investment, briefed about the functions and interests of his company. He said that they wished to expand their business here as Pakistan was fast emerging as a hub of investment in this region.

Meanwhile, another delegation of International Finance Corporation (IFC) led by vice-president of industries Declan Duff called on Adviser to Prime Minister on Finance Dr Salman Shah here on Thursday.

The delegation briefed the adviser about its investment in different sectors like banking oil and gas education, infrastructure and power generation.

The adviser informed the delegation that Pakistan had achieved considerable success in economic growth but still there was a huge potential to fully develop the manpower available in the country.

He said that Pakistan aimed to be a major manufacturing country so that it could create jobs for millions of young people.

The adviser said that there were vast opportunities of investment in education, communication and infrastructure. He informed the delegation about setting up of infrastructure fund by the government.


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## Neo

Friday, August 25, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\08\25\story_25-8-2006_pg5_3

ISLAMABAD: The country has been able to considerably reduce the foreign debt servicing burden, economic adviser Dr Ashfaq H Khan said on Thursday, describing it a major success.

Addressing Pakistani press officers posted abroad, he underlined the importance of the reduction in foreign debt servicing and said there was a time when the country used 6.6 per cent of its gross domestic product (GDP) on loan repayment.

Giving an overview of the economic progress he said fiscal discipline, deregulation, pro-investment policies, consistency, debt limitation, and sound economic management had produced robust upward trends.

He said the ratio of tax, trade, investment and savings to the GDP showed that the economy was growing at a fast pace.

Dr Ashfaq said the economic reforms introduced by the government had stabilized the exchange rate and attracted over 3 billion dollar direct foreign investment in the last financial year. 

He said strong domestic demand for goods not only helped sustain increased growth rate but also paved way for reducing unemployment, poverty, fiscal deficit and foreign debt.

He said Pakistan had re-entered the international debt capital markets by successfully launching new 10-year and 30-year 144A sovereign bonds, which reflected confidence of investors in the governmentÃ¢â¬â¢s economic policies.

To illustrate increased economic activities, he said the private sector had borrowed over 1,100 billion rupees from banks in less than 3 years to expand their operations across the country.

The adviser said the per capita income had gone up to 847 dollars showing an increase of 14.2 per cent in last three years.

Remittances at around 4.5 billion dollars continue to remain one of the largest sources of external finance for the country, he noted. Poverty has been reduced to 29.9 per cent from 34.46 percent and fiscal deficit brought down to 3.4 per cent from 7 per cent in the last 3 years, he said.


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## Neo

KARACHI: The land of Pakistan is very profitable and fruitful for Japan, giving an opportunity to expand trade and investment, but bad image of the country being portrayed by western media restricts big traders from entering this trade corridor, Consul General of Japan Shoichi Nakano said.

Addressing the business community at the Karachi Chamber of Commerce and Industry here on Thursday, Shoichi Nakano hoped recent Japanese investment worth US$15 million in the Karachi Export Processing Zone would generate lucrative results, which would help remove all the misconceptions about Pakistan and attract more Japanese investors for business and investment.

Ã¢â¬ÅJapanese companies have about 70 per cent investment in the automobile sector which it seeks to enhance further, while its investors are seeking joint ventures and big investment in PakistanÃ¢â¬â¢s textile sector,Ã¢â¬Â he added.

Ã¢â¬ÅBoth countries should enhance bilateral trade by assisting each other, which will also minimise trade imbalance between them.Ã¢â¬Â

The Japanese diplomat lauded the progress made by PakistanÃ¢â¬â¢s economy and stressed the business community to enhance bilateral trade in diversified sectors.

Earlier, President KCCI Haroon Farooki pointed out imports from Japan had touched $1.45 billion while PakistanÃ¢â¬â¢s exports could not surpass $164 million.

He urged the business community to enhance trade and establish joint ventures with Japanese entrepreneurs, which would bring technology in the country.


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## Neo

KARACHI: Increase in the interest rates shall not slow down the pace of economic growth during the current fiscal year and GDP growth would remain same as of the just ended financial year, economic experts believe.

However, if consumer financing -especially car financing by the banks - is not stopped immediately then it would adversely harm the economic growth in the years to come, they foresaw.

Economic experts expressed these views at a public dialogue on Ã¢â¬ÅImpact of Increase in Interest Rates,Ã¢â¬Â held here on Thursday by Pakistan Press Foundation.

Dr Shahid Hasan Siddiqui, Chairman, Research Institute of Islamic Bank & Finance, argued that due to bold steps, the pace of economic growth would remain same as of the last fiscal year. First, State Bank of Pakistan has increased discount rates from 9 per cent to 9.5 per cent and secondly the central bank has revised export refinance rates from nine percentage points to 7.5 percentage points in Monetary Policy, he recalled and welcomed these steps as positive for economic growth of the country just for the ongoing fiscal year.

Dr Kaiser Bengali pointed out that SBP has increased interest rates as a measure to curtail inflation without affecting the economic growth.

Two years ago economic growth was not the objective of the present government and as a result of that unemployment increased unprecedented, seven million people fell below the poverty line, budget deficit, current account deficit increased to the historical levels whereas SBP maintained reserves artificially, he added.

Dr Bengali advised government to immediately stop the car financing that was adversely harming the economic growth and was need of the economy in contemporary.

Responding to a query, he maintained that preventing car financing would obviously minimise banksÃ¢â¬â¢ profits and would decline the auto sector, on the contrary, the suggested measure would positively impact on the overall economic growth, he added.

Experts warned that increase in investment should not be taken as being done presently by Privatisation Commission of Pakistan giving away profit making government own entities on through away prices. Moreover, the change of ownership under the name of privatisation should not be classified as Foreign Direct Investment (FDIS), they added.

MA Jabbar, representative of Federation of Pakistan Chambers of Commerce & Industry (FPCCI), said, Ã¢â¬ÅWe have no fundaments to run the country economy. We need to shift our stance from short-term financing to the long-term to invest in the job creating and production sectors.Ã¢â¬Â

He said that policy makers made economic policies against the growth orientation and give free hands to the manipulators.

Speakers believe that increased discount rate by SBP, and subsequently interest rates would affect cement and textile sectors in the country, as these two sectors are the biggest borrowers of the banks for their expansion projects.


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## Owais

*'Less-efficient' plant: Wapda to pay $3.156 million rent per month* 


ISLAMABAD (August 26 2006): The Water and Power Development Authority (Wapda) will pay $3.156 million per month, as rent, for 150 MW thermal power plant, which, according to Planning Commission, is not only expensive but also runs on low efficiency, official sources told _Business Recorder _here on Friday.

The Economic Co-ordination Committee (ECC) of the Cabinet had approved the proposal in its last meeting, subject to approval of tariff by National Electric Power Regulatory Authority (Nepra) and reprioritisation of gas allocation quota for the rented plant, sources said.

They said that 'G E Energy' has also offered another plant, of 100MW capacity, to be available in March/April 2007, and Wapda reserves the right for its acquisition, if required, at equal or lower rates, depending on the offered rates through competitive bidding.

According to details, Wapda had received two unsolicited proposals from Alstom Power Rental ('APR') through Associated Group and General Electric Energy (G E Energy) through bids invited in the press. The two unsolicited proposals were examined by Wapda and Northern Power Generation Company Limited (NPGCL), which approved the following, subject to ratification/approval of tariff by Nepra:

a) Arrangement of 150 MW Power Plant at NGPS, Multan, on rental basis from G E Energy at a tariff of 3.133 cents/kWh (excluding fuel cost) for 3 years at 92 percent availability [monthly rent of $3,156,111 inclusive of O & M charges] be finalised.

b) Wapda to reserve its right for acquisition of another plant of 100 MW offered by G E Energy, which can be available in March/April 2007, if required. This acquisition would be at equal or lower rates, depending on the offered rates through competitive bidding.

a. Proposal of Associated Group for deploying 100 MW plan, subject to matching its tariff with G E's tariff. Sources said that Wapda has informed that it had received no response on tendering process, and the Board of Directors of NPGCL advised the management to seek GoP's approval for allocating special gas quota for the rented plants.

Sources said that the rented plants are expensive. However, given the urgency to have additional power capacity before next summer as per Wapda's demand projections and the long gestation period, renting of plant/plants appears to be the only short-term solution if shortfalls are to be met. As regards the provision of natural gas, Wapda has been asked to reallocate natural gas quota from its existing plants. Further, as the commissioning of the new IPPs, for which gas has already been allocated, will take 2-3 years, practical arrangements be worked out with the Ministry of Petroleum and Natural Resources to utilise this gas for the rented plant in the intervening period. The gas requirement of these plants is about 30-35 MMCFD/150 MM plant at 60 percent load factor.

Sources said that the Ministry of Water and Power had recommended to ECC to allow renting of power plant/plants by Wapda/NPGCL as an emergency measure, subject to acceptance of tariff by Nepra, and added that Wapda should only rent as much power as is absolutely necessary and which would be utilised with high load factor for economic utilisation of capacity.

According to sources, Wapda would select the nearest possible location to the load centres of Gujranwala, Faisalabad or Lahore to install the plant. However, if it is necessary to locate the plant at Multan then it should be ensured that there are no transmission bottlenecks. The Planning Commission in its comments said that the proposed plant was expensive and had low efficiency. However, in view of anticipated high power shortages in the country, and to maintain economic momentum, the proposal may be agreed to.

The NPGCL has been directed to operate the plant factor so that overall cost per unit is reduced. Wapda has also been asked to increase liquidated damage (LD) from the proposed ratio of 1:1.25 to high factor to bind the bidder for highest availability, sources said.


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## Owais

*IMF questions go-slow on privatisation* 


ISLAMABAD (August 26 2006): The International Monetary Fund (IMF) review mission has questioned the government's strategy of going slow for the sell-off of the public sector entities, and suggested to the Privatisation Commission to take the job more seriously.

A two-member IMF review team met the Privatisation Commission officials here to review the sell-off plan for the current fiscal year. Sources said that the IMF team raised several questions regarding privatisation of different public sector entities, including Wapsa power distribution companies, PPL, PSO. NIT, SNGPL SSGC, OGDC and banks IPOs and strategic sale.

The team also questioned the status of KESC and PTCL sell-off. The review mission was of view that the Privatisation Commission should complete formalities for sell-off of the entities short-listed for the current fiscal year.

The Privatisation Commission team briefed the IMF review mission about the status of various entities listed for privatisation during the current fiscal year. The mission was also apprised about Pakistan Steel Mills Corporation (PSMC) sell-off controversy. The mission was told that the Council of Common Interests (CCI) had approved sale of different public sector entities, including PSMC.

The mission was also informed that the government was working actively to offer OGDC's global depository receipts (GDRs) in the international market by the end of the current fiscal year. It was apprised that the government plans to offer NIT for strategic sale on priority basis.

The review mission held meetings with Prime Minister Shaukat Aziz, different Cabinet members and economic policy makers. It has suggested an aggressive strategy to increase exports and investment for key sectors to sustain current pace of economic growth.

Under article IV of the consultations, the Fund can review economic growth of its member countries including Pakistan and give suggestions for policy making. However, its suggestions are not binding for members who are not beneficiary of its financial assistance.


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## Owais

*Importers assure government: sugar prices not to go up in Ramazan* 

KARACHI (August 26 2006): The quantity of sugar in the country is more than the requirement. This was stated by Adviser to Prime Minister on Finance, Dr Salman Shah, while talking to APP after a meeting with a delegation of sugar importers at a local hotel on Friday.

The Adviser said that the meeting was held to review the situation and ensuring stable supply position in the country's markets and bringing about improvement in it besides maintaining the prices and supplies at reasonable level.

He said that the members of the delegation "have committed" that during Ramazan the prices would not be allowed to go up and that supply would be ensured.

Salman said that the government has inventories in sugar, and the importers and mill owners also have stocks of this commodity. He expressed hope that during Ramazan there would not be any problem, and sugar prices would remain quite reasonable for the consumers.

The Adviser to PM said that Trading Corporation of Pakistan (TCP) has also made arrangements for 800,000 tons sugar, while importers have 250,000 tons. Besides, mill owners also have sufficient stock.

He said that sugar available in the country is more than the requirement. He said that TCP would maintain a strategic reserve of sugar of 0.4 million tons sugar. He said that the prices of the commodity internationally are quite reasonable. The Adviser to PM said that there is no rising trend in sugar prices in the country, rather they were coming down gradually.

He said that with the arrival of the new crop, sugar prices were expected to remain stable and the consumers would benefit from it. Dr Salman said that wheat prices in the country were stable for the past two years and this was because of maintenance of good reserve. He said that for the next crop of the commodity the farmers would also have good incentive for wheat production.

The Adviser said that importers have been provided subsidy for importing gram pulse (dal chana) and because of this there were some imports of this commodity. He stated that prices of `dal chana' were quite stable.


----------



## Owais

*Shippers start millions of cotton bales dumping at Chinese ports* 


KARACHI (August 26 2006): International shippers have started dumping millions of cotton bales at Chinese ports in anticipation of a tremendous demand that would be created in the days to come, sources told _Business Recorder _on Friday.

They said that international shippers, mainly from the United States, moved their stocks by July 31, as the subsidy of step-2 by US government to exporters was due to end.

Traders hinted sharp rise in world cotton prices as cotton crop the world over has been affected by uneven weather conditions. They said that cotton prices would start inching up in the next couple of weeks, especially during September.

Cotton trade gurus hinted that Pakistan would also have to import at least 2.5 million bales cotton to meet the domestic needs and traders might have procure cotton at comparatively higher rates.

"It is premature to predict the country's annual cotton crop production. However, it is being anticipated that torrential rains and floods in some areas of the country could hit the crop to a major extent and the country might witness a shortfall of 1.2 million bales," said Ghulam Rabbani, Chief Executive of Drachenberg Trading Company, Texas (USA).

Sources said that international shippers had been dumping huge cotton stocks at Chinese ports, mainly Daliyan port, for the last one-and-half year, but they have now expedited the process of transporting cotton stocks containing millions of bales to China, keeping in view the upcoming cotton demand from a number of countries.

"They (shippers) are expecting tremendous demand of cotton from almost every niche of the world in the coming days and definitely hoarding is being done for speculation and price spike," the exporter remarked. Traders are of the view that cotton price, currently at 54-55 cents/lbs, could reach upto 55-58 cents/lbs in the coming days, particularly during September.

One trader commented, "Actually, they (shippers) are storing huge cotton stocks at the Chinese ports because warehousing is comparatively cheaper there and China is the biggest cotton consumer and its crop has also affected this year."

He said that the hoarders were confident that China could alone procure such big stocks if any country does not show buying interest. "China's annual cotton production stands at around 6 million tons against the annual consumption of 10 million tons, while its crop has been affected by uneven weather conditions and the remaining gap is to be filled through imports," he added


----------



## Owais

*China to dig 150 petroleum exploratory wells in Pakistan* 

ISLAMABAD: China Petroleum&#8217;s vice-president, Liu Xi Hui has said that his company would be assisting in drilling of 150 petroleum exploratory wells in Pakistan next year.

In a meeting with the Federal Minister for Petroleum and Natural Resources, Amanullah Jadoon here, Liu Xi Hui told that a huge potential for investment in Pakistan&#8217;s petroleum sector existed and China Petroleum wanted to avail of this opportunity by making investment. He also briefed about the details of China Petroleum&#8217;s different projects in Pakistan. 

Federal Minister for Petroleum and Natural Resources, Amanullah Jadoon on this occasion welcomed the China Petroleum&#8217;s participation in the construction of PARCO&#8217;s Karachi-Mahmood Kot 850 kilometre long white oil pipeline project. He also briefed the Chinese delegation about LNG, coastal refinery and other petroleum projects.


----------



## Owais

*SBP siphons off Rs9.80 billion liquidity * KARACHI: State Bank of Pakistan (SBP) has obtained Rs9.80 billion from the banks for six days at an interest of 8.40 per percent.

The Central Bank under its stringent monetary policy accepted offers from the banks for the purchase of treasury bills worth Rs9.80 billion only at an interest of 8.40 percent as against the total offers of Rs11.10 billion received.

Short-term loans&#8217; interest rate today closed at the highest of 9.4 percent.


----------



## Owais

*Trade pact with US to be finalised: Shamshad *

KARACHI: Governor State Bank of Pakistan Dr. Shamshad Akhtar said Friday that Pakistani textile products worth $2 billion could be exported to the USA in the wake of a special commercial agreement with the United Stats.

During a ceremony here, the governor told Geo News that negotiations about finalization of the agreement were under way and soon it would be finalized.

&#8220;Agriculture is vital to Pakistani economy and in past, loans continued to be provided on political basis; however, this misuse is no longer in place owing to reforms in the banking system as well as the investment in the field from private sector,&#8221; Dr. Shamshad said.

She said the government was providing loans to small cultivators on priority basis.


----------



## Neo

ISLAMABAD, Aug 25: Prime Minister Shaukat Aziz said on Friday as the agriculture sector was the backbone of country's economy the government had adopted a holistic approach to improve farm productivity, introduce value addition and augment income of farmers.

He was presiding over a meeting at the PM House on to review the agricultural growth in Pakistan.

The prime minister said agriculture had a 22 pet cent contribution to the GDP and was a major employer in the rural areas where 67 per cent of the population lives.

He said as a result of the government's initiatives total size of agriculture sector now was about $30 billion. Rural poverty has declined from 39.26 per cent in 2000-01 to 28.1 per cent in 2004-05 thereby showing a decline of 11.16 percentage points.

The prime minister said the steps taken by the government for better water management, lining of water courses, supply of better seeds, fertilisers and

pesticides will further accelerate agricultural growth and will

help improve the living standards of the people in the rural areas.

He emphasised the need to facilitate the use of innovative technologies, demand driven research, market infrastructure development and compliance with international quality standards to improve competitiveness in the agricultural sector.

Secretary ministry of food, agriculture and livestock made a presentation about reforming Pakistan Agricultural Research Council (Parc), and restructuring of the Agricultural Price Commission (Apcom).

Fisheries policy and action plan and poultry development policy and action plan were also presented to the prime minister.

He reviewed the performance of each sector and said new challenges required innovative and demand-driven research and knowledge-based development system.Ã¢â¬â


----------



## Owais

*Swedish groups keen to invest in Pakistan* \

LAHORE (August 27 2006): Several Swedish business groups have shown interest for making investment in Pakistan due to the economic turnaround witnessed by the country in recent years.

The interest was shown by the Swedish businessmen during their meetings with Lahore Chamber of Commerce & Industry (LCCI) delegation led by Mian Misbah-ur-Rehman, currently in the Scandinavian country for promotion of bilateral trade between the two countries, a spokesman of LCCI said here on Saturday.

On arrival in Stockholm, the LCCI delegation was warmly welcomed by the Commercial Counsellor, Javed Akbar. Later, the delegation met Ms Sophia Linder and Ms Karin Askelof, head of the International department at Swedish Chamber of Commerce. They briefed the delegates on the work of the Swedish trade body and the facilities being offered to the exporters and importers.

The Swedish Chamber offered free use of the chamber's database and facilities for the LCCI. They also showed interest in offering capacity building programs, study visits, matchmaking, seminars, and conferences in Sweden for the members of the LCCI.

Ms Askelof assured of full support of Swedish Chamber to promote bilateral trade between the two countries. Mian Misbah-ur-Rehman also invited the Swedish Chambers to visit LCCI.

Later, the visiting delegation was received by Borje Risinggard, a senior executive of Swedish Trade Federation at the federation office. Risinggard gave a comprehensive briefing to the delegation on existing import and exports trade scenario between Pakistan and Sweden and highlighted the efforts of the Swedish Trade Federation in promoting the same.

Moreover, the LCCI delegation also visited the Swedish Trade Council, where they were briefed by Per G Hallstrm, Information Specialist and Head of the market services, about different trade promotional programmes and services being offered to the trade organisations both in Sweden and the rest of the world.


----------



## RAPTOR

Sunday, August 27, 2006 

*World Bank rates Pakistan in top 10 investment destinations*
_Daily Times Monitor_

LAHORE: The World Bank has included Pakistan in its list of 10 most attractive countries for investment, Geo news quoted a British journal as saying. According to the channel, the Bank has issued a list of countries with an investment-friendly atmosphere and satisfactory law and order, where investors&#8217; have the potential to earn profit and their capital would be safe. Britain is the second largest investor in Pakistan, the channel reported, adding that last year the volume of foreign investment was $3 billion.


----------



## Neo

Islamabad (August 27 2006): Prime Minister Shaukat Aziz has said that out of 30 thousand vacancies created for the people of Balochistan in federal and provincial government departments, 23 thousand have been filled while recruitment of 7 thousand vacancies is under process.

Chairing a meeting at the Prime Miniser House this afternoon to review progress of on going mega development projects in Balochistan, the Prime Minister said that the government was paying special attention to the development of Balochistan province.

"President Pervez Musharraf and Pakistan Muslim League government are the first one, which have launched meaningful programmes in Balochistan to bring it at par with more developed areas of the country" he added.

He said "Rs164 billion allocated by the federal government for 140 ongoing development projects in Balochistan are manifestation of government's commitment to bring the province at par with more developed areas of the country" and added that these projects will lead to create more jobs and better facilities of life for the people.

He said government has adopted a holistic approach for the development of Balochistan and the economic and political initiatives are being made in tandem to expedite growth and development in the province.

The Federal Government had given Rs 100 million to each district in Balochistan to initiate local projects to directly benefit the people.

The Prime Minister said the Mirs and Sardars of Balochistan are contributing in government's efforts for overall economic uplift of the area, education and health facilities for the population and development of the Balochistan province. "The successful convening Bugti Jirga is a landmark event, which will contribute to peace and development in this province" he emphasised.

He said the construction of dams, Gwader port, network of roads and mineral and fisheries development programmes undertaken by the government will change the face of Balochistan.

He said government is particularly focusing on strengthening of infrastructure and 35 percent of NHA budget is being spent on building a network of roads and highways in the province which will open up more income generation and employment opportunities.

The PM said Kachi Canal which is under construction will increase agriculture production by providing better irrigation facilities to five districts including Dera Bugti, Balon , Jhal Magsi, Sibi and Naseerabad.

Shaukat was informed that a total area of seven lakh (70,0000) acres will be irrigated by Kachi Canal. This includes one lakh two thousand ( 102,000) acres of land in Dera Bugti. Construction work on the canal is in progress on both ends of the canal, which is being done to speed up completion.

Chief Secretary Balochistan in his presentation gave details of the implementation status of Mirani Dam, Sabakzai Dam, Kachhi Cannal, RBOD-III development of Gwadar port/city, Quetta water supply and environmental improvement project and Kohlu Development Packages.

He said Mirani Dam and Sabakzai Dams will be completed by the end of this year and June 2007, respectively. Kachi Canal phase one will be competed in 2008.

The Prime Minister was informed that 38 water filtration plants have been set up in Balochistan and 130 more sites have been identified. Rs 650 million have so far been released by the federal government for various projects under Kohlu Development Package.

The Prime Minister was also informed that site measuring 122 acres has been selected for Cadet College Kohlu, and 8 acres have been earmarked for Kohlu Girls College.

Chief Secretary Balochistan said utility store and Nadra have been opened in several points of Balochistan and more will be opened soon. The Prime Minister was updated on progress of Gwader port its industrial estate and support facility. The Prime Minister said Gwader is destined to be major hub for trade manufacturing and tourism.

The Prime Minister reviewed the programmes in details and gave instructions for the timely implementation. The meeting was attended among others by Federal Minister for Inter-Provincial Co-ordination Saleem Saifullah Khan, Minister of State for Petroleum and Natural Resources Mir Muhammad Naseer Khan Mengal, Deputy Chairman Planning Commission Dr M. Akram Sheikh and senior officials.


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## Neo

SIALKOT (August 27 2006): The world has recognised Sialkot as export-oriented city of Pakistan, since this place possesses century-old industrial heritage. It has developed a remarkable export culture over the period and is contributing over 800 million dollars annually to the national exchequer.

The city is sprawling with thousands of small and medium enterprises (SMEs), which are engaged in honouring their global commitments for export of value-added quality products such as sports goods, surgical instruments, leather goods, gloves, badges, musical instruments etc.

The researchers of various foreign universities were conducting research on unique "export culture" of this city and hub of the cottage industry of the country.

Recently two researchers Anika Altaf and Joni Haijen from Amsterdam visited Sialkot for their joint research work. During their stay, both the researchers carried out interviews of female soccer-stitchers to gauge the impact of fair-trade intervention in their socio-economic lives.

Both Anika and Joni presented their initial findings with the Sialkot Chamber of Commerce and Industry (SCCI). The SCCI President and other participants appreciated the researchers work.

In an informal chat with _Business Recorder _Anika said that business community of Sialkot had extended full co-operation and "assisted us in carrying out the research work." Replying to a question, Anika said that she came to Pakistan after three years for research purposes and "I observed a lot of changes in every sphere of life in Pakistan as a result of this change."

About her research finding, she said that impact of fair-trade had positive potentials, but the workers were still needed more benefits under the fair-trade practice. In its current form in Sialkot, fair-trade was not providing a sustainable livelihood to the women engaged in the soccer ball industry, she said.


----------



## Neo

LAHORE (August 27 2006): Provincial Minister for Industries, Trade and Investment, Muhammad Ajmal Cheema has said that export culture of Sialkot would be promoted in the province and small industries would be modernised so that small businessmen could be able to earn their livelihood in a better manner.

These views were expressed by him during a meeting with a delegation of industrialists at his office, here on Saturday. 'There are vast business opportunities in the Central Asian States (CAS), and Pakistani industrialists should pay attention to explore CAS markets which have great demand for leather, textile, surgical equipment, sports goods and jewellery', he added.

He said that we can only eradicate unemployment from the province through industrial development because government cannot provide job opportunities to all citizens with its limited resources. He said that WTO would greatly benefit textile sector in Pakistan.


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## Neo

KARACHI (August 27 2006): A multinational company Careefour is keen to set up a hypermarket in Karachi with a cost of $75 million, a high-level meeting was told here on Saturday. Sindh Chief Secretary Fazlur Rehman presided over the meeting held at his office Legenre Bruno, the representative of the Careefour gave a presentation to the meeting on the proposed project.

The meeting was told that this project would provide direct employment to some 500 skilled and semi-skilled workers. The hypermarket would be a trade center, which would provide goods and services to consumers as a self-service store.

The meeting decided that the proposed market might be set up around Malir area. In this regard Chairman Chief Minister's Investment Cell Muslim Abbasi was made a focal person. The EDO revenue would made a line of action for the project.


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## Neo

Sunday, August 27, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\08\27\story_27-8-2006_pg5_2

_By Arshad Hussain_

KARACHI: Frequent crashes and the volatility in stock markets during the last few months dissuaded foreign investors from investing in markets resulting in a major decline in portfolio investment by 52.9 percent to $19.6 million in July 2006, compared with investment in the corresponding period of the previous year.

Due to low portfolio investment, total foreign investment has declined by 8.06 percent or $13.4 million in July 2006 to $152.8 million compared with the $166.2 million in July 2005. The country received direct investment of $133 million, an increase of 6.7 percent or $8.4 million. No privatisation proceeds were received in July this year.

Ã¢â¬ÅAll over the world portfolio investment in stock markets has been declining for the last few months,Ã¢â¬Â said Mohammad Sohail, director of research and equities at Jahangir Siddiqui and Co. Ã¢â¬ÅThe same scenario is affecting Pakistan, but we are expecting better foreign investment in the equity market in full year.Ã¢â¬Â 

The central bank has received total foreign investment of $3.872 billion during the outgoing fiscal year. The government has set a full-year foreign direct investment (FDI) target of above $4 billion for the current fiscal year.

Ã¢â¬ÅThe governmentÃ¢â¬â¢s FDI target is achievable as the International Monetary Fund (IMF) is pressurising the central government to privatise public sector entities,Ã¢â¬Â the analyst said.

At the moment an IMF team is on a visit to Islamabad inquiring about delays in the privatisation of WAPDA power distribution companies, Pakistan Petroleum Limited, Pakistan State Oil, National Investment Trust, both Sui Gas companies, Oil and Gas Development Company Limited and banks

After this step, it is being hoped that the privatization commission will finalise the sell off of the short listed companies in the current fiscal year, the market experts said.

According to the data available at the State Bank, the country received portfolio investment and direct investment of $19.6 million and $133 million respectively in the first month of the current fiscal year. 

Portfolio investment from the USA stood at only $3.5 million this July compared with the $32.6 million last July. Major investment in the local bourses was from Singapore, which stood at $18.5 million in July 2006. 

The European Union made an investment of $5.8 million this month compared with the $1.8 million in July 2006. The third highest investment of $4 million was made by the United Kingdom in the first month of the current fiscal year.

Portfolio investment has declined by $3.2 million and $9 million from Western Europe and Switzerland respectively.

Direct investment from Western Europe and European Union has gone up to $46.7 million and $39.9 million respectively. Out of the total $133 million, developed countries have made investment of $89.9 million in Pakistan.

Major inflows of foreign investment of $29.5 million have flown into the trade sector, power sector (Thermal) $22.7 million and $19.7 million in Oil and Gas Exploration.


----------



## Neo

Sunday, August 27, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\08\27\story_27-8-2006_pg5_10

QUETTA: Balochistan Chief Minister Jam Mohammad Yousaf said on Saturday that the Gwadar port project would be inaugurated this year which would be followed by trade and industrial activities in the area. 

The chief minister was speaking to National Telecommunica-tion Corporation (NTC) Chairman Rear Admiral Shahid Farooq who called on him here on Saturday.

He said communication facilities would be of immense importance for the Gwadar Port as it would ensure that investors had access to national and international markets. 

He also directed the NTC to ensure the provision of modern telecommunication facilities along the coastal highway. The Balochistan chief minister accepted the offer of the NTC chairman regarding the implementation of a project to link security cameras to be installed at an important site in Quetta city through an optic fibre system and directed the city government to take advantage of the NTC offer. 

"The basic infrastructure to provide telephone connections to government departments in Gwadar has been established and initially an exchange of 500 lines has been set up in the area," the NTC chairman said. He added that separate exchanges would also be established for government departments in Zhob, Loralai, Khuzdar and other districts.

A separate system for provision of internet facility to the province has been introduced which has improved the internet capacity in Balochistan significantly, he informed. 

A hotline system will also be introduced to ensure that the chief minister had a district link with the government and important institutions in Gwadar.


----------



## Neo

ISLAMABAD, Aug 26: Prime Minister Shaukat Aziz was informed on Saturday that Mirani and Sabakzai dams would be completed by the end of this year and June 2007, respectively.

At a meeting held to review progress of ongoing development projects in Balochistan, Mr Aziz was told by the provincial chief secretary that Kachi CanalÃ¢â¬â¢s phase-I would be competed in 2008.

The chief secretary said 700,000 acres would be irrigated by the Kachi Canal, which included 102,000 acres in Dera Bugti. He said work on both sides of the canal was continuing to ensure early completion of the project.

He gave details of the implementation status of the Mirani Dam, Sabakzai Dam, Kachi Cannal, RBOD-III, development of Gwadar port/city, Quetta water supply and environmental improvement project and the Kohlu Development Package.

He said 38 water filtration plants had been set up in the province and 130 more sites had been identified for the purpose. He said the federal government had released Rs650 million for various projects under the Kohlu Development Package.

The prime minister was told that 122 acres had been selected for a cadet college and eight acres for a girlsÃ¢â¬â¢ college in Kohlu.

The chief secretary said utility stores and NADRA centres had been established in several areas in Balochistan and more would soon be opened.

Prime Minister Aziz said that of the 30,000 vacancies created for the people of Balochistan in federal and provincial government departments, 23,000 had been filled and recruitment on the remaining posts was under process.

He said the government was working to bring development, stability and growth in Balochistan.

The prime minister said allocation of Rs164 billion by the federal government for 140 ongoing development projects in Balochistan was a manifestation of the governmentÃ¢â¬â¢s commitment to bring the province at par with developed areas of the country. These projects would create more jobs and provide better facilities of life to the people, he added.

He said the government had adopted a holistic approach for development of the province and economic and political initiatives were being offered to expedite growth and development in the province.

Mr Aziz said he had given Rs100 million to each district in Balochistan to initiate projects at the local level.

He said Mirs and Sardars of the province were contributing in governmentÃ¢â¬â¢s efforts for economic uplift of the area, and providing education and health facilities. The successful convening of the Ã¢â¬ÅBugti jirgaÃ¢â¬Â was a landmark event and it would contribute to peace and development in Balochistan, he claimed.

He said the government was focusing on strengthening infrastructure and spending 35 per cent of the NHA budget on building a network of roads and highways in the province.

The meeting was attended among others by Federal Minister for Inter-Provincial Coordination Saleem Saifullah Khan, Minister of State for Petroleum and Natural Resources Mir Mohammad Naseer Khan Mengal and Planning Commission deputy chairman Dr M. Akram Shaikh.


----------



## Owais

*New brand &#8216;E-10&#8217; petrol to be launched next week in Lahore* 

LAHORE: Pakistan State Oil (PSO) would be introducing its new brand E-10 of petrol next week here.

Following Islamabad, E-10 petrol scheduled to be launched in Karachi this week was put off for sometime due to the stagnant rainwater that afflicted different parts of the city, but now this brand would be introduced first in Lahore, PSO officials told.

PSO officials further told that the arrangement for 25 vehicles has been made in Lahore as well like Islamabad. They said that initially 10 percent ethanol was being mixed in E-10 and this trial project would continue for six months. 

E-10 would be cheaper by Rs1.50 per litre than the existing petrol price and the ethanol content would be increased to 20 percent in case of its getting a hit in the market, but some change would have to be brought down into the vehicles for using 20 percent ethanol mix petrol.


----------



## Owais

*Innovation, research to grab better share in global textile market: PM* 


*ISLAMABAD *_(updated on: August 27, 2006, 17:31 PST_): Prime Minister Shaukat Aziz on Sunday said the government was committed to facilitate the private sector to improve their competitiveness and productivity.

Talking to a delegation of All Pakistan Textile Manufacturing Association (APTMA) here, he emphasised the need to promote innovation and research to enable the industry to grab a better share in the global textile market.

The prime minister said the government's policies of deregulation, privatisation and liberalisation have created a very conducive atmosphere for the private sector.

To further develop the textile industry, the prime minister said the government has launched a Clean Cotton Project to develop the indigenous cotton processing industry in line with the internationally acceptable standards.

Meanwhile, presiding over a meeting here to review the progress and implementation of mega development projects in Balochistan, the prime minister said the federal government has allocated Rs 164 billion for the completion of the on going development projects in the province. The prime minister said huge allocation are manifestation of the government's commitment to bring the province at par with other developed areas of the country.


----------



## Neo

Saturday August 26, 2006 (1946 PST)

*ISLAMABAD: Prime Minister Shaukat Aziz has said that government is paying special attention the development of Balochistan and out of 30,000 vacancies created for the people of Balochistan in federal and provincial government departments, 23,000 have been filled while recruitment of 7,000 vacancies is under process. *


Chairing a meeting at the PM&#8217;s House Saturday to review progress of on going mega development projects in Balochistan, the prime minister said that President General Pervez Musharraf and Pakistan Muslim League government are the first one, which have launched meaningful programmes in Balochistan to bring it at par with more developed areas of the country. 

The Prime minister said that government is working to bring development, stability and growth in Balochistan. He said Rs 164 billion allocated by the federal government for 140 ongoing development projects in Balochistan are manifestation of government&#8217;s commitment to bring Balochistan at par with more developed areas of the country. These projects will lead to creation of more jobs and better facilities of life for the people, the prime minister said. 

He said that government has adopted a holistic approach for the development of Balochistan and the economic and political initiatives are being made in tandem to expedite growth and development in the provinces. 

The prime minister said he had given Rs 10 crore to each district in Balochistan to initiate local projects to directly benefit the people. 

The prime minister said the Mirs and Sardars of Balochistan are contributing in government&#8217;s efforts for overall economic uplift of the area, education and health facilities for the population and development of the Balochistan province. The successful convening Bugti Jirga is landmark event which will contribute to peace and development in Balochistan, the prime minister said. 

He said the development of dams, Gwadar Port, network of roads and mineral and fisheries development programmes undertaken by the government will change the face of Balochistan. He said government is particularly focusing on strengthening of infrastructure and 35% of NHA budget is being spent on building a network of roads and highways in the province which will open up more income generation and employment opportunities in the province. 

The prime minister said Kachi Canal which is under construction with increase agriculture production by providing better irrigation facilities to five districts including Dera Bugti, Balon, Jhal Magsi, Sibi and Naseerabad. 

The prime minister was informed that a total area of 700,000 acres will be irrigated by Kachi Canal. This includes 102,000 acres of land in Dera Bugti. Construction work on the canal is in progress on both ends of the canal, which is being done to speed up completion. 

Chief Secretary Balochistan in his presentation gave death of the implementation status of Miran Dam, Sabakzai Dam, Kachhi Canal, RBOD-III development of Gwadar Port city, Quetta water supply and environmental improvement project and Kohlu Development Packages. 

He said Mirani Dam and Sbakzai Dams will be completed by the end of this year and June 2007, respectively Kachi Canal phase one will be completed in 2008. 

The prime minister was informed that 38 water filtration plants have been set up in Balochistan and 130 more sites have been identified. Rs 650 million have so far been released by the federal government for various projects under Kohlu Development Package. 

The prime minister was also informed that site measuring 122 acres has been selected for Cadet College Kohlu and 8 acres have been earmarked for Kohlu Girls College. 
Chief Secretary Balochistan said utility store and NADRA have been opened in several points of Balochistan and more will be opened soon. 

The prime minister was updated on progress of Gwadar port its industrial estate and support facility the prime minister said Gwadar is destined to be major hub for trade manufacturing and tourism. 

The prime minister reviewed the programmes initiated in details and gave instructions for the timely implementation. The meeting was attended among others by federal minister for inter provincial coordination Saleem Saifullah Khan, Minister of State for Petroleum and Natural Resources Mir Mohammad Naseer Khan Mengal, deputy Chairman Planning Commission Dr M Akram Sheikh and senior officials.


----------



## Cheetah786

LAHORE (August 27 2006): Several Swedish business groups have shown interest for making investment in Pakistan due to the economic turnaround witnessed by the country in recent years.

The interest was shown by the Swedish businessmen during their meetings with Lahore Chamber of Commerce & Industry (LCCI) delegation led by Mian Misbah-ur-Rehman, currently in the Scandinavian country for promotion of bilateral trade between the two countries, a spokesman of LCCI said here on Saturday.

On arrival in Stockholm, the LCCI delegation was warmly welcomed by the Commercial Counsellor, Javed Akbar. Later, the delegation met Ms Sophia Linder and Ms Karin Askelof, head of the International department at Swedish Chamber of Commerce. They briefed the delegates on the work of the Swedish trade body and the facilities being offered to the exporters and importers.

The Swedish Chamber offered free use of the chamber's database and facilities for the LCCI. They also showed interest in offering capacity building programs, study visits, matchmaking, seminars, and conferences in Sweden for the members of the LCCI.

Ms Askelof assured of full support of Swedish Chamber to promote bilateral trade between the two countries. Mian Misbah-ur-Rehman also invited the Swedish Chambers to visit LCCI.

Later, the visiting delegation was received by Borje Risinggard, a senior executive of Swedish Trade Federation at the federation office. Risinggard gave a comprehensive briefing to the delegation on existing import and exports trade scenario between Pakistan and Sweden and highlighted the efforts of the Swedish Trade Federation in promoting the same.

Moreover, the LCCI delegation also visited the Swedish Trade Council, where they were briefed by Per G Hallstrm, Information Specialist and Head of the market services, about different trade promotional programmes and services being offered to the trade organisations both in Sweden and the rest of the world:flag:


----------



## Owais

*Thermal power FDI inflow in July up 5 times* 


ISLAMABAD (August 28 2006): During the first month of current fiscal year 2006-07 (July), power sector (thermal) topped the list attracting $22.7 million foreign direct investment (FDI), which is more than five times higher as compared to corresponding period of last fiscal year, which was $3.5 million).

On the other hand, investors withdrew $3.4 million (FDI) from electrical machinery industry.

According to State Bank of Pakistan (SBP) data released on Friday, during July 2006, total FDI inflow increased by 6.74 percent, to $133 million, against $124.6 million of July, 2005.

Though the power sector fetched large chunk of FDI, it was all in thermal sector, and there was no investment in hydel sector.

During the period under review, FDI in the communication sector declined, and it was because of telecommunication sector whose FDI declined to $12.4 million against $31.3 million that of FY2005-06.

In information technology, only $2 million was invested against $1.1 million. The notable point in IT sector was that during the period software and hardware development fetched $0.7 million and $0.3 million, respectively, which was less than what it was in the corresponding period of last fiscal, ie $0.6 million.

In postal services, FDI was zero against $0.2 million of last year.

According to SBP data, FDI was zero in fertiliser sector. It is important to note that during July 2005, foreign investors withdrew more than $107.6 million from this sector.

Investment in oil and gas exploration, petroleum refining and mining and quarrying also declined to $19.7 million, $1.4 million and $0.5 million against $20.2 million, $3 million, and $1 million, respectively.

FDI inflow in food and textile sectors also declined. Food attracted $0.9 million and textiles $1.6 million, against $1.1 million and $2.2 million, respectively.

A significant feature of the report is that in July 2006, financial businesses also attracted $10.2 million, compared to $9.7 million.

Trade sector attracted $29.5 million, against $17.2 million, with a growth of 71.5 percent (it received $118 million during 2005-06); construction sector received $4.8 million compared to $4.4 million.

The tourism sector also showed a sizeable growth, attracting $1.8 million against $0.7 million.

Cement fetched $2.2 million FDI against $0.6 million, and petrochemical sector attracted $1.7 million, while it was zero in July 2005.

Economists believe that if the FDI inflow remained strong, it would give a big boost to Pakistan's economy by improving per capita income and accelerating government efforts in bringing down poverty rate. Besides, it would work as a cushion against external shocks and would mute the pressure of climbing current account deficit.

In China, stronger inflow of FDI during the last two decades has not only improved its per capita income to $1,000 but the population living below poverty line also declined to just 10 percent.


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## Owais

*97.1 percent sales tax registration target achieved in 2005-06* 


ISLAMABAD (August 28 2006): The Central Board of Revenue (CBR) achieved 97.1 percent sales tax registration target of 15,278 set for 2005-2006 by registering 14,835 new taxpayers.

According to CBR, Prime Minister Shaukat Aziz had given the target of 15 percent increase in the number of new taxpayers in 2005-06, which has been successfully achieved.

The quarter-wise performance shows that the Board had registered 3076 new taxpayers in July-September (2005-06) against the target of 3055. Three percent increase in the number of sales tax return filers was required during first quarter.

During the second quarter (October-December 2005-06), 3228 new taxpayers were registered with the sales tax department against the target of 4070. Four percent increase in the number of sales tax return filers was required in this quarter.

The Board registered 4075 persons in the third quarter (January-March 2005-06) against the target of 4070. Another 4 percent increase in the number of sales tax return filers was required in this quarter.

In fourth quarter (April-June 2005-06), the Board registered 4456 new firms/companies. Another 4 percent increase in the number of sales tax return filers was required in the last quarter to meet the annual target of 15 percent in 2005-06.

Thus, the overall sales tax registration target for 2005-06 was missed by only 443, ie 2.9 percent


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## Owais

*MoA signed with India and China to promote handmade carpet exports* 


LAHORE (August 28 2006): The representatives from Pakistan, India and China have signed Memorandum of Article (MoA), for the development and promotion of handmade carpet exports under the auspices of World Handmade Carpet Organisation (WHCO) that was formed in China in 2005.

Vice Chairman, Pakistan Carpet Manufacturers and Exporters Association (PCMEA), Major Akhtar Nazir (Retd) revealed this while addressing a press conference at the association office here on Sunday.

Nazir said that all the three member countries have already agreed to form the organisation with a view to develop a product that suits to the importing countries. Now Iran had also shown its interest to join the organisation which would further strengthen this forum, he added.

Elaborating further on the development, he said that the founder chairman of WHCO would be from Pakistan, while general secretary would be taken from China. The organisation's head office has been planned to set up in India. As many as five members from each country would represent WHCO.

Chinese Home Textile Association, Chinese Tibiten Carpet Association, Chinese Chamber of Commerce for Import and Export of Foodstuff, would be among the five members from China. Whereas leading carpet exporters Major Akhtar Nazir (Retd), Latif Malik, Mian Javed ur Rehman, Aslam Tahir and Iqbal Ibrahim would represent Pakistan in the organisation.

Commenting on formation of WHCO, John representative from China, and O.P. Garg from India highly applauded the efforts made by the member countries for the formation of organisation and said that it would help develop and design handmade carpet which in turn would give a boost to the carpet exports of each country, he maintained.

Talking about the Regional Handmade Carpet Exhibition-2006 being held from Monday (August 28), at Expo Centre, Fortress Stadium, Lahore, PCMEA chairman said that it would continue till August 31 while award ceremony would be held on August 30. A large number of foreign buyers, besides local delegates were to attend the exhibition, he said. Adding, he pointed that the exhibition was likely to generate at least 15-20 percent more foreign exchange.

Akhtar Nazir disclosing further said, so far over 200 foreign buyers from USA and European countries had already confirmed their participation in the exhibition.

He told that 50 foreign buyers had already arrived from various countries for the show. 'On their arrival, they expressed their satisfaction over the arrangements of the exhibition. Besides importers, foreign media, particularly Rug News from USA is also arriving to cover this important exhibition. The association has planned setting up of 100 stalls in the exhibition out of which India has been allocated eight stalls, China two and 90 stalls would be set up by the local exhibitors', he maintained.

The vice chairman added that Minister of State for Commerce, Hamid Hiraj would inaugurate the exhibition while Chairman Export Promotion Bureau Tariq Ikram had been pleased to grace the occasion. Punjab Governor Lieutenant General Khalid Maqbool (Retd) would be chief guest on the award distributing ceremony on August 30, he added.

Nazir averring on arrangement of mega event said in order to facilitate the foreign buyers, arrangements had also been finalised for establishing of Carpet Street at Nawazish Ali Road that would help interested importers to view all kind of products at one spot in the provincial metropolis.

He said a Carpet City had been planned at somewhere 50-kilometers from Lahore along the Lahore-Islamabad Motorway. According to the plan, the Carpet City would be set up on an area of 300 acres and all kind of facility like weaving, washing, dying would be provided under the same roof. These steps would help enhance country's carpet exports to earn substantial amount of foreign exchange, he added.

He appreciated export promotion bureau of Pakistan for its all out help for setting up the Carpet City and said that it would take the matter with the ministry of commerce for final approval.

PCMEA vice chairman, however, said that if six percent export rebate was provided to the carpet industry following textile industry example, it would make the products more competitive internationally.


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## Owais

*Indus Motor plans to double its production by 2010* 


KARACHI (August 28 2006): The Toyota Indus Motor Company (IMC) plans to double its production capacity from 50,000 units to 100,000 per annum by the year 2010, a plan in line with industry's target to raise its output from the current 215,000 units to 0.5 million by 2012.

In an exclusive interview with Business Recorder, Indus Motor Company CEO Pervaiz Ghias said the local auto industry employing over 400,000 persons had recorded an average growth of 35 percent per annum during the last few years.

The production had gone up from 45,000 to 200,000 units during the same period, he said, adding the government was projecting the sale of 500,000 units by 2012 as a part of its Automobile Vision while industry was looking for 350,000 units by 2010.

Pervaiz said the auto sector in Pakistan had the potential of becoming a major driver of economic growth, adding the Indus Motor Company alone had contributed Rs 12 billion to the exchequer in FY06.

He said the transformation of local auto industry into globally competitive and export-oriented force needed investment, acquisition of latest technologies, expansion in existing capacities, and rationalisation of tariff regime for its integration into the global supply chain. "All of this necessitates government's support to the local auto manufacturers in the form of a consistent long-term policy," Ghias observed.

Commenting on the import of used-cars, he said the policy was making its impact felt in the local industry, which at the first instance, may seem positive as the delivery of clog of cars seemed to be addressed to. "However the matter if analysed on a long-term and macro-level identifies some serious consequences for both the industry and the country," he added.

Last year, he said the imported reconditioned cars accounted for a market share of 19 percent, which was only four percent previous year. This ratio was equal to the 25 percent of the total production capacity of the local plants.

"If 46,000 cars - figures available till June 30 - are imported each year, there would be no expansion plans on the side of local manufacturers," Pervez Ghias remarked.

Although, the government had restricted import of used-cars over five-year-old, but still much more needed to be done by way of non-tariff restrictions so that the misuse of transfer residence and gift scheme was stopped by unscrupulous second-hand car importers who evaded taxes and document transaction. "Domestic demand has to be met by the domestic industry, as is the policy in all other countries," he said.

"The industry has been instrumental in transferring technology to vendors and dealers. The development of this industry would result in substantial foreign exchange savings, which would be drained, as if a short-term solution to address supply and demand gap, the imports of cars continues," he cautioned.

The Indus Motor Company is the second largest local manufacturers of cars in the country accounting for the 18 percent of the total market share in the last fiscal year.

At present, it produces the leading brands; Cuore in the 800cc class and Toyota Corolla in the 1300cc class. One car is assembled every four and a half minutes at the state-of-the-art IMC plant at Port Qasim.

"The quality is according to international Toyota standard. We do not say that a car is made in Japan or Pakistan, we say it is made in Toyota just like the other 62 plants elsewhere in the world. There are regular quality audits that ensure the standards are maintained," Ghias maintained.

On the issue of premium, IMC CEO said that there were two solutions to this problem, one, was increased production that was being done by the local players and the other was government control over transactions by way of documentation and checking source of funding.

"It is the unauthorised dealers and fake buyers ie resellers that were creating artificial demand and the customer was forced to resort to buying on premium. The issue creates bad name for the manufacturers and we condemn this activity," he added.


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## Owais

*Over Rs 223.405 million anomalies detected in PPO accounts* 


ISLAMABAD (August 28 2006): The Auditor General of Pakistan has detected misappropriations of more than Rs 223.405 million in the accounts of Pakistan Post Office department. The Pakistan Post Office has failed to recover nearly Rs 36 million from the Pakistan Telecommunication Company Limited (PTCL) as service charges on account of delivery of telephone bills.

According to the audit report tabled in the National Assembly a few days ago, PPO authorities incurred an irregular expenditure of Rs 62.873 million during 2002-03 on printing of stationery and forms from the Pakistan Post Foundation Press without obtaining competitive rates from the Printing Corporation of Pakistan.

The report says there was a variation of Rs 42.188 million between the closing balance of 220 saving bank accounts and the balances appearing in the annual profit statement issued by the Director Accounts, Lahore for the financial year 2002-03.

The differences were not reported by the heads of units of seven formations of the department to the PPO director (accounts), for ratification. The situation, report reveals, reflects that working of the GOPs is not checked appropriately which may lead to over-payment, fraud or embezzlement of the public money.

Moreover, nearly 47 cases of misappropriations, frauds, losses, thefts and dacoity amounting to Rs 29.213 million occurred during 2002-03, but these cases were not reported to audit authorities, who observed that these cases were not appropriately processed or finalised as required under rules.

The PPO suffered a loss of Rs 16.684 million, as 27 formations of the department incurred the hefty amount on engagement of daily wages and contingent paid staff without getting funds allocated under the relevant head during the same period.

The unauthorised expenditure was charged to the regular establishment head instead of the proper head of account.

The audit report also says that Rs 13.546 million was drawn in six formations of the PPO department from the allocation made under the head 'Capital Outlay' during 2002-03, and placed under transitory head 'Other Deposits' in order to avoid the lapse of funds.

The authorities awarded contracts for conveyance of mail to private contractors in a non-transparent manner, causing a loss of Rs 5 million to national kitty.


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## Owais

*Powerlooms sector demands R&D support, WHT withdrawal* 

FAISALABAD (August 28 2006): Chairman, All Pakistan Cotton Powerlooms Association (APCPA), Abdul Haq, has said that big investors and industrialists have fully benefited by upgradation in 'Textile Vision 2005', while small units, especially the powerlooms industry, had been totally ignored.

Addressing a business forum, he said that in a way the miserable condition of small and poor farmers was discussed but practically the big landlords benefited. Similarly, in the industrial sector the small industrialists and investors dreamed of bright future, but their all ideas and thoughts remained unrealised.

The APCPA chief said that under 'Textile Vision 2005', the work was done throughout the country relating to the upgradation, under which spinning and processing were not functioning in accordance with their production capacity. In the weaving sector, only the mill sector had been upgraded, but the small scale weaving sector, which was called the non-organised sector had got nothing from the 'Textile Vision 2005'.

He said that the programme of up-gradation announced for the powerlooms industry by Federal Ministry of Industries and Smeda had totally flopped. According to him, the policies prepared in 'closed rooms' never proved effective and there was no say of small industrialists.

Haq said that when the handlooms of textiles were free of quota, then no one bothered to listen to the miseries of the sinking cottage industry. "Now, when India has become the leading exporter of handloom products, we have decided to change our thinking."

He urged the government to convene a roundtable of the ignored segments of the textile sector in the Textile Vision 2005, so that factors relating to failure could be sorted out.

He said that the policy which had been announced by the Prime Minister for promotion of SMEs, small scale industrialisation by Smeda has yet to start it work on it, but what was being done at present was not less than a tragedy. For example, take the electricity tariff B-I and B-II. These are yielding negative impact on the small-scale industrial sector, especially powerlooms industry, which is providing livelihood to more than one million persons, directly or indirectly. Under present tariff system, big industrialists are getting electricity on cheaper rates and enjoying more privileges, while powerlooms industry gets costly electricity tariff, which is the main hurdle in the progress of the 'biggest cottage industry', he said.

Abdul Haq said that if the powerlooms industry had got the facility of research and development and up-gradation facilities, and the electricity tariff had been reduced, then these ancillaries textile units would also have flourished.

He said that before Textile Vision 2005 powerlooms industry had 79 percent share in the export of grey cloth. Now this ratio has been reduced to 59 percent in non-organised sector.


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## Owais

*Negative signals about Pakistan's ranking* 

(August 28 2006): The indication that Pakistan's credit rating may be downgraded is sad news. According to some reliable sources, the Singapore-based Standard & Poor's Ratings Services has hinted at changing the long-term positive outlook of Pakistan's credit rating owing to domestic political and economic risks and emerging regional situation.

The State Bank of Pakistan's Governor, Shamshad Akhtar is reported to have informed the Federal Government about the negative signals coming from S&P that clearly indicate a likely downward revision of Pakistan's credit rating that was upgraded from "stable" to "positive outlook" in December last year. S&P analysts have been exchanging data with the central bank for quite some time now but there is no deadline for the review as such.

The SBP Governor is also reported to have written to the government about the impact of downgrading of the country's credit rating on the overall economy that has already been showing signs of imbalances in various sectors. When contacted, the Advisor to the Finance Ministry, Ashfaque Khan said that it was a complicated process and a team of Standard & Poor's would be visiting Pakistan before finalising any revision.

The downgrading of Pakistan's ranking, in our view, if actualised, would be unfortunate for the country, though indications of such an action should not be a surprise. The credit rating of a country, it may be explained, is a reflection of the strength of its economic fundamentals, particularly the behaviour of its foreign sector.

The Standard & Poor's has for the last few years been consistently improving its outlook for Pakistan in view of considerable improvement in its macro-economic indicators and normalisation of relations with India. In December last year, it had revised its credit rating on Pakistan to "positive" from "stable", citing improvement in external debt indicators. Following this, the rating agency affirmed its current 'B+' foreign currency and 'BB' local currency long-term and 'B' short-term sovereign ratings assigned to Pakistan. Since then, there have been lots of negative developments, prompting the rating agency to reconsider its outlook with regard to the prospects of Pakistan's economy.

The GDP growth rate declined last year and sustainability of a respectable growth in the coming years has become suspect due to a number of factors, including continued low level of savings in the economy.

The budget deficit is on the rise, strengthening the fears that inflationary pressures may reemerge. The biggest negative point is the highest ever trade and current account deficit at about $12 billion and $5 billion respectively last year. During the first month of the current fiscal year, the trade deficit widened to $1.239 billion as against $726.936 million in the same month of 2005-06, as oil prices hit a new high in the international market.

Higher debt costs would ultimately make a large dent in Pakistan's foreign exchange reserves. The uncertain political future in Pakistan before a run-up to the elections, souring of relations with India, a tenuous border situation on the western side, conflict in the Middle East and possibility of its spill-over to the region are also some of the negative factors that may be the basis for a downward revision in the credit rating.

The consequences of downgrading of the credit rating are obvious and need not be recounted here in detail. It would be hard for Pakistan to sell bonds in the international market at favourable terms and attract the much-needed foreign exchange. Foreign banks would be reluctant to do business with their Pakistani counterparts and foreign investors may be tempted to avoid the country.

The privatisation programme of the government may receive a setback and, overtime, foreign exchange reserves of the country would come under pressure. All of this suggests the need to take remedial measures immediately to reverse the trend of deteriorating economic indicators and improve the domestic political and regional climate so far as possible so that S&P maintains at least the present credit rating of the country. We know this is not easy but the alternative to this approach would be harmful to the economy in the long run.


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## Owais

*Railways and FCCI joint venture soon to launch cargo trains* 


FAISALABAD (August 28 2006): Pakistan Railways is ready to have a joint venture with the Faisalabad Chamber of Commerce and Industry to launch a cargo train and upgrade the Faisalabad railway station. Addressing the FCCI members, Federal Minister for Railways Sheikh Rashid Ahmad said 14 more freight trains would start working this year.

He urged businessmen to invest in the railway sector. He said display centres and other commercial activities could be started at the railway station.

In this regard, Pakistan Railways was ready to have joint venture with the business community.

Sheikh Rashid Ahmad said fast trains to link Faisalabad with other major cities, like Karachi, Lahore, Rawalpindi and Multan, would soon be started.

In his welcome address, FCCI President Mian Muhammad Hanif said the cargo train facility for Faisalabad Dry Port Trust would be helpful in promoting the export activities.

City District Nazim Rana Zahid Tauseef was also present on the occasion.


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## Owais

*Cotton prices may rise on crop shortage, quality factor* 


KARACHI (August 28 2006): The ginners were in trouble facing lack of buying interest from the consumers as rain had nearly forced mills to get shutters down besides a report from America that exports of made-ups will be hit hard, during the week ended on August 26,2006.

The spot rate was dreaded to be touched as scenario change was not in grip. The spot rate was firm until Wednesday but had to be revised higher by Rs 25 to Rs 2475.

*WORLD SCENARIO: *

Contracts journeyed erratically through the week making hectic efforts to find a direction but except scenario change in Texas where rains were reported increasing somewhat prospect of an improved yeald. However, opening was weaker as futures dived down on speculators indulgence that ldt prices to bottom. The October was down 0.29 to 52.11 and Dec down 0.44 to 54.08 cents a pound.

On Tuesday futures snapped a losing streak to end up for the first time in five days.

The trade buying and short covering did the magic and caused a change. Fundamentally focus was on weather over the US cotton belt, which has raised questions on the type of demand that may emerge for cotton marketing year 2006.07 gets underway.

Until a week back it had disappointed all the players and it appeared that a drought from July through early August would result in a US cotton crop that would be around 19 million bales. But rains have brighten the prospect of favourable scenario sending crop production to high level.

On Wednesday speculative activity pulled contracts down. Meanwhile Pak officials informed that heavy monsoon rains have caused damage about 10pc of the country's cotton crop in Sindh area which produces quarter of total production. However, traders said they were watching eagerly China's issuance of new import quotas for cotton.

On Thursday the cotton market moved marginally higher on rebounding from the previous day's negative session obviously with little fresh direction to inspire trading, operators said. They said they were not inspired by trade data from USDA as it reported net upland sales of cotton rose 16pc to 91,800 bales from a week ago amid a 23pc drop in export.

They expressed uneasy feeling over almost two weeks the benchmark contract has been stuck in two cent range.

On Friday final session showed strengthened as technical buying. Traders said on a macro scale the market is wrestling with two questions, one is the drop in the US and/or world crops enough to sponsor a supply driven rally irrespective of demand and two: when will demand pick up and will it meet projections. The futures closed October up 0.40 to 53.50 and Dec up 0.47 to 55.6 cents a pound.

*LOCAL TRADING: *

The cotton consumers were pressing ginners to take out stocks at softer rates to lay hands on as they were held up due to inclement weather, mills staying inoperative and report from America that a big group buyers of made ups will not be able to continue. Inclement weather continued to dampen the full swing operation as all waited for a better scenario change favouring both the sellers and buyers.

On Monday modest business transpired as ginners felt pressure which they were not going to low down to. Rains had continued with that sellers/buyers remaining tense. They would have likesd a scenario change enabling all players to become busy and normal. But neither local nor the international news was incentive ladder to start business. The ginners looking at the temper of rains were getting ready for pushing prices higher but consumers were not ready to oblige. Spot rate remained stuck up at Rs 2450.

The second session was no better as buying interest remained thin. No change in spot rate was possible. Brokers with no business had been favouring ginners should not be so stiffly and must be thankful to outlet opportunity. Nearly 500 bales of cotton changed hands in the range of Rs 2500/2525.

On Wednesday no business transpired as both ginners and textile mills were reading the developments due to rains and attacks of pests in the aftermath. However , chances are 50/50 for both the players, but wil depend on the rains condition after a fortnight or so. This period is considered very crucial for the cotton and textile traders. Spot rate remained unchanged at Rs 2450.

On Thursday speculative buying by textile millers pushed cotton price higher, market sources said. The spot rate was up by R 25 to Rs 2475. The millers took the report about damages in lower Sindh and some parts of Punjab and lifted cotton giving ginners a chance to play up with the long stuck up prices.

Nearly 600 bales were lifted at prices ranging between Rs 2500 and Rs 2625 depending on the quality. The cotton commissioner was not certain about the damages but had hoped production loss by damages by 1.5 million or around.

On Friday the buying turned respectable as millers tried to resume week long absence from the market and buy. The raise in price a day earlier had no effect over 1000 bales of cotton were bought at prices ranging between Rs 2475 and Rs 2625 depending on quality.

*IMPORT SUBSTITUTION, HOW LONG: *

For six decades people at the helm of affairs in Pakistan ignored thoroughly on major field of petro-chemical based industry. Had industries would have been set up as soon as cotton based economy was considered parallel to none other sector country would have enjoyed exemplary prosperity.

With extra-ordinary vision to successfully muster resources to keep this country at par with China and India. China envisioned the idea as back as 60 years to build and manufacture everything to be the short and long cost effective. One after another leaders here emerged to leave a mark on the course of history.

But our learned PhDs and class engineers and recognised scientist first knocked at the door in country for an opportunity to serve this country. But disappointed as they were., were eloped by countries who saw worth in them and paid the amount country had considered too much. It was, knowledgeable circles say for merely 18000 or so per month.

Thus the country with ever rising import was thrown to the brink of bankruptcy. Loans carrying high interest rates were acquired to buy or manufacture fashion powder or gun powder. The circles stood firm that Pakistan will any day will have to think that, cotton economy on top, and textile products earning 70 pc of the total of the forex, petro-chemical sector will have to be embraced and sooner the better.

Or, Pakistan will never emerge as an industrialised country and top exporters and earners from the textile products. The authorities must realise the grave mistake committed in the past for dearth of raw material or expertise, ignored the industries based on petro-chemicals.

The Chittagong steel mills was also opposed on raw material grounds but is running and meeting the country's needs. And sirs, will you ponder for a moment what precious things country established that led it to the brink of bankruptcy? The details are very ugly. Pertinent question is that Pak or foreign friends patronised raw material suppliers of Europe and Amercia and elsewhere should have set up, at whatever cost, to day textile raw materials besides cotton would have been receiving most of its chemicals and dyes needs from tjis country in stead of 70pc from abroad. Once newspapers reported chemical and dyes town was being set up.

It was good to hear. Country lover want now town set up. The donors have today been talking of religiosity, they will not mind Pakistan spends the interest payment on debts to be devoted to making industries that would make Pakistan pay all debt at a stretch instead of in bits. The hint is not that Pakistan is awarded LDC status but time to make Pakistan industrialised in true sense. Similarly need for production of textile machinery for all purposes should be manufactured and govt freed from demand of packages.

*LAMENT, CERTAINLY NOT: *

In China textile think tank, after going through a report showing deplorable condition leading Best Manufacturing Group to filing chapter bankruptcy, should have started how to meet the likely loss of $42 million. This sort of befalls afflict some business. The losers must not however waste time and energy on lamenting.

BMG of New Jersey is one of the best groups but misfortune led the management, to, as it so happens in America, resort to register bankruptsy. The loss as Pakistan exporters have calculated will come to around $42 million. Fortunately the BMG was importers of items that Pakistani exporters have made inroads in but the market they hope would remain intact. Ofcourse, they are worried the new approach to new buyers may record some hurdles on account of importers own preferences for importing the items imported by BMG without much hassle.

This is where Pak exporter, or may be exporter in other countries, get illusioned and take for granted that they won't find replacements. They have already expressed in the report that Pak exporters will have to make renewed efforts to find some sound and reliable US importers with whom they could build a smooth trading relationship.

Apprehending such losses expose weakness on the part of exporters, who has very vague picture of world market. In this case exporters seen to be unaware of the importers Pakistanis were having contacts around. The exporters should have, if they have surplus products to sell beyond, if such a setback hit them.


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## Owais

*Cont......*

It has been past experience that some aggressive exporters would contact our diplomats abroad for remaining untouched from ardent importers in the country they are working in for this purpose. Often diplomats also either write or seize the meeting or conference they are invited to attend to tell their exporters such and such country has scope for imports of products. among many countries particularly are said to have scope for our products one being Poland and other South Africa.

However, this is consoling that some exporters have reached America and meeting their importers who may not oblige right now and even exporting and exploring new American market and importers. If this is so, the loss being contemplated will be recovered with renewed efforts.

DIRT-FREE COTTON CULTURE: 

A few chips more are the obstruction in getting seedcotton cleaned and supplied to textile exporters. Officials are always aware of the cure but they have been victims of indifference thus their approach misses the right tract. The clean cotton or contamination free lint has not been as difficult as it has been made to look.

A recent report from Islamabad quoted a senior official in Minfal, who, however preferred to remain anonymous as it had feelings the sector consuming most cotton has the key to make the programme of clean cotton a real success. Some ginners in Sindh also think likewise, no, in fact they suffered financial loss, as consumers refused to pay additional money spent on the lint for making it clean.

Only the cotton and textile exporters can encourage ginners to supply required quality lint and spinners and textile exporters who always are in look out lint of international standard can make sure the success to achieve a culture of dirt-free lint. The ginners are on record they claimed they had made moves to supply clean lint because they were hurt for this reasons. Pak annually lost one billion dollar.

They called the instrument lint cleaner or roller-gin and they regret to say their rusted parts could be seen in some corners of the ginneries. But the cotton buyers who won't buy below world standard quality cotton, won't pay a penny more than the rest of cotton. It is since then the efforts are now being stepped upto make Pakistan a contamination free cotton culture. But it is still to get the move going. This particular point has to be kept in mind that ginners who had travelled to countries to observe and learn how in Turkey, India and Italy cotton is turned into clean lint.

Exports are of the opinion that the belief that all contamination in cotton is at picking stage. But they contest this belief and claim that cotton or seedcotton gets contaminated while on the way carried by middlemen or the "Arhatis." These two are also major players and they must be made conscious to avoid seedcotton getting mixed up with foreign elements, which have nothing to do with contamination.Tthat has made Pak cotton so much unpopular sort of thing that without nay word or bargain, according to sellers, foreign importers of cotton and textile products pay five to 10 cents lower than cotton of other countries.

US WAS NOT BACKING OUT: 

The words of the Chief US trade negotiator are to be taken on face value that it was premature to review trade legislation to give countries time to reach a new world trade deal. The talks were declared as collapsed on July 24, 2006. The knowledgeable circles touching upon the issue recalled US past gimmickry unworthy of super power game. All the other WTO members looked aghast, at one another.

Lama surrendering with all of them. All the ultra-hopeful members looked at their closed fists, which they had all put together could inject a new life in dying WTO. But the US had not budged an inch from its rigid stand. Naturally, tearful Lamy, in whispered tone said talks were being suspended. And now report of US trade representative Susan Schwab that despite "there has been strong resistance to any relaxation it was not backing away from its demand in the talks for deep farm tariff cuts." The US president himself, many will recall had expressed an early meeting just to lest his own and his country's business.

But the WTO chief Lamy and his Union had clearly stated to participate in any meeting to face the similar situation and end. However, the US trade representatives language seemingly gave a hope that US has to live up to its bigness. Susan's tone is clear that some solution is coming and before the trade promotion authority expires in mid-2007. Undoubte1dly Susan had in her view as all Americans November elections had.

The sources pursuing into the turn and twist in her language said that let us hope for the best and should take rather seriously that "it was premature to renew trade legislation." The sources however were not optimistic that all are intended to go well from US side.

This may be a half hearted call to get EU and Lamy attitude to soften as EU has not been going to attend CAIRNS group meeting in Australia around September 20/22. So, so what the meeting in Australia is some weeks in future. Time can show us as many game or twice as much the world has already witnessed.

TAIL PIECE: On a cursory look on BR Port Activity column certain news hurts feelings of some vulnerable people, such as one on August 2, 2006, was that 3993 tonnes of sugar at Karachi Port were unloaded. My God, hold on Sir, there was yet another news about sugar 2536 tonnes unloaded at Port Qasim. The total comes to 6449 tonnes.

The foreign exchange drained, could only be correctly calculated by the mill owners. The consumers can only feel the pinch of their hard earned tax money drained out to import an item served entire subcontinent before partitions world thinks and rightly so, it being agri based country, but they refuse to believe. Sugar, wheat and even some cotton needs are met from imports.


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## Owais

*Adamjee declares Rs 1.064 billion after-tax profit* 

KARACHI (August 27 2006): Adamjee Insurance Company Limited has declared after-tax profit of Rs 1.064 billion for the first half of the current year ended on June 30, 2006, as compared to Rs 456 million in the corresponding period of previous year.

Announcing the financial results here on Saturday, Nasreen Rashid, Chief Operating Officer of the company, said that earning per share (EPS) of the company had increased to Rs 11.71 as compared to Rs 5.52 of previous year.

The break-up value per share has also increased to Rs 37.05 in the period reviewed against Rs 22.31. Total assets of the company have increased to Rs 10.238 billion from Rs 7.395 billion. Investment income rose to Rs 917 million as compared to Rs 323 million.

The paid up capital of the company rose to Rs 909 million against Rs 826 million, while the company has announced to increase its paid up capital to Rs 1 billion. Adamjee Insurance is the first insurance company which has announced increase in its paid up capital to Rs 1 billion.

The gross premium of the company was Rs 3.9 billion in the first half of 2006 against Rs 2.9 billion, showing 35 percent increase, while the net premium was Rs 2.6 billion against Rs 1.9 billion with an increase of 26 percent. The underwriting profit was Rs 331 million against Rs 293 million, showing 13 percent increase.-PR


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## Owais

*Worldcall signs Rs 720 million agreement for WLL system* 


LAHORE (August 22 2006): The Worldcall Group of Pakistan on Monday signed Rs 720 million agreement with Huawei Electronics of China to collaborate in setting up a Wireless Local Loop (WLL) system in South of Pakistan.

According to a spokesman of the company, the contract award marks a major milestone in Worldcall positioning as a premier WLL operator in Pakistan. The contract includes line capacity infrastructure deployment for Worldcall WLL operations. Worldcall contract with Huawei for South of Pakistan will focus Karachi and Hyderabad as principal target areas. Service launch under this turnkey contract is planned for first quarter 2007. Besides the basic telephony services, WLL brings more value to the network by offering high speed Internet access, multi media, bandwidth on demand and fast file transfer.

'Pakistan is witnessing an unprecedented growth in demand and the wired network alone is not enough to keep up with it. This is especially true in areas where existing cables would require costly or time-consuming upgrades to provide high-speed, high-quality Internet access', the spokesman pointed out.

According to him, WLL is ideally suited for expansion in an existing wire line network in the provisioning of local telephone service. However the deployment of WLL will depend upon the prevalent market and regional terrain.

Huawei Technologies is one of the world's foremost solution providers for WLL CDMA networks. Selection of Huawei for the turnkey contract was based on excellence of Huawei's technology offering, along with its ability to deliver turnkey solutions on a major scale. In CDMA solution offering, Huawei is already a world leader with matchless profile in 450 MHz solutions deployed for WLL service, the spokesman added.


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## Neo

ISLAMABAD, Aug 27: The government has decided to set up a $500 million Thar Coal Mining Company (TCMC) run by the private sector to develop the countryÃ¢â¬â¢s largest deposit after having failed to involve any major company for investment in coal mining and power generation.

The plan, approved by the president and the prime minister, envisaged unbundling of the Thar Coal project into mining and power generation to bring down the size of investment in each block from $1.5 billion to $500 million, a planning commission official told Dawn. There are more than six major blocks identified so far in Thar.

The decision was taken after realising that mining and power generation needed to be developed independently. It was also felt that energy crisis had already hit the country and it might begin to affect the economy from next year and even the power produced from natural gas was now costing 5.9 cents per unit.

Ã¢â¬ÅWe lost six years in trying to attract large companies to finance up to $1.5 billion in mining and production of electricity from Thar coal reserve but failed to get a breakthrough because such a big investment was not forthcoming,Ã¢â¬Â said a senior government official.

It has also been decided to gear up Wapda to set up first coal-based thermal power plant at Thar if foreign or local investors continue to show indifference because dependence on imported fuels has to be checked.

He said the Ã¢â¬Ëmining majorsÃ¢â¬â¢ were not coming in for the Thar coal mining. Many companies showed keen interest in power generation at Thar coal but showed hesitation when the government asked them to also develop the mines themselves. He said an integrated project of mining and power generation required investment between $1 billion and 1.5 billion which was found to be difficult. Ã¢â¬ÅThar (coal) is not worth $1.5 billion investment for a foreign investor.Ã¢â¬Â


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## Neo

THE government has committed to provide electricity to the entire population by 2007. Out of a total of around 130,000 villages, 99,600 were electrified at the end of March 2006. There are still 30,400 villages that have to be provided with electricity.

The hydro potential in Pakistan has been estimated at 46,000 MW; the present installed capacity is 6,459 MW. According to the Ã¢â¬ËPolicy for Power Generation Projects Year 2002Ã¢â¬â¢, Pakistan plans to commission 12 large scale hydro power plants, besides other relatively small scale projects.

Large hydro power generation projects involve a number of social, political and technical issues. Despite the governmentÃ¢â¬â¢s intensive campaign, it has failed to remove the fears of Sindh and NWFP on the issue of the Kalabagh Dam. Also, the construction of barrages and dams upstream on Indus has degraded the Indus delta.

The promises of cheap hydro energy from large dams, if analysed from a sustainable development prism, are not reliable because of two reasons; first, there is a vocal demand to include the social displacement and environmental degradation costs in the up-front capital costs of such projects.

Financing of such mega projects remains the most important aspect of this problem. Funding from international donors for such a project is difficult to receive, considering their commitment to facilitate investments in private thermal based power plants.

Second, even if the government arranges funding for such projects, the outlays involved in resettlement compensations are huge. For example, the government intends to spend Rs2.025 billion on the resettlement issues of the Kalabagh Dam by constructing 20 model and 27 extended villages.

Also the world over, a large hydro power is not considered as a renewable energy option due to its negative impact on the local environment and on the people displaced by water flooding. There is also strong evidence to show that such large schemes emit greenhouse gases, often equivalent to fossil fuel power plants, due to the decaying of biomass covered by the reservoir.

However, small hydropower plants have emerged as a desirable option, especially for hilly terrains where natural and manageable waterfalls are abundantly available. Being environmentally benign and having a small gestation period, small hydro resources receive worldwide attention both in developed and developing countries to augment energy generation. Small hydro plants offer a wide range of benefits, especially for rural areas in developing countries.

Development of small hydro power plants (SHP) around the world has increased substantially in the last 10 to 15 years because of limited and fast depleting fossil fuel resources such as coal, oil and natural gas.

The worldÃ¢â¬â¢s installed capacity of small hydro plants is 47,000 MW, against an estimated potential of 180,000 MW. The development of small hydro projects appears strong in many parts of the world, especially in Asia, where it accounts for more than 19,000 MW of energy. Within Asia, China alone contributes more than 15,000 MW to the grid. There are over 420 small projects producing 1423 MW in India

Within the range of small hydro power plants mini-hydro typically refers to schemes below 1 MW, micro-hydro refers to schemes below 100 kW and pico-hydro to schemes below five kW. Although all of these technologies could be regarded as small hydro power plants, they have specific technical characteristics that warrant their own definition.

Generally speaking, micro- and pico-hydro technologies are used in developing countries to provide electricity to isolated communities where the electricity grid is not available, whereas mini-hydro tends to be grid connected. In most of the cases, no dam or reservoir storage is involved.

Generally the Northern areas are thinly populated. Low population and scattered settlements make it economically unfeasible to provide electricity supply to such places through the national grid.

These hilly areas receive a significant quantum of precipitation every year. Hence, water flowing through small rivers and streams is a potential source for small hydropower generation in order to solve the problem of energy shortages in such geographically discouraging areas

In fact, Pakistan Council of Renewable Energy Technologies (PCRET), a department of the Ministry of Science and Technology, has implemented 290 micro-hydro power (MHP) schemes in FATA and the northern areas with a total capacity of 3.5MW, ranging from 3-50kW per plant, with the participation of local community . All of these plants are run-of-river type in the low (four meter) to medium (30 meter) head range.

Similarly, Aga Khan Rural Support Programme (AKRSP) has constructed 171 micro-hydel units providing electricity to around 17,000 households in the remote and isolated region of northern Pakistan, and currently provides 11,000 households with electricity in very remote locations.

Once the plant is installed, the local community takes the responsibility of operating it. These plants provide electricity mainly for domestic purposes. Local people have installed agro processing plants for flour grinding, rice husking, lathe, in the power house. Such units are run during the day time, directly from the turbine shaft. The electricity produced through micro hydropower in the country is in the range of 5-50 kW.

Recently United Nations Development Programme (UNDP), the Alternative Pakistan Energy Development Board (AEBD) and German Technical Assistance Agency (GTZ) launched a Rs4.5 million project to promote adoption of renewable micro-hydro energy for the poor rural communities in Northern Areas.

A major advantage of micro hydro is that it can be built locally at a considerably less cost. For instance, imported turbine sets generating up to 50 kW cost approximately Rs30,000-60,000 per kW, while the local manufacturers located in Taxila, Gujranwala, Lahore, Karachi offer facilities for turbine manufacturing at Rs10,000-15,000 per kW, with marginally reduced turbine efficiencies. The cross flow turbine used by PCRET and AKRSP is manufactured in local workshops.

The unit cost of MHP in Pakistan is currently $1000-1200. The areas are remotely located at considerable distance from the national grid. Hence micro hydropower plants are the most attractive option of power generation. The system is a decentralised one, with no dependency on the national grid.

The substitution of conventional sources of energy like traditional biomass for cooking, diesel generators, kerosene lamps and biomass stoves with renewable energies like SHP help to decrease carbon dioxide emissions and also contribute to poverty alleviation and economic development by supplying the electricity needs for lighting, water pumping and operating small workshops.

These projects benefit the local environment by using a natural resource to generate much needed electricity without depleting the quantity or quality of that resource or harming aquatic fauna and flora.

The access to electricity provides women with an opportunity to improve their social and economic condition. Women in rural areas use time saved and extended working hours due to availability of light to manufacture traditional handicrafts for domestic and commercial purposes. Many children, especially young girls use the extra hours available during the nights to study.

Small hydropower (SHP) is a renewable energy source, a proven technology that can be connected to the main grid, used as a stand-alone option or combined with irrigation systems. The development of micro hydropower plants should continue, with continuous research for increasing the efficiency of these plants. Further, the government should launch new micro and Pico-hydro energy projects through Town council and Union council respectively. The costs of local manufacture can be reduced still further by developing local engineering capabilities and advisory services.


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## Neo

Conspiracy theories alleging the collusion of large multinational corporations with the spread of the new empire led by the now sole superpower seldom receive serious academic attention. These theories are often discredited as a figment of imagination of left-wing radicals still reeling under the shock of the demise of socialist regimes.

However, a recently-published book by someone who claims to have had first-hand involvement in shaping the policies of a number of developing countries, including Kuwait, Saudi Arabia, Iran, Indonesia, Colombia, Ecuador and Panama as an undercover agent for the US government and the recipients of large infrastructure contracts provides some useful insights into the modus operandi of collusion between big business and US government agencies in pursuit of extending the new empire&#8217;s global reach.

The book, entitled &#8220;Confessions of an Economic HiT Man&#8221; by John Perkins, sheds new light on the genesis of the present conflicts in the Middle East and shows that military adventures by the new empire are only a last resort to subdue a country.

The idea that corporate interests have undue influence over White House administrations is neither new nor unbelievable, but has grown in credence during the Bush administration, especially since the Iraq war.

According to a recent Gallup poll, 70 per cent of those questioned in the US said they believed that big business had too much influence over Bush administration decisions.

The existence of a thriving business in the heart of Washington D.C. on K Street, which has become synonymous with the corporate lobbying industry, testifies to this influence. The book vividly articulates how audaciously this influence is manifested in practice on a global scale.

Briefly, Perkins describes economic hit men (EHM) as &#8220;highly paid professionals who cheat countries around the globe out of trillions of dollars&#8221;. They funnel money from the World Bank, the US Agency for International Development (USAID), and other foreign &#8220;aid&#8221; organisations into the coffers of huge corporations and the pockets of a few wealthy families who control the planet&#8217;s natural resources.

Their tools include misleading financial and economic reports, rigged elections, besides payoffs, extortion, sex, and murder, which are more typical of James Bond-type cloak and dagger spy stories. &#8220;They play a game as old as empire, but one that has taken on new and terrifying dimensions during this time of globalisation.&#8221;

The Harvard Advisory Group (HAG) in Pakistan in 1960s was one of the early proto-types from which a nucleus of &#8220;EHM&#8221; emerged. In particular, Richard Gilbert, the field supervisor of the project, developed a close relationship with President Ayub Khan, who honoured him with one of the highest civilian awards, Sitara-i-Pakistan, on the Independence Day in 1965. He was instrumental in making Pakistan a firm ally of the US in the cold war and in inducing it to follow a foreign-aid dependent development strategy.

The EHM came into being after a realisation that military and CIA-type operation needed to be supplemented by direct involvement of (pseudo) professionals who would seduce third world rulers into embarking on ambitious development plans funded by multilateral lenders which would provide multi-billion contracts to mega-multinationals like Bechtel, Haliburtron, GE, GM and Enron.

These loans were to be largely used for the benefit of elites and for greasing the palms of the bureaucracy, military and the politicians, creating an unbreakable dependency on the empire and its financial institutions. Mr Perkins calls this evil nexus &#8220;corporatocracy&#8221;.

Interestingly enough, the former CEOs of these large corporations, like McNamara (GM), George Shulcz (Bechtel) and Richard Cheney (Haliburton) have served high executive offices in the US Administration in recent decades.

The archetype of the EHM was Kermit Roosevelt, a grandson of President Theodore (not Franklin) Roosevelt, who was sent to Iran as a CIA agent to topple the regime of Prime Minister Mossadegh in August1953 for trying to nationalise the oil industry and overthrow the Shah.

&#8220;I owe my throne to God, my people, my army - and to you,&#8221; said a sobbing and grateful Shah of Iran to Kermit Roosevelt after being restored to the Peacock Throne.

Since the Mossadegh affair, American corporations and government agencies employ two types of operatives: &#8220;economic hit men,&#8221; who bribe emerging economies, and &#8220;jackals,&#8221; who may be used to overthrow or even murder heads of state in Latin America and the Middle East to serve the greater cause of American empire.

The EHM were recruited by CIA and the NSA and assigned to work for private consulting companies, engineering firms and construction companies, to provide them a cover. Even the role of the &#8220;jackals&#8221;, formerly performed directly by CIA, is now sub-contracted to private sector, to avoid Congressional scrutiny.

Perkins entered the service of EHM after cutting his teeth in the Peace Corps in Ecuador, working with the indigenous farming population, an ideal internship opportunity for his future career. Simultaneously, he interviewed with the National Security Agency and then became an economic forecaster, with the pretentious title of Chief Economist (although he had only a Bachelor&#8217;s degree from Boston University and a minimal training in economics) with a major consulting company called Chas. T. Main, based in Boston.

Perkins joined this international network in the wake of the first oil shock, after the formation of Opec in the 1960s largely to challenge the power of &#8220;big oil&#8221; companies which set extremely low prices for crude oil. His work in Saudi Arabia is particularly revealing, because of the construction boom the oil shock spawned as a result of the enormous rise in oil prices.

Helping shape the US &#8211; relations was the EHM&#8217;s main task during that period that became pivotal to avoiding a serious recession in the US and the world economy after the 1973 oil shock, which raised the price of crude oil from $1.30 on January 1, 1970 to $8.32 on January 1, 1974.


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## Neo

The US immediately realised that Saudi Arabia had to play a key role if the oil cartelÃ¢â¬â¢s back had to be broken and if the use of the oil weapon resorted to by Arab countries in the Yom Kippur war had to be banished for good. Simultaneously, the US raised its military aid to Israel to $3 billion and set forth an arms race which would absorb a large part of the increased oil proceeds of the Arab world.

Almost as soon as the oil embargo ended in March, 1974, the United States started negotiations with Saudi Arabia to provide it technical and military support, both for its internal and external security and to transform the medieval nomadic nation into a modern economy. These negotiations led to the creation of a powerful collaborative institution called Joint Economic Commission JECOR (much wider in scope than, for instance, the Harvard Advisory Group in Pakistan) with overall management and responsibility delegated to the US Department of Treasury.

The unwritten job description of the EHM working in the commission as employees of various consultancy firms was Ã¢â¬Åto maximise payouts to US firms and to make Saudi Arabia increasingly dependent on the United States.Ã¢â¬Â

The Royal House of Saud agreed to play a dual role to help the US economy in exchange for keeping it in power Ã¢â¬â the threat of MossadeghÃ¢â¬â¢s fate hanging over its head as a sword of Democles, in case of non-compliance.

First, in its role as a Ã¢â¬Åswing producerÃ¢â¬Â it would agree to maintain the price of oil within acceptable limits by pumping more oil, often in excess of OpecÃ¢â¬â¢s agreed quota. Secondly, it would send most of its petro-dollars back to the United States and invest them in US government securities.

The US Treasury Department would use the interest from these securities to hire US companies to build Saudi ArabiaÃ¢â¬ânew cities, new infrastructure. This strategy not only kept Saudi Arabia under a tight US leash, it also provided a great fillip to economic growth in the US which had started decelerating in the 1970s.

Saudi ArabiaÃ¢â¬â¢s economic development in the 1970s also spawned the growth of defence-related industry which increased its dependence on the United States to defend itself from possible backlash against modernisation within the country and the fear of such unfriendly neighbours as Iran and Iraq.

This dramatically increased the expenditure not only on expensive military hardware supplied by the US firms but also the construction of airports, missile sites, radar stations and military bases which provided lucrative contracts to the US companies.

This ingenious method of recycling petrodollars and converting the oil shock into a bonanza for the US corporates was, according to Perkins, quipped by insiders as the Saudi Arabian Money-laundering Affair (SAMA) with a pun on the initials of the Saudi central bank.

Perkins shows that the seeds of the Bin Laden insurgency, two decades after he decided to give up the role of an EHM, were sown by the way the US and other western oil and infrastructure contracts cashed in on the opportunity. Saudi Arabia was hardly the only fertile ground for EHMs to prosper. Latin America and East Asia also figure prominently in PerkinÃ¢â¬â¢s confessional account. In fact an earlier version of the book was dedicated to the Ecuador president Jaime RoldÃÂ³s and PanamaÃ¢â¬â¢s president, Omar Torrijos, who died in mysterious air crashes in the 1980s.

According to Perkins, when we economic hit men failed to bring RoldÃÂ³s and Torrijos around, and the other type of hit men, the CIA-sanctioned jackals who were always right behind us, stepped in.Ã¢â¬Â Perhaps, General Ziaul HaqÃ¢â¬â¢s exit from this world 18 years ago could also be explained in similar terms.

No one knows where the EHM will strike next. But after oil, it is water that is being targeted for privatization by the corporations with the help of the World Bank and the IMF.


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## Neo

DUE to the accumulation of heavy debts, followed by intermittent external and internal shocks in the 1990s, economic mangers were urged by international lending agencies to undertake reforms on a priority basis in order to remove social and economic imbalances.

Since then, successive governments have been focusing on liberalising the financial sector, dismantling foreign exchange controls and deregulating markets to achieve an open and competitive economy for foreign investment and trade. More importantly, they have privatised public sector enterprises in order to enhance the private sectorÃ¢â¬â¢s role in the development process.

Despite initial efforts in the last decade to restructure state-owned commercial banks and the State Bank of Pakistan (SBP) and privatise a few financial institutions and certain loss-incurring public sector state entities, the country has remained in the grips of high inflation, low GDP growth rates, rising fiscal and trade deficits and a worsening of the poverty and unemployment situation.

However, 9/11 proved to be a blessing for the external sector of the economy due to a spurt in the inflows of remittances and a rescheduling of external loans. This resulted in a sharp rise in the countryÃ¢â¬â¢s forex reserves, improvements in its balance of payment position and stability in its exchange rate against leading currencies.

Deregulation ,in the real sense, started from 1999 onwards with the purpose of promoting a more open and competitive economy, by eliminating or reducing subsidies, deregulating prices and trading in some areas particularly oil and gas prices.

The present practice of fortnightly fixing of fuel prices is directly linked to the international oil price level. Pricing distortions with regard to natural gas have also been removed. Similarly in the agriculture sector, particularly in compliance with WTO dictates, subsidies allowed to farmers relating to the pricing of their crops have been brought down to minimum and the concept of market based prices has been strengthened.

But due to a lack of good governance, the opening of food items procurement to the private sector has led to speculative trading in agriculture commodities, particularly wheat and sugar items, and the creation of cartels by the suppliers of these commodities. This has negated the concept of competitive markets.

The recent sale of PTCL and KESC to foreign buyers did not bring any improvement in the operational efficiency of these organisations; instead KESCÃ¢â¬â¢s new management proved itself incapable of handling its affairs.

The sale of United Bank and Habib Bank brought a quick turn around in the performance of these two major institutions, helped by the injection of billions of rupees by the government to prepare them for privatisation. But the imprudent approach towards the privatisation of the Pakistan Steel Mills has evoked a lot of criticism from all quarters.

The overall results of the deregulation and privatisation policies have not been very fruitful for the economy. Privatisation has in fact aggravated the unemployment situation and enhanced economic inequalities.

In fact, in a democratic set-up, reforms require consensus- building. There should be a general awareness that the process of reforms result in creating losers and gainers. As such, policy makers must have concern for equity. They must develop mechanisms to compensate losers and must search out ways for distributing the benefits of reforms to all stake holders.

Financial sector reforms have improved the financial health of banks. Restructuring and privatisation of the four big state-owned banks, where huge amounts of non-performing loans (NPLs) had concentrated, have improved their operational efficiency. Settlement of their NPLs issue is being undertaken through the creation of the Industrial Restructuring Corporation (IRC). The IRC acquired NPLs from banks in order to pass the related liability and assets to third parties for ultimate recovery from borrowers.

Furthermore, regulated processes like selling treasury bills and other securities like Pakistan Investment Bonds, in vogue until early nineties, was made market oriented through the introduction of the sale of government papers through open auction.

Prudential regulations enforced since early nineties for all categories of banks / financial institutions and compulsion on the part of all banks to obtain credit and operational efficiency ratings from rating agencies placed on the panel of SBP are effective measures for ensuring risk management, transparency and self-discipline.

Despite a turnaround achieved in the financial sector, the recent spurt in consumer financing and banks quest for maximising loan spread are potential risks to the viability of the financial sector as well as the economy.

The SBP must tighten its control and monitoring on these counts through a credit policy in order to ensure deployment of bank financing for productive ventures and entailing less reliance on the import of consumer items which adversely affect the trade balance.

Recent efforts to make institutional credit accessible to small and medium enterprises, particularly exclusively through micro finance banks and SME bank and regulating financing to this sector, are steps in the right direction for inducting financially disadvantaged segments of the population in the formal economic process.

However, in order to make these specialised institutions really accessible to potential entrepreneurs, the procedure for obtaining loans need to be further simplified and made cost effective for the client.

One of the basic aims of introducing reforms was to bring macro economic stability. In the period, 1999-2003, efforts were stepped up to achieve fiscal discipline. A sizable reduction in debt Ã¢â¬â GDP and fiscal deficit Ã¢â¬â GDP ratios was achieved.

The governmentÃ¢â¬â¢s efforts towards evolving fiscal discipline are visible from the CBRÃ¢â¬â¢s embarking on a programme for widening its tax net accompanied by a significant reduction in allocations for debt servicing after rescheduling of external debts reduced the fiscal deficit ratio to GDP to the internationally bench marked level( three per cent).

However, thereafter speculative trading in essential food items, cement etc and a continuous rise in oil prices forced the government not only to import these items, but also to offer these commodities / goods to the general public at subsidised prices. Thus not only the balance of trade and the balance of payment position were adversely impacted, but also the fiscal deficit increased substantially in recent years.

Second, for the development of infrastructure through the current Public Sector Development Programme (PSDP) of Rs415 billion and also for the rehabilitation programme of earth quake affected areas, the government resorted to borrowings from the IMF and other funding agencies, raising external debt.

Reform related policy should ensure debt sustainability over the medium term. In conformity with internationally recognised strategy, policy makers must focus on sustainability of debt rather than on reducing the fiscal deficit ratio to GDP through temporary measures.

External borrowings in particular need to be utilised prudently for development projects, with the sole aim of making each project viable enough to service a portion of its debt from its own generated funds, and for accelerating the over-all economic growth rate to achieve a budget surplus.


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## Neo

Pakistan, falling under the category of low income developing countries, needs restructuring and reform to reduce poverty. Apart from focusing on enhancing the economic growth rate, direct poverty eradication measures are needed. Steps taken to strengthen SME and the micro business sector (which can generate large number of employment and self- employment opportunities) through specialised financial institutions and relief in taxation and tariff rates to small and medium-size businesses, are moves in the right direction.

However, the non-availability of necessary infrastructure, particularly utility services is impeding the expansion of this sector. Infrastructure development programme needs to be vigorously pursued as envisaged in the PSDP programme.

Structural reforms need to be directed to both the formal and informal sector for achieving sustained economic growth and removing inequalities. Economic activities must have a favourable impact on the informal sector as well. There are severe social and economic imbalances particularly between urban formal and rural informal sectors. Poverty and unemployment levels are much higher in the rural sector. The lack of employment opportunities reduces household incomes.

Merely providing social safety nets and low cost services for the poor is not a sustained approach towards alleviation of poverty of a magnitude that exists today. Focus should be on the development of human capital through informal and formal employment and exposing the informal sector to new technologies.

PakistanÃ¢â¬â¢s overall poor performance with regard to the education and health sectors has been the main contributor towards aggravating the poverty situation. Education sector reforms aiming at providing education for all, improving the quality of education with emphasis on higher and technical education need to be implemented and monitored vigorously. The country has failed to improve even the enrolment rate at the primary level; the only exception is Punjab where offers of cash incentives have rapidly improved the enrolment rate.

Improvements in the education and health sectors need to be evaluated on the basis of their impact on the development of human capital which is a necessity for achieving sustained high economic growth rates. Social sector reforms in education and health must aim at formulating policies to produce a highly skilled and energetic work force capable of making use of new technologies. Vocational and higher education needs to be promoted on priority basis.

Spending on the health sector has no doubt been enhanced, but still a majority of areas do not have access to health facilities. Despite a significant increase in the number of doctors and paramedical staff, hospitals and dispensaries in rural areas are understaffed and do not have the necessary equipment and apparatus. Due to a lack of effective supervision and monitoring at all levels, the funds allocated for the health sector are widely misused. Reform agenda, in the health sector in particular, must be directed towards improving delivery of services.

The second generation reforms contained in the agenda relate to the restructuring and capacity building of institutions and improving governance at all levels to sustain the process of change.

Restructuring of the financial sector has shown positive results, but restructuring process in certain entities like the Central Board of Revenue have failed to give desired results because their regulatory authorities are dysfunctional.

Revenue mobilisation efforts of CBR are much below the mark. Tax Ã¢â¬â GDP ratio, instead of showing improvement has fallen back to just over nine per cent. Conflict ridden political environment also impedes the governmentÃ¢â¬â¢s sincere efforts to introduce new measures to remove economic and social imbalances.

However the solution lies with the government itself. Good governance is the pre-condition; it must enforce rules of conduct to achieve harmony in all aspects of national life.


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## Neo

*Rebuilding costs*

*By A.B. Shahid*



THERE were times when one remembered monsoons for an exciting romantic encounter in the rain but not anymore. Rains, almost everywhere, now tend to be ferocious and unforgiving. Weather experts blame rainsÃ¢â¬â¢ fury on industry-driven atmospheric pollution and planet warming but arrogant growth-driven governments and profit-driven businesses no longer heed weather expertsÃ¢â¬â¢ wailing.

For the people of Pakistan, the 2006 monsoon leaves behind painful memories; TV channels showed the world how they suffered. While the damage suffered by people in the hinterland was unusually high compared to earlier monsoons, the cities suffered beyond their capacity to bear and, Karachi Ã¢â¬â PakistanÃ¢â¬â¢s biggest industrial and financial centre Ã¢â¬â suffered the most.

The response speed of the administration shows that damage to the infrastructure will take years to repair. A look at just the road network shows that almost all thoroughfare were damaged, and pretty badly. While the repairs will cost huge sums of money, during the repair phase transport will become a nightmare, and will escalate the industryÃ¢â¬â¢s costs. The extensive damage to drainage, power and telecom lines could cause widespread frustration and unmanageable chaos.

Inability of the countryÃ¢â¬â¢s biggest industrial city to function at its pre-monsoon pace (which was by no means satisfactory) will have negative consequences for the economy as a whole because repair work will result in postponing development work elsewhere. That isnÃ¢â¬â¢t all; repair expense will enlarge fiscal deficit beyond its already ascending projections. Public sector borrowing will suck in more bank credit and starve private sector borrowers. Economic growth will suffer due to the huge losses suffered by the industrial and commercial sector.

Industries in almost all major industrial cities could not operate at their usual pace because of prolonged power outages, and suspension of transport due to network breakdowns. Both domestic and export orders worth billions were lost/held up either completely or for their better part, reducing the prospects of growth, revenue collection, and export earnings. Following rains that began on July 31, most factories in SITE, Korangi and North Karachi industrial areas were without power for a week; they could run only for a few hours a day on their own power.

Based on 05-06 GDP figure (Rs6,130 billion at current factor cost with Karachi producing half of it), estimated losses in those seven days alone exceeded Rs55 billion. These losses will triple or quadruple until life returns to normal in the coming weeks or, perhaps, months.

Commercial markets fared no better. Most of them remained inaccessible, and their ground floors and basements (often serving as warehouses) were flooded, with billions worth of stocks destroyed wholly or partly. Bulk of these losses canÃ¢â¬â¢t be retrieved because businesses find outlay on insurance a mere waste. Irrespective of their questionable practices, the fact is that a huge number of businesses will end up with losses, and sales and income tax collection will take a dip.

It is well worth asking, Ã¢â¬Åwhy was the damage so extensive whose economic fallout will be enormous?Ã¢â¬Â Undoubtedly, rain was ferocious but should the infrastructure collapse on such a scale, especially the parts built recently using modern design and construction technology. Should we blame this monumental collapse on modern design and construction technology? Or was it due to the dishonestly or incompetence, or both, of the builder-supervisor combine? Or was it because the government ignored weather forecasts and did not prepare in advance for the coming tragedy?

Whichever the case, this mess places in doubt the expertise of Pakistani construction planners, supervisors and builder/contractors. This is no ordinary affair. It needs in-depth investigation, before more of the taxpayersÃ¢â¬â¢ money is placed in their hands for squandering it away. An investigation to identify the culprits would be in the interest of the civil engineering fraternity and construction contractors. In the absence thereof blame will lie squarely with engineers and builder/contractors.

Things (obvious even without a formal investigation) indicate chaotic (or was it simply callous?) management of the city by its present and previous governments. The way the sewerage and rainwater drainage systems were blocked to help build huge plazas, led to the disaster. Rainwater simply couldnÃ¢â¬â¢t find its way to the sea.

Planners and constructors of new roads paid no attention to road banking nor verified that drains running alongside were unblocked to drain the rainwater off the roads. It is shocking that CDGK has not updated its decades old city map showing the underground network of gas, water, sewerage, power and telecom lines.

Given the recent frantic pace of construction (and burying of scores of fresh sewerage lines, with scant concern for their connectivity), it is anybodyÃ¢â¬â¢s guess what is the networkÃ¢â¬â¢s shape, and are the drains inter-connected. In this milieu, it is no surprise that gutters keep overflowing as if it was KarachiÃ¢â¬â¢s fate.

This apathy encouraged builders to go on doing what they are doing Ã¢â¬â build plazas with no concern for what will happen to the cityÃ¢â¬â¢s sewerage and utility supplies system. Over-flowing gutters are not the only example of citizensÃ¢â¬â¢ apathy; they donÃ¢â¬â¢t protest against a lot that their city governments shouldnÃ¢â¬â¢t be doing. Because the protesting forums (all credit to them) are not supported by the citizens as openly and effectively as they should be, city governments go on doing what they consider right in their wisdom.

No one would like to obstruct the city government; it will amount to craving for the old corrupt bureaucratic system. This, however, doesnÃ¢â¬â¢t imply foregoing accountability. Whatever happened in the last few weeks proves that the city planners lack competence, if nothing else.

City governments must not be allowed to compound their offence by mis-prioritising development work, and refusing to take good advice. Many city government functionaries are inexperienced. That this is so, is proved by the fact that these governments simultaneously launch too many development projects without realising that such a policy dilutes planning and supervision effort, and over stretches contractorsÃ¢â¬â¢ resources, which results in poor work quality, defective finish, and also pushes up resource prices. This is a recipe for disaster.

While city governments must carry the blame essentially for execution errors, the federal government carries a far bigger share of responsibility for what we face now. In the last six years, in spite of repeated assertions by concerned observers, the government did not commence a massive infrastructure refurbishment exercise that had become overdue.

Even if you set aside everything else for a start, just look at the expansion in power generation capacity and building of water reservoirs. Growth in these sectors was negligible. Yet, the government pursued a policy of low fiscal deficit (ironically, close to the EU level) and low allocation for PSDP, and in spite thereof, held out assurances about development.

In this backdrop, it is worth asking whether the government was pursuing a sustainable growth policy or some other (the feel-good?) policy. It would be a folly to believe that growth can be sustained without strengthening both physical and social infrastructures of a country. Dams, bridges and railway networks are collapsing because of their continued neglect due to insufficient allocation for their maintenance, and substantial waste of those already inadequate allocations.

It is a dangerous scenario because, while the pressure of population growth requires building new dams, bridges, roads, highways, railways and a host of other things, the existing infrastructure is slowly but surely falling apart. In such a backdrop, our priorities must be re-building the collapsing infrastructure and adding to it to meet rising demand. But do we have the resources for both?

The advice to suck out the post-9/11 liquidity from the banking system, and use it for rebuilding the infrastructure not only fell on deaf ears, but also was denied by the policy-makers. Now that much-needed resource base is stuck in un-productive uses and lending banks can pull it out pre-maturely, only at the expense of suffering losses.

The other alternative is to pick up the begging bowl once again (that we were told had been broken forever). ADB, which voluntarily offered substantial funds for re-building KarachiÃ¢â¬â¢s collapsing infrastructure, may not be as willing to foot the repair bill a second time simply because we wasted the earlier bail-out.

It is imperative that we donÃ¢â¬â¢t cover up the past errors but discuss them openly so that lessons are learnt, a lot more eyes besides the city governmentÃ¢â¬â¢s can see and prevent things from going wrong.


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## Owais

Neo said:


> *Indus Motor Company (IMC) plans to double its production*
> 
> KARACHI (August 28 2006): The Toyota Indus Motor Company (IMC) plans to double its production capacity from 50,000 units to 100,000 per annum by the year 2010, a plan in line with industry's target to raise its output from the current 215,000 units to 0.5 million by 2012.
> 
> In an exclusive interview with Business Recorder, Indus Motor Company CEO Pervaiz Ghias said the local auto industry employing over 400,000 persons had recorded an average growth of 35 percent per annum during the last few years.
> 
> The production had gone up from 45,000 to 200,000 units during the same period, he said, adding the government was projecting the sale of 500,000 units by 2012 as a part of its Automobile Vision while industry was looking for 350,000 units by 2010.
> 
> Pervaiz said the auto sector in Pakistan had the potential of becoming a major driver of economic growth, adding the Indus Motor Company alone had contributed Rs 12 billion to the exchequer in FY06.
> 
> He said the transformation of local auto industry into globally competitive and export-oriented force needed investment, acquisition of latest technologies, expansion in existing capacities, and rationalisation of tariff regime for its integration into the global supply chain. "All of this necessitates government's support to the local auto manufacturers in the form of a consistent long-term policy," Ghias observed.
> 
> Commenting on the import of used-cars, he said the policy was making its impact felt in the local industry, which at the first instance, may seem positive as the delivery of clog of cars seemed to be addressed to. "However the matter if analysed on a long-term and macro-level identifies some serious consequences for both the industry and the country," he added.
> 
> Last year, he said the imported reconditioned cars accounted for a market share of 19 percent, which was only four percent previous year. This ratio was equal to the 25 percent of the total production capacity of the local plants.
> 
> "If 46,000 cars - figures available till June 30 - are imported each year, there would be no expansion plans on the side of local manufacturers," Pervez Ghias remarked.
> 
> Although, the government had restricted import of used-cars over five-year-old, but still much more needed to be done by way of non-tariff restrictions so that the misuse of transfer residence and gift scheme was stopped by unscrupulous second-hand car importers who evaded taxes and document transaction. "Domestic demand has to be met by the domestic industry, as is the policy in all other countries," he said.
> 
> "The industry has been instrumental in transferring technology to vendors and dealers. The development of this industry would result in substantial foreign exchange savings, which would be drained, as if a short-term solution to address supply and demand gap, the imports of cars continues," he cautioned.
> 
> The Indus Motor Company is the second largest local manufacturers of cars in the country accounting for the 18 percent of the total market share in the last fiscal year.
> 
> At present, it produces the leading brands; Cuore in the 800cc class and Toyota Corolla in the 1300cc class. One car is assembled every four and a half minutes at the state-of-the-art IMC plant at Port Qasim.
> 
> "The quality is according to international Toyota standard. We do not say that a car is made in Japan or Pakistan, we say it is made in Toyota just like the other 62 plants elsewhere in the world. There are regular quality audits that ensure the standards are maintained," Ghias maintained.
> 
> On the issue of premium, IMC CEO said that there were two solutions to this problem, one, was increased production that was being done by the local players and the other was government control over transactions by way of documentation and checking source of funding.
> 
> "It is the unauthorised dealers and fake buyers ie resellers that were creating artificial demand and the customer was forced to resort to buying on premium. The issue creates bad name for the manufacturers and we condemn this activity," he added.


Duplicate Post Neo. see post # 2012


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## Owais

*MoF and MoC vie for control of insurance entities* 


ISLAMABAD (August 29 2006): Finance Ministry is facing tough resistance from Commerce Ministry for taking control of the 'profit-making' public sector insurance entities including State Life Insurance Corporation (Slic), sources told _Business Recorder _here on Monday.

Both ministries are on collision course for the past one year, but practically the war of words was seen at a recent meeting on insurance sector. The meeting was presided over by Prime Minister Shaukat Aziz.

The more interesting aspect of this controversy is that Asian Development Bank (ADB) is fully backing the Finance Ministry's viewpoint, saying that insurance business was being hurt by Commerce Ministry, sources said.

Finance Ministry, in its presentation to the Prime Minister, argued that insurance entities were financial institutions, being administered by finance ministries throughout the world. It stressed that the management of insurance companies should be transferred to it, instead of Commerce Ministry.

Dr Salman Shah, Prime Minister's Advisor on Finance, who was representing Finance Ministry, also pleaded that insurance business was not being properly handled by Commerce Ministry due to unskilled manpower, and that appropriate measures were needed to streamline this business, which could only be undertaken by Finance Ministry.

Sources said that Commerce Minister Humayun Akhtar opposed the proposal tooth and nail, asking why Finance Ministry was demanding shifting of insurance entities.

He also questioned whether Commerce Ministry was not part of Government of Pakistan, which is administrating this sector since 1983.

He also criticised Asian Development Bank for backing Finance Ministry on the issue, arguing that his ministry was doing its best to facilitate investment in the insurance sector, and the questions raised by the donor carried no weight.

Since the privatisation of banks, Finance Ministry has been making efforts to take control of profit-making insurance entities, which is not acceptable to Commerce Ministry, Humayun said, according to sources.

He said that his ministry was in favour of liberalisation of insurance sector and it had already asked the Privatisation Commission to initiate the sell-off process of Alpha Insurance Company.

Sources said that the Prime Minister heard viewpoints of both ministries but did not comment. He, however, directed Commerce Minister to revise the composition of Board of Directors of insurance companies, as most of the directors were occupying these slots, carrying a lot of privileges and perks.

The Prime Minister in a meeting of Cabinet Committee on Privatisation (CCoP) a few months back had directed Commerce Ministry to transfer Slic to Finance Ministry, but the Ministry showed reluctance in implementing the order.

The World Bank (WB) has also asked the government to liberalise insurance industry through reforms in line with the banking sector. "Insurance penetration is very low as compared with other countries at Pakistan's income level which requires further consolidation and liberalisation of the industry," sources quoted WB mission on Implementation Completion Report (ICR) as saying.

The WB is of the view that the county's banking sector has gone through beneficial structural reforms, but the rest of the financial sector had not been subjected to reform process to that extent.


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## Owais

*SBP issues guidelines for livestock financing* 


KARACHI (August 29 2006): The State Bank of Pakistan (SBP) on Monday issued 'Guidelines for Livestock Financing' to facilitate and encourage the banks/financial institutions in enhancing flow of credit to the livestock sector.

The 'guidelines' cover all areas of livestock financing business, including loan purpose and objectives, product development, eligibility of borrowers, delivery channels, monitoring mechanism, etc.

With the issuance of the 'guidelines', banks/financial institutions are expected to considerably enhance the flow of credit to this important sector of the economy. Banks may adopt the guidelines in their present form or with some modifications that suit their organisational needs and market characteristics.

Livestock is the largest sub-sector of agriculture, accounting for 47 percent of value-addition in the sector, and constitutes about 11 percent of GDP. The disbursement of credit to the agriculture sector has witnessed significant growth during last few years as a result of sector-friendly policies of the State Bank of Pakistan and efforts of the commercial banks.

However, the livestock sub-sector could not get due share in the substantially enhanced flow of credit to the agriculture sector.

In view of the contribution of the livestock sector to GDP, and employment creation, especially in rural areas, the SBP had established a 'Committee of Experts' to devise strategy for increasing the share of institutional finance to this sector, which has huge growth potential. In the light of the recommendations of the 'Experts Committee', and inputs from stakeholders, including banking sector and Ministry of Food and Agriculture and Livestock (Minfal), the State Bank has framed these guidelines.

The State Bank of Pakistan has asked all concerned to visit its website: www.sbp.org.pk for detailed guidelines.


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## Owais

*Bangladesh asks Pakistan for duty-free market access* 

KARACHI (August 29 2006): Bangladesh has invited Pakistani traders to increase import volume and urged Pakistan's government to allow duty-free access to its products. The issues were raised at a joint meeting of the Pakistan-Bangladesh Business Council held in Dhaka, late Sunday.

In a statement received here, the Pakistani side assured enhanced efforts for sourcing diversified products from Bangladesh as well as to assist in trade promotion efforts of Bangladesh for improving market access.

Federation of Pakistan Chambers of Commerce & Industries (FPCCI) president Chaudhry Muhammad Saeed led the Pakistani delegation while Federation of Bangladesh Chambers of Commerce & Industries (FBCCI) president Nasir Hussain led the Bangladeshi side at the joint meeting where Bangladesh foreign affairs adviser Reaz Rahman was the Chief Guest. Both the sides were agreed to cooperate in the full implementation of Safta and Joint Business Council (JBS) could be a forceful tool for expansion of trade and investment.

The meeting also agreed to strengthen co-operation in areas of ICT, agriculture, services and technology. FBCCI and FPCCI decided to set up a committee for settlement of trade disputes comprising members from the FPCCI and FBCCI. To promote bilateral trade and economic relations, the FBCCI and FPCCI agreed to undertake studies to identify areas of bilateral co-operation.

Pakistan-Bangladesh Joint Business Council meeting would be held regularly every year in either country. The next joint meeting will be held in Islamabad at a mutually convenient date. FBCCI and FPCCI will exchange information about availability of products and industrial processes facility of industrial training, sources of financing offers and requests for joint ventures and licensing and identification of possible partners.

They will exchange professional experience relating to services rendered to their respective members, facilitating their relationships and providing adequate support for the successful outcome of specific programmes.-PR


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## Owais

*Exhibitions vital for attracting investment: 'Build Asia 2006' show inaugurated* 


KARACHI (August 29 2006): International exhibitions are important for creating positive image of Pakistan, especially of Karachi, and attracting foreign investment by highlighting opportunities to boost confidence of international business community.

This was stated here on Monday by Karachi City Naib Nazim Nasrin Jalil at a press briefing while inaugurating 'Build Asia 2006' exhibition at Karachi Expo Centre, organised by 'Ecommerce Gateway'.

She said that the government realises the significance of Karachi as hub of business activities in the country and believes that it is of utmost importance that the city keeps playing its due role in the progress of economy.

"The government also gives emphasis to improve law and order in Karachi to attract investors from around the world," she added.

With the completion of various mega projects, co-ordinated progress in social sector, and provision of civic facilities, the city would assume a significant position among the world's modern and beautiful cities in the coming years, she said.

She asked Pakistani companies operating in Dubai and other countries to come forward and start mega projects in the country and contribute to government's efforts for making Karachi a 'Mega City'.

She said that Karachi City government has initiated housing projects for low-income people and in this regard draws of 80 square yards and 120 sq yards plots were held, and about 50,000 people were facilitated.

Housing projects on 240-yard and 400-yard plots were also in pipeline, she said, and added that it was a major achievement of the City government.

She asked the builders to provide low price construction material to the allottees of plots so that they could be able to have their own houses at reasonable cost.

Nasrin said that several other housing projects were also on the cards, and as soon as the provincial government would approve availability of land the projects would be started.

In reply to a question about hardship the recent monsoon rains had caused, she said that a 'bill' would be floated in the city council to make it mandatory to build storm water drains along all new roads. The system would also be applied to present road network, step by step.

She said that the city government was being criticised for the rain-related problems. She clarified that the local government was not alone responsible for the chaos, and other bodies like KPT and cantonment were also equally responsible.

Earlier, the Naib Nazim visited pavilions of Pakistani and foreign countries. She invited them to explore investment opportunities in the country and participate in the development of Karachi as 'Mega City'.

She praised entrepreneurs from Turkey, China, Germany and other countries participating in the exhibition. The exhibitors assured her of their participation in the city's fast moving construction industry.

Dr Khursheed Nizam, President, E-commerce Gateway Pakistan (Pvt) Ltd, said that the event would improve Pakistan's image globally as a modern and progressive country.

The international exhibitions allow participants to have the opportunity to explore the immense business and investment, which Pakistan offers. Many ventures, partnerships and joint ventures find their roots through participation in the exhibitions, he added.


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## Owais

*Resolution of new IPPs problems directed* 


ISLAMABAD (August 29 2006): The Minister for Water and Power, Liaquat Ali Jatoi, on Monday conducted open hearing on problems faced by new independent power producers (IPPs), and directed concerned departments to remove the bottlenecks immediately.

He also gave one-week time to Orient Power to sign Implementation Agreement (IA), while Attock Refinery (125 MW), Orient (225 MW), Star (140 MW), Sapphire Electric (225 MW) and Saif Group (225 MW) were told to sign IA within one month.

The representatives of IPPs, who were invited by the Minister for hearing their problems, complained that Private Power Infrastructure Board (PPIB), Wapda, Nepra and Ogra were not extending full co-operation for new projects, which was the need of the hour to overcome power shortage.

Sources said the Minister was holding a formal meeting, but to hear the problems he invited IPP reps individually in his office in the presence of officials of those departments which the IPPs believe were not extending full for cooperation. PPIB said that the IPPs were honouring their commitments they had made at the time of submission of their projects.

Jatoi heard the viewpoints of new IPPs and asked them to complete their projects in time so that the government could meet the growing demand of power, adding that the government would extend all possible assistance and remove bottlenecks to increase power generation capacity.

He said that the government had simplified procedural requirements for new and existing investors in the power sector and exempted them from various taxes and duties.

The meeting was attended by Secretary and Adviser of the Water and Power Ministry, Additional Secretary Petroleum, Chairmen Wapda, Nepra, Vice Chairman Ogra, MD PPIB, CEOs of the future IPPs and senior officials of the Ministry, PPIB and Wapda.


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## Owais

*'Oil outlet at Gwadar may generate $0.33 billion revenue annually'* 


ISLAMABAD (August 29 2006): One million barrel daily oil outlet capacity at Gwadar could generate $0.33 billion revenue annually, International Institute of Policy & Conflict Resolution (IIPCR) executive-director Dr Gulfraz Ahmad said.

He was speaking at a conference on "Global Energy Security and Regional Peace Through: Alternative International Petroleum Storage and Loading Terminals Outside the Strait of Hormuz" arranged by the IIPCR and Pakistan Engineering Council (PEC) here, on Monday.

The Gwadar port could assist in facilitating expected increase of 10 million barrels daily movement of oil in 2020 for east-bound regions through this strait, in which China alone would be requiring five million barrels per day, he added.

Emphasising the role of Gwadar as a port, which has sufficient capacity to handle big oil tankers of 0.5 million barrels, he said the port is nearer compared to the other options of oil terminals such as East-West Pipeline across Saudi Arabia to the port of Yanbu and the Abqaiq-Yanbu natural gas liquids line across Saudi Arabia to the Red Sea. Such options would be very expensive and long as compared to Gwadar, he added.

Speaking on the problem, he said, the Strait of Hormuz has reached its maximum capacity handling container, transporting 20 million barrels of oil per day and there is a considerable need to meet the transportation requirements with two percent increase in the oil demand globally per year.

The Strait of Hormuz is only 34 miles wide, out of which only a narrow strip of six miles is available as deepsea for convenient movement of big oil tankers, he added. Two miles each for incoming and outgoing ships with two miles strip parting them is just not sufficient to handle the increasing world oil demand, he added.

This is choking in the Strait and in coming 13 to 14 years, he said, the oil flow is expected to reach 34 mbpd, he added.

Considering this challenge, the world would have to device new alternatives. The east-bound countries are seeing considerable growth in their economies, talking especially of China, whose energy appetite is unending and also for other Asian countries, he said Gwadar is ideally suited to meet oil needs of this zone.

Pakistan is also looking toward raising a 21 million tons oil refinery in collaboration with China at Gwadar in coming eight to 10 years. The present oil refining facilities in the country is 10 to 11 million tons, he added.

Further elaborating the issue, he said the oil is the main source of global energy meeting for 38.5 percent of the demand.

Other energy sources are gas, 23.7 percent; coal, 24.7; while hydel and nuclear have over six percent contribution each.

He said oil reserves with the big five (Iran, Iraq, Saudi Arabia, UAE, Oman) are enough for 100 years, and so the oil would remain a main source of energy for a long time, and the Strait of Hormuz, he said, would not be able to meet the increasing world oil demand.

To resolve this problem, petroleum exporting countries of the Persian Gulf could create outlets for oil outside the Gulf to augment their export capacities to meet the global oil demand. This could be done by setting up adjunct oil storage and loading terminals beyond the Strait in the Gulf of Oman and the Arabian sea. They could also pump some additional oil through sub-sea pipelines to alternative outlets and augment their export capacities without adding to the congestion of the Strait of Hormuz.

Fortunately, there are a number of options for locating adjunct/alternative terminals outside the Strait of Hormuz along the coast of Iran, Pakistan and Oman. He said this is the appropriate time to give this concept a focussed attention, as it would take over a decade or so for the facilities to be created and oil export arrangements to be operative.

Pakistan Engineering Council chairman and planning commission deputy chairman Dr Akram Sheikh said theme of the today's meeting is important not only for Pakistan but is equally so for the region and indeed for the world.

The modern day world depends heavily on commercial energy for sustaining its economy and lifestyle. Global energy security has assumed new dimensions, challenges and concerns.

Promoting global energy security relates to the peace and prosperity of mankind. In that context, Pakistan is fortunately situated at the hub of a regional energy corridor. It provides land links to West Asia, Central Asia, and South Asia.

It can contribute to the capacity and security of the global oil movement, especially from the Persian Gulf countries to east-bound markets in South Asia, south-east Asia, and Pacific Asia by making available its new deepsea port at Gwadar for alternative international petroleum storage and loading terminals to the Gulf oil exporting countries.

Adviser to prime minister on energy Mukhtar Ahmad said a lot of work is to be done in this regard from the concept to the implementation stage. It has multilateral advantages. It is hoped we could take this forward meaningfully. There is an acute need for a combined move between various departments to make it a success.

Special envoy to prime minister and former ambassador Riaz Khokhar said we must ensure harmony and security within the country to make this project more attractive and viable for other stakeholders in the region to support it.

Many other prominent members of the intelligentsia attending the roundtable discussion participated actively.

There was a proposal from a participant for making Gwadar as trans-shipment-free port collecting only rental charges. This would interest oil exporting countries and investors and would help in expediting the operation of the port.


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## Owais

*Islamic Finance Indicators: task force discusses compilation guide draft* 


KARACHI (August 29 2006): The draft of compilation guide on Prudential and Structural Islamic Finance Indicators (PSIFIs) was discussed at length by the task force set up by Islamic Financial Services Board (IFSB) at its meeting held under the auspices of the State Bank of Pakistan (SBP) in Karachi.

The development of 'Prudential Islamic Finance Database' will help gauge Islamic banks' contribution to the economic growth and overall financial sector development.

The document will serve as a 'guiding tool' to IFSB for development of macro prudential analysis and assessing the structure and state of development of Islamic financial services industry. It also intends to serve as a supplement to International Monetary Fund's 'compilation guide' of financial services industry. 

The meeting of the task force was attended by representatives of Islamic Banking Department, SBP, other central banks/monetary officials, prominent consultants in the field of Islamic banking, Islamic Development Bank (IDB) and Islamic Financial Services Board (IFSB). The State Bank of Pakistan is the founding member of IFSB. 

Islamic Financial Services Board (IFSB) is an international standard setting body of regulatory and supervisory agencies having interest in ensuring soundness and stability of Islamic financial services industry. It represents a strong commitment by the regulatory and supervisory bodies to embark on collective and systematic efforts to develop prudential guidelines and best practices for Islamic financial services industry.

In advancing its mission, the IFSB promotes the development of a prudent and transparent Islamic financial services industry through introducing new or adapting existing international standards consistent with Islamic Shariah principles, and recommend them for adoption.

To strengthen and streamline statistical information on Islamic financial services industry (IFSI) world-wide the IFSB had formed the task force on Prudential Islamic Finance Database


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## Owais

*Government urged to reduce cost of inputs making exports competitive* 


FAISALABAD (August 29 2006): "We do not want any subsidy we want only level playing field," said Pakistan Textile Exporters Association (PTEA) Chairman Arif Tauseef here on Monday while briefing newsmen on problems confronting textile exporters.

He said that Pakistan's textiles were overly burdened with duties, high cost inputs and inflationary credit finance. "Research and development support extended recently by the government to home textiles and made-ups sector is basically intended to boost exports of the country. But this is not the real solution to the problem. The real problem is that exporters are facing tough competition in international market from rival countries' exporters. Pakistan's exports are comparatively costlier due to high cost of production in the country," he said.

He said that the cost of inputs like gas, electricity and credit finance were comparatively higher in Pakistan and hence Pakistan's exports were incompetitive in international market. It was for this reason that the country's exports did not fare well in the quota phase-out regime and a declining trend started when fabrics' exports in July 2006 plummeted to $154 million from $207 million of November 2005.

In the context of heavy investment of $4 billion in machinery and 2.5 times investment in infrastructure (land, building, labour, raw material, electricity, gas) the exports should have reflected an increase of 40 percent in quota phase-out period but the performance was rather negative, he added.

He said that the real reason of this reverse trend was exorbitant escalation in the cost of inputs like electricity, gas and petroleum products, he said.

The PTEA chairman said that in the new world trade regime, financial support and subsidies on exports were of no real avail as the benefit was either passed on to the foreign buyers or was wiped out by other factors. He cited the example of reduction in export refinance rate of 1.5 percent announced recently in the textile package in July 2006, which has been offset by proportionate KIBOR rate in August 2006. The facility has been eroded even before the exporters could avail of it, he said. Subsidies and support are no solution to boost exports, he said. The real solution is to reduce cost of inputs like gas and electricity to provide level playing field to Pakistani exporters visa-a-vis their rival countries' exporters and thus make them competitive in international market, he said.

He said that liquidity crunch was also hampering the turnover of exporters. He said that exporters felt relieved when sales tax was made zero-rated and this positive measure was welcomed, but billions of rupees were still stuck up in deferred sales tax refund cases withheld due to minor objections and verifications even 450 days after zero-rating. Had this amount of exporters been released, their liquidity position would have eased, he said.

Protective duties on polyester, dyes and chemicals charged to exporters are another burden on exports making them incompetitive, he said. Impact of these duties in cost-push is about 8 percent, he said. He urged the government to return this levy on exports.

Duty drawback rates have again been slashed without taking the exporters into confidence. Resultantly, huge stocks with duties paid on them would adversely affect the cost of exportable goods rendering exports incompetitive, he said.

The PTEA chairman said that last year an investment of Rs 180 billion in textile machinery and infrastructure facilities was made by exporters with the aim of value-addition and providing employment opportunities to people. This investment was intended to give quantum jump of 40 percent to textile exports but surprisingly the exports for July 2006 went down by 4 percent, which means that actual decrease in exports was around 44 percent. The exporters are wondering what the future of huge investment on machinery and value-addition would be. The exporters apprehend that if this trend continued there would be large-scale unemployment and the workers would come on the road and create law and order situation.

Arif urged the government to take a realistic view of the matter and facilitate the exporters by actually zero-rating the exports through reduction in cost of inputs removing burden of protective duties, easing liquidity through pending sales tax refund and reducing cost of gas and electricity to make exports competitive in real terms.


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## Neo

ISLAMABAD, Aug 28: A UN delegation led by Dr Hafiz A. Pasha, assistant secretary general, United Nations, called on Dr Salman Shah, adviser to prime minister on finance and economic affairs, here on Monday.

Dr Pasha briefed the adviser about the UN programme in Pakistan with reference to economic growth and human development.

The adviser briefed the delegation about different developments in the country. He said the textile industry would become a major engine of growth in this country. He said there was a significant increase in investment in developing the manpower in Pakistan to drive the economic growth.

He informed the delegation about the growth in the banking sector in Pakistan. &#8220;Quality and competitiveness have been the hallmark of our economic policy,&#8221; he said and hoped that cooperation between Pakistan and the United Nations would further grow in coming years.


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## Neo

Tuesday, August 29, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\08\29\story_29-8-2006_pg5_4

_* Former foreign secretary Riaz Khokhar says govt needs to analyse Chinese plan for energy import through Gwadar Port, as Beijing is negotiating five oil and gas pipelines with CARs_

ISLAMABAD: Former foreign secretary Riaz Khokhar has said the government needs to analyze the Chinese plan for energy import in future as Beijing is negotiating around five oil and gas pipelines with Central Asian Republics. 

There must be a careful study to examine whether China would require Gwadar Port facilities for future oil and gas import, he added. 

He said this while taking part in a discussion on a research paper presented by Gulfaraz Ahmed, Executive Director of the International Institute for Peace and Conflict Resolution (IIPCR), an institute of National University of Science and Technology (NUST). The roundtable discussion, was jointly organized the IIPCR and the Pakistan Engineering Council (PEC), on Monday. 

In his paper, Mr Gulfaraz said Gwadar Port is one of the suitable options for east-bound oil trade for South Asian, Southeast Asian and Asia Pacific markets as it would be impracticable from 2020 onwards to ship increasing quantity of oil through the present route of the Strait of Hormuz.

Besides Gwardar Port, the new Iranian deep-sea port at Chabahar and some ports on the coast of Oman are other likely choices for oil trade as the present choke point of oil trade at Hormuz is becoming congested and it could affect global energy security as well as regional peace. 

He said around 60 million barrels per day oil is imported, which represents the scale of global oil trade. At present oil is available and maritime routes are able to handle the required shipping flows. The availability of oil is, however, shrinking due to declining reserves and a number of oil-surplus countries such as China, Malaysia and Indonesia. They would become net importers of oil in coming years. Around 57 percent of global oil reserves are concentrated primarily in a few countries of the Gulf, which are likely to outlast many other sources of the world oil supply. It is generally visualized that the global reliance on the oil reserves of the Gulf countries will continue to increase in the foreseeable future. 

The Oman option would be suitable for south-bound oil meant for European and US markets. The Iranian Chabahar Port is suitably located for south and east bound oil movement, he said. 

The Gulf countries are expected to export around 22 million barrels of oil daily in 2006. Nearly 90 percent of the exports, 20 million barrels daily, would be transported through the narrow Strait of Hormuz, which constitutes a big choke point for the global oil trade. The oil trade from the same sources, in a little over a decade, could be around 34 million barrels per day. The projected increase of 14 million barrels of daily oil flows in just about 13 years through the already congested choke point could affect the smooth flow of oil affecting the reliability of oil supplies and increasing the freight and shipping costs. 

By 2020, the world demand for oil is estimated to cross 110 million barrels daily. The export of Gulf oil is expected to rise to about 34 million barrels, of which around 32 million barrels would have to pass through the Strait of Hormuz on daily basis. 

This is close to twice the quantity of oil passing through the Strait of Hormuz at present. The increase in the eastbound oil in 2020 is expected to go up to 10 million barrels daily, of which the export to China alone is likely to go up by over five million barrels daily, Mr Gulfaraz said in his paper. 

The Gwadar Port can handle very large crude containers of up to 0.5 million tons dead weight, which form crucial part of the international oil movement. For every one million barrels daily outlet capacity at Gwardar, Pakistan could possibly net over a third of a billion dollars a year in revenues besides other indirect economic benefits, including employment opportunities. This will generate substantial resources to boost Pakistan's efforts to develop the vast and backward province of Balochistan, according to the paper. 

Some of the participants, who are retired officials from the civilian and military bureaucracy, however, expressed doubts over the thesis made in the paper. Since other choices are available through Iran and Oman ports, the Pakistan government must be required to declare Gwadar Port an open port with open policy. There must be speedy cargo handling in place at the new port. There must be an environment, which is entirely improved from the outdated facilities being provided at Karachi Port. 

Some of the participants, including Lt-General Talat Masood (retd), said much importance should be given to the commercial importance of Gwadar. If we continue to stress on strategic position of Gwadar, then the proposed port will lose its commercial and economic benefits. There must not be a surrender of strategic place to anyone, he said without much explaining. 

The roundtable conference was attended by Deputy Chairman of the Planning Commission Engineer Dr Akram Sheikh, Adviser to the Prime Minister on Energy Mukhtar Ahmad and other senior serving and retired government officials. fida hussain


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## Neo

Tuesday, August 29, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\08\29\story_29-8-2006_pg5_11

KARACHI: Pakistan International Airline (PIA) Corporation announced on Monday a growth of 16.4 percent in revenue in the first half of 2006 to Rs 31.3 billion from the Rs 29.6 billion earned during the same period last year. 

The financial results released by the Karachi Stock Exchange (KSE) on Monday said: "The airline losses before tax stood at Rs 5.144 billion in the first half of 2006 against the losses of Rs 1.651 billion in same period last year. There is a growth of 13.4 percent in passenger traffic and an 8.4 percent growth in cargo traffic. The airline achieved 72.3 percent passenger seats factor and 59 percent of cargo load factor between Jan 2006 and June 2006," the statement said.

In the second quarter of the current fiscal year, the airline's revenue increased by 21 percent to Rs 16.7 billion compared with the Rs 13.8 billion earned in April-June, 2005.

During the same period, passenger traffic increased by 17.3 percent, cargo traffic by 15.3 percent. The system passenger seat factor increased to 70 percent and the cargo load factor grew to 60 percent.

During the period Jan-June 2006 revenue increased to Rs 31.3 billion from Rs 26.9 reflecting an increase of 16.4 percent, the financial result said.

PIA's domestic market share increased from 60.4 percent to 69.3 percent, an improvement of 15.6 percent over the corresponding period last year, in spite of a static market.

A statement from the airline added that in the annual report for 2005 it was reported that the aviation industry continued to experience financial constraints globally mainly due to the increase in oil prices and lost over $45 billion since 2001. 

Expenses on aircraft fuel increased by 47 percent in 2006 compared with the results of last year, whereas, the increase of 10 percent in operating expenses was mainly due to inflationary trends, an increase in interest rates and currency fluctuations.


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## Neo

LAHORE: State Minister for Commerce, Hamid Yar Hiraj has said that huge potential exists to increase carpet exports up to $1 billion mark.

He was speaking at inaugural ceremony of three-day Regional Carpets Exhibition 2006 here on Monday. Carpet manufacturers and exporters from China, India and Pakistan are participating in the third regional exhibition besides around 170 foreign buyers and over 100 local carpet manufacturers. 

Hamid Yar Hiraj said that government had announced several incentives for carpet manufacturers in the trade policy. He added that measures like establishment of carpet city in Karachi and Lahore would go a long way in enhancing volume of exports. 

State Minister and Chairman Export Promotion Bureau (EPB), Tariq Ikram said that the establishment of Trade Development Authority of Pakistan (TDAP) would focus on the promotion of exports from traditional and non-traditional sectors. He was of the view that a consistent increase in the export had been witnessed during past six years. 

He maintained that the policies pursued by the government had helped increase countryÃ¢â¬â¢s exports by 85 per cent since 1999. Among others, Vice Chairman Pakistan Carpet Manufacturers and Exporters Association (PCMEA), Maj (retd) Akhtar Nazir also spoke on the occasion.


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## Neo

*IDB assures full support for reconstruction, rehabilitation process*

Monday August 28, 2006 

*JEDDAH: The Chairman of the Islamic Development Bank Dr Ahmad Ali has assured Prime Minister of Azad Jammu and Kashmir Sardar Attiq Ahmad khan that his bank would play a role in human resources development in reconstruction program of AJK government. *


This assurance was given by the Bank chief when the Prime Minister visited the headquarters of the Bank here on Monday morning before leaving for Pakistan. Veteran Kashmiri leader Sardar Abdul Qayyum Khan was also present. 

The AJK Prime Minister briefed the Bank chief about the priorities areas demarcated by the present government in AJK for domestic and foreign investment. These areas are the hydel power generation, minerals, tourism, forest based wastes recycling, horticulture and the spread of technical education. 
The Prime Minister also lauded the role of the Bank in tackling the situation arising out of the devastating earthquake of October 8, in AJK and NWFP. 

The Prime Minister and elderly Kashmiri leader Sardar Abdul Qayyum Khan also visited various section of the Bank and applauded their economic development role of the IDB in the Islamic countries. 

The Prime Minister also invited the Bank chief to visit AJK to see for himself the potential of the vast investment there in private and public sectors. Dr Ahmad Ali Khan thanked the AJK Prime Minister for visiting the headquarter of his organisation and taking keen interest in the working of the Bank and its future projects.


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## Neo

*ISLAMABAD*_: August 29, 2006_: 

President General Pervez Musharraf on Tuesday received a high-level Chinese delegation led by Liu Yunshan, Member of the Politburo of the Communist Party of China.

Welcoming the delegation, the president recalled his visits to China in February and June this year in the context of the talks that he had with President Hu Jintao in order to expand and deepen the excellent bilateral relations.

The president said that it was time to move towards bilateral co-operation on the broadest spectrum.

Referring to the 55th anniversary of the diplomatic relations between Pakistan and China, the president noted that the two countries enjoyed excellent diplomatic relations and there was a convergence of views on international issues.

President Musharraf invited Chinese investment in the high-tech, heavy industry and energy sector. He also invited the Chinese to establish an Engineering, Science and Technology University in Pakistan.

Referring to the communication links between the two countries, the president said that along with the up-gradation of the Karakorum Highway, a railway link, a fibre optic link and an energy pipeline could be established.

Liu said that Chinese President Hu Jintao is looking forward to his visit to Pakistan in the future adding that friendship between the two countries was in the hearts and minds of the people.

This all-weather friendship that had stood the test of time was in fact a paradigm of friendly collaboration between countries of different social set-up.

He expressed satisfaction at the co-operation of the two countries at the international level.

He fully agreed with the president's vision, which he called "inspiring", about the course of future co-operation and said that it would receive careful and positive examination by the Chinese side.

Liu Yunshan, accompanied by a 17-member delegation of the Communist Party of China, is visiting Pakistan from August 28 to September 1.


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## Neo

*PESHAWAR*_: August 29, 2006_

Ambassador of Japan to Pakistan, Seiji Kojima said on Tuesday that Japanese government would consider setting up of mega projects on the pattern of Toyota, Honda, Suzuki motors in Peshawar.

The Japanese envoy made these remarks while addressing a meeting of the members of the Sarhad Chamber of Commerce and Industry (SCCI).

The Japan government would look into the possibility of establishing mega projects in automobile sector in the city.

Seiji Kojima said, the procedure for obtaining Japan visa by the business community of the NWFP would made simple on the recommendations of the SCCI. He said Pakistan and Japan enjoy closed friendly and exemplary trade relations which are being strengthened with each passing day.

The government of Japan was proud of her relations with Pakistan, he explained. He also lauded the export of various goods from NWFP to Japan.


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## Owais

*PSO sell-off put on back burner* 


ISLAMABAD (August 30 2006): The Privatisation Commission has put Pakistan State Oil (PSO) and other major entities' sell-off process on the back burner, at least for the first half of the current fiscal year. Sources in Privatisation Commission told _Business Recorder _on Tuesday that reversal of Pakistan Steel Mills Corporation (PSMC) privatisation was the major cause of delay in offering PSO and other public sector entities for bidding before December 31.

They said that other than PSO, NIT, SSGC, SNGPL, OGDC, PPL were some of the major companies whose privatisation was almost impossible in the next six months. They said that Privatisation Commission officials were totally confused over the post-PSMC sell-off situation and, despite repeated announcements by government top brass, they do not believe that the government would be able to come out of the PSMC shock to take up new companies for bidding.

They added that Privatisation Commission had informed about its position to International Monetary Fund IMF review mission vis-a-vis PSO and other major entities' sell-off for the current fiscal year.

It is interesting to note that Privatisation Minister Zahid Hamid has repeatedly announced to pursue the privatisation plan for 2006-07, to achieve the target. But his team clearly speaks of the question of credibility of Privatisation Commission after PSMC sell-off setback.

One member of his team, referring to Zahid's statements, said that the Minister's announcement were simply for the purpose of face saving and had nothing to do with the factual position.

He said the Privatisation Commission was working on only small transactions such as IPOs of different banks and OGDC, but no big company was now in the final stage for strategic sale before the end of the current calendar year.


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## Owais

*70,000 tons gram will be imported before Ramazan* 


ISLAMABAD (August 30 2006): Private sector firms have opened Letters of Credit (LCs) for 70,000 tons black gram to be imported from Tanzania, Australia and Ethiopia, official sources told _Business Recorder _here on Tuesday.

"The private sector has opened 42 L/Cs for importing 70,000 tons black gram, which will reach here before Ramazan and the government will extend Rs 6 per kg subsidy," they said. Sources said that the orders placed by the private sector were in addition to 10,000 tons gram, which is already in the market.

Trading Corporation of Pakistan (TCP) has also floated tenders for importing 25,000 tons black gram, which may be imported from India, they said.

Minfal is of the view that stocks of Daal Mash (washed), Daal Masur, and daal Mung (washed) with local stockists and imported stocks would be available in the market before Ramazan. And it is expected that the prices of all pulses would remain stable, except gram due to its high demand in Ramazan.

Industries Ministry had recommended to the government that customs duty on RBD palm olien and palm oil should be reduced by Rs 4000 per ton to offset the impact of increase in prices in world market, but the top decision makers adopted wait and see policy.

An official in federal government said that edible oil price at the international level has started showing downward trend and would come to the previous level within a week.

He said that edible oil prices would also come down in local market. However, the government would continue strict monitoring of prices both before and during Ramazan.


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## Owais

*July exports down 19.45 percent* 

KARACHI (August 30 2006): Exports in July 2006 recorded a fall of 3.85 percent to $1.269 billion over July 2005 and dipped by 19.45 percent to $1.220 billion compared with $1.515 billion in June 2006. According to the provisional figures released by the Federal Bureau of Statistics on Tuesday.

Exports during July 2006 amounted to Rs 73.558 billion as against Rs 91.160 billion in June 2006 and Rs 75.683 billion during July 2005, showing a decrease of 19.31 percent over June 2006 and of 2.81 percent over July 2005.

Main commodities of exports during July 2006 were knitwear (Rs 9,556 million), bedwear (Rs 9,175 million), cotton cloth (Rs 8,760 million), cotton yarn (Rs 7,053 million), readymade garments (Rs 6,872 million), rice basmati (Rs 5,559 million), rice others (Rs 3,676 million), towels (Rs 2,636 million), solid fuel including naphtha (Rs 2,080 million) and leather garments (Rs 1,498 million).

Imports into Pakistan during July 2006 amounted to Rs 148.295 billion as against Rs 179.668 billion in June 2006 and Rs 119.025 billion during July 2005, showing a decrease of 17.46 percent over June 2006 but an increase of 24.59 percent over July 2005.

In terms of US dollars, imports also decreased by 17.61 percent in July 2006 to $2.460 billion as compared to June 2006 $2.986 billion but increased by 23.25 percent as compared to July 2005 $1.996 billion.

Main commodities of imports during July 2006 were petroleum products (Rs 23,427 million), petroleum crude (Rs 20,290 million), other apparatus (telecom) (Rs 6,575 million, iron and steel (Rs 6,252 million), plastic materials (Rs 3,887 million), sugar (Rs 3,746 million), textile machinery (Rs 3,380 million), electrical machinery and apparatus (Rs 2,951 million) and palm oil (Rs 2,892 million) and fertiliser manufactured (Rs 2,807 million).

Based on the provisional figures of imports and exports the balance of trade in July, 2006 was (-) 74.737 billion in terms of Pak rupees and (-) 1.24 billion in terms of US dollars.


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## Owais

*KESC to be given Rs 744 million subsidy* 


ISLAMABAD (August 30 2006): The government has decided to extend Rs 744 million subsidy to Karachi Electric Supply Corporation (KSEC) to offset the impact of 38 paisa (15+23) increase in tariff, allowed by National Electric Power Regulatory Authority (Nepra) a few months ago.

Sources told _Business Recorder _that the Ministry of Water and Power had dispatched the revised tariff notification for printing in the official Gazette on Tuesday.

They said that Nepra had also allowed KESC 28 paisa increase in tariff for the current fiscal year, but it is unclear if it would be passed on to the consumers, or the government would give subsidy. They said that the Ministry of Water and Power would submit the case to the ECC in its upcoming meeting for guidance.

Sources said that the Privatisation Commission (PC) has suggested that a inter-ministerial committee should be constituted, on permanent basis, to monitor the use of subsidy extended by the government to KESC.

According to sources, the utility is of the view that a realistic tariff formula should be in place to put it on a more viable footing, and enabling it to finance the capital expenditure required for availability and reliability of power supply, reducing energy losses, improving customer services and running it efficiently.

The power utility further says that its future power generation would be based on LPG, an alternative to natural gas, which would be almost 50 percent costlier.


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## Owais

*Divergence in trade data* 

(August 30 2006): A vast difference of 3.69 billion dollars in the calculation of Pakistan's trade imbalance by the Federal Bureau of Statistics (FBS) and the State Bank for the year 2005-06 has raised eyebrows and created doubts in the minds of the people about the credibility of figures related to the international trade of the country.

According to the FBS data released earlier, Pakistan's exports stood at 16.45 billion dollars, while imports were reported to be at 28.58 billion dollars, indicating a huge trade imbalance of 12.13 billion dollars. Now the State Bank has put 2005-06 trade imbalance at 8.44 billion dollars after estimating imports at 24.94 billion dollars and exports at 16.50 billion dollars.

As is evident, most of the divergence in the two sets of figures could be attributed to a wide difference of imports amounting to 3.64 billion dollars. Most of the analysts believe that the SBP trade figures are always lower than the FBS figures because the State Bank figures are based on actual realisation of export proceeds and remittance of import payments to the sourcing/exporting country's banks, while FBS depends on the figures of trade documents lodged with the customs. The difference in the sources of data and the manner in which they are computed could, therefore, lead to the difference in figures.

This explanation, however, does not seem to be entirely satisfactory. Recognised that the methodology of computing data is different, yet the variation between the two sets of figures cannot probably be as large as reported for 2005-06. Historically, the difference has not been more than 10 percent and this is understandable.

The State Bank's data on export proceeds and import payments for a certain year may be the result of previous year's movement of goods across the border. The implication of such a development during 2005-06 could, therefore, be that fall in foreign exchange reserves during 2006-07 could be much more than expected because payments for actual imports of more than 3 billion dollars pending with the banking system at the end of June, 2006 would most probably fall due in 2006-07. This means more pressure on the balance of payments during 2006-07, which would call for more efforts for containing imports and expanding exports.

The government is pinning hopes on privatisation to generate about two billion dollars, remittances of about 4.5 to five billion dollars, floatation of bonds of about one billion dollars and exports to fetch 18 to 19 billion dollars, but any downgrading in Pakistan's credit rating may compound the problem of foreign exchange inflows. The foreign exchange reserves held by the State Bank amounting to about 10 billion dollars may also not be able to sustain a prolonged haemorrhage in the external sector of the country.

While all of this needs to be considered in an impassioned manner in due course of time, the relevant authorities must not shy away from giving a proper explanation for the large divergence in the two sets of trade figures for 2005-06 at the earliest to clear the confusion and restore credibility in the statistics released by the government agencies. In a private TV channel programme, the State Bank Governor disclosed that a team of State Bank officials was studying the issue of the big difference of trade imbalances figures. In our view, there is hardly any chance of a substantial error in the State Bank's figures because if it was so the foreign exchange reserves of the country should have shown a greater decline during 2005-06 and the balance of payments data as a whole might not have tallied.

However, there would be no harm if both the State Bank and FBS officials meet to analyse the situation and explain it to the interested circles without further delay. As it is, doubts are often expressed about inflation indices, poverty and labour force surveys, growth and employment statistics, etc which generally show a rosy scene. It would be a pity if external sector statistics of the country were also questioned resulting in damage to credibility.


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## Owais

*Pakistan enjoys strategic partnership with China: PM* 
*ISLAMABAD *_(updated on: August 29, 2006, 22:13 PST_): Prime Minister Shaukat Aziz said on Tuesday Pakistan enjoys strategic partnership with China which is based on the strong trust, abiding co-operation and understanding of each other's positions on regional and global issues.

He was talking to a 16-member delegation of Chinese Communist Party Political Bureau, led by Member of Politburo & Secretariat of Central Committee and Minister of Publicity Department Liu Yunshan, that called on him here at the prime minister's chamber in the Parliament House.

The delegation is visiting Pakistan on the invitation of Pakistan Muslim League.

The prime minister said that the relations between Pakistan and China have withstood the changes in international environment and there is a great potential of further enhancement of relations between the two countries in the fields of politics, trade, economy, education, defence, security, culture and above all people-to-people contact.

He said Pakistan and China enjoy unanimity of views on all important regional and international issues. The two countries are opposed to terrorism and are pursuing common objectives of peace, security and better living standards for their population, the prime minister added.

Talking of the great potential for trade between Pakistan and China, the prime minister hoped that this year the trade between the two countries will cross $5 billion.

He said the Karakoram Highway provides the shortest link for export of goods from western China and the ports of Gwadar and Karachi provide the shortest route for import of gas and oil to China.

The prime minister said as a result of the macro-economic stability, consistency and continuity of policies and the level playing field provided to foreign investors, Pakistan has become an attractive destination for the private and public sector companies of China.

He said it is heartening to note that a large number of Chinese companies have started joint ventures with Pakistani companies for domestic consumption and export.

The prime minister said the world is fast moving towards a knowledge based economy. The two countries need to enhance co-operation in production of value added goods, Information Technology, Science & Technology and joint research for mutual benefits.

Talking of the importance of political linkages between Pakistan and China, the prime minister said linkages between PML and Communist Party of China provide the necessary platform for people-to-people contact which adds to the existing strong bilateral relations and diplomatic linkages between the two countries.

Liu Yunshan reaffirmed the views expressed by Prime Minister Shaukat Aziz and said Pakistan and China are true friends and 55 years of diplomatic relationship between the two countries serve as a model for the other countries.

Liu Yunshan appreciated the economic recovery and growth momentum achieved by Pakistan and said the expertise of Prime Minister Shaukat Aziz as an economist greatly contributed to the economic stability and development of Pakistan.

He said the recent visit of President General Pervez Musharraf and Prime Minister Shaukat Aziz to China contributed to further strengthening of relations between the two countries and hoped the visit of President Hu Jintao to Pakistan in November this year will be a landmark event.

He said there is a great potential of enhancement of co-operation between Pakistan and China.

He added that China desires to assist Pakistan in setting up Engineering and Media Universities and it also desires to further promote collaboration with Pakistan in the fields of science & technology, defence and security.


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## Owais

*French investment invited in oil and gas sector* 

ISLAMABAD (August 30 2006): Federal Minister for Petroleum and Natural Resources Amanullah Khan Jadoon has invited French investors to avail investment opportunities in Pakistan, saying the government is providing a level playing field to prospective investors in oil and gas sectors.

He was talking to French Petroleum Company Total Chief Executive Officer Emmanuel Laurante, who called on him here on Monday and discussed matters pertaining to oil and gas co-operation. The minister said the government had deregulated the petroleum sector and there existed large opportunities for investment by local and foreign investors.

The government, he said, was providing lucrative incentives and allied facilities to the investors in oil and gas activities and upgrading of refineries and set up coastal refinery.

French Company's CEO appreciated the investor-friendly policies of the government and assured that the French investors would continue to participate in upcoming oil and gas projects for mutual benefit. Additional Secretary of Petroleum Shaukat Hayat Durrani and officials of the ministry were also present


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## Neo

KARACHI, Aug 29: Libya has shown keen interest in purchase of around 50,000 tons of Irri-6 from Pakistan. In this regard a delegation from Tripoli is expected soon to inspect rice processing and quarantine facilities, official sources disclosed on Tuesday.

The development has been described a breakthrough. Libya has not purchased rice from Pakistan before and this deal, if materialised, could open up a new market for Pakistani rice.

The sources indicated that the deal would be carried out at government-to-government level and it could be used as a swap against loans taken by Pakistan from Libya.

However, official sources did not disclose the amount of loans against which the rice deal was taking place but confirmed that Libya had shown interest in purchase of rice (Irri-6) from Pakistan.There had been great demand for Pakistani basmati rice in Arab countries of the Middle East and this would be for the first time that an Arab (African) nation purchases Irri-6 rice from Pakistan.

According to market sources presently world market rates of Irri-6 are being quoted at around $240 per ton and once the deal was through it would fetch around $120 million for the country. However, if the deal was made against outstanding loans this amount may be swapped.

The sources said that a lot of enthusiasm was being shown by official circles with regard to this deal as it was being looked upon as an opportunity for capturing a new market of a sizeable quantity for export of rice.

According to some estimates the country would have a bumper rice crop this season. It is generally being felt by the private sector that the total production would come to around 5.6 million tons. The country has already managed to cross a billion dollar mark in export of rice during last season.

However, these analysts feel that Irri-6 may be in less production this season due to the late availability of water but are optimistic about the overall cultivation of paddy.

It is being generally felt that the superior quality rice with aroma of E-98 variety, also known to be as good as original basmati, would be in larger quantities in Sindh this season.

The analysts further said that the E-98 variety grew well in less water at its initial stages and could compensate the paddy growers fairly well against the expected loss on account of Irri-6 crop.

They opined that since this variety required more investment towards input cost but was equally poised to fetch higher price in the world market for being of long grain, high quality and also having almost same aroma as of original basmati.

Indian exporters had been exporting this variety in the world market under the name of original basmati and even managed to get high price close to the price of basmati, which ranged from $400 to $700 per ton.


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## Neo

By Farhan Bokhari, Special to Gulf News

This week's protests in Pakistan's Balochistan province following the killing of the most prominent tribal elder of the area, do not bode well for the region's prospective gas explorers. 

Balochistan has often been described as Pakistan's singular region rich in gas reserves. Not only is Balochistan home to the largest gas reserves so far discovered in Pakistan, the province, more importantly, stands at the centre of plans by the Pakistani government to transport gas to the country from nearby countries such as Iran or the newly independent central Asian states supplying gas through Afghanistan.
The late Nawab Akbar Khan Bugti, who died on Saturday in an operation carried out by the Pakistani military, had taken it upon himself to become the self appointed advocate for the rights of the Baloch people. 

He opposed plans by the government of pro-US leader General Pervez Musharraf to back new ventures in his province, ranging from deployment of military troops at newly-created military cantonments to development of new facilities for prospective foreign investors.

Many Pakistanis may well have lamented Bugti's style of politics. He was reputed to run his own justice system in parallel to the government, with provisions ranging from sentencing of individuals to private prisons where they were jailed. 

In the immediate aftermath of Bugti's death, there is widespread violence from protesters across Balochistan. It is clear that the government of General Musharraf has obviously underestimated the political fallout. Warnings of a long war have been delivered publicly by some of Balochistan's leading political leaders, which must be disconcerting for prospective investors.

There can just be no enduring peace and settlement in Balochistan as things appear to look for the foreseeable future. Consequently, the idea of attracting investors to take long-term stakes in the range appears as faulty as ever. 

The Pakistani government's promise to oversee billions of dollars flow in to new investments in Balochistan which would lead to a sharp rise in the volume of gas supplied, appears doomed to fail for now. In brief, the promise of taking Pakistan towards a new era of prosperity, thanks to the prospective gas projects, is one that probably went down the tube when Bugti's mountainous hideout in a remote area was attacked.

The delay in undertaking new gas projects of course only promise to cause a huge setback to Pakistan's economic interests. In the past few years, Pakistan's foreign lenders have urged the south Asian country to take steps towards arranging new sources of gas supply as the country's existing gas reserves, by some estimates, could run out in the next two to three years.

Not too long ago, Pakistan tasted the experience of gas shortages when some of Bugti's followers allegedly destroyed a portion of the gas pipeline running from Balochistan to elsewhere in the country. They could not have chosen a more opportune time, right at the peak of the winter months, when gas shortages truly hit domestic consumers, and the significance of Balochistan to Pakistan's overall comfort level was adequately highlighted.

With a new round of mayhem in Balochistan following Bugti's death, its impossible to predict the extent to which Pakistani authorities would successfully meet the challenge of keeping the existing pipelines secured from the province. 

But even if they succeed in meeting that challenge, the next challenge of overseeing large new investments flow to the region, chasing new opportunities for gas exploration, is likely to remain a distant dream.

Ultimately, Pakistan's pro-US rulers have to reconcile themselves to a fundamentally vital reality. But political mistakes of the kind made with Bugti's death is bound to unleash not just political but also economic consequences.
​


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## Neo

Wednesday, August 30, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\08\30\story_30-8-2006_pg5_3

ISLAMABAD: The Mahbub-ul-Haq Human Development Centre will launch its ninth annual report on human development in South Asia 2005 at a local hotel on Wednesday. The report, entitled Human Security in South Asia, analyzes the socio-economic and political factors threatening human security in South Asia.

Analyzing the notion of human security from multiple dimensions, the report records that the current patterns of economic growth in South Asia have made million of people vulnerable and insecure to even the slightest shocks. It also demonstrates how conflicts in the region both among states and within continue to divert resources towards defence. Another focus area of the report is the increasing environmental degradation in South Asia and deteriorating health conditions which threaten the very existence of the people in the region. The report also analyzes the international biases that restrict gender equality in South Asia.

High-level governmental officials, representative of diplomatic missions, international development institutions, academic community and civil society will attend the launch. The panel of speakers includes Kadija Haq, Jania Bjorn Kanavin, Ambassador of Norway, Dr Arfa Syeda Zehra, Chairperson of the National Commission on the Status of Woman, Jan Vander Moortele, resident representative of the UNDP, and Dr Ishrat Hussain, Chairman of the National Commission for Government Reforms. Dr Najam and Dr A R Kemal will also comment on the state of human security in Pakistan.


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## Neo

Wednesday, August 30, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\08\30\story_30-8-2006_pg5_11

KARACHI: The profit after taxation of Pak Suzuki Motor Co Limited (Suzuki motor) surged by 167 percent to Rs 2.06 billion in the January-June 2006 period due to increasing sales.

"The sales of the company have gone up during the said period," an analyst said. "The company is also making further investment to expand its plant in Karachi."

The net earning of the company stood at Rs 2.06 billion for the Jan-Jun 30, 2006 period compared with the Rs 770 million earned in the same period last year. The earning per share was Rs 38.1 compared with the Rs 14.3 in the first half of 2005. 

Net sales of the company grew to Rs 24.26 billion versus Rs 16.9 billion last year - a growth of 44 percent.


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## Neo

_Manufacturers increase to 50, more seeks licence_

By Imran Ayub

KARACHI: The number of motorcycle manufacturers in the country has reached 50 as majority of the local producers have acquired Chinese technology and are expected to produce 800,000 bikes by December 2006.

A top official said that the government offered manufacturing licences in May 2006 but there were still several players, with both local and foreign investments, waiting to get a nod from the authority concerned.

Ã¢â¬ÅA meeting of our body was held before the federal budget 2006-07 in which licences were awarded to the interested parties, which increased the number of local motorcycle manufacturers to 50,Ã¢â¬Â said Imtiaz Rastgar, Chief Executive Officer of Engineering Development Board (EDB).

Ã¢â¬ÅSince the announcement of budget we have not yet issued a single licence, but our policy is to expand the local market for both local and international players in a bid to increase competition and enhance quality.Ã¢â¬Â

He said less than half a dozen motorcycle manufacturers were operating with Japanese technology as most of the new entrants preferred to adopt Chinese techniques of motorcycle production.

Ã¢â¬ÅNow those manufacturers with Japanese technology are planning to expand their production capacity to compete in the market,Ã¢â¬Â said Rastgar.

The countryÃ¢â¬â¢s motorcycle production industry started witnessing phenomenal growth some three years ago, when several local assemblers acquired Chinese technology with most of the production units set up in different industrial estates of Punjab.

By the end of 2005, some 35 assemblers were producing different categories of motorbikes in different industrial estates. Pak Hero Industries, Atlas Honda, Pakistan Cycle Industrial Co-operative Society Limited, Saigols Qingqi Motors Limited, Excel Industries, New Asia Automobiles, United Sales, Blue Star Automobile, Pacific Motor Company Limited, HKF Engineering (Pvt) Limited, Sazgar Engineering Works Limited, Star Asia and Zxmco Pakistan enjoyed the major market share by the end of last calendar year.

Similarly, Suzuki Motorcycle Pakistan Limited, Dawood Yamaha Limited, Dewan Motorcycles Limited, Ahmed Automobile Company, NJ Auto Industries, Sitara Auto Impex and AB Engineering also designed plans to produce different-styled motorbikes last year.

The EDB chief said there were several other players who were interested in investing in the countryÃ¢â¬â¢s auto industry and they would enter the market by the end of current financial year.

He said increase in Chinese motorcycle brands had pushed the Japanese assemblers to increase their interests in Pakistan and plan fresh investment strategy for the country.

Ã¢â¬ÅIt is our market expansion policy, which encouraged Honda Atlas to set up a new motorcycle assembly plant in Lahore to meet growing demand,Ã¢â¬Â added Rastgar.

Like Honda, he said, other foreign manufactures of motorcycles in Pakistan would also increase their capacity in the days to come.

Honda a few months ago set up a new $39.13 million motorcycle production plant in Lahore. The new plant would increase companyÃ¢â¬â¢s combined annual production to 500,000 motorcycles from the current 400,000 motorcycles.

In 2005-06 total seven foreign assemblers managed to sell 516,640 pieces of the product compared to 417,066 sold out in 2004-05. The assemblers produced total 520,124 motorcycles during 2005-06 compared to 416,189 manufactured in 2004-05.


----------



## Neo

KARACHI, Aug 29: Despite assurances by the banks depositors still get much low return on their deposits making negative earnings on savings in the wake of prevailing high inflation.

The banking spread has increased further in July, 2006 against July last year. The spread was 7.42 per cent in July 06 compared to 6.90 per cent in July 05 for all banks.

The return on fresh deposits has significantly increased during last 12 months but the analysts say the contribution of fresh deposits is not significant as compared to huge volume of banksÃ¢â¬â¢ deposits. The lending rate has also gone up.

Ã¢â¬ÅThe monthly average fresh deposits are around Rs22 billion and during January to July 2006, Rs151 billion were deposited in the banking sector,Ã¢â¬Â said an analyst. In July Rs26 billion were deposited.

The bank deposits have reached Rs2.81 trillion, which means the fresh deposits are just 5 per cent of over all volume of bank deposits.

The weighted average lending rate in July, 2006 was 10.42 per cent and the return on deposits was 3.09 per cent making the spread as 7.42 per cent.

In July 2005, the lending rate was 8.96 per cent and return on deposits was 2.06 per cent making the spread as 6.90 per cent.

However, weighted average return on fresh deposits went up to 5.15 per cent from 2.97 per cent in July 2005. But the lending rates on fresh loans were not provided.

Bankers said that most of the lending is being made on floating rates and estimated that 80 to 85 per cent lending was on the basis of floating rate.

The Karachi Inter Bank Offered Rate (Kibor) is the benchmark and lending is usually made on the prevailing Kibor rate plus the spread, which varies.

Bankers said the 6-month Kibor rate is 10.38 per cent and the lending rates must be over the Kibor by 1.5 to 2 per cent.

Ã¢â¬ÅThe fresh lending is being made at around 12.20 to 12.5 per cent--this again brings the spread as high as 7.15 per cent--keeping the return on fresh deposits at 5.15 per cent,Ã¢â¬Â said an analyst.

In May, the State Bank governor had asked all banks to share profits with the depositors but the situation remained almost same even after four months.

Banks have been offering higher return on deposits--even more than 10.5 per cent--but the depositors are asked to fix their money for longer terms.

Most of the depositors keep their money either in the saving accounts or current accounts.

According a brokerage house report the share of current accounts in the total deposits was about 24 per cent.

Ã¢â¬ÅThe saving accounts are the biggest attraction for the customers as they serve both the purpose by providing return as well as an access to liquidity,Ã¢â¬Â said the analyst.

Analysts said that the depositors would continue to suffer the losses as the return was much below the inflation. The State Bank has already said that no action would be taken against the high banking spread.

Banks have been making record profits and foreign banks have also started taking interest in the presence of high profitability offered by the banking system. However, the high profitability is being made at the cost of depositorsÃ¢â¬â¢ money.

Bankers complain that most of the customers keep their money in current/ saving accounts, which offer low returns and they do not opt for time deposits, which offer better return. This is the reason for low return to the depositors, they said.

In fact, it was because of financial conditions of the people, who prefer to keep their money in current accounts. They can not afford to engage their liquidity for a longer period.


----------



## Neo

*SINGAPORE *_(updated on: August 30, 2006, 19:35 PST_): Pakistan's diesel demand is forecast to jump 70 percent in a decade to 15.07 million tonnes, as the overall fuel consumption almost doubles, forcing the country to boost imports, an oil official said on Wednesday.

Total demand for oil, which accounts for 31 percent of the country's energy needs, will grow to 32.51 million tonnes by 2015 and 66.84 million tonnes by 2030, from 16.8 million tonnes last year, said M Adil Khattak, chief executive of Attock Refinery.

To cope with the demand, Pakistan is seeking investments of up to $16 billion for oil-related infrastructure, including refineries, pipelines and storage facilities, he told an oil conference.

But domestic diesel production, even after taking into account three proposed refinery projects, could only yield 10.93 million tonnes a year, a shortfall of more than 4 million tonnes by 2015, he said.

The shortfall of all oil products by 2015 is projected at 30.33 million tonnes, up from 13.18 million tonnes in 2005, he said, adding that the deficit would be covered by imports.

"We need the oil and we need to import. Despite the plans to generate more energy using other means including natural gas and LNG, we still need to import substantial volumes," he told Reuters on the sidelines of the conference.

"We will need to import and large volumes at that. And we will need to have the infrastructure in place to cater for the incremental volumes," he said, without giving import projections.

Demand for diesel, used for transportation and agriculture, is projected at around 8.88 million tonnes this year, and domestic inventories currently stand at 30 days, well below the required 45 days, Khattak added.

*NEW REFINERIES*

Demand for fuel oil, used mainly for power generation, was also expected to grow at a fast rate, he said, without giving any figures. Most of Pakistan's new power plants are oil-fired thermal units, due to the country's depleting natural gas reserves.

Khattak said part of the incremental demand could be met by supplies from neighbouring India.

"Reliance had been very interested in supplying diesel to the country but it will take some time before that is going to happen. I am sure that it will happen but it would take maybe three to five years," he said.

Pakistan is pushing ahead with the development of three refineries, in addition to the existing six with a total refining capacity of 285,500 barrels per day (bpd).

The latest proposal is an oil plant near Karachi with a planned capacity of 250,000 bpd.

The government will invite investors to bid for the project, estimated to cost $1.5-$1.8 billion, in two months and it is expected to be operational in about two years at the earliest, he said, adding that China and Kuwait are among the interested parties.

Another facility, the 100,000-bpd privately funded Indus refinery project, is expected to be ready in about 15 months while the third -- the 120,000-bpd Bosicor project -- has a two-year timeline.

Khattak said the Bosicor project, which will upgrade the existing facility from its 30,000-bpd capacity, is at the process-design stage


----------



## Owais

*LNG-specific energy plan approved* 


ISLAMABAD (August 31 2006): President Pervez Musharraf on Wednesday approved an alternative energy plan with main focus on import of LNG and setting up of its countrywide network to provide a cheaper source of fuel to industrial and domestic sectors. He also okayed a proposal of the petroleum ministry to cap private sector's 350 million dollar investment for setting up of an LNG terminal at Qasim port, Karachi.

The president asked the ministry to encourage the private sector for LNG import and remove all bureaucratic hurdles to attract investment in this key area.

The president also directed the ministry and other departments to make LNG import plan and delivery of the alternative source of energy a success in the shortest possible time.

He was presiding over a meeting held here to review the progress made on the availability of cheaper sources of energy to industrial, commercial and other sectors to keep the pace of economic growth at the current level.

Sources told _Business Recorder _that the president was given a detailed presentation during the meeting on local gas resources, steps being taken by the ministry to cap investment for oil and gas sector and the private sector's eagerness for import of gas. It also covered a comparative study on prices of LPG, LNG as these two could be major resources in the future to supplement the gas supply to ensure continuous availability to the industrial and other sectors.

The president was informed that more than one Pakistani groups were keen for LNG import for industrial and domestic use. He was told that a Dubai-based group had committed 211 million dollar investment to set up a separate berth at Bin Qasim port Karachi to handle specifically imported LNG.

He was informed that the private sector was willing to import LNG and set up a separate terminal at Qasim port and then transport imported gas to different parts of the country to use it as an alternative to LPG.

LNG will be also used for power generation to produce cheaper electricity. The president was told that Karachi Electric Supply Company (KESC) and Wapda were two major sources for buying of LNG from the private sector since it costs much less than furnace oil. LNG will also be a good alternative to LPG due to its comparative less cost.


----------



## Owais

*IPPs expansion project allowed on 88 percent capacity availability* 


ISLAMABAD (August 31 2006): The Private Power Infrastructure Board (PPIB) has agreed not to force the independent power producers (IPPs), interested in capacity expansion, to function at 90 percent annual availability, especially for plants running on furnace oil.

Sources in PPIB told _Business Recorder _on Wednesday that the National Transmission and Dispatch Company (NTDC) has also 'stamped' the decision, saying that it would have put further financial burden on the consumers.

Sources said that the Economic Co-ordination Committee (ECC) of the Cabinet had decided on May 29, 2006 that "project-specific negotiations be conducted by PPIB under the umbrella of security documents, with the approval of the Board. However, in case of any deviation from the policy, or an increase in GoP's financial and contingent liability, the matter be placed before the ECC for approval".

According to sources, PPIB was expecting that most of the new thermal IPPs would use gas as fuel. Accordingly, one of the key improvements from the security documents of the 1994 policy was increase in annual availability from 86 to 90 percent.

During negotiations on security package, power generation projects based on 'Combined Cycle Gas Turbine' (CCGT), using gas as primary fuel, had agreed to the increased annual capacity availability of 90 percent, sources said.

However, almost all of the IPPs, interested in capacity expansion of their existing facilities, and the leading business houses, both part of GoP's initiative to enhance the power generation capacity on fast track basis, asked the PPIB that annual capacity availability of 90 percent would be too high for the reciprocating plants running on furnace oil. The IPPs were of the view that this binding would significantly increase the operation and maintenance (O&M) cost of the power generation facility, which would ultimately translate into increase in consumer-end tariff, sources said.

While most of the IPPs are still insisting on 86 percent capacity availability, in line with the 1994 agreements, the PPIB argues that 88 percent availability should be economically viable.

According to sources, PPIB also obtained power purchaser, NTDC, point of view, which said that 'diesel plants can achieve 88 percent availability without any additional cost, but in case of furnace oil, O& M cost would increase.

The PPIB in its meeting discussed the issue, and allowed minimum annual availability of 88 percent for power plants based on reciprocating engines, running on furnace oil, in the light of technology to be used in expansion, sources added.


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## Owais

*Rs 45.07 billion decline in banks' net foreign assets in July* 


ISLAMABAD (August 31 2006): The net foreign assets (NFA) of the banking system (central and scheduled banks) have gone down to Rs 717.61 billion during July 2006, against Rs 762.67 billion in June before the end of 2005-06, illustrating a decline of Rs 45.07 billion.

The reason is said to be the widening trade deficit that resulted in massive outflows of foreign assets as well as lower net receipts in external financing.

The central bank's 'Pakistan Monetary Survey', which is analytical account of the State Bank of Pakistan (SBP) and scheduled banks, based on monthly reporting released on Wednesday showed that both central and scheduled banks contributed to the overall decline in the NFA.

SBP's own analytical account, which excludes scheduled banks, there was a decline of Rs 28.62 billion in NFA held with SBP. During the first month of the new fiscal 2006-07--July--NFA with the bank stood at Rs 609.88 billion, against Rs 638.51 billion at the end June 2006.

The scheduled banks' NFA declined to Rs 107.73 billion from Rs 124.17 billion in June 2006 showing a decrease of Rs 16.44 billion.

The analytical accounts say that the scheduled banks' claims on non-residents (FAs) stood at Rs 136.57 billion, among which, foreign currency with scheduled banks was worth Rs 6.48 billion, deposits Rs 55.32 billion and securities other than shares stood at Rs 74.77 billion, while liabilities to non-residents stood at Rs 28.84 billion that comprised deposits worth Rs 23.418 billion and loans at Rs 5.428 billion.

The decline in the central bank's NFA was inline with the volume of its intervention in the forex market to reduce exchange rate volatility, while the decline in scheduled banks' NFA was the outcome of stable exchange rate expectations that led to robust increase in trade-related lending against foreign exchange cir-25 (FE-25) deposits.

During the month (July) total claims of non-residents were worth Rs 969.48 billion (declined from Rs 1.023 trillion in June 2006) among which their liabilities were at Rs 251.87 billion. On balance, the NFA (central and scheduled banks) stood at Rs 717.61 billion.

The NFA with the Sate Bank stood at Rs 609.88 billion; its claims on non-residents (FA's) stood at Rs 832.91 billion, while their liabilities to non-residents were Rs 223.03 billion.

Out of total non-resident claims, money gold coin and bullion stood at Rs 77.56 billion; special drawing rights (SDRs) holdings with IMF and SBP at Rs 13.13 billion, foreign currency Rs 1.39 billion, securities other than shares (foreign securities) Rs 523.35 billion and deposits stood at Rs 125.22 billion.

During June 2006, these stood at Rs 77.66 billion, Rs 13.02 billion, Rs 1.39 billion, Rs 555.31 billion and Rs 121.51 billion, respectively.

Liabilities to non-residents (foreign liabilities) of SBP increased to Rs 223.03 billion in July from Rs 222.64 billion in June 2006.

During the month under review these liabilities comprised deposits of Rs 42.30 billion, securities other than shares (N.N.N.I.B securities) at Rs 84.28 billion and loans (IMF loan I, PRGF and SDF) stood at Rs 96.45 billion.


----------



## Owais

*Gwadar Port to become operational in six months* 


ISLAMABAD (August 31 2006): The Gwadar Port project would become operational within six months, Minister for Parliamentary Affairs Dr Sher Afgan Khan Niazi told the National Assembly here on Wednesday. He was answering a supplementary question by Muhammad Hussain Mehanti in the question hour on behalf of Minister for Ports and Shipping Babar Khan Ghauri, who was not present in the House.

The replies from the Minister for Parliamentary Affairs were criticised by the opposition members, who pointed out that the question hour lacks sanctity in the absence of the relevant ministers.

Earlier, Speaker Chaudhry Amir Hussain endorsed this irregularity and politely reminded Sher Afgan that the relevant minister or his parliamentary secretary should be present to reply to the questions. Even these remarks from the Speaker could not shake the confidence of Sher Afgan, who retorted, "the point arises if I am not able to answer the questions properly." The question hour started an hour late for lack of quorum, which was pointed out by Abdul Mujeeb Pirzada and Hafiz Hussain Ahmed.

Sher Muhammad Baloch was deeply hurt on the casual approach of Sher Afgan particularly the way he spoke about cold-blooded murder of Nawab Akbar Bugti. Replying to Samia Raheel Qazi's question on the security concerns of the Chinese working in Gwadar, after the colossal operation and murder of Akbar Bugti, Minister for Parliamentary Affairs said that things would settle down in Balochistan within three or four days and security situation will be soon back to normal, adding everything would be fine.

However, Speaker did not allow the infuriated opposition member to speak for long by switching off his mike. Another supplementary question by Abid Sher Ali about award of contract of Gwadar Port to a firm, Dubai Port, without tenders was rejected by the Speaker, terming it irrelevant and not having merit to be a supplementary question.

M P Bhandara from the treasury benches in a point of order asked the Speaker that the question hour is often interrupted with point of orders and Assembly does not reach to any conclusion on serious issues. This practice should be checked and point of orders should not be allowed during the question hour.

To a question by Nawab Abdul Ghani Talpur on making any port duty-free in the country, the minister said that there was no such proposal under consideration.

Answering a supplementary question of Muhammad Hussain Mehanti on the pension rules of Karachi Port Trust (KPT), Sher Afgan said that 25 percent increase in pension of was given to KPT employees w.e.f 1-7-99 who did not take benefit of the memorandum of settlement, effective from 1-4-98.

Further he clarified the pension scheme 2001 was not applicable in the case of the federal government employees. They have de-linked their scales from basic pay scales, which are subject to increase in pay and allowances after every two years as per Charter of Demand, he added.

The minister said notification regarding increase in pension as announced in the recent budget will not be applicable in the case of ex-employees of KPT as per clarifications of the Ministry of Finance that the pension rules of the federal government are not applicable to the employees of the autonomous bodies having their own pay scales.


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## Owais

*Flawed economic growth* 

(August 31 2006): Speaking at the launching of "Asia-Pacific Human Development Report 2006" in Islamabad on Tuesday, a senior UNDP official, Dr Hafiz Pasha, made the thought-provoking observation that "economic growth does not ensure eradication of poverty on its own."

He went on to cite the examples of the Chinese and the Indian economies which grew by nine and five percent, respectively, during the 1990s, while employment growth, in the corresponding order, was only one percent and below one percent. In fact, one does not need to refer to other countries' examples to ascertain the falseness of trickledown theorists' claims.

Our own government takes a lot of pride in declaring that ours is the second highest economic growth rate for the region, if not for the world. And yet, the twin scourges of poverty and unemployment refuse to show any significant sign of decline.

It is another matter, though, that the government professes to have brought down poverty during the last couple of years from 30 percent (according to unofficial estimates the figure stood at a staggering 40 percent) to a few points above 24 percent. Critics point out that the claims are based on an arbitrary definition of poverty rather than any change in the real situation.

This is an undesirable pattern of growth both in terms of the principle of equity and the long-term interest of the developmental process. Of course, there are those who argue that it is, a well-trodden path for generating surplus capital that is essential to achieve high growth rates. They hold that the creation of such capital and the concept of equitable income distribution cannot go together.

According to others, all economic activity should be geared towards betterment of the quality of human life. The fact of the matter is that societies are changing and so are the demands of modern economies. What was acceptable in the past is unacceptable now. Income inequalities generate resentment and lawlessness, which is why even western donor agencies have started to tell our government to address the issue. The UNDP official made a valuable assertion in this regard.

The level of employment, he said, is a dependable indicator to gauge the nature and content of growth. And increase in employment rate reflects that benefits of expansion in economic activity are shared by the people.

Modern economies do not depend anymore only on the capital, managerial capabilities and technical know-how of a few people sitting at the top while majority of the masses toil away in factories or fields; they are increasingly becoming knowledge-based and innovation-driven. It is plain, therefore, that irrespective of egalitarian considerations, there is need for a rethink on our economic growth policy.

Its main focus, aside from increasing employment opportunities, has to be human resource development. Since majority of our population still lives in the rural areas, literacy and skill training programmes are necessary to boost production and improve value addition standards at different levels of agriculture related economic activity.

It is equally important for the government to play the lead role in upgrading and expanding the higher education sector, promoting linkages with commerce and industry. Indeed, the present government has taken some creditable initiatives in that direction. But considering that human resource development, for long, has been a low priority subject for successive governments, the task requires major investments and a sustained focus.


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## Owais

*President for more private sector participation in oil and gas* 

RAWALPINDI (August 31 2006): President General Pervez Musharraf on Wednesday emphasised the need for greater private sector participation in the oil and gas sector, and expressed the hope that all concerned government bodies would take necessary steps for their facilitation.

He was chairing a meeting here to review the progress on the supply of natural gas across the country. Musharraf said private sector's participation in the oil and gas sector was essential to give much-needed impetus for ensuring fuel for Pakistan's sustained high economic growth rate and socio-economic development.

The participants of the meeting were briefed about the various initiatives being taken by the concerned organisations of gas in various parts of the country.

Amanullah Jadoon, Minister for petroleum & Natural Resources, Babar Khan Ghauri, Minister for Ports & Shipping, Dr Akram Sheikh, Deputy Chairman Planning Commission, and other senior officials were present.


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## Owais

*Jadoon lauds BP to undertake offshore seismic survey* 

ISLAMABAD (August 31 2006): The President of British Petroleum (BP) company, Tariq Khamesani called on Federal Minister for Petroleum and Natural Resources, Amanullah Khan Jadoon here on Wednesday and briefed him on his company's programme to undertake offshore seismic survey by the first quarter of next year.

He told that British Petroleum would explore oil and gas in three offshore blocks covering an area of 21,000 sq kms in ultra deep water and would initially invest $50 million.

The minister appreciated the BP's contribution for promoting the oil and gas exploration activities in the country and wished them success in their upcoming offshore exploration activities.

Jadoon said that the government was taking tangible steps to accelerate the pace of oil and gas exploration activities in the onshore and offshore areas aimed at putting the country on the road to self-reliance in the energy sector. "We are here to facilitate and provide all out co-operation to investors in oil-gas exploration," he added.


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## Owais

*TRG signs term sheet for $35 million investment* 

KARACHI (August 31 2006): TRG Pakistan Limited announced on Wednesday that it has signed a term sheet for a $35 million investment in the TRG group by an international investor consortium.

The investor consortium is comprised of Kingdom Zephyr Management Company (a joint venture between Kingdom Holdings and Zephyr Management L.P.), the Dutch Development bank FMO, and the Pan-African investment funds AfricInvest and Cauris Croissance -PR


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## Owais

*Foreign debts increase to $1.430 bln* 

KARACHI: During the fiscal year 2005-06, foreign debts of Pakistan increased to $1.430 billion.

According to State Bank statistics, at the end of FY2004-05, Pakistan had $35.830 billion foreign debts, which rose to $37.36 billion with an addition of $1.43 billion.

The foreign debts of Pakistan in 1999-2000 were at $37.9 billion with its foreign exchange reserves were at only $1.96 billion.

Thus, the proportion of debt and foreign remittances in 1999-2000 was 19.33 percent, which dwindled to 2.84 per cent.

According to a high official, the proportion of Pakistan&#8217;s loans and GDP also decreased.

However, statistics revealed that during FY2005-06, debt servicing was also reduced to $2.71 billion and $2.89 billion. In contrast, during FY2003-04, debt servicing was at $4.96 and in FY2002-03 at $3.15 billion.


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## Neo

ISLAMABAD (August 31 2006): Minister of State Planning Commission Dr Akram Sheikh on Tuesday said the government was focusing on knowledge-based economy and required skilled manpower in manufacturing, service and agriculture sectors for rapid economic growth.

He stated this while addressing as the chief guest at the launching ceremony of Hino Dutro Light Duty Truck and Hino CNG urban Bus service manufactured for the first time in Pakistan.

The State Minister said the government was focusing on technical education so as to generate skilled manpower, adding "we have a very clear future policy with more concentration on knowledge-based economy".

He termed the improvement in the infrastructure critical for uplift of the common man and vowed for major improvement in next couple of years.

Akram Sheikh lauded the steps taken by the present government for economic stability in the country. The growth in auto-sector, increase in exports and better economic position of an individual reflected the economic growth in the country, he said.


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## Neo

ISLAMABAD (August 31 2006): The target date for completion of New Islamabad International Airport (NIIA) is last quarter of 2009. Minister for Defence Rao Sikandar Iqbal stated this in a written reply to a question from Samia Raheel Qazi in the National Assembly on Wednesday.

The MNA had asked about the present status of New Islamabad Airport and date of its completion.

According to the written reply of Defence Minister, the NIIA would be completed by the end of 2009 and Civil Aviation Authority (CAA) is constructing the New Islamabad International Airport (NIIA) on self-financing basis.

He said, the project management consultant has been selected with the approval of CAA Board. Contract agreement with the selected consultant Louis Berger Group of USA, was signed in January 06, 2006.

The contractor has initiated work from February 13, 2006, and Master Plan Phase is in progress, he added. The selection of design consultant, the Minister said is under process. Five firms have been short-listed from which the consultant is likely to be finalised by October, 2006.

Giving details, he said, the design proposals bids were opened on February 16, 2006, and the same are in the process of evaluation. The financial bids of technically top five firms were opened on May 25, 2006. The design of the consultancy proposal, he said, was presented to the CAA Board during its meeting on August 10, 2006.

About the construction contractor, he said advertisements for Expression of Interest (EoI) have been issued and process of short-listing is being followed. The contract is likely to be awarded in January 2007.


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## Neo

ISLAMABAD, Aug 30: Prime Minister Shaukat Aziz said on Wednesday that bilateral trade between Pakistan and China would cross $5 billion mark during the current fiscal year.

The premier was talking to a 16-member delegation of Chinese Communist Party Political Bureau, led by member of Politburo and Secretariat of Central Committee and Minister of Publicity Department Liu Yunshan who called on him in his chamber at the parliament house.

An official announcement said that the premier told the delegation that Karakoram Highway provides the shortest link for export of goods from western China and the ports of Gwadar and Karachi provide the shortest route for import of gas and oil to China.He said that this would help in increasing the volume of bilateral trade between the two countries particularly following the sighing of the early harvest programme (EHP) effective from January last.

The prime minister said as a result of the macro-economic stability, Pakistan had become an attractive destination for the private and public sector companies of China.

He said it was heartening to note that a large number of Chinese companies had started joint ventures with Pakistani companies for domestic consumption and export.


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## Neo

Thursday, August 31, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\08\31\story_31-8-2006_pg5_12

_* Standing cotton crop on around 365,000 acres damaged 
* Cotton production could fall short of target by 365,000 bales_

KARACHI: The recent heavy monsoon rains in Pakistan have damaged the countryÃ¢â¬â¢s key cotton crop but other crops such as sugarcane and rice are expected to benefit from the rains, according to a senior government official. 

Ministry of Food and Agriculture Agriculture Development Commissioner Qadir Bux Baloch said standing cotton crop of around 365,000 acres (147,710 hectares) had been damaged by the heavy monsoon rains this season. 

The ministry carried out an assessment of the damage caused to the crop late last week and the findings of the assessment arenÃ¢â¬â¢t Ã¢â¬Åvery encouraging,Ã¢â¬Â he told Dow Jones Newswires in an interview from Islamabad late Monday. 

Baloch said the cotton crop this season covered an area of around 8.1 million acres, including 6.5 million acres in central Punjab, 1.5 million acres in southern Sindh and the remainder in western Balochistan and the North West Frontier Province. 

Ã¢â¬ÅAccording to our estimates, the crop on 200,000 acres has been damaged mainly in areas along the rivers in Punjab,Ã¢â¬Â he said. Out of this, about 150,000 acres were in Sindh while 15,000 acres were in the remaining two provinces. 

PakistanÃ¢â¬â¢s monsoon season usually coincides with the start of the cotton harvest and while moderate rains are considered healthy for the crop, the rains were very heavy this year. 

Govt may revise cotton crop forecast downwards: The Agriculture Ministry earlier estimated that the 2006/07 cotton crop would be around 13.86 million bales, up from the 13 million bales in the previous year. The cotton harvest begins in September in Sindh and October in Punjab. 

Baloch said increased moisture due to the heavy rains and overcast conditions throughout the country could also increase the possibility of a pest attack. 

But he said he couldnÃ¢â¬â¢t predict how severely cotton production would be affected this season. 

Ã¢â¬ÅI canÃ¢â¬â¢t give you any estimate. We will hold a meeting in the first week of October to assess the situation and to give an initial estimate about production this season,Ã¢â¬Â he added. 

In Pakistan, on an average one acre yields one bale of cotton, which means this year cotton production could fall short of the target by at least 365,000 bales. 

PakistanÃ¢â¬â¢s export revenues are largely dependent on cotton and textiles, accounting for around 60 percent of total exports. A good cotton harvest is considered vital not only for the textile industry but for the countryÃ¢â¬â¢s economic prospects as well. 

The countryÃ¢â¬â¢s domestic cotton consumption is estimated to be 15 million bales in the current fiscal year. Pakistan imports about 1.5 to 2 million bales of high-quality cotton each year to meet the domestic shortfall. 

Sugarcane and rice to benefit: Baloch said the above average rains this season would lead to increased availability of irrigation water that will benefit agriculture in general. 

Ã¢â¬ÅAlthough the cotton crop has been damaged, heavy rains will be beneficial for other important crops like sugarcane and rice,Ã¢â¬Â he added. 

He said the 2006/07 sugarcane crop is estimated to be 50 million tons, up from the 44 million tons last year. 

The rice output target has been set at 5.5 million tons this season, unchanged from last yearÃ¢â¬â¢s level, Baloch added. Ã¢â¬ÅBut after these rains, we expect actual production to be higher than 5.5 million tons,Ã¢â¬Â he said. 

Agriculture accounts for about 25% of PakistanÃ¢â¬â¢s gross domestic product, which is forecast to grow by 7 percent in the current fiscal year, compared with a 6.6% growth recorded in the last fiscal year ended June 30. 

According to government estimates, agriculture is expected to grow by 4.5 percent this year, compared with the 2.5 percent growth in the previous year. dow jones newswires


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## Neo

_Meet 70pc domestic needs; Pak medicines compete well Indian and China_

KARACHI: Pharmaceutical industry is one the most potential sectors of Pakistan that the government considers being the fastest export-oriented as well as profitable for the country owing to a less competitive international market.

Vice Chairman Pakistan Pharmaceutical Manufacturers Association (PPMA) Zahid Saeed stated this while highlighting the developments and future prospects of the pharmaceutical industry in an exclusive interview to The News.

Zahid Saeed said exports of pharmaceutical sector had recorded tremendous growth, netting US$63 million during the year 2004-05. Earlier, the exports had remained frozen around $25 million in the previous four years.

Ã¢â¬ÅThe pharmaceutical exports are rising rapidly at the rate of 20 per cent per annum and the sector is expected to attain 40 to 45 per cent growth in manufacturing and exports by 2010,Ã¢â¬Â he anticipated.

Ã¢â¬ÅWe (pharmaceutical industry) has set an export target of $1 billion by 2010, which is achievable.Ã¢â¬Â

Briefing on the export process of medicines, he said the importing country sought 100 per cent guarantee and scrutiny of the manufacturing industry and its products, adding this procedure wasted a long time and cost extra to the exporters, eventually causing delay in exports.

The importer takes about two years to gather comprehensive information about a pharmaceutical company and its products and the expenses on registration, visits of importerÃ¢â¬â¢s representatives and other processes are borne by the exporting company.

The PPMA vice chairman admitted the pharmaceutical sector had more potential than other export-oriented industries, but he was not satisfied with policies of the government, which he said did not provide facilities for the sector.

Ã¢â¬ÅThe government is not playing a proper role in boosting the growth of pharmaceutical sector, just like it is facilitating others such as textile,Ã¢â¬Â he pointed out.

Ã¢â¬ÅThe 10 per cent import duty on raw material should be minimised, which directly affects the prices and exports of pharmaceutical products.Ã¢â¬Â

He suggested the government should give the pharmaceutical sector top most preference in Free Trade Agreements (FTAs) and Preferential Trade Agreements (PTAs) with other countries. Besides, he added, the Trade Development Authority (TDP) should provide ample representation to this sector during visits to foreign countries.

Discussing the problems, Zahid Saeed said paucity of human resource was a major hurdle in the way of increasing the production and exports of medicines because Ã¢â¬Åthis sector is run purely by relevant experts.Ã¢â¬Â

In spite of many universities and medical colleges generating enough skilled and qualified pharmaceutical graduates, the worldwide demand encourages a sizeable number of professionals to migrate to developed countries, creating shortage in the local industry.

According to the latest survey of PPMA, about 80,000 retailers were engaged in pharmacy business in the country, but only 6,000 had mandatory qualification of B Pharmacy, he mentioned.

Zahid Saeed was satisfied with the current prices of medicines and drugs, which he claimed had not been hiked for the last five years. However, he added, the prices of essential items, petroleum products and many others had been increased substantially in the same period.

Ã¢â¬ÅFlour, pulses and vegetables are daily-use items, but medicines are not, which depicts the demand of medicines. However, the progress of local medicine manufacturing companies is very satisfactory, fulfilling 70 per cent requirements of the masses,Ã¢â¬Â he added. About 70 per cent medicines are manufactured by local companies in the country.

He believed the Middle Eastern, ASEAN and North African countries were lucrative and big markets for PakistanÃ¢â¬â¢s pharmaceuticals because the products were recognised for their high standard.

Ã¢â¬ÅOur products have a good reputation in the world and the price level is also encouraging compared to our competitors. Importers prefer to buy Pakistani products and offer five to 10 per cent higher prices than Indian products,Ã¢â¬Â he said.

Like other areas, Pakistan competes with India and China in pharmaceuticals and its products best quality has escalated demand in the world market, jacking up exports.

He said the local companies were preparing almost every medicine and drug, even for serious diseases like cancer and hepatitis, but there was a need to manufacture vaccines and biological drugs.

There are barely 10 manufacturers in the world, who prepare and export various vaccines and biological drugs for curing fatal diseases and epidemics.

Zahid Saeed said the country needed to manufacture vaccines of polio, anti-tetanus and other diseases, which were very crucial for the lives of people.

Ã¢â¬ÅWe imported a huge quantity of costly anti-tetanus vaccine from India for the quake-stricken people,Ã¢â¬Â he recalled and questioned Ã¢â¬Åif any mishap occurs in the country and pharma companies cannot meet the demand then what will happen?Ã¢â¬Â

Concluding, the PPMA vice chairman said the substantial growth of pharmaceutical sector was providing huge employment opportunities in fields like printing, packaging, sales and many others.


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## Neo

ISLAMABAD, Aug 30: A high-level meeting under President Gen Pervez Musharraf on Wednesday decided to facilitate increased liquefied natural gas (LNG) and liquefied petroleum gas (LPG) imports by the private sector.

It was also decided to ask the Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipeline Limited (SNGPL) to extend their pipeline network to cities and towns in order to overcome the energy shortages in the country.

Deputy Chairman Planning Commission Dr Akram Sheikh, who attended the meeting, told Dawn that a decision had also been taken that the government will construct new berths at Port Qasim, Karachi, to help store the imported liquefied natural gas and liquefied petroleum gas.

The private sector, he said, would be provided necessary facilities to invest in energy related projects with a view to cut the growing energy shortages.

Dr Sheikh said that the meeting discussed various proposals to attract further foreign investment in the oil and gas sector. "And our new measures are expected to help attract more foreign investment in this sector," he said.

Responding to a question, he said that the government will provide land to the investors at the proposed new berths at Port Qasim so as to extensively facilitate them.

He said the president told the meeting that there should be public-private partnership for constructing new gas pipelines. However, in case the private sector could not manage to transport LNG to cities and towns, then the public sector should take the responsibility to deliver, the president said.

Gen Musharraf said that the private sector's participation in the oil and gas sector was essential to give much needed impetus for ensuring fuel for Pakistan's sustained high growth rate, employment generation and socio-economic development.

The participants of the meeting were briefed about various incentives being taken by the concerned government agencies for attracting foreign investment in this vital sector and progress on provision of gas to various parts of the country.

The president emphasised the need for greater private sector participation in oil and gas and expressed the hope that all the concerned government bodies would take necessary steps to facilitate the investors.

The meeting reviewed in detail the progress on the supply of natural gas across Pakistan. The meeting was also attended by Minister for Petroleum and Natural Resources Amanullah Khan Jadoon, Minister for Ports and Shipping Babar Khan Ghauri and other senior officials.


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## Neo

'Plea for large-scale olive cultivation: Potential seen for $3.5bn export - PakTribune'; 

Thursday August 31, 2006 

*PESHAWAR : A study conducted by the NWFP agriculture research centre says that the province can earn $3.5 billion annually from export of olive oil by bringing under olive cultivation the high rainfall areas of the province. *

&#8220;Two million acres of cultivable wastelands and uncultivated forest area can be brought under olive cultivation in the high rainfall zone of the NWFP and if olive produced from there is exported at a minimum value of $2,000 per ton, exports can earn nearly $3.5 billion annually,&#8221; said a study of the NWFP underlying a strategic framework for the province to achieve economic growth through private investment. 

According to the NWFP government&#8217;s record, the province already has over 30 million wild olive trees which could be converted into ones compatible with varieties of high oil contents. 

Pointing out that the existing stock of olive trees in the NWFP are wild in nature and happen to be small in size and carry low oil contents, the study recommends that the existing stock of olive trees could be converted into high yielding European varieties through top working to increase fruit yield and oil content. 

&#8220;The existing trees provide a ready base for producing huge quantities of olive oil in a short period by converting them into high quality plants through top working,&#8221; researchers said. 

The province, according to the study, is house to large tracks of land falling under high rainfall zones suitable for olive plantation. 

The government has been proposed to exploit the situation to its benefit as olive oil production not only offers tremendous opportunities as far as earning foreign exchange was concerned, all the more, the provincial economy could experience a major boost in view of the increasing edible oil consumption patterns in the country. 

Pakistan heavily relies on edible oil imports to meet its consumption requirements every year, therefore, according to the study, bringing more area under olive oil cultivation together with converting the existing stock of trees into high quality European varieties could help open a new avenue to attain economic growth by effectively exploiting the NWFP&#8217;s agriculture sector potential. 

However, in an effort to take benefit of its geographical location, the government has been cautioned to take appropriate measures to address a host of issues &#8212; identified by the study &#8212; needed to be taken care with before venturing into olive cultivation. 

The study has been carried out to pinpoint hurdles hampering growth in different sub-sectors relating to industries and agriculture sectors and suggest ways and means to remove those impediments to achieve economic growth in addition to identifying avenues with untapped potential. 

Other than olive cultivation, the study envisages that the provincial government should also focus on tea plantation as it could be helpful in achieving good results from the agriculture sector which employs about 47 per cent of the NWFP total labour force. 

The study suggests that taking greater advantage of its agriculture sector&#8217;s potential by bringing the untapped potential of tea and olive oil production under utility the province could make progress in its main objective of addressing the issue of increasing poverty through job creation and increasing income generation opportunities. 

It has been suggested that the provincial government should take advantage of the National Tea Research Institute at Shinkiari, in the Hazara region of the NWFP, and persuade local farmers to switch over to tea plantation for which they should be assisted in terms of finances they would require initially.


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## Neo

ISLAMABAD (August 30 2006): Telenor Pakistan will now be reaching 613 destinations, within less than 18 months of the company's launch. The list of newly added destinations include: Badomali, Karor, Kundian, Makhdoom Pur Nayar, Khan Garh, Qabal, Chak Dhara, Gambat, Padidan, bhalwal-Miana Gondal-Khatiala Sheikhan-Miani Road, Gujranwala-AliPur Road, Lahore Satoki, Muzaffargarh-Alipur Road, Pansera-Dijcot Road, Badin-Talhar, Gidani, and Sukker, panu Aqil Raod.

These locations will be launched on August 31, says a press release. Stressing Telenor Pakistan's fast pace of achievements for the benefit of the customers, Telenor Pakistan's CEO Tore Johnsen said, "Telenor Pakistan today is the fastest growing network in the country and we are committed to developing the telecom sector, raising market standards, and offering value-added services."


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## Owais

*Fourth Quarter budget deficit widens to Rs 325.18 billion* 


ISLAMABAD (September 01 2006): Pakistan's budget deficit widened to Rs 325.18 billion (4.2 percent of GDP), up by 150 basis points, in the fourth quarter of 2005-06 as compared to Rs 201.35 billion (2.7 percent) in the corresponding period of last fiscal, while the gross domestic product (GDP) grew by Rs 248 billion or ($4.13billion) during last three months of the FY2005-06.

According to the latest data released by the ministry of finance on 'consolidated federal and provincial budgetary operations' for July-June 2005-06 on Thursday, government's total expenditures stood at Rs 1.40 trillion, including unidentified expenses of Rs 86.31 billion whereas its revenues totalled Rs1.076 trillion.

This big increase in the budget deficit in absolute and percentage terms would force the government to expand its external and domestic borrowing to bridge the deficit.

The data reveals an interesting feature that during the first three quarters of the FY2005-06, GDP remained constant at Rs 7465 billion while in the fourth quarter it suddenly leapt to Rs 7713 billion.

If these are correct estimates then in FY2005-06, Pakistan's GDP growth was lower than 6.6 percent as claimed by economic managers. Perhaps there is some discrepancy.

It is pertinent to note that out of the total expenses, the government spent only Rs 364.99 billion or 26 percent on the Public Sector Development Programme (PSDP). A huge sum of Rs 787.295 billion or more than 80 percent was consumed by current expenditures. The defence expenditures were Rs 241.98 billion (3.1 percent of GDP) during this period.

After analysing and comparing the fiscal data of three-quarters to that of a year-ago, two important things emerge. First, the budget deficit is higher than what it was- 4.2 percent against 3.31 percent of the GDP. Secondly, the amount of unidentified expenses is much larger than what it was - Rs 86.31 billion against Rs78.50 billion.

On the positive side, the expenditure on 12-month PSDP during the period of this fiscal is higher than the same period of the last fiscal. This indicates a change for better in government's policies but much depends on the actual utilisation of the PSDP allocations. The actual utilisation of the PSDP in the first ten months of this fiscal year was about only 78 percent.

*CURRENT EXPENSES: *Within the current expenses of Rs 1.121 trillion in July-June 2005-06, Rs 435.62 billion went to general public services of the federal government, including Rs 195 billion on domestic debt servicing and Rs 42.11 billion on foreign debt servicing.

The defence sector devoured Rs 241.98 billion, expenses on public order and safety affairs ate up Rs 22.23 billion, and economic affairs consumed Rs 59.53 billion. The government somehow managed to spend Rs 17.95 billion (0.23 percent of GDP) on education affairs and services, but the most vital health sector received only Rs 5.17 billion. Worse still, the government spent only Rs 1.858 billion on social protections (direct relief to the poor) and a negligible sum of Rs 163 million on environmental protection.

The spending of Rs 5.17 billion on the health sector means this sector's share in the overall current expenses was 0.46 percent (0.067 percent of GDP) in the whole fiscal year. Similarly, Rs 163 million spending on environmental protection comes to 0.145 percent of total current expenses.

According to the data, the federal revenue collection during the twelve months was Rs 1.076 trillion. Rs 752.99 billion were tax collection while Rs 50.75 billion collected in lieu of petroleum and gas surcharges that include Rs 24.49 billion as petroleum development surcharge and Rs 26.26 billion from gas development surcharge. The non-tax revenues stood at Rs 272.88 billion during the July-June period of FY 2005-06.

The data further says that the federal government has transferred Rs 300.69 billion to the four federating units (Punjab, Sindh, NWFP and Balochistan).

The provincial revenues of the government of Punjab amounted to Rs 221.82 billion against the expenditures of Rs 236.10 billion during the July-June period of the FY 2005-06. Punjab received Rs 148.54 billion as revenue share from federal taxes as NFC Award share during these four quarters of 2005-06.

The total revenue of the government of Sindh stood at Rs 129.80 billion and the total expenditures of the province remained at Rs 136.02 billion during the period. It received Rs 96.32 billion.

NWFP's total revenue amounted to Rs 68.27 billion and total expenditure of the province was at Rs 76.85 billion. The NWFP government received Rs 35.51 billion from the federal government during the said period.

The total revenue of the government of Balochistan stood at Rs 30.45 billion and the total expenditure of the province remained at Rs 47.62 billion during this period of the current fiscal year. The provincial government received a sum of Rs 20.32 billion from the federal government.


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## Owais

*July-August tax collection stands at Rs 93.1 billion* 


ISLAMABAD (September 01 2006): The Central Board of Revenue (CBR) has collected Rs 93.1 billion during July-August (2006-2007) against the target of Rs 91.5 billion, reflecting an increase of Rs 1.6 billion. Sources told _Business Recorder _on Thursday, the revenue collection target for July 2006 was Rs 39.5 billion, while the target for August was Rs 52 billion.

The provisional collection of Rs 93.1 billion during July-August 2006-07 was Rs 83.1 billion less against the target of Rs 176.2 billion set for the first quarter (July-September) of the current fiscal year.

According to provisional figures, the net revenue collection was Rs 93.1 billion during the first two months of current fiscal year against Rs 79.5 billion in the same period last year, showing an increase of 17.1 percent. This collection is expected to further increase in coming days.

Tax-wise break-up in July-August 2006-07 reveals collection of direct taxes was Rs 19.9 billion against Rs 16.6 billion, depicting an increase of 19.7 percent.

Sales tax collection has reached Rs 47.5 billion against Rs 38.5 billion, indicating a growth of 23.3 percent. Sales tax collection at the import stage was Rs 29.13 billion against Rs 24.66 billion, showing a growth of 18.1 percent, while sales tax collection on domestic consumption was Rs 18.35 billion against Rs 13.85 billion, showing an improvement of 32.6 percent.

Collection of the federal excise duty (FED) was Rs 9 billion against Rs 6.9 billion in the corresponding period last fiscal year, showing an increase of 29.5 percent.

The board has amassed Rs 16.72 billion as customs duty during July-August 2006-07 against Rs 17.45 billion in the corresponding period last fiscal, reflecting a decrease of 4.2 percent. This decline in customs duty is due to disruptions caused by rains in rail traffic between Karachi and rest of the country.

The provisional collection of federal taxes for August 2006 is Rs 46.9 billion against the monthly target of Rs 52 billion, showing a shortfall of Rs 5.1 billion.

Monthly breakup shows collection of direct taxes was Rs 9.8 billion; sales tax, Rs 23.5 billion; federal excise, Rs 5.0 billion; and collection of customs duty was Rs 8.6 billion during August 2006.


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## Owais

*'Pakistan to maintained growth momentum'* 


LONDON (September 01 2006): Prime Minister's Adviser on finance Dr Salman Shah has said that Pakistan would maintain its growth momentum as its 54 percent population which is still below 19 years of age would maintain the demand buoyancy.

He was speaking at the three-day Pakistan Investment Forum, organised by Merrill Lynch in collaboration with the Khadim Ali Shah Bukhari Securities Pakistan Limited entitled "Pakistan Equity Investor Forum" which began here in London at the Merrill Lynch Financial Centre on Wednesday.

Salman Shah said that the increasing middle class in Pakistan which holds 51.6 percent share of the household income distribution has affected growth in select consumer markets led by cellular subscribers which have grown by 93.87 percent per annum.

He said that the growth momentum should continue going forward, considering Pakistan's demographic dynamics where 54 percent of the population is still below 19 years of age. "Going forward, these 'baby boomers' of Pakistan should maintain the demand buoyancy."

The adviser highlighted the vast pool of labour Pakistan possesses as this segment of the population enters the productive workforce aided by the huge investment Pakistan is making to develop its human resources. Shah said Pakistan GDP was better than many other countries in the region and Far Eastern countries. He named Vietnam, Egypt and Malaysia as examples.

He said that Pakistan's location advantage should not be underestimated as Pakistan is right at the hub of Asian growth due its logistical proximity with China, India, Central Asian countries and the capital and energy surplus Middle East region.

He briefed the investors of the policies and reforms that Pakistan had initiated to encourage foreign direct investments and foreign portfolio investments.

While highlighting the role of Pakistan's government in encouraging both the economic and the corporate governance turnaround witnessed over the past few years, Shah spoke of Pakistan's economic growth, sustainability and opportunities, economic turnaround and the way Pakistan became the fastest growing global economies over the past couple of years.

The adviser will have one-to-one meeting with global fund managers during his stay there. The forum is targeted as showcasing Pakistan's corporate sector and putting Pakistan on the foreign investor map.


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## Neo

KARACHI, Aug 31: Desperate to show that their main stakes are in the setting up of a new steel project at an investment of $350 million rather than in the controversial privatisation of Pakistan Steel, the sponsors of Tuwairqi Steel Mills are in the process of lodging a letter of credit to import $85 million worth of equipment and machines.

Ã¢â¬ÅWe want our steel project to be commissioned by August 14, 2008,Ã¢â¬Â Zaigham Adil Rizvi, project director of Tuwairqi Steel Mills, told Dawn on Thursday. After completing all the formalities Mr Zaigham and his team of officials are waiting anxiously for a call from the bank they have lodged the letter of credit.

Ã¢â¬ÅThe import and delivery of machines and equipment for the plant in Karachi will demonstrate our seriousness and stake in the project,Ã¢â¬Â he remarked without making any direct reference to business circle gossips that the Saudi group was here to acquire Pakistan Steel with about 5,000 acres of land with excellent infrastructure facilities.

Ã¢â¬ÅOur initial plan was dovetailing state-of-the-art technology of the new plant with that of Pakistan Steel and to maximise the exploitation of infrastructure facilities,Ã¢â¬Â Mr Zaigham made it clear, but added hastily that Ã¢â¬Ånow we are on our own and we are investing heavily in developing infrastructure facilities that include power generation, transmission and other facilities.Ã¢â¬Â

On completion, the steel mill project in Karachi will be the ninth member of the Saudi Arabia-based Al Tuwairqi Group of companies in Dammam that now boasts of three-fold increase in annual turnover to 1,500 million Saudi riyals in 2005 from 450 million riyals in 2001. The group owns and operates six steel mills in Saudi Arab, one in the UK and one in Sharjah. The group has also acquired a steel project in Korea.

Ã¢â¬ÅWe are exploring the

Pakistani market for our products where at present the steel market is for five million tons that is likely to increase to 7 million tons by 2010,Ã¢â¬Â Mr Zaigham disclosed and pointed out that marketing of his projectÃ¢â¬â¢s products in the local market would be with the approval of the Pakistan government and payment of duty so that it could be on a par with Pakistan Steel.

Claiming that quite a substantial civil work has been completed for the upcoming steel project on a 220-acre plot at Bin Qasim in immediate vicinity of Pakistan Steel, the project director was confident of pushing up the installation of plant and machinery at a fast speed to complete the first phase in the next 18 to 24 months at a cost of $130 million.

It is a one-million-ton capacity plant that will produce more than half a million tons of steel billets mainly used in making rebars, wire rods, heavy structures, seamless pipes and other construction materials. The production capacity of the plant will be expanded from one million tons to 1.5 million tons in the future.

The project is based on state-of-the-art technology MIDREX -- a direct reduction process which uses natural gas to convert iron ore into direct reduce iron ore (DRI). A company brochure claims that 60 per cent of the current world production is based on this DRI technology.

The Saudi group has signed an agreement with Sui Southern Gas Company for the supply of 40mmcf of gas per day that will be used as fuel as well as input. The project needs 180 megawatt electricity for which KESC and Wapda have expressed inability to do it right now. A generation station of 35 megawatt is being set up. For long-term arrangement, the project has entered into an arrangement with Wapda for installing a 70km long 220kv transmission line. Four plants of reverse osmosis are being set up to convert the underground water into usable water.

Ã¢â¬ÅThe average production cost of Pakistan Steel is $30 a ton as against international standard of $10 a ton,Ã¢â¬Â Mr Zaigham remarked while trying to explain that his project will focus on the core job -Ã¢â¬â steel making -Ã¢â¬â and will outsource all other responsibilities.

The project plans to set up two centers of technology -- one at Karachi and the other in Lahore -- where engineers in different disciplines will be given on-job training facilities to develop expertise and then they will be posted in various units of the company to acquaint them with fast changing technologies.

Mr Zaigham said project engineers were examining iron ores from Chiniot and other places for raw material consumption in the production. But the decision will be taken on the basis of analytical reports.


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## Owais

*Pakistan and Iran yet to improve trade relations graph: consul general* 


KARACHI (September 01 2006): The consul general of Iran, Syed Musa Hosseini, has said that Pakistan and Iran have yet to improve their 'trade relation graph' so that it could reflect the potential of the two countries and succeed in achieving one billion dollars bilateral trade target.

He was speaking on "Pakistan-Iran Relations: New Developments and Importance", held under the auspices of the Pakistan Press Foundation at the PPF Vickey Zeitlin Media Library, Press Center, on Thursday.

He said, however, it was encouraging that the trade was growing; though the pace is slow. "The enhancement in the bilateral trade target from $389 million to $1 billion is a good sign and shows that it is achievable through concerted efforts made by both the countries." He said that Iran-Pakistan-India gas pipeline strategic project, popularly known as "Peace Pipeline project" would be in the greater interest of the people of this region.

The consul general said: "The project would take off despite foreign resistance, obstacles and pressure. The officials of Iran and Pakistan through their sagacity and resolution to overcome problems would be able to implement the project. I have no doubt about it."

He said that Iran was pursuing nuclear technology for peaceful purposes and for the betterment of its people. Musa Hosseini said: "Iran considers acquisition of nuclear technology as its right which is in conformity with international laws and agreements. Iran has always avoided disagreements and conflicts on this issue. Iran keeping itself within the IAEA confines has offered dialogue to find out solution to apprehensions. This seems to be the only civilised manner to address such issues and it should be realised."

He disagreed with Ambassador Najmus Saquib Ali Khan that Iran's nuclear issue is a dispute and needed "honourable settlement." Hosseini said that it was Iran's right to have nuclear technology and it should be recognised. "Iran thinks it is not a dispute. It is a matter of its right."

In his remarks, Saquib had said|: "We are opposed to force and coercive methods for the solution to Iran's nuclear issue. We (Pakistan) seek honourable settlement of the issue."

Coming back to bilateral trade relations, Hosseini said that seriousness of the two governments toward improvement in bilateral trade could be gauged from the fact that meetings of the joint trade commission that were being presided over by the respective ministers would henceforth be presided over by the respective prime ministers.

Hosseini said that after a gap of four years in June 2005 the joint trade commission had met and agreements were reached at issues related to customs, transport, Sarawan-Panjgoor joint border market, Iran-Pakistan joint investment company, grant of visas to Pakistani businessmen and facilitation in import and export of goods. Preferential tariffs for bilateral trades were also agreed upon.

Recounting some more agreements, Hosseini said that to achieve objectives of bilateral trade Iran had thought it appropriate to connect Kirman with Zahidan with railway lines, construct Chahbahar Road and set up Iranian trade office in Karachi. It has increased the number of weekly flights from one in a week to four.

He said that there was no dearth of agreements and resolutions between the two countries, but they were buried in cold storage. The will to implement them needed resuscitation, he added.

The consul general talked about the wearing off of centuries-old cultural ties between the people of Iran and Pakistan and said that these ties should be strengthened and preserved as common heritage of the two peoples.

He said that there should be frequent exchange of visits of students, literary figures and cultural groups. "It would be necessary for our children to know about each other," he added.

Musa Hosseini brushed aside all reports that Iran was supporting insurgency in the neighbouring Balochistan and wanted the Gwadar Port to become dysfunctional and said that on the contrary Iran was supportive of Pakistan in its developmental efforts.

Ambassador Najmus Saquib, Dr Mukhtar Shaikh, professor, Department of International Affairs, University of Karachi and Fatehyab Ali Khan, chairman, Institute of International Affairs, said in their brief remarks that Iran and Pakistan were tested and trusted friends. The relationship needs further strengthening through mutual trust, frequent exchange of views and safeguarding of mutual interest.

The insurgency-like situation in Balochistan was attributed to general sense of deprivation and economic disparity. There is general sense of disinheritance of land and a feeling of alienation from the mainstream social and economic development.


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## Neo

Friday, September 01, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\09\01\story_1-9-2006_pg5_1

ISLAMABAD: The government is considering approving a proposal for the setting up of a China Industrial Park (CIP), where Chinese industries will be given incentives to establish their units. 

This will be the first park specified for any foreign country, a senior government official told the Daily Times on Thursday. 

The ministry of industries, production and special initiatives (MOIP&SI) has sent a proposal to the Prime Minister's Secretariat and the secretariat has sent the proposal to all other ministries and bodies concerned for their comments, the official said. 

The official said that CIP will be established under the aegis of Pakistan Industrial Parks Development Company (PIPDC), which has the authority to establish industrial parks across the country. The official said the CIP could be established in Karachi. There is sufficient land available with the PIPDC near Pakistan Steel, as some of the non-core land of the mills is owned by the industries ministry. 

The government rejected a demand of the Sindh government, which had demanded the ownership of non-core land as the same land was provided by the provincial government free of cost. The non-core land is thus owned by the federal government and, through the federal government, the industries ministry. 

The official clarified that the first priority will be given to Karachi for setting up the first industrial park, which will be developed for the establishment of industrial units by a foreign country. 

However, at the same time he disclosed there are other considerations, too. Some government experts are of the opinion that the CIP should be established in Balochistan near the under-construction Gwadar Port, he added. 

The official said Balochistan is the most backward province. The province should have an industrial base for there will be nothing exportable from Gwadar Port if the industrial base remain non-existent. Industries in Punjab and Karachi are not expected to opt for import and export through Gwadar for their products will be charged additional transportation fee. Keeping this in view, some experts suggest that the CIP be established in Balochistan near Gwadar.

In the past, Pakistan offered the establishment of industrial units in Export Processing Zones. However, this offer was not largely welcomed, the official said. 

The PIPDC was established so that the government could pursue a vigorous policy for improving the country's industrial base and increase its exports. 

The official said the Chinese industrial sector will be given incentives so that other countries should also be encouraged to come and invest in the manufacturing sector. Most foreign investment is coming in communications, oil and gas exploration and telecommunication sectors. 

There is hardly any investment in the industrial sector. Through the establishment of CIP, the government expects industrial sector of other countries will also come forward to invest in Pakistan. 

The official said the proposal is under the consideration of the PM's secretariat. The industries ministry will formally submit a summary to the Economic Coordination Committee of the cabinet once the ministry obtains comments from all the stakeholders concerned.


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## Neo

Friday, September 01, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\09\01\story_1-9-2006_pg5_2

_* PIA misses revenue target by Rs 75m in Q2 of this year due to rise in fuel prices
* PIA's fuel expense rose to Rs 8.405b in Q2 against the target of Rs 6.113b

_
ISLAMABAD: The Pakistan Steel Mills Corporation has earned a net profit of Rs 705 million against the target of Rs 2,125 million set for the whole financial year 2005-06.

The Pakistan International Airlines Corporation's (PIAC) fuel expense rose to Rs 8.405 billion against the target of Rs 6.113 billion in the April-June period of the current fiscal year.

According to the Financial Improvement Plan report of the state corporations, the revenue target of the PIAC during April-June 2006 could not be achieved by just Rs 75 million in the second quarter April-June 2006 by PIAC mainly due to increase in fuel prices. However, efforts are being made by PIA to meet the target in the rest of the year. 

Expenditures incurred by PIA was Rs 19, 666 million against the target of Rs 16,968 million. An increase of 2.71% was observed. The increase in expenditure is mainly due to the increasing trend in fuel prices. Fuel expense rose to Rs 8.405 billion against the target of Rs 6.113 billion. Fuel prices continued to rock the entire airline industry as these bedeviled the budget and projections of most airlines. 

The Pakistan Steel had set a target of 90% for capacity utilization of steel production during the fourth quarter of FY 2005-06, and it attained 87% of capacity utilization, during the quarter under reference.

As regards the capacity utilization for production of steel during whole of the year 2005-06, it remained at 62%, against its target of 90%. The Pakistan Steel has been facing serious operational problems since May 2005 due to the delay in undertaking their capital repair, which restricted the capacity utilization of steel-making at low level during the last three Quarters. However, the Pakistan Steel completed its indigenous capital repair of coke oven batteries by end-June 2006. Consequently, the capacity utilization for production of steel has started increasing. 

A target of Rs 8,264 million was fixed for sales and other incomes during the fourth quarter, April to June 2006. The Corporation earned net sales of Rs 7816 million, which are Rs 448 million less than its target. Moreover, its total net sales during the whole FY 2005-06 stood at Rs 23,858 million, ie, 72% of the projected value of sale for the year under reference.

The Pakistan Steel earned a net profit of Rs 1503 million against its target of Rs 531 million during the fourth quarter of FY 2005-06. However, the profit earned by the Corporation stood at Rs 705 million against the target of Rs 2125 million set for the whole FY 2005-06.

The Corporation was carrying surplus cash of Rs 10,445 million at the end of June 2006 against the target of Rs 11,014 million, which is lower than its target.

In view of capital repair of coke oven batteries, although the PSM could not achieve the desired capacity utilization level of 90%, its utilization at 87% in the fourth quarter shows a positive sign from only 34% utilization in the first quarter with an overall picture of 62% for the current FY 2006-07. If the increasing trend in capacity utilization is maintained, it is highly probable that the anticipated targets for next FY 2006-07 will be achieved in terms of capacity utilization.

Further, the enhanced capacity utilization has also entailed positive trend on the sales for the fourth quarter, which depicts that the targeted capacity utilization will also enhance the sales volume as well which in turn will facilitate in achieving further targets.

For the quarter under review, the total cost factor (Rs 6,305 million) has also shown a decreasing trend compared with the projected cost (Rs 7,446 million). The increase in cost factor, in third and forth quarters, transpires the effect of repair work (completed in June 2006) which increase the input cost for further production.


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## Neo

Friday, September 01, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\09\01\story_1-9-2006_pg5_5

PESHAWAR: NWFP Chief Minister Akram Khan Durrani said on Thursday that the NWFP had all the prerequisites for economic growth. 

He was speaking to representatives of Tullow, an international investment company, at the Frontier House on Thursday. 

The management of the company briefed the participants about the company's activity in the exploration and exploitation of natural resources particularly in the field of oil and gas. 

Tullow is planning to invest $26 million in investment in Kohat and almost $30 million in Bannu and its adjoining tribal areas where spots have been identified as potential prospects for oil and gas discoveries.


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## Neo

Friday, September 01, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\09\01\story_1-9-2006_pg11_4

ISLAMABAD: The Centaurus, PakistanÃ¢â¬â¢s first seven-star hotel project, was inaugurated on Thursday. The $350 million complex is planned to have a 37-storey deluxe hotel, with two 21-storey residential towers, a 25-storey corporate office complex, and a 5-storey shopping mall. The complex will have a parking lot that would accommodate over 2,000 vehicles. The project will be completed in three years.

The Pak Gulf Construction Private Limited company (PGCL) and Messrs Atkins engineering company Ã¢â¬â the constructors of DubaiÃ¢â¬â¢s renowned Burj Al Arab Ã¢â¬â are executing the project. Saudi Arabian Al-Tamimi Group and the Sardar Group of Companies are making the investment. 

PGCL Chief Executive Officer Sardar Tanveer Ilyas said that the structure complies with the building codes of the Capital Development Authority and can easily sustain an earthquake of 9.5 Richter scale. Ilyas appreciated Pakistan governmentÃ¢â¬â¢s policies, which he said, had encouraged him to make the investment. He said the project would provide employment to thousands. 

President General Pervez Musharraf on Thursday said it was Ã¢â¬Åthe right time to invest in PakistanÃ¢â¬Â because of the countryÃ¢â¬â¢s positive economic policies of de-regulation, liberalisation and privatisation coupled with a liberal foreign exchange regimen. 

Ã¢â¬ÅWe have opened all sectors of the economy for investment and the scourge of red-tapism and bureaucratic delays are being done away with,Ã¢â¬Â said the president at the foundation-laying ceremony of The Centaurus. 

Musharraf said that greater investment was also helping the country fight extremism and terrorism as both evils stemmed from poverty, illiteracy and the lack of economic opportunities. He said that all the governmentÃ¢â¬â¢s policies were in the best interests of the nation. Ã¢â¬ÅWhether it is relations with a country, diplomatic ties or our attitude towards investment, it is being done in PakistanÃ¢â¬â¢s national interest.Ã¢â¬Â

Interior Minister Aftab Ahmad Sherpao, President AJK Sardar Zulqarnain, Population and Welfare Minister Chaudhary Shahbaz Hussain and Chairman CDA Kamran Lashari attended the ceremony.


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## Neo

*KARACHI *_(updated on: September 01, 2006, 18:36 PST_): The government aims to build its first high-speed railway line at a cost of about $1 billion, and work on the project in Punjab province is expected to start next year, the country's railways minister said on Friday.

The service will run between the cities of Lahore and Rawalpindi, said the Pakistan Railways (PR) minister, Sheikh Rasheed Ahmed.

"The 270-km (170-mile) long double-track project will take two years to complete and will cost a billion dollars," Ahmed told Reuters.

"We have already received $300 million from the Asian Development Bank for the project, which we want to inaugurate before the elections," he said.

The country's next general elections are due late next year.

"We have invited international companies to participate in this project, and once completed, it will help us modernise our railways system," he said.

"Normally our passenger trains run at a maximum speed of 105 kph (65 mph), but the new train will have a top speed of 250 kph (155 mph)," Ahmed said.

Aziz Ahmed, chief engineer of PR, said about 70 million people used the system of 11,515 km (7,000 miles) of track a year.

Islamabad has also awarded a contract to a German company to do a feasibility study for a 900-km (560-mile) rail link between Pakistan and China.


----------



## Owais

*Joint venture with Italian firm to set up sleeper plant* 




ISLAMABAD (September 02 2006): A joint venture of a Pakistani firm, 'HIS', and an Italian company, 'PLAN', will set up a sleeper manufacturing plant, adjacent to the existing infrastructure of concrete sleeper factory in Kotri (Sindh), sources in Railways Ministry told _Business Recorder._

The Economic Co-ordination Committee (ECC) of the Cabinet in its last meeting had cleared the proposal to lease out one of the concrete sleeper factories of Pakistan Railways to the joint venture. Sources said that the joint venture, lowest successful bidder, had refused to take the existing concrete sleeper factory at Kotri, saying that the plant and manufacturing techniques followed by Railways were old and obsolescent.

However, after discussion with Railways officials, it was willing to take over the manufacture of twin-block sleepers in the factory, in addition to setting up a new plant at rates at which Railways is currently producing sleepers, sources added.

*Under the proposed agreement, HIS would undertake the following:*

i) Provide mono-block concrete sleepers to Pakistan Railways at Rs 1900 per sleeper, against Railways own cost of Rs 1845, and long ties at Rs 1700 per meter, not manufactured locally in the past. The sleepers provided by the lessee would, however, involve the use of low relaxation high tensile steel, rapid hardening cement and admixture during the grouting process to add strength and durability to the sleepers, which Pakistan Railways is not using at present. The cost includes a return of 10 percent, and 3.5 percent income tax payable by the lessee.

ii) Pay Rs 3.60 million annually as lease amount to Pakistan Railways for the property leased.

iii) Manufacture and supply of twin-block sleepers at Rs 1525 per sleepers, against Railways own cost of Rs 1537, through an agreement till such time as the existing plant and equipment remain functional.

iv) Improve the quality of sleepers by using low relaxation high tensile steel and adding admixture etc which are presently not being used by Railways.

v) Meet the Pakistan Railways annual requirement of a minimum of 200,000 concrete sleepers and other allied concrete sleeper products with the permission to manufacture any other products for the private sector. Additional orders may be provided through mutual consultation.

vi) Allow escalation in prices at 6.5 percent per annum on base price.

vii) In case of any dispute with the contractor, the matter would be referred to the arbitrator as per arbitration clause to be inserted in the agreement.

viii) The contractor will deposit bank guarantee for 2 percent of total cost as earnest money.

ix) The quality of sleepers would be tested by outside agencies.

Sources said that since Pakistan Railways is experimenting by offering concrete sleeper factory to private sector for the first time, the Ministry considered it appropriate to evaluate the performance of the product of one sleeper factory, at Kotri, for the time being.

Based upon performance, other concrete sleeper factory at Kohat would be leased in two years with HIS Industries being given the first right of refusal, sources added.


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## Owais

*Steps taken to increase tax-to-GDP ratio: Yusuf* 



KARACHI (September 02 2006): The private sector is the engine of growth and the government machinery is supposed to be a facilitator to provide an environment that is conducive for investment.

This was stated by Central Board of Revenue (CBR) chairman and Revenue Division secretary-general Abdullah Yusuf at the distribution ceremony of first Large Taxpayers Unit (LTU) Awards 2006 here, on Friday.

The CBR chairman said the government has realised that the private sector is the backbone of the economy and this realisation has given more confidence to local entrepreneurs and foreign investors, and now they are capitalising on it.

Yusuf said an understanding has been developed with the private sector and it is helping the CBR to overcome the historic issue of misdeclaration, which the CBR had tried to address but so far not able to sort it out.

The gap between taxpayers and tax collectors has harmed the CBR efforts and the economic growth of the country. The CBR has taken various measures to fill the gap and facilitate taxpayers, he said.

He said the Karachi LTU has become a viable unit and the model was adopted in other regions like Lahore. Tax units would also be started in Peshawar and Islamabad, soon.

He said in order to increase tax-to-GDP ratio, the board had raised the level of fiscal effort by broadening the base of income and sales tax. Bringing more people into the tax net would extend the base of direct taxation, the chairman added.

He hailed the award distribution ceremony and said the practice would continue on yearly basis to encourage taxpayers on the basis of their performance.

LTU director-general Syed Aqeel Zafarul Hassan on the occasion said this was the first such event to give awards to taxpayers since the establishment of the Karachi LTU in 2002, adding the idea was consented by the CBR chairman to appreciate taxpayers' contribution.

Aqeel said a meeting with leading taxpayers was held to discuss selection criteria and a list was prepared and sent to the CBR chairman for approval.

The selection was made purely on taxpayers' performance like tax compliance, transparency, growth and level of abiding by the laws.

The first ever LTU awards were distributed among leading taxpayers from 17 sectors, including National Bank of Pakistan, Pakistan Petroleum, Lackson Tobacco Limited, Pakistan Steel, Pak Suzuki, National Insurance Corporation Limited, Pakistan Beverages Limited, GlaxoSmithKline Pakistan Limited, Engro Chemical Pakistan Limited, Habib Oil Mills (Pvt) Limited, Unilever Pakistan Limited, Javedan Cement Group, Packages Limited, Siemens Engineering Pakistan Limited and Pakistan Services Limited.


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## Owais

*Thar coal reserves enough for 100 years energy needs: study* 




ISLAMABAD (September 02 2006): A meeting on energy security plan on Friday was informed here that Thar coal reserves were enough to cater to the country's energy needs for 100 years, and the government has established a company to implement the plan to turn the potential into reality on fast track basis.

The meeting, presided over by Planning Commission Deputy Chairman Dr Akram Shaikh, was given a detailed presentation, which showed that Thar coal reserves could produce energy equal to 400 billion barrels of oil, or 850 TCF gas, which in real terms was greater than combined oil reserves of any two major oil producing countries--Saudi Arabia and Iraq, or Saudi Arabia and Iran.

Sources said the study, presented in favour of real potential of Thar coal, showed that Saudi Arabia and Iraq have reserves of 377 billion barrels of oil. Likewise, Saudi Arabia and Iran's reserves were around 390 billion barrels of oil.

A comparative study of oil producing countries showed that Saudi Arabia has oil reserves of 264 billion barrels, Canada 179 billion, Iran 138, Iraq 115, Kuwait 101 and UAE 98 billion barrels of oil. The study indicated that net potential of all major oil producing countries stood at 895 billion barrels, whereas Pakistan was blessed with huge reserves of coal in Thar which were in 12 seams and their mining could ensure potential equivalent to 400 billion barrels of oil.

It also gave comparison of other oil producing countries, which have less oil reserves. It indicated that United States has reserves of 247 billion barrels of oil, Russia 157, China 115, India 93, Australia 79, Germany 73, South Africa 49, Ukraine 34, and Kazakhstan 31 billion barrels of oil.

The meeting was told that USA announced to build 100 new coal plants of average nominal capacity of 500 MW during 2000-04.

It was informed that major use of Thar coal would be in power generation because it is not of metallurgical or coking grade. Its other applications could be production of oil, ground and underground gasification, in cement and fertiliser industries.

The meeting was informed that estimated investment of RMBY 300-350 (Approximately $40) per ton was required for coal mining and by using only 2 percent of coal reserves, Pakistan could generate around 20,000 MW power for almost 40 years.

It said that Pakistan needs an investment of $4 billion for mining of Thar coal reserves. Thar coal will give Pakistan a number of by-products. These include anhydrous ammonia fertiliser 5.14 million tonnes, dephenolized cresylic acid pesticides, wire, enamel, expoxy, resin, krypton/xenon gases, high intensity, lighting and lasers, liquid nitrogen, food processing and refrigeration naphtha gasoline blending.


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## Owais

*Pakistan and China to hold talks on FTA soon* 


BEIJING (September 02 2006): Pakistan, China are scheduled to hold fourth round of negotiation on Free Trade Agreement (FTA) in Beijing later this month. A senior official of the Chinese Commerce Ministry told APP that they were looking forward to expedite the negotiation process in order to complete it by the end of this year.

The FTA will be a major step forward expanding the scope of import-export between the two countries. The two sides were holding the talks, keeping in view the complementarily advantages in their industrial and trade structure, ensuring equal benefits.

According to the sources, the 3rd Round China-Pakistan FTA Negotiation made substantial progress in consultations on tariff reduction, and the two sides talked deeply about market access, trade relief and juristic issues in terms of goods trade and reached consensus on the draft text of agreement.

Deputy Director-General of Department of International Trade and Economic Affairs, Zhu Hong, who led his team during the talks, hoped that the two sides would finalise an acceptable arrangement, promoting mutually beneficially co-operative partnership.

Over past few years, China-Pakistan economic and trading relations developed quickly. In 2005, bilateral trade reached $4,26 billion, up by 39 percent compared with 2004. Trade between China and Pakistan amounted to $1,018 billion in January through March this year, up by 42.3 percent compared with the same period last year.

By March 2006, contractual investment of China in Pakistan was $100 million, turnover of overseas projects was $6,9 billion. Pakistan invested $24,31 million in China in all.


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## Owais

*UK traders team due in November* 

LAHORE (September 02 2006): India-Pakistan Trade Unit (IPTU), Director, Jonathan Webber has said that a sector-specific UK delegation is likely to visit Pakistan in November to initiate joint ventures with their Pakistani counterparts, as the present economic scenario is quite conducive for potential foreign investors.

He expressed these views while addressing the members of the Lahore Chamber of Commerce and Industry (LCCI), here on Friday. UK Deputy High Commissioner in Pakistan and Director UK Trade, Investment, Hamesh Daniel, LCCI Senior Vice President, Abdul Basit, Vice President, Aftab Ahmad Vohra, former Senior Vice President, Sohail Lashari and Executive Committee members, Shafqat Saeed Paracha and Faisal Iqbal Sheikh were also present on the occasion.

The IPTU official, who is also heading a seven-member delegation of Birmingham Chamber of Commerce and Industry, said that the UK government was taking all necessary steps, as it wants to multiply its investment in Pakistan. "The British SMEs were working in close co-ordination with SMEs in Pakistan and there are bright chances that positive developments would take place in near future in this regard," he added.

The UK Trade and Investment Director said that a number of projects were in the pipeline, as consistency in policies had impressed the potential British investors who had shown their desire to shift their operations to Pakistan, which was not only a corridor to Central Asian States but also fast getting the status of regional economic leader.

Speaking on the occasion, Abdul Basit said, although trade between Pakistan and UK was gradually growing from $1.1 billion in 2002-03 to $1.4 billion in 2004-5 showing an increase of 27 percent, but it still leaves much to be desired at.

"A lot of progress could be made on trade front by identifying new tradable items and this is possible only through active engagement of the Chambers of Commerce and Industry of the two countries, frequent exchange of economic and trade delegations to identify the areas of mutual interest and arranging of single country exhibitions and also by holding socio-cultural programs in each other's country," he added.


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## Owais

*Pakistani traders invited to Bahrain fair* 

KARACHI (September 02 2006): Pakistani businessmen have been invited to participate in the Bahrain International Property Exhibition (BIPEX) 2006 to be held from November 21 to 24, 2006 in Bahrain.

Mahesh S. Bhatia, Project Manager, Bahrain Convention & Exhibition Bureau and Ahmed Yusuf, Marketing Director, Dubai Shows Limited extended the invitation at a meeting with Azhar Saeed Butt, Acting President Federation of Pakistan Chambers of Commerce & Industries (FPCCI). Mahesh and Yusuf said that the BIPEX 2006 was an excellent opportunity for buyers and sellers to benefit from the latest property boom in the region.-PR


----------



## Owais

*Japan to help explore NWFP's economic potentials* 




PESHAWAR (September 02 2006): Japanese Ambassador Seiji Kojima said on Wednesday that his country had sought the proposals of both Federal and provincial governments for exploration of the economic potentials of NWFP.

Speaking in Guest Hour programme of Peshawar Press Club (PPC), he said that members of the Sarhad Chamber of Commerce and Industry (SCCI) had briefed him on potential of textile, fruit, beverage, metallic, non-metallic, tourism and hydropower generation sectors.

He said the potential would materialise through encouraging domestic and Japanese investment. The Japanese Ambassador was accompanied by Embassy of Japan's First Secretary Masayuki Taga and Consular General of Japan in Peshawar Nawabzada Fazal Karim Afridi.

Seiji Kojima said Japan would provide assistance for the promotion of the potential sectors and also hinted at increase in the assistance of Japan in this regard.

He said that his country would extend assistance in vocational training and technical education adding that they would also provide assistance for development of infrastructure, tunnels, and roads, construction of bridges and initiation of agriculture related projects in NWFP. Furthermore, he said that Japan would also provide assistance in water supply schemes.

The ambassador of Japan said that he had crossed through Kohat Tunnel and appreciated the better management of the facility by Pakistani agencies, which were operating the tunnel-computerised system and were capable to meet any emergency.

He said that maintaining for physical construction, the government of Japan would provide safety technology for maintenance of the tunnel and would later extend it to other parts of the province for agricultural and industrial development of the province.In response to a question, Seiji Kojima said that during their meeting with Chief Minister Akram Khan Durrani and District Nazim Ghulam Ali, he came to know about difficulties in supply of clean drinking water to the people of Peshawar and constant fall in the water level.

He said the project of water supply from Warsak Dam was discussed in the meeting with District Nazim.

He said that before extension of financial assistance, they would go for conducting a feasibility study of the project. The ambassador said that they would also assist provincial government in promotion of education.

He said that he got an impression of the lack of education facilities and particularly for girls, who used to travel a long distance for attending schools. "The government of Japan would like to work for the development of education sector in tribal area," he added.

Regarding Pak-Japan relations, he said that his country considered Pakistan very important partner and was an important donor for later, saying till few years back Pakistan was the largest recipient of Japanese assistance in the world. "We are assisting Pakistan in water supply and development of infrastructure facilities," the ambassador maintained.

He said that Japan was the first country, which provided assistance in relief to the victims of devastated earthquake of October last year. The government of Japan has completed of project of US 66 million dollars in the earthquake-affected area through establishing 130 schools and restoration of 20 medical facilities including some basic health units in district Batagram. The assistance in reconstruction and rehabilitation work in earthquake-affected areas would continue till March 2008.


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## Owais

*LNG-focused energy plan* 

EDITORIAL (September 02 2006): In an initiative that is meant to boost alternative energy sector in Pakistan, President Musharraf has okayed an LNG-specific energy plan which envisages import of LNG and the setting up of a countrywide network to ensure supply of this highly cost-effective fuel for both our industrial and domestic consumption.

According to a _Recorder Report_, the President approved the plan while presiding over a high-powered meeting held to review the progress made on the availability of cheaper sources of energy to industrial, commercial and other consumers. A Dubai-based group has reportedly committed an investment of $211 million for setting up a separate berth at Port Qasim in Karachi for handling specifically imported LNG and its countrywide distribution.

A study on cost-effectiveness of LNG and LPG has, meanwhile, demonstrated that these can become major resources in the future for supplementing the gas production to ensure its uninterrupted, speedy and inexpensive supply. Liquefied natural gas (LNG) is said to be a more cost-effective alternative to both oil and liquefied petroleum gas (LPG).

Further, natural gas has been rightly termed a fuel of choice of 21st century for being environmentally friendly. The current world-wide gas reserves are estimated at 4,900 trillion cubic feet. Pakistan too has huge gas reserves, which have fuelled its economy over decades. Starting with the Sui gas fields in the early 1950s, Pakistan has since developed an extensive transmission and distribution infrastructure.

Use of natural gas, which is cleaner and less carbon intensive than oil or coal, is growing faster than the use of any other fossil fuel. Technological innovation and economic and regulatory changes have resulted in gas becoming the preferred fuel. Natural gas is a highly desirable energy source also in that it burns cleanly with less pollution than other hydrocarbon fuels. Pipeline transportation, which has been the dominant mode over decades, has come to be regarded as not an economically feasible option for transporting gas across oceans.

Liquefied natural gas (LNG) has instead proved itself to be a commercially viable technology for transporting gas. And its consumption is increasing even faster than that of piped gas, making it likely that LNG's share of total gas consumption will substantially increase over the next 10 to 15 years.

In fact LNG markets seem to be already entering a new phase of expansion, with a more diversified range of customers and suppliers. LNG can be unloaded only at specialised terminals, which typically include a jetty and unloading facilities. Hence the need to build an LNG terminal at Port Qasim.

Pakistan's present energy mix has the highest share, ie 50 percent of gas. With the switchover to LNG, the ratio may go up still further. Secondly, with the rapid rise in the level of greenhouse gases in the atmosphere and large-scale depletion of the ozone belt, governments have started exploring environmentally friendly sources of energy. Serious efforts have already been mounted world-wide to harness solar and wind energy for its industrial and domestic use. However, it will take Pakistan considerable time before it can effectively tap these abundant, but cheap, sources of energy.

While the LNG-specific energy plan approved by the President is a step in the right direction, it seems that the initiative has been prompted by the Dubai-based group's offer to set up a separate berth at Port Qasim to handle imported LNG. As launching and operating "front companies" to reap huge profits through influence peddling is not an unknown phenomenon in this part of the world, it would serve the country's interest better if the government closely scrutinised the antecedents of the Dubai group before accepting its offer. Perhaps an open bidding mechanism should be adopted to secure better results.


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## Neo

ISLAMABAD, Sept 1: The export of non-textile products declined by 7.8 per cent to $783.053 million during July 2006 as against $849.345 million the same month last year.

Official figures compiled by the ministry of commerce showed that the decline in the export proceeds during the month under review was due to decrease in export of engineering, sports, carpets, leather, surgical and pharmaceutical products.

The only category which registered a nominal growth was primary commodities which include mostly agriculture produce and to some extent fish food.

Analysts attributed the decline in the non-textile export proceeds to ill-advised and un-proper policies of the government which was only focused on the promotion of textile products.

The government had announced a package of Rs25 billion for the textile sector, while the traditional sectors like sports, surgical and carpets were unable to compete with the similar products manufactured in China, India etc., in international market.

Official figures showed that the export of all sport goods (footballs and gloves) declined by 50.95pc; carpets, rugs and mats by 59.50pc; and leather goods (garments and gloves) by 34.41pc during July 2006 over last year.

The export of surgical goods and medicinal instruments declined by 78.47pc, followed by jewellery dipped by 94.45pc, furniture by 27.96pc, molasses by 731.66pc, footwear (leather and canvas) by 40.12pc during the month.

The export of engineering goods decreased by 31.98pc, auto parts 60.41pc; chemical and pharmaceutical products by 2.14pc, cutlery 72.75pc and onyx manufactured 56.15pc during the month under review.

Among the primary commodities, exports of fish and fish foods rose by 1.59pc, rice by 160.49pc and oilseeds by 142.15pc. However, exports of fruits declined by 58.24pc, vegetables dipped by 87.79pc, tobacco by 18.85pc and meat by 14.76pc during July 2006 over last year.


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## Owais

*Best facilities available for oil and gas exploration: OGDCL* 


ISLAMABAD (September 02 2006): Executive Director, Oil and Gas Development Corporation Limited (OGDCL), Aftab Ahmad on Friday said that government was providing best facilities and incentives to companies for exploring oil and gas in the country.

Talking to PTV, he said it always had been the concern of the government to make efforts regarding oil and gas in the country and to involve private and multinational companies in this regard.

He said, Pakistan was one of the countries where the efforts for exploring gas started a long time ago and success ratio of Pakistan was very good. The government policies had always been positive and balanced in this regard, he added.

He said, every upcoming policy in this regard was better than last policy, as the government knows that international situation was changing day by day regarding oil and gas and it wanted to stand with the world.

Present reservoirs of oil were 291 million barrels, he added. He said, consumers in Pakistan couldn't pay the international price so the government has to ensure that there was a balance between consumer and producer's price. He said, according to geologists, there were many opportunities of exploring gas in the country and government was working on it actively.


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## Owais

*Pakistan cellular phone market advance at 94% annually* 

ISLAMABAD: Pakistan cellular phone market is advancing at a giant-pace of 94 percent per annum. 

Finance advisor to prime minister, Dr. Salman Shah told this in a three-day Pakistan Investment Forum held at London under the aegis of Myrill Lynch and KASB Securities in collaboration.

Salman Shah said that 51.6 percent share of Pakistan&#8217;s gross market constituted of daily domestic use items.


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## Neo

Saturday, September 02, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\09\02\story_2-9-2006_pg5_12

SIALKOT: British Deputy High Commissioner Hamish Daniel called for narrowing the communication gap between the UK and Pakistan in order to increase the volume of bilateral trade and economic development. 

He was speaking to members of the Sialkot Chamber of Commerce and Industry on Thursday. The deputy high commissioner spoke of the need to exchange information in order to bring the business communities of the two countries closer.

He added that several trade missions would visit Pakistan next November. The delegation will assess the possibilities of investment in different trade fields, he added. 

He said there were many opportunities to establish joint ventures between the business communities of United Kingdom and Pakistan. He said the exchange of trade delegations would help create a better atmosphere to explore possibilities of collaboration between UK and Pakistan. He added that 32 delegations from Birmingham had visited Pakistan last year to promote trade between the two countries.

The business community of Birmingham had showed a keen interest in developing trade ties with Pakistani counterparts, he said. Hamish Daniel said that more efforts were needed to formulate a mechanism to enhance trade and commercial activities between the UK and Pakistan. 

The deputy high commissioner said there were 80 British Companies operating in Pakistan and he added that further investment of 140 million dollars were in the pipeline. 

SCCI President Nouman Idris Butt said the economic success of developing countries under the WTO regime depended on the cooperation of developed countries in the provision of technical, consultative and advisory support. This will minimise the disadvantages of developing countries trading under the WTO regime, he said.


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## Neo

Saturday, September 02, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\09\02\story_2-9-2006_pg11_6

ISLAMABAD: The Pakistan Post will launch five revolutionary services to facilitate customers in a proactive manner, and revamp the organisation to meet the challenges of the 21st century, Pakistan Post Director General Arshad Khan told Federal Minister for Communication Shamim Siddiqui at the Pakistan Post Headquarters in Islamabad.

In his presentation titled the Ã¢â¬ËNew Vision of Pakistan PostÃ¢â¬â¢, Khan shared his plans to launch five new services in the post offices of the country: instant money transfer, collection of utility bills from homes, top of the line courier services, tehsil headquarters level tele-centres and the disbursement of micro financing. Khan said the Pakistan PostÃ¢â¬â¢s vision is to transform itself into a self-sustaining, customer-friendly and dynamic organisation by utilising its nationwide infrastructure as the hub of commercial activity.

Siddiqui appreciated the presentation and praised the DGÃ¢â¬â¢s initiative. He advised him to make the organisationÃ¢â¬â¢s environment more customer-friendly and to equip it fully to compete with the private sector.

The meeting was also attended by State Minister for Communication Shahid Jamil Qureshi, Communication Secretary Tariq Mehmood and senior officials from the Ministry of Communication and Pakistan Post.


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## Neo

Saturday September 02, 2006 

*NORWAY: Prime Minister Shaukat Aziz has said country offers enormous opportunities to the expatriate Pakistanis for investment in several sectors adding government will extend full protection and assistance to them on this count. *

"There are various sectors wherein the expatriate Pakistanis can invest. Government will provide security and assistance to them", he said this while talking to a delegation of Pakistan Muslim League Norway, which called on him in Oslo Friday. 

Prime Minister held government was striving hard to for the socio-economic development and prosperity of the country. The basic amenities are being provided to the people at their doorstep. 

He went on to say PML has introduced politics of decency. He appreciated the efforts being employed by the Pakistani nationals in the development of Norway. 

The participation of Norwegian prime minister in the ceremony of Pakistani community and Norwegian king in the Independence Day celebrations of Pakistan here reflect the unique position Pakistanis are enjoying in Norwegian society. He reiterated several foreign investors are making investment in Pakistan due to investment friendly policies, consistency in economic policy and level playing field being provided by the government. He made special reference to the investment made by Telenor company saying this Norwegian company has made investment to the tune of $600 million adding that international community has also acknowledged the prudent policies being pursued by the government.


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## Owais

*Duty-free imports worth Rs 3.65 billion allowed in 2005-06* 


ISLAMABAD (September 03 2006): The Central Board of Revenue (CBR) had allowed duties- and taxes-free import of 490 different consignments worth Rs 3.65 billion by manufacturers-cum-exporters under the Duty and Tax Remission for Export (DTRE) scheme during 2005-06.

This remission of duties and taxes was granted with the condition of re-exporting finished products under the DTRE scheme. According to the latest data compiled on Saturday, the Large Taxpayer Units (LTUs) at Karachi and Lahore granted approval to 34 consignments involving remission of duties and taxes of Rs 445.48 million last fiscal year.

The Collectorate of Sales Tax and Federal Excise, Karachi, approved import of 241 consignments worth Rs 681.362 million in 2005-06.

According to break-up, Karachi LTU approved 16 consignments involving duties/taxes-free import of Rs 400.070 million; LTU, Lahore, 18 approvals worth Rs 45.410 million; Collectorate of Sales Tax and Federal Excise, Lahore, 75 approvals, Rs 704.590 million; Collectorate of Sales Tax and Federal Excise, Gujranwala, 78 approvals, Rs 309 million; Collectorate of Sales Tax and Federal Excise, Faisalabad, 13 approvals, Rs 608.217 million; Collectorate of Sales Tax and Federal Excise, Rawalpindi, six approvals, Rs 265.770 million; Collectorate of Sales Tax and Federal Excise, Peshawar, 23 approvals, Rs 382 million; Collectorate of Customs, Sales Tax and Federal Excise, Multan, 11 approvals, Rs 218.132 million; Collectorate of Customs, Sales Tax and Federal Excise, Hyderabad, 3 approvals, Rs 25.083 million and Collectorate of Customs, Sales Tax and Federal Excise, Quetta has granted six approvals involving duties/taxes free import of Rs 10.820 million under the DTRE scheme.


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## Owais

*PSM needs Rs five billion for revamping* 


KARACHI (September 03 2006): Pakistan Steel Mills (PSM) has sought federal government consent to spend around Rs 5 billion on revamping and modernisation of its infrastructure and increasing its production capacity, sources told _Business Recorder _here on Saturday.

They said that PSM has sent its proposals to the Ministry of Industries, Production for the upgradation of major departments of the plant. "Pakistan Steel intends to replace old equipment and infrastructure of three of its major departments ie hot strip mill, coke oven battery plant and steel making plant. This is likely to cost around Rs 5 billion," they said.

"The production capacity of PSM would be increased by 0.4 million tons to around 1.5 million tons per year, if Rs 5 billion is injected into its existing plants," sources added. They said that PSM was waiting for 'go-ahead signal'.

The implementation of the plan would enable PSM to stand in line with any modern steel plant in the world, sources said.. "Soon after receiving the nod from the authorities concerned, revamping process would get started," they added. They said that if the government allowed the PSM management to commence revamping of its major departments, the process would take at least two-and-a-half years to complete it.

The amount would be spent from its savings. Nevertheless, prior permission has to be obtained to inject such a hefty amount, they added. They said that tenders would have to be floated the huge work and the revamping process would be carried out in at least three phases. Sources said that PSM intends to start revamping process on its own, and all development and modernisation work would be carried out indigenously.

Pakistan Steel has paid Rs 18.6 billion as taxes and duties to the national exchequer during the last three years, and the amount would increase significantly when the mill would produce more 0.4 million tons steel products annually.


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## Owais

*Bids for deep-water port invited* 


KARACHI (September 03 2006): Karachi Port Trust (KPT) has invited bids for pre-qualifications for site investigation work from international marine contractors for developing country's deep-water port for container ships in the neighbourhood of its lower harbour.

The planned modern deep-draught berths are to be constructed at 'Keamari Groyne', to help accommodate larger vessels at the port. The idea is to build a major regional transit and transhipment hub for handling the current and future generations of container vessels with up to 17 metres draught.

The marine contractors should be of international repute who specialise in site investigation works with capability to carry out geophysical surveys, marine boreholes and vibrocore sampling in-situ and laboratory testing to international specifications. The contractor must have jack-up barges and seismic survey equipment and be able to start work by November 1 this year.

The facility is intended to enable Karachi port in the recent hype scenario in shipping dynamics and the forecast of boosting trade growth to create very strong regional markets.

The KPT has also been planning for a long time that it could provide transhipment facilities and access to larger vessels, which would help in increasing throughput as well as utilise optimum infrastructure of the port.

The deep-draught berths would provide terminal 24 hours and 7 days a week (round-the-clock) access for vessels, with no tidal restrictions.

The terminal would also be equipped with quay cranes (rail tyre gantry), rubber tyre gantry (RTG), spreader stackers, forklifts, empty handler, towheads chassis, chassis and power generator facility.

Karachi port registered overall growth of 13 percent cargo during 2005-06, which is a sign of economic activities in the country. For the first time in the history of KPT, containerised cargo crossed the mark of 1.144 million Twenty Equivalent Units (TEUs), resulting in a growth of more than 25 percent.

The port's overall cargo handling crossed record 32.2 million tons and managed 1995 vessels, against 1768 ships in previous year. The cargo handling at the port remained on a rise registering a massive growth of 32.35 percent in dry cargo, as 21.60 million tons cargo was handled, against 16.32 million tons of previous year.

This was mainly due to the growing demand of fertiliser, coal, cement and sugar.

Liquid cargo handling remained low this year--at 10.66 million tons--compared to 12.29 million of previous year. However, the port will be connected to the White Oil Pipeline shortly, which will enhance its liquid cargo handling.

Due to an increase in demand of imported vehicles, the port handled a phenomenal number of 57,352 vehicles during the year compared to 18,699 of previous year.


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## Owais

*Holland group to invest $160 million in stores* 


ISLAMABAD (September 03 2006): The Steenkolen Handels-Vereeniging (SHV), a Netherlands based group of companies that runs cash-and-carry business in different countries, is all set to open its branches in Pakistan with an initial investment of $160 million.

Sources told _Business Recorder _that Makro-Habib Pakistan, a joint venture of SHV Holdings NV and House of Habib, would establish 12 cash-and-carry stores in different cities under the brand name of 'Makro'.

A delegation of SHV holdings NV during a meeting with Minister for Industries and Production, Jehnagir Khan Tareen recently sought government help in locating suitable places for setting up these stores. The Minister promised all-out help to the delegation and said that such stores in Pakistan would provide the much-needed market for farm and dairy products.

Sources said that the government is keen to attract investment in different sectors for which it offers incentives and concessions to prospective investors.

They said that 'Makro' is 'cash-and-carry' wholesale concern, selling in high volume food and non-food products to customers. Target customer groups are small and medium size retailers, caterers and institutional markets.

At present, 'Makro Asia' has 69 stores in different countries and its head office for Asia is in Bangkok. The group would initially set up 12 stores in Pakistan.

Sources said that fresh food (meat, fish, vegetables, and fruits), dairy products, dry food, packed food, spices, personal care products and much more would be available to the customers at a single place.


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## Owais

*World Bank raises 44 percent aid for NWFP DPC-II* 


PESHAWAR (September 03 2006): The World Bank has announced 44 percent increase in the financial aid for second phase of social sectors reforms programme (DPC-II) of the NWFP government by enhancing it from $90 millions to $130 million as well as releasing the funds as soon as the required conditionalities for this programme are fulfilled.

Announcing the decision, Harsha Atarupen, team leader of the visiting eight-member World Bank mission in a high-level meeting chaired by NWFP Senior Minster Siraj-ul-Haq at Cabinet Room of Civil Secretariat Peshawar on Saturday, lauded the performance of NWFP government on ensuring the transparent use of the recently released World Bank assistance of $90 million for first phase of DPC-I besides vivid progress towards achieving the targets.

Among others, Finance Secretary Ziaur Rehman, Education Secretary Shafiullah Khan, Health Secretary Abdus Samad, Industries Secretary Abdul Khaliq of NWFP attended the meeting.

It is worth mentioning here that the reforms programme under (DPC) is aimed at improving the standard of all social sectors in NWFP in a great and consistent manner wherein education and health sectors were given special attention.

The World Bank has released $90 million tranche in lump-sum for the first phase of this programme as a result of hectic efforts of the NWFP government and overall excellent performance.

The mission head said WB Country Director Johan Wall in view of the financial discipline, outstanding work in improving social sector and horrendous earthquake last year, had assured prompt release of the DPC-I tranche of $90 million as well as increasing that amount to $120 million for next phase during his Peshawar visit and meetings with the provincial senior Minster few months back.

He, however, said it was later decided by the World Bank to make an increase of $10 million more to enhance these funds to $130 million for next phase owing to the satisfied implementation on first phase of the reforms programme (DPS-I).

The NWFP senior minister while eulogising the gesture of the World Bank about financial management and outstanding performance of the NWFP government, assured that the MMA government would ensure the transparent and judicious use of the assistance and loans provided by the international community and the set goals obtained accordingly.


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## Owais

*Damage from rains: growers demand Rs 50 billion rehabilitation package* 


HYDERABAD (September 03 2006): Expressing grave concern over the widespread devastation wreaked by recent rains in lower Sindh, the Sindh Abadgar Board (SAB) has demanded of the federal government to announce a relief package of Rs 50 billion for the construction of infrastructure, government properties, houses and rehabilitation of the affected people.

The Board at its monthly meeting held here on Saturday under the chairmanship of Abdul Majeed Nizamani reviewed the overall situation following the heavy rains. It observed that the Kharif crops had suffered irreparable losses and all the districts of lower Sindh except Thar, Kohistan and Kachho had been devastated due to rains and collapsed drainage system.

It said that as soon as the monsoon season started, the irrigation department closed all canals and water channels although it should not have been done in those areas which had not been affected by rains. It observed that the irrigation department should have only maintained vigilance on the embankments.

It noted that due to overflow and breaches in the LBOD, Mirpurkhas, Umerkot, Badin, Tando Allahyar, Thatta and Tando Muhammad Khan districts had suffered the most.

It claimed that according to the survey conducted by it, 75 percent cotton crop and 80 percent vegetables and fodder had been destroyed in Mirpurkhas; 70 percent cotton and 80 percent vegetables had been destroyed in Umerkot; 80 percent cotton, 20 percent sugarcane and 90 percent vegetables in Sanghar, 85 percent cotton, 25 percent sugarcane and 55 percent vegetables in taluka Jhando Mari of Tando Allahyar district had been destroyed.

It said that crops in Badin and Thatta districts had suffered losses to the tune of Rs 3 billion and Rs 2.5 billion respectively, and added that taluka Tando Ghulam Hyder and Bulri Shah Karim of Tando Muhammad Khan district had also been seriously affected.

It noted that tax exemptions in these areas would prove meaningless, and demanded of the federal government to announce a relief package of Rs 50 billion to rehabilitate the infrastructure and compensate the affectees in these districts. It further demanded that the government, to combat natural calamities like earthquakes, epidemics, floods etc, should formulate a disaster management policy.

It said that a detailed inquiry should be held into the wrong designing and non-performance of LBOD and its capacity should be increased. It said that the irrigation department should be directed to withdraw the rotation programme to ensure water supply at the tail-end.

The Sindh Abadgar Board took strong exception to the approval of nine new sugar mills--eight in Punjab and one in Sindh--and termed it as dangerous for the agrarian economy. It questioned the wisdom of the government in sanctioning new sugar mills when only 65 percent of the required 63 million tons sugarcane was being produced in the country for the existing 74 functional mills.

It said that it will not only destroy the textile industry but will also create cotton and wheat crises. It argued that for production of additional sugarcane, a lot more water would be required which will increase tension between Punjab and Sindh.

It demanded that the approval of the new sugar mills should be withdrawn, adequate price should be fixed for sugarcane, sugar mills should be directed to start crushing season in October and new varieties of sugarcane which could produce more sucrose should be discovered through research.

In another resolution, the board demanded that on the pattern of chemical fertilisers, prices of pesticides of different brands should be fixed and strict action should be taken against those dealers, who are selling spurious and expired pesticides to the growers.


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## Owais

*President for modifying dairy farming* 


RAWALPINDI (September 03 2006): President General Pervez Musharraf on Saturday stressed the need for effectively harnessing the dairy resources of the country. Chairing a meeting here, he observed that although Pakistan is one of the largest producers of milk, it ranked very low in dairy products.

The meeting here at the Camp Office reviewed progress on the development of dairy products in Pakistan. Whereas production of milk could still be increased significantly by enhancing per cow yield, which is very low as per international standards, the dairy manufacturing sector was unable to make optimum use of the milk already available.

The President identified the poor collection/marketing systems and use of obsolete technology as the causes for Pakistan's backwardness in this sector.

Industries, Production and Special Initiatives Minister Jehangir Khan Tareen briefed the meeting about the measures being taken for the growth and development of the dairy sector in the country. Over 640 model farms will be established by June 2007 and this number will increase to 2440 by 2013, he said.

During the meeting, strategies for achieving medium-term goals through private and public sector collaboration were also discussed.

Matters relating to structural reforms in dairy industry, and up-gradation of Food Laws and quality standards also came under discussion.

Musharraf said there is a need for reorganising dairy farming in the country on modern lines, so that this vital and untapped resource might be utilised to earn foreign exchange.

He emphasised that the development of the dairy sector would greatly help in job creation and poverty alleviation.

The President also instructed for human capital development in the sector by imparting vocational training. He appreciated the role of Pakistan Dairy Development Company, a public-private partnership, in improving the lot of eight million dairy farming households in the country.

Appreciating the financial contributions made by the private sector to strengthen the company, the President assured that the government would also provide necessary financial and administrative support to the Company. Representatives of various dairy farms, foreign experts, and other senior officials attended the meeting.


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## Neo

KARACHI, Sept 2: A lull seems to have set in the functioning of the government at all levels in last ten weeks or so following in quick succession a few landmark events in PakistanÃ¢â¬â¢s history.

These are: Supreme Court judgment on Pakistan Steel, OppositionÃ¢â¬â¢s vote of no confidence against the prime minister in the National Assembly, and recently Nawab Akbar BugtiÃ¢â¬â¢s death and his controversial burial.

In Sindh, the distance between the chief minister and his cabinet colleagues, belonging to his own party as well as of those of Muttahida Qaumi Movement (MQM, has again increased to a stretch that there is virtually no communication and ministers and advisers complain of many files, summaries and issues again piled up on the chief executiveÃ¢â¬â¢s desk.

Major decisions awaiting approval of the government include setting up of a micro finance bank with public private partnership, appointment of a fund manager for pension fund, several investment proposals and setting in place a system to allot land on less than market price to legitimate investors, government teachersÃ¢â¬â¢ issues, and opening of provincial jobs.

Ã¢â¬ÅThe chief minister has no time to discuss issues of his province,Ã¢â¬Â a minister complained, who with his few other colleagues want to discuss the employment, industrialisation and other issues. The MQM ministers look visibly in a state of shock on BugtiÃ¢â¬â¢s death and the way he was buried.

Ã¢â¬ÅBalochistan was the only province after Sindh where some of our MQM colleagues enjoyed the best of hospitality during the eventful decade of nineties,Ã¢â¬Â a MQM leader in Sindh government confided.

At the federal level too, the policy draft on Small and Medium Enterprises (SMEs) is almost finalised and is waiting for a final vetting by the prime minister secretariat for last few weeks.

The Ã¢â¬ÅRozgarÃ¢â¬Â scheme was announced in the federal budget for 2006-07 and is now to be launched on Tuesday but not with much fanfare that could match what Benazir Bhutto did for announcing her Employment Programme in 1989 and then Self-Employment scheme in 1994 and Nawaz SharifÃ¢â¬â¢s Yellow Cab scheme in 1992.

Unemployment has always been a chronic issue in Pakistan on which all military governments have remained indifferent and totally unconcerned but political governmentsÃ¢â¬â-even those of late Mohammad Khan Junejo in 1986 and Shaukat Aziz in 2006Ã¢â¬â-try to offer some lucrative programmes to get some support.

Government sources and banking circles attribute the delay in launching of the Rozgar scheme to Ã¢â¬Åpolitical factorsÃ¢â¬Â without elaborating whether it is an in-house division of the mega size federal cabinet on this issue or the emerging question mark on PakistanÃ¢â¬â¢s political horizon. Whatever the reasons are, the ministers in Sindh cabinet belonging to MQM or PML (Q) are as much in wilderness as an educated young man, who is desperately looking for a job and is eagerly waiting for the details of scheme

But the government programme that is most hardly hit by the lull is privatization, which has come to a virtual halt.

After a nine-member bench of the Supreme Court scrapped the privatisation deal of Pakistan Steel on June 23, the government showed a brave face of going ahead with its public sector divesture agenda with same religious fervor and commitment.

On August 3, 2006 its website showed the list of more than two dozen entities to be privatised before the end of 2007. This list of upcoming privatisation has now been removed from the website and has been replaced by another list that shows names of same entities but without any indication of dates.

Pakistan Steel was on top of the previous list with a note that its 51 to 75 per cent shares will be offered with management control. The date was to be announced Ã¢â¬Åafter resolution of technical problems.Ã¢â¬Â No word is coming from the government on future plans for Pakistan Steel.

Media reported on Saturday that a few directors on the board of Pakistan Steel have decided to quit on charges of Ã¢â¬Åtoo much government interferenceÃ¢â¬Â and sources in Pakistan Steel say that the contract term of the PSM Chairman General (retd) Abdul Qayuum has expired.

Ã¢â¬ÅThe chairman is on notice to hold office till appointment of a new head,Ã¢â¬Â a well placed source in Pakistan Steel disclosed, who said that the contract term of the present chairman has expired more than eight weeks ago but the government is not able to find a successor.

Ã¢â¬ÅThis uncertainty is affecting the working of Pakistan Steel,Ã¢â¬Â the source said.

As many as ten privatisation deals were to be taken up in the year 2006 that include offering 90 per cent shares with management control of Heavy Mechanical Complex and Heavy Electrical Complex.

The sale of management rights of National Investment Trust (NIT) in the current third quarter (July to September) of 2006 is probably the most significant and important privatisation that would have far-reaching impact on PakistanÃ¢â¬â¢s corporate world.

There is no word if any progress is being made on NIT divesture as the month of September begins. Another significant feature of privatisation programme is offering of Oil and Gas Development Company (OGDCÃ¢â¬â¢s) GDR to foreign investors.

Substantial headway has been made and road shows organised abroad are being addressed by top leadership of the government. The stock brokers and corporate leaders remain unsure whether these GDRs of OGDC would be offered in the stipulated time frame.

As it appears that divesture of shares and offering of management control of Pakistan State Oils, Pakistan Petroleum, Sui Southern Gas, Sui Northern Gas, Faisalabad Electric Supply Company, Peshawar Electricity Supply Company will be put on hold till next elections expected either in 2007 or 2008.

The Opposition political parties have made a big issue of privatisation of Pakistan Steel after the judgment of Supreme Court but are apprehensive of transactions of Habib Bank Ltd. Pakistan Telecommunications, Karachi Electric Supply Corporation and many other deals.

Ã¢â¬ÅAll these controversial deals are bound to dominate the electioneering next year or in 2008,Ã¢â¬Â a local PPP leader declared.


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## Neo

Sunday, September 03, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\09\03\story_3-9-2006_pg5_2

LAHORE: Heavy monsoon rains across the country are expected to increase sugarcane production by 15 percent both in terms of yield per acre and sucrose recovery, say agriculture experts. 

Talking to the Daily Times, agriculture experts pointed out that the heavy rains are a blessing for the sugarcane crop and the increased production would bring down sugar prices the next year. 

The Punjab government has recently increased support price for sugarcane to Rs 60 per maund and the Sindh government is likely to make further increase in it. 

However, the sugarcane farmers have recently expressed concerns over surplus stocks lying with sugar mills ahead of the next crushing season, fearing that any delay in the start of crushing season may bring losses to them. Therefore, they have urged the government to restrict the Trading Corporation of Pakistan from releasing undue stocks in the market unless the sugar mills exhaust their stocks.

The sugarcane farmers had received lucrative price for their crop in the last crushing season and, in some cases, farmers received Rs 100 per maund against the government announced price of Rs 48 per maund. Eventually, the sugar millers increased sugar prices and the government kept on arresting the prices throughout the outgoing year. But still sugar prices in the market have remained above Rs 30 a keg. The government received flak from the opposition and the people over rising sugar prices. The opposition also included the prices of sugar in its charge sheet prepared against the prime minister in the recent no-confidence motion. 

The sugarcane farmers have been facing tough conditions since 1999 when then commerce minister Abdul Razzak Dawood announced duty-free import of sugar from India on the basis of wrong figures provided by the ministry of food, agriculture and livestock on crop estimates. The millers, which kept on criticizing the decision of importing duty-free sugar from India, delayed the crushing season that put farmers in a difficult situation. The sugar industry delayed payment to many farmers across the country that discouraged the farmers' community at large and they lost interest in sugarcane crop. The country witnessed an unprecedented increase in sugar prices, which jumped up to Rs 40 a kg in 2002-03. The sugar industry had been facing a glut-like situation and the government was left with no option but to activate the Trading Corporation of Pakistan to procure surplus stocks of sugar mills before the next crushing season. 

Things did not improve in the next two years and sugarcane farmers avoided heavy plantation till 2005 when abnormal rise in petrol prices compelled Brazil to produce more ethanol fuel from sugarcane than sugar. This created a shortage of sugar in the international market. 

The decline in sugarcane cultivation in Pakistan led to an increase in prices of sugarcane, resulting in disputes between the millers and growers in Sindh and criticism of the government by the sugar industry. 

Heavy rains this monsoon season have again given hope to the farmers, as they were expecting a fall in production if there were insufficient rains. What remains to be seen whether the government would be able to manage the prices or not, say analysts.


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## Neo

Sunday, September 03, 2006http://javascript<b></b>:; http://www.dailytimes.com.pk/print.asp?page=2006\09\03\story_3-9-2006_pg5_5

ISLAMABAD: Federal Minister for Kashmir Affairs and Northern Areas Maj.(R) Tahir Iqbal has said Rozgar Pakistan Programme would be launched in Northern Areas along with other parts of the country to overcome unemployment issue in the area.

He was addressing a public gathering at village Gaje, District Ghizr of Northern Areas. He also distributed compensation cheques for Rs 100,000 each among the families of seven flood victims who died during the rains and landslides last month.


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## Neo

*BEIJING *_(updated on: September 03, 2006, 15:53 PST_): Chinese private companies will soon finalise deals with their Pakistani partners to make investment in the energy sector, said sources in the China Chamber of Commerce for Petroleum Industry (CCPI).

The CCPI will send a delegation to Pakistan later this year to finalise their ongoing negotiations.

The sources told APP in Beijing that the Chinese companies were encouraged by economic and investment policies of Pakistan government and prepared to undertake joint ventures in the oil and coal mine sector.

According to the secretary general of CCPI, Wang Junjue, the deals vary from joint oilfield development to coalmine investment. This will be a breakthrough for private domestic oil companies on the overseas market, he added.

Nearly, 30 MoUs were signed by private oil companies of both countries during a forum held in Islamabad in late April. These MoUs cover investment in oilfields, oil refineries, coal-fired power plants and hydropower projects.

The two sides also discussed a possible oil pipeline from Gwadar Port to Xinjiang and building up oil storage and refining facilities at the port.

The oil pipeline proposal was made in a general co-operation agreement reached by the two governments during President Pervez Musharraf's official visit to Beijing in February.

The two countries also proposed at the forum to establish an international joint fund to support the development of energy projects by Chinese private oil companies in Pakistan.

According to the informed sources, the Chinese petroleum industry has indicated an interest in shifting its excess capacity to Gwadar. The CCPI and All China Federation of Industry and Commerce (ACFIC) conveyed to Pakistani authorities during a recent visit that the Chinese petroleum industry was keen to invest in Pakistan's energy sector.

The ACFIC and CCPI indicated that both the public and private sectors were willing to cooperate in energy projects in Pakistan. This co-operation will not be restricted to building oil pipeline to set up an energy corridor to Gwadar, but also in shifting energy related industry to Pakistan.

However, the government will need to provide strong support to lay down a framework for a safe financial, investment and security environment in Balochistan to attract this investment, the sources said.

The Chinese petroleum industry sees four potentially fruitful projects. Firstly, an oil pipeline linking Gwadar to Xinjiang in China to set up an energy corridor.

The economic viability of such a project was yet to be worked out. Secondly, the development of Gwadar Port Energy Zone, where the Chinese could set up an oil refinery with a capacity of 21 million tonnes.

Thirdly, the Gwadar energy zone could accommodate other energy sector industries. The Chinese business groups said that China has excess capacity in the petroleum services industry and planned to move the excess capacity to Dubai, but was now considering shifting it to Gwadar, the official added. According to their initial estimates, the Gwadar Port Energy Zone could attract investment of up to $13 billion.

Fourthly, the Chinese petroleum industry also indicated an interest in oil and gas exploration projects in Pakistan, the official said. The Chinese business groups had proposed that a Pak-China energy and trade co-operation promotion association be established for such projects.

The association would include members from the oil and gas sector and other industries in the power sector. They had also suggested that a Pak-China joint investment company be set up to finance these projects, the sources added.


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## Neo

LAHORE: Promotion of information technology culture in Punjab is the top most priority of the government and in order to make the Punjab province hub of information technology, the provincial government has increased the budget up to Rs 800 million this year while a number of new projects have been started.

Punjab Minister for Information Technology Abdul Aleem Khan stated this while presiding over the departmental review meeting, here on Tuesday. He disclosed that computerisation of different departments and public sector organisations were being designed. He added that at a cost of Rs 512.921 million new projects have been designed in Auqaf, Co-operatives, Food, Excise & Taxation, Transport and Police departments.

He told that already ongoing schemes would be completed by spending Rs 287.09 million in this fiscal year, which would enhance the capacity of government departments. For creating awareness I.T. seminars would be held in colleges and universities by the government while exhibitions of information technology and software competitions would be arranged to provide better and competitive opportunities to the students, he added.


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## Neo

*Developing Thar coal*


ESTIMATES of the current power shortage in the country vary from expert to expert. On one point, however, there is a clear consensus: PakistanÃ¢â¬â¢s energy crisis will assume critical proportions in the foreseeable future if plans to substantially increase generation capacity are delayed any further. Besides infrastructure development, the uninterrupted supply of power-generation inputs is a major concern. 

The government itself now admits that there is no Ã¢â¬Åtangible or bankableÃ¢â¬Â progress on proposed gas pipelines from regional suppliers. This is a critical, though expected, setback given that domestic gas output alone cannot meet future power generation needs. Oil-fired plants, though vital in the short term to fill existing shortages, are becoming increasingly unviable because of costlier petroleum products. Also, there is no consensus in sight on big dams that can produce cheap hydroelectricity on a large scale. However, this doesnÃ¢â¬â¢t mean that we should not go full-speed ahead on the construction of small- and medium-sized hydroelectric projects.

In this dire scenario, there is an urgent need to focus on indigenous and cost-effective sources of power generation. PakistanÃ¢â¬â¢s estimated coal deposits are second only to those of the US but coalÃ¢â¬â¢s share in electricity generation is less than one per cent Ã¢â¬â compared to 77 per cent in India, 58 per cent in the UK and 52 per cent in the US. 

Sindh accounts for 99.7 per cent of the countryÃ¢â¬â¢s 184.66 billion tons of coal deposits, of which 175.51 billion tons are located in Thar. According to the deputy chairman of the Planning Commission, the country Ã¢â¬Åcan generate around 20,000 megawatts for almost 40 yearsÃ¢â¬Â by using only two per cent of existing coal reserves. Clearly, the way forward lies in developing TharÃ¢â¬â¢s vast coal resources. It is imperative, however, that the authorities take into account the serious environmental risks associated with coal processing and utilisation Ã¢â¬â especially the release of particulates and greenhouse gases Ã¢â¬â as well as the potentially hazardous impact of the mining process itself. Coal power need not be as Ã¢â¬ËdirtyÃ¢â¬â¢ as it used to be. In this connection, the focus must be on relatively clean European technology that is already proving to be commercially viable. The US may attempt to use Pakistan as a dumping ground for the obsolete plants it needs to phase out to meet its own environmental standards. This must not be allowed to happen.


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## Neo

LAHORE: Provincial Minister for Women Development Ashifa Riaz Fatyana has said upcoming women expo in the provincial metropolis would help empower women economically and socially.

Ashifa said the achievements and accomplishments of Pakistani women deserve to be recognized and celebrated.

She stated this while addressing a press conference to brief the media regarding up-coming WomenÃ¢â¬â¢s Expo to be held at Fortress Expo Centre, Lahore from September 8 to 10.

She said that provincial Ministry of Women Development is working to turn the idea of women empowerment into a reality.

She said that WomenÃ¢â¬â¢s Expo Lahore is the continuation of WomenÃ¢â¬â¢s Expo held in Karachi in April this year and it would be organized in all the major cities of Pakistan.

The 3-day exhibition is being organized by 4th Dimension Pvt Ltd in collaboration with Department of Women Development, Government of Punjab, German Agency for Technical Cooperation (GTZ) and Parks and Horticulture Authority (PHA) along with several other government and non-government organizations.

She said that during the WomenÃ¢â¬â¢s Expo, experts from health & nutrition, education & training, beauty, fitness & home management would undertake health screenings, enlighten women about their multi dimensional roles by sharing their success stories, provide free recipes & nutrition solutions, discounted beauty services as well as guide the participants about cost effective ways of house makeovers, household tips and quick fix approaches. 

She said that several local organizations from the region will participate under the banner of their respective chambers at WomenÃ¢â¬â¢s Expo Lahore.

Care Foundation and Kashf Foundation have been given complimentary stalls for the social awareness among the masses.

She said that over fifty thousand invitations have been extended to women working in various walks of life. Over one thousand dignitaries from the region are invited as guests of honour.

Minister said that Ã¢â¬ÅHunarrangÃ¢â¬Â Pavilion is being established in collaboration with the Department of Women Development, Government of Punjab for promoting and projecting cottage industry.

CEO 4th Dimension Mustafa Qayyum said that this 3-day Exhibition would promote WomenÃ¢â¬â¢s Gender Mainstreaming and provide them with networking opportunities to celebrate their success and achievements.


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## Owais

*ECC forces Wapda to procure HEC transformers* 


ISLAMABAD (September 04 2006): The Economic Co-ordination Committee (ECC) of the Cabinet has forced the Water and Power Development Authority (Wapda) to procure 132/11 kV transformers from the Heavy Electrical Complex (HEC) which the utility fears would be taken up seriously by the Public Accounts Committee (PAC).

Sources told _Business Recorder _the water and power ministry had apprised the ECC, in its previous meeting that the Heavy Electrical Complex was unable to submit the required guarantee and Wapda should be allowed to procure transformers on competitive basis.

They said that Wapda had invited bids for 132/11 KV transformers for which two main local manufacturers - the Siemens and the Heavy Electrical Complex - along with foreign firms participated.

Though the foreign bidders had quoted lower price, the two local firms were given higher ranking after allowing for price preference as per commerce ministry's SRO No 827(1), 2001, the sources added.

Keeping in view the capacity of suppliers, orders of 38 transformers of 20/26 MVA and 10 transformers of 10/13 MVA capacity were placed to the Heavy Electrical Complex besides, Siemens and an Iranian supplier.

However, the Heavy Electrical Complex being in serious financial crisis was unable to submit performance bond and the bank guarantee despite Discos extra-ordinary offer of 30 percent advance payment. This had delayed the installation of transformers.

Sources said the industries ministry had suggested that instead of bank guarantee a guarantee of the State Engineering Corporation (SEC) should suffice, which Wapda had refused to accept.

"This is not acceptable to Wapda, and would attract serious objections of the PAC as imprudent commercial arrangements besides seriously exposing Discos to financial risks," the sources quoted the water and power ministry as saying in its arguments.

Sources also said the Heavy Electrical Complex has recently indicated that it might be able to arrange bank guarantee against 50 percent interest-free advance, but would still unable to post performance bond up-front.

"Wapda is examining it favourably as an extraordinary measure even though non-provision of performance bond up-front is in non-conformity with commercial practices and contracting procedures. However, even if HEC starts manufacturing transformers at this last stage, it will not be able to meet the demand of Discos," the sources quoted the ministry as further saying in the ECC meeting.

The water and power ministry, while taking stock of the situation had made it clear that because of continuing overloading of the 132/11 kV secondary power system, apprehended that if immediate action was taken to augment the transformation capacity, the condition in the next summer would be worse than the current year.

The ministry had suggested that requisite transformers should be procured on war-footing with free-hand to complete the task themselves or with the assistance of Wapda, if needed.

The ministry had also proposed that all the Discos should make efforts that at least the grid stations, which are, at present, loaded at 90 percent or above are augmented by end April 2007 with corresponding improvement in the transmission system.

Sources said the ECC heard the viewpoint of ministries of the water & power and the industries and directed Wapda to procure transformers from financially-sick the Heavy Electrical Complex.


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## Owais

*'September critical for cotton crop'* 


ISLAMABAD (September 04 2006): The month of September is critical for cotton crop because of heavy rains and extended monsoon season, Crop Commissioner Dr Qadir Bux Baloch told _Business Recorder _here on Sunday.

He said that cotton crop has been sown on 8.01 million acres--6.5 million acres in Punjab, 1.5 million acres in Sindh and 0.1 million acres in Balochistan and NWFP. Of this, cotton crop over 0.4 million acres has been damaged--0.25 million acres in Punjab and 0.15 million acres in Sindh--by heavy rains and floods.

He said that since the monsoon season is still continuing, with already 10 percent more than normal seasonal rain, Minfal was not in position to make any forecast about the actual cotton production at this stage, though the production target of 13.8 million bales had been fixed at the time of sowing.

He said that the Federal Crop Committee, comprising senior officials of Federal and Provincial ministries of Food & Agriculture and the Agriculture Extension Services Departments would meet in the first week of October to review the Kharif crops position and their likely production.

He said that because of the rains, overall cotton picking and arrivals in the ginning factories would remain slow, but once the rainy season was over, the situation could considerably improve.

Dr Baloch said that at present the cotton crop is not under major pest pressure.

About other Kharif crops, he said that sugarcane had been sown on 10 percent more acreage than last year and due to timely rains the crop was in good condition.


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## Owais

*M-8 project put on hold for security reasons* 


ISLAMABAD (September 04 2006): The government has put on hold Rs 5.177 billion M-8 construction project - the highway that will provide road linkages to country's biggest sea port - owing to volatile law and order situation in Balochistan, sources told _Business Recorder._

The government, it is reliably learnt, has requested the Frontier Constabulary to make fool-proof security arrangements for completion of the road project connecting multi-billion dollar Gwadar port with country's main road network.

According to details, the National Highway Authority (NHA) is undertaking a project of more than Rs 5.177 billion to construct M-8 that comprises Gwadar, Turbat, and Hoshab sections.

Sources said nearly 193.3-km-long M-8 has been categorised in three sections, one Gwadar to Turbat (53.6-km), second Gwadar to Turbat (63.45-km), and the third Turbat to Hoshab that is around 76.25-km. Similarly, the authorities have allocated Rs 1.545 billion for the construction of first section of Gwadar to Turbat, Rs 1.699 billion on the second portion of Gwadar to Turbat road, whereas Rs 1.932 billion from Turbat to Hoshab, the last section.

The multi-billion Gwadar deep seaport project that lies at the heart of President General Pervez Musharraf's vision of prosper Pakistan is already embroiling in controversies, as its inauguration has been rescheduled twice.

Despite firm directives by President General Pervez Musharraf and Prime Minister Shaukat Aziz, the authorities have failed to timely complete the road and rail network to connect the Gwadar Port with the main network. According to the last Economic Survey, the government has neither succeeded in establishing road network nor completed rail infrastructure connecting the biggest seaport with the main communication network.

President Musharraf firmly believes that the Gwadar project is of natural importance and it would help in enhancing linkages with Afghanistan, Central Asian and Gulf states, making Pakistan a vibrant hub of commercial activities for the energy rich states.

He has time and again asked the authorities to complete all work relating to Gwadar port so it may be made operational in all respects in the current year.

However, the deteriorating law and order situation in Balochistan - the biggest province areas - wise has almost made impossible for the government to carry on its development projects there especially after the killing of Baloch tribal chieftain Nawab Akbar Bugti.

Sources told _Business Recorder _that the construction of M-8 was scheduled to be completed in September 2006, as the authorities were directed to accomplish the project as early as possible. But the volatile law and order situation in the province where Chinese camp was attacked and series of explosions have forced all contractors to stop the work.

It is learnt that the authorities have so far spent Rs 3.299 billion on the said project that has succumbed to worsening law and order situation. The FC has been requested to make security arrangements that would cost an additional amount of Rs 195 million.

When contacted, Federal Communication Minister Shamim Siddiqui admitted that the project was put on hold due to deteriorating law and order situation in the area.

However, he negated the impression that the project was in limbo, hoping the construction work would resume in a day or two. He said the help of the Frontier Constabulary has been sought and there would be no more a security issue. When asked, the minister said the other road projects connecting Gwadar with the main network have been completed timely and M-8 would soon be completed too.


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## Owais

*Newly-formed coal mining firm may usurp Sindh rights* 


KARACHI (September 04 2006): The formation of the Coal Mining Company (CMC) under the federal government is considered as another bid to deprive Sindh of its due rights.

Sources in the Sindh government and the Sindh Coal Authority told _Business Recorder _that on the one hand the federal government is engaged in the privatisation of national entities, on the other, it has created a company to explore and prepare feasibility of coal reserves in Sindh.

The creation of new company also provides the federal government a full authority over coal reserves in Sindh and the province would be sidelined in the process, the sources added.

The summary of the proposed Coal Mining Company has been approved by Prime Minister Shaukat Aziz and sent to the petroleum ministry but has not yet made public, sources said.

For the last 15 years, a powerful lobby in the federal government had thwarted the efforts of the government to develop coal resources. The lobby has still engaged in delaying the project and their vested interests would not bring any results under the new coal company.

They said the federal government would operate the newly-formed company and all revenues would go directly to Islamabad. This would frustrate the people living in the areas where coal reserves were identified, sources said.

The proposed CMC would work under the ministry of petroleum and natural resources and it would be co-ordinating among all the stakeholders on issues related to the coal sector development.

The officials in the ministry have proposed a plan to carry out a new survey study that there was insufficient detailed survey of mineral resources. The plan would open doors of corruption, sources said.

Sources said there was no need to conduct another study because already two world recognised firms (Chinese and Germans) had carried out detailed study.

Sources said that the object of the company to further delay the exploration of coal and create an impression that the provincial government was failed to undertake the projects. The delay would have far-reaching negative impact on the overall economy of the country, they added.

The chief minister and the governor of Sindh have reiterated on several occasions that the coal exploration must benefit the province and royalty should be utilised for the betterment of the people of the province. Sources said the coal authorities have assured the Sindh governor in a meeting held in July 2006 that they were fully capable of developing the coal reserves and exploiting the same for the betterment of people.

Pakistan has fourth largest coal reserves in the world, but the development of the coal sector could not be undertaken properly. Whenever the work carried out seriously by the Sindh government the lobby in the federal government has thwarted the development projects, they said. The government is seeking to overcome energy crisis through available recourses, including coal. It wants to explore the coal deposits but again the main hurdle was the lobby, which is misguiding the government on the issues, they said.

Several countries are producing electricity from coal while having the fourth largest reserves of coal, Pakistan was far behind to capitalise on coal for its power demands.

The United States generates 52 percent electricity from coal, the United Kingdom 58 percent, Australia 77 percent, Germany 52.5 percent even India produces 77 percent power from coal while having enough reserves Pakistan could not even produce one percent from coal, the sources said.

They said that foreign companies are reluctant to invest in the coal exploration or coal base power plant because they were always discouraged by the lobby in the federal government. The stubbornness of Wapda were also a hurdle because of Wapda's reluctance to offer fair tariff has put the plans of the Shenhua Group from China on hold. The group had planned to set up a 600 MW power plant at an estimated cost of $500 million in Thar, sources said.


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## Owais

*Hydropower generation projects plan in pipeline* 

SIALKOT (September 03 2006): Punjab government has formulating an action plan for the setting up of five hydropower generation projects in various areas of the Province. Official sources told _Business Recorder _here on Saturday that under the programme the proposed hydropower generation projects would be carried out in Sialkot, Gujranwala, Sheikhupura, Okara and Pakpattan.

The programme would be undertaken with the financial assistance of Asian development Bank (ADB) for producing 25 megawatt electricity. After a detailed survey as many as 48 sites had been identified at various canals where hydel power projects of 500 megawatts would be established in Punjab. The step taken by the government would not only help provision of low cost electricity to the masses but would leave a positive impact on industrial and agriculture sector in Punjab.

In addition to this the government was also making efforts for generating energy from thermal, solar and other sources and in this regard the government had already taken many steps. The work on hydropower projects would undertake in near future sources added.


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## Neo

The killing of Nawab Akbar Khan Bugti, a political figure and the province-wide protest it sparked, would intensify the feelings of alienation among Balochis, making their entry into the national political mainstream far more difficult. At this point of time, its consequences on the development process in the province are also uncertain.

Politics and economics are deeply inter-related. From the point of view of economics, the present rulers have made serious efforts to develop the neglected province and started mega projects including Gwadar port. These mega projects open up Balochistan for both foreign and domestic investors.

But the Balochi reservations about sharing of benefits of these projects have not been removed. Unfortunately, the rulers have not fared well on political front. The political issues linked to these mega projects remain unresolved.

The three main issues agitating the Balochis are;

(1) setting up of military cantonments in Gwadar, Kohlu and the Bugti tribal area;

(2) the lack of employment opportunities for locals in the ongoing mega projects and

(3) the serious reservations about the entire development process.

When the centre decided to set up military cantonments without taking the local leaders into confidence, many Baloch senators accused the government of launching an unannounced military operation. A parliamentary committee was set up to achieve political reconciliation. The committee contacted Nawab Akbar Bugti and discussed the related issues with him but the recommendations made by it in consultations with Akbar Bugti were not implemented.

Military actions in the past have also created political instability, centre-province disharmony, social chaos and intensified feelings of frustration and alienation among the Baluchis and subsequently retarded the process of economic development in the province.

Nawab Akbar Bugti was a veteran Baloch nationalist leader. The nationalists contend that the real beneficiaries of the on-going mega projects would be the non-locals and aliens.

They base their judgment on historical realities, post-independence policies of discrimination and the development strategies of the decision-makers in Islamabad.

The nationalist interpret the ongoing process of development as the politics of development. This politics, they contend, will continue to keep the people of this province deprived, poor, least developed and most backward.

They contend that uplift programmes reflect the federal governmentÃ¢â¬â¢s plan to settle outsiders in Gwadar and other areas, which, they think, would change the demography of the province.

They contend that the federal government earns Rs84 billion annually from Sui gas fields, but gives the Balochistan government only Rs5 billion under the head of development surcharge and excise royalty.

They claim that in the Saindak copper project, BalochistanÃ¢â¬â¢s interest was jeopardized as Chinese share in it was 74 per cent, the federal government held 25 per cent and the province got only one per cent.

Neglect: Undeniably, Balochistan has suffered long years of neglect. The province is mired in poverty. In terms of literacy, higher education, technological development, healthcare, infrastructure development and industrialization, the province is far behind rest of the country.

The grievances of Balochistan include the denial of provincial autonomy as guaranteed by the Constitution, a poor share of royalty on gas and other minerals, economic backwardness and inadequate fiscal disbursement on the basis of geographical areas and under-development.

No military solution to the Balochistan problem would be viable. In the past, the military operations have been ineffective, even counter- productive to solve political problems. In fact one military action, after a pause, has led to another.

Deployment of security forces, establishment of cantonments and military operation are not the suitable strategies to create a stable security environment.

There is need to learn from the past experience. A political reconciliation can help sustain the ongoing development process.

No mega-project will bear fruit in the given state of security and law and order situation in the province. The need of the hour is to create real security environment that will serve long-term objectives associated with the economic development.

What is critical for creating a real security environment is the participation of local stake-holders and fair distribution of development gains.

The real parameters of security vis-ÃÂ -vis development process are yet to be defined. It is about the stake, cooperation, support and engagement of the populace in the development activities taking place in their area. In broader perspective, security concept covers all areas- from economic, social, political and cultural to environmental.

If all these areas are secure and not vulnerable, the development process, which involves changes, certainly brings a positive change not only on ground but also in social attitudes of the people. In a state of real security one feels economically, socially, politically and culturally secure: security in all its aspects.

The federal government should contact the existing tribal and political figures and take them into confidence about development agenda and ensure their consent and approvals.

Effective measures need to be taken which could allay the sense of alienation, bring nationalists into the mainstream politics, create local stake in the provinceÃ¢â¬â¢s development and assuage their grievances.

A sense of ownership should be created among the local people making them directly responsible for the security of vital installations. New doors to cooperation and prosperity should be opened. Physical force will not work.

On the national scene, a key issue is how to remove province-centre disharmony. It requires removing disparities in incomes between various provinces? The situation has also led to provincial disharmony and differences. It has created regional disparity leading to a north-south divide.

The development schemes in Balochistan also suffer from bad planning and slow implementation. The lack of proper planning and faulty procedural codes have also increased the cost of the Kachchi canal project from Rs31.2 billion to over Rs70 billion. The security problem in Balochistan has delayed the completion of the Rs13 billion Gomal Zam Dam by more than two years. However, at a meeting held last month to review progress of ongoing development projects in Balochistan, Prime Minister Shaukat Aziz was told by the provincial chief secretary that Kachhi canalÃ¢â¬â¢s phase-I will be competed in 2008.

According to the official estimate, 700,000 acres will be irrigated by the Kachhi canal, which includes 102,000 acres in Dera Bugti. The work on both sides of the canal was continuing to ensure early completion of the project. Prime Minister was informed that Mirani and Sabakzai dams would be completed by the end of this year and June 2007, respectively.

The Balochistan economy is small relative to those of Punjab and Sindh and according to the SPDC report, the growth rates are somewhat misleading on account of low base.

The province appears, at the best, to remain trapped in a low-level equilibrium and at worst regressing further into under-development.

The report raises doubts about the accuracy of 1972 population census of Balochistan where a significant part is nomadic

The regional disparity is actually the outcome of inequitable allocation for development funds among the federating units over a long period of time. According to one estimate, 89 per cent of rural Balochistan and 49 per cent of SindhÃ¢â¬â¢s rural population is in high deprivation areas.

The entire urban population in Balochistan resides in high deprivation districts and the provinceÃ¢â¬â¢s share in low as well as medium deprivation districts is zero. The provincial capital, Quetta does not even qualify for a medium deprivation status.

Over 50 per cent population is subsisting below poverty line in the province. All the districts in the province except Quetta and Ziarat are in the lowest category of high level of deprivation. These districts share 88 percent of the population of Balochistan.

According to the Labour Force Survey (LFS) 2003Ã¢â¬â2004, urban unemployment is 9.7 per cent in Pakistan, and 12.5 per cent in Balochistan. Between 2001 and 2003, unemployment decreased from 8.3 to 7.7 per cent in Pakistan but went up from 7.8 to 8.2 per cent in the province.

Though Balochistan has been untouched by strong economic growth, its weak economy is likely to be affected by the rising unrest after the killing of Nawab Akbar Bugti in recent Kohlu military action.

The severe droughts in recent years and ongoing military operation has also led to internal migration and increased the vulnerability of the poor. The province has the highest percentage of the highly deprived, both in terms of income and other indicators of poverty.

The officials claim that Rs164 billion have been allocated by the federal government for 140 ongoing development projects in Balochistan.

These projects would create more jobs and provide better facilities of life to the people. They also claim that the 30,000 vacancies created for the people of Balochistan in federal and provincial government departments, 23,000 had been filled and recruitment on the remaining posts is under process.

Officials claim that the government has adopted a holistic approach for development of the province. What is however actually needed is to review the present development policy and allocation priorities, which have worsened the disparities in regional incomes and follow it up with political dialogue for reconciliation with the nationalists.


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## Neo

Without careful and intelligent handling, there exists a possibility of current political turmoil to assume the proportions of a crisis, which may induce the economic actors to take a back seat. This could make country a prey to regional and international powers, who are obsessed with promoting their interests at the cost of others.

If the current wave of political unrest subsides quickly, it would not significantly affect the economy, that is on an expansion path at over six per cent average growth rates. However, if the situation is allowed to linger on, that it could spell Ã¢â¬ËdangerÃ¢â¬â¢ for the economy.

The medium and small businessmen will be affected if the situation does not improve immediately. The next three months, including the holy month of Ramadan, is the peak business period in the country. The onus of responsibility to monitor and improve the situation lies with government but the opposition also needs to be cautious when devising its strategies. Exercising the writ of the government is important but ways other than the mode adopted so far are needed. At the same time, the political parties need to weigh their options against gains to the people and not in narrow context of short-term political mileage over opponents.

Hopping from crisis to crisis, national economy has developed very stubborn resilience. It has proved to be strong enough to cope with shutter downs and wheel jams. It does get depressed temporarily but bounces back with vengeance.

These views were expressed by the business leaders in Karachi and representatives of some of the high performing sectors that include capital market, automobiles, and cement sector over the present political scenario. Several attempts to contact official spokesman on the economic affairs in Islamabad and minister of state for finance Omer Ayub Khan proved futile. The Prime Minister and Dr Salman Shah were out of the country.

Ã¢â¬ÅThe political climate affects the business environment. When political situation heats up investment sentiments cool off. For the last fortnight, we wake up to a bad news every other day. There is need for the government to come out with some positive news to perk up the investors sentimentsÃ¢â¬Â, said a key player in the Karachi stock market who owns a chain of businesses and is tipped to be one of the richest men in the country.

Ã¢â¬ÅIn my view for the next year and a half, the situation is going to be little shaky, till the time elections are held and power is transferred to the elected party. For now, it will take time but the situation will improve. As for the capital market, the current levels are supported by the strong performance of listed companies and not just positive perceptions. It, therefore, can hold ground for quite sometimeÃ¢â¬Â, the high profile broker commented.

A senior business tycoon who represents his class at a number of forums acknowledged that military governments are more popular with the business community. Elaborating on reasons he said that during Martial Laws there is stability and continuity in policies.

The power is also centralized so it is easier to negotiate for our demands with the government. Whereas in a democratic set up when it is free for all. Every Tom and Dick and Harry poses to be one in power throwing his weight around, aggravating the problems of the business class. He, however, did oppose the high-headed attitude of a military government that he said alienates the people from the state. Like in the case of Nawab Akber Bugti, this business veteran felt that the government has further complicated the already tangled political situation.

Ã¢â¬ÅThe outburst of reaction in form of blasts and strikes will drive customers out of local markets. If the situation is allowed to persists for next few months it would translate into huge business losses to local businessmen and retailers who traditionally do roaring business in period preceding EidÃ¢â¬Â, he said.

Ã¢â¬ÅThe last three months of the year are also crucial for exporters who have deadlines before the Christmas shopping season picks up in the West. We are hoping that the government will understand the sensitivity of the situation and act accordingly to contain the damage incurred because of the mishandling of the Balochistan situationÃ¢â¬Â, he asserted.

Ã¢â¬ÅBusiness and investment are like migratory birds. It travels to lands that offer favourable environment. Political strife and uncertainty can drive the investors out who are already showing signs of fatigue, waiting for issues related to infrastructure to be resolvedÃ¢â¬Â, second generation business leader of Karachi Amin Bandukda said commenting on the impact of political developments on the economy of the country.

A young professional heading research section of a leading brokerage house said that finance professionals were surprised over the extent of support the opposition was able to muster in the national assembly. Ã¢â¬ÅIt showed that opposition is not as weak as many of us like to believeÃ¢â¬Â. He said that the measures such as the banking and the capital market reforms implemented by the government have increased the depth of the economy making it even more resilient.

He felt that the psychological sentiments do matter in the capital market but the physical performance of listed companies decide the fate of bourses. Ã¢â¬ÅIn Pakistan most listed companies have given out very good results and these very companies will support the market level and continue to provide stabilityÃ¢â¬Â, he said. A self-proclaimed socialist turned businessman said that his group was about to finalize a joint venture deal with a major international investment group but at the last minute it backed out. Ã¢â¬ÅThey decided not to engage their capital in a volatile political situation and left for more stable environment in the regionÃ¢â¬Â.

He warned of what he called spacious neighbours waiting to pounce on an opportunity to capitalize on every bad news originating from the country. Ã¢â¬ÅWho would like to see the Gwadar Port develop into a regional business hub? Who would like Iran-Pakistan-India pipeline project to materialize that has a potential to alter the dimensions of geo-regional equation? Who favours Pakistan developing its mineral treasures in Balochistan with Chinese assistance? No oneÃ¢â¬Â, he said. Ã¢â¬ÅAny gain in Pakistan is perceived to be a loss by these powersÃ¢â¬Â, he asserted. Ã¢â¬ÅWe do not really need enemies. We have proved times and again that we can inflict on ourselves more daunting blows than any external forceÃ¢â¬Â, a retired economist in Islamabad said. He ruled out any foreign hand in the making of the current crisis. He, however, did agree that there are many forces who would like to fish in PakistanÃ¢â¬â¢s troubled waters.

Economic mismanagement comes in way of realisation of true economic potential. It is hoped that the military-led government will make a conscious effort to pacify the situation to allow the economic actors to deliver.


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## Neo

Does Pakistan need a second Green Revolution? Does it need to radically increase its agricultural output to outpace the population growth of 1.9 per cent officially or far more actually?

There is also the urgent need to raise the nutritional level of the bulk of the people, particularly of the lower income groups with critically low protein consumption. India benefited a great deal by the first Green Revolution in the 1960s Pakistan gained only marginally. The share of agricultural output in domestics economy came down from 25.9 per cent in 1999-2000 to 22.5 per cent last year.

An increase in the total food grain output was from 19.58 million tones in 1999 to 31.268 million tones last year. That means an increase of just over 50 per cent in 15 years during which period the population increased by 3.1 per cent per year.

At the same time, the wheat output increased from 14.565 million tones to 21700 million tones, an increase of just three per cent annually. If the population growth had not outstripped the output of wheat, we would not have wheat or Atta crisis with their high prices from time to time.

In India, Prime Minister Manmohan Singh says his country needs a second Green Revolution as an Australian wheat ship berthed at Chennai, the first ship to arrive in India in six years now. It marked the reverse of the move towards Ã¢â¬Åfood independenceÃ¢â¬Â that began in the 1970s.

IndiaÃ¢â¬â¢s population is rising by 1.5 per cent annually and the output of all the crops is rising by 1.25 per cent. The grain output is rising by 1.5 per cent.

In a country where 77 per cent of the people depend on agriculture, crop failures and rising rural indebtedness have resulted in 15,000 suicides per annum in the last five years.

But the first green revolution did not benefit in full the whole of India, the more enterprising Punjab and Haryana benefited far more.

In a country where the average land holding is 2.5 acres, large provinces like Bihar and the UP did not benefit from the first green revolution substantially.

And now a second revolution is coming to IndiaÃ¢â¬â¢s farm land in the shape of farm to supermarket sales, which tries to reduce the abuses of the middlemen and the dominant Ã¢â¬ËMandisÃ¢â¬â¢ which instead of helping the farmers to get good prices have become the focus of exploitation by local officials, the middlemen and the money lenders.

A breakthrough is coming in India, initially through foreign investment in the agricultural trade and exports. A British firm Ã¢â¬ÅFieldFreshÃ¢â¬Â in which a Rothschild of the famous banking family has a 50 per cent shareholding, has entered into a partnership in India with Barti enterprises, a top telecom outfit.

The joint venture will operate on leased out 4200 acres of land (on 78 farms in the Punjab) for producing beans, snow peas, carrots and a variety of other vegetables to export to Europe and the Middle East.

In the West, Tesco, the famous distribution firm sells many of these products. FieldFresh expects an export of $15 million of vegetables on an initial investment of $50 million this year. The chief of the Barti enterprises says he plans a nation-wide retail chain with Tesco as the partner.

Reliance, one of the two largest business groups in India has far more ambitious plans in this area. Mukesh Ambani, announced in June a multiyear investment of $5.6 billion in the agricultural sector to revolutionise it.

He will not confine himself to the lands in the Punjab. He will use farms in West Bengal, Marashtra and other provinces and set up rural centres for providing the farmers their inputs and handling their output.

Supply chains are planned from the farms to the Reliance retail chain of stores as well to export the products. He promises higher return to the farmers, lower prices for the consumers and far better products.

And he hopes to emerge as IndiaÃ¢â¬â¢s top mango exporter as well by selling 3600 tonnes annually. He has already begun growing mangos in the land adjacent to his Jamnagar refinery .

The Walmart of America is planning to open its supermarkets in India. It has already done that in China where it has taken the uncommon step of permitting trade unions.

In Pakistan, Prime Minister Shaukat Aziz has been talking of reducing retail prices by promoting a chain of German-Pakistani cash n carry chains. They will buy the farm products from the farmers at fair prices and sell them to the consumers direct.

But the efforts to set up such stores is far from visible and little is known about what is being done in that area. We are far behind, while the consumer prices, particularly for vegetables shoot up. In fact, any kind of disturbance anywhere, not too far pushes up vegetable and fruit prices sharply.

Walmart, the largest US company, tries to reduce prices to the lowest levels. In Pakistan, traders of all kinds always opt for the maximum price as they seek very high profit.

The prime ministerÃ¢â¬â¢s solution to the price problem is not so much organising supplies from the farms to the supermarkets but increasing the number of wholesale markets in each city from one to two. But that cannot prevent the monopolists and the cartel makers from jacking up prices.

China has given up seeking food self sufficiency at any cost in favour of a flexible and realistic policy. When it can import food grains cheap from abroad, it does not want to overstrain by striving for food self-sufficiency at any cost.

In India, Dr Manmohan Singh is adopting the same pragmatic policy. If fruits and vegetables grown in India can get good prices abroad, he does not want to grow food grains at any cost, but use a part of the large export earnings to buy food grains from abroad.

Pakistan is importing 70,000 tones of black gram before Ramadan through the private sector and 25,000 tones through TCP while 10,000 tonnes imported earlier are available in the market. That is being done to meet the higher demand for black gram in Ramadan.

Our gram production record is poor. In 1990-1991, the country produced 531,000 tonnes of gram and after 15 years it produced 527000 tonnes last year. Also disappointing is the mustard and rapeseed output- down from 228,000 tonnes to 188,000 tonnes over 15 years.

Agricultural experts have been cautioning the government against neglecting or casually treating agriculture but along with a lot of rhetoric. But the feudal lords who rule the roost in the farm belt are able to get higher support prices for their crops all the time and are happy. And the consumer pays a heavy price for that while the middlemen and the artis fill their pockets.

India made good use of the Pepsi cola company before permitting it to distribute its bottles there. The Pepsi company played a significant role in increasing vegetable production and export.

The new varieties of tomatoes it introduced raised its production in the Punjab from 88000 tonnes to 300000 tonnes and its agricultural export last year earned $400 million, but we offer facilities for unconditional sale of almost any foreign product..

Will a real effort now be made for a farm to consumer supply chain through super markets and the vegetable prices be cut or will the artis mobilise their political support and defeat any move to help the consumers?

In India through the efforts of feel fresh, 30-40 per cent of the waste in the vegetable output was eliminated. So, the prices were reduced and the quality of the supply improved. The same can be done in Pakistan if the government takes an initiative and sustains that.


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## Neo

*By Dr Ali Muhammad Khushk and M. Ibrahim Lashari*
Sugarcane is the second largest non-food crop after cotton and ranks fifth in respect of acreage. Prolonged drought and heat stress decreased its production by 22 per cent in 1999-2000, and further 17 per cent in 2000-01.

Of late, there has been confrontation between growers and millers over price. Growers demand higher price for their raw material and millers complain about increase in production cost and imports.

Late crushing causes dissatisfaction as well as financial loss to both, farmers and millers. Other problems are stagnant cane yield, non-payment of dues to growers by mills, and low import parity prices.

A study it revealed that more than 65 per cent farmers have decreased the total area under cane production due to water shortage, behaviour of the millsÃ¢â¬â¢ management, late payments, increased input cost, and diseases and rodent attack.

Constraints faced by the growers are underweighting of cane at purchase centres and mill gates, undue deductions by mills up to 10 per cent, delays in payments, middleman, obtaining an indent, and the payment of premium.

The price structure is such that out of the sale price some 35 per cent of the cost goes to farmer and 24 per cent to the government in taxes etc., 21 per cent to mills with nine and six per cent to wholesalers and retailers respectively. The country exports sugar at low price and imports the same at high rates.

Transporters, particularly trolley-owners also exploit mill owners by demanding additional Rs250Ã¢â¬â300 per trolley during cane shortage, while a delay in unloading at the gate incurs an additional Rs100 per day for trolley along with the provision of food and tea for trolley drivers etc by the mills.

The government intervenes by issuing export permits to mills, importing sugar on public account and controlling retail distribution below the market price through utility stores.

Production, consumption and demand play an important part as production depends upon support price. The support prices of sugarcane affect the production cost and uncontrolled factors such as weather and technology. The volume of cane crushed is mainly related to production, milling capacity and prices of cane and gur.

Consumption relationship indicates the price elasticity for refined sugar as four and income elasticity as eight in nominal terms. This implies that relatively small change in cane supply causes more proportional increase in sugar price.

Sugar mills, producing in excess to marketÃ¢â¬â¢s demand are portrayed as going through a difficult period and in need of the state support. Thus many are provided the governmentÃ¢â¬â¢s assistance in a situation that is not the responsibility of the state.

It is a case of state backing a resourceful segment for the exploitation of national resources and rake off operations against the general public. Mills owners are one factor in building the sugar crisis- their reluctance to pay growers the right price promptly.

The purchasing of excess stocks from mills and delayed payments to growers, and delay in crushing are bad aspects for the industry.

Another aspect of delay in crushing causes a negative impact on wheat crop that replaces it in many fields across the country.

These factors create shortage thus increasing the price of the commodity. These factors are manoeuvred towards a specific end by a plan jointly managed by the elements that should have been working to control the price escalation and meet the shortage.

The latest move to resolve the crises is a strange one. Supply to the Utility Stores has been doubled with a view to providing relief to public.

The Utility Stores are selling one kg of sugar for Rs27, while in the market it is available at Rs37-38. A price difference of Rs15 is unheard of and, to the say least, is not natural.

There is an upward trend in sugar price in the international market but the almost double domestic rate is simply not justifiable.

The shortfall of up to one million tons could be eased if the buffer stock available with the Trading Corporation of Pakistan (TCP) is utilised. The stock has cost the TCP Rs18 per kg.

Policymakers have failed to realise the gravity of the situation. Instead of checking the price hike, a free hand has been given to hoarders and profiteers, operators of the utilities stores for forcing consumers to buy other items if they sought sugar at controlled price.

The government has failed in adopting a proper agriculture policy. There is no planning at any level for important crops, including sugarcane, and no monitoring system.

Sugar crisis persisted despite the fact that some two million tons was produced and a huge quantity imported. The countryÃ¢â¬â¢s requirement is four million tons a year as against the supply of six million tons produced by more than 70 sugar mills.

Although, the government intervention is limited in keeping the prices at a reasonable level but maintaining self-sufficiency in sugar production, static yield and weaknesses in existing regulations are few problems facing the industry.

There is a need to appoint an investigating committee to probe the causes and suggest steps to revitalise the sugar sector. The committee should consist of experts from the agriculture, marketing, pricing, industry, sugar technology and the financial institutions.

There is need for seed treatment in sugarcane cultivation. Agencies such as research and extension department should be directed to enhance the knowledge of growers through demonstration.

Sugar mills should be bound to arrange and distribute seeds of high yielding varieties on easy terms to enhance production and to reduce poverty.

Awareness among farmers on the balanced use of fertilizer be enhanced and the government should take necessary steps to increase its supply at reasonable rates and at proper time.

Demonstration plots should be organised by the Extension Wing of Agriculture Department at least on village level to disseminate information among the farming community in an effective manner.


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## Neo

SO far, economic and some socio-economic variables have been identified as factors behind population growth. It has been established that population reduction is positively correlated with inclusive economic growth, poverty eradication, and provision of education, health, and infrastructural facilities.

Non-economic variables or quasi-economic variables, that may appear non-economic but betray economic logic, remain outside the realm of consideration, however significant they may actually be.

Unless these variables too are factored in to seek active and quick public response, population growth rates will not fall fast to the desired levels. These non- or quasi-economic factors revolve around half the population that is female and, therefore, considered secondary in realms of public and private decision-making.

The secondary status of women is age old and has not improved despite the Ã¢â¬ÅimpressiveÃ¢â¬Â GDP growth rates, vast women enrolment in universities, appointments of some women to the highest echelons, and the demonstrated ability of some women to even fly fighter jets in the skies.

The paradox is that these few women are not representative of the multitude who face physical and psychological abuse and lack effective recourse to the legal system where the scale is tipped against them. The fact that the Hudood Ordinance is so difficult to amend in favour of women shows the second-class status that women have in the country.

This second-class status of women speaks volumes about their ability to influence decisions even at home such as the microeconomic decision pertaining to family size. Population growth rate is, therefore, negatively correlated to the status of women. The lower their status, the higher would the population growth rate be.

Bulk of population growth is contributed by the poor low-income, less educated or uneducated households where women of productive age groups are totally subservient to men and elder women alike. So, a GDP growth and educational system that bypass the poor low-income segments will not be able to influence the population growth rates for the better any time soon. Here real population growth rates are meant and not the ones massaged for a favourable evaluation by the powers that be.

Even poverty reduction that raises people only to subsistence and slightly above will not impact population growth significantly for a very long time until people are integrated in the mainstream and are not just literate but are educated enough to become enlightened. That is, the male-female equation within their households stands transformed from one of extreme inequality to one of equity.

So, shall we wait until the asset and income distributive justice comes to prevail in our country as a precursor for male-female intra-household parity before population growth rate is brought down meaningfully? Or, shall we try on war footing to reduce intra-household gender disparities in parallel with macro level efforts towards reduction of income and education disparities?

The policy outlook thus far has been that focus should be on income and education and the rest will take care of itself by default. This too has not been happening. Persecution of women in educated affluent households also makes headlines.

In many cases, women are educated and in one case a woman computer engineer was gagged to death by a family comprising many male lawyers. So, in our country even education and professional training may not change traditional attitudes and behaviour.

And, the tradition is based on perverse economic logic. Girls were regarded as financial liabilities and boys as financial assets in pre-Islamic times. They still are viewed as such. Girls are then psyched into considering their own selves as secondary through their initiation and socialisation process. Women students may excel in education but not many view themselves at par with other members of the society.

Many will tend to take a backseat when it comes time to take crucial decisions related to various facets of personal and professional lives. And, when it will come time to start a family, many will hold their head high at the birth of a male child regarded as superior birth in a patriarchal society that relegates women to secondary status.

The desire for sons filters down to the low-income segments from the educated classes as well and they try to catch up even more on this score. These are significant quasi-economic factors that keep feeding into population growth rate, PTV ads notwithstanding that fall mostly on deaf ears. That is, desire for sons and secondary status of women who cannot influence family size are quasi-economic factors that need a frontal attack to control population growth.

What the policy makers assume will happen by default through GDP growth and education is not happening. So, a grand design is required to bring about gender parity in parallel and to shoot for its quick materialisation irrespective of when parity in incomes/assets and education is achieved.

First, equality before law is of paramount importance. All gender parity arguments will ring hollow for as long as the same is not upheld by the law of the land.

The Hudood Ordinance must be amended as desired by women and enlightened men who know religion just as well. Second, there is a need to drastically change the subservient, pleasing, and fatalistic images of women portrayed by electronic and print media in plays and ads alike.

Third, gender parity should begin to be inculcated from the primary school level in both the genders as girls need to understand, appreciate, and assert their status in society and boys must begin to come to terms with it.

Fourth, as for the bypassed vast population segments, mass campaigns by government and NGOs together can help change attitudes in addition to the electronic media that has a broad outreach too.

Fifth, women will need to stand up and take charge not just collectively but in their individual capacities also. This is a tall order but the first steps must be taken to influence quasi-economic factors of womenÃ¢â¬â¢s status and supremacy of the son both of which influence population growth unfavourably for the country.

With unbridled population growth, the issue of income inequities and poverty are compounded and so are the issues of illiteracy, malnutrition, infant and maternal mortality, disease, pressure on scare resources, rural-urban migration, poor urban management, pollution, and environmental degradation.

All of these feed back into income disparities and poverty and the vicious circle goes on with half the countryÃ¢â¬â¢s population of women unable to influence individual and collective socio-economic outcomes for the better. It is this 50 per cent of the countryÃ¢â¬â¢s human potential that must be unleashed for what is called human development that alone can lead to national economic development. It must be understood that human development is not just the development of men but of both male and female population alike.


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## Neo

PakistanÃ¢â¬â¢s oil and gas needs are growing very rapidly. A population growth rate of over two per cent per annum combined with the average annual economic growth rate of over six per cent in recent years has pushed up the annual demand for oil by over one per cent per annum and gas consumption by nearly 11 per cent.

Indigenous production of oil is over 65,000 barrels a day and that of gas is nearly 4000 million cubic feet per day. The balance in the domestic oil reserves is estimated to be around 300 million barrels and that of gas nearly 33 trillion cubic feet. Considering the annual increase in consumption rates of oil and gas under the obtaining economic circumstances and the expected increase in these consumptions in the heightened growth scenario, these reserves are not going to last for much longer.

During the year 2005-06 an investment of nearly $600million is said to have been made in the upstream petroleum sector and as many as 41 wells were drilled in the period. But this is too inadequate considering the looming challenges.

To quote the CEO of Attock Refinery, M. Adil Khattak, total demand for oil which accounts for 31 per cent of the countryÃ¢â¬â¢s energy needs, will grow to 32.51 million tons by 2015 and 66.84 million tons by 2030 from 16.8 million tons last year.

The shortfall of all oil products by 2015 is projected at 30.33 million tons, up from 13.18 million tons in 2005. And to cover this shortfall with imports would be prohibitively costly as the world oil prices are likely to remain hovering around $70-75 a barrel for the next few years.

The recent terrorist activities in Saudi Arabia which contributes nearly 18 per cent to the total world supplies and which has the largest world reserves (265.3 billion barrels), the unending mayhem in Iraq which has the second largest reserves (115 billion barrels) and the nuclear ambitions of Iran which has the third largest reserves( 96.4 billion barrels) and has 11.2 per cent share in the world supplies have combined to create heightened uncertainty in the oil market at a time when its demand in both China and the US has peaked to new heights in 30 years on the back of the two countriesÃ¢â¬â¢ phenomenal economic growth.

Meanwhile, major oil reserves are said be becoming harder to find and more expensive to exploit. Many of the oil fields outside Opec have dwindled to very low levels needing costly technology to develop.

Oil industry watchers predict that at least over the next five years the oil price would not go any where near $100 a barrel, but they also project that the price would not go lower than $65 a barrel during this period. The world gas price will be influenced by this oil price band. Advanced economies have so far taken the volatility in world oil prices very well, showing very low rates of inflation as they have been using oil less intensively and more efficiently than in the past. But other economies, especially the developing economies are expected to suffer from recessionary bouts as a result of sustained high world oil prices.

China which has the 8th largest reserve (30.6 billion barrels) of oil in the world and India which is a major oil importing country have both gone out in the world and invested heavily in prospecting industry in many countries to cover their future needs.

Pakistan on its part is said to be seeking investments of up to $16 billion for oil-related infrastructure, including refineries, pipelines and storage facilities. Side by side, Pakistan has also been seeking to import gas through pipeline from Qatar, Turkmenistan and Iran.

But while the investment for oil-related infrastructure has remained abysmally low compared to the needs, the gas import plans have so far remained no more than pipe dreams as the main junctions (Afghanistan and Balochistan) on the routes of Turkmenistan-Afghanistan-Pakistan pipeline and that of Iran-Pakistan-India pipeline continue to remain in the grip of violence and lawlessness.

So, in order to import gas from Iran without major disruptions and also to attract major investment for exploring indigenous oil and gas fields Pakistan needs a peaceful Balochistan, a province which is also endowed with rich deposits of oil, gas, coal, copper, silver, gold and other mineral resources. And now it has a modern state of the art seat port as well.

However, ever since independence to date, the centre has kept this province in a state of total neglect, depriving it of even a modicum of social and physical infrastructure and ruled it from the federal capital rather than letting its people rule themselves from Quetta. The resulting deprivation and destitution has injected among the Baloch people an acute sense of alienation.

Their legitimate demands for provincial autonomy and their struggle to get their constitutional rights over their own assets restored were wrongly labelled as rebellion to crush which military campaigns have been mounted against them as many as three times since 1958.

The third and the latest campaign is still on. This has rendered the province completely lawless and not a very attractive destination for foreign investors with some exceptions proving the rule.

The killing of Nawab Akber Khan Bugti last month is likely to add a further element of violence in the life of the province making it much more difficult to attract foreign investment in the oil and gas sector in the province.

So, if not for anything else, at least for the sake of national economy, the federal government should bring about without any further loss of time a qualitative change in its approach to the law and order problem of the Balochistan province.

To start with, it should immediately suspend the Cantonmentisation of the province. This should be followed up immediately by doing away with the concurrent list in the Constitution. And then the process of implementation of the 33 or so recommendations of the parliamentary committee on Balochistan should be taken in hand earnestly.

These recommendations had envisaged a substantial increasing in the prescribed price of gas at Sui from Rs51 per mmbtu to about Rs95 as against Rs240 for the new gas fields in Sindh and Punjab. This is expected to introduce a modicum of equity among the three provinces.

And perhaps for the same purpose the Dilawar Abbas sub-committee had also recommended that net royalty of each province should be estimated by dividing the total collection of gas development surcharge (GDS) plus the total amount of royalty for all the provincial gas fields by gas production of that particular province. At present Punjab and Sind are enjoying lucrative royalties at the cost of Balochistan.

Indeed, the relative prosperity of urban Sindh and of most of Punjab to a large extent is attributed to cheap gas that has been piped to these regions over the last 50 years from Sui gas fields in Dera Bugti.

So, to enable the country to meet a future of dwindling and costly fossil fuels Pakistan needs a peaceful Balochistan, a Balochistan which is empowered to negotiate with foreign investors directly for the exploitation and development of its proven underground wealth and a Balochistan capable of bringing about social reformation on its own without outside interference.


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## Neo

*ISLAMABAD *_(updated on: September 05, 2006, 18:52 PST_): Juan Miranda, the Director General of Central and West Asia Department of the Asian Development Bank, called on Dr Salman Shah, Adviser to Prime Minister on Finance, Revenue, Economic Affairs and Statistics here on Tuesday.

The ADB delegation briefed the adviser about its programme of private-public participation in infrastructure and utility sector development programme.

The ADB informed that it would provide finances of about 700 million dollars for projects of energy, transport and micro-credit sectors.

The director general said that about 400 million dollars would be available for energy and transport and 300 million dollars for micro-credit.

The adviser appreciated the ADB assistance in development of Pakistani economy. He hoped that National Highways Authority would be able to finance its projects itself.

The advisor said that an autonomous company would soon be set up to look after processing and financing of the projects in the field of urban services, energy, highways and other infrastructure with private sector participation.

He assured the delegation that no undue delays would be made in the undertaking of these projects. He thanked the delegation for the co-operation and expressed the hope that co-operation would be beneficial for the country.

The meeting was attended by senior officials of ADB and of the ministry of Finance.


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## Neo

ISLAMABAD (September 05 2006): The International Monetary Fund (IMF) has commended Pakistan's economic growth, sensing "excellent medium-term prospects" with strong increase in the domestic and foreign direct investment (FDI).

However, the IMF has asked Pakistan for 'fiscal consolidation' through higher public savings to control widening current account deficit and address external vulnerabilities.

An IMF mission led by Middle East and Central Asia department division chief Miguel Savastano concluded its discussion with Pakistani authorities on recent economic developments, prospects, and policies under the annual article IV consultation.

The mission noted continuation of macroeconomic stability, market reforms, the privatisation programme, trade liberalisation, and improvement in the country's physical and human infrastructure would encourage further investment and increase productivity.

A two-pronged fiscal consolidation strategy meant for augmenting revenues and rationalising expenditures, recommended by the mission, would help in bringing down the external current account deficit and addressing external vulnerabilities.

It noted in part because of the increased investment activity, and buoyant consumption, domestic demand growth continued to outpace domestic supply growth in 2005-06, notwithstanding, an improvement in comparison with the previous year.

In conjunction with the impact of further rise in the international oil prices that imbalance has led to a widening of the external current account deficit.

At the end of June 2005-06, Pakistan's current account deficit stood over $5 billion, compared with $1.53 billion a year earlier.

Fiscal deficit rose to Rs 325.18 billion (4.2 percent of the GDP) up by 1.5 percentage points during 2005-06 as compared to Rs 201.35 billion (2.7 percent) in FY2004-05. The IMF also discussed with authorities monetary and fiscal policy in the context of desirability to address pre-emptively external vulnerabilities associated with the observed widening of the external current account deficit.

The fiscal policy stance under the 2006-07-budget would support growth and had taken into account the rehabilitation and reconstruction needs after the earthquake.

The mission welcomed the focus of the budget on infrastructure and human development, and the objective to further enhance tax revenue mobilisation, it noted. The mission commended recent State Bank of Pakistan measures to further tighten monetary policy. The targeted slowdown in domestic credit growth should help in further reducing inflationary pressures and growth in imports. Authorities stood ready to further tighten monetary policy to achieve this objective should the need arise.

Continuation of macroeconomic stability, market reforms, the privatisation programme, trade liberalisation and improvement in the country's physical and human infrastructure will provide the right environment to encourage further investment and increase in productivity. It also noted larger inflows on the financing side of the balance of payments, including FDI, had ensured a full financing of the current account deficit in 2005-06 and added to foreign reserves.

The prospects for a similar outcome in 2006-07 and beyond looked good, provided continuation of the recent deceleration in the brisk pace of growth in imports and strong export performance.


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## Neo

ISLAMABAD (September 05 2006): The total internal debt obtained from 2003 to 2006 stood at Rs 359.4 billion, minister of state for finance and revenue Omar Ayub Khan said on Monday.

While responding to a question from MNA Begum Ishrat Ashraf during the question hour, the minister in a written reply gave the National Assembly details of the debt: permanent debt, Rs 177 billion; floating debt, Rs 40.4 billion; and unfunded debt, 142 billion.

The total debt year-on-year remained at Rs 24,287 million (2003); Rs 119,825 million (2004); Rs 117,631 million (2005); and Rs 146,218 million (2006), he added. National Assembly speaker Chaudhry Amir Hussain was in the chair. To a supplementary question, the minister informed the house the government under fiscal responsibility law has put a limit of loan up to 60 percent of the GDP. Earlier governments, he said, used to borrow unlimited amounts so much so that they used to borrow more to payback loans.

In reply to a question from Yasmin Rehman, the minister said there are 314 brokers in the stock market and the total listed companies are 654. Regarding investment by brokers, he said, such information is not available as it is not part of stock exchanges regulations or laws being administered by the Securities and Exchange Commission of Pakistan (SECP), but he told the house that at all times net capital balance maintained by the KSE is Rs 2.5 million; LSE, Rs 4 million; and ISE, Rs 2.5 million.

Replying to Qamar-uz-Zaman Qaira's supplementary question regarding brokers not allowed to create mutual funds world-wide, the minister replied that Pakistan's stock market has just completed first generation of reforms and it would improve steadily.

Answering a supplementary question on Rs 1500 billion scam, the minister informed the standing committee of finance and revenue has held three meetings on the stock market crash of 2005 and the report will be presented in October, 2006. Forensic Accountants will unearth the facts. He said there is a need to establish an alternative mechanism of financing, which unfortunately was not there to overcome such a crisis.

On a question raised by Ruqayya Khanum Soomro whether visas granted by India to Pakistanis are for the entire country or for specific cities and exempting the Pakistanis from police report, parliamentary secretary for interior Sanaullah Mustikhel said in a written reply that Indian government has recently proposed changes in the visa agreement of 1974, which inter alia also includes visit of the country instead of specifying cities/places to be visited. In the existing agreement, he said, visa for a maximum of eight places can be granted, which the interior ministry has kept intact instead of the entire country.

Furthermore, he said, as per Indian proposals visitors are required to register themselves at the checkpost of entry and within 24 hours of reaching their destination they are required to report to prescribed authority or the nearest police station and as such they have not proposed exemption from police reporting.

He added these proposals are under consideration and any change/addition/deletion in the existing visa agreement will be made after mutual agreement between the two governments. All matters will be finalised on the principle of reciprocity and in the national interest.

A supplementary question was raised by Mehreen Anwar Raja on the preparation of Computerised National Identity Card (CNIC). She pleaded the identity of females should be attached to their father's name, as there are cases of divorce.

The National Assembly speaker supported her suggestion and asked her to put up this issue to the interior ministry so it could be put to the assembly for necessary action. Earlier, the parliamentary secretary for interior said they do make changes in the CNIC on the request of citizens to which MNA Mehreen responded that it was a very lengthy process.


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## Neo

ISLAMABAD, Sept 4: The International Monetary Fund (IMF) has cautioned Pakistan about higher external current account deficit and has asked authorities to enhance public savings for fiscal consolidation and to create right environment to encourage investment and increase productivity.

It noted that fiscal policy had an important role to play in bringing down the external current account deficit and addressing the external vulnerabilities. Ã¢â¬ÅIt thus recommended a path of further fiscal consolidation through higher public savings," said the IMF at the conclusion of its article IV consultation with Pakistan here on Monday.

"Continuation of macroeconomic stability, market reforms, the privatisation programme, trade liberalisation, and improvement in the countryÃ¢â¬â¢s physical and human infrastructure will provide the right environment to encourage further investment and increase in productivity, going forward," said the IMF.

The six-member IMF mission, led by Miguel Savastano, Division Chief in the Middle East and Central Asia Department, held discussions with the authorities in the federal government and the State Bank of Pakistan (SBP) over the last fortnight.

The mission concluded that PakistanÃ¢â¬â¢s economy withstood well in 2005-06 the impact of several exogenous shocks, including the tragic earthquake of October 8, 2005, a significant rise in international prices for oil, and less favourable weather conditions which impacted on agriculture output.

At 6.6 per cent economic growth in 2005-06 remained impressive, especially in view of a monetary policy tightening which successfully helped in bringing annual inflation down to 7.6 per cent at end June 2006, compared to close to nine per cent a year earlier.

In the missionÃ¢â¬â¢s assessment, the prospects for sustained high economic growth in 2006-07 and over the medium-term remain excellent, with evidence of a strong pick-up in domestic and foreign direct investment, as Pakistan has increasingly been viewed as a promising destination for investment. The mission noted that, in part because of the pick up in investment, but also because of buoyant consumption, domestic demand growth had continued to outpace domestic supply growth in 2005-06, notwithstanding an improvement in comparison with the previous year.

In conjunction with the impact of the further rise in the international price for oil, that imbalance has led to a widening of the external current account deficit.

The mission also noted that larger inflows on the financing side of the balance of payments, including foreign direct investment, had ensured a full financing of the current account deficit in 2005-06, and added to international reserves.

The prospects for a similar outcome in 2006-07 and beyond looked good, provided continuation of the recent deceleration in the brisk pace of imports growth, and strong export performance.

The missionÃ¢â¬â¢s discussions with the authorities on monetary and fiscal policy took place in the context of the desirability to address pre-emptively the external vulnerabilities associated with the observed widening of the external current account deficit.

The mission commended the State Bank of Pakistan for the measures recently implemented to further tighten monetary policy. The targeted slowdown in domestic credit growth should help further reducing the inflationary pressures and the growth in imports.

The fiscal policy stance under the 2006-07 budget would support growth, and had to take into account the rehabilitation and reconstruction needs after the earthquake. The mission welcomed the focus of the budget on the infrastructure and human development, and the objective to further enhance tax revenue mobilisation.


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## Neo

Dubai: Dow Jones Indexes, a leading global index provider, announced the launch of an Islamic equity index for Pakistan that will be used to launch that country's first Sharia-compliant index fund.

Dow Jones officials told a news conference yesterday the index was launched in partnership with Pakistan's Jahangir Siddiqui group, which owns the country's top asset management company.

The Dow Jones-JS Pakistan Islamic Index, which includes 30 companies with a collective market capitalisation of $22 billion, measures the performance of Sharia-compliant companies listed on the Pakistani stock market.

It is Pakistan's first Islamic equity index and offers an opportunity to Sharia-compliant investors to benefit from the nearly 30 per cent growth Pakistani markets have witnessed in the last two years.

About 56 listed companies in Pakistan, one of the most attractive emerging markets globally, pass the test of Sharia compliance, officials said.

The index will serve as an underlying benchmark for investment products such as mutual funds, exchange-traded funds (ETFs) and other investment products.

JS Abamco Ltd, Pakistan's top asset management company which manages $400 million in funds, said it would launch Pakistan's first Sharia-compliant index fund riding on the index. The open-ended fund will be JS Abamco's tenth and will expect to raise about $100 million, Najam Ali, its chief executive told Gulf News.

"We aim to introduce several Sharia-compliant investment opportunities to Islamic fund managers across the globe," Ali said.

Islamic fund managers globally are estimated to manage $100 billion of assets, which is expected to grow by 15-20 per cent a year for the next 15 to 20 years. 

Najam Ali said corporate earnings in Pakistan were likely to rise 25 per cent this year after jumping 30 per cent last year. The market trades at about 9-10 times 2007 earnings.

Pakistan's broader 100-company index jumped 34 per cent in 2005.

Dow Jones Indexes has an Islamic index for Turkey, Malaysia and Pakistan and is poised to launch one for Dubai in partnership with Dubai Financial Market. It also has a 50-company Arabian Titans Index that includes companies from 10 countries.

"The Pakistan Islamic Index will raise the confidence of global investors looking for Sharia-compliant opportunities in the Pakistan stock markets," said A. Rushdi Siddiqui, Global Director, Dow Jones Islamic Market Index Group.

Siddiqui said about 1,900 companies across 40 countries with a market capitalisation of $11 trillion pass the test of Sharia compliance, nearly 99 per cent of which are in non-Islamic countries.

http://www.gulfnews.com/business/Markets/10065098.html
​


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## Neo

*By Naween A. Mangi* Bloomberg News

Published: September 5, 2006




*KARACHI* Pakistan Petroleum, the nation's largest gas producer, plans to drill overseas in the wake of a rebellion that has curbed exploration in the country's largest province. 

The state-controlled company will seek opportunities in Oman, Yemen and Africa, the company's chief executive, Syed Munsif Raza, said in a recent interview. At home, it will step up production outside Baluchistan, where rebels demanding a greater share of the area's mineral wealth have attacked pipelines. 

The Pakistani government wants exploration locally and abroad to meet growing demand for gas. 

The Karachi-based company will raise exploration spending 60 percent to 6.6 billion rupees, or $109 million, over the next three years, Raza said. One-fifth of its budget will be spent overseas. 

Mohammad Fawad Khan, a research analyst at KASB Securities in Karachi, said that a "key challenge for this company is to add reserves to its portfolio," but that "expanding internationally with management that doesn't have experience overseas is a challenge in itself." 

The company operates Pakistan's biggest gas field at Sui in Baluchistan, which accounts for 25 percent of the country's gas production, supplying power stations and fertilizer makers. 

"In our trade, if we don't continue to replenish our resources, we will be out of business," Raza said. "That's why we really need a big find." 
Pakistan Petroleum plans to step up domestic exploration and will expand production to 30 blocks by June, from 27, Raza said, without naming where the new blocks will be located. The company will drill as many as 12 wells a year for the next decade, he said. 

Raza plans to expand drilling in offshore areas, most importantly the Indus river delta, Raza said. A total of 12 offshore wells have so far been drilled in Pakistan from Gwadar in Baluchistan and in the Indus River delta. None have had "any real commercial success," he said. 

"There has been success in exploration in river deltas of Brazil and Nigeria as well as the Gulf of Mexico," he said. "The Indus River delta is among the largest in the world and there are indicators of potential." 
Exploration efforts have been stymied by violence in Baluchistan, of which just 2 percent has been explored. The sparsely populated province makes up 45 percent of Pakistan's land area. 

Until May, Pakistan Petroleum teams were conducting geological surveys in five blocks in Baluchistan. Operations have since been halted because of security worries, Raza said. 

"This certainly sets back our plans, but things should improve in a few months," Raza said. "There is some resistance to investment in Baluchistan and this is a worry, but in the long run this area will yield good results." 

The Baluch tribal chief Nawab Akbar Khan Bugti was killed by Pakistani security forces on Aug. 26. Bugti, 79, led the struggle for political autonomy in Baluchistan and demands for a share of the province's gas and mineral wealth. 

The government blamed Bugti for ordering attacks on natural gas pipelines and oil installations. In 2003, the Pakistani Army deployed 3,000 soldiers in the province to protect gas pipelines running for thousands of miles in the region. 

"If there's one reason exploration in this country has seen a setback it is the Baluchistan factor," said Najam Ali, chief executive of Abamco Limited in Karachi. "A lot could have happened there, but no one can do anything about it." 

The company's stock has gained 16 percent since January, outpacing the benchmark KSE100 index, which has risen 5.6 percent. The government, which owns 78 percent of the company, plans to sell a 51 percent stake this year as part of an asset-sale plan. 

Pakistan Petroleum gas production rose 5 percent to 1 billion cubic feet a day in the year ended June 30. The company's output production is expected to increase at least 5 percent annually for the next few years, faster than the 2.6 percent average annual growth of the last five years, Raza said. 

Pakistan has "healthy" prospects, with only 1.74 wells having been explored for every 1,000 square kilometers of land compared with a global average of 10 wells, Merrill Lynch said in a July 31 report. The success rate of drilling in Pakistan is higher than average, the report said. 
The company's annual sales growth will remain around 30 percent in the next few years, Raza said. Profit growth will slow to about 40 percent as a result of an end to fixed gas prices. In 2002, gas pricing was liberalized by the government. Before that, producers received a fixed return of 30 percent. 

The company posted a 55 percent rise in full-year profit on Aug. 17 aided by higher production and prices. Net income rose to 13.4 billion rupees in the 12 months ended June 30. Revenue rose 36 percent to 31.76 billion rupees. Profit has more than tripled in the last four years. 
Japan eyes Russian crude 

Nippon Oil, Japan's biggest petroleum refiner, would seek increased crude oil supplies from Russia if United Nations sanctions disrupted oil imports from Iran, the company's chairman, Fumiaki Watari, said Tuesday. 

"Russia is a big source of crude oil," Watari told reporters in Tokyo. "We also could increase oil purchases from other countries on a spot basis." 

Nippon Oil said in March that it planned to trim oil imports from Iran by 15 percent this year because of concern that the crisis over the country's nuclear program was increasing the risk of supply disruption. The Tokyo- based company has no supply agreements with Russian oil ventures in the event shipments from Iran stop. 

"Countermeasures such as buying oil from Russia and other producer nations aren't enough to cover any supply losses from Iran," said Hidetoshi Shioda, senior energy analyst at Mizuho Securities in Tokyo. 

Nippon Oil last month said it had purchased oil from the Exxon Mobil-led Sakhalin-1 oil and gas project in Russia for the first time to diversify its supply sources. The company bought the oil in a so-called spot basis for immediate delivery. 

The refiner imports 80 percent of its oil under contracts of at least one year, said Watari, who is also vice president of Japan's most powerful business lobby, Nippon Keidanren. 

Iran, holder of the world's second- largest reserves of oil and gas, has refused to end its uranium-enrichment program, prompting the United States and Europe to seek sanctions by the UN Security Council.

http://www.iht.com/articles/2006/09/05/bloomberg/sxpakoil.php


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## Neo

Tuesday, September 05, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\09\05\story_5-9-2006_pg7_4

ISLAMABAD: The Central Development Working Party (CDWP) is likely to approve funding for the Water and Power Development Authority (WAPDA) to buy land for major water reservoirs, including Kalabagh Dam, at its next meeting, a senior government official told Daily Times on Monday. 

Ã¢â¬ÅThe acquisition of land for dams is on top of the governmentÃ¢â¬â¢s priority list,Ã¢â¬Â said the official. He said that the CDWP of the Planning and Development (P&D) Division was likely to take up proposals for land for Kalabagh Dam, Bhasha Dam and other water projects. Proposals submitted by WAPDA are likely to be considered at the next CDWP meeting, most probably on September 23. 

The official said that the P&D had directed ministries and other autonomous organisations to submit proposals for new development schemes as early as possible. He said that the agenda for the next meeting was being finalised. The official refused to give details of WAPDAÃ¢â¬â¢s actual demand for the purchase of land for Bhasha and Kalabagh dams. He said that WAPDA had asked for Rs 67 billion to buy land for Akhori Dam. WAPDAÃ¢â¬â¢s demand for the other two water reservoirs is likely to be higher. 

Proposals for buying land were previously included in project concept (PC-I) reports and land was acquired after a detailed study of PC-Is, but the policy had been revised, he said, adding that agencies and ministries had now been directed to prepare separate proposals for the acquisition of land. 

The government has decided to prioritise the purchase of land for various projects because of the increasing rates. The official said the government was giving final touches to a new formula, under which hydel profit would be given to federating units, to reach a consensus on controversial projects such as Kalabagh Dam. The formula is being devised to address complaints by NWFP and the Northern Areas, and this initiative is seen as a big step towards consensus on the construction of big dams. 

Royalty for the proposed Bhasha Dam is to be given to the Northern Areas under this formula. The revised mechanism will help NWFP get a considerable share in royalty for the proposed Kalabagh Dam, but according to the formula, the province will not be given royalty for Bhasha Dam. NWFP could also get a share equal to that of Punjab as royalty for Ghazi Barotha power project.


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## Neo

Tuesday, September 05, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\09\05\story_5-9-2006_pg5_1

_* Total exports last year were Rs 68.675b against exports worth Rs 71.2b in 2004-05 

By Sajid Chaudhry_

ISLAMABAD: Pakistan's exports to Afghanistan in previous fiscal stood at Rs 68.675 billion against the exports of Rs71.2 billion in fiscal 2004-05, showing a decrease of Rs 2.252 billion, a government official told the Daily Times on Monday. 

Quoting official data compiled here recently, the official said Pakistan's exports during July-June period of last fiscal year 2005-06 were Rs 68.675 billion. Pakistan during this period exported wheat and flour worth Rs 5.856 billion against exports of Rs 8.260 billion in fiscal year 2004-05, showing a decrease of Rs 2.764 billion. 

The export of rice during 2005-06 fiscal stood at Rs 2.641 billion against the export of rice worth Rs 2.421billion in 2004-05 fiscal, showing an increase of Rs 22 million in the last fiscal. The export of ghee to Afghanistan during fiscal 2005-06 stood at Rs 4.470 billion against the export of Rs 5.519 billion in 2004-05 fiscal year, indicating a decrease of Rs 1.049 billion in 2005-06 fiscal. 

The export of sugar from Pakistan to Afghanistan during in fiscal year 2005-06 amounted to Rs 1.425 billion against the export of Rs 2.687 billion in 2004-05 fiscal, showing a decrease of 1.262 billion in 2005-06 fiscal. The export of cement from Pakistan to Afghanistan in 2005-06 fiscal remained at Rs 4.143 billion against the cement export worth Rs 3.343 billion in fiscal 2004-05, indicating an increase of Rs 790 million in the 2004-05 fiscal. 

The export of paints and varnishes in 2005-06 fiscal stood at Rs 877.903 million against the export of Rs 2.989 billion in 2004-5 fiscal, showing a decrease of Rs 2.11 billion in 2005-06 fiscal. 

Mild steel products' export in 2005-06 fiscal to Afghanistan remained at Rs 2.063 billion against exports worth Rs 4.179 billion in 2004-05 fiscal, indicating a decrease of Rs 2.116 billion in 2005-06 fiscal. Sanitary wares' export during 2005-06 fiscal to Afghanistan amounted to Rs 139.425 million against exports worth Rs 107.196 million in 2004-05 fiscal, showing an increase of Rs 32.22 million in 2005-06 fiscal.

The export of constriction materials during 2005-06 fiscal to Afghanistan was worth Rs 949.808 million against the export worth Rs 838.572 millions in 2004-05 fiscal, showing an increase of Rs 111.236 million in 2005-06 fiscal. 

The export of electrical goods to Afghanistan during 2005-06 fiscal stood at Rs 2.209 billion against the export of Rs 626.663 million in 2004-05 fiscal, indicating an increase of Rs 1.582 billion in 2005-06 fiscal. 

The export of electronic goods to Afghanistan during 2005-06 fiscal remained at Rs 18.088 million against the export of Rs 186.234 million in 2004-05 fiscal, indicating a decrease of Rs 168.146 million in 2005-06 fiscal. 

Export of medicines to Afghanistan during 2005-06 fiscal amounted to Rs 653.960 million against the exports of Rs 525.572 million in 2004-05 fiscal, indicating an increase of Rs 128.388 million in 2005-06 fiscal year.

The export of other grains and pulses to Afghanistan during 2005-06 fiscal stood at Rs 882.503 million against export of Rs 256.612 million in 2004-05 fiscal, indicating an increase of Rs 625.891 million in 2005-06 fiscal. 

The export of fruits and vegetables to Afghanistan during 2005-06 fiscal was Rs 1.665 billion against the export of Rs 1.514 billion in 2004-0-5 fiscal, indicating an increase of Rs 151 million in 2005-06 fiscal. 

The export of milk and cereals to Afghanistan during 2005-06 fiscal stood at Rs 1.095 billion against such export of Rs 922.382 million in 2004-05 fiscal, indicating an increase of Rs 172.618 million in 2005-06 fiscal. 

The export of miscellaneous goods to Afghanistan during2005-06 fiscal stood Rs 39.582 billion against such export of Rs 35.896 billion in 2004-05 fiscal, indicating an increase of Rs 3.686 billion in 2005-06 fiscal. 

Pakistan imported from Afghanistan goods worth Rs 2.919 billion in 2005-06 fiscal year against the import worth Rs 3.488 billion in 2004-05 fiscal, indicating a decrease Rs 569 million in 2005-06 fiscal. Pakistan imported vegetables, fresh fruits, dry fruits, seeds, country drugs, spices, timber, scrap and miscellaneous goods.


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## Neo

_Awareness of quality, environment care a must_

LAHORE: Australian High Commissioner in Pakistan Zorica McCarthy has said that the awareness of quality, environment care and safety during production and service delivery are allied to stringent liability legislation and regulations and it is a happy sign that situation in Pakistan is now taking a positive turn in this regard.

She expressed these views while speaking at ISO certification ceremony, arranged by QMS Certification Services, an Australian International Certification body, to award ISO 9000/14000 certificates to various firms.

Quality certificates were awarded to Manzoor Textile Mills, Roberts Rice, Muridkey; Kashif Rice; Alipur Chatha and Prime Engineering Lahore.

Speaking on the occasion, the Australian High Commissioner said that awareness of quality creates a need for independent evaluation and approval of production processes and it is a satisfying factor that the desired awareness is increasing with every passing day.

The diplomat pledged to extend maximum cooperation to Pakistani companies so that they could be able to get due place at global market. She appreciated commitment of Pakistani industrialists to implement management system in true letter and spirit.

Provincial Minister for Environment Makhdoom Ishfaq highlighted the measures taken for environment-friendly business atmosphere. He said that establishment of industrial estates in Punjab is a step in this direction.

Speaking on the occasion, LCCI President Mian Shafqat Ali said that the textile industry is the backbone of PakistanÃ¢â¬â¢s economy. It accounts for 27 per cent value addition in the manufacturing sector. It employs 38 per cent of the industrial workers and contributes 60 per cent to the foreign exchange earnings of the country.

He said that the progressive liberalisation of world trade has created opportunities and challenges for Pakistan. Although Pakistan has the capability of acquiring comparative advantage over many countries in many products access to such capabilities is sometimes hindered by failure to meet the quality standards and environmental safeguards demanded by the buyers.

He said that it is a good omen that there is a greater realisation emerging in PakistanÃ¢â¬â¢s textile sector as it has not only to become competitive to export more but has to provide environmental safeguards also under compliance of ISO 9000-14000.

LCCI Senior Vice President Abdul Basit said that the Lahore Chamber would continue to play its role for creating awareness among Pakistani companies to get international certification.


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## Neo

ISLAMABAD, September 5 (RIA Novosti) - Russia is seeking to expand its economic presence in Pakistan, the head of a delegation that has arrived in the Asian country said Tuesday. 

The Soviet Union maintained close ties with Pakistan and now Russia is moving to restore its influence in the region, including by re-establishing ties with its former partner. 

Yelena Danilova, who is in charge of foreign ties with the Economic Development and Trade Ministry, said cooperation between the two countries was far from intensive despite a recent rise in trade. 

"In 2002, trade between Russia and Pakistan was only about $100 million but in 2005 the figure rose to $278 million," she said, adding that Russian exports had doubled in the past year, according Pakistani sources. 

The head of the Russian delegation, who will be in Pakistan until September 7, also said that her country was ready to join a multi-billion-dollar project to build a gas pipeline to transport Iran's natural gas to India and Pakistan. 

Pakistan has invited Russia to join the 2,500-kilometer (1,555 mile) pipeline project, and Russian natural gas giant Gazprom showed interest in the offer when the company's chief executive, Alexei Miller, met with Pakistani President Pervez Musharraf last October. The project is set to get under way in mid-2007. 

Danilova also said Russia was interested in building thermo-power and hydropower plants in Pakistan, which has a population of about 148 million. 

"In this sector, we have presence in countries neighboring Pakistan, and now intend to enter this market too," Danilova said. 

The delegation head said the governments of the two countries had agreed to set up a commission for trade and economic cooperation in 2000. 

"But the commission has not been formed, and therefore the visit of our delegation is virtually the first event in the past six years designed to consider bilateral economic potential comprehensively," she said. 

Danilova said her delegation, including officials from the Foreign and Economic Development and Trade ministries, had already met with Pakistani diplomats, and would also talk to representatives of other top ministries and leading companies in the country. 

The Russian official added that Pakistan was ready to cooperate in telecommunications, in particular, using Russian spacecraft for communication purposes, geological surveying and to provide early warning of natural disasters. About 80,000 people died in an earthquake that hit Pakistan last year. 

Danilova also said Russia was interested in exporting agricultural equipment to Pakistan. "We had contacts in this area in Soviet times, and now we are set to revive them," she said, adding that Pakistan also needed Russian railroad cars, fertilizers and automobiles. 

"A joint venture has been opened to assemble [Russia's] Kamaz trucks in Pakistan," she said. "A total of 200 trucks have already been made, and it is only the beginning." 
She also said her delegation planned to discuss the legal aspect of further relations, including guarantees for Russian investors. 
Pakistan has also proposed signing an agreement on a free trade zone but Danilova said that Russia was considering the idea.

http://en.rian.ru/russia/20060905/53538286.html


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## Neo

KARACHI, Sept 4: Pakistan Industrial Credit and Investment Corporation (PICIC) is preparing for a complete sell-out and ABN Amro has shown interest in the group, banking sources told Dawn on Monday.

The current wave of foreign investments in the financial sector of Pakistan could take a new turn if the PICIC like institutions are sold to an international bank.

Ã¢â¬ÅWe have information that ABN Amro has shown interest and initiated a dialogue with the PICIC officials,Ã¢â¬Â said a highly-placed banking source.

However, no official confirmation was available from both the entities involved in the initial talks for a possible deal.

Sources said that the PICIC as a development finance institute (***), PICIC bank and PICIC insurance company would be merged into one unit and then the whole group would be sold out.

Last month, the Standard Chartered Bank officially announced to buy Union Bank, which made it the largest foreign bank in the subcontinent. Financial experts said it was a vital deal for the banking industry in Pakistan, which also attracted more foreign banks to strengthen their roots in this sector.

The Standard Chartered Bank had acquired controlling stakes with 80.86 per cent interest in Union Bank with an investment of $413 million, which was the biggest-ever investment by a foreign bank in the financial sector.

The banking industry has been earning record profits for two and a half years and its share in GDP has unexpectedly gone up.

Ã¢â¬ÅThe growth in the financial sector has changed the banking industry scenario and the foreign banks consider it the right time to invest for attractive results,Ã¢â¬Â said a highly-placed government official.

Banking sources said that a number of banks from the western world were taking interest to sound ideas for investing in the financial sector of Pakistan.

The PICIC earned a profit (after tax) of Rs845 million in the first half of the current year 2006, which was higher than the corresponding period of last year when it earned Rs633 million.

However, the PICIC Commercial Bank posted a loss of 12 per cent during the same period. It earned an after-tax profit of Rs650 million compared to Rs733 million during the corresponding period of last year.

The bank is going to add 14 more branches during 2006, which will extend its network to 129 branches. Currently, it has 115 branches all over the country.

Ã¢â¬ÅIf the deal is finalised, the investment could be bigger than the Standard Chartered Bank as the PICIC, as a group, is much larger than the Union Bank,Ã¢â¬Â said a financial analyst.

ABN Amro was established in 1948 and was the first foreign bank to be granted a license by the Pakistan government. With total assets of over Rs66.5 billion, equity of Rs4.5 billion, and deposits of almost Rs52 billion, ABN Amro is placed well and positioned as one of the larger foreign banks in Pakistan.

The bank posted pre-tax profits of nearly Rs2.2 billion (December 31, 2005). Over the last four years, ABN Amro has significantly enhanced its profile in Pakistan, and is comfortably ranked amongst the top three foreign banks in the domestic market.

It has a network of nine online branches located in all the major cities.

---ABN Amro International is a prominent banking group--ranked eighth in Europe and seventeenth in the world on tier-1 capital-- with over 3,500 branches, a staff of 111,000 and total assets of 597.7 billion euro.


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## Neo

KARACHI, Sept 4: Pakistan will emerge as the first country on the world map of ports to have a deep-water container terminal with a draft of 18 metre. It will be capable of receiving and handling super post-Panamax container vessels with a loading capacity of over 14,000 boxes.

The container terminal with an estimated cost of $1.2 billion is being built at east of Keamari Groyne and is going to be operational within next three years wherein four berths out of total ten berths will be completed under phase-1.

The futuristic container port will not only bring in economic benefit to the country in the form of lower freight charges but will also entirely change the complex of shipping trade in the region.

In order to meet the economies of scale major shipping lines would prefer to avail the ultra-modern facility and use it as a hub for transhipment purposes.Above all, the rapidly growing economies of Asia and ever-increasing volume of containerised cargo of the region prove a boon for shipping companies and port operators, who are equally faced with rising costs of operation.

Even today shipping lines are confronted with rising cost and on an average a ship having loading capacity between 2,000 to 8,000 Teus incur a fix and permanent cost of around $50,000 per day.

Shipping companies are frequently changing their vessels to bigger-size vessels, which could accommodate large volumes of containers for haulage and also ensure freight competitiveness.

Presently large size vessels operating in the world have the capacity to carry around 5,000 to 8,000 Teus but only two months back a first super post-Panamax vessel with a loading capacity of over 9,000 boxes made a maiden voyage to a European port.

However, the deepest draft of any port in the world is not more than 17 metre.

By taking lead in providing deep-water container terminal facility the country would also manage to attract cargoes of other countries, besides, helping its own trade by reducing cost and transit time. Presently most of the cargo destined for Pakistan first goes to other regional ports and then carried by feeder vessels to Karachi.

However, after the establishment of the new container terminal the entire process will be reversed as mother-ships (super post-Panamax vessels) will not only discharge country&#8217;s cargo directly but will also bring in transit cargo meant for other ports of the region.

According to ports and shipping experts the deeper-draft container terminal will greatly influence the shipping activity in the region and countries like China and India could also benefit from this facility. India&#8217;s north-western provinces could get a big margin in freight as compared to Mumbai Port, which is further to the south of Karachi. Similarly, Chinese provinces to south-west could also cut their cost as this terminal can reduce their distance by 500-km.

The experts said that only those ports would remain in the limelight, which keep pace with the changing environment and technology and there are many instances where some leading world ports diminished with the time and were reduced to regional ports. If the Karachi Port is to keep itself abreast of the changes it will have to upgrade its facilities and improve efficiency, they added.

The Karachi Port Trust (KPT) chairman Vice Admiral Ahmad Hayat told Dawn that already many lines had shown interest in starting their operation in Pakistan in anticipation of upcoming deep-water container terminal. He said that the KPT would take full care to ensure that the container port start its operations under first phase on June, 2009, and the progress of the project will be monitored on hourly basis.

He said under phase-I the cost would come to around $530 to $550 million and out of this the KPT will be spending around $350 million with $200 million coming through investment from the private sector.

He further said that the 1,500 metre long four-berth terminal quay wall, designed at 18 metre depth, together with separate navigable approach channel, 700 metre wide harbour basin, navigational aids and the protection works will be constructed by the KPT at Keamari Groyne.

However, he said the private sector will be asked to build and equip the 65-hectare backup area as a high throughput terminal, including container yards, storage and transfer areas, operational buildings, STS cranes, RTGs and all supporting equipment and facilities to handle a minimum of 1.5 million Teus per annum in phase-II.

The KPT chairman said that the terminal will be connected with the cargo village being developed on an area of 13.3 acres. This will provide all sorts of facilities including container freight station (CFS), warehousing complex, container storage complex, bonded warehouses, dangerous goods storage and disposal facility, marketing and commercial zone, cold storage and food processing plants etc.

Responding to a question Ahmad Hayat said that the second phase of the container terminal will be completed by 2010-12 and this will enable the terminal to handle up to 1.5 million boxes per annum.


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## Neo

KARACHI, Sept 4: The cement industry managed to export a total of 0.24 million tons, which represented the highest-ever export of cement in a single month.

Figures released by the All Pakistan Cement ManufacturersÃ¢â¬â¢ Association on Monday showed growth of 26.2 per cent in exports during August over the July exports of 0.19 million tons.

A.R. Thaplawala, executive director of Lucky Cement Company, claimed that his company had a share of 41 per cent in the exports, which stood at 97,210 tons. Ã¢â¬ÅWe are exporting mainly to the Middle East and Afghanistan,Ã¢â¬Â Mr Thaplawala said.

Overall cement sales (local plus exports) increased by 26 per cent to 1.80 million tons for August, from 1.43 million tons in July. Local sales rose by 6.5 per cent to 1.51 million tons in August from 1.44 million tons in the earlier month.

Sales growth was despite the slowdown in construction activity due to heavy monsoon rains. In comparison to the same month last year (Aug 2005), sales represented an increase of 19.3 per cent in Aug 2006.

Sector analysts calculated that the sales of concrete during the first two months of the current fiscal year (July-Aug) had posted a growth of 18.8 per cent to 3.49 million tons as compared to 2.94 million tons in the comparable two months of last year.

Sales in the local markets stood at 3.06 million tons for July-Aug 2006, representing an increase of 15 per cent, whereas exports at 0.42 million tons depicted a growth of 48.1 per cent for two months vis-ÃÂ -vis same time last year.


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## Owais

*$30.822 million Afghan goods transported to India in 2005-06* 


ISLAMABAD (September 05 2006): Goods from Afghanistan worth $30.822 million were transported to India through Pakistan during 2005-06. The total value of goods, which Pakistan imported from Afghanistan, was nearly Rs 3 billion during the tear, whereas the value of goods transported to Afghanistan through NWFP and Balochistan under Afghan Transit Trade (ATT) was Rs 21 billion.

According to month-wise break-up, the value of Afghan goods which reached India via Pakistan was $0.962 million in June 2006; $1.590 million in May; $2.014 million in April; $2.339 million in March; $3.011 million in February; $2.438 million in January 2006; $4.640 million in December 2005; $2.766 million in November; $4.537 million in October; $3.520 million in September; $1.848 million in August; and $1.158 million in July 2005.

The data further shows that major imports from Afghanistan included vegetables, fresh fruit, dry fruit, seeds, spices, timber, scrap and other items.

Out of Rs 3 billion imports from Afghanistan, goods worth around Rs 1.19 billion were imported via Torkham, and about Rs 1.8 billion via Chaman in 2005-06.

Month-wise data shows that Rs 188.310 million worth imports were made from Afghanistan in June 2006; Rs 158.781 million in May; Rs 150.091 million in April; Rs 144.202 million in March; Rs 182.756 million in February; Rs 158.187 million in January 2006; Rs 263.922 million in December 2005; Rs 296.972 million in November; Rs 461.996 million in October; Rs 390.112 million in September; Rs 290.370 million in August; and Rs 233.766 million in July 2005.

The value of goods transported to Afghanistan under Afghan Transit Trade (ATT) via Torkham was Rs 13.1 billion and via Chaman Rs 7.9 billion in 2005-2006.

Monthly data shows that the value of goods in transit to Afghanistan was Rs 2405.655 million in June 2006; Rs 2207.516 million in May; Rs 687.376 million in April; Rs 2186.538 million in March; Rs 1963.682 million in February; Rs 897.008 million in January 2006; Rs 2060.133 million in December 2005; Rs 1761.214 million in November; Rs 1708.645 million in October; Rs 1910.663 million in September; Rs 1801.257 million in August and Rs 1310.746 million in July 2005.


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## Owais

*ICCI demands price control in Ramazan* 


ISLAMABAD (September 05 2006): Islamabad Chamber of Commerce and Industry (ICCI) on Monday demanded of the government to ensure availability of essential daily use consumer items at reasonable prices during Ramazan. In a statement issued here on Monday, Abdul Rauf, ICCI president urged the government to make sure the availability of daily consumption products.

He further said that due to the high consumption of pulses, rice, onion, tomato, potato, dates, vegetables and spices, their prices increase during Ramazan. There is no shopkeepers body leverage to regulate the prices he said and added the district administration is responsible to keep proper check of prices.

He recalled that the government provides relief to the consumers through utility stores in every Ramazan but it is matter of concern that only one percent consumers have access to these relief centres which neutralises the positive impact of this package.


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## Owais

*Turning a liability into an asset* 


EDITORIAL (September 05 2006): Presiding over a meeting of the National Commission for Human Development in Islamabad last Thursday, President General Pervez Musharraf vowed to achieve 85 percent literacy by 2012. The federal as well as provincial governments, he said, were fully committed to the plan and all necessary financial allocations would be made available to achieve the target.

This might evoke some skepticism since successive governments in the decade of the '90s had made similar, in fact, even taller promises. In a particularly improbable claim, one education minister, Syed Fakhar Imam, had declared that 100 percent literacy would be attained by 2000. For a while General Musharraf has also been showing a lot of interest in improving literacy rates, yet not much progress is in evidence.

The official figure of 46 percent literacy has not moved up at all during the last three years. It is generally believed that this figure too is hugely inflated since it is not based on universally accepted standard as set by UNESCO.

Nearly half of this number includes people who can barely write their names. In fact, not long ago, General Musharraf himself had lamented that whatever the official literacy figures might say, the real literacy was around 15 percent. That figure may have improved somewhat during the last few years, but not to a significant level.

Unfortunately, education has never received the priority it should have had in governmental planning. The combined budgetary allocations of education and healthcare sectors have, over the years, been a minuscule 2 percent, whereas UNESCO recommends a minimum of four percent of the GDP for education alone. However, the situation, it seems, is about to change now.

General Musharraf averred that the federal as well as provincial governments are fully committed to make the necessary financial allocations. That may not mean the government is ready to make major sectoral shifts in money spending, but that it would be helped by outsiders to promote education and channelise the energies of this country's children and youth in productive endeavours.

Notably, President Musharraf did not make an empty sounding claim of attaining 100 percent literacy in the next six years, but set the target at 85 percent. Even the 85 percent mark, though not completely unrealistic, seems difficult to achieve unless, as we have been repeatedly saying, the government grapples with it on a war footing.

Provincial as well as district governments must place basic education on the top of their respective priority lists. Provision of basic education to all may act as a stimulant for many to go on to pursue the quest of knowledge at higher levels as well, and realise the full potential of their talents. Mass education would widen the talent pool that this country badly needs to fight ignorance and backwardness.

Our economic policy makers never let an opportunity go by to point to the country's vast population to argue that it constantly annuls a large part of their developmental successes.

What is seen as a liability can be turned into a valuable asset through a sound strategy for human resource development. The two obvious start areas are literacy and skills training. It is not enough to have just a literate workforce devoid of technical skills since the modern economy is becoming more and more knowledge-based. Education and skills training must cater for the market place so that it contributes to an increase both in the quantum and level of economic activity. The thrust of government policy must be to popularise education at all levels of formal learning.


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## Owais

*Boosting the handmade carpet industry* 


(September 04 2006): Addressing the inaugural ceremony of Regional Handmade Carpet Exhibition-2006, in Lahore, on August 28, Minister of State for Commerce Hamid Yar Hiraj gave an assurance to the Pakistan Carpet Manufacturers and Exporters Association that the government would take steps for facilitating the exporters, while also formally announcing setting up of a Carpet City in Lahore.

At the same time, the Chairman of Export Promotion Bureau of Pakistan, Tariq Ikram, urged the carpet exporters to explore new markets to enhance their share in the international trade. Speaking on the occasion, Indian delegate O.P. Garg, lauded the effort for organising carpet exhibition and making it a successful show.

Saying that such exhibitions also provide an opportunity to buyers to view the quality, standard and design of the products under the same roof, he also announced holding of a handmade carpets exhibition, in Delhi, in October, and invited Pakistani exporters to participate in it and to exhibit their products in India. On his part, the PCMEA's chairman of the organising committee of the exhibition, Major Akhtar Nazir Khan (Retd), said that Chobi design of Pakistani carpet was gaining popularity world-wide and that foreign buyers had also shown their interest in it.

He further said that the exhibition received an encouraging response from national and international buyers, expressing optimism that the exhibition would yield 20-30 percent additional foreign exchange earnings, while noting that the carpet industry provides direct and indirect jobs to over 1.5 million people in the country.

At the same time, he urged the government to provide necessary facilities to the carpet industry in order to help it maintain its share in the international market.

Earlier, addressing a press conference, on the eve of the Regional Handmade Carpet Exhibition-2006, which ended in Lahore, on August 31, he had made the heartening revelation to the effect that representatives of the carpet industry from Pakistan, India, and China had signed a Memorandum of Articles, for development and promotion of handmade carpet exports, through the World Handmade Carpet Organisation that was set up, last year, in China. More to this, he disclosed that all its member countries have already agreed to revitalise this forum, understandably, with a view to developing products compatible with the demand potential in the importing countries.

Coming in the midst of stiffening competition with machine-made varieties, Iran's keen interest in joining it, should be seen as further brightening the prospects of its role in so boosting the handmade carpet industry as to meet the challenges of globalisation too.

For, although mass production of machine-made carpets has, evidently, outstripped the demand for handmade varieties, it is the preservation of the exquisite craftsmanship of the latter down the centuries past that has continued to give it an edge over the former. Pakistan, India and China apart, excellence in handmade carpets belongs to a much wider region, which was referred to as the Orient. For to it also belong a number of countries in Central Asia, extending to Afghanistan.

As such, it is not for nothing that brightly coloured and patterned carpets, traditionally made by hand from high-quality wool in the Mid-East and Far East, have been identified as Asian carpets. Now that renewed efforts are being made to bolster the industry with involvement of WHCO, it should be a matter of pride for Pakistan.

For under the stipulated arrangements, Pakistan has been tipped as the founder chairman of WHCO, while general secretary would be taken from China. Notably, the organisation's head office has been planned to be located in India. As many as five members from each country would represent WHCO. That Pakistan's vital role in preservation and promotion of excellence of the handmade carpets has been acknowledged by the other members of the fraternity should leave little to doubt from the tremendous response to the carpet exhibition.


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## Owais

*Indus Motor earns record profit* 

KARACHI (September 05 2006): Indus Motor Company has achieved impressive results for the year ending June 2006 with record production, sales and profit after tax. This was announced at the annual meeting of Indus Company's Board of Directors, held here to review the company's financial and operating performance for the financial year ending June 30, 2006.

The production of Toyota and Daihatsu brands combined were 42,000 units, an increase of 20 percent over 35,000 units, while the sales revenue increased to Rs 35.2 billion up 28 percent over Rs 27.6 billion achieved last year. The after tax profit was Rs 2.6 billion (Rs 1.4 billion in 2005), primarily due to increase in sales volume and favourable exchange rates.

The board of directors expressed satisfaction with the company's performance and recommended a final dividend at the rate of 70 percent or Rs 7 for the year ending June 2005, which together with the interim dividend of 50 percent or Rs 5.00 already paid will result in a total dividend for 2005-2006 of 120 percent.

Overall, the countrywide market for locally manufactured passenger cars and light commercial vehicles for twelve months ended June 30, 2006 grew an impressive 22 percent to 187,000 units compared to 153,00 units for the same period 2005. The total production of CKD units for the period was approximately 193,000 units up 27 percent over twelve months ended June 2005.

All major auto makers enhanced production of CKD units to meet customer demand. The government decision to liberalise imports of new and used vehicles through reduction in custom duty caused CBU imports to rise by 640 percent to over 46,000 units, creating pressure on the sale of locally produced models.-PR


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## Owais

*UAE group offers modern housing scheme near Port Qasim* 

ISLAMABAD: A major trading group of United Arab Emirates (UAE) has offered investment worth billions of dollars in modern housing scheme envisaged on the two islands near Port Qasim.

Emar Group has expressed its interest in investing in modern housing projects on Bandal and Bado islands near Port Qasim and authorities were engaged in talks with the Emar Group in this regard, reports said.

The Group has offered investing billions on these islands in the next 15 years, following 12000 acres of land given to them on lease for construction of a modern housing scheme equipped with power plant, golf course and other state of the art facilities.


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## Owais

*Economic growth to sustain its fast pace* 

ISLAMABAD: The foreign and local investment in Pakistan is on he rise and its economic progress is expected to sustain its rapid pace during the current fiscal year.

The officials of International Monetary Fund (IMF) said this after the meeting with Pakistani officials here.

According to IMF, the foreign investors have growing interest in Pakistan.

Advisor to finance ministry, Dr. Ashfaq Hasan told Geo News that IMF is satisfied with Pakistan&#8217;s economic growth and economic measures taken up by the government.

IMF officials had been apprised of all related details.

During the last fiscal year, the economic growth was at 6.6 per cent; whereas, the government, in current fiscal year, is trying to achieve the goal of 7 per cent economic growth, Ashfaq Hasan said adding that inflation rate is being attempted at lowering from 7.6 per cent to 6.5 per cent.


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## Neo

Mod note:

Owais,

Please try not to post the whole 'business section' of news papers here. 
Instead, be selective and provide only news articles with significant information.

Thanks!

Neo


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## Owais

Neo said:


> Mod note:
> 
> Owais,
> 
> Please try not to post the whole 'business section' of news papers here.
> Instead, be selective and provide only news articles with significant information.
> 
> Thanks!
> 
> Neo


I didn't post that whole section. I m slective in posting and already reduced per day posting . I only posts those news which I think are related to macroeconomics. if you want me to reduce more, ok I will.....


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## Owais

*ADB to give $700 million aid* 

ISLAMABAD (September 06 2006): The Asian Development Bank (ADB) would provide financial assistance of $700 million for projects in energy, transport and micro-credit sectors. This was stated by Juan Miranda, director-general of Central and West Asia department, ADB, who called on Dr Salman Shah, adviser to prime minister on finance, revenue, economic affairs and statistics here on Tuesday.

The director-general said about $400 million would be available for energy and transport and $300 million for micro-credit. The visiting ADB delegation briefed the adviser about its programme of private-public participation in infrastructure and utility sector development.

Salman Shah appreciated the ADB assistance for Pakistan's development. He hoped the National Highways Authority would be able to self-finance its projects. He said an autonomous company would soon be set up to process and finance projects in the field of urban services, energy, highways and other infrastructure with private sector participation.

He assured the delegation that no undue delays would be allowed in undertaking these projects. He thanked the delegation for the co-operation which, he hoped, would be beneficial to the country. Senior officials of the ADB and of finance ministry attended the meeting.


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## Neo

ISLAMABAD (September 06 2006): The Asian Development Bank (ADB) would provide financial assistance of $700 million for projects in energy, transport and micro-credit sectors. This was stated by Juan Miranda, director-general of Central and West Asia department, ADB, who called on Dr Salman Shah, adviser to prime minister on finance, revenue, economic affairs and statistics here on Tuesday.

The director-general said about $400 million would be available for energy and transport and $300 million for micro-credit. The visiting ADB delegation briefed the adviser about its programme of private-public participation in infrastructure and utility sector development.

Salman Shah appreciated the ADB assistance for Pakistan's development. He hoped the National Highways Authority would be able to self-finance its projects. He said an autonomous company would soon be set up to process and finance projects in the field of urban services, energy, highways and other infrastructure with private sector participation.

He assured the delegation that no undue delays would be allowed in undertaking these projects. He thanked the delegation for the co-operation which, he hoped, would be beneficial to the country. Senior officials of the ADB and of finance ministry attended the meeting.


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## Neo

LAHORE (September 06 2006): Japanese Ambassador to Pakistan Seiji Kojima has said that the Japanese companies have invested over $100 million in Pakistan in the last three years.

He expressed these views while addressing a seminar on 'Global Challenges for Corporate Sector' organised by Lahore Chamber of Commerce here on Tuesday. Punjab Secretary Commerce and Investment, Saeed Ahmad Alvi and LCCI President Mian Shafqat Ali were also present on the occasion.

The Ambassador hoped that the volume of the Japanese investment in Pakistan, particularly in the automobile sector, would increase further in the near future. He also hoped that with the expanding demand for automobiles in this part of the world, the Japanese vendors and suppliers would also invest here. This would certainly improve the production quality of the local vendor industries that are still dependent upon the old production techniques," he added.

According to him, Pakistan's automobile sector has a great potential for growth. High quality standards would help the Pakistani automobile sector to enter the international market besides meeting the domestic demand. In order to survive in a globalise environment, both Japan and Pakistan need to join hands in order to further promote their bilateral economic relations.

He said that the volume of Japan's exports to Pakistan had increased from $500 million in the year 2001 to $1.5 billion in 2005. However, the volume of Pakistan's exports to Japan has decreased from $600 million in 1995 to only $143 million in 2005, he pointed. Enumerating the ways to rectify this situation, Kojima suggested that the corporate sector must strive towards improving its competitiveness and increase its economic value addition to move up the technological ladder and become more innovative. "Japan International Co-operation Agency (Jica), Japan External Trade Organisation (Jetro), AOTS and other Japanese organisations could assist the Pakistani small and medium enterprises in the human resource development and technology transfer. In this connection, Jica has contributed in imparting technical skills on the plastic mould to Pakistan Industrial Technical Assistance Centre (Pitac) Lahore," he added.

The Ambassador further said that Japan had been the top bilateral donor to Pakistan throughout the previous decade and had contributed $5.16 billion till December 2004. He said that the major projects executed with the Japanese assistance include, Kohat Tunnel Project, Up gradation and Rehabilitation of the Indus Highway, Ghazi Barocha Hydropower Project and The Mother and Child Health Care Centre at PIMS, Islamabad.

He was of view that there should be a close coordination between the public and private sectors of Pakistan so that resources of the two sectors would be better used in the prioritised areas.

On Safta, the Japanese envoy hoped that Pakistan would benefit from regional trade in the longer run due to the improved competitiveness and access to the large market of South Asia. "As a newly admitted observer of SAARC, Japan could assist SAARC countries," he added. The Punjab Commerce and Investment Secretary highlighted the steps being taken by the provincial government to attract foreign direct investment.

Earlier, in his address, LCCI President Mian Shafqat Ali said that Japan had contributed significantly in the development of Pakistan in the shape of Japanese investment, joint ventures, transfer of technology and education and training. "The spin off and spill over effects of Japanese operations in Pakistan would provide a lot of opportunities of learning.


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## Neo

ISLAMABAD (September 06 2006): Balochistan has large reservoirs of marble and other minerals and the marble city built in Gadani would not only boost industrial but also create employment opportunities in the area.

Marble city was the need of the hour and PC one of this project was approved last year in April. Pace of work is very fast and almost three units have started production, PTV reported. Up-till now, there was only trading of marble, but the government made effort that not only it is processed properly but also could get good price in international market.

Everyone knows that there is variety of marble in Balochistan, which is not found any part of the world. So, to get maximum benefit from it, the government is providing every basic facility like water, electricity and road infrastructure.

Almost 56 units had started production and among them five were set up by overseas Pakistanis, and most of the machinery used there would be imported from China, Turkey and Italy. Some units in marble city are preparing tiles and other are preparing every day used items and decoration pieces as these things have great demand in the international market.

In these plants every necessary machinery is available for cutting of marble, making things from them and also to polish them. Most of the industrialists working there belong to Balochistan and they are working with devotion to participate in the development of the country. Under vision 2016,in marble city the number of industrial units would be increased up to 5000.


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## Neo

Wednesday, September 06, 2006 http://www.dailytimes.com.pk/print.asp?page=2006\09\06\story_6-9-2006_pg5_1

ISLAMABAD: The damage to standing cotton crop by the heavy monsoon rains and floods could deprive the country of the targeted GDP growth in the current fiscal year, an official said on Tuesday. 

"Like the last fiscal, the agriculture sector is likely to continue its dismal performance in the current fiscal and it will miss the target of 4.5 percent growth," the official. This will affect the overall GDP growth, projected at seven percent growth rate for the current fiscal. 

The recent rains and floods have benefited the rice and sugarcane crops, but cotton is the real base of the economy and the country's major foreign exchange earner. Cotton crop on around 365,000 acres, mainly in Punjab, has been damaged due to floods. In the last fiscal, the floods destroyed around 260,000 acres of cotton crop, and this factor had largely contributed to the dismal performance of the agriculture sector. 

According to the government's estimates, agriculture has been estimated to grow at 4.5 percent in the current fiscal against the last fiscal's growth of 2.5 percent. In the Annual Plan 2006-07, the government admitted that GDP growth in0 fiscal 2005-06 stood at 6.6 percent, which is below the target of 7.3 percent due to a shortfall experienced mainly in the production of major crops and large-scale manufacturing. 

The major crops have been estimated to grow at 4.3 percent in the current fiscal year against the negative growth of 3.6 percent in the last fiscal. The official said that due to damage to the cotton crop, there is little chance that the overall target in the agriculture sector can be achieved. In 2004-05 the robust GDP growth of 8.4 percent was largely attributed to overall growth of 17.8 percent in major crops. This factor is not likely to be the same in the current fiscal, the official said. 

The cotton crop size has been targeted at 13.8 million bales this fiscal compared with last year's achieved production of 13 million bales. In the 2004-05 fiscal the achieved cotton production was 14.6 million bales. 

The official added the recent continuous rains and floods and its negative impact on the major agriculture crops would be assessed in depth at the upcoming meeting of the Federal Committee on Agriculture, which is to meet the next month. The meeting will be presided over by Federal Agriculture Minister Sikandar Hayat Khan Bosan and will be attended by officials from all the four provinces. They will submit their reports on damage to crops and also suggest a compensation package for the severely-hit areas, the official said. 

Rains and floods have hit the total cotton crop on 0.2 million acres in total cultivated 6.6 million acres in Punjab, 150,000 acres in 1.5 million acres cultivated land in Sindh and 15,000 acres out of 100,000 acres of cotton crop cultivated in Balochistan and the NWFP. The recent rains and floods have badly hit Mirpurkhas and Sanghar districts in Sindh where the wet spell continued for 20 days without a break. 

The large-scale manufacturing also is not expected to perform well in the current fiscal as energy supply and other factors responsible for rapid growth are not in keeping with the demands of the industrial sector, especially in the country's industrial and commercial hub Karachi. This will leave the government with the option of depending on the services sector, which helped the government manage the GDP growth of 6.6 percent in the last fiscal.


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## Neo

KARACHI: National Bank of Pakistan (NBP) has set 12 per cent mark-up rate for the first year for its PresidentÃ¢â¬â¢s Rozgar Scheme (PRS), which was formally launched by President General Pervez Musharraf on Tuesday.

It was stated in a press note of the NBP, issued here. It said, under the PRS, five types of financing facilities will be available from September 6, throughout Pakistan and duly filled-in form will be taken back from September 13.

The applicant must be minimum matriculate with an age limit of 18-40 years.

The eligible borrowers will be required to make down payment of 15 per cent and it will include first yearÃ¢â¬â¢s asset insurance premium. The cost of life and disability insurance will be borne by Government of Pakistan.

After first year, the mark-up rate will be Karachi Inter-bank Offered Rate plus 2 per cent.

Fifty per cent of this mark-up will be paid by the borrower, which means 6 per cent mark-up will be paid by borrower and remaining 6 per cent will be borne by government. The first 10 per cent loan losses, under the scheme, will be taken up by govt.

Females will not be allowed financing facility for the establishment of PCO and Tele-Centre.

The first product, NBP Karobar Utility Store, under Utility Store Corporation franchise for setting up small-scale retail outlet or mobile utility store. USC will give its franchise. The average financing facility will be Rs1,00,000 for 5 years with grace period of 3 months.

The borrower will purchase the stocks. The financing facility can be used for purchase of furniture and fixtures, payment of security deposit, advance rent under franchise from USC.

The facility can also be used to purchase 2-3 wheeler, 4 stroke petrol or CNG, LPG vehicle, auto scooter, motor cycle rickshaw with attached loader body to carry USC goods for retail sale.

Under second product named as NBP Karobar Mobile USC, the limit of financing facility will be Rs1,00,000.

The third product named as NBP Karobar Transport is designed to finance 2-3 wheeler, 4 stroke petrol, CNG, LPG vehicle, auto scooter, motor cycle rickshaw. The average size of loan will be Rs1,00,000 for 5 years with grace period of 3 months.

Under NBP Karobar PCO the financing facility will be limited to Rs5,000 for a maximum period of 2 years with a grace period of 3 months. The last product named as NBP Karobar Tele-Centre will be for the setting up Tele-Centre.

The maximum facility will be Rs50,000 for a maximum period of 2 years with grace period of 3 months.


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## Neo

LAHORE: CEO Engineering Development Board Imtiaz Rastgar has said establishment of Pakistan Iron and Steel Institute will go a long way in meeting the demand of the industry and will especially ease the dearth of skilled manpower.

He was addressing a meeting of founder members of the Iron and Steel Institute here on Tuesday.

Imtiaz Rastgar, who is also chairman of the institute, underlined the importance of steel sector in the development of the country, adding the industry was facing severe shortage of skilled manpower and the institute would go a long way in meeting the demand of the industry.

He reiterated the support of the Engineering Development Board for the development of steel industry and its linkages with world supply chain.

The institute, the first of its kind in Pakistan, is being established under publicÃÂ±private partnership and each founder member has contributed Rs1 million for this purpose. 

The government had earlier announced a matching grant for the project.

The meeting decided to expedite the completion of formalities and directed the draft articles and memorandum of the institute should be finalised for discussion in the next meeting in the first week of October.

The Pakistan Iron and Steel Institute is being established in the wake of a proposal floated by Jahangir Khan Tareen, Minister for Industries, Production and Special Initiatives in August last year.

He advised the industry to have a world class steel research and development institute. Since then, the industry has been striving hard to set up the institute. The EDB is assisting the founder members in this regard.


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## Neo

KARACHI, Sept 5: The large-scale manufacturing (LSM) sector growth fell by 46 per cent during the last fiscal year ended June 30, 2006, final figures released here on Tuesday showed.

The important constituents of the LSM were in trouble and the heavy-weight textile sector was the worst performer when compared with its performance the previous year.

The LSM sector grew at 10.68 per cent during FY2006 as against 15.6 per cent the previous year, showing a fall of 46 per cent.

The textile sector posted a growth of just 4.27 per cent compared to 24.7 per cent the previous year. Its weight in the LSM sector also fell to 24.49 per cent from 32.62 per cent. The poor performance of the textile sector was the main reason for the fall of overall LSM growth in the FY2006.

Cotton yarn and cotton cloth having a weight of 13.06 per cent and 7.54pc in the LSM grew by 11.46 per cent 0.61 per cent during the fiscal year 2006.

The automobile sector growth fell to 25.7 per cent from 32.6 per cent and its weight in the LSM dipped to 3.95pc from 5.27 per cent. Car and jeeps (2.53pc weight) grew by 27pc and motorcycle (0.13pc weight) by 30.4 per cent during FY 2006.

The growth in the electronics also fell to 36.5 per cent during 2006 from 44 per cent the previous year. Its weight also dropped to 2.48 per cent from 3.31 per cent.

The air-conditioners production showed remarkable growth of 99.78pc but its weight in the LSM remained just 0.074 per cent. The production of TV sets showed a growth of 6.34 per cent but with just 0.266pc weight in the LSM.

Similarly, the production of refrigerators grew 9.82 per cent while its weight was 0.58 per cent in the LSM.

The government has made the production of motorcycles, TV sets, air-conditioners and refrigerators as reference for high economic growth but all of these items have less than one per cent weight in the LSM.

Growth of petroleum products fell to 2.24pc from 9.4 per cent in 2005. Food and beverages having a weight of 14.35 per cent posted a growth of 5.28pc. The sector had a weightage of 19.12pc but growth was minus 2pc in 2005.

The growth in the production of fertiliser dropped to 5.14pc in 2006 from 25.7 per cent the previous year.

However, pharmaceutical and chemical sectors growth improved to 12.94pc and 11.16pc respectively from 4pc and 3.4pc the previous year.

The most concerning issue is the textile sector which earns 60 per cent foreign exchange for the country. Credit intake of the sector had dropped last year and the information shows that the current year is also sluggish for the sector.

The SBP has provided attractive refinancing facility to the textile sector and slashed the export refinance rate to get a better result.

http://www.dawn.com/2006/09/06/ebr1.htm


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## Owais

*Orient Power signs accord for 225MW thermal plant* 


ISLAMABAD (September 07 2006): The Private Power Infrastructure Board (PPIB) and Orient Power Company on Wednesday inked the 'Implementation Agreement' (IA) for setting up 225MW Thermal Power Plant at Balloki.

This is the first private sector power project, which has matured after 1995, especially with the intervention of President Pervez Musharraf, Prime Minister Shaukat Aziz and Minister for Water and Power Liaquat Ali Jatoi.

PPIB Managing Director Khalid Rehman signed the agreement on behalf of GoP, and Nadeem Babar, Chief Executive Officer, represented the Orient Power Company.

The signing ceremony was witnessed by Minister for Water and Power Liaquat Ali Jatoi and officials of the Ministry, PPIB and the Orient Power Company.

The Power Purchase Agreement (PPA) and the Gas Supply Agreement (GSA) were earlier initialled by National Transmission and Dispatch Co (NTDC), and Sui Northern Gas Pipelines (SNGPL), respectively.

The Orient Power Company is the first independent power producer (IPP) to initial the agreement under the 'Policy for Power Generation Projects 2002'. This project will be capable of operating on dual fuel, based on combined cycle technology. It will use gas as fuel, and will be established at an estimated cost of $170 million. The power plant is expected to provide electricity by 2008.

On this occasion, Jatoi said that the Government was making all efforts to induct power into the system to support rapid economic development in the country. While all available options are being looked into to produce more electricity, the government is stressing and encouraging utilisation its indigenous fuels and resources for power generation, he said.

He said that due to the economic and investment-friendly policies of President General Pervez Musharraf and Prime Minister Shaukat Aziz, the private sector has expressed interest to invest particularly in the power sector.

Jatoi said that recently the PPIB had advertised seven raw site hydropower projects internationally, soliciting proposals for these projects, including Statement of Qualification (SoQs).

These are in addition to the seven raw hydel sites advertised by PPIB last year. Encouraging response was received as 16 prominent local and foreign sponsors from US, UAE, Malaysia, Iran, Czech Republic had submitted their detailed proposals. These hydropower projects envisage a total capacity of around 1,620 MW, and would draw an investment of more than $2 billion.

The Minster said: "We are confident that these projects will materialise and will be helpful in meeting the projected power deficit in the country. All these projects are based on indigenous fuel/resources, and are a cheaper option compared to oil based power plants."

Orient Power CEO Nadeem Babar appreciated the support of the Minister and the PPIB and said that all of them had facilitated the Company to resolve the outstanding issues enabling it to invest in the power sector. He said that the company would also expand the project in the second phase, after 2008, to further generate 225 MW power. He also hailed the policies of the government regarding incentives for investors and reforms in the power sector.

The Minister said that agreements were also being issued for negotiations to sponsors of the 225 MW Muridke Power Project by Sapphire Group and 225 MW Sahiwal Power Project by Saif Group within a week.


----------



## Owais

*Economic growth forecast revised downward: development outlook issued* 


ISLAMABAD (September 07 2006): The Asian Development Bank (ADB) on Wednesday reduced the economic growth forecast for Pakistan in FY2006-07 to 7 percent, 30 basis points below its own yearly forecast in April 2006. Pinpointing the 'grey' areas of economy, it has projected that the current account deficit would touch $7.9 billion (5.5 percent of GDP).

However, it sees greater progress in reducing inflation. The ADB in its 'Asian Development Outlook (ADO) 2006 Update', an economic report issued on Wednesday, said that "the burgeoning current account deficit, continuing high inflation, and latent power shortages are potential risks to the country's medium-term economic prospects. Moreover, additions to the pro-poor measures, already announced in the FY2006-07 budget may, in the lead-up to the 2006-07 general elections, further weaken the budgetary position in the coming year".

Pakistan's economy is advancing strongly, despite the shocks of the earthquake and the continued upsurge in international oil prices. Economic activity remains dynamic and social indicators have improved, which together augur well for continued rapid development.

Inflation is forecast to decline in FY2006-07 to average 6.5 percent. However, this moderation depends crucially on central bank's implementing a tighter monetary policy to keep domestic demand in check. Already, in July, SBP tightened its stance by raising its policy rate (the 3-day repo rate, which is its rediscount rate) from nine percent to 9.5 percent, and adjusted upward both the bank's cash-reserve requirement ratio and their statutory liquidity requirement ratio.

These measures are likely to impact domestic demand, but only with a lag. SBP's Monetary Policy Statement for July-December 2006 set a program for FY2007 that envisages lowering growth in monetary assets (M2) to 13.5 percent and plans a reduction in private sector credit growth to 18.4 percent. Achieving these targets, aimed at reducing inflation to 6.5 percent, will again require SBP to focus on money market conditions to control reserve money appropriately.

The Bank says that "most important, the update's forecasts presuppose that SBP will carry out monetary tightening and that budget reliance on SBP finance will be consistent with attainment of the monetary objectives".

"FY2007 production conditions in the main commodity-producing sectors are expected to improve from FY2006. A positive outlook is also underpinned by a substantial strengthening in investment in FY2006 and forecasts of yet further increases the following year", it added.

Substantial public sector investment in irrigation in the last few years and a sharp increase in imports of agricultural machinery in FY2006 are seen as boosting agricultural output. Assuming normal weather conditions, agriculture is projected to grow by 4.5 percent in FY2006-07.

Growth in industry is expected to rebound to 9.1 percent. New investments, especially in the textile, cement and fertiliser sub-sectors, and incentives provided in the FY2006-07 budget for exports of leather and footwear goods, and marble, as well as for rice-processing plants, should buoy output.

In services, heavy foreign investment in telecoms in recent years will help the sub-sector maintain fast momentum in FY2006-07. Strengthened by reforms and privatisation, the financial services industry will also maintain robust growth. Nevertheless, services sector growth as a whole is projected to slow to a more sustainable 7.1 percent in FY2006, following the very rapid rises of last two years.

In the FY2006-07 budget, extension of the tax net to real estate transactions and raised tax rates on some financial services is expected to increase receipts at a very healthy double-digit rate, while non-tax receipts are likely to exceed the budget estimate. Current expenditure, however, may exceed the budget target for two main reasons: a likely overrun in defence expenditure due to ongoing operations against militants; and possibly, greater domestic debt servicing.

Various measures favouring low-income groups announced in the FY2006-07 budget may also raise current spending. On balance, the fiscal deficit, targeted at 4.2 percent of GDP in FY2006-07, including 0.6 percent for earthquake expenditure, is likely to increase to 5.0 percent of GDP, with the budget as a whole continuing to impart a strong expansionary impetus to the economy, the report said.


----------



## Owais

*Pakistan ranked 74th in friendly economy ratings* 

SINGAPORE (September 07 2006): Pakistan is the 74th easiest place in the world to do business in. According to the annual "Doing Business" report of the World Bank, which ranked 175 economies in terms of regulations that enhance or constrain business, Pakistan's overall ranking declined from its 66th place in the previous report.

But the Bank praised the country for a new customs clearance process that cut the number of days to import goods to 19 days from 39, said the report released ahead of the bank's joint meetings with the International Monetary Fund (IMF) here next week.


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## Owais

*Inflows from US push up SCRAs* 


KARACHI (September 07 2006): USA's withdrawals from Special Convertible Rupee Accounts (SCRAs), an indicator reflecting portfolio investment climate in Pakistan, stood reduced from $6.3 million on September 1 to $1.4 million on September 4, indicating arrival of some $4.8 million in fresh funds from that country.

Switzerland also pumped in a small amount, while a small outflow occurred in the case of UK. All in all, there was an increase of about $5 million in SCRAs, pushing up the outstanding balances of all countries to $16.4 million on September 4.

Singapore, in the meanwhile, continues to be the main driving force in the case of SCRAs during FY07 so far. Its holdings in these accounts amounted to $41.3 million on September 4, the same as on September 1. The second positioner, Liberia, had only a small positive balance.

Of the 14 active players during FY07 so far, all other countries had net withdrawals between $0.03 million (Qatar) and $14.2 million (Switzerland) despite a small fresh arrival recorded in the case of the latter.

The KSE 100 Index, which stood at 10,064 on August 31, in the meanwhile, declined to 10,002 on September 4. Profit taking in banking and energy sectors, besides uncertainties on both internal and external fronts, were stated to be the factors forcing the investors to offload part of their holdings. Updates on SBP General Index of Share Prices and aggregate market capitalisation, which stood at 428 and Rs 2,815 billion, respectively on September 1, were not available.


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## Owais

*Pakistan's economy advancing strongly: ADB* 

ISLAMABAD: Pakistan economy is advancing fast despite the devastation of the October earthquake and the continued upsurge in international oil prices Economic activity remains dynamic and social indicators have improved, which augurs well for continued rapid development, reports Asian Development Bank.

The ADB's Asian Development Outlook Update 2006 confirms the continuation of the fast growth stemming from the Government's far reaching macroeconomic and structural reforms initiated in 2001, which subsequently propelled the economy to annual expansion of about 7% over 4 years. 

The report also stressed the main macroeconomic challenges, like bringing down inflation and containing the growing trade and current account deficits.

The ADB Update is a supplement to ADB's annual flagship publication, Asian Development Outlook 2006, which was published in April and forecasts economic trends in the region. 

According to the report, developing Asia's strong economic expansion is expected to continue, with growth projected at 7.7% in 2006 before easing to 7.1% in 2007. 

"The outlook for Asian growth is quite positive as both domestic and external conditions remain favorable," said Mr.Ifzal Ali, ADB's Chief Economist at the launch of the ADO Update 2006. 

"The region should act now to lay defenses against potential risks and ensure the region's rapid growth is sustained." "The region should take advantage of this strength to act in three areas that could undermine growth if not addressed the need to complete the adjustment to high oil prices, he need to pick up the pace of fiscal
consolidation and the need to stimulate investment," he said.

The 7.1% growth forecast for 2006 represents a 0.5 percentage point increase form the April forecast. 

The upward revision significantly reflects accelerated growth in the People's Republic of China (PRC) due to booming investments and exports. ADO Update forecasts 10.4% growth for PRC in 2006. 

Upward revision to growth forecasts of the three larger South Asian economies. Bangladesh, India, and Pakistan on the back of strong export growth also fed the upward adjustment.

For 2007, ADO Update forecasts growth of 7.1% for developing Asia, up marginally from the 7.0% forecast in April. 

The easing form 2006 growth is anticipated based on expected slower demand from industrial countries and continuing high oil prices. 

ADO Update's forecast for 2007 rests heavily on the assumptions that policy adjustments in PRC will slow the economy to a more moderate 9.5% expansion and that India continues to grow at 7.8%.

Growth in South Asia in 2006 is projected at 7.5% up from 7.3% forecast in April Since 2002 South Asian growth has averaged 7.7% almost matching that of East Asia and two percentage points above growth in Southeast Asia.

Increasingly vibrant manufacturing activities in Pakistan Bangladesh and India, are lifting exports, which contributed to some upgrading of growth estimates in 2006. 

In Nepal, the restoration of Parliament and a broadened political process have improved the economic situation and prospects ADO Update also raised growth estimates for Afghanistan and Sri Lanka despite continuing security issues. 

ADO Update includes a section on trade issues that may have implications for the longer term, as well as a theme chapter on developing Asia's raising influence in world commodity markets.


----------



## Neo

*ISLAMABAD, *_September 07, 2006_: The Asian Development Bank (ADB) is to invest $3 billion in the local water and power projects over the next three to five years, government officials said on Thursday.

The country's growing economy needs more energy and water to support the world's sixth-largest population.

A seven-member ADB team, led by Juan Miranda, made the pledge during a meeting with Minister for Water and Power Liaqat Ali Jatoi.

The ministry said the ADB would focus on financial assistance of $500 million for renewable energy development, $1.2 billion on improving power transmission, $250 million on improving distribution and $800 million on irrigation projects.

"To achieve economic growth targets set by the government, the power sector needs to increase its generation capacity, efficiency and coverage," the ministry quoted Jatoi as saying.

ADB officials were not immediately available for comment.

President Pervez Musharraf has often warned of looming energy and water shortages choking growth and wants to build five dams on the Indus river system.

One of the five, the Kalabagh dam, has stirred fierce opposition from downstream provinces that fear it will rob them of water.

The Manila-based ADB would discuss with the World Bank the financing of big water projects, the ministry said


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## Neo

*KARACHI*_: September 07, 2006_: Karachi Electric Supply Corporation (KESC) would set up a $420 million power plant of about 750 megawatts capacity at the existing Korangi Thermal Power Plant (KTPP).

This was informed by CEO KESC Frank Scherschmidt during a facilitation visit of media persons to KTPS on Thursday. Construction site of new power plant was also shown.

Frank informed that construction of new plant was an integral part of KESC's two-year layout through which Rs 50 billion would be spent for rectification and enhancement of power supply system.

He mentioned that Rs 25 billion would be spent in one year, while rest of the amount would be spent next year.

During his briefing, he also explained power generation system of KESC. He said the total efficiency of power generation of a steam power plant was near about 40 percent while of a gas power was about 33 percent. He apprised new power plant would be a 'combined cycle' power station with conjunction of both steam and gas plants.

"It's efficiency would be around 50 percent", he added.

He also pledged for arranging a media person's trip to Bin Qasim Power Station.

Sultan Ahmed, spokesman of KESC, informed that during 2006-07, 14 new grid stations would be established in the city for better distribution of power.

"After completion of new power plant it would become inevitable to enhance power distribution system as old system has become outdated and not capable to bear extra load", he said, adding "45 kilometres long transmission lines would also be installed to facilitate new power station".

The media persons were told that new power project at KTPP comprises of four Gas Turbines (GTs), each having capacity of about 122 MW. These will subsequently be converted into high efficient combine cycle blocks by adding two steam turbines of 131 MW each, which means each block of combined cycle would be of about 375 MW.

The expected commissioning dates of GT Units would be:

Unit-1 from April 2007, Unit-2 from May 2007, Unit-3 from July 2007 and Unit-4 from August 2007.

After completion of four units 488 MW power is expected to be injected into KESC system by next summer which would minimise demand and supply gap to great extent.

The expected commissioning dates of Steam Turbine Units would be as Unit-1 from February, 2008 (First Combined Cycle Block) and Unit-2 from June 2008 (Second Combined Cycle Block).

According to KESC officials work had already been taken in hand and soil investigation work was completed. The construction activities are expected to commence from December/January 2007.

It may be recalled that the new plant would be initiated alongside old Korangi Power Plant, which has installed capacity of 382 MW while its existing capacity is around 192 MW. The installed capacity of Unit-1 and 2 out of its four units were 66 MW each while those of Unit-3 and 4 were 125 MW each.

The Unit-2, commissioned in November 1965 was accidentally damaged in September 1996.


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## Neo

ISLAMABAD (September 07 2006): The construction of Rs 18 billion ($300 million) new Islamabad airport would begin in next three months. The Civil Aviation Authority (CAA) officials told PPI that the contract for construction of airport would be awarded by January 2007.

Advertisements for expression of interests have already been issued and process of short listing was in progress. The airport was to be completed before December 2009.

The contract agreement with the selected consultant from USA had been signed while selection of the design consultant was in process. CAA Board was currently reviewing different designs of the new airport submitted by five international firms of consultants and architects.

Representatives of these firms had given detailed briefings to the CAA board regarding their respective designs. The board was likely to approve a design very soon. The groundbreaking ceremony of the airport would be held in a month or so.


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## Neo

Thursday, September 07, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\09\07\story_7-9-2006_pg5_11

_* ADB to invest $200m in energy, power sectors in 2006, to spend $150m-$200m a year on NHA programmes

_ISLAMABAD: The Asian Develop-ment BankÃ¢â¬â¢s (ADB) future assistance programmes for different sectors of PakistanÃ¢â¬â¢s economy were reviewed here on Wednesday. 

A high-level delegation of the AD led by Juan Miranda, Director-General of the Central and West Asia Department, held a meeting with Dr Salman Shah, Adviser to the Prime Minister on Finance, and senior officials of the ministries of finance, planning, agriculture, communications and others to discuss the ADBÃ¢â¬â¢s future assistance programme for different sectors of PakistanÃ¢â¬â¢s economy.

Briefing the adviser to the PM, the ADB director-general said that the main objective of his department was to evolve a focused and targeted strategy for preparation and implementation of its various programmes by creating an enabling environment for both the private and public sectors. 

He stressed the emphasis on involvement of private sector in different sectors of the economy. He supported the second-generation reforms being implemented by the government. He said that the ADB programme in Pakistan will be enhanced to about two billion dollars annually, which would be available for development of energy, transport, urban services, infrastructure and the social sectors as well as for second generation reforms and projects in the water and agriculture sector. 

Support will be provided for financial sector and capital market reforms and for public resource management. He emphasized on improving productivity, efficiency, credibility and liberalization in the overall development plans of the country. He also stressed that more and frequent interactions would be held between the ADB and the project executors for successful and timely completion of the projects. 

About the agriculture sector, the ADB emphasized on raising the productivity and integration of various projects under a cohesive overall framework. The ADB official said that an integrated rural development programme with development projects like development of livestock, building of farm to market roads, providing inputs to small and marginal farmers would be coordinated to close the urban-rural gap.

Referring to the proposed megacity project in Karachi, the ADB official said that the project would involve about 800 million dollars. The ADB expressed its plans to invest about 250 million dollars in the sectors of energy and power in 2006. It said that it would spend about 150 to 200 million dollars a year on the National Highway Authority programmes. 

In addition an investment of around a billion dollars would be made for the National Trade Corridor connecting Karachi with northern borders under the proposed programme. The ADB also showed its readiness to finance projects in education, health and sanitation.

About the agriculture sector, the adviser said that agriculture has to be commercialized. He said that there is much potential for developing the agriculture sector to make it more competitive and profitable. Referring to the mega city project, the adviser said that Karachi should become a real financial, industrial and commercial center of the region. It should be benchmarked with other mega cities such as Singapore, Bangkok, Kuala Lumpur, etc. He stressed that it should become a driver of growth for Pakistan.

The adviser said that after completion of the national trade corridor, Pakistan would become the center of regional cooperation with China and the Central Asian Republics. He said that development of the capital markets was key for economic development and national competitiveness. The adviser also informed the delegation that there is a big scope of promoting the insurance sector in Pakistan. He said that there is still a great opportunity for expanding capital markets with new instrument of financing such as private equity, voluntary pension schemes, REITS, mutual funds, etc. 

Earlier, the adviser gave a comprehensive presentation to the delegation on different aspects of the economy. The ADB appreciated the governmentÃ¢â¬â¢s roadmap for development of the economy, which would include development of agriculture, roads, banks and social services, water sector and financial markets. The adviser thanked the delegation for its cooperation and assured it that the government would be working closely with the ADB on its assistance programme.


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## Neo

KARACHI, Sept 6: The World Bank report on Sindh economy is being delayed because of sharp conflict in perceptions and assessment of the bankÃ¢â¬â¢s researchers and surveyors with the provincial and federal governments on provincial finances and functioning of the departments.

There are now doubts if the document will be released within the year 2006 or even later.

Ã¢â¬ÅWe have sent a final draft of the report to Sindh government about two months ago and we are waiting for their comments,Ã¢â¬Â a source in World Bank office in Islamabad informed Dawn by telephone on Wednesday.

The Sindh government officials are not at all happy with the World Bank draft report and call it a Ã¢â¬Ådocument of ignoranceÃ¢â¬Â.

Ã¢â¬ÅThe World Bank team did not see any mining potential in Sindh,Ã¢â¬Â a senior official retorted who wondered as to how could Ã¢â¬Åthey ignore provincial annual development outlay has gone up from a mere Rs5 billion about four years ago to Rs32 billion in the current fiscal yearÃ¢â¬Â.

Ã¢â¬ÅOur financial discipline is worth emulating,Ã¢â¬Â claimed another bureaucrat, who pointed out that the government cleared a State Bank loan of Rs10 billion, paid bills pending for last more than a decade, absorbed salaries increase, pre-paid federal government loans, established pension fund and invested Rs50 billion in development during last five years.

Ã¢â¬ÅWe are executing projects being funded by the World Bank, Asian Development Bank and the federal government involving billions of rupees,Ã¢â¬Â he said and wondered as to why the Sindh government would be entrusted with this gigantic task if there is poor governance, corruption and law and order problem.

What has angered most the Sindh government Ã¢â¬â politicians and bureaucrats both Ã¢â¬â is the observation Ã¢â¬Åpoor governance is the single most important developmental challenge facing Sindh,Ã¢â¬Â in a report based on World Bank teamÃ¢â¬â¢s survey of stakeholders in May 2005.

Ã¢â¬ÅCorruption and law and order, which are derivatives of a weak governance system, emerge as the second and third most critical challengesÃ¢â¬Â is another observation of the same report that has failed to amuse Sindh government functionaries.

The World Bank team found the Ã¢â¬Åcoalition nature of the government in Sindh to have been burdened with political stalematesÃ¢â¬Â and that the government find it difficult to Ã¢â¬Åfocus on developing the type of strategic vision, action programme and implementation driveÃ¢â¬Â that made Sindh once a leader in implementing reforms in earlier years too unpalatable and impossible to swallow.

The World Bank team also noted Ã¢â¬Åsustained bureaucratic inactionÃ¢â¬Â and Sindh governmentÃ¢â¬â¢s Ã¢â¬Ålack of attention to business related issuesÃ¢â¬Â has created a severe policy uncertainty, and heightened the level of distrust between the business community and the public sector institutions.

Ã¢â¬ÅThe economy has stagnated and the number of people below the poverty line has increased steadily,Ã¢â¬Â is a comment that has embarrassed Sindh government and Ã¢â¬Åirritated federal governmentÃ¢â¬Â to quote an analyst who said that Ã¢â¬ÅIslamabad is now very sensitive to provincial economic disparities issueÃ¢â¬Â.

To illustrate his point, the analyst says that federal government claims to have brought down

poverty level by 10 per cent in two years but has deliberately ignored to mention poverty issue with

reference to the provinces.

Another example of suppressing poverty reports on Sindh is concealing the findings of district based Multiple Indicator Cluster Survey carried out in 2002-03 with the help of Unicef.

The report lies buried deep under the heap of files of the provincial chief minister and according to the officials Ã¢â¬Ånow another survey is dueÃ¢â¬Â. The report reveals extreme poverty conditions in rural population of the province.

The first World Bank team came to Karachi in August 2004 in response to a request made by the Sindh government to prepare a report on provincial economy.

In its Concept Note the World Bank called Sindh Ã¢â¬Åhistorically one of more affluent and developed provinces of the countryÃ¢â¬Â. The initial observations were that Sindh is clearly left behind other provinces in growth and development.

KarachiÃ¢â¬â¢s problems are getting acute, and the renewed country wide focus on economic growth is yet to be pursued with similar vigor at (Sindh) provincial level.

Another World Bank team visited Sindh in January this year and gave its observations on education and finance departments which too were not welcome.

A final presentation of the proposed roadmap of reforms was given to Sindh government in March 2006 and according to a source the final draft of the report was given sometimes in June.

According to the World Bank source the final assessment and findings are shared with authorities, the Sindh government in this respect and their observations and views are sought. The World Bank then gives final touches to the report in light of the views and observations of the authorities involved in the survey and is considered and discussed in the bankÃ¢â¬â¢s board of directors before making it public.

The bank committed to prepare the report on Sindh economy before the presentation of 2005-06 budget. It has not been presented in 2006 and analysts and observers doubt if this report would be given before December next.

Ã¢â¬ÅThe government will like to hold this report even in 2007 or 2008 so that it does not figure in the election campaign,Ã¢â¬Â remarked a political activist.


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## Neo

KARACHI: Pakistan and Russia on Wednesday agreed to enhance cooperation and start joint ventures in the field of IT and telecom, an official statement said.

Ã¢â¬ÅThe two sides also announced exchange of trade and investment delegations and set up focal groups to further explore possibilities of collaboration in the areas of information technology, business process outsourcing, telecommunications and space technology,Ã¢â¬Â said the statement issued following a meeting between Awais Ahmad Khan Leghari, Federal Minister for IT and Telecom and a six-member Russian trade delegation.

The delegation was led by Elena Danilova, Director Russian Ministry for Economic Development and Trade, currently visiting Pakistan to explore business opportunities. IT Secretary Farrukh Qayyum, Member Telecom Nooruddin Baqai and other officials were also present.

Ã¢â¬ÅPakistan considered Russia a country with huge potential to participate in the growth of IT and telecom sector in Pakistan,Ã¢â¬Â it quoted Leghari as saying.

He said the two countries could also forge stronger business ties in the field of space science, which Pakistan was seeking to develop with the help of reliable technology and expertise such as that possessed by Russia.

Ã¢â¬ÅWe do not want to become mere purchasers, but strategic partners and transfer of technology and skills should form the core of any business relationship,Ã¢â¬Â he added.

He said Pakistan and Russia could also reap economic benefits through interaction and close partnerships in business process outsourcing, which was gaining a strong foothold in Pakistan due to cheap workforce and excellent English language skills.

The minister said his country had embarked on a massive e-government programme and the provision of IT-enabled services had become a key area of focus for partnerships with the local and international IT players.

Elena Danilova said Russia viewed Pakistan as an emerging economic centre and the growth of telecom and IT sector had encouraged many Russian companies to look at possibilities of coming to Pakistan in a big way.

Ã¢â¬ÅRussia is ready to facilitate exchange of traders and investors to discuss and earmark areas in which the countries could forge joint ventures,Ã¢â¬Â she said.

Meanwhile, Leghari also met with Greg Oliveau, Head Asia Pacific Region Aeromobile, who briefed the minister on his companyÃ¢â¬â¢s plans to launch Ã¢â¬ËGSM on BoardÃ¢â¬â¢ initiative in collaboration with Telenor Pakistan to provide a safe and cost-effective way for air passengers to use mobile phones without interruption.

CEO Telenor Pakistan Tore Johnsen told the minister his company was one of the two partners in the UK-based joint venture Aeromobile, and discussions with the management of Aeromobile were already under way to make Pakistan one of the first countries to have the GSM-on-board technology.

The minister assured complete government support to the visiting Aeromobile official in bringing this technology to Pakistan as a pioneering initiative in the world.


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## Owais

*China pledges $50 billion investment* 


ISLAMABAD (September 08 2006): China has pledged $50 billion investment to Pakistan to develop Gwadar port on the pattern of its Shenzhen port over the next five years. The plan referred by Beijing to Islamabad indicated that Chinese investment for this mega project will come in two phases and its lion share will go to the petrochemical industry.

Pakistan had offered China co-operation in the energy sector in a big way when President General Pervez Musharraf visited Beijing in February last. The President conveyed his Chinese counterpart Hu De Ping during the course of consultations that Gwadar port will be the best facility for his country to meet its growing energy demand.

This was followed by a Pak-China energy forum, which was held in Islamabad in April this year. The Chinese President had led a 150-member team in the forum.

These high-level negotiations led to a formal understanding between China and Pakistan that the two sides will take full advantage of each other's potential to ensure their energy security. China pledges to make huge investment in Pakistan to develop its infrastructure and other facilities to help it become an energy corridor for the region.

Sources said Chinese investment plan was under study in Islamabad and the two sides are likely to sign a formal agreement for the Gwadar port-specific investment during the upcoming visit of the Chinese President to Pakistan.

The plan was discussed more than once at the highest level to make it work and achieve objectives in the stipulated time period.

They added the Chinese President's visit to Pakistan is expected in November and foreign ministries of the two sides were actively busy in giving final touches to the schedule and activities of the meeting. China contributes 25 to 30 percent of Pakistan's investment in different areas and it intends to increase this percentage in the future.

Sources said Pakistan is targeting to take Chinese investment between 120 to 150 percent in next 10 years and the Gwadar port will serve as a hub to achieve the target.

Pakistan is planning a petrochemical zone at Gwadar to attract foreign invest to promote petrochemical industry. The plan also included at least two major oil storage facilities for supply to China and other regional countries, besides meeting growing national demand of petroleum products.

Islamabad is positioning itself to become an energy corridor to ensure supply of petroleum products to China and other countries of the region. China's energy needs are growing fast and with the development of Gwadar port Pakistan can ensure supply of oil and gas through pipelines and land route.


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## Owais

*Government looking for site to build new port: minister* 


KARACHI (September 08 2006): The federal government is looking for a suitable site to build country's fourth port, preferably in Balochistan. In this regard, experts in the ministry of ports and shipping are already working to identify the suitable site to build a port.

Minister for Ports and Shipping Senator Babar Khan Ghauri shared these views in an exclusive interview with _Aaj TV _here. Though no decision has yet been taken, the minister said potential site could be Ormara or Sonmiani. Pakistan's economy is rapidly growing because of strategic location the country enjoys. "There is a place for fourth port in Pakistan," he added.

Babar Ghauri said Pakistan was poised to become hub of transit trade for North Western India, Western China, Afghanistan, Central Asia and even parts of eastern Iran.

The port operator for Gwadar deep-water port would be finalised in one-month time. The ministry had received expression of interests (EoIs) from local and international firms, including DP World, P&O, PICT and others.

The Gwadar port has potential to become a major port of the region. "We expect that the Gwadar port will also grab some business held by other regional ports. Therefore, all the applicants are being examined carefully."

Without naming any port or operator, the minister said the government wanted to make sure that the port operator did not make Gwadar a second category port. Ghauri was optimistic about improving financial health of the Pakistan National Shipping Corporation (PNSC).

He said the corporation was operating a fleet of 14 vessels, including four oil tankers and one bulk carrier. While, two oil tankers and another bulk carrier would be inducted in the existing fleet soon. "Pakistan is no more dependent on foreign shipping lines for the import of crude oil," he added. Ghauri said that country's annual crude oil import stood around nine million tonnes. Of which the PNSC is transporting 8.1 million tonnes.

"After acquiring two more oil tankers by the end of this year, Pakistan will be supplying oil to Sri Lanka, Bangladesh and other countries." He said rising PNSC fleet would also benefit Pakistani seafarers, who had suffered discrimination after 9/11 incident, as many shipping lines refused to board Pakistani seamen due to strict regulations in many countries.

He informed about the successful negotiations with DP World regarding establishing of second container terminal at Port Qasim and increase in royalty charges for containers' movement. As opposed to the previous cargo terminal at PQA, the second terminal is being built on build-operate and transfer basis for period of 30 years. The government has allotted the QICT at build-operate and own (BOO) basis with movement charges of $4 per container.

Under the new contract, the terminal operator will pay PQA $9.2 for movement of each container. The PQA would earn an additional $300 million over 30 years, due to revision in royalty charges.


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## Owais

*Russian team visits commerce ministry* 

ISLAMABAD (September 08 2006): A Russian delegation headed by Ms Elena, Director of the Department for Foreign Economic Relations visited the Ministry of Commerce. The delegation was told that the economy of the country is increasing. There is a substantial increase in exports. The Russian delegation expressed its interest in the fields of gas, oil and agriculture machinery.

The delegation also expressed its interest in the construction of power stations to counter the energy crisis of Pakistan Regarding agriculture machinery, the delegation was told that there is no ban on the import of tractors. Only new tractors could be imported on zero duty.


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## Neo

ISLAMABAD (September 08 2006): The Asian Development Bank (ADB) has offered investment of $3 billion in water and power sectors in Pakistan during the next three to five years, but questioned transparency in utilisation of funds.

The federal government has also sought $6.46 billion investment from the bank for the construction of Diamer-Basha dam for which a working group comprising concerned federal ministries and development partners would be established to work out financing modalities.

The World Bank (WB) has already expressed its willingness to finance the project, after all the confronting issues are resolved by the government amicably. The bottlenecks of ongoing and future water and power sector development projects funded by the ABD were discussed at a meeting between a seven-member bank's delegation headed by Juan Miranda and the Minister for Water and Power, Liaquat Ali Jatoi on Thursday.

The ADB team assured technical and financial support for major water and power sector projects, including up gradation of distribution systems and transmission lines in order to improve system efficiency for supply of electricity to the consumers besides major rehabilitation and infrastructure projects in water sector.

The bank would extend $500 million financial assistance for renewable energy development, $1200 million for power transmission improvement, $250 million for power distribution system and $800 million for irrigated agriculture and water resources, besides number of technical assistance programmes for capacity building and other relevant studies.

Jatoi, while welcoming the delegation informed that Pakistan under the able leadership of the President and the Prime Minister was making rapid economic progress resultantly economic activities were contributing to achievement of high GDP growth.

He further said that Pakistan was also focusing on alternate energy projects like wind power, solar energy, coal-based generation along with hydel power, which is cheapest and that the bank's support would be of great importance.

He further informed the delegation that the power sector is currently undergoing reforms and restructuring, which are fully supported by the ADB, stressing for co-ordinated meetings of the donors for expediting the progress of work on Diamer-Basha dam and urged upon active role of ADB in this regard.

Miranda appreciated the efforts of the present regime to maintain stable economic growth and offered both technical and financial assistance to keep up the momentum. He also apprised the minister about the ADB's internal system for making investment in such projects.

The minister thanked the ADB for offering assistance in water and power sectors and assured the delegation of his full support and co-operation for implementation of the programmes in a transparent manner. The adviser, Ministry of Water and power, member (Power), Wapda and senior officers of the ministry attended the meeting.


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## Neo

ISLAMABAD (September 08 2006): Pakistan automobile industry needs to develop indigenous capability focussing on quality of vehicles instead of price and quantity to sustain in a competitive and free global market.

This was stated by Takahiro Fujimoto, Director Manufacturing Research Centre, Tokyo University while delivering a lecture to automobile manufacturers and policy makers organised by Japan External Trade Organisation (Jetro) on Dynamics of Japanese Industrial Management Policy and System-application in Auto and Manufacturing Industry of Pakistan".

He suggested that Pakistan's future designs of cars should be different from the one of India and Japan, if the industry wanted to have an indigenous identification in world auto market and develop their own vendors industry.

Fujimoto said there are many lessons the Pakistani manufacturers could learn from their Japanese counterparts, which had faced many challenges by European, and American manufacturers in 1990s but did not compromise on quality. Japanese manufacturers had rather learned from these experiences and further strengthened their capability in operation, brand power, and market strategy.

He said India, Thailand and Taiwan are emerging as potential automobile hub in the region whereas Pakistan's industry is yet to frame policies for improving production quality. As the local market is expanding, Pakistani companies need to strengthen their own capability instead of looking outside, he said emphasising that Japanese companies had never compromised on quality for the sake of profit, as a result they not only enhanced volume but also became major players in auto sector.

"The India auto industry, which has almost developed itself indigenously and strengthen wide range of other supporting industries, provides direct employment to 550,000 persons whereas 12 million are indirectly attached to it," he added.

Earlier, in his opening remarks, Engineering Development Board (EDB) CEO Imtiaz Rastgar highlighted the initiatives taken by the government for the promotion of the sector.

He said that after the implementation of Tariff Based System (TBS), the key requirement for vendors is to focus on quality, productivity and organisational development to meet the growing domestic demand. The other major area is to develop a missing link between academia and industry, he added.

A government representative contended that industry was not playing its due role as manufacturers are relying on import instead of localising their product. Spare parts of over Rs 40 billion are being imported annually, which is more than half of total requirement of Rs 70 billion cars. All they have been focussing on door locks, seats cover and other small invaluable localisation and continued importing all the major auto components, he added.

Later talking to _Business Recorder_, he said how the country could achieve localisation of parts when the manufacturers of one or the other company have developed a chain for smooth supply of parts instead of developing local capability.

India, Taiwan and Thailand are likely to be regional players in the auto sector because of their indigenous capabilities, which always remained low priority of Pakistani industry and subsequently they would be facing problems in a free market, he added.


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## Neo

KARACHI (September 08 2006): A meeting, presided over by Sindh Chief Secretary, Fazlur Rehman, on Thursday reviewed the matters pertaining to revival of Karachi Circular Railway and setting up of Karachi Urban Transport Company. Federal Secretary, Railway, Shakeel Durrani and City Nazim Syed Mustafa Kamal also attended the meeting.

The federal secretary apprised the meeting of Japanese investment offer of $800 million in KCR and stressed on introducing modern railway services in Karachi to facilitate the citizens. He also assured fullest co-operation in this respect from Pakistan Railways.

The chief secretary on this occasion directed the departments of transport and planning & development to jointly prepare the PC-I of a project and submit the same by September 10 so that the Karachi Urban Transport Company could be set up under the rules and regulations for operating from Sohrab Goth to Tower.

The company would be formed jointly by the provincial government and CDGK.

The meeting decided that Sindh government and CDGK would finalise the strategy by September 15 and during this period, Director General, Karachi Mass Transit, Malik Zaheerul Islam, as a representative of city Nazim, would co-ordinate with the Sindh government, Pakistan Railways and other stakeholders. It further decided that a consultant would immediately be appointed under the law for finalising the financial structure of the project.

For meeting the initial financial requirements of the project, Rs 10 million would be sought and a summery to this effect would be moved this week by the finance department for approval at higher level.

ACS, Development, Ghulam Sarwar Kherro, Secretary Transport, Nasar Hayat, Special Secretary, Development, Rehana Memon, railway and other officials also attended the meeting.


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## Neo

ISLAMABAD, Sept 7: The United States sees significant investment opportunities in Pakistan, especially in power generation, ports, airports and other infrastructure projects, says Robert Adam Mosbacher, chief executive officer of the US Overseas Private Investment Corporation (OPIC).

"We want to be part of Pakistan's very impressive story by strengthening additional capacity, supporting small and medium sized businesses and by promoting access to credit," he further stated.

A source said Mr Mosbacher called on Prime Minister Shaukat Aziz here on Thursday. The OPIC CEO said the United States had decided to provide funding to the American investors through Citigroup which was operating throughout the country.

"The government has been assured that OPIC would also provide necessary guarantees to the US investors about the protection of their investment in Pakistan," he said. Without the involvement of OPIC, the source said, the US investors were reluctant to invest in the country.

Mr Mosbacher said the US strongly supported increase in investment in Pakistan in view of the "extraordinary economic progress made by Pakistan in the last few years".

The prime minister on the occasion said last year Pakistan attracted an investment of $3.8 billion, including FDI, which was the highest in country's history. Pakistan offered lucrative investment opportunities, especially in power generation, IT, telecom, agriculture business, tourism and construction, the premier added.

"We want OPIC to have a bigger footprint in Pakistan. Our energy needs are growing by 10 per cent and one cannot go wrong by investing in power generation," he said.

Giving an overview of the economy, the prime minister said Pakistan was virtually bankrupt seven years ago and the economy was rebuilt by focusing on the macro side by containing deficit, debt and managing other economic indicators.

Simultaneously, a massive structural programme was initiated which has transformed the country's economic scene. Ã¢â¬ÅDeregulation, liberalisation and privatisation are the guiding principles of our economic philosophy,Ã¢â¬Â he said.

Mr Aziz said the economy, which had been growing six-eight per cent consecutively in the last three years, was projected to grow at seven per cent during the current financial year.

Per capita income, he said, had reached $850, which was the highest in the region. Ã¢â¬ÅDue to vibrancy in the economy and reforms, tax collection is increasing by 20-25 per cent per year and, we are now in the phase of second generation reforms.Ã¢â¬Â

The Fiscal Responsibility Law, he said, introduced by the government, had limited the borrowing powers of the government, which could not go beyond a fixed percentage of the GD.

Privatisation Minister Zahid Hamid and other senior officials also attended the meeting.


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## Neo

ISLAMABAD, Sept 7: The higher transportation cost has severely constrained economic growth, competitiveness of PakistanÃ¢â¬â¢s exports and improvement of peopleÃ¢â¬â¢s life. Official sources told Dawn on Wednesday that the World Bank, in one of its studies, estimated an annual loss of Rs220 billion or 6 per cent of GDP due to inadequacies of the transportation system.

The bank listed some of the major issues of transport sector which also included inadequate physical capacity, inadequate maintenance system, poorly targeted priorities of investment, operational and financial inefficiencies of the public investment, lack of private sector participation and environmental impact.

The government was told to consider the rational allocation of inland freight traffic between rail and road network, privatisation of railwayÃ¢â¬â¢s operation in selected sections and inclusion of private sector in development of roads, airlines, ports and shipping.

The inland navigation could help in improvement of the efficiency of the transport sector.

The road density, an import indicator of economic development, is low (0.32 km per sq. km) in Pakistan as compared to neighbouring countries such as India (0.49 km per sq. km and Sri Lanka (0.48 km per sq. km).

Punjab and Sindh have high and Balochistan has density of only 0.12 km per sq km. Road population and road per vehicle point to a different story. Balochistan is the highest and Punjab is the lowest in both indicators.

The current road network is considered to be insufficient to cater to the needs of the growing population. Pakistan needs at least another 100,000 km network of roads to increase the road density to be at par with India and other regional countries. Due to insufficiency of roads, 30-35 per cent of perishable harvest is lost annually.

The assessment of roads done by a joint study of National Highway Authority (NHA) and World Bank indicated that 47 per cent of national highways were in poor condition and only 28 per cent of the network was in good condition.

The major causes of deterioration of the road network include (a) rapidly increasing traffic volumes partly due to shift from rail to road (b) inadequate funds for maintenance, (c) inefficient government institutions, (d) overloading, and (e) lack of private sector involvement.

It was said that the inclusion of the private sector in road development was not very successful in spite of policy framework and package incentives. Private sector could be involved in many ways including toll operation and maintenance contacts.

Due to insufficient funds allocation, proper maintenance of road network is not taking place and causing deterioration of networks. A study by Asian Development Bank estimated that in Punjab the budget allocation of road maintenance was just 19pc of the total requirement of Rs8bn.

About air transportation it was said that currently 43 airports are operative in Pakistan including 10 airports equipped for international traffic and 15 feeder airport.

However, whereas the number of passengers in domestic and international flights has increased by 27 per cent during the last two decades, the share of air transportation is merely 10 per cent of passenger traffic and negligible in freight.

The main issue in the air transportation is said to be the poor quality of the services and airport facilities. The service level is not of international standard which is the main hurdle in developing tourism industry.

The capacity at Karachi and Lahore airports has increased but Islamabad is still low. The car parking facilities and aircraft parking stands need attention of the government.

Similarly, the share of entire Pakistan merchant fleet including Pakistan National Shipping Corporation (PNSC) is barely eight per cent which is much lower than 40 per cent share allowed under Unctad Code of Conduct.

Private sector partnership is not good enough because of poor investment climate, lack of level-playing field with PNSC enjoying the first right of refusal for government cargoes. Also, application and processing of documents is slow in the port and shipping ministry.

The government has been advised to modernise facilities at the Karachi and Qasim ports by containerisation of traffic on Built Operate Transfer (BOT) and Built Operate Own (BOO) arrangements with the help of dry ports and bounded warehouses.


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## Neo

Singapore: India and Pakistan have two months to agree with Iran on a major natural gas pipeline or Tehran will earmark more of its reserves for liquefied natural gas (LNG) projects, a senior official said on Thursday.​ 
Talks on the $7 billion gas pipeline from Iran home to the world's second-largest natural gas resources through Pakistan to fast-growing India have stumbled recently as Tehran has asked nearly twice the rate that New Delhi wants to pay.​ 
"(They) are not prepared to pay the real price of gas in the market, therefore we are reviewing increasing the capacity of gas allocated to LNG," Mohammad Hadi Nejad Hosseinian, Iran's deputy oil minister for international affairs, said at a conference in Singapore.​ 
"We may increase the capacity to these LNG projects and decrease capacity allocated to the pipeline."​ 
Separately he told Reuters: "We have to decide in a maximum of one and a half to two months (on the pipeline)."​ 
Past deadlines set by Iranian officials for completing major energy projects have often been missed as negotiations on key deals can carry on for years.
India, Pakistan and Iran agreed last month to appoint an outside consultant to suggest a price for the gas. ​ 
Iranian officials had offered a price linked to Dated Brent crude that equated to about $8 per million British thermal units (mmBtu), while New Delhi wants to pay about $4.25 per mmBtu.​ 
Nejad Hosseinian said yesterday that they were now working to change the pricing formula to one based on LNG import prices to Japan, the world's biggest consumer of the fuel, taking into account the cost of freight and transport.​ 
India is trying to eliminate power shortages by securing new sources of energy for its booming economy, the fourth-largest in Asia, while Iran is eager to finally tap into its mostly undeveloped gas resources.​ 
But New Delhi is also weighing the cost of using cleaner fuel natural gas against more abundant but dirtier domestic coal. It has already agreed a landmark civilian nuclear co-operation deal with the US to boost its atomic power capacity, forcing it to walk a fine line in dealings with Tehran.​ 
"The reality is the Asian buyers have to compete with the Western market, they can't use the old rules that gas should compete with other energies," said Nejad Hosseinian.
India is also a potential buyer of Iran's LNG, but a preliminary supply deal agreed nearly two years ago has also stalled over the issue of price.​ 
Singapore (Reuters) Oil prices would rise if the West imposed new obstacles to investing in Iran's oil sector, although Tehran does not expect such measures from the United Nations, a senior government official said yesterday.​ 
"I don't think the Security Council will put sanctions against oil and gas," Nejad Hosseinian told reporters in Singapore.​ 
"If they stop us from more investment in oil, long-term, oil prices will increase."
Apart from the risk to short-term supplies, analysts fear sanctions could slow much-needed investment in Iran's upstream sector, home to the second-largest oil reserves, accounting for about 10 per cent of the world's total proven reserves.​ 
A lack of investment stymied for decades by vicious infighting and layers of bureaucracy in Iran would make it more difficult for Tehran to bring onstream new oilfields or boost output at older ones to meet future demand.​


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## Neo

Friday, September 08, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\09\08\story_8-9-2006_pg5_2

ISLAMABAD: Russia has shown interest in investing in water, power, energy agriculture machinery, steel manufacturing and irrigation sectors as a fact-finding mission of the Russian Federation has started initial negotiations with different ministries, a senior government official told the Daily Times on Thursday. 

This is the first time that a high-level Russian delegation is visiting Pakistan to identify sectors for investment that would usher in a new era in economic relations between Islamabad and Moscow, he added. 

Ms Elena V Danilova, Director of the Department of Foreign Economic Relations of the Ministry of Economic Development and Trade of the Russian Federation, who is heading the delegation, has already called for the establishment of a Pakistan-Russia Joint Business Council. 

The Russian delegation, according to the official, has expressed interest in investing in manufacturing agricultural machinery, especially tractor manufacturing. This is the sector in which the Russian authorities want to invest within a short span of time, he said. 

However, on long-term basis, Moscow is keen to invest in diversified sectors as Pakistan has become attractive for investors from different regions. A recent report of the World Bank said that doing business became easier in Pakistan than India in the fiscal year 2005-06. In the world ranking of 175 countries, South Asia's Maldives ranked at 53, Pakistan 74, followed by Bangladesh 88, Sri Lanka 89, Nepal 100, and India 134, Bhutan 138 and Afghanistan 162. 

The report states that Pakistan has been ranked 74 in case of doing business, 54th in starting a business, 89th in dealing with licences, 126th in employing workers and 68th in registering property. 

The inflow of foreign direct investment from various countries had registered a growth in the last fiscal. This year too the government expects that FDI would increase as the interest among foreign investors is rising.

The official said the government is doing everything possible to facilitate foreign and local investors through various means. The powers of the Board of Investment have been increased that will play a great role in facilitating investors, who are coming from different regions and countries. 

Pakistan is focusing on various regions, including the Gulf, Southeast Asia and some other regions to persuade investors to invest in the country. 

Russia, the official said, has the expertise most sectors. It has the skill to provide products at relatively competitive prices to local and international markets. The official said each and every sector of the country is open for investment. However, top priority is being given to the industrial sector, which will not only provide more jobs, but transfer technology as well, the official added.


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## Neo

KARACHI: MCB Bank Ltd, PakistanÃ¢â¬â¢s second-largest listed bank, said on Thursday it was preparing a global depository receipt (GDR) sale in London worth up to $150 million.

MCB, which ranks behind National Bank of Pakistan on the Karachi Stock Exchange (KSE) with a market capitalisation of about $1.9 billion, will start pre-marketing the offer later this month.

That timetable could beat to the market a potentially larger London issue by Oil and Gas Development Company Ltd (OGDCL), which plans to list between 10 and 15 per cent of the $9 billion oil firm as a GDR by the end of the year.

Ã¢â¬ÅWe will be launching the roadshows from the 25th, with an approximate pricing date of the GDR of Oct 9,Ã¢â¬Â said Ali Munir, Chief Financial Officer of MCB Bank. Ã¢â¬ÅThe size of the issue will be $100-$150 million,Ã¢â¬Â he said, confirming information given to Reuters earlier by a source in Beijing.

Munir said roadshows for the GDR issue will be held in Dubai, Singapore, Hong Kong, Amsterdam, London, Boston, New York and San Francisco.

The lender first announced its GDR plan in July and it has appointed Merrill Lynch as its sole book-runner. The bank, which has more than 950 branches, is offering all primary shares, representing about seven per cent of its total enlarged share capital.

Shares of MCB Bank closed more than two per cent down at Rs223.15 on Thursday while the broader market was down 1.41 per cent.


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## Owais

*Govt seeks review of blocked PSM sale 
**ISLAMABAD *_(updated on: September 08, 2006, 18:43 PST_): The government of Pakistan on Friday asked the Supreme Court (SC) to review a decision to block the sale of the country's biggest steel producer, Pakistan Steel Mills (PSM).

In a blow to the country's beleaguered privatisation programme, the court in June stopped the sale to a Russian-led consortium, saying privatisation laws were violated and "acts of omissions and commissions" committed by government officials.

The court also ruled that the valuation of the project and the final terms offered to the consortium had been adversely affected by the violations.

A team of government lawyers filed a petition in the court on Friday asking that the judgement be "reviewed, recalled and set aside".

The privatisation of PSM was referred to the SC after a petitioner said the firm was a "strategic asset" that was being sold to the consortium in haste at a throw-away price.

The consortium, made up of Russia's Magnitogorsk Iron and Steel Works Open JSC, Saudi Arabia-based Al-Tuwairqi Group of Companies and Pakistani firm Arif Habib Securities, made a bid of $362 million for a 75 percent stake in PSM at an auction on March 31.

In its review petition, the government said the court's judgement "incorrectly holds" that the valuation of the share of PSM was not carried out in line with the laws.

The country's privatisation programme has been far from smooth and the government has had to abort several sales.


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## Owais

*Two new ghee plants being set up in Karachi* 


KARACHI (September 09 2006): To local firms have received government approval for setting up edible oil refineries in Karachi, which would cost about $10 million, sources said on Friday. They said that these two parties who would establish their plants in Karachi are Waheed Hafeez Ghee Industry and Hamza Edible Oil Refinery of Lahore (Sufi Group).

Both (Waheed Hafeez and Sufi Group) have acquired land near Port Qasim. Construction of the plants is likely to begin in December this year, which may take 18 months to complete. Thus, production is likely to commence by February 2008.

These units would have production capacity of around 500 tonnes per day. With the induction of these two edible oil plants, the number of big refineries in the country would reach 10, while the total edible oil production would rise to 7,000 tonnes per day, which currently is 5,000 tonnes.

About the technology that would be used in these edible oil refineries, Sources said that these plants would have the latest, world-class technology. However, both parties were reluctant to divulge from where they would procure the machinery. "The technology which they (units) would use, is 'Continuous Refinery' and might be bought from the European market, which runs the plant smoothly without getting heated," sources added. These refineries would use crude palm oil, to be imported from Malaysia and Indonesia.

Waheed Hafeez Ghee Industry is basically an Islamabad-based party. The country's demand for edible oil is 1.5 million tonnes per month, which goes up to 3 million tons during Ramazan. Of this 3 million tonnes, around 0.6 million tonnes is supplied by some 128 small and big edible oil refineries across the country.


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## Owais

*Pakistan to host second Islamic Economic Forum* 


ISLAMABAD (September 09 2006): Pakistan will host the three-day 2nd World Islamic Economic Forum starting November 5 here with the theme "Unleashing the Economic Potential" in collaboration with the World Islamic Economic Forum Foundation.

This was disclosed at a joint news conference addressed by chairman of the World Islamic Economic Foundation Tun Musa Hitam and minister of state for economic affairs Hina Rabbani Khar on Thursday.

They said key issues to be taken up by the forum are: Muslims economic renaissance, revitalising the OIC, promotion of Muslim solidarity in economic, social and political affairs, the role of Muslim leadership in a globalised world, the development of entrepreneurship and leadership qualities among youth and women, promoting inter-faith harmony, understanding trends in science and technology and Islam and the western world.

Keeping in view the forum's theme, deliberations at the event will also focus on exploring investment opportunities in tourism and infrastructure development, information, telecommunications and outsourcing, water, energy and resources and enhancing competitiveness of Muslim companies and businesses.

The forum will be attended by over 400 delegates from all over the world. Delegates include high-level government officials, business and economic leaders, besides some heads of states and governments.

Tun Musa Hitam said on the occasion, MoUs will be signed among four/five selected universities on research and development of different technologies and enhancing of training facilities in vocational, technical education.

"We are not meeting merely for business collaborations but we are actually saying that we are doing so in the context of a changing system: one that is increasingly favouring and accepting Islamic finance and services as an important component of the international financial system.

Thus, the forum acknowledges this underlying strength and advantage and offers participants with discussion topics that take into account this renewed vigour, unleashing the economic potential that is inherent in our emerging markets," Musa added. Hina Rabbani Khar said the forum will be a panel-oriented conference which will concentrate on exploiting the potential of emerging markets.

The first World Islamic Economic Forum was held in October 2005 in Malaysia and was attended by more than 600 participants, she said. "In today's energy-dominant economic order, it is important to ensure revenues from the vast oil and gas reserves found in Islamic countries are channelled into assisting sustainable economic development of other Muslim countries.

The forum will address this and other issues that promote cross-border trade, commerce and investment by providing a conducive ground for interaction and networking among government representatives, industry heads, regional experts, professionals and corporate managers," Hina added.

The event would be addressed by a host of distinguished personalities, including Prime Minister Shaukat Aziz and Malaysian Prime Minister Abdullah Ahmad Badawi. Similarly, President General Pervez Musharraf will join other global leaders in a special keynote leadership panel on "Muslim Leadership in a Globalised World".


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## Owais

*Kuwait for joint ventures in SME sector* 


LAHORE (September 09 2006): State Minister and Secretary General of Manpower and Government Restructuring Programme of Kuwait Dr Waleed Al Wohaib has said that Kuwait is keen to promote joint ventures with Pakistan in SME sector.

He stated this while speaking at a reception hosted by chief executive officer of Small and Medium Enterprises Authority (Smeda) Shahab Khawaja in his honour.

Dr Waleed maintained that he was highly impressed with the industrial development of Pakistan, and was trying to identify the areas where Kuwait could join hands. The two sessions of formal meetings with Smeda officials during the last two days were highly useful and hoped that the discussions would soon lead to a memorandum of understanding between Smeda and the Kuwaiti Manpower Department.

Aqeel Al Jassem, while expressing his views on this occasion, emphasised upon the need for enhancing economic co-operation among the Islamic countries. He was of the opinion that Pakistan should share its experience with the brother countries like Kuwait in SME development strategies. Earlier, Shahab Khawaja, CEO, Smeda assured the Kuwaiti delegation of the best possible co-operation to promote bilateral relations in the fields of manpower, industry and trade, especially in the SME sector.

Besides, former Secretary General, Islamic Chamber of Commerce and Industry, Iftikhar Hussain, General Manager Central Support, Khalid Kifah, Deputy GM, Technical Innovation, Imran Chaudhry, Manager Donor Co-ordination, Fayyaz Riaz, Manager Smeda-JICA Industry Support Cell, Salman Khalid, Project Director, Industrial Information Cell, Sheharyar Tahir, Manager, AHAN and Liaqat Ali Gohar, Manager PR & Marketing were also present on the occasion.


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## Owais

*Canadian firm and FPCCI sign MoU* 


KARACHI (September 09 2006): In order to boost the country's exports and to promote the image of its products in local and international markets it is necessary to educate the manufacturers about the importance of branding.

In this connection a memorandum of understanding (MoU) was signed between the Federation of Pakistan Chambers of Commerce & Industry (FPCCI) and Canadian based company ABC Namebank at the Federation House, here on Thursday.

According to the MoU, seminars and workshops would be held in the eight industrial cities of the country to educate the top management of major exporters about the branding issues. About 100 exportable brands would be developed which would carry assurance of world class quality.

The Canadian firm would help in establishing a secretariat at the FPCCI to facilitate the exporters on marketing issues pertaining to overall image and branding.

On the occasion, Chaudhry Muhammad Saeed, president, FPCCI, said that the registration of new products with their brand names would increase the reliability of Pakistani products world-wide.

A brand name would enable a local company to boost 200 percent of its exports because after the introduction of Intellectual Property Rights, people across the world rely on branded products, he said. The brand names would give the best price to the local manufacturing companies, which were already famous in the international market, he added.

He said that several international companies were selling their products due to popularity of their brands while the real manufacturers are in different countries. The branded companies were now only putting their energies on research and innovative ideas to improve the image of their brands.

Pakistan is also among those countries where big companies have placed orders to local manufacturers for their products. These manufactured products sold in the world market with the big companies' logo, he said.

Several sectors like textile, surgical and sports goods, which have good demand in the international market, but could not get better return due to non availability of popular brands, he said.

Nasim Javed, President ABC Namebank, said that the company would provide training, technical facilities and consultancy to local entrepreneurs about the branding which would boost their confidence in manufacturing. The signing ceremony was also attended by Akbar Abdullah, vice president FPCCI and Mohsin Ashraf of ABC Namebank International.


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## Owais

*French group identifies 10 sites for chain of hotels* 


ISLAMABAD (September 09 2006): Accor Group of France will build a chain of its hotels in all major cities of the country. Gerard Pelission, President of Accor Group, disclosed this during a meeting chaired by Zahid Hamid, Federal Minister for Privatisation and Investment here on Friday.

Pelisson, accompanied by senior officials from the Accor Group, said that the Group has identified 10 sites for its chain of hotels and will soon start their projects.

He said that the company is aware of the potential that Pakistan offers in the tourism sector and this is the reason why they have decided to enter into long lasting partnership with Pakistani investors.

He pointed out that Accor will also brought its 5-star and 4-star hotel chain of Novotel in Pakistan and are currently in the process of finding good locations.

Zahid Hamid, Federal Minister for Privatisation and Investment, welcomed the decision of Accor Group and said their presence in Pakistan will be a welcome addition to the hotel industry.

Earlier, Hamid briefed the delegation about the economy, privatisation and investment climate in Pakistan. Saleem Gul Sheikh, secretary tourism also made a presentation on the tourism sector in Pakistan. Talat, acting secretary Board of Investment, Pakistan Investment Counsellors and senior officers of BOI also attended the meeting.


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## Owais

*Textile exports to increase to $50 billion till 2016: ABL chief* 


MULTAN (September 08 2006): Allied Bank Ltd (ABL) President, Naeem Mukhtar has expressed the hope that volume of textile exports would increase to $50 billion till 2016 and it would help develop Pakistan economically. Addressing a gathering of industrialists, traders and ginners on Thursday.

The ABL chief said that replacement of outdated, old, discarded machinery and infrastructure and establishment of new industry and value addition was necessary to compete China and India in the world market.

He urged upon ginners to run their business personally and avoid leasing out their ginning factories. He asked them to modernise their factories, besides using fibre-testing equipment to meet the global market challenges and WTO conditions.

He said the ABL was rated in five major banks in Pakistan, adding that it would advance loans of 5, 7 and 10-year terms on reasonable mark-up to replace the old machinery with modern and digital ones so that the textile industry could meet the demand of international buyers.

He said that Pakistan had been progressing by leaps but unfortunately, our ginning industry lagged behind, adding that ABL would advance loans for the modernisation of ginning industry after textile mills.

He said that all the ABL branches were connected with on-line system and it would finance the trading and business concerns in the information technology and trading experts would be sent to Southern Punjab to help local traders. He hoped that by this step we could develop ourselves like Korea and China.


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## Owais

*'10 times growth in microfinance in six years'* 


ISLAMABAD (September 09 2006): The microfinance sector in Pakistan has grown tenfold, to 600,000 clients, over the past six years, but the further growth would be impeded if the lending rates continued to remain low, notes a latest United States Agency for International Development (USAID) funded report.

The report, titled 'Microfinance Performance in Pakistan 1999-2005: Growth - But a Structural Flaw Persists', observes that micro-finance industry is capable of providing financial services to the poor, who traditionally lack access to commercial banking services.

Various public and private organisations, such as Pakistan Poverty Alleviation Fund, Khushhali Bank, and a range of other microfinance banks and NGOs have invested at least $400 million for providing microcredit services. This investment has led to remarkable progress, as the microfinance sector has grown from 60,000 active borrowers in 1999 to more than 600,000 in 2005, the report notes.

The study applauds the incredible progress made in the country's microfinance sector in terms of rapid expansion, solid repayment rates of loans and low delivery costs.

However, it asserts that microfinance providers need to charge interest rates that meet their costs in order to make microfinance services fully sustainable. "The interest rates, service charges and other fees charged to borrowers are too low for growth to continue" in the microfinance sector.

It notes that delivering microfinance loans remains a high-cost activity because services are often delivered at the doorsteps of more difficult-to-service poor clients and remote areas. As a result, the interest rates charged on microfinance loans need to be higher than for typical loans from commercial banks, it stresses.

The study, conducted through USAID funded project 'Widening Harmonised Access to Microfinance' (WHAM), is being implemented by ShoreBank International Ltd. The report is a joint effort of ShoreBank and Pakistan Microfinance Network.

According to the report's statistics, most of Pakistan's microfinance lending organisations have a strong track record of recovering the loans. It also points out that the microfinance services have so far reached only 6 percent potential clients and 94 percent potential clients still remain without access to microfinance services.

It emphasises that microfinance lenders in Pakistan have a choice to make: they can either choose to continue to cover revenue shortfalls through subsidies and accept that the sector will never expand beyond the level of subsidised support; or they can charge higher interest rates to cover costs to build a capital base, and help in establishing strong and sustainable microfinance providers.

ShoreBank's Country Representative in Pakistan Gregory Chen, commenting on the report findings, said: "A rise in interest rates would help ensure that 94 percent of those who remain excluded from microfinance services could gain access over time."

"There is ample evidence in Pakistan, and around the globe, that most of those without access can afford to pay the full cost of access to financial services," he said, adding that "to cap interest rates at a level that does not fully cover costs will deny most potential borrowers this choice."


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## Owais

*China, UAE intend to invest in Pakistan* 

ISLAMABAD: China and the United Arab Emirates (UAE) intend to invest $93 billion in Pakistan.

The UAE investors have shown their interests in Pakistan&#8217;s Bin Qasim and real estate sectors and intend to invest $43 billion in the next 10 years, while China, in a statement released here from Chinese capital Beijing, has expressed its intention to invest $50 billion in the construction and development of Gawadar Port in the next five years.

Analyst Muhammad Sohail told that Pakistan was now being ranked among the countries most attractive for investment. He said that such a huge investment flowing in would step up the development pace in the country.


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## JB 007

Owais said:


> *China pledges $50 billion investment*
> 
> 
> ISLAMABAD (September 08 2006): China has pledged $50 billion investment to Pakistan to develop Gwadar port on the pattern of its Shenzhen port over the next five years.


hi owais i would like to confirm the news, is it US$50bn or US$50,000Mn? thanks


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## Neo

Its likely to be $50 million. Gwadar is going into second phase development and China usually pledges 50-350 million.
Imho its a typo mistake by the author..:embarassed:


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## JB 007

Neo said:


> Its likely to be $50 million. Gwadar is going into second phase development and China usually pledges 50-350 million.
> Imho its a typo mistake by the author..:embarassed:


hi Neo, actually the news came in one more post also and it was said that total of about $93bn from UAE and China is going to be invested in pakistan. i thought if this is correct news, only china can make inflow of about $10bn on average every year solving all the problems. infact 300Mn -350Mn is also no less. this is a very good money. thanks


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## Neo

KARACHI, Sept 8: Overseas business support units will be set up under the umbrella of the Trade Development Authority of Pakistan (TDAP) in a bid to strengthen overseas markets for the promotion of countryÃ¢â¬â¢s exports.

The units will be run jointly by the public-private sector, official sources said on Friday.

There is a growing concern amongst economic planners that without registering a quantum jump in exports, the country could not sustain its high growth. Consequently, a task has been given to the Planning Commission to draw a roadmap for achieving a major breakthrough in exports within next couple of years.

The Planning Commission has constituted a committee headed by Tariq Ikram, Minister of State and Chairman of the Export Promotion Bureau (EPB). According to initial working made by this committee, a target of $40 billion exports during the next five years was likely to be achievable.

The sources said the setting up of these units was part of this scheme which would be used to record a quantum jump in exports by adopting short and long-term strategies. Initially, these units will be set up in six countries as a pilot project.

The Federation of Pakistan Chambers of Commerce and Industry and the Foreign Office were being taken on board for this project because their assistance and expertise would be needed, the sources added.

The units will be run on self-financing basis with only first two years and the governmentÃ¢â¬â¢s financial support will be there to pass the gestation period smoothly.

These business support units will be run by the local people of that country and their remunerations will be linked with their performance based on quantum of import orders generated by them. It is expected that the units in three years time will start generating fresh export orders to the tune of $1 billion per annum for countryÃ¢â¬â¢s exporters.

The operations of these units will be closely monitored by the TDAP which will be equipped with high-level technology to run its affairs.

The TDAP is awaiting legislation, but sources said a preliminary work was in advanced stage, as the government wanted to ensure that exports were taken full care of and should record a quantum jump to arrest the ever-rising trade gap.

The economic planners are well aware of the fact that if the country does not increase its exports in coming years, a sever crisis could emerge and this will further deteriorate the trade gap, as job opportunities totally depend on exports.

The sources said high-level technology would be inducted at every operating level of the TDAP, adding that more than 50 per cent procurement had been already made. They said almost all the required hardware and software had been procured.

Similarly, the EPB has been geared up to update its records and systems for the induction into the TDAP. Arrangements are afoot to use other tools for expanding exports by establishing virtual exhibitions. Interactive facilitation and infrastructure will be made available to the exporters, and trade fairs and exhibitions will be arranged.


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## Neo

JB 007 said:


> hi Neo, actually the news came in one more post also and it was said that total of about $93bn from Saudi Areabia and China is going to be invested in pakistan. i thought if this is correct news, only china can make inflow of about $10bn on average every year solving all the problems. infact 300Mn -350Mn is also no less. this is a very good money. thanks


 
JB,

Pakistan has been marketing itself quite agressively to foreign investors and respected entities like WB, ADB, Marryl Lynch to name a few have praised Pakistan for the economic turnaround since the recession of late nineties.

There are two major factors to our success:

- Arabs are looking for a safer place to invest there money rather than US, UK or Continental Europe.
- Immidiate high returns to foreign investment and governments grants to protects the asstets.
- Creation of tax free ecomomic zones throughout the country.
- Growing FTA between Pakistan and the rest of the world.
- The China factor: To counter India, Pakistan needs to grow in economic field rather then military and we're China's main ally and a potential regional hub and corridor for chinese trade.

Only major disadvantage is the political instablity in Balochistan and some other area's of Pakistan and the military rule.
The former is being dealt with properly; we've seen actions against the Bughti's and number of attacks on gas pipelines and other assets seems to have declined drastically as direct result.
The latter will be solved since elections are due early next year.

Its upto the next civil government to follow the same path by endorsing current policies.

As for the figures published lately, I can comfirm the $30-40 billion from UAE, $10 billion from KSA, $2-5 billion from Kuwait and another $2-3 from Qatar and Bahrain.
China will surpass UK as largest foreign investor and the potential is as high as $100 billion during next 7-10 years all depending on the ongoing negociations.

Things are looking good for Pakistan! :flag:


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## Neo

Saturday, September 09, 2006http://javascript<b></b>:; http://www.dailytimes.com.pk/print.asp?page=2006\09\09\story_9-9-2006_pg5_2

KARACHI: Export Promotion Bureau (EPB) Vice-Chairman Naveed Arif said Pakistan was the top exporter of dates in the world this year as it exported 78,000 metric tonnes of dates to 30 countries including USA, Canada, European Union, Japan, China and India.

He was speaking after the inauguration of the Pakistan Honey and Dates Show 2006 at the Karachi Expo Centre here on Friday.

The Export Promotion Bureau, that organised the show, said about 150 exporters and producers of honey and dates are displaying their products at the three-day exhibition. It added that about 30 importers from the Gulf such as Saudi Arabia, India, China and Uzbekistan were displaying products at the show.

FPCCI President Chaudhry Mohammad Saeed inaugurated the show and visited various halls. 

He called for improving the quality and packaging of honey and date products for export.

He also called upon date exporters to market their products so that they reached the Pakistani market as well as Muslim countries before Ramadan.

The FPCCI president also spoke of the need to produce by-products of dates in order to increase foreign exchange earnings.

He said exports of honey had also increased from less than $1 million to $3 million this year.

Date and honey exporters called on the government to help them invest in modern machinery.


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## Neo

Saturday, September 09, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\09\09\story_9-9-2006_pg5_11

KARACHI: Federal Minister for Industries, Production and Special Initiatives Jehangir Khan Tareen said on Friday that the country had the potential to export at least 600,000 units of arms a year.

He added that a sports and hunting arms producing industry would be established at Darra Adam Khel by streamlining more than 200 arms manufacturing units in the area.

The minister said the Pakistan Industrial Development Corporation (PIDC) had taken a decision in this regard. He was speaking to journalists after chairing a meeting of the PIDC board of directors at PIDC house here on Friday. He said the meeting had also approved a proposal to establish a sports and hunting arms developing company in Darra Adam Khel.

There are around 200 small arms manufacturing units in the area, which produce good quality arms and ammunition.


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## Neo

Saturday, September 09, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\09\09\story_9-9-2006_pg7_12

_* CDWP to consider 48 projects worth Rs 66b in next meeting

By Fida Hussain_

ISLAMABAD: The Water and Power Ministry has sought a sum of Rs 125 billion to buy land and resettle people likely to be affected by the proposed Kalabagh and Akhori dams as the Central Development Working Party (CDWP) of the Planning and Development Division is likely to consider around 48 other projects worth Rs 66 billion, a senior government official told Daily Times. 

The official said that the CDWP would also consider the land acquisition and resettlement for the Diamer Basha dam project. However, the ministry has not given a separate cost for buying the land, said the official. The ministry has given the total cost of the project at around $6.53 billion with a foreign exchange component of $3 billion. 

The ministry has estimated the cost of land acquisition and resettlement for Kalabagh Dam at Rs 58.6 billion and Akhori dam at Rs 68 billion. Besides the three major dam projects, a power distribution enhancement project of Rs 73 million in the energy sector is also on the tentative agenda of the CDWPÃ¢â¬â¢s next meeting.

The official said that the list of the projects would be finalised in pre-CDWP meetings which is to be chaired by Planning Commission Deputy Chairman Dr Mohammad Akram Sheikh. 

The planning body will also consider Rs 21 billion development schemes in transport and communications, a Rs 272.545 million project in water resources, Rs 1.5 billion project in physical planning and housing, Rs 827 million schemes in population welfare, Rs 199 million scheme in culture, sports and tourism, Rs 1.4 billion project of industries and commerce, Rs 29 billion schemes in the health sector, Rs 573 million projects in education, Rs 97 million project in information technology, Rs 8.54 billion in agriculture and food, Rs 597 million schemes in science and technology, and Rs 2.7 billion projects in the higher education sector. 

The next CDWP meeting is considered to be important because it will consider vital energy projects. The meeting will be crucial in a sense that it will take up the land acquisition of Kalabagh Dam for which the federal government is yet to remove the grievances of Sindh and NWFP, the official said.


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## Neo

*Emaar Pakistan launches Portuguese-style Mirador homes at Canyon Views*

*Emaar Pakistan, the country-arm of global real estate major Emaar Properties, has unveiled Mirador homes, a neighbourhood of Portuguese-styled villas at its first master-planned community project in the country, Canyon Views in Islamabad.*

Family villas set amidst open green spaces, walkways

Perfectly suited for families, each stand-alone Mirador villa recreates the flourish of Portuguese architecture with terracotta walls, gabled roofs and wrought iron detailing. Wide-open green spaces, meandering walkways and tree-lined streets set the stage for an ideal getaway from the hustle and bustle of typical urban quarters. The stylish homes, located in close proximity to the city centre, are created to meet the requirements of the country's population seeking unique living environments. 

'Mirador homes form the first component of Canyon Views, Emaar's first master-planned community in Pakistan,' said Mr Mohammed Al-Falasi, Managing Director, Emaar Pakistan. 'With Mirador, Emaar is bringing in the best of Portuguese style living quarters, the architectural components of which are perfectly suited for the warm climes of Pakistan.' 

Mirador offers its residents a range of community and sports amenities such as cricket grounds, swimming pools and tennis courts. The streetscapes are ideal for a leisurely stroll or cycling. Children have dedicated play areas and swimming pools. The town centre will feature retail outlets, restaurants, fitness facilities, schools and a mosque. 

Spanish or Portuguese style decorative elements complement the pitched colourful roofs in the exteriors. The villas, designed with a meticulous eye for details, boast modern fittings and elegant finishes. Large kitchens come fitted with extensive cabinetry and granite countertops. Residents have a choice of colour palettes for the interior. 

Ceramic tiles are standard throughout the villa. Ten-feet high ceilings in living spaces and 9-ft high ceilings in principal spaces assure cooler ambient temperatures. All bedrooms, with en-suite bathrooms, have built-in wardrobes. The villas have special living quarters for service staff and two car parks. 

Advanced entertainment and communication facilities are offered including hi-speed Internet access. All villas have private yards enclosed by boundary walls. Twenty-four hour security and maintenance services will also be provided. 

'Emaar has a track record of handing over 14,000 homes in varied master-planned community projects in Dubai, and we are expanding on the same model in Islamabad with the Mirador homes at Canyon Views,' said Mr Al-Falasi. 'These villas mark a celebration of life by offering residents a proportioned living quarter with large balconies opening to lush green landscapes and a wide range of community amenities.' 

Canyon Views is part of a PKR145 billion (US$2.4 billion) development outlay by Emaar in Pakistan and is located in the Defence Housing Authority Islamabad (DHAI) Phase 2 extension. 

The sales center for Mirador homes is located at DHA Phase 2 extension, off Islamabad highway. Potential investors and home-owners can visit the centre from September 10 for more details on the project or log on to www.emaar.com to register interest. 

Emaar is also developing the Highlands in Islamabad and Crescent Bay in Karachi apart from having signed a Memorandum of Understanding with the Port Qasim Authority to develop a mixed-use project in Karachi. 

Emaar's Pakistan development initiatives are in line with the company's Vision 2010 of becoming one of the world's most valuable companies through focused expansion and diversification.


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## Owais

*Private sector to add 2000MW electricity by 2008 
**ISLAMABAD *_(updated on: September 09, 2006, 21:16 PST_): Prime Minister Shaukat Aziz on Saturday said the government would tap all possible sources to increase power generation and maintain the momentum of growth.

Chairing a meeting at the PM House to review the demand and supply situation and overall progress in electricity generation, the prime minister said the demand of electricity has increased by 11 percent in the last year reflecting economic vibrancy, high growth and improved living standards.

He was informed that the total hydel production was 6740 MW, 1000 MW higher than last year while the total consumption and demand of electricity was at par with 14,000 MWs.

The prime minister said electricity demand was growing by 6-8 percent annually. During the last year 19,000 tube-wells were installed and 15,000 villages were electrified.

He reiterated government's commitment to provide electricity to every village in the country by 2007 and said the villages, which are not on the grid, would be provided electricity through alternative sources of energy.

While efforts are being made to increase hydel power, electricity generation through coal and thermal power generation will also be encouraged, he added.

The prime minister said government was encouraging the private sector investment in power sector and a level-playing field has been provided to local and foreign investors.

He said the government has formulated a clear policy, streamlined the procedures and reduced approval time to remove bottlenecks hindering private sector participation.

The Minister for Water and Power Liaquat Ali Jatoi informed the prime minister that private sector will add up to 2000 MW of electricity by 2008.

Four companies; Saif Power Limited, Orient Power Company Ltd, Star Power Generation Ltd and Sapphire Group will produce 800 MW and supply it to Wapda.

The prime minister was informed that Wapda would provide 1100 MW thermal power by 2008.

The Private Power Infrastructure Board (PPIB) has invited Request for Proposals (RFPs) for coal power generation using local and imported coal.

The representatives of the private sector who attended the meeting appreciated the interest taken by the president and the prime minister to streamline policies in the power sector.

They said as a result of the government policies local and foreign businessmen were investing in the power sector, which augurs well for the future development of the country.


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## JB 007

Neo said:


> Pakistan has been marketing itself quite agressively to foreign investors
> There are two major factors to our success:
> 
> - Arabs are looking for a safer place to invest there money rather than US, UK or Continental Europe.
> - The China factor: To counter India, Pakistan needs to grow in economic field rather then military and we're China's main ally and a potential regional hub and corridor for chinese trade.
> 
> we've seen actions against the Bughti's and number of attacks on gas pipelines and other assets seems to have declined drastically as direct result.
> 
> As for the figures published lately, I can comfirm the $30-40 billion from UAE, $10 billion from KSA, $2-5 billion from Kuwait and another $2-3 from Qatar and Bahrain. China will surpass UK as largest foreign investor and the potential is as high as $100 billion during next 7-10 years all depending on the ongoing negociations.
> 
> Things are looking good for Pakistan! :flag:



this is good thing for pakistani economy that Arabs and China want to invest in pakistan. if someone will ask me about status of pakistan among muslim countries in terms of economic performance, I may rate her close to malaysia, indonessia. I guess pakistan has got reputation close to these countries. 

action against Bughti was a gamble played by Mr Musharraf, either he will win or he will loose. Mr Musharraf look like a honest man but he gotto understand that he cant solve all the problems by bullets. there was no man like 80 year old Bughti in the world. Bughti is thinking of the people living in Baluchistan. if they will not think like that, no Bughti will get support from them. in the same way, even if indian military kill few leaders of Hurriyat Ã¢â¬Åby mistakeÃ¢â¬Â, thinking of 10-20% people of kashmir will not be changed who think Hurriayt is right. anyway lets see whether Mr Musharraf win this gamble or not. if he will win, problem of baluchistan will be solved completely and if he will lose, pakistan will face very tough situation in Baluchistan similar to that of East pakistan in 1970.

Neo if we add $40bn from UAE, $10bn from KSA, $10bn from other Arabs, and rest $100bn from China as you said, this comes around $160bn and if 30-$40bn from rest of world including US, Europe and Japan (if we assume with this trend as you said), then the total comes atleast around $200bn for next 7-10 years or about $20bn to $30bn on average for next 7-10 years. brother I donÃ¢â¬â¢t know how correct your information is, but if this is true, pakistan will emerge as the fastest growing economy in the world beating all the expectations. but even if we look on the excellent performance of pakistan in terms of FDI last year, it was just around $3.2bn including $1.8bn through just privatisation or just about $1.4bn excluding FDI thru privatisation. I donÃ¢â¬â¢t know how much success pakistan will get in this mission of FDI. but even if pakistan get only 40-$50bn (excluding privatisation) for next 7-10 years, this will be said to excellent for a small economy like pakistan and this may be a solution to tackle widen trade deficit of pakistan. otherwise if we look on trade performance of pakistan, things are completely different and it no good. 
anyway i give my best wishes.


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## sigatoka

JB 007 said:


> I donÃ¢â¬â¢t know how much success pakistan will get in this mission of FDI. but even if pakistan get only 40-$50bn (excluding privatisation) for next 7-10 years, this may be a solution to tackle widen trade deficit of pakistan.


 
In any given year Capital Acc. Surplus + Trade Deficit Must equal 0. (by definition) 
(similarly Trade Surplus + Capital Account Deficit must equal 0) 


In a year that Privatisation occurs, capital surplus increases (because inflow of capital), therefore trade deficit must increase for equation to equal zero. FDI in the short run allows a nation to consume more than it produces (and in the long run it forces a nation to consume less than it produces- because foreign owners have to be paid dividends). Its real benefits are from transferring technology (which spills over) and thus it allows long run consumption to increase. 

p.s. what exactly do you have against a trade deficit? Japan has been running mamoth surpluses for at least (as long as i have been seing internation finance on tv) and they have been growing at the great rate of 1% for that time. The U.S. on the other hand has been running large trade deficits and been growing more like 3-3.5% a year since (i started watchign int. finance on t.v.)


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## JB 007

sigatoka said:


> *In any given year Capital Acc. Surplus + Trade Deficit Must equal 0. (by definition)
> (similarly Trade Surplus + Capital Account Deficit must equal 0) *
> 
> 
> In a year that Privatisation occurs, capital surplus increases (because inflow of capital), therefore trade deficit must increase for equation to equal zero. FDI in the short run allows a nation to consume more than it produces (and in the long run it forces a nation to consume less than it produces- because foreign owners have to be paid dividends). Its real benefits are from transferring technology (which spills over) and thus it allows long run consumption to increase.
> 
> p.s. what exactly do you have against a trade deficit? Japan has been running mamoth surpluses for at least (as long as i have been seing internation finance on tv) and they have been growing at the great rate of 1% for that time. The U.S. on the other hand has been running large trade deficits and been growing more like 3-3.5% a year since (i started watchign int. finance on t.v.)


you are right


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## Neo

JB 007 said:


> this is good thing for pakistani economy that Arabs and China want to invest in pakistan. if someone will ask me about status of pakistan among muslim countries in terms of economic performance, I may rate her close to malaysia, indonessia. I guess pakistan has got reputation close to these countries.


Indeed, we're among the fastest growing muslim economies and we're poised to become an Asian Tiger.
FTA with Malaysia is in the making, it will be effictive early next year.  



> action against Bughti was a gamble played by Mr Musharraf, either he will win or he will loose. Mr Musharraf look like a honest man but he gotto understand that he cant solve all the problems by bullets. there was no man like 80 year old Bughti in the world. Bughti is thinking of the people living in Baluchistan. if they will not think like that, no Bughti will get support from them. in the same way, even if indian military kill few leaders of Hurriyat Ã¢â¬Åby mistakeÃ¢â¬Â, thinking of 10-20% people of kashmir will not be changed who think Hurriayt is right. anyway lets see whether Mr Musharraf win this gamble or not. if he will win, problem of baluchistan will be solved completely and if he will lose, pakistan will face very tough situation in Baluchistan similar to that of East pakistan in 1970.


Bughti is a closed chapter and the event has been hi jacked by opposition and anti Pakistan elements, totally blown out of proportion.
There were strikes in Pakistan, nationwide protests, all but the Bughti tribes had there say! Why? Because they're relieved to be freed from abuse and moder day slavery he put up on his own people.
At the end of the day, everything will be normal. It's merely storm in a glass of water.  



> Neo if we add $40bn from UAE, $10bn from KSA, $10bn from other Arabs, and rest $100bn from China as you said, this comes around $160bn and if 30-$40bn from rest of world including US, Europe and Japan (if we assume with this trend as you said), then the total comes atleast around $200bn for next 7-10 years or about $20bn to $30bn on average for next 7-10 years. brother I donÃ¢â¬â¢t know how correct your information is, but if this is true, pakistan will emerge as the fastest growing economy in the world beating all the expectations. but even if we look on the excellent performance of pakistan in terms of FDI last year, it was just around $3.2bn including $1.8bn through just privatisation or just about $1.4bn excluding FDI thru privatisation. I donÃ¢â¬â¢t know how much success pakistan will get in this mission of FDI. but even if pakistan get only 40-$50bn (excluding privatisation) for next 7-10 years, this will be said to excellent for a small economy like pakistan and this may be a solution to tackle widen trade deficit of pakistan. otherwise if we look on trade performance of pakistan, things are completely different and it no good.


I got those figures from news articles and most of it is posted in this thread. Pakistan has been receiving high profile trade delegations from these countries, even if the half of the pldged amount is materialised, it will turn Pakistan into en economic powerhouse.
Figures from China and UAE are most reliable, many of the mega projects have already started.


> anyway i give my best wishes.


Thanks man! :flag:


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## Neo

KARACHI (September 10 2006): State Bank of Pakistan (SBP) Governor Dr Shamshad Akhtar has asked the banks to make plans to raise home remittances to six billion dollars in the current financial year. In a meeting with bank heads at the SBP head office, Karachi, on Saturday.

The SBP governor stressed the need for capturing additional home remittances through banking channels. They are a better source than borrowing and more sustainable; therefore, it is worth the effort and the additional cost, said the central bank chief.

Dr Shamshad Akhtar asked the bank heads to forge alliances with banks and exchange companies in countries where they do not have branches. Further, she asked them to explore the possibility of Internet banking and post themselves on popular websites. Banks would need to offer better pricing and more efficient delivery mechanism than exchange companies and moneychangers, she added.

The SBP governor formed a task force under Habib Bank Ltd (HBL) President Zakir Mahmood to come up with recommendations within the next four weeks to achieve current financial year's target of six billion dollars, and also develop a medium-term plan to further enhance the remittances to eight billion dollars by FY 2009-2010.

It is also learnt that Prime Minister Shaukat Aziz himself is also leading a wider task force to explore all avenues to reduce the pressure on the external account.

The current account imbalance has risen to record high after posting healthy surpluses in 2002 and 2004 despite a sharp rise in foreign direct investment (FDI) to $3.5 billion in FY06.

According to knowledgeable sources, the inflow of foreign currency through informal channels is at least one to one and half times the inflow of $4.3 billion through formal channels.

The demand in informal channels is to cater for gold imports into the country, reverse capital flight to buy properties abroad and meet the calls from trade emanating for under-invoicing (of imports to pay lower duty) and over-invoicing (in exports for earning rebates), and also fulfil various exchange control rates of mandatory nature such as: circuitous exchange flow arising due to bad debt, etc.


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## Neo

ISLAMABAD (September 10 2006): Prime Minister Shaukat Aziz on Saturday said the government would tap all possible resources to increase power generation and maintain the momentum of growth. Chairing a high-level meeting at the Prime Minister House to review the demand and supply situation and overall progress in electricity generation.

Prime Minister said the demand of electricity has increased by 11 percent in the last year reflecting economic vibrancy, high growth and improved living standards.

He was informed that the total hydel production was 6,740 MW, 1000 MW higher than last year while the total consumption and demand of electricity was at par with 14,000 MWs.

The Prime Minister said electricity demand was growing by 6-8 percent annually. During the last year 19,000 tube-wells were installed and 15,000 villages were electrified. He reiterated government's commitment to provide electricity to every village in the country by 2007 and said the villages, which are not on the grid, would be provided electricity through alternative sources of energy.

While efforts are being made to increase hydel power, electricity generation through coal and thermal power will also be encouraged, he added. The PM said government was encouraging the private sector investment in power sector and a level playing field has been provided to local and foreign investors.

He said the government has formulated a clear policy, streamlined the procedures and reduced approval time to remove bottlenecks hindering private sector participation. The Minister for Water and Power Liaquat Ali Jatoi informed the Prime Minister that private sector will add up to 2000 MW of electricity by 2008.

Four companies; Saif Power Limited, Orient Power Company Ltd, Star Power Generation Ltd and Sapphire Group will produce 800 MW and supply it to Wapda.

Shaukat was informed that Wapda would provide 1,100 MW thermal power by 2008. The Private Pour Infrastructure Board has invited Request for Proposals (RFPs) for coal power generation using local and imported coal.

The representatives of the private sector who attended the meeting appreciated the interest taken by the President and the Prime Minister to streamline policies in the power sector. They said as a result of the government policies local and foreign businessmen were investing in the power sector, which augurs well for the future development of the country.

The meeting was also attended among others by Javed Sadiq Malik, Principal Secretary to PM, Mukhtar Ahmad, Advisor on Energy to PM, Acting Secretary Petroleum and Natural Resources, Chairman, Wapda, Chairman, Nepra, and senior officials. The private sector was represented by Javed Saifullah Khan, Nadeem Babar, Javed Ahmad Noel and Shahid Abdullah.


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## Neo

ABBOTTABAD (September 10 2006): Business community from the US is interested to construct at least 20 small hydro-power generation projects in NWFP in next two years on Built Operate and Transfer (BOT) basis, besides investing in 69 other projects costing $650 million after the sovereign guarantee by Government of Pakistan.

President Hazara Chamber of Commerce Industry, Engineer Jehanzeb Khan held a detailed briefing to the visiting officials from USA, which includes Robert Mosbachwr, Dulsa Zahniser and Jones C Polan.

Initially 20 projects with the capacity of 1 MW to 20 MW will be constructed in Hazara, Malakand and Peshawar divisions. He told that local businessman were invited for joint venture with the US investors while matters regarding the onward sale of power to either directly community or companies will be settled later on.

Engineer Jehanzeb Khan said that the government of NWFP was asked to constitute an independent authority to monitor the working of Hydel power units and to fix the tariff and also to help out the investors to remove the hurdles during and after the establishment of units.

Jehanzeb Khan said that three categories had been recommended to the US business partners which includes Small, Medium and Mega Projects for which locations had been identified at River Indus, River Kunhar, River Swat, River Siran, River Jehlum with hundreds of natural spring and other falls in hilly areas of NWFP. Elaborating the capacity of the proposed power generation units, he said that these could produce electricity from 1 MW to 5,000 MW.

Chamber President said that if power generation had been started through Hydel then it will reduce at least 34 percent burden on main National Grid and not only power shortage problem will be solved forever but due to Hydro Power generation, local industry and general people would have opportunity to get electricity on much reduced rates.

He added that it will also provide jobs to unemployed youth and predicted an economic revolution in the NWFP. For the early start of this scheme, Jehanzeb Khan said that early attention by the government of NWFP can bring billions rupees foreign investment in the province. He said that the earthquake had badly affected the business activities in Hazara division.

He said after the arrival of foreign investment in NWFP, it will boost not only local economy but the province will be in a position to increase their revenue as industries will be getting electricity on cheaper rates.


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## Neo

KARACHI (September 10 2006): Port Implementation Authority has short-listed three foreign companies to operate Gwadar Port, _Aaj TV _reported on Saturday. The port is likely to start operations this year, it added. Those companies, which have been short-listed, included China Harbour, Port Singapore and Dubai Port World.

In this regard, Authority's British Consultant Arther D. Little has issued a letter to the companies asking them to complete documentation process. Initially, the port will be used for transhipment as well as local needs. After completion of roads and rail track the port would work as a route to the Central Asian states.


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## Neo

KARACHI (September 10 2006): The removal of the bottlenecks and smoothening of the supply chain right from the manufacturer to the port and the vice versa would enhance the economic activity, enabling Pakistan to export more, Member of the National Trade Corridor Improvement Program (NTCIP) Task Force, Mohammed Rajpar said here on Saturday.

The Managing Director of General Shipping Agencies (Pvt) Ltd who is also a Board Member of Karachi Dock Labour Board and Port Qasim Authority, Member of Ship Owners' Advisory Committee and Gwadar Port Negotiation Committee, in an interview with APP said it is for the first time that a Prime Minister is giving such constant and consistent attention to improvement of the supply chain to enable the country meet new challenges of the global village.

Rajpar said the NTCIP Task Force is a brainchild of Prime Minister Shaukat Aziz who is moving at a fast pace, focusing on capacity building and infrastructure development in order to ensure that the country's economic growth rate is maintained without facing any bottlenecks.

PM Shaukat Aziz believes that the strength of a chain is determined by its weakest link and he often repeats to the Task Force members that he wants to see all their respective sectors strong.

Responding to a query, Rajpar said during the last 3 years, Pakistan's cargo volumes have increased 13 to 20 percent per annum and this growth is expected to remain on higher side during the next couple of years. "The rule of the thumb is that trade grows 1.3 times of GDP growth. Since the latter remains robust there are concomitant prospects for trade.

Appreciating the President Pervaiz Musharraf, Federal Minister for Ports and Shipping Senator Babar Khan Ghauri, he said it is their efforts that Dubai's DP World, Emaar and Nakheel groups are active in Pakistan and more are expected to enter into the market in due course

About Gwadar, he said it can emerge as a business hub for the region with fascinating opportunities for shipping lines to serve markets as far as Western China. Central Asian Republics and Afghanistan. There is a particular interest in the "Energy Corridor" aspect by creating a strategic oil reserve outside the Straits of Hormuz, he added.

Talking about his business, he said "Being an active advocate of change in industry practices, we are trying to bring a cultural change amongst local merchants," Rajpar said. "We are convincing importers to open FOB L/Cs to control their shipping choices as the complaints regarding CNF imports have increased wherein the exporters tend to hire cheaper, unreliable lines/carriers to save on freight resulting in higher costs, delays or other complications."

It is in the interest of the importers as well as the local freight forwarders/shipping agents that FOB L/Cs are opened and carrier is nominated by the importer after negotiating freight charges. "They can make us compete to get competitive rates and we offer one window service encompassing shipping, custom clearance, land transport, etc," Rajpar argued.


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## Neo

MIRPUR (September 10 2006): The amount of Rs 18 billion will be spent for the execution of various development projects in Azad Jammu Kashmir during current fiscal year, official sources said. The sources told APP here on Saturday that Rs 500 million were being spent on various developments projects across the liberated territory during the first quarter of the ongoing financial year.

Various development projects launched in Azad Kashmir during the current fiscal year will not only benefit the AJK population vis-ÃÂ -vis extension of latest amenities of life at their doorsteps. The AJK government has decided to remove all undue bottlenecks in the way of the development works.

A sum of Rs 500 million had been earmarked for power sector as the AJK government had set the target of electrifying the entire population up to the year of 2007.

The federal government will spend over Rs 70 billion for Mangla Dam raising and Neelum-Jhelum Hydel Power projects to make the maximum use of the available hydel power potential in AJK. Work on Bataar and Kathai Hydel power stations will remain in progress whereas extension of two megawatt and one point six megawatt hydel stations at Leepa and Kathai would be carried out, the sources said.

The education sector had already been also received Rs 390 million during the next fiscal year. The construction work on the buildings of eighty middle and thirty high schools and five Inter-Colleges in various parts of the of AJK will be afoot and resumed in quake-hit zone soon. The work was abandoned following the recent earthquake.

Physical planning and housing sector will get Rs 387 million. Adequate allocation for Greater Water Supply Schemes of Bagh, Dadayal, Sehnsa and Hijreera was also being made. Besides the construction of different official buildings in various districts, the construction of High Court Circuit benches at Mirpur, Kotli and Rawalakot was expected to be completed within the stipulated time frame, the sources added.


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## Neo

ISLAMABAD (September 10 2006): Accor, French leading chain of hotels is coming to Pakistan, hoping to start construction of their first hotel by July next year. Accor chairman and co-founder Gerard Pelisson told a press conference that they have signed two memorandums of understanding with Pakistani partners to have a network of hotels in different parts of the country.

He said that Accor is a leading name across the world and in the Muslim countries of North Africa, Middle East and Far East. They are starting their venture in Pakistan as it offers vast opportunities for its mix of five star, four star and three star hotels, the last being its specialty.

Leading a five-member team, Pelisson held discussions with the minister for investment Shahid Hamid and called on President Musharraf who assured them of full co-operation.

Pelisson has already signed two memorandums of understandings with Karachi businessmen Jahangir Siddiqui and Siddiqui and Sorss Karachi. We have an ambitious programme of expanding hotel industry in the country and want to build long-term partnerships with private sector here, he added.

Questioned if issues of security bothered them, Pelisson said that the robust economic growth and the huge potential of the industry in Pakistan would be their assets.

They plan to cater for not only the foreign tourists as the countrywide would become a hub of trade and commerce because of its geographic location but equally serve the domestic tourism which too is expanding fast. The chain of three star hotels branded as IBIS will outnumber the other categories of four and five star hotels. He was optimistic that Pakistan with a population of 160 million and growing per capita income, they would meet only a part of the demand.

Pelisson told a reporter that hotels take two to three years to build and a same period to be profitable and he was not deterred by any issue of security or law and order which is equally good or bad elsewhere.

To begin with they would be investing 30 million dollars and put in more equity as the chain gets expanding. This would offer employment to some 300 persons. He hoped that within a few years, their investment would rise ten fold and also the job opportunities. What's good about the chain is that they run their own training academy in hotel management which would help young entrants and is bound to be a key to their success.


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## Neo

Islamabad: An upcoming global depository receipt (GDR) offered by Pakistan's privately owned Muslim Commercial Bank (MCB) worth $150 million highlights what could possibly become a trend. 

The GDR to be offered in London precedes expectation of a much larger offer of a GDR by Pakistan's state owned Oil and Gas Development Corporation (OGDC). ​ 
The two offers may indeed prompt fresh international interest in the south Asian country where the economy has been in a recovery mode for the past couple of years.
Additionally, MCB's foray on to the global markets highlights the rising profits across Pakistani banks which have overseen a robust rise in their performance during the past few years. Banks have spearheaded the recovery process in a way that no other sector has. Its hard to find a Pakistani bank these days which hasn't recorded a sharp rise in its profits recently.​ 
Similarly, OGDC's launch of a new GDR is driven in part by the rising returns across sectors dedicated to energy related businesses as demand for energy grows in the midst of rising industrial activity. ​ 
*Tasting the benefits*​ 
OGDC's launch may indeed also be helped by the history of its share prices which have gained robustly on the Karachi stock market, making the company among the most favourite picks for investors.​ 
The two upcoming GDRs therefore rightly raise expectations for Pakistani leaders of more such activities coming up on the global markets in the foreseeable future. As international investors learn to taste the benefits of Pakistani offerings in this way, many are bound to be attracted to future offers.​ 
The new GDRs may also help the government's case in reaching out to global lenders for financing upcoming infrastructure projects such as plans for the development of new dams and high speed roads which appear to be among the cornerstones of Pakistan's investment policies.​ 
But in reaching out to global markets in this way, Pakistan needs to closely track a three pronged challenge that it faces which could acutely determine the outcome of its move.​ 
First, lifting the global appetite for investments in Pakistan must be closely follow up simultaneously with a series of reforms within the country. ​ 
Foreign investors may be impressed by the message which comes with the GDR offer but they would eventually look at the ways in which the offering country's investment environment comes together. ​ 
Pakistan's economic recovery notwithstanding, the country still suffers from a number of impediments which hamper new investments. ​ 
These range from inadequacies tied the operational environment such as the government's failure to improve the law and order situation, to the failure of the country in resolving some of its remaining bureaucratic obstacles. ​ 
Ultimately, the reality on the ground must count for more than merely the first message or messages which flow from initiatives such as the GDR offer.​ 
Second, Pakistan's quest for a fast paced growth in international investments as a result of the GDR must also be tied closely to a conscious effort by the government for a major facelift for the country. In spite of conciliatory messages put across by leaders such as General Pervez Musharraf, Pakistan's military ruler, Pakistan is often associated with a host of militant trends. 
Investment policy​ 
In the latest such episode, the arrest of at least one suspect in Pakistan of Pakistani origin but British nationality in the recent failed attempt to bomb a number of commercial airliners leaving London's Heathrow airport, brought no joy to Pakistan. 
On the contrary, the case only further tainted Pakistan's already distorted image. A success in reaching out to prospective investors must in part rest upon Pakistan's ability to quickly revamp its security environment as a prerequisite for its investment policy. ​ 
Finally, the disjointed state of Pakistani politics must also play a role in undermining the country's security interests. ​ 
Even for investors who are not driven centrally by Pakistan's failure to fully democratise, the country's recurring political uncertainty must only work as a huge disincentive. ​ 
The GDR offers have the capacity to remind many prospective investors of Pakistan's recent successes. ​ 
It is also possible that they may be significantly over subscribed. But this event leading to a flow of direct investments in to Pakistan with the purpose of creating new jobs can hardly be a foregone conclusion.​


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## Neo

Neo said:


> *Emaar Pakistan launches Portuguese-style Mirador homes at Canyon Views*
> 
> *Emaar Pakistan, the country-arm of global real estate major Emaar Properties, has unveiled Mirador homes, a neighbourhood of Portuguese-styled villas at its first master-planned community project in the country, Canyon Views in Islamabad.*
> 
> Family villas set amidst open green spaces, walkways
> 
> Perfectly suited for families, each stand-alone Mirador villa recreates the flourish of Portuguese architecture with terracotta walls, gabled roofs and wrought iron detailing. Wide-open green spaces, meandering walkways and tree-lined streets set the stage for an ideal getaway from the hustle and bustle of typical urban quarters. The stylish homes, located in close proximity to the city centre, are created to meet the requirements of the country's population seeking unique living environments.
> 
> 'Mirador homes form the first component of Canyon Views, Emaar's first master-planned community in Pakistan,' said Mr Mohammed Al-Falasi, Managing Director, Emaar Pakistan. 'With Mirador, Emaar is bringing in the best of Portuguese style living quarters, the architectural components of which are perfectly suited for the warm climes of Pakistan.'
> 
> Mirador offers its residents a range of community and sports amenities such as cricket grounds, swimming pools and tennis courts. The streetscapes are ideal for a leisurely stroll or cycling. Children have dedicated play areas and swimming pools. The town centre will feature retail outlets, restaurants, fitness facilities, schools and a mosque.
> 
> Spanish or Portuguese style decorative elements complement the pitched colourful roofs in the exteriors. The villas, designed with a meticulous eye for details, boast modern fittings and elegant finishes. Large kitchens come fitted with extensive cabinetry and granite countertops. Residents have a choice of colour palettes for the interior.
> 
> Ceramic tiles are standard throughout the villa. Ten-feet high ceilings in living spaces and 9-ft high ceilings in principal spaces assure cooler ambient temperatures. All bedrooms, with en-suite bathrooms, have built-in wardrobes. The villas have special living quarters for service staff and two car parks.
> 
> Advanced entertainment and communication facilities are offered including hi-speed Internet access. All villas have private yards enclosed by boundary walls. Twenty-four hour security and maintenance services will also be provided.
> 
> 'Emaar has a track record of handing over 14,000 homes in varied master-planned community projects in Dubai, and we are expanding on the same model in Islamabad with the Mirador homes at Canyon Views,' said Mr Al-Falasi. 'These villas mark a celebration of life by offering residents a proportioned living quarter with large balconies opening to lush green landscapes and a wide range of community amenities.'
> 
> Canyon Views is part of a PKR145 billion (US$2.4 billion) development outlay by Emaar in Pakistan and is located in the Defence Housing Authority Islamabad (DHAI) Phase 2 extension.
> 
> The sales center for Mirador homes is located at DHA Phase 2 extension, off Islamabad highway. Potential investors and home-owners can visit the centre from September 10 for more details on the project or log on to www.emaar.com to register interest.
> 
> Emaar is also developing the Highlands in Islamabad and Crescent Bay in Karachi apart from having signed a Memorandum of Understanding with the Port Qasim Authority to develop a mixed-use project in Karachi.
> 
> Emaar's Pakistan development initiatives are in line with the company's Vision 2010 of becoming one of the world's most valuable companies through focused expansion and diversification.


 
Emaar hosts first-ever international sale of residences in PakistanPosted: 10-09-2006 , 06:27 GMTGlobal real estate major Emaar Properties has commenced the first-ever international sales of its overseas master-planned communities with the opening of the Canyon Views sales center in Islamabad, Pakistan.

Emaar Pakistan, the country-arm of the property developer, offers Portuguese-style Mirador villas at the dedicated Canyon Views sales center located at Defence Housing Authority Islamabad (DHAI) Phase 2 extension, off Islamabad highway.

Canyon Views is part of a PKR145 billion (US$2.4 billion) development outlay by Emaar in Pakistan and is located in the DHAI Phase 2 extension.

Potential investors and home-owners can visit the centre from September 10, log on to www.emaar.com or call (+92 51) 2803173 for sales enquiries. Experienced sales staff and customer service representatives will be on hand to assist potential investors.

Emaar has embarked on an ambitious expansion and diversification drive in line with its Vision 2010 of becoming one of the worldÃ¢â¬â¢s most valuable companies. The company has unveiled master-planned communities and mixed-use developments in Saudi Arabia, Morocco, Syria, Tunisia, Turkey, Egypt, Pakistan and India.

Ã¢â¬ÅWe are honoured to host the first-ever international sales of an overseas master-planned community project by Emaar,Ã¢â¬Â said Mr Mohammed Al-Falasi, Managing Director, Emaar Pakistan. Ã¢â¬ÅCanyon Views extends on the concept of self-sustaining neighbourhoods that Emaar pioneered in Dubai. The Mirador homes at Canyon Views match international standards and have already gained overwhelming response from Pakistan and abroad.Ã¢â¬Â

The sales center will showcase perfectly simulated models of the Mirador homes. Ã¢â¬ÅVisitors can also gain a glimpse of EmaarÃ¢â¬â¢s other developments in the region,Ã¢â¬Â said Mr Al-Falasi. Ã¢â¬ÅThe center is manned by an efficient customer service team and has ample parking spaces.Ã¢â¬Â

Perfectly suited for families, each stand-alone Mirador villa recreates the flourish of Portuguese architecture with terracotta walls, gabled roofs and wrought iron detailing. Wide-open green spaces, meandering walkways and tree-lined streets set the stage for an ideal getaway from the hustle and bustle of typical urban quarters. The stylish homes, located in close proximity to the city centre, are created to meet the requirements of the countryÃ¢â¬â¢s population seeking unique living environments.

Mirador offers its residents a range of community and sports amenities such as cricket grounds, swimming pools and tennis courts. The streetscapes are ideal for a leisurely stroll or cycling. Children have dedicated play areas and swimming pools. The town centre will feature retail outlets, restaurants, fitness facilities, schools and a mosque.

Emaar is also developing the Highlands in Islamabad and Crescent Bay in Karachi apart from having signed a Memorandum of Understanding with the Port Qasim Authority to develop a mixed-use project in Karachi.


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## Neo

Sunday September 10, 2006 

*ISLAMABAD: Prime Minister Shaukat Aziz has said the demand and consumption of electricity has increased by 11 percent since the last year, which is reflective of economic vibrancy, high growth, improved living standards and rapid electrification going on in the country. *


The Prime Minister was chairing a high level meeting at the PM&#8217;s House on Saturday to review the demand and supply situation and overall progress in the electricity generation projects undertaken by the private sector. 
The Prime Minister said presently there is parity between the demand and supply of electricity due to rains, more efficient hydel production and the overall demand and supply both stand at about 14 thousand MW. 

The total hydel production which today is 6740 MW is 1000 MW higher than last year and the total consumption / demand of electricity which was 12500 MW has increased to 14.1 thousand MW, the Prime Minister said. 

The Prime Minister said the electricity demand is growing by 6-8 percent annually. 
During the last year 19000 thousand tubewells were installed and 15 thousand villages were electrified. He reiterated the government&#8217;s commitment to provide electricity to every village in the country by 2007 and said the villages, which are not on the grid, would be provided electricity through alternative sources of energy. 

The Prime Minister said government would tap all possible sources of electricity generation to increase power generation and maintain the momentum of growth. While efforts are being made to increase hydel power, electricity generation through coal and thermal power generation will also be encouraged. 

The Prime Minister said government is encouraging the private sector investment in power sector and a level playing field has been provided to local and foreign investors. The government has formulated a clear policy, streamlined the procedures and reduced approval time to remove bottlenecks hindering private sector participation. 
The Minister for Water and Power Laiquat Ali Jatoi informed the Prime Minister that private sector will add upto 2000 MW of electricity by 2008. 

Four companies, Saif Power Limited, Orient Power Company Ltd, Star Power Generation Ltd and Sapphire Group will produce 800 MW and supply it to WAPDA. 
The Prime Minister was informed that WAPDA would provide 1100MW thermal power by 2008. 

The Private Power Infrastructure Board has invited Request for Proposals (RFPs) for coal power generation using local and imported coal. 
The representatives of the private sector who attended the meeting appreciated the interest taken by the President and the Prime Minister to streamline the policies in the power sector. 

They said as a result of the government policies local and foreign businessmen are investing in the power sector, which augurs well for the future development of the country. 

The meeting was also attended among others by Javed Sadiq Malik, Principal Secretary to PM, Mukhtar Ahmad, Advisor on Energy to PM, Acting Secretary Petroleum & Natural Resources, Chairman, WAPDA, Chairman, NEPRA, and senior official. The private sector was represented by Javed Saifullah Khan, Nadeem Babar, Javed Ahmad Noel and Shahid Abdullah.


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## JB 007

Neo said:


> Indeed, we're among the fastest growing muslim economies and we're poised to become an Asian Tiger.
> FTA with Malaysia is in the making, it will be effictive early next year.
> 
> 
> Bughti is a closed chapter and the event has been hi jacked by opposition and anti Pakistan elements, totally blown out of proportion.
> There were strikes in Pakistan, nationwide protests, all but the Bughti tribes had there say! Why? Because they're relieved to be freed from abuse and moder day slavery he put up on his own people.
> At the end of the day, everything will be normal. It's merely storm in a glass of water.
> 
> 
> I got those figures from news articles and most of it is posted in this thread. Pakistan has been receiving high profile trade delegations from these countries, even if the half of the pldged amount is materialised, it will turn Pakistan into en economic powerhouse.
> Figures from China and UAE are most reliable, many of the mega projects have already started.
> 
> Thanks man! :flag:



i think pakistan has already become an asian tiger like india, china, thailand. but she has to work very hard to get close to those tigers who are very successful like s. korea, singapore and even malaysia.

bughti &#8230;&#8230;&#8230;. hope so.

neo if u r confident on even half of the estimated amount of FDI ie for $100bn by even next 10 years, I can guarantee, pakistan will emerge as the fastest growing economy of the world. per capita income of pakistan will get atleast 3-4 times even on PPP terms by next 9-10 years and pakistan will get place among middle order countries. atleast among lower middle order countries. even $10bn FDI on average for next 10 years for a hardly $110bn pakistani economy, this will turn Pakistan into an economic powerhouse. world is full of surprises, I have even read about success of india in IT during management studies in sydney. may be next generation will read few pages about pakistan also, who knows.


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## Owais

*Purchase of 175 passenger coaches: $92 million railways deal with China termed flawed* 


ISLAMABAD (September 11 2006): Despite repeated justifications by the government, the Auditor General of Pakistan has termed contrary to set of laws the $92 million deal with China for purchase of 175 passenger coaches. Besides calling it a flawed deal, the AGP has unearthed misappropriations of more than Rs 522.958 million in the accounts of Pakistan Railways.

According to the audit report for 2004-05, Pakistan Railways struck a deal valuing $92 million (Rs 5.52 billion), without fair competition, to purchase 175 passenger coaches.

The Code for Stores Department of Pakistan Railways stipulates that tenders should be invited abroad as well as in Pakistan whenever it is considered necessary or desirable to do so in order to obtain adequate publicity and to ensure economical purchase.

If the response to any invitation to tender is poor owing to inadequate publicity or some other reason, fresh tenders should be invited and measures taken to bring the invitation to tender to special notice of all likely bidders.

But, the report says, the case with Pakistan Railways was different where tender for the purchase of 175 new design passenger coaches (40 completely built and 135 completely knocked down units) was only published in local press that is contrary to codal provisions.

Due to inadequate publicity, only two Chinese firms participated in the bidding whereas the bid of Dongfang of China was declared un-responsive.

Instead of re-tendering as required under the codal provisions, the contract, valuing $91,890,002, was awarded to China National Machinery, Import and Export Corporation (CMC) on single tender basis, without generating fair competition.

The government has been subjected to scathing criticism over its "faulty deal".

The audit report shows that the national kitty suffered a loss of Rs 26.419 million when 37 non-air conditioned coaches, received in the Carriage and Wagon Shop, Mughalpura, for periodical overhauling took extra days, depriving Pakistan Railways of potential earnings of more than Rs 26 million.

Material, like sheets, welding electrodes, paint, granular cork compound and PVC cable, valuing Rs 23.896 million, out of Rs 44.331 million, was procured during June 2000 to August 2002 for 'Rehabilitation of 240 passenger coaches project' and it was found lying in the store of Carriage Factory, Islamabad, even after completion of the project. That indicated that material was procured in excess of the requirements.

The officials failed to recover Rs 190 million of lease and security fees, as an amount of Rs 142 million, on account of commitment fee and lease, was paid by the consortium to install 2000 CNG stations against total payment of Rs 332 million, leaving an outstanding balance of Rs 190 million, which had not been paid by the consortium up till November 2005.

Pakistan Railways also failed to recover an amount of Rs 157.705 million due to poor contract management, while the officials caused a loss of Rs 22.069 million to national exchequer because of undue payment of interest.

The report shows scores of other cases causing huge losses to national kitty.


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## Owais

*Pakistan invited to join ASEM* 


HELSINKI (September 11 2006): Asian and European leaders said on Sunday they would invite India, Mongolia and Pakistan as well as Bulgaria and Romania to join future gatherings of ASEM, a forum dedicated to dialogue between Europe and Asia.

"I am convinced that this enlargement will not only widen but also significantly deepen Asia-Europe relations," said Prime Minister Matti Vanhanen of Finland, which holds the EU's rotating presidency.

He made the invitation in a speech to leaders and top officials from 38 Asian and European nations gathered in Helsinki for two days of talks on trade and security issues.

The addition of the three Asian countries to the twice-yearly Asia Europe Meeting (ASEM) will help lessen the imbalance in the forum, where the European Union's 25 members outweigh the 13 Asian countries currently in the club.

China, Korea, Japan and the 10 states of the Association of Southeast Asian Nations (Asean) are the current ASEM members.

The EU will grow to 27 members next year if Bulgaria and Romania join the bloc as scheduled.

ASEM is widely seen as being long on talk and short on substance and is still trying to prove its relevance despite having 10 years of existence behind it. The Helsinki summit marks the 10-year anniversary of ASEM, which started with a meeting in 1996 in Bangkok.


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## Owais

*Centre to develop sports industry in Sialkot soon* 


SIALKOT (September 11 2006): A full-fledged Sports Industry Development Center costing more than Rs273.11 million would soon be set up in Sialkot for catering to needs of sports industry particularly soccer ball industry of the area.

Official sources told _Business Recorder _here on Sunday that necessary arrangements were being made to undertake the project. The proposed center would be developed over 25 kanals of land in stipulated period of one year.

The proposed Sports Industries Development Center (SIDC), a joint venture of the Small and Medium Enterprise Development Authority (Smeda) and Sialkot Chamber of Commerce and Industry (SCCI), is being funded by the Public Sector Development Programme (PSDP) of the federal government.

The step was being taken for sustaining future of sports goods sector by infusing modern technology of mechanised ball through the provision of common facilities services, technology transfer and training etc.

The SIDC would not only provide technical facilities of manufacturing techniques of mechanised soccer ball but also produce 5000 soccer balls in a single shift while its production capacity would be 15,000 balls per day.

Main features of the SIDC project would enable sports goods sector to adopt new technology of mechanised ball, which is threatening the current hand-stitched inflatable soccer ball.

The SIDC project will improve Pakistan's position in international market of hand-stitched inflatable balls in general and soccer ball in particular. It will provide skilled workforce to the sector and help in developing an indigenous patent for mechanised soccer ball and get it registered internationally, provide assistance in setting up mechanised ball production lines in individual industrial units, developing prototype balls for the industry and developing quality vulcanisation and past moulds.

At present soccer ball manufacturers are facing serious threats in the form of 'Thermo-molded ball' that uses technology to produce a ball having most of the characteristics of hand stitched ball.

The SIDC would provide technical know how, trained labour force, reverse engineering prototype development and mould making services besides, the centre will also manufacture and sell thermo-moulded balls to the exporters on order. Meanwhile, exporters and manufacturers engaged with soccer ball industry have expressed satisfaction over the steps the government has taken for setting up SIDC in this export-oriented city.

The SIDC would not only help reduce the problems of soccer ball industry but enable them to compete more easily in the global market, they added.


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## Owais

*New gas reserves discovered in Balochistan* 


ISLAMABAD (September 10 2006): New gas reserves have been discovered in Jhal Magsi district of Balochistan. According to initial estimates, 15 million cubic feet gas would be obtained from the gas-field one well.

The Oil and Gas Development Company Limited (OGDCL) has planned to undertake drilling of three more wells in the Jhal Magsi district for exploration of gas reserves, PTV reported.


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## Neo

FAISALABAD (September 11 2006): The Punjab government will launch 'Lower Bari Doab canal improvement project' with $200 million financial assistance by Asian Development Bank.

According to Punjab Irrigation and Power Department sources this project would upgrade the Lower Bari Doab Canal System and rehabilitate the infrastructure of head works of the Baloki Barrage to minor canals as well as address on-farm water management activities and groundwater management.

The project will involve about 700,000 ha of irrigated area. Significant capacity building activities for farmers' organisations will also be part of the project.

The project will help promote economic growth, increase farm incomes and improve resource sustainability through enhanced productivity of agriculture.

*PROJECT COMPONENTS INCLUDE: *

(i) Rehabilitation and upgrading of LBDC and BS link canal head regulators;

(ii) Rehabilitation and upgrading of LBDC main canal and entire distribution system;

(iii) Intensifying systematic groundwater monitoring and resource management in the LBDC command;

(iv) Improve on-farm water management practice and agriculture support; and

(v) Institutional reform and strengthening to ensure improved operation and management of the LBDC system.

Apart from this 'Punjab irrigated agriculture development sector project' has already been approved, which will be completed with financial assistance of Netherlands Fund $557,000, Japan Special Fund $595,000 and Co-operation Fund for the Water Sector $90,000.

*THE FOLLOWING PRINCIPLES WILL GUIDE THE PROJECT DEVELOPMENT:*

(i) Entire irrigation system must be improved in unison to ensure that water entering into the main canal provide benefits at farm level; (ii) canal flow, groundwater, and drainage must be managed together to improve irrigation, productivity and environment; (iii) agricultural support services, inputs, and markets must be strengthened to help farmers take advantage of improved irrigation; and (v) institutions must be reformed and strengthened in parallel with infrastructure rehabilitation to improve management.

The technical assistance of ADB and ensuing project will provide a model of best practice for irrigation modernisation and reformed management practices in the link canal system as well as ADB's pipeline of forthcoming irrigation projects in Pakistan.

The sources said the overall goal of the project was to improve rural livelihoods and reduce poverty through improved irrigation service delivery, enhanced agricultural practices, and strengthened water resources and environmental management in Punjab.

http://www.dawn.com/2006/09/11/ebr14.htm


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## Neo

ISLAMABAD, Sept. 11th, 2006: Prime Minister Shaukat Aziz on Monday said the investment regime of the government coupled with incentives and the level playing field provided to investors have reduced the cost of doing business in Pakistan.

The openness of government policies and transparency in transactions is attracting higher investments and Pakistan is geared to become a regional hub for trade and manufacturing, the Prime Minister said.

He was talking to Anwar Merchant, President of Canadian Pakistan Business Council (CPBC) who called on him here at the Prime Minister house.

The Prime Minister said that macro economic stability, continuity and consistency of policies have restored the confidence of investors and helped the business to flourish. 

These polices have made Pakistan an investment friendly place and the record ($ 3.8 billion) Foreign Direct Investment (FDI) in the last financial year is reflective of the success of government's policies, he added.

The Prime Minister identified construction, agri business, infrastructure, energy, mining and IT and Telecom as areas with vast opportunities for the investors.

Giving an overview of the economic recovery achieved by the country, the Prime Minister said the broad-based and multifaceted reform agenda undertaken by the government has changed the entire economic landscape of the country.

He said the size of the economy has almost doubled during the last seven years and Pakistan's economy has grown at an average rate of almost 7.0 percent per annum during the last four years and over 7.5% in the last three years, thus positioning itself as the second fastest growing economy of the Asian region.

The Prime Minister said Pakistan was able to achieve 6.6% growth during the last financial year despite the losses caused by earthquake and surging oil prices at the international market.

"Pakistan's economy has proved itself remarkably resilient in the face of shocks of extra-ordinary proportions", the Prime Minister said.

He said per capita income, which is considered one of the main indicators of development grew by an average rate of 13.9% per annum during the last four years rising from $ 582 in 2003 to $ 847 in 2006, adding, 12.8 million people were brought out of poverty net during 2002-2005.

The Prime Minister said the economic philosophy of the government is based on the broad principles of privatization, deregulation and liberalization and transparency is the hallmark of the government's transactions.

Anwar Merchant, the head of the delegation appreciated Pakistan government for streamlining the investment policies and procedures.

He said Pakistan is a great place for investment as it offers tremendous opportunities and a conducive environment for the private sector.


----------



## Owais

*PSO privatisation: Abu Dhabi Group pulls out of contest* 


ISLAMABAD (September 12 2006): The Abu Dhabi Group of UAE, one of three short-listed bidders, has pulled out of the contest, leaving behind only two parties--Al-Ghurair Group of UEA, and Saudi Arabia's Al-Jumahia-led consortium--for Pakistan State Oil bidding.

The officials working on the transaction here are of the view that Abu Dhabi Group's withdrawal from the contest was a serious setback to PSO sell-off plan and it might force the government to wind up the on-going bidding process.

Sources said that Abu Dhabi Group's exit and its possible impact on PSO bidding process were discussed at the Privatisation Commission board meeting here on Saturday. One of the officials, who attended the meeting, told _Business Recorder _on Monday that the Board, after detailed discussion, referred the case to the Cabinet Committee on Privatisation (CCoP) for guidance. The Privatisation Commission informed the Board that the inordinate delay in bidding resulted in the exit of Abu Dhabi Group of UAE and now only two parties are to contest for PSO in the case the Privatisation Commission is asked to go for the transaction on the exiting process.

The board was informed that Privatisation Commission was left with two options-restart the bidding process and invite afresh expression of interest (EoI) from the interested parties, or go by the on-going process. Abu Dhabi Group is the second party to withdraw from PSO bidding. Earlier, Fauji Foundation went out without giving any specific reason.


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## Owais

*Pakistan's economic momentum ahead of 2007 elections* 


KARACHI (September 12 2006): As President Musharraf enters the final year of his, current presidential term, he can point to a robust economic picture, with growth exceeding six percent for the third year in a row, healthy external accounts, and much improved macroeconomic indicators (table).

J.P. Morgan Chase Bank in its Research note said that the economic turnaround has been accompanied by a significant acceleration in the implementation of economic reforms, progress in privatisation and an attendant sharp increase in foreign direct investment (FDI) inflow. Moreover, the country has been able to access international financial markets on favourable terms, the latest issue being two Eurobonds totalling $800 million with tenors of up to 30 years.

Pakistan's subindex in the composite EMBIG has widened relative to the over all EMBIG since last April after consistently out performing the index since June 2002.

Going forward, the main underlying factors that sustained the post 2001 performance-the imprimatur of an IMF programme, major debt forgiveness, and the surge in remittances will not be repeated and Pakistan will face a tougher international environment, as well as difficult domestic economic challenges. In particular, it will need to overcome internal and external macroeconomic imbalances-economic overheating, negative fiscal trends, and a widening external account gap in order to sustain good economic performance over the longer term.

Surging exports, an expansionary fiscal stance, and abundant liquidity have underwritten rapid output growth over the last three years. Real GDP growth reached 8.6 percent in FY2004/05 and 6.6 percent in FY2005/06 (fiscal years running to June 30, 2005). However, in combination with the rapid rise in energy costs, these factors have made for persistently high levels of inflation (first chart). Indeed, inflation has picked up again just in the past three months to around eight percent oya, after hitting a two-year low of 6.2 percent in April.

Monetary policy has been tightening in the past year, with a gradual removal of liquidity through open market operations. Consequently, growth in base money slowed to around 10 percent oya in May 2006 from a high of 23 percent in September 2004. Rates on 90-day T-bills have risen by about 50bp to 8.80 percent since March, and the State Bank of Pakistan (SBP) raised the discount rate by 50bp, to 9.5 percent at the end of July this year. As a result, real interest rates have moved into positive territory. Nevertheless, the SBP still maintains a pro-growth bias.

*KEY ECONOMIC INDICATORS AND FORECASTS FISCAL YEARS BEGINNING JULY 1 *
========================================================================== 2002/03 2003/04 2004/05 2005/06 2006/07GDP (US$ billion) 85.0 98.3 113.1 131 5 146.5GDP/capita (USD) 579.0 669.0 742.0 847.0 900.0Real GDP growth (%) 4.7 7.5 8.6 6.6 7.0Fiscal balance (% of GDP) -3.7 -2.4 -3.3 -4.2 -4.2CRI (%oya) 3.1 4.6 9.3 7.9 6.5Exports of goods ($ billion)10.89 12.40 14.40 16.80 19.50(%oya) - 13.8 16.2 17.1 16.1 -Imports of goods ($ billion)11.33 13.60 18.75 27.90 34.10(%oya) - 20.0 37.8 48.8 22.2 -Trade balance ($ billion)-0.44 -1.21 -4.35 -11.10 -14.60Current account ($ billion)3.16 1.31 -1.75 -5.80 -6.30(% of GDP) 3.7 1.3 -1 5 -4.4 -4.3Net FDI ($ billion) 0.82 0.92 1.68 3.53 5.00Fx reserves ($ billion) 10.72 12.33 12.62 13.02 13.02Total ext debt ($ billion) 35.47 35.26 35.83 36.56 38.00(% of GDP) 43.1 36.7 32.6 28.3 25.9Total public debt (% of GDP)76.9 69.7 82.5 53.3 50.8Exchange rate(Rs/$) 58.50 57.57 59.36 59.81 80.00==========================================================================

*Sources: *State Bank of Pakistan, IMF, J.P. Morgan.

*EUROBOND ISSUANCE AND TRADING *Pakistan's March 2006 Eurobond issue-the third in six years-substantially extended the country's external debt curve, but faced moderately weaker investor appetite than did earlier issues, due to broader emerging market trend at the time.

This latest issue went beyond the maximum five year maturity previously achieved by including a $500 million 10-years tranche A at 7.125 percent (240bp over Treasures) and a $300 million 30-year trance B at 7.875 percent (a spread of 302bp).

The term were marginally less favourable than for recent similarly rated recent sovereign issues, but in line with prevailing market conditions. There are currently three Eurobonds outstanding. On September 5, the 16s and the 36s were trading at spreads of 250bp and 311bp, respectively, an increase of 8-10bp since the date of issue but down from peaks of 304bp and 334bp, respectively on July 17.

*A QUESTION OF FISCAL SUSTAINABILITY *Under the Fiscal Responsibility and Debt Limitation Law (FRDL) of 2005, the government is committed to balancing the budget by FY2008 and reducing public debt to 60 percent of GDP by 2013.

The debt stabilisation target was achieved in this past fiscal year despite the surge in government spending, which rose an average of 12 percent p.a. in the five years ended FY2005/06 as a result of big increase in security, infrastructure, and social spending.

Outlays are expected to increase 9.7 percent in FY2006/07. After narrowing in FY2002/03 and FY2003/04, the fiscal gap has widened in the past three years, and is expected to reach 4.2 percent of GDP in each of FY2005/06 and FY2006/07.

In addition to privatisation revenues, which cover about 25 percent of the fiscal gap, about one-third of the deficit is financed by bilateral and multilateral loans and grants. (Pakistan's low per capita income and strong diplomatic support from the US should ensure the continuation of official monies as a long-term financing source.)

The government has completed its financing in the past four years by means of bond issuance-in the form of Eurobonds, as well as "sukuks" (Islamic bonds). The FY2006/07 budget plans for issues totalling $500 million. Expansionary fiscal policies and a narrow tax base will complicate fulfilment of the FRDL, but the fiscal gap should remain manageable in the medium term.

Nevertheless, both the State Bank of Pakistan and the IMF have been pressing for fiscal reform. As a result of under-taxation or tax exemption for major sectors, Pakistan has one of the lowest tax takes among emerging markets, with tax revenues the equivalent of only about 10 percent of GDP.

Without fiscal reform (which could prove difficult, considering the powerful vested interests of the tax-exempt sectors, particularly agriculture), the financing of much-needed social and infrastructure spending will prove challenging in the longer term. Privatisation is moving ahead, with the sale of strategic stakes in state-owned companies and listings on the KSE.

*NET FOREIGN INVESTMENT BY SOURCE $ MILLION, FISCAL YEARS BEGINNING JULY 1 *
==================================================== 2001/02 2002/03 2003/05 2004/05UAE 17.3 120.4 146.5 417.3USA 324.7 226.6 259.8 373.0UK 2.1 184.4 41.9 199.1 -Switzerland 30.6 5.7 211.3 127.5Saudi Arabia 1.4 43.6 5.3 18.2Others 102.7 239.4 256.9 541.5Total 474.6 820.1 921.7 1,676.6====================================================
*Source: *State Bank of Pakistan

Privatization proceeds for 2005 totalled about $3 billion. Currently, 63 companies are on the sale list of which 26 are slated to be sold by the end of FY2006/07. As shown by the experience of other major emerging markets such as Brazil, Mexico, and Turkey, privatisation often acts as a catalyst for private greenfield investment.

Recent data seem to support the emergence of this dynamic for Pakistan, as private sector inflows quadrupled between FY2001/02 and FY2004/05 (the last year for which we have full data) to $1.7 billion, with the UAE, Saudi Arabia, the United States, and the UK as the major investors (table).

*FINANCING A WIDENING CURRENT ACCOUNT GAP *The turnaround of the external accounts has been one of the major achievements of the past six years, after Pakistan narrowly averted an external default in 1999. Three successive years of current account surpluses, debt relief, and large capital inflows allowed stabilisation of the external debt and accumulation of foreign exchange reserves.

Over the past five years, exports rose 60 percent and worker remittances quadrupled Foreign exchange reserves stood at $13.0 billion (8.7 months of imports) at the end of FY2005/06, while the external debt has stabilised at around $36.6 billion (or 28.3 percent of GDP, down from 49.5 percent in FY2000/01).

However, rapid economic growth and the surge in both oil import costs and capital goods imports have reversed the previously improving current account trends, pushing the current account back to deficits of US$1.8 billion in FY2004/05 and an estimated $5.8 billion in FY2005/06 (table). Oil import costs jumped 67 percent in FY2005/06 to $6.6 billion, accounting for about two-thirds of the deterioration in the current account balance.

*CURRENT ACCOUNT BALANCE $ MILLION, FISCAL YEARS BEGINNING JULY 1 *
================================================================== 2002/03 2003/05 2004/05 2005/06Exports 10,889 12,398 14,401 16,800o/w: Textiles 5,810 8,073 8,465 9,787Imports 11,333 13,604 18,753 27,900Petroleum products 2,807 3,166 4,080 6,600 Capital goods 2,175 4,200 5,918 7,500Trade balance -444 -1,206 -4,352 -11,100Remittances 4,237 3,871 4,166 5,000Current account balance 3,165 1,314 -1,753 -5,800==================================================================
*Source: *State Bank of Pakistan and J.P. Morgan.

Patterns of external financing have shifted in the past two years from official assistance to greater reliance on private flows. While Pakistan continues to be the recipient of large official disbursements, it is increasingly dependent on foreign direct and portfolio investments, which totalled $4.5 billion in FY2005/06, a tenfold increase in five years financing almost 80 percent of the past fiscal year's current account deficit (chart).

While privatisation and a booming stock exchange gave a major boost to these flows, a large portion of the FDI comes from Pakistan's oil-rich neighbours of the Gulf Co-operation Council, reflecting close economic and political ties-according to published data, the UAE and Saudi Arabia accounted for about 25 percent of total private investment, both FDI and FPI, in FY2005/06.

*MEDIUM-TERM OUTLOOK *The IMF completed its annual Article IV review this week. Its preliminary assessment of Pakistan's recent economic performance and medium-term economic prospects is very positive, although it points to the vulnerabilities associated with the widening current account gap.

The economic expansion maintains considerable momentum, and the government's projection of 7 percent growth for FY2006/07 seems on track. Strong export performance, the recent stabilisation of oil prices, and continued growth in remittances are expected to stabilise the current account deficit at about 4.3 percent of GDP, with strong FDI flows and official finance providing the bulk of the financing. In the longer term, though the widening.

*SOCIOECONOMIC DEVELOPMENT *Building on several years of rapid economic growth, Pakistan now needs to translate that growth into tangible benefits for the population at large. With per capita income of under $1,000, Pakistan is classified as a Low Income country by the World Bank.

Moreover, income distribution is highly skewed, with the poorest 20 percent of the population receiving only about 6.6 percent of total income, versus almost 50 percent going to the top 20 percent. Also, almost 40 percent of the rural population and 23 percent of the urban population are classified as poor.

While pro-poor public spending has gone up significantly as a percentage of GDP (from 3.6 percent to about 4.6 percent in the past two years), it remains inadequate. Spending on external gap remains a major threat to economic stability.

Under J.P. Morgan's base case for oil prices and economic growth, we estimate that the trade deficit could double between FY2005/06 and FY2009/10 to $20 billion, leading to a current account deficit of $10-12 billion (5.5-6 6 percent of GDP). Extrapolating from the medium-term projections done by the IMF in its 2005 review of the Pakistani economy, the current account would have to remain at about education as a share of GDP is estimated at about 7.8 percent significantly below the 13-16 percent average for East Asian emerging market countries.

Pakistan has committed itself to the UN's Millennium Development Goals (MDG), which aim to improve sharply the socio-economic conditions of the world's poorest citizens by halving the incidence of poverty by 2015.

As seen in the fiscal discussion of the main text, Pakistan's social and infrastructure spending has increased significantly in the past few years, but will need to grow even faster to make the Millennium goals achievable.

Five percent of GDP for the external debt to stabilise at current levels (relative to GDP). However, this would require FDI/FPI flows to double from today's levels by FY2009/2010, as well as additional private external financing of $2-3 billion per annum experience in other major emerging markets over the past few years shows that such a scenario can he achievable but will require and acceleration of economic reforms, in particular on the fiscal and privatisation side.

*Politics: *Musharraf to be reelected despite a more robust opposition

President Musharraf has brought considerable stability to Pakistan's fractious politics. He also has proven to be a key ally of the West in the global war on terror. The President, who is also the head of the armed forces, has consolidated his power and remains unchallenged.

Nevertheless, the deterioration in the domestic and regional political climate in the past few months has increased the pressure on Musharraf from several directions.

Both presidential and legislative elections are scheduled for the fall of 2007-on dates still to he determined. Musharraf his likely to be reelected. The president is chosen by an Electoral College composed of the national and regional legislatures. By moving his own reelection ahead of the legislative ones, Musharraf will face an Electoral College where he has a majority.

Potential gains by a more unified opposition in the next legislative elections may force Musharraf to broaden his coalition. Currently, his coalition controls 200 seats in the 342 member National Assembly (centered around 126 seats for the MQM-Q), against 100 for the two major secular parties PPP and PML-N, which have formed an electoral alliance, the Alliance for the Restoration of Democracy (ARD).

Moreover, the ARD joined hands with the largest Islamic party the MMA, to present a motion of no confidence against Prime Minister Shaukat Aziz on August 23. This no-confidence vote, which failed, under-scored the potential for a broader anti-Musharraf coalition, which could gain control of parliament with a shift of 30 seats next October.

Musharraf's efforts to walk a fine line between co-operating ailing with the West (and in particular the United States) and appeasing the powerful domestic Islamic parties have been complicated by the current rising tide of anti Americanism in popular opinion.

The security situation has deteriorated with a spike in Islamic militant and Taliban activity in the provinces bordering Afghanistan, as well as a rise in violence in Balochistan. Pakistan has deployed 40,000 troops in the border provinces in the past few months, and casualties on both sides are reported to the heavy.

However, the just-announced "peace agreement" between the government and tribal leaders in the North-western provinces is a first step toward restoring some measures of calm and policing the frontier more effectively. Balochistan, a gas rich province occupying a key strategic position between Afghanistan and Pakistan's access to the Persian Gulf, has been the scene of rising separatist activities.

The recent killing of the head of Balochistan's largest tribe and key separatist leader by the Pakistan armed forced can only worsen tensions between the separatist and the government.

Relations with India have deteriorated in the wake of Indian allegation of Pakistani involvement in the recent Mumbai bombings. Earlier, Pakistan and India made little progress with regard to Kashmir and establishing economic links.

While these challenges are contained for the time being, they serve as a reminder that the significant economic achievements of the past five years could be eroded by the risk of discontinuity in the political scene in the medium term, Musharraf's ability to play an effective role will depend on broadening his political base.


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## Neo

ISLAMABAD (September 12 2006): Minister of State for Petroleum and Natural Resources, Mir Muhammad Nasir Mengal on Monday said that competition of mega projects in Balochistan would usher in new era of progress and prosperity in the country.

He was addressing a public gathering on the occasion of gas supply to village Harrar near Gujarkhan, says a press release. The minister said the government was mobilising all resources for the socio-economic development of the people across the country.

He said concrete steps were being taken for the speedy development of remote and backward areas aimed at bringing them at par with the developed ones as quickly as possible.

He said the government was completing Rs 135 billion mega projects in Balochistan, adding that Gwadar deep seaport, Mirani Dam, Coastal Highway and Karachi Canal Projects would bring rapid progress in province. Mengal said that a handful of vested interests were trying to create rift among the people of two provinces to achieve their nefarious designs of impeding socio-economic development process.


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## Neo

KARACHI (September 12 2006): Pakistan is set to become the second largest user of compressed natural gas (CNG) in the world by June, 2007. At present performance wise the growth of the country's CNG sector is at first place in the world that has achieved a large infrastructure in a short span of time.

The CNG Station Owners Association of Pakistan (CNGSOAP) has urged the federal government to freeze the prices of natural gas for at least three years to stabilise the CNG sector in the country.

Chairman CNGSOAP, Malik Khuda Baksh told _Business Recorder _on the sideline of a press briefing here on Monday that government is providing such facility to the producers of fertilisers.

Malik said that there are 1,187 million vehicles, which have been converted to CNG and over 991 filling station, are operational, while 381 new stations are in the pipeline to provide alternative and environment-friendly fuel to consumers across the country.

During the last financial year, the exchequer saved substantial amount in terms of foreign exchange on account of oil import, he said, adding that lots of efforts are needed to save more money. "As we have planned to manufacture CNG equipment in the country" to avoid dependency on other nations but at the same time we have to look into the import equipment to know the development made to improve safety and efficiency of the CNG, he added.

Quoting the example of neighbouring countries like Iran and India, Malik said, in the last three years, they have established its own manufacturing infrastructure of CNG cylinders and other allied equipment's in both neighbouring countries to capture international market as well as to meet their own country's growing CNG demands. Some Indian cities have become smoke-free through a strict Delhi's High Court Order, which gave them a very short span of time to convert all commercial transport into CNG including large buses.

He said they requested the CNGSOAP to help them in providing theoretical or practical expertise, "but we provided them theoretical assistance and they are growing at a very fast pace."

The city transport is producing 70 percent pollution and the government's decision of zero-rate duty on the import of complete knock down (CKD) kits of CNG and Euro-II buses is a right step in controlling such menace.


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## Neo

ISLAMABAD, Sept 11: The government is considering a proposal to Ã¢â¬ËrenegotiateÃ¢â¬â¢ existing agreements with foreign partners to permit export of cars and tractors from Pakistan.

Similarly, official sources told Dawn on Monday the government was contemplating another proposal, submitted by a group of experts, to encourage tripartite partnership amongst foreign investors, technology partners and local industrialists with assured work load.

But they urged the government to improve the countryÃ¢â¬â¢s image in terms of law and order situation, environment, security, trained labour force, and cost of doing business.

These proposals were contained in the draft of "Technology - Based Industrial Vision and Strategy for PakistanÃ¢â¬â¢s Socio-Economic Development" which was presented to the government for approval jointly by Pakistan Institute of Development Economics (PIDE) and Higher Education Commission/COMSTECH for substantially enhancing the share of industrial and engineering sectors.

Talking about the globalisation, the draft, a copy of which was also made available to Dawn, said that there was a need for relocation of industries from industrial countries to Pakistan by attracting large multinational companies to invest in Pakistan and make the country a hub of the global supply chain.

The government was also urged to make Saarc and Economic Cooperation Organisation (ECO) effective trade blocs.

It was advised to bridge the widening technological gap with the developed countries through invigoration of engineering industry by providing conducive environment including the required technological, financial and physical infrastructures, and creating a seamless integration with emerging trends of global production systems.

About the policy framework, the government was advised to formulate a long-term industrial policy with the consultation of stakeholders to avoid sadden business shocks.

The draft believes there is need to reform taxation system to ensure effective implementation of research and development tax benefits and timely tax refunds and that there is need to remove discrepancies/anomalies of preferential treatment of duty-free imports of products, particularly for infrastructure projects.

In this regard, the government was also urged to implement intellectual property laws and enforcement system and further rationalisation of tax and tariff regimes.

The government was also urged to invest $10-12 billion for increasing the share of industrial sector in GDP to 25 per cent and the share of engineering goods to 30 per cent of manufacturing by 2010.

This will provide goods of international quality at competitive prices for domestic and international markets, support other sectors of economy, and will facilitate in exploiting the niche in global translocation of industrial production.

To meet the target an investment of $10-12 billion would be required up to 2010, another $20-25 billion up to 2020 and $30-40 billion by 2030. It will initially generate employment for two million people.

If these joint proposals were accepted and implemented, the government was told that this would help increase the exports of engineering sector to $2 billon, $5 billion and $12 billion by 2010 and 2030 if low scenario of exports is assumed.

However, this can only be achieved through a growth-led strategy of value-added quality production.

The allocation of additional resources from the technology development fund, common facilities centres, technology centres and technical manpower development, the draft said, could take Pakistan to the path of rapid industrial development.

With continued cooperation between Central Board of Revenue (CBR) and the ministry of industries and production for further rationalisation of taxes, tariffs and SROs can positively affect the overall output of the country.

"Given the political will, commitment and patronage, it is possible to achieve these targets with full participation of the private sector stakeholders".


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## Neo

ISLAMABAD, Sep 11: Pakistan is an attractive country for foreign investors due to better policies of the present government. It is also facilitating investors in terms of income tax and other taxes with no sanctions on transfer of profits to any other country.

It was stated by president Islamabad Chamber of Commerce and Industry (ICCI) Abdul Rauf in a meeting with a Canadian delegation led by Andy Merchant, president Canada Pakistan Business Council (CPBC).

He said the present government had introduced several reforms including liberalisation of trade and investments.

The delegation discussed various measures to improve economic and trade relations between the two countries, said a press release issued on Monday.

The ICCI president said that the WTO regime had abolished all trade barriers leaving international market open to all countries without any discrimination, transforming the world into a global village.

He further said that the Gwadar Port was a mega project through which a communication channel would be established with the Middle Eastern states.

Speaking at the meeting the CPBC president Andy Merchant that his delegation mainly comprised of bankers and they were interested in investing in banking sector.

He said that the Canadian investors wanted to invest in other sectors including drinking water projects and air-conditioning.


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## Neo

Tuesday, September 12, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\09\12\story_12-9-2006_pg5_3

_* It wants to invest in power plant, cement plant, real estate and hotels and livestock sector

By Sajid Chaudhry_

ISLAMABAD: Qatar has expressed willingness to make multi-billion dollar investment in four major projects in Pakistan and has linked it with provision of incentives such as five-year tax holiday, waiver of import duties on plant and machinery and help in acquisition of suitable sites. 

Qatar has indicated investment in setting up a 500-megawatt power plant in Punjab, one state-of-the-art cement plant with an investment of $225 million, a livestock project to source one million live animal per annum, and construction of three five-star hotels and investment in housing coloniesÃ¢â¬â¢ projects, a government official informed the Daily Times on Monday. 

Sheikh Hamad Bin Jassim Bin Jabbor Al Thani, First Deputy Prime Minister and Minister of Foreign Affairs, has approached Prime Minister Shaukat Aziz through a letter and has pointed out some important issues to materialize the said investment projects, the official added. Hotel Development and Real Estate: The Qatar side has said that we are prepared to invest in the development and construction of five-star hotels and housing colonies in Karachi, Lahore and Islamabad. They have informed that in this connection we have already decided on suitable sites in Islamabad and Karachi, but require assistance in acquisition of suitable sites in Lahore. 

Power Project: In line with the government of PakistanÃ¢â¬â¢s increasing requirements for electricity supply, Qatar has shown its willingness to invest in the 500-MW power plant planned by the Water and Power Development Authority (WAPDA) in Chichokimaliam, Punjab. Qatar has requested for a 75% equity stake in this project and has also shown its interest in increasing its capacity to 700MW, with further investment. 

Cement Plant: Qatar has also shown its preparedness to invest $225 million in setting up a state-of-the-art cement plant near a site offering plentiful access for raw materials. They have requested for four types of assistance and incentives for this investment, which include lease on land for quarrying possibly in Punjab or Sindh, waiver of import duties for plant and machinery, exemption from income tax for a five-year period and provision of gas and electricity connection. 

Livestock Project: Qatar has informed that we are willing to source one million live animals per annum to diversify their present import base, which is focused manly on imports from Australia and India. In this regard, Qatar has requested two major incentives. They required 5,000 acres of irrigated land on government lease in Punjab or Sindh near National Highway that would be declared or have same status as an export processing zone. And land near seaport for storage of at least 30,000 live animals at one time. 

Qatar has requested the government of Pakistan to approve their participation in the power project provide suitable land for the cement plant and the livestock project and finally assist in acquisition of suitable sites for real estate and hotel development. Qatar has hoped that the government of PakistanÃ¢â¬â¢s assistance in the said projects would result in closer economic relationship between the two countries and would bring gains to the peoples of the two countries.


http://www.dailytimes.com.pk/default.asp?page=2006\09\12\story_12-9-2006_pg5_3


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## Neo

The ministry of finance's economic outlook, issued on Saturday, seems a bit optimistic and relies much on validation from overseas multilateral agencies for claiming "extraordinary successes" despite external shocks. The document, which liberally quotes the World Bank, the International Monetary Fund and the Asian Development Bank (ADB), does admit that the country still faces many problems, especially related to creating jobs, reducing poverty, deteriorating physical infrastructure and worrying socio-economic indicators. However, it quotes from a recent international ranking of Pakistan which places the country in seventy-fourth position out of 175 countries. This is 60 places above India's ranking of 135. However, the fact remains that there are a host of rankings done by reputable organisations and a country's rank may vary considerably according to their scope of coverage and terms of reference. That being the case, it is not too difficult to pick a ranking of one's choosing to portray one's company in a more optimistic manner. The one mentioned by the ministry of finance relates to the ease, or otherwise, of setting up a business in a country and on that Pakistan has done well. However, on the ranking that really matters -- the UN's human development index which measures literacy, healthcare and other variables f socio-economic progress -- it has been doing dismally for quite a number of years.

This is not to say that there hasn't been economic progress in the country, especially under this government. Since the past two to three years especially, the economy has experienced substantial growth in its GDP per capita. In addition to that, inflows of foreign investment have increased considerably in recent years as well and several sectors of the economy are doing well. The problem however is very fundamental and it relates to the fact that the fruits of this economic growth have been far from equitably distributed. Of course, in any capitalist economy (this being the model of choice now), depending on the degree of domination by business and corporate interests and on the nature laws relating to trade and commerce, it is to be expected that those who control the means of production and those allied with them will stand to benefit the most. 

The ministry for instance quotes from the ADB which it quotes as praising the present government's macroeconomic management which allowed the economy to emerge relatively unscathed after last year's devastating earthquake. However, this does not take away from the fact that the management of the post-quake rehabilitation effort has been far from satisfactory. Many of those who lost their houses and property have still not been able to receive government compensation, either because of red tape or because their due share has been diverted to other people by corrupt local officials. The relief effort also saw a scandal of sorts when tents of not the required quality and specification were provided to the survivors and construction of replacement dwellings -- when the next winter in the region is around the corner -- has not yet begun. Furthermore, one reason Pakistan was able to absorb the impact of the earthquake was because the economy of the region that was affected is not a major contributor to the country's GDP. Also, the reconstruction effort, purely from an economics point of view, also adds to GDP primarily because of construction of housing and the employment that is generated. Apart from issuing economic outlooks that to many may seem as overly optimistic and the result of selective quoting from sources, the ministry of finance would do well to examine its policies whose aim is to alleviate poverty and should analyse why poverty has not risen by the proportion that it should have were the fruits of economic growth more evenly distributed. 

http://www.thenews.com.pk/daily_detail.asp?id=23712


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## Neo

By Muhammad Yasir

KARACHI: The incident of 9/11, which triggered the metamorphosis of global politics and economics, forced many Muslim countries, particularly Pakistan, to change policies in order to survive in a changed world.

Ironically, despite all its efforts in war against terrorism, Pakistan could not maintain its good image in the eyes of western world, particularly in USA. Moreover, PakistanÃ¢â¬â¢s status of being a frontline state in US-led war against terror did not help the country in acquiring reciprocal economic assistance and trade facilitations.

Delays in the issuance of visa, hurdles in marketing of goods and services, complications in security, customs, shipping and cargo processes are some of the major grievances that Pakistani businesses have been suffering since 9/11 incident. 

Many exporters reported they had lost deals with importers of western countries, which assumed that Pakistani products were suspicious, making market access difficult in these countries.

On the contrary, the business community of the country had been hopeful that as frontline state in the war against terrorism, the US and its allies would offer a trade corridor to Pakistan to enhance its exports.

President Federation of Pakistan Chamber of Commerce and Industry (FPCCI) Chaudhry Muhammad Saeed said that post 9/11 policies were not fruitful for the country in terms of trade benefits.

Ã¢â¬ÅWe (Pakistan) were not given the status of free market and quota free access in the developed countries similar to that granted to Jordan, which we were expecting as a key ally of USA in war against terrorism,Ã¢â¬Â he said.

Ã¢â¬ÅPakistan was anticipating strong economic ties with USA by signing Business and Investment Treaty (BIT) but due to lack of confidence and negotiation on the business laws and procedures, it has not materialised so far.Ã¢â¬Â

FPCCI chief told The News that the mega industrial projects of Reconstruction Opportunity Zones (ROZs) could not be constructed at the Pak-Afghan border owing to lack of peace in the region and other notable apprehensions between two states.

Ã¢â¬ÅPakistani private sector can not get the needed economic benefits from USA.Ã¢â¬Â He pointed out that Foreign Direct Investment (FDI) has increased up to $3.57 billion at the back of privatisation of national assets during the past four years.

Ã¢â¬ÅForeign exchange remittance surged to four billion dollars per annum as the foreign capital is being transacted legally through banks,Ã¢â¬Â he mentioned. Chaudhry Saeed pointed out that in absence of viable and sustainable business activities the local investors started investment in the capital market and real estate leading to speculation in these sectors. Speculation in turn leads to vicious boom-bust cycles, which greatly affects the socio-economic plight of common citizen.

President Lahore Chamber of Commerce and Industry (LCCI) Mian Shafqat Ali was of the view that the country was not provided special trade packages and other concessions that it deserved for its post 9/11 role.

Ã¢â¬ÅUSA did not do lavished aid on Pakistan as it should have given to the country instead it withdrew its one billion dollar loan for Pakistan and has given free trade market access only to the earth quake affected areas,Ã¢â¬Â he pointed out.

Bilal Mulla Central Chairman of Pakistan Readymade Garment Manufacturer and Exporter Association (PREGMEA) said the value added export of the country declined sharply during this year instead of surging owing to the tarnished country image of Pakistan. Ã¢â¬ÅOur exports have increased in previous years but if we glance at our trade deficit then we find our country at ground level,Ã¢â¬Â he said. 

http://www.thenews.com.pk/daily_detail.asp?id=23649


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## Neo

STOCKHOLM, Sept 12 (Reuters) - Mobile phone network equipment maker Ericsson said on Tuesday it won an order worth $274 million to expand the network of Warid Telecom in Pakistan. 


"Under the agreement, Ericsson will provide capacity for an additional 10 million subscribers through its mobile softswitch solution and the expansion of the radio access network in existing and new cities," the group said in a statement. 
The deal includes radio, transmission and packet core network equipment, as well as multimedia services.


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## JB 007

Owais said:


> *Pakistan's economic momentum ahead of 2007 elections*
> *KEY ECONOMIC INDICATORS AND FORECASTS FISCAL YEARS BEGINNING JULY 1 *
> ========================================================================== 2002/03 2003/04 2004/05 2005/06 2006/07GDP (US$ billion) 85.0 98.3 113.1 131 5 146.5GDP/capita (USD) 579.0 669.0 742.0 847.0 900.0Real GDP growth (%) 4.7 7.5 8.6 6.6 7.0Fiscal balance (% of GDP) -3.7 -2.4 -3.3 -4.2 -4.2CRI (%oya) 3.1 4.6 9.3 7.9 6.5Exports of goods ($ billion)10.89 12.40 14.40 16.80 19.50(%oya) - 13.8 16.2 17.1 16.1 -Imports of goods ($ billion)11.33 13.60 18.75 27.90 34.10(%oya) - 20.0 37.8 48.8 22.2 -Trade balance ($ billion)-0.44 -1.21 -4.35 -11.10 -14.60Current account ($ billion)3.16 1.31 -1.75 -5.80 -6.30(% of GDP) 3.7 1.3 -1 5 -4.4 -4.3Net FDI ($ billion) 0.82 0.92 1.68 3.53 5.00Fx reserves ($ billion) 10.72 12.33 12.62 13.02 13.02Total ext debt ($ billion) 35.47 35.26 35.83 36.56 38.00(% of GDP) 43.1 36.7 32.6 28.3 25.9Total public debt (% of GDP)76.9 69.7 82.5 53.3 50.8,
> *Exchange rate*(Rs/$) 58.50 57.57 59.36 59.81 *80.00*(*2006/07*)
> ==========================================================================
> 
> *Sources: *State Bank of Pakistan, IMF, J.P. Morgan.


is this a mistake or plan of SBP? if this is a plan, SBP would be bit slow. foreign investors have paid $1=60Rs last year, they will require some time to digest this change.:biggrin: :biggrin:


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## Owais

JB 007 said:


> is this a mistake or plan of SBP? if this is a plan, SBP would be bit slow. foreign investors have paid $1=60Rs last year, they will require some time to digest this change.:biggrin: :biggrin:


Opps!
I posted this in table form but that's become messy after posting:what1:


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## Owais

*$340 million floating LNG terminal to be set up at Port Qasim* 


KARACHI (September 13 2006): A floating liquefied natural gas (LNG) terminal will be set up at Port Qasim at a cost of $340 million. According to details available here on Tuesday, 'Associated Group' has been issued 'no-objection certificate' (NOC) by the Ministry of Petroleum & Natural Resources for import of LNG, along with setting up a floating LNG terminal and re-gasification facility at PQA.

The Kadiro creek, opposite Khiprianwala island, has been earmarked for this purpose. Pakistan is currently facing energy crisis, with soaring fuel oil prices having adverse impact on national exchequer. To fill the gap between demand and supply of fuel oil and to meet energy requirements of the expanding economy, establishment of LNG terminal is an imminent requirement. LNG is regarded as a cost-effective alternative to both oil and liquefied petroleum gas (LPG), besides being an environment-friendly fuel.

To meet the immediate LNG import requirements, a dedicated LNG vessel, with on board re-gasification facility, shall serve as a floating terminal and make re-gasified LNG available to the country within nine months. A daughter ship shall dock alongside for refilling the mother ship with imported LNG. The frequency of refilling the mother vessels shall be three to four times a month.

Floating LNG terminal is not only cost-effective but a time-efficient solution since land-based LNG storage terminal and re-gasification facility would require 3-4 years for implementation besides high project cost which would have adverse pricing impact on end-users. The development of LNG terminal at Port Qasim would also serve a larger national interest in promoting growth and development in this sector of economy.


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## Owais

*Current account deficit up by 134 percent in July* 



ISLAMABAD (September 13 2006): Fuelled by the $1.54 billion trade deficit, Pakistan's current account deficit during the first month of the new fiscal year 2006-07 (July) rose by 134 percent to $0.961 billion, against $410 million of July 2005.

Asian Development Bank (ADB) in its 'Outlook' last week had also pinpointed the burgeoning current account deficit as a 'gray area' of the country's economy by projecting it at $7.9 billion (5.5 percent of GDP) for 2006-07. During 2005-06, it had reached a worrisome $5.68 billion--4.7 percent of gross domestic product (GDP).

Independent economists are of the view that the widening current account deficit poses threat to the economy simultaneously on both internal and external fronts. They also have questioned time and again as to how long the trade deficit could continue on that trajectory without disrupting the economy. And, how much longer Pakistan could continue to spend more than it earns, and support the growth.

With the start of the new fiscal year, the country's current account deficit (excluding official transfers) has witnessed a worrisome increase of $551 million or 134 percent to $961 million against $410 million of July 2005, the State Bank of Pakistan (SBP) reported.

According to independent economic experts, this external disequilibrium in the shape of current account deficit may have a significant impact on the value of the rupee. Besides, it may translate into a large increase in Pakistan's net foreign debt position. A large and growing public debt could also eventually put upward pressure on interest rates and crowd out private investment, they opine.

The government's economic managers, on the other hand, are of the view that Pakistan is enjoying an economic boom and the current account was manageable by borrowing from abroad, remittances, drawing down reserves and inflow of investment.

The country witnessed this current account imbalance, as trade deficit (in goods and services) jumped to $1.537 billion during July 2006 from just $827 million in July 2005. The trade deficit figures were arrived at using the freight-on-board value of imports and exports.

The central bank data shows that goods import stood at $2.395 billion whereas exports totalled $1.36 billion, thus leaving a trade imbalance of $1.035 billion. The services account also witnessed a large imbalance of $502 million during July 2006, as inflows under this account stood at $200 million, whereas outflows totalled $702 million. Thus, on balance, total trade deficit stood at $1.537 billion.

The factors responsible for this huge deficit include higher outflows on account of transportation, travel, insurance, construction services, royalties and licence fees.

Pakistan had to spend $265 million on transportation account whereas its earning under this head was only $92 million. Thus, the net deficit in the service account due to chartering of vessels for imports, export shipment was $173 million.

Another factor responsible for big services' account deficit was a net outflow of $80 million on account of overseas travelling. Pakistan had to spend $99 million to finance personal and business-related travelling abroad of individuals and groups whereas it earned only $19 million under this account.

Hence, the services account deficit in July 2006. The same applies to spending on insurance and royalties and licence fees paid to international organisations and their employees operating in Pakistan.

The imbalances in trade and services were so large in July 2006 that the current account turned negative despite a strong build-up in current transfers. Net current transfers rose to $778 million during the month from $606 million in July 2005. Current transfers went up as Pakistan received $377 million in workers' remittances or foreign exchange sent back home by overseas Pakistanis during this month, up from $313 million in a year ago period.

A big increase in foreign currency deposits, held by the resident deposit holders, also boosted current transfers. However, it declined to $19 million against $54 million in corresponding month primarily because of the stable rupee.


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## Owais

*Musharraf seeks greater EU market access: out-of-box Kashmir solution stressed* 

BRUSSELS (September 13 2006): President General Pervez Musharraf on Tuesday urged the world to do more to rebuild Afghanistan and later after meeting European Commission president Jose Manuel Barroso called on the European Union to grant greater market access for Pakistani products.

"With trade our industry expands and creates jobs and when it creates jobs it strikes at the root of poverty and also strikes at the root of extremism and terrorism," he said. Barroso praised Pakistan for helping foil the British airline bomb plot in August and said the two sides had agreed to step up ties, although he gave no figure for the enhanced aid.

"The European Union greatly appreciates Pakistan's role in acting against terrorist networks," Barroso said. The EU president also said Musharraf had given "encouraging signals" regarding a readmission agreement the Commission has been seeking for illegal migrants. President Musharraf warned the West that Taliban insurgents were a more dangerous terrorist force than al Qaeda because of the broad support they have in Afghanistan.

The President defended his commitment to counter-terrorism. He told EU lawmakers Taliban fighters had regrouped in southern Afghanistan. "The centre of gravity of terrorism has shifted from al Qaeda to the Taliban," he said. "This is a new element, a more dangerous element, because it (the Taliban) has its roots in the people. Al Qaeda didn't have roots in the people." He said he was certain Taliban fighters were being commanded by former Taliban ruler Mullah Omar from a base in southern Afghanistan, where Nato troops are struggling to contain an insurgency. He rejected criticism that Pakistan was not doing enough to prevent the Taliban from mounting attacks on Nato troops by infiltrating its porous borders with Afghanistan.

"No one should blame us or doubt us for not doing enough," he said, adding that Pakistan had deployed 80,000 troops on its side of the border to tackle militants.

*OUT-OF-BOX SOLUTION OF KASHMIR *President Musharraf has said "we have to remain engaged for an 'out-of-box solution' of the Kashmir dispute for lasting peace in the region". Addressing the opening session of global discourse on Kashmir at the European Parliament here, he reminded the audience that he had offered 'food for thought' to break the deadlock in 2001, which included 'demilitarisation', 'self-governance' and 'joint management', but the Indian response "is still awaited".

At the same time, he said, he stood by the firm resolve that Pakistan would not move away from its principled stand unless India also moved from its stand. President Musharraf said Kashmir "runs in the blood of every Pakistani" and Pakistan wants peace and stability on the basis of "sovereign equality, honour and dignity".

He said the confidence-building measures (CBMs) were important, "but we need to address the malaise and not only the symptoms". He said the "fleeting opportunity must be seized" to resolve the decades-old dispute by showing "sincerity, flexibility, courage and boldness" on the part of the leadership of the two countries. He emphasised that such issues could not be put in the cold storage.

*TALKS WITH BELGIUM PRIME MINISTER *President Musharraf and Prime Minister of Belgium Guy Verhofstadt on Tuesday held talks on boosting economic ties between the two countries as the Pakistani leader called for the European Union (EU) to play a major role in resolving the crisis in the Middle East.

The meeting, on the second day of President Musharraf's four-day visit to Belgium, covered bilateral issues and regional and international matters of mutual concern. The two leaders discussed ways and means to further strengthen ties between Pakistan and Belgium, particularly in trade and economic fields.

The recent crisis in Lebanon and the situation in Afghanistan were the focus of discussion between the two leaders as they agreed on the need of resolving problems in the Middle East as soon as possible.

Talking to reporters after the meeting, the Belgian Prime Minister said President Musharraf urged the European Union to play a bigger role in finding solutions to the Middle East crisis. The two leaders also exchanged views on regional issues, including the situation in Afghanistan and how the country could have peace and stability.

Responding to a question on the recent peace agreement the government has signed in North Waziristan, he said military force can only buy time and it does not produce an ultimate solution. He said while the government was committed to fight terrorism militarily, extremism is a state of mind and a different strategy is needed to deal with it.

*ADDRESS TO PAKISTANI COMMUNITY *Speaking to the Pakistani community here on the first day of a four-day visit to Belgium, President Pervez Musharraf said that he looked forward to enhancing relations between Pakistan and Belgium, and urged the Pakistani community to promote Pakistan's image and work for well-being of their adopted country.

The President said it had warm relations with Pakistan. Both the countries had common understanding on international and regional issues and were also trying to enhance this co-operation in the economic sector, he added.


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## Owais

*Minfal told to enhance agriculture exports to $10 billion by 2013* 


ISLAMABAD (September 13 2006): Prime Minister Shaukat Aziz has directed the Ministry of Food, Agriculture and Livestock (Minfal) to enhance its agri exports target to $10 billion by 2013, instead of $6.5 billion. He further directed the ministry to focus on four major areas, which have a meagre contribution to the national kitty, sources in the Ministry said on Tuesday.

The Prime Minister gave these directions over a briefing by Minfal on 'Export potential: High growth scenario' by Secretary, Minfal, in which the Ministry proposed an estimated export target of $5.25 to 6.5 billion, to be met by 2013.

To achieve the export target of $10 billion, the Prime Minister directed the Ministry to formulate a comprehensive strategy and plan of action for making the target viable in the stipulated time.

The sectors include horticulture, livestock, fisheries and primary commodities. Besides rice, which had a contribution of $0.964 billion in exports last year, the remaining agri sector had a dismal performance despite there being a huge export potential.

The Ministry had prepared a two-phase estimated export targets, ranging from $3.2 to $4 billion by 2010, and $5.25 to $6.5 billion by 2013, against current exports of $2.29 billion. The export potential of livestock was estimated at $1 to 1.2 billion by 2010, and at $1.5 to $2 billion in 2013, against the current exports of $0.868 billion.

Fisheries exports of $0.5 to $0.7 billion have been estimated by 2010, and $1 to $1.2 billion by 2013, against the current figure of $0.2 billion. Horticulture exports of $0.3 to $0.4 billion are targeted by 2010, and $0.6 to 0.8 billion by 2013, against the current level of $0.13 billion.

And, the exports of primary commodities, including rice and wheat, are projected $1.2 to $1.4 billion by 2010 and $1.6 to $2 billion by 2013, against current exports of $0.964 billion and $0.1 to $0.15 billion by 2010, and $0.25 to 0.3 billion by 2013 against current nil exports.

The Prime Minister assured the Ministry all assistance to meet its needs, sources said. The Prime Minister also constituted task forces for these sectors, for originally producing surplus in the agri sectors, and later making the export targets achievable.

The task forces would not only chalk out strategy for producing agri surplus but also making compliance to the value-added products at par with international sanitary and phytosanitary rules.

The target would be within reach if the constraints and bottlenecks in exports of value-added agriculture products were redressed, said an official, but the worrisome task is first to make the country agri exportable.

Last year, agriculture sector showed negative growth and the economic survey said that lower than expected growth was mainly because of poor performance of the agriculture sector, which contributed only 2.5 percent to the GDP.

The agri managers in the ministry are again anticipating low growth in the sector, as one of the major cash crops is expected to contribute below target mainly because of increased pest and cotton leave curl virus (CLCV) attacks and floods and monsoon rains damage.

The major exportables of the agri sector include primary commodities, cotton manufactures and other items. The primary commodities are rice, fish, fruits, vegetables, wheat flour, spices, oilseeds, nuts, kernels, leguminous vegetables, raw hides and skins, raw wool, animal hair, crude animal material, molasses, raw cotton, cotton waste and tobacco.


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## Owais

*Gwadar economic and energy zone: Pak-China joint venture consortium to be formed* 


ISLAMABAD (September 13 2006): Pakistan and China will set up a joint venture consortium to finalise the preferential policy and tax incentives package for the establishment of 'Gwadar Economic and Energy Zone' comprising an oil refinery, LNG terminals and petrochemical industry.

Sources said on Tuesday that the Central Board of Revenue (CBR) is examining a proposal of Economic Affairs Division for possible exemption of duties and taxes for the 'Zone'. They said that Pakistan and China would ink a Memorandum of Understanding (MoU) for establishment of the zone, which would allow setting up a joint venture consortium for designing, developing, constructing and managing the Zone.

Under the proposed MoU, both governments would establish a 'working group' to identify appropriate sites and work out the incentives package to facilitate the setting up of the joint venture consortium, sources added. The two countries would jointly conduct technical and financial studies on setting up of an oil refinery, LNG terminal and petrochemical industry to be located in the Zone.

Sources said that Pakistan government would provide land and an incentives package to ensure that the enterprises based in the Zone are commercially viable. The Pakistan government would also ensure safety and security of Chinese experts working on these projects. In this connection, Pakistan's Ambassador in Beijing has conveyed to the government to work out the concessions for the Zone, sources added.

The governments of Pakistan and China had signed a declaration on bilateral trade development as well as a Treaty of Friendship Co-operation and Goods-neighbourly Relations in April 2005.

Both countries are determined to promote mutually beneficial co-operation in the field of energy in accordance with the framework agreement on energy co-operation signed in Beijing in February 2006. Pakistan and China recognise the importance of establishing an Economic Energy Zone by setting up storage sites, oil refinery and LNG terminals as well as related petrochemical industry at Gwadar.


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## Owais

Neo said:


> ISLAMABAD (September 12 2006): Prime Minister Shaukat Aziz on Monday said the investment regime of the government coupled with incentives and the level playing field provided to investors have reduced the cost of doing business in Pakistan.
> 
> The openness of government policies and transparency in transactions is attracting higher investments and Pakistan is geared to become a regional hub for trade and manufacturing, he added.
> 
> He was talking to Canadian Pakistan Business Council (CPBC) President Anwar Merchant, who called on him here at the Prime Minister's House. The prime minister said that macro-economic stability, continuity and consistency of policies have restored the confidence of investors, and helped the business to flourish. These polices have made Pakistan an investment-friendly place and the record ($3.8 billion) foreign direct investment (FDI) in the last financial year is reflective of the success of government's policies, he added.
> 
> Shaukat Aziz identified construction, agri business, infrastructure, energy, mining and IT and telecom as areas with vast opportunities for the investors. Giving an overview of the economic recovery achieved by the country, the prime minister said the broad-based and multifaceted reform agenda undertaken by the government has changed the entire economic landscape of the country.
> 
> He said the size of the economy has almost doubled during the last seven years, and Pakistan's economy has grown at an average rate of almost 7 percent per annum during the last four years, and over 7.5 percent in the last three years, thus positioning itself as the second fastest growing economy of the Asian region.
> 
> The prime minister said Pakistan was able to achieve 6.6 percent growth during the last financial year despite the losses caused by earthquake and surging oil prices at the international market.
> 
> "Pakistan's economy has proved itself remarkably resilient in the face of shocks of extra-ordinary proportions", he added. Shaukat Aziz said the per capita income, which is considered one of the main indicators of development, grew by an average rate of 13.9 percent per annum during the last four years rising from $562 in 2003 to $647 in 2006, adding that 12.6 million people were brought out of poverty net during 2002-05.
> 
> He said the economic philosophy of the government is based on the broad principles of privatisation, deregulation and liberalisation and transparency is the hallmark of the government's transactions. Anwar Merchant, the head of the delegation, appreciated the Pakistan government for streamlining the investment policies and procedures.
> 
> He said Pakistan is a great place for investment as it offers tremendous opportunities and a conducive environment for the private sector. Anwar Merchant said Canadian companies are keen to invest in Pakistan particularly in infrastructure and power sector. Among others, Privatisation and Investment Minister Zahid Hamid, Minister of State for Privatisation and Investment Umar Ahmad Ghumman, Canadian High Commissioner David Collins, and senior officials attended the meeting.


Duplicte post neo. you have already posted that in post # 2215 and in 2218


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## Neo

*BRUSSELS *_(updated on: September 13, 2006, 19:06 PST_): President General Pervez Musharraf on Wednesday assured foreign investors to fully meet energy requirements of their industries in Pakistan on sustained basis and invited Belgian investors to benefit from the country's liberal economic policies, skilled manpower, improved law and order and cheap labour, making it an ideal investment destination.

"We will guarantee gas, electricity to any investor in Pakistan," he said while responding to a question at a breakfast meeting with leading Belgian companies on the third day of his visit to Brussels.

The president shared with the business leaders ground realities in Pakistan and said their investment in Pakistan was fully protected.

"I believe Pakistan is the most misperceived country and suffers from poor perception, realities are different," he said while projecting Pakistan as a destination for profitable business ventures.

On the growing energy needs, President Musharraf referred to the phenomenal growth in economy that led to a sharp rise in demand and subsequently to a supply-demand gap.

But, he assured that government has strategized the country's energy requirements and exploring all opportunities to meet the demand. "We are looking at all resources of power generation from export of energy to local production through alternative resources," he added.

In this respect, he said Pakistan was holding talks with Iran for importing gas and was even looking at buying electricity from Kyrgyzstan.

President Musharraf also cleared any misperception about Pakistan, inviting the businessmen to come to Pakistan and see for themselves the ground realties. "Don't believe me, come and see for yourself."

He said there were 700 foreign companies operating in Pakistan for the last 40 years and they never had any problem. Nestle was setting up its biggest plant in a remote Kabirwala town that bespeaks of their confidence in Pakistan's economy.

"It was true that my perception about Pakistan was quite different because of media coverage, unfortunately but now we have much clear view of what is going on in Pakistan," said Omer Baturalp of Puratos company dealing with food business.

"I foresee a sharp increase in trade and business relations between Pakistan and Belgium and the president's speech was very reassuring that it will certainly happen," said another businessmen Dirk Van Steerteghem of Flanders Investment and Trade.

President Musharraf gave a glimpse of how Pakistan's economy was performing, especially in the last four years during which it recorded 7 per cent growth on average.

He said the GDP has doubled in four years and the debt to GDP ratio has been brought down from 101 per cent to 55 per cent, which was even lower from the benchmark of 60 per cent set by the European Union for their trade.

The president said the country's foreign exchange reserves that could just meet two weeks imports in 1999 and have now risen remarkably and were now enough to meeting imports requirement of 8 months.


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## Neo

*BANGKOK *_(updated on: September 13, 2006, 21:03 PST_): Federal Minister for Industries, Production and Special Initiatives Jehangir Khan Tareen said on Wednesday that government is focusing on the development of gems and jewellery sector and plans to enhance its exports form $23 million to $500 million through skill development, market access and tapping its rich potentials in the country.

He stated this while talking to newsmen after inaugurating the Pakistani pavilion here at "38th Bangkok Gems and Jewellery International Fair: 2006".

Earlier, Thai Minister for Commerce Somkid Jatusripitak formally inaugurated the international fair. Pakistan has established 22 stalls in the Gems and Jewellery Exhibition for the second time.

The federal minister said that Pakistan would continue to participate in the exhibition in the future as well and expressed the hope that this year exhibition Pakistan would earn up to $10 million.

Tareen said that government of Pakistan and the Ministry of Industry has adopted a strategy for the development of gems and Jewellery sector and has established Pakistan Gems and Jewellery Development Company (PGJDC) with public private partnership to achieve this objective.

He said that to market Pakistani gems and jewellery products, Pakistan plans to participate in US and Hong Kong Gems and Jewellery fairs and to enhance the sectors' exports of the country.

The minister also mentioned about "Ahan initiative" to promote local gems and jewellery sector for the benefit of the country and its people.

He highlighted the economic achievement of the government and added that the economic policies initiated by the government would continue for the betterment of the masses and prosperity of the country.

Pakistan, he said has enormous potentials for development and reiterated the commitment of the government to promote this sector for the benefit of the country.

The minister appreciated the quality and standard of Pakistani products and assured the exhibitors of the government's all out efforts support for the development of this sector.


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## Neo

KARACHI (September 13 2006): A Malaysian national automobiles company, Proton, is launching its automobiles in Pakistan on Friday (September 15). Sindh chief minister Dr Arbab Ghulam Rahim is expected to launch the car, Royal Motors executive-director Sultan Mehmud disclosed this at a press conference here.

Proton holds 60 percent market share in Malaysia. It was established in 1983. In 1985, Proton cars were rolling on the streets. It is worth mentioning here that Lotus, a world famous European sports car manufacturer (Since 1952) was bought by Proton in 1996, so now the legendary Lotus is operating under the flag of Proton.

Sultan Mehmud further informed in the Karachi region, Royal Motors would operate their own outlets, whereas in other parts of the country they have a chain of distributors with all after-sales service facility to Proton customers.

He added at the moment Proton is launching its four different models-both in the CNG and petrol-in Pakistani market and all cars would be imported and this will continue for the next one and half year and by that time Proton would establish its assembling plant in Pakistan.

Marcus Lee, business executive, Middle East and Africa region (export division); Sohail Amjad, manager sales, Royal Automobiles Private Limited and Syed Noman Ahmed, manager services, Royal Automobiles Private Limited were also present on the occasion.


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## Neo

Wednesday, September 13, 2006 

_By Irfan Ghauri_

ISLAMABAD: Around 3.23 million people are unemployed in Pakistan, Minister for Labour and Manpower Ghulam Sarwar Khan told the Senate on Tuesday. 

In response to a question, Khan quoted the labour force survey 2005-06 to support his argument and said the government was creating new jobs to eliminate unemployment. 

Minister for Ports and Shipping Babar Khan Ghauri told the Senate that 95 percent of the work on Phase-I of Gwadar Port and 70 percent of the additional dredging work on a water channel had been completed. In his written reply to a question, Ghauri said the Gwadar Port was expected to go operational by December this year. 

To another query, Ghauri said that the Planning Commission had completed a feasibility study on the possibility of inland water transport facilities at the Indus River, adding that the study found that the project was not feasible for multiple reasons. 

Education Minister Lt Gen (r) Javed Ashraf Qazi said the Higher Education Commission (HEC) had sponsored 2,655 people for masters and PhD studies in local and foreign institutions during the last five years. He said the HEC sponsored 91 students in 2001-02, 90 in 2002-03, 917 in 2003-04, 1,179 in 2004-05 and 378 in 2005-06. 

Of the total, 18 students were from Balochistan, 581 from Azad Kashmir and Federally Administered Tribal Areas (FATA), 1,552 from Punjab, 248 from Sindh and 256 from NWFP.


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## Neo

Owais said:


> Duplicte post neo. you have already posted that in post # 2215 and in 2218


My bad, I've deleted 2218.
Thanks for reporting.


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## Neo

JALALABAD (September 14 2006): Prime Minister Shaukat Aziz has said that Pakistan would build railway track from Chaman to Spain Boldak, road from Jalalabad to Torkhom, a kidney centre at Jalalabad, Arts Faculty at Kabul University and many other development projects under its $250 million assistance package for rebuilding of Afghanistan.

He was speaking at a ceremony held to inaugurate of the first phase of Jalalabad-Torkhom road and to start its second phase here on Tuesday. Pakistan has built the first phase of the road in which the existing road was rebuilt and in the second phase the road would be dualised with the cost of Rs 3.5 billion.

Shaukat said that Pakistan is playing a very active role for rebuilding of Afghanistan and providing its assistance to build infrastructure in this country especially in education and health sector.

He said that being Muslim countries Pakistan and Afghanistan are bound in historical, religious and cultural long lasting relations.

He said that Pakistan believes that a strong and peaceful Afghanistan is in favour of Pakistan and it would continue its efforts for the rebuilding of Afghanistan.

He said that the buildings of road and rail track would increase the trade activities between the both countries, which would strengthen already strong relations among the people of both sides.

He appreciated the efforts of FWO, Pak Army engineers, National Highway Authority and other concerns for completing the first phase of the project in record time.

Afghan President Hamid Karzai thanked the government of Pakistan for providing assistance for the rebuilding of Afghanistan. He said that Pakistan always provided its co-operation and help for Afghan government and its people. "We cannot forget Pakistan assistance provided to the millions of Afghan citizens during their migration," he mentioned.

Afghan President Karzai said that the construction of road between Pakistan and Afghanistan would increase the trade activities between the two countries.

He said that he believes that any nation cannot progress without education and thanked Pakistan for its assistance in education sector in Afghanistan.

He said already strong relations between Afghanistan and Pakistan would be strengthening with the passage of time.

Gul Aga Sherzai, Governor, Nangerhar province, said that the people of this province thank Pakistan for construction of road.

Afghan Minister for Public Works, Sorab Ali Safari also spoke on this occasion and briefed about the importance of this road. He informed that over 14,000 vehicles run on this road daily, which indicates the importance of this road for trade activities between the two countries.

Hamid Karzai presented Ghazi Mir Masjidi Khan Award to Farrukh Javed, Chairman NHA and Major General Asif Ali, DG, FWO and Ghazi Mir Bacha Khan award to Chaudhry Karamat of Nespak for their tremendous efforts and contribution for construction of Jalalabad-Torkhom road.

Earlier, Hamid Karzai, ministers and other Afghan high officials welcomed Pakistan's Prime Minister Shaukat Aziz and the members of Pakistan high-level delegation at Nangerhar Airport with open arms. Information Minister Muhammad Ali Durrani, Communication Minister Shamim Siddiqui, Chairman National Highway Authority, DG, FWO, former governor NWFP Commander Khalil-ur-Rehman (Retd) and the high official of NHA, FWO were in the delegation.

Prime Minister Shaukat Aziz and Afghan President Hamid Karzai jointly laid the foundation stone of the second phase of Jalalabad-Torkhom road project and inaugurated the first phase of the project.


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## Neo

ISLAMABAD (September 14 2006): Pakistan has obtained foreign loan of $584.3 million from July 2005 to March 31, 2006. Minister of State for Economic Affairs and Statistics Hina Rabbani Khar stated this in the National Assembly on Wednesday.

She was replying to a question from Maulana Abdul Akbar Chitrali during the question hour, who asked for details of total loans obtained by the government during the said period along with the names of lending countries. The minister for state said that main lenders were China with $322.3 million, Japan with $244.7 million and Korea with $17.3 million.

She specified that loan obtained from China for Buyer's Credit for Earthquake Rehabilitation was $300 million and for Gawadar Deep Water Port Project, $22.3 million. Loan obtained from Japan was for three projects namely Lower Chenab System Rehabilitation Project $112.2 million, Load Dispatch System Up-gradation Project $34.4 million and Emergency Loan for Earthquake Recovery $98.1 million respectively, she added. The loan of $17.3 million from Korea was for 220KV Ghazi Road Lahore Grid Station Project, she said.

She negated the remarks of Opposition member, who blamed the government of begging and replied that it is borrowing and not begging. Further she said that all countries including US, Japan or any other developed nations have to borrow one way or the other. There is nothing wrong with the borrowing, she added.

Differentiating between borrowing and begging on the demand of Opposition benches, Hina said that borrowing does not put the country's sovereignty at stake, whereas you are not the choosier in the other case. She also informed the House that Government as a policy matter refused debts of $375 million offered by International Monetary Fund (IMF) and $200 million from Iran as it thought the loans were harmful to the sovereignty of the country, she added.

The state minister also told the House that debt to GDP ratio in 1999 was 90 percent, which has come down to 54-55 percent.

To another question from lady MNA Jamila Ahmad on the steps taken by the Government for the welfare of imprisoned women during 2004-05 and 2005-06, the Parliamentary Secretary for Interior Sanaullah Mastikhel informed the House that 1300 imprisoned women have been released on the initiative taken by the President of Pakistan. Talking about other steps, Sanaullah told the House that in Punjab, lady advisers of the Chief Minister are visiting the jails in routine to provide maximum relief to the women prisoners. The NGOs are providing legal aid to women prisoners.

To another question pertaining to CDA from Dr Farid Ahmad Paracha, the parliamentary secretary informed that the total revenue collected by CDA during 2003 and 2004 through sale/auction of residential, commercial plots was Rs 4,249.2 million. Income earned on the sale of forms of those schemes including the non-refundable amount was Rs 4,36,800, he added.

There were number of questions for the Ministry of Interior, which were either not satisfactorily answered or not replied at all. The Speaker National Assembly Chaudhry Amir Hussain strongly instructed the parliamentary secretary to ensure their replies in the next rota day ignoring his justifications for the shortcomings, which according to him were futile. State Minister for Interior Zafar Iqbal Warraich was also in the Assembly.

Replying to a question from Dr Farid Ahmad Paracha on foreign direct investment during 2005-06, the State Minister for Privatisation and Investment said it was $3,512 million. Regarding its break-up, he said that we do not have any figures. We have not established any procedure to differentiate between foreign investors and foreign investment coming on behalf of Pakistani living abroad or local, as such information is not available.


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## Neo

KARACHI: The country is eyeing over $100 million in software exports during 2006-07 as record figures achieved in the last financial year push the authorities to set the target at a high level for the emerging industry.

Officials and industry players say the increased interest of western firms in outsourcing towards Pakistan indicates the country is fast catching up in software development and at such a rate that its global IT revenue should reach around $9 billion in next four years.

Ã¢â¬ÅWe have set $108 million software export target for 2006-07,Ã¢â¬Â said Yousuf Hussain, Managing Director Pakistan Software Export Board - a federal body set up to promote outsourcing and software exports.

Ã¢â¬ÅWe are inspired by the State Bank data, which showed our companies managed to export over $72 million worth of software during 2005-06 and with the same rate we should achieve this (new) target by the end of June 2007.Ã¢â¬Â

He said according to the parameters defined by the WTO (World Trade Organisation) regime the software exports were estimated at more than $100 million during 2005-06 but the figures registered by the State Bank put the exports at $72.6 million.

The countryÃ¢â¬â¢s software exports crossed $70 million during 2005-06 for the first time, registering a 50 per cent growth, as western firms started turning more and more towards Pakistan for IT-enabled services to cut costs and raise profits.

The countryÃ¢â¬â¢s IT industry has emerged as the fastest growing sector, mainly supported by a phenomenal jump in call centre operations during the last two years. More than 140 such centres are currently operational, mainly in Lahore, Karachi and Islamabad offering employment to around 5,000 people.

Defined as a unit, the call centres have adequate telecom facilities, trained manpower and access to database providing information to customers. The advancement in telecom technology has made it possible that the person handling a call could be anywhere provided that communication and interaction is properly handled.

The growth in business from western companies has inspired local investors to explore new opportunities. Though Pakistan remains far behind India in telecommunications, operators believe they are on the right path now.

Ã¢â¬ÅThe good thing is that western companies are looking at Pakistan to outsource services,Ã¢â¬Â said Jehan Ara, President Pakistan Software Houses Association. Ã¢â¬ÅItÃ¢â¬â¢s an important development as after 9/11 local companies faced a tough time in terms of winning business from these companies.Ã¢â¬Â

However, she questioned the mechanism of calculating export figures by the State Bank, saying it should be reviewed by the authorities concerned as exports were much higher during 2005-06 than those registered by the central bank.

Ã¢â¬ÅThe State Bank only counts those revenues which come under the head of remittances. It should also take those expenditures in export revenue calculation, which companies bear for marketing and their front office abroad,Ã¢â¬Â added the PASHA chief.

The authorities appear aware of the approaching opportunities and claim to have spent Rs115.2 million during fiscal year 2004-05, for subsidising various activities of immediate relevance to the industry, like participation in international exhibitions and achieving quality certifications.

The PSEB says it will continue projects initiated during the last two years and plans more in the new fiscal for the growth of software exports and call centre operations.


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## Neo

*ISLAMABAD*_: September 14, 2006_: Head of the External Co-ordination Wing of the Russian Ministry of Economic Development and Trade Alena Zalinova said on Thursday her country has shown interest in modernising the Pakistan Steel Mills (PSM).

She stated, in an interview, that PSM Karachi was one of the projects completed with the assistance of the former Soviet Union.

Russia intended to take part in bids for privatisation and modernisation of the PSM, she said.


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## Owais

*Food inflation hits double digits* 


ISLAMABAD (September 15 2006): Once again, the rising inflation, particularly of food items, is becoming a nightmare for economic managers, which (food inflation) during August 2006 leaped to double digits (11.08 percent) from 7.44 percent a month earlier; thus, snatching the purchasing power of the low-income group.

The general inflation measured by the Consumer Price Index (CPI) climbed during August to 8.93 percent from 7.63 percent in July, depicting an increase of 1.3 percentage points in a span of one month, says the State Bank of Pakistan 'inflation indicators' released on Thursday.

The bank's data reveals during fiscal 2005-06, average annualised CPI inflation was 7.92 percent and food inflation 6.92 percent. While in the first two months (July-August) of 2006-07, the average general inflation rose to 8.28 percent with food inflation of 9.25 percent.

It was at 7.63 percent (food inflation 7.44 percent) during the first month (July) of this fiscal year, indicating inflation is again rising and is still a potential threat to the economy.

Though the government has tightened its monetary policy in July-the SBP tightened its stance by raising its policy rate (the three-day repo rate, which is its rediscount rate) from 9 to 9.5 percent, and adjusted upward both the banks' cash-reserve requirement ratio and their statutory liquidity requirement ratio. Yet, the accommodative monetary policy prevailed for the last few years would have a boosting effect on inflation.

Food inflation, having more than 40 percent weightage in CPI basket, unevenly affecting the purchasing power of the low-income group, increased by 2.24 percent during August 2006 over the previous month.

In one month, general inflation increased by 1.25 percent; food inflation, 2.24 percent; non-food inflation, 0.89 percent; and core inflation increased by 0.54 percent in August 2006 over the last month.

Inflation indicators, the bank providing since 1998-99, reveal annualised CPI inflation was highest during FY2004-05 at 9.28 percent, of which the food inflation was 12.49 percent.

Majority of the population consists of low- and middle-income groups and always suffered most by the increasing food inflation. When prices go up, it hit these groups and squeeze their purchasing power.

Core inflation (excluding certain sectors, whose prices are most volatile, specially food and energy) stood at 6.20 percent during August of the new fiscal against the annual average of 7.11 percent in FY2005-06.

The non-food inflation also declined to 7.43 percent during the month under study while in the last fiscal the average non-food inflation stood at 8.63 percent.

The other indicator of inflation, ie, the Wholesale Price Index (WPI), in general though, indicating decline, yet the food inflation in August increased by a huge margin (2.8 percentage points) to 8.19 percent from 5.39 percent in July 2006.

WPI was at 10.10 percent during FY2005-06, of which the food inflation was seven percent and non-food inflation at 12.37 percent. In August 2006-07, it declined to 8.17 percent with food inflation at 8.19 percent and non-food inflation at 8.15 percent.


----------



## Owais

*Kuwaiti firm not endorsing PSMC sell-off process* 


ISLAMABAD (September 15 2006): The Privatisation Commission is facing difficulty in getting Al-Kuwait Investment Company's endorsement of the Pakistan Steel Mills Corporation (PSMC) privatisation, it was learnt here on Thursday.

Sources said the Al-Kuwait Investment Company-the runner-up bidder for the PSMC's controversial sell-off-has turned down the Privatisation Commission's request to endorse in writing the mills privatisation process.

Sources said the Privatisation Commission had approached the Kuwait investment group to get its endorsement in writing to establish that the transaction was carried out through an open and transparent process. The company informed the Privatisation Commission it could consider the request for the PSMC bidding process endorsement if provided reasons of the certification and details of the Council of Common Interests (CCI) decision for the PSMC future.

Privatisation Commission officials were considering to again approach Al-Kuwait Investment Company with requisite information to get the endorsement of the PSMC bidding. Sources in the commission were tight-lipped about the necessity of approaching the Kuwaiti group to get its certificate for establishing the PSMC's sell-off, which was later struck down by the Supreme Court of Pakistan.

Specially, in a situation when the Privatisation Commission has already refunded first instalment of the payment to Al Tuwairqi group-led consortium. Sources said the Privatisation Commission had refunded the first instalment and earnest money to the winning consortium last month.

Its only purpose could be to get Al Kuwait Investment Company's certification in support of its review petition filed before the Supreme Court of Pakistan. It may be noted the Privatisation Commission has submitted a review petition before the Supreme Court of Pakistan in PSMC sell-off case. The hearing into the case is expected sometimes next month.

Arif Habib-one of the parties of the winning side led by Al Tuwairqi group of Saudi Arabia-has also filed petition before the Supreme Court of Pakistan, seeking review of the decision.


----------



## Owais

*PTCL declares Rs 20.777 billion profit* 




KARACHI (September 15 2006): The Pakistan Telecommunication Company Limited (PTCL) has announced a final cash dividend for the year ended June 30, 2006, at Rs 2.00 per share ie 20 percent. This is in addition to interim dividend already paid at Rs 3.00 per share ie 30 percent.

PTCL's profit after tax (PAT) for the year ending June 30, 2006, comes to Rs 20.777 billion (EPS: Rs 4.07) as against Rs 26.605 billion (EPS: Rs 5.22) for the year ending June 30, 2005, marking a decline of around 21 percent. The operating profits of the company stood at Rs 27.397 billion as against Rs 36.363 billion the previous year. The gross revenue remained Rs 69.085 billion against the operating cost of Rs 41.688 billion.

The other income added to the profits was calculated at Rs 3.913 billion against Rs 3.387 billion calculated last year. Financial charges levied on the company were Rs 336.401 million as against Rs 455.099 million last year. While the profit before tax stood at Rs 30.974 billion for the year ending June 30, 2006, as compared to Rs 39.296 billion last year.

The annual general meeting (AGM) of the company will be held on Tuesday, October 31, 2006 at S.A Siddiqui Auditorium, PTCL Headquarters, Islamabad. The above entitlement will be paid to the shareholders whose names will appear in the Register of Members on October 20, 2006. The share transfer books of the company will be closed from October 20-31, 2006.


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## Owais

*Economy to grow close to 7 percent: Shamshad* 


SINGAPORE (September 15 2006): State Bank governor said on Thursday the economy would expand by close to 7 percent this fiscal year and that tight monetary policy was helping control demand without stifling growth.

Shamshad Akhtar, governor of the State Bank of Pakistan, told Reuters in an interview that a buoyant service sector, a robust retail sector and strong investment would drive growth this year.

"We are definitely upbeat on Pakistan's economic prospects," Akhtar said. "We are likely to achieve close to 7 percent growth in 2007," she added, giving a figure broadly in line with a previous central bank forecast.

Pakistan's economy grew by 6.6 percent in the fiscal year that ended in June. Akhtar said the financial services sector was exceptionally strong, expanding by more than 20 percent in the same period.

Akhtar said the main risk to growth was the high price of oil, so she was happy with the recent drop in crude prices.

Pakistan assumed a crude oil price of $68 a barrel in its most recent budget. US crude traded around $64.50 on Thursday.

On a possible slowdown in the US economy crimping demand for Pakistan's exports, Akhtar said she was confident cooler growth in the world's biggest economy would have only a limited impact on Pakistan. "Pakistan is trying to diversify its export products, as well as markets," she said. In the previous fiscal year, the US was Pakistan's biggest export destination, taking 24 percent of total exports.

Akhtar said the central bank's tight monetary policy was working to slow private credit growth and that the inflation target of 6.5 percent this fiscal year was attainable.


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## Owais

*Pakistan&#8217;s fiscal position should be on &#8216;medium-term footing&#8217; : IMF* 

Singapore: The International Monetary Fund (IMF) put on notice the countries with high public debt and/or budget deficits such as the Philippines, India and Pakistan, saying that their fiscal positions should be put on a &#8220;medium-term footing.&#8221;

This meant that &#8220;further consolidation and improvements in the composition&#8221; of the Philippines&#8217; debt&#8212;which is associated with foreign currency risks&#8212;would reduce the vulnerability to changes in global investor sentiment and enhance monetary policy credibility, the agency said. 

Last week the Asian Development Bank maintained its 2007 GDP outlook for the Philippines at 5.3 percent, lower than the government&#8217;s 5.7-percent assumption. Reasons for the relatively lower forecast include slow investments and low capital outlay.


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## Neo

KARACHI, Sept 14: The UK-based European giant Barclays Bank is interested to make investment in Pakistan and a team of its experts is coming early next week to explore the potential, highly placed banking sources told Dawn on Thursday.

The rising interest of the foreign banks in the financial sector has already involved several world top ranking banks in Pakistan.

Barclays is one of the largest financial services companies in the world. It has been involved in banking for over 300 years and operates in over 60 countries with more than 118,000 permanent employees.Ã¢â¬ÅBarclays Bank will explore possibility to buy a bank in Pakistan,Ã¢â¬Â said the banking sources.

He said a number of banks are in line for sale and the foreign banks feel comfortable to invest in the high-yield banking sector. Standard Chartered Bank has recently acquired Union Bank which made it the largest foreign bank in Pakistan.

The foreign banks interest in Pakistan has boosted the image of its financial sector which has been making record profits for the last two and half years.

However, the high competitive situation has compelled small banks to either sell their entities or merge with the other banks.

According to a research report since 1998 small banks started disappearing from the market. The merger and sale is the world phenomenon and small banks are losing ground for the existence.

There were 46 schedule banks in 1997-98 in the country which, due to mergers and acquisition, had reduced to 39 as on Dec 31, 2005.

However, the acquisition of Union Bank was first of its type in Pakistan. The participation of foreign banks is still on the lower side in Pakistan.

Ã¢â¬ÅAs on Dec 31, 2005, there were 11 foreign banks representing nine per cent of total banking sector assets,Ã¢â¬Â said Mohammad Imran, researcher at JS and Company.

Currently, banking sector in Pakistan is highly concentrated. Top six banks represent 63pc of the total banking deposits (based on March 2006 data). Moreover, in terms of profitability these banksÃ¢â¬â¢ share is also 64 per cent.

Barclays is a UK-based financial services group, with a large international presence in Europe, the USA, Africa and Asia. Its presence in the financial sector of Pakistan would help the sector to bring it at par with the global banking standard.

For the year ended 31st December 2005, the Group achieved a pre-tax profit of ÃÂ£5,280m, up fifteen per cent on 2004. In 2005 Barclays paid approximately ÃÂ£3bn in taxes. In the six months ended June 30, 2006, Barclays made a pre-tax profit of ÃÂ£3,673 million, up 37pc on the same period in 2005.


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## Neo

ISLAMABAD: The countryÃ¢â¬â¢s second largest telecom service provider - Ufone - on Thursday boasted of bringing Ã¢â¬Åthe countryÃ¢â¬â¢s largest ever expansion of its network amounting to $550 millionÃ¢â¬Â.

The implementation would begin from November while its network is envisaged to cover over 1,500 cities, towns, villages and all major highways in the country.

The plan focuses on the expansion of the network in terms of capacity and coverage in existing and new cities besides providing high-speed wireless data services based on EDGE technology.

Ufone President Babar Khan told a press conference that the current investment in network expansion would double its existing capacity.

The investment signals EtisalatÃ¢â¬â¢s priorities for the future which has so far been carefully weighing its options and expansion plans.

The Ufone has awarded the contract to a Chinese company Huawei, one of the most rapidly growing telecom vendors globally. The new infrastructure would work along side the already deployed infrastructure by Nortel and Siemens.

Babar said the previous Network Roll-out was also the single largest expansion plan in the history of Pakistan and Ã¢â¬Åthis time again we are keeping the precedenceÃ¢â¬Â.

Huawei is the vendor of choice in latest Third Generation Telecommunications Networks, 28 of the worldÃ¢â¬â¢s top 50 operators worldwide are using Huawei infrastructure. 

The Ufone chief further informed the audience that over the last 2 years, its subscribersÃ¢â¬â¢ base had grown from 650,000 to over 8.5 million nationwide.


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## Neo

_A biogas plant can exploit tons of buffalo manure generated in the locality_

By Fasahat Mohiuddin

KARACHI: In addition to New Zealand-based firms, some American companies have also started surveying KarachiÃ¢â¬â¢s Bhains (Cattle) Colony to explore the possibility of installing a biogas plant there.

Tons of buffalo manure is generated on a daily basis in the locality and is just washed away in storm water channels and drains causing pollution and also losing a good opportunity.

Electricity can be generated by exploiting this waste product, say experts. The city has been facing acute power shortages and continued load-shedding has made life miserable for citizens. Under these circumstances, one should look for some alternative source of power and it should be through local resources.

It is high time some cheap source of power was found so that power could be supplied without any interruptions, add analysts.

Natural gas currently accounts for more than 50 per cent of the countryÃ¢â¬â¢s primary energy supplies. 

With accelerating economic growth, the demand for gas is increasing sharply. The nationÃ¢â¬â¢s existing recoverable indigenous gas reserves are either declining or are incapable of meeting the rising demand. Hence, the country will face acute gas-energy shortages in the near future.

In order to overcome the projected shortfall, energy experts have recommended the use of imported liquefied natural gas in order to meet the energy shortage up to 2010 and beyond, and also to facilitate LNG-importing companies. The government has granted a 10-year complete tax and duty holiday on the import of liquefied natural gas (LNG).

The government also expects to meet further shortages through cross-border gas imports through transnational pipelines from Iran, Turkmenistan and Qatar. Besides the measures mentioned above, we further need to look for alternative energy sources such as biogas, wind power and solar energy to substitute natural gas. Of the sources mentioned above, the most appropriate is biogas and can easily replace natural gas.

This source can be generated from a variety of biomass material that is easily available all over Karachi. The primary sources of biogas are buffalo dung, municipal solid waste and sewage sludge. 

The process of biogas conversion is simple and yields a gaseous product that consists of 55-60 per cent methane and the balance is carbon dioxide.

The heating value of biogas is approximately 600-800 BTU/cubic foot. Biogas of this quality can be used to generate electricity. It may be used as fuel for steam boilers, space heaters or to run refrigeration equipment. It is also a suitable cooking and lighting fuel.

The gas can also be used in vehicles using CNG as fuel. Natural gas is consumed heavily by CNG stations in Pakistan. Biogas production is virtually possible in every city and village of the country, argue experts.

Electricity from biogas can be generated for on-farm use or for sale to the local electric power grid. The most common technology for generating electricity is an internal combustion engine with a generator.

In order to identify and implement measures for the substitution of natural gas with alternative renewable sources, ATCO International Inc, a Pakistani-owned, Texas-based firm, has already begun work on a feasibility study for a buffalo manure-based biogas plant to be located in Cattle Colony, Landhi.

The 500,000 heads of cattle in the area produce 5,000 metric tons of cow dung daily. The buffalo manure emits large quantities of methane, carbon-dioxide and hydrogen sulphide into the atmosphere. 

This pollutes the surrounding air and the atmosphere around Cattle Colony where pollution levels have exceeded those permitted by NEQS (National Environmental Quality Standards).

Urgent action is required to attend to this matter because Pakistan is one of the first signatories to the Kyoto Protocol. This obliges the country to decrease the quantum of greenhouse gases to levels permissible under the protocol.

Methane produced from cattle dung can be recovered in a biogas plant and used for power generation. This not only helps meet the power shortage but also helps reduce greenhouse gas emissions.

Pakistan has one of the worldÃ¢â¬â¢s largest livestock population. According to an estimate, around 1 million cattle are present in three different locations of Karachi.

This project is based on the feasibility study of a biogas plant in Landhi Cattle Colony. The area has a population of around 200,000 cattle. Brief data analysis shows that a 38MW power plant can be installed by using cow dung generated in the locality.


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## Neo

By Naween A. Mangi

Sept. 15 (Bloomberg) -- Siemens Pakistan Engineering Co., a unit of Europe's biggest engineering company, said it aims to increase exports to the Middle East by 25 percent this financial year, taking advantage of an oil-driven infrastructure boom. 
Sales of electrical transformers and industrial automation equipment to the Gulf countries will expand to 10 billion rupees ($165 million) in the 12 months to Sept. 30, 2007, from 8 billion rupees a year earlier, Chief Executive Officer Sohail Wajahat Siddiqui said in a Sept. 11 interview at the Karachi headquarters of the 136-year-old company. Exports may double by 2012, he said. 
Oil prices, which tripled since 2002, have fueled an infrastructure boom in nations such as the United Arab Emirates and Saudi Arabia. The United Arab Emirates will boost its electricity generating capacity 52 percent to 19,400 megawatts by 2010 to meet demand that's rising as much as 7 percent a year, the government's 2006 yearbook said. 
``Siemens Pakistan always pays good dividends and has a wide range of businesses,'' said Manzoor Ahmed Shaikh, head of research at the Pakistan government-owned National Investment Trust that manages 80 billion rupees and owned 25 percent of Siemens Pakistan as on Sept. 30, 2005. ``It's one of the best multinational companies in Pakistan, which is why we have held its shares since they were at about 200 rupees.'' 
Siemens Pakistan shares, which have risen 11 percent this year, fell 2.5 percent to 975 rupees on Sept. 8, the last time the stock traded. 
Biggest Customers 
Siemens Pakistan, which started exports when Siddiqui took the helm seven years ago, sells to 12 Asian countries. United Arab Emirates and Saudi Arabia are the biggest customers, buying powergrid stations, transformers, technology for cement plants and industrial automation equipment. 
``We broke into markets like the Middle East where the `Made in Pakistan' label is far more acceptable than elsewhere,'' said Siddiqui, who has been with the company for 25 years in several countries, including Germany where parent Siemens AG is based. ``As it happens, those are the same markets where they have oil money to spend on growth.'' 
A fifth of the company's 50 billion rupees of new orders in the year ended Sept. 30, 2005, came from overseas. The company's profit almost doubled to 779 million rupees in the period from 412 million rupees a year earlier. Net sales climbed to 13.13 billion rupees from 7.11 billion rupees. 
``Success stories like this are only possible when we have stable policies for several years,'' Siddiqui said. ``Our growth depends on the security situation, the economic environment and the cost of doing business remaining favorable.'' 
Home Revenue 
The company's local sales will grow at double the gross domestic product rate in the next few years, he said. Pakistan's $129 billion economy is forecast to grow 7 percent in the year started July 1, compared with 6.6 percent the previous year. 
Siemens Pakistan, which also makes networks for traditional and cellular phone networks, power generators, medical equipment and household appliances, has increased its workforce to 6,000 from 1,500 in the last seven years. The company plans to ramp up production to meet rising demand from the telecommunications and power transmission sectors in Pakistan, Siddiqui said. 
Overseas investment in Pakistan telecommunications is expected to hold at $1 billion a year until at least 2009, Shahzada Alam Malik, head of market regulator Pakistan Telecommunications Authority, said in an interview on June 23. As many as half of Pakistan's 160 million people are expected to use telephones by that time, up from 23 percent in March this year and 4.3 percent in 2003, he said. 
Transformers 
Siemens Pakistan will complete building a plant that will produce 220 kilovolt power transformers at the end of this month. The 1 billion rupee plant, the first of its kind in Pakistan, will begin production in December 2007 and will be expanded to produce 500 KV transformers by 2011. 
The company will also spend 1 billion rupees in the next two years to produce 3 megawatt power generators to add to the existing line of 2.2 megawatt generators. Pakistan expects an electricity shortfall of 5,530 megawatts by 2010. 
Siemens will spend at least 500 million rupees every 12 months for the next five years on capacity expansion to take advantage of Pakistan's construction boom, Siddiqui said. 
Pakistan's government allocated a record 435 billion rupees in the budget for the fiscal year that began July 1 for building roads and dams and upgrading ports. 

http://www.bloomberg.com/apps/news?pid=20601100&sid=aVqdbRtdckPo


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## Owais

*July-August remittances up by 22.72 percent* 


KARACHI (September 16 2006): Pakistani expatriates' remittances during first two months (July-August) of the current fiscal year 2005-06 registered an increase of $150.30 million, or 22.72 percent, as compared to the corresponding period of last fiscal year.

A total of $811.85 million was received as workers' remittances against $661.55 million of last fiscal year. The amount, $811.85 million, includes $0.80 million received through encashment and profit on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

During August 2006, workers remitted $434.84 million, against $348.41 million in August, 2005, depicting an increase of $86.43 million, or 24.81 percent.

The remittances during July-August, 2006 from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK, and EU countries amounted to $203.59 million, $165.34 million, $124.97 million, $115.42 million, $69.38 million and $24.60 million, respectively, as compared to $188.93 million, $119.56 million, $93.02 million, $85.49 million, $72.39 million and $17.15 million.

Remittances received from Canada, Australia, Norway, Switzerland, Japan and other countries during these two months amounted to $107.75 million as compared to $80.01 million in the corresponding period of last fiscal year.

The monthly average remittances come out to $405.93 million as compared to $330.78 million of last year. The inflows from almost all countries increased last month against August 2005.

According to break-up, remittances during August, 2006 from USA were $112.86 million, Saudi Arabia $84.42 million, UAE $65.35 million, GCC countries (including Bahrain, Kuwait, Qatar and Oman) $57.94 million, UK $37.68 million and EU countries $14.07 million as compared to $97.63 million, $62.93 million, $49.71 million, $44.93 million, $38.67 million and $9.89 million.

Remittances received from Canada, Switzerland, Australia, Norway, Japan and other countries during August 2006 amounted to $62.40 million as compared to $42.78 million during August, 2005.


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## Owais

*Seven sectors identified for trade with Canada* 


KARACHI (September 16 2006): An 11-member delegation of Canada-Pakistan Business Council called on President of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Chaudhry Muhammad Saeed here on Thursday. Seven sectors of business were identified as potential sectors including health, education, financial services, Information Technology and power generation.

Anwer Merchant, leader of the delegation observed on the occasion that a Memorandum of Understanding (MoU) exist between the members of Business Council aimed at promoting trade between Canada and Pakistan. He said that Consul Generals in both the countries are working vigorously towards the same end.

The leader of Canadian delegation informed the businessmen that their counterparts are ready to transfer technology and are interested in working with people in food sector like preservation and quality improvement.

President FPCCI, Chaudhry Muhammad Saeed exchanging views said that Pakistan is a growing economy. The per capita power of the nation needs to be focused for a real economic breakthrough. He praised the present government for its liberal investment policies and said that yet Pakistan's natural wealth is to be explored. All that needed for boosting Pakistan's economy is progressive planning. We are the fifth largest milk producers but import dairy items, he said.

He dispelled the negative propaganda against Pakistan and said that people of Pakistan are very peaceful and policies pursued by the government are beneficial to foreign investors. During a candid discussion over investment opportunities in Pakistan, when human resources were mentioned from FPCCI side, a member of Canadian delegation inquired about the percentage of skilled labour.

FPCCI president admitted that skilled labour availability is limited at this point of time. He however told that concrete steps have been taken by Punjab government and federal government. Nine technical universities are planned out of which one at Sialkot is coming up fast, he informed the questioner.

To another question about important pieces of legislation to save foreign investor from cumbersome court procedures in case of a dispute as mentioned by a member of FPCCI, it was told that Pakistan has 20-30 trained Arbitrators. Arbitration Centres are being set up and legal, factual mechanism was being put in place, the delegation was informed.

Haroon Rashid, a former Karachi Chamber of Commerce and Industry (KCCI) President and senior member of FPCCI told the delegation that maximum facilities are extended to foreign investors. Pakistan offers security, financial inventive and above all legislative protection. He cited the examples of multinational companies and said these are earning money as their profit rates are 30-70 percent.


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## Owais

*Engro to invest $200 million to globally expand its food industry* 


KARACHI (September 16 2006): The Chief Executive Officer (CEO) Engro Foods Limited Sarfraz A Rehman has announced to spend over 200 million dollars to expand its food industry globally as part of a larger programme.

This he said at a press conference held at a local hotel on Friday. Director Supply Chain Shamsuddin Sheikh, Director Marketing Ali Akbar, and Director Sales Babar Sultan were also present on the occasion.

CEO Engro Food Limited said that company had come out with a plan which comprised three phases to emerge as a global player. In the first phase the company will be transformed within the next five years into first national food industry giant, he said.

Unfolding the plan, he further said that in the second and third phases, they would intend to transform the company first into regional force and later into a global player in the dairy sector.

Regarding next year plan, Sarfraz said company's board had already approved Rs 2.0 billion investment package for 2007, in capacity expansion and marketing, including setting up of a proposed plant in central Punjab.

He said several dairy firms had entered the market in the past but failed to survive due to lack of technical expertise and financial soundness. "Some other business groups are thinking of also entering this field but have not realised the complex demands of the industry which require several years of preparatory work, high calibre of human resource and substantial investment in time and efforts," he maintained.

He speculated that in next three to five years only two or three major dairy firms would be existing in the consumer market and Engro would be one of them. He announced that the company would introduce new products/brands in various dairy categories after completing solid consumer and product research. The company has already hired various global research partners to develop its future portfolio, he added.

He observed that 46 percent livestock in the country could not be so far exploited. The company is running 300 shops in the country currently, and planning to set up more 1,500 such shops in next five years with the capacity of 2,000 direct jobs, he said.

Shamsuddin Sheikh said that Pakistan would emerge as one of the leading global dairy industries in the world after Europe and United Stated had started minimising subsidies in the dairy sector.

Regarding setting up a plant in Karachi, he said no plan by the company has so far been chalked out to set up its plant in Karachi, however in future it may be considered. Ali Akbar said that Central Asia and Middle East were the focusing zones for Pakistan to export dairy products.


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## Owais

*Pakistan, Iran for early conclusion of talks on IPI pipeline* 


DUSHANBE (September 16 2006): Pakistan and Iran on Friday, while agreeing for an early conclusion of talks on their gas pipeline project, said it would not only benefit the two peoples, but also the entire region in the long run.

Prime Minister Shaukat Aziz in a meeting with the Iranian Vice President, Ali Saidu, on the margins of the SCO meeting of heads of governments also discussed bilateral relations, political and diplomatic ties and measures to further deepen their co-operation in all facets.


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## Owais

*Oil and gas sectors: Pakistan offers to train engineers of Yemen* 


ISLAMABAD (September 16 2006): The Ambassador of Republic of Yemen, Abdul Elah Mohamed Hajar called on the Federal Minister for Petroleum and Natural Resources, Amanullah Khan Jadoon here on Friday and discussed with him matters pertaining to promoting oil and gas co-operation.

During the meeting the Minister said that there exists a lot of opportunities for Pak-Yemen co-operation in the oil, gas and mineral sectors and both countries could learn from each other's experiences.

Jadoon informed that Oil & Gas Development Company Limited (OGDCL) had already been participating in the bidding of two blocks in Yemen and team of oil and gas experts would soon visit to the country to explore for further opportunities in the oil and gas sector.

He said that Pakistan could provide training to Yemen engineers in the reputed Oil & Gas Training Institute (OGTI) here and extends co-operation in intra-country Pipe Line Transmission and Distribution Network in Yemen. He also extended invitation to Yemeni counterpart to visit Pakistan.

The Ambassador welcomed the OGDCL's participation in the exploration activities in his country and hoped that oil and gas co-operation between them would grow and flourish in the days ahead for the mutual advantage.

Secretary Petroleum and Natural Resources, Ahmed Waqar, DG (P.C) Naeem Malik Acting Managing Director OGDCL, Mubashar A Zafar were also present during the meeting.-PR


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## Owais

*Turkish company keen to set up 150MW power plant near Sialkot* 


ISLAMABAD (September 16 2006): A 4-member delegation of Turkish company, Gama Energy, called on Minister of State for Privatisation and Investment Omer Ghuman and Chairman Board of Investment (BoI) here on Thursday and expressed interest to invest in power sector of Pakistan, initially setting up a 150 MW power plant near Sialkot.

The delegation headed by Suriyya also included Yucel Ozden, Member of the Board Managing Director of Gama Energy. The minister said brotherly relations between Pakistan and Turkey needed to be transformed into equally excellent economic relations. He said Pakistan offered the most liberal investment policies in the entire region, and asked the Turkish investors to take benefit of the conducive environment here.

The leader of the Turkish delegation showed interest in investing in the power sector and said they were also looking at other projects in the energy sector specially based on coal. Gama Energy (Turkey) is part of Gama Holdings which has revenues of approx $1 million in yearly revenue. It also owns a group of companies which includes IPPs in multiple countries around 2000 MW. Talat Miyan, Acting Secretary BoI and other senior officers of BoI also attended the meeting.


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## Neo

LAHORE (September 16 2006): Pakistan needs to incorporate new technologies and modern management practices and put intense focus on building an information-based economy by upgrading the technical and managerial skills of its people.

Punjab Information Technology Minister, Abdul Aleem Khan expressed these views while speaking at a launching ceremony of LCCI IT handbook "Open Source Technology", here on Friday. LCCI President Mian Shafqat Ali, Vice President Aftab Ahmad Vohra and Convener LCCI IT Standing Committee Armaghan Saqib were also present on the occasion.

The minister maintained that Pakistan could not attract major revenue from the world markets because its economy still largely based on the low-tech, low-value industries that have long been fully mechanised and running very efficiently in developed nations.

He further said that many countries had taken concrete steps to rejuvenate their stagnated industrial base by rapidly moving to the new-age technologies to produce products and services that are in great demand in the world markets.

According to him, information technology is the current choice of many developing and developed countries to upgrade their economies and become competitive in the global market place.

The IT-based economies have streamlined the most complex economies of the world and enhanced the productivity to the level where an economy such as that of the US has wriggled out of the entire trillion-plus dollars national deficit and turned into a surplus in recent years. The LCCI president said that the book has come to rescue the problems being faced by the IT users. The Handbook would serve as reference for the new comers and especially to managers.


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## Neo

Saturday, September 16, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\09\16\story_16-9-2006_pg5_5

KARACHI: Sindh governor Dr Ishrat-ul-Ebad Khan has expressed the hope that some 100,000 people will get job opportunities after the establishment of Garment Center and Textile City.

Presiding over two different meetings at governor house in which the progress achieved so far in relation to Garment Center and Textile City was reviewed.

He emphasised upon making available walk-in facilities to skilled workers for providing them self-employment facility in Garments City to be established in Baldia.This garment city, he said, should consist of big, middle and small units where business of all levels could be carried out and even small units could join the exports of international standard.

He stressed that work should be done with the concept of promoting workers, skilled people and labours. He also called for establishment of training centres in Garment and Textile cities.

Dr Ebad directed the concerned authorities that work should be started on the same pattern in various districts of interior of Sindh with particular focus on Thatta, Badin, Khairpur, Mirpurkhas, Sukkur etc on priority basis. He emphasised upon promoting traditional and old skills of various areas and expediting Ã¢â¬Åone Hunar, one NagarÃ¢â¬Â (one product, one village) programme in this regard.

He made it clear that governmentÃ¢â¬â¢s objective is not to indulge in business or sell land but its all focus is on providing employment to common man and alleviating poverty.


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## Neo

Saturday, September 16, 2006http://javascript<b></b>:; http://www.dailytimes.com.pk/print.asp?page=2006\09\16\story_16-9-2006_pg5_8

LAHORE: Punjab Minister for Agriculture Muhammad Arshad Khan Lodhi has said that Punjab produced 17.2 million tons of wheat in 2005-2006 and the government wants to enhance this production to 20 million tons by benefiting from the latest technology and availing of experiences from the developed countries. 

He was presiding over a departmental meeting to review the arrangement for a three- day seminar on wheat production national wheat production technology to be held in Faisalabad where agriculture experts and agro scientists and progressive farmers from all the four provinces will participate and give their recommendations to enhance wheat production. The minister said that the government wants to enhance wheat production. He said that farmers in Punjab are hardworking and land is fertile, and the latest technology should be used to increase production.


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## glyn

All good stuff Neo, and most interesting, but may I give a word of caution? Please do not get over-reliant on the undoubted short term benefits of agro-chemicals to boost crop yield, as there could be long term problems. One way round this is to add more agro-chemicals in future years, but this is expensive and is not good for the soil. If agro-chemicals are needed I would suggest that they are only used where absolutely necessary and applied at the lowest volume possible.


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## Neo

KARACHI: In its quest to modernise the indigenous engineering base and provide a springboard to the engineering industry of Pakistan to pursue a market expansion strategy, the Engineering Development Board (EDB) is all set to field a strong group of 16 engineering companies to display their products and capabilities at the worldÃ¢â¬â¢s leading technology fair Ã¢â¬ËMIDEST 2006Ã¢â¬â¢ scheduled to be held from November 7 to 10 2006 at Paris, said a press release issued on Friday.

MIDEST, the worldÃ¢â¬â¢s leading industrial subcontracting show, offers a broad spectrum of technologies in metal processing, plastics processing, composite materials, electronics and electrical, micro techniques, surface treatments, industrial fasteners and industrial services fields.

After the resounding success of PakistanÃ¢â¬â¢s participation at Hannover Messe 2005 and 2006, participation at MIDEST has also doubled over last year, indicating a mindset transformation where more and more companies are now looking towards export markets to stay on course in an increasingly competitive environment.

Technology fairs like MIDEST offers them a unique opportunity to embrace cutting edge technologies and forge business alliances with companies looking for viable outsourcing destinations.


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## Owais

*Prime Minister for speedy execution of investment projects* 


ISLAMABAD (September 17 2006): Prime Minister Shaukat Aziz has emphasised the need for greater inter-ministerial and inter-provincial co-ordination to further expedite the implementation of local and foreign investment projects. He said this at a meeting held at Prime Minister House on Saturday to review the investment prospects and their fast tracking in the country.

The meeting was attended by Minister of State for Board of Investment Umar Ahmad Ghumman and officials of federal and provincial governments. The Prime Minister said that Pakistan is fast becoming a destination of choice for investors and investment is coming in from all parts of the world as a result of the macro economic stability, consistency and continuity of the government policies, transparency of procedures and investment friendly policies.

He said that processes should be simple and seamless to facilitate investments contributing to more economic activity, jobs' creation and enhancing the production capacity. The meeting identified power, cement, construction, agribusiness, livestock, real estate and hotel business, IT & telecom as potential areas where extensive opportunities exist for local and foreign investors.

Ghumman updated the meeting about various initiatives taken by the Board of Investment to attract investors. He briefed the meeting about major proposals for investment being processed by the Board of Investment.

The meeting was also attended by Minister of State for Food and Agriculture Muhammad Ali Malkani, Principal Secretary to the Prime Minister, Secretary Water and Power, Secretary Petroleum & Natural Resources, Secretary Industries and Production, Secretary Food, Agriculture and Livestock, Secretary Tourism, Secretary Defence, Secretary Board of Investment, Chief Secretary Punjab, Chief Secretary Sindh, Acting Chairman Wapda, Managing Director PPIB and senior officials.


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## Owais

*July and August trade deficit rises to $2.13 billion* 


ISLAMABAD (September 17 2006): Pakistan racked up a $2.13 billion trade deficit during the two months (July, August) of 2006-07, which is about 36.7 percent higher than last year's deficit of $1.56 billion, Federal Bureau of Statistics (FBS) said on Saturday.

During July and August, exports amounted to $2.85 billion and imports to $4.98 billion, resulting in the goods and services deficit of $2.13 billion, the FBS said, and added that the gap was steadily widening.

It indicated that Pakistan spent more on importing petroleum products, machinery, sugar, raw material and other goods and services. Everybody paid more for oil, while Pakistan's businesses sold far less exportable products overseas.

The data shows that Pakistan's economy pulled in 17.86 percent more imports during the two months than the imports worth $4.23 billion recorded during the same period of last fiscal year, while its exports depicted an increase of only 6.87 percent. The high growth in imports and slow pace of exports are responsible for the burgeoning gap--a matter of great concern.

During August 2006, exports grew by 7.62 percent to $1.51 billion, from $1.40 billion of August 2005. Imports during this month amounted to $2.52 billion, which reflect a growth of 13.04 percent from $2.23 billion of August 2005.

The burgeoning deficit has put pressure on the rupee, which could also create inflationary pressure as Pakistan pays more for imported goods. It suggests that the rupee may still need to fall to help in narrowing the gap. But there is a risk of pushing inflation higher, if it does.

It is worth mentioning that the government has targeted imports of $28 billion and exports of $18.6 billion with a trade deficit of $9.4 billion. Now, in July-August (2006-07), the trade deficit stands at a bumpy $2.13 billion. At this rate, the deficit for the whole fiscal year 2006-07 could work out to about near $13 billion.

If the current pace persists, several economists said, more worrisome is the possibility that the swelling trade deficit will eventually cause a steep drop in rupee value against dollar and other currencies. Local importers would demand more for dollars in the coming months to finance their surplus imports. It would also increase interest rates rapidly and lower Pakistanis' living standards.

A glance at the trade data shows that consistent rise in the country's imports is disturbing for trade officials as exports/imports gap would be much wider than estimated.


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## Owais

*Soviet-era junk steel ruining ship-breaking industry* 


KARACHI (September 17 2006): Over 100-year-Old Russian steel junk is paving its way into local market, which is hampering the ailing ship-breaking industry of the country. Newly elected chairman of the Pakistan Ship Breaking Association (PSBA) Azam Malik told _Business Recorder _on Saturday.

The ship-breaking industry facing hard times since 2004 as a large quantity of old Soviet-era junk steel, including outdated rusted water and oil pipelines continuously arriving in the country's market via Afghanistan through Chaman and Taftan borders from the Central Asian States.

Owing to its sub-standard quality, this junk steel is sold at a very low price in domestic markets as compared to broken ship steel and attracting some re-rolling mill operators on pricing issue, which is about Rs6-8 per kilogram cheaper than broken ship materials.

Malik appealed to the government to save the ship-breaking industry, which was annually generating Rs 3-4 billion in terms of taxes and duties to the national exchequer in 1999, but which have now shrank to only Rs 270 million in 2006.

He elaborated facts contributing to ship-breaking industry's decline. For higher profits, domestic re-rolling mills are utilising the Soviet steel for making steel bars used as construction material.

The issue becomes serious in view of the trend of building high-rises in cities. Who knows how much of this low quality steel will be utilised in these upcoming residential & commercial projects, he questioned, adding, "how many more Margallah towers like tragedies may waiting to happen."

Malik appealed to Chief Justice Iftikhar Muhammad Chaudhry to take 'suo motu' notice against unscrupulous elements, who are playing with the safety of the residents of newly constructed high-rises.

At present, domestic ship-breaking industry provides employment to 20,000 labourers and also provides indirect employment to 80,000 workers, who are facing the imminent danger of unemployment.

When President Musharraf took over power in October 1999, the industry generated revenues to the tune of Rs 3.53 billion, with 64 scrap ships anchoring at Gadani ship-breaking yard in Balochistan.

In 2000, 37 ships anchored at Gaddani, during the year and the government earned revenue of Rs 2.40 billion. In 2001, 27 ships arrived for breaking purpose that contributed Rs 778 million in tax revenues. In 2002, the number of ships increased to 36, whereas the government earned Rs 2.40 billion in revenues. In 2003, the government only earned revenue of Rs 710 million from domestic ship-breaking industry.

These revenue figures reached Rs 1.1 billion in 2004, but declined to as low as Rs 280 million in 2005. Tax authorities have earned Rs 160 million revenues in 2006 to date, he informed.


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## Owais

*Exports in August totalled at $ 1.507 billion* 


*ISLAMABAD *_(updated on: September 17, 2006, 02:13 PST_): Country's exports were registered at $ 1.507 billion during the month of August showing an increase of 7.6 percent over the corresponding period of last year. 

The export also registered an increase of 12 percent over the last month i.e. July 2006 which was $1.348. 

The imports in the month of August 2006 was $ 2.525 billion showing an increase of 2.6 percent over the corresponding period of the last year's $ 2.234 billion. 

According to the provisional trade figure released here Saturday the balance of trade has reached -$ 1.018 billion in August 2006 from -$1.114 billion in July 2006. 

However when compared with the previous month, the balance of trade has come down to -$ 1.018 billion from -$ 1.114 billion in July 2006.


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## Owais

*Balochistan coast: Minfal recommends ban on poaching by Sindh fishermen* 


ISLAMABAD (September 17 2006): The Ministry of Food, Agriculture and Livestock (Minfal) has recommended to the government that fishermen of Sindh should be barred from fishing in the designated areas of Balochistan coast.

Sources told _Business Recorder _that the issue would be discussed by the Inter-Provincial Co-ordination Committee (IPPC) which is scheduled to meet on September 18, under the chairmanship of Federal Inter-Provincial Co-ordination Minister Saleem Saifullah Khan.

The Balochistan government, in its proposal, has stated that illegal fishing by Sindh fishermen in its territorial waters creates problem for the local fishermen and also affects fish bio-diversity.

The fishermen of Balochistan coast, time and again, make hue and cry and demand for stoppage of illegal fishing by these trawlers. Some time they protest and even create law and order situation, the provincial government added.

Sources said the Balochistan Fisheries Department has its own Sea Fisheries Ordinance, 1971, for curbing banned netting and illegal fishing in its area of jurisdiction.

The department has placed orders for the purchase of one wooden boat for patrolling purpose during the current financial year and the government allocated Rs 20 million during financial year 2006-07 for the purchase of two fibreglass-patrolling boats. Moreover, the Balochistan chief minister has also announced Rs 10 million for the purpose.

Sources said the provincial fisheries department is trying its best to stop illegal fishing within its limited resources; however, the assistance of the Sindh government in this respect will be very helpful.

According to the sources, Minfal in its comments admitted that there was a dispute between fishermen of Sindh and Balochistan on use of trawler and Katra net by the Sindh fishermen in the territorial waters of Balochistan.

There is no trawler and 'Katra boats' registered in Balochistan. The fishermen of Balochistan consider these gears to be destructive, thus adamant not to use of these gears in territorial waters of Balochistan.

The Balochistan Coastal Development Authority had previously allowed certain number of fishing boats to operate in the designated areas of Balochistan coast, but still a large number of fishing boats from Sindh poach in the waters of Balochistan. Minfal has recommended to the IPCC that the issue should be settled on permanent basis to avoid any clash in future.


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## Owais

*SPI up by 10.13 percent* 

ISLAMABAD (September 17 2006): The Federal Bureau of Statistics (FBS) on Saturday announced the Sensitive Price Indicator (SPI) inflation year-on-year of 53 daily-use items for the week ending on September 14, 2006 has increased by 10.13 percent as compared to the corresponding week of last fiscal.

This double-digit increase in the prices of daily-use items (mostly kitchen) is disturbing the budget of low- and middle-income groups and snatching their purchasing power. The significant feature of the weekly bulletin of FBS released here was that year-on-year rise in the prices of some necessities and kitchen items was exorbitant.

These items were sugar, tomatoes, potatoes, diesel, petrol, kerosene oil, fire wood, gur, LPG, and all kinds of pulses, which hit the low-income group. The bulletin on SPI, based on data collected for about 53 items from 17 centres, showed that 22 items registered increase whereas eight items showed decline while prices of 23 items remained unchanged.

However, further analysis of the data revealed year-on-year basis, 11 items are dearer by double digits. These include gram pulse by 41 percent, liquefied petroleum gas (11kg cylinder) 26 percent; firewood, 22 percent; salt, 21 percent; gur, 19 percent; potatoes, 18 percent; cooked dal, 17 percent; cooked beef, 15 percent; tea (packed) 12 percent; tea (prepared) 11 percent; vegetable ghee, 11 percent; and fresh milk price increased by 11 percent over corresponding week of last fiscal.

The FBS figures further showed that though prices of 23 items posted no change during the week, yet compared to the corresponding week of last year, several items are now costly. For example, natural gas is dearer by 20 percent; mutton, 14 percent; kerosene, 14 percent; diesel, 12 percent; matchbox, 11 percent; and curd price increased by 10 percent.

The bulletin further indicates though the prices of eight items decreased, yet compared to the prices of corresponding week of last year, items which showed increase in their prices were: tomatoes, which is dearer by 148 percent; mash pulse, 57 percent; moong pulse, 46 percent; sugar, 26 percent; bananas, 24 percent and chicken farm increased by 14 percent.


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## Owais

*Thai help can boost Pakistani gem and jewellery export: Smeda* 


LAHORE (September 17 2006): The Pakistan's gems and jewellery sector would be able to make an adequate room in the export market by having technological assistance from Thailand.

Small and Medium Enterprise Development Authority (Smeda) CEO Shahab Khawaja stated this while addressing a reception hosted by Smeda and the Pakistan Embassy in Bangkok in honour of the Pakistani delegates and the Thai Association of Gems and Jewellery.

According to a message received from Thailand, Pakistan's Ambassador Lieutenant General Khateer Hussan Khan (Retd) and its Commercial Counsellor Syed Zafar Ali Shah based in Bangkok also spoke on the occasion.

Shahab Khawaja, in his address of welcome, said that Pakistan was rich in raw materials, whereas Thailand had attained excellence in technology and marketing in gems and jewellery industry. The combination of both the potentials can make an incredible progress in the world market, he said, adding that Pakistan, which stands nowhere, at present, in the world business of gems and jewellery would gain an attractive opportunity to increase its exports in this field to an optimal level.

Federal Industries, Production and Special Initiatives Minister Jahangir Khan Tareen's visit to Pakistan Pavilion in the Fair gave a boost to the Pakistani gems and jewellery sector in Bangkok, he added.

Meanwhile, speaking on the occasion, Khateer Hassan Khan gave an overview of Pak-Thai business relations and said that canvass of business activities in Thailand was surprisingly vast, and it can be an attractive market for Pakistan as well to have its due share in the world business.

He appreciated Ministry of Industries and Smeda for developing a comprehensive strategy for gems and jewellery sector with a practical marketing move.


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## Owais

*Rs 378.4 million allocated for dams in Balochistan* 


QUETTA (September 17 2006): The government has allocated Rs 378.4 million for construction of different dams in the province, sources told APP here on Saturday. An amount of Rs 25 million has been allocated for construction of Sukkan Delay Action Dam, of which Rs 13.5 million had already been spent, and the government has allocated Rs 1.2 million more in the current fiscal year.

Kolan Delay Action Dam Naal area is being constructed at a cost of 17 million rupees, of which Rs 15 million had already been spent, and the authorities have allocated Rs 2.9 million in the current fiscal year. Sawar Kaur Dam is being constructed at a cost of Rs 100.5 million, of which Rs 68 million had already been spent, and the government has allocated five million rupees for the year 2006-07.

A sum of Rs 28 million has been allocated for construction of Gawal Delay action dam near Kohlu town, of which Rs 17.7 million had been spent, and the government has allocated Rs 4.5 million in the current fiscal year.

Similarly, Rs 64 million has been earmarked for the construction of Akhtar Nikka Delay Action Dam, of which Rs 47 million had been spent, and the authorities have allocated Rs five million for the year 2006-07.

Check dams in Quetta valley are being constructed at a cost of Rs 95 million out, of which Rs 16.8 million had been spent, and five million rupees has been allocated for the current year. Khair Manda Delay Action Dam is to be constructed at a cost of Rs 30.6 million, of which 19.5 million rupees had already been spent, and the government has allocated Rs four million for the current year


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## Neo

SINGAPORE, Sept 16: Pakistan is all set to achieve the millennium development goals (MDG) by slashing the poverty level by half from above 30 per cent in the year 2000 to 15 per cent by the year 2015. It will pull hundreds of millions of people out of abject poverty and integrate them into the economic mainstream.

The goals will be achieved by sustaining the current high growth rate in an environment of macroeconomic stability and by investing in physical and human infrastructure to a level that suits the country's needs.

Pakistan's representatives Dr Salman Shah, adviser to the prime minister on economic affairs, and Dr Ashfaque Hasan Khan, adviser to the ministry of finance, made these observations in one of the 10 seminars on the first day programme of seminars 2006 in Singapore.

The seminar on "South Asia ends poverty: How the region with the greatest concentration of poor people can make history" was addressed by a panel of experts and representatives from Pakistan, India and Sri Lanka. The vice-president, South Asia region of the World Bank, was chairing and moderating the seminar.

In reply to a question referring to observations made in the UNDP Asia Pacific Human Development Report (APHDR) 2006, Ã¢â¬ÅTrade on Human Terms: Transforming Trade for Human Development in Asia and the PacificÃ¢â¬Â, regarding the growth in South Asia to be predominantly jobless and to the fact that from a food surplus the region is becoming a net importer of food grains, the panellists expressed their reservations.

Wahiduddin Mahmud, professor of economic at the Dhaka University, said he did not know about the report. Dr Ashfaque said over 5.54 million jobs had been created over the last five years in Pakistan.

The focus of the 2006 meetings is on Asia to quite an extent, as it is believed at the World Bank and the IMF that it deserves to have a bigger voice at the fund and the bank because its contribution to the world economy has grown substantially.

"Today Asia is the most vibrant and dynamic region of the world. The simultaneous rise of India and China is the amazing growth story of this century. It, however, is not an unqualified success, as Asia still faces many challenges and has its shortcomings," observes the bank in one of the reports.

The Programme of Seminars (PoS), the organisers believe, is a fitting forum to share this story. This is the reason why "Asia in the world and world in Asia" is chosen to be the theme of the seminars, informed a representative of the committee responsible for the series of seminars.

The Singapore Institute of Policy Studies co-organised the PoS for the 2006 IMF-World Bank annual meetings.

This is the first time in 10 years that PoS is coming back to Asia to have a special focus on Asia and to benefit from the input of Asian thought leaders.

In all 37 seminars will take place for which 140 speakers are drawn from all over the world. These include outstanding people from the public sector, civil society, academia, international organisations and media.

Ten years ago World Bank President James Wolfenson initiated the PoS as an intellectual forum for an active engagement on issues of common concern and interest. World Bank and IMF current president and managing director Paul Wolfowitz and Rodrigo de Rato convinced of its contribution decided to carry on with this programme.

The organisers describe it as a festival of learning, dialogue and consensus building with the ultimate purpose of building a better world.

http://www.dawn.com/2006/09/17/ebr1.htm


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## Neo

17 September 2006 

ISLAMABAD &#8212; The rate of inflation has touched 9.93 per cent in August this year due to the continuous increase in the house rent and food items over the corresponding month last year thus hitting the low income group. 
The inflation measured through consumer price index (CPI) also registered an increase of 1.25 per cent during the August 2006 over July 2006. While the year on year increase in inflation stood at 8.28 per cent in July-August in 2006. When contacted Advisor on Finance Dr Ashfaq Hassan Khan said that the sudden increase in inflation was expected due to heavy rains and flash floods during the last two months.
He said that the supply of food items to major cities disrupted due to which the food inflation rose 11.08 per cent, which had a negative impact on the over all national inflation.
However, he said that the non-food inflation was around 7 per cent during the month under review. 
Official statistics, however, showed that the house rent was constantly on rise during the last six months. The house rent rose by 0.42 per cent in March 2006, 0.62 per cent in April 2006, 0.60 per cent in May 2006, 0.52 per cent in June 2006, 0.54 per cent in July 2006 and 0.55 per cent in August 2006 over the previous months.
The government remained silent about this phenomenal increase in the house rent during the period under review, which would have serious implications on the monthly budget of the low income and middle class people. 
When the adviser asked for the reasons for this increase in house rent during the period under review, he replied that it was not in his knowledge. The statistics showed that almost all food items registered a growth during the month of August 2006 over the previous month of July 2006. Food and beverages: Onion (16.55 per cent), tomatoes (13.45 per cent), eggs (13.39 per cent), vegetables (8.05per cent), vegetable ghee (4.73 per cent), pulse gram (4.55 per cent), besan (4.12 per cent), fresh fruits (3.91 per cent), chicken farm (3.78 per cent), gur (3.20 per cent), mustard oil (3.10 per cent), tea (2.76 per cent), wheat flour (2.51 per cent), wheat (2.27 per cent), cooking oil (2.06 per cent), pulse moong (1.57 per cent), jam, tomato, pickles & vinegar (1.14 per cent) and sweetmeat & nimco (1.00 per cent). Fuel and lighting: LPG (1.73 per cent); Medicare: Doctor's fee (7.49 per cent).


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## Neo

Sunday, September 17, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\09\17\story_17-9-2006_pg5_8

LAHORE: Pakistan International Airlines domestic market share rose from 60.4 percent to 69.3 percent during the first six months of the current year, showing an increase of 15.6 percent over the corresponding period last year. 

According to PIA sources here, on international routes also it achieved growth of 11 percent against market growth (from/to) Pakistan of 8.2 percent during the same period.

The sources said that increase was achieved as a result of dedicated efforts of PIA staff, provision of better services to passengers, cost curtailment and other such like initiatives.

During the same period revenue increased to Rs 31.3 billion from Rs 26.9 billion showing increase of 16.4 percent.

The sources said this growth in revenue was achieved despite unprecedented increase in oil prices resulting in hike in expenses on aircraft fuel by 47 percent in 2006 comparing to 2005.


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## Neo

QUETTA: Balochistan Governor Owais Ahmed Ghani has said the present government has provided a solid foundation to Balochistan through its development projects and the province is now ready for economic take off.

He was talking to a delegation of Pakistan Administrative Staff College Lahore comprising participants of National Management Course led by Rector National College of Public Policy Lt-Gen Javed Hassan, which called on him here on Saturday.

The governor said the development activities of the present government revolve around common man, which is why the middle class is making rapid progress in the province.

Ã¢â¬ÅThe development schemes launched in Balochistan during the last five years on a large scale have no precedent in the past history of the province,Ã¢â¬Â he said, adding there are various development projects being currently implemented in the province by the federal government at a total cost of Rs 185 billion.

The governor also informed the delegation about the social, political, economic and geographical backgrounds of the province and the efforts of the government for its development.


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## Neo

KARACHI, Sept 16: Data for the fiscal year 2005-06 issued by the State Bank on Saturday showed that monetary growth was 15.18 per cent, which was much higher than the target.

The data issued after a delay of two-and-a-half months also revealed that private sector borrowing was the real cause for pushing up the monetary growth on the higher side.

Credit to the private sector for the whole fiscal year 2005-06 reached Rs401.7 billion as against the target of Rs330 billion, showing an increase of Rs71.7 billion or 21.7 per cent. However, credit to the private sector was lower than the preceding year (2004-05), which figured at Rs437.8 billion.

The private sector credit growth was out of the expectation of analysts, as they believed that the higher interest rate would impact upon the flow of credit and credit growth would remain within the target.

The growth reflects that the credit demand remained high during the whole year. Analysts believe that consumer-based economic activities would continue during the fiscal year 2006-07 despite higher inflation and costly money borrowing.

The data also showed that the government pumped huge money into public sector companies like Wapda, KESC, etc., during the fiscal year 2005-06, which was negative in 2004-05. The government pumped Rs7.663 billion as compared to a negative Rs12.689 billion in the preceding year. Wapda, KESC, PIA, OGDC, PTC and Pak Steel consumed a total credit of Rs4.755 billion during the year, while others consumed the rest.

The governmentÃ¢â¬â¢s budgetary borrowing remained much below the target of Rs120 billion, as only Rs70.950 billion were borrowed during the year.However, the monetary growth represented with a figure of Rs450.147 billion as compared to Rs479.796 billion in the preceding year. Thus the monetary growth reached 15.18 per cent as against the target of 12.81 per cent, but it was lower than the preceding year growth of 19.30 per cent. This increase was 18.5 per cent higher than the target.

Analysts said the high monetary growth was the real cause of higher inflation that had started gaining weight in the current fiscal 2006-07. The two-month figures of inflation were termed alarming, especially the food-led inflation that reached double digit.

Ã¢â¬ÅThe whole inflation is food-led in the first two months and it may create uncertainty in the country,Ã¢â¬Â said an analyst. He was of the view that the government failed to check price escalation despite its promises in the budget that the price inspection would keep a tight grip on the Ã¢â¬ËunwantedÃ¢â¬â¢ price hike.

Ã¢â¬ÅClearly the government has been losing grip on its machinery to implement the decisions and avail desirable results,Ã¢â¬Â he said, adding: Ã¢â¬ÅDisappointment on mass level could lead to political uncertainty, which would be extremely injurious to the economic growth we have achieved during the political stability prevailing in the country for the last seven years.Ã¢â¬Â

The government had promised to check prices by a two-way strategy. It decided to supply essential items through the network of utility stores and appointed inspectors to check the price hike. Both the decisions look failed, as utility stores are short of the items in demand and the price inspectors were not on the scene.

Ã¢â¬ÅThe State Bank is also responsible for controlling the inflation but it also looks in trouble because inflation is going higher despite tight monetary policy,Ã¢â¬Â commented a banker.


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## Neo

KARACHI, Sept 16: UAE Consul General Suhail Matar Saeed Al-Ketbi on Saturday called on Sindh Chief Minister Dr Arbab Ghulam Rahim and discussed with him investment opportunities in the province.

During the meeting, the chief minister apprised the UAE consul general about investment potential in agro-based industries, the establishment of modern cold storages besides potential for value addition in fruits and vegetables for making juice, pulp, concentrates of mango, kinno, peach, banana, melon etc especially for exports to the Middle East.

The chief minister informed the diplomat about shortage of low cost houses and said one million houses are needed immediately.

He assured full support of the Sindh government if any investor comes forward and shows interest in this sector.

He also referred to potential in tourism industry and cited old civilization of Moenjodaro, Gorakh Hill, development of 75 km costal belt with construction of sea resorts at Hawkesbay and Sandspit etc, besides Thar desert safari which, he said, can attract the interest of the potential investors.


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## Neo

SIALKOT, Sept 16: Exports from Sialkot have increased to $1 billion from $850 million by virtue of the effective trade policies of the government.

Punjab Industries Minister Muhammad Ajmal Cheema said this while talking to newsmen here on Saturday. District nazim Muhammad Akmal Cheema was also present.

The minister urged the exporters to focus on diversification of traditional to non-traditional items and exploring new world markets.

Ajmal Cheema said the chief minister had released Rs12 billion for construction of the Rs20 billion Sialkot-Lahore motorway project. He said work on the project had been started and would complete by the end of 2007.

He said the Punjab government would soon establish two new small industrial estates near Pasrur and Kamoki along the Sialkot-Lahore motorway.

*CABLE OPERATORS*: The district government has failed to prevent cable operators from airing anti-Pakistan Indian movies in bordering villages.

Talking to this correspondent, local leader Pir Anwar Shah Qalandar and people of Oora, Khuraney, Nandipur, Sabzpeer, Nandipur, Kingra, Bajra Garhi, Umraanwali and Harpal complained that cable operators were continuously telecasting Indian obscene and anti-Pakistan movies through their illegal channels.

Meanwhile, a group of residents said the authorities concerned have failed to remove the prolonged fault in PTVÃ¢â¬â¢s booster near Pasrur.

*BORDER AREAS*: The chief minister has released special development fund of Rs3 billion to the district government for the uplift of border areas of Chawinda and Pasrur along the Sialkot Working Boundary.

Punjab Minister for Labour and Human Resources Syed Akhtar Hussain Rizvi and District Nazim Akmal Cheema, during a visit to Pindi Baagho, Pasrur tehsil, on Saturday, said the government would soon establish four new degree colleges, three inter colleges in PasrurÃ¢â¬â¢s border areas, besides upgrading more than 100 government educational institutions and establishing a stadium.


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## Neo

Friday September 15, 2006 

*KARACHI: The Institute of Environmental Studies, University of Karachi, has built a model solar energy park, which is the first of its kind in the country. The park will be inaugurated on September 20. *

Dr Moazzam Ali Khan, In charge of the institute, said this while talking to the scribe in his office on Thursday. The solar park has a room, kitchen and washroom, all operated through the solar energy. It has solar lights, solar cooker, geyser, solar fountain, sterling energy model, a desalination plant to clean brackish water and steam generation model. According to Dr Khan, only Pakistan, United States and Israel have this technology. 

He said that the park was constructed after a fruitful liaison between the university and industry. 

He was very enthusiastic because, in his opinion, it was a great breakthrough in solar energy generation in Pakistan. Dr Moazzam said &#8220;We need alternative energy sources and the wind and solar energy are the answer. Now that we have the practical model, it will be used for classic teaching&#8221;. Describing the details, he said that the solar panels in the park absorb solar energy and it is stored in dry batteries. The resultant energy is supplied in the form of DC current.


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## Owais

*No ADB soft loans for water projects* 


ISLAMABAD (September 18 2006): Pakistan is likely to be deprived of Ordinary Capital Resources (OCR) loans, commonly known as soft-term loans, being extended by the Asian Development Bank (ADB), sources in the Ministry of Water and Power told _Business Recorder._

Pakistan was receiving soft loans from the ADB for the ongoing water sector projects like Second Flood Protection Program, National Drainage Program (NDP) and Chashma Right Bank Canal (CBRC) on 3 to 5 percent interest, but now the Asian Bank is not ready to extend loans on the same interest rate.

"The Asian Development Bank is now shifting from the category of soft to hard or commercial loan and we have asked the government to take a policy decision for future strategy," the sources added.

Sources said the issue has been discussed at a meeting with the consultative mission of the ADB, which visited Pakistan from August 29 to September 10 to review and discuss its lending and non-lending program 2007-09.

According to the portfolio of the lending from 2006 to 2009, the ADB has not listed any federal water sector project and the government took up the issue with the ADB team and proposed that a project with the nomenclature of 'water sector infrastructure development' for construction of large water reservoirs may be included in the pipeline projects, the sources maintained.

The non-lending assistance of the ADB for the water sector generally at the federal level, provided for the establishment of secretariat of National Water Council (NWC), strengthen institutional framework and building capacity for strategic planning and policy analysis to improve the development and management of water resources.

Replying to a question on NDP, the sources said that on the directions of GoP, some loan proceeds were diverted to DERA, CRBC and Pat Feeder by the World Bank and the ADB, respectively in 1999-2000.

"The ADB has also diverted $25 million from the NDP to Earthquake Reconstruction and Rehabilitation Authority (Erra) at the request of GoP during 2006," the sources added.

The Ministry of Water and Power has recently turned down ADB's revised Terms of References (ToRs) on institutional framework, except National Water Council (NWC), saying that the proposed amendments were not in line with the ToRs of the study.

One of the objectives of the Technical Assistance of the ADB was to document and assess irrigation rehabilitation and institutional reform experience accomplished under the NDP in order to guide the bank.

The ministry is of the view that institutional reforms could not be undertaken as per the approved schedule due to a number of reasons.

"The effects of institutional reforms may be accruing after three to four years and any assessment of success is premature and may lead donor agencies to a wrong direction," the sources quoted the ministry as saying.


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## Owais

*Pakistan backs IMF voting reform package* 


SINGAPORE (September 18 2006): Pakistan has voted in favour of the reform package tabled to increase the voting power and influence of developing countries in the International Monetary Fund. The adoption of package of reforms increases the votes of four countries - China, South Korea, Mexico and Turkey - and commits the Fund to a broader review of how to allocate voting power in future.

The IMF Board started the reform process at its August 31 meeting in Washington, where it recommended ad hoc increases in quotas of four countries and agreed to come up with a new formula by next year's annual meetings to ensure that developing countries' quotas would not be further eroded and not to make additional ad hoc changes before the major overhand.

Pakistan's representative on the Board, Abbas Mirakhor (Iran) along with other executive directors from sub-Saharan Africa had threatened to oppose the package outright, backed off from a 'no vote' on the board after receiving the pledge that the future formula would not erode developing countries' quotas.

The reforms are part of the Fund's plan to regain its credibility in the developing world, where it has been criticised for being overly influenced by the developed nations.

Breaking ranks with other developing nations, India, Argentina, Brazil and Egypt have opposed the package as they fear that the second stage of the adjustments "may not happen". In a joint statement, they said that increasing the legitimacy of the Fund requires increasing the voting power of developing countries rather than reducing them as a group. Fears have arisen due to European countries' refusal to back the US pledge not to seek an increase in its quota and votes be computed according to gross domestic product.

State Bank of Pakistan Governor Dr Shamshad Akhtar did not anticipate difficulty in getting the reform package adopted, as 85 percent of the votes have been obtained.

Talking to reporters, she said that having taken one step together, trying to satisfy developing countries that are under-represented, and advance countries that are also under-represented, is not an easy task. The developed countries already have a voice in the international financial system and, whatever the size of their vote, will always have a voice just their size and political and economic significance. The challenge for them is to exhibit a level of maturity on future principles.

After the adoption of the package, on Monday, Pakistan's vote size will be shaved off marginally. However, its quota for availing emerging relief of SDR 1.1 billion will remain unchanged.

IMF's 184 members are given voting rights, called 'quotas', based on their size of their economies and reserves, as well as their openness to trade and capital flows. United States of America has effective veto power, with 17 percent of the votes. Small European countries, such as Belgium, have more voting power than larger developing countries, like South Korea and Mexico.

The second stage involves a significant change in the Fund's governance to overhaul the formula to calculate voting rights, followed by a second round of hikes for developing countries. There will also be an increase in 'basic votes' which are the votes all countries get, irrespective of economic size. This is expected to help the poorest countries whose economies have grown relatively slowly.


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## Owais

*Musharraf to attend roundtable with US traders today* 


NEW YORK (September 18 2006): President General Pervez Musharraf will attend a roundtable with the US investors, businessmen, bankers and chief executives of important companies at a local hotel on Monday. Among six federal ministers, three state ministers, one provincial chief and two professionals.

Only one minister seems to be the relevant person to assist the President at this meeting where Pakistan would be projected as the most strategic location for investment.

Those who are included in the presidential entourage among others are foreign minister Khurshid Mehmud Kasuri, information minister Mohammed Ali Durrani, railways minister Shaikh Rasheed, minister for special education Zubaida Jalal, state minister for foreign affairs Makhdoom Khusro Bakhtiar, minister of state for privatisation Umer Ahmed Ghumman, minister for women development Sumaira Malik, minister for religious affairs and minorities affairs Ijazul Haq, NWFP governor Ali Jan Orakzai, state minister for education Anisa Zaib Tahirkhali, human resource development chairman Dr Naseem Ashraf and bureaucratic reforms chairman Dr, Ishrat Hussain.

The President will brief participants on the economic progress in Pakistan and availability of resources to facilitate investment, trade, joint ventures and industrialisation.

But from the team of ministers, state ministers, professionals and officials there seems to be only one minister, Umer Ahmed Ghumman, who is directly related with the objective/purpose of the roundtable.


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## Owais

*Two UAE groups to develop Manora to Cape Monze seafront: MOUs signed* 


KARACHI (September 18 2006): Two major groups of United Arab Emirates (UAE) have shown interest in investing and developing seafront, from Manora to Cape Monze, for foreign and local holiday seekers. The seafront would be converted into modern residential apartments, five-star hotels, and water and recreational facilities.

The groups include Dubai World (DW) Group, which is a Dubai government owned corporation incorporated under the law of the UAE, and EMAAR Properties, also incorporated under the law of UAE.

One Memorandum of Understanding (MoU) to this effect was signed by Ports and Shipping Minister Babar Khan Ghauri on behalf of the Ministry, Irfanullah Khan Marwat for Sindh government, and Sultan Ahmed Bin Sulayem, Executive Chairman of Dubai World.

The other MoU was also signed by Babar Khan Ghauri, with Muhammad Ali Al Abbar, Director General of the Department of Economic Development, Dubai, and Chairman EMAAR Properties.

Both groups showed investment plans for the development of coastal area near Karachi in a meeting with Prime Minister Shaukat Aziz and, after discussion with him, the two MoUs were signed.

After signing of the MoUs, the Prime Minister directed all concerned ministries and provincial government, including Ministry of Ports and Shipping, Ministry of Defence and Government of Sindh to co-operate in the projects.

According to documents made available for Business Recorder, as the area indicated by Dubai World from Manora to Cape Monze is very extensive, its development may be carried out in phases.

In first phase, Manora area, in conjunction with Sands Spit area and the land behind Karachi Port Trust (KPT) western backwater up to its (KPT) land limits with Hawkes Bay would be offered to the UAE groups. However, the environmental concerns would be resolved before undertaking the projects.

In the second phase, while developing the Hawkes Bay beachfront, it would be ensured that beachfronts are developed in such a way that portions are available to general public for routine recreational purposes.

The government also directed that all concerned agencies should co-operate and make the required parcels of land available for this development venture, which promises to bring huge Foreign Direct Investment (FDI) into Pakistan.

In this connection, the premature cancellation of land leases, if required, would be thoroughly examined and recommendations to be finalised before the proposed joint meeting of the President and the Prime Minister.

Presently, Pakistan Navy, KPT and Cantonment Board are using the entire area and the Secretary of Defence has been directed regarding such development and there should be a mechanism to be applied for shifting the Pakistan Navy and Cantonment Board facilities located at Manora to its (Pakistan Navy) land at Cape Monze area.

The KPT and DW will finance the construction of alternative accommodation and office blocks on Navy land at Cape Monze area required to implement the shifting process.

The Manora Island would be vacated by all agencies and handed over to KPT for the development programmes.

A committee would be constituted to liaise and negotiate with Dubai Worlds, clearly indicating what area can be given and, the associated issues of each segment of their development programme.

Sources in the Ministry of Ports and Shipping said that there are so many issues relating to such a huge plan and could not be settled in a short period of time.

The KPT facilitated some officials of both UAE groups in an aerial survey of Manora to Cape Monze beaches in the first week of May this year.


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## Owais

*IFC to give $50 million loan to HBL* 


KARACHI (September 18 2006): The International Finance Corporation (IFC) will provide an eight-year term loan of $50 million to Habib Bank Ltd at 175 basis points above LIBOR, it is learnt. The IFC loan will be classified as Tier-II capital by HBL. It can be used for the planned acquisition by HBL of small bank in Urumqi, China.

Urumqi is presently underdeveloped and offers opportunities for infrastructure financing.

Meanwhile, some foreign banks, with affiliates in Pakistan, have reported that they have received invitation from Finance Ministry to pitch for structuring floatation of Global Depository Receipts (GDR) of Habib Bank by September 25-27, it is learnt.


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## Owais

*Trade with Thailand can be enhanced to $500 million: Pakistan's envoy* 


BANGKOK (September 18 2006): Pakistan and Thailand mutual trade potentials are enormous in various sectors, specially gems and jewellery, and participation of Pakistani business delegation in "Bangkok gems and jewellery fair 2006" would help further enhance trade between the two countries.

Ambassador of Pakistan to Thailand, Lieutenant General Khateer Hasan Khan (Retd) stated this while addressing the luncheon jointly hosted by Embassy of Pakistan and Small and Medium Development Authority (Smeda) in the honour of Pakistani delegation and journalists here.

Syed Zafar Ali Shah, Pakistan's Commercial Councillor and Alternate Permanent Representative of Unescap Bangkok, Chairman Smeda Shahab Khawaja, also spoke on the occasion.

Suhail Aaamir, Project Director Ahan (One village one product), the representatives of Bangkok Gems and Jewellery Traders Association, Pakistani businessmen, journalists and Thailand government officials also participated.

Ambassador Khateer Hasan Khan said that bilateral trade between Pakistan and Thailand was $70-80 million, which is not sufficient to the trade potentials existed between the two countries.

"We can enhance the bilateral trade to 500 million dollars by exploiting the trade potentials of the two countries", he remarked.

He said that Pakistan apart from the export of raw jewellery could also export seafood, agriculture products, surgical goods, textile and leather goods to Thailand.

Pakistan, he said, needs technical support from Thailand to promote our gems and jewellery sector.

He said that both the countries were involved in expansion of their mutual businesses and Pak-Thai Chamber of Commerce and Industry was established in the year 2005 under the Chairmanship of Chaudhry Shabahat Hussain.

He also appreciated the support and co-operation of Thai government to Pakistan embassy every time and need.

General Khateer expressed the hope that the Gems and Jewellery fair 2006, in which Pakistan is also participating, would help boost gems and jewellery trade for the benefit of the two countries.

He said that Pak-Thailand has traditionally enjoyed good relationship and stressed the need for enhancing it further.

He specially mentioned that crown prince of Thailand personally visited Pakistan for the distribution of relief goods when Pakistan was hit by a devastating earthquake in October last year.

Shahab Khawaja speaking on the occasion said that Pakistan had also participated in the Bangkok fair 2005, in which twenty businesses participated.

He added that Pakistan had rich gems and jewellery resources and called for Pak-Thailand mutual co-operation to exploit the resources for the benefit of the two people.

He further said that Pakistan wanted to learn from the Thai experience and technical support for the promotion and development of gems and jewellery sector in Pakistan.


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## Owais

*Pace of work on Thar coal project to be accelerated: Prime Minister* 


MITHI (September 18 2006): The pace of work on the Thar coal project would be accelerated so that the area be made prosperous, and the local people provided with more jobs, said Prime Minister Shaukat Aziz here on Sunday.

Addressing a gathering at Circuit House here during his short visit to Thar, he said during his recent visit to Tajikistan he had talked with the Chinese premier about accelerating pace of work on the Thar coal project. He said the Chinese company would now spur the pace of work and resultantly the whole area would witness progress and prosperity.

Shaukat Aziz announced provision of natural gas to Mithi, saying the people of Thar had given him votes and he could not forget them.

He said the federal government with the help of provincial government would open cattle farms in Thar area, adding that a cattle colony would be set up in Thar over 200 acres of land, and he would himself inaugurate the cattle colony.

The prime minister said the government would also consider setting up of a university in Thar, and asked the local people to work hard for progress of their area under the self-help basis.

Shaukat Aziz said the Badin district was also badly affected by rains and he would visit Badin within a week and announce a package for it.


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## Neo

THE expected tour of Prime Minister Shaukat Aziz to China during last week of September, followed by the visit of President Hu Jintao to Pakistan in November this year, will pave the way for opening new avenues of bilateral co-operation on wide-ranging issues.

China has extended financial, technical and industrial assistance for various sectors of economy. It helped to establish a sound capital goods industry, which is equipped with versatile production facilities and design and engineering capabilities.

A few of these monumental projects are Heavy Mechanical Complex, Heavy Foundry and Forge, Heavy Electrical Complex, Heavy Industries Taxila, Pak Aeronautical Complex and a number of thermal and nuclear power plants.

Of late, there has been increasingly Chinese investment in private sector too, particularly in auto industry.

A unique feature of the Chinese co-operation has been the transfer of technology and willingness to upgrade production machinery to suit local market conditions. As part of technology transfer programme, a large number of Pakistani engineers and technicians have been trained by the Chinese experts, in China as well as in Pakistan. The whole-hearted technology transfer, in contrast with the reservations of the western sources, has immensely helped Pakistan in achieving self-reliance in some sectors.

Pakistan can learn from ChinaÃ¢â¬â¢s rich experience in further promoting its economic and industrial development. This is also considered desirable in the present situation when PakistanÃ¢â¬â¢s trade deficit is worsening persistently.

Besides oil, major portion of foreign exchange is spent on the import of capital machinery, vehicles and other equipment, which has a share of almost 30 per cent in total import bill. The machinery group, second largest component of the import bill, consumed $5.918 billion in 2004-05 and $7.949 billion in 2005-06, the highest ever in a year.

Understandably, there is an urgent need for adopting measures for import substitution. The authorities can facilitate and encourage indigenous manufacturing of selected items of machinery in collaboration with the Chinese. There may be a number of areas for product diversification that can be jointly identified for the proposed cooperation, taking into consideration the classification of import of machinery and equipment by Pakistan during last few years and the competitive edge of the Chinese products.

According to the available statistics, Pakistan has been importing textile machinery, power generating machinery, electrical machinery, construction and mining machinery, agricultural machinery and other equipment, accessories and semi-finished goods.

Though textile industry maintains its ranking of the single largest manufacturing sector, unfortunately indigenous manufacturing of its machinery could not develop along with the growth of textile industry.

Resultantly, demand for textile machinery still is almost entirely met through global imports. The dedicated machinery installed at the Spinning Machinery Company at Lahore and Textile Machinery Company at Karachi are at present lying idle as the two industrial units stand privatised, which can be put to operation again, in private sector. Even, otherwise, local engineering industry has the requisite capacity and capability to produce various items of textile machinery, if foreign technology partners extend support in terms of design, engineering and quality assurance.

The products may include ring spinning frames, for which Chinese machines are already popular in the local market, and other equipment like shuttle-less looms, blow room equipment, draw frames, carding machines, dyeing and finishing machines etc for which the Chinese have acquired latest technology from the western sources.

In the first phase, CKD kits/components for these items may be imported and assembly can be done locally. Sometime back the Chinese were also interested to produce and market silk printing machinery in Pakistan. Indigenous manufacturing of textile machinery items could, preferably, be undertaken on a joint venture basis, which, besides other advantages, would allow continuous technological up-gradation in the area, so essentially needed by us.

Major funds have recently been allocated for the improvement of communications and other infrastructure, whereas various projects of highways, canals, dams and water reservoirs are planned. These activities require a wide range of earthmoving and construction machinery such as bulldozer, scraper, excavator, motor grader, mechanical shovel, mobile crane, dump truck and alike that are being imported at present.

Farm mechanisation can get boost if modern agricultural machinery, including farming vehicles and small tractors, is produced and made available locally. Development of mining, quarrying and material handling equipment is another feasible proposition as prospects for mechanised mining for upcoming projects are very promising, which would replace present deployment of manual labour allowed to work under poor working and living conditions.

Currently, the governmentÃ¢â¬â¢s major thrust is on developing energy sector for which a number of incentives have been extended lately. A variety of equipment for thermal and hydro power stations can be produced to meet the growing demand. Refurbishing and manufacturing of the large turbines and generators for power generation can be undertaken under a phased programme. Likewise, a broad range of equipment for grid stations needs to be produced domestically.

Pumps and compressors required for the energy sector can be manufactured in Pakistan. Oil drilling rig is in high demand for oil and gas exploration activities, which at present is being availed by domestic as well as international oil exploration companies operating in Pakistan primarily on rental basis.

Drilling rig, on-shore or offshore type, which normally is required to operate up to a depth of 10,000Ã¢â¬â12,000 meters, is very costly world over and, consequently, its rental charges are as exorbitant as $18,000 per day. Rigs for soil investigations and water well drilling are also needed. Production of oil drilling equipment however will require balancing/up-gradation of existing machinery and other facilities.

The proposed arrangement, if implemented in real earnest, will result in improving the growth of engineering goods that remains practically stagnant.


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## Neo

FOREIGN direct investment (FDI) inflows have increased in the last two financial years, peaking at $3.5 billion during 2005-06. The figure was 131 per cent higher than $1.52 billion for 2004-05.

The government sees the volume of capital inflows as a major achievement. Yes, as far as the numbers go, the official claim is very much justified. But there are certain points to ponder over the FDI trends and the emerging scenario.

The economic turnaround achieved about 2-3 years back, started attracting foreign investment which had practically shied away in the last decade.

Now, the all-important question is, where does this enormous capital go and what impact it has on the economic landscape? Did it really generate new economic activities and employment opportunities?

If we look at the FDI inflows in 2004-05 and 2005-06, a major chunk went to communications sector. In 2004-05, communications (including telecom) attracted FDI worth $517 million (34 per cent) followed by financial business $269.4 million (17.7 per cent), oil, gas and petrochemical $217 million (14.3 per cent), power $73.3 million (4.8 per cent), trade $52.1 million (3.4 percent), chemicals $51 million (3.3 per cent) and others $343.1 million (22.5 per cent).

Almost the same pattern continued in first ten months of 2005-06. Telecom was the largest recipient with $1.0 billion, followed by energy Sector ($304 million), financial services ($265.5 million), trade ($81.9 million), construction ($54.4 million) and others. As far as big amounts against the telecom sector are concerned, these have largely come from Telenor, Warid and Etiselat.

The figures speak for themselves. The two cellular operators paid $291 million each for licences, adding to it considerable investment in infrastructure and related developments. The investment enhanced economic activities and created much needed new employment opportunities. The official claim of rise in employment against annul averages of yester years were perhaps well aided by these investments.

On the other hand, nearly half of the FDI came from privatisation proceeds, including the mega deal of PTCL with UAEÃ¢â¬â¢s Etiselat. The privatisation of vital public utility and assets, bringing in $2.59 billion in total, makes Emirates the single largest country of origin of FDI to Pakistan, surpassing USA by a big margin that held the position for long. Can it, nonetheless, be labelled as productive capital inflow?

True that some of the Arab investors, their coffers overflowing with fresh petro-dollars, are willing to buy profitable enterprises. But does it indicate that Pakistan has become an investment destination and money coming in will change the economic scene?

First, it is not correct to include privatisation proceeds as FDI, because privatisation does not represent any asset creation or real increase in economic activity. Even including the privatization proceeds, the aggregate inflows remain far below the international trends and even by regional standards - with modest chances of any new production activities and employment generation that is required the most.

How are we faring on FDI front can be gauged from a recent survey of 82 countries conducted by the Economist. Pakistan is placed at number 74.

With FDI figures going up, it is time to ponder for policy planners. FDIÃ¢â¬â¢s role in development of developing nations needs no elaboration. But it is important to consider hich sectors need the FDI the most, and how to prepare these sectors for the same. While capital from abroad should be welcomed, rather solicited, efforts should be made to channellise the inflow of funds to priority sectors after accurate identification.

Economics observers believe that certain sectors have the potential of not only becoming new attraction for foreign investors, but can prove to be a cure for un-employment and poverty. For instance, construction is one of these sectors and it has already started attracting notable foreign investment.

Just one mega project in Islamabad, a joint venture of a Saudi and a Pakistani firm, is expected to net in some $350 million. The joint-venture is building a multi-purpose complex containing a 19 storey residential tower, 22 storey offices tower, a five floor mega shopping mall and above all, PakistanÃ¢â¬â¢s tallest 37 storey hotel.

The project is underway on a 6.59 acre plot at accost of over Rs5 billion. Initial total cost of the project was $300 million, but was revised upward to make the complex an earthquake-proof structure.

Thai and other Gulf-based investors have also shown interest in construction sector. As some 35-40 industries are involved in construction, the sector enhances across the board economic activities. FDI in this sector becomes even important considering the shortage of housing units, particularly urban areas.

Then there are sectors like livestock and dairy forming, processing of vegetable and fruits, tourism, engineering and other employment-intensive fields awaiting investments.

Although big FDI investments can provide a sense of satisfaction to the policy makers, the actual requirements of the economy and its masses remains far from fulfilled. A comprehensive, well thought-out strategy, formulated in consultation with stakeholders in every sector is needed to benefit optimally from the surging foreign investment.

http://www.dawn.com/2006/09/18/ebr13.htm


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## Neo

18 September 2006 



NEW DELHI Ã¢â¬â The RSS has sought immediate expulsion of Ericsson from India in the wake of the Swedish telecom majorÃ¢â¬â¢s reported deal with Pakistan to supply sophisticated equipment for military use. 
Ã¢â¬ÅIts sale to Pakistan of equipment that can be used while attacking India shows the companyÃ¢â¬â¢s insensitive disregard of India. For this, Ericsson company should be asked to pack its bags and leave India,Ã¢â¬Â RSS mouthpiece Panchjanya said in an editorial in its latest issue.
It cited media reports which said Swedish aircraft major SAAB and Ericsson combine have signed a $1.15-billion deal with Pakistan to supply it with airborne early-warning systems.
Ã¢â¬ÅPakistan has been trying for the past 25 years to buy these highly sophisticated devices, but has been unsuccessful,Ã¢â¬Â the RSS mouthpiece claimed. It called this deal a security concern for India.
It said that the Swedish telecom company should either cancel the deal or end its business in India. 
Ã¢â¬ÅEricssonÃ¢â¬â¢s agreement with Pakistan, which does not lie in IndiaÃ¢â¬â¢s interest, does not make the company eligible to stay (any more) in India,Ã¢â¬Â it said.
The RSS weekly also described as Ã¢â¬ËsaddeningÃ¢â¬â¢ the Indian governmentÃ¢â¬â¢s Ã¢â¬ËsilenceÃ¢â¬â¢ on the deal. No Ericsson official was available for comment.  

http://www.khaleejtimes.com/Display...ent_September651.xml&section=subcontinent&col=


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## Neo

THE federal government claims that the economic opportunities created by the high economic growth has brought down the ratio of population living below the poverty line from 34 to 25 per cent. However, what has not been acknowledged is that some 56.2 per cent population remains vulnerable and is on the verge of falling in the poverty trap.

The poverty becomes more apparent when you enter any goth, village, deh or killiÃ¢â¬âsituated not more than even two kilometres from any urban centre. Worn-out households, unhygienic living conditions, small children working, unemployed youth and a number of social ills speak volumes of the way people live.

The fact that some 60,000 skilled and non-skilled labourers have opted to work in the war-torn Afghanistan to earn more than what they were earning in Pakistan can be regarded as a strong evidence of the alarming proportion of the poverty found in Pakistan.

No doubt, the government has taken initiatives to find ways and means for dealing with the situation. However, the achievement of the end objective to improve peopleÃ¢â¬â¢s living standards would largely depend on the success of the future socio-economic strategy.

Official sources say that the government has undertaken is formulating Ã¢â¬Ësocial protection strategyÃ¢â¬â¢ by targeting segments of society most vulnerable to fall below the poverty line.

The need to have an effective policy and undertaking full-scale measures to counter the poverty threat emanates from a lending agencyÃ¢â¬â¢s findings that one in four Pakistanis is poor and one in every two vulnerable to fall prey to poverty.

The analysis is based on the findings of the World BankÃ¢â¬â¢s study which states that Ã¢â¬Å56.2 per cent of PakistanÃ¢â¬â¢s population faces more than 50 per cent probability of finding itself in poverty in the next few yearsÃ¢â¬Â.

The study distinguishes between the vulnerable Ã¢â¬â those with a high probability to find themselves in poverty and the non-vulnerable. Within this vulnerable group, some are already in poverty (32.5 per cent), while others are currently not so poor (23.8 per cent).

According to the study, 21.9 per cent of the population is poor. It also predicted to be poor in the near future as they are chronically poor and vulnerable.

The large proportion of the population vulnerable to fall prey to poverty are the children under 15 years of age. About seven million children in the 10-14 years age group are not enrolled in schools as a result of which they run high risk of falling in poverty.

According to the World BankÃ¢â¬â¢s assessment, an estimated 2.5 million children - one in every six children Ã¢â¬â is working which reflects that the incidence of child labour is higher among the chronically vulnerable, as one in four children in this category is a worker.

In addition to children, rural household with low levels of assets/land have also been described as the most vulnerable to become poor. The assessment contains that lack of assets together with unemployment and under-employment as key sources of vulnerability in rural areas.

Highlighting the significance of having an effective policy with concrete measures to tackle the issue, the draft strategy says that Ã¢â¬Åthere is currently no overarching social protection strategy in Pakistan, this leads to lack of direction and poor co-ordination on the part of individual agencies and programmes working in this area.Ã¢â¬Â

The government spends about 0.5 per cent of gross domestic product, on the social protection schemes, an amount which is inadequate by any means in view of the growing needs.

Ã¢â¬ÅEconomic restructuring and recessions have led to the high levels of poverty and vulnerability, it is therefore important to ensure that economic growth is shared by poor households,Ã¢â¬Â says the study.

The strategy, being devised to target the most vulnerable groups, aims at strengthening social assistance to provide protection against poverty to large households with children and elderly persons and these households constrained by limited income.

In addition to pleading for a comprehensive health insurance system, the strategy asks for strengthening the labour market regulations and natural and environmental risk management through nationwide planning.

Sources say that the strategy has evolved under the medium-term development framework asking for sustained increase in poverty reduction planned expenditure from 4.25 per cent of GDP in 2004-05 to 5.07 in 2006-07 and 6.49 per cent in 2009-10 financial year.

This means that the government would need an additional amount of Rs46 billion in 2005-06, Rs55 billion in 2006-07, Rs66 billion in 2007-08, Rs78 billion in 2008-09 and Rs92 billion in 2009-10 financial year.

Ã¢â¬ÅCurrently, social protection expenditure is a fraction of poverty reduction expenditure and would need to grow more than proportionately to accommodate the increased expenditure in the proposed programmes,Ã¢â¬Â says the draft strategy, which has also put forth four proposals vis-ÃÂ -vis cash transfer programme to target 10 per cent of the poorest.

This would need a greater amount of funds than what the government is presently spending on schemes that can be regarded as meant to provide social protection but which are not so effective.

The governmentÃ¢â¬â¢s expenditure on such schemes comes to about Rs25 billon per annum out of which an amount of Rs5.86 billion is spent under the Zakat distribution, another Rs4.5 billion through Bait-ul-Maal and some Rs700 million through Tawana Pakistan.

Other than that, an amount of Rs8 billion is extended as wheat subsidy by the federal and provincial governments which do not benefit the poor.

The draft strategy says : Ã¢â¬ÅEach of the broad programmes has a number of projects which reflects the ad hoc nature of how programmes were added on over time, the lack of coordination, sometimes even within programmes, and the lack of an overall strategy for social protectionÃ¢â¬Â.

About the wheat subsidy, the governmentÃ¢â¬â¢s own findings are that though it is the biggest safety net, it is a non-targeted poorly packaged scheme that has, at best, a very small impact on the poor.

According to officials, the government has been proposed to establish an institutional structure with defined functions and responsibilities for various public sector entities to carry out the strategy side by side strengthening and reforming the current Bait-ul-Maal enabling it to become an effective agency.

For any poverty reduction programme to succeed, the government needs to take measures to create economic opportunity at the grass root level as social protection policies would only keep the poor dependent on doles.


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## Neo

SINGAPORE, Sept 17: The World Bank is actively considering a $6.5 billion four-year support programme for Pakistan to assist this promising economy overcome the difficulties that deficient physical and human development infrastructure pose in its effort to accelerate the growth further in a way that benefits widest sections of the society.

Ã¢â¬ÅPakistan is a success story that needs to be told and heard here. There is also a need to show a clear break from the past (before 1999 period) when the countryÃ¢â¬â¢s policies were inconsistent and irresponsible. The country needs this to reach out to the potential investors and also to make a case for the support it is seeking from donors to match the physical and human infrastructure deficit,Ã¢â¬Â John W Wall, country director, Pakistan, in the World Bank, said this in an interview with Dawn on the sidelines of the meetings.

Ã¢â¬ÅAt the moment, Pakistan has the soundest and safest banking system in South Asia, but many people do not know that,Ã¢â¬Â he said.

He said that PakistanÃ¢â¬â¢s delegation had a chance in the huge gathering of bankers and private sector representatives to present its case to be a country that offered comparatively favourable business environment for investors in South Asia. Ã¢â¬ÅThis is exactly what Pakistani official delegation has been doing over the past two days and intends to do over the next couple of days of meetings in SingaporeÃ¢â¬Â.

The WB director was referring to an array of meeting that the State Bank of Pakistan governor and Dr Salman Shah, head of PakistanÃ¢â¬â¢s delegation, are having with the World Bank/IMF teams and others.

Mr Wall said that restructuring of the fund and the bank, if approved, would benefit Pakistan and other developing countries as the dominance of lending countries in the institutions would be moderated, creating more space for the voices from emerging and less developed nations.

On the sensitive issue of conditionality, he said that the bank had realized that reforms could not be imposed on countries from outside. Ã¢â¬ÅWhen countries are coerced into certain policy prescriptions, they lack willingness to implement them,Ã¢â¬Â he added.

Ã¢â¬ÅWe have changed. We realize that we can not buy reforms. We have cleansed ourselves of that attitude. Even when governments sign on the dotted line in most instances, they do not live up to promises madeÃ¢â¬Â, he said.

He said that the bank now operated with close consultation with the policy makers so that they took the ownership of the programme.


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## Neo

A ROSY economic outlook for 2006 from the ministry of finance ought to be welcome. While it looks up in terms of GDP growth rate, the ministry is honest enough to accept the challenges of job creation, poverty reduction, social indicators improvement, and physical infrastructure.

If the challenges are as humongous as they are, one wonders why the IFIs are so enthusiastic about the Ã¢â¬Åeconomic progressÃ¢â¬Â that is coupled with a lack of progress on crucial fronts. For, this shortfall might serve as a drag even on growth in the future.

One further wonders about the IFIs excitement as unless there is progress on the other fronts, growth will not be generated endogenously for a long time as per their own endogenous growth theory they exported to us and that serves as the basis of our economic policies. Could the IFIs be defining Ã¢â¬Åeconomic progressÃ¢â¬Â too narrowly?

IFIs satisfaction emanates from an Ã¢â¬ÅimprovementÃ¢â¬Â in PakistanÃ¢â¬â¢s business environment. One has reasons to wonder about this too given the law and order situation, the poor infrastructural facilities, the image of breeding terror that is dispelled by the top brass but that gets borne out every now and then when terror strikes, the provincial tensions now, the despondency that prevails together with the attitudes that serve as a drag on productivity and low levels of literacy, education, and health conditions, percentage point improvements notwithstanding.

In the exuberance, the dismal progress, if at all, on these other indicators is lost sight of and all appear to be managing by hope on this front rather than through positive definite action.

So, the improvement in the country rating only on the basis of the Ã¢â¬Åtime and cost to meet government requirements in business start-up, operation, trade, taxation, and closureÃ¢â¬Â may look impressive at 74 out of 175 economies with India trailing at 134.

However, it does not capture the full picture that would together make up the business environment leave alone the economic landscape that should be seen on a canvas much broader than the above narrow depiction.

Even for business to perform, the businesses require a proactive strategic outlook which is lacking. Business start-up requires a competitive go-get mindset for successful operations that too is rare. The giant of textiles is having difficulty competing internationally with the protective umbrella receding.

Then businesses require social and political stability to pursue their goals with some degree of confidence. They need roads, electricity, and other utilities for sure. Roads get washed away after one downpour. Electricity situation is chaotic. Gas and gasoline price issues feed into the cost of production.

With food prices spiralling upwards, labour costs go up. The environment is anything but comfortable for businesses. To give a high ranking on the basis of even business environment that is defined even more narrowly than what business environment actually comprises is to forcibly give a ranking that is not valid enough even for the measure that they are attempting to measure. Ends do not always justify the means.

To use the business environment score as a proxy for economic progress would be least convincing too. It is important to know the contributors to high GDP growth. Good weather conditions that should hopefully be similar in the future to yield a decent agricultural growth rate, credit financed demand for industrial products, banking sectorÃ¢â¬â¢s contribution based on high spreads and the continued injustice to depositors, and viewing capacity utilisation as growth when growth is increase in potential output to name a few sources of GDP growth.

As for inflation, the rate of inflation may remain in single digit but consumers experience a higher burden on their household budgets due to a price line rising incessantly and faster. How CPI is measured remains a big question mark as there should be harmony between the officially stated inflation rate and the price pressures experienced by people.

Exports may be touching new highs but so is the trade deficit. Trade deficit shot up to $4.5 billion during 2004-05 (SBP Annual Report, 2004-05). It further increased to $6.5 billion during JulyÃ¢â¬âApril2005-06 (SBP Third Quarterly Report, 2005-06.

That current account deficit is financed by foreign inflows in 2005-06 is no consolation if Pakistan is liable to pay in the future. Question remains about the extent of imports of finished luxury goods that the upscale segment can now access due to liberalisationÃ¢â¬â-a factor that must be of great comfort for the foreign suppliers whose interests are promoted by the IFIs through rapid liberalisation.

The external deficit is explained in part by rising oil prices on the international market. But, does Pakistan not import subsidised oil from Saudi Arabia, UAE, and Qatar and is the oil price not fixed for some time? In-depth item-wise independent trend analysis is required.

So, what is passed on as an economic feat too needs a deeper look to see who benefits? The multitude is being asked to wait for the trickle at an unknown point in time in the future. So, never mind what rank we may get on a narrowly defined business environment indicator, the ranks we have on human development and human deprivation speak volumes about the dichotomy in the policy preferences.

PakistanÃ¢â¬â¢s HDI (human development index) rank is 135 behind IndiaÃ¢â¬â¢s at 127 and only better than Nepal, Papua New Guinea, Ghana, Bangla Desh, Congo, Uganda and a few other medium and all low HDI countries (UNDP: Human Development Report 2005). HDI is based on longevity, knowledge, and per capita income.

Out of HPI-1 (human poverty index) ranks for 103 developing countries, PakistanÃ¢â¬â¢s is at 68 behind IndiaÃ¢â¬â¢s at 58 with Ghana, Sudan, and Congo and many other smaller countriesÃ¢â¬â¢ better than PakistanÃ¢â¬â¢s (UNDP: Human Development Report 2005).

HPI-1 measures long and healthy life, knowledge, and access to economic provisioning gauged by percentage of population without sustainable access to improved water source and percentage of children underweight for age. HPI-2 also includes percentage of people below income poverty line and social exclusion as measured by the rate of long-term unemployment (12 months or more). HPI-2 is calculated for 18 selected OECD countries. One is curious to know what it would be for developing countries in general and Pakistan in particular.

Unless improvement is shown significantly on the human development and human poverty indices and their results square with the one on what the IFIs call business environment, the result cannot be called development.

For a country to develop, all must benefit as the development of a few is the development of a few and not that of the nation as the nation is a lot bigger than the few who have been benefiting from the imported endogenous growth theory pushed by the IFIs.


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## Neo

glyn said:


> All good stuff Neo, and most interesting, but may I give a word of caution? Please do not get over-reliant on the undoubted short term benefits of agro-chemicals to boost crop yield, as there could be long term problems. One way round this is to add more agro-chemicals in future years, but this is expensive and is not good for the soil. If agro-chemicals are needed I would suggest that they are only used where absolutely necessary and applied at the lowest volume possible.


Agree on post poits Gyln.
In Pakistan's case, benefits of agro-chemicals are huge and could mulitply the yield by factor 3 to 4 and allow difersification in crops. The enviromental demage is unavoidable sine we need to feed 160 mouths, possibly 350 milion by year 2040 so one way or other we'll have to apply modern technology which often includes use of agro-chemicals.

Imho much better solution will be to switch over to GM species of crops to gain highest yield, better water management and introduction of greenhouses to allow highest cultivation of soil.


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## Neo

SINGAPORE (September 19 2006): With 54 percent of the 160 million population under the age of 19 years Pakistan has a huge pool of baby boomers at a time when the West offers a growing market with great potential for all kinds of consumer goods, said the Advisor on Finance Dr Salman Shah.

Addressing the loan signing ceremony between the International Finance Corporation and Habib Bank Limited here on Monday, Shah said that the stage was set for foreign as well as domestic investment and for the banks to mobilise domestic savings. Financial players are needed for asset management, real estate investment trusts, rural finance and pensions.

The growth of demand by consumers can be judged by the sale of 1.5 million new cellular phones every month as the income of the middle class, constituting 60 percent of the population, is increasing. They are the driving force behind the 25 percent growth in the sales of all kinds of household appliances.

He said that consumer finance is still very small as percentage of banks' balance sheets. Local demand is reaching the scale which makes the local products competitive.

"Pakistan is producing tractors at a cost lower than India, and we are seeking a transformation of our export base from textiles to engineering products. Until now, foreign investment was concentrated in infrastructure-oil and gas and power sectors-but now it is increasingly flowing into manufacturing including textiles."

Earlier, State Bank of Pakistan Governor Dr Shamshad Akhtar welcomed the IFC's growing involvement in Pakistan beyond financing. She said that IFC's technical advice for implementing Basle II would be invaluable.

She said that concerns expressed about overheating of Pakistan's economy were unfounded. And, the high spreads enjoyed by banks at present were largely due to monetary tightening to effectively manage the economic risks.

She said the central bank was seeking credit diversification and banking inroads in the under-served areas. "Cross-fertilisation of knowledge is more important than seeking money," she added.

*REUTERS ADDS: *Pakistan may issue a 15-year foreign currency bond when it taps the global bond market next to create better liquidity after the sale of 10- and 30-year bonds this year, an official said on Monday.

"We may do a 15-year bond - between 10 and 30 (years) we need to fill them up," adviser to prime minister on finance Salman Shah told reporters. He said the government had not decided on the timeframe for the bond issue, but he added different maturities were necessary to have liquidity in its bonds. In March, the government sold a total of $800 million 10- and 30-year bonds-the country's third foray into the international bond market since 2004.

When asked if the government has been able to contain inflationary pressures, he said the monetary tightening has helped curb rising inflation. "We have tightened up, the supply situation is better. This year our target is 6.5 percent, we should be able to do that," he said.

The adviser said the government was "watching" the situation closely after the central bank recently increased its benchmark interest rate and hiked its cash reserve ratio for banks. Foreign banks are on the hunt for more acquisitions in Pakistan's banking sector following Standard Chartered's purchase of a local bank, State Bank (SBP) governor Dr Shamshad Akhtar said on Monday.

"I am confident that there will be 2 to 3 additional international banks that will be viewing Pakistan with keen interest. Some of them are already talking to the local banks," the governor said. Akhtar said she also expects further consolidation in Pakistan's banking sector because of higher capital adequacy ratios and new regulations that banks must adhere to under Basel II.

In August, Standard Chartered agreed to buy an 80.9 percent stake in Union Bank for $413 million. Under Pakistan law it is also obliged to make a public offer for Union Bank's remaining shares, which would take the total price to $511 million, the biggest purchase by a foreign bank in Pakistan.

She was speaking at an event in Singapore where International Finance Corp announced a $50 million long-term loan to Habib Bank Ltd, the country's second biggest bank in terms of assets.


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## Neo

*ISLAMABAD *_(updated on: September 19, 2006, 19:09 PST_): Minister of State for Investment, Omer Ahmed Ghumman on Tuesday expressed the hope about the prospects for pouring of $2-5 billion investment from US businessmen into Pakistan in next one-two years.

Talking to PTV in a telephonic interview from New York the minister said that President Pervez Musharraf during his interaction with the US investors had removed all the misperceptions and reservations about the business environment in Pakistan.

He has ensued new confidence among the US businessmen particularly among Pakistani origin Americans the minister said and added the results would come on surface in next 2-3 months.

He said the US business community was very much convinced the way President Musharraf briefed them adding none of the participants expressed any reservation over law and order situation in Pakistan.

President Musharraf has offered his personal co-operation to the US investors for doing business in Pakistan and they were deeply impressed by this offer, he added.

$2-5 billion US investment eyed after Musharraf's speech


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## Owais

*Pakistan likely to skip sugar imports in 2006/07* 
*BEIJING *_(updated on: September 20, 2006, 15:54 PST_): Excessive imports this year and expectations of a better harvest next year mean Pakistan could skip importing sugar in the upcoming crop year, a leading industry official said on Wednesday.'We have now a huge surplus of imported sugar,' Mian Kausar Hameed, chief operating officer of Dewan Mushtaq Group, a leading sugar producer.

"We don't expect Pakistan will import sugar in the year 2006/2007."

Pakistan still has 800,000 tonnes to 900,000 tonnes of sugar left over from a total of 1.3 million tonnes imported in 2005/2006.

"The stock will carry over to the next year 2006/2007," he told a Beijing sugar conference organised by F.O.Licht and the China Sugar Association.

Inventories and estimated domestic output of 3.3 million tonnes would balance consumption, which he put at 4.0 million tonnes for next year.

"Maybe because it is an election year and the government wants to be very sure of keeping prices lower, they might import maybe 200,000 tonnes or so," he said.

Pakistan produced 2.6 million tonnes of sugar in 2005/2006.


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## Owais

*Pakistan's call for World Bank-IMF help to build up energy infrastructure* 


SINGAPORE (September 20 2006): The global community faces a major challenge in securing affordable and cost-effective energy supplies while preserving regional and global environment, said PM's adviser on finance Dr Salman Shah here on Tuesday.

Addressing the plenary session of the World Bank/IMF annual meeting in Singapore, he said there are two dimensions to the energy challenges (i) the escalating oil prices, which are risks to fiscal and macro-economic stability in mostly oil importing countries, and (ii) the deficit of needed investment in energy sector.

Closing the infrastructure deficit is critical to any efforts towards unleashing growth potential and attainment of millennium development goals (MDGs) in the developing countries, he added.

"The World Bank and the IMF have to play an active role in financing and assisting the countries to accelerate needed investment in infrastructure", said Dr Salman Shah


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## Owais

*US firm keen to set up 5,000MW coal power plant* 


NEW YORK (September 20 2006): An American company has shown interest in setting up a 5000MW coal power plant in Pakistan, State Minister for Investment Umer Ghumman said on Tuesday.

Ghumman said that during an interaction with Brain Miller, executive vice president, general counsel and company secretary, AES Corporation, he found Miller interested in exploring possibilities of setting up a coal power plant in Pakistan. He said that AES officials would visit Pakistan for an in-depth study of the proposal.

He said AES if comes to Pakistan with a plant of 5000MW generation capacity "we will be able to get power in between 2.5 cents to 3.5 cents per unit. He said that soon there will be a follow up meeting and something concrete would come out.

He said that Miller was already studying the possibility of travelling to Pakistan with the proposal. Ghumman said that he has met with a few other power-producing company heads and has asked them to relocate some of their plants from other less lucrative locations to Pakistan for which the Pakistan government would provide all possible assistance.

He said that relocation of power plants is economical and convenient and therefore, easily acceptable to companies planning to either wind up their business at one location and move to another or to expand their business.

Giving his overall view of meeting businessmen at the roundtable interactive luncheon meeting he said investors seem more interested in telecommunication, oil and gas exploration, power generation and financial services.


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## Owais

*Pakistan to learn from NYSE: law needed to check frequent stock fluctuations* 


NEW YORK (September 20 2006): Minister of State for Privatisation and Investment Umer Ahmed Ghumman said on Monday that Pakistan would learn from the New York Stock Exchange how to manage frequent and abrupt fluctuations in the Pakistani stock exchanges so that the interest of the small and medium investors could be saved.

The minister was talking to press after attending a roundtable meeting with the US investors/businessmen, chief executive officers of important US companies and top bankers at a local hotel where President General Pervez Musharraf had given them a briefing on Pakistan's economy and opportunities for investments.

Ghumman said the NYSE had a legislated a system to manage its transactions and Pakistan would have to study it to find out how it could be replicated.

He said that to make the Karachi Stock Exchange (KSE) attractive and to control frequent fluctuations that shook confidence of investors, legislation would be needed. "There is need to monitor fluctuations in the market, which bring uncertainty and loss to those who do not have holding capacity. We will have to consult the NYSE for legislation," he added.

The minister said that all the stakeholders such as stock markets, regulators and investors would have to study the system, take guidance from success stories and draw a plan that could lead to the process of monitoring fluctuation in stock markets.

Ghumman said that it was a chance meeting with Executive Vice President of Global Client Group, NYSE, Noreen Culhane, at the roundtable meeting where continued erratic behaviour of Pakistani stock markets came under discussion.

He said that the NYSE had shown interest in helping Pakistan in drawing legislation to check rapid fluctuations in "our stock exchanges." He said Pakistani markets were attractive for foreign investors, but they feared abrupt fluctuations, which were too frequent and, at times, disastrous.

"Once the erratic behaviour of the market has been checked through a legal process/legislation, foreign investment and number of foreign buyers would multiply many more times," he said.

*APP adds: *The minister said the American entrepreneurs eyed Pakistan as one of the most attractive destinations for investment. "The American business leaders say they have great confidence in Pakistan's economic potential and investment prospects as the country now has corruption-free leadership, that is committed to its economic development," the minister said. Ghumman, who also met the chief executive officers of various companies, told newsmen that AES Corporation was interested in setting up a plant for generating 5000 MW of energy from coal in Pakistan.

Leading companies, including Ethan Allen Corporation, a mega furniture chain, Merrill Lynch, Sweet Water International, Xerox were also looking at Pakistan to expand their business, the minister said, and expressed the hope that these companies would come in a big way and push forward Pakistan's economic growth.


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## Owais

*Textile industry: one-year relief from EOBI, Sessi under study: EPB* 


KARACHI (September 20 2006): The government is considering exempting the textile industry from the Old-Age Benefit Institution (EOBI) and the Sindh Employees Social Security Institution (Sessi) deductions for one-year to bring the cost of doing business down as huge sums are paid in these heads.

Minister of State and Export Promotion Bureau (EPB) Chairman Tariq Ikram stated this during a visit to Al Abid Silk Mills, here on Tuesday. He said the textile industry paid huge money to both the EOBI and Sessi, and if the industry gets one-year relief the business would flourish and exports would also get boost as well.

The EPB chief said the worker relief institutions would not be deprived of their due share, adding the government would pay them during the period. He offered the Al Abid Silk Mills to establish a warehouse near Port Qasim for its finished goods. He also offered that consultant for any field that required by a company from the EPB then the Bureau would slash the fee of the consultant to 50 percent.

Al Abid Silk Mills CEO Nasir Sattar informed the state minister that the decline in bedwear exports were nearly 20 percent and this was occurred after quota regime. He said that the reason for the disaster was high cost of inputs ie gas, electricity, banks mark-up, taxes, and non-availability of zero-rating atmosphere.

He cited examples of India and Bangladesh where governments have provided conducive environment to their entrepreneurs. Due to these incentives the international buyers attracted there and exports of these countries were growing.


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## Owais

*Cooperation with China growing in oil and gas sector: Jadoon* 


ISLAMABAD (September 20 2006): Federal Minister for Petroleum and Natural Resources, Amanullah Khan Jadoon has said that Pak-China co-operation in the oil and gas sector is rapidly growing for the mutual advantage.

He was talking to a delegation from China Xinjiang Petroleum and Allied Services, headed by Youting Kou, General Manager, who called on him and discussed investment opportunities in the oil and gas sector.

The minister said that the government was providing attractive package of incentives to investors in the onshore and offshore oil and gas exploration and it would welcome company's investment in these sectors. Jadoon also highlighted the salient features of the investor-friendly policies of the government and the ongoing oil and gas exploration activities in the country.

Kou, head of the Chinese delegation, briefed the Minister on Xinjiang Petroleum and its activities in the oil and gas sectors and expressed his keen desire to participate in the exploration activities in Pakistan. Minister of State for Petroleum and Natural Resources, Mir Muhammad Naseer Mengal, Secretary Petroleum, Ahmad Waqar, Additional Secretary Shaukat Hayat Durrani and acting Managing Director OGDCL Mubbashar A Zafar were also present during the meeting.


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## Owais

*IPI gas talks: Ahmadinejad may invite Singh and Musharraf by November-end: Kasuri* 

NEW YORK (September 19 2006): Iran President Mahmoud Ahmadinejad is likely to invite President General Pervez Musharraf and Indian Prime Minister Manmohan Singh for a negotiated settlement of the proposed Iran-Pakistan-India gas pipeline, after the consultants appointed to work out benchmark pricing recommendations submit their report by the end of November 2006.

Talking to newsmen at Roosevelt Hotel on Sunday, Foreign Minister Khurshid Mahmud Kasuri said that the gas pipeline project "is in the interest of the three countries, and it will finalise at some stage".

He said that the consultants appointed to find out benchmark pricing formula were expected to come up with their recommendations in early November. "Once it is done, there is a possibility that Iranian President Ahmedinijad invites President Musharraf and Prime Minister Manmohan Singh for a negotiated settlement," he added.

He said that Pakistan is a growing economy and its needs of energy resources are expected to grow proportionately. The gas reserves of Pakistan are likely to last only about 10 to 115 years as against the estimated target of 40 years. More energy sources were to be found out, he added.

About the delivery of super-sophisticated fighter jets, Kasuri said that Pakistan is not oblivious to its political, economic and defence needs and it would not take decisions that would compromise with its sovereignty.

"Pakistan has ensured that there are no bottlenecks in the delivery of F-16s, and the country is in the serious business of buying aircraft that suit its defence needs."

He said that Pakistan has ensured that the past bitterness in F-16s deal would not be remembered. "We have ensured that the past experience is not repeated."

He made it clear that Pakistan "is in the business of buying the aircraft that are of high quality" and fulfil the requirements of its air force. "Pakistan is not looking for remote-controlled toys; we need high-performance aircraft. Pakistan is paying a hefty sum of $5 billion, and what the country is acquiring is - bang for the buck."

He brushed aside all suggestions that the United States has laid down preconditions for the sale and said that the United States "has not set any unusual preconditions" for sale of the aircraft to Pakistan. "The only condition that is there pertains to non-transfer of the technology, which is a general rule in all such deals."

On the prospects of a bilateral investment treaty with the United States of America, Kasuri said that a lot of pertinent issues have been resolved, but added that it was not likely to conclude during the current visit.

However, he said, there was sustained inflow of American investment into various promising areas of Pakistan's economy.

Pakistan, he said, would safeguard its interests in respect of concluding the bilateral investment treaty with the United States.

Kasuri said that the upcoming meeting between President Musharraf and President Bush in Washington would review bilateral co-operation in an array of fields including energy, economy, education, science and technology, etc. "The meeting has significance in that this is for the first time that the two leaders will be meeting in the wake of Pakistan and US reaching a strategic partnership in March this year during the American President's visit to Islamabad. Since then, the bilateral strategic dialogue has picked up between the two partners and the two presidents now will have the opportunity to review progress in this respect," he added.

President Musharraf's visit would focus on furthering Pakistan-US ties in a broad range of fields, he said, and brushed aside the suggestion that Afghanistan might become a major issue in view of Afghan President also visiting Washington immediately after Musharraf's talks at the White House.

He expressed hope that there would be progress vis-&#224;-vis establishment of reconstruction opportunity zones in the tribal areas. The idea was floated and discussed during President Bush's visit to Islamabad.

On the North Waziristan issue, Kasuri made it clear that Pakistan would not be pulling out the troops from the area, and "in fact, would be able now to patrol the border region effectively". The deal with tribal elders is aimed at isolating the extremists and 'weaning away' the youth from the influence of extremist elements.

Under the agreement, the tribal leaders have assured to check cross-border movement. They have committed not to allow any foreigner indulging in extremism and violence.

In reply to a question, he said that if the deal proved successful, it might be replicated by Afghanistan government. "This is a holistic approach having military, political, administrative and economic and reconstruction aspects."

Briefing journalists about the Brussels and Havana visits and meetings of the President with world leaders, Kasuri said these were useful in the sense that they provided an opportunity to clear misconceptions and misperceptions about the various policies Pakistan is pursing to find out peaceful solutions to its internal as well as external problems.

He said that the meeting between President Musharraf and Prime Minister Manmohan Singh was marked with flexibility and boldness. There was a message that the two countries could resolve the outstanding disputes.

When asked whether Pakistan was sending troops to Lebanon to be included in the UN peacekeeping mission, he said that no such decision had been taken. "Only army experts for mine clearing in the war-hit areas will go."


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## Neo

Wednesday, September 20, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\09\20\story_20-9-2006_pg5_8

KARACHI: Ufone, one of the major cellular service providing company of Pakistan, on Tuesday announced largest-ever expansion of its network at a cost of $550 million which will push its total investment to $900 million in the country. 

Speaking at a press conference in Karachi, Chief Executive of the Ufone Babar Khan told journalists the envisaged plan focuses on the expansion of the network in terms of capacity and coverage in existing and new cities besides providing high-speed wireless data services based on EDGE technology.

With the help of the new investment, the cellular company in the next one and a half years would be in a position to offer uninterrupted coverage to its clients from Karachi to Peshawar. 

Giving the details of latest expansion plan of Ufone, he said that it will not only change the current scenario of the local telecom industry, but will also give new meanings to quality service and customer satisfaction.


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## Neo

ISLAMABAD: Tullow Oil Pakistan (Ltd) on Tuesday expressed interest to invest $5 billion in oil and gas sector in remote areas of Pakistan. In this connection a delegation of Tullow Oil led by Paul Mc Dade called on Federal Minister for Inter-provincial coordination Salim Saifullah Khan. The delegation apprised the minister of plans and projects as well as investment made by Tullow Oil Company in oil and gas exploration in Pakistan. The company has so far invested $200 million and further desires to invest $5 billion in oil and gas sector. It has started production from Chachar Oil Field, Sindh, and is presently working on five blocks in NWFP and intends to work on three blocks in Balochistan. Talking to the delegation the minister said prudent policies of the government had made Pakistan a most conducive country for foreign investment in the entire region.


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## Neo

KARACHI, Sept 19: The country expects to produce around 3.3 million tons white refined sugar this season starting from October 1, 2006. However, this is going to create a glut in the market because already around 1.6 million tons of unsold sugar stocks are lying in the country.

Contrary to the previous year when prices went sky high, the current season will witness a crash in sugar prices that may even inflict sever damage to growersÃ¢â¬â¢ interest and that of the sugar industry, observe sugar analysts.Due to poor harvest of cane crop last year, the country could hardly produce around 2.6 million tons, which was much below the domestic demand. Consequently, the government allowed free import of sugar by the private sector and the Trading Corporation of Pakistan.

At present around 1.6 million tons of sugar stocks are lying with different stakeholders, which will allow the country to have opening stocks of around one million tons at the start of new crushing season. On an average the country consumes around 0.325 million tons per month. This would mean that 0.65 million tons would be consumed before the start of the next season.

Industry sources say presently the TCP was holding around 0.8 million tons of white refined sugar, 0.225 million tons with trade and 0.609 million tons with sugar mills.

The open market has already started witnessing a fall in sugar price which is being quoted at around Rs32 per kg. Sugar analysts feel that once the new crop sugar starts pouring in, the price will further crash and this will imbalance the costing of growers and the industry.

Despite the fact that recent heavy rains in Sindh have damaged around five to 10 per cent of standing sugarcane crop, but it equally proved to be a boon for growers who are now expecting higher yield of cane. As a result of this, the province expects to produce around 1.1 million tons of sugar as against 0.9 million tons produced last year.

Similarly, Punjab is also going to harvest large sugarcane crop this season and sugar production is being estimated to be 25 per cent higher than last year.

Pakistan Sugar Mills Association (PSMA) Chairman Abdul Wajid told Dawn that the coming crushing season would be quite difficult for the growers and industry because in the presence of huge unsold stocks, offtake of sugar from the new crop would be slow and this would create liquidity problem for the industry.

As fallout of this situation, he said, the growers might also have to face some delayed payments from the industry. Mr Wajid also feared that this vicious circle might also directly inflict damage to the banking sector from where huge funds would be taken by the industry for running their industry and purchase of cane.

The PSMA chairman said the sugar industry had no financial strength to bear the brunt of carrying huge inventory for longer period because with a glut in sugar market there would be no immediate offtake of fresh production.

He urged upon the provincial and federal governments to seriously look into the situation and take immediate steps to help avert the ugly situation that might arise with the advent of new crushing season and save the growers and industry from facing financial crisis.

Responding to a question, Mr Wajid said in his opinion the only way out, and that too could be one of many required measures, was to delay the crushing season at least by one month. This will help achieve two objectives. Firstly, it would help the crop get fully matured to have higher yield, and secondly it would further exhaust sugar stocks and create a demand, he added.


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## Neo

KARACHI: Speakers at a conference revealed that by 2018-19 usage volume of CNG would be on a par with that of motor gasoline (petrol), however, they mentioned that diesel would sustain its dominating share in oil marketing.

The speakers were unanimous to establish strong networking with international CNG companies to channelise resources and expertise for the development and growth of CNG sector in the country and asked government to provide basic facilities to it.

They were addressing at Ã¢â¬ÅCNG Conex-2006 (International CNG Conference & Exhibition)Ã¢â¬Â, jointly organised by National Forum for Environment & Health (NFEH), in association with CNG Stations Owners Association of Pakistan (CSOAP) and HDIP at a local hotel on Tuesday.

City Naib Nazim Nasreen Jalil said that 30 per cent of public transports were emitting hazardous pollutants that were resulting in diseases like cancer, asthma etc. Ã¢â¬ÅTo prevent this deteriorated situation 15-year old public bus fleet would be replaced with CNG busesÃ¢â¬Â she said, adding Ã¢â¬Å250 to 300 CNG-fitted buses would be on roads by the end of this year.Ã¢â¬Â

Nasreen said that federal government would provide funds of Rs5 billion to bring 8,000 CNG buses to the city and vowed to make double CNG stations in the city which were currently 123 in number.

Malik Khuda Bux, Chairman, CSOAP, said basic objective of this conference was to let international potential investor know that Pakistan was one of the fastest growing countries in usage of CNG. Pakistan had become CNG leader in Asia and third largest user of CNG in world after Argentina and Brazil, he added.

In technical session, Riaz Rashid, Sr Manager, Engineering Development Board (EDB), informed that currently four local companies were manufacturing CNG kits, one was producing dispensers, one was producing compressors and a company was manufacturing priority panels.

CNG-fitted vehicles are touching a figure of 5.5 million across the globe thus showing great opportunities to local companies. Masroor H. Khan from Shell Company apprised that in 2020 CNG share in gas sector would reach to about 6.3 per cent, which was about 1.2 per cent in 2004. He deplored over turnaround time from inception to commission of a CNG station, which took approximately 12 to 18 months and urged to reduce this time period to flourish CNG stations across the country. 

It may be mentioned that presently more than 1.1 million vehicles are running on CNG while 1,056 CNG stations are working at the moment in Pakistan. More than 3,500 applications for seeking provisional licence from OGRA (Oil & Gas Regulatory Authority) are in pipeline for establishing CNG stations.

Shahab Raja, Advance Electronics, Amir Hassan, chief executive Tesla Pakistan and others also spoke.


----------



## Neo

ISLAMABAD (September 21 2006): Marubeni Corporation, a Japanese firm, has shown interest in four thermal based projects of 1650 MW capacity, including 450MW Uch-II power project at Kashmore, 400MW at Faisalabad and two projects of 800MW and 350MW at Chichokimalian, which would be offered through International Competitive Bidding (ICB).

The intention to participate in tenders was expressed by a six-member Japanese business delegation, headed by Kazuhiko Sakamoto, Sr Executive Vice President of Marubeni Corporation at a meeting with Pakistani delegation, led by Federal Minister for Water and Power, Liaquat Ali Jatoi on Wednesday.

The meeting was informed that the company had successfully implemented and executed a number of power projects world over in a span of three decades and was interested to invest handsome capital in power sector in Pakistan. As of today, the company has completed EPC projects with an aggregate capacity of about 69,000MW, and is currently constructing 20 power plants around the world.

The company is also interested to increase its export of electrical equipment like generators, turbines and other machinery to Pakistan. The company had participated in the ICB for three thermal projects and was confident of submitting a competitive and responsive bid, it was further informed.

While welcoming the Japanese delegation, the Minister informed about the simplified procedure for facilitating foreign investment particularly in power sector.

The delegation was further informed that a flexible regime for foreign investment exists in the country and no procedural problem would impede them from investing in power sector.

The minister apprised the delegation that the power sector in Pakistan had a great potential for making profitable investment in the country as the growing demand of power has been registered as 10-12 percent.

Jatoi further said that Pakistan had cordial economic relations with Japan and the visit of the delegation would further boost trade and economic co-operation between the two countries.

The leader of the Japanese delegation expressed satisfaction over the economic situation and apprised the Pakistani side that the company had a vast experience in the power sector.

The minister assured the delegation of his full support to facilitate the company for investing in the power sector and invited it to participate in the ICB of other power projects, and assured further that the competition would be based on transparency and equal opportunities for all intending investors.


----------



## Neo

ISLAMABAD (September 21 2006): While finding a quick solution to worsening electricity shortage problem, Wapda on Wednesday signed an emergency power supply agreement with Alstom Power Rental (APR), a US-based company, for instalment of a 136 MW power plant in Sheikhupura.

The agreement provides that Alstom Power Rental will install the plant, on rental basis, and make it operational within 120 days. The plant will be operated and maintained by APR for 36 months, with the agreement renewable if the two parties intended to carry on the arrangement on long-term basis. The project will cost APR about $117 million.

The agreement will help Wapda plug power supply/demand gap without any capital investment. The tariff has been structured on the basis of Wapda's existing aggregate tariff for protection of consumers' interest. After singing the agreement APR president John Campion committed to Wapda about commissioning the plant within the stipulated time.

The installation of the power plant takes 24-36 months to go into operation. He termed the agreement as a landmark project for Pakistan and hoped that it would greatly contribute towards resolving its energy crisis. John added that APR has undertaken the fast track power projects in many countries like Sri Lanka, Haiti, and Mexico. The project is likely to impact other IPPs, which will have to compete with APR's aggressive tariff terms and timeline for the project.

John appreciated Wapda chairman Tariq Hameed and his team's co-operation to install the project on highly competitive terms. He said that the project would be a good addition to Pakistan's power generation capacity.

APR was awarded the project through a competitive bidding process. Keeping in view the on-going energy shortage, Wapda had invited proposals for the setting up of power plants on rental basis through press on July 11, 2006. APR was one of only two parties, which bid for the project. Oklahoma-based Walters Power International (WPI) and Lahore-based Associated Group (AG) are working with APR for setting up of the project.

Oklahoma former Governor David Walters, who is also WPI president, on the occasion said that the investment climate in Pakistan has undergone a dramatic change and it allows the foreign investors to come up with critical projects. WPI is involved in Pakistan for different projects for the past 10 years.


----------



## Neo

CAIRNS (September 21 2006): Federal Minister for Commerce, Humayun Aktar Khan met with Deputy Prime Minister and Minister for Trade of Australia, Mark Vaille here on Wednesday. Both the ministers considered the proposals put forth by Pakistani and Australian officials as a result of Joint Trade Commission (JTC) meeting between the two governments.

Secretary Commerce of Pakistan, Asif Shah headed the delegation. Both the ministers showed their resolve to continue this process of trade negotiations and to find ways and means to increase bilateral trade through better market access. The Australian Minister was very cordial and welcomed the suggestions made by Pakistani side.

Humayun Akhtar khan, who is attending Ministerial meeting of Cairns Group of WTO member countries, also discussed Doha Development Agenda in the context of stalled WTO talks with his Australian counterpart Mark Vaille. Both the Ministers agreed to work in a cordial manner with each other and other trading partners to restart the negotiations as soon as possible.


----------



## Owais

*Short selling allowed in November futures: KSE-100 index recomposed* 


KARACHI (September 21 2006): The Securities and Exchange Commission of Pakistan (SECP) has allowed short selling in November futures contract with the condition of adopting necessary changes in KAT (trading software).

In a letter to Karachi Stock Exchange, the regulator said that although the matter was communicated earlier, but KSE has now shown its inability to bring about requisite changes in the KAT to allow for short sale under the new system, even though KSE is already monitoring the five percent of the free-float position limit imposed on the brokers in futures market and is also monitoring short sale in excess of Rs 50 million.

The regulator's letter said that in view of the fact given above that KSE is not ready to allow short sale under the new system, SECP has no option but to continue the ban on short sale for the October Futures Contract. Short sale shall, therefore, be allowed from November Futures Contract after KSE brings about necessary changes in its system and adopts the new system.

Re-composition: The Karachi Stock Exchange (Guarantee) Limited (KSE) has carried out the re-composition exercise and the details of the changes in the KSE-100 index companies for the review period from March 2006 to August 2006, based on the re-composition rules of KSE-100 Index.

The re-composition exercise has been carried out pursuant to the decision taken by the Board of Directors of the Exchange in their meeting held on March 29, 2004, whereby the management has been authorised to carry out the exercise of re-composition by itself. In aggregate, three companies would be affected due to re-composition process. The following is the details of Incoming and Outgoing companies:

Incoming companies are including Meezan Bank Limited, Kohat Cement Company Limited and Pakistan International Container Terminal Limited all three under the reason of Market Capitalisation Based Rule while the outgoing companies are including Kohinoor Textile Mills Limited, Nishat (Chunian) Limited and Telecard Limited all under the Market Capitalisation Based Rule.

The recomposed Index, based on the prices of August 31, 2006, will capture the market capitalisation to the extent of 90.29 percent of the total market capitalisation as compared to 90.08 of the current Index. The revised Index will be implemented with effect from October 02, 2006, and the revised/recomposed list of KSE-100 Index companies is as under:

*CLOSE - END MUTUAL FUNDS *

01. PICIC Growth Fund*

02. PICIC Investment Fund

*MODARABA *

03. Fayzan Manufacturing Modaraba*

*LEASING COMPANIES *

04. Orix Leasing*

*INVESTMENT BANK/INVESTMENT COMPANIES./SEC COMPANIES *

05. Arif Habib Securities Limited

06. Jahangir Siddiqui & Co Limited

07. PICIC*

*COMMERCIAL BANKS *

08. Allied Bank Limited

09. Askari Commercial Bank Ltd

10. Bank AL Habib Limited

11. Bank Alfalah Limited

12. Bank of Punjab

13. Faysal Bank Limited

14. Meezan Bank Limited

15. Metropolitan Bank Limited

16. NIB Bank Limited

17. MCB Bank Limited

18. National Bank of Pakistan Ltd*

19. PICIC Commercial Bank Ltd

20. Prime Commercial Bank Limited

21. Saudi Pak Commercial Bank Ltd

22. Soneri Bank Limited

23. Union Bank Limited

24. United Bank Limited

*INSURANCE *

25. Adamjee Insurance Co Ltd*

26. EFU General Insurance Co Ltd

27. I. G. I. Insurance Co Ltd.

28. New Jubilee Insurance Co Ltd

29. Pakistan Reinsurance Co Ltd

*TEXTILE SPINNING *

30. Gadoon Textile Mills Ltd*

*TEXTILE WEAVING *

31. Kohinoor Weaving Mills Ltd*

*TEXTILE COMPOSITE *

32. Azgard Nine Limited

33. Nishat Mills Limited*

*WOOLLEN *

34. Bannu Woollen Mills Limited*

*SYNTHETICS & RAYON *

35. Dewan Salman Fibre Limited

36. Gatron Industries Limited

37. Ibrahim Fibres Limited*

*JUTE *

38. Thal Limited*

*SUGAR & ALLIED *

39. J.D.W. Sugar*

*CEMENT *

40. Attock Cement Pak. Limited

41. Bestway Cement Limited

42. Pakistani Cement Co Limited

43. Cherat Cement Co Limited

44. D. G. Khan Cement Co Ltd

45. Fauji Cement Company Ltd

46. Kohat Cement Company Ltd

47. Lucky Cement Limited*

48. Maple Leaf Cement Factory Ltd

49. Pioneer Cement Company Ltd

*TOBACCO *

50. Lakson Tobacco Co Ltd

51. Pakistan Tobacco Co Ltd*

*REFINERY *

52. Attock Refinery Limited

53. Bosicor Pakistan Limited

54. National Refinery Limited*

55. Pakistan Refinery Limited

*POWER GENERATION & DISTRIBUTION *

56. KESC

57. Kohinoor Energy Limited

58. Kot Addu Power Company Ltd*

59. The Hub Power Co Ltd

*OIL & GAS MARKETING COMPANIES *

60. Attock Petroleum Limited

61. P. S. O*

62. Shell Pakistan Limited

63. Sui Northern Gas Pipeline Ltd

64. Sui Southern Gas Co Limited

*OIL & GAS EXPLORATION COMPANIES *

65. Mari Gas Company Limited

66. OGDC*

67. Pakistan Oilfields Limited

68. Pakistan Petroleum Limited

*ENGINEERING *

69. International Industries Ltd*

*AUTOMOBILE ASSEMBLER *

70. Al Ghazi Tractors Limited

71. Atlas Honda Limited

72. Honda Atlas Cars Limited

73. Indus Motor Company Ltd

74. Millat Tractors Limited

75. Pak Suzuki Motor Co Ltd*

*AUTO & ALLIED *

76. General Tyre & Rubber Co*

*CABLES & ELECTRICAL GOODS *

77. Siemens Engineering Co Ltd*

TRANSPORT

78. PNSC

79. P. I. A. C. "A"*

80. P. I. C. T

*TECHNOLOGY & COMMUNICATION *

81. PTCL "A" *

*FERTILISER *

82. Dawood Hercules Chemicals Ltd

83. Engro Chemical Pakistan Ltd

84. Fauji Fertiliser Bin Qasim Ltd

85. Fauji Fertiliser Co Limited*

*PHARMACEUTICAL *

86. Abbott Laboratories Limited

87. GlaxoSmithKline Pak. Ltd*

*CHEMICAL *

88. Clariant Pakistan Limited

89. Colgate Palmolive Limited

90. ICI Pakistan Limited*

91. Pakistan PTA Limited

*PAPER & BOARD *

92. Packages Limited*

*VANASPATI & ALLIED *

93. Wazir Ali Industries Limited*

*LEATHER & TANNERIES *

94. Bata Pakistan Limited*

*FOOD & PERSONAL CARE PRODUCTS *

95. Nestle Milkpak Limited*

96. Rafhan Maize Products Limited

97. Unilever Pakistan Limited

*GLASS & CERAMICS *

98. Ghani Glass Limited*

*MISCELLANEOUS *

99. Dreamworld Limited

100. Pakistan Services Limited*


----------



## Owais

*Low tax-to-GDP ratio: documentation of agriculture, services sectors needed early: CBR* 

ISLAMABAD (September 21 2006): The low contribution of agriculture and services sectors in the tax-to-GDP ratio points towards immediate need of documentation of the untapped sectors and services. A CBR report said that the mismatch between the sector-wise share in the tax and GDP was one of the major reasons for low tax-to-GDP ratio in the country.

The share of agriculture in GDP was 20.2 percent and 1.2 percent in taxes. Manufacturing sector's share in GDP was 17.1 percent and in taxes 62 percent while the share of services sector in GDP was over 50 percent and its share in taxes was 32.8 percent.

Within services, the share of transport, storage and communication in GDP was 13.8 percent and in taxes the share was 4.5 percent; the share of construction sector in GDP was 2.2 percent and its contribution in taxes was 2.9 percent; and the share of wholesale and retail trade in GDP was 16.9 percent and 2.8 percent in taxes.

The report said that the low contribution of agriculture and services sectors highlighted the need to diversify to untapped areas. The report specified that the reasons for low tax-to-GDP ratio included the narrow tax base, as large contribution in taxes was made by administrated sectors like POL, services and utilities.

Other reasons for low tax-to-GDP ratio are: mismatch between sectoral shares in tax and GDP ratio; narrow tax base; poor compliance by taxpayers; too many exemptions; presence of large underground economy and informal sector; leakage and evasion due to administrative weaknesses and limited efficiency gains; and too much centralisation and adverse taxpayers' perception that the collected amount was not spent on basic needs, the report added.


----------



## Owais

*Good opportunities for local and foreign investors: Prime Minister* 


ISLAMABAD (September 21 2006): Prime Minister Shaukat Aziz said on Wednesday that Pakistan, being a country of 160 million people with a huge market, offers attractive investment opportunities particularly in the areas of power, energy, railways, IT & telecom and infrastructure and the government is providing a level playing field and investment friendly environment to local and foreign investors.

He was talking to Kazuhiko Sakamoto of the Marubeni Corporation, who called on him along with a delegation at the Prime Minister's House on Wednesday.

The Prime Minister said the reform agenda of the government is based on the philosophy of privatisation, deregulation and liberalisation and transparency is the hallmark of all government transactions.

He said deregulation and opening up of the IT & telecom sector resulted in big investments making it the fastest growing industry in Pakistan with 37 million cellular phone subscribers at the moment.

The Prime Minister said that as a result of the high growth achieved by the country during the last few years, the demand in power sector is increasing by 10 to 12 percent annually and the government is encouraging investment by the power sector to bridge the gap between demand and supply.

Giving overview of the economy, the Prime Minister said Pakistan's economy maintained a solid pace of expansion in 2005-2006 and achieved 6.6 percent growth despite an extraordinary surge in oil prices and the losses caused by the last year's earthquake. The magnitude of growth that Pakistan has achieved during the last four years in a row has positioned Pakistan as one of the fastest growing economies in the Asian region, he added.

The Prime Minister said the exchange rate is steady, inflation is reducing and credit rating and balance of payment situation has improved.

He said the size of the economy has doubled during the last seven years, per capita income, which is considered one of the main indicators of development, grew by an average rate of 13.9 percent per annum during the last four years rising from $582 in 2003 to $847 in 2006.

Poverty is declining and 12.8 million people were brought out of poverty net during 2002-2005.

Kazuhiko Sakamoto, Senior Executive Vice President of Marubeni Corporation appreciated the economic stability achieved by Pakistan and said they are very optimistic about Pakistan's economic future.

Kazuhiko Sakamoto said his company is planning to increase its presence in Pakistan and will invest in the areas of electricity generation and oil refineries.

The meeting was also attended among others by Minister for Water and Power Liaquat Ali Jatoi, Principal Secretary to the Prime Minister Javed Sadiq Malik and senior officials.


----------



## Owais

*'Uninterrupted' power supply during Ramazan assured* 


KARACHI (September 21 2006): The Karachi Electric Supply Corporation (KESC) is making all out efforts for uninterrupted power supply during the holy month of Ramazan. Briefing media about the power supply situation here on Tuesday, KESC Chief Executive Officer (CEO) Frank Scherschmidt said.

"He could not predict if there would be power breakdowns during Ramazan, but I assure that every effort would be made to ensure uninterrupted power supply during the holy month."

He said the electricity supply situation in the city would definitely improve within next one year as concerted efforts were being made. KESC's Principal Officer, Public Relations Syed Sultan Hasan said the power utility had started load shedding on Tuesday due to shortfall.

At Bin Qasim Power Station (BQPS), 210MW-unit no. 5 was out of order due to shortage of generation of about 100MW, hence the KESC resorted to load shedding for one hour on rotation basis from 2.05 p. m. hours, he said. Sultan said a very low frequency was being experienced by the KESC due to problem at the Wapda's end.

The chief of National Power Control Centre (NPCC), through fax message, requested the KESC to restrict the power import from 700MW to 600MW temporarily, he said, and added because of this the load was being shed at Baldia, Orangi, Lyari, North Karachi, Mauripur, Queen's Road, SITE and Elander Road grid stations.


----------



## Neo

SINGAPORE, Sept 20: Pakistan hopes to benefit from the IMF reforms, as weightage of emerging markets and developing countries increases in the key economic surveillance agency. The focus of the Pakistani delegation, in meetings, was more on narrating the tale of economic success of the country to development partners.

Dr Salman Shah, adviser to the prime minister on finance and leader of the Pakistan delegation to the meeting, was upbeat about the outcome of the meeting. "A more sensitised IMF where the developing world is better represented will be more heedful of our needs so it gels well with our interests," he said in an interview with Dawn after the conclusion of the meeting.

He said members of delegations held a whole array of bilateral meetings with the officials of donors of the last resort. "We got a chance here to meet a number of regional partners and relevant IMF/World Bank officials to discuss issues of mutual interest," he said.

He saw the pledge of member nations to strive to put stalled Doha round of trade talks back on track as a very positive development. "Pakistan is an opening expanding economy and need access to new markets for its rising export surpluses. The current surge of protectionist tendencies poses limit to our access and therefore we favour a level-playing field in trade."

He said there was a growing need to align regional trade agreements such as Asean in Far East or Safta in South Asia with the multilateral WTO. "Ultimately it is going to be the competitiveness of a country that will determine its positioning in trading relationships."

On the issue of governance, Pakistan's delegation leader says the country favours accountability, as high level of corruption saps the country's capacity. However, he said it should be a two-way process and there should be an equal treatment towards everyone and must not be misused as a tool to pressurise capital-starved economies.

"Our objective is to sustain growth in Pakistan in long haul with stable macro economic management by supporting the competitive and efficient private sector and deliver in terms of achieving the millennium development goals," he said.

When asked as to why Pakistan did not put up the position paper on the IMF agenda when some of much smaller countries made their papers available to press, Dr Shah said the delegation was too preoccupied with its engagements and did not see the need for such a paper. Many members of the delegation, especially Dr Shamshad Akhtar, Governor, State Bank of Pakistan, gave out interviews to a number of media outfits in Singapore who were here to cover the event.


----------



## Neo

Thursday, September 21, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\09\21\story_21-9-2006_pg5_11

KARACHI: Due to ongoing development projects at the Karachi Port Trust (KPT), it will soon become a regional hub and be able to cater to hassle-free movement of large vessels. 

"Mother vessels calling at nearby ports after the completion of development work would give preference to Karachi port owing to its strategic location which would reduce the freight cost on cargoes resulting gross benefit to traders," said KPT Chairman Admiral Ahmad Hayat while briefing French Ambassador to Pakistan Regis de Belenet who visited the KPT head office on Wednesday. Consul-General of France Pierre Seillan was also present on the occasion. 

According to a press statement issued by the KPT, briefing the ambassador about details of the development schemes at the KPT, the chairman said that deepening of the channels of the port would cater 16 meters draft vessels and for this purpose and the KPT would reconstruct its existing births in various phases to cater large vessels.


----------



## Neo

Thursday, September 21, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\09\21\story_21-9-2006_pg5_2

ISLAMABAD: Marubeni Corporation Japan is planning to increase their presence in Pakistan and will invest in the areas of electricity generation and oil refineries.

A delegation of the company called on Prime Minister Shaukat Aziz here on Wednesday. He said that Pakistan being a country of 160 million people with a huge market offers attractive investment opportunities, particularly in the areas of power, energy, railways, IT & telecom and infrastructure and the government is providing a level playing field and investment-friendly environment to local and foreign investors.

Kazuhiko Sakamoto of the Marubeni Corporation led the delegation. 

The prime minister said the reform agenda of the government is based on the philosophy of privatization, deregulation and liberalization and transparency is the hallmark of all government transactions.

The prime minister said deregulation and opening up of the IT & telecom sector resulted in big investments making it the fastest growing industry in Pakistan with 37 million cellular phone subscribers at the moment.

He said that as a result of the high growth achieved by the country during the last few years, the demand in power sector is increasing by 10 to 12 percent annually and the government is encouraging investment in the power sector to bridge the gap between demand and supply.

Giving an overview of the economy, the prime minister said Pakistan's economy maintained a solid pace of expansion in 2005-2006 and achieved 6.6% growth despite an extraordinary surge in oil prices and the losses caused by the last year's earthquake. The magnitude of growth that Pakistan has achieved during the last four years in a row has positioned Pakistan as one of the fastest growing economies in the Asian region.

The prime minister said the exchange rate is steady, inflation is coming down and credit rating and balance of payment situation has improved.

He said the size of the economy has doubled during the last seven years. Per capita income, which is considered one of the main indicators of development, grew by an average rate of 13.9% per annum during the last four years rising from $582 in 2003 to $847 in 2006. Poverty is declining.

Kazuhiko Sakamoto, Senior Executive Vice-President of Marubeni Corporation, praised the economic stability achieved by Pakistan and said they are very optimistic about Pakistan's economic future. He said his company is planning to increase their presence in Pakistan and will invest in the areas of electricity generation and oil refineries.

The meeting was also attended, among others, by Minister for Water and Power Liaquat Ali Jatoi, Principal Secretary to the Prime Minister Javed Sadiq Malik and senior officials.

The Japanese company has shown keen interest in four thermal power projects, including 450MW Uch-II power project at Kashmore, 400MW at Faisalabad and 350MW at Chichokimalian being processed through International Competitive Bidding (ICB) by the Private Power Infrastructure Board (PPIB). 

Another project, 450MW thermal power plant, is at Chichokimalian.

The intention to participate in tenders was expressed by a six-member Japanese business delegation, headed by Kazuhiko Sakamoto, Sr Executive Vice-President of Marubeni Corporation, at a meeting with Pakistani delegation, led by Federal Minister for Water and Power Liaquat Ali Jatoi, here on Wednesday.

The company said it has successfully implemented and executed a number of power projects the world over in a span of three decades and is interested in investing handsome capital in the power sector in Pakistan. As of today, the company has completed EPC projects with an aggregate capacity of about 69,000 MW, and is currently constructing 20 power plant projects around the world. The company is also interested in increasing its exports of electrical equipment such as generators, turbines and other machinery to Pakistan. The company had participated in the ICB for three thermal power projects and is confident to give a competitive and responsive bid, it was further informed.

While welcoming the Japanese delegation, the water and power minister informed about the simplified procedure made by the government under the directions of the president and the prime minister for facilitating foreign investment in Pakistan, particularly in power sector. The delegation was further informed that a flexible regime for foreign investment exists in the country and no procedural problem would impede them from investing in power sector which would provide a win-win situation to the investors. 

The minister apprised the delegation that the power sector in Pakistan had a great potential and viable future for making profitable investment as the growing demand for power has been registered at 10-12 percent. The minister said that Pakistan has very old and cordial economic relations with Japan and the visit of the delegation to Pakistan would further boost the trade and economic cooperation between the two countries.

The leader of the Japanese delegation expressed satisfaction with the economic situation of Pakistan and apprised the Pakistani side that the Japanese company had a vast experience in the power sector.

The minister assured the delegation of his full support to facilitate the company in investing in the power sector and invited the company to participate in the ICB of other power projects.


----------



## Owais

*Pakistan's strategic oil reserves insufficient: World Bank* 



ISLAMABAD (September 22 2006): The World Bank has termed Pakistan's strategic oil storage capacity insufficient to ensure its energy security and proposed to build it up to an optimal level to cater to defence and other needs.

The bank also suggested Pakistan to make a distinction between oil marketing companies (OMCs), commercial inventories and strategic stocks to make a difference between its various needs and ensure supply during any unforeseen event.

Sources said the issue was raised by a World Bank mission during its meetings with policy-makers in Islamabad. The mission headed by Mrs M. Heitner had visited Islamabad from September 4 to 15.

The mission proposed in order to develop a framework for strategic oil stocks, detailed analysis followed by feasibility studies should be carried out. The mission has drafted Terms of Reference (ToR) to define a framework responsive to Pakistan's environment and priorities.

The mission noted strategic stocks of crude oil and petroleum products provide a cushion against unforeseen events and are vital for energy security of any country.

It added the level of strategic stocks (different from commercial inventories of oil marketing companies (OMCs)) is a function of proximity to supply sources, pattern of consumption of different products, availability of transport infrastructure and defence needs. In Europe and North America, average strategic stocks are equal to about 90 days of consumption, while it is 60 days in the UK.

The mission maintained in Pakistan there was no distinction between commercial inventories and strategic stocks and its total cover varies between 21-28 days of consumption for different products. Under the current international oil market volatility, and other security concerns, strategic stocks have assumed an even greater importance.

The mission was of the view Pakistan needs to address the issue of strategic oil stocks from several viewpoints: (a) commercial considerations (product-wise demand in different market segments, proximity of supply sources to the market, cost of foregone demand); (b) financial implications (capital and operating cost, cost of dead inventory, financial levy on the consumer, etc); (c) technical issues (recycling/refreshing of stocks, volumetric losses, etc); (d) institutional set-up, ie, ownership of the 'strategic stocks entity' and sharing of risks and rewards; and (e) legal and regulatory issues.

It arguments were that different countries adopt different strategies for oil reserves handling. Usually, the mission said industry involvement is highly desirable given the necessity to recycle stocks from time to time. Hence, they have to be up to industry standards.


----------



## Owais

*$30.97 million cargo contracts for DAP imports cancelled* 


KARACHI (September 22 2006): Importers of DAP fertiliser are in a fix as their three import cargo contracts worth around $30.97 million have been cancelled due to uncertainty regarding subsidy announcement on DAP imports by the government, sources said.

Sources said approximately three months back, the federal government had announced to give subsidy on DAP import after getting approval from the economic co-ordination committee (ECC) of the cabinet; however, the decision has not been implemented yet.

"The ECC had decided to give subsidy of Rs 285 per 50 kilogram bag on imported DAP fertiliser. However, the said decision has not been implemented yet," industry sources said.

"Importers had made contracts of around 105,000MT of DAP fertiliser at an average cost of $295 per MT and they were in the process of opening up LCs. However, banks refused to open up LCs as the subsidy issue was not resolved till that time," sources said. They said banks were of the view the government has not yet allowed to give subsidy on DAP imports and they could not provide guarantees to any importer till the matter gets resolved.

Highlighting contract details, sources said cancelled contracts were made in the United States for shipment in September and the booked fertiliser was due to arrive here in October. "The fertiliser was booked for Rabi crop season as farmers usually start sowing wheat during this season (from October onwards)," they remarked.

Industry sources maintained if the government allows subsidy on DAP imports now, local importers would see viability of the trade and if find DAP prices higher in the international market, they would not go for more imports. "The government's decision of not clarifying subsidy issue could put an adverse effect on wheat sowing this year," they estimated.

They said 0.5 million MT stocks of phosphatic fertiliser is in the importers' and manufacturers' hand, however, the country would need 0.7 million MT of fertiliser during Rabi season for wheat sowing, and currently it depicts a shortage of 0.2 million MT.

Trade sources have pointed out imports of DAP fertiliser have almost come to a halt as the end-consumer are reluctant to procure fertiliser in anticipation of steep decline in DAP prices in the days to come. "Farmers and our distributors have refused to procure and sell DAP fertiliser as they are anticipation implementation of the decision regarding subsidy, which would bring down its prices in the domestic market," sources elaborated.

Underlining the situation of current DAP imports, they said, "the import process has badly hit due to confusion over subsidy and this could be gauged from the fact that only 65,000 MT of DAP fertiliser is on the way for Rabi crop compared to 0.3 million MT, which was imported during the corresponding period last year.

In this connection it is pertinent to mention here that country's annual consumption of DAP fertiliser currently stands at 1.2 million MT, of which 0.3 million MT is produced locally by Fauji Fertiliser Bin Qasim while the remaining gap is to be met through imports mainly from the United States, Russia, China, Australia and Tunisia.


----------



## Owais

*Non-food inflation declines to 7.4 percent* 


KARACHI (September 22 2006): Non-food inflation has declined to 7.4 percent in August 2006 from 8.8 percent in the corresponding period last year, according to the State Bank's monthly publication 'Inflation Monitor', released on its website here on Thursday.

However, the headline inflation increased in the second month of the current fiscal year primarily due to an upsurge in food inflation coming from supply disturbances on the back of recent rains and floods that not only affected production, but also transportation of commodities from farm and mills to the markets.

Consumer price inflation has been recorded at 8.9 percent YoY in August 2006 compared with 8.4 percent in the same month last year. Food inflation has been registered at 11.1 percent - the highest of the last 13 months.

After being recorded at less than 7 percent on average during FY06, food inflation increased significantly to 11 percent YoY in August 2006, driven mainly by increase in prices of wheat flour, bread, cooking oil and ghee, chicken, eggs and vegetables, including onion, tomatoes, and green chillies along with persistent pressure on prices of some pulses.

Contrary to food inflation, non-food inflation declined from 8.8 percent in August 2005 to 7.4 percent in the month under review primarily due to decline in inflation of transport and communication sub-index and continued deceleration in house rent index, says the Inflation Monitor.

Core inflation measured as non-food and non-energy declined from 6.3 percent in July to 6.2 percent in August 2006, while trimmed mean core inflation showed an increase from 6 percent at the end of FY06 to 6.5 percent in August 2006. The rise in trimmed mean core inflation is due to some key food and energy items, having very high weight and high inflation, like fresh milk, beef, mutton, potatoes and petrol supper. Thus, the recent inflation has primary been coming from supply factors, while the demand factors still remained under control with the deceleration in money and credit growth during the initial months of FY07 and rise in interest rates.

Wages of construction workers showed a deceleration due to temporary slowdown in the construction work because of rains during the month under review. Wage inflation has been recorded at 15.9 percent in August 2006 compared with 17 percent in the preceding month. However, it was higher than that recorded in the corresponding month last year.

On the dis-aggregated level, wages of skilled workers increased by 15.7 percent, and those of labourers by 16.9 percent, which were lower as compared with July. As the nominal wages decelerated and CPI inflation increased, real wage inflation went down significantly and recorded at 6.9 percent in August 2006 compared with a higher rate of 9.4 percent during a month earlier, according to the Inflation Monitor.-PR


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## Owais

*US companies evince great interest in energy sector* 


NEW YORK (September 22 2006): President Pervez Musharraf has said discussions with US companies on investment in energy sector in Pakistan are in various stages and concrete proposals are likely to be formulated in the near future.

Addressing a crowded press conference at the United Nations headquarters on Wednesday, President Musharraf said he would be going back to Pakistan with optimism as major companies in different sectors had shown interest in investment in Pakistan.

"They have shown great interest in energy sector and I am optimistic of better response," he added. The President said economic growth of Pakistan had attracted them and some of the potential investors were in different stages of discussion with "us" on investment proposals. He said that as far as investments from the United States were concerned, they were flowing to Pakistan regularly.

To a question, the President said that he wanted to develop consensus on the Women Empowerment Bill before pushing it through parliament. There should be no misunderstanding that the government had yielded to pressure rather it had adopted a reconciliatory attitude, he added.

He said that many previous governments could not dare take up the bill, and added: "Even the woman prime minister could not touch it." President Musharraf said taking up such issues where two groups, liberals and obscurantist, were dagger drawn with each other and one wanted us to repeal the Hudood Ordinance altogether or it would come on the streets and protest.

Those who favoured the existing Ordinance had said if the bill was adopted, they would stage protest, he said. "It is me who could take the initiative and come up with the proposal to bring about improvement through the Women Empowerment Bill. And please do not forget, I could do so only because I am in uniform."

He said he wanted consensus to develop on this bill. "I do not want political disruption on any issue. We do not want political turmoil."

*PALESTINE ISSUE *The President said that Palestine issue is the core of problems. Once this issue is settled, much of the peace process would succeed and normalcy would return. "It will have positive effect elsewhere as well," he said.

He said that double standards were dividing the world into factions. "There is a perception that the United States of America is siding and favouring Israel. Unless the Palestinian issue is resolved, there would be no peace in the Middle East," he said.

Muslims World would continue to protest and doubt the American approach toward the Middle East issue, he said, adding they thought the American approach was in favour of Israel.

To another question, the President said that Afghan President Karzai should find out Mullah Omer in Afghanistan as he had never been to Pakistan since 1995.

President Musharraf said that blame game should now come to an end and there should be realisation of ground realities.

He said that the agreement "we have entered into with the elders of North Waziristan should not be misinterpreted. The agreement is not with the Taliban," he said with emphasis.

The President explained in detail the Afghan situation, Taliban factor and terrorism, and said that the situation was complex and needed multifaceted solutions.

"We are doing it through an agreement of peace with the elders of the tribal belt bordering Afghanistan. If this succeeds, it may be replicated on the other side of the border," he said. To yet another question, the President said relations with India were improving and there was room for more good work.

He said that there was a desire to find out a viable solution to Kashmir issue, acceptable to Kashmiris, India and Pakistan. "India does not want redefining of the border and Pakistan is sticking to its stand that the Line of Control (LoC) is not final."

The President said the realisation of irritants was a positive sign and it brought hope. "With right amount of will, a solution is possible," he added.

President General Pervez Musharraf has said there is consensus that the United Nations Security Council's composition should be enlarged and made more representative of "current realities".

He was speaking at a dinner meeting co-hosted by the President of Pakistan and the Prime Minister of Italy for an exchange of views to promote agreement on Security Council Reform-Ideas for a way forward at Roosevelt Hotel on Wednesday.

President Musharraf said: "Perhaps an equitable formula for rotation could offer the answer-perhaps regional representation combined with rotation could offer the answer."

He said current realities are complex. "Certainly it involves greater representation for some major states." In this context, the African proposal for regional seats for Africa, selected by Africa, is an interesting approach. This may be worthy of emulation with suitable adjustment for other regions also, he added.

He said but there are some other actors, including the middle-sized states whose aspiration also needs to be accommodated and hasten to add the smaller states constitute the vast majority of UN membership and they, too, have an important contribution to make to the working of the Security Council.

He said: "We will have to accommodate as far as possible the interest of all."

Therefore, there is a need to explore ways and means to promote frequent representation for larger, middle-sized and smaller states.

President Musharraf said the reform of the Security Council's working methods-making it more transparent, accountable and effective-is equally important. He said for smaller states, in particular, this aspect of reform of the council may well be more important than its composition.

He said several interesting proposals are on the table. "We need to find agreement on these in the context of a comprehensive reform of the Security Council." He said Italy, Pakistan, and other like-minded countries are convinced that the reforms of the Security Council, to be effective, will have to be achieved by the widest possible agreement. "This will, among other things, ensure early ratification of a charter amendment."

He said over the last decade, we have discussed and debated Security Council reforms. "We have not explored compromises through sustained negotiations. Once, there is a genuine desire to compromise, to build widest possible agreement, I believe, all countries could explore more freely the possible options for an agreed solution."

He said Prime Minister Prodi and he, together with other like-minded countries, extended the invitation to this event (dinner meeting at Roosevelt) to all UN member states to underline our commitment to explore, with political flexibility and diplomatic creativity, and through a negotiation process, possible options for a solution to Security Council reform that can command the widest possible agreement.

He said, "We believe that, today, when the Council's role is central to the maintenance of international peace and security, it is incumbent upon member states to make a serious and sincere endeavour to achieve an early general agreement on this vital issue." In his remarks, Secretary General Kofi Anan said the world has changed dramatically since 1945 and the Security Council must change too.

He said without an expansion of its power base, it's hard to see how we are going to go on meeting the demands that member states make on us, particularly in the area of peacekeeping.

He said rising troops for peacekeeping is far from being the only problem. "The Council also needs greater political participation of all regions if it is to be accepted as fully legitimate by all-as it must be, in order to address major challenges to the Middle East peace process, and in Iran, Iraq, Sudan, Afghanistan, and many corners of my own continent." He said while everyone agrees on the need for expansion of the Security Council, there is still no agreement on how to do it.

Later, addressing a joint press conference after the dinner Musharraf and Italian Prime Minister Romano Prodi said it is the beginning of process and ideas are being gathered. More such meetings would follow to develop consensus on reforms procedure.

President General Pervez Musharraf received US Vice-President Dick Cheney, Defence Secretary Donald Rumsfeld, Commerce Secretary Carlos Gutierrez and Energy Secretary Samuel Bodman at Blair House Thursday morning and discussed matters of mutual interests.

It is learnt, the President discussed civilian nuclear needs of Pakistan and the extent of co-operation in related technical matter, defence affairs and energy requirements with Cheney, Rumsfeld and Bodman. He also discussed matters related to trade and commerce and business co-operation between the businessmen of the two countries with Gutierrez.

Sources said the meeting with the Vice-President and three secretaries of states was fruitful and they have assured Pakistan of their fullest co-operation in achieving its goal in related sectors.

*APP adds: *United States Secretary of State Condoleezza Rice called on President General Pervez Musharraf here on Wednesday. They discussed US-Pakistan relations and exchanged views on regional and international issues of common interest during the meeting. Foreign Minister Khurshid M Kasuri was also present.

President Pervez Musharraf paid high tributes to United Nation Secretary General Kofi Annan, who leaves his post at the end of this year after completing two five-year terms. In his opening remarks at a press conference, the President said that Annan was a "pillar of hope in the turbulent decade of the 90s" who worked hard to move the UN forward and to bring peace and harmony in the world. "We wish him well in future," he said.


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## Owais

*Government considering allowing used power plants* 


ISLAMABAD (September 22 2006): The federal government is considering allowing the use of refurbished thermal power plants to meet future power requirements provided that the National Electric Power Regulatory Authority (Nepra) clears the proposal, official sources told _Business Recorder _here on Thursday.

Two private sector firms, the Glimmer (Pvt) Limited and the Associated Group, have come forward to set up thermal power plants of 150 MW and 400 MW, respectively, using refurbished and used equipment. "The Glimmer's plant which has already been used for 10,000 hours can be commissioned by October 2008 provided that all formalities are completed by December 2006," the sources added.

The water and power ministry is of the view that proposal is attractive, but the Power Policy - 2002 does not allow the use of refurbished and used equipment, adding that the proposal has been forwarded to Nepra to fix initial cost of used plant.

Another company, the Associated Group has also proposed setting up a 400 MW thermal power plant based on imported natural gas with refurbished equipment near Karachi, after a go-ahead signal of the regulator, the sources maintained. Sources also said that most of the proposed fast track projects have been withdrawn by the leading business houses due to non-availability of gas or controversial tariff given by Nepra.

Only Taiyo Hills has submitted a detailed proposal for a 120 MW project at Eminabad near Gujrwanwala and the sponsors have finalised the site of project in consultation with the Water and Power Development Authority (Wapda), the sources added.

The firm has not only confirmed on-site delivery of Caterpillar engines by January 2008, but also commissioning by June 2008, besides, providing financial strengths to implement the proposed project and accepting Nepra's upfront tariff.

Sources said recently the PPIB has received ten new expression of interests (EoIs) with a cumulative capacity of 2,000 MW and the sponsors have been asked to approach power purchase (National Transmission and Dispatch Company (NTDC) for the endorsement of size, technology, and exact location of their proposed projects.

The sponsors have also been asked to examine the draft project agreements uploaded by the PPIB on its website and the upfront tariff before submission of the detailed proposals to the government.

*The proposed projects are: *Taiyo Hills, 120 MW (Eminabad), Gulf Power, 129 MW (Gakkhar Mandi), Wisdom & Cecex, 117 MW (Lahore), Kohinoor Maple Leaf, 200 MW (Lahore/Gujranwala), Gharibwal Cement, 150 MW (Chakwal), Jabbar Utilities Limited, 400 MW (not indentified), Bestway Group, 200 MW (Rawat near Rawalpindi), and Universal Power, 150 MW (Lahore).


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## Owais

*Foreigners invited to invest in Hyderabad* 


HYDERABAD (September 22 2006): The Zila Nazim Hyderabad Kanwar Naveed Jamil has invited foreign investors for their investment in Hyderabad and said that Hyderabad has good potential for the investment in industrial as well as agriculture sector.

He said this while holding a meeting with the Ambassador of France to Pakistan Regis De-Belenet and Consul General of France at Karachi Pierre Seillan at Circuit House Hyderabad this morning.

The Zila Naib Nazim Hyderabad. Zaffar Rajput, MPA Aslam Perwaiz, DCO Hyderabad Muhammad Hussain Syed and Vice Chairman Hyderabad SITE Association of Trade and Industries Mohammad Shoaib were present in the meeting.

Zila Nazim Hyderabad Kanwar Naveed said Hyderabad was the second largest city of the province and was rapidly expending due to its industrial potential and population influx. He said that considering standard infrastructure as essential for investment and living standard of people, the district government Hyderabad has prepared a Master Plan on the basis of needs up to 2025. He said that this master plan of development was being implemented and different mega-projects especially pertaining to drainage and communication field have been tendered. He said that after the completion of all projects of master plan, the situation of Hyderabad city would be much better in all respects.

He said that under the Master Plan drainage and communication was being given priority, besides district government Hyderabad has also planned to establish a five star hotel in the city and added that it was good opportunity for the investment by French investors. The Zila Nazim also invited the foreign diplomat for establishing French Art Centre and French language learning centre at Hyderabad. While briefing the diplomats about recent torrential rain fall in Hyderabad, the Zila Nazim informed them that his district falls in low rain zone with receiving 2" rain fall usual but unfortunately this year we received up to 18" rain fall against all expectation and previous record. He said that though this situation was beyond the capacity of concerned department but we successfully faced it with courage as such up to 99 percent rain water has been drained out and now the situation was totally under control.

Zila Nazim said that though preservation of historical places and monuments was the job of Federal Government but due to our interest, the district government Hyderabad have evolved joint mechanism and also has earmarked Rs 30 million for the preservation of historical places and monuments of Hyderabad.

The ambassador of France to Pakistan talking on the occasion said many companies of his country were already investing in Pakistan in different sectors. He said that they were also interested in the hotel industry but due to high land rates in big cities of Pakistan they were facing problems. He said that his country was also providing higher education facilities to Pakistani students as such there was considerable number of students studying for their higher education in France.


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## Owais

*Trade talks: Lamy seeks Pakistan's help in breaking deadlock* 

ISLAMABAD (September 22 2006): The Director General World Trade Organisation (WTO), Pascal Lamy, has sought the help of Commerce Minister Humayun Akhtar Khan to break the deadlock in talks among the member states.

Lamy placed this request to Humayun Akhtar at a meeting in Australia, where he is attending the meeting of Cairns Group, comprising 17 countries and have sound voice in trade negotiations. The Cairns Group of agricultural exporting nations, which account for over 25 percent of the world's agricultural exports, celebrates 20 years of concentrated efforts to liberalise trade in agriculture.

The meeting brought together trade ministers, officials and farm industry bodies from all the Cairns Group countries Argentina, Australia, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Guatemala, Indonesia, Malaysia, New Zeeland, Pakistan, Paraguay, the Philippines, South Africa, Thailand and Uruguay.

As the first significant gathering of ministers since the suspension of the WTO Doha round of negotiations, the Cairns Group Ministerial Meeting provided a useful opportunity to discuss how to receive global trade talks.

During the current Doha negotiations the Cairns Group has continued to push for the liberalisation of trade in agricultural exports, a cause that unites the group across language, cultural and geographic boundaries, made up of developed and developing countries across five continents. The group is committed to achieving free and fair trade in agriculture that provides real and sustainable benefits for the developing world.


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## Neo

ISLAMABAD, Sept 21: Pakistan and the United States have agreed to move forward for early finalisation of reconstruction opportunity zones (ROZs) and Bilateral Investment Treaty (BIT).

Ã¢â¬ÅBoth Pakistan's Commerce Minister Humayun Akhtar Khan and US Trade Representative Susan Shawab have showed their resolve to move forward on the ROZs and BIT in a positive manner,Ã¢â¬Â said an official announcement issued here on Thursday by the commerce ministry.

The commerce minister met the US trade representative at the sidelines of the Cairns group meeting held in Australia. Trade ministers and representatives of 17 other than Cairns Group countries are attending the meeting to kick-start the stalled negotiation on Doha Development Agenda (DDA).

The meeting provided a useful opportunity to discuss how to receive global trade talks. During the current Doha negotiations, the Cairns Group has continued to push for the liberalisation of trade in agricultural exports.

The commerce minister also held bilateral meetings with WTO director general Pascal Lamy and New Zeland Trade Minister Phil Goff.

The WTO DG asked Mr Khan to play his role as a lead mediator to break the dead lock in talks.

The Cairns Group include countries Argentina, Australia, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Guatemala, Indonesia Malaysia, New Zeeland, Pakistan, Paraguay, the Philippines, South Africa, Thailand and Uruguay.


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## Neo

ISLAMABAD, Sept 21: Pakistan ranks 95th among 127 countries in terms of economic freedom, mainly due to an ineffective implementation of legal system, security of Property Rights and access to sound money.

Pakistan even stands behind many under-developed and developing countries such as Madagascar, Senegal, Uganda and some African countries, says Economic Freedom of the World--2006 annul report.

The report, a copy of which was made available to Dawn, indicated that among the South Asian countries India had the highest ranking of 53 followed by Sri Lanka and Bangladesh standing at 83 and 95, respectively. The Nepal has the worst ranking of 118 in the region.

Pakistan, according to the report, has the worst ranking in legal structure and security of Property Rights (119); as against IndiaÃ¢â¬â¢s rank of 44, suggesting clearly the need for independent judiciary, availability of a trusted legal framework for private businesses to challenge the legality of government actions, protection of Intellectual Property Rights and non-military interference in the rule of law and political process.

Similarly, Pakistan has the most horrible rank of 117 in access to sound money, thus proposing that to earn a high rating in this area, it must follow policies and adopt institutions that lead to low and stable rates of inflation and avoid regulations that limit the use of alternative currencies, should the citizens want to use them.

Despite opening up the international trade unilaterally, Pakistan still has a long way to go as indicated by its rank of 106 under the freedom to trade internationally. This showed that PakistanÃ¢â¬â¢s trade faced a wide variety of restraints like high tariffs, quotas, hidden administrative restraints, exchange rates and capital controls.

The report suggested that for achieving a higher rating in this area, a country must have low tariffs, a trade sector larger than expected, efficient administration of customs, a freely convertible currency and few controls on the movement of capital.

Pakistan has a better rank in credit market regulation (61), labour market regulations (10), among the South Asian countries. However, the report recommended for an effective private banking system to allocate credit to private parties and to refrain from controlling interest rates to receive higher rating for this component of the regulatory area.

Moreover, Pakistan should allow market forces to determine wages and establish the conditions for dismissal of workers, avoid excessive unemployment benefits Ã¢â¬â that undermine work incentives Ã¢â¬â and refrain from the use of conscription.

However, in terms of business regulations, Pakistan ranks 88. This showed high restraints and bureaucratic procedures that retard entry into business, which lead to high cost of doing business.

The report recommends that countries like Pakistan must allow markets to determine prices and refrain from regulatory activities that retard entry into business and increase the cost of manufacturing products. They also must refrain from playing favourites, that is, from using their power to extract financial payments and reward some businesses at the expense of others.

According to the report, Hong Kong and Singapore occupy the top two positions. The other nations in the top 10 countries are: New Zealand, Switzerland, United States, Ireland, United Kingdom, Canada, and Luxembourg.


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## Neo

Friday, September 22, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\09\22\story_22-9-2006_pg5_1

ISLAMABAD: Pakistan and Iran have agreed to a proposal relating to passenger and commercial cargo carriage by private shipping lines between Iranian port of Chabahar and Pakistani port Gwadar, a senior government official told the Daily Times on Thursday.

Both countries have agreed to constitute a study group of experts to investigate the economic feasibility of establishing a joint venture between Iranian and Pakistani private sectors, in coordination with the respective government authorities. In this regard both countries have also agreed to nominate their representatives on the proposed study group through diplomatic channels within three months, the official added. 

This consensus was reached at the first meeting of Joint Committee on Port-Maritime Cooperation between Pakistan and Iran held at Tehran. The meeting was arranged in pursuance of a MoU signed at the 14th session of the Pakistan Iran Joint Economic Commission in year 2005.

Keeping in view the interest of both sides to broaden cooperation regarding passenger and commercial cargo carriage between Pakistani and Iranian ports these proposals were discussed at the meeting. 

Both sides also agreed to promote cooperation between the ports of Chabhar and Gwadar and possibly ports of Shahid Jajaee and Karachi as well. In this regard both the delegations agreed to facilitate exchange of information and delegations from the respective ports. 

The Iranian side expressed their desire to visit Gwadar Port in near future. The Pakistan side agreed to refer this matter to the authorities of Gwadar Port in order to officially invite the Iranian ports and shipping authorities. 

The Iranian side emphasized early finalization of draft MoU on search and rescue operation to promote bilateral cooperation in this field. The Iranian side was informed that the draft MoU was under consideration in coordination with the relevant authorities. However, the Pakistani side agreed to convey its comments on the MoU in due course through diplomatic channels. 

In view of maritime location of Pakistan close to the Indian Ocean and the experience of Iran in the Indian Ocean, in the MoU on Port State Control, it was proposed to the Pakistan side to consider joining the said MoU. The Pakistan side agreed to examine the proposal.

While emphasizing the significance of cooperation among neighbouring countries in prevention of maritime pollution, cleaning up of seas and providing requisite facilities such as technical training as well as the necessity of proper implementation of MARPOL and OPRC Conventions, of which both countries are members, the Iranian side proposed signing of MoU on Prevention of Maritime Pollution between the two countries. The Pakistan side welcomed the proposal and announced its readiness to examine the draft of the MoU and convey their comments at the next meeting. With a view to improving maritime environment the two sides agreed to expedite the process of ratification of the CLC Convention. 

It was further agreed that both sides would exchange sample certification of their classification institutes to facilitate recognition of documents of non-conventional vessels. Both sides also agreed to facilitate and promote cooperation among their shipping companies and it was further agreed to exchange lists of interested private shipping companies to organize their meetings to facilitate business activity. 

The Iranian side informed that there is a 50% discount on port dues at Imam Khomeini Port for any vessel carrying transit cargo to Iraq. They invited the Pakistani side to avail of the facility.


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## Neo

Friday, September 22, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\09\22\story_22-9-2006_pg5_2

_By Tanveer Ahmed _

KARACHI: The government has sought proposals from the ministry of food, agriculture & livestock (MINFAL) to increase exports of seafood to $700 million by year 2010 and $1,500 million by year 2005. 

Ã¢â¬ÅMINFAl has asked the stakeholders in the fisheries sector to submit their proposals to meet the target,Ã¢â¬Â sources told the Daily Times on Thursday.

Pakistan having a vast potential in the fisheries sector has remained unable to tap this potential despite the claims of the government to have registered a quantum jump in fish and fish productsÃ¢â¬â¢ export, which totalled below $200 million so far.

Pakistan exported $196.15 million worth of seafood products in 2005-05 financial year compared with $138.94 million worth of exports in the previous year, registering a substantial growth of 41 percent.

The sources said that various surveys conducted in the past suggest that Pakistan could take up its fish and fish productsÃ¢â¬â¢ export over one billion dollar annually with the development of aquaculture in the coastal belt of the country.

However, despite the known potential of the fisheries sector of the country, no serious efforts have been made to utilize its untapped potential, the sources said, adding that now there has been increasing realization among policy-makers to utilize this potential to contribute to the overall export volume of the country.

Ã¢â¬ÅThe plan is also part of this yearÃ¢â¬â¢s trade policy to develop the non-traditional sectors to enhance the export, especially in view of the fierce competition the countryÃ¢â¬â¢s textile exports are facing in the international marketÃ¢â¬Â, the sources said.

The sources in the seafood industry said that the industry is now engaged in preparing proposals to submit them to the ministry to enhance fish and fish productsÃ¢â¬â¢ exports. 

Highlighting some of the proposals on which work is underway, the sources said that improvement in catching system of regularization of all steps on scientific modern methods and implementation of the rules already in existence with some modifications.

Improvement in auction system, market timings, removal of illegal auctions, strong security system in markets along with the increase supply of raw material and improvement and addition of plants proportionately.

Also, the government should give free lands or at nominal rates to exporters, requiring them to invest in aquaculture and preference should be given on shrimp farming with the provision of necessary infrastructure for the development of aquaculture.

Besides, strong legislation and enforcement of laws at creeks and at harbours for checking illegal fishing while there should be a strong central authority with full power to run the seafood industry.

Concessions such as reduced refinance rate, prompt resolution of pending sales tax, abolition of all kind of sales tax, duty free import of machinery, duty free imports of packing material used for the seafood export. 

The industry sources said that these and host of other proposals, which are being worked out, if accepted and implemented in letter and in spirit, would bring about a sea change in seafood exports.

Ã¢â¬ÅDespite the fact that the industry performed exceptionally well during the last fiscal year on the back of strong growth in tuna fish catching, it is still struggling to fully recover from the turbulent times it faced in the recent pastÃ¢â¬Â, the sources added.


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## Neo

BY BABU DAS AUGUSTINE 

22 September 2006 



DUBAI Ã¢â¬â The Central Depository Company (CDC) Pakistan which hosted a roadshow in Dubai on Wednesday to promote investment in the Pakistani capital markets is expecting a big growth in investment flows during the next 12 months. 
The roadshow sponsored by Khaleej Times and attended by more than 200 finance professionals including representatives of fund management companies, stock brokers, leading GCC-based private equity houses, stock exchanges and government officials was addressed by CDC officials, Pakistan-based fund managers and economists.
Speaking at the roadshow, Mohammad Basheer Janmohammed, chairman of Central Depository Company (CDC) said, Ã¢â¬ÅCDCs MoUs with Abu Dhabi Stock Market and Dubai Financial Market will open the floodgates of investment into Pakistan. We expect to see a significant number of cross listings. In addition, we expect a number of Pakistani companies to raise capital from the UAE in the near future.Ã¢â¬Â
Describing the MoUs as the first steps towards achieving greater investment flows into Pakistan economy from the UAE, he said, Ã¢â¬ÅThere is urgent need for free and uninterrupted fund flow between the two countries. While Pakistan's economy is booming, its stock market, one of the best performing markets in Asia has a relatively low P/E of 9. A number of fund managers and brokerages have shown interest in opening their representative offices in the UAE to facilitate UAE-based investors to invest on Pakistan's stock market.Ã¢â¬Â
Welcoming foreign portfolio investments into Pakistan's markets he said, Ã¢â¬ÅWe are examining the possibility of allowing foreign banks and institutional investors that have no physical presence in the country to participate in the stock market.Ã¢â¬Â As for the raising of capital from the international markets, CDC chairman said, Ã¢â¬ÅUntil now Pakistani companies wanting to raise money through ADRs and GDRs went to American and European markets. Now, closer home, we have Dubai International Financial Centre.Ã¢â¬Â Presenting the growing investment opportunities in the country Dr S Qaiser Anis, President of Pakistan Business Council, UAE said, Ã¢â¬ÅThere is huge consumption surge that is happening in the economy which is driving an allround boom. The Pakistani middle class are showing big appetite for spending which was previously unheard of. Along with the growth we are also facing the threat of inflation. But the sound government policies are expected to keep the economy on track.Ã¢â¬Â
Speaking about the economic fundamentals Janmohammed said: Ã¢â¬ÅThe reform agenda of the government is based on the philosophy of privatisation, deregulation. liberalisation and transparency. The huge market size offers attractive investment opportunities particularly in the areas of power, energy, railways, IT and telecom and infrastructure and the government is providing a level playing field and investment friendly environment to local and foreign investors.Ã¢â¬Â
Pakistan's economy maintained a solid pace of expansion in 2005-2006 and achieved 6.6 per cent growth despite an extraordinary surge in oil prices and the losses caused by the last years earthquake. Currently the key economic indicators such as the exchange rate and inflation are steady as sovereign credit rating and balance of payment situation has improved.
The size of Pakistan economy has doubled during the last seven years. Per capita income, which is considered one of the main indicators of development, grew by an average rate of 13.9 per cent per annum during the last four years rising from $582 in 2003 to $847 in 2006. Poverty is declining as 12.8 million people were brought out of the poverty net during 2002-2005. 

http://www.khaleejtimes.com/Display...usiness_September740.xml&section=business&col=


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## Neo

Updated at 2115 PST WASHINGTON: The hundred percent members of American Business Council (ABC) declared the atmosphere of business and investment positive in Pakistan, this was reported on Friday.

According to a survey report issued by ABC, the 96 percent council members agreed that PakistanÃ¢â¬â¢s economy is moving quite well; while, 47 percent members voiced their reservations over the internal and external political situation of Pakistan.

The report says that many members also expressed their reservations over law and order in Pakistan.

According to survey report, only six percent companies gave Sindh government a good rating; while, 20 percent preferred good rating for Punjab.

The report notes that ABC members deposit every year more than Rs35 billion in PakistanÃ¢â¬â¢s national exchequer in form of direct and indirect taxes.

The report further says that ABC members lowered the rating of ministries of industry and health, Export Promotion Bureau and Intellectual Property Organisation.

For the first time ever, the performance of city governments has been reviewed and 15 percent members gave good grades to Karachi City Government whereas the 29 percent appreciated Lahore City Government.


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## Owais

*Musharraf's visit linked to promoting investment* 


ISLAMABAD (September 23 2006): Prime Minister Shaukat Aziz said on Friday that President Musharraf's visit to Cuba and the US would help project Pakistan's true image abroad, highlight the critical role being played by it in the global and regional peace and security and further promote foreign investment in the country.

He made these observations while talking to Pakistan Muslim League Secretary General, Senator Mushahid Hussain Syed, who called on him at the PM's House.

The prime minister said that the US was a major trading partner and investor in Pakistan and the president's interaction with the leading businessmen and investors would help create awareness among them and generate interest in investing in Pakistan in several sectors, including power generation, financial services and infrastructure.

He said that the president's address at the United Nations General Assembly highlighted Pakistan's desire for peace, its efforts towards dispute resolution and promoting interfaith harmony and understanding in the world.

It also underscored Pakistan's firm belief that the UN system has contributed to peace and that it could be made even more effective through well thought out and comprehensive reforms.

The prime minister said that president's interaction with overseas Pakistanis belonging to all walks of life would also contribute to their better understanding of the government's policies enabling them to be in a better position to advocate the case of Pakistan at various levels. It would also encourage them to increase their remittances and investments in Pakistan, he said.


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## Owais

*'US industrialists ready for investment'* 


LAHORE (September 23 2006): The industrialists, businessmen and traders of the United States have shown keen interest to invest in Pakistan following President General Pervez Musharraf's address to them during his current visit there.

Former chairman Pak-US Business Council and President Federation of Pakistan Chambers of Commerce and Industry, Iftikhar Ali Malik stated this here on Friday. He said that there were ample prospects for US and other foreign multinational companies to invest in various sectors in Pakistan.

While unfolding distinct features of his economic policies, President Musharraf in his speech offered an unprecedented package of incentives to foreign investors, Malik said that the president also assured sovereign guarantee to their investments with better and secured business atmosphere. He said Pakistan was a country rich in history, culture and natural resources, adding he was confident that the partnership between the United States and Pakistan would further improve in the years to come.


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## Owais

*Non-food inflation declines to 7.4 percent* 


KARACHI (September 22 2006): Non-food inflation has declined to 7.4 percent in August 2006 from 8.8 percent in the corresponding period last year, according to the State Bank's monthly publication 'Inflation Monitor', released on its website here on Thursday.

However, the headline inflation increased in the second month of the current fiscal year primarily due to an upsurge in food inflation coming from supply disturbances on the back of recent rains and floods that not only affected production, but also transportation of commodities from farm and mills to the markets.

Consumer price inflation has been recorded at 8.9 percent YoY in August 2006 compared with 8.4 percent in the same month last year. Food inflation has been registered at 11.1 percent - the highest of the last 13 months.

After being recorded at less than 7 percent on average during FY06, food inflation increased significantly to 11 percent YoY in August 2006, driven mainly by increase in prices of wheat flour, bread, cooking oil and ghee, chicken, eggs and vegetables, including onion, tomatoes, and green chillies along with persistent pressure on prices of some pulses.

Contrary to food inflation, non-food inflation declined from 8.8 percent in August 2005 to 7.4 percent in the month under review primarily due to decline in inflation of transport and communication sub-index and continued deceleration in house rent index, says the Inflation Monitor.

Core inflation measured as non-food and non-energy declined from 6.3 percent in July to 6.2 percent in August 2006, while trimmed mean core inflation showed an increase from 6 percent at the end of FY06 to 6.5 percent in August 2006. The rise in trimmed mean core inflation is due to some key food and energy items, having very high weight and high inflation, like fresh milk, beef, mutton, potatoes and petrol supper. Thus, the recent inflation has primary been coming from supply factors, while the demand factors still remained under control with the deceleration in money and credit growth during the initial months of FY07 and rise in interest rates.

Wages of construction workers showed a deceleration due to temporary slowdown in the construction work because of rains during the month under review. Wage inflation has been recorded at 15.9 percent in August 2006 compared with 17 percent in the preceding month. However, it was higher than that recorded in the corresponding month last year.

On the dis-aggregated level, wages of skilled workers increased by 15.7 percent, and those of labourers by 16.9 percent, which were lower as compared with July. As the nominal wages decelerated and CPI inflation increased, real wage inflation went down significantly and recorded at 6.9 percent in August 2006 compared with a higher rate of 9.4 percent during a month earlier, according to the Inflation Monitor.-PR


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## Owais

*Karachi retail grocers reject City Govt.&#8217;s pricelist* 


KARACHI: Karachi Retail Grocers Group has rejected the pricelist released by the City government.

Group&#8217;s chairman, Sufi Mohammad Akram and secretary general, Farid Quraishi told journalists that the City government has issued the pricelist unilaterally by ignoring the proposals of the wholesalers and retailers.

Farid Quraishi said that if the government wanted realization of the published rates, then it should ensure the enforcement of the prices in the wholesale market. He said that the pulses and spices, for which the City government has fixed prices, were available in the wholesale market at higher rates. He told that if the retailers do not get these items from the wholesale market in accordance with the City government&#8217;s prices, then they would stop its selling altogether.


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## Neo

Saturday, September 23, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\09\23\story_23-9-2006_pg5_3
KARACHI: The American Business Council (ABC) of Pakistan' survey of this year has found a positive outlook on the overall business climate in the country.

According to a statement of the ABC on Friday, this year's survey results revealed a positive outlook on the overall business and economic climate and general satisfaction with the roles played by the SBP, SECP, CBR, income tax and customs.

On the other hand, a decline in ratings was evidenced for ministries of industries, health, interior and labour & manpower as well as the Export Promotion Bureau and the Intellectual Property Organization.

In addition, a broad cross-section of respondents expressed concern over the deterioration in law & order and indicated that international perception is still not positive. Zubyr Soomro, the ABC President, said that 2006 survey results provided members with current assessment as well as changes in their perception versus last year. Results of this survey are based on responses from 85 percent of ABC members.

The results suggest that 100 members are positive about the overall business climate in the country, 96 percent members rate the domestic economy as good or fair while 47 percent expressed reservations over the internal and external political situation.

The Sindh government overall received a good rating from only six percent of respondents whereas the government of Punjab received a rating of 20 percent. For the first time, the survey also sought assessments of city governments, whereby 15 percent of respondents gave a good rating to the City District Government Karachi while 29 percent gave the City District Government Lahore a good rating. ABC members contribute a sizeable amount to the national exchequer every year in direct and indirect taxes with last year's contribution exceeding Rs 35 billion. Member companies provided direct and indirect employment opportunities to more than half a million.


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## Neo

KARACHI: During the first two months of current fiscal year, the foreign financers invested $407.3 million directly and indirectly in Pakistan.

According to State Bank of Pakistan, during July and August 2006, foreign investors financed $31.9 million in stock market and equities. While, the amount of $375.4 million was directly invested.

The chunk of investment came from the developed countries, which is $263.9 million as direct investment. The foreign investment sent by developing countries was $78.5 million.

The developed countries were less attracted by stock exchanges and equities than developing countries.


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## Neo

_Rs125.203bn being spent on AJK reconstruction_

MUZAFFARABAD: An amount of Rs 125.203 billion is being spent on the reconstruction and rehabilitation of the earthquake-ravaged areas of Azad Kashmir, as a strategy is being evolved to ensure implementation of development and reconstruction projects. 

This was stated by AJK Minister for Works and Serra Col (retd) Raja Muhammad Nasim Khan while speaking at a high-level meeting here on Friday. He said efforts were under way to expedite the reconstruction and rehabilitation process to ensure its early completion to help facilitate the victims. 

Deputy Chairman Erra Lt-Gen Nadeem told the meeting that the matter was also under consideration to hand over the whole reconstruction and development works of Muzaffarabad city to China to make sure qualitative, standard and timely completion of reconstruction phase.

He said the standard and timely reconstruction of the quake-battered city of Muzaffarabad according to the town planning was essential and imperative. 

The meeting reviewed in detail different aspects of the ongoing reconstruction and rehabilitation activities as it was also informed about the details of the strategy being taken regarding development and reconstruction works in various sectors. 

The meeting was told that over Rs 64.32 billion investment was being made on different sectors of development. 

In the health sector, Rs 5.92 billion is being spent as some 176 health centres will be reconstructed in the quake-hit areas of Azad Kashmir, which include two district hospitals, two Combined Military Hospitals, four Tehsil hospital, 47 civil dispensaries, 15 Rural Health Centres and 96 basic health units, the meeting was informed. 

In the education sector, Rs 28.240 will be spent on the reconstruction of 12 degree colleges, 29 inter colleges, 298 higher secondary schools, 498 and 1,852 middle and primary schools respectively. 

The meeting was informed that Rs 6.140 billion was being incurred on the communication and roads sector on the construction of 810km roads and 2,725-metre long bridges.

The meeting was told that development work plans of electricity, education and health sector's projects have been completed while work plans of the other sectors in connection with the reconstruction phase were under completion. 

The meeting was told that Satellite Town for the rehabilitation of victims will be established near the Muzaffarabad Airport while the project of Muzaffarabad Airport repair and extension will also be implemented. The meeting was told that in the reconstruction phase the local contractors of Azad Kashmir could also join the construction projects as sub contractors. 

The meeting was informed that Rs 25.17 billion has been disbursed among the victims as assistance while Rs 3.45 billion has been distributed among the heirs of victims as compensation amount so far. 

The meeting was told that a survey regarding the destroyed and damaged buildings in the rural and urban areas had been completed as compensations would be distributed among those victims, who were residing in more than one storied buildings according to the amended policy of ERRA besides some 5000 prefabricated houses will also be provided to most vulnerable families disturbed due to land sliding and land use plan in Muzaffarabad.


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## Ababeel

Pakistan is going well so far,however the economy needs transformation from an agrarian to knowledge based eonomy very fast.Fields such as engineering,electronics,material sciences,semiconductors,industrial automation systems etc must be given highest priority as soon as possible otherwise the developed & newly emerging economies will go much ahead.
Chinese,malaysian & Turkish help must be taken to develop these departments immediately.Simultaneously National R & D in these sections must be strengthen with huge investments.


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## Owais

*PM for maintaining sanctity of Ramazan 
**ISLAMABAD *_(updated on: September 23, 2006, 23:50 PST_): Prime Minister Shaukat Aziz has called upon all the sections of society including parliamentarians, businessmen, government servants and public at large to play their due role and fulfil their personal and collective responsibilities in maintaining the sanctity of Ramazan.

Talking to a group of parliamentarians who called on him here at the PM House on Saturday, the prime minister said Ramazan is a month of blessings and fasting acts as a shield against vices.

"The noble qualities of patience, spirituality, sacrifice and the realisation of the pains of less fortunate and the deprived can become the basis of a society based on social welfare, equality, justice, tolerance and a sense of caring and sharing," he said.

The prime minister reiterated the government's commitment to provide maximum relief to the public during the holy month of Ramazan and said any artificial price hike will be encountered with the full force of the law.

The provincial governments have been asked to ensure adequate supply of essential items through an expanded distribution network and fully activated mechanism of price checks through the price magistracy system, he added.

The prime minister said in addition to the Ramazan Package announced by the Federal Government, the provincial governments have also been asked to devise similar schemes to provide further relief on a broad range of items most commonly consumed during Ramazan.

Talking of President General Pervez Musharraf's meeting with US President George W. Bush, the prime minister termed the meeting as very productive and said it will lead to further cementing of bilateral relationship and the strategic relationship that exists between Pakistan and the United States.

The meeting between the two leaders, the prime minister said, has created a better understanding and appreciation of Pakistan's point of view on regional and international issues.

He said that the president's address at the United Nations General Assembly projected Pakistan in its true light.

It highlighted Pakistan's role as an anchor of peace in the region, our efforts for dispute resolution, regional co-operation, and for promoting interfaith harmony and understanding in the world, he added.

The prime minister further said that the address also underscored Pakistan's firm belief that the UN system has contributed to peace and that it can be made even more effective through well thought-out and comprehensive reforms.

He said as a result of the steps taken by the government, the economic landscape of the country has been transformed. The magnitude of the growth achieved during the last four years in a row has positioned Pakistan as one of the fast growing economies in the Asian region, he added.

The prime minister said the additional fiscal space created as a result of the success of reform agenda has enabled the government allocate more resources for development projects and the government is now focussing on transferring the benefits of growth to the grassroots level.

He said the number of development schemes under implementation today are unprecedented in the country's history.

The government is focussing more on improving the facilities of health, education, clean drinking water, electricity and strengthening of infrastructure, he added.

The government, the prime minister said, will continue to enhance allocations for the development projects and will ensure their timely implementation.

The parliamentarians said the meeting between President Musharraf and US President Bush would help further strengthen the bilateral ties and create a better understanding of each other's point of views on major international and regional issues.

They said the president's Havana and US visits have been instrumental in projecting Pakistan as a moderate, enlightened and investment friendly country and more investments will be coming to Pakistan which will result in employment generation, up-gradation of skills and transfer of knowledge and technology.

The Parliamentarians assured the prime minister that they will co-ordinate with the relevant authorities to keep a vigilant check on prices and to control the unnecessary price hike of essential commodities during the month of Ramazan.

The members of parliamentarians' delegation included Maulana Abdul Bari (Provincial Minister of Balochistan), Rao Muhammad Ajmal Khan, MNA, Syed Gulzar Subtain, MNA, Syed Javed Ali Shah, MNA. Special Assistant to the prime minister, Commander (r) Khalil-ur-Rehman was also present in the meeting.


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## Owais

*CDWP approves 23 projects worth Rs 22.9 billion* 


ISLAMABAD (September 24 2006): The Central Development Working Party (CDWP) on Saturday approved 23 projects costing Rs 22.9 billion, while deferred three projects worth Rs 96.13 billion. The meeting, chaired by planning commission deputy chairman Dr Akram Sheikh, approved 23 projects worth Rs 22.9 billion including a foreign exchange component of Rs 6 billion.

The meeting deferred three projects-one pertaining to water & power and two of population & welfare divisions. The water and power secretary and Wapda chairman had informed the commission in writing they would not be available on the said dates to attend the CDWP meeting; therefore, energy sector projects worth Rs 95.73 billion were deferred.

Of the 23 projects approved in the Saturday's meeting, nine projects have already been included in the public sector development programme (PSDP) 2006-07 with an allocation of Rs 10.4 billion while nine projects of Rs 17.35 billion have been recommended by the CDWP to Ecnec for consideration and approval.

Projects recommended to Ecnec include wheat farming system (Rs 645 million), crop maximisation project-II (Rs 7.8 billion), construction of bridge on River Ravi (Rs 686 million), rehabilitation of telecom system by Erra (Rs 630 million), land record management and information system (Rs 3.12 billion), provision of water to Pakistan Textile City Limited (Rs 636 million), new office block for foreign affairs (Rs 532 million) and AJK-community infrastructure and services programme (Rs 2.4 billion).

Giving details of approved projects, commission spokesman Dr Asif Sheikh said out of 23 projects, 10 projects worth Rs 8.2 billion were related to infrastructure, nine projects of Rs 6.1 billion to social sector while the remaining four projects of Rs 8.6 billion were related to other sectors.

Of the approved projects, six projects are to be executed in Punjab, four in Sindh, one each in Northern Areas and AJK and 11 in other parts of the country, Dr Sheikh added.

Rs 95.73 billion have been allocated for the energy sector for acquisition of land and resettlement for major dams. Project-wise, Rs 67.023 billion was allocated for Diamer-Bhasha dam; Rs 818 million with foreign exchange component (FEC) of Rs 258 million for Akhori dam; Rs 27.824 billion for carrying out detailed engineering design and tender documents of Akhori dam; and Rs 72 million for power distribution enhancement project.

The CDWP deferred two projects of population and welfare division worth Rs 469 million and asked the division to resubmit them with proper PC-I, he said. It also deferred establishment of the Medical College at the Sargodha University, as the Punjab government has informed the meeting that the said university does not have the prescribed faculty to start classes, Dr Sheikh added. The meeting also approved a proposal for utilisation of technical assistance in the development projects.

*It recommended policy options, which include:*

i) Incorporating the programme of raising the expertise efficiency and utilisation of local human resources.

ii) Using participation of local human resources in each of the foreign-funded TAs.

iii) Acceptance of foreign experts in only those areas in which local expertise is not available.

iv) Technical assistance loan should be avoided as far as possible.

v) Encouraging and ensuring transfer of essential knowledge through such technical assistance programmes.

vi) TA loan if unavoidable should not be spent on purchase of equipment, furniture, cars, study visits abroad and payment of office rent. This will be met from counterpart local funds and

vii) Delivery cost should not be more than 5 to 7 percent of the total TA amount.

Member infrastructure, Dr Asad also informed media men that the Asian Development Bank (ADB) would provide $800 million for the development of mega cities in Sindh while the World Bank would provide $100 million for the next three years for the development of mega cities of Punjab.

Donor agencies like Jica have also shown interest in developing other cities in the country, Dr Asad added. Implementation director-general Lieutenant General Zubair (Retd) said all mega projects of infrastructure and communication would be completed on time.

To a question, Zubair said work on the Gomal Zam dam would be supervised by the Frontier Works Organisation but there was no increase on the cost of projects. The Chinese firm will construct the main dam while Turkish firms will construct irrigation system, he added. This was the third meeting of the CDWP in the current fiscal while in earlier two meetings, 53 projects worth Rs 74.9 billion were approved.


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## Owais

*Growth target may be missed due to low level of investment* 


ISLAMABAD (September 24 2006): With the current low level of investment, the government will not be able to achieve the GDP growth target of 7.6 percent in the coming five years as projected in the Medium Term Development Framework (MTDF), the Institute of Policy Studies (IPS) cautioned.

A research study entitled "Pakistan's Economic Journey: Need for a New Paradigm" launched recently by the IPS suggests the realisation of the economic goal would require substantial rise in investment to more than 25 percent from the current level of 17 percent.

An investment rate of 20 to 25 percent of the GDP is considered to be reasonable to meet the replacement and incremental needs of a balanced economy. However, the total investment persistently remained below 19 percent of the GDP in the past.

Assuming over seven percent per annum growth during 2006 to 2015, the GDP of Rs 7.713 trillion should double in 2015 to Rs 15.426 trillion, generating a ten-year total investment of around Rs 22 trillion.

Over 90 percent of the investment are linked to economic activities in the agriculture, mining, industry, energy, transport and communication sectors.

Although, the investment in these areas is important as it leads to rise in production and productive capacity, building infrastructure and improving services, but for a balanced development, the study proposed paradigm shift in the reallocation of resources and enhancing investment in other areas as well.

Though the MTDF 2005-10, which designs for the 7.6 percent annual economic growth, projects marginal improvement in total investment; yet it seems difficult to achieve designed growth rate with the current level of investment unless it is supplemented with the human capital and efficient use of key inputs.

The study underlined the need to bridge the fiscal, balance of payment and investment gaps to ensure balanced development, besides harnessing the agricultural potential, whose sustained vertical growth is a critical element of the economic and social wellbeing, eradication of poverty and economic disparity.

The pace of diversification and structural change needs to be speeded up to turn the industry into an engine of growth as the basic industries like steel, metallurgy, heavy engineering, petrochemical and basic chemical, which are considered as indicators of industrialisation hardly exists.

The manufacturing sector is dominated by sectors such as cement, sugar, oil refining and others.

The study proposes inter-industry and inter-firm linkages, like sub-contracting vendor industry, harmonisation of standards, quality and processes, sharing of skills, technology and knowledge.


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## Owais

*Punjab plans to organise, upgrade cottage industry* 

SIALKOT (September 24 2006): The Punjab government is actively considering a plan to establish an enterprise development organisation shortly in the province. Official sources told _Business Recorder _here on Saturday that the prime concept of the proposed organisation was to organise the cottage industry and to provide solid footing to the artisans in the province.

Under the programme, special steps would also be taken to provide facilities to the artisans for promoting local products and to provide technical assistance and marketing facilities to the cottage industry and artisans in Punjab. The programme would surly encourage cottage industry, especially artisans, to produce local products using home-grown skills.

Besides, the proposed programme would also ensure the considerable increase in the income of business community engaged in the cottage industry as well as artisans.

Sources further revealed that under a phased programme, 50 cluster development centres (CDC), aimed at technology upgradation, would be set up in major industrial cities of the province.

Under the programme, product development centre for composite-based material for sports goods industry (Sialkot), business support centre for electrical fittings industry (Sargodha), wood furniture facility services centre and showroom (Chiniot) and support centre for development of auto parts (Lahore) would be completed during 2006-2007.

Similarly, the CDC for metallurgy casting and agriculture (Daska), CDC for technology of domestic electrical appliances (Gujranwala), CDC for development and promotion of light engineering industries (Multan) and CDC for light engineering industries would also be established. Special focus will be on textile machinery and spare parts in Faisalabad, said the sources, had been included in the current annual development programme and work on these clusters would be carried out soon.

They said the step was being taken to provide maximum assistance and extend support to the business communities in technology upgradation


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## Owais

*Strategy being evolved to improve wire industry competitiveness* 



ISLAMABAD (September 24 2006): A strategy is being developed to improve the competitiveness of wire rod, wire manufacturers and downstream industry. This was stated by CEO Engineering Development Board (EDB) Imtiaz Rastgar during a meeting with industry's representatives on Saturday, says a statement.

He said that the stakeholders have to prepare recession proof plans as single market and product base will not result in required growth of the sector adding that the EDB would continue discussion with all stakeholders to develop a result-oriented strategy.

However, he said that the sector should not lobby for tariff protection alone as it would not improve its competitiveness in the world market. Tariffs protection is a marketing tool only for domestic market, he added.

The CEO said that the sector has to look inward to solve its problem of energy and production wastage as it could cut the production cost by 25 percent, which no measure of tariff protection could give.

Referring to pre-budget series of discussions with the stakeholder, he said at that time the steel sector was studied in total but how EDB has fascinated it into different segments to fulfil its special requirements.

He said the cottage industry was playing a vital role in developing the economy of the country but it was not getting correct type of raw material. EDB wants to solve this problem on priority basis, he added. Rastgar also referred to the tariff protection provided to the sector in the present budget and said that it should result in market expansion.

The representatives of the industry raised the issues of dumping, under-invoicing, raw material storage, quality, and improvement in business environment. They also underlined the need of new production technology, which could save energy at much larger scale.


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## Owais

*CNG vehicles surpass one million mark: HDIP* 


KARACHI (September 24 2006): Over Rs 15 billion have so far been invested in CNG sector with establishment of 1,060 gas stations in more than 76 cities and towns of country while the number of vehicles converted to CNG has surpassed one million mark, said Hilal Raza, Director General, Hydrocarbon Development Institute of Pakistan (HDIP).

He was addressing at the concluding session of 3-day international CNG conference, organised by National Forum for Environment & Health in Karachi.

Hilal Raza told that federal government has approved a policy under which CNG buses would be introduced in eight big cities of country by the end of 2007. These cities include Lahore, Islamabad, Hyderabad, Faisalabad. The government would extend interest free loans for the purchase of buses and mini buses.

He said the provincial governments have been asked to take steps for setting up big CNG stations. "The local companies would also be encouraged for manufacturing CNG products besides transfer technology projects would be launched with assistance of foreign companies. A company from Italy would soon install a plant here," he told.

He vowed to ensure strict enforcement of the laws regarding use of CNG stations and cylinders, as nine fatal incidents had taken place during last six years of which five alone in 2005. The number of accidents owing to substandard cylinders was 17, he added.

Hilal Raza further told that four local companies have started manufacture and marketing of CNG kits while the Hinopak Motors have started manufacturing CNG buses locally.

Earlier, important presentations were made by local and foreign participants of the conference who presented the latest CNG technologies available and which are now being brought into Pakistan to meet the rapidly growing demand for CNG.

Cognisant of this demand, Executive Director PSO Kalim Siddiqui informed that PS0 is working extensively for the promotion of CNG culture and has more than 50 percent CNG stations out of total CNG stations throughout Pakistan. He told that 12,000 to 15,000 vehicles were being converted to CNG every month in the country.

Asma Khan, Manager Product Development of HinoPak gave details of the contribution of the company in providing the city with dedicated CNG 'green' buses and the expansion plans for the future.

The low price differential between diesel and CNG was also highlighted by speakers as well members of the audience and this was cited as one of the key reasons for the lack of interest in conversion of urban transport vehicles from diesel to CNG. The other major reason being the absence of large refuelling stations, for which it was recommended that the government should allocate land at convenient locations, with inlet pressure of gas be provided on priority basis and that too at more than 60 PSI.

In the speech given by Mujahid Anwar Sr. General Manager SNGPL he highlighted the plans for launching of mother daughter stations and support to the industry in providing better composition gas for CNG.

In the presentation given by Shoaib Warsi of SSGC he had highlighted the future plans for enhancing gas inlet pressure to the stations and discussed current and future gas distribution network. Presentation was given by Mohammed Ather EDO Transport CDGK regarding the poor quality fuel used in our transport system, which is a cause for damage to the environment and health. He added that sulphur contents present in diesel is harmful for health whereas CNG is harmless to the health and environment. He supported the earlier announcement from CDGK for induction of CNG buses in the next five years.

The conference concluded with a general consensus that the CNG industry, the government and regulatory bodies, as well as the consumers have to work together for the promotion of a safe CNG climate in the country.

Earlier, Peter Crowe expert from UK, Dr Gerhard Koenig from Austria, Cohn Fountain Richard Castle from UK, Alessandro Varisco from Italy, Riaz Rashid Manager Engineering Development Board, Amir Hussain, Shehzad Manzoor, Naeem Qureshi, Malik Khuda Baksh and other also spoke on the occasion.

In the exhibition Axiom Engineering, Greaves Pakistan, Pakistan State Oil, Tesla Technologies, Khattak Sons, Morgan Technologies, Hino Pak Motors, Afzal Motors, Pak Suzuki, Allied Engineering, Global Pakistan & other companies displayed their CNG products.

CNG Owners Association chairman Malik Khuda Bux, forum president Naeem Qureshi and others also spoke. The conference concluded with a general consensus that the CNG industry, the government and regulatory bodies, as well as the consumers have to work together for the promotion of a safe CNG climate in the country.-PR


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## Owais

*8.25pc interest rate on one-day loans in money market* 


KARACHI: Before the month of Ramazan, in the beginning of new banking week, the interest rate fell by 115 basis points to come at 8.25 percent.

Last day, the interest rate on one-day loans closed at a high level of 9.40 per cent owing to the shortage of money and reserve averaging. Banks had to take recourse to discount window of the central bank.

In the beginning of today&#8217;s market, the interest rate was nine per cent.

According to money market dealers, the forthcoming week on September 28th, a total of Rs52.20 billion is expected to inflow in banking system as the Rs50 billion through the maturity of T-bills and Rs2.20 billion through the maturity of Open Market Operations.


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## Kaiser

Pakistan needs to start investing in its IT and Biotech sector. India is currently by 2010 gonna have a 17 billion dollar IT industry and 5 billion dollar biotech industry, but Pakistan might only have a edge in the telecom industry. Pakistan needs to raise education to 5% from the current 2% then move on with spending 2-3% of the GDP in R & D developement in IT, telecommunications, and Biotech. 

We cant just spend the rest of our lives growing fruits and cotton while the world moves on into the technological era


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## Kaiser

It would be seriously smart if the Pak govt made upto 10-20 science, technology, engineering university's per years. This way it could have a large engineering, and technology workforce to deal with future growth in Pakistans technology industry

Remember 50% of pakistan's population are childern and 1/3 of them dont go to school. We must atleast have hope for the million of childeren in pakistan that have the potential to be the next leader of microsoft or the next CEO of intel.

I havnt met 1 child in pakistan that doesnt spend his whole day studying for an exam or reading a book the whole day


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## Owais

*Edible oil output at 32000 tons per annum expected* 


PESHAWAR: Pakistan would be able to achieve an output of 32000 tons of edible oil annually in the wake of large-scale olive cultivation in the Frontier province.

Pakistan Oilseed Development Board (PODB)&#8217;s NWFP Director, Ghulam Idrees told journalists here at the Tarnab Farm that Pakistan produces about 30 percent of its requirements of edible oil, which were being obtained from sunflower, canola and cotton seeds, while the rest 70 percent mostly constituted of palm oil and soybean were imported from abroad.

He told that PODB had started several projects for wild olive&#8217;s crossings and its cultivation in the year 2000 and 13000 plants blossomed into giving fruits in 2005.

Ghulam Idrees said that the country would be able to produce 32000 tons of edible oil per annum in the years to come in the wake of increased olive production.


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## sigatoka

Kaiser said:


> 1. Pakistan needs to raise education to 5% from the current 2% then move on with spending 2-3% of the GDP in R & D developement in IT, telecommunications, and Biotech.
> 
> 2. We cant just spend the rest of our lives growing fruits and cotton while the world moves on into the technological era


 
1. I agree with raising the level of spending on education to 5% but I disagree that Pak. such a backward technological nation should spend so much on R&D development. 

The reason is that unless a nation is operating at the frontier of knowledge (like most developed nations are) it can acquire technology simply by removing restrictions to FDI (and reductions in tarriffs and quotas). 

2. When everyone moves to tech. era and you are the only one growing fruits, then the terms of trade will move such that your fruits will become valuable in that you can exchange many "techy" items for your small number of fruits.


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## Owais

*PPL and OGDC gang up for sixth LPG price raise from October 16* 


ISLAMABAD (September 25 2006): Pakistan Petroleum Ltd (PPL) and Oil and Gas Development Co (OGDC) - two public sector gas companies - have ganged up for Sixth increase in liquefied petroleum gas (LPG) rates from Rs 28,235 to Rs 34,705 per ton from October 16. Both companies have conveyed their plan in writing to other LPG producers, it is learnt.

The Fifth increase was made on September 16, to fix LPG rate at Rs 28235. PPL and OGDC are extremely worried why LPG price in Pakistan is not at par with CP Aramco.

They have also shown displeasure over private sector companies for not following in their footsteps to fleece the poor consumers by keeping on increasing LPG prices on monthly basis.

Sources said that PPL and OGDC have written separate letters to the private sector LPG producers to remind them that they were following the direction of Petroleum Secretary Ahmed Waqar, who had approved a formula on April 5 last to increase LPG price from Rs 17,000 per ton to Rs 34,705 a ton before Ramazan.

What a novel way to follow CP Aramco for 100 percent increase in LPG rates from April to September!

The letters showed that PPL and OGDC were extremely worried as to why LPG price in Pakistan was only Rs 28,235 against Rs 34,705 a ton. They should really be worried about it since they are still behind the target of Rs 34,705 per ton set by the Secretary who, being the 'principal accounting officer', is their boss.

PPL and OGDC's worry shows how strictly they follow Petroleum Secretary's orders. But neither PPL nor OGDC give the reason to target CP Aramco to fix its price for Pakistani consumers. They might have an idea that Pakistani LPG users, particularly dwelling in Northern Areas, Azad Kashmir and other far-flung areas are as rich as AP Aramco's clients.

One better might go through PPL and OGDC letters to get the right idea who says what. Let's start with PPL. In its letter dated September 20 it said: "LPG price of Rs 28,235 was still much lower to the base price of Rs 34,705 per ton, evaluated by LPAC subcommittee for LPG pricing in accordance with the applicable formula".

It said: "A meeting of LPAC producers to discuss LPG pricing policy may be worthwhile only when the government prescribes any new formula in accordance with production and distribution policy 2006". It would be unjustified not to give OGDC's point of view in its own words. It also wrote a letter on September 20.

It said: "The increase in LPG base price was done on the orders of Petroleum Secretary. Ahmed Waqar in a meeting held on April 5, last advised the producers to increase LPG price on monthly basis in three equal tranches to bring it at par with CP Aramco prior to holy month of Ramazan. Subsequently, LPAC meeting was held at Parco office Karachi on April 14, to review and fix LPG price in line with the directives given by the Petroleum Secretary and it decided to fix LPG price @ Rs 20,214 per metric ton from 16. Another LPAC meeting was held at PPL head office Karachi on May 15. LPAC agreed upon LPG price increase @ Rs23.147 per metric ton, but later on it withheld the notification.

During June last LPAC agreed to fix the price at Rs 23,147 per metric ton from June 16. However, OGDCL keeping in view the benefit of end consumer fixed the price at Rs 22,153 metric ton from June 16. Third meeting was held at OGDCL office, which unanimously fixed price at Rs 25,000 per metric ton from August 16.

It will be worthwhile to mention that the LPG price after the recent increase to Rs 28,235/per metric ton is still below CP Aramco price of Rs 34,705 per metric ton.

They said the meetings in DG(Gas)MP & NR, Office were held from time to time and attended by all LPAC members to devise a long-term pricing formula".

The same date of PPL and OGDC's letters is not a coincidence. It rather shows how co-ordinated efforts are being made on their part to follow Petroleum Secretary's directions, particularly when these are for increase in the prices of any petroleum product.


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## Owais

*$7 billion FDI to be sought this year* 


KARACHI (September 25 2006): Pakistan is aiming to obtain $7 billion in foreign direct investment within the current financial year, it is reliably learnt. The government is planning road shows in Middle East and Europe to inform the investors of the opportunities for investment in the country in manufacturing as well as infrastructure projects.

Plans are also underway to raise at least one billion dollars through overseas global depository receipts (GDRs) offerings from the financial sector alone.

Over half a dozen investment banks have been invited for presentation to the Ministry of Finance between September 25 and 31st, 2006 for sequencing of GDR floatation of National Bank of Pakistan, United Bank Limited, Habib Bank and Kot Addu Power project.

Both NBP and UBL are locally listed and have a track record of market valuation, whereas HBL is yet to be listed. As such, GDR offering of HBL without local listing sounds difficult, say the experts.

Proposal to undertake a simultaneous IPO & GDR offering has its own difficulties. IPO offerings to domestic constituents are usually at a discount and GDR offering to overseas investors at the same price simultaneously would invite political criticism.

The whole exercise for raising forex investments is being undertaken by the Ministry of Finance, and the Privatisation Commission, thus far, has been kept out of the discussions.

The mandarins in Islamabad are said to be dissatisfied with the PCs handling of GDR issue of the Oil and Gas Development Corporation.

Not only has the issue been delayed from June but also the minimum price guarantee was not obtained at the time of finalisation of mandate. As a result, the OGDC's share price has dropped from Rs 165 in June to Rs 125 despite new discoveries by the Corporation.

According to informed sources, due diligence by the Citi group/Goldman Sachs consortium will be completed within the next few days. The delay is being attributed to preparation of accounts as required by investors abroad.

The government's offering of GDR's would need to be properly sequenced and not look like a 'fire-sale', said an expert from an investment institution, which has been invited to Islamabad to bid for a mandate. As such, the invitation for EOIs for four institutions shows lack of understanding about the market in Islamabad.

Secondly, with MCB's GDR floatation of $100 to 150 million by Merill Lynch already underway and plans for road-shows in Far East, Middle East, Europe and North America commencing from next month - a step by step cautious approach is advisable in order to obtain better pricing for the offerings from Pakistan.

After listing of MCB's GDR and enhancement of capital of the bank; the existing shareholders are expected to have a seven percent dilution of their holding.

According to knowledgeable sources there is a huge difference in floating bonds and GDR's in the international market. There are around 10 countries in Asia, which are tapping the bond market.

Whereas, there are over 7000 companies from this region in the bourses in the West. Also, the pool foreign investors already active on the Karachi Stock Exchange would need to be enlarged for GDR floatation.


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## Owais

*ADB to provide $6.325 billion assistance in 4 years* 


ISLAMABAD (September 25 2006): The Asian Development Bank (ADB) will extend $6.325 billion financial assistance to Pakistan in four years from 2006 to 2009 for agriculture, natural resources, energy, finance, water supply, sanitation and waste management, transport and communications sectors.

Official sources told _Business Recorder _that funding for current fiscal year would be $1.466 billion, followed by $1.030 billion in 2007, $1.855 in 2008 and $1.975 billion in 2009.

Of the total, $5.5 billion would be given as 'Ordinary Capital Resources (OCR) loans' while the share of Asian Development Fund (ADF) is only $815 million and, interestingly, no soft loan would be available for energy sector in four years.

The Ministry of Water and Power has already conveyed to the concerned quarters that since no soft loan is available for energy sector, the government should finalise its strategy to arrange hard loans from the bank.

In 2006, the bank has agreed to provide funding for agricultural and natural resources sectors to the tune of $370 million, of which $200 million would be OCR and $170 million from ADF.

Sources said that of $370 million loan, $200 has been allocated to Punjab irrigated agriculture development sector project, which is commercial loan, while $38 million would be given for Sindh coastal and island community development project, $85 million for Balochistan rural development and drought mitigation $5 million for capacity building and project preparation for rural uplift and $42 million for FATA rural development which are soft loans.

In the energy sector, the bank would provide financing of $450 million for two projects ie renewable energy development and power transmission enhancement of which $200 million would be for renewable energy and $250 million for power transmission, which are commercial loans.

For development of micro-finance program, the bank would provide $40 million as OCR loan and $65 million soft loan, while $230 million would be for private participation in infrastructure of which $200 million would be OCR and $30 million from ADF.

The bank would provide $50 million for Sindh basic urban services and $10 million for mega city project as soft loan.

Funding for the transport and communications would be $230 million, of which $50 million would be for PPP initiatives for National Highway Development and $180 million for National Highway Sector Development Investment Project as hard loans.

In 2007, the bank would provide funding of $180 million of which $150 million has been fixed for community storage and irrigated agriculture development sector project, and $30 million Bahawalpur rural development project.

In the energy sector, the bank would give $250 million for power distribution enhancement.

The government would also get $150 million loan for law, economic management and public policy, of which $40 million would be for Punjab resource management program/subprogram, $60 million for Punjab justice support program and $5 million for FATA governance reform program.

To devolve social services in NWFP, the bank would provide $50 million and $215 million mega city project while $120 million for National Highway Sector Development Investment Project.

In 2008, the bank would lend $205 million for the development of agriculture and natural resources, of which $150 million would be for sector irrigated agricultural and water resources project and $55 million for rural modernisation. The bank would provide $200 million for renewable energy development project II.

Sources said that the bank would extend $205 million for capital market, insurance and contractual savings program.

Lending for law, economic management and public policy would be $325 million which includes $120 million for Balochistan resource management program and $205 million for private sector development program.

Financial assistance for Sindh DSSP II and mega city project II would be $100 million and $600 million, respectively. The bank would also extend 320 million for the transport and communication sectors, of which $150 million for provincial highways, $120 million for National Highways Sector Development Investment Project III and $50 million for PPP initiatives for National Highways Development III.

In 2009, lending for the agriculture and natural resources would be $180 million, which includes $150 million for water sector development and $30 million for agribusiness development project II.

Funding for energy sector would be $600 million of which $350 would be for power transmission enhancement II and $250 million for energy efficiency improvement.

The bank would extend $210 million to develop capital market access to sub-sovereigns and $460 million for private participation in infrastructure development program II and strengthening risk management, income stability for rural economy while funding for Punjab Basic Urban Services would be $100 million.

Lending for social sector development project would also be $100 million, followed by provincial highways II, $175 million and National Highways sector Development Investment Project-V $160 million.

Sources said that financial assistance pipeline from 2006 to 2009 has been discussed with ADB mission which recently visited Pakistan.


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## Owais

*Signs of slowdown in major economies and cut in oil, gold prices may keep cotton prices depressed*


KARACHI (September 25 2006): During the last week, weather was quite favourable ie, hot and dry for cotton activities. Cotton picking operation was accelerated leading to large seed-cotton arrivals in gins and markets. More and more gins resumed ginning operation in the last week.

Spinner-buyers were seen active in cotton buying from gins. Good weather is heralding for some recovery of the cotton damaged by rains and floods. On the present position of the crop, fair estimates indicate production of some 13.0 million bales this season against our target of 13.8 million bales. However, rains have also damaged the quality of cotton.

Prices of seed-cotton touched the level of Rs1,400 per 40 Kg on higher prices of cottonseed and oilcake. Lint prices touched season's highest level of Rs2,750 in Punjab. During the last week, lint cotton prices remained firm and steady except last two days when the prices of cottonseed and lint cotton slipped down. Seed-cotton in lower Sindh is quoted at Rs1075 - 1100 in Sindh and up to 1,200 per maund of 37.324 Kg in Punjab. Lint cotton prices are reported to have eased down by some Rs50-75 per maund on lack of buying interest.

The spinners say that yarn off=take is not comfortable and liquidity position is very tight. As such, spinners resist any increase over and above the level of Rs2,700 per maund. This spinners version is supported by viability in going to import of cotton.

New York cotton prices appear to be in low sentiments and selling pressure resists any reliable increase in values. New crop December 06 contract could not make its headway over the level of US Cents 55.0/lb. The other day, one exporter asked my opinion to sell in export Pakistan cotton equivalent to T-1467 staple 1-3/32 around 49 fob Karachi. He appeared pessimistic about the cotton export prices on the grounds of slowdown of retail economies in US and European Union, easy trend in housing prices, drastic cut of 20 percent in world crude oil prices, some more than 30 percent decrease in world gold prices and delay in active buying by China.

Of course, the factors bear enough weight to impose a situation of decrease also in the cotton prices. China is reportedly issuing import quota of some 700,000 tonnes of cotton to its textile mills. Although, Chinese mills are running on low cotton inventories, China prefers to delay import. Some 500,000 tonnes of cotton is already lying in different warehouses in China on consignment basis, which would be taken by mills against the respective quotas.

The reports indicate that cotton end-use in China is increasing with the improvement in standard of living and increase in purchasing power and will. The report estimate amount of domestic end-use of cotton would be double in next five years.

This situation would lead to reduction in Chinese textile exports. Of course, increased spinning capacity would demand more cotton but any slowdown in textile products in prominent textile goods consuming countries would work against it.

If the recently developed situation of decrease in prices of oil, gold, housing, consumer economy and to some extent in stocks and pressure of US dollar continues further for a couple of months, there are reasons to understand that despite increasing spinning capacity of raw cotton, lint cotton prices may not cross the barrier of 60. Generally, US economy flourishes when abnormal conditions of turmoil are found in some parts of the world.

Iran crisis has slowed, war-like conditions in Afghanistan and Iraq have already saturated, Israel - Palestinian crisis has slowed down and the sentiments of war against terrorism appear fading down.

*GM TECHNOLOGY (BT COTTON): *In the meeting of International Cotton Advisory Committee held in Brazil on 11th September, 06, its executive director in his address disclosed that Bt Cotton area has gone up to 50 percent of Global cotton area, which benefited the farming community by good return and higher yield and less pest-attack.

*ACCORDING TO A SURVEY REPORT OF COTLOOK POSITION OF BT COTTON SOWING IN SOME COUNTRIES IS: *

China; Bt Cotton was sown on 60 percent of total cotton area in China in 2005-2006 season and in 2004-2005 the percentage was 55 percent. Indigenously, Chinese companies are producing 70 percent of Bt Cottonseed and 30 percent by foreign companies.

*INDIA: *In India as many as 20 GM cotton varieties are available for commercial sowing. Last season, Bt Cotton covered as area of about 2.5 - 2.7 million hectares out of 8.8 million hectares, which is 28.4 - 30.68 percent. In Indian State of Gujarat, Bt Cotton sowing covers 90 percent of its area, Maharshtra 65 percent and Punjab 40 percent. India has doubled its yield in last seven years. Great efforts are being made on the research for even better seed and recently, two Indian seed companies have introduced Bt Seed also in Extra Long Staple cotton.

*USA: *83 percent of national cotton area were covered by GM cotton varieties in 2005-2006 season while in 2004-2005 it was 80 percent. US have been making efforts for long to reduce area under cotton and increase yield and production. In 1926 USA produced 17.9 million 480-lb bales on area of 18.1 million hectares (yield = 215.32 Kg lint / hectare) while after 78 years in 2004, USA produced 23.2 million bales on 5.5 million hectares (Yield = 918.41 Kg of lint per hectare). Thus USA has maintained an average production level of 20.0 million bales but its domestic consumption, which was at 11.0 million bales some seven years back is estimated around 5.5 million bales in 2006-2007 season.

*AUSTRALIA: *Bt Cotton sowing is on 88 percent of its total area under cotton in 2005-2006.

*MEXICO: *39 percent in 2004-2005 season.

*COLUMBIA: *43 percent. Also Bt Cotton varieties are being cultivated commercially in Brazil, Argentina, South Africa. In countries like Burkino faso, Israel and Turkey it is at trial stage.

In Pakistan, the position of Bt Cotton is not known. However, some efforts are being made to evolve Bt Cotton varieties but resistance from seed companies is there. Some people speak against introduction of Bt Cotton on some grounds of damage to natural environments. All the prominent cotton producing countries are benefiting from the use of GM technology and this technology has greatly benefited the farming community and positively contributed to higher productivity and production ultimately boosting economies of the countries. Pakistan should take immediate steps to introduce Genetically Modified (GM) technology in cotton to increase its seasonal cotton production, which is lagging far behind its domestic requirements.


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## Owais

*MONEY WEEK: private sector mainly responsible for monetary expansion of Rs 450 billion in fiscal year 2006* 



KARACHI (September 25 2006): Money supply in FY06 increased by Rs 450 billion compared with Rs 480 billion in FY05. The final monetary data, incorporating the end-June position of the banking system (SBP and scheduled banks), was released in an update by the State Bank on September 16.

Most of the increase was brought about by expansion in domestic credit (up Rs 399 billion compared with Rs 427 billion in FY05). Net Foreign Assets (NFA) also contributed some Rs 51 billion compared with Rs 54 billion in FY05. Expansion in domestic credit was largely the result of continuing private sector economic activity in the country besides, the undertaking of massive rehabilitation and reconstruction effort in the quake-hit Azad Kashmir and upper regions of the country.

The contribution in the form of increase in NFA was the result of increased inflow of remittances during FY06 ($4,600 million compared with $4,169 million in FY05). However, their overall impact on monetary expansion was lower than in FY05 because of the record increase in imports ($24,558 million compared with $18,753 million in FY05) compared with lesser expansion in exports ($16,374 million compared with $14,401 million in FY05) in FY06 affecting the overall quantum of NFA negatively.

The quake might have also affected the export sector negatively (more local goods needed domestically) and the import sector positively (more imported goods needed for both relief and reconstruction).

The private sector credit expanded by Rs 402 billion compared with Rs 438 billion in FY05. Expansion in the domestic credit in FY06 was entirely accounted for by commercial bank credit (up Rs 417 billion) while in FY05, the commercial bank credit contributed nearly Rs 428 billion of such credit. Bank credit to PSEs also expanded by Rs 8 billion compared with a retirement of Rs 13 billion in FY05.

On the other hand, specialised banks whose credit expanded by over Rs 10 billion in FY05, it contracted by nearly Rs 16 billion in FY06. Since distribution of specialised credit is not available, we cannot say for sure which sector (agriculture, industry, co-operatives or SME) was affected most by the squeeze in specialised credit. OINs (Other Items-Net) of the banking and SBP credit to NBFIs, on the other hand, contributed to contraction in domestic credit in the amounts of Rs 101 billion and Rs 1 billion, respectively.

The expansion impact of government borrowing during the year amounted to Rs 91 billion of which Rs 71 billion was borrowed to meet part of the budget deficit and Rs 20 billion for procurement of commodities, especially wheat - a crop whose harvest usually completes by the conclusion of the financial year.

*MONETARY SUPPLY SQUEEZES IN FY07: *In the meanwhile, another update made available on September 22 revealed that money supply in the first fortnight of FY07 (July 1 to 15, 2006) declined by Rs 57 billion. The cause was both a squeeze in domestic credit (down Rs 37 billion) and a drawdown of NFA (down Rs 20 billion). The squeeze in domestic credit was caused by a retirement of Rs 22.5 billion worth of commercial bank credit to the private sector and of Rs 1.2 billion to PSEs (partly offset by an expansion of Rs 2 billion in specialised bank credit), and a massive contraction amounting to Rs 57.5 billion in OINs of the banking system. Expansion in government borrowing from the banking system (SBP and scheduled banks) (up Rs 42 billion: Rs 40 billion for budgetary borrowing and Rs 2 bilion for commodity operations) largely offset the overall squeeze impact of the foregoing factors containing domestic credit contraction to Rs 37 billion only.


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## Owais

*Rs50 billion target set for the sale of T-Bills *


KARACHI: State Bank of Pakistan (SBP) has set Rs50 billion target for the biddings of 3, 6 and 12 months Treasury Bills.

Money market dealers told that the maturity of over Rs52 billion T-Bills was expected by Thursday, therefore, it was being hoped that the target would be achieved easily.

Invest Capital&#8217;s Head of Treasury, Naeemul Hassan told that the old cut off rate remaining firm for the 3, 6 and 12 months&#8217; treasury bills was likely. The cut off rate on September 13 biddings for 3 months T-Bills was 8.64 percent, for 6 months 8.81 percent and for the 12 months T-Bills 9 percent


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## Neo

*MOSCOW *_(updated on: September 25, 2006, 15:25 PST_): A Russian company is in talks to supply electricity to Pakistan over a 30-year period in a deal worth up to 90 billion dollars (70 billion euros), business daily Kommersant reported on Monday.

Electricity would be supplied by Russian export monopoly Inter-RAO from plants under construction in Tajikistan and Kazakhstan, the company's deputy general director Alisher Kalanov told the newspaper following negotiations with the Pakistani government last week.

Exports could begin within six years and would require investment of several hundred million dollars, he told the paper.

The deal would be worth between 2.5 billion and three billion dollars per year over 30 years, supplying 50-60 billion kilowatt-hours per year to Pakistan, whose current annual production is 82 billion kilowatt-hours, the paper said.

Last year Russian electricity monopoly Unified Energy Systems, which controls 60 percent of Inter-RAO, said it was looking into the export of electricity from two hydro-electric plants under construction in Tajikistan and a thermal power plant being built in Kazakhstan, all due to come on line in 2009, the paper said.

However, exporting electricity from the plants to Pakistan in a cost effective manner would require the building of electricity cables across Afghanistan, a geopoliticial complication that could undermine the viability of the project, local experts told the newspaper.

The delegation also discussed the possibility that Inter-RAO could help build an electricity plant in Pakistan, Kalanov said.


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## Neo

THERE is a world of fantasy attached to hidden informal economy, as it exists in reality in Pakistan and almost all other countries. It is a story of a mix of reality and fiction, mystery and investigation. A number of economists keep trying to unearth its roots, size and impact on the overall national economy, politics and on social fabric. It is an endless pursuit. Meanwhile, the informal economy continues to prosper.

In Pakistan, the estimates of Ã¢â¬Åblack economyÃ¢â¬Â vary. It is from 100 per cent-more than Rs7.5 trillion-as assessed by Majyd Aziz, the President-elect of the Karachi Chamber of Commerce and Industry to 50 per cent plus -Rs3.5Ã¢â¬â4 trillionÃ¢â¬âas indicated by Ahsan Iqbal, a senior Pakistan Muslim League (Nawaz group) leader and Professor Khurshid Ahmad a Jamat Islami senator. Taj Haider, a former PPP senator is of the view that black money hides itself in different forms such as Ã¢â¬Åunaccountable assetsÃ¢â¬Â is spread in all over.

Going by a single yardstick, the stagnant and low tax-GDP ratio in an environment of high of economic growth, averaging seven per cent for the last four years, indicates that the informal economy is gaining strength.

Retired General Khalid Maqbool, a former chairman of the much feared National Accountability Bureau (NAB), now the Governor of Punjab, has called the burgeoning underground economy and smuggling on big scale as a symptom of widespread corruption in the public sector. According to him, the underground economy is estimated to have expanded at an annual rate of 26 per cent over the last 23 years as compared to average annual growth of 17 per cent in nominal GDP.

The general as NAB Chief read a paper on, Ã¢â¬ÅStrategy for combating corruption in PakistanÃ¢â¬Â at an international gathering in Korean capital city Seoul in the year 2000. His assessment was that underground economy expanded at the rate of nine per cent more in last 23 yearsÃ¢â¬â1977 to 2000.

Huzaima Bokhari and Dr Ikramul Haq in their analysis of 2006 Finance Bill put the estimate of black economy at Rs1.8 trillion and termed the taxation system as retrogressive.

Black economy goes along with corruption, speed money, smuggling, crime, drugs, highly inflated government contracts and tax evasion. It is all-pervasive, at least in Pakistan and most the citizens are its victims.

A sudden spurt in street crimes these days in Lahore and Karachi is said to be manifestation of total collapse of social, economic and political order as educated and uneducated young men have adopted money spinners as their role models.

Politicians, businessmen and teachers all agree that black money plays havoc in elections. Ã¢â¬ÅBlack money plays its role in general elections and those of the local bodiesÃ¢â¬Â, Asad Saeed, a practicing economist said. Ã¢â¬ÅPoliticians thrive on black moneyÃ¢â¬Â a business leader said while pointing towards the life style of the top leaders of the three mainstream political parties.

Professor Khurshid believes that black money has created wide income disparities, a social upheaval and market distortions. Ahsan Iqbal endorses this view but adds hastily that black economy Ã¢â¬Åhad been a social cushion during the decade of nineties when white economy was on downslide and it helped in employment generationÃ¢â¬Â.

Some supporters of PPP and PML (N) remain convinced that black money helps in consolidation of military rule. In return, a military government provides a far more fertile ground for generation of black money. Ã¢â¬ÅLook at stock exchange, commodity prices escalation with support of bank loans, real estate and growing services sectorÃ¢â¬Â an economics teacher of a local college pointed out to substantiate his claim.

Ã¢â¬ÅTax evasion and income concealment are the expression of a no-confidence on the systemÃ¢â¬Â, argues Ahsan Iqbal of PML (N) as according to him, when the state does not deliver services-health, education, utilities, roads and transport and even security, why should people pay tax?Ã¢â¬Â.

Since 9/11, Pakistan received $55 billion plus as remittances, loans, privatisation and other capital inflows. AhsanÃ¢â¬â¢s point is that infusion of such a massive foreign inflow revived the economies of the countries like Somalia. Ã¢â¬ÅBut in Pakistan, this money was literally squandered awayÃ¢â¬Â. It has generated a big part of the black economy.

Smuggling is an answer to growing demand of certain goods and services in the market that the state arbitrarily denies to its citizensÃ¢â¬Â, remarked Shakoor Ahmad, an owner of a shop in Rainbow Center (Saddar, Karachi) which is considered to be the biggest bazaar in Asia of pirated videos and CDs.

Multinational companies estimate Rs10 billion revenue loss from violation of the copyright law. Ã¢â¬ÅBut these multinationals too generate black money from transfer pricingÃ¢â¬ÂÃ¢â¬âa counter-argument from Shakoor Ahmad.

A glimpse of how black money generates was offered by the former NAB chairman Khalid Maqbool in his paper as referred earlier. Based on certain figures, the general estimated a leak of Rs333 billion that 10.4 per cent of the GDP from a total of Rs1.36 trillion government transactions.

A sum of Rs47 billion were pilfered away from Rs470 billion loans offered by the government controlled banks when appointments were politically motivated. His estimate was that 50 per cent tax was evaded because of discretionary powers of tax officers which at that time was Rs218 billion as against total collection of Rs436 billion.

Some 25 per cent amounting to Rs29 billion was siphoned off from Rs116.3 billion development programme. Another five per cent amounting to Rs4 billion was kickbacks as a reward of Rs67 billion oil import contract. A sum of Rs9 billion or 10 per cent of the governmentÃ¢â¬â¢s current expenditure was Ã¢â¬Åoutright pilferage of public fundsÃ¢â¬Â amounting to Rs94 billion.

The general obviously did not include defence allocation which remains immune from any discussion in the legislature and according to Ahsan Iqbal, a nominee of Accountant General carries out the audit that is never made public. Another amount of Rs26 billion or 15 per cent of Rs175 billion for public utilities that included subsidies was squandered away by collusion of corrupt staff and consumers. The general does mention about extortion by law enforcement agencies and their collusion with criminals but has not quantified the amount.

While the former NAB chief estimated only 50 per cent evasion in tax, a study conducted by Lahore University of Management Sciences in a survey in 2003 found that out of Rs100, the government receives only Rs38 and Rs62 is pocketed by the tax payer, tax collector and tax practitioner. It means that Rs720 billion tax collection in 2005-06 is only 38 per cent of about Rs2 trillion which should have been collected by the Central Board of Revenue.

Taxes continue to be evaded and businessmenÃ¢â¬â¢s under-invoicing is proved by the CBR Chairman, Mr Abdullah Yousuf in an interview about a month ago. He said that PakistanÃ¢â¬â¢s import to China in 05-06 based on the invoices has been assessed at $1.5 billion. But the Chinese export department has sent them documents which reveals that actual import from China was $2.5 billion. A difference of $1 billion means about Rs60 billion. It means revenue loss for the government and generation of about Rs70-80 billion from the sale of these goods in the market. Leaders of Pakistan-China Business Council say goods worth more than $3-3.5 billion arrive from China every year.

Majyd Aziz says that one should safely add $15 billion to $44 billion officially declared import and export figures in 2005-06. Businessmen say that the entire jewellery market, alcohol, entertainment industry, video and CDs market and a big part of consumer goods market remains undocumented.

Corruption and black money has assumed a new dimension after Transparency International in its 2006 survey found that an overwhelming majority of its 4,000 respondent consider the government of Musharaf-Shaukat Aziz more corrupt than those of Benazir and Nawaz Sharif.

This survey addressed, Ã¢â¬Åpetty corruption issuesÃ¢â¬Â and in its report suggested for a study based on at least 10,000 households to find out how black money is being generated and what are its impact on politics, economy and the nationÃ¢â¬â¢s moral fabric.

http://www.dawn.com/2006/09/25/ebr1.htm


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## Neo

INTER-regional disparities are increasing, with Punjab province at one end and Balochistan and the NWFP on the other. Yet, within Punjab, education achievements and better infrastructure are leading the much better off central and northern districts to attract more investment and grow more rapidly than the southern districts.

These not- so- shocking but still highly disturbing observations have been made in a recent World Bank research paper.

And of course, the relatively depressed regions run the risk of their becoming perpetual basket case areas by failing to attract capital and skilled labour which otherwise find it more profitable to go to faster-growing and richer regions as has been in the case of Balochistan and NWFP.

The higher the inequality, the harder it is for growth to reduce poverty. Inequality reflects deeper distortions in access to markets, in the availability and quality of health, education and infrastructure services, and in rural urban distinctionÃ¢â¬âall of which dampen growth and poverty reduction.

Highly unequal access to education means that talented children are denied the opportunity to invest in their human capital, the main determinant of long-run growth.

According the WB paper, rising inequality often implies capture of ethnic groups or castes that perpetuate disparities by providing private benefits to their own group rather than public goods that can help generate broadly-shared economic growth.

And rising inequality means sizeable populations are vulnerable to falling deeper into poverty because they lack assets like land or livestock or the human capital that can be used to cope with shocks. Because a large section of the population tends to be clustered around the poverty line, even a small shock can push many down into poverty.

Rising inequality can thwart reforms. Market- oriented, pro-growth policies that temporarily increase inequality can generate a political backlash, leading to backsliding and policy distortions that slow growth.

Finally, rising inequality breeds conflict. Left unaddressed, disparities create social tension and perception of alienation and neglect, sowing seeds of domestic conflict. The rising insurgency in Balochistan is cited by the WB paper as being the result of lack of development.

Quoting international experience the paper says that the quickest route to slow economic growth is complacency during periods of high growth. Most countries with rapid growth in any one decade show marked deceleration of growth rates in the next. But in the opinion of the research paper, sustaining this growth over extended periods will mean having to buck the trend.

Pakistan has enjoyed a fairly reasonable growth rate since 2002, but one of its 10 children still dies before his fifth birthday and only 57 per cent of children complete primary school.

Indeed, every time this country has recorded an annual average growth rate of over six per cent over an extended period, its failure to arrest the resulting wide socio-economic gaps between regions, among sub-regions and between classes have not only choked growth but the associated tensions have led to massive damage to the national fabric to an extent that at times we have been categorized as failed or failing state. Therefore, the subject of growing inequalities needs to be studied not only in all its depth and width but as frequently as is possible.

It has been seen that during the decades of 1960s and 1980s when higher growth resulted in higher government incomes, temptation got the better of the rulers and they let themselves be dictated by populism and pandered to vested interests. This is happening once again. With an eye on the next election, the government is letting the rich to plunder without any check or hindrance.

These richer classes are amassing wealth by forming cartels and indulging in hoarding while those who are supposed to curb these activities are looking the other way on orders from political leadership at the top because it is these very moneyed classes who are expected to pay the election bill of the ruling party.

On the other hand, the government is launching rather haphazardly a number half baked, hastily planned and impossible-to-monitor projects to provide relief to the poorer sections. Such schemes in the past have only ended up lining the pockets of unscrupulous public providers and benefiting the affluent and in the process pushing up the rate of inflation further up.

This need not continue for the sake of the people and this country. Let us for a change leverage rapid growth to achieve distributive justice. This is, of course, easier said than done because while there are many bookish prescriptions and those that are dispensed by the multilateral aid agencies, so far nothing seems to have actually worked.

In the immediate post-war period and up until the advent of Mrs. Thatcher on the world scene and the rise of the Asian tigers, the World Bank and the IMF used to put a lot of emphasis on planned economy and the public sector. And since, the two institutions along with the Asian Development Bank have been promoting the idea of the Ã¢â¬Ëleast governmentÃ¢â¬â¢ with the private sector serving as the engine of growth. But neither of the two prescriptions seems to have worked with any degree of perfection. If there were any successes here and there due to either of the two, those could only be attributed to chance.

Of course, there cannot be a perfect answer to such problems as growing economic inequality in a growing sea of plenty. Still, one can make some visibly sustainable progress by undertaking political and financial decentralisation of all development work, making the providers at the service delivery stage accountable and cleansing the judiciary of the corrupt.

If it is true thatÃ¢â¬â¢ it is not the business of the government to be in businessÃ¢â¬â¢, then it is doubly true that it is not the business of the private sector to be in public welfare. Let the private sector run schools, hospitals and make roads, produce goods and sell other services for profit. Let the private sector also make the most of the market forces and become ever richer. But let us make it pay its tax dues in full.

When only a little over a million out of 150 million people pay income tax, there is hardly anything one can do to achieve even a modicum of distributive justice. Let the government start fulfilling its national responsibility in the context of distributive justice from this point and not let the tax evading private sector fool the nation claiming that it is doing national duty by running profit earning schools and hospitals.

Let the private sector make money and leave the business of providing succour to the poor and the job of removing economic inequality to the public sector. Of course, the public sector is riddled with corruption, lack of capacity, inefficiency and low productivity. But all this can be taken care of to a large extent by setting up inbuilt systems of accountability and institutionalising oversight by relevant communities with stakes in schools, colleges, hospitals and public works.

All this of course would not make much of a dent in the existing inequalities immediately, but it could be a good starting point to build on progressively. Meanwhile, regulatory mechanisms with statutory powers and free from political interference need to be established to bring and sustain order in the market and keep prices and supplies within the reach of the most of the population.


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## Neo

PakistanÃ¢â¬â¢s economy has been diversified over the years but agriculture still is the largest sector of the economy. With its present 22 per cent share in the GDP, it accounts for 44.8 per cent of the total employed labour force. It serves as the base sector for the countryÃ¢â¬â¢s major industries like textile and sugar and bulk of the exports.

Agriculture also contributes to growth by providing raw materials, as well as being a market for industrial products. What happens, therefore, to agriculture is bound to have a substantial impact on the overall growth GDP.

Pakistan has basic ingredients such as fertile land, irrigation water, hard working farmers and certified seeds. The need of the hour is to utilise these which can be possible through proper policy- making.

Good management suffers due to the shortage of technical expertise which mostly leads to the failure of our food policy. Previous experience shows that the majority of farmers failed in getting minimum ceiling price of wheat and this created a big gap between the demand and supply thus putting the country in the list of food deficient. Farmers have not proper storage, packing and distribution facilities.

Agriculture is facing problems like low productivity, unfit irrigation water, adulterated chemicals, non-availability of modern technology etc. Here the extension workers can play an active role if they carry out the following functions and duties:

* Convince the farmers to implement latest technology.

* Provide necessary information to farming community.

* Exchange and discuss problems and suggesting remedial measures.

Pakistan is a developing country and our farmers are yet to comprehend the advancements taking place around the world as they are illiterate. The extension worker should promote agriculture and its allied industry in line with the WTO rules and regulations.

Human resource development is the main tool for enhancing agricultural productivity. It will not only increase the resource base productivity but can also play a vital role in reducing the pre and post-harvest losses, judicious use of irrigation water, balanced fertilizers, and recommended doses of pesticides and insecticides. It will reduce per unit cost of output, vital for competing with other developed nations.

For creating awareness about the WTO agenda among farming community we need objective-oriented policies. They should know about different agreements related to agriculture and their responsibilities and how the new world trade order will affect their profitability and how to it can enhance the same. The role of extension workers need to be reorganized. The government should provide them with the facilities for performing their duties and allocate to them specific areas.

Suggestions: The following suggestions are necessary for the betterment of the present conditions of our traditional farmers through the efforts of extension workers:

* The role of institutions is very crucial in this case. The government should begin training programmes for extension workers.

* The government should monitor extension workers performing their duties.

* Facilities such as motorcycle, fuel and other requirements should be provided to them for visiting every farmer.

* Farmers should be persuaded to adopt the latest techniques. Extension workers should motivate them by estimating and presenting the profitability of new techniques.

* The ignorant farmers should be informed by the extension worker about the use of ISO-certified products and the rules and regulations of the WTO.


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## Neo

THE Private Power and Infrastructure Board (PPIB) has invited expressions of interest from potential investors for the development of integrated power project based on imported coal, on non-exclusive basis, proposed to be set up near Karachi. The two top ranking parties will be pre-qualified to install 1,000-1,200 MW capacity each power plant, with the provision of expansion in future.

But the project poses numerous issues, problems and challenges and the government of Sindh has already reacted sharply against it.

The development of a coal-fired power plant based on imported coal is a complicated and arduous process. The project may run into snags. Remember the Gordon Wu project of the 1994-power policy era?

The nation may end up losing opportunities presently available to it to develop domestic coal reserves, an activity which obviously cannot be undertaken in parallel to establishing a power plant based on imported coal. It is not consistent with the governmentÃ¢â¬â¢s committed policies.

The first and foremost concern is that the country would remain heavily dependent on imported coal source for power generation. The technology selected will depend on coal analysis and characteristics. For this reason, each plant is highly complex having custom-designed systems and as such the proposed plant can not be switched to using indigenous coal at any stage of operations.

The quality of local raw coal ranges from lignite to sub-bituminous, having calorific value of 5,219 to 15,801 BTU/lb, which is considered to be of good quality and suitable for power generation. Pakistan has proven coal resources to the extent of 185 billion tons, compared to total world reserves of 909 billion tons of lignite to sub-bituminous coal. According to recent estimates, there is a potential to generate annually about 20,000 MW electricity for forty years or so, based on available and mine-able domestic coal reserves.

Recently, the government has approved various power projects based on domestic coal to be set up in the private sector, while others are in process. After a Chinese company backed out almost a year ago, an American corporation plans to set up a 1,000 MW capacity integrated power plant near Thar coalfields that are viable for large-scale mechanised mining. Likewise, the LOIs have been issued to Pakistani investors along with foreign partners to establish a 200-MW plant at SondaÃ¢â¬âJherruk, a 200-MW and another of 150-MW capacity at Lakhra, all to be located at respective mine-mouth.

Already, there are indications by the American company not to develop Thar-coal based project. Instead it is instead seeking permission to construct plant based on imported coal. This will have far-reaching implications and socio-economic fall-outs also, as areas like Thar, Lakhra, Sonda and Jherruk will ever remain under-developed.

Second, it will be an expensive proposition to set up an integrated project on imported coal. It will result in high and non-competitive tariff. Indeed, coal is the most common fuel for utility and industrial energy generation worldwide, accounting for at present almost 40 per cent of worldÃ¢â¬â¢s electricity. Globally, coal consumption is over five billion tons annually.

Supply of coal, in this case, known as thermal or steam coal (lignite and sub-bituminous), has to be secured from the international market. In order to ensure reliable, regular and uninterrupted supply of coal for the plant, the investors will be required to arranging and managing long-term coal supply contracts. This will not be possible to secure from international market, unless the investor, only a foreign investor in this case, would have his own lease of coalmines in one of the coal exporting countries. Still, the regular and reliable supply of coal could not be guaranteed for longer periodsÃ¢â¬â-almost for 30 years of plant life span.

A power plant of gross design capacity of 1,200 MW will require approximately eight million metric tons of coal per year, depending on coal quality and technology adopted, which is translated into a daily supply of about 22,000 tons coal, or hourly supply of over 900 tons to the plant.

Such plants are designed on a large scale for continuous operation. Imported coal is bulky and expensive to transport. Coal price in international market is currently in the range of $34-$39 per metric ton for thermal coal of about 11,800 BTU with low to medium content of sulphur. Thus, the proposed plant, besides having high operating cost, will have a heavy and constant drain on foreign exchange resources.

Again, the logistics are to be created to receive and handle transportation of imported coal of this magnitude to the power plant efficiently. In fact, sea transportation cost accounts for almost 70 per cent of the delivered coal price internationally. For economic reasons, cargo ships are commonly used for carrying minimum 40,000-50,000 tons of coal, which takes several days to unload.

This essentially requires a deep-water jetty and other infrastructure, the construction of which is yet another expensive proposition in comparison to mine-mouth projects. The proposed plants are to be located near a seaport, so as not only to facilitate coal delivery through conveyors, but also to meet large requirements of cooling water. Water requirements for the plant of this size are estimated to be over two billion gallons per day at full load.

Inter-connection and transmission infrastructure is to be created for dispersal of power generated by the proposed plant. Wapda, the power purchaser, is therefore responsible to construct high voltage transmission system at its cost, for which a detailed study needs to be conducted. One wonders why the government is promoting costly, and, more importantly, risky power project in spite of comparative advantages of using indigenous coal.

Many within the government discourage cheaper power projects, like hydroelectric and indigenous coal, to promote imported fuels. The government has recently decided to unbundling of Thar coal project into mining and power generation that would now be developed as separate projects. This methodology will attract additional investment in setting up projects based on indigenous coal.

Third, project is primarily aimed at international investor specialising in power project based on imported coal, as pre-qualification conditions are too stringent for a domestic investor to comply with. Potential investors need to have total net worth of not less than $125 million in case of corporation/consortia, whereas main sponsor of the consortium should have net worth not less than $50 million.

They are also required to have minimum ten years experience of developing and/or operating similar projects of not less than 300 MW capacity in any country. AES Corporation of the USA and Malakoff Berhad of Malaysia have already shown interest in developing the project.

It amounts to encouraging foreign investors and discouraging the domestic business. First, the IPPs should not be concentrated in the hands of a few foreign investors, for obvious reasons, and therefore present trend of monopolistic approach need to be arrested instead of promoting it further. Currently, International Power of UK, to quote as an illustration, owns and/or operates almost 60 per cent of total installed power generation capacity in private sector in the Wapda system. Likewise, operations of the KESC are in the hands of the consortium dominated by foreign investors.

Foreign investors are allowed to repatriate profits/dividends, which are large and growing in the power sector. Over the years, outflow of foreign exchange in large amounts would further strain the critical balance of payments position. Just in the month of July 2006, the foreign direct investment (FDI) inflow in thermal power was to the level of $22.7 million.

It will take at least six years from today for plant based on imported coal to go on stream and thus it will not serve the purpose of bridging the demand-supply gap in near future. The viability of proposed plant, which could achieve commercial operations in the year 2012, becomes questionable.

A sizeable investment in power generation by the IPPs may create additional 3,826 MW capacity by then to the existing Wapda system, whereas Wapda itself will add to its present power generation capacity in the range of 3,000 MW. Likewise, KESC plans to establish its own power plants and does not show interest to purchase electricity from the IPPs to be located in its licensed area.

As a first step, a detailed bankable feasibility study will require to be conducted for the integrated project based on imported coal. The study will address evaluation of imported coal usage, selection of power plant technology, plant location, load flow study, plant conceptual design, infrastructure and interfaces including transmission interconnection, environmental impacts, project schedule, cost estimates, preliminary financial evaluation and project finance-ability.

This will also require soil, geological, seismic and hydrological investigations and studies related to construction of jetty and other infrastructure required for the plant.

PPIB has recently decided to engage consultants for preparation of detailed terms of references (TOR) for the project feasibility study that is required to be undertaken by the pre-qualified investor at his own cost, expense and risk.

The preparation of the requisite feasibility study will ideally take about 16-18 months and cost millions of dollars. Thus, the studies entail substantial capital and other resources at risk on the part of investor, without guarantee of project being commercially viable.

Only on the completion of the feasibility study, the activities can commence for engineering and preparing design specifications for procuring the long lead plant machinery, primarily consisting of a pulverised coal boiler and one steam turbine generator required for each battery of 500-600 MW capacity.

About six months are required for preparation of the engineering, procurement and construction (EPC) specifications, firming up the source of coal supply, bid preparation by the EPC contractor, EPC bid evaluation, preliminary contract negotiations and contract award by the project sponsor.

From start of project engineering to installation, erection, commissioning and test running of the plant, a period of 50 months is considered achievable. This includes a 40-month construction period beginning with civil works for the foundation, and simultaneously, for jetty and other infrastructure, and ending at the substantial completion of installation work.

Thus, based on a practically reasonable EPC schedule, the power plant can be commissioned not earlier than six years from the date of issue of the Letter of Intent by the government, of course, subject to the investorÃ¢â¬â¢s will and commitment.

It is assumed that project funding could be arranged and other project development activities such as power purchase agreement and licensing could proceed concurrently. However, not a single power project, whether in public or private sector, has ever attained commercial operations in stipulated time period.

Finally, the proposed plant is focused for location near Karachi, within 100 km along length and breadth of the metropolis. There are a number of factors however unfavourable to the proposed location. As explained above, deep seawater is required for construction of jetty to facilitate berthing of coal-carrying ships of 60,000 to 80,000 Dwt capacity.

There is no feasible location near Karachi. Bin Qasim will not be an option since required land for the projectÃ¢â¬â- minimum 1,000 acresÃ¢â¬â- is simply not available even if investor would be willing to pay high market price. Keti Bandar and Sonmiani are shallow seawater locations and thus not suitable for selection as the project site.

Environmental issues, affecting further de-gradation of highly polluted Karachi city, are of paramount importance. The operation of a coal-fired power plant emits massive amounts of greenhouse gases including carbon dioxide, nitrogen oxides and sulphur dioxide.

A standard 1,200 MW plant generates daily about 2,000 tons of carbon dioxide. Plant emissions also include radioactive elements, more radiation than a nuclear power plant. Coal burning also produces very large quantities of ash, some 400 tons of ash per day out of a plant facility of this size, which poses enormous dust control problem, in spite of developing the requisite ash disposal.

Though installation of emissions control devices, such as electrostatic precipitators, scrubbers and filter bags, are essential component of the coal-fired power plant, the flue gases that contain reasonable amount of emissions are dispersed into the atmosphere, in practice.

In conclusion, the government needs to review its strategy, carefully taking into consideration merits and demerits of the proposed project that is not even included in the National Energy Security Plan, and to rely on domestic coal. The government should accelerate activities related to exploitation, mining, processing and utilisation of indigenous coal, primarily for power generation.


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## Neo

HOME remittances touched a record $4.6 billion in the last financial year. And in the first two months of the new financial year (July and August) the remittances increased by 22.72 per cent over the same period last year or by $150 million to $811.85 million.

In August, the amount remitted through the banking channels was $435 million or 24.81 per cent over the same month in the previous year. Clearly, the amount sent home by overseas Pakistanis is on the rise constantly since 9/11 when it had dropped below a billion dollars.

This is happening despite the decline in the number of workers overseas. More money is coming from the US than from any other single country including Saudi Arabia and UAE. Workers abroad now prefer sending their earnings/savings home rather than retain them in foreign countries and get that frozen on one account or another by foreign governments.

The countryÃ¢â¬â¢s finance managers are delighted as this inflow helps to reduce the negative balance of payments, which peaked at $5.5 billion last year. The country is facing a trade deficit of over $2.2 billion in the first two months of the current financial year.

But one powerful department of the government is not happy on tax exemptions on the sustained rise in home remittances though that helps the economy a great deal, particularly its external account. That is the Central Board of Revenue and its Chairman Abdullah Yousaf is very vocal about its concern in its area.

He is convinced, as are many others that some of the remittances represent tax evaded income sent abroad through the hundi system and then repatriated through the banking channels as home remittances. In fact, bringing the money home as workers remittances is regarded as a patriotic act.

Some of this could be tainted money of corrupt officials at home(or even ransom money) which could not be declared or revealed here as that could bring their conviction after they are sacked from their top jobs. So when the money returns home, that is all white and can be spent lavishly and openly.

It is difficult to check the money as it comes in as foreign companies may not issue certificates of payment. Nor can our labour attachÃÂ©s certify the authenticity of our earnings. If the government insists on such certificates, the senders of the money can produce fake or forged certificates and the whole exercise will be futile.

What could be possible, if at all, is checking the money going out of the country first through the hundi. But that is too tough an exercise as among the senders are senior corrupt officials including from the police and intelligence services, and they know their hundi system pretty well. It is an old, well anchored institution whose secrecy is well guarded.

So, if the money cannot be checked as it goes out, it cannot be verified as it comes back as earnings or savings of Pakisani workers overseas. So the practice may continue as long as we desperately need foreign exchange to balance external payments or reduce the current account deficit.

Once cleaned up through such a monetary u-turn, the money can be invested in several tax-free enterprises, particularly for real estate deals as has been happening in recent times. The rising inflow of remittances has pushed up the price of real estate in the country, particularly in the Defence Housing Authority of Karachi and other Defence housing societies which are increasing in number. It goes into the stock market for profitable speculation with too little tax paid. Clearly such money has a long tax- free run while the CBR looks at it helplessly and protests in vain.

The ill-gotten or untaxed money is sent abroad and used to bring in a great deal of goods tax-free or at concessional rates which is sold in the local market at high prices.

But many of the overseas Pakistanis complain on return, that the prices of many such items are low in Pakistan, it is no longer rewarding to bring in such goods for sale.

And yet, recent reports said the government was adding 700 more items to be brought in by overseas Pakistanis duty- free or at concessional rates. But will they be able to compete with the cheap Chinese goods in Pakistan?

All that is too frustrating for the CBR chairman who wants to be as rational as possible, more so when the World Bank and the IMF urge the CBR to raise the low-GDP ratio now at 10 per cent.

The CBR cannot urge the government to scrutinise the sources of remittances diligently and weed out the tax-free or tax-evaded money coming back continuously as honoured home remittances. If the government tries to do that, such money will not return through the banks or the inflow of such money may be stopped until safer times return.

The larger picture should be seen clearly. As crimes increase and kidnapping for ransom becomes more common, the money earned through this process has to go out or be obtained abroad to ensure the culprits security.

Similarly, as corruption spreads wider, and the sums involved becomes larger, the money has to be sent out or obtained in countries other than Pakistan to ensure the culpritsÃ¢â¬â¢ safety. Similarly, if a person has a large tax evaded income, he prefers to send that out and receive it later as home remittances of some relative living abroad.

So such crimes within the country have to be checked and the widespread corruption come down. The tax evasion should curbed to check the informal economy becoming larger and larger.

Even otherwise, the efforts of the CBR to increase the revenues in a big way by enlisting the services of other agencies in anti-smuggling operations have been a failure. It had given anti-smuggling powers to the army, navy, coast guards and Frontier constabulary and Rangers. As those powers did not produce any great results, they were withdrawn six months ago.

And now the CBR has Rs950 million to acquire speed boats to check smuggling by the sea. But for spending that much money, the CBR wants a proper study of the anti-smuggling performance of the coast guards using its own speedboats. If the results of the study were not found very encouraging, the CBR may not deem it wise to spend Rs950 million on acquiring speed boats for its own anti-smuggling operation.

The CBR finds its permitted areas for raising revenues limited. But it sees plenty of opportunities for far larger tax collection if permitted which it is not. That makes the CBR to tax the taxed even more and face a storm of protests.


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## Neo

25 September 2006 



ISLAMABAD Ã¢â¬â The World Bank has advised Pakistan to rationalise tariffs especially those of power and gas with a view to adequately facilitate foreign direct investment (FDI) in the country. 
One of the failures of the present government, the Bank believed, is its inability to reduce the cost of doing business in Pakistan by not providing inexpensive and timely the local and foreign investors.
According to one safe estimate, also approved by some government officials privately, FDI could double within one year if various hurdles and impediments in the way of businessmen are removed by the government.
However, the concerned government officials frequently quote the new report of World Bank/International Finance Commission (IFC) which says "doing business became easier in India and Pakistan in 2005-06", adding that five reforms in India and two in Pakistan reduced the time, cost, and hassle for businesses to comply with legal and administrative requirements.
No other South Asian economy improved its business regulations in 2005-2006, ranking the region last in the pace of reforms.
India, as leading reformer in South Asia, has taken over the top spot from Pakistan in last year's report. India cut the time to start a business from 71 to 25 days and reduced the corporate background discussion with some officials revealed that the government urgently needs to simplify business registration,
cross-border trade, and payment of taxes, as well as easing access to credit and strengthening investor protection without which no meaningful investment could take place in the country.
"The problem is that we have too many laws, our bureaucracy is non cooperative and our tariffs, especially those relating to customs, are still high compared to other countries. Then we do not have proper infrastructure which is particularly in bad shape in transport sector. All these things have become a big hurdle in the way of the investors", an official said when approached.
He also said that while power rates were still high, the frequent electricity breakdown was further causing problems to the industrialists. He quoted an example of an investor from Libya who recently came to Pakistan and despite making all efforts, he could not get the required support to set up his business from the Board of Investment (BoI). "Later, he came to us and we helped him to some extent", he said adding that BoI needed to be made a vibrant organisation in a bid to providing all possible facilities to the investors in the country. Like Dubai and China, Pakistan should also provide instant infrastructure facilities to the investors under one roof if at all real local and foreign investment was to be attracted, he said.
A former senior official of the Planning Commission said that World Bank/IFC report has shown some improvement as far doing business in Pakistan was concerned. According to the report, he said, Pakistan was on 74 position in terms of providing infrastructure facilities to the investors which meant that, "we are still far behind and need to do some thing concrete to remove various hurdles being faced by the investors." He said an investor faces lot of problems in getting electricity, gas and water connections for establishing his factory. Moreover, the cost of the land has become so expensive that it was becoming more and more difficult to set up new industries in the country.
He said that the government must undertake second generation reforms to address various serious issues with a view to lowering the cost of doing business in Pakistan.
People sitting in the local offices of donor agencies also believed that cost of doing business in Pakistan was still very high and was causing frustration to the investors. They have proposed that so-called 'one window operation' should be made possible with a view to offer timely and inexpensive infrastructure facilities to the local and foreign investors. 

http://www.khaleejtimes.com/Display...usiness_September805.xml&section=business&col=


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## Owais

*Canadian firm to invest $5 billion in coal gas project* 


NEW YORK (September 26 2006): Pakistan and a Canadian oil and gas company have signed a memorandum of understanding (MoU) here at the Roosevelt hotel on Monday relating to the exploration, development, production and commercialisation of coal bed methane (CBM) in Sindh.

The company expects to bring foreign direct investment of around $2.05 billion for the initial production phase and an ultimate capital outlay exceeding $5 billion. Cathy Oil and Gas Limited executive chairman Robert Muller and Pakistan ambassador Mehmud Ali Durrani signed the MoU. President General Pervez Musharraf presided over the MoU signing ceremony.

Speaking on the occasion, the President hoped the maturation of the MoU would bring relief to the people of Thar desert, who were deprived of the basic necessities of life. He said Pakistan would provide all support to the company and facilitate in their work.

The President in a lighter vain said this would be the second CBM after the one he had initiated in Havana at his talks with Indian Prime Minister Manmohan Singh. "I hope the two CBMs succeed." In this context of this MoU, the CBM stands for coal bed methane.

Muller in his brief speech said the three-stage project involves preliminary airborne reconnaissance survey across the Sindh province, including the use in Asia of the US-restricted airborne gravity gradiometer technology. He said this data will be used to develop a geological model of the Indus Basin to identify areas for exploring coal bed methane (CBM).

Cathy expects to spend over $200 million on one of the largest CBM exploration programmes by global standards involving seismic lines and exploratory drilling over extensive areas to identify second stage exploration targets.

The final exploration stage of the project involves additional drilling, detailed geological surveys by global standards over an extensive area. The last stage--production--involves setting up the CBM production wells and gathering systems.

Gas produced will then be fed into Gas to Liquid Plants (GTL) to produce value-added products such as diesel and jet fuel. Muller said another company--Jacobs Engineering--will design and fabricate GTL plants of 10,000 barrel per day capacity for Cathy.

He said Cathy expects a combined capital outlay of around $2.05 billion for the initial production phase and an ultimate capital outlay exceeding $5 billion.

He said the project would bring direct employment to 50,000 people and more than 100,000 people would be employed in the connected downstream industry.

He said the project would bring immeasurable economic and technological benefits to Pakistan. In addition to contributing to raising the value of annual tax revenues, the project and the value of the CBM extracted ($10 billion) will have a significant impact on Pakistan's balance of trade, especially its energy deficit.

He said Cathy's initial investment of $2.05 billion, which represents over two-third of Pakistan's current foreign direct investment rate, will also lead to direct and indirect employment.

"The company estimates that total and support employment in both the gas processing and gas plant manufacturing will be around 50,000. This could result in an additional 100,000 indirect jobs."

Muller said as part of this project, Cathy will also establish a centre of excellence in the geo-data management and remote sensing and train the department of mining staff in advanced technologies for groundwater management, geological hazards identification, agricultural prioritisation, environmental hazard analysis and mineral and petroleum exploration. He said these skills will be used by Pakistani geo-scientists for both the domestic and international projects.

Extraction of the CBM from the Indus Basin coal is expected to produce an average 20 barrels of oil for every barrel of synthetic diesel or jet fuel produced.

Gas production for a single 10,000 barrel per day capacity GTL plant is expected to produce some eight million gallons of water per day. This water will be available for a wide-range of uses in Pakistan. In the southern region of the exploration, it would be brackish and in the northern it would be potable, Muller said on a query from President Musharraf.


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## Owais

*July-August portfolio investment down 50.9 percent* 



ISLAMABAD (September 26 2006): Though foreign direct investment (FDI) in Pakistan during July and August 2006-07 soared by 62.65 percent to $375.4 million, the withdrawals from portfolio investment were on the rise that dipped by 50.9 percent ($33.1 million) to $31.9 million from $65 million recorded in corresponding period of last fiscal year, the State Bank of Pakistan (SBP) reported on Saturday.

The most depressing thing of the State Bank data was that investors withdrew about $29.6 million from portfolio investment. Singapore was the only country which brought in $43.6 million portfolio investment.

During the first two months of the current fiscal year, the amount of FDI rose to $375.4 million against $230.8 million of 2005-06, but portfolio investment declined to $31.9 million against $65 million in corresponding period of last year. Therefore, on balance, total foreign private investment (FDI and portfolio investment) in two months increased by 37.7 percent to $407.3 million from $295.8 million in corresponding period of last year.

The central bank in its third quarterly report, released a few months back has also warned the government of surging portfolio investment because of its high volatile nature as its sudden withdrawal was not only depressing the stock prices but also reducing central bank of the recipient country's ability to maintain its currency value.

"The surge in portfolio investment is always seen with concern due to the high degree of volatility attached to these flows since its sudden withdrawal depresses the stock prices", the Bank says.

The Bank in its report has also expressed concern over the utilisation of privatisation proceeds for financing non-developmental expenditures and its inclusion in Foreign Direct Investment (FDI), suggesting to the government to focus on non-privatisation FDI for bringing in new technology and market access to accelerate growth.

According to the break-up of investment by region, developed countries made total investment of $262.4 million including FDI $263.9 million and withdrew portfolio investment of $1.5 million. The developing economies invested $111.6 million (FDI $78.5 million and $33.1 million portfolio investment).

Among developed countries, Western Europe made total investment (FDI and portfolio) of $117 million and European Union, $102.5 million against $89.8 million and $59.1 million last year. Besides, under unspecified head (investment by IFIs) was $33.2 million. This included FDI of $33 million and portfolio investment of $0.2 million.

Among developing economies, Caribbean Islands invested $2.8 million in FDI and withdrew $0.5 million portfolio investment during the period under review. Africa, including Libya, Egypt, Mauritius, South Africa and other African countries invested $13.1 million FDI, among which only Mauritius made direct investment of $12.7 million. However, African countries made zero portfolio investment in Pakistan during the period.

Asian countries (West Asia, South, East and South East Asia) made total investment of $96 million including $62.4 million FDI and $33.7 million portfolio investment.

The break-up of investment further says that United States was the biggest investor in Pakistan totalling $122.3 million with $117.1 million FDI and $5.2 million portfolio investment. United Kingdom (UK) was next with total investment of $67.5 million, including FDI of $65.4 million and portfolio investment of two million dollars.

However, in terms of direct investment, United Arab Emirates (UAE) was third ($48.2 million) followed by Switzerland with $20.8 million, Netherlands $15.8 million and Luxembourg with 170.6 million dollars. Saudi Arabia withdrew $3.4 million FDI.


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## Owais

*Japan pledges $207 million ODA for two projects* 


ISLAMABAD (September 26 2006): The Japanese government on Monday pledged $207 million Official Development Assistance (ODA) for two projects pertaining to road construction and power transmission. Among this ODA amount (normally soft loan), $174 million would be spent on Indus Highway Construction Project (Phase-III) and remaining $33 million on Dadu-Khuzdar Transmission System Project.

Japanese Ambassador to Pakistan Seiji Kojima announced this here in a meeting with Minister of State for Economic Affairs Hina Rabbani Khar. The transport is an important sector of the economy. In Pakistan, road transport accounts for 89 percent of passenger traffic and 96 percent of the freight traffic.

It is, therefore, of great significance for the best use of the road network that it should not only be maintained but also be widened and rehabilitated.

The Indus Highway (N-55) is shorter than the existing National Highway (N-5) by 500-km, but it being unfinished has overloaded the Indus Highway with traffic, which is one of the major bottlenecks in smooth flow of traffic.

The Indus Highway is the key route for domestic distribution that connects Peshawar with the main seaport of Karachi. In comparison to N-5 that starts from the east shore of the Indus River, the Indus Highway starts in the west shore.

The completion of the Indus Highway (N-55) would be instrumental in bringing socio-economic progress to less developed areas. Larkana and Dadu in the northern Sindh that are famous for the production of rice is the central part of the third phase of Indus Highway. The completion of the third phase will contribute to the economic development of Sindh, it will significantly help in improving the transportation of agricultural goods to Karachi that is the main port city. The improvement in the market access will result in an improvement in the business and economic activities.

The power consumption in the agriculture sector is large as it is mainly used for pumping underground water. In addition, the electric power demand has also risen in the refrigeration storage of farm products, in the raw cotton industry and in the mineral industry. Almost no or insufficient power supply through the main line expanding from Gudu in Punjab hinders the development of agriculture and other industries.

The construction of the hydropower plant is difficult because the amount of the rainfall is very little in this province and the thermal power plant construction is also difficult. So the demand for transmitting the electric from another areas is high in this region.​


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## Owais

*Accord on trade with US soon: Musharraf* 


NEW YORK (September 26 2006): President General Pervez Musharraf has said that agreement on bilateral trade and market access with the US will be finalised soon. He said this while speaking at a dinner, organised to raise funds for the National Commission for Human Development Fund at a local hotel on Sunday.

Referring to Pak-US relations, the President said that progress in discussion on bilateral trade and market access was likely to materialise soon as the talks had paved ways to success. He said that Pakistan had reached agreement of F-16 deals, and added: "Best possible deal is given to us."

He said that there was complete unanimity of opinion between President Bush and himself on issues of mutual interest. "We have confidence and trust in each other and are determined to fight together against evils."

The President, addressing the Pakistani community, gave details of Pak-US relationship, state of Pakistan's economy, situation in Balochistan, fight against terrorism, fear of the process of Taliblisation, responsibilities of Pakistani's living abroad and needs for healthcare, education, poverty alleviation and unemployment.

President Musharraf said that Pakistan's internal and external policies were in the right direction. He said he would get the women empowerment bill passed by parliament. The President, in his more than 120-minute extempore speech, stressed the need for deal with national and international issues with prudence and keeping the national interest supreme.

He said that Pakistan's literacy rate had gone up, the gross domestic product (GDP) had doubled and per capita income had gone up, investment was coming in and the economy was booming.

He said that Pakistanis, living in the US, should adopt this country and abide by its rules. He said that good conduct of Pakistanis would create an image of their country of origin and its advantages would be many. He said that he was a soldier and "a man of field."

"My army has confidence in me and follows me," he said, and added that it was necessary that people should be optimistic about their future. He said: "I assure you Pakistan is on the path of progress."


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## Owais

*Pakistan seeks joint ventures with Bahrain* 


ISLAMABAD (September 26 2006): Pakistan is hoping to cash in on Bahrain-US Free Trade Agreement (FTA) by encouraging its business community to strike up joint ventures. Pakistan embassy deputy head of mission Shaukat Ali Mukaddam said, there are good opportunities for joint ventures between Bahrain and Pakistan business communities, especially in the textile and food industries, private _TV News _channel reported.

A clause in the FTA will allow over the next 10 years for 60 million linear meters of textiles to be imported to Bahrain and then after production exported to the US.

He said, business communities in Bahrain and Pakistan should take full advantage of this. "Pakistan is the third largest textile exporting country in the world and our leather industry is advanced, so we could take leather from Pakistan and items could be manufactured in Bahrain," Mukaddam added.

"Also, we are one of the largest fruit producers, so we could bring fruit to Bahrain and they could export canned fruit and juices. There are a lot of opportunities," he said. Mukaddam said, they would be highlighting Bahrain at an investors' conference for expatriate Pakistanis in Islamabad in mid-December.

The Joint Economic Committee, which seeks economic, trading and investment co-operation between Pakistan and Bahrain, will also hold its next session in Islamabad in the first quarter of 2007.

Mukaddam said, "We want to invite the Pakistani investors to come to Bahrain, we have informed the community in Pakistan and are waiting for feedback. We hope our businessmen will cease the opportunity."


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## Owais

*Rising steel prices disappoint local importers* 


KARACHI (September 26 2006): Chinese galvanised steel prices have shot by $30 per tonne during the last week due to price spike of zinc at London Metal Exchange (LME), trade sources said on Monday. They said that Chinese prime material of galvanised coil has become costlier by $30 per tonne to $750 per tonne, during last week, as the rising zinc prices at LME pushed steel prices upward.

"The rising steel prices on the international front have extremely disappointed the local importers, who were anticipating a steep decline in the world's steel prices during this month (September)," said a Karachi-based importer.

Importers are of the view that steel prices, after touching peak, are coming back to previous levels and no one wants to take a major risk in that situation. Senior traders said that a few importers had hardly booked a meager quantity at the rate of $750 per tonne and majority of them was currently sidelined and meticulously monitoring the international trend.

"I think around 2,000 to 3,000 tonnes of galvanised coils have been booked," a trader said. They pointed out that the recent price hike of galvanised steel coils is for November shipment. "Our (importers) earlier placed orders at the rate of $720 per tonne are now on the way to Karachi port and the booked commodity would be arrived here shortly, so we prefer to stay idle for some more days," said another importer.

He further said that the importers intend to start placing their orders in October as they are expecting the market to get settled by that time. "If market gets settled, then we would try to bring Chinese material here and we are still optimistic that galvanised coil prices would be cut down by $50 per tonne to $700 per tonne in the next few weeks," he added.

"We are not in a hurry," said a leading importer, adding that construction activities across the country are dormant these days and people usually avoid starting construction of their houses or any other project, therefore, we would import the material when the prices would decline.

He dispelled the impression that the country could witness shortage of the commodity due to lesser steel imports, and said that previous contracts were being actualised and the already booked material was in the pipeline.

The importer said that steel trade would be viable for local importers when international prices of hot-roll material would come down to $425 per tonne, and of galvanised coil rates to $700 or $710 per tonne.

"Hot-roll coil is, in fact, the base material for us and if its prices cut significantly then it would put a positive impact on the prices of other materials," he added.


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## Neo

*NEW YORK *_(updated on: September 26, 2006, 17:33 PST_): US Senator John Kerry has called for increasing US development funds for Pakistan as part of the strategy to counter extremism.

"(We) must use economic leverage to ensure the Taliban no longer finds sanctuary and recruits in Pakistan", he said in an op-ed article in The Wall Street Journal.

Noting that Washington gave Pakistan only $300 million in economic support last year. Kerry said the amount was insufficient as that's "what we spend in a day in Iraq."

"We need to give more in development funds earmarked for specific projects that help undermine radicals and demand more in return from (President Musharraf) government," he said.

Kerry said that US seemed to have forgotten Afghanistan. "It is clear the Taliban and al Qaeda have not," he pointed out.

"We cannot afford to repeat the mistakes of the past," Kerry said. "The US must not cut and run from the real frontline in the war on terror. We must recommit to victory in Afghanistan".


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## Neo

MOSCOW (September 26 2006): A Russian company is in talks to supply electricity to Pakistan over a 30-year period in a deal worth up to $90 billion (70 billion euros), business daily Kommersant reported on Monday.

Electricity would be supplied by Russian export monopoly Inter-RAO from plants under construction in Tajikistan and Kazakhstan, the company's deputy general director Alisher Kalanov told the newspaper following negotiations with the Pakistani government last week. Exports could begin within six years and would require investment of several hundred million dollars, he told the paper.

The deal would be worth between 2.5 billion and three billion dollars per year over 30 years, supplying 50-60 billion kilowatt-hours per year to Pakistan, whose current annual production is 82 billion kilowatt-hours, the paper said.

Last year Russian electricity monopoly Unified Energy Systems, which controls 60 percent of Inter-RAO, said it was looking into the export of electricity from two hydro-electric plants under construction in Tajikistan and a thermal power plant being built in Kazakhstan, all due to come on line in 2009, the paper said.

However, exporting electricity from the plants to Pakistan in a cost effective manner would require the building of electricity cables across Afghanistan, a geopolitical complication that could undermine the viability of the project, local experts told the newspaper. The delegation also discussed the possibility that Inter-RAO could help build an electricity plant in Pakistan, Kalanov said.

http://www.brecorder.com/index.php?id=480349&currPageNo=1&query=&search=&term=&supDate=


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## Neo

KARACHI, Sept 25: Foreign private investment in PakistanÃ¢â¬â¢s stock market has suddenly jumped in September. Almost all the investments came from the United States and the United Kingdom.

Official figures released by the State Bank showed that up to September 22 this year, an investment to the tune of $42.096 million flew into Pakistani stocks. It was much higher than the portfolio investments made in July and August that totaled $31.9 million.

The figures showed that only investors from the US and the UK were active while the usually active Singapore, the UAE, Saudi Arabia and some European countries remained on sidelines. The US invested $26.730 million and the UK $16.371m in September.

Experts said most of the investments went in the oil sector, while telecommunications and cement also attracted some investments. Analysts said if the pace of portfolio investment continues for the whole year, it might cross the last year investment. During 2005-06, a total of $351.5 million was recorded as portfolio investment.

The inflow of foreign direct investment (FDI) also went up significantly during the first two months of the current fiscal year. During July-August 2006-07, FDI reached $375.4 million against $230.8 million during the corresponding period last year, showing a rise of 63 per cent.

Pakistan had received a record FDI of about $3521 million during 2005-06, including the privatisation proceeds. It had been the biggest help to the government struggling to meet the record trade deficit.

The rising import has threatened the balance sheet of the countryÃ¢â¬â¢s foreign exchange account and the governmentÃ¢â¬â¢s effort to increase exports and reduce imports remained failure for the last couple of years.

The fear of further widening of trade deficit has compelled the State Bank to take care of the situation. The SBP advised banks to improve their efficiency to increase the Pakistani workersÃ¢â¬â¢ remittances. The SBP has set a target of $6bn for the current fiscal year remittances, while last year it received a total of around $4.3bn.

The analysts said the high portfolio investment would improve the countryÃ¢â¬â¢s image abroad and the higher FDI was a sign that the country had potential for the foreign investment.

However, they say FDI would increase with the privatisation of governmentÃ¢â¬â¢s stakes in oil companies like Oil and Gas Development Company. They were of the view that the telecom sector had already received maximum FDI and no significant investment in this sector looked possible.

The analysts said for the last seven years there had been an effort on the government level to attract Arab countryÃ¢â¬â¢s wealth but could hardly sell PTCL and KESC.

However, fresh investment from the Middle East has started coming into the financial sector, real estate and construction. The analysts believe that the real estate and construction had tremendous potential of growth and had great attraction for the Arab countriesÃ¢â¬â¢ investment.


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## Neo

ISLAMABAD: Prime Minister Shaukat Aziz on Monday said that Pakistan was geared to become the regional hub for Information Technology and Telecom business due to the deregulation and privatisation policy, opening up of telecommunication sector, the competitive and comparative advantage due to the availability of highly skilled human capital, world-class infrastructure and reduced cost of doing business has stimulated phenomenal growth as well as attracted investments. 

Prime Minister was talking to a delegation of Ericsson headed by Ragnar Back, Chairman Ericsson Operations in Central and Eastern Europe, Middle East and Africa who called on him at the PM's House here Monday. 

The prime minister said, "Telecommunication, today, is the fastest growing sector of the country with 27 per cent teledensity and he country has 37 million cellular phone subscribers and the number is fast growing". 

He said the use of cellular phones among low-income subscribers was growing. In rural areas the government was providing the facility of phones through the system of wireless local loop. Prime Minister said Pakistan has come a long way in developing the Information Technology industry. 

He said the total size of Information Technology business in Pakistan has reached about $ 2 billion with 50 per cent growth per annum during the last three year and this includes domestic industry, hardware and export of software and Information Technology enabled services. 

He said government was in a process of setting software technology parks at Karachi Lahore and Islamabad. Islamabad, the Prime Minister said is rapidly growing as an Information Technology and telecom hub. 

Chairman Ericsson Operations in Central and Eastern Europe, Middle East and Africa Ragnar Back apprised the Prime Minister of the plans of Ericsson to expand business in Pakistan. He said presently the company has employed about 700 professionals in Pakistan and the number will increase to 1000 by the end of this year. Ragnar Back emphasized the strategic importance of Pakistan and said deregulated markets such as Pakistan are experiencing exponential growth and competition. Ericsson continues to focus on strategic partnerships in these growth markets. Ragnar Back said Ericsson in collaboration with Higher Education Commission and Government of Punjab is working towards the launch of University of Engineering Science and Technology, at Sialkot in 2008. The delegation including Bo-Erik Dahistorm, President of Ericsson Middle East and Zibber Mohiuddin, President and CEO of Ericsson Pakistan praised Pakistan's favourable policy framework. They presented felicitations on the phenomenal growth and development of telecommunications sector in Pakistan and said it is due to dynamic and visionary leadership of President Pervez Musharraf and Prime Minister Shaukat Aziz. The Ericsson delegation reassured the Prime Minister that Ericsson's top priority in Pakistan was to continue developing the Telecom industry of Pakistan.


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## Owais

*300 importable items from India may be allowed: heavy agenda for ECC today* 


ISLAMABAD (September 27 2006): The Economic Co-ordination Committee (ECC), which is scheduled to meet on Wednesday, September 27 with Prime Minister Shaukat Aziz in the chair, is expected to clear above 300 items to be imported from India on the basis of positive list, official sources told _Business Recorder._

As _Business Recorder _reported recently that the government was waiting for a suitable time for expanding in the list of items importable from India, and the meeting between President Pervez Musharraf and Indian Prime Minister Manmohan Singh in Havana paved the way for such a development on trade front.

Sources said the new items to be included in the positive list would be around 320-340, as the final decision would be taken by the ECC, which is a competent forum.

They said India had passed on a list of 286 items to Pakistan a few months ago, but later on, the list was further enhanced through diplomatic channels, whereas local business community had demanded permission to import 900 items.

After a detailed comparison of both the lists and keeping in view the interests of the local industry, the government had identified above 300 items, which would be included in the positive list for the time being, the sources added.

Sources said that preference has been given to items on which the duty is about five percent and are not being locally manufactured.

At present, the trade volume between both the countries is less than $1 billion and it is very much in favour of New Delhi. The volume of trade between Pakistan and India during 2004-05 was $746.396 million against $476 million in 2003-04.

The share of Pakistan's total exports to India was 0.8 percent, whereas the share of imports from India was 2.5 percent during 2003-04. Sources said Pakistan's share of exports to India increased to 2.8 percent during July-May 2004-05, while share of imports from India jumped to 8.6 percent when compared with the same period last year.

However, illegal trade between the two countries is higher than the legal channels and they are seriously working on curbing it.

*HEAVY AGENDA FOR MEETING *The ECC is likely to approve establishment of second container terminal at Port Qasim on 'Build, Operate and Transfer' (BOT) basis. It may also approve wheat support price and the much-talked about use of balanced fertiliser.

The ECC is also expected to approve financial package for the Water and Power Development Authority (Wapda) to cope with cash shortfall of 2005-06, besides extending irrevocable government guarantee for raising Rs 7 billion emergency loan.

The ECC would also decide the volume of subsidy to be given to Karachi Electric Supply Corporation (KSEC) against the tariff determined by National Electric Power Regulatory Authority (Nepra) but the government did not pass it on to the consumers. Import of 100 MW electricity from Iran to Gawadar would also be considered by the ECC.

Enhancement of equity to 100 percent for foreign insurance companies, leasing of 'right of way' (ROW) land by National Highway Authority (NHA), exemption from import duty on power and water desalination co-generation projects, equity based investment abroad by resident Pakistanis, diamond bar Island city, a proposal for development of state-of-the-art resort-theme park and modern urban facilities at Bundal-Buddo Islands, Port Qasim, Karachi.

The ECC would consider cases referred to tariff anomalies committee R&D Support to manufacturers-cum-exporters of dyed/printed fabrics and home textiles.

The ECC would also determine price and terms & conditions of land at downstream industrial estate (DIE) Bin Qasim Karachi, restoration of facilities withdrawn by Central Board of Revenue (CBR), signing of Implementation Agreement (IA) between Tuwairqi Steel Mills and GoP and extension in the date of signing of Gas Sales Agreement (GSA) under the Fertiliser Policy-2001 are also on the heavy agenda of the ECC meeting.


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## Owais

*Banking sector profits up by 65 percent* 

KARACHI (September 27 2006): The banking sector staged yet another remarkable performance as the profitability of all the 22 listed banks during the first half of the calendar year 2006 surged by 65 percent, touching Rs 32 billion as against Rs 19.4 billion registered during the corresponding period of 2005.

Analysts said that major reasons attributable to this growth were higher advances and increase in lending rates of the banking sector at large. As a result, mark-up income of the banks rose by 75 percent whereas net interest income soared by 42 percent.

Top performers, in terms of percentage growth in bottom line, were UBL, ABL and Meezan Bank (MEBL), recording increase of 125 percent, 117 percent and 112 percent, respectively, while on the other hand of the spectrum stood NIB, KASB and Saudi Pak Commercial Bank (SPCB) which lost 69 percent, 41 percent and 15 percent in terms of profitability.

The overall advances of the listed banks during the period under review rose by 11 percent to Rs 1.6 trillion. At the same time, deposits rose by 6 percent to Rs 2.27 trillion. As a result, the Advance/Deposit ratio netting provisions for non-performing loans stood at 68 percent.

Hence, the banking system is generally in a sound condition despite State Bank of Pakistan's tighter requirement for banks to maintain cash reserve requirement and statutory liquidity requirement of 7 percent and 18 percent respectively from 5 percent and 15 percent previously.

Due to its recent entry in commercial banking, Bank Islami had the highest ADR of 165 percent, following which were NIB and MEBL with an ADR of 99 percent and 86 percent respectively. On the other hand, Crescent Commercial Bank (CCBL) was the safest in this regard, having an ADR of 27 percent.

Next up was SPCBL and then the Bank of Khyber whose ADRs stood at 38 percent and 45 percent respectively. As far as the interest rate environment is concerned, weighted average lending rates of the banking system on fresh loans rose by 3.1 PPS y-o-y to 10.1 percent during the first half of calendar year 2006, whereas rates on fresh deposits during the same period rose by 2.1 PPS to 4.5 percent.

Consequently, spreads were up by a percentage point at 5.5 percent from 4.5 percent previously, which effectively translated into an increase of 22 percent y-o-y.

Jawad Haleem, a research analyst at Atlas Capital Market, said that the profitability of the banking sector for the full year 2006 is expected to surge by 39.41 percent to Rs 66-67 billion as against Rs 47.5 billion during 2005.

The prospective price to earnings and prices to book value multiples of the industry for calendar year 2006 are thus expected at 8.5 and 2.3 respectively. "Being at the deepest discounts to both these industry multiples, our best picks of the sector are BoP, ACBL, FABL and Picic Commercial Bank (PICB)," he added


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## Owais

*Sindh authorised to award licences for coal gas exploration* 


ISLAMABAD (September 27 2006): The Ministry of Petroleum and Natural Resources has authorised the government of Sindh for awarding exploration and production licences of Coal Bed Methane (CBM) to the intending companies. According to the notification issued on Tuesday, the Sindh provincial government would henceforth award licenses for this purpose.

A dispute resolution committee headed by Minister for Petroleum and Natural Resources has also been constituted with Minister for Law, Justice and Human Rights, Provincial Minister Mines and Mineral Development, secretary law, justice and human rights division, secretary defence division, secretary petroleum and natural resources and secretary provincial mines and mineral development department as its members, the notification said.

Sindh government had taken up the matter with the federal government, claiming that CBM was the property of provinces and it should be regulated by them alone.

The matter was put before the Economic Co-ordination Committee (ECC) of the cabinet, in its meeting on June 14, 2006, by the Petroleum Ministry, the committee constituted a dispute resolution committee (DRC) under the chairmanship of petroleum minister to resolve disputes amongst the stakeholders on the country's natural resources.

Under the regulation of Mines and Oilfields and Mineral Development (Government Control) Act, 1948 (XXIV of 1948) and Pakistan Petroleum (Exploration and Production) Rules, 2001.

*The notification sets the following conditions for the exploration and production of Coal Bed Methane as:*

a) The Provincial Licensing Authority for CBM would issue exploration and production licenses after due diligence and obtaining necessary performance bond from the intending companies;

b) The provincial government will not grant rights to explore and produce CBM over the areas already allotted by the Federal government for petroleum exploration without first obtaining the consent of respective companies on case to case basis;

c) CBM operations do not hinder petroleum exploration and production activities;

d) The Federal government would have the right to issue licenses for exploration and production of petroleum in the CBM licensed areas;

e) The above conditions would be made part of the contract/agreement with the intending company, giving specific time lines for the proposed work programme, subject to the security clearance by the concerned government organisations for carrying out reconnaissance and exploration by the intending companies;

f) All the relevant documents including agreements with the provincial government, Performance Bond and Contract documents with the intending company will be formulated in consultation with the Ministry of Petroleum and Natural Resources and Law and Justice Division.


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## Owais

*Kuwait bans fish from Pakistan* 


KUWAIT CITY (September 27 2006): Kuwait on Tuesday slapped an indefinite ban on all fish imports from Pakistan and Iran on health grounds, said Commerce and Industry Minister Falah al-Hajeri. The ban was attributed to a suspicion that some fish imports from the two Asian nations could contain bacteria that cause cholera, the minister told the state-run Kuna news agency.

Some members of the municipal council have alleged that Emirate's food health authorities have allowed Pakistani and Iranian fish imports into Kuwait despite testing positive for the cholera microbe. The council is scheduled to hold an emergency session on Wednesday to discuss the issue.


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## Owais

*US-based firm acquires 70 percent stock of 2 Pakistani BPO companies* 


KARACHI (September 27 2006): The Los Angeles-based firm, En Pointe Technologies, has acquired 70 percent stocks of two private sector Pakistani companies, Ovex Technologies Ltd and Ovex Pakistan Limited. Both companies provide back office operational and financial accounting services for En Pointe.

En Pointe is a provider of hardware, software, and information security, and manages services for government agencies and enterprise customers. Sources said that En Pointe Technologies Inc, a leading provider of business-to-business information technology products, services and solutions, has entered into a definitive agreement to acquire 70 percent of the stock of two privately-owned Pakistani companies that provide business process outsourcing (BPO) services.

The transactions are expected to close on or before October 4, 2006. However, financial terms of the deal could not be known.

Ovex Technologies (Private) Limited has provided offshore services to En Pointe and other customers since 2003, while a related company that was formed in July 2005, Ovex Pakistan (Private) Limited serves the domestic Pakistan market. The two companies, collectively 'Ovex' employ more than 700 highly skilled and trained staff members.

Ovex currently provides back office operational and financial accounting services for En Pointe directly as well as back office support for various US customers under a contractual arrangement with Premier BPO Inc, a variable interest entity partially owned by En Pointe.

Ovex Domestic has been providing call centre services for its first customer, a large Pakistan telecommunication firm, since December 2005. "This will be a landmark transaction for the BPO industry in Pakistan. We believe that En Pointe is the first US publicly-traded company to make a BPO acquisition in Pakistan," said Omar Saeed, Managing Director Ovex Technologies.

"We believe that Ovex is already one of Pakistan's largest and most experienced business outsourcing providers and expect Ovex to become the first BPO enterprise in Pakistan to reach the 1,000 employee mark by the end of 2007," he added.

"To serve the Pakistani domestic market, Ovex Domestic is being positioned to become a leading supplier of BPO services, including the multinational businesses that have been recently attracted to the region.

As a subsidiary of a US based publicly-traded company, we believe that Ovex will be able to offer our own domestic publicly-listed companies an optimal level of performance in servicing their business transactions, including the competency, integrity and transparency expected of public companies," Saeed added.


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## Owais

*BIT with US to be finalised soon: minister* 


ISLAMABAD (September 27 2006): The Minister of State for Investment, Umar Ahmad Ghuman has stated that President General Pervez Musharraf's visit had increased Pakistan's standing in the international community and had enhanced its position regarding existing and potential foreign investors significantly.

The Minister who is currently part of the President's official entourage to United States stated that Pakistan's economic successes were much appreciated by the many foreign investors who had the chance to meet the President on this trip.

The Minister stated that the US administration had reiterated their support for furthering the President's investment initiative and facilitating US investors to invest in Pakistan through the bilateral investment treaty (BIT) which was close to being finalised between Pakistan and the US administration.

The fact that Pakistan had achieved economic growth at 6.6 percent in 2005-06, and that Pakistan's economy had grown at an average rate of almost 7.0 percent per annum during the last four years (2002/03-2005/06) certainly positioned Pakistan as one of the fastest growing economies of the Asian region, says a press release.

The Minister stated that many foreign investors were impressed by the emergence of a new investment cycle with investment rate reaching 20.0 percent of GDP (highest in the last 12 years).-PR


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## Owais

*'Potential exists to boost land trade with China'* 


ISLAMABAD (September 27 2006): A lot of potential exists between Pakistan and China to enhance trade through land routes which the two governments could exploit by removing the procedural requirements, upgrading infrastructure facilities, sharing information, and further reducing customs duty and tariffs on goods.

These views were expressed by visiting Chinese delegation at a roundtable "Pak-China Trade: The Ground Linkages", organised by the Institute of Policy Studies in collaboration with the Pak-China Business and Investment Promotion Council here on Tuesday.

Kashgar Administration Commissioner Chen Ji, who is leading the delegation to Pakistan in an exhibition, said that the link of Kashgar could be used in promoting the business and people-to-people relations between the two countries. He said the Karakoram Highway has already been upgraded to China's national standards and the same is under way on the Pakistani side.

The visiting Chinese official informed that agriculture and livestock were the mainstay of economy of the areas bordering Pakistan and there was a lot of surplus sheep to be exported.

"Meat of Halal animals like sheep and goats can be exported from Kashgar to Pakistan," he said, adding the problem of traffic and communication between the two countries should be improved for enhancing two-way business.

An official from Animal Husbandry Commission of Pakistan informed that Pakistan and China have signed four protocols for co-operating in the livestock sector. Bilateral trade volume in this sector is, however, very low, he regretted.

Jalil Ahmad Malik, president, Rawalpindi Chamber of Commerce and Industry and Aman Ullah Khan, chairman, Pak-China Business and Investment Promotion Council were also present on the occasion. Earlier, IPC Director General Khalid Rahman, briefed the guests about the IPC's China program.

Senator Professor Khurshid Ahmad said that co-operation between China and Pakistan has increased substantially in areas of strategic defence and construction sectors but the real challenge lies in trade which needed to be further explored.

He said that land route and communications were the basis of trade between the two countries, which should be supported by aerial routes as well. He said that Asia would play a significant role in world affairs in the next 20 years and the strategic co-operation between Pakistan and China would be of great importance in this context.

Professor Khurshid observed that there were several problems relating to trade between the two counties which needed to be addressed. There were many agreements between the two countries, but they were not properly made operational. There was a need to develop rule of business, he said underlining the opening of bank branches in both the countries. He also pointed out problems of physical infrastructure, movement of people, visa facilities to businessmen, language barriers, quality of goods, and services.


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## Owais

*Maiden Islamic Sakuk Institution to be set up next year* 


KARACHI: Pakistan&#8217;s maiden Islamic Sakuk Institution with a paid up capital of $100 million would be set up next year.

The expert who had set up Bahrain Islamic Liquidity Management Centre and Islamic Capital Partners&#8217; M.D. Ashar Nazim told this to Geo News.

He told that the Islamic Sakuk Institution would be dealing in the issuance of Islamic Bonds and liquidity management for the Islamic banks in Pakistan. The formation of a consortium comprising of Gulf and Pakistani investors has been planned for the setting up of this Institution.

He told that a presentation for the setting up on this Institution has already been given to the State Bank of Pakistan, which was appreciated.

Ashar Nazim told that Islamic banks presently needed Islamic securities for SRL, while the appetite for the Islamic Bonds also existed in the traditional market. He told that the Gulf Sakuk market during a short span of four years has tremendously expanded from $1 billion to $40 billion.

He said that Pakistan&#8217;s Islamic Sakuk Institution would be the third of its kind in the world, following Bahrain Liquidity Management Centre and Bahrain Sakuk House.


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## Neo

KARACHI, Sept 26: Standard Chartered Bank has become the largest bank in Pakistan in terms of paid-up capital after the acquisition of Union Bank. Its paid-up capital is now higher than National Bank of Pakistan.

After the merger, the bank has been named Standard Chartered Bank Pakistan (SCBP). It has already become the largest foreign bank in Pakistan.

Standard Chartered PLC announced on September 5 this year that its subsidiary company, Standard Chartered Bank (Pakistan) Limited, had completed the acquisition of a 95.37 per cent interest in Union Bank Limited. The bank paid $487 million cash for the purchase of Union Bank.

On Monday, the bank announced to pay 2.5 shares of SCB to buy one share of Union Bank. The current free float of Union Bank is estimated at 16 million shares.

Ã¢â¬ÅBy applying this swap ratio (2.5:1), the paid-up-capital of SCBP would reach Rs8.9 billion, ordinary shares of 892 million,Ã¢â¬Â said Muhammad Imran, analyst at JS brokerage house.

The paid-up capital of SCBP is the highest among all banks operating in Pakistan. The second highest paid-up capital is of National Bank which stands at Rs7.09 billion, with the largest branch network and the biggest number of account holders.

As per the detailed amalgamation scheme, after excluding 323 million shares of Union Bank (which SCB has already bought), SCBP will issue 39 million ordinary shares at par value to the registered holders of the ordinary shares of Union Bank.

Mr Imran said his calculation showed that SCBP would earn a profit of Rs7.8 billion in 2006. Banking has been a high-profit sector for more than two years and it attracted a number of foreign banks to invest in Pakistan.

Banking sources said at least three top European banks were involved in searching for a suitable financial institution to buy. They said one of the largest banks from the Middle East was also making effort to attract a European buyer.

Meanwhile, PICIC Commercial Bank is also said to have been looking for a buyer and majority shareholders are in contact with foreign banks.

Ã¢â¬ÅThe high growth of the financial sector during last couple of years in Pakistan has changed the mood of investors and the sector is under the current of new investment waves that could change the names and working of many banks operating in Pakistan,Ã¢â¬Â said a well-placed banking industry source.

He said like Union Bank, which had a strong footing in the industry, many bank would receive attractive package to replace them with a foreign entity.


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## Neo

KARACHI, Sept 26: Romania is prepared to develop valuable industrial collaboration with the business community from Pakistan, Chamber of Commerce and Industry of Romania Vice-President Jose Iacobescu said on Tuesday.

In a meeting with PakistanÃ¢â¬â¢s Ambassador Sanaullah in Bucharest, Mr Iacobescu said the collaboration could be carried out in different modes including joint ventures, direct sale and purchase projects as well as transfer of technology.

Former Romanian minister for privatisation Prof Sorin Dimitriu, who is currently president of the Balkan Institute for Metallurgical Forecasting, accompanied Mr Iacobescu and informed Pakistan ambassador that his institution would like to support any business initiative from Pakistan to ensure transfer of defence-related technology.

Iacobescu reiterated that a large section of the newly-privatised industry units in Romania were sincerely looking for commercial partners worldwide. Due to PakistanÃ¢â¬â¢s economic recovery and expanding needs for development, Romanian businessmen perceived the country investor friendly.

He expressed the hope that the bilateral Joint Governmental Commission would meet soon in Romania and on the eve of this meeting a business delegation from Pakistan would visit Romania to hold discussions with their counterparts.

In response to an invitation to send a business delegation to Pakistan to look at the expanding railway development projects, Iacobescu showed his keenness to exchange expert-level delegation in order to determine prospect for future collaboration


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## Neo

ISLAMABAD, Sept 26: Prime Minister Shaukat Aziz has said Pakistan is geared to become the regional centre and strategic market for software development and research and development (R&D) activities in IT and telecom by virtue of the availability of highly qualified personnel and the reduced cost of doing business.

He was talking to Ren Zhengtei, president Huawel Technology of China, who called on him along with a delegation at the PMÃ¢â¬â¢s House on Tuesday.

Mr Aziz said Pakistan and China had a special relationship which was strategic, close and multifaceted covering political, diplomatic, defence security, social and cultural fields and the enhanced levels of cooperation were in the mutual benefit of the two countries.

He said the government being cognizant of the vital role played by emerging technologies in the development process had placed development of education sector among its highest priorities.

He said the government was investing in human capital to prepare a critical mass of highly qualified people in key areas of science and technology to lead the development process.


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## Neo

ISLAMABAD: One of the leading telecom operators in the country, Ufone on Tuesday signed a $550 million agreement with a Chinese company for the largest-ever expansion of its network.

With the expansion, Ufone will be covering more than 1,500 cities, towns, villages and all major highways in the country by the end of June 2007.

Addressing the ceremony, Minister for Information Technology Awais Ahmed Khan Leghari said Pakistan had led to a revolution in the telecom sector where the mobile phone subscribers alone had gone beyond 40 million mark.

Awais asked the Chinese companies to look at Pakistan as a serious place for expanding their businesses for which the government of Pakistan offered full support and incentives.

President Huawei Technologies, Ren Zheng Fei said the telecom industry in Pakistan was now in a high speed development period, when the Ã¢â¬Åkey of competition lies on the rapid network construction in a scaled manner and provision of rich services to customers.Ã¢â¬Â

Ã¢â¬ÅWith our rapid response to customer requirements and rich experience in scaled network construction globally, we are fully confident in our capability to satisfy such requirements,Ã¢â¬Â he added.


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## Neo

Wednesday, September 27, 2006javascript:; 
ISLAMABAD: Prime Minister Shaukat Aziz on Monday said the total size of information technology and telecom sectors in Pakistan had reached about $ 2 billion with 50 percent growth per annum during the last three year.

Talking to a delegation of Ericsson, he said the deregulation and privatisation policy stimulated phenomenal growth in Pakistan attracting investments in the information technology and telecom sectors. He said the information technology (IT) and telecom business included domestic industry, hardware and export of software and IT enabled services. The prime minister said the telecommunication today was the fastest growing sector in Pakistan having 27 percent teledensity.

He said the country had 37 million cellular phone subscribers and the number is fast growing. He added the use of cellular phones among low-income subscribers was growing in both rural and urban areas.

He said government was in the process of setting software technology parks at Karachi Lahore and Islamabad. Ragnar Back chairman Ericsson operations in Central and Eastern Europe, Middle East and Africa apprised the prime minister of the plans of Ericsson to expand business in Pakistan. He said presently the company employed about 700 professionals in Pakistan and the number would increase to 1,000 by the end of this year.


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## Neo

Wednesday, September 27, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\09\27\story_27-9-2006_pg7_1

_* Refinery feasible if blister copper production 100,000 tonnes a year: MRDL chief

By Malik Siraj Akbar_

QUETTA: The MCC Resources Development Limited (MRDL), a subsidiary of the China Metallurgical Group Corporation (MCC), has shelved a plan to set up a refinery at Saindak to separate gold from blister copper. 

Talking to Daily Times at the Metal Mining Complex at Saindak in Chagai district, MRDL Chairman Zou Jianhui said the refinery was not feasible at Saindak, with its current quantum of blister copper production. He said the refinery was feasible at a blister copper production level of 100,000 tonnes a year, but the Saindak project was producing only 18,000 tonnes. 

The MRDL chief said that there were compatible charges to refine gold and copper in the international market and it was relatively cheaper to undertake the job there instead of setting up a gold refinery at Saindak. 

The Pakistani government signed an agreement with the Chinese government for a soft loan of $22 million in early the 1990s to establish the proposed refinery. The agreement was signed when Saindak copper reserves were handed to MRDL after the MCC set up the first metal mining complex at Saindak at an initial cost of $141 million. The investment was a soft Chinese loan for Pakistan. 

Jianhui said that setting up a refinery with the current production level would overburden the commercial venture with more losses and debt. He showed keen interest in continuing the production even beyond 2010, when the lease period for the MRDL ends. He said that Pakistani workers would replace a number of Chinese workers and technicians next year. Ã¢â¬ÅPakistanis are being trained in phases for the purpose,Ã¢â¬Â he said. He did not give the exact number of Chinese experts to be replaced by Pakistanis. He said that negotiations were in progress with Pakistani officials on the training of local workers and transfer of technology to Pakistan. 

The MRDL chairman said the company had brought experts from China, therefore the performance of Saindak was much better than many of the companies working under the MCC in China. About the expansion of the metallurgical complex, he said that it depended on the Eastern Ore Body. He said the MRDL would expand the complex if it finds better grade copper reserves here. 

Jianhui was concerned over the rising oil prices. He said the cost of production had gone up by 50 to 60 percent since the MRDL started production of blister copper at Saindak. He said there had been a 400 percent increase in the oil prices over the past few years. 

Asked why MRDL was not importing furnace oil from Iran (a few miles from the Saindak metal mining complex) instead of transporting it from Karachi (about 1,000 kilometres from the project), Jianhui said the Pakistani government had allowed the company to import furnace oil from Iran, and the company was trying to do so. 

The MRDL chief said the company was providing free electricity to two of the surrounding villages at a cost of Rs 4.4 million a year. He said the company was also running a school for locals.


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## Neo

*ISLAMABAD *_(updated on: September 27, 2006, 21:12 PST_): The government of Pakistan gave approval in principal on Wednesday for Emaar Properties of United Arab Emirates to go ahead with a $43 billion project to build a model city near Karachi.

Emaar, which will have 85 percent equity in the project, will develop two islands, Bundal and Buddo, near Karachi into a city with state-of-the-art facilities, Ashfaque Hasan Khan, an advisor to the prime minister, told reporters.

"It will be just like another Dubai," Khan told Reuters later. "It will consist of everything. Residential buildings, theme parks, offices, just about everything."

"We want to build it because it will create new jobs, bring in investment, create new housing and a new city," he added.

The Port Qasim Authority will hold 15 percent in the form of land, Khan said after a meeting of the Economic Co-ordination Committee.

The project is expected to take about 13 years.

Khan said approval in principal for the project had been given after all formalities were completed. Legal documents would be completed within three months.

Link: UAE firm to build model city near Karachi


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## Kaiser

Neo said:


> Wednesday, September 27, 2006 http://www.dailytimes.com.pk/images/shim.gif
> ISLAMABAD: Prime Minister Shaukat Aziz on Monday said the total size of information technology and telecom sectors in Pakistan had reached about $ 2 billion with 50 percent growth per annum during the last three year.
> 
> Talking to a delegation of Ericsson, he said the deregulation and privatisation policy stimulated phenomenal growth in Pakistan attracting investments in the information technology and telecom sectors. He said the information technology (IT) and telecom business included domestic industry, hardware and export of software and IT enabled services. The prime minister said the telecommunication today was the fastest growing sector in Pakistan having 27 percent teledensity.
> 
> He said the country had 37 million cellular phone subscribers and the number is fast growing. He added the use of cellular phones among low-income subscribers was growing in both rural and urban areas.
> 
> He said government was in the process of setting software technology parks at Karachi Lahore and Islamabad. Ragnar Back chairman Ericsson operations in Central and Eastern Europe, Middle East and Africa apprised the prime minister of the plans of Ericsson to expand business in Pakistan. He said presently the company employed about 700 professionals in Pakistan and the number would increase to 1,000 by the end of this year.


 
This is a good sign

If we can keep growth at this rate for a couple years (8) then we will be poised to become an IT power


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## Owais

*Global Competitiveness Index places Pakistan at 91 *


ISLAMABAD (September 28 2006): Pakistan has been ranked at Number 91, among 125 countries, up by three points over previous year, in the global race for competitiveness, according to Global Competitiveness Report 2006-07, released by World Economic Forum.

However, it (Pakistan) was 48 places behind India (at No 43) and 12 places from Sri Lanka, at 79, but ahead of Bangladesh,' at 99, and Nepal at 110. The Global Competitiveness Index (GCI) "provides a holistic overview of factors that are critical to driving productivity and competitiveness".

It is these nine factors i.e. institutions, infrastructure, macroeconomy, health and primary education, higher education and training, market efficiency, technological readiness, business sophistication and innovation that finally are put together based on which countries are ranked.

Pakistan scored relatively well on market efficiency (ranked 54th) with "business sophistication" and "innovation" (ranked 60th and 66th respectively). India performed very well on market efficiency (21), business sophistication (25) and innovation (26). The best in innovation category is Japan, followed by Switzerland, Germany, the US and Sweden. China, at 57, is way down.

What has pulled down Pakistan's score is its 'basic requirements'. At 91, it is far below India's 60, China 44 or US 27. Within this, Pakistan's worst scores come, predictably, in the areas of "health and primary education" (rank 108), higher education and training (104), technological readiness (89) and macroeconomy (86).

Infrastructure, one of the basic prerequisite for robust economic growth, is not doing so badly (rank 67), while the country scored relatively bad in its "institutions" (rank 79). India was ranked 62 and 34 respectively in these categories. In the area of "efficiency enhancers," Pakistan was ranked exact to its total ranking at 91.

The report says, "The value of increased spending on education will be undermined if rigidities in the labour market and other institutional weaknesses make it difficult for new graduates to gain access to suitable employment opportunities. Attempts to improve the macroeconomic environment-e.g., bringing public finances under control-are more likely to be successful and receive public support in countries where there is reasonable transparency in the management of public resources, as opposed to widespread corruption and abuse".

Innovation or the adoption of new technologies or upgrading management practices will most likely not receive broad-based support in the business community if protection of the domestic market ensures that the returns on rent-seeking are higher than those for new investments. Therefore, the most competitive economies in the world will typically be those where concerted efforts have been made to frame comprehensive policies, that is, those which recognise the importance of a broad array of factors, their interconnection, and the need to address the underlying weaknesses they reveal in a proactive way.

This year, over 11,000 business leaders polled in record 125 economies world-wide. The survey questionnaire is designed to capture a broad range of factors affecting an economy's business climate that are critical determinants of sustained economic growth. The Forum annually delivers a comprehensive overview of the main strengths and weaknesses in a large number of countries, making it possible to identify key areas for policy formulation and reforms.


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## Owais

*100MW electricity to be imported from Iran: ECC allows 302 more goods to be traded with India* 


ISLAMABAD (September 28 2006): The Economic Coordination Committee met here on Wednesday and decided to expand the list of importable items from India, reduced the price of phosphate fertiliser and restored duty drawback facility for export of cement to Afghanistan.

The ECC, in its meeting here with Prime Minister Shaukat Aziz in the chair, also endorsed the decision to import 100 MW electricity from Iran for Gwadar City, which is fast coming up as Pakistan's major port on the mouth of Gulf of Oman.

Briefing reporters the Prime Minister said that 302 more tariff lines have been added to expand trade with India "in consultations with all stakeholders". The tradable items with India would now also include, among others, pharmaceuticals, plastic, iron and steel, machinery and parts, diesel locomotives and surgical equipment.

The ECC reduced the price of phosphate fertilisers by Rs 250 per bag to help increase agricultural productivity and income of farmers. As a result of this decision, the price of phosphate fertilisers would come down to Rs 827 per bag from about Rs 1077.

The Prime Minister said that one million tonnes DAP was available in the country and 0.2 million tonnes was being imported to augment the supply. He added that 0.1 million tonnes urea was also being imported. An awareness campaign would be launched shortly to sensitise farmers to use DAP, instead of urea, to increase the yield, he added.

The meeting also decided to increase the support price of wheat from the existing Rs 415 per 40 kg to Rs 425. The Prime Minister said that as a result of price management system introduced by the Government the sensitive price index showed continuous downward trend during the last four weeks. The price of wheat in Pakistan is the lowest in the region, he said.

Shaukat said that following price reduction the sales at Utility Stores Corporation outlets had increased four times and the Corporation was taking steps to ensure continued supply of items at its outlets.

He told reporters that the Oil and Gas Development Corporation (OGDC) had reversed the increase in LPG price for the benefit of the consumers.

The Prime Minister said Wapda had presented its report to him about the countrywide power failure on last Sunday within the stipulated 48 hours. The report contains recommendations about changing the 'standard operating procedure', more investment, introduction of more technology and proper training of personnel to avoid such mishaps in future.

Later, briefing reporters about some other decisions of the ECC, Economic Advisor to Finance Ministry, Dr Ashfaq Hassan, said that a Dubai-based company, Emaar, would invest over $43 billion over the next 13 years to establish a state-of-the-art city near Karachi. The new city, to be spread over 12,000 acres, would be set up on two islands known as Bundal and Buddo.

Another UAE-based company, Dubai Port World, would invest $300 million on a second container terminal at Port Qasim, the Advisor said, adding that this would be first a 'green field' project undertaken in the port sector of Pakistan. He said that the ECC, with a view to attract investment in the sector, has allowed foreign companies to carry out insurance business in Pakistan.

Dr Ashfaq told newsmen that there had been another oil find by OGDC in Kohat district with production capacity of about 4000 barrels oil and 12 million cubic feet gas per day. The same company has also discovered another gas well in the area, he added.

He said that a decision had been taken for import of 100 MW electricity from Iran for Gwadar. He said that the facility of Research and Development Support Fund for textile, previously available for processing, would now be available across-the-board to the sector.


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## Owais

*Islamabad to go ahead with IPI gas pipeline* 


NEW YORK (September 28 2006): President General Musharraf said on Wednesday that Islamabad would go ahead with his plan to have Iran-Pakistan-India gas pipeline and the US-Iran strained relations would have no effect on this decision.

He was addressing a press conference before his departure to Washington for an Iftar-dinner meeting with US President and Afghan President Hamid Karzai on Wednesday evening. This press conference began with question and answer session as the president opted to give a chance to journalist to ask as many questions, as they wanted.

President General Pervez Musharraf described his visit to the United States as 'very successful' during which he has been able to remove misperception about Pakistan, especially the peace deal the government has signed with the tribal elders in North Waziristan.

"It has been a very successful visit," he told reporters. He said the high point of the visit was success in changing the perception about Pakistan's role in the anti-terror campaign and its contribution to fight the menace. The President made a strong case that the Taliban insurgency was rooted in Afghanistan and cited a new United Nations report, which upheld his viewpoint that it was an Afghan phenomenon.

He said the UN Secretary General report on the situation in Afghanistan clearly says that the foot soldiers of the insurgency are Afghans, recruited within Afghanistan.

The report has identified five distinct leadership centre of the Taliban, appearing to act in loose co-ordination with each other and benefiting from financial and operational link with the drug trafficking network.

*IFTAR-DINNER: *President General Pervez Musharraf will meet Afghan President Hamid Karzai and US President George W Bush at Iftar-dinner at the White House. The three leaders, sources said, would discus a wide range of international issues but Pak-Afghan relations in the light of new spat of accusations from both sides regarding the presence of Mullah Omer and Osama bin Laden either in Pakistan or Afghanistan would be the highlight of their discussion.

The recent agreement Pakistan has entered into with tribal elders of the North Waziristan area has created misunderstanding in the minds of many Americans as well as in the minds of the Afghans. President Musharraf would explain the nature of the agreement and its benefits.

President Musharraf in his numerous meetings with the American opinion leaders, media and scholars has been explaining the nature of the agreement which is to fight the Taliban and the process of Talibanisation in Pakistan and Afghanistan and this he would further discuss at the Iftar-dinner.

The meeting would focus on developing better understanding between Pakistan and Afghanistan and the common strategy that would help the two countries jointly fighting against evils that is spreading across the two countries and threatening expansion of terrorism.

Development and rehabilitation work in Afghanistan would also come up for discussion. Sources said that this would be a crucial meeting and effective and 'better relations would emerge'. The meeting of the three leaders would be independent of their aides in the beginning. Their aides would later join in.

Earlier, on Tuesday the president addressed a select audience at the Cornell Medical Center. He briefed the audience about the measures he has taken to move toward enlightened moderation, need to be cautious in framing a policy to interact with Israel, development of human resources in Pakistan, fight against terrorism and the amount of success achieved and economic progress in Pakistan. President on Tuesday remained engaged with leading media men and TV channels giving them interviews. From Washington the President would fly to UK for a two-day stay.


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## Owais

*Pakistan allows more goods to be imported from India* 


*ISLAMABAD *_(updated on: September 27, 2006, 19:12 PST_): The government decided on Wednesday to allow imports of machinery, surgical items, chemicals and pharmaceuticals from India to expand economic relations between the two neighbours.

The Economic Coordination Committee, Pakistan's top decision-making body on economic issues, on Wednesday allowed import of more than 302 "tariff lines" from India.

Pakistan earlier had put 1,527 tariff lines on the list, covering a total of just under 800 products.

"The decision will allow import of different items of machinery, surgical items and chemicals from India," Ashfaque Hasan Khan, an adviser to the prime minister, told reporters after the meeting.

The new additions to the list of permissible items will also include raw materials and metals, diesel locomotives, and textile machinery.

"The taxes and duties applicable on these items will be the same as those applicable on imports from other countries," said Khan.

While India's surging economy has stolen the spotlight, Pakistan's economy has also been one of the fastest growing economies in the world despite the lack of integration between the two.

The constraints on trade had irked some Pakistani industrialists, who have imported Indian-made goods, like textile machinery, from Dubai in order to beat the ban, businessmen say.

Trade between the two neighbours has grown since they launched a peace process, but remains well below $1 billion a year, and under $2 billion including a black market trade mostly routed through Dubai.


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## Owais

*New oil and gas reserves discovered in Kohat* 


*ISLAMABAD *_(updated on: September 27, 2006, 19:09 PST_): State-run Oil and Gas Development Company Ltd (OGDC) has discovered oil and gas reserves in northwestern Pakistan, a government spokesman said on Wednesday.

The reserves found at Kohat, some 175 km (110 miles) west of the capital Islamabad, are expected to produce around 4,000 barrels of oil and 12 million cubic feet of gas per day.

OGDCL, the country's largest firm, has a market capitalisation of around $10.2 billion and the government has recently announced plans to list it on the London Stock Exchange through an issue of global depository receipts (GDR) by December.

With the latest discovery, Pakistan's oil production capacity will increase to approximately 69,000 barrels from 65,000 barrels per day, the spokesman added.


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## Owais

*'2.5 million bales cotton may have to be imported'* 


KARACHI (September 28 2006): As the rains have deteriorated the quality of cotton, the country may need to import 2.0-2.5 million bales cotton to meet the country's burgeoning domestic cotton consumption estimated at 15.5-16.0 million bales for FY06-07.

The current situation of the crop indicates production of some 13.0 million bales this season against the target of 13.8 million bales, said a report issued by Atlas Investment Bank. Cotton picking operation has been accelerated leading to large seed-cotton arrivals in the ginneries.

Although cotton prices moved up and down under impact of heavy downpour and it was feared that hike in demand and fear of damage might push prices higher, but inclement weather reversed the situation. Cotton prices increased 9.1 percent in August YoY basis, which is more than the change of 8.8 percent, which was recorded in July.

According to a report of International Cotton Advisory Committee, world cotton production is expected to remain stable at 25 million tons, while demand is projected to increase by three percent to a record 25.7 million tons.

The expected shortfall of cotton target for this year means that the textile industry, which requires almost 15 million bales, will be forced to depend on imported cotton and fibre to meet its requirements. However, the improving cotton crop as a result of favourable season may further support cotton prices to remain stable, going forward.


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## Neo

ISLAMABAD, Sept 27: The import bill of petroleum products recorded a hefty growth during the first two months (July-Aug) of the fiscal year 2006-07, over the same months last year.

The total import bill touched $4.985 billion in July-August 2006 as against $4.230 billion in the same months last year, indicating an increase of 17.83 per cent. The statistics showed that the State Bank of Pakistan monetary policy had helped a lot to control the inflow of importable products.

But this decline in the import bill occurred mainly due to a fall in import of machinery of 10 per cent, around two per cent overall decline in transportation machinery including vehicles, a 16 per cent dip in food items import, and a 21 per cent decrease in agriculture implements during the period under review.

Official figures released by the Federal Bureau of Statistics (FBS) here on Wednesday showed the import bill of petroleum products alone rose by 53.53 per cent to $1.549 billion during the first two months of the current fiscal as against $1.008 billion in the same months last year.

In total POL imports, the share of petroleum crude rose by 9.18 per cent to $646.835 million during the months under review as against $592.435 million in the corresponding months last year.

The statistics indicated that the only leading contributor to the highest trade deficit was the bill of POL, which has been enhanced due to a persistent rise in oil price in the international market.

According to the FBS, the second biggest component of the import bill in value was machinery group. However, it declined 9.65 per cent during July-August 2006, over last year.

The decline in this group was mainly due to a 24.94 per cent negative growth in import of textile machinery, followed by 11.50 per cent decline in import of telecom apparatus, and 31.57 per cent fall in agriculture machinery and implements. However, the import of construction machinery rose by 33.57 per cent and electrical machinery and apparatus by 31.81 per cent, power generating machinery by 51.92 per cent and office machinery by 3.64 per cent.

Food items import declined by 15.99 per cent to $342.140 million during July-Aug 2006 as against $407.269 million in the corresponding months last year. This decline in food items occurred due to a 1.81 per cent decline in milk products, followed by 27.84 in dry fruits, 54.5 per cent in soybean oil, and 30.69 per cent in palm oil.

However, the import of sugar rose by 9.68 per cent, pulses 69.10 per cent and wheat un-milled 100 per cent.

According to the statistics, the import of metal groups had declined by 11.90 per cent during the July-August period of the current fiscal year, over the last year. In this group, the import of gold has declined by 43.27 per cent, followed by a 49.12 per cent fall in iron and steel scrap and 1.15 per cent in iron and steel.

The agriculture and other chemical group also declined by 21.12 per cent during the fist two months of the current fiscal year, over the last year. In the group the import of fertilizer declined by 13.05 per cent, insecticides by 35.78 per cent, plastic materials by 17.32 per cent and medicinal products by 8.66 per cent.


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## Neo

Thursday, September 28, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\09\28\story_28-9-2006_pg5_6
LAHORE: A renowned UAE company, Coastal Group, has shown keen interest in setting up international standard car manufacturing plant with an initial investment of $1 billion and a hefty amount for purchase of land has been transferred into Pakistan.

The proposed project will provide employment opportunities to thousands of people. However, some circles having vested interests are hatching conspiracies against this project of extreme public importance.

This was stated by the Director Commercial Coastal Group, Hafiz Ayub Ismail after his return from three-day tour of Germany.

Ayub said that governmentÃ¢â¬â¢s measures to attract investment were inadequate as investors were facing technical obstacles in investment projects, which were creating doubts in their minds about their premium.

Ayub said that investment during the last two years was predominantly made in unproductive sectors of telecom and construction. But the environment should be improved to promote investment in productive sectors so that poverty could be mitigated and the economy could be put on right the track, he emphasised 

He said that big manufacturing plants were essential to start production projects on a massive scale. He added that the investors coming to Pakistan were facing difficulties in acquiring land due to painstakingly slow and lengthy structural procedures.

Ayub complained that bureaucracy is also playing a non-cooperative role in this regard and demanded of the government as well as national media to take notice of it. He called upon President Musharraf and Prime Minister Shaukat Aziz to give special attention to production projects set up through foreign investment and besides that both the leaders should direct the Board of Investment to dispose of the problems faced by foreign investors in a specific timeframe.


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## Cheetah786

Pakistan has given a Dubai property firm the go-ahead for a $43bn (ÃÂ£22.8bn) project to develop two island resorts. 
Emaar Properties, one of the United Arab Emirates' biggest property firms, will have an 85% share in the 13-year project to develop Bundal and Buddo. 

Emaar plans to develop the site near Karachi into a model city with homes, apartments, offices and theme parks. 

"It will be just like another Dubai," Ashfaque Hasan Khan, an adviser to the prime minister said. 

"We want to build it because it will create new jobs, bring in investment, create new housing and a new city," he added. 

Pakistan's Port Qasim Authority will hold the remaining 15% stake in the enterprise in the form of land, the government said. 

So far the plans have been approved in principle. Legal documents are expected to be completed within three months. 

Emaar - the UAE's biggest property firm by market value - plans to build thousands of homes, schools, shopping malls and hospitals stretching from Morocco to India.


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## Owais

*'PIA suffers over Rs 6 billion loss'* 


KARACHI (September 29 2006): Pakistan International Airlines (PIA ) incurred a net loss of over Rs six billion during the first half year ended June 30, 2006, according to the directors' report to the shareholders available here on Thursday. The report was signed by Tariq Kirmani, Chairman and CEO on August 28, 2006.

According to the interim condensed financial statements, the Corporation has incurred a gross loss of Rs 74 million and a net loss of Rs 6,144 million during the half year ended June 30, 2006. This has resulted in an accumulated loss of Rs 17,944 million as of the balance sheet date.

The auditors M/s Anjum Asim Shahid Rahman and M/s Ford Rhodes Sidat Hyder & Co in their review report have drawn attention to the gross, net and accumulated losses and the current liabilities and assets of PIAC. They have pointed out that as of the balance sheet date, the Corporation's current liabilities exceeded its current assets by Rs 20,326 million.

These conditions, auditors said indicated the existence of a "material uncertainty, which might cast significant doubt about the Corporation's ability to continue as a going concern."

However, they said that these interim condensed financial statements have been prepared on a going concern basis. The validity of the said assumption is dependent upon the successful outcome of the measures being taken by the management.

The Chairman in his report while summarising the half-yearly report had reported loss before tax at Rs 5,977 million and loss after tax at Rs 6,144 million. During the year January-December 2005, PIA had reported before tax loss of Rs 4.513 million and after tax loss of Rs 4.412 million.

Whereas aircraft fuel cost was Rs 16,442 million, other operating expenses exceeded this amount and stood at Rs 21,265 million during the period ended June 30, 2006.

The auditors without further qualifying their review report have also drawn attention to note 11.1 to the interim condensed financial statements (un-audited) for the six-month period ending June 30, 2006, which have been signed by Tariq Kirmani and Kamal Afsar, Director.

The note reads as under: Civil Aviation Authority (CAA) has claimed additional amounts aggregating to Rs 3,649 million (December 2005: Rs 3,819) in respect of rent and allied charges, landing and housing charges, aviation security and bay charges, interest/surcharge etc.

The matter has been referred to the Ministry of Defence through which a reconciliation and settlement exercise is currently in progress. The management considers that no additional liability of material amounts is likely to arise as a result of such exercise. Accordingly, no provision in this respect has been made in these interim condensed financial statements.

Despite increase in fares, closure of several foreign stations and reduction in the frequency of its flights to some foreign stations to bring down expenditure, PIA's losses have continued to multiply year after year.

It has been pointed out in the directors' report that the unprecedented increase of Rs 5.2 billion in oil prices during the half year ended on June 30, 2006, dented airlines profitability, as compared to corresponding period of 2005.

The expense on aircraft fuel increased by 47 percent in 2006 comparing to 2005, whereas, the increase of 10 percent in operating expenses was mainly due to inflationary trends, rise in interest rate and currency fluctuation.

The turnover-net in second quarter April-June 2006, comparing to the corresponding period in 2005, showed an increase of Rs 2.9 billion, thus, off setting the impact of higher cost of aircraft fuel by Rs 2.9 billion in 2nd quarter 2006. The breakdown in second quarter indicates a positive outlook to attain profitability levels in future.


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## Owais

*Refineries given deadline to switch to Euro II diesel* 


ISLAMABAD (September 29 2006): The government has set the deadline of January 2008 for refineries for switch over from Euro 1 (low quality diesel) containing high sulphur content to Euro II, premium product to minimise the risk of pollution in major cities.

The Euro II contains 2500 pm (0.25 percent) sulphur against 10000 pm of Euro 1. Refineries currently import Euro 1, which is posing serious threat to the environment due to high sulphur content. At present, four refineries are functioning in Pakistan to refine imported crude oil.

The petroleum ministry has issued a circular to the refineries asking them to make necessary arrangements for the switch over within the stipulated period.

Sources said refineries import low quality diesel for refining and sell it to the consumers on premium rates. Diesel, having high level of sulphur, is a serious problem as smoke emitted as a result of its combustion pollute the environment in the major cities. Karachi, Lahore and other cities where long vehicles operate on diesel are its typical example.

Import of diesel containing high level of sulphur provides an ideal opportunity to the importers to buy low quality diesel from the international market and sell it to the consumers at higher prices. This is a cheating of technical nature.

Sources said the government had issued the circular to the refineries for switch over in July 2006. However, the industry considers that the deadline does not allow it sufficient lead time to carry out the necessary feasibility studies.

They said that the government was actively pursuing the case to ensure that the refineries do not get any excuse to delay in switching over to Euro II diesel.


----------



## Owais

*Mobilink to launch $300 million bonds* 


KARACHI (September 29 2006): Pakistan Mobile Communications (Pvt) Ltd - Mobilink- will next month launch a $300 million denominated bonds, a banker with knowledge of the deal said on Thursday.

"The size of the issue would be approximately $300 million," said the source, requesting anonymity. "It would be a Reg. S bond, launched in October," he said, which typically means the securities would not be sold in the United States. The source gave no details on the maturity of the issue, which would be the first dollar bond sale by Pakistan's biggest cellphone operator.

Mobilink, the local unit of Egypt-based Telecom Company Orascom declined to comment on the debt sale, but market sources say it has mandated ABN Amro and Deutsche Bank to handle the issue.


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## Owais

*Pakistan for early signing of ECO trade accord* 


UNITED NATIONS (September 29 2006): Pakistan has called on member states of Tehran-based Economic Co-operation Organisation (ECO) to sign and ratify a trade agreement "at the earliest" so as to boost regional trade.

The call was given by Minister of State for Foreign Affairs Makhdoom Khusro Bakhtiar while speaking at the ECO Council of Ministers meeting held in New York on the margins of the 61st Session of the United Nation General Assembly. The Minister also called for progress on the Fast Track Protocol under Ecota, while stressing its voluntary character, as originally agreed.

He emphasised the need for progress on the creation of the ECO Science Foundation and welcomed the proposal by the ECO Secretariat to hold a meeting of experts on the subject in the near future.

Earlier, during the 10th Joint Ministerial Meeting of ECO and Association of South East Asian Nations (Asean), Makhdoom Khusro Bakhtiar noted that Pakistan as the founding Member of ECO and Saarc and as a country pursuing close collaboration with Asean was very happy to see the intensification of co-operation between Asean and ECO.

He welcomed the signing of the ECO-Asean memorandum of understanding (MoU) in January 2006 and called for the institution of a periodic review mechanism to assess the implementation of the MoU. The State Minister also stressed the need to work on energy co-operation as a priority area for collaboration between ECO and Asean. The ECO members are Afghanistan, Azerbaijan, Iran, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan, Turkey, Turkmenistan and Uzbekistan.


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## Owais

*Pakistan allowed access to Malaysian markets* 


ISLAMABAD (September 29 2006): Malaysia has agreed to provide market access to Pakistan's traditional items of exports including mangoes, textile, leather, surgical instruments, agriculture and manufactured goods. Oranges', potatoes and lemon already can be exported to Malaysia at zero duty wef January 1.

Agreement to this effect was reached during the seventh meeting of Trade Negotiating Committee (TNC) of the Pakistan-Malaysia Free Trade Agreement (FTA) was held here on September 25-27.

The Pakistan delegation was led by the Joint Secretary Ministry of Commerce, Shahid Bashir, while the Malaysian delegation was led by the Deputy Secretary General, Ministry of International Trade and Industry, Dato Ooi Say Chuan.

It was expected that market access secured by Pakistan through this FTA would enhance Pakistan's exports to Malaysia and will also bring the people of the two friendly countries closer.

The draft FTA also includes a chapter on promotion and protection of investment.

The FTA was expected to provide impetus for attracting foreign direct investment (FDA) from Malaysia.

The meetings were held in an atmosphere of complete cordiality and understanding and both the sides made substantial headways in finalising the draft.

Except a very few most of the draft agreement chapters have been agreed upon.

It had also been decided by the two sides to convene the meeting of the subgroup on services and rules of origin to settle the all-outstanding issues before the next TNC meeting in mid October.

The two sides also reaffirmed their desire to complete the negotiations on the bilateral FTA before the forthcoming visit of the Malaysian Prime Minister to Pakistan in November, this year.


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## Owais

*Engro chemical wins Asian CSR Award* 


KARACHI (September 29 2006): Engro Chemical Pakistan Limited awarded the prestigious Asian CSR Award in the concern for health category for its telemedicine intervention called "Project Hope" that provides state of the art tertiary healthcare to lesser privileged rural communities in the interior of Sindh.

The award was received by Wajid Hussain Junejo, Public Affairs Manager, at a glittering ceremony held in Manila Philippines, attended by nearly 500 delegates from 24 countries and 321 organisations. In a statement issued here on Thursday, the Engro was adjudged as winner for the Fifth Asian CSR Award among a very strong competition between 178 entries from 98 national and multinational companies operating world-wide with their headquarters based in 14 countries.

Conveying the decision of the judges to Engro, Felipe B. Alfonso, Vice Chairman, Board of Trustees, Asian Institute of Management, Centre for Corporate Responsibility said, "It is my pleasure to inform you that Project Hope - Telemedicine Project submitted by Engro Chemical Pakistan Limited, is deemed the most outstanding project in the Concern for Health category of the Asian CSR Awards 2006. Yours is an outstanding achievement."

Started in August 2005, Project Hope links rural spokes via video-conferencing to the hub in Karachi, where specialist doctors' access x-rays, ECGs and other diagnostics in real time.

The project covers some of the least developed areas in the country, having low literacy and high poverty, with ratio of doctors to population of 1:2915. It makes available no less than fifteen medical specialists ranging from neonatology to cardiology on a daily basis to rural communities located hundreds of kilometers away.

"Winning the Asian CSR Award is of course a matter of great pride for us, but its real significance is that the award is an independent appraisal of our CSR initiative and an endorsement of our Project Hope, which gives us confidence that it will serve the community as we hoped it would," said Asad Umar, President and CEO of Engro Chemical. Dr Rashid Jooma, the renowned neurosurgeon who heads Project Hope stated, "It is indeed gratifying to be recognised through this award and we are greatly encouraged. Engro needs to be lauded for this quite unique corporate social responsibility project that has already proved to be nothing short of a lifesaver for lesser privileged rural communities who otherwise really had very little or no hope."-PR


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## Owais

*NWFP gas and oil reserves go up by 24.53 percent* 


ISLAMABAD (September 29 2006): Around 24.53 percent increase has been recorded in gas and oil reserves respectively in the area of Tal in north-west Frontier Province (NWFP). According to a private TV channel, from 21 billion cubic feet to 25.84 billion increase in reservoir was recorded in Makori and Manzilai area of Tal area in Kohat.

It is pertinent to mention here that a foreign company MOL is operating the Tal block fields.


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## Neo

*ISLAMABAD *_(updated on: September 29, 2006, 20:35 PST_): The government of Pakistan awarded oil and gas exploration rights for three deep water blocks in the Arabian Sea to a local firm, Petroleum Exploration (Pvt) Limited (PEL), on Friday.

"Petroleum Exploration is the first Pakistani private sector company that is venturing in the capital intensive offshore exploration," the Petroleum Ministry said in a statement issued after signing a production sharing agreement between the company and its own Government Holdings Pvt Ltd.

The ministry expects PEL to invest over $3 million during the next two years after being granted licences to explore the three offshore blocks -- Indus-J, -O and -P.

The company is already producing 40 million cubic feet (1.13 million cu metres) of natural gas per day from two of its 11 exploration blocks, the statement said


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## Neo

Friday, September 29, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\09\29\story_29-9-2006_pg5_2
*Pakistan improves competitiveness, declares WEF report 2006*


ISLAMABAD: The World Economic Forum (WEF) has identified three major areas like infrastructure, education and skill development as gap in the further improvement in PakistanÃ¢â¬â¢s global competitiveness ranking.

However, WEFÃ¢â¬â¢s newly released Global Competitiveness Report 2006 finds that Pakistan has improved its competitiveness ranking from 94 to 91 among 120 countries of the world. 

The ministry of finance is due to launch the first of its kind Ã¢â¬ËState of Pakistan CompetitivenessÃ¢â¬â¢ report in February 2007, covering all the important indicators for bench marking as well as further improvement. 

Addressing a press conference here on Thursday Minister of State for Finance and Revenues Omer Ayub Khan along with Aurther Behen, Chief Competitiveness Support Fund (CSF), said that Pakistan showed solid improvement from last yearÃ¢â¬â¢s 94th place to 91st place this year. 

Some 125 countries participated in this yearÃ¢â¬â¢s survey over 117 in the prior year. PakistanÃ¢â¬â¢s move up the ranks added significance when compared to the drop in the rankings experienced by many noteworthy emerging economies like Brazil, China, Malaysia, Russia and Thailand.

Russia and Brazil dropped by 9 places in the GCI ranking, China by 6, Thailand by 2 and Malaysia by 1. With its rise of two places over the last year, regional competitor India failed to keep pace with PakistanÃ¢â¬â¢s improvement.

Omer said that a host of indicators make up the GCI. Pakistan ranked 79 for Initiatives, 67 for Infrastructure, 86 for Macro Economy, 54 for Market Efficiency, 89 for Technological Readiness, 60 for Innovative Factors and 66 for Business Sophistication in the world. 

Omer termed PakistanÃ¢â¬â¢s ranking improvement in the GCI as a result of the reforms and higher spending in the infrastructure during the last few years. He said that this ranking still indicates that there is a need to put further emphasis on primary, secondary and tertiary education, in ways that contribute to the tactical skills of the workforce.

He said that the report also suggest that Pakistan would do well to increase its number of business educational institutions. Interestingly, Pakistan scores relatively well in areas related to innovation and business sophistication.

Mr. Aurther said pointed out that the Competitiveness Support Fund (CSF) which is a joint initiative of Ministry of Finance and United States Agency for International Development USAID, is working closely with World Economic Forum on the ranking of Pakistan as well as on identifying the areas to be improved and methodology that will bring about help create university and industry linkages to promote knowledge-based enterprise, knowledge based economy in the Pakistan. 

He said that CSF is at present doing policy analysis in the areas like motorcycle industry, food processing, fisheries processing industry where Pakistan has competitive edge and can improve its exports. 

He said that the CSF is trying to develop a strong partnership between government, industry and universities to promote research activities and commercialisation of important research and ideas for benefit of the peoples. He said that PakistanÃ¢â¬â¢s global Competitiveness Index can further be improved through upgrading of skills of the industrial as well as the agriculture workers and CSF is also focusing these areas.


http://www.dailytimes.com.pk/default.asp?page=2006\09\29\story_29-9-2006_pg5_2


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## Neo

Friday, September 29, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\09\29\story_29-9-2006_pg5_9
*India, Pakistan banks seek branches in each otherÃ¢â¬â¢s country*

MUMBAI: Indian and Pakistani banks have shown interest in starting operations in each otherÃ¢â¬â¢s countries, State Bank of Pakistan Governor Dr. Shamshad Akhtar said. 

However, she did not name any banks, as both the regulators are still to endorse the applications. She said that, as per the understanding between the Reserve Bank of India and the State Bank of Pakistan, two Indian and two Pakistani banks would be permitted in each otherÃ¢â¬â¢s countries.

Dr. Akhtar also said that the relations between the central banks of the two countries are cordial and open and added that focus of the relationship would sharpen going forward. 

Pakistan has steadily reduced government holding across all sectors and 80 percent of Pakistani banks are now privately owned, she said. Pakistani banking is also approaching a phase of consolidation with the intention of avoiding over expansion. Market forces will determine the consolidation process, Dr. Akhtar added.


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## Neo

QUETTA: Balochistan Chief Secretary KB Rind on Thursday said that a marble city, comprising over fifty industrial units, is being established for uplift of mineral sectors in the province. 

Talking to a World Bank mission, led by Ronald White here, he said the government has spent a huge sum on the construction of Gwadar port, Kachhi Canal and Coastal Highway to remove sense of deprivation among people as well as attract foreign investment in various sectors in the province. 

He termed the current environment of the province extremely suitable for investment and said the investors could make profitable investment in various sectors including minerals and fisheries. 

Besides, he said, the government has taken special measures to ensure better education and health facilities to the people. 

As a result education and health infrastructures have been extended to every nook and corner in the province, he said adding that efforts are also being made to promote women education in view of their important role in national progress and prosperity. 

Regarding the working of local governments the CS termed their performance satisfactory due to exemplary relations and harmony between the provincial and district governments. The problems at grassroots level are being gradually resolved, the CS said.


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## Owais

*Three deep water blocks awarded to PEL* 


ISLAMABAD (September 30 2006): The Petroleum Exploration (Pvt) Limited (PEL), a local private sector oil and gas exploration and production company, on Friday signed three agreements with the government for exploration in offshore blocks. The PEL is the first Pakistani company to come up for offshore exploration in ultra deep waters.

The production sharing agreements pertain to Blocks No 2266-4 (Offshore Indus J) covering an area of 2436.3 kilometres; Block No 2266-7 (Offshore-O) spread over an area of 833.78 kilometres; and Block No 2365-3 (Offshore Indus-P) covering an area of 896.48 kilometres.

All the three blocks are located in ultra deep waters in the exclusive economic zone of Pakistan in the Arabian sea. The company will invest millions of dollars on exploration and production of its offshore blocks. Petroleum secretary Ahmad Waqar, PEL chairman & chief executive Zaheeruddin, director-general, petroleum concessions, M. Naeem Malik and managing-director, Government Holdings (Private) Limited, Khurshid Anwar, signed agreements.

The signing ceremony was witnessed by petroleum minister Amanullah Khan Jadoon and state minister for Petroleum Nasir Mengal.

The PEL has registered encouraging growth over the past few years to become a leading company in Pakistan's oil and gas sector. It's producing 40 mcf gas per day from it's two concessions. It is also committed to drill 26 onshore explorations and development wells, besides acquiring 1000 kilometres 2D seismic data in next three years.

The PEL is operating petroleum concessions. These were Mirpur Mathelo (2769-9) 1030.7 PEL (operator) 47.6 percent; Fr Frontier Holdings Ltd, 47.5 percent; GHPL, 5 percent; Salam (2769-13) 200.22 PEL (operator) 50 percent; Frontier Holding Ltd, 50 percent. Karsal 3272-12) 724.42 PEL (operator) 50 percent; Frontier Holdings Ltd, 50 percent. New Larkana (2768-10) 2426 PEL, 100 percent.

Badin IV north (2467-6) 1246 PEL (operator) 50 percent; Frontier Holdings Ltd, 50 percent. Badin IV south (2458-6) 1265.3 PEL (operator) 50 percent; Frontier Holdings Ltd, 50 percent. Jhangara (2567-5) 358 PEL (operator) 40 percent; OGI, 60 percent. Sukkur (2768-9) 2435.4 PEL, 35 percent, Man Gas (operator) 65 percent. Offshore Indus-J (2266-4) 2436.4 PEL, 100 percent. Offshore-P (2365-3) 897.48, 100 percent share and Offshore-O (2266-7) 833.78, 100 percent.

PEL's developmental and production leases included Badar Hasan, Sadiq Hamza EWT Kandra. In addition, PEL owns 10 percent working interest in Zamardan block and 35 percent working interest in Sukkur block.

In his comments, petroleum minister Amanullah Kahn Jadoon said the government was committed to extend all possible assistance to local and foreign companies for oil and gas exploration and production. State minister Nasir Mengal said the government will keep on encouraging investment in Pakistan's oil and gas sector.

PEL chief executive and chairman Zaheeruddin appreciated the offshore and onshore policies of the government. He said he feels the government policies need improvement to cater well to alluring investment for Pakistan's oil and as sector.

He thanked the petroleum minister, minister of state, secretary and petroleum concessions director-general for co-operating with his company in conducting oil and gas exploration and production activities. He said the petroleum ministry has made it possible for his company to work with great zeal and commitment for exploiting gas resources.


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## Owais

*ADB held responsible for water projects delay* 


ISLAMABAD (September 30 2006): The Asian Development Bank (ADB), one of the major lenders of National Drainage Program (NDP), has been held responsible for delay in the projects of North-West Frontier Province (NWFP) and Balochistan, official sources told _Business Recorder _here on Friday.

The issue was discussed at a recent meeting between the Secretary Water and Power Ashfaq Mahmood and ADB team, which visited Pakistan to discuss the country's four years' funding strategy, sources said.

They said that NWFP had finalised portfolio for funding the NDP through ADB loan but, according to the Provincial NDP Co-ordinator, six month from October 2005 to April 2006 have been lost due to delay in clearance of sub-projects by ADB.

They said that ADB had agreed in March 2006 to fund all works that could be awarded up to June 30, 2006. However, so far Rs 1.680 billion worth of contracts have been awarded in the provinces, while Bid Evaluation Report (BER) of remaining contracts were awaiting clearance from the bank.

They said that Balochistan remained out of NDP from 2001 to 2003 and it rejoined the program in September 2003. However, it took a long time to put in place the necessary infrastructure for resumption of NDP activities.

The ADB kept itself away from those projects, which could have been delayed. "Sensing that delayed start of activities would ultimately delay the completion of development work, ADB refused to fund different components of the program in case of Balochistan," sources said, adding that persistent efforts at federal government level persuaded ADB to resume funding for those schemes that could be safely awarded up to June 30, 2006 for their completion before December 2006.

The bank, however, agreed to finance the Environment Management Plan (EMP) of the federal and provincial governments including AJK under the NDP to the extent of Rs 77.121 million, which is progressing.

The Ministry of Water and Power has already conveyed to the concerned quarters that since no soft loans are available for energy sector, the government should finalise its strategy to arrange hard loans from the bank.

Sources said the government's concerns had been conveyed to the senior management of the bank during the recent visit to Islamabad and meetings with the officials of Ministries of Finance and Water and Power.


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## Owais

*OGDCL earns Rs 46 billion profit* 


ISLAMABAD (September 30 2006): The Oil and Gas Development Company Limited (OGDCL) has earned after-tax record profit of Rs 46 billion, against Rs 33 billion of last year. The ninth annual general meeting (AGM) of OGDCL was held here on Friday, which was attended by shareholders, and chaired by OGDCL Chairman/CEO Arshad Nasir, according to a press release.

The AGM approved accounts of the company for the year ended June 30, 2006 duly recommended by the board of directors. As compared with last year's sales, revenue of the company increased by 31 percent; profit before tax by 34 percent; and profit after tax by 39 percent despite higher exploration write-off on account of increased exploration activities.

The company achieved operating profit margin of 64 percent; net profit margin of 48 percent; return on assets of 39 percent; and return on equity of 52 percent. Higher profitability of the year resulted in earnings per share of Rs 10.69 as compared with Rs 7.67 in last year.

The members were informed that the company had maintained its status as leading oil and gas exploration and production company in the country. It has 37 percent of the total acreage granted to all exploration and production companies operating in the country.

Its average daily production, including the share from joint ventures, averaged 39,659 barrels per day crude oil, 937 mmcfd gas and 358 metric. tons per day LPG compared with 39,130 barrels crude oil, 919 mmcfd gas and 334 metric. tons LPG during the previous year.

Approval was also granted for the final dividend of 37.5 percent in addition to 52.5 percent already paid as interim dividend during the year, which makes total dividend for the year to 90 percent. KPMG Taseer Hadi & Co and M Yousuf Adil Saleem & Co, Chartered Accountants, were re-appointed as statutory auditors for next year.-PR


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## Owais

*Cotton production target cannot be achieved: FAP* 


LAHORE (September 30 2006): Due to severe virus attack on cotton crop, the target of 12.8 million bales of cotton would not be achieved this year. This was stated by acting chairman, Farmers Associates Pakistan (FAP), Hussain Jahanian Gardezi, while addressing the 108th meeting of the FAP here on Friday.

He said that initially the target of 13.8 million cotton bales was fixed but later the target was revised to 12.8 million bales. The areas like Mulatn, Vehari, Khanewal, Kabirwala, Mailsi, Lodhran and Karorpacca were worst hit by virus.

He welcomed the government's decision to bring down the prices of DAP fertiliser. However, he asked the government to ensure smooth supply of the fertiliser. He also appreciated the decision of the government to enhance wheat support price. He asked the sugar mills to start sugarcane crushing from October15. He hoped that sugarcane crushing season would start according to schedule.

He asked the government to take steps for giving due return of milk to the farmers. Director FAP, Rabia Sultana and Secretary, Muhammad Adrees were also present on the occasion.


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## Owais

*Work on Rs 140 million expo center begins* 


SIALKOT (September 30 2006): The initial construction work on Rs140 million project Sialkot Expo Center has been started. The site of the expo center was identified adjacent to Sialkot Chamber of Commerce and Industry (SCCI) building.

SCCI sources told _Business Recorder _here on Friday that the purpose of setting up of expo center was to display locally manufactured products under single roof. The under construction center would be a multi-storied building consisting of four display centres, two halls, office box, auditorium, restaurant and living rooms for the foreign visitors.

The city industrial sector is contributing handsome foreign exchange amounting to 800 million dollars annually that is exceptional feat, considering the small size and population of the city. The completion of Sialkot Expo Center would be another addition in this export-oriented city and hub of cottage industry of the country, which would help facilitate the foreigners especially the diplomats on their visit to Sialkot.

The Sialkot City Package Programme was started by SCCI in collaboration with other trade bodies and the exporters are voluntarily contributing 0.25 percent against their export invoices to change the face of the city by constructing roads and remodelling the sewerage system. Under the programme most of the city roads have been completed while work on remaining roads is in progress.


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## Neo

LAHORE (October 01 2006): Pakistan-Canada Business Council (PCBC)'s executive committee member, Mian Fahim Qamar has said that President Pervez Musharraf's recent US visit will have a far-reaching impact on the country's economy and its future.

In his reaction, Fahim Qamar, who is also executive committee member of Lahore of Chamber of Commerce and Industry (LCCI), said that this visit has removed some misconceptions prevailing in the West about our role in the war against terrorism. As a result of the President's American tour, US investors are planning to rush to Pakistan to invest in several mega projects here, he claimed.


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## Neo

GWADAR (October 01 2006): An international standard oil refinery would be established in Gwadar, which will be the biggest refinery of Pakistan. This was stated by the Balochistan Governor Owais Ahmad Ghani at a briefing to correspondents after presiding over a high level meeting here on Saturday.

Owais said site for the refinery was being considered and talks with international firms were underway in this connection. Governor said Gwadar Port is future of Pakistan. Future of Gwadar is bright and secure dredging along the port would be completed towards the fall of the current year.

An international standard airport would also be built in the city which would not only for Gwadar but for entire central region. A committee has been set up for acquiring land for this airport with minimum losses.

He said talks were also underway with international private companies for the development of fishery sector. It would have direct access of fish cache to European markets. He said a 350 bed hospital was also being built in Gwadar and its first phase will be completed towards the end of the year. It would be expanded from Workers Welfare Fund.

To resolve drinking water problem of Gwadar, desalination plants would be set up at Pasni and Ormara at a cost of Rs 500 million.


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## Neo

KARACHI, Sept 30: Net inflow of foreign funds in the countryÃ¢â¬â¢s stock market during September amounted to $79.7 million, which represents the highest single month portfolio investment by overseas investors in eight months of this calendar year.

According to the data released by the State Bank of Pakistan, net inflow of funds in the stock market stood at a staggering $37.6 million in the last four trading days of September (Sept 25-28).

Foreign portfolio investment in the first three months of the current financial year (July-Sept) amounted to $89.2 million. Analysts thought that since the settlement of trade of the last dayÃ¢â¬â¢s transactions would be next week, the figure could cross over the $100 million mark early in the first week of October.

So what has rejuvenated the interest of foreigners in the countryÃ¢â¬â¢s equity markets?

Ã¢â¬ÅInternational fund managers are positive on the Pakistani market, specifically in the banking sector,Ã¢â¬Â says Aqeel Karim Dhedhi (AKD), one of the most known brokers at stock exchanges. He said that some of the foreign fund managers were in talks with local brokerages so as to establish joint ventures for investment in equity market.

Dhedhi said that India and China were already benefiting from huge flow of funds in emerging markets, but Pakistan has now come to be discovered as a new destination, because of its attractive stock valuations and a flourishing economy.

He contended that according to accepted norm, foreign portfolio investment must at least be one-third of the direct foreign investment. Ã¢â¬ÅIt has just begun to happen in our countryÃ¢â¬Â, he says.

Foreign direct and portfolio investment in Pakistan registered a 131 per cent increase in the last fiscal year amounting to $3.87 billion compared to $1.67 billion the year earlier.

Other brokers held similar views.

A stock broker who was part of the team of CDC delegation that held roadshows last month in Dubai and Abu Dhabi to introduce PakistanÃ¢â¬â¢s capital market observed that a number of fund managers and brokerages had shown interest in opening their representative offices in the UAE to facilitate investors to invest in Pakistani stocks.

But it is possible to dismiss a stock brokerÃ¢â¬â¢s enthusiasm for their livelihood depends on selling optimism. Independent analysts, nonetheless, admit that the holy month of Ramazan has started with good gains for stocks.

Last week, the market saw its third consecutive positive closing with benchmark KSE-100 index up by two per cent to close above 10,500 points mark on weekly basis.

Traders said that heavy buying by offshore funds was witnessed last week in the Oil & Gas Exploration (E&P) sector due to news of new findings. But bulk of the foreign investment went into the banking sector.

Following the acquisition of Union Bank by Standard Chartered, which has become the first multinational bank to be listed on the countryÃ¢â¬â¢s stock exchange, the market was rife with rumours of a UKÃ¢â¬â¢s banking giant in advanced takeover talks with a Middle Eastern bank in Pakistan.

Ã¢â¬ÅLast week, commercial banksÃ¢â¬â¢ market capitalisation grew by 4.6 per cent, thereby, outperforming the market,Ã¢â¬Â says an analyst.

He mentions that banking sector profitability, which stood at over $1 billion, is at an all-time high and is generated by the enhanced business volume, the rising share of high-yield assets and widening spreads. All of which provides a considerably healthy return on equity of over 26 per cent after tax in the banking sector.

Overall it is the good corporate earnings and dividends; continued drop in long-term interest rates; expectations of economic growth and possible settlement of external and internal political issues that are cited by most market gurus as the reasons that makes market attractive.

But in the last resort, it is an improved coordination between the apex and the frontline regulators; the liquidity; (P/E) multiple of 12.5x; and better yields that are at the back of generating interest in equities of both local and foreign investors.


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## Neo

ISLAMABAD, Sept 30: Pakistan is likely to offer additional fiscal and non-fiscal incentives to the international institutional investors with a view to luring them to make new investment in the country.

"Although we have a very liberal investment policy that helped achieve an all-time high over $3.5 billion foreign direct investment (FDI) by June this year, the government would very much like to further facilitate foreign investors," said Minister for Privatisation and Investment Zahid Hamid.Talking to Dawn on Saturday on telephone from Dubai, he said he and Dr Salman Shah were currently visiting the United Arab Emirates (UAE) and Kuwait for attracting institutional investors to invest in various fields, including the privatisation.

"We are here to hold country road shows for institutional investors and to explain them about various investment opportunities and exceptional good performance of the Pakistani economy," Mr Hamid said.

"This is an effort to further attract foreign investment on a sustained basis for which the Pakistan government would provide all possible incentives," he said adding that there existed an improved investment climate and better security situation in Pakistan.

Responding to a question, he said that there was no FDI target for 2006-07, but it was expected to be much higher than that of over $3.5 billion achieved in the last financial year.

He was sure that investment houses, commercial banks and other international financial companies based in the Middle East would invest in Pakistan.

The minister for privatisation and investment said that the Privatisation Commission had lined up a number of transactions, which will be completed during the current financial year.

He said that the institutional investors of the UAE and Kuwait were largely expected to take part in the privatisation programme of Pakistan.

"We have identified a broad-based privatisation programme, which is being shared with the investors of the UAE and Kuwait," he said and hoped that they would benefit from the investment opportunities that now existed in Pakistan.

The commission, he said, has accelerated the privatisation process to finalise a number of transactions including that of Pakistan State Oil (PSO) during 2006, positively.

"We are finalising dates to further push up the privatisation process and both the PSO and OGDCL's Global Depository Receipts (GDR) along with some other state-owned entities will be disinvested during 2006," he said.

He said he was deliberately avoiding giving exact dates for clearing some bigger transactions at this stage, although their timings had been firmed up by the PC.

He said the government was committed to vigorously pursuing its privatisation policy and to transfer the management of the public sector entities to the efficient private sector, which had the capacity to bring in new investment and latest technology for expansion of the projects to increase production and revenues of the government.

Earlier, on September 9, the privatisation board approved recommendations of the committee for pre-qualification of the bidders for the privatisation of National Power Construction Corporation (NPCC). It discussed matters related to the secondary public offering of the shares of the United Bank Limited (UBL) and offer of shares to employees of the Pakistan Telecommunication Company Limited (PTCL).

The PC board also discussed the recommendations of the committee for the proper sequencing of strategic sale of the public sector entities to be offered and the initial public offering (IPO) as well as secondary public offering for the divestment of government shares through capital market.

The PC board also considered the case of Saindak Metals Limited and Saindak Development Corporation (SDC) and recommended their de-listing from the privatisation programme in view of the fact that the project has been leased out for 10 years to a Chinese company.

In the case of public offerings, this would not only benefit small investors but also increase market capitalisation.


----------



## Neo

KARACHI, Sept 30: Sindh and Balochistan are relatively less densely populated provinces of Pakistan than Punjab and the NWFP. These provinces have a higher density of government servants and are comparatively badly managed with more illiterates. They are by and large financially insolvent and show high crime rate.

A recent World Bank study has worked out a ratio of 1.85 government servants for every 100 persons in Balochistan and 1.29 for every 100 persons in Sindh. In contrast, there is a ratio of 1.21 government servants for 100 persons in NWFP and only 1.06 in Punjab, the most populated province of the country.

Sindh boasts of showing the highest-ever growth of 60.5 per cent in government employees during 1988 to the year 2000, when elected and caretaker governments replaced each other in quick successions.

In 1988 the headcount of government servants in Sindh was 285,042. This number swelled to 457,494 in the year 2,000. Compare it with only 22.9 per cent growth in Punjab where the number of government employees increased from 722,916 in 1988 to 888,796 in the year 2,000.

The NWFP too showed a high rise of 48 per cent in number of government employees Ã¢â¬â from 177,196 in 1988 to 262,074 in the year 2,000. In Balochistan, the number of government employees increased from 98,942 in 1998 to 128,132 Ã¢â¬â a rise of 29.5 per cent.

Ã¢â¬ÅIn Sindh and Balochistan, the strategy adopted by Islamabad was to accommodate as many locals in the government jobs as possible in 1988 and after when the quasi-elected governments replaced military handpicked team of politicians,Ã¢â¬Â a retired bureaucrat in Karachi explained.

He said that late Zulfikar Ali Bhutto adopted the same policy in 1972 and afterwards. Ã¢â¬ÅJust recall, how strong was the Ã¢â¬ÅJiye SindhÃ¢â¬Â current in late sixties and how it was mellowed down in early seventies,Ã¢â¬Â he said.

His other explanation for expansion in bureaucracy in Sindh and Balochistan, the two southern provinces, which are lagging far behind in economic development, education and infra structure, is that during more than 15 years of One Unit Ã¢â¬â 1954 to 1970 Ã¢â¬â people from Punjab literally took over most of the government jobs in police, schools (teachers) and even low positions in districts and tehsils.

Ã¢â¬ÅYou will not find as many people from outside Punjab province in Lahore Secretariat as you find them in provincial secretariats of Karachi and Quetta and even in police stations, schools and health centres in the villages of Sindh and Balochistan,Ã¢â¬Â he said.

Immediately after taking over the responsibility, Mumtaz Bhutto in Sindh and Sardar Ataullah Mengal in 1972, wanted to repatriate policemen and other government employees back to their home province--Punjab.

Consequently, Mumtaz Bhutto had to be taken out of Sindh and inducted in the federal government and Ataullah MengalÃ¢â¬â¢s government was dismissed to retain the status quo in the two provinces.

Officials say that the government jobs were thrown open much before 1988 in Sindh when Mohammad Khan Junejo was appointed prime minister and Ghous Ali Shah as the chief minister. But late Jam Sadiq Ali, after being appointed in 1990 on dismissal of the Benazir government, used government jobs as a bait to win over PPP supporters in the province.

It was during Jam Sadiq AliÃ¢â¬â¢s tenure that the highest number of persons Ã¢â¬â both from rural and

urban areas Ã¢â¬â were given government jobs in Sindh. In the finance department, the number of newly recruited officers of grade 16 and 17 increased so much in 1990 and 1991 that there were no chairs and desks available to accommodate them.

Education remains the most sought-after department for employment by the job seekers from the lower middle class groups in rural and semi-urban areas of Sindh. It provides the opportunity to get recruited, get monthly salary and enjoy benefits without attending the schools.

At one time there were as many as more than 6,000 schools without teachers. The World Bank report says the number of employees in Education department increased from 49,600 to 101,000Ã¢â¬â-almost 104 per cent.

The quasi-elected and handpicked caretakers did focus on social sectors after 1988 and invested heavily in bricks and mortars and increased the number of primary schools by 160 per cent during 1988 and 2,000. In this period the national average of rise in primary schools was 25 per cent.

Those, who watch the affairs of Sindh, say that literacy in terms of schools enrolment, students in secondary and higher secondary, professional, technical and vocational institutes, particularly in the rural and semi-urban areas of province is just dismal and pathetic.

Ã¢â¬ÅIt may appear as a puzzle that Sindh succeeded in building so many new schools, and hospitals, hiring the maximum number of civil servants and spending billions of rupees, and yet has very little to show in terms of improved development outcomes,Ã¢â¬Â is the candid observation of the World BankÃ¢â¬â¢s report that asks a question--why?

The report then answers, Ã¢â¬ÅWhen the governance is weak, the increased investment goes into bottomless pit, benefiting no one, except the corrupt officials and the private contractors.Ã¢â¬Â

The report suggests that the Sindh government should improve its governance with increase in the investment and Ã¢â¬Åadopt a strategy that the neighbouring province Punjab is trying to implement in the education sector.Ã¢â¬Â

Not that the World Bank has taken an initiative to point out the problems resulting from a bulging bureaucratic machinery and directionless investment, but there have been politicians and officers in Sindh, who had earlier documented deterioration in administrative and financial management of their province since 1980-90.

Ã¢â¬ÅThe annual growth rate for establishment cost between 1976 to 1991 was 6.3 per cent,Ã¢â¬Â an official document reveals to point out that this cost increased to 16 per cent a year between 1991 to 1997.

The document blames the directionless initiatives taken by the federal government during the decade of eighties and nineties such as the five point programme, mohalla and mosque schools, Nai Roshni schools, employment generation programmes by government to provide jobs to doctors, engineers and raising of Kutcha police.

Ã¢â¬ÅThese initiatives resulted into an over-sized establishment rising from 214,000 employees in 1984-85 to 445,830 in 1999-2000.Ã¢â¬ÅThe bulk of these postsÃ¢â¬â- nearly 74 per centÃ¢â¬â-are in low-skilled levels in basic pay scale grades 1 to 7 and 19 per cent in basic pay scale grades 8 to 16,Ã¢â¬Â the document reveals to illustrate that this expansion has also changed the revenue expenditure pattern in the province bringing general administration from rank IV to rank II downgrading the economic services from rank II to rank IV.

In this backdrop of a bulging bureaucracy and the rising establishment cost, the present political stalemate of the coalition government in Sindh, emanates from differences on new recruitments in thousands in the Sindh government.


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## Owais

*Private sector playing credible role in development: PM* 


*ISLAMABAD *_(updated on: October 01, 2006, 17:58 PST_): Prime Minister Shaukat Aziz has said that government is working on a two-pronged strategy to keep the prices of essential commodities under control.

Talking to a delegation of Islamabad Chamber of Commerce and Industry in Islamabad , he said on one hand it is working to ensure the supply of these items in sufficient quantity while on the other hand administrative steps have been taken to check hoarding and undue profiteering.

Referring to the economic development the prime minister said high growth achieved by the country has restored the confidence of the investors and created a predictable environment.

He said the private sector is playing a credible role in the development process.

Aziz said the reform agenda undertaken by the government was multifaceted and broad based and was on the philosophy of deregulation, liberalisation and privatisation coupled with transparency and good governance.


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## Owais

*SBP wants to set up Islamic banking as parallel system* 



KARACHI (October 01 2006): The State Bank of Pakistan (SBP) aims to establish Islamic banking as a parallel banking system which would be comparable and compatible to conventional banking and could become the banking of first choice in Pakistan, depending on market demand.



This was stated by SBP Governor Dr Shamshad Akhtar at a meeting of the heads of Islamic banks and Islamic banking divisions of conventional banks here on Saturday. Azhar Kureshi, SBP Advisor on Development Finance, and Pervez Said, Director, Islamic Banking Department, were also present in the meeting.

Dr Shamshad said that Islamic banking was a high priority area for the SBP, and she was professionally and personally committed to its growth in the country. "It needs to be robust enough to offer a viable alternative to conventional banking, should the market decide that we should have an exclusively Islamic banking system in the country.

Whatever the market forces decide, the SBP is committed to providing an enabling environment for developing this banking system to enable it to play the role the market may want it to play."

She said: "Towards this end we have made very good progress since the launch of this initiative three years ago. To support this industry and to strengthen the regulatory framework we have taken a number of initiatives that have resulted in this impressive growth in this industry.

"The regulations for licensing of Islamic Banks are in place. We have licensed six full-fledged Islamic commercial banks and 12 conventional banks with stand-alone Islamic branches. We have others in the pipeline. The licensing policies and regulations have worked well and the launch of this initiative has been issueless."

A Shariah Board has been constituted at SBP, which consists of Shariah scholars as well as industry experts and has been functioning smoothly. The Shariah Board has approved the Shariah Compliance Inspection Manual which has been developed by consulting firms of international standing and has undergone extensive refining internally at SBP.

"We are now in the process of training our Inspection staff to carry out this audit and will be implementing it shortly. This will pave the way for ensuring high standards of Shariah compliance by the industry," she added.

At the National Institute of Banking and Finance an Islamic banking certification course has been introduced to cater to the development needs of potential and existing workforce of Islamic banking. The course is aimed at building the capacity of banks to deliver Islamic banking products and services.

"We have formed different task forces to address specific issues like development of a liquidity management product, harmony in Shariah rulings and development of the Islamic products needed by the industry like Long Term Financing for Export Oriented Projects (LTFEOP)".

The task force on Liquidity Management Product has been successful in coming up with a Shariah-compliant structure that successfully mimics the functionality of T-Bills. BMCs or Bait-ul-Mal Certificates will provide the Islamic Banking industry with the much-needed Shariah-compliant liquidity management product that is also SLR-eligible.

"I must congratulate the task force that had members from Standard Chartered Bank, Dubai Islamic Bank, Citibank, Meezan Bank and SBP. I believe the structure finalised is a hybrid and currently the best in class globally. We are currently co-ordinating with MOF to have BMCs issued asap (as soon as possible). We are also working on Islamic Scheme for Long Term Financing for Export Oriented Projects (LTFEOP) through a task force in which Meezan Bank is playing a key role. Similarly, another task force on Research and Development in Islamic Banking and Finance has been established."

The SBP also holds, on regular basis, co-ordination meetings with the Shariah Advisors of Islamic banking institutions through which various issues of immediate nature faced by the industry are resolved and it also focuses on achieving harmonisation of practices related to Islamic banking Shariah operations in different institutions.

In order to give the much-needed global exposure to the domestic Islamic banking industry the SBP is taking a number of steps. "We are in the process of finalising an MoU with the Malaysian based International Centre for Education in Islamic Finance (INCEIF). The MoU will provide the framework for co-operation between SBP and INCEIF to promote and undertake research, development, training and education in Islamic finance. SBP has been encouraging holding of international Islamic banking conferences as these allow for a good way of knowledge transfer."

It also gives exposure to the local industry to the best international practices in different area of Islamic finance. "Last year, we had one such conference, which was very well received. This year, we have already had one, and another one is in the pipeline. I am told that now there is a tremendous interest by international event managers to hold Islamic banking conferences in Pakistan", she said and added, "as such we will be seeing a healthy number and mix of such conferences in the future".

For providing level playing field to Islamic banks, the SBP in co-ordination with ICAP, SECP and CBR is leading the resolution of issues related to Accounting Standards and Taxation.

All in all, a lot has been done and a lot needs to be done. However, this needs to be done in a private-public sector partnership as regulating an industry is no longer a one-way street and market trends as determined by the private sector play an important role in formation of regulatory standards.

"In the recent past, I carried out a restructuring within SBP. Islamic Banking Department has now been placed in the 'Development Finance Cluster'. This has been done to bring focus to the developing side of Islamic banking as this system is still in its early stages and a lot of developmental work is required to provide it the strong regulatory base that it needs if it is to be a system comparable to conventional banking system."

However Islamic Banking Department will continue to be involved in the Islamic Banking Policy and Regulations side and will continue to play its role in ensuring a smooth functioning of this industry. As such it will continue to be the interface between SBP and the Islamic Banks.

"I have outlined for you the major steps we have taken but there is lot more that has been happening and will continue to happen so that we can deliver on our commitment of providing a comparable and compatible Islamic banking system."

The Governor asked for feedback from the participants as to how they see the progress so far and what are the areas of concern or areas where SBP support would be needed. The chief executives of Islamic banks and heads of Islamic banking departments/divisions of conventional banks appreciated the regulatory framework adopted by the State Bank for promotion and development of this industry. Most of the participants said that the biggest problem being faced by the Islamic banking industry today is non-availability of Islamic instrument for liquidity management.

The other issues highlighted by them related to taxation, trained human resource, long-term export finance scheme and standardisation of Islamic banking guidelines etc.

The Governor, while appreciating the comments of the meeting participants, said that such meetings would be held on quarterly basis. She said that all-out efforts were being made to meet the challenges faced by the Islamic banking industry. She said that SBP was in the process of re-aligning its next five-year strategy, and asked the participants to volunteer for preparing the 'Vision' for the industry. In this regard, a committee of Islamic bankers was formed.

Regarding the issue of Liquidity Management in Islamic banks, the Governor said that MoF is pursuing it. Similarly, the other task force on Research and Development would also work faster for solutions of capacity building issues in Islamic Banking and Finance.

For looking into the issue of Basle II implementation in Islamic banks, she said that one or two Islamic banks should work on internal rating methods, which would then be further looked after by some technical experts in the field. Commenting on the role of the National Institute of Banking and Finance, she said that it was offering an Islamic banking certification course to cater to development needs of potential and existing workforce of Islamic banking.

She said that the State Bank wanted an institute of banking and finance in Karachi which should cater to the growing needs of banking sector, including Islamic banking & finance.

Dr Akhtar informed the participants that the State Bank was also working on Islamic version of the Scheme for Long Term Financing for Export Oriented Projects (LTFEOP), which would soon be issued.

She said she was very concerned about deteriorating quality of services in banking sector and advised Islamic bankers that they should attract and retain their customers on the basis of high quality services. She stressed the participants that instead of opening branches in already over-served areas; they should focus on setting up branches in under-served areas.

Being Head of Islamic Banking at the State Bank, Pervez Said also responded to most of the queries of the participants. Particularly, he highlighted the initiatives taken and efforts made by the Islamic Banking Department of the State Bank.

Concluding the discussion, the Governor assured the participants that she would continue to support the promotion of Islamic banking as a parallel system operating at a level playing field with commercial banking.


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## Owais

*Rs 4.2 billion shortfall in July-September provisional revenue* 


ISLAMABAD (October 01 2006): The provisional collection by Central Board of Revenue (CBR) in the first quarter of 2006-07 (July-September) has amounted to Rs 172 billion against the quarter's target of Rs 176.2 billion, depicting a shortfall of Rs 4.2 billion.

According to a CBR announcement on Saturday, the Board has collected Rs 172 billion in the first three months of current fiscal year against Rs 152 billion in same period of last fiscal year, showing 13 percent growth.

Since September 30 was the last day of filing income tax returns, it is expected that the final turnout would be much higher, and the revenue target for the quarter (July-September) would be easily achieved. Due to late closing of returns filing time, CBR will release the detailed account on Monday, October 2, the Board announcement said.

The Board had collected Rs 99 billion during July-August 2006-07 against the target of Rs 91.5 billion, reflecting an increase of Rs 7.5 billion. On the basis of the year's target of Rs 835 billion, the CBR has chalked out quarter-wise targets of 2006-07. The target of the first quarter was fixed at Rs 176.2 billion; second quarter (October-December) Rs 203.7 billion; third quarter (January-March) Rs 204.6 billion and the target for the fourth quarter has been fixed at Rs 250.5 billion, sources said.


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## Owais

*Banks and mutual funds to be hit by government U-turn on NSS: KIBOR to rise* 


KARACHI (October 02 2006): Banks, mutual fund and asset management companies are expected to be adversely impacted by the government's decision to permit the corporate sector to invest in National Savings Schemes.

Since NSS instruments (are on tap) providing ease in entry and exit to depositors and have zero risk being sovereign paper, liquidity is expected to flow from banks into Savings Schemes. The liquidity crunch, say experts, will not only force the banks to raise deposit rates but also enhance lending rates of borrowers.

The U-turn taken by the government would help it shift reliance from bank to non-bank borrowing for budgetary needs as it will drain the surplus fund in the system into NSS, however, in the process all structured financial products of Asset Management Companies will dry up and the secondary market for bond trading will become dormant.

There are Rs2.8 trillion with the banks and around Rs1 trillion in NSS. For the last three years government's efforts to balance the inflows into NSS through household savings with the outflows of corporate deposits from NSS - due to curbs under NSS rules - have failed.

However, the net outflow from NSS in a falling interest rate scenario was manageable. Since last year the net outflow is on the rise and in the next two years the maturity of corporate deposits will be huge and in no way can it be balanced with the sale of PIBs to corporate sector; as banks have miserably failed to market these bonds to clients and are holding a huge chunk themselves; besides government drying up their flows under an erroneous policy.

With interest rates collapsing to as low as 2 to 4 percent range from 10 to 12 percent, the Federal government, for a short-term gain refrained from issuing PIBs with regularity and instead increased its reliance on short-term treasury bills. This did provide relief to the budget on debt-servicing cost but all warnings to issue PIBs to fund the outflow from NSS - three to five years down the line were ignored.

Despite repeated warnings in annual report of the central bank that government's debt profile was shifting from long- to short-term and this can cause concern when the interest rates start rising, no heed was given and PIB auctions in meagre amounts were held once or twice a year instead of quarterly intervals with regularity.

Multilateral institutions had advised in the mid-90s to have a level playing field in terms of rates and correcting the tax differential between NSS instruments and Certificate of Investments (CoIs) of banks and non-bank institutions for development of the bond market in the country. The rationale to stop the corporate in NSS was based on the notion that savvy investors are better placed then house-holds to evaluate the investment products on the capital market where government paper can compete with private issues.

Some experts say with rising pace of T-bills stocks; bank spreads not being reduced despite repeated moral persuasion and post-1998 plan to develop a market for medium- and long-term instruments failing has forced the government to take the U-turn. This decision should put to rest any expectancy from the capital market for fixed income instruments to finance infrastructure projects.

"Government has not taken a long-term view it will be interesting to see if overseas banks, contemplating an entry into Pakistan after the Standard Chartered buyout of Union Bank, will now remain interested in entering this country," said a bank treasurer.

Provident funds and pension funds will come back to NSS, bank spreads may be reduced by 50 to 70 basis points but not 200 basis points sought by the authorities. Yes T-bill rates will come down as the government needs are increasingly met through NSS, but KIBOR, which reflects the availability of liquidity, will go up, said an expert. In essence debt servicing of private sector will go up and their credit growth will slow down. When the SBP tightened its monetary policy and raised discount rate and managed the liquidity in the system with daily OMOs, KIBOR came slightly down but the T-bills rate went up considerably.

It appears that the dialogue between the fiscal and monetary managers for a consensus is missing and therefore a well thought out policy is non-existent, said a leading economist.

Analysts expect growth in banks' balance sheets to slow down and the growing appetite of asset management companies and mutual funds to diminish.


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## Owais

*1,384,309 income tax returns filed: over 20 percent increase from last year* 


ISLAMABAD (October 02 2006): The Central Board of Revenue (CBR) this year received total 1,384,309 income tax returns (1,384,309) up to September 30, 2006, against 1,152,799 (1,152,799) returns last year, reflecting an increase of 20 percent.

CBR spokesman and Member, Facilitation and Taxpayer Education (FATE), Habib Fakhruddin, said on Sunday that total tax paid along with the returns up to September 30, 2006 was Rs 11.98 billion, against Rs 4.5 billion of last year, showing an extraordinary growth of 170 percent.

He said that taxpayers who could not furnish their returns by September 30 2006 for any reasonable cause and have applied for extension in time within the due date, may approach their respective Commissioners of Income Tax for such relaxation and file their returns within the next 15 days. He added that the CBR has advised the Regional Commissioners of Income Tax (RCITs) and Commissioners of Income Tax to facilitate such applications.

Taxpayers who could not file copies of their computerised national identity cards (CNICs) along with their returns have been advised to do the needful up to October 15, 2006, the CBR spokesman said.


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## Owais

*AJK government signs pact with two power companies* 


MUZAFFARABAD (October 02 2006): The Azad Kashmir government has formally signed an agreement with two power companies for providing 15 megawatt electricity so that the growing electricity requirement of the state could be fulfilled. This was stated by Azad Kashmir Chief Secretary (Electricity) Mushtaq Gorsi while talking to newsmen here on Sunday.

He said that the agreement between the Azad Kashmir government and power companies would bring positive results, saying it would also help speed up work on hydel projects.

To a question about the load shedding he said that it is being carried out from the main grid stations of Mangla and Rawat due to lack of power generation in Pakistan, adding, "We have no control over it." He also made it clear that the load shedding would continue till the increase of power generation in the said grid stations.

To another question he said that 132 KV line is being constructed from Mangla to Bagh to reduce the load shedding, adding that 67-kilometre long alternative double line is also being built from Mangla to Chaksawari.

The chief secretary said that they would also replace the outstanding meters with new meters to be installed on poles to save line losses. He said that during the current year more electricity schemes would be completed which would also help reduces load shedding.


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## Owais

*CBR receives Rs 11.98 billion Income Tax, registers 170 percent increase* 



*ISLAMABAD *_(updated on: October 01, 2006, 21:41 PST_): A spokesman of the Central Board of Revenue (CBR) has intimated that total returns filed upto September 30, 2006 are 13,84,309.

"Last year, on the same date returns filed were 11,52,799 showing an increase of 20%," he added.

Tax paid along with returns upto 30-09-2006 is Rs 11.98 billion as against Rs 4.5 billion in the corresponding period of last year showing increase of 170%.

It may be clarified that the taxpayers, who could not furnished their returns by due date i.e. 30-09-2006 for any reasonable cause and have applied for extension in time within the due date, may approach their respective Commissioner of Income Tax for such relaxation and file their returns within 15 days. Regional Commissioner and Commissioners are being advised to facilitate such applications.

It may be reiterated that those taxpayers who could not file copies of their Computerised National Identity Card (CNIC) along with returns are also advised to do the needful up to October 15, 2006.


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## Owais

*Rs 520 mmillion gas project under completion* 


MULTAN (October 02 2006): A mega gas project ensuing an expenditure of Rs 520 million for Mailsi, Tibba Sultanpur and Dokota is under completion, said National Assembly member Muhammad Azhar Khan Yousufzai, on Sunday.

Talking to APP here, he said President Pervez Musharraf and Prime Minister Shaukat Aziz had provided unprecedented funds worth Rs 1.1 billion for the development of the hitherto neglected Mailsi, which is famous for its bumper cotton crop across the province.

He said among the projects under way include the mega scheme of Sui gas, which would cost the exchequer Rs 520 million. He said 95 percent work on 60 km long main pipeline laying task has been completed from Jahanian (Khanewal district) to Mailsi (Vehari district).

He said the supply to Tibba Sultanpur would start within a couple of weeks during Ramazan benefiting a town of 20,000 population and then the same number of population would be benefited at Dokota on way to Mailsi.

Azhar Khan said that some villages lying in the proximity of Mailsi city like Basti Kumbir and Tilokpur would also be supplied with the Sui gas.

The legislator from Mailsi said that supply to the Mailsi city would start probably in November-December benefiting more than 70,000 souls.

He said it was a long-standing demand of the people of Mailsi, which was accepted by General Pervez Musharraf during his visit to Mailsi some six months back.

He said other projects, which had been sanctioned by the government, include electrification projects worth Rs 190 million, roads schemes worth Rs 120 million, sewage scheme for Mailsi city Rs 70 million, tehsil headquarters hospital upgradation Rs 85 million and Rs 25 million allocated for railway under-pass.

Azhar Khan said all these development projects, when completed, would usher the area in an era of prosperity.

He lauded the government decision to increase support price of wheat which will encourage the farmers to grow more wheat.


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## Neo

*Why Sindh is lagging behind?*



*By Sabihuddin Ghausi*
AS many as 94 per cent of the 60 American multinationals have a negative image of Sindh government, according to a recent annual survey.

Sharing this perception, chief executives of a few British and German multinationals described Ã¢â¬Åbad governanceÃ¢â¬â¢Ã¢â¬â¢ the single most critical challenge to the development of the province.

The World Bank too, carried out a survey of primary stakeholders in December 2004 to discover that Ã¢â¬Åan overwhelming majority of them consider bad governance as the biggest challenge to the SindhÃ¢â¬â¢s developmentÃ¢â¬â¢Ã¢â¬â¢.

Ã¢â¬ÅCorruption and law and order, which are derivatives of weak governance system, emerge as the second and third most critical challengesÃ¢â¬â¢Ã¢â¬â¢. It is this candid observation of the World Bank report that has caused discomfort to the political leadership as well as the bureaucrats in Karachi.

A recent report of Transparency International put Punjab government ahead of Sindh on corruption index has brought some consolation to the provincial administration. But the World Bank report, Ã¢â¬ÅPakistan: Securing SindhÃ¢â¬â¢s Future: The Prospects and Challenges AheadÃ¢â¬â¢Ã¢â¬â¢ awaits official comments from the provincial authorities even after submission and presentation about nine months ago.

According to World Bank sources in Islamabad, the bank gives the draft report to the government after carrying out surveys and holding sessions with stakeholders. A presentation is made and then the relevant authorities are expected to offer comments. The bankÃ¢â¬â¢s board then reviews the draft report in the light of comments of the government and gives it a final shape that accommodates all views and comments.

Spread over 100 pages, the World Bank report is divided into seven chapters. The bank study has detected an all round deterioration. Thee province is falling behind in almost all sectors be it economy, manufacturing, agriculture, services education, gender equality and social sectors.

What is startling is the fact of highest incidence of absolute landlessness, highest share of tenancy and the lowest share of land ownership in Sindh. The wealthy landlords with holdings in excess of 100 acres, who account for less than one per cent of all farmers in the province, own 150 per cent more land than the combined holdings of 62 per cent of small farmers in the province with land holdings of less than five acres.

Crops and livestock have been devastated by the four years drought exposing more than 50 per cent of its rural population to extreme poverty. Being on the lower riparian, water supply remains less than what is needed and hence all the problems.

The World Bank found Sindh to be endowed with many characteristics of a high growth region. At one time it was the most industrialized province accounting for 40 per cent of the countryÃ¢â¬â¢s manufacturing output in the country.

Rich in mineral resources, the province possesses one-third of total deposits of the country. At one time it was the most efficient producer of agricultural goods. The per capita income in Karachi was 55 per cent higher than the national average at the time of independence. Karachi was the first city in Asia to have a full fledged airport and its sea port was the main supplier of cotton and grains to Europe in 19th and 20th century.

The cityÃ¢â¬â¢s seaport is well connected by extensive road and rail network with all parts of the country and is well extended to India in East and up to Central Asia in North. The province has highest literate population, a strong entrepreneurial class, a large pool of educated labour with relatively low wages and home to many institutions of higher learning,

According to the World Bank report Ã¢â¬ÅSindh should be on a fast growth track and Karachi should have been a flourishing metropolisÃ¢â¬â¢Ã¢â¬â¢.

Instead of building on the initial advantages to become countryÃ¢â¬â¢s growth engine, the province, Ã¢â¬Åhas been gradually losing position of pre-eminenceÃ¢â¬â¢Ã¢â¬â¢ the report notes and goes on to illustrate its observations with facts that show the rise in unemployment in the province.

The report warns of deterioration in unemployment situation as it counts 610,000 unemployed in the year 2003-04 and nearly half a million persons are likely to be get added each year for next ten years.

Ã¢â¬ÅWithout a sustained growth rate of around 7-8 per cent per year, the number of unemployed in Sindh could go as high as 1.6 million by 2013-14Ã¢â¬â¢Ã¢â¬â¢ warns the report.

The provinceÃ¢â¬â¢s share in the national gross domestic production (GDP) is found to have fallen in almost all sectors with the largest declines recorded in large scale manufacturing, finance and insurance, transport and communication sectors.

Another significant observation of the World Bank is that the SindhÃ¢â¬â¢s development indicators are not only low in absolute term, but are growing less rapidly relative to rest of the country. For example, its literacy increased by five percentage points from 51 to 56 between 1998-99 and 2004-05, while corresponding increase in the country was eight per cent, from 45 to 53 per cent. With a 41 per cent net primary enrolment rate, it was one percentage behind the national average.

This gap widened to four percentage points by 2004-05. In 1998-99, the percentage of household with access to roads exceeded the national average by two percentage points but it fell by seven percentage points in 2004-05.

Poverty headcount ratio increased from 23.4 to 40.4 per cent between 1995-96 to 01-02 when corresponding national poverty was 30.1 per cent in 95-96 and 36.4 per cent in 01-02.

The report has raised issues as to why Sindh has grown below its potential and is lagging behind the other provinces in growth, poverty reduction and social indicators.

The report addresses the growing inequality and disparity within the province across various dimensions. How can these barriers be removed, enabling the province to accelerate its economic growth, improve distribution and reduce poverty? This is one question that the World Bank tries to answer in the context of sound economic policies of the federal government.

But in this utter dismal socioeconomic scenario, the World Bank report finds light at the end of tunnel. Ã¢â¬ÅFortunately, the favourable conditions at the global and national levels and the provinceÃ¢â¬â¢s own existing and potential strengths provide an opportunistic setting for the government to embark on a broad and ambitious reform programmeÃ¢â¬â¢Ã¢â¬â¢ the report suggests.

The report notes polarisation in Sindh political environment, where political parties are formed on ethnic lines and it pleads for building a consensus in favour of reform among the existing political parties. According to the WB report, it is the only province where politicians are mobilised on ethnic lines with conflicting interests.

As a part of its study, the World Bank in its earlier report given in May last year found that nature of coalition government seems to have been burdened by political stalemates that is holding the provincial government to focus on developing the Ã¢â¬Åtype of strategic vision, action programme and implementation drive that made the province a leader in implementing reforms in earlier years.

Moreover, a lack of attention to business related issues and sustained bureaucratic inaction has created a perception of severe policy uncertainty and has heightened the level of mistrust between the business community and the public sector institutionsÃ¢â¬â¢Ã¢â¬â¢ the report pointed out while drawing attention towards economic stagnation and increase in the number of people being pushed down the poverty line.

Ã¢â¬ÅIt seems that the progressive policymakers, the resilient business community and the activist civil societies have given up any hope of creating a more prosperous SindhÃ¢â¬â¢Ã¢â¬â¢, the report said.

Top executives of about half a dozen multinationals and business leaders endorse most of the observation of World Bank. Ã¢â¬Å The government does not have any vision for future economic developmentÃ¢â¬â¢Ã¢â¬â¢ remarked a chief executive of a giant multinational. Except for Governor of province, the business leaders and executives of big corporations find difficulties in communication with the ministers and the bureaucrats.

Ã¢â¬ËIs there really any Investment Cell in the Chief Minister House?Ã¢â¬â¢Ã¢â¬â¢ asks an executive of a corporation who said he never knew if there was any cell working in the province. But his questions as to when the cell was notified, what are its terms of reference, who are its members and how many times it has met and whether it has given any approvals to projects and finally does it interact with local and foreign businessmen remain unanswered. So long as Kamal Mustafa was the provincial minister for IT there was some communication between the government and foreign investors.

The Karachi Chamber of Commerce and Industry leadership including President Majyd Aziz have high hopes from the political leadership of the provincial government. Ã¢â¬ÅFrom the Governor to the Chief Minister, all area easily accessibleÃ¢â¬â¢Ã¢â¬â¢ Majyd Aziz said.

But he admits that the government does not have any vision for industrialisation and agricultural growth. He concedes that lawlessness is growing out of proportion that now threatens the normal day-to-day economic activity. Ã¢â¬ÅBut four times reshuffling in the cabinet portfolios is no issue for usÃ¢â¬â¢Ã¢â¬â¢ Majyd Aziz said and hopes for best in the coming days.


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## Neo

*Balochistan and IPI gas pipeline*



*By Syed Fazl-e-Haider*
Islamabad and Tehran have agreed to conclude quickly the talks on the $4.5 billion Iran-Pakistan-India (IPI) gas pipeline project. In the trilateral scheme of gas pipeline project, Iran would be the supplier, India recipient and Pakistan transit facilitator as well as buyer of Iranian gas.

The security situation however needs to be improved in Balochistan across which the strategic pipeline will pass.

According to one estimate, Pakistan is expected to get $200-$500 million annually in transit fees alone. Some MPAs in the Balochistan assembly have recently demanded a higher royalty as the greater part of the IPI gas pipeline passing through their province. The house later unanimously admitted a motion that seeks to debate the issue.

Some assembly members believe that the success of the IPI project is linked to accommodation of BalochistanÃ¢â¬â¢s demands. Their concern revolves round two main issues: Balochistan needs to be assured of a royalty that will satisfy the people of the province and the locals must be ensured maximum employment in the project.

The proposed Iran-Pakistan gas pipeline project conceived in 1993 was later proposed to be extended to India. The pipeline would carry 1.1- 3.4 billion cubic feet per day (BCFD) gas from Iranian Pars field to Pakistan. A 2670-km pipeline of 32 to 44 inch diameter would be laid from Iran to India, 707 km of which would traverse Pakistani territory, a greater part of which will pass through Balochistan.

Under the plan, Iran would build the pipelines from its Pars gas field to Jiwani in Balochistan (near PakistanÃ¢â¬â¢s border), while Pakistan would lay the pipelines from its side up to Jiwani. This would greatly save the cost of the proposed Iran-Pakistan gas pipeline project by $1 billion.

The gauge of the pipeline would be increased from 36 inches to 40 inches if India shows interest in the Iran gas pipeline project. The inter-state gas distribution company (SSGC) puts the cost of the Iran pipeline project at $2.1 billion. The length of pipeline has been calculated as 2106 km.

IndiaÃ¢â¬â¢s oil minister recently called the proposed gas pipeline from Iran across Pakistan Ã¢â¬Ëa risky ventureÃ¢â¬â¢ that would be difficult to finance. He viewed that security for any pipeline was a concern because it would run across volatile areas of Pakistan where other pipelines have been attacked in the past.

The proposed plan for laying Turkmenistan-Afghanistan-Pakistan (TAP) gas pipeline could not be materialised due to the prevailing political instability and uncertain security situation in Afghanistan.

Islamabad has however repeatedly been rejecting the IndiaÃ¢â¬â¢s concern contending that it can effectively handle the security of the proposed IPI gas pipeline. Petroleum and Natural Resources Minister recently claimed the government had been looking after the 6,000-kilometer-long domestic pipeline network that provided gas countrywide. But the recent incidents of targeting gas installations and blowing up of gas pipelines have become a routine in the province.

The acts of sabotage have several times forced the gas company to shut off the main compressor plant, thus suspending gas supply to parts of Balochistan, Sindh and Punjab. A decline in production has reduced the provinceÃ¢â¬â¢s share in gas royalty to Rs1.5 billion in.

The transportation of hydrocarbons from energy-rich Central Asia and Iran to energy-starved South Asia is a complicated business involving strategic interests of big powers and corporate interests of global energy giants. The proposal of laying gas pipelines from Daulatabad fields in Turkmenistan or South Pars fields in Iran to Gwadar in Balochistan has triggered a cold war between pro-project and anti-project actors in the regional geopolitics.

The US opposes the IPI pipeline project but supports the TAP pipeline project. On the other hand, the Russia supports the IPI pipeline project and opposes TAP pipeline project. While IndiaÃ¢â¬â¢s position in the game is that of running with the hare and hunting with the hound.

BalochistanÃ¢â¬â¢s concerns about the IPI gas pipeline needs to be addressed. The primary beneficiary of the economic gains from transit fee for trans-regional gas pipelines should be shared by the locals in the form of royalty and job opportunities to Balochis in the IPI project. And the locals should be made directly responsible for the security of the pipeline traversing in their territory. The provincial government needs to be involved in the pipeline issue.

In short, the current Balochistan crisis needs to be amicably resolved through political reconciliation on the autonomy issue.


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## Neo

*Doors open for larger trade with India*



*By Sultan Ahmad*
THE one-hour positive meeting between President Pervaiz Musharraf and Dr Manmohan Singh at Havana and their decision to resume the composite dialogue between the two countries has opened the path for larger trade. As a first step, India had suggested the inclusion of about 300 items from that country for PakistanÃ¢â¬â¢s positive list of imports for India.

And the Economic Committee of the Cabinet has approved that list of 302 items which include pharmaceuticals including those manufactured under franchise from foreign companies, which should be cheaper than the same kind of items available in Pakistan through imports or local manufacturing which are priced high.

Iron and steel imports from India approved now should be cheaper than imports from the West. So should be machine parts from India which have been coming otherwise through third countries or through smuggling.

The same should hold good for diesel locomotives and surgical goods from India. It is to be hoped that Indian exporters will not put up the prices for exports to India far above the higher exchange rate of the Indian rupee.

The actual trade between the two countries including a two-way smuggling and trading through third countries like Dubai and Singapore is said to be of $3 billion.

The two governments are loosing a great deal in revenue because of smuggling, while the products obtained through third countries cost far more than what direct trade would.

In fact, Pakistani businessmen wanted about 900 items more from India to be added to the positive list. For such an escalation they have to wait.

Both the governments of India and Pakistan want larger trade between the two countries. But while India believes that larger trade and greater cultural relations and more people to people exchanges will lead to a congenial climate for the solution of political problems, Pakistan wants political problems inclusive of the Kashmir dispute solved first or at least positive moves made in that direction simultaneously.

While there have been many meetings between the two countries including submit level talks, there has been no real progress in the area of resolving political disputes. Hence larger trade between the two countries is held up.

The total trade between the two countries is barely $1 billion while the potential is said to be of $5 billion. The two governments are loosing a great deal of revenue, while the products obtained through third countries cost far more than what direct trade would cost.

There are other deterrents to full scale trade between the two countries. India wants to be given the Most Favoured Nation (MFN) treatment by Pakistan in mutual trade. But Pakistan is not ready for that until India makes positive moves for a settlement of the Kashmir dispute.

India gave the MFN status to Pakistan two years ago but Pakistan argues that it is ineffective as there are several tariff and non-tariff barriers. Hence the volume of PakistanÃ¢â¬â¢s exports to India is too small.

At the same time, the South Asia Free Trade Agreement (SAFTA) has come into effect after laborious efforts. But Pakistan wants trade between the two countries on the basis of the positive lists of both countries.

Under the SAFTA, the seven member countries of Saarc enjoy tariff concessions on 4872 items. India hence strongly objected to its exclusion from this list by Pakistan and proposes to take up the issue at the meeting of the ministerial council of SAFTA.

Meanwhile, Pakistan is importing more and more vegetables and meat from India as well as sugar to overcome its shortage of these essential items. As a result, trade between the two countries rose to $746 million in 2004-05 against $476 million in 2003-04.

In the earlier years, Pakistani businessmen were opposed trade with India, but now the textile mill owners find they can buy chemicals and dyes much cheaper from India and so is the case of textile machinery.

In addition, China is now able to sell a great many variety of manufacturers much cheaper than India. Pakistani businessmen have also become more self-confident and venturesome than before and are ready to compete with India on home grounds.

As a result of such developments and the inclusion of 302 items from India to PakistanÃ¢â¬â¢s positive list, the volume of trade between the two countries should increase.

The infrastructure for larger trade with India is also being improved in Pakistan. An agreement has been signed for resuming the long abandoned shipping service between Karachi and Mumbai. And the Thar-Munabao railway line has been restored . But the major deterrent against the trade with India is the absence of an Indian visa office in Karachi or the old Deputy High CommissionerÃ¢â¬â¢s office. That is not to be opened until Pakistan is able to get suitable place for a visa office in Mumbai, which is taking a long time.

The approval of 302 items to be included in the list by the ECC so promptly shows that Pakistan is ready for larger trade with India and the greater number of items, inclusive of diesel locomotives. That should get the business on both sides more active to increase the volume of trade between them in a significant manner.

Now the Indian businessmen should explore the Pakistan market to ascertain what they can buy from us. It canÃ¢â¬â¢t be a one way trade for two long. Pakistani traders should also participate in Indian trade fairs not only in New Delhi but also in other parts of India.

And President Musharraf has also reaffirmed following his long US visit that negotiations to build the Iran-Pakistan-India gas pipeline are on and the details are being awaited from a consultant. Dr Manmohan Singh is very keen on the project and Russia is now reported to be interested in the tri-nation pipeline.

Meanwhile, its has been reported by the Transparency International that India is among the 30 countries identified for bribing to boost its exports.


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## Neo

*New housing and real estate development policy*



*By Ihtasham ul Haque*
A NEW policy on the Ã¢â¬Åhousing and real estate developmentÃ¢â¬Â for channelling sizeable resources to the investors and amending land acquisition laws has been jointly drafted by the Ministry of Housing and Board of Investment.

The draft envisages an attractive package to lure foreign and local investors in rural housing schemes. There are many private and cooperative housing societies operating or being established in the urban areas. None a single one is being set up in the rural areas.

People suffer from critical shortage in housing both in urban and rural areas especially the poor. And the rising land prices have been identified as one of the major impediments in the way of investment in the housing sector, which both the ministry and BoI believe, needs to be rationalised by a comprehensive long-term workable policy.

It would be the second effort to lure some meaningful local and foreign investment in the housing and real estate sector. A number of incentives were given to the investors in the National Housing Policy to make housing affordable for the poor. Now, there is a growing realisation that a rapid growth in housing finance can significantly develop housing and real estate.

The copies of the draft have been sent to the economic ministries, State Bank of Pakistan (SBP), banking institutions and other concerned agencies in order to come up with a final report to be approved by the cabinet for effective implementation.

The BoI and the ministry of housing and works are of the view that the financial institutions should give mortgage loans for housing purposes at market rates.

All commercial banks should be encouraged to advance loans for housing and housing projects by earmarking a Ã¢â¬Åsubstantial percentageÃ¢â¬Â of their loan portfolio like they do for other industries and commercial projects. The central bank is being requested to set up a Ã¢â¬Åhousing refinance windowÃ¢â¬Â for long-term funds from multilateral agencies.

Institutions maintaining insurance, provident and EOBI funds etc can be encouraged to invest a part of their portfolio in the housing and construction sector including long-term housing bonds. A part of the sale proceeds of valuable public land will be set aside to provide plots for low-income people, for the poor and needy at Ã¢â¬Åconcessionary ratesÃ¢â¬Â.

Similarly, the draft urges financial institutions and housing institutions to float long-term bonds at market rates to raise housing finance. Also, housing finance institutions shall be promoted to encourage savings and provide credit from community-based finance and other sources.

Under the proposed policy, the provincial governments would be required to urgently identify state and other lands in and around urban and local settlements for housing development. It provides for amending land acquisition laws to make provision for unified, transparent and market oriented system and minimisation of litigation.

The provision of trunk infrastructure shall be the responsibility of Wapda, PTCL, SNGPL,SSGCL, KESC etc. The cost of trunk infrastructure will be an additional charge on the public and private housing development schemes with the planned areas.

The construction sector is currently growing at by 7.9 per cent. and has attracted an investment of $89.3 million since July 2004. The draft anticipates that the growth in the sector will be multiplied manifold in the future. Building and construction sector is identified as the driver of economic growth.

According to the official estimates, Pakistan has over 19.3 million housing units. For a population of 148.7 million people, about 24.8 million units are required. Hence a shortfall of 5.5 million homes is estimated at end June 2004. On an annual basis, the country needs 570,000 units against the actual supply of 300,000, showing a shortfall of 270,000 units and the backlog is rising.

The overall housing stock comprised 39 per cent kuchcha houses, 40 per cent semi-pukka and 21 per cent pukka houses. The household size is 6.6 persons and the occupancy per room is 3.3 persons. It is estimated that to make up the backlog and to meet the shortfall in the next 20 years, the overall housing production has to be raised to 500,000 housing units annually.

The housing ministry and the BoI both believe that without extending adequate fiscal and non-fiscal incentives to the local and foreign investors, it would be difficult to ensure required pace of investment in housing projects.

However, it is agreed that the existing National Housing Policy has not been able to cope with the problems effectively..

Once the final report of the housing ministry and the BoI was prepared and submitted to the prime minister for approval and it is enforced effectively, one could talk about the new investment opportunities in the housing sector.


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## Neo

Monday, October 02, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\10\02\story_2-10-2006_pg7_22
*Steps to make Pakistan a land of honey*


PESHAWAR: Haji Wahid, a 54 year-old-beekeeper, was leading a happy life earning a handsome amount to feed his family but two thirds of his bee colonies were destroyed in the October 8 earthquake last year.

A native of Bajaur Agency, Wahid is running honey business with the assistance of 50 members of his family at Tarnab, a hub of honey trade in the NWFP. 

Ã¢â¬ÅI travel with the bees across the country to provide them with pollen and nectar,Ã¢â¬Â said Wahid, who started his honey business in 1992. He said that he visited Punjab and Azad Kashmir in search of bee-flora plants and flowers at the end of the spring season. Ã¢â¬ÅThe large scale cutting of calocacia (palosa), berry, shisham, sunflower, peaches and citrus fruits in the NWFP has affected beekeeping,Ã¢â¬Â he added.

Another beekeeper, Hameed Khan, said hundreds of his bees were killed during the termite attack in Karak. He said his bees could have been saved had he got anti-termite medicines and injections at the early stages. The medicines useful for bee treatment were being imported from China, Australia and Germany, which were not only expensive but were often not available in remote areas of the province, Khan complained.

He said there was an ever-increasing demand for PakistanÃ¢â¬â¢s berry and palosa honey in Saudi Arabia, Kuwait, Yemen, the UAE, Qatar and other Middle Eastern countries besides Europe because of its fine quality. He urged the government to fix honey rates to help thousands of beekeepers in their business.

Raza Shah, president of Pak Beekeepers Association (PBA), said that 6,000 honey farms existed in the NWFP. He said the government should impose a ban on the cutting of berry and palosa trees to save millions of bees from starvation and ultimate extinction. He said beekeepers should be provided interest-free loans.

Haji Rafique Najeeb, a leading honey exporter in Tarnab said, Ã¢â¬ÅDemand for Pakistani honey is always on the rise in the Gulf states, especially Saudi Arabia.Ã¢â¬Â He said an increase in average yield of honey per colony had increased from four kg to 21 kg while the total production in the country had increased from 250 tonnes to 2,500 tonnes for the last two decades. He said the increase in honey production had brought down the prices of honey in the local market. Ã¢â¬ÅI have been selling berryÃ¢â¬â¢s honey for Rs 180,000 a tonne in 2005 against Rs 160,000 in 2006,Ã¢â¬Â Rafique said. He added local beekeepers needed to have technical know-how and training to improve the quality of honey and to increase their annual income.

He alleged that some officials of the Food Department demanded illegal gratification from the exporters and on refusal declared their products injurious to human health.

Ã¢â¬ÅThe departmentÃ¢â¬â¢s inspectors take 20 samples from the honey market every month to examine its quality,Ã¢â¬Â Dr Bilal, deputy district health officer (DDHO) of Peshawar, said. The samples are divided into three parts, all sealed. One is handed over to the owner, another to the Health Department official while the third is sent to the laboratory for test, he added. Ã¢â¬ÅWe lodge an FIR against the owner once his product is declared injurious to health,Ã¢â¬Â the official said. 

Ã¢â¬ÅThe population of the local bee apis florae (small bee) is gradually vanishing from the country because of consistent loss of flora plants, flowers and scrub forest,Ã¢â¬Â Anisur Rehman, assistant entomologist of the Agriculture Research Institute (ARI), Tarnab, said. He said if urgent measures were not taken for the conservation and protection of flora plants, there was every possibility of loosing an average five to 10 kilogramme out of 1,000 kg honey.

China became the biggest honey producing country by giving attention to apis cerana bee while the Pakistan stood 20th.

In 1977-78, the official said, that Pakistan Agriculture Research Institute (PARI) had brought apis mellifera (western bee) to increase honey production but unfortunately they were not adjusted with the climate and proved to be non resistant to diseases.

Ã¢â¬ÅA gigantic project with the assistance of UNHCR was launched for Afghan refugees in 1981-82 at the ARI where a large number of apis mellifera were brought from Australia and Italy. They were distributed among the refugees and locals that played major role in the increase of honey production,Ã¢â¬Â he added.

Ã¢â¬ÅThere is a possibility of losing the wild bees in the future if proper attention was not given to its preservation and management of natural forest,Ã¢â¬Â said Dr Mumtaz Malik, chief conservator of the NWFP Wildlife Department. The gradual cutting of olive, kicker and berry trees also contributed to the decline of wild bee population, he added.

Dr Malik said beekeeping could be developed as a non-wood-forest product for the locals living near the forests by raising their income level through preservation of wild bees population. Under the Palas Conservation Project in Kohistan, he said, the capacity building and training of the beekeepers was being focused.

Ã¢â¬ÅThe government has included a Ã¢â¬ËHoney is remedy for healthÃ¢â¬â¢ in the Annual Development Programme of 2006-2007 to promote the beekeeping industry in FATA,Ã¢â¬Â said Dr Syed Qasim Shah, assistant director of agriculture in FATA. It is a two-year project and would be completed with an estimated cost of Rs 950,000. A project for women called Ã¢â¬ËHoney in kitchenÃ¢â¬â¢ is also in the pipeline. Nine projects worth Rs 22.175 million are underway in FATA with focus on capacity building, farmersÃ¢â¬â¢ education and raising nurseries of bee-flora plants in FATA.

Ã¢â¬ÅWe will issue a card to beekeepers for their identity before law enforcing agencies to save their time while migrating from one agency to another or settled areas,Ã¢â¬Â Dr Shah said. The department has planned to train 8,000 people, including 1,000 females, besides distributing 2,500 bee-boxes on cheap rates among the farmers of tribal areas by 2010 to bolster their income. 

Ã¢â¬ÅThe University of Engineering and Technology (UET), Peshawar, is working on a honey extracting machine which will be available in the market in June next,Ã¢â¬Â Javed Iqbal Khattak, SMEDA manager said. The cost of an electric machine would be Rs 9,000 which is designed in such a away that could purify tonnes of honey in relatively far less time besides saving precious life of bees off springs that are killed in thousands during purification process of combs, he said.


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## Owais

*World Bank accuses government of distorting petroleum prices* 


ISLAMABAD (October 03 2006): The World Bank has accused Pakistan of petroleum products' prices' distortion, and warned that continuity of this flawed strategy would have negative impact on its economy in free market mechanism.

The bank referred a number of items in support of its viewpoint, which were massively distorted by the government to achieve some social and other objectives.

These included undue protection to refineries through concession in taxes, below import-parity-plus-margin sale of diesel and kerosene and tax relaxation to CNG and LPG. The bank highlighted thorny issues for the government in its a recent report. The report was based on a World Bank's mission's visit to Islamabad in September.

The report indicated that refineries were protected through a 5-10 percent import duty. This was forcing the consumers to pay correspondingly higher charges for the products. It added that with the exception of Parco, a little rationale seems to protect other refineries, which are old and have depreciated.

It said that petroleum prices across Pakistan for most of the products have been equalised through a freight equalisation margin applicable to 29 main depots. The fund is administered by the industry on behalf of the government, while cartage rates are fixed by the government. It added that the policy was questionable from economic standpoint and has other consequences. The mission supported OCAC's point of view to reduce the number of depots to 8 as an interim measure and then abolish the freight pool, once for all.

The report indicated that diesel and kerosene have been sold to end-consumers at prices below import parity plus margins. This resulted in price signals not being passed on to the consumers that resulted in building up of arrears to the refineries and OMCs. It maintained that gasoline has traditionally been fuel of choice for private vehicles, and as a result, was heavily taxed. In recent years, CNG, based on domestic gas, has captured a significant market share, given that out of a fleet of about 5 million light vehicles, in excess of 1 million now operate on CNG. CNG, which is not specifically taxed, costs about 40 percent of the price of motor gasoline.

The report said that in 2005, the government had authorised LPG use in private vehicles. LPG, which is not specifically taxed, represents effectively 80 percent of that of gasoline. As a result, gasoline, for which specific taxes account for about 23-29 percent of retail price, is not competitive with LPG and CNG.

The report said this was affecting inter alia the government, and finally it would affect fiscal receipts and the refining industry, which produces excesses of gasoline for export (in the form of naphtha). The report added that international prices of gasoline and diesel were usually close. But in Pakistan diesel price is only 63 percent of gasoline. The difference is excessive as it provides another incentive to switch from gasoline to diesel, largely at the expense of the Exchequer. The bank stressed the need of reducing the gap to bring in line with the international practices.


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## Owais

*Revenue receipts exceed target by Rs 11.18 billion* 


ISLAMABAD (October 03 2006): The Central Board of Revenue (CBR) has collected Rs 187.38 billion in the first quarter of 2006-07 (July-September) against the target of Rs 176.2 billion, reflecting a growth of Rs 11.18 billion.

According to updated figures released on Monday, the Board collected Rs 187.38 billion against Rs 152 billion in the corresponding period of 2005-06, showing 23.2 percent growth.

On September 30, the Board's provisional collection had amounted to Rs 172 billion the period of July-September. But further Rs 15.38 billion was collected during following 48 hours on receipt of revenue figures from far-flung areas.

Tax-wise break-up shows that the collection on account of direct taxes was Rs 66.32 billion, against Rs 48.18 billion of last year, depicting an increase of 37.6 percent.

Indirect taxes collection amount to Rs 121.06 billion against Rs 103.87 billion, showing an improvement of 16.6 percent. Sales tax collection has reached Rs 75.60 billion against Rs 62.98 billion, indicating a growth of 20 percent. Of this, sales tax collection at import stage was Rs 44.80 billion, against Rs 39.02 billion, showing a growth of 14.8 percent, and sales tax collection on domestic consumption was Rs 30.80 billion, against Rs 23.96 billion, showing an improvement of 28.6 percent.

The collection on account of federal excise duty (FED) was Rs 16.48 billion, against Rs 12.23 billion, showing an increase of 34.6 percent. Against gains in all these taxes, the CBR Customs Wing has shown poor performance, as collection on account of customs duty was Rs 28.9 billion, against Rs 28.6 billion, reflecting a nominal increase of 1.2 percent.

At the same time, the overall payment of customs rebate to exporters also declined as compared to the payments made last year, sources said. The Board paid Rs 19.83 billion as refund and rebate to exporters during the first quarter 2006-07 against Rs 18.20 billion in last fiscal year, reflecting an increase of Rs 1.63 billion.

Out of this, sales tax refund was Rs 11.18 billion against Rs 7.57 billion; direct taxes refund Rs 4 billion against Rs 5.2 billion and payment of customs duty rebate was Rs 4.67 billion in the first three months of current financial year against Rs 5.28 billion of last fiscal year, showing a shortfall of Rs 0.61 billion.

As per data, the provisional collection of federal taxes for September 2006 is Rs 88.26 billion, while total refund and rebate paid during the month was Rs 4.54 billion.

The monthly-break-up shows that direct taxes collection was Rs 44.73 billion and indirect taxes collection was Rs 43.53 billion. Sales tax collection was Rs 26.74 billion; federal excise Rs 5.4 billion and collection of customs duty is Rs 11.28 billion


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## Owais

*UK emerges lead investor as SCRAs soar to $97 million* 


KARACHI (October 03 2006): UK emerged as the lead investor, for the first time this year, on September 28 with its balances under Special Convertible Rupee Accounts (SCRAs) rising to $55.6 million. And, on September 29, its balances surged further and reached $63.5 million.

This was the result of net cumulative flows of $57.2 million during the month up to September 28 and $65.1 million to September29. Singapore, which has been relegated to the second position since, did not bring in any new funds between September 26 and 29 and so that its balances remained at $44.1 million on September 29 as on September 26. USA's balances also remained unchanged--around $16 million--although it brought in new funds to the tune of some $27.5 million in September alone.

On withdrawals front, Switzerland remained active in September also, as it had been throughout FY07. Its withdrawals reached $18.5 million on September 29, or $0.2 million higher than on September 26.

Hong Kong also continued withdrawing, albeit small sums, so that total withdrawals during the year reached $3.1 million on September 29. Qatar, too, withdrew a small amount since September 26. Its total withdrawals during the year to September 29 remained a small figure, viz, only $0.03 million. There was no change in the balances of other active players compared with the position on September 26.

Indices reflecting stocks position in the country for relevant dates changed as follows: KSE 100 Index (November 1991=1,000) increased from 10,305 on September 26 to 10,512 on September29. KSE 30 Index (June 30, 2005=10,000) rose from 12,808 to 13,077. BRIndex (September 16, 2004=5,000) increased from 11,076 to 11,374; and SBP General Index of Share Prices (2000-01=100) rose from 424 to 430.

Aggregate market capitalisation, accordingly, rose from Rs 2,820 billion on September 26 to Rs 2,875 billion. The increase in indices occurred despite the fact that roll-over week effect and the reported delay in implementation of amended CFS pushed investors to book profits. Banks, however, continued attracting investors' focus as Picic, BAFL, NBP and MCB scrips remained top volume leaders providing all-important cushion to the indices.


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## Owais

*Over $500 million FDI expected in Islamic banking* 

KARACHI (October 03 2006): Approximately 500 million dollars to 600 million dollars will flow into Pakistan's Islamic banking industry alone as foreign direct investment (FDI), estimate President and Chief Executive Officer of BankIslami Pakistan Limited Hasan A. Bilgrami.

Talking to _Business Recorder _on Islamic banking and its future prospects, he said that the above amount could be substantially increased with the assistance of the government. He said that the total deposits with Islamic banks in Pakistan will reach Rs 780 billion by 2014, according to a research report on the future prospects of Islamic banking industry in Pakistan published by the Islamic banking division Ferguson Associates.

The State Bank of Pakistan (SBP), which has got an encouraging response in its efforts to promote Islamic banking from foreign and local investors, targets Islamic banking to have a 10 percent share of the total banking industry in Pakistan by 2020.

Bilgrami said that over a dozen of institutions had come into the Islamic banking market and many more were planning to enter. As of now, four Islamic banks, including BankIslami Pakistan Limited, was operating as full-fledged Islamic banks, he said, adding new Islamic banking licences had been given to two more banks, which were expected start business in 2006. Applications of many other interested parties for NOC were being processed by the SBP, he said.

In addition to full-fledged Islamic banks, Bilgrami said there were dedicated Islamic branches of conventional banks. So far, 12 banks had been issued licences for dedicated Islamic Banking Branches (IBBs), he said, adding in total there were around 110 branches in Pakistan offering Islamic products to customers.

The share of Islamic banking assets in total banking sector had reached around 2.41 percent now, a sizeable growth as compared to just 0.5 percent in 1996, he said.

The fast growing BankIslami Pakistan Limited, which started operation from the second quarter of 2006 with the sole purpose of providing banking facilities to its customers in strict compliance to the Islamic laws currently, had six branches, he said.

Bilgrami said it further planned to open 10 branches and a number of banking centres and expand its network to Islamabad, Lahore, Quetta, Faisalabad, Peshawar and Multan, etc. In next three years, it would have 36 branches and 83 banking centres all over Pakistan, he said.

Bilgrami said that there were 267 Islamic banks in over 75 countries, which managed approximately 202 billion dollars in deposits, 400 billion dollars in investments and over 262 billion dollars in other assets. Another 200 billion dollars to 300 billion dollars are managed by the Islamic windows of international banks.

He explained that the most crucial difference between conventional and Islamic banking was the strict prohibition of interest in letter and spirit.

To ensure this, according to Islamic economic theory, all financial transactions must be asset based. Moreover money could not be charged for money, since money itself had no intrinsic value. Furthermore, Shariah placed great emphasis on risk sharing; in an interest-based transaction the lender's profit is confirmed and no risk is involved on his side, and thus he is prohibited from profiting by it.

"Since interest cannot be charged on loans, Islamic banks make their income through Sharia-complaint transactions inducing sale (Murabahah, Salam, and Istisna), Islamic leasing (Ijarah) and profit and loss sharing techniques (Mudarabah and Musharakah)," he said.

BankIslami is the first bank in Pakistan as well as in the region to deploy biometric ATMs for its customers to ensure better security and service. Biometrics is defined as an automated method of verifying or recognising the identity of a person. BankIslami is providing the biometrics facility to its customers through fingerprint scanning.

BankIslami is sponsored by three groups, ie DCD Group, Dubai Bank and Jahangir Siddiqui and Company Limited. DCD Group has played a pioneering role in setting up of institutions such as the Islamic bank of Britain and European Islamic Investment Bank in the UK aside from partnering with Dallah Al-Baraka Bank in South Africa.

Dubai Bank is one of the upcoming banks in the UAE, owned by Dubai Holdings, the investment arm of Government of Dubai and Emmar Properties, which is the largest real estate company in terms of capitalisation in the region.

Jahangir Siddiqui & Co Ltd is the largest and most diversified financial services group in Pakistan with a track record of innovation and success. It has the distinction of sponsoring the first and largest asset management company, ABAMCO Limited and the first Islamic fund. Recently JS Group has been at the forefront of starting a US $70 million private equity fund in Pakistan.


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## Owais

*Sindh gives land to Kuwait-based company for refinery* 


KARACHI (October 03 2006): The Sindh government has allotted 500 acres of land to a Kuwait-based company to install an oil refinery at Port Qasim. The company intends to invest $1.5 billion in refinery sector.

The Sindh government has eased its land allotment policy to encourage foreign investment. Under the new policy, the investors have to file an application with the chief minister with a feasibility of their proposed project. The investors are given a particular time for presentation and then the request will be entertained.

The Sindh government is keen to promote investment in oil refinery and other allied sectors. In this respect, it has allotted 2600 acres to a construction firm to develop industrial area at Dhabeji.

The finance department is working out the price of the land. The land will remain property of the provincial government and the developer will invest his money. Through allotment of industrial plots, the developer and the Sindh government will retrieve their investment.


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## Neo

*Revenue collection up 23pc in 1st quarter*

ISLAMABAD, Oct 2: The Central Board of Revenue (CBR) collected Rs187.4 billion revenue during the July-September period of fiscal year 2006-07 as against Rs152.1 billion the same period last year, indicating an increase of 23.2 per cent.

Official figures released here on Monday showed that the revenue collection had surpassed the target set for the period under review by 5.1 per cent.

It further showed that the collection of direct taxes increased by 37.6 per cent to Rs66.3 billion during the first quarter as compared to Rs48.2 billion collected during the same period last year.

The sales tax collection reached to Rs75.6 billion during the period compared to Rs63 billion the same period last year, showing a growth of 20pc.

The excise duty receipts registered an increase of 34.6 per cent at Rs16.4 billion during July-Sept 2006-07 against Rs12.2 billion the same period last year.

While collection of customs duties rose by 1.2 per cent at Rs29 billion during the period under review over the corresponding period last year.


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## Neo

*Cement exports up by 53.7pc*



LAHORE, Oct 2: The cement demand during the first quarter of the current financial year has grown by 20.99 per cent to 5.414 million tons from 4.474 million tons during the same period last year.

In a statement issued on Monday, the newly elected All Pakistan Cement Manufacturers Association (APCMA) chairman Aizaz Mansoor Sheikh said the cement exports had registered a growth of 53.72 per cent and the domestic demand grew by 17.51 per cent.

During the period under review, the capacity utilisation was 74.49 per cent from an expanded capacity-base made available with the start of new production lines and optimisation of production capability undertaken by several plants.

The APCMA has appreciated the recent decision of the government regarding restoration of duty drawback on exports and waiver of subsidy on import of cement.


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## Neo

*PM for changing entire tourist culture* 

*ISLAMABAD *_(updated on: October 03, 2006, 21:26 PST_): Prime Minister Shaukat Aziz on Tuesday called for generating new ideas and pursuing an effective marketing strategy to benefit from the rich tourism potential of the country.

Addressing the first-ever convention of tour-operators, District Co-ordination Officers, Nazims, travel agents here at the PM Secretariat, he called for bringing about a change in the entire tourist culture of the country.

"We have to package, manage the image and market it to the world as we have the natural beauty, a rich culture, vibrant heritage and a long history," the prime minister said.

He said the tourist trade was bringing in investment of billions of dollars across the world besides generating extensive economic activity.

However he said the true potential was not being realised in Pakistan owing to a complacent attitude.

"We have to change the entire culture and make it tourist friendly," he told the travel agents and tour operators.

"We have to utilise whatever we have but we need to adopt a positive approach and generate ideas that sell," he added.

The prime minister said tax incentives to the tourism industry were no answer to generating more tourist traffic. Rather he called for making all out efforts by being competitive and by providing quality service to the tourists.

"Pakistan has a tourist friendly ambience, ranging from lofty peaks in north to the vast deserts and the glistening sea in the south," he added.

He said it was his desire to see the federal capital as the regional conference and convention centre, with lots of hotel space and facilities for foreign visitors.

The prime minister mentioned the Gandhara civilisation that was in close proximity to the capital, besides the religious place of worship for Sikhs.

Similarly he said cities like Lahore, Karachi and others can think of marketing their historical places, organising festivals which generate interest in local culture, arts and crafts.

Prime Minister Shaukat Aziz also called for promoting domestic tourism and mentioned the recent rain in Tharparkar which attracted hundreds of tourist from Karachi.

He asked the DCO's and Nazims to promote local tourism by arranging events and activities which can gradually attract people from all over the country and even abroad.

The prime minister also pointed at the local specialities of each area like the 'pala' fish of Hyderabad, the Mughal era building of Lahore, the steam safari to Landikotal - all which can attract local and foreign tourists.

He said the Pakistan International will start new flights to Northern Areas, Gawadar and some special package tours for visits to religious places like Nankana Sahib.


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## Neo

*WB offers $125 million to promote rural telephony: Awais*

*ISLAMABAD *_(updated on: October 03, 2006, 21:37 PST_): Ministry of Information Technology will shortly launch a multi-billion-rupees project with the help of World Bank to accelerate growth of telecommunication in remote areas of the country.

Minister for Information Technology, Awais Ahmad Khan Leghari on Tuesday said details for the Rural Telecommunications Access Project were being worked out and the World Bank had agreed to provide $ 125 million financial aid to jumpstart growth of basic telephony in the rural areas.

He made this announcement in a statement following a meeting with a four-member World Bank delegation headed by senior WB representative Ritin Singh, which met him here to discuss modalities of the project and identify areas to receive support within the telecom sector.

Leghari said the amount received from the World Bank would be deposited in the Universal Service Fund (USF) as contribution by the government to bring the rural population into the mainstream of the country's economic development.

"The benefits of such an intervention would be a higher GDP growth, improved governance and poverty alleviation through enhanced economic activities and job creation," he said and added this would also give us the advantage of not only the provision of much-needed funding into the USF to start it up, but World Banks' technical assistance based on their experience of similar initiatives in other developing countries would also be available to us in the roll-out process.

Leghari said the government wanted to invest heavily into the rural telecommunication to bridge the access gap through output-based aid schemes as introduced earlier by many countries in South Asia, Latin America and Africa.

"International experience shows that despite deregulation and competitive private sector participation, universal access to telecom services is unlikely to be achieved without intervention, at least in the initial phase of development," he said.

He said the government would use USF to extend a one-time subsidy or grant for private operators, and the subsidy would be offered through bidding on a competitive basis to keep the cost as low as possible to ensure maximum private investment in achieving universal service goals.

"The fund would also be used to create an atmosphere free of exclusivity rights or technology restrictions to ensure maximum advantages to the target population," he said.

He said rural tele-density in Pakistan stood at a dismal 1 per cent of the population and he was keen to take it to at least 5 per cent by 2010, which obviously required for a massive investment to put in place a proper telecom infrastructure.

"We estimate this cost to be around $ 100 million and the grant being extended by the World Bank would provide us with an ideal platform to extend telecom services to the un-served areas," he said.

Earlier, Leghari told the World Bank delegation Pakistan had made significant progress in telecommunication development in recent years with the overall tele-density touching 18 per cent at the back of around 40 million mobile phone subscribers.

"A healthy competition in the market has resulted in various benefits for the subscribers including very low tariff, reduced cost of bandwidth, better quality and higher efficiency," he said.

He said the benefits of the telecom development had been far-reaching for the economy with a third of the total FDI Pakistan received coming through telecom-related investment, but disparities still existed, especially in the rural areas where tele-density was still teetering at 1 per 100 inhabitants.

"The rural-urban divide is constantly widening as the mobile phone revolution is largely forced in the urban areas while the WLL system is also far from meeting the requirement of the rural areas which make up for 70 per cent of the country's population," he said.

Leghari said the government had identified four key areas, including basic rural telephony, broadband, e-services and content development, to focus on during the roll-out of the Universal Service Fund.

"Our aim is to provide at least 250,000 broadband connections and offer three major e-services within the next 12 to 18 months," he said, pointing out content creation as a key area because without content creation there would be no solid progress in the broadband proliferation which heavily relied on the availability of content in local languages.

The minister said the provision of e-services was a vital pillar of the government policy to take the fruits of IT to the common man and called for addressing the information infrastructure gaps alongside acceleration of rural telecom access, to provide the rural population with greater access to public services.

He said some of the key areas warranting immediate government support included development of a common E-government platform that integrates disparate government ministerial information systems within a centralised data warehouse, accessible through a secure web-enabled enterprise application system.

He also called for scaling up ICT pilot projects and establishing an E-Commerce legislative and regulatory framework which could secure Pakistan's national interest, and international principles of law.


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## Neo

*Pakistan continuing its economic growth: Prime Minister* 

ISLAMABAD (October 03 2006): Prime Minister Shaukat Aziz has said Pakistan is continuing its economic growth; development and the structural reform agenda so as to further improve the standard of living of the people.

He was talking to Moeen Qureshi, former caretaker Prime Minister of Pakistan and Chairman Emerging Partnerships, US who called on him at the Prime Minister House on Monday. The Prime Minister highlighted the various reforms initiated in financial services, agriculture, industry, governance, and justice and security fields.

He also apprised Moeen of the priorities of the government in the social sector and the steps taken by it for employment generation, better facilities of health and education.

He said the government had made record high allocation of over Rs 415 billion for the Public Sector Development Programme which covers a host of areas including power generation, better roads, education, infrastructure development, health care, irrigation and construction of water storage. Shaukat said the government is also encouraging public private partnership particularly in port management, electricity generation and telecom sector.

He said that inflation is beginning to show downward trend and The 6-8 percent growth target will be achieved. He said the government continues to encourage the domestic and foreign investment, which is occurring at a record level in manufacturing, agriculture, services sector, tourism, construction, real estate development, IT and Telecom.

Moeen appreciated the economic achievements of the government and the structural reforms introduced during the last seven years. He said the reform agenda of the government coupled with consistency and continuity of the policies have put Pakistan's economy on a sound footing.


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## Neo

*$500m automation project*

_Sindh, Malaysian firm in final talks_

By Imran Ayub

KARACHI: The Sindh government has entered into final talks with a Malaysian firm for awarding a $500 million contract for the automation of public service institutions in the province, a highly-placed source said on Monday.

He said senior provincial officials visited Malaysia recently, where final phase of talks were held and eventually it was estimated the contract would cost $500 million to the Sindh government.

&#8220;In the detailed talks between the Sindh government and the Malaysian firm, implementation of e-government came under discussion,&#8221; said the source. &#8220;It includes automation of government institutions, which mainly deal with public services.&#8221;

He said the Sindh government desired to seek federal government&#8217;s financial assistance to execute the project and it could take a few weeks more to finalise the modalities and conditions for the project.

&#8220;The provincial IT ministry has moved a summary to get final nod from the provincial cabinet and then it will take up the matter with federal authorities,&#8221; added the source. In 2002, the federal government launched e-government programme with an aggressive campaign to put all the public service departments online but plans almost failed to take off in the absence of a comprehensive strategy and design.

However, last year the government constituted National e-Government Council, which announced around a billion-rupee e-government projects. Initially, the federal government picked up six projects for the e-government programme. However, the recent move has extended the scope of the programme to provincial level.

The official said the Sindh government had planned to bring automation in vehicle testing system and registration along with other public service institutions. &#8220;The government also designs a strategy to computerise the police record,&#8221; he added. &#8220;For this purpose, in the first phase the Sindh government is likely to take up 24 police stations across the province to test the impact of automation.&#8221;

He said Civil Hospital Karachi was also among other government-run institutions, which was on the authorities&#8217; list for automation. &#8220;The projects will not only facilitate citizens but also bring transparency in the government institutions,&#8221; said the source citing the government plans.

He said the e-government programme was envisaged to adopt a paperless environment in all the ministries and departments to enhance their performance. &#8220;The local software houses and companies don&#8217;t have potential to execute anyone of the projects alone,&#8221; said the source in response to a query.

The country&#8217;s IT industry size touched a total volume of $2 billion during 2005-06 and official estimates suggest it may reach near $3 billion by the end of current financial year. In a recent presentation to Prime Minister Shaukat Aziz, the Pakistan Software Export Board (PSEB) - a federal body set up to promote outsourcing and software exports &#241; claimed under the World Trade Organisation (WTO) formula IT services and software exports stood at $1 billion during 2005-06.

&#8220;As per estimates, IT export revenue, reported by the State Bank, was $75 million,&#8221; said Yusuf Hussain, Managing Director PSEB citing the presentation. &#8220;Similarly, our IT export revenue brought into the country was $150 million and global IT export revenues were counted at $600 million while our domestic IT revenues touched $1.4 billion.&#8221;


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## Neo

Washington, DC
October 2, 2006 
*China, India and Pakistan: half of world cotton production and two-thirds of world cotton consumption*


World cotton production is projected at 25 million tons in 2006/07. China (Mainland), India and Pakistan combined are expected to produce 13 million tons in 2006/07, or over half of world production for the first time in history. World cotton consumption is expected to continue to increase in 2006/07, but at a slower rate than in the last two seasons, to 25.6 million tons. China (Mainland), India and Pakistan combined may consume 16.6 million tons of cotton in 2006/07, or 65% of projected world consumption, up from 50% in 2000/01. Cotton consumption in the rest of the world is projected to remain stable at 9 million tons. World cotton imports are projected at 9.2 million tons in 2006/07, slightly down from the record reached last season. 
World cotton ending stocks are projected at 11.6 million tons in 2006/07, down for the second consecutive season.

WORLD COTTON SUPPLY AND DISTRIBUTION .2005/062006/072007/082005/062006/072007/08.Million TonsMillion BalesProduction 24.6625.025.7113.3115118Consumption 24.7925.626.2113.9118120Exports 9.749.29.244.74242Ending Stocks11.9111.611.554.75353Cotlook A Index*.56.15..56.15.* US cents per pound.


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## Owais

*Pakistan faces cotton shortfall after pest attacks 


* 
*KARACHI *_(updated on: October 04, 2006, 18:03 PST_): Pakistan, heavily reliant on cotton, expects a smaller crop this year due to bad weather and pest infestation, farmers and government officials said on Wednesday.

Farmers and government officials said the crop could fall to 12 million bales, against a targeted 13.82 million.

"We would have very little choice other than to scale down our earlier estimates of 13.82 million bales to 12 million," said a government official.

Agriculture officials said they had begun assessing the crop size and that they needed at least 10 more days to complete their assessment.

Qadir Bux Baloch, the Agriculture Development Commissioner, said a government-appointed cotton crop assessment committee would come up with its report on the crop size in the second week of October after assessing damage.

"Crops in three (main) cotton producing areas in Punjab are heavily damaged by the leaf curl virus," Baloch told Reuters, referring to the central province that is the main cotton producing region.

He said rains had also damaged at least 20 percent of standing cotton on more than 250,000 acres (101,250 hectares) in southern Sindh province, which produces a quarter of Pakistan's cotton.

Official said floods in the Chenab River, which passes through a number of cotton-producing areas, had also affected the crop in Punjab.

Another official said the long monsoon season had resulted in the shedding of cotton flowers in the Punjab, reducing yield.

"The season started with an unfavourably long monsoon which hampered cotton flower formation," said the official, who asked not to be named.

"And now high temperatures are favouring infestation of pests, so it is pretty sure that we will not have a big crop this year."

The official said the latest pest attacks were likely to cut total output further.

"The damage made by the pest attack is extensive, much higher than previously estimated," he added.

In May, Pakistan expected its cotton crop to increase by more than six percent to 13.82 million bales in the 2006/07 crop year.

Cotton sowing starts in February and ends in June, while the harvest starts from July in Sindh and September in Punjab.

Cotton and textiles account for about two-thirds of the country's exports and a healthy cotton crop is vital to economic growth.

A poor crop could deal a blow to government's hopes of seeing the economy grow around 7 percent in 2006/07 (July-June) against last year's 6.6 percent.

Pakistan expects domestic consumption of 15 million bales in the season that started in July, in line with recent years. Despite being the world's fourth-largest cotton producer, Pakistan annually imports about 1.5-2.0 million bales of high-grade cotton to meet growing demand from local textile mills.


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## Owais

*Rs 27.46 billion loss to IDBP: Finance unable to take action* 


ISLAMABAD (October 04 2006): The Finance Ministry has expressed inability to take any action against those responsible for causing Rs 27.46 billion financial loss to the Industrial Development Bank of Pakistan (IDBP).

"Loans were extended by a set of individuals, and monitoring was done by others. It would be quite difficult to arrive at clear-cut conclusion and definitive evidence of individuals' interaction in a court of law," sources quoted Finance Ministry as saying in a report to be discussed by the Cabinet on Wednesday.

The said that different heads of IDBP wrote off loans of Rs 7.772 billion from 1989 to 2004, of which, Rs 5.862 billion was waived from 2000 to 2004 during General Pervez Musharraf's tenure as President and Chief Executive.

Sources said that Rs 1.089 billion was written off in 2000-01, followed by Rs 292.858 million in 2001-02, Rs 1.245 billion in 2002-03, Rs 258.155 million in 2003-04 and Rs 2.976 billion in 2004-05. However, total financial loss had accumulated to Rs 27.46 billion up to June 2006.

Sources said that the Cabinet, while considering Finance Division's summary on "corporatisation and restructuring of IDBP' in its meeting of July 12, 2003, decided that details of persons/agencies responsible for the bank's financial problems along with complete losses sustained by the bank should be placed before the Cabinet.

Sources said that a summary was submitted to Cabinet Division on August 17, 2004 soliciting approval for IDBP (re-organisation and conversion) Bill 2004 together with the State bank's investigation report about losses of IDBP.

The Cabinet Division advised that in view of importance of proposed legislation, two summaries - one relating to the proposed legislation and the other to the SBP report - might be submitted separately, sources added.

Accordingly, a summary for the Cabinet on October 6, 2004 was submitted for approval of the IDBP (re-organisation and conversion) Bill 2004.

The Cabinet in its meeting on October 13, 2004 approved the bill, which was cleared by the Standing Committee of the National Assembly on 2nd August 2005 and referred to the House for passage.

Sources further said that as for the report on the IDBP losses and the persons involved, State Bank of Pakistan, being the regulator of the banking sector, was requested to investigate.

The sources said the government has only forwarded five cases to the National Accountability Bureau (NAB) which includes Plaza Enterprises Limited, whose case is pending before the Sindh High Court.

Hayat Vinyle Limited had offered a plea bargain with the bank after which the bank wrote of Rs 22.279 million loan. As regards Ital Pak Marble Limited, the bank said that its losses could not be determined now and would be finalised after recovery Rs 42.366 million as per the MoU.

Regarding the case of Ital Pak Marble and Pakistan Multicoating Limited, the bank said that due to facilitation provided by NAB, addendum to the MoU was prepared by Mandviwala and Zafar Legal Consultants regarding further payment of Rs 1.128 billion to be received by the bank after incorporating developments that have taken place since the original MoU was signed.

In this regard, after unanimously arriving at consensus amongst the bank and Sultan Lakhani, settlement agreement was signed in the office of NAB Sindh at Karachi on August 9, 2004.

About Delta Type Limited, the bank said that offer made by the borrowers at NAB was not acceptable to the bank being on lower side. As such the case was returned by the NAB. The bank is continuing legal action against the company and its director and guarantors, sources added.


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## Owais

*Big setback to public-private joint ventures* 


KARACHI (October 04 2006): Public-private partnership for infrastructure projects has received a hard blow on account of the government's decision to permit non-bank corporations again to plough their pension funds, gratuity schemes and provident funds into National Saving Schemes.

"They have killed the institutional market. How will investors' benchmark 10-15-20 years COIs raise financing for these projects?" questioned an investment banker.

According to an economist, NSS is a guaranteed money loser for the government. He argued, "Every time the interest rate rises, the investor can cash out and then re-enter NSS Schemes again. Secondly, the cash flow is uncertain. "And, thirdly, when interest rates rise, capital losses can be booked on investment in Pakistan Investment Bonds (PIBs). No need to do it for COIs in NSS."

The government had managed to reduce its bank borrowing for budgetary support at the end of the first quarter of FY07. The net increase in bank borrowing in first quarter FY06 was Rs 80 billion. In the corresponding period a year later it was Rs 44 billion.

This reduction was largely due to transfer of Rs 49 billion from State Bank profits to the budget and receipt of Rs 8 billion from Etisalat on account of PTCL sell-off.

The government has once again opened a Pandora's box. All work to restructure CDNS, streamlining its operations and demutualisations were nicely proceeding along. The net inflow in the first two months of the current financial year was said to be Rs 12 billion. It was estimated that due to Behbood Schemes for pensioners the net inflow for the year would be Rs 30 billion. Why then lose the hard won gains since 2002, is perplexing for economic agents.

If the government was indeed worried about the fiscal deficit getting out of hand, it could have allowed a one-off eligibility to institutional investors to renew their investments upon maturity. Historically, experts say, neglect of policy results in economic upheaval and the whole nation has to pay the price. It is better to think through the impact before tinkering, experts opine.


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## Owais

*UK, Singapore and US raise SCRAs to $108 million* 


KARACHI (October 04 2006): During most of September, movements in Special Convertible Rupee Accounts (SCRAs) was an affair between UK, Singapore and USA on the one side (ie the build-up side) and Switzerland and Hong Kong on the other (the depletion side).

USA, which had all along been a lead investor in Pakistan's scrips, has been lagging behind this time and appears satisfied to occupy third position. Singapore has been occupying the driving seat until recently when, on September 28, it was overtaken by UK as lead investor.

The trio brought in still more fresh funds between September 29 and October 2, the dates for which latest update was available. However, Switzerland appears to have lost all interest in Pakistan's portfolio investment. Its withdrawals rose to a hefty $20 million on October 2, which included $1.5 million withdrawn during the three intervening days. Hong Kong withdrew another $0.6 million in the first two days of October with total withdrawals reaching $3.7 million on October 2.

Among the leaders, UK's balances rose by $7.7 million to $71.2 million between September 29 and October 2; those of Singapore rose by $4.6 million to $48.7 million; and of USA by $0.6 million to $17 million.

There was no change worth mentioning in the balances of other countries, except Germany, which also withdrew a very small amount of $0.001 million, making the first movement since the beginning of the new financial year.

Indices, reflecting stocks position changed as follows: KSE-100 Index (November 1991=1,000) increased from 10,512 on September 29 to 10,616 on October 2. KSE-30 Index (June 30, 2005=10,000) rose from 13,077 to 13,228; and BRIndex30 (September 16, 2004=5,000) increased from 11,374 to 11,529.

Update on SBP General Index of Share Prices (2000-01=100) and aggregate market capitalisation was not available, which stood at 430 and Rs 2,875 billion, respectively, on September 29. The increase in indices occurred as stocks succeeded in shrugging off week-end hesitancy with investors indulging in speculative buying in half a dozen small banks still ruling at attractively lower levels with merger and acquisition reports rife in the market


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## Owais

*Pak-US council discusses bilateral investment treaty* 


ISLAMABAD (October 04 2006): The Pak-US Council under the Trade and Investment Framework Agreement (TIFA) started its second meeting at the commerce ministry here on Tuesday to broaden and strengthen bilateral trade and economic relations.

Commerce secretary Syed Asif Shah headed the delegation from Pakistan. Representatives from foreign affairs, industries and law ministries, economic affairs division also participated in the discussions.

Official sources told _Business Recorder _the meeting discussed bilateral investment treaty, intellectual property rights, protection of pharmaceutical patents and reconstruction opportunity zones (ROZs). They said the US delegation was given an update on institutional development and legislative process to accommodate US demands for protection of US business interests before finalisation of TIFA.

They said the meeting, being held as a follow-up of President General Musharraf's visit to the United States, was significant due to its potential for strengthening of bilateral relations with particular reference to trade and investment.

Commerce secretary Asif Shah and US trade representative Hatwick will brief newsmen about the outcome of the second meeting on Wednesday at the commerce ministry.

It may be recalled the Trade and Investment Framework Agreement (TIFA) was signed on June 25 in Washington DC by the then finance minister, Shaukat Aziz, and USTR Bob Zoellock. Article 2 of the TIFA provides for setting up of Pak-US Council on trade and investment.

The first meeting of TIFA council was held in April 2004 in the USA, which discussed issues pertaining to bilateral investment treaty, intellectual property rights and trade, etc.


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## Owais

*SBP to introduce 100, 500 currency notes* 


*ISLAMABAD *_(updated on: October 04, 2006, 17:43 PST_): The State Bank of Pakistan (SBP) will introduce new currency notes in the denominations of 100 and 500 in the forthcoming month.

Talking to private TV channel, States Bank's spokesman Waseem-ud-Din said that the central bank, in accordance with the government's decision is introducing new currency notes in place of all old notes.

The bank's spokesman said that both old and new currency notes of 100 and 500 would remain valid simultaneously.

The target of introduction of new currency notes in place of old ones would be achieved during the current year, Waseem-ud-Din said.


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## Owais

*'Noor Group refinery to be a milestone in ties with Kuwait'* 

ISLAMABAD (October 04 2006): A 3-member delegation from Kuwaiti Noor Financial Investment Company headed by Deputy Chairman Nasser Al Marri called on Minister for Petroleum and Natural Resources, Amanullah Khan Jadoon here on Tuesday and discussed matters pertaining to the proposed refinery being set up by the company at Port Qasim with an investment of US $1.5 billion.

The minister welcomed the Kuwaiti Noor Financial Group's investment for setting up the refinery at Port Qasim and said it would be a milestone in Pakistan-Kuwait brotherly relations.

He said the government has deregulated the petroleum sector and was providing an attractive package incentives to the prospective investors in an investor-friendly climate.

He said there existed a lot of potential for the investors in oil and gas activities and privatisation process of state owned units. He invited the Kuwaiti company to participate in the oil and gas activities for the mutual advantage.

The minister said the government would facilitate the Kuwaiti company for the setting up oil refinery and assured them his full co-operation in this regard.

Deputy Chairman Kuwait Noor company briefed the minister about the world-wide activities of the group and appreciated the growth of oil and gas industry in Pakistan in last few years.

He said that Noor company would also take part in the oil and gas units privatisation activities for the mutual advantage.


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## Owais

*German traders keen to set up equipment manufacturing plants for alternate energy* 


KARACHI (October 04 2006): The German businessmen have expressed their willingness in setting up the plants for manufacturing equipment required for generating alternate/renewable energy, as Pakistan is far behind in this sector. One unit manufacturing wind generator would cost around four million dollars and three or four units are expected to be setup soon.

The concerned issues were discussed in detail, at a conference recently organised jointly by Alternate Energy Development Board, German Consulate and Pak-German Business Council.

SS Haider, an alternate energy expert told _Business Recorder _that the German businessmen were very keen to make investments in this sector, particularly in establishing the plants manufacturing equipment required for generating energy.

He said that European businessmen encouraged with the policies of the present government had realised the profitable opportunities existing in Pakistan.

European countries have set the targets to reduce their dependence from the conventional energy resources. The European companies involved in the manufacturing of alternate energy generating systems, like wind generators and solar cells etc, are awfully busy in meeting their own requirements and have no capacity to export the equipment. Alternate energy analysts said that Pakistan was an ideal place for investment and setting up manufacturing units, as the labour is quite cheap and available in abundance, with tropical weather and favourable government policies adding that the foreigners could also export their products from Pakistan. It is matter of great concern that the country has not been able to prepare wind generators, while the prices of 50MW wind generator has reached to $3.5 million from $2.2 million in the past three years.

"We are begging for wind generators from the Europeans for the last over three years, but they are busy in meeting their own requirements and have no time to pay heed to our cries. There has been a difference of at least one million dollars in the price of 50MW wind generator and they are still not providing us with the product," said an analyst. He further added, "we must manufacture it in home, if want to meet our energy requirements. There are some low capacity generators and we may also copy and modify it as there is nothing wrong in it," he observed.

Top management representatives of Cosmos Group, Suntechnics and Hawi Energietechnik Germany attended the conference, which was also attended by the members of Pak-German Business Council. Local businessmen offered all their co-operation to the foreigners in this regard. Another expert in the field of alternate and renewable energy talking about the above mentioned conference said that it was a matter of great concern that when the Germans asked for the feasibility report regarding the solar energy plans and solar cells, there was nothing to be presented. Experts and analysts are of the opinion that Pakistan was way behind in the alternate energy sector and added that consistent attention should be given to the area.

They also criticised the role of Pakistan Silicon Institute, Islamabad, which has failed to play its role.


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## Owais

*ABN Amro eyes stake in Prime Bank* 


KARACHI (October 05 2006): Dutch bank ABN Amro is eyeing a stake in Prime Bank, and plans to start a due diligence review of the mid-sized Pakistani lender soon, sources familiar with the development said on Wednesday. "ABN Amro has been granted permission by the state bank to conduct the due diligence of Prime Bank," said a banking source, who declined to be identified.

He, and other sources, however, did not say how much time the process will take. Senior ABN Amro and Prime Bank officials were unavailable for comment. Prime Bank has a network of 63 branches across country, and its deposits amounted to around 40 billion rupees ($660.5 million) as of June 30.

Prime Bank shares closed 5 percent up on Wednesday, at 55.65 rupees, in a broader market, which was up 1.43 percent. It has a stock market value of about $250 million, according to Reuters data. Dealers said Prime Bank's sharp rise was due to speculation over ABN Amro's interest.

ABN Amro is one of several foreign banks eyeing possibilities in Pakistan. Britain's Barclays Plc, Singapore's Temasek Holdings, and HSBC are among those exploring possibilities, according to bankers. Analysts say foreign banks have been attracted to Pakistan's financial sector by reforms that have laid the platform for rapid growth and rising incomes.

Major banking reforms pushed through by Prime Minister Shaukat Aziz, the finance minister President Pervez Musharraf poached from Citibank and then promoted to premier, have helped the economy's rehabilitation. Banks' profits grew 87 percent in 2005 and are expected to grow at around 44 percent this year, according to analysts.

They say that over the next few years, the banking sector will likely see more consolidation because of higher capital adequacy ratios and new regulations under Basel II. Driven by high profits, banking sector stocks have gained 44 percent so far this year, analysts said, outperforming a near-11 percent rise on the broader stock index

Bankers say that after the sale of Union Bank, PICIC Commercial Bank, Soneri Bank and Prime Bank are the next likely targets for foreign buyers. However, they say that potential buyers will try to pay less for these banks, compared with the price that Union was able to attract. Standard Chartered paid over 17 times Union Bank's 2005 earnings and 5.6 times its net asset value as of the end of March.


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## Neo

*80pc quake reconstruction by 2009: Musharraf* 

*ISLAMABAD, *_October 05, 2006_: President Pervez Musharraf on Thursday said 80 per cent of reconstruction work in quake-ravaged areas would be completed by 2009 but urged donors to help meet shortfall of 800 million dollars for building houses and facilities in excess of earlier estimates.

Speaking at the first ERRA Annual Review Conference, he reaffirmed resolve of the government to convert the challenge posed by October 8 earthquake into an opportunity for raising living standard of people.

"We can not bring 73,000 people who died but I assure the survivors to give them better life, better living standard and facilities," he promised.

President Musharraf said he had set 2009 as target for the Earthquake Reconstruction and Rehabilitation Authority (ERRA) to complete 80 per cent of reconstruction work in quake-hit areas of AJK and NWFP by 2009.

But the construction of houses would be completed by December, 2008 as, the president said, it was the main issue for the sustenance of people in the areas devastated by 7.6 magnitude earthquake last year.

However, as against an earlier estimate of 400,000 houses, the government would now have to build 600,000 houses to accommodate some 3.5 million displaced persons.

As a result, the president said, the cost of 3.6 billion dollars calculated earlier for the reconstruction phase has now increased to 4.4 billion dollars, creating a shortfall of 800 million dollars.

The president urged the people and the international community to help meet the challenge of building additional houses and other facilities in excess of earlier estimates.

The amount would be utilised most judiciously to provide comfort to the people affected by the earthquake, he added.

President Musharraf highly praised the efforts of ERRA to meet the challenges and said Pakistan was now being referred to as a text-book model for meeting tragedy of such epic proportion.

He also expressed his gratitude to the international community, the United Nations, innumerable NGOs, the entire Pakistani nation and the country's armed forces for joining hands to give everything to those who lost everything.

These combined efforts, the president said, had proved those wrong who were portraying dooms-day scenario and predicting death of people by famine, harsh winter and epidemics.

He said no one died of hunger, epidemic or lack of facilities and thanked the global community for their invaluable support to transport relief goods from all over the world and deliver it to the people in remotest of areas.

There were also prediction that people would not survive the harsh Himalayan winter, he said but added that no one was frozen to death and again thanked the world community for meeting the requirement of one million tents.

The president asked those predicting dooms-day scenario to see things positively and understand the realities.

In this respect he referred to reports which claimed that some 1.8 million would still be living in tents in the coming winters.

President Musharraf said as a result of the committed efforts, 95 per cent of the affected people now have proper shelter and only five per cent were living in tents.

Referring to reports of corruption, the president said while there may be a few instances at the lower level, full credit goes to the ERRA for disbursing Rs.60 billion among the affected people in a transparent manner. 

Recalling the immediate aftermath of the earthquake, the president said helicopters of army, air force and navy along with US Chinooks provided the vital support to rescue thousands of people.

Similarly, he said at the time when the entire communication network had broken down, the army engineers worked day and night to open roads in just two or three days so that relief goods could reach the stranded people.

"The whole efforts were synchronised and well done...we are proud of it," he said and added that without the world support, Pakistan alone could not have handled the disaster.

The president said the joint survey carried out by the World Bank, the Asian Development Bank and the government agencies estimated 5.2 billion dollars on relief and reconstruction efforts.

He was full of praise for the international community which attended the donors' conference in Islamabad last year and pledged 6.5 billion dollars.

President Musharraf also expressed gratitude to the people and expatriates Pakistani for contributing Rs.12 billion in the president Relief Fund.

However, the president said the test was not yet over as after the relief and rescue phase, the efforts now have entered the challenging task of reconstruction and rehabilitation.

The president said the review conference was held to show to the donors the achievements and the work on ground.

He held a firm assurance to the donors that their assistance had not gone and would not go waste and would be utilised for the genuinely affected people hit by the quake.

He said that 95 per cent people were provided proper shelter, offices and departments were functioning and economic activities going on in markets and bazaars.

The devastated Balakot district was being relocated while Muzaffarabad, Bagh and Rawalakot would be developed through proper town planning to have better facilities than they had earlier.

People were constructing houses, the president said and added that they would get the last tranche only when they followed the earth-quake resistance design provided by the government.

About the educational and health facilities, the president said that the government was following the need-based strategy and said all these facilities would be constructed in a better manner. 

President Musharraf underlined the need of raising rescue teams at the national level to meet disasters of such massive magnitude.

He also referred to the creation of National Disaster Management Authority and National Disaster Management Plan in this context.

The president on the occasion said the government was determined to change this challenge into an opportunity and said "we will not fail the nation, we will not fail the people who are affected by the earthquake".

Earlier, after entering the Convention Center Hall, the president went straight to children and women on wheel-chairs, victims of the October 8 earthquake, who had been invited to attend the function.

He inquired after their health and assured that the government would continue to look-after them and provide best of medical facilities.

In his remarks, the Chairman ERRA, Altaf Saleem, presented an overview of the efforts made so far for the rehabilitation of the quake-hit people.

Deputy Chairman ERRA, Lt. General Nadeem presented the Annual Review 2005-06 titled "Rebuild, Revive With Dignity & Hope".

A documentary was shown on reconstruction efforts, followed by launching of Theme Song on earthquake and unveiling of Remembrance Day Stamp by the president.

President Musharraf also inaugurated the Photo Exhibition, featuring efforts related to relief, rescue, reconstruction and rehabilitation efforts.


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## Neo

*UAE investors eye Pak energy firms*

5 October 2006 

DUBAI &#8212; Leading UAE groups and Middle East investors have shown strong interest in energy sector of Pakistan despite recent rescheduling of privatisation plan, a senior Pakistani official told Khaleej Times yesterday. 

"The government is committed to the privatisation plan and it's on track," Dr Salman Shah, Adviser to the Prime Minister on Finance, Revenue, Economic Affairs and Statistics, said here.

In reply to a question about privatisation of Pakistan State Oil (PSO) in which leading UAE groups are participating, he said it would be privatised by the end of this year.

"PSO transaction is at advance stage now and it would be concluded by December," Dr Shah said.
"Its a mega transaction and such deals take time," he said adding that bidders concerned are not worried due to the delay in PSO privatisation.

"Leading investors and investment houses in the UAE have shown interest in Pakistan's economy and they will also participate in the privatisation programme," he said. "Gulf region has shown significant interest in Pakistan's privatisation programme," he observed. 

"We have a meeting with leading investment houses and groups in Abu Dhabi and Dubai and response is encouraging," he added.

Dr Shah was in Dubai yesterday in connection with the roadshows for the forthcoming issue of OGDCL after meeting key investors in Kuwait.

The PSO is the largest state-run oil company in the country as well as a listed entity on Pakistani bourses. The Federal Government holds approximately 54 per cent stake in PSO, including both direct holdings of the Federal Government and indirect holdings through GOP owned institutions.
It is the second attempt of the government to sell a majority stake in the company after scrapping a plan to sell the company in 2003 following lack of interest shown by Kuwait Petroleum Corporation, one of the two bidders. The second bidder was Pakistan's Fauji Foundation.

The UAE groups are among strong contenders for PSO and two state run gas companies &#8212; SNGPL and SSGC. However, investors from Saudi Arabia are also being considered as serious buyers for Pakistan's largest state-run oil firm and gas entities.

"Al Ghurair Investment and Abu Dhabi Group of UAE are potential bidders for PSO and participated in a pre-bid meeting in March this year," sources in Pakistan's Privatisation Commission said. Consortium of Al Jomeih Group of Saudi Arabia is the third short-listed contender for Pakistan's biggest fuel oil company.

About the UAE groups interested in two gas entities, the official said Warid WLL/Abu Dhabi Group, Dana Gas PJSC/Aljomaih Group and Crescent Petroleum Company International Limited of UAE have shown their interests in Sui Northern Gas Pipeline Company Limited (SNGPL) and Sui Southern Gas Company Limited (SSGC) and submitted SOQ to ensure their participation in privatisation process of both the gas firms.

Moreover, Al Ghurair Investment LLC/Calik Energy A.S and Shell International Gas & Power Limited of UAE are willing to participate in bidding process for only SNGPL and SSGC respectively.

United Bank Limited, one of Pakistan's top three commercial banks and partly owned by Abu Dhabi Group of UAE, is also among the potential bidders for both the state-run gas companies.

Other Middle East investors who submitted SOQ include Noor Financial Investment Company (Kuwait)/ National Industries Group, Global Investment House (Middle East) / KOGAS, Aref Investment Group (Kuwait)/ National Gas (Egypt) and Burhan Oil Services Company (Kuwait).
The Privatisation Commission will not allow one party to acquire both gas companies, however one party may participate in the privatisation process for both to maximise their chances in the bidding process.

Pakistan earned record over $3 billion proceeds from selling stakes in nine state-run companies during the last fiscal year ended on June 30.

"The proceeds will increase after the government sells stakes in key public sector units including PSO, PPL, OGDCL and National Investment Trust Limited during the current fiscal year," sources concluded.


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## Neo

*GDR listing to enhance Pakistan&#8217;s profile*

ISLAMABAD, Oct 4: The Pakistani government is considering embarking on Global Depository Receipt (GDR) offers of shares from three banks - Habib Bank, United Bank and National Bank - and a power generation company.

In an interview to UK-based daily Financial Times, Privatisation and Investment Minister Zahid Hamid stated that this to be followed by an international GDR offer of 10-15 per cent shares of the state-owned Oil and Gas Development Company (OGDCL) on the London stock-exchange.

The minister said that this OGDC offer would give us access to international capital markets. &#8220;It will not only enhance the country&#8217;s profile but also help OGDC&#8217;s transformation,&#8221; he added.

Mr Zahid further stated that the response from prospective investors during roadshows outside Pakistan had been positive.

OGDC, with a market capitalisation of approximately $10.2bn, announced this week that it had discovered oil and gas reserves in the northwest, which would raise the country&#8217;s daily oil production capacity to 69,000 barrels from 65,000 barrels. It has also discovered gas reserves with a capacity of about 12 million cubic feet per day.

The Financial Times observed that the plan highlights Pakistan&#8217;s increasing interest in reaching out to international capital markets, almost 12 years after Pakistan Telecom shares were offered globally in this way.

The move follows an economic recovery of more than two years that has encouraged government leaders to give the go-ahead for Pakistan&#8217;s return to international capital markets, senior government officials have said.

The government has not revealed the exact value of OGDC shares that would be offered, though officials have said they expect the listing to take place in the next two to three months, the daily reports.


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## Neo

*Export of non-textile products up by 33pc*

ISLAMABAD, Oct 4: The export of non-textile products mainly commodities rose by 33.3 per cent to $1.228 billion during the first two months (July-Aug) of the fiscal year 2006-07 as against $0.921 billion the same months last year.

Official figures compiled by the ministry of commerce showed that the increase in the export proceeds during the months under review was due to a hefty growth of more than 25 per cent in export of primary commodities mostly rice.

Meanwhile, export of Pakistan&#8217;s traditional products like engineering goods, sports, carpets, leather, surgical and pharmaceutical products were constantly on decline during the first two months of the current fiscal year.

Analysts attributed the decline in these manufactured products to the ill-advised and improper policies of the government, which were only focused on the promotion of textile products.

They said that the textile tycoons had a say in government policies and they could easily get what they want at the cost of the taxpayers. However, the government remained silent about other sectors, which were near to closing down if no proper steps were taken immediately.

Among the primary commodities, exports of fish and fish products rose by 2.70 per cent, rice by 103.32 per cent, and meat and meat preparations by 9.32 per cent. However, exports of fruits declined by 48.68 per cent, vegetable dipped by 56.04 per cent, tobacco by 73.81 per cent and oil seeds by 10.79 per cent during July-Aug 2006 over last year.

Official figures showed that the export of sport goods (football and gloves) declined by 46.37 per cent; carpets, rugs and mats by 43.42 per cent; and leather goods (garments and gloves) by 40.75 per cent during the months under review over last year.

The exports in these sectors were on decline despite the fact that government exempted them from sales tax and other duties.


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## Neo

*Ã¢â¬ËIncrease in cotton productionÃ¢â¬â¢*

MULTAN, Oct 4: An increase of 14.46 per cent was registered in the cotton bales which arrived at various ginning factories in Punjab as compared to the corresponding period, last year.

According to the data provided by the Pakistan Cotton Ginners Association, till September 646,643 bales of cotton arrived at the mills of the province as compared to last yearÃ¢â¬â¢s 564,941.

According to the break down, in Multan 20336 balse arrived for ginning, at Khanewal, 88,982, Lodhran 4,090, Muzaffargarh 22,220, Dera Ghazi Khan 9,145, Rajanpur 9,880, Layya 10,560, Vehari 70,900, Sahiwal 97,342, Pakpattan 43,827, Okara 10,300, Qasur 3,400, Toba Take Singh 34,782, Fasialabad 40,409, Jhang 21,500, Mianwali 1,300, Bhakhar 8,000, Rahim Yar Khan 33,200, Bahawalpur 32,050 and in Bahawalnagar 84,300 bales arrived at the factories.

This year, the total number of cotton bales which arrived at various ginning factories across the country was 1,103,264 while it was 1,273,554 last year.

*Results*: The Bahauddin Zakariya University announced the result of BSc electrical and civil engineering here on Wednesday.

According to the results, out of 17 candidates of electrical engineering, second term, first annual examination-2005, eight were declared successful, while out of 63 civil engineering, first term, 2006, candidates, 37 passed the first annual examination.

*RALLY*: The Save Animal Movement, observed animal day and held a rally here.

The movement office-bearers Maqbool Hussain Bhatti (secretary general), Rashid Rehman, Baigam Zuhra Sajjad Naqvi, and others spoke at the rally.

They demanded an end to torture on the animals, besides a separate ministry for their welfare.


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## Neo

Thursday, October 05, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\10\05\story_5-10-2006_pg5_2
*Pakistan, US to set up body to promote trade, investment*

ISLAMABAD: Pakistan and the United States have agreed to form a Trade Liberalization Study Group to create an environment conducive to the promotion of trade and investment between the two countries. 

The US side has, however, ruled out the possibility of a Free Trade Agreement in near future between the two countries. This was announced at the conclusion of the second meeting of the Pak-US Trade and Investment Framework Agreement (TIFA) Council. Assistant United States Trade Representative (AUSTR) Ambassador Douglas Hartwick and Syed Asif Shah, Secretary Commerce Pakistan, at a joint press briefing on Wednesday. 

The terms of reference of the study group would be finalized and exchanged between the two countries and the measures that would be recommended by the study group would be implemented by both the countries for promotion of bilateral trade and investment, said Mr Shah. 

Ambassador Hartwick said both the countries have discussed the basic details of the Re-construction Opportunity Zones (ROZs) to provide economic and employment opportunities to the less developed areas of Pakistan and Afghanistan to benefit from zero duty concession from the US side. He, however, clarified that the list of the products to qualify for the zero-duty status at the time of import at US ports are yet to be finalized.

He said the ROZsÃ¢â¬â¢ package is important for the US as well as for the other two stakeholders. The US will finalize the recommendations in this regard after getting input from Pakistan, Afghanistan and the private sector of both the countries. 

For the establishment of ROZs, the US government will require a new law and legal authority. 

A law relating to the establishment of ROZs is still to be drafted in the US and this government would try early finalization of this process so that this can be got approved from the competent authority in the United States. 

He informed that the government of Pakistan has completed its study on the subject that will be handed over to the United States in the next few weeks. He said the US wants a large list of products for zero-duty status from ROZs so that the areas are able to avail of more benefits from these zones. 

He said textile products are a wide term and the US will decode which type of textile products to be included in ROZsÃ¢â¬â¢ package. He said the US has not denied inclusion of textile products in the proposed list of items. 

On the issue of Bilateral Investment Treaty (BIT), the ambassador said five rounds of negotiations have been held between the two countries and both the countries are near an agreement on the BIT.

He, however, pointed out that investment policy and legal issues require due care in finalization of this process. Both the countries want early finalization of this important agreement. 

Replying to a question relating to Pak-US Free Trade Agreement, the ambassador said that Ã¢â¬Åit is possible but when we donÃ¢â¬â¢t know.Ã¢â¬Â He, however, said Pakistan is not benefiting properly from the Generalized System of Preferences (GSP) program due to lack of awareness. 

Pakistan can benefit more from this GSP program, which provides for duty- free market access to developing trading partners of the US, including Pakistan. He informed that the current tenure of the GSP is ending on December 31, 2006. However, he hinted its extension for another one or two years and said the new GSP will review the status of the beneficiary countries, including Pakistan. However, he ruled out the possibility of PakistanÃ¢â¬â¢s expulsion from this (GSP) program in future. At present Pakistan is getting $100 million duty-free market access under this GSP program, he added. 

On the issue of Intellectual Property Rights (IPRs), the ambassador said Pakistan has taken some remarkable steps during the last 18 months due to which Pakistan has been placed among the countriesÃ¢â¬â¢ list which have shown good improvement in IPRsÃ¢â¬â¢ protection and enforcement. He said the US will offer further assistance to Pakistan to build its capacity for enforcement of IPRs. This will enable the country to attract more foreign direct investment and trade opportunities. 

Later a joint press statement relating to the US-Pakistan TIFA Council meeting was also issued. According to the joint statement, the United States and Pakistan underscored the importance of the economic relationship and pledged to work to continue to expand bilateral trade and investment opportunities.

On IPRs, the US delegation praised PakistanÃ¢â¬â¢s progress in strengthening its intellectual property regime. The delegations identified areas for continued cooperation to strengthen protection. The United States noted the need for further progress on issues, such as data protection and patents. Ambassador Hartwick announced new US assistance for capacity building for Pakistani ministry of health and Intellectual Property Office (IPO) officials. 

The two delegations reviewed preparations for the establishment of Reconstruction Opportunity Zones (ROZs) to spur development of economically-disadvantaged areas in the border regions of Pakistan and Afghanistan. The ROZ initiative will require new US legislation. The ROZ concept was announced by President Bush during his visit to Pakistan in March 2006.

The two sides explored new ways to expand trade, including greater use of the US GSP program, diversification of trade, textiles and agriculture. 

Ambassador Hartwick praised Pakistan for its commitment to expanding economic opportunities through economic reforms, reducing tariffs and pursuing open investment policies. A Pakistan-US joint study group on trade liberalization was also formed, to explore ways and means to enhance the bilateral economic relations between the two countries. 

Ambassador Hartwick also held consultations with representatives of private business in Peshawar, Islamabad and Karachi during his visit. 

The next TIFA meeting is scheduled for 2007 in Washington.


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## Neo

Thursday, October 05, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\10\05\story_5-10-2006_pg5_7
*80,000 tonnes of mangoes exported*

KARACHI: The country exported 80,000 tonnes of mangoes during this season by meeting the target, however it fell short of export figures of last year when around 100,000 tonnes of mangoes was exported in the last season.

The countryÃ¢â¬â¢s mango export figures were all-time high during the last season because of good crop, however during this season, unsuitable weather conditions dampened the prospects of good crop, which resulted in low production and export target, officials in Pakistan Horticulture Development & Export Board (PHDEB) said.

Pakistan had a good fruit production and export season last year when good mango production was followed by bumper kinnow crop and its record export. Like low mango production and export, officials predict that kinnow production and its export would also not be high as was recorded in the last season.

Officials said that most of exportable mangoes went into the traditional markets of Middle East and Europe, which consumed 37239 tons and 13650 tonnes respectively while rest found its way into other markets with new Iranian market imported 1350 tonnes of mangoes. They, however expect that prospects for future export of mangoes would be bright as new Iranian and Chinese markets would be exporting more mangoes from Pakistan, whose potential is yet to exploited.

Presently mangoes are exported to United Arab Emirates (UAE), Saudi Arabia, Oman, UK and Kuwait while the other potential markets, being targeted include China, Iran, South Africa, Australia, Russia, Central Asian States and East Europe.

As Pakistan has signed protocols with China and Iran, it carries bright prospects because these countries are located in the neighbourhood, making it easy for the Pakistani fruit to capture these markets because of cheap and easy transportation. Mango production was anticipated at around 1.6 million tonnes, but the bad weather conditions caused 20 to 25 per cent shortfall in production by bringing it down to 1.3 million tonnes during this season.


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## Neo

*Pakistan surpasses US in cotton consumption*

KARACHI: Pakistan has become the third largest country in cotton mill consumption during the current fiscal, overtaking the United States as it stands among three countries which are estimated to consume 65 per cent of the total commodity&#8217;s consumption the world over.

A recent report issued by the International Cotton Advisory Committee (ICAC) suggests Pakistan&#8217;s textile industry follows China and India in cotton mill consumption and the trend is likely to continue for the next few years.

&#8220;China (mainland), India and Pakistan combined may consume 16.6 million tonnes of cotton in 2006-07, or 65 per cent of projected world consumption, up from 50 per cent in 2000-01,&#8221; said the ICAC estimates received here by the federal ministries of agriculture, industries and the newly-formed textile.

&#8220;Cotton consumption in the rest of the world is projected to remain stable at nine million tonnes.&#8221;

Similarly, it said, cotton consumption in the United States was on the decline on higher production cost and increased influence of imported textile products, which convinced the local manufacturers to shift their production units to Asian countries.

The cotton use by the mills in the country has been on the rise for the last more than two years on what the industrialists say is a massive balancing, modernisation and replacement (BMR) programme and expansion plan undertaken by the textile industry. The industry is believed to have invested $4 billion to $5 billion since 2000 in the BMR.

The ICAC, which represents 42 governments of cotton producing and consuming countries, said the global textile industry is expected to continue to increase raw material consumption on higher production demand but not at the required pace.

&#8220;World cotton consumption is expected to continue to increase in 2006-07, but at a slower rate than in the last two seasons, to 25.6 million tonnes,&#8221; said the international body.

It said the textile industry mainly in Asia could face a shortage of raw material due to lower-than-expected production of cotton than demand.

Analysts see the ICAC prediction in line with the expectations but see tough time ahead for the local industry due on lower cotton production and higher production cost.

&#8220;There is no doubt that the textile industry has registered growth during the last few years but at the same time it faces serious challenges,&#8221; said Faisal Shaji, head of research at Capital One Equities.

&#8220;Prices of raw material, particularly the cotton, are not likely to come down from the current level but even feared to go further up, which would ultimately increase the production cost.&#8221;

He said the higher cost could prevent the local industry to design aggressive production plans for the current financial year. The overall situation could also hit the production and export of the textile products, he added.

&#8220;In the current scenario gross margins of the textile mills are likely to go down during this fiscal on increased production cost and higher interest rate,&#8221; said Shaji.

Textile shares more than 60 per cent of exports from the country every financial year. However, for a year it faces a downward trend in its overall share. The latest figures compiled by the Federal Bureau of Statistics earnings from textile products dropped by 7.10 per cent during July-August to $1.625 billion compared to the corresponding period last year.

A recent United Nations Development Programme (UNDP) report revealed that Pakistan is selling its textile products to the European Union countries and the US at the cheapest rate in South Asia.


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## Neo

*Foreign portfolio investment reaches $107.8m* 

LAHORE: Portfolio investment in stock exchange and securities through Special Convertible Rupee Accounts (SCRA) has increased to $107.893 million, which is highest so far in the current fiscal.

According to latest data released by State Bank of Pakistan, SCRA saw $17.13 million inflow on October 02, 2006 against outflow of $6.40 million. The net inflow registered on October 2 was $10.72 million. Resultantly, cumulative net inflow via SCRA has been jumped to $107.89 million in the current fiscal. Just two days back, the SCR account had a quantum jump to $97.2 million.

The major contributors have been from UK with investment totalling $7.60 million while USA bagged second position as far as portfolio investment is concerned with inflow of $4.86 million.

Investors from Singapore invested $4.66 million on October 2, securing third position.

Cumulative investment from UK has been to the tune of $71.15 million in current financial year while Singapore secured second position with $48.74 million.

The major chunk of overall portfolio investment has been in the banking sector.

On outflow side, cumulative portfolio investment of Switzerland stands at $20.04 million in the current financial year followed by Hong Kong with $3.68 million. 

Unlike previous trend, foreign investment in stock exchanges of the country is once again consolidating, especially for last one month.

Earlier, since March this year a sharp decline has been witnessed. July was the worst when investment declined sharply from $49 million (last year same month) to $29 million this fiscal. 

Unlike past year, when US and UK shared the major chunk in pie, this time Singapore has brought major investment and presently enjoys second position as far as cumulative net flow during the fiscal.


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## Neo

*Chinese company may not resume coal-fired power project in Thar* 

KARACHI (October 06 2006): A Chinese state-run company, Shenhua Group Corporation may not resume its 600MW coal-fired power project in Thar till the electricity tariff issue with the Pakistani government is not resolved.

Sources in the Sindh Coal Authority (SCA) told _Business Recorder _on Thursday that in order to meet power shortage in the country the provincial government had once again established contacts with the Chinese group through the SCA but it (Shenhua group) was still avoiding to restart their work in the Thar desert.

"There is slim chance that the Chinese group may response because new offer does not contain any negotiation on power tariff," the sources said. The Shenhua group had intended to initiate work on 600MW coal-fired power project at an estimated cost of $500 million in Thar but Wapda's reluctance to offer fair tariff put the plans of the group on hold.

Wapda had offered 5.7 cents power per unit but the group had stand that since the Wapda was paying eight to 13 cents per unit to gas-based, diesel-based and fuel oil-based IPPs, the authority should increase the tariff for the electricity produced by the coal-fired power plants.

The sources said that the government intended to invite the group to re-initiate the project because the Chinese company had completed much of its work and was in better position to start electricity generation work on earliest.

The government in the year 2002 had asked Shenhua group to develop block one of Thar coal-field after accepting its proposal to establish a 600MW power plant. The group in collaboration with the Geological Survey of Pakistan (GSP) carried out studies and completed a feasibility report for the project. On the basis of the studies the group signed about seven agreements with the government for the construction of power plant, the sources said.

The proposed project was to be undertaken on build, operate and transfer (BOT) basis was scheduled to generate electricity by the year 2009. Total coal reserves in Sindh province are estimated at 184 billion tonnes. While only in Thar 175 billion tonnes of coal reserves are identified.

The Thar coal-field extends over an area of 9,000 sqkm out of which 356 sqkm has been studied in detail by the GSP, proving nine billion tonnes coal in four blocks. The moisture found in the coal at the Thar coal-field is 46.77 percent and heating value 5.774 percent (Btu) but when dried, its heating value jumps to 10.8 percent (Btu) making it the best coal in the world.


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## Neo

*SCRAs: Singapore balances exceed $100.5 million* 


KARACHI (October 06 2006): After re-emerging as lead investor on October 3, Singapore continued consolidating its position under Special Convertible Rupee Accounts (SCRAs), where its balances exceeded $100.5 million on October 4. In the meanwhile, USA's balances also rose by $1.8 million to $26.7 million on October 4.

Small increases in balances of Hong Kong and Switzerland were also noted. Hong Kong's positive balances improved by another $0.05 million to reach $0.12 million on October 4, while Switzerland's minus balances further improved and stood at $19 million on October 4, indicating fresh investment of $0.2 million as on that date.

The above-mentioned positive inflows were partly offset by dis-investments initiated by UK and Qatar. Accordingly, UK's balances declined marginally to $71.2 million compared with $71.8 million on October 3, while Qatar's existing negative balances deteriorated to minus $0.041 million compared with $0.04 million on October 3. All in all, the overall balances of all countries under SCRAs rose to $174.3 million on October 4, an increase of $3.3 million over their level on October 3.

In the meanwhile, the benchmark KSE-100 index showed a gain of 150.83 points to close at 10743.55 points on October 4. The KSE-30 index also gained 132.36 points to close at 13279.84 level. The BRIndex30 scored a positive change of 83.62 points to close at 11,496.21 points.

The gains exhibited by the indices were attributed to (a) investors covering of positions in oil and banking sectors at the prevailing lower levels after a day old correction, (b) the news of discovery of some new oil and gas reserves by OGDCL in the north-west, and (c) the news that Pakistan is considering floating GDRs of shares of three major banks, including HBL, UBL and NBP besides the oil and gas giant OGDCL.


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## Neo

*KDLB to be closed down by December* 


KARACHI (October 06 2006): The federal government has decided to close down the Karachi Dock Labour Board (KDLB) by December this year as part of its landlord port strategy and under the National Trade Corridor (NTC) programme. The closure of KDLB would cost around Rs 4.2 billion ($70 million) to the national exchequer.

In this regard, the Prime Minister gave the formal approval for the KDLB closure in July and a consensus on the issue was developed for its closure through Voluntarily Separation Scheme (VSS) option.

The federal government has assigned the ports & shipping ministry to look into this "very important" matter and settle issues relating to the KDLB peacefully.

The government has chalked out a comprehensive plan for ports improvement and modernisation to reduce dwell time for cargo at lower charges. Efficient ports can save $457 million annually to the national kitty.

The World Bank in its report suggested, in case of closure the KDLB would have to pay about Rs one million to each employee. There are about 3895 employees and officers on its payroll. Of which about 3673 are dock workers; 185 staff members; and 37 are officers. The total payoffs calculated by the bank would be around Rs 4.2 billion.

This would be equivalent to a minimum of seven years salary and is considered to be extremely generous as per international standards (for example the United Kingdom dock workers received a maximum of about 15 months salary).

It would have to be available as lump sum amount, enabling those who wish to set up other businesses to do so.

The federal government has decided to close down the KDLB by December this year after developing consensus with workers and the management as part of its landlord port strategy (LPS) and under the National Trade Corridor (NTC) programme, but was unable to formulate mutually agreed separation scheme.

The LPS concept was adopted in early 1990s that envisages the role of the port authority as a facilitator for investment in the private sector to operate various port-handling facilities. Sources told _Business Recorder _three possible options are under consideration for generating financial resources for the closure of KDLB.

Firstly, the continuation of the 'KDLB cess' for the next three years to repay a bank or from another loan, eg, from the Karachi Port Trust (KPT) surplus account, which would be used to pay the lump sum now with future 'cess' payments as security.

This would not be an unacceptable burden in practice, as the cess would have to be paid if the KDLB were retained. Secondly, sale of the KDLB property and the third option is the government funding, or alternatively, a loan from the World Bank or a commercial bank.

The World Bank, being a possible source of funds, has an extensive track record of assisting with sensitive labour reductions, eg, in coal mining in Russia.

The World Bank could also assist with a social audit of the likely consequences of closing the KDLB and make provision for worker counselling, retaining and other social safety net measures. The cargo handling companies to be operated by the private sector would replace the KDLB after its closer.

There are no major problems with the terminal operators' own labour. The problems are caused by the KDLB, whose registered dockers the terminal operators are obliged to employ and subsidise. The original aim of the KDLB when it was set up in 1973 was reasonable, like similar schemes in other countries.

The Karachi Dock Workers Scheme (Regulation of Employment) was promulgated through an ordinance in 1973, which was eventually passed as an act in 1974.

The KDLB was established to provide regular work and income for dock workers, who had previously been employed on a casual basis.

*IN PRACTICE, HOWEVER, THE SCHEME STARTED BADLY AND IT HAS BECOME MORE UNSATISFACTORY OVER THE TIME. ITS MAIN DEFICIENCIES WERE: *

-- It was overstaffed from the start. When the KDLB opened in 1973, about 8,598 dockers reported for registration. This was more than had been expected and almost twice the requirement.

-- The dockers (dock workers) were guaranteed an employment at a time when containerisation and other forms of mechanical handling were reducing the need for manual workers.

-- The reduction of KDLB via natural wastage was slowed by the introduction in 1987 of the hereditary right of a son to replace a retiring dock worker (phased out in 2000).

-- The wages for the dock workers rose to levels several times higher than those for workers in comparable work elsewhere in Karachi and the cost if medical and other benefits for relatives as well as dockers are included have increased steadily.

-- The KDLB staff receives further payments under an incentive scheme. These were based on very low, outdated "norms" for cargo handling, which resulted in the dock workers getting bonuses even if handling speed is very low.

-- The registered dock workers, however, do little work on quays. In fact, they were trained mainly for outdated general cargo, break-bulk operations, while two thirds of the Karachi's dry cargo is containerised. The port operators, however, were obliged to employ the KDLB gangs and to pay for them essentially to watch the operations. The general consensus within the port is that the KDLB staff are neither needed nor wanted.

-- Worse, the manning levels for KDLB gangs are several times as high as would be necessary, even if they worked (eg, KDLB container gangs consists of 24 men while only four to six dock labourers were needed). They were based on outdated productivity norms.

*MAIN EFFECTS OF THE KDLB ON EFFICIENCY AND COST AT THE KARACHI PORT CAN BE SUMMARISED AS: *

I) The KDLB does not detract significantly from port productivity, because its members do not participate greatly in the work.

II) The KDLB adds significantly to the cost. Firstly, the cargo handling companies are obliged to employ the unnecessary KDLB gangs and in most cases, pay unnecessary incentive payments. Secondly, the cargo handling companies have to pay a 'cess' (ie, a levy) to provide minimum salaries for KDLB staff when they are not "working" and medical as well as other benefits.

III) The KDLB impairs the competition between the KPT and Port Qasim Authority (PQA) as the PQA does not have a Dock Labour Board (DLB).


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## Neo

*ADB may approve $40 million loan for BRDP II* 


ISLAMABAD (October 06 2006): The Asian Development Bank (ADB) is likely to approve 40 million dollar concessional loan next month for 'Bahawalpur Rural Development Project phase-II' (BRDP)' aimed at augmenting income generation activities in the region.

Official sources told _Business Recorder _on Thursday that the proposed project that would be executed in three districts Bahawalnagar, Bahawalpur and Rahim Yar Khan would focus on reducing poverty by providing backward rural areas with basic infrastructure, such as roads and electricity and promoting community-based social and economic activities.

Phase-I of Bahawalpur Rural Development Project (BRDP) loan of 38 million dollar was approved on September 26, 1996. It has successfully addressed lack of rural infrastructures (roads, irrigation, electrification, etc,) and promotion of social mobilisation for community-based development in this poverty-ridden area.

In total, 600 kilometers (km) of rural roads will be improved (492 km has been completed to date), 475 villages will be electrified (391 to date), 684 watercourses have been improved, and 560 community organisations, including 192 women's organisations, have been mobilised for income-generating activities or infrastructure construction and operation.

Based on notable achievements of the BRDP and existence of remaining vast underdeveloped rural areas, the government requested the ADB to provide further assistance to finance follow-on second phase, sources said.

The Punjab government initiated preparatory works for a second-phase project in early 2005 and is carrying out its own feasibility study. To support the Punjab government in preparing the loan project, ADB Management also cleared and approved a project preparatory technical assistance (TA) of 0.3 million dollar in September 2005.

The 40 million dollar loan will focus on three components: improvement of core rural infrastructure, promotion of community-based economic and social activities and small-scale infrastructure development, roads and electrification of villages.

The second component will include community mobilisation, capacity-building for enhancing skills, non-formal literacy programme for women, and provision of matching seed investment for income-generating activities, and small-scale infrastructure projects, such as brick pavement of small roads and minor water supply and sewerage facilities.

The third component will include project management and capacity building of district authorities for planning, implementation and operation and maintenance of rural infrastructure including others such as veterinary services. Sources said Bahawalpur division consists of three districts - Bahawalpur, Bahawalnagar, and Rahim Yar Khan which are categorised as "high deprivation area" in the Punjab Poverty Reduction Strategy paper, 2003.

Many socio-economic indicators of the area such as literacy ratio, road length per area, village electrification rate, telephone connection rate, rate of population with safe water supply, etc, are below provincial averages. The region constitutes the cotton-wheat zone, which has the highest poverty incidence: as high as 56 percent among other agro-climatic zones in Pakistan.


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## Neo

*'Country to be made tourist-friendly'* 

ISLAMABAD (October 06 2006): Federal Minister for Tourism Nilofar Bakhtiar on Thursday said the government understood the importance of tourism and was focusing on to make the country a 'Tourist-friendly'. She said, 'Visa on arrival policy' had been approved and it was on the implementation stage, which would be run through recognised tour operators.

Nilofar Bakhtiar said, the Indian visa regarding religious tourism had been extended from five days to 15 days and normal visa for any Indian tourist had been extended from 15 days to 30 days, adding it was on reciprocal basis.

She said, visa-friendly policy of the government would not only generate income but also promote the image of the country, adding they had also established a very aggressive marketing strategy.

In the first phase for promotion of tourism we have selected some countries for the marketing purpose, she said, adding some products from Moenjodaro and Texila would be marketed to those countries.

She said, Gandhara civilisation would be marketed in Japan and for this purpose all the materials were translated in Japanese language. A website of tourism was on final stages, she added.

Nilofar Bakhtiar said, workshop on tourism generated many ideas and a resolution was passed, adding nazims would work together with the Ministry of Tourism for the promotion of tourism in the country. She said: "We have to package, manage the image and market it to the world as we have the natural beauty, a rich culture, vibrant heritage and a long history".


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## Neo

Friday, October 06, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\10\06\story_6-10-2006_pg5_6
*Pakistan set to become IT, telecom regional hub: Aziz*

ISLAMABAD: Prime Minister Shaukat Aziz said that Pakistan is geared to become the regional hub of information technology (IT) and telecom business in view of the availability of highly skilled human capital, ease and reduced cost of doing business and its world-class infrastructure.

Talking to Fredrik Baksaas, President and CEO of Telenor Norway at the PM House on Thursday, the Prime Minister said deregulation, privatization policy and opening up of telecommunication sector has stimulated phenomenal growth, attracted foreign investments and telecom sector today is the fastest growing sector of our economy.

Fredrik Baksaas said that Pakistan has all the features of becoming a success story in view of the comparative and competitive advantages of doing business in Pakistan. Fredrik Baksaas also said that there is a direct relationship between the teledensity growth and the GDP growth of the country. Research shows that there is an increase of one percent in the GDP with 10 percent increase in teledensity. He said according to GSMA Association research, the contribution of telecom sector in the overall GDP growth of Pakistan is 4 per cent.

The prime minister told that mobile sector has shown growth of over 100 per cent in last two years. This, coupled with the incentives provided to the Information and Communication Technologies (ICT) sector, has created an enormous range of opportunities for all segments of the industry.

The prime minister said the combined teledensity during last three years has increased from 4.5 per cent to more than 27 per cent and the number of subscribers of fixed and mobile telephony has increased from 8 million in 2003 to 42.7 million in 2006. Mobile subscribers alone are in excess of 36 million, the prime minister said. 

The prime minister also told that the use of cellular phones among the low-income subscribers is growing in the country. In rural areas the government is providing the facility of phones through the system of wireless local loop. Fredrik Baksaas apprised the prime minister of the plans of Telenor to expand its business in Pakistan and said that in view of the favorable policy framework of Pakistan, Telenor is working on a long-term plan to establish their business in Pakistan.


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## Neo

Friday, October 06, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\10\06\story_6-10-2006_pg5_9
*Romanian help sought to utilise coal resources*

ISLAMABAD: Pakistan has sought Romanian assistance to help the government exploit the coal resources. Pakistan is the second largest country having coal reserves of 185 billion tonnes.

Federal Minister for Petroleum and Natural Resources Amanullah Khan Jadoon, sought the help while talking to Charge dÃ¢â¬â¢ Affaires Romanian Embassy Mircca Hurmuz who called on the minister on Thursday, according to an official statement.

There exists a lot of potential and opportunities for promoting Pak-Romania cooperation in the hydrocarbon and mineral sectors for mutual advantage and they discussed matters of mutual interest. 

Mr Jadoon said that a package of attractive incentives was being offered to the investors in the onshore and offshore oil and gas exploration and the Romanian companies can take part in these activities individually or by establishing joint ventures. He said that Romania could help Pakistan exploit the coal resources. 

The Charge dÃ¢â¬â¢ Affaires said that there was tremendous scope for both countries to enhance mutual cooperation in oil, gas and mineral resources for mutual advantage.


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## Neo

Friday, October 06, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\10\06\story_6-10-2006_pg11_1
UK pledges ÃÂ£90 million to maternal and child health in Pakistan
*Maternal deaths 120 times more likely in Pakistan than in the UK*

ISLAMABAD: The UK has committed ÃÂ£90 million to help address the tragedy that every year 25,000 to 30,000 women in Pakistan die from complications of pregnancy and childbirth, and 160,000 babies die in their first month of life.

Gareth Thomas, UK minister for international development, made the announcement following a meeting in Islamabad with Prime Minister Shaukat Aziz. This is his third visit to Pakistan.

The money will be the UKÃ¢â¬â¢s contribution to PakistanÃ¢â¬â¢s National Maternal, Newborn, and Child Health (MNCH) policy and strategic framework. The UK will be funding more than one third of the entire programme.

Ã¢â¬ÅThe political leadership is committed to improving the social sector in Pakistan and has increased the Public Sector Development Programme (PSDP) allocation, especially in the health and education sectors. The prime minister has already approved the programme for the next five years and now it will be placed before the Central Working Development Party (CWDP) for final approval in its next meeting on October 21,Ã¢â¬Â the minister said. 

He said that women of reproductive age and their children, especially the poorest, would benefit most from the programme. Ã¢â¬ÅBetween 2006 and 2011 the programme will save the lives of at least 30,000 women and 100,000 babies. These improvements will transform health and quality of life of 10 million families across the whole of Pakistan, and will also avert deaths and ill health well beyond 2011,Ã¢â¬Â he said.

Thomas, who is visiting Pakistan ahead of the one-year commemoration of the earthquake of October 2005, said, Ã¢â¬ÅA woman in Pakistan is 120 times more likely to die a maternal death than a woman in the UK. For poor women the risk is even higher. The UK is contributing to this new Pakistan-led initiative to train more community-based midwives, provide better family planning services and have skilled staff in all district hospitals who can safely deliver babies on an emergency babies. The programme will also help women and their families improve their knowledge and take healthy action for a safe pregnancy.Ã¢â¬Â

Ã¢â¬ÅThe people of UK, especially of my constituency who mainly belong to Pakistan are very happy in extending this help to Pakistan. We hope that this programme will be tremendous success,Ã¢â¬Â Thomas said.

The UKÃ¢â¬â¢s contribution will mainly be spent in the UK Department for International DevelopmentÃ¢â¬â¢s focal provinces of Punjab and North West Frontier Province. The success of the MNCH programme is dependant upon the government of Pakistan committing at least half the overall ÃÂ£245 million (Rs 27 billion) cost of the initiative.


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## Neo

*Exchange cos may handle Hajj remittances*

KARACHI: State Bank of Pakistan on Thursday allowed commercial banks and exchange companies to handle remittances for Saudi Arabia by Hajj Group Organisers (HGO), for Hajj in December 2006.

Exchange Policy Department of central bank by issuing circular letter number 17 and 18 of 2006 allowed the handling of remittances by HGOs both to commercial banks and foreign exchange companies.

The SBP said the HGOs must be enlisted with Ministry of Religious Affairs and &#8220;remittances shall be on account of accommodation and the compulsory Hajj dues to concerned Saudi Arabian agencies.&#8221;

The banks and the exchange companies will effect the Hajj-2006 remittances as per the amounts or percentage of packages advised by the Ministry of Hajj to each HGO.

The banks and exchange companies will have to verify the following documents.

Letter in original from ministry of religious affairs must be presented by HGO to banks and exchange companies showing enlistment as HGO and allocation of the seats and the amount or percentage of foreign exchange to be remitted to Saudi Arabia.

The banks and exchange companies would also verify list of Hajjis along with copies of relevant pages of hajj passport that is first two pages and page bearing visa and copy of air ticket to be obtained before scheduled departure dates.

Banks and exchange companies for inspection purpose must retain the copies of above-mentioned documents. The banks and exchange companies will ensure that &#8220;no remittance is affected after the first Ziqa&#8217;ad, 2006.&#8221;


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## Neo

*Swiss business delegation to make full use of market potential in Pakistan*

*ISLAMABAD: Swiss corporate business delegation impressed by the business and investment package offered by the government of Pakistan has showed its keen interest for making full use of market potential in Pakistan. *

State Minister for Finance Omar Ayub Khan while stating this said that the delegation is interested in investing in Pakistan and establishing business relations with the country. 

The Minister informed them about the various measures, which were taken by the Government of Pakistan for the foreign investors. The Minister said that Pakistan was a profitable country for foreign investors and assured that the government would remove any bottleneck if faced by investors in Pakistan. 

Earlier, the Swiss delegation comprising Paul Louzado, Sales and Marketing Director SIG Combibloc Okeikan, Bernd Mirshle, Head of Corporate Business SIG Combibloc Okeikan, Kashif Bashir Sheikh, Country Manager, SIG Combibloc Okeikan and Norbert Hoffmann Chief Operating Officer, SIG Combibloc called on State Minister for Finance Omar Ayub Khan. 

They said that growth in Pakistan was demand led which was an indicator the standard of living and prosperity of the people of the Pakistan was raising as a result of the government?s efforts. They also praised the professionalism and positive attitude of the Pakistani companies and workers. The company specializes in providing packaging solutions for liquid consumable products liked milk, juices etc.


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## Neo

Neo said:


> Friday, October 06, 2006
> *Romanian help sought to utilise coal resources*
> 
> ISLAMABAD: Pakistan has sought Romanian assistance to help the government exploit the coal resources. Pakistan is the second largest country having coal reserves of 185 billion tonnes.
> 
> Federal Minister for Petroleum and Natural Resources Amanullah Khan Jadoon, sought the help while talking to Charge dÃ¢â¬â¢ Affaires Romanian Embassy Mircca Hurmuz who called on the minister on Thursday, according to an official statement.
> 
> There exists a lot of potential and opportunities for promoting Pak-Romania cooperation in the hydrocarbon and mineral sectors for mutual advantage and they discussed matters of mutual interest.
> 
> Mr Jadoon said that a package of attractive incentives was being offered to the investors in the onshore and offshore oil and gas exploration and the Romanian companies can take part in these activities individually or by establishing joint ventures. He said that Romania could help Pakistan exploit the coal resources.
> 
> The Charge dÃ¢â¬â¢ Affaires said that there was tremendous scope for both countries to enhance mutual cooperation in oil, gas and mineral resources for mutual advantage.


 
*Potential for promoting Pak-Romania ties in hydrocarbon, mineral sectors exist: Jadoon*

*ISLAMABAD: Federal Minister for Petroleum and Natural Resources Amanullah Khan Jadoon has said that there exist a lot of potential and opportunities for promoting Pak-Romania in the hydrocarbon and mineral sectors for the mutual advantage. *


He said this while talking to the Charge d? Affairs of Romania Mircea Hurmuz who paid a courtesy call on him here on Thursday and discussed matters of mutual interest and bilateral cooperation. 

During the meeting the Minister said that Government was according top priority to the speedy promotion of energy sector and briefed him about the development activities in the oil, gas and minerals. 

He said that a package of attractive incentives was being offered to the investors in the offshore and onshore oil and gas exploration and Romanian companies can take part in these activities individually or by joint ventures. 
Jadoon recalled the Romanian cooperation in setting up of National Refinery in Karachi and said that both countries could benefit from each other?s experience in these vital fields. 

The Minister said that Pakistan is the second largest country in the world having coal reserves of 185 billion tones that the government was trying to increase 50 per cent share in the energy mix. Romanian can help us in exploiting the coal resources, he maintained. 

The charge d? Affairs of Romanian agreed that existed a tremendous scope of both countries cooperation in oil, gas ad mineral for the mutual advantage. Secretary Petroleum and Natural Resources Ahmad Waqar and DG were also present during the meeting.


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## Neo

*$226 million offered in Karachi public transport* 

*KARACHI*_: October 06, 2006_: The Kenhill Private Limited has offered to invest 200 million euros in Karachi public transport and said the company in co-operation with Holland Bus Private Ltd is interested in plying 1500 comfortable buses during the next 2 years.

Company's CEO Mohammed Samiullah met the Nazim Karachi Syed Mustafa Kamal at his office on Thursday and made the offer and said for this purpose it has a budget of 200 million euros.

He said if tax incentive is given by the Federal Government and proper routes allotted in Karachi, the company will bring 1200 new buses on road in the next 2 years.

Welcoming the offer, Mustafa Kamal said that all possible steps would be taken to bring transport culture in line with the international standard.

In future, he informed, CNG buses would be introduced in Karachi and city government is developing infrastructure suiting such buses.

He said CNG stations are being established and terminals being constructed so that investors may not face any problems.

The world over, he pointed out, preference is being given to CNG buses and major manufacturers are producing such buses. Therefore the companies investing in transport sector should focus on bringing CNG buses.

He said the government has already given permission to bring 8,000 CNG buses over the next 4 years and the companies investing in this sector will not have to pay mark up on bank loans.

He said that introduction of large size modern buses will bring a positive change in the transport culture.

He assured that city government will provide clean environment and profitable routes to investors.

Mustafa Kamal said that a number of companies have contacted the city government for making investment in the transport company, and the one coming first to invest will prove to be more beneficial.


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## Neo

*Pakistan to take over as G-77 chairman at UN in January*


Islamabad, Oct 6: Pakistan will take over the chairmanship of the Group of 77 and China at a special ceremony in January 2007, its Ambassador to UN Munir Akram has said.

It was unanimously elected to head G-77 and China at a ministerial-level meeting of the group last month after its endorsement by the Asian Group.

Foreign Minister Khurshid Mahmood Kasuri will go to New York for the January ceremony when Pakistan takes over the chairmanship from South Africa, the current chairman, state-run APP news agency reported today.

Akram said 2007 would be an important year for developing countries as key issues and follow ups on some of the recommendations of the 2005 summit of world leaders would come up.

The G-77 would also begin consultations with the new UN secretary-general as he works to formulate his policies for the management of the organisation, he said.

It is the fourth time in the group's history that Pakistan would lead it since its inception in 1964. The group is a loose coalition of developing nations which promotes the collective economic interests of its members. There were 77 founding members, but now the organisation has expanded to include 132 members.


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## Owais

*Iranian ban on Basmati rice may cause $80 million loss* 


LAHORE (October 07 2006): The Rice Exporters Association of Pakistan (Reap) has expressed grave concern over temporary ban imposed by Iran on import of Basmati rice from Pakistan. Najaf Shah, member, managing committee and former Reap chief, expressed this concern while addressing a press conference here, on Friday.

Among others, Mian Haroon Rashid and Taimur Gill were also present on the occasion. Najaf asked the government to immediately take up the matter with the Iranian diplomat in Pakistan. He added Iran has placed a two-month ban on Basmati rice from Pakistan due to good domestic crop.

He averred the government should take all stakeholders into confidence and evolve an integrated strategy to tackle the situation. He warned share of the Pakistani rice could be reduced substantially if remedial measures were not taken. He expressed the fear that around $70-80 million loss was expected due to the ban. Besides, price of paddy would be decreased in the local market, he added.

He feared any delay in action on the issue could deprive the country of huge foreign exchange. He said the government should get the Minimum Export Price of rice implemented to help the country earn more and more foreign exchange.

"It should also impose a ban on Document against Acceptance (DA), as it is also badly hitting the Pakistani exports; recently a few Pakistani exporters had to face a loss of over Rs 70 million under this trade system," he added.

He was of the view the government should facilitate people to freely move between the two countries in connection with trade and cultural activities. He pointed out one-year visa fee to Iran is Rs26,000, which is almost transportation cost of three shipments. He urged the government to start the diplomatic dialogue with Iranian government to resolve the issue.

The Reap representative stressed the need to implement recently enforced Preferential Trade Agreement (PTA) with Iran in letter and spirit. They said an early resolution of the issue could help Pakistan maintain its share in Iran's rice market.


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## Owais

*World Bank accuses government of protecting refineries* 

ISLAMABAD (October 07 2006): The World Bank has accused that Pakistan's inter-government arrangements were allowing refineries to charge from the consumers on petroleum products more than what they actually consume. The report has shown that the refining policy tailored by Petroleum Ministry was facilitating the refineries to tax the consumers and get undue benefits.

The bank made this stunning disclosure in its report on Pakistan's different sectors of economy. It covered Privatisation, Petroleum, Oil and Gas Regulatory Authority and other players' role in pricing and Pakistan's indigenous gas resources demand and supply situation. The report, prepared by its energy sector review mission, which recently visited Pakistan, was submitted to all relevant ministries and departments.

The report called the government of Pakistan policy of protecting refineries through tax exemptions as irrational and recommended it to do away with this mechanism as early as possible. It said: "The refineries are protected through a 5-10 percent import duty, as a result of which consumers are being asked to pay correspondingly higher charges for the products they consume."

The report said that with Parco refinery's exemption, to which inter-government agreements apply, there is little rationale to protect the other refineries, which are for the most part old and depreciated. Sources said the Petroleum Ministry discussed the contents of the report with the heads of refineries early this week. Petroleum Secretary Ahmed Waqar chaired the meeting.

Sources said the refineries' chief executives disagreed with the World Bank's report. They rather demanded increase in their profit/margin to make their business in Pakistan more thriving. Under the existing arrangements, refineries get 10 percent deemed duty on HSD, light diesel oil, kerosene and JP-4. Pakistan has five refineries with 9 to 10 million tons refining capacity.

The World Bank also questioned various other issues relating to refining and made suggestions to the government for improvement in this area. The use of diesel having high sulphur content was one of them, and charging the public for premium quality diesel having 0.5 percent sulphur. The differential in price between the two kinds of diesel is about $20 per ton. Pakistan's total diesel consumption is around 8 million tons per annum.

Pakistan still allows the use of diesel 10,000 ppm (1 percent) sulphur, notwithstanding the environmental consequences, and the low quality of air in cities such as Karachi and Lahore.

The government issued a circular to the refineries in July 2006 to switch to Euro II Diesel (2,500 ppm) by January 2008. The industry considers that this does not allow them sufficient lead time to carry out necessary feasibility studies and, subsequently, execute the subject works (and could only complete those around 2008-11).


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## Owais

*Rs 2.484 billion subsidy for KESC approved* 



ISLAMABAD (October 06 2006): The federal government has approved Rs 2.484 billion subsidy for the Karachi Electric Supply Corporation (KESC) to keep consumers- end tariff unchanged. A senior official in the Ministry of Water and Power told _Business Recorder _here on Thursday that the government would notify 28.08 paisa per unit increase in tariff, but it would not be passed on to the consumers.

The official said that Nepra had given a multi-year tariff formula for seven years to KESC in September 2002 but the tariff was being revised quarterly to adjust the fuel price and cost of power purchase from IPPs and public sector generation companies. Besides, it allows adjustment of O & M cost on CPI basis.

The government has not been passing on the tariff adjustments to consumers, allowed by Nepra to KESC from July 2004 to July 2006 to provide relief to the public and in this regard an amount of Rs 11.891 billion has been given to the utility as subsidy, he added.

The regulator had forwarded adjustment raising KESC tariff by paisa 28.08 per unit for the period April-June, 2006 to be made effective from July 01, 2006 for all categories of consumers except the lifeline consumers on account of fuel price adjustment (paisa 24.30) and CPI Indexation (paisa 3.78).

The official further said the ministry had proposed that in case the tariff adjustment determined by Nepra for the quarter April-June of 2006 ie, 28.08 paisa per unit is not passed on to the consumers GoP has to bear an additional tariff subsidy of Rs2.484 billion.

"We had recommended that increase in fuel price adjustment determined by Nepra should not be passed on to the consumers and absorbed through payment to KESC by GoP till such time that the GoP decides to increase consumer tariff," the official maintained. The Economic Co-ordination Committee (ECC) of the cabinet discussed the issue in detail, in its previous meeting wherein it was decided that the government would absorb raise in tariff.


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## Owais

*Hong Kong also awakes as SCRAs surge to $181 million *


KARACHI (October 08 2006): Hong Kong, which had been dis-investing ever since the beginning of FY07 and had negative balances to the tune of $3.1 million under Special Convertible Rupee Accounts (SCRAs) until about the end of September, has brought in so far during October nearly $9.5 million, including $6.3 million on October 5.

Singapore, which continues to be the lead investor, also brought in $0.6 million by way of fresh funds on October 5. Accordingly, its cumulative net flow during FY07 reached $101.4 million on that date.

USA also strengthened its SCRAs, albeit nominally, with net flows during the year to October 5 rising to $26.753 million from $26.748 million a day before.

On the other hand, the balances of UK and Switzerland deteriorated a bit. UK's positive balances showed a net withdrawal of $0.011 million on October 5, with its overall balance declining to $71.154 million on that date, while negative balances of Switzerland deteriorated by another $0.416 million to reach $19.445 million on October 5.

No change in balances of any other country was observed. Meanwhile, the benchmark KSE-100 gained 112.27 points to close at 10,855.82 points on October 5 successfully crossing 10,800 psychological barrier.

The KSE-30 share index closed at 13,544.18 points, or 264.34 points higher than a day earlier, making a historical headway by jumping over 13,500 level for the first time. The volume-based BRIndex30 registered a positive change of 224.62 points to close at 11,720.83 points on October 5.

The bullish trend at the shares market was attributed to the news about increasing balances in non-residents' special convertible rupee accounts and acquisition of a domestic bank (Prime Bank) by a leading foreign bank (ABN Amro).

Price flare-ups were witnessed in banks and OGDCL scrips, in particular, and were triggered by reports of major public sector, or partly public sector, banks and OGDCL's GDR listing on London Stock Exchange. Accordingly, across-the-board buying was witnessed in KSE with NBP, MCB, Bank Alfalah and OGDCL playing the special lead roles.

The aggregate market capitalisation, accordingly, reached close to the Rs 3 trillion-mark amid healthy trading at the Karachi bourse, which was just 144 points behind the 11,000 milestone. Besides speculative buying in stocks related to oil and gas exploration and banking, cement sector also extended the needed support to allow the market reach the record capitalisation figure.


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## Owais

*Growers asked to supply sugarcane to mills *

HYDERABAD (October 08 2006): Sindh chief minister Dr Arbab Ghulam Rahim has advised growers to supply their sugar cane production to those sugar mills, which have completed preparation for sugar cane crushing season 2006-07.

The Sindh Agriculture Department informed here on Saturday the management of Ansari Sugar Mills Matli, Army Welfare Sugar Mills, Badin and Khairpur Sugar Mills, Khairpur have informed their mills are ready for crushing but due to non-supply of sugar cane from growers, the crushing could not be started yet, according to a handout issued here, on Saturday.

In view of such a situation, the Sindh chief minister has advised sugar cane growers to supply their sugar cane production to the management of these sugar mills so that sugar cane crushing season 2006-07 could be started in the province accordingly.


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## Owais

*Nine world operators interested in KPT's deepest terminal *

ISLAMABAD (October 08 2006): For the construction of Karachi Port's deepest terminal, nine world-renowned operators have submitted their pre-qualification documents.

Talking to a private news channel, Director General of Planning and Development, Karachi Port Trust, Jamshed Zaidi, said that among those companies, DP World, CGM and AP Moller were included.

He said the pre-qualified parties might be selected in November, while the successful party would be chosen by February or March. Jamshed Zaidi said that initially, 16-metre deep draft would be prepared and four berths would be built. Besides, 1.5 kilometres long key wall would be constructed, which would be financed by the successful party.

Jamshed Zaidi said the project of deep draft containers terminal worth 500 million dollars and would be given to the operator on lease for 25 years, who would fix latest equipment on it.


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## Owais

*Over $20 million fresh foreign investments in bourses *


KARACHI: Foreign investors made fresh investments of over $20 million in Pakistani stock markets up to October 6 in the current fiscal year.

State Bank of Pakistan (SBP)&#8217;s released figures showed that the foreign investors until October 6 current fiscal year made fresh investments of $26.4 million in the stock markets, while the Swiss, British and the US investors during the same period have taken out $6.37 million. 

Thus during July1 to October 6, the aggregate volume of foreign investments in the stock markets pegged at $201 million, out of which, Hong Kong investors made investments of $10.1 million, UAE $0.072 million, Britain $0.377 million and USA $15.8 million.


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## Owais

*Mexico lifts ban on Pakistani rice import *

ISLAMABAD: Mexican government has lifted the ban on the import of Pakistani rice.

Federal secretary for food, agriculture and livestock, Ismail Quraishi told Geo News that the Mexican government has sent a special communication intimating their decision in this regard. He told that a special directive has been issued to the Rice Commissioner for providing guidance to the exporters regarding the changed situation.

Ismail Quraishi told that it was premature to say as to how much of rice would be exported through this avenue. Mexico had slapped a ban on Pakistani rice import ten years ago.


----------



## Owais

*Central govt announces new payphone policy *


ISLAMABAD: Ministry of Information Technology on Saturday announced a new rationalized policy to allow for setting up of public call offices (PCOs) across the technology platforms of all cellular, local loop (LL) and wireless local loop licensees. 

The new policy is aimed at spurring growth and proliferation of telecom access through a simplified mechanism of PCO/payphone service provisioning by all local loop operators, including cellular mobile and WLL licensees, said an official statement released by the ministry. 

The statement listed main objectives of the policy as being achievement of a broader coverage, outreach and economic opportunity integrating seamlessly into the Rozegar Scheme launched by President Pervez Musharraf. 

The policy makes available several community level business models based on PCO/payphone services which can be launched through the microfinance programme of National Bank of Pakistan and other commercial banks under the Rozegar scheme. 

Similar business models had been successfully employed in several countries and the new policy would facilitate their adoption in Pakistan through promotion of community level entrepreneurship to improve the level of economic opportunities 
available to the rural population. 

The statement noted that the need for rationalizing the payphone/PCO regime was felt due to the effective role the PCOs, especially those offered by cellular and WLL operators, could play in enhancing the access, outreach and employment 
opportunities. 

The new policy establishes the right of mobile cellular operators and regional LL/WLL licensees to be treated on a par with nationwide integrated licensees such as PTCL, Special Communication Organisation and NTC. 

They would henceforth be allowed to operate payphones/PCOs as a part of platform services without any additional fee or license either directly or through other distribution channels. 

The policy clarifies only third parties wanting to offer services in collaboration with the licensed operators will be required to register for the class license issued by the PTA. 

The entities operating under the individual payphone licenses may continue to operate under the current regime until theexpiry of their license or they may opt for a class license or become associated with any of the licensees. 

The policy tasks the PTA to negotiate with banks and other institutions to facilitate provision of loans/credit lines without complexity and burdensome documentation. 

A broad and well-structured publicity campaign will also be undertaken to inform the public about the policy in the context of President's Rozegar Scheme. 

The statement said the new policy was expected to help bridge the access gap and enhance outreach of service to the un-served rural masses. 

The policy is also expected to provide improved economic opportunity by promoting self-employment based on ownership of street and household level community PCOs under the microfinance facility of the Rozegar Scheme. 

The scheme would benefit the rural consumers by providing them increased choice in payphones.


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## Kaiser

Owais said:


> *Nine world operators interested in KPT's deepest terminal *
> 
> ISLAMABAD (October 08 2006): For the construction of Karachi Port's deepest terminal, nine world-renowned operators have submitted their pre-qualification documents.
> 
> Talking to a private news channel, Director General of Planning and Development, Karachi Port Trust, Jamshed Zaidi, said that among those companies, DP World, CGM and AP Moller were included.
> 
> He said the pre-qualified parties might be selected in November, while the successful party would be chosen by February or March. Jamshed Zaidi said that initially, 16-metre deep draft would be prepared and four berths would be built. Besides, 1.5 kilometres long key wall would be constructed, which would be financed by the successful party.
> 
> Jamshed Zaidi said the project of deep draft containers terminal worth 500 million dollars and would be given to the operator on lease for 25 years, who would fix latest equipment on it.



I think the contract should be given over to dp world


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## Neo

*NIT unitÃ¢â¬â¢s net asset value rises by 8.40pc*

KARACHI, Oct 7: National Investment Trust (NIT) Ã¢â¬â PakistanÃ¢â¬â¢s largest mutual fund Ã¢â¬â posted Net Asset Value (NAV) of its unit at Rs46.69 at September 30, showing increase of 8.40 per cent, from Rs43.07 at the close of previous quarter on June 30 (ex-dividend).

In a statement issued on the conclusion of the meeting of its board of directors on Saturday, the fund claimed that the NAV had outperformed benchmark KSE-100 index by a margin of 3.17 per cent; the index having increased by 5.24 per cent during the period under review.

NIT stated that net income earned by the fund during the first quarter ended Sept 30, amounted to Rs943 million which translated into earning per unit of Rs0.60.

Ã¢â¬ÅIt may be mentioned here that the net income of Rs5,829 million earned by the fund in the corresponding three months of last year included capital gain of Rs5,128 million earned through sale of strategic holding of National Refinery Limited (NRL) by the Privatisation CommissionÃ¢â¬Â, chairman NIT Tariq Iqbal Khan observed and added that net income of the fund would have depicted an increase of 35 per cent in the period under review if the capital gain of NRL earned during the corresponding quarter of previous year were to be set aside.

Similarly, capital gains realised during the first quarter of the previous year stood at Rs5,228 million, which included Rs5,128 million on account of NRL. Excluding that one-time gain, capital gains registered a growth of 63.14 per cent for the period under review to Rs155 million, from Rs95 million in the same time last year.

Dividend income of the fund amounted to Rs951 million compared to Rs716 million in the corresponding period of last year, showing an increase of 32.85 per cent.

Total amount of fund under management of NIT grew to Rs73.09 billion at Sept 30, from Rs64.30 billion as on June 30, reflecting a growth of 13.68 per cent.

The sale of NIT units (including CIP) during the quarter under review rose by 125 per cent to Rs3,742 million compared to sale amounting to Rs1,665 million in the corresponding period of last year.


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## Neo

*Pakistani marble can compete in quality*

ISLAMABAD, Oct 7: Federal Minister for Industries, Production and Special Initiatives Jahangir Khan Tareen has said that Pakistani marble is of excellent quality and its products can compete with any other products in the world market.

Pakistani entrepreneurs working in the marble and granite sector are doing very well and government is very keen to help them so as to tap full potential in the marble and granite sector, he added.

According to a press release issued here on Saturday the minister was talking to the Pakistani exhibitors during his visit to the Pakistani pavilion at Verona Marble fair on the last day of his visit to Italy.

Mr. Tareen led a Pakistani delegation for participation in Verona Marble fair held in Italy from 5-8 October. The delegation included experts of the newly-formed Pakistan Stone Development Company) (Pasdec), representatives of the Sindh Mines and Mineral Institute, Export Promotion Bureau and some private companies.

The minister, talking to the exporters at Pakistani stalls, said,Ã¢â¬Â We have a long way to go to fully develop our marble and granite sector. We need to employ new technology and scientific methods to compete with the rest of the world,Ã¢â¬Â he said adding that it is for these reasons that Pasdec has been formed.

Under Pasdec the government plans to set up quarries where modern methods of mining will be used. It also plans to impart training to the people working in the marble and granite industry, the minister said.

He further said that the Pakistani participation in the fair would prove very useful for Pakistani marble industry.

Ã¢â¬ÅHis meetings with the Italian officials have afforded an excellent opportunity to learn from the Italian experience, which will help us in developing our marble and granite sector up to its fullest potential,Ã¢â¬Â said the minister adding that he was satisfied with the quality of items displayed by Pakistani companies at the Italian fair.


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## Neo

*Pakistan's kitchen items prices highest in Saarc region *

ISLAMABAD (October 08 2006): Prices of most of the kitchen items in Pakistan are higher as compared to Dhaka, New Delhi and Colombo. According to a comparison of the prices of 26 essential items among the four major South Asian Association for Regional Co-operation (Saarc) members available to Business Recorder showed that except wheat, flour and rice, most of the kitchen items prices are higher than the neighbouring Dhaka and New Delhi.

The prices of combustible fuels were cheaper in India, Sri Lanka and Bangladesh, while POL prices were almost the same in the other four neighbouring countries of South Asia. Similarly, the prices of fertilisers and cement were cheaper in the most populous countries on the earth, the document added.

The prices of essential items in Islamabad were as: wheat Rs 11.76/kg, wheat flour Rs 13.50/kg, rice basmati broken Rs 23.44/kg, masoor pulse Rs 44.50/kg, moong pulse Rs 61.00/kg, mash pulse washed Rs 76.50/kg, gram pulse washed Rs 42.00/kg, beef Rs 133.75/kg, mutton Rs 255.00/kg, farm chicken Rs 81.25/kg, Eggs Rs 36.75/dozen, sugar Rs 34.82/kg, cooking oil Rs 86.00/kg, potatoes Rs 30.00/k, onion Rs 21.25/kg, tomatoes Rs 42.13/kg, red chilies Rs 80.00/kg, Garlic Rs 75.75/kg, Diesel Rs 38.80/L, Petrol Rs 57.77/L, Kerosene Rs 40.00/L, Natural gas Rs 3.69/MMBTU, LPG Rs 60.00/kg, CNG Rs 33.40/CM, Elec (domestic 1-100 units Rs 2.41/unit, Elec commer 1-100 units---, DAP Rs 23.00/kg, Urea Rs 11.00/kg and Cement Rs 283/50kg.

The prices of essential items in Dhaka, Bangladesh were: wheat Rs 15.69/kg, wheat flour Rs 17.43/kg, rice basmati broken Rs 56.66/kg, masoor pulse Rs 61.02/kg, moong pulse Rs 61.02/kg, mash pulse washed Rs 61.02/kg, gram pulse washed Rs 55.02/kg, beef Rs 130.77/kg, mutton Rs 174.00/kg, farm chicken Rs 82.82/kg, Eggs Rs 43.59/dozen, sugar Rs 39.23/kg, cooking oil Rs 52.30/kg, potatoes Rs 19.17/kg, onion Rs 15.69/kg, tomatoes Rs 52.33/kg, red chilies Rs 69.74/kg, Garlic Rs 52.30/kg, Diesel Rs 28.76/L, Petrol Rs 50.56/L, Kerosene Rs 33.12/L, Natural gas Rs 3.35/MMBTU, LPG Rs 23.43/kg, CNG Rs 6.49/CM, Elec domestic 1-100 units Rs 2.17/unit, Elec commer 1-100 units 4.39/unit, DAP Rs 13.16/kg, Urea Rs 4.35/kg and Cement Rs 244/50kg.

The prices of essential items in New Delhi, India were: wheat Rs 15.72/kg, wheat flour Rs 18.34/kg, rice basmati broken Rs 26.20/kg, masoor pulse Rs 47.16/kg, moong pulse Rs 70.74/kg, mash pulse washed Rs 83.84/kg, gram pulse washed Rs 55.02/kg, beef Rs 91.31/kg, mutton Rs 183.40/kg, farm chicken Rs 91.70/kg, Eggs Rs 28.82/dozen, sugar Rs 30.13/kg, cooking oil Rs 65.50/kg, potatoes Rs 15.72/kg, onion Rs 15.72/kg, tomatoes Rs 26.20/kg, red chilies Rs 131.00/kg, Garlic Rs 81.31/kg, Diesel Rs 43.03/L, Petrol Rs 63.53/L, Kerosene Rs 47.16/L, CNG Rs 25.15/CM and Cement Rs 263.31/50kg.

The prices of essential items in Colombo, Sri Lanka were: wheat Rs 35.00/kg, wheat flour Rs 35.00/kg, rice basmati broken Rs 64.00/kg, masoor pulse Rs 38.00/kg, moong pulse Rs 38.00/kg, mash pulse washed Rs 38.00/kg, gram pulse washed Rs 41.00/kg, beef Rs 166.00/kg, mutton Rs 282.00/kg, farm chicken Rs 146.00/kg, Eggs Rs 43.92/dozen, sugar Rs 40.00/kg, cooking oil Rs 137.00/kg, potatoes Rs 39.00/kg, onion Rs 24.00/kg, tomatoes Rs 15.00/kg, red chilies Rs 125.00/kg, Garlic Rs 58.00/kg, Diesel Rs 37.29/L, Rs 57.00/L, Kerosene Rs 25.64/L, LPG Rs 41.62/kg, Elec domestic 1-100 units Rs 10.00/unit, DAP Rs 24.46/kg, Urea Rs 6.98/kg and Cement Rs 341.00/50kg.


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## Neo

*KCCI for identical industrial policies throughout country *

KARACHI (October 08 2006): The Karachi Chamber of Commerce and Industry (KCCI) has suggested that a comparative study should be conducted of various policies practised by provinces, influencing trade and industry, to remove dissimilarities in the country.

This suggestion was made in a report of Industry and Privatisation subcommittee of KCCI. The report suggested that labour laws must be the same all over the country.

The report has proposed that the self-assessment scheme for social security, as introduced by Punjab government, should be adopted by Sindh government also and all inspections, regarding labour, should be stopped completely.

The report noted that land rent has been increased from Re 0.06 to Rs 8 to Rs 10 per square yard per annum by the provincial government, which is very high and must be revised downward.

The report noted that the price of land is increasing rapidly. Therefore, the Sindh government should also remove the ban on conversion of agricultural land into industrial land, to facilitate industrial development in the province.

The report suggested that industries should be exempted from inspection of their weight and measures. The report proposed that industries should be exempted from professional tax as well as from revenue stamp duty.

The report pointed out that the government is responsible to provide all infrastructures at affordable price to industries to make them cost-effective. The report demanded that the late payment surcharge on KESC and gas bills, which are 10 percent and 2 percent, respectively, should be reduced, as it is a financial burden on industries.

The cost of water connections to industries have been revised by KWSB, and for a connection of 0.5 inch water line the charges are around Rs 0.55 million, which is very high and an impediment in industrial growth, Therefore, it should be reduced to reasonable limits, the report proposed.

It said that KWSB should lay the main lines, and individual connections from main line would be borne by the industries. KWSB may install water meters to charge industries according to consumption.


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## Neo

*0.5 million housing units needed annually to meet shortfall: KCCI *

KARACHI (October 07 2006): The Karachi Chamber of Commerce and Industry (KCCI) estimated that the overall production of housing units has to be increased to 0.5 million units annually to address 6.1 million backlog of housing in Pakistan for meeting the housing shortfall in next 20 years.

This was stated in a report of KCCI sub-committee on housing, construction industry and infrastructure. The sub-committee has also extracted statistical date, which showed that there was backlog of 6.1 million houses in Pakistan, while annual requirement of housing units each year was 670,000 units.

It is, however, a matter of great concern that the present accomplishment is only 270,000 units per annum instead. Therefore, the extensive disparity is taking its toll with addition of 300,000 units every year in the backlog out of which the annual requirement of Karachi comes to 170,000 units alone. The report said that the port cities all over the world always played significant role in the economic well being of the nations. Karachi is the only port city of the country and its participation in the economy is worked out to 68 percent of the total revenues collected by the government exchequer.

The report noted that there were 482 katchi abadies in Karachi in year 1984 but it had increased so rapidly to reach 1471 katchi abadies in 2005. The report stressed the need to plan a course of the swelling population of the city.

According to housing census 1998, the housing backlog, which stood at 4.30 million, has been currently projected at 6.19 million. The report said that the present housing stock is also rapidly ageing and an estimate suggests that more than 50 percent stock is over 50 years old. It is also estimated that 50 percent of the urban population now lives in slums and squatter settlements. The report said that meeting the backlog in housing, besides replacement out-lived housing unit is beyond the finical resources of the government. This necessitates putting in place of framework to facilitate financing in the formal private sector and mobilise non-government resources for a market base housing finance system.


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## Neo

*1,893 more villages to be electrified *

KARACHI (October 07 2006): A total of one thousand eight hundred and ninety-three villages of Sindh are to be provided with electricity during the financial year 2006-07.

Under the village electrification programme, bids have been invited till October 21, 2006, in the office of the Project Director Hesco, Construction Operations, Wapda, Hyderabad. All these 1,893 villages will be provided electricity under the project within the financial year 2006-07.


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## Neo

Sunday, October 08, 2006 

*International study backs PakistanÃ¢â¬â¢s stance: FTA not to affect US textile industry, US officials told*

ISLAMABAD: Based on findings of an international study, Pakistan has assured the United States that a Free Trade Agreement (FTA) between the two countries would not have adverse affect on the US textile industry, a senior official at the ministry of commerce told the Daily Times on Saturday.

A Pakistan-USA FTA is critical to increased investment in Pakistan and increased export to the USA. It would send a strong signal to all countries about US commitment to PakistanÃ¢â¬â¢s economy. It would demonstrate also that Pakistan plays by internationally accepted economic rules. 

This was conveyed to the US authorities during the Pakistan-United States Trade and Investment Framework Agreement (TIFA) Council second meeting held at Islamabad from Oct 2 to 4. 

The recent study by the prestigious Institute for International Economics provides both political and economic rationale for an FTA with Pakistan and minimizes the perception widely held in the USA that such an agreement would adversely affect the US textile industry, the Pakistan side informed the US authorities. 

The official was of the view that the US is denying market access in textile products to Pakistan under any possible trading arrangement, or the proposed FTA. The US is asking Pakistani authorities to diversify their export base and get market access on such products other than textile due to the strong opposition by the US textile industry. The official said textile exports constitutes 80% of the PakistanÃ¢â¬â¢s export base and the US denial to market access in textile to Pakistan means no benefit for Pakistan in any new trading arrangement. 

However, some experts are of the view that Pakistan should diversify its export base because it would help Pakistan to benefit from the US as well as from other potential trading partners in the possible market access in future. 

The Pakistan side, during the TIFA Council meeting, also stressed that the US administrationÃ¢â¬â¢s early official designation of Pakistan as a potential FTA partner is important as the US presidentÃ¢â¬â¢s fast track authority for conducting trade negotiations would lapse next year (July 2007). 

Pakistan accords high priority to its trade and commercial relations with the USA not only because it is PakistanÃ¢â¬â¢s largest partner, but also because of quality of the USAÃ¢â¬â¢s industrial and services sector and its leadership in technology. Pakistan believes in a comprehensive economic partnership between the two countries under the Trade and Investment Framework Agreement (TIFA) to realize the full potential of bilateral relations.

To this end negotiations are being held on Bilateral Investment Treaty (BIT) and there is a need to have corresponding progress on trade side at the TIFA meeting.

According to the official, the US side was also informed that Pakistan values US support in combating extremism through economic uplift. Reconstruction Opportunity Zones (ROZs) have the potential to improve US image in Pakistan in a manner that the earthquake relief work did last year. Pakistan expects ROZs to help realize these objectives of social and economic stability through economic development, employment generation and increased economic activity in the country. 

The government has made considerable progress towards Intellectual Property Rights (IPR) compliance by way of establishment of the Intellectual Property Organization of Pakistan (IPOP) and action taken against the companies that were involved in pirated disk business. 

Pakistan has already worked out its wish list for locations and product coverage, which the government of Pakistan has shared with the US government. The government considers the private sector to be the main engine of growth and the main source of employment generation. In Pakistan a substantially large portion of economic activities is in the hands of the private sector and with the accelerated pace of privatization, the role of the private sector is further expanding. PakistanÃ¢â¬â¢s banking, financial, telecom, and IT sectors are much stronger today compared with 10 years ago and in comparison with most of the other countries in the region.


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## Neo

Sunday, October 08, 2006 

*Pakistan team to study Japanese technical education model*

ISLAMABAD: Under technical cooperation between the Government of Pakistan and Government of Japan, a five member Pakistani delegation has left for Japan to study the Japanese model of Technical and Vocational Education and Training (TVET) says a press statement.

Headed by Kamran Rasool Secretary Ministry of Industries, Production and Special Initiatives; the delegation includes Mr. Khushnood Akhtar Lashari Executive Director National Vocational and Technical Education Commission (NAVTEC), Nadeem Ashraf Secretary Technical Education & Vocational Training Authority (TEVTA) Punjab, Tariq Awan Director Manpower and Technical Education NWFP and Durr-e-Shahwar Nisar Member FPCCI Committee on Women Entrepreneurship Karachi. 

During their stay, the delegation will study the Japanese technical and vocational education and training (TVET) system; linkages programme between schools, institutions, local communities and industry; and shall also study the way in which the public-private partnership is contributing to the TVET. The delegation will also observe various training initiatives of the Japanese government in the fields of agriculture, services sector, construction, hospitality, tourism, automobile, metal working, and light engineering. 

The overall objective of the technical cooperation, extended through the Government of Japan is to assist the policy makers and concerned government departments in the formulation of policies and programmes for strengthening and upgrading of technical and vocational education and training (TVET) system in Pakistan and to learn from the Japanese experiences. The delegation will explore and identify possible areas of further cooperation between the two countries in the field of technical and vocational education. Realizing the role of skilled and technically educated manpower for development of overall national economy, the Government of Pakistan has established NAVTEC. The Commission is reviewing policy and evolving strategy, as well as preparing training programmes relating to human resource development, with a focus on TVET. The visit of this high level delegation will help NAVTEC to learn from the Japanese model.


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## Neo

*Housing offers good return on investment*

ISLAMABAD, Oct 6: Pakistan offers excellent investment opportunities in housing construction and real estate development sectors in the wake of expanding middle class with growing purchasing power.

This was observed by Senate Chairman Mohammedmian Soomro while talking to an investment delegation of Jumeirah Group of UAE at his residence here on Friday.

Mr Soomro stated that housing was one of the basic requirements and the government was committed to give priority to this sector. Ã¢â¬ÅIt has demonstrated its commitment by allocating significant resources for accelerated development of the sector which would contribute to the economy in the form of additional employment besides supporting 30-40 allied industries,Ã¢â¬Â he added.

He said the multiple effects of the housing sector had the potential to create more employment opportunities and generate industrial, commercial and trade activities.

He said that housing and construction were experiencing a boom particularly in the post earthquake period as a major effort had been launched to provide shelter to the homeless.

The foreign investors and entrepreneurs could take advantage of the positive environment and invest in areas offering lucrative returns, he added.

He further said that the government had declared housing and construction as a priority industry and simultaneously formulated a pragmatic and workable National Housing Policy in order to revitalise this sector and was providing various incentives for the construction industry and private sector builders.

Mr Soomro pointed out that as a result of proactive policies and an environment conducive to investment, many reputed construction companies and real estate developers were coming to Pakistan.

Terry Redding, head of the Jumeirah Group delegation, lauded the investor-friendly policies of the government and said the country had the potential to emerge as a major hub of investment in the region.


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## Neo

*Super Basmati issue *

Pakistan sidelined at rice moot due in Delhi

KARACHI: Pakistani rice research scientists are not to be allowed to present research papers at 2nd International Rice Congress (IRC)-2006 to be held on October 9-13, at New Delhi. 

The International Rice Research Institute (IRRI) organizes the event after every two years, which is considered the worldÃ¢â¬â¢s premier rice research event.

This yearÃ¢â¬â¢s event is being organized jointly by IRRI, Indian Council of Agriculture Research (ICAR) along with Philippine in Indian capital New Delhi.

The International Rice Commerce Conference will involve international leaders of rice trade, producers, exporters, buyers, and allied industries (such as quality testing, finance and e-commerce) and will focus on product diversification, value addition, and business promotion. 

It will provide a forum to enable participants to develop a blueprint for commercial trade and to identify business challenges and opportunities in markets and product development.

The conference will review the current state of the global rice trade and its prospects for the future. 

Experts will track key trends and their impact on the rice business, evaluate prices in terms of their impact on the cost of production and demand, and probe into developments in selected key markets (producing, exporting, and importing markets).

The participants of the event will focus on innovations for efficiency enhancement in view of the increasing need to conserve resource use in rice. Important aspects of rice research and related environmental and economic impacts will be covered in several sessions and satellite work-group meetings. 

Each session will have four invited lead speakers who will present a comprehensive review on the selected topic assigned by the conveners and co-conveners of the various sessions. 

At this occasion a ministerial round table meeting would also be held. 

It is most surprising that no name of Pakistani scientist or agronomist was mentioned for presentation of research or for discussion at official website of IRRI, where details of name, timing and research topic of scientists and agronomists belonging to different countries including India, Philippine, USA and Japan have been exhibited for presentation on diverse topics related to rice at different sessions and workshops in the conference. 

However Dr. Mohummad Akhtar Tahir from Rice Research Institute Kalashahkaku and Dr. Bashir Cheema working in private sector were invited at the conference, The News learnt through reliable sources.

Sources said that Dr. Mohammad Akhtar would not be allowed to present his research papers on Super Basmati rice at conference and added that instead of him Dr Bashir would give his presentation on rice.

Last year Pakistan exported rice worth $1.2 billion and is major producer of prime qualities of Basmati rice including Super Basmati which fetches more than $600 per tonne should be given due share of participation at international rice congress. 

This scribe tried to contact Secretary Agriculture in order to get official version in this regard but failed. 

Ã¢â¬ÅWe have unfortunately left the field open to the only other producer of Basmati in the world to display Ã¢â¬Ëtheir heritage in BasmatiÃ¢â¬â¢ and claim it as well that they have already been doing this quite blatantly in case Super Basmati brand theft,Ã¢â¬Â a rice trader Khawaja Zahid told The News from Lahore.

He further said that Rice Exporters Association of Pakistan (REAP) a representative body of rice trade in the country also expressed ignorance regarding this event as its Chairman resigned couple of week back did not inform its members regarding this event which was basically organized by IRRI where Pakistan rice farmers trader, miller and exporters should be participated. 

He said that the Ministerial Round Table meeting could have been used to address Super Basmati brand theft at a global platform whereas the issue of Geographical Indications sharing could have been raised questioning the position of India due to theft of identity of our variety of rice by India.


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## Neo

*$103.815 million foreign portfolio investment came in one month *

KARACHI (October 09 2006): The net inflow of foreign investment in the country's stock market during one month, from September 6 to October 6, amounted $103.815 million, of which $20.075 million came only in one day, on October 6, which was the highest portfolio investment in any single month during the current fiscal year.

The massive inflow of foreign funds witnessed during last 10 days in the country's stock markets pushed the portfolio investment to $200.984 million during the first quarter (July-September) of the current fiscal year. Out of this, $143.2 million portfolio investment was made between September 27 and October 6, 2006.

According to data released by the central bank, portfolio investment in the country from July to October 6 is $200,984,940 but the same stood at mere $57.7 million on September 26, 2006.

Almost half of the investment has been made from Singapore. Investors from the island have more than $101 million in the Special Convertible Rupee Accounts (SCRA) to their credit. Singapore is followed by $71.127 million investment from UK and $38.032 million from USA.

A total of $16.533 million investment in the country's stock market came from Hong Kong while $59943 came from Liberia.

Hasnain Asghar Ali of Aziz Fidahusein Securities said that the speedy rise in portfolio investment in the country's equity market during last 10 days showed that foreign investors were seeing a growing future in Pakistan's market. Growth in banking sector in the country and mergers/acquisitions of local banks by foreign groups show the interest of foreign investors to invest in Pakistan.

They also see much potential in the oil and gas sector and the discoveries of oil and gas reserves in the country depict handsome returns.

He said that the oil and gas sector is a high potential area as there has been very little foreign investment in this area as compared to the existing potential, which would bring more investors triggering growth in the equity market.

Ayaz Dawood, CEO, Guardian Modaraba, said that Pakistan seems to be a growing country which is attracting the foreign investors to invest their capital here.

He said that the Arab investors are very much interested as they observe Pakistan as a safe country for their investment.

Whereas during the said period major outflow came from Switzerland, Swiss investors withdrew $20.853 million from Pakistan's stock market. Investors from B V Islands took away $2.063 million and the investors from UAE took away $1.728 million from the country's equity markets.

Others who took away their investment from the country's equity market during the period of review included Bahrain $70,641, Guernsey $66,177, Kuwait $848,626, Luxembourg $34,184, Qatar 40,546, Saudi Arabia $423,696 and Germany $52.


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## Neo

*MONEY WEEK: monetary expansion remains subdued amid continued drawdown of foreign reserves *

KARACHI (October 09 2006): When net foreign assets (NFA) of the banking system- or crudely put the country's liquid foreign exchange reserves- accumulate, money supply increases even if government borrowing or private sector credit utilisation remain unchanged at their existing levels.

Money supply contracts or monetary expansion decelerates when foreign assets are depleting depending upon whether domestic credit expansion (DCE) remained unchanged (contraction case) or expanded instead (deceleration case). The latter was the case on 2nd and 9th September according to the latest updates of monetary statistics of the country. On 2nd September, domestic credit expanded by Rs60 billion but monetary expansion was limited to Rs7 billion only.

On 9th September, DCE amounted to Rs95 billion but monetary expansion was even less than half (Rs43 billion) the size of DCE. Each time, the explanation for subdued monetary expansion was the massive drawdown of NFA on these dates, which roughly averaged to Rs52 billion on each occasion. In our last review, we extensively dealt with BOP factors leading to accumulation or drawdown of foreign reserves.

In the meanwhile, as a result the foregoing changes in monetary statistics, liquid reserves of the country declined to $12,569.6 million on 2nd September though the same improved nominally to $12,570.1 million on 9th September compared with $12,652.7 million at the end of August, $12,854.2 million at the end of July and $13,136.9 million at the end of June 2006.

The reserves improved for a short while to reach $12,602.1 million on 16th September but according to latest updates, beginning 23rd September, the downslide in foreign exchange reserves set in again with reserves standing at $12,546.6 million as on that date and stood further lower at $12,532.9 million on 30th September.

It appears the drawdown has continued except on one weekend as explained above during September. The cumulative loss of reserves for the period July 01- September 30 comes to about $604 million meaning that still larger increase in imports and drawdown of NFA of the banking system has occurred after 9th September which will largely offset the impact of borrowing from the banking system by the government and the private sector in the coming weeks.

Among other developments, government borrowing which decelerated to Rs47.5 billion on 26th August, after having reached Rs64.8 billion on 12th August, picked once again to reach Rs72 billion on 2nd September and further to over Rs97 billion on 9th September- the date for which the latest update is available. On 9th September, Rs89.7 billion were borrowed for budgetary support and Rs6.2 billion for commodity operations compared with Rs64.4 billion and Rs6.5 billion respectively on 2nd September.

Break-up of budgetary borrowings revealed that on 9th September, Rs73 billion were borrowed by the federal government and Rs16.7 billion by the provincial governments compared with Rs58 billion and Rs6.4 billion respectively on 2nd September. Both federal and provincial governments borrowed exclusively from the central bank (plus Rs96 billion compared with end June position) as they retired credit to the scheduled banks (minus Rs6.8 billion compared with end June position) on 9th September compared with plus Rs64 billion borrowed from the central bank and minus Rs6.7 billion retired to the scheduled banks on 2nd September.

Private sector, which showed a retirement of Rs11 billion on 26th August continued showing retirement of credit even on 2nd and 9th September but the magnitude of retirement declined on 2nd September (minus Rs7.35 billion) but increased on 9th September (minus Rs11.43 billion). The development showed that the impact of fresh borrowing of Rs3.7 billion that took place on 2nd September was more than offset by the increase in retirement of Rs4.1 billion on 9th September.

Larger retirement on 9th September took place on account of commercial banks (minus Rs17.6 billion compared with end June position) as specialised banks, which include the SME Bank, showed net credit expansion of Rs6.2 billion as on that date as against a retirement of Rs12.1 billion by commercial banks and an expansion of Rs4.7 billion by specialised banks on 2nd September. As part of non-government sector credit expansion, credit by the banking system to PSEs shrank by Rs3.5 billion compared with a smaller retirement of Rs2.9 billion on 2nd September whereas SBP credit to NBFIs increased by a nominal Rs0.2 billion on 2nd September which remained unchanged at that level on 9th September.

Behaviour of other items (net) or OINs of the banking system, a segment of domestic credit expansion or contraction, changed significantly. These items, which exerted a contraction impact of Rs4 billion on 26th August compared with a much larger contraction impact of Rs57 billion on 15th July, started exerting expansion impact as from 9th September as compared with a very small contraction impact of Rs1.3 billion on 2nd September. Between 2nd September and 9th September, expansion in domestic credit on account OINs amounted to Rs13.3 billion.

Overall, domestic credit showed an expansion of Rs95 billion on 9th September compared with Rs60 billion on 2nd September. Money supply figures for the respective dates showed a smaller expansion of Rs43 billion and Rs7 billion which found expression in the drawdown of NFA to the tune of about Rs52 billion on each date.

A 7th October update released late on that day showed that on 16th September, monetary expansion decelerated to Rs29 billion but mainly on account of decline in government borrowing to Rs67.6 billion (budget: Rs61.4, commodities: Rs5 billion, other: Rs1.2 billion) as both private sector credit expansion and NFA improved.


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## Neo

*Time for a fresh look at trade policy*

By M. Ziauddin

IT is time the government took a fresh look at the content and direction of its foreign trade policy. Of course, the exports have almost doubled in the last seven years, going up from nearly $8 billion in 1999 to $16.4 billion in 2005-6.

But they are no more than 13 per cent of the GDP. IndiaÃ¢â¬â¢s exports have crossed 16 per cent of its GDP while those of ChinaÃ¢â¬â¢s have gone up to 40 per cent of its GDP.

So, in order to attain a growth rate in export which would be in line with the rates in other South Asian countries, Pakistan would need a new foreign trade strategy aimed at diversifying the export items and their destinations and augmented by an industrial policy that would produce enough exportable surpluses of high quality and value addition.

And a will to implement this strategy will have to be found to avert being influenced by the politically powerful lobbies which have kept our foreign trade in the low end all these years in order to ensure their own rents and unearned profits.

At the time when President General Pervez Musharraf took over the reins of the country on October 12, 1999 our exports were nearly 14 per cent of the GDP. In fact, in the so-called Ã¢â¬Ëlost decadeÃ¢â¬â¢ of 1990s when Pakistan had become the most sanctioned country after Libya, it had successfully doubled its exports from a little over $4 billion in 1989 to nearly $8 billion in 1999.

Now with only three years left in this current decade of plenty when the countryÃ¢â¬â¢s exports have been allowed generous additional access into the rich markets as a reward for our contribution to the war on terror and also blessed us for the same reason with enough fiscal room to carry out the much delayed structural reforms, the military-led government has been able to just about double the export earnings.

Exports during the 1990s had doubled despite the fact that the increase in imports during the decade had been restricted to only $3 billion. But the doubling of exports in the last seven years has been achieved by pushing up the imports by as much as $18 billion from $10 billion in 1999 to about $28 billion in the outgoing year. No doubt, a lot of textile related machinery was imported in 2002-04, but most of it was for producing more yarn rather than for making value addition to exports.

And during the decade of 1990s, the trade gap had expanded by over $3 billion only in three years but dropped to $1.7 billion in the final year of the decade. In the last seven years, the $3 billion mark gap was crossed for the first time in 2003, and subsequently it doubled to more than $6 billion in 2004 and it was over $11 billion in 2005.

The growth rate in imports in the last three years has been phenomenal. It went up by over 27 per cent in 2004, then it went over 32 per cent the next year and in the out going year it had gone up by nearly 45 per cent. And most of this import (minus the soaring oil import bill) was made up of consumer goods like mobile phones, consumer durables and two and four wheelers.

In the last seven years, there has not been any addition to the list of major exports which has remained confined to a few items only: cotton, leather, rice, synthetic textiles and sports goods.

These five categories of exports account for 74.5 per cent of total exports during the first nine months of last year with cotton manufacturers alone contributing 58.4 per cent, followed by leather (6.1 per cent), rice (6.9 per cent) and synthetic textiles (1.2 per cent). Further break up of figures reveals that almost all the export earnings of cotton group have originated from textile and clothing.

And the direction of the exports has also remained confined to a few countries as well. The seven countries, namely USA, Germany, Japan, UK, Hong Kong, Dubai and Saudi Arabia account for 50 per cent of our exports. The US is the single largest export market for Pakistan accounting for 27 per cent of its exports followed by the UK, Dubai, Germany and Hong Kong Japan as PakistanÃ¢â¬â¢s major export destination is fast vanishing as less than one per cent of its exports are entering this land of rising sun.

This has happened despite the fact that in the last seven years the government has announced umpteen numbers of policies to promote new categories of exports and has also entered into agreements with a number of countries for preferential and free trade besides early harvest accords.

In fact what had happened is, every year the policy makers have announced a number of measures and steps to boost exports, but most of these announcements have continued to remain announcements only and implementation has been restricted to only about 50 per cent and most of that too only on paper.

Remember the fanfare that had accompanied the announcement of governmentÃ¢â¬â¢s intentions to set up textile cities, promises to restructure the National Tariff Commission and establishment of ROZs? Nothing has so far happened on all these scores. These are only three examples. There are many more such announcements which were made perhaps to play to the gallery for political mileage but without any intention of translating them into action.

Even the so-called phenomenal increase in exports in the last seven years has been achieved mainly by offering the exporters decidedly rent seeking kind of concessions. PakistanÃ¢â¬â¢s export sector has over the years progressed not on innovation, quality or value addition but on concessional schemes like refinance scheme, cash compensatory rebates, freight subsidy and research and development support.

Additionally, exporters have been obliged with duty exemptions and tax concessions. According to one analysis, it is the government which makes up the profit component of the exporters while they compete in the world market on the basis of throwaway prices alone.

In fact it has been observed that people take up the business of exports only to avail the governmental concessions and tax breaks and not to do any real export business. The freight subsidy was originally announced for the export promotion of new products and to new markets but now it is being availed by even those who sell traditional items in the traditional markets.

These analysts said that dollars earned through subsidised exports cost much more than the prevalent exchange rate. Subsidies put an extra burden on the budgets expanding the budgetary deficits which are normally financed through printing of currency or new indirect taxation or borrowing, all of which add to the rate of inflation.

The government has so far refused to accede to the demand by the textile industry for a package of Rs50 billion worth of concessions. But this lobby is politically too powerful for a government just about to enter the election phase. Moreover, it is a government overly beholden to the big business. So, one should be too surprised if the government is finally persuaded by this lobby.

This sector had made huge profits over so many years. It can always draw on these profits to meet the challenges of the so-called Ã¢â¬ËunfavourableÃ¢â¬â¢ markets of today and also use these resources to start the much delayed value addition in the textile products.

The government should also take a fresh look at its industrial policy which today is focused only on automobile, textile, cement and white goods which so far have failed to produce exportable surpluses except the textile sub-sector which too is only producing exportable surpluses in low-end products only. And despite the concessions and incentives offered to the manufacturing sector in the last seven years, it is showing a declining trend with the last year recording a growth rate of nine against the target of 15 per cent and an achievement of over 27 per cent in the previous year. And agriculture in the last year grew at only 2.5 against a target of 4.2 per cent. On the other hand, the availability of water, gas and electricity is relatively much more uncertain in Pakistan than in other regional countries.

So, we need an industrial and agricultural policy that would ensure adequate supplies of required inputs at economical costs so that enough exportable surpluses of good quality and with higher value addition are made available to achieve exports to the tune of at least 15 per cent of the GDP in the short term. Otherwise, the rising trend in the growth rate of exports is likely to reverse in the coming years.


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## Neo

*Making industry globally competitive*

By Noor Fatima

THE authorities took a number of steps to improve macro-economic stability that included market reforms and structural adjustments during the decade of 1990s.

While the economy has grown at a robust pace for the past four years, as result of these reforms and favourable exogenous shocks, there are a number of impediments in building up a competitive economy and the industrial production structure needs to undergo considerable changes.

The World Economic ForumÃ¢â¬â¢s (WEF) three indices (macro-economic conditions, public institution, and technology) present an yearly report of competitiveness of economy of 117 countries. In the Global Growth Competitiveness Index-2005, PakistanÃ¢â¬â¢s position is at 94 and its regional vis-ÃÂ -vis other competitors are shown in the following chart. 

The ranking in the business competitiveness shows Pakistan at 66 out of 116 countries in 2005. This explains the strengths and weakness of its business environment, trade and stabilisation policies.

On the one side, its economy shows strong recovery for the last two years but on the other side, it is still fragile keeping in view the international competitiveness capacity.

Though the Medium Term Development Framework (MTDF) 2005-10 envisaged a strategy to move towards an efficient, balanced, internationally competitive, environmental- friendly and technologically-driven knowledge economy, one can look forward to PakistanÃ¢â¬â¢s pursuits for competitive economy but with a great doubt.

PakistanÃ¢â¬â¢s main competitive disadvantages are evident form long history of macro-economic instability, high public deficit particularly in 1990s and inflationary pressure, which ultimately effected the GDP growth and poverty incidence negatively. To foster competitiveness, economic growth, poverty reduction and private enterprises, a domestic predictable business environment is required to improve the level of investment.

The World BankÃ¢â¬â¢s Doing Business indicators show that cost of investment is still very high as compared to other regional countries and with regard to cost of contract enforcement.

Pakistan is still lagging behind the other competitors. The major element that can undermine the growth pace is the low level of investment which stands only 17 per cent share of GDP. This is lowest in the region as compared to 24 per cent share of GDP for India, 19 per cent of Bangladesh and 38 per cent of China.

The Wold Bank study finds that much remains to be done to move towards a path towards sustainable economic growth. The main concern is the industrial sector and exports of low-value added products, mainly in the textile and clothing sectors. It also emphasised competitive labour market in terms of enhancing the economyÃ¢â¬â¢s technical capacities or improving the skills of the labour force.

The skill gap is considered an important element for underpinning the growth pace. In the UNIDO (2002) report, Pakistan ranks below all the regional countries and does not perform well by even regional standards. As per international competitiveness skill index, Pakistan is at 75. With such constrains of skill development, poor quality of vocational training available for management and workers, the firms are not investing in human capital.

The Higher Education Commission is trying to increase spending on education from four to eight per cent of the GDP by 2010 with major focus on science and engineering graduates. But to move towards a competitive economy to attract foreign investment, and to reduce transaction cost, there is a need to address the skill gap and low labour productivity on a priority basis.


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## Neo

*Livestock reduces poverty*

By Murtaz-ul-Hasan & M. Abbas Aziz

THE share of crops in value-addition in agriculture has gradually declined from 65.1 per cent in 1990-91 to 47.5 per cent in 2005-06, while the share of livestock has increased from 29.8 to 49.6 per cent. Livestock contributes almost 10 per cent of overall export earnings.

The livestock sector posted a steady growth of around five per cent in the last decade. However, the growth slowed down to 2.6 per cent in 2003-04 and 2.3 per cent in 2004-05 but it shot up to eight per cent during 2005-06.

Within this sector, milk is the largest and the single most important commodity. Despite decades of neglect, Pakistan is the 5th largest milk producer in the world. The total value of milk produced is higher than the value of two major crops, that is, wheat and cotton.

With 35 million people engaged, the role of livestock in rural economy is critical. On an average each family holds about 2-3 cattle/buffalo and 3-4 sheep/goats and derives 30 to 40 per cent of its income from it. The most effective means of alleviating poverty is introducing measures that target the poor directly. The livestock sector has close links with poverty reduction.

Livestock production is one important enterprise in which small scale rural producers can successfully engage to improve their livelihood and obtain a relatively constant stream of income thus moving from subsistence to market orientation. However, low productivity has added to income inequalities of livestock farmers. The majority of poor households, especially landless or small landowners, depend on livestock for income.

The role of women as providers of labour is important. Pakistani rural woman spends between one-fifth and one-quarter of her working hours in livestock related activities; the grazing and watering of animals, the sale of products to agents, and the care of sick animals. In cleaning animals and caring for sick ones, the work of both sexes is approximately the same. Women are exclusively responsible for cleaning sheds, manure collection, egg collection and selling produce to villagers.

An effective way of increasing the protein intake of poor is by enhancing livestock production. Another approach is to create higher demand for labour and services provided by the poor. The spill-over effects from such growth is limited because large-scale livestock production tends to be capital and energy intensive as opposed to labour-intensive. Growth in large-scale commercial sector is unlikely to generate additional employment opportunities for the rural poor.

A preferred approach is to make best use of labour-intensive innovations that make use of surplus family labour and, to a lesser extent, create some local employment opportunities for non-family members. In rural areas farming, livestock, and non-farm activities are major sources of employment and income. The incidence of poverty is higher for those who depend solely on livestock and lower for those who have both crop farming and livestock activities. The majority of non-poor depends on crops while the poor on livestock.

Although, the economics of livestock production is heavily distorted in favour of large-scale producers, yet this sector has enormous potential to combat poverty and strengthen economic growth. Its projected growth in livestock offers a unique opportunity; a rapidly growing market of which many rural people already have the experience and which they can enter without the need for substantial resources and training. Enhancing production doesnÃ¢â¬â¢t offer a universal solution to rural poverty but for many it represents a practical way to build assets and financial security. Livestock development is imperative for strengthening of the national economy as it has full potential for job creation, meeting food requirements and taking a very active part in export drive in globalization.

PakistanÃ¢â¬â¢s share in world milk production (five per cent) is double its share in global population. The increase in production recorded so far is largely due to rise in number of animals rather than an increase in per dairy animal yield.

International comparison shows that the productivity (annual yield per dairy animal) of New Zealand dairy animals is three times the Pakistan average. This difference is due to a variety of reasons that include better genetics and technology, animal health services, proper nutrition and etc.

Unabated increase in animal population may not be a solution. The appropriate way to go forward is through increases in yield and not number through better genetic technology, animal healthcare and more nourishing feed for livestock. This strategy can help the low-income groups in procuring sustainable livelihoods in rural and peri-urban areas.

Another area which needs attention is to improve and extend veterinary services to village level. Production of green fodder should be increased by growing high yielding varieties and following improved agronomic practices. The animal herders at village level should be educated to use urea and molasses with roughages for improved nutritive value.

The depleted range lands in desert, arid and semi-arid regions should be improved by adopting well-established technology for each region. Scattered livestock herders should be organized on community basis. Arrangements should be made to collect and take milk to the nearest centre for chilling before transporting the same to a processing plant.

The village organizations should be provided advisory services and training for better management of their animals by improving their breeds, feed, and health. Necessary veterinary services should be provided at grassroots level, besides improving their marketing system.

Since the livelihood profiles and productivity patterns of the large, landless community of livestock owners and the other community of landed livestock owners are different, it is desirable to follow of nuanced and different strategies for the two communities.


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## Neo

*Pakistan lowest in region in mutual funds investment *

KARACHI (October 10 2006): Pakistan's asset management industry has blossomed in the last few years, providing investors many ways to diversify their current investment portfolios and seek higher returns.

Pakistan, as compared to other emerging and non-emerging economies, ranks among the lowest with regard to investment in mutual funds instead of much potential and high return rates.

Analysts at the mutual fund industry said that in Pakistan, the investment ratio as percentage of bank deposits currently stands at a mere 5 percent as compared to India's 20 percent and developed economies at 90 percent plus level. There are currently 28 asset management companies to choose from, which offer both open and closed end schemes.

Equity funds pose a different scenario, as the returns are volatile. In this case, it is needed to look at how the KSE 100 Index performed during the period of performance in question, as that is the benchmark of performance for investors in the stock market.

According to a research report, AKD Opportunity Fund has topped the list in the open end (Equity) category with an approximate return of 8.93 percent during the period from July 1 to September 30, 2006, followed by NIT, which has also appreciated by 8.58 percent. These two funds have actually provided the best return among all asset classes. AKD Opportunity Fund's return of 8.9 percent beats the KSE 100 index's performance for the same period, which was 5.2 percent, followed by an impressive return of 8.6 percent by NIT. UTP A30+ Fund came in third with a return of 7.53 percent, interestingly this is an index fund.

As for as the closed end category is concerned the Golden Arrow Selected Stock Fund has outperformed the competition by providing a return of 6.6 percent in the first quarter of FY 2007. In second place is the AKD Index Tracker Fund, giving a return of 5.4 percent.

The top two performers in closed end funds (Golden Arrow Selected Stock Fund Limited and AKD Index Tracker Fund) and the top performing open-end fund (AKD Opportunity Fund) happen to be managed by AKD Investment Management Limited.

Interestingly, out of the 20 equity funds reviewed during this period, only 6 funds in fact outperformed the KSE-100 and two of them are index funds, hence, proving the point that very few Fund Managers successfully manage to consistently beat the performance of the KSE 100 Benchmark Index.

In order to understand how this impressive return was achieved by AKD Investment Management, the Chief Executive Officer of AKDIML, Faisal Bengali, stated: "We have outperformed the KSE 100 index and our competition due to our strict investment discipline. We conduct deep fundamental analysis of sectors and stocks and conduct a regional comparative study to ensure we invest in undervalued, high quality stocks, showing growth potential. Our execution is assisted by our technical analysis of the market and key financial ratios."

On the fixed income side, this quarter of the 8 income funds it is observed that essentially the returns of fixed income funds do not really differ from one another, ie the best performing fixed income fund for the period was Atlas Income Fund with an appreciation of approximately 2.96 percent, followed by Askari Income Fund at 2.95 percent.

Looking at the range of NAV appreciation in this category it is seen that it starts from around 2.50 percent to 2.96 percent, thus also proving that the fixed income market still does not have much depth, an illiquid secondary market and limited investment options have resulted in most fixed income funds being managed more or less the same and the returns are at best 150-200 bps above 6-month KIBOR.

The performance of top five open-end income funds is: Atlas Income Fund 2.96 percent; Askari Income Fund Class B 2.95 percent; Faysal Income and Growth Fund 2.93 percent; AMZ Plus Income Fund 2.77 percent; and UTP Income Fund 2.55 percent.


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## Neo

*'Efforts on to pass economic benefits to masses' *

RAWALPINDI (October 10 2006): Pakistan has attained economic stability due to consistency of its economic policies and efforts are being made to pass on the fruits of economic stability to the masses, said Sardar Muhammad Yaqub, Deputy Speaker of National Assembly here on Monday.

He was addressing the inaugural ceremony of a painting exhibition of Mariya Minhas at Rawalpindi Arts Council (RAC). Yaqub said that President Musharraf and Prime Minister Shaukat Aziz have highlighted the soft image of the country abroad.

Talking about relief, rehabilitation and reconstruction activities in quake-hit areas, he said that the country had marked the first anniversary of devastating October 8, 2005 earthquake, which had destroyed various parts of NWFP and AJK. "We once again stood united in this hour of need and the whole nation reaffirmed its pledge to use all out efforts for rehabilitation of the affected people," he added.

He said that President Musharraf and Prime Minister Shaukat Aziz had announced numerous relief packages for the affected people in AJK and NWFP and government would make sure the immediate implementation on these announcements.


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## Neo

*Plan prepared to set up five hydel power projects *

SIALKOT (October 09 2006): Punjab government has prepared an action plan for the setting up five hydel generation projects in various areas of the province. Official sources told Business Recorder here on Sunday that under the programme the proposed hydel generation projects would be established in Sialkot, Gujranwala, Sheikhupura, Okara and Pakpattan.

The programme would be undertaken with the financial assistance of Asian Development Bank (ADB) for producing 25-megawatt electricity.

After a detailed survey as many as 48 sites had been identified at various canals where hydel power projects of 500 megawatts would be established in Punjab. The step taken by the government would not only help provision of low cost electricity to the masses but would leave a positive impact on industrial and agriculture sector in Punjab.

In addition to this the government was also making efforts for generating energy from thermal, solar and other sources and in this regard many steps had already been taken by the government. The work on hydropower projects would undertaken in near future sources added.


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## Neo

*MCB GDR receives enormous response*

KARACHI, Oct 9: MCB Bank Limited (MCB) that has set out to raise around $100 to $150 million in fresh equity from international market in the form of Global Depository Receipt (GDR) has received warm investor response.

The GDR, which is the first in last 10 years by a Pakistani company, is to be listed on the London Stock Exchange.

Market sources said on Monday that subscription/commitment amounting to over $500 million had already been booked. A consortium of Merrill Lynch and KASB had been mandated to place the issue with institutional and retail investors outside Pakistan. MCB - acquired by the Nishat Group in a privatisation deal in 1991 - had first disclosed its plans to sell GDRs on July 3.

The bank officials had previously mentioned approximate Ã¢â¬ËpricingÃ¢â¬â¢ date to be decided on Oct 9, but the market players with an eye on the developments said that Ã¢â¬ËpricingÃ¢â¬â¢ could not be ascertained till the evening on Monday (Oct 9).

Senior bank officials were mostly participating in roadshows currently underway in Dubai, Singapore, London, Hong Kong, Boston, New York, San Francisco and Amsterdam. The shows had begun on Sept 25.

Banking sector analysts estimated that at the size of the issue ($100-$150 million) the GDR would increase bankÃ¢â¬â¢s paid-up capital by five per cent (one GDR equals four ordinary shares) and would account for an inflow of Rs9 billion. Increased equity will either facilitate the bank to acquire a small local bank or expand its domestic and overseas branch network.

Analysts said that much of the huge foreign portfolio investment this year had gone into the countryÃ¢â¬â¢s banking sector, because of the sectorÃ¢â¬â¢s high earnings growth. Listed banksÃ¢â¬â¢ earnings soared by 99pc to reach Rs47.5bn ($790m) in the last calendar year 2005. The momentum had continued during the current year with earnings growth of 68 per cent in the 1H2006.

A stock pundit observed that encouraging response to the MCB GDR offering would embolden the government to go ahead with its long contemplated plans to sell GDRs in OGDC; NBP; Kapco and others.


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## Neo

*US asks Pakistan to consult Afghanistan on ROZs*

ISLAMABAD, Oct 9: The United States has asked Pakistan to consult Afghanistan on the establishment of proposed reconstruction opportunity zones (ROZs) in the economically deprived areas on both sides of Pakistan-Afghan border.

Well-placed sources told Dawn on Monday that the direction came from the US side during the recent visit of top USTR official delegation that met Pakistani officials as part of the Pakistan-US Council under the Trade and Investment Framework Agreement (TIFA).

"The government of Pakistan has formally agreed to consult with Afghanistan on ROZs in the meeting," a source privy to the meeting told Dawn. However, the sources said the USTR officials were already in contact with the Afghan officials on the establishment of the proposed ROZs in Afghanistan.

US President George W. Bush had accepted the Pakistani proposal of ROZs in his last visit to Pakistan. Mr Bush had announced that the trade zones established in the remote areas (tribal and border) would get duty free access on goods exported to the US market.

However, it was not clear at the time of the announcement of the facility that Pakistan would share these zones with Afghanistan, the sources added. Pakistan initially proposed 20 districts for the establishment of ROZs.

The sources said that leading Pakistani businessmen who were invited to the meeting with the USTR delegation had also showed their unwillingness to share these zones with Afghanistan. They were of the opinion that Afghanistan had no infrastructure or other expertise in the field, so it would not be advisable to go for the joint venture with them.

The businessmen have demanded that these ROZs should be located in some settle areas for its economic viability and longer life to provide employment to greater number of people, added the sources.

The sources said the USTR delegation had categorically conveyed to the Pakistani delegation that the Congress would give authorisation for the ROZs only when the same facility would be allowed for Afghanistan. This would be on the pattern of the US facility of the qualified industrial zones (QIZs) mandated into law by the Congress only for Israel and Jordan.

Currently, the US technical teams were visiting various part of the country to interact with different stakeholders to finalise their recommendations regarding areas for the proposed ROZs, list of items and other procedures.


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## Neo

*Expansion in scope of Rozgar scheme likely*

KARACHI, Oct 9: National Bank of Pakistan has indicated possible changes in the Ã¢â¬ËRozgar SchemeÃ¢â¬â¢ by way of expansion and inclusion of new trades and areas and also by way of enhancement to benefit the largest number of Ã¢â¬Ågenuine and legitimateÃ¢â¬Â educated unemployed.

Responding to a news report published on the Rozgar Scheme on October 6 issue of Dawn, the NBP management asserted that four weeks time was not sufficient to determine the success or failure of any scheme. Ã¢â¬ÅThe product is in the test or in a learning phase and will take time to generate pace,Ã¢â¬Â a senior executive of National Bank explained the slow movement in receipt and processing of the loan applications.

The Rozgar scheme was announced in the 2006-07 budget in June and was formally launched on September 6 by President Gen Musharraf who promised to reach 2.5m jobless and educated young men and women with Rs100bn loans in next five years.

Since its launching on September 6, the National Bank reported distribution of more than 292,000 loan application forms in all parts of the country by first week of October of which 231 were received by the bank.

The NBP statement reports approval of 20 cases by October 5 that include 5 in Dera Ismail Khan, 8 in Peshawar, 4 in Gujrat and one each in Jhang, Jehlum and Lahore Central.

The NBP officers were, however, not sure if the successful loan applicants have been given rickshaws, grocery items by the Utility Store or telephone instruments have been installed.

Under the scheme, that offers loan up to Rs200,000, there is no provision for cash but either a CNG driven four stroke Chinese made rickshaw is offered, a franchise of utility store with grocery items are offered or a telephone instrument is installed.

The NBP has set up a comprehensive Complaint Centre at the head office where complaints are received directly by any loan applicant. The complaint is handled by a senior officer in the head office who is in touch with 143 designated NBP branches. Ã¢â¬ÅBased on the feedback we receive directly from these call centres, we can make changes in the Rozgar scheme,Ã¢â¬Â a senior executive explained.

As he explained, every bank product takes time to generate pace. He quoted the example of NBP Advance salary scheme under which Rs80bn loans have been given to 1.1m borrowers in last three years. Ã¢â¬ÅOnly a handful loans were distributed in the initial phase of four months,Ã¢â¬Â he said.

He questioned the assertion that NBP was creating hurdles in the smooth implementation of the scheme. He said that the NBP has hired the services of ICIL for verification of the names addresses and telephones. The ICIL too said that Rozgar scheme was a well structured and planned product for which the NBP was striving to reach the genuine borrower.


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## Neo

Tuesday, October 10, 2006 

*WB, ADB suggest total autonomy for CAA*

By Sajid Chaudhry

ISLAMABAD: The World Bank, Asian Development Bank (ADB) and aviation industry have proposed to the government to grant total autonomy to the Civil Aviation Authority (CAA) by making it independent of the ministry of defence, the Daily Times has learnt. 

On the proposed National Aviation Policy, the ADB has proposed that the CAA should act as regulator independent of the ministry of defence. The National Aviation Policy contents should be clearly spelt out, benchmarking is required, human resource development (HRD) is required and training for airport operations should be made part of the policy. The impact of the decentralization should be indicated clearly. 

The World Bank has proposed to the government that restructuring of the CAA should include a separate regulatory and air traffic control body for proper implementation of the new aviation policy of the country. 

The ADB made these suggestions at a consultative meeting on the proposed National Aviation Policy (NAP) 2006. The consultative meeting, presided over by Dr Akram Sheikh, Deputy Chairman of the Planning Commission, was informed that the this meeting was convened pursuant to the decision of Prime Minister Shaukat Aziz at a meeting on the National Trade Corridor, that the draft National Aviation Policy should be discussed with all stakeholders at the national level under the National Trade Corridor (NTC) Task Force. 

The National Aviation Policy is an important document with significant emphasis on PakistanÃ¢â¬â¢s aviation sector in the years ahead. The purpose of the meeting was to discuss the current draft of the policy to further develop and refine it to create an environment conducive to the aviation industry.

The ministry of communications has also proposed to the government that the role of CAA should be clearly defined in the National Aviation Policy and to gauge the efficiency of CAA, benchmarking of its tasks is required. 

The Planning and Development Division has also supported this idea and has proposed that benchmarking of all civil aviation operations (charges, services, safety) vis-ÃÂ -vis best international practices be carried out and made part of the proposed policy. 

Shaheen Airport Services has suggested to the government that the National Aviation Policy rationalize the role of CAA independent of the ministry of defence to run it on commercial lines. 

The Royal Aeronautical Society of Pakistan and Shaheen Airline during the consultation on the National Aviation Policy recommended that the government, in consultation with all stakeholders, should consider restructuring of the CAA so that its current functions of safety and economic regulation and airport infrastructure development can be carried out effectively in a professional manner. There is a need to have an independent organization to focus on and professionally manage safety regulation, economic regulation and airport infrastructure development. The government should ensure the writ of the restructured CAA. 

The Federation of Pakistan Chamber of Commerce and Industry (FPCCI) has pointed out that the CAA is now performing multiple functions, including that of regulator, investigator and commercial organization. The FPCCI has proposed to the government that role of the CAA should be limited to that of a regulator only.


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## Neo

Tuesday, October 10, 2006 

*Spain invited to bid for high speed train in Pakistan: Rashid *

ISLAMABAD: A high-speed train will be introduced between Rawalpindi and Lahore in one year that is estimated to run at the speed of 250-300 kilometres per hour, said Railway Minister Sheikh Rashid Ahmed on Monday. 

He was talking to Spanish Ambassador Jose Maria Robles. 

The minister invited Spanish firms to participate in the feasibility and later on the construction of this high-speed track.

He said the Pakistan Railways would initiate metro service in eight major cities of the country with a population of over two million. In this regard, he said feasibility studies in Karachi, Lahore and Rawalpindi/Islamabad have been initiated and are expected to be finalized within six months.

Mr Rashid told the ambassador that a mass-transit authority has been established in this respect. He said Spain having rich experience in metro service will be encouraged to join the Pakistan Railways in independent capacity or joint ventures in metro service.

Mr Rashid told Mr Robles that the Pakistan Railways is interested in the modern technology of Spain in terms of locomotives, signalling system, passenger and freight coaches and laying of railway track to bring improvement in the railway network and operations.

He said execution of work on doubling of rail track on Khanewal-Lahore (270 kms) section has been started, which will be completed in one year.

The minister said special attention is being given to freight service as it is the major source of earnings for the Pakistan Railways. "Now 900 freight coaches are plying the tracks and we have fixed a target of 1,000, and the number of freight trains will be increased to 14 from the existing 10", he added. Mr Rashid sought SpainÃ¢â¬â¢s cooperation in manufacturing locomotives, passenger and freight coaches. Keeping in view the rising economy of Pakistan the load of freight movement has increased manifold and to cope with this emerging and projected situation in term of goods transport, the Pakistan Railways needs locomotives and freight coaches, Mr Rashid said.


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## Neo

*State of the Art technology must for identifying new mineral deposits, says Jadoon *
Tuesday October 10, 2006


ISLAMABAD: Federal Minister for Petroleum and Natural Resources Amanullah Khan Jadoon on Monday said that application of state of the art-technology was must for identifying and exploring new mineral deposits in the country. 
He expressed these views while addressing over a high level meeting to review the mineral sector?s goals here on Monday. Minister of State for Petroleum and Natural Resources Mir Muhammad Naseer Mangal and Secretary Petroleum Ahmad Waqar also attended the meeting. 

The Minister said that the country was endowed with vast deposits of coal, copper, lead Zinc and other precious metallic and non-metallic potential. 

He underlined the need to accelerate the pace of mineral exploration activities aimed at increasing its share in the growth of national economy. 

Jadoon said that the Geological Survey of Pakistan (GSP) should gear up its activities for updating geological mapping and seismic data as early as possible that could provide geological information about new mineral deposits and its quality. 

DG, GSP Talib Hussain Mirza in his detailed presentation informed the meeting that 50 per cent task of geological mapping had been carried out and 48,000 sq.km. areas for mapping and 18,000 sq.km. for geo-chemical exploration were to be covered under accelerated geological project. 

He said that availability of geological maps and related data of mineral potential would attract investment in the country. 

The DG said that evaluation of iron and associated base metals in Punjab and NWFP, exploration of massive sulphides in Uthal and Lasbella districts and tertiary coal in central salt range in Punjab were in progress. 

He said that efforts were underway for airborne geo-physical survey for identification of mineral potential areas of Pakistan.


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## Neo

*High speed train to be launched between Rawalpindi-Lahore: Rashid *
Tuesday October 10, 2006

ISLAMABAD: Federal Minister for Railways Sheikh Rashid Ahmad on Monday said that Pakistan would introduce high speed train between Rawalpindi and Lahore in one year that will have a speed of 250-300 km/hour. 
He said this while talking to Spanish Ambassador Jose Maria Robles who called on him in the ministry of railways. 

The Minister invited Spanish firms to participate in the feasibility and later on construction of this high speed track, the first ever adventure in South Asia. 

He said that Pakistan Railways would initiate metro service in 8 major cities of Pakistan having population over 2 million. 

The process of feasibility studies in Karachi, Lahore and Islamabad/Rawalpindi has been initiated which is expected to be finalized within six months. 

The Minster told that Spain having rich experience in metro service in encouraged to join Pakistan Railways in independent capacity or joint ventures in metro service. 

Sheikh Rashid informed Robles that Pakistan Railways was keenly interested to avail the modern technology of Spain in terms of locomotives, signaling system, passenger and freight coaches and lying of rail track in order to bring over all improvement in Railway network and operators. 

He said that execution of work on doubling of rail track on Khenewal-Lahore (270 Kms) section has been started, which will be completed in one year. 

The completion of project would also bring a revolutionary change in the culture of Pakistan Railways not by improving train timings but also passengers dependency. 

The minister said that special attention was being focused on freight service being major source of earning for Pakistan Railways. 

"Presently 900 freight coaches are plying on tracks and we have fixed the target of increasing the number to 1000 while freight trains would be increased to 14 from 10," he added. 

He asked for Spain cooperation in manufacturing of locomotives and passenger and freight coaches. 

"Keeping in view the rising economy of Pakistan the load of freight movement has increased manifold and to cope with this emerging and projected situation in term of goods transportation, Pakistan Railway directly needed locomotives and freight coaches," he concluded.


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## Owais

*CBR opposes new exemptions to aviation industry *


ISLAMABAD (October 11 2006): The Central Board of Revenue (CBR) has opposed any new exemption/concession of duties and taxes to the aviation industry, particularly the flying schools, and chartered planes under the proposed National Aviation Policy (NAP) 2006.

Sources told Business Recorder on Tuesday that the tax officials have submitted their comments on NAP, keeping in view the exemptions given in the 2006-07 budget.

The CBR has drafted recommendations on the directive of Prime Minister Shaukat Aziz in a meeting in connection with the National Trade Corridor, which decided to discuss the draft National Aviation Policy with all stakeholders to create an environment conducive for the aviation industry.

The CBR is of the view that since adequate exemptions are already in place, any extension therein is not supported under the National Aviation Policy, sources said. According to the Board, presently, exemption from sales tax is available for aircraft (not helicopters) spare parts, if imported by domestic airline for maintenance of planes.

Exemption of customs duty and sales tax is also available on import of aircraft spares, parts, tyres, navigational equipment, accessories for maintenance and operations of aircraft, chemicals, lubricants and paints, air tickets, aircraft carpet, aircraft fabric, skydrol (brake fluid), laminated sheet, aluminum alloy sheets, aluminum alloy extrusions, aircraft seats, tools, test equipment, life jackets, spares of TGS vehicle, meals trolley, ball hand seal, standard units, exterior washing liquid, air head set electronics, air head set pneumatic and sealants. The items should also be imported by domestic airlines for maintenance of their aircraft.

Sources said that the said exemptions are linked with the commercial activity for general public. Therefore, extension of exemption for exclusive use eg flying schools, chartered planes is not supported by the Board.

They said that unconditional exemption has been granted to planes and other aircraft covered under the Sales Tax Act, 1990. However, helicopters, having only insignificant share in the local aviation sector, cannot be extended the same exemption.

Previously, exemption of sales tax under the Sixth Schedule of Sales Tax Act, 1990 was applicable on imported aircraft having un-laden weight of 8000 kg or more. Generally, commercial airlines hold aircraft above 8000 kg whereas General Aviation Operators use aircraft below 8000 kg. In order to promote the aviation industry, all types of aircraft have been exempted from levy of sales tax by including the same in the Sixth Schedule of Sales Tax Act, 1990.

According to CBR, flight simulator software is already exempt from sales tax levy, while publications and manuals, too, are exempted from sales tax. The Board said that elimination/reimbursement of taxes on secondary routes would be discriminatory and would cause distortion in the local air travel market.

All plants, machinery, equipment (whether or not locally manufactured) is already zero-rated from sales tax purpose and aviation related items are also exempted from sales tax. The Board has already given a number of exemptions to the aviation sector and further exemptions would not be appropriate in this regard.


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## Owais

*Oil and gas sector reforms: World Bank assures continued assistance *


ISLAMABAD (October 11 2006): The World Bank fully supports Pakistan government's petroleum sector reforms and would continue to provide assistance in realising the full benefits of oil and gas sector liberalisation and reforms, a spokesman of the WB said here on Tuesday.

He said that the government of Pakistan has undertaken a deregulation and reform programme in the past seven years and the World Bank has been an active partner in this endeavour and upon government request, it has provided technical assistance and advisory support in liberalising the sector.

He said that these reforms have helped in achieving: 

(a) An enhanced level of Exploration and Production activity, resulting in a number of new gas discoveries which enabled domestic gas production to increase by about 50 percent from about 2.4 to 3.6 billion cubic feet per day.

(b) A transparent Gas pricing framework - linking producer prices with consumer tariffs - has been implemented. This has enabled gas companies to plan and undertake investments to transmit the increased volume of gas to consumers.

(c) Petroleum downstream market has been deregulated, with fuel oil, diesel and LPG prices determined entirely by the market. For other products, prices were pegged to international prices and adjusted periodically. Due to the unprecedented hike in international oil prices, this process has been interrupted in recent months.

(d) Oil and Gas Regulatory Authority (OGRA) has been established, which oversees the operation of the sector and arbiters the conflicting interests of different stakeholders (consumers, investors, government etc).

(e) Improved product specifications have been introduced in the market (lead-free petrol, low sulfur diesel, etc) and natural gas as cleaner fuel has replaced liquid fuels in the automotive and power generation sectors.

The spokesman said that there is still an unfinished agenda and reform measures in a number of areas are still pending. "The government has adopted a step-by-step approach towards the implementation of these measures so as to make these sustainable", he added.

He said that the World Bank (WB) would continue to provide assistance to realise the full benefits of oil and gas liberalisation and reforms programme.


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## Owais

*50 percent equity term waived for sugar mills loans *


ISLAMABAD (October 10 2006): The government on Monday waived off the condition for the sugar industry of 50 percent equity for financing from banks, and agreed that a directive would be issued as a follow-up of Monday's meeting between the secretaries' committee and Pakistan Sugar Mills Association (PSMA) held in Lahore.

The official side told PSMA representatives that the government would issue a directive to the SBP to ensure that banks provide financing to the sugar industry without any undue condition. The 'waiver' was one of Pakistan Sugar Mills Association (PSMA) demands to start crushing operation 2006-07.

However, the government team turned down PSMA demand for barring Trading Corporation of Pakistan (TCP) from offloading its stocks in bulk and made it clear that TCP would stay in the market to ensure that sugar prices remain at a reasonable level.

Other decisions of the meetings were that PSMA would cooperate with the government to ensure smooth supply of sugar in the market so that prices do not cross a reasonable level. Secondly, the industry would make prompt payments of the produce to the growers, and thirdly, the government would safeguard the sugar industry through a tariff-based regime to check dumping of sugar in the market.

The crushing operation in Sindh will start from November 1, 2006, and in Punjab and NWFP from November 15. This was decided in a meeting held here on Monday between Secretaries Committee and representatives of Pakistan Sugar Mills Association (PSMA). Federal Secretary Food and Agriculture Ismael Qureshi, Secretary Industries Kamran Rasool, Secretary Minfal Haroon Akthar, Cane Commissioner, Punjab, Abdul Ghafoor Bhatti, and President, Pakistan Sugar Mills Association (PSMA) Zaka Ashraf attended the meeting.

Briefing media persons after the meeting, Ismael Qureshi said that sugarcane price has been fixed as Rs 60 per 40 kg for Punjab, Rs 67 for Sindh, and Rs 65 for NWFP.

He ruled out any possibility of increase in sugar prices. He said that the country has sufficient sugar stocks and at present, 0.6 to 0.7 million tons sugar is available with the Trading Corporation of Pakistan. The duty on sugar dumping would stay. However, TCP would play its due role to maintain sugar prices in the country, he added.

He said that last year the cane price in Punjab was Rs 45 per 40 kg, but now it has been increased to Rs 60, which would benefit the farmers. He said that draft amendment in 'Pesticides Act' aimed at checking adulteration in pesticides had been prepared and it would and be placed before the Cabinet soon. The Secretary said that 'Cotton Vision' policy was in its final stage of preparation and it would soon be announced.


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## Owais

*AJK government to launch Rs 90 million uplift projects *


MIRPUR (October 11 2006): Azad Jammu and Kashmir government has evolved an integrated plan launching a number of uplift schemes to ameliorate the life of common man, official sources said.

Sources told APP here on Tuesday that the schemes includes Rs 90 million projects of the construction and carpeting of about 80 km long roads in all three districts of Mirpur division by the end of current financial year. The construction work on over 24 kilometres of main and link roads has so far completed and work on 23 km of roads is near completion.

Under the social sector uplift programme, colossal funds have been allocated for uplift schemes for each of the four constituencies of Kotli, Bhimber and Mirpur district of Mirpur division. Similarly Rs 20 million has been earmarked in the Federal Presidential Fund for the areas falling in all the four electoral constituencies of the district. All the new projects will be completed by the end of ongoing financial year 2006-07, sources said.

The construction work on all these development projects will be completed in the stipulated period, the sources said. Sources further said that the AJK government has determined the priorities for the speedy progress of roads and electricity sectors in the division especially in Mirpur and the adjoining hamlets. Particular attention was being given to ensure the smooth and stable supply of electricity to the consumers in Mirpur and the adjoining hamlets - besides other parts of the division.

Referring to the upcoming Rs 62 billion Mangla Dam Raising Project, sources said that the gigantic project would usher in the new era of speedy progress and bringing about exceptional socio-economic uplift and prosperity in Azad Kashmir especially in Mirpur district. The AJK government has already chalked out a broad-based plan to electrify all the remaining parts of Azad Jammu Kashmir including remote and far flung areas by the end of year 2007.


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## Owais

*Pakistan's team in Beijing to hold talks on FTA *


BEIJING (October 10 2006): A nine-member high-level delegation from Pakistan arrived here on Monday morning to hold talks on Free Trade Agreement (FTA) with Chinese officials from October 10. The Secretary Commerce Syed Asif Shah is leading the delegation, while the other members comprise Joint Secretary, Ministry of Commerce Shahid Bashir.

He is also the chief negotiator, General Manager Board of Investment Riazul Haq, Teepu Mohabat Khan, Joint Secretary, Textile Ministry, Shujauddin, Additional Collector Customs, CBR, Naeem Anwer, Deputy Secretary Ministry of Commerce, besides representatives from Ministry of Food and Agriculture, Ministry of Industries and Special Initiatives.

The Vice Minister, Ministry of Commerce Yi Xiaozhun will lead the Chinese side. According to Dr Naeem Khan, Counsellor Commercial and Economic, Pakistan Embassy, this would be the fourth round of negotiations on FTA. He said that the talks on FTA would continue for next three-day.

Before, leaving for China, a senior official of the Commerce Ministry told APP in Islamabad that they were looking forward to expedite the negotiation process in order to complete it by the year end. The FTA will be a major step forward expanding the scope of import-export between the two friendly countries.

Both the countries enjoy most favourable environment to conclude a mutually beneficial agreement because of their excellent diplomatic relationship, the sources said, adding they are prepared to accommodate each other upholding their overall business interest.

FTA was raised at a time when such trade arrangements are becoming increasingly popular and the two countries have stepped up their efforts to strengthen their economic ties.

Pakistan pinned great hope on FTA, also for correcting its balance of trade position with China. Over past few years, China-Pakistan economic and trade relations have developed quickly. In 2005, bilateral trade reached US $4.26 billion, up by 39 percent as compared to 2004.

Trade between China and Pakistan amounted to US $1.018 billion in January to March this year, up by 42.3 percent as compared with the same period last year. By March 2006, contractual investment of China in Pakistan was US $100 million, turnover of overseas projects was US $6.9 billion.

Pakistan invested US $24.31 million in China in all. The enhancement of the bilateral ties reflects the political will of the two governments and also the aspiration of the two peoples, the sources said, adding that it serves the fundamental interests of two sides and is conducive to peace and prosperity in the region


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## Owais

*'Pak-Bangladesh FTA to be signed soon' *


KARACHI (October 10 2006): The outgoing Bangladesh Deputy High Commissioner, Muhammad Abdul Hanan, gave a clear call for more regional trade and hoped that Pak-BD FTA would be inked soon.

The Bangladesh deputy high commissioner, who paid a farewell visit to Karachi Chamber of Commerce and Industry (KCCI) President Majyd Aziz, said it should be understood that trade is not charity, but kit is in fact enlightened self-interest.

He said that Pakistani manufacturers should not consider their Bangladeshi counterparts as rivals but partners. This thinking would bring about a fundamental change and trust in them in the global world.

"Trade and bilateral relations between Karachi and Bangladesh business community grew considerably during my tenure as deputy high commissioner in Karachi and the credit goes primarily to the positive attitude of the Karachi Chamber", said Hannan.-PR


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## Owais

*SBP gets Rs7b at 8.30 interest rate *


KARACHI: State Bank of Pakistan today (Tuesday) got from the banks seven billion rupees for two days at 8.30 per cent interest rates through Open Market Operations.

The banks offered the central bank seven billion rupees for the purchase of treasury bills. Accepting all bids, State Bank absorbed all the money.

Yesterday, the central bank determined the target at Rs15 billion for the auction of three-month, six-month and twelve-month T-bills.

According to money market dealers, T-bills worth Rs33.2 billion are getting matured on Thursday. Accordingly, the auction target would be easily achieved.


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## Neo

*OGDCL eyes $1 billion profit in 2007 *


ISLAMABAD: October 11, 2006: The country's biggest listed firm Oil and Gas Development Co. Ltd. (OGDCL) expects its net profit to rise to $1 billion in the financial year to June 2007, a top company official said on Wednesday.

OGDCL, which produces 59 percent of the country's oil and 25 percent of its natural gas, earned a net profit 45.8 billion rupees ($755.3 million) in fiscal 2006.

"We expect that our profit would rise to $1 billion this year, and so we do not require any borrowing or any loans for our future investments," said Arshad Nasar, chairman and chief executive officer of OGDCL.

"We would be looking at new areas of exploration and would try to expand our canvas to contribute towards our profitability," he said at a media briefing.

The company plans to spend around $2 billion on new exploration ventures over the next three years, he said.

Nasar said OGDCL has set targets for the exploration drilling of 41 wells in the current financial year and added that the company is also planning to go for offshore drilling as well as overseas ventures.

"OGDCL, for the first time, is also planning to venture outside the geography of Pakistan," he said, adding that the company was looking at joint venture possibilities in Oman, Libya and other countries.

OGDCL has a market capitalisation of $9.63 billion and the government plans to list it on the London Stock Exchange through an issue of global depository receipts by December.


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## Neo

*MCB Bank raises $150 million through GDR *

KARACHI: October 11, 2006: MCB Bank Ltd. said on Wednesday it raised $150 million by issuing global depositary receipts in London.

"We are pleased to confirm that MCB Bank Limited has successfully raised $150 million through the issue of 8,622,100 GDRs," MCB, which ranks behind National Bank of Pakistan on the Karachi Stock Exchange, said in a statement to the exchange.

"Each GDR represents four underlying equity shares and will be listed on the London Stock Exchange," it said.

The private sector MCB Bank Ltd, formerly known as Muslim Commercial Bank Ltd, has an asset base of about $5.0 billion and a deposit base of over $3.8 billion.

MCB will be the first Pakistani company to be listed on the London Stock Exchange for trading on the Professional Securities Market, the company said.

The bank first announced its GDR plan in July and Merrill Lynch was its sole bookrunner.

At 0720 GMT, MCB Bank shares were trading 1.00 rupees down at 270.80 rupees in a broader market, which was down 0.22 percent. Pakistan is considering four more firms, including three banks, for foreign listings through the issuance of GDRs in the current fiscal year ending on June 30, 2007.

The government has already announced plans to list the Oil and Gas Development Co. Ltd. (OGDCL) on the London Stock Exchange by December.

The new companies on the list were National Bank of Pakistan (NBP), Habib Bank Ltd (HBL), United Bank Ltd (UBL) and Kot Addu Power Co. (KAPCO).

Analysts say the government is trying to attract foreign institutional investors to Pakistan through such issues at a time when its economy has been performing well.

Pakistan's economy grew by 6.6 percent in the year that ended on June 30, while the government is expecting 7 percent growth this year.


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## Neo

*Growth in car sales slowing down*

KARACHI, Oct 10: Sales of locally-assembled cars surged by 10 per cent to 40,044 units during the first quarter of this fiscal year as compared to 36,242 units the same period last year, but market pundits say the sales are showing slow growth over previous year owing to rising car financing rates.

According to figures compiled by Pakistan Automotive Manufacturers Association (PAMA), sales of Indus Motors (makers of Toyota and Daihatsu cars) rose by 48 per cent to 12,314 units as compared to 8,328 units while sales of Pak Suzuki Motor Company posted an increase of 21 per cent to 27,765 units from 22,978 units.

Sales of Honda Atlas Cars and Dewan Farooqui Motors Limited showed a negative growth which made an impact in the cumulative sales of all the assemblers. Honda sales fell by 43 per cent to 4,640 units from 8,184 units while sales of Dewan Motors dipped to 2,331 units from 3,102 units.

Ã¢â¬ÅThe growth in car sales has started dampening down as it had been growing in the range of 25-30 per cent in the previous years,Ã¢â¬Â observes Mohammad Suhail of Jehangir Siddiqui Research.

He attributed the slowdown in sales to rising car financing rates and the heavy import of used cars to fill up the demand and supply gap during the previous fiscal year.

The increase in interest rates had started making a negative impact on the sales of cars especially in higher engine capacity cars, he said, adding that it appeared penetration of cars in the Pakistani roads had reached a saturation point.

Also, there had been stability in the countryÃ¢â¬â¢s economic growth as compared to boom period in the previous year. Ã¢â¬ÅI think that sales will remain in double digits in coming months but it may not maintain pace of previous years,Ã¢â¬Â Sohail said.

Market analysts think that the bubble of imported used cars has burst as dealers are now offering these cars below the cost to clear the pile-up stocks of 30 per cent out of total import of over 45,000 units in 2005-06 that are still parked at showrooms.

Besides, poor re-sale value and problems in getting their parts have opened the eyes of the genuine buyers who had become wild for these cars without having any market knowledge.

In early months of last fiscal year, dealers had made windfall by selling used cars at higher rates in view of rising demand. Those dealers who had initially made quick money had sidelined themselves from this business now, while new entrants were facing problems and were suffering losses.

In locally-assembled cars only those cars bode well which enjoy good re-sale value, availability of parts at affordable rates and mostly available with factory fitted CNG in engine capacity of 800-1,000cc engines.

Honda cars are facing problems because of higher prices and it is not available in factory fitted CNG. HondaÃ¢â¬â¢s older models in the market have already lost both cash value and re-sale value.

Car market is abuzz with reports that Indus Motors is planning to launch Toyota Corolla XLI CNG in order to compete with Suzuki Liana CNG version.

However, Director Corporate Planning and Customer Relations of Indus Motors, Shah M. Saad Hussain said that the company currently did not have any plans to launch XLI CNG.


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## Neo

*Pakistan gains economic stability*

ISLAMABAD, Oct 10: With the successful implementation of first generation structural reforms and gaining economic stability, Pakistan entered international capital markets through the issuance of the debt instruments.

Ã¢â¬ÅPakistan has so far floated three sovereign bonds, the last one was floated on March 23, 2006,Ã¢â¬Â Dr Ashfaque Hassan Khan, Adviser Ministry of Finance told APP here on Tuesday.

He said that Pakistan successfully issued $500 million 10-year notes and $300 million 30-year bonds in the international debt capital market on March 23.

The adviser said that this transaction which represented the first international 144-A bond issued by Pakistan since 1999, raised significant interest among US institutional investors.

He further said that by issuing 10 and 30 years bonds Pakistan completed its primary objective of establishing a full Pakistani International yield curve in record time.

Dr Ashfaque said it was important to note that this offering was the largest ever funding exercise of the government.

He said the largest deal, prior to this transaction, had been the $600 million Sukuk or Islamic bond in 2005.

He said it was the longest ever tenor achieved by Pakistan.

He said that both the new 10-30 year offerings were debut offerings for Pakistan by dollar yield curve was extended out to 30 years in just two years time.

He said the most emerging markets sovereign issues had taken a longer time to extend their yield curve from five to 30 years .

The adviser said it took Philippines four years and Brazil and Turkey three years to extend their yields curve to 30 years.

Having established a relationship with global investors in the international capital markets, Pakistan has now decided to establish a relationship with Global Depository Receipts (GDR) offering for the best corporate assets namely OGDCL, NBP, UBL, HBL and Kapco with a listing on London Stock Exchange.

He added that this would be totally a new set of global investors who will be investing in the share of these scrips.

Dr Ashfaque said that many developed and developing countries had taken this route to showcase not only their country but also their best scrips.

This, he said, is a form of privatisation and there exists a strong relation between privatisation, economic success and Foreign Direct Investment (FDI).

Pakistan, he said has already on the radar screen of international capital market and with the GDR offering, it will also be on the radar screen of the international equity market.

He said that many international bonds had already started publishing research on PakistanÃ¢â¬â¢s economy and the most recent once include research from Union Bank of Switzerland (UBS), J.P Morgan and Deutsche Bank.Ã¢â¬âAPP


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## Neo

*More exports to Germany stressed*

KARACHI, Oct 10: There is a need to diversify Pakistani exports to Germany since 80 per cent of the trade is restricted to textile and leather.

Ã¢â¬ÅThe present trade regime of both Pakistan and Germany does not reflect the desired potential that is achievable,Ã¢â¬Â Hans-Joachim Kiderlen, Consul General of Germany, said this during his meeting with Majyd Aziz, President, and members of the Karachi Chamber of Commerce and Industry.

He said: Ã¢â¬ÅIndividual German businessmen are very satisfied with their business partners here and prefer to do business with those who have developed long-term relationships because of high quality and reliability of Pakistani entrepreneurs.Ã¢â¬Â

The German consul general was agreeable to the idea of a business-friendly visa system in the consulate as in his opinion genuine businessmen and their technical people should be given due consideration.

The German diplomat, who has been in Karachi for about a month, pointed out that there was a need to remove the `fixedÃ¢â¬â¢ mindset and perception that foreigners have of Karachi and said that it was very difficult to change overnight.

Majyd Aziz said efforts should be initiated to make trade and joint ventures more meaningful and profitable.


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## Neo

Wednesday, October 11, 2006 

*US help sought to improve industrial infrastructure*

By Sajid Chaudhry

ISLAMABAD: Pakistan has sought United States technical as well as financial support for broad based industrial development in Pakistan. 

In this regard the government of Pakistan has requested the US side to designate a team of experts for upgrading PakistanÃ¢â¬â¢s industrial infrastructure, a senior government official told Daily Times on Tuesday.

Pakistan side also proposed to designate the year 2008 as the year for Economic Relations with United States of America to promote business-to-business contact of private sector of both countries.

This request was placed before the US side during the second meeting of Trade and Investment Framework Agreement (TIFA) Council held at Islamabad last week. TIFA Council deliberated upon the steps for making environment more conducive to increase in trade and investment between the two countries. 

The official further informed that during the meeting, the Pakistan side informed the US team that following the successful example of work done by CEOs for earthquake relief, US President may designate a team of CEOs for upgrading PakistanÃ¢â¬â¢s industrial infrastructure.

Pakistan has proposed in this regard that the team of US CEOs can meet Pakistani counterparts and officials of government of Pakistan to discuss the regulatory environment and infrastructure constraints to generate interest among large number of US companies in PakistanÃ¢â¬â¢s economy and to promote Pakistan as investment destination all over United States. 

United States may support broad based industrial development in Pakistan. This would help meet long standing United States request for Pakistan to reduce its overwhelming reliance on textile and apparels in its export. US support for broad based industrial development will address issues at three levels: (a) across the industries (b) at individual industry or sector level and (c) at individual company level.

Pakistan has also proposed that this may not be a USAID programme, but government of Pakistan and individual beneficiary companies in Pakistan may meet all or part of expenses.

The official said that Pakistan side said that Pakistan wishes to designate the year 2008 as the year for Economic Relation with United States of America. During the year, Pakistan and USA may launch a large number of activities for promoting private sector contacts and alliances. 

The official was of the view that an inadequate industrial infrastructure is the main reason behind the slow progress in the industrialization of the country. Although the government of Pakistan has declared many areas as Export Processing Zones but majority of these EPZs are lacking even basic facilities like utilities and road network. Due to this state of affairs the country is facing difficulties in attracting direct foreign investment in manufacturing sector from the last many years. 

The US support, if made available, would play a vital role in meeting the deficiency of infrastructure in industrial sector and would enable the country to accommodate more investment in industrial sector. This would also help achieving rapid industrial development in Pakistan and create a good amount of employment opportunities in the manufacturing sector. United States is also negotiating establishment of Reconstruction Opportunities Zones in specific areas to reduce the poverty.


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## Neo

Wednesday, October 11, 2006 

*Worldcall Telecom earns about Rs 1 billion profit*

* Announces 15% bonus share g Board of directors recommends increasing companyÃ¢â¬â¢s authorised share capital to Rs 9b

KARACHI: The board of directors of Worldcall Telecom Limited has recommended a 15% bonus share issue for the shareholders, as the company in the financial year ended June 30, 2006, has posted a profit after tax of nearly a billion rupees. 

The company began operating in December 2004 and in seven months of the previous financial year had posted a Rs 19.2 million loss by June 30, 2005. However, in the financial year ended June 30, 2006, the company has managed to earn post-tax profit of Rs 947.6 million. 

Analysts pointed out topline growth as the major factor behind the fast improvement in gross profit that helped the company to post decent gains.

According to the financial results announced at the Karachi Stock Exchange (KSE) on Tuesday, net revenue of the company increased by 542 percent in the financial year ended June 30, 2006 against the net revenue of Rs 677.8 million in the previous financial year ended June 30, 2005.

The direct cost moved up by 339 percent to Rs 2.67 billion compared with Rs 607.83 million for the last seven months of previous financial year.

Gross profit of the company in the period under review increased by over 2,000 percent to Rs 1.6 billion compared with gross profit of Rs 70.02 million in the last fiscal year.

In the last financial year the company had managed to post operating profit of Rs 591.7 million compared with the Rs 21.4 million loss at the operating level in the previous financial year.

Worldcall Telecom earned pretax profit of Rs 1.18 billion in the financial year ended June 30, 2006 against the loss before taxation of Rs 31.9 million earned in the December-June period of the previous financial year.

Worldcall Telecom Limited remained the second in volume with trading of 20.27 million shares at the Karachi Stock Exchange and its share price closed at Rs 12.80 from Rs 12.20, after a gain of 60 paisas.

In order to facilitate the issue of bonus shares, the board of directors has also decided to increase the authorized share capital of the company from Rs 7,750 million to Rs 9,000 million, subject to the approval of the shareholders at the upcoming general meeting.


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## Neo

Wednesday, October 11, 2006 

*Ã¢â¬ËPakistan seeks to enter global equity marketÃ¢â¬â¢*

ISLAMABAD: With the successful implementation of first generation structural reforms and gaining economic stability, Pakistan entered into international capital markets through the issuance of the debt instruments.

Ã¢â¬ÅPakistan has so far floated three sovereign bonds, the last one we float on March 23, 2006,Ã¢â¬Â Dr. Ashfaq Hassan Khan Advisor Ministry of Finance told here on Tuesday. He said that Pakistan successfully issued $500 million ten-year notes and $300 million thirty-year bonds in the international debt capital market on March 23.

The Advisor said that this transaction, which represented the first international 144-A bond issued by Pakistan since 1999,raised significant interest amongst US institutional investors. He further said that by issuing ten and thirty years bonds, Pakistan completed its primary objective of establishing a full Pakistani International yield curve in record time. Dr. Ashfaq said it is important to note that this offering was the largest ever-funding exercise of the government.

He said the largest deal prior to this transaction has been the $600 million SUKUK or Islamic Bond in the year 2005. He said it was the longest ever tenor achieved by Pakistan.

Dr. Ashfaq said that both the new ten-thirty year offerings were debut offerings for Pakistan by US dollar yield curve was extended out to thirty years in just two years time. He said the most emerging markets sovereign issues have taken a longer time to extend their yield curve from five to thirty years.

The Advisor said it took Philippines four years and Brazil and Turkey three years to extend their yields curve to thirty years. Having established a relationship with global investors in the international capital markets, Pakistan has now decided to establish a relationship with Global Depository Receipts (GDR) offering for the best corporate assets namely the OGDCL, NBP, UBL, HBL and KAPCO with a listing on London Stock Exchange. He added that this would be totally a new set of global investors who will be investing in the share of these scrips.


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## Neo

Wednesday, October 11, 2006 

*WB to continue assisting govtÃ¢â¬â¢s petroleum sector reforms*

ISLAMABAD: The World Bank has urged upon the Government of Pakistan to implement pending reforms initiatives in the petroleum sector reforms to make them sustainable. However, the World Bank has announced that it would continue to provide assistance in realising the full benefits of oil and gas sector liberalisation and reforms.

A World Bank Statement issued here on Tuesday stated that Government of Pakistan has undertaken a deregulation and reform programme in the past seven years. The World Bank has been an active partner in this endeavour, and upon Government request, it has provided technical assistance and advisory support in liberalising the sector. These reforms have helped in achieving:

An enhanced level of exploration and production activity, resulting in a number of new gas discoveries, which enabled domestic gas production to increase by about 50 per cent from about 2.4 to 3.6 billion cubic feet per day.

A transparent Gas pricing framework - linking producer prices with consumer tariffs - has been implemented. This has enabled gas companies to plan and undertake investments to transmit the increased volume of gas to consumers. The petroleum downstream market has been deregulated, with fuel oil, diesel and LPG prices determined entirely by the market. For other products, prices were pegged to international prices and adjusted periodically. Due to the unprecedented hike in international oil prices, this process has been interrupted in recent months.

Oil & Gas Regulatory Authority (OGRA) has been established, which oversees the operation of the sector and arbiters the conflicting interests of different stakeholders (consumers, investors, government, etc).

Improved product specifications have been introduced in the market (lead-free petrol, low-sulfur diesel, etc), and natural gas as a cleaner fuel has replaced liquid fuels in the automotive and power generation sectors.


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## Neo

*EU, WWF launch BMP for Cotton & Sugarcane in Pakistan *
Wednesday October 11, 2006

BAHAWALPUR: The European Union Commission and WWF have formally launched four year project "Better Management Practices for Water Thirsty Crops" worth one million Euros to ensure sustainable sources of freshwater to support the livelihoods of poor communities in Pakistan. 
This project will create a mechanism for increasing water availability and reducing pollution by decreasing the amount of water and pesticide use in Cotton and Sugarcane production. 

EU provides the funds to the tune of 0.75 million Euros and the implementing partner WWF for this project provides remaining 0.25 million Euros. The project aims to promote better management practices on Cotton and Sugarcane that improves environmental quality and enhances the livelihoods of the farmers. 

The objectives of the project will be achieved by developing and implementing appropriate "ON farm" Better Management Practices in Faisalabad and Bahawalpur. It focuses discourage access use of pesticides sprays in Cotton fields and encourage natural way of farming for these crops. 

While speaking at the formally inauguration ceremony of the project which was largely attended by the local cotton growers and stakeholders, the Head of European Union Commission Pakistan, Michael Dale said that agriculture and water has become an intertwined issue and lack of sustainable practices that are employed in agriculture such as excessive use of irrigation, imbalance use of fertilizers, irrational use of pesticides, health impact on the farming communities are a few to mention. 

He said that this project would contribute towards elimination of the just spoken perils to the environment. He said that for the improvement of farmers livelihood and environment it was necessary to promote natural way of farming on modern lines so we can save farm and farmers. 

He said that training of farmers through farmers field schools and building the capacity of farmer organizations through training of trainers would be a prosperous step forward creating the field trained human resources in agriculture sector which could contribute in sustainable development. He said that a recent completed European Commission regional project on IPM implementer by FAO has proved the training of farmers through farmer?s field schools, which have achieved remarkable results in the cotton growing areas of Pakistan. He said that the project addressed the issues of sustainable agriculture and rural development, environment protection, trade, human health and most of all hopes for the poor through quality farmer education. 

He said that on the success of this project the government of Pakistan has launched its own programme on IMP. Mr. Dale expressed hope that the partnership of this programme with Agriculture departments would bring good results in terms of testing the innovative better management practices and their wider dissemination to resource poor farmers living even in the remote areas. Earlier, Project Director Hammad Naqi Khan gave a detailed briefing about the project and said that though the project has been started for last nine months but today it was formally launched with first batch of trained farmers for better management practices for water thirty crops. He said that the project would promote Better Management Practices (BMPs) by small and large scale sugarcane and cotton farmers in Bahawalpur and Faisalabad by 2010. 

These BMP centers in Bahawalpur are addressing the level of water used, the amount of pesticides and chemical fertilizers applied and the variety of seeds used in the project. He said that through this project, the farmers are mobilizing to reduce pesticide on Cotton fields and reduce use of chemical fertilizers by Cotton and sugarcane growers. The representative of Farmers? Welfare Association Bahawalpur said that the yield has increased due to the BMP implementation. We used to spray ten times which was very expensive and now we spray twice and cotton is softer and whiter, eventually easier to sell in the market. Dr. Iftikhar Ahmed, DG WWF Pakistan Ali Asghar Habib and Deputy Director WWF Derk Kuiper also spoke on the occasion.


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## Owais

*54.2 percent rise in July-August current account deficit *



ISLAMABAD (October 12 2006): Pakistan's current account deficit during the first two months (July-August) of 2006-07 rose by 54.2 percent to $1.89 billion, against $1.226 billion recorded in the same period of 2005-06.

More worrisome during the period under review was that resident deposit holders withdrew $58 million (in July they deposited $19 million and in August withdrew $77 million) from foreign currency accounts (FCA), primarily because of the stable rupee, against $38 million they deposited during the same period last fiscal year.

Inflows in these accounts could prove a cushion in moderating current account deficit but, unfortunately, it turned negative and then deteriorated the current transfers, too.

It is worth mentioning that the multinational donors have, time and again, cautioned the government by pinpointing the burgeoning current account deficit as a gray area of the country's economy.

During 2005-06, the deficit reached 4.7 percent ($5.68 billion) of the GDP against only $1.784 billion during 2004-05. And now, the Asian Development Bank (ADB) has projected Pakistan's current account deficit at $7.9 billion (5.5 percent of GDP) by end-June 2006-07 in its Asian Development Outlook (ADO) released last month.

With the start of the new fiscal year, fuelled by a $2.844 billion trade deficit, the country's current account deficit (excluding official transfers) in two months witnessed an increase of $664 million or 54.2 percent to $1.89 billion against $1.226 billion in corresponding period of last fiscal year, the State Bank of Pakistan (SBP) reported on Wednesday.

Independent economists are of the view that the widening current account deficit was posing threat to the economy simultaneously on both internal and external fronts. They also have questioned, time and again, as to how long the trade deficit can continue on that trajectory without disrupting the economy. And, how much longer Pakistan can continue to spend more than it earns and support the growth.

The government's economic managers, on the other hand, were of the view that Pakistan is enjoying an economic boom and the current account was manageable by borrowing from abroad, remittances, drawing down reserves and inflow of investment.

The country witnessed this current account imbalance as trade deficit (in goods and services) jumped to $2.844 billion during July-August 2006 from $2.075 billion in corresponding period of previous year. The trade deficit figures have been worked out using the freight-on-board (FOB) value of imports and exports.

The central bank's data shows that goods import stood at $4.713 billion whereas exports totalled $2.756 billion thus leaving a trade imbalance (in goods) of $1.957 billion. The services account also witnessed a large imbalance of $887 million during July-August 2006 as inflows under this account stood at $426 million whereas outflows totalled $1.313 billion. Thus on balance, total trade deficit (goods and services) stood at $2.844 billion.

The factors responsible for this huge deficit included higher outflows on account of transportation, travel, insurance, construction services, royalties and licence fees.

Pakistan had to spend $531 million on transportation account whereas its earning under this head was only $187 million. Thus, the net deficit in the service account due to chartering of vessels for imports, export shipment was $344 million.

Another factor responsible for big services' account deficit was a net outflow of $168 million on account of overseas travelling. Pakistan had to spend $208 million to finance personal and business-related travelling abroad of individuals and groups whereas it earned only $40 million under this account. Hence the services account deficit in July-August 2006. The same applies to spending on insurance and royalties and licence fees paid to international organisations and their employees operating in Pakistan.

The imbalances in the trade and services were so large in July-August 2006 that the current account turned negative despite a strong build-up in current transfers. Net current transfers rose to $1.473 billion during the period under review, from $1.243 billion in corresponding period last fiscal year.

Current transfers went up as Pakistan received $812 million in workers' remittances or foreign exchange sent back home by overseas Pakistanis during the period, up from $661 million in a year-ago period.

According to independent economic experts, this external disequilibrium in the shape of current account deficit may have a significant impact on the value of the rupee. Besides, it would translate into a large increase in Pakistan's net foreign debt position. A large and growing public debt could also eventually put upward pressure on interest rates and crowd out private investment.


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## Owais

*SBP accepts Rs 16.327 billion bids in treasury bills auction *


KARACHI (October 12 2006): The State Bank of Pakistan in its fortnightly Treasury Bills auction received bids worth Rs 26.327 billion against its target of Rs 15 billion, which was 1.75 times of the amount on offer. By maintaining its last cut-off yield, it accepted Rs 5.5 billion for 3-month bills at a cut-off yield 8.6417 percent.

In six-month bills, it lifted Rs 1 billion at 8.8142 percent, and in 12-month bills the accepted amount was Rs 9.827 billion. On Thursday there is Rs 35.78 billion OMO maturity, and T/bills' maturing amount is Rs 5 billion.

Despite total maturity of Rs 40.78 billion, banks refrained from aggressive bidding in the auction due to the need to adjust their weekly average position. And now being mid-Ramazan, the cash requirement shoots up requiring Rs 10 to Rs 15 billion. This will raise the amount of currency in circulation.

Keener interest was seen in one-year T/bills auction, due to higher return. If the compounding factor is taken into consideration, there is less charm in three-month bills, unless the SBP has to match its placement. Otherwise, it's a losing proposition. There is also good arbitrage opportunity for a bank placing funds in longer tenor and borrowing from the market, since the cost of borrowing is below 8.5 percent, on daily basis.

Banks short in government securities do get opportunity regularly through open market operation (OMO). On average, SBP has been keeping it OMO rates stable around 8 percent, and does not allow excessive volatility in line with its monetary policy. Two weeks are offered through OMOs at around 8.5 percent, whereas one-month outright T/bill is offered by the central bank at 8.55 percent.

Money market dealers are looking for tighter conditions by year-end. Tighter liquidity conditions could have emerged, but delay in sugarcane crushing till November and further delay in wheat sowing until late November has given some respite to the banks, even though seasonal borrowing of cotton started in October.

The seasonal demand is likely to continue for the next six months. It is estimated that seasonal borrowing would be somewhere between Rs 40 billion and Rs 50 billion.

A dealer of a foreign bank managing his bank's Asset and Liability Management (ALM) book, says, "I see exciting days ahead as we are approaching year-end. In the remaining five auctions in 2006 there is T/bill maturity of Rs 219.607 billion. We have to keep an eye on government borrowing from banks and the year-end demand for rupee by banks for window dressing of balance sheets.

I remember, last year Rs 30 billion bank deposits were shed in a short span of time. My information is that branches of some of the leading Pakistani banks are already offering 11.30 percent on 3-month interbank deposit, and seasonal demand is yet to pick up. So, I am keeping my fingers crossed."

Meanwhile, in the interbank foreign exchange market, the rupee tested 25-month low of 60.69 per one US dollar during the week. The rise in dollar coincided with long weekend in USA due to Columbus Day holiday and nuclear explosion conducted by North Korea.

Pakistani rupee followed the Asian currency and showed some weakness as there was no inward report of dollar on the first day of the week. Fall in the value of rupee was also due to corporate and Ministry of Defence payments, which were close to $70 million. Average weekly oil payments ranged between US $125-150 million. The rupee is likely to recover and retest at 60.60 per dollar by next week. The rupee has strong support at 60.75, says a foreign exchange dealer.

Dollar gained strength in the international market, which also saw weakening of Asian currency. Demand for dollars and gold surged as safe haven buying emerged. But news of slump of US housing market is likely to dampen the enthusiasm.

Home building probably dropped at a 20 percent annual rate in the third quarter, the biggest slump since the last three months of 1990. The US growth is now likely to be weaker than 3 percent. If the US economic numbers show further signs of weakness, Fed may act quickly by slashing its overnight repo rate by 25 basis point.

Says an analyst who specialises in currency trading: "I think. for Pakistani importers its good time to hedge their foreign currency as dollar will soon take further beating. For the remaining days of this last quarter of 2006, dollar will take the beating. Euro has strong support at 1.2450, unless 1.2320 surrenders for 1.2750.

Cable is a buy around 1.8420, with support at 1.8320 for a move to 1.8880. While Yen is likely to further weaken towards 120.50 areas before forming a base, its strong resistance line lies at 121.80 before recovering to 116.50." Gold will find strong resistance at $592 per oz and is likely to touch $530 by year-end.


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## Owais

*Low growth in July-September duty collection due to tariff revision *

ISLAMABAD (October 12 2006): The nominal growth in customs duty during the first quarter (July-September) of 2006-07 was due to the massive tariff rationalisation on imports of raw materials/inputs announced in the budget, sources said on Wednesday.

Commenting on short collection of customs duty of Rs 28.9 billion in July-September 2006-07 against Rs 28.6 billion, sources said that the government would suffer revenue loss of Rs 6.7 billion due to change in customs duty structure. The revenue impact due to these relief measures was evident from duty collection figures in the first quarter of current financial year.

Moreover, the Board is not collecting customs duty on certain items on which sales tax is being collected at import stage. For example, the Board is collecting reasonable amount of sales tax on import of POL products, fertilisers and sugar.

Sources said that the restriction of five years on import of vehicles under gift, personal baggage and transfer of residence schemes is one of the major factors, which resulted in less amount of duty collection from vehicles. Prior to the restriction, a large number of over five years old vehicles were imported. As a result of this change, the duty collection drastically came down during the quarter.

Under tariff rationalisation, the customs duty was reduced on 200 raw materials and parts/components, 100 different types of equipment of broadcasting sector, 95 machinery/equipment, 89 types of electrical appliances, 54 items of telecommunication-related equipment, 49 industrial inputs and duty was reduced on import of 43 organic/inorganic chemicals in the budget.

Duty on 80 items belonging to construction and steel sectors was reduced. It included duty reduction on secondary quality flat rolled steel products from 25 percent to 20 percent.

The duty rate on trucks of five tons and above capacity was reduced to 40 percent and that on their CKD kits to 10 percent. Dump trucks and trailers for prime movers were placed in the same duty slab. Customs duty on import of prime movers was slashed to 15 percent and was exempted on CKD kits to the extent of non-indigenised parts. Duty on CNG buses in CBU condition was brought down from 20 percent to 15 percent.

Duty has been either abolished or reduced on over 200 raw materials, parts and components used in the sectors like aluminium, condensers manufacturers, electric fans, shoes/footwear, gas appliances, horticulture, master batches, screw manufacturing, seamless pipes industry, steel, foundry, casting and forging sector, telecom, PVC industry and stationery manufacturers.

Duty was reduced from 25 to 20 percent and 10 to 5 percent on 12 types of cutting tools of artisans, skilled and semi-skilled workers, whereas 14 chemicals of the textile processing industry were exempted from customs duty. Duty on 16 machine tools has been brought down from 25 to 20 percent and 10 to 5 percent.

Duty on import of 11 different types of raw materials used by the plastic industry has also been reduced. Moreover, seven inputs of leather industry were exempted from customs duty.

Duty on entire tariff heading 8471, for computers, except CRT monitors in second-hand condition, has been exempted. Computer parts and accessories falling under HS headings 8473.3010 to 8473.5000 have also been exempted from customs duty.

The import of bicycle chain parts and components was exempted from customs duty, while duty on bicycle chain and free wheels was slashed from 20-25 percent to 15 percent.

Therefore, all these factors resulted in decrease in customs duty during the first three months of the current fiscal year, sources said.


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## Owais

*'Pakistan emerges as ideal destination for investment' *

LAHORE (October 12 2006): Punjab Minister for Industries, Commerce and Investment, Muhammad Ajmal Cheema has said that Pakistan has become an ideal destination for foreign investment. "A number of world renowned multinational companies are planning to invest in Pakistan", he said while talking to a delegation of German investors that called on him at his residence.

The minister said that the taxation system in Pakistan had been simplified. He said that the government had fixed export target of US $18 billion for the current fiscal year.

He said that privatisation policy was going on very successfully, adding that the state-owned enterprises (SOEs) like PSO, State Life Insurance would be privatised in near future. The minister said that the government was paying full attention to road infrastructure besides industrial progress and for this purpose, the Rs 14 billion Lahore-Sialkot Motorway would be initiated soon. He said that small industrial estates would be developed along the Motorway.


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## Owais

*Disbursements under NBP's "Rozgar scheme" to begin from next month *


KARACHI: Sanctions and disbursements under the "Rozgar scheme" of National Bank of Pakistan (NBP) will start in November this year.

This was stated by NBP president Syed Ali Raza while talking to newsmen at the Iftar here Tuesday. 

He said that due to short working timing in Ramazan and the large number of loan applications, the processing was slow. However, he noted that the processing will get momentum after Ramazan.

"We have out sourced the processing under Rozgar scheme and a separate company was examining the applications. 

The company is checking and verifying contact numbers and locations of loan seekers to minimize the chances of frauds, he added.

Raza pointed out that over 175,000 applications have been received so far under the scheme and more were pouring in. 

"I see a quantum jump in the disbursement and the bank is expecting to disburse Rs 10 to 15 billion per annum under the scheme, he noted.

To a question about the non-performing loans, he said that 90 per cent loans are secured and have provisions in the balance sheet. As soon as they (loans) are recovered they directly go to the profit and loss account, he added.

Talking of the issue of NBP Global Depository Receipts (GDR), he said it will be done keeping in view of the market conditions. The time of issue and amount will be decided later, he said


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## Owais

*Cell phone subscriber base crosses 40m mark *


KARACHI: Cell phone subscriber base crossed 40 million mark for the first time ever, as mobile phone companies added almost seven million fresh customers during the first quarter of 2006-07 on continued popularity of the service across the country.

Latest figures compiled by Pakistan Telecommunication Authority revealed that cellular phone connections stood at over 41.50 million by September 2006, which crossed 34 million by the end of last fiscal.

&#8220;By September 30, 2006 total number of cellular subscribers stood at 41.50 million (41,502,203),&#8221; said a PTA official. &#8220;It reflects a 16.8 per cent growth in total cellular subscriber base from July to September 2006.&#8221;

He said during first quarter of the fiscal almost seven million (6,995,646) new connections were sold on the back of comparatively cheaper tariff offers due to increased number of service providers.

&#8220;So there was over 25 per cent mobile density rate by September 2006,&#8221; said the PTA official.


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## Owais

*NBP permitted to open branch in India *


NEW DELHI: Reserve Bank of India&#8217;s (RBI) cross holding norms for private sector banks do not permit Habib Bank of Pakistan to come to India, because of which only one bank from the neighbouring country--National Bank of Pakistan--is likely to be given entry initially. 

Habib Bank along with the state-run National Bank of Pakistan had applied to RBI, India's banking regulator, for starting operations in India, while SBI, PNB and Bank of India had sought approval for going to Pakistan. 

Switzerland-based Aga Khan Fund for Economic Development, which holds 51 per cent in Habib Bank, is also a promoter of Development Credit Bank in India. 

Its holding in DCB will come down to 31 per cent from 57.47 per cent after its equity dilution in the ongoing IPO by the bank. 

RBI's cross holding norms do not allow the private sector banks to hold more than 5 per cent stake in another bank, which is the reason why Habib Bank is not being allowed to enter India, Finance Ministry sources told PTI. 

It's only a regulatory issue that does not permit Habib Bank to start operations in India, they said. 

Initially, only the National Bank of Pakistan is likely to be allowed to enter India, and as such either SBI or PNB will be permitted entry into Pakistan on a reciprocal basis, the sources said. 

First of all, it would be seen how the National Bank of Pakistan operates in the country before allowing any other banking entity into India, they said. 

However, so far a proposal on allowing NBP has not come to the Finance Ministry and is pending with the RBI only, they added.


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## Neo

*Trade deficit widens to $1 billion in Sep *

ISLAMABAD: October 12, 2006: Pakistan's trade deficit widened to a provisional $1.0 billion in September from $838 million in September 2005, official data showed on Thursday.

The trade deficit for July-September of fiscal 2006-07 was $3.2 billion, compared with a deficit of $2.4 billion in the same period a year ago.


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## Neo

*New power generation projects to help meet electricity shortage: PM *

ISLAMABAD: October 12, 2006: Prime Minister Shaukat Aziz on Thursday said new power generation projects in the private and public sector will help the country meet its growing demand of electricity. 

Talking to Liaquat Ali Jatoi, Minister of Water & Power, at the PM House, the PM emphasised the need to pursue more hydel and renewable energy projects and to tap all available resources of energy including coal, solar, wind, and biomass for generating electricity. 

Aziz said the demand for electricity was growing as a result of high economic growth, increase in per capita income, growing middle class, increased foreign investment in industrial projects and electrification of urban and rural areas. 

He said the government was encouraging projects on public-private partnership basis to meet demand of electricity. He said it was an excellent opportunity for the private sector to invest in this sector. 

The Minister for Water and Power updated the PM on the latest situation in the power sector and informed him that there was no load shedding in the country except where maintenance and renovation work was in progress. 

On the Karachi Electric Supply Corporation (KESC), the minister said the situation was gradually improving and the Water and Power Development Authority (Wapda) was giving additional power to the KESC. 

He said the KESC was planning to increase its capacity to meet Karachi's growing energy needs.

The minister also briefed the PM on the latest situation about the availability of water in the country. He said adequate water was available in various reservoirs to meet the irrigation needs of Rabi crop. 

He discussed various projects related to the irrigation system, the repair of various barrages and other measures taken by the Federal and Provincial Governments to improve water supply to the agriculture sector. 

Aziz said water and power were critical for increasing agricultural productivity. He said the federal government in co-ordination with the provincial governments will take all measures for better water management to increase its supply. 

The premier appreciated efforts being made by the ministry to attract investment in power projects to augment availability of electricity in the country.


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## Neo

*IT share in total taxes stands at only 30pc*

ISLAMABAD, Oct 11: Unlike other developing countries, the share of income tax in total federal taxes in Pakistan hovered around 30 per cent during the last few years, suggesting massive measures for generating additional revenues from this source.

In emerging economies like Turkey, Mexico, Brazil and Korea, the contribution of direct taxes is gradually increasing and has reached around 45 per cent. The advanced countries like, the US, Belgium, Sweden, Japan, Austria, Germany, the Netherlands, France, Norway and Switzerland are the examples where the share of direct taxes is more than 60 per cent of total tax revenues.

The Central Board of RevenueÃ¢â¬â¢s last quarterly report (April-June) of the fiscal year 2006 released here on Wednesday said that despite the fact that the share of income tax in total taxes stood around 30 per cent but even though it has increased from 18 per cent in the early 1990s. It appears that within an international perspective, there is a scope for generating additional revenues from this source.

The report observes that indirect taxes are believed to be regressive in nature as their burden is shifted forward on to the final consumers. On the other hand, the direct taxes, being Ã¢â¬ËgenerallyÃ¢â¬â¢ progressive, help in maintaining the overall proportionality of the taxation system. Direct taxes also play a key role in ensuring a sustainable level of economic growth and development.

It was pointed out that one of the constraining factors is the rather low contribution of the corporate sector. This is evident from the fact that despite the existence of a reasonable number of corporations registered with the government -- CBR and SECP -- the return filers are low and within those who file returns, only a small fraction declares taxable incomes.

On the other hand, a large majority of the corporations continue to claim business losses or showing nil incomes. Besides absence of corporate tax culture, there is also a concern about the role of withholding agents. One of the findings of a recently concluded study is that the revenue from withholding tax in comparison to its base appears to be quite low.

The report said that the importance of GST as a tax on consumption activities had increased manifold. Its share has gone up to about 41 per cent in total federal taxes in recent years.

In most of the East Asian and other developing economies, the contribution of income and corporate taxes is between six per cent and seven per cent of GDP, whereas it is close to three per cent in Pakistan. Clearly, there is scope to raise this level to the international standards.

Anticipating that the economy will maintain the high growth trajectory, the budgetary target for Fiscal Year 2006-07 has been set at Rs835 billion, showing an increase of 17.2 per cent over the provisional collection of Rs712.5 billion of last year.

Given that the outturn of individual taxes and growth trajectories are materialised, the CBR projections anticipate that the share of direct taxes in total CBR collection will be 31.7 per cent -- higher than last year, and within indirect taxes, the shares of sales tax, excise, and CD will be 60.3 per cent, 12.1 per cent and 27.6 per cent, respectively.


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## Neo

*Chevron enters Pakistan energy market*

ISLAMABAD, Oct 11: Global energy giant Chevron has made its entry into PakistanÃ¢â¬â¢s petroleum market.

In a letter addressed to various Ministries on Wednesday, Caltex informed that it had changed its corporate name from Caltex Oil Pakistan to Chevron Pakistan Ltd.

When contacted the General Manager Public Affairs Irfan Qureshi confirmed the news and added that the brand Caltex would remain unchanged.

Chevron is one of the biggest energy companies in the world, operating in 180 countries. Pakistan now has three of the worldÃ¢â¬â¢s top companies operating in the petroleum sector. The other two are Shell and Total.

This move by Chevron should signal the government of confidence of international companies taking interest in PakistanÃ¢â¬â¢s economic growth. The government can attract huge investment by these foreign investors by pursuing policies that will keep such international giants tied into PakistanÃ¢â¬â¢s petroleum sector.


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## Neo

Thursday, October 12, 2006 

*PIA acquiring ATR aircraft*

KARACHI: Pakistan Interna-tional Airline (PIA) will receive three brand new ATR aircraft in next November, December and January, and the rest will be received in May 2007. 

The first aircraft was delivered earlier in the year. 

The airline has ordered seven brand new ATRÃ¢â¬â¢s. PIA has temporarily grounded one ATR due to component failure, the airline statement said here on Wednesday. 

Components are to be acquired from outside, and once PIA replaces components the aircraft will be able to fly again. 

The statement said PIA had planned to use the F-27s along with the sequential arrival of the ATRs to meet its domestic schedule requirements. The plan envisaged grounding of one F-27 for every new ATR that was delivered to PIA and thus replacing the entire Fokker 27 fleet with the newly-acquired ATRs. 

The statement said the unfortunate grounding of the complete F-27 fleet resulted in PIA operating its Boeing 737 aircraft on routes where it was capable of landing, to subsidize the operation of domestic flight schedule. 

Similarly, the C-130s of the Pakistan Air Force were being used to serve Northern Areas, until the replacement occurred, just as the ATR was flying down the Mehran coastal cities. These Mehran coast flights will resume shortly, as aircraft components have been replaced to make it operational. 

PIA always has the highest consideration of passenger safety and comfort in mind and towards this end we never fail to ensure that all PIA flights are operationally completely safe to fly. We hope that the ATR is ready soon and safely airborne again, the statement said.


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## Neo

Thursday, October 12, 2006 

*Pak, China set to sign economic cooperation deal*

ISLAMABAD: Pakistan and China are all set to sign first ever Five year Trade and Economic Cooperation Action Plan during the forthcoming visit of the Chinese President starting from Nov 23, a senior government official told Daily Times on Wednesday.

The Five Year Action Plan would cover the cooperation in the areas like trade, power generation, investment, energy, minerals, manufacturing, agriculture, IT and telecommunication, tourism, low cost housing, infrastructure, banking, insurance, transportation, engineering and construction.

Pak-China Five year Trade and Economic Cooperation Action Plan would be finalised and initialed in first meeting of the Economic Cooperation Group (ECG) scheduled during November 9-12, 2006. A Chinese Assistant Minister will be heading a high level delegation to participate in the Economic Cooperation Group meeting to be held at Islamabad. 

The Five year Trade and Economic Cooperation Plan is the continuation of the Framework Agreement on Expanding and Deepening Bilateral Economic and Trade Cooperation between Peoples Republic of China and Government of Pakistan which was signed on February 20, 2006 during the President of PakistanÃ¢â¬â¢s visit to China. 

The Framework Agreement aims to create a favourable environment for Chinese enterprises in the nine major areas of the economy of Pakistan. These areas and their sub areas include agriculture, plant protection, breeding, fishery and processing, light industry textile, electromechanical projects, infrastructure and public engineering construction, exploring, exploiting and processing of mineral resources, cooperation in the energy sector, cooperation in the information technology and telecommunication sector, development of tourism, banking, insurance and transportation, low cost housing and other areas of interest.

Both sides agreed to establish Economic Cooperation Group (ECG) at the working level under framework of the Joint Committee on Economic, Trade Scientific and Technical Cooperation between China and Pakistan.

A 17 member delegation of Chinese Expert Group headed by Mr. Gou Husheng, vice President China International Engineering Consulting Corporation (CIECC) visited Pakistan during July 16th-26th and held discussion with concerned ministries and departments of the government of Pakistan.

Some delegation members also visited Karachi and held meetings with provincial government, city government, Karachi Port Trust and Port Qasim Authority. The purpose of this visit was to collect information, data and specific projects for preparation of Five Year Action Plan under the said agreement. 

The official further informed that an advance working team is arriving Pakistan in the last week of October 2006 and will remain in Pakistan till the 2nd week of November 2006. The team will discuss various project proposals with the relevant ministries and divisions. According to the schedule, Chinese Assistant Minister will be arriving Pakistan from November 9th-12th to hold the first meeting of Economic Cooperation Group (ECG) to finalize and initial the Five Year Action Plan. This Five Year Action Plan will be formally signed during Chinese PresidentÃ¢â¬â¢s visit to Pakistan starting from November 23, 2006.

Pak-China Free Trade Agreement and Memorandum of Understanding (MoU) on cooperation in Energy sector would also be the part of this action plan. Chinese petroleum industry had earlier indicated shifting of energy related industry and its access capacity to Gwadar Port Energy Zone (GPEZ) and had also estimated that this zone can attract Chinese investment of around $13 billion. Pakistan is also eyeing Chinese oil and Gas exploration and development companies to invest in Pakistan and transfer latest technology in this sector.


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## Neo

Thursday, October 12, 2006 

*Musharraf stresses Balochistan development*

ISLAMABAD: President General Pervez Musharraf said on Wednesday that timely completion of development projects would bring Balochistan at par with other provinces. 

Presiding over a meeting that was attended by the prime minister, Musharraf underscored the need for technical education in creating job opportunities. Prime Minister Shaukat Aziz said the government was taking steps to provide electricity, potable water and gas to people at the grassroots level. 

The meeting was told that the federal government had created 33,000 permanent jobs for the people of Balochistan. The meeting decided to increase the provincial quota for Balochistan from 3.3 percent to 5 percent in accordance with the 1998 census. The Balochistan governor and chief minister briefed the meeting on the pace of development projects, and the arrangements being made to improve the law and order situation.


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## Neo

*Cell phone subscriber base crosses 40m mark *

KARACHI: Cell phone subscriber base crossed 40 million mark for the first time ever, as mobile phone companies added almost seven million fresh customers during the first quarter of 2006-07 on continued popularity of the service across the country.

Latest figures compiled by Pakistan Telecommunication Authority revealed that cellular phone connections stood at over 41.50 million by September 2006, which crossed 34 million by the end of last fiscal.

Ã¢â¬ÅBy September 30, 2006 total number of cellular subscribers stood at 41.50 million (41,502,203),Ã¢â¬Â said a PTA official. Ã¢â¬ÅIt reflects a 16.8 per cent growth in total cellular subscriber base from July to September 2006.Ã¢â¬Â

He said during first quarter of the fiscal almost seven million (6,995,646) new connections were sold on the back of comparatively cheaper tariff offers due to increased number of service providers.

Ã¢â¬ÅSo there was over 25 per cent mobile density rate by September 2006,Ã¢â¬Â said the PTA official. Ã¢â¬ÅAlmost all the four major companies - Mobilink, Ufone, Al Warid and Telenor - grabbed better market share during the first three months of 2006-07, which also brought different tariff packages for the subscribers.Ã¢â¬Â

The figures gathered by the telecom watchdog show Mobilink led the market with 20.31 million subscribers followed by Ufone, which was serving 8.86 million people across the country by the end of first quarter.

With the arrival of UAE-based Al Warid Telecom and Norwegian Telenor both competition and subscriber base grew at much faster pace, as the last yearÃ¢â¬â¢s entrants attracted 5.93 million and 4.59 million subscribers respectively by the end of September 2006.

The PTA data says by September 2006 Paktel, which offers both AMPS (advanced mobile phone system) and GSM (global system for mobile communications) services enjoyed 1.50 million subscribers and the only AMPS service Instaphone had a share of 285,000 by the quarter end.

The cellular density witnessed phenomenal jump in the last two years as mobile phone grew by staggering 170 per cent during 2005-06, which outnumbered almost six-decade old fixed telephony service by more than 500 per cent in 15-year operations.

Analysts see growth in cellular subscribers in line with expectations, but say the current fiscal the mobile phone service providers may not witness such phenomenal jump in customersÃ¢â¬â¢ numbers, which have already reached to a higher level.

Ã¢â¬ÅThe growth is likely to remain slow in percentage term during 2006-07,Ã¢â¬Â said Anwaar Ahmed Khan, a telecom analyst at Capital One Equities. Ã¢â¬ÅThe companies may enter into those areas where they have yet to initiate service, which would need network expansion and investment.Ã¢â¬Â

He said a cutthroat competition was expected among the operators during 2006-07, after the mobile number portability (MNP) was implemented by all the six cellular operators across the country.

Ã¢â¬ÅThe MNP would decide the real market leader,Ã¢â¬Â said Khan. Ã¢â¬ÅAfter the MNP implementation the companies must have to improve their service quality to keep their subscribers intact.Ã¢â¬Â

MNP is a system, which enables a mobile phone subscriber to carry the same number while changing the cellular mobile operator. 

The project, which requires Rs600 million, was earlier decided to implement in January 2006 but later the deadline was extended to November 2006. The service, however, is not in place yet and no new deadline has been announced.


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## Neo

*Govt mulling projects to provide over 20 e-services: Awais *
Friday October 13, 2006 

ISLAMABAD: Minister for Information Technology Awais Ahmad Khan Leghari Thursday said his ministry was working on a series of projects to provide wireless broadband services to over 100 major urban centres to lay the groundwork for provision of e-services to the public. 
"We are planning to use resources from the Universal Service Fund to take the wireless broadband internet service to at least 100 towns with up to 0.5 million population as a way to increase awareness about using IT as a tool to improve socio-economic conditions," he said during a meeting with a five-member Intel Corporation delegation led by Intel Corporation Vice President John Davies who called on the president to brief him on IntelÃ¢â¬â¢s plans and new initiatives for participating in the growth of IT industry in Pakistan. 

Awais said his ministry was planning to use the USF aggressively to increase teledensity and broadband penetration by setting up more tele-centers which would also become the hub for provision of all key public services besides being repositories of knowledge and information for the local people. He said the USF would become operational in about a month and the World Bank had also agreed to provide Pakistan a sum of $125 million to fund any project to increase universal access in the country. 

He said it were not just the urban areas starving for e-services but the rural areas were also eagerly looking for the delivery of such services. He said the provision of about 20 public services electronically would involve massive investment and the government would like to outsource the provision and subsequent handling of these services to the private sector to add value to the local industry. He said his ministry would also invest heavily into the content development in local languages and efforts would be made to use Urdu as a medium of distribution of the public services. 

The minister said the computer industry in Pakistan was going from strength to strength and though the imposition of GST had been a stumbling block, the ministry was doing all it could to ensure there was no discouragement to computer manufacturing and user proliferation. He conceded there was a need to introduce low-cost personal computers to the literate population, especially students and government employees, and his ministry would consider provide incentives for any such initiative. He said Pakistan being a country of 150 million people, including a growing middle class endowed with better literacy, could be an ideal place for investment for any international company. 

Later while addressing a function on the occasion of the launch of Ã¢â¬â¢World Ahead ProgrammeÃ¢â¬â¢ in Pakistan by Intel Corporation, Awais Leghari said e-services and telemedicine were some of the key facilities which could be provided to people at tele-centres. He welcomed IntelÃ¢â¬â¢s initiative and hoped other companies would also help in the government efforts to accelerate access to technology and improve opportunities for education, commerce, healthcare and communication for all Pakistanis. 

He hoped the IntelÃ¢â¬â¢s World Ahead Program would provide a foundation for technology usage and ownership besides extending broadband internet access and preparing students for success in todayÃ¢â¬â¢s knowledge-based economy. He said Pakistan was emerging on the radar screen of IT global market as there was a huge amount of good stuff happening in the It sector in Pakistan. He said Pakistan was an IT-savy country and was increasingly being recognized as a strategic location for big companies to expand their operations. Earlier, John Davies said his company was launching its World Ahead Program in Pakistan, with the objective of accelerating access to uncompromised technology for all people in Pakistan. 

Under the programme, Intel would establish six tele-centres at Attock, Multan, DG Khan, Sukkur and Gwadar to provide low-cost connectivity for voice and data, ICT training and basic telemedicine. The project would help provide an easy access to e-mail for job-hunting; gathering information about farming weather and the pricing of crops. "These tele-centers will be a key step in bridging the digital divide and making technology more easily accessible to citizens in Pakistan," said Mr Davies. 

He said his company had a strong history of collaboration with the government of Pakistan to bring technology close to peopleÃ¢â¬â¢s lives. "The Intel World Ahead program does more than just provide affordable PCs," he said, calling it "a holistic programme to help build everything from the right systems tailored to local needs, and critical connectivity, to sustainable local capabilities through quality education that makes a meaningful difference in peopleÃ¢â¬â¢s lives".


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## Neo

*20 central research laboratories set up in major universities *
Wednesday October 11, 2006

FAISALABAD : The Higher Education Commission (HEC) has established more than 20 Central Research Laboratories in major universities across Pakistan to support the conduct of truly world-class research. 

According to HEC report, which highlighted the two-year key achievements (July 2004 to June 2006), the HEC Digital Library now provides access to over 20,000 leading research journals, covering approximately 75 percent of the world's peer-reviewed scientific journals. The 'Access to Scientific Instrumentation' program has been launched to facilitate access to sophisticated scientific instrumentation to researchers across the country. 


The Commission also granted charter to 13 new universities over the past two years, with the majority opened in areas where higher education opportunities were previously unavailable. The Commission has supported the establishment of new universities in order to spread higher education to all areas of Pakistan. 


The report said that additional residential facilities, particularly catering to female students, have also been constructed at universities across the country to remove access barriers for students from remote areas. 


During the past two years, the Commission has undertaken a systematic process of implementation of the five-year agenda for reform outlined in the HEC's Medium-Term Development Framework (MTDF), in which access, quality and relevance have been identified with key challenges faced by the sector. 


Over 2000 scholarships have been awarded during the period under the indigenous Ph D programme, undertaking measures at each step of the process to ensure that international standards of quality are not compromised. 


The implementation of Indigenous Ph D programme has led to a dramatic increase in the number of students engaged in Ph D programs over the previous years. This crucial performance indicator has risen by 56 percent, whilst ensuring international standards of quality are maintained at every stage. 


Increased Ph D enrolment has been supported by increased funding for research and investments in facilities and equipment. With an increased number of Ph D faculty in universities in Pakistan, the ratio of faculty-to-students remains less than 2 students to each Ph D faculty member. 


Foreign scholarship programs have been geared towards improving the research base in areas of key national relevance where the requisite facilities are not available within Pakistan, particularly in areas relating to engineering and applied and pure sciences. 


Selected through an independent and rigorous screening process, Ph D scholars have proceeded to Germany, France, Austria, Netherlands, Korea and China. In addition, scholars have also been sent to premier research institutions in the US, UK, Australia and New Zealand. During the past two years, more than 700 scholarships have been awarded for students to study abroad. In addition, a programme to fund Post-Doctoral Fellowships has been successfully completed, placing more than 100 scholars for 9-12 month fellowships in premier academic and research institutions abroad. 


A massive program was also launched during the period to increase the number of seats available in the universities and to provide increased opportunities to students to study in the universities in Pakistan. As a consequence, enrolment in universities has increased by more than 40 percent in the past two years. Enrolment in distance learning programs, which provide opportunities for education to the most remote corners of the country, has also shown substantial increase. With approximately 128,500 students inducted in distance learning courses at various levels, current enrolment in these programs has increased by 19 percent over previous years.


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## Neo

*World's 5th largest gold, copper reserves found in Pakistan *

The world's fifth largest reserves of gold and copper were discovered in Chaghi area in Pakistan's southwest Balochistan province, local newspaper The News reported on Thursday. 

Director General of Provincial Department of Mineralogy Maqbool Ahmed said that two multinationals, Canadian and Chilean-firms, which were issued licenses 10 years earlier for exploration of gold in the Bekodik area, have completed the exploration work and have chalked out a project for the extraction of gold and copper. 

In the preliminary stage, the two companies will invest a billion U.S. dollars in the project, Ahmed said. 

According to Ahmed, 200,000 tons of copper and 400,000 ounce of gold will be produced annually through the said project. 

The Balochistan government will get a share of 25 percent. With the start of the project, employment will be provided to 3,000 youth of the province. 

According to Ahmed, there are gold reserve in Zhob and Lasbela districts of the province and nine multinationals have been issued licenses for their exploration. 

However, the opposition parties in the province expressing their reservations charged that federal government wishes to loot the resources of the province. 

Source: Xinhua


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## Owais

*OGDC gets go-ahead to restart work in Balochistan *


ISLAMABAD (October 13 2006): After a break of two years, President General Pervez Musharraf has given Oil and Gas Development Company (OGDC) a go-ahead signal to restart drilling activities at abandoned oil and gas exploration fields in Balochistan, it was learnt here on Thursday.

The Frontier Constabulary (FC) has been ordered to provide fool-proof security to OGDC crew to avoid any untoward incident during the exploration work. Sources said the law and order situation in Balochistan was discussed at a high-level meeting, chaired by President Musharraf, decided to follow an aggressive policy for oil and gas exploration work and take snipers to task if they tried to block the move.

Balochistan Governor Awais Ghani, Chief Minister Jam Yousaf, the chief secretary, and other high-ranking officials of the province attended the meeting. Sources said the President told the meeting in clear terms that the government would carry out oil and gas exploration and production work in Balochistan, and not allow anyone to disturb its plan.

Talking to Business Recorder regarding the restart of exploration activities in Balochistan, an OGDC official said: "We have received a go-ahead signal and this will be translated into action shortly."

The most of Balochistan area has promising gas and oil reserves, but these resources remained untapped. Sardars' duplicity in words and actions adversely hit the OGDC and other oil and gas exploration and production companies work in Balochistan.

The OGDC, a major share holder, in Balochistan had abandoned exploration work at Kuhlo and Kalachas when its crew were attacked at these gas fields by gunmen belonging to Mari and Bugti tribes. It suffered a loss of lives of its some of the crew members in these missile attacks. Kuhlo and Kalachas fall in the most promising belt for oil and gas production and initial reports are indicative of huge gas reserves in these fields.

The OGDC has a number of gas fields in Balochistan, Uch, Pirkoh, Kuhlo, Kalachas and Sanora and Zin are of great importance. Surveys show that Kuhlo and Kalachas have 400 percent more oil and gas reserves than Sui fields, which had been a single source of gas supply to the whole country for decades.

Sui and Uch fall in Bughti's area, while Kuhlo and Kalachas in Marri's and Sanora in Mangal's area. These fields have been an easy target for snipers' missile attacks during the last two years. However, with the killing of Akbar Khan Bughti in an encounter with the forces, the situation in Balochistan is different and the authorities want to restart oil and gas exploration and production work in the province on fast track basis.


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## Owais

*Trade gap widens to $3.158 billion in first quarter *


ISLAMABAD (October 13 2006): Pakistan racked up a $3.158 billion foreign trade deficit during the first quarter (July-September) of the current fiscal year 2006-07, which is about 31.69 percent higher than the last fiscal deficit of $2.398 billion, the Federal Bureau of Statistics (FBS) announced on Thursday.

During July-September 2006-07, nation recorded total exports of $4.269 billion and imports of $7.428 billion resulted in a goods and services deficit of $3.158 billion and the gap is steadily widening.

It indicates that Pakistan spent more on imported petroleum products, machinery, sugar, raw material and other goods and services. Everybody paid more for oil. Meanwhile, Pakistan businesses sold far less exportable products overseas.

The data reveal that Pakistan economy pulled in 13.38 percent more imports during three months of the current fiscal year than imports worth $6.551 billion recorded during the same period of the last fiscal while, its exports depicted an increase of only 2.88 percent against $4.153 billion during corresponding period last fiscal year.

The high growth in imports and slow pace of exports is responsible for burgeoning gap-a matter of great concern. The most worrisome feature of the FBS data was that exports during September 2006 declined by 4.53 percent to $1.416 billion while imports amounted by 5.22 percent to $2.321 billion as compared to the corresponding month last fiscal year.

It is worth mentioning that the government has targeted imports of $28 billion and exports, $18.6 billion, with a trade deficit of $9.4 billion. Now, in July-September (2006-07), the trade deficit stands at a bumpy $3.158 billion. At this rate, the deficit for the whole of the fiscal year 2006-07 would work out to be near $13 billion.

A glance at the trade data shows consistent rise in the country's imports is disturbing for trade officials as export-import gap would be much wider than the estimates for the financial year 2005-06.

The burgeoning deficit has put pressure on the rupee, which could also create inflationary pressure as Pakistan pays more for imported goods. It suggests the rupee may still need to fall to help narrowing the gap. But there is a risk pushing inflation higher if it does.

More worrisome still, several economists said, if the current pace persists there is the possibility that the swelling trade deficit will eventually cause a steep drop in the rupee against dollar and other currencies.

Local importers would demand more dollars in coming months to finance their surplus imports. It would also increase interest rates rapidly and lower living standards in the country.


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## Owais

*Defence clearance must for developing islands *

ISLAMABAD (October 13 2006): The federal government has linked construction of $43.135 billion Diamond Bar Island City near Karachi with the clearance from the defence ministry, especially Pak navy, which is reportedly opposing the project, sources in the finance ministry told Business Recorder here on Thursday.

A United Arab Emirates-based firm EMAAR has planned the project, which is expected to take about 13 years. The Port Qasim Authority (PQA) would earn $3.72 billion.

The UAE company will develop projects on 12,000 acres of land on Bundal and Buddo islands, comprising residential, commercial and leisure real estate projects, industrial parks, free zone and port terminals. "The economic co-ordination committee (ECC) of the cabinet deliberated the project in detail and sought the viewpoint of Pak navy regarding proposed utilisation of two islands," sources added.

The firm would be entitled to have 85 percent profit on all cash capital requirement while the remaining 15 percent would go to the PQA for providing two Islands on 99 years lease. Sources said the ECC also rejected the agreement prepared by the ports and shipping ministry with the firm, saying "the agreement is not comprehensive and requires many clarifications".

According to sources, some of the ECC members were worried that the project would have negative impact on operational requirements, suggesting it should not be cleared in haste. "Queries were made about the ownership of two islands and operational requirements of Pak navy as well as various aspects of the project relating to demarcation of islands, non-performing liabilities in the event of non-execution of the project, dispute resolution mechanism, environmental and hydrological aspects," sources further said.

The PQA's professional capacity to carry out analysis of legal, financial and environmental issues also came under discussion, sources continued. The ECC, after holding a detail discussion on merits and demerits of the project, approved the proposal, in principle, with following observations:

i) To sort out the issue pertaining to Pakistan navy and come up with a solution.

ii) To carry out environmental and hydrological studies within the fixed deadlines.

iii) Defence Housing Authority (DHA) be made part of all discussions.

iv) The PQA will engage highly professional teams of legal and financial advisors in consultation with law and finance ministries for examination and completion of technical matters/documentation on fast-track basis within a period of three months. The finance ministry would provide budgetary support for engaging the two teams.

v) The law ministry would vet documents to be signed by the PQA and EMAAR.

The ports and shipping ministry, in its briefing, also informed the ECC in response to PQA's advertisement, four firms submitted their expressions of interest (EoIs) out of which only M/s EMAAR was pre-qualified, sources concluded.


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## Owais

*Future of seafood exports to EU at stake *


KARACHI (October 13 2006): The future of seafood exports to the European Union (EU) is in doldrums due to unhygienic conditions at the Karachi Fish Harbour, sources said. Talking to Business Recorder on Thursday, sources said the European Union's Marine Fisheries Department (MFD) had suspended the operational work of K-1 (EU corridor) auction hall due to unhygienic conditions.

The hall was reserved for the seafood exports to the European countries, they added. Sources said MFD officials had sent many notices to the Karachi Fisheries Harbour Authority (KFHA) for inspection of the K-1 hall but KFHA did not take the MFD's notices seriously to implement the EU recommendations on the harbour, including K-1 hall.

They said the MFD was a competent authority of the EU here to inspect the whole harbour and implement the EU recommendations. They said the MFD gave a month's time to the KFHA for strictly implementing the EU rules but the authority did not follow its instructions. MFD officials found a lot of irregularities due to which it had suspended operational work of seafood exports from the K-1 hall.

They said there was no standard operating system in the K-1 hall, entire jetty, channel and at boats. The MFD's inspection team found a lot of irregularities like wash basins were not cleaned; shrimps and fish were being washed at the floor. The people were smoking and eating pan in the EU corridor. Besides, they said, entry in the K-1 hall is restricted to selected people and this rule was also being violated. They further said the fish should be brought only from the MFD's approved fishing boats in the K-1 hall.

Sources said the EU had tried many times to impose a complete ban on the Pakistani seafood due to unhygienic conditions but the MFD had given some guarantees due to which the union did not take any action. The MFD had given the EU some suggestions, including construction of a new auction hall like K-1. They said the K-1 hall was constructed on the recommendations of the EU but today the Sindh fisheries department, Karachi Fisheries Harbour Authority (KFHA) and the Fishermen's Co-operative Society (FCS) were not implementing the EU recommendations.


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## Owais

*Barclays hiring experienced Pakistani bankers *


KARACHI (October 13 2006): Britain's leading Barclays Bank has started hiring experienced bankers from Pakistan. All those who have been hired so far belonged to the Citibank Karachi. They include Ahmed Khizar Hayat, Salman Arshad, Farhan Waheed, Zeshan Salim and Saqib Cheema.

Although rumours are rife that Barclays Bank has an eye on some Pakistani banks, its activities in Karachi are being kept a closely guarded secret. The Citibankers who have been hired by the Barclays Bank have been initially posted in their Dubai office. Sources believed that ultimately these bankers would be brought back to Pakistan to look after Barclays' operations here, as and when the bank takes over some Pakistani banks.

The sources further informed that some of the new inductees have already been left for Dubai to assume their offices while some will be going within next few days. It may be mentioned here that a number of mergers and acquisitions of Pakistani banks are in the line of happening, as the State Bank of Pakistan (SBP) made it mandatory for a bank to have paid-up capital of Rs six billion to continue its operations.

After this condition many banks are in a fix because of their paid-up capital which is quite low than the requirement of the SBP. An analyst said that the profitable banks having lesser paid-up capital are being acquired by the foreign banks while the non-profitable local banks are lobbying for mergers, as foreign banks are not interested in them.

He further said that if Barclays acquires any of the banks in Pakistan, it is going to be another largest acquisition after the equitation of the Union Bank by the Standard Chartered Bank.


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## Owais

*$57.6 million garments orders diverted to competitors *
\
KARACHI (October 13 2006): Over $57.6 million worth export orders for readymade and knitwear garments have been diverted from the country to the regional competitors during the last two months of the current fiscal year, trade sources told Business Recorder on Thursday.

Sources said that the country has been witnessing decline in its textile exports since the beginning of new financial year and the regional competitors like China, Bangladesh, India and Sri Lanka are aggressively marketing their products and price competitiveness in the world's markets. The statistics reveal that the country has exported around $229.15 million readymade garments during July and August, this year, as against its export of nearly $237.77 million during the same period last year, depicting a straight decline of $8.62 million or 9.5 percent.

Similarly, knitwear exports from the country was recorded at around $318.5 million during the said period (July-Aug06) as against $347.34 million during the same period last fiscal year, portraying a drastic downfall of $28.84 million.

Likewise, the number of exported readymade garments' units have also shed by 0.648 million dozen during the period under review as it has been recorded at 6.176 million dozen as compared to 6.824 million dozen units exported during the fiscal year 2005-06.

Besides this, the exported units of knitwear garments during July-Aug06 fell by 1.692 million dozen as the country had exported some 12.91 million dozen as against 14.602 million dozen units during the financial year (2005-06).

"Actually, the manufacturers of Bangladesh are getting Pakistani fabric at 3 percent lesser price than the local manufacturers due to 3 percent Research and Development (R&D) support enjoying by the local industry," said a leading readymade garment exporter.

He said that higher cost of production, increased wages of unskilled workers, rising international competition and pathetic infrastructure has let the local manufacturers and exporters price uncompetitive on the international front. "Bangladesh enjoys zero percent duty on its fabric import to European Union (EU) countries, while Pakistani exporters have to pay 10 percent import duty," said another exporter.

Commenting on the recent downward trend in country's textile exports, one exporter said: "This downward trend could continue as we have already missed a number of big export orders due to frequent and prolonged power failures across the port city."

He said there are one million garment workers in Bangladesh whose average wage is Rs 1400 (Pak rupees) while Pakistani workers get minimum wage of Rs 4,000.

On the contrary, some 800 members of Pakistan Readymade Garments Manufacturers and Exporters Association (Prgmea) across the country are engaged in exporting locally manufactured garments mainly to European Union (EU) countries followed by United States, Canada, United Arab Emirates (UAE), and Japan.

According to statistics, China enjoyed biggest (19 percent) share of United States market in 2004-05. India was 8th in ranking with 3.4 percent, followed by Bangladesh and Pakistan with ranking 10th and 21st and market share of 2.8 percent and 1.7 percent, respectively.

Similarly, regarding EU countries, major chunk of export was claimed by China (13.2 percent), followed by Bangladesh (3.8 percent market share) and ranked 5th, India (2.9 percent) 6th in ranking, and Pakistan stood 11th with 1.1 percent market chunk during 2004-05.


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## Owais

*Oman Oil buys 49 percent stake in Orient Power *
ISLAMABAD (October 13 2006): The Oman oil Company acquired a 49 percent stake in country's Orient Power Company. The 450MW power plant will be constructed in two phases at Balloki, just outside the city of Lahore.

Mulham Al Jarf deputy chief executive officer of Oman Oil Company and Nadeem Babar Chief Executive Officer of Orient Power Company signed the agreement in here on Thursday in the city.

This project represents a groundbreaking investment for Oman Oil Company in Pakistan especially when it meets our international investment guidelines, said Molham Al Jarf, deputy chief executive officer of Oman Oil.

'Phase I of the project is expected to cost around $181 million. The plant is designed as a combined cycle gas-fired project. The plant is scheduled to be completed in two years and is expected to be operational in late 2008,' said Nadeem Babar CEO of Orient Power Company.

Sui Northern Gas Pipeline will supply natural gas under a long-term supply contract and all the power produced will be sold to National Transmission and Dispatch Company under a long-term power sales agreement.

The project will be connected directly to the Lahore Grid, and on completion of both phases, it is expected to provide nearly 20 percent of the power requirements of Lahore, 'Times of Oman' reported.


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## Owais

*HBL disallowed to operate in India *
ISLAMABAD (October 13 2006): Reserve Bank of India (RBI) has denied permission to Habib Bank Ltd of Pakistan to operate in India. After refusal to HBL, National Bank of Pakistan-is only Pakistani bank likely to be permitted to operate in India initially.

Habib Bank along with the state-run National Bank of Pakistan had applied to RBI, India's banking regulator, for starting operations in India. On the other hand SBI, PNB and Bank of India had sought approval for operating their branches in Pakistan.

After rejection of HBL plea, the National Bank of Pakistan is likely to be allowed to enter India, and as such either SBI or PNB will be permitted entry into Pakistan on a reciprocal basis.


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## Owais

*French investors invited to invest in Hyderabad projects *

HYDERABAD (October 13 2006): The District Nazim Hyderabad Kanwar Naveed Jamil has said that establishment of five star hotel, industrial expo centre and extension of industrial estate was at the top of the district government agenda to introduce and strengthen new economic & industrial culture in the district for the socio-economic uplifting of the people.

This he observed, while talking with the Commercial Counsellor Embassy of France in Pakistan, Walid Otari, who called on him at Circuit House here on Thursday. Members and office-bearers of Hyderabad Chamber of Commerce & Industries, MPAs Aslam Perwaiz and Naeem Ishtiaq and EDO Revenue Abdul Sattar Jatoo were also present in the meeting.

Talking on the occasion, the District Nazim informed the visiting guest that the district government had already reserved piece of land for the establishment of five star hotel and was in negotiation with different investors to implement the project. He also invited interest of French investors in this project. He said that further land required for the extension of Hyderabad SITE had been got sanctioned, while the matter of expo centre establishment was in process.

The District Nazim said that Hyderabad being situated on the bank of National Highway towards up country and near to seaport Karachi has good industrial potential. He said that availability of raw material due to its fertile land and manpower at low rate was another incentive for the investors, in addition to that full co-ordination and co-operation would be made available by the district government specially to encourage the foreign investment.

Kanwar Nadeem, while inviting French Embassy for holding industrial exhibition of French goods here, asked the French Commercial Counsellor that district government would provide all facilities required for the job.


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## Owais

*Vietnamese trade team due in November *

KARACHI (October 13 2006): The Commercial Counsellor and Head of Vietnam Trade Office, Naguyen Hong, informed the business community that a high-powered trade delegation from Vietnam will visit Pakistan in November this year and sign two memorandums of understanding (MoUs) with the Karachi Chamber of Commerce and Industry (KCCI).

Speaking at a meeting with KCCI President Majyd Aziz, he said the first MoU would be to participate in the My Karachi Exhibition scheduled to be held in June 1-3, 2007 and the second MoU would be an agreement to exchange delegations, ideas, and information, plus initiating a programme where each organisation, would on a reciprocal basis host a team of two representatives consisting of a member of the managing committee and a staff member who would visit one another to learn the best practices adopted in each organisation.

He said the Pakistani pharmaceutical exporters have a very good reputation in Vietnam for their clear-cut policies and business methods.-PR


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## Owais

*48,688 CBU motorcars imported in fiscal year 2006 *

ISLAMABAD (October 13 2006): The imported Completely Built-in Units (CBU) motorcars were at 48,688 in 2005-06 against 8,880 in 2004-05, following duties/taxes incentives extended to the auto sector in budget 2005-06. The CBR data analysis on vehicles (2005-06) reveals the value of imports of motorcars in CBU condition has also recorded robust growth of around 226 percent.

Subsequently, the collection of customs duty has also been significantly improved from Rs 4.7 billion in 2004-05 to Rs 12 billion during 2005-06 yielding a substantial growth of Rs 7.3 billion. The collection of duty from CBU motorcars has been exceedingly higher than the annual projection of gain of Rs 1 billion from the measure during 2005-06.

The analysis revealed that the auto sector is the most reliable source of customs duty collection due to tariff peaks and its elasticity. The cars in CBU condition were subjected to customs duty ranging from 50 percent to 100 percent in 2004-05.


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## Neo

Friday, October 13, 2006 

*Pakistan Steel needs full overhaul*

ISLAMABAD: The Pakistan Steel (PS) has presented a plan to the government seeking a complete overhaul of the mills, which the management describes as essential for the PS to survive as a viable industrial unit, a senior government official told the Daily Times on Thursday

The presentation was made at a meeting held at the ministry of industries, production and special initiatives early this week. The government has indicated that the management could be allowed to make investment to such an extent that could enable the mills for resale through privatization. 

This was for the first time that the PS management, now headed by Major-General Mohammad Javed (retd) presented the overhauling plan after the PS privatization was annulled by the Supreme Court. 

Mohammad Javed, who replaced Lt-General Abdul Qayyum (retd) as PS chairman, demanded of the government that fresh investment is necessary to fetch a good price for the industrial unit, which is being operated in the public sector. The ministry of industries has been opposing the complete overhaul of the PS. However, the ministry is supporting the idea of making investment by the government to enable the mills for resale. 

The meeting was presided over by Minister for Industries and Production Jahangir Khan Tareen and was attended by Minister for Privatization and Investment Zahid Hamid. Secretary Industries Kamran Rasool and Secretary Privatization Ikramullah and senior officials of the ministries concerned were also present. 

The official declined to give the exact amount needed for complete overhaul of the PS. However, it has already been observed that the PS has to undergo a major overhaul if it is to survive as a unit. 

A source privy to the meeting said overhauling is important because in the last 25-30 years, Coke-Oven Batteries, Hot Strip Mill and Steel Making Department remained totally ignored because of financial crunch and non-professional approach with which the mill was being run.

If the mill is revamped and partially expanded to 1.5 MT, its expenditure could be between $150-200 million, the meeting was informed. Its expansion to three million tons per year, which is its original economic size, would involve one billion US dollars. The official said there was general consensus at the meeting that the PS should be made a viable industrial unit and this is a must for the resale of the mills at a good price. 

In the last bid of privatization, the Privatization Commission and the cabinet committee on privatization were held responsible for lower price fixed for the sale of the mills. The PS management was of the view that the government could not attract good buyer if its condition was not substantially improved. 

There is a need that the government should go ahead with the overhaul plan of the mills before the next privatization move is launched.


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## Neo

Friday, October 13, 2006 

*Pakistan starts registration of cattle as Geographical Indication*

LAHORE: After a bitter experience at the hands of Indian scientists on registration of Basmati rice as Geographical Indication, Pakistan has initiated the registration process for its cattle (Sahiwal and Cholistani) and buffaloes (Neeli and Ravi) as Geographical Indication.

Babar Yaqoob Fateh Muhammad, Provincial Secretary Livestock, told on Thursday that the government has hired consultants besides allocating funds to initiate the registration process.

Ã¢â¬ÅThe Indian scientists have started claiming Sahiwal cattle as Indian cattle in some conferences, which our scientists have challenged then and there,Ã¢â¬Â said Babar Yaqoob, adding: Ã¢â¬ÅHaving strong realisation that Indian is trying to Ã¢â¬ËIndianiseÃ¢â¬â¢ it like the Basmati rice, we have started the registration process of these livestock as Pakistani GI.Ã¢â¬Â

According to him, both the Sahiwal and Cholistani cattle and Neeli and Ravi buffaloes are also available in India but still they are not in pure form there. Similarly, he added, the number of these breeds is also very minimal India. 

It may be noted that Pakistan has six indigenous cattle breeds in all four provinces which include Sahiwal and Cholistani (Punjab), Dhani and Bhag Tari (Balochistan), Kohistani (NWFP) and Kundi (Sindh). In buffaloesÃ¢â¬â¢ breed, both Neeli and Ravi belong to Punjab.

The livestock is contributing heavily to PakistanÃ¢â¬â¢s economy, as it has a total share of 37 per cent in terms of annual income against 33 per cent from the agriculture sector. Pakistan is also third largest milk producer world over and many multinationals are planning seriously to invest in PakistanÃ¢â¬â¢s livestock sector during next two to three years.

The government of President Musharraf has also given special importance to the livestock sector and budget allocations to this sector has registered a robust growth from merely Rs 50 million (some three years back) to around one and half billion for the current fiscal.

According to some estimates, Pakistan is producing 32 billion litres of milk annually, but 76 per cent of total production is wasted at homes due to unorganised marketing system. The government is investing heavily not only marketing but throughout the livestock chain to capitalise the potential appropriately.


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## Neo

Friday, October 13, 2006 

*Pakistan economy shows vigorous recovery: report*

ISLAMABAD: The government that came to power in 1999 has undertaken reforms, which have helped, produce a vigorous economic recovery since 2001.

Economic growth is a flagship indicator for the Pakistan economy illustrating the new dynamism of the unshackled private sector, Union Bank of Switzerland (UBS) Investment Research on Pakistan reported. 

The report of UBS Investment research was published recently on Ã¢â¬ÅAsian Economic PerspectiveÃ¢â¬Â, in which Pakistan governmentÃ¢â¬â¢s achievements on the economic front and positive growth in the economy were highlighted.

According to the report, the real economic growth, which ebbed to 2-3 per cent in 2000-01, expanded uninterruptedly to 7.8 per cent in 2004-05.

With fiscal and monetary stabilisation policies, a privatisation plan and benefiting from firm international support the economy has witnessed an upswing not seen since the early 1960s or mid-1970s, the report said.

About sustainability in the economy, it said that in our view maintaining the momentum of the current upswing depends at least in part upon a few key factors: encouraging private savings, raising the investment ratio, maintaining stable single digit inflation and resisting the urge to rollback fiscal reforms in a cyclical dip.

The UBS report observed said that previous administrations have succeeded in generating economic expansions, but they tended to be more limited due to the high government involvement in business and often came unstuck as external shocks or political change brought adverse policy reaction.

The UBS report said that what is different about this time round is that the administration has succeeded in raising the savings investment gap from -5 per cent of GDP in the 1990s to close to 0 per cent.

It added that this has happened alongside a big improvement in the current account and implies an accumulation of savings which, after a while will help lift domestic investment.

As a result the long term average growth rate has likely risen. Correlating this with previous trends is hard due to structural breaks in the series. However on the basis that the economy averaged around 6 per cent growth from the mid-1970s to mid-80s when industry was being nationalized and when the economy was less internationally integrated, then today a more efficient private sector with accumulating savings ought to manage 7-8 per cent after the investment ratio has started to rise with a reasonably stable political backdrop, the report said.

Ã¢â¬ÅWe would look for investment to be focused into the core comparative advantage areas of light manufacturing, commodities and agriculture production,Ã¢â¬Â the report said. It observed that at a minimum, investment into energy and water utilities would appear to be necessary considering the electricity shortages and water management difficulties in various parts of the country.

Economy, the report said has witnessed upswing not last seen since 1960s or 1970s Savings investment gap has risen driven by external & fiscal improvement 8-7 per cent long term average growth range likely sustainable, but further investment required to ramp up to 7-8 per cent Investment ratio yet to lift.

The UBS report further said that there appear to be 3 broad factors, which impact economic growth: the ratio of investment to GDP, the agricultural sector performance and the inflationary background. Perhaps the most important of these in the longer run is the investment ratio, the report said.

It added that previous economic expansions have been accompanied by a rise in this ratio (1960-65, 1974-76). Likewise slowdowns have also seen a reduction (late 1960s and 1990s). Unusually during the recent 2002-06 economic expansion the ratio has remained relatively flat, below the historical average.

It added that various studies have ascribed the present rebound to more efficient use of economic inputs (or a rise in total factor productivity, TFP).

However if this is so, looking ahead the supply-side bottlenecks developing (especially in energy) should be expected to put a cap on further acceleration in growth without a rise in investment, the report said. It said that a supply-side boon agriculture incomes account for around a quarter of GDP and so it is also a main determinant of GDP.

As a consequence rainfall, and its ability to bring supply side shocks is an ongoing factor in assessing the likely GDP growth outcome.

High rainfall in 1966-67, 1985 and 1995 undeniably boosted incomes in those years and conversely, the droughts, particularly those in the 1990s and 2001 had sharply negative impacts on GDP. Hence it is tempting to conclude, at least in the interim, that the healthy rainfall trends in recent years have enabled the current expansion to blossom so fully.


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## Neo

*PPL to invest $7.7m for exploration in Indus block *

ISLAMABAD: The government on Thursday awarded an exploration licence to Government Holdings (Pvt) Limited (GHPL) and signed petroleum production sharing agreement with GHPL and Pakistan Petroleum Limited (PPL) for eastern offshore Indus-C block, covering an area of 2,494 sq kms.

This block is located in the Arabian Sea, approximately 150 kms off the coast of Karachi. The PPL will invest US$7.7 million during the first three years of the initial term of the licence.

This new production sharing agreement is part of the governmentÃ¢â¬â¢s drive to attract investment into the oil and gas sector and boost PakistanÃ¢â¬â¢s economy by substituting imported oil with indigenous oil and gas.

To meet this objective, the unexplored offshore region is being given special emphasis where an oil and gas discovery can provide major impetus for attracting new investments, significantly affecting exploration landscape of Pakistan.

The PPL has been involved in petroleum exploration and production in Pakistan for over half a century and has made several oil and gas discoveries including the Sui field. It has geological and geophysical knowledge, data and experience in exploration and field development.

The company is the producer of gas from Sui, Mazarani, Kandhkot and Adhi fields. The company is operator of eight exploration licences and seven development and production leases. Besides, it has working interest in eight exploration licences and six development and production leases.

At present, the PPL produces around 770 million cubic feet of gas, 3,870 barrels of oil and 70 metric tons of LPG per day.

The execution ceremony was witnessed by Amanullah Khan Jadoon, Minister for Petroleum and Natural Resources and Mir Muhammad Naseer Mengal, Minister of State for Petroleum and Natural Resources.

The exploration licence and petroleum sharing agreement were signed by Ahmed Waqar, Secretary Petroleum and Natural Resources, Mohammad Naeem Malik, Director General Petroleum Concession, Agha Sher Hamid Zaman, Director GHPL and Syed Munsif Raza, Managing Director PPL.


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## Neo

*Wireless broadband services for *

100 urban centres soon: Awais

ISLAMABAD: Ministry of Information Technology is working on a series of projects to provide wireless broadband services to over 100 major urban centres to lay the groundwork for provision of e-services to the public.

Minister for Information Technology, Awais Ahmad Khan Leghari on Thursday said the government is planning to use resources from the Universal Service Fund to take the wireless broadband internet service to at least 100 towns with up to 0.5 million population as a way to increase awareness about using IT as a tool to improve socio-economic conditions.

He was addressing a launching ceremony of Ã¢â¬ËWorld Ahead ProgrammeÃ¢â¬â¢ in Pakistan by Intel Corporation with the objective to accelerating access to uncompromised technology for all people in Pakistan. The launch of the Intel World Ahead in Pakistan reflects the collaboration between Intel Pakistan Corporation, Wateen Telecom and Ministry of IT. 

He welcomed IntelÃ¢â¬â¢s initiative and hoped other companies would also help in the government efforts to accelerate access to technology and improve opportunities for education, commerce, healthcare and communication for all Pakistanis.

The minister expressed the hope the IntelÃ¢â¬â¢s World Ahead Program would provide a foundation for technology usage and ownership besides extending broadband internet access and preparing students for success in todayÃ¢â¬â¢s knowledge-based economy.

Leghari said e-services and telemedicine were some of the key facilities which could be provided to people at tele-centres. He said Pakistan was emerging on the radar screen of IT global market as there was a huge amount of good stuff happening in the It sector in Pakistan. 

The minister said Pakistan was an IT-savy country and was increasingly being recognised as a strategic location for big companies to expand their operations.

On the occasion, Intel Corporation Vice President John Davies said under the programme, Intel would establish six tele-centres at Attock, Multan, DG Khan, Sukkur and Gawadar to provide low-cost connectivity for voice and data, ICT training and basic telemedicine. The project would help provide an easy access to e-mail for job-hunting; gathering information about farming weather and the pricing of crops. Ã¢â¬ÅThese tele-centers will be a key step in bridging the digital divide and making technology more easily accessible to citizens in Pakistan,Ã¢â¬Â said Mr Davies.

He said his company had a strong history of collaboration with the Government of Pakistan to bring technology close to peopleÃ¢â¬â¢s lives. Ã¢â¬ÅThe Intel World Ahead program does more than just provide affordable PCs,Ã¢â¬Â he said, calling it Ã¢â¬Åa holistic programme to help build everything from the right systems tailored to local needs, and critical connectivity, to sustainable local capabilities through quality education that makes a meaningful difference in peopleÃ¢â¬â¢s lives.Ã¢â¬Â Chief Executive Officer (CEO), Wateen Telecom Tariq Malik said, Ã¢â¬ÅWe are proud to work with Intel and the Federal Ministry of Information Technology and Telecommunications to bring the first ever WiMAX broadband deployment to Pakistan.

We also expect to make available cutting-edge wireless broadband connectivity in selected urban and rural areas,Ã¢â¬Â he added.

Earlier in the day, Leghari held a meeting with a five-member Intel Corporation delegation led by John Davies.

Awais said his ministry was planning to use the USF aggressively to increase teledensity and broadband penetration by setting up more tele-centers which would also become the hub for provision of all key public services besides being repositories of knowledge and information for the local people.

He said the USF would become operational in about a month and the World Bank had also agreed to provide Pakistan a sum of $125 million to fund any project to increase universal access in the country. He said it were not just the urban areas starving for e-services but the rural areas were also eagerly looking for the delivery of such services.

Awais said the provision of about 20 public services electronically would involve massive investment and the government would like to outsource the provision and subsequent handling of these services to the private sector to add value to the local industry. 

The minister said his ministry would also invest heavily into the content development in local languages and efforts would be made to use Urdu as a medium of distribution of the public services.

He said the computer industry in Pakistan was going from strength to strength and though the imposition of GST had been a stumbling block, the ministry was doing all it could to ensure there was no discouragement to computer manufacturing and user proliferation.

He conceded there was a need to introduce low-cost personal computers to the literate population, especially students and government employees, and his ministry would consider provide incentives for any such initiative.

He said Pakistan being a country of 150 million people, including a growing middle class endowed with better literacy, could be an ideal place for investment for any international company.


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## Neo

Friday October 13, 2006

*Pakistan's NBP hopes to open Indian branch soon*

ISLAMABAD, Oct 13 (Reuters) - National Bank of Pakistan (NBP) , the country's largest bank, hopes to set up its first branch in India next year, the bank's president said on Friday. "We submitted an application to the Reserve Bank of India a few months back, and have since been in continuous correspondence with them," Syed Ali Raza told Reuters. 
"These things take time. But all going well, we hope to open up a branch there by the middle of next year," he said. 

State-run NBP has a market capitalisation of about $3.15 billion. In the year to December 2005, it had a net profit of 12.71 billion rupees ($209.6 million). 

Raza said it had not been decided where the bank would open the branch, but said preference would be in the capital, New Delhi. 

"It depends if they give us a choice. Most probably, it would either be New Delhi or Bombay," he said. 

"But our preference would certainly be New Delhi." 

Last year, India and Pakistan agreed to allow banks to open branches in each other's countries after a gap of four decades. 

The move came amid a hesitant peace process between the South Asian neighbours that included talks on the disputed Himalayan region of Kashmir, over which they have fought two of their three wars since independence from Britain in 1947. 

No Indian banks have yet opened branches in Pakistan. 

Two Indian banks operated four branches in Pakistan and one Pakistani bank operated a sole branch in India from independence until the two countries fought their second war over Kashmir in 1965. ($1=60.62 Pakistani rupees)


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## Owais

*Rs 19.5 billion package for Balochistan unveiled *


QUETTA (October 14 2006): Prime Minister Shaukat Aziz on Friday announced Rs 19.5 billion development package for Balochistan that includes Rs 2.5 billion special package for Dera Bugti and Kohlu districts. This package is in addition to Rs 31 billion being released to the province during the current fiscal year for mega projects, he said.

Addressing a crowded press conference here at the Governor house, he said special emphasis has been placed for socio-economic development of the province and improving the living standard.

Flanked by Balochistan governor Awais Ahmad Ghani and chief minister Jam Muhammad Yusuf, he unveiled a new "Vision for Balochistan," devised in consultation with the provincial government.

The vision provides the policy guidelines and actions for a developed and prosperous Balochistan, creating employment opportunities, ensuring speedy development and promoting investment-friendly atmosphere.

The Prime Minister said the development package (the Incremental Financial Support 2006-07) includes additional Rs 6.3 billion to be provided to the province under the NFC award, Rs 2 billion under gas development surcharge, Rs 2.1 billion deferment of federal government's loan, Rs 2.9 billion special development programme for all districts of the province for micro-level development.

Another Rs 2.5 billion for Kohlu and Dera Bugti districts, Rs 1.7 billion for construction of Labour Colony in Sui and Rs one billion each for Gwadar Development Authority and Gwadar International Airport are also included in the package.

He said currently 138 projects of the federal government are in progress in Balochistan at a total cost of Rs 164 billion. He said these projects have provided about 70,000 jobs to local youths of the province.

The Prime Minister also announced to provide 200 bulldozers to Balochistan on emergency basis and said tenders for import of the same would soon be invited. Referring to unemployment in Balochistan, the Prime Minister said 32,124 jobs would be given to the people of Balochistan.

"5000 jobs from grade-1 to 16 have been allocated for Balochistan in the federal departments while 6000 jobs would be provided to local youths under the newly increased job quota of the province from 3.5 percent to 5 percent," he elaborated.

"11000 jobs would be provided to Baloch people under the ministry of food, agriculture and livestock," he added. Prime Minister Shaukat Aziz said 11,000 jobs had already been allocated for Balochistan under the ministry of food and agriculture's programme in which 500 more vacancies would also be created this year. Some 160 vacancies at POF, Wah and Aeronautical Complex, Kamra, have also been allocated for Balochistan youth, he said.

The Prime Minister said 7,300 jobs would be provided to Baloch people in Pakistan army while 365 vacancies at Sheikh Zaid hospital, Quetta would also be filled by the local youth, he said.

"Advertisements for these jobs would be published in local press while the recruitment will also be made in Balochistan itself for which teams will be deputed in the province," he said.

"We will also launch an internship scheme in government departments all over the country under which youth would be given jobs in various departments at a monthly allowance of Rs10,000. It will also create job opportunities for Baloch people," the Prime Minister said.

The Prime Minister also referred to the Rozgar scheme recently launched by President General Pervez Musharraf and said the youth of Balochistan can also benefit from this scheme under which the National Bank of Pakistan will provide soft loans.

He further said the admission quota and scholarships for Balochistan students in various colleges and universities of the country have also been increased. The Prime Minister expressed satisfaction over the law and order situation in Balochistan and said the situation is now improving in the province.

Replying to a question, he said the government is ready to talk to every body for broad consensus on national issues. The Prime Minister, however, vowed no compromise would be made on stability, sovereignty and integrity of Pakistan.

Replying to another question, Shaukat Aziz said a Senate committee under the chairmanship of Wasim Sajjad is working on the provincial autonomy and the matter would be taken forward on the basis of its recommendations.

About the permanent solution of the financial crisis of Balochistan, the Prime Minister stressed the need for creating economic activities in the province through various sources, but said investment and better law and order situation are prerequisites which must be attained.

He said Balochistan has great potential in mineral and oil and gas sectors. Two big copper companies of the world from Canada and Chili are investing millions of dollars in the Recodik copper and gold project that will generate increased employment opportunities, he said.


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## Owais

*Pakistan becomes attractive country for investors: Musharraf *


ISLAMABAD (October 14 2006): President General Pervez Musharraf has reiterated that Pakistan has become attractive country for investors owing to continuity of policies and adoption of reform agenda by the government.

He was talking to chief executive PTCL Mohammad Abdullah Ali Bamakharama who called on the President in President Camp Office, Rawalpindi on Friday. Aiwan-e-Sadr sources told Online that President observed that the structural reforms introduced in the past seven years have enhanced the volume of economy twofold. Revenue receipts have surged by Rs 400 billion.

He went on to say the per capita income has increased and poverty has been reduced. "We are sustaining continuity of our policies and we will continue to pursue these policies in future, he added.

Pakistan has become attractive country for investment due to incentives and concessions announced by the government for investors. Flow of foreign investment soared beyond 3 billion dollars last year and it would witness further rise this year.

Citing particularly to development in IT and Telecom sectors, he said revolution has come in these areas. The number of mobile phone users has crossed the mark of 41.5 million. The performance of PTCL is improving following its privatisation, President underlined.

President underscored the need for further cementing the bilateral ties between Pakistan and UAE in all spheres of life. PTCL chief lauded the prudent policies including visa policy being followed by the government. He thanked the President for the co-operation extended by government of Pakistan vowing he would transform PTCL into a company capable of providing services of international standard. Maximum facilities would be provided to Pakistani subscribers, he assured.


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## Owais

*Oil discovered in Hyderabad *

KARACHI (October 14 2006): The Oil and Gas Development Company Limited has discovered oil in its exploratory well at Pasakhi North East, located in District Hyderabad, Sindh. An estimated 1800 barrel per day oil is expected from the exploratory well No 1 in Pasakhi D&PL in Lower Guru Formation.

The company's statement sent to Karachi Stock Exchange here on Friday says that the Pasakhi North East Well No 1 was spudded on March 5 this year and was drilled down to the depth of 4486 metres (MD)/4150 metres (TVD). The well has been plugged at 3530 metres and the lower Guru formation has been tested.

The post-completion results of the well are tabulated as N/T combination 12-B with gross quantity of 2000 barrel per day (BPD), while the oil quantity is estimated at 1800 barrel oil per day (BOPD), with water quantity of 200 barrel water per day (BWPD) at API 41.20 degree. The company would convey further information with respect to reserves, addition and sustainable production potential to all concerned as it becomes available.


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## Owais

*R&D support authority: Commerce loses battle with textile ministry *

ISLAMABAD (October 14 2006): The Commerce Ministry has lost the legal battle with Textile Ministry over 'right to administer Research and Development (R&D) support to textile sector'.

Sources told Business Recorder that the two ministries were having a legal bout over R&D controversy, but the Law Ministry stamped out Commerce Ministry saying that since the subject of R&D support had been allocated to Ministry of Textile Industry, the administration of this subject be transferred to it.

"Draft order, proposed to be issued by Textile Ministry, is perfectly legal and does not suffer from any jurisdictional infirmity," sources quoted Law Ministry as saying.

However, Commerce Ministry has challenged the observation of Law Ministry by sending the case to Cabinet Division which, one official said, was the right forum to decide such disputes. Giving background, sources said that Commerce Ministry, which is uneasy since the creation of Textile Ministry, had approached Law Ministry, claiming that the subject of R&D support in textile sector belonged to Commerce Division.

The stance of Commerce Ministry was that imports and exports across customs frontiers are a subject allocated to it under the Rules of Business, 1973 and it is competent to issue statutory rules and orders (SRO) involving imports and exports invoking its powers under section 3 of Imports and Exports (Control) Act 1950. The ministry claimed that the Act has not assigned to the Ministry of Textile Industry.

The Law Ministry said that the subject R&D support to textile sector is aimed at facilitating and supporting the textile sector. It seems pertinent to point out that the Ministry of Textile Industry came into existence on May 9, 2005, pursuant to the notification S.R.O. 430(1) 2005, and subjects related to textile industry were allocated to it, sources quoted the Law Ministry as saying.

It further said that the subjects allocated to the Textile Industry Division are enumerated at item 29A reads as follows: "Training, skill development, research for quality improvement and productivity enhancement throughout the production/valuation change".

In view of these provisions, it transpires that R&D support to textile sector is the administrative concern of the Textile Ministry, the sources quoted Azam Warraich, Additional Secretary Law as saying. "No doubt, administration of Imports and Exports (Control) Act, 1950 has not been assigned to the Textile Ministry but the subject of R&D support to textile sector has been allocated to it," Law Ministry added.

However, Law Ministry has suggested that as the issue raised by the Commerce Ministry basically relates to the interpretation of entry 7 of item 29 A of the schedule II to the Rules of Business, 1973, the Commerce Ministry, if it so liked, may seek interpretation of the Cabinet Division.

"If there still remains any legal issue to be resolved we will be glad to render necessary assistance to the Commerce Ministry as and when desired," Additional Secretary, Law said. Sources said that Commerce Ministry has now taken up the issue with the Cabinet Division.


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## Owais

*World Bank against gas subsidy for fertiliser industry *

ISLAMABAD (October 14 2006): The World Bank has demanded that the government should put an end to its policy of heavily subsidising the fertiliser industry for gas, saying that it was the basic reason of distortion in the pricing mechanism and was hurting other categories' interests.

Sources said the World Bank conveyed its concern on the issue when its power sector mission held a meeting with the officials of Petroleum Ministry some time back.

The bank said that fertiliser industry was enjoying subsidy in gas rates at the cost of other consumers, and continuation of the mechanism would keep on putting the other categories at disadvantage.

The bank is against cross-subsidy mechanism-based gas pricing mechanism and wants that Islamabad should charge all categories at actual rates to remove distortion in the system.

The World Bank's missions and Islamabad office have been raising the issue regularly with the officials during meetings and want early end to it.

It also expressed serious concern over subsidising general consumers at the cost of other categories.

The bank said it understands that a number of new fertiliser plants were being set up with gas supplied for use as feedstock at heavily subsidised prices. There are many other sectors which may have higher utility for use of gas (such as power sector, or even residential consumers if they are charged appropriately in relation to competing fuels). It proposed that the government should review the fundamental issue of administrative allocation of gas to different consumer categories, ascertain the relative utility of gas use in different end-uses, and establish the principle of charging tariffs which cover full cost of supply.

The government is subsidising gas to fertiliser industry to promote investment in this sector and help it produce more fertilisers to meet agriculture sector's demand. Despite these incentives, local fertiliser production is short of demand.

Pakistan is facing huge gap in fertilisers' demand and supply and relies heavily on imports to meet the demand of the farmers for all seasons.


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## Owais

*Hutchison plans to invest in Gwadar port project *

ISLAMABAD (October 14 2006): Hutchison Port Holding plans to increase its investment in Pakistan, possibly in the Gwader seaport project which, the group's chief executive, J E Meredith, said has the potential to become regional hub for trade.

He said that Pakistan is in his group's regional focus because of its geo-strategic location and investment-friendly polices. Hutchison Port Holding, which operates in 44 countries around the world and is already working in Pakistan, has plans to invest more in the ports sector, possibly by way of joint venture on public-private partnership basis, he said.

He expressed these views in his meeting with Prime Minister Shaukat Aziz here at the Prime Minister House on Friday. Also present at the meeting was Ports and Shipping Minister Babar Khan Ghouri.

Prime Minister Shaukat Aziz said the investment regime of the government, incentives, and the level playing field provided to investors, reduced the cost of doing business, openness of policies and transparency in transactions was attracting higher investments and Pakistan is geared to become a regional hub for trade and manufacturing.

He said that Pakistan, being a country of 160 million people with a huge market, offers attractive investment opportunities, particularly in the areas of power, energy, railways, IT & telecom, ports and shipping, construction and real estate sectors.

The reform agenda of the government is based on the philosophy of privatisation, deregulation and liberalisation, and transparency is the hallmark of all government transactions, he said, and added that the government was encouraging investments on public-private partnership basis.

The Prime Minister said the size of the economy had doubled during last seven years. Last year, the GDP growth was 6.8 percent. Per capita income grew at an average rate of 13.9 percent per annum during last four years, rising from $582 in 2003 to $847 in 2006. Poverty is declining and 15 million people have been brought out of poverty net in last five years.

The PM said that Pakistan was fast becoming a regional hub of IT, telecom and media business and a large number of companies are shifting their businesses to Islamabad as doing business is more feasible in Pakistan.

The Prime Minister said that as a result of the fast growth and investments being made by the private sector, there is a skills gap and the government has initiated many programmes for capacity building of the technical manpower.


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## Owais

*Framework for ADB power transmission project prepared *

FAISALABAD (October 14 2006): The National Transmission and Despatch Company (NTDC) has prepared 'Indigenous People's Development Framework' (IPDF) for Power Transmission Enhancement Program (PTEP) for Asian Development Bank (ADB), which will be implemented in Pakistan.

According to National Transmission and Despatch Company (NTDC) report, the objective of this project is twofold. On the one hand, it would establish the mechanisms and procedures required to satisfy the requirements of ADB policy on Indigenous People (IP), hereafter mentioned in the text simply as 'the ADB Policy', and on the other hand, it seeks to provide guidelines for preparation and implementation of the needed IP actions, either in the form of a modified 'Land Acquisition and Resettlement Plan (LARP) for situations where IP impacts are of small to medium magnitude, or in the form of a stand-alone Indigenous People's Development Plan (IPDP) for situations where impacts on IP are broad-based and systemic.

The Power Transmission Enhancement Program (PTEP), or hereinafter 'the Program', will be financed through a multi-tranche financial facility (MFF), including four tranches, each including several subprojects. The Facility appraisal requires the appraisal of the first tranche of the PTEP, which involves projects aiming at the expansion of existing grid stations through addition of transformers, construction of new grid stations, and installation of 220 kV transmission lines of various lengths.

Based on ADB operational policies regulating MFF proceedings all projects within a proposed tranche will have to be fully prepared. This includes, for projects with IP issues, the preparation of the appropriate IP action fitting the specific project situation.

According to NTDC sources, LARP or IPDP preparation activities will be initiated as part of the preparation of each tranche appraisal. Following the completion of detailed engineering design (DED) of the projects, each IPDP will be reviewed and, if necessary, updated prior to its implementation. The tranche design consultants and the tranche implementation consultants will have both international and local IP development capacity sufficient to cover all IPD planning and implementation needs for the first three years of the tranche implementation.

ADB will provide capacity to the Pakistan Resident Mission (PRM) for review and approval of Category 'B' IPDPs. Category 'A' IPDPs will be reviewed and approved by Regional Department at ADB headquarters in Manila.

In order to guarantee that the Project is implemented in accordance with the ADB policy and that general guidance is given for the preparation of IP action commensurate to impacts and IP compensation needs this document details the following: (i) ADB and Pakistan's Definition of Indigenous Peoples, (ii) Social Assessment Summary; (iii) The ICFRMP IP Policy and Strategy, (iv) Participatory Planning and Capacity Building (v) Document Preparation and Studies, (vi) Organisation and Responsibilities, (vii) IPDP Preparation Plan, (viii) Disclosure, Monitoring and Evaluation.


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## Owais

*World Bank sees power as most critical bottleneck for Pak-India economies *

ISLAMABAD (October 14 2006): The World Bank has pinpointed power as the most critical bottleneck, with transportation a close second, for Pakistan and Indian economies, as it estimates that due to power problems, these two lose 5-8 percent business annually.

The bank has also shown concern over the low tax-to-GDP ratio in Pakistan, which has declined over time and is now at 9.1 percent of GDP. It added that, like other countries of the region, Pakistan is facing increasing inter-regional disparities, with Punjab at one end and Balochistan and the North-West Frontier Province on the other. If these disparities went unchecked, poverty reduction and economic growth would dampen further, the bank has warned.

The South Asian region has lower saving and investment rates and, in particular, huge infrastructure deficits; distortions in labour markets; lower total factor productivity levels and poor quality of roads, inefficient ports, and inadequate transport services are still big challenges to sustain their growths.

In addition to infrastructure, the high cost of bureaucratic red tape and regulations--the sure signs of poor governance--impede investment in the region.

The bank says that ending poverty in South Asia in one generation requires faster growth. If growth can be accelerated and sustained at 8 percent a year, and the past response of poverty to growth is maintained, income poverty in the subcontinent will fall to single-digit in two decades.

Currently, growth is creating not just more resources but the potential to generate the political space for greater reform. On the one hand, it is breeding greater public demand for addressing urgent challenge and, on the other, it gives politicians the opportunity to make trade-offs through strategic prioritisation, it added.

The World Bank report titled 'Can South Asia End Poverty In A Generation', released by the bank last month, argues that growth, and the need for even faster growth, is helping to bring South Asia's key problems to the fore, creating pressures to deal with them. This means the region has an unprecedented opportunity: a chance of ending poverty in a generation.

It says that South Asia is sitting on another gold mine of growth--integration within the region. It is the least integrated region in the world. Starting from such a low base, greater trade among South Asian countries could have huge benefits to its people and then poverty reduction.

"Annual trade between India and Pakistan is currently about one billion dollars. Estimates show that it could be as great as $9 billion. Having enjoyed the gains from greater openness to the world at large, the private sector in each South Asian country can now benefit from trade with its neighbours", the bank said.

The bank says that even if the region achieves 8-10 percent growth, sustaining it will be a challenge, given a number of ticking time bombs lurking in the background.

Three risks stand out: Water, HIV/AIDS and Conflicts. These are denting growth in the region, the bank says. "Pakistan and northern India have been described as among the most 'water-stressed' areas in the world. Partly due to pricing policies that encouraged overuse, and partly due to hydrological and weather conditions, these areas, whose economies are dependent on irrigated agriculture, risk a severe water shortage at some point in the next 50 years."

Recent estimates for Andhra Pradesh show that global climate change, through its effect on droughts, could reduce future agricultural output and hence GDP by up to 3 percent. A major water crisis could undermine many of the economic gains accumulated over the years.

Although the HIV-prevalence rate is less than one percent, it poses an economic development risk to the region. There is a possibility of the epidemic spreading from localised groups, such as intravenous drug users or sex workers, to the general population. Furthermore, the syndromes of denial and stigma, which contributed to the spread of HIV/AIDS in other regions, are deeply rooted in South Asia.

Perhaps the most vivid set of risks facing the subcontinent is the number of simmering and full-blown conflicts. Sri Lanka, Afghanistan and Nepal have all experienced long-term civil conflicts in last two decades. The costs of Sri Lanka's 20-year civil war have been put at 2-3 percentage points of growth a year.

The region also faces numerous low-level conflicts that could flare up into a major disaster. Skirmishes on the border between Pakistan and India are one example; the Naxalite movement in India, which is prominent in one-quarter of the country's districts, is another. And the July 2006 railway bombings in Mumbai were a reminder that terrorism has a foothold in the subcontinent.

These three risks are real and they could seriously undermine the gains in economic welfare that South Asia has achieved over the past two decades.

But there are two reasons to be optimistic. First, South Asia has faced a number of adverse shocks in the past five years, and managed to sustain growth. The increase in oil prices has had only a mild impact on growth-mainly because governments took the politically difficult decisions to pass on most of the price increases to consumers, especially in Pakistan and India.

Just in the past two years, the region has also been hit with a series of natural disasters-floods in Bangladesh, a tsunami in Maldives, Sri Lanka and south India, and an earthquake in Pakistan-but the economies of these countries have rebounded within a year or two. The resilience of the South Asian people to these disasters has been remarkable.

Home to some of the world's fastest growing economies, fuelled by surging manufacturing and service exports that require highly productive and skilled people, South Asia has some of the worst levels of human deprivation on the planet. South Asia's recent growth offers an opportunity to change this.

Pakistan has enjoyed six percent annual GDP growth since 2002, but one in 10 children still dies before his fifth birthday and only 57 percent of children complete primary school.

Economic growth has led to a significant increase in the demand for education in India and Pakistan. Private schools are cropping up in rural Punjab province of Pakistan, charging about $2 per month in tuition, and hiring as teachers the graduates of the local high school. In urban Pakistan, all the growth in education enrolment is in the private sector.


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## Owais

*30 Chinese firms, 400 engineers working in Karachi projects *

KARACHI (October 14 2006): As many as 30 different Chinese companies and about 400 Chinese engineers are taking part in various uplift projects here. A Chinese delegation from Shanghai apprises City Naib Nazim Nasreen Jalil, while talking to her at her office on Friday.

They said a large number of Chinese investors were showing keen interest in investing in Karachi. The delegation, led by Vice Principal of Shanghai Urban Planning & Design Research Institute Huang Jiming, comprised of Zhou Dongxiao, Deputy Director of Shanghai Peoples Association for Friendship with Foreign Countries, Senior Engineer of Planning & Science and Technology Division Zhao Jiong, Shanghai Rail Transit Research's Deputy Manager General Wu Xioahong, Program Co-ordinator of Shanghai city Comprehensive Transportation Planning Institute Xu Yan and Qian Yulin of Environmental Protection Engineering Company Limited Shanghai, while Chinese Consul General Sun Chun Ye was also present.

The delegation members viewed that visit of City Nazim Mustafa Kamal to Shanghai has further strengthened friendly ties between Karachi and Shanghai, declared twin-cities in 1984.

Greeting the delegation, Nasreen Jalil said the path of friendship on which Pakistan and China were travelling jointly would be strengthened with passage of time. She hoped visit of Chinese delegation would further bilateral trade-ties between the twin-cities.

She informed that population of Karachi had gone beyond 16 million and felt the metropolis required a sound and co-ordinated planning. In this regard, she said the city government had already prepared a master plan for Karachi, which meets the needs up to 2020.

She was of opinion that opposition was quite strong in the City Council but as the city government was co-operating with them undertaking works to uplift infrastructure of 18 towns of without any discrimination, opposition was also extending its co-operation. She observed that although Karachi produces 68 percent revenue of the country but still it was deprived of its due share.

Nasreen apprised the delegation about reforms being made regarding representation of women in local bodies. She told that representation of women, which was earlier at 10 percent in the City Council, now had been raised to 33 percent and right now 830 women were present in city at different tiers of system unlike 20 women in past.

Leader of Chinese delegation Huang Jiming informed that population of Shanghai was approximately 17 million and after including those coming from other Chinese cities for their work, the figure would be around 20 million. He said Shanghai was spread over an area of about 6,000 Sq Km.


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## Neo

*Govt allows 100pc equity in insurance business*

ISLAMABAD, Oct 13: The government has enhanced the ownership rights to 100 per cent from 51 per cent for both domestic and foreign companies in life, non-life and general insurance business in a bid to attract foreign direct investment (FDI) in the sector.

A senior official told Dawn on Friday that the insurance sector was liberalised following bigger demand from the foreign insurance companies desirous to operate with 100 per cent equity in Pakistan.

The government, except the insurance sector, has allowed all other services-based sectors to hold 100 per cent equity. Due to this restriction, the insurance industry did not grow in Pakistan at a pace as it developed in other countries of the world.

The official said that Prime Minister Shaukat Aziz had approved the proposal in the recently held meeting of the Economic Coordination Committee (ECC) of the federal cabinet.

The official said that the commerce ministry had proposed to the government to allow foreign insurance companies to hold 100 per cent equity in life, non-life and general insurance business with the conditions for bringing in a minimum of $2 million in foreign exchange and raising an equivalent amount from the local market.

It was also decided that there would be no restriction on the number of branches and to whom they shall employ, said the official and added the foreign companies would be treated at par with the domestic companies.

When contacted Secretary Commerce Syed Asif Shah told Dawn his ministry moved the proposal on a feedback received from various insurance companies which intended to carry out investment in the sector.

He, however, said that this granting of 100 per cent ownership rights has not been committed with the World Trade Organisation (WTO). This means that Pakistan could retract this right to foreign companies from 100 per cent to any level.

The general insurance was the only area which was gearing up to grab new business opportunities that were emerging from a fast track privatisation programme, growing construction industry, increasing international trade and equally expanding domestic wholesale and retail trade.

When contacted Dr Ashfaq Hassan Khan, adviser to finance ministry, told Dawn the opening of the insurance sector would help attracting foreign companies to invest in the sector, which has enormous potential.

He said the liberalisation of the insurance sector was very much part of the financial reform process, which was delayed due to some problems. He said like banking sector, the insurance sector would also attract foreign players to get benefits from growing economy of Pakistan.

Answering a question he said that it would be premature to guess that how much investment would be attracted following opening of the insurance sector.

During the last three years, the government raised Rs240 billion by privatisation of 26 big public sector companies. The international trade during the year 2005-06 exceeded $44 billion and services sector that has wholesale and retail trade as big components were now more than 50 per cent of PakistanÃ¢â¬â¢s economy.

All these economic developments have offered business opportunities to the general insurance companies.


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## Neo

*Marble, granite cities to be set up: Tareen *

KARACHI: Three marble and granite cities will be opened in the country, first in Karachi, Sindh and Balochistan to develop marble and granite industry on modern lines and produce quality products.

This was stated by the Federal Minister for Industries, Production and Special Initiative Jahangir Khan Tareen while chairing a high level meeting regarding the development of marble and granite sector at PIDC House here Friday.

Sindh Minister for Mineral Development Irfanullah Khan Merwat and senior officials were also present on the occasion.

He said that it has been already decided to speed up the work for the establishment of marble and granite city and training centre in Karachi.

The federal government will provide Rs100 million for this project while Sindh government will provide land.

Tareen pointed out that granite city will be established at Thatta or at any other place identified by the Sindh Government.

Similarly another marble city will be established in Balochistan. 

He pointed out that latest and sophisticated heavy machinery will be purchased for these cities where small marble units can get these machines on rent for cutting, polishing and processing of marble and granite.

Ã¢â¬ÅThis will enhance the quality of the products and reduce wastage in marble and granite mining, cutting and polishingÃ¢â¬Â, the minister observed.


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## Neo

*KESC to take quick steps for supply gap of electricity: PM *

KARACHI (updated on: October 14, 2006, 23:43 PST): Prime Minister Shaukat Aziz said on Saturday that there is a surge in the demand for electricity as a result of the high growth and investment in the industrial sector and Karachi Electric Supply Corporation (KESC) should take necessary steps to bridge the gap between demand and supply to resolve the problems faced by the people of Karachi.

He was presiding over a meeting here at the Governor House held to review the power supply situation in Karachi.

The prime minister said the government is working to make Karachi the business and commercial hub of the country. It is closely monitoring the power supply situation in the city to solve the problems faced by domestic and industrial consumers, he added.

Shaukat said KESC urgently need to improve its transmission system so that it could be in a position to distribute additional power for which it is in the process of generating.

PM directed that mobile transformers be introduced in Karachi as a back up support to tackle the problem of power shortage caused by failure in transmission lines.

Chief Executive and Managing Director KESC Frank Sehersehmidt briefed the meeting about KESC's plans to enhance its power generating capacity.

He said presently there is no shortfall in terms of power supply as the demand and supply of power are almost matching and the power breakdowns are mostly caused due to renovation activities and the construction work going on in most part of the city.

Mr Frank said KESC is working on a comprehensive plan to increase its power generation and distribution capacity. The plans being implemented will result in addition of 1000 MW additional power to the KESC system within a period of two years.

The CEO KESC informed that the company will spend Rs 22 billion during the next three years on expansion, renovation and rehabilitation of its facilities.

He said as a result of steps being taken by KESC the power supply situation will considerably improve by April next year.

Federal Minister for Water and Power Liaquat Jatoi informed the meeting that Federal government will provide necessary funds to KESC under Physical Improvement Plan to enable it to ensure smooth power supply to Karachi.

Shaukat asked KESC to set up more complaint centres, increase its interaction with community and public representatives and also keep the public informed about its plans through media.


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## Neo

*ISLAMABAD, Oct 14 (APP): An International Symposium on High Capacity *

Optical Networks by Enabling Technologies - HONET 2006 was organised in USA to enhance already existing US-Pakistan collaboration for the promotion of science to benefit humanity at large.

The symposium jointly organized by National University of Science and Technology (NUST) and University of North Carolina at Charlotte provides a forum to the eminent scholars from US, Canada, Dubai, Japan and Pakistan to share their knowledge and experience, thus paving the way for new foreign linkages and bridges for further research and exploration of knowledge. 

And more importantly the fresh cooperative lies built during this symposium would further strengthen US-Pakistan relationship, besides promoting inter-scholars research collaboration. 

In the current age of globalization, it is imperative for all nations to join hands to pursue projects of mutually beneficial collaborative research. 

NUST has always ardently espoused this cause and has stayed in the forefront in achieving its objectives. The three-day US-Pakistan international symposium is a prime manifestation of this spirit. 

Funded by National Science Foundation (NSF), USA, the symposium was the third of the HONET series since its inception in 2004. It was co-sponsored by Higher Education Commission, Pakistan Telecommunication Company Limited (PTCL) as well as Charlotte Research Institute (CRI) and JEEE Cosmos, USA. 

The most significant outcomes of the previous two workshops/symposia were forming of associations and forging sustainable links between USA and Pakistan in the field of academics and scientific research, with agreements providing for students induction in various scientific disciplines as well as research visits by the faculty. 

The first workshop of HONET series was successfully held in December, 2004. Optical networks have emerged as one of the core technologies. Efforts at the HONET platform are sure to advance this revolution further.


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## Neo

*Pakistan wants Shenhua to revive $1b project*

14 October 2006 

ISLAMABAD Ã¢â¬â Pakistan wants Chinese Shenhua Group to revive the $1billion mining and coal fired power project of 600MW which remained unfinished for the last many years.

Pakistan has approached the Chinese government to help bring back Shenhua Group for negotiations for the revival of power project at Thar in Sindh.

Sources said that the government believed that before closing the chapter, the Chinese Shenhua Group should be contacted as a last and final effort before the project was offered for international bidding. 

The government, these sources said, had already taken a decision to establish a $500 million Thar Coal Mining Company on corporate lines with federal government's guarantee and the block earlier earmarked for Shenhua group could also be made part of that broader mining project.

When contacted, Secretary Petroleum Ahmad Waqar confirmed that a delegation to China comprising himself and adviser to the prime minister on Energy Mukhtar Ahmad had taken up the matter with the Chinese government in September. 

We really want to reactivate the project that had become dormant for some reasons, he said.

He said the delegation requested the vice-chairman of the National Development Reforms Commission (NDRC) of China, a highest planning forum like Pakistan's Planning Commission, to bring back the company for negotiations. 

We told them that we are willing to talk again on the project and resolve any outstanding issues, he said. He said the vice-chairman of NDRC had promised

to consult Shenhua Group and get back to the government of Pakistan with the response.

Waqar said the positive thing with the Shenhua group was that it was the largest group in China that is dealing with mining and power generation at the same time. He agreed that the main issue for break up of negotiations on the project was disagreement over the power tariff. 

We have no contact with the company since long and we have made another effort to restore

communication between the two sides, the petroleum secretary said.

He said in competing fuels imported coal was almost equal to natural gas rates of about five cents per unit power generation cost while domestic coal would be slightly higher at about 5.56.0 cents, which would again be far cheaper than oil based 14 cents or so per unit cost.

The 600-MW coal-fired private power project originally planned to be developed by Shenhua Group of China (SGC) at Thar coal field in Sindh Province had run into problems when the Economic Coordination Committee (ECC) of the cabinet in Pakistan approved and offered to Shenhua group 5.39 cents per unit a tariff that was not acceptable to the Chinese firm.

The SGC did not say no to the tariff but went into hibernation and did not respond to a number of communications originating from Pakistan, another government official said.

He said President Gen Pervez Musharraf was also disturbed over non-materialisation of negotiations with a firm on Thar development that he himself had brought in with a lot of effort.

He twice expressed concern over delay in the development of the 600MW Thar coal-based project and directed a high-powered committee to remove all irritants within 15 days a deadline that could not be met in 11 months. 

He had taken personal interest to provide over Rs 2 billion to the provincial government out of the federal resources to complete all infrastructure-related facilities.

Pakistan had offered a tariff of 5.39 cents per unit to Shenhua group last year. 

The Chinese company had originally demanded 5.79 cents per unit for the 600MW project against Wapda's offer of 3.2 cents and National Electric Power Regulatory Authority's (Nepra) assessment of 4.2 cents. 

The levelised tariff was, however, increased to 5.39 per unit in October last year at the intervention of Prime Minister Shaukat Aziz who wanted to kick-start the project.

http://www.khaleejtimes.com/Display...business_October435.xml&section=business&col=


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## Owais

*Saudi Arabia to be offered Gwadar as energy corridor *

ISLAMABAD (October 15 2006): Pakistan, during meetings between the two countries next month, will offer to Saudi Arabia the use of the Gwadar deep-sea port as energy corridor, official sources told Business Recorder here on Saturday.

They said that the first phase of the deep-sea port has almost been completed, at a cost of Rs 15 billion, and it would become operational in about two months' time.

They said that with the functioning of Gwadar port, Pakistan would become a hub of trade in the Gulf region and would serve as an energy corridor for Central Asia, Middle East, South Asia and western parts of China.

Gwadar is located at the entrance of Persian Gulf, from where 40 percent oil containers pass. "Negotiations with various private parties are underway for handing over operational rights of the port," sources said. Besides, the geo-strategic importance, some of the evident economic benefits of the development of Gwadar port are as follows:

To grab trade opportunities with landlocked Central Asian States and Afghanistan. Promote trade and transport with Gulf States. Trans-shipment essentially of containerised cargo. Unlock the development potential of hinterland. Diversion of influx of human resources from upcountry to Gwadar instead of Karachi. Socio-economic uplift of the province of Balochistan. Establishment of shipping related industries. Oil storage, refinery and petrochemicals. Export Processing and Industrial Zones. Reduce congestion & dependency on existing Ports Complex at Karachi/PQA. Serve as an alternative port to handle Pakistan's trade in case of blockade of existing ports. Will become a regional hub of major trade and commercial activities.


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## Owais

*Super Basmati DNA tests successful *

ISLAMABAD (October 15 2006): The DNA testing of Super Basmati has proved that its characteristics match with the already notified variety, published in the Gazette of Pakistan on January 1, 1998, sources told Business Recorder on Saturday.

The notification of the Super Basmati would be published in the Gazette of Pakistan under the Seed Act 1976 within a couple of days along with the deoxyribonucleic acid (DNA) results, they said. The row between India and Pakistan over registration of the Basmati variety started when India claimed developing the 'Super' in the Kharif 2003 season as a Basmati variety under the Exports Inspection Certification Act.

After the Indian claims, sources said, Pakistan decided to carry out DNA test of the variety at National Institute for Biotechnology and Genetic Engineering (NIBGE), Faisalabad, which matched the characteristic of the variety already registered under Seed Act 1976 on January 1, 1998.

After the notification of the variety, it would help the concerned officials to dissuade India from officially tagging its rice a 'Super Basmati', sources said, adding that the issue would be taken up bilaterally through diplomatic channels.

If the diplomatic means failed to persuade India, then Pakistan would move Dispute Settlement Court (DSC) of WTO.

However, Super Basmati rice issue was on the agenda of recently concluded international rice conference in India that it is exclusively Pakistani variety.

Super is originally grown in Pakistan as a cross between traditional pure line basmati cultivators and modern dwarf rice lines. Super Basmati has always had an edge over Indian Pusa Basmati-1 in international markets. Pakistan fears if India starts exporting the same rice, it could lose up to 40 percent of the world market.

Super Basmati is globally recognised as Pakistan's basmati variety and is very well accepted with exports over 800,000 tons. This rice variety has a high yield and earns a lot due to its superior quality. According to an estimate, annual rice exports from India and Pakistan fetch around $2.5 billion.


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## Owais

*EPB chief for setting up of leather garment city *

KARACHI (October 15 2006): Export Promotion Bureau (EPB) chairman Tariq Ikram has emphasised establishment of a "leather garment city" in Karachi to boost leather garments exports. Speaking at the certificate distribution ceremony of the second project for training of leather garment industry workers here, on Saturday.

He said leather garment sector is an important industry of the country and more attention should be given to its development. He assured the EPB would provide all possible co-operation for the establishment of this city. Tariq Ikram said exports are increasing every year and hoped it would cross $18 billion and likely to touch $18.5 billion during the current fiscal year.

He appreciated Plgmea for providing training to their workforce by foreign trainers. Earlier, Plgmea (central zone) chairman Chaudhry Ahmed Zulfiqar Hayat said the second training programme for the workforce of the leather garment industry has been completed successfully with the assistance of Korean technicians.

Six Korean technicians in the field of fashion leather garments and motorbike leather garments have been hired to provide training for six months in Pakistan.

The government and EPB had provided major financing for this project whereas participants shared 20 percent of the cost. The total cost of the project was Rs 13.5 million. Three technicians provided their services to the workforce of 13 factories in Karachi and three in Lahore while other three served 16 factories in Sialkot.

He said this programme is a small step in the right direction to improve quality of leather garments being produced in Pakistan and to reduce their costs. "We have to adopt modern production techniques to provide greater value products to our buyers," he said, added we have decided to carry out such training programmes on regular basis." Plgmea acting-chairman Waseem Reyaz, former chairman Fawad Ejaz and others were also present on the occasion.


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## Owais

*Ethiopian team keen to import auto parts *

ISLAMABAD (October 15 2006): A three-member Ethiopian delegation headed by Habte Radish, GM, Mesfin Industrial Engineering PLC visited Engineering Development Board (EDB) headquarters here on Saturday. The delegation showed interest in import of auto parts, three wheelers, tractors and power transmitters etc from Pakistan.

Hadish said that Ethiopia was huge market of 80 million people with no auto industry, therefore, the Pakistani manufacturers can easily make inroads there. He added that his company was interested to have some sort of joint venture with Pakistani manufacturers.

He further said that cement was another sector in which immediate benefits can be made by Pakistan as Ethiopia was producing 1.2 million tons of cement against a demand of 12 million tons. In addition the government has announced a programme of construction of 4,000 houses this year. He invited a delegation of EDB to visit Ethiopia in near future to review the potential of the industry.

Senior officials of the Board briefed the delegation about current policies of the government to increase exports. They assured the delegation that every effort will be made to provide them necessary data Match-making with Pakistani companies will be also arranged.


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## Owais

*Government striving for long-term economic uplift: minister *

ISLAMABAD (October 15 2006): Minister of State for Finance and Chairman of the Competitiveness Support Fund (CSF), Omar Ayub Khan said on Friday that Pakistan was focusing on innovation and competitiveness for long-term economic development.

According to a message received here from Lyon, France, Omar Ayub Khan was speaking at the concluding session of the 9th annual conference of the World Competitiveness Institute (TCI), organised in collaboration with the Chamber of Commerce and Industry Lyon. He also presented Pakistan's vision for economic development and its role as a catalyst in the region.

He announced an 8.4 percent increase in Pakistan's GDP over the previous year and added that this had produced a dynamic effect on the economic development of the country, creating new opportunities for employment and the elimination of poverty.

Omar Ayub Khan said that private sector in Pakistan had been given incentives targeting economic growth and the people increasingly trust the future planning and projects of the Government.

Khan said that the CSF had been established as a joint venture between the Government of Pakistan and the United States Agency for International Development (USAID) to address the economic competitiveness issues of the economy.

Speaking as the keynote speaker on the occasion, the Minister briefed the audience about the economic development policies initiated by President General Pervez Musharraf and Prime Minister Shaukat Aziz. "We are committed to improving the economic competitiveness of Pakistan through innovation and competitiveness", the minister announced.

Khan, who was representing a delegation in the conference consisting of professionals from the public as well as the private sector, said that Pakistan's speeding economic development had increased its energy requirements, and to fulfil these, four mega-dams, including the Kalabagh Dam, would be constructed during the next ten years.

Together they were expected to produce up to 4000 MWs of electricity and would earn the exchequer revenue of $4 billion annually. This had created immense potential in this sector. He added that after 2000, a stable and persistent economic policy had yielded positive results.

He added that, during the past four years, 10 textile projects have invested about $5 billion, the livestock industry was being upgraded and 4 percent of GDP was to be spent on health and education. He continued by noting that the overall economic weightings have swelled to $125 billion in the latest fiscal year, compared to $62 billion six years ago.

The Pakistan competitiveness delegation participated in the other sessions of the conference as well, including the potential of biotechnology clusters in Pakistan, governance and session innovation journalism. The conference was attended by more than 500 experts from various sectors.

Members and new participants joined together to share ideas, build alliances and explore the best modes of economic development. Additionally information was offered about specific clusters, introductory courses on cluster theory and presentations were given by an array of world experts. Omar also met Elisqbeth THION, Vice President of the Chamber of Commerce and Industry, Lyon to promote French investment into Pakistan.


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## Owais

*'Pakistan tourism to get a boost by organising Buddhist sector' *


KARACHI (October 15 2006): Pakistan tourism industry can get a major boost if a comprehensive and tourist-focused strategy is put in motion, and one prime sector is the Buddhist tourist sector, said General Srilal Weerasooriya, High Commissioner of Sri Lanka.

In a meeting with Karachi Chamber of Commerce and Industry (KCCI) President Majyed Aziz, during his visit to KCCI on Saturday he said that Buddhists from all over the world would visit Pakistan to see the Buddhist relics and sites such as Texila, Gandhara and Harappa.

He said that just in Sri Lanka there are 14 million Buddhists and many are keen to visit Pakistan. He observed that last year two delegations of Buddhist priests visited Pakistan for this purpose and suggested that to facilitate the Buddhist tourism, it was imperative that PIA should schedule two weekly flights on the Lahore-Colombo route.

He said that PIA Chairman Tariq Kirmani should take the initiative in this regard. General Weerasooriya further said that Buddhists from Myanmar, Japan and other South Asian countries could come here if an attractive tour package of one week was developed for them. Pakistan tourism officials should work with tour operators to develop the package as well as the infrastructure, he added.

The High Commissioner said that the Pakistan-Sri Lanka Free Trade Agreement had not been as successful as envisioned, as bilateral trade was limited to a few items and not more than $200 million.

He called for more imports of tea from his country and said that Sri Lanka was ready to source textile from Pakistan. He said that the proposed Ceylon Tea Centre to be set up in Karachi was still in the planning stage. General Weerasooriya invited Pakistani investors to set up power plants in his country since there was shortage of power and the returns were very profitable. He said that Sri Lanka was embarking on a program to explore oil and hoped that this would bring fruitful results for Sri Lanka.-PR


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## Owais

*Wapda row with Shenhua resolved: new tariff to be offered for coal-based plant *
KARACHI (October 15 2006): The main impediment between Wapda and Shenhua group has been resolved as the country's biggest power producer and distributor have finally agreed to procure the facility from coal-fired power plants at increased rates.

Sources told Business Recorder on Saturday that the government had re-established contacts with the Chinese group and invited it to resume its work on the 600MW, $500 million coal-fired power plant in Thar. The government had also pressed Wapda to increase the tariff for the coal-fired power producer, which is viable for both parties.

Sources said that a delegation of Shenhua group was due on October 19 on a five-day visit. The delegation, during its stay, would resolve all pending issues including signing of tariff agreement. The new tariff, at what cost Wapda would buy electricity from the Chinese company, has not been revealed so far.

Petroleum and Natural Resources Secretary has called a meeting on October 17 in Islamabad to discuss the issues with Sindh Coal Authority and Sindh Mines and Minerals Department. The meeting would discuss facilities to be provided by the government in Thar, sources said.

They said that President Pervez Musharraf was keen to see the project materialise. He was disappointed over the delay despite his hectic efforts to bring the Chinese company back to work.

The recent developments have shown that the government was very much worried about energy shortages in the country and wanted to utilise resources at the earliest to avoid any power crisis in the country. Sources said that formal announcement about the project would be made during the visit of the Chinese president in November next.

It is learnt that the Chinese group would increase power production from 600MW to 1000MW. If the project talks finalised then the company would start work by year-end, or early next year. The project would be completed in three years. The Shenhua group left the project in 2005 due to dispute about tariff. Wapda's reluctance to offer fair tariff put the plans of the group on hold.

Wapda had offered 5.7 cents per unit power but the group had the stand that since Wapda was paying eight to 13 cents per unit to gas-based, diesel-based and fuel oil-based IPPs, it should increase the tariff for the electricity produced by the coal-fired power plants.


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## Neo

*Refineries investing to reduce air pollution*

KARACHI: The government has set a deadline of 2008 for all the refineries to become compliant with EURO 11 specification aimed at reducing sulphur content in diesel to 0.05 per cent from the current around one per cent in order to reduce vehicular air pollution.

All the refineries have geared up efforts to make heavy investment in this regard in order to meet the deadline.

In sharp contrast, a paper relating to the Pakistan Millennium Development Goals (PMDGs) 2005 reveals that sulphur content should range between 0.5 and 0.25 per cent in diesel by 2015 as per the MDG target for ambient air quality. The document says that diesel used in Pakistan contains very high sulphur content (one per cent). Pakistan, however, plans to reduce the sulphur content by half in 2010 and by three quarter in 2015. The paper says that lead content in petrol is also high -- 0.35 gram/per litre -- which is a major health hazard.

Refinery officials say that the refineries are already far ahead of the PMDGs and the real facts are not reflected in the PMDGsÃ¢â¬â¢ document.

Aftab Husain, general manger commercial and technical services, Pakistan Refinery Limited, said that he had gone through the PMDGs but the market facts are very different. Petrol had already become lead-free in 2002 and the document reveals another story.

In diesel, he said out of total consumption of 7.5m tons per annum, 4.5 million tons were being imported that contained only 0.5 per cent sulphur contents. Local refineries produce three million tons of diesel that has 0.7-0.9 per cent sulphur contents.

Ã¢â¬ÅThe Euro II deadline set by the government for diesel is 0.05 per cent by 2008,Ã¢â¬Â he said, adding that his company was investing $188 million purely on this project.

Mr Husain said over $100 million investment was required for acquiring hydro desulphurisation plant from the US and European countries. All the refineries are working on this project.

However, he said the refineries might face a delay in achieving 0.05 per cent sulphur contents by 2008. Ã¢â¬ÅIt may take more time because all the consultants and plant manufacturers all over the world are already booked for various oil and gas projects in upstream and downstream sectors worth $260 billion in various countries.Ã¢â¬Â Many consultants and plant manufacturers have declined to take new projects, as they are already overbooked, Mr Husain says.

The project like hydro desulphurisation takes 36-40 months from front and engineering design, engineering procurement and construction phase up to commissioning, he added. Consequently, if the projects start at the end of 2006, it will take up to early 2010 for completion.

CNG: According to the PMDGs 2005, the number of CNG vehicles had increased sharply from 500 in 1990-91 to 280,000 in 2000-01 and to 700,000 by March 2005. Air pollution levels in most cities of Pakistan have reached critical thresholds. The most serious issue is the presence of excessive particulate matters (SPMs). Among others, the major sources of excessive SPM are vehicular emissions. The target for CNG vehicles population for the Medium Term Development Framework 2009-10 is 800,000 vehicles and 920,000 vehicles by 2015 under the MDG.

CNG Stations Owners Association of Pakistan Chairman Malik Khuda Bux was not aware of MDGs but he said the industry had already exceeded the MDG target of 900,000 vehicles by 2015, as over 1.1 million vehicles were already plying on the roads. He said at present there were 1,079 CNG stations in the country, and the government had already issued licences to 3,811 more stations, out which 119 stations were in various stages of construction. An investment of Rs20-25 million (excluding land price) is required for setting up a CNG station, he adds.

Inayatullah Ismail, manager media relations, SSGCL, flatly refused to provide any reply to a questionnaire sent by Dawn regarding CNG with reference to controlling vehicular air pollution. The subject is a part of the PMDGs. He said he had referred the questionnaire to the senior general manager, management services, Engr Naimur Rahman Akhoond, who said the issue of MDGs did not relate to SSGCL. Even Mr Inayatullah said that he had first time heard about the MDGs.

Ã¢â¬ÅOur function is to only provide gas. We do not indulge in other business,Ã¢â¬Â he said, adding that the government had never given any details or guidelines on the MDGs.

CNG Dealers Association Chairman Abdul Sami Khan had also no knowledge about the MDGs. Ã¢â¬ÅThe government has not intimated anything on it with the association,Ã¢â¬Â he added. Ã¢â¬â A.S.K


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## Neo

*Ã¢â¬ËWe are doing all within our means to achieve MDGsÃ¢â¬â¢*

By Ihtasham ul Haque

ISLAMABAD: Prime Minister Shaukat Aziz has said that the government is all set to attain most of the Millennium Development Goals (MDGs), including 100 per cent literacy rate by 2015.

Ã¢â¬ÅWe are committed to MDGs for eradicating poverty, providing health and education facilities to all, ensuring gender equality and combating HIV,Ã¢â¬Â he said.

In an interview with Dawn, the prime minister said the government was moving in the right direction for achieving the MDGs set by the United Nations.

Ã¢â¬ÅJust take the example of poverty, which is gradually reducing. Four million people were pulled out of poverty in 2004-05,Ã¢â¬Â he said.

He said poverty had reduced by 10 percentage point from 35 per cent to 25 per cent and the international donor agencies had also termed it a Ã¢â¬Ëgood achievementÃ¢â¬â¢. In absolute numbers, he claimed, the count of poor persons had fallen from 49.23 million in 2001 to 36.45 million in 2005.

To a question, Mr Aziz said that a number of policy measures had been adopted to improve literacy, and the focus was on backward areas. He said the way he was personally monitoring the progress, most of the districts would have to attain 100 per cent literacy by 2015 to support a national average of 88 per cent by 2015.

He stressed on the need to create awareness about the MDGs among different stakeholders, especially in the private sector.

Ã¢â¬ÅIt involves motivation and enough funds, and the government is doing this job very seriously, considering that the literacy level in the country is still very low,Ã¢â¬Â he said, emphasising on public-private partnership to achieve broad MDGs objectives.

The prime minister denied that the conditions set by donors, particularly those related to introduction of user fee in public hospitals, were causing problem to the government.

Ã¢â¬ÅSince all arrangements are being done on an affordable cost and with full support of the donors, there is no problem dealing with any issue,Ã¢â¬Â he said, adding that subsidies were being offered to different segments of society with the support of the donors.

He said the Ministry of Finance and the Planning Commission had worked out a joint strategy to adequately meet the millennium goals by 2015.

When asked about the assessment of funds required to implement the goals set by the UN, Mr Aziz said the government was regularly disbursing considerable funds to meet the requirements.

He said the World Bank and the Asian Development Bank had enhanced their annual financial assistance to Pakistan. Both were offering over $2.5 billion annually in order to remove poverty and help achieve other economic indicators relating to health, education, rural development, etc, he added.

About reducing child mortality, he said even though intra-national, intra-Balochistan and intra-Sindh disparities widened in the past, on an average there was an improvement of 10 percentage points in the immunising coverage.

In absolute coverage, he said, districts of Punjab dominated the top-10 ranking, with above 90 per cent coverage. Districts of Balochistan, with roughly 40 per cent coverage, were at the bottom, he said, adding that coverage in many of the districts in Sindh and NWFP grew rapidly.

Regarding the national MDG target of greater than 90 per cent set for 2015, the prime minister said that at least 16 districts had already achieved it, and another 50 districts were likely to do so around 2015.

He said disparities in the coverage of safe water supply had narrowed, indicating convergence nationally and provincially. He said the top 10 positions in the coverage were equally shared among the four provinces in 1998 as well as in 2005. However, districts of NWFP and Balochistan shared most of the bottom 10 positions in 1998 and 2005, he said, adding that districts in Balochistan also shared the distinction of being the fastest growing during 2001-05, while the opposite was evident for few districts in Punjab.

Under a broader definition of safe water supply, the prime minister said that nearly 36 districts of the country had achieved the national target (narrowly defined as pipe/hand pump) of 93 per cent set for 2015.

In reply to a question, he said there were many challenges like poverty and unemployment which warranted even more serious efforts on the part of the government and the private sector to achieve broad improvements in the economy.


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## Owais

$*407.3 million foreign investment received during July-August 2006-07 *


ISLAMABAD (updated on: October 16, 2006, 17:32 PST): Pakistan attracted a total of US $407.3 million as foreign investment during July-August 2006-07, official sources told APP here on Monday.

The sources said a total investment amounted, $407.3 million in the first two month of current fiscal year as against $295.8 million in the same period of last year, thereby exhibiting an increase of 37.7 percent.

The Foreign Direct Investment, a major component of overall foreign investment, was amounted to $375.5 million in the first two months of current fiscal year as against $230.8 million in the same months last year showing an increase of 62.5 percent, they remarked.

The sources further said the portfolio investment on the other hand stood at US $31.9 million as against $ 65 million last year.

"The US has been the largest investor in Pakistan accounting 31 percent of the total FDI in the first two months followed by UK (17.4%), UAE (12.8%), Switzerland (5.5%) Netherlands (4.2%) and so on", they added.

Official sources said that energy sector (oil and gas and power) along with communication sector have been the major attractions of foreign investors in Pakistan, accounting for 23.5% each, followed by financial businesses (17.4%) and trade (11%). Three-fourth of the FDI has therefore, come to these sectors, they added.

Official sources said that Pakistan has become an attractive investment destination in various sector of the economy and the government's investment friendly policies have further lured the investors - both domestic as well as foreign investors.

The stable and fastest growing economy of Pakistan in the region followed by consistency and continuity in the economic policies are yet another major reasons for the enhanced foreign investments in the country.


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## Owais

*New dry port to be constructed near Kot Radha Kishan *


KASUR (updated on: October 16, 2006, 17:33 PST): The Pakistan Railways has decided to construct another dry port near Kot Radha Kishan at Premnagar railway station to relieve load on Lahore's dry port, said the Chairman National Assembly's standing committee for Railways here on Monday.

Talking to reporters, Sardar Tufail Ahmed Khan said that 300 acres of land, for the project, has already been acquired by the Railway authorities and CBR which largely aims to expedite unloading of goods from trains arriving from Karachi.

He said the work for laying a railway track for the new dry port would be started soon and shades will also be set up for the unloaded goods at the port.

Tufail said that the government has completed the survey of all the railway bridges in the country and in the light of this inspection about 100 bridges are to be repaired and four new ones will be constructed.

He said that the Frontier Works Organisation (FWO) is undertaking the construction of Ran Pathani bridge in Sindh for which a budget of Rs 100 million have been spared. It could take another four months to complete, he added.


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## Owais

*Inflation reaches 8.73 percent in September *

ISLAMABAD (October 16 2006): Besides skyrocketing food stuff prices, increasing medical expenses are inflicting 'a body blow to millions of Pakistanis living on fixed income', as during September 2006, its (Medicare) prices leaped to 9.77 percent from 7.89 percent a month earlier.

Increasing expenses on education is another head of CPI basket which, during September, jumped to 7.16 percent from 6.25 percent in the same month last fiscal year. Within a month, its prices increase by 1.31 percent, affecting adversely the low-income citizens.

If the current rising trend persists, it would dampen government's efforts at achieving high literacy rate and ultimately Millennium Development Goals (MDGs).

It is important to note that general inflation measured by the Consumer Price Index (CPI) has touched 8.73 percent in September this year due to continuous increase in prices of food items, fuel and lighting, house rent, Medicare and education expenses over the corresponding month of last year.

The rising inflation-particularly of food items-is also becoming a nightmare for economic managers which, (food inflation) during September 2006, leaped to double digits (11.26 percent) from 11.08 percent a month earlier and 7.44 percent in July; thus snatching the purchasing power of the low-income group.

Food inflation, having more than 40 percent weightage in the CPI basket, unevenly affecting the purchasing power of low-income group, increased by 0.14 percent in September over previous month and 2.24 percent during August 2006 over previous month (July). This surging trend is a serious challenge for the government.

Majority of population consists of low- and middle-income groups and it always suffered most by the increasing food inflation. Whenever price of food basket goes up, it hits these groups and squeezes their purchasing power.

The Federal Bureau of Statistics (FBS) data reveals during 2005-06, average annualised CPI inflation was 7.92 percent and food inflation, 6.92 percent. While in the first quarter (July-September) of 2006-07, the average general inflation rose to 8.43 percent with food inflation more than nine percent.

It was at 8.73 percent (food inflation 11.26 percent) during September of this fiscal year, indicating that inflation is again on the rise and is still a potential threat to the economy.

The house rent also increased by 7.28 percent over the corresponding month of last fiscal year. The government statistics, however, showed that the house rent was constantly on the rise during the last seven months. The house rent rose by 0.42 percent in March 2006, 0.62 percent in April, 0.60 percent in May, 0.52 percent in June, 0.54 percent in July, 0.55 percent in August and 0.56 percent in September 2006 over the previous months.

However, the government remained silent about this phenomenal increase, which would have serious implications on the monthly budget of the low-income and middle-class people.

Though, the government has tightened its monetary policy in July, the SBP toughened its stance by raising its policy rate (the 3-day repo rate, which is its rediscount rate) from 9 to 9.5 percent, and adjusted upward both the banks' cash-reserve requirement ratio and their statutory liquidity requirement ratio, yet the accommodative monetary policy prevailed for the last few years would have a boosting effect on inflation.

The prices of all groups of the CPI basket also increased significantly in one month. These include: Medicare increased by 2.06 percent, education by 1.31 percent, household, furniture and equipment by 0.65 percent, house rent by 0.56 percent, transport and communication by 0.20 percent, and fuel and lighting prices increased by 0.16 percent over August 2006.

The FBS data reveals for several months, prices of some necessary goods and services such as food, house rent, transport and communication shot up significantly.

Economists opined that inflation should range between 7-8 percent, but it is likely to go up if the present upward trend in prices continued. At the moment, officials look quite helpless in controlling the abruptly surging trend in commodity prices.

It is also important to note all multilateral donor agencies, including the Asian Development Bank (ADB) and the World Bank have sounded concern time and again over high inflation in the country. They are expressing fear the inflationary and external pressures are expected to stay over and above the laid down targets for FY2006-07.

Experts analyses show that Pakistan would face two main challenges-burgeoning current account deficit fuelled by oil import and soaring inflation-which, they say, would hover around eight percent or slightly cross it at the end of the financial year despite good economic indicators. They say it would in turn affect prices of food and beverages, transport and communication and house rents.

In such circumstances, it has become hard for economic managers to tame inflation. They also look helpless in controlling prices of petroleum products, house rent, transport and communication, sugar, wheat and other edible items. It is obvious rise in petroleum prices will have a multiplier effect on a large number of items.


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## Owais

*Massive inflow of portfolio investment continues *

KARACHI (October 16 2006): Massive inflow of portfolio investment in the country's stock market continued as $13.5 million foreign investment came in the country during the last week ending October 12.

According to the data released by the State Bank (SBP), a total of $214,514,415 has been brought into the market during the current fiscal year (from July 1, 2006 to October 12, 2006).

A huge sum of $6,456,745 portfolio investment was recorded on October 12, 2006. Investors from Hong Kong invested $2,273,709 in the country's stock market while $21,435 was invested by investors from Switzerland; $775,491 from UK; and $3,386,110 from USA during a single session.

During the first three months of current fiscal year, almost half of the investment was made from Singapore. Investors from the island have more than $101.361 million in the Special Convertible Rupee Accounts (SCRAs) to their credit. Singapore is followed by $74.995 million investment from UK and $49.276 million from USA. A total of $16.352 million investment in the country's stock market came from Hong Kong while an investment of $59,943 came from Liberia.

Whereas during the said period major outflow came from Switzerland. As Swiss investors withdrew $22.235 million from Pakistani stock markets, while investors from BV Islands took away $2.063 million and investors from the UAE took away $1.748 million from the country's equity markets.

Others who took away their investment from the country's equity market during the period under review included Bahrain ($70,641), Guernsey ($66,177), Kuwait ($848,626), Luxembourg ($34,184), Qatar ($40,546), Saudi Arabia ($423,696) and Germany ($52).

Faisal Shaji, head of research, Capital One Securities, said massive inflow of portfolio investment was witnessed due to growing banking, oil & gas and cement sector in the country. He said major share of the portfolio investment came in the banking sector and more investment is expected in this sector. Cement and E&P sectors also have much potential and these sectors could attract more investment from overseas investors in future.


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## Owais

*PNSC finalises $135 million deal with ABN-Amro Bank *

KARACHI (October 16 2006): The Pakistan National Shipping Corporation (PNSC) has finalised $135 million financing deal with a leading foreign ABN-Amro Bank for acquisition of three vessels as a part of national flag carrier's fleet expansion plan, it is reliably learnt.

The new vessels includes two double-hull oil tankers of 'Aframax class' and one bulk carrier of 'Panamax class', but the Corporation is considering delaying the purchase of bulk carrier amid declining trend of tonnage (ships) in the international market.

The vessel acquisition plan would cost an amount of $150 million, of which $135 million has been arranged through financing from ABN-Amro Bank, while remaining amount of $15 million would be provided by the Corporation from its own resources.

In this regard, Prime Minister Shaukat Aziz has given go-ahead for the purchase of vessels.

Sources told Business Recorder that the Corporation obtained necessary approvals from the federal government that also appreciated the plan and it is expected that these vessels would be inducted into the fleet in the financial year 2006-07. The national flag carrier have to replace its ageing oil tankers as one of its oil tankers would be out of business under restrictions of Condition Assessment Scheme (CAS) of International Maritime Organisation (IMO) in 2007, while another three tankers would fall under the same in 2010.

Lack of adequate fresh tonnage (new ships) due to financial constraints has resulted in gradual deterioration of the PNSC fleet in terms of age profile and unless the trend was reversed, foreign vessels would grab a bigger chunk of the country's seaborne trade, the source said. The age profile of the fleet, however, is gradually deteriorating as in terms of dead-weight tonnage (DWT), over 62 percent of the fleet of 15 ships with about 636182 DWT is over 26 years old, while remaining 38 percent is 18 to 23 years old.


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## Owais

*EU export licence may be suspended: 'Karachi Fish Harbour needs to meet standards' *
KARACHI (October 16 2006): Terence James, International Expert in Facility Design, in his report issued recently about the Karachi Fish Harbour said if no action was taken, it likely would result in suspension of the EU export licence.

"The existing harbour is badly congested, there is no access to existing 'floating pontoons' and is lacking viable control system. The activities occurring at the Karachi Fish Harbour and market hall are short of the world industry standard and that required to meet European Union standards for fish handling," the report added.

"The existing facilities with the exception of the recently completed EU Corridor auction hall K-1, are in a poor state of repair, suffering badly from lack of maintenance. It is unlikely to be able to support any growth and should be viewed as a constraint on the development," it said.

The report, with title of "Trade related technical assistance facilities design" further said that the deterioration of the facilities and the more onerous standards demanded by the EU and internationally, had resulted in the current facility being incapable of meeting the required standard overall. This is resulting in expenditure, in a piecemeal fashion, to try and meet EU export standards.

It said there are no effective 'Traceability' systems in place, which are increasingly demanded internationally. Conditions of hygiene and handling on the vessels are inadequate. Failure to react to this change will result in continued expenditure and disruption trying to comply with EU standards in a piece meal approach, which will be both practically and commercially inefficient.

The report said the harbour was badly congested with vessels often two or more deep waiting to land. Fishermen are manhandling catches across other moored vessels as there is insufficient room on the quayside.

Vessels are landed by hand in a method, which is unacceptable regarding compliance with the EU standards. It is also inefficient, adding to the delays in landing and exposes the catch to contamination spoilage. Vessels should load their catch into approved containers, which can be lifted mechanically from the vessels. There is no effective control system adding to the inefficient landing and congestion.

STUDY FINDINGS: 

-Karachi Fisheries Harbour Handling Facilities: These are badly out of date, inefficient, unhygienic and incapable of meeting international or EU standards in their present form. Significant investment is required, both in rehabilitation of existing and new facilities.

-KFH Vessel Provision, Landing and Control: A confused, inefficient, often chaotic state exists leading to capacity restrictions, poor handling and spoilage of product, which in turn results in lower revenue for poor quality product and higher quantities of trash.

-Maintenance and Repair/Upgrade Provision: The current situation results in part, to the lack of adequate financial recourses to maintain and upgrade the harbour and its facilities.

The report said the harbour's overall position was likely to result demanded with consequences to the local society of job loss. Consequences to the commercial supply infrastructure and allied processing industries in declining business and job loss, and a decline of the local economy. In addition the government will loose foreign exchange earnings.

The report said that significant changes had been taken place in the international market in the past 10 years and changes would continue to occur in the future. EU legislation and the international expectation of best practice and traceability would result in uneconomic development and be inferior to a properly conceived plan.


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## Owais

*Italian group keen to invest in mine sector: MoU next month *

KARACHI (October 16 2006): An Italian group has shown keen interest to invest in Pakistan's mine and mineral sector and an agreement in this regard would be signed early next month.

Sources in the Sindh mines and mineral department told Business Recorder the Carrara group from Italy is coming next month to assess the potential of natural resources in Pakistan. During the visit, the group would sign a memorandum of understanding (MoU) with the authorities.

Sources said the group made the offer to Pakistani entrepreneurs in an exhibition in Italy after a detailed study of granite samples.

The Sindh mines and mineral department through the Export Promotion Bureau had participated in the Italian granite exhibition in this month. Pakistani entrepreneurs displayed six samples of granite. A number of foreign investors visited the stalls and had shown keen interest in pink and blue varieties of the granite, sources said.

They said about 52 countries participated in the exhibition and they set up about 1500 stalls in the exhibition. When contacted, Sindh mines and mineral department director-general Sohail Akbar Shah said Pakistan has rare quality of stones in the world that has vast potential to attract foreign investment.

He said the government was planning to lure foreign investments for exploration and setting up plants in the mines and mineral sector, specially in Sindh, where approximately one billion tonnes of granite had been identified.

In this regard the department had participated in the Italian exhibition and displayed six samples of granite. The quality of Pakistani granite attracted several foreign investors because of the rare quality of granite, he said.

He said: "Our focus was on Italian investors because Italy is the world leader in marble, granite and stone sector and has expertise in the industry. The Italians are also equipped with modern technology for mine exploration."

The granite rock formation is found in the Nagarparkar region of Thar.

These formations are 1450 to 1500 feet high and cover an area of about 40 square miles with an estimated one billion tonnes of granite reserves. The granite is available in a variety of colours and textures.

The Sindh government has allocated Rs 32 million in this fiscal year to carry out a feasibility report of the exploration. The report would contain study of the area, shades of granite (pink, blue, grey, etc), financial study of the project, he said.

The purpose of the report was to sort out exact reserves in the province because past studies gave estimations but did not define the actual quantity and locations, he said.


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## Owais

*Investment under CFS declines *

KARACHI (October 16 2006): Total investment under the continuous funding system (CFS) on the Karachi Stock Exchange week-on-week basis has declined by nine percent to Rs 22.27 billion against Rs 24.48 billion in the previous week.

Analyst said many of the badla eligible securities were subjected to spot trading during the week. Muhammad Sohail, an analyst at JS Securities, said it was due to this reason that weak holders offloaded their positions in these scrips.

This could also be the reason that open interest at derivatives counter increased to Rs 9.8 billion from Rs 8.9 billion in the last weekend as investors leveraged them through the futures market. Analysts attribute the fall partly to lesser demand for liquid funds.

Rate of return at the CFS counter remained stable at 13.4 percent, whereas cost to carry in the futures market increased by 84bps to 8.2 percent. The upper limit of the investment under CFS is Rs 24.5 billion.


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## Owais

*Sectors to be identified for foreign investment *

KARACHI (October 16 2006): Naib City Nazim Nasreen Jalil has said that the City District Government Karachi will identify the sectors and projects for foreign investors. Talking to Dr Junaid Ahmed, Adviser to the federal ministry of finance, who met the naib city nazim at her office, she said the city nazim would be requested to issue directives to the concerned departments in this respect.

Dr Junaid apprised her about the Investment Conference being organised in December this year to be participated by local and Saudi investors. He requested Jalil to identify sectors and projects that could be presented at the conference to the investors.


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## Owais

*Chinese investors offered maximum incentives *

LAHORE (October 16 2006): Punjab Chief Minister, Chaudhry Pervaiz Elahi has offered maximum incentives to Chinese investors for investment in Punjab under private-public partnership scheme.

According to a handout issued here on Sunday, in his presidential address to an investment conference at Shangai the Chief Minister said that Punjab is a best place for investment for Chinese industrialists and traders. The conference was largely attended by industrialists relating to electronics, mineral development, textile, tourism, power generation, real estate, media and other industries.

The Chief Minister said that Punjab government is providing resources in the industrial sector along with education and health as a result of which a conducive climate has been created for biggest investment in the province.

After the conference, two important MoUs were signed between the Chinese investors and Bank of Punjab.

According to the first agreement Bank of Punjab will ensure better financial facilities to Chinese investors while under second MoU they will invest in a mega project of international standard markets and stores in the province.

Under the first phase of this project, 150 hyper markets would be set up in different cities and after that more than one thousand convenience stores would be opened throughout Punjab.


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## Neo

*Competition driven sustained growth*

By Afshan Subohi

IT is no more natural endowments that decide the fate of a country and its people. It is rather the way resources are put to use or competitiveness of an economy that decides its position in the integrated modern world of today. Sustainable development, therefore, depends on the level of productivity and competitiveness in an economy.

A tiny Asian island city state Singapore would not have achieved the status it has compared to countries many times its size, rich in natural resources of wide varieties. Singapore is a country smaller in size to many bigger cities of the world. Karachi is about four times more populated than Singapore, peopled by 4.3 million.

The country has neither land nor drinkable water. It has to import both drinking water and earth from neighbours to quench the thirst of its citizens and to reclaim land to meet the needs of a fast expanding economy.

Singapore is a fascinating example of how sincerity of purpose, focused effort and effective planning can work wonders. It invested in its people and coastline and developed into one of the most business-friendly economies, housing offices of several thousand multinationals and overseas businesses.

It handles more than 20 per cent of containerised world cargo. The country is clean and green with enviable living standards. In the business world it is regarded as an efficient, peaceful and predictable country that serves as an excellent gateway to the world for trade.

Singapore was ranked fifth as one of the most competitive economies in league with US, Sweden, Switzerland and Denmark. And one significant reason for it is that its hunt for talents is worldwide. SingaporeÃ¢â¬â¢s Ministry of Manpower runs an international talent department.

Pakistan stood at 91st position in the current Global Competitiveness Report released by the World Economic Forum among 125 countries surveyed. India was ranked 43rd, Sri Lanka 79th.

The nine factors that were taken into account by the World Economic Forum to asses the competitiveness are: institutions, infrastructure, macro-economy, health and primary education and training, market efficiency, technological readiness, business sophistication and innovation.

Does this low ranking of Pakistan matters when it is growing at rates comparable to Asian giantsÃ¢â¬â India and China? Before attempting to answer this question, it would be appropriate to define competitiveness.

There are several ways to understand competitiveness but in essence at macro level it is determined by the level of productivity, that is, returns to capital from investment. Logically productive economies are far more likely to create wealthy countries.

Professor Micheal Enright, director of the Competitiveness Programme at the Hong Kong Institute of Economics and Business Strategy, defines it for firms as the ability to succeed against competitors in ways that lead to higher profits. At macro level, he says, that it is the ability of a nation to support productivity that allows a high and rising standard of living. This involves competitiveness in a sufficient range of firms and industries to foster economic growth and development, he says.

In the light of this definition low ranking of Pakistan indicates that businesses and most industries at the micro level are less productive and therefore cannot compete with their counterparts in the global market. Implying that return on per dollar of capital per unit of labour is lower than in most other countries. This certainly is a dismal situation and should ring the alarm for both public and private sector.

It was only after much of the petty business was wiped out from local market as a result of influx of cheap imports from China and increasing threat to exportable surpluses from competitors that the issue of productivity popped up on the development agenda of the government. Cynics, however, feel that the issue was taken up because of external pressure. They feel the government was sensitised by the western nations who need competitive trading partners in the developing world to support their economies.

Whatever the inspiration be, the government did create a companyÃ¢â¬â National Productivity Organization in 2003 under the ministry of industry and production. Though three and a half years later, the company is still without a CEO, it is said to be acting as a think tank to identify factors leading to low productivity.

The NPO collaborates with other private bodies such as Pakistan Business Forum to address the issue. Kamran Rasool, secretary ministry of industry and production admitted that the situation is not gratifying and the country has a long way to go before our industry and businesses can respond in a befitting fashion to the challenges of a dynamic international market. He felt that NPO will have to be made effective with sufficient budget to assist industry in training manpower and achieving sophistication.

A senior source in Islamabad told Dawn that so far the NPO has trained 22,000 people from management to shop floor cadres. The company is also said to be working to evolve benchmarking facilities for different categories of firms. A study was conducted for the spinning industry. Currently, the organisation is said to be working on a project to promote energy efficiency in industries.

Another company, Competitiveness Support Fund (CSF) has been launched this year in collaboration with USAID with $20 million seed money. An insider told Dawn that company was initially placed under the ministry of industry. However, donors on more comfortable terms with the ministry of finance got the CFS placed under this ministry to suit their interests.

When confronted the CEO of competitiveness support fund Arthur Bayhan told Dawn from Islamabad that they favoured placement of the CSF under ministry of finance as it is the core ministry compared to the ministry of industry which is a side ministry.

Ã¢â¬ÅCompetitiveness is a cross cutting subject much wider than the scope of a side ministry catering to one specific area of the economyÃ¢â¬Â. He said that a study identified a gap in PakistanÃ¢â¬â¢s efforts to become more competitive: it lacks a vehicle to finance and promote innovation. The CSF, he said is designed to address this gap.

He told Dawn that his company has identified four industries: motorcycle, food processing, fishery and automobile sectors where Pakistan has a comparative advantage. The CSF has decided to assist to improve competitiveness in these sectors.

An effort will be made to commercialise research at the academic institutions and develop linkages between universities and industry. The CFS also plans to create business incubators to get knowledge based industry promoted, he said.

Chaudhry Mohammed Saeed, President the Federation of Pakistan Chamber of Commerce and Industry was skeptical as he does not see any focus on research and development in private or the public sector.

Ã¢â¬ÅWho does not know that six per cent R&D duty concession offered to the textile sector is not directed to research. It is a subsidy to exporters to compete internationallyÃ¢â¬Â. For all the BMR in the textile sector it is still not in a position to compete without government support internationally, Saeed said.

The head of the apex private sector representative body pointed out that well positioned vested interest does not want promotion of innovative practices for petty gains. He quoted the example of powerful lobby of pesticides importers who assure that disease resistant seeds are not made available to growers for their business to thrive even if it costs dearly to the country.

Saeed accepted that the private sector has yet to realise the worth of research and development in promotion of their business in the long-run. Ã¢â¬ÅWe want immediate returns whereas research is a long drawn process. R&D is not a part of our culture. Till the time we understand and appreciate the role of innovation in successful business operation we will continue to dragÃ¢â¬Â he said.

Independent analysts saw the issue of competitiveness more of a political than an economic subject linked directly to investor perception of stability of the country. Ã¢â¬ÅWhen the mindset of the elite is to keep dual nationality to move out of the country with their assets at the first sign of political upheaval who in the right mind would invest in research?Ã¢â¬Â an analyst posed a question. Given an option, investors prefer short-term investment in capital market or properties or at best in a trading venture where money rolls back in months.

This adds up to the sad reality that the despite all pomp and show, the growth bubble can bust anytime. For a long-term sustainable development, the government will need to improve the competitiveness by investing in most dependable asset of the country, its people. It will need to create institutions but above all it needs sincerity of purpose to climb up the said index.


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## Neo

*Tardy pace of trade negotiations*

By M. Ziauddin

PRESIDENT General Pervez Musharraf has returned home from an 18-day long foreign trip with lots of praises for his leadership qualities and a couple of million dollars from the proceeds of his bookÃ¢â¬â¢s sale.

However, he seemingly was not so successful in resolving issues of a bilateral free trade area (FTA) agreement, a bilateral investment treaty (BIT) and the launching date for Reconstruction Opportunity Zones (ROZs).

And nobody in the US seemed to be interested in discussing with him the matter of lifting the ban on the supply of nuclear fuel and equipment for setting up nuclear power plants in Pakistan facing looming power shortages.

The US President during his visit to Pakistan in March last had announced the establishment of ROZs along the Pakistan-Afghan border in Tribal Areas. The products made in the ROZs are to get duty-free market access in the US. However, the relevant US legislation covering the ROZs is still being awaited. And there is no hope of things getting started until the next year.

And the US continues to be non-committal on inclusion of the whole textile made-ups into the proposed ROZs. The FTA is to be signed after the finalisation of the BIT. But so far there has been no concrete movement on the BIT as the kind of conditions that are being put forward by the US seem too restrictive for Pakistan to agree.

Even the Generalized System of Preference (GSP) offered to Pakistan by the US is expiring in two months time and there is no guarantee that the US Congress would extend the agreement for another year. Not only this. It is so cumbersome for the Pakistani businessmen to get a business visa for travel to the US and on the other hand, the travel of the US businessmen to Pakistan is highly restricted because of the frequent American travel advisories.

The national economy is about to enter the choke mode as energy shortages have started slowing down the wheels. Textiles, the mainstay of our exports are finding it increasingly difficult to compete in the world market against the better quality products of China, India and even Bangladesh.

The flow of foreign investment is confined only to non-export oriented, but highly profitable domestic utilities such as telephone services, power plants, gas and oil marketing companies. All these are expected to bring in no more than another $5-6 billion. But in due course of time, the repatriation of profits would drain out more than what had come in.

So, Pakistan badly needs either civil nuclear power, say about of 1200MW to 1500MW immediately or it have to go for the costly thermal power stations of equal capacity. International assistance is required to help us build the Bhasha dam at least over the next seven years at the latest to save the economic wheels from coming to a complete halt.

Meanwhile, in order to enhance our stagnating exports, we need access to the rich market of the US for our textile and leather garments. Besides, this we also need an expedited processing of the proposal to set up ROZs.

The latest economic numbers give an indication of the oncoming crisis. The external debt and liabilities stand at $37.26 billion compared with $35.83 billion in June 2005, showing an increase of nearly $1.50 billion. Last year alone, the government borrowed more than $2 billion. In the same year it also mobilised $800 million by floating Eurobonds. The year 2005-06 ended with a trade gap of $12 billion, almost equal to our foreign exchange reserves.

The import bill has surpassed the export earnings by almost 100 per cent. The Supreme Court verdict on the sale of Pakistan Steel Mills seems to have warned off the prospective foreign buyers of our other even more lucrative public entities. The only number that has continued to remain positive is that of remittances which is approaching $5 billion annually. But once the overseas Pakistanis see the gathering clouds they would find it risky to keep their savings in the host countries.

Clearly, the macroeconomic stability the government had so painstakingly established with severe belt tightening at a time when the 9/11 related bonanza was creating massive fiscal space is seemingly under serious threat from infrastructure shortages, low productivity, low savings, decelerating investment rates, lack of markets, limited variety of exportable goods and massive technological deficit.

With the US dragging its feet on its promises, it appears that Pakistan will have to fend for itself in the coming months and years. But how does a country which has come to completely depend on outside help for its economic well being and does not know any life without the US crutches, cope with such a reality?

Unless Pakistan takes some very smart and quick steps and without losing any more time, the country would surely be left far behind in the economic race that is on at a frenzied pace in Asia itself.

And in order to get a head start in this race even at this late hour, the country very badly needs the FTA and the BIT and the ROZs. So, the government would do well to focus more on these issues rather than wasting time and resources in non-productive foreign trips.


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## Neo

*Foreign aid declines for farm sector*

By Amin Ahmed

ISLAMABAD, Oct 15: Though agriculture plays a starring role as the most important sector for employment and income generation in Pakistan, foreign aid for agriculture and rural development has continued to decline.

Only three projects have been listed as ongoing in the Public Sector Development Programme for 2006-07, which received foreign aid, whereas for new projects no foreign aid has been committed. The three projects are: Chaghi water and agricultural development programme; livestock disease control or eradication of rinderpest; and agricultural business development and diversification project which is being assisted by the Asian Development Bank. The total foreign aid for these projects in 2005-06 was Rs907.5 million.

Foreign aid for agriculture and rural development fell to less than $5 billion in the late 1990s from $9 billion in early 1980s, according to statistics released by the UN Food and Agriculture Organization (FAO) on the occasion of World Food Day being observed on October 16.

Only investment in agriculture together with support for education and health would turn the situation around. The bulk of that investment would have to come from the private sector, with public investment playing a crucial role, especially in view of its facilitating and stimulating effect on private investment, the FAO said.

Underlining the importance of foreign aid in agriculture, FAO Director-General Jacques Diouf said that the public sector in many parts of the developing world had been slow to respond to the changes that globalisation had brought to markets. Investment in building the capacity of governments to help their small farmers and to encourage private investors was money well spent.

Increasing the volume of public investment in agriculture was of absolute necessity and it was crucial to make such assistance more effective.

The FAO had helped 165 member countries to obtain funding for almost 1,600 agricultural and rural investment programmes and projects. That represented funding commitments of over $80 billion, said Dr Diouf in his message on World Food Day.

The FAO report said that most of the worldÃ¢â¬â¢s farmers were small-scale farmers. As a group, they were the biggest investors in agriculture. They also tended to have inadequate or precarious access to food themselves. If they could make a profit with their farming, they could feed their families throughout the year and reinvest in their farms by purchasing fertilizer, better quality seed and basic equipment.

Small producers faced many obstacles beyond their control: lack of credit, insecure land tenure, poor transport, low prices and poorly developed business relations with agribusinesses to say nothing of natural factors such as drought, flood, pests and disease.

The report said a new model for cooperation between the public and private sectors in rural development was evolving. The model included new ways to bring together producers and agribusiness; establish and enforce grades and standards; improve the investment climate for agriculture; and provide essential public goods such as rural infrastructure.


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## Neo

*Adopting latest rice planting systems*

By Dr Sardar Riaz A. Khan

RICE an important food crop and one of the main export items accounts for 6.1 per cent of the value-added in agriculture and 1.3 per cent to the GDP. The country in respect to area under rice (paddy) ranks 10th in the world and 14th for yield per ha. The yield gap and world ranking suggests poor rice production system which needs immediate attention of the policy makers.

Rice is one of the highest water requirement crops depending on early and late maturing varieties. Course varieties are early maturing while fine basmati varieties are late maturing. It may be pointed out that of the total area, 62 per cent is under basmati, 27 per cent under Irri course varieties, and 11 per cent under others.

About 96 per cent basmati rice is grown in the Punjab as environment over there is suitable in maintaining the quality and aroma of basmati rice. Although, its yield is much lower than Irri but the demand is high in the national and international markets. Most of the farmers prefer to grow basmati rice despite low yield, high production cost and intense water requirement.

One kilogram rice is produced with about 25,000 litres of water while in China and India five and two kg of rice is produced respectively with the same quantity of water. The cost of rice planting and irrigation efficiency could be improved by following improved planting system.

The traditional rice planting system comprises puddling method that requires 10 to 20cm of standing water throughout its growing season resulting in higher water use than actually required. The problem of labour and expenditure has been aggravated due to the industrialization and urbanization. Lower plant population is also one of the main constraints in obtaining high yield under conventional planting.

However, a number of planting systems such as parachute rice transplanting technique, the SRI-method, the Chinese technologies, planting rice under plastic film cover, double cropping, hybrid planting, the Chinese rice transplanter, and directing seeding are other alternate systems which reduce cultivation cost, labour and water needs of the crop.

The Directorate of Agriculture, On Farm Water Management, Punjab in collaboration with the Pakistan Agricultural Research Council introduced the Chinese Parachute Rice transplanting technology in 2000 which takes 20-25 days to attain the seedling height of about 20cm as against 30-40 days. Plastic trays with 1.25cm deep plugs are used for raising the nursery.

About 2-3 healthy seeds are put in each plug of the tray followed by covering with sieved soil. A solo spray machine is used for throwing seedlings in such a way that proper quantity of soil surrounds the roots of each seedling in the form of a ball. Thus, parachute technology not only saves land and labour but also promotes early tillering.

The Directorate in collaboration with the University of Agriculture Faisalabad initiated the SRI technology. Initially farmers were not convinced but after witnessing the superiority of standing crop their confidence grew significantly. This technology increases production and raises the productivity of land, labour, water and capital.

Plants grown in close contact with weeds have to compete with weeds for nutrients, water and sunlight. In this technique seedlings are spaced by maintaining the plant to plant distance 20, 25, 30, and 40cm preferably in square pattern giving more access to sunlight and air above the ground.

China produces double cropping of rice using short duration and high yielding varieties. Pakistan should also study economic potentials of taking two crops of rice in regions with longer growing season. China is also growing high yielding and environment-resistant hybrid rice and has introduced five such varieties in Sindh. Minfal should collect information about its performance and study the potential of their cultivation in other provinces, as well.

Three technical reforms have taken place in China which are popularisation of dwarf varieties, reforming the cropping system by planting double cropping of rice and popularisation of hybrid which increases the average yield from 1,500kg per ha in 1950s to nearly 4,000kg per ha now.

China grows rice seedlings under plastic film covers which helps sowing and transplanting of seedlings to evade the attack of cold waves and low temperature in early spring in colder regions. Pakistan should also study the potential of this technology in Azad Kashmir, the NWFP, the Northern areas and parts of Balochistan having cold waves and low temperatures in spring.

The Chinese trasnsplanter helps in transplanting seedlings mechanically on large area in short time thus saving the cost of labour, besides planting the crop earlier providing it longer growing period. Pakistan should take into account its potentials.

China uses Azolla and the Indian Punjab Dhaincha as green manure crops which improve organic matter in the soil and physical conditions. It not only increases the yield of rice but of the following wheat crop as well. Rice is transplanted immediately after burying green manure crops to avoid delay in sowing.

The decreasing water resources and increasing labour cost may force farmers to adopt alternate ways. Direct seeding of germinated or ungerminated seeds is one of the options. It is getting popular because of economic benefits.

Although transplanting gives more yield than direct seeding, comparable yields with transplanting method can be achieved if direct seeded crop is properly managed. Seed priming technology is being used to increase the yield of direct seeded crop.

Scientists at the University of Agriculture, Faisalabad have established that osmohardening with calcium chloride in fine rice and osmohardening with potassium chloride in course rice which are more effective in priming seed.

The Directorate of On-Farm Water Management, Punjab has adopted conservation approach rather than conventional by developing zero tillage technology, furrowÃ¢â¬âbed planting, parachute and now KRL-rice transplanting techniques. It should also study the potential of various rice planting techniques as stated earlier. Besides other advantages these techniques may also help in saving water.


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## Neo

*Kuwait firm targets prime land in Lahore*
BY MUZAFFAR RIZVI 

16 October 2006 

DUBAI Ã¢â¬â A Kuwaiti firm has submitted Expression of Interest to acquire prime land in Lahore to build and operate a high-rise state-of-the-art five star hotel in provincial capital of Punjab, Pakistan.

"Noor Financial Investment Company of Kuwait will face prominent local business and hotel groups in the bidding competition, which is due in near future," a senior official of Pakistan's Privatisation Commission told Khaleej Times yesterday. "The Privatisation Commission is holding a pre-bid meeting today with the potential bidders who are keen to own and run a five star hotel on Shahrah-e-Quaid-e-Azam, Lahore," he said.

"The prime land is presently titled as "Services International Hotel (SIH) with an area of 15 Kanals and 4 Marlas," he said adding that the pre-bid meeting is being held to create better understanding of the process and to respond to the queries of the interested parties. 

The commission had invited Expression of Interest (EOIs) in March 2006 and received nine EOIs from interested parties including Noor Financial Investment Company of Kuwait.

Other parties submitting EOIs include Associated Group (Lahore), Bahria Town (Pvt) Ltd (Rawalpindi), Hashwani Hotels Ltd, Marwat Enterprises (Pvt) Ltd (Lahore), Regent Plaza (Karachi), SA Builders (Lahore), Tri Star Group (Islamabad) and Consortium of Sapphire Textile Mills Limited (Lahore). 

The available clear title of the land is in the name of Punjab Cooperatives Board for Liquidation (PCBL) to operate a hotel.

'The bidders for the land shall undertake to commence construction and operate a high-rise state- of- the- art five star hotel in an agreed time frame," the official concluded.


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## Neo

Monday, October 16, 2006 

*Pakistan plans to increase oil reserves*

ISLAMABAD: Pakistan has decided to increase its strategic oil reserves from 21 to 60 days of consumption to ward off security, commercial and economic concerns in case of an unexpected supply disruption. 

Official sources said the government had not yet decided how it would increase strategic stocks of crude oil and petroleum products. 

A number of issues emerged during initial discussions among stakeholders on the subject. The discussed issues such as imposing a tax to generate funds for the storage capacity and build-up of stocks, operations of these stocks and whether the stocks should be maintained by oil companies or by the government or by a new strategic stocks entity. 

As a result of these issues, the government has sought the World BankÃ¢â¬â¢s assistance to engage a professional consultant for a study on the subject, and to analyse the cost-benefit ratio of raising the stock level. 

Sources said the objective of the study was to develop a framework for the development of strategic crude oil and petroleum products stocks, in accordance with official security concerns and international best practices. An official source said the bank had prepared terms of reference for the study. The source said that the total storage capacity of all installations and depots in the country amounted to only 21 days of consumption, which would be insufficient during a supply crisis. Increased stocks would be available for use both in case of price and supply interventions, and difficult situations.


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## Neo

Monday, October 16, 2006 

*Pakistan prone to calamities: World Bank*

ISLAMABAD: The World Bank has put Pakistan on its list of countries vulnerable to natural hazards with a high rate of mortality and economic losses. 

The bankÃ¢â¬â¢s Ã¢â¬ËGlobal Hotspots StudyÃ¢â¬â¢ identified 86 countries vulnerable to natural hazards, and pointed out that 30 percent of PakistanÃ¢â¬â¢s population or GDP in various areas was at risk from two or more hazards. 

According to the study, 9 percent of the total area with 40.1 percent of the population is in the risk zone, while the percentage of GDP at risk has been calculated at 41.6 percent. 

For the first time, the study provided a scientific basis for benchmarking and reducing the risk of economic losses. 

A recent evaluation by the WBÃ¢â¬â¢s Independent Evaluation Group (IEG) said that natural hazard risks were highly concentrated, therefore special attention needed to be paid to planning ahead of disasters and reducing long-term vulnerability in countries at the highest risk. 

The study recommended that disaster mitigation be made an integral part of strategic planning processes in such countries. The bank is teaming up with the International Strategy for Disaster Reduction (ISDR), and has just launched the Global Facility for Disaster Reduction and Recovery to reduce the impact of natural calamities. 

After consulting various groups, the WB Board approved the global facility on the basis of three guiding principles; the new United Nations ISDR system would provide a coherent and coordinated approach to all global stakeholders for disaster reduction and recovery, ISDR processes, particularly joint programmes, would strengthen the global sharing of advocacy knowledge and partnerships, and the focus of the facility would be on capacity building to make the Millennium Development Goals disaster-proof. 

The facility provides expertise and technical assistance to Ã¢â¬Ëlow and middle-income countriesÃ¢â¬â¢ to mainstream disaster risk reduction in strategic planning. 

The Department for International Development of the UK has already allocated $8 million to this purpose, and several donors ensured additional support to the global facility. The new WB initiative also aims at supporting the implementation of the Hyogo Framework for Action, a global action plan adopted by 168 governments last year that includes guiding principles, priorities for action and practical steps to make the world safer from natural hazards.


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## Neo

*Govt pursuing extensive programme to meet energy needs: Musharraf *

RAWALPINDI: October 17, 2006: President Pervez Musharraf on Monday said government was pursuing an extensive programme to meet country's growing energy needs to sustain high economic growth and fast-paced industrialisation.

He made these remarks at a meeting also attended by Prime Minister Shaukat Aziz, as part of periodic review of the power sector.

Musharraf said the rapid economic growth and industrialisation has increased energy demand manifold and the government had made short, medium and long term plan to meet the future requirements. He underlined the need for tapping all sources of energy in this regard.

The President referred to various projects to generate energy through hydel, gas, coal and alternative sources to meet rising industrial demand that in turn will help reduce poverty through more job creation.

The optimum utilisation of energy resources is also important to achieve the goal of supplying electricity all over the country , he added.

Musharraf underscored the need of focussed efforts to plug gap between policy formulation and its implementation through regular review of demand and supply.

Speaking on the occasion, PM said that the government is also encouraging private sector investment in the energy sector in the wake of rising energy demand.

The premier said the government would explore all possible sources of energy to increase power generation in order to maintain the momentum of economic growth.

The government, he added, has formulated a clear policy, streamlined the procedures and reduced approval time to remove bottlenecks hindering the participation by the private sector.


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## Owais

*Plugging power shortfall: Musharraf approves three-pronged strategy 
*
ISLAMABAD (October 17 2006): President General Pervez Musharraf on Monday expressed dissatisfaction over Wapda and KESC power theft and line losses, and directed their management to improve performance in this area to make sure that maximum electricity goes for productive use. The President approved a three-pronged strategy for plugging the gap in power demand and supply before next summer.

It comprises sharp reduction in line and other losses, arrangements for more power generation on fast-track basis, and a prudent management to minimise load on system to avoid any failure or major fault in the system.

Sources said that the President was seriously concerned over the current losses level and wanted quick improvement from Wapda and KESC in this area. He directed the top management, present in the meeting, that they should take all possible measures to bring power theft and other losses of power to an acceptable level.

High losses rates of Wapda and KESC have also consistently been questioned by international donors, in particular the World Bank. But both utilities have yet to reach an acceptable level. The World Bank and other donors take 20 percent losses for electricity as acceptable level. Wapda's losses are comparatively less than KESC but still these are much higher than the acceptable level.

The meeting, that lasted for four hours, was attended by Prime Minister Shaukat Aziz, Minister for Water and Power Liaqat Ali Jatoi, Planning Commission chief Dr Akram Shaikh, Wapda Chairman Tariq Hameed, and KESC chief and senior officials of the concerned ministries and other departments.

The President also wanted a short-term solution to power shortage. He directed Wapda and KESC to implement short term as well as long term policy to overcome power shortage problem. He said that all means, including alternative sources of power generation, should be utilised, in an effective manner, to produce more power before next summer season when its use would go up considerably. Jatoi in his presentation told the meeting that Wapda and KESC have been directed to come up with an acceptable solution to power shortage that was posing serious threat to all sectors which substantially contribute to speed up the economic growth of the country.


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## Owais

*JP Morgan plans to reopen equity business in Pakistan *

ISLAMABAD (October 17 2006): J.P. Morgan is planning to reopen its equity business in Pakistan, the first foreign brokerage to return since they abandoned the South Asian nation in the early 2000s, sources familiar with the development said. The number 3 US bank shut its Pakistan equity brokerage arm five years ago as part of a consolidation plan.

"J.P. Morgan will be opening an equity platform in Pakistan along with equity and economic research," said a market source with knowledge of the development. "A decision in this regard has been taken, and the bank will start operations hopefully in January," said the source, who declined to be identified.

J.P. Morgan closed its equity broking business in Pakistan in 2001 saying at the time it did "not have sufficient scale in equity broking to maintain a sound business franchise". It continued its position in investment banking.

Pakistan's financial market has seen revitalised foreign interest in recent months. Last month, Asia-focused Standard Chartered completed the 487 million dollars purchase of a 95.37 percent stake in Union Bank Ltd, the biggest buy yet by a foreign bank in Pakistan.

This month, Dutch bank ABN Amro started a due diligence review of mid-sized Pakistani lender Prime Bank. According to bankers, Britain's Barclays Plc, Singapore's Temasek Holdings and HSBC are also exploring possibilities.

Another source familiar with J.P. Morgan's plans said the US bank would set up sales and research operations. "It will be the biggest international bank presence in the equity market in Pakistan," he said.

Analysts said J.P. Morgan's decision was testimony to the rising Pakistan risk appetite of foreign institutional investors. They said rising foreign portfolio investment in Pakistan in recent years, and the recent success of MCB Bank's global depository receipts (GDR) issue, also showed that foreign interest in Pakistan was rising.

In the fiscal year ending on June 30, foreign portfolio investment to Pakistan stood at 351.5 million dollars, compared with a net outflow of 27.7 million dollars in 2003-04. MCB Bank, Pakistan's second-largest listed bank, raised 150 million dollars last week by issuing GDRs in London.

A senior government official said the return of J.P. Morgan to Pakistan would be a significant move, and added that more foreign brokerage houses were likely to follow.


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## Owais

*Chinese investors: Elahi announces provision of 500 acres of land *


LAHORE (October 17 2006): Punjab Chief Minister Chaudhry Pervaiz Elahi has announced provision of five hundred acres of land for Chinese investors in different industrial estates of the province. He made this announcement at a reception hosted by Minister for Science, Technology, Culture, Information and Public Affairs of Jiangsu province, Sun Zhijun, at Nanjing on Monday.

Sun Zhijun is also a member of the Standing Committee on Jiangsu of Communist Party of China. A large number of the Chinese investors, members of the Chief Minister's delegation besides the ambassador of Pakistan in China, Salman Bashir were also present on the occasion.

The Chief Minister said that the Chinese entrepreneurs who would invest 25 million dollars in the industrial estates in Punjab, would be provided with this land free of cost while the others with developed industrial plots at the original cost. He said that such plots have already been allocated for Chinese investors in the industrial estate of Faisalabad.

He said that the industrial progress of China was a model for the other countries and Pakistan also wanted to set its future course of development on these lines.

He stressed the need for better co-ordination between the chambers of commerce and industry of China and Pakistan and said that Punjab government wants to exchange teachers and students with China in technical education sector.


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## Owais

*Over 50 percent of global FDI goes to rich nations: Pakistan got 0.24 percent in 2005 *

ISLAMABAD (October 17 2006): More than half of global foreign direct investment (FDI) goes to the developed countries due to their high profitability rates, a United Nations report says.

Titled as 'World Investment Report 2006, FDI from Developing and Transition Economies: Implications for Development', the report highlights how sharply the inflows to developed countries have increased over the past few years.

According to the report launched here on Monday, almost 90 percent of FDI inflows to developed countries originated in other developed countries--a strong indication of global wealth being concentrated in few hands!

In 2005 alone, the report said, the inflows of the foreign direct investment to the developed nations had jumped 37 percent, to $542 billion, and prospects for further increase were promising.

The amount ($542 billion) that went to the developed nations was more than half of the total $916 billion FDIs for the year (2005), and 29 percent higher than the previous year, it added. The developing nations, that otherwise perhaps are in the need of more inflows, received only $334 billion, 22 percent of the total investment that moved either way in the year.

In Asian region, the FDI inflows to South, East and south-east Asia, including Oceania, reached a new high of $165 billion in 2005, a 19 percent increase over 2004, the report said. With a continued high economic growth, the region has become more attractive to market-seeking FDIs. Furthermore, it has become a hot spot for transnational corporation investment (TNC) investment in financial services and technological industries.

China was at the top of the list among the recipient countries of the region, as well as of the developing world, with $72.4 billion inflows, followed by Hong Kong and Singapore with $35.9 and 20.1 billion, respectively. Pakistan was at the bottom on the list with only $2.2 billion received in 2005, way behind India which received $6.6 billion in the year.

Compiled by the UN Council on Trade and Development (Unctad), the report said that the increase was partly driven by strong economic growth in some countries. Also a high corporate profitability, that increased the number and volume of cross-border mergers and acquisitions (M&As) to the second largest recorded since 1987 was contributing in it.

In 2005, the largest single recipient of inward FDI inflows was the United Kingdom, with total $165 billion, largely due to the merger of two outfits into Royal Dutch Shell. The United States was a close second to the UK in the FDI recipients' list, with $99 billion inflows in the year.

Some European countries were also among major recipients of FDIs in 2005. They were France ($64 billion); Netherlands ($44 billion); Germany ($33 billion); Belgium ($24 billion); Spain ($23 billion) and Italy $20 billion.

About Pakistan, nothing much was said in the report, but experts believe a global phenomenon of sharp rise in the FDI over the past some years was of very little advantage for Pakistan's people due to its absorption in non-productive services sectors like telecom and petroleum (exploration and marketing).

A tendency of restricting investment to only big urban centres and neglecting rural areas altogether by foreign investors was another reason that deprived the downtrodden creatures of the surging FDI's fruits. This was the expression one could gather from a few questions the media persons asked at the launch.

But there was nobody, either from the UN economic team in Pakistan or the government, at the ceremony to answer these questions. State Minister for Investment Omar Ghumman was scheduled to chair the event, but he did not turn up.


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## Owais

*Central bank powerless in controlling rupee value: Dr Shamshad *


KARACHI: Governor State Bank of Pakistan Dr Shamshad Akhtar said Monday that the foreign exchange reserves of the country are quite enough for the payments of the 27-week imports; however, the bank has no authority over the value of rupee.

Addressing a seminar regarding access to financial sector in rural areas and mobile money transfer, she said that devaluation of money was given impetus by the increasing demand of dollar in the market.

Dr Shamshad Akhtar said that the central bank had no objection to the government&#8217;s permission for institutions to invest in national saving schemes, provided that there should be parity between banks&#8217; profits and the profits being given in these schemes.

Regarding Pak-Indian banking, the central bank had talks with Reserve Bank of India, she added.


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## Neo

*Trade surplus with US drops*

ISLAMABAD, Oct 16: PakistanÃ¢â¬â¢s trade surplus with the United States dropped by $47.5 million in the first eight months of the current calendar year over the corresponding period last year, despite reassurance by President Bush of further opening US markets for Pakistani goods and the ongoing efforts to reach a free trade agreement (FTA) with the worldÃ¢â¬â¢s sole super power.

The trade surplus with the US came down to $1.27 billion in January-August 2006 from $1.318 billion in the same period last year, statistics of the US Census Bureau show.

Sources at the commerce ministry said that things seemed to be not improving for Pakistan, as the vital issue of FTA was not taken up with the US authorities during the recent visit of Gen Pervez Musharraf to the United States.

They said the Generalised System of Preference (GSP), which the US had offered to Pakistan, was also expiring in the next two months and Pakistan would have to mount diplomatic efforts to make the US Congress extend the agreement for another year.

From January to August this year, Pakistan exported goods worth $2.454 billion to the US, mostly textile, textile products and apparel, while it imported goods worth $1.183 billion from the US during this period.

In August alone, the US had a negative trade balance worth $226 million with Pakistan. But keeping in view its long standing association with the US and its present role in the war on terror, Pakistan is still far behind and is on seventh position in the list of 25 countries from which the US imports textiles, textile products and apparel as its top trading partners.

Pakistan is even behind Bangladesh -Ã¢â¬â on number sixth in the list -Ã¢â¬â which exported textiles products worth $306.6 million to the US markets in August this year as compared to PakistanÃ¢â¬â¢s $295.2 million.

In July, Pakistan exported textile products worth 320 million to the US that saw a 7.9 per cent decrease in August.

China has topped the list by exporting textile products worth $3.5 billion to the US in August, followed by Mexico with $626.5 million at number two and India with $383.1 million at number three.


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## Neo

*Pakistan FDI inflow grew 95pc in 2005*

ISLAMABAD, Oct 16: Pakistan witnessed a 95 per cent growth in foreign direct investment (FDI) inflow in 2005 to touch the $2.183-billion mark, while the outflow fell to $44 million, states United Nation's World Investment Report 2006 launched here on Monday.

A comparative analysis showed that the growth in FDI inflow for Pakistan was much higher than some of the neighbouring economies. The FDI inflow has increased by 50 per cent for Bangladesh, 21 per cent for India and 17 per cent for Sri Lanka.

Globally, the FDI inflows have climbed by 29 per cent -- a second consecutive year of increase -- to reach a total of $916 billion. These increases were across the board. For developed countries, the FDI inflow went up by 37 per cent to $542 billion, while for developing nations it went up by 22 per cent to a record $334 billion.

However, still the world inflows remained far below the 2000 peak of $1.4 trillion.

Regionally looking South, East and Southeast Asia, because of continued high economic growth, has become more attractive to market seeking FDI. The region where the FDI inflows reached a new high of $165 billion in 2005 has become a hot spot for trans-national corporation investments in financial services and high technology industries.

The region is said to be attracting high quality FDI aimed at high value-added and knowledge-intensive activities.

The report also focuses on South-South investments that have been growing for almost 15 years and have strong global implication.

FDI OUTFLOWS: The FDI outflow for Pakistan fell to $44 million in 2005 from $56 million in 2004.

Outflows from the South, East and Southeast Asia region declined by 11 per cent during this period, although they were still relatively high at $68 million. Asia's new industrialising economies -- Hong Kong (China), South Korea, Singapore and Taiwan province of China -- remained the main sources of FDI from developing countries, despite a significant decline in their outflow in 2005.

Outward flow of FDI from the region still focuses on services, but a growing share of capital outflows from the region has been targeting manufacturing and natural resources.

Muhammad Muslim, director general (Planning and Policy), Board of Investment, speaking at the launch of the report said last year Pakistan was well ahead of its investment target of Rs3 billion. Pakistan received a cumulative investment of Rs3.6 billion.

In reply to a question, the official agreed that most of the foreign investment was going to the non-productive sector, particularly the services sector. Besides, he said Pakistan had its own limitations of absorbing the investment because of infrastructure constraints, something that was evident from the inability of Ã¢â¬Åour roads to cope with the growth in the automobile sectorÃ¢â¬Â.

However, he noted that the growth in the services sector had a positive effect on the overall economy and boosted the productivity of the country.


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## Neo

*PM approves geological survey for gem deposits*
ISLAMABAD, Oct 16: Prime Minister Shaukat Aziz on Monday approved a proposal for conducting geological survey for gem deposits in various parts of the country to quantify the existing deposits and identify potential mining locations.

Chairing a meeting at the Prime MinisterÃ¢â¬â¢s House to review the gems and jewellery sector development strategy, the premier said the government was working to establish Pakistan as high value-added, internationally competitive, world-class hub for precious stone cutting and jewellery manufacturing.

The government is targeting to double exports of gems and jewellery within a period of one year and increase the volume of export to $500 million in a period of five years from the existing $25 million.

Mr Aziz said Pakistan had high potential in the gems and jewellery sector because of availability of natural resources of precious and semi-precious gemstones, skilled craftsmen, strong domestic market demand and low cost of labour.

He said the Pakistan Gems and Jewellery Development Centre had been established to make efforts to increase the export of gems and jewellery.

The prime minister said the ministry of industries and production should focus on conducting market and industry surveys on regular basis to develop Pakistan brand and roadmap for international recognition. They should improve their marketing skills to establish Pakistani products as a brand in the world market, he added.

Mr Aziz also emphasised the need to promote research and innovation to diversify product base and establish quality standards and mechanisms for implementation.

Industries and Production Minister Jehangir Khan Tareen made a presentation about the significance of gems and jewellery industry and government's strategy to enhance exports and introduce value-addition in the existing products.

Mr Tareen said the government would establish gem testing and certification labs at gem trade hubs of Giligit, Quetta, Peshawar and Karachi. He said the training facility and manufacturing centres to upgrade technology and processes would be set up in Karachi, Lahore, Peshawar, Quetta and Northern Areas.


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## Neo

Tuesday, October 17, 2006 

*Inflation may fall in Oct-June of this fiscal*

* 6.5% inflation target expected to be achieved

ISLAMABAD: Recent tightening of the Monetary Policy is likely to reduce core inflation further during the remaining months (October-June) of the current fiscal year 2006-07 and the overall inflation target of 6.5 per cent is most likely to be achieved, according to the Quarterly Review of the Inflation during July-September period. 

Food inflation was 9.9 per cent in the first quarter of the current fiscal year as against 8.4 per cent in the same quarter last year. With the end of Ramazan and then Eid, the supply situation in the country is most likely to improve. 

A Finance Ministry report available with Daily Times on Monday states that that the overall CPI-based inflation stood at 8.7 per cent in September 2006 as against 8.5 per cent in the corresponding month last year. The pick up in overall inflation in the month of September 2006 is largely attributed to a sharp pick up in food inflation, which stood at 11.3 per cent as against 7.5 per cent in the same month last year.

The widespread monsoon rains in different parts of the country along with the collapse of a crucial bridge, linking north and south of Pakistan, disrupted the flow of goods throughout the country. Furthermore, with the advent of Ramazan (fasting month of the Muslims) during the last week of September, there is additional pressure on prices of vegetables and fruits.

All these factors collectively contributed to this rise in food prices during the month of September. The sharp pick up in food inflation contributed to this rise in overall consumer price index (CPI).

Non- food inflation on the other hand witnessed a deceleration in the month of September 2006. Non-food inflation stood at 7.0 per cent in September 2006 as against 9.3 per cent in the same month last year. Core inflation (non-food non-energy inflation), as expected, shows a significant deceleration in the month of September 2006. Core inflation was 6.2 per cent in September 2006 as against 9.6 per cent in the same month last year. Recent tightening of the Monetary Policy is likely to reduce core inflation further during the remaining months of the current fiscal year.

The first quarter of the current fiscal year (July-September 2006-07) shows a decelerating trend in inflation with the exception of food inflation. The overall CPI-based inflation was 8.4 per cent in the first quarter of the current fiscal year (July-September 2006-07) as against 8.6 per cent in the corresponding period of the last fiscal year (2005-06).

Non-food inflation declined to 7.4 per cent as compared to 8.6 per cent during the same period. Most importantly, core inflation averaged 6.6 percent in the first quarter of the current fiscal year as against an average of 9.2 percent in the same quarter last year. Food inflation on the other hand witnessed some increase during the period. Food inflation was 9.9 per cent in the first quarter of the current fiscal year as against 8.4 per cent in the same quarter last year.

With the end of Ramazan and then Eid, supply situation in the country is most likely to improve and there are already indications that food inflation is likely to decelerate in the remaining months of the current fiscal year. The overall inflation target of 6.5 per cent is most likely to be achieved.


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## Neo

* Sustainable financial systems for poor needed: SBP chief *

KARACHI: The State Bank Governor, Dr Shamshad Akhtar, has emphasised that building sustainable financial services systems for poor is of critical interest and requires laying foundation for potentially profitable market and enterprises that can develop ways to reduce the costs and risks of serving them.

Ã¢â¬ÅBoth SBP and banking industry are working towards exploring options on how to reach financial services to un-banked segments of population and will be able to draw from lessons and experience of the regionÃ¢â¬Â.

She was delivering her keynote address at a seminar on Ã¢â¬ËImproving Access to Financial Services: Mobile Money Transfer and BeyondÃ¢â¬â¢ which was jointly organised by the SBP and ADB here on Monday.

She said that while encouraging e-banking and e-commerce, SBP is now working closely with the banking industry to explore options for adoption of new technologies to reach under-banked areas with the objective of enhancing access of rural, agriculture and microfinance credit and to attract international remittances.

In this respect, strategic alliances with overseas partners with special focus on technological compatibility are encouraged by SBP. Dr Shamshad Akhtar highlighted the importance of sharing regional experiences of strategic approaches, options and innovative connectivity models for rural and under-served areas.

She noted that developments in the financial industry and technology have been mutually reinforcing with developments in database management systems along with networking has encouraged virtual and electronic banking and commerce thereby facilitating an explosion of financial innovations.

Additionally, the banking industry has exploited different technologies to deliver financial services with the proliferation of automated teller machine (ATM) and point-of-sale (POS) network and devices.

The use of a mobile phone to conduct payment and banking transactions (m-banking) is at an early stage in a number of developing countries and is growing as mobile phone service providers are penetrating in developing markets and setting up the infrastructure.

For improved coverage of mobile banking applications there is need to develop proper sector regulation, effective institutional and commission arrangement sharing amongst retailers, clients and outlets that accept and sell cash and commission. Such an arrangement can also be used to launch an aggressive marketing campaign that is geared for all types of users and service providers, she added.

In his opening remarks, Dr Peter Fedon, Country Director, ADBÃ¢â¬â¢s Pakistan Resident Mission stated that modern technology solutions hold much promise for increasing access to efficient and sustainable financial services and reaching clients in remote or under-serviced areas for continued economic growth.

Fedon stressed the importance of bringing in innovation and applying new technologies for improving operational efficiencies, and reducing transaction costs associated with delivery for financial services, such as worker remittances. Additionally, infrastructure that supports delivery of financial services provides a channel for multiple other services such as education that can further bolster development and entrepreneurship in rural and remote areas.

Speaking on experience of Philippines in using technology for greater financial services outreach, Jose G. Vega of Globe Telecom explained about the G-Cash product and its social and economic impact on mobile money transfer to more than 10 million Filipino migrant workers all over the world and improved access of the un-banked population to microfinance services in Philippines Allen Hammond of the World Resources Institute (WRI) discussed emerging technology models including (i) mobile wireless (cellular) networks; (ii) fixed wireless technology (WiFi, WiMax); and (iii) a new generation of satellite networks (VSAT) designed for data transmission. In this respect, he demonstrated on how applications for financial services, agricultural services, and health services can be addressed using VSAT technology as done in a pilot project in rural Viet Nam.

ADBÃ¢â¬â¢s John Forbes highlighted some of the key issues and challenges involved in the convergence of telecom and financial services and its effects on Anti-Money Laundering/Wire Remittance Operations, and Know Your Customer (KYC) standards.

In addition, legal and regulatory challenges were discussed and areas for international cooperation were identified. Mehr Shah of Pakistan Microfinance Network provided an overview of the current state of the microfinance sector in Pakistan, issues, and opportunities, and challenges it faces with respect to technology integration in its operations.

While concluding the seminar, Azhar Kureshi, Adviser to Governor on Development Finance highlighted the importance of pragmatic analysis of technological innovations for the financial sector.

He further apprised the participants about the efforts being made by SBP in connection with improving access to the financial sector, especially in the context of remittances of overseas workers.

It may be pointed out that this seminar was jointly organized by the State Bank and the Asian Development Bank as a part of regional information exchange and sharing of experiences in areas of mobile money transfer, emerging technology models and strategic options for getting connectivity into rural areas.

The senior representatives from SBP, major commercial banks, micro-finance banks and institutions, exchange companies, government departments, non-governmental organizations and major donors attended the seminar.


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## Neo

*Tremendous investment opportunities in upcoming LNG, LPG projects: Jadoon *
Tuesday October 17, 2006

ISLAMABAD: Federal Minister for Petroleum and Natural Resources Amanullah Khan Jadoon has said that there existed tremendous opportunities for local and foreign investors in the upcoming Liquefied Natural Gas (LNG) and Liquefied Petroleum Gas (LPG) projects. 
He stated this while talking to a delegation from Dawood Group of Companies led by its chairman Hussain Dawood who called on him here on Monday to discuss investment potential in the oil and gas sector. 

He said that the government was taking concrete steps to bridge the energy supply and demand gap by exploiting indigenous resources and through import gas from Iran, Turkmenistan, Qatar after 2010. 

The minister said that in order to meet the growing economic needs the government was working on import of LNG and LPG fuels and invited the Dawood Group of companies to avail investment opportunities in these upcoming projects. 

Chairman Dawood Group thanked the minister for this gesture and expressed his group?s willingness to participate in the LNG projects. He appreciated the governments? efforts for introducing investor-friendly policies in the oil and gas sector which has been helped to attract investment in the country. 

Senior Joint secretary (Development) Jehangir Khan and Director general (Gas) Saeedullah Shah were also present during the meeting. 

USAID Launches $11.5 Million Child Health Program in FATA 

Islamabad: The U.S. Agency for International Development (USAID) has awarded a grant of $11.5 million for implementing a three-year program on providing child health services in FATA to Save The Children, a US-based nongovernmental organization. 

Beginning October 1, 2006, the program will deliver a health package for FATA children up to the age of 5, covering immunization and treatment for lung infection, diarrhea, newborn care and nutrition. 

The package will also strengthen the Agency Headquarter Hospitals (AHQH) and Agency Health Management Teams (AHMT) that are working to achieve quick and visible improvements. The program?s challenge will be to foster public support for further improvements in the region?s health system. 

The main purpose of the USAID-funded program is to increase community acceptance of principles and practices essential to the health of the region?s children. It is targeting an estimated 1,512,00 women of reproductive age in FATA with activities to raise awareness of the importance of hygiene, nutrition, neo-natal care and other preventive measures for common ailments remain abysmally low among the locals. 

The FATA Child Health Support Program is part of the $3 billion in aid that the U.S. Government will provide to Pakistan over the next five years to improve education, health, governance, economic growth and security.


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## Neo

*July-Sept workers remittances hit $1.233 billion *
 
KARACHI (updated on: October 17, 2006, 19:13 PST): Pakistan received US $1,233.59 million as workers' remittances during first quarter (July- September, 2006) of current fiscal year, against $1,002.65 million in corresponding period of last fiscal registering increase of $230.94 million or 23.03 percent, the State Bank of Pakistan announced here on Tuesday. 

The amount of $1,233.59 million includes $0.98 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) & Foreign Currency Bearer Certificates (FCBCs), the SBP said.

In Sept 2006, Pakistani workers remitted $421.74 million as against $341.10 million in Sept, 2005 depicting increase of $80.64 million or 23.64 percent.

The inflow of remittances during first quarter (July - September, 2006) from USA, Saudi Arabia, UAE, GCC states (including Bahrain, Kuwait, Qatar & Oman), UK and EU countries amounted to $311.87 million, $242.79 million, $190.82 million, $173.47 million, $102.23 million and $36.43 million respectively as compared to $283.33 million, $174.32 million, $141.72 million, $130.79 million, $110.96 million and $26.85 million.

Remittances from Canada, Australia, Norway, Switzerland, Japan and other countries in the first quarter amounted to $175.00 million as compared to $128.51 million in corresponding period of last fiscal.

The monthly average remittances for July-September, 2006 comes to $411.20 million as compared to $334.22 million in same period of last fiscal.

The inflow of remittances into Pakistan from almost all countries increased last month as compared to Sept, 2005.

According to break up, Pakistan received workers' remittances during September, 2006 from USA ($108.28 million), Saudi Arabia ($77.45 million), UAE ($65.85 million), GCC countries - including Bahrain, Kuwait, Qatar & Oman ($58.05 million), UK ($32.85 million) and EU countries ($11.83 million) as compared to corresponding receipts from respective states during Sept, 2005 i.e. $94.40 million, $54.76 million, $48.70 million, $45.30 million, $38.57 million and $9.70 million.

Remittances from Canada, Switzerland, Australia, Norway, Japan and other countries in September, 2006 amounted to $67.25 million as compared to $48.50 million in September, 2005.


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## Neo

*22.5 million tons wheat production target fixed *

ISLAMABAD (October 18 2006): The government on Tuesday fixed 22.5 million tons wheat production target for Rabi 2006-07, while production of 12.4 million cotton bales would be the first estimate for the out-going Kharif season.

The Federal Committee on Agriculture (FCA), which met with Federal Minister for Food, Agriculture and Livestock (Minfal) Sikandar Hayat Khan Bosan in the chair, reviewed production of Kharif corps, water situation and its availability for Rabi season, along with availability of inputs and production targets for Rabi crops.

The meeting was informed that overall growth of the agriculture sector was positive, but in some areas natural disasters like floods and monsoon rain destroyed the crops in two districts of Sindh and Punjab each.

Later, addressing a press conference at the Ministry, the Minister said that the government was focussing on the development of agriculture sector. He said, "We are also expecting good growth in livestock and fisheries sub-sectors". The first production estimates of Kharif crops would go up during second and third reviews, he added.

About surplus wheat, he said that currently the federal and provincial food departments have a surplus stock of nearly two million tons. The fate of this stock would be decided after Ramazan. However, the government would give priority to domestic consumers, he added. About urea import, the minister said that the Ministry would import nearly one million tons urea to meet domestic demand.

The production of sugarcane would be 51.8 million tons, which is 16 percent higher than last year's production, while rice production will maintain the record level of 5.4 million tons as of last year.

Similarly, cotton production, in the first estimate, would be 12.4 million bales, which would be almost equal to last year's production recorded in the national account, but it would be 1.4 million less against the fixed target of 13.8 million bales for Kharif season.

TARGETS FOR RABI CROPS 2006-07 

WHEAT: The Ministry fixed a target of 22.5 million tons wheat production for the next season, with Punjab 17.8 million tons, Sindh 2.75 million tons, and 1.25 million tons for NWFP and 0.7 million tons for Balochistan.

GRAM: Total production of gram has been set at 706,000 tons, with Punjab 605,000 tons, Sindh 55 tons, NWFP 20 tons and Balochistan 26 tons.

LENTIL: It would be sown on an area of 47,000 hectares, with production estimate of 28,000 tons.

POTATO: The potato crops would be sown over an area of 114,000 hectares, with production of 2,000,000 tons.

ONION: The area target for sowing of this crop is estimated 126,000 hectares with production target of 2,103,000 tons for 2006-07.

WATER SITUATION: A representative of Indus River System Authority (Irsa), present in the meeting, informed the committee that water availability for Rabi would be 14 percent less than the normal availability of 36 MAF, but 3 per cent more than last year's availability.

The water storage situation as on October 17 was 5.28 MAF at Tarbela, 3.98 MAF at Mangla and 0.137 MAF at Chashma, with total storage of 9.36 MAF.

FERTILIZER POSITION: Availability of urea fertiliser would be 3 million tons against the requirement of 2.8 million tons, while 0.1 million tons urea will be imported during Rabi season while the availability of phosphatic fertiliser will be 1.5 million tons against last year's availability of 1.225 million tons.

SEED POSITION: Availability of seed in the country will be 217,357 tons, which is 21.56 percent of total requirement. Scientifically, wheat certified requirement is 20 percent.

HERBICIDES: Presently, 327 herbicides are registered for Rabi 2006-07 crops. The import of herbicides for the current Rabi crop is 20 percent more than the planned imports.

CREDIT: Last year's credit target was Rs 130 billion, against which Rs 137 billion was disbursed. For the current year, the target is Rs 160 billion. At present, there are 1.6 million borrowers and the number could increased to 3 million borrowers. Weather situation: The Meteorological Department forecast 25 percent more rains and snowfall during coming Rabi season.


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## Neo

*Pakistan's economic growth more vulnerable than India and China: World Bank *

M ISRAR KHAN & SAQIB FAROOQ 
ISLAMABAD (October 18 2006): The World Bank on Tuesday said economic growth in Pakistan is more vulnerable than India and China, as it has few cushions (reserves) to finance external shocks compared to these two important countries of the region.

John Wall, the World Bank Country Director, Pakistan said on the occasion of presentation of report 'Can South Asia End Poverty in a Generation?', "Growth in Pakistan is more vulnerable than India and China" he said this in the context of financing increasing trade and budget deficits.

He further said though Pakistan has made major changes in its policies in last 15 years, yet investors trust has to be developed to enhance inflow of private direct investment and ultimately sustaining growth.

Commenting on low tax-GDP ratio, Wall said that Pakistan has the potential to increase it by 5-6 percentage point if it manages to broaden the tax base.

He also said that in Pakistan nobody is serious in paying taxes and asked is there any example of punishment to tax evader in whole of South Asia? In USA, if some one is found guilty of tax evasion, he is liable to maximum 15 year imprisonment.

Infrastructure deficit in Pakistan is hampering growth and its fiscal space which is growing less than four percent annually is too little to finance this deficiency, he added.

Shekhar Shah, Chief economist from Delhi and author of the report during his presentation said that despite sizeable economic growth, south Asia is still 30-40 years well behind East Asia. East Asia experienced high economic growth on account of high FDI inflow while South Asian economies depend mainly on remittances.

Shah said even when poverty is defined in absolute terms, such as people living on less than $1 a day, reducing the number of people living below this level to zero cannot in any sense be considered as "ending" poverty.

"The deprivation suffered by people who live on two dollar a day-or even $10 a day-is so severe that they too should be considered poor.

Furthermore, as codified in international declarations such as the Millennium Declaration, poverty has many dimensions, including ill-health, illiteracy, unsafe drinking water, sanitation and environmental degradation", he added.

While responding to a question, he said that the increasing fiscal and trade deficits are not related to the economic growth rate directly but have to be managed and reduced with the passage of time.

The inflow of FDI and NGOs work as incubator is a temporary and initial help. Presently, higher growth rates of 8-9 percent are required to reduce the inequality gaps, which is on the rise and benefiting the rich class mostly.

However, higher growth rates have its impact on the overall situation, and the benefit reaches to the poor also though not proportionately, he maintained.


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## Neo

*UN Development Fund: Pakistan urges raise in allocation *

UNITED NATIONS (October 18 2006): Pakistan has called for a "fair increase" in the allocation for the UN's Development Account set up in 1997 to fund technical co-operation projects for the benefit of developing countries.

Speaking in the General Assembly's budget committee, Pakistan's delegate Bilal Ahmad Virk wondered whether the current level of the account - 67 million dollars realised over five bienniums - justified declaring development as one of the UN's key pillars of activities.

"It becomes stark when compared with over 5 billion dollars that the UN spends on maintenance of peace and security, the crisis which often arise from the 'politics of scarcity', inadequate attention to socio-economic development and poverty eradication," he added.

Virk, who is a member of the National Assembly, was participating in a debate on the financing of the Development Account and construction of additional UN facilities in Addis Ababa and Vienna.

He called for a "quintessential increase" in the Development Account so as it can make a meaningful and significant contribution to member states' national efforts to implement the Millennium Development goals (MDGs) and other internationally recognised targets in the fields of human rights and sustainable development.

The Pakistan delegate said the Account's core objectives were capacity-building via individual economic and technical co-operation projects at the sub-regional, regional, and inter-regional levels, and it was a valuable complement to, and not a substitute for, other development activities.

Virk said it was vital to identify predictable financing, as many projects ended up orphaned. He reiterated that savings should not come at the cost of normal programme activities or result in unnecessary downsizing, although all United Nations departments and offices should continue to enhance efficiency in delivering their mandated programmes and services with the target of $200 million for the Development Account in mind.

He also expressed support for construction of additional office facilities for the Vienna International Centre and the Economic Commission for Africa (ECA).


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## Neo

*New Islamabad airport design not yet approved *

RAWALPINDI (October 18 2006): The Government has not yet approved the design of the New Islamabad International Airport (NIIA) submitted by five international construction companies to Managing Board of Civil Aviation Authority (CAA).

The CAA Managing Board has not so far held the meeting for final approval of the design which would also be presented to Prime Minister Shaukat Aziz for final approval, said a sources in the CAA while talking to Business Recorder.

These companies have presented the designs in a meeting of the board and representatives of these companies briefed the meeting about their designs of NIIA, the source said and added that the company, whose would design got approved, would be appointed as consultant for this Rs 30 billion mega project.

The sources said that the initial work of airport has been kicked off and by the end of this year groundbreaking ceremony would be held. Now so much work has been done that can't be reverted, the sources maintained. They said that the requisite land for the project has been acquired and full payment was made to landowners.


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## Neo

*Hungarian firms eager to invest in Pakistan *

ISLAMABAD (October 19 2006): Hungarian Ambassador to Pakistan, Bela Fazekas said a number of leading investors from his country are interested to invest in various areas in Pakistan taking advantage of investment friendly atmosphere available here.

He was talking to Federal Minister for Privatisation and Investment, Zahid Hamid here on Wednesday. Fazekas said liberal policies in the region, excellent investment climate and unlimited potential had made Pakistan an attractive destination for the investors.

He said Hungarian investors were ready to enter into joint ventures with Pakistani companies. The ambassador said that Pakistan was an important export destination for Hungry with a huge market for the cellular mobile sets of Nokia among others.

The Federal Minister briefed the Hungarian envoy about the investment and privatisation scenario in Pakistan.


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## Neo

*Vast investment scope for Norwegian firm in Balochistan: Ghani *

QUETTA (October 19 2006): Balochistan Governor Owais Ahmad Ghani has said that there are tremendous opportunities for investment in different sectors of activity including Gwadar. While speaking to a delegation of foreign investors here on Wednesday, he said, "We would not only welcome foreign investment in the province but would also encourage them.

The delegation comprised Norwegian Company Aqualyng, Green Energy Development based at Dubai and Micro Vision Company representatives. The delegation told the Governor that purpose of their visit was to view opportunities of investment in various sectors in Balochistan, adding that they were interested in mining, minerals, electricity and supply of water cleaning plants.

The Governor apprised the delegation of steps so far taken in these sectors and further opportunities, and said: "We would welcome foreign investment in these sectors." He said steps were underway to make Gwadar a modern port and planning was being made for coming 50 years. He said the work on building a new modern airport for Gwadar would also be started soon.


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*CDWP to consider 36 projects costing Rs 269 billion *

ISLAMABAD (October 19 2006): Following the directives of Prime Minister Shaukat Aziz, the Ministry of Industries has finalised a plan for expanding the network of Utility Stores Corporation (USC) by establishing 16 distribution centres and 440 new outlets costing Rs 812.17 million.

In this regard, the Ministry has submitted PC-1 to the Planning and Development (P&D) Division, which will be considered by the Central Development Working Party (CDWP) in its meeting on Thursday.

The CDWP meeting, which will be presided over by Planning Commission Deputy Chairman Dr Akram Sheikh, will consider a total of 36 projects valuing around Rs 249 billion. In the energy sector, the planning body, which has the power to approve projects valuing Rs 500 million and refer the schemes above this amount to Executive Committee of National Economic Council (Ecnec), will take up eight projects.

PROMINENT AMONG THESE SCHEMES ARE: Rs 57.6 billion land acquisition of Kalabagh dam; Rs 27.8 billion Basha dam project land purchase; Rs 0.8 billion for detailed engineering design and tender document; and Rs 67 billion for land acquisition of Akhori Dam project; Rs 1.6 billion for second rural electrification project in Balochistan; Rs 150 million for allocation of funds for the feasibility studies of six additional sites for nuclear power plants; and Rs 4.7 billion for development of renewable energy projects in NWFP.

Sources told Business Recorder that most of the projects in the energy sector were deferred in the last meeting of CDWP, which were again included in the agenda while keeping in view their importance in economic development.

In water resources, the CDWP will take up Rs 229 million NWFP schemes ie construction of Maidani Dam in Kurram Agency; Rs 1.08 billion ground water recharge of Quetta, Pishin, Mastung and Mangochar valleys; and Rs 6.3 billion detailed engineering and tender document of Nai Gunj Dam Project.

The CDWP is also expected to approve the Ministry of Railways' land acquisition project for setting up dry port at Prem Nagar in Punjab. Rs 657 million project of formulation and core and search teams of interior division will also come up for the consideration.

In culture, sports and tourism sector the project of preservation of restoration of Derawan Port, Cholistan, with cost of Rs 165.47 million. In health sector, the important schemes include Rs 5.29 billion construction of medical tower at Pakistan Institute Medical Sciences (PIMS), Islamabad, and Rs 410 million construction of two trauma centres in the country.

In transport and communications sector, the CDWP will consider the project of constructing bridge over River Indus connecting Larkana and Khairpur districts at a cost Rs 4.8 billion. Rs 12.3 billion scheme of constructing additional carriageway of National Highway N-55 Sehwan Ratodero section will also come up for the consideration.


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## Neo

*'Surgical industry capable of earning $300 million annually' *

SIALKOT (October 19 2006): Surgical Instrument Manufacturers Association of Pakistan (Simap) Chairman, Aamir Riaz Bhinder has said the surgical industry is capable to earn at least 300 million dollars annually within three years time but it needs extra-ordinary attention of concerned government departments.

Talking to newsmen here on Tuesday, he said that the world market of surgical industry was around 30 billion dollars whereas the share of Pakistan was hovering between 180 to 200 million dollars for the last two decades.

Individually, in their limited business capacity, the exporters are already trying to bring in new techniques, technologies and products in the field of surgical. He foresees that currently there was no threat of global competition especially in Asian region for Pakistan adding that Pakistan was the largest supplier of medical instruments to America, Central European Countries Japan etc, he said.

Simap chairman said that the major problem of surgical industry was lack of proper liaison between the industry and government. The authorities prepare policies without prior consultation with relevant industry and then expect from the business community to mould according to the policy.

Aamir Riaz Bhinder further said that lack of brand development was another major issue concerning to this industry. Brand development was such an exercise that could not be done by a company due to the fact it requires huge resources and expertise and support of the government is direly needed in this regard.

The businessmen engaged with surgical industry in Germany, Japan, UK, USA etc, were enjoying full support of their governments in shape of technology up-gradation, training, export marketing strategies, linkage with academia etc, while Pakistani surgical producers have no such support.

The setting up of skill development center, common facility center, R&D support, brand development and promotion, export marketing strategies, direct linkage with universities and institutes were the need of hour for tracking the surgical industry on modern and scientific lines and its global acknowledgement, he said.

The Simap had prepared an outline and proposals for presenting the government for the development of the industry, he said.


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*EDB urged to work on developing engineering sector *

ISLAMABAD (October 19 2006): Industries, Production and Special Initiatives Minister Jahangir Khan Tareen has called upon the Engineering Development Board (EDB) to work more aggressively for the development of the engineering sector.

He stated this while addressing the officials of the EDB here on Wednesday. The minister said the government was committed to developing the engineering sector, and the EDB has a vital role to play in this regard.

Jahangir Khan Tareen appreciated the development of new ginning machine, transport, tariff, etc and other initiatives taken by the Board. However, he advised the Board to speed-up and work more aggressively.

The minister directed that the regional offices of the Board at Karachi (partially operational) and Gujranwala should be established speedily and assured availability of necessary funding.


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*CDWP approves 37 projects worth Rs 232.38 billion *

ISLAMABAD (October 20 2006): The central development working party (CDWP) on Thursday approved Rs 232.38 billion for 37 development projects out of which Rs 150 million were sanctioned for conducting feasibility studies for setting up six additional nuclear power plants in the country.

Dr Asad Ali Shah, member, planning commission, briefing reporters after the CDWP meeting, said the power plants were to be established in Qadirabad, Taunsa, Sukkur, Guddu in the Sindh province, Multan in Punjab and Nowshera in the NWFP.

The CDWP, which met with planning commission deputy chairman Dr Akram Sheikh in the chair, approved/recommended 20 projects in infrastructure sector costing Rs 208.12 billion; 15 projects in social sector worth Rs 22.5 billion; and two in other sectors worth Rs 1.6 million. Out of these 37 projects, 17 projects were referred to the executive committee of the national economic council (Ecnec) for approval.

Giving area-wise detail, Asad said six projects worth Rs 151 billion were approved for Punjab; seven projects in Sindh (Rs 21.3 billion); six projects in NWFP (Rs 23.8 billion); three projects in Balochistan (Rs 3.2 billion); one project worth Rs 0.2 billion in Fata; and two projects worth Rs 0.69 billion in AJK and 12 projects all over the country with an allocation of Rs 32.23 billion.

He said the recommended projects included Rs 4.8 billion scheme relating to construction of bridge over River Indus connecting Larkana and Khairpur districts; Rs 12.3 billion for additional carriageway of National Highway (Sehwan Ratodero section); Rs 2.3 billion for improvement of National Highway (N-45); Rs 145 billion for concept clearance paper Lahore Rapid Mass Transit; and Rs 13.5 billion in communication sector and World Bank-funded support concept clearance paper for rural telecommunication and e-services development project of the ministry of information technology and telecommunication sector.

In the water sector, the water and power ministry groundwater recharge project in Quetta, Pishin, Mastung and Mangoehar valleys worth Rs 1.09 billion has also been recommended for the Ecnec approval. In the energy sector, the recommended schemes included water and power ministry second rural electrification project in Balochistan worth Rs 1.6 billion; power transmission enhancement project worth Rs 15.6 billion; development of renewable energy in NWFP costing Rs 4.7 billion; and almost the same project with an allocation of Rs 4 billion in Punjab.

The setting up of Gujranwala tools, dies, moulds centre costing Rs 878 million; Rs 784 million expansion of network of Utility Stores Corporation (USC); construction of medical tower at Pims, Islamabad, and JPMC, Karachi worth Rs 2 billion and 3 billion, respectively; national maternal, new born and child health programme of Rs 11 billion; and Gavi phase-II health system strengthening of Rs 3.5 billion have also been recommended to the Ecnec.

The CDWP, which has the power to approve projects worth up to Rs 500 million and recommend schemes above this allocation to the Ecnec, also recommended Rs 883 million project of establishing medical college at the University of Sargodha for Ecnec approval.

The projects of establishing construction machinery training centres in four provinces and AJK worth Rs 478.6 million each have also been approved by the CDWP.

Among other approved projects included construction of Maidani dam in Kurram Agency worth Rs 229.1 million; detailed engineering design and tender documents of Nai Gaj dam project; power transmission enhancement project-II of Rs 48.2 million; establishment of Thar Coal Mining Development Company worth Rs 260.7 million; construction of two trauma centres on motorway worth Rs 89 million; national breast screening programme worth Rs 421 million and others.


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*Mills predict 3.5 million tonnes sugar output in 2006-07 *

ISLAMABAD (October 20 2006): The Pakistan Sugar Mills Association (PSMA), in its annual review, has predicted 3.5 million tonnes of sugar production in 2006-07, season, one million tonnes more than the last year's 2.5 million tonnes.

The last year shortfall in sugar production and the gap of 1.4 million tonnes in demand and supply had left the government in total disarray. Desperate authorities took a number of decisions, mostly in haste, to increase supply and bar the profiteers from fleecing the consumers.

The PSMA said that keeping in view higher cane prices, sugar rates in 2006-07, will stay over Rs 38 per kg at retail level. It had presented the annual review in its AGM held in Lahore last Sunday. Its details are as follow:

OUTLOOK 2006-07: As per data provided by the Ministry of Food, Agriculture, and Livestock (Minfal) there is 14 percent increase in the plantation area of sugarcane. The cane production had dropped significantly in the past two years in a row limited to 44 million tonnes. The increase in the plantation area with promising weather conditions ie supply of irrigation water and rains, the sugarcane production is expected to over 50 million tonnes, which ensures the increase in the sugar production to about 3.5 million tonnes.

Though sugarcane production in 2006-07 shows better prospects yet the utilisation of sugar mills will remain around 50 percent capacity provided 40 million tonnes supply is made to the mills.

The Punjab government has already announced indicative minimum price of sugarcane as Rs 60/40-kg, which means that delivered price at the mill-gate with the inclusion of transportation, cess and price competition would be around Rs 70/40- kg on average. The Sindh government has also recently announced Rs 67/40-kg and NWFP Rs 65/40-kg.

With such enhanced sugarcane price, the production cost of sugar cannot be less than Rs 34/kg ex-mill ie retail price expected to a minimum Rs 38/kg. Confusion prevails over the price structure due to the following reasons, which have been brought to the attention of the Government of Pakistan at a higher level. The 2005-06 a deficit year of sugar production by one million tonnes ended with a surplus of over one million tonnes.

Crushing season 2006-07 starts with a carryover stock of 1.2 million tonnes. The season 2006-07 producing 3.5 million tonnes will have availability of 4.7 million tonnes against a consumption of 4 million tonnes.

Major stock held at the end 2005-06 belongs to the Trading Corporation of Pakistan (TCP) which the government intends to offload at a highly subsidised rate to the market threatening the domestic sugar price.

International sugar market prices are down whereas the government has yet to clamp down any import duty to stop further inflow. While the industry bears a strong feeling to pay better sugarcane prices to ensure a better sugarcane crop in future there is confusion as how to maintain a balance in the minimum indicative price and a matching production cost. The government has been approached at several occasions explaining these issues of utmost importance.

Despite these hurdles, the Sindh government has already issued directions for an early start of crushing on October 1, 2006. As a regular phenomenon every year millers are pressurised for an early start of the crushing with the plea to vacate some portion of the land from sugarcane for the sowing of wheat, whereas the millers resists to accept the plea for the reason that the sugarcane quality at the early season is of very low recovery, the fact is very well known to the all ministries concerned and the growers as well who irrespective of the facts force for the early start as the payment system of sugarcane has still continued based on the weight and not the quality.

As per our estimates early start of the sugar mills with the low recovery is causing a loss of minimum 150,000 tonnes of sugar costing mills billion of rupees, which is a phenomenal loss to the industry and the country.

Overlooking the technical and the positive aspects in favour of the late start, the main cause can be spelled out as the row between the growers and the millers over the price-hike and the non-availability of the crop. Shortage and the immaturity of the crop in the beginning normally result the early closure of the season at the higher recovery period. An adverse step for achieving the optimum production.

*REVIEW 2005-06 PRODUCTION*: Unaware of the severe effects of the frost in the coming months, the PSMA was optimistic in forecasting sugar production of just over three million tonnes against the domestic consumption estimated of 3.9 million tonnes.

The continuation of the last year's short production, the frost-attack further deteriorated the situation. As usual, the sugarcane price immediately sparked the situation, with the result that sugar market started reflecting the production cost, which had always been a sensitive issue for the government.

Right in this meeting last year, a million tonnes shortage of sugar was forecast based on the official information for production of sugarcane crop. The need for the import of raw sugar was also ascertained to supplement the production. The severe frost attack on sugarcane crop in Northern Punjab and NWFP further disturbed the supply of quality sugarcane. Besides the above loss, the lucrative business of Gur making flourished as the demand was high at home and Afghanistan seriously hurting the mill sector.

Overall situation remained below average as 30 million tonnes of sugarcane was utilised by the mills to produce 2.58 million tonnes of sugar, supplemented by 372,500 tonnes refined from raw sugar and a marginal addition of only 8,700 tonnes from beet. Thus, the total production was registered at 2.964 million tonnes, apparently below 50 percent of the production capacity of the mills, thus Pakistan experienced second crop disaster in a row.

*SUGAR PRICE STRUCTURE AND THE CRISES*: The government supported sugarcane production by setting a market support price announced before or after planting. The local demand is always above the minimum price fixed as a result mills renegotiate the procurement price. The provincial governments in 2005-06, increased the official cane purchase price for 40-kg to Rs 45.00 for Punjab and NWFP and Rs 48.00 for Sindh.

The Sindh government later revised this price to Rs 60.00. However, during the entire season the price fixation remained a volatile issue between the growers and the millers. The growers refused to sell the cane at the official price and millers in some areas of Punjab and Sindh were forced to delay the start of crushing season.

The miffing sector ended up bearing the bulk of the risk when the circumstances changed. While the support price varies significantly when there is shortfall during a particular harvest, there is no similar level of adjustment when the harvest is good and cane is in abundant supply.

With intermittent stoppages the season's sugarcane price averaged to Rs 80.00 in Punjab and up to Rs 95.00 in Sindh resulting in a significant rise in the production cost to above Rs 32.00 to Rs 34.00 per kg without addition of 15 percent sale tax which was immediately reflected in the market sentiments and retail sugar market shot up from Rs 38.00 to Rs 40.00.

The unprecedented increase in the minimum support price in the province of Sindh triggered the situation in the whole country. The increase of sugarcane price twice in the same crushing season by about 50 percent encouraged the growers to further dictate cane prices and cartel supplies.

As a result of the situation, the sugar market immediately started reflecting the trend in sugar prices, the sugar production was also termed as deficit by about a million tonnes.

The disturbance in the sugar market was immediately noticed by the government, which labelled the millers as profiteers involved in cartel under declaring the sugarcane procurement and production of sugar.

The government was informed of the situation and the deficit of sugar for the season to arrange import of the required quantity of sugar, which besides duty-free import of raw and refined sugar approved the import of about 850,000 tonnes of sugar by the TCP for sale and distribution through Utility Store Corporation (USC) outlets, with an obvious objective of subsidising the sale to bring the market prices down.

The import of refined sugar to the tune of 1.5 million tonnes along 0.5 million tonnes of raw sugar already refined has now converted one million tonnes deficit year into a million tonnes surplus year.

The situation thus developed hampered the economy of all concerned and the oversensitiveness has resulted the year ending with large stocks held by the TCP, mills and by the traders who imported sugar at high price. Ironically, the international prices started subsiding as soon as Pakistan had enough of self-dumped sugar.

The sugar crises during the year caused the industry face the blame game with all government agencies actively involved. In this connection few actions are being mentioned without going into details.

The Monopoly Control Authority (MCA) charged the sugar mills for cartel of sugar and registered cases against mills for their sale being below the desired assumed percentage by the MCA. The National Accountability Bureau (NAB) was asked to investigate corrupt practices leading to the sugar crises in the country. The investigation was later withdrawn.

The CBR appointed customs-armed staff at the mill's gates to supervise and monitor procurement of sugarcane and the sale of sugar looking for tax-evasion and sale to unregistered buyers. The monitoring was withdrawn with the end of crushing.

The State Bank of Pakistan (SBP) imposed 50 percent margin restrictions for financing against the security of sugar stock and instructed for immediate adjustment of all advances against the security of sugar stock. The final date for adjustment was later extended from July 31 to October 31, 2006.

After hectic meetings at the PSMA with the government officials concerned some of the restrictions have eased down. The government intervention for bringing down the import duty, subsidising the supplies through its outlets and blaming the industry hardly matters without taking necessary measures to support production of a better crop in a competitive environment.

The past experience and record showed that the sugar prices moved up and down inversely proportional to stocks and the same was the effect on the price of Gur where no factories are involved, contains impurities and remains tax-free.


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*Non-food inflation drops to seven percent: SBP *

KARACHI (October 20 2006): Non-food inflation maintained its declining trend and was recorded at 7 percent in September 2006 compared with 9.3 percent in the corresponding period last year, according to the State Bank's monthly publication titled 'Inflation Monitor' which has been released on its website on Thursday. In August 2006, the non-food inflation was recorded at 7.4 percent.

Headline inflation was recorded at 8.7 percent in September 2006 that was slightly lower than inflation in the preceding month. The main source of current rate of inflation was food inflation at 11.3 percent in the month mainly due to strong demand as a Ramazan effect.

In the non-food group, house rent index (HRI) maintained its declining trend which started after February 2005, and recorded a moderate increase of 7.3 percent in September 2006 compared with about 11.3 percent in the corresponding period last year. Similarly, sub-indices of fuel and lighting, transport and communication and cleaning laundry and personal also decelerated in the month.

A closer look at price movements of individual items included in the CPI food group reveals that prices of 49 commodities, including fresh milk, beef, sugar, chicken, pulses gram, Mash, Moong, etc exhibited above 10 percent inflation YoY in September 2006, of which some fruits and vegetables like guava, green chillies, tomatoes, etc showed more than 30 percent inflation.

The combined weight of such commodities (with double digit inflation) is about 52 percent of the food group. On the other hand, prices of 12 commodities like onion, eggs, rice, etc declined or remained the same during the month. The rest of items, having a weight of 38 percent in food group exhibited subdued or moderate inflation.

The core inflation measured as non-food non-energy remained stable in September 2006 at its previous month's level. However, trimmed mean core inflation continued to rise and has been recorded at 6.6 percent in September 2006. This rise in trimmed mean core inflation was due to some key food and energy items, having high weight and high inflation, like fresh milk, beef, mutton, potatoes, and CNG.

Following the pattern of first two months of FY06, wage inflation continued its decelerating trend in September 2006 resulting from weak demand due to low construction activities in Ramazan. Average wages of construction workers registered a YoY growth of 14.8 percent compared with 15.9 percent in the preceding month and 16.7 percent in the corresponding period last year. Both skilled and unskilled labours wage inflation contributed to this deceleration.


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*Banks extend Rs 50 billion to private sector in fresh credit *

KARACHI (October 19 2006): Banks credit to private sector, which showed a net credit retirement by economic agents of Rs 20.5 billion by July 15, started picking up slowly thereafter, so that credit retirement almost vanished by September 16, and actually turned into a positive change by September 23.

By that date, banks had already extended Rs 23 billion in fresh loans to the private sector. However, compared with June 30, 2006, private sector credit recorded an increase of only Rs 1.5 billion by September 23, which did not reflect the true position of credit utilisation by the private sector in recent weeks.

According to the latest update by the State Bank, credit expansion, compared with June 30, 2006 amounted to Rs 29.4 billion on September 30 but when credit retired up to July 15 is added back, fresh loaning to the private sector between July 15 and September 30 comes to Rs 50 billion.

Net borrowing by the Government sector, in the meanwhile, amounted to Rs 45.8 billion, almost entirely on account of Federal Government, as Provincial Governments retired Rs 9 billion to the banks.

Of the total, nearly 84 percent, or Rs 38 billion, was borrowed to meet the budget deficit, 14.5 percent (or Rs 6.5 billion) for procurement of various commodities including wheat, and 1.5 percent (or Rs 1.2 billion) for other credit expansion which occurs because of utilisation of accumulated funds under Zakat, privatisation proceeds and similar accounts. (For more details, see 'Money Week' appearing on Monday next).


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*ADB wants Pakistan to cut deficit, inflation*

ISLAMABAD, Oct 19: The Asian Development Bank has urged Pakistan to lower its fiscal deficit and inflation with a view to further improving the countryÃ¢â¬â¢s economy.

Pakistan's overall fiscal deficit could increase to five per cent of GDP in 2006-07, including expenditures related to earthquake reconstruction, equivalent to 0.6 per cent of GDP, it further stated.

In its latest "South Asia Economic Report (SAER)", the bank also termed "still high" eight per cent inflation in the country. It said that inflation declined in 2005-06 and that significant decline in food inflation was in part offset by higher oil prices. Tight monetary policy and measures, such as liberalised imports of food and other essential items in short supply helped combat inflation.

However, the ADB believes that Pakistan would be able to achieve seven per cent GDP growth during the current financial year because of the recovery in the agriculture sector, and higher private investment and increased development spending are projected to boost economic growth.

When contacted adviser to the ministry of finance Dr Ashfaque Hasan Khan did not agree with the ADB report and insisted the government would achieve its 4.2 per cent fiscal deficit target in 2006-07. Likewise, he said that earthquake related expenditure would also remain under the target.

Dr Khan said that inflation stood at 7.9 per cent and not eight per cent as was claimed in the ADB report. He said the government was hopeful to achieve its inflation target of 6.5 per cent in 2006-07, which would further come down to 5.5 per cent during 2007-08.

The report said the budget 2006-07 continued the growth-oriented policy stance, and development spending was projected to increase to 4.9 per cent of GDP. The budget also aims at increasing revenues through broadening the tax base, and the tax-to-GDP ratio is projected to rise by 0.4 per cent of GDP.

It said that Pakistan's GDP growth had slowed in the fiscal year 2005-06 to 6.6 per cent, largely because of the impact of adverse weather conditions on major crops. This significantly reduced growth in the agriculture sector and in agro-based industries, particularly cotton textiles and sugar.

"Slower growth in money supply during the last financial year and continued tight monetary policy should reduce inflation to 6.5 per cent in 2006-07," the report said.

The State Bank of Pakistan maintained a tight monetary policy stance in 2005-06, and the rate of increase in broad money was below operations without significantly raising the benchmark six-month Treasury bill rate. In July 2006, the SBP accelerated the monetary tightening by raising the cash reserve requirement, the statutory liquidity requirement, and its policy rate by 50 basis points to 9.5 per cent.

The development expenditure in 2005-06, the report said, increased by 37.8 per cent to 4.1 per cent of GDP compared to 2.8 per cent two years earlier. Similarly, the fiscal deficit increased to 4.2 per cent of GDP, including expenditures amounting to 0.85 per cent of GDP on earthquake relief and rehabilitation.

Domestic production was unable to meet the increase in domestic demand in 2005-06, and imports rose more than twice as fast as exports. Imports were also boosted by the large increase in the oil import bill and trade deficit increased sharply.

The current account deficit swelled to 4.4 per cent of GDP. However, because of a more-than-two-fold increase in foreign direct investment to $3.5 billion, including privatisation proceeds, a well-received $800 million Eurobond issue by the government, larger inflows of official assistance, and lower amortisation. Official foreign exchange reserves rose by $955 million to $10.8 billion.

The ADB report also said that import growth was projected to slow down significantly during the current financial year, as tight monetary policy dampens growth in domestic demand, and exports are likely to more or less sustain their growth because of improved agriculture production, and the reduction by the European Union of the anti-dumping duty on bedlinen exports and restoration of some benefits under the Generalized System of Preferences. However, the current account deficit is expected to rise to 5.5 per cent of GDP.

Growth in South Asia has been accelerating since the early 1990s, and its economic performance during the last decade-and-a-half has been impressive. Economic growth has contributed to significant reduction in poverty in the region. "Today, South Asia stands at a point where the potential for sustained high growth and poverty reduction is excellent." The region has a unique opportunity to drastically reduce poverty over the next decade, provided the right policy choices are made.

South Asia is well established on a high growth path, with strong and improving macroeconomic fundamentals. While India is in the lead, the improvement in performance in South Asia is broad-based.

"In macroeconomic management, the key areas of concern are inflation and increasing current account deficits. This may require curbing domestic consumer demand through appropriate monetary and fiscal policies, and action on domestic energy prices to improve energy use efficiency," the report added.

"South Asia stands at critical juncture today, where the potential for sustained high growth and poverty reduction is excellent", the report added. A unique opportunity exists to drastically reduce poverty over the next decade, provided the right choices are made, said Kunio Senga, Director General of ADB's South Asia Department.

The report says that intra-regional trade and investment offers immense opportunities for accelerating growth and reducing poverty in South Asia. India could become a hub for stimulating the growth of intra-industry trade in the region and boost the inflow of foreign investment into South Asia.


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*920 new companies registered in 1stQ*

ISLAMABAD, Oct 17: The Securities and Exchange Commission of Pakistan (SECP) has registered 920 companies in the first quarter of the current financial year.

The new monthly incorporations were 347, 309 and 264 in July, August and September respectively, show the commissionÃ¢â¬â¢s official statistics released here on Tuesday. The Company Registration Office (CRO) Lahore registered the most number of companies 324, CRO Karachi 285 and CRO Islamabad 211.

The CROs at Peshawar, Faisalabad, Multan, Quetta and Sukkur registered 42, 28, 17, nine and four companies respectively.

Of the 920 companies, 898 were limited by shares comprising 21 public unlisted companies, 840 private companies, and 37 single member companies. In addition, the commission also registered 11 foreign companies, nine associations not-for-profit and two companies limited by guarantee.

Total authorised capital and paid-up capital of the companies limited by shares amounted to Rs50.881 billion and Rs2.102 billion, respectively.

The services sector recorded 161 new incorporations, followed by 121 in trading, 64 in Information Technology, 59 in communication, 50 in fuel and energy, 49 in the real estate development, 38 in construction and 37 in textile sector.

The SECP encourages and facilitates corporatisation of all businesses so that the corporate sector contributes towards the economic development of the country, a statement issued here stated.


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*Trade with India to reach $2bn this fiscal: 302 items on positive list*

ISLAMABAD, Oct 18: Pakistan has diverted its global trade of $1.332 billion to India following the inclusion of 302 new importable items, mostly raw materials, industrial machinery and its parts, in the positive list to increase the volume of bilateral trade, officials told Dawn on Tuesday.

With the full utilisation of these importable products from India, which were currently imported from various countries, the volume of bilateral trade between Pakistan and Indian would reach around $2 billion during the fiscal year 2006-07. Indian would then become PakistanÃ¢â¬â¢s sixth largest trading partner after the US, the EU, China, Saudi Arabia and the UAE.

Pakistan has recently added 302 new items to the positive list for trading with India. The total number of trading items with India now comes to around 1,075. The enhancement of the positive list will also increase the scope of Safta between Pakistan and India, as more items will be considered for duty reduction under the agreement.

Officials said that out of 302 new items, import of 111 raw materials, 171 machinery and parts and 19 other items were allowed from India following demands from various stakeholders, particularly from some industries. The other items include surgical related equipments, homeopathic medicines and diesel locomotives.

According to the officials, only 20 items out of total 302 were placed under PakistanÃ¢â¬â¢s sensitive list of the Safta agreement. This means that 282 items will be eligible for duty reduction under Safta.

Pakistan has already had a huge trade deficit with India and the liberalisation of trade will further swell trade deficit, as PakistanÃ¢â¬â¢s exports are not increasing at that pace as it should be because of non-tariff barriers in the Indian market.

The officials said that though Pakistan trade gap would widen with India, the import of these items from India at cheaper cost than what was being paid now would save huge amount of foreign exchange for the national kitty.

The officials, however, did not mention the exact amount of saving Pakistan would achieve due to diversion of trade of these items from global partners to

India. Ã¢â¬ÅWe assumed that it would help a lot in reducing the cost of doing business as reduced freight and other charges would make the products less expensive for our industries,Ã¢â¬Â the officials added.

The State Bank of Pakistan in its report identified greater potential of Pakistan-India trade in the range of $1 billion to $5.2 billion in a year as according to an analysis of bilateral trade composition in the year 2004. The reports identified 1,181 items worth $3.9 billion common between PakistanÃ¢â¬â¢s exports and Indian imports. Similarly, against 2,646 common items of PakistanÃ¢â¬â¢s imports worth $7 billion in the year 2004, India had exports worth over $15 billion.

The study found that in case of over 50 per cent of these items, the unit values for PakistanÃ¢â¬â¢s imports are more than the unit value of Indian exports, hinting at the possibility of the import potential from India to Pakistan of many of these items at far cheaper cost than what is being paid now. The study assesses PakistanÃ¢â¬â¢s average national saving in foreign exchange between $400 million and $900 million provided the Pakistan government expands its positive list of importable items from India.

Analysts said that trade with India, still under one billion dollars -- was not large to have an impact on the overall export performance, but it had the potential to become large if both the countries approached it in the right way and did not make quick changes in policies and procedures.

They pointed out that complementarities existed between the two countries in the sectors of agricultural products, tires, minerals, iron and steel, chemicals and pharmaceuticals, automobiles and their spare parts, leather, new and renewable energy technology and cooperation between small and medium enterprises. Pakistan is a competitive supplier of cotton goods, particularly menÃ¢â¬â¢s apparel, home textiles and fabric.


----------



## Neo

*Pakistan facing umpteen problems in finalising gas projects*

20 October 2006 

ISLAMABAD Ã¢â¬â Pakistan government is experiencing difficulties to finalise even one gas pipeline project out of the three proposed projects relating to Qatar, Turkeministan and Iran due to various reasons.


An official of the ministry of petroleum and natural resources is not sure whether these three gas pipeline proposals will materialise in near future that has pushed the government to look for other alternatives to meet the growing gas requirements in the country.

Qatar, he said, will not lay a gas pipeline upto Pakistan by saying that it did not have enough gas reserves, therefore, it was no more considering the proposal.

The emerging frightening situation in Afghanistan particularly due to the increasing incidents of suicide bombings by Taleban has extensively marred the chances of laying Turkeministan gas pipeline via Afghanistan.

And due to consistent opposition by the US government, the official said, the much talked about $7 billion Iran-Pakistan-India (IPI) gas pipeline project was also in doldrums despite a broad understanding reached between Islamabad and New Delhi over it. He conceded that Qatar has conveyed to Pakistan that it did not have enough gas reserves which could be imported. "This is what they have conveyed to us and that is why we are not very hopeful about it," he said.

The situation in Afghanistan, the official pointed out, was not conducive for bringing gas pipeline from Turkeministan, although Daulatabad gas reserves were in huge quantity which could be imported by the neighbouring countries including Pakistan. 

"You tell me how can we have any gas pipeline from Turkeministan keeping in view the increasing fighting in Afghanistan," he said.

But the official was not all that pessimistic about IPI gas project saying that some positive developments have taken place to have the pipeline laid from Iran to Pakistan and then to India.

However, he did not raise political issues like the continuous opposition by the Bush administration about the IPI and said: "I cannot talk about it as this has to be discussed and finalised between the top authorities of both the countries," he said acknowledging that the issue was not all that simple.

Responding to a question, the official said that the cost of the IPI gas project could be more than $7 billion due to increasing steel prices in the international market. Steel, he said, was a major component for determining the exact cost of the project.

He said discussion on price formula for Iranian gas was still to be concluded after which the issue of transit fee will be decided for taking the pipeline upto to India.

The official did not say any thing whether the royalty of gas to be charged from India could range from $500 million to $600 million. "There is no decision about it as the issue is still to be negotiated." He called for early settling of pricing formula about which Iran was not showing enough flexibility. Once that formula was agreed upon, he said, other issues like project structure, framework, quality and quantity of gas and other commercial and legal issues will be decided.

To a question, he said that it has been agreed with India to appoint a U.K based Singapore consultant Ã¢â¬â Gaffney Cline Ã¢â¬â to help sort out issues relating to gas pricing between Iran, Pakistan and India.


----------



## Neo

*Pakistan remittances from UAE soar 34.6pc*

19 October 2006 

KARACHI Ã¢â¬â Pakistani expats residing in the UAE remitted $190.82 million during the first quarter (July-September 2006) of the current fiscal year as against $141.72 million remitted during the same period last fiscal, registering an increase of $49.1 million or a mammoth 34.64 per cent.


Overall, Pakistan received $1,233.59 million remittances from abroad during the July-September 2006 quarter of the current fiscal year as against $1,002.65 million during the same period last fiscal, showing an increase of $230.94 million or 23.03 per cent.

The amount of $1,233.59 million includes $0.98 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs), according to the State Bank of Pakistan.

As for the month of September 2006 alone, the overseas Pakistanis remitted $421.74 million as against $341.10 million in September 2005, depicting an increase of $80.64 million or 23.64 per cent. The inflow of remittances from the US during the July-September 2006 period amounted to $311.87 million as compared to $283.33 million in the corresponding period last fiscal, and from Saudi Arabia $242.79 million as compared to $174.32 million. Moreover, a total of $173.47 million was remitted from four GCC states including Bahrain, Kuwait, Qatar and Oman as against the previous figure of $130.79 million. The current and previous figures in case of the UK remained $102.23 million and $110.96 million respectively, and in case of the EU countries $36.43 million and $26.85 million respectively.

Remittances from Canada, Australia, Norway, Switzerland, Japan and other countries in the first quarter amounted to $175.00 million as compared to $128.51 million in the corresponding period of last fiscal.

The monthly average remittances for July-September 2006 comes to $411.20 million as compared to $334.22 million in same period of last fiscal.

The inflow of remittances into Pakistan from almost all countries increased last month as compared to September 2005.

As per the break-up, remittances received in September 2006 remained $108.28 million from the US, $77.45 million from Saudi Arabia, $65.85 million from the UAE, $58.05 million from other GCC countries including Bahrain, Kuwait, Qatar and Oman , $32.85 million from the UK and $11.83 million from EU countries as compared to the September 2005 of $94.40 million, $54.76 million, $48.70 million, $45.30 million, $38.57 million and $9.70 million respectively.

Remittances from Canada, Switzerland, Australia, Norway, Japan and other countries in September 2006 amounted to $67.25 million as compared to $48.50 million in September 2005.


----------



## Neo

*World Bank lauds PakistanÃ¢â¬â¢s poverty reduction efforts*

WASHINGTON, Oct 18: Preliminary estimates released on Wednesday by the World Bank show that PakistanÃ¢â¬â¢s poverty rate declined by 5 percentage points in the first half of this decade.

The bankÃ¢â¬â¢s World Development Report for 2007 also praises Pakistan as Ã¢â¬Åone of the top 10 global reformersÃ¢â¬Â last year.

In a separate report titled, Ã¢â¬ÅCan South Asia End Poverty in a Generation?, the bank notes that due to recent economic growth, thereÃ¢â¬â¢s more political will and extra money available to tackle key obstacles to eradicating poverty in Pakistan and other South Asian countries.

The bank points out that South Asia has an estimated 400 million young people aged 12 to 24, or about 30 per cent of all youth in developing countries. The expected increase in working age population offers a tremendous opportunity for economic growth in South Asia, provided the greater labour supply is productively employed, and that saving and investment increase.

Economic growth has made it possible for South Asian countries, including Pakistan, to pursue Ã¢â¬Åsecond-generationÃ¢â¬Â reforms, such as the privatisation of public enterprises, deregulation of industries and financial sector reforms.

While they are politically much more sensitive, these reforms are also more feasible when GDP is growing at 6 per cent a year. First, some of the growth is the result of partial progress on these reforms.

Pakistan, for example, has privatised most of its banking sector, Ã¢â¬Åwith impressive early results.Ã¢â¬Â

Thanks to economic reforms, especially trade reforms, South Asian countries have improved the efficiency of their economies Ã¢â¬Â¦ all these countries experienced an increase in TFP (total factory productivity) growth, and in TFPÃ¢â¬â¢s contribution to overall growth in the decade following reform.

Between 1968 and 2001, manufacturing value added increased by a factor of 6 and 7 in India and Pakistan, respectively.

The ratio of exports to GDP in Pakistan, Bangladesh and India, however, remain considerably lower than in Malaysia, Thailand and Korea; in fact they are lower than these East Asian countriesÃ¢â¬â¢ ratios in the 1960s.

Thirdly, a significant feature of the leading East Asian economies such as China, Malaysia and Thailand is the speed with which they have moved up the technological frontier. Increasingly, their exports consist of products embodying high technology. In India and Pakistan, on the other hand, high technology intensity products are still a small share of manufactured exports.

http://www.dawn.com/2006/10/19/top10.htm


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## Owais

*WAPDA to get additional Rs 5.1 bln for improve power services: PM *


ISLAMABAD (updated on: October 20, 2006, 23:03 PST): Prime Minister Shaukat Aziz on Friday said the government will provide an additional amount of Rs. 5.1 billion to WAPDA to improve the power distribution and generation in the country.

He was chairing a meeting here at the Prime Minister House to review the overall situation in the power sector.

The premier said that the government would make all possible efforts to bridge the gap between demand and supply of electricity.

He said that currently electricity demand is increasing by 6 to 8 percent, which is reflective of economic growth and improved living standards.

Shaukat said that present shortfall in the demand and supply is due to expansion of middle class over the years.

He said that during the last year, 19000 tube wells were installed and 15000 villages were electrified across the country.

The premier said that by the end of 2007 every household will be provided electricity under the Roshan Pakistan Programme.

He said that the government will make all out efforts to meet the power needs of domestic and industrial consumers.

Chairman WAPDA, Tariq Hameed updated the Prime Minister about the ongoing development schemes.

He said that ongoing repair of transmission lines and maintenance work will improve the power situation further in the country.

He said that with additional allocation of funds WAPDA will be able to ensure smooth supply of power to the end users.


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## Owais

*Commerce, CBR advised to impose 15 percent duty, waive regulatory duty on sugar *
ISLAMABAD (October 21 2006): To fulfil the pledges made with Pakistan Sugar Mills Association (PSMA) for timely starting crushing operation, the Ministry of Food, Agriculture and Livestock (Minfal) has forwarded an advice to Ministry of Commerce and the Central Board of Revenue (CBR) to impose 15 percent import duty on refined or raw sugar and waive regulatory duty on sugar export, sources in the Food and Agriculture Ministry said.

Following intensive talks between PSMA representatives and Secretary, Food, Agriculture and Livestock, Ismail Qureshi, it was agreed to start the crushing operation from November 1 in Sindh and from November 15 in Punjab, approving PSMA's demands with a set of conditions.

After waiving 50 percent equity condition for getting bank loan, Secretary Food and Agriculture, Ismail Qureshi told Business Recorder on Friday, the advice for imposition of import duty and waiving off regulatory duty have been sent to the concerned department. "The Central Board of Revenue (CBR) will issue an SRO in this regard soon," Qureshi said.

When asked about another demand of PSMA that TCP would not release sugar stocks as market intervention, he said that it was conditional and the Corporation would not intervene till the end of November, if the millers started crushing timely.

"There will be no restriction after November if the prices remain stable", he said. However, the TCP would carry out its operation to provide sugar to Utility Store Corporation (USC), he added. "The government is fulfilling what it pledged with the millers on October 4," Secretary Qureshi said. Some of 16 mills in Sindh have started their boilers, which is a positive sign both for the millers and the cane growers, he said.


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## Owais

*SPI maintains double-digit rise *
ISLAMABAD (October 21 2006): The Sensitive Price Indicator (SPI), for the lowest income group up to Rs 3,000, has been maintaining double-digit rise for the last several weeks compared to the corresponding weeks of last year, as given by Federal Bureau of Statistics, and is 11.60 at present.

Prices of 46 items, out of 53 included in the Sensitive Price Indicator (SPI), have shown increase as compared to the corresponding week of last year. The SPI year-on-year basis of 53 essential daily use items for the week ending on October 19 has shown 9.86 percent increase as compared to the corresponding week of the last year.

The weekly bulletin of Federal Bureau of Statistics (FBS) shows that on year-on-year basis the prices of some essential commodities and kitchen items, which hit the low-income group the most, have risen.

These items are tomatoes 81 percent; potatoes 20 percent; gram pulse 54 percent; moong pulse 40 percent; mash pulse 53 percent; sugar 22 percent; vegetable ghee 9 percent; wheat 3 percent; gur 15 percent; curd 10 percent; milk 11 percent; tea 12 percent; salt 24 percent; chicken 16 percent; kerosene 7 percent; firewood 21 percent; gas 20 percent; diesel 4 percent and LPG 18 percent.

The SPI bulletin, based on data of 53 items from 17 urban centres, showed that 11 items registered increase, and 10 declined, while prices of 32 items remained unchanged as compared to last week' figures.

The FBS data show that though the prices of 32 items posted no change during the week, they are costlier as compared to the corresponding week of last year. For example, diesel increased by 4 percent; petrol 3 percent; gas 20 percent; kerosene 7 percent; firewood 21 percent; matchbox 8 percent; bread 9 percent; curd 10 percent; milk 11 percent; mutton 13 percent and beef by 13 percent.

Several items showing decrease against last week's prices are still higher when compared with the corresponding week of last year. These are tomatoes, wheat flour, sugar, vegetable ghee, moong, gram and mash pulses and LPG.

It is noted from the report that the increase and decrease in prices for most of the items remained marginal ie well below, or around, one percent from last week's prices, except that of LPG, which decreased by 7 percent from last week's price.

According to the FBS report, for people in lowest income group of up to Rs 3000, the SPI shows that the increase is 11.60 percent, for Rs 3001 to 5000, it is 11.19 percent, for Rs 5001 to 12000, 11.09 percent, and for above Rs 12000 income group, it is 9.79 percent.


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## Owais

*Banks asked to ensure ATM service round the clock *

KARACHI (October 21 2006): The State Bank of Pakistan (SBP) has directed all banks that adequate backup arrangements should be made to ensure availability of ATM service round the clock. The SBP observed that incidents of "ATMs out of cash/service" are on the rise, particularly during the days of first Ramazan, Eid holidays and other long weekends.

In order to minimise such incidents and to ensure continuous availability of ATM facility, the SBP in its guidelines for banks said disruption of service for regular maintenance should be properly planned and communicated in order to avoid inconvenience to card holders. Any major breakdown, along with reasons thereof, should immediately be reported to the payment system department, SBP.

A maximum downtime of ATMs from 12 of midnight to 8am to process Zakat deductions and closing of books of accounts on the first of Ramazan, June 30 and December 31 would be admissible.

Special arrangements should be made to replenish cash in ATMs during long weekends and holidays. For this purpose, extra cash cassettes to refill ATMs may be arranged to mitigate risks associated with the opening of cash vaults at branches during holidays. Comprehensive operating procedures should be put in place to timely resolve cases of out of cash, breakdown of ATMs, systems and network.

The SBP announced the above instructions will come into force with immediate effect. All banks and switch operators are required to comply with these guidelines.


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## Owais

*Exporters suffer Rs 2.8 billion loss due to cut in drawback rates *
ISLAMABAD (October 21 2006): The exporters suffered a loss of Rs 2.8 billion due to reduction in duty drawback rates on import of raw material/inputs used in the finished products exported during 2005-06. While reviewing the budgetary impact of relief measures in 2005-06.

A CBR quarterly report said that there had been net gain of Rs 3.3 billion of customs duty in 2005-06 due to huge saving of around Rs 2.8 billion from rebate on the items where duty has been decreased.

In the 2005-06 budget, the customs duty was reduced on certain textile items ie PTA from 20 percent to 15 percent (refundable U/S 21(a)(b) of Customs Act, 1969 read with SRO 450(I)/2001), from 20 percent to 3 percent on chips, 6.5 percent on fibres, 7 percent on yarns, and from 25 percent to 14 percent on fabrics of man-made yarns, blended yarns etc.

As expected, this tariff reduction resulted in a growth of 114.8 percent in the value of imports while dutiable imports grew by 145.4 percent. This substantial growth in dutiable imports made up for the loss due to tariff reduction. Consequently, the collection of customs duty increased by 28.8 percent.

In absolute terms, the gross collection increased from Rs 1.7 billion in 2004-05 to Rs 2.2 billion in 2005-2006. A gain of around Rs 489.2 million has been recorded during 2005-06 against annual projected loss of Rs 2 billion for 2005-06.

As far as net collection is concerned, there has been an estimated gain of Rs 3.3 billion due to huge saving of around Rs 2.8 billion from rebates on the items where duty had been decreased.

According to the report, the collection of duty from yarn increased by 4.1 percent, fibre by 25.4 percent and fabrics by 74.6 percent during current fiscal. The reduction of customs duty has encouraged imports substantially, ie yarn by 101.9 percent, Fibre by 153.1 percent, and fabrics by 97.8 percent.

Exemption of Customs Duties from Urea @ 5 percent: The import of urea has been exempted from the customs duty in budget 2005-06. The import of urea has increased by 108.8 percent while a loss of Rs 204.1 million in duty was recorded during 2005-06. The loss in duty is line with the estimated loss of Rs 244 million during 2005-06.

Tariff Reduction from 20 percent to 15 percent on Agricultural Tractors: The tariff had been reduced on agricultural tractors from 20 percent to 15 percent in budget 2005-06. Consequently, the value of imports has jumped by about 66.7 percent while collection of duty grew by Rs 142 million against projection of loss of Rs 60 million.

Decrease in duty on edible items: In response to reduction in Customs duty rates, the dutiable imports of edible items went up by 9.9 percent during fiscal 2005-06 while duty collection declined by Rs 244 million against a loss of Rs 140 million projected at the time of budget 2005-06 declaration.

Tariff Reduction for Agricultural machinery and equipment: The value of imports of these items increased by 31.9 percent while additional collection of Rs 119 million was registered against annual projection of a loss of Rs 610 million.

Tariff rationalisation on Plants, Machinery and Equipment including their parts: Capital inflow was important for stepping up the pace of development of the industry. Customs duty on locally made plants, machinery, and equipment was reduced to 10 percent and duty on parts equated with the duty on machinery parts to which they form part. Moreover, the local manufacturing machinery parts subjected to 10 percent duty were allowed to import raw material @ 5 percent ad valorem.

The imports of plants, machinery and equipment including parts largely increased by 49.4 percent while dutiable imports also went up by 59.7 percent during 2005-06. The growth in imports did not only compensate the drastic effects of duty reduction on duty collection but also increased the collection from Rs 4.8 billion to Rs 6 billion during the same period of PFY. An additional amount of Rs 1.2 billion in duty resulted in 2005-06.

Decrease in duty on raw material: The customs duty on a large number of raw materials was reduced in the budget FY 2005-06 to lower the cost of doing business, expanding industrial production, and accelerating the economic activities.

The report said that policy initiatives were successful as all items exhibited positive growth in imports except raw materials of photography and cinematography. Due to reduced rates of duty on raw materials, the imports of these items had gone up by around 31.6 percent while the collection of customs duty declined from Rs 9.6 billion in 2004-05 to Rs 7.2 billion during 2005-06. This entailed a decline of Rs 2.5 billion or 26 percent against annual estimate of loss of Rs 2.6 billion for 2005-06.

Despite growth in the imports of 10 out of 11 raw materials, decline in customs duty was recorded in 9 items due to lowering of duty rates.


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## Owais

*Kuwait group to set up 0.1 million bpd refinery near Port Qasim *

ISLAMABAD (October 21 2006): Noor Financial Company of Kuwait, a major international investment group, will set up an export-based oil refinery at Port Qasim at a cost of $1.2 billion on 'build-own-operate' (BOO) basis, having crude refinery capacity of 100,000 bpd.

The project will be ready by 2010. Noor Financial Company and the Government of Pakistan had signed a memorandum of understanding (MoU) for the project during Amir of Kuwait's visit to Pakistan in June this year.

Noor Financial Investment Company is engaged in investment and financial activities in Kuwait, Middle East, Asia and other emerging markets. It was established as a sister organisation of National Industries Group (NIG), one of the largest industrial groups in the Middle East, listed at the Kuwait Stock Exchange.

As per MOU, Noor Financial Company and National Industries Group would, either solely or in co-operation with other parties, complete the project in four years.

Pakistan would provide all necessary assistance to Noor and NIG to facilitate participation in joint venture for the project. It will assist in processing approvals for requisite licences and any aid at regulatory approvals as per rules and policies and incentives applicable on the project.

In order to attract investment in the downstream refining sector, the government offers incentives under the Petroleum Policy, 1997 for establishment of the new oil refinery project at any location of investor choice. It has linked up import-parity-price formula to Singapore-FOB spot price for the new oil refineries.

The government also allows import of crude oil from any source subject to price economics after lifting local crude allocated if any. The new oil refinery also enjoys concessionary rates of duties/taxes for equipment not manufactured locally.

The new refineries are free to sell their products to any marketing company, or they can set up their own marketing companies.

The government also ensures the investors' continuation of the policy of de-regulation in the lube industry, retail outlets development to ensure healthy market competition, improve quality and better customer services.

It is worth mentioning that the demand of deficit petroleum products will be met in the country after commissioning of the new coastal oil refinery of 12-13 million ton per annum capacity as planned by 2010.

The MOU said that the parties agreed to co-operate in establishing joint venture along with other local and international investors to promote oil and gas industry.


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## Owais

*EPZA records $17.209 million rise in 2005-06 exports *

KARACHI (October 21 2006): The Export Processing Zone Authority (EPZA) has recorded an increase of $17.209 million, or 10 percent, in the cumulative export figures of the EPZA during 2005-06 as compared to 2004-05. This was stated by Rukhsana Saleem, Chairperson of EPZA, in a press statement here on Friday.

"The exports touched $233.209 million in 2005-06 against $216 million during 2004-05," she said, adding that this also included export figures from Sialkot Zone, which started operation this period.

The statement said this notable increase had been made possible due to consistent efforts of the Authority to create a healthy and positive investment environment in the zones.

"All operational procedures have been simplified and the investors are being facilitated in quick completion of import and export documentation," she said.

She said that recently the condition of obtaining import certificate has been abolished in the zones, which has been greatly appreciated by investors.

The revival of closed units in Karachi Export Processing Zone was also playing a major factor in increasing exports from the zone, she said. With the reactivation of good number of sick units, the export volume was expected to go still higher.

The EPZA chairperson said that industrial activities in KEPZ Phase-II where infrastructure development is almost complete were likely to start shortly. "About 20 approved projects of Phase-II have executed licence agreement with the Authority, completing ground work for start of construction of factory buildings," the statement added.-PR


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## Owais

*USA's $12.1 million raises SCRAs to $225.5 million *


KARACHI (October 21 2006): The USA brought in fresh funds amounting to $12.1 million on October 18, raising its balances to $67.1 million and the overall balances under non-resident Special Convertible Rupee Accounts (SCRAs) surged to $225.5 million.

Hong Kong's balances also increased by $0.3 million to $11.3 million the same day. UK withdrew $0.4 million from its balances and its net cumulative flow during the year on October 18 reduced to $67 million, thus allowing USA to occupy the second position since the beginning of the year.

Qatar also withdrew a small amount. All in all, these forward and backward movements resulted in overall increase of about $12 million in SCRAs on October 18. No other noteworthy development was observed.

It may, however, be of interest to note that before being relegated to the third position on October 18, UK overtook Singapore--the then first positioner on September 28 when its balances rose to $55.6 million compared with Singapore's $44.1 million. Singapore, however, re-emerged to occupy the top slot on October 3 when its balances under the unique portfolio arrangement rose to $98.8 million--a position it has managed to maintain so far. Its balances on October 18 amounted to $101.4 million.

The October 20 update made available at the time of writing of this report showed that on October 19 balances under SCRAs had increased to $230.5 million--an increase of about $5 million over the level attained on October 18 including net inflows of $6 million (USA: $3.5 million, UK: $2.5 million) and net outflows of $1 million (Hong Kong: $1 million, Qatar: negligible).


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## Owais

*Foreign investors keen to acquire Pakistani companies: minister *


ISLAMABAD (October 21 2006): The Federal Minister for Privatisation and Investment, Zahid Hamid, has said that foreign investors are showing great interest in Pakistani companies, including banks. He stated this while addressing a meeting of the Board of Privatisation Commission (BPC) here on Friday.

He said that due to the excellent performance of the economy as a result of the innovative and highly successful economic reforms introduced by Prime Minister Shaukat Aziz under the guidance of President Pervez Musharraf, which have been acknowledged by the world at large, has generated exceptional investor interest in Pakistani companies, including banks.

He informed the PC Board members that during the first quarter of FY 2006-07 foreign investment, including FDI and Portfolio investment, had shown significant increase as compared to corresponding period of last FY. The remittances were also much higher than in the corresponding period of last year, he added.

He said that the consistency and continuity of the economic policies of the government had greatly increased investors' confidence in Pakistan economy and encouraged them to avail of the exciting investment opportunities through the privatisation program green field investment as well as through the stock market.

The government is considering proposals for launching GDR of UBL, NBP & HBL in the international markets after completion of GDR of ODGCL with proper sequencing. Most of the major transactions, like PSO, NITL, Fesco, Jamshoro Power Company, and PPL were at an advanced stage, he added. The Board took various decisions relating to the privatisation process of various transactions.

The meeting was informed that Expressions of Interest (EOIs) from prospective investors for acquisition of minimum 90 percent shares of Heavy Electrical Complex (HEC), together with management control, on an 'as is, where is' basis have been invited by November 22, 2006.

The meeting was further informed that pre-bid moot for the sale of moveable and immovable assets of Services International Hotel (SIH), Lahore, on 'as is where is' basis had been held.

According to the decision of the Cabinet Committee on Privatisation (CCOP), the successful buyer would construct a five-star industry standard hotel at the prime location of Shahrah-e-Quaid-e-Azam, Lahore.

Six parties participated in the said meeting which include: 

1. Associated Group,

2. Hashwani Hotels,

3. Marwat Enterprises,

4. Noor Financial Investment Company,

5. SA Builders; and

6. Tristar Group.

Four parties participated in another pre-bid meeting for the sale of minimum of 90 percent shares of Hazara Phosphate Fertilisers Ltd (HPFL). The parties, which participated in the pre-bid meeting, included 1-Al-Tuwairqi Group of Companies, Karachi, 2- Chanar Sugar Mills Limited, Lahore, 3- Regal Food Products Ltd UK facilitators: TN Associates, Islamabad; and 4-Warble (Pvt) Limited (Allahdin Group of Companies), Lahore. The bidding of both SIH and HPFL will be held accordingly.

The meeting reviewed the progress and status of the privatisation process of various upcoming transactions and Secondary Public Offering of United Bank Limited (UBL) and the Initial Public Offering (IPO) of State Life Insurance Company shares through capital market under the program, 'Privatisation for the People', which has benefited a very large number of small investors in the past.


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## Owais

*Pakistan gets first satellite hub *

KARACHI (October 21 2006): Comstar ISA Ltd, the leading satellite service provider in Pakistan, here, on Friday, announced the completion of installation, testing and commissioning phase of the Infosat 5IF satellite broadband hub. The hub is now commercially available to users throughout the country putting Pakistan on the satellite broadband map.

The Infosat I-Direct Hub has been installed in the country with the collaboration of Infosat Communications. Infosat is a Bell Canada Enterprises (BCE) subsidiary and the largest broadband satellite operator in Canada.

With the commissioning of the hub Infosat completed the first phase of its investment in Comstar and formally took control of 22 percent shareholding in Comstar ISA Ltd.

Comstar president and CEO Sami Bajwa said since the signing of the agreement between Comstar and Infosat in February 2006 it has taken only eight months to complete the financial and legal work, train our human resource, import, install and commission the country's first true broadband hub and make it commercially available.


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## Owais

*Expo Pakistan to be held from March 29 *


LONDON (October 21 2006): Expo Pakistan 2007, an annual extravaganza of the country's goods and services is being held at the Expo Centre, Karachi, next year from March 29 to April 1. More than 500 Pakistani companies, representing all major sectors of industry and services including manufacturers, retailers, trade associations and commercial service providers will participate in the event.

These companies will set up stalls at the venue to exhibit their products, officials at the Trade and Economic Wing of Pakistan High Commission said on Friday.

Expo Pakistan received an overwhelming response in the previous years and has since become an annual feature providing one stop opportunity for the international trader, manufacturer, businessperson and investor to see for themselves the quality and variety which Pakistan's industry and small and medium enterprises (SMEs) have to offer. Over a thousand international buyers, retailers and investors are expected to visit the forthcoming Expo.

One of the largest delegations to visit Expo Pakistan 2007 will be from the United Kingdom, which will comprise retailers, chain stores representatives, government officials, buying houses, representatives of the trade and industries associations and private businesses. This reflects the interest of the UK business in Pakistan.

"Pakistan is one of the fastest growing economies of Asia. With its competitive costs of production, excellent infrastructure, easy availability of raw material and educated human resource it is now a market to reckon with," said Commercial Secretary Saira Najeeb.


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## Neo

*Rs321 million for manufacturing, designing centres*

LAHORE, Oct 20: The Planning Commission has approved an amount of Rs321 million for the establishment of CAD/CAM centres in five industrial towns of the country.

According to a spokesman for Technology Upgradation and Skill Development Company (TUSDEC) on Thursday, the funds for the centres being set up in Lahore, Karachi, Peshawar, Quetta and Sialkot would be released soon under the Public Sector Development Programme (PSDP).

The centres will impart training in the fields of computer-aided designing (CAD) and computer-aided manufacturing (CAM), with an ultimate objective of promoting digital manufacturing in the country.

CAD/CAM techniques are relied upon worldwide for product design and manufacturing. These are vital to enhance productivity in the industrial sector, besides increasing the competitiveness in the domestic and international markets.

Over the last few years, the level of awareness of the importance of these technologies has grown considerably in Pakistan&#8217;s industries.

Some industrial sectors like automobiles, home appliances, engineering products, textiles and construction have subsequently started shifting from traditional manufacturing practices to modern design approaches.

However, the lack of skilled manpower for the running CAD/CAM based units is the major challenge being faced by the local industry.

In order to bridge this gap, TUSDEC took the initiative to establish these centres, which will be linked with NIDA (National Institute of Design and Analysis) as a hub.

The centres will provide basic as well as advanced CAD/CAM training. The initiative will help launch a career for its students and create capacity in digital manufacturing systems for assimilations in Pakistan.

According to the TUSDEC spokesman, these centres will impart training to the industrial staff, engineers and technologists using computer systems and latest software used by industries globally.

Some 14,000 students will be trained in three years at all the centres, thus creating employment opportunities for the skilled workforce.


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## Neo

Saturday, October 21, 2006 

*WB team praises PakistanÃ¢â¬â¢s economic performance*

ISLAMABAD: A delegation led by Greame Wheeler, Managing Director of the World Bank called on Dr. Salman Shah, Advisor to the Prime Minister on Finance here today, appreciated the performance of PakistanÃ¢â¬â¢s economy and assured continuous support of the bank for the economic development of the country.

Welcoming the World Bank delegation, Dr. Salman Shah briefed the delegation about various aspects of the Pakistan's economy. He said that Pakistan was the most rapidly growing economy in the region, with 6.6 percent growth rate in the last fiscal year. Dilating in detail on various reforms in various sectors of the economy, he pointed out that both unemployment and poverty have shown a significant reduction. The Managing Director of the World Bank appreciated the performance of the Pakistan economy and assured continuous support for its development.

The meeting was attended by Minister of State for Economic Affairs Division, Governor, State Bank of Pakistan and senior official of the Ministry of Finance, Economic Affairs Division, Planning Division, CBR and other.


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## Neo

Saturday, October 21, 2006 

*Pakistan, China to pledge working for economic integration*

* Chinese president visiting Pakistan next month

ISLAMABAD: During the forthcoming visit of the Chinese president to Pakistan, the two countries would pledge working actively towards a Pakistan-China Free Trade Area and economic integration. 

The Peoples Republic of China has also proposed enhancing the volume of bilateral trade between Pakistan and China up to $15 billion under the five-year development program 2007-2011on trade and economic cooperation, a government official told the Daily Times on Friday.

Draft of the five-year development program on trade and economic cooperation between Pakistan and China has been proposed by China for possible signing on the occasion of official visit of the president of China to Pakistan expected to start from Nov 23. 

The draft suggests that to continuously deepen and give major boost to China-Pakistan bilateral and economic cooperation, to register a bilateral trade of about $15 billion by the fifth year of five-year program 2007-2011.

Both sides to agree to actively engage in deeper and broader bilateral trade and economic cooperation by every possible means. In this regard both the countries would try to create more favourable conditions for expanding bilateral trade in goods and services, continuously expanding bilateral trade through the signing of trade arrangements. Both the countries would take effective measures to facilitate and regulate the growth of border trade, encourage western China and north Pakistan to conduct on-land border trade. Bilaterally on trade, both sides to agree to take effective measures to strengthen cooperation in international shipping, cargo and passenger customs clearance, inspection and quarantine, and information sharing, actively press forward the free trade process, promote trade facilitation, reduce or remove trade barriers to promote rapid growth in bilateral trade. 

Both the countries would also look into the possibility of establishing a Pakistan-China Trade and Economic Zone/Industrial Park to build a platform for two-way investment and create a favourable investment climate. Both the countries would agree to share their experiences in the establishment and management of special economic zones, explore effective modals and mechanism for managing the zone and play out their leading role in investment promotion and industry clustering. 

China-Pakistan trade and economic cooperation would span over a wide range of areas and number of projects. Both the countries would set up corresponding organization and coordination mechanism and substantive supporting measures to substantiate the five-year development program, continuously promote bilateral trade and economic cooperation, pursue common development and maximize the interests for both sides. 

At present bilateral trade between Pakistan and China is governed under the Early Harvest Program (EHP) that would lead to a Free Trade Agreement. Under the current Pakistan-China EHP, both the countries are providing duty concessions ranging from 0% to 90% on goods of mutual interest.


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## Owais

*SC annuls land quota allotment in Gwadar *


QUETTA (updated on: October 21, 2006, 22:03 PST): A division bench of Supreme Court has observed that the Balochistan Government is not competent to allocate land quota in Gwadar for allotment, and ordered cancellation of all land quota, whether industrial or residential, allocated to MNAs, MPAs, senators, ministers and other dignitaries, in Gwadar.

The bench also directed for cancellation of the 50 plots allocated for allotment to serving and retired members of judiciary in Sanghar Housing Scheme, Phase-V, in Gwadar.

All allotments, mutations, alienation, transfers made in favour of any private party after the first hearing of the petition, that is October 5, 2006, were also declared as of no legal effect and their copies were directed to be sent to the Registrar, Supreme Court in Islamabad, so that their legality, authenticity and genuineness could be assessed.

The bench also restricted Chief Minister, Revenue Minister and Board of Revenue Balochistan from allotting land in Gwadar in violation of the statutory Land Lease Policy notified through a notification by Balochistan Government on December 1, 2000.

It ordered the Balochistan Government to formulate a comprehensive policy for state land in Gwadar for its allotment and disposal to be based purely on transparency and fairness.

The bench ordered the senior member, Board of Revenue, to point out all illegal allotments made during last five years in Gwadar. "A complete record of all the allotments during the last five years be furnished within four weeks to the Registrar Supreme Court of Pakistan in Islamabad," it directed.

The bench, comprising Justice Javed Iqbal and Justice Raja Fayyaz Ahmed, issued the directives while hearing a petition filed by a woman, Zahra Bibi, who complained that her land had been taken by the provincial government, and prayed for allotment of alternative land to her as promised by Balochistan Chief Minister.

The bench directed Secretary, Law, Balochistan, to furnish explanation as to how contradictory opinions were tendered which culminated into allotments of 4100 acres land in favour of Mir Nazar Kalmati and his family through a notification issued by Capt Fariduddin Ahmedzai, Principal Secretary to Balochistan CM.

The Secretary was also directed to furnish the complete data of the pending cases about the allotment, mutation, alienation and claims with respect to land located in Gwadar against the government to ensure that satisfactory arrangements have been made to defend the government properly.

It also directed the Advocate General Balochistan to procure all judgments passed by Qazi courts, Majilis-e-Shoora and Balochistan High Court during last five years regarding allotment, mutation, alienation and ownership of land in Gwadar and to submit their copies to the Registrar Supreme Court in Islamabad within four weeks.

The bench also ordered for submission of details of all allotments, sale, disposal and exchange of industrial plots in Gwadar indicating how the allotment was made and in whose favour, and by whom. The details of the amount received in this regard will also be placed before the Registrar Supreme Court in Islamabad within four weeks.

It directed the Member, Board of Revenue, to submit to the Registrar Supreme Court the list of names of all EDOs (Revenue), Tehsildars, Naib Tehsildars and Patwaris, who remained posted in Gwadar during last five year. 

The bench observed that the Executive District Officer (Revenue) and the Settlement Officer posted in Gwadar were inefficient and that they failed to check the illegal transactions, mutations.

It directed for their immediate transfer and submission of report within a week to the Registrar Supreme Court. It also directed for disciplinary action against them.

The Court ordered for transfer of Tehsildar Gwadar and disciplinary action against him and its finalisation within four weeks for mutating the land and his irresponsible attitude towards public duties. If needed, a criminal case be also registered against him, the Court further ordered.

It clubbed the petition with the others of the same nature pending at the principal seat of Supreme Court in Islamabad and directed for fixing of all such appeals and petitions before a larger bench at some early date after soliciting the approval of the Chief Justice.


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## Owais

*World Bank lists factors impeding economic growth *

ISLAMABAD (October 22 2006): A World Bank team on Saturday said Pakistan lacks a platform required to meet its growing energy and other infrastructure-related needs and suggested that the government should come up with a quick solution to address the risky issues.

It identified inequity in growth, high inflation rate and slow investment pace in energy sector, imbalance in imports and exports, and public sector's monopolistic attitude as serious problems for Pakistan and suggested that Islamabad should introduce a policy of openness, having more space for private sector to take the role of an engine to expedite the pace of progress and help it become competitive in today's challenging world.

The team comprising Graeme Wheeler, managing director; Praful Patel, regional vice chief; and Jhon W. Wall, country director for Pakistan.

Graeme Wheeler is currently visiting Pakistan. During his first two-day stay, he held separate meetings with President General Pervez Musharraf and Prime Minister Shaukat Aziz, and other policy-makers to know what Islamabad plans to do to rise to the occasion and give World Bank's recipe to quicken the process of economic development.

The WB team was of the view that Pakistan's public sector entities especially gas, power utilities have been unable to attract investment to enhance their production capacity and as a result the country faces an imminent power crisis.

Graeme Wheeler and his other team members gave views on all issues relating to Pakistan's economy. These covered the government reforms programme, privatisation of public sector entities, particularly, gas and power producing and distribution companies.

He was convinced that Pakistan was much comfortable on economic front than four years back due to fast recovery and its growth was highly impressive. He noted that Pakistan's reforms and other initiatives for economic recovery have been a great success and hoped that the policy-makers in Islamabad will keep the same line of action intact to pass on its benefits to the people.

However, in Wheeler's opinion, Pakistan could even do better on economic front by exploiting its untapped potential. He said Pakistan's economic growth was much less than its actual potential and strategic location in the region. He was of the view that Pakistan should encourage private sector investment for energy and other sectors.

Jhon W. Wall recommended a three-pronged strategy to meet gas needs. It included exploitation of indigenous resources by offering incentives to the private sector, finding out a quick solution for import of gas and using the option of LNG that in Jhon's opinion was comparatively an easy option for supplementing local gas production.

In response to a question, Patel said Pakistan must focus on infrastructure-related projects to take a get positioned to deliver as energy and trade corridor for other countries of the region. He also wanted more active role from the regulatory bodies in Pakistan to have a check on the role of all parties in a deregulated regime


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## Owais

*Island City: Law ministry questions parts of proposed deal *

ISLAMABAD (October 22 2006): The Ministry of Law and Justice has raised questions over some of the clauses of the proposed agreement to be negotiated between GoP and 'Emaar' for the $43.165 billion Diamond Bar Island City, advising the government to be very careful in negotiating terms and conditions for the project, official sources told Business Recorder.

However, the Board of Investment (BoI), headed by Umar Ghumman, supported the proposal, provided Pakistan Navy, one of the major stakeholders, is to be taken on its Board, sources added. They said that the Law Ministry examined the documents and observed that land would be provided by Port Qasim Authority (PQA) in return of 15 percent of the net profit.

According to the draft agreement, the authorised and initial share capital of the joint venture and the nominal value per share would be decided by the UAE-based firm Emaar. The management would consist of seven directors, of which, two would represent PQA. Even their role is also restricted under Article 2.2 of the proposed agreement while the reading of Article 4 is arbitrary. The ministry further observed that land would be leased out for 99 years, automatically renewable for another 99 years.

Emaar would have the right to sub-lease to other parties without any payment to PQA. The GoP would provide land free of any encumbrance, third-party rights and environment contamination to soil and water which, according to the Law Ministry, may affect the project and ensure the registration of the lease agreement to Emaar.

"Such lease by PQA shall be unconditional, irrevocable and irreversible, and PQA would indemnify against all loses, damages, costs etc in the event that Emaar is deprived of its right to quit possession, lease hold, sub-lease, etc" the ministry said.

The ministry has also observed that under Article 4.2, GoP would secure statutory and regulatory approval even to third parties having jurisdiction over the project and undertakes that no such approval shall be withheld or delayed. Sources quoted the ministry as saying that Article 4 (GoP's obligations), Article 5 (EIL and Emaar obligations) need to be negotiated from GoP's viewpoint, as well.

Regarding representation and warranties, the Law Ministry was of the view that GoP has to be very careful in granting this warranty. Before initiating negotiation on the agreement, the concerns of all Ministries and Divisions have to be taken into account.

The sponsors of the project have proposed that rules of London Court of International Arbitration would be applied in case of any dispute, and the Law Ministry asked the government to look into this aspect also.

The Board of Investment, in its comments on the proposal said that in addition to PQA directors, one of the directors might be taken from Pakistan Naval HQ on management as an ex-officio director.

Sources said that four firms/consortia, Emaar Properties, Dubai, UAE, ETA Star Property Developers, UAE, Mazyood Giga International, UAE and Al-Ameera Arif Habib (Pvt) Limited, Pakistan submitted their Expressions of Interest (EoI). However, after detailed evaluation of the documents, Emaar was pre-qualified with the approval of Ministry of Ports and Shipping. The 'city' would be developed at Bundal and Buddo islands in 13 years.


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## Owais

*Four companies short-listed for Gwadar port operations *

KARACHI (October 22 2006): The Gwadar Port Implementation Authority (GPIA) has short-listed four companies and consortia for the Gwadar port operations and development. In this regard, the GPIA would issue tender bidding documents to these companies and consortia for final selection.

A total of nine expressions of interest (EoIs) were received by the GPIA for concession for the port and terminal operations and development.

Nine companies and consortia, who have submitted EoIs were: 

Port of Singapore Authority (PSA) International Pte Ltd, Singapore;

Pembianaan Redzai Sdn Bhd, Malaysia;

Globe Marine Service Co, Saudi Arabia; a joint venture of Pakistani and French group-Pakistan International Container Terminal (PICT) and

CMA-CGM group, Engro Vopak, Pakistan;

National Company, Pakistan;

Noor Investment Company, Saudi Arabia;

Sea Trade Grains, Pakistan; and

Mansour Al Mosal, Saudi Arabia.

According to the document made available for Business Recorder, the GPIA's adviser to the tendering process, Arthur D. Little, a British consultant, has carefully reviewed all information contained in the EoIs submissions and as a result the advisor recommended that four companies and consortia will be placed on the short-list (of bidders who should be issued the tender document).

The four companies and consortia have been presented and discussed with the tender committee Saturday morning. The tender committee would submit a full report with all relevant details of the evaluation process next week.

The Gwadar port is the third port of the country, located about 533 kilometres east of Pakistani border with Iran, close to the entrance of the Persian Gulf.

A first multi-purpose terminal with a quay length of 600 metres (draft 14.5 metres along berths) and a sizeable backup area has been completed.

Cranes, other terminal equipment, pilot and tugboats have been acquired. A master plan for further development of the Gwadar port has recently been completed.

The Gwadar port's location is strategic, its outlook is promising and many port and industrial investors are showing strong interest in its development.

The idea behind the tender procedure is to enter into a Built-Operate-Transfer (BOT) based concession agreement with a suitable international port and terminal operator.

The GPIA would determine the potential operators/investors, who will subsequently be invited to submit complete technical and financial proposals based on a comprehensive tender document.

The scope of the concession (approximately 40 years) includes operations of the current multi-purpose terminal, development and operations, over time, of around eight additional berths with related facilities, including possibly modern free zone facilities and some other port or terminal-related services.

Cargo types to be handled are containers, general cargo, break bulk, liquid cargo, clean dry bulk (under certain environmental constraints), ferries, Roll-on and Roll-out (Ro-Ro) ships and cars.


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## Neo

*Eid sales increase by 20pc*

KARACHI, Oct 21: Majority of market players and businessmen believe that the pre-Eid business this year has increased by 10-20 per cent as compared to the last year. Others reject this view and claim that sales this year have dropped by 20-50 per cent as fixed income group takes beating from inflation and were driven out of the market.

As far as prices are concerned industrialists maintain that they have not increased the prices of garments and clothes. They accused the retailers of increasing the rates arbitrarily during the period preceding Eidul Fitr.

Many people complete their shopping in the early days of Ramazan to avoid rush and get good bargain, but they had to put up with old stuff as retailers usually bring new stuff (garments and accessories) in the last days of the holy month and price them the way they wish.

One of the main reasons of high buyersÃ¢â¬â¢ turnout at bazaars and shopping centres was said to be an improved law and order during the holy month and secured parking arrangements.

The rush and buyersÃ¢â¬â¢ enthusiasm, however, indicate that inflation has not deterred the passion for shopping at Eid. Some on the lower end must have cut short their shopping list and restricted it to the needs of children to celebrate the happy occasion.There is no official or private forum that compiles data to quantify retail sales during Ramazan, but according to a garment producerÃ¢â¬â¢s estimates, a departmental store, covering an area of 2,000-2,500 sq-ft, recorded a turnover of Rs7-8 million in just 30 days of Ramazan.

As far as retailers are concerned they make equivalent of 11 months turnover during the holy month alone. Many shopkeepers made stereotype statements about the laggard sales during the holy month, perhaps for fear of income tax officials. Some were not as secretive.

Chaudhry Zulfiqar Ahmed of Lifestyle Store, Bank Road, Saddar, Rawalpindi Cantt, told Dawn that people had enough money and that was the reason that the sales are going at normal pace as compared to the last yearÃ¢â¬â¢s depressed sales for first 20-25 days of Ramazan when a powerful earthquake had played havoc in the northern areas. Even in entire Rawalpindi, sales of shalwar kameez, kurta, shoes and other items have been going at a normal pace.

Shaharyar Buksh, owner of H. Karim Buksh Outlets in Lahore, said that one could not compare sales with last year when sentiments were low due to earthquake. Ã¢â¬ÅHowever, this year sales have been quite normal and so far there have been no complaints about any drop in sales.Ã¢â¬ÂJaved Riaz, managing director of Raja Saheb outlets in Lahore, told Dawn that sales were much better than last year, and even in other shopping areas in Lahore, sales were going at a normal pace.

Nasir Saleem, proprietor of Liberty Store at Bahadurabad, said that sales had been on the higher side by 10-20 per cent as compared to last year because of satisfactory law and order situation and better economic conditions. He claimed that majority of middle and upper middle class people throng Bahadurabad shops because of affordable prices as compared to other markets. He ruled that people refrain from going for big shopping this year.

Mohammad Nasim Aarfeen, owner of Wardrobe store in Bahadurabad and Delhi House store in Saddar, said sales had been going at an Ã¢â¬ÅaverageÃ¢â¬Â and not at Ã¢â¬ÅnormalÃ¢â¬Â pace this year, despite huge hustle and bustle in the markets which literally lacked the presence of genuine buyers. It is the same pace of sales that had been recorded in the first 25 days of last Ramazan when consumersÃ¢â¬â¢ sentiments were shattered by massive killing of people and children in deadly earthquake. Last year, sales had picked up pace in the last five days before Eid.Ã¢â¬ÅFood buying comes first before making clothes. Unfortunately the meteoric hike in rates of grocery items is actually not allowing buyers to go wild for clothes and garments,Ã¢â¬Â Mr Aarfeen said.

Cooperative Market Saddar President Mohammad Feroz said that sales of kurta and shalwar kameez were 20 per cent higher than last year. He said Indian kurta (finished and clothes) had stormed the markets, thus inflicting a blow to the sales of locally produced items. Ã¢â¬ÅI think more than 25,000 gents Indian kurtas and over 15,000 children kurtas have been sold in this Ramazan,Ã¢â¬Â he said.Tariq Road Traders Action Committee President Siddique Memon said that sales this Ramazan had increased by 20 per cent as compared to the last year.

Ã¢â¬ÅImproved law and order situation and cheap and affordable prices of garments, shoes, clothes have pushed up retail sales this year,Ã¢â¬Â Mr Siddique said, claiming that majority of Tariq Road shopkeepers are offering 20-25 per cent discount on items. He said the 32-year-old market, having 8,000 shops, 39 shopping centres and 43 different bazaars, lured customers because of price and variety.Mr Siddique said China had captured 90 per cent share in children garments, 95 per cent in shoes and 90 per cent share in imitation jewellery.

However, Bohra Bazar Market Association Yousuf Khan President said sales this Ramazan had lowered by 25-30 per cent as compared to the last year. He reckoned that the rush of buyers had gained pace but majority of them were window shoppers.

Abdul Samad Khan, senior vice-president of the Saddar Alliance of Market Association, claimed that the sales had dropped by 50 per cent as compared to the previous years owing to rising prices of kitchen items.

Industry players offer a different view. Bonanza Garments Industries Director Hanif Bilwani said that sales had increased by 15 per cent as compared to the last yearÃ¢â¬â¢s lower turnout in the first 20 days and then recovered in the last 10 days.

Al Karam Textile Mills Director Rafeeq Ibrahim said that sales were better this year than last yearÃ¢â¬â¢s average sales due to earthquake. However, he said that small and medium sized textile millers were feeling the pinch over the huge influx on Indian shalwar kurta fabrics and finished kurtas, as they had lost the market share.

He said actually retailers in the markets had lifted huge stocks of Indian fabric and customers because of their designs and colours. Ã¢â¬ÅOur local industry does not compete with Indian fabrics because of high cost of production,Ã¢â¬Â he said, adding that after-effects of the Indian fabric arrivals would be witnessed after Eid.


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## Neo

*Pakistan's total value of imports hits $ 7.42 b*

22 October 2006 

ISLAMABAD Ã¢â¬â PakistanÃ¢â¬â¢s imports from global sources are beating across all foreign trade projections, making its foreign trading partners much more upbeat, but sending warning signals to the government.

The reasons: exports are moving dismally slowlyÃ¢â¬â widening the trade deficit.

Unlike all previous projections by the government, imports rose an 30.3 per cent during the first quarterÃ¢â¬âJuly-SeptemberÃ¢â¬â of the current fiscal 2007. The total volume of imports was a record $ 7.429 billion, official statistics unveiled this week show. Imports in the like quarter of fiscal 2006 were $ 5.22 billion. The import target for 2007 is $ 28 billion, which industry sources say will be surpassed. The growth in imports can, however, slowdown this year, because of reduced import of machinery, except for the hi-tech industrial and telecom equipment in some of the sectors which are going through a boom to feed the domestic market, as well as for exports. Import of autos, electronics, home appliances, cellular phones, including those with big price-tag will also go on as the per capita income is rising.

While high prices of imported oil were a big factor in pushing up the import bill, it may, or may not, decline. But, that will depend , on the trend of international pricing, energy situation and supplies. Already these high energy prices have raised the cost of industrial output Ã¢â¬â and exports Ã¢â¬â where the industry are complaining of having to face a tough competition to their products. In fact, international competition, to several products, including textiles, is one of the factors limiting the overall exports. The situation has led the industry to demand a decisive reduction in the cost of utility prices. But, the government has not responded favourably to these demands.

While international oil prices have, in recent months, declined from $78 to $56 a barrel, Prime Minister Aziz has announced that the government plans no reduction in oil prices as it has to make up and recoup the subsidy it has been paying in the past. The current, high, domestic prices of oil will " continue until the government losses in subsidy become negative. The governmentÃ¢â¬â¢s policy, however, is not to earn revenue from oil imports," Aziz said over the weekend.

Exports in the first quarter rose 2.8 per cent to $ 4.269 billion, compared to the like quarter of 2006. Exports in the same quarter last year were $ 4.149 billion. The export target for 2007 is $ 18.6 billion.

The high rise in imports with a rather dismal export growth has widened the trade deficit to $ 3.159 billion compared to $ 2.399 billion in the like quarter of 2006. The trade deficit in the first quarter is higher than that of last year chiefly because imports rose sharply, while exports moved slower than the same quarter of 2006. In fact, this quarterÃ¢â¬â¢s export performance is so poor that it could not contain the widening trade deficit notwithstanding that the imports this year are moving up, but slower than last year. The projection of trade deficit in 2007 is $ 9.4 billion.

All indications, on the basis of present foreign trade volumes, are that it will widen further. The government, however, maintains that this yearÃ¢â¬â¢s trade deficit, as a percentage of GDP will decline. Its other forecasts are that the Pakistani currency will stay stable, notwithstanding the widening trade deficit.

It also points out to $ 750 balance of payments surplus during July-August this year. 

The situation will require a very strenuous effort to catch up with the Ministry of Commerce (MoF)-set export target of $ 18.6 for the whole of fiscal 2007. However, even if this target is achieved, it is considered to be too low in order to narrow the trade deficit. The actual exports in whole of fiscal 2006 were $ 17.4 billion. The present slow movement of exports may make it difficult to attain even that modestly increased target for 2007. One of the key elements in the export slowdown is an eight per cent reduction in export of textile items which include ready-to-wear garments. The governmentÃ¢â¬â¢s grant of a 6.0 per cent subsidy on textile exports has, so for, not impacted this trade. Its export rather has declined. The government has also announced a Rs 25 billion package to help export textiles.

Fiscal 2007 has also experienced a negative export growth of several other products, including leather, surgical and medical equipment, and footwear, even though the government made these export tax-free. The State Bank of Pakistan, (SBP), the central bank, is already cautioning the government regarding the negative implications of the growing trade deficit over the current account deficit. The trade deficit in 2006 had piled up to $12 billion, and had raised howls over the situation, as it pressured the current account balance. The balance was partly managed as a result of rising home remittances of overseas Pakistan working in the Gulf, Saudi Arabia, and North America. It was also helped by sale of state-owned enterprises to foreign investors as well as by an increase in FDI inflows. The government is upbeat over the inflows of home remittances and FDI this year. However, forex proceeds on account of sale of state-owned enterprises are likely to decline as the government is still readying more units to be pout on the auctioneerÃ¢â¬â¢s block.

In spite of the difficulties of this situation, the government is allowing free imports in order to keep the country on its high-growth track. GDP growth is likely to be around 6.5,a bit down from the actual of 2006. 

SBP has advised the commercial banks in Pakistan and abroad to put in place steps to mobilise savings and remittances from overseas Pakistanis in order to help improve the balance of payments situation. The remittance, with a $ 4.2 billion inflow in 2006 had played a significant role in bridging the balance of payments gap. SBP sees a larger potential of remittances growth, particularly from the Gulf. It has set a target of $ 6.0 billion for 2007.

What are the export prospects for the year? The target may be achieved, but industry leaders are not upbeat about it. They criticise the present high cost of utilities and the taxation structure. Consumer groups, however, allege that the industry had, over the last five decades, become so dependent on government subsidies for exports, tax breaks and enjoyed high rates of profits in the domestic market that now when international competition, under the WTO regime, is impacting them, they are unable to withstand it in terms of prices, variety and quality of products. 

They blame the industry and exporters themselves for landing in this ordeal. Economists also point out that the fragility of a range of industries is evident from the fact that it is unable to compete against even Bangladesh, Vietnam, and Malaysia Ã¢â¬â the comparative new comers in textiles and several other products. The government, in consultation with industry, has set for it 2007 textile export target of $ 11.5 billion. But, it will indeed require vary concerted efforts to achieve it in the present global competitive environment.

Almost three dozen key export products have recorded a downtrend during the first quarter of this year. These include almost all the value-added textile products, leather garments and leather products, and carpets and rugs.

Rather than being innovative, and fighting aggressively, the manufacturers of these slump-hit products are still more demanding government subsidies and tax breaks. But, the government seems to be in no mood to do so, because of financial constraints, and its growing distaste to keep the industry on crutches.


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## Neo

Sunday, October 22, 2006 

*Ã¢â¬ËCountry to face 2.9% shortfall in cotton outputÃ¢â¬â¢*

KARACHI: The country will face around 2.9 percent shortfall in cotton production this year, a spokesman of Pakistan Cotton Ginners Association (PCGA) said on Friday.

According to estimates, 2.468 million bales of cotton has been arrived at ginneries across the country as compared to last yearÃ¢â¬â¢s 2.541 million bales till October 15.

He said this shows a 2.9 percent shortfall in the national production. He said 644 ginneries are functioning in Punjab and in Sindh around 162 are operating.

He said Punjab has shown an excess of 9.62 percent production with 1.651 million bales, while Sindh province has registered a major decline of 21.12 percent with an output of 0.816 million bales. He said the heavy rains and floods in Sindh damaged the cotton crop causing to the shortfall in production.

He said textile mill owners purchased the produce in a big way, around 1.682 million bales compared to last seasonÃ¢â¬â¢s 1.614 million bales.

Exporters remained slow in purchasing the cotton, and according to estimate, they purchased around 23,900 bales compared to last yearÃ¢â¬â¢s 30,000 bales till October 15.

Unsold stocks lying at the ginneries include 0.205 million bales of cotton and 0.555 million bales of un-ginned Phutti, he added.

According to the spokesman, the approximate existing rates of cotton and Phutti in the open market remains Rs 2400 per maund to Rs 2450 per maund, and Rs 1100 per 40 kg respectively in the Punjab.

He said the governmentÃ¢â¬â¢s revised support price for Phutti was Rs 1025 per maund, while the old support price for lint amounting Rs 2269, was yet to be revised.


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## Neo

Sunday, October 22, 2006 

*WB to help Pakistan sustain 7-8% growth*

ISLAMABAD: World Bank (WB) Managing Director Graeme Wheeler announced here on Saturday that the WB would continue to support the governmentÃ¢â¬â¢s efforts in strengthening its physical infrastructure to sustain a growth of 7-8 percent per annum.

A high level WB delegation led by Wheeler, held detailed discussions with the Pakistan governmentÃ¢â¬â¢s economic team, lead by Prime MinisterÃ¢â¬â¢s Finance Advisor Dr Salman Shah.

The advisor briefed the delegation about various aspects of PakistanÃ¢â¬â¢s economy. He said the GDP in the last seven years had almost doubled and had expanded to $130 billion and that the per capita income had also increased to $847. He said that Pakistan had emerged as one of the fastest growing economies in the Asian region with an average growth of 7 percent in the last four years. 

He lauded the stock market performance over the last six years and added that the consistency and continuity of polices had restored investorÃ¢â¬â¢s confidence in PakistanÃ¢â¬â¢s economy. He said this made the Pakistani market attractive for foreign investment.

The delegation was informed in detail about the major economic reforms undertaken in Pakistan over the last seven years. 

The adviser underlined PakistanÃ¢â¬â¢s strategic location and hoped Pakistan would soon become West AsiaÃ¢â¬â¢s trade, energy and transport corridor. 

The WB managing director appreciated PakistanÃ¢â¬â¢s economic performance and said the WB would continue to support the governmentÃ¢â¬â¢s efforts in strengthening its physical infrastructure, which was vital for sustaining a growth of 7-8 percent per annum.

http://www.dailytimes.com.pk/default.asp?page=2006\10\22\story_22-10-2006_pg7_9


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## Neo

*Every fourth person uses a mobile phone in Pakistan*

21 October 2006 

KARACHI Ã¢â¬â Cellphone subscribers' base has reached 41.5 million in Pakistan, a country having an estimated population of 150 million. This implies that every 4th person in the country is a confirmed user of the high-tech gadget.

According to latest figures compiled by the Pakistan Telecommunication Authority (PTA), mobile phone companies operating in the country added almost seven million fresh customers during the first quarter of 2006-07, taking the total number of cellular phone connections to 41.5 million by September 2006 as against 34 million at the end of last fiscal year.

"As on September 30, 2006, the total number of cellular subscribers was 41,502,203 or approximately 41.50 million," said a PTA official. "It reflects a 16.8 per cent growth in total cellular subscriber base from July to September 2006."

He said during first quarter of the fiscal as many as 6,995,646 (or almost seven million) new connections were sold on the back of comparatively cheaper tariff offers due to increased number of service providers.

"This show a mobile density rate of over 25 per cent by September 2006," said the PTA official. "All major companies Ã¢â¬â Mobilink, Ufone, Warid and Telenor Ã¢â¬â grabbed better market share during the first three months of 2006-07," he added. According to the PTA figures, Mobilink led the market share with 20.31 million subscribers followed by Ufone with 8.86 million by the end of first quarter.

With the arrival of the UAE-based Al Warid Telecom and Norwegian Telenor, competition and subscribers' base grew at a much faster pace, as the two respectively magnetised 5.93 million and 4.59 million subscribers by the end of September 2006. The PTA data says by September 2006 Paktel, which offers both AMPS (advanced mobile phone system) and GSM (global system for mobile communications) services enjoyed 1.50 million subscribers and the only AMPS service Instaphone had a share of 285,000 by the quarter end.

The cellular density witnessed a phenomenal jump in the last two years as mobile phone grew by a staggering 170 per cent during 2005-06.

Analysts see growth in cellular subscribers in line with expectations, but believe that the mobile phone service providers may not witness such a phenomenal jump in customers' numbers in the current fiscal.

"The growth is likely to remain slow in percentage term during 2006-07," said Anwaar Ahmed Khan, a telecom analyst at Capital One Equities. "The companies may enter into those areas where they have yet to initiate service, which would need network expansion and investment."

He said a cutthroat competition was expected among the operators during 2006-07, after the mobile number portability (MNP) Ã¢â¬â a system enabling a subscriber to carry the same number while changing the cellular mobile operator Ã¢â¬â was implemented by all six cellular operators in the country.

"The MNP would decide the real market leader," said Khan. "After the MNP implementation the companies will have to improve their service quality to keep their subscribers intact."

Earlier, the MNP project which requires Rs600 million was to be implemented in January 2006 but the deadline was extended to November 2006. Yet the service is not in place, and no new deadline has been announced in this regard.

http://www.khaleejtimes.com/Display...business_October631.xml&section=business&col=


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## Neo

*ECC refuses to withdraw 100 percent export curb on EPZ *

ISLAMABAD (October 23 2006): The federal government has refused to withdraw 100 percent export restriction imposed on units established in Export Processing Zones (EPZ), saying that any change in the existing policy would be disadvantageous to the local industry.

Official sources told Business Recorder that the issue had been submitted by Industries Ministry to Economic Co-ordination Committee (ECC) of the Cabinet in its last meeting.

The ministry was of the view that certain incentives allowed to investors for EPZs have been withdrawn by the CBR to the detriment of the existing and potential investors.

Sources said that the ministry had proposed that export restriction imposed on units in EPZs should be withdrawn and 100 percent export of manufactured items to tariff areas for home consumption on payment of customs duty may be withdrawn.

Alternatively, the ministry suggested that exports up to 60 percent of production to tariff areas may be allowed, besides import of construction material by units in the EPZ at zero rate in respect of excise duty and sales tax, sources said.

They said that CBR opposed the proposal tooth and nail, saying that the incentives proposed by Industries Ministry, if approved, would not only create distortion in the economy but would also hurt industry.

According to sources, the ECC agreed with the viewpoint of CBR and rejected the proposal of Industries Ministry, which disappointed the concerned officials of the ministry.


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## Neo

*ADB may provide $320 million for poverty reduction *

ISLAMABAD (October 23 2006): The Asian Development Bank (ADB) is likely to provide $320 million loan by the end of this year for 'Improving Access to Financial Services Sector Development Program', aimed at reducing poverty and sustaining economic growth through putting in place an inclusive financial sector.

Official sources told Business Recorder that out of the total amount, the Bank would provide $300 million from its Ordinary Capital Resources (OCR) and the remaining amount from its concessionary Asian Development Fund (ADF).

This program would support in stabilisation of the financial sector by ensuring access to sustainable institutional financial services for a majority of poor and low-income households and their micro enterprises at competitive prices.

According to sources, the program will assist the government in improving performance and efficiency of the financial sector at the lower levels, increase outreach and product and service innovation, and utilise new technologies and applications to reduce transaction costs associated with delivery of financial services.

According to the bank documents, with growing income disparity, the importance and role of microfinance is well recognised along with the urgent need for greater outreach of sustainable financial services to rural and remote areas.

In 2000, the Government launched the Microfinance Sector Development Program (MSDP) that concentrated on the establishment of a single microfinance institution, the Khushhali Bank (KB), the first microfinance bank in Pakistan.

The MSDP also supported development of legal frameworks, which included the ordinance to establish KB and a separate ordinance to govern the establishment and operation of all other microfinance banks. The MSDP is an on-going project and scheduled to be completed by 2007.

The bank says that the abundance of subsidised credit line has not resulted in the envisioned outreach or provision of financial services needed by the poor. A broader scope of measures, encompassing microfinance and also reaching beyond to include such fundamental issues as property rights, land registration of the poor and private sector participation is required for achieving an inclusive financial system.

The Pakistan Country Strategy and Program Update (CSPU) 2006-2008 broadly supports expansion of the outreach of small and medium-sized enterprises and microfinance services, and strengthening institutions with private sector participation.

The government's request for support to improve access to financial services is within this overall framework of country assistance to Pakistan for development and poverty alleviation, and complements other on-going ADB assistance programs in the financial sector, the ADB said.


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## Neo

*Punjab advances Rs 1.01 billion loans for industrial projects* 

SIALKOT (October 23 2006): The Punjab government has advanced loans amounting to Rs1010.784 million for setting up 1231 industrial projects in different industrial towns of the province.

Official sources told Business Recorder here on Sunday that the accomplishment of these new industrial projects would generate employment opportunities for 24,000 people in the province.

They said the government had already introduced highly conducive policies for attracting foreign investment as a result of which German-based Metro group was eager to establish its ten warehouses with the initial investment of 200 million dollars in Punjab. The volume of investment would be increased to 500 million dollars to enhance the number of warehouses to 25.

The sources revealed that Metro group had started export from Pakistan and so far articles amounting to 40 million dollars had been exported and it was expected that the export volume would be two billion dollars in future.

In addition to this the government was actively considering to establish "Enterprises Development Organisation" shortly in the province. The prime concept of the proposed enterprises development organisation was to organise the cottage industry and provide solid footing to the artisans in the province.

Under the programme special step would also be taken for providing facilities to the artisans to promote local products and provide technical assistance and marketing facilities to the cottage industry and artisans.

The programme would surly encourage cottage industry, especially artisans to produce local products using their home grown skill. The programme would also ensure the considerable increase in the income of artisans engaged with the cottage industry.

The sources further said that under a phased programme, 50 cluster development centres for technology upgradation would be set up in different major industrial cities of Punjab.

Apart from that product development centre for composite based material for sports goods industry (Sialkot), business support centre for electrical fittings industry (Sargodha), wood furniture facility services centre and showroom (Chiniot) and support centre for development of auto parts (Lahore) would be accomplished during 2006-2007.

Similarly, the establishment of cluster development centre for metallurgy casting die and agriculture (Daska), cluster development centre for technology of domestic electrical appliances (Gujranwala), cluster development centre for development and promotion of light engineering industries (Multan) and cluster development centre for light engineering industries special focus on Textile machinery & spare parts in Faisalabad had been included in current annual development programme and work these clusters would be carried out soon.

They said the step was being taken to provide maximum assistance and extending support in technology upgradation to the business communities engaged with these businesses, the sources added.


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## Neo

*Industries being gradually shifted from urban areas *

LAHORE (October 23 2006): Punjab Minister for Industries, Commerce and Investment, Muhammad Ajmal Cheema has said that industries causing environment pollution are being gradually shifted from urban areas.

Addressing a high-level meeting at Civil Secretariat here, the minister said that industrial units would have to adopt environment friendly atmosphere keeping in view the new challenges of WTO. He said that all industries should have to eliminate the anti environment procedures otherwise their products could not compete in the world market. Ajmal Cheema said that many multinational companies are interested in establishing their projects in Pakistan.

The minister said that separate zones are being set up in every city for new industrial units and a comprehensive policy is being formulated to shift the industries from urban areas. He said that separate land is being allocated to industries outside the urban areas.


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## Neo

*Sialkot to have surgical technology institute soon *

SIALKOT (October 23 2006): The Technical Education and Vocational Training Authority (Tevta) is finalising necessary arrangements for setting up a full-fledged Institute of Surgical Technology costing Rs 180 million in Sialkot shortly. Besides, Metal Industries Development Centre (MIDC) would be upgraded to provide technical assistance and guidance to the surgical industry.

Official sources told Business Recorder here on Saturday that the concept of setting up Institute of Surgical Technology was to track the industry on modern manufacturing lines. The proposed institute would be a start of new era in the development of surgical industry, which would result in rapid increase in the export.

The institute would produce technical manpower in surgical field, which is direly needed at this juncture. The potential world-wide market for surgical devices is estimated to be over 10 billion dollars whereas exports from Sialkot is around 150 million dollars per annum.

The prime objective of setting up surgical training school is to develop the skill of young people as qualified surgical instrument mechanics as well as to enable the manufacturers and exporters engaged with the industry to improve the standard of surgical instruments.

The step would not only help reduce unemployment graph but also supportive in increasing the overall production of surgical units as well as help in increasing the export volume.

The surgical industry represents manufacturers and exporters of surgical instruments, dental instruments, veterinary, pedicure and manicure items, tailor scissors, barber scissors and beauty saloon instruments.

There are about 1200 small and medium surgical units functioning in and close to Sialkot with 60,000 workforce. The surgical industry is manufacturing about 100 million instruments annually, including disposable instruments, which constitute 60 percent of exports and reusable instruments that is 40 percent of the exports.

Pakistan-made surgical instruments are most economical in the world coupled with unconditional guarantee of finest quality and world-renowned companies of surgical instruments are entering into joint ventures with Pakistani companies.

Special attention has been focused on weak areas for improvement and strenuous efforts were being made for creating awareness among manufacturers and exporters for diversification in products.

The world market for surgical instruments is over 30 billion dollars and Pakistan's exports currently stand with 150 million dollars, the sources revealed. The surgical manufacturers and exporters were making strenuous efforts for improving the marketing and exploring new venues especially non-traditional markets aimed at enhancing surgical instruments exports to 300 million dollars, they added.

In addition to this the Tevta was making necessary arrangements to establish poly technical institute in Narowal district and technical training school at Pasrur tehsil of Sialkot district. Besides, Tevta would provide training to 30,000 males and females in various trade fields in Sialkot and Narowal districts.


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## Neo

*ADB to give $510 million for indigenous energy *

FAISALABAD (October 22 2006): The Asian Development Bank (ADB) will provide $510 million for Renewable Energy Sector Development Investment Program in Pakistan to develop indigenous, non-polluting, and renewable sources of energy to help meet Pakistan's power shortage and diversify the power sources.

This project will also improve the quality of the power system, particularly in rural areas. Under the first set of sub-projects, NWFP will develop a cluster of small hydropower from perennial high-head rivers that are abundant in the province. Punjab will also develop a cluster of low-head, high-volume small hydropower stations that can be installed in the existing irrigation canal system with perennial water flows.

The scope may be expanded to cover other renewable sources as well as other provinces in future. An effort will also be made for capacity development of renewable energy sector-related agencies.


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## Neo

*Faultlines in renewable energy policy draft*

By Engr Hussain Ahmad Siddiqui

THE government is all set to launch a policy for the development of renewable energy. The 76-page policy document, claimed to be the first-ever, was finalised last week by the ministry of water and power, and after receiving comments from concerned ministries, is now to be placed before the Economic Co-ordination Committee (ECC) of the Cabinet for approval.

The policy framework aims at promoting power generation through alternate indigenous resources, with the support of private sector, in the wake of anticipated power shortages at the national level as well as the ever-increasing cost of conventional fuels.

For this purpose, the Alternative Energy Development Board (AEDB) is being allowed to deal with wind and solar energy projects of sizes even larger than 50 MW capacity each, hitherto the domain of the Private Power and Infrastructure Board (PPIB).

Likewise, AEDB will process development of small hydropower projects that are currently dealt with by the respective provincial governments under their own power policies.

The salient features of the policy include inviting domestic and foreign investments primarily for the development of power projects based on renewable energy sources.

These are categorised as (i) independent power producers (IPPs) for supply of power to the national/regional grid only, (ii) captive-cum-grid spill-over projects, (iii) captive power projects and (iv) off-grid (stand-alone) projects.

The policy covers immediate, short, medium and long-term plans, but focuses on guidelines, procedural mechanism and facilities only for immediate term programmes i.e. for the period January 2006 to December 2007.

Thus, the first phase includes grid-connected small-hydro, wind and biomass-fuelled power units, while off-grid projects include wind and solar photovoltaic projects.

The document develops operational, administrative and market arrangements, offers financial and fiscal incentives to the investors including a cost-plus tariff, guarantees power purchase and provides government protection against risks.

Captive-cum-spill-over power projects will not require any permission from the government, according to the draft policy, whereas the developers will be able to sell surplus power to the Water and Power Development Authority (Wapda) entities namely NTDC and DISCOs or other provincial utility companies.

If approved, the policy will make it mandatory for the purchaser to purchase power from renewable energy-resource projects, but, at the same time, small power projects will not require tariff determination from National Electric Power Regulatory Authority (Nepra), which is currently the regulation.

Projects of up to 50 MW net installed capacity, fully or partially connected to the national grid, shall enjoy the governmentÃ¢â¬â¢s guarantee for fulfilling contractual obligations of power purchaser.

Likewise, the government shall provide protection to investors against specific political risks, and also against changes in the taxes and duties regime. The respective governments shall facilitate investors in acquiring land or right-of-way for project development, as well as in providing site access.

More importantly, the policy has the unique feature to allow an investor to avail the facility of delivering power on the existing infrastructure and receiving equivalent power for use at a location of his choice.

A study of the fiscal and financial benefits extended to the investor does not only reveal the unprecedented nature of this assistance but also sheds light on the governmentÃ¢â¬â¢s desperation to attract whatever investment in this area regardless of its earlier policies. For example, import of machinery and equipment for power generation projects is allowed duty-free and sales tax-free, even if produced locally. Central Board of Revenue (CBR) has issued SRO to this effect on June 6, 2006.

Ironically, the policy document lays emphasis on optimal indigenisation of machinery and equipment and the AEDB claims to have signed in the past agreements for acquisition of design engineering and production technology for local manufacturing. All benefits and concessions extended through Power Policy 2002 and its subsequent amendments, such as exemption from income tax including turnover rate tax and withholding tax on imports and repatriation of equity along with dividends, will also be applicable to all projects initiated under this policy of 2006.

The document also addresses immediate term policy guidelines and procedural requirements for establishing bagasse based co-generation projects and non-power facilities based on renewable energy resources.

A detailed policy framework for medium term implementation (January 2008-December 2010) will be formulated later based on the experience of the policy being introduced, followed by another document for the long- term plan phase.

In the long-term phase, renewable energy will be fully integrated within the national energy plan. The Asian Development Bank (ADB) received last week expressions of interest from international consultants to prepare a detailed policy framework and action plan for capacity development of the AEDB. For this, the ADB has already earmarked $800,000.

Renewable energy and clean technologies are the buzzwords globally. But indigenous renewable energy resources have peculiar characteristics.

In the context of Pakistan, renewable energy resources include biomass fuels, water, solar and wind energy, which all are potentially significant but highly unpredictable in their respective behaviour. Bio-energy systems transform biomass resources into heating, electricity and other uses, at much lower cost. But the systems developed are at too small a scale and thus are neither economically sustainable nor reliable.

Solar thermal system is employed for heating, cooking and a broad range of other applications. It is cost-effective and efficient but its market will remain undeveloped due to many factors. Solar photovoltaic systems are large scale and too expensive. These systems are, therefore, unable to play a major role in contributing towards meeting the national power requirements, at any given time.

Nonetheless, the need for rural electrification of remote areas utilising these resources that require short gestation period has assumed greater significance then ever before, particularly for containing poverty and improving socio-economic conditions. In fact, Sindh and Balochistan are ideal for utilisation of solar energy. In some of these far-flung areas, sadly, light is urgent need of the populace, and there are about 44,000 villages electrified.

Since July 2003, the government has implemented a plan to develop remote areas with the help of alternate energy resources. The schemes included construction of 5,000 solar homes, 10,000 solar cookers and 6,000 geysers. The physical achievement, however, remains much below the target.

Here, the implementation of the 2006 policy would pose a crucial question as to whether the private sector would be responsible for providing rural electrification and, if so, at what cost to the consumer.

Power generation through exploitation of renewable resources of wind energy and small hydropower at a large scale can prove to be economically viable and sustainable. These projects entail high capital cost and associate different risks-hydro projects are complex in nature, whereas power from wind turbines may be available intermittently.

The National Energy Security Plan proposes to set up renewable energy projects, progressively, with a cumulative capacity of 9,700 MW, by the year 2030, with a focus on exploiting wind energy resources.

It was planned to contribute from present non-existent share of renewable energy to the initial level of 10 per cent in the total installed power capacity by 2010. This however, as endorsed by AEDB, does not seem to be practically achievable under the given circumstances because proper economical and technical appraisals, including detailed wind mapping, for installation of wind turbines in different parts of the country are still not available.

At present, three wind-farm power projects of total 145 MW capacity are being established, on build-own-operate-and-transfer (BOOT) basis, at Keti Bandar and Gharo in Sindh. These fast-track projects, which are being implemented by the American, Canadian and Swedish wind turbine manufacturers jointly with local investors, have already run into snags, delayed by almost two years and are being re-scheduled now.

In the second phase, wind power plants of 700 MW cumulative capacity will be installed. As many as 22 national and international companies have signed contracts for developing projects of about 1,100 MW cumulative capacity windmill farms, however the prospective sponsors have not come forward so far.

The policy, nonetheless, attempts to extend more incentives and benefits, even to the on-going projects, as it would basically deal with the projects achieving financial close by end 2007, with an aggregated capacity of 300 MW.

The power purchaser, as per the provisions of the draft policy, shall absorb the risk of availability of wind speed that would have impact on effective energy output.

Sadly, the document does not provide any safeguard to the consumer ensuring affordable electricity. World-over the wind energy system is known for moderate capital outlay, short lead-time, lower line losses and increased energy efficiency of electricity distribution.

Thus, the wind energy power generation cost is much lower than the oil or gas-based projects. Wind energy costs compare favourably with conventional fossil-fuelled power plants, and continue to decline steadily and substantially as technology improves.

Wind power generation cost has come down to an average of US Cents 2.5 per kWh in developed countries while in developing countries, the cost is a maximum of five Cents per unit depending upon site conditions.

Earlier, the AEDB had estimated energy cost through its planned projects as Cents seven per kWh, which was considered to be on the higher side and acceptable to project sponsors. But Nepra has subsequently allowed, in August this year, an up-front tariff of Cents 11.75 per kWh for the first 10 years and Cents 9.5 per kWh average for project life of 20 years.

A 45-MW wind energy project is costing $400 million, in spite of cheap and subsidised land cost, availability of infrastructure and numerous concessions and benefits to the investor. Undoubtedly, the western investors and suppliers of machinery have taken us for a ride, as they develop business opportunities in PakistanÃ¢â¬â¢s emerging market, with much higher profits.

The Alternative Energy Development Board, since its inception in July 2003, has not been able to establish a single project worth mentioning, either wind or solar energy. It had taken over the UNDP-sponsored 100-150 MW wind farm project for fast-track implementation, for which a feasibility study was available many years ago, which has not yet materialised.

The dismal performance of the AEDB may have direct impact on the prospects of success of the new power policy in so far as the wind energy is concerned. It is admitted by the AEDB in the document that the original target of developing power through renewable energy resources to achieve 10 per cent share in total installed generation capacity by the year 2010 was revised downward to five per cent in 2005 and has been further slashed this year to just over one per cent.

This may precisely be the reason that the policy allows AEDB to deal with, in addition to micro- (less than 100 kW) and mini-(100 kW to one MW) hydropower units, the development of small hydropower projects of 10 MW capacity each, even stretching to higher capacity, in a bid to justify its existence.

According to a report published by the PPIB, there exists a total hydropower potential of additional 41,722 MW. Out of this, as many as 570 schemes and sites, with a potential of cumulative capacity of above 2,165 MW capacity, have already been identified for establishing small-size hydropower stations.

These schemes of capacity varying up to 40 MW capacity include projects for which technical and economic feasibility studies have been finalised. Studies are being conducted on various other sites too.

Experts estimate that further potential exists to generate additionally 3,000 to 4,000 MW through establishing small hydropower plants. Punjab government has recently approved 40 schemes of small power units on various canals and barrages that would be capable to generate a cumulative total of 65 MW electricity.

Efforts are thus underway by various concerned departments and agencies, at provincial level, to exploit the small hydropower potential with the strong participation of the private sector.

Power policies of the governments of the NWFP and AJK have adopted simple procedures, extending fiscal and financial concessions and attractive tariffs. The NWFP government has recently revised its power policy to make it more investor-friendly, while the Punjab government has approved the hydro power policy only last month.

The latest move of the AEDB to take over the authority and resources resting with the provinces is bound to create conflicts and non-co-operation, if not a tug-of-war situation, among various federal and provincial organisations, thus hampering the on-going progress on development of small hydropower.

The policy for 2002 provides requisite framework, guidelines, fiscal and financial incentives and concessions to power plants of 50 MW capacity and above, including renewable energy projects. The proposed renewable energy policy has adopted same or similar guidelines, concessions and provisions for application and implementation procedures etc, Ã¢â¬âÃ¢â¬â a fact that has been acknowledged in the document. Why then was there an urgent need to introduce another policy and that too an interim, one may ask?

In essence, the policy for 2006 is a flawed document with misplaced focus. It is simply an attempt to build the AEDB empire that would result in widening the gulf between the federal and respective provincial governments, implementation of which may not ensure the envisaged achievement of desired objectives.

It is imperative for the government to heavily rely on developing its huge hydro potential and utilise large coal resources to meet future power needs.


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## Neo

*Economic downturn or de-regulation blues?*

By A.B. Shahid

IN the first quarter of FY 2007, credit off-take has been below expectations while repayments (many representing pre-mature settlement) have been high. Rise in outstanding credit over FY06 has therefore been only 1.5 per cent, raising fears on an economic slow down. For the government, it should be unsettling since the impact of the slow down could soon become undeniably visible, making 2007 Ã¢â¬â the election year Ã¢â¬â a difficult period.

Economic slowdown in Pakistan is not an oddity; in varying degrees the trend is visible globally but what is worrying that its impact may be more pronounced because Pakistan faces a host of problems.

There are purely economics-related factors including the rapid rise in lending rates (from 2-12 per cent per annum in the last 12 months), rising inflation that is sapping industryÃ¢â¬â¢s cost efficiency, a managed exchange rate that wonÃ¢â¬â¢t be sustainable, stiff competition from cheap imports that are undermining consumer durable producing sectors, and slow decline in both exports and domestic demand (interestingly enough even for locally-assembled cars and motorbikes). It is feared that inability to check these trends may force a reversal of the current fiscal and monetary policies.

According to bankers, however, the factor causing the drop in credit off-take is growing uncertainty about the future, which the World Bank has rightly called Ã¢â¬Ëinadequacy of cushionsÃ¢â¬â¢ to withstand external shocks, while hinting at PakistanÃ¢â¬â¢s exchange reserves that progressively form a lower percentage of its escalating trade deficit.

World Bank remark about Ã¢â¬Ëlack of cushionÃ¢â¬â¢ isnÃ¢â¬â¢t a surprise because observers had been pointing to the developing economic vulnerabilities as trade deficit soared rapidly in the aftermath of oil price hike and liberal import of goods with marginal utility.

They persisted with a stance that seemed aimed at making Pakistan resemble western economies in terms of low single digit fiscal deficits and inflation, high but consumption-oriented growth, and economic de-regulation. This flawed policy couldnÃ¢â¬â¢t deliver the results Pakistan needed. IMF too has expressed its anxiety over the build up of the trade deficit and growing inadequacy of foreign exchange reserves to fund that deficit.

The over-exuberance that characterized the de-regulation process, especially on the financial services and import-oriented sectors, precipitated the ensuing economic downturn. Despite warnings that GDP growth (painted as a Ã¢â¬ËsuccessÃ¢â¬â¢) was deceptive because it reflected a dangerous rise in consumption fuelled by imports, policy-makers remained unconcerned about preventing this distortion from escalating. It finally seems to be crystallizing but it is a bit too late to correct the course without causing more than just a ripple.

It also proves that hurriedly deregulating economies is fraught with risks whose crystallisation can force re-regulation and hurt the sentiment for investment Ã¢â¬â something a country with a high population growth rate simply canÃ¢â¬â¢t afford.

According to bankers, while introducing floating rates of interest neither they nor their borrowers visualized that while this pricing basis keeps borrowing cost in line with prevailing interest rates, it rises as rapidly as do the market rates, more so in markets where inflation indices are fiddled to artificially pull down interest rates for a while, but not for ever. ThatÃ¢â¬Ës what happened in Pakistan, and a bit too soon.

Because of inexperience in dealing on floating rates (and the fact that the period when they were introduced, interest rates everywhere were at their historic lows), projections of revenues, financing costs and profitability relied too heavily on sustained low interest rates. Rapid rise in interest rates turned these projections upside down. While clever borrowers (mega customers) repaid their loans or re-priced them on fixed rates, most borrowers are in a fix. Bankers now fear a significant rise in loan defaults 2006 onwards.

Exporters are in bigger trouble. With a global economic downturn setting in, they are finding it harder to sustain their hold on foreign markets that are now far more competitive. This brings into question another aspect of the capacity residing in commercial banks.

With $6 billion worth of investment over the last six years in balancing, modernisation and replacement of its industrial base, why isnÃ¢â¬â¢t the textile sector poised for sustained export growth?

The fact that this sector is slowing down in spite of this investment gives the impression that technology import was not focused on meeting the coming competitive challenges. Lending banks obviously lacked the capacity to forestall this unwanted outcome through multi-dimensional assessment of the risk involved in export-oriented project finance.

In the de-regulation drive, DFIs were closed on the assumption that commercial banks can undertake project finance (seemingly, without developing a credible capacity there for). Many banks still lack the capacity for risk assessment because they donÃ¢â¬â¢t deem it necessary to setup investigative units for assessing the sourcing, technical advantages, productive life, pace of obsolescence, and pricing of the plants as well as the research needed to assess the impact of technology change in competitor countries, on the projects being financed by them.

Banks rely on borrowersÃ¢â¬â¢ expertise in these areas, which is wrong. While deregulating the banking sector, in our over-exuberance we forgot that DFIs failed because of these very weaknesses although they had at least the infrastructure there for (no matter how rickety); what they needed was a revamp thereof, not closure.

We also ignored re-structuring of the economy to steadily reduce its dependence on the textile sector. We allowed this sector to remain the mainstay of the economy and made the state hostage to its demands. Any drop in textile exports now sends shock waves across the economy.

According to the latest figures, during July-September 2006 textile exports fell by eight per cent (or $129 million) over those recorded in the corresponding period last year. Exports of other items too have either stagnated or fallen over their last year levels but drop in textile exports Ã¢â¬â the largest chunk of exportsÃ¢â¬â becomes a major crisis.

A sustained reduction in activity in this sector could push-up an already high unemployment, with ripple effect in other sectors including cotton production, value-addition chain of the textile sector, and its infrastructure support services.

Setting-up of the National Textile Strategy Committee (NTSC) is a positive move to identify impediments to growth of this sector. NTSC will primarily focus on increasing market access (for which the government must use its diplomatic muscle), and cost of doing business (for which the government must agree to new fiscal concessions and subsidies).

The agenda includes fundamental issues including production of standardized cotton grades, product diversification, capacity enhancement and technology up-gradation of the value-addition chain, development of a sector-compatible infrastructure and transport and communication system, capacity building of human resources, and watching trends in textile exports to identify high-end product markets.

Interestingly enough, it doesnÃ¢â¬â¢t include identifying loss-making basic activity sub-sectors for disinvestment and acquiring units abroad that offer major economies although it may be time to do away with the lower end of the yarn manufacturing sub-sector and investing in higher yield activities.

While there is no doubt that similar exercises must be conducted for other sectors to ensure their long-term health, implementing improvements will take time. What we need now is a short-term strategy. It would be futile to rely on subsidies (that only escalate the fiscal deficit) to exports to forestall an economic slowdown.

Gradually realigning the exchange rate would be a less expensive route; it could meet exportersÃ¢â¬â¢ needs and exercise a rationalizing influence on imports without imposing controls. With this strategy, GDP growth may still be sustainable above six per cent, not otherwise.


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## Neo

*A retrogressive taxation system*

By Sabihuddin Ghausi

DOES PakistanÃ¢â¬â¢s taxation system promote or retard manufacturing growth? Is it industry-friendly? And one final question: Is the tax burden fairly distributed?

An attempt was made to find answers to these questions from trade leaders and business executives, a former senator and a senior official responsible for the promotion of industrial development.

The taxation system is not fair in the sense that it does not raise revenues proportionate to the incomes generated by different sectors of the economy. This was the virtual consensus. More than 60 per cent of the revenue is contributed by the manufacturing whose share in the GDP has remained stagnant for decades at around 17/18 per cent.

The services sector that includes retail and wholesale trading, transport, construction, real estate, and stock trade is either under-taxed or spared of taxation altogether. Yet, it is the biggest sector comprising 50 per of the economy. Then comes agriculture with 23-24 per cent of the GDP that generates only 1.2 per cent of tax revenue.

Ã¢â¬ÅWe will try to change this taxation system to make it business and manufacture-friendly, bring equity and justice and create a system where any one who works more would earn moreÃ¢â¬â¢Ã¢â¬â¢, says Taj Hyder, a former PPP Senator now engaged in organising weekly study circles of his party workers to debate the current socio-economic and political issues.

The former Senator is convinced that the taxation system is hurting industry, impeding business growth and virtually ignores those who are creative and hard working.

Businessmen did not mince words when calling the taxation structure, Ã¢â¬Ëretrogressive, exploitative, inflationary and expansionaryÃ¢â¬â¢Ã¢â¬â¢ that alienates a section of society by creating in them a feeling of being discriminated against, while Ã¢â¬ÅothersÃ¢â¬â¢Ã¢â¬â¢ are treated as favourites.

However, there are business leaders and multinational executives who feel convinced that the government has started responding to their difficulties and is gradually drawing up a business-friendly taxation structure.

Ã¢â¬ËPakistanÃ¢â¬â¢s taxation structure manifests deep mistrust between the government and the businessmenÃ¢â¬â¢Ã¢â¬â¢ observed a business leader while pointing out to the load of withholding and presumptive tax that constitute almost 90 per cent of the taxÃ¢â¬âincome tax.

Ã¢â¬ÅYou pay 1.5 per cent of your export proceeds, no matter you earn profit or suffer lossÃ¢â¬â¢Ã¢â¬â¢ he said , adding that Ã¢â¬Åsix per cent withholding tax on import is a final tax settlementÃ¢â¬â¢Ã¢â¬â¢. These and many other such taxes are levied because businessmen want to avoid hassles in tax assessment and tax collectors find it convenient to meet their collection targets. However, the real victims of this system are millions of consumers who have to bear the inflationary impact of these levies, which are treated as indirect taxes by business.

Ã¢â¬Ë The government mainly focuses on revenues and employment generation remains a secondary goal when it comes to taxing industryÃ¢â¬â¢Ã¢â¬â¢, Majyd Aziz, President of Karachi Chamber of Commerce and Industry said.

Mr Ameen Bandukda, chairman of SITE Association of Industry, is more vocal in declaring the taxation system as Ã¢â¬Åanti-industryÃ¢â¬Â. He refers to the unending problems of the biggest sectorÃ¢â¬âtextiles as an example. He advocates revamping of the taxation structure before it is too late.

The slump in the exports in the first quarter of this fiscal year is the direct outcome of the taxation which pushed up production cost to a level Ã¢â¬Åwhere our exports are gradually becoming uncompetitive and foreign products are flooding the domestic marketÃ¢â¬â¢Ã¢â¬â¢, said another businessman.

Mohammad Idrees, Textile Commissioner who has been an industrial development officer his whole life, identifies the taxation system as one of the many factors responsible for the plight of the textile industry. There are other factors that hurt industries such as outdated management practices, flawed production and marketing techniques and lack of prudent decision making by the businessmen.

The taxation system is business friendly, says Qazi Sajid, Chief Executive, German chemical company who is also on the board of a dozen companies. He also sees a lot of improvement in tax system over the last few years which has resulted in Ã¢â¬Åvirtual end of direct contactÃ¢â¬â¢Ã¢â¬â¢ between the tax payer and the tax collector.

Ã¢â¬ÅMy company and others where I am on the board now files our tax returns on internet and thatÃ¢â¬â¢s allÃ¢â¬â¢. There is virtually no hassle in getting refund of extra advance taxation.

Ã¢â¬ÅNo excise inspector is there now in our factory without whose signature, in the past, we could not move our production outside the factory gateÃ¢â¬â¢Ã¢â¬â¢, he said.

Qazi refuses to believe that taxation has impeded the growth of manufacturing and production. The large-scale production touched the record highest of 18 per cent about a year ago and still maintains a reasonable growth rate.

Ã¢â¬ËThe industry consumes almost Rs5 billion worth of chemicals as against hardly Rs1 billion a few years ago. Growing appetite for chemicals consumption, he said, is one indicator of industrial growth.

Ameen Dadabhoy, a ruling party Senator, concedes that agriculture, stock exchange, real estate, retail, wholesale trade, construction and landed gentry are virtually outside the tax net and it causes a heart-burning.

Ã¢â¬ÅI tried hard to bring all these sections of society under the tax net while participating on the Senate Finance CommitteeÃ¢â¬â¢s deliberations. He reiterates his intention to continue to strive in this direction.

Engineer M.A. Jabbar, a former FPCCI vice president, wonders as to how the government can tax at import or at production stage when no business transaction has taken place.. Ã¢â¬ÅWorld over, you are allowed to install your manufacturing facility, buy inputs, produce goods and after these goods are sold in the market, the government taxes you on your incomeÃ¢â¬â¢Ã¢â¬â¢.

Imagine the plight of the common men from whom the government collected Rs3.5 trillion in six years (1999-00 to 2005-06) by implementing the World Bank and IMF sponsored reforms and compare this collection with Rs1.9 trillion in the entire decade of 90Ã¢â¬â¢s. Now President Musharraf has announced that his governmentÃ¢â¬â¢s intends to collect Rs1 trillion in 2007-08.

Tax recovery went up by roughly 11 per cent every year in the last six years, but the tax-to-GDP ratio remained dismally lowÃ¢â¬â at 10 per cent of the GDP. What does this mean? It means that tax is not being recovered from all sectors of the economy.

While a large section of population is being over-taxed, an entire class of elite has been given a free hand to speculate in trading on easy bank loans and earn tax-free income.

A crippling tax burden on a few sectors is leading to expansion of black economy and is reducing social acceptability of the tax system. It is time to develop a tax structure based on equity that would increase revenues and spur economic growth.


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## Neo

*Indigenisation of auto sector*

Prior to government take-over in 1970Ã¢â¬â¢s, a private sector company dealt with Bedford trucks, buses and other vehicles while another company dealt with their engines. The deletion of foreign parts in truck chassis varied between 20 to 22 per cent. Up to 1982, deletion achieved in National Motors was 82 per cent. Some progress in deletion was also made in engine-making in the Ã¢â¬ÅBela EngineersÃ¢â¬Â.

If this deletion programme was continued with the same enthusiasm, by now the country would have achieved self-reliance in manufacture of most of auto parts, leading to growth of engineering capacity and a robust vending industry.

Pakistan Machine Tool Factory had specialised in manufacturing transmission systems. Naya Daur was to produce bonnets and heavy mechanical complex, Long Members. National Motors imported raw materials for the vendors. and provided finances to them when needed. The company also provided design, drawings, specifications and samples of the components for the deletion programme. Before actual deletion, test runs were made and only when the original manufacturers were satisfied, was the deletion effected.

National Motors placed separate funds at the disposal of Pakistan Automobile Corporation for setting up other projects for the deletion programme of Bedford. They chose to develop Ã¢â¬ÅWheel Rim PlantÃ¢â¬Â and a Ã¢â¬ÅTool and Dies Project.Ã¢â¬Â

There was great pressure on National Motors for giving up Bedford technology as it was considered by some to be old and outdated. This pressure was resisted. It was explained that the technology was not outdated and that in any case it will act as a spring board for acquiring other technologies.

The original manufacturers of Bedford Vehicles, viz Vauxhall Motors in England and a subsidiary of General Motors offered to National Motors franchise for rest of the world for the models being produced in Pakistan and supply of tools and dies which may be needed.

The offer was transmitted to Pakistan Automobile Corporation and to the government but there was no response.

Bedford makes of vehicles are no longer on the production line. There may not be much point in weeping over the past actions. However, what has happened is that not much deletion appears to have been achieved in the other projects launched either for trucks, buses, tractors or for cars, jeeps, motorcycles etc.

Not much attention appears to have been paid to manufacturing transmission system and engine. Even the steel plates are being imported for car body parts. Only one model is earmarked for progressive manufacture and more attention is paid to marketing other models. It is hoped that vending industry is actually manufacturing components and parts and it is not importing these for giving only cosmetic treatment.

The bottom line is that the progress in engineering industry will come with upgrading of skills and with value addition to the products on which we need to focus. We have importing cars and other vehicles and also mobile phones, with no value addition of any kind from our side.

Imports of built-up products do not involve engineering skills at all. Some restraint in this regard may not be out of order.


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## Neo

*Reducing the debt burden*

By Ihtasham ul Haque

PakistanÃ¢â¬â¢s external borrowing requirements are increasing because of surging imports, falling exports and ballooning trade deficit. The rising domestic demand, fuelled by high economic growth, is being met by unsustainable level of import despite its funding by capital inflows like workers remittances.

While there is need for more external assistance, the debt burden is increasing in absolute terms when the export earnings for servicing loans and credits is falling and bulk of the imports cater to the domestic demand and not the export-oriented industries. Similarly, quite a sizeable part of the foreign investment goes into acquisition of existing enterprises and definitely not in creating any notable capacity for exports of goods or services.

Though the current ratios of debt to GDP or export earnings may appear to be robust to the policy makers, the emerging trends in external sector are not so promising. The situation would become more clear when a report on the debt situation, now being finalised, will be presented before the Parliament in January 2007.

Officials claim that the economy is growing at a much faster pace and its size has almost doubled after update of national accounts and a seven per cent economic growth over the last four years. This has improved the debt-GDP ratio. The countryÃ¢â¬â¢s borrowing requirements are also rising. Ã¢â¬ÅBut we need to keep an eye on the rising trendÃ¢â¬Â an official said.

The Fiscal Responsibility Law approved by the Parliament places a debt ceiling that should not be more than 60 per cent of the GDP by 2012-2013 and that it should decline by 2.5 percentage of the GDP every year. The law provides that revenue deficit should be zero by 2007-08 and the government should not guarantee loans of the state enterprises which are more than two per cent of GDP.

But the Debt Policy and Co-ordinated Office seems to be facing problems in managing the debt burden, though its officials continue to claim that so far targets fixed under the Fiscal Responsibility Law have over-performed, especially in ensuring that public debt should remain less than 60 per cent of the GDP.

The debt office is handicapped by lack of trained manpower and experts for managing debt and debt liabilities. In past three years, only six experts could be hired because of the non-availability of such professionals in the market. It could prove costly to the national exchequer.

Director General of the debt office, Dr Ashfaque Hasan Khan, says that debt itself in not bad but it is the burden of debt which matters. Debt burden, he says, must continue to decline and this is what the government is doing over the last few years.

Ã¢â¬ÅAnd that is why, the burden of debt is almost half during the last seven yearsÃ¢â¬Â, he said, adding that borrowing domestically or from international sources is normal part of economic activity.

As long as the borrowers can earn a higher economic and social rate of return than the cost of borrowed funds, creation of debt is not a burden. Debt servicing problems arise when the debt carrying capacity of the economy does not increase, commensurate with the increase in its debt service liabilities.

The debt carrying capacity is defined as the ability of a country to service its external liabilities within an orderly and stable macro economic framework.

Dr Khan said that people say that PakistanÃ¢â¬â¢s debt is rising and those who say this they see absolute numbers. But international capital market, banks, rating agencies and international analysts look at the burden of debt and not the debt itself.

However, the situation has improved since the government repaid expensive loans which were offered by the Asian Development Bank (ADB). Most expensive loans carried a maximum 5.5 per cent LIBOR interest rate but he conceded that interest on bonds floated by Pakistan is seven per cent.

Out of total $37 billion debt, about $14 billion belonged to bilateral creditors of the Paris Club, while $15 billion worth of loans were secured by World Bank, ADB and the Islamic Development Bank (IDB). Nearly a loan of $1.5 billion given by the IMF on account of Poverty Reduction Growth Facility (PRGF) was continuing and was still to be fully repaid.

When reminded that independent economists still cast doubt about the government Ã¢â¬Ës ability to handle its huge debt, he referred to three major reports recently given by Deutche Bank, Union bank of Switzerland(UBS) and J.P. Morgan. Ã¢â¬ÅThey all say Pakistan has arrived in the international capital market and is managing its debt carefully and that there is no worrying thing for the countryÃ¢â¬Â.

According to the latest update of the debt office, the external debt and liabilities stood at $37.265 billion at the end of financial year 2005-06 as against $35.834 billion at the end of 2004-05, showing an increase of $1.431 billion or four per cent.

The debt and liabilities stood at $38.9 billion at the end of 1998-99. Although external debt has risen by $1.43 billion in 2005-06 compared to the previous year, the debt burden has, however, declined significantly over the year.

As a percentage of GDP, the external debt was 32.3 per cent in 2004-05 but declined to 28.9 percent in 2005-06. Similarly, PakistanÃ¢â¬â¢s external debt and foreign exchange liabilities as percentage of foreign exchange earnings stood at 134.3 per cent in 2004-05 but declined to 120.6 per cent in 2005- 06.


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## Neo

*Foreign firms eyeing the insurance market*

By Sultan Ahmad

Pakistan is expected to experience an explosion of insurance business and firms as an expanding insurance cover is required in an environment of high economic growth, particularly for the industrial and services sectors.

With government agreeing to 100 per cent foreign ownership and banks allowed to set up insurance firms, the industry may expand rapidly.

Besides, the massive privatisation of 26 major public sector enterprises in three years has freed the privatised firms to get their business insured with any company instead of only the state-owned National Insurance Corporation. That means very large business for the private sector insurance companies.

In addition, foreign investment is coming in large measure and new companies need adequate insurance of their choice. They are assured large insurance business for foreign companies.

And with the foreign investment increasing particularly in the energy sector, telecommunications and in the IT sector the scope for business for foreign insurance companies has opened up in a big way.

But as the law stands today, the government may still be the gainer as all insurance companies have to re-insure a portion of their insurance business with the public sector insurance corporation.

But, the foreign insurance companies are going for the killing in a big way. They are not content with the 51 per cent share holding they are permitted now. Instead they want to invest all the hundred per cent capital of the company and the government has agreed to that.

For all, that they have to bring only $2 million as capital and can raise an equal amount which any good company can easily do.

They are asking to be allowed to subscribe hundred per cent of the capital on their own as other foreign investors have been given the same right to be on a level playing field with the domestic investors.

Another major development is that the banks are now allowed to set up their own insurance companies and insure their banking business. This facility will be available to foreign banks as well on the basis of a level playing field for all.

And this could be the most hazardous or dangerous part of the banking reform. When the banks insure their own business transactions they may provide insurance cover to phony loans transactions as well.

The managers may not insist on adequate or proper insurance cover for their large loans or major import export- transactions. The collateral they secure for large investment loans may be too small or too phony to cover the loans. As a result the banks may suffer large losses and the depositors and the ordinary share holders may come to grief.

Even without banks having their own insurance companies, malpractices in obtaining insurance cover are many. As a result the large industrial bank has sunk with bad loans of Rs27 billion and the State Bank of Pakistan has finally called for an inquiry not through the normal banking channels, but by the FIA or the National Accountability Bureau so that the criminal practices of the loan givers established and the guilty punished according to their crimes.

Similarly, an inquiry against the manner in which the Crescent Standard Investment Bank was bankrupted by its directors has been making headlines. One of its directors, Iftikhar Soomro wrote a highly revealing letter to a city newspaper detailing the follies of its managing director and other top office holders which brought the bank to this sorry pass.

This is a country in which at least three banks- the Indus Bank, the Mehran Bank and the Bankers Equity were utterly bankrupted and the National Development Finance corporation was merged with the National Bank as the run on the investment bank began. More insecure banks are now seeking mergers with stronger banks.

The State bank of Pakistan as a guardian of the commercial banks has not been able to insure the integrity of the banks. So, how could the banks now manage their loan portfolios better if they have their own insurance companies to protect their loans.

Simultaneously, a great deal is being done in the name of Islamic banking and efforts to promote Islamic mode of insurance in the name of Takkaful. What has been done for long in the Industrial Development Bank of Pakistan and the Crescent Standard Investment Bank is not only contrary to all the norms of banking but against all the Islamic principles in an Islamic state. How can we now allow such banks to have their own insurance companies and multiply their malpractices?

And how banks having their own insurance companies and insuring their loans compatible with BASEL 2 which seeks a rigid banking discipline among the banks and bankers. It is certainly against the spirit of BASEL 2.

In a country where the non- performing loans rose in the 1990s to Rs250 billion or one- third of the bank advances, the banks cannot be allowed to provide their own insurance cover to their own loans.

The United Bank which is largely owned by UAEÃ¢â¬Ës ruling family along with Sir Anwar Pervez is in the lead among foreign banks to have its own insurance company. It is moving fast in that direction.

While more and more foreign companies are to come, the State Life with its very large assets is to be privatised, but that does not seem to have a high priority.

As more insurance companies come in, we have little to fear about foreign banks setting them up, except for new comers in the Gulf who are new to the business. But the Pakistani banks with their large deposits and shareholders funds should not be encouraged to set up their own insurance companies.

There is plenty of scope for banking and insurance business if Pakistan becomes an energy corridor for Central Asia and West China or the industrial and commercial hub of the region. But the two institutions should remain separate and errant bankers should not be allowed to provide insurance cover to large loans which may go down the drain.


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## Neo

*'Pakistan will gain more from Safta'*

TIMES NEWS NETWORK
MONDAY, OCTOBER 23, 2006 

NEW DELHI: As India waits for the next Safta ministerial council to take up the issue of Pakistan violating the regional trade agreement, a study shows that Pakistan will actually lose more in global exports by withholding concessions to India. 

The study by the Asian Development Bank (ADB) and United Nations Conference on Trade and Development (UNCTAD) also shows that IndiaÃ¢â¬â¢s gains will not be affected significantly if Pakistan only partially participates in Safta, and that Bangladesh will benefit the most from a full implementation of Safta. 

Ã¢â¬ÅIndia has the least to gain out of the Safta except for political gains. However, India and Pakistan gain more in exports to Bangladesh,Ã¢â¬â¢Ã¢â¬â¢ said Veena Jha, coordinator of UNCTAD, India programme. 

The study shows that India is less affected because of a larger market with exports tied in other countries outside the Saarc region. But for the Saarc countries, India becomes a major market. 

India has accused Pakistan of violating Article 23 of Safta and going back on negotiations by limiting trade with India to items on PakistanÃ¢â¬â¢s positive list of 733 importable items, whereas under Safta, there is supposed to be no positive list. 

India has written to the Saarc secretariat asking that the matter be resolved immediately. The study assumes significance as the findings show that PakistanÃ¢â¬â¢s global exports would increase by 0.77% with full Safta.


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## Neo

*Pakistan sees Chinese interest in Himalaya pipeline *

BEIJING (updated on: October 23, 2006, 18:37 PST): China is interested in Pakistan's proposal for a trans-Himalayan pipeline to carry Middle Eastern crude to western China, a Pakistan embassy official said on Monday.

The proposed pipe would link Pakistan's deepwater port of Gwadar, which is close to the Iranian border and is partly financed by Beijing, with China's remote western regions.

Pakistan also hopes to secure Chinese investment in a large refinery complex.

The route over the Himalayas would be an expensive and challenging engineering feat, and once the oil reached China it would likely have to be shipped thousands of kilometres further east to coastal areas, where most energy demand is centred.

But it would allow security-conscious Beijing to reduce the portion of its oil shipped through the narrow, piracy-prone Malacca straits -- which now carry up to 80 percent of the country's oil imports.

"At the moment it is just an idea that we have brought forward, but the Chinese side have said they are interested," Naeem Khan, commercial and economic counsellor at the Pakistani Embassy in Beijing, told Reuters.

"It would be part of a larger trade corridor. We have already agreed to upgrade the Karakoram highway (between the two nations) and the pipeline would go in tandem with that."

President Hu Jintao is expected to travel to Pakistan in November, Khan and Chinese businessmen said, reciprocating a February visit by Pakistani leader Pervez Musharraf, who pressed for closer economic and strategic ties.

The two countries aim to lift two-way trade to $8 billion by 2008, and are discussing a free trade agreement. Bilateral trade rose to $4.25 billion in 2005 from $3.06 billion in 2004.

REFINING COMPLEX 

Private and state-owned Chinese oil companies are also in talks with Pakistan about construction of a refinery at the same port where the pipeline would originate -- which Islamabad would like to turn into a regional energy hub.

Officials want to build a refinery and petrochemical complex with an initial 10 million tonnes per year (200,000 barrels per day) capacity, later expanding to 21 million tonnes, Khan said.

The government is considering a raft of incentives from free land for refinery construction, to allowing unlimited duty-free import of crude for processing, sales tax exemption for refined product exports and infrastructure support.

The product from the refinery would be expected to include at least 60 percent middle distillates -- kerosene and diesel.

"We have to make it a profitable venture to attract investors, " Khan said, adding that officials hoped to get Beijing's approval for the project by the end of the year.


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## Neo

*World Bank to help Punjab develop large cities *

ISLAMABAD (October 24 2006): The World Bank will be assisting Punjab Government in developing large cities to promote economic growth and improve infrastructure, service delivery in major cities of Pakistan, says a press release of World Bank.

In this regard the World Bank and the Government of Pakistan signed a grant agreement on Friday for $750,000 to help finance preparation activities for Punjab Large Cities Development Policy Loan (DPL), administered by World Bank Policy and Human Resource Development (PHRD) program, funded by the Government of Japan.

The loan will be used to assist cities in developing strategic investment plans and improved service delivery in solid waste, urban transport, and strengthen local finances that support infrastructure investment and service delivery.

The Japan HRDF has contributed over $250 million since 2000 in various programs to various countries and is one of the largest funds managed by the World Bank.

The Japan PHRD Fund supports five main programs; The PHRD Technical Assistance (TA) Program, the Joint-Japan/World Bank Graduate Scholarship Program (JJ/WBGSP), the PHRD-World Bank Institute (WBI) Capacity Development Program, the Japan Staff and Extended Term Consultants (ETC) Program, the Japan-World Bank Partnership Program.

This project's objective will be met through implementation of three consecutive Development Policy Loans of $100 million each, says a press release of World Bank.

The PHRD grant will support activities required for the preparation of the project and may include preparation of feasibility studies, environmental, social, economic assessments, stakeholder consultations, studies and workshops, surveys, and provision of technical services.


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## Neo

*Sugarcane output up 16.9 percent this year *

KARACHI (October 24 2006): The country's sugarcane production has reached 51.8 million tons this year, up 7.5 million tons, or 16.9 percent, compared to last year's crop, official sources said on Monday. They said that the country has witnessed another bumper sugarcane crop this year due to ample water supply and increase in per acre yield.

"The increased sugarcane production is a positive sign as it has crossed 50 million tons mark this year, which stood at 44.3 million tons last year," said Inayatullah Khan, Federal Cane Commissioner, when approached.

He said that sugarcane growers of both Sindh and Punjab had bagged big profits and enjoyed a good support price for their crop, which in fact motivated the growers to further improve their crop quality and per acre yield this year as well.

"We had initiated seed projects for cane growers early this year aimed to provide quality seeds to them so that they could enhanced crop size and its yield," he said. He said that better profits last year encouraged growers to use superior quality of fertiliser.

This year, the share of Punjab in the sugarcane crop production is the biggest with nearly 60 percent, followed by Sindh and NWFP with 30 percent and 10 percent, respectively.

The Sugarcane Growers Association has also lauded the efforts of the concerned departments, who have specially focused Punjab region for increasing crop figures. Some of the well-educated growers had imported expensive and good quality international seeds to get world-class crop. "Punjab grows cane crop on 41 percent of its total cultivable land," said Qurban Ali Shah, President, Sugarcane Growers Association.

He said that Sindh grows sugarcane on 24 percent of its aggregate cultivable land, but this figure could be increased substantially if adequate water supply is ensured. He said that with 51.8 million tons harvested crop of sugarcane, the sugar mills would be able to produce around 3.8 million tons white refined sugar.


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## Neo

*Pakistan's performance on most MGDs unsatisfactory *

LAHORE (October 24 2006): The Asia and Pacific region as a whole is on track to achieve most of the millennium development goals (MDGs), but progress in many individual countries, including Pakistan, is slow and performance on some vital targets is unsatisfactory, according to a new report titled 'Millennium Development Goals: Progress in Asia and the Pacific 2006'.

The report is produced through a regional partnership between Asian Development Bank (ADB), United Nations Development Programme (UNDP) and UN Economic and Social Commission for Asia and the Pacific.

It says that regional targets, such as halving poverty and hunger, achieving universal primary education, and eliminating gender disparity in education, are on track or have already been achieved. And, progress on these is impressive compared to sub-Saharan Africa and even Latin America.

The report pointed out that two-thirds of Asians, or a total of 1.5 billion people, are still without access to basic sanitation. The region is also home to roughly three times as many underweight children and people living on less than $1 a day. The region is not progressing fast enough to meet some important targets, including infant mortality and access to basic sanitation in urban areas. Meanwhile, HIV prevalence is actually on the rise and the proportion of people with access to improved water sources is declining.

The regional scorecards presented in the report mask some drastically uneven progress across countries. Many of the developing countries of a region that stretch from the Pacific to Central Asia are likely to miss or even regress from a wide range of MDGs, including the targets on child health, and diseases, such as HIV and TB.

The countries of most concern are identified in the report by combining a measurement of their current level of deprivation against progress on the MDGs. Using this, they are grouped into the following four categories.

*MOVING AHEAD:* Making good progress and with a latest status better than average for the region, including Armenia, Azerbaijan, People's Republic of China (PRC), Kyrgyz Republic, Malaysia, Palau, Thailand, and Vietnam.

*LOSING MOMENTUM:* Would have to accelerate progress to be able to meet targets, although from a relatively favourable latest status, including Fiji Islands, Kazakhstan, Samoa, and Uzbekistan.

*CATCHING UP:* Making progress but their latest status is below the region's average, Afghanistan, India and Nepal.

*FALLING FURTHER BEHIND:* Causing greatest concern because they score negatively on both progress and latest status indexes. These countries include Bangladesh, Indonesia, Laos People's Democratic Republic, Mongolia, Myanmar, Pakistan, Papua New Guinea, and Philippines.

The report avers that there is also a wide divide between progress seen in urban and rural areas. Of the 2 billion rural dwellers world-wide without access to basic sanitation, 1.5 billion were in Asia and the Pacific in 2004. Yet in that year, only one-third of all Asians living in rural areas had access to basic sanitation compared to 74 percent of urban residents. "Much remains to be done if governments in the region are serious about delivering the MDG promises to their poor and to achieve sustainable development," the report adds.

It says that at present, too many countries that score low on the progress or status of the education and health targets commit only a small proportion of their GDP to these sectors. And, countries of most concern in the region are often among those not receiving enough from trade or aid.

The report concludes that while developing countries must commit to supporting institutions and policies that promote the sustainable economic growth required to achieve the MDGs, developed countries must also deliver on providing more and more efficient aid and ensure fair trade and a more equitable share of global prosperity for poor people.


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## Neo

*24.2 percent households report much better living standards: survey *

ISLAMABAD (October 24 2006): According to the latest survey of Pakistan Social and Living Standards Measurement (PSLM), only 24.2 percent have reported better or much better economic situation, while 51.5 percent households reported no change and 23.9 percent households reported that situation has gone worse.

The survey of PSLM 2004-05 by Federal Bureau of Statistics (FBS) covered 76,520 households of the entire country on a range of social sector issues like education, health, housing, water supply and sanitation showed some encouraging results. Karachi district emerged on top in literacy.

An interesting finding was that only 6.5 percent households were satisfied with the working of police, 11 percent were satisfied with agriculture extensions, 11.8 percent with veterinary services, 36 percent with government basic health facilities and 10.5 percent were satisfied with family planning services. However, 60 percent of households expressed their satisfaction with schools.

It made a startling revelation that as many as 86.6 percent of households in Pakistan have their own house, whereas 7 percent live on rented accommodation. Islamabad has the lowest percentage of personal accommodation with 58.8 percent, while 37 percent live in the rented or subsidized rented units.

The report further states that the percentage of houses with one room has declined from 38.1 to 24.2 percent, while houses with 2 - 4 rooms increased from 55 to 68.7 percent and more than five rooms increased from 6.9 to 7.1 percent.

The report says that Gross Enrolment Rate (GER) for primary schools (age 5-9) increased from 72 percent in 2001-02 to 86 percent in 2004-05 as reported by Federal Bureau of Statistics survey of 2004-05 conducted under Pakistan Social and Living Standards Measurement (PSLM) 2004-05.

According to report, Narowal district in Punjab, Karachi in Sindh, Abbotabad in NWFP and Ketch in Balochistan with GER 130 percent, 111 percent, 117 percent, and 110 percent, respectively, have been ranked as top districts within the provinces for primary education.

The Net Enrolment Rate (NER) of primary education is substantially lower than GER due to overage enrolments but has also shown increase in the enrolment trend from 42 in 2001-02 to 52 in 2004-05, supporting the GER findings.

The information in the report has been collected from all schools public, private and also including deeni madaris. Though the enrolment has declined in the government schools from 74 percent to 72 percent for the same period, it has been 100 percent in the poorest districts like Bhakkar (Punjab), Tharparkar (Sindh), Upper Dir (NWFP), and Jhal Magsi (Balochistan).

The middle level (age 10-12) GER is 41 to 46 percent, while for NER it is 16 to 18 percent and considered more realistic due to enrolment of overage students. The increase in the Matric level (age 13-14), GER (42 to 44 percent) and NER (9 to 11 percent), the report says.

The report says that the real impact will be observed after four/five years when the existing primary level cohort will reach Matric level. Moreover, the increase has taken place in both sexes across all provinces, it added.

The adult literacy (15 years and above) has been worked for the first time and has risen 43 percent in 'Pakistan Integrated Household Survey (PIHS 2001-02) to 50 percent in PSLM 2004-05.

According to this, Rawalpindi 75 percent in Punjab, Karachi 78 percent in Sindh, Abbotabad 65 percent in NWFP, and Quetta 65 percent in Balochistan are top districts within the provinces for literate persons over aged 10 years and above.

The report on the health says that prevalence of sickness/injuries is less in the districts of Punjab than other provinces.

The report on health covers sickness/injuries, immunisation, Diarrhoea and the use of pre and post-natal services. It says that 93.38 percent cases of sickness/injuries visited the health consultants. Regarding immunisation based on mother's recall; at least one immunisation had increased from 74 percent to 83 percent. While measure that include mother's recall as well as record of immunisation given to child shows a rise from 53 percent to 77 percent in the proportion of one year old who are fully immunised.

Children suffering from diarrhea under the age of five has increased from 14 to 16 percent and Sindh has shown significant increase from 11 percent to 18 percent, which may be attributed to shortage of clean drinking water, says the report.

Bhawalpur with 28 percent in Punjab, Larkana 30 percent in Sindh, D.I. Khan 29 percent in NWFP and Gwadar 34 percent in Balochistan province are considered the most affected districts within provinces for diarrhea.

According to the report, female pre-natal consultations increased from 35 percent to 50 percent in the period from 2001-02 to 2004-05, but post-natal consultations remained low with 23 percent in 2004-05, it said. Moreover, tendency of Tetanus Toxoid injection for pregnant women increased from 46 percent to 51 percent and was highest in Sialkot with 87 percent among all cities of Pakistan.

Electricity facility has reached to 83.9 percent (2004-05) from 70.5 percent (2001-02) houses with Sialkot at the top with 99.29 percent. The usage of gas has also increased from 20.2 to 29.5 percent. Karachi and Lahore are declared top consumers of gas with 89.18 percent and 77.85 percent households enjoying this facility.

Similarly, tap water supplies have improved from 25 percent to 39 percent in the specified period. Balochistan and NWFP are the most deprived provinces of drinking water facility owing to reduction in water resources from water pump resultantly increase in use of poorest of resources from 20 to 25 percent in rural areas, it added.

The survey of households showed that 51.5 percent reported no change of their economic situation, while 24.2 percent reported better or much better with 23.9 percent reporting for worse. Regarding the facilities offered and their satisfaction of the facilities/services, 36 percent reported satisfaction on government basic health facilities, 10.5 percent satisfied with the family planning services, 60 percent with schools, 11.8 percent with veterinary services, 11 percent with agriculture extension and 6.5 percent with the police.

It is also notable that most of the districts in Punjab and Sindh are generally less satisfied with the services/facilities as compared to NWFP and Balochistan, the report says.

http://www.brecorder.com/index.php?id=490073&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Moody's rates $250m phone company's notes * 

Dubai: Moody's Investors Service has assigned a (P)B3 senior unsecured rating to the proposed $250 million notes issuance (due in 2013) of mobile operator Pakistan Mobilink Communications Limited (Mobilink). 

Moody's says the proceeds will be used partly to refinance bank loans and fund ongoing capital expenditure. At the same time, Moody's has assigned a (P)B1 corporate family rating to Mobilink. The outlook for the ratings is stable.

This is the first time Moody's has assigned ratings to Islamabad-based Mobilink. Moody's says it expects to affirm the ratings and remove the provisional status upon satisfactory review of final documentation and completion of the issuance.

"The (P)B1 corporate family rating reflects Mobilink's strong position as Pakistan's largest mobile operator, and as facilitated by management's ability to rapidly roll out extensive network coverage as well as establish its brand to enhance prospects for strong subscriber and revenue growth," says Moody's Charles Macgregor, a VP/Senior credit officer, lead analyst for the company.

The rating also reflects the increasingly competitive and fragmented nature of Pakistan's cellular market, the challenges Mobilink faces in managing its growth strategy and profit margin, and its projected negative free cash flow position due to substantial growth-driven capex spending and a resultant increase in debt and financial leverage.

In accordance with Moody's global rating methodology for telecommunications companies, Mobilink's overall performance measurements indicate a Ba3 rating category, one notch above its (P)B1 corporate family rating category.

At the same time, the (P)B1 corporate family rating factors in the company's substantial debt-funded capex plan, medium-term refinancing risk, and moderate risk of financial demands from its parent.


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## Owais

*Canadian company to explore oil, gas in Sindh *


CALGARY (updated on: October 24, 2006, 15:17 PST): The Jura Energy Corporation on Tuesday announced that its Joint Venture Partner, Petroleum Exploration (Pvt) Limited has entered into a Seismic Data Acquisition Contract with the Oil and Gas Engineering Company of Sichuan Petroleum Administration for exploration of oil and gas in different areas of Sindh province of Pakistan.

The Contract provides for the shooting of approximately 600 kilometres of 2D seismic over five exploration licences, Mirpur Mathelo, Kandra (Lower Goru), Salam, Badin IV North and Badin IV South, and one Development Lease, Kandra (SML); all Blocks being located in Pakistan in the Middle and Lower Indus Gas Basins.

The Jura holds between a 37.5% and 50% participating interest in each Block.

The SPA will mobilise its crew from China to Pakistan within the next sixty days and all seismic surveys have been estimated to be completed within eight to twelve months from the Contract award.

The Jura is based in Calgary, Alberta, and listed on the Toronto Stock Exchange.


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## Owais

*World Bank to help Punjab develop large cities *

ISLAMABAD (October 24 2006): The World Bank will be assisting Punjab Government in developing large cities to promote economic growth and improve infrastructure, service delivery in major cities of Pakistan, says a press release of World Bank.

In this regard the World Bank and the Government of Pakistan signed a grant agreement on Friday for $750,000 to help finance preparation activities for Punjab Large Cities Development Policy Loan (DPL), administered by World Bank Policy and Human Resource Development (PHRD) program, funded by the Government of Japan.

The loan will be used to assist cities in developing strategic investment plans and improved service delivery in solid waste, urban transport, and strengthen local finances that support infrastructure investment and service delivery.

The Japan HRDF has contributed over $250 million since 2000 in various programs to various countries and is one of the largest funds managed by the World Bank.

The Japan PHRD Fund supports five main programs; The PHRD Technical Assistance (TA) Program, the Joint-Japan/World Bank Graduate Scholarship Program (JJ/WBGSP), the PHRD-World Bank Institute (WBI) Capacity Development Program, the Japan Staff and Extended Term Consultants (ETC) Program, the Japan-World Bank Partnership Program.

This project's objective will be met through implementation of three consecutive Development Policy Loans of $100 million each, says a press release of World Bank.

The PHRD grant will support activities required for the preparation of the project and may include preparation of feasibility studies, environmental, social, economic assessments, stakeholder consultations, studies and workshops, surveys, and provision of technical services.


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## Neo

*Pakistan takes to alternative software*

New Delhi, Oct 24 (IANS) Pakistan, often criticised for software 'piracy', is placing its faith on the Free Software and Open Source options to get out of this trap and also build local skills. 

Also called Free/Libre and Open-Source Software (FLOSS), it is a family of software liberally licensed to grant the right of users to study, change and improve its design through the availability of its source code.

Fouad Riaz Bajwa, general secretary of a network called the Free and Open Source Software Foundation of Pakistan (FOSS-FP), told IANS: 'FOSS-FP was (thought of) in February 2004, and set up actually in 2005. Our goal is to help people identify open alternatives to 'pirated' (or illegally copied) software.

'Our aim is also to identify processes by which people, governments, enterprise and the civil sector can use Free/Libre and Open Source Software for their sustainable economic development.'

Bajwa said this was being done by working with universities, linking up with the Pakistani public sector infrastructure and seeing whether it can be utilised for FLOSS education.

Free Software and Open Source still has only a marginal presence in the world of computing. But it is becoming increasingly attractive to a range of governments, for a diverse - sometimes conflicting - set of reasons.

Kerala recently took a major decision to officially shift education in schools to Free Software. Countries like Brazil and South Africa also support its use, as does China, though some of the latter's concerns are based around security.

In Pakistan, the attempt is also to build skills. FOSS-FP has been holding short-duration, single-day literacy campaigns. 'We give (students) free training on installing and using Ubuntu Linux, Open Suse, Red Hat Fedora Core,' Bajwa said.

Free Software comes in the form of different 'distributions'. Although each works in somewhat different ways from each other, there is commonness, and learning the different 'distros' can be a challenge.

FOSS-FP is also trying to promote and build the FLOSS software developer community in Pakistan.

'We want to build a community around FLOSS, and help them in terms of making available open source resources, advocacy and collateral (marketing materials), mailing lists, wikis (to share information) and portals,' he says.

FOSS-FP's site claims to have received nearly 600,000 hits, and has 580 members. 'We have members in Malaysia, India and Dubai,' Bajwa says with pride. 

http://www.dailyindia.com/show/73602.php/Pakistan_takes_to_alternative_software


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## Neo

*Pakistan's economic growth may rise to seven percent of GDP: ADB*

ISLAMABAD (October 25 2006): Pakistan's economic growth is likely to rise to 7 percent of GDP owing to recovery in agriculture sector, higher private investment, and increased development spending, says the latest Asian Development Bank (ADB) report.

The report, 'South Asia Economic Report: October 2006', which has been published by ADB for the first time, covers the data/ figures up till September 30, 2006. This new series of publication will be issued biannually.

It says that though the inflation declined in 2006, it is still higher at 8 percent due to high oil prices. Tight monetary policy and measures taken by State Bank of Pakistan in 2006 are likely to bring down the inflation to 6.5 percent in 2007.

The report says that fiscal deficit increased to 4.2 percent of GDP, development spending is projected to increase to 4.9 percent of GDP and overall fiscal deficit could increase to 5 percent in 2007. Moreover, the current account deficit is expected to rise by 5.5 percent of GDP.

According to the report, Pakistan's GDP growth slowed down in FY2006 to 6.6 percent, largely because of the impact of adverse weather conditions on major crops.

This significantly reduced growth in the agriculture sector and in agro-based industries, particularly cotton textiles and sugar. Recovery in the agriculture sector, higher private investment, and increased development spending are been projected to boost economic growth to 7 percent in FY2007, it adds.

Inflation declined in FY2006, but was still high at 8 percent. A significant decline in food inflation was in part offset by higher oil prices. Tight monetary policy and measures, such as liberalised imports of food and other essential items in short supply in FY2006 and continued tight monetary policy should reduce inflation to 6.5 percent in fY2007.

The State Bank of Pakistan (SBP) maintained a tight monetary policy stance in FY2006 and the rate of increase in broad money was below the growth in nominal GDP.

SBP kept liquidity tight through open market operations without significantly raising the benchmark 6-month Treasury Bill rate. In July 2006, SBP accelerated the monetary tightening by raising the cash reserve requirement, the statutory liquidity requirement and its policy rate by 50 basis points to 9.5 percent.

The government continued with its expansionary fiscal policy initiated in FY2005, aimed at increasing development spending and accelerating growth. In FY2006 development expenditure increased by 37.8 percent, to 4.1 percent of GDP compared to 2.8 percent two years earlier.

In FY2006 the fiscal deficit increased to 4.2 percent of GDP, including expenditures amounting to 0.85 percent of GDP on earthquake relief and rehabilitation. The FY2007 budget continues the growth-oriented policy stance, and development spending is projected to increase to 4.9 percent of GDP.

The budget also aims to increase revenues through broadening the tax base, and the tax-to-GDP ratio is projected to rise by 0.4 percent of GDP. The overall fiscal deficit could increase to 5 percent in 2007, including expenditures related to earthquake reconstruction, equivalent to 0.6 percent of GDP.

Domestic production was unable to meet the increase in domestic demand in FY2006 and imports rose more than twice as fast as exports. Imports were also boosted by the large increase in the oil import bill and the trade deficit increased sharply. The current account deficit swelled to 4.4 percent of GDP.

However, because of a more than two-fold increase in foreign direct investment to $3.5 billion including privatisation proceeds, a well-received $800 million Eurobond issue by the government, larger inflows of official assistance and lower amortisation, official foreign exchange reserves rose by $955 million to $10.8 billion.

In FY 2007 import growth is projected to slow down significantly as tight monetary policy dampens growth in domestic demand, and exports are likely to more or less sustain their growth because of improved agriculture production and the reduction by the European Union of the anti-dumping duty on bed linen exports and restoration of some benefits under the Generalised System of Preferences. However, the current account deficit is expected to rise to 5.5 percent of GDP.


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## Neo

*CBR told to give exemption on $100 million NBP loan to PSO*

ISLAMABAD (October 25 2006): The Ministry of Finance has directed the Central Board of Revenue (CBR) to give income tax exemption on foreign currency loan of $100 million granted to an oil distributing company by National Bank of Pakistan (NBP) branch in Bahrain.

A tax official told Business Recorder on Tuesday that NBP, Bahrain, had granted a foreign currency loan to PSO in 2001. However, the CBR later decided to withdraw tax exemption granted on the said loan and also refused to accept tax exemption application for 3-year rollover.

The External Finance Wing of Finance Division has informed the CBR that although NBP Branch at Bahrain is controlled and managed by NBP Head Office, Karachi, but its operational matters, including accounts and audit, are controlled by the laws and regulations of the monetary authorities of Bahrain.

In addition, the above foreign currency loan was arranged by NBP Bahrain by obtaining the deposit money from individuals/entities residing in Bahrain at some costs based on LIBOR. The NBP is obliged to pay agreed costs in terms of interest/rental to its clients without deduction of tax.

With the withdrawal of exemption, the NBP will not be able to pay the agreed interest to its depositors. Moreover, the overall income of NBP is taxable in Pakistan under the prevailing laws, he added.

He said that keeping in view the factual status, CBR has been requested to consider to agree with the grant of tax exemption under Clause-77 of Part-I of the 2nd Schedule to the Income Tax Ordinance for the original loan amount and under Clause-72 of Part-I of the 2nd Schedule of the Income Tax Ordinance, 2001 for three years rollover by treating the above NBP's loan as foreign currency loan, the official said.[/B]

ISLAMABAD (October 25 2006): The Ministry of Finance has directed the Central Board of Revenue (CBR) to give income tax exemption on foreign currency loan of $100 million granted to an oil distributing company by National Bank of Pakistan (NBP) branch in Bahrain.

A tax official told Business Recorder on Tuesday that NBP, Bahrain, had granted a foreign currency loan to PSO in 2001. However, the CBR later decided to withdraw tax exemption granted on the said loan and also refused to accept tax exemption application for 3-year rollover.

The External Finance Wing of Finance Division has informed the CBR that although NBP Branch at Bahrain is controlled and managed by NBP Head Office, Karachi, but its operational matters, including accounts and audit, are controlled by the laws and regulations of the monetary authorities of Bahrain.

In addition, the above foreign currency loan was arranged by NBP Bahrain by obtaining the deposit money from individuals/entities residing in Bahrain at some costs based on LIBOR. The NBP is obliged to pay agreed costs in terms of interest/rental to its clients without deduction of tax.

With the withdrawal of exemption, the NBP will not be able to pay the agreed interest to its depositors. Moreover, the overall income of NBP is taxable in Pakistan under the prevailing laws, he added.

He said that keeping in view the factual status, CBR has been requested to consider to agree with the grant of tax exemption under Clause-77 of Part-I of the 2nd Schedule to the Income Tax Ordinance for the original loan amount and under Clause-72 of Part-I of the 2nd Schedule of the Income Tax Ordinance, 2001 for three years rollover by treating the above NBP's loan as foreign currency loan, the official said.


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## Neo

*IDA to provide $50 million for mineral resources uplift*

FAISALABAD (October 25 2006): The International Development Agency of the World Bank will provide finance assistance of $50 million for 'Sustainable Management of Mineral Resources' to assist Pakistan Government in implementing its strategy to accelerate sustainable minerals sector development by strengthening governance, transparency, and capacity in the management of mineral resources.

The particular emphasis on community development, environmental compliance, and equitable sharing of mineral resource benefits, and attracting private sector mining investment.

In a project 'Study report', Michael Stanley, Senior Mining Specialist, Oil, Gas, Mining and Chemicals Department of World Bank said the core objective of the project 'Sustainable Management of Mineral Resources' is that the provincial level reforms will be implemented in Balochistan as a pilot case, and will aim to provide a demonstrative effect so that other provinces follow with similar reforms.

He hoped that the project is expected to yield the following outcomes:

(i) increased private sector investment in the mineral sector as a result of (a) collection and dissemination of basic geodata, and (b) improved investment enabling climate through enhanced legal and fiscal frameworks in line with international practices;

(ii) improved institutional capacity at the federal and provincial levels to manage the mineral sector;

(iii) increased taxes/royalties revenues at federal and local levels;

(iv) formulated policies on mitigation of potential impacts of mining on associated communities and on increased benefit sharing at the community level; and

(v) improved efficiency and transparency of licensing process through a harmonised mineral licensing system.

The borrowers' objective is for the mineral sector to contribute to economic development through export earnings, taxes and royalties, employment, and community level wellbeing.

Michael said that Pakistan has a rich mineral endowment, but the current contribution from the production of solid minerals to the GDP is about 0.5 percent, significantly below a global range of between 2 and 8 percent of GDP. Pakistan's near term growth potential exists with commercial exploitation of Saindak copper and possible future exploitation of Reko Diq copper deposits, Duddar zinc-lead deposit and other polymetallic deposits, Punfmin iron ore deposit, Thar coal, gemstones, and construction materials including dimensional stones.

It is estimated that with sufficient capital and a favourable investment climate Pakistan's solid minerals sector has the capacity to contribute annual foreign exchange earnings in the range of $1.5-2.0 billion or 2-3 percent of GDP, contribute annually $200 million to tax revenues of federal and provincial governments, stimulate secondary and tertiary economic activity, promote growth and provide employment and community development in the largely remote rural regions of the country, he added.

He said that the Pakistan Government has started the reform of the sector by formulating in 1995 a National Mineral Policy (NMP). The NMP decentralised licensing, regulatory, oversight functions, and taxation to provincial governments to achieve efficiencies and promote local economic development.

The federal government remained responsible for sector promotion and co-ordinating across federal, provincial, and regional governments. However, the results are still below expectations mostly due to relatively slow implementation of the NMP, and uncertainty created by inadequacies of provincial mining concession rules, which fail to meet international standards; and lack of knowledge of the mineral potential of the country, he added.

To address these circumstances and to achieve greater international competitiveness, study report stated that the Pakistan Government in November 2005 requested the Bank to assist it with: strengthening mineral sector institutions and legislation at both the federal and provincial levels; improving respective social and environmental performance and community wellbeing; establishing transparent, uniform and non-discretionary provincial mineral cadastre systems; and promoting investment opportunities by disseminating Pakistan's mineral resource information and geo-data globally.

Michael said he hoped that the proposed project would contribute to CAS objectives as follows:

(i) strengthening the enabling investment climate - the project will assist developing a regulatory framework for mining sector development and sector investment in a manner that is competitive and in line with best international practice, adjusted to the particular conditions of Pakistan; and

(ii) supporting pro-poor policies - the project will assist formulation of sustainable development policies, including preparation of community development plans for mining communities (most are in remote areas), mitigation of adverse impacts of mining on communities, and greater benefits sharing at the local level.

This project will also build on the successful dialogue between the Bank and the Government on mineral sector development through reviews, strategic analysis and stakeholder dialogue over the past three years. The proposed project is a direct extension of this dialogue.

The Bank's lending will bring unique expertise on development of sustainable mineral sector given its successful growth experience in similar operations in Ghana, Peru and Tanzania, as well as in Madagascar, Mauritania, Mozambique, Papua New Guinea and other countries. The project will also benefit from the results and recommendations of the Extractive Industry Review of 2003, and the Management Response of 2004, he clarified.


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## Neo

*World Bank to provide $300 million for trade corridor improvement*

FAISALABAD (October 25 2006): The International Bank for Reconstruction and Development (World Bank) will provide a loan $300 million to Pakistan for National Trade Corridor Improvement Program (NTCIP) to reduce the cost of trade and transport logistics and bring services' quality to international standards to reduce the cost of doing business in Pakistan and ultimately enhance export competitiveness, and accelerate industrialisation.

According to official sources, Planning Commission; Central Revenue Board, Ministry of Railways, Ministry of Communications/National Highways Authority, Ministry of Ports & Shipping, and Ministry of Defence will jointly achieve the project objectives through a comprehensive multi-sector reform program aimed at streamlining procedures and improving services and physical infrastructure.

The scope of the current program includes railways, the road transport industry, ports, trade facilitation and air transport.

*At the end of the reform program, official sources stated, the following outcomes are expected:*

-- Reduced share of domestic transport and cost of non-factor services in the total value of commodities;

-- Overall reduction of transport and transit costs and times for goods using the National Trade Corridor;

-- Increased rail share of long distance freight traffic;

-- Reduction in the operating deficit of railways, with objectively determined and targeted subsidies;

-- Better corridor user satisfaction;

-- Improved safety and reliability of transport operations; and

-- Improved procurement practices and enhanced accountability of the entities involved in NTCIP.

In a project study report on 'Key Development Issues and Rationale for Bank Involvement', World Bank expert Jean-Noel Guillossou, Senior Transport Economist, co-TTL , Amer Zafar Durrani, Senior Highway Engineer, co-TTL stated that the poor performance of the trade and transport logistics sector significantly reduces the competitiveness of the actual and potential export industries and ultimately hurts the country's overall economic growth.

The transport system in Pakistan generates high economic losses from a mismatch between supply and demand for transport services and supporting infrastructure.

It is estimated that the inadequate and inefficient transport system is imposing a cost to the economy of about 4 to 6 percent of the GDP, constraining economic growth, reducing export competitiveness and hindering social development, they added. Both experts said that an efficient transport system is a prerequisite for Pakistan to become globally competitive.

They said that the Pakistan government with World Bank support has developed a strategic approach for the transport sector, focusing first on the National Trade corridor linking Pakistan's major ports in the South with its major cities and trade corridors to the North. The objective is to promote an integrated approach to planning, investing and managing the National Trade Corridor transport logistics system.

The Government of Pakistan and the World Bank agreed on a financing program, which includes a programmatic Development Policy Loan (DPL), specific sub-project investment lending and a technical assistance loan. The Bank and GOP agree that a multi-sector policy-oriented DPL to support implementation of reforms acting as triggers for specific sub-project investment lending would be most effective.

The technical assistance loan will help to prepare and monitor reforms and provide the additional analytical underpinning. Investment lending will ensure that the transport infrastructure provides the capacity and the level of service expected to satisfy the increasing demand, they added.

According to the report, the World Bank has provided, and will continue to provide, analytical support to develop the framework to guide sub-sector policies (for highways, railways, ports and trade facilitation), including pricing, regulation and enforcement, medium term budgetary frameworks, restructuring and progressive commercialisation of public entities and strengthening of institutions (National Highway Authority, Pakistan Railways, etc).

The study report says that Fiscal Year 2006, ended in June 2006 with generally good economic outcomes. GDP growth was a robust 6.6 percent, exports grew by 14 percent, and average inflation decelerated from 9.3 percent in FY05 to 7.9 percent in FY06. Growth in recent years has been broad-based with all key sectors of the economy making a significant contribution.

Foreign investors' interest in Pakistani assets remained strong, with the sale of KESC and the partial sale and transfer of management control of PTCL in FY06.

Presenting the Transport Sector Overview, the study report said that the prospects for continued rapid growth over the next 3 years were good, provided political and macroeconomic stability were maintained, that structural reforms and investments to reduce the cost of doing business continue, and that domestic savings and public and private investment increase.

On the macroeconomic stability front, the key challenge is to arrest the widening of the current account deficit. Imports have been growing rapidly, and the current account deficit has risen to $5 billion in FY06 (3.9 percent of GDP) up from $1.5 billion in FY05 (1.4 percent of GDP).

The main reason for this has been strong import demand, fuelled partly by healthy economic growth and higher oil prices, but also by loose monetary policy pursued and a rupee appreciating in real terms over the past few years. The Government and the central bank plan to take additional steps on the monetary, exchange rate and fiscal fronts to reduce demand pressures and curb the current account deficit.

Although the transport sector is functional, its efficiency is relatively low with long waiting and travelling times, high costs and low reliability. These factors constrain Pakistan's ability to integrate into global supply chains, which require just-in-time delivery.

*According to the study report, the main weaknesses of the present transport system can be summarised as follows:*

-- High port costs, resulting in higher charges to users than might be considered desirable in terms of overall economic policy, increasing openness to world economy and stimulating trade and allowing Pakistan to capture a share of the regional and global market share.

-- Long dwell times for inbound containers due to low port productivity and undue delays at customs (100 percent of containers are examined physically). The result is congested terminals and the need to construct additional facilities, which could be avoided by taking actions, which reduce dwell times and congestion.

-- Relatively shallow draft in ports, which will increasingly limit direct shipping connections as the size of container vessels on direct services increase. Calls from smaller vessels providing feeder services would result in higher shipping costs compared to other ports in the region, which have a higher depth.

-- Poor highway conditions and weak highway management, which prevent the main road infrastructure to provide the required levels of service. Forty-four percent of the road on the National

Trade Corridor is in fair or poor condition. Available capacity is limited by pedestrians, non-motorised transport, and grossly overloaded, small obsolete, slow moving trucks. As a result, road services are generally slow (around 25 km/h) and unreliable.

*Exporters and importers have developed special costly arrangements for high-value freight operating under time constraints:*

-- High truck overloading, which leads to road damage, high accident rates, slow speeds and congestion. Fatalities/100 million vehicle kilometers are 10 - 20 times higher in Pakistan than in Europe, North America or Australia. As a result, while the trucking industry in Pakistan has low direct costs, its external costs are high.

-- Insignificant levels of rail freight traffic, which do not reflect the intrinsic potential of rail. The rail system has been largely abandoned by the private sector. The rail could increase its share of the freight market in view of its competitiveness on long distances (about 800 km) as demonstrated in other parts of the world.

-- Pakistan Railways is unprofitable and financially unsustainable. It is unable to service its debt and has been often unable to fully fund its operating costs and pension payments. To continue to operate, Pakistan Railways has received significant subsidies from the Government (US $133 million in 2004 and US $65 million in 2005). The 2005 financial statements show an improvement of the operating account with a slight profit of about US $4.6 million, before depreciation and interests. This profit is generated by non-railway activities, however. Excluding these activities, the deficit on the operating account would have been US $41.7 million and the need for subsidies of about US $106.6 million. The reported deficits are distorted by the low levels of depreciation used in the accounts of Pakistan Railways. The deficit would increase by about US $60 million if international standards were adopted.

-- Incomplete implementation of the customs reform agenda. The simplification, modernisation and harmonisation of procedures and documents are at the heart of the trade facilitation agenda with customs clearance being the main focus. Significant progress has been made already with the average customs clearance time reduced from seven to less than one day comparable with international standards. Full implementation of the new system will allow clearance procedures to be moved away from the border while, at the same time, reducing opportunities for informal payments and providing incentives for importers and exporters to obey existing regulations.

Weak, fragmented and relatively under-developed freight forwarding/logistics sector. It has yet to transform to provide the breadth of services and levels of vertical integration, which are increasingly found elsewhere and are necessary for the export-oriented manufacturing sectors, particularly in textile and clothing.


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## Neo

*Pakistan's globalised companies - what next? *
By Farhan Bokhari

The beginning of a marketing campaign this week by Pakistan's largest mobile phone company, seeking to raise $250 million from its first global bond, is indeed a significant milestone in the country's economic history. 

For the financial markets, this marks yet another occasion when a Pakistani market plans to head overseas to raise capital.

This move by Pakistan Mobile Communications (Pvt) Ltd, commonly known as Mobilink, comes just at a time when the largest oil and gas exploration company, known as OGDC (Oil and Gas Development Company) is expected to soon head to international markets to raise up to $1.5 billion through the issuance of a GDR (Global Depository Receipt). 

The government is considering plans to similarly offer shares from three public sector banks (Habib Bank, United Bank and National Bank) as well as the 'Kot Addu' power company, similarly through GDRs on international markets. At the same time, one of Pakistan's largest banks known as the Muslim Commercial Bank has just recently positioned itself for a foray to similarly tap international capital markets with a GDR on offer.

Such offers come with the upside of consolidating moves by Pakistan's larger companies, seeking to raise not just capital on global markets, but also their profile. Once considered just exclusive domestic players, some of Pakistan's key companies have become known entities to global investors.

Domino effect

This is the combined result of not just a demonstrable yearning to tap the global markets, but more importantly, the consequence of an economic recovery. 

Banks, telecom and energy sectors, to name just some of those in a recovery mode, have seen their profits rise considerably over a period of time.

Consequently, such high returns give them the financial profile to become noticeable for international investors, who are actively seeking to chase the best possible deals around the world. 

However, what must follow these otherwise complementary developments, are two important trends. On the one hand, it's vital for those Pakistani companies which haven't already caught on the trend of reaching out to global markets, to consider internal reforms of the kind which would give them the edge to become global players. 

By becoming increasingly profitable and robust, such companies have the opportunity to position themselves as the most thriving players within the community of Pakistani companies.

Once they achieve that goal, their next frontier would indeed be that of positioning themselves for similar forays into international capital markets.

Getting noticed

In the long run, this would allow such companies to become players who would then be well placed to be noticed by international investors.

To translate the success of the few which are now preparing to reach out to international markets, to the benefit of the many more that have still not ventured out in this way, requires not just a recognition on the part of the corporate players themselves, but also a necessary push by the government.

The Pakistani government and regulators involved with corporate functions, must begin pushing companies far more aggressively than what they have done so far, to conform to global standards that make them competitive in the face of rigorous international standards. On the other hand, the kinds of moves presently being considered by the corporates venturing outwards must not cause an oversight of Pakistan's many pressing economic challenges fundamental to its economy.

For long, the country has followed a primarily flawed model of development, where prosperity of a few has often led to increasing ignorance of the needs of the many more who are essentially members of the lower middle and lower income groups. 

The ultimate measure of economic growth and prosperity of a country has to be driven by the quality of lives led by its people. 

The current spate of indications surrounding Pakistan's economic recovery, though impressive, do not necessarily underline the ways in which the country's people stand to benefit directly from companies reaching out increasingly to global capital markets.

http://www.gulfnews.com/business/Comment_and_Analysis/10077222.html


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## Neo

*Pakistan's rising land prices an impediment to foreign investment*

25 October 2006 

ISLAMABAD Ã¢â¬â The rising land prices in Pakistan have been identified by the government as one of the major impediments to sizable local and foreign investment in the housing sector.

The Ministry of Housing and Works and the Board of Investment (BoI) feel that land prices in the country needs to be rationalised and brought down by working out a comprehensive long term policy.

They have jointly finalised a draft of the "Housing and Real Estate Development" - Sector Profile that calls for formulating new policy measures to remove the growing housing shortage across Pakistan.

The draft also urges the government to announce attractive package to the foreign and local investors to come forward and invest in rural housing schemes. "There are many private and cooperative housing societies which are being established in the urban areas but not a single society is being set up in the rural areas," it added.

This would be the second effort to lure some meaningful local and foreign investment in the housing and real estate sector, following a number of incentives that were offered to the investors in the National Housing Policy aimed at offering affordable housing for the poor. 

There is a growing consensus that a rapid growth in housing finance can significantly contribute to the economy in the form of additional employment and support to variety of allied industries.

The copies of the draft have been sent to the economic ministries, State Bank of Pakistan (SBP), the banking institutions and other concerned agencies in order to come up with a final report to be approved by the cabinet for effective implementation.

The BoI and the ministry of housing and works are of the view that the financial institutions should give mortgage loans for housing purposes at market rates. In this regard, all commercial banks will be encouraged to advance loans for housing and housing projects by earmarking a "substantial percentage" of their loan portfolio like other industries and commercial projects. The central bank is being requested to set up a "housing refinance window" for long term funds from multilateral agencies.

Institutions maintaining insurance funds, provident fund, EOBI funds etc shall be encouraged to invest a part of their portfolio in the housing and construction sector including long term housing bonds. 

Part of the sale proceeds of valuable public land will be set aside to provide plots for low income housing and housing for the poor and needy at "concessionary rates."

Similarly, the draft also urged the financial institutions and housing institutions to float long term bonds at market rates to raise housing finance. Also, housing finance institutions shall be promoted to encourage savings and provide credit from community based finance and other sources.

The draft sought the support of the provincial governments to urgently identify land in and around urban and local settlements for housing development.

It called for suitably amending land acquisition laws to make provision for unified transparent and market oriented system and litigation minimisation. 

The provision of trunk infrastructure shall be the responsibility of Wapda, PTCL, SNGPL,SSGCL, KESC

etc. The cost of trunk infrastructure will be an additional charge to the public and private housing development schemes with the planned areas.

The construction sector in Pakistan has grown by 7.9 per cent against 3.1 per cent last year and a yearly target of 5.4 per cent.

As a result of this growth, the sector has realised an investment of $89.3 million since July 2004. It is anticipated, according to the draft, that the growth in the sector will be multiplied manifold in the near future.

Building and construction sector is among the identified sectors of the government as the driver of economic growth. There are strong backward and forward linkages associated with construction and housing sector and hence a spurt is actively in this sector unleashes a chain reaction in other industries. It is also said that not less that 40 industries are linked to construction and housing sector.

Construction industry alone provides impetus to these 40 industries. 

As the government aims at alleviating poverty and improving revenue collection, a focused attention to the industry can help in achieving both the objectives.

According to the official estimates, Pakistan has over 19.3 million housing units. 

About 24.8 million housing units for a population of 148.7 million people are required. Hence a shortfall of 5.5 million homes is estimated as of end June 2004.

On an annual basis, the country needs 570,000 units against the actual supply of 300,000. 

http://www.khaleejtimes.com/Display...business_October718.xml&section=business&col=


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## Neo

Wednesday, October 25, 2006 

*Pakistan, China to set up joint investment company*

By Sajid Chaudhry

ISLAMABAD: Pakistan and China are set to announce establishment of a Ã¢â¬ËPak-China Joint Investment CompanyÃ¢â¬â¢ and other forms for cooperation between financial institutions, an official at Economic Affair Division told Daily Times on Tuesday.

The establishment of Pak-China Joint Investment Company would be an initiative to be undertaken under Pak-China Five-Year Development Programme in financial sector cooperation.

Recognizing the importance of strengthening financial sector cooperation to facilitating and implementing Pak-China Five Year Development Programme, both sides would commit to taking effective measures to intensifying financial sector cooperation including establishment of a Pak-China Joint Investment Company and other forms of bilateral exchanges and cooperation between financial institutions. 

This five-year development Programme for promotion of trade and economic cooperation between the two nations would be initialed during November 9-12 in a first meeting of Pak-China Economic Cooperation Group. The group is comprised of top officials of the both countries mainly of economic ministries and departments. 

The Chinese Assistance Minister will be arriving Pakistan to participate in first meeting of Economic Cooperation Group (ECG) and the said five-year Programme would be formally signed during Chinese PresidentÃ¢â¬â¢s visit to Pakistan starting from November 23, 2006.

A 15 member high level Chinese delegations visited Pakistan during July 2006 to finalise agenda of the meeting of recently constituted Pak-China Economic Cooperation Group (ECG). The delegation was comprised of officials from China International Engineering Consulting Corporation (CIECC) headed by Mr. Gou Husheng, Vice President and Chief Economic of CIECC, Dr. Hu Donsheng Deputy Director General of Department of Planning Business, CIECC and the other members of delegation are Xin Zhongli of Foreign Economic Cooperation, Du Zhenli Department of IT, Li Kaimeng Department of Policy Study, Zhang Xi of Metallurgy, Li Hua of Policy Study, You Bojun of Social Servies Business, Dr. Xu Yudong of Business Planning, Lu Xainghai of Agriculture and Water, Zhou Beiwen of Energy Business, Zban Jinwen of Petrochemistry, Light Indsutry and Textile Business and Wang Ping of International Business.

The Chinese delegation had discussed the existing state of affairs of PakistanÃ¢â¬â¢s economy and trade and future plans for its development in medium term and long term. The delegation also discussed the domestic economic development, the industrial structure and its main characteristics, level and structure of domestic consumption, market structure and its main characteristics. PakistanÃ¢â¬â¢s opinion on current situation of the economic and trade cooperation between the two countries, problems and their solution. PakistanÃ¢â¬â¢s overview for the existing investment projects from Chinese enterprises, problems and directions, which need to be improved. 

The areas that would be included in five-year plan for promoting cooperation amongst the two countries are relating to all sectors of economy. Agriculture, PakistanÃ¢â¬â¢s main targets and request of agricultural Programmes in next five years, possible fields and projects in the areas like grains, cotton, animal husbandry, dairy products, livestock, agri-irrigation and water saving technology, manufacturing, textile industry, electronic appliances, machinery and equipments, automobile industry, building materials. Transportation, water supply, sewage treatment in main cities, mining industry cooperation and mineral processing, energy resources, tale-communication network conditions and application conditions, information application and equipped conditions, electronic products manufacturing industry conditions, electronic information industry development plan, exhibitions and conferences, tourism industry, project contract, business and trade, financial services, management services, education and training, technology cooperation and human resource, frame work and method of economic and trade cooperation, investment environment and financing arrangements.


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## Neo

Wednesday, October 25, 2006 

*Cotton output forecast at 12.4m bales in 2006-07*

KARACHI: Initial cotton production of the country has been forecasted 12.4 million bales in April 2006-January 2007 cotton crop output, down from a targeted 13.86 million bales, a government statement said. 

The countryÃ¢â¬â¢s main federal committee on agriculture was held Tuesday to review summer crop estimates and set a target for the upcoming winter crops. 

Ã¢â¬ÅDespite torrential rains and high floods in Punjab and Sindh during last monsoon season, the cotton production losses are low. Ã¢â¬ÅGood news is that the last flowering of cotton has raised the possibility of even higher production,Ã¢â¬Â the statement said, adding that the estimate for 2005-06 cotton output was about 12 million bales. 

Ã¢â¬ÅThese numbers are of the first estimate and can be expected to be enhanced during the 2nd and 3rd estimates,Ã¢â¬Â the statement said, without specifying when subsequent estimates will be released. 

The countryÃ¢â¬â¢s cotton crop of around 365,000 acres (147,710 hectares) has been damaged due to floods resulting from heavy monsoon rains, the official said. 

The agriculture ministry had earlier estimated the 2006- 07 cotton crop output was likely to total 13.86 million bales, up from 13 million bales in 2005-06. 

PakistanÃ¢â¬â¢s cotton harvest usually begins in September in Sindh province and October in Punjab province. 

The statement said sugarcane production in the 2006-07 crop year is estimated at 51.8 million tonnes, 16 percent higher than last yearÃ¢â¬â¢s production, while rice output is estimated to be unchanged from 5.4 million tonnes in the last crop year. 

The committee also set a 22.5-million-ton target for 2006-07 wheat crop output, up from 21.6 million tonnes produced in the last crop year, the statement said. 

Agriculture constitutes about 25 percent of PakistanÃ¢â¬â¢s gross domestic product, which is forecast to grow 7.0 percent in the current fiscal year that began in July, up from 6.6 percent growth recorded in the last fiscal year that ended June 30. 

According to government estimates, the countryÃ¢â¬â¢s agriculture sector is expected to grow 4.5 percent this fiscal year, compared with 2.5 percent in the previous fiscal year.


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## Neo

Wednesday, October 25, 2006 

*Pakistan developing new high yield rice varieties*

KARACHI: Pakistan is working towards developing new rice hybrids using its existing Basmati strains for a multiple increase in yields to boost output and exports, a senior Pakistani rice scientist said. 

Rice is one of the major farm commodities produced in Pakistan and more than half the output is exported. According to the U.S. Department of Agriculture estimates, the countryÃ¢â¬â¢s rice output in the 2006-07 marketing year on a milled basis is estimated at 5.6 million metric tonnes of which around 2.9 million tonnes may be exported. 

Pakistan is expected to be among the top five exporters of rice by volume in 2006-07. 

Ã¢â¬ÅWe are using Chinese rice material and our own Basmati lines to develop new types of rice with a potential to even double the current yields,Ã¢â¬Â MB Cheema, a scientist with PakistanÃ¢â¬â¢s Experimental Seed Production Unit said in an interview to a foreign news agency. 

Even though the new types being developed wouldnÃ¢â¬â¢t qualify as Basmati hybrids because one of the parent varieties would be non-Basmati but could nevertheless mark an improvement is several characteristics of long grain rice. 

He said new lines of rice have been developed with potential annual yields between 5-6 tonnes a hectare, but work is still at an initial stage and may take a few more years for tests to be conducted on various parameters. 

Cheema said current basmati hybrids give annual yields of around 3-4 tonnes a hectare. 

Cheema said the new types are being tested using several parameters including length, width and breadth of grain, water absorption ratio and cooked grain elongation ratio. 

Ã¢â¬ÅOur major breeding efforts are directed towards improving plant type of long and extra-long grain rice,Ã¢â¬Â said Cheema. 

Long grain rice is between 6.7 millimeters and 7.4 millimeters, he said and added that grains above 7.4 millimeters are extra-long grain. Cheema said hybrid rice breeding has been going on for over a decade now in Pakistan. 

Pakistan is also working on new types of Basmati. In Pakistan, around 2.6 million hectares of land is covered by rice. 

Cheema said in PakistanÃ¢â¬â¢s Punjab province, nearly 96 percent of rice output is Basmati. 

Basmati is the worldÃ¢â¬â¢s costliest rice, known for its unique aroma, grain length and taste. It is grown in certain select areas of India and Pakistan. Research work is also carrying to develop new Basmati hybrids, he said. 

The long grain super Basmati was released for general cultivation in Pakistan nearly a decade ago. 

In 2000, tall long grain Basmati-2000 was approved for cultivation in PakistanÃ¢â¬â¢s Punjab province. 

Cheema said so far Pakistan has developed several new lines of Basmati, some of which are undergoing research trails.


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## Owais

*Indian cabinet approves shipping pact with Pakistan *

New Delhi: In a move expected to give a fillip to India-Pakistan trade, India Friday approved a revised protocol on resuming shipping services with Pakistan.

The revised protocol was approved by the cabinet at a meeting chaired by Prime Minister Manmohan Singh Friday. 

'The revised protocol will allow lifting of cargo between the two countries by third country vessels as well as lifting of third country cargo by Indian and Pakistani flag vessels from each others' ports,' Information and Broadcasting Minister Priya Ranjan Dasmunsi announced after the cabinet meeting.

'This is expected to enhance tonnage under both flags and also result in competitive shipping rates,' he added.

Giving figures, he said Indian exports to Pakistan had registered a 167 percent growth between 2001-02 and 2004-05, rising from Rs.8.54 billion to Rs.22.88 billion. Imports from Pakistan had risen 42 percent in the same period from Rs.2.92 billion to Rs.4.70 billion, he pointed out.

The cabinet also approved the purchase through a global tender of seven container scanning systems at a cost of Rs.1.72 billion.

The container scanning systems will be deployed at Mumbai, Chennai, Tuticorin, and Kandla ports 'and will reveal discrepancies, if any, between the declaration made in documents and the actual contents of the containers', the minister stated.

The cabinet also gave its approval for extending by five months till March 31, 2007, the term of the National Commission for Religious and Linguistic Minorities.

'This will enable the commission to concretise its recommendations in a meaningful, purposeful and pragmatic manner,' Dasmunsi explained.

The cabinet also decided to ratify the Convention on the Protection and Promotion of Diversity of Cultural Expressions adopted by UNESCO in October, 2005, the minister said.


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## Owais

*Cotton production target would be achieved: Punjab Minister *

LAHORE: Cotton production target of 10.8 million bales would be achieved despite a little damage to the crops this season by pest attacks.

Punjab Agriculture Minister, Arshad Khan Lodhi told this in a meeting with a delegation of the growers held here on the second day of Eid.

He said that the Pest Warning And Quality Control of the Agriculture Department took timely preventive measures and provided guidance to the growers besides supplying pesticide in time for overcoming the pests attacking the crops.

Arshad Lodhi told that the menace of the sale of tainted pesticides has been controlled to a great extent by taking stern actions against elements indulging in such anti-social activities


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## Owais

*Mid-term plan for agriculture sector growth *

ISLAMABAD: Pakistan has devised a mid-term plan setting 4.5 percent growth rate in agriculture sector for next five years. 

The wheat production will be enhanced to 25 million tonnes from existing 21.7 million tonnes under the mid-term plan, Chairman Pakistan Agriculture Research Council Dr. Muhammad Tasnim said in Islamabad. Under the plan rice production target has been set at six million tonnes in a year. 

The rice exports from the country would exceed to $ one billion this year, Tasnim expected.


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## Owais

*Sustainable economic growth: Asian Bank stresses importance of three areas *
ISLAMABAD (October 28 2006): The Asian Development Bank has suggested, and emphasised on, three areas for sustainable economic growth of South Asian countries - quality of regulations, effectiveness of government interventions, and quality of infrastructure - which have a direct impact on their economic growth.

The document titled 'South Asia Economic Report', released in October 2006 by Asian Development Bank (ADB), states that South Asia is not fully realising its growth potential. The over-regulated business environment does not allow for a conducive environment.

It states that a good regulatory environment results in a healthy balance between government intervention and market mechanism and provides a stable and supporting business environment. But, when the regulations are overly imposed, it restricts the business activities.

The report estimated that if Pakistan improved its quality of regulations to the level of Thailand, the additional GDP growth could amount to 0.8 percent and, for India, it could amount to 1.6 percent, it adds.

It further says that one of the areas that is over-regulated relates to setting up running a business enterprise. Firms are frequently confronted with a heavy burden of administrative requirements such as permits and regulations issued by the government, which are substantially more complicated in South Asia. The permit and regulation fee in South Asia, as percentage of income per capita, is 903 percent in Pakistan and 606 percent in India. Contrary to this, Thailand has 11 percent, Malaysia 78 percent and China 84 percent.

The taxation system is also very complex and singles out the regulatory features. In some cases, the cost of compliance with tax regulations exceeds the revenues collected. The frequent use of exemptions and exclusions complicate the taxation system and make the system vulnerable to tax avoidance and evasion, and to discriminatory tax assessment, it says.

Similarly, the number of signatures involved for international trade is excessive which has a negative impact on the trade. Comparing with Asean 4, it says, for imports and exports only seven and five signatures are required, respectively, whereas in South Asia 22 and 12 signatures are needed for the same documentation.

Customs, which is also one of the main departments and plays an important role in facilitating business, unfortunately is not supportive in South Asian region due to its lengthy procedures and excessive signing besides manual system, instead of computerised. It further obstructs the smooth flow of business with its tedious and extensive physical examination of goods, it adds.

Despite reducing tariffs, substantial tariff barriers to trade still persist. The average import tariff in South Asia is about 18 percent, which is high compared to the average tariff in Asean 4 which is about nine percent, it adds.

On government effectiveness, the report says that considerable scope for improvement remains in government effectiveness in South Asia. Compared to the frontrunners Malaysia and Thailand, government interventions through public spending are found to be less effective in South Asian countries, but it says that Pakistan is above average in South Asia with 40 percent and is at par with Indonesia and slightly edging India, which is 35 percent.

The third very important area, the report says, is infrastructure, which encompasses power, transportation and telecommunication. These three sectors are very critical for efficient functioning of the economy.

It says that lack of physical infrastructure in South Asia is well documented and is repeatedly highlighted as one of the major constraints to sustaining high economic growth in the region, particularly for the manufacturing sector. The reliability of power supply and the quality of railroads, ports and transport are of main concern.

The report says that Pakistan is the only country in the South Asian region which has a good record of import-export time with average of 20 days, whereas India has 34 days.

The report applauds the initiative taken by Pakistan in privatisation of Pakistan Telecommunication Corporation and Karachi Electric Supply Company, which would have a positive impact on the economy of Pakistan and would invite foreign direct investment and public-private partnerships as in India public-private partnerships have attracted $8 billion after they initiated policy reforms in infrastructure, it says.


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## Owais

*Low-sulphur diesel: refineries not prepared to meet December 2008 deadline *

ISLAMABAD (October 28 2006): The oil refineries have differed with the government over deadline and presented their demands for switch-over from low quality diesel, having high sulphur content, to Euro II to address the pollution issue in major cities.

The demands are grant of zero-rated duty on import and exemption from all government levies on plants and machinery for refineries. The refineries have also demanded higher price for low-sulphur diesel.

The refineries are of the view that since the switch-over was a big task and needed huge investment, it also needed at least 36 months from the date of approval of the demands.

The government had set December 2008 as deadline for the refineries to ensure supply of Euro II with 500 ppm sulphur for marketing. Euro II is quality diesel, which causes less pollution due to low sulphur content.

An Oil Companies Advisory Committee (OCAC) letter, addressed to Petroleum Ministry, indicated that oil refineries were not ready to meet the government deadline of December 2008 for changing over from low quality diesel to Euro II having 500 ppm sulphur content.

The refineries import low quality diesel and, after refining, sell it to dealers to supply to vehicle owners at their outlets. The low quality diesel is a major cause of pollution in the cities where diesel vehicles ply in large numbers for transportation and carriage of goods.

The World Bank has been drawing attention of the officials towards this serious issue for a long time, suggesting that early introduction of Euro II diesel could help Pakistan address the pollution problem in major cities like Karachi, Lahore and Rawalpindi/Islamabad.

The letter indicated that oil refineries were not ready to take any advice from the government, whatever situation arises in cities where the use of low quality diesel was being used massively, until and unless its demands were met.

The letter said "We are delighted to share with you that all refineries are targeting for 500 ppm - Euro II-compliant diesel. In this regard, all of the refineries have carried out studies and presented estimated investments to the government. It also referred to meeting held in Islamabad on September 6, last and attended by the officials of the Petroleum and Environment ministries.

It further said "You (The ministry of Petroleum) will appreciate that refineries' upgradation is a capital-intensive project (estimated $500 million). At the same time lead-time for commissioning of such projects is 36 months. Therefore, refineries have presented a realistic time frame of December 2009." It showed that refineries have submitted essential prerequisites to execute the project that were basically demands for duty waiver on import of machinery and plants, besides exemption for them from all kinds of government levies and taxes.


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## Owais

*World Bank to provide $70 million for Karachi dockers labour board project *

FAISALABAD (October 28 2006): World Bank (WB) will provide $70 million for "Karachi Dockers Labour Board Restructuring Project" for reducing the cost of trade and transport logistics and bringing services' quality to international standards in order to reduce the cost of doing business in Pakistan and ultimately enhance export competitiveness and the country's industrialisation.

According to official sources, overall reduction of transport and transit costs and times for goods using the National Trade Corridor; and Reduced share of domestic transport costs and cost of non-factor services in the total value of commodities.

The project will include three components:

Severance: The objective of this component is to reduce the cost of Pakistan ports for port users by reducing related labour costs. This component will finance severance and related payments to management and workers retrenched due to closure of KDLB Labour Redeployment Services: The objective of this component is to provide labour redeployment services, to KDLB management and workers who have been displaced by closure of KDLB, to assist them in re-entering the labour force. This component will finance: (i) technical assistance and minor goods to develop and maintain administrative procedures between KDLB and other agencies (to be identified during project preparation) facilitating the assessment and planning for delivery of services to KDLB workers, and (ii) the actual cost of delivering labour redeployment services for up to 4,000 displaced staff. Labour redeployment services will be demanded driven and will include, but not be limited, to those addressing: frictional unemployment (ie, social and career/counselling, job placement)), structural unemployment (ie, institutional and on-job training), and lack of demand for labour (ie, temporary community employment, small/micro business assistance).

Project Management and Evaluation: The objective of this component is to: (i) ensure effective administration and co-ordination of the overall project including financial management and accounts, procurement, and reporting; (ii) ensure effective communication related to the decision to close down KDLB and to the implementation of the retrenchment plan; and (iii) to monitor the social impact of the closure of KDLB.

The component will finance technical assistance and minor goods to ensure co-ordination of project management activities and monitoring of the impact of KDLB in displaced workers, their families, the community, and the net impact of labour redeployment services provided to retrenched KDLB staff.


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## Owais

*Pakistan to buy locomotives from Russia and Ukraine *

RAWALPINDI (October 28 2006): Pakistan has decided to purchase high-speed locomotives and comfy wagons from Russia and Ukraine to modernise its internal traffic system and provide better facilities to passengers, railways minister Sheikh Rashid said here, on Thursday.

Talking to journalists during his visit to Rawalpindi railway station and Railways hospital, the minister said the railways has achieved the target of Rs 50 million profit for the first time in its history. "We have fulfilled the promise to run 40 special trains on Eid to help people reach their homes to celebrate Eid with their loved one," he added.

He said the number of rail passengers has increased manifold due to reforms introduced in the railways and enhanced facilities to people. The increased figures of passengers are ample proof that people have trust in the railways, he added.

He told reporters Prime Minister Shaukat Aziz has instructed him to get latest high-speed locomotives and comfortable wagons from Russia and Ukraine and soon he would be visiting these countries to finalise deals.

He said the railways has been transformed into a profitable organisation. "Railways has trained manpower but in the past it was not utilised in a befitting manner. Now, we are using this potential to serve the nation in a better way," he added. Sheikh Rashid said the proposal of bullet train is under consideration but the topmost priority is to double the track from Khyber to Karachi. On the occasion, he distributed sweets and flowers among passengers and patients.


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## Neo

*Business, industry suffer huge losses: Extended Eid holidays*

KARACHI, Oct 27: The nation has to suffer billions of rupees loss in industrial production owing to extended Eidul Fitr holidays which resulted in long closure of production facilities throughout the country. Even export trade has to suffer millions of dollars on missing weekly shipping schedule.

Business leaders and industrialists have expressed their utter dismay over long closure of business and industrial establishments and demanded of the government to adopt some proper and fool-proof method in this modern and scientific era for sighting of moon in order to avoid recurrence of such incidents.

The business and industrial activity will remain at standstill until coming Monday because there is no possibility that those who left for their ancestral places on Jumatul Widah would return before early next week.

Ã¢â¬ÅHad the government handled the eid holidays issue wisely, there would have been only three close holidays starting from Oct 24 to October 26,Ã¢â¬Â said a leading exporter, adding that this would have also discouraged people from clubbing their holidays with other close days such as Jumatul Widah and week-end.

The long closures have also made exporters to suffer as they missed their two weekly shipment schedules i.e. Monday and Thursday. This may force some exporters to air-lift their cargo in order to save their LCs from expiring or losing their export contracts.

SITE Association of Industry Chairman Amin Bandukda told Dawn that the industrial production in SITE area suffered on an average a loss of Rs2 billion per day.

He said that on Friday, there was very thin attendance of work-force in the industry and there was no possibility that workers who left to interior of Sindh or the upcountry would come back before Monday.

Mr Bandukda said that around 3,000 units in SITE area were involved in production of large variety of goods including textiles, engineering, chemicals, pharmaceuticals, beverages, steel re-rolling etc.

He urged the government to adopt some proper calculation or method for sighting of moon as it had economic implications as for any nation in this era quality, timely delivery and competitive price were the major weapons of success on the world market.

Korangi Association of Trade and Industry (KATI) Chairman Masood Naqvi said that there was rare possibility of witnessing full-scale production activity before coming Monday, because many industrial workers who left for their ancestral places would not be able to come back in time due to face transportation problems.

Responding to a question, he said that around 4,000 industrial units set up in KATI contribute around Rs250 million per day towards national exchequer in shape of duties and taxes. Ã¢â¬ÅThis will give clear picture as to how much industrial production is lost per day,Ã¢â¬Â he added.

Ã¢â¬ÅSighting of moon is a serious issue and it should not be left to Moulvis and scientific methods should be adopted to avoid controversy resulting in economic losses for the country,Ã¢â¬Â Mr Naqvi asserted.

In an era where up to a split of second could be calculated there was no reason that lunar movement could not be calculated well in advance, he maintained.

North Karachi Industrial Area (NKIA) Patron-in-Chief Capt Moiz Khan said that he had to close his unit at Juma prayers as no workforce returned. Ã¢â¬ÅI kept my office open till midday on Friday in the hope that labour would report back after Eid holidays but nobody returned back,Ã¢â¬Â he complained.

He further said that all the markets and commercial areas of the city also remained closed and there was no hope that industrial and business activity would come to normal before Monday.

However, he said that the messing up of Eid holidays by the government was the main reason that most of the workforce would not come back to their work places before early next week. Ã¢â¬ÅThis would mean that the industrial production will remain at standstill for around 10 to 11 days incurring huge economic loss.

He said that the North Karachi industrial area contributed on an average around Rs200 million per day towards the national kitty.


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## Neo

*Pakistan urged to reduce tariff on utilities*

28 October 2006 

ISLAMABAD Ã¢â¬â The World Bank has urged Pakistan to reduce the cost of doing business in Pakistan especially by lowering tariff rates of power, gas and other essential utilities.

One of the failures of the present government, official sources conceded, is its inability to reduce the cost of doing business in Pakistan and that inexpensive and timely infrastructure facilities such as land, electricity, gas etc were needed to be offered to the local and foreign investors.

According to one safe estimate, also approved by some government officials privately, Foreign Direct Investment (FDI) could double within one year if various hurdles and impediments in the way of businessmen are removed by the government.

However, the concerned government officials frequently quote the new report of World Bank/International Finance Commission (IFC) which says "doing business became easier in India and Pakistan in 2005-06", adding that five reforms in India and two in Pakistan reduced the time, cost, and hassle for businesses to comply with legal and administrative requirements.

No other South Asian economy improved its business regulations in 2005-2006, ranking the region last in the pace of reforms.

India, as leading reformer in South Asia, has taken over the top spot from Pakistan in last year's report. India cut the time to start a business from 71 to 25 days and reduced the corporate income tax rate from 36.59 per cent to 33.66 per cent. 

A Supreme Court decision made enforcing collateral simpler, easing access to credit. New risk management procedures in customs lowered

import time by two days and exports by nine days. Reforms to stock exchange rules toughened investor protections. Pakistan was the runner-up reformer in South Asia this year.

Background discussion with some officials revealed that the government urgently needs to simplify business registration, cross-border trade, and payment of taxes, as well as easing access to credit and strengthening investor protection without which no meaningful investment could take place in the country.

The research on Pakistan in the World Bank/IFC report was conducted by Dr Zafar Moeen Nasir, senior economist at the Pakistan Institute of Development Economist (PIDE). He believes the situation has slightly improved as far as the cost of doing business in Pakistan is concerned.

"The problem is that we have too many laws, our bureaucracy is non cooperative and our tariffs, especially those relating to customs, are still high compared to other countries. Then we do not have proper infrastructure which is particularly in bad shape

in transport sector. All these things have become a big hurdle in the way of the investors," he said when approached.

He also said that while power rates were still high, the frequent electricity breakdown was further causing problems to the industrialists. He quoted an example of an investor from Libya who recently came to Pakistan and despite making all efforts, he could not get the required support to set up his business from the Board of Investment (BoI). 

"Later, he came to us and we helped him to some extent," he said adding that BoI needed to be made a vibrant organisation in a bid to providing all possible facilities to the investors in the country. Like Dubai and China, Pakistan should also provide instant

infrastructure facilities to the investors under one roof if at all real local and foreign investment was to be attracted, he said.

A former senior official of the Planning Commission and former head of PIDE, Dr. A. R. Kamal said that World Bank/IFC report has shown some improvement as far doing business in Pakistan was concerned.


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## Neo

Saturday, October 28, 2006 

*Fiscal 2005-06: 17 industries contributed 79% of indirect taxes*

By Hamid Waleed

LAHORE: Some 17 industries (Commodity Groups) have contributed about 79 percent of the total gross receipts of indirect taxes during 2005-06. 

Total collection under these major contributors of Indirect Taxes stood at Rs 427.6 billion against Rs 111.2 billion from other sources.

The Central Board of Revenue (CBR) documents reveal that more than half of this collection emanates from six items that include petroleum products, automobile sector (vehicles and parts), electrical and mechanical machinery, cigarettes, telecom sector, and iron and steel. 

These seventeen industries include petroleum, auto sector, machinery, cigarettes, telecom, iron & steel, edible oils, natural gas, cement, plastic, sugar, chemicals, electrical energy, beverages, textile, fertiliser and coffee, tea etc.

According to details, collection of indirect taxes through petroleum stood at Rs 105.1 billion during 2005-06 against Rs 67.1 billion in 2004-05 with an increase of 56.8 percent. This collection, among all 17 industries, is the highest collection of indirect taxes followed by auto sector Rs 63.1 billion), machinery (Rs 32.1 billion), cigarettes (Rs 28.9 billion), telecom (Rs 28.3 billion), iron and steel (Rs 27.3 billion), edible oils (Rs 23 billion), natural gas (Rs 19.8 billion), cement (Rs 17.6 billion), plastic (Rs 14.9 billion), sugar (Rs 15.3 billion), chemicals (Rs 15.3 billion), electrical energy (Rs 13.4 billion), beverages (Rs 8.9 billion), textile (Rs 5.2 billion), fertiliser (Rs 5.1 billion) and coffee and tea (Rs 4.4 billion).

The tax analysts have termed it a case of narrowness of the base of indirect taxes. It also highlights the pitfall of relying on any of these few items could have far reaching revenue implications, they said, adding: It should be obvious that any contingency faced by these industries can cast a debilitating effect on tax receipts.

The direct taxes, on the other hand, have also surpassed the upwardly revised annual target of Rs 215 billion by 4.5 percent. The overall growth in FY05-06 in gross and net collection has been 21.7 percent and 22.5 percent, respectively over last year. In terms of value, the net collection has been Rs 224.6 billion, which is Rs 41.2 billion higher than previous year. In response to completely liquidation of refund remaining pendent, the refund payments of Rs 34 billion were 17.1 percent higher than those paid out in FY04-05.


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## Neo

Saturday, October 28, 2006 

*China to offer efficient farming techniques to Pakistan*

ISLAMABAD: The Peoples Republic of China will offer dry farming, water-saving irrigation technologies and high-tech fertilization to Pakistan under a five-year cooperation action plan in the field of agriculture and technical cooperation to be agreed between the two countries during the forthcoming visit of the Chinese president, a government official told the Daily Times on Friday.

The Chinese side has indicated this in the draft five-year cooperation action plan submitted to Pakistan for review before the Chinese presidentÃ¢â¬â¢s visit to Pakistan. A Chinese assistant minister will be visiting Pakistan from Nov 9 to 12 to finalize and initial a five-year cooperation action plan in consultation with Pakistani authorities. 

In the area of agriculture, China has said that it fully acknowledges PakistanÃ¢â¬â¢s needs for increasing agriculture productivity, developing deep agriculture processing and expanding PakistanÃ¢â¬â¢s agriculture exports. The two sides are likely to express readiness to further intensify and deepen comprehensive agricultural cooperation, share experience and technology and encourage Chinese agriculture processing and agriculture technology companies to invest in Pakistan. 

In the field of agriculture the two sides would agree on the priorities of cooperation in the field of agriculture over the next five years. Both the countries would develop strategic cooperation in water-saving irrigation, dry and water saving farming and high-tech fertilization. Strengthening cooperation in fruit, dairy and feed processing, pesticide management, aquaculture, ocean fishery and fish product deep processing. Strengthening cooperation in farming technologies and technical training. Strengthening cooperation in cotton diseases and pest management, field management and cotton ginning and processing technologies. 

In the area of technical cooperation both the countries would agree that both the sides recognize mutual complementarity in science and technology as well as long-standing and fruitful bilateral cooperation in this area and foresee enormous potential for future cooperation. Both sides to intensify cooperation primarily in the areas over the next five years. Water-saving irrigation and dry farming, seeding, farming machinery, fruit, meat and dairy processing, saline alkali soil transformation, acid and alkali resistant crop breeding. 

The five-year cooperation action plan between Pakistan and China aims to steer and promote rapid, stable and orderly development of bilateral trade and economic cooperation to broaden the scope and enhance the level of cooperation to achieve a balanced trade with win-win and mutually beneficial results and to drive comprehensive socioeconomic development in both the countries. 

Agriculture is considered to be the backbone of the Pakistan economy and the largest employer. AgricultureÃ¢â¬â¢s share in GDP was over 35% a few years ago, which stands at 22% now. PakistanÃ¢â¬â¢s agriculture is facing many challenges, including less availability of water and credit, lacking new agriculture technologies and innovations, training on modern lines and a host of other factors.


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## Neo

*Government sets 22.5 million tonnes wheat target *

ISLAMABAD: October 29, 2006. The government has fixed 22.5 million tones wheat targets for the current Rabi season, higher by more than 7,90,000 tones than the previous year's production.

Federal Secretary Food, Agriculture and Livestock was on Sunday quoted by Radio Pakistan as saying that the target would be achieved by 17.8 million tonnes production in Punjab, 2.7 million tonnes in Sindh, 1.25 million tonnes in NWFP and 0.7 million tonnes in Balochistan.

He said wheat will be cultivated over 10 million acres of land in Punjab, more than 2.2 million acres of land in Sindh, 1.8 million acres in NWFP and about 750,000 acres in Balochistan.


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## Neo

*Dana Gas consortium in Pakistan LNG terminal deal *

DUBAI: October 29, 2006. A consortium including Dana Gas has signed an agreement to develop a liquefied natural gas terminal in Pakistan at an estimated cost of $200 million, the UAE company said on Sunday.

A statement said Dana Gas, Single Buoy Moorings (SBM) and US-based Granada Group signed the memorandum of understanding for the LNG terminal at Port Qasim, Karachi, which would have an initial capacity of 3.5 million tonnes a year.

It said the consortium was holding talks with major LNG producers, but did not name them.

"Dana Gas has the objective to develop a network of LNG terminals mainly in the MENA (Middle East and North Africa) region and to tap into the LNG value chain including LNG trading activities," the statement said.

It said Dana Gas signed a co-operation agreement with SBM, under which the United Arab Emirates firm would focus on LNG marketing activities and SBM on the supply and operation of LNG floating storage and regasification terminals.

"The newly formed alliance will initially target LNG terminal projects in Pakistan, Lebanon and Kuwait," it said.

Pakistan, which has its own gas fields, expects to have a supply deficit as soon as 2008. Plans to import LNG and pipeline gas from Iran and Turkmenistan are based on projected gas demand growth of about 6.5 percent a year.

Industry sources in Pakistan have said they expected the LNG terminal to be completed around 2010.

Dana Gas was set up to deliver gas to utilities and industrial users in the UAE. With an agreement to import Iranian natural gas delayed, Dana Gas' second-quarter earnings came entirely from investments and financing activity.

The firm said it aims to invest in the upstream gas industry in the Middle East, the transmission and distribution sector and gas-related industries such as petrochemicals.

The statement said natural gas consumption in the Middle East has been growing by an average 5.9 percent a year in the last 10 years, driven mostly by demand for power generation due to growing populations and an industrialisation drive.


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## Neo

*Musharraf for common man's access to resources: PPAF role against poverty explained *

ISLAMABAD (October 29 2006): President General Pervez Musharraf on Saturday underlined the need to facilitate common man's access to resources through broadening of economic opportunities, especially for the disadvantaged and poor segments of the society to alleviate poverty in the country.

He made these remarks during a presentation by Pakistan Poverty Alleviation Fund (PPAF) on efforts to empower the poor and increase their income. The President noted that as a result of focussed efforts, the government had been able to bring the poverty ratio down to 24 percent from 34 percent, and added that efforts must continue to reduce this further in the coming years.

He said that the government was following a strategy to improve the quality of life through job creation in urban areas and development of agriculture sector in the rural areas, and taking steps to transfer the gains of economic turnaround to the people at the grass-roots level.

He stressed the need to increase the outreach of Pakistan Poverty Alleviation Fund in the remote regions of the country, particularly in Balochistan, and concentrate on schemes for provision of both potable water and water for agriculture. The President appreciated the projects being undertaken by PPAF in 20,000 villages in various parts of the country.

Earlier, PPAF Chairman Hussain Dawood and Kamal Hayat, Chief Executive of the Fund, made a presentation on achievements made so far by PPAF, a body formed in 2000 to achieve the objective of poverty alleviation through public-private partnership.

They informed the meeting about various initiatives to empower the poor, especially women, through increasing their income level and enabling their accessibility to infrastructure and social services. They said that local communities and partner organisations were fully involved through institution building support for sustained development.

Various international agencies, like the World Bank and International Fund for Agriculture Development and other private sector financial institutions, are supporting PPAF efforts, especially in the area of micro-financing and funding community-level projects. The meeting was informed that since 2000, the PPAF has made total disbursement of $391 million, including $222 million for micro-financing.

In rehabilitation and reconstruction efforts in the quake-hit areas, the meeting was told that PPAF had supported government efforts in the rebuilding process that resulted in construction of 115,000 housing units with around 1,000 infrastructure schemes rehabilitated. The meeting was attended by Dr Salman Shah, Ms Hina Rabbani Khar, Minister of State for Economic Affairs, and Secretary Economic Affairs Division and concerned officials.


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## Owais

*ADB provides Rs 2 billion for Punjab's social uplift *


ISLAMABAD (updated on: October 29, 2006, 19:25 PST): The Asian Development Bank (ADB) has provided over Rs 2 billion to Punjab government for social uplift of the people in barani areas in ten districts of the province.

According to a report, the Punjab government will contribute Rs 560 million and community will also invest Rs 516 million in these projects.

These projects are aimed at poverty alleviation and social uplift of the people and to generate sources of income for the poor families. The programme is of five years duration and will be completed in 2010.


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## Owais

*Decks clear for shipping protocol with India *

KARACHI (October 29 2006): Decks have now been cleared for signing of the shipping protocol between Pakistan and India, following the approval by Indian cabinet of the revised protocol between the two countries.

The signing of the protocol, which had already been approved by Pakistan Cabinet earlier, will give a big boost to the sea borne trade between the two countries. The protocol had been pending during past eight months, awaiting Indian cabinet's approval.

The revised protocol will allow lifting of cargo between Pakistan and India by third-country vessels from each other's ports, which would enhance the tonnage under the flags of both countries and also would result in competitive shipping rates.

Minister for Ports and Shipping Babar Khan Ghauri said that this step would go a long way in promoting private investors in the shipping sector as now more ships would be able to fly Pakistan flag and both countries' ships could lift third-country both bulk cargo and containers. This would also boost the economy and subsequently bring down freight charges.

Director General Ports and Shipping, Captain Anwar Shah, welcoming the decision said that informal trade in the shipping sector was around $2 billion but now the benefit would go to both countries and there would be no double handling.

Pakistan already has 'Mega I' flying Pakistan flag in the private sector. Now Mega II and Mega III would also be flying Pakistan flag. Currently, they are plying under Sri Lanka flag.

In December last year, Babar had stated that Karachi-Mumbai service would start soon after the signing of shipping protocol in 2006. Licence in this connection has already been granted to a Pakistan company, which would comply with Indian merchant shipping law requirements.

According to Captain Shah, the Habibullah group has received the licence after carrying out necessary feasibility studies. Now, more ships from the private sector would be encouraged to come forward. Nissan shipping had also stated that when the shipping protocol would be signed, it too would also fly Pakistan flag.

The protocol, to be signed shortly, would accelerate private sector participation and help Pakistan's economy generate employment opportunities. This would go a long way in reducing poverty in the country.

It said the consortium was holding talks with major LNG producers, but did not name them.

"Dana Gas has the objective to develop a network of LNG terminals mainly in the MENA (Middle East and North Africa) region and to tap into the LNG value chain including LNG trading activities," the statement said.

It said Dana Gas signed a co-operation agreement with SBM, under which the United Arab Emirates firm would focus on LNG marketing activities and SBM on the supply and operation of LNG floating storage and regasification terminals.

"The newly formed alliance will initially target LNG terminal projects in Pakistan, Lebanon and Kuwait," it said.

Pakistan, which has its own gas fields, expects to have a supply deficit as soon as 2008. Plans to import LNG and pipeline gas from Iran and Turkmenistan are based on projected gas demand growth of about 6.5 percent a year.

Industry sources in Pakistan have said they expected the LNG terminal to be completed around 2010.

Dana Gas was set up to deliver gas to utilities and industrial users in the UAE. With an agreement to import Iranian natural gas delayed, Dana Gas' second-quarter earnings came entirely from investments and financing activity.

The firm said it aims to invest in the upstream gas industry in the Middle East, the transmission and distribution sector and gas-related industries such as petrochemicals.

The statement said natural gas consumption in the Middle East has been growing by an average 5.9 percent a year in the last 10 years, driven mostly by demand for power generation due to growing populations and an industrialisation drive.


----------



## Owais

*Five percent regulatory duty imposed on sugar import: duty relief withdrawn* 

ISLAMABAD (October 29 2006): The Central Board of Revenue (CBR) has imposed 5 percent regulatory duty (RD) on the import of four different types of sugar and also withdrawn exemption of 10 percent customs duty on the import of the commodity with effect from October 14, 2006.

The board issued two notifications on Saturday for the assessment of sugar at the import stage following the imposition of customs/regulatory duty. According to an SRO.1074(I)/2006, the CBR has levied 5 percent regulatory duty on import of raw cane sugar (HS Code 1701.1100); raw beet sugar (HS Code 1701.1200); white crystalline cane sugar (HS Code 1701.9910) and 5 percent RD has been imposed on the import of white crystalline beet sugar (HS Code 1701.9920).

Through another SRO.1075 (I)/2006, the CBR has amended SRO. 567(I)/2006 of June 5, 2006 to withdraw exemption of 10 percent customs duty on the import of sugar. The board will charge 10 percent duty on the import of raw cane sugar; raw beet sugar; white crystalline cane sugar and white crystalline beet sugar.

Sources told Business Recorder that notifications have been dispatched to the collectors of customs for compliance, as both the imposition of 5 percent RD and restoration of 10 percent customs duty on the import of sugar would be applicable from October 14.

In a meeting with the Pakistan Sugar Mills Association (PSMA) in Lahore on October 10, the government had agreed to safeguard the sugar industry through tariff-based regime to check dumping of sugar in the market. The crushing operation in Sindh will start from November 1 and in Punjab from November 15, 2006.

The PSMA had demanded imposition of RD on the import of sugar. In its annual review, the PSMA had said that the international sugar market prices were down, whereas the government has to clamp down any import duties to stop further inflow. It has predicted 3.5 million tonnes sugar production during 2006-07 season, one million tonnes more than the last year's 2.5 million tonnes.


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## Neo

*Ensuring peace in Balochistan top priority: Shaukat *

ISLAMABAD (October 29 2006): Prime Minister Shaukat Aziz has said rapid development of Balochistan, welfare of its population and ensuring peace in the province are the major priorities of the government, and economic and political initiatives are being made in tandem to expedite growth and development in the province.

Talking to Balochistan chief minister Jam Mohammad Yusuf, the Prime Minister said the government is working to bring development, stability and growth in Balochistan by focusing both on mega projects as well as micro development schemes, which would lead to creation of jobs, better facilities of life and prosperity for the people.

He said more than Rs 160 billion allocated by the federal government for development projects in Balochistan are a manifestation of the government's commitment to bring the province at par with more developed areas of the country.

The Prime Minister said the quota for the people of Balochistan has been increased on the basis of the last population census, which will increase their representation in various services.

He asked the Balochistan chief minister to step up efforts of the government for providing technical and vocational training to Baloch youths. He said the government is focusing on imparting skills training to the people of Balochistan to improve their prospects for getting employment.

Official sources said implementation of development projects, party matters and enhancing role of police also came under discussion. The process to convert 'B areas' into 'A areas' and recruitment of people of Balochistan into various services was also discussed.

The chief minister appreciated the interest taken by the federal government in the development of Balochistan. He said the Prime Minister's recent visit to Balochistan and the development packages announced by him have contributed to strengthening the faith of the people in the federal government for bringing development and prosperity in Balochistan.

He said while the completion of mega development projects will change the economic landscape of the province, micro-finance programmes will bring more prosperity to the people and will help them improve their living standards.


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## Neo

*$100 million to be spent on big cities in Punjab *

FAISALABAD (October 29 2006): The Punjab Large Cities Development Project will be launched in Faisalabad, Lahore, Rawalpindi, Multan and Gujranwala, which will be completed with the financial assistance of $100 million of International Bank for Reconstruction and Development (IBRD) under a phase-wise programme.

Pakistan is currently rated as one of the most urbanised country in South Asia with one-third population out of total population of 160 million lives in urban areas.

According to official sources, the Punjab Large Cities Development Policy Loan is designed to promote economic growth and improve infrastructure service delivery in the major cities of Punjab. The project will assist cities in developing strategic investment plans and improved service delivery in solid waste, urban transport, and strengthening local finances that support infrastructure investment and service delivery.

According to an update project study report, Punjab is Pakistan's most urbanised province, with roughly 36 percent of its population living in urban areas. While its capital, Lahore, is home to about 7 million people, the Punjab also has four other cities with populations in excess of one million, namely Faisalabad, Rawalpindi, Multan and Gujranwala. Not surprisingly, the population density of the Punjab is more than 31/2 times the rest of Pakistan.

According to data from the Development Data Platform (a World Bank Database), Pakistan's largely urban-based manufacturing and services sectors accounted for 77 percent of GDP in 2003, while contributing to over 90 percent of GDP growth between 1999-2003.

Given its above average national urban structure and still rapidly urbanising process, the Punjab is perhaps uniquely poised to place its cities at the center of its economic development and poverty alleviation strategies. However, cities in the Punjab face many challenges, including a projected doubling of the population by 2021 if current growth rates hold.

The proposed DPL's objectives are consistent with the Draft CAS for FY'06-09, which notes that while the urban sector was an area of limited engagement during the previous CAS, devolution has created opportunities for deeper engagement and the Government of Pakistan has accorded greater priority to urban development with a particular focus on the "mega-cities".

Official sources stated that the Punjab Large Cities DPL has benefited from ongoing analytic work on local government issues in the Punjab, ranging from municipal finance to land and housing, as well as solid waste management and water supply.

The DPL will also complement the Punjab Municipal Services Improvement Project (PMSIP), which deals with capacity building and the provision of services in the small municipalities of the Punjab.


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## Owais

*Refinery project near Gaddani declared EPZ *

ISLAMABAD (October 29 2006): The government has declared that an oil refinery would be established in Balochistan as 'Export Processing Zone' (EPZ). The Ministry of Industries and Production issued a notification on Saturday notifying the jurisdiction of the oil refinery for operating as EPZ.

According to the notification, the government has declared 1811 acres land, located at Mouza Mawali Junubi and Kund, sub-Tehsil Gaddani, District Lasbela, Balochistan, duly demarcated, fenced and bounded as 'Export Processing Zone' for setting up of an oil refinery project. The north and south sides of the EPZ cover private land, whereas the east and west sides of the project comprise private/government land and Arabian sea, respectively.


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## Owais

*MFD conditionally approves restoring fisheries supply to EU *

KARACHI (October 29 2006): The Marine Fisheries Department (MFD) has given conditional approval for restoration of fisheries supplies from K-1 Auction Hall at the Karachi Fish Harbour for its onward export to European Union (EU).

MFD Director General Syed Qamar Raza told Business Recorder that he had conducted an inspection of the Harbour here on Saturday and observed some improvements that had been brought in there, however, there was much room for further improving conditions to meet the requirements.

He said the MFD had restored the supplies on the condition that within next three months, all the needed changes should be made as per the commodity standards of EU, otherwise, the action would be taken again in case of no improvement in the harbour.

"Noticing some of the improvements, the conditional approval has been given for restoration of fisheries supplies. However, there is much more to be done to meet the community standards of EU," he said.

"We are preparing the exporters and the harbour for the EU's inspection, which is due shortly. There were some deficiencies, which have been pointed out and an ultimatum to the Karachi Fish Harbour Authority (KFHA) of three months has been given to remove them, otherwise the ban would be re-imposed," Qamar Raza remarked.

The MFD suspended the supplies intended for export to EU from the fish harbour about one month back following the deficiencies in the landing, handling, storage and display of seafood until the relevant requirements are fully met and facility is resubmitted for inspection and approval of the MFD.

The suspension of supplies was resisted by fisheries-related provincial departments and seafood export sector accusing the MFD of destroying the seafood industry and the export sector.

However, in order to facilitate the exporters, all the establishments approved for export to EU countries were advised to implement the Vendor Assurance Programme (VAP) through purchasing the raw material directly from the approved boats until the Auction Hall at the Harbour are operated under Standard Operating Procedures (SOP).

Meanwhile, in a letter, the MFD cautioned that if immediate improvements were not brought at Karachi Fish Harbour, Pakistan would not be able to pass forthcoming European Union inspection and might face new challenges under WTO regime.

"National as well as EU regulations don't permit to handle the food (fish and fishery products) intended for exports in unhygienic manner and in the international market significant changes regarding food security have been taken place and these would continue to occur," it mentioned.

The MFD said the implementation of hygienic standards were in the larger interest of the country, adding that it was the Karachi Fish Harbour Authority (KFHA), which was not realising its responsibility concerning maintenance of harbour facilities and handling of fisheries products under improved hygienic conditions as per the requirements of EU.

The communication pointed out that on August 26, during the inspection of Harbour, a number of major deficiencies were observed and notified to the KFHA for rectification by the committed date of September 15, 2006. However, despite the commitment of the department concerned, no remedial steps were taken to improve the situation meeting the commodity standards.

The MFD had given the guarantee on behalf of all the stakeholders to EU and now it was its responsibility to ensure all the guarantees. "We want all related issues regarding exports to EU are resolved and the sector should be ready for next inspection," Qamar Raza said. Pakistan seafood export has shown a record increase of $198 million in the last financial year, over around $140 million export of previous year.


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## Owais

*Textile body takes stock of causes of seven percent fall in exports *

ISLAMABAD (October 29 2006): The textile Industry has undergone 7 percent decline in its exports in the last two months due to delay in taking notice of the looming crisis in textile sector exports.

The decline started some eight months ago, whereas the standing committee held a meeting on Saturday which, according to a committee member Mrs Yasmeen Rehman, was held after a delay of four months. The standing committee meeting, chaired by Nazir Jatt was held on Saturday to review the factors causing the decline and how to rectify the situation.

Textile Ministry Secretary Masood Alam briefed the committee about different factors, which hurt the competitiveness of the industry. Among these were rise in cost of utilities, taxes, mark-ups and sales tax on raw materials. The committee discussed incentives to the industry to ensure its competitive edge internationally.

The volume and income of textile exports have dropped to the extent that it is even less than Cambodia. The committee noted that China, India and Bangladesh, the main competitors of Pakistan, were offering several incentives to the textile sector.

However, the exports of Pakistan regarding bed wear eg bed sheets, towel etc have seen better results than last year. The committee decided to meet again on November 6 to look for recommendations and suggestions of eminent industrialist Zubair Motiwala and would also hear the point of view of Tariq Saeed Saigol about how to reinvigorate the industry to make it competitive, and reduce the cost of doing business.

It was strongly felt that to meet the World Trade Organisation (WTO) challenges there was dire need to bring major changes to enhance the textile trade. Revision of export finance rates, State Bank of Pakistan mark-up rate on textile loans, solving crisis of spinning industry, reducing gas and electricity charges, skill development training programme and following clean cotton programme efficiently, offering subsidy etc were discussed at length in the meeting.

Moreover, expediting commercial counsellors in foreign countries to appoint professionals with experience and knowledge of exports especially in textile. The committee would put the recommendations to Prime Minister at the earliest for approval after finalising them in the November 6 meeting.

The meeting was attended by Farid Paracha, Chaudhry Manzoor, Pervez Malik, Haroon Ehsan Paracha, Mehmood Sultan, Rahmatullah Khalid, Asiya Nasir and Joint Secretary Mintex Tipu Muhaabat Khan.

According to the Ministry, causes of decline in exports are: the textile industry is experiencing higher cost of production because of high mark-up rate, which used to be as low as 3.5 percent, and now has increased to nine percent. This is leading to about 15 percent price differential in Pakistan's products with its close competitors viz China, India and Bangladesh.

The value-added sector viz home textiles and garment industry have been urging reduction/compensation in the power and gas rates, which are said to be higher than the competitors. Increasing FTAs/PTAs and other trends eg overseas acquisitions of international chains by India of American Pacific, Dan River etc such outsourcing capabilities are not available to Pakistan's exporters.

Other factors hurting the exports are GSP and anti-dumping duties. Moreover, rising costs of utilities ie gas, electricity tariffs plus cost of finance and wages have increased the cost of production and made exports uncompetitive compared with Bangladesh etc. Increased cost of finance has slowed down capital formation and expansion/value-addition.

SUBSIDIES BY CLOSE COMPETITORS: China is giving 13 percent cash subsidy for garment exports plus free electricity for exporting firms. India allows five percent rate reimbursement of normal interest rate and further incentive of capital subsidy of 10 percent extended from 20. 04. 2005 to encourage some sectors besides export marketing finance programme create and enhance export capability and competitiveness of the textile industry.

India, is also offering export product development programme 5 - 7 years soft-term loan at 20 percent margin, zero rating of all innovative taxes, surcharges like education cess, under the duty drawback. Incidence of duty on HSD/ furnace oil has also been factored in the drawback calculation.

Bangladesh, the Ministry said, was providing 5 percent cash incentives/subsidy to export industries using local yarn and fabric. Duty drawback in services used by textile export industries rates are water 60 percent; electricity: 80 percent; telephone: 60 percent; C&F Agents 100 percent; insurance 100 percent; and deduction of tax at source of 0.25 percent on total export proceeds of knitwear and readymade garments as final settlement of tax liability.

Sources in the Ministry told Business Recorder that following main measures had been taken by the Ministry: R&D facility of 6 percent to woven and garments on export since April 2005; 5 percent facility extended to home textiles on export; and 3 percent facility provided to dyed and printed fabrics on export from 1.7.2006.

State Bank of Pakistan has reduced mark-up rate on Export Re-Finance by 1.5 percent to bring it down from 9 percent to 7.5 percent. Facility at SWAP is being extended to the industry to change high cost loans to low cost loan under LTF-OEP scheme, except spinning.

In addition to this, a scheme for production of standardised and clean cotton has been launched with collaboration of provincial governments. Sales tax on import and local supply of major inputs/raw material used in the entire manufacturing chain of textile industry has been made zero rated.

Moreover, Mintex has started projects to establish Textile City at Karachi and Garment Cities at Karachi, Lahore and Faisalabad. It has also launched Stitching Machine Operator Training (SMOT) and EDF has allocated Rs 96 million for this purpose.

Federal Textile Board has been set up to implement contamination-free cotton, project financing for small and medium entrepreneurs and liaison with all stakeholders. The Prime Minister has constituted 'National Textile Strategy Committee' (NTSC) to devise short-, medium- and long-term strategies for Textile Industry, and the Committee would submit its report by December 31, 2006.


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## Neo

Sunday, October 29, 2006 

*Industrial units asked to invest in HR development*

FAISALABAD: International Labour Organization (ILO) is planning to launch a project on Ã¢â¬ËMarketing of LabourÃ¢â¬â¢ in Pakistan, said Dr Rashid Amjad, Director Policy Planning of ILO here Saturday.

During a meeting with President of Faisalabad Chamber of Commerce and Industry (FCCI), Muhammad Ayub Sabir, he said that cooperation of private sector was imperative to bridge the gap between the required and available skilled manpower in the country.

He also asked the industrial units to invest in Human Resource, which would ultimately payback in the form of increased quality and production. Earlier, President FCCI, Ayub Sabir said that the shortage of trained manpower has become a daunting challenge for Pakistan's industrial sector.


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## Neo

Sunday, October 29, 2006 

*Sino-Pak rail link soon*

ISLAMABAD: Pakistan and China are expected to sign an agreement to lay down a rail link between the two countries during Chinese President Hu JintaoÃ¢â¬â¢s visit next month. Ã¢â¬ÅThe Chinese president is expect to visit Pakistan on November 23, and the two countries will sign the agreement on this occasion,Ã¢â¬Â sources told Daily Times. The sources said the Planning Division had approved a project to study the feasibility of a 750 kilometre rail link from Havilian, Abbottabad district, to the China border. The study will start after the agreement is signed. The sources said discussion on the technicalities of the project would start on November 11, when the Chinese deputy economic minister is due to visit Pakistan, accompanied by a technical team. The new rail link will be an important route for Pakistan to Central Asian countries, and help make Pakistan the Ã¢â¬Åtrade and energy corridorÃ¢â¬Â the government keeps talking about. The sources said the two countries would also enhance cooperation in railways construction, locomotives and railways signalling systems. The link will further ties and the two countries have already signed an Agreement on Expanding and Deepening Bilateral Trade and Economic Cooperation in February 2006. According to the agreement, the two countries have set up a Joint Working Group for economic cooperation and formulated a five-year programme to enhance Pakistan-China trade and economic cooperation. The two countries will also start upgrading the Karakoram Highway in the near future, the sources said.


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## Neo

*Malaysian firm bidding for $300 million coal power plant *

KUALA LUMPUR (updated on: October 30, 2006, 12:39 PST): Malaysia's second-largest power producer Malakoff is bidding for a Pakistan power plant construction and management contract worth up to 300 million dollars, a report said on Monday.

Malakoff is one of 16 firms which last year submitted bids to construct, operate and manage a 1,000MW integrated coal-based power plant near Karachi, the New Straits Times said.

It was pre-qualified for the job early last month and is expected to know by the end of next week whether it has been successful, the daily quoted company sources as saying.

Other companies in the running are Sumitomo of Japan, Siemens and Reinhaul of Germany, and AES Corp. of the United States, it said.

Malakoff, which is being taken private by 22 percent owner Malaysian tycoon Syed Mokhtar Al Bukhary, has been looking abroad for new sources of revenue.

Last year it joined forces with state energy producer Tenaga Nasional and the government's investment arm Khazanah Nasional to secure a 2.6 billion dollar deal to build the Shoaiba power and water desalination plant in Saudi Arabia.


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## Neo

*Pakistan energy firms post strong profits *

KARACHI (updated on: October 30, 2006, 14:16 PST): Pakistan's two largest exploration and production firms posted strong profit growth in their fiscal first quarters on rising oil and gas prices and higher output.

The country's biggest listed firm, the Oil and Gas Development Co. Ltd. (OGDCL), on Monday reported a 36.7 percent jump in July-September net profit to 12.33 billion rupees ($203.3 million) compared with 9.02 billion rupees in the same period last year.

The state-run firm also announced an interim cash dividend of 1.75 rupees per share. The government plans to list the company on the London Stock Exchange through an issue of global depositary receipts (GDRs) by December.

Also on Monday, state-run natural gas producer Pakistan Petroleum Ltd. (PPL) posted a 41.8 percent jump in profit for the quarter to Sept. 30.

PPL's net profit in the July-September period was 3.80 billion rupees ($62.65 million) compared with 2.68 billion rupees a year earlier.

PPL is also high on the government's privatisation agenda. The country's third-largest listed company has a market value of around $3 billion and the government has pre-qualified four companies to bid for a 51 percent stake in the firm.

Analysts said the strong earnings growth for PPL came on the back of phasing out of discounts on wellhead gas prices from the Sui and Kandkot fields.

"The periodic revision in the price of the Sui field, and higher international oil prices to a lesser extent are the two main contributors towards this growth," said Suleman Amir Ali, analyst at brokers Invest Capital and Securities.

Under a wellhead pricing formula agreed with the government, PPL will increase its gas price by 25-26 percent a year until the end of the first half of 2007. State-owned institutions absorb some of the increase without passing it on to customers.

PPL's gas production is estimated to have increased by 8.5 percent as it increased output from the Qadirpur, Sawan, and Manzalai fields and began production from the Makori field, said Ali.

Oil and condensate production were expected to rise about 5.5 percent year-on-year in the quarter on higher production from Adhi, Manzalai and Makori fields, he said.

The company did not release production figures with its financial statement.

OGDCL, which produces 59 percent of Pakistan's oil and 25 percent of its gas, and has a market capitalisation of around $11 billion, also benefited from the higher oil prices and production.

Analysts said the company's oil production rose an estimated 9 percent year-on-year during July-September. An average rise of 23 percent in gas prices during the period also supported the growth, they said.

The company hopes to enter its first overseas exploration venture next year, Arshad Nasar, the firm's chief executive, told Reuters in an interview earlier this month.

OGDCL plans to invest about $2 billion over the next three years on exploration and production activities, including a target of drilling 41 new wells in 2006/07, Nasar had then said.

At 0750 GMT, PPL shares were up 80 paisas at 265.35 rupees, while OGDCL shares were down 1.20 rupees at 154.80, in a broader market that was up 0.15 percent.


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## Neo

*Poverty down to 24pc, says Musharraf*

ISLAMABAD, Oct 28: President Gen Pervez Musharraf on Saturday underlined the need for facilitating the common manÃ¢â¬â¢s access to resources by expanding economic opportunities.

During presentations made by the Pakistan Poverty Alleviation Fund (Ppaf), he said financial assistance should be provided to poor segments of society to eradicate poverty from the country.

The president said the government had brought down the poverty ratio from 34 per cent to 24 per cent, adding that efforts should be made for more reduction of poverty in coming years.

He said peopleÃ¢â¬â¢s living standard was being improved through creation of jobs in cities and development of agriculture sector in rural areas.

He asked Ppaf to extend its activities to remote areas, particularly Balochistan. He said focus should be on provision of safe drinking water to people and canal water for agriculture.

The president appreciated Ppaf for launching projects in 2,000 villages.

The meeting was informed that Ppaf had joined the government efforts in reconstruction of quake-hit areas and built 115,000 houses and rehabilitated 1,000 infrastructure projects.Ã¢â¬âOnline

http://www.dawn.com/2006/10/29/nat20.htm


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## Neo

*Taking the bull by the horns*

By Nasir Jamal

If everything goes according to the script, Pakistan will reap a record wheat crop next year. Farmers firmly believe that the wheat output will surpass the official target of 22.50 million tons fixed for the next crop, which will be ready for harvest in April.

The optimism about the next wheat yield stems from favourable weather conditions as well as certain timely initiatives Ã¢â¬â reduction in the prices of fertilizers(especially phosphate and potash) and increase in the wheat support price Ã¢â¬â recently announced by the government to help the farmers partly cut down their input costs and offset the negative impact of rising inflation.

The government initiative to slash the prices of fertilisers, especially that of DAP, is expected help the growers save approximately Rs12 billion over the next one year in the shape of reduced expense on inputs.

Wheat growers will benefit the most as a result of the cut in the prices as they use about 60 per cent of the total fertilisers sold for both Rabi and Kharif crops. In addition, the lower prices will encourage the farmers to increase the use of fertilisers, particularly DAP that pushes up the final crop yield.

The decision to increase the wheat support price to Rs425 per maund for the next crop from Rs415 per maund last season is likely to make the farmers richer by Rs1.65 billion, according to AgriForum chairman Ibrahim Mughal. The net benefit that the wheat farmers are going to reap from these two government decisions is going to be around Rs8.5 billion or more.

The governmentÃ¢â¬â¢s decisions to facilitate the growers for a better wheat yield are apparently driven by three considerations:

1) Pakistan wants to raise its wheat output to 30 million tons by 2015; 2) Islamabad needs agriculture to grow by 4.5 per cent so that the overall GDP growth rate target of seven per cent fixed for the current financial year is achieved; and, 3) The ruling coalition led by Prime Minister Shaukat Aziz will be going into elections towards the end of 2007 and will require the support of farmers if it wishes to return to power.

The wheat output target fixed for 2006-07 is up by about 0.8 million tons from the last yearÃ¢â¬â¢s production of 21.7 million tons. This year farmers are expected to grow wheat on 20.903 million acres Ã¢â¬â 15.93 million acres in Punjab, 2.27 million acres in Sindh, 1.88 million acres in the NWFP and 0.83 million acres in Balochistan. This compares with 20.53 million acres of land brought under wheat cultivation during last year.

Farmers say the area to be brought under cultivation of wheat will also surpass the official target because of wet weather that actually encouraged farmers in the Barani areas in Sindh as well as Punjab to start sowing since the first half of this month. The wet weather conditions will also help improve the final output of the crop.

The national average wheat yield per acre too is estimated to rise to 27 maunds per acre this year from last yearÃ¢â¬â¢s 26.43 maunds. Though it looks like an ambitious target if the past is anything to go by, it still is achievable in view of the positive steps taken by the government to encourage the wheat sowing.

The wheat yield per acre is highest in Sindh (30 maunds) followed by Punjab (27.94 maunds), Balochistan (21 maunds) and the NWFP (16.66 maunds).

If everything goes right, Pakistan, which will begin the next wheat harvest with a carry-over stock of over one million tons, will have at least two million tons of surplus.

The governmentÃ¢â¬â¢s recent initiatives like increasing procurement price to encourage wheat production in the country apart, farmers in Punjab strongly favour reduction in their input costs. Ã¢â¬ÅThe increase in the wheat procurement price is good. But higher procurement price always leads inflation to rise, ultimately impacting negatively on the input costs. Therefore, the government must ensure that the farmersÃ¢â¬â¢ expense on inputs is reduced,Ã¢â¬Â says Mughal.

Ã¢â¬ÅThere are around one million tube-wells and 425,000 tractors that will be operating during wheat sowing and afterwards. The government must slash the rates of diesel and electricity, which form a major part of the farmersÃ¢â¬â¢ input expense, required to operate tube-wells and tractors,Ã¢â¬Â says Mughal.

He says the wheat output can be increased manifold if the government ensures increase in the availability of certified seed. At present only 14-15 per cent certified seed is available with the public and private sector. Ã¢â¬ÅIdeally, 20-25 per cent of the total seed used should be certified ,Ã¢â¬Â he says.

Besides, he says, weeds are a big threat to the crop and cause a loss of 15-20 per cent in the final outcome in addition to adding to input costs as farmers have to use greater quantity of fertilisers than is required.

Ã¢â¬ÅShould the government provide easy, long-term credit to farmers for purchasing herbicides to fight the threat of weeds, we can substantially increase our output. Total amount required to fight the threat of weeds will not be more than Rs4 billion. But its ultimate benefit to the economy will be greater than Rs20 billion. Should we increase our per acre yield by one maund, farmers will get an additional Rs8.8 billion. You can imagine the kind of impact it will leave on their lives.Ã¢â¬Â

Farmers also fear that the surplus crop will bring its own old problems with it and increase their post-harvest losses as the governmentÃ¢â¬â¢s procurement is slow and inefficient.

Ã¢â¬ÅThe government enters the market quite late. By the time it comes into action, it is already too late for the hapless farmers who do not have arrangements to store their produce. They are forced to sell their produce at discounted rates, far less than the official procurement price, just to make sure that it is not wasted,Ã¢â¬Â says Mughal.

Ã¢â¬ÅThe government needs to start addressing these issues Ã¢â¬â input costs as well as post-harvest difficulties faced by growers in selling their crop Ã¢â¬â right away. If it is done and these issues addressed properly, we can become a permanent wheat exporting country to such destinations as Iran, Turkey, India, Afghanistan, etc in the years to come,Ã¢â¬Â he says.

But the question is: Ã¢â¬ÅWho is going to take the bull by horns?Ã¢â¬Â


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## Neo

*Technologies for increasing wheat crop*

By M. Ather Mahmood & Dr A.D. Sheikh

Pakistan is predominantly an agricultural country. However, the yield of almost all the crops obtained is far less than their potential.

The cop production technologies developed through research are there but their adoption remains limited. This requires an efficient and effective information flow about agricultural technologies from the researchers to the farmers.

Wheat is the countryÃ¢â¬â¢s most important agricultural commodity and contributes 13.7 per cent to the value-added in agriculture and three per cent to the GDP. Its share in the total cropped area is 37 per cent.

Being staple food grain, it contributes 42 per cent of total calories required per capita per day. The wheat straw is also important as fodder. Consequently, it occupies a central position in agricultural economy and policies.

A wide gap exists between the national average yield (about 2586 kg/ha), progressive farmersÃ¢â¬â¢ yield (about 5000 kg/ha) and potential yield (about 6800 kg/ha).

Pakistan has been a net importer of wheat for the past several decades. This situation is not enviable. It is believed that the future increase in wheat production will come through yield enhancement since land resources will decline.

The area under wheat should preferably be decreased to accommodate pulses and oilseed crops to overcome the gap in their supply and demand. Efforts to increase the wheat productivity have always been the concern of the researchers who have developed technologies for its production.

The agricultural department publishes brochures and booklets for recommended production technologies for each crop. These are considered as recommended technological package.

The technological package includes varietals selection, land preparation practices, sowing schedule, seed rate, fertilisers, irrigation schedule, weed control, insect pest and disease control and harvesting. By adopting these recommended technologies, the farmers can get higher yield.

The Technology Transfer Institute (PARC), Faisalabad has undertaken a study to assess the adoption of wheat production technologies in the rice-wheat and mixed cropping zones of the Punjab.

The survey was conducted in three important districts of the rice-wheat zone namely Sialkot, Gujranwala and Sheikhupura and three districts of mixed zone namely Faisalabad, Jhang and the T.T. Sigh. A total of 180 wheat growers were randomly interviewed (90 from each zone) for the collection of requisite data.

The main findings of the survey are summarized as follows: Land preparation is the first and important activity to be performed for wheat production. The study results reveal that about 83 per cent of farmers prepared the land as recommended by experts.

Crop production largely depends on the choice of variety. The seed must be healthy, cleaned and treated to get higher yield. If the choice and practices are right as recommended by the experts for that particular area, then there will definitely be higher yield.

About 78 per cent of the respondents sow the recommended varieties. However, the major reliance is still on Inqilab 91.

Timely sown wheat gives higher yield and delayed sowing affects the yield. The wheat experts said that one day delay after November 20 reduced the yield from 15 to 20 kg per acre. The problem of delayed wheat sowing in the rice-wheat zone is due to late rice harvesting.

Similarly, the reason behind late planting of wheat in the mixed cropping zone is the late vacation of the field mainly by sugarcane crop. The survey results reveal that only 54 per cent of the respondents sow wheat in time.

Farm experts emphasise the practice of line sowing rather broadcast method. However, farmers generally practice broadcast method for wheat in order to save time and resources.

The survey results highlight the same fact that only 27 per cent of the growers practice line sowing as per recommendation of the department.

The recommended seed rate for timely wheat sowing i.e., before November 20 is 50kg per acre. If the sowing is delayed to December, then the recommended seed rate is 70kg per acre.

The farm level practice is very contrary to it, the farmers generally apply seed 40kg per acre for timely sowing and little late sowing, and 50kg per acre for December sowing. Only 45 per cent of the farmers apply seed as per department recommendation.

Fertiliser is a key input for better crop production. The timely and balanced use of fertiliser increases the yield by five to 10 maunds per acre. The farmers of survey area generally apply nitrogen and phosphorous fertilisers but they donÃ¢â¬â¢t apply the potash fertiliser.

The survey results reveal that only two per cent of the growers apply fertiliser according to the recommendation of the department. The obvious reason for low fertiliser application is its price.

Wheat crop generally requires three to four irrigations at different stages of growth. There are three critical stages i.e., first irrigation normally 20-25 days after sowing, second at boot stage and third at milk stage of grain development. About 88 per cent of the respondents apply irrigation as recommended by experts..

Weed control is important to get higher yield of wheat crop. It is estimated that weeds reduce the yield by 30 to 40 per cent. There are about 75 per cent of the respondents who apply weedicides.

The results of the study clearly indicate that some recommended technologies like land preparation, varieties, irrigation and weed control are well adopted while others like sowing time, sowing method, seed rate and fertiliser application are not so well followed.

Following are some suggestions to improve wheat productivity based on survey results.

* The majority of the farmers fail to timely sow their crop due to number of reasons. There is serious decline of yield due to late planting. We should develop technologies to minimise this problem.

*Similarly, sowing method and seed rate of the majority of the farmers are not as per recommendation of the agricultural department. So, there is strong need to increase the rate of adoption of these technologies.

*The application of fertiliser is the lowest among all the wheat production technologies. The reasons of low application need to be seriously reviewed and properly tackled.

*The adoption of weed control practices is high among the sampled farmers. Efforts should be made to further improve the weed control practices.

*Improve awareness about the recommended technologies.

http://www.dawn.com/2006/10/30/ebr4.htm


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## Neo

*Luring foreign direct investment*

By Hussain H. Zaidi

Foreign direct investment (FDI) is investment in new or existing facilities involving control of a foreign enterprise. As against volatility of foreign portfolio investment in stocks and shares, FDI involves a long-term commitment, and is seen as the most important source of foreign financing.

Investment creates jobs and expands output. For developing countries, FDI is necessary to fill the gap between domestic savings and the desired level of investment. On the other hand, for foreign investorsÃ¢â¬âtransnational corporations (TNCs)Ã¢â¬âthe investment oversees serves in the main four purposes: One, it enables them earn far more profits than it would be possible otherwise.

Two, it enables them to locate their manufacturing activities where they can be performed most efficiently or cost effectively. Three, it enables them to re-introduce a product in a foreign market, often by customising it with the foreign country environment, after the product has reached the maturity stage in the domestic market. Four, it enables them to diversify their portfolio and thus minimise risks

The decision to invest in a foreign country, like other business decisions, is based on cost and benefit analysis. Speaking generally, FDI is made in a country, if perceived benefits outweigh perceived costs.

As a principle, FDI is made in those countries where risks are low and returns are high. However, speaking in specific terms, there are many factors in the host country which restrict or promote FDI.

Before we discuss these factors, letÃ¢â¬â¢s look at global FDI inflows.

In 2004 were $648 billion. Of these, developed countries attracted FDI worth $380 billion, while developing countries attracted FDI worth $233 billion. This gives developed and developing countries shares of 59 and 36 per cent respectively.

The USA, which attracted FDI worth $96 billion, was the single largest beneficiary of FDI inflows. The USA was followed by China, which attracted FDI inflows worth $64 billion. Hong Kong, a special administrative region of China but a separate customs territory, attracted FDI worth $34 billion.

If we add FDI inflows into Hong Kong to FDI inflows into mainland China, China becomes the largest beneficiary of FDI inflowsÃ¢â¬âa total of $98 billion. Region wise, the European Union (EU 15), received the largest amount of FDI whose value was $197 billion.

Conversely, the entire continent of Africa could attract only $18 billion worth FDI. The least developed countries (LDCs), the economies most in need of FDI inflows, received FDI inflows of only $11 billion.

The main factors which promote or restrict FDI inflows include the level of demand in the host country, the absence or presence of created assets, protection of FDI, the overall investment climate, the economic environment, and the political situation. We begin with the level of demand. The level of demand in the host country depends in the main on two factors: the purchasing power of the consumer, and the size of the market.

Consumer purchasing power is measured by income. Ceteris paribus, countries with higher per capita income are more attractive markets for foreign investment than countries with low per capita income. One reason for low level of FDI in LDCs and most developing countries is low per capita income. This is a catch 22 situation for these countries.

In these countries, the level of domestic investment is low mainly because domestic savings are low and domestic savings are low, because per capita income is small. These countries need FDI to bridge the gap between domestic savings and the desired level of investment caused by low per capita income. But FDI inflows into these countries are restricted, inter alia, because of small per capita income.

The second factor underlying the level of demand is the size of the market. The larger a market, the greater attraction it holds for foreign investors. This is for at least three reasons. In the first place, a large market has a high level of aggregate demand.

In the second place, a large market makes it possible for businesses to actualize the economies of scale and thus bring down the cost of production. In the third place, in a large market generally surplus labour is available which increases the marginal utility of capital. An obvious example of the relationship between market size and FDI inflows is China.

However, mere market size, though important, is not sufficient to attract FDI. A case in point is India, the second largest market after China, which received only $5 billion FDI in 2004, while Singapore, a country many times smaller than India, managed to receive $16 billion FDI in the same year. This means there are factors other than market size which must be looked into which attract TNCs. One of these factors is created assets, which refer to the existing level of human resources and commercial and physical infrastructure. While countries need FDI to upgrade their created assets, foreign investors need existing level of created assets in choosing a market for investment.

It is created assets which mainly explain why a miniscule city-state of Singapore receives three times more FDI than a giant India. Again, it is lack of created assets that is the main reason for low level of FDI in LDCs and Africa.

The third important factor is protection of investment and the related assets such as intellectual property rights. The host country must put in place a strong legal framework for the protection of investment. Such framework must guarantee to the foreign investor most favoured nation treatment (MFN), national treatment and fair compensation in case of expropriation of investment.

MFN treatment means that any advantages, privileges and immunities granted to the investors of one country are extended to the investors of other countries as well. National treatment means that the host government will not discriminate between foreign and local investors in terms of application of laws, rules and taxes.

Since at present, there is no multilateral investment treaty, countries enter into bilateral investment treaties to ensure that their investors are not discriminated against vis-ÃÂ -vis other investors from other countries as well as investors from the host country and are also immune from arbitrary change in policies of the host government.

Protection of IPRs is also an important component of an effective legal regime for investment. Generally, investors are reluctant to enter into a foreign country if its laws and administrative procedures do not provide for effective protection of copyrights and patents.

But there are exceptions. China, for example, lacks an effective IPRs enforcement system but still it is the most attractive market for foreign firms. This is due to the huge size of the Chinese market and the fast pace at which the economy is growing for last more than a decade.

The investment climate includes the overall investment policies of the host government. Arguably, the most important of these policies are what are commonly referred to as trade related investment measures (TRIMS). The host government while attracting FDI has some policy objectives to achieve. For instance, they may want to encourage the development of ancillary industries, seek transfer of technology, create jobs in a particular sector or safeguard or improve the balance of payment (BoP) position.

In order that these objectives are achieved, the host government puts many conditions on the foreign investor. Such conditions are called TRIMS. The most common TRIMS are: Local content requirement, which requires that the foreign investor shall use a certain amount of local inputs in production; technology transfer requirement, which stipulates that the foreign investor shall transfer specified technology to local firms; trade balancing requirement, which requires that imports must be equivalent to a certain proportion of exports; foreign exchange restrictions, which restrict access to foreign exchange and thus access to imports.

Export requirement stipulating that a certain proportion of the output shall be exported; remittance restriction place curbs on the right of the foreign investor to repatriate returns from investment; local equity requirement, which requires that a certain proportion of assets must be owned by local persons; and employment requirement, which stipulates that a certain percentage of the workforce employed in a foreign-owned enterprise shall consist of the local people.

While the use of TRIMS may be necessary to achieve some key policy objectives, it is not without problems. In the first place, the use of TRIMS discourages foreign investors, because it deprives them of the freedom to purchase labour and capital inputs from the market where it is most suitable from them.

Moreover, as a rule, firms are reluctant to transfer technology, because technology is the strategic source of their competitive advantage. In the second place, many of the TRIMS, such as the local content requirement, are not approved of by the Agreement on Trade Related Investment Measures of the World Trade Organisation (WTO). Therefore, for both practical and legal reasons, countries should use TRIMS with caution.

The economic environment includes the state of the economy, price and productivity of inputs, availability of finance and subsidies, market-oriented policies like a floating exchange rate, privatisation, growth of the market, and proximity to other markets.Socio-political factors include political stability, law and order situation, government policies, political image of the country, continuity of policies, clean administration and fair treatment to TNCs from the host government.

A country characterised by political instability, bad law and order, poor governance, ad hocism of policies, a negative political image, corruption in high places and lack of fair treatment to foreign enterprises does not have a good potential for foreign investment, because these factors increase the risk of doing business.

http://www.dawn.com/2006/10/30/ebr8.htm


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## Neo

*Tourism Ã¢â¬â an unexploited sector*

By M. Nazir Ali

Despite its many visible and invisible benefits and its multiplier effects on the economy, the tremendous potential of tourism remains untapped.

In many countries, tourism is a major foreign exchange earner, lures foreign investment and contributes to employment-generation and poverty-alleviation. In Pakistan, the policy framework has failed to bring about any visible improvement in this sector.

Besides a full-fledged federal ministry of tourism, tourism development corporations work at the federal and provincial levels. The department of tourist services (DTS) looks after the standard and categorising of tourist service.

The Hotel and Restaurant Act 1976, Travel Agency Act 1976 and National Tourism Policy of 2001 (which accorded tourism the status of an industry) are in vogue.

The tourism policy targeted an annual growth of five per cent in tourist arrivals. The foreign exchange earning was expected to move to the level of $800 million by 2005 as compared to $200 million in 2001.

However, no target was accomplished. Pakistan ranks very low in terms of world tourism income. In the global tourism income of $ 514 billion, Pakistan shares only $135 million- a mere 0.03 of global income.

Likewise, out of the total touristsÃ¢â¬â¢ arrival in the world estimated at 694 million per year, Pakistan receives 0.5 million tourists annually, which is indeed very low. IndiaÃ¢â¬â¢s earns from tourism over $2 billion annually.

The Tourism Master Plan of 2000 says that, Ã¢â¬ÅTourism in Pakistan is still in early stages of developmentÃ¢â¬â¢. The foreign tourists represent only 13 per cent of all visitors, while domestic tourists are only 5-7 per cent of all domestic travellers.

With the oldest civilization (Mohenjodaro, Harrape and Gandhara being their cradle), snow-bound mighty mountains in the north, shining beaches, and golden deserts in the South, combined with a large number of religious, cultural and historical places, the country has tremendous attraction for tourists. It has also potential for tourism sports like mountaineering and trekking.

There is a wide variety of natural, historical and religious sights for tourists, especially for Buddhists, Hindus and Sikhs.

But Pakistan has not been able to make headway in religious and cultural tourism whereas a study shows that, Ã¢â¬Åout of 230 million tourist trips undertaken to India, the largest proportion is made up of religious pilgrimagesÃ¢â¬â¢.

Though having immense potential as envisaged in the tourism policy 2001, Pakistan could not emerge to be a viable and buoyant sector of the economy.

In fact, unlike any other industry, tourism cannot be developed or promoted in isolation. Its development is conditioned by a host of geo-political and socio-economic considerations.

The 9/11 had a very damaging impact on tourism and aviation industry all over the world. Having been declared as the hub of terrorism by the foreign media, Pakistan has been the worst sufferer.

The travelling advisories given by western countries to their citizens as well as refusal by some of the leading international air lines to touch Pakistani air ports further aggravated the situation. Afghan and Iraq wars combined with continued Middle East crisis had their own share in restricting travelling to this part of the world.

Tourists expect peaceful environment and security of life in the visiting country. PakistanÃ¢â¬â¢s tarnished image largely keep away tourists. Undeveloped tourists sites, inadequate infrastructure, law and order problem, lack of A-one entertainment facilities, social and religious restrictions, and lack of proper publicity, are some of the major constraints.

Some of these factors also restricted the development of the domestic and religious tourism.

The medium-term development frameworkÃ¢â¬â2005-10, estimates Investment of Rs1.28 billion through public-sector development programme (PSDP), specially for the development of infrastructure.

In the past also, both public and private sectors were involved in the promotion of tourism. Now, the concept of public-private sector has been introduced, perhaps to ensure more co-operation and co-ordination between the two.

All the strategies adopted so far have failed to fully exploit the economic potential of tourism which is quite broad-based. Studies, made on the subject both at national and international level identified four core issues, which are pre-requisite for the sustainable development of tourism.

These are development of a policy; structure of the management machinery; the legal and regulatory process and the source of sustainable tourism funding.

The government needs to evolve a new composite and integrated policy encompassing the related issues and measures.

Some mechanism be developed for the promotion of foreign trade and attraction of foreign investment through interaction with foreign visitors as well as publicity and projection of our products.

Hotels and tourist spots must be show-windows of our products, specially those of handicrafts. All the staff, involved in tourism promotion activity must be educated and trained.

Tourism presently is supply-led rather than a market-driven industry. It is not important what we offer. What is important is what the market wants.

Therefore, all services/facilities, institutional frame-work, rules and regulations etc. be upgraded and restructured in conformity with the market requirements.

To sum up, the sustainable development of this sector, which is indeed long over-due, will accrue many-sided benefits both to the country as well as its people.

The efforts both at the government as well as private sector level be geared up to their optimum level to off set the deficiency of the past and to quicken process of its development, through appropriate policy framework.


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## Neo

*Managing the worsening power crisis*

By General (rtd) Zahid Ali Akbar Khan

Pakistan recently experienced the fourth major power breakdown to hit the national grid since 1999 and the longest in its history. It cost the nation over Rs200 million.

This is mainly as a result of shortage of power and poor transmission and distribution infrastructure. When demand outstrips the capacity, causing a ripple effect and resulting in the collapse of the entire system.

We will continue to live with this phenomenon unless we take drastic action, on war footings, to improve the power sector of the country; without it the tall claim of eight per cent increase in GNP in future will only be a dream.

Our power generation capacity was considerably enhanced in the nineties, but since 2000 no major project has been constructed.

From 1987 to 1992, in Wapda, we doubled the power generation capacity. Major transmission lines from Tarbela to Jamsharo via Faisalabad and Multan were added to reduce the line losses which were brought down from 28 per cent to 19 per cent. It has now jumped to 30 per cent.

During People PartyÃ¢â¬â¢s tenure in power considerable power generation capacity was added in private sector. There was a lot of criticism at that time on the power tariff of 6.5 cents given to these developers, but at that time this was the only solution to meet the rising demands.

Since then no significant addition has been done to our power generation capacity resulting in the present crisis.

Instead of taking long time measures to over come energy crisis we are grappling at quick fixes which will only bring further deterioration in this sector. It is incomprehensible why KESC was hurriedly privatised without the government having negotiated capacity building programme on improvement of distribution system with the buyer.

The price the people and Karachi based industry and commercial sector are paying as a consequence of frequent power failure is all too evident. These and other failures of political and economic aspects of the government are least likely to restore the investorÃ¢â¬â¢s confidence in the country.

It is disturbing that instead of undertaking mega projects in public sector, government has opted for a further pulling out of the power sector. The revised power policy is aimed at inviting independent power producers to fill the gap between supply and demand.

If pursued in disregard of the consequences, it will only make the power crisis go further up in the years ahead. Such policies are the result of the highest tariff in the region today. This is having a catastrophic effect on our exports.

We are trying to deceive the nation by performing opening ceremonies of projects like Bhasha Dam, which should have least priority. During late 1980s we tried to complete the feasibility of this project with foreign assistance but the investors refused to finance the feasibility because according to them the area was disputed. One wonders how we can finance this mega project now.

Without detailed feasibility it is surprising how we have laid the foundation stone of Bhasha Dam. A similar faÃÂ§ade was enacted in the past when a developer from Honk Kong was hailed in the press for the development of billion dollars thermal coal project which did not see the light of the day.

The preliminary study of Bhasha Dam has indicated that this is a questionable project and difficult to construct even for a developed country mainly because of the technical problems.

If constructed it will be the highest concrete Dam in seismic prone region. It will be prohibitively expensive to construct because of the difficult design and mountainous terrain.

The transmission line will have to be constructed over the most rugged and unstable mountain region of the world. Even a small slide will cause havoc to the transmission line which may take months to restore. Bhasha is therefore a non-starter to meet our immediate energy needs.

During the last fiscal year, Pakistan spent $6 billion on energy imports when oil was at $40 a barrel. If oil prices reverts back to between $60 to $70 per barrel and with about 10 per cent annual increase in the energy consumption, we would need over $9 billion this year for energy import, about $3 billion go out for debt servicing resulting in the expenditure of 2/3 of our meagre export earnings of $17 billion.

A recent report of UNDP indicates that we have no elasticity to raise our exports earnings. Even our principal industrial sector of textiles has been loosing market share in textile and clothing in competition with the regional countries including Bangladesh which does not even grow cotton.

Last yearÃ¢â¬â¢s trade deficit of $12 billion, the highest in the countryÃ¢â¬â¢s history has already been overtaken in the last three quarters. So, where is the hard currency going to come to pay for our essential needs, such as medicine, machinery, defence and reserves to keep the rupee from sliding.

Our countryÃ¢â¬â¢s use of privatisation proceeds and home remittances to finance the current consumption is self defeating. The feel good factor thus created would start to evaporate as the few remaining state owned enterprises are sold out.

This should give sleepless nights to our policy makers. As if that was not worrying enough, we still want to add to our external venerability by opting for second hand expensive and inefficient imported thermal power plants on rental bases at a tariff of three cents per KWH excluding fuel cost and buying F-16 air crafts for billions of dollars. One wonders why we need these expensive toys when we have nuclear deterrent.

I recall when we achieved our nuclear capability in 1983, we used to argue with General Zia, to go nuclear instead of keeping the bomb in the basement, reduce the army to half (because nobody would dare to violate the borders of any nuclear state) and use the money thus saved, for the development of the country: but he also did not want to displease the Americans.

Our total installed capacity of power is 19500 M W. Considering the spinning reserves and the line losses, the firm capacity is reduced to about 10000MW resulting in massive load shedding of two to three thousand MW.

With eight to 10 per cent annual increase in power demand Pakistan will require about 25 thousand MW of firm capacity by 2015. It is, therefore, imperative that we increase our installed capacity with all available resources at the earliest, otherwise our exports will completely collapse and the country will plunge into darkness for 30 per cent of the time.

At present we are generating 50 per cent of our power by natural gas, 30 per cent hydro, 16 per cent oil, 3.3 per cent nuclear and only 0.2 per cent coal. The country has the capacity of 40000 hydro electric power and abundant coal reserves which are both cheap sources of energy compared with nuclear and gas. Our endeavour should be to base our power plants on indigenous sources.

Hydro power: We are generating only 6000 MW of hydro power against the potential of forty thousand MW. This is the cheapest source of renewable energy and is also environment-friendly.

As explained earlier Bhasha Dam is a non-starter because it is very expensive and difficult to construct, more over it does not fit in the time horizon. Small hydro projects will not make significant difference, moreover these are expensive to construct because of economy of scale.

The only major project which can be completed in the next eight to 10 years is Kalabagh Dam which beside generating 4000 MW of cheap power will have considerable water storage for irrigation purposes, essential to meet the food demands of our growing population.

Kalabagh Dam has no adverse effects on any province. This project has been unnecessary politicised by the vested interests.

When Mr Jam Sadiq was the chief minister Sindh, Mr Jatoi who is the minister of water and power at present, was a minister in Sindh cabinet will recall that the Sindh government almost agreed for the construction of this project at that time. The only opposition was from the Frontier Province.

Here too all the technical experts of the province agreed with WAPDA that Kalabagh had no adverse effects on Frontier Province . Only one political Party was against it. I recall the comments made to me after a detailed presentation regarding Kalabagh by a senior member of that party.Ã¢â¬Â GeneralÃ¢â¬Â, she said ,Ã¢â¬Âwhat you are saying makes a lot of sense but agreeing to start this project will be our political deathÃ¢â¬Â.

With a little bit of more persuasion, all concerns can be brought to a consensus to start this project which is vital for the survival of Pakistan.

Coal-fired units: Pakistan is sitting on 185 billion tons of coal estimated to be second largest reserve in the world. While 1.5 millions MW of coal-based power plants are in the various stages of development around the world we do not even have a single MW plant based on coal. Compare to this 77 per cent of power generation is based on coal in India, 58 per cent in UK and 52 per cent in USA.

Investment in an indigenous integrated coal mining and power generation is a long-term commitment by investor. It is different from investment in the franchise of a fast food chain or from importing ready made power plants. Hence partnership of public and private sector is essential for the successes of such projects.

For the first time, a 150 MW coal-fired plant was installed with the Chinese help at Lakhra in early 90s. It was also planned to develop the coal mines in the area to meet the requirements of this plant.

Against a market value of about $130 million we contracted this plant from China at a cost of $70 million. We asked the Chinese why they are giving us this plant at such a low price, their answer was that though it was a proven technology and such plants are operating all over China, they intended to export similar plants to the entire world . They wanted a corroboratory reference that such a plant is successfully operating outside China.

Lakhra coal plant successfully operated for over two years. Later it was shut down due to poor maintenance. Our future coal fired plants should be based on Lakhra Coal which is of better quality than Thar coal, which has excessive water contents.

Modern technology of pulverized coal, synthetic gas or gaseous fabrication of coal considerably reduce emissions of gases in the atmosphere and make them environment friendly. We should immediately explore the possibility of constructing coal fired plants.

Gas turbines: Power generation based on gas turbines is the quickest means of generating power. These turbines are available off the shelf and have an efficiency of 55 against 36 per cent of oil fired power plants. To overcome the immediate shortage of our power requirements we should set up power plants based on gas. It is imperative that we should endeavour to immediately conclude the agreement for the construction of gas pipe line from Iran for such projects.

Nuclear projects: We have made some headway with the help of China in the nuclear field. Uranium exploration in Pakistan started in the late seventies when we started the Kahuta nuclear project. Geological and exploratory projects carried out since then have resulted in delineation of favourable areas of uranium deposits in Pakistan.

It indicates the resource potential in excess of 30 thousand metric tons of uranium 308. The requirement of yellow cakes for the project needs can be catered to a significant extent from indigenous resources.

Currently there are international embargoes on the transfer of nuclear power technology to Pakistan. People Republic of China is the only supplier of the nuclear power plants to us.

In view of the latest agreements of India and USA in the nuclear field we must also try to get the embargo removed so that we can contract more efficient nuclear power plants from developed countries.

Cost of construction of nuclear power plant is comparable with thermal and hydro plants, but in the long run it is most expensive because its decommissioning cost is more than the commissioning cost. However it is environment friendly and essential to meet our Power requirements.

Infrastructure development: In the last ten years, our line loses in WAPDA system have gone up from 19 per cent to over 30 per cent where as in KESC loses are estimated to be 40 pert cent. It is therefore paramount that more transmission lines should be constructed and distribution system over hauled This can not be done in private sector, it has to be undertaken by public sector.

To overcome the present energy crises it is repeated again that all the national resources should be galvanised, on war footing, to add about ten thousand MW to the existing power generation in the next ten years.

Economical power plants can not be completed over night. Hydro plants require eight to ten years from feasibility to completion, coal based plants four to six years, nuclear three to five years.

Only oil and gas based plants require two to three years but the power generated is very expensive, therefore not feasible in view of prevailing highest tariff in Pakistan compared with the countries in the region which is already making our exports uncompetitive.

What our country needs is a serious straightening of economic and development priorities along with a pinch of selfless patriotism. A tall order indeed.

Ã¢â¬â The writer is a former chairman, Wapda

http://www.dawn.com/2006/10/30/ebr15.htm


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## Owais

*PSO first-quarter net profit drops on inventory losses *


KARACHI (updated on: October 31, 2006, 16:36 PST): The Pakistan State Oil (PSO) posted a bigger-than-expected drop in first-quarter net profit on Tuesday, down 78 percent, that analysts blamed on high inventory losses.

July-September net profit slumped to 566.5 million rupees ($9.34 million) from 2.5 billion rupees a year earlier, the oil marketing company said in a statement.

Quarterly sales rose around 30 percent to 100.9 billion rupees.

"The decline in earnings was on the back of a sharp drop in international refined product prices in the Arab-Gulf region, resulting in inventory losses," said Naveed Vakil, analyst at AKD Securities.

Analysts said ex-refinery prices during the period dropped by an average 8 percent.

"Another factor contributing to the year-on-year drop in earnings was the 19-21 percent reduction in absolute margins at oil marketing companies in April," said Shahab Farooq, head of research at Al-Habib Capital Markets.

The PSO has a 65 percent share of Pakistan's petroleum market, where its main rivals are Shell Pakistan and Caltex Pakistan.

The government plans to sell a 51 percent stake in the PSO. The PSO shares closed down 4.15 percent on Tuesday, underperforming a broader market that fell 1.74 percent.

The PSO stock has lost 28 percent so far this year, while the benchmark KSE 100-share index has gained 18.5 percent.


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## Owais

*First quarter FDI soars by 203.8 percent *

ISLAMABAD (October 31 2006): Foreign Direct Investment (FDI) in the country during first three months of 2006-07 soared by 203.8 percent year-on-year to $1.029 billion, while portfolio investment dipped by 16.77 percent to $120.6 million, the State Bank of Pakistan (SBP) reported on Monday.

During July-September 2006-07, FDI year-on-year increased to $1.029 billion from $338.7 million of 2005-06, while portfolio investment declined to $120.6 million from $144.9 million, according to statistics released by the central bank.

Therefore, on balance, total foreign private investment in the three months (July-September 2006) increased by 137.67 percent to $1.149 billion from $483.7 million in the corresponding period of last year.

A significant feature of the data was that though FDI inflow followed steep rise right from the beginning of the new fiscal year and increased enormously, portfolio investment showed a declining trend.

According to break-up of investment by region, developed countries made total investment of $796 million (FDI $709 million and portfolio investment $87 million), and the developing economies invested $268.5 million (FDI $235.3 million and portfolio investment $33.3 million).

Among developed countries, Western Europe made total investment (FDI and portfolio) of $499.5 million and European Union of $483.9 million, against $152.9 million and $116.1 million respectively in corresponding period of last fiscal year. Besides, under unspecified head (investment by IFIs) was $85 million. This included FDI of $84.7 million, and $0.3 million in portfolio.

Among developing economies, Caribbean Islands invested $3.6 million as FDI and withdrew $0.6 million portfolio investment. Africa, including Libya, Egypt, Mauritius, South Africa and other African countries, invested $19.6 million.

Asian countries (western Asia, South, East and Southeast Asia) made total investment of $245.6 million ($211.6 million FDI and $33.9 million portfolio investment). The United Kingdom (UK) was the biggest investor in Pakistan by investing $433.6 million ($365.8 million FDI and $67.9 million portfolio investment).

United States was next with total investment of $262.2 million (FDI $227.6 million and portfolio investment $34.7 million). United Arab Emirates (UAE) was third with total investment of $187.6 million. It injected $192.2 million FDI and withdrew $4.5 million portfolio investment.

Singapore made sizeable investment of $49.7 million, against only $2.8 million in corresponding period of last fiscal year. It made $46.6 million portfolio investment and $3.1 million FDI, against only $0.1 million and $2.7 million, respectively, in corresponding period of last fiscal year.


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## Owais

*Pakistan, Malaysia agree to sign FTA *


KUALA LUMPUR (updated on: October 31, 2006, 16:35 PST): Pakistan and Malaysia have agreed to sign the Free Trade Agreement which will be executed in the start of next year following the three day visit of Malaysian Prime Minister Datuk Seri Abdullah Ahmad Badawi to Pakistan from November 4.

Both the countries have held Joint Ministerial Committee meetings and had already singed Early Harvest Programme paving the way to finalise the FTA between the two countries, said Pakistan's Acting High Commissioner to Malaysia, Jamshid Iftikhar in an exclusive interview with APP's correspondent Fayyaz Chaudhry in Kuala Lumpur on Monday.

He said that following the official visit of Prime Minister of Malaysia Abdullah Ahmed Badawi from November 4 to 6 to Pakistan, there will be another meeting of Joint Ministerial Committee in Islamabad in December this year and the FTA will be executed early next year.

Giving details about the visit of the Malaysian Prime Minister to Pakistan, the Acting High Commissioner said Prime Minister Abdullah Ahmed Badawi will arrive Islamabad on November 4 on his second official and bilateral visit to Pakistan as earlier he visited in February 2005.

The visit of Malaysian PM, which is on the invitation of Prime Minister Shaukat Aziz will further promote bilateral, economic and trade relations between the two countries, said Pakistan's High Commission to Malaysia.

Pakistan's Prime Minister Shaukat Aziz has visited Malaysia twice in 2005.

Highlighting the areas of co-operation between the two countries during this visit, the High Commissioner said, besides discussing to promote trade and economic relations, both the leaders will also discuss to enhance co-operation in other fields including tourism, improving infrastructure in Pakistan and getting benefit from the development in the Information Technology.

Malaysian Prime Minister Abdullah Ahmad Badawi during his visit to Pakistan will also attend the World Islamic Economic Forum being held in Islamabad from November 5 to 7 and he will be the key note speaker on the first day of the meeting of the high level forum.

Under the FTA, Malaysia has agreed to provide market access to Pakistan's traditional items of export including mangoes, textile, leather, surgical instruments and other agriculture and manufactured goods, said the statement and it has been proposed in the FTA that oranges, potatoes and lemon can be exported to Malaysia at zero duty from Jan. 1, 2006.

The FTA also include a chapter on promotion and protection of investment, and it is also expected to provide impetus for attracting the foreign direct investment from Malaysia to Pakistan.

Prime Minister Shaukat Aziz will also brief Prime Minister Badawi about economic reforms in Pakistan to get Malaysian businessmen to invest in Pakistan. A lot of private companies from Malaysia are already investing in Pakistan in various sector.

During the visit of Prime Minister Badawi to Pakistan, both sides will explore many areas of co-operation between the two countries.


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## Owais

*Russian firm to invest in Pakistan's power sector 
ISLAMABAD (updated on: October 31, 2006, 16:54 PST):* 

The RAO UES, a Russian construction company has expressed keen interest to invest in Pakistan's power sector including the project of 5000 MW Bunji hydro power project.

The Russian company's interest came to surface when Minister for Water and Power Liaquat Ali Jatoi held talks with the management of the RAO UES while paying a short visit to Moscow on his way back to Pakistan from Tajikistan, says a fax message received here from Moscow on Tuesday.

The investment would also focus on power sector on the prospective project related to import of electricity to Pakistan from Tajikistan and other Central Asian states.

The minister briefed the company's delegation of the upcoming plans of Pakistan in power sector and apprised them of the Government of Pakistan's liberal and generous policies to encourage private sector in generation and transmission of electricity.

The company will soon send a high level team of experts to Pakistan to explore the opportunities in this regard.

The Ambassador of Pakistan in Moscow Mustafa Kamal Kazi was also present on the occasion.


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## Owais

*Hubco 06/07 Q1 profit jumps 13.2 percent *


KARACHI (updated on: October 31, 2006, 16:42 PST): Pakistan's leading private power producer, Hub Power Co. (Hubco), on Tuesday reported a better-than-expected 13.2 percent jump in quarterly net profit, an increase analysts said was due to higher plant utilisation.

Hubco's earnings growth has been constrained by a tariff structure that falls as the company reduces its debts, but future ventures could provide additional upside for dividend payouts, analysts say.

The firm has expressed interest in acquiring a 51 percent stake in state-run Sui Southern Gas Co. Ltd. (SSGC), which the government plans to privatise this fiscal year. It also plans to bid for three combined cycle power generation projects.

In its first quarter ended Sept. 30, Hubco earned a net profit of 722 million rupees ($11.9 million), up from 638 million rupees earned a year earlier, it said in a statement.

The result was above analysts' expectations of 650-700 million rupees. Earnings per share during the quarter rose to 0.62 rupees from 0.55 rupees. Dividends are announced with half and full year results.

Analysts said Hubco's load factor improved in the quarter. Sales almost tripled to 11.72 billion rupees from 4.07 billion rupees a year-ago. However with prices fixed and input costs offsetting the revenue increase, analysts said earnings growth was limited.

"The profit has most likely stemmed from higher utilisation, leading to improved levels of thermal efficiency," said Naveed Vakil, analyst at AKD Securities.

Hubco's profits fell sharply last year as its tariffs were cut following repayment of its senior debt. The company's tariffs are front-loaded -- set high initially but designed to reduce over time.

The tariff is based on "Cost plus ROE (Return on Equity)" structure, with costs defined in cash flows terms and including debt repayments, analysts said. Hubco fully repaid its senior debt in July 2005, resulting in lowering of its annual debt repayment to 980 million rupees from 3.9 billion rupees.

The firm runs a 1,292-megawatt thermal coal power plant near Karachi. Its biggest shareholder is Britain's International Power Plc., with a stake of 16.6 percent. Hubco shares were down 1 percent at 25.45 rupees as Tuesday's market close approached, in a broader market that was down 1.5 percent.

Hubco shares have risen around 6 percent in 2006 so far, while the benchmark KSE 100-share index has risen almost 20 percent.


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## Owais

*Charles meets Musharraf and Shaukat: youth business project inaugurated *

ISLAMABAD (October 31 2006): Britain's Prince Charles spent a business day here on Monday, beginning his weeklong visit to the country with a call on President Musharraf, followed by a meeting with Prime Minister Shaukat Aziz and inauguration of a youth business programme.

However, his expected intercession with Pakistani authorities to secure the life of the death row inmate, British citizen Mirza Tahir Hussain, did not take place, according to a report quoting Information Minister Durrani. "This issue was not discussed. Neither did they want to talk about it nor did we talk about it," he said.

But, an unidentified Pakistani diplomat was cited having said that after their meeting, as Musharraf led his guest to the car, the Prince raised the issue, to which the President responded that effort would be made to handle it in a way that would satisfy both sides.

Prince Charles, accompanied by his consort, Duchess of Cornwall Camilla Parker, arrived here on Sunday night on his maiden visit to Pakistan, during which he will also go to Lahore, Peshawar and visit the earthquake hit areas. His itinerary includes a visit to a Madressah, near Peshawar.

Since the visit is taking place under strict security arrangements, the general public would get a very limited view of the royal couple. That would be indeed causing severe disappointment here, particularly to women who would like to see Camilla, who has taken the place of Princess Diana.

Prince Charles and the Duchess called on Prime Minister Shaukat Aziz at the Prime Minister House, where the latter informed the guests that Pakistan has all the essentials of democracy, including a functioning parliament, an active opposition and free media. The two also met on one-to-one basis for some time.

Another highlight of the royal visit was inauguration of 'Youth Business International Mentor's Programme' which was also addressed by the Prime Minister.

Addressing the function, Shaukat said that Pakistan and the United Kingdom share a friendship, which is rooted in history. "We are dedicated to the promotion of dialogue and understanding between Islam and the West, a goal, which I know, is close to your heart. Indeed, we in Pakistan greatly appreciate the consistent efforts that you have made in this regard."

He said: "We also welcome the valuable assistance that your country is providing towards Pakistan's economic and social development. In this context, we greatly appreciate your personal interest and contribution to the enhancement of the youth in Pakistan, which is symbolised by today's event.

"I am confident that your visit to Pakistan and, in particular your presence here today, will greatly contribute towards further strengthening of the friendship between our countries and peoples", the Prime Minister said.

He said his government attaches highest priority to the development of the youth, as it is underscored by the fact that a separate full-fledged Ministry of Youth Affairs was created. "We have involved the youth in decision-making by reducing the voting age from 21 to 18 years", he added.

The Prime Minister also apprised the visiting dignitaries of the several programmes for youth capability enhancement, including the Youth Internship Programme, Youth Awareness Programme, and Credit Facility for Youth, Youth Volunteer Corps, Youth Development Centres and the International Youth Exchange Programme.


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## Owais

*IPIC to set up $2 billion oil refinery at Khalifa point: ECC to consider proposal today *

ISLAMABAD (October 31 2006): The International Petroleum Investment Company (IPIC) of Abu Dhabi has agreed to establish oil refinery at Khalifa point, Hub, with the refining capacity of 200,000 to 300,000 barrels crude oil per day.

Official sources told Business Recorder the company has submitted its $2 billion investment plan to the government, which would be considered by the economic co-ordination committee (ECC) of the cabinet in its meeting on Tuesday.

The government had decided to offer 2,000 acres of land in Hub, primarily acquired for the Pak-Iran refinery, to prospective investors to establish oil refinery through international competitive bidding (ICB).

In 2002, Tehran had unilaterally refused to help establish $1.3 billion refinery in Balochistan's coastal areas, saying the project has no rate of return. The petroleum ministry had indicated that the land acquired by the State Petroleum and Petrochemical Corporation (PERAC) for setting up of Pak-Iran refinery is available at Khalifa point.

Sources also quoted the ministry as pointing out that the estimated cost of a mega project with 200,000 to 300,000 barrels per day (bpd) refining capacity is about $2 billion. Pakistan and Iran had signed an agreement on May 16, 1991 to initiate the project with a capacity to refine 120,000 barrels crude oil per day, but later Iran backtracked on the proposal and any of the arguments from Pakistani side did not convince it.

The petroleum ministry had suggested to seek proposals from the short-listed prospective investors (single entity or joint venture) to set up a new, state-of-the-art deep conversion refinery of this capacity at Khalifa point on Build-Own-Operate (BOO) basis under the incentives regime applicable to projects established in the Export Processing Zones (EPZs), sources added.

They said investment proposals had been evaluated on the basis of technical and financial soundness of development and operation of the proposed refinery.

The country's current demand of petroleum products is about 16 million metric tons per annum, 82 percent of which is met through imports (crude and finished products) and the rest through indigenous resources.

Pakistan's total refining capacity, at present, is about 12.8 million tons per annum against total demand of 16 million. Energy demand and supply projections indicate, by 2011-12 the total deficit of petroleum products in the country would be over nine million and 11 million, respectively.


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## Owais

*OGDC earns Rs 12.328 billion net profit in first quarter *

ISLAMABAD (October 31 2006): The Oil and Gas Development Company (OGDC) has earned after-tax profit of Rs 12.328 billion during the first quarter of 2006-07, against Rs 9.021 billion in the corresponding period last year.

The OGDC board of directors, which met here on Sunday to consider the quarterly accounts of the company for the period ended September 30, 2006 under the chairmanship of Arshad Nasar, declared first interim dividend of Rs1.75 per share for the year 2006-07 as compared to Rs1.25 per share for first quarter of last year, according to a press release.

Despite heavy rains in September, sales revenue of the company increased by 26 percent; profit before tax by 28 percent; and profit after tax by 37 percent, as compared to the corresponding period of last year.

The company's net profit margin increased to 49 percent and return on assets was 41 percent. Higher profitability of the year resulted in earnings per share of Rs 2.87 as compared to Rs 2.10 in the corresponding period of last year.

During the period 1,316 L kms. of 2D seismic survey was carried out. Drilling operations continued at 15 exploratory and two development wells. Two more wells at Chak 14-1 (exploratory) and Rajian 4-A (development) were spudded during the quarter.

Its average daily production, including the share from the joint ventures, averaged 39,682 barrels per day of crude oil, 826mmcf per day of gas and 823 M. tons per day of LPG compared to 37,418 barrels of crude oil, 333mmcf of gas and 309 M. tons of LPG during the corresponding period of the previous year.

The company recently had two discoveries - Mela Exploratory Well No 1 and Pasakhi North East Well No 1 - in September and October this year.-PR


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## Owais

*NBP net income grows to Rs 14 billion *

KARACHI (October 31 2006): The National Bank of Pakistan (NBP), in the first nine months of 2006 earning announced here, on Monday, declared that the net income of the bank grew by 61 percent to Rs 14 billion, translating earning per share of Rs19.76.

Net interest income of the bank grew by a hefty 45 percent to Rs 21.720 billion. Non-interest income of the bank improved by 28 percent to Rs 9 billion.

Muhammad Imran, an analyst at JS Research, said among non-interest income dividend from NIT units contributed significantly. The NBP has a practice to book NIT dividends in the third quarter of the calendar year.

This time NIT dividends contributed Rs2.85 per share in the bottom-line of the bank. The bank did not announce any payout with the results.


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## Owais

*ABL registers Rs six billion operating profit in nine months *

KARACHI (October 31 2006): The Allied Bank Limited (ABL) has posted an operating profit of Rs 6 billion, reflecting a growth of 59 percent during the first nine months period ended September 30, 2006 as compared to the corresponding period last year.

The board of directors of ABL approved the accounts for nine months in a meeting held on October 30, 2006 at Lahore. The profit after-tax was Rs 3.4 billion, registering a growth of 65 percent during the period under review from Rs 2.1 billion during the same period last year. Consequently, the earning per share jumped to Rs 7.53 from Rs 4.57.

The deposits of the bank grew by 23 percent to Rs 198 billion, while loan book increased to Rs 144 billion by posting a growth of 20 percent over December 2005. The NPLs decreased by 4 percent and the net NPLs to net loans ratio dropped to 2.3 percent from 3.6 percent.

The income to cost ratio improved to 2.6:1 from 2.2:1 in the corresponding period. The capital and reserves of the bank increased by 24 percent to Rs 16.7 billion.-PR


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## Owais

*MCB profit up by 61 percent *

KARACHI (October 31 2006): Profitability of the MCB Bank has grown by 61 percent to Rs 8.642 billion, translating earning per share of Rs16.89 during the first nine months of the current year ended September 30, 2006, as compared to Rs 5.382 billion, EPS Rs10.52, during the corresponding period last year.

Analyst said major contribution in the earnings growth was made by net interest income, which grew on the basis of higher spread of the bank. The net interest margin (NIM) of the bank increased by 100bps to 8 percent. Interestingly, advances of the bank depicted a declining trend quarter-on-quarter basis.

Net interest income (NII) of the bank increased by 51 percent to Rs 15.5 billion. Interest expense to interest income ratio of the bank increased to 16.4 percent from 15.9 percent in the corresponding period of last year. Non-interest income of the bank improved by 5 percent.

The bank also announced third interim cash dividend of Rs2 per share, ie, 20 percent with the results. This is in addition to interim dividend already paid at Rs4 per share, ie, 40 percent


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## Neo

*Defence exports cross $200m mark: DEPO*

By Iftikhar A. Khan

ISLAMABAD, Oct 30: Defence exports of Pakistan have crossed the $200 million mark as the countryÃ¢â¬â¢s robust defence manufacturing industry continues to expand. This was disclosed by Major General Syed Absar Hussain, Director General, Defence Export Promotion Organisation (DEPO),while talking to Dawn here on Monday after briefing defence attaches of different countries on the International Defence Exhibition and Seminar (IDEAS) 2006. The event is scheduled to be held in Karachi from November 21 to 24.

General Absar said a new Armoured Personnel Carrier (APC) named Ã¢â¬ËSaadÃ¢â¬â¢ will be unveiled for the first time at IDEAS 2006. Pakistan launched APC Saad equipped with Battle Field Management Systems, including computerised command, control, communication, intelligence and information systems in July 2003.

Gen Absar did not give details whether the Saad to be displayed at IDEAS 2006 was an upgraded version.

He said improved versions of the Al-Khalid battle tank and Super Mushak single piston engine aircraft will also be put on display besides various other upgrades.

The Al-Khalid tank has a night-fighting capability as well as the ability to automatically track targets. Super Mushak can be used as a trainee aircraft as well as for other aerial and defence operations.

Earlier, in his presentation, he said there will be a presentation on JF-17 Thunder aircraft jointly developed by Pakistan and China.

He said an international seminar on Ã¢â¬Åexpanding global security environmentÃ¢â¬Â will be held on Nov 20. The seminar will be presided over by either the defence minister or the foreign minister and addressed by various foreign delegates.

He said the formal inaugural ceremony of the exhibition will also take place the same evening. The exhibition will be open for the general public from November 21.

He said a Joint Forces Display in the sea at Manora island will mark the culmination of one of the worldÃ¢â¬â¢s largest defence exhibitions. He said all the three services will demonstrate their prowess.

He said the Special Services Group (SSG) of the Pakistan Army will demonstrate a mock anti-terrorist operation.

He said the theme of the exhibition will be Ã¢â¬ÅArms for PeaceÃ¢â¬Â, adding that the purpose was not just to sell weapons but also to show the soft image of Pakistan to the world.

He said 165 leading manufacturers from 23 countries, including 91 foreign and 74 domestic companies, had participated in IDEAS 2004.

He said this time 107 delegates from 95 countries have been invited, adding that 75 delegates from 70 countries have so far confirmed their participation.


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## Neo

*Banned seeds to yield 1m cotton bales this season*

By Sabihuddin Ghausi

KARACHI, Oct 30: More than one million bales of cotton this season is being obtained from the sowing of genetically modified seeds either smuggled from India or trans-shipped from Australia as a mis-declared item via Dubai, Singapore or Hong Kong.

Officially, the sowing of genetically modified seed in Pakistan is banned for which the government issues warning to the growers through electronic and print media well in advance at the time of plantation. But the use of these seeds, identified officially as bio-technological seeds (BT Seeds), is gradually becoming popular among the farmers because of its pest resistant quality and better yield in last few years.

Farmers in Sindh call BT seeds Ã¢â¬ÅBhittai seedÃ¢â¬Â and according to Syed Qamaruzzaman Shah, president Sindh Chamber of Agriculture (SCA), the seeds have been sown on about 0.1 million to 150,000 acres in the province.

President of Karachi Cotton Association (KCA) estimates cotton production from BT seeds this season anywhere Ã¢â¬Åfrom 10 to 20 per cent of the total cotton productionÃ¢â¬Â.

With an indicated cotton output of 12 million bales plus this season, the BT seeds contribution comes to one million bales plus, the highest so far in the country in the face of federal agricultural ministryÃ¢â¬â¢s repeated warnings against the use of these seeds.

Ã¢â¬ÅThe seed mafia and the pesticide mafia are against the official adoption of BT seeds in Pakistan,Ã¢â¬Â a senior official in the federal textile ministry informed Dawn on Monday who disclosed that the textile ministry has Ã¢â¬Åagain urged the agriculture ministry to adopt the BT seed.Ã¢â¬Â

Pakistan is a net importer of pesticides and one big importer hails from a powerful political business family of central Punjab that has interest in sugar, textiles, dairy farming and other areas.

The genetically modified seeds were first introduced in Pakistan about five years ago by an American multinationalÃ¢â¬âMonsanto--that has registered its patent internationally. The company wants observation of international patent rules for marketing its seeds in Pakistan.

Ã¢â¬ÅAny agreement with Monsanto would have bound Pakistan with unbearable conditions,Ã¢â¬Â is one argument offered by the bureaucrats in federal food and agricultural ministry. For example, there is a condition to import fresh seeds every year from the company rather than allowing the farmers to use seeds from the crop as is being done now.

Ã¢â¬ÅWhy should not farmers use BT seeds if these are beneficial to them,Ã¢â¬Â argued Qamaruzzaman Shah who said that this variety of seed had improved yields per acre and has been found pest resistant and moisture resistant.

He explained that some parts of lower Sindh were rendered unsuitable for cotton plantation after farmers switched over to bananas and sugarcane because of excessive use of water increased humidity in the environment. Ã¢â¬ÅCotton needs dry weather and heat,Ã¢â¬Â he said.

The BT seeds gave good results in an environment where humidity was relatively high and is, therefore, being used excessively. Ã¢â¬ÅBags full of BT seeds are offered as gift by zamindars to each others,Ã¢â¬Â the SCA chief replied when asked as what is the source of these seeds.

Zahid Bashir, however, wants all necessary safeguards for the use of BT seeds. He advocates a formal agreement with Monsanto or with any company that has produced these seeds. Ã¢â¬ÅBefore sowing these seeds, these should be properly modified to suit our soil and our environment,Ã¢â¬Â he stressed. The company should provide necessary training to technicians and farmers and also offer after-sales service as it is in case of every big deal.

Cotton traders and farmers blame bureaucratsÃ¢â¬â¢ fixations and frozen minds for delaying the official adoption of genetically modified seeds.

These seeds have been adopted in India where cotton output this season is being estimated at around 28 million bales--more than double that of Pakistan--where the Federal Committee on Agriculture has recently cut down crop estimate to 12.4 million bales from 13.8 million bales. China too has adopted these seeds and is now reaping benefits.With an expected 12.4 million bales production, the textile industry is all set to import about 2.5 million bales to 3 million bales in the coming months as there is a demand of about 15 million bales by the local industry after investment of about $5 billion in last five years. The government is exploring the possibility of cotton import from India via Wagah overland to cut down on freight and ensure swift delivery.


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## Neo

* PIAÃ¢â¬â¢s revenue increases by 13pc *

KARACHI: The revenue of Pakistan International Airlines (PIA) has increased by 13 percent. This was announced in a statement of the national carrier issued here on Monday.It said that the PIAÃ¢â¬â¢s 298th Board Meeting was held in Karachi on Monday with the Chairman and CEO PIA, Tariq Kirmani, in the chair.

PIA Board approved the 3rd quarterly accounts for the period July-September 2006 and the interim condensed financial statements (un-audited) for the nine months period ended September 30, 2006. The overall revenue of the nine months to September 2006 has increased by 13per cent.

This healthy revenue growth was fully offset by un-favourable 39 per cent growth in fuel cost mainly due to 28 per cent increase in fuel prices. The domestic and international tariffs were suitably adjusted during the year to partially recover the increased cost, as the market forces did not allow the company to fully recover the fuel cost increase.

The fuel cost for the nine months to September 2006 accounts for 49 per cent of the revenue whereas it was only 40 per cent of the revenue during the same period last year. In this highly competitive environment, PIA managed to increase its market share in the domestic passenger segment and fully protected its share in the international passenger segment.

The overall available Seat Kilometres increased by over 13 per cent and Revenue Passenger Kilometres increased by a healthy 10 per cent. The cargo business also showed an increase of over 7 per cent. The passenger and freight yield showed a modest increase as well. As of end of September 2006, PIAÃ¢â¬â¢s market share in the domestic passengers segment had increased to 69 per cent and in the international passenger segment to 48 per cent. 

This growth in market share was achieved by improved customer services, additional and convenient flight scheduling and better facilities especially to Business Class passengers among other initiatives.

The addition of two new Boeing 777LR also greatly facilitated the quality and convenience to the passengers. The Board appreciated the managementÃ¢â¬â¢s efforts to counter the adversities by adopting a strategy focusing attention on enhancement of revenue through improved sales, of new selling initiatives, competitiveness and cost curtailment. A professionally developed financial re-structuring plan has also been submitted to the GOP for assisting the company to rejuvenate itself for the challenges ahead.


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## Neo

*Pak wants closer economic ties, enhance cooperation with Russia: PM *

ISLAMABAD: October 31, 2006: Prime Minister Shaukat Aziz has said Pakistan attaches great importance to its relations with Russia and wants closer economic ties and enhanced co-operation in a broad spectrum of areas particularly in the fields of oil, gas, petrochemical and steel.

Talking to a Russian Delegation led by Mr. Mikhail L. Golubev, President EZOT, a leading fertiliser company of Russia who called on him at the PM's House on Tuesday morning, the prime minister said there is a great potential for closer economic ties and bilateral co-operation between Pakistan and Russia and Pakistan desires to tap this potential for mutual benefit.

The premier said that wide-ranging structural reforms introduced during the last seven years coupled with macroeconomic stability, rapid, strong and sustained economic recovery, reduced cost of doing business and transparency in policies and procedures has transformed Pakistan into one of the ideal locations for foreign investment and investments are flowing into Pakistan from all parts of the world which is resulting in faster growth, jobs creation and poverty alleviation.

Aziz said the geo-strategic location of Pakistan makes it an ideal location to serve as a regional hub for manufacturing and trade and Pakistan can cater to the needs of the market of many Asian regions.

He said Pakistan is strengthening its infrastructure and building a network of roads and highways to leverage its true potential .

Talking of the fertiliser policy of the government, the prime minister said agriculture is the backbone of our economy and the government has taken a number of steps to increase the production and productivity in the agriculture sector.

He said the government is encouraging the use of a blend of fertilisers to increase the yield per acre.

Aziz said the use of DAP has increased manifold after the government's decision to reduce its price. The enhanced use of DAP is expected to result in substantial increase in the next wheat and sugarcane crops, he added.

Mr. Mikhail L. Golubev said his company, which has more than 7000 employees and earns a revenue of $ one billion annually is happy about their plans to start joint ventures with a Pakistani company.

He appreciated the investment friendly polices and procedures in Pakistan and said Pakistan has good prospects for foreign investment in a host of areas.


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## Owais

*Russia to participate in IPI gas pipeline project: India *


MOSCOW (updated on: October 31, 2006, 20:14 PST): India's Minister for Petroleum and Natural Gas Murli Deora has welcomed the Russian proposal to participate in the India-Pakistan-Iran (IPI) gas pipeline.

After his talks with Russian Energy and Industry Minister Viktor Khristenko, Deora said, India has welcomed the Russian proposal to participate in the 2,700 km long project, in the form of technological, financial and investment assistance.

"From India, I welcomed the proposal by Khristenko during the talks. It is a very important that we from India welcome the participation by Russian companies in the India-Pakistan-Iran gas pipeline, Deora said, stressing "We will take up this issue with Iran and Pakistan."

Deora is on a two-day visit to participate in the "Moscow Energy Week," an international gathering for representatives of oil industry.

He also invited Khristenko to attend the ceremony to be held in the first week of December at Mangalore to receive the first shipment of crude oil from Sakhalin-1 project by Prime Minister Manmohan Singh.

The first shipment of about 90,000 tons crude oil by the ONGC's overseas arm, the OVL, from Sakalin-1 project would be processed at ONGC's subsidiary Mangalore Refinery and Petrochemicals Ltd (MRPL).

Deora said during the talks with Mr Khristenko, the sides exchanged views on the issue of increased co-operation between Indian and Russian oil companies.

"The issue of obtaining participating interest in upstream projects of Russia came up for discussion," he said adding the OVL would make large investments in the E&P projects likely to come up in Sakhalin region.

Noting enhanced co-operation between Russian and Indian companies, in the mutual interest, Khristenko agreed to consider the OVL's offer for co-operation with Rosneft and Gazprom.

"The commercial discussion would pave the way for better co-operation between the two sides," he said.


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## Owais

*Oil refinery to be set up at Khalifa Point: ECC defers auto policy draft *

ISLAMABAD (November 01 2006): The Economic Co-ordination Committee (ECC) of the Cabinet, which met here with Prime Minister Shaukat in the chair on Tuesday, approved establishment of an export-specific oil refinery at Khalifa Point (in Hub), with 200,000 to 300,000 barrels per day (bpd) capacity.

The project would need $4 to 5 billion, of which 75 percent share would be of Abu Dhabi-based public entity, 'International Petroleum Investment Company' (IPIC), while Parco would have the other 25 percent shares.

Briefing the journalists, Dr Ashfaque Hasan Khan, Economic Advisor to Finance Ministry, said that several other parties had shown interest in purchase of project shares, prominent among them, according to him, was the Asian Development Bank (ADB).

He said that 50 percent investment to be made in the project would be by the IPIC, while the remaining 50 percent of Abu Dhabi government would be withdrawn later.

The project would be commissioned in 2010, but its construction would start from July next year. He said that the Oil and Gas Development Company Limited (OGDCL) has discovered 28.5mmcfd gas in Sindh, but did not provide details of the discovery.

The ECC did not approve new auto policy draft, prepared by the Ministry of Industries and Production, and directed that the policy should be re-submitted after taking all stakeholders on board including Finance Ministry, CBR and the private sector.

"The ECC was of the view that the policy needed more deliberations," he said.

When asked whether the auto policy draft was deferred because of powerful auto makers' lobby, he said there were other stakeholders who should also be consulted on the issue.

Dr Ashfaque said that the ECC approved re-channelisation of gas from Mari Deep and Zamzama fields to the power sector. Giving the details of this specific issue, he said that in 2004, PPIB had allocated 60mmcfd gas to the power project of Fauji Foundation and 40mmcfd to ETA power project, but both projects were short of 9mmcfd (5+4mmcfd).

According to a study, 50mmcfd additional gas could be drilled from Mari Deep, in addition to the existing capacity of 100mmcfd, of which 9mmcfd would be allocated to both projects.

However, the remaining 41mmcfd gas would be left at the disposal of SNGPL, which could be allocated to Wapda's Guddu thermal power station and it would give same quantity of gas to Zamzama that would be used in any other thermal power station to be established in central Punjab. Regarding utilisation of production bonus/obligations of oil and gas exploration and production companies, the ECC decided to revise the language of agreement to make it obligatory to provinces to utilise the bonus on development of the area where exploration was carried out. He said that the ECC approved 70 cents per MMBTU gas price for fertiliser plant being set up on Qadirpur gas field for ten years to be started from the commissioning of the project.

The project is being established by a consortium of Engro Chemicals Limited, Orascom and Fauji Foundation.

The ECC deferred discussion on strategy for agriculture sector and exemption of sales tax for public transport sector.

In reply to a question, he said that 340 new utility stores outlets would be established by the end of current calendar year, while licences would be issued to 100 franchises, of which 20 have already been issued.

Ashfaque admitted that prices of onions, tomato and potato were high due to non-movement of transport due to Eid holidays.


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## Owais

*Private sector credit growing but slowly *

KARACHI (November 01 2006): Private sector credit, which grew to Rs 29.4 billion during the first quarter of FY07, has continued growing since then though the rate of growth has been rather slow. On October 7, it had grown to Rs 30.6 billion, recording a growth of only Rs 1.2 billion over previous week.

A week later, the growth turned out to be Rs 6 billion on October 14 with overall credit expansion in the sector rising to Rs 36.6 billion during the year, compared with the overall expansion of Rs 73.4 billion in the corresponding period of last year.

Specialised credit to the private sector also increased from Rs 1.3 billion on September 30 to over Rs 4.6 billion on October 7 though it decelerated to Rs 4.1 billion on October 14. Apparently, it indicates somewhat slower economic activity this year than in the corresponding period of last year but, considering the re-circulation of credit availed in last two years which comes to about a trillion rupees, the private sector does seem to be facing some liquidity crunch. This huge amount of credit, when retired, becomes available for fresh loaning to economic agents.

Government borrowing, in the while, rose from Rs 45.8 billion on September 30 to over Rs 63 billion on October 7 and further to Rs 78.5 billion on October 14. The increase was entirely on account of budgetary borrowings of the Government as its borrowing for commodity operations declined from Rs 6.5 billion on September 30 to Rs 5.6 billion on October 14.

Government credit expansion on account of utilisation of Zakat and privatisation proceeds etc also squeezed from Rs 1.3 billion on September 30 to minus Rs 0.5 billion on October 14, indicating an increase of unutilised funds under these heads by about Rs 2 billion during the intervening two weeks.

Money supply, accordingly, rose from Rs 62.6 billion on September 30 to a marginally higher level of Rs 62.8 billion on October 7 and then sharply to Rs 71.2 billion on October 14, in line with the increase in government and private sector borrowing from the banking system.


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## Owais

*Protocol to boost economic ties with Tajikistan signed *

ISLAMABAD (November 01 2006): Pakistan and Tajikistan have signed a protocol to extend economic relations and strengthening of co-operation in the fields of energy, insurance, investment and industry, air transport, communication, banking and financial sectors, agriculture and food industry, transport and construction of roads, science and technology, education, health, tourism, culture on the basis of mutual equality.

They have also agreed to increase the current level of trade and facilitate joint ventures in the field of trade, industry and services. The second conference on the Regional Electricity Trade between the Central Asian and South Asian countries as well as Second Session of the Pak-Tajik Joint Economic Commission was held in Dushanbe and concluded the other day.

Water and Power Minister Liaquat Ali Jatoi along with the water and power delegation, NTDC, and the communication ministry participated from the Pakistan side.

After the closing session of the JMC and Trade conference, Federal Water and Power Minister and JMC Pakistan Chairman Liaquat Jatoi and Kislyakova Larisa, deputy minister of economy and trade and Tajikistan JMC chairman signed the protocol on behalf of their respective countries. According to a report received from Tajikistan, both parties agreed to extend co-operation on energy trade as the financial institutions have assured their support for the transmission line project via Phul-e-Khumiri and Kabul areas to Pakistan to export power from Tajikistan.

As an alternative, an additional transmission line through Wahkhan corridor shall also be considered. The two countries also agreed to co-operate in the field of extraction and processing of gas and oil products. The Pakistan side agreed to initiate dialogue through the ministries concerned for the purpose.

The Tajik side requested the Pakistan side to co-operate in the field of construction of irrigation system, technical assistance in provision of drinking water in rural areas and management of water resources in Tajikistan and Pakistan agreed to consider it.

Liaquat Jatoi, in his inaugural speech, highlighted the economic achievements of Pakistan under the leadership of President General Pervez Musharraf and Prime Minister Shaukat Aziz. He said the country's economy is fast growing and maintaining this growth Pakistan's annual energy needs are increasing at an unprecedented rate of 10 percent.

He elaborated the government's energy policy and expressed his full support for implementation of the construction of power transmission line project from Tajikistan to Pakistan through Afghanistan. The participants of the conference also signed a memorandum of understanding (MoU) at the conclusion of the conference.

Jatoi, during his stay in Dushanbe, called on Tajik President Emomali Rahmonov and discussed a wide range of issues especially relating to bilateral economic and trade co-operation. Both countries agreed to provide facilities to each other to enhance bilateral trade, including relaxation of visa policy.

He also mentioned that Pakistan wanted to establish air links and open a branch of the National Bank of Pakistan (NBP) in Dushanbe. The Tajik president agreed and assured his full support to the proposals.

The parties agreed to hold the third session of the Joint Tajik-Pak Commission on trade, economic and scientific-technical co-operation in Islamabad in 2007 on dates convenient to both countries.


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## Owais

*'China interested to invest $15 billion in Pakistan' *

KARACHI (November 01 2006): Adviser to the Prime Minister on Finance, Dr Salman Shah has asked business community to submit their proposals regarding Chinese investment which should be discussed with Chinese President Hu Jintao who is scheduled to visit Pakistan in November this year.

Presiding over the Pak-China economic co-operation meeting held in Islamabad, he said that China is interested to invest 15 billion dollars in different projects in Pakistan.

The adviser said that the Chinese president will arrive here on November 23, and during his visit he will sign different agreements of mutual co-operation.

He advised business community to suggested areas in which Chinese should make investment.

Giving details of the meeting senior vice president of Karachi Chamber of Commerce and Industry (KCCI) Amir Abdullah Zaki said that he emphasised on the Government to make efforts to improve infrastructure and create better condition for Chinese investment.

He said that Pakistan should encourage China to invest and co-operate in upgrading of high tech processing, weaving and chemicals industries and etc. He said that Pakistan also need Chinese co-operation to upgrade its agriculture and engineering sector.

He suggested that the Government should also discuss issue of revival of sick units and industries closed since last many years. He assured the adviser that KCCI will soon submit its concrete and well prepared practical proposals to the Government.

Representatives of Lahore Chamber of Commerce and Industry, Government representatives attended the meeting.


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## Owais

*Russian Company and FFC plan joint ventures *

ISLAMABAD (November 01 2006): A leading Russian Fertiliser Company, EZOT, and Fauji Fertiliser Company (FFC) plan to set up joint venture to produce urea and DAP fertilisers both for local consumption and export purposes, sources told Business Recorder here on Tuesday.

They said that the visiting Russian delegation, led by Mikhail Golubev, President of EZOT, and FFC management are expected to sign a memorandum of understanding in Rawalpindi this week. EZOT, a major producer and exporter of fertilisers, earns $1 billion annually.

Golubev met with Prime Minister Shaukat Aziz and Minister for Food & Agriculture Sikander Boson here on Tuesday and unfolded his company's plans to start joint ventures with FFC in Pakistan, which is 15 percent deficient in urea and 70 percent in DAP fertiliser to meet its growing requirements of agriculture sector.

In his meeting with Minister for Food & Agriculture, the leader of Russian delegation said that two more EZOT technical experts' delegations would visit Pakistan to finalise technical and financial details of the joint ventures.

He said that EZOT & FFC joint ventures would not only enable Pakistan to meet its domestic requirements but would also export fertiliser to other countries in the region. The Minister asked the Russian delegation to also set up tractor manufacturing units in Pakistan since its domestic industry is unable to meet the annual requirement of 35,000 new tractors.

Official sources said that Pakistan's exports to Russia rose to $45 million in 2004-05 from $21 million in 2003-04 and their economic ties and co-operation are also on the rise.


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## Owais

*Dim chances of Gwadar Port inauguration during Chinese leader's visit *

ISLAMABAD (November 01 2006): The chances for inauguration of Gwadar Port on the eve of Chinese President visit to Pakistan look remote owing to lack of finalisation of operators and persistent delay in the construction of infrastructure particularly building of roads.

Sources told Online on Tuesday that Chinese engineers had completed Gwadar deep sea port in April, 2006, and handed over it to the Pakistani authorities. The construction of remaining infrastructure including residential and commercial buildings, roads and offices was to be completed by Pakistani authorities. But they have failed to do this job so far. Therefore, opening of the port seems to remain in doldrums.

Sources informed that President General Pervez Musharraf has expressed dismay and resentment over inordinate delay in construction of infrastructure. He wanted to inaugurate the port on the occasion of Chinese President visit to Pakistan. But ministry of ports and shipping is not prepared for it and list of operators has not been finalised up till now. Government wanted to assign contract to Dubai Port World to run Gwadar port. The Chinese are also taking interest in it.


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## Neo

*Import bill up by 13.38pc in first quarter*

ISLAMABAD, Oct 31: The countryÃ¢â¬â¢s import bill rose by 13.38 per cent to $7.428 billion during the first quarter (July-Sept) of 2006-07 as compared to $6.551 billion the same period last year owing to rising imports of petroleum products, automobile and mobile phones.

Official figures released by Federal Bureau of Statistics (FBS) here on Tuesday indicated that the overall import bill did not record that much growth in comparison to last year following massive decline in imports of food items, machinery and agriculture implements.

The statistics showed that the import bill of petroleum products alone rose by 35.35 per cent to $2.172 billion during the quarter as against $1.605 billion the same period last year.

In total POL imports, the share of petroleum crude rose by 2.28 per cent to $966.997 million as against $945.402 million corresponding period last year.

In the telecom sector, the import of mobile phones increased by 57.3 per cent to $198.956 million during July-Sept as against $126.466 million the same quarter last year.

However, the import of other apparatus of telecom declined by 23.09pc to $231.556 million as against $304.658 million the same period last year.

The second biggest component of the import bill in value was machinery group. However, it declined 4.31 per cent during July-Sept 2006 over last year mainly due to a 30.78 per cent negative growth in import of textile machinery followed by 31.36pc fall in agriculture machinery and implements and 21.58pc in other machinery.

However, the import of construction machinery rose by 25.41 per cent and electrical machinery and apparatus by 30.55 per cent, power generating machinery by 47.91 per cent and office machinery by 4.18 per cent.

The import of transportation group both in CBU and CKD/SKD increased by 7.84pc to $393.288 million during the quarter as against $364.680 million the same period last year.

Food items import declined by 23.30 per cent to $533.369 million during July-Sept 2006 as against $695.432 million in the corresponding period last year. The import of milk products declined by 6.83 per cent, dry fruits by 27.32pc, sugar by 25.71pc, palm oil by 25.38pc, tea by 0.04pc and wheat by 43.71 per cent.

The import of metal groups fell 17.86 per cent during the quarter under review. In this group, gold imports dipped by 24.65pc, iron and steel scrap by 45.24 per cent and iron and steel by 20.87pc.

The agriculture and other chemical group also registered 23.33 per cent decline during the quarter over last year. The import of fertiliser fell by 46.02 per cent, insecticides by 40.45 per cent, plastic materials by 10.50 per cent and medicinal products by 21.91 per cent.


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## Neo

*UAE to build $5 bn oil refinery in Pakistan*

Islamabad, November 1, 2006

International Petroleum Investment Co, owned by the government of Abu Dhabi in the United Arab Emirates, has received approval from Pakistan's government to build a 5 billion dollar oil refinery at Hub in the southwestern province of Balochistan.

The refinery, which will be Pakistan's biggest, have the capacity to process 300,000 barrels of oil a day, Ashfaque Hasan Khan, an economic adviser to the government said.

The proposed refinery will help Pakistan meet demand for oil products, which is expected to grow 5 per cent annually to reach more than 18 million tons by 2010.

The country has five refineries producing 11.2 million tons of oil products a year.

Pakistan imports about 85 per cent of the oil its uses, half of which arrives as refined products, according to the US Energy Information Administration.

International Petroleum, which will own 75 per cent of the refinery, will start building the processor next year and complete it by 2010, Khan said.

Pak Arab Refinery Co, owned by the Pakistan government, will have a 25 per cent share.

http://www.hindustantimes.com/news/181_1833359,00020008.htm


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## Neo

Wednesday, November 01, 2006 

*ECC okays building $5b oil refinery in Balochistan*

* Auto policy, ST exemption on public transport deferred 
* Price of 80 mmcfd gas at Qadirpur gas field fixed at $0.70 per MMBTU 

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Tuesday approved establishment of a coastal oil refinery at Khalifa Point, Balochistan, by International Petroleum Investment Company of Abu Dhabi with an investment of $5 billion. 

The ECC also approved a mechanism for transfer of oil and gas production bonus as royalty to the provinces and onward to the district governments for development of areas concerned. 

The ECC, which met under the chairmanship of the Prime Minister Shaukat Aziz, considered 14-point agenda. Dr Ashfaque Hassan Khan, Adviser to Ministry of Finance after the meeting briefed the media about the decisions taken at the meeting. He informed that the ECC deferred the approval of the proposed auto policy with a direction to the Ministry of Industries and Production to consult stakeholders like Ministry of Finance, Central Board of Revenue and Board of Investment and submit revised policy within 30 days. ECC also deferred the approval of sales tax exemption on Public Transport Sector and presentation on agriculture research. 

ECC approved establishment of a coastal oil refinery at Khalifa point by International Petroleum Investment Company of Abu Dhabi with an investment of $5 billion. Dr Ashfaque further informed that this oil refinery would be export purpose refinery with a capacity to refine crude oil of 200,000 to 300,000 tonnes per day. 75 percent shares of this refinery would be held by IPIC, which is owned by government of Abu Dhabi, and 25 percent shares would remain with PARCO. The work on this refinery would start within a year and this would be operational in 2011. 

ECC also approved a mechanism of collection of production bonus and transfer of it to district governments through provinces as royalty. Dr Ashfaque told that it would be collected by the federal government and would be transferred to the provincial governments and than this bonus amount would be transferred to the relevant district governments for execution of development projects.

He informed that the ECC expressed satisfaction over the price control mechanism through Special Magistrates adopted by the provinces during the month of Ramadan and decided to continue the enforcement of it. The ECC was informed that due to the weeklong Eid holidays the transport was not available between farm to markets, which led to shortage of onion, potatoes and tomatoes in the market and also increase in their prices. The ECC was also informed that now the situation is changing with the resumption of transport in the country after Eid.

ECC was also informed that with the reduction in prices of DAP and other Phosphatic fertilisers by the ECC, their prices have came down by 21 percent to 30 percent in the country, however, the prices are still high in the Rawalpindi Region. The ECC directed the relevant authorities to monitor the market take stern action against those dealers who are charging higher prices of these fertilizers. 

The ECC also appreciated the role of Utility Stores in maintaining the prices of essential items during the month of Ramadan. It was informed to the ECC that at present 697 stores are working in the country and some 340 new stores would be operational by the end of this calendar year 2006. Licences to 100 franchise utility stores would be issued by the end of November 2006. ECC also fixed the gas price of $0.70 per MMBTU for the available 80 mmcfd gas at Qadirpur gas field. ECC decided that all four bidders would be allowed to bid for the premium on this gas and the bidder that would offer highest bid would be allocated gas quota of 80 mmcfd for 10 year on the same price.


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## Neo

*FDI hits $1.3 billion in first quarter *

ISLAMABAD (updated on: November 01, 2006, 21:07 PST): The country's foreign direct investment (FDI) amounted to $1.3 billion during the first quarter of year, thus exceeding $700 million as compared to previous year.

The State Bank of Pakistan was quoted as saying that FDI during the first quarter of previous year was recorded at $328.7 million. FDI amount for the first quarter current fiscal year was $133.2 million including PTCL sale instalments.

Energy sector attracted most of the foreign investors, as $161.8 million was invested in the oil and gas sector, while in the power sector $42.8 million of investments flowed into the country.

Besides, $282.7 million were invested in the financial sector, while portfolio investment remained at $120.6 million.

Leading FDI countries included USA, Britain, Eastern and western Europe.


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## Neo

*Rs 237.4 billion taxes collected in July-October *

ISLAMABAD (November 02 2006): The Central Board of Revenue (CBR) has collected Rs 237.4 billion during the first four months of 2006-07, against Rs 201.2 billion in the same period of last year, reflecting an increase of Rs 36.2 billion.

According to provisional figures released on Wednesday, CBR Customs Wing has shown poor performance with a shortfall of 2.3 percent in import duty collection during July-October. Overall, tax collection (provisional) during July-October 2006-07 has indicated a cumulative growth of 18 percent.

Direct taxes collection was Rs 79.6 billion, against Rs 59.3 billion, showing an increase of 34.3 percent. Indirect taxes collection was Rs 157.72 billion, against Rs 141.94 billion, showing an increase of 11.1 percent.

Tax-wise break-up shows that sales tax collection was Rs 98.37 billion, against Rs 86.56 billion, indicating a growth of 13.6 percent. Sales tax collection at the import stage was Rs 57.08 billion, against Rs 53.28 billion, showing a growth of 7.1 percent, and sales tax collection on domestic consumption was Rs 41.29 billion, against Rs 33.27 billion, showing an extraordinary growth of 24.1 percent.

The collection of federal excise duty (FED) was Rs 21.74 billion, against Rs 16.88 billion, showing an increase of 28.8 percent. The collection of customs duty was Rs 37.60 billion, against Rs 38.49 billion, reflecting a decrease of 2.3 percent.

The Board paid Rs 25.51 billion as refund and rebate to exporters during the first four months of 2006-07, against Rs 25.30 billion in the same period of 2005-06, reflecting an increase of 0.8 percent. Out of this, sales tax refund was Rs 15 billion, against Rs 11.2 billion; direct taxes refund Rs 4.6 billion, against Rs 7 billion and payment of customs duty rebate was Rs 5.8 billion, against Rs 7 billion, showing a decrease of 15.9 percent.

The collection (provisional) of federal taxes for October, 2006 is Rs 49.6 billion, which is expected to increase further in the coming days when figures would be finalised, sources said.


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## Neo

*Qatar to invest $2 billion in cattle meat projects *

ISLAMABAD (November 02 2006): Qatar is willing to invest about $2 billion in cattle fattening and establishing slaughterhouses in Pakistan, it is learnt. Sources in the Ministry of Food, Agriculture and Livestock (Minfal) told Business Recorder on Wednesday that Qatar would make this huge investment to explore untapped potential of milk and meat production.

A delegation, led by Qatari officials has requested Minfal to identify locations for setting up slaughterhouses. The Qatari Prime Minister would formally sign an agreement with government and private sector shortly, they added.

"We have informed the Board of Investment (BOI) and Prime Minister Secretariat about Qatar's intention for investing in meat production", an official told this correspondent. Qatar would invest in meat fattening, poultry breeding and meat and poultry processing units.

After meeting the domestic requirements, meat would also be exported to Middle East and European markets, he added. Meanwhile, the Livestock and Dairy Development Board (LDDB) signed a Memorandum of Understanding (MoU) with 'Grazing Grounds', Karachi, to provide technical assistance to the private sector to establish a large sheep and goat farm for meat production on main Karachi-Hyderabad Super Highway.

According to official statement, the private sector firm would also be establishing a state-of-the-art slaughterhouse, along with cold storage facilities, to provide hygienic quality meat to local consumers as well as for export.

The livestock farm would be established over 1000 acres land, with both breeding and fattening facilities for the animals. Total investment in the project would be Rs 1.4 billion, and the project is expected to fatten 175,000 animals, producing about 5250 tons additional meat annually.

The LDDB was established as a private sector company under section 42 of Companies Act and is registered with SECP. It is mandated to promote and facilitate livestock, meat, dairy and poultry development in the country. The company will be executing two livestock development projects worth Rs 3.2 billion, to be funded by the federal government for improvement of milk and meat production in the country.

The signing ceremony was attended by, Federal Minister for Food, Agriculture and Livestock Sikandar Hayat Khan Bosan and Minfal Secretary Ismail Qureshi.


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## Neo

*ADB forecasts seven percent GDP growth for fiscal year 2007 *

ISLAMABAD (November 02 2006): The Asian Development Bank (ADB) on Wednesday forecast 7 percent GDP growth for FY 2006-07. Pinpointing the 'grey' areas of economy, it projected that the current account deficit would touch $8.5 billion (5.9 percent of GDP). However, it saw notable progress in curbing inflation.

Inflation is forecast to decline in FY2006-07 to average 6.5 percent. However, this moderation depends crucially on central bank's implementing a tighter monetary policy to keep domestic demand in check. Already, in July, SBP has tightened its stance by raising its policy rate (the 3-day repo rate, which is its rediscount rate) from nine percent to 9.5 percent, and adjusted upward both the bank's cash-reserve requirement ratio and their statutory liquidity requirement ratio.

The ADB in its 'Pakistan Economic Update (July 2005-June 2006)', an economic report issued on Wednesday by ADB resident mission in Pakistan, said that Pakistan's economy is advancing strongly, and forecast that main commodity producing sectors are expected to pick up and the services sector is likely to maintain its robust growth.

The projected high growth is underpinned by a substantial increase in investment last year and a further increase in investment forecast for the current year. Expected stabilisation of oil prices in the year will also help growth. Substantial public sector investment in irrigation in the last several years and a sharp increase in import of agricultural machinery last year is expected to boost agriculture output, as will the duty-free import of tractors, enhanced subsidy on fertilisers, and the new package of incentives for the livestock sub-sector, all announced in the 2006/07 budget.

Heavier than normal rains in the monsoon season are expected to help the water-intensive rice and sugarcane crops. Greater moisture in the soil will also improve the prospects of the wheat crop. However, the cotton crop could be adversely affected by greater moisture, which makes the crop more vulnerable to pest attacks. On balance, the agriculture sector is projected to grow by 4.5 percent in 2006-07.

The industry sector is expected to expand by 9 percent. The large-scale manufacturing, which accounts for almost half of the value-added in the industry sector, is expected to grow by 11.0 percent, supported by new investments in textiles, cement and fertiliser industries, and a number of incentives provided in the 2006-07 budget.

The projected higher sugarcane crop will boost the sugar industry. The two other important sub-sectors included in the industry sector, construction and electricity and gas are also projected to show robust growth.

It says, "The significantly enlarged size of the public sector development program, reconstruction of areas affected by last year's earthquake, and greater supply of cement due to its duty-free import from India permitted since April 2006, will all boost construction in 2006-07. Hydel generation, which has a relatively larger value-added component than thermal electricity, will get a boost from greater availability of water in the two main water reservoirs. Finally, substantial foreign investment in the past few years will boost the oil and gas sector".

In services, heavy foreign investment in telecoms in recent years will help the sub-sector maintain fast momentum in FY2006-07. Strengthened by reforms and Privatisation, the financial services industry will also maintain robust growth. Nevertheless, services sector growth as a whole is projected to slow to a more sustainable 7 percent in 2006-07, following the very rapid rises of last two years.

In the FY2006-07 budget, extension of the tax net to real estate transactions and raised tax rates on some financial services is expected to increase receipts at a very healthy double-digit rate, while non-tax receipts are likely to exceed the budget estimate. Current expenditure, however, may exceed the budget target for two main reasons: a likely overrun in defence expenditure due to ongoing operations against militants; and possibly, greater domestic debt servicing.

*GRAY AREAS:* While pinpointing the gray areas, the ADB identified potential threats to Pakistan's medium-term economic growth.

The ADB said that the growing current account deficit, continuing high inflation, and emerging power shortages are potential risks to the country's medium-term economic prospects and any deterioration in the law and order situation could add to adverse affect on medium-term economic growth.

More specifically, the end of China specific safeguards imposed by the USA and EU against textile and clothing (T and C) imports in 2008 may further weaken Pakistan's textile export prospects, it added.

However, the bank forecast that due to continued robust growth in global trade, the China-specific safeguards, and the lower anti-dumping duty on bed linen imports from Pakistan by EU will all boost exports, which are likely to increase by 13.0 percent in 2006-07.

The update further says that a possible further increase in the oil price, in case of sanctions against Iran for example, could also hurt Pakistan's economic prospects.


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## Neo

*State Bank may ease interest rates: steady downtrend in core inflation *

KARACHI (November 02 2006): With import growth reined in and a steady downward trend achieved in (non-food, non-energy) core inflation, the State Bank of Pakistan may be in a position to reverse its monetary policy stance and ease interest rates as early as first quarter of 2007, say economic experts.

This is, however, contingent on continuation of current trend in data depicting a fairly marked cooling off in the economy's overheating.

*INFLATION:* September inflation (year-on-year) came in lower than expected (8.73 percent vs 8.93 percent in August), despite strengthening of pressure in food prices. While the momentum in food inflation is likely to continue over the next 2-3 months--due to the recent disruption in the supply chain as well as the (moderate) impact of the increase in the support price of wheat--the trend in non-food inflation may continue to counter it.

The largest item ex-food in the CPI basket, house rent, has depicted a continuous weakening trend since late 2005. This is expected to continue into 2007 on the back of lower input prices (cement, steel) and stable-to-lower house prices. Apart from the CPI, the other major inflation indicator--WPI--is also depicting softness.

More importantly, from a monetary policy perspective, the steady downward path of core inflation (non-food, non-energy) is well established, with September Y/Y core inflation (6.16 percent) at its lowest level since late 2004. Further, the pace of decline in core inflation appears to have accelerated since June this year.

*MONETARY:* Monetary data so far for FY07 is mixed, with M2 as well as reserve money (RM) growth significantly higher than corresponding period FY06, but utilisation of credit by private sector substantially slower. Expansion in M2 till October 7 has been recorded at 1.84 percent (vs -0.69 percent), while RM growth is at 9 percent (vs 2.1 percent). Credit to private sector is up 1.45 percent compared to 3.9 percent in the same period of FY06. Net government bank borrowing is up 7.5 percent and, combined with a lower drawdown of Fx reserves, accounts for the faster expansion in M2 to-date.

*BALANCE OF PAYMENTS:* Perhaps the most heartening bit of data from SBP's perspective are the July-September import numbers. According to FBS data, import growth has slowed to 13 percent for the first quarter, well below its rate of increase in FY06 (around 40 percent). A slide in world oil prices, combined with a decline in the value of machinery imports, has been major contributor.

At this pace, import growth for FY07 is likely to come in below the forecast of 15 percent. Together with inflation, reining in the import growth is a key target of central bank's policy. (It should be noted that while a simultaneous slowdown in exports is likely to translate into continued upward pressure on the current account, the operational target of monetary policy is more than likely limited to curtailing import growth).

All in all, while SBP is likely to miss the full year's target for consumer inflation (6.5 percent), a likely moderation in underlying economic conditions during FY07, combined with an entrenchment of the declining trend in inflation indices (particularly in non-food non-energy prices) is likely to lead to sufficient basis for a reversal of course in monetary policy by early 2007. This is contingent, however, on continuation of current trends in data.

While the overall outlook is more benign now than a few months earlier, say the economists, the risks posed by continued strong expansion in reserve money (M0) and the central bank's NDA need to be carefully monitored.


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## Neo

*Gulftainer in Dh183m Pakistan joint venture *

Sharjah: Sharjah-based port management firm Gulftainer has launched a Dh183.5-million joint venture in Pakistan to provide land cargo transport services amid an increase in the country's foreign trade.

Set up in equal partnership with Karachi-based logistics company Pak Shaheen Group, the joint venture will move cargo between Pakistani cities and ports.

Known as Gulftainer MTI, the company aims to become the largest logistics and transport firm in Pakistan.

Gulftainer general manager Peter Richards said the venture will benefit from an absence of strong competition in the fragmented logistics sector of Pakistan.

"The intention of this joint venture is to invest in new equipment and systems, with the aim of revamping and enhancing inland transportation within Pakistan," the partners said in a statement.

"Healthy economic environment in Pakistan has allowed for a much greater amount of import and export volume to pass through Karachi's terminals. 

"This new joint venture aims to provide improved transportation alternatives," said Yusuf Farrukh, chief executive officer of Pak Shaheen Group.

Initially, 22 trucks equip-ped with global positioning system (GPS) will be deployed, but the fleet size will increase to 100 by the end of 2007, Richards said.

All the vehicles will be linked to an advanced information technology system, allowing shipping lines, importers and exporters to monitor their cargoes throughout Pakistan.

The company expects to move 2,000 TEUs (twenty-foot equivalent container unit) per month. It will hold talks with Pakistan car manufacturers on distributing their vehicles throughout the country.

The Pakistani venture is Gulftainer's first foreign road transport operation. It manages the container terminals of Sharjah and Khor Fakkan and operates a fleet of trucks in the UAE.

Richards said Gulftainer wants to use its UAE-gained experience of dealing with shipping lines and their customers in its overseas expansion.

Pak Shaheen Group and Gulftainer also plan to develop an inland container depot (ICD), container freight station, refrigeration parks and cold stores as part of the $183.5-million spending plan.


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## Neo

*China to help Pakistan drill oil, gas wells *

ISLAMABAD: China will help Pakistan initiate an aggressive drive to explore oil and gas to meet the countryÃ¢â¬â¢s energy requirement, a senior government official told The News.

Chinese companies have demanded 48 concessions to drill wells as part of efforts to explore oil and gas across the country.

The official said Ã¢â¬ÅPakistan has limited drilling capacity as it has only 30 rigs that is why the country is unable to find oil and gas reserves at the required pace.Ã¢â¬Â

At present, 19 companies have 53 drilling licences, including 14 foreign companies, which are exploring oil and gas in the country.

The official said Chinese Petroleum Chamber comprising 1,000 members had shown its desire to participate in the drive to drill oil and gas wells. Ã¢â¬ÅChinese Petroleum Chamber has 2,000 rigs, of these 500 are capable of drilling more than 3,000 metres deep to explore oil and gas reserves.Ã¢â¬Â

The official said Pakistan authorities have been asked to attract Chinese companies, urging them to bring in at least 200 rigs in the country for expediting the pace of drilling.

The official said a task force would be constituted to negotiate with Chinese companies. To a question, the official said PakistanÃ¢â¬â¢s policies were not made specifically for China as these were open to others as well.

The official said Pakistan had made a plan to increase its capacity of drilling to 500 wells in 2005-10, 1,800 in 2010-20 and 3,000 wells in 2020-30.


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## Neo

*Neelum-Jhelum hydropower project* 

Wapda selects Chinese consortium

ISLAMABAD: In the much-awaited, but positive development, WAPDA has finalised a Chinese consortium China Gezhouba (group) Co Ltd China and CMEC, China (CGGC-CMEC) for construction of the much delayed, but strategically most important project of 969 MW Neelum-Jhelum hydropower, The News has learnt.

Ã¢â¬ÅWe have, to this effect, recommended to Government of Pakistan for formal approval of a Chinese consortium CGGC-CMEC out of 4 companies, which participated in the international competitive bidding for the project,Ã¢â¬Â a WAPDA official said.

The Neelum-Jhelum hydropower project is so significant and its immediate completion is essential, otherwise India, in case of earlier completion of the Kishanganga hydropower project, will have the priority water rights over the Neelum river under the 1960 Waters Treaty.

The Neelum-Jhelum hydropower project is proposed on the Neelum river, which is called the Ganga river in held Kashmir and on the same river, India is building the Kishanganga hydropower project.

India is reported to have completed 60-65 per cent construction of Kishanganga hydropower project, but PakistanÃ¢â¬â¢s authorities concerned so far have miserably failed to initiate the Neelum-Jhelum hydropower power project. Ã¢â¬ÅPakistan now needs to embark up this project with speedy pace so that this mega project could be completed prior to the completion of Kishanganga project to ensure the priority water rights.

WAPDA argued in its recommendation that CGGC-CMEC has come up with the offer to complete the mega project at a cost which is reduced 17 per cent than the cost offered by runner up bidder China International Water & Electric Corporation, China (CWE) JV to complete the project.

He said that based on the prices in 2005, the cost of construction works of the project has been estimated at $1.1 billion and CGGC has come up with $1.3 billion bid while CWE has come up with the $1.8 billion.

The CGGC-CMEC will arrange funding of $800 million for the project while CWE JV had offered to arrange $700 million to complete the project.

Ã¢â¬ÅWe have recommended to Ministry of Water and Power the name of CGGC-CMEC, a Chinese company to initiate construction of the project for approval,Ã¢â¬Â a senior WAPDA official said. He said that after evaluating the four bidders terms sheets for the project, WAPDA made this recommendation to the government.

He said that four companies Frontier Works Organization, Pakistan (FWO); Synohydro Corporation, China-SHC-HPE (JV); China International Water & Electric Corporation, China (CWE) JV and China Gezhouba (group) Co Ltd, China and CMEC, China (CGGC-CMEC Consortium) participated in International Competitive Bidding (ICB) which was held in Lahore.

National Engineering Services of Pakistan (NESPAK) has already declared Frontier Works Organization supported by WAPDA and other government institutions such as Planning Commission as non-qualified, as FWO did not meet the minimum qualifying criteria.

He said that SHE-HPE joint venture did not submit the tender security and is considered as non-responsive.


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## Neo

*Two more marble cities to be set up in Balochistan*

QUETTA, Nov 1: Balochistan will have two more marble cities in Khuzdar and Dalbandin while three modal centres would be set up in the province at a cost of Rs270 million with funding from the federal government for the development of the mineral sector.

The decision to this effect was taken at a high-level meeting held here, which was attended by Chief Minister Jam Yousuf and Federal Minister for Industry and Production Jahangir Tareen.

The meeting reviewed the issues related to mineral development in the province and the progress made on the implementation of the programme for cementing the water tanks and drains.

The meeting was briefed on the plans for exploring minerals, especially marble, grained, onyx and other precious stones and their export to the international markets.

The meeting was informed that the government had set up Pakistan Stone Development Company with the collaboration of the private sector that would take steps for exploration and development of minerals in the country, especially in Balochistan, promoting investment in this sector and its access to the international markets.

The meeting was told that the federal government would establish a modern centre at Gadani Marble City at a cost of Rs140 million that would provide training and marble products manufacturing facilities in the area. The provincial government would provide land for the centre.

It was decided in the meeting that two more marble cities would be set up in the province while more facilities would be extended in Loralai for exploration and development of minerals with the financial help of the federal government.

It was further decided that the federal and provincial governments would jointly take steps for providing basic infrastructure, including supply of electricity in the mineral-rich areas of Balochistan and special arrangements would be made for providing power supply to the Chagai district.

The meeting also reviewed the pace of implementation on the presidentÃ¢â¬â¢s programme for cementing water tanks and drains in the province.

It was informed that during last one year 3,755 drains and water tanks were cemented in the province at a cost of Rs1 billion and up to June next year 4,000 more drains and water tanks would be cemented.

Federal Minister for Industry and Production Jahangir Tareen informed the meeting that the steps for the development of mineral resources in Balochistan would continue and the federal government would provide maximum financial resources and technical assistance to the province in this regard.


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## Neo

*ADB warns Pakistan of economic risks*

ISLAMABAD, Nov 1: The growing current account deficit, continuing high inflation and the emerging power shortages are potential risks to the countryÃ¢â¬â¢s medium-term economic prospects, warns the Asian Development Bank (ADB).

Ã¢â¬ÅAny deterioration in the law and order situation could also adversely affect medium-term growth,Ã¢â¬Â further says the latest ADB Economic Update finalised in late October 2006.

It added that the end of China specific safeguards imposed by the United States and European Union (EU) against textiles and clothing (T&C) imports in 2008 may further weaken PakistanÃ¢â¬â¢s textile export prospects.

Ã¢â¬ÅThe current account deficit is projected to increase to $8.5 billion, or 5.9 per cent of GDPÃ¢â¬Â.

A possible further increase in oil prices, in case of sanctions against Iran for example, could also hurt PakistanÃ¢â¬â¢s economic prospects, the report feared.

With pro-growth government policies, continuous increase in the public sector development programme, and projected increase in total investment, the medium-term outlook for the economy is positive and the growth target of 7-8 per cent looks feasible.

The real GDP growth in 2006-07, the update said, is projected at 7.0 per cent. The main commodity producing sectors are expected to pick up and the services sector is likely to maintain its robust growth.

The projected high growth is underpinned by a substantial increase in investment last year and further increase in investment forecast for the current financial year. Expected stabilisation of oil prices will also help growth.

Substantial public sector investment in irrigation in the last several years and a sharp increase in import of agricultural machinery last year is expected to boost agriculture output, as well the duty-free import of tractors, enhanced subsidy on fertiliser, and the new package of incentives for the livestock sector, all announced in the 2006-07 budget.

Heavier than normal rains in the monsoon season is expected to help the water-intensive rice and sugarcane crops. Greater moisture in the soil will also improve the prospects of wheat crop.

Ã¢â¬ÅHowever, the cotton crop could be adversely affected by greater moisture, which makes the crop more vulnerable to pest attacks. On balance, the agriculture sector is projected to growth by 4.5 percent in 2006-07,Ã¢â¬Â the update believed.

The industry sector is expected to expand by 9.0 per cent. The large-scale manufacturing, which accounts for almost half of the value added in the industry sector, is expected to grow by 11.0 per cent, supported by new investment in textiles, cement and fertiliser industries, and a number of incentives provided in the 2006-07 budget.

With the projected high GDP growth, extension of tax net to real estate transactions, and increase in tax rates on some financial services, tax receipts are expected to maintain a robust double-digit growth in 2006-07. Non-tax receipts are expected to exceed the budget estimate, as the estimate of receipts from the USA for logistic support for the war in Afghanistan appears conservative.

Current expenditure is also expected to exceed the budget, mainly because of expected overrun in the interest payment on domestic debt. The budgeted decline in interest payment on domestic debt is not likely to be achieved, considering the increased domestic debt stock at the beginning of the year, the higher planned borrowing from the banking system for the financing the budget, and the expected further increase in interest rates. On the balance, the fiscal deficit is likely to increase to 5.0 per cent of the GDP in 2006-07,Ã¢â¬Â the update said.

The target for fiscal deficit for the current financial year has been fixed at 4.5 per cent of the GDP.

Inflation is expected to decline in 2006-07, as monetary policy is further tightened, the supply of food is augmented by the projected higher growth in agriculture, and the oil price stabilises. The low monetary growth in 2005-06 relative to the growth of nominal GDP will also have a lagged dampening effect on inflation in 2006-07 is expected to decline to 5.6 per cent.

Import growth is likely to decelerate in 2006-07 because of expected stabilisation of oil prices and lower demand for consumer durables because of higher interest rates. However, the projected high economic growth and substantial increase forecast in investment will sustain high growth of imports, which is expected to remain at about 15.0 per cent.


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## Neo

*Pakistan, Russia cooperate in rail sector*

MOSCOW, Nov. 2 (UPI) -- Russia and Pakistan plan to cooperate in rail projects that include linking Pakistan with Iran and Afghanistan. 

Pakistan's Railways Minister Sheik Rashid Ahmed, who is visiting Russia, met with his counterpart Vladimir Yakunin and Transportation Minister Alexander Misharin to discuss cooperation, reports the Pakistan Times. 

Ahmed said Pakistan's current projects include laying tracks to connect Quetta in Baluchistan and the port city of Gwadar, purchase of 1,000 to 2,000 freight cars, locomotives and the installation of modern signal system. 

Yakunin said Russian Railways was interested in taking part in all projects of expansion and modernization of Pakistan's railways network and initiate joint ventures, the report said.


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## Owais

*SBP to maintain tight monetary stance *

KARACHI (November 03 2006): The State Bank of Pakistan (SBP) has said that it will continue to maintain its tight monetary stance in order to bring down inflation to the FY07 annual target of 6.5 percent.

According to SBP economic assessment, the underlying excess demand pressures in the economy have been curbed substantially with a lagged effect following sequential upward adjustments in reserve requirements and policy rate (SBP three-day Repo Rate) supplemented by proactive open market operations.

Early results for first quarter of FY07 confirm that there has been visible, albeit lagged impact of monetary tightening on core inflation which has been brought down to 6.2 percent in September 2006 from 7.6 percent in September 2005. However, there are a number of factors, which require SBP to maintain its current monetary stance.

First, the year-on-year monetary expansion was 18 percent in mid-October FY07 compared with the Credit Plan FY07 target of 13.5 percent. The monetary expansion is higher than envisaged due to higher level of government borrowing, which also seems to be squeezing the private sector credit.

There are concerns from certain quarters that the private sector credit growth has slowed down excessively and that this will stifle economic growth. However, the latest trends indicate that private credit growth is growing at 20.4 percent year-on-year basis, which is above the Credit Plan FY07 target of 18.4 percent. This trend indicates that the private sector credit growth is consistent with real GDP growth target of 7 percent for FY07.

Secondly, while the tight monetary policy has certainly helped significantly reduce inflation in the country, CPI inflation nonetheless remains high.

THE FOLLOWING RISKS TO THE DOMESTIC INFLATION OUTLOOK ARE WORTH NOTING: 

(1) While core inflation measured by non-food non-energy eased in September 2006, core inflation measured by trimmed mean moved up in September 2006. More importantly, the levels of core inflation measured by both methodologies are above 6 percent, and lower levels are clearly more desirable.

(2) Also, while non-food inflation has declined, it remains high at around 7 percent in September 2006.

(3) Similarly, the volatility in food inflation is another concern. The inflation in food prices has been in double-digits since August. While these prices are less sensitive to monetary policy, it should be kept in mind that the impact of rising food prices will certainly affect inflationary expectations in the country with a lag.

(4) It must also be kept in mind that there is little evidence that the recent decline in international energy prices will substantially reduce inflationary pressures in the economy, as domestic prices of key fuels remains unchanged, and

(5) Finally, international prices of non-fuel commodities, including metal remain strong, which could add to domestic price pressure. In particular, this could weaken (or even reverse) the deceleration in the House Rent Index.

Moreover, in modulating monetary policy the State Bank also considers other macroeconomic factors such as strength in aggregate demand and indicators of fiscal and external sector performance.


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## Owais

*World Bank approves new water action plan for Pakistan *

ISLAMABAD (November 03 2006): The World Bank has approved a new water management action plan to benefit poor farmers, who are tailenders of River Indus. For decades, thousand of poor families have suffered because of this lacuna.

The action plan comes in response to the panel investigation requested by the residents of Badin. The residents claimed they were adversely affected by the World Bank's failure to comply with certain operational policies in connection with the World Bank-financed Pakistan National Drainage Program (NDP) project and earlier Left-Bank Outfall Drain (LBOD) project.

In its investigation, the panel found that the design of the LBOD project underestimated prevailing conditions and the risk of extreme meteorological events. This contributed to the breakdown of the LBOD system and suffering of the local people in lower Badin district, and to significant adverse impacts to important fisheries and wetland habitats known as "dhands".

The panel found instances of non-compliance with provisions of several bank policies, including environmental assessment, natural habitats, indigenous people and cultural property.

After about five decades of bank's support in water sector, it has been realised the weaknesses in its old water management plan. Inspection panel chairperson Edith Brown Weiss said: "The panel has heard the voices of poor people suffering at the tailend of the drainage system in southern Sindh, and seen the coastal environment's degradation. We appreciate the importance of the bank involvement in the water sector in Pakistan. Our report, however, highlights the need to take a holistic view of water and drainage systems to ensure risks are identified and assessed and harm to people and the natural environment minimised. We trust that the bank's action plan will be implemented in close consultation with the affected people."

The panel also found non-compliance in the area of bank supervision, determining that it had been less than adequate in respect to the LBOD system, and that people in southern Badin "fell outside the field of vision of those, who designed and appraised the project".

The bank's board of executive directors heard details of bank management's action plan to address extreme poverty, impacts on the affected population and environment and help manage the severe flooding risks in the lower Indus Basin, particularly in Badin and Thatta districts, says a press statement released by the bank.

World Bank president Paul Wolfowitz said: "While these older bank-supported projects did succeed in creating opportunities for poor people in Sindh by expanding agriculture dramatically, the inspection panel has shown that the World Bank and everyone involved in projects could have done a better job of mitigating risks and impact of natural disasters on the poor within and outside the project areas."

"The inspection panel has recognised the importance of the bank remaining committed to helping Pakistan improve its water resource management, and our future work will be strengthened by lessons learned from the LBOD and NDP projects."

In its investigation, the panel found that the design of the LBOD project underestimated prevailing conditions and the risk of extreme meteorological events.

The bank's action plan is designed to address with urgency the plight of the poorest people of the lower Badin and Thatta districts and help them deal with the risks inherent in living on this exposed and low-lying plain.

The bank-supported Pakistan Poverty Alleviation Fund, which works according to development choices made by the affected communities themselves, is already at work in the area with $18 million for community projects to build livelihoods and small-scale infrastructure. The program will focus special attention on those people close to the LBOD for whom the panel found that the LBOD was a contributing factor to flood damage.

In addition, a flood response plan will be worked out with local officials to ensure better management of this risk, including early warning, evacuation plans and flood refuge structures. The bank will report on progress before the next monsoon season in June 2007.

In the medium and longer terms, coastal zone and River Indus management will be a priority focus. The board also emphasised importance of the World Bank remaining engaged in Pakistan's challenging water sector and managing risks associated with large complex projects.

In recent years, a number of severe meteorological events have affected Sindh, including the heavy cyclone in 1999, which caused extensive damage to components of the LBOD system, the Tidal Link canal and the Cholri Weir. In 2003, the largest rainstorm on record struck southern Sindh, causing widespread flooding and loss of life across the area as far as Karachi.

"At the time the project was designed, the emphasis was on getting the biggest benefit for farmers by reducing salinity and water-logging to expand irrigated areas," said John Wall, World Bank country director for Pakistan.


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## Owais

*Chinese firm finalises plan to set up power plant in Thatta *

KARACHI (November 03 2006): A China-based company has finalised its plan to set up 250MW coal-fired power plant with the estimated cost of 400 million dollars at Sonda-Jherruk in Thatta district.

Sources told Business Recorder that China National Machinery Import and Export Corporation (CMC) had completed feasibility work for setting up 250MW coal-fired power plant with the cost of $400 million and soon strike a deal with the government for the purpose.

The deal would be another breakthrough following the Shenhua Group of Companies, a China state run company, which had restarted negotiations with the government for setting up 1000MW coal-fired power plant in Thar with the investment of one billion dollars.

A CMC delegation recently visited coal identified areas in Sindh, including Sonda-Jherruk in district Thatta. The main purpose of the visit was the collection of investment framework for coal field and power house on basis of build, operate and transfer (BOT), and investigation of coal-field site in Sonda-Jherruk. The delegation after the visit had held meetings with several government officials about the facility provided at the site.

The reserves at Sonda-Jherruk, the second largest in Sindh, comprising more than seven billion tonnes coal, is located at a distance of around 150-kilometre in north-east of Karachi and about 30-kilometre in south-east of Hyderabad, where all required infrastructure have been made provided by the provincial government.

The company had signed a memorandum of understanding (MoU) in July this year with the Sindh Coal Authority to conduct detailed feasibility study for the development of a coal mine of one million tons annual production capacity.

According to the MoU, the CMC had to arrange investment and ensure availability of coal deposits on long-term basis like 30-40 years to meet the requirements and establishment of 250 MW indigenous coal-fired power plant at Sonda-Jherruk field. The project would generate 2,000 to 3,000 jobs for local people, sources said.

Sources said the present government was keen to utilise natural resources to overcome energy shortages in the future. On the directive of President Pervez Musharraf, the government had accelerated the efforts to plug the power gap through coal reserves.


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## Owais

*Shaukat welcomes investment from Kuwait and GCC *

ISLAMABAD (November 03 2006): Prime Minister Shaukat Aziz on Thursday said Pakistan is a growing economy with attractive opportunities for investors and welcomes investment from Kuwait and other Gulf Co-operation Council (GCC) countries.

He was talking to deputy chairman and managing-director of Noor Financial Investment Company of Kuwait, Naser Al Marri, who called on him at the Prime Minister house here. The Prime Minister said investment opportunities in the country are greater than ever before. Naser Al Marri informed the Prime Minister the group is considering several projects.


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## Owais

*'Pakistan's six percent annual growth result of micro-finance' *

ISLAMABAD (November 03 2006): Chief Executive Pakistan Poverty Alleviation Fund (PPAF) Kamal Hyat has claimed that six percent annual growth of Pakistan is the result of micro-finance and there is an increase of active borrowers by 85 percent.

The size of micro-finance sector in Pakistan is estimated at about Rs nine billion, and Rs five billion savings reaching around 800,000 clients, announcing PPAF as the premier financier of micro-finance in Pakistan today driving its growth and expansion.

This was disclosed at the Micro-entrepreneurship Award 2006 programme jointly organised by PPAF and Citigroup Foundation launched by Citigroup here on Thursday.

While speaking at the contribution in alleviating poverty, Hyat said, "issues relating to the poor and under-privileged are central to the nation's progress.

The Micro-entrepreneurship awards programme is a key effort in the quest for generating awareness of the significance of micro-finance particularly in a country like Pakistan." Out of one billion poor population of the world ten percent has access to micro-finance facility, he said.

Success of any programme lies in the support from the government, which he said, remained immense and sponsored by, while World Bank is the main financier with Rs 432 million out of total Rs 600 million. In addition, free market conditions play vital role, he added.

Kamal Hyat said, PPAF has managed to raise Rs 250 million during the last five years in micro-financing with major ratio of 80 percent going to the rural community.

Responding to another question, he said that PPAF is responsible for petty loans averaging Rs 12 - 15,000 to a maximum limit of Rs 30,000 targeting agriculture and dairy farms of the poor community so they could improve their living and become independent, he added.

He claimed that interest rate on these loans is the lowest in the world with 16-18 percent mark-up in Pakistan. Giving example, he said that the interest on loans is 30 and 60 percent in Bangladesh and Latin America respectively. Elaborating further, he said that apart from offering loan PPAF is also responsible for capacity building of the people and providing water facility free of charge, which he speculated to have brought the interest rate as low as 3-4 percent in real terms.

According to him, PPAF has reached 22,000 villages out of 40,000 in 108 districts of Pakistan where it is functioning actively. The rest of the villages are also availing of the facility but no proper offices of PPAF exist there. This constraint is mainly due to financial resources, he added.

He said, we have achieved 100 percent recovery. On the question of auditing of accounts, he said, proper internal and external auditing is carried out by the World Bank itself twice a year and monthly internal auditing is a routine feature of the organisation, he added.


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## Owais

*Pakistani and Iranian ministers meet on margins of ECO moot *


TEHRAN (November 03 2006): Iran's Interior Minister Mostafa Pour Mohammadi in talks with visiting Pakistani State Minister of Interior Zafar Iqbal Warraich said giving attention to regional security was "strong point" in meeting of interior ministers of Economic Co-operation Organisation (ECO) member states here dubbed "Security, Stability and Sustainable Development".

Zafar Warriach, along with three other ECO member states and five deputy ministers as well as Uzbekistan's ambassador to Tehran attended meeting, which ended on Thursday.

Promotion of economic co-operation among ECO members, money laundering, organised crime and illegal immigration are major issues discussed. ECO comprises Iran, Pakistan, Turkey, Kyrgyzstan, Kazakhstan, Uzbekistan, Azerbaijan, Afghanistan, Tajikistan and Turkmenistan.

Pour Mohammadi said promotion of Tehran and Islamabad economic co-operation, particularly in energy, would help deepen their bilateral ties. Exchange of mutual experiences in security will help strengthen Tehran and Islamabad campaign against drugs and terrorism.


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## Owais

*Spending on electrification, social security and welfare declines: ADB *

ISLAMABAD (November 03 2006): The Asian Development Bank (ADB) has noted that though the government's pro-poor public expenditure under its poverty reduction strategy during 2005-06 has increased, yet spending on village electrification, social security and welfare and food support programme have declined substantially.

The Pakistan Economic Update (July 2005-June 2006) released on Wednesday by ADB Pakistan resident mission states that Pakistan's PRSP expenditure continued rapid increase in FY 2006, when it touched Rs 258.5 billion compared to Rs 192.5 billion in FY 2005.

As a percentage of GDP, PRSP expenditure increased from 2.9 to 3.4 percent and the government share of poverty-related expenditure in total public expenditure also increased from 25.1 percent to 27.6 percent.

However, the bank noted that expenditures on village electrification which plays an important role in boosting economy of rural areas where the bulk of the poor lives has enormously declined by 52.4 percent to one billion rupees. Expenditures on social security & welfare and food support programme have also declined by 28.1 percent to Rs 2.3 billion and 22.2 percent to Rs 2.1 billion respectively during the period under review as compared to last fiscal year.

THE UPDATE STATES PRO-POOR EXPENDITURE HAS BEEN GROUPED UNDER THE FOLLOWING HEADS: improving access of the poor to market and community services, fostering human development, accelerating development of rural areas, improving governance, and providing safety nets.

Expenditures under all these heads recorded increase in FY 2006, with the sharpest increase being in expenditures on social safety net (133.4 percent) due to unplanned relief and rehabilitation operations in areas affected by the 8 October 2005, earthquake which resulted in sharp increase in expenditure on natural calamities (included in safety nets) to Rs 12.1 billion in the first three quarters of 2005/06 from Rs 408 million in the same period of 2004/05.

On development of rural areas, expenditures grew by 42.3 percent to Rs 48.8 billion, on human development it increased by 29.7 percent to Rs 124.8 billion, access to market and community services increased by 29.5 percent to Rs 25.9 billion and expenditure on governance increased by 19.5 percent to Rs 41 billion during the period as compared to last fiscal year.

Of the 17 sectors identified for pro-poor expenditure, education, health, population planning, social security and social welfare, water supply and sanitation (WSS), and rural development, including village electrification, may be considered as core areas. Almost three-fifths of the total poverty-related expenditure is incurred on these sectors.

However, total expenditure on these core areas, at Rs 143 billion, represented an increase of 25.7 percent compared with first three quarters of 2004-05, which was much lower than the overall increase in PRSP expenditure. This does not reflect well on priorities assigned among sectors identified for poverty reduction.

Expenditure on education, which accounts for 37.4 percent of the total pro-poor expenditure, increased by 30.1 percent to Rs 96.8 billion in the first three-quarters of 2005/06. As a percentage of GDP, it increased from 1.1 to 1.3. More than one-third (37.2 percent) of the increase in expenditure on education was due to sharp increases in development expenditure on secondary and higher education (college and university education).

Development expenditure on general college and university education increased sharply to Rs 8.9 billion from Rs 558 million in the corresponding period of the preceding year, reflecting the high priority given to higher education by the Government.

Expenditure on health increased by 19.2 percent to Rs 23 billion. Expenditure on hospitals and preventive health measures, which together account for the bulk (87.3 percent) of the expenditure on health, recorded increases of 17.4 percent and 22.4 percent, respectively. Mother and child health expenditure more than tripled to Rs 155 million.

The shift in emphasis from curative to preventive health care facilities is a positive development. Both current and development expenditure on rural water supply and sanitation, which play a significant role in improving the health of the population, also recorded a sharp increase in the first three quarters of 2005-06.

Expenditure on irrigation and roads and highways continued to increase at a rapid pace. However, expenditure on rural calamities (included in safety nets) to Rs 12.1 billion in the first three quarters of 2005/06, electrification declined to less than half of the amount spent in the corresponding period of 2004/05.

In addition to pro-poor budgetary expenditure, the government provides safety nets for the poor through transfers from the Zakat (an Islamic welfare fund) and Employees Old age Benefits Institution (EOBI), as well as microcredit disbursed by the Pakistan Poverty Alleviation Fund (PPAF) through non-government organisations, Khushali Bank (KB), and Zarai Taraqqiati Bank Limited (ZTBL).

Disbursement of microcredit, which had more than doubled in the preceding two years, slowed down significantly, increasing by only 4.7 percent in the first three-quarters of 2005-06.

Microcredit disbursed through partner organisations of PPAF, which accounts for 70.1 percent of total microcredit, declined by 6.6 percent. Disbursement by KB, however, increased by 31.5 percent. The number of female recipients of microcredit increased by 35.1 percent, while that of male recipients declined by 9.6 percent. Female recipients, at 50,244, constituted 38.4 percent of the total beneficiaries of the various microcredit programmes.


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## Owais

*Rs 25 billion projects to be completed in Gwadar *


ISLAMABAD (November 03 2006): Work on plethora of development projects worth more than Rs 25 billion has been expedited in Gwadar aiming to transform it into a modern and developed city equipped with all basic amenities.

The construction of 350-bed hospital with the estimated cost of Rs 550 million, 250 acre sports complex, central park and a number of small recreational parks on western side would be completed within a period of next five years, PTV reported.

Work is nearing completion on two main boulevards of the city, Jinnah Avenue and Awaran Avenue. Numerous under-construction high rise buildings are enhancing the charm of the city and also providing job opportunities to the locals.

The government has recently allocated an additional amount of Rs one billion for expediting infrastructure development ventures being continued on accelerated pace in the city. Likewise an additional Rs one billion has been provided for the Gwadar international airport.

Gwadar Port would also have two modern fish harbours and would soon be the biggest port in the region making Pakistan the maritime hub for the region linking Europe and the West with the Central Asian states.

Planning has been finalised to set up water purification plant having capacity of providing 35 million-gallon clean water to the inhabitants. The government has allotted 2,000 acre of land for establishing Gwadar Industrial state.


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## Neo

*Pakistan ahead of many nations in reforms' implementation: PM *

LAHORE: November 03, 2006: Prime Minister Shaukat Aziz said here on Friday that Pakistan is ahead of many countries in implementing economic reforms and improving governance.

"Pakistan has been ranked as one of the top ten reformers globally, and the top reformer in the South Asian region," he said while delivering the keynote address at the regional conference of Young Presidents Association (YPO) at a local hotel.

Aziz said that the country is now very well positioned to make the best of available opportunities.

"We in Pakistan are determined to ride the tide of globalisation and turn this challenge into an opportunity," he said.

Talking about government efforts to develop Pakistan as a modern developed Islamic state, he said that the country has opened up to take advantage of opportunities presented by global economic integration.

"We are also striving to shore up our national security and domestic economy to safeguard national interests and to promote the welfare of our citizens," said the PM.

Referring to the difficult times Pakistan was passing through seven years ago, he said that the present government, since then, has implemented an ambitious and all-encompassing reform agenda, covering all aspects of national life -- political, administrative, social and economic.

"This has brought about massive change in the country and the process of national renewal is well underway," Aziz said.

He said that liberal economic policies had attracted huge foreign direct investment in various sectors. Cellular telephony alone received FDI worth US $ 295 million recently, he added.

He said that the government is endeavouring to attract foreign investment in sectors like power generation and tourism.


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## Owais

*Pakistan, Italy ink 'debt for development' swap agreement *


ISLAMABAD (updated on: November 04, 2006, 17:06 PST): Pakistan and Italy signed an agreement on Saturday in connection with 'debt for development' swap of approximately $85 million which is 50 per cent of the total Italian debt that Pakistan owes to Italy.

The agreement was signed by the visiting Italian Deputy Foreign Minister Gianni Vernetti and Minister of State for Economic Affairs Hina Rabbani Khar.

Hina said, in May 2006 Italy had already agreed for cancellation/adjustment of the first 50 per cent of Italian debt towards GoP's expenditure up to $85 million incurred on Afghan Refugees related projects.

This portion of loan will stand cancelled by the end of 2008. The servicing of the whole Italian debt - ODA has however been stopped from May 2006 as agreed upon by the government of Italy.

As per agreement signed, the loan under the swap is proposed to be off set in five equal tranches (2009-2014) commencing from the formal cancellation of first 50 per cent in 2008.

Hina said the payments eligible for swap operations will be made from budgetary resources of the government of Pakistan and shall be spent on jointly agreed social and development projects.

Priority will be accorded to rehabilitation and reconstruction in the earthquake area and also rural development, poverty alleviation and improvement in education sector, she added.

She said that the pace of co-operation and work with the Italy is very fast.

We moved very fast for promoting bilateral co-operation during the last two years than compared to the previous 20 years, the state minister said and assure that this debt swap will be used for development.

These include the projects of the federal government, provincial governments of local governments, Non-Governmental Organisations or channelled by relevant UN organisations such as FAO, IFAD and WFP.

The above two debt cancellation/swap agreements reached with the government of Italy is in accordance with the joint declaration issued during the visit of Prime Minister Shaukat Aziz to Italy (July 13 to July 15, 2005) which interalia include decision to speed up the finalisation of the agreement for debt cancellation and debt swap agreement.

The deputy Italian foreign minister, on the occasion, said we are interested in regional stability and development in Pakistan and this agreement is an opportunity to work together.


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## Owais

*Sensitive Price Indicator up 10.33 percent *

ISLAMABAD (November 04 2006): The Sensitive Price Indicator (SPI) year-on-year of 53 essential items for the week ending on November 2 has shown 10.33 percent increase as compared to the corresponding week of the last year. Last week's figures ending on October 27 with record surge in the index (11.86 percent) were not reported by the Federal Bureau of Statistics (FBS) due to Eid holidays.

However, this week's data on SPI, based on 53 items from 17 urban centres, showed that 23 items registered increase; 10 items showed decline; while prices of 20 items remained unchanged with reference to the last week prices.

The weekly bulletin of FBS shows that the rise in the prices of some necessities and kitchen items in 12 months has been substantial. These items are pulses, curd, milk (fresh), gas, kerosene oil, LPG, firewood, potatoes and onions, which directly hit the low-income group. Whereas, onions showed the highest increase of 145 percent, while sugar despite new high revised rates still registered 22 percent increase over last year.

Analysis of the data suggests 45 items showed increase over the last year. Out of these, 20 items of significance to low-income group include: onions, 145 percent; potatoes, 35 percent; sugar, 22 percent; salt, 25 percent; red chilies, 21 percent; gram pulse, 54 percent; moong pulse, 42 percent; mash pulse, 52 percent; gur, 17 percent; beef, 15 percent; milk, 11 percent; curd, 10 percent; tea, 11 percent; match, box 10 percent; firewood, 20 percent; petrol, 3 percent; diesel, 4 percent; LPG, 19 percent; kerosene, 7 percent; and gas increased by 20 percent.

Moreover, few items, showing decrease from the previous, week are still dearer when compared to corresponding week of the last year, which are onions, potatoes, gur, moong and mash pulse and LPG.

This week's lowest income group up to Rs3000 has been hit severely with 12.79 percent increment, whereas the income group of above Rs 12,000 remained the lowest affected with 9.89 percent. The intermediate groups of Rs3001-5000 and 5001-12000 showed percentage increase of 12.19 and 11.75, respectively.


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## Owais

*Government unwilling to provide Rs 79 billion to Wapda *

ISLAMABAD (November 04 2006): The government is reluctant to extend financial support of Rs 79 billion to the Water and Power Development Authority (Wapda) to cope with cash shortfall, official sources told Business Recorder here on Friday.

They said that the utility, in its case submitted to the Ministry of Water and Power said that it has incurred a cash shortfall of Rs 49.239 billion, and an accounting loss of Rs 29.136 billion due to continuation of consumer-end tariff despite increase in the prices of gas and furnace oil, higher establishment cost due to pay revision, village electrification, non-payment of Rs 10.87 billion by the Federally Administrated Tribal Areas (FATA) consumers and less availability of hydel energy.

The Ministry of Water and Power, while agreeing with the contents of the documents provided by the utility, had asked the federal government to waive DSL or convert it into equity, excluding the DSL or Faisalabad Electric Supply Company (Fesco) and Genco-1, and release cash deficit as cash grant to the utility.

The issue was discussed by the Economic Co-ordination Committee (ECC) of the Cabinet in its meeting on September 27, wherein it was decided that Finance Secretary and Wapda Chairman should discuss it with Prime Minister Shaukat Aziz.

Sources said that Wapda Chairman Tariq Hameed held a meeting with Finance Secretary as per the directive of Prime Minister, but the issue is yet to be resolved as Finance Ministry is not ready to accept the utility claim.

However, the ECC had approved a proposal of Wapda in which it had sought irrevocable guarantee from the GoP for raising Rs 7 billion emergency loan from a consortium led by National Bank, to overcome financial obligations of the Independent Power Producers (IPPs). The consortium had demanded irrevocable guarantee from the GoP for repayment of dues.

The Water and Power Ministry also complained against Finance Ministry for not dispatching its comments on summaries in time, which caused delay in taking decisions. Sources said that the Prime Minister took serious note of Finance Ministry's attitude, saying that the ministry should give its views on the summaries promptly, whenever it is called for.


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## Owais

Norway cancels $20 million Pakistan's debt 


OSLO (November 04 2006): Norway said on Friday it had agreed to cancel 20 million dollars of debt owed by Pakistan on the condition that the money is used for reconstruction efforts following a 2005 earthquake that killed some 74,000 people.

"We are pleased that this money can be used to help rebuild Pakistan after the 2005 earthquake," aid minister Erik Solheim said in a statement.

The funds are to be used to help rebuild social infrastructure, such as schools and health care centres, by the end of 2008. The Norwegian debt relief represents almost half of Pakistan's 46 million dollar debt to the Scandinavian country.


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## Owais

*MoC and PC to launch $25 million trade, transport facilitation project *

FAISALABAD (November 04 2006): Planning Commission and the Ministry of Commerce will jointly launch 'Trade and transport facilitation project - II', to be completed with 25 million dollar technical assistance of the World Bank over a period of five years.

According to official sources, during the project preparation and implementation, partnership and collaboration with ADB, JBIC, UNDP and EC would further be developed.

The project development objective of the proposed technical assistance is to improve the performance of the trade and transport logistics system and bring it up to international standards with the aim to reduce the cost of doing business in Pakistan and ultimately enhance trade competitiveness and the country's industrialisation.

The government would achieve this objective through policy reforms targeted within the framework of National Trade Corridor Improvement Programme (NTCIP), investment projects relating to railways, road, ports and shipping, aviation, trade facilitation and capacity building and increased institutional capacity to develop and implement the changed sector environment.

Direct recipients of the proposed technical assistance project are NTCMU, TTFU, National Trade and Transport Facilitation Committee (NTTFC), and respective public agencies (ministries, operating authorities). The initial beneficiary will be Pakistan's private sector trading community, which will have better opportunities to enhance their competitive position in their international markets, and under competitive pressures, reduce costs to consumers.

This should in turn generate additional employment and growth opportunities. Pakistani consumers should also benefit from the resulting reduced costs of imports. Specific targets and their benefits would be set during project appraisal, the sources added.

The Pakistan government and WB have agreed on financing NTCIP through programmatic DPLs, specific project investment lending and a technical assistance loan, and also agreed that a multi-sector policy-oriented operation to support implementation of reforms acting as triggers for specific project investment lending would be most effective.

The technical assistance loan will help prepare and monitor reforms through establishment of co-ordination units within the Planning Commission and the MoC and provide additional analytical underpinning and training opportunities.

The project consisting of (i) capacity development in the entities directly concerned with the implementation of NTCIP, (ii) support for the implementation process of NTCIP through analytical work on trade supporting infrastructure and services needs, (iii) strengthening of the private sector participation through TTFU and NTTFC, (iv) establishing sustainable monitoring and evaluation system and (v) manage the external communications strategy for the NTCIP.

The project's five components will finance the institutional set up of NTCMU and TTFU, and national and international consultancy services resulting in underlying studies, research, and training. The funds will be proportionately divided in both units.

Many of the technical assistance and capacity building requirements facing the implementation of the NTCIP are institutional and technical in nature, which is difficult to address in investment operations. The relatively under-developed private sector in Pakistan has a major role to play by adopting itself to the changed environment.

The WB project report said that Pakistan's economy had expanded by over 6.5 percent per annum during the past four years. A wide-ranging program of economic reforms launched in 2000 has played a key role in the country's economic recovery. These reforms have done much to boost Pakistan's share of total trade in GDP (rising to 30 percent in 2005). Exports have strongly performed in recent years, growing to about US 14.4 billion dollars in 2005, and investment has rebounded. To sustain sufficient momentum for this growth in the coming decade, Pakistan is now focusing on reducing the cost-of-doing business and increasing productivity and international competitiveness. A major initiative has therefore been launched to improve the trade and transport logistics chain.


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## Owais

*Italian help sought for FTA with EU *

ISLAMABAD (November 04 2006): Pakistan has sought Italy's help for inclusion in the EU initiative for free trade agreement (FTA) with Asian economies including India as WTO plus arrangement, official sources told Business Recorder.

They said that Commerce Minister Humayun Akhtar raised the issue of Pakistan's inclusion in the FTA arrangement with the visiting seven-member Italian delegation headed by under-secretary of state Gianni Vemetti who called on him here on Friday.

The Minister said that Pakistan needed to be accorded same treatment specially keeping in view its position in the context of the Safta. The Italian under-secretary of state assured that Italy in principle favours Pakistan's demand and would not support any action discriminating Pakistan.

The two ministers also reviewed the current bilateral trade and status of the joint ventures earlier agreed upon in the spheres of auto parts, marble, jewellery, gems, textiles and footwear sectors.

The Italian delegation stressed stability in the region and suggested an early meeting of the Joint Ministerial Commission to discuss bilateral trade in detail for promotion of economic and trade ties between the two friendly countries.


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## Owais

*Pakistan and Italy agree to promote trade ties *


ISLAMABAD (November 04 2006): A seven-member delegation from Italy, headed by Under-secretary of State Gianni Vemetti, called on Federal Minister for Commerce, Humayun Akhtar, on Friday. Commerce Secretary Asif Shah was also present on the occasion.

The Minister, after reviewing current bilateral trade, raised the issue of EU's embarking on initiating FTA with Asian economies, including India, as WTO plus arrangement.

He informed the visiting Minister that Pakistan needs to be accorded same treatment, especially keeping in view its position in the Safta context. The support of Italian government was requested in this regard.

The visiting Minister assured Humayun that Italy, in principle, favours his concern and would not support any action discriminating Pakistan. The Under-secretary of State stressed the need for stabilisation in the region and requested for more commercial exchanges. The Italians also requested for early holding of JMC with a view to draw a concrete agenda for promotion of economic and trade relationship.


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## Owais

*WIEF to promote business and trade: Shaukat *

ISLAMABAD (November 04 2006): Prime Minister Shaukat Aziz on Friday said that the World Islamic Economic Forum will promote business and trade activities and will lead to a better image of Pakistan as important leaders, intellectuals and professionals from all over the world will attend the Forum.

He was talking to Bob Hawke, former Prime Minister of Australia who called on him here at the PM House. Bob Hawke is visiting Pakistan to attend the World Islamic Economic Forum (WIEF), which will be held in Islamabad November 5-7.

The Prime Minister said Pakistan values its multifaceted relationship with Australia and is keen to further strengthen co-operation in a broad spectrum of areas particularly trade, investment, education, agriculture, agribusiness and livestock.

Emphasising the need for promoting interfaith, inter-civilisation, inter-cultural harmony, the Prime Minister said the gap between people belonging to different faiths is widening and the world needs to work harder and make dedicated efforts to bridge this gap.

"The more walls we create, the more challenging it will be for future generations", the Prime Minister said.

Bob Hawke appreciated the initiative taken by Pakistan to organise WIEF and said the Forum will be instrumental in networking of business community and new ideas and concepts will be generated as a result of it which will create economic opportunities.

He said a number of Australian companies are keen to invest in Pakistan and enter into joint ventures with Pakistani companies in the fields of energy and agribusiness.


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## Owais

*Gwadar port: pre-bid moot held *


KARACHI (November 04 2006): The Gwadar Port Implementation Authority (GPIA) held a pre-bid conference for the first prospective private port operators for Gwadar port. In a statement issued here on Friday.

It said the representatives of PSA International, Singapore; Globe Marine Services Co, Saudi Arabia; Pakistan International Container Terminal (Pvt) Limited, and Westport, Malaysia attended the conference.

ADL Consultants for the tendering process conducted the meeting in the presence of the tender committee, which comprises of board members of the management board and senior officers of both the Gwadar Port Authority (GPA) and the GPIA.

The conference ended with a positive vibe for further visit of participants to the data room at Gwadar port office, Karachi and subsequent site visit to Gwadar port.-PR


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## Owais

*Indus Motors intends to expand manufacturing plan *


KARACHI: Indus Motors Company intends to manufacture 1,50,000 units pr month through expanding its plant till 2015, Pervez Ghayas, the corporation chief executive, told Geo news.

Explaining the reasons for delay in expansion programme, he said the company's expansion would require increase in supply to vendors, adding that Indus was also negotiating with Toyota to increase its production.

Currently, the company manufactures 50,000 units monthly.


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## Neo

*Plan to attract investments in export zones*

ISLAMABAD, Nov 3: The government has asked the ministry of industries, production and special initiatives to formulate a long-term plan for attracting local and foreign investment in the country's export processing zones (EPZs).

Official sources told Dawn on Friday that Prime Minister Shaukat Aziz believed that EPZ was a great idea that "failed to take off" in Pakistan. It had big potential but somehow it kept on drifting away from its objectives, he said.

On the directives of the prime minister, the ministry of industries directed the Export Processing Zone Authority (EPZA) to develop a well thought-out strategy, which should include an aggressive marketing plan keeping in view the methodologies adopted by Malaysia, Thailand, India and Bangladesh for attracting investment in EPZs.

Based on that strategy, series of short-term plans will be worked out for proper execution and monitoring to ensure adequate foreign investment in the zones.

The marketing plan will be executed individually by the EPZA in association with the Board of Investment (BoI). The proposal for organisational restructuring and corporatisation of EPZs has also been, in principle, approved by the government.

Sources said that the prime minister was critical of the performance of the EPZA and said that it never had a vision or the strategy to pursue its objectives, therefore, it was imperative that the organisation's culture be changed by charting out an aggressive plan and by hiring dynamic people to execute it.

Sources said that the emphasis will be laid to attract prestigious and reputable investors, who have viable plans to execute their investment proposals. Top global investors installing even assembly operations would be a good beginning as their best practices bring an element of respectability to the organisation.

It was said that the infrastructure was scarce and an expensive commodity should not be wasted along with misuse of land and duty free vehicles. The authority has been asked to revamp its contracts, systems, procedures, and sanctions in such a way that transition to good corporate governance becomes smooth and seamless.

Sources said that the development of the Karachi Export Processing Zone (KEPZ) phase-II will be carried on fast track basis, which will include building of 5-story building, having recreational areas and a snack bar. They said that all possible legal remedies will be taken to reclaim the land for KEPZ phase-III along with the idea of having a jetty for direct transportation from the nearby port.

A decision has also been taken that the zones at Sialkot, Risalpur and Gujranwala will be revisited and plans for their re-vitalisation or viability be considered afresh. The establishment of an EPZ at Gwadar will be executed in the light of the guidelines given by the ministry of industries and production so as to make it a "model zone".

Similarly, all taxation and tariff related issues, including the Research and Development support for garment units in EPZs will be comprehensively examined in consultation with the ministry of commerce and the Central Board of Revenue (CBR) and the case will be submitted to the prime minister for his consideration.

Sources said that Karachi was making substantial contribution in software exports and the future prospects seemed even brighter. There were reports, they said, that US firms were on the look-out to software houses and call centre firms that can perform well.

The major reason is that Pakistani market is 30 per cent cheaper than that of India and it has under-utilised pool of computer science graduates and English language speakers.

It has been learnt that Pakistan Software Export Board is in the process of conducting a feasibility study but its exact scope is not known. Besides that, no credible survey is available, which could shed light on the potential demand of space for hi-tech businesses.

In this behalf the government has asked the concerned officials to conduct a feasibility study, which will not only help EPZA achieve its objectives, but will also be useful for the government to ascertain the gap, which will emerge in future demand and supply.


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## Neo

*German diplomat vows to raise trade to $2bn*

KARACHI, Nov 3: Consul General of Federal Republic of Germany Hans-Joachim Kiderlen has expressed confidence that his countryÃ¢â¬â¢s business and economic relations would attain a new peak and the two-way annual trade volume will touch the $2 billion mark.

Ã¢â¬ÅThe trade balance is at present in our favour and we realise that it is not a sustainable relationship and we are keen to see imports from your side go up,Ã¢â¬Â remarked Mr Kiderlen on Thursday evening at a welcome dinner hosted by Pakistan German Business Forum (PGBF), which was attended by a large number of business executives representing most of the 200 members of the forum.

President of Karachi Chamber of Commerce and Industry Majyd Aziz, who is also a member of the PGBF, attended the dinner.Mr. Kiderlain arrived in Karachi about one and a half months ago to take charge of the consulate recalled the historic role played by Karachi in economic development of Pakistan and promotion of countryÃ¢â¬â¢s business relations with the world.

---He pledged on the occasion to play his role as a diplomat to invite foreign businessmen and government representatives in Karachi.

Besides business and economic relationship, the German consul general said that his country enjoyed relations with Pakistan in cultural field, education and municipal services. Ã¢â¬ÅMy mission is to further strengthen and expand relationship in these areas,Ã¢â¬Â he announced.

Reviewing trade between Pakistan and Germany he said Pakistan mostly exported textile products and imported machinery from his country. Ã¢â¬ÅPakistanÃ¢â¬â¢s exports need to be diversified,Ã¢â¬Â the German consul general advised Pakistani businessmen.

Earlier President of the PGBF Qazi Sajid spoke of the role of the forum in promoting German investment in Pakistan and development of the two- way business relations. The German companies, he pointed out, were playing a key role in economic development of Pakistan and making valuable contribution in social sectors.

The PGBF was founded in December 1997 and has 200 companies on its membership list. The German ambassador in Pakistan is the patron-in -chief of the PGBF. The PGBF works in close relations with different chambers and trade bodies in Pakistan. In September 2002, it signed an MoU with Chamber of Commerce and Industry Rahein-N Mannhiem, Germany (IHK). The IHK has more than 5,000 members from German industrial and trade segments.

President Pervez Musharraf visited Germany in June 2003. The visit was reciprocated by German Chancellor Gerhard Schroeder in October. Since then Pakistan and Germany has several contacts at the foreign ministersÃ¢â¬â¢ level and at non-governmental levels.


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## Neo

*Warid gets a $500m loan for expansion in Pakistan*
4 November 2006 

ABU DHABI Ã¢â¬â Warid Telecom (Warid), the fastest growing mobile cellular operator in Pakistan, has signed a loan agreement for $500 million to finance its nationwide EDGE-compliant mobile network expansion supplied by Ericsson in Pakistan.

The signing ceremony was held in Abu Dhabi which was attended by top global executives of EKN, ABN Amro Bank N.V., Standard Chartered Bank PLC, Ericsson, and Warid Telecom.

The $500 million loan mainly supported by ExportkreditnÃÂ¤mnden (EKN) Sweden (The Swedish Exports Guarantee Board), is structured as a buyer credit facility and arranged by ABN Amro Bank N.V. and Standard Chartered Bank PLC as the Joint Lead Arrangers. 

In addition, ABN Amro Bank N.V. is the Facility Agent and EKN is the agent, while Standard Chartered Bank PLC is the Intercreditor Agent. The disbursement of the facility is subject to necessary approvals including the approval from the State Bank of Pakistan.

The loan will be utilised by Warid for financing its GSM network equipment supplied by Ericsson in 2006 and 2007. Ericsson has been the key network equipment supplier for Warid. The financing will facilitate Warid's expansion plans and enhance its mobile network capacity. It will also further enable Warid to leverage its strengths and take advantage of the huge market potential and customer growth rates in Pakistan.

The transaction carries a few firsts: The Warid financing is the single largest EKN-backed telecom financing, not just in Pakistan but also throughout the Middle East and Asia; It is the largest corporate Export Credit Agency (ECA) backed transaction since 1998 and the largest cross-border capital expenditure related telecom debt financing into Pakistan. 

Wateen Telecom & Taavun is currently undertaking the rollout of new mobile networks in Bangladesh and the Republic of Congo, alongwith the recent acquisition of a telecom licence in Uganda. 

The group is also in the process of setting up a Global IT solutions company Ã¢â¬â Raseen in Pakistan Ã¢â¬â in partnership with Sir Terence Mathews, Chairman of the international IP Communications giant Mitel Networks Corporation. 

Warid Telecom is owned by the Abu Dhabi Group Ã¢â¬â one of the largest groups in the Middle East. The group is led by Shaikh Nahyan bin Mubarak Al Nahyan and it is the single largest foreign investor group in Pakistan.


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## Neo

*WB offers $359m to improve highways *


KARACHI: The World Bank has offered over $350 million for national expressways project under National Trade Corridor Improvement Programme, aimed at reducing the commercial traffic time and cutting vehicle operating cost.

A document issued by the Bank with project details says it has decided to offer a total of $359.10 million for the development of two different highway routes in Punjab province.

Ã¢â¬ÅThe proposed project comprises development of two access-controlled, four-lane, 75 miles an hour design speed expressway facilities along new alignments adjacent to two existing two-lane provincial highways between Wazirabad-Pindi Bhattian and Khanewal-Lodhran,Ã¢â¬Â said the project information document of the World Bank.

Ã¢â¬ÅThe civil works involve construction of four new lanes, fence, grade-separated interchanges, over and under passes, toll plazas, rest and service areas, and truck parks.Ã¢â¬Â

It said a preliminary economic analysis indicated economic internal rate of return (IRR) of about 12 per cent. The policy support and institutional strengthening component would be defined during project preparation based on the needs for support to implement sector reforms, added the document.

Currently together the ports, road and railways along National Trade Corridor handle 95 per cent of external trade and 65 per cent of total land freight serving the regions of the country which contribute 80 per cent to 85 per cent of GDP.

Main objective of the NTC initiative is to reduce the cost of trade and transport logistics and bring it up to international standards in order to reduce the cost of doing business in Pakistan and ultimately enhance export competitiveness and the countryÃ¢â¬â¢s industrialisation.

The World Bank document said to execute the project, National Highway Authority (NHA) would prepare and provide the bank a sectoral environmental assessment (SEA), environmental assessment and environmental management plans (EMPs) and social assessment and a resettlement policy framework (RPFs) for the two civil works contractÃ¢â¬â¢s under the expressway development component.

Ã¢â¬ÅThe EAs will detail the measures to mitigate the impacts on land resources in the corridor of impact during the construction phase, define the responsibilities for implementation and supervision, and arrangements for monitoring of impacts,Ã¢â¬Â it said.

Ã¢â¬ÅThe EMPs will define frameworks for monitoring along the project corridor and arrangements for institutional and policy support to National Highway Authority (NHA) and other stakeholders.Ã¢â¬Â

It said the EMPs developed by the NHA would help the organisation address the adverse environmental and social impacts, enhance project benefits, and introduce standards of good environmental and social practice for highway construction and operation within the organisation and in the country.

The government has already announced it is taking a strategic and holistic approach to the transport sector and launched an initiative to improve the trade and transport logistics chain along the north-south NTC linking PakistanÃ¢â¬â¢s major ports in the south and south-west with its main industrial centres and neighbouring countries in the north, north-west and east.

A task force of prime minister under the chairmanship of deputy chairman Planning Commission has been leading the NTC initiative through six sectoral committees, which include highways, railways, civil aviation, ports and shipping, trucking, trade facilitation in partnership with the private sector and development partners.

Ã¢â¬ÅThe Task Force has identified key reforms and actions that are necessary to achieve the objective of the initiative,Ã¢â¬Â said the World Bank.

It said the prime minister had endorsed the reform agenda, targeted outcomes and deadlines and was personally monitoring implementation on a quarterly basis.


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## Neo

* $1bn worth of mobile phones imported in 2005-06 *

LAHORE: The total value of mobile handsets imported into Pakistan crossed US$1 billion in 2005-06 and cellular subscribers witnessed an average increase of 1.7 million per month during the same period, showing an augmented mobile penetration of 22.2 per cent. 

According to a report prepared by the Pakistan Telecommunication Authority (PTA), the authority forecast 25 per cent annual growth in the import of mobile handsets and estimated that 65 million subscribers would be added by 2007. 

The authority observed that net addition made to total subscriber base per month from July to December 2005 was 1.3 million whereas almost 22 million subscribers were added in the first six months of 2006.

Mobilink made the highest net addition among all operators as 1.1 million subscribers were added to its total in the month of June 2006.

The number of mobile subscribers in 2005 was 7.7 million which increased to 21.7 million in 2006. With such an increased penetration, there are still large number of rural and semi-urban areas that are inaccessible.

The penetration in Balochistan grew by more than 125 per cent in just one year. According to the break-up, mobile penetration in Balochistan was 8.1 per cent in 2006, 12.2 per cent in NWFP, 23.9 per cent in Punjab and 27.3 per cent in Sindh.

The mobile handset market is affected by global market trends in addition to growth in local subscriber base. Import of handsets through proper channel is increasing and reduction is observed in availability of smuggled sets.

The PTA stated in its report that according to estimates provided by local resellers, the number of imported handsets stands at around 750,000 to 800,000 per month.

Advanced technology and sophisticated sets are now commonly available in the local market and handsets with camera are becoming very popular and this trend is likely to grow in the next two years as these features will become standard in the future.

The PTA said that the handset market was dominated by four major players in which Nokia was leading with 55 per cent market share, Sony Ericsson 22 per cent, Samsung 17 per cent and Motorola 5 per cent.

The PTA estimated that there were 12 to 15 thousand mobile phone shops across Pakistan and this large number of handset shops is generating huge employment opportunities. Indirectly, they were employing more than 60,000 people within the industry.


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## Neo

*Technical education being aligned to meet market needs *

ISLAMABAD: A 6-member delegation, comprising senior officials of Australian Department of Education, Science & Technology and AusAID, is visiting Pakistan on the request of Prime Minister Shaukat Aziz to help Pakistan in its efforts to realign its TVET according to the market needs.

Chairman National Vocational & Technical Education Commission (NAVTEC) Altaf Saleem in a meeting with the delegation here on Friday said that Technical and Vocational Education and Training (TVET) was being revamped in the country and was being aligned with the needs of the economy.

Chairman NAVTEC solicited Australian governmentÃ¢â¬â¢s support for developing standards for TVET as well as mechanism for monitoring and evaluation.

The delegation members appreciated NAVTEC strategy of active contact with market with futuristic focus. The delegation head Ross Muir while appreciating the recent initiatives of skills training said, Ã¢â¬ÅOur mission has observed real commitment by all stakeholders to improving the TVET sector.Ã¢â¬Â

The chairman informed that on the directive of the President and under the Prime MinisterÃ¢â¬â¢s special initiative, pilot projects for skills development have been started in sectors facing skills shortage.

Pakistan has 28 million young people aged 15-19 years, said Altaf, adding that these short training programmes shall turn the young manpower into a useful and productive human resource.

Ã¢â¬ÅTechnical education directly benefit the business,Ã¢â¬Â said Altaf. Therefore we are engaging with industry to become our partners in skills training. It also directly benefits the workforce as they get gainful employment immediately.Ã¢â¬Â

Altaf Saleem informed the delegation about NAVTEC plans to increase the capacity to train one million people annually by 2010 from the present annual capacity of 320,000. He said that such training programmes will focus on quality and relevance to domestic and international market. He informed that foreign exchange earnings from Pakistani workforce working abroad amount to 25 per cent of exports and that can be further increased provided exported manpower have technical skills.

NAVTEC chairman also shared plans to start second shift for technical education in government schools. This will increase the intake capacity and will help overcome shortage of trained manpower.


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## Neo

*First liner put Karachi on world sea cruise map: president *

KARACHI: November 05, 2006: President Pervez Musharraf on Saturday said Karachi has been placed on the map of world sea cruise with the launch of first ever sea cruise liner.

Pakistan is blessed with a unique landscape - loftiest mountains, vast plains, deserts, coastlines, rich cultural heritage, ancient civilisations and cradle of different religions.

Karachiites must see up North and northern area people must see coastal lines", he noted while addressing the select gathering of diplomats, senior officials, leading businessmen, bankers and notables on-board Gulf Dream Cruise Liner at Karachi Port.

The president noted that more than 500 destinations are covered by sea cruise operators and Karachi has now been added to that list.

He asked KPT to provide more facilities to attract more cruise operators. He noted that more has to be done in the form of port infrastructure, passenger services, amenities to facilitate cruise operations.

He asked Pakistanis to promote tourism within the country by self to attract foreign tourists into Pakistan. He asked people to first see the unique places of the country. It would help in development of hotels, motels and other tourism facilities at the tourist resorts, he noted.

"Pakistanis themselves must travel to see their own tourist attractions. Then foreign tourists will come", Musharraf said.

Musharraf said Pakistan is a land of exotic and picturesque pleasure and its people should explore these tourist attractions. Pakistan offers varied temperatures starting from 50 degrees plus Celsius to minus 50 degrees.

The country is blessed with difficult terrain and virgin coastal line with coastal towns like Ormara, Gwadar. He said the government was developing Gwadar as an industrial and tourist town and its town planning was already done. It will emerge as one of the most beautiful towns of Balochistan and Pakistan in next 15 to 20 years, he said amid thunderous applause.

He said the plains of Punjab and Sindh and the inhospitable deserts in Punjab and Sindh offer great tourist attractions. "In the North, you will find some of the highest mountains of the world." 

Talking of cultural heritage, president Musharraf said Pakistan is blessed with 8000- year- old Meher Garh civilisation in Balochistan, Indus civilisation, Gandhara civilisation, Mughal period landmarks and relics of Alexander's stay, etc.

He noted that Pakistan happens to be the cradle of three olden religions - Buddhism, Hinduism and Sikhism. 

He said the government was trying to open up these attractions through road links connecting remote northern mountainous areas to main roads. 

" We are linking Chitral, Hunza, Gilgit, Skurdu, Astore, Kaghan, Chilas. I strongly recommend Karachiites to explore their own country and its beauty. Travel, these are very safe areas. The most exquisite and most beautiful places of the world," he observed.

Referring to sea cruise, president Musharraf said it is most comfortable when the sea is calm. Launching of Karachi-Dubai cruise is for the first time in the history of Pakistan, he added.

He urged the cruise operator Rizwan Mohiuddin to also include Gwadar as one of the destinations.

Talking of his association with the water, the President said that he has promoted water sports in the country.

Earlier, Port and Shipping Minister Babar Khan Ghauri said more cruise liners have shown interest to operate from Pakistan due to the business friendly shipping policy of the country.

He said he was going to India by the end of this month to sign a shipping protocol to start shipping and ferry services between the two countries.

KPT Chairman Vice Admiral (Rtd) Ahmed Hayat said the port was encouraging more sea cruise liners. He said it was the fastest growing business in the world.

He said Manora (Island) was being developed as a tourist resort and its construction will begin in August next at a cost of Rs 2 billion.


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## Neo

Saturday, November 04, 2006 

*Balance of trade improves by 42% in July-September*

KARACHI: The trade balance of the country is continuously showing a declining trend on monthly basis and stood at $784 million in September this year from $1.114 billion on June 30, 2006.

Ã¢â¬ÅThe trade balance has declined over by 42 percent or $330 million in last three months,Ã¢â¬Â a market expert said. Ã¢â¬ÅDeclining oil prices in the international market were the main reason behind shrinking trade gap,Ã¢â¬Â the expert said.

The countryÃ¢â¬â¢s export stood at $4.269 billion in first quarter of the current fiscal year with a growth rate of 2.8 percent, while the countryÃ¢â¬â¢s import is at $7.429 billion with a growth of 30.3 percent compared to last year. Because of the high growth, the total trade gap had touched $3.159 billion.

The trade deficit was also higher than last year. The trade deficit of first quarter 2005-06 was $2.399bn. This quarter trade deficit increased by $760 million or 31.6 percent over last yearÃ¢â¬â¢s trade deficit during the same period.

In the year 2005-06, the countryÃ¢â¬â¢s export grew by 13.1 percent with a total export figure of $16.4 billion, while the import was at $28.5 billion.

According to the market experts the countryÃ¢â¬â¢s import may touch $30-$33 billion in the current fiscal against its full year target of $28 billion. However, the export may hardly meet its target of $18.6 billion, the experts said.

They said the trade gap might further increase from $12 billion to $14 billion in the current fiscal year.

Through the privatisation proceeds, the federal government is taking different measures to reduce the balance of payments in current fiscal year and had announced globally depository receipt (GDR) of the government holding in National Bank of Pakistan (NBP), Habib Bank Limited (HBL) and Allied Bank Limited (ABL). However, the privatization commission had also announced to conduct GDR of government entities in Oil and Gas Development Company Limited (OGDCL), which may help raising above $2 billion to shrink the gap of balance of payments.

The government had already given a $4 billion target of foreign direct investment including the portfolio investment while the overseas employees would remit above $5 billion in the current fiscal year. Last year the government received over $4.8 billion remittances from overseas Pakistanis.

The banking sources said the country can easily managed the balance of payment in the current fiscal year if the government receives foreign currency donation from the international donors agencies. The US government had already sanctioned around $800 million aids for the country.


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## Neo

Saturday, November 04, 2006 

*Pakistan economy ill prepared for world trade scenario: experts*

ISLAMABAD: PakistanÃ¢â¬â¢s economy and its various sectors, particularly the domestic industry, are ill prepared for the changing international trade scenario mainly due to lack of good governance, shortsighted policies, implementation issues and a serious lack of response to the competitive world market. 

These views were expressed by speakers at a roundtable, Ã¢â¬ÅWTO, FTAs and RTAs: Implications for Pakistan Economy with Special Reference to Auto Sector,Ã¢â¬Â organized by the Institute of Policy Studies.

Masud Daher, CEO of MilleZum Consult Pvt Ltd, was the main speaker at the event, which was chaired by Mr. Fasih Uddin, former chief economist and Chainman IPS Working Group on the WTO. 

The speakers noted that the deadlock in WTO negotiations was the major reason behind spurring regionalism and bilateralism; many free trade agreements (FTAs) and Regional Trade Agreements (RTAs) were being negotiated and implemented by countries Ã¢â¬â including Pakistan with regional and global partners. 

Mr Daher, mentioning a study by the World Bank, said: Ã¢â¬ÅPakistan lacks the best practices required to benefit from free trade agreements.Ã¢â¬Â 

Citing an example, he said both Pakistan and India have bilateral FTAs with Sri Lanka and the three countries are also members of SAFTA, which becomes a complicated arrangement for Pakistan. Ã¢â¬ÅThere is no mechanism to check Indian goods being re-exported to Pakistan via Sri LankaÃ¢â¬Â, he added. 

He opposed the import of used cars in the country terming it a disaster for the local auto industry. The view was supported by Mohammad Sulaiman, a consultant with the Engineering Development Board. Ã¢â¬ÅIt amounts to making Pakistan a junkyard of old carsÃ¢â¬Â, said Mr Sulaiman. 

Khalid Rahman, the Director-General of the IPS, while responding to a suggestion, said the IPS would continue to interact with different stakeholders, including the government, for intensive debate on such issues of national importance. 

While concluding the session, Mr. Fasih Uddin said FTAs and RTAs were tools of convenience and complications Ã¢â¬ÅMultilateral-ism remains the best choice,Ã¢â¬Â he said.

A select gathering of international trade and industry experts, government officials, intellectuals and businessmen was present on the occasion.


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## Neo

Saturday, November 04, 2006 

*Pakistan ahead of all others in implementation of reforms: PM *

* Aziz says foreign direct investment touched highest ever mark this year 
* Says economy back on track 

LAHORE: Prime Minister Shaukat Aziz said on Friday that Pakistan was ahead of several countries in implementing economic reforms and improving governance. 

Ã¢â¬ÅPakistan has been ranked as one of the top ten reformers globally and the top reformer in the South Asian region,Ã¢â¬Â Aziz said while delivering a keynote address at the Young PresidentsÃ¢â¬â¢ AssociationÃ¢â¬â¢s (YPO) regional conference, which was attended by the Punjab governor. 

Ã¢â¬ÅWe are determined to ride the globalisation tide and turn this challenge into an opportunity,Ã¢â¬Â Aziz said, adding that the country was taking advantage of opportunities offered by global economic integration. 

Referring to the Ã¢â¬Ådifficult timeÃ¢â¬Â that Pakistan passed through seven years ago, he said the current government had implemented an Ã¢â¬Åambitious and all-encompassingÃ¢â¬Â reform agenda covering all aspects of national life Ã¢â¬â political, administrative, social and economic. 

Aziz said that Ã¢â¬ÅliberalÃ¢â¬Â economic policies had attracted huge foreign direct investment (FDI). The government was trying to attract foreign investors to sectors like power generation and tourism, he said, adding that all sectors of economy were open to FDI, and foreigners could hold up to 100 percent equity. He said the process for launching businesses had been made Ã¢â¬Åextremely simpleÃ¢â¬Â. Investment in the economy had reached 20 percent of the GDP, and FDI had touched its highest ever mark at $3.5 billion this year, he added. 

He said that political institutions had been reformed, with greater representation for women and minorities and the institutionalisation of democratic norms. About reforms introduced to devolve administrative authority to the local level, he said that these reforms were aimed at improving decision-making. 

Ã¢â¬ÅWe have also successfully implemented a stabilisation programme and structural reforms, which have put the economy back on track for sustainable growth and poverty alleviation. We are now one of the fastest growing economies in the region, and we hope to sustain a growth trajectory of 6 to 8 percent,Ã¢â¬Â the prime minister said. 

Ã¢â¬ÅOur strategy has reduced the number of people below the poverty line from 34.5 percent to 23.9 percent.Ã¢â¬Â He said that economic reforms were driven by deregulation, liberalisation and privatisation, while the central thrust of the governmentÃ¢â¬â¢s strategy was to create an environment for the private sector to become an Ã¢â¬Åengine of growthÃ¢â¬Â. 

Aziz said the government wanted to maintain a stable macro-economic environment, and push ahead with the second generation reforms aimed at increasing productivity and competitiveness, improving key governance institutions and maintaining a consistent policy framework. 

The prime minister said that Pakistan was fully committed to promoting peace and stability in the region and the world. 

Ã¢â¬ÅWe are keen to promote peace and cooperation with our neighbours by resolving outstanding issues.Ã¢â¬Â He said that Pakistan was pursuing economic diplomacy as a major aspect of its foreign policy. 

Condemning terrorism, he said the menace had affected Pakistan Ã¢â¬Åmore than any other country because of our geo-strategic locationÃ¢â¬Â.


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## Neo

*Iran offers cheap electricity to Pakistan *

ISLAMABAD Nov 4 (Online): Iran has offered to provide cheap electricity to Pakistan which could be further expanded to India through Pakistan like gas pipeline agreement, told a press release issued here Saturday. 

According to the press release, Iranian Ambassador in Pakistan H.E Masha-Allah Shakeri made this offer in a meeting with Federal Minister for water and power Liaqat Ali Jatoi here in his office Saturday. 

In the meeting both the sides exchanged views on bilateral trade relations especially in power sector between the two brotherly countries. They agreed to extend cooperation in water and power sectors and to establish a joint investment company to gain goals and objectives in this regard. 

The federal minister informed the Iranian Ambassador that power sector is viable business in Pakistan, which has attracted the foreign investors in this sector. "Presently sixteen Independent Power Producers companies (IPPs) are generating 6500 MW electricity under the Power Purchase Agreement between the government and companies", he added. 

He further told that the growing demand of electricity is 18000 MW while the existing availability power is 13500 MW in the country. He invited the Iranian government to come forward and participate in mega hydropower projects in Pakistan. 

The Iranian Ambassador appreciated the growing economic situation in Pakistan and offered investment in water and power sectors particularly in construction of dams for producing electricity in Pakistan.


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## Neo

*Pakistan proposes creation of Islamic Economic Union *

ISLAMABAD (November 06 2006): Pakistan has proposed creation of an Islamic Economic Union by entering into multilateral free trade agreements and promoting free flow of capital, labour, goods and services.

The proposal was by made by Prime Minister Shaukat Aziz in his keynote address, 'The way forward for Muslim Economic Renaissance' at the inaugural session of the three day Second World Islamic Economic Forum Conferences 2006 here on Sunday.

*PRIME MINISTER SHAUKAT PUT FORWARD A SEVEN-POINT ACTION PLAN, WHICH INCLUDED FOLLOWING INTEGRATED AND CALIBRATED MEASURES:* 

i) The OIC must evolve an effective dispute resolution mechanism to resolve its issues and problems and put in place a sound framework for mutual co-operation, besides promotion of unity amongst and within the member countries, broaden and deepen economic relations and ensure energy, water and food securities.

ii) The Muslim World must undertake necessary political, economic and social reforms to create an enabling environment for harnessing our individual and collective potential by ensuring political stability and continuity, good governance, transparency and accountability as well as consistent economic policies and improved delivery of social services especially in health and education.

iii) The OIC member countries must focus on education and catch up in the field of science and technology, skill development through vocational training which are in demand in national and international markets.

iv) The Islamic countries should evolve a comprehensive growth model to provide a strategy for balanced development and provide for sharing of financial and commodity surpluses through institutional mechanisms driven by public-private partnerships.

v) The less endowed Muslims countries should develop absorptive capacity to make optimal use of scarce domestic capital and to benefit from cross-border flows.

vi) Depending upon individual comparative and competitive advantage, the Islamic countries should try to specialise and carve out niches for themselves in vital economic sectors such as energy, telecom, IT, banking, mining, agriculture, services etc; and

vii) OIC and Islamic Development Bank need to be repositioned and re-invigorated and create a world-class capital market to attract international capital which would enable the Muslim countries to finance their growth and development.

He said that the Muslim world is rich in human capital as well as physical resources and has immense potential for growth, progress and prosperity. "We constitute one-fifth of world population and our people are intelligent, industrious and enterprising and possess 70 percent of the world's hydrocarbon reserves" he said.

However, he said, that "our economic performance is not commensurate with our true potential, since a vast majority of Muslims live in poverty and backwardness; nearly 39 percent of the world's Muslim population lives below the poverty line.

Muslim world makes up 19 percent of the humanity but only 6 percent of its income. Its share in global trade is barely 7-8 percent while only 13 percent of its total trade is among its member countries. Sadly, no Muslim nation is among the group of developed industrialised countries.

Shaukat said that the new world order is characterised by economic integration, technological advancement, predominance of knowledge economy and diffusion of democratic idea which has brought three fundamental changes, namely (i) new governance paradigm whereby the private sector is leading the process of economic growth and governments have become policy makers, facilitators, regulator and enablers; (ii) supra-national institutions are laying the rules of the game and nation-states are called upon to operate within that framework; and (iii) buoyant expansion of global trade and capital flows as well as free exchange of ideas and technology provide vast opportunities for growth and also pose challenges.

He said that the way forward in this highly competitive and inter-dependent world is through improved governance and reform within individual Muslim states, on the one hand, and by exploring new avenues of mutual cooperation based on commonality of interest, on the other.

Shaukat said that one of the biggest challenges facing the Muslim world is on account of insecurity emanating from disunity and dissensions "within our ranks, which not only sap our energies and resources but also undermine our prospects of meaningful co-operation."

"Muslims in Iraq, Afghanistan, Palestine, Lebanon and Kashmir continue to face insecurity, death and destruction," he added.

The Prime Minister emphasised that "we should not allow ourselves to become hostage to the actions of a minority within ourselves who have taken to extremism for one reason or the other and approach the current-day realities with open minds and adopt futuristic vision to resolve our issues and problems.

He said the world community has a responsibility to remove the causes of injustice and frustration so that a lasting solution to the scourge of extremism and terrorism can be found.

He said that under the leadership of President General Pervez Musharraf the government has carried out comprehensive and multidimensional reforms in the political economic and social spheres to rejuvenate its position in the world.

In the political field, he said, the government has ensured good governance through accountability and transparency and empowered the people from grass root to the national level.

In the economic sector, he said, the government's reforms based on the principles of deregulation, liberalisation and privatisation have ensured an upward growth trajectory and 14 million people have come out of poverty in just four years.

He said in the social realm, the government is focusing on improving and enlarging the delivery of health and education in order to develop and a healthy and educated workforce that would shore up Pakistan's knowledge based economy.

In the opening session, Prime Minister of Malaysia and Chairman of OIC Dato Seri Abdullah Ahmad Badawi also presented his special keynote address "enhancing global competitiveness and trade among Muslim countries.

He said that the Muslim nations are faced with economic, social and political problems, which they cannot address without assistance from other Muslim countries and co-operation with the West.

He said that there is a wide urban and rural divide in the Muslim countries because of economic, social, and cultural disparities which, is hampering poverty alleviation in the OIC member countries.

He said that Muslim countries must allocate more funds to provide quality education to its new generations and take urgent steps to reduce unemployment of the youth, which is highest in the world.

Badawi said the governments of OIC member countries must strive to end sectarianism, ethnicity and promote culture of tolerance, enlightenment and higher education to meet complex challenges of the contemporary world.

Presenting his paper entitled 'Challenges of Social Development to Islamic World' President of Islamic Development Bank Dr Ahmed Mohammad Ali assured the conference that IDB would extend maximum financial assistance to member countries for poverty reduction programmes.

Chairman of World Islamic Economic Forum and former Deputy Prime Minister of Malaysia, Tun Musa Hitam, also addressed the conference and highlighted future programmes and vision of WIEF.

At the end of the inaugural session, two memorandums of understanding (MOUs) were signed to increase co-operation among the Muslim countries in various social and educational fields. Pakistan, Bangladesh, Malaysia and Indonesia signed an MOU to provide vocational training to youth in their countries.


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## Neo

*Malaysia agrees to build three highways *

ISLAMABAD (November 06 2006): The Malaysian government agreed on Sunday to construct three vital highway projects, including Karachi Northern Bypass, on build, operate and transfer (BOT) basis.

Both Pakistani and Malaysian governments will soon sign a memorandum of understanding (MoU) to undertake construction work on Rawalpindi-Tarnol Interchange, Rawalpindi Bypass and Shahdara Interchange, Lahore, besides Karachi Northern Bypass.

The announcement came after high-level talks between the two delegations led by Federal Communication Minister Shamim Siddiqui and Malaysian Works Minister Dato Seri S. Samy Vellu here in the communication ministry here.

In a significant move, the Malaysian government has also given a go-ahead signal to make M-4 (Faisalabad-Khanewal) project in which Pakistani authorities would share the construction work as well.

During the meeting, Shamim Siddiqui appreciated Malaysian government's contribution to the development of communication sector in Pakistan and suggested visiting Malaysian minister to construct three projects on BOT basis.

He said more than $600 billion projects in the communication sector were in the pipeline in near future. He, therefore, said there was great opportunity for Malaysian contractors to take part in these projects and join hands with the Pakistan government.

Vellu told the meeting that he would make a study of projects, whereas one Malaysian contractor said his company has already made the study of Tarnol Interchange and Rawalpindi Bypass that is viable for even BOT basis.

It, however, was decided by both sides that for construction of these three projects, MoU would be signed very soon.

The Malaysian minister designated Secretary General, Ministry of Works, who would visit Pakistan again during the month to sign the MoU with the Pakistan government.

The MoU to build M-4 has already been signed between the two countries, but the Malaysian government was not ready to build the project on BOT basis and has regretted to build the M-4.

However, the Malaysian side has reviewed its decision and pledged to make motorway section with the joint efforts of Pakistan government.

Shamim Siddiqui requested his Malaysian counterpart for transfer of technology and for the training of technical staff, which Seri S. Samy Vellu agreed to provide all types of training facilities in the construction industry and transfer of technology to Pakistan.

The minister also introduced the President and General Secretary of All Pakistan Contractors Association with the visiting delegation and hoped contractors of both the sides would make joint venture in realising the projects in Pakistan.

Responding positively, the Malaysian minister asked the communication minister to send a delegation of Pak contractors to Malaysia.

The Malaysian delegation comprised Dr Dennis Ganendra, Mohammad Azri Abdullah, Hamzah Hassan, Tan Boonseng, N. Puvanendran and Selathurai Nadseson, whereas Additional Secretary Muhammad Abbas, Joint Secretary Firdaus Alam, NHA Member (Planning) Raja Nosherwan were among the Pakistani delegation.


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## Neo

*Joint investment company to be set up *

ISLAMABAD (November 06 2006): Pakistan and Malaysia on Sunday agreed to set up joint investment company and announced that the Free Trade Agreement (FTA) between the two countries, to be signed by the end of 2006, would give further boost to their trade and economic relations.

Prime Minister Shaukat Aziz and his Malaysian counterpart Abdullah Ahmed Badawi, during their one-on-one meeting and later at the delegation level talks, covered a wide spectrum of bilateral ties between their countries.

"I am happy at the outcome of bilateral talks...It is my hope to see our bilateral relations are further expanded and deepened," the Malaysian leader told reporters at a joint press briefing with Prime Minister Shaukat at Prime Minister House.

Shaukat said that Pakistan and Malaysia have agreed, in principle, to set up a joint investment company to provide institutional framework for investment in each other's country.

He said that the two countries already have an 'Early Harvest Programme', and would conclude the FTA by the end of this year that would lead to further increase in their trade and economic ties.

He noted the deep and close ties between Pakistan and Malaysia and said that the two countries share common faith, heritage and desire to promote peace, progress and development in the world.

In the context of bilateral diplomatic ties, Prime Minister Shaukat briefed the Malaysian leader about the latest situation in the region and Pakistan's desire to resolve all disputes in South Asia.

He briefed him on the ongoing composite dialogue process with India and Pakistan's desire to resolve all outstanding disputes including the core Kashmir dispute for durable peace in the region.

The two leaders also discussed Pakistan's desire to engage with Asean as Prime Minister Aziz thanked his counterpart for his country's support to Islamabad to attain full dialogue partner status with the strong regional grouping.

Pakistan and Asean, he added, could be natural partners to create win-win situation for both. Aziz said they discussed the ongoing extensive co-operation between their countries in the field of defence.

The Prime Minister said the two countries have multifaceted co-operation in the defence field and was pleased to note that Malaysian companies would participate in the upcoming annual Defence Exhibition to be held in Karachi this month.

He expressed satisfaction over the growing trade ties between the two countries and noted that Malaysian investment in Pakistan had improved during last two years.

He said that with 40 companies, Malaysia has a strong presence in Pakistan in sectors like construction, IT, telecom etc. The Prime Minister said that Malaysia has excellent universities and Pakistan would like to benefit from their rich experience by sending its students there for education.

Prime Minister Badawi expressed full satisfaction over the outcome of talks and hoped that the trade and economic ties between Pakistan and Malaysia would further improve.

The two countries currently have a trade volume of around $700 million which, the Malaysian leader hoped, could reach the $1 billion mark.

In reference to the proposed joint investment company, Prime Minister Badawi said that presence of Pakistani investment companies in Malaysia would be yet another catalyst in further enhancing investment in the two countries.

He welcomed Pakistan's support to the World Islamic Economic Forum (WIEF) which is holding its second conference in Islamabad.

Prime Minister Badawi, who launched the WIEF last year, said that its first meeting in Malaysian capital Kauala Lumpur, also attended by Prime Minister Aziz, the Pakistan leader had proposed to have its second meeting in Islamabad.

He said it was a matter of great satisfaction to see that about 600 delegates from countries and business concerns were attending the three-day moot, including those from non-Muslim countries.

The Malaysian leader, who also hold the current chair of the OIC, hoped that the Forum would be able to expand economic relations between Islamic countries and also their commercial ties with other states.

"I hope that the Forum would be an important catalyst to increase the process of economic development in the OIC countries," he added. The Malaysian leader said that he also briefed Prime Minister Shaukat Aziz on the situation in southern Thailand.

Badawi said he had asked Thai Prime Minister to engage the people of southern part of his country in confidence-building measures to improve the situation. He expressed the hope that the new premier would be able to bring about peace and stability there.

In southern Philippine, he said, Malaysia has asked to have an international monitoring group there to initiate another round of talk that he hoped would help improve the situation there.

Responding to a question on the WIEF, he said it was too early to judge its performance, but added that the aim was to improve economic co-operation within the OIC countries. He said he was confident that the second meeting of the Forum would be very successful.

On exporting manpower from Pakistan, he said the process is on and his country would continue to export labour from the country as the opportunities arise.

Prime Minister Shaukat Aziz also expressed satisfaction and said that currently 15,000 workers were employed in Malaysia, but added that the export of manpower was always demand-driven, but the countries had made good progress this area.

About the WIEF, he said that that crux of any economic co-operation was to engage private sector of different countries.

He hoped that the Forum would institutionalise private sector networking and connection within the Ummah and beyond. "In the world of globalisation, we have to look at all countries to interact with each other," he said.

The primary focus of the Forum, he said, was the private sector from Islamic countries, but stressed the imperatives to engage everybody so that it provides one of the best platforms for interaction with the private sector.

He noted the immense interest of world business leaders after the Forum's first meeting and said that its second moot was being attended by more than 600 delegates that include cabinet level representations from many countries.

"The most important feature of any forum like this is bilateral network, which has been encouraged and provided for in various sessions," he added.

The Malaysian Prime Minister, when asked about the possibility of having one Eid within the Muslim Ummah, said his country has adopted a formula whereby it calculates the date for the sighting of the moon.

The two leaders also discussed how Zakat could be used for poverty alleviation. Pakistan would send a ministerial-level representation to Malaysia to attend a conference later this month on the subject.

The two leaders also discussed the issue of Dengue fever and Pakistan sought the advice from Malaysia for technical know-how and help to tackle this disease.

Earlier, Prime Minister Aziz welcomed the Malaysian leader at a formal ceremony held at the Prime Minister House.

At the ceremony, national anthems of the two countries were played. The Malaysian Premier inspected the Guard of Honour. Later, Prime Minister Aziz introduced the distinguished guest to the Services Chiefs and members of his Cabinet. Prime Minister Badawi also introduced members of his entourage to Prime Minister Aziz.


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## Neo

* ADB funding to implement 'water financing projects' *

FAISALABAD (November 06 2006): The Water Financing Programme (WFP) will be implemented through Asian Development Bank's regional and private sector operations departments in Pakistan, India, Indonesia, Vietnam and other Asian countries during 2006-2010 and more than $15 billion would be provided for the project.

According to ADB sources, for 2006, the programmed level of water investments already exceeded $2.4 billion. When the programme is expanded to 2009-2010 on a pro-data basis, total delivery could reach $12 billion over five years, exclusive of co-financing. While planned water investments will continue across the region, WFP will focus in its first phase on India, Indonesia, Pakistan, PRC, and Vietnam, which together account for about 80 percent of the current pipeline of water investments.

ADB's regular lending programmes in these countries will also offer the greatest opportunity to explore an expansion of water lending beyond current levels.

To complement higher levels of lending, ADB will pursue additional bilateral co-financing partnerships to increase technical assistance in support of water investments. "Our aim is to increase assistance from the current level of approximately $12 million to $20 million per year for national water sector reforms, project preparation, monitoring and capacity development," said ADB sources.

In implementing WFP, ADB will further strengthen collaboration with civil society, including knowledge partners and the academe, development and advocacy NGOs, parliamentarians and support for media networking.

To ensure successful implementation, ADB's Regional and Sustainable Development Department would monitor the programme through funding support, innovation, knowledge sharing and the provision of special advisers to regional departments and the private sector operations.

The Asia Water Watch 2015 study, commissioned by ADB, WHO, UNDP, and UNESCAP, estimates that annual investments of $8 billion-at minimum will be needed over the next decade to meet millennium development goal (MDG) targets for safe drinking water and sanitation alone. Additional investments are needed for irrigation services, river basin management, flood management and mitigation, and wastewater management to ensure the future of this precious resource. Investments in water are also crucial to meet the broader MDG targets of reducing poverty, hunger, child and maternal mortality and the incidence of major diseases, and improving environmental sustainability.

*WFP WILL ENSURE THE DELIVERY OF A SUBSTANTIAL INVESTMENT, REFORM, AND CAPACITY DEVELOPMENT PROGRAM IN THREE KEY AREAS:* 

(i) Rural water services to improve health and livelihoods in rural communities, including investments in water supply and sanitation, and irrigation and drainage.

(ii) Urban water services to support sustained economic growth in cities, including investments in water supply, sanitation and wastewater management, and environmental improvement; and

(iii) Basin water management to promote integrated water resources management and healthy rivers, including investments in the infrastructure and management of multifunctional water regulation and hydropower facilities developed in a basin context, flood management, and the conservation and improvement of watersheds, wetlands, and ecosystems.

The WFP focuses on combining increased investments in water infrastructure with capacity building, private sector participation, and improved water governance.

It is expected that such investments will be well over $2 billion annually, representing approximately 25 percent of overall ADB lending over a three-year moving average period, and a doubling of ADB's investments in water compared to 1999. WFP will also mobilise co-financing and additional investments from governments, the private sector, and multilateral and bilateral partners. An initial target of $100 million in bilateral grant assistance has been proposed to support the implementation of WFP.


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## Neo

*'Pakistan being recognised as economic leader' *

ISLAMABAD (November 06 2006): International community is now recognising Pakistan as an economic leader. Minister of State for Economic Affairs, Hina Rabbani Khar talking to PTV said, "World Islamic Economic Forum, I think, is of a great significance to Pakistan because it shows to us at least that the world is now recognising Pakistan as an economic leader."

She said successful holding of second meeting of World Islamic Economic Forum will put Pakistan on the world stage as a country which is capable of hosting such event and a country which has been able to generate the type of interest in the world for hosting such events.

This forum has a unique significance as it is really for the interest of the Muslim World.

Federal Minister for IT and Telecom, Owais Ahmed Leghari said these forums usually provide a great opportunity for investors and business leaders within a certain region to be able to network with each other. It is not just these interactive sessions.

Question Answer sessions and interactive sessions that add a huge amount of value to the people who are actually the audience for them. But it is the opportunity outside these sessions in common areas to interact with the business leaders and success stories of this region to interact with each other and try to explore new opportunities, new areas in which mutual co-operation could be of economic benefits to all of them.

Minister of State for privatisation and Investment, Omer Ahmed Chumman said, more importantly, how globalisation is taking an impact on this investment scenario in Pakistan is that more and more investors from the Far East and the Middle East are coming into Pakistan thinking that there is a much better environment to investment into Pakistan because there was a transparency in the system, there was continuity in the policy, and obviously there is direction of the government in terms of promotion of investment.

Chairman Higher Education Commission (HEC), Dr Atta-ur-Rehman said the World Islamic Economic Forum is a major opportunity for the Islamic countries to come forward with a clear cut strategy and an action plan based on this vision to develop economy.

Advisor to the Ministry of Finance, Dr Ashfaq Hassan Khan said this forum will bring not only the Islamic World closer as far as the economic and financial integration was concerned but this will also dispel some of the misperception which had been projected outside Islamic world about the Muslim countries. These countries are also very active in business and financial world so this is a right step in the right direction. And for Pakistan this was a great honour, he added.


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## Neo

*Oil sector to get $4 billion more investment *

ISLAMABAD (November 06 2006): Country's booming oil sector will be receiving another $4 billion investment in a joint initiative by the Pak-Arab Refinery. International Petroleum Investment Company and Associated United Arab Emirates International Petroleum Investment Company (IPIC) and Associated UAE Investors will take up to 75 percent stake.

While Pak-Arab Refinery (Parco) will take the 25 percent stake to set up the Khalifa Refinery.

This Refinery is planned at Khalifa Point about 50-km west of Karachi on the coast line and 25-km South West of the industrial town of Hub.

Parco Managing Director Muhammad Rasheed Jung told APP in an interview that the refinery will help overcome the diesel shortfall in the country and produce value-added products for the local market as well as for export.

"Our objectives is to establish a market leader in producing clean high quality middle distillates and other value-added products for domestic market and for export in the international market", said Rasheed. "It is after quite some time that the oil industry is receiving that voluminous investment," he added.

About 1000-acre of land is available for the project being planned close to Hubco power plant (1,250 MW) and in the vicinity of the Bosicor Refinery.

The refinery requires SPM, marine for receiving crude and product export and products pipelines connected to white oil pipeline terminal at Port Qasim. The Government of Pakistan (GoP) will facilitate it with infrastructure.

Rasheed said the refinery will have a capacity to process about 250,000 to 300,000 tonnes of crude oil and hence double the existing refining capacity of the country.

"Oil production at this refinery will help overcome the shortfall and meet the occasional shortfall like hydel energy and LPG," he said.

Rasheed said products over and above the local needs will be exported. As part of the incentives of the government for foreign investment the refinery location is being declared export processing zone (duty-free area) and all imports during project implementation and operation will be duty-free.

Rasheed said the desired product quality is based on Euro-IV specifications, a parameter in vogue in European and other developed countries.

The government has already set the 2011 as cut-off date for refineries to elevate their standards to Euro-III in phases, he said, adding the detailed refinery configuration will be finalised after scheme optimisation.

Rasheed, However, said conceptually it will be a deep conversion refinery based on latest technology having isomerization, reforming hydrocracking and coking technologies.

Its major units will include crude distillation, vacuum distillation, isomerization, gas treating unit, Naptha HDS, Reformer, kero HDS, hydrocracker, delayed coker, sulphur recovery unit and hydrogen plant, he added.

Rasheed said the refinery will maximise middle distillates (diesel, jet fuels and kerosene) and current plans reveal that more than 60 percent of refinery production will be middle distillates.

Gasoline will be one of the major products with 2.1 to 3.0 million tonnes per annum that would be suitable for domestic and major markets with high RON/MON and low aromatic and benzene.


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## Neo

*Missing the big picture*

At a time when PakistanÃ¢â¬â¢s sprawling textile industry was confidently expecting large-scale increase in its exports, following the end of the textile quota, the foreign sales have come down by over 10 per cent during July-September compared to the same period last year.

According to present negative trends, the current quarterÃ¢â¬â¢s export performance, it is feared, may turn out to be far worse. Urgent remedial measures have to be taken by the government, industry and exporters, if the adverse trend is to be reversed decisively

The fall in PakistanÃ¢â¬â¢s textile exports has come at a time when not only South Asian competitors in this sector are doing very well but even Cambodia in the Far East is said to be exporting more textiles than Pakistan.

This has happened despite the investment of five billion dollars on the expansion and modernisation of the industry and a million dollars more on the erection of factory buildings.

And this has happened despite the assertion of the ebullient textile industrialists that they will do far better in a textile quota-free world.

While PakistanÃ¢â¬â¢s overall exports rose by only 2.9 per cent in the first quarter of this financial year, Indian exports went up by 37 per cent in the first half of its financial year ending September 30.

PakistanÃ¢â¬â¢s July- September textile exports were for $2.449 billion against $2.73 billion in the first quarter of last year.

Official figures show that export of almost all textile items, except cotton yarn and cotton carded, recorded a negative growth despite the recent support package, fiscal and financial, announced by the government.

The concessions given to the industry by the government, instead of helping to boost the exports, appear to have brought down the prices of Pakistani textiles abroad and reduced their market size except for cotton yarn. Compared to that the more expensive export items of China and India had a far larger sale in the European Union.

The export of ready made garments from Pakistan dropped in the first quarter by 7.84 per cent and cotton cloth export declined by 14.61 per cent. But export of cotton yarn increased by 19.57 per cent.

Export of knit wear, a value added item declined by 10 per cent, bed wear dropped by 19 per cent and towels by 4.82 per cent.

Export of made-up articles including other textiles declined by 33.54 per cent and art silk and synthetic textiles came down by 24.57 per cent. These are indeed large losses, more so for those confidently hoping for larger exports.

Cotton yarn exporters are having an exciting time because of nearly 20 per cent rise in yarn exports. While that makes yarn more expensive for those manufacturing and exporting fabrics and other textiles at home, the yarn is sold at cheaper prices abroad by passing on a part of the benefit to the foreign buyers given by the government to the spinners.

While other textile exporters are protesting against the financial concessions given to the spinners, the spinners are asking for more subsidies. And the All Pakistan Textile Mills Association is supporting that demand as it is dominated by the spinners.

But other textile exporters want a check on yarn exports in the form of quota restrictions or a duty on exports of yarn so that they can get all the yarn that they need and at fair prices and make their products more competitive to sell abroad.

While the interests of the textile industry were being looked after by the ministry of industries and the ministry of commerce until recently there was clamour for a separate textile ministry. But now there is not only a cabinet minister for textiles, but also a minister for state which is wholly unnecessary.

And yet the textile exporters are protesting that all that the textile ministry is doing is to ask for concessions for the textile mill owners and not looking at the larger problems of the industry.

Evidently the three ministries have not been able to solve the problem of the textile industry in a highly competitive world where decisions have to be taken quick and actions follow immediately.

So, the textile exporters sought intervention of Prime Minister Shaukat Aziz. He has promised to do the needful and he has asked the Planning Commission to suggest measures to raise PakistanÃ¢â¬â¢s exports from 13 per cent of the GDP to 15 per cent.

A small committee has been set up under Tariq Saigol to come up with urgent solutions. Both the bodies have yet to submit their reports.

It is not good for the country that the yarn exports flourish at the cost of cotton cloth, readymade fabrics and knitwear which have received serious setbacks on the export front.

The yarn exports are increasing at the cost of other higher priced textile exports at a time when the country has run out of its own cotton and it may have to import a million bales of cotton this year apart from importing finer cotton to make better textiles.

There is nothing glorious in extracting a great deal of concession from the government and then selling the yarn at cheap prices abroad. The textile industrialists should improve the quality of their products and become more venturesome in the exports. If the current policy results in a closure of about 300 knitwear units or eventually a million spindles, as claimed by the textile industry, that would damage the economy a great deal.

Instead of often rejoicing over higher exports, the mill owners should promote the value added goods and try to get far more for every pound of cotton textile. Pakistan cannot sacrifice its large economic interests for the small gains of the spinners.

The spinners have dominated the industry for too long. Now that we have no surplus cotton, the policy of rejoicing over the export of cheap yarn should give way to a more sound approach to textile export.

Textile mill owners should be far more enterprising and far less conventional, and should come up with new products on the basis of market studies abroad and new designs that reflect the new trends abroad. They should look for new markets, moving away from their quest for cheap markets and radicalise their trade.

They should participate in international trade fairs and fashion shows and improve the efficacy of their business practices.

They need more educated sales force and they have to keep up with the new trends in the world textile trade which has changed a great deal after the quota system ended and meet new market demands. And they have to prefer exporting more and more of the value added to cheap goods and emerge successful through a determined quest for success.


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## Neo

*Biotechnology for sustainable agriculture*

Agriculture provides raw material to industry which generates employment and strengthens economic self-reliance. Unfortunately, contemporary agriculture is confronted with multifarious problems which have shattered the concept of sustainable agriculture.

Though the world farming communities are harvesting the fruits of green revolution, there are many snags in boosting production. These include uncertain and low productivity and failure of conventional farming in resolving the long-standing agriculture and environmental issues.

In the present scenarios, biotechnology has emerged a novel area of scientific endeavour which possess a huge potential to realise the dream of sustainable agriculture and environment.

Being enriched by inputs from both conventional and modern scientific experimentation like genomic research, biotechnology could prove a panacea for uplifting of degraded socio-economic and scientific infrastructure on sound basis in all developing countries like Pakistan.

As embedded with cultural and socio-economic values, biotechnology might be helpful in resolving long lasting agricultural and environmental issues like over-exploitation of human resources etc.

Across the globe, an intensive work is going on to exploit the biotech knowledge ornamented with the genome reshuffling to address major agricultural and environmental issues like salinity, drought and biodiversity degradation which the so-called green revolution almost failed to resolve.

Through gene reshuffling, the drought and salt resistant varieties are being introduced for obtaining optimum benefits from less than ideal soil conditions.

Green revolution performed well on normal soil conditions but unfortunately it could not help farmers having degraded landscapes in most countries of the world. There is no significant change in the rehabilitation of soils affected by higher salts concentrations.

Like other countries, in Pakistan, a major portion of irrigated and rain-fed area is salt affected. Since green revolution, different strategies based on physio-chemical methodologies have been proposed by scientific communities.

Admittedly, some success stories exist within the domain of these approaches but in most cases these proved timely. None of these helped farming sector on sustainable and long-term basis. Particularly, under our natural conditions, we could not reap bonanza due to our arid conditions.

Drought conditions coupled with salt affected conditions proved a major limiting factor in the success of these conventional approaches to attain sustainable agriculture and environment.

Around the globe, all conventional approaches to long-lasting agricultural and environmental issues have been replaced with recent biotech approaches. But unfortunately, the pre-existing trend in our research endeavour has not shown a remarkable shift accordingly.

Likewise pest problem remained unresolved and became more severe. About 30-50 per cent of food produced becomes victim to pest each year. In addition, extensive use of pesticides on crops has given birth to contaminated commodities.

Many people within the country and abroad have raised their comments on the quality of cotton, vegetables, fruits, rice and other crops. Contamination of vegetables and fruits with pesticides residues in the daily-use vegetables have been extensively reported by the scientists.

Indiscriminate use of pesticides has also played havoc with environmental quality, biodiversity and public health in many parts of the country. On global scale, usage of pesticides on crops has greatly declined due to several alternatives based on biological approaches.

In addition to introduction of pest, drought and salt resistant genetically modified crops, use of plant growth promoting rhizobacteria and their metabolites as bio-fertilizers, bio-pesticides and plant growth regulating substances, have received much attention.

Meanwhile, though it is hard to describe recent advances in agronomy in all its domain, a change in conventional approaches in all sectors of agricultural research by respective research institutes is highly needed in the era of biotech revolution after green revolution. For future endeavour. following strategies are suggested.

Ã¢â¬Â¢Legitimate efforts are needed to review biotech approaches in respective fields and future research work should be based on novel ideas.

Ã¢â¬Â¢Hi-tech instrumentation is pre-requisite before taking any initiative as most of our research laboratories are devoid of hi-tech instruments and have not conducted research of international standards.

Ã¢â¬Â¢Characterization of plant or microbe origin enzymes/secondary metabolites and their production on commercial scale for agricultural application should be carried out to minimise the use of agrochemicals in agriculture.

Ã¢â¬Â¢Efforts should be made for bio-remediation of contaminated and rehabilitation of the degraded landscapes for production of high quality commodities.

Ã¢â¬Â¢There is a dire need to upgrade the infrastructure of research institutes by undertaking reforms proposed by the scientific communities to encourage them to demonstrate well on scientific grounds.

Ã¢â¬Â¢Exploitation of biological alternatives employed for sustainable crop production and environmental remediation should be promoted at academic and research institutes for the development of successful biological approaches to resolve the different agricultural and environmental issues.


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## Neo

*Upgrading skills for knowledge-based economy*

By Noor Fatima

Technological developments in the last century have transformed a majority of wealth-creating activities which are now more Ã¢â¬Åknowledge-basedÃ¢â¬Â and not so much physical-based.

In a knowledge-based economy, the capital is enhanced not only through the material production (manufacturing) but also by non-material production. The ratio of education and training is comparatively very high in knowledge- based economies and a considerable portion of GDP is invested in the skill development.

Now multinationals compete head-to-head locally as well as internationally. A substantial structural adjustment is required at local and regional level. The global knowledge has to be transferred into the local context and should be used for the enhancement of the local knowledge. It has to be globalisation of local knowledge and localisation of global knowledge.

By inter-connecting local, regional and global knowledge, an economy based on knowledge and innovation can be built.

The knowledge economy is differentiated from the industrial economy on basis of the following features: first:1) communication revolution has intensified the move towards knowledge codification.(2) Flexibility of organisation reduces waste and increases the productivity of both labour and capital by integrating the Ã¢â¬ËthinkingÃ¢â¬â¢ process. 3) intensive knowledge, skills development and constant learning process- knowledge is being created on an every increasing scale. (4) Innovation and knowledge networks.

These basic factors are cost reducing and the skills are rated. Therefore, investments become mandatory for human capital and use of information becomes more crucial. Now sources of economic productivity depend on the ideas more then the goods.

PakistanÃ¢â¬â¢s is also working to move towards Ã¢â¬Ëknowledge based economyÃ¢â¬â¢. According to Medium-Term Development Plan (MTDP)2005-10, there is a strategy to move towards an efficient, balanced, internationally competitive, environmental friendly and technologically driven knowledge economy.

One can look forward to PakistanÃ¢â¬â¢s pursuits for knowledge economy but with greater doubts in the given state of skill and knowledge attainment.

There are two major potential challenges in shaping the knowledge based economy- the quality and quantity of education and investment in skill development- to develop knowledge hubs.

As such there is no prescribed unit for quantifying knowledge to measure in numerical figures but it can be assessed on certain indicators which reflect in economic performance.

Peter Drucker, in 1966 in his book, Ã¢â¬ËThe Effective ExecutiveÃ¢â¬â¢, described the difference between the manual worker and the knowledge worker and proved that it does make difference to produce product Ã¢â¬Ëby handÃ¢â¬â¢ and by Ã¢â¬ËheadÃ¢â¬â¢.

That is why the patents, trademarks and other intellectual property rights(IPRSs) are considered critical by WTO as an incentive for investment and generation of new idea, information and knowledge.

According to the study of World Bank based on the indicators of knowledge economy on science and technology development table). It reflects where we stand in integrating our firms with the world.

The data on R&D development shows that Pakistan is behind comparable countries like India and China. Bangladesh is also performing better in some of the indicators. That is the reason why Pakistan has smaller number of applications for patents. The high technology exports exhibit the same trend.

The training of various skills is imparted through polytechnics and vocational training centres. And new centres of excellence are being established as a result of efforts made by Higher Education Commission.

But as Dr A. R. Kemal argues that cost-effective and demand-driven investment in education and skill was required but it alone would not suffice Ã¢â¬Åuntil institutions were developed that recognise the value of investing in people and provide dignity, respect and fair deal for working men and womenÃ¢â¬Â.

Pakistan is a country with about 25 million youth of 18-25 years age group but a very small percentage of 1.7 are able to make contribution in national economy with their right kind of training and education.

Around 540 technical and vocational institutions have the capacity to produce only 200,000 skilled people every year which is inadequate as compared to the demand of the knowledge economy and the countryÃ¢â¬â¢s population.

Just focusing on enhancing the enrolments in technical institutes is not enough. We need to emphasise on quality with quantity of skill development according to the need of the firms and entrepreneurs.

To make knowledge based economy, there is a need to have a change in strategy. Long term planning is mandatory based on a realistic assessment of our economic activities in the light of emerging trends and prudent investment polices.

This requires three generation of investment reforms: First generation reform calls for adoption of market friendly policies- to liberalize the investment regimes by reducing barriers to inward FDI, strengthening standards of treatment for foreign investors and giving a greater role to market forces in resource allocation.

Second generation reforms are the investment promotion policies which attracts investment by Ã¢â¬ËmarketingÃ¢â¬â¢ their locations.

To move to- wards third generation reforms, investment promotion policies framework is required for attracting investment to target key investors in the identified industries and firms.

Further to meet their specific vocational workforce, there is a need to have programmes of transfer of knowledge through global production networks and establishment of Ã¢â¬Ëknowledge hubsÃ¢â¬â¢, in the light of industry development priorities.

This is the only gateway for Pakistan to establish a successful knowledge- based economy.

Globalization of local knowledge and localisation of global knowledge are the pre-requisites of knowledge based economy.


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## Neo

*$500m UAE fund for Pakistan planned*

ISLAMABAD, Nov 5: A group of Dubai-based investors has decided to create a $500 million Ã¢â¬ËPakistan Infrastructure FundÃ¢â¬â¢, especially to help improve energy, transport, power, health and sanitation sectors.

Ã¢â¬ÅThis fund will be officially launched at the end of the three-day World Islamic Economic Forum,Ã¢â¬Â said Dr Marcus Fedder, the fundÃ¢â¬â¢s chairman.

He told this correspondent that its basic objective would be to promote public-private partnership for offering funding to Pakistani private sector through multilateral agencies.

He said that it had been decided to increase the level of funding from $500 million to $5 billion over the next decade.

Dr Feeder said that the government had agreed to facilitate the new fund, adding that the government would not be required to pool its financial resources for the fund.

He said that a number of international investors were taking part in the World Islamic Economic Forum to assess the potential of cooperation with PakistanÃ¢â¬â¢s private sector.

He said that Pakistan was one of the most important regional destinations for foreign investment because it offered a competitive investment policy.

He hoped that the government would reduce the cost of doing business in Pakistan by offering inexpensive facilities like power and gas to investors.

He regretted that vested interests in the West were painting a poor picture of Pakistan to discourage foreigners from investing here. Ã¢â¬ÅThis is not fair,Ã¢â¬Â he said.

He urged the United States and Britain to stop issuing negative Ã¢â¬Ëtravel advisoriesÃ¢â¬â¢ about Pakistan.


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## Owais

*UAE to invest $4 billion in Khalifa oil refinery near Hub *


ISLAMABAD (updated on: November 06, 2006, 17:11 PST): The country's booming oil sector will be receiving another US$ four billion investment in a joint initiative by Pak Arab Refinery, International Petroleum Investment Company and Associated United Arab Emirates.

The International Petroleum Investment Company (IPIC) and Associated UAE Investors will take up to 75 percent stake while Pak Arab Refinery (PARCO) will take the 25 per cent stake to set up the Khalifa Refinery.

This refinery is planned at Khalifa point about 50 km West of Karachi on the coast line and 25 km South West of the Industrial town of Hub.

Managing Director Pak-Arab Refinery Limited Muhammad Rasheed Jung told APP in an interview that the refinery will help overcome the diesel shortfall in the country and produce value added products for the local market as well as for export.

"Our objectives is to establish a market leader in producing clean high quality middle distillates and other value added products for Pakistan's domestic market and for export in the international market," Rasheed said.

"It is after quite some time that the oil industry is receiving that voluminous investment," he added.

About 1000 Acres of land is available for the project being planned close to Hubco power plant (1250 MW) and in the vicinity of Bosicor refinery.

The refinery requires SPM, marine for receiving crude and product export and products pipeline connected to white oil pipeline terminal at Port Qasim. 

The Government of Pakistan will facilitate with infrastructure.

Rasheed said the Refinery will have capacity to process about 250,000 to 300,000 tons of crude oil and hence double the existing refining capacity of the country.

"Oil production at this refinery will help overcome the shortfall and meet the occasional shortfall in the like hydel energy and LPG," he said.

Rasheed said products over and above the local needs will be exported.

As part of the incentives of the government for foreign investment, the refinery location is being declared export processing zone (duty free area) and all imports during project implementation and operation will be duty free.

Rasheed said, desired product quality is based on Euro IV specifications, a parameter in vogue in European and other developed countries.

The government has already set the 2011 as cut off date for refineries to elevate their standards to Euro III in phases.

The Managing Director Pak Arab Refinery said the detailed refinery configuration will be finalised after scheme optimisation.

However, he added, conceptually it will be a deep conversion refinery based on latest technology having Isomerisation, reforming, hydrocracking and coking technologies.

Its major units will include Crude distillation, Vacuum Distillation, Isomerisation, Gas Treating Unit, Naptha HDS, Reformer, KERO HDS, Hydrocracker, Delayed Coker, Sulphur Recovery Unit and Hydrogen Plant, he added.

Rasheed said, the refinery will maximise middle distillates (diesel, jet fuels and Kerosene) and current plans reveal that more than 60 per cent of refinery production will be middle distillates.

Gasoline will be one of the major products with 2.1 to 3.0 million tonne per annum that would be suitable for domestic and major markets with high RON/MON and low Aromatic and Benzene.

Other products include very low Sulphur ultra clean Gas Oils and Diesel Fuel (5.5-8.2 million tonne per annum), high quality jet fuels and Kero (0.5-0.8 million tonne), Low Sulphur high propane LPG (0.3-0.4 million tonne), NAPTHA (0.02-0.1 million tonne), Sulfur (0.1-0.2 million tonne) and Coke (0.7-1.1 million tonne per annum).

Rasheed described facilities by the government as a major contributor in attracting foreign investment.

He said the project had been planned for a barren area and its implementation would lead to economic activity in the area.

"The project will be employing 800 to 1000 professionals directly and benefit 2000 another families indirectly," he said.

He foresaw more industries in that area once this project kicks off, ushering in massive socio-economic activity and creating job opportunities for the poor people in the area.

He stated that being Euro IV standard project, it would be environment friendly and fulfilling the environmental standards in terms of emissions particularly GreenHouse Gases.

He said the sponsors are keenly pursuing the project benefiting from the government support and facilitation for the foreign investment.

"As the documentation has been initiated for the incorporation of the company, the project is expected to complete by 2011," Rasheed said.


----------



## Owais

*IT sector to attract $3 billion investment in four years *


ISLAMABAD (updated on: November 06, 2006, 16:53 PST): Further investment of $3 billion is expected in country's IT and Telecom sector by 2010 due to the consistent policies and incentives offered to investors.

Senior Project Manager Ministry of Information Technology Salman Maalik on Monday told the state-run TV channel that around 750 reputed IT companies were working in the country due to excellent profit margins and availability of cheap skilled labour.

Planning is being finalised to ensure judicious utilisation of Rs 3 billion research and development fund. Universities would be equipped and provided excellent facilities to ensure production of skilled labour in the country, he said.

World's GSM association has already awarded Pakistan as a country providing mobile companies excellent opportunities to grow.


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## Owais

*Upsurge noted in Pakistan's FDI: Kasuri *


ISLAMABAD (updated on: November 06, 2006, 16:59 PST): Foreign Minister Khurshid Mahmood Kasuri on Monday said there was an upsurge in the foreign direct investment (FDI) and last year investment was 3.8 billion dollars, which was 300-400 million dollar six or seven years ago.

Talking to private TV news channel, he said a refinery project which is joint venture of Pakistan and Abu Dhabi would be started within three or four months, adding it is project of four billion dollars which is the biggest single project in the history of Pakistan.

He rejected the misconception that only Islamic countries are investing in Pakistan and said, a major investment is expected from US soon, and other countries are also interested in investing in Pakistan.

The interest which investors of the world are showing manifests that the environment for investment was friendly in the country, he added.

Talking about Islamic Economic conference held recently he said, it was very successful and some agreements of co-operation were signed with Malaysia and both are interested in establishing banks in each other's countries, which would flourish business activities in both the countries.

He said that in Makkah summit, most of the proposals presented by Pakistan were approved and now, "We will try our best for the implementation of these proposals".


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## Owais

*USA continues strengthening its SCRA *

KARACHI (November 06 2006): USA, whose balance under Special Convertible Rupee Accounts (SCRAs), a non-residents portfolio investment financial arrangement, rose to $113.1 million on October 31, further rose to $133.3 million on November 3, showing an increase of $20.1 million in the first three days of November, including $4 million pouring in on November 3 alone.

Balances held by Singapore showed only nominal improvement over its position on October 31 as its balance stood at $111.8 million on November 3 compared with $111.3 million on October 31.

UK also improved its balance under the SCRAs, reaching to $107.2 million on November 3 compared with $104.6 million on October 31, an increase of $2.6 million during November so far.

The other major player, Hong Kong, went disinvesting $0.5 million during November so far, though it still enjoyed positive inflows amounting to $14.6 million as on November 3 compared with $15.2 million on October 31.

Switzerland, whose disinvestments had been by far the largest since the beginning the new financial year, disinvested another $1.2 million during the first three days of November with its account showing a debit balance of $29 million compared with a debit balance of $27.8 million on October 31.

Disinvestments by Luxembourg and Qatar also increased marginally and stood at minus $0.1 million and minus $0.02 million, respectively.

As a result of all these changes in the balances of aforementioned countries, overall balances of all players under SCRAs increased from $312.6 million on October 31 to $334 million on November 3, an increase of $21.4 million in just three days of the current month


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## Owais

*Pakistan ideal place for foreign investment: National Assembly speaker *

SIALKOT (November 06 2006): National Assembly Speaker, Chaudhry Amir Hussain has said that economic activities are picking pace in all sectors of the economy as Pakistan has become ideal country for the foreign investment.

Talking to exporters and traders here on Sunday, he said the government was making strenuous efforts for providing solid base to the industrial sector through extending various incentives and concessions to the business sector.

He said under the present global scenario the exporters and manufacturers should concentrate on diversifying the export and introduce new products for fetching maximum foreign exchange for the country.

He said the concept of this programme was to expand strong industrial base and create wide employment opportunities for the skilled and educated persons.

The Speaker further said that in order to produce technical and trained hands the government had already taken numerous measures. Under the strategy vocational education institutions were being established at district and tehsil headquarters shortly for imparting technical education to the male and female students.

He said the step would not only help scaling down the unemployment graph but also supportive for the industrial sector of the country.

He stressed upon the businessmen to establish industrial units in ignored areas for generating the employment opportunities for the rural population and discouraging the rural migration towards cities.

He called upon the business community to play a pivotal role in the development of far-flung areas through the establishment of cottage and small sized industries.


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## Neo

*Malaysian telecom company investing $100 million in Pakistan *

ISLAMABAD (updated on: November 06, 2006, 18:22 PST): One of Malaysia's leading telecom companies is investing 100 million dollars in Pakistan for connecting 107 cities with 4,100 kilometres of fibre optic cable.

Speaking here at a news conference, chief executive officer of Telekom Malaysia (TM) Yusof Annuar Yaacob, said "Project Ittehad" will boost country's overall communications infrastructure.

One of its subsidiary companies, Multinet is providing broadband internet access via wired and wireless media in 12 cities in Pakistan.

The CEO of Multinet, Adnan Azdar said 40 percent of the total investment by the TM has already been made.

The Multinet is first private sector operator in developing optic fibre infrastructure in Pakistan.

Yaacob said the company, which has 23 million mobile subscribers all over Asia, is looking seriously at making inroads into Pakistan's lucrative mobile market.

The TM, headquartered in Kuala Lumpur, has a string of other subsidiaries in Asia where it has substantial equity control in several mobile operators, Yaacob said at the press conference held on the sidelines of the World Islamic Economic Forum.

"We are the emerging leader for Asian communication and has all the right ingredients for international success," he added.

He said the Multinet will be able to fulfil the needs of Pakistan's high growth telecommunication sector, offering services to mobile operators, long distance international operators and internet service providers.

As one of the largest listed companies in Malaysia, the TM has a market capitalisation of $ 8.38 billion and interests in Indonesia, Singapore, Cambodia, Thailand, Bangladesh, Pakistan, India, Sri Lanka and Iran.

With a combined population of nearly two billion across nine Asian markets, where it has invested over $1.3 billion, Yaacob was confident that the company will capture further telecommunication market share.

"We are focusing on quick and efficient execution of specific strategies and we hope to capture more market share," he added.


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## Neo

*Pakistan wants back-office business*

Simon Hayes
NOVEMBER 07, 2006 

AUSTRALIAN companies are starting to add Islamabad, Karachi and Lahore to their list of offshoring possibilities as Pakistan builds up an IT push.

At least four large Pakistani software development companies are understood to be working in Australia, taking on big Indian groups including Tata Consultancy Services, Satyam Computer Services and Infosys. 
"In IT collaboration everything is electronic so it doesn't matter if you're in Sydney, Afghanistan or Pakistan," Pakistani Consul-General Azam Mohammed says. 

"That's not a real challenge in this sector." 

Pakistan's status as a "front-line state in fighting international terrorism" had not done much for its reputation where business travellers are concerned, Azam says. 

But business is taking place regardless, he says. 

"We are very bad at perception management," he says. "Those who visit Pakistan have a totally different perception." 

The Pakistan Software Export Board estimates the nation's IT industry is worth $US1 billion ($1.3 billion) a year, with $US600 million of that coming from offshore software and services. 

Pakistan is offering some attractive incentives for foreign IT firms, including a tax holiday until 2016 and 100 per cent profit repatriation. 

Pakistan, unlike India, is not chasing call-centre and back-office work, Azam says. 

"We don't actively pursue call centres because the trained labour is already absorbed," he says. 

"That's something we're not keen on, as there is a negative perception of it in many countries where jobs might be lost. 

"We say we are not the bad guys in everything. We are not responsible. Someone else is." 

The country has taken on some fairly unusual back-office work, though. 

First Marvel uses Pakistan's cheaper workforce to run customer relationship management data cleansing and marketing campaigns for Australian companies. 

"The aim of CRM is ultimately to market one-to-one, but that's not really possible because you'd need an army of campaign managers," First Marvel director Ian Goldman says. 

First Marvel cuts costs for marketers by running campaigns from its Lahore headquarters. 

"In the traditional world you might do 10 campaigns," Goldman says. 

"But the difference in labour costs means you can do 100 or 1000 campaigns."

The Australian 

http://australianit.news.com.au/articles/0,7204,20697228^15317^^nbv^,00.html?from=public_rss


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## Neo

*M'sia-Pakistan Trade To Reach US$1 Bln With FTA, Says PM *

ISLAMABAD: The implementation of the Malaysia-Pakistan free trade agreement (FTA) next year is expected raise two-way trade to US$1 billion from the current US$730 million, Prime Minister Datuk Seri Abdullah Ahmad Badawi said here Sunday.

He said the present bilateral collaboration in various fields between both countries was showing positive signs and progressing well.

"We hope to achieve the US$1 billion mark," said Abdullah at a joint press conference with his counterpart Shaukat Aziz after their bilateral meeting at the Pakistani prime minister's official residence.

Abdullah arrived here Saturday for a three-day official visit.

Malaysia and Pakistan had signed the agreement on early harvest programme (EHP) in October last year, which paved the way for the free trade accord. The EHP took effect from January 1, 2006.

The EHP covers products with most favoured nation (MFN) tariffs of 10 percent and below and products with MFN tariffs of 5 percent eliminated.

Pakistan's EHP offer to Malaysia covers 5.49 percent of the import value or RM146.3 million involving 1,256 tariff lines.

The products include machinery, mechanical equipment and appliances, plastic products and chemical, rubber and timber products.

Malaysia's offer to Pakistan covers 114 tariff lines covering an import value of RM22.7 million or 10.97 percent of its total imports from Pakistan. The products include textile and clothing, agriculture and jewellery.

Touching on the bilateral, Abdullah said that he was happy with the outcome of the meeting and hoped to see that it would further expand in the future.

Meanwhile, Shaukat said that trade in goods between both countries had increased while Malaysian investments in Pakistan over the last two years have improved tremendously.

"So far, there are 40 Malaysian companies doing business in Pakistan," he said.

Shaukat also said that Malaysia and Pakistan have both agreed in principle to set a joint investment company to promote investments in Pakistan and vice versa.

Both leaders later witnessed the signing of two memoranda of understanding.

The first was between the National Highway Authority of Pakistan and Minconsult Sdn Bhd for the construction of a 409km Qila Saifullah-Zohb-DI Khan and Qila Saifullah-Loralai roads in Balochistan.

It was signed by Minconsult International Limited Director Datuk Ir Dr Dennis Ganendra while NHA was represented by its chairman, Maj Gen Farrukh Javed.

The other was between the International Centre for Education in Islamic Finance (INCEIF) and Pakistan's National Institute of Banking and Finance (Guarantee) Limited (NIBAF).

Bank Negara Malaysia Governor Tan Sri Dr Zeti Akhtar Aziz, who is also INCEIF chairman, signed on behalf of the centre while Dr Shamshad Akhtar signed for NIBAF.

http://www.bernama.com/bernama/v3/news_lite.php?id=227966


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## Neo

*Refinery project approved despite exaggerated cost: bidding decision cancelled *

ISLAMABAD (November 07 2006): The Federal Government seems not to have learnt any lesson from Supreme Court's verdict on Pakistan Steel Mills (PSM) sell-off, whereby it was directed to exercise care and ensure extreme transparency while dealing with public offerings.

The summary approved by the Economic Co-ordination Committee of the Cabinet (ECC) on October 31 2006, for setting up Khalifa Coastal Refinery with an approximate range of 9-13 million tonnes per annum capacity, was fraught with a number of anomalies in the modus operandi in granting permission to International Petroleum Investment Company, to execute the joint venture with a public concern, Parco.

It is surprising such a major decision has been made without the support of any study and thus knowingly the date of commissioning announced at the press briefing 2010 has been changed to the first quarter of 2012.

First of all, the summary offers a strange logic that in view of the fact that IPIC is an Abu Dhabi Emirate-owned company and other members of consortium would also be Dubai/Abu Dhabi companies (who knows what those companies are or may be). Therefore, the condition of international competitive bidding may be withdrawn in modification of earlier ECC decision taken on April 14, 2006.

Such an autocratic selection of a firm for a major joint venture gives rise to the feeling that the ECC has once again used a short cut to oblige a specific party. International bidding should have helped to determine the real price tag of the project. But those sitting at the helm of affairs preferred to act in their autocratic style of governance in deciding the fate of a huge project like this, said a Karachi based consultant.

It is also well known that Royalties in Middle East, besides running the government, are also in private business for themselves. For instance, UAE companies like Etisalat have competed with Singapore government's investment arm of Tamasek for PTCL.

The price tag of any project is always a debatable issue. Khalifa Coastal Refinery is no exception. The cost of the proposed refinery is estimated at $4-5 billion. Also, six years gestation time indicates that the joint venture will have to do everything from scratch and that the proposed project is yet a thought on paper only.

The estimated cost of the Khalifa Refinery, if compared with the cost of under-construction Essar Oil Ltd--a refinery in India with a production capacity of 10.5 to 12 million tonnes of processed products per year (million MT per annum)--seems highly exaggerated. Essar Oil Limited is being constructed in Gujarat, India, at an estimated cost of $2.26 billion which is less than half of the Khalifa Coastal Refinery's estimated cost.

On the other hand, India's Reliance Industries Ltd is presently undertaking extension of 33 million MT per annum in Reliance Petroleum situated at the special economic zone in Jamnagar at an estimated cost of $6 billion. The oil and petrochemicals company plans to nearly double the capacity at its 660,000 barrels per day facility, which is greater than the proposed capacity of the Khalifa Coastal Refinery.

Compared with the cost of Essar and Reliance oil refineries, the Khalifa's estimated cost of $4 to 5 billion is highly dubious. These facts were needed to be taken into account had there been study to support the agreed cost. It is more surprising that in the blue book referred to in the ECC summary itself the cost has been kept at $1.7 billion by government experts Enar Petrotech.

Moreover, 26 percent of such an exaggerated cost would be funded by Parco with the option to offload up to 20 percent shares to parties like Asian Development Bank with the approval of the government. Such an agreement for the offloading of 20 percent shares will be enough to bear the real cost and the exceeding amount will reduce the investors' equity in the project.

Ultimately, the nation will again have to bear the burden in the years to come as ex-refinery price would still be fixed by the government taking into account all costs including debt servicing, the consultant remarked.

A leading local textile-cum-banking group has already showed interest in putting up a coastal refinery. How can free land and infrastructure (including mooring) be offered to foreigners and not to Pakistani businesses? asked the consultant.

The text of the summary is being reproduced below for the interest of the general public. ECC vide its decision in Case No ECC-72/4/2006 dated April 14, 2006 approved a package of incentives for setting up of a new state-of-the-art oil refinery of 200,000 to 300,000 barrels per day (about 9-13 million tons per annum) at Khalifa Point near Hub, Balochistan, with the direction that the Ministry of Petroleum and Natural Resources and Oil and Gas Regulatory Authority will select the party on the basis of international bidding.

Various incentives, including free of cost land, have been offered for this refinery in addition to those already given in the Petroleum Policy 1997, subject to its commissioning by 31st December, 2010. ECC Summary along with approval is at Annex-1.

The Ministry of Petroleum and Natural Resources prepared a Blue Book through a consultant Enar Petrotech Services (Pvt) Ltd, which inter alia contained all basic information relating to investment opportunity in the setting up of a new oil refinery at Khalifa Point. The Blue Book was proposed to interested investors as well as investors in the Pak-China Energy Forum held in Islamabad from 25th - 27th April, 2006.

International Petroleum Investment Company (IPIC) of Abu Dhabi, a Government owned company, approached the Ministry of Petroleum and Natural Resources and expressed its keen interest in making investment in the Coastal Refinery of 200,000-300,000 barrels per day capacity at Khalifa Point and thereafter confirmed their interest through a letter dated 10th August and 24th September 2006 (Annex-II).

IPIC established in 1984 is run by an independent Board of Directors, whose Chairman is Sheikh Mansour Bin Zayed Al Nahyan and it has 24 years experience of investing in petroleum related projects. IPIC's shareholding in Parco is held through its IV holding company Abu Dhabi Petroleum Investment Company (ADPI).

*Salient features of IPIC proposal in the Coastal Refinery are as under: *

i) A Consortium to build the proposed refinery will consist of IPIC and its associated investors in the ratio of 75 percent and Parco 25 percent. Out of IPIC's proposed 75 percent stake, half of the stake could be retained by IPIC while the remaining half to be taken by other UAE Government institutions including companies from the Emirates of Abu Dhabi and Dubai.

ii) IPIC has proposed that the name of the refinery would be Khalifa Coastal Refinery.

iii) IPIC proposes that Parco should join in this project with a view to having integrated approach with reference to Parco's existing Mid-Country Refinery Project.

iv) IPIC would be only financing the project while Parco, apart from putting in its share of funds, will co-ordinate and act as Operator of the new Coastal Refinery.

v) The cost of the proposed refinery is estimated at $4-5 billion and it could be commissioned by the year 2011-2012.

Parco management is of the view that in order to exercise effective control of the company, particularly in relation to fundamental business decisions, their shareholding should not be less than 26 percent of equity. The Ministry of Petroleum and Natural Resources is in agreement with Parco's above proposal.

The Asian Development Bank vide its e-mail dated October 3, 2006 (Annex-III) has also shown interest in participating in the proposed Coastal Refinery which will be considered against Parco's 26 percent shareholdings.

In view of the investment proposal offered by IPIC at para 3 above and the position explained at paras 4 & 5, following is submitted for consideration and approval of the ECC:

i) Parco may be allowed to form a joint venture company with IPIC for setting up of the state-of-the-art new deep conversion refinery at Khalifa Point, Hub Balochistan.

ii) Parco may be allowed to take 26 percent share equity with the option to offload up to 20 percent of their shares to parties such as Asian Development Bank subsequently with the approval of the Government of Pakistan. Accordingly, JV Company will comprise IPIC 74 percent and Parco 26 percent shareholding.

iii) The land up to 1000 acres from the 1800 acres available at Khalifa Point Hub, Balochistan, will be provided to IPIC/Parco joint venture free of cost for the proposed Khalifa Coastal Refinery Project. In modification of earlier ECC decision dated 14-4-2006 referred above, the land will be used only for the Refinery Project.

iv) All other incentives/concessions, terms and conditions approved by the ECC vide its decisions dated 14-4-2006 will be applicable for IPIC/Parco Joint Venture Company. The refinery project will be commissioned by 1st quarter of 2012 as proposed by the IPIC in modification of earlier commissioning deadline of 31st December 2010.

v) In view of the fact that IPIC is an Emirate of Abu Dhabi owned company and other members of consortium would also be Government of Abu Dhabi/Dubai owned companies; therefore the condition of international competitive bidding may be withdrawn in modification of the earlier ECC decision dated 14.4.2006. The proposals at para 6 above are submitted for the approval of the ECC.


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## Neo

*Chinese firm gets new Gwadar airport contract *

ISLAMABAD (November 07 2006): The federal government has decided to award the contract of new Gwadar International Airport (NGIA) to a public sector Chinese company, the China Harbour Engineering Company (CHEC), which will execute the project in the shortest possible time on fast track turnkey basis, official sources told Business Recorder here on Monday.

However, the Civil Aviation Authority (CAA) would be responsible for design review and supervision of the project, ensuring that the new airport is built as per best international practices, sources said.

The airport, which is expected to be a regional hub, would be developed primarily to cater to cargo market, with an investment of $70 million. CAA had invited proposals for project management and design consultants in March. Several firms expressed interest in the project, including CHEC, which also offered to undertake the entire airport project on fast track turnkey basis.

The firm also submitted its proposal to President Pervez Musharraf before his visit to China in June, 2006. Sources said that Defence Ministry examined the Chinese offer and found it to be an attractive proposition. It was also observed by the government and CAA that Pakistan could benefit by the early completion of the project through turnkey/EPC methodology due to its low cost and financing offered by the Chinese firm, they added.

"CAA's analysis of the Chinese offer showed that if it were to undertake the project in the conventional way then it would take 36-42 months to complete it, whereas the completion time given by CHEC is 24 months," sources said.

Other benefits of the offer are that the company is already mobilised in Gwadar and is familiar with the working conditions there. The firm had completed a major reference project in Pakistan--the Gwadar Deep Water Port Phase-I--and has vast experience of undertaking several engineering-based projects including airports (China-Macao-Hang Kong).

With the completion of the project at much earlier date than planned, both CAA and government could benefit from early realisation of revenue. Defence Ministry is of the view that being a State enterprise, the firm is in an ideal position to arrange finances for the project on the same lines as was done in the case of Gwadar Deep Water Project Phase-I ie preferential buyers credit and grants/soft loans.

Sources said that the offer of CHEC has already been approved by CAA Board in its meeting on July 8. In order to move forward, CAA has proposed to enter into a Memorandum of Understanding (MoU) with CHEC. After its signing, the firm would undertake a feasibility study, inclusive of site investigation, necessary surveys, preliminary design, cost estimates etc and finally submit a technical and financial proposal to the CAA.

The CAA would then review the technical and financial proposal to ensure that the requirements of ICAO are satisfactorily met. Once the technical and financial offers are accepted by CAA, the government would be requested to enter into a formal agreement with the firm on price and terms and conditions of the financial offer, as the project is being funded through PSDP.

The Planning Commission has supported the proposal, but it advised MoD to obtain approval of the Prime Minster for awarding the project to the Chinese company. Sources said that the MoU is likely to be signed during the visit of the Chinese President in due course of time.


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## Neo

*France plans huge investment in hotel and auto sectors *

LAHORE (November 07 2006): French Ambassador Regis De Belent has said that France is planning a huge investment in hotel and auto sectors in Pakistan in near future and all the modalities to this regard had been finalised.

He further said that two high-powered delegations would visit Pakistan, first in the end of this month while the second in the next month, to have firsthand knowledge about the available opportunities here.

He expressed these views while speaking at the Lahore Chamber of Commerce and Industry (LCCI) function on Monday. LCCI President Shahid Hassan Sheikh, Senior Vice President Yaqoob Tahir Izhar, Vice President Mubasher Sheikh and former presidents Mian Misbah-ur-Rehaman and Bashir A Baksh were also present on the occasion.

Regis De Belent, who spoke at length on issues of mutual interest, said that economic reforms initiated by the present government had impressed the French businessmen, who were now diverting their attention towards Pakistan. He called for making more frantic efforts to improve the perception of Pakistan, which has been tarnished by a number of factors.

He also urged the LCCI members to make investment in France, which has become a land of opportunities. He was of the view that there were a number of sectors lying unexplored at the moment and this was high time for both the sides to initiate joint ventures.

He said the French embassy was holding seminars to educate Pakistani businessmen on economic scenario in France. It is high time that both the countries should join hands to take the existing volume of trade between the two countries to new heights.

Speaking on the occasion, the LCCI president said that France and Pakistan enjoy extremely cordial and friendly relations. "Both the countries have common perception about most of the international political and economic issues, and have steady trade relations. A brief analysis of our bilateral trade indicates that the total trade between France and Pakistan had averaged about $471 million over the last six years.

Exports from Pakistan to France averaged around $299 million and imports from France to Pakistan were $172 million during this period. Pakistan's exports to France during this period have been showing an increasing trend," he added.

He said that France had also significantly contributed to the building up of defence capability of Pakistan's Air Force and Navy. This speaks of remarkable relations that exist between the two countries, which form the basis for more co-operation in other fields also, he added.

He further said that major areas where France and Pakistan could work together included telecommunication, automobiles, shipbuilding and automotive parts, defence equipment, oil and gas exploration, infrastructure, textiles, garments, leather products, electrical and electronics appliances, fruits and vegetables, livestock and dairy, fisheries, horticulture, storage facilities for agro-products and cool chains.

"Any investment made in Pakistan would find market for its products in Pakistan, Central Asian States, China and other regional countries. Pakistan Railways also intends to lease out facilities to the private sector. France may be interested in this offer also," he added.

He averred that although Pakistan was the fifth largest producer of milk in the world, the current industry was inadequate to meet the growing demand for milk and other dairy related products.


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## Neo

*Foreign investment on rise: Kasuri *

ISLAMABAD (November 07 2006): Foreign Minister Khurshid Mahmood Kasuri on Monday said there was an upsurge in the foreign direct investment (FDI) and last year investment was 3.8 billion dollars which was 300-400 million dollars six or seven years ago.

Talking to private TV news channel, he said a refinery project, which is a joint venture of Pakistan and Abu Dhabi, would be started within three or four months, adding it is $4 billion project, which is the biggest single project in the history of Pakistan. He rejected the misconception that only Islamic countries are investing in Pakistan, saying a major investment is expected from US soon, and other countries are also interested in investing in Pakistan. The interest, which foreign investors are showing, manifests that the environment for investment was friendly in Pakistan, he added.

Talking about the World Islamic Economic Forum conference held recently, he said it was very successful and some agreements of co-operation were signed with Malaysia and both are interested in establishing banks in each other's country which would flourish business activities in both the countries.


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## Neo

*15 MoUs to be inked during Chinese president's visit *

ISLAMABAD (November 07 2006): Pakistan and China are going to sign 15 memorandum of understandings (MoUs) during Chinese president's visit to Islamabad, being scheduled for the last week of the current month.

A Pakistani officials team, headed by Planning Commission chairman Dr Akram Shaikh, is currently in Beijing to discuss modalities with Chinese public and private sector companies for preparing framework of the (MoUs).

The team includes Petroleum Secretary Ahmad Waqar and Planning Commission Member Infrastructure Dr Asad Shah. Sources told Business Recorder on Monday that Pakistan is expecting $15 billion Chinese investment in a number of key areas in next three to four years and Chinese president's visit will provide an opportunity to help Chinese companies invest in Pakistan in a big way.

The areas and projects for which Pakistan is willing to sign MoUs are exploitation of Thar coal, development of a special industrial city in Gwadar, setting-up of a big refinery at Gwadar Port and a pipeline to carry refined oil from the port to China.

Pak officials team will also prepare paperwork for signing MoUs for getting Chinese technical assistance to improve its agriculture sector performance.

The sources added Pakistan is seriously concerned over its shrinking per acre agricultural output and wants help from china in this regard. China has shown great interest in Gwadar Port development and offered Pakistan to develop it on the modern lines within short time.

Shinwa Group, a mining giant, is willing to get a contract from the government of Sindh for mining of coal at Thar. The Chinese company has already conducted a feasibility study, confirming Thar coal reserves as huge.


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## Neo

*Kuwait lifts ban on Pak labourers *

KARACHI: Kuwait has removed ban on visa for Pakistani labourers, lifting the local operatorsÃ¢â¬â¢ hope, which eye the Arabian state as potential importer of more than 50,000 countryÃ¢â¬â¢s workforce within a year after the latest development.

The fresh move came after series of meetings between Kuwaiti authorities and high ups of PakistanÃ¢â¬â¢s federal ministry of labour, manpower and overseas Pakistanis, sources privy to the development said.

Ã¢â¬ÅThe Kuwaiti government in fact stopped issuing visas to Pakistani labourers on undisclosed grounds more than six months ago,Ã¢â¬Â said a source in trade of manpower export and close to the authorities.

Ã¢â¬ÅThe federal minister recently visited Kuwait and held talks with the authorities concerned and managed to convince them for the removal of such ban. The new visa policy for the Pakistani labourers would be effective within next few days.Ã¢â¬Â

He said the local Overseas Employment Corporation (OEC) had also called a meeting of local operators to brief them on the new Kuwaiti policy, which would accelerate the process of manpower export to the Arab country.

Hundreds of thousands of Pakistanis fly abroad every year since early 1970s to get better employment opportunities. The overseas Pakistanis have been instrumental in managing good foreign reserves during last three years and bridging trade deficit through remittance they sent back to home.

The country faced more than $12 billion trade deficit during the last two financial years, which was offset to some extent through more than $8 billion remittances sent home by the overseas Pakistanis during the same periods.

Kuwait, which has been main importer of Pakistani manpower, however remained unpredictable during the last two years on off and on bans on the Pakistani labourers and in consistent visa policy. However, the latest move as overseas local overseas employment promoters may appears as lasting.

Ã¢â¬ÅKuwait has a potential of importing 100,000 Pakistani labourers in a single year,Ã¢â¬Â said Hanif Rinch, Chairman Pakistan Overseas Employment Promoters Association (POEPA). Ã¢â¬ÅDue to the continued violence in the neighbouring Iraq, such figures do not appear achievable but still there is a potential to attract thousands of Pakistani workers.Ã¢â¬Â

He said strategy of Arab countries to localise the labourers input was the main reason behind the ban on Pakistani manpower in Kuwait and the trend had also caused serious decline in overall manpower exports from the country.

The least hiring of Pakistanis in Saudi Arabia and banned put by Qatar, Kuwait and Bahrain on Pakistani manpower imports have emerged as threats to hit the permanent manpower export feature from the country.

During 2005 total 91,773 people flew abroad against 173,824 Pakistanis left the country in 2005. This shows a negatives difference of 47.2 per cent in a single year and the gap has been on the rise this during 2006.

The operators say declining trend in manpower export may affect the countryÃ¢â¬â¢s foreign exchange reserves negatively, as overseas Pakistanis have been one of the major sources in forex reserves rise during the last few years.


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## Neo

*Bidding for refinery near Hub cancelled: Govt to sign accord with UAE company*

ISLAMABAD, Nov 6: The government has cancelled its decision to hold International Competitive Bidding (ICB) for setting up of a $4-5 billion coastal refinery at Khalifa Point near Hub in Balochistan, and instead, has decided to sign an agreement with a UAE-based company for the project without any bidding.

In the process of shelving ICB, the estimated cost of the project has increased by more than 100 per cent to over $4 billion from $1.7 billion over a period of just six months.

Similarly, instead of saving time required by doing away with ICB, the project completion date has been delayed by more than a year to an unspecified date in 2011-12 instead of December 31, 2010, official document revealed.

The government would hand over about 1,000 acres -- out of a total 1,800 acres belonging to State Petroleum Refining and Petrochemical Company (Perak) -- to the UAE-based investors free of cost but this would not be treated as its equity but a facilitation incentive in addition to complete tax holidays as available to other Export Processing Zones (EPZs) in the country and crude imports will be completely duty-free.

To be the largest refinery in Pakistan so far, the capacity of Khalifa-Coastal Refinery of up to 13 million tons would be higher than the countryÃ¢â¬â¢s total existing capacity of about 12.5 million tons. The refinery would now be a joint venture between International Petroleum Investment Limited (IPIC) and Pak-Arab Refinery Limited (Parco) on 75:25 per cent basis. The IPIC is a company directly owned by the Abu Dhabi government while Parco is a joint venture between Pakistan and Abu Dhabi government.

As such, IPICÃ¢â¬â¢s total shareholding in the refinery would come to 84 per cent but IPIC would have maximum voting rights of 74 per cent, said Muhammad Rasheed Jung who is managing director of Multan-based Parco and has been given the assignment to complete the Khalifa-Coastal Refinery.

He has so far set up three refineries including one in Pakistan that he now heads as managing director.

On April 14 this year, the prime minister-led Economic Coordination Committee (ECC) of the cabinet decided to set up a $2 billion mega oil refinery at Khalifa Point for commissioning by December 31, 2010.

Dr Ashfaq Hassan Khan, the government spokesman on economic issues had announced that the ECC directed the ministry of petroleum and natural resources to award the contract through an international competitive bidding on BOO basis.

M/S Enar Petrotech Services, the consultants appointed by the petroleum ministry, prepared a Ã¢â¬ÅBLUE BOOKÃ¢â¬Â and worked out the project cost at $1.7 billion. The blue book containing terms and conditions and incentives was shared with a number of interested investors and as a result a number of Chinese, Japanese, Saudi and other Arabian companies showed interest in the project, official documents suggest.

Mr Jung, who was transferred by IPIC to Pakistan to set up Parco in 1989, told Dawn that he convinced secretary petroleum and his team that there was no need for the ICB since the project would be export-oriented and the products to be marketed in the domestic market would be sold under the existing pricing mechanism available to all other companies and hence his parent company "IPIC" be facilitated to set up the project that would bring in a sizable foreign direct investment, so direly needed by the country.

He said the secretary petroleum and director general oil visited the UAE last month and within three days of their stay, the IPIC management issued a letter of acceptance to set up the project as per terms and conditions approved by the government of Pakistan but without ICB.

With the completion of Khalifa Refinery, the UAE group would have a capacity to refine about 17.5 million tons (including 4.5 million tons of Parco) of petroleum products in a total refining capacity of 25.5 million tons, compared with just eight million tons capacity of all the remaining five refineries - an ideal situation for POL monopoly.

Mr Jung said following IPICÃ¢â¬â¢s consent, the ECC withdrew its April 14 decision of holding ICB. Instead, it decided on October 31 (last week) to allow IPIC to enter into a joint venture with its subsidiary Parco to set up the refinery Ã¢â¬Åat an estimated cost of $4-5 billion for commissioning by the year 2011-2012,Ã¢â¬Â says the relevant summary.

Dr Ashfaq said after the ECC meeting on October 31 that IPIC of the UAE and Parco jointly owned by the governments of Pakistan and Abu Dhabi had been allowed to set up a $4-5 billion coastal refinery at Khalifa Point to have the capacity to process 200,000-300,000 barrels of oil per day. He declined to comment about the bidding.

According to the summary, out of IPICÃ¢â¬â¢s 75 per cent stake, half of the stake would be retained by IPIC while the remaining half to be taken over by other UAE government institutions including companies from the Emirates of Abu Dhabi and Dubai. Parco will be the operator of the new coastal refinery.

The Asian Development Bank (ADB) has also shown interest to be the partner in the project and Parco would be at liberty to sell its 20 per cent shareholding to the ADB with the GOPÃ¢â¬â¢s approval. As such, PakistanÃ¢â¬â¢s shareholding would practically reduce to about three per cent in view of envisaged 20 per cent offloading of shares by the Parco.

The refinery would be a state-of-the-art deep-conversion project with hydrocracker and delayed cocker facilities and would produce high quality middle distillates and other value added products and would not produce furnace oil and hence overcome diesel deficit which currently stands at about 4.5 million tons per annum.

It would export motor spirit and generally produce EURO-IV specific products - environmentally much better than EURO-II products currently produced by local refineries, Mr Jung said.

At present the country consumes 16 million tons of petroleum products, of which 82 per cent requirement is met through imports. Total refining capacity in Pakistan currently stands at 12.8 million tons.

This 1800-acre land was purchased by the state-owned Perac in the 1980Ã¢â¬â¢s for setting up a refinery in the public sector in collaboration with Iran. However, the project could not materialise due to differences between the two governments over guaranteed rates of return.

Besides other incentives, 80/20 rule, which requires export of 80pc of total production to foreign countries, applicable for industrial units established under EPZA rules would stand relaxed for this project. There would be no restriction on import of crude oil. All crude oil imports would be exempt from customs duties and tax. All other incidental charges associated with the import would, however, be applicable.

Moreover, the government would facilitate the installation of supporting infrastructure including Single Point Mooring (SPM), sub-marine pipelines, product pipelines and electric power supply from national grid. The government would, however, not provide any guarantee for return on investment and the refinery would have to optimise its own operations for reasonable margins.


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## Neo

Tuesday, November 07, 2006 

*IT sector to get $3b investment in 4 years*

ISLAMABAD: Further investment of $3 billion is expected in countryÃ¢â¬â¢s IT and Telecom sector by 2010 due to the consistent policies and incentives offered to the investors.

Senior Project Manager Ministry of Information Technology Salman Maalik Monday told that around 750 reputed IT companies were working in the country due to excellent profit margins and availability of cheap skilled labour.

Planning is being finalized to ensure judicious utilization of Rs 3 billion research and development fund. Universities would be equipped and provided excellent facilities to ensure production of skilled labour in the country, he said. WorldÃ¢â¬â¢s GSM association has already awarded Pakistan as a country providing mobile companies excellent opportunities to grow.


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## Neo

Tuesday, November 07, 2006 

*Kalabagh and Basha Dams will change PakistanÃ¢â¬â¢s fate: Hameed*

* WAPDA chairman says Kalabagh will generate over $1b revenue annually
* Kalabagh to be used only as a water storage and power generation facility

ISLAMABAD: The construction of the Diamir-Basha and Kalabagh dams will change PakistanÃ¢â¬â¢s fate, said WAPDA Chairman Tariq Hameed in a briefing to members of the National AssemblyÃ¢â¬â¢s Standing Committee on Planning and Development on Monday.

Hameed said that tender documents of the Kalabgh Dam had been finalised and the dam could be built in six years in an estimated cost of $6.1 billion. Ã¢â¬ÅThis dam Ã¢â¬â the last on the Indus River, if built Ã¢â¬â will have a storage capacity of six million acre feet (MAF) of water with a power generation capacity of 3,600 mega watts per day,Ã¢â¬Â he said. Ã¢â¬ÅAs far as the relocation of people is concerned, the damÃ¢â¬â¢s construction will affect 78,000 people in the Punjab and 42,000 in the NWFP on 27,000 acres of land in Punjab and 3,000 acres of land in the NWFP,Ã¢â¬Â he added.

Hameed said that the dam would be used only as a water storage and power generation facility with no irrigation purposes except control of the Down Kotri water flow for better distribution of water.

He said the construction of the Diamir-Basha Dam would be completed in 2016 with an estimated cost of $7 billion, a water storage capacity of 6.5 MAF and power generation capacity of 4,500 MW. He added that the dam would affect 22,000 people living in the area. The chairman said that WAPDA planned to relocate the affected people within five kilometres of their present locations. Ã¢â¬ÅWe have planned nine modern villages on both sides of the Basha Dam lake and 29 for the Kalabagh Dam out of which 16 will be in Punjab and 13 in the NWFP,Ã¢â¬Â he added.

Hameed said the annual accumulated income of Kalabagh would be more than $1 billion while Basha would generate an income of Rs 82.3 billion. 

Responding to membersÃ¢â¬â¢ questions on the distribution of money to the affected people, Hameed said that WAPDA would distribute the money to the provinces since it was a provincial matter. He dispelled the notion that big dams were not being built in the world because of their ecological fallout, saying that 59 big dams were being built in China, 35 in Japan, 22 in Turkey, 28 in Iran and 6 in India, while Pakistan was constructing only four big dams. 

He told committee members that other countries stored 40 percent of their natural flowing water while Pakistan was currently storing only 13 percent. Ã¢â¬ÅWe started with 18 percent, but have reached 13 percent due to salinity in the dams. Even if we build Basha by 2016, we will be storing only 13 percent of the natural flowing water keeping in view the salinity ratio in the old dams,Ã¢â¬Â he added. 

Earlier, opposition members staged a walkout to protest the briefing on the Kalabagh Dam. The opposition members, including the PPPPÃ¢â¬â¢s Hizbullah Bughio and Khalid Iqbal Memon and the MMAÃ¢â¬â¢s Razia Aziz, were joined by Syed Javed Ali Shah, a member of the PML-F Ã¢â¬â a coalition partner of the ruling PML. 

However, committee chairman Sardar Bahadur Khan Sihar persuaded opposition members to end the boycott and attend the meeting. The protesting members said that they were not against the construction of big dams, but were opposed to the construction of Kalabagh Dam against the wishes of the three smaller provinces. 

They said that the government should refer the matter to the Council of Common Interest (CCI) to win the support and confidence of the smaller provinces.


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## Neo

*PM wants development, infrastructural growth in tandem *

ISLAMABAD (updated on: November 07, 2006, 19:38 PST): Prime Minister Shaukat Aziz has said that the development and growth of infrastructure in the country has to move in tandem with the growing economy and the government is building quality infrastructure to improve productivity, efficiency and competitiveness.

The prime minister said this while talking to Marcus Fedder, Chairman Pakistan Infrastructure Fund, who called on him at the PM's House on Tuesday morning.

The prime minister said that Pakistan's economy is growing by six to eight percent per year and the government is committed to building dams, roads, ports and airports to facilitate the process of economic development.

Providing electricity and natural gas to the people to transfer the benefits of high economic growth at the grassroots level is another key priority of the government, he added.

The prime minister said that logistics chain throughout the country is being improved to ensure ease of doing business and reduce travel time and cost of transportation of goods and services. He said the government encourages the setting up of Pakistan Infrastructure Fund so as to allow investment in the country.

Fedder told the prime minister that with its headquarters in Dubai the Fund would be launched with $500 million having an international investor base comprising international investors around the world. He said that the Fund would be executed through public-private partnership.


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## Neo

*Infosat launches first broadband satellite hub in Pakistan *

KARACHI, Pakistan, Nov. 7 /CNW/ - Infosat Communications, Inc., Canada's
leading satellite solutions provider, announced that it has formally completed
its 22% investment in Pakistan's Comstar ISA Ltd. This venture will see both
companies emerge as pioneers for the introduction of the latest in satellite
communications technology into Pakistan for the very first time. The expansion
into this growing market for broadband solutions is already being seen as a
turning point for businesses, enterprises, and government agencies in Pakistan
wanting reliable operability and coverage for their communication needs.

The Satellite Broadband Hub is now commercially available throughout the
country and will be known as the "Connect" solution. A VSAT network not unlike
the ones which have made Infosat Communications an industry leader in North
America - its ability to meet the needs of various sectors, including banking,
oil and gas, and government organizations is well on its way to fruition with
several key projects already implemented.

Infosat's brand represents unparalleled expertise and customer support,
both of which has helped to build its vast portfolio of clients since 1985 by
introducing innovative products and customized solutions to assist companies
with their communication requirements. Further to this, Comstar ISA is
Pakistan's leading satellite service provider with nearly 15 years experience
in the telecommunications sector.

"We are truly excited about incorporating the capabilities and reputation
of Comstar with Infosat," said John Robertson, Infosat President and CEO.
"This investment represents a unique opportunity for both companies to
solidify their foothold in Pakistan where the use of satellite technology is
still in its infancy, but the demand is ever-increasing."
"We feel confident that we now have the market presence and backing
required to satisfy the demand for satellite technology," said Sami Bajwa,
Comstar President and CEO. "Infosat is well known in North America, and has
experienced solid growth year over year, expanding their operations
successfully into Europe and Africa. Without a doubt, their decision to
explore the market potential in Pakistan alongside Comstar will be a rewarding
one."

Carey Healey, Senior VP and GM of Infosat states, "This investment
represents a progression towards a truly global service whereby multi-national
companies are able to efficiently connect their voice and data circuits back
to their head offices in North America and beyond. No matter what remote area
their new project is located in, Infosat and Comstar can provide a solution
that is scalable and unique to their business."


----------



## Neo

*SSGC to raise Rs4 bln for 28pc supply rise *

KARACHI (updated on: November 08, 2006, 21:11 PST): The Sui Southern Gas Co Ltd (SSGCL) said on Wednesday it would raise 4 billion rupees ($66 million) via bank loans and a domestic Islamic bond to fund a roughly 28 percent increase in the gas volumes it distributes.

The firm, which is 70 percent government-owned, has entered into an agreement with a consortium of banks to borrow 3 billion rupees next month, said Abid Sherani, chief financial officer of SSGCL.

SSGCL is also high on the government's privatisation agenda, and Islamabad plans to sell a 51 percent stake along with management control.

The company has embarked on an infrastructure development programme to update and expand its distribution network, which is part of the government's overall plan to reduce dependence on imported fuel oil.

SSGCL trades in gas from the country's largest field at Sui in the troubled Balochistan province.

The violence has included attacks on gas pipelines, but analysts say it is unlikely to keep investors away given the high potential for profit from the company.

PRIVATE BOND PLACEMENT

Sherani also said a 1 billion rupee Sukuk Islamic bond would be privately placed this month.

"Presently we are negotiating yields on the bond with the arrangers, but the rates will be floating," Sherani told Reuters. He said the five-year bond would pay interest linked to the six-month Karachi interbank offered rate.

Sherani said the funds raised would be used to expand the company's gas supplies to customers to 1,800 million cubic feet per day (mmcfd) by 2008. Currently, the company is supplying 1,400 mmcfd to its 1.9 million customers.

The company plans to raise its distribution capacity by more than 200 mmcfd by the end of 2007.

Sherani said the company planned to invest a total of 10 billion rupees in the current fiscal year to finance its projects, which entail 70 percent debt financing and 30 percent through the company's own resources.

"A total of 6 to 7 billion rupees are expected to be raised this year through various instruments ... the money is going to be raised as and when it is required," he added.

The firm's Sukuk will be the country's second in the domestic market after state-utility Water and Power Development Authority sold a 8.0 billion rupee Islamic bond in February.

Dubai Islamic Bank and Standard Chartered Bank are the main arrangers of the bond.


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## Neo

*Overseas Pakistanis investing in housing: 60 per cent flats booked*

KARACHI, Nov 7: About 60 per cent of flats in newly announced housing projects are booked within two weeks. Expatriate Pakistanis are active in the property business in Karachi and their share in new deals is not less than 30 per cent.

These facts emerged from a survey conducted by Dawn. A number of stakeholders in the property business were contacted and their views were sought over the demand, viability and possible future of housing schemes advertised.

It has been observed that builders prefer pre- and post-Ramazan period to announce new schemes. Among others a reason could be the fact that most of overseas Pakistanis visiting the country in a year come during this period.

Association of Builders and Developers (ABAD) Chairman Hafiz-ur-Rahman Butt told Dawn that some six new projects of flats and apartments had been introduced by the builders which would be completed in three to four years and so far these projects had received a good response.

He said that builders had been flooding the print and electronic media with advertisements for the last few years especially on two religious occasions in order to lure visiting expatriates Pakistanis. There are hardly any big projects for new houses and bungalows because of high cost of land.

He said that the local immigrants, who migrate from various cities to Karachi, were not active in the property market as they preferred to stay on rent. Besides, majority of them were too poor to afford property in the mega city, he added.

Ã¢â¬ÅPakistan faces over six million houses backlog and every year a new demand for 600,000 houses crops up for residential purposes. More than 50 per cent of existing housing stock is over 50 years old. It is also estimated that 50 per cent urban population now lives in slumps and squatter settlements,Ã¢â¬Â he observed.Both the private and public sector jointly provide 300,000 units every year, he added. Ã¢â¬ÅImproper infrastructure and lack of bank loaning facility for housing sector (like on the pattern of car leasing and financing) are the main impediments in meeting the rising demandÃ¢â¬Â.

It is assumed that the new projects especially apartments will put a burden on the Karachi Electric Supply Corporation (KESC), which has already been infamous for record load-shedding in last summer and even till today. The KESC will have to make extra efforts in managing the additional load of power when these projects mature in the next three to four years.

Mr Rahman claimed that the KESC had already approved the power load for new projects.

He said ABAD had already discussed the power and water situation with Prime Minister Shaukat Aziz recently and apprised him about the new projects.

KESC Chief Spokesman Sultan Hassan told Dawn that by July 2007 the mega city would have additional power of 500-mw when Combine Cycle Power Plant would be installed. Ã¢â¬ÅThe plant will be imported from Italy at a cost of Rs25 billion,Ã¢â¬Â he added.

Power consumption is expected to reach over 2,500-mw next year. Last year in summer Karachi consumed 2,350-mw in which Wapda provided 750-mw while 250 mega watts were shared by two Independent Power Producers and the rest was generated by the KESC. In start of winter this year, power demand is 2,100-mw while in December, January and February it will range between 1,800-1,900-mw.

Ã¢â¬ÅWe have a short-term arrangement for future power requirement but we canÃ¢â¬â¢t tell about our long-term plans,Ã¢â¬Â he said while replying a query how the KESC would handle the power situation in view of upcoming mega housing projects.

He said that power demand was increasing by seven to eight per cent every year keeping this tempo in view the city would need additional 1,000-mw by 2009-2010. Ã¢â¬ÅWe expect that power consumption in the city will reach between 6,000-7,000-mw by 2015 in case the 7-8 per cent economic growth is maintained,Ã¢â¬Â he said, adding that the KESC could increase the load consumption in short-term only.

He said the KESC load sanctioning depended on availability. Last year there were some pending cases of builders for 250-300-mw but it could not be executed, he added.

Media Adviser Karachi Water and Sewerage Board (KWSB) Azizullah Sharif told Dawn that there was no water problem and even it would not be in future when new mega projects would mature after three to four years.

The real problem is distribution. Some 30-35 per cent out of total present water supply of 629 million gallons per day goes into losses due to leakage and pilferages, he said, adding that the KWSB has already divided the city into three zones in order to check water losses.

The cityÃ¢â¬â¢s current water demand is 648 MGD.

The city gets 577 MGD from Indus Source, 100 MGD from Hub and two MGD from Dumlotte Well. Besides, 100 MGD is also being supplied from K-III project which started four months back. Out of 100 MDG from K-III, domestic consumers get 80 per cent supply while the rest is provided to the industries, he said.

He said a feasibility report was being prepared for another project to get another 100 MGD from the Indus Source. The report would be sent to the Ecnec for the approval.


----------



## Neo

*Infrastructure building govtÃ¢â¬â¢s top priority*

ISLAMABAD, Nov 7: Prime Minister Shaukat Aziz has said that the countryÃ¢â¬â¢s economy is growing at annual rate of six to eight per cent and the government is committed to building dams, roads, ports and airports to facilitate the process of economic development.

The prime minister was talking to Pakistan Infrastructure Fund Chairman Marcus Fedder who called on him at Prime Minister House on Tuesday.

The prime minister said that the infrastructure development had to move in tandem with the growing economy and the government was building quality infrastructure to improve productivity, efficiency and competitiveness.

Providing electricity and natural gas to the people to transfer the benefits of high economic growth at the grass roots level was another key priority of the government, he added.

He said that the logistics chain throughout the country was being improved to ensure ease of doing business and reduce travel time and cost of transportation of goods and services.

Mr Aziz said the government encouraged the setting up of Pakistan Infrastructure Fund so as to allow investment in the country.

Mr Fedder told the prime minister that with its headquarters in Dubai the Fund would be launched with $500 million having an international investor base.

He said that the Fund would be executed through public-private partnership.

Adviser to the prime minister on finance Dr Salman Shah and senior government officials also attended the meeting.

Talking to World Islamic Economic Forum (WIEF) Chairman Tun Musa Hitam who called on him on Tuesday, the prime minister said that Muslim countries which were facing similar challenges needed to adopt a common strategy to tackle them.

He further said that the WIEF had emerged as a platform for networking among business communities of the Muslim countries and it would also strengthen economic ties between the Muslim and non-Muslim countries.

Underlining the richness and diversity of Muslim world in human capital as well as physical resources, the prime minister emphasised the need for improved governance and reforms within individual Muslim countries and enhanced economic cooperation among them for the economic renaissance of the Ummah.

Ã¢â¬ÅEconomic cooperation based on commonality of interest complementing each other will lead to economic revival of the Muslim world,Ã¢â¬Â the premier said. The WIEF has received an overwhelming response which augers well for the economic development of the Muslim countries, he added.

Tun Musa Hitam said the feedback of the WIFE was excellent and it was shaping up nicely as a platform of economic cooperation and it was hoped that it would gradually emerge as the most important forum of the Muslim world.


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## Neo

*Malaysia offers joint venture*

ISLAMABAD, Nov 7: Malaysian Minister of Plantation, Industries and Commodities Datuk Peter Chin Fah Kui has offered joint ventures in the field of olio chemicals to the members of Pakistan Vanaspati Manufacturers Association (PVMA).

Talking to a PVMA delegation led by its chairman Sheikh Amjad Rashid at the sidelines of the World Economic Forum (WEF) here on Monday, the Malaysian minister assured guaranteed availability of necessary inputs and other incentives to the joint ventures set up in Pakistan in the field of olio chemicals.

Mr Datuk asked the chairman PVMA to build a consortium of the PVMA member units for import of palm oil products from Malaysia, as it will benefit them while negotiating the price as well as chartering of a ship for transportation of palm oil consignments.The chairman PVMA promised to look into this proposal during the meeting of the association being held on November 13.

He informed the minister that the PVMA was facing multiple problems with the Malaysian exporters of palm oil products as a result of which the Malaysian volume of trade of palm oil was shrinking in favour of its competitor country, Indonesia, which was offering lower prices.

He said if remedial measures were not taken, the Malaysian exporters will lose one of the biggest markets of palm oil products in Pakistan. Mr. Amjad pointed out there was always shortage of vessels carrying palm oil from Malaysia to Karachi. The PVMA members suffered high losses as they were required to pay the freight, customs duty and other taxes to the government, which is about 70 to 80 per cent of the C&F price of the commodity received by the PVMA members at Karachi ports.

The delay in shipment of the consignments to the PVMA member units by the exporters was another big problem, which, in fact, should be in accordance with the shipment period agreed while executing a supply contract.

The chairman further informed the minister that the PVMA member units, after paying the full price while opening a letter of credit, have to wait for a long time for the receipt of delivery orders and other shipping documents for release of the consignments.


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## Neo

*DP World out of race for Gwadar*
BY MUZAFFAR RIZVI 

8 November 2006 

DUBAI Ã¢â¬â DP World is no longer in the race to clinch the contract for Gwadar Port operations in Balochistan province of Pakistan after declining to submit an 'Expression of Interest' following the issuance of the revised tender last month.

"We have looked carefully at this opportunity and have decided not to pursue it," a DP World spokesperson told Khaleej Times yesterday. 

According to sources, PSA International of Singapore is still in the race and is considered to be a strong contender for Pakistan's first deep sea port, which is due to become operational by the end of this year after completion of the first phase. 

Globe Marine Services of Saudi Arabia, Westport of Malaysia and Pakistan International Container Terminal (PICT), Karachi, are the other pre-qualified and short-listed bidders for the final competition. 

The authorities concerned have directed the four pre-qualified port operators to submit their bids by December 4, 2006 to Gwadar Port Implementation Authority (GPIA) so that the handing over of port operations is finalised by the end of December.

According to sources, a policy board headed by the Prime Minister Shaukat Aziz will finalise the port operator after evaluating the bids to be submitted by the short-listed firms.

"The awarding of the concession for Gwadar Port on BOT basis is at an advanced stage and the government will complete the process by the middle of next month," sources said.

GPIA through Lloyds List on October 16 invited Expression of Interest (EoIs) from international port and terminal operators for Gwadar Port. The Authority approved four companies out of a total nine companies who had submitted EoIs within the stipulated timeframe.

Nine companies and consortia, who have submitted EoIs were Port of Singapore Authority (PSA) International Pte Ltd, Singapore; Pembianaan Redzai Sdn Bhd, Malaysia; Globe Marine Service Co, Saudi Arabia; a joint venture of Pakistani and French group-Pakistan International Container Terminal (PICT) and CMA-CGM group, Engro Vopak, Pakistan; National Company, Pakistan; Noor Investment Company, Saudi Arabia; Sea Trade Grains, Pakistan; and Mansour Al Mosal, Saudi Arabia.

The tender committee headed by Farooq Rehmatullah in consultation with Arthur D. Little (ADL), consultants for Gwadar Port, evaluated and short-listed four companies including PSA International, Singapore; Globe Marine Services, Saudi Arabia; Pakistan International Container Terminal (PICT), Karachi; and Westport, Malaysia. "The tender committee will make its recommendation by the December 10 to the Ministry of Ports and Shipping in order to get final approval from the policy board," he explained.

"It is expected that the signing of the agreement for the concession with the successful bidder will be finalised before the close of current calendar year," he said.

In answer to a question about participation of DP World in the bidding process, sources say DP World didn't submit its EoIs in revised tender process. 

In answer to a question, he said the agreement would be 40 years lease on Built Operate and Transfer (BOT) basis and three companies would have to be set up to run different operations Ã¢â¬â port and terminal operations, marine services and free economic zone.

http://www.khaleejtimes.com/Display...usiness_November240.xml&section=business&col=


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## Neo

*Banks drive economic growth *

PM seeks Malaysian expertise to develop Islamic banking

ISLAMABAD: Underlining the importance of a well-functioning financial sector for microeconomic stability, Prime Minister Shaukat Aziz on Tuesday said the banking sector in Pakistan had been transformed from a state-owned sector to a vibrant private industry, driving the economic growth of the country.

Talking to Dr Zeti Akhtar Aziz, Governor Central Bank of Malaysia, who called on him here at the PM House, the prime minister said Pakistan was working to establish Islamic banking as a parallel banking system comparable and compatible to conventional banking.

To achieve this, he said, the government would prepare a pool of Islamic financial practitioners who were innovators, agents of change and visionaries.

He said the sharing of experiences and expertise between Pakistan and Malaysia would enable both the countries to work closely and collaborate to spearhead the development of Islamic banking, finance and insurance.

The prime minister said the Memorandum of Understanding, signed recently between Pakistan and Malaysia in the field of banking, would help establish a framework of cooperation between the two countries for undertaking research, training and education in Islamic finance.

Ã¢â¬ÅBoth countries will be able to benefit from each otherÃ¢â¬â¢s perspectives of the industry as well as the pool of market practitioners, Shariah scholars, university professors, regulators and other service providers,Ã¢â¬Â he said.

Dr Zeti Akhtar Aziz expressed the desire to further strengthen economic cooperation between Pakistan and Malaysia. She congratulated the prime minister and the government of Pakistan on the successful convening of World Islamic Economic Forum.

The meeting was attended, among others, by the Adviser to Prime Minister on Finance, Dr Salman Shah, Minister of State for Finance, Omar Ayub Khan, Governor State Bank of Pakistan, Dr Shamshad Akhtar and senior officials.


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## Neo

*Govt committed to enhance income of farmers: PM *
Tuesday November 07, 2006 

ISLAMABAD: Prime Minister Shaukat Aziz has said that government is making all out efforts to introduce an efficient supply chain in the country as it will read to reduction in prices, improvement in quality and enhanced incomes for farming community. 
The Prime Minister said this while talking to Mr. Thomas Martin Huebner, CEO Metro Group, one of the largest Germany based wholesale Distributors in the world that plans to set up a chain of cash and carry outless across Pakistan. The Group is investing $ 200 million in Pakistan and scheduled to start its operation by the middle of next year. 

The Prime Minister said that the government is focusing on improving logistics and supply Chain through better roads, railways, warehousing to ensure, and efficient delivery system in the country to improve competitiveness and productivity and reduce the production. 

Mr.Huebner updated the Prime Minister on the progress of his company's operation in Pakistan and thanked him for the help being extended to it in setting up its business. 

He informed the Prime Minister that other German investors are keen to invest in agriculture business, especially the dairy sector as Pakistan ranks amongst the top six producers of milk in the world. 

Mr. Huebner who is currently in Pakistan to participate in the world Islamic Economic forum (WIFE), said that he had no doubt that several foreign businessmen attending the Forum will be encouraged to invest in Pakistan in view of attractive investment opportunities it offers.


----------



## Neo

*Dwindling reserves threatening economy*

ISLAMABAD, Nov 8: With higher imports and slowing down privatisation, the foreign exchange reserves have started to deplete alarmingly and could cover just three to four months of imports from about nine-month coverage two years back, Dawn has learnt.

The latest estimates put total foreign exchange reserves at about $12.4 billion, of which $10.2 billion are currently held by the State Bank. After accounting for more than $1.2 billion liabilities and selling of dollars in the futures market by the central bank, net foreign exchange reserves stand close to $8.5 billion.

This means that the countryÃ¢â¬â¢s reserves can cover about 3-4 months of import bill - a situation better only than last few months of the Nawaz Sharif government when reserves were enough just for few weeks of imports, a senior executive of a foreign bank told Dawn.

This is despite the governmentÃ¢â¬â¢s policy statements over the last year that it would maintain reserves to cover at least six months of imports at all times.

PakistanÃ¢â¬â¢s imports in the first quarter of the current year have amounted to about $7.43 billion, averaging at around $2.48 per month, which is much higher than last yearÃ¢â¬â¢s monthly average imports of about $2.38 billion. The trade deficit at the current rate of about $1.054 billion per month was also likely to cross $12.7 billion and put an additional burden of about $600 million by end of the year.

Sources in the lending agencies said the Asian Development Bank and the World Bank have been pointing out the declining trend in the foreign exchange situation and advising the government to put in place fall back arrangements and avoid overvaluation of the local currency.

The World Bank, said these sources, asked the government recently to pursue "an appropriate exchange rate policy that will avoid overvaluation of the currency".

Compared with this situation, these sources said, the foreign exchange reserves were increasing about two years back, at the same time prepaying high cost loans through creation of a sinking fund of about $1.2 billion that led to prepayment of about $1.18 billion debt to the ADB. At one time, the reserves had reached $13 billion, enough for more than nine months of imports and that too after prepayment of loans.

These sources said Pakistan has started to rely heavily on foreign direct investment (FDI) but this source under the exchange rules can go anywhere at any time, whether it is in the equity or the capital market.

Ã¢â¬ÅWhat the government can do in case the FDI starts to go back to its original destination because it would then put big pressure on the exchange rate of rupee and the level of reserves would drastically come down,Ã¢â¬Â said a source at a multilateral agency.

A major part of the FDI during the last 15 months or so has been through the privatisation process, instead of asset creation that may not be available in the days ahead.

On top of that, the repatriation of dividends would put additional burden on foreign exchange reserves, the source said, adding the privatisation of PTCL alone has increased profit repatriation by about $210 million. This meant that total flight of foreign exchange in the shape of dividends would touch about $800 million by end of this year.

Already, he said, an arbitrage has been created in favour of the dollar owing to increase in interest rates by the State Bank of Pakistan and a foreigner could gain about seven per cent just by selling dollar in the local market and then by buying it back because of a stagnation in the value of rupee over the years.

The ADB told the government recently in writing that Ã¢â¬Åthe heavy reliance on these non-recurrent and sometimes volatile inflows (US payments for logistic support, privatisation and foreign investment in equities) is a major issue for sustaining such high levels of both imports and the current account deficit, highlighting the governmentÃ¢â¬â¢s need to strengthen the underlying fundamentals of the balance of payments.

Last year, the US provided over $1.1 billion to Pakistan for logistic support which may not be available in the longer run. Another $1.5 billion was borrowed through Sukuk and Eurobonds last year and $3.3 billion through selling of the state assets.

Ã¢â¬ÅOther worrying features were that the current account deficit rose so strongly, despite receipts of $1.1 billion from the United States for logistics support; and that one third of current account deficit financing was non-recurrent, and related to inflows from privatisations and foreign investment in equities,Ã¢â¬Â the ADB said.

According to the ADB, the burgeoning current account deficit, continuing high inflation, and latent power shortages are potential risks to the countryÃ¢â¬â¢s medium-term economic prospects. Moreover, additions to the pro-poor measures already announced in the FY2007 budget may, in the lead up to the 2007 general elections, further weaken the budgetary position in the coming year.


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## Neo

*MoodyÃ¢â¬â¢s puts Pakistan on review for upgrade *

LONDON: MoodyÃ¢â¬â¢s said on Wednesday it had placed PakistanÃ¢â¬â¢s B2 foreign and local currency bond rating on review for a possible upgrade, citing declining debt ratios and substantial recent economic growth.

The agency said while PakistanÃ¢â¬â¢s debt ratio remained higher than some of its rating peers, the bulk of external debt was owed to multilateral and bilateral creditors on concessionary terms. This limits liquidity risk and the debt servicing burden, it noted.

MoodyÃ¢â¬â¢s also said fiscal policy been relatively restrained. Ã¢â¬ÅPakistanÃ¢â¬â¢s real sector has been enlivened by several years of structural reforms, including a restructuring of the banking sector, trade liberalisation and a programme of privatization that has improved productivity and spurred foreign investment,Ã¢â¬Â said MoodyÃ¢â¬â¢s Vice President Tristan Cooper.

The Pakistan government plans to issue a sovereign bond in the international market next year and also has plans to list top state-run companies abroad through issuance of global depositary receipts. In addition, several Pakistani firms looking at borrowing from the international capital market.

Ã¢â¬ÅThis is a very positive statement from MoodyÃ¢â¬â¢s, and its timing is also very appropriate for the Pakistani government, as well as companies here,Ã¢â¬Â said Asif Qureshi, head of research at brokers Invisor Securities.


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## Neo

Thursday, November 09, 2006 

*Imports of auto sector cause $1.08b trade deficit *

* Trade deficit due to imports of auto sector may increase to $5.5b in the next 5 years

By Sajid Chaudhry

ISLAMABAD: Trade deficit due to the imports of auto sector which now stand at $1.08 billion is likely to increase to $5.5 billion in the next five years (2010-11) unless corrective steps are taken to actively promote the development of the local auto parts industry and to encourage exports. 

As an immediate step, it has been suggested to the government that in order to reduce the trade deficit, a complete ban be imposed on the import of CBU vehicles, which have flooded the local market. CBU imports are not only hurting the assemblers (OEMs), but also the auto parts industry.

The banking and leasing sector should increase the initial deposit from 10% to 25% for leasing of cars. Such a move is bound to discourage those individuals who on very small initial payments book/gain ownership of an excessive number of vehicles for later sale at marked-up prices. 

These were the three important suggestions of the preliminary report on the auto industry, which is circulated by the ministry of finance to the ministry of commerce and other economic departments for information and comments. The private sector has prepared the preliminary report on the auto industry. 

The report explained that the during the last five years the auto industry has shown tremendous growth and the production of cars have increased by 27.9%, trucks 41.01%, light carriage vehicles (LCV) 27.31%, farm tractors 13.16%, motorcycles 31.85% and only the production of buses has decreased by 53.18%.

The report has projected that the production of auto industry during 2006-07 to 2010-11is likely to increase, according to the Compound Annual Growth Rate. Production of cars to reach from 227,284 to 910,775 or by 41.5%, the number of trucks from 6,383 to 25,431 or 41.3%, LCVs from 43,966 to 155,633 or by 37.2%, farm tractors from 58,525 to 120,209 or by 19.7%, motorcycles from 1,187,604 to 7,400,413 or by 58%.

The foreign exchange spent on import of CKD kits and CBU vehicles for the last two years, according to the customs data, stands at $804 million for CKD kits and $311 million for the import of CBU vehicles, making a total of $1.115 billion for the last two years. 

The report further reveals that exports of auto parts against this huge import bill of $1.115 billion per year, which is likely to increase to over $6 billion in the next five years. Export value of auto parts is estimated at $35 million only, as per the Engineering Development Board. Thereby leaving a trade deficit of $1.080 billion at present. 

The report has pointed out that the problem of late delivery of locally-produced vehicles and additional mark-up/ Ã¢â¬ÅonÃ¢â¬Â being charged could have been handled differently. The assemblers should have been asked to increase production in a shorter period of time and the government should have provided all necessary help to aid them in this regard. 

In order to control opportunistic behaviour by vehicle hoarders who in turn were, and still are, responsible for charging mark-up from consumers, a system should have been set up. 

It has been suggested to make it mandatory that the vehicle booked with a local assembler is to remain in the name of original person who has booked the vehicle once delivered can only be transferred after 3-6 months after registration. Such a step would render the new vehicle Ã¢â¬Åsecond handÃ¢â¬Â, thereby deterring the business of opportunistic hoarders. 

The banking and leasing sector can also play a positive role by increasing the initial deposit from 10% to 25% for leasing of cars. Such a move is bound to discourage those individuals who on very small initial payments, book/gain ownership of an excessive number of vehicles for later sale at marked-up prices.


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## Neo

Thursday, November 09, 2006 

*New oil discovery in Sindh*

KARACHI: Orient Petroleum International Lnc and its joint venture partners Bowengrgy Resources (Pakistan) SRL, Zaver Petroleum Corporation Limited and Government Holdings (Private) Limited have announced the discovery of natural gas in a successful production testing of Ahmed-1 Well in Block No 2568-7 Mirpurkhas in Sindh, said a companyÃ¢â¬â¢s statement here on Wednesday.

It said the well flowed 28.74 mmscfd of gas at a fixed choke of 48/64 with a flowing wellhead pressure of 2,705 psig. The calorific value of the gas is 941 btu/Scf. This is the fifth major discovery in Mirpurkhas block, it added.

The Orient Petroleum International Inc is the operator of the Mirpurkhas, Khipro and Sakhi Sarwar exploration blocks and is producing from eight discoveries in the three producing fields located in the northern region of Pakistan


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## Neo

*Pakistan Must Raise Lending Rates, Cool Economy: Andy Mukherjee *

By Andy Mukherjee

Nov. 9 (Bloomberg) -- Bondholders are getting less jittery about the risk of Pakistan's economy overheating and stalling. 

Looking at credit-default swap prices, Prime Minister Shaukat Aziz, the architect of Pakistan's spectacular economic revival in recent years, must feel relieved. 

The cost of buying protection against default by the Pakistan government on $10 million of sovereign debt fell to $181,250 this week from $285,000 on June 26. 

Credit-default swaps are financial instruments based on bonds and loans that are used to speculate on a borrower's ability to repay debt. The moderation in the insurance cost shows that bondholders are discounting the threat posed to the rapidly growing economy by the ``unholy trinity'' -- booming consumerism, burgeoning state spending and cheap money. 

Pakistan's trade gap widened 32 percent in the first quarter of the fiscal year that began July 1. Imports rose 13 percent from a year earlier, while export growth was about 3 percent. 

The trade imbalance has been exaggerated by oil prices. Machinery imports to create new capacity have also played a part. ``Perhaps the most troubling aspect of the import bill is the dark side of consumerism -- the increasing volume of consumer goods imported,'' said Ahsan Javed Chishty, an economist at securities firm BMA Capital Management Ltd. in Karachi. Led by autos, consumer durable imports jumped 42 percent from a year earlier in the nine months through March 2006, Chishty said in an Oct. 15 note to investors. 

Election Cycle 

Although tax collection is on target -- not surprising for an economy projected to grow 7 percent or more this year -- there is ``no sign that fiscal policy will be less expansionary ahead of elections in 2007,'' Irene Cheung, an analyst at ABN Amro Holding NV in Singapore, said in a note to investors this week. 

The government's budget for the current year includes a planned 15 percent increase in civil-servant wages and similar gains in pension payments and subsidies on everything from food and fertilizer to energy and cement. 

With the Asian Development Bank predicting Pakistan's budget deficit at 5 percent of gross domestic product for the current fiscal year, higher than the government's 4.2 percent target, the onus is on the central bank to cut total demand in the economy. 

The State Bank of Pakistan boosted the discount rate by half a percentage point to 9.5 percent in July, the first increase in the benchmark in 15 months. Simultaneously, the monetary authority cut liquidity in the banking system by raising reserve requirements to 25 percent of deposits from 20 percent. 

Fighting Inflation 

Inflation, which in September hovered close to a 13-month high of 8.9 percent, may slide back, allowing the government to meet its target of a 6.5 percent climb in consumer prices this year, the Asian Development Bank said last week. 

It might take another round of interest-rate increases to tame inflation; and the expectation is that the central bank would rather raise the cost of credit than allow its hard-won macroeconomic stability to come under a cloud. 

While announcing a review of Pakistan's B2 foreign-currency rating, five levels below investment grade, for a possible upgrade, Moody's Investors Service yesterday struck a cautionary note about overheating. ``Despite its optimism over the state of Pakistan's economy, Moody's maintains some reservations concerning persistent inflationary pressures, the deteriorating current account balance and a relaxation of fiscal policy,'' the ratings company said. 

Foreign direct investments, remittances from Pakistani workers in the U.S. and Saudi Arabia, and the overseas money pouring into the Karachi stock market, Asia's best-performing in the past five years, are all supporting the widening current account gap for now. Yet there's no room for complacency. 

Reserves, Risks 

Pakistan has about $14 billion in foreign-exchange reserves, which can only pay for about six months of imports. 

While that would have been considered a healthy level before 1990, the average for developing countries nowadays has risen to about eight months of imports. 

Pakistan's capacity to sustain a sudden loss of confidence in its currency is greater than it used to be, though it is by no means permanent. For more-sustainable financing of the current account gap, the political risk premium must narrow, BMA Capital's Chishty said. 

That might be difficult in the short run. 

Even if it's ultimately successful, the peace process with neighboring India will be long. Meanwhile, relations are souring with Afghanistan, where the government in Kabul accuses Pakistan of helping the Taliban regroup. 

Musharraf's Next Move 

There are also fragile internal politics to consider: In August, a no-confidence motion against Prime Minister Aziz had the backing of 136 lawmakers, 36 short of the number needed to topple him. ``And it is these 36 votes that will determine the state of government come 2008,'' Chishty said. 

Investors are also unsure if President Pervez Musharraf will give up his job as the army chief when parliamentary approval for him to run both the state and the military lapses in 2007. If he does become a civilian president, how stable will Pakistan's political system be? 

A capital-account surplus of $8 billion this fiscal year will comfortably cover a current-account deficit of $6.5 billion, Chishty said. However, if that shortfall widens to $8.5 billion, as forecast by the Asian Development Bank, financing it will become a much tougher proposition. 

The business cycle needs containment, even as the election timing demands there be no letup in expansion. 

The State Bank of Pakistan should have no hesitation in hitting the brakes. 

http://quote.bloomberg.com/apps/news?pid=20601039&sid=a7wPHn8MzLmk


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## Owais

*Basmati definition to be expanded under FTA with Sri Lanka *

KARACHI (November 10 2006): The commerce ministry has decided to expand the definition of Basmati rice to Long Grain Pakistani Basmati Rice in terms of Pakistan-Sri Lanka Free Trade Agreement.

In a public notice, the commerce ministry said it was stipulated earlier that the variety of Basmati rice eligible for duty concession on export to Sri Lanka in terms of Pak-Sri Lanka FTA between the two countries would be "PK-385" and "Super Basmati" varieties only.

The certificate of origin will henceforth cover all varieties of Basmati rice falling under the description of "Long Grain Basmati Rice." After implementing of new definition many other varieties of long grain basmati rice especially PK-198 (D-98) variety would be able to export.

It is worth mentioning here that Sri Lank purchased PK-198 (D-98) variety of rice from Pakistan, but due to ban on this variety it could not be exported under the FTA. Former Rice Exporters Association of Pakistan (Reap) vice chairman told Business Recorder here on Thursday that Sri Lanka is a huge market for PK-198 variety of rice.

"We developed the Sri Lankan market for this variety of rice with its value addition from $350 to $450 per tonne", he said, adding that after this decision of the commerce ministry the growers and exporters of Sindh would be benefited. He appreciated the commerce ministry and Commerce Minister Humayun Akhtar Khan who took this decision and solve this issue.


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## Owais

*Malaysia seeks duty cut on palm oil import *

ISLAMABAD (November 10 2006): Malaysia has requested Pakistan to slash 20 percent regulatory and customs duty on import of crude palm oil (CPO) before fully implementing free trade agreement (FTA).

Pakistan charges a fixed amount of Rs 9,550 per tonne as regulatory and customs duty on CPO import besides 15 percent sales tax, but refineries are allowed to import CPO for Rs 9,000 per tone. Official estimates suggest that Pakistan imported 1.6 million tonnes of palm oil from Malaysia annually, majority of which is refined palm olein.

Malaysia, which is the world's largest palm oil producer, has requested Pakistan for reducing import duties on palm oil, official sources told Business Recorder on Thursday.

"They have exchanged the requests and offered lists before the enactment of the FTA between the two countries", they said, adding the issue would be resolved soon as the prime minister has constituted a committee of departments concerned to look into the matter.

"If the government accepts the offer by slashing the duty, the Central Board of Revenue (CBR) would roughly suffer a revenue loss of Rs 15 billion, therefore, they are opposing the move", the same officials opined.

However, the Ministry of Industry and Production had already proposed to the Economic Committee of Cabinet for slashing the duty on palm olein, but Minfal strongly objected to the move fearing it would hurt the growers of oil crops.

Thirty percent of other cooking oil is also mixed with imported CPO to make it consumable, therefore, it is difficult for the government to give one player concession, he added.

Pakistan is the world's fourth largest consumer of vegetable oils with a domestic demand for 2.5 million tonnes, 90 percent of which is covered by imports, mostly of Malaysian palm oil and olein, while only 12 percent consumption of cooking oil is met from domestic sources. Currently, the trade volume between Pakistan and Malaysian is $600 million (Euro 472 million) and would be enhanced to $1 billion (Euro786 million).


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## Owais

*Italian oil company exploring investment opportunities *

ISLAMABAD (November 10 2006): Senior Vice President of ENI Petroleum Company of Italy Umbertto Vergine along with members of his delegation called on the Federal Minster for Petroleum and Natural Resources Amanullah Khan Jadoon here on Thursday and discussed investment opportunities in the oil and gas sector.

Welcoming the delegation the minister said that there existed tremendous potential for the prospective investors in Pakistan's oil and gas sector adding that attractive package of incentives was being offered in the onshore and offshore explorations.

He said the government has made investors-friendly policies to attract investment and taking measures to further improve the incentives being offered to investors in onshore and offshore exploration. The minister invited the ENI to participate in the upcoming oil and gas projects besides increasing its activities in the explorations.

He briefed the delegation about the upcoming mega projects of LNG, oil refineries and infrastructure development. He also wished ENI for its offshore exploration endeavours.

Senior Vice President of ENI informed the Minister about the arrangements being made by this company to undertake deep sea exploration in Pakistan in the beginning of next year involving a huge investment. He said that ENI would further enhance its involvement in oil and gas activities for the mutual advantage. Additional Secretary, Shaukat Hayat Durrani, Director General petroleum Confessions, Muhammad Naeem Malik and ENI General Manger in Pakistan were also present in the meeting.


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## Owais

*Collectors to analyse revenue achievements, targets *

ISLAMABAD (November 10 2006): Collectors of sales tax would review the progress on the taxation measures taken in budget 2006-07, including collection of federal excise duty on financial services.

Sources said on Thursday that the collectors' conference would analyse the revenue achievement vis-&#224;-vis targets for the first quarter of 2006-07. Sales tax collection was Rs 75.60 billion in July-September 2006-07 against Rs 62.98 billion in the same period last fiscal, indicating a growth of 20 percent.

Sales tax collection at the import stage was Rs 44.80 billion against Rs 39.02 billion, showing a growth of 14.8 percent, while sales tax collection on domestic consumption was Rs 30.80 billion against Rs 23.96 billion, showing an improvement of 28.6 percent.

The upcoming conference would review the refund claims pendency in zero-rated as well as other sectors. The regional tax officials would also discuss the audit of export-related refunds claims assigned to the chartered accountant firms.

The sources said that the second quarterly collectors conference would also finalise the Regional Tax Offices (RTOs) rollout plan, database cleansing and weeding out of old tax record. The conference would also discuss availability of importers/exporters data of Pakistan Customs Computerised System (PACCS) incorporated into the Sales Tax Automated Refund Repository (STARR) computer system and STREAMS (Sales Tax Risk Evaluation and Management System) for the payment of sales tax refund.


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## Owais

*New Rs 100, Rs 500 notes from today *

PESHAWAR (November 10 2006): The State Bank of Pakistan (SBP) is going to issue new currency notes of Rs 100 and Rs 500 denomination in the country on November 10. SBP Governor Dr Shamshad Akhtar is likely to release the new currency notes in a function scheduled at the headquarters of the central bank in Karachi.

"The main feature of the new currency note of Rs 100 denomination was said to be the replacement of the photo of the renowned and historic education institutions of Islamia College, Peshawar, with Mazar-e-Quaid, Karachi," a senior SBP officer told Business Recorder on condition of anonymity.


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## Owais

*SBP governor advises Islamic banks to target rural areas *

KARACHI (November 09 2006): State Bank of Pakistan Governor Dr Shamshad Akhtar said here on Wednesday that Islamic banking should primarily concentrate on unexplored market in the rural Pakistan rather than offering its products to the urban population, and enter into direct competition with conventional banking that has already captured the existing market.

She was speaking at the 'Islamic Banking and Money Market Conference' being held at a local hotel. The SBP Governor took a critical view of the products that Islamic banking has introduced so far and expressed concern over slow development of the new products to offer to the people so that they could be persuaded to think about its effectiveness. "Give them faith in you products," she added.

She said that as far as she knew there were only two products available on the market, and a few were still being thought about. "We have product needs. This industry should think of coming up with small houses financing, small business finance, support to agricultural needs, products meeting the needs of the rural poor, financing for the small and medium-size entrepreneurs etc. The industry should position itself and face the challenges," she stressed.

Dr Akhtar said she did not see any value-added and innovative products being offered by Islamic banking institutions, which was indicative of the fact that so far the system was being managed in the same manner as the conventional bankers have done.

In her opinion, there should be distinct demarcation between the Islamic banking and the conventional banking to make it clear for the customers to see the differences and advantages of one system over the other.

"As far as I am concerned, I am a voracious reader, and I have yet to see material to understand the concept of Islamic banking, distinct from the conventional banking which is interest-based, to speak plainly."

She said that still there was need to discuss it threadbare in the light of shariah and Islamic laws of doing business. The ideological needs should be discussed and unanswered questions should be answered. The opinion regarding interest-based banking and the Islamic banking, which gives an impression that it is free from interest, calls for examination. "You say you do not operate on the existing banking principles, but I do not see anything new. In my opinion, you are getting into the pitfall of conventional banking," she added.

She said that the Islamic bankers would have to get out of urban centres. They would have to leave the already exploited market, and go for new markets and new products.

She said that she could see some progress in the Islamic banking. She said that as it was being projected that from the existing growth of two percent there would be a growth of about ten to fifteen percent in the next ten to 15 years, it seemed to be a challenging task.

She said that it would be possible only if a mechanism could be developed to manage excess liquidity available at home and abroad. It would begin from gaining faith of the people in the system to introducing innovative products, she added.


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## Owais

*'Muslim states keen to enhance economic ties' *


ISLAMABAD (November 10 2006): Prime Minister's Adviser on finance Dr Salman Shah has said there exists willingness among Muslim countries to enhance economic co-operation. Speaking in a PTV programme, he said this willingness if materialised can bring a revolution in the living conditions of the Muslim world.

He said the recently concluded meeting of the World Islamic Economic Forum (WIEF) was of the unanimous opinion that Muslim countries should explore all opportunities for economic uplift of their people. Economic empowerment is a key to political strength in the contemporary world, he said, adding the political problems being faced by the Muslims in various parts of the world would be amicably resolved if they get economically empowered.

He said Muslims make above 20 percent of the world population besides having control over above 70 percent of energy resources but unfortunately their share in global GDP is only 6 percent.

This is a miserable situation, which the Muslim leadership has to tackle with serious approach, said Dr Shah, adding that the realisation is already emerging in this regard. To a question, the adviser said that strengthening of economic ties between the Muslim states does not aim at any confrontation with rest of the world.

The forum would adopt a policy of collaboration at the international level with the objectives of seeking more opportunities for the economic empowerment of the people in Muslim states, he said.

He said there are three components of the contemporary Islamic world. First, there are oil rich countries having abundance of capital at their disposal. Secondly, there are developing countries with great potential of industrial boost provided they have investors. Thirdly, there are underdeveloped countries where people are living a miserable life sans basic living needs. He said the mutual interaction and co-operation between the Islamic countries can fill all the gaps, adding there will be a win-win position for all.

Dr Salman Shah said that geographically and climatically the Muslim countries are well placed to play an important role in world economy and politics, but they are unfortunately lagging behind. To another question, he said elimination of extremism and sectarianism is a must to have a modern, developed and progressive Islamic world and every Islamic country has to take solid steps in this direction.


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## Owais

*Pakistan has potential to become economic leader in Asia: Polish envoy *

KARACHI (November 10 2006): Consul General of Poland Ireneusz Makles has said that Pakistan has the potential of becoming major economic leader in Asia owing to its progressive leadership and the consistent trade and economic policies that are the most favourable in the region.

He was talking to journalists at his residence on Wednesday on the occasion of 88th anniversary of restoration of Poland's independence, which falls on November 11. He said that Pakistan's growing economy and its strategic location as a regional hub, a principal gateway to the Central Asian Republics, a large consumer market, abundant natural resources, entrepreneurial people and a skilled and hardworking labour, well established infrastructure and liberal investment-friendly policies offer enormous opportunity to foreign investors.

The consul general said that Poland and Pakistan had established co-operation in trade and commerce, energy and agriculture sector, chemicals, textile etc.

He said that both countries had concluded agreements on trade co-operation, avoidance of double taxation, maritime and cultural co-operation. He said that Pakistan plays an important role both in the Muslim World and in providing regional and global security and stability.

Poland highly appreciates the key role of Pakistan in the global fight and anti-terrorism efforts. Pakistan is in the frontline of international war on terrorism. He said, "We are aware of the problems Pakistan faces in its war on terrorism and acknowledge the fact, that very often the Pakistani people are victims of terrorism."

He said Poland highly appreciates continuity of Pakistan's economic growth, fast economic development and structural and comprehensive reforms in various sectors. "Pakistan at present stands among the top four Asian countries. All economic indicators point to the fact that Pakistan will sustain acceleration in the growth of six to eight percent over the next five to ten years.

As such investors should look to Pakistan as a potential hub of economic activity in the region," he added. Makles said he was working to improve trade and economic relations, create better environment for business community and to establish industrial units in joint ventures. He identified oil and gas, energy, infrastructure, maritime, engineering and food processing sectors. In addition there is room for developing co-operation in the development of small and medium enterprises.

He said Poland could supply electrical equipment, including diesel generators, railway equipment, agricultural machinery and spare parts, heavy vehicles and marine and diesel engines. He said, "Our countries should also focus on the development of projects in agriculture, water supply, sewage treatment plants and transfer of new technology."

He said Pakistan had enormous deposits of coal. Poland is traditionally one of the biggest producers of coal and has world standard technologies and equipment and we can expand our relations through assisting Pakistan in this field.


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## Owais

*Islamic banking association to be set up *

KARACHI: The second two-day Pakistan Islamic Banking and Money Market Conference, "Position for Growth", which concluded here Wednesday recommended that Islamic banking industry should set up an Islamic banking association to work on customers perception, communication and education. 

"Such a body can also represent industry while dealing with the regulators and government bodies", the conference proposed. 

The conference was of the view that Islamic banking sector should think about its strategic objectives, migration and market share gain or focused innovation, not just migration like micro customers, SME capital market- based products. It highlighted the need for development of a vision, road map and action plan for Islamic banking. 

The conference opined that the regulators should provide patronage of the process, not instructions for the sector. The regulators besides industry participants and customers representatives and specialist consultants should take up a participative approach. 

The conference also developed a consensus to take steps to address liquidity management issues of the sector. 

The participants were of the view that secondary market institutions should be developed to encourage development of housing finance. 

Looking at the enhanced availability of the liquidity in the GCC, the participant suggested that specialist Finance Institutes should be established with focus on assessing liquidity to provide infrastructure investment in Pakistan. 

The forum should play a role in assisting large Pakistani corporate sector to access GCC financial market, the conference underlined.


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## Neo

*Pakistan fish, shrimp export to Europe rises to $200 million *

KARACHI (updated on: November 10, 2006, 18:29 PST): The fish and shrimp export from Pakistan to European countries has risen from 154 million dollars last year to 200 million dollars this year.

This was stated by Dr Mohammed Nawaz Baluch, Managing Director Karachi Fish Harbour Authority in a meeting with City Naib Nazim, Nasreen Jalil at her office here on Friday.

He said because of special interest by Governor Dr Ishrat-ul-Ebad Khan and Chairman Fisheries Fakir Jadim Mangrio, the best possible arrangements of cleanliness have been made at Jetty and Market.

Nasreen Jalil described the increase in fish and shrimp export to Europe a good omen and observed that EU has lifted ban on these exports from Pakistan.

She said Allah has blessed our country with rich bounties and they are so fortunate in the matter of sea food.

She noted that fish and shrimp is being exported not only to Europe but also to US, China, Sri Lanka and other countries.


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## Neo

*Mega project of $1.1 billion to improve 86,000 watercourses launched *

ISLAMABAD (updated on: November 10, 2006, 18:30 PST): The government has launched a mega project of $1.1 billion to improve 86,000 watercourses throughout the country for saving water on one hand and improving resource productivity on the other, a Minister of State for Food said here on Friday.

Minister of State for Food, Agriculture and Livestock Muhammad Ali Malkani said the only way that we can continue to deliver to our people their needed requirements is to formulate the practical recommendations and suggest ways for their implementation.

He said "The project on resource conservation technologies has been initiated to conserve water".

Another major project to improve application efficiency, irrigation systems (Drip/Sprinkler) is being planned, he said adding, government is also taking policy measures for collection of water charges and transfer the management of irrigation system to the users.

The minister said Water demand management in agriculture is critical to conserve environment and improve productivity. "Water is considered an economic good as well natural resource and the climate change has introduced changes in water availability", he added.

Malkani said the fresh water demand is increasing for human and industrial use and Agriculture had been and shall continue to be the major user of fresh water. However, the water saving can be achieved by improving its application efficiency, he added.

There are variety of issues and probable solutions to achieve optimal water application efficiency, he said adding, it is imperative to avoid water stress in agriculture to ensure quality output.

He said the water demand management underpins agricultural profitability and food security and the demand for water in developing countries is rising rapidly due to increase in population, changes in life style and industrial expansion.

The growing fresh water scarcity, deteriorating water quality, inadequate funding for irrigation development and maintenance and trans- boundary water sharing, water logging and salinity, ground water depletion, high sedimentation load and poor drainage are some of common problems in the region, he added.

The minister said the countries of the region need to formulate and implement prudent policies both at national and regional level that promote water saving through efficient use of water resources, possible re-allocation of water supplies from low-value uses to higher-value uses and allow the recovery of at least the operation and maintenance costs needed to maintain, rehabilitate and develop the water infrastructure.

Pakistan is endowed with the world's largest surface irrigation system, which has been built over the past 100 years, he said adding, the increasing demands for water lead us think and act differently.

He expressed the confidence that experts from ECO Region have thoroughly examined and discussed water related problems faced by our nations. These are the issues that any planner with the Government would advise these recommendations to be implemented not merely through words but by action, he added.


----------



## Neo

*PM launches 'Destination Pakistan 2007' for American tourists *

NEW YORK (updated on: November 10, 2006, 17:40 PST): Prime Minister Shaukat Aziz on Friday launched campaign to attract American tourists, saying Pakistan's great cultural heritage and scenic beauty offered a unique blend to international tourists. 

"Ranging from high snow covered mountains in the north to vast lush fields and great resorts, the country is also a source of attraction for religious tourists," Aziz told the select gathering of tour operators, leading businessmen and people belonging to different walks of life while launching 

'Destination Pakistan 2007'.

He said, "Pakistan is a tourist destination for every one and offers tremendous options for all."

The PM said the government is promoting religious tourism and said a large number of Buddhists and Sikhs visit their religious places. he said

Aziz said Pakistan situated at the crossroads of Central Asia, East Asia and South Asia links many civilisations.

He said the government has been improving the infrastructure to promote tourism to provide best possible facilities to the tourists.

The PM asked the overseas Pakistanis and American people and make Pakistan as their tourist destination.

He said Pakistan offers many sites of tourist attractions like the famous silk route, six out of eight highest peaks of the world and Indus valley civilisation.

He appreciated efforts of Agha Khan for building hotels and resorts in northern Pakistan.

Aziz said Pakistan is a moderate and hospitable country and wants to share its culture, cuisine, music, art with the world.

The PM said besides summer adventures in Pakistan, there is trekking options, mountaineering, rock climbing, air safaris and many other natural places to see.

Earlier, the Minister for Tourism Nelofar Bakhtiar welcoming the guests and introducing "Destination Pakistan 2007" said the government has planned a number of activities for the next 12 months to attract tourists from around the world.

She said special packages would be provided to the overseas Pakistanis and their children for their visit to Pakistan.

The minister also highlighted various measures taken for the promotion of tourism in the country and asked the American and Pakistanis to visit Pakistan taking advantage of facilities and opportunities being provided during the year 2007.

The launching ceremony of "Destination Pakistan 2007" was attended by a large member of overseas Pakistanis, American tourism travel operators and members of Sikh community.

Ministry of Tourism, Travel operators and PIA established their stalls on this occasion to highlight the facilities being provided for the tourists in Pakistan.


----------



## Neo

*ENI plans to invest in deep sea exploration*

ISLAMABAD, Nov 9: ENI Petroleum Company of Italy will make huge investment to undertake deep sea exploration in Pakistan from early next year. This was informed by ENI Senior Vice-President Mr Umberito who along with members of his delegation called on Federal Minister for Petroleum and Natural Resources Amanullah Khan Jadoon here on Thursday.

According to a statement issued here they also discussed investment opportunities in the oil and gas sector.

Welcoming the delegation, Mr Jadoon said that there existed tremendous potential for the prospective investors in PakistanÃ¢â¬â¢s oil and gas sector and attractive package of incentives was being offered in the onshore and offshore explorations.

The minister said that the government had made investors-friendly policies to attract investment and taking measures to further improve the incentives being offered to lure investment in onshore and offshore exploration.

He invited the ENI to participate in the upcoming oil and gas projects besides increasing its activities in the explorations. He briefed the delegation about the upcoming mega projects of LNG, oil refineries and infrastructure development.

Additional Secretary Shaukat Hayat Durrani, Director General Petroleum Confessions, Muhammad Naeem Malik and ENI General Manager in Pakistan were also present during the meeting.

APP adds: Meanwhile, visiting Hungarian Foreign Minister Ms. Kinga Gonez held a meeting with Mr Jadoon on Thursday and both sides agreed to expand cooperation in the oil and gas sector for their mutual advantage.

They also agreed that there existed a lot of potential and expertise for exploring new avenues of interaction in this vital field of the economy to bring the two countries closer.

Mr Jadoon spelled out the priority being given to the promoting of oil and gas sector by the government as a key element of overall socio-economic development of the country.

He invited the Hungarian investors to take advantage of the investment opportunities in the onshore and offshore exploration, upcoming liquefied natural gas (LNG), oil refineries and infrastructure development projects.

Ms. Kinga appreciated the tremendous growth of PakistanÃ¢â¬â¢s petroleum sector in last few years and investor-friendly policies being pursued by the government to attract investment.

She said that her visit to Pakistan would open new vistas of cooperation in diversified fields particularly in the oil and gas sector for the mutual benefit of the two countries.

She also expressed keenness of Hungarian companies to participate in the upcoming PakistanÃ¢â¬â¢s oil and gas projects.

Minister of State for Petroleum Mir Muhammad Naseer Mengal and officials of the ministry were also present during the meeting.


----------



## Owais

*Trade deficit rises by 67 percent in first quarter *

ISLAMABAD (November 11 2006): Despite a strong build-up in current transfers, the burgeoning trade deficit has turned Pakistan's current account negative at $2.654 billion during the first quarter (July-September) of 2006-07, depicting an increase of $1.066 billion, or more than 67 percent, over $1.588 billion of corresponding period of last fiscal year.

The imbalances in the trade and services were so large ($4.053 billion) that it plunged the current account underwater in spite of strong build-up in current transfers during July-August 2006. Net current transfers rose to $2.302 billion during the period under review, from $1.926 billion of corresponding period of last fiscal year.

Current transfers went up as Pakistan received $1.233 million in workers' remittances or foreign exchange sent back home by overseas Pakistanis during the period, up from $1.002 million a year ago.

More worrisome was that during the period under review the resident deposit holders withdrew $50 million (in August they withdrew $77 million and in September deposited $8 million) from foreign currency accounts (FCA) primarily because of the stable rupee.

Inflows in these accounts could prove a cushion in moderating current account deficit but unfortunately it turned negative and dented the current transfers, too.

Economists are of the view that the widening current account deficit poses threat to the economy simultaneously on both internal and external fronts. However, government economic managers say that Pakistan is enjoying economic boom and the current account is manageable with borrowing from abroad, remittances, drawing down reserves and inflow of foreign investment.

The SBP data shows that Pakistan witnessed this current account imbalance as trade deficit (in goods and services) jumped to $4.053 billion during July-September 2006 from $2.912 billion of last year. The trade deficit figures have been deduced by using freight-on-board value of imports and exports.

SBP data says that imports stood at $6.89 billion, whereas exports totalled $4.164 billion, leaving trade imbalance (in goods) of $2.759 billion. The services account also witnessed a large imbalance, of $1.329 billion, during July-September 2006 as inflows, under this account, stood at $653 million against outflows of $1.982 billion. Thus, on balance, total trade deficit (goods and services) stood at $4.053 billion.

The factors responsible for this huge deficit were higher outflows on account of transportation, travel, insurance, royalties and licence fees. Pakistan had to spend $783 million on transportation account whereas its earning under this head was only $287 million. Thus, the net deficit in the services account due to chartering of vessels for imports, export was $498 million.

Another factor responsible for big services' account deficit was a net outflow of $267 million on account of overseas travelling. Pakistan had to spend $328 million to finance personal and business-related travelling abroad of individuals and groups whereas it earned only $61 million under this account. Hence the services account witnessed deficit in July-September 2006. The same applies on spending on insurance, royalties and licence fees paid to international organisations and their employees operating in Pakistan.

According to economic experts, this external disequilibrium in the shape of current account deficit may have a significant impact on the value of rupee. Besides, it would translate into a larger increase in Pakistan's net foreign debt position. A large and growing public debt could also eventually put upward pressure on interest rates and crowd out private investment.


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## Owais

*Auto/machinery parts duty structure revised *

ISLAMABAD (November 11 2006): While giving exemption of customs duty on import of raw materials, components/sub-components and sub-assemblies of prime movers, the Central Board of Revenue (CBR) has withdrawn 15 percent 'additional customs duty' on the import of six types of parts used in the industrial assembly and manufacturing of agricultural tractors of 50 HP and above till June 30, 2007.

The CBR on Friday issued SRO 1124(I)/2006 to amend SRO 693(I)/2006. According to the notification, 'additional customs duty' would not be charged till June 30, 2007 on import of inlet manifold (Hs Code 8409.9971); tapet cover (HS Code 8409.9971); timing case (HS Code 8409.9971); timing cover (HS Code 8409.9971); connecting rods (HS Code 8409.9973) and crown wheel and pinion (HS Code 8483.1011).

The Board has also imposed 'additional customs duty' on import of two more components for vehicles under sub-heading 8704.2190. These are frame assembly and long member for frame.

The components for vehicles of Chapter 87 (HS codes 4009.1110, 4009.2110, 4009.3110 and HS code 4009.4110), would be liable to 'additional customs duty' without the condition of '4x2 vehicles only' as per amended SRO 693(I)2006.

In another decision, the Board has decided not to give exemption of duties/taxes on import of components or sub-assemblies of automotive vehicles/batteries where 'additional customs duty' has been imposed under section 18 of the Customs Act, 1969.

All those components or sub-assemblies chargeable to 'additional customs duty' would not be eligible for the benefit of exemption under SRO 655(I)/2006. The CBR has issued an SRO 1122(I)/2006 through an amendment in SRO 655(I)/2006 to implement the decision.

Through another amendment, following is the extent of exemption available on import of sub-components, components and sub-assemblies of automotive vehicles, automotive climate control equipment and automotive batteries meant for in-house use or supply to OEMs and assemblers or sale in the open market under SRO 655(I)/2006:

The exemption of customs duty has been given on import of raw materials, sub-components, sub-assemblies and components (not manufactured locally) for road tractors for semi-trailers (prime movers) of 280 HP and above of PCT heading 8701.

Exemption of customs duty would be available on import of raw materials, sub-components, sub-assemblies and components (not manufactured locally) for road tractors for semi-trailers and trailers (prime movers) less than 280 HP.

Zero-percent duty would be charged on import of raw materials, sub-components, sub-assemblies and components (not manufactured locally) for agricultural tractors covered under PCT heading 8701.

The exemption of duty would be applicable on the import of raw materials, sub-components, sub-assemblies and components (not manufactured locally) for fully CNG-dedicated vehicles of PCT heading 87.02.

For vehicles of PCT heading 87.03, rate of duty on raw materials would be zero-percent; sub-components, 5 percent; sub-assemblies 20 percent and rate of duty on the import of its components (not manufactured locally) would be 10 percent.

For vehicles falling under PCT heading 87.02 (Non-CNG) and 87.04, rate of duty on raw materials would be zero-percent; sub-components, 5 percent; sub-assemblies, 15 percent and rate of duty on the import of its components (not manufactured locally) would be 10 percent.

For vehicles of PCT heading 87.11, rate of duty on raw materials would be zero-percent; sub-components 5 percent; sub-assemblies 20 percent and rate of duty on the import of its components would be 10 percent. The condition of 'not manufactured locally' is also applicable.

For bicycles falling under PCT heading 87.12, rate of duty on raw materials would be zero-percent; sub-components 5 percent; sub-assemblies 15 percent and rate of duty on the import of its components would be 10 percent. The condition of 'not manufactured locally' is also applicable.

Other vehicles: Rate of duty on raw materials would be zero-percent; sub-components 5 percent; sub-assemblies 15 percent and rate of duty on the import of its components would be 10 percent. The condition of 'not manufactured locally' is also applicable here. The Board has also issued another SRO, No 1123(I)/2006, to amend SRO 656(I)/2006.

Through this amendment, the CBR has revised one condition for exemption of components (which include sub-components, components, sub-assemblies and assemblies but exclude consumables), imported in any kit form, for assembly or manufacture of vehicles falling under Chapter 87 under SRO 656(I)/2006.

Under the amendment, the importer-cum-assembler or manufacturer shall submit hard and soft copy of list of components with parts numbers along with respective PCT headings intended to be imported by him to the Engineering Development Board (EDB) as per 'Annex B'. The description of components and their parts numbers shall be in accordance with that given in the Service Manual/Parts Catalogue of the vehicles. The EDB shall verify the list of components identified as aforesaid by the importer on the lists.

The Customs department will release the consignments of components for assembly or manufacture of vehicles on the basis of lists (part number and description) verified by EDB. Pending verification of lists by the EDB, the customs department may allow provisional release against 'Corporate Guarantee' submitted by the importer-cum-assembler or manufacturer. The Board has also revised Form-B of Annexure-B of SRO 656(I)/2006, which deals with the data on 'Records to be maintained in respect of imported components'.

Through another change in SRO 693(I)/2006, the Board has specified the correct HS Codes of different sub-components and components, specified in Appendix I and Appendix II of the notification, as part of any kit form for the assembly or manufacturing of motor cars and vehicles.


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## Owais

*Seven revenue spinners contribute 67.4 percent of total duty collection: collectors conference informed *

ISLAMABAD (November 11 2006): Seven major commodities groups have contributed 67.4 percent of total customs duty collected during the first four months of the current fiscal year.

Giving details of the performance of collectorates of customs, CBR (member) fiscal research and statistic Dr Athar Maqsood informed the collectors' conference that only seven major revenue spinners have 67.4 percent share of the total customs duty during the period under review.

The items are: vehicles and parts (22.2 percent), edible oil and fats (13.4 percent), POL (10 percent), mechanical and electrical machinery (7.2 percent), plastics and its articles (3.9 percent), and iron and steel contributed 3.4 percent in the total customs duty collection during July-October 2006-07.

The quarterly conference of collectors of customs and collectors of appeals, which held here on Friday, reviewed the performance of the collectorates in the last quarter and evolved a strategy for revenue optimisation. The conference was chaired by CBR chairman and revenue division secretary-general M. Abdullah Yusuf.

The CBR (member) legal, in his presentation, told the conference that the opening pending balance of adjudication cases on July 1, 2006 was 1548. Following filing of fresh cases during July to October 2006, the total number of pending adjudication cases remained 5141 cases. Out of these cases, 4907 cases have been disposed of by October 31.

He said the board has disposed of a total of 78,000 tax appeals since 2003-04, whereas now number of appeals is 2000, which are all fresh. The conference was informed that the overall revenue collection during first four months (July-October) of current fiscal year has surpassed the target of Rs 236.2 billion.

CBR (member) human resource management (HRM) Muhammad Talha briefed the conference on the latest position on Internal Job Process (IJP) and development of carrier planning for CBR employees.

He asked collectors to complete service record of employees, including ACRs for timely completion of the process. In his concluding remarks, the CBR chairman called upon collectors to make concerted efforts for more revenue generation to raise tax-to-GDP ratio, which presently is not at the desired level.

He said: "We have to focus on potential areas, which have yet to be exploited. Tax machinery cannot afford to continue with historical problems. Tax officials have to change mindset and make the organisation efficient and transparent."

Speaking on the retrenchment of the staff, he made it categorically clear that under no circumstances the CBR will send any employee home forcefully. However, special package or golden handshake scheme can be offered to surplus employees.

Later, member, facilitation and taxpayer education (FATE), Habib Fakhruddin, who has the additional charge of member, tax policy and reforms, apprised the conference of the latest position regarding establishment of 11 modal customs collectorates across the country.

Earlier, a presentation on post-clearance audit (PCA) was made by the PCA project director. He outlined the concept, objectives, nature and techniques of the system.

He also briefly mentioned salient features of the existing PCA systems in other countries like Japan, UK, Ireland, Uganda, etc. He also presented the proposed model of PCA in Pakistan


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## Owais

*Liberal economic policies help attract investment: leading businessmen, investors meet Shaukat *
NEW YORK (November 11 2006): Prime Minister Shaukat Aziz on Friday held meetings with leading businessmen and potential investors here and explained to them that future of Pakistan's economy is bright and the country is attracting more investment due to the liberal economic policies.

Talking to them, the Prime Minister said discussions are going on between Pakistan and the United States for bilateral investment treaty, which will give boost to bilateral trade and investment between the two countries.

The Prime Minister said Pakistan seeks an early conclusion of these talks with United States for benefit of the business community of both the countries.

He said that Pakistan is now in the phase of second generation of reforms. He said as a result the investment-friendly policies of the government, fundamentals of the economy are sound with the economy growing between six to eight percent for the fourth year in row, the flow of Foreign Direct Investment (FDI) reaching $3.5 billion last year.

Shaukat Aziz said Pakistan is also an attractive destination for institutional investors including local, regional and international sectors.

He said, Pakistan's entry into the global market is reflective of transitional economy, which opens new investment opportunities in the country for local and international investors. The Prime Minister said Pakistan offers a level playing field to all the investors in different sectors. He said those who have already made investments in Pakistan are getting good return by benefiting from investment friendly polices of the government.

Those who called on the Prime Minister included Jay Collins, Chairman of US-Pakistan Business Council and Jerome Kelley Vice President Merrill Lynch, Talking to Jay Collins, Shaukat Aziz appreciated the efforts of the Council in enhancing trade links between the two countries.

The Prime Minister said due to the efforts of the Council, potential investors were now looking towards Pakistan for investment in various fields.

Talking to newsmen after the meeting, Jay Collin said, the US-Pakistan business Council is working more closely Pakistan to encourage trade investment.

He said the Council has a large membership with entrepreneurs from all the sectors and they are showing increasing interest for business with Pakistan.

He said, "We are very pleased that talks are going on in right direction between Pakistan and United States and they will like to see early conclusion of the investment treaty." Jay Collins said the Council remains in constant touch with the leaders and officials of Pakistan to promote trade, business and investment activities.

Jerome Kelley Vice President Merrill Lynch giving his remarks after the meeting with the Prime Minister said they regularly hold investors conferences and road shows to attract investment in Pakistan. He said with the privatisation of the banks in Pakistan, the interest of the investors is rising. He said the investors now know that Pakistan has sound economy which in on the path of growth.


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## Owais

*Cement sector registers 16 percent growth *
ISLAMABAD (November 11 2006): The cement sector has registered 16 percent growth during the last four months from July to October against the corresponding period of last year, sources told Business Recorder on Friday.

Well-placed sources said the recently compiled statistics have revealed that the total production of the cement sector was 6.32 million tonnes during the four months, saying the total operational capacity of 28 units has almost surpassed 33 million tonnes, which was only 21 million tonnes at the start of January this year. They, however, said the capacity utilisation was only 72 percent in October owing to Ramazan and Eid holidays. The production by the end of December is expected to reach 40 million tonnes following the capacity enhancement by cement manufacturers.

Moreover, they said D.G. Khan cement, a new unit in Chakwal, will become operational soon, while the expansion projects of two entities-Best Way cement and Attock cement-have almost completed.

Other units, they said, were also planning production capacity enhancement as they see growing demand of the commodity in future, particularly when the construction of dams would start.

The last year's cement crisis had forced the government to allow the import of unlimited quantities of cement without any customs duty and withholding tax through the private sector to meet demand for price stabilisation in the domestic market. The government had also earmarked an amount of Rs 720 million in the budget to arrest the cement price hike. The prices of cement as a result of the government intervention were reduced from Rs350 per bag to a level of Rs225-240.

This reduction in prices at local market discouraged its import and only 14,000 tonnes cement was imported during June to September against the L/C of 217,000 tonnes. They said the State Bank had also paid freight rebate to cement importers during the last four months.


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## Owais

*India welcomes Russian interest in IPI project *

MUMBAI (November 11 2006): India's oil minister Murli Deora said on Friday he welcomed Russia's interest in participating in a proposed Iran-Pakistan-India natural gas pipeline. "We believe that Russia's participation is important for the safety and security of the pipeline," he told reporters.

The plan to pipe Iranian natural gas across Pakistan has been discussed for more than a decade, but hostility between Islamabad and New Delhi and fears of terrorist attacks on the pipeline have delayed the project. Deora said his Pakistani counterpart also welcomed the proposal to involve Russia in the $7 billion project, and hoped that Iran would also support it.

He declined comment on the nature of Russian involvement, but a senior oil ministry official said that Russia's involvement would help finance it.


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## Owais

*Germans invited to invest in Hyderabad *


HYDERABAD (November 11 2006): District Nazim Hyderabad, Kanwar Naveed Jamil invited German investors to make investment in various projects including education sector and establishment of garbage recycling plant in Hyderabad. He made such invitation during a meeting with Ambassador of Germany in Pakistan, Dr Gunter Mulack here in his office late on Wednesday.

The Nazim said a series of development projects have been initiated in Hyderabad district and there is need of heavy machinery for their timely completion. He said the District Government could save heavy amount for its development projects by importing reconditioning machinery and spare parts with sufficient guarantee.

Dr Gunter Mulack, speaking on the occasion said both Pakistan and Germany have strong relations in trade, education and cultural activities and his country desired to make these relations more strong.

To a suggestion of the District Nazim, the German Ambassador assured that he would approach the concerned departments for import of reconditioning machinery for completion of development projects in Hyderabad. Appreciating the standard of handicrafts, furniture and bangle industries of Hyderabad, he invited the local traders to visit Germany and open venues for exports of their products.

Among others, MNA Pervez Qureshi, District Naib Nazim, Zaffar Rajput, District Co-ordination Officer, Muhammad Hussain Syed, Executive District Officer (Revenue) Abdul Sattar and representatives of Hyderabad Chamber of Commerce and Industry were also present in the meeting.


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## Owais

*Trade with Pakistan to touch $1 billion mark soon: Iranian CG *

PESHAWAR (November 11 2006): The Consul General of Iran, Mohammad Eghbal Ali Asghari, has said that the quantum of trade between Pakistan and Iran, which stands at $400 million, would reach the $1 billion mark in near future.

Addressing a reception arranged by Iranian Consulate at a local hotel on Thursday night he said that the target required serious efforts in this direction. The reception was attended by a large number of people from different walks of life including politicians, traders and journalists. NWFP Governor Ali Mohammad Jan Aurakzai also attended.

Eghbal said: "My prime duty as representative of Iran would be to create an atmosphere of brotherhood between the two nations, besides promoting cultural, trade and commercial relations with Pakistan, particularly with the Frontier province." He has been recently posted as Iranian Consul-General in Peshawar.

He said that both brotherly countries share huge cultural, historical, religious and lingual similarities, which bond them in a very special relation not only on domestic forums, but also on international levels.

"The similarities on stands of both countries on regional and international issues bespeak of a complete understanding between the top leadership of Iran and Pakistan," he added.

He said that that before coming to Pakistan, he had called on President of Iran, Dr Mahmoud Ahmadinejad, who directed him to exploit potentials and diplomatic prowess for further cementing the fraternal bonds between Muslim countries. Iran, he said, has a clear-cut policy with regard to Pakistan, which is based on mutual respect, solidarity, co-operation and Islamic fraternity.

"Both Pakistan and Iran have really been good samaritans as they stood by each other in all hours of need," he said, adding that recalling that Iran was the first country to extend recognition to Pakistan and, similarly, Pakistan was the first country to recognise 'Islamic Revolution' of Iran.

He promised to bring the people of the two countries nearer and dearer to each other and extended all-out co-operation and any help in achieving these lofty goals.


----------



## Owais

*'Destination Pakistan 2007' launched for US tourists *
NEW YORK (November 11 2006): Prime Minister Shaukat Aziz on Friday launched a campaign 'Destination Pakistan 2007' for American tourists, saying the country's great cultural heritage and scenic beauty offered a unique blend to international tourists.

"Ranging from high snow covered mountains in the North to vast lush fields and great resorts, the country is also a source of attraction for religious tourists," Prime Minister Shaukat Aziz told the select gathering of tour operators, leading businessmen and people belonging to different walks of life. Shaukat Aziz said, "Pakistan is a tourist destination for every one and offers tremendous options for all."

The Prime Minister said the government is promoting religious tourism and said a large number of Buddhists and Sikhs visit their religious places. Shaukat said Pakistan situated at the crossroads of Central Asia, East Asia and South Asia links many civilisations. He said the government has been improving the infrastructure to promote tourism to provide best possible facilities to the tourists. The Prime Minister asked the overseas Pakistanis and American people to make Pakistan as their tourist destination.

He said Pakistan offers many sites of tourist attractions like the famous silk route, six out of eight highest peaks of the world and Indus valley civilisation. He appreciated efforts of Aga Khan for building hotels and resorts in northern Pakistan. Shaukat Aziz said Pakistan is a moderate and hospitable country and wants to share its culture, cuisine, music and art with the world.

The Prime Minister said besides summer adventures in Pakistan, there is trekking options, mountaineering, rock climbing and many other natural places to see.

Earlier, the Minister for Tourism Nilofar Bakhtiar welcoming the guests and introducing "Destination Pakistan 2007" said the government has planned a number of activities for the next 12 months to attract tourists from around the world.


----------



## Owais

*Govt borrows Rs84.17 to cover up budget deficit *

KARACHI: To cover up the budget deficit, the government borrowed from the banking system Rs84.17 billion till October 21, 2006, a SBP report says on Saturday.

This loan is Rs31.48 billion more than that of previous year.

According to State Bank of Pakistan statistics, for the same duration last year, the government borrowed Rs52.69 billion from the banking system.

During the current year, from July 1st to October 21st, the government borrowed Rs111.50 billion from State Bank of Pakistan. This amount was Rs93.79 billion for the above-mentioned duration


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## Owais

*Czech company eager to invest in oil, gas sector *

ISLAMABAD: A company from the Czech Republic is appraising the situation here for making further investment in the oil and gas exploration sector.

Czech company, MND chairman Carol Komarek, in a meeting here with the Federal minister for Petroleum and Natural Resources, Amanullah Jadoon, told that the MND was working in Pakistan&#8217;s oil and gas sector since last 10 years, while it was keen to further invest in gas storage and privatization projects.

Federal Minister, Amanullah Jadoon, on this occasion, told that a vast opportunity of investment in Pakistan&#8217;s oil and gas sector existed, as only 25 percent of its oil and gas reserves have been discovered thus far


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## Owais

*Pakistani traders leave for Britain *


LAHORE: Yaqoob Tahir, Senior Vice President of Lahore Chamber of Commerce and Industry, will act as President of the Chamber in the absence of Shahid Hassan Sheikh, who has left for UK on a 12-day tour.

During his tour, Shahid Hassan will meet with prominent industrialists and traders there, and return to Pakistan on November 23, said an LCCI spokesman here on Saturday.

Talking to Geo News before leaving for UK, Shahid Hassan Sheikh said that during their visit, the British investors would be apprised of the investment opportunities, specially the salutary effects of the present government&#8217;s policies on the investment atmosphere of the country.


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## MIG_ACE

Owais said:


> *India welcomes Russian interest in IPI project *
> 
> MUMBAI (November 11 2006): India's oil minister Murli Deora said on Friday he welcomed Russia's interest in participating in a proposed Iran-Pakistan-India natural gas pipeline. "We believe that Russia's participation is important for the safety and security of the pipeline," he told reporters.
> 
> The plan to pipe Iranian natural gas across Pakistan has been discussed for more than a decade, but hostility between Islamabad and New Delhi and fears of terrorist attacks on the pipeline have delayed the project. Deora said his Pakistani counterpart also welcomed the proposal to involve Russia in the $7 billion project, and hoped that Iran would also support it.
> 
> He declined comment on the nature of Russian involvement, but a senior oil ministry official said that Russia's involvement would help finance it.




How will the pipeline benefit russia?? They wont invest without getting any returns.


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## JB 007

Owais said:


> *Trade deficit rises by 67 percent in first quarter *
> 
> SBP data says that imports stood at $6.89 billion, whereas exports totalled $4.164 billion, leaving trade imbalance (in goods) of $2.759 billion. The services account also witnessed a large imbalance, of $1.329 billion, during July-September 2006 as inflows, under this account, stood at $653 million against outflows of $1.982 billion. *Thus, on balance, total trade deficit (goods and services) stood at $4.053 billion*.
> .
> .
> .
> According to economic experts, this external disequilibrium in the shape of current account deficit may have a significant impact on the value of rupee. Besides, it would translate into a larger increase in Pakistan's net foreign debt position. A large and growing public debt could also eventually put upward pressure on interest rates and crowd out private investment.


this is a serious case that total export of pakistan was around $4.817bn (including merchandise and service export)for the first quarter while total trade deficit for the same period was about $4.053bn. here growing trade deficit is mainly covered by foreign remittances and FDI inflow. remittances are OK but the FDI pakistan is getting will be taken away after a certain period. also FDI in real state and energy business doesn&#8217;t increase export like that of FDI in manufacturing sector where pakistan is getting no FDI. pakistan cant afford this much luxury of import for a long. government need to work very hard to control this growing trade deficit. we can understand why import is increasing but there is no reason why export has almost 0% growth. right now, foreign reserve of pakistan is enough for 3 months of import only. immediate steps need to be taken otherwise pakistan may face economic crisis like what ASEAN faced in late nineties. and once pakistan will loose confidence of foreign investors, it will take a long time to back on internation market.


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## Neo

*MobilinkÃ¢â¬â¢s investment to touch $2.5bn mark*

KARACHI: Nov 10: With the additional investment of $500 million the total investment made by Mobilink would touch $2.5 billion by the end of 2006. This was stated by Zouhair A Khaliq, president and CEO of Mobilink.

Ã¢â¬ÅToday, we are one of the largest private foreign direct investor (FDI) in Pakistan and contribute significantly to the national exchequer by way of taxes, duties and royalties.

We are committed to the economic prosperity of the country, provide direct and indirect employment to more than 5,000 people and contribute towards social causes,Ã¢â¬Â Khaliq said in a statement.

Despite several hiccups in the quality of its service, the company has maintained a lead in the market by being the first to reach 20 million customers mark. MobilinkÃ¢â¬â¢s emphasis in recent months, however, has been on improvement in infrastructure.

The company intends to invest another $500 million imminently to facilitate the rapid increase in network capacity and enhance technological infrastructure to address some of its critical connectivity issues.

Last week, Chairman and CEO of Orascom Telecom--the parent company of Mobilink--Mr Naguib Sawiris was in Pakistan recently to receive Tamgha-e-Quaid-Azam. On the occasion he announced his groupÃ¢â¬â¢s intention to invest in the tourism sector.
http://www.dawn.com/2006/11/11/ebr14.htm


----------



## Neo

*Property boom emerging again *

KARACHI: The property market of Karachi is once again attracting a lot of money these days due to stable stock, gold and currency markets. Particularly, a large number of new schemes of plots as well as flats near the Northern Bypass have been announced (and also extensively advertised), which are drawing a number of buyers.

A luxury flat of 180 square yards in a recently announced project, 10 kilometres from Sohrab Goth, is priced at no less than Rs4 million. This gives an idea of how expensive the houses are, even if located in the outskirts of the city.

A residential plot of 80 square yards in a project near the Northern Bypass is available at Rs249,000, although it is as far as 35 kilometres from Sohrab Goth. In the same scheme, a residential plot of 120 square yards costs Rs379,000.

Most of the buyers of plots and flats in these projects are Pakistanis living abroad, who have come to their home country for celebrating Eid. As they have money, they put it in property so that when they return after a few years of extremely hard work they have a spacious home to live in.

Builders say Pakistanis working in Arab countries and the US are the most attractive clients for them because they are able to make timely payments. It is for them that most of the builders announce and advertise their projects around Eid days.

Builders say usually they experience difficulties in obtaining agreed money from buyers residing locally, but those working abroad are their ideal buyers.

Similarly, in a much advertised scheme, which is located far away from the main city, a 200 square yard plot is being offered at a price of Rs695,000 and 400 square yard plot for Rs1,395,000.

The commercial plots in such schemes are even more expensive. A 400 square yard plot is priced at Rs2,995,000. In another scheme, a 100 square yard commercial plot is being offered at Rs700,000 and 200 square yard plot for Rs1,800,000.

The projects being built in the main city are certainly more expensive. On average, flats in Clifton and Defence areas are priced at Rs5,000 per sq ft, in Bahadurabad at Rs6,000 per sq ft and in PECHS Rs6,000 per sq ft. In Gulistan-e-Jauhar, which is an area of lower middle and middle income groups, flats are available at Rs2,500 per sq ft on average.

Besides, the financing facilities being offered by banks and other institutions are also a factor behind this activity in the construction industry, as now people can obtain loans from more sources. In recent years, the monetary authorities of the country have encouraged banks to lend money for housing, giving impetus to this industry.


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## Neo

*Mineral sector to get $50m help: WB *

KARACHI: The World Bank has committed more than $50 million to assist government in sustainable mineral sector development with a particular focus on Balochistan as a pilot case.

A document issued by the international donor agency suggests the bank is offering a total of $56 million for the mineral sector with an objective to contribute to economic development through export earnings, taxes and royalties, employment and community level well-being.

Ã¢â¬ÅThe core objective is to assist the Government of Pakistan in implementing its strategy to accelerate sustainable mineral sector development by (i) strengthening governance, transparency, and capacity in the management of mineral resources, with particular emphasis on community development, environmental compliance, and equitable sharing of mineral resource benefits, and (ii) attracting private sector mining investment,Ã¢â¬Â said the project information document (PID) issued by the World Bank.

Ã¢â¬ÅThe provincial level reforms will be implemented in Balochistan as a pilot case, and will aim to provide a demonstrative effect so that other provinces follow with similar reforms.Ã¢â¬Â

It said the project was expected to yield increased private-sector investment in the mineral sector as a result of collection and dissemination of basic geodata and improved investment enabling climate through enhanced legal and fiscal frameworks in line with international practices.

At provincial level, it said, the project was expected to be an IDA Credit with indicative cost of $48 to $55 million. Most of the project activities would be implemented simultaneously, but certain reforms at the provincial level including development of provincial mining regulatory framework and community development policies would start after overarching federal level frameworks were established, added the document.

Ã¢â¬ÅProduction and management of geo-data includes establishment of a mineral resource information centre for the management and dissemination of mineral resource information; compilation of existing and collection of new basic geo-data; and activities to support sector promotion,Ã¢â¬Â said the World Bank.

Ã¢â¬ÅA Provincial Regulatory Framework and Institutional Strengthening includes, restructuring of provincial regulatory and fiscal frameworks relating but not limited to licensing, cadastral services, environmental compliance, mine health and safety, inspection and training; and institutional modernization and strengthening.Ã¢â¬Â

The international agency also focuses federal institutions for the potential growth of the sector as the document says improvement of the federal legal, regulatory framework, fiscal and taxation Regimes and Institutional Framework would the part of such campaign.

Ã¢â¬ÅIt includes modernising and strengthening legal and fiscal frameworks, monitoring of industry activities, enforcing regulatory and environmental compliance, and institutional modernisation and strengthening as well as technical and non-technical capacity building,Ã¢â¬Â it added.

It says development of a Template for Provincial Mineral Concession Rules and Regulations includes development of standardised rules and regulations for the award, renewal, cancellation and administration of mineral rights, and coordination of standardised mineral cadastre system at the provincial level.

Ã¢â¬ÅFormulation of National Sector Policies for Sustainable Development includes modernisation and strengthening of existing policies using international best practice duly adjusted to local conditions and formulation of consultation and planning frameworks to ensure community well-being for both large and small-scale mining,Ã¢â¬Â said the World Bank document.

At federal level, it says, coordination and promotion of mineral sector development and dissemination of basic geo-data includes establishment of a national mineral resource information centre and institutional strengthening and capacity building of the Geological Survey of Pakistan.


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## Neo

*Cruise liner to provide big boost to UAE-Pak tourism*
11 November 2006 

DUBAI Ã¢â¬â The Gulf Dream Cruise, with 240 passengers on board, arrived in Dubai from Karachi on Thursday evening amid celebrations.

The Consul-General of Pakistan, Abdul Hamid, said the luxury cruise liner would give a boost to tourism ties between both the countries.

The passengers included both Indians and Pakistanis who travelled to Karachi by air just to enjoy the sea journey. 

Raghu Katria, an Indian, said, Ã¢â¬ÅI flew to Karachi so that I could take the cruise which I enjoyed immensely. They must serve Pakistani cuisine though,Ã¢â¬Â he said. Ã¢â¬ÅI go cruising every year and I must recommend this cruise to all people.Ã¢â¬Â

Also present on the cruise were Pakistani singer Shehzad Roy and pop group Bombay Vikings. 

However, several families with children said the delay in receiving visas upon arrival was the only hitch during the two-day journey.

Rizwan Mohiuddin, President of the Gulf Dream Cruise, said the company was the first to be granted a licence by the Pakistani government. The ferry does not offer regular transportation, but a fun-filled journey including on board entertainment such as theatre, games and restaurants, he added. 

Ã¢â¬ÅWe are hoping to promote tourism between the two countries and give people in Pakistan and the UAE an opportunity to sail across the Gulf waters and the Arabian Sea.Ã¢â¬Â 

Pakistani passenger Toufiq Hamdani said, Ã¢â¬ÅThe cruise is much cheaper compared to the costs of international cruises. We enjoyed it.Ã¢â¬Â

The Gulf Dream Cruise will run a weekly ferry service between Dubai and Karachi. 

Upon arrival in Dubai, passengers will be taken on a tour of the city and vice versa. 

However, tourists travelling from Dubai to Karachi will have to arrange for their own visas if they are not residents of Pakistan. The round fare for a trip starts at $559. Executive class costs $775 while one has to pay $850 for First Class. Passengers can take a one-way trip too. 

The 196m long vessel weighs 23,000 tonnes and has 540 rooms. It can accommodate up to 1,250 passengers and 400 crew members.

The cruise offers seasonal trips starting from November this year to February 2007 with six to seven cruises each month. The next season will start in November 2007.


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## Neo

*Pakistan Aims to Raise $15 Billion From Asset Sales in 5 Years * 

By Khalid Qayum

Nov. 10 (Bloomberg) -- Pakistan plans to raise as much as $15 billion in five years selling state assets, including stakes in energy companies and banks, as accelerating economic expansion draws investors to the South Asian nation. 

``Over the next five years, our target is that between $2 billion to $3 billion should come from privatization'' annually, said Salman Shah, adviser on finance to Prime Minister Shaukat Aziz, in a Nov. 8 interview in the Pakistani capital Islamabad. ``As the economy grows, our reforms deepen and we're trying to tell the Pakistan story, we are getting a good response.'' 

Pakistan needs investment to boost growth and bridge a current account deficit that, according to the Manila-based Asian Development Bank, may reach $8.5 billion in the fiscal year to June 30 from $5 billion last year. Pakistan's government forecasts the $129 billion economy will expand 7 percent this year, from 6.6 percent growth last year. 

``The government has a fairly long list of assets that can be privatized,'' Shah said. Some of the proceeds from the asset disposals will go toward the repayment of $35 billion of overseas debt. 

Pakistan plans to sell shares in five oil and gas companies this fiscal year, including global depositary receipts in the biggest explorer Oil & Gas Development Co. and in the country's three largest banks. It also plans to sell stakes in Pakistan State Oil Ltd., the country's biggest fuel retailer, and the largest gas producer, Pakistan Petroleum Ltd. 

Overseas Investment 

The funds from asset sales will help the country increase foreign direct investment to $5 billion this fiscal year, he said. Overseas investment in the South Asian country tripled to $1 billion in the quarter to Sept. 30 after having more than doubled to $3.5 billion in the last fiscal year from $1.5 billion in the previous 12 months. 

The country's widening current account deficit is not a ``concern'' as the country seeks economic growth and as global oil prices decline, Shah said. 

Pakistan's current account deficit widened last year after the country's oil import bill increased 67 percent to $6.66 billion. Pakistan imports 85 percent of the fuel it uses domestically. 

``Our financial flows are so strong'' on overseas investment and from asset sales ``that we will be building up our reserves,'' he said. The rising current account deficit is being driven by import of ``machinery and raw material, which are ingredients of an expanding economy. At some point in time our current account deficit will start coming down.'' 

The Asian Development Bank said in a report on Nov. 2 that the current account deficit was a potential risk to the country's medium-term economic prospects. 

`Satisfied With Situation' 

Standard & Poor's, which had said in June it may have to cut the country's outlook because of concerns about government debt, has been reassured by the economic performance. 

``Standard & Poor's is satisfied with our situation,'' Shah said. ``They will be looking at Pakistan in perspective of the performance of the economy and revenue collection,'' which has been buoyant. 

There was no domestic threat to the economy as there was a national consensus on economic management, Shah said. As far as external factors are concerned, the impact of developments in Iraq and Iran could become threats to growth prospects. 

The results of the U.S. midterm election aren't expected to lead to any changes in policy toward the South Asian nation. 

``Pakistan has bipartisan support from the U.S.,'' Shah said. ``The U.S. interest in Pakistan is long-term.'' 

The move to tighten monetary policy this year will slow imports and prevent the economy from ``overheating,'' he said. The government wants economic growth to stay in a band of 6-8 percent, the adviser said. 

Monetary Policy 

The central bank's move to increase the benchmark lending rate to commercial banks by 0.5 percentage points to 9.5 percent on July 31 ``is having a positive impact,'' Shah said. ``We are in watch mode to see how things move, and if we think we further need to tighten it up we will definitely tighten it up.'' 

Pakistan's trade deficit widened by 32 percent to $3.16 billion in the first quarter ended Sept. 30 as exports increased 13 percent to $7.43 billion. The government expects the trade gap to narrow to $9.4 billion this fiscal year from $12.1 billion last year. 

The government won't cut imports to help the economy to grow and will be satisfied with foreign currency reserves that can pay for at least six months of imports, Shah said. 

``It's important we maintain a prudent level of reserves and carry on the growth of economy rather than slow down significantly,'' he said. Pakistan's foreign currency reserves were $12.5 billion last week, or equivalent to about seven months of import. 

To contact the reporters on this story: Khalid Qayum in Islamabad, Pakistan, at kqayum@bloomberg.net . 

http://www.bloomberg.com/apps/news?pid=20601080&sid=aQZpeHiQkKEw


----------



## Neo

*World Bank's MIGA helps promote FDI in Pakistan *

KARACHI (November 12 2006): Foreign investors interested in opening up businesses in Pakistan can offset potential non-commercial risks to their investments with the help from the Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group. That was the key message of a business roundtable held on Saturday here, said a press release here.

The event, hosted by the Institute of Bankers, Pakistan (IBP) drew representatives from about 10 leading banks and financial institutions. Kicking off the event were Board of Investment (BoI) Director General Arif Elahi, SBP governor's Adviser on development finance Azhar Iqbal Kureshi, and Institute of Bankers, Pakistan (IBP) Chief Executive Muhammad Saleem Umer.

Inaugurating the roundtable discussion, Kureshi stressed the importance of foreign direct investment for the economic development of Pakistan and the importance of MIGA in providing guarantee for such investments, particularly in large infrastructure projects.

Muhammad Saleem Umer welcomed MIGA's initiative to share with Pakistani bankers how the agency's political risk instruments can play an important role in security foreign direct investment in developing countries, including Pakistan.

Foreign direct investors can play a critical role in reducing poverty by building roads, providing clean water and electricity, and above all, providing jobs. But foreign direct investment into developing countries is often inhibited by concerns about political risks.

The government cannot shoulder the burden-financially or technically-of addressing the country's development needs alone. The private sector can help economies grow and avert the need for governments to use funds better spent on acute social needs.

Speaking at the event, MIGA Chief Counsel Srilal Perera and Investment Officer Hal Bosher discussed how MIGA gives private investors the confidence and comfort they need to make sustainable investments in developing countries by providing political risk insurance; technical assistance; and dispute mediation services.

"MIGA is committed to promoting socially, economically, and environmentally sustainable projects," said Perera.

"A MIGA-supported project is already helping in developing a more efficient telecommunication infrastructure in Pakistan," he said. "MIGA has provided Orascom Telecom Holding SAE of Egypt a guarantee for $79 million to cover its $88 million equity investment in Pakistan Mobile Communications Limited."

Perera also highlighted the improved financial terms encouraged by MIGA's coverage, including better access to project finance, lower borrowing costs, and longer loan tenors.

MIGA can also help Pakistani entrepreneurs minimise risk while investing in other developing countries. Investment Officer Hal Bosher spoke about opportunities for Pakistani investors in Afghanistan. In the past one year, MIGA has supported three projects in Afghanistan, including a pharmaceutical manufacturing plant, a microfinance project, and a cotton ginning project. All three projects were underwritten under the agency's Small Investment Program.

"We at MIGA are able to cater to the different risk preferences and unique needs of both large, complex transactions and small investments," said Bosher.

"Our Small Investment Program is tailored to provide a flexible and competitive political risk insurance product tailored to the needs of small investors"


----------



## Neo

*Five-year uplift plan for Pakistan: Chinese advance team due on November 16 *

ISLAMABAD (November 12 2006): A Chinese advance team will reaching Islamabad on November 16 on three-day visit to finalise, before the scheduled visit of Chinese President Hu Jintao with a huge private sector delegation, a 'five-year development plan' for Pakistan, official sources told Business Recorder here on Saturday.

They said that the team, headed by an Assistant Minister, would hold discussions with all concerned ministries at the Economic Affairs Division (EAD) to give final touches to the agreements to be signed, most probably, on November 23 in Islamabad.

"Both countries are negotiating projects of investment of upto $30 billion, and agreements will be signed during the visit of Chinese President," sources said.

They said that all focal ministries have been directed to complete their homework over the proposed agreements to avoid any inconvenience during discussions with the Chinese advance team.

The main projects would be related to infrastructure, new Gwadar international airport (NGIA), new Islamabad international airport (NIIP), establishment of six nuclear power projects, an oil refinery at Gwadar, and a pipeline to deliver its refined products to Kashgar, besides coal mining and power production in Thar.

For the oil refinery, the Ministry of Industries and Production has issued notification recently declaring the refinery area as 'Export Processing Zone' (EPZ).

"We have declared 1811 acres land located at Gaddani, duly demarcated, fenced and bounded to be a zone for setting up of oil refinery project," sources added.

They said that on the North and South is private land, while on the East is private/government land and on the West is Arabian Sea, and the land is owned by Mahmod Haroon.

The Chinese President would make a formal announcement for setting up the oil refinery with a total refining capacity of 21 million tons oil per annum. The project would have two components, including a petrochemical complex and oil storage with an investment of $12 billion.

Sources said that both countries would also sign an agreement regarding establishment of special zones for Chinese companies, besides further co-operation in defence field. A Pakistan delegation, headed by Planning Commission Deputy Chairman Dr Akram Sheikh, has already completed negotiations on different agreements with the Chinese team in Beijing and set the pace for tangible announcements during the visit of President Hu Jintao.


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## Neo

*Country may have 0.5m tonnes surplus sugar next year*

* Sugar price unlikely to come down 
* Sugar production could be up 20-25% because of higher sugarcane output

KARACHI: In spite of the expected high production in the current fiscal year, sugar prices are unlikely to ease due to its high production cost and export of jaggery to Afghanistan through official channels.

Ã¢â¬ÅThe Pakistani sugar industry has set a production target of 3.5-3.6 million tons for the next season sugarcane crushing for which is to begin by the middle of November this year,Ã¢â¬Â said Zaka Ashraf, Chairman of the Pakistan Sugar Mills Association (PSMA), by phone from Lahore on Saturday. 

Ã¢â¬ÅThe sugar industry can easily achieve this target because of 25-30 percent higher production of sugarcane,Ã¢â¬Â he added.

Because of low production of sugar in the last fiscal year, sugar price had touched Rs 45 a kg and above by the middle of 2006. But the governmentÃ¢â¬â¢s strategy to import sugar through the private and public sectors helped to bring the prices down up to Rs 33-34 a kg. 

Ã¢â¬ÅIt would be difficult for the sugar millers to further bring the prices down from this level as the government had set Rs 60 per 40 kilograms the price of sugarcane in Punjab and Rs 67 per 40 kg in Sindh,Ã¢â¬Â said Iskander Khan, Chairman of the PSMA NWFP.

He said: Ã¢â¬ÅThe federal government has levied a 15 percent import duty on sugar, but it has not accepted the long-standing demand of the PSMA to impose regulatory duty on jaggery manufacturers, nor has it done anything to stop its export to Afghanistan.Ã¢â¬Â

Ã¢â¬ÅAround 80 percent of sugarcane in the last crushing season was used to make jaggery in the NWFP, and only 8,000 tons of sugar was produced,Ã¢â¬Â he said, adding: Ã¢â¬ÅThe price of jaggery has jumped to Rs 55 a kg in the NWFP from Rs 25 a kg.Ã¢â¬Â Owing to the poor policy of the federal government in the last crushing season, the CBR had to lose Rs 800 million under the head of general sales tax and other taxes, an official claimed. 

Market experts said the country would have another prices crisis during the next crushing season as the country would have 0.4-0.5 million tons of excess sugar. Now the Trading Corporation of Pakistan (TCP) has 600,000 million tons. Private importers have around 200,000 tons sugar in their warehouses. If the PSMA of all three zones achieved their sugar production targets, the country would have above 4.2-4.4 million tons of sugar against its total consumption of 3.8 million tons. The production of sugarcane is likely to be higher by 25-30 percent this year.

The sugar associations said all sugar mills would start crushing by the end of November. 

In the last fiscal year the government had imported nearly 850,000 tons of sugar through the TCP compared with 98,677 tons last year. 

Two years old sugar crisis is expected to end in 2007, as sugar production is likely to be higher this year than in the last two years. 

Sugar price had shot up by 150 percent from Rs 18-19 per kilogram in December 2003 to Rs 45 in March 2006.

Ã¢â¬ÅThe previous fiscal year was the worst in terms of sugar price, as its rates were all time high throughout the country because of the governmentÃ¢â¬â¢s policies,Ã¢â¬Â a PSMA office-bearer said. 

Ã¢â¬ÅThe federal government has not prepared any long-term policy for the sugarcane growers nor for the sugar industry, which may create trouble for the growers and millers in the coming crushing season over the price issue,Ã¢â¬Â he added.

The State Bank of Pakistan in June this year imposed a 50 percent cash margin on all loans to private traders for the purchase of sugar in a move to counter hoarding. The SBP withdrew the cash margin restrictions in October.

The federal government had imposed as ban on the export of sugar to Afghanistan, a source said, adding: Ã¢â¬ÅBut it is still being smuggled out to Afghanistan.Ã¢â¬Â


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## Neo

*LSM index posts 10.94% growth in July-Aug of current fiscal*

KARACHI: The Large Scale Manufacturing (LSM) index has registered a 10.94 percent increase in July-August period of current financial year over the corresponding period of previous year.

However, the LSM index recorded a growth of 7.49 percent in month of August of ongoing fiscal year against the same month of last financial year. LSM index witnessed 12.98 percent growth in July this compared to same month of previous year, the official statistics suggest.

The LSM index is based on the latest production data of 100 items provided by Oil Companies Advisory Committee (OCAC), Ministry of Industries & Production and provincial bureau of statistics.

The breakup of data shows that OCAC index declined by 11.53 percent in July-August period of this financial year whereas in August alone, the index was down by 17.30 percent.

The Ministry of Industries & Production index was up by 10.56 percent in first two months of current financial year whereas in month of August, it depicted a growth of 9.53 percent.

The data complied by the provincial bureaus of statistics suggests that this category index was up by 15.93 percent in first two months of financial year 2005-06 over the previous year and in August alone, it went up by 8.86 percent compared to August of previous financial year.

In the petroleum production sector, the statistics show that Jet fuel production dipped by 8.83 percent in July-August 2005-06 and 17.40 percent in August. Kerosene Oil production was up by 4.83 percent and 21.53 percent in July-August and August period of current financial year respectively.

In the first two months, Motor Spirits production dipped by 7.59 percent, High Speed Oil production by 16.00 percent, Furnace Oil by 16.03 percent, Lubricating Oil by 20.85 percent and LPG production by 2.87 percent. 

In the Ministry of Production & Industries Index, the production of cigarettes was up by 12.74 percent in first two months. Cotton yarn by 14.53 percent, cotton cloth by 13.77 percent, paper & board 9.58 percent, caustic soda by 9.57 percent, steel products by 5.94 percent, pig iron by 104.63 percent, glass plates & sheets by 2.04 percent and cement production by 10.29 percent

The auto sector performed well in the first two months of current financial year and contributed substantially in the overall index growth, Tractors production was up by 20.44 percent by standing at 8162 units in first two months, trucks high by 4.51 percent by standing at 718 units, buses by 4.92 percent at 192 units, jeeps & cars production by 14.86 percent at 27478, motorcycles production by 2.86 percent at 122153 units. 

Whereas, the production of soda ash dipped by 2.89 percent, phosphate fertilizers by 11.42 percent and coke production by 34.28 percent. 

In the Index of Provincial Bureau of Statistics, vegetable ghee production was up by 0.78 percent in July-August period, cooking oil was up by 4.53 percent, starch and its products by 14.17 percent, beverages by 22.78 percent, cycle tyres by 42.62 percent, cycle tubes by 12.66 percent, motor tyres by 13.72 percent, air conditioners by 27.48 percent, electric meters by 16.13 percent, switchgears by 124.39 percent, diesel engines by 64.53 percent.

Whereas the production of TV sets declined by 37.19 percent, bicycles by 16.00 percent, electric bulb by 15.21 percent and blended-tea by 1.96 percent.


----------



## Spring Onion

http://www.khaleejtimes.com/Display...vember/business_November374.xml&section=busin
ess


*US, Pakistan plan joint study of select economic sectors*
FROM A CORRESPONDENT 

13 November 2006 



ISLAMABAD &#8212; The United States and Pakistan have jointly finalised a plan to conduct several studies on the global competitiveness of selected economic sectors to help increase Islamabad's exports.


As a first step, officials said, the growing motorcycle industry of Pakistan has been selected for carrying out a policy analysis.

The Competitiveness Support Fund (CSF), a joint venture the Ministry of Finance and the US Agency for International Development (USAID) will examine where competitiveness already exists within targeted sectors and where it can be improved. 

CSF will use the studies to forward recommendations to the government of Pakistan on policy interventions it should take to make certain sectors more internationally competitive. 

The first sector selected by CSF is the growing motorcycle industry in Pakistan. Other analyses will follow on the automotive and food processing sectors. Motorcycle Industry estimates show that last year a total of over 700,000 motor cycles were produced in the country. The industry has been experiencing a healthy growth rate of around 30 per cent per year for the past 4-5 years. It is estimated that production will cross the million units mark by 2008.

To identify the prospects and problems/obstacles of the motorcycle industry, a high-level delegation from CSF recently visited Karachi and met the key stakeholders. A follow-up visit is scheduled for the first week of September to Lahore for an interaction with the stakeholders there as well. 

Presently there are 43 motorcycle assemblers in the country that have been licensed by the Engineering Development Board (EDB). Out of these, there are 3 Japanese assemblers (Honda, Yamaha and Suzuki), while the remaining 40 assemble Chinese motorcycles. These assemblers buy parts, sub-assemblies and assemblies from over 200 large, medium and small vendors located in Karachi and Lahore. It is estimated that the motorcycle industry employs more then 200,000 people directly and indirectly.

There are a number of government agencies that are involved in regulating, controlling and monitoring the motorcycle industry. These include the Engineering Development Board (EDB), the Pakistan Standards and Quality Control Authority (PSQCA), the Ministry of Industries & Production (MOIP) and the Central Board of Revenue (CBR).

The primary objective of this study is to carry out a policy analysis of the competitive advantage of the local motorcycle industry, along with identification of the problems being faced by the sector.


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## Neo

*UAE fund mulls $5b investment in Pakistan*

DUBAI: A state-managed fund in the United Arab Emirates is considering investing five billion dollars in an oil refinery in Pakistan, the federationÃ¢â¬â¢s official WAM news agency reported on Sunday.

The project was discussed at a board meeting of the International Investment Company (IPIC) of the largest UAE emirate of Abu Dhabi, WAM said. Ã¢â¬ÅWith an estimated capacity of 200,000 to 300,000 barrels per day, the refinery is expected to play a positive role in boosting the Pakistani economy. It will also support the UAE drive to diverse its sources of income.Ã¢â¬Â The board expects IPICÃ¢â¬â¢s profits in the current year to hit one billion dirhams (270 million dollars), the news agency added.


----------



## Neo

*Shaukat for finding ways to eradicate poverty *

HALIFAX (November 13 2006): Prime Minister Shaukat Aziz on Sunday urged the world community to fulfil its obligations and work together with utmost sincerity and commitment to find ways and means through creating employment and income generating opportunities for the poor segments of society to eradicate poverty.

Delivering keynote address at the Global Micro-Credit Summit here, he that said poverty "is the gravest challenge" facing humanity at present, and "poverty and social deprivation lie at the root of extremism". He proposed a five-point holistic and inclusive strategy for promotion and spreading micro-credit in countries with high poverty levels.

The Prime Minister called for fighting poverty from a common platform by pooling energy and resources of the international community to rid the world of poverty, hunger, disease and deprivation.

He said that governments in developing countries must demonstrate a strong political commitment towards supporting microfinance, coupled with imparting technical and vocational skills to the poor for sustainable income generation, involvement of multiple actors and institutions to ensure microfinance outreach to the target groups, secure commitments at the global level to ensure macro economic and regulatory frameworks to support the growth of microfinance and mainstreaming of the microfinance into the financial sector as a commercially viable proposition.

He said that extremism breeds a festering sense of injustice and denial of economic opportunity, and multiple interventions are required to cause a dent into poverty.

He said there was need for a lasting and sustainable poverty reduction strategy and it must focus on creating income-generating avenues for the poor and the disenfranchised, particularly the women. He said that Pakistan has successfully implemented a stabilisation programme and wide ranging structural reforms, which have put the economy back on the track of sustainable growth and poverty alleviation.

"Pakistan's poverty reduction strategy has brought down the number of people below the poverty line from 34.5 percent in 2001 to 23.9 percent in 2005," he said.

He referred to 'Fiscal Responsibility Law' and said that it has been promulgated to ensure fiscal discipline and to obviate future policy slippages.

The Prime Minister said that Pakistan has implemented a Poverty Reduction Strategy, built on four pillars of accelerating growth, investment in human development, promoting self-employment through microfinance and social safety nets for the most vulnerable groups.

Shaukat Aziz said Pakistan government has also established strong foundations of micro-finance in the formal sector, along with extending support to civil society institutions.

Khushhali Bank was set up as the first specialised microfinance institution and a law was promulgated to provide separate regulatory framework for micro-credit institutions, he said.

He said that four specialised microfinance banks have been established at district level in Pakistan. He also referred to a variety of institutional models to increase micro-credit coverage to the poor, including the Pakistan Poverty Alleviation Fund, rural support programmes and credit lines for microfinance by commercial banks and leasing companies.

He said that Pakistan is combining micro-credit with skill development and social mobilisation as a comprehensive strategy to enable the poor to make the best use of borrowed resources.

Appreciating the efforts of Nobel Laureate Professor Yunus in the field of micro-credit, he said he established a successful example in this regard by establishing successful model of the Grameen Bank of Bangladesh.

The Prime Minister also appreciated the contribution made by the Micro-credit Summit Campaign since 1997. He also welcomed the objective of the Summit to officially launch the campaign's extension to 2015 by which time it is hoped to ensure that 175 million of the world's poorest families, especially women, would receive credit for self-employment as well as 100 million of the world's poorest families would move from below one dollar a day to above one dollar a day, adjusted for purchasing power parity.

He said that serious challenges, in terms of widening inequality between rich and poor nations, are creating islands of opulence amid oceans of poverty.

He said that war, illiteracy, poverty, pandemics, social injustice and intolerance still haunt the world while poverty is the gravest challenge facing humanity at present.

He said the poor suffer from lack of income and assets; they have little or no access to basic human needs such as health and education; they are handicapped because of social exclusion and voicelessness.

Shaukat Aziz said there is need to improve the coverage and outreach of micro-credit to the majority of poor populations.

Referring to measures taken by Pakistan government to eradicate poverty, he said the government has implemented an ambitious and all-encompassing reform agenda, covering all aspects of national life; political, administrative, social and economic which has brought about a positive change in the country and the process of national renewal is well under way.

The Prime Minister said that political institutions have been reformed, women and minorities have been given greater representations, democratic norms and practices have been institutionalised, accountability and transparency are the order of the day.

"We have all the ingredients of a sustainable democracy--a vibrant opposition, a free media, an independent judiciary and, above all, an informed public opinion", he said.

The Prime Minister said that in the economic sector, Pakistan has successfully implemented a stabilisation programme and wide-ranging structural reforms, which have put the economy back on the track of sustainable growth and poverty alleviation.

He said Pakistan is now one of the fastest growing economies in the region and hopes to sustain a high growth trajectory of 6 to 8 percent. He said the government has adopted a variety of institutional models to increase the coverage and outreach of micro-credit to the poor.

He said the government is also encouraging the private sector to come forward, and the regulatory role of the central bank is that of a policy maker, enabler and facilitator and the policy framework promotes public-private partnerships and private sector initiatives.

The Prime Minister said these initiatives have led to positive outcomes as evidenced by substantial growth in the micro-finance sector in Pakistan over the last six years.

He termed the start of Greenfield micro-finance banks, entry of commercial banks, diversification of products, manifold increases in the number of borrowers and development of distribution network as conduits for income generation, particularly for women, landless farmers and workers without assets.

The government, he said, is combining micro-credit with skill development and social mobilisation as a comprehensive strategy to enable the poor to make the best use of borrowed resources.

Concluding his keynote address, Prime Minister Shaukat Aziz said, "We have to learn from each other, share our insights and experiences, and adopt the best practices."

http://www.brecorder.com/index.php?id=496071&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*ADB for amending SECP laws to facilitate investment *

ISLAMABAD (November 13 2006): The Asian Development Bank (ADB) has asked the federal government to amend laws and ordinances related to Securities and Exchange Commission of Pakistan (SECP) to facilitate investment and improve corporate governance standards, official sources told Business Recorder.

Sources said an ADB team of Financial Management Governance Program (FNGP) is scheduled to visit Pakistan from November 22 to 29 to discuss these issues with the quarters concerned for which the bank has already committed a loan of $80 million subject to the fulfilment of agreed conditions.

The main thrust of the bank is to amend the Companies Ordinance, 1984, further improving corporate governance standards, the Trust Act, 1988 to meet modern investment requirements, the SECP Act, 1997, SECP Ordinance, 1969 and the Central Depository Act, 1997.

Sources said the ADB is also of the view that the SECP should encourage de-mutualisation and integration through electronic communication network and alternative trading system for the establishment of a dynamic national market.

They also said the SECP has also been asked to issue guidelines and regulations for opportunities de-mutualisation offer in the new markets. The mission would also discuss issues related to Postal Life Insurance and other insurance companies, they added.

The ADB had committed $260 million loan to restructure SECP and insurance sector, of which the bank disbursed $100 million as first tranche, while $80 million was given in September last, they added.

The remaining $80 million tranche would be disbursed as and when the government fulfils the commitments. However, the government would pay commitment charges to the bank till the conditionalities are met, the sources said.

It is interesting to note that the finance ministry is making efforts for taking control of the 'profit-making' public sector insurance entities, including the State Life Insurance Corporation (Slic) with the ADB support.

But the commerce ministry is on collision course with the finance ministry for the past one year on this issue, saying that why one organisation was being taken from one ministry without any solid justification.

"The ADB is fully backing the finance ministry's viewpoint, saying that insurance business was being hurt by commerce ministry's handling of the organisation," sources said.

The World Bank (WB) has also asked the government to liberalise insurance industry through reforms in line with the banking sector. "Insurance penetration is very low as compared with other countries at Pakistan's income level, which requires further consolidation and liberalisation of the industry," sources quoted WB mission as commenting on Implementation Completion Report (ICR).

The World Bank is of the view that the county's banking sector has gone through beneficial structural reforms, but the rest of the financial sector had not been subjected to reform process to that extent.


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## Neo

*Investment under CFS up by 13.4 percent *

KARACHI (November 13 2006): Total investment under CFS (Continuous Funding System) had been increased by 13.4 percent to stand at Rs 28.0 billion during the week ending on November 11, 2006 against Rs 24.7 billion a week earlier, while the cost of borrowing at CFS counter went down by 50 bps on week-on-week basis.

Interestingly, out of total CFS investment, on an average, 98.6 percent was recorded in the old 32 scrips while only 1.4 percent was recorded in the new scrips.

An analyst at JS Research said that this was owing to the fact that the new scrips, added to CFS, are less liquid as compared to old ones. The average rate in old scrips of CFS stood at 16.7 percent, whereas it stood at 18.4 percent in case of the new scrips.


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## Neo

*Task force of Pakistanis working on Wall Street set up: Shaukat seeks long-term investment *

NEW YORK (November 12 2006): Prime Minister Shaukat Aziz has constituted a task force of Pakistani nationals working on Wall Street for attracting investment from hedge funds, private equity, venture capital and other fund management into Pakistan.

At an interactive meeting with a group of Pakistanis Friday evening from across the US arranged by the Pakistan embassy, the Prime Minister said under the new paradigm we are already tapping the capital market with bond and GDR issues.

But besides this, we want to attract long-term investment from the surplus pool of money and use it intelligently as a driver of the economy. He said our neighbour is doing it-so these funds have already reached South Asia. We need to pull some towards us and create the absorption capacity, he added.

Responding to the Prime Minister's plea for help, the Wall Street gurus said these funds were meant for seven to 10 years. The investors want security capital and an exit strategy. For this to happen the legislative system must provide guarantee that these funds are not usurped by successive governments.

The Prime Minister assured participants that the government was prepared to provide the enabling environment as well as the necessary legislative guarantees.

He asked them to come up with definite proposals and asked the minister of state for finance to co-ordinate with the task force comprising to channelise these funds into Pakistan.

Talking to media on Saturday, Prime Minister Shaukat Aziz said in order to enhance tourism the government has decided to focus on Trekking and Mountaineering clubs in North America, the Sikh community wanting to visit their religious sights and the Pakistani Diaspora wanting to know their roots.

He also said during his visit he has interacted with some members of the Democratic leadership. In the past, we also dialogued with them as the minority party. However, once various committees in the Congress are constituted we would further interact with them. He said the conduct of foreign policy is in pursuit of national interest.

"Our contacts will be used for the nation and not for personal gains," he added.

*APP adds:* Speaking about the upward trend in investment, the prime minister said a lot of foreign and domestic investment was taking place in power generation. The government, he said, was trying to attract people to set up power generation stations and provide electricity through public-private sector partnership.

The prime minister listed IT, telecom, oil and gas exploration, refining and distribution, hotel, tourism, construction and retail and wholesale supply chains as sectors offering promising opportunities. He said that there was tremendous potential for agro business as more and more companies were investing in dairy and other farm products. This would increase income of farming community in rural areas and help eradicate poverty.

He said that in textile and engineering sectors the country has skilled people who produce textile and engineering goods. He pointed out that wages of Pakistani workforce are lower and their productivity is high.

Aziz said the government left the IMF mode and went into international market by issuing bonds in order to achieve economic sovereignty and set a benchmark for the private sector to follow.

Now the private sector is coming into the bond market and liquidity is high in the Pakistani market, he informed the gathering. He said the focus of the government is on change of approach from conventional to unusual methods as no country can grow unless it attracts foreign savings.

Pakistan, he said, is poised to see a sustained upsurge in economic activity. He referred to the forthcoming visit of Chinese President Hu Jin Tao to Pakistan and hinted at establishment of economic zones for Chinese companies in Pakistan to produce and export goods. The Prime Minister said some Middle Eastern entrepreneurs were interested in establishing oil refineries in Pakistan for export to other countries. This would also create job opportunities for Pakistani people, he added.

Aziz asked the Pakistani Americans to identify sectors for their investment in the country. During interactive session with investors, he sought their suggestions and assured them that the government would ensure proper protection for their investment.


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## Neo

*ADP to provide $200 million to implement Punjab resource management project *

FAISALABAD (November 13 2006): Punjab Resource Management Programme (Subprogram- III) will be launched during 2007 with the financial assistance $200 million of Asian Development Bank.

According to official sources, the goal of financial assistance is to help formulate subprogram-III and implement the cluster programme.

This will help support poverty reduction through good governance, including improved public sector resource management.

This project will provide policy advice and capacity strengthening through consulting services, with a focus on civil service reform, human resources development, and development of key institutions; pro-poor delivery of basic social and public services; and private sector development, public-private partnerships, and reforms in public sector organisations.

Despite many initiatives aimed at developing Pakistan's economic and social sectors, the country's level of development remains below its potential. Social indicators are poor. Issues of governance encompassing public institutions and functions have been identified as being central to the poor development performance both at federal and provincial levels.

The government has undertaken reforms at various levels, including the provinces, and ADB has been asked to help Punjab to reform its public sector and processes.

The Punjab Resource Management Programme comprising three subprograms over the subsequent years began in 2003 and will be implemented over a period of about five years.

According to ADB sources, the third subprogram would be presented to ADB Board for approval in 2007.

*OFFICIAL SOURCES EXPLAINED THAT THE POLICY REFORMS UNDER THE PRMP ARE DIVIDED INTO THREE AREAS:* fiscal and financial management, processes and institutions for pro-poor service delivery, and private sector development. PRMP will achieve its purpose when policy reforms result in public resource management that is efficient, cost-effective, transparent, and accountable and leads to higher equity and sustainability.

*This project will have following components.*

*FISCAL AND FINANCIAL MANAGEMENT:* A key responsibility of the program management unit (PMU) is to provide timely advice to the implementing departments and to co-ordinate support for implementation targets. Experts will be engaged to facilitate revenue and expenditure management; restructuring of public debt and provincial liabilities; analysis of inefficient subsidies and options for phasing them out; improve accountability and financial management systems; and a review of reforms for public procurement systems.

*CIVIL SERVICE REFORM:* To sustain the ongoing reforms, the Punjab government will reform its human resource management. This component will support the Punjab government to review and assess various options on restructuring the provincial civil service; assist in the preparation of a human resources policy; provide technical review for amendments to the legislation and rules of the provincial public service commission; and design a medium- term departmental restructuring plan.

In addition, this component will help the change management unit to circulate viable options for civil service reforms.

*PRIVATE SECTOR DEVELOPMENT:* A key focus of subprogram 2 is to facilitate province-wide reforms for private sector activities, forging public-private partnerships and reducing GOP's direct involvement in commercial activities.

Under this component, Project will be provided to draft laws, regulations and rules required to effect changes in the legal regime that impedes private sector growth; prepare templates for public-private partnerships; design provincial and local government innovations in business processes to encourage the inclusion of private sector in service delivery; help provincial and local governments to privatise and outsource agriculture-related functions; and prepare options for privatising public sector organisations.


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## Neo

*Dutch firm to open cash & carry stores *

KARACHI (November 13 2006): The opening of three Micro Cash and Carry stores, being established by a Holland company in the city on immediate basis will be performed towards the end of November. Managing Director, Micro Cash & Carry, Mareh Miakie Wiez announced this while talking to City Nazim, Syed Mustafa Kamal during a meeting along with his delegation held at the Nazim's office.

A total of 150 local people would get employment in these three stores, he informed. The city nazim welcomed the company on starting their business activities in the city and said Karachi was one of the seventh largest cities of the world and its population is 17.5 million. It is not only the economic hub of the country but also of the whole region, where vast business opportunities are available.

The nazim said efforts were being made to provide the citizens with facilities of international standards, therefore, projects of infrastructure upgradation and development had been initiated in the city keeping in view the future requirements.


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## Neo

*Estimating the black economy*

By Qazi Masood Ahmed & M. Haider Hussain

THE tax and tariff reforms during the 1990s can be regarded as the first comprehensive exercise of its kind and therefore it becomes desirable to gauge their impact on the black economy and on tax evading practices.

With some modifications, this paper uses the standard monetary approach to obtain the latest estimates of the size of the black economy and its macroeconomic implications.

If the underground economy is large and significant, there is a clear evidence of market distortions, poor governance and of disproportionate administrative regulations.

The phenomenon has been discussed and defined in economic literature under many different names such as unofficial, informal, unregistered, unobserved, shadow, subterranean, parallel, hidden, invisible and irregular.

Conceptually, there are four classifications of the underground economy according to the particular institutional rules they violate. These are: illegal economy; unreported economy; unrecorded economy and informal economy.

Moreover, as Schneider and Frey (2001), point out, the notion of underground or the black economy should not be identified only with illegality. Most of the activities are perfectly legal but the taxes are evaded due to different reasons and due to loopholes in the economy itself.

The study addresses the issue of the size of the unreported economy in Pakistan and in estimating the resources that are lost due to tax evasion and its avoidance.

As is evident, a comparison of these studies in the context of Pakistan reveals contradicting results vis-ÃÂ -vis the size of the black economy. Econometrically, the bases of these alternative results may include (i) choice of variables, (ii) choice of the estimation period, and (iii) choice of the functional form and underlying assumptions.

The data for our analysis covers the 1960 to 2003 period and is obtained from various issues of the Pakistan Economic Survey and the State Bank of PakistanÃ¢â¬â¢s annual reports.

The black economy turns out to be at its peak during the early 1960s, when the corporate and personal income tax rates were high. The corporate income tax rate was 30 per cent including 30 per cent super tax during that time. This (aggregate corporate income and super tax of 60 per cent) rate dropped to 40 per cent during the late 1980s.

Likewise, the maximum personal income tax rate was 75 per cent during the 1960-64 period, which was the reason for the black economy to remain well above 30 per cent of the GDP during the same period.

The black economy kept declining during the 1965-75 period, when this rate was brought down within the 60-70 per cent range (Qureshi, 1989, pp.23). Furthermore, this rate was 56 per cent during 1980-1986, later brought down to 39 per cent in 1988 and subsequently to 28 percent in 1993 Ã¢â¬â the effect of which is consequently reflected by the shrinking black economy in the periods under review.

However, Kemal (2003), reports an increasing trend of the black economy during 1995 and 1998 Ã¢â¬â which is contrary to our results.

A possible explanation could be the tax reform effect, which was absent in Kemal (2003). Furthermore, results of Kemal (2003) are based on a special specification where lagged dependent variable is used as explanatory variable with a high positive co-efficient.

In the present study, the impact of tax reforms is dominating. The black economy as a percentage of GDP declined by nine percentage points in case of both currency ratio and currency bearer bond equation during 1996 and 1997. The corresponding decline in tax evasion as percentage of GDP was 39 per cent and 32 per cent, respectively, for both methods used.( Figure 1 and 2)

The black economy remained relatively high during the early 1990s at around 26 per cent of GDP. During that period, tax-to-GDP ratio was almost stagnant at 13 per cent and the rate of return on deposits was falling - a disincentive to withdraw from activities related to the black economy

Nevertheless, during 1996-97, tax-to-GDP ratio dropped to 12.7 per cent after touching its peak at 14 per cent, coupled with the increase in rate of return on deposits from 6.4 per cent to 6.8 per cent. Both these factors, especially the tax reform effect, played a significant role in slashing the black economy.

The further decline of tax-to-GDP ratio during the 1999-00 period, which does not appear to have great impact on the size of the black economy, was actually the result of re-basing of the countryÃ¢â¬â¢s GDP. On the other hand, the sharp decline of rate of return on deposits from 1998 onwards, acted as a hurdle in reducing the size of the black economy.

Roughly, the inclusion of bearer bonds increases, on an average, the black economy as a percentage of the GDP by five percentage points each year. Bearer bonds were introduced during the mid 1980s to promote savings.

Later on, they became a handy medium of exchange due to their limited physical quantity requirement for any transaction as against currency and also because of their hassle-free acquisition.

The annual compound growth rate of currency in circulation and bearer bonds during the last two decades remained almost the same; i.e. at 12 per cent. Also the size of the black economy has slightly increased from 2000 onwards. This is, perhaps, due to the reduction of rate of return on deposits, which declined by more than 30 per cent during the 2000-2003 period, revealing the weak stance of the monetary policy.

During the same period, the effective coverage of indirect as well as direct taxes was increased. This brought some of the untaxed sectors into the tax net, causing the tax-to-GDP ratio to increase slightly by 0.26 per cent.

In this paper, an attempt has been made to estimate the size of the unreported part of the economy, that is the result of tax evasion. This becomes of special importance once the impact of taxation reforms is incorporated. Overall, the black economy has a declining trend as a percentage of GDP. This is due to the tax reforms involving rationalisation of tax rates.

Despite the fact that the black economy as a percentage of the GDP has decreased, the annual compound growth rate of the black economy during the sample period remained more than 11 per cent. At disaggregated level, this growth remained at two per cent during the 1960s, 17 per cent during the 1970s, 15 per cent during the 1980s and 13 per cent during the 1990s and onwards .

Similarly, tax evasion grew at the rate of 12 per cent. This growth remained at five per cent during the 1960s, 19 per cent during the 1970s, 16 per cent during the 1980s and 11 per cent during the 1990s and onwards.

Estimates of the black economy cannot be taken as precise measures. They can, nevertheless, be effectively used to deduce broad trends and directions.

In the light of above discussion, therefore, several suggestions pertaining to policy actions can be made. Although increase in the direct tax revenue is vital for a developing country because of its redistributive effects, the medium of this increase, nonetheless, cannot solely be the increase in tax rates since this gives rise to tax evasion.

Instead, broadening the tax base would be an ultimate solution. To supplement these efforts, official administration regarding the detection and preventing of tax evasion should be improved.

Tax reform process should be consolidated and integrated with other macroeconomic reforms. The presence of loopholes in the system and the prevailing corruption among the tax authorities cannot be ignored when dealing with the issue of evasion.

These inefficiencies must be dealt accordingly in order to curb the tax losses and to reduce the cost of being part of the reported economy.

(Edited excerpt from SPDC research report on Ã¢â¬ÅEstimating the Black Economy through Monetary ApproachÃ¢â¬Â: A Case Study of PakistanÃ¢â¬Â).


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## Neo

*Hurdles in Indo-Pakistan trade*

By Sabihuddin Ghausi

WHILE politicians in Pakistan and India continue to blow hot and cold, measured steps are continuing to enlarge bilateral trade ties between the two countries.

The statement by Indian Foreign Minister Parnab Mukerjee on SaftaÃ¢â¬â¢s future in absence of co-operation he seeks from Pakistan or the threat held out by PakistanÃ¢â¬â¢s Railway Minister to stop operation on Sindh-Rajasthan sector if India does not start its train service, are meant to cajole each other to move forward more speedily. These indicate some impatience with the pace of progress, made by either side, towards a mutually agreed direction.

It also indicates, as seen at the political level, the interest of the two sides do not coincide in some areas in the immediate context. Yet, the changing global trade trends leaves them with no or very little option but to forge closer trade ties.

These statements from the two senior politicians of India and Pakistan notwithstanding, the two neighbouring countries have recently taken three important decisions that will serve as catalysts for expanding their bilateral trade.

First, the ratification by Indian cabinet on October 28 of a protocol of direct shipping link between the two countries; second, a decision to resume cargo service between Indian and Pakistani Punjab and on the Sindh- Rajasthan sector; third, the move to open branches of two banks in each othersÃ¢â¬â¢ countries.

Pakistan included more than 300 items early this month in its positive list for trade with India. Ã¢â¬ÅIt means diversification of more than a billion dollar global import towards India,Ã¢â¬â¢Ã¢â¬â¢ remarked an executive of a giant chemical multinational who added that the list includes dyes and chemicals needed by PakistanÃ¢â¬â¢s textile industry.

Within days after these announcements, Indian and Pakistan businessmen got busy in setting up warehousing facilities for dyes and chemicals at Lahore and Karachi.

Ã¢â¬ÅWith the operation of direct railway cargo service and permission to import dyes and chemicals from India, we will save on freight, we will get a quick delivery. It will enable us to maintain a week or 10 days inventory rather than for three monthsÃ¢â¬â¢ period that we are presently doing while importing from EuropeÃ¢â¬â¢Ã¢â¬â¢ said Mirza Ikhtiar Baig, a denim manufacturer whose product needs lot of dyes and chemical inputs.

Indian software houses are meanwhile exploring outsourcing a part of their international job to Pakistani companies. Ã¢â¬ÅIt is wrong to assume that Indo-Pakistan trade is a one way affairÃ¢â¬Â Baig said. Indians too need to share part of their commitments with Pakistanis and are desperately looking for partners at Karachi and Lahore. Pakistan Software Association leaders are in consultation with their Indian counterparts.

The bilateral trade volume is now close to $1 billion a year and businessmen look pretty confident of Ã¢â¬Åat least 100 per cent rise in trade this yearÃ¢â¬Â says a Jodia Bazar trader. His optimism is based on increase of importable list from India, bilateral facilities like direct shipping, cargo train service and opening of bank branches.

A study of State Bank of Pakistan has recently projected two-way trade potential between Pakistan and India at more than $5 billion a year. The study is based on an analysis of items imported by Pakistan from countries other than India and available in India also. Indian global imports can be catered by Pakistan.

While the official two-way trade remains close to $1 billion, businessmen put volume of smuggling and circular trade through UAE at about $1-2 billion a year. Ã¢â¬ËÃ¢â¬ÂThe volume of tradeÃ¢â¬âformal and informal, direct and indirectÃ¢â¬âis already worth about $3 billionÃ¢â¬â¢Ã¢â¬â¢, a Jodia Bazar trader said. KarachiÃ¢â¬â¢s famous Rainbow Centre in Saddar is a big ware house of smuggled Indian DVDÃ¢â¬â¢s of latest and old films, music and dance albums.

In Bombay Bazar, the shops display hoardings and billboards that offer packets of goods that can fetch between Rs5,000-10,000 in India. Called, Ã¢â¬ÅDone TradeÃ¢â¬â¢Ã¢â¬â¢ in business jargon, this is going on openly in India and Pakistan and beneficiaries are the hundreds of visitors.

Raees Ashraf Tar Mohammad, a leader of Pakistan importers based in Jodia Bazar, said that as many as half a dozen small and big launches sail between Karachi and Mumbai and Kundala in India. In May last year, Raees was in Mumbai with a goodwill delegation.

Ã¢â¬ËÃ¢â¬ÂThe governments in India and Pakistan have no business to deny consumers the right to get goods and commodities in either of two countries at reasonable pricesÃ¢â¬â¢Ã¢â¬â¢ he declared at a meeting amidst applause. His logic is simple. Ã¢â¬ÅRestrictions on trade promote smuggling because it is consumersÃ¢â¬â¢ right to get good quality goods at reasonable prices from anywhereÃ¢â¬â¢Ã¢â¬â¢.

Amjad Rashid, an international food trader doing relief and rehabilitation work in Afghanistan and Iraq holds bureaucrats of the two countries responsible for creating hurdles in two-way business.

Ã¢â¬ÅNow we should look beyond trade and explore signing some protocol to enter into joint venture arrangementsÃ¢â¬â¢Ã¢â¬â¢. Amjad got an order to supply blankets to war-torn Afghanistan.

Pakistani blanket firms lacked the capacity to supply the order and so Amjad got these supplies from Amritsar and other parts of East Punjab.

The blanket industry in East Punjab is based on recycling and offers a piece at Rs150-200 that suits Pakistanis, while an average quality local blanket cost anywhere between Rs2,500-3,000. Those coming from Iran are somewhat cheaper. Ã¢â¬Å The Indian technology can create employment and provide blankets at affordable prices to local consumers,Ã¢â¬â¢Ã¢â¬â¢ argues Amjad.

Pakistan and Indian businessmen have suffered a lot because of their bureaucracies. Visas are difficult to get in Islamabad and Delhi. On most of the occasions, visas are denied without assigning any reasons. They are issued for specified cities rather than for the whole country.

Recently, an Indian journalist narrated in detail on website the hardships of Pakistani visitors invited by a Bangalore-based company to see their manufacturing facilities.

This company has set up a subsidiary in Dubai to service its customers in North Africa, West Asia and Central Asia. A few Pakistani companies came in contact with this firm and showed interest in doing business. Consequently, these businessmen were invited to India.

In India, these visitors were asked to report to police stations in which their hotels were located. Ã¢â¬ÅIn one city, Pakistani visitors had to go to five different police stations because of their lack of knowledge about jurisdictionsÃ¢â¬â¢, the journalist said..

Ã¢â¬ÅThe experience of our Pakistani visitors with our bureaucracy was so horrendous that it was a real study in Ã¢â¬Ëhow to repulse the visitors,Ã¢â¬â¢Ã¢â¬â¢ sums up the Indian journalist.

The communication between Indian and Pakistani businessmen is much easier than between businessmen of any two other countries because of the language. The market dynamics, customer expectations, cultural patterns, fashions and tastes for goods are almost same in the two countries.

These factors encourage big and small companies in India and Pakistan to explore new areas of cooperation. But bureaucrats and politicians miss no opportunity to create hurdles.

In Pakistan, the bureaucrats and politicians sit on decisions for giving MFN status to India.

Similarly in India, the politicians and bureaucrats want to keep Pakistan, Bangladesh and China away from any economic venture in their communication and infrastructure projects because of Ã¢â¬Åsecurity reasons.Ã¢â¬Â


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## Neo

*Exports up 1.3 percent in Jul-Oct 06 *

ISLAMABAD: November 14, 2006:The country's exports in first four months of current fiscal (July-October) year were recorded at around $ 5.552 billion, showing an increase of 1.3 percent over the exports worth $ 5.478 billion realised in the like period of previous fiscal.

According to official trade figures, the exports during the month of October, 2006 totalled at around $ 1.282 billion as against $ 1.325 billion realised in the corresponding period of the last fiscal, showing a decrease of 3.2 percent in the like period of the last year.

The exports achieved 29.8 percent of the set target of $17.00 billion for the current fiscal while the import achieved 34.1 percent of the set target of the current fiscal.

During the first four months of the current fiscal, the imports also witnessed 9.0 percent growth to $ 9.560 from $ 8.877 billion in the same period of the last financial year.

The country's imports in October 2006 were recorded at $ 2.132 billion, witnessing a decrease of 8.3 percent over imports worth $ 2.326 billion realised in the corresponding month of last fiscal.

According to the provisional trade figure released here on Tuesday the balance of trade has reached -$ 0.850 billion in October 2006 from -$1.027 billion in September 2006.


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## Neo

*ADB Karachi uplift fund doubles, adds Hyderabad, Thatta *

KARACHI: November 14, 2006: The Asian Development Bank (ADB) raised funding of Karachi Mega City Development Project from $400 million to $800 million, besides supporting expansion of Karachi master plan to include Hyderabad, Thatta and other nearby towns in it.

City Nazim Syed Mustafa Kamal in his recent tour to Manila had successful talks with ADB officials to raise funding for the project. 

The ADB has also set up a local support unit in Karachi for study of uplift project with cost of $13million.

On Monday, an ADB delegation, comprised of director Dr. Jim Arthur, transport specialist James A Leather and urban economist Shane Rosenthal called on the City Nazim and discussed uplift projects of Karachi.

It was observed that after completion of master plan it would greatly help to plan and expedite uplift projects.

The delegation said the bank was interested in projects of transport, solid waste management, Katchi Abadies, training of employees, master plan and water board.

The delegates also held separate meetings with DCO Karachi and EDOs.

Meanwhile, the CDGK had set up a district town co-ordination committee for study of various sectors of Karachi Mega City Project. All town Nazims and town municipal officers would be members of this committee.

On the occasion, the City Nazim disclosed that after the talks with ADB officials, it was decided to expand master plan of Karachi and make it a regional plan by adding Thatta, Hyderabad and other nearby towns.

He said the studies would be conducted on problems of these towns, as well as, facilities available there, so that their residents could be provided with job opportunities near their homes.

He said that $ 13 million study of local support group of Karachi Mega City Project include Rs 10 million project of developing parks and forests to reduce pollution, Rs 35 million for transport issues, Rs 40 million for converting Karachi master plan into a regional one, Rs 30 million for geographic information system of Karachi, and Rs 54 million for Karachi Water and Sewerage Board (KWSB) projects.

For study of Karachi urban transport model Rs 24 million were tagged while Rs 5 million were earmarked for linking Orangi with other areas of the city, Rs 55 million for controlling transport-based pollution, Rs 14 million for Malir water study, Rs 15 million for study of construction elevated expressway from Guru Mander to Northern Bypass and Rs 2 million for study of linking Superhighway with the National Highway.

For study of industrial estates Rs 15 million were earmarked, while Rs 2 million were tagged for revamping of industry in Orangi town, Rs 45 million for pilot project to uplift Katchi Abadies, Rs 20 million for comprehensive study of solid waste management and Rs 32 million for study on viral diseases and healthcare issues.


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## Neo

*Balochistan uplift with greater focus on jobs: Musharraf *

RAWALPINDI (November 14 2006): President General Pervez Musharraf on Monday underscored the need for sustaining pace of development work in Balochistan, saying that completion of various infrastructure and social sector projects would bring a sea change in lives of common people in the province.

Chairing a high-level meeting here, attended by the Balochistan governor, the chief minister and senior political leadership of the province, the President said that past governments neglected Balochistan, which has tremendous potential in various sectors like livestock, fisheries, mining, etc that can be promoted for the prosperity of the people of Balochistan.

He said the government was concentrating on peace and development in Balochistan with greater focus on creating job opportunities and ensuring better education and health facilities.

President Musharaf recounted various initiatives of the present government to improve living standard and make up for the past neglect meted out to the people of Balochistan.

The participants of the meeting also discussed in detail and exchanged views on various political initiatives being taken for the promotion of peace and harmony in the province. Besides political initiatives being taken, he referred to creation of 32,000 jobs in the province by the federal government, many of which have already been filled with the induction of the local people.

The increase in quota for Balochistan from 3.5 percent to 5 percent will also result in some additional 6,000 jobs, he added. President Musharraf expressed his satisfaction over the ongoing development activities in the province where mega projects like Gwadar and Mirani dam were nearing completion besides many small schemes at the local level.

As many as 138 projects at a cost of Rs 164 billion are underway in the province, he said, adding that Rs 31 billion has been allocated for the current year as against Rs 25 billion last year. The government is also providing funds out of Khushhal Pakistan Programme for many local schemes, he said.

President Musharraf noted that law and order in the province was showing improvement which, he added, would also help in creating an enabling environment for the private sector to supplement government's efforts in the development process.

He firmly stated the government would not allow any subversive activities in Balochistan to impede the process of development and would ensure the writ of law for the safety and security of its people.


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## Neo

*Expatriates remitted $16.9 billion in five years, National Assembly told *

ISLAMABAD (November 14 2006): The Pakistani expatriates have remitted $16.9 billions in the last five years, Minister of State for Finance and Revenue Omar Ayub Khan stated this in a written reply submitted to the National Assembly.

While answering a question from MNA Sher Akbar Khan advocate during the National Assembly session held on Monday, he said the year-wise remittances are $4236.85 million (2002-03), $3871.58 million (2003-04), $4168.79 million (2004-05), and $4600.12 million (2005-06). However, district-wise data has not been compiled, he added.

To another question from MNA Yasmeen Rehman, the minister replied that Government of Pakistan floated Pakistan Sovereign Bonds (10-year maturity) worth $500 million and Pakistan Sovereign Bonds (30-year maturity) worth $300 million during the year 2005-06, but none in the current fiscal year so far, he added.

The major recipients of 10-years maturity bonds were United Kingdom with $195.6 million, Singapore with $118 million, United States with $88.6 million and Hong Kong with $76.74 million and same countries responded sale of 30-year maturity bonds, he added.

While responding to Hakim Qari Gul Rehman's question Omar Ayub Khan said that there is no proposal for declaring District Mansehra as tax-free zone and to another question from Samia Raheel Qazi the state minister said that there is no proposal to remove GST on computers and parts thereof.

Certain organisations using green belt in Islamabad for their parking are paying monthly rent to the government, the Minister for Interior Aftab Ahmed Khan Sherpao said while submitting his reply in the Assembly to a question from Begum Ishrat Ashraf.

Marriott Hotel, he said, is paying the highest amount of Rs 59,820 and Agriculture Development Bank of Pakistan is paying Rs 9610. The National Accountability Bureau, Bahria Institute of Management Sciences, Bestway Cement and World Bank, all pay in the range of Rs 5000 to Rs 6000 approximately, he added.

In another in-writing reply Minister for Commerce Humayun Akhtar Khan on a question from Fauzia Wahab said the quantities of rice, fish and spices exported during 2005-06 were 3,638,576MT, 128,486MT and 19,910 MT respectively. He said that there has been improvement in exports of all the three commodities compared to last year data ie 25.85 percent in quantity and 23.19 percent in value.

The minister on a question from Begum Ishrat Ashraf on edible oil import has informed that in 2004-05, 605,054.6MT of edible oil was imported, which valued Rs 45,038.5 million, whereas 1,695,905MT was imported in 2005-06 valuing Rs 44,218.2 million.


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## Neo

*Islamabad and Beijing close to FTA *

BEIJING (November 14 2006): China and Pakistan have all but wrapped up the free trade agreement ahead of the state visit to Islamabad later this month by President Hu Jintao, the official Xinhua news agency reported on Monday.

Xinhua quoted sources with China's Ministry of Commerce as saying that negotiators cleared the last major hurdle, on market access, during a fifth round of talks in Beijing on Friday. The talks began after a visit to Pakistan in April 2005 by Chinese Premier Wen Jiabao. Two-way trade increased 39 percent last year to $4.26 billion.


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## Neo

*'Cities in Pakistan poorly configured for economic life' *

ISLAMABAD (November 14 2006): Despite the fact that cities are the engine of economic growth, in Pakistan these are poorly configured for economic life and lacking offices, commercial and warehouse spaces, Dr Nadeem-ul-Haq, Director, Pakistan Institute of Development Economics (PIDE), pinpointed this on Monday.

City organisation and policy development is an issue that has not been sufficiently discussed, he while announcing that PIDE, in collaboration with National Reconstruction Bureau (NRB), is holding a two-day conference on city organisation on November 15, (Wednesday) in Karachi.

Research on urban issues is rare in Pakistan, more so in the context of cities. Process of urbanisation, and to some degree service delivery, are the only areas where researchers have shown some interest, while cities as an entity have escaped their attention.

Little research throws light on cities: residence patterns; zoning; optimum size; architecture; globalisation; governance; or the developing phenomenon of urban sprawl in Pakistan.

Due to these serious shortcomings, city organisation and development in Pakistan had been very poor and the country would need better-organised cities, which give impetus to production, to achieve sustainable economic growth, Nadeem said.

He added that research and innovative ideas are a miss owing to budget cuts on research and the country's dependence on donors' community in initiating new policy ideas.

Nadeem said that overcrowding, soaring land prices, intense competition, traffic congestion, poor housing, poor sanitation, mounting social problems, deteriorating environment and rising crimes could push people and businesses away from urban centres. He said world was turning urban, and economic growth and urbanisation are becoming inextricably linked. He declared urbanisation as an essential condition for durable development. Every form of economic development has a basis in the city.

The two-day conference would discuss the issues like why don't capital and people move outside, combining themselves with cheaper land and thereby increasing profits, he said. Increasing number of people live in or near cities and most economic activity takes place in them. Economic growth often involves conversion of rural land to urban uses, residential, commercial and industrial, as economies make transition from an agrarian-based economy to an urban economy based on industry and services.

Pakistani cities are inherently different from most cities in the world, as they provide no urban density in the heart of the town. There are no social institutions for middle class, like libraries, clubs and theatres or town squares in any city of the country.


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## Neo

* More planned cities needed for growth *

ISLAMABAD: The city organisation and development in Pakistan had been very poor and the country need well planned and organised cities, which should be places of production, in order to achieve sustainable economic growth.

It was stated by Dr Nadeem-ul-Haque, Director, Pakistan Institute of Development Economics (PIDE) on Monday. Pakistani cities appear to be not configured for economic life since all of them lack office, commercial and warehouse spaces, said Dr Nadeem as he announced that PIDE in collaboration with National Reconstruction Bureau (NRB) is holding a two-day conference on city organisation on Wednesday in Karachi.

Overcrowding, soaring land prices, intense competition, traffic congestion, poor housing, poor sanitation, mounting social problems, deteriorating environment and rising crimes could push people and businesses away from urban centres, he said. 

The two-day conference would discuss the issues like why donÃ¢â¬â¢t capital and people move outside, combining themselves with cheaper land and thereby increasing profits, he said. Increasing number of people live in or near cities and most economic activity takes place in them.

He said world was turning urban, and economic growth and urbanisation are becoming inextricably linked. He declared urbanisation as an essential condition for durable development. Every form of economic development has a basis in the city. Economic growth often involves the conversion of rural land to urban uses, residential, commercial and industrial, as economies make transition from an agrarian-based economy to an urban economy based on industry and services.

Cities are centres of growth because of the density and proximity of complementary economic activities in urban areas, leading to economies of scale. In addition, cities promote growth of productivity because they offer a larger market.

Larger market size is critical, since fixed costs can be spread out among more consumers. In cities, modern technologies are generally more readily available and more affordable. Pakistani cities are inherently different from most cities in the world, as they provide no urban density in the heart of the town. City centres are reserved for the state, and only elites are allowed to share it with the government. Land is mainly owned by government and managed through heavy and complex regulation.

There are no social institutions for middle class, like libraries, clubs and theatres or town squares in any city of the country. Research on urban issues is scarce in Pakistan, more so in the context of cities.


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## Neo

*Pakistani medicine exports touch $80m*

KARACHI: Exports of locally manufactured medicines has surged to $80 million during the last few years, which is 6 percent of the total sales of $1.6 billion in the country. 

While talking to Daily Times, Dr Qaiser Waheed Chairman of the Pakistan Pharmaceutical Manufacturer Association said that over the last few years, exports of locally manufactured medicines were stagnant at $35 million but pursuance of better and effective marketing strategies by the pharmaceutical companies and competitive prices of their products compared to neighboring countries, pushed the exports figures up. 

He said that Africa, Philippines, Vietnam, South America, Burma, Yemen, Middle Eastern countries and Afghanistan are some of the countries ranked as largest buyer of locally manufactured medicines.

He claimed that deregulated exports of some Pakistani low-priced medicines, which runs in millions of rupees monthly, is unaccounted for as through illegal channels, Pakistanis medicines cater the requirement of the large Afghani population.

Citing instance in this regard, he said that Glycerine Tri Nitrate, which is a life-saving drug and used in emergencies for cardiac patients is available at Rs 8 for 30 tablets and it is exported in bulk quantity to Afghanistan.

Expressing his dissatisfaction over current export ratio of medicines, he said that compared to India, Pakistani is lagging far behind in this field as export of Indian medicines constitute 15 percent of their total sales.

Citing reasons for the better exports of medicines manufactured in India, he said that due to the government backing and incentives offered to local pharmaceutical industry, their pharmaceutical industry is making good progress. 

For the purchase of modern machinery, plant automation and import of modern equipments, the Indian government is offering loan on 2 percent interest, which is far below compared to the 16 percent offered to Pakistani pharmaceutical by the government. 

He also blamed the unrealistic and irrational policies by the federal health ministry as major deterrent factor towards increase in export of locally manufactured medicines. The local pharmaceutical industry needs regular and persistent policies by the concerned ministry for boosting the local drug industry and enhancing countryÃ¢â¬â¢s exports to a substantial level.


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## Neo

*Bumper rice crop to boost exports*

ISLAMABAD, Nov 13: The country's rice exports are likely to be boosted by falling domestic prices because of an expected bumper harvest in the 2006-07 crop year.

According to a private TV channel the rice output will be increased to 5.6 million tons from the previous year's harvest of 5.4 million tons after an increase in the area under cultivation and a high yield.

Ã¢â¬ÅWe have harvested around 5.3 million tons and hopefully the crop will be over 5.6 million tons by the end of the season,Ã¢â¬Â said a senior official at the ministry of food and agriculture.

Pakistan's eight-month long rice crop runs from April to November and the official said a final estimate on the crop size would be available in December. Annual domestic consumption is about 2.3 million tons.

Rice production has risen in the past few years backed by a government

drive to boost output and as more farmers switch over to rice also because of better availability of irrigation water.

Production this season could surpass the target of 5.6 million tons because of better availability of water following winter rains in February, the heaviest in Pakistan for 30 years, the official said.

Ã¢â¬ÅBetter availability of water has also nominally increased the cultivation area this year to 2.6 million hectares (6.424 million acres), and has also improved yield per acre,Ã¢â¬Â the official said.

Abdul Majid, a major rice exporter, said the country planned to increase rice exports in the fiscal year 2006-07 despite stiff competition from Southeast Asia.

Ã¢â¬ÅOur estimate suggests that we hopefully will end the season by exporting up to $1.3 billion worth of rice,Ã¢â¬Â he said.

Pakistan sold a record 2.9 million tons of rice last year, when rice-export revenues exceeded $1.1 billion, beating the previous high of $933 million in 2004-05.

Majid said the international demand was on the rise, especially for top quality basmati rice, while local rates were coming down.

The main buyers of Pakistani rice were African countries, Sri Lanka and Afghanistan.

He said the Irri-6 crop from the southern province of Sindh was already in the market, while basmati would be ready for harvest later this week.


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## Owais

*World Bank calls for hefty increase in taxes on LPG and CNG *

ISLAMABAD (November 15 2006): The World Bank has demanded of the government to tax liquefied petroleum gas (LPG) and compressed natural gas (CNG) heavily to remove distortion in the petroleum products' pricing mechanism.

Sources told Business Recorder a high-level delegation of the World Bank headed by its managing-director had drawn the attention of authorities in Islamabad towards huge distortion in petroleum products' prices during a recently concluded visit.

The delegation asked authorities to substantially tax CNG and LPG to do away with their policy of providing incentives to one kind of fuel at the cost of others. The delegation cautioned authorities Pakistan's policy of giving tax incentives to CNG and LPG can result in sharp decline in the government revenue receipts and create serious problem for it.

The delegation was of the view gasoline has traditionally been the fuel of choice for private vehicles, as a result it was taxed heavily. It pointed out in recent years, CNG has captured a significant market share given that out of a fleet of about five million light vehicles, in excess of one million now operate on this cheaper fuel. The delegation argued CNG costs about 40 percent of the price of motor gasoline and as a result it was a major source of distortion in petroleum products' prices.

Sources said the delegation also showed concern over marginally less taxation on LPG and demanded of the government to increase rate of taxes for this cheaper fuel.

It maintained the government authorised LPG use as fuel in private vehicles in 2005 and since then it was an easy option available with vehicles owners. The delegation was of the view, like CNG, LPG also need to be taxed to bring it reasonably close to gasoline price.

The delegation maintained LPG price represents 80 percent of gasoline, whose taxes account for about 23-29 percent of the retail price. The delegation cautioned authorities distortion in petroleum products' prices could affect inter alia government's fiscal receipts and refining industry income in the future.


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## Owais

*SCRAs improve to reach $304.8 million *

KARACHI (November 15 2006): Special Convertible Rupee Accounts (SCRAs), balances in which plummeted to $298.8 million on November 10, improved on November 13 to reach $304.8 million after fresh receipts of $7.6 million from USA.

Accordingly, USA's overall cumulative flows during the year so far rose to $127.4 million on November 13. On November 6 USA's balances stood at a record high level of $139.5 million.

On the withdrawals front, largest withdrawal of $0.9 million was recorded in the case of Singapore followed by smaller withdrawals of $0.7 million and $0.2 million in the case of UK and Hong Kong respectively. Negligible withdrawals also occurred in the cases of Guernsey, Qatar, and Switzerland.

As of now, USA is leading the list of top players followed by Singapore, UK and Hong Kong with their net cumulative flows during the year to November 13 amounting to $102.7 million, $90.4 million and $13.6 million, respectively.

At the stock market, mixed trend prevailed until the close of the market which ultimately witnessed a gain of 4.39 points in the KSE 100 index which rose to 10743.84 points on November 13. The KSE-30 index also showed a gain of 4.07 points closing at 13177.56 points. Both these indices use market capitalisation as the basis of comparison.

The BRIndex-30 Index, which uses turnover as the basis of comparison, however, shed 30 points over the level obtaining on the previous day to stand at 11,183 points indicating low trading in the shares covered by the Index.


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## Owais

*Overall fiscal deficit contained to Rs 260 billion *

FAISALABAD (November 15 2006): The Overall Fiscal Deficit (OFD) (excluding earthquake related expenditure) has been contained to Rs 260 billion, 3.4 percent of GDP in 2005-06 as against the target of Rs 285 billion, 3.8 percent of the GDP. While the OFD, including earthquake spending has been worked out at Rs 325 billion, 4.2 percent of the GDP during the period.

According to Finance Division's Budget Management Report 2005-06, prudent fiscal management is the foundation of a stable macroeconomic environment. Weak fiscal balances had been the major source of microeconomic difficulties in Pakistan.

The Overall Fiscal Deficit averaged above 7 percent of GDP in 1990s. After five years of extensive efforts, through reforms in the tax system and tax administration, the present government has succeeded in gaining fiscal stability.

The report said, total revenue receipts collected during 2005-2006 amounted to Rs 1077 billion as against the target of Rs 990 billion indicating an increase of Rs 87 billion. The tax revenue collected by CBR during 2005-2006 amounted to Rs 712 billion as against the target of Rs 690 billion indicating an increase of Rs 22 billion and 21 percent higher as compared to the last year's collection. Non-tax revenue receipts for the year 2005-2006 amounted to Rs 273 billion as against the target of Rs 215 billion ie an increase of Rs 58 billion. The major increases were on account of dividends' and other receipts.

Total expenditure during 2005-2006 was Rs 1402 billion as against the revised estimates of Rs 1415 billion. Current expenditure for the year 2005-2006 amounted to Rs 1035 billion out of which debt servicing and defence expenditures were Rs 237 billion and Rs 242 billion respectively.

According to provisional accounts, development expenditure for the year 2005-2006 has been booked at Rs 365 billion ie, 4.7 percent of GDP, which is higher by 0.5 percent than Overall Fiscal Deficit at 4.2 percent of GDP.

The OFD amounting to Rs 325 billion has been financed through net external borrowing of Rs 149 billion, non-banking borrowing of Rs 8 billion, bank borrowing of Rs 71 billion and from privatisation receipts Rs 97 billion.

Meanwhile, Corporate Finance Wing looks after the economic, financial and corporate affairs of all public sector entities (PSEs), which are working under the administrative control of the federal ministries/divisions. The financial support is provided to the PSEs for their re-structuring programme, in the shape of equity injection, and advancing government's loans for the working capital requirements and provision of subsidy to meet any shortfall through the GOP's budget.

Moreover, the PSEs are also allowed to avail Bank Credit to meet their financial needs. The government's policy decisions are implemented, relating to the issues for picking up of the government guaranteed liabilities and non-collectable loans, provided by financial institutions.

The financial and operational re-structuring of various public sector loss-sustaining entities was done to make them profit-earning. In this connection, the financial improvement plans (FIP) were drawn up by setting up the operational targets, which are being monitored regularly by the Finance Division. With respect to this, the necessary financial support is being provided regularly by the Finance Division.

The government also provides the financial support in the form of subsidy to PSEs, like TCP and USC in order to meet the objective of providing essential and primary food commodities to the consumers at reasonable and subsidised rates. The financial support is also provided through bank credit to the provincial food departments, Passco and TCP for the procurement of food and crop items and the guarantees issued to the Banks, in order to ensure availability of reasonable stock of commodities with the government departments.

The CF wing implemented the government's decisions to provide financial assistance to the corporate sector, during FY 2005-2006 as follows:

-- Wapda's debt servicing liability (DSL) towards the GOP, amounting to Rs 6.397 billion, was converted into the GOP's Equity in Wapda. Moreover, the GOP also injected new equity of Rs 384 million in KESC as per the sale purchase agreement signed at the time of privatisation of KESC.

-- Subsidy amounting to Rs 6.548 billion was provided to KESC for making it's cash shortfalls during the period from July 7, 2005 to November 29, 2005.

-- The Finance Division cleared inter-corporate circular debt of Rs 238.049 million payable by KESC to PSO/PKGCL.

-- Subsidy amounting to Rs 8515 million was provided to Pakistan Railways to meet its operational shortfall during FY 2005-2006.

-- Bank credit was arranged for the procurement of wheat by PASSCO, the provincial food departments and other entities. Moreover, subsidy of Rs 8.900 billion was provided to TCP on the import of wheat, fertiliser and sugar. An amount of Rs 0.957 billion was provided to PASSCO for wheat operations (Local procurements).

-- The Finance division continued to pay the instalments of mark up and principal amount of GOP's guaranteed loans/GOP Bonds, issued to Banks, against the liabilities of various PSEs during FY 2005-2006. In this connection an aggregate of principal amount of Rs 4926.297 million and mark up amount of Rs 2443.600 million was paid.

-- The Finance division provided an amount of Rs 1721.919 million as subsidy/grant and compensation to various PSEs, including Pak Dairy Development Company, Atta Relief Package and Ramazan Package to USC, compensation to Fauji Fertilisers, Bin Qasim Ltd (FFBQL) and Ghulam Ishaque Khan Institute (GIK) etc. An amount of Rs 250 million was injected as GOP's Equity in the capital of Pak Textile City Ltd and Rs 145.045 million were paid to Banks against servicing and re-payment of loans against the liability of USC and Peoples Steel Mills Ltd, which was treated as GOP's Equity in these entities.

Moreover, an amount of Rs 190.278 million was paid to Banks for servicing of loans against the liability of Pakistan Oilseed Development Board (PODB) and Heavy Electrical Complex (HEC), which was treated as GOP's loan to these Entities.

-- The Finance Division arranged local and foreign currency Bank loans, amounting to approximately Rs 6 billion to PIAC, against the GOP's guarantee. Moreover, Rs 1529.550 million were paid for servicing and re-payment of debt against the liability of the Entity, which was treated as GOP's Equity in the capital of the Company.

-- The Finance Division also undertook the financial and operational restructuring of Karachi Shipyard & Engineering Works (KS&EW).

With regard to this, the GOP's loan liability of Rs 816.00 million would be converted into GOP's Equity. Furthermore, GOP will also provide the guarantee against foreign currency credit and local loans to be borrowed by the Entity.


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## Owais

*FTA with China finalised, says Humayun *

ISLAMABAD (November 15 2006): Commerce Minister Humayun Akhtar said on Tuesday that Pakistan and China have finalised Free Trade Agreement (FTA), which would be signed during the visit of Chinese President Hu Jintao.

"There is no hitch now, as negotiating teams of both countries have resolved all concerning issues and paved the way to sign the pact," he said while talking to journalists after addressing a press conference regarding replacement of 43-year-old Export Promotion Bureau (EPB) with 'Trade Development Authority of Pakistan' (TDAP).

Asif Shah, Secretary, Commerce, Tariq Ikram, Chief Executive Officer (CEO) of the Authority, Naveed Arif, Secretary, TDAP, FPCCI President Saeed, and Additional Secretary Ashraf Khan were also present at the press conference. The newly constituted Authority which, according to the minister, is expected to be operational within six to eight months, would have all administrative and financial autonomy for achieving its stated objectives, including powers to hire manpower at market rate.

The minister said that TDAP mandate has also been expanded to include trade development, rather than only export promotion, as was the case of the defunct EPB.

He admitted that exports growth rate was going down, while imports were on the rise. However, he said, the government was conducting different studies to give special attention to competitiveness at the global level and production cost.

Regarding qualifications' criteria for the CEO, and whether the government would follow them, he said that Commerce Ministry believes that Tariq Ikram has all the abilities and qualities which have been mentioned in the Ordinance.

Asked if he would enjoy the status of Minister of State after the replacement of EPB with TDAP, Commerce Minister said that a summary had already been submitted to the Prime Minister, and decision was still awaited.

"It is our intention that the CEO should be an experienced and dynamic person with all powers to take decisions, and be responsible to the Parliament," he added.

Humayun said that TDAP would establish and manage its export development centres, business support centres/facilities, information centres and exporters' training institutes. In reply to another question, he said that the government had studied different international models, and the most favourable model was selected for Pakistan. He added that his view was that all such decisions should be taken very carefully.

One of the main issues was adjustment of Commerce and Trade Group officers, besides the regular employees, which has been resolved amicably, he said. The Commerce Minister said that Auditor General of Pakistan would conduct audit of TDAP in the light of financial rules to be finalised by Finance Ministry. Asked why the government was in a hurry to establish TDAP through an Ordinance before the start of National Assembly session, he said that he did not know that National Assembly had been summoned.

Tariq Ikram, who claimed he would work on the existing perks and privileges, said that the government had kept three things in mind while formulating the Authority. These include: enhancement of trade, removing weaknesses of Pakistan's trade, and 50-year export requirements. He said that trade associations always registered complaints of delaying on the part of EPB in release of funds but now this process would be started through online. He added that several other steps would also be taken to facilitate exporters.

He said that there was need to enhance production capability to meet the targets, but duplication with other organisations would be avoided. "We will take decisions in consultation with all concerned ministries, but duplication will not be allowed," he added.

He said that some time would be required to implement the stated goals and so far the two consultants have been hired for this purpose. One consultant would help in developing the organisation, while the other would extend support to assess human resource.

He said that eight Executive Directors have been hired for the new organisation, and further hiring would be made in the days to come. He said that TDAP would also hire experts of different fields, including IT experts, to meet the requirements of the Authority.


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## Owais

*July-October trade deficit expands to $4.01 billion *

ISLAMABAD (November 15 2006): Pakistan racked up $4.01 billion foreign trade deficit during the first four months (July-October) of the current fiscal year 2006-07, which is about 17.94 percent higher than that of corresponding period of last year ($3.39 billion), Federal Bureau of Statistics (FBS) said on Tuesday.

During these four months, exports totalled $5.55 billion against $5.47 billion of last year, and imports were to the tune of $9.56 billion and $8.87 billion, depicting a huge deficit. The worse thing is that the gap is steadily widening.

The provisional data of the FBS shows that Pakistan's economy pulled in 7.69 percent more imports during this period while its exports depicted an increase of only 1.34 percent. The high growth in imports and slow pace of exports are responsible for the burgeoning gap.

It is worth mentioning that the government has targeted imports of $28 billion and exports of $18.6 billion allowing a trade deficit of $9.4 billion. Now, in July-October (2006-07), the trade deficit stands at $4.01 billion. At this rate, the deficit at the end of the year could be about $12 billion, if no corrective measures are taken.

During the period under review, the slow growth in exports may make it difficult to achieve the exports target of $18.6 billion. However, it is significant to note that exports during October 2006 further declined by 3.24 percent to $1.282 billion as also imports declined by 8.33 percent to $2.13 billion.

According to provisional figures, exports during October 2006 declined to $1.28 billion against $1.42 billion in September 2006, showing a decrease of 9.47 percent.


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## Owais

*ADB raises $800 million fund for Karachi project *

KARACHI (November 15 2006): The Asian Development Bank (ADB) has raised the cost of the biggest ever development package - Karachi Mega City Development Project - started in the history of Karachi from $400 million to $800 million which comes to about Rs 48 billion.

City Nazim Mustafa Kamal, during his visit to the ADB head office in Manila, met the bank's high officials and succeeded in convincing them that fast track activities in Karachi have been started for infrastructure development, therefore, there is need for sustaining this pace so that the shortcomings experienced due to halted development process in the past could be met with.

In the light of bank's successful talks with Mustafa Kamal it increased the amount of the Karachi Mega City Development Project from $400 million to $800 million while releasing $13 million, which comes to approx. Rs 80 million for the study of Karachi's development projects set-up a Local Support Unit here.

Meanwhile, a representative delegation of he Asian Development Bank consisting of ADB Director G.H.K. Dr Jim Arthur, Transport specialist James A. Leather and Urban Economist Shane Rose, which is, at present, on a visit to Karachi, met City Nazim Syed Mustafa Kamal at his office and talked on development package, and said it is the bank's desire to see that work on development projects for Karachi may start at the earliest.

On the occasion, the City Nazim said after preparation of the Karachi Master Plan, there would be no utility of wasting time on the study for development projects because all the plans and projects have been clearly defined in the Master Plan.

He pointed out that for the first time in the history of Karachi, a comprehensive and co-ordinated Master Plan has been prepared, therefore, now all development works will be carried out as per Master Plan.

For the development of Karachi, he said the city government held talks with the government at the lower level and bureaucracy for uniform development of Karachi and had full consultation on the city projects and finalised the same.

Mustafa Kamal said the city government's present leadership had steered the city to the path of development in a short period of one year and this journey of development will continue and will get a further spur with the ADB financial assistance.

The ADB representatives praised the City Nazim's vision, saying the ongoing development activities show that Karachi is developing fast and the ADB will fully assist in this programme.

They evinced interest in the projects of solid waste management, Katchi Abadis, employees training, Master Plan, and Water Board. The delegation also had separate meetings with DCO and EDOs and had a detailed exchange of views on projects.


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## Owais

*Rs 1332 billion spent on poverty reduction in five years *

FAISALABAD (November 15 2006): Over the last five years the government has spent Rs 1332 billion on poverty-related and social sector programme to cater to the needs of poor and vulnerable sections of the society. An update annual performance report said the strong economic growth had created employment opportunities and reduced unemployment.

According to Labour Force Survey 2005 (First two quarters), since 2003-2004 and until the first half of 2005-2006, 5.82 million new jobs had been created as against an average job creation of 1.0-1.2 million per annum. Consequently, unemployment rate, which stood at 8.3 percent in 2001-02 declined to 7.7 percent in 2003-2004 and stood at 6.5 percent during July- December 2005. The rising pace of job creation is bound to increase the income levels of the people. The IT sector alone has created 114,737 new jobs in 2005-2006.

Headcount ratio, ie, percentage of population living below the poverty line has fallen from 34.46 percent in 2000-2001 to 23.9 percent in 2004-2005, a decline of 10.6 percent. The report claimed that the percentage of population living below the poverty line in rural areas has declined to 28.10 percent from 39.26 percent, while in urban areas, it declined to 14.9 percent from 22.69 percent during this period.

Poverty Reduction Strategy Paper (having completed its three years of implementation in June 2006), final touches are being given to the PRSP-2, which will take into account the recent socio-economic developments while addressing the main shortcomings of the original PRSP.

The poverty headcount, which stood at 34.46 percent in 2000-01, has come down to 23.9 percent by 2004-2005- a substantial decline of 10.6 percent. Rural areas have witnessed a higher fall in poverty, where the headcount ratio declined to 28.1 percent by 2004-05, as compared to 39.3 percent in 2000-01, while urban poverty fell to 14.9 percent from 22.7 percent during this period.

Cumulative PRSP expenditures (budgetary as well as non-budgetary) during 2001-05 amounted to Rs 1,124 billion, with the budgetary expenditures averaging 4.1 percent of the GDP during this 5-year period. Out of which, on pro-poor sectors in the FY 2004-05 the government had spent Rs 316.2 billion. This has exceeded the target of Rs 278 billion by Rs 38 billion.

During FY 2005-06 at the end of third quarter, Rs 250 billion had been spent in pro-poor sectors. The education and health sectors have absorbed half of the pro-poor budgetary expenditures, which are reflected in the improved outcomes in these sectors. Results of the survey show that during 2002-2005 the literacy rate had gone up by 8 percent to reach 53 percent in 2004-2005, while the gross enrolment rate at the primary level had risen from 72 percent in 2001-2002 to 86 percent in 2004-2005.

Results for the health sector show that immunisation coverage of children aged 12-23 months increased by 24 percent during 2001-2005, reaching 77 percent in 2004-2005. In addition to the on going efforts for poverty alleviation, the government during FY 2005 initiated the Khushal Pakistan Programme-2 (KPP-2) and the Khushal Pakistan Fund (KPF). The KPP-2 is a special programme for initiating small development schemes all over the country, for which an amount of Rs 20 billion had been allocated in the current fiscal year under the Public Sector Development Programme (PSDP).

The development schemes to be carried out through this programme include, small roads including farm to market roads, small water supply schemes, construction, repair of small rural roads, pavement of streets, drains and storm channels in villages, sewerage and garbage collection schemes, essential repair of primary and higher schools, basic health units/ rural health centers, rural electrification and provision of gas to villages.

The KPF will be used for financing various small development schemes in the whole country, which are outside the scope of the PSDP. The Fund will be replenished on yearly basis. The development projects to be covered will include schemes for provision of clean drinking water, sanitation, district link roads, infrastructure and capacity building for improvement in service delivery of health and education sectors.

According to official sources, the KPP-2 and KPF will continue under the PRSP-2, aiming at increasing pro-poor budgetary expenditures to over 5 percent of the GDP during its first year of implementation. Social protection in the country is currently being provided through various programmes and institutions in the public sector, which include the Zakat, Pakistan Bait-ul Mal, Employees' Old-Age Benefits Institution and Workers Welfare Fund (WWF).


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## Owais

*Pakistani industrialist gets international recognition *

LAHORE (November 15 2006): A Pakistani industrialist Iftikhar Ali Malik, who is also Chairman of Pak-US Business Council, has been given due recognition in the widely published latest edition of "The International Who's Who" 2006.

The International Who's Who since its first publication in 1935 has become the standard reference work on the world's most famous and influential personalities.

Following is the text reproduced as published: "Malik Iftikhar Ali; Pakistani industrialist and trade union official; 30 December 1944, Lahore; employee with Auto spare parts, Auto filter, Chairman Executive committee, Pakistan Automobile Spare parts Importers and Dealers Association, Member executive committee Lahore Chamber of Commerce and Industry (LCCI), 1980s, former President, LCCI, 1990, Vice President, Zonal Chairman and life member of Federation of Chambers of Commerce and Industry 1994.

Former President Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and life member also. Life member of Saarc Chamber of Commerce and Industry, Pak-Indo CCI and ECO-CCI".

The Federal government in recognition of his meritorious services rendered for the promotion of private sector, has appointed Iftikhar Malik as member of the Board of Director of National Bank of Pakistan, while federation had nominated him as first Chairman of Pak-US Business Council for the two years.

It may be mentioned here that President Pervez Musharraf has given civil award Sitar-I-Imtiaz to Iftikhar Malik's father Muhammad Shafi Malik in recognition of his social services.


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## Owais

*Twin islands' sale aimed at promoting investment: Ibad *

HYDERABAD (November 15 2006): Sindh Governor Dr Ishrat-ul-Ibad Khan has said the sale of twin islands of Karachi is only aimed at promoting investment in the province and to bring a change in the living standard of the people.

He said this while talking to mediapersons after addressing as the chief guest at the third and last session of a seminar on "Corruption at lower level- causes, effects and remedies," organised by the Hyderabad District Government in collaboration with National Accountability Bureau (NAB) here at the Circuit House on Monday.

Dr Ishrat-ul-Ibad said billions of rupees would be invested on the coastal belt, which would bring prosperity in the area, and added the issue of twin islands was a matter between the Federal and provincial governments.

He said the prime objective of selling those twin islands was to attract investment. Those islands were being affected due to erosions and, therefore, this opportunity was being availed, he added.

The Sindh governor said this investment would not only bring development, but would also bring new job opportunities for the local people, and the entire economy would be revived with the development of those islands in Karachi.

To a question, he clarified that Adviser to Chief Minister for Health Faisal Gabol was not removed because of corruption charges, and added the government was working in a holistic manner to address the problem of corruption.


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## Neo

*President not happy with PIA's performance *

ISLAMABAD (November 15 2006): Taking strong notice of delays in Pakistan International Airlines domestic and international flights, President General Pervez Musharraf has directed the national flag carrier to improve its service forthwith.

Sources said that at a briefing given by PIA Chairman Tariq Kirmani here at the President's Camp Office on Tuesday, the President expressed dissatisfaction over the service of PIA. Prime Minister Shaukat Aziz was also present on the occasion. The President said that PIA's performance was not up to the mark, and the routine delays in flights of the national flag carrier was not a good omen.

The President said that the government was assisting PIA financially, so it must show better results and improve its image as national airline. President Musharraf also directed PIA Chairman to take good care of Haj flights schedule, and delay in Haj flights should be avoided at every cost to provide relief to pilgrims.

He said that the service on domestic and international routes should be upgraded and the complaints lodged by European Union about standard of PIA flights should also be addressed.

Prime Minister Shaukat Aziz said that bringing PIA out of deficit was the top most priority of the government. Therefore, new aircraft have been inducted in the PIA fleet, whereas several aircraft have also been hired on lease.


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## Neo

*Chinese investment in Balochistan projects touches $1 billion *

KARACHI (November 16 2006): China is the biggest foreign investor with an investment of one billion dollars in different projects in Balochistan province alone. Balochistan Economic Forum (BEF) President Sardar Shaukat Popalzai told Business Recorder here on Wednesday.

The investment already made, a further investment of 200 million dollars in Saindak gold, copper and 195 million dollars in Duddar lead and zinc projects was being made in the development of these projects by China.

According to Chinese Consul General Sun Chun Ye, Chinese companies would invest in macro and micro level projects in Balochistan, particularly in the Gwadar port city. This assurance was given by him while addressing a roundtable on 'China and Pakistan economic relations with reference to the province of Balochistan-Gwadar port city,' organised by BEF at a local hotel in Gwadar on Monday.

A message received here said that the Chinese Consul General, who especially flew to Gwadar from Karachi along with senior executive of leading Chinese companies to attend the roundtable, said that with every passing day, bilateral economic and business relations between Pakistan and China were touching new heights.

China would help the province of Balochistan to become an important strategic business hub of the region, he said, adding he was very optimistic about the high profile potential of Gwadar city.

Ignoring all security apprehensions, the Chinese companies were enhancing their commercial involvement in the province, he said. BEF President Popalzai, presenting an overview during the roundtable, offered an impressive economic profile of the province along with Gwadar port city. He said that China was leading foreign investor in Balochistan, and appreciated the involvement of local manpower in the Chinese projects.

He said that Chinese investments had given confidence to the local tribes and now businessmen were considering their direct participation in the economic development of the province. Senior executives, including President and Chief Executive Officer (CEO) of MCC Resources Development Company Limited Zou Jianhui made presentation on Saindak gold copper and Duddar lead-zinc project.

China Harbour Engineering Company Manager Haijun Sun made presentation on Gwadar deep sea port and chief representative of Beixin Road and Bridge Construction Company Limited Shen Ganhua made presentation on Gwadar-Turbat road.

Former Gwadar district Nazim Baboo Gulab announced the establishment of Gwadar Business Council. Gulab, who is very active in promoting the economic interests of Gwadar port city, further highlighted the potential of the city and thanked the Chinese companies for developing the Gwadar deep-sea port.

Gwadar Industrial Estate's Project Director MB Magsi also briefed the participants about the progress made in the estate, and said that top priority was being given to the development of infrastructure and provision of water and power. All the plots in Gwadar Industrial Estate have been reserved and most of the investors are finalising their projects.

Gwadar District Nazim Ghafoor Kalmati, PACO Chairman Colonel Syed Akbar, and Director General of Gwadar Port Implementation Authority Syed Muzaffar Ali Shah also made brief presentations. A large number of businessmen, industrialists, bankers, representatives of public and private organisations, government officials and diplomats attended the roundtable.


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## Neo

*'Pak-French trade at lowest ebb' *

SIALKOT (November 16 2006): French Ambassador to Pakistan De Belenet has said that trade relations between France and Pakistan have much potential, but currently trade activities between the two countries are at lowest ebb.

Addressing a news conference here on Tuesday, he added that despite of this tendency, major French multinationals had established important subsidiary and there were bright opportunities of investment by the French private sector in Pakistan.

French Ambassador said that France and Pakistan were enjoying highly cordial and friendly relations in various fields since long, adding that those relations would be further strengthened with the passage of time. Replying to a question, he said that special attention had been focused on further accelerating the bilateral trade between the two countries.

He said we were very keen in augmentation of developing strong collaboration in all fields with Pakistan on top priority basis for enhancing the trade volume between the two countries. De Belenet was of the opinion that Kashmir issue was purely the internal issue of Pakistan and India. He appreciated the dialogue process between Pakistan and India and said this process would help in developing cordial relations between the two countries.

The dialogues were the best way for resolving disputes and defusing tension between Pakistan and Indian and the French government would support the outcome of dialogues, he added. Answering a question, the French ambassador said that Sialkot had special and unique export culture and the business community of the area was rendering laudable services not only for producing quality and standard products but also for undertaking mega projects of Sialkot International Airport.


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## Neo

*Pakistan and France sign 40 million euro agreement *

ISLAMABAD (November 16 2006): Pakistan and France signed a financing agreement of euro 40 million here on Wednesday to support the rural housing reconstruction sector of the earthquake-affected areas.

The financing agreement was signed by Secretary Economic Affairs Division (EAD), M Akram Malik on behalf of Pakistan and Ambassador of France to Pakistan Regis de BELENET on behalf of the French Government.

State Minister for EAD Hina Rabbani Khar and Chairman, Earthquake Reconstruction and Rehabilitation Authority (Erra) Altaf Saleem were also present on the occasion.

Hina Rabbani Khar said this agreement was in the context of the pledge made by the French government during the International Donors Conference held on November 19, 2005 in Islamabad for 80 million euro ($94 million) as soft loan for reconstruction and rehabilitation of the earthquake affected areas.

She said that half of this pledge-40 million euro ($47 million) would be utilised in the rural housing sector and remaining half would be used to fund the environment sector (water and sanitation). The French soft loan dedicated to the rural housing sector will be implemented through the French Overseas Development Assistance financial institution-the French Development Agency.

The loan will be repayable in the 20 years, including seven years grace period. The 40 million euro housing component of the project focuses on the reconstruction and rehabilitation of individual houses in accordance with para-seismic standards given by Erra.

These funds will be retroceded in the form of compensation to private persons to finance the reconstruction of their houses. A compensation of Rs 150,000 per house proposed for totally destroyed house will be paid to the beneficiary in three instalments based on the progress and quality of rebuilding work.

For partially damaged house, a compensation of Rs 50,000 per house will be disbursed as a single instalment. The implementing agency Erra will be in-charge of carrying out the project. This rural housing reconstruction project will have three components, including the compensation for reconstruction of destroyed or damaged houses on the basis of general scheme adopted by the Pakistani authorities.


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## Neo

*Plan for development of auto industry unveiled*

ISLAMABAD, Nov 15: The government has unveiled a pre-determined five-year tariff under the Auto Industry Development Plan (AIDP) to increase production turnover of the auto industry and annual export of parts to $10 billion (Rs600bn) and $650m (Rs39bn) respectively by 2011.

The plan discourages import of used cars through tariff measures and calls for introduction of a computerised registration system on a uniform basis for access across the country.

The annual gross sales turnover of the auto industry, at present, stands at Rs210 billion while export of auto parts are estimated at $35 million. As such, the increase in production turnover is projected to increase by 185 per cent while the exports of auto parts would make quantum jump.

The plan envisages development of two auto-parts vendor clusters near Port Qasim, Karachi and Motorway, Lahore and seeks to reduce the existing monopolistic tendencies of the existing manufacturers by encouraging new entrants.

It seeks to enhance auto-sectorÃ¢â¬â¢s contribution in GDP to reach 5.6 per cent and the share in manufacturing sector to 25 per cent by 2011. Likewise, the employment level has been projected to increase from 192,000 to 250,000 as direct jobs and from around one million to 2.5 million indirect jobs.

The new programme prepared by the ministry of industries and production and its affiliate Engineering Development Board (EDB), conceding that the existing industry was Ã¢â¬Åworking under high protection tariffÃ¢â¬Â and a few manufacturers have Ã¢â¬ÅmonopolisedÃ¢â¬Â the market. Ã¢â¬ÅThe products are characterised by relative low-quality, high priced fewer models, long delivery times and poor service to the customersÃ¢â¬Â.

The successor Tariff Based System (TBS) introduced last year, on the other hand, has created plus 400 tariff lines for the parts and components for the auto sector which nearly cover six per cent of total tariff lines.

This would remain a major challenge for the government negotiators on how to gain or provide market access to the partner countries in the future free trade arrangements. Final outcome of NAMA (Non-Agricultural Market Access) negotiations may also catch the industry unaware, says the plan.

It has proposed a phased reduction of tariff for the high tariff rates of localised items and the tariffs would come down by at least 15 percentage points for the localised components within five years but still remain higher than CKD (completely knocked down) tariffs for non-localised components.

As such, the tariff for vendors and manufacturers of parts and components which is currently zero for raw material, five per cent for sub-components and 10 per cent for components would be reduced to zero for all the three categories from next year. The import duty on completely built units (CBU) of cars would not be further lowered to encourage investment in the auto sector, components and manufacturing.

For localised parts of CKD cars, the tariff would reduce from 50 per cent to 45 per cent in 2008-09 and further to 35 per cent in the next two years. The tariff for CKD non-localised parts would be reduced from 35 per cent to 32.5 per cent in 2007-08 and would keep on decline by 2.5 per cent every year to 25 per cent in 2010-11.

The rate for CBU cars up to 1500cc, the tariff would be reduced from 50 per cent to zero next year (2007-08) and to be kept at that level thereafter. For CBU cars between 1500-1800cc, the current rate of 65 per cent would be reduced at the rate of five per cent annually to 50 per cent by 2010-11. For CBU cars exceeding 1800cc, the applicable rate of 75 per cent would be reduced at the rate of five per cent per annum to 50 per cent in 2010-11.

For LCVs, the tariff on CKD kits would be reduced from 20 per cent to 15 per cent at the rate of one per cent every year. However, the tariff for CBU LCVs, the rate would be reduced from 60 per cent to 50 per cent in a phased manner by 2010-11.

For two-wheelers, the tariff on CKD kits would be reduced from existing 30 per cent to 20 per cent in phased manner to 2010-1. Similarly, the tariff on CBU two wheelers would reduce to 60 per cent by 2010-11 from existing rate of 90 per cent.

For localised CKD parts of tractors and heavy commercial vehicles, the existing tariff of 35 per cent has been proposed to be reduced to 25 per cent in 2010-11.

For prime movers (up to 280 HP) the tariff for CKD would be reduced from 10 per cent to five per cent next year and then kept at that level onwards. Similarly, the tariff for CBUs would be reduced to 25 per cent next year and then kept at that level for the next five years. The tariff for prime movers (above 280HP) and would remain unchanged, while it would be reduced for trucks from 10 to five per cent and from 30 to 25 per cent next year.

The government has also proposed to allow the assembly of new entrants through import of 100 per cent CKD kit at the rate of duty applicable to non-indigenised parts. However, they would be asked to provide a commitment to develop and purchase local parts for fitment in the locally assembled cars. Some productive asset investment incentives would also be provided to the vendors and manufacturers.

The policy also envisages discouragement to the existing policy for the import of used cars and trucks. As such, the depreciation on import value of used cars would be reduced from two to one per cent per month and total depreciation limited up to 25 per cent only while transfer of residence and baggage rules would implemented strictly.

The registration of vehicles would be standardised throughout the country through a computerised system so that it is accessible on all Pakistan basis to help better data for the government, tax authorities, town planners and traffic authorities.


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## Neo

*PakistanÃ¢â¬â¢s defence exports surge to $200 million: DEP chief*

Thursday, November 16, 2006
KARACHI: Pakistan has achieved substantial growth over the years in terms of defence related exports, which have presently surged to $200 million from $20 million in the year 2000.

This was stated by Maj General Syed Absar Hussain. Director General Defence Export Promotion (DEP) while briefing the representatives of the print and electronic media in connection with the preparations for the forthcoming mega defence show Ã¢â¬ÅIdeas 2006Ã¢â¬Â, titled Ã¢â¬Ëarms for peaceÃ¢â¬â¢, which is scheduled to start on November 21 to 24 at the Expo Centre, Karachi.

The mega event is managed by the Defence Export Promotion Organisation and it is organised by Pegasus Consultancy (Pvt) Ltd.

City Nazim Karachi, Mustafa Kamal also spoke about the various efforts by the city government to complete the different ongoing development schemes in the vicinity of the Expo Centre, venue of the defence exhibition. DIG Traffic, Falak Khurshid explained in detail with the help of charts about the different traffic diversions which would come into affect with the commencement of the mega event around the Expo Centre.

Maj Gen Syed Absar Hussain said that a variety of defence equipments including Al-Zarar tank, anti tank and anti-air equipments and Mashhak plane were sold to South Asia and South Asian countries and Gulf countries and it requires a wide range of modern equipments to cater their defence needs.

He admitted that some countries, keeping in view their weak financial position, were offered weapons on credit-terms.

In the context of the mega defence exhibition Ã¢â¬ÅIdeas 2006Ã¢â¬Â, the DG of the Defence Export Promotion said that it would be one of the largest exhibitions of its kind in the history of the country, which would be participated by 200 plus exhibitors from 25 countries around the globe, which would display their defence products. 

Some 80 delegates would participate officially in the defence exhibition from 50 countries, which includes ministers and different services chiefs.

Compared to previous exhibition, the Ã¢â¬ÅIdeas 2006Ã¢â¬Â would be double in size as massive arrangements were made for the successful holding of the international defence exhibition. He applauded the Export Promotion Bureau (EPB) for enhancing displaying the capacity of the Expo Centre by constructing two huge sized exhibition halls in a short period of time which would help accommodate large number of defence items for display.

The equipments, which would be put on display, include armed personnel carriers, logistic vehicles, physical display of augusta sub-marine, improved version of Al-Khalid and Al-Zarar Tanks. 

The DG DEP said that on the 25th of November, a grand cultural show would be organised including cultural and musical shows and army band display, which would be participated by the eminent artists of the country. The programme would be aired live on television channels. 

He appealed to people of Karachi to cooperate with the government in the successful holding of the mega-event, as it would highlight image of the city worldwide.

Replying to a question about countries, which would take part in the international defence exhibition, he said they include US, Gulf countries, Germany, Australia, China, Turkey, and some European countries. City Nazim Karachi, Mustafa Kamal said that all targets given to the city government before the start of the defence exhibition was completed within time and it was an honour for Karachi to be selected for this international mega event.

http://www.dailytimes.com.pk/default.asp?page=2006\11\16\story_16-11-2006_pg5_6


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## Owais

*Pakistan, Russia to promote economic, strategic ties 
*

ISLAMABAD (updated on: November 16, 2006, 19:29 PST): Pakistan and Russia on Thursday agreed to further expand the co-operation in various fields including trade, economic, oil and gas and defence.

Foreign Minister of both the countries met here at the Foreign Office and reviewed bilateral relations and discussed enhancement of co-operation in a number of areas.

Foreign Minister Khurshid Mahmood Kasuri and his Russian counterpart Sergey Lavrov talking to newsmen following the meeting said they discussed regional and international issues of mutual interest.

They reiterated resolve to develop closer bilateral ties and enhancing trade and commerce, which currently stands at $500 million.

Russia expressed its deep concern and reservations about the growing Taliban and al Qaeeda insurgency on Pak-Afghan borders, and has stressed on encouragement and closer co-ordination between various ethnicities of Afghanistan.

Russia also expressed desire for direct investment in Pakistan, while regional issues pertaining to Iraq, Afghanistan, Middle East, and Pak-India peace talks also cropped up in the meeting.

It is pertinent to note that Pakistan is an active member of the Shanghai Co-operation Organisation, (SCO) and both countries co-operate actively in the aspects of terrorism and other factors for which joint working groups exists.

Russia has expressed deep interest in co-operation in the expansion of railways, energy and electricity, and coal thermo-hydel power projects, while Pakistan has also expressed its keen interest and expectations about the official visit of the Russian president to Pakistan.

Replying to a question Khurshid Kasuri said that both Pakistan and Russia have identical interests and views about the Afghan issue, and agreed about the worsening situation there, which was not conducive for a stable Afghanistan desired, and wanted all the groups to adopt a realistic and mutual approach towards the betterment of their country (Afghanistan).

Replying to a question, the Russian foreign minister said that both countries have held talks on strengthening war against terrorism, economic co-operation and security factors.

He said that Pakistan was a major power of the region, and is one of the most important of Islamic countries, besides being an active delegate of SCO, while talks are going on for its permanent membership of the Organisation, and promised Russian support for the purpose.

He said although Pakistan has not requested any defence co-operation, yet Russia was willing to discuss the co-operation in this field as well, and would be strictly within the framework of Russian policies and legislation.

Replying to another question, he said that Russia wants an end to the insurgency on its Afghan neighbouring border, and expressed his reservations and concern about the growing activities of al Qaeda and Taliban.

He stressed on inclusion and participation of all the Afghan ethnic groups in the (Afghan) political mainstream, and said that the framework for the return of multi-national forces from the country depended upon the Afghan masses.

Replying to another question, he said that a conducive dialogue for the solution of Palestine and Iraq conflicts between warring adversaries are imminent, while he also expressed his satisfaction over the ongoing peace talks between Pakistan and India.

He assured of an early visit by the Russian President while extending an invitation to Khurshid Mahmood Kasuri to Russia.


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## Owais

*Workers remit over $1.644 bln in July-October 06 *


KARACHI (updated on: November 16, 2006, 19:16 PST): Pakistan received $ 1,644.20 million as workers' remittances during first four months (July- October, 2006) of current fiscal year as against $ 1,375.15 million in corresponding period of last fiscal year registering increase of $ 269.05 million or 19.57 percent.

The amount of $ 1,644.20 million includes $ 1.02 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) & Foreign Currency Bearer Certificates (FCBCs).

During October, 2006, Pakistani workers remitted $ 410.61 million as against $ 372.50 million in October, 2005 depicting increase of $ 38.11 million or 10.23 percent.

The inflow of remittances during first four months (July - October, 2006) from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar & Oman), UK & EU countries amounted to $421.76 million, $318.20 million, $ 250.70 million, $ 231.61 million, $ 138.45 million & $ 48.31 million respectively as compared to $ 391.80 million, $ 232.59 million, $ 196.28 million, $ 181.19 million, $ 148.68 million & $ 39.73 million.

Remittances received from Canada, Australia, Norway, Switzerland, Japan & other states during first four months amounted to $ 234.15 million as compared to $ 177.79 million in corresponding period of last fiscal year.

The monthly average remittances for July-October, 2006 comes out to $ 411.05 million as compared to $ 343.79 million in same period of last fiscal.

The inflow of remittances into Pakistan from almost all countries increased last month as compared to October, 2005. 

According to break up, Pakistan received workers' remittances during Oct 2006 from USA ($ 109.89 million), Saudi Arabia ($ 75.41 million), UAE ($ 59.88 million), GCC countries - including Bahrain, Kuwait, Qatar & Oman ($ 58.14 million), UK ($ 36.22 million) & EU states ($ 11.88 million) as compared to corresponding receipts from respective countries during October, 2005 i.e. $ 108.47 million, $ 58.27 million, $ 54.56 million, $ 50.40 million, $ 37.72 million & $ 12.88 million.

Remittances from Canada, Switzerland, Australia, Norway, Japan and other countries during Oct 2006 amounted to $ 59.15 million as compared to $ 49.28 million during Oct 2005


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## Owais

*Rs3 billion mega afforestation plan launched in Punjab *


MULTAN (updated on: November 16, 2006, 18:21 PST): Under a federal government directive a mega afforestation plan is being launched in Punjab with an estimated cost of Rs 3 billion.

Sources in the Forest Department told APP on Thursday that federal government has asked the provincial governments to increase one percent forest area in their respective regions.

In the light of this directive, Punjab government has allocated a hefty amount of Rs 3 billion to accomplish the task, sources said.

Under the provincial plan, plantation will be carried out on 15,000 acres in Punjab. Plantation will be done on 20,000 miles long sides of all canals in the province with the aim to increase one percent forest.

Furthermore, in the catchment areas 10,000 acres will also be afforested in the province.

Apart from this, for the purpose of expanding and improving pastures, fodder will be grown on 2,700 acres of land in Cholistan (Bahawalpur), while 100 acres will be afforested and 100 old water ponds will be desilted.

The sources added that two water turbines will be installed at Mauj Garh area of Cholistan (Rohi).

According to the plan, in Dera Ghazi Khan region pastures will be established in six Rakhookh (on state land) and 100 acres will be afforested. 

Six turbines will also be installed to provide drinking water for cattle population of the area besides digging of ten new water ponds for the animals and humans.

As many as 2400 embankments will also be erected along the rivers. A bund will also be built to preserve rain water for the cattleheads.

In Thul (Bhakkar, Layyah) area new varieties of fodder will be cultivated on 25 acres of land as nursery for the purpose of research and a research institute will also be set up to achieve the best possible results.

This mega project also covers Potohar (Rawalpindi) region where plants will be grown on 5400 acre of pasture land. A soil conservation scheme is also a part of the Potohar development project, it was learnt.


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## Owais

*Auto industry development plan finalised *

ISLAMABAD (November 16 2006): The government on Wednesday finalised Auto Industry Development Programme (AIDP), which offers five-year pre-announced tariff structure on CKD, CBU, and auto parts for all categories of vehicles, policy and incentives for new entrants and about liberalised import of used cars, establishment of Rs 6 billion fund for competitiveness, technology acquisition, research and development of two auto clusters for establishing the sector on solid grounds.

The draft has been forwarded to the stakeholders ie industry for its comments. The revised draft contains new entrants' policy and import of used cars issue, which were disturbing the local industry and became a bone of contention between the sector and the government, halting local manufacturers' expansion projects.

When contacted, Pakistan Automotive Manufacturing Association (PAMA) refused to comment, saying that as the AIDP deals with two major problems confronting the local industry, nothing could be said before studying it in detail.

The new entrants' policy allows assembly, by new manufacturers, through import of 100 percent CKD (complete knocked down) kit at the rate of duty applicable to non-indigenised parts. However, the new entrants will be asked to provide a commitment to develop and purchase local parts for figment in the locally assembled cars.

'New entrants' means a potential assembler/manufacturer of Car/LCV who has no direct or indirect relationship with the present assembler/manufacturer and had never undertook assembly/manufacturing of cars/LCVs in Pakistan in the past. Companies producing over 500,000 units of cars/LCVs annually in countries other than Pakistan are considered as 'new entrants'.

The government says that the AIDP aims at doubling the contribution of auto industry to GDP to Rs 600 billion in the next five years and reaching an export level of $350 million for components mostly to the international market and to the OEMs. Motorcycles, tractors and cars are expected to identify markets for themselves, thus raising export potential to $300 million by 2011-12.

The plan proposed two auto industry clusters - one in Karachi and the other in Lahore - to enhance inter-firm co-operation and encourage innovation and specialisation in the production and supply chain.

Moreover, the proposed plan also offers Rs 6 billion fund on matching grants for the industry's competitiveness, research and development, and technology acquisition (TAF). It has also been proposed that government technical institutes should be attached with the automobile companies for practical training, similar to 'house job concept' in medical profession.

It has also proposed that the government may waive tax liability on the cost of training, which would be based on quality and number of persons trained by these institutes.

Meanwhile, a statement said that the Engineering Development Board (EDB) has released draft auto industry development programme (AIDP) for stakeholders' comments. It gives details about incentive regime, workable mechanism, procedure and relevant rules on productive asset investments, technology acquisitions, research & development, human resource development, auto cluster and auto industry development committee.

AIDP also proposes certain solutions to the government on used vehicle imports, auto exports, emission controls, strengthening of safety, standards and accreditation, registration and licensing system, road network programme and motor vehicle examination system.

It contains formation of an auto industry development committee with equal composition of public and private stakeholders, which would be responsible for steering the development of auto industry and to examine, certify and recommend the entitlement of proposed incentives for an assembler or a vendor. AIDP also includes auto industry investment policy, commonly referred as new entrant policy, which provides eligibility criteria, benefits and terms and conditions for new assemblers of cars/LCVs.

It may be recalled that EDB has drafted the programme after consultations with the stakeholders, starting with a workshop in March 2006. Its basic objective is to develop the industry on sustainable basis through proposing pre-announced five- year tariff structure on CKD, CBU and auto parts for all categories of vehicles. The EDB claims that the programme will safely steer the industry through to the transitional phase after the introduction of Tariff Based System (TBS).


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## Owais

*Rs 99.85 million auto parts centre to be completed by year-end *

LAHORE (November 16 2006): A project to set up Auto-Parts Support Centre (Cluster Development Centre) would be completed by the end of this year at a cost of Rs 99.85 million, while the Technical Education and Vocational Training Authority (Tevta) would also set up a training institute adjacent to this Centre for the students.

Punjab Industries, Commerce and Investment Minister Muhammad Ajmal Cheema stated this during his visit to Auto-Parts Support Centre being constructed at Quaid-e-Azam Industrial Estate here on Wednesday, an official said.

He said with the completion of the Cluster Development Centre in Lahore the facilities like designing, tools, dies and testing would be made available for this sector.

On this occasion, the minister directed the authorities concerned to expedite construction work so as to complete it within the stipulated period.

Cheema also said that Rs 99.85 million has been earmarked for this project and the provincial government is also setting up such support centres in other cities of the province to prepare skilled force for the industries.

The minister was briefed that 75 percent of civil work of the project has been completed.


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## Neo

*Musharraf inaugurates Mirani Dam *

TURBAT (November 17 2006): President General Pervez Musharraf on Thursday inaugurated the Mirani Dam and sought support of the people of Balochistan against anti-development and retrogressive elements to steer the province into a new era of prosperity.

"I am proud to be inaugurating the Mirani Dam today," the President said of the project he launched in 2002, but was originally conceived in 1956.

The Mirani Dam in Kech area of Mekran district with a catchment area of 12,000 sq. km has been built in four years at a cost of Rs 6 billion that includes Rs 1.5 billion in compensation to the affected people.

It will have a storage capacity of over 300,000 million acres feet of water that could be used for drinking and irrigation of vast barren lands. President Musharraf said he will also inaugurate Subakzai Dam in March next.

He reiterated his resolve to develop Balochistan, saying the government has allocated and would continue to provide resources to improve living standard of the people there. He said the government has initiated many mega projects like Gwadar Port, Mekran Coastal Highway, Kachchi Canal, Subakzai Dam, besides many small-scale development schemes, to bring progress and prosperity to Balochistan which was neglected in the past.

"Balochistan must demand what they need and we are ready to give them," the President said. He said leaders in the past made hollow promises to people, but could not deliver as they neither had the resolve nor the resources to spend on their welfare.

Moreover, he said there were a handful of anti-development elements, which were opposed to Balochistan's development as it directly came into conflict with their own petty interests.

"These elements do not want to see Balochistan develop and progress and want to keep their people illiterate and backward to serve their own interest," he said.

The President sought people's support against these anti-development elements and made it clear that the government would never allow anyone to challenge the writ of the law.

President Musharraf also urged the people to vote for moderate and progressive people in the next general elections who want to take Pakistan forward as a developed country.

"The Election - 2007 is very important and future of Pakistan depends on it," the President said and urged people to reject retrogressive forces. Balochistan Governor Owais Ghani, Chief Minister Jam Muhammad Yousaf, Water and Power Minister Liaquat Ali Jatoi and Social Welfare Minister Zobaida Jalal also attended the Dam's inauguration.

President Musharraf said the Mirani Dam was part of Water Vision - 2025 he had launched in 2002 to plan to meet the looming shortfall in coming years. Under the vision, he said the government will construct many more Dams, including the Kalabagh by 2016. These also include Basha Dam, Munda Dam, Kurrum Tangi and several other water reservoirs.

Pakistan is already facing a shortfall of 9 million acre feet of water that will swell to 30 million acre feet, if no Dam is built in the coming years. "We have to plan today to meet future requirements," he said, while regretting that 35 million acres feet of water go waste every year, as there was no capacity for storage.

Moreover, he said Balochistan was also not getting its share in the absence of canals to channel the water into the province. In this context, he said the government was constructing Rs 40 billion Katchi Canal and Punjab had been gracious to provide land for its 350-km stretch that will pass through the province include quota in reputed colleges and universities for students from Balochistan and their free boarding besides, facilitating admission of children to technical institutions.

He said that 20 children from Balochistan have been accommodated in a first technical school recently opened by the Lahore Corps. The President said organisations like the Pakistan Ordnance Factory (POF) and Kamra have been asked to take people from Balochistan, train and also create job opportunities for them.

On the demand of the local Nazim, the President announced to open two branches of Balochistan University in Gwadar and Turbat. He also promised to provide bulldozers for the area so that development activity could be started there. The President said the government was looking into the possibility of writing off agriculture loans of the poor farmers.

He asked the private sector to come forward and set up factories in the area, which will see a new era of prosperity after the inauguration of the Mirani Dam.

PC Hotel inaugurated: Addressing the inaugural function of Zaver-Pearl Continental Hotel in Gwadar on Thursday night, President Musharraf said that the government is developing Balochistan on priority basis and numerous projects are being implemented on macro and micro levels. He said all these projects would bring a new era in the social and economic life of the people of Balochistan.

Musharraf said in addition to mega projects, the government is also doing a lot on micro level to ameliorate the lot of the common people of Balochistan. Every Nazim in the province has been given Rs 100 million, besides Rs 2.3 billion have been reserved for MNAs and MPAs for small development schemes, he added.

The President said schemes were also being proposed to provide free education, from primary to college level, to talented students of the province in best institutions of the country.


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## Neo

*Government to restrict import of used cars *

ISLAMABAD (November 17 2006): The government was left with no option but to incorporate the local automotive manufacturers proposals in the Auto Industry Development Plan (AIDP) to restrict the import of used cars, which were allowed earlier on the recommendation of the Ministry of Industries and Production to plug the demand-supply gap.

Sources told Business Recorder that the industry in their recommendations took a categorical stance on the issue and convinced the government that the liberalisation of used car imports, primarily allowed to facilitate overseas Pakistanis and to ease the demand-supply gap, was being misused grossly by the second-hand car dealers.

They contented that the liberalised import of used car facilitated car dealers, rather than the common man, who were selling these cars in large number. The industry wanted the government to reduce the depreciation allowance.

The government, accepting the local manufacturers demand, has agreed to cut the depreciation on import value of used cars from two percent to one percent per month besides limiting total depreciation to 25 percent. To check the misuse of Transfer of Resident (TR) scheme, it has agreed to allow only those vehicles import, which are registered in the name of importer for at least one year in the country of residence.

The EDB, in the AIDP, conceded that the used car imports and liberal baggage rules led to high import of buses and trucks. Bus sector has registered negative growth (-7 percent) during last five years despite this era of buoyant growth. This also badly affected the bus body building sector.

It said that the import of used dump trucks and concrete mixers has hurt truck assemblers adversely. Bus/truck assemblers have been utilising only 19 percent of their production capacity due to these misdirected policies and poor controls by regulators. It says that the used vehicles import would not benefit the consumer or the industry and suggested the government for a long-term policy on the issue, which might include strict implementation of TR and baggage rules with compulsory registration of vehicles in the name of returning Pakistanis for at least one year.


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## Neo

*Larger inflows than outflows help SCRAs rise to $306.2 million *

KARACHI (November 17 2006): Larger inflows than outflows helped Special Convertible Rupee Accounts (SCRAs) to rise to $306.2 million on November 14 compared with $304.8 million a day before. Almost entire fresh inflows of $4.9 million originated from USA whose net cumulative flows during the year to November 14 rose to $132.1 million.

A small amount of $0.1 million also poured in from Bahrain which converted its erstwhile $0.6 million negative balance to a positive balance of $0.07 million.

Outflows, on the other hand, amounted to $3.5 million on November 14 and were accounted for by Singapore ($1.9 million), Switzerland ($0.6 million), Hong Kong ($0.5 million) and UK ($0.3 million).

Accordingly, net cumulative flows during the year so far of Singapore, UK and Hong Kong declined to $100.8 million, $90.1 million and $13.1 million, respectively while net withdrawals by Switzerland rose from $28.4 million on November 13 to $29.1 million on November 14. USA, Singapore and UK nonetheless continued to occupy the top three positions.

On the stocks front, the KSE 100 Index moved from 10,744 points on November 13 to 10,869 points on November 14, while the KSE-30 Index moved from 13,177 to 13,357 points on the respective dates. The BRIndex-30 Index, however, registered a gain of 132 points over its November 13 level to reach 11,315 on November 14.

The consistency in the movement in the indices covered indicated that both market capitalisation (used as basis by the two KSE indices ) and turnover of shares (used as basis by the BRIndex) moved in the same bullish line.


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## Neo

*Russian foreign minister meets Musharraf and Shaukat *

ISLAMABAD (November 17 2006): Russian Foreign Minister Sergey Lavrov who was on a two-day visit to Pakistan from November 15, 16 called on President Pervez Musharraf on Thursday. In the economic field, the two sides discussed various proposals related to energy, oil and gas, coal reserves, hydropower, communications and infrastructure.

The President also apprised the Russian Foreign Minister of the Quadrilateral transit in trade Agreement involving Pakistan, China, Kazakhsatan and Kyrghistan.

Talking to Russian foreign minister Sergey V Lavrov, Prime Minister Shaukat Aziz on Thursday said Pakistan greatly values its multifaceted relationship with Russia and is keen to strengthen these diplomatic, political and economic ties and further expand co-operation in a broad spectrum of areas including trade, investment, education, energy and oil and gas exploration. Strengthening of bilateral cooperation, regional and international issues came under discussion during the meeting.

Shaukat Aziz said Pakistan is a peaceful country and does not harbour aggressive designs against any country. "Our defence policy is designed to safeguard our integrity and sovereignty. Pakistan is maintaining its tactical as well as strategic defence capabilities to ensure peace in the region", he added.

Reiterating the need for tangible progress on the Kashmir issue, the Prime Minister emphasised for settlement of the issue in line with wishes and aspirations of the Kashmiris.

Talking of Afghanistan, Shaukat said Pakistan wants to see peace and stability in Afghanistan and is extending all possible assistance to the Afghan government in this regard. He said the world needed to focus more on ensuring sustainable peace in the region.

Underlining the important role played by Pakistan in the region because of its geo-strategic location, the Prime Minister said that uniquely positioned at the confluence of three regions; Central, Western and South Asia, Pakistan is fast emerging as the junction for multiple corridors of co-operation between the three regions involving energy, trade and transportation.

Emphasising the importance of interfaith harmony, Shaukat said the world is needed to work harder to bridge the widening gap between various faiths to make it a more peaceful and harmonious place to live.


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## Neo

*Pakistan and Russia to activate joint commission *

ISLAMABAD (November 17 2006): Pakistan and Russia on Thursday agreed to further expand the co-operation in various fields including trade, economic, oil and gas and defence. Foreign Minister of both the countries met here at the Foreign Office and reviewed bilateral relations and discussed enhancement of co-operation in a number of areas.

Foreign Minister Khurshid Mahmood Kasuri and his Russian counterpart Sergey Lavrov talking to newsmen following the meeting said they discussed regional and international issues of mutual interest.

He said during the meeting they also discussed the issues including Pakistan-India relations and the composite dialogue for resolution of core issues including Kashmir dispute, war against terror, Central Asia, Afghanistan, Middle East peace process, Iraq, Iran etc.

Sergey Lavrov said both the countries have agreed to launch the mechanism to activate Pakistan-Russia joint governmental commission to promote economic and trade relations.

The Russian Foreign Minister said both the countries have also agreed that the Commission should meet regularly to review the ongoing projects and issues and explore possibility for further avenues of co-operation.

The Foreign Minister said the bilateral trade has more than doubled last year to over $500 million. He said the visits of trade delegation from Pakistan to Russia and economic delegation from Russia to Pakistan in September, 2006, have helped identify specific areas of co-operation and both sides are keen to follow up on that.

Kasuri said Pakistan and Russian Federation enjoy friendly and co-operative relations, based on a common desire to promote peace, prosperity and stability in their respective regions, and the world.

Kasuri said, "We had constructive and fruitful discussions" adding that "We consider Russia as an engine for increased economic growth and a factor of peace and stability in the Shanghai Co-operation Organisation (SCO) region and it is satisfying to see the steady growth in the multi-dimensional relationship."

The Foreign Minister said bilateral contact has increased substantially and the Joint Working Groups on bilateral co-operation, strategic stability and counter terrorism met early this year.


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## Neo

*10-12 percent growth in energy requirements: Shaukat *

ISLAMABAD (November 15 2006): Prime Minister Shaukat Aziz on Tuesday said Pakistan's energy requirements are growing by 10 to 12 percent annually and the government is working to harness the huge potential, of the country in oil and gas exploration sectors to maintain the momentum of high growth.

Talking to a delegation of Kuwait Petroleum and MOL, the National Company of Hungary who called on him here at the PM House, the Prime Minister said encouraged by the consistency and continuity of policies and transparency of procedures a number of world renowned companies are investing in the oil and gas sectors in Pakistan.

He said as result of the high growth momentum and improvement in the living standards there is surge in demand in the energy sector in Pakistan. The government, the Prime Minister said is working to enhance the country's indigenous capacity and also looking into possibilities to import energy from other countries.

He said Pakistan is in an ideal position to serve as the regional energy and trade corridor because of its geo strategic location.

An oil refinery, which will refine 300,000 barrel oil per day, being set up near Gwadar by a company of Abu Dhabi, will facilitate oil export in the region, the Prime Minister added.

The government, the Prime Minister said is facilitating investments and a level playing field has been provided to the local and foreign investors. He said transparency is the hallmark of the government's policies, which has restored the confidence of the investors and record high investments are flowing into Pakistan from all parts, of the world.

Badar N Al Khasti, chairman of the Board of Kuwait Petroleum said his company, which is operating in fifteen countries of the world in oil and gas exploration sector, has long term plans for doing business in Pakistan and is working on projects to invest in Pakistan.

Zoltan Aldott, chief executive exploration and production, MOL, Hungary said that MOL which is the leading oil exploration company of Hungary finds the investment climate in Pakistan as conducive and desires to expand their business here.


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## Neo

*Plan to develop competitive food industry*

ISLAMABAD, Nov 16: The Competitiveness Support Fund (CSF) has decided to develop an effective food processing industry in Pakistan by proposing viable recommendations aimed at removing critical bottlenecks and obstacles hence making the sector internally and internationally competitive.

CSF, which is a joint initiative of the ministry of finance and the United States Agency for International Development (USAID), will launch a study to give clear policy recommendations to the Pakistan government on how industry should be structured and how competition can be fostered.

Given its geographic location and natural endowment, the fund officials believed that there were good reasons that Pakistan should develop a competitive food processing industry.

Pakistan is ideally located for trade with the Middle-East, China and India. To capitalise on these advantages, the country must focus on the twin aspects of competition and technical innovation, or at least the ability to catch up with and adopt advanced food processing technology, and development of market conditions that encourage investment, both domestic and foreign.

A policy analysis on competitive aspects of the food processing sector in Pakistan will be carried out.

The CSF will work on the study with all the keys stakeholders dealing with the sector, including the government agencies, private sector representatives and the educational and research institutions in Pakistan.

The CSF, which is based on international best practices (prevailing in India, Thailand, Turkey, Ireland, Finland etc) and has been tailored to the current Pakistani economic environment to strengthen and make the private sector more competitive and to improve the policy framework needed for innovation-based competitiveness.

Pakistan is primarily an agricultural country with a high proportion of its population living in rural areas. Agriculture and fisheries provide the raw material for an extensively developed food processing industry that accounts for between 25 and 30 per cent of the GDP.

With a host of sub-sectors it is the largest industry in Pakistan, and it continues to grow as the use of processed food becomes popular, particularly in the cities. The list of sub-sectors includes beverages, dairy, fruits and vegetables, snack foods and cereal-based foods (wheat and rice), meat, confectionery and vegetable oil (including vegetable ghee).

In this respect, the success of the Pakistani food industry, the CSF argues, depends on wider aspects of the economy and of governance.

The food processing sector depends on a highly vertical integrated structure. The study of the competitive advantage of the food processing sector will take into account the entire industry structure and the value chain, including the supply of raw material, its intermediate processing, the core industry itself and the market environment, both domestic and external, along with other essential inputs.

It will also examine the structure of key sub-sectors, including a value-chain analysis of primary post-harvest processing through secondary to tertiary processing, comparative costs of production within the value chain, import parity pricing and technical and innovation aspects of individual sub-sectors, including factors affecting adoption of technology.

A fundamental aspect of this approach is to understand the basic advantage (or disadvantage) with which the specific industry is endowed.

On the marketing side, the study will look into packaging, eco-labelling, design, distribution and market access.


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## Neo

*More cargo service for India may hurt Pak industry *

Authorities reluctant to agree on freight train via Khokhrapar as influx of industrial products is much easier from this side compared to Wagah

KARACHI: India has demanded two separate cargo train services from Pakistan in a move believed to facilitate its goods transportation to Pakistan, which the local authorities fear may cause serious damage to local traders and industry.

A senior official said the high ups of the two sides met recently in India to resolve decades-old railways-related issues between the two countries, which concluded with several suggestions and proposals from both sides and cargo trains demand exclusively from the Indian railway authorities.

Ã¢â¬ÅThey (Indian railway authorities) want a separate cargo or freight train from Lahore and similarly the same kind of full-fledged cargo service via Khokhrapar,Ã¢â¬Â said Ali Arif, Additional General Manger Freight Pakistan Railways.

Ã¢â¬ÅWe have assured the Indian authorities to consider such request after fixing issues of more importance like passenger service and other matters.Ã¢â¬Â

He said the countryÃ¢â¬â¢s railways authorities were more concerned about smooth operation of passenger service before allowing cargo operations from the two sides but still it would take all considerations into account before reaching any conclusion.

India and Pakistan in February this year agreed to revive the Khokhrapar-Munabao train service, severed in 1965 war between the two countries. The Pakistan Railways spent Rs1 billion for the replacement of 135-kilometre meter gauge track with broad gauge from Mirpurkhas to Zero Point (border), 8-kilometere from Khokhrapar.

The two sides did not rule out freight services on this route at a later stage but currently the authorities appear firm that such service may not be allowed without the consideration of local traders.

Ã¢â¬ÅIt may be more beneficiary for Indians rather Pakistanis,Ã¢â¬Â said Arif of Pakistan Railways, who recently returned from India after holding talks on different issues. Ã¢â¬ÅSo more important issue for us, is facilitation for passengers of two sides through good and smooth service.Ã¢â¬Â

He said currently a single freight train was being operated via Wagah-Attari border daily, which appeared more than enough as per local needs of the traders and an additional service could damage the balance.

Trade volume between India and Pakistan started rising last year after the federal government allowed import of essential food items from the neighbouring country through land routes to cap the rising prices of the food items through increased supply.

Traders of the two sides believe the volume of bilateral trade may touch $10 billion-mark within next five years tilting mostly in favour of India after a recent thaw in relations between the two nuclear-armed neighbours.

Although border trade is yet to start at Khokhrapar, businessmen and traders fear that it would be damaging for the local business interests, as cheap Indian products would flood local markets, with Karachi is the likely influx of cheaper Indian consumer goods.

Ã¢â¬ÅAhmedabad is just 100 miles from Munabao, Soorat is 150 miles from Ahmedabad and Mumbai is 150 miles from Soorat which means that influx of industrial products is much easier from this side as compared to Wagah border,Ã¢â¬Â said a local trader.

He said that many smart Indian businessmen were stationed close to the Pakistani border and the neighbouring Marwari, Gujrati, Soorti, Juna Garhi and Mumbai tycoons all had access to Pakistani market through Khokhrapar.


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## Neo

*Offsetting Indo-US N-deal to IslamabadÃ¢â¬â¢s advantage*

Hu poised to offer Pakistan N-plants

* Analysts and diplomats predict Beijing ready to build six nuclear reactors
* Chinese and Pakistani officials keeping mum on accord

BEIJING: Chinese President Hu Jintao was expected to unveil an extensive nuclear cooperation plan with Pakistan during his visit to Islamabad next week, analysts and diplomats said on Thursday. 

On the first trip to Pakistan by a Chinese president in a decade, Hu, they said, was likely to announce BeijingÃ¢â¬â¢s intention of helping Islamabad construct six nuclear plants over the coming decades. 

Ã¢â¬ÅThe political intent is quite certain. The specifics are less certain, but this will be a political gesture above all,Ã¢â¬Â said one diplomatic observer in Beijing, speaking on condition of anonymity due to the official secrecy around discussions.

However, Chinese officials have not given any word of any nuclear deal being concluded during the visit, while PakistanÃ¢â¬â¢s Foreign Office spokeswoman, Tasnim Aslam, said that no new deal was imminent. 

According to the Beijing-based observer, Pakistan has asked China to build up to six reactors of 600- or more megawatts, at least twice the size of the 300-megawatt reactor that China built at Chashma, in Punjab. 

The broad agreement appears likely, however, to leave the scale and specifics of cooperation for future talks - and also leave open whether China, with its own bold plans for expanding nuclear power, can spare the expertise to back PakistanÃ¢â¬â¢s expansion.

But even a vague agreement will remind the world that China values its Ã¢â¬Åall-weather friendÃ¢â¬Â Pakistan, even while Beijing courts India, a sometimes bitter rival of both countries. Hu will visit India before Pakistan.

Ã¢â¬ÅPakistan has been eager for a nuclear deal and raised it a number of times,Ã¢â¬Â said Zhang Li of the Institute of South Asian Studies at Sichuan University in southwest China.

Ã¢â¬ÅI think there are signs that Hu will make an announcement during this visit to show relations are developing in a healthy direction.Ã¢â¬Â

An announcement during HuÃ¢â¬â¢s visit would cap intense lobbying from Islamabad, eager to expand nuclear ties with Beijing and offset IndiaÃ¢â¬â¢s influence and the Indo-US civilian nuclear energy plan and showcase that it does not lack other sources of support.

ChinaÃ¢â¬â¢s Foreign Ministry would not directly say whether Hu would announce a deal during his visit, saying only that Beijing wanted to build on the two countriesÃ¢â¬â¢ current pact on nuclear energy cooperation.

Ã¢â¬ÅThis visit will play a major milestone role,Ã¢â¬Â spokeswoman Jiang Yu told reporters. Ã¢â¬ÅWeÃ¢â¬â¢re willing to expand cooperation with Pakistan within the framework of this agreement.Ã¢â¬Â The Beijing-based China Business Times reported in August that China was likely to announce in November that it would sell Pakistan six 300-megawatt plants.

China has said any nuclear cooperation would be for peaceful purposes only and would accept international safeguards.

But a nuclear agreement may rankle Washington, worried about ChinaÃ¢â¬â¢s atomic exports, especially after PakistanÃ¢â¬â¢s chief nuclear scientist, Dr AQ Khan, admitted in 2004 that he had sold nuclear know-how to Iran, Libya and North Korea. Before China joined the NPT in 1992, it helped Pakistan develop nuclear weapons, the United States has said.

An American official said on Monday that US President George W Bush might raise worries about PakistanÃ¢â¬â¢s nuclear programme with Hu on the sidelines of the Asia-Pacific Economic Cooperation (APEC) meeting in Vietnam this week.

http://www.dailytimes.com.pk/default.asp?page=2006\11\17\story_17-11-2006_pg1_1


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## Neo

Friday, November 17, 2006 

*Ã¢â¬ËPakistan needs better IT infrastructureÃ¢â¬â¢*

LAHORE: Pakistani businesses are facing severe challenges in the international market competitiveness due to lack of a proper IT and e-commerce infrastructure.

Ã¢â¬ÅOnly technology can help Pakistani businesses to come at par with their counterparts in other countries,Ã¢â¬Â Project Director Industrial Information Network (IIN), Salman Khalid said while speaking at an IT conference organised by Oracle Pakistan at a local hotel. IIN, PakistanÃ¢â¬â¢s first Business-to-Business (B2B) portal has jointly been developed by Small and Medium Enterprise Development Authority (SMEDA) and Ministry of Information Technology and Telecommunications.

Salman Khalid said that IIN was presently facilitating the textile and leather sectors, adding that more sectors would be added in the days to come. He said that IIN was working on the promotion of use of B2B e-commerce within the country and utilise information technology to link businesses with international buyers, suppliers, trade facilitation bodies and the government institutions. Ã¢â¬ÅHopefully, IIN will act as a catalyst to trigger a ripple effect and usher a paradigm shift in the way businesses are currently operated in Pakistan,Ã¢â¬Â Salman Khalid said.


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## Owais

*Musharraf says Gwadar Port operation encourages sea farers *


GWADAR (updated on: November 18, 2006, 03:07 PST): President Pervez Musharraf said on Friday the world best port operators would be brought in to initiate operation at Gwadar port for making it popular among sea farers.

Addressing a gathering after performing the ground-breaking ceremony of a labour colony constructed jointly by Federal Ministry of Labour and Manpower and the Workers Welfare Board, he said this exercise was necessary as otherwise the desired results could not be achieved.

The president said there would be investment, employment and increased economic activity and prosperity in the region when the port becomes functional and offers competitive service to the coming vessels.

Gwadar Port, Musharraf said, would be linked with Central Asian Republics, besides linking it with Coastal Highway, RCD Highway, Indus Highway and Karachi Coastal Highway, while a railway link with the entire country was being given active consideration.

He announced a number of steps for educating the youth from Balochistan, providing them with technical training and employment.

President Musharraf called upon the youth from Balochistan to learn some technical skills. They should learn some technical work for better emoluments, better employment and better future, the President said adding that education needs to be promoted in Balochistan for its speedy development. 

"I have contacted a number of reputable institutions all over Pakistan for training the youth from Balochistan", he said. The IVth Corps, Lahore has already initiated a number of technical training programmes for youth from the province where they were being imparted three to six months training in welding, electrical work, plumbing and computer skills", he added.

The president advised the youth that "Today's era is of technical expertise and you must learn a skill and move forward."

He called upon the youth to acquire technical education.

The president announced scholarships for brilliant children from Balochistan in cadet colleges, higher education in universities and professional colleges for youth from the province. He also announced that all post-graduates from the province would be given contract employment and paid Rs 10,000 per month.

Every thing would be done for Balochistan and its people and they should also reciprocate by denouncing terrorist elements, Musharraf said.

He said recently three Chinese engineers were targeted and rockets were fired. This shall not happen, as it would stall the development of the province, he said asking the people to identify the terrorist elements.

Responding to slogans against terrorism raised by the people, president Musharraf said terrorism would not be allowed to hamper development efforts of the government.

He handed over confirmation letters to 45 employees of the Gawadar Development Authority (GDA) and said 35 other employees of technical cadre would soon be recruited.

The President asked the people to decide about their future on their own and not to allow others to decide their fate. Nothing was done for the people of Balochistan by the previous leadership and they wasted the resources or misused it for their own benefits, he added.

He said the people should differentiate between the leadership which was sincere to the cause of people and those having selfish aims. 

President Pervez Musharraf said it is true democracy now and the people should exercise their right of franchise with extreme caution and vote the people who are for democracy and for development.

Referring to the labour colony project, Musharraf said it was planned for the poor people. He asked the provincial government to ensure that deserving people got houses. He also gave a patient hearing to a group of women after the function who had submitted their applications. 

Chief Minister Balochistan Jam Muhammad Yousuf in his brief address said the dream of development of Balochistan could not be transformed into reality without the President Pervez Musharraf.

Federal Minister for Ports and Shipping Senator Babar Khan Ghauri addressing on the occasion said 100 per cent vacancies of Gwadar Port have been filled with local people.


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## Owais

*Auto industry expansion programme: government announces pre-determined five-year tariff *

ISLAMABAD (November 18 2006): The government has responded to the auto industry with a clear long-term future road-map by announcing pre-determined five-year tariff, to carry out expansion programmes, in the Draft Auto Industry Development Programme (AIDP), designed to strengthen the auto sector by making the vendors and manufacturers more inter-dependent and encouraging the new entrants to invest in Pakistan.

Engineering Development Board (EDB), Chief Executive Officer (CEO), Imtiaz Rastgar stated this while briefing newsmen on the new draft AIDP on Friday.

Rastgar said the government was sensitive to the industry's demand of a long-term policy to carry out their expansion programme, which has been provided in the new AIDP.

He said the efforts were made to include all the recommendations of stakeholders in the policy to make the auto sector and vendor industry sustainable.

EDB CEO said the auto industry development programme had been designed to expand the base of the industry enabling it to export parts worth $300 million and to check the liberal import of used cars.

He conceded that the existing industry was working under high protection tariff and it subsequently led to absence of competition, which resulted in low quality, high cost, fewer models, long delivery times and poor service to the customers. The advent of new entrants in Pakistani auto industry would create competition and eventually the people would have quality cars, he observed.

"We have responded the industry with a clear future roadmap by announcing pre-determined five-year tariff so that they could carry out expansion program to increase production turnover of the auto industry and annual export of parts which are envisioned in AIDP by 2011," he added.

He dismissed the impression that the permission of importing 100 Completely Knocked Down (CKD) kits at the rate of duty applicable to non-indigenised parts (35 percent) to the new entrants would harm the local vendor industry saying that new investors would have to develop the local vendors industry as they would not be able to import every part.

Giving details of the plan, Rastgar said it would discourage import of used cars through tariff measures, calls for introduction of a computerised registration system on a uniform basis, projects increase in production turnover 185 percent, envisages development of two auto-parts vendor clusters to reduce the existing monopolistic tendencies of the existing manufacturers by encouraging new entrants.

The plan to seeks 5.6 percent auto-sector's contribution to GDP and the share in manufacturing sector to 25 percent by 2011, projects employment level to 250,000 as direct jobs and 2.5 million indirect jobs and proposes a phased reduction in the tariff.

Zahid Yaqoob, an EDB official, who has been one of the key members involved in preparing the AIDP and accompanied the CEO during the media briefing, deplored that there was a mechanism ie deletion programme but it was not supported by any policy document and AIDP, in fact, would be the first policy of its kind.

When asked what guarantee would be given to the investors that there would be no other policy regarding auto sector in the presence of AIDP as was seen lately when the Ministry of Industries and Production moved a summary seeking reduction in the tariff on CKD and CBU, he said the EDB wanted consensus of all the stakeholders and acceptability of the AIDP.

However, it is difficult to predict that the fate of auto industry development programme would be different from that of textile and other policies.


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## Owais

*Inflation turns into double digit *

ISLAMABAD (November 18 2006): The inflation, in terms of Sensitive Price Indicator, turned into double digit of 10.37 percent during the week ending November 16, 2006, over the past one year as a result of 0.33 percent increase during previous week.

According to weekly price review released by Federal Bureau of Statistics (FBS), the SPI of 53 items of daily use, with the benchmark of 2000-01, reached the level of 150.05 during the period under review.

The hardest hit, again, were the households with incomes up to Rs 3000 per month with the increase in SPI of 0.53 percent over the previous week. It rose by 0.46 percent for households for the income bracket Rs 3001-5000 by 0.36 percent for those with incomes between Rs 5001 and Rs 12000 and by 0.14 percent for those with incomes above Rs 12000.

Compared to the corresponding period of last year, the SPI shows an increase of 13.07 percent for the lowest income group, of 12.41 percent for those with incomes Rs 3001-5000, of 11.84 percent for those with incomes of Rs 5001-12,000 and of 9.74 percent for the highest income group.

The significant feature of the weekly bulletin was that year-on-year the rise in the prices of some necessities and kitchen items was exorbitant. These items were sugar, potatoes, firewood, gur, LPG, and all kinds of pulses and higher gas charges, which hit the low-income group. It is pertinent to point out that due to manipulations of stakeholders, sugar prices would soon see a rise.

The bulletin on SPI, based on data collected about 53 items from 17 centres, showed that 22 items registered increase, seven items showed decline, while prices of 24 items remained unchanged. Noteworthy was the behaviour of the price of onion. Its average price showed an increase of 11.53 percent over previous week.

Potatoes, long a staple of the people of modest incomes, moved up to Rs 27.20 per kg from Rs 25.91 per kg of previous week. As compared to corresponding period, this meant an increase of 38.35 percent.

However, further analysis of the data showed that out of 22 items year-on-year basis 11 items were dearer by double digit. These include onions by 161 percent, potatoes 38 percent, red chillies 28 percent, tomatoes 27 percent, gur 22 percent, cooked beef 17 percent, garlic 15 percent, beef 13 percent, mutton 13 percent, fresh milk 12 percent, and curd price increased by 11 percent over corresponding week of last fiscal year.

Among these items, in a short span of one week, the prices of onion increased by 11.53 percent, potatoes 4.98 percent, farm egg 3.79 percent, garlic 2.12 percent, red chillies 1.55 percent and cooked beef prices increased by 1.04 percent over previous week.

The FBS figures further showed that though prices of 24 items posted no change during the week, compared to the corresponding week of last year, several items are now costlier. For example, gas charges increased by 20 percent, firewood by 18 percent, cooked dal 16 percent, tea (packed) 12 percent and tea prepared by 11 percent.

The bulletin further indicates that though the prices of seven items decreased compared to the prices of corresponding week of last year, items which showed increase in their prices were gram pulse, which is dearer by 49 percent, mash pulse 48 percent, moong pulse 28 percent, and sugar price increased by 22 percent.


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## Owais

*CresBank accepts Saudi party's Rs six billion bid: Tarin's offer rejected *

KARACHI (November 18 2006): The Board of Director of Crescent Commercial Bank Limited (CresBank) on Friday announced acceptance of a bid from a premier Saudi financial institution to invest Rs 6 billion (around $100 million), and rejected the offer of Rs 2.8 billion from a consortium led by former Union Bank boss, Shaukat Tarin.

According to sources, the said offer is from Saudi American Bank (Samba) Riyadh. Samba was originally a joint venture between Saudi business groups and Citibank. But Citibank pulled out its stakes and gave the management in 2003, after filing a trillion dollars legal case due to terrorist attack on September 11, 2001.

Now, 54 percent stakes are owned by the Saudi Government, through its various pension funds and other state institutions. Prince Waleed Bin Talal has less than 10 percent stake in Samba.

Samba operations are primarily confined to Saudi Arabia, and it is now attempting to break out into a regional bank. With 'Return on Equity' of 45 percent, the investors get the capital investment back in two years.

After the injection of Rs 6 billion in CresBank, its paid up capital would rise to Rs 8 billion.

Sources said that for no fault the commercial bank had to face advised market conditions due to the common group holding with Crescent Standard Bank Limited (now taken over by SECP). As a result, its deposits have struck from Rs 7.5 billion to Rs 3.0 billion.

Samba is expected to pour its money through a right issue, which will reduce the Crescent group shareholding from 38 percent to less than 10 percent, and give management control to the Saudi entity.

The Board of Crescent Commercial Bank Ltd (CCBL), in its 31st meeting held on November 17, 2006, after deliberating over definitive investment propositions from a number of potential investors, approved an investment of Rs 6.0 billion into the bank from a premier financial institution from Saudi Arabia. This investment is subject to the appropriate regulatory approvals and execution of definitive agreements.


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## Owais

*Plan on anvil to make government insurance companies more business-friendly *

ISLAMABAD (November 18 2006): Commerce Ministry is preparing a strategy to make the public sector insurance companies more business-friendly and efficient as compared to private sector to avoid international financial institutions' resentment on their privatisation, sources told Business Recorder.

The plan is being deliberated at a time when Asian Development Bank Financial Management Governance Program (FMGP) mission is coming here to discuss progress on the targets set for the government to qualify for an $80 million loan, sources said.

An official of Finance Ministry told this scribe that ADB is of the view that all insurance business should be handled by the private sector, as public sector entities are comparatively inefficient.

Sources said that Commerce Minister Humayun Akhtar had convened a meeting of all stakeholders in Islamabad a day before to discuss the weaknesses of public sector insurance industry and restructure it in accordance with future requirements. The World Bank has also asked the government to liberalise insurance industry in line with banking sector reforms.

"Insurance penetration is very low as compared to other countries at Pakistan's income level which requires further consolidation and liberalisation of the industry," sources quoted WB as saying. They said that the Commerce Minister also expressed dissatisfaction over the performance of public sector insurance companies, and directed them to attract more investment through improvement in their existing schemes.

"Insurance companies have been asked to bring improvement in their existing schemes besides introducing new schemes to attract more investment," sources quoted the minister as directing the heads of insurance companies.

Commerce Ministry also fears that if right and in time decisions were taken to improve the insurance sector, Finance Ministry, which has lost its control over banks after privatisation, would detach insurance sector from it.

Sources said that ADB had committed $260 million loan to restructure the insurance sector and the Securities and Exchanges Commission of Pakistan (SECP), of which the bank had released $100 million as first tranche, while $89 million was given in September last.

The remaining $80 million tranche would be disbursed as and when the government fulfils the commitments ie amendments in SECP laws, improvement in governance standards and restructuring of insurance sector. Most of the commitments the government made with the bank have not yet been fulfilled and, according to sources, the scheduled mission would certainly express its displeasure on these issues.


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## Owais

*Romania sees good prospects for joint ventures in Pakistan *

KARACHI (November 18 2006): Deputy Prime Minister of Romania, Bodgan Pascu said that good prospect exists to have joint ventures in alternative energy, agriculture and information technology with Pakistan. Addressing members of Karachi Chamber of Commerce and Industry (KCCI) on Thursday, he said that Pakistan and Romania had many areas in which they could cooperate and develop joint venture units.

He informed that Romania was developing its garment sector and Pakistan could help it in this regard. The Deputy Prime Minister said that the purpose of his visit was to further strengthen trade and economic relations of both the countries. "We want to build a strong bridge of relations between Pakistan and Romania", he said.

He pointed out that Romania was going to become European Union (EU) member from January 1, 2007, adding that Pakistan could benefit from Romanian membership by exporting more and more goods to EU countries in collaboration with Romanian counterparts.

He invited Pakistani business community to invest in Romania and establish industrial units. He noted that the balance of trade was in favour of Pakistan. Total export from Romanian to Pakistan come to 11.1 million dollars whereas total imports come to 14.7 million dollars.

Bodgan Pascu informed that he was responsible of Small and Medium Enterprise (SME) development in his country and offered his co-operation in development of SMEs in Pakistan.

He said that besides other sectors Romania also offers good opportunities to Pakistan manpower in construction sector. He said that Romania had decided to recruit around 10,000 peoples from Pakistan in different fields. Earlier, President KCCI Majyd Aziz present welcome address.


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## Neo

*Core inflation dip to 5.7 percent in October: SBP *

KARACHI: November 18, 2006: The State Bank of Pakistan (SBP) has said that the core inflation as well as headline inflation declined during the month of October 2006.

According to the SBP monthly publication, 'Inflation Monitor' which has been released on Saturday, core inflation measured as non-food non-energy (NFNE) was recorded at 5.7 percent and trimmed-mean core inflation was 6.4 per cent during the month under review compared with 7.8 and 7 percent respectively in the month of October last year.

The SBP Inflation Monitor says the headline inflation exhibited a lesser growth of 8.1 per cent in October 2006 compared with the growth in preceding month (September). It was less than the same month of the last fiscal year.

Non-food inflation has declined significantly to 6.4 per cent in October, 2006 - the lowest level for the last two years.

In August and September, 2006, the non-food inflation was recorded at 7.4 and 7 per cent respectively. Nonetheless, pressure on food inflation still exists which is also evident from a considerably high rate of growth in SPI. However, WPI continued its declining trend and came down to 6.7 percent during the month under review, says the Inflation Monitor.

A closer look at price movements of individual items included in the CPI food group reveals that prices of 49 commodities including fresh milk, beef, sugar, chicken, pulses gram, mash and moong, cooked mutton, honey, tomatoes, chilies green etc. exhibited double digit inflation with a combined weight 52.4 per cent in total food group. On the other hand, prices of 14 commodities like apple, ginger, pulse masoor declined during the month under review. The rest of items, having a weight of 35 per cent in food group, exhibited subdued or moderate inflation.

In the non-food group, House rent index (HRI) maintained its declining trend, which started after February 2005, and recorded a moderate increase of 6.9 per cent in October 2006 compared with about 11.1 per cent in the corresponding month of the last fiscal year.

Inflation in Fuel and Lighting declined to 11.3 per cent in October 2006 compared to 12.1 per cent in the preceding month. Most notable decline was recorded in transport and communication that already had been showing a continuous decrease since November 2006: Year on Year (YoY) inflation of 3.8 per cent in October 2006 compared with 22.7 per cent in the same month of the last fiscal year.

On the other hand, Medicare registered a significant increase in prices with a rate of 9.9 per cent in the month under review compared with 1.6 per cent growth in the same month last year.

Wage inflation that started declining from the start of FY-07 continued its decelerating trend in October 2006 resulting from lower wages of both skilled and unskilled workers on account of slow down in construction activities, the Inflation Monitor added.


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## Neo

*Case being made for getting concessions: Overall exports falling*

KARACHI, Nov 17: Not only the textiles, but almost all major key items of PakistanÃ¢â¬â¢s export have been hit hard by the extreme slump in the current fiscal year and exporters are trying to make a case for getting a wholesome fiscal concession and relief package that should bail out the export trade from the present crisis.

Ã¢â¬ÅIt is an almost across-the-board slump,Ã¢â¬Â argued a top business leader who is now under pressure of his members to make a case for the export trade rather than for the pampered segment like textiles. Ã¢â¬ÅIt is not only the textiles, but other items like leather, sport goods, carpet and rugs, surgical instruments, petroleum products, fish, cutlery, gems and jewellery, fruits and vegetables, cement, chemicals, furniture, tobacco, handicrafts and a variety of other key exportable items are on decline,Ã¢â¬Â he pointed out.

Exporters complain that textile business enjoy a clout and influence in the government and in assemblies and has managed to get one concession after the other. After getting rebate on export of virtually on all textile products, reduction of interest rates on export refinance, swapping of high interest loans with relatively low interest rate bank loans, the textile lobby recently won another major concession on sales tax exemption on energy.

Ã¢â¬ÅWhy other business sectors are being overlooked,Ã¢â¬Â is a question that is now being discussed and debated in all the business meetings as leaders of leather industry, sport goods, surgical instruments, chemicals and others argue that they have equally been hit by the high cost of doing business.

The rising financial and mounting energy and transport costs, according to them, have pushed the cost of their goods up rendering them uncompetitive in the international export market.

Exporters have noticed that the government is now releasing, with an inordinate delay, the international trade statistics every month and that too in two instalments. In the first release, last on Wednesday, the government informed the public of aggregate exports in July-October at $5.55 billion and imports at $9.4 billion, showing an imbalance of more than four $4 billion.

The detailed and item wise import-export figures are expected to be released by end of this month but exporters say that the declining trend of more than two dozen key items that constitute the core and development categories has become more pronounced in October.

In the first quarter (July-September) 2006-07 all the 10 key textile products including raw cotton have shown declining trend as compared to their performance in the same period last year. Export of knitwear during first quarter of 2006-07 stood at $472.88 million which is 10pc lower compared to $525.90m the same period last year.

Bedwear export was down by more than 19 per cent to $449 million, cotton cloth export declined by about 15 per cent to $464 million. The knitted and crocheted fabrics export came down by more than 29 per cent. The art silk and synthetic fabric export lost 25 per cent as it could realise only $48.67 million. Export of towels was down by about 5 per cent to $147.68 million and raw cotton export came down by more than 56 per cent.

The slump in textile sector has come after getting export rebates and announcement of fiscal package that may cost government anywhere from Rs25 to Rs30 billion this year.

But the other key items of core category and development category also beg for same treatment as these are equally hard-pressed as amply manifested in the official trade statistics.

In first quarter of this fiscal, the export of carpets fell by about 42 per cent to $38 million, surgical instruments declined by more than 37 per cent to $39 million, surgical instruments also by 37 per cent to $255.59 million, petroleum products by 17 per cent to $152.69 million, leather garments by more than 42 per cent to over $109 million, leather by 17.50 per cent to $561.76 million, footwear by more than 33 per cent to $23.65 million.

The export of gems and jewellery was also under tremendous pressure and fell by 69 per cent to only $2 million. The export of chemicals showed about 16 per cent decline, fish about one per cent, engineering goods more than 27 per cent, fruits by about 45 per cent, vegetables by about 53 per cent, cutlery by about 33 per cent, poultry by about 99 per cent, cement 22 per cent, spices 34 per cent, furniture 31 per cent and tobacco by 43 per cent.

Ã¢â¬ÅMajority of these export industries are labour-intensive and a slump can cause unemployment at a time when elections are round the corner,Ã¢â¬Â the business leader warned.

With inflation hovering near double digits for the second consecutive year, the government is showing no inclination to bring down oil prices in domestic market and there is a determination to increase revenue collection to Rs1 trillion next fiscal from Rs835 billion this year.

The business is trying to make a case for direct 10 to 12pc decline in rupee-dollar exchange value. The inflation rate in most of our trading partner countries is less than 5 per cent while Pakistan has an average 9 per cent for the second consecutive year and hence businessmen plead for a realistic parity.

But a devaluation of 10 to 12pc in one go has its own perils. Whether a rupee devaluation will make PakistanÃ¢â¬â¢s export competitive is a doubtful proposition but it certainly will push up debt burden and debt servicing, import bill and cost of invisibles in the foreign exchange budget.


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## Neo

*Airport privatisation Ã¢â¬Ënot happening soonÃ¢â¬â¢ *

Workshop costs raise eyebrows

KARACHI: The Director General of the Civil Aviation Authority, PakistanÃ¢â¬â¢s aviation sector regulator as well as operator of the countryÃ¢â¬â¢s airports, has clarified that while airports will be handed over to private sector, Ã¢â¬Åthis does not seem to be happening any time soon.Ã¢â¬Â

Speaking to The News, Farooq Rehmatullah, who has been brought in from the private sector to improve the functioning of the CAA, said that the ultimate goal may be privatisation in one form or another, this is something that has to be planned and thought through.

The interesting development this week has been that after hiring a foreign firm to develop a plan forward for the CAA, its management has now acquired services of a private university to train employees who see these steps leading to privatisation.

As part of Rs3.5 million consultancy agreement with Lahore University of Management Sciences (LUMS), a three-day training workshop for CAA officers started on Friday in Karachi, a little over three months after government contended reports of CAAÃ¢â¬â¢s bifurcation in a Senate session.

Documents available with this scribe suggest that Dubai-based McKinsey and Company was hired for $0.5 million to prepare a business plan, which suggested certain initiatives for Ã¢â¬Ëreorientation of the organisationÃ¢â¬â¢.

Soon after his appointment, Farooq Rehmatullah, the former head of Shell Pakistan, set up a CAA Restructuring Team to assist the agenda of introducing drastic changes within the regulator, a CAA official, who wished not be named, said.

Ã¢â¬ÅAlthough these initiatives are aimed at improving the working of the organisation, the officers feel lost and confused, not sure of where they are headed,Ã¢â¬Â he explained.

He confided that excessive amount of money is being spent to accommodate the participants of the workshop. DG CAA Farooq Rehmatullah told the inaugural session of the workshop that the changes in CAA were part of a constant process to meet the requirements of modern day aviation industry, which would help achieve better results.

The three-day workshop on the restructuring of CAA was being conducted by a two-member LUMS team to give an outline of a strategic plan for the transformation of the regulator. Ã¢â¬ÅCAA is to be steered towards a new direction so that it can function in harmony with modern day aviation sector and therefore had a working set-up accordingly,Ã¢â¬Â DG CAA said in his address.

He said the present era of information technology warranted adoption of modern way of conducting CAA operations. Ã¢â¬ÅSuccess is awaiting us but for this every one will have to work hard to switch over to meet modern day requirements, which is the objective of this workshop.Ã¢â¬Â


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## Neo

*Pakistan rail link next year: minister *

Tehran, Nov 18, IRNA 

Minister of Roads and Transportation Mohammad Rahmati said here on Saturday that Iran's railway network will link up with Pakistan's in a year with the completion of Kerman-Bam-Zahedan railroad project. 

According to the ministry's Public Relation Department, the minister told the secretary general of the Economic Cooperation Organization (ECO) that with the linking of Iran's railway to Quetta, Pakistan, the country will be connected the Central Asian countries and Turkey. 

He underlined, "Quetta railway should to be reconstructed and its current situation is not suitable for optimum use in this respect." Turning to the completion of Iran's railway link to the Turkish network, he added that in the preliminary stage, the railroad of Van Lake should be completed under a finance project. 

For his part, the new ECO Secretary General Khurshid Anwar expressed satisfaction with his visit and underlined the effective role of transportation in expanding cooperation among members of the organization. 

"Trade, energy and transportation are considered the three major activities of the organization, and without transportation the two other factors will not be materialized," he added. 

He noted that ECO Insurance Committee was established by Iran, and expressed hope that Tehran will play a key role at the committee meting. 

http://www.irna.ir/en/news/view/menu-237/0611187495185719.htm


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## Owais

*ADB not satisfied with Wapda's successor companies *

ISLAMABAD (November 19 2006): The Asian Development Bank (ADB) has expressed dissatisfaction over the financial management and governance systems of successor companies of Water and Power Development Authority (Wapda), official sources told Business Recorder here on Saturday.

"Lack of generation capacity, constraints in the transmission and distribution systems, financial management and sustainability of the sector entities and corporate governance structure are the key challenges for the successor companies of Wapda," the sources quoted the bank's fact-finding mission saying in a report recently submitted to the government.

The mission, which discussed overall performance of the power sector, was of the view that Pakistan's power sector is facing major challenges in supporting the government strategy to increase electricity supply to its urban and rural population.

"Nearly 45 percent of the population does not have access to electricity and the power sector, a key infrastructure provider will have to increase its capacity to sustain economic growth target of the MTDF," the bank observed.

According to the government plans, Central Power Purchase Agency (CPPA) was scheduled to start its operations as an autonomous entity in July 2006, but the government has faced difficulty in achieving this goal because of the complex nature of the entity, which would act as the centre of the demand and supply of the electricity market.

The government would spend 1.1825 billion dollar to streamline the system of which the ADB would extend 950,000 dollar as technical assistance.

Commenting on the impact and outcome of technical assistance, the bank said that it would improve efficiency in the power sector in lowering the cost of electricity for consumers.

The merit order implementation further enhanced by the CPPA would foster the incentives and environment for power generators to actively seek cost efficiency in their operations and act to set benchmarks for the power sector, the bank maintained.

However, the bank said that financial viability and credibility of CPPA is vital for Independent Power Producers (IPPs) since the new organisation is intended to be the counterpart of power purchase agreement.

The CPPA function has made up most of the losses for National Transmission and Dispatch Company (NTDC). However, currently, the generation tariffs have adjusted to reach cost recovery but the consumer tariffs have lagged behind.

The gap is accumulated in NTDC accounts as losses and the outstanding receivables from distribution companies have also burdened the financial accounts of NTDC.

However, the financial legacy of the CPPA function would be passed on to the autonomous entity and the financial viability of the entity would affect the attractiveness of the power sector for future investment by the commercial participants, the bank questioned.

It is worth mentioning that the World Bank (WB) is not satisfied with the pace of restructuring process and expressed reluctance to fund projects until power sector companies are made completely independent.


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## Owais

*Musharraf calls for knowledge-based economy *

LAHORE (November 19 2006): President General Pervez Musharraf on Saturday called for developing knowledge-based economy through promotion of quality science and technology education in the country.

"Only natural resources are not enough to make progress; we have to develop our human resource base to make the country economically stronger," he said at the ground-breaking ceremony of University of Engineering, Science and Technology (UEST) to be set up with the assistance of University of Technology Graz (Austria) some 25km from here.

The President regretted that education sector had been ignored in the past and added that the present government has evolved a comprehensive strategy to develop education system at all tiers. He said that the budget of Higher Education Commission (HEC) alone, which used to stand at a meagre allocation of Rs 500-600 million a few years ago, had been raised to Rs 22 billion.

"We have set the economy right; so, there are much more resources available for education sector," the President said. He said that education had to be universalised at primary level, and there should be a primary, middle or high school within one kilometre radius from the home of a student.

He said that after matriculation, the students should have a choice to join technical or general education. He said that promotion of technical education would create skilled manpower, much needed by different sectors of the economy.

About the plan for setting up nine universities of engineering, science and technology, he said that establishment of these universities, with the help of countries like Austria, Sweden, France, Germany, Italy, China and South Korea, would cost Rs 250 billion over a period of 10 years.

He said these engineering, science and technology universities would help Pakistan to have better qualified human resource needed for economic development. About the University of Engineering, Science and Technology, Lahore, he suggested that the university should be named as Pakistan-Austria University (PAU).

He expressed hope that the university would add a new jewel to the crown of Lahore, the biggest seat of learning in Pakistan. He said that work on the establishment of a university in Karachi with the assistance of France had begun, while the ground breaking of another university, to be set up in Sialkot with the help of Sweden, would be held soon.

He said that Pakistani youth would have access to world class engineering and technology education, while the Austrian companies, investing in Pakistan, would have good human resource. Musharraf said that low quality education and lack of skilled manpower were responsible for backwardness in the Muslim world. The President regretted that of 500 top universities in the world, none belongs to any Muslim country.

OUR CORRESPONDENT ADDS: Musharraf praised the role of Corps Commander Lahore, for the promotion of higher education. He said Lieutenant General Shafaatullah Shah has generously donated 100 acres of land worth Rs 5 to 6 billion in Defence Housing Authority (DHA) exclusively for the purpose of promotion of quality higher education in Pakistan.

Musharraf said that Corps Commander Lahore has donated a valuable tract of land measuring 100 acres for the establishment of University of Engineering Science and Technology on the request of Chairman Higher Education Commission, Dr Atta-ur-Rehman.

The President said Corps Commander has also given consent to donate 30 acres more land for this project, which is being established in collaboration with the University of Technology, Graz Austria. The new varsity will be situated in phase seven of DHA.

Musharraf mentioned that he visited last week the Lahore Institute of Technical Education (LITE) being manned by Lahore Garrison, where students are being imparted training of steel fixer, shuttering carpenter, fabrication, tailoring and plumbing etc.

It may be mentioned that LITE is functioning under the management of Lahore Corps through its existing resources and has been affiliated with National Vocational and Technical Education Commission (NAVTEC) and Punjab Board of Technical Education. The parameters laid down through NAVTEC are being implemented.

Chairman Higher Education Commission, Dr Atta-ur-Rehman said on the occasion that Pakistan had below-25 year population of 85 million, which formed a huge pool of creativity. He said that knowledge and technology had become the key drivers of growth in the world. 'Pakistani universities were presently producing 300 PhD scholars at present. After 3 to 4 years, the number of PhD scholars would touch the mark of 1,500, he added.

He further said that students at Pakistani universities had now in access to more than 20,000 international journals and added that Pakistan would soon become the first country in the world to have video lecturing for students.

Punjab Governor Khalid Maqbool, Lahore Corps Commander Lieutenant General Shafaatullah Shah, Austrian Minister for Education, Science and Culture Dr Elizabeth Gehrer, Austrian Ambassador in Pakistan, Federal Minister for Population Welfare Shahbaz Hussain, Punjab Minister for Non-Formal Education Hussain Jehanian Gardezi and a number of Austrian and Pakistani educationists attended the ground-breaking ceremony


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## Owais

*Cement output to touch 47 million tons by 2009 *

ISLAMABAD (November 19 2006): Cement production will be around 47 million tons by year 2009 with the expansion in production capacity of the existing 28 units, which will be enough to meet both domestic and export needs, it is learnt.

Sources said that three investors, from UAE, Egypt and Qatar, are also considering setting up cement plants here. However, they said, the final decision to this effect would be taken by January next year whether to set up these plants in Sindh or Balochistan. The production from these units would be in addition to 47 million tons that is anticipated from the present 28 units.

The demand of sulphur-resistant (SR) cement, white cement and blast furnace slag cement from Gulf states has been increasing, besides the ordinary Portland cement (OPC) from Afghanistan.

The biggest export market of Pakistan's cement is Afghanistan, where competition is growing among the Central Asian States, Iran and Pakistan. However, Pakistan is in a better position because of low freight charges. The cement sector has seen production of 6.32 million tons during the last four months, bringing total production till October to 33 million tons from 21 million tons during January 2006.

This production is expected to rise to 38 million tons by the end of December as a result of on-going capacity enhancement by existing units. Attock Cement has completed its expansion project and the expansion program of Bestway Cement would be completed soon. D G Khan Cement's new unit in Chakwal is likely to start production soon, whereas the other units have either started their capacity enhancement program or are planning.

Cement manufacturers see growing demand of the commodity at home due to planned construction of dams and increase in reconstruction activities in Afghanistan.

Cement crisis last year had forced the government to intervene. As a result, the government allowed import of unlimited quantities of cement without any customs duty and withholding tax through the private sector to meet the growing demand. The government had also earmarked an amount of Rs 720 million in the budget to arrest cement price hike.

The government has been paying substantial subsidy to cement importers to stabilise the prices.

Sources said that cement import has already been stopped because of much reduced prices in the domestic market. The government hopes that cement prices will remain under control because of the commitment of local manufacturers to raise the level of production and increase production capacity.


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## Owais

*ADB mulling over $300 million grant for IAFSP *

FAISALABAD (November 19 2006): Asian Development Bank (ADB) is considering providing $320 million for Improving Access to Financial Services Programme (IAFSP) in Pakistan to provide significant benefits and will have positive impacts on the poor.

According to a project study report of Julie Rogers, Principal Financial Sector Specialist of ADB, the reduction of poverty is of the highest priority for the Government of Pakistan.

Despite the high level of economic growth averaging over 7.5 percent for the past three years, 24 percent of the population, or 36 million people, continue to live below the poverty line. Further sustained economic growth requires a financial sector that is stronger and more effective in mobilising savings and allocating these to productive use.

Building an inclusive financial sector means broadening the outreach and deepening the service, while at the same time striving for efficiency and ensuring sustainability. Although the sector has made good progress, the small outreached achieved in contrast to the vast numbers of unbanked has shown that new measures are needed in Pakistan to improve access to financial services.

Project report revealed that the goal of the proposed IAFSP is to assist the Government to reduce poverty, build an inclusive financial sector, and promote sustainable economic growth utilising modern technologies and applications to lower cost of delivery of financial services and to improve efficiencies.

The programme will contribute to this goal by achieving its objective of ensuring access to sustainable institutional financial services for a majority of poor and low-income households and their micro enterprises at competitive prices.

The programme will support the government to improve performance and efficiencies of the financial sector; promote diversification and innovation in product and services delivery; and increase outreach in rural and remote areas. The programme will support the government's core reforms to increase access and accelerated growth nation-wide, including programmes for literacy.

ADB sources hoped that this programme will provide significant benefits and will have positive impacts on the poor.

THESE INCLUDES: 

(i) a deeper financial sector that fosters broad-based, economic growth, reduces poverty and contributes to macroeconomic stability;

(ii) development of a sustainable market-oriented microfinance sector with greater outreach to the poor in rural and remote areas;

(iii) a developed regulatory and supervisory framework that promotes innovation and product diversification, private sector participation and lower cost, sustainable financial services;

(iv) improved credit information and land registration system to provide essential information for access to credit;

(v) improved capacities and efficiencies of financial service providers for new technologies and applications, including mobile money transfer and VSAT technologies to improve access to financial services in rural and remote areas; and

(vi) increased literacy (financial and basic) improving access of the poor to financial services.

The goals of the programme are reflected in the Government's Medium-Term Development Framework 2005-2010 and Strategic Directions to Achieve Vision 2030.

The government will also actively assist and support ongoing programme monitoring and evaluation by facilitating consultations with related agencies and other key stakeholders as appropriate.

In accordance with the simplified Disbursement Procedures and Related Requirements for Programme Loans, procurement of goods and services produced in and originating from ADB's member countries will be made with due consideration to economy and efficiency in accordance with standard Pakistan public sector procedures and normal private sector commercial practices acceptable to ADB.


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## Neo

*$1 billion handsets imported in Pak in 2005-06 *


ISLAMABAD: November 19, 2006: Pakistan mobile phone handset market is expanding with every passing year and during 2005-06 the total value of handsets imported in the country crossed US$1 billion and forecasted growth in this import is 25 percent annually.

Sources in the Pakistan Telecommunication Authority (PTA) told Online that there are 12 to 15 thousands mobile phone shops across the country and generated huge employment opportunities. They said that about 60,000 people directly and indirectly are employing in this sector. 

They said that according to estimates provided by local resellers of the mobile phone handsets, the number of handsets imported currently at around 750,000 and 800,000 per month.

Advanced technology and sophisticated sets are now commonly available in the local market and handsets with camera and music are now becoming very popular and this trend looks to grow in the next two years as these features will become standard in the future, they said.

They said that four major players dominate Mobile Phone Handsets market, Nokia leading with 55 percent, Sony Ericsson 22 percent, Samsung 17 percent and Motorola 5 percent. 

They said that due to the increasing trend of import of handsets through proper channel, the reduction is observed in availability of smuggled sets.


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## Neo

*Rs 1010.784 million loans for 1231 industrial projects *

SIALKOT (November 19 2006): The Punjab government has advanced loans amounting to Rs 1010.784 million for setting up 1,231 industrial projects in different industrial towns of the Punjab.

Official sources told Business Recorder here on Saturday that the accomplishment of these new industrial projects would generate employment opportunities for 24,000 people in the Punjab. The present government had concentrated and working on to bring about the industrial revolution for ensuring strong industrial base.

The government had already introduced highly conducive polices for attracting foreign investment as a result of which German based Metro group would establish its ten stores with the initial investment of US 200 million dollars in Punjab. The volume of investment would be increased to 500 million dollars while number of stores would enhance to 25 stores.

Sources revealed that Metro group had started export from Pakistan and so far articles amounting to US 40 million had been exported and it is expected that export volume would be US 2 billion dollars in future.

In addition to this the government was actively considering establishing "Enterprises Development Organisation" shortly in the Province. The prime concept of the proposed enterprise development organisation was to organise the cottage industry and to provide solid footing to the artisans in the Province. Under the programme special step would also be taken for providing facilities to the artisans for promoting local products and to provide technical assistance and marketing facilities to the cottage industry and artisans in the Punjab.

The programme would surly encourage cottage industry especially artisans to produce local products using their home-grown skill. The programme would also ensure the considerable increase in the income of business community engaged with the cottage industries well as artisans.

Sources further revealed that under a phased programme 50 Cluster Development Centres of Technology Upgradation Centres would be set up in different major industrial cities of Punjab. Under the programme Product development Centre for composite based material for Sports goods industry (Sialkot), Business Support Centre for Electrical fittings Industry (Sargodha), Wood Furniture Facility Services Centre and showroom (Chiniot) and Support Centre for Development of Auto parts (Lahore) would be accomplished during 2006-2007.

Similarly, the establishment of Cluster Development Centre for Metallurgy casting die and agriculture (Daska), Cluster Development Centre for Technology of Domestic Electrical appliances (Gujranwala), Cluster Development Centre for Development and Promotion of Light Engineering Industries (Multan) and Cluster Development Centre for Light Engineering Industries special focus on Textile machinery and spare parts in Faisalabad had been included in current annual development programme and work these clusters would be carried out soon sources said.

The step was being taken to provide maximum assistance and extending support in technology upgradation to the business communities engaged with this business, sources added.


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## Neo

*Pakistan may not benefit from bumper wheat crop*

KARACHI, Nov 18: Pakistan has been put at a disadvantageous position in intra-region wheat trade as the commodity has not been included in its positive list under South Asia Free Trade Agreement (Safta).

Many Saarc countries are generally food-deficient and import large quantities of food grains to meet their domestic shortages. Sometimes, however, they reap bumper crops and end up with exportable surpluses.

According to the information gathered by Dawn, Saarc states under Safta included wheat in their positive lists of free trade but Islamabad objected on the ground that normally wheat crop in Pakistan was not big enough to allow its export and it got it dropped from the list.

As a result India gets an edge over Pakistan as a supplier of the commodity to other wheat-deficient Saarc nations.

Under Safta, all the seven countries will have to liberalise and reduce their tariff regimes to ensure free trade among the Saarc states. Presently India has 1,000 items under sensitive list with tariff ceiling of 20 per cent and Pakistan has 1,200 items in the sensitive list with tariff ceiling of 22 per cent.

With strong indications that Pakistan is going to harvest bumper wheat crop of around 22.5 million tons or 0.8 million tons higher than last year and would be carrying over huge stocks of around 2 million tons, therefore, there is a strong possibility that it would have huge exportable surplus.

According to reports India for the second consecutive year is going to have poor wheat harvest owing to severe drought and bad sowing. Similarly, Australia once a net wheat exporter also faced with draught and its major crops are badly affected.

Consequently, Pakistan would have achieved big gain out of current situation where most wheat producing nations are also short in wheat and above all big consumer nations like India are also importing it in large quantities.

India which on an average harvests around 80 million tons of wheat had already placed wheat import orders in the world market for around 10 million tons to meet its domestic shortages. However, so far it managed to import around 7 million tons.

Had Pakistan put wheat under Safta on free list it would have been in advantageous position to capture Indian market. This would also have given freight advantage to India due to proximity of area and help Pakistan to improve its balance of payment with India.

Due to strong demand from India wheat prices in the world market have scrambled to $240 per ton and last shipment India received from Russia was quoted at around $228 per ton. Some time back the Russian Black Sea wheat prices were being quoted at around $147 to $158 per ton but now they have risen to $240 and above.

However, it is very strange that policy-makers in Islamabad even on knowing that cash crops or for that matter any other crop fully depend on climatic conditions and rainfall, therefore, their production is always erratic even there are extremes in quality and quantity but yet they excluded wheat from free list of Safta.

There is a strong demand that private sector people from wheat trade and exports should be involved in policy decisions and national level decisions should not be left at the mercy of bureaucracy.

Leading exporter of value-added wheat products Syed Johar Ali Qandhari demanded that the newly formed Trade Development Authority of Pakistan (TDAP) should induct people from private sector to frame policy for boosting of exports of non-traditional items like food and allied products.

He said there was strong demand for Pakistani wheat products such as wheat flour grade one (maida), plain floor (Atta), semolina (sujee) and vermicelli (pasta) etc.


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## Neo

*Chinese team due to give final shape to FTA*

ISLAMABAD, Nov 18: Ahead of Chinese President Hu Jintao's visit to Islamabad, a high-level Chinese technical team is scheduled to arrive here on Monday to give final touches to modalities of the free trade agreement (FTA) envisaging removal of tariff and non tariff barriers for a freer trade and investment within next five years.

Well-placed sources told Dawn on Saturday that the six-member Chinese delegation during their stay would give final touches--like translation into Chinese language etc--to the proposed FTA draft, which had almost been finalised in the last meeting held in Beijing.

The agreement is scheduled to be signed during the four-day Chinese presidentÃ¢â¬â¢s state visit starting from November 23, which would allow reduction of customs duty on selected items to zero per cent within a period of three years. While the duty on the remaining items of the list would be scaled down to 5 per cent within a period of five years.

The sources said that the both sides agreed that the PTA would come into effect from early next year. However, the real reduction in tariffs on all agreed products would start from July 1, 2007. Under the proposed agreement, China has agreed to provide preferential market access to all PakistanÃ¢â¬â¢s core products, including textile products.

The proposed FTA agreement would have two parts- trade in goods and investment chapter. However, the services chapter would be negotiated after the signing of the agreement, the sources added.

Pakistan will be the first country with whom China would be signing an investment treaty as part of the FTA, the sources said and added China has so far not offered this facility under its operational FTAs to any country.

The sources said China was also pushing for having a similar FTA with India. China is also pressuring India to grant "market economy" status, which most developed nations and some developing nations have not accorded to Beijing in view of its highly opaque pricing system and high-level of subsidies offered to exporters. But they will go for a regional trade agreement in the first phase, added the sources.

According to the statistics, top five items of export to China constituted 86.65 per cent of PakistanÃ¢â¬â¢s total exports to China indicating a very narrow base. Cotton yarn alone has a share of 55 per cent of the total exports to China.

Under the investment chapter of the agreement, the sources said Pakistan was looking for relocation or for possible Chinese joint ventures with local firms to meet the domestic demand as well as for exports to Central Asian States and China.

Some sectors, which would attract possible Chinese investment, includes textile, light machinery, dairy farming, pesticides, leather, non-woven fabric, man made filament yarn, tractor, marble, fruits and vegetables, glass industry, beverages, plastic product, motor cycles, organic chemicals and pharmaceuticals etc.


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## Owais

*Musharraf and Blair discuss ways to enhance trade *

LAHORE (November 20 2006): President Pervez Musharraf and British Prime Minister Tony Blair on Sunday in a meeting at the Governor House here agreed to further cement relations between the two sides to fight extremism and terrorism.

The two leaders agreed that restoration of peace in Afghanistan is a crucial issue. Blair said that defeating terrorism would take a long time, but lauded co-operation of Pakistan in this direction.

Later, addressing a joint news conference the two leaders announced that they had consensus views on all major issues. The exchange of views between them had led to an understanding and an improvement in ties between the two sides, Musharraf said.

But he warned that military action alone would not defeat the Taliban in Afghanistan. He called for political and economic steps, along with military action, to deal with the militant Taliban, and restore peace in Afghanistan. The international community should give 'Marshall Plan-like package' for reconstruction and economic development in Afghanistan, particularly in the south-eastern areas, President Musharraf said.

Foreign Minister Khurshid Mahmood Kasuri, Pakistani High Commissioner in the United Kingdom Dr Maleeha Lodhi and senior officials were also present on the occasion. The President said that war on terrorism in Afghanistan could not be won by military action alone. "We have to come up with a broader strategy, and this strategy must involve political elements and reconstruction and development," he said.

He said, "I never said that war against Taliban can not be won. I never believe in accepting defeat before an enemy. We must win this war."

He said: "We need to put our house in order here on our side and make sure that support (for Taliban) is cut off. But the main battle is in Afghanistan."

He argued and pointed out that his country was working hard to stop extremist elements here country from supporting the Taliban. "The Taliban problem is an Afghan problem, which is in the south-eastern region of Afghanistan, being supported by elements from this side."

He added that its solution lay in what was done in Afghanistan and not what was being done in Pakistan.

"Pakistan is certainly taking action here against elements which are supporting whatever is happening in south-eastern region of Afghanistan," he said. He said that Pakistan was doing much more than its capacity. "We have suffered about 600 dead in Afghanistan. Now if you think that we are suffering dead by not doing anything, or not doing enough, then you are not looking at reality," he said. "We must look at realities and keep re-adjusting strategies, besides finding out new solutions to the problem. That is what Pakistan is doing."

He said that Pakistan was the sole country, which was trying to implement the whole package aimed at addressing all aspects, including military, political, administrative and reconstruction.

However, he pointed out that more actions were needed from Afghanistan side, as the Taliban problem was on the Afghanistan side and the battle had to be won on that side (Afghanistan).

"Pakistan is against terrorism, extremism and Talibanisation, and Pakistanis are against any kind of Talibanisation that is backward culture of rejecting democracy and imposing very obscurantist kind of culture on Pakistan society," the President said, and added that Pakistan had rejected Talibanisation, and even the Afghan people would not like it (Talibanism).

"I believe in seeing the present, and trying to resolve disputes", Musharraf said, adding that "the resolution of Palestine issue would help overcome what was happening in Iraq, Lebanon and Afghanistan, besides creating effect against international terrorism."

Talking about ways and means to enhance trade with the UK, the President said that the two sides discussed trade and economic relations in the meeting and he also informed the British Prime Minister about Pakistan's relations with India and efforts to settle the issues, including Kashmir, Siachen and Sir Creek. He expressed the hope that his meeting with the British Prime Minister would go a long way in strengthening relations between the two countries.

The British Prime Minister pledged to double the UK development aid for Pakistan to &#163;480 million ($960 million), which he said was meant for over three years to support educational reforms, aimed at countering the influence of Islamic seminaries (madrassahs).

Terming the talks "immensely constructive", Tony Blair praised Musharraf for his courage, saying that his leadership had put Pakistan on this journey of "change and modernisation".

According to him, Britain's relations with Pakistan were at their highest point for many years, and commended the role of Islamabad for extending co-operation in what he said "counter-terrorism".

"I think we are seeing a strengthening of the relationship at every level, which I welcome enormously," Blair said.

Pledging his commitment to fighting the Taliban, he said: "This terrorism that we are facing, of which one manifestation is what has happened in Afghanistan, has been a long time going, and will take a long time to defeat."

He said: "Nobody should be in any doubt at all about our commitment to Afghanistan," he said, adding that it was of fundamental importance to global security "to stick with it and see the job through."

"We are facing a threat from people who want to Talibanise our society, to prevent our society from making progress," he said, adding that to check terrorism and extremism, there was need to take necessary security measures, and support the democratic will of the people in Iraq and Afghanistan.

Referring to the debate on ways to tackle global terrorism, he said that the solution to this problem had different aspects, "some of which pertain to security and some of which are ideas which challenge the ideology of extremism and some of which have to do with reconstruction and development with economic progress."

About the presence of Nato forces in Afghanistan to fight terrorism and extremism, he said that Nato's summit meeting, to be held in 10 days, would analyse what further was required to do in Afghanistan. "There should be no doubt about our commitment what we are doing to help Afghanistan, recognising that it is not just about security," Blair stated. He said he also recognised the importance of reconstruction and development, which needed to be done along with security efforts.

He said that his country supported Pakistan's economic development and also was supporting its ongoing reforms process, especially in the education sector. He said that Pakistan had achieved a lot of economic development over the past couple of years and there had been significant reduction in poverty level and the per capita income had been doubled.

Blair also lauded President Musharraf's efforts for improving Pakistan's relations with India, and said that all outstanding issues, including Kashmir, needed to be addressed in a different and better way.

About partnership between UK and Pakistan universities, he said the number had been increased to 50 from 15, and added that the establishment of new universities in Pakistan, with the help of foreign universities, would bring a very positive impact on Pakistan's education sector, and the economy.

Regarding Iran's nuclear issue, the British Prime Minister said that Iran should abide by obligations of IAEA and the UN.


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## Owais

*Development partnership agreement signed: UK doubles aid *

ISLAMABAD (November 20 2006): Pakistan and Britain on Sunday signed a 'Long-term Development Partnership Arrangement' to reduce poverty and achieving Millennium Development Goals (MDGs) in Pakistan through active partnership between the two countries.

The agreement was signed by Prime Minister Shaukat Aziz and British Prime Minister Tony Blair here at Prime Minister House, following the talks between the two prime ministers. Under the agreement, the British government will provide 480 million pounds in the next three years through the Department for International Development (DFID) of the UK.

The agreement will provide a long-term development partnership between Pakistan and Great Britain through a transparent framework for mutual accountability for implementation of the development partnership between the two countries.

Under the agreement, the development partnership between the two countries is based on a shared commitment to achieve the objectives to reducing poverty with the objective of achieving the Millennium Development Goals (MDGs) in Pakistan.

The agreement would ensure respecting relevant international human rights obligations, strengthening financial management and accountability, and reducing the risk of funds being misused.

The Pakistan government, under the agreement, would take effective steps to reduce poverty in line with the Paris Declaration (2005) and achieve high and broad based economic growth including the rural economy, while maintaining macroeconomic stability.

The agreement will also help Pakistan to take initiative so that by 2015 all children with special emphasis on girls and children in difficult circumstances have access to free primary education of good quality.

It will also help to improve levels of adult literacy by 2015, especially for women, and equitable access to basic and continuing education for all adults.

The agreement will also help to reduce gender disparities in education, and achieving gender equality by 2015, with a focus on girls' full and equal access in basic education of good quality.

It will also improve health services delivery, particularly in maternal and neonatal health, besides improving provision of clean water and sanitation services.

Specific arrangements for allocating and disbursing the development assistance will be decided in separate discussions. Under the agreement, the UK will also provide financial and technical co-operation for capacity development.


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## Owais

*Pakistan ready for freight movement via Thar Express *

ISLAMABAD (November 20 2006): Pakistan is ready to allow freight movement to and from India through historic rail link - Thar Express - that is likely to be resumed this week. Islamabad, however, anticipates a matching response from New Delhi.

Which is reluctant to carry freight between the two neighbouring countries via this rail route, Federal Minister for Railways Sheikh Rashid Ahmed said on Sunday.

Nuclear arch rivals are all set to resume a rail service between Khokhrapar to Munabao on November 23 that was suspended earlier this year when railway track submerged with rainwater during heavy monsoons.

"We have received a letter from India in which it expressed their desire to restart the service from November 23. We welcome this step and hope the service would serve people of both the countries," Railways Minister told Business Recorder.

To a query, he said so far there would be no freight service between the neighbouring countries through said rail route. "We are ready for freight movement as well, but the Indian side seems to be reluctant in this regard," he added.

Sheikh Rashid said Pakistan has spent more than Rs 2 billion to upgrade and replace its narrow gauge 128-kilometer track from Mirpur Khas to the Khokhrapar by laying a broad gauge track.

To a question, he dismissed the impression that the element of smuggling was behind what he termed reluctance shown by the Indian authorities to allow freight movement on Thar Express, named after the desert from where it passes.

"There are salt and dates which we can export to India through Thar Express... There is no question of smuggling or anything," he replied in categorical terms.

The transport link was severed following 1965 Indo-Pakistan war and efforts were never made to restore it since then. However, both countries started a composite dialogue process to settle all disputes peacefully including restoration of communication links.

For the first six months, Sheikh Rashid Ahmed said Pakistani train rolled into India and now the Indian train will cross into Pakistan to Zero Point Railway station as it has been decided to operate the service on six-month basis.


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## Owais

*Switzerland to finance Rs80 mln NWFP natural resource management *


ISLAMABAD (updated on: November 20, 2006, 16:43 PST): Switzerland has agreed on Monday to provide Pakistan an aid of eighty million rupees to strengthen its natural resources in North West Frontier Province.

An agreement to this effect was signed by Swiss Ambassador to Pakistan Mr. Markus Peter and Secretary Economic Affairs Division Mr. M. Akram Malik here.

Under the agreement the Swiss government in the first phase will provide in the form of a grant of eighty million rupees for protection and conservation of forests in Haripur, Lower Dir and Hangu through the Swiss Agency for Development and Cooperation.

The NWFP Government is contributing seven million rupees in the project, which will be completed in December 2008.

Speaking on the occasion the Swiss Ambassador Markus Peter said the main objective of the project is to support resource management at community level and to improve livelihood especially of marginalized groups through multipartner integrated natural resource management.

He said the Swiss government has been contributing in Natural Resource Management for the last twenty years with a focus on forest management and planning.

Secretary Economic Affairs Division M. Akram Malik said Pakistan and Switzerland enjoy old and excellent bilateral relations.

He said the annual development assistance of Swiss government reaches fifteen million Swiss Frances.

He also appreciated the granted extended by Swiss government in the earthquake hit areas and its contribution in Northern Areas.


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## Owais

*Textile, sugar industries, growers warned of recession if lack harmony *


ISLAMABAD (updated on: November 20, 2006, 22:12 PST): The Chairman of the Senate Standing Committee on Food, Agriculture and Livestock, Senator Mian Muhammad Amjad Abbas has warned that the national economy may suffer a colossal loss if the textile and sugar industries fail to evolve grower-friendly polices urgently and do not ensure that the interests of all stake holders are fully protected.

He was presiding over a meeting of the Senate Standing Committee on Food, Agriculture and Livestock, at the Parliament House today. The Committee called upon all stake-holders in the cotton and textile production to work in complete harmony with one another for improving the quality and enhancing productivity of the country's premier export so that it can stay competitive globally. 'A long term, forward looking and uniform policy is what we need today to look after the interests of the 3-major parties i.e. the government, growers and the textile mill owners and friction-free relations between the stake holders is the key to surmount the growing challenges in this area', it was observed.

The meeting underlined the need of improving the quality of research being carried out at various cotton development institutes in the country and called for developing disease-resistant, high yielding and contamination free varieties. It also called for raising the awareness level of farmers and easy availability of the necessary inputs at reasonable rates.

'The growers tend to replace a crop which no longer remains profitable and economically viable to them no matter how important it is for the national economy', said the Chairman.

The meeting stressed the need of complete elimination of the baneful role of the middle-man, which was perceived as a major impediment hampering productivity, stifling business environment and blocking reasonable return to the farmers.

"The policy of shifting the blame simply does not work and the stake holders will have to move jointly against this menace," the members demanded.

The meeting also underscored the need to provide a fair return to the farmers, extension of outreach services, easy availability of superior quality seed, pesticides and other inputs, along with greater role of the private sector in promotion of quality research.

The representatives of the growers demanded that no sugar mills be allowed to be set up in the cotton growing areas to protect the legitimate interests of cotton farmers.

The Committee directed the Ministry of Food and Agriculture to take tangible steps for promoting awareness among the farmers regarding crop raising, use of pesticides etc.

The meeting also dwelt on issues relating to support price of sugarcane, start of crushing season, payments to the growers, accurate weighing and amendments in the Sugar Factories Act.

The Committee emphasised that the 3-stake holders i.e. the government, growers and mill owners must be on the same wave length to avoid crisis situation like the one faced by the country last year.

"Evolution of realistic policies based on ground realities and their sincere implementation can remove the existing trust deficit on part of the various parties", it was noted.

The meeting, which was attended by the representatives of the growers, sugar /textile industries, provincial governments and Minfal and textile division, stressed that a comprehensive and forward looking policy must be evolved in both the areas i.e. textile and sugar as they constitute a vital component of the national economy and not only the government but also the common man has a high stake in them.


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## Owais

*10.9 percent industrial growth recorded during Q1 of FY 2006-07: minister *


LAHORE (updated on: November 20, 2006, 16:44 PST): Federal Minister for Industries, Production and Special Initiatives, Jahangir Khan Tareen on Monday said industrial sector grew at 10.9 percent during first quarter of the fiscal year 2006-07 against 10.7 percent in the last fiscal year.

"Industrial sector is growing in a consistent manner, lending more strength to country's economy," he said while talking to newsmen at a function held here in connection with World Children Day at Special Education and Training Centre.

The ceremony was attended among others by renowned psychiatrist, Dr. Khalida Tareen and Principal of the centre, Ms. Zarina Farrukh.

Tareen said an industrial survey was being conducted to ensure that every segment of the industry was reflected in the development of this important sector of the economy.

About country's booming auto sector, he said automobile production had not declined. "The availability of automobiles in the country through local production and the imports, increased this year," Tareen added.

He said, due to enough supply of the automobiles, the premium on the automobiles was witnessing declining trends.

He said automobile manufacturing companies had prepared their expansion plans of duration ranging between three to five years. "These expansion plans fully reflect the confidence of private sector especially the foreign investors in present government," Jahangir Khan Tareen said.

He said the first phase of Multan Industrial Estate had been completed while the work on the second phase was in progress.


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## Neo

*Defining income groups*

By Afshan Subohi

PEOPLE as economic actors are often categorised with reference to their financial standing in a country. They are generally categorised in lower, middle or upper strata/class depending on their lifestyle and net worth.

Statements such as plight of lower class, dynamism of middle class or apathy of upper class are repeatedly used by public speakers and columnists and writers. Who make up these classes in Pakistan is far from clear.

An inquiry by Dawn into the definition of these classes exposed the level of disharmony in perception and understanding over the issue. In an informal survey, score of people in economic ministries, academia, professionals and representatives of the private sector were asked to define each class in terms of its income bracket. Responses exposed the level of confusion regarding the cut off income level that separates each class from the other.

Figures for income level of Rs4,000 and less to as much as Rs20,000 were quoted to be the cut off level for the lower class. For middle class, cut off was Rs50,000 to Rs100,000 and less. People earning above Rs20,000 to Rs100,000 were categorised as belonging to the upper strata of the society by different sets of interviewees.

The exercise, however, generated material that merit public sharing. At the start an attempt was made to describe the lifestyle of three classes before getting into numbers to quantify their earnings.

Most Karachiites interviewed described people living in Layari, Korangi, Orangi, Landhi, Lalukhet, Golimar, North Karachi and several hundred kutchi abbadis in and around city, to be making up the lower class. On an average, these households live a tough life. They are estimated to be about 25-30 per cent of the cityÃ¢â¬â¢s population.

Average size of a family in such localities is bigger and in many cases all adults work to supplement family income. In extreme cases, even children are working to meet the family budget. They are low ranking government employees, factory workers, petty traders, plumbers, tailors, masons, drivers, electricians, school teachers, construction workers, guards, etc.

Besides kitchen expenses, they fully or partially avail public utilities, spend very little on education or health and manage simple household durables such as fans. Some households also have television and telephone.

In view of the people interviewed in Karachi, those residing in Gulshan, Nazimabad, North Nazimabad, Federal B Area and other such localities represent the middle class. These are white collar workers with comparatively smaller families. They are doctors, engineers, professors, lecturers, contractors, traders, businessmen, government officers, etc.

They typically own some property, a motorcycle or a car, send their children to private schools, are computer literate, have telephones and cable network, avail private health care and use many consumer durables. These are said to be the people behind surge in domestic demand.

The upper class in view of same interviewees typically reside in Defence, Clifton, KDA and PECHS. They belong to the class whose demand is price insensitive. A senior business leader and Chairman Karachi Chamber of Commerce and Industry felt that rich people tend to hide their assets for obvious reasons so it is hard to judge the real net worth of richest of the rich in the country.

Ã¢â¬ÅElite in Pakistan is certainly richer than what most people contemplateÃ¢â¬Â, said another businessman. A senior civil servant confirmed that in Pakistan, billionaires are not in hundreds, they are in thousands. Ã¢â¬ÅPakistanis with property in elite localities in provincial capitals or in Islamabad have joined the rich men club. There are many such people in the country nowÃ¢â¬Â, said a retired economist.

Senior research officer Maqsood Sadiq of Centre for Research on Poverty and Income Distribution (CRPRID), a specialised cell in the Planning Commission, argued that this categorisation of classes is unrealistic. In his view, it may hold ground if perspective is limited to Karachi and Karachi alone.

From perspective of the country that include Thar and Kharan deserts and long stretches of land where even basic amenities are not available categorising people making Rs10-20,000 as poor is unrealistic. He said it would be absurd to pigeonhole a person living in a house in city with a job and supplementary income of other family members in lower class.

Ã¢â¬ÅBeyond cities there are few Pakistanis who enjoy luxury of living in a house with running tap water equipped with sewage, electricity and gas. To me except for, may be, small chunks in kutchi abbadis almost 90 per cent of KarachiÃ¢â¬â¢s population is not poor. They have already joined the ranks of middle classes. Roughly about 40 per cent of KarachiÃ¢â¬â¢s population may constitute middle class and the rest of 50 per cent belong to the upper class. How can a person living in a small flat in Gulshan-e-Iqbal that is worth no less than Rs2-2.5 million be counted in middle classÃ¢â¬Â, he asserted.

The argument of the researcher does carry weight. His view was indirectly complemented by another interviewee who felt that rural/urban and inter-regional disparity is so stark that any generalisation would be misleading. There are all three classes of its own in each locality and income divide in different localities within a city render them incomparable. Ã¢â¬ÅI see such broad aggregation serving no purposeÃ¢â¬Â, Ahmer Mustaffa a sociologist felt.

According to current official numbers at 7.5 per cent GDP growth rate, the population of the country is increasing by 1.9 per cent per annum and the real per capita has grown at an average rate of 5.6 per cent. The only measure that government has to assess the relative strength of sections is Pakistan Social and Living Standards Measurement (PSLM) survey that provides data on household income, consumption expenditure and consumption patterns at national and provincial level with rural/urban breakdown.

The Household Integrated Economic Survey (HIES), a component of PSLM survey provides important data on household income, consumption expenditure and consumption patterns. The key distributions in HIES are examined across five standardised per capita consumption expenditure quintiles. Each quintile contains 20 per cent of the total sample households. The first quintile contains lowest 20 per cent of the total households. In the second quintile the next better of the 20 per cent of the total and so on. In the fifth quintile, the richest 20 per cent of the total households are accounted for.

The results of the most recent survey of 2004-5 confirmed that richer households have comparatively smaller household size. The pattern of consumption expenditure showed that the level of consumption expenditure in urban areas is higher than the rural areas.

An analysis of quintiles in the report revealed that average consumption expenditure of the richest class in urban areas are more than three times higher than the lowest income class and double the same income class in the rural areas.

Similarly among total households 20 per cent of the highest income level in urban areas command income more than three times than the lower income level of 20 per cent of households.

The Pakistan Economic Survey 2005-06 analysed these numbers. According to the survey : Ã¢â¬ÅThe estimates indicate that consumption inequality in urban Pakistan is higher than in rural Pakistan. Moreover urban inequality increased fasterÃ¢â¬Â. The economic survey uses Gini Coefficient as a broad aggregative measure. The trend of the Gini values indicated that consumption inequality has increased during the 2001-05 period.

This is about all in terms of trend that one finds in the official papers reflecting on the relative strength of different classes. A senior economist in Islamabad said that of five quintiles, the first two fell in the lower class and upper three represent middle class of Pakistan. He said that upper class in Pakistan is so minisculeÃ¢â¬â hardly one per centÃ¢â¬â that it is not reflected in sample surveys.

Investigations revealed that most realistic estimates regarding the level of disposable income in different areas, districts and localities are available with marketing companies. These outfits need this data to fashion marketing strategies for their clients that include big multinationals specialising in consumer items such as Lever Brothers, Proctor and Gamble, etc.,

These outfits, however, carry out surveys and studies on demand for the clients and have no interest to share sometimes intriguing results with the public. The fact is that results are guarded as business secrets available only to those who are willing to pay for them.

Highest offices in the relevant ministries were contacted but probably the subject was too direct and in absence of readymade processed numbers, senior bureaucrats preferred to avoid commenting.

As there was no unanimity on definition of three classes it was not possible to project the numerical or relative strength of each class as percentage of PakistanÃ¢â¬â¢s population with confidence.

Ã¢â¬ÅI cannot say anything. In absence of credible data rough projections can be very misleading. May be, the government should initiate a study on the subject to better understand dynamics of PakistanÃ¢â¬â¢s economyÃ¢â¬Â, commented a senior banker approached by the paper for comments.


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## Neo

*Fabrication of power plant machinery*

By Engr Hussain Ahmad Siddiqui

INDIGENISATION is the core of the policy for power generation projects -2002. It includes local fabrication of power plants as an important feature.

Ã¢â¬ÅFinancial and Fiscal RegimeÃ¢â¬Â of the policy lays emphasis on use of indigenous machinery, equipment and accessories, explicitly stating: Ã¢â¬Å maximum indigenisation shall be promoted.Ã¢â¬Â

Consequently, the policy allows concessions from custom duties etc on imports related to power projects, either in public or private sector, only in case the goods are not manufactured domestically.

Furthermore, Ã¢â¬Åfeatures of the power policyÃ¢â¬Â highlight: Ã¢â¬Å to promote indigenisation, the local engineering industry will be encouraged to form joint ventures with foreign companies in order to develop power projects with a cumulative capacity of at least 2,000 MW by the year 2015.Ã¢â¬Â

Energy sector action plan approved by the president is also focused on optimal use of indigenous resources of fuel as well as that of machinery.

In practice, however, nothing concrete has been achieved in this direction. Unfortunately, the local industry has not come forward to avail the opportunity offered under the policy or to exploit new business potential in the emerging domestic power equipment market.

The Private Power and Infrastructure Board (PPIB) has not yet received a single proposal for developing the projects out of total capacity of 2,000 MW, which has been allocated to local industry under joint venture arrangements.

At the same time, the project sponsors and their engineering, procurement and construction (EPC) contractors are reluctant to place order for locally produced machinery for the respective power projects, resorting freely to imports of almost cent per cent required plant machinery items.

A reasonable engineering and manufacturing base for the production and supply of machinery and equipment for power plants, which is capital and skill intensive in nature, exists in the country.

The industry, in public and private sector, is currently in a position to achieve indigenisation level to the extent of 30-35 per cent by value and much higher by weight, for various power projects.

Many industrial units have the facilities to deliver mechanical and electrical equipment, at competitive prices and of international quality.

Their dozens of engineers and technicians have been trained in Germany, Japan and China to keep abreast with the latest manufacturing techniques and quality control procedures specifically related to power plant equipment.

The manufacturers have the qualification of prestigious American Society of Mechanical Engineers (ASME) stamps for the power boilers, pressure vessels and pressure piping. HMC has produced equipment for 210 MW thermal power plants installed in Karachi in recent past in collaboration with Hitachi (Japan) and Deutsche Babcock (Germany).

The equipment supplied by the domestic companies to thermal power projects, mainly to Water and Power Development Authority (Wapda) and Karachi Electric Supply Corporation (KESC), includes utility boilers, steam condensers, vessels and tanks, heat exchangers, pumps, cooling towers, ducts and piping, cranes and steel structure. In addition, a number of spare parts have been produced to meet emergency demands of power stations.

Equipment and components have also been supplied to hydroelectric power stations. The list of supplies include a variety of electrical equipment such as transformer, switchgear, control panels, cables etc., besides other mechanical equipment and accessories of a power plant.

Since each project has to be designed and engineered according to selected technology, configuration and site conditions, the technology for major equipment, however, has to come essentially from foreign sources.

To encourage use of goods produced in the country, the Central Board of Revenue (CBR) notifies, and regularly updates, the list of such machinery, materials and intermediary items, under the Customs General Order.

The latest CGO No. 10 of October 7, 2003, covers machinery and equipment, indicating comprehensive list of design and engineering services and machinery and equipment available locally for various industrial sectors including energy.

There are however structural weaknesses in the institutional and regulatory framework and other constraints that hamper promotion of optimal indigenisation of machinery and equipment.

Implementation of Power Policy 2002 is already a success story. Proposals for setting up as many as 45 projects, with a cumulative gross capacity of over 13,800 MW, at an estimated total investment of $13 billion, are either in the pipeline for construction or under active processing by the PPIB.

These include four thermal power projects of total 800 MW capacity that are in advanced stage and for which letters of support (LOS) have been issued, whereas letters of interest (LOI) have been issued for fast track projects, including capacity expansion of existing Independent Power Producers (IPPs), to add 1,200 MW total capacity to the system.

Many other new thermal, gas- and oil-based, power projects of cumulative capacity of 3,388 MW have already been allowed for setting up countrywide.

In addition, power projects based on Lakhra and Thar coal resources, as well as on imported coal, with cumulative capacity of 1,550 MW are under consideration. Likewise, it is planned to create a total of 5,720 MW capacity additional hydro power generation in private sector.

Consequently, various hydro projects are at different stages of processing. Expressions of interest (EoI) for another seven hydroelectric power projects, with a cumulative capacity of 1,620 MW, have recently been invited. Proposals have also been received recently by the PPIB for expansion of Tarbela hydel power station by 960 MW.

Effective and meaningful participation of local engineering industry is possible in these forthcoming power projects. Indeed the initiative has to come from the engineering industry, preferably on a collective basis.

There may be a need for financial and fiscal incentives to be extended to engineering industry in order to embark upon manufacturing of machinery for power plants of various types and technologies in a big way and on a sustainable basis.

The industry will also require balancing, modernisation, rehabilitation and expansion (BMRE) of its existing facilities, under a phased programme, to achieve optimal indigenisation of plant machinery.

The government should devise ways and means to promote indigenisation, within the provisions of the Power Policy, but without compromising the interest of the entrepreneurs.

These measures will aim at overseeing that not only a substantial share of orders for manufacturing and supply of machinery is obtained by the local industry, but also the opportunity to assimilate requisite modern technology is availed fully by the local industry.

On the other hand, it will provide momentum to the cherished goal of self-reliance, resulting in contributing largely towards import substitution, besides reduction in capital cost and variable operation and maintenance (O&M) cost of the plant and deriving numerous benefits of standardisation.

In view of the foregoing, it shall be desirable that the Engineering Development Board (EDB), which is mandated to strengthen engineering sector, may take initiative to suggest various measures to be adopted by the government for the promotion of indigenisation of power plant machinery. This should essentially be aimed at encouraging technology transfer arrangement, in accordance with the provisions of the Policy 2002, which in essence is investor-friendly.

The global power equipment manufacturers are large and powerful multi-national companies, and without the involvement of the government, they would not agree to the idea of progressive indigenisation of machinery.

This may be the most opportune time for the EDB to propose extending concessions and benefits to local engineering industry within policy framework, as the government intends to make extensive revisions in the Policy 2002 and plan to announce policy for development of renewable energy for power generation during this month.


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## Neo

Monday, November 20, 2006 

*UK to give $910m for madrassas, poverty*

* Total funding will cover the period between UK financial year 2008-09 and 2010-11

ISLAMABAD: Britain will provide financial assistance of $910 million to Pakistan to reduce poverty, reform madrassas and improve the delivery of health and sanitation services and clean water.

The commitment was made under an agreement called the Ã¢â¬ËLong Term Development Partnership ArrangementÃ¢â¬â¢ signed after one-on-one and delegation level meetings between Prime Minister Shaukat Aziz and his British counterpart Tony Blair at Prime MinisterÃ¢â¬â¢s House.

Under the agreement, the UK Department For International Development (DFID) will provide Pakistan $201 million in the UK financial year 2007-08. The total funding of $910 million will cover the period between UK financial year 2008-09 and financial year 2010-11. Much of the cash will go towards promoting President Gen MusharrafÃ¢â¬â¢s policy of Ã¢â¬Åenlightened moderationÃ¢â¬Â in madrassas that have been blamed for radicalising Muslim youths, including visiting Britons. The assistance under the agreement includes financial aid, technical cooperation for capacity development, support through international organisations or civil society organisations and other forms of development assistance.

The agreement aims at helping Pakistan meet the Millennium Development Goals for reducing poverty and strengthening financial management and accountability to reduce the risk of misuse of funds. Aziz later told a press conference the grant from the UK government would help Pakistan achieve the Millennium Development Goals. Blair told a press conference in Lahore that some $38 million would be released immediately to help tackle poverty in Pakistan.


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## Owais

*World Bank advises raising domestic saving *

ISLAMABAD (November 21 2006): The World Bank has suggested to Pakistan to focus on raising domestic saving, instead of relying on foreign saving ie international borrowing and FDI, to sustain its high economic growth through augmenting investment in physical and human capital and productivity increases.

Though Pakistan has seen an average growth of 6 percent for the last four years, the Bank has questioned how, with low domestic saving rate and low foreign direct investment, Pakistan would be able finance its rapidly growing economy in the medium term.

The World Bank report titled 'Determinants of saving in Pakistan' argues that if Pakistan wants to sustain its growth and increase its investment without paying increasing shares of income in interest or dividends, it has to finance this investment by raising its domestic saving rate.

It says that countries frequently rely on inflow of foreign savings ie capital or international borrowing, to meet investment needs. However, international borrowing can rise, or decline, depending on cyclical movements, exchange rates, external shocks, and a host of other factors. In the long run, reliance on foreign capital is also unsustainable as international liabilities erode the national income base, the report said.

Very few countries go without any international borrowing or lending in a particular year, and Pakistan is no exception. The difference between Pakistan and other fast growing economies like the ones in East Asia is that while inflow of foreign saving gave an initial boost to growth in these countries, domestic saving has been key in sustaining rapidly increasing domestic investment.

The report says: "The recent decline in household and public saving rates in Pakistan juxtaposed to increasing domestic investment needs in a fast growing economy suggest that unless saving goes up, economic growth will suffer.

To sustain its current growth momentum, without incurring the expenses of heavy international borrowing, Pakistan will need to reverse the current low (and declining) trend of domestic saving and resolve its geopolitical challenges in order to attract FDI.

Foreign direct investment could not fill the domestic resource gap even if it is doubled; hence, domestic saving is the only feasible source of extra funding unless Pakistan goes on an international borrowing spree with all of its consequences."

It says: "Saving rates have declined since 2003, despite strong economic growth in the country. Moreover, from a brief domestic resource surplus in the early 2000s, Pakistan is currently facing a domestic resource gap of around 3.5 percent of output. With a gross domestic investment rate of only 18 percent of GDP in recent years and a widening domestic resource gap, targeted growth by the government of 6 percent or higher is unlikely to be achieved."

Historical data for Pakistan place the national saving rate at around 14 percent of GDP, on average, for the period 1973-2005, and the domestic saving at 11 percent of output, on average, for the same period. While the national saving rate has been at comparable levels to the one in some of the fast growing East Asian economies, the domestic saving rate for Pakistan has been significantly lower. This suggests that net income and current transfers from abroad comprise a rather larger component in Pakistan's national saving than in the counterpart countries.

Moreover, the responsiveness of Pakistan's domestic saving rate to changes in the GDP per capita growth is lower than in the comparator countries. For example, a one percent increase in the income levels (measured by the GDP per capita in constant 2000 US$) increases Pakistan's domestic saving rate by 0.06 percentage points.

The estimated coefficient for Pakistan (5.52) is lower than the estimated ones for China (12.42), Indonesia (7.97), and Malaysia (7.55). This suggests that the elasticity of saving rate to changes in the level of income in Pakistan is smaller than in other fast growing economies.

The domestic saving rate in Pakistan has been around less than 12 percent on average for the last four decades, or almost three times smaller to the one in East Asia, for the same period. Second, despite strong economic performance, foreign direct investment (FDI), although improving, is low in Pakistan by regional and world standards.

The report says that East Asia has sustained high growth rates in the last decades, with a different magnitude of foreign capital flows in their domestic investment than the one in Pakistan. While the share of FDI in total investment has more than doubled since 1990 in Pakistan, it is still only at less than 7 percent of gross capital formation at present. This reflects low confidence of foreign investors in Pakistan, it added.

The report analyses that first, Pakistan's domestic saving rate is historically lower than the one of the fast growing Asian economies in absolute terms and when controlling for the level of economic development. Second, the domestic saving rate has considerably different structure in Pakistan from the one in the comparator East Asian countries, with corporate and public saving at significantly lower levels in Pakistan. Third, informal channels of saving are popular in Pakistan, and their economic significance (albeit difficult to quantify) could be as large as 2 to 4 percent of output.

Fourth, based on regression analysis, it has been found that demographic, financial development, fiscal, and economic growth variables are statistically significant determinants of Pakistan's domestic and private saving rates; hence, policy recommendations focus on these four factors.

Saving trends in Pakistan reveal cyclical patterns much like saving trends in the rest of the world. The domestic saving trend of Pakistan is marked by a notable increase in the early 1990s, from an average rate of 8 percent of GDP in the 1980s to 17.5 percent of GDP in 1991. High returns on the National Saving Scheme (NSS) instruments, especially over 1993-99, attracted individual and institutional deposits and explain the boost in saving.

Sectoral breakdown of Pakistan saving shows that private saving accounts for over 90 percent of national saving and preliminary data for 2005 place private saving at 12.5 percent of GDP. In comparative perspective, the private saving rate of China is three times the one of Pakistan, and the private saving rate of India is twice the one of Pakistan.

Household saving is the largest component of private (and domestic) saving in Pakistan and has accounted for about 11 percent of GDP on average for the period 1981-2005. Since its peak in 2003, which may well be due to official recording of flows that already existed, household saving has declined in both nominal and real terms.

Pakistan households save in conventional financial instruments such as various types of deposits, NSS instruments, mutual funds, GP fund, and cash. However, even if all forms of financial saving are accounted for, the financial saving rate of Pakistan is below 10 percent of GDP; and considerably lower than the one in East Asia (and especially China) and even India.

Although deposits of scheduled banks (stock) have been growing steadily in the last several years in Pakistan, their penetration is still low at around 40 percent of GDP, compared with 190 percent of GDP in China. There are 192 bank deposit accounts per 1000 people in Pakistan, compared to 1250 in Malaysia.

Corporate saving in Pakistan accounts for about 10 percent of private saving and 1.3 percent of GDP on average for the period 1981-2005. Compared to the fast growing economies of East Asia, and especially to China, the level of corporate saving in Pakistan is negligible. Observers attribute the rise of overall saving in East Asia precisely to a surge of corporate profits, which became a significant source of investment in several of the countries in East Asia.

Public saving accounts for around 10 percent of national saving in Pakistan, or 1.5 percent of output, on average, for the period between 1970 and 2005. Government saving witnessed an increase in 2004, which could be attributed to some improvement in financial management of government resources (expenditure management) and somewhat tightened fiscal discipline. Albeit positive since 1976, public saving is still in the neighbourhood of 3 percent of GDP, which is low when compared to the rate of public saving in East Asia.

Overall, in comparative perspective, saving rates in Pakistan are lower across the board than those in countries with similar per capita income. While the rate of household saving has been moderate for the last three decades (although still lower than the one in East Asia), corporate and public saving rates have been considerably lower in Pakistan than in the fast growing Asian economies.


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## Owais

*Cotton production target revised to 12.41 million bales *
ISLAMABAD (November 21 2006): The Cotton Crop Assessment Committee on Monday agreed to set production target at 12.41 million bales for the current season. The committee, which met under the chairmanship of Food and Agriculture Minister Sikandar Hayat Khan Bosan, reviewed the current cultivated area and production target.

The meeting was informed that the ginning out-turn, staple length and strength of the crop this season was reported better. The next review meeting would be convened in the first week of December.

The estimate includes 10 million bales cotton from Punjab, 2.3 million bales from Sindh, 0.103 million bales from Balochistan and 0.007 million bales from NWFP.

The meeting was attended by Secretary, Ministry of Textile Industry, Agricultural Development Commissioner Minfal, Joint Secretary (A/E) Minfal, Vice President, Pakistan Central Cotton Committee, Secretary, Agriculture Sindh & Balochistan, Director Crop Reporting, Agriculture Department, Punjab, and senior officers of Provincial Agriculture Department, TCP, PCSI, PCCC and representatives of KCA, Aptma and growers.


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## Owais

*March-2005 crisis: report being presented to National Assembly panel today *

KARACHI (November 21 2006): The much awaited foreign experts' investigation report on the Karachi Stock Exchange March-2005 crisis will be presented to the National Assembly Standing Committee on Finance and Revenue on November 21. This was announced by PM's Adviser on finance Dr Salman Shah while talking to a private TV channel on Monday.

He said the foreign experts in their briefing to the NA standing committee would point out the causes of the KSE March-2005 crisis. It is worth mentioning the SECP announced investigation regarding the KSE March-2005 crisis, in which the investors lost $13 billion. A US investigating team was hired to probe against the suspect involvement of a number of brokers in March crisis in July 2006 and the probing team issued notices to 12 brokers at KSE for their suspect involvement in the said crash. The brokers were directed to provide data of their transactions made prior to KSE crash.

The forensic team was given a three-month time to complete its investigation on the subject and present a comprehensive report before the NA standing committee on finance within the stipulated time.


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## Owais

*Nike ends Pakistani soccer balls deal *

KARACHI (November 21 2006): Sporting goods company Nike Inc on Monday said it stopped orders with its Pakistan-based supplier of hand-stitched soccer balls over labour concerns. The company said the decision follows the supplier's failure to correct significant labour compliance violations.

Nike said soccer teams and leagues sponsored by Nike will not be affected by the decision. The company, however, continues to source apparel in Pakistan.


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## Owais

*'6.5 percent inflation target to be achieved' *

ISLAMABAD (November 21 2006): Adviser to prime minister on finance Dr Salman Shah said on Monday current fiscal year target to keep the inflation rate down to the level of 6.5 percent would be achieved, and the food and beverage items' prices with eased supplies would drop in the next quarters.

Talking to a private TV channel, he said the core inflation in October remained at the last two years' lowest level due to stern monetary policy, while the headline inflation, ie, consumer price index (CPI), was stabilised because of keeping oil and gas prices unchanged by the government.

Gas price only once increased in July, he added. When quizzed about untamed food items' prices, Dr Salman Shah said rains and floods had hit fruits and vegetables supplies during the first quarter of the current fiscal year, which prompted volatility in prices.


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## Neo

*CDWP to consider Rs 150 billion projects on November 28 *

ISLAMABAD (November 21 2006): The Central Development Working Party (CDWP), which is scheduled to meet on November 28 under the chairmanship of Planning Commission Deputy Chairman Dr Akram Sheikh, will consider projects worth Rs 150 billion.

Official sources told Business Recorder that very important energy sector projects, including land acquisition for Kalabagh dam, Akhroi dam, Diamer-Basha dam, along with engineering design and preparation of tender documents for Diamer-Basha dam, installation of additional gas turbines at Guddu thermal power station (GTPS), Chashma hydropower project (184 MW) and detailed engineering and tender documents for Basho hydropower project would be considered.

The Planning and Development Division has proposed allocation of Rs 40 billion for Diamer-Basha dam; Rs 37 billion, including Rs 17 billion foreign exchange component, for acquisition of land for Kalabagh dam; Rs 188 million for gas turbines for GTPS; Rs 21 billion for Chashma hydropower project; Rs 90 million for Basho hydropower project; and Rs 26.7 billion for Akhori dam.

In the water sector, the meeting is expected to approve Rs 85 million for the construction of a complex for the offices of the Chief Engineering Advisor/Chairman Federal Flood Commission. Minister for Water and Power Liaquat Ali Jatoi will inaugurate the complex building on Tuesday.

Other projects, proposed by different ministries are: construction of hostel building for 200 persons at NTB complex, H-9, Islamabad (Rs 129 million); textile institute for construction trade, Mandra (Rs 78 million); establishment of vocational training institute, Sindh (Rs 1.924 billion); establishment of Pak-China friendship centre at Islamabad (Rs 650 million); and live telecast National Assembly and Senate proceedings (Rs 189 million).

Construction of 3rd and 4th floor at Collractorate of Sales Tax, Sales Tax House Karachi (Rs 63 million); construction of 64 apartments for Customs officers at FL-13, Clifton Karachi (Rs 339 million); construction of 12 number apartments in Ministers' Enclave, Islamabad (Rs 143 million); construction of eastern and expansion of southern sewage treatment plant, construction of sewage pumping station at Tulsi Das Apwa School, Hyderabad (Rs 444 million); preparatory analytical work for Punjab large cities project (Rs 60 million); and water supply and sanitation sector project-phase II (Rs 6 billion) would also come under consideration.

The meeting would discuss construction of various facilities at Expo Centre, Karachi phase-II (Rs 2.536 billion); National Program for Family Planning and Primary Health Care (Rs 39 billion); National Maternal New-born and Child Health Program (Rs 20 billion): and medical rehabilitation of disabled in earthquake hit districts (Rs 792 million).

Land acquisition for Rawalpindi by-pass (Rs 1.377 billion); construction of steel bridges in FATA (Rs 390 million): and enhancement of training capabilities of the construction machinery training institute, Islamabad (Rs 348 million), are also on the agenda.

The meeting would also consider 'Tawana Pakistan', school nutrition package for girls (Rs 6.525 billion); National Talent Scholarship Scheme (NTSS), phase-1 (2007-08) (Rs 310 million), establishment of cadet collage at Kohala (Rs 218.7 million), research for agriculture development program Rs 3.631 billion) and construction of roads under phase-III of NAS funded border security program in FATA (Rs 440 million).


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## Neo

*Development partnership agreement signed: UK doubles aid *

ISLAMABAD (November 20 2006): Pakistan and Britain on Sunday signed a 'Long-term Development Partnership Arrangement' to reduce poverty and achieving Millennium Development Goals (MDGs) in Pakistan through active partnership between the two countries.

The agreement was signed by Prime Minister Shaukat Aziz and British Prime Minister Tony Blair here at Prime Minister House, following the talks between the two prime ministers. Under the agreement, the British government will provide 480 million pounds in the next three years through the Department for International Development (DFID) of the UK.

The agreement will provide a long-term development partnership between Pakistan and Great Britain through a transparent framework for mutual accountability for implementation of the development partnership between the two countries.

Under the agreement, the development partnership between the two countries is based on a shared commitment to achieve the objectives to reducing poverty with the objective of achieving the Millennium Development Goals (MDGs) in Pakistan.

The agreement would ensure respecting relevant international human rights obligations, strengthening financial management and accountability, and reducing the risk of funds being misused.

The Pakistan government, under the agreement, would take effective steps to reduce poverty in line with the Paris Declaration (2005) and achieve high and broad based economic growth including the rural economy, while maintaining macroeconomic stability.

The agreement will also help Pakistan to take initiative so that by 2015 all children with special emphasis on girls and children in difficult circumstances have access to free primary education of good quality.

It will also help to improve levels of adult literacy by 2015, especially for women, and equitable access to basic and continuing education for all adults.

The agreement will also help to reduce gender disparities in education, and achieving gender equality by 2015, with a focus on girls' full and equal access in basic education of good quality.

It will also improve health services delivery, particularly in maternal and neonatal health, besides improving provision of clean water and sanitation services.

Specific arrangements for allocating and disbursing the development assistance will be decided in separate discussions. Under the agreement, the UK will also provide financial and technical co-operation for capacity development.


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## Neo

*Leather exports drop by 35 percent in first quarter *

KARACHI (November 22 2006): The exports of leather and its products from the country have witnessed a drastic decline of around $107 million during current fiscal year as the local industry has become uncompetitive from several aspects on the international front, trade sources told Business Recorder on Tuesday.

Sources said that the exports of leather and its made-ups declined by around $107 million or 35 percent to $194.6 million during (July-September 2006), compared to $301 million during the same period last year. They said the country is also failed to match the export figures of financial year 2004-05, where it stood at $221.8 million.

According to statistical details, the country exported leather around $61.7 million during the first three months of the current fiscal (July-Sept06) which is 17.5 percent less from fiscal year 2005-06, as the country had exported around $74.8 million leather during the same period last year.

Similarly, leather garments export from the country witnessed a straight decline of around 44 percent as it stands at $77.2 million during July-Sept06, while the country had exported $140.2 million leather garments during the same period last year, the sources said.

Likewise, leather footwear exports from the country also registered a downfall of 33.6 percent to $23.6 million during the under review period against $35.6 million during the same period last year, they added. Sources said the leather gloves export from the country slashed by around 35 percent to $26.2 million during July-Sept06 against the corresponding period last year where it stood at $40.5 million.

Industry sources said that leather products (eg handbags, wallets, belts and other accessories) exports were also decreased by 40 percent to $5.7 million during the first three moths of the current fiscal year against $9.6 million in the same period last year.

"The high cost of production is the main impediment in country's exports growth," said a leading leather garments exporter, adding the government should seriously pay heed to the exporters' grievances as it is focusing on the textile sector.

"The government has facilitated textile sector by giving a separate ministry to it and if we (leather industry) are given a separate government representative, the local industry would definitely flourish besides growth in exports," the exporter suggested.

He made the demand of Pakistan Leather Garments Manufacturers and Exporters Association (Plgmea), saying: "We (Plgmea) do not seek any research and development (R&D) facility from the government, what we demand is freight subsidy on export cargoes."

The pundits of leather industry have also pointed out that China is eating the Pakistan's share in the international export market besides other countries and it has emerged as the biggest leather and its made-ups exporter on the international front.

"Of an aggregate world's leather exports of $4.5 billion - $5 billion, China is currently enjoying around $2.1 billion chunk, followed by Turkey, India and Pakistan," said a Karachi-based exporter. He said Pakistan's leather and its made-ups are exported mainly to Europe, United States, Russia via Dubai and some Far Eastern countries.

Former Plgmea chairman Fawad Ijaz Khan has demanded of the government to provide incentives to leather industry and set up 'Leather Garment City' to the manufacturers and exporters so that they could carry out design-making, stitching, and packaging under one-roof. He said the export refinance rate, utilities' cost, transportation and labour wages are higher in the country and the government should address these issues immediately.

"Designs for the next year are being finalised these days and if the government intends to provide relief to the industry, it should provide it on urgent basis," Fawad Ijaz Khan stressed.


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## Neo

*'6.5 percent inflation target to be achieved' *

ISLAMABAD (November 21 2006): Adviser to prime minister on finance Dr Salman Shah said on Monday current fiscal year target to keep the inflation rate down to the level of 6.5 percent would be achieved, and the food and beverage items' prices with eased supplies would drop in the next quarters.

Talking to a private TV channel, he said the core inflation in October remained at the last two years' lowest level due to stern monetary policy, while the headline inflation, ie, consumer price index (CPI), was stabilised because of keeping oil and gas prices unchanged by the government.

Gas price only once increased in July, he added. When quizzed about untamed food items' prices, Dr Salman Shah said rains and floods had hit fruits and vegetables supplies during the first quarter of the current fiscal year, which prompted volatility in prices.


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## Neo

*Qatar, Singapore may allow labour quota for Pakistan *

*More than 150,000 people to get opportunity of overseas employment*

KARACHI: Pakistan has succeeded in winning support for its manpower exports to Qatar and Singapore in a major move to dispatch more than 150,000 Pakistanis for overseas employment, officials said.

They said the Federal Ministry of Labour, Manpower and Overseas Pakistanis held a series of meetings with the two respective governments and finally convinced them to allow quota for Pakistani labours in their countries.

Ã¢â¬ÅThe agreement with Qatar in this regard is scheduled for January 2007 during the state visit of Emir of Qatar Sheikh Hamid bin Khalifa Al Thani to Pakistan,Ã¢â¬Â said one of the officials who recently returned from Qatar and Singapore.

Ã¢â¬ÅQatar accepts Pakistani labours and issues visas on internal demand but a formal accord would allow a specific number of Pakistani labours and consistent visa policy.Ã¢â¬Â

Similarly, he said, talks with Singaporean authorities also made headway but the South East Asian state has not announced any exact timeframe to sign the accord.

Ã¢â¬ÅBut we are very much hopeful of the date within next one month. Developments on two different fronts would give almost 150,000 Pakistanis opportunity of overseas employment within a year.Ã¢â¬Â

The recent developments have lifted hopes of local operators, who were already rejoicing removal of ban on Pakistani labours by the Kuwaiti government earlier this month.

The officials and local operators believe that accord with Singapore and Qatar coupled with removal of ban on Pakistani labours by the Kuwaiti government may increase manpower export by 150,000 within a year.

Ã¢â¬ÅThe OEC (Overseas Employment Corporation) would soon call a meeting of local operators to brief them on the new developments to design a strategy,Ã¢â¬Â said the official.

He said the fresh move would not only generate overseas employment opportunities for Pakistanis but also open new avenues for local operators to capitalise on the developments.

Hundreds of thousands of Pakistanis have been flying abroad every year since early 1970s to get better employment opportunities. The overseas Pakistanis have been instrumental in managing good foreign reserves during the last three years and bridging the trade deficit through remittances.

The country faced more than $12 billion trade deficit in the last two financial years, which was offset to some extent by more than $8 billion remittances from overseas Pakistanis during the same period.

Kuwait and Qatar, which have been main importers of Pakistani manpower, however remained unpredictable during the last two years due to off and on ban on Pakistani labours and inconsistent visa policy.

However, the latest move appears to be lasting, overseas employment promoters said. Ã¢â¬ÅThe two countries have a potential of importing more than 150,000 Pakistani labours in a single year,Ã¢â¬Â said Hanif Rinch, Chairman Pakistan Overseas Employment Promoters Association (POEPA).

He said strategy of Arab countries to localise the labour input was the main reason behind the ban on Pakistani manpower in Kuwait and the trend had also caused serious decline in overall manpower exports from the country.

The cut in hiring of Pakistanis in Saudi Arabia and ban by Qatar, Kuwait and Bahrain on Pakistani manpower imports has emerged as threat to hit the permanent manpower export feature from the country.

During 2005 total 91,773 people flew abroad against 173,824 in 2005. This shows a negatives difference of 47.2 per cent in a single year and the gap has been on the rise in 2006.

The overseas employment promoters say declining trend in manpower export may affect the countryÃ¢â¬â¢s foreign exchange reserves negatively, as overseas Pakistanis have been one of the major sources behind the rise in forex reserves during last few years.


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## Neo

*IDEAS brings windfall for hotels *

KARACHI: The room occupancy rate of leading hotels has once again risen to 100 per cent owing to holding of the four-day International Defence Exhibition and Seminar (IDEAS) 2006 in Karachi.

About 997 foreign delegates are participating in the international exhibition whereas a great number of government officials and army high-ups are staying in the local hotels. Moreover, IDEAS organiser claims that about 2,600 defence professionals are expected to view the exhibition.

Hotel Marriot the conference venue of IDEAS 2006 has 210 rooms of which 80 per cent have been reserved by foreign delegates and exhibitors. 

Pearl Continental Hotel has 209 rooms of which 60 to 70 per cent have been reserved by the participants of the exhibition. 

Avari Tower has 209 rooms mostly occupied by foreign delegates who have come from 23 different countries of the world.

Besides, the room occupancy of other four and three stars hotel including Hotel Mehran, Regent Plaza and Carlton Hotel are also at the higher side.

Other hotels namely Days Inn, Hotel Farhan and Embassy Inn are also hosting to the exhibition participants.

The room rate of hotels has increased automatically as the result of surging demand.

Director Operation Rakaposhi Tours Syed Khaqan-ul-Asar told The News that hotels have increased their room rates by 50 to 70 amid surge in demand.

He said five star hotels normally charge Rs12,000 for standard room but they are charging Rs15,000 to Rs18,000 from the participants of exhibition.

Khaqan added that other four or three star hotels have raised room rates by Rs2,000 to Rs3,000 for the foreigners and VIPs attending IDEAS 2006, adding that some delegates could not find rooms in any hotel of the city on the occasion.

Rakaposhi Tours is the official coordinator for accommodation and transportation 

The business of Rent-a-Car has also geared up in the city. Besides cars, coasters are also provided to the exhibitors for transporting and touring the city. Khaqan-ul-Asar told that his company has arranged about 50 cars and 10 coasters from different transport companies for facilitating the foreigners.

Zeb Rent A Car services is charging Rs5,000 per day for latest model cars and Rs8,000 per day for air conditioned coasters.


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## Neo

*Gwadar port to start operation in March 2007 *

KARACHI: The Gwadar port would be operational in March next year after the completion of its channel dredging, said Minister for Ports and Shipping Babar Khan Ghauri here on Tuesday.

He was talking to reporters after inaugurating development work at Port Qasim and a briefing by the high officials of PQA.

He said the shipping protocol would be signed in December after which the proposed ferry service would start.

He said nine more terminals would be developed at the Port Qasim by 2010. About the twin islands issue, he said it was a joint venture between Emaar and PQA and that there should be no fears about it.

Earlier in the briefing, he was told that the development projects currently underway at the PQA Industrial Estate include construction of flyover at the junction of PQA main access road and National Highway.

A 113-kilometre road is being built to link different industrial zones. PQA access road is being dualized. A bridge is being constructed over Railway line. Water supply system is being laid along with installation of pump houses and construction of underground tanks to ensure efficient water supply.

A 114-kilometre-long storm water drainage is being built besides the construction of 153-kilometre sewerage system.

The projects also include a bridge over Pakistan Steel outfall channel and conveyor belt, a bridge over Pakistan Steel intake channel to serve as an alternate route for heavy traffic and construction of two additional customs gates and allied infrastructure. Besides, poles are being erected to ensure proper lighting at the roads.

With the completion of these projects, PQA will transform itself into a modern industrial port and a business hub, further accelerating industrial and commercial activities, which will help curb joblessness and bring the poverty level down.

With completion of infrastructure projects, a chain of commercial activities will be established, which will help local entrepreneurs with limited capital do business without any risk of loss.

The minister was informed that the PQA has recorded 11 per cent average growth in cargo handling over the last five years. The port accounts for more than 40 per cent of sea-borne trade of the country.

The PQA reduced tariffs by around 16 per cent in 2005 in order to cut cost of doing business. The authority is undertaking many projects at a cost of Rs11 billion, one of which is deepening of the channel to accommodate all-weather 14-metre draught vessels.

The officials told the minister that the authority aimed to focus on cost recovery rather than profit maximisation and reduction of cost of doing business by improving trade logistics to international standards.


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## Neo

*Businessmen see positive impact on economy: IDEAS 2006*

KARACHI, Nov 21: The business community sees the defence exhibition in a positive light. They feel that the mega event Ã¢â¬ÅIDEAS 2006 PakistanÃ¢â¬Â will open up new avenues for boosting civilian economy and go a long way in improving the countryÃ¢â¬â¢s image.

They, however, gave mixed reaction to holding of the event at the venue in the middle of the residential area. They think that the main problem is traffic mess caused by closure of main arteries, digging up of roads and ongoing construction work all over the city. Besides, security measures taken to ensure a hassle-free movement of top military officials of Pakistan and foreign countries, delegates and guests to the event venue also created problems for the general public.

However, market observers believe that the exhibition of defence related items give an impression worldwide that Pakistan is interested in displaying its military muscles and building its image as a well-positioned military power. In sharp contrast, common man face stark realities like lack of basic facilities, water, power, education followed by rising poverty, democratic norm, political turmoil, etc. Dawn tried to solicit views from the businessmen on the holding of IDEAS 2006 and its impact on civilian economy.

Site Association of Industry Chairman Ameen Bandukda believes that this kind of event improves countryÃ¢â¬â¢s image and gives an impression to foreign investors that Pakistan also enjoys an edge in hi-tech engineering and its related sectors. Ã¢â¬ÅThis kind of exhibition lures foreign people to enter into business deal with local entrepreneurs, besides giving a good impression about improved security in Karachi.

He thinks that the location (Expo Centre) is ideal but security measures for the VVIPs create problems for the general public. The government should introduce such security measures in which roads and passages remain open for the people.

Ã¢â¬ÅI think helicopters could be used in bringing the VVIPs to the venue,Ã¢â¬Â Mr Ameen said, adding that the government could also think of shifting the venue outside the city in order to avoid disturbance in the city.

He expressed surprise over the closure of educational institutions in the city. Ã¢â¬ÅNowhere educational institutions are closed for holding an exhibition.Ã¢â¬Â

Korangi Association of Trade and Industry Chairman Masood Naqi says that countryÃ¢â¬â¢s civilian economy benefits most when such huge number of foreigners land in the city. Ã¢â¬ÅActivities such as room occupancy of hotels, airline business, transportation, etc., thrive on such occasion and the government gets taxes and duties also. Even foreigners bring foreign exchange and spend them while shopping and purchasing of some kind of material in the exhibition.Ã¢â¬Â

Ã¢â¬ÅHolding of such event of world repute is a good step. At least the world knows that Pakistan also excels in other field,Ã¢â¬Â he said, dispelling the impression that such events cause traffic problems only in Karachi. Ã¢â¬ÅI have witnessed many grand events all over the world where traffic problems do occur. Even sometime one cannot find a taxi,Ã¢â¬Â he said, adding that improvement in traffic management could help prevent big traffic problems in the city on such occasion.

Mr Naqi was of the view that the Expo Centre was not the right place for such events. These kinds of events should be held 40-50km away from the city in view of lack of infrastructure and proper handling of traffic load.

Due to inadequate infrastructure for free flow of traffic, the government had to close educational institutions on Tuesday, he added.

F.B. Area Association of Trade and Industry Chairman Masroor Ahmed Alvi said that economies of many countries relied on holding big events which generated economic activities in transportation, airline, hotel business, etc. These kinds of events in Karachi also boost civilian economy, but ultimately turn out to be a problem for the common man because of improper traffic management system.

Ã¢â¬ÅCommon people are more concerned about their own economy. Exhibition or no exhibition, they have to go to their work and traffic disruptions make life more difficult for them,Ã¢â¬Â he said.

He said the event should not be shifted outside Karachi. Ã¢â¬ÅThe Expo Centre is the right place, but traffic management needs to be improved.Ã¢â¬Â


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## Neo

*Pakistan, US agree on mechanism for dispute settlement: Paving way for signing BIT*

ISLAMABAD, Nov 21: Pakistan and the United States both have softened their stand over their proposed Bilateral Investment Treaty (BIT) for early signing of the much delayed pact.

Official sources told Dawn on Tuesday that the United States has eventually accepted that the "judicial and legislative actions" of Pakistan should not be allowed to be challenged in any international court of law.

The US side, they said, have conceded to differentiate between the "bad faith and the error of judgment" and that the decisions announced by superior courts of Pakistan will not be challenged without any legitimate justification.

In return, Pakistan has accepted that the treaty will be applied with retrospective effect, meaning that any thing pertaining to the existing American investment could also be challenged.Pakistan, in this regard, has assured the US government that it will be obligatory for Pakistan to give compensation to the US investors in case of their dispute, which has not been settled. One of the cases in point was the dispute that erupted few years ago over the opening of a US restaurant chain--McDonald in Lahore.

Sources said that Pakistan has also subdued to American pressure to accept additional forums other than International Centre for Settlement of Disputes (ICSD) to deal with arbitration clauses. The US side maintained that since a number of rules of ICSD were needed to be upgraded, other centres for dispute resolution should also be considered.

The US side was insisting to have more than one international forum to settle investorsÃ¢â¬â¢ disputes, while Pakistan wanted only the ICSD. Also, Pakistan wanted the US investors to exhaust the local remedy in Pakistani courts before opting for any international forum in case of any dispute.

Pakistan had also argued that there will be a wastage of time and money to approach other dispute resolution centres and that let the ICSD alone be approached in case of any dispute. "But we have now given up this stance and all these issues could pave the way for early signing of the treaty", a concerned official said.

However, he said he was not in a position to give any tentative date for the signing of the much delayed BIT.

He said a decision has also been taken that all the rounds of talk--that have so far held between the two sides--will be made part of the treaty while interpreting any dispute in any international court of law.

"This will be termed as the negotiations history at the time of any dispute before any court of law", the official said claiming that a "major hurdle" in the way of signing the treaty has been removed.

But the US Assistant Secretary of State for South Asian and Central Asia Mr Boucher when visited Pakistan earlier this month had said that there were some "serious technical problems" which were blocking the signing of the treaty.

Another source said that Pakistan had succeeded in convincing the US officials to change their draft law on BIT for signing of the proposed treaty. "In many previous rounds of talks, the US side used to say that since this draft on BIT has been approved by the American Congress, there could be no change in it. But eventually they (Americans) had accepted our point of point on it," he said.

"We had told the Americans that if they were coming with a prepared mind to continue insisting on the acceptance of draft law approved by their Congress, then we are afraid it would not be possible to sign this treaty," he said.

Both sides, he said, have conceded to remove their differences over BIT and that one should now hope that it will be signed in the near future. Nevertheless, he too did not like to give any timeframe for the signing of the treaty.

Earlier, the United States and Pakistan exchanged their "Non Papers" as was proposed by US Ambassador to Pakistan Ryan C. Crocker before holding a final round of talks to conclude the treaty.Mr Crocker believed that there was a need for holding "informal talks" in which non papers should be exchanged in order to work out differences over the draft of the treaty, earlier approved by the Bush administration.

Sources said Prime Minister Shaukat Aziz, while presiding over a high level meeting recently had expressed his concern over the delay in signing the treaty. He said that both sides should hold their final round of talks to decide the issue. Foreign Secretary Riaz Mohammad Khan had also proposed holding of the final round of talks during the meeting.

The US side had also linked the signing of BIT with the inking of a Free Trade Agreement (FTA), which was being sought by Pakistan more vehemently in order to have new concessions for the country's products into the United States.

It is believed that the proposed BIT would largely benefit the American investors wishing to invest in Pakistan, while FTA would be more helpful to Pakistan.


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## Neo

*Pakistan gives transit facility to India *

ISLAMABAD:22 Nov, 2006: India has been allowed by Pakistan to use the Karachi port for trading with Afghanistan. 

According to foreign office spokesperson Tasneem Aslam, Afghanistan will also be able to export items to India through Pakistani territory. 

Visiting India last week for the Second Regional Economic Cooperation Conference on Afghanistan, Kabul's Foreign Minister Rangin Dafdar Spanta had said that Pakistan would soon provide India with transit trade facilities to Afghanistan. 

Analysts say because of the unstable India-Pakistan relations, Islamabad has allowed India transit facility to Afghanistan only on a case-to-case basis while ensuring that Indian exports to Afghanistan do not hit its commercial interests. 

Indian wheat was transported through Pakistan to Afghanistan during the Taliban regime. 

India has for long demanded that Pakistan allow the use of the Wagah border in Punjab for trade while Pakistan wants India to trade through the Karachi port. 

http://timesofindia.indiatimes.com/N...how/528076.cms


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## Neo

*New industrial zone being set up at Uthal*

QUETTA: Balochistan Minister for Industries and Commerce Mir Abdul Ghafoor Lehri has said that a new industrial zone is being established at Uthal some 100 kilometres away from Karachi on RCD Highway.

In a statement issued here on Tuesday, he said that the Industrial Zone is being constructed at Zero Point at Uthal, for which infrastructure is being improved.

He said that work on Gwadar Industrial Zone has been completed and Marble City in Gaddani (GMC) is successfully nearing completion.

The minister maintained that the province would soon turn into a commercial and economic hub, which would raise the living standard of the people.

The minister said that the government would extend all possible cooperation to the investors in GMC. The federal government has fulfilled all its promises regarding development of Balochistan. Uplift schemes worth billions of rupees would bring about prosperity and their fruits would soon reach people after their completion, he said.


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## Neo

*ADB Lending Pakistan $600 Million To Lure Private Investment *

KARACHI -(Dow Jones)- The Asian Development Bank said Wednesday it will lend $ 600 million to Pakistan to help increase private sector participation in infrastructure development.

The bank said the loan is intended to attract private sector investment in power, transport and water subsectors by establishing a comprehensive framework that will address key policy, legal, regulatory, and institutional constraints to private participation in these areas.

"The ADB program will support the (Pakistan) government in creating an environment that encourages and supports private participation in infrastructure, rather than building the needed infrastructure exclusively with public funds," a bank statement quoted Jurgen Conrad, a senior ADB financial economist, as saying.

"Given the scarcity of financial resources, this is the only feasible approach for addressing the mismatch between limited supply and increasing demand for infrastructure," he added.

The bank said its Private Participation in Infrastructure Program for Pakistan is comprised of two parts, the first of which involves a $400 million loan from ADB's ordinary capital resources. That loan carries a 15-year term, including a grace period of three years, it added.

The remaining $200 million will be given to continue the reforms after successful implementation of the first phase, the bank said.

The bank said several Pakistani government agencies have started to build strong pipelines of projects to be tendered to the private sector, and the program will provide a mechanism for arbitration to protect investors, and standardize bidding procedures and documents to increase transparency.

In recent years, Pakistan has substantially raised public spending on infrastructure development to cater to the needs of a growing economy.

In the current fiscal year that began July, the Pakistani government has allocated PKR415 billion for infrastructure development, up sharply from PKR272 billion in the previous year.

The economy is projected to grow 7% in the current fiscal year, surpassing last year's 6.6% growth. 

http://www.nasdaq.com/aspxcontent/Ne...INE000540.htm&


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## Neo

*China, Pak set to sign many agreements during Hu`s visit *

Beijing, Nov 22: China today signaled its plan to sign "unprecedented agreements" with Pakistan during President Hu Jintao's upcoming visit, but kept mum on the possibility of a deal to supply up to six nuclear reactors to Islamabad. 

"During President Hu's four-day state visit to Pakistan, China is expected to sign unprecedented agreements with the South Asian country," the state-run Xinhua news agency reported. 

However, the report did not say whether China will sign an Indo-US-style civilian nuclear agreement with Pakistan for the supply of six nuclear reactors. 

China and Pakistan will ink a five-year development programme for bilateral economic and trade cooperation during Hu's visit which will be the first-ever agreement for China to sign with another country, the report said. 

Hu and his Pakistani counterpart, Pervez Musharraf, will attend the inauguration ceremony of the Haier-Ruba economic zone in the eastern Pakistani city of Lahore, the first of the eight economic zones to be established outside China and mainly managed by Chinese companies. 

"The above-mentioned achievements are major breakthroughs by both China and Pakistan in seeking new modes and approaches in their economic and trade cooperation," the report quoted unnamed sources as saying on the eve of Hu's visit to Islamabad, the first by a Chinese President in a decade. 

Chinese government has already announced that it will sign other agreements with Pakistan in areas such as trade, culture and education during Hu's visit. 

http://www.zeenews.com/articles.asp?aid=337226&sid=NAT&ssid=


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## Neo

*Oracle Pakistan announces expansion programme *
Monday November 20, 2006 

LAHORE: Oracle Pakistan on Wednesday has announced its expansion programme with the aim of strengthening its presence in fast growing cities of the Asia Pacific region, including Lahore. 

While addressing a press conference, Regional Director for Oracle South Asia Growth Economies (West) Samina Rizwan said that Pakistan is experiencing unprecedented growth and emerging companies in Pakistan's high-growth cities provide the foundation upon which Pakistan's economic success will ride. 

"We want these companies to have lots of choice in world-class software to meet their growing information needs. Easy access to affordable technology solutions, world-class support and services to manage their business and IT infrastructure are critical to their success," she added. 

According to her, they are already working with such companies across the country and they have now further strengthened on the ground support from Oracle and their partners. 

Oracle's Life Time Support Policy is an example of how customers not only have the best products to run their business, they also enjoy unrivalled product support and rights to further release to evolve their systems and stay competitive in this dynamic marketplace. Oracle has expanded its presence into more than 45 high-growth cities across the Asia Pacific region. The multination companies, including Oracle Corporation, have noticed fast growing economy of Pakistan and decided to launch their operation. 

She was of the view that many areas, including textile, sugar, rice, leather, fisheries, gems, agriculture, engineering, retail and services, need world-class technology because Small and Medium Enterprises (SME) constitutes 90 percent of the enterprises in Pakistan and employ 80 percent of the non-agro labour force. Its share in annual GDP of Pakistan is approximately 40 percent, she added. 

Responding to newsmen, Samina said that the education in IT needs great improvement, particularly the quality of education in project management, communication skills.


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## Neo

*All set to finalise investment modalities on Hu's arrival *

ISLAMABAD (November 23 2006): Islamabad is all set to finalise modalities of investment especially in railway, communication and port sectors with Beijing on the arrival of Chinese President Hu Jintao on Thursday.

The government anxiously anticipates unprecedented Chinese investment in a number of key areas, especially mega projects at Gwadar port, rehabilitation and realignment of Karakoram Highway and laying of rail track to connect the two friendly neighbouring countries.

It is widely believed that Hu Jintao's visit to Pakistan is bound to further promote bilateral co-operation in various fields and give new impetus to the Sino-Pak friendship.

"Although, I don't have any specific meeting in schedule with the Chinese authorities but we do hope a great investment from our brethren country for the development of our railway sector," Minister for Railways Sheikh Rashid Ahmed told Business Recorder on Wednesday.

Pakistan and China are planning to establish a rail link from Pakistani city Havelian to Chinese Kashgar city. "The government has earlier assigned a German firm to undertake the feasibility of the rail link. Following the special directives of President Pervez Musharraf we have also asked a Chinese firm to prepare feasibility study of the said route," Sheikh replied.

The minister said the feasibility study would be ready in a year, assuring that the government is committed to materialise the plan as soon as possible. Likewise, two Chinese firms have applied for operating bullet-proof train between Rawalpindi and Lahore. China has rich experience in railway sector and it can help Pakistan in improving the railway infrastructure besides investing in new mega projects, he said.

To assist Pakistan for developing the road network, China is very keen to rehabilitate and realign the quake-battered Karakoram Highway. Pakistan and China have signed a Memorandum of Understanding (MoU) early this year for re-alignment of KKH at an estimated cost of Rs 18 billion.

Sources said that both the countries are expected to take an overview of the project and will discuss other issues pertaining to KKH, a symbol of Sino-Pak lasting friendship. The two countries have already launched a cross-border bus service on two routes one from Gilgit to Kashgar and other between Sust and Tashurgan.

Furthermore, it is reliably learnt that the government is seeking help of the Chinese companies to develop a special industrial city at Gwadar besides setting up a big refinery at Gwadar port. It is learnt that a Pakistani high-level delegation had visited Beijing some days back to do some ground work prior to the visit of Hu Jintao.


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## Neo

*Financing sought from World Bank and ADB for NTC project *

ISLAMABAD (November 23 2006): Pakistan has sought financing support from a consortium of the World Bank, Asian Development Bank (ADB) and Japan Bank for International Co-operation (JBIC) for $5-6 billion National Trade Corridor (NTC) project. A six-member delegation of the consortium held a meeting with the policy makers here the other day to discuss broader outlines of the project.

Planning Commission Deputy Chairman, Dr Akram Shaikh led the Pakistani side during the meeting. He was assisted by the senior officials of the ministries of Port and Shipping, Communications, Commerce and other related departments.

The donors' delegation is currently visiting Pakistan to asses its needs for setting up quality infrastructure of roads, trains and ports for establishing NTC.

Sources said the consortium representatives were given a detailed presentation on NTC project, covering its significance for Pakistan, cost and period of completion.

NTC is the part of Pakistan's ambitious plan worked out to establish a strong base for redesigning its trade links with the regional players, besides providing them a transit facility for their bilateral trade.

Pakistan had conceived the idea of NTC sometimes back and keeping in view strategic advantage over other countries of the region decided to complete the project on priority basis. Other than NTC, energy corridor is also the part of the plan.

Since it's a mega project, Pakistan is looking for financial support from the consortium of World Bank, Asian Development Bank (ADB) and Japan Bank for International Co-operation (JBIC).

Sources said Pakistan needs a basic infrastructure of the international standard to establish a link in different parts and make sure that tradable items are transported from one part to another quickly and without much hassle. They said the authorities were also fully aware that poor infrastructure was adding to the cost of its tradable items besides delaying their supply to the market.

One member of the official team told Business Recorder on Wednesday that the consortium representatives were informed that Pakistan will have a strong road network to provide the transit facility to the regional countries to help them enhance trade with each other.


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## Neo

*Government reluctant to release province-wise poverty data *

MULTAN (November 23 2006): The federal government is reluctant to release the poverty figures of federating units, Sindh, Balochistan, NWFP and Punjab to avoid backlash from the smaller provinces, sources told Business Recorder on Wednesday.

Although, the federal government had released the national data in the Economic Survey 2005-06, claiming reduction in poverty from 34.6 percent in 2001 to 23.9 percent during 2004-05, so far it has not released the province-wise poverty data, they said.

The Center for Poverty and Income Distribution (CPRID) has already forwarded its analysis to the Planning Commission some two months ago on the vital subject, but the relevant authorities are not releasing these figures officially, the sources said.

The Planning Commission high-ups when contacted regarding any plan to release the official poverty data related to four provinces, no one was willing to talk on the subject obviously knowing the intentions of the ruling elite, which has no plans to release these figures in near future. Instead of sharing the information, one official replied rowdily, "You should not find negative things for reporting."

However, the sources claimed that the government did not want to plunge into a new controversy on poverty figures related to provinces hence they do not have any plan to release these figures by the end of current financial year.

On the other side, the World Bank estimates tabled before the government showed that the poverty level was almost stagnant in Punjab during 2000-01 and 2004-05 as it stood at 30.6 percent in 2000-01 and 29.5 percent in 2004-05.

In 2000-01, Punjab's urban poverty was 22.8 percent and 33.8 percent in rural areas, which stood at 21.2 percent in urban areas and 33.4 percent in rural areas in 2004-05.

The poverty in Sindh declined significantly from 37.4 percent in 2000-01 to 22.4 percent in 2004-05. The poverty in urban Sindh was 20.6 percent in 2000-01, which declined to 13.8 percent in 2004-05. The rural poverty in the province was 48.1 percent in 2000-01, which was reduced to 28.9 percent in 2004-05.

The WB estimates show the overall poverty in NWFP was 42.3 percent in 2000-01 with urban poverty of 29.9 percent and rural poverty 44.4 percent, which reduced up to 39.3 percent in 2004-05. The rural poverty in NWFP is 41.9 percent while urban poverty is 26.1 percent in 2004-05.

The bank estimates reveal that the overall poverty in Balochistan was 37.1 percent in 2000-01 with urban poverty of 27.4 percent and rural poverty 37.1 percent. The overall poverty reduced to 32.9 percent in 2004-05 with urban poverty of 21.5 percent and rural poverty of 35.8 percent in the province.

http://www.brecorder.com/index.php?id=500170&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Punjab plans to develop SME industries *

SIALKOT (November 23 2006): The Punjab government has initiated an action plan for the development of small and medium enterprise (SME) industries for ensuring strong industrial base in major towns, including Sialkot. Sources told Business Recorder here on Wednesday that the step had been taken to further accelerate the pace of export activities in the province.

Under the plan new industrial estates would be established near Gujranwala, Narowal and Pasrur. The proposed industrial estates would be developed on the pattern of Sunder industrial estate (Lahore) where all modern facilities would be ensured, the sources added.

They said special attention had been accorded to bring about the industrial revolution through setting up large-scale industries, including agro-based industries in the province. The government had set aside eight billion rupees for extending loan facility to the SMEs and newcomers for upgrading and setting up their industrial units.

In addition to this, steps had already been taken for facilitating businesswomen to promote women entrepreneurship in the province, they said. The sources claimed that adequate steps had also been taken to diminish the financial problems being faced by the businessmen engaged with small and medium industries as well as for removing the hitches, which were hindering the process of setting up of new industrial projects.

Besides, they said, the government was taking necessary steps to motivate the business community and manufacturers that should divert their attention on producing non-traditional products with innovation for fetching foreign exchange through the export of non-traditional products because there was a great demand of non-traditional products globally.

The government would provide all facilities, including financial assistance to the willing persons for manufacturing non-traditional products, they added. They said the government was also providing loan facilities to expand the agro-based industries and dairy development, engineering and information technology in Punjab.

The government was mobilising all available resources for motivating and attracting Overseas Pakistanis and foreign investors to invest in export processing zones, especially in Sialkot and Gujranwala.


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## Neo

*'Rolls-Royce Phantom' debuts in Pakistan *

LAHORE (November 23 2006): Rolls-Royce Motor Cars on Wednesday opened its first showroom in Pakistan at Lahore and announced to establish its outlets also in Karachi and Islamabad. Dewan Motors has been appointed as an exclusive representative of the motorcar company in Pakistan.

Farooq Mustafa, President and Chief Operating Officer of Dewan Motors revealed this while briefing newsmen. Frank Tiemann, Manager, Corporate Communications, Europe and Middle East, Rolls Royce Motor Cars, Axel Obermuller, Managing Director Europe and Middle East Rolls Royce Motor Cars, Dewan Yousaf Farooqui, Chief Executive Officer of Dewan Motors were also present on the occasion.

Farooq Mustafa said that this partnership has opened the last chapter in our relationship with prestigious BMW Group, having already launched the BMW and Mini Importer ships. Dewan Group through Dewan Motors has again taken the lead in bringing the most successful premium automobiles in the world to the emerging Pakistan's economy.

About his company, he said that Dewan Farooque Motors, the first company of Dewan Group- Automotive Operations, opened its doors for business in April 1999 and in short span of seven years, we have grown to seven companies. The entry of Rolls-Royce in the Pakistan automobile market reflects the rapid economic growth taking place in the country, he added.

Speaking on the occasion, Axel Obermuller, Managing Director Europe and Middle said that Rolls Royce Motor Car that has capacity of producing 1000 units per year, produced 796 cars during 2005 and like to meet the target of 800 cars world-wide.

He also highlighted the company's history and salient features of the current model. As many as 5.5 million cars are produced annually out of which Rolls Royce has share of 800 cars because every car is manufactured on individual order basis. The car engine and chassis is standard while rest of car is customised and manufactured as per requirement/desire of the customer, he added.

He further said that Rolls Royce currently has eight dealers in the Middle East region; in Abu Dhabi, Bahrain, Dubai, Doha, Jeddah, Kuwait City, Lahore and Riyadh. The Rolls Royce dealers have been increased to 76 in the world, he added.


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## Neo

*Govt acts to put PIA back on track*

ISLAMABAD, Nov 22: The government has asked the management of Pakistan International Airlines (PIA) to make full disclosure of its financial position and future business plans as a pre-condition for allowing the airlineÃ¢â¬â¢s restructuring.

Adviser to the Prime Minister on Finance Dr Salman Shah told reporters here on Wednesday that many factors, including oil prices and other structural problems, were responsible for the current financial crisis faced by the national flag carrier.

He declined to comment on measures being considered by the government for the restructuring of the corporation, which continues to suffer on an average Rs1 billion a month, but said it was PakistanÃ¢â¬â¢s national asset and would be put on a sound footing very soon. He said the airline had a big market and there was no reason why it could not be made a profitable entity.

He did not say how much public money would have to be injected to bail out the company whose total losses exceeded its assets by more than Rs22 billion.

Sources said the government had made up its mind to sell some assets of the PIA Investment Limited (PIAL), including the Roosevelt Hotel in New York whose majority shareholding came to PIA recently in a deal with a Saudi prince.

Secretary Finance Tanveer Ali Agha said the government could not provide guarantees or inject money unless the company made full disclosures of its financial position. He said a restructuring package would hopefully be prepared in consultation with PIAÃ¢â¬â¢s financial advisers. This would include relief on loans in the kind of interest and repayment restructuring.

He said fuel price was one of the reasons, but other structural problems were to be blamed more and added that several other airlines were earning profits or were able to break even despite facing similar fuel price trend. He said the corporation had submitted its restructuring plan to the government and the finance ministry had also appointed a financial adviser to examine it, adding that a bail-out package would be based on future business plan of the company.

The weak financial health of PIA came to light recently when its internal auditors said conditions indicated the existence of a Ã¢â¬Åmaterial uncertainty which may cast significant doubt about the corporationÃ¢â¬â¢s ability to continue as a going concernÃ¢â¬Â.

The corporationÃ¢â¬â¢s chartered accounts Anjum Asim Shahid Rahman and Ford Rhodes Sidat Hyder & Co wrote in their note to the half-yearly report that the corporation incurred a gross loss of Rs74 million and a net loss of more than Rs6.1 billion during the half year ended June 30, resulting in accumulated losses of over Rs17.9 billion of the balance sheet date.

The corporation's current liabilities exceeded its current assets by Rs20.326 billion, the auditors said. They said due to lack of adequate audit trail to support the carrying value of inventories at moving average costs as result of problems with the inventory management system, they could not verify the valuation of capital spares and consumable stores and spares with carrying value of more than Rs3.7 billion and over Rs2.4 billion, respectively.


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## Neo

*Pakistan may import 2m bales of cotton*

KARACHI, Nov 22: The country may have to import around two million bales of cotton even after harvesting the estimated 12.7 million bales during the current season 2006-07.

The flow pattern of phutti (seed cotton) from fields to ginneries so far indicates that the crop size would be around 12.5 million bales because Sindh crop is running short and Punjab is little better than last year.

The textile industry believes that cotton demand this year would be over 14 million bales and this will create a gap of around 1.5 to two million bales between demand and supply. Consequently, besides importing long staple variety the industry would also have to import substantial quantity of regular quality cotton to meet its demand.

Industry sources expressed resentment over governmentÃ¢â¬â¢s attitude towards the problems being faced by the largest industrial sector of the country.

Ã¢â¬ÅWe have failed to understand the mindset of policymakers towards problems confronted by the textile industry which is the major source of foreign exchange earner as well as job provider in the country,Ã¢â¬Â lamented former Aptma chairman Anwar Tata.

He said that the policymakers promote the view that the industry should learn to operate without official support but they fail to explain how to conduct business if it has to pay 14 per cent mark-up on its capital goods as well as working capital after getting the same at four per cent when BMR was being carried out about five years back.

Mr Tata was also critical about sudden decision for removing polyester fibre imports from DTRE and asking importers to pay 6.5 per cent duty.

According to official figures, around 6.807 million bales have been processed up to November 15, 2006 by the ginneries in both the cotton growing provinces of Sindh and Punjab. This is 0.9 per cent or 6,013 bales higher over the corresponding period last year.

However, slow phutti arrival from Sindh cotton fields is an indicator that the estimated production at around 12.7 million bales would be hard to achieve. Consequently, it is being privately estimated that raw cotton production during 2006-07 would remain around 12.5 million bales.

During the period under review cotton production in Sindh remained 13.23 per cent lower at 1.480 million bales as against 1.706 million bales recorded in the same period last year.

Despite the fact that arrival of phutti in Punjab was slightly better and up to Nov 15, 2006 around 5.327 million bales were produced or 4.55 per cent higher over 5.095 million bales recorded in the corresponding period last year, but it is expected that the arrival would flatter out in due course, particularly after first picking.

As a result of this prices of raw cotton in the domestic market are being recorded at higher level and are currently in the range of Rs2400 and above per maund.

It is interesting to note that fairly huge stocks of unsold cotton of around 2.078 million bales are also lying with the ginners but the underlying sentiment in the cotton economy as a whole is of depressing and uncertain as most of the textile units are reported to be faced with financial crisis.


----------



## Neo

*CDB investment to build Pakistan's economic infrastructure, Salman told *

ISLAMABAD (updated on: November 23, 2006, 21:55 PST): A high-level delegation led by Lie Kegu, Vice Governor, China Development Bank (CDB) called on Dr. Salman Shah, Adviser to Prime Minister on Finance, Revenue, Economic Affairs and Statistics here on Thursday.

Welcoming the delegation, the adviser said that Pak-China economic co-operation will greatly contribute to economic development in both the countries. He particularly mentioned the development opportunities of infrastructure both urban and rural in Pakistan. He also pointed out that the economic co-operation between the two countries would be based on the partnership between the corporate and private sectors of both countries with the government playing a leading supporting role.

He said that Pakistan would welcome Chinese companies to invest in different sectors of Pakistan inline with the five year economic and trade agreement. He said that Pakistan has a great potential for growth and development and now it should be our objective to create an environment to fully achieve the potential.

The Chinese vice governor appreciated Pakistan's rapid economic development in the recent years. He said that the China Development Bank would invest in Pakistan especially in building up the economic infrastructure and industrial development adding that China would also provide necessary financial support in the sectors of industry, services, agriculture, healthcare and education. He said that the business relationship between the two countries should be further developed and strengthened.

The two sides agreed to quickly set up the Joint Investment Company soon after the signing of MoUs on Friday between the two countries. They emphasised on evolving an efficient working mechanism so that the project should start as early as possible. The two sides agreed that Pakistan and China who have already developed a joint working group would also establish a preparation-working group between the Ministry of Finance and China Development Bank for long term financing of different projects in the country. This joint working group would workout different details of the projects to be implemented with the help of China Development Bank.

The adviser said that the two countries will sign five-year economic co-operation plan and the joint investment company objective would be to implement part of the economic co-operation plan. He said that the joint investment company would work as a window of the China Development Bank for evaluation of joint ventures between the two countries. He informed the delegation that according to the plan development of the special economic zones and investment in the sectors of telecommunications, infrastructure, industry, agriculture will be expedited.

The adviser assured the Chinese side that a mechanism of financial co-operation between the two countries would be soon established to achieve the targets of long-term co-operation with China.

The vice governor of China Development Bank said that economic co-operation between China and Pakistan will go beyond five years.


----------



## Neo

*Pak-China trade to hit $15 billion after FTA *


ISLAMABAD: November 23, 2006: Pakistan and China will sign a free trade agreement (FTA) during Chinese President Hu Jintao's on-going visit, state media quoted a senior diplomat as saying on Thursday.

Pakistani ambassador to China Salman Bashir told the official Associated Press of Pakistan that the accord would be signed on Friday after talks between President Musharraf and his Chinese counterpart.

"A free trade agreement will be the highly important document to be signed," Bashir said, adding that the two sides had completed negotiations on the deal in "record short time" since starting in August last year.

The agreement will cut tariffs to zero on hundreds of items for import and export between the two countries, he said.

"We are expecting to take volume of bilateral trade to 15 billion dollars within the next five years with the implementation of the FTA," Bashir said.

The foreign ministry said earlier that a number of agreements would be signed during the visit but did not specify which.

Last year, trade between China and Pakistan grew by 39 percent to 4.26 billion dollars compared with 2004, according to Chinese Commerce Ministry statistics.


----------



## Neo

*ADB to provide $600m for infrastructure *

LAHORE: Asian Development Bank (ADB) is lending $600 million to help increase private sector participation in infrastructure development in Pakistan.

According to a press release issued by the bank on Wednesday, the programme should attract private investment in power, transport and water sub-sectors by helping the country establish a comprehensive framework that will address key policy, legal, regulatory and institutional constraints to private participation in these areas.

The Pakistan government has identified $81 billion in investment, which is likely to come from the private sector over 2005-2010, but nearly 70 per cent of this is expected to go to manufacturing, agriculture and housing.

Ã¢â¬ÅThe ADB programme will support the government in creating an environment that encourages and supports private participation in infrastructure, rather than building the needed infrastructure exclusively with public funds,Ã¢â¬Â says Jurgen Conrad, an ADB Senior Financial Economist.

Ã¢â¬ÅGiven the scarcity of financial resources, this is the only feasible approach for addressing the mismatch between limited supply and increasing demand for infrastructure.Ã¢â¬Â

The program comprises of two sub-programs, the first of which involves a $400 million loan from ADBÃ¢â¬â¢s ordinary capital resources. The loan carries a 15-year term, including a grace period of three years.

The interest rate will be determined according to ADBÃ¢â¬â¢s LIBOR-based lending facility. Subprogram two for $200 million will continue the reforms after successful implementation of the first subprogram.

Under the first subprogram, pilot projects will be carried out to demonstrate how infrastructure projects involving private participation can be successfully prepared and implemented in previously unregulated areas.

Several government agencies have started to build strong pipelines of projects to be tendered to the private sector, and the program will provide a mechanism for arbitration to protect investors, and standardize bidding procedures and documents to increase transparency.

About 40 projects are expected to materialize under the subprogram, with private resources financing more than 80 per cent of overall investment costs. A policy task force has already been established to oversee program implementation.

A technical assistance grant of one million dollars from the Japan Special Fund, provided by the Government of Japan, will help the Government carry out the reforms called for under the loan.

The Ministry of Finance is the executing agency for the first subprogram, which will be carried out over three years. The second subprogram will be processed toward the end of the first and run for another four years to 2013.


----------



## Neo

*Suzuki rolls out 100,000 vehicles*

KARACHI: The Pak Suzuki Motor Co Ltd has rolled out 100,000 vehicles from the production assembly lines on November 22. Pak Suzuki is the first automobile company of Pakistan who achieved the production and sales of more than 100,000 vehicles during the year 2006, a company statement said here on Wednesday.

Kenichi Azukawa, MD and CEO Pak Suzuki performed the Tape Cutting in simple and graceful ceremony held on their assembly line. Azukawa appreciated the efforts of all employees in increasing the production beyond 100,000 units in a single year, it said.

Ayukawa said our next milestone is to roll out the 200,000th vehicle within the next 5 years. He told the team members to continue enhancing the quality levels to give the customers value for their money, the statement said.


----------



## Neo

*Rating upgrade shows world confidence in Pak economy*

ISLAMABAD: Dr Salman Shah, Adviser to the Prime Minister on Finance and Revenue has announced that MoodyÃ¢â¬â¢s Investors Services, an international rating agency, has upgraded Pakistani government bond rating from B2 to B1 bringing the country at par with rating of Indonesia.

Addressing a press conference on Wednesday, he said that it was big step forward and this step showed that international agencies had confidence in the countryÃ¢â¬â¢s economic policies.

He said that the government has decided to restructure Pakistan International Airlines (PIA). The high oil prices in the international market and some internal problems have made the restructuring of national flag carrier very necessary. He said that new airbuses would be provided to the PIA, which, according to him, has larger market to excel after the restructuring. A meeting in this regard would be held shortly. 

He rejected the international financial institutions (IFIs)Ã¢â¬â¢s projections that the countryÃ¢â¬â¢s budget deficit would touch 5.5 percent of the GDP. Ã¢â¬ÅThe budget deficit is likely to be contained to 4.2 percent of GDP,Ã¢â¬Â he added. He said that improvement in ratings would help Pakistan to stay at better position in the international bond market. Pakistan will be floating bond each year in the international market, he said. 

This improvement will have a good impact on the OGDCL Global Depository Shares (GDS), which is currently being floated at the London Stock Exchange (LSE). The volume and price of GDS would be determined by the end of this month, he said. The planned road shows of OGDCL in the US, Middle East and Far East will also have positive impact on the companyÃ¢â¬â¢s GDR. 

The MoodyÃ¢â¬â¢s rating was a result of persistent decline in external debt to GDP ratio in Pakistan. The new ratings would encourage the foreign investors to invest more in the country. They will start investing with more confidence, he said. The government, he said, would also build up foreign exchange reserves.

In reply to a question, he said that current account deficit would not pose any major challenge to the national economy. The inflow of foreign direct investment and remittances would help the government to contain the current account deficit within budgetary limits.


----------



## Owais

*Musharraf, Hu to sign free trade pact today *


ISLAMABAD (updated on: November 24, 2006, 09:49 PST): Chinese President Hu Jintao and President Pervez Musharraf were expected to sign a free trade deal on Friday after talks aimed at sealing the allies' ties in a changing region.The pact is set to be one of the key points of Hu's visit, the first by a Chinese leader to the Muslim nation for 10 years.

Hu was greeted with a 21-gun salute after flying in late on Thursday from a trip to India, during which he pledged to double trade between the two countries and speed up work to resolve a border row.

At a welcoming banquet Hu reassured his hosts that China's relationship with their "dear brothers" in Pakistan remained unchanged, the official Associated Press of Pakistan quoted him as saying

He praised Musharraf, a key ally also of the United States since the September 11, 2001 attacks, for "effectively responding to serious and complex developments both at home and internationally".

Musharraf said Pakistan's friendship "has remained constant and unchanged regardless of the transformed global circumstances".

The two leaders were due to meet for wide-ranging talks on strategic and economic issues on Friday.

Hu will also meet Prime Minister Shaukat Aziz. Officials said the two countries would sign a number of deals after the talks, and Pakistan's ambassador to Beijing, Salman Bashir, told state media on Thursday that the "most important" was the free trade agreement.

Last year, trade between China and Pakistan grew by 39 percent to 4.26 billion dollars compared with 2004, according to Chinese Commerce Ministry statistics.

Bashir said Pakistan expected the figure to hit 15 billion dollars within five years of implementation of the free trade pact.

China will also sign a five-year development program for trade and economic co-operation in the first agreement of its kind ever signed by Beijing, the official Chinese news agency Xinhua reported this week.

Hu and Musharraf are also expected to inaugurate a special economic zone in Lahore when the Chinese leader travels to the historic eastern city on Saturday.

Pakistan will also give Hu the rare honour of addressing the nation live on state television, becoming the first foreign dignitary to do so since then-US president Bill Clinton in 2000.

Pakistan's foreign ministry said reports of a possible nuclear deal similar to one made by India and the United States earlier this year were "speculative", but stressed the long-term cooperation with China in the field.

China has built an atomic power plant in Pakistan and is helping with a second, despite international concerns.

Beijing remains Islamabad's largest arms supplier and the two are jointly developing a fighter jet. It has also invested millions of dollars in a "megaport" in Gawadar to gain access to the Arabian Sea.

Maqbool Bhatti, Pakistan's ambassador to China from 1982 to 1987, said Hu's "milestone" visit after a 10-year gap had "psychological importance" for Pakistan after the US decided to treat India as a strategic partner.

But he added that Beijing and Islamabad would not focus too closely on New Delhi, adding: "One important aspect of the Sino-Pakistan friendship is that it is not aimed at any country."

Bhatti predicted the deals to be signed would include assistance for a nuclear power plant, as well as on conventional energy sources like coal-based stations and on a rail link to Central Asia.


----------



## Owais

*Chinese textiles flood Pakistan's markets *


RAWALPINDI (updated on: November 24, 2006, 11:18 PST): Chances are these days, the traditional shalwar kameez baggy trousers and tunics that most Pakistanis wear will be made of Chinese fabric, not Pakistan-made material.

China-made fabrics have flooded Pakistan in the past few years, to the delight of consumers but to the alarm of Pakistani manufacturers who are seeing their share of the domestic market fast shrinking.

Chinese President Hu Jintao arrived in Pakistan for an official visit on Thursday.

Boosting trade between the old allies will be high on his agenda -- and a free trade agreement is expected to be announced -- but China's textile trade with Pakistan is doing just fine.

At the main fabric market in the city of Rawalpindi, most of the countless bolts of material of every colour stacked up in rows come from China, traders said.

"Customers are very fashion-conscious. They love to wear outfits made of well-woven, colourful Chinese fabric," said Jan Alam, a shopkeeper at the Rabi Centre fabric market.

"Their prices are also better than local stuff," he said. "Demand for Chinese fabric is huge."

Mujtaba Hassan, a woman college lecturer shopping for fabric for her daughter's wedding dress, said she would only buy Chinese material.

"Their colours and textures are wonderful, the quality is good and the prices are reasonable so there's no question of buying anything else," Hassan said.

Some traders are reluctant to even stock Pakistani material.

"Sales of locally manufactured fabrics are very low and nobody wants to tie up their money for a long time. That's why people have switched to the imported fabric," said Ilyas Gul, owner of Gul China Silk shop.

DAMAGE 

Shoppers don't have much sympathy for Pakistani manufacturers.

"It isn't a matter of nationalism. It's about what you're offering and at what price. They should make their material and prices competitive," said 25-year-old Sukaina Azhar.

Pakistan's fabric imports from China rose to $109 million last year from $40 million the previous year, according to official figures, but a huge quantity of fabric is smuggled in, officials say.

The domestic industry is reeling.

"This is going to damage Pakistan's textile industry," said Akbar Sheikh, spokesman for the All Pakistan Textile Mills Association.

"It's a major problem because you can never compete world-wide unless you're efficient in your own market."

Sheikh criticised the government for reducing duties on imported fabric while levying taxes on raw-material imports.

The government should cut input costs and improve availability of raw materials, he said.

The expected free trade agreement with China is also raising concern with industry officials complaining it would benefit China more than Pakistan.

A Textile Industries Ministry official said the government was helping manufacturers reduce costs, including cutting interest on loans, but they had to improve their competitiveness.

"China is very much in competition but as good businessmen, they should first put their house in order," said ministry secretary Syed Masood Alam.


----------



## Owais

*$20 billion trade accord with China today *

ISLAMABAD (November 24 2006): Pakistan and China sign more than $20 billion five-year trade and economic co-operation agreement on Friday which will pave the way for Chinese investment in all sectors, a senior officer told Business Recorder here on Thursday.

He said a Chinese advance team has been holding discussions with the various ministries at the Economic Affairs Division to finalise a number of agreements/MoUs for last 10 days relating to infrastructure, further development of Gwadar seaport, oil refineries, agriculture, engineering, and tourism sectors.

He said the huge five-year trade and economic co-operation agreement will be singed by PM's Adviser on finance Dr Salman Shah and his Chinese counterpart at a ceremony at the Aiwan-e-Sadr in the presence of Chinese President Hu Jintao and President Pervez Musharraf.

Sources said that Pakistan and China agreed at a meeting between Dr Salman Shah and a high-level delegation led by China Development Bank Vice Governor Lie Kegu here on Thursday to quickly set up a joint investment company to implement economic co-operation plan which would work as a window of the China Development Bank for evaluation of joint ventures between the two friendly countries.

Communication Minister Shamim Siddiqui and his Chinese counterpart will sign another agreement under which China will provide $337 million for rehabilitation and re-alignment of Karakoram Highway (KKH) which has become necessary because of construction of the Munda dam.

Private sectors of the two countries will also sign about 18 agreements at the Planning Commission for co-operation in automobile, oil and gas, housing, agriculture, vending, and tourism sectors.


----------



## Owais

*CDB investment to build Pakistan's economic infrastructure, Salman told *


ISLAMABAD (updated on: November 23, 2006, 21:55 PST): A high-level delegation led by Lie Kegu, Vice Governor, China Development Bank (CDB) called on Dr. Salman Shah, Adviser to Prime Minister on Finance, Revenue, Economic Affairs and Statistics here on Thursday.

Welcoming the delegation, the adviser said that Pak-China economic co-operation will greatly contribute to economic development in both the countries. He particularly mentioned the development opportunities of infrastructure both urban and rural in Pakistan. He also pointed out that the economic co-operation between the two countries would be based on the partnership between the corporate and private sectors of both countries with the government playing a leading supporting role.

He said that Pakistan would welcome Chinese companies to invest in different sectors of Pakistan inline with the five year economic and trade agreement. He said that Pakistan has a great potential for growth and development and now it should be our objective to create an environment to fully achieve the potential.

The Chinese vice governor appreciated Pakistan's rapid economic development in the recent years. He said that the China Development Bank would invest in Pakistan especially in building up the economic infrastructure and industrial development adding that China would also provide necessary financial support in the sectors of industry, services, agriculture, healthcare and education. He said that the business relationship between the two countries should be further developed and strengthened.

The two sides agreed to quickly set up the Joint Investment Company soon after the signing of MoUs on Friday between the two countries. They emphasised on evolving an efficient working mechanism so that the project should start as early as possible. The two sides agreed that Pakistan and China who have already developed a joint working group would also establish a preparation-working group between the Ministry of Finance and China Development Bank for long term financing of different projects in the country. This joint working group would workout different details of the projects to be implemented with the help of China Development Bank.

The adviser said that the two countries will sign five-year economic co-operation plan and the joint investment company objective would be to implement part of the economic co-operation plan. He said that the joint investment company would work as a window of the China Development Bank for evaluation of joint ventures between the two countries. He informed the delegation that according to the plan development of the special economic zones and investment in the sectors of telecommunications, infrastructure, industry, agriculture will be expedited.

The adviser assured the Chinese side that a mechanism of financial co-operation between the two countries would be soon established to achieve the targets of long-term co-operation with China.

The vice governor of China Development Bank said that economic co-operation between China and Pakistan will go beyond five years.


----------



## Owais

*'Karachi becoming centre of attraction for businessmen' *


KARACHI (November 24 2006): Nazim Karachi, Mustafa Kamal has said that Karachi is fast becoming a centre of attraction for businessmen and industrialists world over.

This is becoming possible as a result of the steps taken by the city government to make Karachi world's modern and developed city under a vision with focus on fast development, improving law and order and infrastructure of international standard.

He said that work has started on direct 900 million dollar investment while Asian Development Bank (ADB) has enhanced the 400 million dollar assistance for Mega City Development project to 800 million dollars while project study started with 13 million dollars.

He stated this in a meeting with Swiss Ambassador Markus Peter here on Thursday at his KWSB office. The Swiss Consul General Martin Bienz and Deputy Head of Mission Konstantin Obolensky were also present on the occasion.

In the meeting exchange of views took place on investment interest of Swiss businessmen and industrialists in Karachi and said the Swiss companies are interested in the solid waste management, transportation, infrastructure development and pharmaceutical business. In this regard a high level Swiss trade delegation will have a visit Karachi on February 7, 2006 to have a review of investment in various sectors.

Swiss Ambassador described Nazim Karachi a motivated leadership and said because of his dynamism, he saw a positive change in the city in a very short period. On the occasion he particularly referred to Bagh Ibn-e-Qasim and said that its construction in such a short time was highly impressive and surprising. It is no doubt, appreciative and with this development pace, many development schemes in Karachi will see completion in a short time.


----------



## Owais

*57 OIC member states to gather at Muslims BIG *

KARACHI (November 24 2006): Entrepreneurs & businessmen from 57 OIC member Muslim countries are to gather at Muslims BIG - Business & Investment Gala - to be held from February 10-12, 2007.

ICCI headquartered at Karachi extends support for country pavilion and also forwards the information to the 57 OIC member countries to participate in Muslims BIG to showcase and promote their products and services in order to achieve the social and economic development for the Islamic countries.

The event aims to become a unique platform for participants from US, Europe, Central Asian Republics, China, India, Far East and other parts of the world to explore joint venture, investment and trade opportunities available in the 57 OIC member Muslim countries & other participating nations as well.

Alongside business activities, the participating nations will also be given opportunity to highlight their cultures while the people of Pakistan will get a chance to show the delegates their warm hospitality and variety in lifestyle this metropolis offers.

The Islamic Chamber is an affiliated organ of the Organisation of Islamic Conference (OIC) and represents the private sector of 57 Member Islamic Countries.

It aims at strengthening closer collaboration in the field of trade, commerce, information technology, insurance/reinsurance, shipping, banking, promotion of investment opportunities and joint ventures in the member countries.

Its membership is comprised of the national chambers/unions/federations of chambers of commerce and industry of the member countries. Thus, it is expected that with the participation from 57 OIC member countries in Muslims BIG would establish a forum for Muslim businessmen to effectively carry out development process, to facilitate exchange and dissemination of information and technical experiences in trade, industry and other different economic activities for the betterment of Islamic Ummah.


----------



## Owais

*Singapore and Qatar likely to import Pakistani manpower *

ISLAMABAD (November 24 2006): Pakistan has succeeded in winning support for export of its manpower to Qatar and Singapore in a major move to dispatch more than 150,000 Pakistanis for overseas employment.

Ministry of Labour, Manpower and Overseas Pakistanis held a series of meetings with the two respective governments and finally convinced them to allow quota for Pakistani labours in their countries, private TV News channel reported.

The agreement with Qatar in this regard is scheduled for January 2007 during the state visit of Emir of Qatar Sheikh Hamid bin Khalifa al-Thani to Pakistan, said an official who recently returned from Qatar and Singapore.

Qatar accepts Pakistani labourers and issues visas on internal demand but a formal accord would allow a specific number of Pakistani labourers and consistent visa policy.

Similarly, he said, talks with Singaporean authorities also made headway but the South East Asian State has not announced any exact timeframe to sign the accord.

"But we are very hopeful of the date within one month. Developments on two different fronts would give almost 150,000 Pakistanis opportunity of overseas employment within a year," he added.

The recent developments have raised hopes of local operators, who are already happy on removal of ban on Pakistani labourers by the Kuwaiti government earlier this month.

The officials and local operators believe that accord with Singapore and Qatar coupled with removal of ban by the Kuwaiti government may increase manpower export by 1504000 within a year.

"The OEC (Overseas Employment Corp) would soon call a meeting of local operators to brief them on the new developments to evolve a strategy," said the official.

He said the fresh move would not only generate overseas employment opportunities for Pakistanis but also open new avenues for local operators to capitalise on the developments. Hundreds of thousands of Pakistanis have been flying abroad every year since early 1970s to avail better employment opportunities.


----------



## Owais

*Karachi Shipyard not to be privatised: managing director *

KARACHI (November 24 2006): Managing Director, Karachi Shipyard and Engineering Works, Vice Admiral Iftikhar Ahmed Thursday said that Government has decided not to privatise Shipyard and Ministry of Defence Production will run the organisation.

Talking to reporters here at Karachi Expo Centre on Thursday, the third day of IDEAS-2006 Exhibition, he said for the time being the government has provided funds to run the affairs of the Shipyard which he said would be repaid in the next three to four year's time after making its earnings from new projects to be undertaken in the near future. He informed that under an agreement with China four ships will be manufactured - three in China and one in Pakistan.

Vice Admiral Iftikhar Ahmed informed that the manufacturing of a frigate has been started in collaboration with China and hoped the same will be completed soon.

Manufacturing of the advanced submarine will also be undertaken with the co-operation of either Germany or France. He also mentioned that an agreement has been made with Germany for manufacturing of wind turbines.


----------



## Owais

*Forex reserves fall by $650 mln this year *

KARACHI: Pakistan's foreign exchange reserves fell by $650 million during current fiscal year. 

According to State Bank of Pakistan figures the reserves hit an all-time high of $13.111 billion on July 1st, 2006.

The reserves fell by $650 million to $12.460 billion within last 4 &#189; months.

Pakistan's foreign exchange reserves remained between $12 to 13 billion from FY 2003-04 till now.

The reserves in neighboring India, China and Iran are increasing rapidly.


----------



## Owais

*KESC signs contract with ABB for nine new gird stations *

KARACHI: KESC's addition, renovation and system improvement projects to improve power supply network gained momentum with the signing of a contract with Asea Brown Boveri(ABB) for nine new pre-fabricated grid stations. 

The contract signing ceremony held at KESC head office was attended by KESC CEO, Frank Scherschmidt, Chief Financial Officer Mohammad Asghar, Chief Supply Chain Officer Mahmud Ansari, Divisional Director Engineering Khalid Iqbal and General Manager Project Waqas Khalid. 

The ABB was represented by its President Farhat Ali, General Manager Waseem Ahmed and Project Manager Joachim Schremp. 

According to a KESC spokesman, the management is working hard to carry out system improvement work on fast track. This would enable the corporation to provide stable power supply to consumers,eliminating overloading by enhancing the transmission and distribution capacity by adding new grid stations. 

He said the existing power transmission and distribution capacity of the city power utility stood at 2800 MW. However, due to increase in industrial and commercial activity the power consumption in certain areas faced overloading of the local network causing breakdowns and loadshedding. 

Another reason of the system overloading is the increase in use of electricity without intimation to KESC by the consumers, he pointed out. 

Currently, he said, 52 conventional grid stations are distributing electricity to the city industrial, commercial,residential and agricultural consumers. 

Another three grids started last year are in the process of establishment at Mauripur, West Wharfand Old Town. Of these two would be ready by April 2007, but the West Wharf would be delayed as the work has been stopped by the Karachi Port Trust, which has asked KESC to first renew the land lease. 

He said the contracted nine new hybrid grid stations would be of international standard and state of art technology and their establishment would require smaller space while commissioning andinstallation of compact machinery is time efficient. 

He said by next year the total number of grid stations would increase to 64 and thus the transmission and distribution capacity of then city network would increase to 3600 MW. 

The pre-fabricated grids would be established at Pakistan Refinery Ltd., Korangi South, Gulshan-e-Maymar, near Finance and Trade Centre, Azizabad, Jail Road, Memon Goth, Malir, Tipu Sultan Road and near Airport.


----------



## Neo

*Faisalabad to get IT park *

FAISALABAD: Information Technology (IT) park would be established here to generate and further accelerate the economic activities. 

Punjab Minister for Communication and Works, Chaudhry Zaheer-ud-Din while inaugurating an IT seminar at University of Agriculture Faisalabad here Thursday, underlined the importance of education for the socio economic uplift.

He said that Punjab has emerged as role model owing to revolutionary policies adopted by Chief Minister Chaudhry Pervaiz Elahi to provide education to all in the province. He said that these policies have yielded positive results.

He also termed IT as the engine for socio economic growth and said that progress was not possible without promotion of IT in any sector. It was in this respect that Punjab Information Technology Board (PITB) was constituted to translate the vision of Chief Minister Chaudhry Pervaiz Elahi to develop Punjab as a hub of IT.

He said that PITB has been providing demand-based training in IT at subsidized charges. He said that free IT training would be imparted to government officials while up to 80 per cent subsidy would be given to the students and employees of private sector organizations.

Zaheer-ud-Din said that the government had launched computerization of land record in the province which would not only provide jobs to the computer literate persons, but also save people from the Ã¢â¬ÅPatwariÃ¢â¬Â culture.

He said that Chief Minister Punjab has been endeavouring to make Punjab a hub of IT and in this connection an IT Park is already under construction in Lahore.

Ã¢â¬ÅThis park will generate economic activity up to the tune of Rs9 billion in addition to providing respectable jobs to the educated youth, he added. He said that an IT park would also be established in Faisalabad very soon to speed up the economic activities.

Dr. Ashfaq Ahmad acting vice chancellor UAF said that agriculture sector could also benefit from IT. Ã¢â¬ÅWe could get satellite imaging of our fieldsÃ¢â¬Â, he said and added though IT related analysis, and we could not only determine the exact farm production but also make necessary arrangement for its storage. Rizwan Amin Chairman PITB said that board has launched demand based IT program to cater to the needs of various sectors.


----------



## Neo

*Joint investment company: Pakistan and China sign MoU today*

ISLAMABAD: Pakistan and China have agreed to quickly set up the Joint Investment Company soon after the signing of MoUs on Friday between the two countries.

A high-level delegation led by Lie Kegu, Vice Governor, China Development Bank called on Dr Salman Shah, Adviser to Prime Minister on Finance, Revenue, Economic Affairs and Statistics here on Thursday.

The Vice Governor of China Development Bank appreciated Pakistan's rapid economic development in the recent years. He said that the China Development Bank would invest in Pakistan especially in building up the economic infrastructure and industrial development. He also said that China would also provide necessary financial support in the sectors of industry, services, agriculture, healthcare and education.

He said that the business relationship between the two countries should be further developed and strengthened. The two sides agreed to quickly set up the Joint Investment Company soon after the signing of MoUs tomorrow between the two countries. They emphasised on evolving an efficient working mechanism so that the project should start as early as possible.

The two sides agreed that Pakistan and China who have already developed a joint working group would also establish a preparation-working group between the Ministry of Finance and China Development Bank for long term financing of different projects in the country. This joint working group would workout different details of the projects to be implemented with the help of China Development Bank.

Welcoming the delegation, the adviser said that China and Pakistan economic cooperation would greatly contribute to economic development in both countries. He particularly mentioned the development opportunities of infrastructure both urban and rural in Pakistan. He also pointed out that the economic cooperation between the two countries would be based on the partnership between the corporate and private sectors of both countries with the government playing a leading supporting role.

He said that Pakistan would welcome Chinese companies to invest in different sectors of Pakistan inline with the five-year economic and trade agreement. He said that Pakistan has a great potential for growth and development and now it should be our objective to create an environment to fully achieve the potential.

The adviser said the two countries will sign five-year economic cooperation plan and the joint investment company objective would be to implement part of the economic cooperation plan. He said that the joint investment company would work as a window of the China Development Bank for evaluation of joint ventures between the two countries. He informed the delegation that according to the plan development of the special economic zones and investment in the sectors of telecommunications, infrastructure, industry, agriculture would be expedited. The adviser assured the Chinese side that a mechanism of financial cooperation between the two countries would be soon established to achieve the targets of long-term cooperation with China. The Vice Governor of China Development Bank said that economic cooperation between China and Pakistan would go beyond five years. The adviser thanked the delegation for its interest in investment in Pakistan.


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## Neo

Friday, November 24, 2006 

*Budget deficit to be brought to 3% of GDP by 2009-10*

By Sajid Chaudhry

ISLAMABAD: The ministry of finance will continue to maintain macroeconomic stability by ensuring bringing the budget deficit at sustainable level of 3 percent of the GDP by the fiscal year 2009-10, according to the Key Macroeconomic Targets set for the next four years.

The report suggests that actual budget deficit to be around 3.7 percent of the GDP during the current fiscal year 2006-07 and it would be brought down to 3.5 percent of the GDP during next fiscal year 2007-08, 3.2 percent of the GDP during the fiscal year 208-09 and finally to be brought down to 3 percent in the fourth year of 2009-10.

The actual budget deficit was 5.4 percent of the GDP during the fiscal year 1999-2000 which came down to 4.3 percent in the fiscal year 2000-01, 4.3 percent in the fiscal year 2001-02, 3.7 percent in the fiscal year 202-03, 2.3 percent during fiscal year 2003-04, 3.3 percent in the fiscal year 204-05 and 3.4 percent in the last fiscal year 2005-06. 

The public debt would also be brought down to a sustainable level of 39.8 percent of the GDP, which was 95.9 percent of the GDP in the fiscal year 1999-2000, by the fiscal year 2009-10 through maintaining macroeconomic stability in the next four years. Public Debt as percentage of the GDP was brought down to 56 percent of the GDP in the fiscal year would be further reduced to 50.6 percent of the GDP in the current fiscal year 2006-07, 46.4 percent in the fiscal year 2007-08, 43 percent of the GDP in the fiscal year 2008-09 and 39.8 percent in the fiscal year 2009-10. 

The external debt would also be kept at sustainable level and will be brought down to 22 percent of the GDP by fiscal year 2009-10 from 28.9 percent in the fiscal year 2005-06 under the Key Macroeconomic Targets. External debt as percentage of the GDP to be brought down to 26.7 percent in the current fiscal year 2006-07, 24.9 percent of the GDP in the fiscal year 2007-08, 23.3 percent of the GDP in the fiscal year 2008-09 and 22 percent of the GDP in the fiscal year 2009-10. 

Pakistan's economic growth rate to be increased to from 7 percent of the GDP in the current fiscal year 2006-07, 7.4 percent in the next fiscal year 2007-08, 7.8 percent in the fiscal year 2008-09 to 8 percent by the fiscal year 2009-10. Public investment would be increased from 20 percent of the GDP in the last fiscal year 2005-06 to 21.5 percent in the current fiscal year 2006-07, 23 percent in fiscal 2007-08, 24.5 percent in fiscal year and 26 percent in the fiscal year 2009-10.

The challenges, which are faced by the economy, have been identified as increase in the tax to GDP ratio, trade to GDP ratio, increase in investment to GDP ratio, increase in savings to GDP ratio and capital out put ration in the next four years.

http://www.dailytimes.com.pk/default.asp?page=2006\11\24\story_24-11-2006_pg5_2


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## Neo

*Pakistan, China sign FTA, $15 billion target eyed *

ISLAMABAD: November 24, 2006: Chinese President Hu Jintao and Pakistani counterpart Pervez Musharraf oversaw the signing of a landmark free trade deal on Friday and vowed to take the allies' 'evergreen' relationship to new heights.

The two countries also agreed to co-operate on airborne early warning radar planes and inked a slew of other agreements to boost their ties in the spheres of defence, energy and the economy.

Officials have said the trade agreement could triple bilateral trade to 15 billion dollars within five years in a key move for both the countries.

"This serves the fundamental interests of our two peoples and is also conducive to the peace and development of our region," Hu told a news conference after hour-long talks with Musharraf.

"We want to work with Pakistan to raise our strategic ties to a new level," added the first Chinese leader, the first to visit the Islamic republic for a decade.

Musharraf said the "evergreen relationship of Pakistan and China will remain for all time".

The presidents watched their ministers of commerce ink the trade pact and other accords, including a separate five-year development programme which the Chinese news agency Xinhua said was the first of its kind for Beijing.

They also agreed to set up a joint investment company.

But while Hu said that Beijing would continue to co-operate with Pakistan's nuclear power industry -- China has built one reactor here and is helping to construct another -- he did not announce any new deal.

Pakistani officials had earlier dismissed "speculative" reports that China would unveil a major new atomic agreement with Pakistan similar to one made between its arch-rival India and the United States earlier this year.

Separately Pakistan's Air Force said it had agreed with China to jointly develop aircraft equipped with long-range early warning radars.

"The same may be delivered to Pakistan in coming years," it said in a statement, without specifying a timeframe.

Beijing remains Islamabad's largest arms supplier and the two are jointly developing the JF-17 Thunder fighter aircraft. China has also invested millions of dollars in a deep sea port in Gawader to access the Arabian Sea.

Pakistan will later Friday give Hu the rare honour of addressing the nation live on state television, becoming the first foreign leader to do so since then-US president Bill Clinton in 2000.

Pakistan's ambassador to Beijing, Salman Bashir, told media on Thursday that bilateral trade should hit 15 billion dollars within five years of implementation of the free trade pact.

Last year, trade between China and Pakistan grew by 39 percent to 4.26 billion dollars compared with 2004, according to Chinese commerce ministry statistics.

Hu was greeted with a 21-gun salute after flying in late Thursday from a landmark trip to India, during which he pledged to double trade between the Asian giants and speed up work to resolve a border row.

Hu and Musharraf are also expected to inaugurate a special economic zone in Lahore when the Chinese leader travels to the historic eastern city on Saturday.

Maqbool Bhatti, Pakistan's ambassador to China from 1982 to 1987, said Hu's "milestone" visit after a 10-year gap had "psychological importance" for Pakistan after the United States decided to treat India as a strategic partner.


----------



## Neo

*FTA to raise trade to $15 billion: 31 agreements and MoUs signed with China* 
RAFIQ GORAYA & MUHAMMAD BILAL

ISLAMABAD (November 25 2006): Pakistan and China on Friday signed Free Trade Agreement (FTA) and 30 other agreements/ MoUs in the public and private sectors to strengthen and expand their strategic partnership and economic cooperation in all fields. Chinese President Hu Jintao and President General Pervez Musharraf witnessed the signing at the Aiwan-e-Sadr.

Officials said that the FTA, effective from July 1, 2007, would reduce tariffs to zero rates on hundreds of items for import and export between the two countries, reduce trade imbalance, which is in favour of China, cut duties on Pakistan's exports, and increase bilateral trade to $15 billion in five years.

Pakistan and China also signed a multi-faceted five-year joint development programme on trade and economic cooperation and establishing a joint investment company to pave the way for billions of dollars Chinese investment in Pakistan in different sectors including agriculture, energy, communication, infrastructure, tourism, housing and industry.

*OTHER AGREEMENTS AND MOUS SIGNED BETWEEN THE TWO COUNTRIES WERE:* 

1. Agreement on security of financing for China-Pakistan bilateral cooperation.

2. Exchange of Letters authorising construction of schools and hospitals in the October 8 earthquake-hit areas in Pakistan.

3. MoU regarding $337 million Chinese financial support for upgradation and rehabilitation of Karakorum Highway.

4. Transfer of completion certification of Gwadar port (Phase-I).

5. Authorising the relevant departments to establish Consulate-General of Pakistan in Chengdu.

6. Executive program of cultural agreement between the two countries for 2007-2009.

7. Contract agreement on KKH improvement project (Raikot to Khunjerab).

8. Framework agreement between China North Industries Corporation and Heavy Industries, Taxila (HIT).

9. Huawei-PTML-PTML GSM Phase-V expansion project contract agreement.

10. MoU between China Zhenhua Oil Company Limited and Ministry of Petroleum and Natural Resources.

11. Agreement on exploration and development of Saindak East project.

12. Agreement between Qingqi Group and National Bank of Pakistan on collaboration in President's Rozgar scheme.

13. China's PVC back integrated complex on Engro Asahi Polymer and Chemical Limited Pakistan.

*PRIVATE SECTOR AGREEMENTS *In addition to the 17 agreements, representatives of leading Chinese and Pakistani companies also inked nearly 13 agreements and Memorandums of Understanding worth $3 billion to undertake joint ventures in various sectors of hotels, housing, industrial parks, cement, fertiliser, transport, pesticides and others.

Major Chinese companies which signed agreements include China International Industry and Commerce Co Ltd (CIIC Group); Ningxia Building Material Group China; China National Chemical Engineering Group Corporation; International Business Incubator of China; Tianjin Renong Pesticide Industries Co Ltd; CETC International Co Ltd; Great United Petroleum Holdings Co Ltd; and GingKo Petroleum and Chemical Company Limited.

The agreements were signed from Pakistan side by The Board of Investment, Army Welfare Trust, National Logistic Cell, Federal Government Employees Housing Foundation, Housing and Works Ministry, Ruba Group of Pakistan, Fatima Fertiliser Limited, Incubator Centre of National University of Science and Technology (NUST), Pak-China Chemical, Motherhood (Pvt) Ltd, Pakistan Petroleum Limited, and Infrastructure Development Company (Pvt) Ltd.

Board of Investment officials said that an umbrella MoU between Pakistan and China was also signed under which these projects will be implemented within the next five years.

They said that Chinese investment in the public sector of Pakistan has always been very impressive, and described the signing of these agreements and MoUs as a big breakthrough in the private sector investment, which would be followed by more significant investments in near future. They said that the economic relations between the two countries were robust and strong.

China has made valuable contribution to Pakistan's economic development, particularly in the development of infrastructure and setting up of basic industries.

Beijing is also helping Islamabad in the development of Gwadar deep-sea port, whereas more than 50 Chinese companies are working in Pakistan in oil and gas, IT and telecom, power generation, engineering, automobiles, infrastructure and mining sectors.


http://www.brecorder.com/index.php?id=501050&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Hu in Lahore to inaugurate 'higher economic zone', electronics plant *

LAHORE: November 25, 2006: Chinese President Hu Jintao arrived in Lahore on Saturday for cultural and business visits after concluding a free trade deal and pledging to boost strategic ties. 

In historic Lahore, decorated elaborately with Pakistan and Chinese flags and portraits of Hu and Pakistani leaders, Hu was given a warm reception by Punjab governor Khalid Maqbool and chief minister Chaudhry Pervez Illahi.

School children lined up along the red carpet laid at the tarmac and cheered Hu as he disembarked from his plane at Lahore's international airport.

State television private satellite channels showed live footage of Hu's arrival.

Hu was set to visit the tomb of Allama Iqbal and the scenic Mughal-era Shalimar gardens, Pakistani officials said.

He will later attend a banquet hosted by key political and business leaders.

Hu told business leaders in Islamabad late Friday that he would remain in Lahore on Sunday for the inauguration ceremony of an electronics plant and a "higher economic zone" being set up by China.

The zone is one of eight being established outside China and mainly managed by Chinese companies, China's official Xinhua news agency said this week.

The Chinese president's Lahore trip comes a day after he and his Pakistani counterpart Pervez Musharraf oversaw the signing of a landmark free trade agreement.

The pact could treble bilateral trade to 15 billion dollars from 2005's level of 4.26 billion in a key move for both the Asian economic giant and its fast-developing neighbour, diplomats said.

The two countries also agreed to co-operate on an airborne radar system and inked a slew of pacts on defence and the economy including a five-year economic co-operation plan.

Hu meanwhile said China wanted to "work with Pakistan to raise our strategic ties to a new level," quelling Pakistani fears that Beijing is getting too close to neighbouring India.

Hu later addressed the Pakistani nation live on state TV and Musharraf presented him with Pakistan's highest civilian award.

The Chinese president praised Musharraf's "enlightened moderation" programme to counter extremism and made an apparent reference to Western policies of intervention.

"One cannot make irresponsible remarks about the internal affairs of other countries simply because of differences among countries and it is equally wrong to blame a particular civilisation, nation or religion for some problems and conflicts in the world," Hu said.

Hu also said that Beijing would carry on co-operating with Pakistan's nuclear power industry -- China has built one reactor here and is helping to construct another -- but he did not announce any new deal.

Beijing remains Islamabad's largest arms supplier and the two are jointly developing the JF-17 Thunder fighter aircraft.

Hu is scheduled to return to Beijing midway through Sunday.


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## Neo

*Govt seeks Chinese investment in textile weaving *

KARACHI: The government has sought Chinese investment in weaving segment of the dwindling textile industry in a move to share windfall the neighbouring country is enjoying across the globe, a senior official said.

He said the textile ministry, in its suggestions for a formal accord with China, had proposed a two-pronged strategy to attract Chinese investment and the agreement could bring the worldÃ¢â¬â¢s biggest textile countryÃ¢â¬â¢s techniques in the local industry.

Ã¢â¬ÅOur proposal focuses on two main segments,Ã¢â¬Â said Syed Masood Alam Rizvi, Federal Textile Secretary. Ã¢â¬ÅWe want Chinese interest in our weaving sector and also their contribution to enhancing our human resource skills. This will really boost our industrial interest and ultimately help our industry to grab some share with thriving Chinese industry.Ã¢â¬Â

He said the focal point of the proposals was joint ventures between China and Pakistan but investment should be made within the country for setting up production units in weaving segment.

The textile ministryÃ¢â¬â¢s proposals were part of several others, which were shaped in more than a dozen accords signed between the two countries during the ongoing visit of Chinese President Hu Jintao on the second leg of his first-ever subcontinent tour.

The agreements include a $20 billion five-year trade and economic cooperation accord, which would pave the way for Chinese investment in all sectors. The textile ministry sees its proposals getting space within such cooperation agreement.

Ã¢â¬ÅThe modalities and mechanism of the accord will be much clearer once its draft is issued after signing of the agreement,Ã¢â¬Â said Rizvi, the Textile Secretary.

He said Beijing had recently taken an initiative to expand its textile production units outside the country and in the first phase targeted African countries as best place for such ventures.

Ã¢â¬ÅThe Chinese government a few weeks ago invited all the countries of the continent (Africa) and unearthed its plan to set up (textile) production units there,Ã¢â¬Â he added.

PakistanÃ¢â¬â¢s textile exports have been on the decline, faced with soaring production costs and inadequate government response. There are also signs of pack-up and move to Bangladesh by the crucial textile industry.

The latest data released by the Federal Bureau of Statistics showed textile exports declined by 9.11 per cent to less than $3.23 billion during the first four months (July to Oct) of the current fiscal year. Over the same period last year, that figure was more than $3.55 billion.

Ã¢â¬ÅIf China agrees to put its money in Pakistani textile, it will bring fruit for both the industry and the government,Ã¢â¬Â said Zakir Lalani, a leading exporter of readymade garments. Ã¢â¬ÅBut the authorities should realise that it is not the solution to competition, we are facing from the Chinese industry. The main incentive for Chinese industry is the low cost of doing business compared to any other part of the world.Ã¢â¬Â

He said China had earned a good name in weaving and human resource skills and its contribution to local industry should be welcomed.

Downfall in PakistanÃ¢â¬â¢s textile exports has already alarmed the authorities concerned pushing Prime Minister Shaukat Aziz to constitute National Textile Strategy Committee with the task to make proposals by December 31 to work out National Textile Strategy in order to make the industry more competitive and sustainable.

There is a strong feeling among both industry players and government officials that if the new approach fails to attract local industry, Pakistan may witness desperate moves from the textile sector.

Ã¢â¬ÅThe government will have to take all proposals into account before finalising the strategy,Ã¢â¬Â says Faisal Shaji, Head of Research at Capital One Equities. Ã¢â¬ÅIf it doesnÃ¢â¬â¢t work, I fear we will miss the last boat.Ã¢â¬Â

He said the government should make a quick move to arrest the declining trend in exports, which were projected to earn $11.5 billion in 2006-07, up from $10.1 billion last year.


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## Neo

*Chinese firm to invest more in oil, gas sector *

ISLAMABAD: Chairman of the China Norinco Company, Ma Zhigeng along with his 10-member delegation called on Minister for Petroleum and Natural Resources, Amanullah Khan Jadoon here on Friday and discussed with him investment potential in PakistanÃ¢â¬â¢s oil and gas sector. 

During the meeting, Chairman Norinco informed the minister about the signing of Baska and Bahawalpur East blocks held at the Aiwan-e-Sadr this morning in the presence of two presidents and expressed the desire of his company to further invest in three more blocks to promote oil and gas cooperation.

He said that Pakistan and Norinco had been partners since long in various fields and this was the first step for Norinco to enter into petroleum sector cooperation with Pakistan for their mutual advantage.

Ma Zhingeng also evinced interest to participate in the privatization process of public sector oil and gas entities. 

Welcoming the Norinco delegation, the minister said that Sino-Pak deep-rooted and time-tested friendly relations were spanned over many decades and growing with the passage of time in diversified fields including oil, gas and minerals. 

Jadoon said that there existed vast opportunities for Pak-Norinco interaction in the petroleum sector which would help learn a lot from each otherÃ¢â¬â¢s experience in this vital field of economy. 

He briefed the delegation about the salient features of upcoming oil and gas projects besides onshore and offshore exploration activities in the country.

The minister said that government would welcome China Norinco investment in these activities.

Minister of State for Petroleum Mir Muhammad Naseer Mengal, Secretary Petroleum Ahmad Waqar and senior officials of the ministry were also present during the meeting.


----------



## Owais

*Pakistan rapidly transforming into major market economy: PM *


LAHORE (updated on: November 26, 2006, 17:18 PST): Prime Minister Shaukat Aziz on Sunday said that Pakistan was rapidly transforming into a major market economy with large product, services, labour markets and world class manufacturing and servicing hub of the region.

Speaking at the inauguration ceremony of Pakistan Haier and Ruba Economic Zone here, he said that economic growth in Pakistan opens avenues for Chinese entrepreneurs. He said with China emerging as an exporter of capital, there are huge win-win opportunities for both sides.

He said the Free Trade Agreement and the joint 5-year economic plan provide the conducive environment for our private sectors to collaborate for mutual benefit.

Chinese President Hu Jintao, Punjab Governor, Lt.Gen (Retd) Khalid Maqbool, Federal Minister for Information and Broadcasting Muhammad Ali Durrani, Federal Minister for Privatisation, Zahid Hamid, founder Chairman Pak-US Business Council and Co-Chairman Businessmen Panel, Iftikhar Ali Malik, Chairman WAPDA and business magnates were also present on the occasion.

Aziz said, "We have created an investor-friendly environment in Pakistan and our country offers vast investment opportunities in energy, oil, gas, mining, engineering, automobile, infrastructure development, information technology and telecom, financial and agriculture sectors to name only a few. We also have a sound and transparent privatisation programme," he added.

He said during the last seven years, we in Pakistan have implemented broad based and multi-dimensional structural reforms and put our economy on a high growth trajectory. He said per capita income has risen substantially and there has been a significant reduction in poverty. He said last year, we received the highest ever level of foreign investment in Pakistan.

The premier said that we in Pakistan are also leveraging our geo-strategic location and developing a network of infrastructure to create multiple corridors of regional co-operation in energy, trade, transportation, tourism and people-to-people contacts. 

He said we are keen to share with our Chinese friends the advantages accruing from such linkages and complementarities.

He said Pakistan is open for business and over 600 multi- national companies are already profitably operating in Pakistan. He said with a population of 160 million people and a growing middle class, Pakistan is the most profitable part of their franchise and we will welcome Chinese businessmen to invest in any sector and benefit from our economic growth coupled with dynamism.

He said China has always generously contributed towards our national development efforts and we highly value their assistance that has strengthened our security and development. 

He said that agreements singed during the visit of President Hu Jintao including those between our private sectors, will further cement our mutually beneficial relations.

Aziz said that the inauguration of Pakistan Haier and Ruba Economic Zone is another milestone of economic co- operation between the private sectors of the both countries. He said we are grateful to the Chinese government for supporting this first ever initiative of its kind overseas.

He said we welcome this initiative and our government will provide the necessary facilitation and incentives to support and replicate it in different parts of the country.

Aziz said "let me also appreciate the contribution made by the Ruba Group, which have made substantial investments in the country and acted as a bridge between the private sectors of Pakistan and China.

The prime minister said that let me conclude by thanking his excellency President Hu Jintao for joining us today on this landmark event. "I am confident that the governments and the private sectors of our two countries will continue to collaborate for mutual benefit and thereby contribute towards the further strengthening of Pakistan-China friendship."


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## Owais

*125 new CNG buses in Karachi likely next month *


KARACHI (updated on: November 26, 2006, 20:00 PST): A private bus firm, Holland Bus Company, said it would bring 125 CNG buses in Karachi by the end of December 2006.

In this regard a delegation of the firm led by its general manager Mr. Hons called on City nazim Syed Mustafa Kamal at his office on Saturday. 

He said that his company, which was a consortium of 11 bus companies, could met the target of introducing 8000 wide-bodies buses in Karachi in two years.

He said that 125 buses would be imported from Holland; however, a bus making plant could be set up in Karachi. 

Hons said 24 persons were being trained in Holland to run these 125 buses and these trained persons would train more staff in Karachi.

The city nazim assured the delegation of all-out co-operation and said there were ample opportunities for transporters to run modern buses in Karachi. 

He regretted that this city of 18 million souls still had no reliable public transport system.

Kamal said that brining modern buses in Karachi would not only provide lucrative profit to transport companies, but they would also cater needs of Karachi commuters and create more job opportunities.

Separately, the city nazim on Saturday night attended a "gala variety program', the last program of Ideas2006, at the Peoples Sports Stadium Lyari. Sindh Governor Dr Ishratul Ibad Khan was the chief guest.

Speaking on the occasion, the city nazim congratulated Karachiites for making the Ideas2006 a big success. He hoped that this mega program would help in promoting soft image of country, especially Karachi.


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## Owais

*Chinese economic co-operation to be continued: Hu Jintao *


LAHORE (updated on: November 26, 2006, 17:41 PST): Terming Pakistan a strategic partner, Chinese President Hu Jintao said that his country would continually invest in every sector in Pakistan specially in economic sector.

Addressing the inauguration ceremony of Higher and Roba Economic Zone set-up by jointly by Pakistan and China here on Sunday, the Chinese President has termed it a milestone in the timetested Pak-China friendship.

Congratulating the Pakistani nation on the establishment of the Economic Zone, the Chinese President said that it is the first time that China is establishing an Economic Zone outside of China.

Hu Jintao expressed his hope that Pakistan would be benefited from this investment and not only would able to fulfil its requirements regarding electronic products but also export to foreign countries.

Prime Minister Shaukat Aziz on the occasion said that Pakistan is proud of its friendship with China and value its assistance and co-operation in the development of Pakistan.

Aziz said that after the establishment of the Economic Zone, the private sector of both the countries would further close and the government would provide all-possible help in this regard.

The prime minister said that Pakistan is pursuing a friendly investment policies and immense prospects of investment are available in energy, oil and gas, mineral, engineering, auto mobile, infrastructure, information and communication technology and agriculture's sectors.


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## Owais

*Pak-Kazakhstan trade volume likely to swell 300 percent: Kazakh envoy *


ISLAMABAD (updated on: November 26, 2006, 17:29 PST): The envoy of the Republic of Kazakhstan in Pakistan Bakhitbek Shabarbayev is quite hopeful that the trade volume between Pakistan and Kazakhstan is likely to swell 300 percent in the next few years.

While talking to Online, the ambassador, who recently presented his credential papers to President General Pervez Musharraf, said that in 2005 and up to the beginning of November 2006 its volume has made, accordingly, $10.4 million and $10.7 million, against $8.9 million in 2002 and $9.1 million in 2003.

He said that this level of mutual Kazakhstan and Pakistan trade is far the real potential of our states. He pointed out that the principal cause of this problem was in absence of the direct transport communication between the two countries.

He expressed hope that the Karakoram highway will contribute a lot to the surge in bilateral trade between two countries. 

He said that in 1994 Pak-Kazakhstan signed an agreement "on development of Transport Co-operation" and in the same year the governments of Kazakhstan, Pakistan, China and Kyrgyzstan also signed agreement "On Traffic-in-Transit", which envisaged the exploitation of transit potential of the Karakoram Highway.

He said that the parliament of the Republic of Kazakhstan ratified Agreement between the Kazakhstan and Pakistan on mutual incentives and protection of investments and when this agreement enter into force in Kazakhstan will be created more favourable conditions for implementation of mutual investment projects for Pakistani businessmen. 

He said that there existed lot of potential for investors of both countries to cooperate themselves in petroleum and other sector and the investors of both countries come forward and take benefit from each others experience especially in oil and gas sector.

The envoy said: "The Kazakh embassy is carrying out relevant work and there are certain results. So, for example, for the years of my diplomatic mission in Pakistan the average number of Kazakhstan-Pakistan joint Venture companies functioning in Kazakhstan, has increased more than twice, against 26 Joint ventures in Kazakhstan in November 2003. Since the representative offices of the national bank of Pakistan functioning in Almaty. The number of Pakistani businessmen, who visited Kazakhstan on business in the period between 2004 and 2005, increased by two times".

He said that in 2004-2005, the embassy organised and carried out special reconnaissance visits to Kazakhstan for the heads and members of the Chambers of Commerce and Industry of Lahore, Rawalpindi and Peshawar. This year, we plan to organise similar visits of Chambers of Commerce and Industry of other cities of Pakistan, he said. 

He said that Kazakhstan has achieved great success in the economic development, which today is known all over the world.

Average annual rate of growth of industrial production in the country make up more than 10 percent and GNI per capita during the 15 years tripled, the volume of foreign trade turnover increased fourfold, the state budget allocations for public health services grew by four times, for a science and education by three times etc.

In a reply to question regarding the importance of international organisations in the development of the modern world and the role of our countries in these organisations, Shabarbayev said that modern actively globalising world simply cannot exist without international organisations and today's international political and economic structures, simply speaking, are the 'main fundament' for the development of the whole human civilisation.

He said that the reality is that the globalisation process in intensifying and it is bringing in not only benefits in the forms of scientific and technical progress, increasing level and improving life standards of people, but also many common for all people threats and problems- international terrorism, pollution of environment, man-made catastrophes etc, which can be solved only by joint efforts of the world community. 

Therefore, no country, whatever powerful it is, will not be able to actively and effectively develop out of co-operation with international community and its organising. 

He said that the humanity has already rich experience of work in such global forum as United Nations which helped the world in 2oth century to avoid the break out of the third world war, solve humanitarian, technogenetic and other problems. 

Today, he said, the UN has new tasks in its agenda, which require radical modernisation of its activity and Kazakhstan, as majority of other countries, actively supports the idea of UN modernisation in order to increase the effectiveness of its peacemaking and humanitarian activity.

About the Organisation of Islamic Countries (OIC) reforms, the Kazakh envoy said that the process of mutual understanding and support, in the frame of international organisations, is also followed up in the common ideas of reforming OIC. 

In this context, he said that leadership of Kazakhstan paid with great inters and supported initiative of President General Pervez Musharraf -Enlightened moderation-, where was proposed the fundamental principles and ideas on reforming OIC, in order to increase its role and effectiveness in international arena. 

About CICA, the envoy said that the CICA process is aimed at strengthening the interaction and confidence building measures between all countries of Asia. Today, he said, CICA includes 30 states with Pakistan among them, which actively participates in its work and facilitates the expanding and deepening of the activity of this peacemaking process. 

He said that June 17, 2006 meeting of CICA held in Almaty, which was attended by President General Pervez Musharraf, was the important stage of development of the CICA process. He expected hope that the vital decisions, which are to be adopted during this meeting, would allow us to completed formation of CICA process as functional organisation.

About the future of Shanghai Co-operation Organisation (SCO), he said that SCO is comparatively the youngest among international organisations but it earned high respect in the world by its active and effective activity. The SCO will not only promote interregional trade and economic co-operation but also promote peace and security in the vast part of Eurasian continent, he said. 

He said that after joining Pakistan and India in SCO as Observer states peace and security would strengthen in the region as well.

About Kashmir issue, the Kazakh envoy said that his country supported peaceful solution of the Kashmir issue and appreciated the peace process. He said that the peaceful solution of this issue would improve peace and security situation in the region. 

He said that Kazakhstan also believe that without involving the whole community, the peace would not be maintain in Afghanistan.


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## Owais

*China firm to support investment in Pakistan: Hu *

LAHORE (November 26 2006): "Our commercial organisations will give preferential treatment to Pakistan, while Chinese government policy remains firm in supporting investment in this country." This was stated by Chinese President Hu Jintao at a civic reception given by Punjab Chief Minister Pervaiz Elahi at the Shalimar Gardens here on Saturday.

President Jintao received enthusiastic welcome from 7,000 citizens of Lahore. He stated in unequivocal terms that friendship of Pakistan and China would remain steadfast and friendly against all odds and change of political scenario whatever it may be.

The Chinese President averred that economic, political, military, and social relations between the two countries had worked for benefit of each other.

Referring to economic ties between China and Pakistan, he said that Chashma, Gwadar, and Shahrah-e-Karakoram projects spoke volumes of success for them.

He said that China was thankful to Pakistan for collaboration it provided to it in difficult period and this would never be forgotten.

He said that standing by each other in difficult periods, Pakistan and China both had become staunch and dependable friends of each other.

Speaking about hospitality of Lahorites, the Chinese President said that he had witnessed it 22 years back and was feeling its warmth again during the current visit. He said that Chinese were aware of the proverbial friendliness that ripened here historically.

He said that in his meeting with President Musharraf they agreed that their strong brotherly relations would contribute to universal stability.

Mentioning, with reverence, the name of Allamah Iqbal, the Chinese leader said that Lahore had played epoch role in the struggle for independence of Pakistan.

Earlier, Punjab Chief Minister Pervaiz, welcoming Chinese President Jintao, stated that people of Lahore always held the Chinese nation in the highest esteem and the people of Lahore were highly honoured to welcome a leader whose entire life had been symbolic of struggle of highest cause of serving the country and the people of China.

He said that 21st century would have to seek guidance from the ancient Chinese wisdom for solutions of its burning issues and disputes.

The Chief Minister said that China had always upheld the time-honoured principles of international justice, and Pakistan had always enjoyed complete support of China on the Kashmir and other issues.

He said that China had supported Pakistan at every crucial juncture and the people of Pakistan could not forget the fact that when the City was attacked 40 years ago, the friendship of China had stood with them with the strength of Great Wall of China.

He said that with rapid progress made under able guidance of President Pervez Musharraf, the people of Punjab were waiting for guidance of China in the journey of development. He expressed confidence that the federal government would leave no stone unturned towards completion of any project to be executed in the province with the guidance and co-operation of China. Pervaiz said that Punjab government was setting up Jiangsu Cultural Centres in the Province for teaching Chinese language, and would also provide scholarships to students in this regard.

The Chief Minister said that every citizen of Pakistan and Lahore had good wishes for the people of China. The Chinese President was presented a painting and other gifts by the CM on the occasion.

Agencies add: Pakistan and China have entered into an agreement to set up a joint modern electronics complex as a symbol of their everlasting friendship.

The agreement signed by the Defence Science and Technology Organisation (DSTO) and the Chinese firm CETC. The agreement is expected to prove a milestone in achieving self-reliance in the fields of electronics and communications.

It will also help develop the electronics industry and provide a national base for the defence electronics technology. The National Highway Authority (NHA) on Friday signed an agreement with China Road and Bridge Corporation for the upgradation of Khunjerab-Raikot section of the Karakoram Highway (KKH).

The agreement was signed by Chairman, NHA Major General Farrukh Javed and company's president Chen Yu Sheng, says a press release.

Speaking on the occasion, General Farrukh said that Karakoram Highway was a symbol of eternal friendship between Pakistan and China. Widening and improvement of Raikot-Khunjerab section (335 km) was important in view of Pakistan's trade relations with China and the Central Asian Republics. He said the upgradation of KKH into an all weather road was NHA's top priority to improve trade in the region.

Highlighting various aspects of the project, the NHA Chairman said it would cost 490 million dollar and would be completed by 2010. The KKH connects Pakistan (Hasanabdal) with China through famous Khunjerab Pass. It was completed by FWO in 1978 with Chinese assistance.


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## Owais

*SBP modifies export finance scheme *

KARACHI (November 26 2006): The State Bank of Pakistan has modified the export finance scheme and decided that where forwarder's cargo receipt (FCR) is submitted, in lieu of copy of bill of lading or airway bill, it may be accepted as proof of shipment under the scheme.

A SBP circular issued on Saturday said that it had been noticed that some exporters, instead of submitting bill of lading/airway bill, submit house bill of lading or house airway bill along with forwarder's cargo receipt to their bankers as confirmation of shipments of their goods, against which refinance has been obtained.

The circular said that these documents are not valid documents presently for showing performance against refinance loans availed under the scheme at pre-shipment stage.

The bank has therefore decided that in cases where FCRs are submitted in lieu of copy of bill of lading or airway bill, the same may be accepted as proof of shipment under the scheme, provided that such document is backed by letter of credit specifically requiring submission of FCRs and mate's receipt (where shipment is by sea) or export general manifest (where shipment is by air) and that export proceeds thereof have been realised in relation to the shipment involved.

Thus, when export proceeds are not realised, as per time frame prescribed by Exchange Policy Department the shipment will be treated as irregular.


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## Owais

*Industrial sector's share in GDP up at 26 percent: Shaukat *

ISLAMABAD (November 26 2006): Prime Minister Shaukat Aziz said here on Saturday that Pakistan's industrial sector had shown significant growth during past seven years, and the rise in share-to-GDP of overall manufacturing from 23 percent to 26 percent and of large-scale manufacturing from 10 percent to close to 13 percent was a manifestation of this great achievement.

He stated this while presiding over a meeting at the PM House to review large-scale manufacturing statistics. The meeting was attended among others by Minister for Industries and Production Jehangir Khan Tareen, Planning Commission Deputy Chairman Dr M Akram Sheikh and other senior officials.

He said that the industrial sector was continuing to maintain the strong growth momentum and it was heartening to note that the growth of large-scale manufacturing in the first quarter of the current financial year was in double digits.

The Prime Minister reviewed the entire process of industrial statistics and said that availability of accurate data "plays a critical role" in future planning and development of the country.

He said; "The government will continue to improve the system of data collection, compilation and analysis, to make it more suitable for future planning." The Prime Minister asked the Federal Bureau of Statistics (FBS) to complete the next Census for Manufacturing Industries (CMI) as soon as possible.

He also asked Ministry of Industries to broaden the scope of data collection and involve industry associations in the process. The Prime Minister set up a committee comprising Finance and Industries Ministries, Planning Commission, Federal Bureau of Statistic and CBR to monitor the entire process of statistics collection, compilation and analysis.

Earlier, the Ministry of Industries in its presentation highlighted the growth performance of industrial sector and GDP contribution of various sub-sectors. The Federal Bureau of Statistics informed the meeting that it was in the process of completing next Census for Manufacturing Industries (CMI), which has 44 percent more coverage than the 2000-01 census.


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## Owais

*Textile processors seek government incentives *

FAISALABAD (November 26 2006): Sui gas prices and the prices of caustic soda for the textile processing sector should be rationalised and the levy of income tax may be deferred for a period of five years enabling this value-added and export-oriented sector to cope with the vast challenges of the WTO.

This was stated by Mohammad Saeed Sheikh, chairman, All Pakistan Textile Processing Mills Association (APTPMA), on the conclusion of the meeting of the Sub-Committee of the National Textile Strategy Committee (NTSC) in Faisalabad the other day. The meeting was chaired by Mian Tariq Saigol, chairman, NTSC Sub-Committee and Federal Textile Industry Secretary Syed Masud Alam Rizvi.

Among others, Ms Rukhshana Shah, secretary LGCC, MoT Camp office, Lahore, attended the meeting. Representatives of Pakistan Textile Exporters Association (PTEA), Pakistan Hosiery Manufacturers Association, (PHMA), All Pakistan Textile Mills Association (Aptma), All Pakistan Textile Processing Mills Association (APTPMA), Power Looms Association and Caustic Soda Manufacturers presented their viewpoint on behalf of the private sector.

APTPMA was represented by its Chairman Muhammad Saeed Sheikh, former APTPMA chairman Mian Shabbir Ahmed and Faisalabad Region Chairman Mian Aftab Ahmed. Presenting his stance on behalf of APTPMA, Sheikh Saeed contended that whereas Sui gas has assumed the status of a basic raw-material for the value-added and export-oriented textile processing sector, the recent enhancement by Ogra in gas tariff, on the pretext of enhancement of international oil prices is untenable and highly uncalled-for, because the oil prices in the international market have receded considerably and as a sequel to enhancement of gas development surcharge (GDS), the gas companies are making an additional profit of Rs 2 billion.

In view of this state of affairs, the APTPMA chief demanded a relief of at least 30 percent for the textile industry in gas prices enabling it to survive in the international export market.

Other irritants and impediments, which the APTPMA delegation highlighted in the NTSC meeting were the levy of income tax, exorbitant rate of import duty on caustic soda and rationalisation of the rate of mark-up on textile machinery.

They suggested that the import duty on caustic soda flakes should be reduced from 25 to 10 percent, while caustic soda liquid too be reduced to a flat rate of 10 percent.

They also suggested that the rate of mark-up on textile machinery may be reduced to a maximum of 7 percent whether it is for BMR or LMM, saying the levy of income tax on textile exports be deferred for a period of five years.


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## Owais

*Pakistan attractive place for FDI: Musharraf *

LAHORE (November 26 2006): President General Pervez Musharraf has said Pakistan has become an attractive destination for foreign direct investment (FDI). He was speaking at the groundbreaking ceremony of Defence Raya Golf Resorts in DHA here on Friday evening.

First Lady, Begum Sehba Musharraf, Punjab Governor Lieutenant General (Retd) Khalid Maqbool, Corps Commander Lahore, Lieutenant General Shafaatullah Shah and Chief Executive of Malaysian real estate developers, BRDB, Dato Sri Akbar Khan were also present on the occasion.

President Musharraf said that there was a rise in Pakistan's economy and added the country's GDP and per capita income had doubled. In this scenario, Pakistan was a good venue for investment, he maintained.

The president appreciated the Malaysian firm, BRDB for joining hands with Defence Housing Authority (DHA) Lahore in Defence Raya Golf Club project and hoped that more companies would follow suit. He called for promoting the soft image of Pakistan and said that improvement in sports, culture, heritage and tourism sectors could help attain this goal.

He hoped that the projects like Golf Resorts would go a long way in the promotion of healthy activities in the country. The people of Pakistan were keen to have entertainment, the president said and added that the Pak-Malaysian joint venture would attract people to activities like golf. The president observed that DHA, Fauji Foundation and Army Welfare Trust were rendering valuable services in different sectors such as health, education and housing.

He dispelled the impression that army was involved in business activities through these organisations and stated that these were basically engaged in welfare-oriented projects. Taking care of retired army personnel of all ranks was the responsibility of the army and DHA, Fauji Foundation and Army Welfare Trust and all these were working very well for this purpose, he asserted.

However, only a few serving officers/officials of the army, he emphasised were performing duties with these organisations while main focus of the force was on "its professional training and operational preparedness".

Musharraf said the staff of these organisations mainly comprised retired military personnel and civilians. "DHA is also one of the major tax payer organisations of the country," he added. The president appreciated the services being rendered by Corps Commander Lahore Lieutenant General Shafaat Ullah Shah in different sectors and said, "I am greatly impressed by it."

The president also referred to the inauguration of a technical institute and a medical college and laying of foundation stone of a university for which DHA had given a land spreading over an area of 130 acres.

Earlier, Corps Commander Lahore Lieutenant General Shafaat Ullah Shah who is also the President of DHA, said that DHA provided attractive investment opportunities due to credible ownership rights of plots, one window operation, continuity of policies, fast track decision making and above all security of investment.

He said DHA was the only ISO certified housing society in the country. Chief Executive BRDB, Dato Sri Akbar Khan said that a conducive business environment had made Pakistan an ideal place for foreign investment.

He said that a boom had occurred in property sector in this part of the world and hoped that the Defence Raya Golf Resorts project would help provide better housing facilities to Pakistanis especially the local people.


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## Owais

*SPI up 11.78 percent *

ISLAMABAD (November 26 2006): The Sensitive Price Indicator (SPI) year-on-year of 53 essential items for week ending on November 23, has shown 11.78 percent increase as compared to the corresponding week of last year.

The high percentage change is close to that of Eid week, which ended on October 27 and showed a record distinctive figure of 11.86, with income groups of up to Rs 3000, Rs 3001-5000 and Rs 5001-12000 has seen unusual increase of 14.65, 14 and 13.36 respectively, whereas income group of above Rs 12000 were the least affected with only 10.89 percentage change as compared to corresponding week of last year.

The bulletin on SPI, based on data of 53 items from 17 urban centres, showed that 15 items registered increase, 10 items showed decline, while prices of 28 items remained unchanged with reference to the last week prices.

The commodities, which hit the poor most this week were onions, tomatoes, and red chillies showing 31 percent, 23 percent and 4.4 percent change respectively from last week, while the same has seen 263 percent, 82 percent and 33 percent increase from corresponding week of last year. Otherwise, the data provided for rest of the commodities did not show much rise from last week's prices.

The weekly bulletin of Federal Bureau of Statistics (FBS) shows that the rise in the prices of some basic necessities and kitchen items in 12 months has been substantial.

These items, apart from onions, tomatoes and chillies, were vegetable ghee, sugar, gur, salt, tea, pulses, potatoes, curd, milk fresh, beef, garlic, gas, kerosene oil, LPG, firewood, which directly hit the low-income group.

Analysis of the data from the report year-on-year basis of 44 items showed increase over last year. Out of these 22 items of significance to low-income group include: onions 263 percent; potatoes 33 percent; tomatoes 82 percent; wheat 3 percent; sugar 21 percent; salt 25 percent; red chillies 33 percent; gram pulse 49 percent; moong pulse 26 percent; mash pulse 45 percent; gur 24 percent; beef 13 percent; milk 12 percent; curd 10 percent; tea 12 percent; match box 10 percent; firewood 18 percent; petrol 3 percent; diesel 4 percent; LPG 4 percent; kerosene 7 percent; and gas increased by 20 percent.

Moreover, a few items showing decrease from the previous week were still dearer when compared to corresponding week of last year, which are sugar, potatoes, gur, gram, moong and mash pulses, and LPG.


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## Owais

*FTA to further boost Pak-china economic ties *

BEIJING (November 26 2006): The signing of Free Trade Agreement (FTA) between Pakistan and China is a historic event that will help a quantum jump in trade and economic activities between the two countries.

"With the signing of the FTA it is likely to take a quantum leap in the years ahead and the determination of the leadership of the two countries is to increase it to over 10 billion dollars would be realised very soon," said the Chairman Institute of Strategic Studies, Islamabad, Inamul Haque.

Talking to a private TV channel, he termed the signing of the FTA as the most important agreement between the two countries. He said that the agreement on expansion of Karakoram Highway stood as symbol of affection between the two nations.

Haque said that Pakistan and China could play a very positive role in increasing political stability, enhancing economic prosperity and bringing the world closer to each other.

He said that relations between Pakistan and China were comprehensive and had always been based on principles and co-operation with each other for the last over fifty years and added that the friendship and co-operation are strategic in nature.

"We believe that during the 21st century these relations will grow even stronger because of the emerging opportunities and challenges that are confronted in the world," he said.


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## Neo

*Deal inked for coal geological investigation in Thatta *

KARACHI (November 26 2006): Sindh Coal Authority, Mines and Mineral Development Department and China National Machinery Import and Export Corporation (CMC) Saturday signed an agreement for Detailed Coal Geological Investigation (DCGI) in Sondha-Jheruk coal field area in Thatta district for installation of a power plant there.

Abdul Hameed Akhund Secretary, Mines and Minerals Development Department and Shan Web, Vice President CMC signed the agreement in the of Sindh Minister for Mines and Mineral Development.

The agreement was signed in pursuance to a MoU signed on July 29, 2006 for development of mutually agreed and defined integrated coal mine and mine-mouth power generation complex on POT basis. CMC will setup two power generation plants of 300 MW each. Sindh government has identified a large potential of lignite coal resource at Sonda-Jheruk through a preliminary geological survey.

The agreement envisages the conduct of Detailed Coal Geological Investigation (DCGI) by CMC so as to establish firm basis for coal extraction and power generation.

In order to develop the identified Sonda-Jheruk coal field for its commercial exploitation, the CMC will undertake further exploration for detailed geological findings so as to utilise it for power generation, besides attracting international investment.

The CMC will send its engineering technicians, management personnel and mobile drilling rigs together with all necessary machinery, equipment and materials etc to Pakistan who will here as soon as possible. The DDGI will he completed within six months starting from the date of signing of this agreement and this period will be extended in case there were delays beyond CMC's control.

The feasibility study report on an integrated Coal Mine & Power Plant Project will be presented to Sindh government for obtaining Mining License which will be issued within one month from the date of submission of the report. According to CMC sources here its equipment and personal, will start arriving, here in early December.


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## Neo

*Bridging the gap*

KARACHI, Nov 25: Pakistan and China have been the best of friends in the geo-political arena. But how far up the Great Chinese Wall has to be scaled on the economic front, has not really received a serious thought.

The strategic relationship of the two countries has still to mature into close economic ties. Be it bilateral trade, mutual investments (direct/ portfolio or both), joint ventures, aids/loans provided to each other, the gap between the potential and the real is wide.

Scores of formal agreements have pushed total trade volume between Pakistan and China from under $1 billion in 2000-2001 to about $5 billion by the end of 2006. India trade figures were better by a few million in 2000-2001. Today China-India total trade volume stands at $18 billion.

According to information collected from different sources there were about 145 private Chinese companies in Pakistan in 2003. After three years, in 2006 there are in all 52 Chinese companies left in Pakistan. Over the same period, according to our sources in Pakistan German Business Council, presence of German companies in Pakistan increased from 80 to 190. Same seems to be true for several other Western countries.

Except for National Bank of Pakistan no other Pakistani bank has any presence in China. Not a single Chinese bank has so far come to Pakistan.

The apex body of private sector Federation of Pakistan Chamber of Commerce and Industry (FPCCI) does not have any office anywhere in China. Its counterpart next door Federation of Indian Chambers of Commerce and Industry has number of sub stations in China.

Over the last few years West has aggressively penetrated deep into Pakistani society through specialised institutions, NGO sector and through direct contact between professional and traders. No firmed up data was available but there are several dozen organisations jointly manned by Westerners and Pakistanis specialising in issues related to corporate governance, competitiveness, etc. Chinese interaction has been comparatively limited.

These facts beg explanation. Why steps taken to bring economic actors on two sides closer have failed to persuade them into cashing on the opportunities?

Leaders of private sector here when contacted by Dawn expressed great enthusiasm. They admitted that this time round the government kept business class of the country fully involved in the process of defining the parameters of trade relations with China.

FPCCI President Chaudhry Saeed told Dawn from Islamabad that the chamber was in the process of opening the office in Shanghai. He felt that the private sector was oriented towards West and it would take some time before they re-evaluate and reposition their businesses to suit the changed rules of the game.

High profile exchange of visits over the last five years, particularly that of President Pervez Musharraf earlier this year and President Hu Jintao current visit with a 200-member strong delegation, has contributed to further solidify a relationship based on convergence of economic and strategic interests of two countries.

A peculiar feature of closer understanding during the current phase is added emphasis on the economic dimensions of relationship between two nations. It reflects realisation on both sides that in order to sustain a comprehensive relationship substantive economic cooperation was absolutely necessary.

Since 2001 when Chinese Prime Minister Zhu Rongji visited Pakistan, the two countries have signed some 60 trade agreements and MoUs. A joint declaration on direction of bilateral relations was signed during President MusharrafÃ¢â¬â¢s visit to China in 2003. It was a road-map determining the direction and scope of Pakistan-China bilateral relations clearly laying emphasis on expanding economic cooperation. Two countries also signed Preferential Trade Agreement (PTA) in November the same year.

In 2004 during Prime Minister Shaukat Aziz visit, besides signing number of trade agreements Pakistan announced Ã¢â¬Ëfree market economyÃ¢â¬â¢ status for China. Reciprocating China committed to provide $150 million for Chashma Nuclear Power Plant (phase II).

During a landmark visit of Chinese Prime Minister Wen Jiabao in 2005, the two sides signed a treaty of friendship, cooperation and good neighbourly relations. Agreement on Ã¢â¬ËEarly Harvest ProgrammeÃ¢â¬â¢ was also signed that has become operational since January 1, 2006. Under the agreement China has brought to zero tariffs on 767 items.

Two days back two countries succeeded in concluding the Free Trade Agreement (FTA) clearly reflecting willingness at the state level in two countries to enhance quantum of mutual trade.

For people of Pakistan, China is a time-tested friend that provides them with a variety of consumer items within their reach.

The Ã¢â¬Ëmade in ChinaÃ¢â¬â¢ products have penetrated deep into Pakistani market. There are questions asked about the quality of Chinese products but as an ex-Chinese trade commissioner said you get value for money spent. Ã¢â¬ÅYou get what you pay for. Gone are days when China could not produce quality,Ã¢â¬Â he said. Ã¢â¬ÅToday if you are willing to pay you can get good quality products made in ChinaÃ¢â¬Â.

There is no denying the fact that cheap Chinese products have driven many local manufacturers out of domestic market. Probably this has also led to creation of suspicion about China amongst local private sector.

An interesting feature is the fact that numbers of Chinese exports from China to Pakistan are much larger than numbers reflecting Pakistani figures of imports from China.

Still so long ChinaÃ¢â¬â¢s formal trade with Pakistan has been a fraction of its trade with the rest of the world. On PakistanÃ¢â¬â¢s side situation is still worse. With its trade oriented towards far off West China hardly figured till the year 2000 with hardly five per cent of Pakistani exports directed to destinations in China.

The world looked on with awe at evolving closer relationship between Asian dragon China and Asian elephant India. How long will it take for India and China to get rid of the legacies of past to foster ahead with full confidence is not clear?

What is crystal clear, though, is the fact that if Pakistan and China can cross over a few barriers, greater mutual economic integration has the potential to further improve PakistanÃ¢â¬â¢s economic growth story in the region. It also raises the stakes for China as a world leader with its sphere of influence extending to Middle East and Central Asian states through the Pakistani Port at Gwadar.

http://www.dawn.com/2006/11/26/ebr1.htm


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## Neo

*Ufone to cover 1,500 cities by June 2007 *

ISLAMABAD: Ufone has started implementation of its largest ever $550 million expansion programme with a target to cover 1,500 cities, towns and villages by the end of June 2007.

The envisaged plan focuses on the expansion of network in terms of capacity and coverage in existing and new cities, besides providing high-speed wireless data services based on EDGE technology, said Babar Khan, President and Chief Executive of Ufone, while addressing a news conference here on Saturday. 

Ã¢â¬ÅThe current investment in network expansion will more than double the capacity,Ã¢â¬Â he said. 

Babar Khan said the coverage of Ufone for Hajj pilgrims would improve further. He said in line with its vibrant brand strategy and provision of infinite excellence, Ufone is once again set to introduce Ã¢â¬ÅPostpayÃ¢â¬Â for all those who expect more from life; from themselves and from their cell phones so that they can experience an unmatchable mobile communication they always wanted. 

He said postpay provides endless features on their mobile phones so they can enjoy special discounts, virtual private network, GPRS, international roaming, quality network, exclusive customer care, accurate billing and much more.


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## Neo

*Imports, exports increase *

KARACHI: Imports during July-October has surged by 7.69 per cent to $9.560 billion while exports recorded only 1.3 per cent rise to $5.551 billion over same period last year.

According to the provisional figures compiled by the Federal Bureau of Statistics, the exports in October decreased by 9.47 per cent to $1.282 billion when compared with September, 2006 $1.416 billion and by 3.24 per cent as compared to October, 2005 $1.325 billion.

Imports also fell by 12.74 per cent in October, 2006 to $2.132 billion compared to September, 2006 $2.443 billion and by 8.33 per cent as compared to October, 2005 $2.325 billion.

In rupee terms, exports from Pakistan during October, 2006 amounted to Rs77,688 million as against Rs85,681 million in September, 2006 and Rs79,118 million during October, 2005 showing a decrease of 9.33 per cent over September, 2006 and of 1.81 per cent over October,2005.

Exports during July-October, 2006 totalled Rs335,428 million as against Rs327,002 million during the corresponding period of last year showing an increase of 2.58 per cent.

In terms of US dollars the exports during July-October, 2006 totalled $5.552 billion as against $5.478 billion during the corresponding period of last year showing an increase of 1.34 per cent.

Main commodities of exports during October, 2006 were Knitwear (Rs10,157 million), Bedwear (Rs8,159 million), Cotton cloth (Rs7,506 million), Cotton yarn (Rs6,712), Readymade garments (Rs5,864 million), Rice others (Rs3,073 million), Rice basmati (Rs2,718 million), Towels (Rs2,292 million) Made-up Articles (inc other tex)(Rs1,919 million) and Art, silk & Synthetic textile (Rs1,895 million).

Imports into Pakistan during October, 2006 announced to Rs129,170 million as against Rs147,881 million in September, 2006 and Rs138,846 million during October 2006 showing a decrease of 12.61 per cent over September, 2006 and of 6.97 per cent over October, 2005.

Imports during July-October, 2006 totalled Rs577,588 million as against Rs529,877 million during the corresponding period of last year showing an increase of 9 per cent.

In terms of US dollars the imports during July-October, 2006 totalled $9.560 billion as against $8.877 billion during the corresponding period of last year showing an increase of 7.69 per cent.

Main commodities of imports during October, 2006 were Petroleum crude (Rs17,788 million), Petroleum products (Rs15,926 million), Palm oil (Rs5,140 million), Iron & Steel (Rs5,118 million), Plastic materials (Rs4,791 million), Mobile phone (Rs3,789 million), Gold (Rs2,535 million). Textile machinery (Rs2,370 million), Power generating machinery (Rs2,367 million) and Electrical machinery & apparatus (Rs2,336).


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## Neo

Sunday, November 26, 2006 

*Pakistan loses 1,700 physicians a year to other countries*



> * In Feb 2006 Pakistan had 18,000 registered specialists
> * Pakistan will have about 150,500 physicians in 2020 for 208.4m people
> * Pakistan has 1.95% of the worldÃ¢â¬â¢s medical schools
> 
> Daily Times Monitor



KARACHI: Brain drain has been a chronic problem for Pakistan over the years. However, a new study of the phenomenon in medicine has revealed that Pakistan is the third leading source of international medical graduates (IMGs) in affluent countries.

Jamsheer J. Talati and Gregory Pappas published their findings in an article titled Ã¢â¬ËMigration, Medical Education, and Health Care: A View from PakistanÃ¢â¬â¢ that appeared in Ã¢â¬ËAcademic Medicine. Impact of International Medical Graduates on U.S. and Global Health Care: Proceedings of the 50th Anniversary Invitational Conference of the Educational Commission for Foreign Medical GraduatesÃ¢â¬â¢ in December 2006. They pointed out that 60 percent of IMGs in the United States and 75% in the United Kingdom originate from poor countries. Most physicians practicing in Pakistan are graduates of Pakistani medical schools or reentering migrant citizens. Combined, the 39 medical colleges in Pakistan produced an average of 5,038 physicians per year from 2000 to 2004. In 2000, 50 physicians migrated into Pakistan with the MBBS or an equivalent degree and no postgraduate qualification; this number reached 395 in 2004. These graduates were trained in China, the Philippines, the Caribbean, and former Russian Republics. The PMDC has recognized five Chinese medical schools.

Combined, the number of graduates from PakistanÃ¢â¬â¢s medical schools and number of reentering IMGs can be reasonably expected to reach 6,800 per year as schools mature. Since 1960, Pakistani-trained physicians have assumed teaching posts in medical colleges after their postgraduate medical education abroad. At the Aga Khan University Medical College (AKUMC), 63% of faculty in professorial ranks have foreign qualifications. 

As of February 2006, Pakistan had 18,029 registered specialists. Many returning specialists may not have registered themselves as the CPSP alone has certified 6,418 members (MCPS) and 7,329 fellows (FCPS) since its inception in 1962.

The number of medical colleges doubled from 1997 to 2005 despite a dearth of teachers, facilities, and teacher training institutions for medical colleges. The number of students entering medical colleges increased from 400 (in four medical colleges) in the 1960s to 4,239 (of whom 3,552 qualified) in 16 colleges in 1981. Since the first private medical college, AKUMC, was established in 1983, 18 other private sector colleges have been established. Class size, at times exceeds 300 in some public institutions. Fortunately, access to medical education is not limited by poverty or educational or geographical disadvantage. Although the total cost of providing the five years of medical education is U.S. $100,000, students are charged tuition of U.S. $833 at public colleges and U.S. $10,000Ã¢â¬â35,000 at private colleges. 

Causes of physician loss include emigration and cessation (or diminution) of practice for a variety of reasons, including migration.

The researchers estimate that 1,700 physicians per year are lost from the pool of practicing physicians. The Bureau of Emigration and Overseas Employment estimates that annually about 1,000 to 1,500 physicians leave the country, of whom 10Ã¢â¬â15% return, for a net migration of 900 to 1,275 physicians. They can account for 1,150 emigrating physicians per year. Of this number, they estimate that 418 (the number starting graduate medical education in 2004 according to the Association of American Medical CollegesÃ¢â¬â¢ GMEtrack database to 500 emigrate to the US. As 4.4% of IMGs in the United Kingdom are from Pakistan, and there were 4,185, 4,325, and 5,904 IMGs in the United Kingdom (2000Ã¢â¬â2002), they have calculated expected annual emigration to the United Kingdom as 260. They extrapolated that 16 emigrate to Canada annually and 6 to Australia. However, they know that 1,061 and 367 candidates have attempted the Medical College of Canada MCCEE and MCCQE qualifying Part 2 examinations, respectively, indicating a possibly higher rate of migration to Canada. 

The flows to Arabic-speaking nations (ASNs) are probably about 350 annually; 300 a year have emigrated to Saudi Arabia alone. There are an estimated only 31 fellows in the ASN and 38 in other countries.

Although as reported in 2005, 12,813 physicians from Pakistan were in the United States, the United Kingdom, Australia, and Canada, they cannot determine the total number in ASNs. It was assumed that there were 25,000 graduates outside Pakistan, implying that there were 12,200 emigrants in countries other than the above four, chiefly in ASNs. At least 3,000 are accounted for: 2,000 in Saudi Arabia and 1,000 in the Persian Gulf states. They assume that this outflow will continue. An additional 20,000 Pakistani doctors are required in Saudi Arabia. 

Because of marriage, childbearing, and family, a sizeable number of women graduates are not practicing; anecdotal estimates of the percentage range from 5% to 50%. On average, 50% of those admitted to medical school are women; however, despite a higher pass rate for women than for men, as of December 2005 only 38% of registered physicians are women. Altogether, these causes result in loss of 370 physicians from practice.

They estimated that 73,890 physicians were practicing in Pakistan in December 2005. 

The net annual physician gain is 5,100, as 6,800 physicians are produced and 1,702 lost. They assumed a static rate of production of about 6,000 MBBS graduates annually. The number of IMGs (mostly Pakistani IMGs) coming to Pakistan, is projected to be static at 800 per year. They therefore predict that Pakistan will have approximately 150,500 physicians in 2020.

Whereas the supply of physicians in Pakistan is somewhat predictable, the level of demand is less certain: PakistanÃ¢â¬â¢s population is growing rapidly, and at medium growth rates, it will reach 173.6 million in 2010, 191.4 million in 2015, and 208.4 million in 2020. Life expectancy had increased to 62 years by 2004, from 45 years in the 1950s. A total of 6.7 % of the population was older than 60 years (in 2005). The economy is expanding rapidly.

Migration significantly depletes poor countries, but for Pakistan, with an anticipated shortfall in the year 2020 of 58,000 to 451,000 physicians, depending upon population demands, a total ban on migration, even stemming the loss of 1,500 emigrants per year, would still leave a deficit of 35,400Ã¢â¬â428,600 physicians in 2020. The United States had an IMG force of 10% in the 1960s, 18% in 1970, and 25% in 2002. The top 10% of Pakistani physicians are high achievers (some with United States Medical Licensing Examination scores in the 99th percentile). 

The total health expenditure of Pakistan (2004) was 2.4% of the gross domestic product. There were 2,000 medical schools in the world (in 2003). Pakistan has 1.95% of the worldÃ¢â¬â¢s medical schools. It has about 2.55% of the world population, and 39 schools, for a ratio of four million people per medical school.

Information was obtained from multiple sources, including the Pakistan Medical and Dental Council (PMDC) and College of Physicians and Surgeons (CPSP); publications indexed in PubMed; migration surveys; news items; annual publications of the Mehboob-ul Haq Human Development Center; the Web sites of the United States Agency for International Development, the World Health Organization, and the Government of Pakistan; and working papers for conferences.

http://www.dailytimes.com.pk/default.asp?page=2006\11\26\story_26-11-2006_pg7_10


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## Neo

Sunday, November 26, 2006 

*$7 billion needed for dams*

* Sindh, NWFP to be taken into confidence over construction of major water reservoirs 
* Dams on top of agenda for next CDWP meeting 

By Fida Hussain 

ISLAMABAD: The construction of Kalabagh, Diamer-Basha and Akhori dams will cost Rs 1.027 trillion, and the federal government will require Rs 432 billion, or $7.2 billion, in foreign funds for the completion of these projects, a senior government official told Daily Times on Saturday. 

The federal government has decided to take Sindh and the NWFP into confidence over the construction of major water reservoirs, to formally take these projects for funding to international financial institutions (IFIs). 

The official said that this would be the first step by the government in its bid to persuade IFIs to fund the projects. 

He said that unless Ã¢â¬Åwe reach a consensus with Sindh, NWFP and other stakeholders, the federal government cannot take up the funding issue with IFIsÃ¢â¬Â. 

Sindh and NWFP have strong reservations over the construction of Kalabgh Dam, and this is the main obstacle to the governmentÃ¢â¬â¢s plan to take up the funding issue with the World Bank (WB) or the Asian Development Bank (ADB). 

Keeping this in view, the government has decided to bring the stakeholders together and brief them on these projects. 

These projects are on the top of the agenda that has been finalised for a meeting of the Central Development Working Party (CDWP) next week. 

The official said that the CDWP meeting would not seek approval for allocations to these projects. The total cost of the Diamer Basha project has been estimated at around Rs 390.7 billion, Kalabagh Dam at Rs 370.5 billion and Akhori Dam at Rs 267 billion. 

The estimated foreign exchange component (FEC), which often comes in the form of financial assistance from IFIs and donor agencies, is Rs 178 billion ($2.96 billion) for Diamer Basha, Rs 170 billion ($2.8 billion) for Kalabagh Dam and Rs 85 billion ($1.4 billion) for Akhori Dam. 

The official said that these projects were deferred at the last CDWP meeting because of strong opposition from Sindh. The federal government has formed a committee to give a detailed report on these dams to the CDWP because of the provincesÃ¢â¬â¢ opposition. Apart from these three schemes, the CDWP meeting will take up projects of engineering design and preparation of tender documents for the Diamer Basha project, a Rs 188 million project for the installation of additional gas turbines at GTPS Shahdara, and the Rs 21.08 billion Chashma Hydropower Project.

http://www.dailytimes.com.pk/default.asp?page=2006\11\26\story_26-11-2006_pg7_7


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## Owais

*China to transfer indigenous iron ore steel making technology: Pakistan *


ISLAMABAD (updated on: November 27, 2006, 15:47 PST): A Memorandum of Understanding was signed here on Monday between Chinese Company MCC-Beris and Mughal Steel in the presence of Mr. Jahangir Khan Tareen, Minister for Industries, Production and Special Initiatives. 

It covers transfer of technology for making steel from indigenous iron ore reserves. 

The match making between the two companies was done by Engineering Development Board.

The Chinese Metallurgical Construction (Group) Corporation Baotou Engineering and Research Corporation of Iron and Steel Industry and Mughal Steel have agreed on a commercial project of Section Mill and 500m3 Blast Furnace. 

It also envisages a visit of Pakistan Steel delegation consisting of prominent private sector key players to China.

With the completion of the project present production capacity of Mughal Steel will increase to 1 mtpy with modern equipment and automation and control system, widen products range and improve quality.

Both sides have recognised the importance of optimum utilisation of the facilities and services available in Pakistan. The Chinese firm will also arrange training for Pakistani Engineers and Technicians. The project is planned to be completed by end of March 2008.

Addressing on the occasion the minister highlighted the significance and salient features of the MoU and said that it was first agreement of its kind between two steel making organisations of China and Pakistan. 

Imtiaz Rastgar, CEO, EDB, senior officials of the Ministry and Board were also present on the occasion.


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## Owais

*Short-term steps not in conformity with tax reform objective: World Bank *

ISLAMABAD (November 27 2006): The World Bank report on assessment of taxation system has observed that the short-term measures, taken by the Central Board of Revenue (CBR) to increase revenue collection, are not in conformity with the desired objective envisaged in the reforms.

Sources told Business Recorder on Sunday that the WB has submitted the assessment report on tax policy matters to CBR. In the first phase of technical assistance program, Professor Jorge Martinez Vazquez, Georgia State University, visited Pakistan and submitted the preliminary report, 'Preliminary assessment of tax system in Pakistan'.

The report concluded that there was need for medium- and long-term tax policy reforms in Pakistan.

It observed that, "short term stopgap measures, taken in an attempt to increase revenue collection, lack coherence. They frequently ignore other desirable objectives of tax system such as simplicity or distributional consideration".

In the second round of technical assistance program, Kaspar Richter, World Bank Senior Economist would work on modern long-term tax policy reforms in Pakistan.

Sources said that the WB has given a detailed preliminary assessment of the tax system and also compared it with the taxation models of countries having similar economic situation. The assessment also focused on analysis of the tax-to-GDP ratio and documentation of Pakistan's economy.

The CBR will discuss WB suggestions in an upcoming meeting during this week.

Meanwhile, the CBR and WB review mission would discuss key areas of the Tax Administration Reform Project. This includes establishment of Regional Tax Offices (RTOs), Human Resource Management Plans; Integrated Tax Management System, Customs Automation Plan and project management.


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## Owais

*Textile sector seeks cut in energy costs, interest rates *


FAISALABAD (updated on: November 27, 2006, 17:02 PST): Pakistan's textile industry, struggling with stiff competition, fears a further erosion of its global market share unless the government provides subsidies to help offset production costs.

Textiles are the mainstay of Pakistan's economy, accounting for about 60 percent of the country's total exports in 2005/06, and contributing 8.5 percent to its gross domestic product (GDP).

The industry employed 38 percent of the total manufacturing work force.

But textile exports fell 9.11 percent year-on-year to $3.23 billion in the first four months of the 2006/07 fiscal (July-June), and analysts say the trend could hurt overall growth.

The sector has been struggling to compete with Chinese, Indian and Bangladeshi products that are eating into its market share, primarily because of lower prices.

"Our production costs have become very high compared with others due to high energy costs, rising interest rates as well as an increase in wages," said Mian Mohammad Latif, chairman of Chenab Ltd.

"Governments around the globe support their export industries by providing relief. If we don't support our industry, we will be left uncompetitive," said Latif.

Chenab is one of Pakistan's main textile producers, with annual exports worth more than $100 million. It employs about 15,000 people in Faisalabad, Pakistan's main textile city.

Pakistan's export industries, of which textiles are the main one, have suffered because of the international war on terrorism. Many foreign buyers have shunned the country because of fears of militant violence.

Nevertheless, most analysts are hopeful the Pakistani textile industry, which has seen investment of more than $6 billion in recent years on modernisation, can flourish in the quota-free regime in place since 2005.

PROBLEMS, REMEDIES 

Rising interest rates and high energy costs are a heavy burden but Anwar Sajjad, director of the Arshad Group, another Pakistani textile exporter, said the industry was not seeking subsidies.

"What we want is relief on energy prices, as that's about 20 percent of costs, as well as soft interest rates," he said.

"We took bank loans to import machinery and invest at about 4 percent, and that now stands at over 12 percent, making it a very high cost."

A flood of Chinese fabrics into the domestic market is alarming some Pakistani producers. But bigger manufacturers say the Chinese imports are mainly silk and polyester, not cotton, so the threat is not so serious.

The government says it is concerned.

"We are aware of the issues facing the industry and have already formed a committee to look into the problems and suggest remedies," said Textile Industries Minister Mushtaq Cheema.

Cheema, a textile mill owner, said he had requested a meeting with the prime minister to discuss the findings.

"We're hopeful the prime minister will look favourably at the suggestions and some relief measures will be announced."

Time was of the essence, said Chenab's Latif.

"We're already very late and don't have time. Any steps taken today are positive but if we delay further they'll be no use," he said.

"The base of Pakistan's economy is textiles, and if that is failing, all government policies, fiscal or monetary, are bound to fail as well."


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## Owais

*478 million acres land to be brought under wheat cultivation: DCO *


SIALKOT (updated on: November 27, 2006, 16:18 PST): As many as 478 million acres of land will be brought under wheat cultivation in the district during the current season, an official said here on Monday.

"One million acres of land had so far been brought under wheat cultivation in Sialkot, Daska, Sambrial and Pasrur tehsils" said DCO Maj (Rtd) Rizwan Ullah Baig.

He said under the special directive of the Punjab government, local agricultural department had launched a special training programme with a view to enhance the per acre yield, besides, equipping farmers and wheat cultivators with latest farm technology in 1451 villages of Sialkot district, a hub of producing the best quality bumper wheat yield.

The official experts of agriculture department informed the cultivators about the seeds, their treatment, time of sowing and balanced use of fertilisers and pesticides.

The DCO said that the said training programme would certainly prove helpful and supportive in increasing per acre yield of wheat, sunflower, potatoes and other crops, besides, enabling the growers to attain healthier results as well as pave a way for achieving more yielding results.


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## Owais

*$236 million ADB funded Road Safety Education Program launched in Sindh* 


KARACHI (updated on: November 27, 2006, 16:06 PST): Road Sector Development Directorate, Sindh Works and Services Department and Sindh Education Foundation on Monday launched Pakistan's first Road Safety Education Program for the province with a cost US $236 million funded by Asian Development Bank (ADB).

The aim of program is to educate children, assist teachers and community members and inform pedestrians and other road users on the essentials of road safety.

US $231 will be spent on construction of 164 km provincial highways and 1200 km farm to market roads while US $5 million will be used for reform and safety awareness programs.

Sindh Minister for Mines and Mineral Development Irfanullah Khan Marwat was the chief guest of the event. Sindh Minister for Works and Services Pir Sadruddin Shah Rashdi, Sindh Minister for Women Development Dr. Saeeda Malik, Sindh Chief Secretary Fazal-ur-Rehman , MD Sindh Education Foundation Prof. Anita Ghulam Ali, Advisor to Sindh Chief Minister Fatima Surria Bajya, EDOs and teachers from all over the province were also present.

Marwat appreciated the participation of the ADB in this program and said that government was also committed to move forward and take initiatives for safety of masses. He also appreciated the efforts of RSDD and Sindh Education Foundation and assured all possible support in this regard.

Speakers on the occasion indicated that due to lake of road safety education, road accidents were a major and growing cause of death and injury to children in developing countries like Pakistan and urged educational institutes to create awareness and start teaching their students about road safety as our young one were less aware of the potential hazards around.

They also stressed on parents to play their role in guiding their children on the proper usage of roads.

Prof. Anita Ghulam Ali said that road safety was an issue that needed to be addressed. She said that in order to avoid tragedy, we must ensure that we keep up efforts to educate young to start practising road safety from an early age.

She said that the Road Safety Program was an initiative that would also strive uphold the life and dignity of children. 

She said that it was crucial to teach young for making good road safety behaviour as part of their daily life.

Anita said that responsible driving could save lives and reduce the occurrence of road accidents. She also urged school and other education institutions to start teaching about road safety and traffic rules to their students.

Ajaz Ali Khan, DG Road Sector Development Directorate, Sindh Works and Services department told that in Pakistan about 5000 people die in road accidents every year in which 20 percent of all such deaths were under 15 years of age.

He said that by 2020 road accident would be the third leading cause of death in the world.

He said that due to lake of road safety awareness, road deaths and injuries were increasing at a faster pace in Asia then other regions of the world. He said that road accident trends in the country were also on rise and needed to be addressed by comprehensive road safety programs.

Technical Co-ordinator RSEP, Daman Bozar informed that road safety program would be implemented in 100 schools of the province. Increasing skills of teachers to impart road safety training by developing curriculum, improve knowledge, raising awareness of parents, community members and involve them in educational activities were motives of the program, he said.


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## Owais

*OGDC GDRs to fetch $1.5 billion *

ISLAMABAD (November 27 2006): The government will fetch $1.5 billion from Oil and Gas Development Company (OGDC) global depository receipts (GDRs) as its books' building process has been well received in the international market.

The officials in Islamabad say that initial reports on books' building were indicative of GDRs oversubscription. They, however, add that the exact GDRs' size will be decided after getting full picture of the books' building process.

Talking to Business Recorder on Sunday an official said: "The GDRs offering has been well received by investors in the international market and we believe that it's going to oversubscribed".

He said that the response had improved officials' confidence level in Islamabad and they are confident to fetch $1.5 billion from the transaction.

After taking into account the pros and cons of GDRs transaction, the government had opened the books' building process for the investors from November 15 to its close on November 30.

Before opening of books' building process, the officials in Islamabad had announced at a press conference that in case of over-subscription the government would use the option of green-shoe for GDRs offering.

As the books' building process in on, an OGDC team is holding company road shows in USA, UK, Singapore and Dubai to give the investors a good idea of the company profile and contribution in Pakistan's oil and gas production. The company road shows are going to conclude by the end of the current month.

The company road shows are actually a follow-up of the country road shows held sometimes back.

The policy makers claim that the country road shows were a great success and they were going to pay Pakistan a good dividend in the form of good response for OGDC GDRs.


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## Neo

*90pc privatisation proceeds to be used for debt retirement*


ISLAMABAD, Nov 26: The Ministry of Finance has issued Ã¢â¬Ëstanding instructionsÃ¢â¬â¢ to the State Bank of Pakistan to automatically retire government debt to the extent of 90 per cent of privatisation proceeds without seeking further guidance from the ministry on individual basis.

The instructions have apparently been issued following objections raised by the audit department which reported to the Public Accounts Committee last week that the privatisation commission kept privatisation proceeds in a separate account and termed the practice Ã¢â¬Åimprudent and unconstitutionalÃ¢â¬Â.

Earlier, the Finance Ministry used to formally advise the SBP to apply 90 per cent of the proceeds towards retirement of the most expensive debt. Ã¢â¬ÅNow the ministry has issued standing instruction to the SBP to automatically retire debt to the extent of 90 per cent of the proceeds so received without seeking further guidance from the ministry on individual receipts,Ã¢â¬Â an official announcement of the finance ministry said on Sunday.

As far as the mandatory use of 10 per cent of privatisation proceeds for poverty reduction was concerned, the ministry said that it was incurring expenditure for the purpose much more than 10 per cent through a budgetary process with the approval of the parliament as prescribed by the Constitution.

The ministry said the privatisation proceeds were received only into the federal consolidated fund, adding that the privatisation proceeds had never been treated as government revenue.

It said the gap between government revenue and expenditure was the deficit which was

financed through government borrowings. The deficit level was fixed at the time of budget approval and remained unaffected by privatisation inflows, it said and added: "Whenever privatisation proceeds are received, they automatically displace debt of the government.Ã¢â¬Â

Further, the privatisation commission remitted the proceeds of each transaction to the government after making payments to owners other than the government whose shares were sold and after meeting direct transaction costs of the privatised assets.

The audit department had informed the PAC that the Privatisation Commission kept privatisation proceeds in a separate account, other than the federal consolidated fund, and was utilising the money for current expenditures, instead of debt retirement and poverty alleviation. The audit department officials said that the Ã¢â¬Ëunique arrangementÃ¢â¬â¢ not only violated the 1973 Constitution but also negated the 1991 privatisation policy and a related ordinance promulgated in 2000.

The PAC directed the Privatisation Commission officials to appear before the committee within 10 days and clear the commissionÃ¢â¬â¢s position regarding the allegations.

At least two articles of the Constitution envisaged that public money could only be managed through the federal consolidated fund or a public fund.

Article 78 specified that amounts received by the government could either be credited to the federal consolidated fund or public fund.

For spending public money, Article 80 stated that any amount should be budgeted only through the federal consolidated fund.

Finance Secretary Tanveer Ali Agha had informed the PAC that the Finance Ministry had constantly been urging the commission to "stop keeping the funds separately" but without any success. "When the commission was doing this (unconstitutional) practice, we kept pressing for a change ... but our directives were not heard," Mr Agha told the committee.

After facing Finance MinistryÃ¢â¬â¢s pressure, Mr Agha said, the commission got the practice approved from the CabinetÃ¢â¬â¢s Committee on Privatisation in a bid to validate the unconstitutional step. However, he contested the audit departmentÃ¢â¬â¢s objection that privatisation proceeds had been used for any purpose other than debt retirement and poverty alleviation.

http://www.dawn.com/2006/11/27/top2.htm


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## Contrarian

Neo, it would be better if you only start posting on the Indian economy thread. No1 seems to bother to update it LOL


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## ali ahmad

ISLAMABAD, Nov 27: The government has decided to defer three mega dam projects -- Kalabagh, Akhori and Diamer-Bhasha -- owing to opposition from smaller provinces.

The projects with a total cost of Rs1.027 trillion ($17 billion) were put up before a meeting of the central development working party (CDWP) for concept clearance here on Monday to start formal discussions with lenders for foreign funding arrangements.

The meeting, presided over by Planning Commission Deputy Chairman Dr Akram Sheikh, however, approved Rs1.677 billion, including foreign aid of Rs98 million, for detailed engineering design and preparation of tender documents of the Diamer-Bhasha dam project.

The meeting also approved 23 projects costing Rs74 billion.

Representatives of the Sindh government said that an assessment committee had been constituted by the CDWP in the last meeting to submit a comprehensive report covering six key aspects of the three dams and concept clearance could not be taken up at this stage.

They proposed that concept clearance be delayed so that provinces could give their input to the committee and then findings of the committee could be considered at the CDWP level.

A participant of the meeting told Dawn that representatives of the NWFP and Balochistan supported the SindhÃ¢â¬â¢s stance.


http://www.dawn.com/2006/11/28/top1.htm


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## Owais

*Pakistan desires to further strengthen economic, trade ties with UK: PM *


ISLAMABAD (updated on: November 28, 2006, 17:52 PST): Underlining the importance of long standing diplomatic, political and economic linkages between Pakistan and UK, Prime Minister Shaukat Aziz has said Pakistan desires to further strengthen the economic and trade relationship between the two countries through greater interaction between the private and public sectors of the two countries.

The PM was talking to Mr. Ian McCartney, UK Minister for Trade who called on him Tuesday alongwith a 10-member delegation comprising representatives of London Stock Exchange, financial institutions and senior government officials.

Expansion of economic relations between Pakistan and UK, reform agenda of the government and the issue of better market access for Pakistani products in the markets of European Union came under discussion.

The prime minister said Pakistan is an emerging market with a vast potential for growth, rising consumer spending and robust industrial development. The recent listing of Muslim Commercial Bank ( MCB) at London Stock Exchange and forthcoming listing of Oil and Gas Development Company (OGDCL)is a clear evidence of international acceptance of stability in Pakistan's industrial and financial sectors.

Aziz said that as a result of the far-reaching reforms introduced by the government in every facet of life, Pakistan has been transformed into a country having high growth.

The reforms introduced for de-regulation of the economy, transparent privatisation, creation of a business-friendly environment, rationalisation of taxes and tariffs and transparency in the government transactions has restored the confidence of the investors and Pakistan received record Foreign Direct Investment during the last year.

The prime minister said Pakistan has made significant progress on the issue of Intellectual Property Rights. A dedicated organisation has been set up to deal with the issue in a focused manner and we are dealing with violations in tough manners.

He said Pakistan is moving fast on the reform path to prepare itself face the challenges posed by globalisation. He said the government is working on increasing absorptive capacity and the training of the civil servants is one of the steps in that direction.

The prime minister said one of the basic paradigm shifts in the country is a clear distinction in the roles of Ministries and regulators. While policy formulation is the responsibility of the Ministries, regulators have been provided the independence to deal with the implementation part of

it.

He said Pakistan desires to initiate talks on Free Trade Agreement ( FTA) with European Union and said Pakistan being an open economy is in a position to enter into such agreements and implement them effectively. 

The premier asked UK to extend their support to Pakistan in this regard.

Mr. Ian McCartney said the Banks and financial institutions of UK find the investment climate in Pakistan very conducive and a number of them are planning to expand their operations in Pakistan.

He said the private sector companies are keen to invest in Pakistan in health care, financial and oil and gas sectors through joint ventures with Pakistan companies and on public private partnership basis.

McCartney appreciated Pakistan for passing women protection bill and said the legislation will go a long way in providing justice and security to women.

He appreciated the role played by Pakistani community in the development of UK. The British MPs of Pakistani origin are doing their job actively and enthusiastically, he added.

Sir Thomas Harris, Vice Chairman of Standard Chartered Bank said British financial institutions are watching with great appreciation the economic transformation of Pakistan. He said the expansion in their operations in Pakistan, by a number of foreign Banks, is an expression of their confidence in Pakistan's economic and banking sectors.

The meeting was attended among others by Minister for Commerce Mr. Humayun Akhtar Khan, High Commissioner of UK in Pakistan Sir Mark Lyall Grant and senior officials


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## Owais

*Pakistan seeks UK support for trade relations with EU 
*

ISLAMABAD (updated on: November 28, 2006, 17:51 PST): Federal Minister for Commerce on Tuesday sought British government's support to persuade EU for looking Pakistan as attractive trade partner in the back drop EU and Indian negotiation on expansion of trade. 

Ian McCartney, UK Trade Minister along with his delegation called on Commerce Minister Humayun Akhtar Khan to discuss multilateral and bilateral issues. 

The UK Trade delegation consisted of representatives from Government and major business entities. Mr. Hamish Daniel, British Deputy High Commissioner was also present on the occasion. 

Khan welcomed the delegation and discussed Pakistan and EU positions on Doha Development Agenda.

He expressed his satisfaction over the resumption of the Doha Development Agenda negotiations. 

The Commerce Minister also reminded British Trade Minister on the establishment of Joint Commission under the Third Generation Agreement. He requested for British support on early finalisation of EU composition. 

The minister requested the visiting Minister to facilitate Pakistanis living in UK, who are very enterprising, to invest in Pakistan particularly in textile sector.

Expressing satisfaction over bilateral relations between Pakistan and UK, The British Minister expressed his resolve to further strengthen bilateral relations between the two countries adding that EU desires to resolve DDA deadlock and the major partners are restructuring their agriculture policies with a view to resolve the impasse. 

The minister invited Khan to visit other cities of UK like Glasgow, Manchester and North Midlands, where Pakistan origin community is mainly residing, to meet them and attract them to invest and do more business with Pakistan.

The Commerce Minister accepted the invitation and assured the Minister that he will visit the suggested cities whenever, he would be visiting UK and around countries.


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## Owais

*Renewable energy plants to start production by August: AEDB *

ISLAMABAD (November 28 2006): The companies awarded Letters of Intent (LoIs) for setting up renewable energy plants will start producing 3,350 MW electricity within next eight to nine month, AEDB Chairman Air Marshal Shahid Hamid (Retd) said on Monday.

Addressing a three-day workshop on, "Renewable Energy and Energy Efficiency (REEE)", he said that 67 companies were issued LoIs, 14 of them were allotted land, while some of them are negotiating with the National Transmission and Dispatch Company (NTDC) for tariff.

Under the Prime Minister's directive, some 400 villages would be electrified by connecting them with the national grid through renewable energy sources by August 2007, he added. The renewable energy policy will be laid before the Economic Coordination Committee (ECC) of the Cabinet in December for approval and hopefully, it would be approved, he said.

Nepra, in its determination, has set upfront tariff of 10.5 cents for renewable companies that would get the LoIs before the end of December irrespective of renewable policy is approved by the ECC or not.

The AEDB chief said that land acquisition from the provinces as one of the most hectic issues. However, about 17,000 acres of land would be allocated to the interested companies for promoting this sector. "We are promoting the renewable sources of energy to enable our industry to compete outside Pakistan", he added.

Inefficient conservation policy is causing a loss of $1.5 billion annually to the national exchequer and this huge amount could easily be managed by investing $200 million in developing renewable sources, said Enercon Managing Director Dr Pervez Tahir.

"We imported $1 billion of fossil fuel in the first quarter of last year but this figure crossed it in the same period last year", said Dr Pervez, former chief economist in the Planning Commission. The government, he emphasised, along with construction of water and gas projects, should focus on commissioning alternate sources of energy by conserving the tapped sources.

"The private sector always demands incentives and any policy based on incentives proves problematic for the government, but the government have to address it properly," said Dr Pervez. Pakistan's high growth has scrambled energy demand widening the energy gap to meet from the tapped sources, therefore, there is urgent need of exploring other sources of energy, he stressed.

Ulrich Stoehr Grabowski, principal advisor, GTZ, Germany, said the company is working with Pakistani department not only to conserve energy but also to address the environmental issues as well. Besides providing services in wind, solar and micro hydel production, the GTZ is also working with the textile sector in energy auditing in Karachi, Lahore and Faisalabad, he added.


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## Owais

*Government to raise primary education budget to 4 percent of GDP: Musharraf* 
KARACHI (November 28 2006): The government plans to increase the allocation for primary education from 2.6 percent to four percent of the GDP. This was stated by the President Pervez Musharraf here on Monday.

He was speaking as chief guest at the inaugural ceremony of the Latif Ebrahim Jamal National Science Information Centre at the Karachi University Campus.

The President informed the gathering that the increase in allocation for primary education from 2.6 to four percent of the GDP roughly means more than Rs 150 billion.

He stressed the need for growth of the country's economy at a faster rate. "The economy of Pakistan has to be sustained and it has to grow at a fast rate that we have maintained now over the last three to four years," Musharraf remarked.

He pointed out that over the last three to four years we are maintaining the economic growth at the rate of seven percent and that this has to be maintained.

The President said the government would also be financing the establishment of nine universities of engineering, science and technology in the country to be set up with the help of developed countries. This means expenditure of Rs 250 billion over the next 10 years, he added.

Pervez Musharraf said in this endeavour for the promotion of education we need assistance from wherever (possible) and that is where philanthropic activity comes in. "I seek the support of the people of Pakistan, those who are more endowed, those who have more resources," he remarked adding that he knows that philanthropy is in our blood.

The President said Pakistanis spend some Rs 70 to 90 billion on philanthropic activities. He stated that this expenditure is unguided and that we need to know where to place the money.

He pointed out that this is a knowledge driven world and that the basis of the economy is on knowledge. That knowledge happens to be in the engineering and science and technology. The President described the inauguration of Latif Ebrahim Jamal National Science Information Centre as a very historic occasion.

He paid special homage to the memory of Hussein Ebrahim Jamal and Latif Ebrahim Jamal. Musharraf also commended the efforts of their sons for carrying forward the mission of their father and uncle and for contributing so much for Pakistan.

He also pointed towards the manifestation of growing interest in philanthropy in Pakistan which is also inclined especially towards science, technology and engineering which is the requirement and demand of the day for Pakistan.

The President said this is very much in line with the policy of the government.

He explained that our policy is very clear and that it is based on the realisation that this is a knowledge-based world and that without knowledge the economy cannot grow.

Giving a comparison, Musharraf said the total GDP of the whole Muslim world is hardly dollars two trillion whereas the GDP of Germany alone is far more than this and that of Japan is dollars 5.1 trillion in spite of the fact that Japan has no natural resources. This is the proof that knowledge is the driving force of the economy.

He pointed out that it is not the natural resources but is more to do with value addition with knowledge-based addition to the economy. Citing an example, the President said Pakistan is the fifth largest producer of milk in the world but not producing any butter, cheese or milk powder to export to the world.

He said we have the best mango, apple and grapes and resources but when we talk of food or fruit processing - tinned fruits, it is all from abroad and, none from Pakistan.

Musharraf was of the view that we should also be processing the fruit for exports. He also pointed out that in Turbat and Panjgur there are 120 kinds of dates and suggested that factories for producing date biscuits may be set up for export to the world.

President made it clear that our strategy is very clear and that while we want to promote education at all levels we have to have a solid foundation and a solid superstructure. Musharraf pointed out one of the root causes of extremism is poverty, joblessness, illiteracy.

He said our strategy for the industry is to create synergy between higher education, engineering, science and technology and technical education to produce technicians of high quality. University level education to produce engineers and technical education to produce technicians in accordance with our industrial needs - present and future.

He suggested that we should study what we require our industry to take on. The President said we are establishing nine universities of engineering, science and technology in the country with the help of developed countries of Europe and of the East.

He pointed out that these universities are going to be unique. Musharraf said we have lagged behind and the strategy which we have adopted now will take us on a fast course to the level of the world. He also pointed out that out of the 500 top universities of the world none is from the Islamic world.

He said the course we are adopting now is to get a university from abroad and that we have already inaugurated a university with French assistance in Karachi. This is Pakistan-France University. There will be Pakistan-Austria University in Lahore.

He announced that he would shortly inaugurate Pakistan-Sweden University in Sialkot. Musharraf said there would be four such universities in the Punjab, three in Sindh, and also in NWFP and Balochistan.

President Musharraf announced a donation of Rs 30 million for the expansion and infrastructure development of Latif Ebrahim Jamal National Science Information Centre.

He also announced half a month's salary for the staff of the Centre. Vice-Chancellor of Karachi University, Professor Dr Pirzada Qasim Raza Siddiqui, also agreed to give one acre of land on the campus to the Centre for the purpose.

Musharraf informed about what he intends to do personally with the proceeds of the book that he has written and said he has already stated that he would be donating this amount towards a welfare foundation.

Meanwhile, after performing the inauguration of the Latif Ehrahim Jamal National Science Information Centre, the President went round its various sections.

In his address, the Chairman of Higher Education Commission (HEC), Professor Dr Atta-ur-Rahman, said the Latif Ebrahim Jamal National Science Information Centre illustrates what technology is making possible today which was not possible 10 years ago.

He said this is a Centre, which has multimedia capabilities and an access to a very large repository of international journals. Professor Atta said this also marks the beginning of a very exciting progress, first in the world, where we are now linking up our universities and research organisations to top scientists in Harvard, MIT, Cambridge or Oxford and to the top universities across the world so that they can give lectures from there and through fibre links these lectures are listened to live by the students in Pakistan.

He pointed out that 18 universities are already connected up and the others will be connected in the next six months. Speaking on the occasion, the Vice-Chancellor of Karachi University, Professor Dr Pirzada Oasim Raza Siddiqui, paid rich tributes to President Pervez Musharraf for his unprecedented support to the basic education as well as higher education in Pakistan for the very first time.

He said the inauguration of the Latif Ebrahim Jamal National Information Centre is a landmark event in the process of modernisation of facilities at the campus and establishing strong, meaningful linkages with the world's highest centres and learning and research.

The Vice-Chancellor said the project is a glowing example of public and private partnership in the education and research sector. Chairman of the HEJ Foundation, Aziz Latif Jamal, also spoke on the occasion. Sindh Governor Dr Ishrat-ul-Ibad Khan and Chief Minister Dr Arbab Ghulam Rahim, were also present.

The Centre has been described as one of the largest paperless science library or information dissemination centres of the world, which is the first of its kind in the region.

The Husein Ebrahim Jamal Foundation has donated around Rs 20 million for the establishment of this three-storey building on a plot measuring 2,500 square yards and an equal amount has been donated by the Higher Education Commission (HEC) for its construction.


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## Owais

*US encourages Sino-Pak ties *


WASHINGTON (updated on: November 28, 2006, 16:14 PST): The US has said that it encourages the development of bilateral relations between Pakistan and China and does not see anything 'new' in any nuclear defence treaties that may have been signed during the recent visit of the Chinese President Hu Jintao to Islamabad.

"We encourage development of bilateral relations between Pakistan and its neighbours. China and Pakistan have a long history of relations. 

As for any, sort of, nuclear angle on this, I'm not aware of anything new that was announced or is allowed for by these agreements other than what was already grandfathered in by the Nuclear Suppliers Group. So I don't think there's anything new on that front," the State Department Spokesman Sean McCormack told reporters.

Noting that China is a growing power, he said, "we would ask that China play a constructive role in the international community. It is developing economically, diplomatically, politically, militarily."

"China is going to be an important power on the international scene for some time to come. And we would hope that as it develops and as it defines its future role on the international stage that it plays a constructive role," he said.

During his visit to Pakistan, Chinese President Hu Jintao held talks with his Pakistani counterpart Pervez Musharraf and agreed to continue to enrich the contents of bilateral strategic and co-operative partnership by expanding practical and reciprocal co-operation in various fields.

Hu made a five-point proposal for the further growth of bilateral relations and the two sides signed a number of co-operative documents including an agreement on free trade.


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## Owais

*Pak, Germany sign euro 48.973 million deal of bilateral develop cooperation* 


ISLAMABAD (updated on: November 28, 2006, 17:45 PST): Germany has committed financial grant assistance of euro 48.973 million included euro 34 million fresh commitment and euro 14.973 million reprogrammed in the context of Pak-German bilateral development co-operation.

In this connection, an agreement on Financial Co-operation was concluded between the two governments on Tuesday. Secretary Economic Affairs Division Khalid Saeed signed the agreement on behalf of Pakistan while Dr. Gunter Mulack, Ambassador Germany signed the agreement on behalf of German government.

While speaking at the occasion, the Secretary Economic Affairs Division said that according to this agreement the newly committed financial assistance of euro 34 million offered by Germany would be used for the projects in the earthquake affected areas.

He said that about euro 13 million would be utilised for the reconstruction of health infrastructure in Azad Jammu and Kashmir, euro 14 million for the reconstruction of Rural housing and related infrastructure in NWFP and euro 7 million to control HIV/Aids, Blood safety.

He said that the reprogrammed amount of euro 14.973 million has been proposed to be used for the construction of Grid Station Ghazi Road to the tune of euro 1.29 million, euro 6.80 million to be spent for the reconstruction of health infrastructure in Azad Jammu and Kashmir and euro 6.88 million would be spent on medium sized hydropower Stations. 

He thanked Germany for providing euro 48.973 million assistance to Pakistan and said that the bilateral relations between the two countries would further improve in near future. 

German Ambassador Dr. Gunter Mulack said that both countries enjoyed deep brotherly relations, which were growing and strengthening with the passage of time.

He said that the fresh financial assistance would improve basic infrastructure in earthquake-hit areas.


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## Owais

*Rs two billion uplift package for Swabi announced *

PESHAWAR (November 28 2006): NWFP Chief Minister Akram Khan Durrani has announced two billion rupees package for Swabi during his daylong visit of the district on Saturday, Education Minister Maulana Fazal Ali Haqqani said.

Maulana Haqqani, flanked by Muttahida Majlis-i-Amal (MMA) provincial general secretary, Mushtaq Ahmad Khan, was talking to journalists at Peshawar Press Club (PPC) here on Monday.

The large-scale developmental schemes, announced by the chief minister, would help remove the sense of deprivation of the backward district of the province, he said. Maulana Haqqani and Mushtaq Ahmad Khan, belong to Swabi district. Haqqani is district Amir of JUI-F while Khan is provincial general secretary of Jamaat-i-Islami (JI).

The developmental schemes, including the construction of 50-kilometer Jehangira-Swabi Road and 25-kilometer Adina-Lahor Road would cost Rs 920 million and Rs280 million respectively.

The chief minister also announced various projects of the similar nature besides approving the establishment of colleges, schools and rural health centres (RHCs) in different towns and villages of the district.

The minister said that the chief minister had also laid the foundation stone of Fazal Ali Model School, in which the students would be taught Oxford institution curriculum at nominal tuition fee.

The school to be established on 200 kanal of land with the cost of Rs150 million, Haqqani said.

Furthermore, he said the chief minister had also pledged the removal of hurdles in the revival of the sick industrial units of Gadoon Amazai Industrial Estate.

The provincial government would give 25 percent subsidy in the electricity tariff for the industrial units of the zone. Terming the initiation of development schools as a comprehensive uplift package for the district, he said it would bring a revolution in the life of people of Swabi. They said that love and appreciation expressed by the people of Swabi show that the candidates of the religio-political alliance would sweep the next general elections in the district.


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## Owais

*Pakistan, India reject consultant's Iran gas price *


NEW DELHI (updated on: November 28, 2006, 19:17 PST): Pakistan and India have rejected a consultant's suggested price for buying Iranian gas which the energy-hungry Asian neighbours hope to have delivered through a proposed $7-billion pipeline, India said on Tuesday.

U.K.-based consultant Gaffney Cline & Associates was appointed by the three countries in September after they failed to agree on a rate acceptable to all.

"The price worked out by the consultant, which was based on certain parameters given by Iran, was not acceptable to India and Pakistan," Oil Minister Murli Deora said in a parliamentary reply.

No details were available but Deora said Gaffney had been given revised data and asked to work out a new formula.

In August, Iran had offered a price linked to dated Brent crude that equated to about $8 per million British thermal units (mmBtu), while New Delhi wants to pay about $4.25 per mmBtu.

Iran has the second-largest natural gas reserves in the world behind Russia -- about 940 trillion cubic feet -- while growing Asian economies, including Pakistan and India, are scrambling to find energy sources to feed industrial expansion.


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## Owais

*MCC for joint ventures with Pakistani businessmen *

KARACHI (November 28 2006): Manchester Chamber of Commerce (MCC) is interested in promoting trade and joint ventures with Pakistani businessmen. Peter Thompson, International Trade Advisor of (MCC) stated this at a meeting with President and members of Federation of Pakistan Chambers of Commerce and Industry (FPCCI), here on Monday.

Thompson said that the delegation of his chamber visited in Pakistan with open mind to learn about prospects of doing business. He said that Manchester City, which was once a centre of textile industry in the UK was not left with textile distribution companies as the manufacturing industries had been relocated. Earlier, Chaudhry Muhammad Saeed, President FPCCI said that Pakistan attached great importance to the UK in view of the fact that the country was the fourth largest trade partner and second largest investor in Pakistan.

"About 85 UK-based companies were operating in Pakistan and their contribution to our GDP is estimated at 2.5 percent while the annual inflow of remittances from the UK ranged from $300 to $400 million," he said. He said that according to an estimate the Pak businessmen and workforce abroad accumulatively possessed around $45 billion.-PR


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## Owais

*ADB-aided Sindh road safety plan launched *

KARACHI (November 28 2006): Road Sector Development Directorate (RSDD), Sindh Works and Services Department and Sindh Education Foundation on Monday launched Pakistan's first Road Safety Education Programme for the province with a cost 236 million dollar funded by Asian Development Bank (ADB).

The programme aims at educating children, assisting teachers and community members and informing pedestrians and other road users on the essentials of road safety.

231 million dollar will be spent on construction of 164km provincial highways and 1200km farm to market roads while 5 million dollar will be used for reform and safety awareness programmes.

Sindh Minister for Mines and Mineral Development Irfanullah Khan Marwat was the chief guest at the launching ceremony held here. Sindh Minister for Works and Services Pir Sadruddin Shah Rashdi, Sindh Minister for Women Development Dr Saeeda Malik, Sindh Chief Secretary Fazal-ur-Rehman, MD Sindh Education Foundation Professor Anita Ghulam Ali, Advisor to Sindh Chief Minister Fatima Surria Bajya, Executive District Officers (EDOs) and teachers from all over the province were also present.

Marwat appreciated the participation of ADB in this programme and said the government was also committed to move forward and take initiatives for safety of masses. He also lauded the efforts of RSDD and Sindh Education Foundation and assured all possible support in this regard. Professor Anita Ghulam Ali, Ajaz Ali Khan, DG Road Sector Development Directorate and others also spoke on the occasion.

Due to lake of road safety education, road accidents were a major and growing cause of death and injury to children in developing countries like Pakistan, they noted. They urged educational institutes to create awareness and start teaching their students about road safety as our young one were less aware of the potential hazards around. They also stressed on parents to play their role in guiding their children on the proper usage of roads.


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## Owais

*Pak-US free trade talks in last phase of completion: Shah *

KARACHI: Advisor to Prime Minister on Finance Dr Salman Shah said Pak-US talks on free trade are in last phase of reaching an agreement.

Talking to Geo news Monday, he said Pakistan was holding free trade talks with the United States after sign the same agreement with China, adding that progress in this respect is expected soon.

Shah said progress was underway on establishment of reconstructing opputunity zones in under-developed areas of Pakistan, adding that contruction of such zonez would be started after sighting green-signal from the US Congress.

He said privatisation process would be made faster while efforts to increase foreign direct investment were also being made


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## Neo

*Basha, Kalabagh, Akhori dam projects referred to Ecnec: CDWP endorses 21 projects of Rs 11.793 billion *

ISLAMABAD (November 28 2006): While endorsing 21 projects, costing Rs 11,793. 528 million, the central development working party (CDWP) on Monday cleared Diamer (Basha), Kalabagh and Akhori dams' concept, and referred these projects to the Executive Committee of National Economic Council (Ecnec) for approval.

The concept clearance by CDWP was a prerequisite to seek funds from international donors for these projects. Chaired by Planning Commission Deputy Chairman Dr Akram Shaikh, the meeting was attended by senior officials of concerned ministries/divisions.

Sources said that the CDWP agreed that President Pervez Musharraf's announcement regarding water reservoirs projects and in its follow-up Cabinet decision would be implemented. Sources said the dams' projects would be presented to Ecnec along with the report of the committee on dams, due some time in December.

The list of projects recommended to Ecnec for approval, with project-wise cost, comprised Diamer-Basha dam project (Rs 390709.00 million)/foreign component (Rs 177840.00 million); Kalabagh dam (Rs 370502.00 million)/(Rs 170186.00 million); Akhori dam (Rs 266140.00)/ (Rs 85063 million); land acquisition for Rawalpindi bypass (Rs 1377.00 million); rehabilitation and reconstruction of damaged section of N highway spanning over 175 Km in earthquake affected area AJK (Rs 5960.00 million; Diamer Basha dam project-detailed engineering design and preparation of tender documents etc (Rs 1677.424); Chashma hydropower project (184MW) (Rs 21082.002 million); medical rehabilitation of disabled in the earthquake affected districts (Rs 740.00 million); national maternal new-born & child health programme (MNCH) (Rs 19994.871 million)/ (Rs 12404.871 million); preparatory analytical work for Punjab large cities (DPL) project (Rs 60.00 million)/ (Rs 45.00 million); water supply and sanitation sector project phase-II, (Rs 6000.00 million)/ (Rs 210.00 million); and construction of south west waste water treatment plant, Lahore, (Rs 8501.00 million) (Rs 7259.00 million).

It deferred five projects and asked the concerned ministries/divisions to submit them after including complete information. The projects which were deferred included triclien to Attaahk irrigation scheme at Mulkoh district Chitral (Revised) (Rs 462.60 million); establishment of Pak-China friendship centre in Islamabad, (Rs 650.60 million) (Rs 600.00 million); construction of third & fourth floor at Collectorate of Sales Tax, Sales Tax House Karachi, (Rs 63.277 million); construction of 64 apartments for customs officers at FL-13, Clifton Karachi, (Rs 338.80 million); and construction of various facilities at Expo Centre, Karachi-phase-II, (Rs 2536.18 million).

The projects, which the CDWP approved included: enhancement of training capabilities of Construction Machinery Training Institute (CMTI), Islamabad-phase-IV, (Rs 348.966 million); and construction of steel bridges in FATA (Rs 390.00 million).

It also approved installation of additional gas turbines at GTPS Shahdara, Lahore (Rs 188.00 million); detailed engineering & tender documents for Basho hydel power project (Rs 90.243 million).

It also approved construction of office complex for office of the Chief Engineering Advisor/Chairman, Federal Flood Commission in Islamabad (Rs 84.972 million); community water storage Irrigated agriculture development sector project (Rs 33.75 million); enhancement of institutional reimbursement cost (IRC)-position paper, technical institute for construction trade, Mandra, (Rs 78.061 million); construction of 12 No apartments in ministers' enclave Islamabad, (Rs 143.105 million); construction of headquarters Pakistan Rangers Punjab at Ghazi road, Lahore, Rs (69.40 million); construction of eastern & expansion of southern sewage treatment plant, (Rs 915.300 million); and construction of sewage pumping station at Tulsi Das APWA school & Hali road Hyderabad, ( Rs 444.500 million).

Other projects which were approved included: purchase and installation of five 1.5 Tesla MRI scanners in Lady Reading Hospital Peshawar, Mufti Mehmood Hospital, D I Khan, Khalifa Gul Nawaz Medical Complex Bannu, Ayub Teaching Hospital Abbottabad, and Saudi Group of Hospitals, Swat (Position Paper) (Rs 530.00 million); National Talent Scholarship Scheme (NTSS) Phase-I (2007-08), (Rs 310.00 million); establishment of Cadet College at Kohlu (President directive) (Rs 218.754 million); reconstruction & extensive education renovation of buildings of the Abbottabad Public School damaged due to earthquake on October 8, 2005 (P.M directive) (Rs 90.00 million); research for agricultural development program (Rs 3630.98 million)/ (Rs 1094.00 million); establishment of facilitation unit for participatory vegetable seed and nursery production program (Rs 574.825 million)/ (Rs 77.00 million); establishment of land revenue records management system in rural areas of ICT, Islamabad, (Rs 88.653 million); institutional strengthening and capacity building of officers of government of Punjab, (Rs 180.00 million)/ (Rs 120.00 million); up-gradation/extension of Pinstech lab, phase-II, (Revised PC-I) (Rs 2522.19 million); establishment of department of robotics and artificial intelligence at College of E & ME, NUST (Rs 395.306 million)/ (Rs 128.880 million); construction of new buildings for faculty of veterinary sciences at PARC University of Agriculture, Faisalabad, (Rs 200.00 million); strengthening/upgradation of the Institute of Food Science & Technology into National Institute of Food Science & Technology, University of Agriculture, Faisalabad (Rs 197.916 million); and provision of on-line lectures and video conferencing facilities for universities, HEC and allied government bodies (Rs 141.951 million).


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## Neo

*No clearance for Kalabagh, two other dams: CDWP approves 23 projects*

ISLAMABAD, Nov 27: The government has decided to defer three mega dam projects -- Kalabagh, Akhori and Diamer-Bhasha -- owing to opposition from smaller provinces.

The projects with a total cost of Rs1.027 trillion ($17 billion) were put up before a meeting of the central development working party (CDWP) for concept clearance here on Monday to start formal discussions with lenders for foreign funding arrangements.

The meeting, presided over by Planning Commission Deputy Chairman Dr Akram Sheikh, however, approved Rs1.677 billion, including foreign aid of Rs98 million, for detailed engineering design and preparation of tender documents of the Diamer-Bhasha dam project.

The meeting also approved 23 projects costing Rs74 billion.

Representatives of the Sindh government said that an assessment committee had been constituted by the CDWP in the last meeting to submit a comprehensive report covering six key aspects of the three dams and concept clearance could not be taken up at this stage.

They proposed that concept clearance be delayed so that provinces could give their input to the committee and then findings of the committee could be considered at the CDWP level.

A participant of the meeting told Dawn that representatives of the NWFP and Balochistan supported the SindhÃ¢â¬â¢s stance.

The CDWP also agreed to refer the financing arrangement to the assessment committee led by Water and Power Secretary Ashfaq Mehmood. The committee which was earlier given the deadline of Nov 30 will hold its first meeting on Dec 4.

The committee was earlier required to cover five aspects -- environmental impact, land acquisition process, construction priority, funding and implementation strategy of the three dams, which are part of the five dams President Musharraf planned to construct before 2016. Now, the funding arrangements and procedure would also be looked into by the same committee.

It was, however, not clear why the Water and Power Ministry forwarded the three projects for concept clearance when its secretary was yet to hold the first meeting of the committee on the assessment of five vital aspects of the three dams. The committee comprised representatives from all the four provinces.

Planning CommissionÃ¢â¬â¢s Joint Secretary Shahnawaz Husain told reporters after the meeting that the Planning Commission did not have powers to stop discussion on any project.

The Water and Power Ministry had presented a total cost of Rs1.027 trillion for the three projects, including a foreign exchange component of Rs433 billion ($7.22 billion). The cost of Diamer-Bhasha, Kalabagh and Akhori dams had been estimated at $6.51 billion, $6.2 billion and $4.44 billion, respectively.

In all, 34 projects with an estimated cost of Rs1.107 trillion were on the CDWPÃ¢â¬â¢s agenda. Of them, 11 projects costing Rs1.033 trillion were either deferred or withdrawn.

The CDWP approved or cleared for approval by the Executive Committee of the National Economic Council (ECNEC) 23 projects at a total cost of Rs74 billion. This included the enhanced cost of 184mw Chashma Hydropower Project at Rs21.1 billion that had been completed many years ago.

The CDWP also approved Rs5.96 billion for rehabilitation of 175 kilometre national highway damaged by the October 8 quake in the Azad Kashmir. It would be undertaken by the Earthquake Rehabilitation and Reconstruction Authority (ERRA).

Another important project approved at the meeting included Rs20 billion maternal, newborn and child health national programme.

http://www.dawn.com/2006/11/28/top1.htm


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## Neo

*Pakistan may drive up global wheat prices *

With stocks towering above 0.45m tonnes, Pak exports will be affecting international commodity exchanges

By Imran Ayub

KARACHI: The world sees Pakistan instrumental in driving up international wheat prices, as it stands among only three wheat-producing countries across the globe having surplus stocks of more than half a million tonnes from last year crop.

A latest assessment made by the US Department of Agriculture suggests Pakistan along with Argentina and Ukraine would be the major player in the international commodity market to determine 2006-07 prices.

PakistanÃ¢â¬â¢s wheat output is up 450,000 tonnes to 500,000 tonnes and this record production could result in exports to nearby markets, the USDA said in its report.

ArgentinaÃ¢â¬â¢s wheat production was down by one million tonnes to 9.5 million due to decline in wheat cultivation area as previously expected that would cut exportable supplies, the report assessed, but it appeared firm that the South American country could still capitalise on the approaching opportunity.

Similarly, the USDA said, Ukraine was another country which had potential to fetch good amount on wheat export during 2006-07, as it had the largest-ever stock of the commodity. Ã¢â¬ÅUkraine (wheat output) is up 500,000 tonnes to 1.5 million due to higher estimated production. Exports are still expected to be only about a quarter of last yearÃ¢â¬â¢s level,Ã¢â¬Â added the report.

Meanwhile in Pakistan, the international interest has further lifted hopes of the authorities, which are already considering allowing commercial export of surplus wheat rather than executing operations only through the state-run Trading Corporation of Pakistan (TCP).

Officials said the federal Ministry of Food, Agriculture and Livestock has proposed to Ministries of Finance and Commerce to design a strategy, which could allow commercial traders to have some share in wheat exports.

Ã¢â¬ÅAs it appears, we are very much confident that the commercial traders would also get an opportunity for wheat export, if it is allowed,Ã¢â¬Â said a senior official at the agriculture ministry, who asked not to be named.

Ã¢â¬ÅInitially, there was an understanding that wheat should be exported only through TCP but we think commercial exports can fetch better prices with increased market access.Ã¢â¬Â He said the commercial export of wheat would not restrict the state-run commodity trading agency to conduct such an operation, but it would extend scope of better prices of the commodity.

High ups of agriculture and commerce ministries last month gave a hint to resume wheat export after a gap of over two years, amid fears that rising stocks from a good harvest this year could dent domestic prices.

However, the authorities announced that it would not take any decision, until the finance ministry gave a nod to begin the wheat export after analysing domestic needs and its impact on local markets.

Ã¢â¬ÅThe ECC (Economic Coordination Committee) of the cabinet has already removed 15 per cent regulatory duty on export of wheat in order to consume surplus stocks in the country,Ã¢â¬Â said an official at the commerce ministry.

He said the concerned authorities were convinced with huge carryover stocks, the government would be in an odd position when it entered the next season and could face problems in procurement of the commodity due to higher handling cost.

Pakistan enjoyed 1.75 million tonnes wheat export during 2002-03 on better demand from Middle East and African region before the government put the ban on the commodity shipments.


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## Neo

Tuesday, November 28, 2006 

*$43.3b exports by 2013 planned*

* Export Plan for Pakistan 2006-2013 finalised 

By Sajid Chaudhry

ISLAMABAD: The Planning Commission has finalised the draft of the Export Plan for Pakistan 2006-2013 to enhance the current exports GDP ratio from 13 percent to 15 percent of GDP aiming at increasing exports from $16.5 billion to $43.3 billion by 2013, a senior official at the Commission told Daily Times.

Prime Minister Shaukat Aziz, during the Trade Policy 2006-07 preparation meeting, had constituted a high level committee in the chairmanship of Dr Akram Sheikh, Deputy Chairman Planning Commission, to prepare a plan fore enhancing the exports from 13 percent of the GDP to 15 percent for the medium term in consultation with all the stakeholders.

It has been estimated that at present GDP stands at $128.90 billion with export to GDP ration of 13 percent, which will be growing and is expected to reach at $288.70 billion with exports to GDP ration of 15 percent by year 2013, the official added. The exports are to be enhanced with Annual Compound Growth Rate (ACGR) percentages under the Export Plan for Pakistan 2006-2013.

The textile and garment sectorÃ¢â¬â¢s exports are projected to be increased from $9.98 billion in the fiscal year 2006 to $24.36 billion by fiscal year 2013 with ACGR 14 percent per annum. The rice exports, which stand at present at $1.11 billion, would be enhanced to $2.5 billion by year 2013 with annual ACGR of 12 percent.

The leather and leather products had fetched $1.09 billion last fiscal year, which would be increased to $2.26 billion with an annual ACGR of 11 percent. The exports of engineering sector, which at present stand at $0.21 billion, would be enhanced to $2.40 billion with ACGR of 42 percent by year 2013. 

Similarly the fruits and vegetables exports will enhance from $140 million to $370 million with ACGR of 15 percent, meat and meat preparations from $20 million to $100 million with 26 percent ACGR, fish and fish preparations from $200 million to $990 million with 26 percent ACGR, carpets, rugs and tapestry $250 million to $370 million with 6 percent ACGR, sports goods from $350 million to $920 million with ACGR of 15 percent, surgical instruments from $160 million to $420 million with 15 percent ACGR, cutlery from $30 million to $110 million with 20 percent ACGR, furniture from $10 million to 500 million with annual growth rate of 75 percent, pharmaceutical products from 80 million to 290 million with growth rate of 20 percent, marble and granite from $20 million to 680 million with growth rate of 66 percent and gems and jewellery $20 million to $690 million with 12 percent ACGR and other products including services and defence exports from $2.89 million to $6.32 million with 12 percent ACGR. 

The Planning Commission has identified the factors, which are impeding countryÃ¢â¬â¢s exports and has suggested many measures to remove all the bottlenecks in the way of enhancing exports at desired level in this Export Plan for Pakistan. CountryÃ¢â¬â¢s exports share in the international trade, which is declining by each year, has irked the economic managers to prepare a medium term export development plan to bridge the increasing gap between exports and imports.

The Export Plan for Pakistan 2006-2013 is circulated among the economic ministries and divisions for obtaining final views and input to finalise it for formal approval and implementation. It is expected that Economic Coordination Committee of the Cabinet will consider and approve Export Plan for Pakistan 2006-2013 in near future.

http://www.dailytimes.com.pk/default.asp?page=2006\11\28\story_28-11-2006_pg5_1


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## Neo

*India-Pak trade can cross USD six billion: report *

Wednesday November 29, 2006 

New Delhi: Trade between India and Pakistan can increase to a phenomenal level of 6.6 billion dollars if barriers are removed and the neighbouring country implements the South Asia Free Trade Area (SAFTA) agreement, an ICRIER report has said. 
India's exports increased by 157 per cent to 428.1 million dollars and imports by 143 per cent to 82.1 million dollars in the first quarter of 2006-07 as against the corresponding period last year, according to official figures, reports PTI. 

Trade between the two nations is very small as compared to trade between India and its other large partners in South Asia," Indian Council for Research on International Economic Relations said in a report on 'India-Pakistan trade'. 

On the other hand, informal trade through a third country is estimated to be in the range of two billion dollars, the report said.With several regions integrating further through the Free Trade Agreements (FTAs), it is imperative for the South Asian countries to enhance the pace of their liberalisation," it added.In a larger context, South Asia is the least integrated region compared to other regions, namely East Asia, Europe and Central Asia, Latin America, Middle East, North Africa and Sub-Sahara Africa. 

Regional liberalisation within Asia indicates that SAFTA would ultimately lead to integration with a larger community within the continent through BIMSTEC and ASEAN, the paper said. 

However, success of SAFTA in turn would depend on trade relations between India and Pakistan.

http://www.paktribune.com/news/index.shtml?161509


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## Owais

*Sunday may be working day at ports *

ISLAMABAD (November 29 2006): In a major move to facilitate importers/ exporters, the government is likely to announce Sunday as 'working day' at ports from December 15, for 24x7 working hours clearance of trade consignments.

Sources told Business Recorder on Tuesday that the Ministry of Ports and Shipping and the Central Board of Revenue (CBR) have agreed, in principle, to declare Sunday as 'working day', and have started preparations for implementation of the plan. Banks, terminal operators, bonded carriers and shipping agents may be approached to finalise the arrangements.

In this regard, Ports and Shipping Ministry officials have sent their views to CBR for necessary action. The ministry said that ports were already working 24 hours a day. However, clearance of goods depends upon availability of bank and customs officials; otherwise, practically, ports have no role to play.

It was pointed out that ports do not issue delivery orders on Sundays, and labour is also not available on ports, and, if found, they charge extra for working on a holiday.

The officials of Karachi Port Trust (KPT) were of the view that customs staff was not available on Sundays for examinations, and bank staff is also on weekly off.

Keeping in view the observations made by concerned departments, the CBR has decided that it was necessary that Sunday should be made a working day according to business needs of the people.

All relevant officials, departments, banks and organisations working at ports would have to be informed to make arrangements for availability of their relevant staff, the CBR said. It was further decided that the issue of labour availability would be taken care of by KPT and terminal operators. The CBR will co-ordinate and inform all concerned organisations, including banks, customs, Minfal, terminal operators, bonded carriers, shipping agents etc for implementation of this decision.


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## Owais

*Islamabad wants to boost trade ties with UK: Prime Minister *

ISLAMABAD (November 29 2006): Underlining the importance of the longstanding diplomatic, political and economic linkages between Pakistan and the UK, Prime Minister Shaukat Aziz has said that Pakistan desires to further strengthen the economic and trade relationship between the two countries through greater interaction between the private and public sectors of the two countries.

He was talking to Ian McCartney, UK Minister for Trade, who called on him on Tuesday along with a 10-member delegation comprising representatives of London Stock Exchange, financial institutions and senior government officials.

Expansion of economic relations between Pakistan and UK, reform agenda of the government, and the issue of better market access for Pakistan's products in the markets of European Union came under discussion.

The Prime Minister said that Pakistan is an emerging market with a vast potential for growth, rising consumer spending and robust industrial development. The recent listing of Muslim Commercial Bank (MCB) at the London Stock Exchange and the forthcoming listing of Oil and Gas Development Company (OGDC) was a clear evidence of international acceptance of stability in Pakistan's industrial and financial sectors, he added.

The Prime Minister said that as a result of the far-reaching reforms introduced by the government in every facet of life, Pakistan has been transformed into a country having high growth. The reforms introduced for de-regulation of the economy, transparent privatisation, creation of a business-friendly environment, rationalisation of taxes and tariffs and transparency in government transactions have restored the confidence of investors and Pakistan received record foreign direct investment during last year.

He said that Pakistan has made significant progress on the issue of intellectual property rights (IPR). A dedicated organisation has been set up to deal with the issue in a focused manner and is dealing with violations in a tough manner.

Shaukat said that Pakistan is moving fast on the reform path to prepare itself to face the challenges posed by globalisation. He said that the government is working on increasing absorptive capacity, and the training of civil servants is one of the steps in that direction.

The Prime Minister said that one of the basic paradigm shifts in the country was a clear distinction in the role of Ministries and regulators. While policy formulation is the responsibility of the Ministries, regulators have been provided the independence to deal with implementation part.

He said Pakistan that desires to initiate talks on Free Trade Agreement (FTA) with European Union, and added that, being an open economy, Pakistan is in a position to enter into such agreements and implement them effectively. He asked UK to extend it support to Pakistan in this regard.

McCartney said banks and financial institutions of UK find the investment climate in Pakistan very conducive and a number of them are planning to expand their operations in Pakistan.

He said that private sector companies are keen to invest in Pakistan in healthcare, financial and oil and gas sectors through joint ventures with Pakistani companies and on public-private partnership basis.

He appreciated Pakistan for passing women protection bill and said that the legislation would go a long way in providing justice and security to women.

McCartney appreciated the role played by Pakistani community in the development of UK. The British MPs of Pakistani origin are doing their job actively and enthusiastically, he added.

Sir Thomas Harris, Vice Chairman of Standard-Chartered Bank, said that British financial institutions are watching with great appreciation the economic transformation of Pakistan. He said the expansion in their operations in Pakistan, by a number of foreign banks, is an expression of their confidence in Pakistan's economic and banking sectors.

The meeting was attended, among others, by Minister for Commerce Humayun Akhtar, UK High Commissioner in Pakistan, Sir Mark Lyall Grant, and senior officials.

PRIVATISATION: McCartney also called on Privatisation Minister Zahid Hamid on Tuesday.

During the meeting Zahid said that Oil and Gas Development Company's (OGDC) global depository receipts (GDRs) is scheduled for December 6 for listing at London Stock Exchange (LSE).

The privatisation minister briefed the UK delegation about Pakistan's privatisation policy and said the investors could invest in any sector and have 100 percent foreign equity and remittance of capital, profits, royalty, technical and franchise fee and zero-rated import of raw material for export manufacturing.

He said that under the privatisation programme major upcoming transactions were PPL, PSO, SSGC, SNGPL, JPC, Fesco, Pesco, HEC, PSMC, PMTF, etc. The minister also briefed the UK delegation regarding the investment opportunities at Gwadar sea port and its Industrial Estate.

McCartney said that British business and trade delegations were intending to visit Pakistan to find areas for investment.

He said UK eyes investing in Pakistan's healthcare, oil & gas, power and other sectors. He informed the minister that a delegation of Britain's business groups led by Lord Mayor of London would visit Pakistan in February 2007


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## Owais

*World Bank offers technical assistance to draft new ATTA *

ISLAMABAD (November 29 2006): The World Bank (WB) has offered technical assistance to the Central Board of Revenue (CBR) and the commerce ministry for drafting new Afghan Transit Trade Agreement (ATTA), enabling both the sides to exchange data electronically through the Pakistan Customs Computerised System (PACCS).

Sources told Business Recorder on Tuesday the CBR, the commerce ministry, the Word Bank, and other stakeholders recently held a meeting to finalise the methodology for speedy revision of the ATTA.

It has been decided that the government would present new draft of the ATTA to the Afghan government by January 31, 2007 and a new trade mechanism for the Central Asian states would soon be finalised by the CBR and the commerce ministry.

According to sources, the World Bank was of the view that the ATTA needs to be updated/revised and the commerce ministry should take the initiative without any further delay. The World Bank will provide technical assistance for preparation of the revised ATTA.

It was agreed that draft ATTA would focus on full container-load traffic for transit purposes with least interference in the country of transit as per international best practices, sources said.

During the meeting, the commerce ministry opined that it was decided in the last joint ministerial committee (JMC) that the Afghan government will send the draft ATTA for changes, but no such draft has been sent to Pakistan yet.

However, the CBR chairman clarified that it is not the Afghan government, but the Pakistani side to take the lead on this issue, which has been time and again discussed at all forums. It was decided that the commerce ministry should put up a draft agreement at the earliest and send it to Afghan government for comments.

Sources said the Afghan government officials visited the PACCS at Karachi and were ready to exchange data electronically. The Afghan customs operations are already at an advance stage of computerisation using Esecuda software.

The CBR chief said the preparation, finalisation, and co-ordination of the new draft ATTA is the responsibility of the commerce ministry. Tax authorities directed the Customs Wing to put up the requisite proposals for the new draft and after approval send it urgently to the commerce ministry. The ministry would prepare and finalise the draft ATTA and send it to the Afghan government for comments by January 31, 2007, sources added.


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## Owais

*Pakistan lucrative place for foreign investors: Musharraf *

RAWALPINDI (November 29 2006): President General Pervez Musharraf said on Tuesday the geo-strategic location and with its business-friendly environment and consistency in policies, Pakistan had become a lucrative destination for foreign entrepreneurs, offering best of return with adequate legal safeguards on their investment.

Talking to Dubai-based Uniworld group Chairman, Byram Javat and his delegation, the President said Pakistan was making strong economic progress with wide scope of investment in diverse fields, especially energy, information technology, telecommunication, agriculture and infrastructure.

He informed the delegation that the policies of liberalisation, de-regulation and privatisation have resulted in greater inflow of foreign direct investment (FDI) and both local and foreign investors enjoy similar incentives and opportunities. All sectors of the economy are open to foreign investors, he said, adding the government had put in place strong measures to remove procedural and other impediments in the way of investment.

Uniworld chairman said that Pakistan's economic upsurge, coupled with unprecedented incentives, had evoked great interest amongst foreign investors in the country. Like many other international companies, Javet said his group also plans to make investment in the country to the mutual benefit of both Pakistan and his group.

The company has shown interest in the country's expanding hotel industry and healthcare sector.


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## Owais

*Pakistan has excellent opportunity for investment decisions: UK minister *

KARACHI (November 29 2006): British Minister of State for Foreign and Commonwealth Office and Department of Trade and Industry Ian McCartney has said that Pakistan is at the crossroads between China and India, the Gulf States and Central Asia and presents an excellent opportunity to make investment decisions.

He was addressing a press briefing at the British Consulate on Tuesday, which was followed by an interaction between the media and the members of his delegation visiting Pakistan these days.

He said in 1980 Asia had 21 percent of global economy, in 2022 it would be 43 percent excluding China. "Pakistan can share in this," he added.

McCartney said that the United Kingdom was willing to partner in Pakistan's Development. "There is currently one billion pound sterling of bilateral trade between UK and Pakistan." He said the two countries could do more together.

He said Britain was historically one of the largest investors in Pakistan and there were already more than one hundred companies in Pakistan "We can do more together," he added.

He said Tony Blair had announced some relief and investment measures and investment in social and economic development in Pakistan. It would double from 236 million pound sterling to 480 million pound sterling. It was a sign of growing together, he added.McCartney said in Lahore nine million pounds sterling investment to develop community banking was coming. "This will help small business, women and community groups."

He said only in education, some 8,000 students from Pakistan would come to Britain for higher education. "We could do more together to bring our young people together to learn and improve links between our universities and local colleges," he said.

He said Lord Mayor of the city of London, where they were pioneering Islamic financial products, would visit Pakistan next year to promote working in developing expertise in services and helping Pakistani companies seeking new investment opportunities and markets including insurance, legal and banking services. "The lord mayor will bring a high powered delegation with him for an enlarged interaction between the investors of the two countries," he added.

McCartney said that he had fruitful discussion with the Prime Minister, the Minister of Privatisation and Investment and the Minister for Commerce.

He said he had extended invitation to the Minister for Commerce to visit London and meet the vibrant Pakistani communities in Manchester, Birmingham, Blackburn, Preston and Leeds.

Ibukun Adebay, London, from London Stock Exchange, Sir Thomas Harris, Standard Chartered Bank, Michael Hodges, HSBC, and David Raines, HCA, International Health flanked the minister. The Deputy High Commissioner of Britain Hamish was also present.


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## Owais

*'UAE investment promoting modern technology in Pakistan' *

LAHORE (November 29 2006): President Pakistan Muslim League Chaudhry Shujaat Hussain and Punjab Chief Minister Chaudhry Pervaiz Elahi have said that people of Pakistan attach great importance to UAE investment due to which, in addition to generation of job opportunities, modern technology is also being promoted in the country.

They were addressing the participants of a reception hosted by Federal Minister for Education and Youth Affairs of United Arab Emirates Nahyan Mubarak Alnahyan near Rahim Yar Khan on Tuesday.

Chaudhry Shujaat Hussain and Pervaiz Elahi said the projects executed in Pakistan with UAE investment are a shining example of unflinching ties between the two countries.

Chairman National Commission for Human Development and Pakistan Cricket Board, Dr Nasim Ashraf, Chief Executive of Dhabi Group Bashir Tahir and prominent broadcaster PJ Mir were also present on the occasion.

Elahi said that by huge investment in Punjab, UAE has expressed its confidence in Pakistan. He said as a result of investment of 800 million in Trade Centre and Ravi City in Lahore as well as in banking sector, UAE has joined the rank of leading investors in Pakistan.

UAE Minister Nahyan Mubarak Alnahyan, while speaking on the occasion, said launching of various projects in Punjab has been a pleasant experience. He said that people of Punjab are hard-working, talented and loving and bilateral co-operation with Punjab will further increase in future.


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## Owais

*SME zone to boost exports to China to be set up *
ISLAMABAD (November 29 2006): Small and Medium Enterprises (SME) zone would be established in Northern Areas aiming to enhance exports to China, Minister for Northern Areas and Kashmir Affairs Tahir Iqbal said Tuesday.

Talking to the PTV he said PC-1 of the project has already been approved. Feasibility study was being reviewed at the moment. Exports of perishable items especially of cherry would be exported to China after ensuring their preservation.

A sum of Rs 992 million would be spent during the current financial year for overcoming the current 50 percent shortfall of electricity in Northern Areas. Target was to ensure up to 300mw power production in NA by 2020, he said.

Work was also continuing on a package of Rs 10.28 million to provide electricity to Gilgit. An 18mw power generating project would be completed in March 2007 near Gilgit.

Another 18mw power generation project would be initiated by mid of next year, he said. Feasibility study of another 24mw power generation project was ready. Likewise, 6 new generators have also been incorporated in the system for providing electricity facility to Gilgit, Skardu.

Six new grid stations are also being established for stabilising the distribution system there, he added. Efforts are underway for making progress in the field of agriculture. Tree plantation was continuing and around 90,000 saplings would be planted in Northern Areas.

Seeds of wheat and potato has been improved. It will increase production by 20 percent. A sum of 32.0 million is being invested for promotion of tourism in these areas. Three information centres would be established in Gilgit, Skardu and Sust for facilitating tourists, he added.

Website has already been developed and was in final stages. Anyone could get information about tourism. New avenues and sites would also be explored in a bid to attract more and more tourists. Karakoram Highway from China to Hassan Abdal will be doubled within a period of around three years. Nine new villages would be set up for victims of Diamer-Basha dam, he said.


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## Neo

*Infrastructure project uplift plan launched*

ISLAMABAD, Nov 28: Prime Minister Shaukat Aziz on Tuesday urged the public and private sectors to build synergies and go hand-in-hand to meet the enormous development challenges facing the country.

He was inaugurating a two-day public-private partnership forum on "Integrating Resources for Development", which also marked the formal launching of Infrastructure Project Development Facility (IPDF) that will help identify viable projects for private investment.

Describing the private sector as an engine of growth, the prime minister said its involvement in infrastructure development was of vital importance for sustainable and accelerated economic growth. He observed that the fusion of the public and the private sector can bring a tangible difference to the lives of the people.

He was of the view that the development of human capital and infrastructure improvement and expansion were the two major prerequisites of sustained economic growth.

He said the Medium Term Development Framework (2005-2010) of the government underlines the importance of improving the quality and coverage of vital physical infrastructure such as power and water supply as well as transport and logistics chain.

Referring to the state of infrastructure, he said there were significant gaps to be bridged. "We have to expand the coverage and outreach of essential services such as gas, electricity, municipal services and telecommunications to our entire population," he remarked.

He said there was a need to improve the operational efficiency of key sectors such as power and transport. Ã¢â¬ÅUpgrading the entire supply chain is so critical to improving productivity and competitiveness. Above all, we have to ensure food, energy and water security for a growing population," he added.

He said one of the major strategic initiatives in the field of infrastructure development was the National Trade Corridor linking Pakistan's major ports in the south with its major cities and trade routes to the north. The ports, roads and railways along this corridor handle 95 per cent of external trade and 65 per cent of total land freight.

He said that serving regions that account for 80-85 per cent of the country's GDP, this initiative will significantly reduce the time and cost of moving goods and thereby improve the competitiveness of the industry.

He said it was estimated that modernisation of this corridor alone will require investment of about $1 billion per year over the medium term.

He stressed that public-private partnerships can play a key role in mobilising resources and improving efficiencies through managerial expertise, new technology, better project design and implementation, and judicious use of resources.

"Our own experience so far has been quite encouraging. Past efforts to attract private investment, especially in the power and telecom sectors, have contributed to meeting the infrastructure gaps," he pointed out.

Adviser to the prime minister on Finance, Dr Salman Shah in his welcome address highlighted the objectives of the IPPF and said this programme will help the nation to revolutionalise the infrastructure in the country and bring an era of progress and prosperity.

Country Director of Asian Development Bank Peter Feldon and Country Director of World Bank John Wall appreciated the structural reforms being carried out by the government.


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## Neo

Wednesday, November 29, 2006 

*Pakistan wants to initiate talks on FTA with EU: Shaukat Aziz*

* UK trade minister praises Pakistan for passing WomenÃ¢â¬â¢s Protection Bill 
* Says the legislation will go a long way in providing justice and security to women

ISLAMABAD: Underlining the importance of long standing diplomatic, political and economic linkages between Pakistan and the UK, Prime Minister Shaukat Aziz has said Pakistan desires to further strengthen the economic and trade relationship between the two countries through greater interaction between the private and public sectors of the two countries. 

The prime minister was talking to Ian McCartney, UK Minister for Trade, who called on him on Tuesday along with a 10-member delegation comprising representatives of the London Stock Exchange, financial institutions and senior government officials. Expansion of economic relations between Pakistan and the UK, reform agenda of the government and the issue of better market access for Pakistani products in the markets of the European Union came under discussion. 

The prime minister said Pakistan is an emerging market with a vast potential for growth, rising consumer spending and robust industrial development. The recent listing of Muslim Commercial Bank (MCB) at the London Stock Exchange and the forthcoming listing of the Oil and Gas Development Company (OGDC) is a clear evidence of international acceptance of stability in Pakistan's industrial and financial sectors. 

He said as a result of the far-reaching reforms introduced by the government in every facet of life, Pakistan has been transformed into a country having high growth. The reforms introduced for de-regulation of the economy, transparent privatization, creation of a business-friendly environment, rationalization of taxes and tariffs and transparency in government transactions has restored confidence of the investors and Pakistan had received record foreign direct investment the previous year. 

The prime minister said Pakistan has made significant progress on the issue of Intellectual Property Rights. A dedicated organization has been set up to deal with the issue in a focused manner and we are dealing with violations in a tough manner. 

Mr Aziz said Pakistan is moving fast on the reform path to prepare itself to face the challenges posed by globalization. He said the government is working on increasing absorptive capacity and the training of the civil servants is one of the steps in that direction. 

The prime minister said one of the basic paradigm shifts in the country is a clear distinction in the roles of ministries and regulators. While policy formulation is the responsibility of the ministries, regulators have been provided independence to deal with the implementation part of it. He said Pakistan desires to initiate talks on Free Trade Agreement ( FTA) with the European Union and said Pakistan being an open economy is in a position to enter into such agreements and implement them effectively. The prime minister asked the UK to extend their support to Pakistan in this regard.

Mr McCartney said the banks and financial institutions of the UK find the investment climate in Pakistan conducive and a number of them are planning to expand their operations in Pakistan. He said private sector companies are keen to invest in Pakistan in health care, financial and oil and gas sectors through joint ventures with Pakistani companies and on public-private partnership basis. 

He praised Pakistan for passing the Women Protection Bill and said the legislation will go a long way in providing justice and security to women. He appreciated the role played by the Pakistani community in the development of UK. The British MPs of Pakistani origin are doing their job actively and enthusiastically, he added. 

Sir Thomas Harris, Vice-Chairman of Standard Chartered Bank, said British financial institutions are watching with great appreciation the economic transformation of Pakistan. He said the expansion in their operations in Pakistan, by a number of foreign banks is an expression of their confidence in Pakistan's economic and banking sectors. The meeting was attended, among others, by Minister for Commerce Humayun Akhtar Khan, High Commissioner of the UK to Pakistan Sir Mark Lyall Grant and senior officials.


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## Neo

*PM says ROZs to help alleviate poverty *

ISLAMABAD: November 29, 2006: Prime Minister Shaukat Aziz has said the Reconstruction Opportunity Zones (ROZs) being set up in different areas of the country including tribal areas, Balochistan, quake affected areas and the commercially dispersed zones of the country will help alleviate poverty, improve living standards and contribute to overall economic uplift of these areas.

The prime minister was chairing a meeting here on Wednesday to review progress on ROZs programme.

The prime minister said ROZs will greatly transform the less developed areas by strengthening infrastructure, generating economic activities and creating more jobs and better facilities of life for the people of these areas.

The prime minister appreciated that the proposal to set up ROZs also includes that goods manufactured in these Zones will be exported to the US markets on preferential terms.

The prime minister emphasised the need for providing skills training to the people of the areas where ROZs are to be set up to improve their prospects for getting employment. He said the entire physical infrastructure and support system including transport connectivity and supply of essential services to these areas will be strengthened to attract investments and facilitate efficient functioning of the industrial units set up in these areas.

Earlier Secretary Ministry of Commerce made a presentation to update the meeting on progress of the programme.

He said the Ministry is actively pursuing the proposal to set up ROZs with the US authorities and it is hoped that legislation on the programme including the exact locations of the ROZs and products to be manufactured there will be finalised soon between the Pakistani and the US authorities.


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## ali ahmad

Ecnec likely to approve 32 projects



ISLAMABAD, Nov 29: The Executive Committee of the National Economic Council (Ecnec) is expected to give approval to 32 projects worth Rs80 million when its meets here on Thursday.

Deputy Chairman Planning Commission Dr Akram Sheikh told Dawn that one of the important projects to be approved was the construction of an international airport at Gwadar. A road project aimed to link Quetta with other cities and towns of Balochistan was on the list, he added.

He said that projects like construction of an expo centre in Lahore and competitive support fund were also expected to receive the approval.

Answering a question, Mr Sheikh said that President Musharraf and the federal cabinet had approved a number of mega-projects in the water sector, including the Kalabagh, Diamer-Bhasha and Akhori dams.

"Now there is no question of reconsidering or reviewing those projects, including the three dams," he said, adding that the Central Development Working Party, which had met on Tuesday, did not have any objection on these plans.

He said the technical committee had already cleared and approved the dam projects, adding that no province could now challenge these plans.


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## ali ahmad

Electronic media attracts Rs5bn investment


ISLAMABAD, Nov 29: The recent developments in PakistanÃ¢â¬â¢s electronic media have created over 80,000 new jobs and attracted an investment of over Rs5 billion during the last three years.

These figures are based on the licences issued by the Pakistan Electronic Media Regulatory Authority (PEMRA) to private enterprises in different sub-sectors of the electronic media.

PEMRA has also estimated an investment of Rs654 million in wireless cable (MMDS), some Rs580 million in direct-to-home technology, Rs154 million in FM radio sector and Rs2.6 billion in satellite TV field.

The teleport facility is likely to fetch an investment of Rs500 million, shows a report of PEMRA for June 2003 to June 2006.The report has, however, not mentioned any details of the increasing control of the private electronic media by the state and the shrinking space for freedom of information. But, it still depicts a very bright picture of the expansion of electronic media in Pakistan.

The investment would potentially give fillip to local production of complementary goods such as cable, digital receivers, dish, stabilizers, encrypted cards, antenna and TV sets. Nobel TV plans to produce 500,000 TV sets per annum while Sony, National and Singer are already assembling TV sets.

The report says that electronic media can serve as Ã¢â¬Åmega employment generation toolÃ¢â¬Â. Presently, the cable television sector is employing some 30,000 people who are the bread-earners of families comprising around 500,000 members. Pakistan Television (PTV) has 6,000 employees on its payroll while Radio Pakistan has manpower of over 3,000.By the end of 2005-06, the fast expanding private electronic media has generated employment for 50,000 to 60,000 people. The radio sector has employed about 1,000 people, while satellite TV generated direct employment for over 4,000 others. The direct-to-home (DTH) technology could potentially accommodate about 200 people and the cable sector around 10,000. The wireless cable (MMDS) has the capacity to generate 1,000 jobs.

At present, the report says, the electronic media is fetching annual advertisement revenue of more than Rs3 billion. The cable television is earning about Rs5 billion through subscriptions every year. With the establishment of new media outlets, the revenues of the electronic media are expected to shoot up to Rs7 billion by 2007. PEMRA is also hopeful that being a highly capital intensive and holding promising employment opportunities, the electronic media could contribute substantially to the countryÃ¢â¬â¢s economic growth. It expects about Rs6 billion investments in the sector apart from the governmentÃ¢â¬â¢s spending on the state-run electronic media.

The number of existing television viewers of 50 million is increasing by half a million every year, the report claims.

PEMRA is of the view that in the present conditions, the country can easily sustain the establishment of over 230 FM radio stations, at least 12 to 15 satellite TV channels, around 3,000 cable networks, more than 25 MMDS stations and about two DTH operations. In the satellite television sector alone, PEMRA estimates that 36 to 44 channels may become viable until the year 2010.

PEMRA has also issued 86 licenses, in three phases, for establishing FM radio stations in 56 cities.


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## ali ahmad

TDAP inks agreement

ISLAMABAD, Nov 29: The government has allowed the Trade Development Authority of Pakistan (TDAP) to sign an agreement with Argentine Trade Authority for the promotion of bilateral trade.

An official said that the decision was taken in the federal cabinet meeting headed by Prime Minister Shaukat Aziz here on Wednesday.

The official said that the agreement would help in promoting export of various products to Argentina besides exploring market for new products


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## ali ahmad

Move to sign PTA with 57 OIC states\

ISLAMABAD, Nov 29: Prime Minister Shaukat Aziz has approved a proposal of the commerce ministry to ink a protocol with the OIC secretariat for initiation of talks on preferential trade agreement (PTA) with 57 members of the Islamic bloc.

A senior official told Dawn on Wednesday the proposed PTA, which would lead to a free trade agreement, would help in facilitating movement of trade resulting in greater intra-OIC trade.

Under the proposed PTA, all the OIC member countries would scale down tariff to 10 per cent on 7 per cent of the tariff lines of their respective countries in a bid to encourage more intra-OIC trade.

The official said that Pakistan would sign the protocol in the next meeting of the OIC, which was expected to be held in the next three months.

The 57-member Organisation of the Islamic Conference represents almost 1.8 billion people. The OIC countries meet almost 75 per cent of global energy needs and supply the world with 40 per cent of its raw material.

The official said the trade among OIC countries was not substantial.

He said that the proposed PTA among the OIC member-countries deserves close attention. In the emerging global atmosphere of free trade, such an arrangement can help promote greater economic cooperation among the member countries, he added.


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## Owais

*Industrialists urged to benefit from deals with China: Cabinet briefed on Pak-India talks status *

ISLAMABAD (November 30 2006): The Cabinet, which met here on Wednesday under the chairmanship of Prime Minister Shaukat Aziz, has urged the local manufacturers to utilise their full potential to benefit from the recent agreements signed between Pakistan and China.

It expressed hope that the historic visit of Chinese President Hu Jintao to Pakistan would give further impetus to the promotion of bilateral relations in all fields.

Briefing the journalists after the meeting, Information Minister Muhammad Ali Durrani said that the Cabinet appreciated the cooperation between Pakistan and China in defence, energy, trade and investment.

Regarding cooperation for establishment of new nuclear power plants, he said that China would continue to co-operate in positive developments in this field. "China will extend cooperation for all such positive development activities," he added.

About imposition of penalty on currency dealers for violation of rules and regulations, he said that this issue did not come under consideration of the Cabinet. However, an official told Business Recorder that the summary had been withdrawn, by Finance Ministry, without citing any reason.

The Cabinet appreciated Chinese government for establishing China-specific investment zone in Lahore to boost trade between the two countries, which has been established to promote economic relations between the two countries.

He said that the signing of development cooperation agreement would bring the two countries further closer by promoting cooperation in development and economic sector. The people-to-people contact would help a great deal in cementing the already existing very cordial and friendly relations between Pakistan and China.

He said that the Cabinet welcomed the signing of Free Trade Agreement (FTA) with China. Under this agreement Pakistan's trade with China would touch $15 billion.

The Cabinet greatly appreciated that the world's fastest growing market had been opened for Pakistan's exports. The people of Pakistan warmly welcomed the friend from a friendly country with great love and enthusiasm, he said.

The Cabinet also approved signing of an agreement between Pakistan and Zimbabwe on deputation of Pakistan Air Force Flight Instructors to Zimbabwe. Durrani said that Foreign Minister Khurshid Mahmud Kasuri and Foreign Affairs Secretary Riaz Muhammad Khan briefed the Cabinet on the status of Pak-India composite dialogue, including development on contentious issues like Siachen. The Cabinet said that Pakistan is a peace-loving country and wants to promote peace in the region, he added.

The Cabinet was of the view that to ensure durable peace in the subcontinent it was imperative that the Kashmir issue should be resolved in accordance with the aspirations of the people of Jammu and Kashmir, he said. "Confidence-building measures (CBMs) can only be beneficial if there is progress on real issues," he added.

The Cabinet congratulated the Prime Minister on the passage of the Women Protection Bill (WPB). It was viewed as a first step towards the long journey of women's emancipation in Pakistan. The Cabinet also discussed the political situation in the country, but MMA's resignations issue did not come under discussion.

The Prime Minister said that the government was making efforts to strengthen the democratic institutions in the country. He said that the present Parliament would complete its tenure and elections would be held according to schedule.

The Cabinet approved Family Laws (Amendments) Bill 2006 in compliance with Supreme Court order. The Supreme Court in a Constitution petition, No 16 of 2004, had passed the order on 24.4.2006 to suitably amend Section 310-A PPC.

The Cabinet approved a cooperation agreement between Export Promotion Bureau and Export Promotion Agency of Argentina with a view to institutionalise the strong linkages with the export promotion agencies of the two countries. The agreement would promote economic, commercial and business cooperation between Argentine and Pakistan.

The Cabinet approved signing of the protocol on Preferential Tariff Scheme for (IPS-OIC/PRETAS) among the participating member states of OIC. The Pretas aims at reducing tariff of 7 percent of total HS lines in the National Tariff Schedules of member states.

The Cabinet approved for signing of agreement between Vietnam and Pakistan on visa exemption for holders of diplomatic and official passports. The Cabinet granted approval, in principle, to start negotiations on the draft agreement between Pakistan and Morocco on combating terrorism.


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## Owais

*Economic, social sectors developing in tandem: Prime Minister *

ISLAMABAD (November 30 2006): Prime Minister Shaukat Aziz on Wednesday said that the economic and social sectors are developing in tandem and after achieving macroeconomic stability, the government is now focusing on providing better facilities of health, education and other amenities of life to the people to ensure sustainable development for the country.

Talking to Bjorn Stigson, president, World Business Council for Sustainable Development, (WBCSD) Geneva who called on him Wednesday, the Prime Minister termed the improvement in the standard of living of the people at grassroots level as the real criterion for the success of any reform agenda.

He said the broad based, multidimensional structural reforms introduced by the government during the last seven years have put the economy on a high growth trajectory and all sectors of the economy are showing growth.

The Prime Minister said sustaining a high level of investment and growth is a major challenge and the government is focusing on the development of human capital, infrastructure strengthening, health care and gender parity as part of the Medium Term Development Framework.

Shaukat Aziz underlined the major role of private sector in ensuring sustainable development and said the economic philosophy of the government based on three broad principles of liberalisation, deregulation and privatisation.

He said continuity, consistency, transparency of policies and good governance have facilitated the private sector to innovate, grow and lead the development process.

The Prime Minister welcomed the setting up of Business Council for Sustainable Development of Pakistan. Bjorn Stigson said the World Business Council for Sustainable Development is a leading business advocate on sustainable development that brings together some 180 international companies in a shared commitment to sustainable development through economic growth, ecological balance and social progress.


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## Owais

*Musharraf asks pharmaceutical companies to cut prices *

ISLAMABAD (November 30 2006): President General Pervez Musharraf on Wednesday said that the government was working on a comprehensive strategy to provide primary healthcare to all, and asked the pharmaceutical companies to bring down prices to within the reach of the common man.

Inaugurating the 'Health Expo 2006', showcasing Pakistan's health sector, the President spoke of several initiatives the government had taken to provide healthcare to the masses. Medical practitioners, experts, and a large number of medical students and nurses attended the opening of the two-day event.

The President said that the government was transmitting the economic gains to all sectors including health. "We cannot achieve much unless we have a strong economy," he said, referring to the increase in allocation for the health sector.

The allocation for health sector in the federal and provincial budgets, combined, was up by about 300 percent over previous allocation, he said. "But this is not enough. We have to allocate more for the health sector, and it will be done," he added. He pointed to four key areas the government is addressing in providing healthcare at primary and secondary levels.

The government has revived the Basic and Rural Health Units and was ensuring that doctors, medicines and equipment were available at these facilities. He said the BHUs and Rural Health Centres cater to 70 percent of the population, and it was essential to do it. This, he added, would lower the load on major hospitals.

He said that salaries of doctors at the BHUs have been increased to Rs 25,000, and they are also being provided residential accommodation. He said that in the case of Punjab the performance of these centres would be regularly monitored through Chief Minister's Evaluation Cell.

"However we must improve the quality and post-operative care at the tertiary hospitals," President Musharraf said, adding that they could even draw patients from the entire region. He identified the high incidence of water-borne diseases as an area of key concern, and said that the government was aiming at providing clean drinking water to the people by December 2007.

He said Rs 7 billion has been allocated for this purpose and at least filtration plants would be provided at Union level. He said that since it was vital to regularly check the quality of water, the project was being implemented by the Ministry of Science and Technology, under his direct supervision.

The President said that the government was also addressing the area of high mother and child mortality rates and has increased the number of Lady Health Visitors to 96,000 to provide better health care at grass-roots level.

Regarding immunisation, he said that at present about 70 percent of the area was being covered. He, however, directed the Ministry to ensure that the entire population is protected. He said that only 33 cases, mostly from the Afghan refugee camps, were reported in Pakistan this year. He said that Pakistani and Afghan health authorities were tackling the matter together.

He appreciated the role of National Commission for Human Development (NCHD) in providing primary healthcare and improving the capacity of the district governments in addressing health issues.

He also commended the role of medical community after the October 8 earthquake and said that the local and foreign medical teams had done a remarkable job that was even acknowledged by international organisations, owing to the low ratio of dead to the injured. The President said that efficient medical services in the wake of the earthquake had proved wrong all those who were predicting breakout of epidemics.

He also appreciated the role of the pharmaceutical industry and asked it to increase its exports. He also asked the industry to lower the prices of medicines to make these within the reach of the common man.

He said that the surgical instruments industry also needed to become high-tech industry and should go for value-addition. In this regard, he said that a university was being set up in Sialkot to teach relevant subjects to the industry.

Health Minister Nasir Khan said the government was providing free medical services to the poor sector, and added that about 96,000 health visitors, mostly in remote areas, were contributing significantly to reduce the mother and child mortality rate.

Similarly, he said, free diagnostic services were being extended for hepatitis and free vaccination was being provided to the most vulnerable segments. The Minister lauded President Musharraf for his commitment to the uplift of healthcare sector.

About the immunisation campaign, he said that some 32 million children were administered polio vaccine. Free treatment against HIV was being provided, and the health ministry was also undertaking a comprehensive programme to prevent blindness, he added.

Pakistan, he said, also has a booming pharmaceutical industry and its turnover has increased to $1.5 billion, from 800 million dollars in 2003. The country is also known for its best surgical instruments and the industry exported items worth 200 million last year, he said, adding that it was targeting $300 million surgical exports for next year.

Health Secretary Anwar Mehmood said that the 'Expo' had brought together all those related to healthcare and it aims to project what Pakistan has done in this area. He underlined the importance of good health and said his ministry was working on various projects to ensure best of the facilities, especially to the marginalised segment.

The Secretary also noted that there had been impressive growth in the pharmaceutical industry in the country and increase in exports of surgical instruments to many developed countries like the United States, the UK, Germany and the Middle East.

Later, the President also conferred 'Lifetime Achievement Award' on Abdul Sattar Edhi for selfless service to the suffering humanity and for operating the largest network of volunteer ambulance service in the world, and providing shelter to the homeless and the destitute. The international fame Edhi received a standing ovation. Other recipients included Dr Ruth Fow, known as 'mother of leprosy control', and has been serving the people in Pakistan since 1960s.

Similar awards were given to Professor Adeebul Hassan Rizvi of Sindh Institute of Urology, Dr Fariduddin Baqai, and Professor Khawaja Sadiq Hussain for promoting health education, Dr Syed Mohibur Rehman, Professor Dr Nasiruddin Azam Khan and Mrs Khadija Mushtaq--pioneer of nursing profession in the country. The President also took a round of various stalls set up by hospitals and pharmaceutical companies at the exhibition.


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## Owais

*Sindh sugar mills stop cane crushing *

KARACHI (November 30 2006): Sugar mills across the Sindh province halted the ongoing sugarcane crushing on Wednesday afternoon, sources told Business Recorder. They said that an important high-level meeting of the members of Pakistan Sugar Mills Association (PSMA) was held here on Wednesday to take a decision about cane crushing.

Some of the senior members of PSMA Sindh zone dispelled the impression that the issue of suspension of sugarcane crushing had been discussed during the PSMA's meeting and termed it a 'routine meeting'.

Furthermore, PSMA Sindh zone Chairman Aslam Farooq denied the rumours that all 28 sugar mills in Sindh had been brought to a halt, saying that some 10 such mills had temporarily suspended the sugarcane crushing due to several problems they had been facing since first day of the crushing season. "The major reason for the suspension of cane crushing operation was the lack of sufficient sugarcane supply to them," he added.

He said that other 18 mills, which had been provided with the required sugarcane by the growers, were properly operating and would not suspend crushing process. Aslam avoided to reveal the decisions taken at Wednesday's PSMA meeting and said that it was part of the association's regular process and nothing had been decided about the closure of sugar mills.

He said other ten mills had halted sugarcane crushing only on the basis of their individual decisions and may resume crushing operation within a week or so, as soon as the situation got better. However, he dismissed the allegations that sugar mills had been brought to a halt in line with the PSMA's policy supported by all its members. "Growers should improve sugarcane supply to mills as they have supplied only 20 percent of their produce since the crushing season started," he urged.

About the dispute on support price, Aslam said that there was no dispute on support price as it had been agreed by the PSMA Sindh zone with the government to receive sugarcane from growers on Rs 67 per 40-kg and millers are bound to follow the agreement.

"Our agreement with government is Rs 67 per 40-kg sugarcane as a support price on which all mills will get it from growers and there is no ambiguity on this issue in the minds of millers," he elaborated. Regarding situation in Punjab, he said he did not have any idea of the situation prevailing there, however, he observed that some of the sugar mills were operational in Punjab province.

President Sindh Growers Association (SGA) Qurban Ali Shah announced two-pronged policy to press their demands for resumption of sugarcane crushing in Sindh province, which he said, was halted by the millers as their deliberate intention to create 'monopoly' in the market.

He alleged PSMA Sindh zone had already decided that millers would not initiate sugarcane crushing before January 15, 2007 and claimed that SGA had proofs of two meetings held under the PSMA umbrella. "They (PSMA members) have declared in their two important meetings including one held in Lahore that sugarcane crushing will not be commenced before January 15," he added.

Replaying to a question, Qurban Ali Shah said that PSMA had initiated sugarcane crushing only on Sindh Chief Minister Arbab Ghulam Rahim's pressure. Elaborating his two-pronged policy, he said that first the SGA would approach Arbab Rahim and then it would raise the issue in the Sindh Assembly on December 1. The issue will also be raised in the National Assembly, he added.

"We (SGA) will submit a requisition in Sindh Assembly as an adjournment motion to press the growers' demands and put pressure on millers to take their decision back on the sugarcane suspension issue," he said.

Qurban termed the suspension of sugarcane crushing as a 'conspiracy' against the farmers and said all sugar mills had stopped crushing at once, as a pre-planned policy to bring the grower on their keens. However, he said that if the SGA failed to get the sugarcane crushing resumed through Sindh Assembly and CM Sindh's involvement then as a third option it would resort to other means to get the operation done in line with growers demands.

He said that growers would not shy away from staging sit-in in front of mills, on superhighway and on railway tracks to make their demands more prominent and against the suspension of crushing operation.

Moreover, he also underlined that growers would take over the sugar mills by force to run them for sugarcane crushing if the millers did not respond to their demands immediately. "Several recommendations came forward in today's meeting in which one is to take over the mills by force to resume the sugarcane crushing and deliberations in this regard are underway with the SGA's sister origination," he maintained.

He demanded of the Sindh chief minister to resolve the issue on a permanent basis and force the millers to resume their operation immediately.


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## Owais

*Rs70 million Swiss grant for free and fair Elections in Pakistan *


ISLAMABAD (updated on: November 30, 2006, 17:09 PST): The Country Director of the Swiss Agency for Development and Co-operation (SDC), Mr. Denis Bugnard and the Representative of The Asia Foundation (TAF), Mr. Hamid L. Sharif, signed on Thursday a bilateral agreement towards the realisation of the two-year joint-donor program 'Supporting Free and Fair Elections in Pakistan' to be executed by TAF. 

Under this agreement, the Government of Switzerland will provide a contribution of 1.15 million US dollars (70 million Pak Rupees) to the basket-funded program. 

The purpose of this program is to promote an active and educated voting population and to ensure an efficient voting process in Pakistan. 

The Program will provide support to a network of 30 civil society organisations, called the "Free and Fair Elections Network" (FAFEN), to build the capacity of the civil society and increase citizens' participation in the political process. 

Funds will be used for civic education; awareness raising; training of teachers for first-time voters' education program; domestic monitoring of the elections; as well as training of the media and religious leaders. 

The program will be implemented in 110 Districts and 6100 Union Councils in Pakistan and shall complement other efforts of the donor community to address issues relating to the next general elections.


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## Owais

*Vision-2030 envisages prosperous Pakistan: Prime Minister *

KARACHI (November 30 2006): Prime Minister Shaukat Aziz has said that in its Vision-2030, the government envisages a developed, industrialised, just and prosperous Pakistan through rapid and sustainable development to meet the needs of an increasing population by deploying knowledge inputs.

In a massage on the occasion of launching of the Business Council for Sustainable Development (BCSD) Pakistan, he said BCSD Pakistan can immensely contribute to realisation of this vision by engaging business in the quest for sustainable development in the country.

"I am very pleased to learn about the forthcoming Launch of the Business Council for Sustainable Development Pakistan (BCSD Pakistan) in Karachi under the leadership of PSO and PIA", he said and expressed the hope the BCSD Pakistan would be part of the global network of the World Business Council for Sustainable Development, Geneva, Switzerland, which would provide it access to extensive intellectual capital, leading edge thinking and best corporate practices.

He said that there was a growing awareness regarding the role that business could play in creating and maintaining a sustainable environment that stroke an effective balance between economic growth, social progress and ecological efficiency.

He was optimistic that BCSD Pakistan would play an important role in meeting the sustainable development challenges in Pakistan.


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## Owais

*UK pledges &#163;5 million aid for PRSC programme *

ISLAMABAD (November 30 2006): The United Kingdom (UK) would provide a technical assistance of &#163; 5 million (Rs 585 million) to support the implementation of Pakistan's Poverty Reduction Support Credit (PRSC) programme.

In this regard, a memorandum of understanding (MoU) was signed by Dr Yusaf Samiullah, head of the UK Department for International Development (DFID) in Pakistan and Dr John Wall, country director, World Bank, here on Wednesday.

The fund will be used to support the development, implementation and monitoring of policies that support Pakistan's poverty reduction strategy. This includes targeting the poor and vulnerable, promoting growth and macroeconomic stability and supporting a governance framework that will enable better health and education services.

"I am pleased to sign this memorandum of understanding with the World Bank in support of the Government of Pakistan's own programme to reduce poverty. The Government of Pakistan has made good progress in reducing poverty. But more needs to be done to lift the 38 million people still living below the national poverty line out of poverty", said Dr Samiullah.

"Supporting the Government of Pakistan in this way is just one of a number of UK and World Bank programmes designed to support poverty reduction. Looking forward, I am happy that we will double our own programme from Rs 27.6 billion (&#163; 236 million) for the current period 2005-08 to Rs 56 billion (&#163; 480 million.) for the period 2008-11."

"A new Country Assistance Plan will be developed over the coming months to set the framework for using these extra resources, with consultations starting in Pakistan very soon. Our partnerships with the government, civil society, and other donors such as the World Bank will be even more vital as we work together to support Pakistan's progress towards the millennium development goals (MDGs)", he said.

"I am looking forward to working closely with the Government of Pakistan and DFID in pursuit of the outcomes detailed in Pakistan's Poverty Reduction Strategy", said World Bank Country Director John Wall. "This is a good example of the kinds of partnership that can make a real difference", he added.


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## Owais

*Sailkot Chamber hails signing of FTA with China *

SIALKOT (November 30 2006): The local exporters and traders have hailed the free trade agreement (FTA) between Pakistan and China and termed it a historic event in the history of the country.

In an interview with Business Recorder here on Wednesday, Sialkot Chamber of Commerce and Industry (SCCI) President Sheikh Abdul Waheed Sandal said the FTA between the two countries would not only further cement the existing friendly ties but also help boost industrial production and expand trade relations between the two countries.

Waheed Sandal said the agreement would promote economic co-operation and expand boundaries of trade between Pakistan and China. There was a vast scope for the Chinese private sector to invest in various trade fields of Pakistan, including sports goods, surgical instruments leather goods industries of Sialkot.

The FTA between the two friendly countries would help bringing closer the business communities of Pakistan and China and ensure the frequent exchange of trade delegations, which would also help in understanding each others viewpoint for exploring possibilities of joint ventures and investment, he was of the opinion.

The SCCI president said there were bright opportunities for Chinese businessmen for establishing industries in Sialkot Export Processing Zone (SEPZ) as well as establish joint ventures with local businessmen. Abdul Waheed termed the signing of FTA an historic event and said that it was a symbol of deep friendship and love between Pakistan and China.


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## Owais

*S&P assigns 'BB' rating to Pakistan long-term bonds *

KARACHI: Standard & Poor's Ratings Services today assigned its 'BB' long-term local currency debt rating to two Pakistan Investment Bonds.

The bonds issued by the country, totaling Pakistani rupees 7.0 billion (US$117 million), were issued on Oct. 31, 2006. 

These newly rated bonds with maturities of 15 and 20 years carry coupon rates of 10.0% and 10.5%, respectively. 

The 'BB' rating has also been assigned to three other Pakistan Investment Bonds with maturities of three, five, and 10years and with coupon rates of 9.1%, 9.3%, and 9.6%, respectively, totaling PKR10.9 billion (US$181.7 million), which were issued in May 2006. 

"The ratings on Pakistan reflect sharp declines in the government's external debt indicators and structural improvements that, over time, should help Pakistan's integration into the global economy, and secure a higher growth path," said Standard &Poor's credit analyst Agost Benard. 

"Extensive micro economic reforms over the past several years have improved Pakistan's growth prospects, such that real GDP growth of about 7% is a real possibility in the medium term." 

Looking ahead, the ratings could improve if the government can expand its recent tax reforms to widen the tax base and raise government tax revenues significantly from the current low level of 10.4% of GDP. 

The country's credit standing could also improve if the authorities can demonstrate that the current pro-market, pro-growth set of policies will be sustained during successive administrations.


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## Neo

Again I have deleted a few posts from this thread to avoid flooding with insignificant news.

Please be selective, post only stuff that would attract readers and avoid flooding.

What we want to see in this thread is news concerning:
1-development
2-FDI
3-growth and analysis

Thanks,
Neo


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## Neo

*WB, DFID to spend Rs585 million for poverty elevation in Pakistan *

ISLAMABAD: November 30, 2006: The Department for International Development (DFID) and World Bank will jointly spend 585 million rupees for poverty elevation in Pakistan.

In this regard, Memorandum of Understating had been signed between World Bank and DFID.

The amount will be spent on the projects of Micro Finance, Education and Health.


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## Neo

*PM says macro economic situation robust in all sectors *

ISLAMABAD: November 30, 2006: Prime Minister Shaukat Aziz has said that the overall macro economic situation in the country continues to be robust with every sector of the economy including agriculture, industry, services and investment showing encouraging trends. 

The prime minister observed this while addressing the Executive Committee of the National Economic Council (ECNEC) meeting here on Thursday. 

The prime minister said the high growth exhibited by all sectors of economy during the first quarter of the financial year is a result of the focused approach to development adopted by the government and manifestation of the solid foundation laid for a high growth trajectory for future. 

He said the sound macro economic policies, wide ranging structural reforms, consistency and continuity in policies have transformed Pakistan from a fragile to a resurgent economy. 

The growth momentum that Pakistan sustained has underpinned by dynamism in industry, agriculture ad services and the emergence of a new investment cycle supported by strong credit growth. 

The prime minister said that that the 7 percent growth was achieved last year and the GDP growth during the current year is expected to be higher than targeted and range between six to eight percent. 

He said the share of industrial and manufacturing sector towards overall GDP has increased from 18.21 percent in 2001-2002 to 26 percent in 2005-06 and 15.5 percent in 2001-02 to 18.2 percent in 2005-06 respectively. Large scale manufacturing sector during the first quarter of the current year have shown a double digit growth, the prime minister said. 

Aziz said foreign direct investment (FDI) during first quarter of the year has already touched a record level of $1.236 billion showing an increase of 158 percent over the same period of last year. He said more investment is expected to come as a result of a number of agreements signed with foreign countries and private sector enterprises to enhance economic, industrial co-operation and trade promotion. 

The prime minister said tax collection is right on the target and in the first four months (July-October) of the current fiscal year Rs 236.5 billion have been collected which is 17.5 percent higher than the last year. 

He said that core inflation is showing a declining trend as a result of the steps taken by the government, prices of essential commodities remained stable during Ramazan. 

Aziz said consumer spending has been boosted by both structural and cyclical factors, all vital economic indictors are positive and despite several negative indicators around the world. Pakistan has achieved progress and its standing in the international community has also immensely strengthened. 

The prime minister said that on the basis of strong economic fundamentals and declining debt burden Moody's international rating agency has upgraded Pakistan from B2 to B1. 

The prime minister said the ambitious and highest ever PSDP of Rs 470 billion approved by the government is a manifestation of its commitment to development of the country and prosperity of the population. Timely implementation and execution of the projects are the challenges which the government is trying to overcome the prime minister pointed out. 

Aziz said the ECNEC will review projects in the areas of infrastructure strengthening commerce, education, energy, health, higher education, industry, physical planning ad housing rural development areas development and transport and communication.


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## Neo

Thursday, November 30, 2006 

*Govt mulling fund to increase manpower export*

* The proposal is to be discussed at ECNEC meeting today
* ECNEC will also consider 33 projects costing Rs 86b

By Fida Hussain

ISLAMABAD: The government is considering setting up a fund for marketing skilled workforce in different countries. 

The proposed fund is expected to help the government increase manpower export that will ultimately increase the volume of foreign remittances, a senior government official told the Daily Times on Wednesday. 

A proposal in this regard will be discussed at the meeting of the Executive Committee of National Economic Council (ECNEC) on Thursday with Prime Minister Shaukat Aziz in the chair. The planning body will also consider approval of 33 development projects with a total cost of around Rs 86 billion. 

The government has realized that most of the workforce being exported by Pakistan, especially to the Gulf countries, is raw hand and their earnings is much lower than wages of workers from other countries, especially India, Sri Lanka and some others, whose nationals have been capturing high posts in the public and private sector entities of those countries. 

The government has asked the ministry of labour, manpower and overseas Pakistanis and the Planning and Development (P&D) Division to inform the government about the the present strength of Pakistanis in different countries and their professions. According to initial estimates, around four million Pakistanis are in different countries. These Pakistanis have gone to foreign countries with the help of various schemes of the government. The number of Pakistanis in other countries who are there by using schemes of the private sector could be around 2-3 million. 

The official said PakistanÃ¢â¬â¢s workforce export is not at all properly managed and this is the main reason which deprives Pakistan of getting maximum benefit from Pakistanis working in foreign countries. The government will seek help from well-off Pakistanis in different countries to donate to the proposed fund. A matching amount will be contributed by the government, the official said. 

Apart from this proposal, ECNEC will consider the ministry of railwaysÃ¢â¬â¢ scheme of special repair of 36 GMU 30 diesel locomotives with cost being revised from Rs 4.5 billion to Rs 1.6 billion, expansion of network of the Utility Stores Corporation of Rs 784 million, construction of office building for the National Accountability Bureau costing Rs 900 million and land acquisition for new Gwadar International Airport of Rs 1.05 billion. 

ECNEC will also consider the scheme of Electric Power Transmission Enhancement Project costing Rs 12.6 billion, electrification of 7,000 villages in Balochistan that will cost Rs 1.034 billion. The project will be completed in two years. The AJK Community Infrastructure & Service Program in the earthquake-affected areas at a cost of Rs 2.4 billion. The project will be completed in two years. The planning body will also consider the project of Lower Indus Right Bank Irrigation and Drainage Programme (RBOD) the cost of which has been increased from Rs 4.3 billion to Rs 14.7 billion. 

The project of Sabakzai Dam Project, whose cost has been revised from Rs one billion to Rs 1.58 billion will also be taken up by ECNEC. The project of Land Acquisition and Resettlement of Kurram Tangi Dam whose cost has been reduced from Rs 2.7 billion to Rs 931 million, the Sindh Coastal Community Development at a cost of Rs 2.4 billion, Food Security and Productivity Enhancement of Small Farmers in 1,012 villages at a cost of Rs 8.01 billion, Operationalization of Sheikh Khalifa Bin Zayed Hospital in Quetta at a cost of Rs 497.2 million, 1,000 Cuban scholarships for studies in general comprehensive medicines equal to MBBS that will cost Rs 792.6 million, Trade & Transport Facilitation Project-2 of Rs 1.5 billion, and Competitive Support Fund of Rs 2.9 billion to provide support fund to SMEs.


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## Neo

Thursday, November 30, 2006 

*PakistanÃ¢â¬â¢s poverty reduction plan: MoU signed to provide Rs 585 million support*

ISLAMABAD: Dr Yusaf Samiullah, Head of the United KingdomÃ¢â¬â¢s Department for International Development (DFID) in Pakistan and Dr John Wall, Country Director of the World Bank, Pakistan Wednesday signed a Memorandum of Understanding for DFID to provide up to Rs 585 million (ÃÂ£5 million) worth of technical assistance to support the implementation of PakistanÃ¢â¬â¢s Poverty Reduction Support Credit (PRSC) programme.

DFID would double its assistance program from Rs 27.6 billion (ÃÂ£236 million) for the current period 2005-2008 to Rs 56 billion (ÃÂ£480 million) for the period 2008-2011. In this regard a new country assistance plan would be developed over the coming months to set the framework for using these extra resources, with consultations starting in Pakistan very soon.

The Rs 585 million (ÃÂ£ 5 million) worth of technical assistance would be used to support the development, implementation and monitoring of policies that support PakistanÃ¢â¬â¢s poverty reduction strategy. This includes targeting the poor and vulnerable, promoting growth and macroeconomic stability and supporting a governance framework that will enable better health and education services for the country.

Ã¢â¬ÅI am pleased to sign this Memorandum of Understanding with the World Bank in support of the government of PakistanÃ¢â¬â¢s own programme to reduce poverty. The government of Pakistan has made good progress in reducing poverty. But more needs to be done to lift the 38 million people still living below the national poverty line out of poverty, said Dr Samiullah.

He further said that supporting the government of Pakistan in this way is just one of a number of UK and World Bank programmes designed to support poverty reduction. Looking forward, I am happy that we will double our own programme from Rs 27.6 billion (ÃÂ£236 million) for the current period 2005-2008 to Rs 56 billion (ÃÂ£480 million) for the period 2008-2011.

A new country assistance plan will be developed over the coming months to set the framework for using these extra resources, with consultations starting in Pakistan very soon. Our partnerships with government, civil society and other donors such as the World Bank will be even more vital as we work together to support PakistanÃ¢â¬â¢s progress towards the Millennium Development Goals, he told.

Replying to the questions, Dr Samiullah said that helping Pakistan in its efforts to reduce poverty is major focus of DFID. In this regard, the DFID is extending its support to Pakistan in combating TB, HIV-AIDS, polio eradication and malaria in the health sector, provincial management reforms programs, water and sanitation, maternal and new born health. He further informed that UKÃ¢â¬â¢s DFID would start the Women Micro Finance programme to help 25000 households with small credit programmes for their economic empowerment with an assistance of 2.5 million this year, which would be increased, to 10 million in future. 

Ã¢â¬ÅI am looking forward to working closely with the government of Pakistan and DFID in pursuit of the outcomes detailed in PakistanÃ¢â¬â¢s Ã¢â¬ËPoverty Reduction StrategyÃ¢â¬Â, said Dr. John Wall, Country Director of the World Bank, Pakistan. Ã¢â¬ÅThis is a good example of the kinds of partnership that can make a real difference.Ã¢â¬Â

Replying to a question relating poverty figures, World Bank Country Director John Wall validated the governmentÃ¢â¬â¢s claim of reduction in poverty by 10 percent during 2001 to 2004 period and said that World Bank was also represented in the government of PakistanÃ¢â¬â¢s vetting committee headed by deputy chairman planning commission constituted to validate the poverty reduction estimates.

He said 10 percent reduction in poverty was a major achievement of Pakistan. He-however, said that poverty in Pakistan is rural phenomena and coverage of the consumer price index should be expanded to more and more rural areas so that more reliable data is available for any comparison.


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## Neo

*Hi-tech a must to stay competitive: economists *

KARACHI: Pakistani industrial sector is developing, but is focusing on low-tech/low-value manufacturing and it must move to hi-tech/high value added production in order to stay competitive in the world markets.

This was the crux of speeches delivered by two Japanese economists at a seminar here on Wednesday. The seminar was held to present a report entitled Ã¢â¬ÅTowards a Vision 2030: Direction of Industrial Development in PakistanÃ¢â¬Â prepared by Japan International Cooperation Agency.

Prof Hisaki Mitsui, who is senior economist at International Development Centre of Japan, said in his presentation that several sectors, such as textile and automobile, could possibly become leading industries to enable the country achieve the targets set in Vision 2030.

He said that an effective and strong coordination mechanism at the government level was highly needed, particularly for small and medium enterprises.

There was a need to improve relationship between private and public sectors, he said, but pointed out that mistrust between the two parties was deep-rooted in some sectors.

Mitsui suggested that the private sector should strengthen institutional capability of business associations to become a reliable counterpart of the government. On the other hand, the government should keep listening to the voice of the private sector, he said.

Development of own designs, brand names as well as strengthening of distribution and marketing channels should be encouraged, he said.

He identified textile, food processing and automobile as the three sectors, which could lead the industrial growth in the country. He said the information technology sector in the country was mostly services-based and did not focus on manufacturing.

He said the competitiveness of housing-related industry after current construction boom was questionable.

He said the competition with Chinese products should become tougher, but it was important to avoid direct competition with Chinese manufacturers.

Hisaya Oda, who is Assistant Director at Institute of Developing Economics, said that Pakistan was attracting less foreign direct investment than its potential. The FDI inflow to Pakistan had been rising, but the rise was smaller in comparison with the progress made by other Asian countries in that respect, he said.

Particularly, the FDI flow to manufacturing sector was limited, while other Asian countries had successfully attracted FDI into that sector. Manufacturing sector had a share of 67.40 per cent in FDI attracted by China, 26.2 per cent in India and over 69 per cent in Thailand. In Pakistan, it was hardly around nine per cent.

He said low-tech products constituted 72.7 per cent of total PakistanÃ¢â¬â¢s exports whereas the share of medium and hi-tech exports in the total world exports was 54.7 per cent.


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## Neo

*US Congress to discuss setting up ROZs in Pakistan *

ISLAMABAD: The US authorities have formally conveyed to Pakistan that US Congress will take up by January-end the setting up of Reconstruction Opportunity Zones (ROZs) in Pakistan for legislation. Ã¢â¬ÅSecretary Commerce Syed Asif Shah told this in a high level meeting held with Prime Minister Shaukat Aziz in the chair here on Wednesday, during his presentation on progress on the ROZs,Ã¢â¬Â informed sources told The News. 

US President George W Bush during his visit to Pakistan had proposed the Reconstruction Opportunity Zones in tribal areas of Pakistan particularly between Pakistan and Afghanistan in a bid to alleviate poverty, which has become the source of the deadliest spate of Ã¢â¬ËterrorismÃ¢â¬â¢ in the world. 

The sources while quoting the proceedings of the meeting said that Commerce Ministry is actively pursuing the proposal to set up ROZs with the US authorities and it is hoped that legislation on the programme including the exact locations of the ROZs and products to be manufactured there will be finalised soon between the Pakistani and the US authorities. 

According to a press release issued here, Prime Minister Shaukat Aziz has said the Reconstruction Opportunity Zones (ROZs), being set up in different areas of the country including tribal areas, Balochistan, earthquake affected areas and the commercially dispersed zones of the country, will help alleviate poverty, improve living standards and contribute to overall economic uplift of these areas. 

The PM said that ROZs would greatly transform the less developed areas by strengthening infrastructure, generating economic activities and creating more jobs and better facilities of life for the people of these areas. 

He emphasized the need for providing skill training to the people of the areas where ROZs are to be set up to improve their prospects for getting employment. 

He said the entire physical infrastructure and support system including transport connectivity and supply of essential services to these areas will be strengthened to attract investments and facilitate efficient functioning of the industrial units set up in these areas. 

Earlier, Secretary Ministry of Commerce made a presentation to update the meeting on progress of the programme. The meeting was attended among others by Minister for Commerce Humayum Akhtar Khan, Minister for Industries and Production Jehangir Khan Tareen, Minister for Culture Ghazi Gulab Jamal and senior officials.


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## Neo

*Russia shows interest in coal power plant *

KARACHI: Russians have showed interest in coal mining and setting up of coal-fired power plants in Sindh. In this regard a Russian delegation, headed by Chairman Board of Russian Institute of Coal Industries, held a meeting with Provincial Minister for Mines and Mineral Development, Irfanullah Khan Marwat here on Wednesday.

The delegation informed the minister about their large-scale investment plans in coal mining and power plants in Sindh and sought government cooperation in this respect.

The minister welcomed the delegation for investment in Sindh and said that Pakistan and Sindh governments would extend all cooperation to them. 

He pointed out that at present very large coal reserves exist in Thar area and told them to first visit Thar and then Sonda, Jheruk and Thatta and select the site of their choice for initiating the work.

He informed the delegation that in Thar, roads are ready, sweet water exists, telephone facility is available besides a small airport has been constructed and a hotel is under construction. 

Marwat said a Chinese company is already working on coal mining project in Thar while another Chinese company is setting up a power plant in Sonda, Jheruk on which they will start work from December 6.

He told the delegation that companies of various countries are showing interest in coal power plant and mining in Sindh. He said these projects would result in meeting power shortage and reducing unemployment. 

He said these projects would entail large-scale investment, which will result in massive development in Sindh. 

Secretary Mines, Abdul Hameed Akhund and DG Coal Development Authority Abbas Ali Shah were also present in the meeting.


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## Neo

*India and Pakistan Reject Gas Price Devised by Iran * 
Thursday, November 30, 2006 

India and Pakistan have rejected the gas import price worked out by a consultant company appointed by Iran as part of the over US$7 billion tri-nation pipeline project. 

"The price worked out by the consultant, which was based on certain parameters given by Iran, was not acceptable to India and Pakistan. The consultant has been given revised parameters to work out the gas pricing," Oil Minister Murli Deora said in a written reply to a question in Rajya Sabha (the upper house of parliament), Indian media reported. 

Iran had appointed Gaffney Cline and Associates to work out a price formula for the gas Iran wants to sell to the two South Asian neighbors. 

While Deora did not elaborate, sources said the Iranian side had asked the consultant to work out the gas price with future LNG contracts as reference point. 

New Delhi had, however, wanted the reference to be LNG contracts entered into during the past few years, which could then be extrapolated to produce crude oil prices. 

"Since the basis of arriving at the formula was not acceptable, we did not go into the GCA's suggestion," an official said. 

At the last trilateral meeting in New Delhi on August 3-4 Tehran had wanted a price equivalent to 10 percent of ruling Brent crude oil price, plus a fixed cost of $1.2 per million British thermal unit (mBtu). 

At $60 per barrel, the average Brent price during recent times, this translated into a price of 7.2 dollars per mBtu at the Iran-Pakistan border. 

Added to this would be the cost of transporting the gas through Pakistan. 

New Delhi, however, was willing to pay no more than 4.25 dollars per mBtu for gas delivered through the 2,100-km line at its border, sources said.

http://www.rigzone.com/news/article.asp?a_id=38631


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## Owais

*Budget deficit widens to Rs 86.69 billion *

ISLAMABAD (December 01 2006): Pakistan's budget deficit has widened to Rs 86.69 billion (one percent of GDP), up by 50 basis points, or 0.5 percentage point in the first quarter (July-September, 2006) as compared to Rs 37.697 billion (0.50 percent of GDP) recorded in the corresponding period of the last fiscal, the Ministry of Finance reported on Thursday.

According to the latest data released by the ministry of Finance on 'consolidated federal and provincial budgetary operations' for July-September 2006-07, government's total expenditures stood at Rs 342.364 billion, including unidentified expenses of Rs 33.047 billion whereas its revenues totalled at Rs 255.672 billion.

This big increase in the budget deficit in absolute and percentage terms during the first three months of the new fiscal would force the government to expand its external and domestic borrowing to bridge the deficit gap.

Its interesting feature is that during the last three-quarters of the FY2005-06, GDP remained constant at Rs7.465 trillion while in the fourth quarter it suddenly leapt to Rs7.713 trillion and now in the first quarter of the new fiscal 2006-07, it grew to Rs 8.808 trillion.

It is pertinent to note that out of the total expenses, the government spent only Rs 67.46 billion or 21.8 percent for the Public Sector Development Programme (PSDP). A huge sum of Rs 244.16 billion or more than 79 percent was consumed by current expenditures. The defence expenditures were Rs 54.57 billion during this period.

After analysing and comparing the fiscal data of the first quarter with that of year-ago, two important indicators emerged. First, the budget deficit is higher than what it was - one percent against 0.50 per cent of the GDP. Secondly, the amount of unidentified expenses is much greater than what it was - Rs 33.047 billion against Rs 3.881 billion recorded during corresponding quarter of last fiscal.

On the positive side, the expenditure on three-month PSDP during the period of this fiscal is higher than the same period of the last fiscal. This indicates a change for better in government's policies but much depends on the actual utilisation of the PSDP allocations. The actual utilisation of the PSDP in the first three months of the fiscal year was about only 78 percent.

CURRENT EXPENSES: Within the current expenses of Rs 244.163 billion in July-September 2006-07, Rs 97.80 billion went to general public services of the federal government, including Rs 49.09 billion on domestic debt servicing and Rs11.22 billion on foreign debt servicing.

The defence sector devoured Rs 45.57 billion, expenses on public order and safety affairs ate up Rs 4.03 billion, and economic affairs consumed Rs 7.93 billion. The government somehow managed to spend Rs 3.677 billion (0.04 percent of GDP) on education affairs and services, but the most vital health sector received only Rs 903 million. Worse still, the government spent only Rs 139 million on social protections (direct relief to the poor) and a negligible sum of Rs 32 million on environmental protection.

The Rs 903 million spending on the health sector means this sector's share in the overall current expenses was 0.36 per cent (0.01 percent of GDP) in the first quarter of this fiscal. Similarly, Rs32 million spending on environmental protection comes to 0.013 per cent of total current expenses.

According to the data the federal revenue collection during the first three-month was Rs 255.672 billion. Rs 191.62 billion were tax collection. The non-tax revenues stood at Rs 64.052 billion during the July-September period of FY 2006-07. Out of non-tax revenue, Rs 13.558 billion were collected in lieu of petroleum and gas surcharges that include Rs 7.556 billion as petroleum development surcharge and Rs 6.00 billion from gas development surcharge.

TRANSFERS TO PROVINCES: The data further say that the federal government has transferred Rs 78.539 billion to the four federating units (Punjab, Sindh, NWFP and Balochistan).

The provincial revenues of the government of Punjab amounted to Rs 45.54 billion against the expenditures of Rs 59.54 billion during the July-September period of the FY 2006-07. Punjab received Rs 37.21 billion as revenue share from federal taxes as NFC Award share during this period under review.

The total revenue of the government of Sindh stood at Rs 31.77 billion and the total expenditures of the province remained at Rs 29.54 billion during the period. It received Rs 26.23 billion as revenue share.

NWFP total revenues amounted to Rs 12.49 billion and total expenditures of the province stood at Rs 13.80 billion. The NWFP government received Rs 8.72 billion from the federal government during the said period.

The total revenue of the government of Balochistan stood at Rs 8.88 billion and the total expenditure of the province remained at Rs 8.79 billion during this period of the current fiscal year. The provincial government received a sum of Rs 6.38 billion from the federal government.


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## Owais

*US to provide $100 mln educational assistance to Pakistan *

WASHINGTON: United States would provide Pakistan an additional $100 million as educational assistance for fiscal year 2007. Over $200million have been disbursed in Pakistan as U.S. educational assistance since 2002.

Pakistan and the United States have reaffirmed their commitment to support the educational objectives of Pakistan as part of their substantial and growing bilateral relationship.

After the first session of the Strategic Dialogue on Education the two countries hoped to expand educational opportunities for the people of Pakistan and create new prospects for economic growth and development.

The two countries engaged in wide-ranging and productive discussions regarding teacher training programs; promotion of teacher, student and faculty exchanges; improvement of secondary-level science and math studies; administrative capacity-building, including school infrastructure; vocational/workforce education and training to meet Pakistan's labor needs; public/private sector partnerships; and the establishment of linkages between the higher-education academic and research institutions of the two countries and training of Pakistani academics in US institutions. 

Minister of Education Lt. Gen. (Rtd) Javed Ashraf Qazi, and US education secretary Margaret Spelling led the officials of two sides in talks.


----------



## Owais

*990 tons kino, fruiter exported to Russia, Ukraine *

KARACHI: Pakistan since the advent of kino and fruiter export this month thus far exported 990 tons in 45 containers of kino to Russia and Ukraine.

Exporters told Geo News that the export of kino started this month in the second week.

Chairman Fruit and Vegetable Processors and Exporters Association&#8217;s Mateen Siddiqui told Geo News that the kino crop was not fully ripe presently, as it was yellowish and sour in taste, while its exports would rise manifold, the sooner the crop gets ready, he added.


----------



## Neo

*Pakistan's economy transforming: Dr Salman *

KARACHI (December 01 2006): Adviser to Prime Minister on Finance, Dr Salman Shah has said that Pakistan's economy is growing strongly and since it has been transformed into a market-based economy, companies, particularly well governed companies, are going to be its engine of growth in future.

He was speaking at a seminar on "Corporate Governance Beyond Listed Companies" organised jointly by Center for International Private Enterprise (CIPE), Pakistan Institute of Corporate Governance (PICG) and Institute of Chartered Accountants of Pakistan (ICAP) here on Thursday.

Salman Shah said that the economy was being transformed into market economy run by private sector. "With the collapse of USSR, we have seen progressive growth in Pakistan's economy and it has been recognised as one of the emerging economies in the region after India and China", he added.

He said that in the 21st century, Pakistan's economy would be one of the major economies of the world. "In that sense we have to create environment conducive to achieve our potential". The developed economies of the world are in constant reformation, therefore, we need to continue reform our economy", he added.

The adviser said that the Karachi Stock Market in spite of various shortfalls has output form of emerging markets. "Our growth is exceeding good, private sector is increasing and overall growth will increase in time. We have been able to issue 30 years' bonds in the international market, which no other has done so far".

He said around 54 percent population of the country was under 19 years of age and these youth were the real engine of the country's economy. "We have to utilise this youth manpower effectively". He appreciated this important initiative taken by CIPE jointly with PICG and ICAP and assured them of government's support.

Chris Pierce, CEO, Global Governance Services Limited - an international perspective - Corporate Governance for Non-listed companies, in his keynote speech stressed that a strong business case has to be made in favour of raising corporate governance standards for the success of the initiative. He said that internationally, Corporate Governance codes for listed companies were an established practice and this phenomenon was now expanding to segments other than listed companies.

He said that in Asia, Pakistan was the first country that had embarked upon such an initiative. In his welcome address, Moin Fudda, Country Director, CIPE, said that non-listed sector had tremendous economic importance as compared to about 650 listed companies. There were about 50,000 non-listed companies, a diverse group, with both for-profit and not-profit entities of various legal forms and business size.

Zahid Zaheer, CEO, PICG, explained that there were various reasons for promoting good governance in non-listed companies, including protection of the interest of minority shareholders and other stakeholders, including employees. Razzak Dawood, former federal minister of Commerce was of the view that good corporate governance was a journey not a destination.


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## Neo

Fri, Dec. 01, 2006

*Pakistan sells oil co. stake for $813M*
HANS GREIMEL

ISLAMABAD, Pakistan - The Pakistani government said Friday it has sold a 10 percent stake in the country's biggest oil company, Oil and Gas Development Co., to international investors for $813 million in a deal it said highlighted global confidence in the country.

Some 95 percent of the stake was bought by institutional investors from the United States, Britain, Asia and the Middle East, the country's Privatization Commission said in a release. Pakistani investors bought the remainder.

Oil and Gas Development is the biggest player in Pakistan's oil and gas sector and the largest company, by market value, on the country's Karachi Stock Exchange 100 index.

Its privatization marks a milestone of economic reform in South Asia, where Pakistan and India have deregulated in recent years to transform themselves into darlings of foreign investment. Pakistan's government plans to eventually sell 51 percent of the company.

"The success of this offering sends a strong signal of global institutional investor confidence in Pakistan and bodes well for Pakistan's growing participation in the international capital markets," said Zahid Hamid, Minister for Privatization and Investment. "The Government is committed to maintaining the pace of its privatization program."

Friday's sale follows a 2003 initial public offering of 5 percent of the company's shares on domestic stock exchanges. The government now holds an 85 percent stake in the company.

Islamabad-based Oil and Gas Development, which has Pakistani's largest oil and natural gas reserves, sold 39,130 barrels of oil a day last year and controlled 47 percent of the Pakistani oil market. It held about 23 percent of the country's natural gas market.

The Privatization Commission was formed in 1991 and has completed more than 160 transactions since, selling everything from banks and energy concerns, to newspapers and chemical makers.

Pakistan uses the revenue to retire government debt and fund poverty prevention programs. The reforms have helped spur investor interest in Pakistani companies and have helped put the Karachi 100 index up about 9 percent in the last year.

In January, the government sealed its biggest deal to date under the sweeping reforms, selling a controlling stake in the country's top phone company to a Middle Eastern rival for $2.6 billion.

http://www.contracostatimes.com/mld/cctimes/business/16139506.htm


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## Neo

*Electronic media attracts Rs5bn investment *
Thursday November 30, 2006 

ISLAMABAD: The recent developments in PakistanÃ¢â¬â¢s electronic media have created over 80,000 new jobs and attracted an investment of over Rs5 billion during the last three years. 

These figures are based on the licences issued by the Pakistan Electronic Media Regulatory Authority (PEMRA) to private enterprises in different sub-sectors of the electronic media. 

PEMRA has also estimated an investment of Rs654 million in wireless cable (MMDS), some Rs580 million in direct-to-home technology, Rs154 million in FM radio sector and Rs2.6 billion in satellite TV field. 

The teleport facility is likely to fetch an investment of Rs500 million, shows a report of PEMRA for June 2003 to June 2006.The report has, however, not mentioned any details of the increasing control of the private electronic media by the state and the shrinking space for freedom of information. But, it still depicts a very bright picture of the expansion of electronic media in Pakistan. 

The investment would potentially give fillip to local production of complementary goods such as cable, digital receivers, dish, stabilizers, encrypted cards, antenna and TV sets. Nobel TV plans to produce 500,000 TV sets per annum while Sony, National and Singer are already assembling TV sets. 

The report says that electronic media can serve as Ã¢â¬Åmega employment generation toolÃ¢â¬Â. Presently, the cable television sector is employing some 30,000 people who are the bread-earners of families comprising around 500,000 members. Pakistan Television (PTV) has 6,000 employees on its payroll while Radio Pakistan has manpower of over 3,000.By the end of 2005-06, the fast expanding private electronic media has generated employment for 50,000 to 60,000 people. The radio sector has employed about 1,000 people, while satellite TV generated direct employment for over 4,000 others. The direct-to-home (DTH) technology could potentially accommodate about 200 people and the cable sector around 10,000. The wireless cable (MMDS) has the capacity to generate 1,000 jobs. 

At present, the report says, the electronic media is fetching annual advertisement revenue of more than Rs3 billion. The cable television is earning about Rs5 billion through subscriptions every year. With the establishment of new media outlets, the revenues of the electronic media are expected to shoot up to Rs7 billion by 2007. PEMRA is also hopeful that being a highly capital intensive and holding promising employment opportunities, the electronic media could contribute substantially to the countryÃ¢â¬â¢s economic growth. It expects about Rs6 billion investments in the sector apart from the governmentÃ¢â¬â¢s spending on the state-run electronic media. 

The number of existing television viewers of 50 million is increasing by half a million every year, the report claims. 

PEMRA is of the view that in the present conditions, the country can easily sustain the establishment of over 230 FM radio stations, at least 12 to 15 satellite TV channels, around 3,000 cable networks, more than 25 MMDS stations and about two DTH operations. In the satellite television sector alone, PEMRA estimates that 36 to 44 channels may become viable until the year 2010. 

PEMRA has also issued 86 licenses, in three phases, for establishing FM radio stations in 56 cities.


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## Neo

Friday, December 01, 2006 

*ECNEC meeting approves 24 projects worth Rs 57.1 billion*

* Cost of 7 schemes revised from Rs 16.1 billion to Rs 25.5 billion

By Fida Hussain

ISLAMABAD: The Executive Committee of the National Economic Council (ECNEC), which met on Thursday with Prime Minister Shaukat Aziz in the chair, approved 24 new projects costing Rs 57.1 billion and revised the cost of seven schemes from Rs 16.1 billion to Rs 25.5 billion. The new and ongoing projects include a foreign exchange component of Rs 20 billion.

Dr Akram Sheikh Deputy Chairman pf Planning Commission while briefing media persons said that the meeting approved 15 projects of infrastructure valuing Rs 58.9 billion, 12 project of social sector of Rs 17.1 billion and 4 projects of Rs 1.5 billion of other sectors.

Out of the 31 projects, five projects valuing Rs 5.3 billion were approved for Punjab, 4 projects of Rs 19 billion for Sindh, 6 projects of Rs 11 billion for NWFP, 7 projects of Rs 20.5 billion for Balochistan and one project of Rs 2.4 billion for AJK and 8 project of Rs 24.4 billion for all country basis.

He said that federal government would be financing Rs 59 billion for 31 projects approved by ECNEC. However, provincial government would share the cost of the 31 projects by providing funding of Rs 9.2 billion. The sponsoring and executing agencies would also share the cost and NTDC of WAPDA would provide funding of Rs 14.4 billions.

He said the ECNEC meeting approved power transmission enhancement project of Rs 1.26 billion. The project would be initiated in three federating units NWFP, Sindh and Punjab. He said Gwadar would be connected to Central Asian states and with the other cities of Pakistan. To this effect, ECNEC approved a 454-kilometre road of Rs 14.1 billion that will connect Gwadar to Surab, Basima, Nag, Punjgur and Khushab. He said that meeting also approved the land acquisition project for new airport at Gwadar that will cost Rs 1.05 billion. Some 6500 acres of land will be acquired for the airport.

He said that meeting also approved the revised cost of Rs 1.57 billion of Sabakzai dam. The cost of the project has increased by Rs 500 million. The meeting also approved the land acquisition and settlement of the people for Kurum Tangi dam of Rs 2.7 billion.

The meeting approved the most important project RBOD-1 with altered design and revised cost of Rs 14.7 billion. He said that the cost has increased by Rs 8.7 billion mainly because of the increase in interest for the loan acquired for the project. Dr Sheikh said that the meeting also approved the expansion of network for machine Readable Passports within and outside the country to provide passports to maximum Pakistanis. This project will cost Rs 3.562 billion.

The official said ECNEC also approved to electrify 7000 villages in Balochistan that will cost Rs 1.034 billion. The project will be competed in 2 years. ECNEC approved AJK Community Infrastructure & Service Program in the earthquake-affected areas with the cost of Rs 2.4 billion.

Dr Sheikh said that the construction of the new Islamabad airport would be initiated with 6 to 8 weeks. The meeting has also approved another most important project for Sindh Coastal Community Development at the cost of Rs 2.4 billion. 

The meeting approved the project to repair 36 GMU-30 Diesel Electric Locomotives that will cost Rs 1.6 billion. He said that government has planned to increase share of transportation goods through railway trains from 5 to 10 percent during 4 years in the total transportation of goods.

The meeting also approved operationalisation of Sheikh Khalifa Bin Zayed Hospital in Quetta at the cost of Rs 497.2 million, 1000 Cuban scholarships for studies in general comprehensive medicines, that will cost Rs 792.6 million, Trade & Transport Facilitation Project-2 of Rs 1.5 billion, Competitive Support Fund of Rs 2.9 billion to provide support fund to SMEs. He said that the meeting also approved the construction of new office building for the Foreign Office in Islamabad. However, he did not give more details in this regard.


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## Neo

Friday, December 01, 2006 

*TextileÃ¢â¬â¢s share in exports comes down to 58%*

By Tanveer Ahmed

KARACHI: The share of the textile sector in the total exports of the country came down to 58 percent in first four months (July-Oct) of current financial year from 65 percent one year ago.

The conditons in the textile sector on all fronts are indicating a bleak picture since the beginning of current financial year, which has been making the economic managers of the country sleepless, who made huge claims of taking the countryÃ¢â¬â¢s textile exports to further heights at the time of announcement of budget and trade policy.

During the last financial year, the textile exports accounted for 60 percent in total exports of the country, howerver share slashed to 58 percent in the first four months because of declining trend in textile exports. According to the foreign trade statistics, the textile exports have declined by 9 percent during Jul-Oct of 2006-07 to $3.2b as against $3.5b in the same period of last year.

Out of the thirteen items that constitute textile group, only five could post growth in exports. Cotton Cloth, Bed Wear and Readymade Garments that collectively carry around 50 percent weight in the total textile exports, recorded a decline of 18.5 percent, 19.3 percent and 7.2 percent, respectively. Thus, export of value-added products posted a declining trend.

The more worrisome factor is slowdown in expansion of the textile industry because of poor export performance. The industry, which went for major BMR programme some years back to reap the benefits of post quota regime imported billion dollar textile machinery.

However, in July-Oct 2006-07, the import of textile machinery also saw a considerable reduction of 33 percent compared to same period last year, which is indicative of the fact that industrialists are now more in a mood to invest in further expansion of textile industry at the moment.

According to textile exporters, they do not see any improvement in the countryÃ¢â¬â¢s textile exports in the coming days and feared that the second quarterÃ¢â¬â¢s textile export might be on downward side because of the fast loosing share in international textile markets.

Farhan Aziz, research analyst at Jahangir Siddiuqi Capital Market observed that a decline in exports could create a negative impact on the smaller textile manufacturers, while the larger units, which have strong presence in the foreign markets will not be affected.

Although the EU reduced duties on Pakistani bed-linen products from about 13 percent to 7.5 percent in May 2006, he said, this could not help Pakistani products maintain or improve its exports.

The main cause behind this decline was intensifying competition from exporting countries where manufacturing cost is relatively cheaper when compared to Pakistan. Besides, lesser focus on value-added products also makes Pakistani manufactures uncompetitive in the international markets, Aziz felt. However, a government official said that although, the cost of production has gone up over the years, but the Pakistan textile manufactures did not concentrate on brining improvement in quality and designing of their products, which is also a big reason loosing the export orders.

Ã¢â¬ÅThe government has given fiscal incentives to the industry, whatever was possible in the shape of textile package and R&D support, however industry should also play its part to introduce innovative designs and improve the quality to attract the foreign buyers,Ã¢â¬Â he added.


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## Neo

Friday, December 01, 2006 

*7% growth achieved in FY 05-06, says Aziz*

ISLAMABAD: Prime Minister Shaukat Aziz has said that the overall macro economic situation in the country continues to be robust with every sector of the economy including agriculture, industry, services, trade and investment showing encouraging trends. The prime minister said this while addressing the Executive Committee of the National Economic Council (ECNEC) meeting here Thursday.

The prime minister disclosed to the meeting that the actual numbers show that 7 percent growth was achieved last fiscal year 2005-06. It is pertinent to mention here that at the end of the fiscal year 2005-06, due to the availability of data of 9 to 11 months and based upon the provisional figures, the government had announced a GDP growth of 6.6 percent. The prime minister said that the GDP growth during the current year 2006-07 is expected to be higher than 7.2 percent targeted and range between six to eight percent.

The prime minister said that the high growth exhibited by all sectors of economy during the first quarter of the financial year is a result of the focused approach to development adopted by the government and manifestation of the solid foundation laid for a high growth trajectory for future.

He said that the sound macroeconomic policies, wide-ranging structural reforms, consistency and continuity in policies have transformed Pakistan from a fragile to a resurgent economy. The growth momentum that Pakistan sustained has been underpinned by dynamism in industry, agriculture and services, and the emergence of a new investment cycle supported by strong credit growth.

He said that the share of the industrial and manufacturing sector towards the overall GDP has increased from 18.2% in 2001-2002 to 26% in 2005-06 and 15.5% in 2001-02 to 18.2% in 2005-06 respectively. 

The Large-scale manufacturing sector, during the first quarter of the current year fiscal, has shown a double-digit growth, the prime minister added.


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## A.Rahman

*PSM shows Rs 140 million profit in first quarter*

ISLAMABAD (December 02, 2006): Pakistan Steel Mills (PSM) showed a profit of Rs 140 million in the first quarter (July-September) of FY2006-07, which was in line with the set target. PSM's sales and other income totalled Rs 6.033 billion while its expenditures including taxes (Rs75 million) was Rs 5.893 billion.


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## Owais

*Pakistan 06/07 inflation may slip beyond target: SBP *


KARACHI (updated on: December 02, 2006, 13:39 PST): Pakistan may exceed its 6.5 percent inflation target for the 2006/07 fiscal year, as food prices are yet to show a persistent downward trend, the State bank of Pakistan's (SBP) governor Dr. Shamshad Akhtar said on Saturday.

However, the economy's prospects of achieving the 7.0 percent growth target for the fiscal year were promising, Shamshad said at a news conference to unveil the State bank's annual report for the 2005/06 fiscal year.

"While we have been able to curb core inflation, the food prices have as yet not shown a persistent downward trend," said Shamshad. "The inflation rate, perhaps would slip beyond the 6.5 percent target."

Akhtar said that healthy performances from the large-scale manufacturing sector as well as the other sectors of the economy in recent months signalled that the country would be able to achieve the growth target for the year.

On the weakness of the rupee, the governor said the SBP was not tampering with its exchange rate.

"We are not tampering with the exchange rate, it is the reflection of the market forces," she said.

The rupee is hovering at its weakest level for two years after closing at 60.87/89 per dollar on Friday.


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## Owais

*Speedy completion of hydropower projects ordered: all dams to be constructed by 2015, says Musharraf *

ISLAMABAD (December 02 2006): President Pervez Musharraf has directed to speed up the work on the ongoing hydropower projects and ensure their early completion to meet growing demand of fast expanding industrial sector. The President said that the foreign entrepreneurs who intend to set up their industries in Pakistan should be assured supply of energy on sustainable basis.

He stressed the need for timely and efficient completion of these projects for rapid economic growth. He was presiding over a meeting in Rawalpindi on Friday to review the ongoing progress of hydropower projects in the country.

The President was informed that Wapda is undertaking eight power projects, which are expected to be completed by 2012. These projects would help generate additional one thousand one hundred and fifty-five megawatts of electricity, which would help meet country's growing energy demands.

The meeting was also informed that the Mangla Dam Raising at the estimated cost of Rs 62.5 billion would make available 2.8 million acre feet of water and 644 megawatts electricity.

About the Gomal Zam Dam, the meeting was further informed that the project would be completed at an estimated cost of 8.2 billion rupees having storage capacity of 0.89 million acre feet.

President Musharraf said all dams including Kala Bagh, Bhasha, Munda, Gomal Zam and Kuram Tangi would be constructed by 2015 as part of his water vision 2025.

He said if new reservoirs are not constructed now, it would be too late by year 2025, and the country would be facing acute water shortage with serious implications for its economic growth. The President said that the Mangla raising would help provide about 3 million acre feet of water for the benefit of the agriculture and industry.

About recently inaugurated Mirani Dam in Balochistan, the President said that besides cultivating 33,000 acres of barren land and generation of electricity, it would also generate hundred million rupees annually in fisheries sector. He said Subakzai dam, which is nearing completion would be inaugurated next year and would supplement water needs of the province.

The President said that construction of 300-kilometre Kachhi canal from Punjab to Balochistan at a cost of Rs 40 billion would help provide sufficient water for the agriculture of Balochistan. Liaqat Ali Jatoi, Minister for Water and Power, also attended the meeting.


----------



## Owais

*Musharraf vows to develop energy resources on fast track *


RAWALPINDI (updated on: December 02, 2006, 02:57 PST): President Pervez Musharraf on Friday vowed to develop the energy resources of the country on fast track basis to help meet the needs of the fast expanding industrial sector and sustainable economic development of the country.

He was presiding over a high-level meeting here on Friday to review the on-going hydropower projects in the country.

The president was informed that WAPDA was undertaking eight power projects which are expected to be completed by 2012.

These projects would help generate additional 1,155 megawatts of electricity which would help meet country's growing demands for the fast pace economic development.

The president directed to speed up these projects and ensure their early completion to help meet the growing demands of fast expanding industrial sector.

The president said that the foreign entrepreneurs who intend to set up their industries in Pakistan should be assured supply of energy on sustainable basis.

He stressed the need for timely and efficient completion of these projects for the sustainable economic growth of the country.

The meeting was also informed that the Mangla Dam Raising at the estimated cost of Rs. 62.5 billion would make available 2.8 million acre feet of water and 644 megawatts electricity.

About the Gomal Zam Dam, the meeting was further informed that the project would be completed at an estimated cost of Rs. 8.2 billion, having storage capacity of 1.89 million acre feet.

The president said all dams including Kala Bagh, Bhasha, Munda, Gomal Zam and Kurram Tangi would be constructed by 2015 as part of his water vision 2025.

He said if new reservoirs are not constructed now, it would be too late by year 2025, and the country would be facing acute water shortage with serious implications for its economic growth. 

The president said that the Mangla raising would help provide about three million acre feet of water for the benefit of the agriculture and industry.

About recently inaugurated Mirani Dam in Balochistan, the president said that besides cultivating 33,000 acres of barren land and generation of electricity, it would also generate hundred million rupees annually in fisheries sector.

He said Subakzai dam which is nearing completion would be inaugurated next year and would supplement water needs of the province.

The president said that construction of 300 kilometre long Kachhi canal from Punjab to Balochistan at a cost of Rs 40 billion would help provide sufficient water for the agriculture of Balochistan.


----------



## Owais

*Pakistan determined to deny MFN status to India *

ISLAMABAD (December 02 2006): Pakistan is determined to deny Most Favoured Nation (MFN) status to India even after signing of the agreement on promotion and protection of investments at the South Asian Association of Regional Countries (Saarc).

Informed sources in the Board of Investment (BoI) told Business Recorder here on Friday that India had sought MFN treatment under article 4 of the Saarc draft agreement which means all previous bilateral or multilateral investment agreements would read into this pact.

However, Pakistan had contended that MFN should operate prospectively and proposed to exclude from the operation of the article, all bilateral/ multilateral investment agreements signed prior to this agreement, the sources added.

The sources said, Privatisation and Investment Division had sought the comments of Prime Minister Secretariat and Attorney General of Pakistan on the article 4 and establishment of SAARC Arbitration Council, who raised concerns over the increasing role of India.

Attorney General of Pakistan, Makhdoom Ali Khan was of the view that such a clause would only be useful, if the MFN clause is excluded for executing earlier agreements, adding that in the absence of such a decision article 4 should not be a deal breaker. He further argued that if subsequent BITs and MIAs continue to have open-ended MFN clauses, they would be read into this agreement.

"MFN clauses in this agreement, would, therefore require the same extended meaning and scope which article 4 seeks to deny. Nothing of substance would therefore be achieved by curtailing the scope of article 4 without simultaneously reaching a decision in principle that all future BITs. MIAs and the MFN clause is to have restricted scope," the sources quoted the Attorney General as saying, in written comments before the signing of agreement.

The sources said Prime Minister secretariat had directed Pakistani delegation at the 13th SAARC Summit held in Dhaka to ensure that there is no reference or inclusion of MFN clause. Even if article 4 was adopted as suggested by Pakistan, this would not necessarily protect Pakistan's interests vis-&#224;-vis India which was the only country seeking MFN treatment.

According to sources, SAARC Arbitration Council, which has been recently cleared by the federal cabinet would provide a legal framework for fair and efficient settlement of commercial and investment disputes in the region through conciliation and arbitration.

The council would also promote national and international arbitration institution, besides providing fair, inexpensive and expeditious arbitration in the region. The council would act as a coordinating agency in the SAARC dispute resolution and assist in the enforcement of arbitral awards.

The council would be administered by a Director General, to be posted for three-year tenure on the principle of alphabetical rotation from amongst the SAARC member countries. He would work under supervision of the governing board comprising a member nominated by each member state. However, location of the council has been left open for decision by the SAARC Council of Ministers.

The rules of SAARC regional centres in respect of administrative and financial matters would apply mutatis mutandis to the council.


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## Owais

*External liabilities swell to $37.72 billion *

ISLAMABAD (December 02 2006): Pakistan's external liabilities - external debt plus foreign exchange liabilities-totalled $37.72 billion at the end of September 2006, indicating an increase of $459 million over June 30, 2006's liabilities of $37.26 billion, the State Bank of Pakistan (SBP) reported on Friday.

Of the total liabilities, the external debt has surged by $517 million to $36.196 billion at the end of September of 2005-06, against $35.68 billion recorded at the end of June 2006. While, the foreign exchange liabilities declined to $1.528 billion as compared to $1.586 billion recorded at the end June 2006.

It is pertinent to note that during the last four years, the country's public and publicly guaranteed debt has been on the rise reveals the SBP data. On June 30, 2005, it was $31.084 billion and at the end of the same month of 2006 it increased to $32.603 billion. And now, after three months at the end of September 2006, the publicly guaranteed debt further inched up to $33.153 billion.

In public and publicly guaranteed debt, the medium and long-term debt (more than one year) during the period under review augmented by $490 million to $32.897 billion as it was $32.407 billion at the end of June 2006. According to the break-up of the medium and long-term debt, the multilateral debt by end-September, 2006 grew by $462 million to $16.989 billion and bilateral debt up by $82 million to $929 million compared to June 2006 when these stood at $16.527 billion and $847 million, respectively.


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## Owais

*Pak-Jordan FTA talks soon *

AMMAN (December 02 2006): Jordan and Pakistan have agreed to start negotiations early next year for signing a free trade agreement (FTA) between the two countries. Secretary General, Ministry of Industry and Trade, Muntasser Oqlah made the announcement at the opening of a "Made in Pakistan" exhibition in Amman, The Gulf Today reported on Friday.

The exhibition is organised by Expo Jordan and the embassy of Pakistan, the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and the Trade Development Authority of Pakistan.

Some 80 Pakistani exhibitors are showcasing their goods and services to Jordanian buyers. These include cereals and textiles, pharmaceutical goods and agricultural machinery. Exhibitors emphasised that apart from finished products, raw materials are available for import from Pakistan for processing and exporting from Jordan.

Pakistani officials said they considered Jordan as a springboard for further investments within the Middle East and the exhibition gives Pakistani producers the opportunity to interact with the Jordanian market. Pakistan and Jordan already enjoy a healthy economic relationship and both sides have said that they were seeking more business partnerships.


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## Owais

*PIA and American Express announce partnership to develop co-branded products *
KARACHI (December 02 2006): Pakistan International Airlines and American Express Global Network Service on Friday have signed a Partnership Agreement to develop a series of Airline Co-Branded card products for their customers in Pakistan.

These cards, targeted at, and customised for different market segments, will offer customers access to PIA's Awards +Plus loyalty programme, allowing Card members to earn PIA Awards +Plus miles on every purchase.

In addition, Card members will enjoy a range of travel-related benefits, including access to PIA business class lounges, excess baggage allowance and other special promotions developed exclusively for Card members.

"This alliance with American Express is a very significant step in taking PIA's Frequent Flyer Programme to the next level, and the first of many initiatives that will be seen in the near future. PIA's Frequent Flyers are most valuable customers, and the PIA team has been engaged in developing a set of unique, innovative and exciting offerings that will exponentially increase the value of the programme for them. Tariq Kirmani, Chairman PIA hoped that PIA's corporate alliance with American Express shall go a long way in fostering long-lasting business ties between two entities and shall benefit valued customers of PIA & American Express both.

Internationally, American Express has introduced many highly acclaimed co-brand Partnerships with leading airlines around the world, including Delta Airlines, Air Canada, British Airways, KLM, Air France, Alitalia, Virgin Atlantic, South African Airlines, Singapore Airlines, Indian Airlines, Thai Airways and Qantas.

"PIA and American Express Co-Brand Partnership consistently strives to set the pace in the card industry by continuing to offer compelling reasons for high-spending, affluent customers to choose American Express Cards. Both the organisations share a wealth of experience in airline co-branding and mutually welcome the addition of Pakistan International Airlines to network of leading airline co-brand partners," said Kula Kulendran, American Express Senior Vice President, Global Network Services, Japan, Asia-Pacific and Australia.-PR


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## Owais

*SBP Annual Report for 2005-06 records GDP growth at 6.6% *


KARACHI: Pakistan&#8217;s Gross Domestic Product (GDP) growth rate during the financial year 2005-06 remained at 6.6 percent despite October 8 earthquake, agricultural production remaining short of expectations and the persistent high international oil prices.

Governor State Bank of Pakistan (SBP), Dr. Shamshad Akhtar, while presenting the Annual Report for the fiscal year 2005-06, told this.

SBP Governor said that the overall rate of inflation during the fiscal year 2005-06 remained below the target of 8 percent, as it worked out to 7.5 percent only in the wake of the better monetary policy of the Central Bank. However, the prices of daily use items hiked, she said

Shamshad Akhtar during the press conference further told that the trade deficit due to rising imports jacked up to $8.4 billion, double than the government&#8217;s set target. However, the financing account closed in surplus due to better financing position of the government, while on the other hand, investment rate in GDP during the same period stood at 20 percent.

Shamshad Akhtar further told that the administrative expenses of the government during this period witnessed a whopping rise, which was a matter of concern. However, the government borrowings from the Central Bank for meeting the budget deficit remained behind the set target, she added.

Shamshad Akhtar during the press conference cautioning the banks asked them to increase their profit rates given to their depositors, otherwise, the Central Bank would be constrained to take action against them.


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## Neo

*resources will be developed fast: Musharraf*

RAWALPINDI, Dec 1: President General Pervez Musharraf on Friday vowed to develop the energy resources of the country on fast track basis to help meet the needs of the fast expanding industrial sector and sustainable economic development of the country.

He was presiding over a high-level meeting here on Friday to review the ongoing hydropower projects in the country.

The president was informed that Wapda was undertaking eight power projects expected to be completed by 2012. These projects would help generate additional 1,155 megawatts of electricity to help meet country's growing demands for the fast pace economic development.

He directed acceleration in pace of work on these projects and ensure their early completion to help meet the growing demands of the fast expanding industrial sector.

Foreign entrepreneurs intending to set up their industries in Pakistan should be assured supply of energy on sustainable basis, he said.

President Musharraf stressed the need for timely and efficient completion of these projects for sustainable economic growth of the country.

The meeting was also informed that the Rs62.5 billion Mangla Dam Raising project would make available 2.8 million acre feet of water and 644 megawatts electricity.

About the Gomal Zam Dam, the meeting was further informed that the project would be completed at an estimated cost of Rs8.2 billion, having a storage capacity of 1.89 million acre feet.

The president said all dams including Kalabagh, Bhasha, Munda, Gomal Zam and Kurram Tangi would be constructed by 2015 as part of his water vision 2025.

If new reservoirs were not constructed now, the country would face acute water shortage with serious implications for its economic growth, he said.

He said the Mangla raising would help provide about three million acre feet of water for the benefit of the agriculture and industry.

About the recently-inaugurated Mirani Dam in Balochistan, President Musharraf said besides cultivating 33,000 acres of barren land and generating electricity, the dam would also generate about Rs100 million annually in fisheries sector.

He said the Subakzai dam, which was nearing completion, would be inaugurated next year and supplement water needs of the province.He said that the construction of 300-kilometre-long Kachhi canal from the Punjab to Balochistan at an estimated cost of Rs40 billion would help provide sufficient water for the agriculture of Balochistan.

Minister for Water and Power Liaqat Ali Jatoi also attended the meeting


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## Neo

*OGDC GDS sold cheap to investors: Market reaction*

KARACHI, Dec 1: Except the government, everyone at the market thought that shares in Oil and Gas Development Company Limited (OGDC) to international investors had been sold cheap. The market nonetheless was divided among those who were only mildly annoyed and those who were very cross.

The Cabinet Committee on Privatisation (CCoP), chaired by Prime Minister Shaukat Aziz, burnt mid-night oil on Thursday in coming to the conclusion over the size and 'strike price' of OGDC Global Depository Shares (GDS) to be offered to international investors. The Government had set out to divest its holding in OGDC up to 15 per cent or 645 million shares by way of issuance of GDSs to local and international investors. Late on Thursday night, the CCoP announced that the offer size would be 10 per cent or 424 million shares at the 'strike price' of Rs115 per share.

Privatisation and Investment Minister Zahid Hamid told Dawn that he was quite satisfied with the transaction. He said the government would be able to raise $813 million, which he considered an accomplishment. He disagreed that Rs115 was a price on the lower side. He said that the share value was market driven and based on cash flows prepared by financial consultants. And he asserted that Pakistan was competing with GDRs on offer by companies of the Asian giants such as China, India and Thailand.

Ã¢â¬ÅThose companies offered GDRs at an average of 12 per cent discount, while our offer was at 9.5 per cent discount to the market price,Ã¢â¬Â he argued. He said it was a moment to rejoice as Pakistan had been able to attract leading international investors and received two-fold subscription to its offer.

But what does the market think? For several weeks now, at the low-end, the two-dollar a share theory was doing the rounds which had sent the share reeling down from Rs156 in six weeks from Oct 19 to Rs127.20 at the close of trading on Thursday. The strike price of lower than lowest expectations came as a rude shock and the market price of the OGDC share on Friday hit its 'lower lock', losing Rs6.35 to close at Rs120.85. The heavily weighted OGDC dragged the entire market down, resulting in a hefty 230 points plunge in the KSE index of 100 shares.

Ã¢â¬ÅThe government is desperate to collect money from left, right and centre and therefore hardly gave a thought to the loss that it has caused to investors by selling shares at this throw away price,Ã¢â¬Â said a furious fund manager with considerable large funds under management. Like other critics, he asked not to be named. He objected to calculation of 10 per cent discount on the plummeted price of Rs127 and not on the average price of say last three months. This fund manager mentioned that the financial advisors had calculated the strike price on the earning multiple of 10 for FY07, while it should have been on multiple of 14.

He thought most mutual funds would have to bear huge losses, for they had been carrying OGDC stock at the price of around Rs135. He murmured that it was even a bigger financial scam than Pakistan Steel Mills or the March 2005 stock crash.

Another market player sharing the same grim view said that if the government was unable to get a 'fair' price for the stock, it could have scrapped the deal. He was asked if it was possible to do that at such late stage. Ã¢â¬ÅWhen the SBP can scrap the auction of PIBs and T-bills in case of non-receipt of satisfactory amount, why couldnÃ¢â¬â¢t the government?Ã¢â¬Â he asked. He even forwarded a conspiracy theory and said that it needed to be investigated on who was short on the stock and which players took the exit just before the price dropped. One way, he said of judging the losses to investors, was to note that on Thursday evening the CFS amount in OGDC was Rs5 billion.

Ã¢â¬ÅTwo lower locks (another he presumed would be on Monday) would wipe out Rs50 million of the investors money, particularly the smaller ones,Ã¢â¬Â said the fund manager.

But Nadeem Naqvi, CEO at AKD Securities, said that he believed that investors, mainly the punters had no business to enter the CFS market or do leverage trading. Ã¢â¬ÅEven in ordinary circumstances, there are nine out of 10 chances that such speculator would come to grief,Ã¢â¬Â he said.

Mr Naqvi was overall satisfied with the transaction. He pointed out that two large Chinese companies were making IPOs on the same day. Compared to China, Pakistan is only a marginal market and also has a higher Ã¢â¬Årisk perception,Ã¢â¬Â he said and added that it was a good omen that the country had come on the radar screen of foreign investors.

Ã¢â¬ÅThe fact that two Pakistani companies (the other being MCB) had made it to the investment portfolio of foreign institutional investors and fund managers after a gap of 10 years is a happy augury,Ã¢â¬Â he said. Mr Naqvi did admit that the strike price was substantially lower than most valuations at around Rs150 to Rs160 a share, but believed that it was all very well to let foreign investor make money, for why else would he subscribe to other upcoming GDRs of HBL, NBP, Kapco and others. As for local investors, he emphasised that medium to long term investors in the local market would not be the losers. Ã¢â¬ÅOGDC is a high growth, high dividend paying stock,Ã¢â¬Â he said and added that serious investors who would hold on to the stock for say 12 months would have nothing to complain about.Ã¢â¬Â

Another optimistic stock broker counted a few other good things. The free float of OGDC, which would hugely grow in size and few players, would not be able to set the direction of the market by dabbling in one stock. He justified his argument by pointing to the shares in Hubco and PTC where the speculative power had been reduced with their larger float coming into the market.

Mr Naqvi admitted that OGDC had pulled down the entire market and other stocks had been punished, but suggested that at 10,000 levels, many stocks on the banking, fertilizer and O&G companies would drop to attractive valuations and would be ripe for picking.


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## Neo

*Iran to set up auto plant in Pakistan*

LAHORE, Dec 1: Iran has expressed interest in setting up an auto plant in Pakistan like similar units put up by Tehran in Azerbaijan and Syria. This transpired in a meeting between Federal Minister for Industries, Production and Special Initiatives Jahangir Khan Tareen and IranÃ¢â¬â¢s Commerce and Industry Minister Alireza Tahmasebi, who was here to participate in the ECO ministerial meeting, which concluded on Thursday.

Tareen also held meetings with the industries ministers of Turkey and Afghanistan to discuss bilateral and multilateral industrial cooperation.

Tareen apprised the Iranian minister about the progress made by Pakistan in auto industry and assured him of the fullest support and assistance on behalf of the government for having Iranian investment in this area.

The meeting with the Turkish Minister for Industries Ali Coskun focused on promoting the bilateral trade relations. The Turkish minister observed that the trade relations between Turkey and Pakistan did not match their business potential and spirit of brotherhood.

He invited Mr Tareen to visit Turkey so as to look into the areas of industrial and commercial collaboration between the two countries.

Afghan Minister of Commerce and Industry Meer Muhammad Amin discussed the plan for initiating ROZs in the tribal areas between Afghan-Pakistan borders. He disclosed that the plan in this regard would be finalised by end of this month.


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## Neo

*Plan to grow more cotton in NWFP, Balochistan *

KARACHI: Government is planning to enhance cotton cultivation areas in Balochistan and North West Frontier Provinces (NWFP) in absence of chances of further increase in cotton crop in Sindh and Punjab. 

Senior officials of ministry of agriculture, cotton experts and cotton promoting bodies are likely to hold meetings with growers of Balochistan and NWFP for promoting cotton cultivation.

Ã¢â¬ÅSecretary Agriculture Balochistan has convened a meeting of cotton experts, researchers and officials of agriculture departments in Quetta on December 5, 2006 on the recommendations of Pakistan Central Cotton Committee (PCCC),Ã¢â¬Â Vice President PCCC Dr Ibad Badar told The News.

Ã¢â¬ÅThe meeting would promoting cotton cultivation in Balochistan, identifying suitable areas for organic cotton production and to define the participatory role of PCCC and agriculture department of Balochistan,Ã¢â¬Â he said.

Dr Ibad added that setting up of Cotton Research Stations in potential cotton growing areas including Sibi, Loralai, Uthal, Kharan and Baghbana would be discussed.

The meeting of cotton experts is likely to be attended by Agriculture Development Commissioner Qadir Bux Baloch, Vice President PCCC Dr Ibad Badar, Directors of Central Cotton Research Institutes Multan and Sakrund, Director National Institute of Biotechnology & Genetic Engineering Faisalabad besides of provincial agriculture authorities of Balochistan including Director General Extension and DG Research. 

Ã¢â¬ÅGovernment is concentrating on increasing cotton growing areas particularly in Balochistan and NWFP,Ã¢â¬Â a senior official of federal ministry of agriculture said and added that future of cotton lies in Balochistan and NWFP.

Ã¢â¬ÅBalochistan produces around 0.1 million bales of cotton per annum and three ginning factories are already functioning there,Ã¢â¬Â he said and asserted that quality of cotton produced in Balochistan was very good.

It may be noted that federal government had fixed cotton cultivation area target at 3.247 million hectares for fiscal 2006-07, which was the same as that of 2005-06 season.

Cotton was sown on 2.559 million hectares in Punjab, 638,000 hectares in Sindh, 40,000 hectares in Balochistan and 10,000 hectares in the NWFP.

Cotton production estimate of 2006-07 for Punjab was around 10.6 million bales, 3.130 million bales in Sindh, 94,000 bales in Balochistan and 10,000 bales in the NWFP.

However, the 13.834 million bales target was revised to 13 million bales after cotton production fell in Punjab and Sindh although NWFP and Balochistan achieved their targets for current season.

Cotton production has been under strain for two seasons in a row forcing authorities to shift focus on breaking fresh soil in Balochistan and NWFP.

Last yearÃ¢â¬â¢s cotton production target was 15 million bales against actual production of 12.5 million bales. The production in Punjab stood at 10.25 million bales against a target of 11.65 million bales due to lower per acre yield and decline in cultivated area. The production in Sindh also stood at 2.65 million bales against its target of 3.25 million bales.


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## Neo

*Govt to get foreign assistance of Rs. 37 bn for KBD: Asif Sheikh *
Wednesday November 29, 2006 

ISLAMABAD: Federal Government would acquire Rs. 37 billion foreign assistance for the construction of Kala Bagh Dam while Central Development Working Party (CDWP) has approved 30 projects worth Rs. 59.2 billion out of which Rs. 22.5 billion would be obtained through foreign assistance. 
Talking to group of Journalists here on Tuesday, Joint Chief Economist of Planning Commission Asif Sheikh further said that assistance from foreign financial institutions would also be sought for the completion of eight projects including project of Kala Bag Dam. 

The CDWP has given approval to holds talks with foreign financial institutions in this respect, he added. Federal Government would obtain foreign assistance worth Rs. 39.1 billion for Diamer Basha Dam project, Rs. 37 billion for Kala Bag Dam and Rs. 26.6 billion for Akhori Dam under the head of grant and loans, he remarked. 

Besides this, Government for the completion of 8 different development projects including a project to equip eight big cities of Punjab with modern facilities worth Rs. 600 would also take foreign assistance, he maintained. 

Joint Chief Economist of Planning Commission Asif Sheikh added that Rs. 1.37 billion have been allocated to acquire land for Rawalpindi bypass and Rs. 6 billion for the rehabilitation and reconstruction of Damaged section of National highway in earthquake affected areas of AJK. 

He said Rs 23.2 billion for 8-development projects in Punjab, Rs. 0.7 billion for two-development project in Sindh, Rs. 2.8 billion for six development projects in NWFP, Rs. 0.2 billion for one development project in Balochistan, Rs 04 billion for one development project in FATA and Rs. 6 billion for one development in Azad Jammu Kashmir has been allocated during the meeting of CDWP. Rs. 25.9 billion has also been approved for different 11 projects in the country, he added. 

He informed that Rs. 348.966 million for enhancement of fourth phase of Construction Machinery Training Institute (CMTI), Rs. 390 m for construction of Steel Bridges in FATA, Rs. 5960 m for Rehabilitation and Reconstruction of Damages section of National Highways in earthquake affected areas of Azad Kashmir, Rs. 1677.424 m for Diamer Basha Dam Projects Detailed Engineering Design and Preparation of Tender Documents was also approved. 

CDWP has also approved Rs. 188 million for installation of additional gas turbines at GTPS Shahdara, Lahore, Rs. 21082 m for Chashma Hydropower Project, Rs. 84.972 m for construction of office complex for office of the Chief Engineering Advisor/Chairman, Federal Flood Commission, Islamabad and Rs. 462.6 m for Triclien to Attahk Irrigation Scheme in District Chitral, Asif Sheikh added. 

During the meeting of CDWP, the Joint Chief Economist of Planning Commission said that Rs. 33.75 million for community Water Storage Irrigated Agriculture Development Sector Project in Punjab and Rs 33.75 m for the same project in NWFP, Rs. 457.65 m for Construction of Eastern and Expansion of Southern Sewage Treatment Plant and Rs. 222 m for construction of Sewerage Pumping Station in Hyderabad has been approved. 

While giving further details, he said that Rs 69.4 million for the construction of Headquarters Pakistan Rangers Punjab at Gazi Road, Rs. 740 m for medical rehabilitation of disabled in the earthquake effected areas, Rs. 19994.871 m for National Maternal Newborn & Child Health Programme, Rs. 530 m for purchase of different equipments of hospitals in NWFP and Rs. 218.754 m for establishment of Cadet College Kohlu was approved. 

The Joint Chief Economist of Planning Commission apprised that Rs. 200 million for construction of new buildings in University of Agriculture Faisalabad, Rs. 141.951m for provision of online lectures and video conferencing facilities for Universities, HEC and allied Government Bodies, Rs. 88.653 m for establishment of Land Revenue Records Management System in Rural Areas of ICT, Islamabad, Rs. 180 m for institutional strengthening and capacity building of officers of Government of Punjab, Rs. 3630.980 m for Research for Agricultural Development Programme and Rs. 450 million for establishment of facilitation Unit for Participatory Vegetable Seed and Nursery Production Programme has also been approved.

http://www.paktribune.com/news/index.shtml?161514


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## Neo

*Fiscal deficit rises to 4.2 percent *

KARACHI (December 03 2006): The country's fiscal deficit rose to 4.2 percent of GDP in financial year 2006 as compared with 3.3 percent of GDP in the preceding year. The State Bank of Pakistan (SBP) in its Annual Report 2005-06 has said that the fiscal deficit rose due to the expenditure incurred on account of relief and rehabilitation efforts following the October 2005 earthquake, in addition to rise in development expenditure.

The primary and revenue balances posted deficit in FY06 while these had shown surpluses in the preceding years. The SBP suggested to the government that fiscal management should be disciplined, especially when there remain structural weaknesses in the tax system, including a narrow tax base, over-reliance on import-related taxes, privatisation proceeds, and potentially non-recurring sources of non-tax revenue.

*REVENUE:* Total revenue stood at Rs 1076.6 billion with YoY increase of 19.6 percent as compared to the 11.7 percent increase seen in FY05. Though the revenue receipts slightly lagged behind their modified target, the growth in revenues was higher than the growth in nominal GDP. Therefore, the revenue-to-GDP ratio increased to 14.0 percent in FY06 as compared with 13.7 percent in FY05.

The SBP said, "Improvement does not seem to be sustainable in the coming years as the major impetus to this increase was from the non-tax revenue (a part of which may not be repeated in FY07) and surcharges (the latter is mainly from the Petroleum Development Levy, the government has not budgeted any revenue from this head in FY07)."

A break-up of the FY06 revenues showed that tax revenues rose by 19.1 percent YoY to Rs 753.0 billion during FY06. This was mainly due to CBR taxes, which contributed Rs 712.5 billion. The strong revenue growth led to an encouraging improvement in tax buoyancy (from 0.8 percent in FY05 to 1.2 percent in FY06), but this nonetheless remained quite low compared to those of the developing countries.

Non-tax revenue contributed Rs 272.9 billion in FY06, witnessing a rise of 13.4 percent. The non-tax-to-GDP ratio declined from 3.7 percent in FY05 to 3.5 percent in FY06 while the government was expecting it to be at 3.8 percent in FY06.

*EXPENDUTURE:* Total expenditure in FY06 rose to Rs 1,401.8 billion, showing an increase of 25.5 percent (the highest rise in past 31 years) compared with the growth of 18.8 percent in FY05.

However, it was encouraging to note that the jump in FY06 expenditure was mainly due to developmental outlays that rose from 3.5 percent of GDP in FY05 to 4.7 percent in FY06. Despite the fact that earthquake rehabilitation expenditure, amounting to Rs 65.8 billion in FY06, put pressure on current expenditure, the rise in the latter was relatively quite moderate.

Specifically, the current expenditure stood at Rs 1,121.0 billion, with a growth of 18.9 percent in FY06 as compared to the higher growth of 23.6 percent in FY05.

The analysis of current expenditures showed that the ratio of interest payments to GDP declined sharply from the peak of 6.9 percent in FY00 to 3.1 percent in FY06.

The report said that defence expenditure, which historically absorbed a major part of resources, has declined steadily from 5.7 percent of GDP in FY90 to 3.1 percent of GDP in FY06 and seemed to have stabilised in the recent years. On the other hand, the share of current subsidies increased somewhat over the years, the report said.


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## Neo

*GDP growth remains strong at 6.6 percent *

KARACHI (December 03 2006): The SBP annual report for 2005-06 says that despite the unexpectedly weak harvests of some key crops (cotton, sugarcane and wheat), the impact of the October 2005 earthquake, a tight monetary policy and the continual rise in oil prices, real GDP growth remained strong at 6.6 percent during FY06.

The report, issued on Saturday at a press briefing addressed by SBP Governor Dr Shamshad Akhtar has taken detailed overview of the national economy. The report is divided into two parts. Part I deals with review of national economy, and Part II comprises performance review. According to the report, Pakistan's economy overcame adverse pressures to achieve strong growth for the third successive year in FY06.

It says that while the GDP growth was lower than the target of 7.0 percent for the year, and 8.6 percent seen in the preceding year, the growth was nonetheless commendable, given the negative pressures.

Indeed, if not for the significantly adverse impact of poor weather towards the end of Rabi FY06, it was quite possible that the annual target might have been met. Moreover, it should be kept in mind that the FY06 growth rate was still above the long-term growth trajectory of 6.0 percent, required to assist a sustained reduction in poverty.

However, there was a visible deterioration in the quality of economic performance, in the sense that the FY06 growth was more narrowly based, as compared to preceding years. In contrast to a broad-based growth in FY05, the impetus to the high growth in FY06 was principally from the above-target performance of the services sector, as both key commodity-producing sectors--agriculture and industry--saw growth fall well below the respective annual targets.

In particular, growth in the value-addition by agriculture decelerated, as below target harvests for a number of key crops (especially cotton, sugarcane and wheat) led to a fall in value-addition by the crops sub-sector.

The report says that even the modest 2.5 percent growth in agriculture was made possible only by an exceptional showing by the livestock sub-sector, which offset the negative value-addition by crops.

Provisional data shows that growth in the sector jumped to 8.0 percent in FY06, appreciably higher than the 4.0 percent annual target and in sharp contrast to annual average growth of just 3.0 percent for the preceding 5 years.

The only silver lining to this weak performance was that much of the poor performance by the crops sub-sector in FY06 was due to factors that may not repeat in FY07.

Specifically, it is likely that the wheat, cotton, and sugarcane targets would be achieved in FY07 in the light of the improved prospects for water availability and the continued supportive government policies and access to credit. Moreover, high FY06 prices and better water availability are likely to contribute to a bumper sugarcane harvest FY07.

To the reviewer of the economy, encouraging element of FY06 agri sector developments was the visible increase in fertiliser off-take, above target credit disbursement, increased supply of certified seeds and improved availability of irrigation water.

Given favourable weather conditions and supportive pricing policies, there is a strong likelihood that agricultural performance would improve in FY07.

*THE REPORT ADDS:*As with agriculture, it was the deceleration in growth of a large-scale manufacturing (LSM) key sub-sector that pulled down the aggregate industrial growth during FY06.

Growth in LSM production dropped from 15.6 percent in FY05 to 9.0 percent in FY06 and, as a result, industrial growth dropped to 5.9 percent during FY06, substantially lower than both the 9.5 percent target for the year and the 11.4 percent growth achieved in the preceding year.

The deceleration in LSM growth was attributable to a number of factors, including the impact of the relatively poor cotton harvest, capacity constraints being faced by some major industries, as well as a small slowdown in demand amidst rising interest rates.

Most of the remaining industrial sub-sectors also witnessed below-target performance. Growth in small scale manufacturing stood at 9.3 percent, against 7.5 percent, which indicated revision of data for the sector to include the contribution of cotton products, which constitutes 14 percent of small-scale production.

Mining & quarrying sub-sector also witnessed deceleration, registering 3.8 percent growth, which was lower than the targeted 5.2 percent as well as impressive growth of 9.6 percent seen in FY05. This could be attributed to fall in the production of crude oil during FY06.

Construction sector also witnessed deceleration, registering 9.2 percent growth which was significantly lower than the previous year's 18.6 percent, although it was still very high keeping in view the base impact, and as compared to the targeted 7.5 percent.

In fact, construction sector was the only sub-sector in industry that exhibited an above-target performance. This impressive growth could be attributed to the boom in the real estate market, significant increase in public sector development program (PSDP), reconstruction activities in Northern Areas and higher FDI in the sector.

Electricity & gas distribution sector witnessed a negative growth for FY06, which points towards a very serious issue of huge operating expenses in the sector in the form of increased input costs of gas and oil, and large line losses incurred due to the security situation in Balochistan.

In contrast with the commodity-producing sector, the services sector maintained its growth momentum during the year, registering an impressive 8.8 percent growth, which was not only much higher than the 6.8 percent annual target, but was also higher than the high growth of 8 percent seen in FY05.

As a result, the share of the services sector jumped back to the 52.3 percent seen in FY03, after declining during two successive years. All services sub-sectors contributed to this remarkable performance. Although growth in the wholesale & retail trade and finance & insurance sub-sectors weakened a little from the previous year, this seemed to be a high-base effect and performance of both sectors was quite strong.

In particular, the wholesale & retail trade sub-sector witnessed a rise in activity mainly on the back of higher trade volume in the form of higher imports and exports from the economy, a surge in domestic demand boosted by high consumption, and high domestic as well as foreign investment in the sector, all of which compensated for the drag due to relatively weak performance of the commodity-producing sectors.

Finance & insurance also witnessed a significant growth for yet another year, mainly on the back of improved profitability of financial and insurance business during the year.

The profitability of the banking sector, in particular, gained due to the rising spreads as a result of increasing lending rates and lagged adjustment of deposits rates, as well as strong credit demand. Another very strong contribution to the performance of this sector was from the rising profits of SBP.

Transport, storage & communication sub-sector witnessed a huge climb in growth rate from 3.6 to 7.2 percent, mainly reflecting the strong growth in the telecommunication sub-sector in the country.

*AGGREGATE DEMAND:* Despite a deceleration due to a tight monetary policy, aggregate demand remained strong in FY06, on the back of higher consumption as well as investment demand. The strong aggregate demand, together with relatively poor performance of key crops and capacity constraints of domestic industry, and rising oil prices contributed directly to a widening of the country's current account deficit.

Specifically in terms of demand, the private consumption expenditure yet again proved to be the main source of growth in GDP, with its share in GDP rising to 76.9 percent from 75.6 percent for FY05. Although its growth rate was in single digit for the first time in three years, the strong demand by household was probably supported by a number of factors.

*These included:* 

(1) higher income level achieved as a result of sustained growth in the economy for past couple of years;

(2) wealth effect of gains in real estate market and capital gains in stock exchange;

(3) availability of cheaper imports as a consequence of globalisation;

(4) higher credit flow to private sector in the form of consumer financing despite rising interest rate; and

(5) higher remittances being transmitted to economy.

Acceleration in public consumption expenditure was also visible in the rising budget deficit, reflecting the re-construction needs of the economy in the wake of the October 2005 earthquake.

Not surprisingly, given the strength of domestic demand and rising capacity utilisation in LSM, and government focus on improving infrastructure, investment spending also accelerated, growing by 10.3 percent in FY06 compared with a rise of 9.3 percent for FY05. As a result, investment expenditure as GDP percentage also went up to 14.3 percent from 13.8 percent.

Both the public and the private sectors contributed to this higher investment spending. Public sector investment was mainly on account of higher PSDP spending and resulted in externalities for private investment, which grew by 11 percent during FY06, against 9.6 percent for FY05.


----------



## Neo

*Construction workers wages up by 8.6 percent *

KARACHI (December 03 2006): The high growth in the economy and increased activity, particularly in the construction sector, resulted in a rise of 8.6 percent YoY in the average real wages of the construction workers during FY06 compared with only 1.7 percent increase in FY05, and only 0.2 percent in FY04.

The real wages of the construction-related labour groups (such as carpenter, mason, electrician etc) showed significant inflationary trend during FY06 owing to the sustained economic growth and increased activity in different sectors, particularly the construction, said the Annual Report FY2005-06 issued by SBP here on Saturday.

The rise in real wages, on the one hand, showed strong demand for skilled and unskilled construction workers and, on the other hand, it suggested increase in employment at least in construction sector.

The increase in real wages also provided evidence of a rise in the purchasing power of the construction workers. It may be noted that the rise in the real wages was seen for all categories of construction workers, but impact was more pronounced in the case of unskilled labour.

It should also be kept in mind that a broad-based sharp rise in real wages might slow the employment absorption by reducing demand for additional labour, it may also decelerate the present growth momentum going forward, the report added.


----------



## Neo

*Musharraf and Ahmadinejad agree to remove impediments *

ISLAMABAD (December 03 2006): President General Pervez Musharraf on Saturday talked to Iranian President Mahmud Ahmadinejad on telephone and discussed measures to expedite the $7 billion Iran-Pakistan-India (IPI) gas pipeline project.

The two leaders agreed to remove impediments in the 2,600-km-long gas pipeline that aims at supplying natural gas from Iran to Pakistan and then onwards to India. Both leaders also discussed the tariff issue and called for an early resolution of the gas price mechanism and commencement of the project. Musharraf said the project will be a win-win for the people of the two countries and further strengthen their strong brotherly ties.


----------



## Neo

*Rs 160 billion agriculture credit target set for fiscal year 2007 *

KARACHI (December 03 2006): The Agricultural Credit Advisory Committee (ACAC) has set a target of Rs 160 billion for agriculture credit disbursements during the FY2007, which is 23 percent and 16.8 percent higher than the target and actual disbursements respectively for the FY2006.

The total agriculture credit disbursements during the FY2006, owing to the policy advocacy, promotional initiatives and strong entry of commercial banks, reached Rs 137.5 billion, surpassing the target of Rs 130 billion and the actual disbursements of Rs 108.7 billion last year.

However, total agricultural credit disbursement by banking system are still about 47 percent of the total estimated credit requirements of Rs 292 billion and outreach in terms of the number of borrowers at 1.7 million is still hovering around 26 percent of the 6.6 million rural households.

However, the targets are voluntary and indicative in nature as the mandatory targets allocation policy has been phased out from FY2006, while the targets for five big commercial banks have also been made voluntary and indicative in line with DPCBs.

The flow of necessary funding to the sector will now be ensured through conducive policy and regulatory environment, policy advocacy and promotional initiatives and monitoring of Agri-disbursements and portfolio build-up plans.

According to the Annual Report 2005-06 issued by the State Bank of Pakistan (SBP) here on Saturday, the agriculture credit by banks/DFIs has witnessed a phenomenal growth.

Continued efforts for mainstreaming the agriculture and promotional/facilitative role of SBP in the area of policy formulation, introduction of new products in consultation with key stakeholders and capacity building for commercial banks have started bearing fruits in the form of substantially increased activity in the Agri-finance sector.

Prudential Regulations (PRs) for Agricultural Financing prepared in consultation with banks/DFIs and other stakeholders were issued during the FY2006. The PRs are intended to provide a broader regulatory framework to the banks/DFIs.

These encourage banks to diversify their agricultural portfolio in terms of geographical areas, types of financing, etc and avoid the risks of concentration of credit. Banks are also encouraged to extend agricultural financing on the basis of future cash flows, instead of relying solely on the collateral.

During the period under review that SBP also issued 'Guidelines for Livestock Financing' to facilitate and encourage banks/DFIs for enhancing the flow of credit flow towards livestock sector.

The Guidelines cover all areas of livestock financing business including product development and their review, purposes and objectives of loans, eligibility of borrowers, delivery channels, monitoring mechanism, etc. However, the banks may adopt the guidelines in its present form or with some adjustments that suit their individual organisational needs.

It may be mentioned here that SBP has also started consultation with stakeholders for preparation of a draft strategy as desired by ACAC in its mid term meeting to increase outreach in terms of number of borrowers through enhancement of annual credit disbursements from existing 47 percent to 75-80 percent of the estimated agriculture sector credit requirements in next 3-5 years.


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## Neo

*FDI resisters sharp rise during fiscal year 2006 *

KARACHI (December 03 2006): The Foreign Direct Investment (FDI) flows in FY06 amounted to $2.0 billion, registering a sharp rise of 70.6 percent over the preceding year out of which telecommunications sub-sector fetched more than half of the FDI during FY06 compared with about one-third FDI under this head in FY05.

During FY06 privatisation proceeds have registered an unprecedented rise to $1.5 billion mainly on account of PTCL sale to a UAE based company, sale of 73 percent share of KESC to a Saudi group and receipts for Habib Bank privatisation. Desegregated Foreign Direct Investment (FDI) data reveals that sectoral distribution is narrow during FY05 and FY06.

In particular, the telecommunications sub-sector fetched more than half of the FDI during FY06 compared with about one-third FDI under this head in FY05, said the Annual Report FY2005-06 issued by the State Bank of Pakistan.

While during FY05 dominance of telecommunication in total Foreign Direct Investment was mainly attributed to liberalisation and rapid expansion in the cellular network in the country, the FY06 acceleration is principally driven by the privatisation of PTCL.

This also suggests that FY07 FDI is likely to be lower than the levels achieved in FY06. It is also important to note that not only about half of the FDI originated from the Middle East, FDI from different countries and regions is also concentrated in a specific sector.

For example, 95.5 percent of Foreign Direct Investment from the Middle Eat is only in communication sector during FY06. While about 40 percent of FDI from UK and USA focused in telecommunication and oil and gas exploration sectors during FY06.


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## Neo

*Pakistan may miss wheat target by 1.8 million tonnes *

KARACHI (December 03 2006): Pakistan may miss its wheat production target of 22.5 million tonnes by around 1.8 million tonnes during the current fiscal year due to delay in sugarcane crushing and late wheat sowing, agriculture sources told Business Recorder here on Saturday.

Sources said that in the first phase of wheat sowing in the country has badly affected due to delay in sugarcane crushing as it has been done only on 11.650 million acres of land so far against the target of 20.90 million acres of land till November 30, 2006, which is believed to be the most feasible season for wheat sowing.

During the current fiscal year, the total sowing target of the country is set on 20.9 million acres of land while the wheat production target is 22.5 million tonnes, source added.

According to current figures, till the November 30, wheat has been sown on the 11.650 million acres of land, which is the 44 percent lower than total target of 20.9 million acres of land, although November is considered the best month for the wheat sowing to achieve 100 percent wheat production.

Similarly, till November 30, Punjab has achieved 58 percent target of wheat sowing where sowing has been completed on the 9.222 million acres of land against the target of the 15.90 million acres of land. Whereras Sindh has achieved 60 percent target as wheat sowing on 1.359 million acres of land has been completed.

The NWFP has achieved 65 percent target and sowing on 1.212 million acres of land has completed in the NWFP against the target of 1.875 million acres of land. In the Balochistan, just 25 percent target has been achieved and sowing on just 20 million acres of land has been carried out against the target of 0.80 million acres of land.

"The delay in the sugarcane crushing is the main reason of the delay in wheat sowing and still in the different parts of the Sindh and Punjab sugarcane is standing on the fields", said a wheat grower.

He said the slow supply of the DAP urea is another reason for the delay in the sowing. There is no co-ordination between federal and the provisional governments to provide urea on time to growers who are facing severe problems to get the urea as per requirement.

"In December, wheat sowing will continue which will badly hit the production target. Sowing in the December will not give the 100 percent results and wheat production will decline by 10 to 15 percent and that will also affect the total wheat production to decrease by 6 percent to 8 percent," he added.

Six percent to eight percent means that country may miss its wheat production target of 22.5 million tonnes by around 1.8 million tonnes during the current fiscal year. Growers said: "If in the next one week wheat sowing completed then it would be possible to decrease the losses but we are losing a chance to acquire surplus wheat."

However, agriculture experts are expecting 9 to 12 percent decline in the wheat production in current fiscal year all over the world due to the weather. This reason wheat price in the international market is increasing day by day.


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## Neo

*National Assembly panel for ban on sugarcane growing in cotton areas *

ISLAMABAD (December 03 2006): National Assembly's standing committee on textile on Saturday recommended the government to ban conversion of cotton areas into sugarcane growing areas. The committee, chaired by Chaudhry Nazir Ahmed Jatt MNA, also took serious note of installation of sugar mills in the cotton growing areas.

The Cotton Standardisation (Amendment) Bill, 2006 was unanimously approved after a detailed discussion. The Secretary Textile Industry informed the Committee that the Cotton Standardisation ordinance was promulgated in 2002 according to which the administrative entity-Pakistan Cotton Standards Institute-was under the administrative control of the Ministry of Food, Agriculture and Livestock.

He said that with the creation of Ministry of Textile Industry and interim's of the amended Rules of Business, Pakistan Cotton Standard Institute falls under the administrative control of the Ministry of Textile Industry.

He requested the committee for minor amendments to section 5-(1) (b) and section 5 (2) of the ordinance for smooth functioning of the official business of Pakistan Cotton Standard Institute.

The committee also discussed the overall cotton situation in Pakistan and expressed concern on the old procedure and machinery installed in the ginning factories and recommended its upgradation. The committee also stressed upon the need for provision of uniform cottonseeds approved by the concerned department of agriculture to the growers for specific areas.

The MNAs who attended the meeting included Haroon Ihsan Piracha, Maulana Rehmat Ullah Khalil, Mrs Asiya Nasir, Mrs Nayyer Sultana Mrs Yasmeen Rehman, Ghalib Hussain Domki, Muhammad Farhan Latif and Liaqat Ali Marri.


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## Neo

Sunday, December 03, 2006 

*Report shows meagre 5.9% industrial growth* 

KARACHI: The industrial growth during 2005-06 remained at 5.9 percent against its last year growth of 11.4 percent.

The central bank in its annual report released here on Saturday said the industrial growth estimates based on full year data is expected to be little higher than the provisional number.

In particular, the 9 percent growth in large-scale manufacturing (LSM) could reach 10.7 percent during 2005-06, but this could still remain below the annual target (for the first time during the last four years) and also lower than the 15.6 percent growth record in 2004-05.

This was mainly due to rise in unprecedented oil prices, poor cotton and sugar-cane harvests, capacity constraints in key industries as well as a tight monetary stance. Despite rising interest rates, the electronics and automobile industries kept benefiting from the continued availability of consumer financing. The only sub-group of industry to record negative growth during 2005-06 was electricity and oil distribution, with value addition declining by 8.4 percent during 2005-06 in contrast to the 3.5 percent rise registered in the preceding year.


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## Neo

Sunday, December 03, 2006 

*Investment-to-GDP ratio rose to 20% in 2005-06*

KARACHI: The total nominal investment-to-GDP ratio rose to 20 percent during 2005-06 up from 18.1 percent in the preceding year and an average of 17.1 percent in the last five years.

Importantly, this is the highest level of the investment-to GDP ratio in over a decade.

The rise in this ratio is mainly attributed to (i) improved confidence of local as well as foreign investors on the back of good showing of the economy, (ii) a robust 22.3 percent growth in credit to the private sector despite increasing interest rates and (iii) rising public investment.

The State Ban Annual Report said both public and private investment contributed to the rise of total investment during 2005-06, but the increase in the latter was more pronounced. It is important to note that a significant rise in public investment in infrastructure during the past three years also resulted in a trend reversal in private investment. Specifically, the private investment-to-GDP ratio rose by 1.5 percentage points to 13.6 percent during 2006. Public investment also saw a rise of 0.6 percentage points to reach 4.8 percent of GDP in FY06 after having been bottomed out at four percent of GDP in FY03 and FY04.

In addition to investing in infrastructure, the government is taking various additional measures to enhance investor confidence and reduce the cost of doing business in the country. Some of these measures are (1) rationalization of tariffs (2) improvement in the tax refund process (3) removal of procedural bottlenecks (4) review of tax laws and tax machinery and (5) provision of efficient and reformed banking sector.

However, deliberate efforts are also needed to provide low cost and efficient energy with other utilities, amend regulation to make labor market more flexible and improve the law & order situation. 

The importance of improved governance and effective contract enforcement with speedy settlement in case of dispute is very important to sustain the high growth in investment.

Real Fixed Investment: Growth in overall real fixed investment accelerated to 10.3 percent during FY06 compared with 9.3 percent in 2004-05. Although the real investment-to-GDP ratio rose from 13.8 percent in 2004-05 to 14.3 percent in 2005-06, it is still low relative to historical levels and the current growth momentum of the economy.

Agriculture: Real fixed investment in the agriculture sector witnessed a decline for the third year in a row. As a result, the share of real fixed agricultural investment in total real fixed investment fell to 6.3 percent in 2005-06 from 7.4 percent during 2004-05. 

This decline is largely attributed to (1) rising interest rates, as well as (2) farmers tendency to utilize financial resources for production purposes, as evidenced by a declining share of development loans to total loans in recent years. Moreover, a large part of investment needs were probably met from farmersÃ¢â¬â¢ own (unreported) resources due to increased farm income during the last few years amidst better prices of most crops.

Mining and Quarrying: The trend of real investment in the mining & quarrying sector remained volatile in recent years. Real investment in this sector witnessed a growth of nine percent during 2005-06 compared with a fall of 22.2 percent for 2004-05; the fiscal year 2005-06 rise is entirely driven by private investment. Mining & quarrying sector is important for the economy, as it is the main supplier of key inputs and energy to industry. There is a need to exploit the natural resources of the country to sustain and diversify the growth momentum.

Manufacturing: A significant decline in private real investment under LSM more than offset the impact of increased public investment in the LSM sector and a rise in private investment in the small scale manufacturing during 2005-06. The decline in private investment is, in part, a function of the tight monetary stance of the SBP, as well as a slowdown in textile industry during the year. The deceleration in private sector credit growth was 24 percent in 2005-06 compared with a strong 34 percent rise in the preceding year.

Foreign Direct Investment: The flow of foreign direct investment (FDI) is an important indicator of economic performance as well as the economic prospects of an economy. On the one hand, FDI reflects investor confidence in an economy and it provides the required funds to capital deficient economies on the other. 

The transport sector attracted an FDI of $18.4 million against $10.6 million in the preceding year, while the communication sector attracted $1.9 billion of which $1.1 billion were received on account of privatization proceeds for the PTCL sale to a UAE-based company.


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## Owais

*NASC clears Cotton Standardisation Bill *


ISLAMABAD (updated on: December 02, 2006, 22:37 PST): National Assembly Standing Committee (NASC) on Textile Industry has passed Cotton Standardisation (Amendment) Bill 2006 after detailed discussion, told a press release issued here on Saturday.

The committee met here under the chairmanship of Chaudhry Nazir Ahmad Jatt. The members of the committee included Haroon Ihsan, Maulana Rehmat Ullah, Asiya Nasir, Nayyer Sultana, Ghalib Hussain and minister and secretary of Textile Industry and other officials.

The committee discussed the overall cotton position in the country and expressed great concern on old procedure and machinery installed in the ginning factories and recommended that it should be upgraded to the standard.

The committee also stressed upon the need for provision of uniform cotton seeds approved by the concerned department of agriculture to the growers for specific areas.


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## Owais

*Fiscal deficit rises to 4.2 percent *

KARACHI (December 03 2006): The country's fiscal deficit rose to 4.2 percent of GDP in financial year 2006 as compared with 3.3 percent of GDP in the preceding year. The State Bank of Pakistan (SBP) in its Annual Report 2005-06 has said that the fiscal deficit rose due to the expenditure incurred on account of relief and rehabilitation efforts following the October 2005 earthquake, in addition to rise in development expenditure.

The primary and revenue balances posted deficit in FY06 while these had shown surpluses in the preceding years. The SBP suggested to the government that fiscal management should be disciplined, especially when there remain structural weaknesses in the tax system, including a narrow tax base, over-reliance on import-related taxes, privatisation proceeds, and potentially non-recurring sources of non-tax revenue.

REVENUE: Total revenue stood at Rs 1076.6 billion with YoY increase of 19.6 percent as compared to the 11.7 percent increase seen in FY05. Though the revenue receipts slightly lagged behind their modified target, the growth in revenues was higher than the growth in nominal GDP. Therefore, the revenue-to-GDP ratio increased to 14.0 percent in FY06 as compared with 13.7 percent in FY05.

The SBP said, "Improvement does not seem to be sustainable in the coming years as the major impetus to this increase was from the non-tax revenue (a part of which may not be repeated in FY07) and surcharges (the latter is mainly from the Petroleum Development Levy, the government has not budgeted any revenue from this head in FY07)."

A break-up of the FY06 revenues showed that tax revenues rose by 19.1 percent YoY to Rs 753.0 billion during FY06. This was mainly due to CBR taxes, which contributed Rs 712.5 billion. The strong revenue growth led to an encouraging improvement in tax buoyancy (from 0.8 percent in FY05 to 1.2 percent in FY06), but this nonetheless remained quite low compared to those of the developing countries.

Non-tax revenue contributed Rs 272.9 billion in FY06, witnessing a rise of 13.4 percent. The non-tax-to-GDP ratio declined from 3.7 percent in FY05 to 3.5 percent in FY06 while the government was expecting it to be at 3.8 percent in FY06.

EXPENDUTURE: Total expenditure in FY06 rose to Rs 1,401.8 billion, showing an increase of 25.5 percent (the highest rise in past 31 years) compared with the growth of 18.8 percent in FY05.

However, it was encouraging to note that the jump in FY06 expenditure was mainly due to developmental outlays that rose from 3.5 percent of GDP in FY05 to 4.7 percent in FY06. Despite the fact that earthquake rehabilitation expenditure, amounting to Rs 65.8 billion in FY06, put pressure on current expenditure, the rise in the latter was relatively quite moderate.

Specifically, the current expenditure stood at Rs 1,121.0 billion, with a growth of 18.9 percent in FY06 as compared to the higher growth of 23.6 percent in FY05.

The analysis of current expenditures showed that the ratio of interest payments to GDP declined sharply from the peak of 6.9 percent in FY00 to 3.1 percent in FY06.

The report said that defence expenditure, which historically absorbed a major part of resources, has declined steadily from 5.7 percent of GDP in FY90 to 3.1 percent of GDP in FY06 and seemed to have stabilised in the recent years. On the other hand, the share of current subsidies increased somewhat over the years, the report said.


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## Owais

*Balochistan scenario kept energy sector growth in negative: SBP *
KARACHI: Pakistan energy sector growth rate remained in negative in the wake of the losses inflicted on the gas companies&#8217; networks in the province of turbulent Blaochistan.

State Bank of Pakistan (SBP) annual report said that the electricity and gas transmission to the ancillary sector of industries during 2006 declined by 8.4 percent, while this sector had recorded a growth of 3.5 percent in 2005.

Gas companies expanded their networks, but the losses to its installations inflicted in Balochistan offset its impacts.

Overall industrial growth rate in 2006 remained at 5.9 percent, trailing behind the target, while in the large-scale industrial sector, the growth rate despite recording 9 percent rise remained behind target for the first time in last four years.

Automobile industry, outpacing all other industries, surged by 15 percent. Besides, paper, hardboard, ghee oil and fertilizer industries also recorded growth.


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## MIG_ACE

Will the Iran-Pakistan-India Gas pipeline(if it materialises) pass through Balochistan??


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## Owais

MIG_ACE said:


> Will the Iran-Pakistan-India Gas pipeline(if it materialises) pass through Balochistan??



yes ofcourse!
it will pass through Baluchistan and may go to china in future


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## Owais

*World Bank blames government for power sector's difficulties *

ISLAMABAD (December 04 2006): The World Bank has accused the government of putting power sector in a difficult situation due to lack of financial autonomy to the distribution companies, weak regulatory framework and freezing power tariffs for the last few years, sources in Finance Ministry told Business Recorder.

"Power sector has all but stalled during the last few years. The long delay in tariff notifications for Discos and in undertaking their financial autonomy and performance accountability issues have put the sector in a particularly difficult situation," the sources quoted the WB's power sector mission, which completed negotiations with the concerned government official two weeks ago.

The mission was of the view that end user tariff has not been adjusted for the last three years in spite of significant rise in input costs, which is clear sign of the weaknesses in the functioning of the current regulatory framework.

The sources said, WB had sought clear cut date for tariff notifications from the Finance Ministry, but the bank was told that every thing is ready and notifications would be issued after receiving green signal from the highest office.

Regarding tariffs, subsidies and revenues, the mission observed that power sector revenue requirements, as determined by Nepra through determination of end-user tariffs, need to be covered through the sum of: (a) revenues which electricity distribution companies are supposed to recover from consumers through applicable tariffs notified by the government; and (b) the subsidies from the government budget, which should be affordable to the budget and would compensate the companies for the differences between the cost-recovery tariffs determined by Nepra and the tariffs notified by the government ("tariff differential"), if such differences exists.

"This commitment should apply both to the current situation (with end-user tariffs notified in November 2003 in force) and to future tariff notifications," the sources quoted the mission as saying.

According to sources, the mission noted that the current budget provisions for FY07 of Rs 21 billion for tariffs differential is insufficient to cover the expected sector deficit at the prevailing tariffs.

The mission urged the government to notify end-user tariffs for each Wapda -successor distribution company as soon as possible, and to allocate adequate funds in the budget-both under the existing and under new end-user tariffs, once notified-to ensure that the revenue requirements of distribution are met, as described in the previous paragraph.

The structure of tariffs and budget subsidies should incentivise efficiency improvements and should ensure that poor households can afford electricity consumption at the level needed to satisfy the basic needs, the mission suggested.

The Chief Executive Iesco is scheduled to visit Mepco, Lesco, Hesco and National Transmission and Dispatch Company (NTDC) to discuss procurement procedure, ESA study, financial projections, institutional aspects, economic analysis and technical assistance requirements.

The sources further said, the mission also met the donors like the Asian Development Bank (ADB) and Japan Bank of International Cooperation (JBIC), which are active participants of the power sector development.


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## Owais

*Faulty pricing mechanism filling oil-marketing companies' pockets *

ISLAMABAD (December 04 2006): It is the faulty oil pricing mechanism that makes Pakistan an ideal place for oil marketing companies, which are fleecing customers and thriving their businesses without any fear and accountability. It's the only country in the world where oil pricing was left at oil-marketing companies' mercy for years and the new system was sugar coated as deregulated regime.

Pakistan's case is also unique in a sense that here a group of four - the government, oil marketing companies, dealers and retailers was being protected through a proportionate formula in fixing oil prices.

As per proportionate formula, the government, oil marketing companies, dealers and retailers get more money as long as oil prices remain on higher side. Higher profit/ margin is understandable when prices touch high level in the international market, but how one can get more tax or commission when the prices go down.

The pricing mechanism surprisingly safeguards the interests of oil marketing companies and totally ignores the consumers' interests.

High oil prices leaves the consumers screaming under an unbearable burden, which becomes more painful when the government announces that oil prices would be lowered as long as the government meets taxes target.

Sources said proportionate formula is focal point of the National Accountability Bureau (NAB) into oil pricing scam.

The investigators had questioned the officials who they believe were instrumental in introducing the proportionate formula for oil pricing at different stages. Sources said the NAB investigators are near to the conclusion of investigations, which established that the policy of fixing oil prices by oil marketing companies was meant to give them undue benefit.

NAB authorities have questioned a number of senior officials who hold key position in the Petroleum ministry since 2002 and now they are in the processing of identifying the role of each of them to establish that deregulation in oil pricing was actually meant for vested interests.

Sources said NAB chief will present the report of oil scam to President General Pervez Musharraf to seek his permission to take action against at least four senior officials who were believed to make money in deregulated regime and intentionally put in place a flawed system for fixing of oil prices.


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## Owais

*Textile industry records minimal growth in fiscal year 2006 *

FAISALABAD (December 04 2006): The textile industry recorded a minimal growth of 4.3 percent during FY06 as against a strong growth of 27.1 percent in the preceding year.

According to official sources, this is partially due to high base effect, smaller cotton crop and disruption in gas supply particularly in December 2005 to 40-42 captive power plants (CPP) in the areas of Punjab where various textiles units are located.

This weak performance was the major factor for a fall in the contribution of textiles sub-sector in LSM sector to 13.7 percent in FY06 from 39.1 percent during FY05.

Within the textiles sector, production of the cotton ginning industry fell by 12.3 percent in FY06 as compared with the 45.3 percent robust growth during FY05.

Encouragingly however, textile exports continued to perform well in the current fiscal year with 16.1 percent rise as against a modest 5.7 percent growth in the previous year. It is interesting to note that this growth has been achieved despite rising financial cost, high energy prices, higher prices of cotton relative to FY05, a fall in exports prices amidst intense competition, loss of preferential access and disturbances in gas supply.

This raises hopes that with higher cotton output, increase in investment (both foreign as well as domestic investment), sufficient credit availability and expansion in capacity utilisation, the performance of the sector will improve in the coming year. However, competition pressures remain strong, as evident in the deceleration in growth of exports in recent months.


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## Owais

*CFS investment down to Rs 34.95 billion *

KARACHI (December 04 2006): The total investment under CFS decreased to Rs 34.95 billion during the week ended on December 1, 2006 as compared to Rs 35.89 billion a week earlier, while CFS rate closed the week at 15.52 percent.

On the futures counter, open interest in December's contract was recorded at Rs 9.1 billion - rising by 28 percent, whereas the cost of carry in futures stood at 9.13 percent at the end of the week. The highest CFS scrips were NBP, OGDC, PPL, BoP and CTTL.


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## Owais

*Foreign investment improving in Karachi: Ibad *

KARACHI (December 04 2006): Sindh Governor Dr Ishratul Ibad Khan on Sunday said that the metropolis had made tremendous progress with reference to infrastructure and foreign investment during the present regime.

Talking to the participants of junior level diplomatic course from various countries at the Governor House, he said that UAE had extended a hand of cooperation for Pakistan's coastal development and the policies of President Pervez Musharraf had steered the country on the path of economic and industrial progress. As a result of continuity of these policies, he noted that Pakistan would soon earn a significant role in the economic zone.

In the past, the country's coastal areas were ignored, but the present government had infused a new life into them, he asserted. Besides China, local investors had come forward and at present development projects worth millions of rupees were in progress, the governor.

In the past, the industrialists had no feelings of security and protection but the situation had totally changed and now the industrialists were now making continuous demands with the government for providing them land for industrial zone expansion and setting up of new industries, Ibad claimed.

He said the government had made all-out efforts and extended its full cooperation to industrialists for industrial promotion and added people from all parts of the country were coming to the metropolis for jobs and better future, which testified its development and prosperity.

The governor said that the government was committed to creating employment opportunities and providing basic facilities to the people at their doorsteps.

He informed the course participants that law and order situation had not been so much good in the past as it was today.

For promotion of education, the government had set up a network of educational institutions and at present a number of universities were functioning in public and private sectors in harmony with present day requirements, Ibad said. The governor asked the visitors to highlight the bold stance taken by Pakistan while looking into the international scenario.


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## Owais

*Pak-Korea trade volume crosses $1 billion *

KARACHI (December 04 2006): The trade volume between the Republic of Korea and Pakistan has crossed almost one billion dollar. This was stated in a communication of the Karachi Office of the Embassy of the Republic of Korea.

It said that the co-operative and friendly ties between Pakistan and Korea have rapidly strengthened and expanded in various sectors.

The communication further pointed out that in order to enhance further the existing bilateral relations between the two countries, a business delegation from the Republic of Korea will be visiting Karachi from December 6 to 8.


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## Neo

MIG_ACE said:


> Will the Iran-Pakistan-India Gas pipeline(if it materialises) pass through Balochistan??



Yes, it will run thru southern Balochistan and via Gwadar and Bela and Sindh to Rajhastan and possible to Gujrat.
If linked to China, the most logical route is via Kalat in Central Balochistan to Bannu, Peshawar and Chitral in NWFP.


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## Neo

*$1 billion KCR revival programme approved *

KARACHI: December 04, 2006: A high level meeting held under the chairmanship of Sindh Governor, Dr Ishrat-ul-Ebad Khan here on Monday approved in principle the revival of long pending Karachi Circular Railway and developing it on modern lines.

The project will cost an estimated one billion dollars which includes a Japanese loan of 872 million dollars.

The meeting was attended by Federal Railway Minister, Sheikh Rasheed Ahmed, Chief Secretary Fazlur Rehman, Chairman Railway, Nazim Karachi, Syed Mustafa Kamal, Principal Secretary, Mohammed Saleem Khan, D.S. Railway Mir Mohammed Khaskheli and other officials.

The feasibility of the project will be presented by JETRO and work will start after project approval by ECNEC and Planning Commission.

The governor urged the authorities to finalise all the phases expeditiously and said implementation of the project must start by the beginning of new year because already a lot of time has passed and there should be no further delay now.

He said steps should be taken to complete the project in three years.

The governor said it is also the desire of President Pervez Musharraf to get this project completed at the earliest.

He pointed out that with KCR becoming operational, the urban transport system will witness a revolutionary change and people will have better transport facilities.

It was pointed out that Japanese loan will be payable in a period of 40 years with 10 years grace period.

The governor said the expertise, experience and resource available with Pakistan Railway would prove a great assistance for completion of project which would then be transferred to Karachi Urban Transport Corporation.

It was informed that constitution of Karachi Urban Transport Corporation has finalised and its stake holders include the Provincial and City governments and Pakistan Railway.

The circular railways system will have 22 under-passes and over-head bridges to ensure unhindered service.

The governor called for laying standard railway track and having light train for fast movement which the passengers too will prefer its use.

He said Circular Railway will be linked with the City Government's mass corridor schemes and all bus terminals.

He said transport sector in Karachi is a big market for investors having an estimated 12 percent rate of profit which is a good rate.

Ebad also had an appraisal from Railway Minister about operation of Thar Express. Sheikh Rasheed Ahmed informed that all efforts in this regard are being made while foreign ministry is also striving for this.

At Khokhrapar, he informed, Pakistan railways is constructing a modern railway station and it would be the first project of its kind to be completed under Pakistan Railway.

The governor also inquired from federal Minister about the establishment of National Mass Transit Authority, who said the prime minister has given approval in principle while all required stages have been fulfilled and now only Prime Minister's signature are awaited where after it will start functioning.


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## Neo

*Foreign trade, manufacturing*

By Sabihuddin Ghausi

THANKS to liberalisation, the foreign trade sector including manpower export, is over $50 billion in a $140 billion plus GDP.

In just six years, foreign trade has increased from less than $20 billion a year to more than $45 billion in 2005-06 and seems to heading for further but slower pace of expansion in the current fiscal year.

But trade liberalisation has flooded PakistanÃ¢â¬â¢s market with imported goods that has impacted adversely on domestic industrial growth. The captains of trade and industry are facing tough competition in their home markets.

A gradual reduction in import duty and removal of non-tariff barriers have opened the Pakistani market for all sort of goods that include children apparels from Thailand, herbal cosmetics from India, detergent soaps from Turkey, South Africa, Dubai and Lebanon, cheese and butter from Denmark, Holland and Sweden and of course China is a giant hub from where a wide of range of goods are supplied.

PakistanÃ¢â¬â¢s miscellaneous imports from China are now worth about $3 billion that include all varieties of consumer items from dining table stuff to kitchen ware, furniture, curtains, beverages, chocolates and candies and what not.

After sustaining a trade imbalance of $12 billion in 2005-06, official trade statistics reported more than $4 billion trade deficit in the four months of current fiscal year which is 18 per cent higher than the deficit in same period last fiscal year.

Textile is about 10 per cent of Pakistan's GDP, engages about 40 per cent of industrial labour and should cater to the needs of 160 million people of the country. But in last four months, export of a dozen textile products and cotton fetched only $3.32 billion as against $3.55 billion realised last year. The four months textile export earnings do not match the proportionate target fixed by the government for all these products.

Decline in textile exports would further create pressure on the trade balance, which, as a result can bring pressure on the rupee, a report of a local brokerage house warns that share of textile exports has slipped down to 58pc from 60 per cent.

Industry is now reporting closure of knitwear and garment units and looms. And Akbar Sheikh, the chairman of WTO Cell in All Pakistan Textile Mills Association (Aptma) in Lahore fears closure of more than one million spindles by June next year.

Not only the textiles but almost the whole range of export has been hit hard by the export slump. Decline in exports are now recorded for sport goods, carpets, leather, surgical goods, naphtha and many other items.

How would one explain a rather dismal economic and business environment for industrialists, workers and consumers in Pakistan but the neighbouring two giants Ã¢â¬â India and China Ã¢â¬â with more than a billion people in each country- are marching ahead with a fast growth rate, manageable inflation rate and rising number of middle class consumers.

Economists say that India and China derive their strength from their own markets. Their domestic market is expanding with every passing day adding more to the consumer numbers. The strength of the domestic market has imparted tenacity to the Indian and Chinese business to make deep inroads in international markets. Now Indians and Chinese are buying retail outlet networks in Europe and USA, industries and services institutions.

Pakistan remains a fragmented and not so prosperous market, with consumersÃ¢â¬â¢ purchasing power at pretty low levels. There is no institutional linkage between the government and the business though an international commercial banker is prime minister and top businessmen are there in the federal and provincial governments.

The trade bodies that include the apex Federation of Pakistan Chambers of Commerce and Industry lacks proper credentials as legitimate elected representative of the businessmen because it has on its membership a big number of fake and paper chambers and trade associations.

Then there is built-in conflict of business interest conflict between the spinners and the ginners and between the spinners and value added sector in textile, between cane growers and millers in sugar, between leather good manufacturers and tanneries. For decades these conflicts have persisted and get blown up into big controversies. No trade body, government agency or any political party which is supposed to represent all interests-consumers, workers, manufacturers and traders -have never made any serious attempts to work out an arrangement that should ensure a fair and just share in cake to each and every one.

Akbar Shaikh concedes that textile exporters got involved in a price war after the expiry of textile export quota in January 2005. The foreign buyers in Europe and USA are taking full advantage. The buyers are now placing big orders beyond the capacity of Pakistani textile industry.

The foreign buyers want goods to be delivered at the local warehouse and now at the shelf of their store in their cities. Only four Pakistani exporters are now in a position to service Wal Mart orders,Ã¢â¬Â he disclosed. Indian businessmen got together to buy a reputed retail outlet network in Europe to reach the consumers directly.

In Pakistan, only one business house has set up retail outlets on a modest scale in Hong Kong and Dubai and is planning to expand his network. In India, the business and government has been able to develop a rapport. The businessmen give substantial input in the formulation of policies. The interest of the consumers and workers is articulated by a powerful media, parliament and the trade unions.

The Indian banks support their business and government to give them proper policy guidelines. Indian textile now aspires to raise export to $65 billion by 2013 for which the industry is being upgraded, marketing is being streamlined and banks and other institutions are offering support.


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## Owais

*Over $290 million foreign investment in bourses *


ISLAMABAD (updated on: December 05, 2006, 18:10 PST): Foreign investors have made investments of over $290 million in the stock exchanges during the current fiscal year up to December.

A private television channel reported that $290.743 million were invested.

US with $125.2 million investment in Pakistani stock exchanges during the five months of the current fiscal year topped the list among the investing countries, while Singapore with $104.5 million acquired second position. 

Among the countries taking out investments from the stock exchanges during this period, Switzerland with $28.8 million withdrawal remained on top of the list. 

Foreign investors withdrew $102.6 million from the stock exchanges on the first day of the sixth month of the current fiscal year.


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## Owais

*Power failures cost Karachi industries Rs 2.50 billion *

KARACHI (December 05 2006): Industries located in Karachi have suffered approximately Rs 2.50 billion loss due to power failures during the last two days. Chairman SITE Association of Industry, Ameen Bandukda said that winter rains that hit the city on Sunday and Monday disturbed the industrial activities and several industries had to stop their operations in the SITE area, while the rest were hit by slow production.

He told Business Recorder on phone that SITE is the largest industrial area of Pakistan, where more than 3,000 industries are in operation. The load shedding started at 3pm on Sunday, which continued till 1pm on Monday disturbing more than 50 percents industries of the SITE industrial area alone.

Two shifts - 12am to 8am and 8am to 4pm - in SITE industries were completely suspended whereas the third one - 4pm to 12am - partially suffered, he lamented.

The 50 percent industries in SITE have roughly lost Rs one billion in production terms during the two days, he said. The government also suffered in terms of tax collection to the extent of Rs 200 million, he added.

Replying to a question, he said that although export orders have not affected but feared if load shedding continued, export orders might be either delayed in meeting the dateline or cancelled altogether.

"To meet export orders and avoid losses, we have announced next Sunday as working day and decided to run all industries without any brake for the next 15 days."

But if the load shedding continued, we might not be able to fulfill our export commitments, he warned. Korangi Industrial Area, which is the second largest industrial area of the metropolis, also faced the same situation due to power suspension.

Power failure, which started on Sunday afternoon and continued till Monday, badly hit the entire production schedule, said former chairman, Korangi Association of Trade and Industry (KATI), Shiekh Manzar Alam said.

More than 45 percent industries have been affected due to load shedding in Korangi industrial area inflicting a loss of more than Rs 500 million in just two days, he asserted.

Often the material used in producing towels gets stuck-up in the machines when it is in the printing process and stops suddenly as a result of power failure, he informed. "The towel becomes useless for them as it receives such shades which are not required during the dying process," he noted.

Chairman, F.B Area Trade and Industry, Masroor Ahmed Alvi told Business recorder that industrial production also suffered in the F.B area on Sunday and Monday and more than 55 percent industries remained closed for the last 24 hours.

The chairman said that F.B industrial area has also suffered a loss of more than Rs 350 million. It has badly affected the exports, as 90 percent units of F.B industrial area are export oriented, he added.

North Karachi industries have also undergone losses to the extent of Rs 400 million due to power interruptions and rains, said an industrialist of the area who did not want his name to be quoted.

He said that on Monday the workers also did not turn up due to heavy downpour, while power was restored by late afternoon. Because of the shortage of workers, the production could not be resumed to 100 percent capacity, he added. "We have been requesting the KESC that in the national interest they should ensure continuous power supply to industrial areas, but no heed has been paid to our appeal," he lamented.

Landhi Industrial area is, however, an exception because 70 percent industries in the area have their own power generation plants. The remaining 30 percent industries which do not have their own arrangements and depend on KESC for power supply face Rs 250 million loses, said former chairman Landhi Association of Trade and Industry (LATI) Shabaz Ali Malik.


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## Owais

*Paktel and Insta must pay dues before close of business: PTA *

ISLAMABAD (December 05 2006): Pakistan Telecommunication Authority (PTA) on Monday said that since Paktel and Instaphone are defaulters of $29.1 and $58.2 million, respectively, on account of licence fees, would never be allowed to wind up their operations.

Briefing the newsmen on issues pertaining to telecom sector, the PTA chairman, Shahzad Alam Malik, upset by the poor telecommunication services in the country, warned Pakistan Telecommunication Company Limited (PTCL) and cellular companies to improve services, or be prepared for action.

The PTA chairman said that "the regulator takes full responsibility that the services of the above said two companies would not stop and 1.4 million subscribers of Paktel and three hundreds thousands of Instaphone would be taken care of" he added.

It may be recalled that the Millicom International, parent company of Paktel, had to pay $29 million on account of license fee. It should have to clear their dues before taking any final decision. The Instaphone, whose payment on account of licence fee instalment is due, also wants to sell it out.

Giving details, the regulator said both the Paktel and Instaphone had got license renewed during 2004 and 2005, respectively, against an Initial License Fee (ILF) $291 million each. The operator had defaulted the Paktel on account of $29.1 million instalment, which was due in October 2006. In addition to ILF, the operator owes approx. Rs 19 million to the Authority on account of numbering charges and RBS dues.

He said that the Paktel had requested to defer its ILF instalment, which the Authority turned down. In the case of Instaphone, he said its license was renewed in 2005 on ILF of $291 million. The schedule of payment of 50 per cent of ILF was spread over a period of three years.

The operator had paid $21.55 million so far from total outstanding of ILF $58.2 million thus $36.65 million are yet to be paid. In addition, the company has also defaulted in paying total outstanding of Rs 119 million against Annual License Fee, USF, R&D, Numbering Charges and Spectrum Administration fee, he added.

"The company has also not provided Annual Audited Accounts for the year ended December 31, 2005 following which a show cause notice to Pakcom (Instaphone) was served giving 30 days time to explain its position. The PTA will take further action after the expiry of this period in the light of provisions of Telecom Act," he added.

About other issues including Mobile Number Portability (MNP) and Quality of Services (QoS), Shahzada Alam said the MNP implementation was being delayed mainly because of PTCL failure in upgrading its system.

He said the PTA had directed all concerned operators to upgrade their switches for early implementation of MNP after finalising a process guidelines for cellular mobile operators as well as for subscribers, which was discussed at length in the recent board meeting of operators.

The Telecordia has handed over the hardware and software for implementation and after testing between operators it is expected that system would be on by January/February 2007, he maintained. The PTA chairman, gravely disappointed over the telecommunication service in the country, also hinted at what he underlined an early countrywide Quality of Service (QoS) survey to bring about an improvement in the standards of services.

The authority, he said had taken the strong exception of prevalent trend in quality and the problems being faced by cell phone users in the shape of severe congestion, call connection errors, frequent call drops and excessive and unjustified billing. The companies to take appropriate measures to improve QoS before the conduct of this survey otherwise the regulator would have no other option but to take action as per provision of the Telecom Act.


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## Owais

*Pakistan becoming consumer market: PIAF *

LAHORE (December 05 2006): A record increase in trade deficit, persisting high inflation and sharp rise in loans are major areas of concern as these factors are not only increasing poverty but also multiplying problems of common man.

These views were expressed by PIAF chairman Mian Abuzar Shad, vice chairmen Irfan Qaiser and Khamis Saeed Butt while talking to newsmen here on Monday in reaction to the SBP report.

The PIAF leaders maintained that high increase in trade deficit was making the forex reserves weightless and this indicates that Pakistan is fast becoming a big consumer market instead of a manufacturing destination.

They called for adopting urgent measures to strengthen agriculture and industrial sectors of the country. They said that there is a need to bring down the cost of doing business in the country, as the same was rendering the Pakistani goods non-competitive in the global market.

"A visible decrease in rate of large-scale manufacturing from 15.6 percent to 9 percent is a negative trend, which needs to be checked immediately. Ground realities call for immediate action from the concerned quarters otherwise the situation would be out of hands in coming years," they added.


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## Neo

*Pakistan may lose UAE basmati rice market*

ISLAMABAD, Dec 4: Pakistan will lose 400,000 tons of rice market in the United Arab Emirates in the wake of the proposed move to make DNA testing mandatory for clearance of rice shipments at Dubai ports.

Well-placed sources told Dawn on Monday that some UAE based millers were lobbying for promoting the UK branded DNA test to recapture their eroding market share of basmati in the Middle East following growth in export of basmati from Pakistan.

The DNA testing of UK is a type of non-tariff barrier (NTB). It was developed by UK scientists to tighten imports as per their local labelling requirements, the sources said and added that the Pakistani officials were again seemed ignorant as was in the case of Indian Pusa rice registered as basmati in the EU.

A leading rice exporter on condition of anonymity told Dawn that he had warned of this possibility and development long time back but the powers within Rice Exporters Association of Pakistan (Reap) did not then pay heed to the warning and instead took a short-term political view on it. Ã¢â¬ÅNow unfortunately, it is possible that within a short time, the UAE could start demanding shipments that are DNA tested based on the controversial UK DNA testing system,Ã¢â¬Â he added.

Pakistan unfortunately, despite the tradeÃ¢â¬â¢s opposition, earlier adopted the DNA testing Ã¢â¬Ëas an interim measureÃ¢â¬â¢ for export of basmati to the EU. Adoption of this controversial test even as Ã¢â¬Ëinterim measureÃ¢â¬â¢ gives it the stamp of PakistanÃ¢â¬â¢s official approval, he said.

Ã¢â¬ÅIf this happens our exporters will face serious impediments to their exports initially to Dubai and then to the entire Middle East, including Iran,Ã¢â¬Â the exporter warned.

The exporter said that the government should not accept the UK DNA testing protocol for basmati as it was mostly based on samples of admixture unofficially and casually obtained by the UK authorities while putting together this testing protocol.

The UK test did not include all approved basmati varieties of Pakistan and it did include informal varieties that may or may not be in existence or from Pakistan. Ã¢â¬ÅWe must emphasise that an indigenous Pakistan DNA testing protocol must be developed urgently,Ã¢â¬Â he added.

Ã¢â¬ÅOur indigenous test must be based on all approved basmati varieties growing anywhere in Pakistan and with known approved non-basmati varieties as adulterants/admixturesÃ¢â¬Â, the exporter added.


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## Neo

*Record cement sales in November*

KARACHI, Dec 4: Cement sales for the month of November, 2006 stood at two million tons, which was the highest-ever sales, recorded in any single month. Sales for November showed growth of 68 per cent over 1.19 million tons of cement despatches in the corresponding month of the previous year.

Figures released by All Pakistan Cement Manufacturers Association (APCMA)) on Monday put the total sales for five months of the current financial year (July-Nov 2006) at 9.05m tons, which was 26 per cent higher than sales of 7.23 million tons in the corresponding five months of last year.

They said that the higher despatches reflected a pick up in housing construction activity and a spur in exports. Exports for November of the current year stood at 1.70 million tons, which was 75.4pc more than 0.97m tons in the same month last year and represented 46.6pc growth over the five months year-on-year to 9.54 million tons, from 6.51m tons.

Cement analyst Khurram Shahzad at InvestCap said: "Exports had picked up pace mainly to Afghanistan, where reconstruction work had gathered pace, besides exports to growing markets in Dubai, the Middle East and Lebanon." He reasoned that manufacturers had pushed larger number of bags overseas, because of rising demand and better prices in the export markets.

Local sales registered growth of 68 per cent to 1.84 million tons for November this year and 23.25 per cent increase in despatches to 8.10 million tons for five months, compared to sales at 1.10 million tons for November and 6.58 million tons in five months last year.

Analyst Khurram observed that as economy grows so will the demand for cement. He said that the industry would have to stabilise prices so as to protect mainly the smaller producers. He thought that the larger manufacturers could survive due to their economies of scale, but it would be difficult for smaller units to maintain their profitability. Eventually, the smaller cement mills may have no option but to merge with larger units just as happened in the banking sector.

Cement sales for all of the previous year ended June 30, 2005 was 21 million tons and most analysts visualized demand to grow at 15 to 18 per cent, which presented brighter picture for the industry, provided there was stability in local prices, increase in demand and the start of some of the mega projects that the government has in mind.

For the current fiscal, government has allocated a record Rs435 billion in the budget for the development of infrastructure. The government has also reiterated several times its decision to go ahead with the construction of big dams for storage of water and generation of electricity.

The reconstruction work in vast region that was devastated by earthquake of October last year has yet to begin in right earnest. But analysts said that until the manufacturers were able to reach a 'bench-mark price' and the 'distribution of local markets' industry- wise, exports would be the major driver of earnings growth.


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## Neo

*Sites for 480MW plants selected*

ISLAMABAD, Dec 4: Wapda has identified 316 new sites on canal falls for generating an additional 480MW of electricity to tackle the growing power shortfalls across the country.

Official sources told Dawn on Monday that it was becoming increasingly difficult for the government to adhere to the National Energy Security Action Plan aimed at tackling the increasing electricity shortages. Wapda officials were, therefore, directed to initially build five small and medium-sized hydropower projects in Punjab, they said.

In association with the Power Department of Punjab, Wapda officials will be constructing dams of 25MW to 50MW capacity for generating 160.16 GWh cheaper renewable energy annually. Of the 316 sites identified for the purpose, 48 have a potential of more than 2MW.

Supply of power from non-conventional sources even in small qualities would help meeting power shortages to some extent, said the sources.

The Asian Development Bank (ADB) has agreed to provide conditional financial support to help build five dams in Punjab, provided the project is executed by national and multi-national contractors through national and international competitive bidding (NCB/ICB).

Prior to tendering, the Punjab government will complete power purchase agreement, consents, land acquisition, environmental compensations, financial commitments and bidding documents under the guidelines of the ADB.

The energy generated through these five sites will be sold to the distribution companies of Wapda or the National Transmission and Distribution Company (NTDC) at a negotiated tariff.

Five sites identified for generating power in Punjab are Marala, Chainwali, Deg Outfall, Okara and Pakpattan. This is expected to increase additional hydel capacity in the coming years.

The ADB wants that before the mobilisation of ICB or turnkey contractors, the preliminary works like construction of site offices; accommodation for clients, consultants and contractors' personnel; and related facilities should be completed through NCB to avoid delay in completion of the project.


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## Neo

Tuesday, December 05, 2006 

*Industrial output suffers 50-60% loss due to rains*

By Tanveer Ahmed

KARACHI: The industrial production suffered badly on Monday due to the rain-related problems, which varied from 50 to 60 percent in different industrial areas of the metropolis.

The power failures, accumulation of rainwater, low-attendance of workers and traffic-jams because of dug-up roads, wrecked havoc on the industrial production.

However, unlike past, when major power breakdowns caused by heavy downpours in the monsoon season dealt a severe blow to the industrial activities, this time there were lesser losses reported due to the power failures, but the major factor this time around was the low-attendance of workers, who faced difficulties in reaching their workplaces because of the bad weather.

The industrialists complained of facing difficulties in transportation of export shipments because of the conditions of the roads, which turned worse from their already depleted state because of the accumulation of rainwater, making it difficult for the heavy vehicles to move to and from the industrial areas.

Putting the industrial losses in millions of rupees, the industrialists lashed at the civic agencies for their inefficiency to act to provide relief to the citizens in such situations and make possible the drainage of rain water properly, particularly in the industrial areas so that the wheel of industry could be kept moving on uninterrupted.

The Site Association of Industry Chairman Ameen Bandukda put the production losses at around 50 percent due to rain related problems and said that in terms of rupees, it could be one billion rupees as the movement of export shipments also suffered during the day.

Amin pointed out that although, the electricity breakdowns hit the industrial production, the major culprit was the low-attendance of workers and the condition of the road infrastructure, which caused the problems in the area. The SITE industrial areas have over 3,000 units, which employed around 550,000-600,000 employees.

The Korangi Association of Trade and Industry chairman Masood Naqi also put production losses in millions and said that over 50 percent losses were estimated in the production because of rain-related problems. However, he pointed out that there was no major problem of electricity during the rain as the outage of power lasted a very short span of time.

He attributed the losses mainly to the low-attendance of workers, which was just about 40 percent during the day as they faced difficulties to reach out their workplace due to the less than normal movement of public transport. The past chairman FB Area of Association of Trade & Industry Rehan Zeshan told Daily Times that the industrial activities in the area also suffered badly with major losses being recorded by the industry.

He also complained about workers turning up in low numbers, accumulation of rainwater and bad condition of roads, which caused hindrances in the movement of traffic. The FB industrial area has 2,500 units in which 90 percent are export-oriented units. The export shipments also suffered due to these factors, he added.

Dawood Usman Jhakoora, former chairman North Karachi Association of Trade & Industry said that the industrial activities slowed down considerably because of the rain-related problems. The North Karachi area comprises mostly of 2,500 small and medium units employing 125,000 people.


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## Neo

Tuesday, December 05, 2006 

*Production of cotton rises 2.25% since last year*

KARACHI: The Pakistan Cotton Ginners Association (PCGA) has released the cotton arrival report at the ginneries across the country on Monday.

The spokesman of the PCGA said that 8.978 million bales arrived compared to last yearÃ¢â¬â¢s 8.781 million bales till Dec 1, showing a meager increase 2.25 percent in the national production.

According to PCGA, Punjab has shown an excess of 4.83 percent production with 7.112 million bales while the Sindh registered a decline 6.51 percent with 1.866 million bales output.

He said the textile millsÃ¢â¬â¢ purchases show a brisk trend this year, with 6.498 million bales procured this year compared to last yearÃ¢â¬â¢s 6.034 million bales. Private sector exporters bought 67,350 bales compared to last yearÃ¢â¬â¢s 52,600 bales till Dec 1. 

He said unsold stocks at ginneries included 1.041million bales of lint and 1.408 million bales of phutti (seed-cotton). 

He said that the approximate existing rates of lint and phutti on the open market are Rs 2400-2500 per maund and Rs 1100-1200 per 40 kg respectively in the Punjab. 

The governmentÃ¢â¬â¢s revised support price for phutti is Rs 1025 while its old support price for lint is Rs 2269, which is yet to be revised, he added.

Due to the massive crop damage particularly by cotton leaf curl virus (CLCV) and mealy bug in Khanewal, Multan, Vehari and Lodhran districts, the cotton crop assessment committee has reduced the national output target from 13.82 million bales to 12.41 million bales, he said.


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## Owais

Neo said:


> Over $290 million foreign investment in bourses
> 
> ISLAMABAD: December 05, 2006: Foreign investors have made investments of over $290 million in the stock exchanges during the current fiscal year up to December.
> 
> A private television channel reported that $290.743 million were invested.
> 
> US with $125.2 million investment in Pakistani stock exchanges during the five months of the current fiscal year topped the list among the investing countries, while Singapore with $104.5 million acquired second position.
> 
> Among the countries taking out investments from the stock exchanges during this period, Switzerland with $28.8 million withdrawal remained on top of the list.
> 
> Foreign investors withdrew $102.6 million from the stock exchanges on the first day of the sixth month of the current fiscal year.



Duplicate post mate
see post # *3107*


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## Owais

*7.8 percent economic growth to be achieved this year: Salman *

LAHORE (December 06 2006): Advisor to Prime Minister on Finance, Dr Salman Shah, has said that the government expects to achieve economic growth of 7.8 percent in the current fiscal year, while in future it would be kept in the range of 6 to 8 percent.

He expressed these views while talking to newsmen at Lahore University of Management Sciences (LUMS)-World Bank conference on 'Growth and Competitiveness' here on Tuesday. Balochistan Governor Awais Ghani, Federal Industries Minister Jahangir Khan Tareen, Dr Hafeez Sheikh, Arshad Zuberi of Business Recorder and others were also present at the conference.

Salman said that due to the government's prudent economic policies, during the last four years the growth had ranged between 7 and 8 percent, which it wants to maintain and there is potential to do it. He said that there were some areas challenging the economic growth that would be met with more reforms. "In this connection, recommendations from the conference would be considered," he added.

According to him, mark-up cannot be reduced without bringing stability in inflation, which was gradually coming down. Moreover, labour laws would need changes to meet the requirements of globalisation. Nevertheless, the cost of doing business and productivity needed to be ensured under the WTO scenario, he added.

While addressing the conference, Dr Salman said that economy of Pakistan was passing through very exciting transition. He said that the private sector was in the lead with economic growth rate averaging around 7 percent over past three to four years, resulting in substantial reduction in poverty and improving standard of living of the people. "The objective of the government is to sustain this growth over the foreseeable future. This will enable us to pull out of the poverty quagmire and not only achieve the millennium development goals by 2015 but to also launch the country on a path of modernisation, development, international integration and prosperity," he said.

He said: "Today, we have created an environment, both domestically and globally, that would help Pakistan achieve its full potential. We have now in place a growing economy, a dynamic private sector, a vibrant parliament, a totally free media, an independent judiciary and a reasonably functioning bureaucracy. The progress achieved so far permits Pakistan to gaze in the future and visualise Pakistan as a leading emerging nation of the world. If we continue to grow at our current rates the economy would be among the top six, or seven, emerging economies of the 21st century."

He said he was of the firm view that Pakistan's double-digit manufacturing growth rate would lead to Pakistan emerging as a major manufacturing hub. He added that the potential to create gleaming new factories producing quality goods from textiles to engineering, consumer durables to pharmaceuticals, chemicals to hi-tech products at prices that domestic and global markets demand were within reach.

He assured the audience that investment in higher education and technical training would continue to increase rapidly to produce manpower to man the knowledge-based economy of the 21st century Pakistan.

"We are destined to become the logistics, trade, tourism, energy and manufacturing hub that would connect China, Central Asia, West Asia and the Middle East with India and South Asia. We are close to completing our new port city of Gwadar, the world's busiest sea lane for oil tankers. It would be established as a major transhipment port, particularly for oil and oil products including petrochemicals," he added.

He said: "Our second-generation reforms are designed to create effective institutions of a private sector-driven competitive market economy. We are establishing a new competition 'authority', a new statistical authority, reinforcing our security and exchange commission and deepening our capital markets. We are demutualising our stock markets and introducing new systems to ensure transparency of transactions. Our public institutions are being reformed and so is our private sector."

He said: "We are developing an industrial strategy for the country that would provide a hassle-free environment to our industrialists. Modern industrial parks, special economic zones and free trade and warehousing zones, with all requisite infrastructure facilities and communications and connectivity are being created. Moreover, we are also rationalising and reducing the number of taxes, creating a tax system that would promote employment-generating manufacturing.

"Our ports have to be vastly improved. Work has already been initiated through the $5 billion North-South Trade Corridor Project with participation by the World Bank, Asian Development Bank (ADB) and the private sector."

Dr Salman averred that there were plans to create value-addition in the agriculture sector through innovative research and development. He said that construction of five mega dams on the river Indus and expansion of cultivable area were necessary measures underway. "Each mega dam would cost over $6 billion, and annually add 3 percent to GDP growth," he added.

On energy, he said that Pakistan's requirements were growing at double digits rate. To ensure security in energy, to maintain accelerated growth and to remain competitive, gas pipelines, LNG terminals, exploitation of new domestic reserves and development of thermal and hydel power projects were in various stages of implementation.

He said: "IFC and the World Bank in the report entitled 'Doing Business in 2006: South Asian Countries Pickup Reform Pace' declared Pakistan as the top reformer in the South Asian region and Number 10 reformer globally".

He said that the stock market had been rated among the best performing markets over last six years in the emerging markets in the world. The debt-to-GDP ratio continues to decline and touched 55 percent, a far cry from over 100 percent ratio six years ago. The country continues to grow on solid macro economic foundations, he said.

"Pakistan's privatisation program is one of the most advanced in the region, attracting investment from all regions. All public sector holdings would be privatised. Opportunities exist in infrastructure, financial sector, power, oil and gas, manufacturing and shipbuilding. Foreign investors enjoy an even playing field. We welcome investors who invest in green field investments that exploit our strategic location to provide multiple corridors of regional cooperation--pipelines, trade, industry, transportation and tourism," he added.


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## Owais

*Temasek unit to buy PICIC bank *


KARACHI (updated on: December 06, 2006, 14:16 PST): The NIB Bank Ltd., a subsidiary of Singapore's state investment agency Temasek, said on Wednesday it would buy a majority stake in Pakistan Industrial Credit Investment Corp. (PICIC).

An industry source familiar with the deal said NIB Bank would pay about $300 million for the stake in PICIC, which focuses on financing industrial development projects in Pakistan.

NIB Bank's President Khawaja Iqbal Hassan confirmed the intended purchase of PICIC shares, but gave no price.

"We intend to complete the transaction very quickly, as soon as possible," Hassan told Reuters. "After acquiring PICIC, we will be among the top 10 players in the country in terms of assets and distribution network."

The NIB Bank is one of several foreign banks eyeing investment opportunities in Pakistan, attracted by reforms that have laid the platform for rapid growth and rising incomes. Others include Barclays Plc., ABN AMRO and HSBC, according to bankers.

The NIB Bank will pay 82 rupees per share for the PICIC stake -- a 9 percent premium to PICIC's Tuesday close -- but the source did not say precisely how much it would acquire.

"NIB Bank has agreed to buy a majority stake in PICIC at approximately $300 million," said the source. "The acquisition will be done though NIB Bank and not directly by Temasek."

BANKING REFORMS 

Analysts said, at that price, the lender would be able to acquire more than 50 percent of PICIC which, according to its Web site, was set up in 1957 with World Bank help.

PICIC shares rose 1.26 percent to 76.20 rupees by 0825 GMT.

In a notice to the Karachi Stock Exchange PICIC said it was selling a majority of its shares, but did not identify the probable buyer.

PICIC had total assets of 40.5 billion rupees ($664.9 million) at the end of 2005, according to its Web site. It says its commercial banking arm is Pakistan's sixth-largest bank, with 129 branches by the end of this year.

Major banking reforms pushed through by Prime Minister Shaukat Aziz, the finance minister whom President Pervez Musharraf poached from Citibank and then promoted to premier, have helped the economy's rehabilitation.

Banks' profits grew 87 percent in 2005 and are expected to grow at about 44 percent this year, according to analysts.

Last July, Temasek tripled its stake in Pakistan's small commercial NIB Bank (NDLC-IFIC Bank) to 72.6 percent, which was then worth about $57 million.

Temasek is also the biggest shareholder in Standard Chartered Plc. which, in August, agreed to buy Pakistan's Union Bank Ltd. for $511 million.


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## Owais

*Rs 137.91 billion export refinance released in July-November: SBP *

KARACHI (December 06 2006): The State Bank of Pakistan (SBP) released Rs 137.91 billion as export refinance to banks during July-November 2006 as against Rs 120 billion released during the same period last year.

A statement of the SBP issued on Tuesday said this refinance is offered at 6.5 percent ie, 4 to 4.5 percent below six months KIBOR and has so far resulted in a positive impact of Rs 1.07 billion during July-November 2006 for the export sector.

The statement also said that to support major export sector the SBP has been implementing few incentives to the sector offered by the central bank and the government.

This has involved reduction in refinance rates under Export Finance Scheme (EFS), the debt-swap option under rates and the long-term finance scheme for export-oriented projects. (LTF-EOP), and research and development (R&D) support.

The statement said that pursuant to announcement of the debt-swap option under LTF-EOP, the SBP has provided finance of about Rs 13.86 billion through commercial banks against 107 cases to the value-added textile industry in particular and six sub-sectors of the spinning sector in general.

Over and above this amount the industry has availed Rs 8.40 billion under the scheme for new projects. In aggregate, so far, more than Rs 22 billion refinance has been released under this scheme to commercial banks, since its inception on December 2, 2006.

The SBP statement also said that under the research and development support (R&D) scheme, all offices of the SBP BSC across the country have cumulatively released Rs 8.8 billion and cleared about 79,000 cases since July 2005. During July-October 2006 alone, they processed 20,170 cases involving release of about Rs 2.7 billion. In view of the SBP with these incentives, the industry was expected to rationalise its cost structure and consequently increased exports.

However, it is disappointing to note that exports of the sector have shown negative growth in the current fiscal year (July-October 2006) as compared to an increase of 30 percent during the corresponding period last year.


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## Owais

*2.5 million cotton bales likely to be imported: rains play havoc with quality *

KARACHI (December 06 2006): The country is likely to face a shortfall of around 2.5 million bales of cotton, as the recent rains have badly damaged the quality of cotton in Sindh and Punjab, said brokers in the Karachi Cotton Association (KCA) here on Tuesday.

This will result in depending on imported cotton. Pakistan, they estimated, may have to import cotton of 2.5 million bales to meet the demand of local mills, they said.

"Although more than 70 percent of phutti had arrived in the ginning factories till November 30, still 30 percent phutti has been lying in the fields. Widespread rains in Sindh have badly hit the cotton fields in Mipurkhas, Tando Adam, Sanghar, Shahdadpur, and Khairpur districts. In Punjab, all districts, including Multan and Rahim Yar Khan have been affected by rains", a broker told Business Recorder.

He said the cotton crop had matured and was in the last phase of picking when sudden winter rains hit the cotton growing areas damaging a sizeable crop. This situation resulted in an increase in the cotton price by Rs 50 on Tuesday to Rs 2,600 per maund from Rs 2,550 per maund, he said.

The broker said the country depending on imported cotton would be widened by 0.4 million bales in the wake of rising concern by the stakeholders on the crop quality issue. It has also pushed quality premium and if rains continued for a couple of days more the quality, it is feared, would be further damaged and the premium would go up to Rs 50 per maund.

The current year, the cotton crop would be approximately 12.4 million bales as against the demand 14.6 million bales, the brokers said. Every year Pakistan exports the cotton approximately more than 0.4 million bales so this year Pakistan is already facing a shortage of 2.2 million bales, after the rains and damaging the crop this shortfall increased by 0.3 million bales.

So the country is likely to face a shortfall of 2.5 million bales of cotton this season, which would be imported from different countries to meet the shortfall, he added.

"We are spending Rs 1 billion for the import 0.1 million bales and in this season Pakistan would spend Rs 25 billion on the import of 2.5 million bales", said another broker. Till November 30, total 8.9 million bales have been arrived in the ginning factories and 6.5 million bales sold to the textile mills and only one million bales have been in the stock remaining for sale.

On Tuesday, millers offered Rs 50 premium per maund for cotton at the Karachi Cotton Exchange, which was packed in the ginning factories before rains and they are avoiding purchasing the unpacked cotton crop or phutti.

He said that after the rains the colour of cotton has been changed and its white colour has turned into off-white. Contamination also have increased in the cotton and around 0.4 million phutti would be scraped for the growers.

In the current season from May 2006 to date, Pakistan has made 1.4 million bales of import orders to meet shortfall as against last season since August 5, 2005 to April 6, 2006 Pakistan imported 1.691 million bales, source added.


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## Owais

*$830.2 million external debt retired in first quarter *

ISLAMABAD (December 06 2006): Pakistan has retired $830.2 million external debt and liabilities during the first three months of this current fiscal year which stood at $37.724 billion at the end September 2006, the central bank reported on Tuesday.

More importantly, during July-September 2006, the government also retired $10 million principal debt and $5 million in the shape of interest on the total debt ($1.478 billion) of the International Monetary Fund (IMF).

During the period under review, Pakistan's external liabilities - external debt plus foreign exchange liabilities - totalled $37.724 billion. Of this, the external debt amounted to $36.196 billion.

According to the central bank's provisional data released on Friday, the country's public and publicly-guaranteed debt (comprising medium and long-term and short-term debt) has been on the rise for the last four years. And now during the period, the bank said that the country has repaid $568.9 million principal amount and $261.2 million interest on these liabilities and loans of multilateral and bilateral donors.

Of this, the medium and long-term debt (longer than one year) of $32.897 billion, the government refunded $454 million ($258 million principal and $196 million interest). Of the multilateral debt, which amounted to $16.989 billion, the government repaid $262.2 million ($180.8 million principal and $81.5 million interest). Of the Paris Club, $12.818 billion debt, the government repaid the principal amount of $34.2 million and $12.5 million interest. Euro bond/Saindak bonds stood at $1.906 billion, of this $1.5 million was repaid as principal and $74 million in interest.

Other bilateral debt, which stood at $929 million, $3 million was repaid in principal and $18.4 million in interest. On commercial loans/credit of $165 million only $2.8 million was repaid as interest on the loan without any principal amount.

During the period, military debt stood at $90 million. However, the government repaid $38.5 million in principal amount and $6.8 million in interest.

The short-term loans (less than one-year) mostly taken from Islamic Development Bank (IDB) stood at $256 million, of which the government repaid $163 million principal and $3 million interest. The private non-guaranteed debts (more than one-year) during the period stood at $1.565 billion. Its $80 million principal amount was repaid, besides $19 million interest.

The foreign exchange liabilities, excluding foreign exchange bearer certificates, foreign currency bearer certificates, and dollar bearer certificates (which stand at $6 million), was $1.528 billion and during the period under study, the bank retired $92 million in the shape of principal and interest.


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## Owais

*Korea to establish steel coil centre at Karachi *

KARACHI (December 06 2006): A joint venture agreement was signed here between Najin Steel (Korea), Super Tech Auto Parts Limited, Karachi, and the consortium of Aftab Technologies (Pvt) Limited, Pakistan, and Cottage Foods Limited of UK to establish a steel coil centre in Karachi, which would be the first centre of its kind in Pakistan to produce steel coils.

The Consul General of South Korea, Sukehul Chang, witnessed the ceremony as chief guest of Najin Pakistan (Pvt) Ltd at a local hotel. The Consul-General in his address appreciated the painstaking efforts of the related companies to the launch of Najin Pakistan (Pvt) Ltd which would help meet the growing demand of steel products in Pakistan. He said that this joint venture between Pakistan and Korean companies was the second after Jin Kwang JAZ Ltd set up in 2004 to produce auto parts.

According to statistics, Korean steel products worth $89 million were exported in 2004, and this sharply decreased in 2005 to $54 million. He expressed confidence that this joint venture would pave the way for a tangible development in production of steel coils in Pakistan.

Aftab Group Chairman Aftab Ashraf Khan said that the basic concept of the agreement was to act as a premier institution focused on steel customers, recognised for superior and high standard of quality products with innovative approach and attractive return to all concerned.


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## Owais

*$800 million uplift projects announced under KMCDP *

KARACHI (December 06 2006): City Nazim Syed Mustafa Kamal on Tuesday announced that various mega uplift projects worth $800 under the Karachi Mega City Development Projects (KMCDP) would be undertaken by March-April 2007.

He was chairing a high-level meeting at his office which was attended by the representatives of Asian Development Bank, stakeholders, KESC, DHA, PTCL, SSGC, EDOs, chairmen Karachi Port Trust, and Port Qasim Authority, chief controllers of Karachi Building Control Authority (KBCA), and representatives of other civic departments.

Kamal invited proposals and suggestions from all the stakeholders for the master plan before forwarding it to the City Council for approval by the end of December.

The Asian Development Bank (ADB) would provide $800 million for the mega development projects in the city, the Nazim told.

The ADB had also sent consultants for water, sewerage and solid waste management programmes in order to speed up construction pace of work, he added.

Kamal said the CDGK was endeavouring to make arrangements for kicking off uplift projects simultaneously in parts of the city to develop it on modern lines besides, facilitating the general public.

He regretted that the city of 1.8 million people had no facilities of toll free complaint number to respond public on time, but steps being taken to resolve their problems as the CDGK would set up call centers at the estimated cost of Rs 130 million.


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## Owais

*Rs 400 million fund for free financial assistance to improve SMEs *

FAISALABAD (December 06 2006): Small and Medium Enterprises Business Support Fund will provide Rs 400 million free financial assistance to improve the competitiveness of SMEs in the country up to June 2009, with the cooperation of Asian Development Bank. Ministry of finance launched the fund.

This was disclosed by Chief Executive Officer of SME Business Support Fund, David Monkman, here on Tuesday, while addressing the members of Faisalabad Chamber of Commerce and Industry. He said that this free financial assistance will not only enhance the revenue generating capacity of the industrial sector, but also help in IT skill and foreign consultancy.

Ali Sarfraz, Chief Operating Officer of SME Business Support Fund said that Pakistan Government has embarked on a major programme to assist in the further development of Small and Medium sized Enterprises (SMEs). As an integral part of the overall programme, and in support of other components, the BSF has been created with the support of the Asian Development Bank to assist both SMEs and the respective providers of business development services (BDS), he added.

He mentioned that the objectives of the BSF are to assist in the improvement of the competitiveness of SMEs and to enhance the revenue-generating capacity and profitability of emerging businesses. The BSF can provide matching grants to stimulate the use of business support services.

Ali Sarfraz said that the target group comprises of established SMEs (employing up to 250 staff or with a maximum turnover of Rs 300 million) with an operating history of at least three years. BSF can support individual enterprises or a group of enterprises.

The BSF is 'sector neutral', but is selective about working with partners (SMEs) prepared for growth, he added. Talking about the Eligible Activities for the Support, Ali Sarfraz stated that only new engagements of business services could qualify for funding. BSF can support activities such as: Short-term consultancies for management, marketing, production, productivity, product development and adaptation, packaging, quality, standards, technology transfer or upgradation. Market development, research, trade fair activities, sales missions abroad, benchmarking, promotion and similar demand driven support services and others as approved by the BSF management team in line with overall objectives, he pointed out.

Ali Sarfraz clarified that the Funds are not available for capital goods or working capital. Presenting welcome address, Sheikh Abdul Qayum vice president, FCCI said that the present government has undertaken mega projects of value addition city and textile city under the supervision of FIEDMC. This step would go a long way in further boosting up of Textile industry in Faisalabad area. Former President FCCI Sheikh Niaz Ahmad, Seth Iftekhar Ahmad, Muzamal Sultan and others also addressed the seminar.


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## Owais

*'Chiniot can become world class furniture-making centre' *

LAHORE (December 06 2006): Chiniot has the potential to become a world class furniture manufacturing centre, Dario Corbetta, head of the Italian Furniture Manufacturing Association (ACIMAL) said here on Tuesday.

Talking to mediamen after visiting Pakistan's five major furniture clusters, Corbetta said Chiniot could prosper and develop into a furniture manufacturing centre of world repute if the cluster was to incorporate better working conditions, quality workmanship, specialised and hand-held machinery and especially contemporary design.

Corbetta currently visiting Pakistan to explore avenues of collaboration as well as possibility of setting up a woodworking institute in Pakistan similar to the one set up in the Indian city of Bangalore.

Corbetta's visit comes in the wake of a benchmarking study tour to Italy by a 15-member Furniture SWOG (Strategy Working Group) delegation comprising furniture manufacturers from Chiniot, Gujrat, Lahore, Karachi, Peshawar, Rawalpindi, Faisalabad and Gujranwala.


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## Owais

*'Pakistan and Sri Lanka can accelerate tourism industry' *

KARACHI (December 06 2006): Pakistan and Sri Lanka have enormous opportunities to accelerate their tourism industry as both countries have rich and diverse heritage. M Haniffa Ishak, chairman, Sri Lanka Convention Bureau, Ministry of Tourism, stated this at a special program "Meet in Sri Lanka" here on Tuesday.

Pakistan has several attractive places for Sri Lankans, he said, adding that a number of Sri Lankans realise after a long time that a place of Buddha exists in Taxila, Pakistan.

He said that 11,000 Pakistanis visited Sri Lanka in 2005 and the number would increase this year. Ishak said that bilateral ties between both the countries were growing and after signing FTA they would able to increase trade volume. He said that Sri Lanka had become Asia's latest venue for meeting, incentive, convention and exhibition (MICE) travel.

On the occasion, the Sri Lanka Airlines country manager said that airlines had marked a strategic gateway between Europe, the Middle East, Central Asia, and the Far East. "The Sri Lanka Airlines flies to 30 destinations in 20 countries and offers convenient connections to Australasia and the Americans," he said.


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## Owais

*Rolls-Royce plans expansion in 2007 *

LAHORE (December 06 2006): Representatives from the eight Rolls-Royce dealerships across the Middle East have attended an event held in Manama from 25th to 27th November to plan the principle activities of 2007.

It was hosted by Graemo Grieve, Rolls-Royce's world-wide sales and marketing director, Axel Obermuller, managing director for the Middle East and Khalid Rashid Al Zayani, chairman of Alzayani investments the mother company of the Bahranian Rolls-Royce importer Euro Motors.

General managers and sales managers from the dealerships in Bahrain, Kuwait, Oman, Pakistan, Qatar, Saudi Arabia and the UAE discussed plans for the year 2007 and preparations for the launch of the new convertible model.

This new car is closely based on 100EX, the one-off experimented two-door, four-seat convertible, first seen in 2004. It will be unveiled early in 2007 and launched in the Middle East later in the year.

"Advanced orders for the convertible are significant", said Obermuller, "and preparing our business for its arrival is vital to ensure the best possible service for our customers. As part of our business development we have recently opened a new showroom in Lahore, Pakistan, and will soon open another in Oman". The Rolls-Royce Phantom remains the best-selling super luxury car in the world, with sales in 2005 at a 15-year high.-PR


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## Owais

*OGDCL listing on London Stock Exchange * 
LONDON: Oil and Gas Development Company will become the second Pakistani company to been listed at the London Stock Exchange here on Wednesday after the company raised its Global Depositary Receipts (GDR) to US $ 712 million.

Muslim Commercial Bank was the first Pakistani bank to be enlisted at LSE in October after attracting US $700 million worth of demand for its US $ 150 million GDR issue.

Minister for Privatization & Investment Mr. Zahid Hamid and Pakistan High Commissioner to UK Dr. Maleeha Lodhi will attend ceremony for the listing and trading of OGDCL at London Stock Exchange 

The event will also be attended by Najam Hyder, OGDCL Executive Director for Corporate Affairs, Cirspin Osbourne, Managing Director, Citigroup, John Vaske, Managing Director, Goldman Sachs Farrukh Khan, CEO, BMA, Steffan Williams, Managing Director, Capital MS&L 

The sale of government's 8.8 per cent (376.79 millionshares) stake in OGDC raised US $ 712 million last month. 

According to the analysts, this is a welcome development that a Pakistani company has been able to raise such a large amount in the international capital markets after a long time and does indicate confidence of the international investment community in Pakistan&#8217;s economic prospects as well as about OGDC&#8217;s future.


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## Neo

*KHI-Quetta road network still severed *

HUB: December 06, 2006: The rain-hit Karachi-Quetta RCD Highway and Karachi-Gawadar Makran Coastal Highway (MCH) portions could not be repaired even after a lapse of four days. 

While the hundreds of trapped passengers including women and children were languishing in extreme anxiety and anguish near Bela on RCD Highway and near the Hangol River Bridge on MCH, as by now they have completely exhausted their food and drink stocks and left in dire strait.

Qalat Scout, Awaran Scout and Makran Scout contingents were working for the restoration of roads besides providing food and beverage to the passengers and shifting them to the safe places.


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## Neo

*AEDB to electrify 400 villages with renewable energy *

ISLAMABAD (December 06 2006): Alternate Energy Development Board (AEDB) will provide electricity to about 400 villages through renewable energy costing Rs 14 million. The villages, which were 20 kilometres off from the national grid, would be provided electricity through solar cells.

But windmills or micro-hydel would also be installed in some villages on the Prime Minister's directive, official sources told Business Recorder on Tuesday.

Under the scheme, three hundred villages of Balochistan and one hundred villages of Sindh would only pay Rs 250, which is minimum cost of lighting by kerosene and rest would be bore by the government, they said. The amount, each household will have to deposit with the management of the community organisation for looking after and maintenance of the solar cells, they added.

The Board had floated an idea for electrifying 7600 villages but the government has approved initially 400 villages of Sindh and Balochistan by allocating funds from PSDP. Had Wapda executed this project, it would need Rs one billion but the AEDB will complete the project spending much lower cost in two and half year, sources added.

The AEDB is already executing one village in each province through renewable sources. To a question about availability of equipment, they said that some of them like solar panels and inventors would be imported while the rest would be made locally.

When asked about the scope of project, they said that the AEDB is working to make it popular at community level only focussing those areas, where other sources of energy are too costly. Wapda has identified nearly 40,000 villages in country with estimated budget of Rs 18 billion for electrification.


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## Neo

Owais said:


> Duplicate post mate
> see post # *3107*



Thanks for notifying, I've deleted it.


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## Neo

Wednesday, December 06, 2006 

*7-8% growth rate aim of economic policies*

LAHORE: Adviser to Prime Minister on Finance Dr Salman Shah on Tuesday said that the objective of the governmentÃ¢â¬â¢s economic policies is to ensure growth rate of seven to eight percent over the foreseeable future to put the country on the path of modernisation, development, international integration and prosperity.

Speaking at the inaugural session of the two-day Ã¢â¬ËPakistan: Growth and Competitiveness ConferenceÃ¢â¬â¢ organised by the LUMS and World Bank here, he said that by maintaining such economic growth they will be able to pull Pakistan out of poverty quagmire and achieve millennium development goals by 2015.

Ã¢â¬ÅThe economic growth rate of seven to eight percent during the last four years has resulted in substantial reduction in poverty and improvement of standards of living of the people,Ã¢â¬Â he told. 

He said that if Pakistan continues to grow at its current rates, the economy would be amongst the top six or seven emerging economies of the 21st century world.

Dr Shah said: Ã¢â¬ÅWe have the scale and talent to be world class manufacturing and servicing centre of the region.Ã¢â¬Â He said that special attention is being paid to higher education to produce knowledge-based economy.

He said that Pakistan is strategically located in a strong region and Ã¢â¬Åwe intend to exploit this competitive advantage.

We are destined to become logistics, trade, tourism, energy and manufacturing hub that connects China, Central Asia, West Asia and the Middle East with India and South Asia.Ã¢â¬Â


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## Neo

Wednesday, December 06, 2006 

*Mega City projects to start by March*

KARACHI: Various projects under the umbrella of the Karachi Mega City Development Project (KMCDP) would be started by March and April and will cost approximately US$800 million, said City Nazim Mustafa Kamal during a meeting at his office Tuesday. The project is being funded by the Asian Development Bank (ADB).

KMCDP Coordinator Roshan Ali Khan and Master Plan EDO Iftikhar Qaimkhani briefed the participants about the KMCDP and the master plan. 

Kamal asked all stakeholders to submit proposals and suggestions regarding the master plan as soon as possible so that it can be finalized and presented at the city council session at the end of this month for final approval.

He said that the ADB had sent consultants for water and sewerage programmes and solid waste management.

Ã¢â¬ÅThe City District Government Karachi (CDGK) has set up a local support unit to liaise with the civic administration,Ã¢â¬Â Kamal said. Ã¢â¬ÅMoreover, the CDGK is setting up toll-free call centers at an estimated cost of Rs 130 million. Complaints will be forwarded to the department, town or union council office concerned and issues will be addressed promptly,Ã¢â¬Â he said.

Highlighting the importance of the Master Plan, Kamal said, Ã¢â¬ÅThe present master plan will be finalized after the approval of the city council. According to the law, the city council is responsible for planning in the city.Ã¢â¬Â

Copies of the master plan had been sent to all stakeholders in October, and a majority of them have already sent in their proposals and suggestions, the city nazim said, adding that all civic administrations should understand the importance of the master plan, and prepare reports especially to deal with major issues-especially water, sewerage and storm water drainage.

APP adds: The meeting was also attended by Urban Economist For Social Sectors Division Central and West, Asian Development Bank (ADB) Shane Rosenthal. The ADB consultants for water and sewerage, representatives of all stakeholders, EDOs, Secretary Land Utilization, chairmen Karachi Port Trust (KPT) and Port Qasim Authority (PQA), Chief Building Controller and representatives from katchi abadis, SSGC, PTCL, KESC, DHA, Military Land and Cantonments Karachi Region, Lyari Development Authority (LDA), CAA Karachi, Traffic Police, Mass Transit Cell and KMCDP were also present.

Rain water drained out from Faisal Town: On the directives of Shah Faisal Town Nazim Mohammed Imran, sanitation officials and staff (supervised by UC nazims, naib nazims and councilors) cleared out accumulated rainwater from all roads in the area. Imran directed the Solid Waste Management department to ensure that accumulated rainwater was pumped out, and people were provided with a clean and healthy environment. 

He said that immediate action should be taken on public complaints received at the rain emergency center, and a status report should be submitted to him. He further ordered that all potholes be covered and repaired, and that, KWSB officials should rectify leakages in water lines and ensure proper sewerage disposal.


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## Neo

*Temasek said to be eyeing stake in Pakistan Industrial Credit & Investment*

SINGAPORE : Temasek Holdings is buying a stake in Pakistan Industrial Credit and Investment Corp. 

That is according to its subsidiary, NIB Bank, in a statement to the Karachi Stock Exchange. 

No further details on the deal were given. 

Pakistan Industrial Credit and Investment Corp is an insurance and asset management company.


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## Owais

*Offering amounts to $8 billion: OGDCL GDS fetches $18.90 on London bourse *

ISLAMABAD (December 07 2006): The Oil and Gas Development Company Limited (OGDCL), Pakistan's leading oil and gas company, on Wednesday marked the first day of trading of its global depository shares (GDSs) at London Stock Exchange (LSE), according to a message received here from London.

The offering price of GDS was $18.90, with each GDS representing 10 ordinary shares. Based on the offered price, the market capitalisation of OGDCL worked out to approximately $8 billion.

BMA Capital, Citigroup and Goldman Sachs International are the joint lead managers, with Citigroup and Goldman Sachs International as joint global coordinators and bookrunners for the international offering, and BMA Capital as lead manager and bookrunner for domestic offering and joint lead manager for international offering.

Commenting on the secondary offering, Privatisation Minister Zahid Hamid said: "The government's highly successful economic reforms, based on the pillars of privatisation, deregulation and liberalisation, together with policy consistency and continuity, had combined to create a very attractive and conducive investment climate. This had reflected in the success of OGDCL offering and boost for Pakistan's future in the international capital market.

Pakistan's economy was performing well, and foreign direct investment (FDI), including privatisation proceeds, had reached record high levels, he added.


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## Owais

*ADB lends $510 million for renewable energy *


MANILA (updated on: December 07, 2006, 13:34 PST): The Asian Development Bank (ADB) said here on Thursday that it is lending Pakistan 510 million dollars to develop renewable energy sources. 

This is the first loan of its kind to Pakistan and the first loan under ADB's clean energy and efficiency initiative aimed at expanding more efficient energy operations in ADB member countries. 

Pakistan is highly dependent on oil imports and expects to tap coal, oil and gas to meet future needs with renewable energy accounting for only 180 megawatts of Pakistan's power output, the bank said in a statement from its headquarters in the Philippine capital.

However renewable sources hold great potential for Pakistan, the ADB said, citing small and medium hydropower plants as well as wind, solar and biomass power.

"Investment in such renewable energy options would not only be beneficial to the country's energy security, but would boost social equity, lead to a cleaner environment, and make good economic sense," the ADB added.

The first project to be financed by the loan will be a set of small hydropower plants in the Northwest Frontier Province and Punjab. The loan will also expand the country's power supply and improve reliability and quantity of power, the multilateral institution added.


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## Owais

*Government focussing on trade and economic diplomacy: Prime Minister *
ISLAMABAD (December 07 2006): Prime Minister Shaukat Aziz on Wednesday said the government was focusing on trade and economic diplomacy to get better market access abroad and was vigorously pursuing signing of Free Trade Agreements (FTAs) with a number of countries to get level playing field for its products.

Chairing a meeting on Wednesday evening to review the implementation of trade policy initiatives, the Prime Minister said signing of Free Trade Agreement with China was a significant development which would give a boost to our exports to China.

Shaukat said exports were a major mechanism to drive the economy, earn foreign exchange and generate employment and the government was focusing on value addition and increasing productivity and competitiveness of our products to get better market access. He reviewed various incentives given by the government to increase exports and said the Ministry of Commerce should have an aggressive marketing policy and strategy.

The ministry should prioritise building brands and need assessment of the potential clients. It should adopt an industry focused and geography focused approach and should work to leverage the qualitative edge of our products, he added.

The Prime Minister said the liberalised economic policy of the government had increased competitiveness of our products and enabled our exports to grow.

He said Pakistan had a unique advantage in textiles, leather, engineering and agricultural products which should be promoted across the globe. He reviewed transition of Export Promotion Bureau into Trade Development Authority of Pakistan and said the TDAP should be run on professional lines and it should have a focused approach to diversify and increase exports. The authority should explore new markets and identify new products for export. It should focus on trade facilitation, Shaukat added.

The Minister for Commerce explained various initiatives taken by his ministry to increase exports. The Prime Minister appreciated Ministry of Commerce for their initiatives and asked them to redouble their efforts to increase and diversify exports.

The meeting was attended among others by Federal Minister for Commerce Humayum Akhtar Khan, Chief Executive TDAP Tariq Ikram and senior officials.


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## Owais

*Government's annual utilisation raised to Rs 250 billion *

LAHORE (December 07 2006): Chairman, Planning Commission (PC), Dr Akram Sheikh on Wednesday said the government has increased its annual utilisation which is likely to reach to Rs 250 billion during the current fiscal year as compared to Rs 200 of previous year.

Talking to newsmen after addressing the concluding session of International Foundry Congress and Exhibition 2006 organised by Foundry Association of Pakistan, here on Wednesday, Sheikh said work on various development projects is under progress.

Bhasha Dam Work could start in two years and new dams would help get rid of electricity shortage in the country. However, we are trying to explore alternative energy like solar energy and planned to electrify 400 villages under solar energy system, he added.

Over 400 delegates from the industrial sector of Pakistan, including some 50 delegates/exhibitors from India, UK, Germany, Turkey, Iran, China, Japan and Saarc countries participated in the 2-day event.

Similarly, the government is developing roads network in the country and an amount of Rs 25 billion has been made available to National Highway Authority (NHA) for this purpose.

He stressed the need for setting up of common facility centres for the uplift of foundry industry which should establish training centre to impart training to youth so that their need in this regard could be fulfilled, he added.

Razzak Dawood, former federal minister for commerce, asked the foundries to use latest technology and skilled manpower in the industry. Infrastructure development in the engineering sector was crucial for the advancement of foundries.

Appreciating the initiatives taken by the Pakistan Foundry Association (PFA) in organising this moot, he said it had brought all the stakeholders on one platform which will lay strong foundation for the development and growth of foundries in Pakistan.

He further said: "If we want to compete at the highest level we have to improve infrastructure, introduce advanced technology, ensure better facilities and train our skilled and semi-skilled work force."

Sikandar Mustafa Khan, Chairman of the Pakistan Foundry Association (PFA), in his closing remarks said, "The PFA is very happy to realise the success of one of the most ambitious events, undertaken by the PFA, and it is my privilege and honour to thank all the foreign and local delegates to have contributed to the success of the Congress."

Through the day, delegates took part in the technical sessions addressed by experts including Dr P.K. Basutkar, Staffhen Hendricks, Ahson Arshad, Ameer Haider and D.D.Vas.


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## Owais

*'Rs 50 billion investment expected in livestock' *

ISLAMABAD (December 07 2006): The local investors will spend over Rs 50 billion in livestock and meat production business. "The production and processing of milk and meat in the country will show a quantum jump after this investment," Secretary Minfal, Ismail Qureshi told Business Recorder on Wednesday.

Some 30 investors had shown their firm commitment in establishing large farm with capacity of over 5,000 cattle heads, he added. The project would not only bridge demand-supply gap but also make Pakistan exporter of dairy products from 2011, Minfal secretary hoped.

Quoting a World Bank study, Ismail said that the establishment of dairy and meat sector, Pakistan had reached competitive edge in the region. Besides this, Qatar is willing to invest about one billion dollars in cattle fattening and establishing slaughterhouses in Pakistan. Similarly, a milk processing and marketing company, Nestle Pakistan, will invest Rs 24 billion in dairy and corporate farming by importing cattle from Australia.

Export potential of livestock is estimated at $1 to 1.2 billion in 2010 and $1.5 to 2 billion in 2013 against the current exports of $0.868 billion, while fisheries export estimated at $0.5 to 0.7 billion in 2010 and $1 to 1.2 billion in 2013 against the current figure of $0.2 billion.


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## Owais

*40-member Chinese company team due today: work on two coal-fired power plants to start soon *

KARACHI (December 07 2006): A 40-member delegation of a Chinese company is due here on Thursday to conduct the detailed coal geological investigation (DCGI) in Sonda-Jherruk area of Thatta district for setting up two coal-fired power plants, each of 300MW.

Sources told Business Recorder on Wednesday that the delegation of China National Machinery Import and Export Corporation (CMC) would start work on detailed investigation in about a week. Three members of the delegation have already arrived here to determine the possibilities of starting the work at the earliest. The CMC had signed an agreement with Sindh government on November 25 this year to conduct work for setting up these power plants.

The CMC's geological investigation would be completed in three months and later on it would start coal-mining and set up the two power plants. The Chinese company would bear the cost of detailed coal geological investigation.

As is well known, the coal reserves at Sonda-Jherruk are the second largest in Sindh comprising more than seven billion tonnes coal. The area is located at a distance of around 150 km in north-east of Karachi and about 30 km in south-east of Hyderabad, where all required infrastructure has been made provided by the provincial government.

The CMC has to arrange investment and ensure availability of coal deposits on long-term basis like 30-40 years to meet the requirements and establishment of power plants. The project would generate 2,000 to 3,000 jobs for local people, sources added.


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## Owais

*USAid to continue supporting Fata projects *

PESHAWAR (December 07 2006): US Ambassador to Pakistan, Ryan C Crocker has said that more than 50,000 families will benefit from Khushhali Bank programmes in Fata with support from the United States Agency for International Development (USAid).

He expressed these views while addressing a gathering of Khushhali Bank clients and staff here on Wednesday. The US Ambassador congratulated Khushhali Bank on their achievements over the past three years.

He said that creating employment and helping small-scale businesses in Pakistan was an important goal of US. Through micro-finance, USAid is helping provide impetus to sustained economic growth and fight poverty, he added. The US Ambassador specifically encouraged women clients to diligently work for their economic development with Kushhali Bank's participation.

He said that with the assistance of the USAid , the bank had opened 22 branches, including two in Khyber and Kurram agency of FATA, hired nearly 200 loan officers in the field and has disbursed more than 200,000 loans to clients in FATA, Balochistan and Sindh.


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## Neo

*Kachhi Canal project to be completed by 2010: Qadeer *

ISLAMABAD: December 07, 2006: Additional Secretary Planning and Development, Balochistan Sohail Qadeer on Thursday said Kachhi Canal project would irrigate almost 7 lac acres land in the province and would be completed by 2010.

Talking to the state-run TV he said, 22 percent work had been completed on the project, adding different developmental projects are under process in the province which would help alleviate poverty.

He said, a huge development budget had been fixed for Balochistan and importance is being given to improve road network, adding Rs.77 billion had been spent on road network.

Sohail said, besides mega projects in Balochistan focus is also on traditional set-up like agriculture, fisheries, minerals and livestock.

Most development projects signed during the visit of Chinese President Hu Jintao were related to Balochistan, he added.

He said, technical training institutes which would be established for training of women and children would empower women in Balochistan.

As far as minerals explorative from Balochistan was concerned it would provide employment opportunities not only for the locals but people from other provinces would also be adjusted, he added.


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## Neo

*Pakistan requires more big dams: Wapda *

LAHORE: December 07, 2006: Pakistan unavoidably requires construction of more than one mega water reservoirs to cater for the increasing needs of the country in water as well as power sector.

This was stated by Mr. Tariq Hamid, Chairman Wapda while briefing the delegation of Armed Force War Course of National Defence College (NDC) Islamabad, which visited Wapda House here on Thursday.

The Chairman Wapda said Pakistan was fast heading towards a situation of acute water shortage due to rapid growth in population and depleting storage capacity owing to sedimentation, thus, making the construction of mega reservoirs inevitable without further delay.

Tariq Hamid apprised the delegation that, at present, Pakistan has storage capacity of nine per cent of total water available whereas the average storage capacity world-wide stands at about 40 per cent.

He cautioned that Pakistan would be a water-short country like Chad and Ethiopia by the year 2012 if storage capacity was not enhanced considerably. Having cultivable land base of 77 million acres, Pakistan has potential to bring about 22.6 million acres of virgin land under cultivation provided additional water is made available, the Chairman observed.

Talking about the power sector, the Chairman said the annual growth in electricity consumption during the last four years has been recorded as a 9.8 per cent. He shared with the delegation that load on Wapda system increases by 2000 MW of electricity during the peak hours from 6.30 p.m. to 10.30 p.m.

To address problem of possible shortage of electricity in coming years, they have to generate sufficient electricity at affordable rates and that is only possible through construction of big dams, he said.

Referring to the future plans of Wapda, the Chairman said transmission system is being strengthened and improved to bring down system losses to acceptable limits.

He said a number of projects worth Rs 19.6 billion would be completed by this month except Muzaffargarh-Gatti transmission line, which would be operational by December, next year.

The Chairman, making detailed deliberation about the performance of power utility, apprised the delegation that as many as 3778 villages had been electrified, while, 6098 tube wells had also been energised till October 31 during the current fiscal year.

He hoped that most of the targets set for the village electrification for the year 2006-07 would be met. He said all villages comprising of 10 or more households throughout Pakistan except Balochistan would be energised by December 2007 as committed by the President General Pervez Musharraf to the people of Pakistan, however, in Balochistan, the villages would be electrified through alternate resources of energy.

Later, Wapda Chairman Tariq Hamid and the head of the delegation Major General Shahid Iqbal exchanged souvenirs.

Member (Finance) Imtiaz Anjum, Member (Power) Muhammad Anwer Khalid, Member (Water) Muhammad Mushtaq Chaudhary and other Wapda senior officers were also present on the occasion.


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## Neo

* Pakistan aims to be major pharma exporter: PM *

ISLAMABAD: Prime Minister Shaukat Aziz has said that Pakistan is positioning itself as a major exporter of pharmaceutical items and implementing Intellectual Property Rights (IPR) laws to protect all stakeholders, and ensure people get quality medicines at affordable prices.

Talking to Alan P Larson, Senior International Investment Advisor to a US-based law firm and former Under Secretary, Economic Business & Agricultural Affairs at the PM House he said that government has set up Intellectual Property Rights Organization. He said it was an independent regulatory body, fully dedicated to prepare and implement IPR laws in line with the best international practices. 

The PM said, in addition to introducing strict laws, Pakistan has also made substantial progress on the enforcement of IPR laws. The enforcement mechanism has been strengthened and the country was gradually moving towards their complete enforcement.

The prime minister said the government was committed to improving healthcare facilities and besides preventive, curative steps was using mass media to create awareness about eradication of Polio, AIDS and Hepatitis.

He said that wide ranging structural reforms introduced during the last seven years, coupled with macroeconomic stability, consistency and continuity of policies have transformed Pakistan into a destination of choice for foreign investors.

Alan P Larson said there was tremendous potential in Pakistan to undertake research in life sciences, which will increase production and export of pharmaceutical goods from Pakistan. He said the US companies were showing keen interest to invest in Pakistan, which would make availability of high quality drugs at affordable prices.

Larson said Pakistan has a tremendous potential in the pharmaceutical industry and appreciated pursuing of innovative methods in various disciplines of life sciences.

He said a number of US pharmaceutical companies were planning to outsource research and development projects and production of pharmaceutical to countries, offering suitable conditions.


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## Neo

Thursday, December 07, 2006 

*Export plan 2006-2013: Major incentives for foreign airlines in the offing*

* Cut in landing charges, fuel prices envisaged

By Sajid Chaudhry

ISLAMABAD: The seven-year action plan which has been finalised to enhance the countryÃ¢â¬â¢s exports, envisages rationalising high-landing charges and fuel prices for the foreign airlines to increase the commercial cargo lifting capacity of the country, a senior official at Planning Commission told Daily Times on Wednesday.

A committee headed by Dr Akram Sheikh, Deputy Chairman Planning Commission has recently finalised the Export Plan for Pakistan 2006-2013 to enhance current exports GDP ratio from 13% to 15% of GDP aiming at increasing exports from $16.5 billion to $43.3 billion by 2013.

Prime Minister Shaukat Aziz taking notice of the drop in the targeted exports of the country had constituted a high level committee in the chairmanship of Dr Akram Sheikh, Deputy Chairman Planning Commission to prepare a plan fore enhancing exports from 13% of the GDP to 15% of the GDP for the medium term in consultation with all stakeholders.

The committee, which finalised the Export Plan for Pakistan 2006-2013, while analysing constraints impeding exports due to cargo handling capacity of the country has included in action plan Ã¢â¬Åcapacity to lift cargo be increased by rationalisation of high-landing charges and fuel prices for foreign airlinesÃ¢â¬Â. The committee was informed that as less number of airlines is operating, cargo lifted from Pakistan is constrained.

The committee was informed that time involved in completion of various business processes, especially the customs, at the airports is unduly long. The committee recommended that the Pakistan Customs Computerised System (PACCS) may be extended to all airports and all services providers may be networked to function as a single window.

The committee was informed that most of the airports do not have adequate capacity to handle commercial cargo. As an action it was recommended to expand and modernise the commercial cargo terminals of the Karachi, Islamabad and Peshawar Airports.

It was brought to the notice of the committee that airports also lack cargo-scanning facilities and physical examination causes damage and pilferage. The committee in its recommendations for action plan that modern cargo scanning equipments capable of detecting explosives are to be installed for handling of cargo at all international airports.

One of the constraint impeding exports was identified as during peak season of exports of certain commodities like rice, shipping companies each year increases kinnow and mangoes shipping freight. It was included in the action plan that saving on foreign exchange can be achieved through low freight charges by allowing Ã¢â¬Ëflag of convenienceÃ¢â¬â¢ to 150 vessels registered by Pakistani expatriates abroad.

The committee also included in the action plan, facilitating the setting up of cold storage facilities near the international airports by private sector to address the issue of losses of perishable commodities before exports.

By implementing action plan the textile and garment sectorÃ¢â¬â¢s exports are projected to be increased from 9.98 billion in the fiscal year 2006 to $24.36 billion by fiscal year 2013. Rice exports, which stand at present at $1.11 billion, would be enhanced to $2.5 billion by year 2013. Leather and leather products had fetched $1.09 billion last fiscal year, which would be increased to $2.26 billion. The exports of engineering sector, which at present stand at $0.21 billion, would be enhanced to $2.40 billion.

The fruits and vegetables are projected to be increased from $140 million to $370 million, meat and meat preparations from $20 million to $100 million, fish and fish preparations from $200 million to $990 million, carpets, rugs and tapestry $250 million to $370 million, sports goods from $350 million to $920 million, surgical instruments from $160 million to $420 million, cutlery from $30 million to $110 million, furniture from $10 million to 500 million, pharmaceutical products from 80 million to 290 million, marble and granite from $20 million to 680 million and gems and jewellery $20 million to $690 million and other products including services and defence exports from $2.89 million to $6.32 million.


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## Neo

Thursday, December 07, 2006 

*US firms likely to outsource pharma productsÃ¢â¬â¢ production *

ISLAMABAD: A number of US pharmaceutical companies are planning to outsource research and development projects and production of pharmaceuticals to countries, which offer suitable conditions for these activities. 

Alan P. Larson, Senior International Investment Adviser to a US-based law firm and former under secretary of Economic; Business & Agricultural Affairs, said during a meeting with Prime Minister Shaukat Aziz here on Wednesday. 

The prime minister said Pakistan is geared to position itself as a major exporter of pharmaceuticals and is pursuing the implementation of Intellectual Property Rights (IPR) laws and protection of patents with the objective to safeguard the rights of all stakeholders, protect investments and to ensure that people get quality drugs on affordable rates. 

Mr Aziz said the government has set up the Intellectual Property Rights Organization (IPRO), which is an independently-run regulatory body, fully dedicated to prepare and implement IPR laws in line with the best international practices. He said in addition to introducing strict laws, Pakistan has also made substantial progress on the enforcement of IPR laws. The enforcement mechanism has been strengthened and the country is gradually moving towards complete enforcement of these laws. 

The prime minister said the government is committed to improving healthcare facilities for the masses. It has taken preventive and curative steps and is using mass media to eradicate diseases such as polio, AIDS, hepatitis and other such menaces from the country. 

He said wide-ranging structural reforms introduced during the last seven years, coupled with macro-economic stability, consistency and continuity of policies, have transformed Pakistan into a destination of choice for foreign investors and during the last financial year the country received a total investment of $3.8 billion which was a record in the countryÃ¢â¬â¢s history. This year we are expecting an even higher foreign direct investment, he added. 

Mr Larson said there is tremendous potential in Pakistan to undertake research in life sciences, which will lead to increase in production and export of pharmaceuticals from Pakistan. He said US companies are showing keen interest in investing in Pakistan, which will result in the availability of high quality drugs at affordable prices. 

Talking of the government policies and the progress made in various sectors in Pakistan, he said Pakistan has a tremendous potential in the pharmaceutical industry and appreciated that it is pursuing innovative methods in various disciplines of life sciences.


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## Neo

*India, Pak agree to increase freight traffic*

Thursday, 07 December 2006 

New Delhi, Dec 7: In a significant development, India and Pakistan have agreed to increase freight traffic between the two countries.

In a written reply to a question in Lok Sabha, Minister of State for Railways R. Velu said, "Both sides (India and Pakistan) agreed to make efforts to increase the level of interchange of freight traffic." Delegations from both sides met here from October 31 to November 2 to discuss the issue, he said.

"The Indian delegation proposed for starting freight trains via Munnabao-Khokrapar. Pakistan delegation informed that as and when the necessary facilities have been developed, the proposal for opening of Khokrapar route for freight traffic could be discussed and decided," he said.

However, "there is capacity constraint on Pakistan Railway at Wagah," he added.

In reply to another question, Velu informed the house that Indian Railways have tied up with several international railways for co-operation.

"Indian Railways have entered into Memorandum of Understanding (MoU) with railways of Austria, France, Russia, Italy and South Africa in recent past. This has facilitated increased technical co-operation for development of rail related projects," he said in a written reply.


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## Neo

*Musharraf gives Rs 3.6 billion more for Balochistan uplift *

QUETTA (December 08 2006): President General Pervez Musharraf on Thursday announced additional funds for development of Balochistan and vowed to do away with past neglect by developing the province to bring it at par with the developed areas.

"Pakistan because of Balochistan and the development here is the progress of the entire country," he told a large gathering here. He urged the Baloch youth to part ways with those who were against development and progress.

"There is no other 'Lashkar', but only one and that is Pakistan Army, to defend the motherland," the President said, alluding to those made by a few local Sardars. Musharraf asked the people to be the judge and see for themselves the large scale unprecedented development initiated in the province by the government in all sectors.

"My heart beats with my Baloch brethren and you are source of my strength", he said amidst loud applause. Despite the bitter cold, thousands attended the meeting and enthusiastically responded to the announcements made by the President for the people of the province.

Musharraf announced Rs 1 billion for development of Quetta, Rs 100 million each for 28 districts besides Rs 2.5 billion to the parliamentarians for development schemes in their respective constituencies. He announced seven new cadet colleges, two more campuses for Balochistan University at Gwadar and Turbat, 1,000 scholarships for Baloch students enabling them to study in the best schools and professional colleges of the country with free boarding and lodging.

"However, I will urge my young students from Balochistan to focus on their studies, seek higher education and work for their country and the betterment of their families", said the President.

He also announced six new buses for Balochistan University, saying all students who had completed 16 years of education will get a stipend of Rs 10,000 for a year at a government job.

He also announced quota for Baloch students in vocational training institutions besides special training courses for the Baloch youth at Pakistan Ordnance Factories, Aeronautical Complex Kamra, Heavy Industries Taxila, which will later absorb them on regular positions. Musharraf said 1,400 villages will be electrified this year, to be followed by another 2,000 next year and to reach the farthest areas by 2009.

He said electricity from Iran was being supplied to Panjgur, Pasni, Turbat, and Gwadar, while the natural gas supply will also be extended to other areas. He announced gas supply for Urak and Hanna in Quetta and Zhob.

"It is unfortunate that the areas that are a source of natural gas remained bereft in the past. Do not blame me for the past neglects ... I am here to provide you all facilities," the President said. He regretted 50 years of neglect that left country's largest province underdeveloped and vowed to make up for past negligence.

The President, who addressed the gathering after inaugurating a modern Kidney Center and the Overseas Pakistanis Foundation Girls College nearby, said many development projects were in the pipeline.

He said the Subakzai dam will be complete in three months time, whereas he had already inaugurated the Mirani Dam that can meet irrigation needs for 33,000 acres. The work on Rs 40 billion Kachi canal bringing water from Punjab for Balochistan has started on both ends to be completed in 2008.

The President also greeted the people of Balochistan for the re-opening of the Chamalang coal-mines, closed 30 years back after a dispute over ownership between the Luni and the Murri tribes.

These 60-km-long coal mines in Chamalang are considered the world's largest, which produces Rs 300 billion coal. The President said the government was working on providing a comprehensive road network to ensure that development benefits reach every corner of the country.

He said new roads linking Loralai with DG Khan and Zhob with DI Khan were being built, besides progress on the RCD Highway, Indus Highway and Motorway to improve trade links with Iran, Afghanistan and China.

The Gwadar port, he said, will not only serve Pakistan, but also the Middle East, Central Asian states and China. He said Rs 7 billion allocated for safe drinking water, about Rs 2 billion will be provided to Balochistan.

"The rich can always afford the bottled water, but I am working on providing clean water for the poor, who cannot afford costly water," he added.

The President said the Women Protection Act was framed at removing injustices against them and refuted the claim that it was against Islam. "No one in Pakistan can even think of enacting legislation against the Quran or Sunnah," the President said. President General Pervez Musharraf said every village in the rural and remote area of Balochistan will get electricity by the year 2008.

Addressing the public meeting here, the President said 1400 villages will be electrified this year, to be followed by another 2000 next year and announced that electricity will be provided to every village in Balochistan by the year 2008.

He said electricity from Iran was being supplied to Panjgur, Pasni, Turbat and Gwadar to provide power to maximum villages. President General Pervez Musharraf also inaugurated a 50-bed state-of-the-art Workers Welfare Fund Kidney Center.

The first-ever kidney center in Balochistan, constructed on 7.5 acres at a cost of Rs 385 million and having the diagnostic, dialysis, surgical and lab facilities will help the people of this area, as they had to travel to Karachi for treatment.

President Musharraf unveiled the plaque to open the facility. Minister of Labour, Manpower and Oversees Pakistanis, Ghulam Sarwar Khan briefed him about various facilities provided in the kidney center.

Earlier, Balochistan Chief Minister Jam Muhammad Yousaf addressing the public meeting appreciated the efforts and measures taken by President Musharraf for the development of Balochistan.

He said people are grateful to President General Pervez Musharraf for taking special measures for the development of Balochistan, which was ignored in the past. Quetta Nazim Maqbool Ahmad Lehri highlighted the development projects being initiated by the local government for the welfare of the people.

The public meeting was attended by a large number of people from Quetta and its adjoining areas particularly a large number of women belonging to different walks of life.


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## Neo

*Trade deficit estimate revised to $12.2 billion *

ISLAMABAD (December 08 2006): The commerce ministry has revised trade deficit projection to $12.2 billion against the target of $9.4 billion set for the current fiscal year, arguing that restricting imports is neither feasible nor beneficial to the economic health of the country, official sources told Business Recorder here on Thursday.

"If the trend of October follows in the remaining period, the total import in 2006-07 may reach up to $30.3 billion as against the estimates of $28 billion," the sources quoted a commerce ministry report submitted to the Economic Coordination Committee (ECC) of the Cabinet on Wednesday.

The commerce ministry had projected $18.6 billion exports and $28 billion import for the current fiscal year, however, the decline in exports during the first quarter not only disturbed the commerce ministry but also the federal government.

It argued that Pakistan's economy is growing at high rate for the last couple of years with 7 percent projection in 2006-07, adding that increase disposable income, demand for imports also increase.

"Our imports consist mainly on machinery, raw material, petroleum products, and food items whose import cannot be curtailed without impacting economic growth and prices. These imports are essential for sustaining economic activities and stabilisation of prices by augmenting supply position," the sources quoted the commerce ministry as justifying growth in imports.

Comparison on month-to-month basis shows that imports of $2.132 billion in October are 8.3 percent lower than imports of $2.325 billion in the corresponding period last year. The ECC has also directed the commerce ministry and newly constituted Trade Development Authority of Pakistan (TDAP) to submit a report on the causes of less growth in exports.

Sources said the commerce ministry is not ready to take the responsibility of decline in exports and it took very strong position in the ECC meeting, saying that as the country is following a liberal trade regime in line with the World Trade Organisation (WTO) system, imports are affected by the overall economic policies of the country, including fiscal, monetary, and exchange rate policies.

"Fiscal, monetary and exchange rate policies are formulated by the finance ministry and the State Bank of Pakistan (SBP) keeping in view the overall economic position of the country and the commerce ministry has no control on these decisions," the sources quoted the ministry as saying.

Sources also said the commerce ministry has taken a sigh of relief, after it was informed by the Central Board of Revenue (CBR) that exports have touched $1.320 billion in November, showing 15 percent plus growth against the corresponding period last year.


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## Neo

*Pakistan pursuing intra-region trade policies: minister *

ISLAMABAD (December 08 2006): Minister of State for Commerce, Hamid Yar Hiraj has said that Pakistan is proactively pursuing intra-region trade policies to prosper the people. Addressing the South Asia Trade and Investment Forum in London, he urged the European countries to invest in South Asian countries where investment policies were very attractive and labour was very cheap for the industry.

The forum, which is the first of its kind outside the South Asian region, was jointly organised by the Saarc Chamber of Commerce and Industry (SCCI) and the Commonwealth Business Council (CBC). The forum was attended by leading government officials and businessmen from the South Asian region and Europe.

The objective of the forum was to bring together the business and government leaders from South Asia to create and expand business and investment opportunities and build relations between South Asia and Europe, which has become as important as ever for creating a new stage of dynamic development.

In the welcome address, President of SCCI, Dasho Ugen Tsechup Dorji said that economic investment is too often focused in China and Japan and such investments in Asia should not stop at the South China Sea.

Gareth Thoman, MP Parliamentary Under-Secretary of State UK, said it's a high time for Europe to start rising its investment in South Asia. "South Asian countries are being considered as not only prospective markets but also potential areas for investment," he maintained.

Rohitha Bogollagama, Sri Lankan Minister of Enterprise Development & Investment Promotion, Asad Umar, President and CEO of Engro Chemicals, Muhammad Aurangzeb, Executive Vice President, ABN Amro and M.A. Lodhi, Managing Director of the Karachi Stock Exchange were among prominent speakers at the event.

The forum was a milestone to boost trade and investment opportunities in the South Asian region and create an enabling microeconomic environment that would facilitate trade and investment. Supporting investments in and out of the region will facilitate regional integration into the global economy.


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## Neo

*Infrastructure industries index records 26.2 percent growth *

FAISALABAD (December 08 2006): The infrastructure industries index, which measures the performance of seven industries, ie electricity generation, natural gas, crude oil, petroleum products, basic metal, cement and coal, has recorded a 26.2 percent growth in industrial sector of Pakistan.

According to official sources, the index is composed of energy-related industries (83.5 percent share) and construction and allied industries (16.5 percent share), which is a leading indicator of the performance of industrial sector.

The index recorded 26.2 percent growth in 2006 financial year as against 11.3 percent growth in 2005 financial year. The production of electricity and coal accelerated to 12.8 percent and 13.7 percent respectively during the FY06 compared with 10.3 and 2.6 percent growth respectively last year.

The positive impact of these two industries was offset by the deceleration in the production of natural gas, cement and petroleum products and fall in the production of basic metal and crude oil production. In terms of end-use categorisation of industrial production (basic, consumer, intermediate and capital goods), a deceleration is evident in all categories during FY06.

Encouragingly, capital goods group witnessed a marginal slowdown and grew by a strong 26.9 percent during FY06. This relatively strong growth came from higher production of electronic items such as transformers, meters and engineering products eg diesel engine, shuttles and bobbins.

Strong growth in capital goods suggests that growth momentum in other categories is also likely to accelerate in FY07. The second highest increase was registered under the category of consumer goods in FY06 for yet another year, on the back of a sustained rise in income, declining prices of electronics as well as availability of consumer financing. In particular, despite a slowdown in consumer durable goods, this group recorded a strong growth of 31.3 percent in FY06 as compared 40.8 percent growth in FY05.

This strong growth in consumer durable is mainly contributed by electronics and automobile industries due to consumer financing, and an evident weakening is entirely owed to rising interest rates on consumer financing. Given still strong aggregate demand and private spending, growth in consumer goods is likely to remain reasonably good.

The basic goods category showed some resilience, witnessing a deceleration of only 1.6 percent in FY06. Within basic goods, electricity generation (by both Wapda and KESC), marble, coal etc witnessed higher growth rates during FY06 as against in FY05.

The impact of this was offset by slowdown in the output of some chemicals eg hydrochloric acid, sulphuric acid and fall in the production of crude oil and coke. In FY06, the growth rate of 4.9 percent in the output of intermediate goods is lower than 16.8 percent growth in the corresponding year, mainly on account of a fall in the production of metal industry and cotton ginning.

Moreover, growth in production of textile related chemicals and natural gas also witnessed deceleration during FY06. Although, intermediate goods showed a dismal performance, it is likely that the growth would pick up in FY07 since the declines in both metal and cotton ginning appears to be temporary.


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## Neo

*Investment seen volatile in mining sector *

FAISALABAD (December 08 2006): The trend of real investment in the mining and quarrying sector remained volatile in recent years, said official sources. Real investment in this sector witnessed a growth of nine percent during 2005-06 compared with a fall of 22.2 percent for 2004-05 financial year, while the rising trend in 2006 financial year is entirely driven by private investment.

According to official sources, mining and quarrying sector is important for the economy, as it is the main supplier of key inputs and energy to industry. There was a need to exploit the natural resources of the country to sustain and diversify the growth momentum, they mentioned.

Progress in the development to exploit large copper deposit at Riko-Dik in Chagai district of Balochistan was a positive move in this direction, official sources stated, adding that the success in this project could encourage more investment in the mining sector.


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## Neo

*Economy facing major risks: WB: Average inflation 7-7.5pc forecast*

ISLAMABAD, Dec 7: The World Bank has identified some Ã¢â¬Ëmajor risksÃ¢â¬â¢ to PakistanÃ¢â¬â¢s economy in the long and short terms owing to continuously rising fiscal and current account deficits and structural bottlenecks.

Ã¢â¬ÅThe debt dynamics are vulnerable to downturns, inflation target for the year will be missed and the performance of exports and revenue is worrisome,Ã¢â¬Â says the World Bank in its outlook on Pakistan based on latest economic results up to October 2006. Based on current trends, World Bank projects that average inflation during the fiscal year 2006-07 would be in the range of 7-7.5 per cent.

The bank said the poverty rate by the end of 2004-05 stood at 29.2 per cent, a decline of only five per cent from 34.4 per cent in 2000-01 and was well above 23.9 per cent estimated by the government of Pakistan. The bank said its poverty estimate of 29.2 per cent was just 0.8 per cent better than 30 per cent estimated in 1998-99 when President Musharraf assumed power. It said the poverty rate had increased to 34.4 per cent in 2000-01. The urban and rural rate of poverty incidence in 2004-05 stood at 19.1 per cent and 34 per cent, respectively.

"Pakistan's economy in the short run faces the risk of a continued widening of the current account deficit and difficulties in taming persistent inflation. If first quarter trends in the trade balance continue, the current account deficit could end up in the range of five to 5.5 per cent of GDP for the entire fiscal year."

Over the first quarter of 2006-07, the trade deficit has widened by a further $3.2 billion in spite of a deceleration of import growth to 13.4 per cent. Ã¢â¬ÅA significant development is that over the first quarter, exports grew by only 2.8 per cent to $4.3 billion,Ã¢â¬Â the bank said, adding the exports of both textiles and other goods declined.

Over the first quarter of 2006-07, the current account deficit has increased to $2.7 billion, roughly equal to half the magnitude of the full year deficit in the previous year. "Inflationary pressures have continued to persist, but core inflation has started declining," said the bank.

In the current fiscal year, the reliance on domestic borrowing has increased, with government borrowing from the central bank reaching Rs86 billion at end of October 2006, an amount roughly equal to two-third of the amount targeted for the whole fiscal year.

The bank criticised the government for allowing institutional investors to invest in national savings to finance the deficit at a higher cost and said that the opening of NSS to the institutional investors might have an adverse effect on the stock market as mutual funds had begun switching out of capital markets to invest in NSS.

Ã¢â¬ÅPakistanÃ¢â¬â¢s tax system continues to under-perform in fundamental ways,Ã¢â¬Â said the World Bank, adding that the fiscal sustainability of increases in spending hinges on improvements in revenue collections. Ã¢â¬ÅThe tax revenue at 10.3 per cent of GDP and accounting for two-third of total revenue remains low against government's spending needs.Ã¢â¬Â

Ã¢â¬ÅThe revenue structure is heavily skewed towards indirect taxes, with six major items alone accounting for more than half of the total collection in indirect taxes. Moreover, agriculture and services sectors remain outside the tax net, depriving the system of additional revenue resources,Ã¢â¬Â the bank observed.

Sub-national revenue collection, the bank says, is weak, amounting to less than one per cent of GDP. This is partly due to weaknesses in the tax policy, and partly due to limited incentives of the provincial governments to collect their own taxes.

Excess liquidity in the economy has led to increases in domestic demand, which has been the driving force behind the economic growth witnessed over the last few years. The availability of and access to cheap credit has allowed households to finance consumption needs, businesses to expand, contributing to an increase in investment levels to 20.8 per cent of GDP from 18.1 per cent the previous year.

Ã¢â¬ÅPakistan will have to raise its investment rate above the current levels and raise domestic saving rates to sustain higher growth rate,Ã¢â¬Â the concluded.


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## Neo

*Positive list to double trade with India*

ISLAMABAD, Dec 7: A study has revealed that the formal trade with India could be double from $1 billion to $2 billion after a recent action by Pakistan to increase the positive list of tradable products from 773 to 1075 items.

But, the exchange can quadruple, if only there is closer economic cooperation and that could lead to better peace. Whenever one speaks about the peace-promoting economic relations between India and Pakistan, critics opine that relations between the two are marred by the Kashmir dispute and the cross-border infiltration.

These facts were revealed in a joint research study conducted by secretary general of CUTS International--an Indian based leading research and networking group--Pradeep Mehta and its Pakistani partner Ms Huma Fakhar Ã¢â¬â- the Lahore-based lawyer of Fakhar Law International and Market Promotion.

Hence, to expect more peaceful relations between the two fast growing economies through trade is a dream. But the researchers said that they did not agree with the assumption that trade could not help in normalising relations between the two arch rivals.

According to the study, a copy of which made available to Dawn, it was suggested that the US government can promote mutual trade between the two countries by offering duty-free imports, if one used the otherÃ¢â¬â¢s inputs in their exportable items to the US. This idea, the researchers said played positive role in case of many countries.

The study pointed out the example of US scheme of qualified industrial zones (QIZs), which was in operation since 1996, in a bid to promote peace in the Middle East between Israel with Jordan and Egypt. The scheme allowed duty free export to US market from Jordan and Egypt in case a minimum level of inputs from Israel was used in the manufacturing of these products.

Since both India and Pakistan are currently preparing to or entering into various preferential trade agreements (PTAs), bilateral as well as regional) with other countries and regions both with developed and developing countries, it would be sensible to include QIZs type arrangements in some of the agreements, particularly with EU, US and China and even within Safta and the proposed Asean-India FTA.

Such arrangement would help both Indian and Pakistani exporters and importers to reap benefits of free trade as well as promote greater cooperation, the research paper said.

The report says the mega projects like the Turkmenistan-Afghanistan-Pakistan and the Iran-Pakistan-India gas pipeline projects would help in promoting trust and regional economic cooperation between India and Pakistan.

Though both India and Pakistan are moving closer, it is at a snailÃ¢â¬â¢s pace and constantly encountering hurdles. Some of these measures could divert attention from sticky matters and accelerate the speed of greater economic cooperation between the two nations through reduction (if not elimination) in tensions and mistrust and bringing in peace and tranquillity in this region, the researchers opined.


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## Neo

*Cellular firms to start free MNP service in January *

KARACHI: All the six cellular companies have agreed to keep MNP (mobile number portability) offer free of charge, once it starts functioning in January 2007.

Senior officials of the mobile phone companies said the high-ups of cellular firms met last month and agreed to offer free MNP service to consumers, who eagerly wait for the new system across the country.

Ã¢â¬ÅAdvisory Board of the National Database Company met last month and reached a consensus that no fee would be charged from the consumers for MNP service,Ã¢â¬Â said one of the officials of the board, who asked not to be named.

Ã¢â¬ÅInitially, there was resistance from big operators but in the end it was decided that there would be no charges for the service. It has now become the defined policy or regulation for the MNP operation mechanism.Ã¢â¬Â

He said all the six operators - Mobilink, Ufone, Warid, Telenor, Paktel and Instaphone - had also reaffirmed their commitment to meet the deadline of January to implement the MNP after five-time extension offered by the authorities concerned.

Ã¢â¬ÅNo one can be blamed for the delay as such,Ã¢â¬Â said another official. Ã¢â¬ÅIn fact there are so many technicalities involved in implementing such a sensitive and hi-tech system. Each company has to install special equipment and share its data with others, which is obviously a time-consuming procedure.Ã¢â¬Â

The PTA last year asked the cellular companies to implement MNP system by November 2005 in line with Pakistan Telecommunications (Re-organisation) Act 1996, which demands the regulator protect consumersÃ¢â¬â¢ interest and promote availability of a wide range of high quality, efficient and cost-effective services.

However, the operators ignored five consecutive deadlines set by the watchdog with their consent on unknown grounds and finally they approached the federal telecom ministry to win extension, which has now fixed January 2007 to see the system implemented and operational.

Ã¢â¬ÅThe MNP requires more than $500 million investment, which is contributed by the operators at the ratio of their subscribers base share,Ã¢â¬Â said the cellular company official.

He said the companies had met almost all the major requirements of the MNP operation and now there were minor issues left, which would not take more than a month to resolve.

Ã¢â¬ÅSo we are very much hopeful to get such operation started sometime in January 2007,Ã¢â¬Â he added. Ã¢â¬ÅA final meeting of the advisory board is due within next one month to give a nod for the MNP implementation and review the overall achievement.Ã¢â¬Â

MNP is an ability to retain an existing mobile subscriber number along with operator code while shifting connectivity from one operator to another operator. In general it is a circuit-switch network service provided by the cellular or fixed line operators to the consumers with the ability to change service providers, locations or service types without changing their telephone numbers.

Analysts see the MNP as vital in determining real market leader among cellular service providers, as it offers options and requires quality service by the companies to keep their subscribers intact.

Ã¢â¬ÅThere would be a cutthroat competition among the operators in the second half of 2006-07, if the MNP is implemented by the set time,Ã¢â¬Â said Anwaar Ahmed Khan, a telecom analyst at Capital One Equities.

He said the technology would also force the companies to enter into those areas, where they had yet to initiate service and it would ultimately require network expansion and investment.


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## Neo

Friday, December 08, 2006 

*PC shipments grew 20.9% in Q2 compared with last year*

LAHORE: PakistanÃ¢â¬â¢s PC shipments grew 20.9 percent in Q2 2006 (April-June) to 173,834 units as compared to the same quarter of preceding year, announced by Springboard Research, a leading innovator in the IT Market Research industry.

The portable segment experienced the substantial growth of 64.1 percent year-to-year mainly due to a major deal of 4,500 portables announced by Bahria University.

The governmentÃ¢â¬â¢s continuous effort to automate the different public and private sector bodies was also noticeable in the quarter. In the federal budget for fiscal year 2006-2007, the government announced an imposition of 15percent General Sales Tax (GST) on the import and sale of computers and software, which will negatively affect the countryÃ¢â¬â¢s PC/Server market.

The second quarter of 2006 yielded stiff competition among multinational vendors in the desktop market. HP led the market with 5.1 percent share, followed by Lenovo and Dell. The government agenda of promoting local players seems to be materializing for the domestic market development. During Q2 2006, Raffles, a major local player, registered the highest growth in the PC market with 49.5 percent year-to-year growth, while Inbox (another local player) shipments also grew substantially. 

Amongst all segments, government held the greatest share (23.7percent) of total PC shipments in Q2 2006, followed by large enterprises (500+ employees) and the home segment. Additionally, Springboard saw the government, banking and telecom sectors spending heavily in strengthening their IT infrastructure.

One area that has drawn attention from both local and international players is the growing telecom sector in the country. PakistanÃ¢â¬â¢s telecom sector has witnessed an unprecedented growth in the recent years with the total IT spending in the industry estimated at $134.5 million in 2005, generating 22.5 percent annual growth. Currently the hardware segment accounts for about 70percent of the total telecom IT spending in the country. 

Ã¢â¬ÅWith the deregulation of the fixed line and mobile sectors we expect to see a considerable amount of investment both locally and internationally. In this event, IT business opportunities for vendors will be accelerated,Ã¢â¬Â commented Rehan Ghazi, a market analyst in Springboard ResearchÃ¢â¬â¢s Pakistan office.

Although the government has announced new standard operating procedures and projects for the IT industry, the GST imposed in the new fiscal budget will increase computer prices by at least 15-20 percent and make them unaffordable for some home users, educational institutions, and other price-sensitive users. Ã¢â¬ÅOur latest forecast for 2006 and beyond has been decreased as we expect to see a 10-15percent decline in the branded machine sales. We expect the market to grow 23.4 percent in 2006 as compared to our earlier forecast of 25 percentÃ¢â¬Â, added Mr. Ghazi.

The Pakistan PC/server market is one of the fastest emerging segments in South Asia and in the past few years, the market has attracted a lot of attention from international IT vendors. Improving economic indicators and foreign investorÃ¢â¬â¢s confidence will help the sector gain momentum as well. The growing trend of strengthening the IT infrastructure by both government and private sectors may trigger an expansion of competition in the market.


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## Owais

*Prime Minister for efficient use of gas *

ISLAMABAD (December 08 2006): Prime Minister Shaukat Aziz on Thursday said natural gas is an important resource which needs to be used efficiently and judiciously to ensure maximum benefit to consumers including households, industry and power generation units.

He said this presiding over a meeting to review the fuel supply to the power sector held at the Prime Minister House. The PM said that Pakistan is a rapidly growing economy with ever-increasing power demand and the fuel requirements to fulfil the generation needs of the power sector are also growing accordingly.

He said the power demand-supply gap is increasing due to growth in economic activity and the Ministry of Petroleum and Natural Resources should work towards optimal utilisation of the available gas resources.

Shaukat was informed that winter is a season when the demand-supply gap for natural gas is at its highest and the government is making every effort to ensure uninterrupted supply of natural gas to the consumers and all relevant authorities have been directed to maintain seamless co-ordination in this regard.

He stressed the need to carry out further exploration of new gas fields so that this growing fuel demand can be met and the demand-supply gap bridged. He also directed the Ministry of Petroleum and Natural Resources to review the progress on appraisal and development of new gas fields on regular basis and submit periodical reports in this regard regularly.

Shaukat said the government has clear and consistent policies for all sectors of the economy including oil and gas exploration and power sector and all policies are made in a transparent manner. Earlier, the Advisor to the Prime Minister on Energy Mukhtar Ahmed gave a detailed presentation on the situation of fuel supply to the power sector.

The meeting was attended by Federal Minister for Petroleum and Natural Resources Amanullah Khan Jadoon, Chairman Wapda, Secretary Petroleum, Secretary Water and Power and other officials.


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## Owais

*Trade deficit likely to devalue rupee *

ISLAMABAD: The International Monetary Fund issued its annual report on the economy of Pakistan, in which Pakistan is stated to be making satisfactory progress.

Owing to the increasing trade deficit of the country, the report signaled the 20 per cent downward move in rupee&#8217;s value and urged the transparent utilization of national resources and implementation of elastic policies.

IMF&#8217;s report on Pakistani economy says that trade deficit of Pakistan has increased manifold, which may jeopardize the macro-economic stability.

In comparison with the exports of the country, the unbridled imports swelled so much to put the payments balance at risk.

IMF said Pakistan should not delay raising interest rates in order to bolster its competitiveness and meet its inflation target. 

"To be effective, monetary policy should be supported by exchange rate flexibility and a fiscal policy that keeps this year's budget deficit, excluding grants and earthquake-related expenditures, at least at the level of 2005/06," the fund said in its annual review of Pakistan's economy. 

The review was generally upbeat about Pakistan's economy and said economic developments in the last fiscal year ending June 2006 were "favorable," with gross domestic product growth buoyant at 6.6 percent, although lower from the previous year's 8.6 percent, and inflation was declining to 7.6 percent. 

The IMF said economic policies in the current 2006/07 fiscal cycle should focus on reducing domestic demand and strengthening balance of payments. 

It said an increase in domestic demand was a risk to the economic outlook, because it had negative effects on the trade and current account deficits, as well as on the pace of disinflation during 2005/06. 

Pakistan's current account deficit has increased to $5 billion, or 3.9 percent of GDP, from $1.5 billion, or 1.4 percent of GDP, a year earlier.

Record capital flows, mainly from foreign direct investment, including privatization, more than covered the deficit and allowed for a build up of nearly $1 billion in reserves. 

The fund cautioned Pakistan from using the reserves to cover shortfalls in external financing.


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## Owais

*Current economic situation impresses World Bank *

ISLAMABAD (December 09 2006): The World Bank country director, John Wall on Friday said that Pakistan economy is growing very fast more than six percent a year in a row for the last four years. The high growth resulted in a sharp fall in poverty of 5-10 percentage points, increased investment and reduced public debt.

"Pakistan's economy will add another year of over 6 percent growth for the fourth year in a row. This is a remarkable achievement particularly given the major shocks of a big oil price hike and the October 2005 earthquake", Wall said at a press conference here.

Rapid economic growth has produced a sharp fall in poverty of 5-10 percentage points, an increase in investment from 18 percent to over 20 percent of GDP, a great acceleration in foreign trade and reduction in public debt from 85 percent of GDP in 1999-2000 to 55 percent at the start of 2006-07, he said.

John Wall said the problems of low growth, high poverty, high debt and stagnant foreign trade are things of the past decade, says a WB's news release issued at the press conference; now the problems are those to keep the monetary fiscal and foreign payment accounts in balance.

He also praised the government's sound framework for fiscal management, the "Fiscal Responsibility and Debt Limitation Bill." Pakistan's credit ratings have steadily improved, allowing the government to return to the capital markets to raise resources. Investor's confidence has been restored resulting in private capital inflows through remittances, privatisation proceeds and portfolio investment.

These positive developments have allowed private foreign saving to grow by six percentage points of GDP over the last four years. Official transfers have also increased as The World Bank, Asian Development Bank, and Islamic Development Bank; and Japan, the UK, the US and others countries all have made dramatically larger financial assistance available to Pakistan for its long-term development.

Inflation is in single digit and falling, from a spike of over 10 percent to 7.5 percent or less. Interest rates have risen and the growth of credit to the private sector is moderating, indicating tighter monetary policies. Further reductions in inflation may require even tighter credit policies.

Expenditure pressures, including coping with the earthquake reconstruction of over half a million houses and much higher development expenditures on much needed infrastructure, have increased. Tax revenues have grown faster than GPD over the past two years, although they are still low compared to the economy's expenditure needs. Nevertheless, the overall fiscal stance also has been tight and the deficits so far are close to their targets.

The rapid economic growth led to a very healthy growth in foreign trade, resulting in large trade and current account deficits. These have been financed with mostly non-debt creating capital inflows-official transfers, privatisation and foreign investment.

He said that foreign debt, as a percent of GDP, is falling rapidly. Foreign reserves have not fallen-they have even risen a bit, although not as fast as imports. Most recently, foreign trade has cooled off, with sharp reductions in the growth of both imports and exports. If exports pick up from their sudden and inexplicable slump, the trade gap will narrow.


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## Owais

*Musharraf stresses power production from all sources *


QUETTA (December 09 2006): President General Pervez Musharraf on Friday said Pakistan needs to produce electricity from all sources for its rapidly growing industrial and domestic usage and to meet economic growth targets.

"We have adopted a holistic approach to address electricity shortage and are working on short, medium and long term plans to bridge the gap," he said while addressing a gathering at the commencement of Zarghun Gas Field, around 57 km from here.

The 104 million-dollar project aimed at providing natural gas to Quetta and other parts of Balochistan is scheduled to be completed by 2009. The President directed the company engaged in the project to ensure that the locals get the maximum number of jobs and to employ people from other areas only if no local expertise was available.

He however directed the company to set up a training centre to impart necessary skills to train the locals in all aspects of exploration. The President stressed that a conducive atmosphere was vital for any development and noted that the security situation in the province was improving.

"I foresee further improvement in the law and order situation in the next few months and the political environment will also improve," he added. President urged the locals to part ways with those who were against development and progress in the province.

The President said the total national output of natural gas; around 23 percent was being explored from Balochistan, including 18 percent from Sui. He said there were large oil and gas reserves in the province that need to be explored.

"No foreign investor will invest, if there is lawlessness and we all have to work together to ensure adequate security so that the country progresses," he said.

President said he was fully in favour of share of locals from oil and gas exploration fields. He said though the province was getting its due royalty, there was also a need to put in place a mechanism to share the gains with the locals of that particular area.

The President informed the gathering including Governor Awais Ahmed Ghani, Chief Minister Jam Mohammad Yousaf and Minister of State for Petroleum Nasir Khan Mengal about plans to meet country's energy needs.

The short-term strategy to be complete by June 2008 is to generate electricity through natural gas and local units, the focus of mid-term is on hydel, gas and coal and the long-term is to produce electricity through nuclear energy, he added.

The President said in the past few years the prices of oil and gas have surged dramatically in the international market and said there was a need to have a pricing formula that takes into account all realities.

President Musharraf also recalled his recent telephonic discussion with the Iranian President Mahmoud Ahmadinejad and said Pakistan was willing to go ahead with the gas pipeline project as its requirements for energy were increasing.

The President also mentioned the mega development projects in Balochistan including dams, canals, brick lining of watercourses and safe drinking water to improve the quality of life of the common man.

He said two world-class exploration companies, one Chilean and the other Canadian, would explore gold and copper in Balochistan and would put the province on world's gold and copper map by 2010.

The government of Balochistan would have 25 percent share from exploration in Recodak area, he added. He however stressed capacity building of the youth in this regard and urged them to play a proactive role by focusing on education and learning skills that can lead to a bright future, not only for the country but also for their families.

Minister of State for Petroleum Naseer Khan Mengal said the development of gas field was part of President Musharraf's vision for the development of Balochistan and said it will generate economic activity and create more jobs in local industries.

Lieutenant General Imtiaz Shaheen (Retd) Managing Director of Mari Gas Company Limited (MGCL) said that the field development and subsequent production activities at the Zarghun gas field will open new vistas of economic and social uplift for the local community. He said the field was being developed by the Bolan Joint Venture comprising Mari Gas Company (35 percent), Spud Energy Private Limited (40 per cent), GHPL (17.5 percent) and Premier-Kufpec (7.5 percent) and Mari Gas will be the operator.

He said the gas estimates were 132 billion cubic feet (BCF), with recoverable gas reserves of 93 BCF. He said it would be the only field in Pakistan from where the gas shall be produced and consumed exclusively within the same province.

He said the Bolan Joint Venture had entered into a gas sales and purchase agreement with the Sui Southern Gas Company in August 2006, according to which the pipeline quality gas will be supplied to Sui Southern Gas Company and it will be responsible for further transportation to Quetta.


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## Neo

*IMF seeks 10pc devaluation, power rate hike*

By Khaleeq Kiani and Sabihuddin Ghausi

ISLAMABAD/KARACHI, Dec 8: The International Monetary Fund has expressed concern over PakistanÃ¢â¬â¢s large current account deficit, warning that further widening could compromise external debt sustainability.

During consultations with officials of the finance division in Islamabad, the IMF proposed a raft of measures to arrest the deficit. The measures include the raising of electricity charges, devaluing the rupee by 10 per cent and the floatation of investment bonds.

In a recent staff report for the year 2006, put on its website on Thursday, the IMF considers sustainable an annual external account deficit of five to six billion dollars provided the ratio of external current account deficit to GDP declines.

The IMFÃ¢â¬â¢s board of directors Ã¢â¬Ënoted the risks to the (economic) outlook, including the continued strength of domestic demand, and its adverse effects on trade and current account deficits as well as on the pace of disinflation during 2005-06Ã¢â¬â¢, a statement said.

Differences appeared to have emerged between Islamabad and the IMF on the rupeeÃ¢â¬â¢s real exchange value during extensive consultations in August. The IMF mission met the prime minister, his adviser on finance and State Bank governor.

The IMF has suggested a 10 per cent devaluation of the rupee to narrow down the current account deficit to a level that stabilises the net foreign assets to GDP ratio at the level of 2004.

But the government sees the current real exchange rate as appropriate, contending that its devaluation in the nineties was unreasonable and that the exports have not been affected by the recent real appreciation. The IMF however noted that while domestic pressures, rather than losses in external competitiveness, had been a major factor behind the increase in the trade and current account deficits since 2003-04, it proposed that Pakistan should see to it that the real exchange rate does not rise over the medium term.

The IMF had a word of praise for the economy nevertheless. Ã¢â¬ÅPakistanÃ¢â¬â¢s economy has withstood well the impact of large negative shocks, including the earthquake, a sharp increase in international oil prices and unfavourable weather conditions.Ã¢â¬Â

The board advised Islamabad to strengthen the balance of payments to reduce external vulnerabilities by containing the external current account deficit. It also urged the government to obtain foreign financing in keeping with external debt sustainability.

Most of the directors felt that macroeconomic policies during the current fiscal year should aim at reducing domestic demand and strengthening the balance of payments. They cautioned the government against deferring measures to tighten monetary policy, calling for increasing cut-off rates at treasury bill auctions to keep the inflation target in sight.

The IMF called upon the government to make the exchange rate flexible and to adopt measures to keep this yearÃ¢â¬â¢s budget deficit, excluding grants and earthquake-related expenditures, at the level of the last financial year. The directors stressed that beyond 2006-07, PakistanÃ¢â¬â¢s macroeconomic policies should ensure that the external current account deficit-to-GDP ratio remains on a declining path, with a steady build-up of reserves. In this regard, they encouraged the authorities to adopt a policy stance that maintains real interest rates at `positive levelsÃ¢â¬â¢, accompanied by a close monitoring of credit growth and a fiscal consolidation programme that lowers the overall deficit to a sustainable level over the medium term.

The IMF noted that progress on structural reforms was mixed and criticised the government for not going ahead with reforms in the power sector. Ã¢â¬ÅReform of the power sector has stalled and the schedule of higher regional electricity tariffs has not yet been implemented. Progress on trade liberalisation has slowed.Ã¢â¬Â

The IMF viewed the favourable prospects for sizable FDI inflows as important for future gains in productivity and investment. But at the same time, it warned, `challenges lie aheadÃ¢â¬â¢ for macroeconomic policy. They observed that continued reliance on FDI inflows of an uncertain size and timing would require a large degree of flexibility.

The Fund cautioned that the option of resorting to use of international reserves to cover shortfalls in external financing, especially those stemming from delays in FDI-related flows, ought to be used sparingly. They viewed structural reforms as conducive to higher saving and investment, an improved business climate, and poverty-related spending as critical to sustaining growth and reducing poverty.

The IMF asked the government to quickly complete the reform of the regulatory and tariff framework for the power sector, and step up efforts to broaden the tax base and further curtail tax exemptions. Islamabad was also advised to improve its debt management strategy by increasing the issuance of long-term marketable securities and by reducing reliance on treasury bills and the National Savings Schemes (NSS) to finance fiscal deficit.

It also urged the authorities to expedite the process of subscribing to the Special Data Dissemination Standard.

The fund noted that the fiscal deficit exceeded the original budget target for 2005-06 owing to the earthquake-related spending. Excluding the latter, the increase in revenues and expenditures was roughly the same as in the previous fiscal year.


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## Neo

Saturday, December 09, 2006 

*Praise PakistanÃ¢â¬â¢s economic performance since 2001:*

Pak should have flexible exchange rate: IMF, WB 

IMF says fiscal policy should keep this yearÃ¢â¬â¢s budget deficit at 4.2%

By Sajid Chaudhry

ISLAMABAD: The Inter-national Monetary Fund (IMF) says PakistanÃ¢â¬â¢s monetary policy should be supported by exchange rate flexibility (allow devaluation of the Pakistani rupee) and a fiscal policy that keeps this year's budget deficit (excluding grants and earthquake-related expenditures) at least at the level of 4.2% of GDP in 2005/06.

The Executive Board of the IMF that concluded its Article IV consultation with Pakistan on Nov 22 has said in its assessment the executive directors have commended Pakistan's impressive macroeconomic performance since 2001. They welcomed in particular the acceleration in output growth, the steady decline in debt ratios and the fall in poverty rates. The directors noted that Pakistan's strong track record on the macroeconomic and structural reform fronts had made the country increasingly attractive to foreign investors, as shown by the record-high inflows of foreign direct investment (FDI) during 2005/06 and the favourable terms obtained on recent sovereign bond placements in the international capital markets.

The directors noted that during 2005/06 the Pakistani economy had withstood well the impact of large negative shocks, including the tragic earthquake of October 2005, a sharp rise in international oil prices and unfavourable weather. Although these shocks had limited the scope for fiscal manoeuvre, growth had remained buoyant, inflation had declined slightly and the import coverage of reserves had remained stable.

The directors, nonetheless, noted the risks to the outlook, including the continued strength of domestic demand, and its adverse effects on the trade and current account deficits as well as on the pace of disinflation during 2005/06. They noted also the authorities' view that macroeconomic imbalances would decline without the need for further changes in the stance of policies envisaged for the current fiscal year, and welcomed the government's commitment to tighten monetary policy, if warranted. However, most directors felt that macroeconomic policies during 2006/07 should be more effectively geared at reducing domestic demand and strengthening the balance of payments position. To this effect, many considered that a further tightening of monetary policy (including by allowing higher cutoff rates at treasury bill auctions) should not be delayed to help strengthen the external position and allow the government to meet its inflation target. Most directors considered that to be effective, monetary policy should be supported by exchange rate flexibility and a fiscal policy that keeps this year's budget deficit (excluding grants and earthquake-related expenditures) at least at the level of 2005/06.

The directors stressed that, beyond 2006/07, Pakistan's macroeconomic policies should aim at ensuring that the external current account deficit-to-GDP ratio remains on a declining path with a steady build-up of reserves. In this regard they encouraged the authorities to adopt a policy stance that maintains real interest rates at positive levels accompanied by a close monitoring of credit growth and a fiscal consolidation program that lowers the overall fiscal deficit to a sustainable level over the medium term.

The directors viewed the favourable prospects for sizable FDI inflows as important for future gains in productivity and investment, but also as presenting challenges for macroeconomic policy in the years ahead. They highlighted that continued reliance on FDI inflows of uncertain size and timing would require a large degree of flexibility in economic policymaking. In this connection the directors stressed the need to improve the government's capacity to generate timely policy responses to shortfalls of external financing arising from negative balance of payments shocks. The directors were of the view that those shocks should generally require monetary policy and exchange rate responses, but also envisaged a role for fiscal tightening in cases where the shocks are large, or more permanent in nature. The directors cautioned that the option of resorting to the use of international reserves to cover shortfalls of external financing (especially those stemming from delays in FDI-related flows) ought to be used sparingly.

The directors viewed structural reforms conducive to higher saving and investment, an improved business climate and well-targeted poverty-related spending as critical for sustaining growth and poverty reduction over the medium term. They encouraged the authorities to quickly complete the reform of the regulatory and tariff framework for the power sector, and step up efforts to broaden the tax base and further curtail tax exemptions. The directors also saw scope for improving the government's debt management strategy, including by increasing the issuance of long-term marketable securities and reducing its reliance on treasury bills and the National Savings Schemes (NSS) to finance the fiscal deficit. The directors welcomed the initiatives underway to modernize the NSS and reform the system of broker-financing of stock trading, but noted that these should be followed quickly with measures that enable the integration of the NSS with local financial markets.

The directors welcomed the authorities' commitment to maintaining a liberal trade regime and their determination to contribute to the success of the Doha round of trade talks. They called upon the authorities to resist pressures to reinstate adhoc tariff and non-tariff measures and broaden export subsidy schemes.

The directors encouraged the authorities to further improve the quality and timelines of data, including by reporting fiscal data on an economic classification. They also urged the authorities to expedite the process of subscribing to the Special Data Dissemination Standard.


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## Neo

Saturday, December 09, 2006 

*WB says trade deficit is to reach more than $12 billion this fiscal*  

By Sajid Chaudhry

ISLAMABAD: The World Bank (WB) on Friday stressed upon the need to have flexible exchange rate policy, allowing the Pakistani rupee to depreciate against currencies of its trading partners to keep the economy growing and be competitive. 

India and China have allowed their currencies to depreciate to remain competitive in the international export markets. Pakistan at present is not allowing its rupee to depreciate resultantly making its exports uncompetitive in the international markets and encouraging imports leaving exports and imports gap widening. 

Johan Wall, Country Director of World Bank in Pakistan, speaking at a media briefing projected that GDP growth in current fiscal year 2006-07 could reach 6% to 6.5%. The government is projecting GDP growth of more than 7% for the current fiscal year 2006-07. He said the Pakistani rupee has appreciated during the last few years against the currencies of its trading partners. Pakistan has to compete in the international export markets with its competitors who are depreciating their currencies. 

Boom in the economy, which had reached unsustainable level, during the last two years is now moderating. Trade deficit is to reach more than $12 billion due to which current account deficit is expected to be around $6 billion. He said countries making rapid economic progress always face current account deficit, and in Pakistan this deficit is projected to be 5.5% of GDP, which need to be brought down to 3%-4% of GDP. He, however, said it is difficult to project at present that trade deficit and current account deficit by the end of this fiscal year. 

Answering a question, Mr John said Pakistan can maintain 8% growth rate but it would require macroeconomic variables to be correct. The country would require enhancing its saving and investment rate, which would help it to maintain a growth momentum in the long run. He said inflation has declined from 10% in the year 2004 to 8% in the current year 2006, which is still high. The inflation of 8% is still very high for the poor population of the country as its causes shock to their income and reduce their buying power. 

Fiscal deficit that was 6%-7% of GDP in the early Nineties has declined to 3%-4% of GDP and it is expected that the fiscal deficit is to remain above 4% of GDP in the current fiscal year 2006-07. He said inflation can cross the target of 6.5% fixed by the government and can reach 7.5% in this fiscal year. 

Commenting on low tax-to-GDP ration in Pakistan, Mr John said the country has witnessed a GDP growth of up to 9%, and if we take into account inflation of 8%, then the real GDP growth rate was 15%, but the tax-to-GDP ratio is still in single digit, tax-to-GDP rate should be more than the real GDP growth rate. Pakistan should improve its tax policy and bring into the tax net more people to generate more revenues. Anyone owning a car must be brought into the tax net, he said. 

Ã¢â¬ÅPakistanÃ¢â¬â¢s economy has built up a strong momentum of growthÃ¢â¬Â said Mr John, following a Ã¢â¬ÅGrowth and Competitiveness ConferenceÃ¢â¬Â at the Lahore University of Management Science on Dec 5 & 6. Ã¢â¬ÅPakistanÃ¢â¬â¢s economy will add another year of over 6% growth for the fourth year in a row. This is a remarkable achievement particularly given the major shocks of a big oil price hike and the October 2005 earthquake,Ã¢â¬Â he said.

Rapid growth has produced a sharp fall in poverty of 5%-10%, an increase in investment from 18% to over 20% of GDP, a great acceleration in foreign trade and reduction in public debt from 85% of GDP in 1999/2000 to 55% at the start of 2006/07. The government of Pakistan has put in place a sound framework for fiscal management, the Ã¢â¬ÅFiscal Responsibility and Debt Limitation Bill.Ã¢â¬Â PakistanÃ¢â¬â¢s credit ratings have steadily improved, allowing the government to return to the capital markets to raise resources. Investor confidence has been restored resulting in private capital inflows through remittances, privatization proceeds and portfolio investment. These have allowed private foreign saving to grow by six percentage points of GDP over the last four years. Official transfers have also increased as The World Bank, the Asian Development Bank, and Islamic Development Bank, and Japan, the UK, the US and others countries, all have made available dramatically larger financial assistance to Pakistan for its long-term development.

Managing this faster growth has given Pakistan very different and much better quality than at the beginning of this decade. Then the problems were low growth, high poverty, high debt and stagnant foreign trade. Now the problems are those of keeping the monetary fiscal and foreign payment accounts in balance while all the former problems are rapidly improving.

Inflation is in single digits and falling, from a spike of over 10% to 7.5%, or less. Interest rates have risen and the growth of credit to the private sector is moderating, indicating tighter monetary policies. Further reductions in inflation may require even tighter credit policies. 

Expenditure pressures, including coping with the earthquake reconstruction of over half a million houses and much higher development expenditures on much needed infrastructure, has increased. Tax revenues have grown faster than GPD over the past two years, although they are still low compared with the economyÃ¢â¬â¢s expenditure needs. Nevertheless, the overall fiscal stance also has been tight and the deficits so far are close to their targets.

The rapid economic growth led to a very healthy growth in foreign trade, resulting in large trade and current account deficits. These have been financed with mostly non-debt creating capital inflowsÃ¢â¬âofficial transfers, privatization and foreign investment. Foreign debt, as a percent of GDP, is falling rapidly. Foreign reserves have not fallen -- they have even risen a bit, although not as fast as imports. Most recently, foreign trade has cooled off, with sharp reductions in the growth of both imports and exports.


----------



## Owais

*National Savings deposits rises to over Rs1 trillion: Pirzada *


ISLAMABAD (updated on: December 10, 2006, 14:01 PST): The total deposits of National Savings have risen to over rupees one trillion against Rs 2.8 trillion collective deposits of all the commercial banks in Pakistan.

"The National Savings Schemes (NSS) are presently holding the major share in the domestic savings and for providing a truly competitive environment, the government has now allowed institutions to invest in all National Savings Schemes except those which are meant for special segments with immediate effect", Director General NSS, Awais Ahmed Pirzada told APP in an exclusive interview here today.

However, he said with the advent of technological revolution in the financial market, the financial institutions are offering better consumer friendly products every day.

Pirzada said that the NSS rates which remained a major factor in the deposit collection in the past are now narrowly linked with market. Therefore, he said innovative measures are required for deposit mobilisation.

"The wider distribution network is also being geared up to do business in a more effective and professional way and a number of measures have been taken to achieve this objective", he added.

In the light of changed environment, he also highlighted the following measures for promotion of National Savings.

Pirzada said that for providing a truly competitive environment, the government has now allowed institutions to invest in all National Savings Schemes except those which are meant for special segments of the society with immediate effect.

He said that the non-profit bodies, Registered Charities, Public Sector Enterprises excluding Banks, Private Educational and Health Institution, Employees Old Age Benefit Institutions (EOBIs), Private Corporate Sector excluding Banks and Non-Bank Financial Institutions (NBFIs) excluding Insurance Companies, are entitled to invest.

To facilitate the investors and avoid long queues, the Central Directorate of National Savings (CDNS) has decided to extend the facility for automatic transfer of monthly profit into the Savings Account of the holder at the same centres, he added.

This way, DG National Savings said, the client would not have to wait in long queues to get his profit first calculated and then encashed. Planning is underway that in future, the client will be facilitated to draw profit as per his own will and demand.

Therefore, he said, they will be encouraged to save from within the profit as they would be entitled for additional profit at the Savings Account's rate.

To meet the travelling demands of the depositors, he said, the CDNS has decided to introduce the facility of encashment all over Pakistan at the designated National Savings Centres.

The facility will be provided at the important stations keeping in view the demand of the public, he remarked.

To meet the day to day needs of the investors, he said, the limit of two withdrawals within a week's time have been increased to three times a week.

He said there was a mandatory lock-up period of one month in case of Defence Savings Certificates and Special Savings Certificates, which have now been removed to meet the emergent need of the investors.

Pirzada further said that measures are also being taken to facilitate the investment from abroad and several proposals in this behalf are being considered, which will be finalised shortly


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## Owais

*'Government to promote public-private partnership' *

FAISALABAD (December 10 2006): Faisalabad-Multan motorway (M-4) with a projected cost of US $24.5 billion, periodic overlay of M-2 and realignment of salt range with cost projected at US $11.8 billion among others and Karachi-Hyderabad motorway (M-9) with projected cost at US $105 million will be constructed with the co-operation of Private Sector under BOT.

Commenting over the Private Sector Participation in Road Projects, official sources stated that the road network in Pakistan has lagged behind its demand for past ten years, thanks to huge fiscal deficits resulting in lack of resource allocation from public sector. Overall this has created a severe shortage of road infrastructure and resultantly cost of business has gone up giving rise to inefficient markets.

Official sources stated that the Government of Pakistan is trying vigorously to promote the concept of Public Private Partnerships in road sector mainly through BOT concept.

Although this concept is not new; but it was not being implemented on large scale in the past. Hence it would help finance major road projects, which could not be undertaken in the past due to lack of resources.


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## Owais

*Current economic situation impresses World Bank *

ISLAMABAD (December 09 2006): The World Bank country director, John Wall on Friday said that Pakistan economy is growing very fast more than six percent a year in a row for the last four years. The high growth resulted in a sharp fall in poverty of 5-10 percentage points, increased investment and reduced public debt.

"Pakistan's economy will add another year of over 6 percent growth for the fourth year in a row. This is a remarkable achievement particularly given the major shocks of a big oil price hike and the October 2005 earthquake", Wall said at a press conference here.

Rapid economic growth has produced a sharp fall in poverty of 5-10 percentage points, an increase in investment from 18 percent to over 20 percent of GDP, a great acceleration in foreign trade and reduction in public debt from 85 percent of GDP in 1999-2000 to 55 percent at the start of 2006-07, he said.

John Wall said the problems of low growth, high poverty, high debt and stagnant foreign trade are things of the past decade, says a WB's news release issued at the press conference; now the problems are those to keep the monetary fiscal and foreign payment accounts in balance.

He also praised the government's sound framework for fiscal management, the "Fiscal Responsibility and Debt Limitation Bill." Pakistan's credit ratings have steadily improved, allowing the government to return to the capital markets to raise resources. Investor's confidence has been restored resulting in private capital inflows through remittances, privatisation proceeds and portfolio investment.

These positive developments have allowed private foreign saving to grow by six percentage points of GDP over the last four years. Official transfers have also increased as The World Bank, Asian Development Bank, and Islamic Development Bank; and Japan, the UK, the US and others countries all have made dramatically larger financial assistance available to Pakistan for its long-term development.

Inflation is in single digit and falling, from a spike of over 10 percent to 7.5 percent or less. Interest rates have risen and the growth of credit to the private sector is moderating, indicating tighter monetary policies. Further reductions in inflation may require even tighter credit policies.

Expenditure pressures, including coping with the earthquake reconstruction of over half a million houses and much higher development expenditures on much needed infrastructure, have increased. Tax revenues have grown faster than GPD over the past two years, although they are still low compared to the economy's expenditure needs. Nevertheless, the overall fiscal stance also has been tight and the deficits so far are close to their targets.

The rapid economic growth led to a very healthy growth in foreign trade, resulting in large trade and current account deficits. These have been financed with mostly non-debt creating capital inflows-official transfers, privatisation and foreign investment.

He said that foreign debt, as a percent of GDP, is falling rapidly. Foreign reserves have not fallen-they have even risen a bit, although not as fast as imports. Most recently, foreign trade has cooled off, with sharp reductions in the growth of both imports and exports. If exports pick up from their sudden and inexplicable slump, the trade gap will narrow.


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## Neo

*Foreign investors seek security*

ISLAMABAD, Dec 9: International mining companies operating in Balochistan are seeking adequate security cover and necessary infrastructure facilities in Chagai district to complete their over $1 billion copper projects.

Officials told Dawn on Saturday that the Balochistan government had been directed by the centre to ensure timely development and commissioning of mines by extending appropriate protection along with various facilities, especially electricity, gas and water to the international companies.

"In the next five years, Chagai district will be a hub for the metallic mineral mining industry and will contribute significantly to the national economy," says a latest document of the ministry of petroleum and natural resources.

However, it said that international companies should be provided required security and infrastructure facilities in the absence of which Pakistan would not be able to exploit the full potential of rich mineral resources in Balochistan.

Though rich in minerals, the document said, Chagai was faced with acute shortage of water. The area has no surface flow. Like the Saindak project, the expected mining operations in Reko Diq will depend on sub-surface water and it is, therefore, time to explore underground water potential of the region, a pre-requisite for any mining project.

The ministry of petroleum has finalised a plan that envisaged exploration and development of underground water potential for the expected mining projects so as to overcome the shortage of water. In case of finding adequate reserves of underground water, supply of water to the planned projects in the area will be initiated.

"More international mining companies would be attracted to the area, hosting a large deposit of copper ore. Through international investment, Pakistan would become a major copper-producing country in the world," the document said.


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## Neo

*Operators for Gwadar Port selected*

By Parvaiz Ishfaq Rana

KARACHI, Dec 9: The Port of Singapore Authority International (PSAI), with the consortium of AKD Securities, has been selected by the Gwadar Port Implementation Authority (GPIA) for holding negotiations with them as port operators for the Gwadar port.

A draft Letter of Interest (LoI) has been forwarded to the Ministry of Port and Shipping by the GPIA for their final approval.

Official sources in Islamabad told Dawn on telephone that the board meeting of GPIA held on Friday unanimously gave their consent for selection of PSAI and a committee has been set up to hold negotiations with the port operators after getting ministryÃ¢â¬â¢s approval.

However, a consortium of Pakistan International Container Terminal (PICT) and Jahangir Siddiqui has been declared runner-up. While two other participants Ã¢â¬â Dubai DP World and Globe Marine Services of Saudi Arabia -- did not participate in the bidding which took place on Dec 4.The selection has been made after evaluation of financial strength and strategic partnership of the consortiums which participated in the bidding process and submitted their offers to the GPIA.

Since the selection of the port operator is being made on Gross Revenue Sharing (GRS) formula and not on royalty basis as had been in the case of Karachi Port and Port Qasim, the concession winner will have to set up three different companies to look after various activities at the port.

Sources said there would be three major activities at the Gwadar port which include cargo operation, marine operation and free economic zone.

Despite the fact that four companies were pre-qualified by the GPIA, only two turned up on Dec 4, the final date fixed for submitting bids. However, the financial strength of the PS Authority International is beyond doubts, having $12 billion worth with a performance record of over 40 million boxes per annum.

The first multi-purpose terminal at Gwadar has been completed with a quay length of 600 meters and a depth of 14.5 meters, with a sizeable back-up area, and cranes, other terminal equipment and tugs have been acquired.

The government has already declared Gwadar port as petrochemical and POL storage field and is seeking $12.5 billion investment from China.

However, port and shipping experts are of a strong view that the Gwadar Port be handled very cautiously as it was a totally different ball game and unlike KPT and PQA who thrive on captive cargoes, it would have to totally depend on trans-shipment cargo which would mean to compete internationally.

The port will not only have to be efficient and well-equipped, but it would also have to be competitive to have its rightful share in the world cargo. The experts also suggested that the Gwadar port should also be made duty-free and all federal and provincial taxes be exempted for a long period of 20 to 25 years.


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## Neo

*SBP rules out rupee de-valuation *

KARACHI: The State Bank of Pakistan on Saturday ruling out de-valuation of Pak rupee said Ã¢â¬ÅSBP believes that stability in the exchange rate has proved to be and will remain important to ensure macroeconomic stability and to attract investment in the country.Ã¢â¬Â

Without referring to newspapersÃ¢â¬â¢ speculations regarding this week issuance of International Monetary Fund, (IMF) country assessment report about Pakistan the central bank in its press note said SBP Computations indicate that there is no fundamental misalignment of real effective exchange rate of the (Pak) Rupee and therefore, consistent with recent trends the exchange rate will remain stable in the inter-bank market.

The 3-paragraph press release said this view (of central bank) is based on the substantial improvement in the countryÃ¢â¬â¢s economic performance and better investment climate. This has boosted investor confidence, leading to higher non-debt creating flows into the economy, including remittances and Foreign Direct Investment as well as countryÃ¢â¬â¢s ability to borrow from international markets at relatively favorable terms.

SBP predicted that PakistanÃ¢â¬â¢s external financing prospects will remain favorable for several years. SBP said this (fact) is also acknowledged in recent IMF report released under Article 4 consultations with Pakistan in 2006.

Finally the central bank said consistent with its stance, the SBP believes that it is important for macroeconomic stability to contain excessive demand growth in the economy and therefore remains committed to maintain a tight monetary posture.

It said a decline in domestic inflation, consequent to the tight monetary policy, will be crucial in improving the competitiveness of PakistanÃ¢â¬â¢s exports and reducing current imbalances.


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## Neo

Sunday, December 10, 2006 

*Overall external debt down by 1.44% in Q1* 

* Gross domestic debt up by 2.18%

By Arshad Hussain

KARACHI: The countryÃ¢â¬â¢s total external debt liabilities have slightly increased by 1.23 percent or $459 million during July-Sept 2006-07 to $37.724 billion, but the overall external debt of the country declined by $517 million or 1.44 percent to $36.196 billion.

On June 30, 2006, the debt liabilities of the country stood at $37.265 billion, while the total external debt was at $35.679 billion.

During the whole fiscal 2005-06, the countryÃ¢â¬â¢s overall debt has increased by 4.8 percent or $1.642 billion to $35.679 billion from $34.037billion 2004-05.

During the last three-month period, the medium and long-term loans of the country have gone up as the country is depending on it for the budgetary support and other development projects in the country, the market experts said. The medium and long-term loans increased to $32.897 billion in July-Sept this year from $32.407 billion on June 30, 2006.

The federal government has also borrowed an amount of $462 million from the multilateral donor agencies, which soared up to $16.989 billion in July-September compared to $16.527 billion on June 30, 2006.

During the period, the debt of Paris Club has gone down by $13 million or 0.10 percent to $12.818 billion, which was at $13.831 billion on June 30, 2006. However, the short-term loans (one year) of IDB enhanced to $256 million from $196 million in the last three months. Private Non-guaranteed Debt of the country went down to $1.565 million from $1.585 billion in three months. 

The expensive debt of International Monetary Fund (IMF) persistently remained on the declining side at $13 million or 0.87 percent to $1.478 billion from $1.491 billion, the SBP said.

During the last three months, the foreign exchange liabilities of the country remained at $1.528 billion compared to $1.586 billion on June 30, 2006.

Domestic debt outstanding: The countryÃ¢â¬â¢s total domestic debt is stood at Rs 2.342 trillion, up by Rs 50.108 billion or 2.18 percent in July-September 2006 compared to Rs 2.292 trillion on June 30, 2006.

The permanent debt of the country, during the said period, declined by Rs 5.586 billion or 1.11 percent to Rs 494.5 billion compared to Rs 500.14 billion on June 30, 2006.

The floating debt of the country stood at Rs 981.443 billion, up by Rs 41.210 billion or 4.38 percent. On June 30, 2006, the floating debt stood at Rs 940.233 billion.

The unfounded debt also enhanced to Rs 866.983 billion up by Rs 14.484 billion or 1.70 percent in July-September 2006 compared to Rs 852.499 billion of June 30, 2006.

The Bahbood Saving Certificate remained on the top list of the depositors, which rose by Rs 17.707 billion in last three months to Rs 160.6 billion compared to Rs 142.9 billion on June 30, 2006.

Major outflows were recorded in the Regular Income Certificates, which declined by Rs 3.795 billion to Rs 66.258 billion in last three months. The pensionersÃ¢â¬â¢ benefit accounts also went up by Rs 3.956 billion during the said period to Rs 61.455 billion.


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## Neo

*Doubts expressed about economic growth paradigm*

ISLAMABAD: A quarterly journal of the Pakistan Institute of Development Economics (PIDE), has said that Pakistan economic growth paradigm is based on government-centred planning and the growth is reliant on foreign resources, which have not worked so far.

Pakistan Development Review (PDR), which is a quarterly journal of the PIDE and its latest issue published on Wednesday, contained scholarly papers authored by the eminent development practitioners.

The lead article titled Ã¢â¬ÅBeyond Planning and Mercantilism: an Evaluation of PakistanÃ¢â¬â¢s Growth StrategyÃ¢â¬Â is authored by Dr Nadeem Ul Haque, Director PIDE. Besides comments containing productive discussions from renowned economists like Shahid Javaid Burki, Former Finance Minister, Pervez Hasan, Akmal Hussain and Khalid Ikram are also included.

In his paper, Dr Nadeem Ul Haque, Director PIDE says: Ã¢â¬ÅThe economic growth paradigm in Pakistan, based on government-centred planning, reliance on foreign resources, and mercantilism (i.e. encourage exports and discourage imports), has not worked so far because the incentive structure resulting from this approach led to a neglect of governance, disregard for merit and the development of rent-seeking.Ã¢â¬Â

The new growth paradigm, according to Haque, limits the role of government to building such institutions that preserve individual freedom, provide security, and facilitate market transaction, and then allow markets to determine economic-course on their own.

Dr Haque says in his paper that economic research has significantly changed over the years. New ideas and themes such as governance, institutions, globalisation and regulation have emerged. Technology has helped evolve newer methods of disseminating research. He promises that PDR will reflect these changes. He further commits that PDR will attempt to identify key thinkers to develop opinions, comments and debates on policies and issues that confront economic development.

For reforms to take hold, according to Dr Haque, first the public service will have to be modernised. The crux of these reforms, he says, will lie in the management of public service personnel that allows open competition of a professional kind to be established.

Shahid Javed Burki, a commentator on Dr HaqueÃ¢â¬â¢s paper agrees with the suggestion that a new model should be put in place to address many economic and social problems but expresses his reservations that given countryÃ¢â¬â¢s history of economic decision-making, public servants could be instruments of change.


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## Neo

Sunday, December 10, 2006 

*KSE Review: Foreign investment & GDR up KSE index by 173 points*

KARACHI: Karachi stock market managed to maintain positive movement on the weekly basis on back of favourable developments on privatization front, while the enhanced sentiments helped the market to gain trading activity. Global Depository Receipts (GDR) of the exploration sector giant and acquisition of PICIC shares by foreign investment group remained major issues during the ended week.

However, on the negative side the suspension of share trade in Callmate by the regulating authority on the last trading day of the week kept the sentiments of the overall market unhurt, allowing the market to close the week with decent gains. 

The benchmark KSE-100 Index gained 173 points 1.7 percent to close at 10,562 during the outgoing week. Average volumes in the ready market improved to 172 million shares as compared to 135million shares previously. After gaining 289 points in the first three sessions, the Index lost 115 points in the last two days of the week. 

Farhan Aziz, analyst at Jehangir Siddiqui Capital Markets, said Oil and Gas Development Company (OGDC) share price recovery and PICIC acquisition news by NIB Bank, owned by Tamasek Group of Singapore were the two major developments that directed the bourses during the week. 

The price of OGDC share, which went as low as Rs119 per share on Monday due to negative sentiments developed, amid lower than expected price of GDR, recovered during the week and closed at Rs121. This helped Index to improve from previous weekÃ¢â¬â¢s steep decline of 4.4 percent. 

Acquisition news of PICIC by NIB Bank at Rs82-83 per share generated investorsÃ¢â¬â¢ interest in banking sector stocks that have exposure in NIT units. Since NIT holds 55mn shares of PICIC, disposal of PICIC lot would translate into a capital gain of Rs1.39-1.42 per unit of NIT. Besides, NIT would also have a cash inflow of Rs 4.5-4.6bn which enhances its dividend payout ability. 

This would allow NIT to maintain its last yearÃ¢â¬â¢s highest ever dividend payout of Rs5.8 per unit, thereby, benefiting Bank of Punjab (BOP), National Bank of Pakistan (NBP), Faysal Bank Limited (FABL) and Bank of Khyber (BOK).

Khurram Ghufran, analyst at KASB Securities Limited said, it was a mixed week at the bourses as the KSE-100 gained 173 points. Uncertainty clouded the beginning of the week amidst the new risk management regime was introduced and speculation over the price of OGDC share. However, no panic situation was witnessed and the market gained 262 points over the next two days as OGDC held firm and activity picked up in banking other sectors. The bull-charge in banks was driven by MCB, which found buyers due its attractive fundamentals. Interest was also witnessed in Pakistan State Oil (PSO) as the schedule for its privatization was announced. However, some profit taking was witnessed in the last two days as both oil and banks cooled off slightly. The week was rounded off with news that the Securities and Exchange Commission (SECP) had suspended trading in Callmate shares for 60 days. 

Mr Ghufran regarding the upcoming trend said the fertilizer sector is expected to remain in focus next week with the gas bidding for the new urea plant scheduled to take place on December 11, 2006. 

Interest in the banking sector is also expected to persist given the trend seen in the past few weeks. Looking further into future, international oil prices, among other factors, will be important determining factor for market direction.


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## Neo

*Govt losses Rs5-6 billion annually as sale of Iranian petrol in Pakistan soars *

ISLAMABAD, Dec 10 (Online): Smuggling of petroleum products into Pakistan has boomed during the last two years, apparently because of an all-time increase in petroleum prices in the countryÃ¢â¬â¢s history. 

According to an estimate by the ministry of petroleum, the government looses Rs 5 to Rs 6 billion tax revenue per annum due to smuggled petroleum products. The World Bank has advised the government of Pakistan to develop a full proof system to stop this practice in the best interest of all the stakeholders of this sector. 

According to a report of Weekly Ã¢â¬ÅPulseÃ¢â¬Â, smuggling of petroleum products from Iran has a long history. Balochistan and Sindh were the main markets for the smuggled products, but, during the last two years, the market for smuggled oil products has expended to Punjab and NWFP. A wide range of smuggled lubricant brands is found in every city of Pakistan. 

The only advantage of Iranian oil products is the cheaper prices. For instance, one liter of Iranian petrol costs half of the market price of one liter petrol. Moreover, increased prices of petroleum products in the market have increased the demand for smuggled products. 

A survey conducted by the weekly Pulse reveals some interesting facts as well as the connivance of concerned government agencies. Iranian petrol and diesel are openly available in several parts of Karachi, especially which touch the kachchi abadis. The Iranian petrol is much cheaper than the one sold at the petrol pumps. One liter of Iranian petrol is available at Rs 34 to Rs 38 in Lyari, North Nazimabad, New Karachi, Nusrat Bhutto Colony, SITE and Organi town areas, whereas a liter of Iranian diesel is being sold at Rs 28 to Rs 34 in respective localities. 

In Hub, the vicinage Balochistan town of Karachi, one liter petrol and diesel are available at Rs 32 to Rs 36, and Rs 26 to Rs 32 respectively. The survey reveals that in Karachi, almost 50 per cent of public transporters use Iranian petrol and diesel, while rest have converted their vehicles into CNG or LPG. 

The report quoted Security sources that there are different routes of oil smuggling from Iran to different parts of Pakistan. For Pushtun belt of Balochistan, the oil products enter Taftan area of Pakistan, which borders with Zahidan province of Iran. From Taftan, the smuggled products proceed to Dalbadin, Noshki, and then Quetta. 

Iranian petrol and diesel are being sold in Quetta at every corner and street with impunity. One liter of smuggled petrol and diesel are available in Quetta at Rs 30 to Rs 33, and Rs 32 to Rs 33 respectively. Smuggled petroleum products also enter Pakistan via Afghanistan i.e. from Kandahar to Chaman. From Chaman, they proceed to Quetta, Loralai, Qila Abdullah and other Pushtun dominated districts of this rugged province. 

In rest of Balochistan, Iranian petroleum products reach via Panjgoor, Kaitch, Mand, and Gawadar areas. 

In Gawadar, one liter of petrol and diesel are being sold at Rs 25 to Rs 30 and Rs 24 to Rs 28 respectively. In bordering areas of Taftan, Kharan and Kaitch, the prices are much lower. One liter of petrol and diesel in these areas are available at Rs 20 only. 

It quoted sources that the security agencies deployed at the bordering routes are fully involved in smuggling of Iranian petrol Petroleum products are usually smuggled in the wee hours raising the possibilities of major accidents. 

The most horrible fact of this business is the dumping and unloading of smuggled petroleum products. Petrol and diesel are dumped in open space by shopkeepers without taking any safety measures, and supplied through canes. 

Ã¢â¬ÅEverybody knows where this petrol or diesel comes fromÃ¢â¬Â, a security official said. Ã¢â¬ÅWe canÃ¢â¬â¢t do anything to stop it as big fish are involved in this messÃ¢â¬Â, he maintained. 

The smuggled petroleum products have made inroads into NWFP and Punjab too. A few weeks ago, officials of the Sarhad Petroleum Cartage and the Dealers Association warned that they would start selling substandard smuggled petroleum if the government did not stop its sale in the province. 

According to sources, petrol sold in Peshawar, Swat, Mardan, Kohat and other cities of the province is smuggled from Iran, Iraq and Central Asia via Afghanistan decreasing the sales at most of the gas stations has decreased to less than 50 liters per day. 

Owners of gas stations have to face a lengthy procedure to install gas stations. They have to get no-objection certificates from a number of provincial departments. On the other hand, the seller of smuggled oil products just needs to buy some small containers and grease the palms of local police. 

But, irrespective of the fact that the smuggling of oil products have been causing heavy losses to the national exchequer, the growing inflation, and exorbitant increase in petroleum prices have compelled the people to go in the wrong way. 

Ironically, the so-called people-friendly government is not ready to slash the petroleum prices in spite of the fact the prices are registering a constant decline in the international markets.


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## Neo

*Pakistan to sustain $26.2b CA deficit in five years*

JAVED MAHMOOD
LAHORE - Pakistan would sustain a huge current account deficit of 26.20 billion dollars in five years.

The country is expected to brave 5.6 billion dollars current account deficit in 2006-07; 5.6 billion dollars in 2007-08; 5.2 billion dollars in 2008-09; 5.2 billion dollars in 2009-10 and 4.6 billion dollars in 2010-11.

International Monetary Fund has disclosed this in its assessment of the economy of Pakistan under the Pakistan 2006 Article IV Consultation.
International Monetary Fund has observed that by the year 2010-2011 the foreign exchange reserves of Pakistan would increase to 21 billion dollars. 
IMF said the foreign exchange reserves of Pakistan would settle at 12.10 billion dollars in 2006-2007; 14 billion dollars in 2007-2008; 15.90 billion dollars in 2008-2009 and 21 billion dollars in 2010-2011.

The Fund, however, disclosed that the 21 billion dollars reserves in 2010-11 would be equal to 4.1 months imports of the country as imports are growing rapidly.

The Fund has projected 6.5 to 7 per cent growth in the real GDP at cost factor and 6.5 per cent to 5 per cent increase in consumer prices from 2006-07 to 2011.

In their assessment of the economy of Pakistan the IMF directors stressed that, beyond 2006/07, Pakistan&#8217;s macroeconomic policies should aim at ensuring that the external current account deficit-to-GDP ratio remains on a declining path with a steady build up of reserves.

In this regard, the fund directors encouraged the authorities to adopt a policy stance that maintains real interest rates at positive levels accompanied by a close monitoring of credit growth, and a fiscal consolidation program that lowers the overall fiscal deficit to a sustainable level over the medium term.

Similarly, the directors viewed the favorable prospects for sizable FDI inflows as important for future gains in productivity and investment, but also as presenting challenges for macroeconomic policy in the years ahead. 

They highlighted that continued reliance on FDI inflows of uncertain size and timing would require a large degree of flexibility in economic policymaking. In this connection, Directors stressed the need to improve the government&#8217;s capacity to generate timely policy responses to shortfalls of external financing arising from negative balance of payments shocks.

The IMF directors were of the view that those shocks should generally require monetary policy and exchange rate responses, but also envisaged a role for fiscal tightening in cases where the shocks are large, or more permanent in nature. Directors cautioned that the option of resorting to the use of international reserves to cover shortfalls of external financing (especially those stemming from delays in FDI-related flows) ought to be used sparingly.

Directors viewed structural reforms conducive to higher saving and investment, an improved business climate, and well-targeted poverty-related spending as critical for sustaining growth and poverty reduction over the medium term. They encouraged the authorities to quickly complete the reform of the regulatory and tariff framework for the power sector, and step up efforts to broaden the tax base and further curtail tax exemptions. 

Directors also saw scope for improving the government&#8217;s debt management strategy, including by increasing the issuance of long-term marketable securities and reducing its reliance on treasury bills and the National Savings Schemes (NSS) to finance the fiscal deficit. 

The IMF directors welcomed the initiatives underway to modernize the NSS and reform the system of broker-financing of stock trading, but noted that these should be followed quickly with measures that enable the integration of the NSS with local financial markets.

Directors welcomed the authorities&#8217; commitment to maintaining a liberal trade regime and their determination to contribute to the success of the Doha round of trade talks. They called on the authorities to resist pressures to reinstate ad-hoc tariff and nontariff measures and broaden export subsidy schemes. They also encouraged the authorities to further improve the quality and timeliness of data, including by reporting fiscal data on an economic classification. They also urged the authorities to expedite the process of subscribing to the Special Data Dissemination Standard.

Meanwhile, the IMF also observed that Pakistan&#8217;s recent economic performance has been very impressive. Fund said the Growth has accelerated, improvements in public spending and wide-ranging structural reforms have reduced the debt burden and increased efficiency, and pro-poor policies have helped lower poverty rates. 
IMF said the devastating earthquake of October 2005 left a heavy toll in terms of human lives and physical and social infrastructure, but had relatively minor effects on macroeconomic indicators (except for an increase in government spending) owing mainly to the small share of the affected areas in the overall economy.

Fund observed that the economic developments during the fiscal year ending in June 2006 were favorable, with buoyant real GDP growth and inflation declining to 7.6 percent.

http://nation.com.pk/daily/dec-2006/10/bnews1.php


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## Neo

*Livestock contributes 38pc to agri GDP, 12pc of exports*

ISLAMABAD (APP) - Livestock plays an important role in national economy as it contributes 38% to agriculture GDP and makes up 12% of the total exports of the country. 

Livestock has been raised mainly by small and landless farmers and more than 35 million people in Pakistan are involved in livestock related activities in Pakistan. 

Thus livestock production provides the best opportunity to alleviate poverty in the country, official sources told APP here on Saturday. 
Pakistan is endowed with a large livestock population, well-adopted to the local environmental conditions We have some of the best dairy breeds of the tropics. 

Pakistan has 2 buffalo breeds, 1 cattle breeds, 24 sheep breeds and 28 goat breeds. This wide genetic potential provides a lot of challenges but at the same time, great opportunities for the improvement of production potentials of these animals, adding he said, with world attention being focussed on utilization and conservation of indigenous genetic resources.

Improvement in genetic potential of the local breeds is the key to enhance livestock productivity in Pakistan. Unlike nutrition and disease control, improvement in genetic potential is permanent change which is transmitted from one generation to the next. Thus the research in breeding and improving genetic potential of the animal will be real service to the poor. 

National Agricultural Research System in Pakistan is very complex consisting of federal, provincial and academic institutions and coordination is the key to success avoiding duplications and learning from each otherÃ¢â¬â¢s experience. 
PARC is currently operating 14 coordinated research projects, 8 in crops, 4 in fruits and vegetables and 2 in animal sciences. Coordinated programmes in crop sciences are very well established and have yielded excellent results. 
Every programme carries out an annual planning meeting and travelling seminars to assess the crop situation in the fields.


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## Neo

*The IMFÃ¢â¬â¢s advice*

HOT on the heels of the World BankÃ¢â¬â¢s annual report on Pakistan, the IMF, that other horseman of the apocalypse, has come out with its own report. The report has expressed concern over PakistanÃ¢â¬â¢s large current account deficit. The Fund has warned that if the widening current account deficit is not checked, the countryÃ¢â¬â¢s external debt sustainability would be hurt. 

The report was otherwise in praise for the countryÃ¢â¬â¢s economic performance. Ã¢â¬ÅPakistanÃ¢â¬â¢s economy has withstood well the impact of large negative shocks, including the earthquake, a sharp increase in international oil prices and unfavourable weather conditions.Ã¢â¬Â The Fund went on to say that the outlook of the economy for sustainable growth was favourable provided inflation is curbed. The IMF advised that there is need to get political support to broaden the tax base. This is sound advice. The revenue collection system, whether it is provincial land revenue or federal income tax, is riddled with corruption; a general culture of evasion exists amongst the taxpaying public. This has got to change if our swelling budget deficit is to be taken care of.

The controversial advice in the whole report is the suggestion to devalue the rupee. This is where the government and the Fund are said to have had disagreements when the two were having extensive consultations in August. The government sees the current value as not incorrect and argued that the recent depreciation of the rupee did not have an adverse effect on the nationÃ¢â¬â¢s exports. The proposed devaluation (of 10 percent, according to the IMFÃ¢â¬â¢s estimate) is bound to bring with it, inflation. Inflation which the IMF warns about in the very same report. It would do the government good to stick to its guns on the issue. 

The government is right in its assertion that even the devaluation of the 1990s was not good policy. The country is already suffering from the inflationary effects of the liberal monetary policy that the State Bank had been following for over a year. Though the State Bank had taken a decision to tighten belts and remove the excess liquidity of the market, there is going to be a lag time between the policy and its effect. We shouldnÃ¢â¬â¢t ruin the process by devaluation. 

Pick up any economics textbook and you will read about trade-offs, between inflation and unemployment; growth and inflation; between exports and currency value. The trick in all these cases is striking a balance. We all want exports and growth, but there comes a time when the common man has to be taken care of. The harms of a large current account deficit aside, this is one such time. Our galloping inflation has to be reigned in. Now that the advice of the IMF is not binding on us, we should measure any and all advice carefully.


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## Neo

*Strategy developed to achieve $500 million horticulture exports target *

LAHORE: December 10, 2006: Pakistan Horticulture Development and Export Board (PHDEB) has developed a five-year strategy to enhance the exports of fruit, vegetable and flowers to the level of US$500 million by the year 2011-12.

Pakistan's horticulture exports presently stand at US$142 million mark.

"To achieve this goal, we are preparing specific export maximisation strategies for each and every major fruit and vegetable grown in the country," Chairman PHDEB, Saadat Eijaz Qureshi said in an interview with APP.

He said plans were also afoot to focus on three major horticultural commodities- Peach, Potato and Onion in addition to Citrus and Mango.

About Kinno, the PHDEB Chairman said Pakistan had set a target of exporting 250,000 tonnes of this fruit. "Russia, Ukrain and Iran have emerged as the new major markets for our citrus fruit in addition to the traditional markets of Middle East and Far East," he said.

He added that the board was now focusing on Germany, Czech Republic and Poland to enter the lucrative markets of Central and Eastern Europe.

Qureshi said PHDEB had plans to enhance Pak citrus exports to the level of 300,000 tonnes by next year.

To check post harvest losses and to promote value addition in the horticulture sector, he said, the multinational companies were being encouraged to set up plants in the country for the processing of fruit and vegetable.

The preparation of mango pulp, citrus concentrate, tomato paste and potato chips could bring more foreign exchange to the country as compared to the fruits and vegetables itself.

He said PHDEB was taking care of pathological problems of the fruit and vegetable plants. In collaboration with University of Agriculture, Faisalabad and international agriculture research institutions, the issue of plant diseases and pests would be addressed, he added.

Saadat Qureshi said awareness was being created among the farmers about the quarantine related issues especially the Sanitary and Phyto-Sanitary (PSP).


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## Neo

*NSS deposits rise to over Rs 1 trillion * 

ISLAMABAD (December 11 2006): The total deposits of National Saving Centre have risen to over Rs 1 trillion against Rs 2.8 trillion collective deposits of all the commercial banks in Pakistan.

"The National Savings Schemes (NSS) are presently holding the major share in the domestic savings and for providing a truly competitive environment, the government has now allowed institutions to invest in all National Savings Schemes except those which are meant for special segments with immediate effect", Director General NSS, Awais Ahmed Pirzada told APP.

He said with the advent of technological revolution in the financial market, the financial institutions are offering better consumer friendly products every day.

Pirzada said that the NSS rates which remained a major factor in the deposit collection in the past are now narrowly linked with market. Therefore, he said innovative measures are required for deposit mobilisation.

"The wider distribution network is also being geared up to do business in a more effective and professional way and a number of measures have been taken to achieve this objective", he added.

In the light of changed environment, he also highlighted the following measures for promotion of national savings.

Pirzada said that for providing a truly competitive environment, the government has now allowed institutions to invest in all National Savings Schemes except those which are meant for special segments of the society with immediate effect.

He said that the non-profit bodies, Registered Charities, Public Sector Enterprises excluding banks, private educational and health institution, Employees Old Age Benefit Institution (EOBI), private corporate sector excluding banks and Non-Bank Financial Institutions (NBFIs) excluding insurance companies, are entitled to invest.

To facilitate the investors and avoid long queues, the Central Directorate of National Savings (CDNS) has decided to extend the facility for automatic transfer of monthly profit into the Savings Account of the same centers, he added.

This way, the DG National Savings said, the client would not have to wait in long queues to get his profit first calculated and then encash. Therefore, he said, they would be encouraged to save from within the profit as they would be entitled for additional profit at the Savings Account's rate.

To meet the travelling demands of the depositors, he said, the CDNS has decided to introduce the facility of encashment all over Pakistan at the designated National Savings Centres.

The facility will be provided at the important stations keeping in view the demand of the public, he remarked.

To meet the day to day needs of the investors, he said, the limit of two withdrawals within a week's time have been increased to three times a week.

He said there was a mandatory lock-up period of one month in case of Defence Savings Certificates and Special Savings Certificates, which have now been removed to meet the emergent need of the investors.

Pirzada further said that measures are also being taken to facilitate the investment from abroad and several proposals are being considered, which will be finalised shortly.


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## Neo

*No pressure on Pakistan for 10 percent devaluation *

KARACHI (December 11 2006): The International Monetary Fund (IMF) would like Pakistan to meet all of its oil import requirements from the forex flows into the banking system and not dip into the reserves.

The State Bank of Pakistan (SBP), since November 2004, arranges the pay-out from its reserves and then gradually replenish the reserves from daily inflows, in order to keep the rupee stable and protect it from wild fluctuations on account of large import payments on a particular day. According to informed source, last year, the SBP provided $6.5 billion from its forex reserves but then it also augmented the reserves by $5.5 billion from the trade flows.

The Fund staff is basically using the all-time high of Rs 64.46 to a dollar in the second half of 2004 as a reference point when the SBP was told to keep the reserves above $10 billion at all costs by the government and meet all import obligations through export proceeds.

The rupee's weakness in 2004 was compounded by the erroneous hasty and ill-planned decision to pre-pay the Asian Development Bank (ADB) on the loan provided to Parco.

The Fund's own graph of Pakistan's REER given below shows that the rupee since January 2006 was over-valued by three percent.

*GRAPH:* 

Since then the rupee has depreciated by 1.90 percent. With the monthly inflation data, coming with a time lag, the Pakistani currency is being adjusted in accordance with the methodology for exchange rate adjustment provided by the Fund, said the source. "It is not important what the nominal parity is on a particular day. What is more important is to maintain the REER equilibrium over a period of time, ie base year of 2000," he added.

The second issue where the Fund staff and the Pakistani authorities disagree is said to be currency volatility. The Fund has categorised 120 countries into a group, which includes Pakistan. The Fund advocates a two percent movement on an annualised basis (which can be both ways) to avoid a fixed parity regime.

In FY 2004, the volatility of the Pak rupee was around 2.5 percent. In FY 2006, it was 4.6 percent, and this year, it is 1.46 percent on annualised basis.

There can be no disagreement regarding the necessity for Pakistan to keep the trade and current account gaps in check, in order to avoid pressure on the exchange rate. But to equate the parity with a particular level on a particular date amounts to cherry picking, said the source.

The movement of the Pak rupee versus relevant currencies shows that the rupee has depreciated against all currencies other than Bangladeshi taka and the Sri Lankan rupee. Both currencies are under added pressure due to political instability.

*BARGRAPH*

*INTEREST RATE:* The real interest rates in Pakistan are three percent in the positive, ie nominal rate less CPI. While accepting the adjustment done in FY06/07 has played a significant role (with a time lag) to reduce the inflation, the Fund staff feels that more needs to be done by further raising the yields on Treasury Bills by one to two percent to curtail the demand side pressure.

Pakistani authorities point out that non-food core inflation is firmly on downward path. And, the reasons for CPI upward movement are primarily due to pressure emanating from the supply side and from distributional problem. The Fund staff thinks that the government needs to make hoarding of food staff more difficult by raising the interest rates, while the Pakistani authorities point out that commodity traders necessarily do not use bank funds and (arthis) middlemen in the food chain are moneylenders themselves, operating in the grey market.

Food demand cannot be suppressed in a poor country through interest rates but effective administrative intervention and timely imports and removal of distributional obstacles by the government.

Obviously, it is sound economics to reduce inflation otherwise the exporters will lose their competitive edge and ultimately the pressure would come for exchange rate adjustment, said a knowledgeable source. But the impression being created that Pakistan is being pressurised to devalue its currency by 10 percent or will be doing it soon is entirely baseless, the source confided.


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## Neo

*MONEY WEEK: surging other liabilities, declining reserves dictate money supply growth* 

KARACHI (December 11 2006): Monetary expansion during FY07 up to November 25 amounted to Rs 112 billion despite an increase of Rs 125.4 billion in private sector credit and a rise of Rs 59.3 billion in government borrowing. Continuing build-up of banking system's other liabilities and increased draw-down of its net foreign assets (NFA) provided the explanation.

Between July 1 and November 25, 2006, the negative change in Other Items (Net) (OINs) amounted to Rs 26 billion and the draw-down of NFA amounted to Rs 41 billion. Together, the two items added up to Rs 67 billion, neutralising thereby the expansion effect of government and private sector borrowings on money supply to a large extent.

The two factors had already neutralised nearly 44 percent of the expansion effect of domestic credit in the last about five months, Other details showed that increase in money supply during the year so far occurred mainly in 'currency in circulation', as deposit money increased only moderately. While 'currency in circulation' increased by nearly Rs 75.5 billion, deposit money increased by Rs 36.3 billion only. Within deposit money, demand deposits increased by Rs 1,125.4 billion while time deposits showed an equally big decline of Rs 1,086.8 billion.

Two other components, viz, other deposits with SBP and resident foreign currency deposits also declined by Rs 0.1 billion and Rs 2.3 billion, respectively, limiting the overall increase in deposit money so far in the year to just Rs 36.3 billion.

The exodus of time deposits from the banking system (mainly the commercial banks) appears to be the twin effect of low return paid by banks on money deposited with them and an increase in return rates paid on CDNS instruments--a non-bank borrowing window for the government.

It may be recalled that in the corresponding period of last year, money supply had increased by Rs 84 billion, or 2.8 percent, mainly because of a massive draw-down of NFA which amounted to nearly Rs 91 billion between July 1 and November 26, 2005, and a huge increase of Rs 69 billion in other liabilities of the banking system which helped reduce the impact of the increase of Rs 61 billion in government borrowing and of Rs 186 billion in private sector credit to a net domestic credit expansion of Rs 174.5 billion.

The increase in money supply of Rs 84 billion during FY06 was shared by 'currency in circulation', which accounted for Rs 77 billion of it, while deposit money accounted for the remaining Rs 7 billion, although, as against the current year, these were time deposits, which provided the main fillip to increase in deposit money last year.

According to available information, increase in government borrowings during the year so far has been concentrated entirely in government's budgetary borrowing as borrowing for procurement of commodities, and other credit expansion actually declined by Rs 3.3 billion and Rs 1.2 billion, respectively.

Break-up of government borrowing of Rs 63.7 billion for budgetary support revealed that Rs 34 billion was borrowed by the Federal Government while another Rs 30 billion was obtained by the provincial governments. These borrowings had amounted to Rs 73.9 billion and Rs 3.5 billion, respectively, in the corresponding period of last year when total such borrowings had amounted to Rs 77.4 billion. Hoswever, in both years, the borrowing was concentrated in the State Bank, not in the scheduled banks, indicating that institution-wise strategy of policy makers tended to be more inflationary.

Although expansion of private sector credit during the year so far has been slow it was nevertheless steady and reached Rs 125.4 billion by November 25 at which level it was nearly Rs 60 billion short of the level reached in the corresponding period of FY06.

As much as Rs 121.6 billion of it was extended by commercial banks compared with Rs 185.4 billion in the corresponding period of last year.

Specialised banks, however, appeared more active in meeting the credit requirements of specified priority sectors this year as they extended credit in the amount of some Rs 4 billion between July 1 and November 25, 2006 whereas they lent only Rs 0.4 billion between July 1 and November 26 last year.

Bank credit to PSEs showed larger retirement this year (minus Rs 6.2 billion) than in the previous year (minus Rs 1.6 billion) while SBP credit to NBFIs showed net additional lending of Rs 0.2 billion as compared to a net retirement of Rs 1.5 billion last year.

In line with continuing the draw-down of NFA which in rupees amounted to over Rs 41 billion on November25, the country's liquid foreign exchange reserves also continued declining and stood at $12,478.4 million ($10,239.7 million with SBP and $2,238.7 million with scheduled banks) as on that date.

As indicated in previous review, this trend would not only distort the true picture of monetary expansion but would also expose the rupee to increased market pressures. It has already crossed Rs 61 per dollar barrier on December 9, a day before the preparation of this review. (For comments and suggestions research.dept@aaj.tv).


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## Neo

*Pak-India shipping service *

NEW DELHI (December 11 2006): After a gap of 30 years, India and Pakistan will restore cargo shipping services this week when they sign a revised protocol in the sector amid a flurry of high-level visits here from the neighbouring country in the coming days.

The protocol, which will allow vessels of the two countries to lift cargoes of a third country from each other's ports, will be signed on December 14.

It will also allow ships of third countries to lift cargoes of India and Pakistan, PTI reported here quoting Pakistan's Acting High Commissioner Afrasiab.

This will be an amended version of the 1975 Shipping Protocol that prohibits vessels of the two countries from lifting cargoes of any third country.

The revised protocol, which is the amended form of an existing agreement, will also facilitate transit facilities for seafarers of either country for joining or disembarking from foreign flag vessels subject to possession of necessary valid seafarers identification documents and applicable transit visa.

The revised version of the protocol, which was considered a confidence-building measure (CBM) after the 1971 war, is expected to help increase trade between the two countries. The signing of the revised protocol will take place amid increased high-level visits here from Pakistan.

Pakistan's Housing and Works Minister Syed Safwanullah will arrive here on Monday to participate in the first Asia-Pacific Ministerial Conference on Housing and Human Settlement, Afrasiab said. The visit is expected to be utilised for bilateral meetings also.

Safanwallah's visit will be followed by the tour of Senate Chairman Mohammedmian Soomro, who will be here to have consultations under the forum of Commonwealth Parliamentary Union, said Afrasiab.

A six-member MQM delegation also undertook a visit here that concluded on Saturday. During the week-long stay here and in Mumbai, the delegation headed by Farooq Sattar met Prime Minister Manmohan Singh and other leaders.


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## Neo

*World Bank and USAID to work with ADB for investment in energy sector *

FAISALABAD (December 11 2006): The World Bank and United States Agency for International Development (USAID) will work with Asian Development Bank on Capacity Development Programme to promote investment in Energy Sector Pakistan.

The investment programme for the power sector as a whole is estimated to be $150 billion (2006-2030) with $2.2 billion expected for Renewable Energy. According to ADB sources, the investment programme in Energy Sector will contribute to economic development through expanded power supply, especially in rural areas.

It will also generate energy equivalent to 1,700 Gigawatt-hours (GWh) annually, sufficient to serve about 600,000 new domestic consumers. It will improve the reliability and quality of supply. It will also increase the utilisation of Clean and Renewable Energy based power.

USAID will also provide direct support to the South Asia Regional Energy Initiative for Energy and assist sector agencies with collecting and assessing wind data.

Finally, Alternative Energy Development Board (AEDB) is already receiving specialised technical support from the German Agency for Technical Cooperation (Deutsche Gesellschaft fÃÂ¼r Technische Zusammenarbeit), primarily with project preparation.

Official sources stated that the renewable energy development investment programme combines physical investments in new generating capacity across four provinces in several sub-sectors and non-physical interventions in policy reform, capacity development, fiduciary oversight and governance, regulatory and legal frameworks, knowledge management, safeguards, procurement, disbursements, project implementation, evaluation, supervision, monitoring and reporting. The investment programme is the first of its kind in Pakistan. It is also one of the first to be developed under Asian Development Bank's (ADB's) evolving clean energy and environment initiative.

The investment programme has its context in a road map for the energy sector as a whole, in itself a product of diagnostic work over recent years. The starting premise for this work is a recognition that power and energy represent, together with transport connectivity and water, major bottlenecks to high and inclusive economic growth in the country.

Energy supplies are far too dependent on oil imports, the cost of which accounts for a big share of the total import bill. Pakistan needs to be more efficient in energy use, but also to generate more power domestically-through the use of indigenous resources and by changing the mix towards renewable resources. The diagnostic work identified key constraints, challenges, and opportunities. This paved the way for defining a strategic framework, a new policy agenda, and action plans over the short to medium term. The action plans are sequenced and complementary, with transactions involving the private and public sectors, debt and equity finance, and technical assistance.

Nation-wide power demand is outstripping supply, a trend likely to continue unabated for some time. To balance these, Pakistan needs to increase production capacity from 15,500 MW (megawatts) in 2005 to 162,590 MW by 2030.

About 99,000 MW of this is likely to come from thermal power, ie, coal, oil, and gas. But the balance could be met from hydropower and renewable energy, which potentially are environmentally friendlier. Hydro includes large, medium and small plants.

This programme focuses on small to medium plants with significant environmental benefits. Total generation capacity from renewable energy (RE) is currently at a low 180 MW. But there is considerable scope and opportunity to increase it to 9,700 MW by 2030. This will raise RE's profile and its contribution to the total energy mix to 6 percent. This contribution would be much higher were medium to large hydropower generation facilities to be included under the RE package.

Official sources stated that Pakistan's renewable energy potential is greatest in the case of small to medium-sized hydropower plants, but wind, solar, and biomass resources also have potential.

Hydropower resources are located mainly in the northern and central parts of the country, wind and solar resources in the southern provinces of Sindh and Balochistan, respectively. Pakistan's vast agricultural base provides ample opportunities to develop biomass-based energy.

RE delivers on four strategic objectives given in Pakistan's Medium Term Development Framework (MTDF): (i) greater energy security; (ii) reasonable economic and financial returns; (iii) improved social equity, especially in rural areas; and (iv) clean energy and environmental sustainability.

The investment programme for the power sector as a whole is estimated to be $150 billion (2006-2030) with $2.2 billion expected for RE. Of RE, half would be run-of-the-river hydro plants. The rest is assigned to wind energy, solar power, and biomass.

The financing plan involves federal and provincial government budgets, but also the private sector and institutions such as ADB.

The fund-raising strategy calls for a minimum critical mass but also for certainty and diversity of funding sources. A programme of this nature cannot be easily supported on an ad hoc basis, ie, through stand-alone projects processed every two to three years in different sectors and different parts of the country.

The integrity of the investment programme as a whole demands a partnership and continuity. It also means flexibility with regard to subproject choice, a linkage of finance to project preparedness, financial discipline, and maturing physical investments with policy and capacity. It is in this context that the authorities requested ADB support for the programme in the form of a multitranche financing facility (MFF). Such support provides a platform for financial as well as expert assistance, blending reform and capacity development with investments.

Official sources mentioned that the diagnostic work undertaken in support of the programme identified weak capacity at the federal, provincial, and implementation agency levels. Weaknesses differ in importance and magnitude, but include policy formulation, planning, project preparation, financial management, fiduciary oversight, governance in the broader sense (incentives to private sector investment), procedures, systems, safeguards, and procurement.

There is also weakness with regard to evaluation, monitoring, and reporting. The latter include procedures, systems and expertise. The investment programme includes a strong capacity development component. This will support executing agencies (EAs) and implementing agencies (IAs) alike.

Key result areas include (i) information, planning, policy framework formulation and revisions thereof; (ii) human resources development and training; (iii) sector and thematic due diligence, including technical feasibility studies, and RE resource assessments; (iv) systems and procedures for project supervision, monitoring, and reporting; (v) due diligence and mitigation plans (with emphasis on safeguards); (vi) fiduciary oversight, including financial management, procurement, anticorruption measures, and governance; (ix) project management, including accounting and auditing; and (x) outreach work, including communications and public relations. The Alternative Energy Development Board (AEDB) will act as the main counterpart for ADB financing and for the programme. Actual day-to-day work in the sector will be the mandate of specialised RE agencies at the provincial level.


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## Neo

*Portable PCs market grows by 64.1 percent *

KARACHI: The portable PCs segment dominates the overall PC/Server market, as the Pakistan PC shipments grew 20.9 percent in Q2 2006 (April-June) to 173,834 units as compared to the same quarter of preceding year.

The portable PCs segment experienced substantial growth of 64.1 percent year-to-year mainly due to a major deal of 4,500 portable PCs announced by the Bahria University. The government's continuous effort to automate the different public and private sector bodies was also noticeable in the quarter.

The second quarter of 2006 yielded stiff competition among multinational vendors in the desktop market. HP led the market with 5.1 percent share, followed by Lenovo and Dell. The government agenda of promoting local players seems to be materialising for the domestic market development. During Q2 2006, Raffles, a major local player, registered the highest growth in the PC market with 49.5 percent year-to-year growth, while Inbox (another local player) shipments also grew substantially, a report by Springboard Research said.

Among all segments, the government held the greatest share (23.7 percent) of total PC shipments in Q2 2006, followed by large enterprises (500+employees) and the home segment. Additionally, Springboard saw government, banking and telecom sectors spending heavily in strengthening their IT infrastructure.

One area, which drew attention from both local and international players, was the growing telecom sector in the country. Pakistan's telecom sector has witnessed unprecedented growth in the recent years with total IT spending in the industry estimated at $134.5 million in 2005, generating 22.5 percent annual growth.

Currently, the hardware segment accounts for about 70 percent of total telecom IT spending in the country. "With the deregulation of fixed line and mobile sectors, we expect to see a considerable amount of investment, both locally and internationally. In this event, IT business opportunities for vendors will be accelerated," commented Rehan Ghazi, a market analyst.

Although the government has announced new standard operating procedures and projects for the IT industry, the GST imposed in the new fiscal budget had increased computer prices by at least 15 to 20 percent and made them unaffordable for some home users, educational institutions, and other price-sensitive users.

"The Pakistan PC/Server market is one of the fastest emerging segments in South Asia and, in the past few years, the market attracted a lot of attention from international IT vendors. Improving economic indicators and foreign investors' confidence will help the sector gain momentum as well. The growing trend of strengthening the IT infrastructure by both government and private sectors may trigger an expansion of competition in the market," he added.


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## Neo

*Balochistan wants 20pc share in PPL*

ISLAMABAD, Dec 10: Balochistan has started negotiations with the federal government to acquire 20 per cent shareholding in the Pakistan Petroleum Limited and 25 per cent shares in all other concession licences for natural resources to ensure a constant revenue stream to the resource-rich starving province.

The PPL is the countryÃ¢â¬â¢s oldest and largest exploration and production company with annual sales revenue touching Rs20 billion. It produces more than 300,000 million cubic feet of gas and more than 240,000 barrels of oil per year, besides substantial annual production of condensate, liquefied petroleum gas and other minerals.

Governor Owais Ahmad Ghani told Dawn that he expected the mineral sector to be a major revenue-generating source for the province on the longer run because of 25 per cent shares in each mineral concession agreement the provincial government would be signing with private investors from home and abroad. The province has already been given a 25 per cent shareholding in the Reko Diq mining area, whose value of copper and gold deposits are estimated to be over $70 billion at current market price. The Reko Diq mining area has proven estimated reserves of two billion tons of copper and 20 million ounces of gold. Copper and gold are currently traded at over $7,000 per ton and $640 per ounce respectively. Remaining 75 per cent stakes of the project have now been taken over on 50:50 basis by Antofagasta of Chile and Barrick Gold of Canada.

Mr Ghani said that he had requested to the federal government to provide 20 per cent shareholding in the PPL, which is the operator of PakistanÃ¢â¬â¢s oldest Sui gasfield. He said a major shareholding may go to the private sector as the centre planned to sell it but since it was a provincial resource and had been feeding the entire nation since independence, a shareholding would be of great help and justice to the province.

The provincial government, he said, had been discussing with the centre to ensure 20 per cent shares in the company along with a member on its board of directors to increase provincial revenue.

Responding to a question on the National Finance Commission award and gas royalty, he said the two issues were being Ã¢â¬Åtalked and discussedÃ¢â¬Â with the federal government and Ã¢â¬Åsome important things are expected soonÃ¢â¬Â.

Governor Ghani said a number of international oil and gas companies were showing interest in BalochistanÃ¢â¬â¢s untapped resources and the province would like to acquire shareholding in each petroleum concession agreement, since BalochistanÃ¢â¬â¢s financial outcome from Sui fieldÃ¢â¬â¢s royalty was on the decline.

Responding to another question, Mr Ghani said the provincial government was also in discussions with the federal government to retire its expensive cash development loans by taking cheap loans to improve its cash flow position, and the Asian Development Bank was coming forward on this account.

Separately, Balochistan has asked the federal government to reduce the number of federal corporations utilising more than 33 per cent of the countryÃ¢â¬â¢s total funds so that the province could get its due share for development.

A small Saindak Metals Limited is the only corporation out of total 208 autonomous bodies based in Balochistan, says Ghulam Muhyuddin Marri, chief economist planning in the provincial government.

Mr Marri said the Balochistan government had asked the federal government to extend sea coast jurisdiction from zero to 35 nautical miles to ensure higher income from fishing. The federal government had taken over more than 63 per cent shares of the PPL from the Barmah Oil Company in 1997 to raise its ownership to about 94 per cent. Later, it decided to privatise the company but the Balochistan Assembly adopted a resolution asking the federal government to give its ownership to the province. The centre did not oblige the request.

Last year, the federal government reduced its share in the company by 15 per cent through initial public offering. Now, it plans to sell 51 per cent shares along with management control of the PPL.

Balochistan is currently in a classic debt trap Ã¢â¬â taking new loans to service old Ã¢â¬â as its overdraft touched highest ever Rs19 billion this month and interest repayments exceeded Rs250 million per month, arising out of the State Bank of PakistanÃ¢â¬â¢s overdraft and the federal governmentÃ¢â¬â¢s cash development loans. It doles out about Rs3 billion every year in repayments.


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## Neo

*High cost of doing business*

By Sultan Ahmed

AT a time when the country is wooing investors and trying to lure foreign companies in its privatisation process, the issue of high cost of doing a business in Pakistan has come to the fore.

Along with foreign, domestic investors too, are raising the issue as their products face greater competition in a WTO-led world, particularly in textiles - our principle exports.

And this issue has been brought into sharper focus by the World BankÃ¢â¬â¢s annual s survey on the `cost of doing business in 175 countries around the worldÃ¢â¬â¢. The revision in itÃ¢â¬â¢s indicators from year to year causes considerable interest among member-countries and investor-nations.

The Cost of Doing Business Indicators 2007 have been taken seriously and summarised in the annual report of the State bank of Pakistan for 2005-06, released last week.

It is a fact that there had been a significant fall in the status of Pakistan in the 2006 Indicators - when it was ranked 74 out of 175 countries as compared to 66 in 2005. However, it is not the outcome of any degradation in the facilities for investors but the result of the addition of 30 more countries to the index. Some have a far better investment environment than Pakistan; anyway the country has come down by eight points.

But the cost of doing business in Pakistan is far better than in India whose status in the Indicators is 134, while that of China 93, Bangladesh 88 and Srilanka 89.

The State BankÃ¢â¬â¢s annual report underscores the need or rather urgency to improve the areas identified by the World Bank to attract more foreign and domestic investment.

The four major weaknesses identified by the World Bank are: inordinately long time to close a business, long time to register a property, time to start a new business, and delay in getting the credit.

Though by international standards, Pakistan is lagging behind many countries but is better than regional states, including India which is trying to improve its facilities fast.

Weakness in enforcement of contracts is the area in which urgent steps are essential. Inordinate delay can be fatal for business. In this regard PakistanÃ¢â¬â¢s position is a lamentable 163 out of 175 countries. It reflects a serious flaw in the judicial system and practices. The State Bank says the investors want to get their right honoured fairly and at a negligible cost.

The World Bank says the time required for closure of a business in Pakistan is 2.8 years compared with 3.6 years in the region with a cost of 6.3 per cent of the estate value.

Registering a property takes 50 days with the cost of 4.4 of the estate value compared to 116.6 days in the region and 5.3 per cent of the cost of property. In Bangladesh, it takes 88 days to register a property.

Taxation on the companies, says the World Bank, is heavy. A medium-sized company has to make 47 payments and pay 43.3 per cent of the real profits in taxes.

In the area of employment there is a shortage of skilled labour in Pakistan. But it is easier to fire than hire an employee. In the area of labour legislation Pakistan comes at a low 126 out of 175 states.

A mix of complex labour laws and corruption gets a raw deal for workers who get a better deal in most foreign companies as they try to avoid breaking laws.

Making the situation worse by wasting a great deal of time is the red tape. Too many rubber stamps on too many papers are needed which delays the final permission to open a company while breeding extensive corruption in the process.

Our society is raging with too many forgers and false witnesses, hence the officials have to be cautious, particularly, in respect of land transactions which usually takes long.

In regard to income tax, domestic investors complain of double taxation- one of the profits of the company and then the same profit in the hand of shareholders. But the government does not want to give up tax revenues when these are easily spotted and readily collected. The government acts on the maxim that a bird in hand is better than two in bushes. So if it is not ready to let go or reduce revenues coming from existing companies in favour of a larger income which may come from newer companies.

The cost of doing business in Pakistan is enhanced by gross infrastructural inadequacies, particularly water and power shortage. Now, long traffic jams are making the movement of goods more difficult. While wages of workers are low, their productivity too is less and output not high as of skilled workers. So, serious efforts have to be made to impart training to them, particularly in textile, leather and steel industries.

A great deal has to be done to sustain economic growth between six to eight per cent as Dr Salman Shah, Advisor to Prime Minister on Finance desires. We have to increase industrial output and make these more value-added. In business time is money and businessmen cannot afford to waste time and put up with unavoidable delays. The investors want less number of holidays and fewer unscheduled ones which disrupt production and block the movement of goods.

In the West, if a company fails and cannot be made profitable through normal means, it is disposed off and a new business is started and the money lost is regained. But here, the investors hold on to the failing companies for long and use it as a begging bowl to seek favours and concessions from the government. The government hence does not agree to quick disposal of failing companies, including the foreign.

There is a great deal to be done to reduce the cost of doing a business and reducing the hindrances in its way. If done earnestly, Pakistan will not only regain its lost position in the index but will also come up to 50 from 74 by presenting s far more attractive economy to investors, both foreign and local.


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## Neo

*Positive list to double trade with India*

ISLAMABAD, Dec 7: A study has revealed that the formal trade with India could be double from $1 billion to $2 billion after a recent action by Pakistan to increase the positive list of tradable products from 773 to 1075 items.

But, the exchange can quadruple, if only there is closer economic cooperation and that could lead to better peace. Whenever one speaks about the peace-promoting economic relations between India and Pakistan, critics opine that relations between the two are marred by the Kashmir dispute and the cross-border infiltration.

These facts were revealed in a joint research study conducted by secretary general of CUTS International--an Indian based leading research and networking group--Pradeep Mehta and its Pakistani partner Ms Huma Fakhar Ã¢â¬â- the Lahore-based lawyer of Fakhar Law International and Market Promotion.

Hence, to expect more peaceful relations between the two fast growing economies through trade is a dream. But the researchers said that they did not agree with the assumption that trade could not help in normalising relations between the two arch rivals.

According to the study, a copy of which made available to Dawn, it was suggested that the US government can promote mutual trade between the two countries by offering duty-free imports, if one used the otherÃ¢â¬â¢s inputs in their exportable items to the US. This idea, the researchers said played positive role in case of many countries.

The study pointed out the example of US scheme of qualified industrial zones (QIZs), which was in operation since 1996, in a bid to promote peace in the Middle East between Israel with Jordan and Egypt. The scheme allowed duty free export to US market from Jordan and Egypt in case a minimum level of inputs from Israel was used in the manufacturing of these products.

Since both India and Pakistan are currently preparing to or entering into various preferential trade agreements (PTAs), bilateral as well as regional) with other countries and regions both with developed and developing countries, it would be sensible to include QIZs type arrangements in some of the agreements, particularly with EU, US and China and even within Safta and the proposed Asean-India FTA.

Such arrangement would help both Indian and Pakistani exporters and importers to reap benefits of free trade as well as promote greater cooperation, the research paper said.

The report says the mega projects like the Turkmenistan-Afghanistan-Pakistan and the Iran-Pakistan-India gas pipeline projects would help in promoting trust and regional economic cooperation between India and Pakistan.

Though both India and Pakistan are moving closer, it is at a snailÃ¢â¬â¢s pace and constantly encountering hurdles. Some of these measures could divert attention from sticky matters and accelerate the speed of greater economic cooperation between the two nations through reduction (if not elimination) in tensions and mistrust and bringing in peace and tranquillity in this region, the researchers opined.


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## Owais

*November trade deficit $1.39 billion *


ISLAMABAD (updated on: December 11, 2006, 15:17 PST): The country's trade deficit widened to a provisional $1.39 billion in November from $849.6 million in October and $1.18 billion in November 2005, official data showed on Monday.

The cumulative trade deficit for the July-November period was $5.50 billion against $4.58 billion a year earlier, the data from the Federal Bureau of Statistics showed.


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## Owais

*CFS investment up by Rs 800 million *

KARACHI (December 11 2006): The Karachi Stock Exchange (KSE) during the week witnessed a rise in CFS investment by Rs 800 million. KSE figures showed that investments under CFS stood at Rs 35.70 billion against Rs 34.90 billion in the previous week, recording an increase of Rs 800 million.

The interest on CFS financing, rising by 1.39 percent, reached 14.1 percent. Open interest in futures contracts was also seen swelling, while investments under CFS in December contracts remained Rs 9.10 billion, and the interest on CFS financing in futures contracts stood at 7.3 percent.

Experts attributed the increase in CFS investment to the transfer of in-house Badla to CFS


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## Owais

*$2.238 million foreign investments in bourses *

KARACHI: Foreign investors during the current month made investments amounting to $2.238 million in the bourses here.

State Bank of Pakistan (SBP)&#8217;s released figures showed that the US withdrew $5.479 million and Hong Kong about $2.2 million during the current month, while Britain with $4.086 investments during the same period topped the list.

Foreign investors during the current year thus far made investments of $294 million in the Pakistani stock exchanges.


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## Neo

*Albaraka Bank Pakistan plans IPO *

MAMAMA: December 11, 2006: Bahraini Islamic bank AlBaraka is planning to float 25 percent of its unit in Pakistan to bring its capital to $100 million, the minimum for a Pakistani bank, an AlBaraka official said on Monday.

'We are thinking of having an IPO in Pakistan and turning it (Albaraka Pakistan) around and making it an independent bank,' Albaraka General Manager Salah Zainalabedin told Reuters.

'In Pakistan right now they (banking authorities) are looking at a minimum capital of $100 million ... so we will probably be looking at that size,' he added.

The IPO was to take place "soon" but not in the next two months, he said.

Zeinalabedin said Albaraka had obtained the approval of State Bank of Pakistan for the IPO, and planned to sell a 25 percent stake to private investors, while retaining 50 percent. Albaraka Turk, Albaraka's affiliate in Turkey, plans an IPO next year, its general manager said last week.

Zeinalabedin also said AlBaraka hoped to arrange up to $500 million worth of Islamic bonds, or sukuk, in the coming year through two or three deals with issuers


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## Neo

*PSA makes highest Gawadar port bid: port official *

KARACHI: December 12, 2006: A consortium led by Singapore port operator PSA International has submitted the highest bid to manage Gwadar Port but the tender has not yet been awarded, a port official said on Tuesday. 

'We cannot give the figure quoted by PSA International until the negotiations are final but they are the highest and the successful bidder,' the official of the Gwadar Port Implementation Authority said, declining to be named.

The PSA bid was accepted at the weekend.

The Gwadar deep-sea port is on the Arabian Sea, about 450 km (280 miles) west of Karachi and about 70 km (45 miles) east of the Iranian border.

China provided $198 million for the $248 million port project. It is scheduled to begin operations next year.

Under the concession, the winning bidder will take over the operation and management of the port for 40 years.

The port official said the offer from the runner-up -- Pakistan International Container Terminal -- was "far behind" that of the Singaporean operator.

"We are in the process of finalising technical and financial terms and conditions with them and will take a decision very soon," the official said.

Pakistan's AKD Group is part of the Singaporean consortium.


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## Neo

*July-November trade deficit swells to $5.41 billion *

ISLAMABAD (December 12 2006): The trade imbalance has gone up sharply to $5.41 billion during July-November of the current fiscal year which is about 17.91 percent higher than the corresponding period last year ($4.58 billion), the Federal Bureau of Statistics (FBS) reported on Monday.

During this period, Pakistan's exports totalled $6.93 billion and imports $12.33 billion against $6.59 billion and $11.18 billion, respectively, recorded during the same period last year.

The FBS provisional data reveal that Pakistan economy pulled in 10.35 percent more imports during July-November, while exports rose only by 5.09 percent. The high growth in imports and slow pace of exports is responsible for burgeoning gap. The worse is that the gap is steadily widening. It is important to note that previously, in its trade policy for the FY07, the government targeted imports at $28 billion and exports of $18.6 billion with a trade deficit of $9.4 billion during the year.

The huge import pressure and low pace of exports have compelled the government to project upward the trade deficit. A few days back, the commerce ministry had raised its projection of trade deficit to $12.2 billion.

According to the figures, exports during November 2006 increased to $1.38 billion as against $1.28 billion in October 2006, showing a growth of 7.64 percent. While imports in the same period are up by 30.11 percent to $2.77 billion compared to $2.13 billion in October 2006.

It is feared that the slow growth in exports may make it difficult to achieve the target of $18.6 billion. During the fiscal 2005-06, the government had missed its exports target of $17 billion by a margin of $531 million.

During November, the exports increased by 23.94 percent to $1.38 billion and the imports up by 20.64 percent to $2.77 billion as compared to the same period last year.


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## Neo

*'Political unrest, twin deficit major challenges to economy' *

KARACHI (December 12 2006): Pakistan fiscal side is expending as on the monetary side there is no room as investment cycle has slowed. In order to keep growth in the economy, the government is likely to increase its fiscal expenditure, especially on the development side, and that would lead to an increase in fiscal deficit.

Besides, the 2007 election is an immediate major challenge for the economy. One should expect the exiled leaders to return, which might create political unrest and, probably, affect the production side. These views were expressed by KASB Securities group economist, Muzzammil Aslam, in an interview with Aaj TV 'Money Matters' program.

He said that election outcome was important as economic growth is subject to continuation of recent policies and the ongoing reforms. About economic performance he said that for the last three years Pakistan's economic growth has been strong.

The economy recovered in 2004 and picked up pace and in 2005 it registered 8.6 percent growth rate. In 2006 the economy slowed down and registered 6.6 percent growth. Amid capacity utilisation of industrial sector was almost 90 percent whereas agriculture sector witnessed a blip due to high base effect.

He said that in 2007 growth would exceed 7 percent target against market consensus of 6 to 6.25 percent, due to turnaround in agriculture sector, which is likely to register a 4.5 percent growth.

Industrial sector is likely to expand by 10 to 11 percent growth, whereas services sector is expected to perform well and is likely to register a growth rate of 8 percent.

On the outlook of second quarter of current fiscal year he said that going forward economic growth would continue. It will be the wheat crop that would drive the sentiment of the economy. A bumper crop and high wheat prices internationally would give buying power to farmers and with money in their pocket they would have demand for goods and services, which would drive the manufacturing sector. "So, in terms of growth, second half of the fiscal year seems stable."

In terms of macro economic stability, he said there might be some surprises. "Fiscal deficit is the talk of the town. It is election year; the government is likely to spend lavishly. Besides, talks are already underway for reducing oil prices. Expectations are that they will keep it lower to have good numbers in masses.

Moreover, current account deficit and the exchange rate policy are two other major factors to watch. All in all, there will be some surprises as far as our macroeconomic numbers are concerned." The program will continue the discussion on these questions, and researchers from JS, BMA, AKD and Arif Habib Securities are scheduled to participate in it during the current week.


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## Neo

*Saving and investment gap widens to 3.6 percent of GDP *

FAISALABAD (December 12 2006): The gap between the savings and the gross domestic product (GDP) has widened to 3.6 percent during 2005-06, up from 1.6 percent, said official sources.

The sources further said that a high saving-investment gap had adverse implications for the macroeconomic stability, but the present widening in this gap was not an immediate concern since the economy was able to finance this resource gap through higher foreign direct investment (FDI) and remittances.

Moreover, the country's level of foreign exchange reserves was also relatively sufficient as compared to the 1990s, when the saving-investment gap was quite high, they said. However, given that a significant part of FDI, consisting of privatisation proceeds, a sustained saving-investment gap could pose serious threat to macroeconomic stability, said the sources. "Thus, there is a need to improve domestic savings through institutional arrangements and conducive policies," they opined.

They are of the view that an expansion in the network of banks, micro-finance institutions and postal savings to the far-flung areas was needed with a friendly atmosphere for the small depositors.

In addition, savings schemes for school/college students could also help inculcate in students' savings behaviour from the early age. Admittedly, there should not be regulatory intervention in the determination of rate of return on deposits. However, if the financial institutions form a cartel to artificially suppressed returns on deposits, they should be treated accordingly through regulations.

Although national savings rose sharply by 16.5 percent during FY06 compared with 7.5 percent growth in the preceding year, nonetheless this increase is lower than the rise in nominal GDP.

As a result, the national savings to GDP ratio slightly dropped by 0.1 percent to 16.4 percent of GDP during FY06, the lowest level of national savings since FY2001.

In fact, rising interest rates on national savings to GDP ratio did not improve mainly due to the following reasons:

-- Prevailing negative real returns on deposits being offered by the banks.

-- Rise in NSS rates was not in line with the expectations.

-- Continued ban on institutional investment in the NSS, which has been relaxed during FY07.

-- Continued consumption boom in the economy.

In particular, the strength of aggregate demand, supported by both an expansionary fiscal policy as well as rising private consumption in recent years, deteriorated the savings rate in the economy.


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## Neo

*OGDC's GDS oversubscribed by 100 percent *

ISLAMABAD (December 12 2006): The Oil and Gas Development Company''s (OGDC) global depository share (GDS) has been oversubscribed by 100 percent as it fetched $1.5 billion commitments from institutional buyers against the target of $713 million. However, the government decided to take the transaction value only at $813 million, inclusive of $100 million of over-allotment option.

The Privatisation Commission on Monday announced that on behalf of the government of Pakistan the lead managers used over-allotment option for GDS and now total proceeds of the transaction will be around $813 million. It said that Citigroup, Goldman Sachs International and BMA Capital have exercised over-allotment option for 53,294,000 GDS.

Talking to Business Recorder OGDC managing director Arshid Nasar said that GDS was oversubscribed and this inspired the government to use over-allotment option for institutional investors. He added that secondary offering in the local market was every much on schedule and it was going to be available to local investors after December 15.

BMA Capital, Citigroup and Goldman Sachs International are Joint Lead Managers with Citigroup and Golden Sachs International acting as joint global coordinators and Bookrunners for the international offering and BMA Capital as Lead Manager and Bookrunner for the domestic offering and joint lead manager of the international offering.

The retail offer of 21,505,000 shares to investors in Pakistan at the price of Rs 110 per share will commence in December and is expected to be completed within a few weeks. The retail price represents an effective discount of almost 3 percent to the institutional offer price after adjusting for company''s announced first quarter dividend payment of Rs 1.75 per share. Commenting on over-allotment option, Privatisation Minister Zahid Hamid said that additional shares will add $100 million to net proceeds and the amount will be utilised as per law to pay back debt and poverty alleviation.

He said OGDC GDS was Pakistan''s biggest-ever transaction and it raised the confidence of foreign investors in today''s Pakistan. While launching the GDS the minister had announced that Pakistan will use the option of over-allotment in case OGDC share in the international market oversubscribed.


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## Neo

*Germany keen to strengthen economic ties with Pakistan *

KARACHI: December 12, 2006: Germany is keen to further promote the economic ties with Pakistan, Consul General of Germany in Karachi, Hans-Joachim Kiderlen said here on Tuesday.

He was talking to reporters after the inaugural session of a conference organised at a local hotel by the Goethe Institute in collaboration with the Area Study Centre for Europe, University of Karachi.

On the occasion he also delivered a keynote address on " The basic right of religious freedom as the foundation of inter- religious dialogue".

"We have good chimerical, economic relations which we would like to promote and rise more again", the German Consul General remarked with regard to trade ties with Pakistan.

He said, the two countries enjoy many more relations and added Germany has an interest in the Pakistani culture particularly Sufism and archaeology.

He said that science is another topic and pointed out that Pakistan's Higher Education Commission (HEC) is actively seeking the cooperation of Germany like some other European countries for the setting up of the technical universities as well as institutes of technologies.

The Consul General pointed out that Germany would be setting up one such institution in Lahore with the collaboration of the Pakistani authorities.

He also spoke of Pakistan's important role for the stability in this region.

Kiderlen was of the view that it is a broad array of different elements, which characterise German-Pakistan relations.

In her welcome address, Director of the Area Study Centre, University of Karachi, Prof. Dr. Naveed Ahmad Tahir, hoped that at this conference the scholars will contribute more original thinking on the modus operandi needed for protecting the basic principle of freedom of expression while ensuring the religious sensibilities are respect.

She said that no doubt the principle is intrinsically good for human race. However, there must be a distinct line drawn between freedom and license especially as regards religious beliefs.

Dr. Naveed further said that although dissent is often tolerated in political milieu, religion is a matter of unquestioning belief and therefore must not be challenged in any manner by others.

Speaking on the occasion, the Director of Goethe Institute, Dr. Petra Raymond, said that for this conference we have invited journalists, scholars and representatives of Muslim and non- Muslim organisations from Germany, Turkey, Pakistan and Bangladesh to an open exchange forum with students and multiplicators from general public initiating stimulated discussions.

She said that with this conference, the Goethe Institute in Karachi intends to continue the dialogue with the Islamic world, which started after its reopening in 2004.


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## Neo

*Engro Chemicals to set up new fertiliser plant *

ISLAMABAD: Engro Chemicals Private Limited on Monday offered Rs101 million as bid for allocation of 100 million cubic feet per day (mmcfd) gas for setting up a new fertilizer plant near Qadirpur gasfield.

Minister for Industries and Production Jehangir Khan Tareen and Secretary Industries Shahab Khawaja also witnessed the bidding, says a press release. Speaking on the occasion Tareen said that bidding was held in a transparent manner in which four parties including two foreign companies had shown interest.

He said that to make the bidding process transparent for allocation of 100 MMCFD gas for establishment of a new fertilizer plant, the prime minister had constituted a committee. He said only Engro Chemical Private Limited participated in the final bidding and offered Rs101 million. 

Minister informed that four companies namely International Petroleum Investment Limited, Orascom Construction Industries Limited, Fauji Fertilizers and the Engro Chemicals were short listed but on the day of final bidding only Engro Chemicals participated in the process.

The minister said that fertilizer plant after completion would produce 1.3 million tonnes urea per annum in the country thus help save a big amount from the import bill. He added this would also help promote agriculture sector and benefit the farmers. The minister for Industries said the fertilizer plant would be on board in three-years.

He hoped that they would establish a state-of-the-art fertilizer plant and play their role in the promotion of the agriculture sector. Chief Executive Officer of Engro Chemicals Asad Omar said the plant would be completed in three years and will produce 1.3 million tonnes urea per annum.


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## Owais

*Kalabagh Dam to be built as part of water vision: Musharraf *


RAWALPINDI (updated on: December 12, 2006, 20:04 PST): President General Pervez Musharraf said on Tuesday that Kalabagh and all others dams including, Bhasha, Munda, Gomal Zam and Kuram Tangi would be constructed as part of his water vision 2025. 

He was addressing on the occasion of Silver Jubilee celebration of Pakistan Agricultural Research Council in Islamabad. 

He emphasised that agricultural growth could only be sustained by constructing new water reservoirs and said

"If new reservoirs are not constructed now, the country would be facing acute water shortage with serious implications in its agriculture and economic growth". 

President Musharraf said the Mangla Dam raising project being undertaken at an estimated cost of sixty two point five billion rupees would make available two point eight million acres feet of additional water.

Musharraf called for optimising country's potential in the agricultural sector especially through value addition in live stock and dairy. 

The president said this must translate into increased economic gains for the country and poverty reduction.

He said there is a need for a quantum jump in the agricultural sector through area and yield intensification and stressed the need for value addition in live stock, fruit and food processing.

He said Pakistan has tremendous potential in the agro-sector as it has fertile land and favourable climate with abundance of water resources.

Referring to various steps, the government has taken for achieving self-sufficient in food grains, President Musharraf said increase in support price of wheat has helped the country achieve surplus wheat crops. 

About the importance of development of live-stock, the president said the country which is the fifth largest milk producer in the world must value add in this sector in order to enhance its exports. 

He said, for this purpose organisational capacity must be enhanced to optimise country's potential through value addition in all areas especially in dairy products.

Underlining the importance of food self reliance President Musharraf underscored the need for area and yield intensification through advance research in the field.

The president also underscored the importance of drip and sprinkling irrigation especially for the benefit of small farmers and said the use of laser levellers would not only help conserve energy but also make available more water precious of the agriculture of the country. He called for extensive use of lesser levellers by the farmers for achieving better crops. 

Referring to Rs66 billion brick-lining project, the president said this would make available additional water to the farmers and help boost country's agriculture. 

He said fifty percent of brick-lining of 86000 canals would be completed in the current year while the remaining work would be completed in the next two years.

The president urged the farmers to benefit from the agricultural loans and said the Zarai Tarqiati Bank was offering 30 billion rupees to the farmers in the past and now as a result of government initiatives all commercial Banks are offering agro loans to the tune of 160 billion rupees. He called for ensuring that the small farmers stand to benefit from these loans. 

He also gave excellence award to eminent Scientists of the Pakistan Agricultural Research Council for their commendable services in the growth of agro sector through the meaningful research.


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## Owais

*WB for boosting forex to maintain rupee value *

ISLAMABAD: Pakistan needs to strengthen its foreign reserves and further tighten monetary policy to maintain the rupee value at the present level with the existing trade deficit, said John Wall, Country Director of the World Bank.

He was talking to journalists on the occasion of &#8216;2006 Unesco Asia-Pacific Heritage Awards&#8217; announcement ceremony held on the premises of the World Bank. 

Wall said there should not be an artificial movement to maintain the rupee value at the existing level, rather the market forces should play their role in determining the dollar-rupee parity as they are determining on their own the value of rupee. &#8220;The rupee is currently floating and it should remain competitive.&#8221;

He said there is a need to pile up foreign reserves, reduce import and surge exports to an optimum level to overcome the widening trade deficit owing to which the value of rupee can be compromised. He said that to avoid devaluation of rupee, the government also needs to further tighten the monetary policy.

Responding to a question, Wall denied that the World Bank has suggested devaluation of rupee to the government. He said reduction in exports in the first quarter is not a healthy sign.

About recommendations of the International Monterey Fund (IMF) seeking devaluation of rupee, he said it is just an analysis and it is up to the government to decide about the exchange rate assessment of rupee.

Wall said Pakistan&#8217;s existing foreign reserves are enough for imports, but not ample for maintaining 6 to 8 per cent GDP growth in the country. 

However, an official of the Ministry of Finance told The News that the foreign exchange reserves are enough to meet 20 to 25 weeks&#8217; imports and with the input of OGDC GDR receipts the level would further improve. 

He said the government is keeping strict vigil on the market forces so that they could not hurt market stability and enjoy any illegal benefit out of it.


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## Neo

*Govt plans to develop 97000 MW power with renewable energy *

ISLAMABAD: December 12, 2006: The government will develop renewable energy for 9,700 MW power generation employing small hydro, wind and solar technologies by the year 2030.

This was stated by the Chairman Alternative Energy Development Board (AEDB) Shahid Hamid in an interview on Tuesday.

He said under the policy already approved by the PM, the universal access of electricity will be ensured to all parts of the country, especially the rural areas.

The chairman said technologies like small hydropower plants up-to 50 megawatts, solar photovoltaic and thermal energy and wind will be introduced for power generation.

He said under the short term programme of the policy during the period upto June 2008, very liberal and attractive incentives would be provided to attract investment to put the country on the renewable energy map of the world.

Private sector will also be encouraged to undertake commercially viable renewable energy-based power generation projects, he added.


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## Neo

*Difficult choices amid worsening economic trends*

A single line hint Ã¢â¬Åthe Central Bank may have to make a difficult choice, if large external imbalances persistÃ¢â¬Â dropped by the State Bank of Pakistan in its annual report of 2005-06 economy has drawn extreme but conflicting views from the economists and businessmen.

Ã¢â¬ÅWhat this difficult choice for the central bank can be?Ã¢â¬â¢Ã¢â¬â¢ There is a possibility of further tightening of the monetary policy to discourage consumerism and depreciation of rupeeÃ¢â¬â¢s exchange value. What are the implications, the economic, financial, social and political fall out of such an option that State Bank also considers Ã¢â¬Åa difficult choiceÃ¢â¬Â.

Ã¢â¬ÅThe International Monetary Fund (IMF) may be asked to share PakistanÃ¢â¬â¢s foreign exchange management responsibility if foreign inflows fail to match the extraordinary trade deficit and the resultant imbalance in current accountÃ¢â¬â¢Ã¢â¬â¢ is one view. Mr Akbar Zaidi, a noted economist, says that IMF and the World Bank may be engaged but Ã¢â¬Åonly after the elections have been held and not beforeÃ¢â¬â¢Ã¢â¬â¢.

Dr Ashfaq Hasan Khan, a government advisor, accepts that widening imbalance in external sector is a challenge but says that it will be faced with right policies to augment foreign inflows. He is confident of a net increase in foreign exchange reserves at the end of the day. Ã¢â¬ÅWe faced successfully much bigger challenges in the near past and will overcome this challenge tooÃ¢â¬â¢Ã¢â¬â¢, he said from Islamabad.

Businessmen are surprised over a press release issued by the State Bank of Pakistan on Tuesday which suggests that all concessions and incentives offered by the government by way of Rs137 billion refinance, Rs22 billion loans swapping and about Rs11 billion rebates have been misused. Instead of showing improvement, the textile exports are showing negative results in the current fiscal year. Ã¢â¬ÅToo little and too lateÃ¢â¬â¢Ã¢â¬â¢ remarked a textile industry leader on the concession package offered to them which, he said, has failed to push up exports.

A retired bureaucrat blames rising consumerism now being officially promoted, at the cost of bank money and remittances, for bringing PakistanÃ¢â¬â¢s economy under the direct impact of the much feared double edge swordÃ¢â¬âthe inflation and ever widening current account imbalance.

Released with inordinate delay early this month, the report in its assessment of remaining half of the current fiscal year, notes with concern risks to the economy. One is the inflation that ``may remain above 6.5 per cent annual target Ã¢â¬ËÃ¢â¬â¢ and another is widening external current account deficit. Extraordinary trade deficit of over $12 billion in the last fiscal year, which is showing no signs of respite in the current fiscal year, is the main cause of widening current account imbalance.

The State Bank wants the government to reduce import expansion and to boost exports which is easy to say but difficult to do.

There are two ways to deal with this situation. One to continue the tight monetary policy and to further increase the interest rates but then the central bank cannot overlook the Ã¢â¬Åinherent danger of excessive tightening that may hurt the growthÃ¢â¬Â. Ã¢â¬ÅA further rise in interest rates could risk considerably slowing the growth momentum of the economyÃ¢â¬â¢Ã¢â¬â¢, the report apprehends, and the second is a sharp depreciation in rupee value that is fraught with a frightening consequence of economic de-stablisation.

The State BankÃ¢â¬â¢s hint at making a difficult choice comes in context of these two difficult options which has thrown wide open all speculations as to what direction the national economy is taking. Mr Zaidi considers the last five years after 9/11 a period of missed opportunities. Ã¢â¬ÅOur foreign exchange reserves are stagnant at $12 billion though there have been about $20 billion remittances during this period, Ã¢â¬â¢Ã¢â¬â¢ he said.

Mr Zaidi has a point because a casual glance of the foreign exchange reserves of emerging markets in PakistanÃ¢â¬â¢s neighbourhood shows that these are constantly on the rise. Chinese foreign exchange reserves are now close to a trillion dollars from only $168 billion in the year 2000. , China is amassing $17 billion every month in its reserves. China relies heavily on its expatriates all over the world to contribute to the economic growth of the mainland.

India too has mobilised expatriate Indians who are making contributions in the economic development of their country. India was alarmingly bankrupt in foreign exchange reserves in 1990-91, but now has about $170 billion reserves.

Singapore has $129 billion reserve, Indonesia $39 billion, Malaysia $79 billion, Philippines $18 billion and even tiny Viet Nam about $11 billion.

Pakistan benefited from the 9/11 outfall and managed to attract substantial foreign exchange inflows that helped it build up $13 billion reserves in just two years. But for past two-three years, these reserves are stagnant while import bill, and financial outflows in services is increasing.

Ã¢â¬ÅPrivatisation of the PTCL, the Habib Bank and the UBL helped to a great extent in plugging foreign exchange hole last yearÃ¢â¬â¢Ã¢â¬â¢ the retired bureaucrat said who warned that once the foreign investors start repatriating their profits back home the real problem would hit Pakistan. This year, the OGDC`s global depository shares (GDS) fetched more than $800 million. The Privatisation Commission is in the process of finalising transaction of GDS of four other institutions in near future.

Dr Ashfaq Hasan disclosed that the Foreign Direct Investment (FDI) inflow in first four months of the current fiscal amounts to $1.1 billion. His estimate for the fiscal 2006-07 is about $4..5- 5 billion.. Remittances are picking up and are expected to give about $4.6- 5 billion. At the end of the year, he is confident, PakistanÃ¢â¬â¢s reserves would show some improvement.

On the trade side, imports are expected to show a slow down because of lowering of international oil price. Ã¢â¬ÅThe import of textile and cement machinery is now less,Ã¢â¬â¢Ã¢â¬â¢ Mr Ali Reza, President of the National Bank of Pakistan, disclosed. According to him Pakistan investors have opened letters of credits after booking import orders and for some time there will be less pressure.

However, the latest estimate of the Ministry of Commerce is that the current fiscal would end up with a trade deficit of $12 billion.

Exports, however, remain the worrying concern for the State Bank, businessmen and the government. Ã¢â¬ÅThe competitive export market has taken a toll in terms of lower prices as well as a fall in export volumes of some products,Ã¢â¬Â the State Bank report observes on the basis of analysis of export in last four months which is down by more than 10 per cent.

The State Bank does not support subsidies to support export as it Ã¢â¬Åcarries significant economic costÃ¢â¬â¢Ã¢â¬â¢ and instead pleads for policies that should reduce cost of doing business by improving infra-structure, enhance labour skills, strengthen managerial capacity, reduce unit labour cost and provision of unhindered energy at competitive rates.

But this is exactly what textile exporters are asking and pleading. Textile leadersÃ¢â¬â¢ contention is that their products in USA and Europe have been out priced because the energy and labour cost in India, China and Bangladesh is much lower and that in addition there are subsidies being offered in financial cost and exemption from taxes. Ã¢â¬ÅTextile export is hardly 15 per cent of total Chinese export and about 30 per cent of Indian exports,Ã¢â¬â¢Ã¢â¬â¢ argues Aziz Memon, a leading garment exporter. But in Pakistan textile is 60 per cent of total exports, 11 per cent of the GDP and it generates almost 40 per cent of urban employment. A slight slump in textile business shakes the national economy in Pakistan.

India will have to struggle a bit to absorb any setback on textile business and China can easily adjust.

Mirza Ikhtiar Baig, Chairman of Textile Committee in the Federation of Pakistan Chambers of Commerce and Industry, has presented a comprehensive paper showing production cost comparison of Pakistan with neighbouring countries to establish that there is a case for giving a hard look to energy tariff, tax rates and impact of non-revenue taxes on the textiles and on business.

Prime Minister Shaukat Aziz and Commerce Minister Humayun Akhtar Khan are reported to have held several meetings with textile leaders and of other industrial sectors. The government is expected to offer a short-term salvage package to the industry in next one or two weeks.


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## Owais

*Musharraf urges agriculture scientists to help raise per-acre yield *

ISLAMABAD (December 13 2006): President General Pervez Musharraf on Tuesday emphasised the need for optimum utilisation of research and technology and urged the agricultural scientists to help the farmers achieve a quantum jump in per acre yield of crops to improve agriculture sector and alleviate poverty.

The President was addressing the inaugural ceremony of silver jubilee celebrations of Pakistan Agricultural Research Council here at the National Agricultural Research Centre. The President regretted that in last 30 years no dam could be constructed adding that the present government has started various projects to build dams.

He said work on Bhasha-Diamir Dam has been started while Merani Dam has been completed. He said all other big and small dams including Munda Dam, Akhori Dam and Kalabagh Dam will be constructed to provide adequate water for irrigation to the farmers.

President Musharraf said agriculture sector is backbone of the country. He said the country has tremendous potential, all types of fertile land and weathers but there is need to adopt co-ordinated efforts at all levels to get benefit from these natural resources to increase agricultural production.

The President said with 70 percent population depending on the agriculture sector, Pakistan is an agrarian society, therefore, it was the responsibility of the agricultural scientists and researchers to help the farmers to increase the production of their crops.

Appreciating the efforts of the scientists working in Pakistan Agricultural Research Council, the President said due to their efforts there was quantum jump in the wheat production and other crops.

Referring to availability of water, the President said the country has abundant water resources but there is need to build water reservoirs to store it and use it at appropriate time. The President said many canals including Thal canal, Rainy canal and Rikki canal are being constructed for better utilisation of the available water for irrigation.

President Musharraf said due to shortage of water, "We should utilise less water, so that we can irrigate more land by using laser levelling, drip irrigation and sprinklers."

He said laser levelling helps in reducing the use of power and water, therefore, the farmers should be motivated to use these technologies. President said more than 30 percent water, which was wasted in the watercourses was now being saved through brick lining of these courses.

He said the work on brick lining is in full swing and half of it has been completed while in all 86,000 watercourses would be completed within next two years. In Balochistan, the President said, besides the work on brick lining, the government was also improving water tanks to save water.

Musharraf asked the scientists associated with the agricultural research to project and promote their research in a proper way using the mass media. Referring to the importance of support price, the President said government increased the support price of wheat and it helped in improvement of per acre yield.

He however, emphasised the need to adopt a comprehensive market mechanism, so that there should be no need to increase support price and the farmers could get benefit from the market directly. Referring to loans for the farmers, President Musharraf said Zarai Tarqiati Bank of Pakistan Limited (ZTBL) has been directed to help the poor farmers. He said besides rupees 30 billion loans from ZTBL, now the private and other banks have also been providing loans to farmers and rupees 160 billion are available as agriculture loans.

Emphasising the need on value addition the President said Pakistan is the fifth largest milk producing country, but due to lack of facilities, it could not utilise the milk produced in the country. He said multinational companies like Nestle are increasing their activities in this sector the company is setting up its biggest ever milk plant in Kabir Wala due to abundant supply of milk in the area.

President Musharraf said there is a need to bring in "white revolution" in the country as Pakistan has great potential in milk production. President also agreed to the proposal to improve the service structure of the scientists working at the PARC and added that there should be more financial return for them.

Federal Minister for Food, Agriculture and Livestock Sikandar Hayat Bosan speaking on the occasion highlighted various projects and incentives for the improvement of the per acre yield. Chairman PARC Dr Muhammad Tasneen in his welcome address highlighted the work done by the scientists of the PARC for the benefit of the farmers.

The President gave away Silver Jubilee awards to five scientists for their services rendered in the field of research in agriculture sector. Those who received awards included Dr Amir Muhammad, founder chairman PARC, Dr Kauser Abdullah Malik former chairman PARC, Dr Rafique Ahmad ex-director Honeybee Research Institute NARC, Dr Muhammad Afzal Director General NARC and Late Ikram ul Haque ex-Director Planning PARC. Earlier, the President visited an exhibition arranged on this occasion.


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## Neo

*Local carsÃ¢â¬â¢ sale grows by 10.4pc in five months: 64,996 units sold*

KARACHI, Dec 12: For the third time in a row this year the overall sale of locally assembled cars showed a growth of 10.4 per cent during July-November 2006, compared to the same period of last year.

The decline in growth rate in car sales started in July-September this year before that the companiesÃ¢â¬â¢ sales were rising at an astonishing rate of 20-30 per cent.

Total car sales stood at 64,996 units in the last five months (July-Nov-06) as compared to 58,849 units in the corresponding period last year. Again with the exception of few cars like--Toyota Corolla petrol version, SuzukiÃ¢â¬â¢s Cultus, Alto and MehranÃ¢â¬â-sales of Honda cars and Hyundai Santro remained depressed as compared to July-Nov 2005.

However, the sale of Suzuki Liana, which has replaced Baleno this year, has started losing ground to mainly imported cars.

Honda is said to be losing market share because of change of its model to 1,800cc engine coupled with its price hike, as the price of Honda City had also surged with the introduction of new model this year. Hyundai Santro makers are now offering Rs30,000 discount on the purchase of CNG-version to clear the backlog.

Starting with sales of 670 units in July 2006, Suzuki Liana sales had surged to 761 units in August 2006, and then started falling to 655 units in September, 372 in October and 354 units in November 2006. Pak Suzuki is offering free registration and a 29-inch Sony TV in a lucky draw for the buyers of Liana.

A total of 2,379 units of Honda Civic were sold in July-November 2006 as compared to 6,080 units in the same period last year, while Honda City sales plunged to 4,857 units from 6,237 units.

Toyota Corolla sales (mainly petrol version) rose to 14,625 units as compared to 10,426 units, while Daihatsu Cuore sales also increased to 5,372 units from 3,246 units.

Suzuki Cultus and Alto sales went up to 10,209 and 8,779 units, respectively, in July-November 2006 as compared to 7,475 and 5,781 units in the same period of last year. Suzuki Mehran sales jumped to 14,425 units from 13,969 units. Hyundai Santro sales declined to 1,538 units from 2,703.

Giving an overall picture of auto industry, Chief Executive Officer (CEO) Indus Motor Company (IMC), makers of Toyota, Pervez Ghias linked the decline in sales of cars to rise in leasing/financing rates to 14-16 per cent from 10-12 per cent last year.

This was followed by strict documentary requirements and measures taken by the State Bank to lessen default cases and the availability of the used CBU vehicles at reduced costs. Because of rising interest rates, there has been reduction in auto financing business.

He said sales of certain product categories had been affected by arrival of 45,000 used cars in 2005-06. However, import of used cars are now on decline, which means that demand and supply gap has been balanced in some cases and in fact in some cases supply is higher than demand.

Mr. Ghias said that the CBU import policy has been misused by the used car importers as it was designed to facilitate the overseas Pakistanis returning home. Now it is expected that the restriction on import of vehicles more than five years old will pave way for standard vehicles.

As a result of huge glut of used cars few assemblers are operating under capacity. If equivalent number of Pakistani cars would have been sold then it would have been part of documented economy, providing job avenues etc. he added.

To a query why IMC adopted lukewarm attitude in changing models, he said the company has to follow the Toyota global model change policy and the timeframe. Time is required for new product design, sourcing and supply of parts.

He was asked to elaborate on why the assemblers receive huge money from customers in terms of advance booking and keep the same for many months. Even the annual accounts of Toyota Motors 2005-06 showed an amount of Rs6.6 billion received from customers in advance booking.

Pervez Ghias explained that keeping the full amount of money deters potential investors as they can only book a few number of vehicles on the reduced cost. If the companies accept partial payments then they will book more cars and the end-users will have to wait for a longer period.

He added that the companies pay interest amount on waiting period of more than 60 days and the refund facility is available to customers booking cars through dealerships.


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## Neo

*Auto industry key to economic development: Tareen *

ISLAMABAD: Minister for Industries, Production and Special Initiatives, Jahangir Khan Tareen on Tuesday underlined the importance of auto industry and termed it key to economic development of the country.

He said, Ã¢â¬ÅAuto industry because of its forward and backward linkages and economic multiplier effects will contribute to register a robust growth for considerable period.Ã¢â¬Â

He stated this while inaugurating a workshop on Auto Industry Development Programme (AIDP), organised by Engineering Development Board. 

Tareen said the government wants to encourage growth, promote domestic competition, enhance competitiveness and stimulate innovation through the programme. He expressed the hope that the policy framework of the government will double the contribution of auto industry to the GDP from 5 to 6 per cent in 2011-12 from present 2.8 per cent, with turnover of Rs600 billion and export to $350 million and $300 million for CBUs. 

Paying tributes to vending sector, he described it as vibrant major job provider and necessary for the engineering skills know-how and integration of technologies in other sectors.

He said the government will support the auto industry with skill development programmes, technology up-gradation, auto research and development. 

Referring to up-gradation of Engineering Development Board to Authority, he said that the ministry was working on its details and exercise will be completed by the end of January. This will give more independence and powers to the organisations for serving the auto industry. 

However, he expressed regrets on non-introduction of new products by the industry during the last few years. The advantages of the policies initiated by President Musharraf and Prime Minister Shaukat Aziz have benefited the auto industry, he added.

Earlier Chief Executive Officer, Engineering Development Board, Imtiaz Rastgar, in his welcome address said the programme has been developed as the higher protection to the localised parts under the Tariff Base System (TBS) would not be for an indefinite period due to governmentÃ¢â¬â¢s external obligations and risk of potential un-competitiveness.

The programme provides a complete road map to Auto Industry with clearly spelled targets, he said and added that a pre-announced five year tariff plan for both CBUs and components will help the industry to make long term investment and production decisions.

It will also make business environment transparent and predictable, he said and hoped that the incentives given in the programme will give a direction to the industry to become competitive, innovative and sustainable.


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## Neo

*SingaporeÃ¢â¬â¢s PSA makes highest bid for Gwadar Port *

KARACHI: A consortium led by Singapore port operator PSA International [PSA.UL] has submitted the highest bid to manage PakistanÃ¢â¬â¢s Gwadar Port but the tender has not yet been awarded, a Pakistani port official said on Tuesday.

Ã¢â¬ÅWe cannot give the figure quoted by PSA International until the negotiations are final but they are the highest and the successful bidder,Ã¢â¬Â the official of the Gwadar Port Implementation Authority said, declining to be named. The PSA bid was accepted at the weekend.

The Gwadar deep-sea port is on the Arabian Sea, about 450km (280 miles) west of the city of Karachi and about 70 km (45miles) east of the Iranian border. China provided $198 million for the $248 million port project. It is scheduled to begin operations next year.

Under the concession, the winning bidder will take over the operation and management of the port for 40 years.

The port official said the offer from the runner-up Ã¢â¬âPakistan International Container Terminal Ã¢â¬â was Ã¢â¬Åfar behindÃ¢â¬Â that of the Singaporean operator. Ã¢â¬ÅWe are in the process of finalising technical and financial terms and conditions with them and will take a decision very soon,Ã¢â¬Â the official said. PakistanÃ¢â¬â¢s AKD Group is part of the Singaporean consortium.


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## Neo

Wednesday, December 13, 2006 

*WB proposes up to 40% cut in KPT staff*

* Also seeks 15% reduction in port service charges, closing down of Karachi Dock Labour Board
* Suggests privatisation of PNSC

By Sajid Chaudhry

ISLAMABAD: The World Bank has proposed reducing up to 25%-40% Karachi Port staff, 15% cut in port service charges, closing down the Karachi Dock Labour Board and looking into the possibility of privatization of the Pakistan National Shipping Corporation (PNSC) to be included in PakistanÃ¢â¬â¢s ports and shipping reforms. 

Reveals a World Bank report entitled Ã¢â¬ÅTransport Competitive-ness in PakistanÃ¢â¬Â, analytical underpinning for national trade corridor improvement programme, prepared by energy, and infrastructure operation unit of the South Asia Region of the World Bank. 

According to the reportÃ¢â¬â¢s assessment and recommendations, the basic policy decision to make port authorities landlord rather than service operators has already been taken and extensively introduced. But port authorities (particularly the Karachi Port Trust) are still over-staffed and unnecessary labour regulations (at Karachi Dock Labour Board) still persist, rising the cost of services to the users. While cargo-handling charges are comparable with international ports, shipping charges are high and port authorities are very profitable. The government needs to access whether such financial transfers from users to the port authorities are really in the best interest of development, or whether lower charges and lower port profits would have more positive impact on trade and economic development. Ports and shipping reforms should include such actions. 

Improving port management by reducing port charges by 15%, appointing management specialists, reducing port staff by 25%-40%, phasing out Ã¢â¬ÅDouble ChargingÃ¢â¬Â to streamline container handling charges, outsourcing of port services to the private sector and making navigation available on a 24-hour and seven-day a week basis. 

Updating the national port management plan to revaluate the appropriate roles of the Karachi Port Trust (KPT), the Port Qasim Authority (PQA) and the Port of Gwadar. 

Closing down the Karachi Dock Labour Board (KDLB) by using a mutually-agreed separation scheme. 

Improving port infrastructure to modernize and meet international standards by investing in both cargo-handling capacity and draft depth to cater for larger vessels. 

Completing the transformation of KPT to landlord status. In the longer term, the government of Pakistan may also wish to consider whether a restructuring of the KPT to provide greater focus to both port and property activities would increase the effectiveness of both. 

Raise the level of port and commercial, marketing professionalism at both ports and establishing performance-monitoring indicators and benchmarks. 

Sea freight rates are determined in a competitive market and Pakistan can do little to affect them, other than ensuring that the ports charge appropriate rates, provide the draft necessary to maintain encourage direct calls and ensure rapid turn around. At present international shipping provides Pakistan with comparable service times and rates to its main competitors. The role of Pakistan-owned vessels is strictly limited to the PNSC, which enjoys a privileged and profitable position through its monopoly over the import of bulk petroleum oil. Increased participation of Pakistan-owned vessels might be encouraged by the privatization of PNSC, removal of cargo reservation and the maintenance of existing tax incentives. However, commercial benefits of the external sector would be limited as Pakistan-owned shipping would follow world market rates. The economic benefits would also be rather limited as the foreign exchange component for shipping services (capital, cost, fuel, spares) is high.


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## Neo

Wednesday, December 13, 2006 

*Pakistan 3rd in world in banking profitability: IMF*

By Arshad Hussain

KARACHI: PakistanÃ¢â¬â¢s banking sector is on the third position because of its higher profitability in the international banking markets, a report of the International Monetary Fund (IMF) said, which has attracted foreign investors, including multinational financial institutions.

On the IMF chart, PakistanÃ¢â¬â¢s banking profitability is on third position after Colombia and Venezuela. On the IMF chart India is on 36th position and China is on 40th position.

Foreign banksÃ¢â¬â¢ interest in Pakistani banks is also on the rise, partly in response to the governmentÃ¢â¬â¢s plans to divest most of its shares in several domestic banks.

Mergers and acquisitions are on the rise, partly as a result of mandated increases in minimum required capital from Rs 1.5 billion at end-2004 to Rs three billion at end-2006, and further to Rs six billion in 2009. 

Standard Chartered Bank has already completed a $487 million deal to buy a domestic bank, and ABN Amro and other foreign banks are also, reportedly, working to acquire local banks. 

Ã¢â¬ÅMost financial soundness indicators (FSI) of the banking system have improved during December 2004 to June 2006Ã¢â¬Â the IMF report said. Ã¢â¬ÅPakistanÃ¢â¬â¢s banking system continued to strengthen since 2004.Ã¢â¬Â

PakistanÃ¢â¬â¢s banks maintained their ranking among the top half in a group of 44 emerging market countries in terms of indicators of capital adequacy and asset quality, but moved to near top of the ranking in terms of profitability from a position near the bottom in 2001.

The rise in earning and profitability indicators was particularly noteworthy, partly reflecting the high spread between deposit and lending rates (700 basis points). 

BanksÃ¢â¬â¢ financial soundness indicators have improved, though this could be partly due to continued rapid credit growth. The expansion in bank credit to the private sector slowed down to 23 percent in 2005/06 from an average of 31 percent in the previous two years, but remained on the high side. The slowdown in credit during 2005-06 was broad based, affecting all types of borrowers, including households. The growing deposit base remained the primary source for credit expansion; banksÃ¢â¬â¢ foreign borrowing, other than for trade credit, remained negligible. Concentration of the banking system remains high.

As of March 2006, PakistanÃ¢â¬â¢s five largest banks held 53 percent of the systemÃ¢â¬â¢s assets and 51 percent of its loans, somewhat less than at end-2004. 

Public banks still account for about 20 percent of total assets of the banking system (excluding the SBP). Monetary policy was tightened in July 2006; reserve requirements on bank deposits were raised for the first time since end-2000 and, two weeks later, the discount rate was increased to 9.5 percent. 

Foreign investorsÃ¢â¬â¢ interest in Pakistan increased significantly in 2005-06. The sale of the Karachi Electric Supply Company and the partial sale and transfer of management control of Pakistan Telecommunication Company (PTCL) generated large foreign exchange inflows and revitalized the privatization process. Foreign direct investment inflows, excluding privatization, rose by 70 percent. The successful March 2006 cash reserve requirements on demand deposits (CRR) were raised from five to seven percent, and the Statutory Liquidity Requirement on demand and time deposits (excluding CRR) was raised from 15 to 18 percent.

Placement of $800 million of 10-year and 30-year government bonds at very favourable terms was also indicative of strong foreign demand for Pakistani paper.

Progress on structural reforms was mixed. Reforms to broaden the income tax base and reduce rates continued, and the legal framework for investor protection was strengthened. However, reform of the power sector has stalled, and the schedule of higher regional electricity tariffs has not yet been implemented. Progress on trade liberalization has slowed down.


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## Neo

Wednesday, December 13, 2006 

*LSM sector grew 9.7% in Q1 of current fiscal*

By Tanveer Ahmed 

KARACHI: The Large Scale Manufacturing (LSM) index registered a 9.70 percent increase in the first quarter (July-Sep) of the current financial year compared to the corresponding period of the last fiscal year.

However, the LSM index depicted a growth of 6.78 percent in September of 2006-07 compared to same month of previous year. The index was up by 12.98 and 7.49 percent in the months of July and August of the current fiscal year respectively compared to the corresponding months of previous year, the data released by Federal Bureau of Statistics (FBS) showed on Tuesday.

The LSM index is based on the latest production data of 100 items provided by the Oil Companies Advisory Committee (OCAC), Ministry of Industries & Production and the provincial bureaus of statistics.

The breakup of data shows that OCAC index continued to register a negative growth and declined by 9.49 percent in the July-September period of this financial year whereas in September alone, the index was down by 5.39 percent.

The Ministry of Industries & Production index was up by 11.00 percent in the first quarter of current financial year whereas in month of September, it depicted a growth of 10.86 percent.

The data complied by the provincial bureaus of statistics suggests that this category index was up by 11.31 percent in first three months of financial year 2006-07 over the previous year and in September alone, it went up by 2.46 percent compared to August of the previous financial year.

In the petroleum production sector, the statistics show that jet fuel oil production dipped by 1.57 percent in July-September 2006-07, however it was up by 15.23 percent in September. Kerosene oil production was down by 6.40 percent and 23.38 percent in July-September and September periods of the current financial year respectively.

In the first quarter, motor spirits production dipped by 6.64 percent, high speed oil production by 15.60 percent, furnace oil by 12.73 percent, lubricating oil by 1.79 percent and LPG production by 2.77 percent. In the Ministry of Production & Industries index, the production of cigarettes was up by 1.26 percent in first three months. Cotton yarn by 13.32 percent, cotton cloth by 14.25 percent, paper and board by 7.68 percent, caustic soda by 12.35 percent, steel products by 14.47 percent, pig iron by 122.11 percent, glass plates and sheets by 0.94 percent and cement production by 16.38 percent.

The auto sector performed well in the first quarter of current financial year and contributed substantially in the overall index growth, tractors production was up by 7.41 percent with 12192 units in first three months, trucks production rose by 9.56 percent with 1135 units, buses by 17.08 percent at 281 units, jeeps and cars production by 12.73 percent at 41457, motorcycles production by 4.79 percent at 186670 units and production of the LCVs was up by 6.26 with 6945 units in the first quarter.

On the other hand in the MI index, the production of soda ash dipped by 1.75 percent, phosphate fertilisers by 7.75 percent and coke production (Pak Steel) by 29.90 percent in first quarter.

In the index of the provincial bureaus of statistics, in the July-September period, the cooking oil production was up by 3.30 percent, starch and its products by 12.33 percent, beverages by 28.32 percent, cycle tyres by 3.99 percent, cycle tubes by 5.53 percent, motor tyres by 5.64 percent, air conditioners by 218.37 percent, switchgears by 132.01 percent, diesel engines by 31.72 percent.

Whereas the production of TV sets declined by 31.32 percent, bicycles by 11.37 percent, electric bulb by 10.38 percent, tea blended by 8.65 percent, vegetable ghee production by 0.37 percent and electric meters by 19.89 percent.


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## Neo

Wednesday, December 13, 2006 

*Mobilink selects Motorola to expand HLS*

KARACHI: Motorola announ-ced Tuesday an expansion to the successful deployment of its home location server (HLS) to enable Pakistan Mobile Communications Limited Ã¢â¬ÅMobilinkÃ¢â¬Â to serve an additional 10 million subscribers for an average of 30 million subscribers overall. 

According to a press release the existing HLS order, announced in February, supported Mobilink in meeting its fast growth plans and reaching its goal of 20 million subscribers, up from 13 million subscribers. Ã¢â¬ÅThe major benefit of MotorolaÃ¢â¬â¢s HLS is that it enables telecoms providers to add capacity quickly and seamlessly and at reduced capital and operating expenses,Ã¢â¬Â said Jose Figueroa, corporate vice president and general manager, Motorola Networks and Enterprise EMEA.


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## Neo

*Oil and gas found *

KOHAT (December 14 2006): Huge quantity of oil and natural gas has been discovered in Adam Banda, Hangu district, sources confided to NNI correspondent here on Wednesday. Adam Banda, a remote area of southern district Hangu, NWFP, is located some 94 km towards south west of Kohat near Gurguri Oil field.

It is worth mentioning here that "MOL, Pakistan Oil and Gas Company" as investor and operator has been busy in exploration of oil and gas in the 'Thall Block' comprising three districts Kohat, Karak and Hangu for many years.

The MOL has been successfully completed its deep drilling at Manzali Well 1 at Gurguri, some 86 km away from here towards south-west where huge quantity of 1 trillion cubic feet natural gas was discovered besides sufficient quantity of oil in December 2002.

MOL has then successfully drilled two more wells at Makori and Manzali 2 at Sam Banda in Banda Daud Shah Tehsil of district Karak respectively where huge quantity of natural gas and crude oil has been discovered some time ago.

Some four wells have also been completed at Shakardarra, a remote area of Kohat district where sufficient quantity of oil and gas has discovered by OGDC. Production from 2 of its wells has also been started.

The sources further said that work on further exploration of oil and gas is in progress as two more wells are being drilled at Bakha Banda in Banda Daud Shah Tehsil (Karak) and Hoti Banda (Kohat).

According to sources, huge quantity of natural gas and oil has been discovered recently in Hangu district at Adam Banda (known as Manzali Well-3). Although the exact quantity of oil and gas has not yet measured, said the sources, adding that it is under testing. They added it is another success, by the MOL, oil and gas exploring company in the southern districts of the province.


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## Neo

*Chinese company to invest $10 million in celestite mining: MoU signed with Sindh government* 

KARACHI (December 14 2006): A Chinese company has agreed to start $10 million worth project for mining and development of celestite in Sindh. In this regard, 'Sinochem Hebei Corporation', of China, a joint venture of Sinochem Hebei Corp and Yongli Chemical Company Limited, on Wednesday signed a memorandum of understanding (MoU) with Sindh Mines and Minerals Department.

The MoU singed by Du Hui Bin, Director General, Sinochem Hebei Corp, Zhang Xinqi, Manager, Yongli Chemical Company Limited and Muhammad Yaqoob, Vice President, Minred (JVC) on behalf of the Chinese company, while Suhail Akbar Shah represented the Sindh Mines and Minerals Department.

The two Chinese companies, in collaboration with Minerals and Natural Resources Development Pakistan (Minred) to start exploration of celestite on an area of 5,000 acres at Nooriabad, in Thatta district. The Sindh government had allotted two leases to Minred in the area and with the signing of the MoU the company would transfer the two leases to the Chinese company.

A spokesman of Minred told Business Recorder that the company would complete exploration work in one year and, by the end of year 2007, production would be started. The company has brought an initial investment of $2 million and, after setting up the plant in a year total investment would cross $10 million in the country.

He said that the company would be able to produce about 0.3 million tonnes celestite mineral annually and would meet the local demand of 82,000 tonnes, which the country has been importing for defence purposes. Celestite (SrSO4) is a mineral consisting of strontium sulphate. Primary strontium compounds are used in the faceplate glass of colour television picture tubes, ferrite ceramic magnets, pyrotechnics and signals, X-rays and other applications.

On the occasion of MoU signing, Irfanullah Marwat, Sindh Minister for Mines and Minerals, said that the government had concentrated on coal while the mineral sector was neglected.

The present provincial government had realised the importance of natural resources, particularly the mineral sector, in which about 25 different minerals had been identified in the province, he added. He said that there was no involvement of federal government in the project, and the project would materialise within the stipulated time period.

The Chinese company is among 500 world's best and has good reputation in the mining sector, he said, adding that considering the company's ranking, the Director General, Sindh Mines and Minerals Department had visited China and invited the company.

Three Italian companies, including Carrara group, had shown interest to invest in Sindh's mineral resources. He said that the Sindh government had signed seven MoUs in the past and four of them were operational.

About the Shenhua group, a Chinese company, which intends to set up power plant at Thar at a cost of $1 billion, he said that the federal government had approved the plan and it was delayed due to approval from the Chinese government. The minister said that the mining and development of celestite mineral project would provide jobs to about 1,500 locals and, in addition, it would also provide health and education facilities to the people of the area.

He said that the provincial government would provide infrastructure to the company, including roads and electricity. About revenue, he said that the Chinese company would pay royalty to Sindh government at the rate of five percent of the amount of per tonne excavated mineral.


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## Neo

*Chinese company to invest $10 million in celestite mining: MoU signed with Sindh government *

KARACHI (December 14 2006): A Chinese company has agreed to start $10 million worth project for mining and development of celestite in Sindh. In this regard, 'Sinochem Hebei Corporation', of China, a joint venture of Sinochem Hebei Corp and Yongli Chemical Company Limited, on Wednesday signed a memorandum of understanding (MoU) with Sindh Mines and Minerals Department.

The MoU singed by Du Hui Bin, Director General, Sinochem Hebei Corp, Zhang Xinqi, Manager, Yongli Chemical Company Limited and Muhammad Yaqoob, Vice President, Minred (JVC) on behalf of the Chinese company, while Suhail Akbar Shah represented the Sindh Mines and Minerals Department.

The two Chinese companies, in collaboration with Minerals and Natural Resources Development Pakistan (Minred) to start exploration of celestite on an area of 5,000 acres at Nooriabad, in Thatta district. The Sindh government had allotted two leases to Minred in the area and with the signing of the MoU the company would transfer the two leases to the Chinese company.

A spokesman of Minred told Business Recorder that the company would complete exploration work in one year and, by the end of year 2007, production would be started. The company has brought an initial investment of $2 million and, after setting up the plant in a year total investment would cross $10 million in the country.

He said that the company would be able to produce about 0.3 million tonnes celestite mineral annually and would meet the local demand of 82,000 tonnes, which the country has been importing for defence purposes. Celestite (SrSO4) is a mineral consisting of strontium sulphate. Primary strontium compounds are used in the faceplate glass of colour television picture tubes, ferrite ceramic magnets, pyrotechnics and signals, X-rays and other applications.

On the occasion of MoU signing, Irfanullah Marwat, Sindh Minister for Mines and Minerals, said that the government had concentrated on coal while the mineral sector was neglected.

The present provincial government had realised the importance of natural resources, particularly the mineral sector, in which about 25 different minerals had been identified in the province, he added. He said that there was no involvement of federal government in the project, and the project would materialise within the stipulated time period.

The Chinese company is among 500 world's best and has good reputation in the mining sector, he said, adding that considering the company's ranking, the Director General, Sindh Mines and Minerals Department had visited China and invited the company.

Three Italian companies, including Carrara group, had shown interest to invest in Sindh's mineral resources. He said that the Sindh government had signed seven MoUs in the past and four of them were operational.

About the Shenhua group, a Chinese company, which intends to set up power plant at Thar at a cost of $1 billion, he said that the federal government had approved the plan and it was delayed due to approval from the Chinese government. The minister said that the mining and development of celestite mineral project would provide jobs to about 1,500 locals and, in addition, it would also provide health and education facilities to the people of the area.

He said that the provincial government would provide infrastructure to the company, including roads and electricity. About revenue, he said that the Chinese company would pay royalty to Sindh government at the rate of five percent of the amount of per tonne excavated mineral.


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## Neo

*Pakistan approaches Russia to sign PTA *

MOSCOW (December 14 2006): Pakistan has approached Russian Federation to sign Preferential Trade Agreement (PTA), which will finally lead to Free Trade Agreement (FTA) between the two countries. A working group of Pakistani and Russian officials is likely to hold its first meeting in end January 2007, according to commercial section of Pakistan Embassy here.

Pakistan's exports to Russia during March-July 2005 were $10.5 million, but due to extra efforts, it rose to $52 million and expected to increase manifold by end of fiscal year 2006-07 and enhance Russian investment in Pakistan.

Pakistan was biggest export of kinno (mandarin) to Russian Federation and in November 2006, four contracts were signed in Moscow between Pakistani Kinno (mandarin) exporters and Russian buyers.

Russia has huge market for textiles, rice, fresh fruits, vegetables, fabrics, home textiles, fish, seafood, dates, leather products, pharmaceuticals, cutlery, sports goods, and non-traditional items.

Following ban imposed on rice import by Russian agriculture ministry from all countries on December 4, 2006 due to contamination and other regulations, matter was taken up by Pakistan embassy's commercial section for its removal.

Pakistan, India, Thailand, China, Vietnam & United States trade representatives will soon meet Russian agriculture ministry officials to resolve issue. Russian authorities indicated ban on rice import is supposed to be lifted from December 25, 2006. Meanwhile, initial talks between Pakistan and Belarus officials on signing PTA, which will lead to FTA, between two countries will be held on Dec, 18-20, 2006 in Minsk, Belarus capital.


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## Neo

*Japan to provide $207 million loan for two projects *

ISLAMABAD (December 14 2006): The governments of Pakistan and Japan signed here on Wednesday a note verbale whereby Japan would provide a soft loan of 207 million dollars (23.157 billion Yen) for two projects under its Official Development Assistance to Pakistan.

The two projects are Indus Highway Construction, Project (Phase-III) and Dadu-Khuzdar Transmission System Project.The note verbale was signed here by Economic Affairs Division Secretary Muhammad Akram Malik on behalf of Pakistan government and Ambassador of Japan to Pakistan Seiji Kojima represented his country.

Major assistance of this soft loan will be provided for the Indus Highway Construction Project (Phase-III) with an amount of 19.455 billion-Yen (174 million dollars) while 3.702 billion Yen (33 million dollars) will be allocated to Dadu-Khuzdar Transmission System Project.

The agreements are expected to be signed between the Economic Affairs Division Secretary and Senior Executive Director of Japan Bank for International Cooperation Tetsuo Shiouchi on December 15.

The concessional loans carry an interest rate of 1.3 percent and a repayment period of 30 years, including 10 years grace period. These projects would greatly help the infrastructure building on which the government places high priority. These would benefit Balochistan in particular.

As regards, Indus Highway Construction Project (Phase-III), the objective of this project is to strengthen the capacity of the Indus Highway (N-55), which forms an integral part of the national trade corridor. By construction of an additional two-lane carriageway with allied facilities along the 200-kilometre road section between Sehwan and Ratodero, it will contribute to socio-economic development of Pakistan.

The objective of Dadu-Khuzdar Transmission System Project is to supply sufficient and stable electricity to Balochistan by extending transmission line from Dadu to Khuzdar and construct 220KV/132KV grid station, thereby contributing to the economic development of the province and to the improvement of their livelihood.


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## Neo

*Industrial production up by 9.7 per cent*

ISLAMABAD, Dec 13: Pakistan's industrial production grew by 9.70 per cent in the first quarter (July-September) of the fiscal year 2006-07 from a year earlier, showing a dismal performance of the production sectors, particularly in electronics, vegetable ghee and petroleum products.

Official data compiled by Federal Bureau of Statistics (FBS) and released here indicated that the leading factories, mines and oil products showed low production during the period under review over the same period of last year.

The average output of 11 leading oil products dropped by 9.49 per cent during the July-Nov of 2006 over the last year. On month-to-month basis, the production of oil companies dipped 5.39 per cent in September over the same month last year.

However, the average growth in production of 31 industries recorded 11 per cent during the first quarter of the current fiscal over the last year. The output of 37 industries in the four provinces was up by 11.31 per cent during the period under review.

Director Pakistan Institute of Development Economics (PIDE) Dr Nadeem ul Haq told Dawn that slow down in the industrial output was the outcome of the government policy to curtail the demand. He said that it was a conscious decision of the government to raise the interest rates in a bid to control the inflationary pressure in the economy.

Mr Haq said that even in America the interest rates were raised last year, which he said resulted into slow down in the economy. He said that Pakistan enjoyed high growth during the last two to three years, which he said, now necessary to slow down relatively in the current fiscal year.

Industry-wise production analysis showed that production of jet fuel declined 1.57 per cent during the period under review, kerosene oil 6.40 per cent, motor spirits 6.64 per cent, high speed diesel 15.60 per cent, diesel oil 2.44 per cent, furnace oil 12.73 per cent, lubricating oil 1.79 per cent and petroleum products 5.05 per cent.

Production of soda ash fell by 1.75 per cent, nitrogen fertilizer 3.50 per cent, phosphoric fertilizers 7.75 per cent, coke (Pakistan steel) 29.9 per cent during the first quarter of the current fiscal over last year.

However, the production of cigarettes was up 1.26 per cent, cotton yarn 13.32 per cent, cotton cloth 14.25 per cent, jute goods 11.05 per cent, paper and paper board 7.68 per cent, cement 16.38 per cent, steel products 14.47 per cent during the period under review. Production of vegetable ghee declined 0.37 per cent in July-Sept 2006, tea blended 8.65 per cent, wheat and grain milling 1.09 per cent, woollen and carpet yarn 7.13 per cent, plywood 0.79 per cent, liquids 2.60 per cent, hydrochloric acid 6.16 per cent, sulphuric acid 4.71 per cent, safety razor blades 1.83 per cent.Among the electronics goods, the production of deep freezers declined 9.78 per cent, electric bulbs 10.38 per cent, electronic fans 9.08 per cent, electric meters 19.89 per cent, television sets 31.32 per cent and bicycles 11.37 per cent during the July-Sept 2006.

The production of beverages was up 28.32 per cent during the first fiscal year over the last year, paints and varnishes 22.80 per cent, matches 38.97 per cent, motor tubes 23.94 per cent, diesel engines 31.72 per cent, sugarcane machines 91.43 per cent, power looms 38.10 per cent, air-conditioners 218.37 per cent and switch gears 132.01 per cent.


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## Neo

*Humayun claims exports rising, imports falling *

ISLAMABAD: Commerce Minister Humayun Akhtar Khan on Wednesday said all out efforts are underway to help the exporters to keep up pace of exports which registered increase of 23.9 per cent in the month of November 2006 as compared to the corresponding period of the last year.

Speaking at a press conference, he said exports have registered an increase of 5.8 per cent in the month of July 2006, 7.6 per cent in August and 23.9 per cent in the month of November 2006.

While the growth in import slowed down to 10.4 per cent during July- November 2006 as compared to 54.3 per cent during the corresponding period of the last year, he added.

This, he said, has slowed down widening of trade deficit, which is evident from the fact the growth in trade deficit during November 2006 was 17.9 per cent.

He said, Ã¢â¬Åthis is an extremely positive trend and its sustenance shall enable us to achieve the export target of $ 18.6 billionÃ¢â¬Â.

The most heartening aspect is that export of textile and clothing to EU and the US, which account for more than 50 per cent of export of textile and clothing, have increased, he added.

He said it has been decided that trade figure released by Federal Bureau of Statistics (FBS) in future will also include data on services export and imports. FBS is compiling the figures of export and import of services, he said adding, the export of services during July-October amounting to $1.048 billion against import of $2.608 billion for the same period.

Humayun said this year better cotton crop is expected which will boost value added products of textile and clothing.

He said, Ã¢â¬Åwe are attaching high importance to the trade diplomacy which is now bearing fruit as Pakistan has gained market access to China through recently concluded FTA which will spur exports particularly of home textile to the market.

The commerce minister said the local exporters are facing problems of competitiveness due to higher input cost as compared to the other countries including China, India and Sri-Lanka. However, he said, the government is trying to provide level playing field to the exporters enabling them to compete in the world market and enhance exports of the country.

He said government has also announced incentives of R&D support on ready made garments and this facility has been extended to dyed/print fabrics and home textiles.

The refinance rates have been brought down to 7.5 per cent from 9 per cent and Long Terms Financing for Export Oriented project (LTF-EOP) has been amended and interest rate brought down to a maximum of 7 per cent from 9 per cent to provide concessionary financing to export oriented products, he added.

Humayun said freight subsidy is also available and scope has been widened and government is facilitating participation in exhibitions opening of warehouses. Moreover, he said, the Prime Minister has also set up a High Power committee to resolve the problems impacting textile industry.


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## Neo

*Pakistan's GDP to pick up to seven percent this year: World Bank *

LAHORE (December 15 2006): South Asia has witnessed a strong economic growth and Pakistan's GDP is expected to pick up to a robust 7 percent in the year, according to a new World Bank report. The World Bank in its report 'Global Economic Prospects 2007:

Managing the Next Wave of Globalisation,' which was made available on Thursday, said globalisation could spur faster growth in average incomes in the next 25 years than during 1980-2005, with developing countries playing a central role; however, unless managed carefully, it could be accompanied by growing income inequality and potentially severe environmental pressures.

The report says growth in developing countries would reach a near record 7 percent this year. In 2007 and 2008, growth would probably slow, but still likely exceed 6 percent, more than twice the rate in high-income countries, which is expected to be 2.6 percent. Broad-based growth in developing countries sustained over the period would significantly affect global poverty.

Gross Domestic Product (GDP) in South Asia is estimated to have expanded at a very rapid pace of 8.2 percent in 2006.

India led the way with GDP growing by an estimated 8.7 percent, backed by non-agricultural growth in excess of 10 percent. Output in Pakistan is estimated to have slowed from 7.8 to 6.6 percent, following a return to more normal agricultural production in the wake of a bumper harvest in 2005.

In Bangladesh, growth rebounded to 6.7 percent owing to stronger remittance inflows, vibrant services and manufacturing sector output and the waning impact on agricultural output of last year's floods.

Economic activity in Nepal slowed to 1.9 percent because of the intensified conflict, a weather - related decline in agricultural production, and a decline in clothing exports. In Sri Lanka growth picked up to an estimated 7 percent, thanks to a good harvest, and post-tsunami recovery and reconstruction activity.

GDP in South Asia is projected to slow gradually to a still robust 7.5 percent in 2007 and 7 percent in 2008. Weaker external demand, reflecting slower growth in the United States in 2007, tighter domestic monetary and fiscal policies, and tighter international monetary conditions are all factors contributing to the expected slowdown.

The report also predicts that globalisation would expand the global economy from 35 trillion dollar in 2005 to 72 trillion dollar in 2030. Moreover, global trade in goods and services could rise more than threefold to 27 trillion dollar in 2030, and trade as a share of the global economy would rise from one-quarter today to more than one-third.

Roughly half of the increase is likely to come from developing countries, which that only two decades ago provided 14 percent of manufactured imports of rich countries, today supply 40 percent, and by 2030 are likely to supply over 65 percent. At the same time, import demand from developing countries is emerging as a locomotive of the global economy.

"Globalisation is likely to bring benefits to many. By 2030, 1.2 billion people in developing countries, 15 percent of the world population, would belong to the 'global middle class,' up from 400 million today.

This group would have a purchasing power of between 4,000 dollar and 17,000 dollar per capita. It would enjoy access to international travel, purchase automobiles and other advanced consumer durable, attain international levels of education, and play a major role in shaping policies and institutions in their own countries and the world economy," it added.

However, the report warns that the next wave of globalisation would likely intensify stresses on the 'global commons,' which could jeopardise long-term progress. Nations would have to work together to play a larger role in issues involving global public goods, from mitigating global warming, to containing infectious diseases like avian flu, to preventing the decimation of the world's fisheries.

According to the report, global warming is a serious risk. Rising output means annual emissions of greenhouse gas, would increase roughly 50 percent by 2030 and probably double by 2050 in the absence of widespread policy changes.

To avoid this, policies would have to promote 'clean' growth so as to limit emissions to levels that would eventually stabilise atmospheric concentrations.

Moreover, poor countries would need development assistance to adapt to coming environmental changes, including support for their participation in the carbon finance market.

It pointed out that the challenges of rapid globalisation put new burdens on both national policymakers and international officials. Nationally, governments need to ensure that the poor are incorporated into the growth process through pro-poor investments in education, infrastructure, and support mechanisms for dislocated workers. They need to support and invest in workers-all the while promoting rather than resisting change.

Internationally, the report calls for stronger institutions for tackling threats to the global commons. It also calls for more and better development assistance. Reducing barriers to trade is vital as well, since it can create new opportunities for poor countries and poor people.

http://www.brecorder.com/index.php?id=508016&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*CPI goes up to 8.07 percent *

ISLAMABAD (December 15 2006): The Consumer Price Index (CPI) in November went up to 8.07 percent from what it was 7.89 percent during the corresponding month of last year, while the inflation of five-month (July-November 2006) decreased to 8.29 percent over the corresponding period of last year (8.41 percent).

More interestingly, the Federal Bureau of Statistics (FBS) reported that the Wholesale Price Index (WPI) during November 2006 was up by 0.89 percent over corresponding month of last year. During the month under review, it climbed to 7.46 percent over October 2006 (6.70 percent) which signifies future prices rise in the coming months.

The most important feature of the data released by the FBS was that the rising prices of food, fuel and lighting, education, medicare and house rent are still snatching the purchasing power of the low income group, which is a challenge for the economic managers.

The monthly CPI bulletin further reveals that beside other commodities, the prices of food and beverages and fuel and lighting year-on-year during November inched up to double digits as compared to the corresponding month of last year.

According to the data, in November 2006, prices of food and beverages rose by 10.62 percent and fuel and lighting charges increased by 10.51 percent over November 2005. It further says that medicare charges increased by 9.75 percent, education was expensive by 7.25 percent, household, furniture and equipment by 6.88 percent and house rent increased by 6.63 percent as compared to corresponding month of last fiscal.

Detailed analysis of CPI data showed that under food and beverages, the items, which became dearer in November 2006, were onion 67.16 percent, eggs 20.69 percent, potatoes 18.94 percent, gram whole 4.50 percent and dry fruit prices increased by 2.84 percent in one month over October 2006.

According to WPI, the raw materials prices increased by 13.22 percent, food by 9.11 percent, fuel lighting and lubricants by 7.88 percent and manufacturers price increased by 3.13 percent in November over corresponding month last fiscal.

However, comparison of the WPI of November 2006 with the last month (September) of this fiscal, shows that during this one month prices of raw materials (including sugarcane 14.21 percent, and hides 8.17 percent) increased by 5.34 percent, food by 1.12 percent and building materials by 1.08 percent.


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## Neo

*Exports to Russia increase to $52 million *

KARACHI (December 15 2006): The exports from Pakistan to Russia during March to July 2005 remained at 10.5 million dollars and rose to 52 million dollars due to initiatives taken by the Pakistan Embassy's commercial section, which was reopened there.

The Commercial Section was first established in the Embassy premises temporarily in February, 2005 in a room of the Information section but later set-up in a newly hired office near metro Oktyabarskaya. According to an official report, keeping in view the potential of the Region, the exports to Russia are expected to increase manifold by the end of fiscal 2006-7.

Pakistani exporters participated in five international exhibitions of textile products, besides visit by four delegations of cutlery and general goods while various individual exporters also visited the Russian Federation to assess the market and find potential buyers of their products. They were assisted, guided, and helped in achieving the objective.

During 2007, the Commercial Section intends to provide a boost to exports to Russia by participating in more exhibitions of various products and invite more delegations. A big delegation of Russian Importers, for the first time, was brought to Pakistan to participate in Expo-2006.

The report said that individual and collective exporters were being motivated, persuaded, guided and helped in arranging quick visas and match meetings with the Pakistani buyers in Pakistan. The exports of kino (mandarin) were largely introduced, as Russian market is the biggest importer of kino (Mandarin).

Besides textile items, there is a huge market of rice, fresh fruits and vegetables, fabrics, home textiles, fish and seafood, dates, leather products, pharmaceuticals, cutlery products, sports goods and other non-traditional items.

The commercial Section has planned to double its efforts to increase manifold the exports from Pakistan and realise the actual potential and which is expected to grow manifold in future.

In this regard a memorandum of understanding (MoU) valuing $4.4 million was signed in March 2006 at the time of Expo-2006. The representative of M/s RUSPAK was motivated to visit Pakistan and hospitality was extended by the then Export Promotion Bureau and Pakistani Company, Ghausia Trade, Lahore and M/S RUSPAK, St: Petersburg. Pakistani kino exporters visited Moscow during November 2006.

They had meetings with the big Russian importers like M/s Globus Russia, M/S Soyuzpomcontrakt and M/s Moscow International Business Association. Big chains of retail outlets, M/s Paparus, M/S Nature Food, etc were organised by the Commercial Section, Moscow. The importers were accompanied personally by the Minister (Trade) to motivate and persuade the Russian buyers to conduct business with Pakistan.


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## Neo

*15078 KPP schemes completed so far* 

FAISALABAD (December 15 2006): Under Khushaal Pakistan Programme-1, Rs 10651.094 million have been disbursed to executing agencies in the federal/ provincial/district governments for executing 21,515 schemes in approved sectors. So far 15078 schemes have been completed.

This programme will cover essential infrastructure at the village, union council, tehsil and district level; basic education and health; support for creating entrepreneurial and employment capacity; and support for creating direct employment. The federal government has allocated Rs 4.42 billion for the financial year 2006-2007.


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## Neo

*'Furniture exports to cross $500 million by 2015' *

KARACHI (December 15 2006): Furniture exports from Pakistan are expected to cross $500 million by 2015, Chairman All Pakistan Furniture Exporters Association, Turhan Baig Mohammad said.

Speaking at the association's annual general body meeting held recently at a local hotel in Karachi, he highlighted the achievement of the association in 2005-06. The meeting also discussed the problems being faced by the industry, with particular reference to raw material availability, skilled workforce shortage and inadequate production capacities.

The Chairman informed the members that the association had prepared an export plan for the industry. Later, he made a presentation of APFEA's Furniture Vision 2015,in which association is seeking the government's support to develop country's furniture industry located in Karachi, Lahore, Gujrat, Chiniot and Peshawar by providing all the necessary modern facilities so that the furniture exports are increased to around $500 million in less than 10 years.


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## Neo

*ADB to provide $330 million to promote renewable energy *

FAISALABAD (December 15 2006): The Asian Development Bank will provide $180 million and $150 million (total $330 million), respectively to the NWFP and Punjab provinces for Renewable Energy Development Sector Investment Programme under Multitranche Financing Facility (MFF).

According to ADB sources, the maximum utilisation period under the MFF will be for a 10-year period ending December 31, 2017. Each specific loan will have its own closing date to match with its implementation period.

ADB sources explained that the closing date for submitting periodic financing requests (PFRs) under the MFF would be December 31, 2015, provided that such utilisation period would lapse 12 months from the date of the MFF's approval by the Board, unless by such time the first loan agreement under the MFF is signed and made effective.

NWFP and Punjab governments had requested the ADB to provide several loans or tranches to their parts of the Renewable Energy Development Sector Investment Programme. The indicative loan amounts for the two provinces will be $180 million and $150 million, respectively. Each loan under the MFF would not be smaller than $50 million. The first set of loans amounts to the equivalent of $115 million.

Furthermore, the government has delegated authority to the provinces to develop power- generating capacity of up to 50 MW. Renewable Energy (RE) programmes are a mean to deliver this mandate. In May 2005, the government announced a target calling for RE to reach 3.5 percent and 6.0 percent of the total energy supply mix by 2015 and 2030, respectively.

RE development is compatible with the government's twin goals of energy security and promoting indigenous resource utilisation. RE development is also one of the key features of the government's poverty reduction and environmental agendas.

RE supports electrification in remote and rural areas, including those not covered by the main grid. Employment generation and improvements in social wellbeing are two by-products of RE development. The MFF transaction is accompanied by a first PFR to finance a set of subprojects prepared by the provinces and ready for implementation. The investments comprise mainly small to medium-sized hydropower plants in NWFP and Punjab.


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## Neo

*Imports contribute 37pc to exports*

KARACHI, Dec 14: While the threat of huge trade imbalance is looming large, the exports dependency on imported inputs has touched a new peak.

A study conducted by the State BankÃ¢â¬â¢s research department reveals that the contribution of imported inputs in total export level is 37 per cent.

Ã¢â¬ÅThe contribution of imported inputs in total export level is 37 per cent, however, this impact would translate with one period lag,Ã¢â¬Â said the working paper. The paper also provides the disaggregated long-run estimates of imports, which are 24 per cent for raw material and 16 per cent for capital goods.

The objective of the paper was to examine and estimate the long-run dynamics of the real exports and imports for the country.

The trade deficit during the first five months of the FY07 increased by over 17 per cent to $5.450 billion and the government is facing pressure to curtail imports.

Ã¢â¬ÅThe curtailment of imports would surely reduce the trade gap but it will also hit the export negatively,Ã¢â¬Â said analysts Abid Aleem.

Despite all efforts and increased supply of subsidised loans, the exports posted negative growth during July-October 2006-07.

Exporters argue that the high cost of production made their cost uncompetitive on the world markets.

Ã¢â¬ÅThe high inflation is the real problem which keeps the prices of inputs higher as compared to regional countries which are our competitors,Ã¢â¬Â said Abid.

The current monetary policy has curtailed the supply of credit to private sector but the policy also increased the cost of borrowing which adds additional cost to the manufacturing sector.

Ã¢â¬ÅThe recent debate about the overvaluation of the rupee is also very much concerning for the industrial sector as the devaluation will increase the cost of imports and ultimately the export would be hit,Ã¢â¬Â said researcher Imran Ahmed.

He said any devaluation of the rupee would increase the cost of imports, both the raw material and capital goods.

He said this was the reason that our exports never went up with the devaluation of the rupee.

Ã¢â¬ÅThose who argue that the rupee devaluation is must to reduce the trade deficit by increasing exports and curtailing imports, should not ignore the fact that imports have vital contribution for exports,Ã¢â¬Â he said.

Analysts and economists suggested that there was a need to restructure the pattern of manufacturing sector and the products the country exports.

They said the import substitutes should not be exceeding 15 per cent while 20 per cent would allow the country to make fair deals with the countries exporting into Pakistan.

Ã¢â¬ÅThe imported inputs for export means that import will always be high with the rise in exports and this cycle will continue till restructuring of the production pattern,Ã¢â¬Â he said.


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## Neo

Friday, December 15, 2006 

*Food inflation rose to 10.64% in November*

By Arshad Hussain

KARACHI: Food inflation that was on the downward trend in the past two months again increased in November to 10.64 percent compared with the 10.54 percent in October, according to data released by the State Bank of Pakistan here on Thursday.

Ã¢â¬ÅThe consumer price index (CPI) was up 8.07% in November, compared with the 8.11 percent rise in October. Average inflation in July-November 2006 rose to 8.29 percent compared with 8.41 percent in July-Nov 2005,Ã¢â¬Â the data said. The countryÃ¢â¬â¢s headline inflation further dipped in November to 7.07 percent year-on-year basis, according to the data.

Market experts said the inflation rates are stable as the central bank is continuously raising short-term interest rates for the banking sector. The SBP governor has claimed in the annual report 2005-06 that the inflation rates may be beyond the target of 6.5 percent set by the SBP. Owing to the rising inflation, the governor had said, production cost in the textile sector and other exporting goods had gone up. Ã¢â¬ÅIf inflation is not controlled in coming months, the countryÃ¢â¬â¢s exports would be hurt further,Ã¢â¬Â she had said.

The heavily weighted food and beverages component of the CPI rose 10.62 percent on year, compared with a 10.54 percent increase in October. The component has a weightage of more than 40 percent in the index.

Another important component of the CPI, house rent, declined slightly to 6.63 percent from 6.88 percent in October. 

Non-food inflation rose to 6.27 percent year-on-year basis in November this year compared with 6.41 percent in October. Non-food inflation in July-Nov stood at 6.96 percent compared with 9.11 percent in the same period of last year.

Ã¢â¬ÅThe central bank is trying to reduce the inflation rate slowly,Ã¢â¬Â an analyst said. Inflation would be around 6.5-7 percent in the current fiscal year, he added. The government is making serious efforts to increase food supply, the analyst said, adding that the government is importing onion, potato and others food items to reduce prices.

The central bank has further tightened its monetary policy in the first half of the current fiscal, and the policy would be reviewed again in January 2007.


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## Neo

*Strike causes Rs 2.5 billion industry losses *

KARACHI (December 16 2006): Majority of industrial units in all five industrial estates of the city remained closed on Friday as workers failed to report for duty owing to transport strike.

The transport strike call was given by Pakhtoon Action Committee, which was backed by Karachi Transport Ittehad to press the government to clear outstanding of Rs 2.4 million against use of transporters vehicles during local body elections around one and half year ago, compensation of around 200 vehicles (buses, mini buses, coaches and trucks) torched in the city during various violent incidents and other demands. Industrialists said that the one-day closure of industrial units in Karachi causes around Rs 2.5 billion losses.

Korangi Association of Trade and Industry (KATI) Chairman Masood Naqi said that in Korangi industrial estate almost all units remained closed as workers failed to reach their workplace. Those who reached also left for home after some time. He said total closure of industrial units in Korangi industrial estate caused Rs 250 million revenue losses per day.

He said that there were a few units remaining operative with thin work force. Only those workers who are living nearby managed to report for duty. Industrialists from Site said that a very large number of units remained closed. Some industrials on Thursday did not allow their night shift to go home to keep their units operating on Friday.

Industrial units, which remained operative also worked with depleting staff. Industrialists claimed that there are around 3000 industrial units in Site and one-day closure causes around Rs 1 billion production losses; beside, government sustains Rs 200 million revenue losses.

They said that majority of multinational companies already have their own transport to bring staff. Those multinational companies who faced problems in the past have made arrangements and hired transport to bring staff on time. North Karachi Association of Trade and Industry (NKATI) Chairman Dawood Usman Jakhura said the entire industrial units in this industrial estate remained closed.

He said beside non-availability of buses, minibuses and coaches, disturbances at Sohrab Goth, New Karachi, North Nazimabad and other areas also played a major role in creating hurdles in the way of those workers trying to reach by car and their own transport.

He said only a few workers managed to reach the workplace, but after some time they were allowed to go home. He said that industrialists have started thinking to keep their units working on coming Sunday to meet production target as well as export orders.

Some shops in major markets including Saddar, Electronic Market, Jodia Bazaar, Jama Cloth Market, mobile phone markets remained open but there were no customers. Only those shopkeepers managed to reach their shops who have their own transport. Markets in Nazimabad, Federal B Area, Gulshan-e-Iqbal, Gulistan-e-Johar , North Nazimabad remained partly open.


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## Neo

*'Investment-GDP ratio is low to achieve seven percent growth' *

KARACHI (December 16 2006): Major crops output seems healthy, and massive investment in corporate farming may give some positive surprises. Yet growth may tally at around 6.8 percent for the current fiscal year.

This was stated by Khaldoon Bin Latif, Economist/Business Analyst with AKD Investments, in an interview with AAJ TV's program, 'Money Matters'. He added that 7 percent growth target will remain to be achieved due to capacity constraints.

He said investment as percentage of GDP was very low to sponsor 7 percent growth. With increased saving investment ratio economy could maintain its long-term growth momentum, but for increase in investment, the economy needed to improve its savings. Saving has been low for last three years because the real return on all saving instruments has been negative, or mildly positive.

He said that 95 percent of entire banking industry deposits are of less than six months tenure. The biggest savers in this country are not individuals but institutions and, until and unless they are given incentives to save, the investment ratio would not pick up.

He said that interest rate sensitivity of the economy was limited and until the entire system integrated it would remain low. The only way to increase it is to develop the debt market. SBP in its annual report, highlighted this point. Investment class can diversify savings in a developed debt market. Allowing corporations to invest in NSS would not help in achieving this motive. Government sector, which is less riskier than the private sector will absorb the liquidity and private sector investment will crowd out and this will be an eventual drag on the private investment, which is the engine of growth for any economy.


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## Neo

*Arrangements for Expo Pakistan 2007 reviewed: 1000 delegates to attend event *

KARACHI (December 16 2006): Federal Minister for Commerce Humayun Akhtar Khan presided over the first meeting of the steering committee of 'Expo Pakistan 2007' to kick off preparations of this mega event to market the country's products.

The minister deliberating upon the arrangements, to be undertaken for the success of this mega event, said that as many as 1000 delegates from all over the world would be attending the event to be held from March 29 to April 02, 2006.

The Chief Executive, Trade Development Authority of Pakistan (TDAP), Sindh Minister for Industries and Commerce, head of different government bodies, and representatives of the FPCCI, KCCI and various trade chambers and bodies of the country attended the meeting.

The meeting decided that the inauguration ceremony would be held at the 'Bara Dari' instead of Karachi Expo Centre and President Pervez Musharraf would grace the occasion.

During the meeting, the minister and the members of the committee observed different presentations regarding the preparations of the event.

Expo Pakistan 2007, to be held in Karachi is a gateway to the true commercial and cultural richness of Pakistan. It is an ideal one-stop sourcing event, showcasing the premium and value-priced products of Pakistan and will act as a global marketplace for interaction.

Expo Pakistan 2007 is recognised by the government of Pakistan as an important feature of its trade policy to showcase Pakistan, its quality and exotic products to the world. Export Promotion Bureau, first time in the history of Pakistan, held the "Expo Pakistan", a mega trade event in February 2005.

Expo Pakistan 2005 provided an ideal window for the businesses around the world to look more closely into Pakistan's industrial capabilities and explore further opportunities to make business partners with Pakistan for above the edge market superiority in their country.

This event was a resounding success and more than 1200 foreign visitors from 77 countries, Ministers for Trade and Commerce of 15 countries and delegates of 38 Chambers of Commerce assessed the quality "made in Pakistan" products displayed by 450 export-oriented businesses of Pakistan.

It provided a platform for Pakistani exporters and foreign buyers to interact and develop the long-lasting business relationship. During Expo 2005, memorandums of understanding (MoUs) were signed by Pakistani chambers of commerce with the visiting chambers of commerce of different countries.


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## Neo

*Deal signed for $207 million Japanese loan *

ISLAMABAD (December 16 2006): The government of Japan on Friday signed a loan agreement for $207 million (ÃÂ¥23.157 billion) under its 'Official Development Assistance' (ODA) for two projects pertaining to basic economic and social infrastructure to help boost economic development in Pakistan.

According to break-up, Japanese government has extended this amount for two projects-Indus Highway Construction Project (Phase III) $174 million, and the Dadu-Khuzdar Transmission System Project ($33 million).

The agreement was signed here by EAD Secretary Muhammad Akram Malik on behalf of Pakistan government, while Tesuo Schioguchi, Senior Executive Director, Japan Bank for International Co-operation (JBIC) represented his country.


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## Neo

*Inter-city bus service: Korean firm keen to invest Rs 1.5 billion *

KARACHI (December 16 2006): A Korean transport company has shown keen interest to invest Rs 1.5 billion in inter-city bus service in Sindh. A three-member delegation of Daewoo transport company met Sindh Minister for Labour, Transport, Industries and Commerce, Adil Siddiqui and informed him that the company wanted to start Karachi-Hyderabad Daewoo bus service with the investment of Rs 1.5 billion.

The Korean delegation, headed by Executive Officer Daewoo Company, Ching Il Kim, informed the minister that the company had been providing services in Pakistan's 35 cities and now they intended to expand their network across Sindh. After Karachi-Hyderabad route the company would start Karachi-Sukkur route and later on the operation would be linked with entire country, Kim said.

The company has applied for three acre of land on the Super Highway, 3.5 kilometres away from Sohrab Goth, for bus terminal to start Karachi-Hyderabad operation, he said.

The Sindh minister said that the foreign investment in the transport sector would provide international standards of travelling to the local people. Plenty of opportunities were available for foreign investment in transport and logistic in the province.


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## Neo

*Govt not paying heed to SBP advice: High monetary growth*

KARACHI, Dec 15: Credit to private sector during the last five months remained half of what it was during the corresponding period of previous year, but the monetary growth was significantly higher mainly on account of the governmentÃ¢â¬â¢s speedy borrowing.

Despite frequent advices by the State Bank, the government kept borrowing from the banking sector which caused the growth of monetary assets more than last year.

The high government borrowing would hamper the State BankÃ¢â¬â¢s effort to bring down the inflation to 6.5 per cent from above eight per cent by the end of this fiscal year.

Data released by the SBP on Friday showed that the credit supply to private sector during July-December 2006-07 was 6.65 per cent against 12.21 per cent during the same period last year.

The monetary assets showed a growth of 4.28 per cent during the first five months of the current fiscal compared to 3.42 per cent over last year corresponding period.

Analysts said what pushed the monetary growth high was the higher currency growth which was just below than last year. During the said period currency grew by 10.58 per cent compared to 12.12 per cent during the corresponding period of last year.

The government borrowed Rs98.649 billion for budgetary support during the same period against the full year target of Rs120 billion.

Analyst said the government borrowing was inflationary and making SBP efforts ineffective to keep tight grip over the monetary growth and inflation.

The tight monetary policy has almost halved the credit off-take to private sector which could be resulted into slow economic growth but it would serve the purpose to curtail the inflation.

Ã¢â¬ÅHigh cost infrastructure projects require huge inflows of money which is being pumped through borrowing from the banking system,Ã¢â¬Â said Imran, an economic analyst.

He said the government was also spending for earthquake construction but it failed to find out any alternate source for borrowing.

The central bank has been advising the government to issue bonds to meet its liquidity requirement while the World Bank and IMF have been extremely critical about the slow growth of revenue generation.

Ã¢â¬ÅThe revenue growth does not match with the economic growth while the base of taxpayers is also out of economic growth pattern,Ã¢â¬Â said Asif Ali, adding that share of indirect taxes has been increasing for five years.

The analyst said if the borrowing pattern of the government continued inflation would not show any sign of easing and the output of manufacturing sector may decline due to costly credits.


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## Neo

*Plan to develop jewellery sector*

KARACHI, Dec 15: The government is working on a proposal for introducing a degree programme in jewellery design and technology at Karachi University and is also establishing a training centre at University of Balochistan.

This was stated by the Federal Minister for Industries, Production and Special Initiatives Jehangir Khan Tareen while chairing a meeting at PIDC House here on Friday.

The meeting reviewed the progress of Pakistan Gems and Jewellery Development Company (PGJDC), a subsidiary of PIDC. The objective of the company is to promote upgradation of the local gems and jewellery sector through induction of modern equipment and practices to enhance value addition and exports.

He said that the ministry was also negotiating a memorandum of understanding (MoU) with Geological Survey of Pakistan for conducting survey of mines.

The meeting was informed about a business plan for establishing a common facility training and manufacturing centre for gems laboratory and jewellery manufacturing.

The proposal for allocation of 11 acres for the gems and jewellery industries at Korangi Industrial Park Project was also came under discussion.

A detailed presentation was given to the minister on the ongoing activities of the PGJDC. It was informed that various seminars on gem mining were being conducted in collaboration with foreign consultants of USAID.

It was further informed that a programme was conducted by foreign consultant in collaboration with USAID for the training of trainers.

The meeting was told that a shipment of jewellery worth $2.4 million has been made against orders received at Bangkok Jewellery Fair (2006).

A project for development of quality silver jewellery and branding of 18 karat gold jewellery have been initiated by the private sector to cater to the export market.Ã¢â¬âAPP


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## Neo

*Pakistan, WB ink polio pact, $41.6 mln debt turned grant *

ISLAMABAD: December 16, 2006: Pakistan and World Bank on Saturday signed 'The Assignment and Release Agreement' for partnership in polio eradication project, converting $41.6 million International Development Association (IDA) credit into a grant.

The agreement was signed by Secretary Economic Affairs Division Mohammad Akram Malik and World Bank Country Director John W. Wall in a ceremony held here.

World Bank Country Director W Wall after signing the agreement said the overall objective of the project was to support government's efforts to eradicate polio.

It will help supply the Oral Polio Vaccine (OPV) for the country's Supplementary Immunisation Activities (SIAs), he added.

Secretary EAD Mohammad Akram Malik on the occasion said that IDA was supporting the government in polio eradication initiative in partnership with technical agencies (UNICEF, WHO) and several development partners.

"It is the success of the project that the IDA credit has been converted into a grant," he added.

He said IDA grant will be financed by the Bill and Melinda Gates Foundation.


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## Neo

*Industries on a declining course *  

Rising interest rates, fuel costs allow China to capture local market; Bangladesh, Cambodia grab exports

By Mushfiq Ahmad

KARACHI: The industrial sector of the country, after showing some improvement in the last few years, is now on a declining course, because of it being unable to compete with other developing countries of the region and elsewhere.

The number of buyers of our industrialists is decreasing very rapidly, both at the export market and the domestic market.

While the domestic market has fallen to the mighty Chinese, our share of the export market has been grabbed by minnows like Bangladesh and Cambodia.

Since fiscal year 2003-04 the industrial production had shown positive growth. At one stage its contribution to the economy rose to 26 percent.

The industrial sector showed double-digit growth in recent years, but looking at the current trading scenario where our producers have started losing buyers in local and foreign markets, it is imprudent to believe that the industrial sector would sustain its growth.

Of late there are reports Pakistani industrial units closing down because of influx of cheap Chinese products. And only recently the State Bank has reported that our export market has been grabbed by Bangladesh and Cambodia. That is why a large number of exporters have plans to move to Bangladesh. And none of these events have occurred unpredictably.

People with foresight were anticipating the current situation for quite sometime while the Musharraf regime was sitting in oblivion.

If you were to ask an industrialist about his problems, he would like to consume too much of your time. However, a very high cost of energy and high interest rates are their major and genuine problems.

The industrial sector grew impressively when the interest rates were low. As soon as the State Bank started tightening its monetary policy to contain inflation, the growth rate began to decline. It is difficult to understand what purpose a tight monetary policy serves when high inflation occurs because of supply side shocks.

The central bank should keep a check on those who borrow money to buy commodities for hoarding and property for speculation. Why should the interest rates be high for those who want to set up an industrial unit or need working capital?

While the fuel prices are high for every country since the Iraq war began, the prices of gas and electricity are not as high in the competitors as they are here. It is certainly the biggest hurdle in the way of industrial growth. And it seems our authorities are going to fail in their task of making cheap energy available to its manufacturing sector.

The power crisis seems to be unending for this country as the political forces keep fighting over flow of water. And very soon we are going to have to import gas and imported gas will never be cheap.

Actually there was never a serious strategy for increasing industrial production. We owe much to the influx of money from abroad after 9/11. As the banks were flooded with money they were generous in lending. But soon this money found its way into the real estate and stock markets. So it was not an achievement of Shaukat Aziz and company, but only the windfall of 9/11.

It is time the authorities get serious about the industrial sectorÃ¢â¬â¢s development and adopt a sustainable growth strategy. We must not wait for another 9/11 to happen and give a boost to our dwindling economy.


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## Neo

*Govt focusing on innovation, competitiveness *

ISLAMABAD: Minister of State for Finance, Omar Ayub Khan said on Friday that government is focusing on innovation and competitiveness to attain adequate sustainable economic growth. 

He added that the objective of Competitiveness Support Fund (CSF) was to catch up the progress made in various countries on innovation and competitiveness to propel economic growth, enhance quality production and create better employment opportunities for youth.

He was speaking at MoU signing ceremony for promoting knowledge-based agribusiness development. The Memorandum was signed by Pakistan Agriculture Research Council (PARC) and the Competitiveness Support Fund (CSF).

It is a joint initiative of the Ministry of Finance and the US Agency for International Development (USAID) to work together for promoting knowledge-based agribusiness development and long-term growth in PakistanÃ¢â¬â¢s agriculture sector.

Omer Ayub Khan who is also the Chairman of CSF, said that purpose of this initiative was to build linkages between business and research in the country. Ã¢â¬ÅSuch linkages will spark the kind of information sharing that makes business more dynamic and supports the commercialisation of innovations developed at our research institutions,Ã¢â¬Â he added.

The CSF through its financial facilities will develop appropriate instruments to upgrade the competitiveness of the economy and promote overall competitiveness in Pakistan, which will boost the economic growth and create better employment, the minister said.

He said Pakistan now faced an urgent need to ensure the competitiveness of its enterprises and services and to promote innovation to strengthen its economy which is productive and creates conditions for the economic well-being of citizens.

Explaining the working of the CSF, the minister said the programme would use one of its financial facilities to promote knowledge based enterprises.

According to the MoU, PARC and CSF will undertake joint review of various research projects of PARC with a view to identify research areas for commercial benefits, in consultation with the government, private sector, researchers and academia in the agriculture sector. These programs will complement PARCÃ¢â¬â¢s existing projects. An action plan for co-financing of the technical assistance for selected agriculture projects will also be developed. The MEC will comprise of 8-10 members, including PARC, CSF and members from the private sector and academia. 

As one of the principal donors of CSF, the USAID will be an observer on the MEC. Ã¢â¬ÅThis partnership will ensure that Pakistan is better poised not only to understand the needs of the global market, but also meet those needs head-on with a highly skilled, well-trained workforce,Ã¢â¬Â said Acting Mission Director of USAID, Patricia Rader, who witnessed the signing of the agreement.

The CSF will also support PARC in creating linkages with relevant industries and lead the research in areas of livestock sector and dairy development, development of agriculture technologies with emphasis on post harvest technologies and value addition.


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## Neo

*Over 2m to benefit from PresidentÃ¢â¬â¢s Rozgar scheme *

ATTOCK: As many as two million unemployed people of the country would benefit from PresidentÃ¢â¬â¢s Rozgar scheme, for which National Bank of Pakistan (NBP) has allocated funds of Rs12 billion for the provision of easy loans at its 1250 branches throughout the country.

This was stated by Regional Business Chief, NBP Rawalpindi Region, Mirza Tariq Baig while talking to newsmen after the promotion ceremony of PresidentÃ¢â¬â¢s Rozgar Scheme at NBP branch Hazro on Friday.

He said that out of total allocation, Rs1 billion would be utilised in the Rawalpindi region.

He said that NBP has released the funds for the loan so that maximum unemployed persons could be entertained under the scheme.

Mirza Tariq said now the requirement of Matric certificate, guarantor, proof of guarantorÃ¢â¬â¢s property and income had been waved off and now applicant will have to submit photographs and CNIC of his and two witnesses only. Besides this facility, free insurance of vehicle and applicant will also be provided, he added. While loan will be approved within 15 days after receiving the application, if all requirements were fulfilled properly, he said.

He said that applicant will pay only 6 percent mark up on loan while six percent will be paid by the government of Pakistan to the bank, while applicant will deposit 15 percent as down payment of total loan while remaining will be paid in equal monthly instalments within the period of five years.

He said such scheme would not only overcome the poverty ratio but also strengthen the country economy and development.


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## Neo

*'ADB to incline foreign investors to invest in Balochistan'*

QUETTA (December 17 2006): The Asian Development Bank (ADB) will incline the foreign investors to make investment in Balochistan in various sectors, including power and coal mining. This was revealed by ADB Country Director Peter Fedon during a meeting with Balochistan Chief Secretary K. B Rind here on Friday.

He lauded the Federal and provincial governments' steps for development of Balochistan, and said those steps would soon transform Balochistan into a hub of trade activities that would consequently boost the trade relations between Pakistan and the neighbouring countries, including Afghanistan, Iran and Central Asian Republics (CAR).

He expressed his satisfaction over uplift schemes in health, education and social sectors and assured more ADB assistance to the province in these sectors.

The Chief Secretary, on the occasion, informed the ADB Country Director about the development projects and law and order situation in the province, and said the provincial government was jointly working with the ADB and other organisations as development partners.

The government was paying special attention to promotion of fisheries and tourism sectors, while steps were also being taken to impart technical education to people, he said, and added that national and international highways were also being upgraded.


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## Neo

*SPI up 12.49 percent against last year*

ISLAMABAD (December 17 2006): The Sensitive Price Indicator (SPI) year-on-year of 53 essential items for week ending on December 14 has registered increase of 12.49 percent as compared to the corresponding week of last year. Income group of up to Rs 3000, with 14.73 percent rise over the corresponding week of last year is quite high.

The other income groups of Rs 3001-5000, Rs 5001-12000 and above Rs 12000 show 14.36, 14 and 11.66 percent increase respectively. This is obvious from the Federal Bureau of Statistics (FBS) bulletin that high prices of the daily use items are hitting hard the consumers in income groups up to Rs 12000.

The SPI bulletin, based on data of 53 items from 17 urban centres, showed that 20 items registered increase, 7 items showed decline, while prices of 26 items remained unchanged during the week.

Since several weeks onions, tomatoes, potatoes, red chillies, and firewood are maintaining upward trends. This week these are showing 243 percent, 206 percent, 23 percent, 40 percent and 13 percent increase respectively from corresponding week of last year as given in the bulletin.

The weekly bulletin shows that the rise in the prices of some daily necessities and kitchen items YoY has been substantial. Vegetable ghee, sugar, gur, salt, tea, pulses, potatoes, curd, milk fresh, beef, garlic, gas, kerosene oil, LPG, are the other commodities, which hit the low-income groups directly.

Out of total 53 given, 44 items over the corresponding year showed increase, which include: wheat 4 percent; sugar 7 percent; salt 25 percent; gram pulse 47 percent; moong pulse 23 percent; mash pulse 43 percent; gur 25 percent; beef 12 percent; milk 14 percent; curd 11 percent; tea 11 percent; match box 10 percent; petrol 3 percent; diesel 4 percent; LPG 9 percent; kerosene 7 percent; and gas increased by 20 percent.

Tomatoes, which saw substantial increase of 46 percent over last week has further gone up by 7 percent this week, while eggs have also seen a rise of 9 percent within a week. Rest of the 18 items are also witnessing continuous increment in their prices for the last several weeks.

Despite cold weather, chicken prices showed downward trend during the week and on YoY basis, but it is not clear whether it is due to increase in supply or change in consumers preference.

Few items showing decrease from the previous week are still dearer on YoY basis. These are sugar, potatoes, onions, gur, and gram, moong and mash pulses. Masoor pulse is the only essential item of interest to the poor, which has seen decline of 6 percent, with price at Rs 42.64 per kg.


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## Owais

*Kuwait's Mobile Telecom considering to bid for Paktel *

KUWAIT (December 17 2006): Kuwait's Mobile Telecommunications Co (MTC), the third-largest Arab telecoms firm, said on Saturday it was considering to bid for Pakistan's Paktel, a unit of Millicom. The Luxembourg-based emerging markets operator, Millicom, said last month it expected to end its 16-year presence in Pakistan next year due to tough market conditions.

Paktel is the country's fifth largest mobile phone operator and had about 1.5 million subscribers on September 30. "MTC announces that it has expressed initial interest to submit a bid to buy Paktel... ", the bourse said on its Web site.

MTC has taken a $1.2 billion Islamic loan to help fund its expansion and to refinance another $750 million credit facility that complies with ban on lending on interest.

A Paktel acquisition would make MTC, which has operations in 20 countries in the Middle East and sub-Saharan Africa, the latest Gulf Arab company to invest in Pakistan, the world's sixth most populous country.

In September, Pakistan gave Dubai-based Emaar Properties approval to build $43 billion city near Karachi. Abu Dhabi-based Emirates Telecommunications Corp, Etisalat, owns 26 percent stake in Pakistan Telecommunications Co.

Announcing its pullout, Millicom said it decided against making significant investments in Pakistan because of tough market conditions. Pakistani officials had refused to grant delay in payment of a $29 million licence instalment and had not given Paktel permanent access to part of the frequency spectrum, Millicom said.

Like Etisalat, MTC is expanding outside it saturated domestic market. The Kuwaiti telecom firm bought Netherlands-based Celtel last year. MTC's shares rose 3.16 percent to 3.260 dinners on Saturday as the benchmark index posted its sharpest one-day gain in almost nine months.


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## Owais

*Trade deficit declining due to Govt. policies: Humayun Akhtar *

KARACHI: Federal Minister for commerce, Humayun Akhtar has said that the trade deficit was on the wane spurred by the government policies.

Following a meeting of the steering committee of Expo Pakistan-2007 held here, the federal minister told newsmen that the trade deficit for the period July-November worked out to about 18 percent as compared to 147 percent in the same period last year. 

Humayun Akhtar said that the trade gap has declined in the wake of rising exports and diminishing imports, as the government has taken several measures for boosting exports, which included garment industry&#8217;s research and development support, subsidizing of export refinance and facility of long-term loans extended to the industries.


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## Neo

*Workers remit $2bn during July-Nov *

KARACHI: Pakistan received an amount of $2,092.81 million as workersÃ¢â¬â¢ remittances during the first five months (July-November 2006) of the current fiscal year as against $1,683.96 million in the corresponding period of last year, registering an increase of $408.85 million or 24.28 per cent.

The amount of $2,092.81 million includes $1.17 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

During November 2006, workers remitted $448.61 million as against $308.81 million in November 2005, depicting an increase of $139.80 million or 45.27 per cent.

A press note issued by the State Bank of Pakistan on Saturday said the inflow of remittances during the first five months from the US, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $533.46 million, $398.99 million, $318.12 million, $291.47 million, $180.10 million and $62.57 million respectively as compared to $481.54 million, $280.89 million, $243.26 million, $228.25 million, $172.78 million and $47.76 million.

Remittances received from Canada, Australia, Norway, Switzerland, Japan and other countries during the first four months amounted to $306.93 million as compared to $221.63 million in the corresponding period of the last fiscal year.

The monthly average remittances for the period July-November, 2006 comes out to $418.56 million as compared to $336.79 million during the same period of the last fiscal year.

The inflow of remittances into Pakistan from all countries of the world increased last month as compared to November 2005.

According to the break-up, Pakistan received workersÃ¢â¬â¢ remittances during November, 2006 from the US ($111.70 million), Saudi Arabia ($80.79 million), UAE ($67.42 million), GCC countries including Bahrain, Kuwait, Qatar and Oman ($59.86 million), UK ($41.65 million) and EU countries ($14.26 million) as compared to the corresponding receipts from the respective countries during November, 2005 ie $89.74 million, $48.30 million, $46.98 million, $47.06 million, $24.10 million and $8.03 million. Remittances received from Canada, Switzerland, Australia, Norway, Japan and other countries during November 2006 amounted to $72.78 million as compared to $43.84 million during November 2005.


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## Neo

*First irradiation plant to be operational in Feb *

LAHORE: PakistanÃ¢â¬â¢s first irradiation plant, a joint venture of Pakistan Horticulture Development and Export Board and Pakistan Atomic Energy Commission (PAEC) will become operational in February next year.

Ã¢â¬ÅThe establishment of the facility will greatly boost horticultural exports by helping the exporters meet phyto-sanitary requirements under WTO agreement,Ã¢â¬Â Chairman PHDEB, Saadat Eijaz Qureshi told newsmen.

Lack of proper post-harvest technology in Pakistan causes losses to fruit and vegetable production by 30-40 per cent.

Qureshi said the plant would irradiate food items like rice, wheat, cereals, fruits, vegetables and processed food like spices through gamma rays treatment to increase their storage and shelf-life in a most economical manner to fulfill international quarantine requirements such as disinfections and microbial control in horticulture produce.

He said that the project would provide commercial fruit and vegetable irradiation services based on Cobalt 60 gamma radiations to kill the plant pathogens or at least retard the growth of disease-causing bacteria and parasites in food and related items.

Irradiation technology is widely used in scientific as well as commercial applications in the field of agriculture and animal sciences, pharmaceuticals and medical science.

About the safety of this technology, PHDEB Chairman said, three international agencies World Health Organization, Food and Agricultural Organization of the UN, and the International Atomic Energy Agency accept the safety and usefulness of food irradiation.

More than 42 countries in the world including developed countries like the US, Canada, UK, France as well as developing countries like Pakistan, Bangladesh and Thailand have given clearance for irradiation processing of food.

In neighbouring India, the government has also permitted use of irradiation technology in preservation of food items such as potato, onion, rice, wheat atta or maida, mango, resins, dried dates, ginger, garlic, shallots (small onion) and meat products including chicken.

Saadat Eijaz Qureshi said construction work of second irradiation plant would start in Karachi soon after the operationalisation of the plant at Lahore. The construction of KarachiÃ¢â¬â¢s plant would take two years, he added.

http://www.thenews.com.pk/daily_detail.asp?id=35860


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## Neo

*WB for lenient labour rules: Temporary workers get 36pc of job market*

ISLAMABAD, Dec 16: Pakistan has one of the largest populations of temporary workers in the world, who experienced a 3.5 per cent decline in real earnings between 1997-98 and 2003-04, according to a World Bank report. Still, the bank advised the government to go for more lenient labour market regulations, believing that stricter measures were resulting in a lack of investment and a reduction in regular jobs.

In a confidential report on PakistanÃ¢â¬â¢s labour market, the bank says the most significant piece of evidence that labour regulation Ã¢â¬Åis excessive in Pakistan happens to be that the share of temporary workers in Pakistani businesses is one of the highest by any international standard, standing at about 36 per cent against, for instance, 15 per cent in India and three per cent in BangladeshÃ¢â¬Â.

It says the national economic growth rate has been improving during the past four years but job growth remains slower than the increase in labour force, which now includes more than 45 million workers. Interestingly, this slower growth in job creation is not compensated for by improvement in job quality.

Ã¢â¬ÅJob earnings are low and Pakistan faces the double challenge of providing more jobs while also improving earnings and the quality of jobs.Ã¢â¬Â Average earning of salaried employees in 2003-04 was Rs4,088 ($68) per month. For a typical family of six with one person employed, the average earning placed that family below the poverty line. Statistics on earnings of self-employed are not available but are believed to be much lower.

Underemployment Ã¢â¬â seasonal or chronic Ã¢â¬â is another problem facing many workers, especially those in self-employment or the farming sector. Underemployment translates into income losses. Many workers in rural areas have three Ã¢â¬ËinactiveÃ¢â¬â¢ months in a year where they are mostly unemployed, with some 40-60 idle days per year. Average earnings of poor rural workers are less than Rs2,000 ($33) per month.

Earning differentials are large Ã¢â¬â average earnings in rural areas are 68 per cent of earnings in urban areas, while female employees earn 59 per cent of males, although it is not clear if it is for similar work. Earning differentials between rural and urban areas have been diminishing, while those between men and women have been increasing.

For elementary workers (which are focus of minimum wage legislation), average real earnings eroded by 11 per cent from Rs2,671 in 1997-98 to Rs2,374 in 2003-04. Real earnings in the private sector fell more in the informal than in the formal sector. In contrast, government employees saw real wages improve by 21 per cent on average. Real wage gains were also made by some of best-paid professional categories. The rest experiences falling real earnings, with a sharp fall in real wages of illiterate or less-educated workers.

The report says Ã¢â¬Åinformality is widespread and has been growingÃ¢â¬Â. The informal sector accounts for 70 per cent of non-agricultural employment and 55 per cent of wage employment. Informal sector comprises 73 per cent of workers in rural areas and 67 per cent in urban areas. Ã¢â¬ÅInformality overall grew by five percentage points from 65 per cent in 2001-02 to 70 per cent in 2003-04Ã¢â¬Â.

Interestingly, some 61 per cent of the employed labour force in 2004 was self-employed or unpaid family helpers Ã¢â¬â up by two percentage points from 2001-02. Lack of job opportunities rather than inherent entrepreneurial spirit was cited as the main reason people become self-employed, the report said.


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## Neo

*$41.6m WB credit converted into grant*

ISLAMABAD, Dec 16: The Pakistan government and the World Bank (WB) on Saturday signed an agreement to convert $41.61 million credit the former had taken from the International Development Association (IDA) into grant.

The Melinda and Bill Gates Foundation will reimburse this amount to the WB discharging the government of Pakistan of its payment obligations and all liabilities.

The agreement was signed by Secretary Economic Affairs Division M Akram Malik and John Wall, country director WB, here at the Economic Affairs Division.

The overall objective of the project was to support the governmentÃ¢â¬â¢s efforts to eradicate polio from the country. The Polio Eradication Initiative project had been a major national effort since 1994, an official announcement said.

It added that the programmeÃ¢â¬â¢s achievement was reflected in declining number of polio cases from tens of thousands per year in 1980s to 34 cases as on November 2005. The IDA, it added, was supporting the polio eradication initiative in partnership with technical agencies - Unicef and the World Health Organisation (WHO) and several other development partners.


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## Neo

*Shaukat eyeing record FDI this year*

ISLAMABAD, Dec 16: Prime Minister Shaukat Aziz on Saturday said that the country would attract a record inflow of foreign direct investment (FDI) during this fiscal year due to investor-friendly policies of the government.

Talking to George Soros, a renowned global financier, at Prime Minister House, the premier said that Pakistan had become an attractive destination for foreign investment because of the availability of skilled manpower and comparatively low cost of production and a level-playing field to both foreign and local investors.

He said that the country had vast potential in housing and real estate, electricity production and distribution, oil and gas development, IT and telecom, agribusiness including dairy development, petrochemicals and engineering sectors. "We are encouraging the private sector particularly the foreign investors, while the government plays the role of a facilitator," he added.

Mr Aziz said the policies of liberalisation, deregulation and privatisation had been resulted in rapid growth of all segments of the economy particularly telecom and banking sectors. Ã¢â¬ÅTele-density has reached 27 per cent and international investors like Singapore government and Standard Chartered and ABN Amro are increasing their investment here,Ã¢â¬Â he boasted.

With a growing middle class Pakistan is fast turning into a major market economy and a manufacturing and servicing destination in the region, he added.

George Soros appreciated PakistanÃ¢â¬â¢s consistently growth rate and the reform agenda undertaken by the government and said that he would like to contribute in the education and healthcare, develop micro-finance, housing finance, especially to benefit the poor.


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## Neo

Sunday, December 17, 2006 

*Leghari opens IT park in Rawalpindi*

ISLAMABAD: Minister for Information Technology Awais Ahmad Khan Leghari on Saturday said that the government had launched big internship and apprenticeship schemes to place thousands of young IT professionals in the industry.

Ã¢â¬ÅWe are currently running a huge project to give away 10,000 internships and 5000 apprenticeships to help young IT graduates get training and subsequently permanent jobs in the IT industry,Ã¢â¬Â he said during the inaugural ceremony of a software technology park in Rawalpindi. The high-tech IT park has been set up by a leading US IT company MTBC to start its business operations in Pakistan.

Based in New Jersey, MTBC which specialises in the medical billing/transcription business and is recognised in the US as a leading health services provider has already trained and employed over 500 Pakistani IT graduates and further plans to double its employment number by the end of next year.

Mahmud Haq, a US-based Pakistani who heads the company, told the minister his company had come to Pakistan to benefit from a host of investment friendly policies introduced in the IT sector.

He said that his companyÃ¢â¬â¢s business in Pakistan was growing at a fast pace due to availability of a cheap but well-trained manpower which allowed the company to offer services to leading US clients at 4 percent of their cost as compared to 8 percent charged in India and 12-15 percent charged in the United States. 

http://www.dailytimes.com.pk/default.asp?page=2006\12\17\story_17-12-2006_pg5_2


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## Neo

Sunday, December 17, 2006 

*FDI factor starts tantalising textile sector*

By Hamid Waleed

LAHORE: The lure of foreign direct investment (FDI) has started tantalizing the textile circles and they feel that the textile sectorÃ¢â¬â¢s jumbo size now looks very small because of heavy investments made by telecom giants alone recently.

Textile millers say the textile sector has invested nearly $5 billion in the past five years under the Balancing, Modernization and Rehabilitation (BMR) programme, but Mobilink ($4 billion) and Warid ($2 billion) alone have invested $6 billion in a short span of time. They also refer to the proposed investment of $43 billion by the Emmar Group on two islands off the Karachi coast and another $1 billion by Engro Chemicals in near future.

Ã¢â¬ÅSuch an impressive inflow of foreign investment in the country has probably devalued the textile sector in the eyes of policymakers,Ã¢â¬Â said one textile miller.

Others in the textile sector, however, look at the situation in another way. According to them, the industry is facing a crisis of leadership, providing an opportunity to the policymakers to twist the textile sectorÃ¢â¬â¢s arm at their will.

They are of the view that the chairman of the All Pakistan Textile Mills Association (APTMA) is not vocal on textile sectorÃ¢â¬â¢s issues. They claim the former APTMA chairman had a similar attitude, saying: Ã¢â¬ÅThe practice of back channel negotiations with policymakers has diluted the industryÃ¢â¬â¢s position in general.Ã¢â¬Â

They also blamed the industry elders for sidelining small textile millers.

Nevertheless, they said, the textile industry was still contributing largely towards the economic growth of Pakistan. Its share in the total exports of the country was 63 percent, in manufacturing 46 percent, in employment 38 percent, and 11 percent in the gross domestic product. Around Rs eight billion investment had been made during the last five years. But government policies were pushing this important sector to the wall and it could collapse at anytime, they said. 

According to these circles, the input costs are at all time high and volatile, there had been favourable stability in cotton prices during the last three years, but the changing prices of polyester remained unstable for the past many years, which left negative effect on the financial results of the spinning sector. The government is continually increasing prices of other inputs: the cost of electric power is 6.9 cents per kilowatt, which is nearly more double when compared with the rate in our competitive countries. The price of gas is $4.42 per MMBTU and in Bangladesh it is $1.83 per MMBTU. Regardless of the decline in international prices of oil, WAPDA is said to be increasing its prices. The government has revised the minimum wage twice in recent years from Rs 2,500 to Rs 4,000. 

There is no duty drawback for exporting units on use of water, power, telephone, C&F, and insurance, but it is available in Bangladesh, China and India. Our industry is subject to various additional duties and taxes such as EOBI, social security, professional tax, duty and surcharge on utilities, cross subsidy and stamp duty. The levy of custom duty at the rate of five percent on the import of machinery and 5-25 percent on stores and spares does not only discourage the BMR of machinery, but also make the cost of stores and spares high. The levy of income tax on export proceeds from 0.75 to 1.5 percent whereas in Bangladesh this rate is quite low at 0.25 percent of total export proceeds. Then there is the exorbitant increase in interest rate, there are procedural difficulties in raising finance from banks, difficult and lengthy procedures of CBR taxation system, blockage of huge amounts in the name of input sales taxes and advance income taxes in government treasury, delayed refunds, lack of professionalism in policy and procedure-making departments, all are contributing to put the textile sector in difficulty.

Due to all these factors, they said, Pakistani exporters are losing their market share in Europe even with the lower price than exporters from China, India and Bangladesh. They were of the view that the ministries of commerce and industry were of no help in the resolution of the issues. Ã¢â¬ÅThe Trade Development Authority does not realize that once a buyer is lost to other country, he is not likely to return to Pakistan, and once a mill is closed, how difficult it would be to restart it.

They urged the government to take immediate steps to save the textile sector.


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## Neo

Sunday, December 17, 2006 

*Govt to provide 15,000 new jobs to youth in IT*

ISLAMABAD: The government has launched various internship and apprenticeship schemes to place thousands of young IT professionals in the industry, said Information Technology Minister Awais Ahmad Khan Leghari on Saturday.

He said this during the inaugural ceremony of a software technology park in Rawalpindi, set up by a leading US IT company, MTBC, to start its business operations in Pakistan. Ã¢â¬ÅWe are currently running a huge project to give away 10,000 internships and 5,000 apprenticeships to help young IT graduates get training and subsequently permanent jobs in the IT industry,Ã¢â¬Â Leghari said. Based in New Jersey, MTBC specialises in medical billing and transcription and is recognised in the US as a leading health service provider. It has already trained and employed over 500 Pakistani IT graduates and plans to double employment by the end of next year. Mahmud Haq, a US-based Pakistani who heads the company, told the minister that his company had come to Pakistan to benefit from a host of investment friendly policies introduced in the IT sector. 

He said that his business in Pakistan was growing at a fast pace due to availability of cheap but well-trained manpower which allowed the company to offer services to leading US clients at a cost of 4 percent as compared to 8 percent charged in India and 12-15 percent in the US.

Leghari welcomed the companyÃ¢â¬â¢s decision to start its operations in Pakistan and offered to provide, for a certain period, the cost on training and salaries in case the company decided to set up offices in less developed urban centres.

He said, Ã¢â¬ÅThe arrival of your company in Pakistan puts a positive stamp on the scope of growth for the IT sector and IT youth in this country,Ã¢â¬Â Leghari said. He said that his ministry had formulated plans to create job opportunities for youth in the IT sector and had generated over 200,000 jobs during the last two to three years.


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## Neo

Sunday, December 17, 2006 

*Ã¢â¬ËPakistan needs large damsÃ¢â¬â¢*

LAHORE: WAPDA Chairman Tariq Hamid said Pakistan required more large water reservoirs to tackle increasing water and power needs. He was presiding over a seminar on Ã¢â¬ËCorporate Social ResponsibilityÃ¢â¬â¢ organised by the Institute of Cost and Management Accountants of Pakistan. He said Pakistan was heading towards water shortage due to a rapid growth in population and sedimentation of dams, adding that setting up large reservoirs was need of the hour. 

Ã¢â¬ÅPakistan has a storage capacity of 9 percent to total water available, and the average storage capacity worldwide stands at about 40 percent,Ã¢â¬Â he said, and warned that Pakistan would be short of water like Chad and Ethiopia, by year 2012 if the storage capacity was not increased. 

Ã¢â¬ÅHaving a cultivable land of 77 million acres, Pakistan has a potential to bring 22.6 million acres of new land under cultivation provided additional water is available,Ã¢â¬Â he added. He said annual electricity consumption had risen by 9.8 percent during the last four years, adding that the load on WAPDAÃ¢â¬â¢s transmission system had increased by 2,000 MW during peak hours (from 6:30pm to 10:30pm). 

Ã¢â¬ÅTo control electricity shortage in coming years, we have to generate sufficient electricity at an affordable rate by constructing big dams,Ã¢â¬Â he said.


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## Neo

*Rupee depreciation: the wrong debate*

By Yousuf Nazar

IT is a hot topic: is rupee devaluation around the corner? But is it the right question? Perhaps not. The real and more important question is whether the government is prepared to review and change the policies that have contributed to a widening trade deficit in the first place? If not, difficult days may lie ahead.

Prime Minister Shaukat Aziz has denied that the devaluation is on the card. The State Bank Governor criticised the media reports for creating Ã¢â¬Åmisperceptions and misunderstandingÃ¢â¬Â at a rather unusual Sunday press conference.



The Governor maintained that the central bank abandoned fixed exchange rate regime a long time ago and moved to a floating exchange rate regime since early 2000 and the IMF has not advocated, in its consultations with Pakistan, any depreciation and has just provided its perspective and analysis of the movements in the real effective exchange rate. The World BankÃ¢â¬â¢s Pakistan representative has also commented on economic outlook and exchange rate policy at a media briefing in Islamabad, noting that China and India have allowed their currencies to depreciate while Pakistan has not. This is factually incorrect as shown below:
% Change Against US Dollar Since 
January 2006 January 2004 
Pakistan rupee (1.79) (5.96) 
Indian rupee +0.70 +1.99 
Chinese renminbi +3.16 +5.80 



Pakistan rupee has depreciated against dollar while Indian and Chinese currencies have appreciated.

A few observations are in order:

The IMF is not the ultimate authority on macro economic policy. Its often-controversial and questionable prescriptions have some times proved harmful for the countries that were under its programmes and drew sharp criticism from some of the worldÃ¢â¬â¢s leading economists.

Pakistan is currently not under any IMF programme and is not bound by its Ã¢â¬ËadviceÃ¢â¬â¢. Moreover, the IMF has provided estimates of the Ã¢â¬ÅrealÃ¢â¬Â exchange rate using different methodologies. That is, what is the real purchasing power of Pakistani rupee viz-a-viz a basket of currencies given the different rates of inflation in their respective economies? The hard fact is, according to the IMF report, PakistanÃ¢â¬â¢s currency appreciated by 10 per cent in real terms, relative to its trading partners, from December 2004 to June 2006. The correct and relevant question is: does it need an adjustment to bring it in line with its inflation-adjusted value?

Pakistan is not under a Ã¢â¬ËfreeÃ¢â¬â¢ floating exchange rate regime. It is under what is called a Ã¢â¬Ëdirty floatÃ¢â¬â¢ or a Ã¢â¬Ëcrawling pegÃ¢â¬â¢ regime with rupee de-facto pegged to the dollar. What it means that the market forces alone do not determine its value freely and the Central Bank through a variety of controls and interventions plays a key role in determining its value.

The principal reason for the current debate is not the IMF report or some Ã¢â¬ËmisunderstandingÃ¢â¬â¢ but the recent trade performance and the widening current account deficit.

The crux of the matter is the government believes it can run current account deficits year after another as long it can fund them through capital flows or more precisely through borrowings, foreign direct and portfolio investments and privatisation proceeds. In a worst-case scenario, foreign exchange reserves can be used to meet shortfall on a temporary basis.

This approach is faulty, short-sighted and fraught with considerable risks. Industrial and trade strategy should drive financing strategy and not vice versa. It seems that we are treating privatisation as a means of financing the expanding current account deficits while not paying sufficient attention to address the structural and fundamental reasons that are causing the deficits.

The month-wise imports and exports data for the 16 months to October 2006 reveals a clear trend of declining exports and rising imports. (see graph 1)

During the first four months of the current fiscal year, the exports growth of 1.3 per cent compared to a year earlier is not only behind a much higher 7.7 per cent growth in imports but reveals a worrying trend given PakistanÃ¢â¬â¢s huge dependence on Textile and Clothing exports. They account for 60 per cent of exports but are concentrated in low-value added products: yarn and bedwear/towels account for 45 per cent of textile exports while ready-made garments account for only 15 per cent.

During the four months from July-October 2006, textiles and leather exports declined in absolute terms and the small overall export growth was achieved only due to higher rice exports. The low value-added textiles (yarn, cloth, and bedwear/towels) have seen the sharpest decline in the current fiscal year.

The textile industry is blaming higher energy and interest rate costs while the Commerce Ministry has blamed shortsightedness and immaturity of the business community for their current woes. Ã¢â¬ÅThe community in their quest for easy short-term gains, compromises on their long-term interests,Ã¢â¬Â said a spokesperson for the ministry, adding had the entrepreneurs and traders read the signals being given by the government and restructured their businesses accordingly, they could have fared better.

While the government and the industry have traded accusations, Pakistan's balance of payments deficit widened 52 per cent in the first four months of the fiscal year 2006-07. The deficit, the amount by which imports exceed exports, remittances and other incomes from abroad, widened to $3.34 billion in the July-October period, from $2.19 billion a year earlier. The cost of importing oil in the first four months climbed to $2.73 billion by $594 million. Pakistan imports about 85 percent of the oil it uses.

What is not disclosed in the figures is the yet unexplained and even larger increase of $862 million in Ã¢â¬Ëother importsÃ¢â¬â¢. Here, it needs to be highlighted that the data provided by the Federal Bureau of Statistics is not detailed enough to facilitate more in-depth and meaningful analysis and even the Ministry of Commerce has cited shortcomings in the statistical data as an issue in taking appropriate and timely policy actions.

In addition, the quality of reporting is not generally at par with those of some other Asian countries. Notwithstanding these issues, all other major imports, including industrial machinery, commercial and consumer vehicles and metals, reported a decline during July-October compared to a year earlier. In summary, given the rise in Ã¢â¬Åother importsÃ¢â¬â¢ and decline in machinery and vehiclesÃ¢â¬â¢ imports, the assertion that the current difficulties are largely the consequence of a higher oil import bill is not supported by the facts nor does it tell the whole story.

It is not just the current yearÃ¢â¬â¢s data that points to a rapid and unsustainable growth in non-oil imports. During the FY 2005-06, PakistanÃ¢â¬â¢s non-oil imports grew by 32.8 per cent to $21.6 billion from $16.3 billion in 2004-05 and by 76.6 per cent compared to level of non-oil imports ($12.2 billion) in 2003-04.

The government has maintained that the rising imports represent overall economic growth and higher investment spending. If that is case, it should result in correspondingly higher investment spending. However, that is not the case. Why?




No doubt, the GDP has been increasing at a healthy rate but the growth has been fueled by an extraordinary surge in consumption. During 2005-06, private consumption spending was higher by 34.7 per cent in real terms compared to FY 2002-03 as shown in the graph.

In other words, it increased at an average of 10.4 per cent per annum (in real terms without adjusting for inflation) during the four-year period to June 2006, faster than the overall average GDP growth of 7 per cent. In sharp and somewhat curious contrast, the investment spending grew by an average of only 4.2 per cent per annum during the same period.

Simply put, we have been spending more than we have been producing and that spending boom has been supported by a rapidly expanding banking sector that has been one of the principal beneficiaries of the growing remittances since 2001. (see graph 2)

What has also contributed to the deterioration is the lack of proper incentives to encourage the rising foreign exchange flows to go into the productive channels. Fiscal and trade policy distortions have contributed to a record boom in private consumption (cars, mobile phones, real estate, consumer imports) while the investment spending has not risen as fast although the net banking credit to the private sector grew by 29 per cent in 2003-04, 33 per cent in 2004-05 and 30 per cent in 2005-06. This issue lies at the heart of the current debate.

When a credit or a liquidity driven boom is used to finance an ever-increasing level of consumption and does not result in higher capital formation and investment spending, it causes higher inflation. The problem is exacerbated when higher consumption also involves finished goods imports that put additional pressure on the current account.

The trade policy should eliminate or lower tariffs on imported raw materials and discourage consumption of luxury imports on one hand and discourage exports of raw materials and low value-added goods on the other. We seem to have been doing the opposite: importing more and more of finished goods and exporting more and more of raw materials and low value-added goods. The problem has been further compounded by the fact the Central Bank is not completely independent in reality and has not focused on containing the inflation rate as the most important goal of its monetary policy as do most central banks. The policy makers and the businesses must address these fundamental issues on a top priority basis instead of quibbling about the exchange rate.

The writer is a former head of Emerging Markets Equity Investments, Citigroup


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## Neo

*Growth and competitiveness*

By Khaleeq Kiani

PAKISTAN could achieve a higher growth rate of 7-8 per cent provided existing weakness in certain key areas of business environment are addressed effectively.

This was the consensus that emerged at a two-day seminar on Ã¢â¬ÅPakistan: growth and competitivenessÃ¢â¬Â organised by the World Bank at Lahore University of Management Sciences. Many analysts viewed costly and unreliable supply of energy, weak infrastructure and lack of judicial reforms affecting competitiveness.

Weaknesses enumerated by the World Bank included costly regulations, weak public institutions, corruption, political uncertainty and feeble contract enforcement. Other problems reiterated by the bank were transport bottlenecks, corruption, lack of skilled workers , the rigidities of land and labour markets and difficulties faced by SMEs in accessing credit. The country has also a narrow tax base, it was stated.

A former federal minister Dr Abdul Hafeez Sheikh viewed Ã¢â¬Åcorruption as one of the top problems Ã¢â¬Å and added military coups to the listed problems. Listening to his candid speech were minister for industries and production Jehangir Tarin and prime ministerÃ¢â¬â¢s advisor on finance Dr Salman Shah.

Dr Abdul Hafeez Sheikh observed: The tackling of corruption and resolving governance-related issues are important. It should be decided whether the country will be ruled by the army or the army is to be subservient to the elected representatives. Build institutions and not dams.

There was almost a consensus among speakers including academicians that corruption and weak public sector institutions were at the heart of PakistanÃ¢â¬â¢s problems and unless confronted head-on, no policy measures and incentives could be of any help.

Dr Abdul Hafeez Sheikh enumerated many failures of the present military-led government that varied from water and power sectors, to aviation industry and from shipping to gas and Thar coal development. On the positive side, he mentioned telecom, banking and privatisation as successes.

On land holdings and property laws, he said, assets that could not readily be turned into capital, are dead assets. Prof De Soto had been invited to a high profile meeting presided over by the President and attended by ministers and whoÃ¢â¬â¢s who of the government to seek guidance for converting these dead assets into capital but Ã¢â¬Åmysteriously the offer Mr De Soto made was not taken upÃ¢â¬Â.

We have not been able to settle political disputes and inter-provincial issues like resource(NFC award) and water distribution etc. Macroeconomic stability is a must but not sufficient for bringing change in the lives of the people. The countryÃ¢â¬â¢s economy started to improve after 9/11 in the shape of high remittances and capital aid and rescheduling of foreign debt. Growth spurts driven by aid were destined to increase disparities and just a seven per cent of foreign direct investment went into the manufacturing sector- not a good sign for the long-run.

Former finance minister Sartaj Aziz said: the investment to GDP ratio was quite low and Pakistan could not sustain high trajectory of growth with existing trend of investment. An investment to GDP ratio of at least 27 per cent was a must to achieve growth rate of seven per cent.

Interestingly, Pakistan achieved higher growth during three military rules when the country was needed by the foreign powers for their agendas but it never helped reduce poverty. We do not accept dictatorship.

A World Bank study that examined in detail the textile chain and its competitiveness abroad was of focus of all participants. Tariq Sayeed Saigol said his cousin had started to import electronic goods for assembling home appliances because of higher input costs in textiles at home. The bank report said Pakistan could make tangible progress but it would not be automatic. To realise it, Pakistan will need to do more than reinforce the fiscal and monetary discipline that has enabled it to regain lost ground.

The country must also build strongly on initial, far-from-complete progress in designing and promoting an investment-friendly business environment that will nurture new competitive strength. A broader and deeper investment climate reforms and a strengthened macroeconomic framework could propel the economic revival to produce a higher and sustained growth.

The value chain analysis of the textile sector showed that many weaknesses harm the cost competitiveness. In exporting Blue Denim Jeans and other textiles and apparels to the US market, Pakistan was at a competitive disadvantage because of the longer shipping time and higher freight costs as a percentage of export values.

Relative to China this disadvantage amounts to 6.5 per cent of the export value. This highlights the importance of compensating the disadvantage with competitive cost advantages through relatively more efficient Customs administration, port operations, and inland transport and logistics, and lower factory-gate costs.

In cotton spinning where power charges account for about a fifth of total costs and 42 per cent of conversion costs, competitiveness and profitability is adversely affected not only by the high electricity tariffs for industrial users, but also by frequent outages Ã¢â¬âcommonly an average of three per day--that heighten inefficiency and expense. With funds which they could otherwise be used to automate some processes, many textile mills install back-up generators, further raising their costs of production.

In ginning and weaving, the scarcity of trained workers, technicians and engineers is hampering maintenance and productivity improvements. And due to the rigidities of the labour market, contractual hiring is preferred, encouraging under-investment in training by employers and workers.

For non-integrated mills which are mostly SMEs (e.g., in weaving), access to financing is limited by high collateral requirements because of inadequacy of the private credit information system and restricted range of assets acceptable as collateral.

In dying, material inputs account for over 55 per cent costs. Chemicals, mostly imported, account for 95 per cent of these inputs. Collecting rebates on customs duties and other levies paid on these imports can take 3-5 months, delays that create cash flow problems for the firms and raise their costs, thus undermining their competitiveness.

Similar problems are faced in the production of other intermediary inputs, notably yarn. Excessive use of (subsidised) water through flood irrigation is reducing cotton yields and quality and also raising costs of water extraction and tube-well investments.

Many cotton growers cannot obtain enough quality seeds for their crop because of lack of private-sector involvement in the production and distribution of seeds, while inefficient state-owned enterprises are unable to supply sufficient quantities of quality seeds at prices that are set below-cost.

Responding to inadequate supply of quality seeds, growers use retained hybrid seeds, which are susceptible to pests and viruses, thus reducing cotton yields and quality. Former finance of Thailand Tarrin Nimmanhaeminda said the globalisation demanded continuous changes in policy-making so as to maximise gains and minimise losses. He advised the policy makers to defend national interests and put in place hard and soft infrastructure for better regional and global integration.

International quality standards should be accepted and adopted and but law and regulations governing capital flows be very carefully prepared and changed as the world changed. The exploitation of natural resources should be subject to limits and privatisation should not attract the impression of selling away national assets and creating private sector monopolies but for creating competition.

In his opinion Pakistan should provide access to credit but without making it free money so that poorest of the poor could benefit and equality of law is ensured. Besides, he said, the public administration should comprise small, clear and efficient bureaucracy whose wage pattern should not have major gap with the private sector.


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## Neo

*Govt to seek $17 billion from lenders: Construction of three major dams*

By Khaleeq Kiani

ISLAMABAD, Dec 17: The government has decided to immediately prepare and negotiate a $17 biillion, 15-year business plan with four leading international lenders for the construction of three major dams in the country, Dawn has learnt.

The decision on the financing of the construction of the Kalabagh, Diamer-Bhasha and Akhori dams was taken at a meeting of the task force on mega dams led by Adviser to the Prime Minister on Finance Dr Salman Shah on Dec 11.

The task force comprises federal secretaries of the ministries of finance, water and power, the economic affairs division and the planning commission. The adviser on water and power, members of the Water and Power Development Authority and other officials of various government agencies are also on the task force.

A senior government official told Dawn on Sunday that the task force was constituted at a recent meeting of the president and the prime minister and was entrusted with the task of starting formal financial preparations for the dams. He added that the announcement of the task force constitution was not made to keep the professional and technical work in a low profile.

The task force decided to create special cells in three federal divisions -- finance, economic affairs and water and power led by respective secretaries -- to become focal points for interaction with foreign lenders.

Water and Power Secretary Ashfaq Mehmood suggested to the task force to create a Special Purpose Vehicle (SPV) to finance and construct the Diamer-Bhasha dam following the international practice of creation of offshore companies for investment and tax purposes.

Ã¢â¬ÅThis will also enable the government to take up the project along market-based, commercial lines without recourse to normal audit issues and bureaucratic approvals and may encourage even the local private sector to be part of it under the new public-private partnership scheme,Ã¢â¬Â the official said. The task force was informed that initial contacts with the World Bank, Asian Development Bank, Islamic Development Bank and Saudi Fund for Development had already been made and the response was very encouraging.

Some of the lenders, the meeting was informed, needed a broad-based resettlement policy, risk mitigation measures and a long-term business plan along with a repayment mechanism to meet their standards, policy concerns and board approvals.

The World Bank -- because of its experience of resettlement issues of the Tarbela and Mangla dams where many displaced persons are still homeless -- was insisting on a national resettlement policy to satisfy its legal requirements. The bankÃ¢â¬â¢s own poor performance in the implementation of the Left-Bank Outfall Drain has caused it to be more vigilant on environment and livelihood issues of the people likely to be affected by the dams construction.

The water and power ministry cell was directed to prepare a national resettlement policy, land acquisition and resettlement mechanism specifically for the three dams, environmental aspects, tender documents, bidding process and prequalification criteria besides financial needs on an annual basis. It would be assisted by Wapda, Nespak and Chief Engineering Organisation, Indus River System Authority, etc.

The ministry of finance will prepare, with input from the water and power ministry, the overall financing requirement for each project on an annual basis, examine terms and conditions of the foreign financing and put in place the repayment schedule. The cell in the economic affairs division, in consultation with the finance and the water and power ministries cell, will act as a one-window operation to hold formal negotiations with the lenders.

The sources said an inter-provincial committee led by Secretary Ashfaq Mehmood and appointed by the Executive Committee of the National Economic Council a couple of months ago approved early this month a land acquisition mechanism for the Diamer-Bhasha dam.

The committee, however, asked the provincial governments to submit their views on construction priorities and related issues of the two other dams, promising that they would be analysed by Wapda which would come up with a plan for consensus within two months. Till such time, Wapda was directed to start an awareness campaign throughout the country in January about the merits and demerits of various dams.

According to the water and power ministry, the total cost of three dams was expected to be about Rs1.027 trillion ($17.1 billion), including a foreign exchange component of Rs433 billion ($7.22 billion). The cost of the Diamer-Bhasha, Kalabagh and Akhori dams were estimated at $6.51 billion, $6.2 billion and $4.44 billion, respectively.

The government plans to seek foreign financing of $2.964 billion for the Diamer-Bhasha, $2.84 billion for the Kalabagh dam and $1.42 billion for the Akhori dam. These three dams are part of the five big dams project President Pervez Musharraf announced in January. The other two daws -- Munda and Kurram Tangi - are in the process of being given to the private sector for construction. The construction of none of the five projects has taken off yet.

http://www.dawn.com/2006/12/18/top1.htm


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## Owais

*Crisis in the making for sugar sector *

ISLAMABAD (December 18 2006): A serious crisis is in the making in the sugar sector as ex-factory rates have gone as low as Rs 28 per kg, threatening payments to the growers.

The sugarcane rates of Rs 65 and Rs 67 per kg for Punjab and Sindh, respectively, contribute to Rs 23 to one kg sugar cost and, with inclusion of sales tax @ 15 percent and overhead expenditures one kg sugar cost the mills between Rs 32 and Rs 33. The question which comes in one's mind is how long the mills can operate and ensure the payments to growers of the crop when sugar cost becomes more than its selling price. One need not to ponder for a long time to answer that such a situation can not exist for a long time.

ANOTHER QUESTION IS: what is it which is creating the problem for the sugar sector after a break of every four to five years? Market analysts believe that it's the faulty government policy that is pushing the sugar sector towards a situation like that of 1999-2000 when huge unsold stocks of sugar had created glut-like situation, leaving the sugar sector players in complete disarray. Its ultimate effect was sticking up of billions of rupees of the growers' payments and default of bank loans by the industry.

Finally, the government had to play a role and pull the industry out of the crisis by picking up the huge unsold stocks.

The analysts apprehend that sugar sector is slowly and gradually heading towards a serious crisis as the mills' sale of fresh stocks is below average. They say that the situation, if it persists, will result in big unsold stocks with the mills.

THEY CITE THREE REASONS FOR THE LOOMING CRISIS: huge carryover stocks, banks' tough margin financing conditions, and untimely offloading of imported stocks.

They say that the sugar market is being injected with much more stocks than demand that would further bring down sugar prices and make it hard for the mills to pay to the growers for the sugarcane.

The analysts hardly see any chance of improvement in the market sentiment in the near future. They believe that unsold stocks would keep on mounting due to less demand and, finally repeat the 1999-2000 crisis for the sugar sector.

They also believe that corrective measures are needed without any delay to put things in order to avoid a crisis. They suggest relaxation in margin financing for sugar industry to provide it seasonal loans at notional percentage to ensure payments to the growers, besides providing them much space in the market for selling stocks and pay back the banks 100 percent seasonal loans by October 31.

They also demand that the government should give up the policy of governing the sugar sector on ad hoc basis and prepare a long-term strategy to let all stakeholders function with full confidence.

They also stress for more protection for the growers and demand a system that would ensure them timely payments.


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## Owais

Over Rs 600 million announced for Shahdara uplift projects 

LAHORE (December 18 2006): Punjab Chief Minister Pervaiz Elahi has said that PML (N) has lost its identity after its merger into PPP, and Pakistan Muslim League will win with a thumping majority in the next general elections due to its record historic developmental works and public service.

He said that in the past, PML (N) had been accusing PPP of disintegration of the country but now its leadership has formed alliance with it (PPP) while no true Muslim Leaguer even can think of alliance with PPP. He added that there was no question of a deal with the party, which was responsible for disintegration of the country.

He was addressing a public meeting on the occasion of inauguration of the reconstruction work of Ravi Road at Niazi Shaheed Interchange here on Sunday.

The Chief Minister said that PPP, by opposing Kalabagh dam had not only tried to stop Punjab's water and devastate its lands, but also hatched a conspiracy against Pakistan. "Now, how PPP will ask for votes from Punjab?" he questioned.

He said that the hike in electricity rates was the result of wrong policies of PPP government, and those who are against Kalabagh dam do not want prosperity in the country. He said that those who were elected twice from Lahore as chief minister and prime minister did nothing for development of the city and left Pakistan for 10 years, under a 'deal', leaving the workers and voters leaderless.

He said: "Our hearts beat with the poor people and Lahorites, and measures taken by PML government for the development of the city would be seen soon, and the people would themselves see that the government has completed a record number of welfare-oriented projects for their uplift." Pervaiz announced that proprietary rights would be given to the dwellers of all katchi abadies of Lahore along with facilities at par with Model Town and Gulberg.

On the demand of the people, he announced immediate abolition of toll tax at Sagian Bridge. He said that toll plaza at Ravi Bridge G T Road would be shifted outside the city.

He also announced immediate provision of Rs 150 million for construction of a road from Baba Chhatriwala to Niazi Chowk, Rs 140 million for a road from Shahdara to Begum Kot, Rs 50 million for girls degree college at Match Factory, Shahdara, Rs 220 million for setting up a technical college at Shahdara, and Rs 25 million for Faizpur Interchange.

The Chief Minister also announced upgradation of Shahdara Hospital. He further announced reconstruction of Lahore Circular Road and a modern inter-change at Azadi Chowk.

He said that Ravi Town is a backward town of Lahore; therefore, Punjab government has diverted the development sources towards this town. He said that with the cooperation of Bukhatar Group of UAE, a 'sports city' is being developed over an area of 3,000 acres, which will not only open new vistas of development in the area but would also generate a large number of job opportunities.

Meanwhile, 20,000 people will get employment due to construction of Shaikh Zayed Hospital, he added.

He said that Rs 10 million would be given to each union council of Lahore for development projects. He, however, made it clear that after provision of funds, monitoring of utilisation of these funds will be ensured and in case of negligence in the development work, new faces would be introduced.

Pervaiz Elahi on this occasion also distributed documents of proprietary rights among the residents of Katchi Abadies.

Federal Commerce Minister Humayun Akhtar said that Lahore is the city of Muslim League, and PML had carried out extraordinary development works here. He said that earlier Ring Road was announced six times, but it was Pervaiz Elahi who started this project, which would be completed in 2008.

Lahore Nazim Amir Mahmood said that Ravi Town was the background town of Lahore but PML government has constructed the biggest interchange of the country here. He said that due to development projects announced by the Chief Minister, Lahore has now become the city of PML and of Pervaiz Elahi.

MPA Qaisar Amin Butt, President PML Lahore Munir Ahmed, Nazim Data Ganj Bakhsh Town Tariq Sana Bajwa and Nazim Ravi Town Yousuf Ahad also addressed the meeting.


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## Owais

*$38.3 million foreign investment in bourses *

KARACHI: Foreign investors during the current fiscal year made investments amounting to $38.3 million in the Pakistani stock exchanges.

State Bank of Pakistan (SBP) figures showed that the US with $16.8 million investment in December topped the list, while the Kuwaiti investors for the first time in the current fiscal year made substantial investments of $12.2 million to clinch the second position.

Foreign investors during the current fiscal year thus far made investments of $33.3 million in Pakistani stock exchanges, out of which, US with $143.5 million investments remained at the top.


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## Owais

*Foreign investments in coal mining remain lukewarm *

ISLAMABAD: Pakistan has thus far failed to lure foreign investments in projects relating to coal mining and power supply despite attractive incentives offered.

Ministry of petroleum sources said that the ministry has already briefed the high officials about it. 

Sources attributed this failure in attracting foreign investment in coal mining to its frustrating performance, non-availability of support and auxiliary industries relating to mining, lack of reliable and correct data and non-availability of skilled workers besides the huge capital required for projects of coal mining and power houses. Therefore, the incentives offered needed to be perked up further, sources told.


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## Owais

*PM links petroleum price cut to deficit recovery *


ISLAMABAD (updated on: December 18, 2006, 17:45 PST): Prime Minster Shaukat Aziz on Monday said the present government wants the masses to benefit from declining prices of petroleum products in international market but it is still facing Rs 15 billion deficit.

The prime minister, while talking to the newsmen, assured that as early as deficit is recovered, the government will bring down prices of petroleum products on no profit no loss basis.


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## Owais

*Remote areas may get re-gasified LNG *

ISLAMABAD (December 18 2006): The Ministry of Petroleum and Natural Resources is likely to allow 'Gas Naturale', an international firm to supply re-gasified liquefied natural gas (RLNG) to areas located away from gas infrastructure.

However, the Economic Coordination Committee (ECC) of the Cabinet, in its recent meeting directed the ministry to observe the pre-qualification criteria before materialising any deal with the private sector for laying the pipeline.

The ministry has also been asked to first evaluate the financial health, technical expertise and guarantee from the bank pertaining to the bidding companies.

Official sources told Business Recorder that President Pervez Musharraf had directed the ministry to negotiate sales and purchase of gas with Gas Naturale and complete the procedural formalities before October 6.

However, the ministry initiated a consultative process involving the Oil and Gas Regulatory Authority (Ogra), project sponsor and gas utility companies to devise mechanisms to ensure availability of RLNG in such areas where piped natural gas can not be provided due to techno-economic considerations.

After extensive consultations, it was decided that a general policy guideline may be formulated rather than establishing project- specific parameters, sources said.

Accordingly, policy guidelines were drawn up for LNG Policy, 2006 with the primary objective to increase gas availability with the active support of private investors.

The stakeholder decided that natural gas should be offered by the concerned gas utility company through a transparent process after meeting the requirements of the existing consumers, subject to availability at a given point on the main transmission line.

After confirming gas availability from the concerned gas company, the project sponsor will present project details to Ogra on prescribed format to get a licence to undertake the project in accordance with Ogra Ordinance, 2002.

Sources said that areas to be selected by the project sponsor for supply of re-gasified LNG would be those which do not meet the per consumer cost criteria set by the government for development of gas infrastructure or where extension of gas network is technically not viable.

The ministry had recommended that licence, to be issued by Ogra, would be on exclusive basis for the area(s) specified in the application for a maximum period of five years, subject to project sponsor implementing the project in a timely manner as allowed by Ogra.

But the ECC decided that the winning bidder should have 10 years exclusivity in that certain area where it would lay the gas pipeline and no other party would be allowed to lay pipeline in the 10-year period.

The regulator would grant licence for 20 years, which would be renewable if the performance of the private company would be up to the mark.

During this period of exclusivity referred to above, Ogra would not allow any other party to lay or extend pipeline infrastructure in the said area(s).

The project sponsor would undertake the project at its own cost and risk without any state subsidy of any nature whatsoever, according to ECC decision, sources said.

The price of gas payable by the project sponsor to the concerned gas company would be equivalent to weighted average consumer price in Pakistan as determined by Ogra form time to time.

The project sponsor would sell RLNG at a price determined by the regulator to provide reasonable return to the sponsor as per Ordinance provided, however, that such sale price should not exceed LPG consumer price, less 10 percent discount.

As part of conditions of the licence, Ogra will ensure that re-gasified LNG is sold only in the specified area(s) for which the licence has been issued to the project sponsor and the percentage share of re-gasified LNG sale to domestic consumers shall not be less than 80 percent of total gross sale of RLNG, sources said.

In the event the project sponsor is found to be in breach of any of the policy guidelines or the terms and conditions of the licence issued by Ogra, the licence would be cancelled and the gas allocation withdrawn.

In such an event, the project sponsor would be required to promptly reimburse all costs incurred by the consumers in securing RLNG connections, which would not be limited to connection fee, meter charges, in-house pipeline cost etc, wherever applicable, as per determination of Ogra.

According to sources, Finance Ministry had supported the proposal with the condition that no subsidy should be involved at any stage for supply of natural gas, through RLNG, to the consumers.


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## EagleEyes

It would be nice if you guys post one most important news (that can be discusssed) in the section itself rather than this thread. So we can discuss it.

Plus: Neo, dont post the links if its taking you longer. 

Thanks


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## Neo

Webby,

I'm considering to close this 'Daily Update' thread and have a new one called 'Economic Development'.
We'll only discuss major economic news and avoid getting flooded again and again.


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## Neo

*Efforts under way to sustain economic growth: minister *

ISLAMABAD (December 19 2006): Strenuous efforts are under way to further develop infrastructure in the country to ensure sustenance of the growth ratio between 6 to 8 percent. State Minister for Finance Omer Ayub Khan on Monday told PTV that standard of people living in villages have increased persistently due to judicious policies.

Poverty level has already decreased to 24 percent from 34 percent. Rs 304 billion Public Sector Development Programme (PSDP) was aimed at improving standard of living of people especially poor segment of society.

Planning has been finalised to enhance skills of country's labour force in a bid to increase their productivity enabling industries to compete with the international rivals, he said.

Construction of dams is imperative to ensure progress and prosperity of the country and ensuring availability of electricity on cheaper rates. A sum of around 5 billion dollars have been injected into textile sector during the last few years aiming to make it competitive.

Motorcycle production in country has also registered phenomenal increase. About 95 percent parts are being produced locally. Around 200 small industries are manufacturing motorcycle parts for the industry.

The per annum motorcycle production have also increased up to 700,000 units from mere 150,000 last year. Foreign Direct Investment (FDI) has increased to 3.5 billion dollars from 800 million dollars within a few years period. Due to stable policies, investors from across the world have thronged Pakistan and investing money in various projects. It is hoped that the FDI will further increase during the current year.

Various sectors like SMEs, agricultural, financial have shown good performance during the current fiscal year. The financial sector of the Pakistan has also emerged as strongest in the region. Services, agricultural sectors have also shown splendid growth ratio. Livestock sector has also performed excellently, he added.

http://www.brecorder.com/index.php?id=509267&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Remarkable reduction in poverty: Prime Minister* 

ISLAMABAD (December 19 2006): Prime Minister Shaukat Aziz has said that poverty in the country has remarkably reduced during the last four years and asserted that 13 million people have been lifted out of poverty, as Pakistan is set on a high growth trajectory of six to eight percent.

Addressing the inaugural session of three-day international conference marking the Centennial of All-India Muslim League, which began here on Monday, he said the country had undergone positive transformation since the military take-over in 1999.

The centenary celebrations are being attended by guests from USA, UK and Bangladesh and from various parts of the country.

"We deeply cherish and honour the memory of our founding fathers who waged a heroic struggle from the platform of the All-India Muslim League to secure a separate homeland for the Muslims of the Sub-continent," Aziz said.

He added: "We celebrate the centenary of the great political party, which won us our homeland, we should try to understand the idea of Pakistan - the two-nation theory - in its true spirit. We should retrace the steps and strides in that marathon struggle which translated the idea of Pakistan into the reality. Most importantly, we also need to search our souls and reaffirm our commitment to the ideals for which Pakistan was created".

All-India Muslim League was founded in Dhaka on December 30, 1906 and the Quaid-i-Azam was invited to attend and address the meeting of the Muslim League in 1910 and 1911. He was enrolled as member of the party in 1913. As a member of the Congress as well as of the Muslim League was trusted and confided by the both. The Quaid-i-Azam enjoyed a unique position to allay distrust and chart out a course of co-operation between them.

Aziz observed Islam accepts the reality of change and lays down the principle of Ijtehad as a mechanism of interpreting the basic Islamic principles in terms of the changing realities and requirements of life. "The task of reconstructing Muslim societies is indeed stupendous. Such a process has to reflect not only the idiom and thought currents of the modern age but also embody the drive and inner quality of Islam."

Sharing his government's vision with the audience, he said: "We envision Pakistan as a modern developed Islamic welfare state through sustainable democracy and a knowledge-based economy". "We open up globally to take advantage of the opportunities presented by economic integration, we are also striving to shore up our national security and domestic economy in order to safeguard our national interests and to promote the welfare of our citizens," he further said.

Seven years back, when President Musharraf assumed responsibility of the government, Pakistan was in doldrums, beset with festering problems of misgovernance, dysfunctional institutions and a sagging economy, he asserted.

"We have implemented an ambitious and all-encompassing reform agenda, covering all aspects of national life - political, administrative, social and economic. This has brought about a sea-change in the country and the process of national renewal is well underway," Aziz said.

He said his government is open to constructive criticism and honestly feels that promoting a culture of tolerance and mutual accommodation is indispensable for democracy. The government has also implemented broad-based administrative reforms by devolving authority from higher tiers of government to local levels, he added.

"In the economic sphere, we have successfully implemented a stabilisation programme and wide-ranging structural reforms, which have put the economy back on the track of sustainable growth and poverty alleviation."

The Prime Minister said Pakistan is now the fastest growing economies in the region and hoped it would sustain a high growth trajectory of 6 to 8 percent. The poverty reduction strategy has brought down the number of people below the poverty line from 34.5% in 2001 to 23.9% in 2005. In other words, 13 million people have been lifted out of poverty in just four years, he noted.

Mushahid Hussain Sayed in his keynote address said had there been no Quaid-i-Azam and no Muslim League there would have been no Pakistan. Senator Mushahid Hussain Syed, secretary general of PML (Q) also spoke on the occasion.

http://www.brecorder.com/index.php?id=509158&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*All alternative sources to be used for power generation: renewable energy policy launched *

ISLAMABAD (December 19 2006): The Minister for Water and Power, Liaquat Ali Jatoi, has said that the government has decided to use all alternative energy sources to generate electricity to meet the growing demand by 10 to 12 percent annually.

Talking to media persons after the launching of the first 'Policy for Development of Renewable Energy for Power Genereation-2006' on Monday, he said that the policy was in line with President's and Prime Minister's open-arm policy for inviting investment in the country.

The policy, which envisages mainstreaming of renewable energy by employing small hydro, wind and solar technologies in the development plans of the country, would go a long way in strengthening and improving the power supply position of the country, he said.

The minister, briefing the media on the policy approved by the Economic Coordination Committee of the Cabinet, said that the policy lays down very liberal and attractive incentives to attract investment on the 'Renewable Energy Map' of the world. Pakistan is blessed with abundance of renewable energy potential, but so far its potential had not been harnessed, except for a few large hydroelectric projects, he added.

He said that the policy comprises of three phases - short term, medium term, and long term. Short term covers the period up to June 2008. Giving out salient features of the policy, he said that it invites investment from private sector for four categories:

(a) Independent power projects (IPPs) for supply of power to grid only (b) Captive-cum-grid spillover power projects. (ie self-use and sale to utility) (c) Captive power projects (ie. self or dedicated use) and (d) Isolated grid power projects (ie small, stand-alone).

To encourage generation through renewable resources, small projects for self-use will not require any permission from the government, and will also be able to sell surplus power to 'discos' under the policy.

NTDC and Central Power Purchase Agency will purchase all electricity from renewable energy resources projects. The policy will allow an investor to avail the facility of delivering power on the existing infrastructure and receiving equivalent power for use at location of its own choice, after paying wheeling charges etc.

The small renewable energy projects will not require tariff determination from Nepra. It has been allowed that wind and solar projects, irrespective of size of the plant (even more than 50 mw) will be dealt by AEDB. The power purchaser will bear the wind risk as well.

Giving details of financial incentives to the investors, he said that among other incentives, no custom duty or sale tax would be levied on machinery, equipment and spares meant for the initial installation or for BMR or expansion after commissioning of projects for power generation utilisation renewable energy resources. Exemption has been allowed from income tax, including turnover rate tax and withholding tax on imports of machinery and equipment.

The launching ceremony was attended by Secretary and Adviser of the Ministry, Chairman AEDB, Chairman Wapda, Secretary AEDB and senior officials of the Ministry and AEDB.

http://www.brecorder.com/index.php?id=509174&currPageNo=1&query=&search=&term=&supDate=


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## mohammadkhan70

New branches in S Arab, Canada, India soon: President NBP
LAHORE: National Bank of Pakistan (NBP) has planned to provide loans to three million youth in five years under President's Rozgar Scheme.

" The scheme is presently building-up; It will pick upsoon," President NBP, Syed Ali Reza told newsmen here Tuesday.

He said that the process of seeking Rozgar loan has been simplified.

He said that the process of collection of utility bills and the payment of pension to the pensioners had also been made easy.

He also informed that NBP has planned to open its new branches in Saudi Arab, Canada and India shortly.


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## Neo

Tuesday, December 19, 2006 

*Technical assistance loan expected in 2007: WB to help Pakistan exploit mineral resources*

By Sajid Chaudhry

ISLAMABAD: The World Bank will help Pakistan to exploit its mineral resources for its economic development by preparing a Sustainable Management of Mineral Resources Project through a technical assistance loan expected to be approved in the second half of 2007, a government official told the Daily Times on Monday. 

The federal government has already decided to review the National Mineral Policy 1995 aiming to make it more investment friendly, effective and efficient with enhanced productivity and safety. 

In this regard the government has engaged a consortium of consultants led by the Institute of Mining Engineers Pakistan to review and update the policy for attracting sizeable local as well as foreign direct investment in the country. 

Draft of the New Mineral Policy (NMP) is being finalized which would be discussed with the World Bank and other donors and is expected to be approved in the near future. In the area of fiscal regime, it would relate to making the NMP simple, clear and implementable, to promote sustainable investment, allow investors a legitimate profit on investment, measures for sustainable economic activity even after depletion of ore reserves, royalty rates vis-ÃÂ -vis fluctuating metal prices in case of windfall profits. 

In the area of mineral regulatory regime, the recommendations would cover transparent and time-barred procedures for filing applications and grant of mineral licences, restrain on blocking of areas by parties incapable of meeting minimum work commitment. 

The new NMP would include strategies for mineral development in the areas of survey and explorations, data generation, national inventory of minerals, exploration of precious and noble minerals, mineral processing and beneficiation, recycling of metal scrap and waste, mining equipment and machinery, manpower development, linkages from mining development to end user for establishing failure and success stories, financial support for mining, small-scale mining, institutional strength, mine safety, health and welfare of mine workers. 

The official further informed that the core objective of WB technical assistance loan is to assist the government of Pakistan in implementing its strategy to accelerate sustainable mineral sector development by (i) strengthening governance, transparency, and capacity in the management of mineral resources, with particular emphasis on community development, environmental compliance, and equitable sharing of mineral resource benefits, and (ii) attracting private sector mining investment. Provincial-level reforms will be implemented in Balochistan as a pilot case, and will aim to provide a demonstrative effect so that other provinces follow with similar reforms. 

The project is expected to yield the following outcomes: (i) increased private-sector investment in the mineral sector as a result of: (a) collection and dissemination of basic geo data, and (b) improved investment-enabling climate through enhanced legal and fiscal frameworks in line with international practices; (ii) improved institutional capacity at the federal and provincial levels to manage the mineral sector; (iii) increased taxes/royalties revenues at federal and local levels; (iv) formulated policies on mitigation of potential impacts of mining on associated communities and on increased benefit sharing at the community level; and (v) improved efficiency and transparency of licensing process through a harmonized mineral licensing system.

http://www.dailytimes.com.pk/default.asp?page=2006\12\19\story_19-12-2006_pg5_1


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## Neo

Dear readers,

We'll continue to report economic progress in Pakistan in a new manner, this time with _your_ contribution, Q & A's and open debate.

Articles posted without link, comments or with no significance will be deleted immidiately to avoid flooding.

Our economy is one of the fastest growing economies in the world, there's plenty of news and development to discuss and report.

So lets engage and show the world how we're emerging today!

:flag: :flag: :flag:


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## Neo

This thread's been closed. We'll continue to discuss economic growth and hope to have serious debates.

Thanks!
Neo

https://defence.pk/forums/showthread.php?t=3216


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## Neo

*$5 billion FDI likely in 2006-07: Salman *

LAHORE (December 20 2006): Advisor to the Prime Minister on Finance, Dr Salman Shah on Tuesday said Pakistan was expecting foreign direct investment (FDI) worth 5 billion dollars during the year 2006-07.

Talking to newsmen at the annual general meeting of Pakistan Society of Development Economists (PSDE) at a local hotel, he said this amount coupled with foreign remittances worth 4.5 billion dollar and assistance from international financial institutions would help government to keep fiscal and trade deficits within reasonable limits.

He said GDP-Debt ratio had come down to 53 percent due to the efforts of the government. He ruled out the possibility of devaluation of rupee vis-ÃÂ -vis dollar and added that only the market forces would determine the value of rupee. He said the prices of the kitchen items like onion were on decline.

However, Dr Shah said, imports of onion could be made before Eid-ul-Azha in case of shortfall between supply and demand. He said the decline in inflation would ultimately lead to decrease in the mark-up rates.

http://www.brecorder.com/index.php?id=509531&currPageNo=1&query=&search=&term=&supDate=


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## Neo

$5 billion FDI during currnt fiscal year is another tribute to governments current policies.

Despite political instability in some area's foreign investors haven't lost faith in our economy.
If things go well,we'll be receiving more than $10 billion in FDI by the end of this decenium, it will have a major impact on our economy.


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## Neo

*Local and foreign investments grow by 20 percent: Shaukat* 

LAHORE (December 20 2006): *Prime Minister Shaukat Aziz has said that domestic and foreign direct investments have grown by 20 percent, which is the highest in the last two decades.*

Addressing the 22nd Annual General Meeting and Conference jointly organised by Pakistan Society of Development of Economists (PSDE) and Pakistan Institute of Development Economics (PIDE) here on Tuesday, he said the improving economic growth had started to cast its impacts on all segments of society as unemployment and poverty were declining significantly.

The government's financial reforms and privatisation strategy had led to a vibrant trade sector that was empowering the consumer for the first time, he added.

Through prudent economic management, first generation reforms of fiscal consolidation, debt reduction, deregulation, privatisation, and transparent governance, Pakistan's economy had grown at an average rate of almost 7 percent per annum during the last four years, he maintained.

"Our government is committed to good governance through transparency and accountability. Democratic institutions have been strengthened while a deep-rooted process of decentralisation has been set in motion, the Prime Minister said.

He further said that the government was committed to a continuous process of reforms and had embarked a second generation of reforms covering infrastructure up-gradation, institution building and human resource development. He said the government agenda of second generation structural reforms had three prongs, which were mutually reinforcing to achieve good governance and institutional strengthening.

Aziz further said that the government was determined to a market based economy and in this connection it was deregulating markets and improving supervision and regulation of markets to ensure greater competition.

"We have also been developing deeper and more liberal agricultural markets by allowing market based agriculture pricing, free movement of commodities and introducing private sector in wheat operations. We have also developed markets in media, energy and telecom sectors," he noted. The government was developing policies and regulatory mechanism that were aligned to global norms. He further said.

"We have thus adopted measures for better tax and tariff policy including better tax administration. Our fiscal responsibility and debt Limitation Act 2005 puts a check on the mismanagement of fiscal policy by future governments," Aziz said.

As part of the drive to strengthen institutions, the government had already launched initiatives to modernise several of the key agencies of government including judiciary, civil service, monopoly control authority and the police, he said.

This will of course be done by deepening decentralisation, developing greater transparency, utilising the latest technology and relying on a high degree of professional and technocratic management, he added.

The Prime Minister said that commercial, regulation and corporate laws, which defined and protected the rights of investors in debt and equity markets, needed to be constantly updated so that the legal framework facilitated market transactions and protected the rights of all transactions.

The Securities and Exchange Commission of Pakistan (SECP) had actively been pursuing a reform roadmap to develop an efficient corporate sector and capital market based on sound regulatory principles.

"We have provided security to minority shareholders and made efforts to bring transparency and better management and governance structure in the private sector," Aziz maintained.

He stressed upon the quality of law enforcement and said that it was the enforcement of good commercial laws, rather than their mere existence, which encouraged economic agents to engage in market transactions with each other. Access to justice including a fair and quick disposal of court cases was best viewed as a basic constitutional right while efficient justice system expedited economic transactions, ensured sanctity of contract and protected the marginalised groups, the Prime Minister observed.

"Our real challenge is to devolve effective power, citizen empowerment, community based accountability and financial autonomy to the lowest level of local government. It is indeed necessary for effective decision and implementation system down to the grass root level," he said.

He called for developing and implementing an agenda of second generation reforms that provided the rule of law, political stability, economic progress, security of life and property and an efficient transparent and accountable government. Earlier, speaking on the occasion, Director PIDE and President PSDE Nadeemul Haque highlighted the role and achievements and future plans of the society.

He also elaborated the efforts made by the society for collaborating with several Pakistani educational institutions, scholarship programme, conducting conferences and research work.

http://www.brecorder.com/index.php?id=509485&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*PIF offers $500 million investment in Karachi *

KARACHI (December 20 2006): Pakistan Investors Forum (PIF), Saudi Arabia has offered $500 million investment in various development projects in Karachi. A PIF delegation called on acting City Nazim Nasreen Jalil on Tuesday, which was led by the President PIF Khalid M. Chuadhry and General Secretary Shamshad Ali Siddique.

They also invited Nasreen Jalil to Saudi Arabia to urge the Pakistani investors there to invest in the country. They apprised that Pakistani investors had made $900 million of investment in Saudi Arabia in various projects and also willing to invest in the development projects particularly in Karachi.

The delegation expressed deep satisfaction on the continued uplift projects in the city and hoped that improved civic infrastructure would attract more foreign investor to Karachi. Nasreen Jalil assured that investors would be given complete protection and said that Karachi had a friendly investment- friendly environment.

She informed the delegation about all the mega projects in the city and said that the Asian Development Bank (ADB) was providing $800 million for the development projects. The ADB has also set up its office in Karachi to spur the study on Karachi Mega City Development Projects (KMCDP), in addition to their execution effectively, she maintained.

Nasreen said that the increasing trade activities in the metropolis had dispelled the negative perception about Karachi and many more Pakistani had also started investing in various sectors here.

The Acting City Nazim said that around 169 overseas investment companies had their set-ups in the city. She said that President General Pervez Musharraf and Governor Sindh Dr Ishratul Ibad Khan had endorsed the mega city uplift projects, which were being executed under the authority of City Nazim Syed Mustafa Kamal.

She pointed out that after September 11, 2001, most of the expatriates had started investments in the country "because they considered Pakistan as a safe place for investment as compared to the western countries".

http://www.brecorder.com/index.php?id=509620&currPageNo=1&query=&search=&term=&supDate=


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## Neo

Great job by PIF! Karachi needs an uplift badly to prepare for the economic boob we're yet to see. Infrastructure, energy supply, housing, water management all suck!

ADB's $800 million and PIF's $500 million could turn Karachi into a modern mertropole, hope the government and the KMC sticks with the modernisation.


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## Neo

*'Pakistan is fast growing economy' *

LAHORE (December 20 2006): *NSK, which is one of the leading bearing manufacturer companies, is focusing to grow its business in Pakistan, said Leonard Tan, General Manager, Asean and Oceania Aftermarket Business NSK.*

Talking to Business Recorder after opening of Ahad International branch office at Empress Tower here on Tuesday, Tan said Pakistan is one of the fastest growing economies in the world and NSK is carrying out investigations to explore the possibilities of business potential.

He maintained that NSK, which was *established in 1916, has at present 130 sales centres in as many as 25 countries of the world.* The company has 21 manufacturing plants in Japan and 37 in other parts of the world, he said. To a question, he said NSK is going to set up its representative office and a branch office in the near future.

To another query, Tan said that NSK products support the moving parts that form the hearty of every machine. They are rigorously tested to ensure precision, quality, durability and safety under the most demanding conditions. In every industry, NSK technology enhances performance and opens up new product applications and categories.

He added that bearings are vital to any machine and in Japan they are called "the rice of the machine industry". The use of bearings is endless and these are several hundreds of thousands of different types used in almost the whole industry including textile, automobile, pharmaceutical etc. Nevertheless, bearings are vital to all machinery and the functioning of modern society because these enable cars to run smoothly and support the wheels of trains.

The Sales Manager Aftermarket Business NSK, Dennis Sim said on the occasion that purpose of opening representative office of the company in Pakistan is to provide technical support to customers of NSK products. Apart from this, necessary technical knowledge will be provided to the customers. He said that at present NSK has four distributors in Pakistan.

Ahad International Chief Executive S.M. Irfan on the occasion said that they are doing business with NSK for the last 23 years and purpose of opening the office at Empress Tower is to provide guidance and technical knowledge to customers.

From this new office Ahad International hopes to better serve its after market sales and offers the complete range of NSK's automotive and industrial bearing, and high precision positioning and electronic control products, he added.

Moreover, Irfan Sheikh hosted a dinner in honour of Leonard Tan and Dr Dennis Sim at the Royal Palm Golf and Country Club. The dinner was attended by leading industrialists from Punjab.

http://www.brecorder.com/index.php?id=509622&currPageNo=1&query=&search=&term=&supDate=


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## Neo

This is the kind of development we need, more industrial plants under multinational consortium.

Next five year plan is being designed to focus on industrial growth, spoecially large scale and heavy industry will be promoted and will attract more companies like NSK to open plants in Pakistan. :thumbsup:


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## Neo

*Pakistan's first syndicated automotive study initiated *

KARACHI (December 20 2006): JWT Asiatic and Oasis Research have initiated Pakistan's first ever-syndicated automotive study that will provide insights into the Pakistan automotive market.

According to a press release issued here on Tuesday, the continuing upsurge of consumerism in Pakistan has brought about a new demand for an incisive look into customer needs and aspirations. This national urban study will provide insights and invaluable information to better understand customer segmentation and assess their true potential.

The study has been subscribed by several automobile manufacturers in Pakistan and abroad. Results of the study would help companies fine-tune their strategies and offerings.

JWT is a 100 percent-owned subsidiary of JWT New York, part of the WPP Group Plc London. Oasis is one of Pakistan's premier research agencies.

http://www.brecorder.com/index.php?id=509570&currPageNo=2&query=&search=&term=&supDate=


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## Neo

R & D is yet another sector that needs serious attention since demand for consumer goods will increase due growing desposible incomes.

We want to learn from the mistakes of other growing economies where this aspect has caused chaos and pollution due negligence.


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## Neo

*Chinese firm offers help to build second steel mill *

ISLAMABAD (December 20 2006): Beris Engineering and Research Corporation of China has said it was ready to help Pakistan build its second steel mill. The company's president, Sun Xian Min said this during a meeting with the Engineering Development Board, CEO, Imtiaz Rastgar on Monday.

A 5-member Chinese delegation is currently visiting Pakistan. Xian said that the corporation had also shown interest in revamping the Karachi Steel Mill, but difficulties at the government level hampered such progress, said an EDB statement.

Briefing the delegation about Kalabagh project, Rastgar said the government was keen to restart it in view of the growth in steel market and shortage of its products.

He said that the Kalabagh project started in 1964 with the collaboration of a German company. The German company completed the necessary spade work and even started construction of blast furnace but the government shifted the project to Karachi.

He said although the iron available there is low in quantity yet all other ingredients, required for a steel mill, are there. The Chinese company can save a lot of time after going through the earlier findings of the German company, he added.

The Chinese delegation underlined the importance of steel in development of heavy industries in any country. The Chinese technology was most suitable for Pakistan as it was cheap compared to other countries, the delegation added.

The Chinese company had recently signed an MoU with a private steel manufacturing unit for expansion of their plant with indigenous input of Kalabagh iron ore.

The Chinese team also consists of blast furnace specialists and will visit Kalabagh mines soon. They are also going through the report of the German company to judge the feasibility of the project.

http://www.brecorder.com/index.php?id=509541&currPageNo=2&query=&search=&term=&supDate=


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## Neo

Good news!

There's serious shortage in steel production and we're rely on imports. The only Steel Mill we have in Karachi was supplied by Russia in mid seventies and needs modernisation which is expected as soon as the privatisation is completed.

With new iron ore deposits discovered in Kalabagh, Sindh and Balochistan we can become selfsufficient and process the raw materials adding value to GDP.

We need atleast 8 million ton capacity in steel production to meet domestic demand till 2010.


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## Neo

*Iranian minister sees trade touching $1bn *

ISLAMABAD: The trade volume between Pakistan and Iran can be enhanced from $650 million to $1 billion because considerable potential exists for expanding trade between the two neighbours.

Iranian Deputy Commerce Minister Dr. Sadegh Mofateh stated this while addressing a press conference here on Tuesday. He said the trade between Pakistan and Iran has increased from $141.7 million to $638 million during last six years.

He said Ã¢â¬Åpresently trade volume between the two countries is around $650 million which is not satisfactory and it has the scope of expansion to the level of $1 billionÃ¢â¬Â. So that, he said, the volume of trade should be considerably enhanced.

He said Pakistan and Iran are committed in the friendship bonds, as a lot of commonalities exist between the people of both the countries.

Dr. Sadegh Mofateh said Ã¢â¬ÅWe attach high priority to imports from Pakistan and wanted to enhance import of Pakistani Basmati riceÃ¢â¬Â.

He said Iran could help Pakistan by providing export route to its goods towards Russia and other areas. Ã¢â¬ÅIran can provide best route to Pakistani goods for exportsÃ¢â¬Â.

Responding to a question, he said, presently Iran import 200,000 tones of Basmati rice from Pakistan and this quantity can be enhanced many fold.

To another question, he said, we are negotiating with the authorities to set up Iranian Bank in Pakistan.

Meanwhile during a meeting with the Commerce Minister Humayun Akhtar Khan Iranian Deputy Commerce Minister Moffateh pointed out that exports from Pakistan have increased eight folds in last six years.

Humayun and Mofateh discussed bilateral trade between the two counties particularly the export of Basmati rice to Iran.

Khan told the visiting minister that Pakistan is a big exporter of kinnoo, which is unique to Pakistan.

Here it is important that Iran has quarantine requirement on export of Pakistani fruit like mango and kinnoo to Iran. There are no such quarantine conditions imposed even by the European countries on import of fruit from Pakistan. The visiting minister said that Iran exports onion but imports potato. Pakistan could export its surplus potato to Iran. He said that there is considerable potential for expanding trade between the two countries and the environment is ready for trade.

Pakistan and Iran have signed a Preferential Trade Agreement (PTA) in March 2004, which has become operational from September 1, 2006. Pakistan and Iran have granted tariff concessions on more than 600 items under the PTA. It is imperative to enlarge the ambit of PTA and to further deepen the tariff concessions.

http://www.thenews.com.pk/daily_detail.asp?id=36173


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## Neo

*ADB to help improve power transmission in Pakistan *

The Asian Development Bank (ADB) is supporting Pakistan's program to remove transmission bottlenecks to power delivery through a multitranche financing facility amounting to 800 million U.S. dollars, an ADB report said on Wednesday. 

The funds will rehabilitate and expand parts of the country's transmission system to meet present and anticipated future demand and ensure the system's continued operation and maintenance, said the report. 

"Pakistan's present transmission system faces considerable risks and costly servicing because it is operating at or above rating limits," said Rune Stroem, an ADB Principal Energy Specialist. 

"The system as it stands cannot keep up with present demand and risks major delivery constraints. Providing more reliable power is essential for growth and expansion of Pakistan's economy and, in turn, economic and social development," said Stroem. 

Excess load on transmission lines at substations is one of the critical factors causing transmission and distribution losses in Pakistan's power system. At the end of FY2006, more than three quarters of the country's 500 kiloVolt and 69 percent of its 220 kiloVolt transformers were overloaded, said the report. 

http://english.people.com.cn/200612/20/eng20061220_334387.html


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## Neo

*Pakistan to increase local cars production to 500,000 by year 2011: official *

Pakistani government has introduced a five-year Auto Industry Development Plan (AIDP) aiming to increase local production of cars from 200,000 in fiscal year 2005-06 to 500,000 in 2011, a cabinet minister said Wednesday. 

The development plan will help make local auto industry more competitive, create capacity for local design and innovation, domestic competition, human resource development and auto cluster development, said Jahangir Khan Tareen, Pakistani federal minister for Industries, Production and Special Initiatives, according to state-run Associated Press of Pakistan. 

He expressed these views during a meeting with top leaders of the major Car Assemblers in Pakistan, including Toyota Indus Motor, Suzuki and Honda, according to the APP report. 

Under the AIDP, the used car import policy will be regulated so as not to impede the growth of local industry while protecting the consumer interests, the minister said. 

It was agreed during the meeting that indigenization of the local auto industry will be done as required under the AIDP, according to the report, with the minister saying that the government is keen to bring indigenization in the local auto industry. 

The Assemblers were reportedly in agreement with the Ministry on almost all the points of the AIDP draft. 

The automobile industry in Pakistan has witnessed tremendous growth during the last few years. The car production rose to almost 200,000 units by end 2005-06 from about 40,000 in the year 2002-03. 

Source: Xinhua 

http://english.people.com.cn/200612/20/eng20061220_334485.html


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## Janbaz

Definatley, the auto industry is booming. Not only that the retail sector for automobiles is getting bigger. As economy grows people get bigger better cars and the auto manufacturers then set production plants. BMW, Mercedes, Volvo and others are already there and others coming.:flag:


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## Neo

*Government to develop knowledge-based economy: Musharraf *

LAHORE (December 21 2006): The government is striving to create a synergy between education and requirements of the industry so as to develop knowledge-based economy in the country. This was stated by President General Pervez Musharraf while speaking at the fifth convocation of Government College University (GCU), here on Wednesday.

Punjab Governor Khalid Maqbool, Chief Minister Pervaiz Elahi, Education Minister Imran Masood and GCU Lahore Vice-Chancellor Dr Khalid Aftab were present on this occasion.

The President said that nine engineering and science and technology universities were being set up in different parts of the country with the assistance of leading universities of the developed nations like Germany, Austria, France, the Netherlands, Italy, China and Korea to help produce world class technical manpower. "No absolute sovereignty exists in the world, as sovereignty is directly dependent on economic stability. Therefore, it is imperative to strengthen economy in order to fortify sovereignty of the country," he said, and added that any country, which is dependent on others, cannot claim complete sovereignty.

"Our textile sector constitutes 60 percent of total exports, and if the US and Western countries stop buying our products, textile sector would collapse and workforce would lose their jobs," he added.

He said: "The GDP of all 57 Muslim countries, which produce 70 percent of world's oil and 50 percent of gas is half of Japan and less than Germany. A very small country having no natural resources is earning over $400 billion. On the contrary, Pakistan has potential to exploit in the field of gemstones but, without cutting and polishing technology which adds hundred times value, could not take advantage of this natural resource.

"Similarly, despite the fact that we are fifth milk producing country, we are importing butter, yogurt and other milk products. Now it is time to run very fast and develop our human resource. We have enhanced budgetary allocation for education sector from 2.7 percent of GDP to 4 percent, which constitutes Rs 150 billion. We also need to make additional allocation for this vital sector."

He said: "Pakistan is a 'leadership failure state' because the previous leaders could not harness human and natural resources potential that we had. The society as well as previous governments failed to develop Pakistan of 160 million population and huge natural resources. The previous leaders should have built Kalabagh Dam and Bahsha Dam and resolved NFC award and addressed issues concerning provincial autonomy and grievances of Balochistan. The present government has adopted the policy of long-term gain for which we can bear short-term losses."

He said that the standard of primary and secondary education is pathetic and realistic approach needed to be adopted to overcome this challenging issue. "The government is now aware of this problem that where we stand in education," he added.

He said that the government was also improving literacy rate through universalism of education so that the children should have access to primary school within a range of one kilometre. The National Commission for Human Resource has been assigned the task of achieving 85 percent literacy rate by the year 2010. The government is also focusing on improving teachers' potential, curriculum and examination system.

He called for learning geography and said that this subject had gained significant importance because everything, including geo-politics, geo-economic, geo-strategic, relate to learning of geography. "Now relations, be it political or be it economics, are developed on the basis of geography of a country," he added.

President Musharraf said that unemployment was also a problem of this country, which could be redressed by promoting technical education and vocational training centres. "Information technology and computer sciences are market-driven subjects and we must look at the market to decide about acquiring education. The students should avoid going for FA/BA/MA and Ph D, which provide nothing except frustration. We will also have to look for the area of science and technology in which gap is gradually widening in comparison with the developed countries," he said.

He said the government is going to set up nine engineering universities in the country which would help save foreign exchange being spent at present on students for studying abroad. Work has already been started on universities being set up by Pakistan and France in Karachi, by Pakistan and Austria in Lahore and by Pakistan and Sweden in Sialkot, while work would be started on all universities by the year 2008. Out of nine universities, four including one in Multan would be set up in Punjab, three in Sindh and one each in NWFP and Balochistan, he said.

Talking about Ph D education, he said that Pakistan was producing only a couple of dozen Ph Ds, while the Higher Education Commission has planned to produce 1500 Ph Ds by the year 2009-2010, for which budget allocation has been enhanced from Rs 600 million to Rs 28 billion.

He said that corruption and nepotism are problems of serious concern, as in their presence no system can flourish. He lamented that a group has spread the misconception that Islam is in danger in Pakistan, "which is totally wrong". "We just want a tolerant society and no one should be allowed to impose his own point of view on others. This is the time to dictate peace that is for the benefit of Pakistan in particular and for Muslim Ummah in general."

The Pakistani nation has to show to the world that to whom they want to give power in elections 2007, either to moderate and progressive forces or extremists forces, he added.

Punjab Governor Khalid Maqbool said that number of male students in 17 public sector and 16 private sector universities has been increased from 41,000 to 100,000, and female students from 12,000 to 40,000 in just six years. Similarly, the education budget has been enhanced from Rs 1 billion to Rs 11 billion during the period. In order to promote higher education in remote areas, the provincial government is setting up campuses from Chakwal to Rahim Yar Khan. Besides harmonising academic calendar and improving curriculum, the examination system has also been revamped and improved to make it more transparent. However, the research being done in the universities is not included in international ranking, "and that is our ultimate goal" to be achieved, he added.

G.C University Vice Chancellor Dr Khalid Aftab presented the university report.

http://www.brecorder.com/index.php?id=509877&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Efforts on to maintain economic growth rate: Prime Minister *

ISLAMABAD (December 21 2006): Prime Minister Shaukat Aziz on Wednesday highlighting the economic achievements of the government said there was need to check population growth rate, improve infrastructure, better security and continuity of policies to maintain 7 to 8 percent growth rate in the economic sector.

Addressing a seminar on "the economic growth potential for the emerging economics in 21st century and Pakistan's position in the emerging economies" organised by Ministry of Finance here at Prime Minister Secretariat, Aziz said due to structural reforms and macro-economic policies, Pakistan would sustain 7 percent growth rate in economy.

He said: "Pakistan required macro-economic stability, financial discipline, and consistent and transparent policies to bring the country back to the path of high and sustained growth." He said due to prudent macro-economic policies and structural reforms pursued by the government have transformed a fragile economy into a stable and resurgent one.

The prime minister said Pakistan's economy continues to maintain a solid pace of expansion over the last four years. He said the economic recovery had been strong, rapid, sustained and broad-based. He said with economic growth averaging almost 7.0 percent per annum during the last four years, Pakistan had positioned itself as one of the fastest growing economies in the Asian region.

He said this strong growth has been achieved in spite of several exogenous negative shocks, including October 2005 earthquake thereby clearly reflecting the resilience of Pakistan's economy and its capacity to absorb shocks.

The growth momentum that Pakistan has sustained for the last several years is underpinned by dynamism in industry, agriculture and services and the emergence of new investment cycle with investment rate reaching new height at 20 percent of GDP, he said.

The prime minister said, "We believe that pre-requisites for sustained economic growth appear to have gained a firm footing during the last four years." He said besides improved governance, human capital and physical infrastructure were needed to encourage the private sector to play a leading role in promoting investment and growth. The prime minister said the government on its part needed to redefine its role in the economy and encourage the private sector to improve its role.

http://www.brecorder.com/index.php?id=509951&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'EU attaching high priority to trade with Pakistan' *

LAHORE (December 21 2006): *European Union (EU) is attaching high priority to trade with Pakistan and encouraging the EU investors to make investment in Pakistan, as consistency in policies and the liberal environment provided by the present government has now started yielding results.*

These views were expressed by head of the 11-member EU Parliamentary delegation Neena Gill while speaking at Lahore Chamber of Commerce and Industry (LCCI) on Wednesday.

The EU delegation consisted of Edward Macmillan Scott, Josef Leinen, Robert Evans, Philip Kamaris, Claudia Schwendenwein, Ruth De Cesare, Balthasar Benz and Parliamentary Secretary Rozina Tufail. LCCI President Shahid Hassan Sheikh, Senior Vice President Yaqoob Tahir Izhar, former Senior Vice President Sohail Lashari, Executive Committee members Shafique Riaz, Syed Umair and Mohammad Riaz were also present on the occasion.

While appreciating the economic reforms initiated by the government, the head of the delegation said that *this was a right time that the chambers of commerce in Pakistan should establish linkage with EU chambers to increase the volume of two-way trade. *She averred that EU acknowledges Pakistan's efforts for poverty alleviation and economic revival but there is a need to take more steps for improving its perception in the eyes of foreign investors," she added.

LCCI President Shahid Hassan Sheikh said that enhancement in trade and investment between Pakistan and EU countries is possible through active engagement of the chambers of two sides, frequent exchange of economic and trade delegations, as this would help identify the areas of mutual interest. "Participation of Pakistani exporters in the international trade fairs in EU and vice versa could also expand trade between the two countries. The real problem is the denial of market access to Pakistani products," he added.

*According to him, the level of trade between the two sides could be increased significantly by giving greater market access to Pakistan by removing anti-dumping duties imposed at the rate of 5.8 percent by the European Union on the export of bed linen from Pakistan, and doing away with the subsidies provided by EU to its agriculture to give a level playing field to Pakistan.*

Shahid Hassan Sheikh informed the delegation that doing business in Pakistan is comparatively easy to other South Asian Nations. He averred that the top ranked countries in the region are Maldives (53), Pakistan (74), followed by Bangladesh (88), Sri Lanka (89), Nepal (100), India (134), Bhutan (138) and Afghanistan (162). *"Pakistan has been the runner-up reformer in South Asia this year," he added.*

He said that Pakistan's growing economy and its strategic location as a regional hub gateway to Central Asian Republics, large consumer market, abundant natural resources, cheap but skilled labour and liberal investment friendly policies offer immense opportunities for foreign investors. *According to him, Pakistan's agriculture produce is among the best in the world but we have failed to exploit our traditional strengths in agriculture, horticulture, livestock and food processing because we lack technology. Pakistan is the fifth largest producer of milk in the world. EU equipment, cool chains and technologies could exploit Pakistan's full potential in these sectors.*

Speaking on the occasion, LCCI Senior Vice President Yaqoob Tahir Izhar said that business environment in Pakistan has improved considerably and Pakistan's economy has been growing at the rate of 7.5 percent on average over the last three years. He averred that investment cycle is gaining momentum and foreign investment has increased by almost three times.* "Pakistan's stock market is one of the best performing markets of the world. It has outperformed the markets of Malaysia, India, Indonesia, Egypt and Turkey.* Pakistan's investment policy offers attractive terms to foreign investors; 100 percent foreign equity has been allowed and no government sanction is required. Remittance of capital, profits, dividends, royalty has been allowed," he added.

http://www.brecorder.com/index.php?id=509889&currPageNo=1&query=&search=&term=&supDate=


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## Neo

Economic reforms are starting to show results. 

Just a few years ago when Pakistan became major ally in US led WoT the EU offered to ease quota's on some Pakistani export products which didn't go well with some of our neighbors.

Today, only five years later its a different story, its the EU coming to us now!

Well done Mushy and Aziz! 
:flag:


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## Neo

*Russia keen to strengthen trade ties with Pakistan *

SIALKOT (December 21 2006): *Russian government is making adequate efforts for strengthening bilateral trade relations with Pakistan, said Alexander Karyukin, senior expert of Russian Trade Representative Islamabad.*

Addressing Sialkot Chamber of Commerce and Industry (SCCI) members on Wednesday, he said the *Russian government had focused extra-ordinary attention on developing export and import business with Pakistan on top priority basis. "As a first step we are here to develop 'Russia-Sialkot' relations pertaining to various trade fields."*

*Alexander Karyukin informed the house that the Russian government was trying to bring reforms in banking sector in order to resolve problems being faced by the companies doing business with Russia. The visa office of Russian Consulates Karachi and Islamabad would help business community in obtaining visa, he said.*

Expressing his confidence, he said that business community of Sialkot would take appropriate step for developing trade ties with Russia. In his address of welcome, SCCI acting president, Dr Sarfraz Bashir urged the Russian businessmen and investors to invest in Sialkot Export Processing Zone (SEPZ) and avail the incentives available for both local and foreign investors.

Dr Bashir said that the supply chain was based in Germany and other European countries and due to this indirect supply line, the importers of the surgical instruments buy these instruments at much higher price while the delivery time also increased, which definitely damages the importers' interests. The SCCI acting president advised the Russian companies to buy these items directly from Sialkot instead of buying the same from Germany or other countries.

http://www.brecorder.com/index.php?id=509957&currPageNo=1&query=&search=&term=&supDate=


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## Neo

Russians love $$$ and today we have many to offer. 

Only way breaking thru the Indian defence around Moscow is to enhance trade between the two countries, no one can prevent that from happening.

Russian help in mining, matalurgy and agriculture thru private investments could befit our economy.


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## Neo

Thursday, December 21, 2006 

*Improvement of power transmission, water resources management: ADB to give $1.7b loan for power, water resources sectors*

ISLAMABAD: Up to $1.7 billion Asian Development Bank (ADB) financing will support two major programmes in Pakistan: to remove transmission bottlenecks to electricity delivery in the country and to improve the management of water resources and irrigated agriculture in Punjab. 

According to an ADB official announcement made here on Wednesday, the financing plan would include $900 million to boost irrigated agricultureÃ¢â¬â¢s productivity in Punjab and a programme to remove transmission bottlenecks to power delivery through a multitranche financing facility amounting to $800 million. 

The power transmission sector funds will rehabilitate and expand parts of the countryÃ¢â¬â¢s transmission system to meet the present and anticipated future demand and ensure the systemÃ¢â¬â¢s continued operation and maintenance. 

Excess load on transmission lines at substations is one of the critical factors causing transmission and distribution losses in PakistanÃ¢â¬â¢s power system. At the end of FY2006, more than three quarters of the countryÃ¢â¬â¢s 500 kilovolt (KV) and 69% of its 220KV transformers were overloaded. 

Recognizing these issues, the countryÃ¢â¬â¢s sole transmission company, the National Transmission and Dispatch Company (NTDC), in coordination with the ministry of water and power, has prepared a Transmission Sector Roadmap for 2007-2016. Through an investment plan estimated at $3.9 billion, this will address the systemÃ¢â¬â¢s current shortcomings. 

The ADB financing will support the NTDC project, planning, design, implementation, operations and monitoring for the duration of the entire programme. All financing from OCR resources will have a 20-year term, including a grace period of three years. Interest is to be determined in accordance with the ADBÃ¢â¬â¢s LIBOR-based lending facility. The ADB loan will have a 32-year term, including a grace period of eight years, interest will be charged at 1% per annum during the grace period and 1.5% per annum subsequently. The executing agency for the programme is the NTDC. 

According to another announcement of the ADB, to help improve the management of PunjabÃ¢â¬â¢s water resources and increase productivity of the provinceÃ¢â¬â¢s irrigated agriculture the ADB will provide through a multitranche financing facility up to $900 million. The programme will meet about a quarter of the estimated total cost of $3.5 billion to upgrade the provinceÃ¢â¬â¢s irrigation and water resources infrastructure to modern standards. 

Irrigated agriculture in Punjab accounts for more than a quarter of the provinceÃ¢â¬â¢s gross domestic product output, employs about half of the labour force and uses more than 90% of water resources. However, its service level has been adversely impacted by demographic pressures, new production technologies, climatic changes, cropping patterns, floods, etc. Cropping intensities have also increased significantly since original development of the irrigation systems. In response to these developments, farmers have adapted in various ways, including developing private tubewells, which provide more than half the irrigation water in some areas Ã¢â¬â but which are using groundwater resources at a higher than desirable rate. 

To address such problems, the programme will finance comprehensive rehabilitation and upgrading of PunjabÃ¢â¬â¢s irrigation infrastructure, improve strategies and practices for groundwater management and facilitate improved irrigation technology. 

Recognizing the sectorÃ¢â¬â¢s importance to generating higher incomes and growth, the Pakistan government hade asked the ADB to extend financing through a multitranche financing facility of over 10 years that can be converted into separate loans. The first two loans will total $227.8 million Ã¢â¬â $217.8 million from the ADBÃ¢â¬â¢s ordinary capital resources and a one-off $10 million loan from its soft loan instrument, the Asian Development Fund (ADF), to finance the Lower Bari Doab Canal Improvement Project. This project will improve Balloki Barrage and the Lower Bari Doab Canal system that supply irrigation water to more than 700,000 hectares. This initial project will help define the approach and modalities governing subsequent investments. 

The Lower Bari Doab Canal system was built before 1917 and has created an important agricultural area serving the markets of Lahore and Multan. The project will increase irrigation water supply and enhance the equity of its distribution, improve infrastructure safety, mitigate flood risks, as well as develop and strengthen water management and irrigated agriculture institutions. Other investments expected to be supported by the facility over the 10 years include rehabilitation and upgrading and institutional reforms for the Pakpattan, Thal, and Sidhnai canal systems and improvements for Sulemanki, Trimmu and Punjnad barrages. 

The executing agency for the programme is the Punjab irrigation and power department, which is responsible for operation and maintenance, and management of surface irrigation systems that cover 8.4 million hectares in the province and is part of the largest contiguous irrigation system in the world.

http://www.dailytimes.com.pk/default.asp?page=2006\12\21\story_21-12-2006_pg5_2


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## Owais

*Huge oil, gas reserves found in FATA, multinationals to explore more: Shah *


PESHAWAR (updated on: December 22, 2006, 12:51 PST): The Oil and Gas Development Corporation (OGDC) will start drilling in FATA, while number of multinational companies have shown keen interest in this region for oil, gas and other minerals exploration, an official said here on Friday.

Yaqoob Shah, Director FATA Mineral, told APP that the environment of FATA is suitable for all kinds of minerals adding that huge reservoirs of oil and natural gas have been explored in Khyber agency, North and South Waziristan agencies, Kohat, Peshawar and Bannu. 

He said that these reservoirs could be found two kilometres deep inside the earth, adding, that the mineral production from FATA has reached up to 2.4 million tones in the year 2005-06.

He said that Oil and Gas Development Corporation (OGDC) would start drilling in these areas for the exploration of oil and gas reservoirs. He said the foreign oil company, Tullow, has obtained a license for the exploration of the reservoirs of oil and gas in the North Waziristan Agency and Bannu while the oil company of Ireland, MOL, has shown interest in the Khyber agency, Kohat and Peshawar regions.

Yaqoob Shah disclosed that 800 gram per ton reserves of copper has been explored in the tribal areas adding that there are 90 percent chances of the presence of gold in the area, however, he said that no work has been started yet towards that end.

He said that the price of copper in the international market is Rs 7000 per ton adding that the copper export can help earn millions of rupees revenue for the country. 

He said that China is the biggest market of copper in the world and according to the experts 2007 can be called the year of copper.

The Director FATA Mineral said that vast reservoirs of marble have been located in the tribal belt. 

He said that 80 percent of marble is wasted due to the blasting method in these mines and added that FATA Mineral Directorate is taking measures for installation of Block Cutting Machinery in the mines of marble so as to stop the wastage of this precious asset of the country.

Coal mines have been discovered in Sherai area of Dera Ismail Khan and a joint venture of Pakistan Mineral Development Corporation (PMDC) and FATA Mineral Directorate have already been started there. 

The exploration of coal would help stabilising the soaring prices of the commodity. Coal is used in 22 out of 25 cement factories of the country.

He said that exploration and excavation of minerals would usher in a new era of development and prosperity in the tribal areas and would generate new job opportunities. 

He informed that Rs. 178.537 million have been earned as revenue from the mineral production of FATA in the last ten years. He added that Rs. 250 million have been earmarked in 2006-07 ADP out of which Rs.86 million would be spent on the ongoing schemes of the mineral sector whereas Rs.164 million will be utilised for the six new schemes.

For the first time in the history of the country, Mine Rescue Safety and Labour Welfare Station in Orakzai Agency have already been established for the safety of the miners. 

Similarly, geochemical studies are in hand for establishment of a model quarry for marble in Mohmand Agency for exploitation of marble deposits on scientific methods.

The number of ongoing activities in the mineral sector is 11 and includes strengthening of minerals directorate, exploration & Evaluation of precious stones in Mohmand and Bajaur agencies, investigation and evaluation of Manganese in Bajaur agency, model quarry for marble in Mohmand agency, development of soapstone in Kurram agency, construction of shingle road in Mohmand agency, construction of 20 KMs shingle road in mineral bearing area in Kurram agency, Mines/Rescue/Safety and Labour Welfare Station Bowa Orakzai agency, construction of shingle roads in mineral bearing areas of Orakzai agency, development of coal in Orakzai agency and construction of five kilometre shingle roads in mineral bearing areas of S.W. Agency.

The fresh schemes, he said includes development of infrastructure in mineral bearing areas in FATA, source rock mapping and investigators for hydrocarbon potential in FATA, establishment of mini marble city in Mohmand agency, feasibility study for coal briquetting in Orakzai agency, exploration/estimation & exploitation of coal reserves in tribal areas and exploration and development of copper in North Waziristan Agency.

Copper exists mostly in Mohmand agency, North Waziristan and South Waziristan agencies and its total deposits are estimated at 35 million tones. Marble is found in Bajaur, Mohmand and Khyber Agencies with total reserves of 7000 million tones.

Similarly, proven reserves of Chromite are mostly found in Bajaur, Mohmand and North Waziristan agencies. Likewise, the deposits of Soapstone are mostly found in Kurram agency and have been estimated at 3.6 million tones.

Coal reserves gauged at eight million tones have been explored in Orakzai and Kurram agencies whereas 20.000 million tones reserves of Gypsum are present in Dera Ismail Khan.

The inexhaustible reserves of Limestone have been discovered in Kohat, Peshawar ad Dera Ismail Khan while reserves of Manganese have been found in North Waziristan and Bajaur agencies. Moreover, the estimated reserves of Dolomite, Quartz and Silica Sand have been discovered in Mohmand agency.


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## Janbaz

*Singapore to run Gwadar port management*

ISLAMABAD: Pakistan has decided to give the management control of its upcoming deep-sea port in southwestern Baluchistan province to Port of Singapore from next year, a cabinet minister said Friday. 

China, a close strategic and economic ally of Pakistan which has already co-built several projects including two nuclear power stations, has financed around 75 percent of the 250 million dollars it has taken to build the port. 

"Today Prime Minister Shaukat Aziz approved a summary to hand over the management of Gwadar port to Port of Singapore," Pakistan's federal ports and shipping minister Babar Ghauri told media.

"We have formed a committee which will negotiate with Port of Singapore and within 15 days the port would be handed over to them," Ghauri said, adding that Arabian Sea port was expected to be in operation in March. 

Ghauri declined to give further details about the financial aspects of deal. 

Asked why close ally China was not given the management of the port, Ghauri said "China did not apply" for it when international tenders were called.

The News Pakistan.


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## Owais

*ADB approves $320 million for financial reforms *
ISLAMABAD (December 23 2006): The Asian Development Bank (ADB) has approved a $320 million loan and two million dollars technical assistance for 'Improving Access to Financial Services (Phase-I) Programme' to help Pakistan in financial reforms. The programme would support the poor ensuring access to financial services and increase its outreach to rural and remote areas of the country.

Increased access to a range of financial services on a sustainable basis will enable the poor to engage in income generating activities, thereby reducing poverty and vulnerability. The Bank says that though, Pakistan has achieved average economic growth rate of over 7.5 percent for the last three years, yet it has to pursue economic reforms to bring its 24 percent population out of poverty.

During the period of high economic growth, Pakistan had already pursued reforms, which have led to better and more predictable public and private investment environment, job creation and higher incomes, it praised.

Micro-finance in Pakistan has reached fewer than one million people, but the potential market is many times this size, about 20 million people. The sector has improved but still does not touch a vast number of people.

Building a more inclusive financial sector means deepening the quality of the service and expanding the coverage, while at the same time striving for efficiency, says a statement.

"To ensure that growth is inclusive and sustainable, more reforms are needed backed by specific actions targeting those left behind," says Julie Rogers, team leader for the project. Out of total amount, $300 million would come from Bank's Ordinary Capital Resources (OCR) with a 15-year term (including a grace period of three years) and $20 million from its concessional Special Funds resources with a 24-year term (including a grace period of 8 years).

Two million-dollar grant would be financed by Japanese government from their Japan Special Fund to support implementation of strategic measures under the programme.

The goal of the proposed Programme is to assist the government to reduce poverty, build an inclusive financial sector, and promote sustainable economic growth by using technology and applications to lower cost of delivery of financial services and to improve the efficiency of these services.

Private sector participation and innovation in the delivery of products and services will be supported including savings services, transfer remittance services, and products and services that are Shariah (Islamic law) compliant. The Ministry of Finance will execute this two-year programme.


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## Janbaz

*Cell phone users cross 46m *
By Imran Ayub

KARACHI: Cell phone subscribers crossed 46 million figure and officials as well as operators see it touching 50 million mark within next couple of months for the first time ever on continued popularity of the service across the country.

Latest figures compiled by Pakistan Telecommunication Authority suggest cellular phone connections stood at 46.45 million by November 2006, which had crossed 41 million by the end of the first quarter of 2006-07.

&#8220;By November 30, 2006 total number of cellular subscribers stood at 46.45 million,&#8221; said a PTA official. &#8220;It reflects almost a 12 per cent growth in total cellular subscriber base from October 1 to November 30, 2006.&#8221;

He said during first five months of the more than 12 million new connections were sold out on the back of comparatively cheaper tariff offers due to rising competition among the cellular service providers.

&#8220;So there was over 27 per cent mobile density rate by November 2006,&#8221; said the PTA official. &#8220;Almost all the four major companies Mobilink, Ufone, Al Warid and Telenor grabbed better market share during the first five months of 2006-07, which also brought different tariff packages for the subscribers.&#8221;

The figures gathered by the telecom watchdog, shows by November 2006 Mobilink led the market share with 22.03 million subscribers followed by Ufone, which was serving to 9.6 million people across the country.

With the arrival of UAE-based Al Warid Telecom and Norwegian Telenor both competition and subscriber base grew at much faster pace, as the last year&#8217;s entrants attracted 7.3 million and 5.8 million subscribers respectively by the end of November 2006.

The PTA data says by November 2006 Paktel, which offers both AMPS (advanced mobile phone system) and GSM (global system for mobile communications) services enjoyed 1.4 million subscribers and the only AMPS service Instaphone had a share of 0.25 million by November 2006.

The cellular density witnessed phenomenal jump in the last two years as mobile phone grew by staggering 170 per cent during 2005-06, which outnumbered almost six-decade old fixed telephony service by more than 500 per cent in 15-year operations.

Analysts see growth in cellular subscribers in line with expectations, but say the current fiscal the mobile phone service providers may not witness such phenomenal jump in customers&#8217; numbers, which have already reached to a higher level.

&#8220;The growth is likely to remain slow in percentage term during 2006-07,&#8221; said Anwaar Ahmed Khan, a telecom analyst at Capital One Equities. &#8220;The companies may enter into those areas where they have yet to initiate service, which would need network expansion and investment.&#8221;

He said a cutthroat competition was expected among the operators during 2006-07, after the mobile number portability (MNP) was implemented by all the six cellular operators across the country.

&#8220;The MNP would decide the real market leader,&#8221; said Khan. &#8220;After the MNP implementation the companies must have to improve their service quality to keep their subscribers intact.&#8221;

MNP is a system, which enables a mobile phone subscriber to carry the same number while changing the cellular mobile operator. The project, which requires Rs600 million, was earlier decided to implement in January 2006 but later the deadline was extended to November 2006. The service, however, is not in place yet and no new deadline has been announced.

The News Pakistan.


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## Neo

*'Pakistan one of 11 topmost emerging economies' *

LAHORE (December 22 2006): Governor Punjab Lieutenant-General Khalid Maqbool (Retd) speaking in a conference held under the auspices of Pakistan Institute of Development Economics here on Thursday said that efforts of the Punjab government had geared up the economic development endeavour in the province.

He said economic experts were of unanimous opinion that with efforts being undertaken on the economic portfolios, GDP and GNP envisaged targets of the country would be achieved.

The governor quoting a foreign clipping he read recently said that it quoted a top economic expert terming Pakistan as one of the 11 top most emerging economies.

The governor said that better share to provinces from NFC Award had been also instrumental in boosting up economic activity. He said provincial government had deregulated economy and its good effects were being witnessed now.

He said private-government partnership endeavour at provincial level had resulted in establishment of a number of industrial schemes including that of Sundar.

Appreciating the role of CBR, Khalid said that it was investor friendly and in his opinion he had found that business community was happy with the revenue collection authority efforts.

Referring to towering contribution of Punjab in economy, the governor said that its overall contribution in national economic effort was 58 percent. He said province was contributing 60-percent to agriculture sector effort in the country.

Earlier, former federal minister for privatisation Hafeez Shaikh appreciating devolution programme being undertaken in the country at present said he was strong supporter of that. He termed it as a programme of far reaching consequence.

He disclosed that in 90's, $950 billion privatisation occurred in the world. He stated that economic growth increases with gearing up of effort in education. This effort generates macro economic stability, he added.

Hafeez Shaikh pointing towards importance of structural policies said that viable structural policies and institution building were very vital for economic results. He said in three episodes of development occurring in the country during 60's, 80's and 2000,their period lasted hardly for four to five years.

http://www.brecorder.com/index.php?id=510299&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*CDWP approves Rs 23.2 billion for 20 projects *

ISLAMABAD (December 22 2006): The Central Development Working Party (CDWP) on Thursday approved Rs 23.2 billion for 20 development projects, out of which Rs 5.64 billion were sanctioned for construction of two medical towers in Karachi and Islamabad.

Muhammad Asif Sheikh, spokesman of the Planning Commission while briefing reporters after the CDWP meeting said that in Karachi, a 13-storey medical tower would be constructed at JPMC, costing Rs 3.418 billion while the other 14-storey tower to be built at PIMS Islamabad with Rs 2.225 billion.

The other projects in health sector were provision of 64 Slice Helical Scan Angiography equipment at Karachi institute of heart disease worth Rs 120 million and up-gradation of District Hospital Chillas from 100 to 200 beds, costing Rs 200 million.

The CDWP, which met here with deputy chairman planning commission Dr Akram Sheikh in the chair, approved 10-infrastructure projects costing Rs 15.3 billion, seven social sector projects worth Rs 7.2 billion and three others worth Rs 0.7 billion. Out of these 20 projects, two projects pertaining to water and higher education in Balochistan were revised.

These revised projects were extension of Pat Feeder for utilisation of Indus water in Balochistan. Its cost was revised from earlier R 2.2 billion to Rs 4.5 billion due to escalation in prices and increase in command area of the project.

The other project Strengthening and Development of University of Balochistan, Quetta whose cost has revised to Rs 277 million from its earlier Rs 191 million.

Giving area-wise detail Asif said seven projects of Rs 6.9 billion were approved for Punjab. Three projects of Rs 4.0 billion approved for Sindh, one project worth Rs 0.5 billion for NWFP. Three projects of Rs 4.9 billion approved for Balochistan. One project worth Rs 0.2 billion for northern areas, and five projects all over the country approved with an allocation of Rs 6.7 billion.

He said in infrastructure sector the recommended projects include construction of Chaudhry Zahoor Ellahi Shaheed bridge over river chinab at Shahbazpur in district Gujrat with Rs 1.132 billion, amended PC-I/cost estimates for dualisation of Lahore-Kasur Section Khana to Kasur (phase-II) Rs 2.103 billion, amended PC-I/cost estimates for dualisation of Kasur Ganda Road Section (Phase-III) Rs 545.27 million, construction of additional bridge near Salgran on Rawalpindi Murree Kashmir road Rs 35.12 million, construction of dual carriage way Gujrat to salam interchange (motorway) Trough Mandi Bahauddin Rs 2.88 billion and rehabilitation, up-gradation and conversion of 400 coaches with total cost of Rs 3.43 billion.

In the water resources, Trichan to Attahk irrigation scheme at Aulkoh District Chitral worth Rs 429 million was approved including Rs 4.47 billion for extension of Pat Feeder for utilisation of Indus water in Balochistan.

Three projects pertaining to higher education totalling Rs 1.227 billion were as under: Up-gradation and Moderation of existing Laboratories and Libraries at DOW University of Health Sciences, Karachi (Rs 464 million), Up-gradation and strengthening of Quaid-i-Azam University, Islamabad, Phase-II (Rs 485.46 million) and a Rs 277 million project of strengthening and development of University of Balochistan, Quetta, were approved.

In science and technology Rs 712 million two projects ie development and promotion of biogas technology for meeting domestic fuel needs of rural areas and production of Bio-fertiliser (Rs 89 million) and Faculty Development at University of Illinois at Urbana Champaign, USA (Rs 484.38 million) were approved by CDWP.

In industries and commerce one approved project of Rs 138.93 million was construction of boundary wall and site office for Gwadar EPZ. Two projects worth Rs 235.2 million for Okara city approved were; sewerage and drainage scheme for Ssmooth disposal worth Rs 185.16 million and drainage scheme and sewerage system-of Okara city costing Rs 50.02 million.

http://www.brecorder.com/index.php?id=510217&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*Rs 1 billion to be spent on HMC's restructuring *

ISLAMABAD (December 23 2006): Minister for Industries, Production and Special Initiatives Jahangir Khan Tareen said that Ministry would spend Rs1 billion on restructuring of Heavy Mechanical Complex (HMC).

Addressing a gathering of management and workers at HMC, Taxila on Friday, he said,the Ministry is working on its restructuring for the last one month and a comprehensive plan would be ready within 3 months. He said that Government has excluded HMC from the privatisation list due to its sensitive and strategic location.

The minister said that HMC is located near Pakistan Ordnance Factory, Aeronautical Complex and other defence related establishments, which has forced the government to drop it from privatisation list.

The privatisation policy otherwise will continue to be followed in normal course, he added.

The minister urged the management and the workers of HMC that they should work with extra zeal and dedication to avail this opportunity and make HMC a competitive organisation. He warned them that they should not exploit this favourable situation taking undue advantage of the shift.

He said that HMC would be restructured in a way to compete with the private sector and fulfil industrial and economic needs of the country.

In order to meet the objectives, minister said, the HMC management of would be complemented with extra decision making powers to avoid unnecessary delays.

He informed the workers of raising their wages, and the revised minimum wage would be Rs4,000 per month from January 1, 2007. Minister for Labour and Manpower Ghulam Sarwar Khan congratulated the HMC workers on exclusion of HMC from the privatisation list stressing them to put more efforts in making their organisation very competitive.

Managing Director, HMC Syed Ali Ansar and worker's leader Syed Iftikhar Hussain also spoke on the occasion.

http://www.brecorder.com/index.php?id=510637&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*MoU signed to increase manpower export to UAE *

ISLAMABAD (December 23 2006): Minister for Labour, Manpower and Overseas Pakistanis Ghulam Sarwar Khan and his UAE counterpart Dr Ali Bin Abdullah Al Kaabi here on Friday inked a Memorandum of Understanding (MoU) for increasing manpower export to the Gulf state. Ghulam Sarwar Khan said that UAE is the main market for Pakistani skilled and semi-skilled workers.

He said that UAE's growing trend to import more Pakistani manpower was the result of mutual confidence and reliability between the two countries. "Pakistan exported 166,451 skill oriented persons during the last 11 months, out of which 91,675 went to UAE," Sarwar Khan added. He said the present figures revealed 28 percent increase compared to the same period of last year during which 129,834 workers went abroad.

Ghulam Sarwar said the government had introduced foolproof security system by issuing computerised identity cards, machine-readable passports and police clearing certificate to ensure the dispatch of eligible workers abroad. Besides, under integrated border control system, machine readable visa system is being developed in the country to improve security and check irregularities in its migration system, he added.

The agreement would be in force for four years and would be automatically extended for four years consecutively, unless either party gave three months notice in advance denouncing it in writing. He said that recruitment of manpower in Pakistan and its entry in the UAE would be regulated in accordance with the relevant laws, rules and procedures of the two countries.

The minister said that Pakistan and UAE would set up a joint committee to take care of the follow up of the implementation of this MoU. He said the composition of committee would be in the form of at least three members from each country and would meet annually or when it deemed necessary, alternatively in Pakistan and UAE.

Later, Dr Ali Bin Abdullah Al Kaabi appreciated the efforts and policies of Pakistani government and said that Pakistani workers are playing vital role for the socio-development of UAE. Over 0.8 million Pakistani families are living in UAE, he added.

http://www.brecorder.com/index.php?id=510673&currPageNo=1&query=&search=&term=&supDate=


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## Neo

After a decline in recent years its good to see an increase in labor export, we'll see a surge in remittences next year.


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## Neo

*Kuwaiti firm eyes hotel, solid waste projects *

KARACHI (December 23 2006): Kuwait Investment Company (KIC) has expressed keen interest to invest in solid waste management and in construction of a five-star hotel in the metropolis. This was said by the Managing Director Kuwait Investment Company Sheikh Hamid Al Sabah and Consul General of Kuwait H.E. Hasan Bader Al Oqab who called on City Nazim at his office on Friday.

They observed the rapid development of Karachi's infrastructure and of development projects have created huge opportunities for investment as a number of Kuwaiti firms were eagerly considering to invest capital in various sectors in city.

Mustafa Kamal extended complete cooperation to them and assured them protection. He apprised that the city government would establish two more industrial zones in the city to provide basic civic facilities to industrialists, in addition to setting up garment and textile cities and other trading zones.

Mustafa highlighted the features of signal-free corridor from airport to Site industrial area and underline the need of a five star hotel on the corridor. A chain of five star hotels is badly needed to facilitate the foreign visitors attending various exhibitions in Karachi, he said and added that City District Government Karachi (CDGK) had also allocated around nine acres of plot to build a five star hotel.

City Nazim said Karachi is the engine of Pakistan's economy and is a regional hub of all commercial activities where huge opportunities for investors are available. The construction work on the Elevated Expressway from Quaidabad to Jinnah Bridge and IT Tower will soon start, he announced. The Light Train Mass Transit will also be initiated soon, he maintained.

http://www.brecorder.com/index.php?id=510629&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Two Swiss firms to start business in Karachi *

KARACHI (December 23 2006): Two Swiss multinational companies having state-of-the-art technologies, one in pharmaceuticals and the other in engineering sector, will set up their business in the metropolis by the end of January or the beginning of February 2007.

Speaking at an exclusive dinner reception hosted by Farrukh Ansari, managing director and chief executive officer, Ijara Financing Inc (Private) Limited at a local hotel on Friday, Consul General of Switzerland Martin Bienz said that all formalities to make investment in Pakistan have been completed and the operations would be started by the end of January or the beginning of February.

He said that cultural, tourism and educational activities were other areas for Pak-Swiss cooperation and possibilities of investment in these sectors looked bright.

Bienz gave brief overview of trade relations of the two countries and said that both enjoyed good bilateral trade relations.

He said that he had been in Karachi for the last seven months and had enjoyed hospitality of the people of this city. He said that the economy of Pakistan had shown upsurge and potential for business opportunities was enormous.

He referred to the visit of Swiss Foreign Minister to Pakistan, which was another step toward better understanding and cooperation in a number of areas of mutual interest. Earlier, Farrukh Ansari introduced the consul general to the guests including diplomats, high ranking civil and army officials, businessmen and bankers.

http://www.brecorder.com/index.php?id=510628&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Saudi-Kuwaiti group to invest $4 bln in Pakistan *

KARACHI: December 23, 2006: A Saudi-Kuwaiti joint venture, MidRoc Tussonia Ltd, will invest $3 to 4 billion in Pakistan over the next seven years in power generation, refining and real estate sectors.

This was stated by the MidRoc Group President, Sheikh Humoud Al-Sabah at the launching of the joint venture here on Saturday.

Managing Director of MidRoc Zafar Ali and Kuwaiti Consul General Hasan Bader Al-Oqab were also present on the occasion.

He said that his company will set up two wind power generation plants at Mirpur Sakro at a cost of $200 million.

"We have signed a Memorandum of Understanding (MoU) and the first power plant of 50 megawatts costing $100 million will be set up in the first phase while second of a similar capacity and cost in the next phase," he added.

Sabah pointed out that 2500 acres of land has been acquired for this purpose and ground breaking ceremony was held on Thursday.

He said that his company was also setting up 350 MW power generation plant in Lahore.

He said that his company will also establish lube-based oil refinery at Port Qasim over 500 acres of land at a cost of $1.5 billion.

He said that the ground breaking for this project will be held in March next year. This unique refinery will have a production capacity of 200,000 metric tons of all kinds of lubricants per annum.

Sabah said that his company was operating three large refineries, two in Sweden and one in Morocco. We have acquired Swedish technology in oil refining and will the same in Pakistan, he added.

Talking of other interests in Pakistan, he said that Midroc will also develop a modern gatted community housing scheme in Islamabad for overseas Pakistanis.

Similarly, we will build a five-star hotel in Karachi.

http://www.brecorder.com


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## Neo

*Russia to invest in coal mining, power generation *

KARACHI (December 23 2006): Russia has planned to invest in coal mining and coal-fired power plants in Pakistan, official sources told Business Recorder. In this regard, a high level delegation from Russia recently visited Pakistan to assess the potential of natural resources and investment environment, sources in the Sindh Mines and Mineral Department said.

They said that the Russian delegation headed by the Chairman Board of Russian Institute of Coal Industries visited the coal-identified areas in Sindh and assured the government of their positive response.

In a communication with officials in the mining department the Russian delegation informed that they had planned to send proposals to government of Pakistan regarding their investment plan in mining and power generation sector, they added. They said that the delegation visited Block 2 and Block 4 in the Thar coal areas, where a Chinese Company had already started work. The Russian delegation also visited Lakhra to watch the coal mining. However, they declined to inform that how much investment from Russia was expected and how many power plants and area for coal mining they had planned.

The sources said that the Russian delegation held meetings with Federal Minister for Petroleum and Natural Resources Amanullah Khan Jadoon, Sindh Minister for Mines and Mineral Irfanullah Khan Marwat and concerned officials in the mining sector. All the officials from the government side had apprised that about 185 billion coal reserves had been discovered in Sindh and several international companies had approached the government and shown their interest in the coal mining and power generation, they said.

The Sindh government had provided all basic infrastructures in the coal areas to develop these areas, which were economically weak. They assured Russian delegation that basic infrastructure had been provided in the coal areas and Sindh has potential of 185 billion tonnes of coal reserves.

The sources said that the Sindh government had attracted several countries for investment in mining and mineral sector. They said that China was the major contributor in the coal mining and setting up coal-fired power plants. Chinese company had started work in Sonda-Jherruk, Thatta for detailed coal geological investigation.

The China National Machinery Import and Export Corporation (CMC) had planned to set up two power plants of 300MW each in the area. Meanwhile, another Chinese company, Shenhua group of companies, had planned to set up 1200MW power plant in Thar with the investment of one billion dollars. The company had finalised its deal with the government and waiting for approval from the Chinese parliament to start the work.

The sources said that the government was committed to enhance the coal-fired power generation share to meet the energy shortfall.

Pakistan is the fourth largest country in the world having the huge quantity of coal reserves but far behind to cash coal for its power demands, they added.

The United States generating 52 percent electricity from coal, the United Kingdom 58 percent, Australia 77 percent, Germany 52.5 percent even India producing 77 percent power from coal while having enough reserves Pakistan could able to generate less than one percent, the source said quoting the figures.

http://www.brecorder.com/index.php?id=510644&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*British firm signs 225 MW power generation agreement *

ISLAMABAD (December 22 2006): Halmore Power Generation Company Private Limited (HPGCL), a UK-based company, has signed Implementation Agreement (IA) with the Private Power and Infrastructure Board (PPIB) on Thursday. HPGCL has established its office here to set up 225 MW thermal power plant at Bhikki in Punjab.

The IA document was initialled and exchanged between Managing Director PPIB Khalid Irfan Rahman, and Managing Director of the Company, Shahid Hafeez Ahmed in presence of CEO, of the project Dr Mian M. Sharif, CEO, and other senior officials.

Earlier, on December 20, Power Purchase Agreement (PPA) was initialled between HPGCL and National Transmission and Dispatch Company (NTDC) whereas Gas Supply Agreement (GSA) had already been signed with Sui Northern Gas Pipelines Limited (SNGPL).

Signing of IA concludes the package of agreements ie IA, PPA and GSA, as per objectives requirements of the 2002 power policy, after which the company will proceed with its financial closure and thereon the construction of the power complex.

The project, which will be established with $185 million investment, would start commercial operation in 2008. The power plant is based on combined cycle/gas turbine technology, and capable of operating on dual fuel, it will use gas as the primary fuel.

http://www.brecorder.com/index.php?id=510250&currPageNo=1&query=&search=&term=&supDate=


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## Neo

* Gas reserves enough for 22 years *

ISLAMABAD: Pakistan has proven gas reserves, which are enough for 22 years. 

Rashid Lone, MD Sui Northern Gas Pipelines said this during his presentation before the National Assembly Standing Committee on Planning, which met a few days ago. 

The production of gas currently stands at 1.3 tcfd and the government made the plan for aggressive drilling of oil and gas across the country. 

Lone said: ÃÂ¬In the last two years we have managed to inject additional one billion cubic feet gas into the national grid system.ÃÂ® However, he said that in Balochistan there are huge oil and gas reserves, which we have assessed apart from the proven 33 tcfd gas reserves. 

He said that government is also planning to import gas from Iran and Turkmenistan and LNG from Qatar. Out of the proven gas reserves, only 25 per cent of the gas has been explored while 75 per cent is still unexplored. 

Pakistan is fulfilling its gas needs 70 per cent from Sindh, 23 per cent from Balochistan, 6 per cent from NWFP and remaining from Punjab and other areas, he said, adding, the new discoveries are also in the pipeline, which will enhance the production capacity of gas to a reasonable level. He also informed that federal government under the Constitution collects the 12.5 per cent of wellhead price as gas royalty and passed on it to the concerned province. 

He informed the NA committee that SNGPL is undertaking the project for supply of gas to different localities of its franchised areas since 2002-2003 under Tameer-e-Want programme for allocation against MNAsÃÂ­ funds and PMÃÂ­s directive. 

Lone said that consumers of Sui Northern stand at 2.7 million in Punjab, NWFP and AJK. 

Talking about the project for supply of gas to southern districts of Punjab, he said that three district headquarters, two towns or villages and 11 Tehsil headquarters will be provided gas by mid of 2007 at a cost of Rs2.717 billion. 

About plan for supply of gas to southern districts of NWFP, he said that 6 districts including Karak, Bannu, Hango, DI Khan, Tank and Lakki Marwat, would be provided gas facility by the mid of next year at a cost of Rs2.108 billion. 

http://www.thenews.com.pk/daily_detail.asp?id=36623


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## Neo

*Pakistan to build five dams: Aziz *

Saturday December 23

Islamabad, Dec.23 (ANI): Prime Minister Shaukat Aziz said today that his government has cleared a proposal to build five dams.

He said the Bhasha Dam would be the first to built because no one has raised objection on its construction.

Addressing an inaugural function of the Jinnah Pilot project near Jinnah Barrage here on Saturday, Aziz said that before President Musharraf's tenure, Pakistan was recognized as the country carrying begging bowl, but now the situation has been changed and Pakistan has emerged as a self-reliant country.

He also confirmed that Pakistan is planning to purchase power and gas from Iran, adding that his government has set the target of providing electricity to 3,000 villages annually which was revised and now 15,000 villages would be provided power annually. 

http://in.news.yahoo.com/061223/139/6ajoq.html


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## Owais

building of these dams is a good idea but opposition and some government allies have conflicts on that matter.


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## Owais

*UAE group makes huge investment in property *
ISLAMABAD (December 24 2006): The UAE-based Al Ghurair Giga Group has made investment in property worth Rs95 billion in Islamabad. This was disclosed during a presentation on Saturday.

The participants were given a detailed presentation on these projects at Defence Housing Authority (DHA) after the eldest son of the ruler of Ajman and Chairman of Ajman Planning Department Sheikh Rashid Bin Humaid Al Nauimi's visit to the multi-million dollar gold-crest housing project in DHA Islamabad.

He said that President Pervez Musharraf's government has given a confidence to foreign investors which will play a vital role in the economic progress and development of Pakistan.

Sheikh Rashid Bin Humaid Al Nauimi who is visiting Pakistan on a special request of Al Ghurair Giga Group also inaugurated the largest concrete batching plant in Pakistan, which has a capacity of producing 120 cubic meters per hour or 20 trucks in an hour.

The plant has been set up with an estimated cost of $1.5 million by the Malaysian IJM company, which has presence in all continents of the world. The participants were told that Gold Crest DHA is a residential project of in DHA Phase II in Islamabad. The project comprises of construction seventeen 17 high rise towers with combination of studios, one, two, three and four-bed luxury apartments and penthouses.

The project will be built on international standards and all towers will be earthquake resistant in a cover area of 320 kanals. Platinum Square, a commercial project from Al-Ghirair Giga in Phase II, Islamabad comprising a 5-Star hotel, 5 office towers and a world class shopping mall, which spreads over 330 kanals. Soan Riverine Marina will have commercial as well as residential projects.

Each neighbourhood consisting of amazing buildings, villas and hotels spreading over 5.5 kilometers with an estimated investment of Rs 35 billion. Residential and commercial strips both are worth an estimated value of Rs95 billion.

The towers of the Gold-Crest housing project have been designed keeping in line with latest seismic proofing techniques and would rise from 20 to 36 floors. Piling work for the towers have started and construction machinery has arrived on the site from different parts of the world for rapid deployment at the project. Al Ghurair Giga Pakistan has set a target date of December 2008 for the contractors to complete the complex.

The project consists modern high-rise towers that are being built to give an exhilarating experience in the 21st century to urbane upwardly mobile professionals. The project will consist of seventeen 17 high-rise towers with all modern day amenities and facilities provided to the communities.

UAE-based Al Ghurair Giga Group is one of the fastest growing real estate developers in the Gulf, with a host of successful projects in the Middle East and around the world.

Mohammadmian Soomro, Chairman Senate of Pakistan wished a success to the group in Pakistan and said that due to the investors friendly policies of the present government foreign investors are investing in Pakistan with full confidence. Haji Rafiq Giga, president of UAE based company Al-Ghurair Giga said that he is confident that their project in Pakistan would be a success.


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## Janbaz

*Exports up by 5pc*

KARACHI: Exports recorded 5.09 per cent increase to $6.928 billion during July-November 2006 compared to $6.592 billion during the corresponding period of last year.

According to the provisional figures compiled by the Federal Bureau of Statistics, the exports in rupee terms surged by 6.45 per cent to Rs418.937 billion during the same period as against Rs393.548 billion during the corresponding period of last year.

Exports during November, 2006 amounted to Rs83.805 billion as against Rs77,688 million in October, 2006 and Rs66.546 billion during November, 2005 showing an increase of 7.87 per cent over October, 2006 and of 25.94 per cent over November, 2005.

In terms of dollars the exports increased by 7.64 per cent in November, 2006 to $1.380 billion when compared with October, 2006 $1.282 billion and by 23.94 per cent as compared to November, 2005 $1.114 billion.

Main commodities of exports during November, 2006 were bedwear (Rs9,413 million), knitwear (Rs9,303 million), cotton cloth (Rs8,731 million), cotton yarn (Rs6,910 million), readymade garments (Rs.6,089 million), art, silk and synthetic textile (Rs4,017 million), rice basmati (Rs2,932 million), rice others (Rs2,795 million), towels (Rs2,618 million) and petroleum products (excl top Naptha) (Rs2,122 million).

Imports during July-November, 2006 totalled at $12.333 billion as against $11.176 billion during the corresponding period of last year showing an increase of 10.35 per cent.

In terms of rupee, imports during July-November, 2006 stood at Rs745.989 billion as against Rs667.277 billion during the corresponding period of last year showing an increase of 11.80 per cent.

Imports into Pakistan during November, 2006 amounted to Rs168.433 billion as against Rs129.170 billion in October, 2006 and Rs137.400 billion during November, 2005 showing an increase of 30.40 per cent over October, 2006 and of 22.59 per cent over November, 2005.

In terms of US dollars the imports increased by 30.11 per cent in November, 2006 $2.774 billion as compared to October, 2006 $2.132 billion and by 20.64 per cent as compared to November, 2005 $2.299 billion.

Main commodities of imports during November, 2006 were Petroleum crude (Rs21,552 million), Petroleum Products (Rs18,195 million), Other Apparatus (Telecom) (Rs8,310 million), Iron and Steel (Rs6,901 million), Palm oil (Rs5,064 million), Plastic Materials (Rs.4,978 million), Mobile phone (Rs4,718 million) Electrical Machinery and apparatus (Rs4,073 million), Raw Cotton (Rs3,022 million) and textile machinery (Rs2,856 million).

Based on the provisional figures of imports and exports the balance of trade in November, 2006 was (-) 84.628 billion in terms of rupees and (-) 1.394 billion in US dollars.

The balance of trade figures cumulative from July-November, 2006were (-) 327.052 billion in terms of rupees and (-) 5.406 billion in US dollars.

The News.


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## Neo

*Methane gas discovery deal approved *

KARACHI (December 24 2006): Sindh Cabinet which met here on Saturday under the chairmanship of Chief Minister Dr Arbab Ghulam Rahim gave approval in principle to an agreement for discovery of Methane gas under the layers of coal reserves in Sindh.

It may be mentioned here that a MoU in this regard was signed on November 27 during the US visit of President Pervez Musharraf. The agreement was concluded with a joint US-Canadian Company "Soneri" whereby it will carry out a survey of coal reserves in which the help of PC-3 Orien aircraft will also be obtained.

Briefing newsmen after the Cabinet meeting, the Advisor Information Salahuddin Haider pointed out that it was for the first time that Pakistan government entrusted an authority to Sindh government to undertake a survey of gas reserves and also issue licence in this regard, which, otherwise, was the federal government subject.

He said that in the first phase, the company would make a stupendous investment of 5 billion dollars. The advisor said that there had been no law with regard to gas discoveries and, therefore, Sindh government has made some rules. However, before their enforcement, the Cabinet decided their further scrutiny so that no legal hitch remains.

In this regard the Cabinet formed a committee comprising of Secretaries Law, Mines and Minderal Development, Finance and Industries and directed it to carry out vetting of the rules and submit its report within two days. Provincial Minister Mines, Irfanullah Khan Marwat informed the Cabinet that no law in Pakistan existed to explore and develop coal-based Methan gas.

Salahuddin Haider said that according to an estimate there are 25 trillion cubic feet of Methane gas reserves. He said this gas could be used as piped gas and also converted into petrol, diesel and used in the production of chemical.

He said the company will bring entire equipment for gas exploration and Sindh government could levy excise and other taxes, which previously was the subject of federal government. To a question, he said, the issue of IX-X composite examination was not on the agenda of today's cabinet meeting.

However, he said, a meeting has been convened to be held after Eidul Azha, which would also be attended by representatives of federal government and educational experts to take a decision on the issue.

http://www.brecorder.com/index.php?id=510967&currPageNo=1&query=&search=&term=&supDate=


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## Neo

Owais said:


> building of these dams is a good idea but opposition and some government allies have conflicts on that matter.



Conflics and hurdles can be solved and overwon with a feasible plan to serve all comodities.
Its in our comon interest to build these dams or face further desertification of our soil which will create bigger problems in future.

These dams will not only save millions of mcf of water which is currently lost to the see, it will also help to irrigate 22 million acres of new arable land.


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## Neo

*$1bn investment planned for weaving sector*

ISLAMABAD, Dec 23: The Textile ministry has proposed more than $1 billion private sector investment in the weaving sector for setting up of 40,000 new looms to enhance the production of quality fabrics.

The initiative is expected to boost production of quality fabrics used in the manufacturing of home-textile and garments in the value-added chain as currently in the weaving sector only 10,000 looms were operating for manufacturing quality fabrics.

Well-placed sources told Dawn on Saturday that the proposal among others worked out by a sub-committee constituted by the textile ministry was moved to the prime minister secretariat for formal approval.

The sources said that it was also recommended to declare fabrics as raw material in the value-added sector for manufacturing of home textile and garments. Currently, natural fibre and man made fibre were declared as raw materials since 1970s.

The sources said that it was estimated that in case of installing of these additional looms, the volume of the current textile exports would be doubled easily in the years ahead without any other efforts for enhancing the overall capacity of the entire chains of the sector.

The inefficiency of the weaving sector was attributed one of the reason in the report for the down slide in the exports of the textile products during the last five months of the current fiscal year.

Ã¢â¬ÅWe can not expect to raise export of textile products beyond an average 10 per cent due to low capacity of the weaving sector. We do not have the capacity for increasing the overall exports from the sector,Ã¢â¬Â a senior official of the textile ministry said on condition of anonymity.

He said that due to the poor performance of the weaving sector, the total export of yarn stood at more than $1.47 billion during the fiscal year 2005-06. Not only this yarn could be diverted to the value addition chain but more yarn could also be imported for manufacturing of fabrics in the country, he added.

Most of the investment in the last years was made only in the spinning sector for production of yarn without any up gradation of the weaving sector. This lack of improper investment only encouraged the export of yarn as a commodity at the cost of developing the value addition chain.

The production of value added products like garments also declined, which ultimately resulted into lower exports. Moreover, the shortage of yarn also resulted into upsurge in the price of fabrics, which would also increase the price of the end-products rendered it less competitive with those coming from other countries, added the official.

http://www.dawn.com/2006/12/24/ebr17.htm


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## Neo

*ADB to provide $227.8 million for water projects *

FAISALABAD (December 25 2006): Lower Bari Doab Canal Improvement Project and Punjab Irrigated Agriculture Project will be completed with financial assistance of Asian Development Bank. ADB will provide $217.8 million from Ordinary Capital Resources, while $10.0 million from Asian Development Fund.

According to official sources, the project would upgrade the Lower Bari Doab Canal System in the province and rehabilitate infrastructure from the head works of Baloki Barrage to minor canals as well as addressing on-farm water management activities.

This will involve about 700,000 ha of irrigated area. The project will result in civil works for irrigation infrastructure as well as training and support services for the agriculture.

Significant capacity development activities for farmer organisations will be an important part of the project.

The project will promote economic growth, increase farm incomes and improve resource sustainability through enhanced productivity of irrigated agriculture and improve management of Punjab's water resources.

The project components include rehabilitation and upgrading of Baloki Barrage, Lower Bari Daub Canal and BS Link canal head regulators.

The Punjab irrigated agriculture project preparation facility will ensure that the forthcoming projects are expeditiously prepared to fully utilise programme resources, future projects are well designed and meet ADB guidelines.

http://www.brecorder.com/index.php?id=511206&currPageNo=1&query=&search=&term=&supDate=


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## Janbaz

*Rs2 billion sanctioned for NWFP development *

ISLAMABAD: Federal Minister for Industries, Production and Special Initiatives, Jahangir Khan Tareen has said that the President has sanctioned Rs2 billion for industrial development in the NWFP over the next three years.

He was addressing an interactive session with industrialists of the NWFP, organised by the Industrialists Association Peshawar, a press release said here on Tuesday.

The minister also witnessed the signing of an MoU between Sarhad Development Authority and Pakistan Stone Development Company for the acquisition of land for a marble city in Risalpur to be set up by the company.

Elaborating various initiatives taken by the federal government for industrial development in the province, the minister said that the marble city would have an industrial estate, common facility and training centres and marble warehouses so that the processing industry was located near the sources of raw materials and the industrialists had access to HR development facilities and marble stone deposits.

The minister also held meetings with the NWFP government to discuss the Clean Drinking Water Project.

The minister said that Sporting and Hunting Arms Development Company had been set up to establish an industrial estate in Darra Adam Khel to properly exploit the export potential of arms and ammunition manufactured in the area. The government would provide technical support, training and quality raw materials to make the indigenous arms industry competitive in the international market.

The minister informed that similar projects would be initiated for gemstone sector and an MoU will be signed with Geological Survey of Pakistan for the provision of operational funding to carry out extensive surveys of mineral resources. 

Tareen remarked that the hydroelectric resources of NWFP should play a key role in the development and expansion of industrial infrastructure and the federal minister supported the use of electricity of the Malakand-3 project by the local industry.

Tareen invited the provincial government to provide a matching grant of Rs500 million for the rehabilitation of the industrial estates in the province.

Responding to a query the minister announced that government is working on a public-private partnership venture to produce one hundred thousand additional skilled workers to meet the demand of industry.

The News Pakistan.


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## Neo

*July-November FDI up by 105.26 percent *

ISLAMABAD (December 27 2006): Foreign direct investment (FDI) during five months (July-November) of 2006-07 soared by 96.25 percent year-on-year to $1.476 billion from $752.1 million, and portfolio investment rose by 130.27 percent to $623.8 million $270.9 million, according to the State Bank report on Tuesday.

Therefore, on balance, total foreign private investment in five months increased by 105.26 percent to $2.099 billion from $1.023 million of corresponding period of last fiscal year. It is hoped that this fiscal year total investment inflow would cross last year's $3.872 billion. A significant feature of the data is that though FDI inflow followed steep path right from the beginning of the new fiscal year and increased enormously, portfolio investment has been showing an up and down trend from the beginning. However, during the period under review it has shown a huge growth.

According to break-up of the investment, by region, total investment from developed countries was $1.457 billion, including $964.5 million FDI, and $492.3 million portfolio investment, and the developing economies invested $510.8 million (FDI $379.6 million and portfolio investment $131.1 million).

Among developed countries, Western Europe made a total investment (FDI and portfolio) of $731.5 million and European Union $709.8 million, against last year's $239.6 million and $150.7 million, respectively. Besides, under unspecified head (investment by IFIs and other n.s.e) was $132.2 million. This included FDI of $131.9 million and $0.3 million in portfolio.

Among developing economies, Caribbean Islands invested $11.8 million as FDI and $1.3 million portfolio investment; and Africa, including Libya, Egypt, Mauritius, South Africa and other African countries, invested $49.3 million.

Asian countries (West Asia, South, East and South East Asia) made total investment of $447.4 million, including $327.4 million FDI and $119.9 million portfolio investment.

The investment of $666.7 million from the United States (US) was the biggest which included $363.7 million FDI and $303 million portfolio investment. United Kingdom (UK) was the next with total investment of $640.4 million, including FDI of $423.7 million and portfolio investment of 216.7 million dollars. United Arab Emirates (UAE) was third with total investment of $226.3 million, injected $233.1 million FDI and withdrew $6.8 million portfolio investment.

Singapore was the only country, which made a sizeable investment of $116.1 million during July-November 2006-07 against only $2.5 million in corresponding period of last fiscal year. This included $107.1 million portfolio investment and $9 million FDI, against last year's $-0.8 million and $3.3 million, respectively.

http://www.brecorder.com/index.php?i... rm=&supDate=


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## Neo

*Over $13 million equity-based investment made abroad in July-September: ECC to be briefed today *

ISLAMABAD (December 27 2006): The Finance Division will inform the Economic Co-ordination Committee (ECC) of the Cabinet that the nine resident companies/investors have made equity-based investment of $13,145,454 in foreign companies during July-September 2006-07.

Sources said on Tuesday that the Finance Division would present the data on equity-based investment abroad by Resident Pakistanis in its meeting on December 27.

The State Bank of Pakistan (SBP) had allowed the Pakistani residents, including firms and companies, to make equity-based investment (other than portfolio investment) in companies (whether incorporated or not)/joint ventures abroad on repatriable basis, with prior permission of the SBP.

The Cabinet had approved the proposal of the Finance Division to allow equity-based investment abroad by resident Pakistanis with a view to further liberalising economy and deregulating control over the foreign exchange. Subsequently, the ECC had decided that the SBP should approve proposals costing up to $5 million each, and that proposals costing more than $5 million each be submitted to ECC for approval.

The ECC had also directed the SBP to submit a summary statement on quarterly basis to the ECC regarding cases approved by them costing up to $5 million. The State Bank has submitted a summary statement of investment approved by them for the first quarter of fiscal ie July 1 2006-September 30, 2006. The statement showed that the SBP granted permission to nine cases involving a total remittance of $13,145,454.

According to the statement showing details of equity-based investment abroad allowed to resident Pakistanis by the SBP from July 1, 2006 to September 30, 2006: Novatex Limited invested $5,000,000 in foreign company (the Novatex Inc USA); Descon Engineering Ltd, $140,058 in the Descon Engineering Quarter Ltd; the KASB Securities Ltd $325,717 in the Envolvence Capital Ltd, British Virgin Islands; Muhammad Shafi Tanneries (Pvt) Limited $1,000,000 in Sihui Shafi Leather China, Co China; Descon Engineering Ltd $40,850 in Descon Engineering FZE, UAE; Crescent Bahuman Ltd, $60,000 in the Crescent Bahuman Ltd Dubai, UAE; Pakistan Mobile Communication (Pvt) Ltd $5,000,000 in Global Enterprise for Telecom Trade Dubai, UAE; Beaconhouse Public School (Pvt) Limited, UK, $663,047 in the Beaconhouse Educational Service Ltd, UK.

Employer Contribution to Stock Option Schemes: the Ericsson Pakistan (Pvt) Limited made investment of $339,156 in the Telenokitebolaget LM Ericsson, Sweden; Philips Electrical Industries of Pakistan, $12,680 in the Royal Philips Electronics NV, Netherlands; Abbot Laboratories (Pak) Ltd $33,475 in the Abbot Laboratories Inc USA, and the Procter and Gamble Pakistan (Pvt), Limited made investment of $530,471 in M/s Procter and Gamble International Operations, USA in first quarter fiscal 2006-2007.

http://www.brecorder.com/index.php?id=511653&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Govt urged to develop mineral sector*

ISLAMABAD, Dec 26: The World Bank has asked Pakistan to improve its legal (regulatory) and fiscal (taxation) regimes and to have in place an institutional framework in order to attract foreign investment in the mineral sector of the country.

Official sources told Dawn that the WB maintained that the lack of institutional arrangements was impeding progress to adequately develop the mineral sector and hence attracting foreign investment. It also wanted incorporation of social and environmental aspects.

In this behalf, the Bank has urged the government to urgently go for institutional strengthening and capacity building of the Mineral Wing of the ministry of petroleum and natural resources without which it would be difficult to attract considerable foreign investment in the country's neglected mineral sector.

For the development of the mineral sector, the World Bank said, international investment was required to be coordinated at the federal level. Since formulation of policies on mineral development is in the federal domain, considerable capacity improvements are needed to enable establishing mineral frameworks that are consistent at federal and provincial levels.

The Bank also called for facilitating the preparation of provincial Mineral Concession rules and regulations and coordinating development of the provincial mineral cadre systems.

The government, sources said, was asked to coordinate and promote mineral investments, develop and disseminate basic geological information and improve economic conditions of small scale minerals including coal, gemstone and dimension stones.

The Bank is also of the view that a database is pre-requisite to develop mineral sector through foreign investment and that constant monitoring is required to maintain the progress being made by multinational mining companies.

Sources said the international companies interested in making investment in the mineral sector have demanded of the government to have data in digital form. Currently, the mineral wing of the ministry has no facility of data bank and subsequent dissemination to the interested parties. "The establishment of Mineral Data Bank (MDB) is essential", a source said.

The Bank of the view that the mineral wing is under-staffed, which is why it cannot carry out all the required functions.The core function of the mineral wing, the WB believed, should be the correct registration of private companies, maintenance of export and import, data of minerals and dissemination data to different agencies as per their requirement.

The officials of the mineral wing were asked to make efforts for the development of mineral sector by coordinating efforts with the Balochistan Mineral Development Programme, which is likely to be sponsored by international donor agencies.

Initially, the World Bank, sources said, has promised considerable financial assistance to help implement mineral sector development programme.

The government was told that the mineral exploration is "high risk" capital investment. The risk in generation of basic geological data and identification of exploration targets are high, therefore, the private sector, even in developed countries, do not contribute in this phase of mineral exploration and the governments through geological surveys have to undertake these activities.

http://www.dawn.com/2006/12/27/ebr6.htm


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## Owais

*Incentives for Chinese Economic Zone finalised *

ISLAMABAD (December 28 2006): The government has finalised an incentives package for the Chinese Special Economic Zone with exemption of customs duty (on import of machinery/equipment), income tax and sales tax to attract foreign investment for creating balance in $15 billion bilateral trade with China by 2011.

Sources told Business Recorder on Wednesday that three different tax incentive proposals have been finalised for the Chinese Special Economic Zone. The Board of Investment would discuss this package with the Chinese Ambassador, the foreign investors and other stakeholders to ascertain their requirements before submitting it to the Economic Coordination Committee (ECC) of the Cabinet.

They said that the Planning Commission had recently convened a meeting to review the progress on the incentives package for the special economic zone. The package for China Industrial Zones was drafted by Board of Investment (BOI) in consultation with Central Board of Revenue (CBR), provincial governments, Ministry of Industries and Production, Commerce Ministry and Ministry of Textile. These departments discussed threadbare the investment policy and major incentives being provided to companies in China.

Sources said that the importance of establishing local and foreign joint ventures would help in achieving balance in $15 billion bilateral trade with China by 2011, as envisaged in the recently signed Five-Year Development Plan between the two countries. 

It was emphasised that the window of opportunity for potential Chinese investment would not be there for an indefinite period, and the opportunity needed to be best availed by offering substantial incentives at the earliest.

It was also explained that the Memorandum of Understanding (MoU) signed between Ruba Group of Pakistan and Haier Group of China for the establishment of Chinese special economic zone, during the recent visit of Chinese President to Pakistan would act as a catalyst in promotion of mutual economic ties between the two countries.

It is therefore, necessary for all ministries to finalise the incentives package and translate the Ruba-Haier Joint Venture into a reality. It was also explained that similar incentives and country-specific zones could also be offered to other countries.

The Board of Investment apprised the meeting that Ruba-Haier Group has asked for earmarking 3000 acres land near Kala Shah Kaku (Lahore-Islamabad Motorway, M2) for setting up Special Economic Industrial Zone, for which 20 Chinese companies have shown interest. Ruba-Haier Group would provide industry-wise list of the interested Chinese companies with their potential investment range in the next 2-3 days. The government has worked out following incentive proposals after thorough deliberations with the economic ministries:

PROPOSAL-I: Special Economic Zone would be treated as Export Processing Zone (EPZ), and no additional concession would be extended. Proposal-II: SEZ would be treated as EPZ for products/goods manufactured in the country.

For goods not manufactured locally (to be carefully listed) SEZs would be allowed to sell goods in Pakistan without any customs duty, but on payment of sales tax.

SEZ to be exempted from payment of income tax for a specified period.

PROPOSAL-III: SEZ to be allowed duty-free import of plant and machinery. SEZs to attract normal custom duties on raw materials. On exports, these units of SEZs would be entitled to duty drawback and rebate.

Special Economic Zone to be allowed to sell goods in Pakistan without any restriction, on payment of sales tax. This Zone to be exempted from income tax for a specified period. Sources added that all these packages would be discussed with the stakeholders to finalise one package for the Chinese investors.


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## Janbaz

*Pakistan enters 'Next Eleven' Club*

Dr Ashfaque Hasan Khan 
Prudent macroeconomic policies and structural reforms of six/seven years have transformed a fragile economy of Pakistan into a stable and resurgent one. PakistanÃ¢â¬â¢s economy has continued to maintain a solid pace of expansion over the last four years (2002-03 to 2005-06). This recovery has been strong, rapid, sustained and broad-based. 
With economic growth averaging almost 7.0 percent per annum during the last four years, Pakistan has positioned itself as one of the fastest growing economies in the Asian region. This strong growth has been achieved instead of several exogenous negative shocks thereby clearly reflecting the resilience of PakistanÃ¢â¬â¢s economy and its capacity to absorb shocks. 
The strong, rapid, sustained and broad-based economic recovery has not only helped Pakistan joining the club of the fastest growing economies in the Asian region but has started appearing on the radar screen of global financial institutions. 
One such event took placed in December 2005 when a global investment Bank, Goldman Sachs, included Pakistan in the category of new emerging markets, destined to play a major role, in the world economic setting. A background and importance of this achievement needs explanation. 
Goldman Sachs is an international investment bank with a strong credential of economic research as well. In 2001, they identified four emerging market economies, namely Brazil, Russia, India and China (BRICs) who, in their opinion, will play important roles in shaping the destiny of the global economy. They continued to monitor the developments in these economies and through their research continued to disseminate the performance of these economies to the rest of the world. The BRICs continued to attract attention of the world economic powers. By 2006, the BRICs have emerged as central players in the world economy and global policy-making affecting trade capital markets, investment and energy policy. 
In 2003 the Goldman Sachs presented an important piece of work entitled Ã¢â¬ÅDreaming with BRICs Path to 2050Ã¢â¬Â, projecting long-term growth rates for these countries and suggested that the BRICs as a whole would be bigger (in US dollar term) than G-6 countries by 2041. These projections were based on a forward-looking model that stressed the importance of good economic policy and stable institutions. Goldman Sachs continued to publish research on BRICs. The importance of BRICs is now being felt in wide-range of issues concerning the global economy over the past few years. 
In December 2005 the Goldman Sachs extended their coverage from BRICs alone to few other emerging markets that in their opinion, will emerge as major economic power in the world economy. They have identified countries like Korea, Mexico, Vietnam, Iran, Turkey, Egypt, Philippines, Indonesia, Bangladesh, Nigeria and Pakistan and have termed them as Ã¢â¬ÅNext Eleven (N-11)Ã¢â¬Â on the basis of their growing economic strength and favourable demographic profile. Goldman Sachs believes that N-11 presents a healthy environment for a high-sustained growth for the next 50 years (by 2050) because of their prospects for higher investment and favourable demographics. 
It is an honour for Pakistan to be included in the Ã¢â¬ËNext Eleven (N-11)Ã¢â¬â¢ on the basis of its potential to emerge as, in the opinion of Goldman Sachs, major economic power. 
It is also an acknowledgement of the economic success of Pakistan and its policies that it has found place in the club of Ã¢â¬ËNext ElevenÃ¢â¬â¢ The Goldman Sachs projects that the size of the PakistanÃ¢â¬â¢s economy will $ 2287 billion by 2050 from $ 120 billion in 2005. 
In other word, PakistanÃ¢â¬â¢s economy is projected to grow by 6.8 percent per annum in dollar term over the next 45 years. With this rate of increase the per capita income is projected to increase to $ 7753 by 2050 from $ 737 in 2005. If Pakistan further improves its growth environment score (GES) which include macroeconomic stability (inflation, budget deficit, external debt); macroeconomic conditions (investment rates, openness of the economy); technological capabilities (penetration of personal computers, phones, internet), human capital (education, life expectancy) and political conditions (political stability, rule of law, corruption) the size of the GDP and per capita income will improve further. 
Most importantly, the premium of improving GES is enormous. 
For example, if PakistanÃ¢â¬â¢s economy grows by 8.0 percent per annum instead of 6.8 percent, the per capita income would improve by 70 percent. PakistanÃ¢â¬â¢s demographic profile is a blessing for the country as more than half of its population is young. If we improve human capital, particularly education, technical training and health this young population will emerge as a great asset for the country and will help achieve higher economic growth. 
PakistanÃ¢â¬â¢s economic conditions have improved considerably in recent years and as such have attracted the attention of Goldman Sachs to become part of the Ã¢â¬ËNext ElevenÃ¢â¬â¢, destined to play major roles in global economy. While Pakistan has sustained strong growth in the last several years Pakistan will have to work hard to further improve its GES. 
In particular, Pakistan will have to maintain macroeconomic stability that is, to keep inflation, budget deficit low and continue to reduce debt burden; continue to improve investment climate, improve technological capabilities; invest more on physical and human infrastructure; maintain political stability in the country, further improve the rule of law and reduce corruption. 
These are challenges for going forward. Pakistan has so far done well on economic front but more needs to be done to be an active member of the N-11 in general and world economy in particular. 
(The writer is Economic Advisor, Finance Division, Government of Pakistan). 

The Nation Pakistan.


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## Owais

*Multinational firm to invest $150 million in Karachi *


KARACHI (updated on: December 28, 2006, 21:09 PST): A US-based multinational company is willing to make investment worth $150 million in the city to set up over eight vegetable and fish markets besides modern slaughter house.

This was informed by Chairman and member of managing committee ICI Global Economy Group Ali Nawaz Sheikh who called on City Nazim Syed Mustafa Kamal in his office on Thursday.

In his presentation, the chairman said their company is being running such business in various countries around the world including Saudi Arabia, UAE, Korea, Malaysia and others.

He said that their company is willing to set up over eight vegetable and fish markets in the city worth $150 million which would not only provide hygienic and fresh vegetables and meat to the citizens but they will also devise to dispose their produces in all markets.

The firm has also plans to establish its own cold storage and also import cold storage vehicles for this purpose, he added.

"The company, ICI Global Economy Group, has vast experience to run such business not only in many countries of Asia but also around the world. We hope this business will run successfully in Karachi," Chairman Ali Nawaz Sheikh said.

City Nazim Mustafa Kamal pointed that the city government is initiating steps to provide maximum facilities to the investors as the city of 18 million population has vast opportunities to make investment in various sectors.

He mentioned that presently the city has two slaughterhouses while a portion of land also allocated at Northern Bypass to establish a modern abattoir to cater the need of the city.

The city government will welcome the investors in this sector and also extend all co-operation in this regard, he added.

Kamal instructed EDO Master Plan, EDO Enterprise and Investment Promotion to prepare a comprehensive report along with the representatives of the company.


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## Neo

Guys please provide links when posting an article and refrain flloding by posting insignificant news.

Please read the first post.
Thanks!


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## Neo

*Good harvests seen boosting economic growth * :thumbsup:

KARACHI (December 28 2006): Pakistan's economic growth is likely to receive a fillip from higher-than-expected output of major crops in the current 2006/07 fiscal year, Ashfaque Hasan Khan, an adviser to the finance ministry said on Wednesday.

Increased crops of sugar, rice, wheat and cotton will boost a sector that is the largest contributor to Pakistan's gross domestic product. "The agri sector this year is likely to grow by 4.2 percent," said Ashfaque Hasan.

Pakistan faced severe irrigation water shortages during the last fiscal year, resulting in disappointing farm sector growth of 2.4 percent. "The reversal was mostly on account of better availability of irrigation water that persisted both in the Kharif (summer) and Rabi (winter) crop seasons," Khan said.

The agriculture sector is the leading contributor to the country's GDP, accounting for 21.6 percent during the 2005/06 (June/July) fiscal year. About 113.7 million acres (46 million hectares) is farmed and 60 percent of Pakistan's 160 million people are linked to agriculture.

Pakistan's economy grew by 6.6 percent in 2005/06 and the government is aiming for growth of about 7 percent in the current fiscal year. Cotton production in the year ending in June 2007 is expected to be 12.5 million to 12.8 million bales. Cotton and textiles account for about 60 percent of Pakistan's exports. The cotton crop in the last fiscal year was 12.4 million bales.

Khan said industry would also benefit from a healthy cotton crop. Pakistan, the world's fourth-largest cotton producer, expects domestic consumption of 15 million bales in the season that started in Jully, in line with recent years The sugarcane crop exceeded forecasts by 18 percent, at 52 million tonnes.

http://www.brecorder.com/index.php?id=511996&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*GDP down to 4.4pc in privatisation era: Jobless rate jumps to 5.66pc*

KARACHI, Dec 27: The annual growth rate of Gross Domestic Product (GDP) came down to 4.45 per cent during the privatisation decade of 1991-92 to 2001-02 as compared to 6.70 per cent in the pre-privatisation decade of 1981-1991. The unemployment ratio jumped up from 3.77 per cent in 1981-91 to 5.66 per cent in 1991-2001, reveals a well researched study of Action Aid International Pakistan released recently.

The average manufacturing growth ratio during decade of pre privatisation was 7.78 in 1981 to 1991 which slumped down to 4.88 per cent during the privatisation decade of 1991 to 2001. The investment ratio was 17.60 per cent of the GDP during 1981 to 1991, which increased slightly to 17.83 per cent during the privatisation decade mainly because of small investment in balancing and modernisation.

The fiscal deficit during pre-privatisation era is, however, on the higher side at 7.35 per cent as against 6.56 per cent during the privatisation decade because of provision of budgetary resources for the public sector enterprises.

Ã¢â¬ÅThese figures indicate that the privatisation programme has not made positive impact on economic growth, investment and employment,Ã¢â¬Â argues the report that discloses the number of employees in industries including Pakistan Steel, banking and financial institutions, telecommunications. Wapda and the OGDC came down from about half a million in 1991 before the privatisation process was set in.

Ã¢â¬ÅBy the year 2000, the transfer of many of these units to the private sector, downsizing, Golden Hand Shake (GHS) and other such measures reduced this number to one-third. It shows that unemployment might have increased manifold in the current phase of privatisation during MusharrafÃ¢â¬â¢s regime after the year 2002,Ã¢â¬Â the report apprehends.

Ã¢â¬ÅHit by the vicious process of privatisation, downsizing and detachment that has taken place over the last 10 years, more than half a million workers have lost their jobs and are living in abject poverty,Ã¢â¬Â it says.

A survey conducted by the Workers Federation of Pakistan found that the fringe benefits in the private sector are lower and workload is higher as companies start focussing on core functionÃ¢â¬âprofitability setting aside all social considerations like transport, healthy working environment, healthcare, safety nets and facilities for the family members.

Now almost 80 per cent of the workforce in manufacturing sector, road transport, and trade and most of the services sector are part of the informal sector.

Workers in informal economy are neither recognised nor registered. They are also not regulated or protected under labour legislation and social protection. The workers in informal economy suffer from low wages, long working hours, lack of social protection, lack of job security and absence of trade unions.

The study estimates 24.35 per cent of Rs14.62 billion bid money received in privatisation of public sector automobile, cement, chemicals, fertiliser, engineering, ghee, rice, roti plant, newspapers and miscellaneous categories during 1991 to 1997 was given as golden hand shake as 63.30 per cent of more than 35,000 employees opted for it.

Most of the workers, who opted for GHS tried to create self-employment opportunities, lost their money as they had no experience. Many of the retired workers deposited money in banks and national saving schemes but were let down when interest rates were reduced. Quite a few were cheated by the swindlers and big sharks in the stock exchange.

Ã¢â¬ÅPrivatisation has crippled the workers socially, economically and emotionally. They have lost faith in struggle and trade unions as many trade union leaders have betrayed them for their personal interests,Ã¢â¬Â the study says.

-----The report gives the name of 20 public sector units privatised during 1992-94 that are now closed. These are Naya Daur Motors, Dandot Cement, Zeal Pak Cement, National Cement, General Refractories, Pak PVC, Swat Elutriation, Nowshera PVC, Nowshera Chemicals, Pak China Fertiliser, Karachi Pipe Mills, Metropolitan Steel, Pak Switchgear, Quality Steel, Indus Steel Pipe, Fazal Vegetable Ghee, Haripur Vegetable Oil, Khyber Vegetable, Suraj Ghee Mills and Hyderi Vegetable Ghee.

According to the report the privatised units formed cartels and mentioned cement and ghee syndicates that made good profits.

http://www.dawn.com/2006/12/28/ebr3.htm


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## Janbaz

*Poland keen to expand trade with Pakistan*

OUR STAFF REPORTER 
KARACHI - Poland is keen to further expand trade, economic ties with Pakistan and co-operate in oil, gas, energy, mining, infrastructure, chemicals, food processing and developing Small and Medium Enterprises said the Polish Consul General Lreneusz Makes during a diplomats gathering at his residence with PML(Q) Senator Nisar Memon as chief guest to celebrate Christmas on Wednesday. The volume of two-way trade in first nine month was $ 692.3m which did not reflect close relationship between the two countries and there was a constant need for more trade ties, he added.
Poland exported goods worth USD 29.5 million, while Pakistan exports were valued at USD 62.8 million. Balance of trade is in favour of Pakistan. 
Polish Consul General in Karachi also said, he welcomed government&#8217;s decision to declare 2007 as year of tourism in Pakistan and said the country had many beautiful places like Himalayas, which would attract many foreign tourists including Polish who are charmed by beautiful landscapes and hospitality of Pakistani people.

http://www.nation.com.pk/daily/dec-2006/29/bnews8.php


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## Neo

*World Bank 'moderately satisfied' with reforms *

ISLAMABAD (December 29 2006): The World Bank (WB) is 'moderately satisfied' with the reform plans and has asked the government to regularly convene meetings of the Cabinet Committee on Fiscal Reforms (CCFR) to monitor implementation of reform in the Central Board of Revenue (CBR).

Sources said on Thursday that the World Bank review mission has given rating of 'Moderately Satisfactory' to the development objective of the reforms.

The WB was of the view that progress on reforms could easily slip over coming months, unless project management is strengthened and the Board enhances its oversight of the program. A full time Member Tax Policy and Reform and Project Director would ensure proper implementation of the reform projects.

The Bank team also recommended that the Cabinet Committee on Fiscal Reforms (CCFR) be reconvened again on quarterly or six monthly basis to maintain the momentum of the reform and provide support to the reform process as it meets new challenges in the coming year.

According to the WB, the government and CBR management remain committed to the reform program, and the project has shown clear achievements vis-ÃÂ -vis taxpayer's facilitation. The project has gained momentum in recent months, however, it carries significant delays of the past.

The preparatory work for reforming revenue operations and introducing technology has proved more difficult as envisaged during the project preparation. The project management has been very weak, and CBR has faced difficulties finding solid international consultants due to circumstances beyond its control, the WB said.

In recent months, the project has gained momentum and key issues that were highlighted during the March 2006 supervision mission or August 2006 interim supervision mission have been resolved or their resolution is advanced.

The Integrated Tax Management System (ITMS) bidding document has been finalised; the bidding documents for a national customs computerised system with full functionality; a data warehouse are under preparation and the CBR has formulated a staff rationalisation plan.

The CBR has selected a project manager/tax administration advisor with extensive international experience. An international audit consultant has been working at CBR since late August 2006 and an international HR since September 2006. A new Member Audit was appointed in May 2006, the WB added.

http://www.brecorder.com/index.php?id=512324&currPageNo=1&query=&search=&term=&supDate=


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## Neo

We'll complete first fase of reforms in fiscal year 2007/08. Looking back to the developments during last five years, we've all the reason to be proud.

Only six years ago we were on the verge of bankcruptcy but we've emerged as one of the fastest growing economies in the world and developped ourself to be the third most lucrative place for international investors.
Thas a direct result of economic reforms initaited by Aziz and Musharraf!

Second fase reforms are being designed to take us to the next level, with projected economic growth between 8-10&#37;!

:flag::flag::flag:


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## Neo

*Ibad declares 2007 year of development *

KARACHI (December 29 2006): Sindh Governor Dr Ishratul Ibad Khan has said 2007 would be the year of development and prosperity for the province, especially for Karachi, as extraordinary development activities would be initiated besides the kicking off many mega projects.

He said not only a number of ongoing projects would be finalised but many more projects would also be initiated. This he stated in a reception held at Bara Dari, Bagh-e-Jinnah on Wednesday night. City Nazim Syed Mustafa Kamal hosted the reception in the honour of governor for completing four years in the office.

Provincial ministers, advisers, MNAs, MPAs and senators, foreign diplomats, City Naib Nazima Nasreen Jalil, town nazims, industrialists, businessmen besides a large number of people from different walks of life attended the reception. The governor said the satisfactory law and order situation in Karachi had brought local and foreign investment in the metropolis.

"I believe that the situation in all sectors of the province is more satisfactory today than in the past four years. When we took charge some four years ago, we had identified our priorities, which resulted today the improvement in every sector", he mentioned.

He said that earlier the situation in all universities was pathetic but now projects worth billions of rupees running in these academic institutions. "One can witness the confidence of government as the president along with prime minister presenting themselves for accountability at the mausoleum of Quaid-i-Azam, which was not proved in the past. Perhaps the faces of previous leadership was not suitable to present them selves for the accountability, he further added.

The governor said that if the situation became chaos in Sindh, its results would affect the entire country. "The political stability in the country prevails due to the better law and order situation in Sindh", he added.

He expressed thanks for Quaid-e-Tehreek Altaf Hussain, for choosing him for the governorship and supported during the last four-year tenure. He also thanked President General Pervez Musharraf and Prime Minister who extended all cooperation towards him.

The governor also appreciated City Nazim Syed Mustafa Kamal and described him as an active, diligent, hard-worker and intelligent who accelerated the pace of development work in the city without any compromise. He recalled that the IT Ministry was created only for political purpose but Mustafa Kamal had motivated the ministry in a right direction.

City Nazim Syed Mustafa Kamal said the credit goes to the Sindh governor "for completing four years in his office in the history of country as no any single government lasted for such period. The present governor has established such a good example of good governance in the province which resulted into the development in the province as well as in the city on a right direction," he said.

http://www.brecorder.com/index.php?id=512449&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Pak-Korea trade reaches $843 million *

KARACHI (December 30 2006): The volume of bilateral trade between Pakistan and Korea has amounted to 843 million dollars in the first 10 months of the current calendar year. This was stated by the Consul General of the Republic of Korea, Sukchul Chang. Talking to journalists, he pointed out that last year the bilateral trade between the two countries had topped one billion dollars.

Chang informed that from January to October this year the trade volume between Korea and Pakistan amounted to 843 million dollars. Of this, exports from Korea to Pakistan was 550 million dollars whereas imports from Pakistan was 293 million dollars

http://brecorder.com/index.php?id=512690&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Sector-wise project information may help attract Chinese investment: ACEP* 

LAHORE (December 30 2006): Potential Chinese investors are keen to make investment in Pakistan but they are unable to make it only because of non-availability of proper information. If some sector-wise projects were made available to them, it would help the Chinese businessmen to work out their investment plans for Pakistan, which has now become a land of opportunities.

Li Hong, chairman, Association of All Chinese Enterprise in Pakistan (ACEP) expressed these views, while speaking at the Lahore Chamber of Commerce and Industry (LCCI), here on Friday. LCCI president Shahid Hassan Sheikh, senior vice president Yaqoob Tahir Izhar, former presidents Mian Anjum Nisar, Mian Shafqat Ali also spoke on the occasion.

Li Hong maintained that there were ample opportunities for Sino-Pak trade and joint ventures in number of sectors and this could only be materialised if chambers of commerce play their role in this regard. He said that textile equipment, appliances manufacture and agriculture sectors were potential areas where businessmen from both the sides can initiate joint ventures for the rapid economic growth of Pakistan and China.

He said that rapid industrialisation and increasing foreign trade and economic co-operation demonstrate the unique appeal of China. He also urged the LCCI leaders to arrange a business delegation to China so that the Pakistani business community could be able to have firsthand knowledge about the available opportunities there.

Speaking on the occasion, the LCCI president Shahid Hassan Sheikh appreciated the recent visit of Chinese President to Pakistan and termed it a historic event. He said that the FTA and other agreements signed during President Hu Jin Tao's visit to Pakistan would bring the business communities of the two countries further closer besides increasing the volume of two-way trade.

http://www.brecorder.com/index.php?id=512776&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pakistan set to dominate world economies in 21st century: Advisor *

ISLAMABAD (December 30 2006): Goldman Sach, one of the leading investment banks of world has predicted that Pakistan's economy would dominate world's economies in 21st century, Advisor to the Prime Minister on Finance, Dr Salman Shah said on Friday.

Talking to PTV, he said, the same bank is used to advise world's top business organisations about the potential countries where they should invest. Goldman Sach, a leading investment Bank of the world has included Pakistan's economy among 11 most fastly growing economies of the world, saying that Pakistan is set to take control of the world's economy in next 40 years.

These economies of several countries especially of Pakistan will surpass the economies of even G-6 countries in 21st century, the investment bank report said. They have invented a new term (BRIC) consisting of Brazil, Russia, India and China five years ago predicting that Pakistan, Turkey and Egypt will progress faster than the BRIC countries.

He said the bank has particularly appreciated population mixture of Pakistan terming it most vibrant. Out of a population of 160 million almost 55 percent consist of under nineteen years of age. Youngsters of Pakistan will play key role in economic dynamics of next 40 years. The young manpower of Pakistan will come into arena when labours of other countries already retired.

They will provide Pakistan demographic dividend, he remarked. These people not only help enhance production but also create demands of consumer goods. Currently country's per capita income is at $850.Where the personal income increases up to $3000 accelerating consumer goods production to meet increasing demands, he remarked.

Pakistan's middle class is emerging fast while its industry will also move from textile to high tech goods production in the next 25 years, he said. Responding to a question he said import of surplus wheat have been allowed to private sector for creating space for next crop adding that due to good rains Pakistan expects a bumper wheat production this year.

He said that government is also checking the prices of the commodity in order to maintain these. Dr Shah said that Petroleum prices in country are still lower than India and other South Asian countries. Core inflation ratio is up to 5.6 percent. The focus of the government is to bring down food inflation ratio from 10 percent to a lower level, he added.

http://www.brecorder.com/index.php?i... rm=&supDate=


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## Neo

* $150 billion investment planned under Vision 2030 in energy sector* 

ISLAMABAD: December 31, 2006: The government has planned an investment of 150 billion dollars under the Vision 2030 to ensure additional power generation of 1,43310 Megawatt by the end of 2030 to meet energy requirements due to fast growing economy.

Under this plan, the government will invest two billion dollars annually while private sector is expected to invest four billion dollars per annum.

Major focus would be on enhancing Hydel power generation as the country has a potential of about 41722 megawatt electricity while it is generating only 6595 MW at present.

The government besides concentrating on enhancing Hydro power generation has also planned to establish power generation units based on coal, furnace oil and gas to meet growing energy requirements.

Under the Vision 2030, the provinces will also work for promoting public private partnership by engaging them building power generation units on major Canals at about eight hundred sites, which will generate over seven hundred MW electricity.

Source: Brecorder.com 31 Dec.


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## Neo

*EAPCL to invest $ 250 million in PVC sector *
Sunday December 31, 2006 

KARACHI: Infrastructure of all the big cities including Karachi should be developed and aliened with the modern technology before starting any mega project, otherwise these project despite providing facilities would become burden on the cities. 
This was stated by Ajaz Ahad, President Institute of architects Pakistan at the occasion of GREEN ARCH 2006 organized by the Engro Asahi Polymers & Chemicals Limited (EAPCL) in collaboration with the Institute of Architects Pakistan at a local hotel. 

Giving a presentation on "Pakistan - Trends in Urban Development" he said that in order to develop the metropolis technical skill, education and health sector should be developed on war footing basis and the mass migration of people from rural areas to the metropolis be stopped. 

He further elaborated that every year 0.35 million people from rural areas move in the metropolis, which put enormous burden on the already limited resources of the city and in order to stop this mass movement of the people government should develop cottage industry and should also established agriculture-based industries so that people of the rural areas would able to get batter opportunity in their own environment so they would not move towards urban population. 

Nasir Qureshi, Section Head Pipes, Market Development Department, EAPCL in his presentation on "PVC pipe advantages and uses in households" said that the PVC industry in Pakistan is in its early stages of development. 

Nasir querashi said that looking at the future prospects, EAPCL and its joint venture partners decided to further invest in Pakistan and the planned investment is to the tune of US $ 250 million, he added. 

He maintained that the investment would done for an immediate expansion in PVC manufacturing facility from existing 100,000 MT per year to 150,000 MT per year within next year. Further, expansion to 200,000 MT per year will be done by 2010. 

The programme was followed by programme "Loose Talk" by the famous duo of Anwer Maqsood and Moin Akhtar, with the thunderous applause of the guests. 

Later, Syed Ashar Hussain, Marketing and Sales Manager, EAPCL, distributed the mementos to the participants.

http://www.paktribune.com/news/index.shtml?164684


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## Neo

*'Big projects to be burden without modern infrastructure' *

KARACHI (January 01 2007): All mega projects being carried out in big cities including Karachi would be burden if infrastructure was not developed and aligned with the modern technology.

This was stated by Ajaz Ahad, President Institute of Architects Pakistan on the occasion of GREEN ARCH 2006 organised by the Engro Asahi Polymers & Chemicals Limited (EAPCL) in collaboration with the Institute of Architects Pakistan held here at a local hotel.

He was also the chief guest at the occasion. While giving presentation on "Pakistan - Trends in Urban Development", he said that in order to develop the metropolis technical skill, education and health sector should be developed on war footing and mass migration of people from rural areas to the metropolis should be stopped.

He further elaborated that every year 0.35 million people from rural areas moved in the metropolis, which put enormous burden on the already limited resources of the city. To stop this trend, the government should develop cottage industry and such industries based on agriculture so that people of the rural areas could get batter opportunity in their own environment, he added.

Nasir Qureshi, Section Head Pipes, Market Development Department, EAPCL while presenting his presentation on "PVC pipe advantages and uses in households" said that the PVC industry in Pakistan is in its early stages of development. Being the pioneer of the PVC industry in the country, the company has undertaken an intensive market development program, which is expected to considerably boost the local demand for PVC.

PVC is a versatile plastic with a wide range of applications including pipes, fittings, doors and window profiles, artificial leather, packaging sheets, garden hose, electrical cable insulation, furniture and geomembrane applications.

EAPCL is helping the downstream industry through technical assistance and market development for the promotion of PVC products. The technical services provides after sales technical support to all the customers and includes guidance in cost effective recipes, providing technical training at the customers premises and trouble shooting.

EAPCL worked on the development of Pakistan plastic industry and with its proactive strategies the market size arose from 40,000 MT per year in 2000 to 85,000 MT per year in 2006.

This provided hundreds of direct and thousands of indirect jobs, saved foreign exchange being spent on import of PVC and also brought critical technological knowledge and know how to Pakistan.

Looking at the future prospects, EAPCL and its joint venture partners decided to further invest in Pakistan. The planned investment is to the tune of $250 million.

While giving details, Qureshi said that investment would be done for an immediate expansion in PVC manufacturing facility from existing 100,000 MT per year to 150,000 MT per year within next year. Further, expansion to 200,000 MT per year will be done by 2010.

An EDC and VCM manufacturing facility is planned to be installed with the capacity of 200,000 MT per year capacity. The plant is scheduled to be completed by 2008.

A cryogenic storage facility is being established for storage of ethylene.

The programme was followed by programme "Loose Talk" by the famous duo of Anwer Maqsood and Moin Akhtar, with the thunderous applause of the guests.

In the end Syed Ashar Hussain, Marketing and Sales Manager, EAPCL, distributed the mementoes to the participants.

http://www.brecorder.com/index.php?id=513380&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Billions of rupees uplift plans get under way in Sialkot *

SIALKOT (January 01 2007): District Nazim Sialkot Muhammad Akmal Cheema has vowed to develop ignored and far-off areas of rural and urban parts of the district.

Talking reporters here, he said that special attention had been given to improve means of communication and provision of better health and education facilities to the masses in every union council of the district.

Cheema disclosed that the district government was spending more than Rs1.22 billion on the construction of 85 different roads in Sialkot district, adding that construction work on these roads was on different stages and efforts were being made for the completion within the stipulated period.

The steps had been taken for improving the means of communication and linking the far-off areas with their respective Tehsil headquarters in the district, he said.

Cheema revealed that Sialkot-Head Marala road was being converted into dual carriageway at a cost of Rs 350 million and development work on the project would be undertaken soon.

The district government had approved as many as 32 different projects costing Rs50 million under Citizen Community Board (CCB) and development work on these projects would be initiated shortly in various parts of the district, disclosed District Nazim Sialkot Muhammad Akmal Cheema.

More than Rs50 million were being spent on the widening and reconstruction of BRB canal bridge near Daska city for streamlining the traffic on Sialkot-Gujranwala road while Rs20 million would be spent on the widening and improvement of Daska bypass road for reducing the traffic problems.

In addition to this Sialkot-Gujranwala road would be converted into dual carriageway at the estimated cost of Rs1.20 billion, he added.

Special attention, he said, had been accorded on the promotion of education and district government had allocated Rs1.84 billion for the completion of different projects.

Cheema said in order to provide better health cover to the masses at their doorstep Rs260 million were being spent of improvement of rural health centres and basic health units in the district.

He pledged the district government would play an instrumental role for the betterment of the common man and ensure maximum relief for the general public of the district. Cheema said that all available resources were being mobilised for converting Sialkot district into a model district of the Punjab.

http://www.brecorder.com/index.php?id=513390&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*2007 will be year of continuity of policies: PM *

KARACHI: January 03, 2007: Prime Minister Shaukat Aziz said here on Wednesday that 2007 will be the year of continuity and consistency of the ongoing policies and reforms of the present government which would remain under implementation besides carrying out a huge agenda of legislation in the Parliament.

He said the economy will be kept on the track and objectives of foreign policy will be augmented with improved and better relations with all the neighbours and other countries of the world.

Replying to questions at a news conference at the Governor House in which he analysed the achievements of the present government during the year 2006 and its plans for 2007, the prime minister said that efforts will continue for solution of Kashmir issue.

Pointing out that the government will bring further improvement in the standard of living of people, Aziz said that 2007 will be the year of smooth political process, peace and harmony, augmentation of the democratic process and promotion of inter-faith harmony.

He pointed out that year 2007 will witness the completion of parliamentary calendar followed by start of election process during which the people will decide whether they would like to see the continuation of policies with further improvement in the system or some other system.

The PM dwelt at length at the government plans in the fields of education, health and infrastructure with great focus on skill training, a programme which has been launched on a vast scale.

He particularly referred to Rs 3.3 billion worth addition of most modern and state-of-the-art medical facilities at the Jinnah Postgraduate Medical Center, a project which has been approved by the Federal Government.

"Year 2007 will be an exciting and important year for Pakistan during which the outcome of the policy continuation will be carried forward," he declared.

Replying a question, the PM said that a number of steps have been taken to institutionalise the reforms and all targets in this regard have been defined in the fiscal responsibility which can also be seen on the web.

However, if any government wished to deviate from the laws, it will have to obtain approval from the Assembly as everything is covered by law, he explained.

He cited examples of organisations like NEPRA, PTA, OGRA etc., and said all these have come into existence through laws.

Aziz told a questioner that as a result of the government's economic and fiscal policies and measures taken thereunder the unemployment rate is coming down. He cited examples of sectors like telecom and electronic media and pointed out that lacs of people have got jobs in these sectors.

In the rural areas where country's two-third population is living, agriculture has been promoted and prices of DAP reduced by Rs 250 per bag, he said, adding that prosperity of farmers would mean strengthening of economy, which is the focus of present government's policy.

To question about prices, the PM pointed out that it is an issue of supply and demand. He said during the season, the prices of perishable items come down and go up in off-season period.

He said the government will pay attention and improve the retail and wholesale price system with establishment of more 'mundis' (markets).

Aziz said utility stores have played an important role in keeping the price structure under control. The prices offered at utility stores are not only appropriate but quality is also good. He said now utility stores are also being opened under franchise system. 

The prime minister said that a democratic system has been firmly established in Pakistan and today every party had the liberty of giving their viewpoint while the press is free and constructive criticism has brought a positive change in the society.

He told a questioner that the Federal and provincial governments are working on a number of housing schemes for low income people. The Federal government is also bringing a scheme for low grade government employees.

To a question about composite examination, the PM said that a decision in this regard will be taken by the Sindh Cabinet.

Replying a question about Balochistan, he said it is a very important province where fast development is taking place and demands and needs of this part of Pakistan are being fulfilled.

The situation in Balochistan is gradually improving, he added.

Source: Brecorder.com


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## Neo

*$277.9 million foreign investment in Pakistani bourses *

ISLAMABAD: January 03, 2007: Foreign investments in the Pakistani stock exchanges during the first six months of the current fiscal year mounted to $277.9 million.

The US with $123.3 million investments in the Pakistan bourses topped the list among the foreign investors during the fist six months of the current fiscal year, while Singapore with $107.3 million investment was second major investor, Geo TV quoting State Bank figures reported.

Meanwhile, Switzerland withdrew $25.1 million from the stock exchanges, while the France with $2.219 million withdrawal remained second among the countries withdrawing investments.

Foreign investors on the last business day of the year 2006 withdrew $13.8 million from the stock exchanges.

Source: Brecorder.com


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## Neo

*Pakistan's government plans to build fourth port *

Dubai: The Pakistan government said it plans to build the country's fourth port to handle increased cargo volumes.

"We are looking to build our fourth port. In a few months we will make an announcement," Shipping Minister Babar Khan Ghauri told Gulf News in an interview recently.

"We will start construction in 2008. No site has yet been decided," he said.

According to Karachi Port Trust (KPT) chairman Ahmad Hayat, Pakistan's seaborne trade from July 2005 to June 2006 stood at 53 million tonnes, growing by 12 per cent in a year.

Container volume grew by 20 per cent to 1.75 million TEUs (twenty-foot equivalent units) during the same period. 

Pakistan has two ports at Karachi and one at Gwadar in the province of Balochistan. The Port of Gwadar will become operational in March next year as the first phase work nears completion.

It has received $300 million investment from China and the Pakistan government has invested $50 million.

A new port with a handling capacity of some 4.5 million TEUs per year and a quay of 4.5 kilometres is also being developed in three phases at Karachi.

Ghauri said nine major companies, including DP World and a consortium that includes Sharjah's Gulftainer, have been shortlisted to manage Pakistan Deepwater Container Port.

Ghauri could not provide estimates of the financial investment Pakistan needs to develop its port infrastructure. "In the port sector, the sky is the limit," he said.

Meanwhile, Karachi Port Trust (KPT) chairman Ahmad Haya told Gulf News $2.5 billion worth of projects were underway in Karachi. These include the $1.2-billion deepwater port at Keamari near Karachi, set to open in 2009.

The project will be funded 60 per cent by KPT and the rest by three port operators that will manage the three container terminals.

Other projects include development of a cargo village and an industrial zone in Karachi and modernisation of several bulk cargo berths.

DP World, the world's third biggest port management firm, is investing $211 million in a new container terminal at Port Qasim. It already manages one terminal, acquired when it bought P&O earlier this year.
Courtesy GulfNews

http://www.pakistanlink.com/Headlines/Jan07/03/14.htm


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## Neo

*5.2 per cent annual growth planned in Pakistan by 2010*

Wednesday, January 03, 2007

Islamabad,-- SPA -- Efforts are underway to enhance Pakistan's agricultural growth rate up to 5.2 percent by the year 2010, according to an official statement.

This is part of a plan on which the government is working for rapid and sustainable agricultural yield to ensure food security.

The government will invest over 50 billion Pakistani rupees during the next three years on various research and development projects in agriculture and live-stock sectors.

The statement said that under the medium-term development program, the government has decided to expand agricultural credit loan at the rate of over 24 percent increase every year.

It would provide over Rs 1600 billion as agricultural credit to the growers through banks by 2010. 

http://www.dailystar.com.lb/article....cle_id=78 146


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## Neo

*Dollar could cost Rs 120 if reforms not done, 2006 achievements highlighted: Prime Minister *

KARACHI (January 04 2007): Prime Minister Shaukat Aziz has said that had there been no economic reforms, the dollar would have cost Rs120 in the open market. He was addressing a press conference at the Governor House here on Wednesday to highlight the achievements of his government during the outgoing year 2006 and to make projections for the year 2007.

He said: "The economic reforms have brought about improvements in the national economy: the rupee remained strong, local and foreign direct investment improved, government borrowings remained under control, and growth rate, despite difficult times, remained at 6.6 percent. It is likely to achieve 7 percent GDP during 2007. The per capita income has already reached $850."

He said there was some pressure in inflation, but the balance of payments and current account position were under control. "Things are now heading in the right directions," he added.

He said that reforms in the agriculture sector proved helpful and reduction in the prices of DAP/phosphate by Rs250 per bag was welcomed by the farming fraternity.

The Prime Minister did not quote from statistics, and avoided giving figures, confining himself to generalised statement. ".... In economy, during 2006, continuity of economic policy gave results and there was an overall improvement," he said.

He said that around $6 billion soft loans were received for the rehabilitation of earthquake-affected people. "New facilities have come up. New schools, hospitals and residential blocks are in place. The work is progressing, and it would be completed soon," he added.

Referring to people under distress, he said that the government was trying to create an environment where people could stand on their own feet. "They would be helped in establishing their own economic outlets so that the uprooted families are once again financially self-supporting. This activity would create jobs for others in the same area as well," he added.

He said that during 2006 Pakistan maintained its prudent foreign policy. Efforts to raise Pakistan's image as a progressing and peace loving country proved effective. The President and the Prime Minister visited a number of states. Similarly, a large number of the heads of state and other influential persons visited Pakistan. There were exchanges of delegations between Pakistan and other countries. During these exercises, Pakistan's image was projected and its interests were pursued, he added.

He said that Pakistan's foreign policy made it possible for international organisations to look towards it in times of need. "When it came to setting up a committee to look into the UN reforms proposals Pakistan's prime minister was taken on the committee along with Norway and Mozambique. When important issues are there, Pakistan is invited," he added.

He said that during the outgoing year Pakistan participated in all international conferences and, at home, hosted a number of conferences including that on World Islamic Forum. He said that this conference identified areas of weaknesses as well as co-operation among the Muslim countries. "Muslim Ummah needs solidarity and the OIC reorganisation," Aziz added.

He said Pakistan's relations with China remained on the right path. Pakistan would have co-operation in a number of economic areas with China. "China is our strategic partner in all sectors. China and Pakistan are source of strength for each other."

Regarding Afghanistan, he said that Pakistan wants a strong and stable Afghanistan. "We will take our relations forward," he added.

The Prime Minister said that with Iran Pakistan was moving ahead and soon there would be progress in respect of gas pipeline project. "A high powered Pakistani delegation will visit Iran this month to sort out hitches in the project."

He said that Pakistan was against nuclear proliferation. "We favour peaceful, civilian use of nuclear technology, and support its acquisition."

He said that India and Pakistan continued dialogues during 2006 and there was improvement in bilateral relations.

"However, Kashmir is a problem, which needs solution to make South Asia a peaceful region. Composite dialogues with India are in progress in respect of Kashmir, and I am hopeful of encouraging results."

Shaukat said that political process and the process of democratisation continued unabated at home. There were Senate elections, election in the local bodies and by-elections in the national and provincial assemblies. The provincial assemblies and the national assembly completed four years and had entered the fifth year with confidence to complete their tenure. "Assemblies would complete their term and fresh elections would be held in time. Pakistan Muslim League would contest elections along with its coalition partners."

He said that dialogues were part of political process and any contact with other political parties, such as PPP and others, should not create ripples in the political circles.

When asked about his constituency from where he would file nomination(s), he said, "Wait till the time comes."

He said that Pakistan would continue making its armed forces stronger than they were ever before. "F-16s would be procured; planes and frigates would come from China, and all measures would be taken to maintain maximum deterrent levels. The purpose is internal, as well external, security of the country and to provide an atmosphere to people to make economic progress."

He said that Rs 3.3 billion would be spent on Jinnah Postgraduate Medical Centre to add a state-of-the-art facility to this national institution.

He said that during the year under review all mega projects that were initiated were either completed or were reaching completion. "To name a few, Gwadar Port, Coastal Highway and Basha Dam have changed the lives of the people in their areas."

He said that 2007 would not be without challenges. "We will focus on smooth political process, continuity of economic policies and promotion of interfaith harmony."

He said that efforts would be made to create employment opportunity, augment income generation activity, minimise poverty and improve the social sector.

He said that labour survey had been completed and it would be released at a press conference in Islamabad. "According to the findings of this survey, poverty has reduced, and unemployment rate has gone down."

In his opening remarks, the Prime Minister said that he was pleased to see electronic media progressing and providing 'instant news' to its viewers.

He said that it was owing to government policy that print and electronic media had expanded and had provided jobs to many young people. But, when his attention was drawn to the fact that many electronic channels were not able to pay salaries to their employees, that many have not issued appointment letters to their staff members, and many employers were not paying the agreed amount of salary to their employees, he expressed astonishment.

He said, "I would look into the matter. I would also look into the delay in implementing the wage board award." In reply to a question about missing people and agitational protest by their families in Islamabad and elsewhere, he said that the families should file FIR to facilitate an inquiry into 'these reports'.

http://www.brecorder.com/index.php?id=513519&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*OGDCL LSE offering to earn $811 million *


ISLAMABAD (updated on: January 05, 2007, 18:11 PST): Pakistan will realise $811 million through the successful international offering of OGDCL 10 percent shares on the London Stock Exchange through Global Depository Receipts (GDRs) and proposed retail offering.

IPO of Habib Bank Limited (HBL) and GDRs of United Bank Limited (UBL), National Bank of Pakistan (NBP) and Kot Addu Power Company (KAPCO) and later HBL will also be offered with proper sequencing during the next few months and efforts will be made to complete the same by the end of the current fiscal year.

Federal Minister for Privatisation & Investment Zahid Hamid stated this while chairing a meeting of the Board of Privatisation Commission here on Friday.

The PC Board constituted a `Future Portfolio Committee' headed by the minister/chairman PC with two other members of the PC Board to formulate recommendations for processing new transactions from the approved list of the Council of Common Interests (CCI).

The Board reviewed the NITL, PSO and Jamshoro Power Company transactions, which are at an advanced stage.

It was also informed of the progress regarding issue of EOIs for Pakistan Machine Tool Factory, Sindh Engineering Limited, SME Bank, PTDC Motels and Hotels and for appointment of Financial Advisor for PMDC's coal and salt mines.

The PC Board was also informed that 25 percent of the approved bid price of Lyallpur Chemical & Fertilisers Limited has been received within the specified time.

Lyallpur Chemical fetched Rs 280.2 million highest bid and the buyer has paid 25 percent of the total bid amount i. e Rs 70 million while Rs 40 million of the earnest money is also with PC. The buyer will deposit the remaining amount before February 20, 2007.

The Board also discussed the highest offer of Rs 850 million received for the sale of the land of Services International Hotel and recommended to the CCOP that after thorough review of all aspects of the transaction, fresh EOIs be invited from local and foreign investors.

http://brecorder.com/index.php?currMIndex=02&currPageNo=1


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## Owais

Pak-Iran joint investment company established 
RECORDER REPORT 
ISLAMABAD (January 05 2007): Pakistan and Iran on Thursday formed Pak-Iran Joint Investment Company. The representatives of the two sides signed the agreement. A 3-member delegation comprising Mehdireza Darvishzadeh, chairman and managing director; Syed Mansoor Mir Abedeni, deputy chairman; Dr Morteza Adel Gholamzadeh, consultant law is currently visiting Pakistan to formulate the memorandum of articles of the company.

The signing ceremony was held here in the presence of minister of state for finance Omar Ayub Khan. Pak-Iran Joint Investment Company is being established in pursuance of the agreement signed between the two governments in Tehran on February 23, in 2005.

The company shall carry out the business of investing in and financing enterprises and Projects, particularly export oriented enterprises in Pakistan and Iran on a commercial basis. The registered office of the company shall be situated in Karachi with a branch in Tehran, Iran.

The Minister of State for Finance and Revenue Omar Ayub Khan said that the registration of the Pak-Iran Joint Investment Company was a step forward to strengthen the brotherly relations between the two countries. This will give a boost to the economic ties by promoting investment and business in various fields like infrastructure, petroleum, banking, finance, commerce and information technology.

The head of the visiting delegation was of the view that the joint-venture company will enhance bilateral investment between Iran and Pakistan besides giving new height to trade between them. He said Iran and Pakistan should take full advantage of each other's potential in grabbing more share in trade in the global market.

http://brecorder.com/index.php?id=513873&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Per capita income has risen to $850: Salman *

ISLAMABAD (January 06 2007): The Advisor to the Prime Minister on Finance, Dr Salman Shah, has said that Pakistan's per capita income has risen from $425 to $850 over the last six years. In an interview here Friday, he said country's economy is seen a big expansion particularly in sale of consumer goods.

He said, similarly, rate of poverty has declined from thirty four to twenty five percent. Dr Salman Shah said, Pakistan has an all time high foreign investment of four billion dollars in the last fiscal year. He said international banks, the most conservative investors, are making long term investments in the country. He said that with the growth rate of seven percent, Pakistan is the fastest growing economy in the region.

The advisor said national saving schemes are market determined and their interest rates will remain connected to inflation and other market instruments like Pakistan Investment Board.

http://www.brecorder.com/index.php?id=514283&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*FDI to pass US $ 5 billion this year: privatization minister *

ISLAMABAD: Federal Minister for Privatization & Investment Zahid Hamid said that the foreign direct investment in the country would cross record US $ 5 billion in current fiscal year. 

Talking with visiting high level 4-member Iranian delegation the federal minister said the Pak-Iran Investment Company, a Joint Venture between the two governments will open a new era of further deepening economic bonds between the two countries. 

The Minister assured Pakistan's full support to make the Investment Company an effective tool for investors of both the countries. It would generate economic activities for both by identifying new areas for investment and would benefit people of both the countries, he added. 

Zahid Hamid said Pakistan has comprehensive and broad based Privatization Program, and the country has so far privatized 162 public sector units raising US $ 7 billion since 1991 while 87 &#37; of the privatization was completed during the recent 7 years realizing around US $ 6 billion.


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## Neo

Friday, January 05, 2007 

*Gwadar deep seaport to generate two million jobs*

ISLAMABAD: The Gwadar Deep Seaport, which will become operational in March, is likely to generate around two million new jobs in next eight to ten years.

This was stated by Secretary Planning & Development Balochistan Government Sohail Qadeer while speaking to the state television on Thursday.

He further said that the future business hub deep seaport would provide cheapest trade route to ships. The work on the development projects at cost of over Rs 25 billion has been expedited in Gwadar to transform it into a modern and developed city equipped with all amenities.

The construction of 350-bed hospital costing Rs 550 million, 250-acre sports complex, central park and small recreational parks will be completed in next five years, he said.

The water purification plant to provide 35 million gallon clean water to people will start functioning soon.

The 950km rail track will be built to link Gwadar port with rest of the country for which a survey is being done.

He said 950km motorway would also be constructed to facilitate port users. Of this 190km motorway will be completed by end current year, and remaining portion ready in stipulated period. 

http://www.dailytimes.com.pk/default...5-1-2007_pg5_2


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## Neo

Friday, January 05, 2007 

*Landmark achievement: CBR revenue collection exceeded Rs 100b in Dec*

ISLAMABAD: For the first time in history, the revenue collection by CBR has exceeded Rs 100 billion during the month of December 2006. The overall (provisional) collection for the first half of current fiscal year has reached Rs. 409.2 billion, touching a new growth height of 26.3%.

A CBR statement issued here on Thursday stated that the direct tax receipts for the month of December have reached 75.7 billion, recording a massive increase of 117.2%. The major contributory factor has been the improved corporate profitability, especially of the banking, oil and gas, and telecom sectors. 

One of the most important developments during July-December 2006 compared to the corresponding period of last year has been the increasing reliance on domestic taxes rather than import related taxes, which are regressive and vulnerable to various fluctuations.

The share of direct taxes in total collection has increased from historical level of 30% to 42.2%. Two of the domestic taxes, namely the federal excise duties and domestic sales tax have also recorded a double-digit growth of 20.2% and 17.4%, respectively.

On the other hand, on account of declining imports, especially dutiable imports, and continued tariff rationalization and reduction, the collection of customs duties has been lower than last year by about Rs. 700 million, which is an expected outcome.

Anticipating a continuity of this trend, CBR expects that the overall target of Rs. 835 billion would be achieved, notwithstanding the revenue loss due to shrinking imports.

http://www.dailytimes.com.pk/default.asp?page=2007\01\05\story_5-1-2007_pg5_7


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## Owais

*July-December exports may touch $8.43 billion *

ISLAMABAD (January 07 2007): Pakistan's exports are likely to touch $8.43 billion for the first six months (July-December) of current fiscal year against $8.073 billion in the corresponding period of last year, official sources told Business Recorder.

"Trade figures of first six months of current fiscal year, compiled by CBR, show that exports for December have reached $1.413 billion, which are expected to touch $1.5 billion mark after final figures are released by Federal Bureau of Statistics (FBS)," sources said.

There are contradictions in trade figures of November released by the FBS and submitted to the ECC in its meeting held on December 6, 2006. FBS says that exports stood at $6.93 billion in July-November, but statistics submitted to ECC in its meeting on December 6 showed exports of $6.876 billion in July-November.

Sources said that Commerce Ministry may not be able to achieve the exports target of $18.6 billion set for the current fiscal year but exports figures would at least save the jobs of some senior officials.

During December 2005, goods worth $1.470 billion were exported, recording an increase of 30.10 percent against exports of $1.129 billion in the same month of 2004-05, but the current trend is not encouraging. The huge import pressure and low pace of exports have compelled the government to project upward the trade deficit $12.2 billion.

According to the figures, exports during November 2006 increased to $1.38 billion against $1.28 billion in October 2006, showing a growth of 7.64 percent, while imports in the same period were up by 30.11 percent, to $2.77 billion, compared to $2.13 billion in October 2006.

Commerce Ministry is actively engaged in finalising sectoral exports targets but it also fears that the slow growth in exports could make it difficult to achieve the target of $18.6 billion, said an official. During 2005-06, the government had missed its exports target of $17 billion by a margin of $531 million.

Sources said that Prime Minister Shaukat Aziz had also criticised Commerce Ministry for not taking steps to complete the schemes announced in trade policies of last three years.


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## Neo

*Bright 2007 ahead for Pakistan's business, industry*  
By M. Aftab (Analysis)

7 January 2007 

"COMPETITION, Productivity and moving into new sectors" is the battle cry for Pakistani business and industry in 2007. Strong action in these areas will raise profitability. The choice is to prosper or perish.

These are serious thoughts in which Pakistani industry, business and government leaders are engrossed as 2007 ushers-in. 

But, the good news for foreign exporters is that Pakistan will continue to import a great deal of capital goods, machinery, hi-tech plants and equipment, and a wide range of industrial inputs. Import of finished products ranging from big ticket autos, medium and small cars, expensive and moderately priced cellular phones, and home appliances is likely to continue unabated. 

Import growth will continue, in spite of the widening trade deficit. The top financial mangers of the government and the central bank, though cautious of this gap, are not overly worried over external finances. Export growth will be good enough for fiscal 2007 and beyond. Larger home remittances from overseas Pakistanis and increased FDI inflows, particularly from the Gulf, US and EU, are projected to keep the country fairly comfortable to meet its external liabilities and to foot the foreign trade bill.

In case prices of imported oil decline or stabilise, it will be an additional help to external finances. 

Prime Minister Shaukat Aziz has assured this week that economic policies will be further strengthened and fine-tuned to support the business, industry and exports. He has assured continuity of the existing policies, which, in fact, were initiated in 1991. The last nine governments, since then, have adhered to them in order to push the economy forward and to expand foreign trade. Aziz said: "There is a continuity and consistency in economic policies, reforms and good governance. The government efforts for improving the living standards of people have achieved fruitful results, ensuring reduction in unemployment and raise in salaries and wages of the fixed income groups." Such assurances are important to discount political uncertainty because Pakistan will be conducting its national parliamentary elections in 2007.

Two years into the full-blooded operation of the WTO regime, that sent several shocks into the industry, saw many of the business leaders unhappy. Most of them had, in the past, been nourished on sizeable incentives, tax breaks, and assured global markets under quotas and special arrangements. Textiles, the countryÃ¢â¬â¢s biggest industry, exporter, forex earner, and employer is the case in point.

It started loosing markets to those it was exporting under Multi Fibre Agreement (MFA). Textile exports in six months to end December, are down 9 per cent. 

In other areas, business analysts have noticed private sector entrepreneurs now busy drawing up plans to move into new fields Ã¢â¬â high dividend, high-yield areas Ã¢â¬â which hold promise on the basis of the growing domestic market and better export prospects. Some of these sectors include competitively-priced home appliances, retail chain stores, telecom, food processing and agro-based products. 

High-growth auto sector is expected to do still more business, but, imported cars will take away some of its lustre, though good profits are still forecast. In fact, more new plants for trucks, buses, other commercial vehicles and motorbikes are in the offing. Some of these companies are eyeing the Central Asian and South Asian markets as a future potential. But, they have to strive hard to keep their cost of production down and offer attractive prices to buyers at home and abroad. In a wide range of consumer goods, domestic industry is also facing sever competition from low-priced, though low-quality, Chinese products. 

The real estate sector is still very upbeat and a large number of big commercial, office space and residential projects are being floated by foreign firms, including the UAE and Malaysia-based companies, in major cities like Karachi, Lahore, Rawalpindi, Islamabad and Peshawar.

"Pakistani businessmen are going through a transformation. They now know,they will have to gear up to compete. Otherwise, the onslaught of Indian products, after those from China, will wipe them out," warns Mohammad Saeed, a veteran industrialist and former chairman of Pakistan International Airlines and president of Federation of Pakistan Chambers of Commerce and Industry. 

The entrepreneurs increasingly seem to realise the significance of growing challenges, the opportunities these offer, the need to improve quality of export goods, expand variety, ensure price competitiveness and to be more innovative. 

The fact that business and industry can gear themselves up in the evolving global market situation is also endorsed by the fact that FDI inflows into Pakistan are improving. The government and the central bank expect a $5 billion FDI during 2007, up from $3.6 billion in 2006. 

Except for an inflationary push, Dr Shaamshad Akhtar, governor State Bank of Pakistan (SBP), is upbeat over the economic prospects for 2007. SBP, she says, is providing more subsidised funds for exports under its Export Finance Facility (EFF). It provided Rs140.83 billion to exporters under the facility during July 1-November 25, 2006 compared to Rs123.06 billion during the like period of 2005. 

"Debt-to-GDP ratio and high economic growth will stabilise the external current account," which rose to $5 billion in 2006, up from $1.5 billion in 2005. But, she estimates inflation rate will be higher, between 6.8 to 7.5 per cent in fiscal 2007 compared to the government projection of 6.5 per cent. She attributes it to higher than expected food inflation which impacts consumers, especially those in the lower-income groups. High prices of oil have been bugging the economy too, and raising cost of production. 

As domestic and Pakistan-based foreign banks enjoy a high rate of profitability, Islamic banking is emerging fast. Dr Akhtar expects it will "emerge as a parallel to conventional banking and capture more than 10 per cent of the market share over the next three years." Its market share was merely 0.5 per cent in 2003 that rose to 3 per cent in 2006. It now has Rs100 billion plus assets. Both conventional and Islamic banks saw their total deposits rise to Rs 2,920 billion at end-2006 from Rs 2,520 billion at end-2005. Close to 75 per cent of this amount was disbursed as advances in 2006.

As SBP projects, on the back of a 6.8 to 7.2 per cent GDP growth in 2007, the private sector credit take off will also rise 18 to 19 per cent. It estimates 2007 exports to rise to $ 17.2 billion from $16.5 billion and imports to reach $30.7 billion from $28.5 billion. SBP projects home remittances from overseas Pakistanis working in the Gulf, Saudi Arabia, Western Europe and USA to rise to $4.8Ã¢â¬â5.4 billion from the present $4.6 billion. These positive factors will help manage the external finance as businesses at home and foreign trade are expected to keep a faster pace.

http://www.khaleejtimes.com/Display...business_January125.xml&section=business&col=


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## Owais

*Pharmaceutical industry facing closure *

KARACHI (January 08 2007): About 50 percent of local pharmaceutical industry, having $1.6 billion market, is feared to shut down in 2007 following cheaper Chinese and Indian drugs invasion.

Pharmaceutical market sources told Business Recorder that the government's unfriendly policies towards local manufacturers had encouraged the neighbouring countries, where cost of production is much less than Pakistan, making their finished drugs cheaper than Pakistan's products.

Unlike most other countries, drug prices are fully controlled by the government here, which is a major setback for the local manufacturers. The regulators indulge in cutting down prices without knowing the cost of production, which has compelled the manufacturers to stop production, sources said.

Once the import of finished drugs allowed in the country, Indian and Chinese companies would flood the market and it would kill the domestic industry, sources feared. In this regard the government had started to liberalise its import policy and the current year would be very crucial for the local industry, they said.

Pakistan's pharmaceutical industry registered 17 percent growth in 2006, and total market size expanded to $1.6 billion, said Dr Qaiser Waheed, Chairman, Pakistan Pharmaceutical Manufacturers' Association (PPMA).

He said that the phenomenal growth was due to the impact of increase in population in the country and post-effect of earthquake 2005. "But, it does not reflect any government support for the industry," he added.

He said that the country was heavily dependent on imported medicines in the past but now local industry is meeting 90 percent of the domestic demand.

He said that the association was not against drugs price reduction but it sought that price fixation should be viable for the manufacturers.

Dr Waheed said that for the last two years the government's inconsistent policies were killing the industry and several manufacturers had stopped production of life-saving drugs because cost of production had gone beyond limits.

"No other industry in the country has been put under such stringent price control and no other industry has been forced to reduce prices. Given the significant level of foreign investment and international quality of locally produced products, it is only fair that the government should seriously consider the negative impacts of the current economic environment on the industry when making decisions regarding price increases," he said.

The PPMA chief said that the industry imports 90 percent raw material from abroad and several types of duties had increased the cost of doing business, while increase in utilities and labour charges were also harming the industry.

He said that 10 percent raw material was provided from the local market, which is substandard and supported by the government, in terms of different types of tax relaxation.

He said that about 400 units, including local and multinational, were operational in the country and some of them are recognised internationally. In these conditions the industry could not survive, he said, and suggested that the Ministry of Health should take immediate steps to save the local industry.


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## Neo

Owais please include links when posting a newsarticle.
Thanks!

Neo


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## Neo

Monday, January 08, 2007 

*Govt to spend $4b on power distribution*

By Fida Hussain

ISLAMABAD: The government will spend about $4 billion on power distribution over the next 10 years under the Transmission Sector Roadmap 2007Ã¢â¬â2017, which has been prepared by the National Transmission and Dispatch Company (NTDC), a senior government official told Daily Times on Sunday.

The official said the programme focused on power transmission and would address the grievances of industrial, commercial and domestic consumers. He also said the plan would help minimise power breakdowns.

The NTDC programme has been presented to several financial institutions and the Asian Development Bank (ADB) has committed spending $800 million or 20 percent of the total investment. The official said NTDC was formed in 1998 as a part of Water and Power Development AuthorityÃ¢â¬â¢s (WAPDA) unbundling to operate, manage, and develop the national power transmission network. He said the growth in demand was about 12 percent in 2006 and that power generation was expected to grow from about 19,540 megawatts (MW) in 2005 to 162,590MW by 2030. He said the bulk of the additional supply would be met through an expansion of domestic and imported thermal and hydropower generation.

The government is currently pursuing a combination of public and private options to make sure new generation can be added as required. ADB is actively working with the government and private power generation developers to finance publicly- and privately-owned generation stations to meet the current and future demand for electricity.

In order to facilitate efficient and effective evacuation of power from existing power stations, NTDCÃ¢â¬â¢s roadmap addresses the current shortcomings of the power transmission system by recommending rehabilitation, augmentation and expansion projects and power evacuation from the planned power stations in the least-cost power generation plan.

NTDCÃ¢â¬â¢s immediate concern is the capacity of the transmission network to evacuate and transmit generated power to load centres. The 13,051MW peak demand recorded in 2006 was constrained by the transmission system and there was an estimated 800MW of unsatisfied demand. As a result, some transmission sections operated at or above rating limits, thus increasing the risk of transmission failure and costly service restoration. The inability to transmit all available generated power has the same effect as a generation shortage and this results in load shedding to prevent system failure and collapse.

The 500-kilovolt (kV) system provides the main power flow route between the north and south of the country. The bulk of the power is generated in the north (hydropower) and the south (thermal power) with the major load centres being in the middle of the country around Lahore, Faisalabad and Islamabad. As a result, there are always significant power flows from the north or south to the centre, depending on the season and the availability of hydropower.

At the end of 2006, 77 percent of the 500 kV and 69 percent of the 220 kV power transformers were overloaded. This means that security of supply standards cannot be met and NTDC cannot meet its transmission licence obligations.

http://www.dailytimes.com.pk/default.asp?page=2007\01\08\story_8-1-2007_pg7_1


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## Neo

Monday, January 08, 2007 

*$3.5 billion farm investment plan in Punjab from March*

* Programme is spread over 10 years 
* Will generate jobs, increase incomes, help attain a 7% annual growth rate target in province 

By Sajid Chaudhry

A 10-year scheme called the Punjab Irrigated Agriculture Investment Programme (PIAIP) costing $3.5 billion will be launched to generate employment, increase incomes and help attain a target of 6 percent to 7 percent annual growth rate in the province, Daily Times has found.

The programme, which has been presented to donor organisations, will start in March 2007 and be completed by September 2017.

According to the investment plan, the Asian Development Bank (ADB) will give $900 million, World Bank (WB) $600 million, Japan Bank for International Cooperation (JBIC) $400 million, the Punjab and federal governments$200 million, bilateral donors $100 million and $1.3 billion in financing will be negotiated with multilateral or bilateral donors yet to be identified.

Punjab provides about 58 percent of PakistanÃ¢â¬â¢s GDP and its agriculture gross domestic product represents 66 percent of that of Pakistan. PIAIP will not only help improve agriculture in the province, but also speed up efforts to accelerate the growth rate.

Irrigated agriculture in the Punjab accounts for about 28 percent of the provinceÃ¢â¬â¢s GDP output, employs about 54 percent of the labour force, produces about 90 percent of PunjabÃ¢â¬â¢s agriculture output and uses more than 95 percent of water resources.

Irrigated agriculture is crucial to generate higher incomes and attain PunjabÃ¢â¬â¢s target of 6 to 7 percent growth rate. The Punjab Irrigation and Power Department (PIPD) is responsible for operations and maintenance and managing surface irrigation that covers about 8.4 million hectares. PIPDÃ¢â¬â¢s infrastructure has an estimated replacement value of $20 billion and includes 13 barrages, 6,429 kilometres of main canals, 31,214 kilometres of distributaries and minor canals, more than 58,000 field outlets, 3,228 kilometres of flood embankments and 33 small dams.

The infrastructure has seriously deteriorated because of time (much of it is nearly 100 years old), no asset management planning, chronic under funding and ineffective implementation of operations and maintenance. The estimated cost of deferred maintenance is about $2 billion while the estimated cost to upgrade the system is $3.5 billion.

The poor condition of some large infrastructure poses serious risks, yet the deteriorated system more generally means unreliable irrigation service delivery, particularly to the tail ends of canals. Farmers have adapted to unreliable and inadequate canal water by developing private tube wells.

PIAIP will support physical and non-physical investments in water resource and irrigated agriculture. It will finance (i) comprehensive rehabilitation and upgrading of all water resources and irrigation infrastructure; (ii) improved groundwater, conjunctive-use and surface water management strategies and practices; (iii) on farm water management, improved irrigation technologies, and agricultural support services; and (iv) sector reforms, improved management methods, institutional strengthening and restructuring for water resource management, and irrigated agriculture.

PIAIP is expected to support investments in (i) Lower Bari Doab Canal and Balloki Barrage, (ii) Pakpattan Canal and Sulemanki Barrage, (iii) Thal Canal distribution system, (iv) Sidhnai Canal distribution system, and (v) Trimmu and Punjnad barrages. This will impact about 25 percent to 30 percent of PunjabÃ¢â¬â¢s irrigated area.

http://www.dailytimes.com.pk/default.asp?page=2007\01\08\story_8-1-2007_pg13_3


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## Neo

*Pakistan gains $500 million textile orders due to Bangladesh turmoil *

KARACHI (January 09 2007): The political instability in Bangladesh has compelled foreign buyers to place their orders in Pakistan. As a result, some $500 million worth of orders have so far been diverted to Pakistan, trade sources told Business Recorder on Monday.

"The general elections process is underway in Bangladesh, which has deteriorated the law and order situation there. As a result, international buyers have turned toward Pakistan to get their orders on time," they said.

Generally, Christmas is rated as peak shopping season in the West, particularly in US and Europe. Therefore, international buyers intend to get their import orders at the earliest to have moved toward Pakistan in the wake of rising law and order situation in the Bangladesh, they observed.

Textile exporters here have captured some $500 million export orders during October-December period of current fiscal year. This increased Pakistan's textile exports by 26 percent during November, against 6 percent to 15 percent decline during July-October 2006, they added.

"Our textile exports, as expected, will show increase during December and January. However, we are expecting fall again from February 2007 onwards, when the existing export orders grabbed from Bangladesh would be completed," sources said. A leading textile exporter said that the orders, which have been diverted to Pakistan due to the election process in Bangladesh, would help salvage the knitwear industry, which was on the verge of collapse.

Home textile and knitwear have received fresh export orders during the last three months, he said. "If the law and order situation did not improve in Bangladesh after elections in January, we may expect more international orders from European and US markets" he added.

He said that it was mere coincidence that the government linked the increasing textile exports in November with its policies, while it was simply a result of the political chaos in Bangladesh. Bangladesh textile industry is at its gradual growth and the low cost of doing business has helped it to win over buyers against Pakistan and other competitor countries like India and Sri Lanka in the international market, he said.

http://www.brecorder.com/index.php?id=515352&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Prime Minister wants Pakistan to become global engineering hub *

KARACHI (January 09 2007): Prime Minister Shaukat Aziz inaugurated the Daewoo Assembly Plant at Razzaqabad here on Monday, saying he desires to see Pakistan becoming a hub of global engineering products and industry. The project has been taken up by the Afzal Motors Limited in collaboration with the Korean firm.

Shaukat Aziz said the project is one more addition to the creation of world class engineering products in Pakistan. "This is part of our vision to make Pakistan a hub for global engineering products and global engineering industry", he said.

He assured that there would be consistency and continuity in policies. With co-operation of the private sector the government will make the policy framework and provide a good, sound economic environment, he said. The Prime Minister said it is up to the private sector to build factories, to produce goods, to take technology from wherever they can in the world.

"We are an open society and will produce goods, which will sell here and overseas, keeping with the goal to build Pakistan as a modern enlightened, progressive and peaceful country," he said. He termed the inauguration of the Daewoo Assembly Plant a very important day for the country's engineering and transportation industry.

"We are seeing the opening of yet another engineering enterprise which will assemble and manufacture trucks and buses under the Daewoo International label. This is important for Pakistan because we have tried over the years to diversify our industrial base from the traditional industries which are still very important like textile, leather to the engineering industry which adds value, creates jobs and has a greater demand on skills of the workforce," he said.

Shaukat Aziz pointed out that today's venture has a unique feature that the sponsors have got technical assistance from Korea from Daewoo which is known for its technical skills and engineering capabilities. He was pleased that entrepreneurs in Pakistan are getting the truck and bus manufacturing technology from a global producer of vehicles, which will make the country's transportation sector even more efficient and productive.

http://www.brecorder.com/index.php?id=515394&currPageNo=1&query=&search=&term=&supDate=


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## Neo

Tuesday, January 09, 2007 

*51.8 million tonnes sugarcane output this year: commissioner*

ISLAMABAD: Sugarcane Commissioner of the Ministry of Food and Agriculture Anayatullah Khan said Monday that 51.8 million tonnes sugarcane has been produced this year in the country which is 15 percent more than last year.

Speaking in a PTV programme he said there would be a substantial improvement in availability of the sugarcane to mill owners during the crushing season.

He said level of crushing is 19 percent at this time, which if compared with the past year is up by 4 percent.

The crushing of the sugarcane started within time and hopefully the supply of sugar to markets will improve.

To a question he said that government has to create a balance among the stakeholders for the relief of consumers and this role is befittingly being played.

He said if the mill owners and growers want to revive the zoning system, government would have no objection.

To another question he said that all the experiments made in various parts of country for the promotion of sugarbeat cultivation yielded positive results. 

http://www.dailytimes.com.pk/default.asp?page=2007\01\09\story_9-1-2007_pg5_2


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## Neo

Tuesday, January 09, 2007 

*First-ever merger of a Pakistani IT company with a European IT firm*

ISLAMABAD: Aqcel Group, which is considered one of the leading exporters of IT-based solutions in Pakistan, announced its merger with Demark-based IT giant Mondo at a press conference here on Monday. 

ItÃ¢â¬â¢s the first-ever merger of a Pakistan-based IT company with a European public-listed IT company. 

Aqcel is a pioneer in the IT outsourcing and development market, and since 1997 it has been delivering development solutions based on Microsoft technology worldwide. Aqcel is also among the very largest suppliers of Microsoft CRM solutions. With this merger of Aqcel, Mondo grows at a stroke from employing nearly 80 people to a staff of over 1,000, of which the majority will be based in Pakistan and some in Ukraine. 

The Aqcel Group expects a 2007 turnover of nearly 0.8 million US dollars. With the merger, Mondo expects its own turnover for 2007 to be 18 million US dollars (DKK 100-105m), and its net profit to be 5-7%, excluding further expected purchases in 2007. 

Ã¢â¬ÅWe are very excited about the merger. It creates a great opportunity for the Pakistani IT market to create linkages with relatively untapped European IT industry from an outsourcing angle. I am confident that the combined synergies and tremendous demand for IT resources in Europe will put us on the right track to be one of the first IT organizations in Pakistan employing more than 1,000 IT professionals,Ã¢â¬Â said CEO Rana Saad of Aqcel. 

Ã¢â¬ÅThe Aqcel Group suits Mondo perfectly, and brings us a great number of benefits from day one. The most important is that more than 300 highly-qualified and certified employees in Ukraine, Pakistan and Denmark bring us an injection of new expertise that is almost impossible to achieve in Denmark and Scandinavia.

http://www.dailytimes.com.pk/default.asp?page=2007\01\09\story_9-1-2007_pg5_12


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## Neo

Monday January 8

*StanChart plans to double Pakistan network*

KARACHI, Jan 8 (Reuters) - Asia-focused bank Standard Chartered plans to more than double its network in Pakistan in five years to capture a sizable chunk of the country's huge, untapped consumer market, a senior official said on Monday. 
Last year, Standard Chartered Bank (Pakistan) Ltd, a subsidiary of Standard Chartered Plc. , acquired a 95.37 percent stake in Union Bank for $487 million, making it the fifth largest bank in the country. 

"We plan to have 250-plus branches in the next three to five years, meaning our network will more than double," Mike DeNoma, Group Executive Director of Standard Chartered Plc told a news conference in Karachi. 

"We currently have a 6.5 percent share of the market in Pakistan, and we want to take that to 10-15 percent in the next five to six years." 

The bank currently has a network of 115 branches in Pakistan's 22 cities. 

DeNoma said Pakistan had a huge untapped consumer market, and with the country's economy growing steadily, there were was much to capture. ADVERTISEMENT



"The product-innovation and service-innovation market is under-served, and we are committed to lead these areas," he said. 

"We believe in Pakistan. We have been here for 143 years, and we expect to stay at least another 143 years." 

Major banking reforms pushed through by Shaukat Aziz, the finance minister President Pervez Musharraf poached from Citibank and then promoted to prime minister, have helped the economy's rehabilitation. 

Banks' profits grew 87 percent in 2005 and are expected to grow at about 44 percent this year, according to analysts. 

Singapore state investor Temasek Holdings is set to take a controlling stake in Pakistan Industrial Credit Investment Corp. (PICIC) in a deal valued at around $300 million. 

Foreign banks, including Barclays Plc. , ABN AMRO and HSBC , are also eyeing investment opportunities in Pakistan, attracted by economic reforms that have laid the platform for rapid growth and rising incomes. 

http://asia.news.yahoo.com/070108/3/2vf2b.html


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## Owais

*Iran and Pakistan to boost annual trade to $1 billion: Mottaki *


TEHRAN (January 10 2007): Iranian Foreign Minister Manouchehr Mottaki says annual trade between Iran and Pakistan would be increased to US $1 billion. He said this meeting with visiting Pakistan Senate delegation led by Chairman of its Foreign Policy Committee Mushahid Hussein.

Both sides explored avenues to develop bilateral, regional, international co-operation and discussed issues of mutual interest. Mottaki said senior officials of two countries in recent talks agreed to increase current level of trade exchanges to $1 billion. He stressed execution of Iran-Pakistan-India natural gas pipeline project will turn into a symbol for long-term co-operation among regional states. Noting Iran's growth, advancement of science and hi-tech, he voiced his country's preparedness to expand co-operation with neighbouring and Islamic nations.

He underlined Iran's permanent preparedness to attend negotiations, and said, "We believe Iran's demand for accessing its inalienable nuclear rights and counterparty's expectations for easement of its concerns can form a proper base for dialogues between two sides."

Mushahid Hussein assessed as positive his talks with high-ranking Iranian leaders, and hoped bilateral, regional and international co-operation would further expand and deepen, given their political, economic and cultural commonalities and two Presidents' resolve to expand ties.

http://brecorder.com/index.php?id=515787&currPageNo=1&query=&search=&term=&supDate=


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## Neo

Wednesday, January 10, 2007 

*Pakistan attracting FDI in other areas besides privatisation: adviser*

LAHORE: Dr Salman Shah, Adviser to Prime Minister on Finance, said Tuesday that Pakistan was attracting Foreign Direct Investment (FDI) in areas other than privatisation.

Ã¢â¬ÅPakistan would definitely get $5 billion FDI during the current fiscal and it is important to note that more FDI is coming to the green field sites,Ã¢â¬Â he said.

Pakistan possesses lot more investment opportunities with many demographic advantages, he added. Dr Shah was responding to media queries after addressing the participants of the two-day Water Asia 2007 conference.

Regarding the sugar crisis, the adviser said negotiations with the sugar industry were underway and the sugar price was being managed through market mechanism. However, he warned that legal course would be initiated against the industry in case price fixing is proved against them.

Regarding power deficiency, he said, plans are being prepared to enhance the energy efficiency in the country.

Earlier, addressing the conference, the adviser sketched a comprehensive picture of the economic progress over the last four years and highlighted the promising prospects of it.

According to him, the investment to GDP ratio has reached to 20 percent, which is being translated in creation of new jobs and reduction in poverty.

Ã¢â¬ÅIt is a universal phenomenon that sustainable growth brings poverty levels down and this is what we have achieved over the last four years.Ã¢â¬Â

The East Asian countries are a prime example of the fact where economic growth has been persistent over the last 30 years, he said.

However, he termed slow growth in infrastructure and human resource development as a major constraint to the economic growth and pointed out that much attention is focused on education and skilled training.

Ã¢â¬ÅWe have allocated four percent of the GDP on education in this budget,Ã¢â¬Â he said, adding: Ã¢â¬ÅFifty-five percent of the population is below 19 years of age that means that the number of our young generation is 19 million.Ã¢â¬Â

He said Pakistan has a big demographic dividend for the investors who are looking seriously towards it nowadays.

The major foreign companies are coming to Pakistan due to shrinking of markets in other areas and expanding one in South Asia, he said.

He said government has also focused infrastructure development equally and total of Rs 430 billion has been allocated that comes around 4 percent of the GDP against a total demand of 8 to 10 percent of the GDP in Pakistan.

Pakistan is offering tremendous scope of investment in infrastructure development, he said and added that Pakistan is investing heavily on construction of dams both through public as well as public and private partnership.

He termed dams as a matter of life and death for Pakistan and said Pakistan has planned to invest around $6 billion on each dam to be constructed up to 2016. Each dam would contribute 3 percent to the GDP annually, he added.

He also highlighted the importance of water management and stressed on a transparent system ensuring a win-win situation for every stakeholder.

He also gave away shields among water sector experts on the occasion. Earlier, Mian Fazal Ahmed and Ch Mazhar Ali also spoke to the audience.

http://www.dailytimes.com.pk/default.asp?page=2007\01\10\story_10-1-2007_pg5_5


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## Owais

*First half current account deficit rises to $3.86 billion *

ISLAMABAD (January 11 2007): Despite a strong build-up in Pakistan's current transfers, the burgeoning trade deficit pushed the current account deficit (CAD) to $3.86 billion during the first half (July-November) of 2006-07, depicting an increase of 22.7 percent over $3.14 billion in the corresponding period of last fiscal year.

During these five months, in spite of strong build-up in current transfers of about $4 billion, the huge, $6.175 billion, trade deficit in goods and services was instrumental in turning the current account into deficit, the State Bank of Pakistan (SBP) data released on Wednesday said.

Net current transfers rose to $3.97 billion during the period under review, from $3.52 billion of corresponding period of last fiscal year. Current transfers went up as Pakistan received $2.09 billion in remittances or foreign exchange sent home by overseas Pakistanis during the period, up from $1.68 billion a year ago.

However, more worrisome was that during this period, resident deposit holders withdrew $61 million from foreign currency accounts (FCA) against $110 million deposited in these accounts during last year.

Inflows in these accounts could prove a cushion in moderating the current account deficit but unfortunately it turned negative and then dented the current transfers, too. All three multilateral donors--World Bank, Asian Development Bank and International Monetary Fund--have time and again cautioned the government pointing to the burgeoning current account as 'grey area' of the country's economy.

During 2005-06, the deficit had risen to $5.7 billion against $1.784 billion in 2004-05. As percentage of GDP, it rose from 1.6 to 4.4, the highest level in past nine years. And now for 2006-07, the World Bank has forecast it at 5 to 5.5 percent and IMF at 5.6 percent of GDP by the end of the year.

The Asian Development Bank (ADB) in its 'Outlook' a few months back had also projected it at $8.5 billion (5.9 percent of GDP) for 2006-07. On the other hand, the government's economic managers are confident that the current account deficit is manageable by borrowing from abroad, remittances, drawing down reserves and inflow of investment.

Fuelled by huge trade deficit, the country's current account deficit (excluding official transfers) in five months witnessed an increase of $713 million (22.7 percent) to $3.85 billion. The SBP data shows that Pakistan witnessed this current account imbalance as trade deficit (in goods and services) jumped to $6.17 billion during July-November 2006 from $5.40 billion in corresponding period of last fiscal year. The trade deficit figures were arrived at using the freight-on-board value of imports and exports.

Trade deficit (in goods) during the period under review stood at $4.304 billion with $11.22 billion imports and $6.92 billion exports. The services account also witnessed a large imbalance of $1.87 billion, as inflows under this account stood at $1.536 billion whereas outflows totalled $3.41 billion. Thus, on balance, total trade deficit (goods and services) stood at $6.175 billion.

The data shows that the factors responsible for this huge deficit included higher outflows on account of transportation, travel, insurance, royalties and licence fees.

Pakistan had to spend $1.315 billion on transportation account whereas its earning under this head was only $487 million. Thus, the net deficit in the service account due to chartering of vessels for imports/exports was $828 million.

Another factor responsible for big services' account deficit was a net outflow of about more than half a billion ($550 million) on account of overseas travelling. Pakistan had to spend $655 million to finance personal and business-related travelling abroad of individuals and groups whereas it earned only $105 million under this account. The same applied to spending on insurance, royalties and licence fees paid to international organisations and their employees operating in Pakistan.
http://brecorder.com/index.php?id=516067&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Exports up 4.8 percent for July-Dec 06-07 *


ISLAMABAD (updated on: January 11, 2007, 19:39 PST): The country's exports in first half of the current fiscal (July-December 2006-07) were recorded at around $8.437 billion, showing an increase of 4.8 percent over the exports worth $8.047 billion realised in the last corresponding period.

According to provisional trade figures, the exports during the month of December, 2006 totalled at around $1.517 billion as against $1.455 billion realised in the corresponding period of the last fiscal, showing an increase of 4.5 percent in the like period of the last year.

The exports achieved 45.4 percent of the set target of $18.6 billion for the current fiscal while the import achieved 53.2 percent of the set target of the current fiscal.

During the first six months of the current fiscal, the imports also witnessed 9.1 percent growth to $14.886 from $13.651 billion in the same period of the last financial year.

The country's imports in December 2006 were recorded at $2.564 billion, witnessing a decrease of 3.6 percent over imports worth $2.475 billion realised in the corresponding month of last fiscal.

According to the provisional trade figure released here on Thursday the balance of trade has reached -1.394 billion in December 2006 from -1.394 billion in November 2006.

http://brecorder.com/


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## Owais

*Deutsche Bank arranged $ 1.05 billion debt for Pakistan *

KARACHI: Deutsche Bank has arranged a major currency debt worth $ 1.05 billion for Pakistan government and corporates in 2006. 

According to an announcement here, in Asia, Deutsche Bank managed a total of 29 deals in US dollar, Euro and Yen Asia bonds, in 2006. 

The bank has arranged a major currency debt worth $ 4.73 billion for Asian governments and corporates.

Deutsche Bank was the only house to be involved in both international bond issues out of Pakistan in 2006. This included a$ 250 million deal for Mobilink, which was the first corporate bond to be issued out of Pakistan for over 12 years. 

Deutsche also managed a $ 800 million dual tranche issue for Pakistan in March. The deal comprised $ 300million of 30-year bonds. 

The first-ever 30 year bond to be issued from Pakistan, and $ 500 million of 10-year bonds. 

http://geo.tv/geonews/details.asp?id=617&param=3


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## Owais

*July-December trade deficit rises to $6.46 billion* 

ISLAMABAD (January 12 2007): The trade imbalance has gone up sharply to $6.46 billion during the first half (July-December) of the current fiscal which is about 15.3 percent higher than the corresponding period of last fiscal ($5.604 billion), the Ministry of Commerce reported on Thursday.

During this period, Pakistan's exports totalled $8.436 billion and imports $14.896 billion against $8.047 billion and $13.65 billion, respectively, recorded during the same period last year.

The provisional trade data released by the Commerce Ministry revealed that Pakistan economy pulled in 9.1 percent more imports during July-December, while, exports rose only by 4.8 percent. Each month, the import growth exceeds exports steadily widening the trade gap.

It is important to note that previously, in its trade policy for the fiscal 2006-07, the government targeted imports at $28 billion and exports $18.6 billion with a trade deficit of $9.4 billion during the year.

Now in the first half, the country achieved 45.36 percent of exports and 53.19 percent of imports target. The huge import pressure and low exports growth envisages that by the end this fiscal the trade deficit would exceed the set target of $9.4 billion.

It is also feared that if the current trend persists, by the end June 2007, the government may not be able to hit exports target of $18.6 billion. However, imports are likely to cross the target of $28 billion. During the last fiscal 2005-06, the government had missed its exports target of $17 billion by a margin of $531 million.

It is interesting to note that in December 2006, the only month when exports increased while imports declined. The figures reveal that exports during December 2006 increased to $1.517 billion as against $1.38 billion in November 2006, showing a growth of 10 percent. The imports in the same month are down by 7.5 percent to $2.564 billion as compared to $2.774 billion in November 2006.


http://brecorder.com/index.php?id=516427&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*PM urges early finalisation of IPI gas pipeline project 
*

ISLAMABAD (updated on: January 12, 2007, 18:37 PST): Prime Minister Shaukat Aziz on Friday said Pakistan valued its relationship with Iran and emphasised for strengthening the existing affinity between the two countries by expanding economic ties.

The prime minister was talking to Dr. Kamran Bagheri Lankarani, Iranian Minister for Health and Medical Education who called on him at PM House here.

Prime Minister Aziz expressed the hope that setting up of Pak-Iran Investment Company and signing of the Preferential Trade Agreement (PTA) would boost trade and economic ties between Pakistan and Iran.

Aziz said Iran was Pakistan's important neighbour and the two countries enjoyed long and lasting relationship based on common faith, shared history, heritage and values.

The prime minister said as a result of high growth and economic turnaround achieved by Pakistan, the energy needs of the country were growing and Pakistan desired to enhance co-operation with Iran in the energy sector.

Pakistan, the prime minister said, was keen to increase the import of electricity from Iran.

The prime minister also emphasised the need for early finalisation of Iran-Pakistan-India (IPI) gas pipeline on terms and conditions feasible for all parties.

The prime minister talked of the golden period of Islamic history when Muslim scientists and physicians were involved in serious research and advanced new theories in various scientific disciplines, which paved the way for later discoveries and inventions.

He said the Muslim world needs to invest in education and research to build knowledge economies. This will guarantee their economic development, sovereignty and independence in decision making, the prime minister added.

The prime minister said as a result of the reforms undertaken by President General Pervez Musharraf seven years ago, the economic and social landscape of the country has significantly improved.

"Today's Pakistan is different from the Pakistan of yesterday. People have pride in their country and nationhood," the prime minister said.

The government, the prime minister said, believes in development with dignity and growth with equity.

The prime minister said Pakistan recognises Iran's right to use nuclear technology for peaceful purposes under IAEA's safeguards but is opposed to nuclear proliferation.

Talking of the health sector reforms, the prime minister said the government was focusing on preventive and curative steps and had launched a number of awareness campaigns to eradicate diseases.

He said the government was committed to Millennium Development Goals (MDGs) to provide better facilities of health to the people.

Dr. Kamran Bagheri Lankarani expressed appreciation of the Iranian government for Pakistan's stand on various regional and international issues and said this was contributing to regional peace and safety.

He said while Pakistan and Iran had close relations, the trade and economic co-operation needed to be enhanced for the benefit of the two countries.

Dr. Kamran Bagheri Lankarani said the two countries needed to create linkage in various areas of biotechnology and said Iran was ready to help Pakistan in vaccine production.

Dr. Kamran Bagheri Lankarani said Iran was keen to finalise the Iran-Pakistan-India gas pipeline project and was taking steps in that direction.

The meeting was attended among others by Minister for Health Mohammad Nasir Khan and senior officials.

http://brecorder.com/


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## Owais

*Pakistan gets another $600 million export orders as Bangladesh situation worsens* 

KARACHI (January 13 2007): The ongoing political uncertainty in Bangladesh is expected to fetch further $500-$600 million textile deals for Pakistani exporters, said Textile Minister Mushtaq Ali Cheema while talking to Business Recorder on telephone from Germany.

The Minister, who is currently representing Pakistan at Heimtextil exhibition being held in Frankfurt, Germany, also confirmed that Pakistan had also obtained potential export orders worth $500 million, following political unrest in that country.

"Yes, our (Pakistan) export-oriented textile industry has caught a number of those foreign orders which were previously used to be placed in Bangladesh," he confirmed. Cheema said that general election process is underway in that country which has turned into riots and deteriorated the law and order situation there. Consequently, the buyers eyed Pakistan for timely completion of their big orders.

"The exporters of Bangladesh have been dispatching late shipments since October 2006, which had raised the eyebrows of the buyers in Europe and United States," the Minister added.

"I am currently attending Hemtex exhibition here in Germany and found Bangladeshi exporters anxious about their country's law and order situation because they have failed to give right time to their buyers for the export shipments" he remarked.

He said that if the law and order situation did not improve in Bangladesh, "we are expecting more international orders from European and US markets in the next few months, which would be approximately $500-600 million".

He said: "We are also not happy with the ongoing political chaos in Bangladesh but the whole situation is in our favour, and international buyers prefer us for placing orders, against Bangladesh." Due to the political instability, a small number of Bangladeshi exporters had been seen in the exhibition, and they failed to convince the buyers, he added.

About the exhibition, he said that this year there is no price war in the Heimtaxtil exhibition, "as we were expecting, and our exporters are quoting 2 to 3 percent high prices as compared to last year".

He said that the relief package for the exporters in the shape of 5 percent research and development assistance had provided support to the exporters and now the country's textile exporters are getting orders. "We are trying to decrease the cost of doing business, which will make our textile industry more viable in the international market," he added.

http://brecorder.com/index.php?id=516781&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*$5 billion annual marble export possible: expert *

KARACHI (January 13 2007): Pakistan has the potential to export $5 billion marble and stone products annually by providing basic infrastructure to this industry.

Sanaullah Khan, Chairman All Pakistan Marble Mining Processing Industry and Exporters' Association (APMMPIEA) told Business Recorder that lack of basic infrastructure had hampered to explore the real potential of this industry which could contribute $5 billion exports towards national economy.

He said that currently the industry was growing at the rate of 25 percent annually and the exports up to December 15, 2006 crossed $35 million as compared to less than $20 million of previous years. Only first six months of 2006 exports of marble had touched $18 million, he added.

Sanaullah said that the industry was growing on self-reliance basis without any government support. "No infrastructure is provided to miners in the country and about 3,500 units are working without water and electricity," said Sanaullah.

He said that the Pakistan's marble and stone exports had reached to 52 countries, including USA, Italy, Saudi Arabia, China, but its export share in the world market, estimated at $42 billion, was less than one percent.

Sanaullah said that it was not possible for the extractors to import modern machinery, which costs millions of rupees to extract and produce finished products.

In the absence of basic facilities such as roads, electricity, water, etc at the extraction sites, the majority of which were located in the remote areas, were also a major impediment in carrying out the mining activities in the country, he added.

The marble processing industry in Pakistan was around 40 years old and the first major marble deposits were discovered at Mallagori and Swabi in the NWFP. During the last 15 years, a number of processing units were established in the country and the majority of them has used locally manufactured machinery, he said.

He added that on the government level the industry was given consideration for last ten years after rising in world demands. Previously, the government had neglected the industry, which resulted in closure of several small units, he said.

The government had planned to set up four marble cities in the country and announced that the leases would be awarded to the genuine extractors, he said. They are being given contracts against the rules on nepotism, he alleged.

He said from March 2005 to April 2006, an estimated 14 million ton marble and 21,000 tons of granite was excavated from Swat district, Bajaur agencies, Lucky Marwat, Bela, Khuzdar and Loralai in Balochistan and Jungshahi and Bado Jabal in Sindh.

He said that the marble and granite were among the major minerals extracted in Pakistan after coal, rock salt, limestone and China Clay. A source in the marble manufacturing industry said that the foreign investors were reluctant to invest in the sector in the three provinces ie Sindh, Balochistan and NWFP because the mining sites were located in far-flung areas off the main cities and had the deteriorated law and order situation.

The present government had taken some initiative for improving the situation, which would help bring foreign investment in this sector, he hoped. A senior government officials said that the government had planned 10 model quarries at the cost of Rs 900 million to minimise the 70 percent marble stone damages which occur during mine operations due to lack of such technology.

The official also informed that the latest study had unveiled about 17 billion tonnes of granite only in Sindh and steps needed to explore the industry. The official said that government wanted to extract the minerals with the help of modern technology to minimise damages occurred during mining.

The damage resulted in small pieces of stones, which had low value in the world market and our efforts were being made to bring the latest machinery and foreign experts in this field to get better results. In this regard an Italian company had shown intention to set up plant for finished products in the country, the official apprised.

http://www.brecorder.com/index.php?id=516818&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Karachi has attracted $1 billion FDI: Mustafa *

KARACHI (January 13 2007): Karachi has attracted $1 billion out of $3.8 billion foreign direct investment in the country, which shows the confidence of investors on the city. Syed Kamal Mustafa, Nazim, Karachi City District Government (CDGK) said this at the inaugural ceremony of the IAPEX-2007, organised by Institute of Architects, Pakistan (IAP), here on Friday.

The Nazim said that the city had attracted $one billion FDI, which was 26 percent of total investment, so its our duty to make the city more attractive for further economic activities. He said that the city government had materialised the fourth master plan.

In the past three plans were made but none of them could be started, he added. Karachi has 180 million population and is the biggest city of the country. The city generates about 68 percent revenue and having two ports. It is the hub of all financial activities.

The city also links the country with other countries of the world. The nazim invited people from local and abroad to come forward and participate in development works. He said a huge infrastructure was required for the big population.

People engaged in the construction industry had opportunities to take part in the speedy uplift projects in the city. On the occasion Ejaz Ahmed, President IAP said that the IAPEX-2007 was organised to bring professional architects, engineers and builders in direct contact with manufacturers and dealers of building products. The exhibition was an ideal forum to introduce new materials.

He said concurrent with the exhibition was the three-day international Architectural Forum with the theme of 'Emerging Architecture'. Renowned architects from over 10 countries would present papers, he added. This was an excellent opportunity for our architects and architecture students to listen and interact with the luminaries of the profession, he added.

http://www.brecorder.com/index.php?id=516819&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*China offers solar, wind energy technologies *

LAHORE: Chinese ambassador to Pakistan Zhang Chunxiang has said that China can transfer its solar and wind energy technologies to enable Pakistan speedily overcome the power shortage that is impeding its growth potential.

Speaking at his farewell visit to the Lahore Chamber of Commerce and Industry on Friday, he said China gives special preference to Pakistan in all fields including trade.

The ambassador said this is evident from the fact that Pakistan is the first country with which it signed a free trade agreement in South Asia. Moreover, he added, out of the eight special economic zones that China established outside its territory the first is being established near Lahore.

He urged Pakistani businessmen to take full advantage of free access to Chinese market and increase their exports. He said many Chinese entrepreneurs are looking to establish joint ventures in Pakistan. He asked the local entrepreneurs to identify the feasible projects and negotiate with their Chinese counterparts. He hoped, from now onwards, the trade between the two countries would double every year.

He said he would discuss with Prime Minister Shaukat Aziz on the ways to increase bilateral trade between the two countries. He said China is ready to share the technology of the newly developed color cotton variety with Pakistan. Similarly, he added, Pakistan could benefit from varieties of high yield cotton, basmati and other agriculture products.

He said Chinese airlines are negotiating with Pakistani authorities for operating flights from major cities of Pakistan to various destinations in China. Similarly, he added, PIA has been approached to increase direct flights to major Chinese destinations. He said low prices of Chinese products are mainly due to economies of scales obtained through high technology machines. Moreover, he added, labour in China is comparatively cheap. He dispelled the notion that energy cost in China is low. He said energy cost in China are the same as in Pakistan or little higher.

Speaking on the occasion, the LCCI Acting President Yaqoob Tahir Izhar said that Chinese investment is likely to increase in the near future significantly. Government of Punjab has allocated 500 acres of land to China National Power Ltd in Faisalabad Industrial Estate (FIEDMC) to establish an industrial area including 50 megawatt power project. An exclusive Chinese Industrial Park is also being developed at Lila on Lahore-Rawalpindi Motorway near Rawalpindi. He said that some Chinese auto manufacturing companies have also shown interest in manufacturing of tri-wheelers and buses in Pakistan. Izhar said that there are ample opportunities for Chinese investors to invest in Pakistan. PakistanÃ¢â¬â¢s investment policies are based on the key elements of liberalisation, privatisation and deregulation.

http://www.thenews.com.pk/daily_detail.asp?id=38662


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## Neo

Saturday, January 13, 2007 

*Pak rupee overvalued by only 1%-2%: Merril Lynch*

KARACHI: The Pakistani currency is expensive but only to the tune of around 1%-2%, said a research report released by Merrill Lynch, a multinational investment company. 

Ã¢â¬ÅIn our view, the Pakistan rupee does not need to devalue by 10 percent as recommended by the International Monetary Fund, the report said. 

The report said: Ã¢â¬ÅForeign ownership remains low at around 6-7 percent (ThailandÃ¢â¬â¢s foreign ownership is closer to 40 percent and we wonder which market has more risk).

Ã¢â¬ÅEquities in Pakistan have significantly under-performed to the tune of 24 percent. Over the last 12 months, equities within the MSCI Pakistan Index have fallen by around three percent.

Ã¢â¬ÅPakistanÃ¢â¬â¢s de-rating against the regional index has been severe over this period, but the market now commands a 2007e PE multiple of 8.5x with EPS growth of +13.9 percent. Ã¢â¬ÅWithin the sub-continent, PakistanÃ¢â¬â¢s equities look exceptional value when compared with the higher multiples in India.

Ã¢â¬ÅLately, the market has sold off sharply due to a number of unlikely rumours. We think the sell-off is unwarranted and expect the KSE-100 to rise due once the following rumours fail to materialize. Ã¢â¬ÅThe State Bank of Pakistan is unlikely to introduce a minimum deposit rate of four percent (in order to lower net interest spreads). Spreads, however, have already peaked now that deposit rates are rising. Furthermore, it would reverse five years of financial reforms and deter foreign direct investment.

Ã¢â¬ÅThe general election in 2007 is unlikely to alter the irreversible path of PakistanÃ¢â¬â¢s reforms. All parties are pro-reform and have been for the last 10 years, regardless of which party was in power.

Ã¢â¬ÅMerrill Lynch Pakistani strategist Imtiaz Gadar recently raised his market target for the KSE-100 Index to 11,000 based on our analyst price targets.Ã¢â¬Â

http://www.dailytimes.com.pk/default.asp?page=2007\01\13\story_13-1-2007_pg5_3


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## Owais

*Pak-Iran joint ventures in pharmaceutical sector likely *

LAHORE (January 14 2007): Iranian Health Minister Dr Kamran Bagheri Lankarani has said that Pakistan and Iran could initiate joint ventures in pharmaceutical sector, as both the countries have strengths and capacities in many areas, which were neglected in the past.

The Iranian Minister was speaking at the Lahore Chamber of Commerce and Industry (LCCI) on Saturday. Iranian Ambassador in Pakistan Mohammad Ebrahim Taherian, LCCI Acting President Yaqoob Tahir Izhar, Vice President Mubasher Sheikh and former President Mohsan Raza Bukhari and former Senior Vice President Sohail Lashari were also present on the occasion.

Dr Kamran Bagheri Lankarani maintained that Iran has over 40 percent purified pharma raw materials, which are locally available and this provides a huge opportunity to Pakistan that could evolve cheaper and efficient solutions by getting these raw materials from Iran instead of any third country. He offered his help for making Pakistan a polio-free country.

While acknowledging Pakistan's expertise in pharma sector, the Iranian Minister said that Pakistani scientists should collaborate with the Iranian industry for getting better results in future. He said that both Pakistan and Iran are very strong in the field of herbal medicines with knowledge of 7000 medicines while presently both the nations are producing only 2500 drugs, so there is a huge scope available in this particular area. "These herbal medicines could be exported to Europe, as they have only 200 herbal drugs," he added.

While appreciating Pakistan's Ministry of Health efforts for preparing anti-cancer drugs, Dr Kamran Bagheri Lankarani said that Iran needs Pakistan assistance in this sector. Biotechnology is future of pharmaceutical industry and Iran has sufficient knowledge so it is ready to cooperate with Pakistan, he added.

Speaking on the occasion, LCCI Acting President Yaqoob Tahir Izhar called for concerted and sector-specific efforts to increase the volume of two-way trade between Pakistan and Iran. He said that Pakistan and Iran needed to have highest level of bilateral business if both the nations want to face the fast emerging global challenges. It is high time that Pakistani business community should join hands with their Iranian counterparts, as this would help both the countries get a respectable place in the global market, which is highly competitive at the moment, he added.

http://brecorder.com/index.php?id=517185&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*50 percent clean cotton target achieved *

KARACHI (January 14 2007): Pakistan has achieved 50 percent target of clean cotton bales, according to Pakistan Cotton Standards Institute (PCSI) report on Saturday. To produce contamination-free cotton, a special clean cotton program, launched by the Ministry of Textile Industry in the collaboration with Pakistan Cotton Ginners Association (PCGA).

All Pakistan Textile Manufacturers Association (Aptma), and Punjab and Sindh governments, is in progress during current season (2006-07). According to PCSI report, the Institute has selected 23 ginning factories - 17 from Punjab and 6 from Sindh - for the current season for producing clean cotton, and by January 13, 2007 some 0.7558 million maunds phutti had arrived in these factories.

A team of professionals, headed by PCSI officer with representatives of Trading Corporation of Pakistan, provincial agriculture departments and ginners' representatives are inspecting the 23 selected ginning factories in Sindh and Punjab to ensure clean cotton, the report added.

Out of 0.7558 million maunds seed-cotton received, some 50,800 bales of clean lint cotton have been produced, the report said. Ginnirs have sold some 39,400 bales to exporters and spinning or textile mills at an average premium of more than Rs 35 per maund, said PCSI report. It said that the government is also being paid Rs 50 per maund for cotton growers and suppliers of clean and grade 2 seed-cotton (phutti) to the ginners. According to the report, the current year's target of 0.1 million clean bales of cotton would be achieved easily.

http://brecorder.com/index.php?id=517090&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Crisis hits textile industry *

KARACHI (January 15 2007): A crisis like situation appears to have hit the textile industry, one of the major industries of the country, which contributes 11percnt to the Gross Domestic Product (GDP), in addition to providing 40 percent of the workforce in the manufacturing sector.

It not only has biggest share in the country's industrial sector but also has a major share of 62 percent in the total exports, textile exports stood at 8.92 billion during the last fiscal year 2005-06.

Textile sector contributes 46 percent in the country's total production, while its employment provision ratio is around 35 percent of total labour working in the country.

The high cost of doing business has brought about decline in country's textile export by 1.12 percent during the first five months of current fiscal year 2007 as compared to the same period of the last fiscal year.

According to the statistics available here Pakistan's textile exports stood at $4.192 billion during the first five months July-November period of the current fiscal year as compared to $4.239 billion during the same period of the last fiscal year 2005-06, showing a decrease of $47.54 million in five months.

All Pakistan Textile Mills Association (APTMA) claimed that during the first five months of the current fiscal year textile exports have declined by 3.333 percent.

In July declined by 8.20 percent, in August 6.50 percent, 15.95 percent in September and 5.11 percent in October. However, statistics shows an increase of textile export by 27.68 percent in November 2006, which was the first month of the current fiscal year only in which the export graph moved up.

Investment ratio in the textile sector is higher than any other sector in the country, it stood at $50 billion dollar. During the last five years only $5 billion investment has been recorded.

Pakistan's share in the current trade volume is around 3 percent of the world's total textile trade. Country's textile exports alone are potentially targeted to reach $24 billion at the end of 2014.

New investment in the country is gradually declining due to post-quota regime in the international market with much high competition.

All the textile sectors exports including yarn, readymade garments, bed-wear, towel, knitwear, hosiery and other sectors indicates decline during the current fiscal year.

Industrialist said that the major hurdles in the Pakistan's textile export, are the high cost of doing business, unskilled manpower, new financing and deteriorated law and order situation, in addition to post quota regime.

However, after three months later, government announced five-percent research and development fund on the export of textile on the demand of exporters.

The State Bank of Pakistan (SBP), with the aim of relieving some of the difficulties faced by the textile sector due to increasing competition from the neighbouring countries and the rising manufacturing and business costs, offered a debt swap option under the 'Long Term Financing for Export Oriented Projects (LTF-EOP)'scheme for exporters.

The option provided an opportunity to the textile sector (excluding spinning sector but including its six sub sectors) to swap their long term loans taken from commercial banks and DFIs for import of machinery for their units under LTF-EOP Scheme, which offers mark up rates fixed for the tenor of the loan, approximately 5-6&#37; below market rates, SBP said.

Figures shows that under LTF-EOP scheme SBP has allowed amount of Rs 34 billion as refinance to commercial banks/DFIs as debt-swap option to textile industry under LTF-EOP Scheme up to 31st December, 2006 against the target of Rs 30 billion.

According to the SBP that Textile exporters have the flexibility to seek additional new loans under LTF-EOP as banks by and large are currently within the refinance limits set by SBP for 2006-2007.

Despite these incentives exporters are still not satisfy and they demand more relief to boost up the textile export.

"These incentives are very helpful for the textile industry, however we are still not able to compete the international and our regional competitors in the wake of high cost of production," said Shafqat Elahi chairman and Iqbal Ibrahim zonal chairman of APTMA.

They said that our in put cost have been increased by more than 60 percent, interest rates have been increased by 143 percent during the last two years when central bank increased the interest rates to control the inflation, which make negative impact in the browning of the credit by textile sector.

Furnace oil prices increased by 77 percent, gas tariff 53 percent, goods freight 67 percent, cotton 82 percent and wages by 33 percent during the last three years, they said.

Cost of production is the chief hurdle, which is much higher than India, China and Bangladesh, they added.

Bangladesh encouraged local production of yarn and fabric by giving garment mills at 5% subsidy on local procurement of yarn. They have now attained a capacity of over 5 million spindles despite the fact that there is no indigenous cotton and no man-made fibre production, they added.

The emergence of China as a burgeoning force in world textiles is also a cause for concern in a number of textile sub-sectors, they said.

They said that our Textile Industry has made an investment of $5 billion for expanding its production capacity during the last five years while the interest rates were as low as 3% to 4%. However, now more than 200% increase in the credit cost, which consequently increased the financial charges of the mills, has now forced the industry to stop further investment.

They said there has been reduction of 6.4 percent in investment in textile machinery in the year as compared to the corresponding period last year.

Iqbal Ibrahim said that 11 percent inflation rate is also a contributing factor, which drop in fresh investment in textile, while slow down in further investment in the textile industry due to high cost of capital borrowing and increased pressure from regional competition.

He said that Pakistan is one of the leading textile manufacturers in the world. However, our value-added sectors, particularly apparel and knitted clothing have a very small share in the world trade. These sectors are also suffering from the intense competition from China, India and Bangladesh.

He said that since the abolition of quotas in post 2005 scenario, the textile industry has is up against the adverse situation on account of rapid changes on the national and international fronts, where per unit prices of all textile products is declining,

Post quota Pakistan textile products started confronting market competition on account of unfair trading practices of competitors, besides a negative perception of the country of buyers and investors, he added.

Shafqat Elahi said that in order to compensate textile industry the government announced a relief package for the value-added textile sector but left spinning and weaving sectors in spite of being capital intensive, on their own to face harsh realities.

Since last two years economic parameters have badly affected the viability of the industry and retarded its growth and sustainability, while the investment made by the spinning and weaving industry thus is under serious threat, he said.

He said that the strident rise in various cost push factors has an estimated financial impact to the tune of Rs 80 million for a spinning unit of the size of 20,000 spindles and weaving unit having 120 looms to the tune of 65 million.

"We are the largest investors of this nation. We request to the high authorities now to immediately convene local textile investors meeting under president or Prime Minister command. Together we can formulate a strategy to implement your vision for a dynamic, vibrant and prosperous Pakistan," he concluded.


http://brecorder.com/index.php?id=517371&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*$400 million ADB loan for infrastructure projects *

ISLAMABAD (January 15 2007): The Asian Development Bank (ADB) has approved $400 million loan to Pakistan for 'Private Participation in Infrastructure and Program-I (PPIP)' aimed at enhancing economic growth through improved infrastructure services.

Its outcome will enhance private sector participation in the country's infrastructure investment and maintenance to reduce the government's fiscal burden and provide better infrastructure services to the population and enterprises, official sources told Business Recorder.

To achieve the desired objectives, subprograms will also be executed, including strengthening the enabling environment for PPI by addressing the remaining policy, legal, regulatory, and institutional constraints and providing technical and financial support for PPI projects.

This is a cluster program that will consist of Subprogram-I and Subprogram-II (the design of which will depend on the outcome of Subprogram-I and the government's emerging priorities).

A technical assistant grant will support implementation of Subprogram- I and capacity-building initiatives required to support the government's PPI initiatives over the medium- and long-term.

By promoting PPI, the operation will help the government to leverage more financial resources into infrastructure by using the private sector as an intermediary. This will help to fill the gap between (i) the infrastructure the government can afford, and (ii) the infrastructure needed for economic development and poverty reduction, as articulated under the government's Medium Term Development Framework (MTDF).

Infrastructure development is a key pillar of the government's MTDF in recognition of its importance for sustaining economic growth and alleviating poverty. The MTDF acknowledges the necessity of PPI in infrastructure and utilities from the point of view of capital mobilisation, but also in terms of ensuring efficiency and effectiveness.

The government is committed to promote PPI by addressing remaining political, legal, regulatory, and institutional constraints to PPI in priority sectors. Further, under the MTDF, the government has approved specific development programs for the power, transport, and water sectors.


http://brecorder.com/index.php?id=517381&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'ADB extending $900 million for mass transit scheme' *

KARACHI (January 15 2007): The Asian Development Bank (ADB) is extending financial assistance to the tune of $900 million in the shape of grants for the mass transit programme in the metropolis and the city's water and sewerage projects.

This was stated by Karachi Naib Nazim Nasreen Jalil. She was speaking in the 'Bilmushafa' programme of Radio Pakistan, Karachi, on Sunday. She said that the ADB assistance would be utilised for the mass transit programme in the metropolis, the rail system, roads, overhead bridges, underpasses and for improvement of water supply and sewerage.

The Naib Nazim said that Karachi had been neglected in the past. However, she added that attention was paid to this metropolis when President Pervez Musharraf came to power.

She said that a package of $29 billion was prepared under Tameer-i-Karachi programme and the stakeholders were asked to invest in it.

She pointed out that now development programmes are being carried out in Karachi. Nasreen said that both federal and provincial governments want that Karachi should make progress.

She said that Karachi earns almost 68 percent of the revenue of the country, which speaks of its significance. She highlighted the strategic location and importance of Karachi and said that in its development lay the development of the province and the country.

She said that from the K-3 water scheme of 100 MGD, arrangements were being made to provide 6 MGD to Lyari, and 3 MGD to DHA. Steps are also being taken for supply of water to Baldia Town from this scheme, she added.

The Naib Nazim said that Rs 50 million each have been given to the towns for laying sewerage lines and strengthening the water supply lines.

She said that a lot of attention was being paid towards education, and 38 schools would be upgraded as model schools and they would be of the standard of private schools.

She said Nazim Mustafa Kamal "is doing a lot" for the progress and development of the city. She said that concerted efforts should be made by all so that this city could make a rapid headway.

She also spoke about `Hamara Karachi' programme which is being celebrated to mark the platinum jubilee of the Karachi Metropolitan building.

Nasreen said that a number of programmes were being organised for every segment of the society to foster understanding and brotherhood among various communities who dwell in this metropolis and to develop a sense of belonging for the city.

She also pointed out that there are more than 200 historic buildings and "we want to provide information to the people about this city".

http://www.brecorder.com/index.php?id=517410&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Implementation pact signed for 225MW Sahiwal power plant *

ISLAMABAD (January 14 2007): Saif Power Ltd (SPL) has signed 'Implementation Agreement' (IA) with the Private Power and Infrastructure Board (PPIB) to set up 225 mw power generation facility in Sahiwal. The IA document was signed and exchanged between Khalid Irfan Rahman, Managing Director PPIB, and Javed Saifullah Khan, Chairman of the company.

The company had also signed Power Purchase Agreement (PPA) with National Transmission and Dispatch Company (NTDC) a few days ago, while Gas Supply Agreement (GSA) has also already been initialled with Sui Northern Gas Company Limited (SNGPL).

The signing of IA has concluded the package of agreements (IA, PPA and GSA), as per requirements of the 2002 power policy. Now, the company will proceed with its financial closure and, thereafter, the construction of the power complex.

The power plant, which is expected to start its commercial operations early in 2009, would be established at a cost of $189 million. The power plant is based on combined cycle/gas turbine technology, and would be capable of operating on dual fuel. It will use gas as primary fuel.

http://www.brecorder.com/index.php?id=517135&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Pakistan seeks extradition treaty with Australia 
*

ISLAMABAD (updated on: January 15, 2007, 22:53 PST): Prime Minister Shaukat Aziz on Monday said Pakistan values its multifaceted relations with Australia and is keen to further consolidate co-operation in broad spectrum of areas particularly trade, investment, education, agriculture, agribusiness and livestock.

Talking to Philip Ruddock, Attorney General of Australia who called on him at the PM's House this evening, he said the relations between Pakistan and Australia have strengthened as a result of the growing bilateral interaction between the top leadership of the two countries.

Shaukat Aziz said Pakistan is keen to sign extradition treaty with Australia.

He said Pakistan is also positively considering the Australian proposal to sign agreement on mutual legal assistance in criminal matters.

The prime minister said that Pakistan is against terrorism in all its forms and fighting against it out of conviction, in its own national interest and for maintaining peace and stability across the world.

Shaukat Aziz emphasised the need to address the root causes of terrorism to eradicate this scourge adding that terrorism stems from a feeling of deprivation, injustice, lack of opportunities and lack of dispute resolution.

He said Pakistan is assisting Afghanistan in its reconstruction process because a strong stable and vibrant Afghanistan is in the best interest of its people, Pakistan, region and the world.

The prime minister said Pakistan has taken a number of steps to regulate the movement of people at the Pak-Afghan border, which is long and porous.

Pakistan has deployed 80,000 troops to improve security situation in the tribal areas and now weighing various options including fencing and mining of its side of the border with Afghanistan to prevent the movement of extremist elements. 

He said the international community needs to expedite the process of reconstruction in Afghanistan and more economic opportunities should be created for the people of Afghanistan to discourage extremism and terrorism. This will encourage the Afghan refugees living in Pakistan to return to their homeland, the prime minister added.

Giving an overview of the economic turnaround achieved by Pakistan, the prime minister said, as a result of the broad based reforms introduced by the government during the last seven years in every facet of life, the economic and social landscape of the country has significantly improved. 

The prime minister said per capita income and the size of economy have doubled, poverty has come down from 34-46 percent in 2001 to 24 percent in 2006 and all social indicators are moving up.

He thanked the Australian government for the 500 scholarships for Masters and Ph. D level students and 6.6 million dollar agricultural support programme initiated by Australia for Pakistan.

Philip Ruddock said Australia attaches importance to its relationship with Pakistan and desires to further strengthen co-operation between the two countries. 

He said Australia wants to sign extraction treaty and agreement for mutual legal assistance with Pakistan is being worked out with Pakistani authorities.

brecorder.com


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## Neo

* Labour-intensive industries lack investment *
By Mansoor Ahmad

LAHORE: Pakistan has generated $6 billion in foreign investment through privatisation in the last seven years, but it is still on the look-out for investors that can enter labour-intensive industrial sectors.

Foreign investment in the country is not coming in the manner that generates productivity. The country received $6 billion investment in the last seven years including $3.5 billion foreign direct investment in the previous fiscal (2005-06). However, 10 per cent of the investment came from the privatisation of commercial banks and 36 per cent was received as proceeds of the PTCL and OGDCL sell-off. Thus, 46 per cent or almost half of the total foreign investment went to the already operational companies. The remaining 54 per cent FDI was invested in new projects that too mostly in the services sector. Very few green industrial and job-intensive projects were set up with this foreign investment.

Foreign direct investment, according to the UNCTAD, amounted to $1.2 trillion across the world in 2006 with Asia accounting for investment inflows of $183 billion. China, Hong Kong and Singapore were the top three recipients of the FDI. PakistanÃ¢â¬â¢s share in foreign investment inflows during the year was around two per cent of the total FDI received in Asia and 0.2 per cent of global FDI.

Economic experts believe Pakistan is still not an attractive place for foreign investors and the recent surge in foreign investment is more the result of personal efforts of the President and Prime Minister and privatisation of national assets.

The investment policy, experts say, looks excellent on paper but its implementation is a serious problem. PakistanÃ¢â¬â¢s ratings on governance, regulation, competitiveness and political freedom are too low to attract any meaningful investment, they say.

Every time the President and the Prime Minister visit foreign countries they lure the investors there. A few that show interest then visit Pakistan and things move fast in these particularly special cases. However, for those investors that choose to come through normal channels, hurdles still exist. The investors rethink their investment plan after experiencing bureaucratic snags, corruption and incompetence.

Pakistan stands at 142nd place in the latest Corruption Perception Index of Transparency International with transparency points of 2.2 out of 10. India and China, our main competitors in the global trade, are ranked 70 with transparency score of 3.3 per cent. 

In the Business Competitive Index released by the Geneva-based World Economic Forum, Pakistan is ranked 91st out of 125 countries. India is at number 43 and China at 54. The same forum placed Pakistan at 67th place in the Network Readiness Index while India and China at 40 and 50.

ST Kearney, a US-based research institute in its FDI Confidence Index for 2006, ranked China first and India second as the most favourite destinations for foreign investment. Pakistan is not even among the first 50 most lucrative global countries for foreign direct investment.

Global Integrity, another western NGO, assessed countries on the basis of freedom to civil society, media, government accountability, corruption and rule of law, oversight regulation and election process. In its Global Integrity Ratings for 2006, India is among states with moderate rating and Pakistan among countries with weak rating.

Freedom House of US classifies countries on the basis of freedom of speech, vote, business corruption and judiciary. It has classified Pakistan as the country that is not free. Again Afghanistan is classified as partially-free country along with Bangladesh and Sri Lanka. India is classified as totally-free country.

Investment consultants say the global investors go through the analyses of the above international institutions before investing in any country. Unfortunately, Pakistan is not rated favourable. The country would have to improve its governance and regulatory institutions to qualify as one of the favourite destinations for investment. They point out that geographically Pakistan is ideally located as a gateway to the vast and virgin market of Central Asia, besides bordering China.

http://www.thenews.com.pk/arc_news.asp?id=3


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## Neo

*Minfal hopeful of exceeding revised cotton target *

ISLAMABAD (January 16 2007): The Ministry of Food, Agriculture and Livestock (Minfal) is hopeful of exceeding revised cotton target of 12.5 million bales, as it is expecting production of 13 million bales at the end of season.

"We will exceed the revised target of 12.5 million bales by achieving 13 million bales against the fixed target of 13.82 million", official sources told Business Recorder on Monday.

The Minfal would have achieved record production of 16 million bales had the pest and viral attacks not damaged the current crop, the official claimed.

Both pest (Mealy bug) and viral (CLCV) attacks caused a loss of 1.5 million bales each limiting the size of crop nearly to hover around 13 million bales, he added.

The cottonseed arrival in ginning factories of Punjab and Sindh has been reported as 11.082 million bales against last year's arrival of 11.246 million bales in PCGA, during the last fortnight.

The Minfal had also chalked out a short-term strategy to control mealy bug causing 12 percent loss to cotton production during this season for which Rs 29 million had been allocated, Cotton Commissioner Dr Masood Amjad Rana said.

According to conservative estimates, the epidemic (mealy bug) caused Rs 4 billion losses, damaging the crop in the cotton growing areas, which equalled CLCV damages, Dr Rana added.

Under the plan, the ministry would control this pest, first appearing last year in Vehari, Punjab through biological control by strengthening the institutions, as they have no set up to control this, he said. The Ministry would organise an international workshop in Islamabad in August for this purpose. The government would also make efforts to increase production of friendly pest and later distributing it among farmers, he said.

About the CLCV control, Cotton commissioner said that the Minfal along with its attached departments like Central Cotton Research Institute (CCRI) was introducing viral resistance varieties.

Besides conventional varieties, the ministry was also working on fast track to introduce Bt cotton varieties in the market as well, he added.

http://www.brecorder.com/index.php?id=517563&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Single point mooring project starts at Khalifa Point *

KARACHI (January 16 2007): Country's first project of Single Point Mooring (SPM) floating jetty has started at a cost of $60 million in the proximity of Khalifa Point, near Hub Industrial area, Balochistan.

Sources told Business Recorder that the SPM floating jetty would help larger oil tankers to load and discharge crude oil and other petroleum or liquid cargoes to storage areas at the coastline and later pumped through pipelines directly to oil refinery.

In this regard, a land of 20 acres has been acquired for oil storage area. The installation and operation of SPM project is a joint venture between the Coastal Refinery Limited and Bosicor Pakistan Limited. The cost of SPM project also includes foreign direct investment (FDI) from an Italian company.

A United States based (Houston, Texas) company OPE Corporation has been assigned as technical consultant.

The source said, "We are in the process of installing SPM floating jetty with joint venture of Bosicor Pakistan Limited at Khalifa Point, Hub, Balochistan."

In this connection, "We have already imported SPM and have acquired permissions from all the relevant government departments for its installation," the source said.

"This is a unique project of its kind, being the first offshore petroleum project of the country. The SPM will load and unload petroleum products. The project is expected to be commissioned in October 2007," the source said.

http://www.brecorder.com/index.php?id=517560&currPageNo=2&query=&search=&term=&supDate=


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## Neo

January 16, 2007 

*CNG sector attracts Rs44bn investment: No impact of oil price cut*

By Aamir Shafaat Khan

KARACHI, Jan 15: The governmentÃ¢â¬â¢s decision to cut petrol price by Rs4 per litre from January 15 is not likely to impact the investment scene in the CNG sector.

The decision will not discourage investors from putting money in the CNG sector while conversion of vehicles to CNG from petrol will continue unabated, observers said.

However, cut in petrol rate will reduce the margin of saving on cars using the CNG. The percentage of saving on a CNG car was 52.70 before a cut in petrol prices.

The saving has now shrunk to 50.7 per cent after Rs4 per litre benefit to the owners of cars running on petrol, chairman CNG Station Owners Association (CNGSOA), Malik Khuda Bux told Dawn on Monday.

But in case the Oil and Gas Regulatory Authority (Ogra) comes out with a decrease in gas prices in coming days, the saving factor could increase again, he said.

Ã¢â¬ÅCut in petrol prices will not affect the conversion of vehicles from petrol to CNG,Ã¢â¬Â Malik said adding that the petrol price depends on the geo-political situation. The government will enhance the petrol price in case world oil prices climb again owing to any uncertain situation in worldÃ¢â¬â¢s politics.

He ruled out the possibility that investors would refrain from putting money in the CNG industry after petrol price cut. The CNG sector will continue to flourish despite cut in petrol prices, he added.

As many as 1.18 million vehicles have so far been converted into CNG as compared to one million vehicles in April 2006. By April 2005, there were 700,000 vehicles on the roads.

Currently, 1,131 CNG stations exist in the country as compared to 930 by March 2006. He said that some 4,000 licences have been issued to the new investors for setting up CNG stations, while 200 stations are in the process of construction.

Malik said an investment of Rs32 billion had been made in the CNG sector till now. The investment figure will jump by Rs12 billion in case 200 stations, that are being built, are included.

A large number of people have converted their petrol cars to CNG after meteoric rise in petrol prices during the last few years. Even at petrol pumps only motorcycle owners are seen filling their fuel tanks while there is hardly any rush of vehicles there.

People using CNG cars are still seen making long queues at the CNG stations due to problems of low pressure of gas from the gas utility and rising number of vehicles.

An executive in a leading Japanese car assembling unit, who asked not to be named, said that cut in petrol rates will not make any difference in the CNG booking of cars. He said that the company had been rolling out 70-80 per cent units fitted with CNG kit now-a-days as compared to 20 per cent vehicles on petrol.

Since the petrol became costlier there has been 25 per cent growth every year in booking of vehicles fitted with CNG.

Ã¢â¬ÅDespite cut in petrol prices, there is still a 50 per cent saving on CNG vehicles as compared to petrol,Ã¢â¬Â he said adding that the CNG maintenance of CNG cars is cheaper as compared to petrol version cars.

http://www.dawn.com/2007/01/16/ebr1.htm


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## Neo

Tuesday, January 16, 2007 

*Linkages with CARs, Middle East, China: Pak developing energy, trade, transport corridors: PM*

ISLAMABAD: To establish economical and efficient linkages with the Central Asian Republics, China and the Middle East, Pakistan is working on developing energy, trade and transport corridors, said the prime minister here on Monday. 

He was talking to Manfred Boes, President of the International Federation of Freight Forwarders Association (FIATA), world's largest NGO in the field of transportation, who called on him at the PM's House. 

The prime minister said that Pakistan is committed to improving and upgrading its logistics chain and infrastructure in order to sustain the present level of growth of its economy. Pakistan's major strategic initiative in the field of infrastructure development is the National Trade Corridor linking Pakistan's major ports in the south with its major cities and trade routes in the north. The ports, roads and railways along this corridor will significantly reduce the time and cost of moving goods and people and improve the productivity and competitiveness of the industry, he said. 

The prime minister said Pakistan's strategic position can play a vital role in the logistics of the region. 

Mr Aziz said that Pakistan is conscious that upgradation of infrastructure development is critical not only to business and industrial activity but also for human development and reducing poverty. 

The prime minister said that the government is engaged in a massive infrastructure development programme to build motorway quality roads, dualizing railway tracks and constructing deep-water ports to support the growth momentum. 

He said that apart from expanding the logistics chain, the government is meticulously maintaining the existing infrastructure to meet the current requirements. 

Manfred Boes said that the NTC's initiative is timely and will go a long way in improving the logistics chain without which no meaningful economic activity is possible. He said that Pakistan's impressive growth rate will encourage development of a first-class logistics chain in the country.

http://www.dailytimes.com.pk/default.asp?page=2007\01\16\story_16-1-2007_pg5_4


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## Neo

*Pakistan Jul-Dec Forex Remittances Up 25% At $2.568 Billion *

KARACHI -(Dow Jones)- Pakistan received $2.568 billion in foreign exchange remittances in the first half of the current fiscal year that began July 1, up 25% from $2.055 billion the same period last year, the central bank said Tuesday.

The State Bank of Pakistan said in a statement that remittances received in December 2006 totaled $475.21 million, up 28% from $371.24 million in December 2005.

Remittances in the last fiscal year that ended June 30 totaled a record $4.60 billion, compared with $4.168 billion the previous year.

The central bank data reflect only legal remittances made through banks.

Foreign exchange remittances make up the bulk of Pakistan's foreign exchange reserves, which also include foreign currency deposits held at banks.

Latest central bank data showed foreign exchange reserves were at $12.922 billion in the week ended Jan. 6.

More overseas Pakistanis are now using banks to wire home their foreign currency following a crackdown on informal money exchanges after the Sept. 11, 2001, terror attacks in the U.S. 

http://www.nasdaq.com/aspxcontent/N...CQDJON200701160904DOWJONESDJONLINE000342.htm&


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## Neo

Jan 17, 2007 

* Chinese eye Pakistan's real estate*
By Syed Fazl-e-Haider 

QUETTA, Pakistan - Pakistan and China have already entered a five-year economic and trade cooperation framework to increase Chinese investment in the South Asian country. Some important sectors, including real estate, have also been identified for Chinese investors so that the country's industrial production can be enhanced. 

Some 20 Chinese companies have committed to investing in the recently proposed Pak-China Industrial Zone, near Kala Shah Kako in the province of Punjab.This would be the first Chinese

industrial zone outside China in which leading Chinese groups would make investments and establish various projects. At a recent meeting with Pakistani Prime Minister Shaukat Aziz, a Ruba Haier Group delegation from China requested that the government of Punjab allocate land to the Chinese Industrial Zone on a deferred-payment basis and also proposed that the cost of the land could be recovered from the developers within 15 years. 

Some other major Chinese groups have also visited Pakistan recently and discussed their investment plans with top officials in Islamabad. The government has already set up a steering committee to complete the exercise and come up with a final incentive package, as well as utility agencies to provide the required infrastructure so that work can start as soon as the land has been allocated. The incentive package would help the Chinese investors to finalize their investment plans in the proposed Pak-China Industrial Zone. 

The real-estate business has seen a boom in Pakistan in recent years. The property market in the country has benefited from the present government's commitment to promote Pakistan as an investment choice. New real-estate projects in Karachi, Lahore, Islamabad and the future port city of Gwadar have built-in infrastructure to support the rapid development of housing schemes. On the other hand, the real-estate business has also developed rapidly in recent years in China, which has more than 20,000 property-development companies. The Chinese government has worked out policies and measures for the reform of the urban housing system to promote comprehensive development of the real-estate business. 

China International Industry and Commerce Co Ltd (CIIC) has shown keen interest in constructing 10,000-15,000 houses for low-income groups and other development projects. The CIIC is currently planning the construction of housing units in the capital, Islamabad, which is considered a relatively safe city because of the presence of international diplomatic missions and government offices. Surrounded by green hills and beautiful landmarks, most housing schemes in the city and in the surrounding areas sell out quickly and have always been considered a good long-term investment. 

In Punjab, about 200 hectares of land at M-III Industrial Estate in Faisalabad has been allocated for Chinese investors. The Rs4.25 billion (US$95 million) M-III, which will be the biggest industrial estate in the country, is being established on about 1,820 hectares. 

The Xiao Changfu, dean of Chongqing Social Science Academy and deputy director general of the Chongqing government's Development Research Center, recently led a nine-member Chinese delegation to Pakistan to assess the country's investment climate. Xiao said China is keen to invest in real estate in Pakistan and that the delegation would present its report to Chinese chambers of commerce and industries. 

Gwadar is another area where China's stake in real estate will prove strategic. After the completion of the deepsea port project, Gwadar is likely to emerge as a South Asian business hub and modern investment center. Property in Gwadar is considered a good investment and the speculative trade in real estate is booming there. 

Islamabad has plans to establish hotels, motels, playgrounds, boating clubs, theme parks, marinas and other recreation projects in Gwadar. The future port city will be connected to the rest of the country by land, sea and air links. The government has decided to set up a tax-free industrial zone of international standard in Gwadar and it has acquired about 4,050 hectares of land for this purpose. Housing schemes and highrise construction on commercial plots are planned and will be up to international standards. 

Officials in Islamabad claim that leading international investors have shown keen interest in Gwadar because of its strategic location and potential for becoming a major transshipment trade center in the region. Chinese companies are likely to invest in real-estate projects in the second phase of the Gwadar seaport project. 

There certainly exists vast potential for Chinese companies to invest in Pakistan's real estate. The free-trade agreement (FTA) recently signed between the two countries also provides a level playing field for Chinese investors in Pakistan. Chinese products are penetrating deeply into the Pakistani market and, as a result, people regard China with suspicion, as these cheap products have driven many local manufacturers out of the domestic market. 

Islamabad has welcomed Chinese investment in Pakistan and allowed Chinese companies to exploit the country's real-estate potential. During a visit by Pakistani President General Pervez Musharraf last February, the private sectors of Pakistan and China signed 19 agreements and memoranda of understanding worth $500 million to undertake joint ventures in various sectors of bilateral interest. The projects, mostly related to real-estate development, are to be implemented within the next four to five years. 

Besides liberalization of trade in goods, the FTA covers investments, including investment promotion and protection, treatment of investment, expropriation, compensation for damages and losses, and dispute settlement. The deal will enhance economic cooperation between China and Pakistan. 

http://atimes.com/atimes/South_Asia/IA17Df03.html


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## Owais

*'Pakistan implementing plan for modernising three ports' *

KARACHI (January 17 2007): Pakistan has started the process of implementing a comprehensive development programme for modernisation of its three ports: Port Qasim, Karachi Port and Gwadar Deep Sea Port. This was an important part of a detailed National Trade Corridor Improvement Programme (NTCIP), focusing on boosting transport capacity and linkages with all neighbouring countries.

The newly appointed federal secretary of ports and shipping, Naheed Haider said this while speaking at inaugurating of 3rd Meeting of Heads of Reference Marine Organisations of Economic Co-operation Organisation (ECO) member states here on Tuesday.

She said after the development and modernisation, the ports would help promoting inter-regional co-operation, trade and tourism between the member states. In view of rapid changes reshaping the ports and shipping industry, the delegates to the third meeting would deliberate on new trends and find ways to enhance co-ordination within the frame-work of ECO charter for the benefit and common interest, Naheed said, adding that the initiatives was taken by the ECO member countries in the field of maritime transport with the assistance of international organisations.

http://brecorder.com/index.php?id=517961&currPageNo=1&query=&search=&term=&supDate=


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## Janbaz

*Egypt likely to invest in banks*

ISLAMABAD: Prime Minister Shaukat Aziz on Tuesday said Pakistan had become a lucrative destination of foreign direct investment in view of the availability of skilled manpower, comparatively low cost of production and a level-playing field for foreign and local investors.

The prime minister stated this while talking to a delegation of Egyptian bankers comprising Ahmed ElBardai and Wagdy Rabat, representing the Orascom group, who called on him at the PM House. Zouhair Khaliq, Chief Executive Officer Mobilink also attended the meeting.

The prime minister said Pakistan attracted foreign direct investment of $3.1 billion last year, which was a manifestation of the growing investorsÃ¢â¬â¢ interest in the country. The overall rate of investment at 20 per cent of the GDP was the highest ever achieved by the country, he added.

The PM pointed out that comprehensive institutional reforms introduced by the government had put the economy on a high growth trajectory, which Ã¢â¬Åwe are determined to sustain.Ã¢â¬Â

He said the government had provided an investor-friendly environment as all sectors of the economy were open for business. With a population of 160 million and a growing middle class, Pakistan was fast turning into a major market economy and a manufacturing and servicing destination in the region, he said.

He said the governmentÃ¢â¬â¢s policies of liberalisation, deregulation and privatization, particularly in the banking sector, had attracted several international investors.

Bardai and Rabat, on the occasion, said the economic policies of Pakistan were well appreciated and recognized all over the world, especially in the investor and financial community. They expressed interest in investing in the banking sector and the hotel industry of Pakistan.
The News.
http://thenews.jang.com.pk/daily_detail.asp?id=39092


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## Janbaz

*$49m project to develop agri-businesses*

ISLAMABAD, Jan 16: The Ministry of Food, Agriculture and Livestock (Minfal) has launched a project for the improvement of horticulture and livestock related business in the country, official sources said here.

About 2,000 agro-enterprises are expected to benefit from the agribusiness support fund operations over the five years of the project life.

Further, a handful of institutions are expected to develop dedicated agribusiness finance functions, which could benefit an additional 10,000 agro-enterprises, (including up to 12,500 farm entrepreneurs) by improving access to finance, providing significant jobs and income generating opportunities.

The total cost of the project is estimated at $49 million to which the government will contribute $6.9 million, the agribusiness enterprises $10.4 million, private sector institutions $600,000, and the beneficiaries $100,000. The Asian Development Bank will provide a concessional loan of $31 million for the project.

The agri-business development project would lead to development of 705 agriculture business enterprises through formation of 1,250 farmers groups involving 12,500 farmers. Additionally, the project will develop 100 business development support companies and 30 research and extension service provider companies as well as supporting 10,000 agriculture business enterprises backed with a strong human resource component.

The project will focus on horticulture business, through actions to improve the livestock and dairy institutional framework, and support to the selected enterprises will be provided.

The agriculture sector accounts for 25 per cent of gross domestic product, almost half of jobs, and about 70 per cent of exports. However, the sector's growth has been on the decline since 1990, and yields of major crops have stagnated in the past decade.

Commercial agriculture and agribusiness development in the country is constrained by poor infrastructure, sector institutions and policies, and governance practices. Limited access to modern technology and to financial and business development services further hampers development, says the project document.

The rationale of the project is to address constraints that impede development of the sector, and exploit domestic and export market opportunities in the agribusiness sector, thereby contributing to increased economic growth and rural employment.

The Dawn.
http://www.dawn.com/2007/01/17/ebr2.htm.


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## Janbaz

*Japan keen on power sector*

SLAMABAD, Jan 16: An eight-member Japanese business delegation, led by Yamada Yoshiki, on Tuesday called on the Senate chairman and discussed with him possibilities of Japanese investment in the field of power generation, jewellery, housing and construction industry came under discussion.

During the meeting Muhammedmian Soomro informed the delegation that "we have a lot of expertise in the field of jewellery and that collaboration between the two countries would be fruitful." The Senate chairman told the Japanese investors that more and more foreign companies were making investments in various fields these days and having good returns.

He told them that there was a tremendous scope for power generation as Pakistan was short of electricity.

Mr Soomro said: "We discourage the use of furnace oil for generation of electricity because of its high cost as production of electricity by using coal would be quite cheaper.Ã¢â¬Â

The Senate chairman called upon the Japanese team to opt for cheaper options, like use of hydropower, solar energy and the wind-mills for power production.

Regarding cooperation in the field of construction industry, Mr Soomro told the Japanese team that there was a shortage of nearly six million housing units in the country, and that Pakistan would welcome Japanese investment in the construction sector.

While welcoming the Japanese investors, the Senate chairman highlighted the cordial and friendly relations between Pakistan and Japan and hoped that the growing ties between Japan and Pakistan would play a significant role in the progress, prosperity and development of the region.

The Dawn.
http://www.dawn.com/2007/01/17/ebr9.htm.


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## Neo

*Housing backlog to reach 100 million in 20 years: FPCCI *

KARACHI (January 17 2007): Pakistan may face a housing backlog of 100 million in the next 20 years against the backlog of 61.9 million at present, if the construction industry is neglected continuously.

Munir Sultan, Co-chairman, Standing Committee on Housing & Construction Industry of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) told Business Recorder that the World Bank had reported backlog of 61.9 million against the backlog of 4.27 million in 1998.

"If the construction industry is further ignored by the government the shortfall shall keep adding to the accumulation of housing," he said. "I believe that by the passage of 20 years the further shortfall of 10 million houses will be added to the present backlog."

He said that the construction had been neglected and no incentive was given to this job providing industry and delay in regularisation of the frozen lands in Karachi, which was basic raw material for the construction industry.

Sultan said that fiscal year 2004-2005 GDP growth rate of 8.6 percent was realised first time in the history whereas the target was 6.8 percent and the construction industry's growth registered at 18.6 percent unexpectedly on a very higher side due to which the overall economic growth was 8.6 percent. But as per the economic survey report for the year 2005-2006 the GDP rate was 6.6 percent against the target of 7 percent, the construction industry achieved growth of 9.2 percent despite all odds.

It is less than phenomenal growth of 18.6 percent, but higher than the target of 7.5 percent and better than the performances in last 15 years, he said. The State Bank of Pakistan has acknowledged in its annual report that construction was the only sector to have achieved higher than targeted growth, he said.

He said that main impediment in growing housing industry was prolonged frozen lands matter, which should be finalised on emergent basis where the amount of Rs 130 billion from the poor masses has been stuck-up in Karachi. He also suggested that the government should direct the financial institutions to provide house construction loans instead of house purchase loans.

About 600,000 to 700,000 people added to Karachi population annually, which increased the number of katchi abadis from 471 in 1984 to 1,482 till June 2005. "These katchi abadis have encroached land of government and semi-government worth billions of rupees," he said, adding due to this the crime rate had been increased besides getting illegal water and power connections.

He said the present government under the leadership of President General Pervez Musharraf and Prime Minister Shaukat Aziz had taken serious note of housing backlog and accepted the importance of housing and development, which was internationally recognised an important pillar of measuring country's economy.

He said the government had attracted foreign developers and some projects had been finalised in the area of Defence Housing Authority and Coastal Line, which was still beyond the purchasing power of the lower and middle-income families. He suggested that there was need of satellite town and low-cost housing on emergent basis to meet the housing backlog.

He also demanded of the government that the allotment of lands was being banned for long and it should be realloted to genuine builders. He mentioned that the government was sincere to develop the industry but bureaucracy had created obstacles for preventing the growth, which would directly hit 72 other related industries. If the industry collapsed it would result in mass unemployment, he said and adding that millions of people were employed in the allied industries.

http://www.brecorder.com/index.php?id=517987&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Textile exporters expect $1 billion orders from Heimtextil fair *

KARACHI (January 17 2007): The country's textile exporters are expecting to get foreign orders worth of one billion US dollar from Heimtextil exhibition, "the world largest home textile event held every year in Germany," concluded recently, exporters, who participated the event, told Business Recorder on Tuesday.

This year more than 3,000 textile related exhibitors from 75 countries participated in the exhibition, while around 0.1 million businessmen, buyers and importers visited it from all over the world. Pakistan is also a big participant of the Heimtextil for the last many years and this year 166 Pakistani textile exporters participated in the fair. Exporters of home textile bed-wear and towel manufactures displayed their products in the exhibition.

Although this year, the members of Pakistani delegation were fewer than those of the last year, however Pakistani exporters got a positive response from international buyers, told a visiting exporter. Around 90 percent Pakistani participants have revised export orders worth of approximately of $600 million during the three day of the exhibition while more than $400 million fresh orders are also expected to be finalised soon".

"We have provided new designs and products to our customers for the quality checking and they will finalise new order shortly after the negotiation on the price," he added. He said that our home textile export, which stood at around $3 billion annually depends on this exhibition and leading exports are getting a large number of export orders from this event.

Minister for textile Mushtaq Cheema told Business Recorder that this year there was no price war at the Heimtextil exhibition against our expectations and our exporters had quoted 2 to 3 percent high prices as compared to those of last year.

"In the exhibition our exporters were confident, while the Indian and Bangladeshi exporters failed to receive response but the Chinese exporters dominated the exhibition by giving a tough time to the Pakistani exporters," the minister observed. He said that relief package for exporters in the shape of five-percent research and development (R&D) assistant has provided support to the exporters and make the competitive to get orders.

http://www.brecorder.com/index.php?id=517949&currPageNo=2&query=&search=&term=&supDate=


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## Owais

*10 EoI received for Heavy Electrical Complex sell-off *


ISLAMABAD (updated on: January 17, 2007, 16:56 PST): The Privatisation Commission (PC) has received ten Expressions of Interest (EoI) and Statement of Qualification (SOQ) from the interested parties to participate in the privatisation process of Heavy Electrical Complex (HEC).

The interested parties included 1.ABB (Pvt) Limited, 2. Areva T&D Pakistan (Pvt) Ltd, 3. ICC (Pvt) Limited, 4. Iljin Heavy Industries Co. Ltd, through Seven A's Corporation, 5. Lahore Polypropylene Industries (Pvt) Limited, 6. Pak Elektron Limited, 7. Noor Financial Investment Company, 8. Sahfi Associates, 9. Shahzad International, and 10. Siemens (Pakistan) Engineering Company Limited.

A pre-qualification committee will now evaluate these parties for pre- qualification on the basis of the information submitted by them in the Statement of Qualification.

Heavy Electrical Complex (HEC) is one of the industrial units of State Engineering Corporation (SEC) engaged in the manufacturing of power transformers of different types (total annual capacity 3000 MVA) with primary voltage rating of 66 and 132 KV.

In addition, the HEC undertakes repair and refurbishment of old and damaged power transformers upto 500 KV. HEC was incorporated as a private limited company in 1991 and commenced full-scale commercial operation in 1997.

HEC is located in Hattar Industrial Estate about 65 Km from country's capital Islamabad. HEC is spread over an area of 81.379 acres. A total of 63 acres of land is included in the transaction out of which 20 acres is non-core land for expansion. 

Major clients of HEC products include WAPDA, its corporatised entities and KESC. HEC has six main manufacturing shops namely Machine shop, Winding shop, Insulation shop, Core shop, Fabrication shop and Assembly shop. 

In addition HEC has an oil purification shop, high voltage test laboratory equipped with 250 tonne overhead travelling crane. HEC can diversify its manufacturing range by including other products such as instrument transformers, high voltage circuit breakers and other grid stations equipped for meeting demand of the products in domestic and foreign markets.

brecorder.com


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## Owais

*Japanese firm keen to invest in Pakistan *

ISLAMABAD (January 18 2007): Satoko Owner Tomato Design Limited, a Japanese company has shown interest invest in power and financial sector and Gawadar port. The CEO of the company showed interest in investing in Pakistan during a meeting with Board of Investment BoI Talat Miyan.

Talat Miyan briefed the delegation about the opportunities for investment in Pakistan and said that there is strong diplomatic relationship between Pakistan and Japan. He said that the investment policies of Pakistan are the most liberal in the whole region and there is unlimited potential in power, tourism and construction sectors fully open for investment.

He briefed them about the investment incentives and opportunities in said sectors and other infrastructure facilities. He assured all support from Government of Pakistan to Japanese Investors and told them that this is the right time to invest as Pakistan is becoming a hub of business in the region.

The members of the delegation are Yoshiki Yamada, President Nihon Sho Koh Inc, Satoko Takahashi, Owner Tomato Design Co Ltd, Ayaki Kawase, President, Construction Project Consultant Inc, Takeo Mogami, GM Overseas Division, Construction Project Consultant Inc, Farida Yahiya Sapphire Gem Co Ltd, Sheikh Umar Frooq, CEO, Habian Solitec, Malik Shahid Ahmed Khan, Chief Operating Officer, Habian Solitec.


http://brecorder.com/index.php?id=518333&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Cellphone users jump by 145pc *

KARACHI: Cellphone subscriber base grew by more than 145 per cent during calendar year 2006, as continued popularity of the service attracted over 28 million new customers during the period, a senior official said on Wednesday.

Latest figures compiled by the Pakistan Telecommunication Authority suggest total number of cellular service users stood at 48.50 million by December 2006, which were 19.6 million by the end of 2005.

Ã¢â¬ÅIt shows an increase of 147.44 per cent, which is the highest in a single calendar year,Ã¢â¬Â said the official at PTA. Ã¢â¬ÅThere is also a 4.5 per cent increase if we compare such figures with the previous month (November 2006). In fact, there is an exceptional jump in cellular subscribersÃ¢â¬â¢ number.Ã¢â¬Â

He said during 2006 almost 29 million new connections were sold by the six cellular companies on comparatively cheaper tariffs and increased network reach of the service providers.

Ã¢â¬ÅSo there was over 28 per cent mobile density rate by November 2006,Ã¢â¬Â said the PTA official. Ã¢â¬ÅThe four major companies - Mobilink, Ufone, Al Warid and Telenor - earned better market share during 12 months of 2006, which attracted subscribers with different tariff packages and incentives.Ã¢â¬Â

The figures, gathered by the telecom watchdog, show by December 2006 Mobilink led the market share with 22.70 million subscribers, followed by Ufone, which was serving 10.10 million people across the country.

With the arrival of the UAE-based Al Warid Telecom and Norwegian Telenor both competition and subscriber base grew at a much faster pace, as the new entrants attracted 7.6 million and 6.6 million subscribers respectively by the end of December 2006.

The PTA data says by December 2006 Paktel, which offers both AMPS (advanced mobile phone system) and GSM (global system for mobile communications) services enjoyed 1.3 million subscribers and the only AMPS service Instaphone had a share of 0.2 million by the year-end.

The cellular density witnessed phenomenal jump in the last two years as mobile phone subscriber base grew by staggering 170 per cent during 2005-06, outnumbering almost six-decade old fixed line telephony service by more than 500 per cent in 16-year operations.

Analysts see cellular service growth in line with the expectations, but say 2007 appears challenging for the cellular companies, when MNP (mobile number portability) is expected to be in place.

Ã¢â¬ÅA cutthroat competition is expected among the operators during 2007, after the MNP is implemented by all the cellular operators across the country,Ã¢â¬Â said Anwaar Ahmed Khan, a telecom analyst at Capital One Equities.

Ã¢â¬ÅThe MNP would decide the real market leader. After the MNP implementation the companies must have to improve their service quality to keep their subscribers intact.Ã¢â¬Â

The MNP is a system, which enables a mobile phone subscriber to carry the same number while changing the service provider. The system, which requires over Rs500 million, was scheduled to be implemented in November 2005 was delayed for more than a year on unknown grounds.

Now the regulator has set January 2007 as new deadline for the project completion and seems confident to meet it. 

Ã¢â¬ÅThe MNP is almost ready to be launched,Ã¢â¬Â said the PTA official. Ã¢â¬ÅThere were some complications in the project, which have been removed and proper service would be available to subscribers within newt few weeks.Ã¢â¬Â

http://www.thenews.com.pk/daily_detail.asp?id=39259


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## salman77

*​Pakistan, Abu Dhabi to promote trade, defence ties​*ISLAMABAD: Crown Prince of Abu Dhabi Sheikh Mohammad Bin Zayed Al-Nahyan said his country is greatly impressed by the economic strides Pakistan has made.

He stated this in a meeting with Prime Minister Shaukat Aziz Thursday at Prime Minister House here Thursday. The two leaders discussed bilateral, regional and international matters with special focus on investment, trade, defence and security fields. The two sides agreed to promote bilateral cooperation in all sectors.

The UAE will continue to encourage its private sector to enter into joint ventures with their counterparts in Pakistan, as it is a win-win for all. The Crown Prince, who is also Deputy Supreme Commander of the UAE Armed Forces, said he has no doubt that UAE businessmen will continue to invest in Pakistan.

Investment, he said, comes only to a place where it is considered safe and the people of UAE and its investors have great faith in Pakistan. Pakistan can always count on UAE just as UAE counts on Pakistan.

Shaukat Aziz said he welcomed the fact that the UAE has emerged as the largest single investor in Pakistan, which is reflective of the close relationship between the two countries. Talking about the composite dialogue process with India, the prime minister said Pakistan is a peaceful country and wants to resolve all outstanding issues with India including the Kashmir dispute.

Sheikh Al Nahyan who is also Chairman of the Executive Council of the Emirate of Abu Dhabi said that the UAE welcomes the Pakistan India dialogue and hoped it would lead to resolution of all issues. The prime minister apprised the visiting dignitary about PakistanÃ¢â¬â¢s relations with China, which he described as close and reliable friend of Pakistan.

Regarding the developments in the Middle East, the prime minister said Pakistan believes that peace in the region hinges on an honourable and just solution of the Palestine issue. He said Pakistan will continue supporting the just struggle of Palestinian people for the establishment of an independent state.

Pakistan also supports IraqÃ¢â¬â¢s sovereignty, territorial integrity and unity and is concerned over the worsening security situation and sufferings of the Iraqi people. He said the current visit of the Sheikh Mohammad Bin Zayed Al-Nayhan would further consolidate and expand bilateral ties between our two countries.

The meeting was followed by banquet hosted by the Prime Minister in honour of the Crown Prince and his delegation at the Prime MinisterÃ¢â¬â¢s House. Speaking on the occasion the prime minister said Pakistan and the UAE have cooperated with each other in every field. We share our mutual desire for peace in the region.

General Sheikh Mohammad Bin Zayed Al Al-Nahyan said that UAE will make its best efforts to maintain and enhance its record high investment in Pakistan. He said the people of UAE appreciate the support Pakistan gave it in developing UAEÃ¢â¬â¢s armed forces particularly the Air Force. He also appreciated the services rendered by about half a million Pakistanis living in the UAE in helping the nation develop and prosper.


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## Owais

*UAE trade with Pakistan to hit $5.1 billion *


ISLAMABAD (updated on: January 19, 2007, 17:24 PST): Trade between Pakistan and the UAE is set to reach $5.1 billion (Dh18.71 billion) by the end of June, increased by 20 per cent over $4.1 billion in 2005-06.

The first six months of this financial year have yielded a strong results. Exports to the UAE have risen to $700 million compared to $1.3 billion for full-year 2005-06,private news channel reported.

During the last fiscal year the UAE's exports were $2.8 billion and imports from Pakistan were $1.3 billion, keeping the trade balance in favour of the UAE.

Pakistan's exports to UAE were petroleum products worth $400 million, rice $250 million, textiles $200 million, engineering $60 million, leather $120 million and others.

The growth trends in two-way trade are very encouraging and both governments will continue to work closely with the private sectors to enhance co-operation in trade, commerce, investments and other vital areas.

brecorder.com


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## Owais

*Growth on track; inflation to be higher: SBP *

KARACHI (January 19 2007): Monetary policy statement for January-June 2007: first quarterly report for fiscal year 2007: The State Bank of Pakistan says that the growth target (7 percent) for the current year is achievable. However, inflation would be higher (7.5 percent) because of the double-digit increase in food prices.

Issuing the Monetary Policy Statement on Thursday, for January-June 2007 and the first quarterly report for FY07, SBP feared that the increase in money supply will be higher than envisaged in the Credit Plan by the central bank for the year. Further, the volatility in government borrowing is putting pressure on monetary policy.

The report clearly illustrates that the proper application of monetary policy in a calibrated manner has successfully curbed the demand side inflationary pressures while supporting the growth momentum.

SBP said the high reserve money growth is of serious concern as it is indicative of future monetary expansion and inflation. "Liberal access provided to exporters under EFS and LTF-EOP" has added Rs 42 billion over and above the credit plan rise in M2.

In addition, the net foreign assets of the banking system have also expanded by Rs 11.5 billion in the first half of FY07 as against Rs 66.7 contraction a year ago.

SBP report says that although government borrowing for budgetary needs could well be within the Rs 120 billion target - the source of borrowing is a concern for the monetary policy.

The report warns that government borrowing from the banking system jumped from Rs 20 to Rs 60 billion in last 18 months - causing a sharp increase in reserve money. This has a potential of re-igniting the inflationary pressures in the economy. And, the path of low stable inflation could be extended and interest rates kept at a high level for a longer period.

The report says private sector credit growth has slowed down primarily due to dampening of consumption-oriented demand for credit. The demand for long term fixed investment, however, has remained intact.

There has been a decrease in demand for working capital. It has slowed down as most industries are working at near full capacity. Unless additional capacity becomes operational, SBP does should not expect a significant rise in the demand for working capital.

Since inflation in Pakistan is relatively higher compared to its competitors and trading partners, the Relative Price Index (RPI) increased by 4.5 percent. It offset the gains emanating from nominal depreciation of the rupee and the Relative Effective Exchange Rate (REER) index appreciated slightly by one percent during last six months, concludes the report.

http://brecorder.com/index.php?id=518577&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Current account deficit reaches $3.8 billion *

KARACHI (January 19 2007): Current account deficit reached to 3.8 billion dollar during July-November of current fiscal year of 2007 as compared to 3.1 billion dollar recorded in the corresponding period of fiscal year of 2006.

According to the State Bank of Pakistan (SBP) quarterly report, the current account balance worsened further in the first five months of fiscal year 2007 and increase in deficit was contributed by goods and income deficit along with services deficit.

However, current transfer inflows showed improvement of 465 million dollar over the corresponding period, mainly due to higher remittances inflows. It is worth mentioning that despite persistent current account deficit since fiscal year 2005, Pakistan's debt to GDP ratio is continuously improving.

According to the SBP report the services account deficit also recorded an increase of 5.2 percent during July-November to reach 1.9 billion dollar as compared to 46.5 percent rise in the corresponding period last year.

An unusual lower growth in services account deficit was largely due to the absence of one-off outflow for construction services. The payments for construction services declined by 77 million dollar during July-November FY07 as compared to the same period in FY06. The higher payments for construction services during July-November FY06 were related to the deferred construction payments for the Ghazi Brotha Dam.

Similarly, the net outflow under other business services also recorded fall of 40 percent during July-November FY07. Thus the saving on construction services and other business services partially offset the routine outflows on account of transportation and travels account.

http://brecorder.com/index.php?id=518581&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*ADB to extend $36 million for coastal areas *

LAHORE (January 19 2007): Asian Development Bank (ADB) is lending $36 million to reduce poverty and improve environmental management in six coastal sub-districts of Sindh. According to a press release, the loan is the first to be approved by the ADB Board of Directors in 2007.

The project focus includes job creation, community-driven development and methods for households to cope with environmental degradation in parts of Thatta and Badin districts, where a million people live in poverty.

Environmental degradation is a significant concern in the area around the Indus delta, where losses of agricultural land and declining inshore fishing stocks have occurred.

Over a six-year period, Sindh Coastal Community Development Project would provide opportunities for environmentally sustainable growth at the household, community, and institutional levels. At the household level, improved development of mangrove planting, crab and prawn ponds, bivalve and seaweed rafts, and training for a variety of skills would create income-generating options, it said. Households will also benefit from access to micro loans and savings services.

At community level, the organisation of village groups, leadership training and community-managed development funds would increase self-reliance and improve access to water, roads, and other basic services. At the regional level the project would support development of a coastal zone management and monitoring plan, the statement added.

Surveys of water quality and fisheries in near-coastal areas as well as work to enhance public sector responsiveness to local needs are planned. "The most urgent issue to be faced on the Sindh coast is poverty and environmental decline that households are likely to face," says Betty Wilkinson, an ADB Rural Development specialist.-PR

http://brecorder.com/index.php?id=518621&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Import of mild steel, iron sheets from India allowed upto March 31 *


ISLAMABAD: The government on Thursday allowed the import of Mild steel (MS) reinforcement bars grade 40/60, mild steel angle iron sections graded 40/60 and corrugated galvanized iron sheets SWG falling under their respective headings shall be importable from India upto March 31, next, via land route as well, for exclusive use in the reconstruction of earthquake affected areas. 

This decision has been taken by the Ministry of Commerce on the recommendations of the Earthquake Reconstruction and Rehabilitation Authority (ERRA), says an order by the Ministry here today. 

Following is the text of the order: "The Federal Government is pleased to direct that the following further amendments shall be made in the Import Policy Order, 2006, namely:- In the aforesaid Order, in paragraph 16, under heading B in clause(viii), for the second proviso, the following shall be substituted, namely: - Provided further that mild steel (MS) reinforcement bars grade 40/60,mild steel angle iron sections graded 40/60 and corrugated galvanized iron sheets SWG falling under their respective headings shall be importable from India up to the 31st March, 2007, via land route as well, for exclusive use in the reconstruction of earthquake affected areas on the recommendations of the Earthquake Reconstruction and Rehabilitation Authority (ERRA)".

http://geo.tv/geonews/details.asp?id=940&param=3


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## Janbaz

*Privatisation yields $6bn in 7 year*

SLAMABAD, Jan 18: Federal Minister for Privatisation and Investment Zahid Hamid has stated that the government is fully committed and very serious to bring Pakistan State Oil (PSO) to the bidding point within the set target as "we have received encouraging response."

The minister stated this during his meeting with a delegation of Kuwaiti investors, led by Mr Hussain Al Shammaa, Managing Director, Bakri Energy Marketing Systems, on Thursday.

He informed the Kuwaiti group that the data room for the due diligence of PSO was ready and would be made available to the parties soon after the completion of pre-qualification process on the basis of the information received from the parties through their statements of qualification (SoQs).

The minister said that Pakistan had liberal economic and pro-investor policies and provided level playing field to all in a most fair, open and transparent manner.

The governmentÃ¢â¬â¢s strong political will and commitment from the top has yielded record results on the privatisation and investment fronts during the last seven years of President General Pervez MusharrafÃ¢â¬â¢s government.

Since 1991 to-date Pakistan has realised privatisation proceeds worth $7 billion out of which major portion of $6 billion was received during the last seven years, he said.While briefing the delegation about the investment policy and achievements, Mr Zahid stated that Pakistan provided conducive and very attractive investment environment.

The leader of the delegation of Kuwaiti Investor group expressed his keen interest in the privatisation of PSO and wished the minister for successful completion of the transaction.

http://www.dawn.com/2007/01/19/ebr8.htm.
The Dawn.


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## Neo

*Low imports of dutiable items hitting revenue*

ISLAMABAD, Jan 18: The gradual slowdown trend in imports, particularly in dutiable imports has posed a serious threat to the government to achieve the annual tax target of Rs835 billion set for the fiscal year 2006-07.

This warrants a special attention towards other appropriate remedial measures like plugging the loopholes in customs collection. The decline in dutiable imports seriously hits the customs duties collection followed by revenue from sales tax and withholding tax.

The CBRÃ¢â¬â¢s first quarterly report 2006-07 released here on Thursday indicated that although CBR had accomplished the assigned target for July-Sept of 2006, the trend of decreasing dutiable imports, if continued, might create difficulty in achieving the revenue target for the remaining year.

On the other hand, the higher growth in the direct taxes has been possible due to vibrant economic activities in the banking, oil and gas and telecommunications sectors. The boom in the construction sector has also contributed positively towards this end. The improved voluntary compliance has been the result of various policy changes in the income tax regime.

There might be a need to search for new avenues for replenishing the erosion of revenues from the existing base. Improved enforcement, systematic audit and efficiency gains from the on-going reforms are some of the options that would have to be exploited, the report suggested.

Along with efforts to broaden the tax-base, it is equally important to reduce leakages as the gap between the taxes realized and their potential from the existing taxpayers, particularly the corporate sector, appears to be quite significant.

This difficult task can be accomplished through effective audit, for which the national audit plan needs to be completed on priority basis, the report recommended.Since different rates of duty are applied on imports any sudden decline in major commodities with higher ad valorem duty and specific rates of duty on items like vehicles, edible oils etc can seriously affect the collection of customs duty. On the other hand, valuation of imported goods is also essential for safeguarding government revenues, the report added.

The fluctuation in imports can cast straight impact on the collection of sales tax due to a flat rate of 15 per cent on all the imports. However, any decline in the import of raw materials results in the lesser claims of input in sales tax.

The report says that around 90 per cent of the value of imports has been contributed by only 26 commodity groups during the first quarter of the current fiscal year. Within this group, nearly 58 per cent of the import value is generated by POL products (27.1 per cent), machinery (20.3 per cent), vehicles and organic chemicals (5 per cent each).

A detailed review of these commodities confirms that electrical machinery (Ch: 85) has reflected a growth of 14 per cent. The transmission apparatus including mobile phones constituted 57.4 per cent of electrical machinery.

The growth in the imports of mobile phones during the first quarter has been 26.7 per cent while transmission apparatus excluding mobile phone grew by 16 per cent.

On the other hand the import of general machinery has reduced by 3.1 per cent.

http://www.dawn.com/2007/01/19/ebr2.htm


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## Neo

*SBP unclear about achieving targets*

KARACHI, Jan 18: The State Bank of Pakistan has advised the government in blunt terms to reduce its dependence on borrowing from the central bank as it is Ã¢â¬Åmost inflationary and it contributes to reserve money growthÃ¢â¬Â.

It advises the government of publishing quarterly borrowing targets at the beginning of every period to reduce uncertainty associated with its borrowings.

Ã¢â¬ÅThe high government borrowings and the resulting rise in reserve money, has the potential of re-igniting inflationary pressures,Ã¢â¬Â warns the first quarterly SBP report for 2006-07 released on Thursday.

But the report begins with an optimistic note of achieving 7 per cent economic growth rate despite a few negative factors which are failure of key kharif crops and a fear of large-scale industry coming under adverse effects of electric power shortages in coming months.

While making it clear that the State Bank will Ã¢â¬Åneed to continue tight monetary policy for a longer period,Ã¢â¬Â the report says the inflation is set to exceed the 6.5 per cent initial target and is indicated to range between 6.7 to 7.5 per cent and monetary expansion will be between 13.5 to 14.5 per cent instead of original target of 13.5 per cent in the current fiscal year.

The tone of the report is optimistic but it is tentative in substance when it is indicating expected growth in industrial production, exports and revenue while expressing concern on governmentÃ¢â¬â¢s dependence on borrowing from the banking sector and decline in indirect taxes. The report is a central bank review of economic performance of the first quarter Ã¢â¬â July-September 2006 Ã¢â¬â but it has given numbers from July to October 2006 and July to November 2006 in certain areas.

Inflation seems to be the dominating theme of the State Bank report for the first quarter as State Bank of Pakistan Governor Dr Shamshad Akhtar in her remarks on Thursday made it clear that price stability remains the prime objective of the central bank but then it does not mean economic growth has been relegated to secondary position in importance.

Ã¢â¬ÅWhile an anticipated recovery in large-scale manufacturing is likely to be realised, it seems that achieving a 13 per cent growth target may prove difficult,Ã¢â¬Â is how the SBP report is optimistic and tentative on industrial growth.

Similarly, the weak performance by three major kharif crops - cotton, rice and maize Ã¢â¬â had reduced the probability of a sharp rebound by agriculture, though even here, the value addition is likely to be an improvement over the preceding year if contribution from the livestock and the wheat crops remains strong. While dropping hints on less than expected growth in large-scale industry and agriculture, the SBP report pins all hopes on the services sector Ã¢â¬Åto turn in an above the target growthÃ¢â¬Â.

It reports acceleration in growth of large-scale manufacturing in first quarter of FY07 to 9.7 per cent from 8.8 per cent in the same quarter of FY06. This growth was led by textiles, electronics, chemicals and metals.

The report claims of Ã¢â¬ÅsomewhatÃ¢â¬Â easing of inflationary pressures in the current fiscal year which it attributes to its tight monetary policy but stresses for a further reduction in domestic inflation to ensure improvement in export competitiveness and a better return to bank savers. Ã¢â¬ÅCore inflation has already dropped significantly,Ã¢â¬Â the report claims while attributing it to its monetary policy to point out the instability in inflation is driven by food prices.

Food inflationary pressures, the report says, could be better controlled by improvement in supply of key staples and to take suitable administrative measures as were taken in Ramazan.

According to report the collection of indirect taxes declined in the first quarter that is attributed to deceleration in imports coupled with higher growth in development expenditure. But direct tax collections improved and State Bank hopes that this should considerably offset the loss of indirect tax reduction.

Ã¢â¬ÅHowever, if any revenue shortfall do emerge, the impact on fiscal account should be sterilised through curtailing expenditure and makes a specific reference to non-discretionary and non-development expenditure,Ã¢â¬Â the report suggesting the possibilities of adjustments and appropriation in the budget in coming weeks and months.

The report calls persistent large-scale current account deficits Ã¢â¬Åundesirable in the medium termÃ¢â¬Â but declares in clear terms that PakistanÃ¢â¬â¢s present current account deficit is not yet a serious problem. It is because the current account deficit is forecast at 4.5 per cent which it says is manageable, the country is in a position to comfortably finance the deficit through strong non-debt flows also by taking at relatively favourable terms and that PakistanÃ¢â¬â¢s GDP ratio is on decline.

As leading international rating companies continue upgrading PakistanÃ¢â¬â¢s credit rating position, it manifests PakistanÃ¢â¬â¢s comfortable debt-to-GDP ratio.

But then the State Bank advises the government to demonstrate its commitment of fiscal discipline because it is crucial in reassuring international investors, thereby supporting a further improvement in the countryÃ¢â¬â¢s credit rating.

A slowdown in PakistanÃ¢â¬â¢s exports has surprised the State Bank of Pakistan which has contributed to the widening trade deficit. The report announces support in all measures that aim to reduce cost of doing business.

http://www.dawn.com/2007/01/19/ebr1.htm


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## Neo

January 19, 2007 

*Pakistan ahead of regional economies: Economic freedom index* 

WASHINGTON, Jan 18: Pakistan is ranked ahead of many regional economics in terms of economic freedom, according to the latest worldwide index of economic freedom. The 2007 Index of Economic Freedom, jointly conducted by The Heritage Foundation and Wall Street Journal, has put Pakistan at the 89th place.

Pakistan has also earned a better ranking compared with most of developing countries on the index, which rates economic freedom of countries taking into account some key factors including ease of doing business, regulations, investment freedom, financial freedom, fiscal freedom, property rights, trade freedom etc.

India is 104 on the index which measured economic freedom of 161 countries.

The assessment notes that Pakistan scores well in fiscal freedom, business freedom, freedom from government, and labour freedom. It also acknowledges that the governmentÃ¢â¬â¢s efforts to liberalise the business climate are producing results.

In the background, experts observe that Pakistan is a vital crossroads between Central and South Asia and also add that wide-ranging macroeconomic reforms have spurred economic growth.

China, a major regional economy, has been ranked 119th on the index.

The executive summary of the 2007 Index notes that modern scholars of political economy are rediscovering the centrality of Ã¢â¬Åfree institutionsÃ¢â¬Â as fundamental ingredients for rapid long-term growth.

Economic freedom is strongly related to good economic performance, the summary stresses.

The Index reflects that the top 20 countries have held relatively steady. Even though the methodology used for rating economic freedom has been revised with this edition of the Index, the composition and order of the top 20 economies have hardly changed at all.

Japan and Belgium moved into the top group (compared to the old methodology, not compared to 2006 scores using the new methodology), whereas Austria and Sweden fell to lower positions.

Hong Kong has the highest level of economic freedom for the 13th straight year. Singapore remains close, ranked second in the world, and Australia is ranked third freest economy in the world, which means that the Asia-Pacific region is home to the top three economies.

Twelve of the top 20 freest economies are European. A majority of the freest economies are in Europe, led by the United Kingdom, Ireland, Luxembourg, and Switzerland. Only five are in the Asia-Pacific region. The remaining three are from the Americas: the United States, Canada, and Chile.

A new labour freedom factor has been added, and entrepreneurship is being emphasised in the business freedom factor.

Both of these new categories are based on data that became available from the World Bank only recently.

http://www.dawn.com/2007/01/19/ebr12.htm


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## Neo

*LSM grows by 9.7 percent *

KARACHI (January 19 2007): Large Scale Manufacturing (LSM) has grown up by 9.7 percent during the first quarter (July-October) of the current fiscal year, as compared to 8.8 percent during the same period last year. According to the State Bank of Pakistan (SBP) first quarter report, issued on Thursday.

The LSM growth acceleration is not broad-based and growth in the LSM during the first quarter is primarily due to acceleration in the production in textile, electronics, chemicals and metal industries.

The electronics sub-sector recorded an extraordinary 41.6 percent growth during the first quarter. This sector grew by 9.2 percent during the same period last year. The report said and added that strong income growth, better access to credit, and the efforts of power utilities to modernise and extension in their distribution networks are the main factors behind the extraordinary performance of the electronics sub-sector.

The report said that the growth in the textiles sub-group also rose to 12.4 percent during July-October 2006 as against a decline of 0.9 percent in the same period last year. This growth in textile sub-group is the second highest for any first quarter during the last six years.

The growth recorded in textile production appears to be supported by the acceleration in the growth of the chemical sub-sector to 10.1 percent during first quarter of 2007 as compared with 8.2 percent growth during same period of last fiscal year. Production in the metals sub-sector also grew by 14.5 percent during July-October against the 4.1 percent decline during the same period last year.

The improvement can be attributed to the streamlining of production by Pakistan Steel after completion of repairs of its coke oven batteries in the last quarter of FY06.

During the July-October the automobiles sector registered lowest growth during the last six years, which is only 11.1 percent compared to a strong growth of 33.1 percent in the same period of the preceding year, report added.

The production of fertiliser also fell in July-October, dropping by 1.7 percent as against a rise of 3.7 percent growth during the same period of the preceding year. This decline was mainly due to capacity constraint as well as lower demand on the back of untimely rain and an anticipated subsidy announcement by the government, report concluded.

http://www.brecorder.com/index.php?id=518603&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Crude oil refining capacity rises to 12.62 million tonnes *

ISLAMABAD: The capacity of refineries in the midstream and downstream oil sector has reached about 12.62 million tonnes per annum. According to official data presented by the Oil and Gas Regulatory Authority (Ogra) in its annual report.

The Attock Refinery Limited, which began its operations in 1922 with a small capacity of 119,000 tonnes per annum, has now increased its capacity to 1.82 million tonnes per annum.

The National Refinery Limited, which has now been privatised, is refining 2.7 million tonnes crude oil per annum. In addition, it has two lube refineries, which have a combined capacity of 176,000 tonnes of lube base oils and the BTX unit has a 25,000 tonnes per annum capacity.

The third refinery, Pakistan Refinery Limited, has the present design capacity of 2.1 million tonnes per annum. Pak-Arab Refinery Limited (Parco), largest in the country, was commissioned at Mehmood Kot with the capacity of 4.5 million tonnes per annum. It has an asset base approaching Rs 100 billion.

Bosicor Pakistan Limited (BPL) was incorporated in Pakistan as a public limited company in 1995. It has a designed capacity of 1.5 million tonnes per annum. These refineries are producing complete range of both energy and non-energy products.

Non-energy products include lubes and greases, asphalt, solvent oil, mineral turpentine, benzene toluene xylene, jute batching oil, processing oil, carbon oil, and wax.

http://www.brecorder.com/index.php?id=518274&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Potential of service sector to bridge the trade gap *

EDITORIAL (January 18 2007): Professor Ahmed Mahmood's discourse with the Business Recorder on 14th January, 2007 was quite instructive and covered a number of subjects relevant to the conditions obtaining in Pakistan. Being an expert on South East Asian Economies and a highly respected academician, his analysis carries a stamp of authority and feasibility.

In a highly convincing tone, he advised the policy makers of the country to rely more on the service sector to bridge the trade gap and develop social capital which is being increasingly regarded as a crucial factor in accelerating the development process. Pakistan had the human capital and infrastructure to become a hub of education and services, in the fields of agriculture, livestock, fisheries, fruits and vegetables, medicine, dentistry, engineering, information technology, media, telecommunication, management, accounting, nursing, tourism, especially health tourism, marketing of health services, etc.

In these fields, the country had a vast competitive edge over other nations, like China, Thailand, Vietnam and Middle Eastern countries, provided it builds credible institutions in these sectors. Also, instead of focusing on increasing textile and clothing exports, which account for only five to six percent of the total world trade, Pakistan should diversify its exports from low to high value addition and improve the quality and branding of its traditional and non-traditional exports.

The government, in particular, should encourage and facilitate the talented women entrepreneurs involved in fashion designs, fine arts, etc to enter the regional and global markets.

Professor Mahmood asserted in no uncertain terms that social capital, like physical and human capital, was a valuable and productive resource and economic researchers have recently shifted their focus from physical and human capital to this new variable in order to identify the reasons for widening cross-country income differences. This was because 40 to 60 percent of economic growth was left unexplained by changes in the traditional factors of growth. Though Pakistan had social capital in certain pockets, the country needs to create positive and institutional social capital on a much higher scale which must ensure that institutions are working and interactions between the individuals and the institutions create conditions that enhance the wellbeing of the entire society and not of a few individuals.

We feel that we were lucky to have such a useful conversation with Professor Mahmood. The topic was particularly pertinent because of the growing trade deficit of the country and the apparent inability of the authorities to halt this deteriorating trend. Professor Ahmed Mahmood, leaning on his experience and learning, has obviously shown a new way to the economic managers of the country by advising forcefully to avoid the beaten track and adopt innovative ways to increase exports and earn foreign exchange. Pakistan must carve out a niche in the services sector and entrepreneurs and exporters must be encouraged to adopt new strategies to maximise foreign exchange earnings.

The countries which realised the importance of this strategic shift early have been amply rewarded because the provision of services is generally much more costly in the developed world due to higher labour costs. Pakistan, on the other hand, remained engaged in producing and exporting low quality products or encouraged the export of cheap labour, which of course increased home remittances but led to a sub-optimal use of a precious resource. More foreign exchange could be earned by training the manpower and providing services like back-office functions of the financial and aviation sectors from Pakistani soil. The country has a lot of potential and talent in this field because of qualified, trained and cheap manpower.

It needs to be noted, however, that in order to translate the Professor's vision into reality, proper investment is needed to develop the necessary skills in the services sector. The investment of resources and effort of the right kind is sure to yield very high dividends for the country and generate handsome opportunities for employment. Also, the law and order situation and overall perception of the country needs to be greatly improved. In addition, social capital has to be developed. Unfortunately, the structure created by institutions and political developments so far has created such a rigidity in thinking that it has prohibited flexibility and creativity in the society which are the essential ingredients to move faster than others.

http://www.brecorder.com/index.php?id=518354&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Ups and downs of textile sector *

KARACHI: After posting an annual average growth of 11 per cent in the last seven years, PakistanÃ¢â¬â¢s textile exports came under pressure during the first four months of the current fiscal year. However, in November 2006 it started moving up and total textile exports touched $864.935 million as compared to $681.570 million in the same month of last fiscal and $783.883 million in October 2006.

During July-October 2006, textile exports recorded a decline of 9 per cent to $3.2 billion against $3.5 billion in the same period last year. This resulted in the declining share of textile items in total exports of the country.

During July-Oct 2006, textile exports accounted for 58 per cent of the total exports as compared to a share of 65 per cent a year earlier. Alone in Oct 2006, textile exports were down by 5 per cent to $783 million from preceding monthÃ¢â¬â¢s (September 2006) exports of $824 milllion and 5.2 per cent on year-on-year basis.

During first four months, out of 13 items, that constitute textile group, only five could post growth in exports. Cotton Cloth, Bed Wear and Readymade Garments that collectively carry around 50 per cent weight in the total textile exports, recorded a decline of 18.5 per cent, 19.3 per cent and 7.2 per cent, respectively. Thus, export of value-added products posted a declining trend.

However, in the month of November it came in the reverse gear and started moving up and total textile exports touched $864.935 million as compared to $ 681.570 million in the same month of last fiscal and $783.883 million in October 2007.

Though Federal Bureau of Statistic did not issue final figures of December 2006 so far, it is anticipated that textile exports are likely to increase considerably during month of December. 

Many reasons are being linked with current rise in textile exports during last two months. However, some textile exporters said that the improvement in textile exports was recorded high in November because last year exports declined massively due to October 8 earthquake that hit northern part of the country badly, on the other hand government characterised it as its policies that helped in expansion of exports particularly 6 per cent Research and Development (R&D) Support for textile sector. 

Textile sector is the backbone of PakistanÃÂ­s economy. In FY06 textile exports accounted for the 60 per cent share in total exports of the country. This share came down to 58 per cent in (Jul-Oct 2006) but in November this share rose to 80 per cent of total exports of the country which slightly narrowed down burgeoning trade balance of Pakistan at this stage. 

During the period under review European Union (EU) reduced anti-dumping duty on Pakistani bed-linen products from about 13 per cent to 7.5 per cent in May 2006, this could not help Pakistani products to maintain or improve its exports. Main cause behind this decline was intensifying competition from peer exporting countries where manufacturing cost is relatively cheaper as compared to Pakistan. 

Moreover, lesser focus on value-added products also makes Pakistani manufactures uncompetitive in the international markets.

The two committees, headed by Zubair Motiwala and Tariq Saigal, had submitted their recommendations on reducing cost of doing business in textile and clothing sector which was total cost Rs50 billion but government did not pay any heed to these proposals except announcing 6 per cent R&D Support.

These committees had recommended that textile industry should be declared a priority sector for application of separate lower gas tariff in line with the rates prevailing in Bangladesh. In addition, they demanded that power tariffs prevailing in the country were on the higher side and need to be rationlised and they also recommended that government should devise strategy to bring the cost of furnace oil-based power generation at par with gas-based power generation.

The committees also demanded financial support, tax and duty exemption besides market access but they are still waiting for governmentÃÂ­s response to much of their recommendations.

Decline in exports created a negative impact on smaller textile manufacturing units to some extent but larger textile units and garment factories remained unaffected which have had strong presence in foreign markets and did good business.

http://www.thenews.com.pk/daily_detail.asp?id=39376


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## Neo

*Musharraf Wants More UAE Investment*
Azhar Masood, Arab News 

ISLAMABAD, 19 January 2007 Ã¢â¬â Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces of the United Arab Emirates Sheikh Mohammad Bin Zayed Al-Nahayan held talks with President Gen. Pervez Musharraf and Prime Minister Shaukat Aziz yesterday.

The crown prince, who arrived here on a two-day visit yesterday, discussed with President Musharraf regional and bilateral issues. President Musharraf apprised Sheikh Mohammad of the investment opportunities existing in the country. He said PakistanÃ¢â¬â¢s policies were investment friendly and urged UAE entrepreneurs to invest in the country in real estate, hotel industry, joint defense projects and ports and shipping. UAE is one of the biggest investors in Pakistan.

UAEÃ¢â¬â¢s Etisalat has major stakes in PakistanÃ¢â¬â¢s Telecom company. 

Prime Minister Shaukat Aziz hosted a dinner in honor of the visiting crown prince. Another important dignitary from the UAE, Sheikh Hamdan Bin Rashid Al-Maktoum, also arrived in the central city of Bahawalpur.

He will open an international airport in Bahawalpur which has been funded by him. 

Meanwhile, Air Arabia yesterday announced the start of operations between Sharjah and Pakistan, which becomes 21st country the low-cost carrier is flying to. Flight schedules will include Karachi and Peshawar.

http://www.arabnews.com/?page=4&section=0&article=91130&d=19&m=1&y=2007&pix=world.jpg&category=World


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## Owais

*Team leaving for Turkey to resolve Bayinder contract issue *

ISLAMABAD (January 20 2007): A Pakistani team of experts led by Secretary Communication Tariq Mahmood is leaving for Istanbul on Sunday to discuss the $700 million dispute between the National Highway Authority (NHA) and the Turkish construction company Bayinder,

National Highway Authority terminated Bayinder's contract for the construction of the multi billion Islamabad-Peshawar Motorway (M-1) project in 2000 on its failure to complete two sections of Peshawar Motorway according to the agreement.

The contractor registered a case with the Paris-based UN subsidiary the International Commission for Settlement of Investment Disputes (ICSID) seeking damages of about $400 million from Pakistan for its alleged violation of a bilateral investment treaty.

The company also filed suits with Turkish courts for inflated claims of billions of rupees.

On its part, the NHA said that under the original agreement, Bayinder was required to hand over completed M-1 project to NHA by December 2002 and Pakistan suffered huge economic losses because of serious breach of contractual commitments on the part of Bayinder.

NHA further said that termination of agreement delayed the project by at least another four years and got NHA's Rs 6 billion stuck up with the Turkish Banks.

Official sources told Business Recorder here on Friday that NHA and Bayinder are contesting their claims in courts of arbitration and settlements in the US, France and Turkey as a massive sum of $700 million was involved.

They said that this dispute was also discussed at the highest level between the two governments without any positive results. The Pakistani team includes NHA representatives and legal experts of dispute resolutions will stay in Istanbul and Ankara for a week and also Turkish government officials.


http://brecorder.com/index.php?id=519017&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*July-December textile exports up 4.3 percent *

KARACHI (January 20 2007): Pakistan's textile exports witnessed a growth of 4.3 percent during the first half of the current fiscal year (July-December 2006-07) at $5.318 billion, against last year's $5.097 billion, depicting an increase of $220.493 million, according to official statistics on Friday.

The post-quota regime has put a negative impact on the country's textile exports, showing a decrease of 1.12 percent during July-November of the current fiscal year.

The exports in textile rose by 14 percent to $976.402 million during December 2006 against $857.998 million of December 2005 indicating an increase of $118.404 million during December 2006. However, textile exports in December 2006 showed an increase of $111.467 million, or 12.89 percent, against $864.935 million in November 2006.

During this period (July-December 2006-07), cotton yarn exports showed a rise of 9.66 percent; knitwear exports moved up by 13.29 percent, and towels by 4.63 percent. Similarly, exports of tents increased by 206.13 percent; readymade garments by 2.49 percent, art silk by 127.87 percent, whereas exports of other textile sectors registered 2.97 percent growth.

However, exports of four textile sectors fell during this period, which included raw cotton, cotton cloth, bed-wear and made-up articles. Raw cotton exports declined by 23.53 percents, cotton cloth by 10.50 percent, bed-wear by 6.41 percent and made-up articles by 6.87 percent. Country's textile exports fell by 1.12 percent during the first five months of current fiscal year as compared to the same period of last fiscal year.

Pakistan's textile exports were $4.192 billion during the first five months July-November period of the current fiscal year as compared to $4.239 billion during the same period of last fiscal year (2005-06), showing a decrease of $47.54 million in five months.

http://www.brecorder.com/index.php?id=519359&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Growth on track; inflation to be higher: SBP *

KARACHI (January 19 2007): Monetary policy statement for January-June 2007: first quarterly report for fiscal year 2007: The State Bank of Pakistan says that the growth target (7 percent) for the current year is achievable. However, inflation would be higher (7.5 percent) because of the double-digit increase in food prices.

Issuing the Monetary Policy Statement on Thursday, for January-June 2007 and the first quarterly report for FY07, SBP feared that the increase in money supply will be higher than envisaged in the Credit Plan by the central bank for the year. Further, the volatility in government borrowing is putting pressure on monetary policy.

The report clearly illustrates that the proper application of monetary policy in a calibrated manner has successfully curbed the demand side inflationary pressures while supporting the growth momentum.

SBP said the high reserve money growth is of serious concern as it is indicative of future monetary expansion and inflation. "Liberal access provided to exporters under EFS and LTF-EOP" has added Rs 42 billion over and above the credit plan rise in M2.

In addition, the net foreign assets of the banking system have also expanded by Rs 11.5 billion in the first half of FY07 as against Rs 66.7 contraction a year ago.

SBP report says that although government borrowing for budgetary needs could well be within the Rs 120 billion target - the source of borrowing is a concern for the monetary policy.

The report warns that government borrowing from the banking system jumped from Rs 20 to Rs 60 billion in last 18 months - causing a sharp increase in reserve money. This has a potential of re-igniting the inflationary pressures in the economy. And, the path of low stable inflation could be extended and interest rates kept at a high level for a longer period.

The report says private sector credit growth has slowed down primarily due to dampening of consumption-oriented demand for credit. The demand for long term fixed investment, however, has remained intact.

There has been a decrease in demand for working capital. It has slowed down as most industries are working at near full capacity. Unless additional capacity becomes operational, SBP does should not expect a significant rise in the demand for working capital.

Since inflation in Pakistan is relatively higher compared to its competitors and trading partners, the Relative Price Index (RPI) increased by 4.5 percent. It offset the gains emanating from nominal depreciation of the rupee and the Relative Effective Exchange Rate (REER) index appreciated slightly by one percent during last six months, concludes the report.

http://www.brecorder.com/index.php?id=518577&currPageNo=3&query=&search=&term=&supDate=


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## Neo

January 20, 2007 

*PMI buys 50.21pc stakes in Lakson: Rs20.62 billion deal*

By Shahid Iqbal

KARACHI, Jan 19: The Philip Morris International (PMI) announced on Friday that it will further acquire over 50 per cent stakes in the Lakson Tobacco Company that will bring an inflow of $338.9 million in Pakistan.

It is a major deal as the Lakson is the second largest cigarette manufacturer in the country after Pakistan Tobacco.

Ã¢â¬ÅItÃ¢â¬â¢s a big deal as Lakson has 47 per cent share in the Pakistani market,Ã¢â¬Â Shahid Ahmed Khan, executive director of Lakson Tobacco, told Dawn. The PMI will buy 50.21 per cent stakes which will accumulate 90 per cent share for the PMI.

Ã¢â¬ÅThe PMI will acquire an additional 50.21 per cent stake in the Lakson Tobacco from major shareholders in a transaction valued at Rs20.62 billion ($338.9 million),Ã¢â¬Â said an official release issued by the PMI.

Ã¢â¬ÅThe Philip Morris International already has 40 per cent stakes,Ã¢â¬Â said Khan, adding it was the confidence of the company which resulted in more foreign investment.

The PMI would buy the shares from a number of Lakson Tobacco's principal shareholders for PKR 666.89 per share.

Based on a price per share of PKR 666.89, Lakson Tobacco is valued at Rs41.07 billion.

The Philip Morris International will pay cash for all shares tendered and expects the tender offer to be completed within 90 days, subject to customary regulatory review and approvals.

Lakson Tobacco is Pakistan's second largest tobacco company, with an estimated cigarette volume of 29.8 billion units in fiscal year, ending 30 June, 2006, generating net revenues of approximately Rs10 billion.

Pakistan is the growing market of 63 billion units of cigarettes and the sector is a major revenue generator for the government.

Morven Gold is the leading brand in the market with an estimated 37 per cent market share, complemented by Diplomat and Royals.

Additionally, Lakson Tobacco is the licensed manufacturer of PMI's Marlboro and Red & White brands in Pakistan.

Khan said this foreign investment was a proof of growing investorsÃ¢â¬â¢ confidence in Pakistan's economy.

Pakistan witnessed a substantially high foreign investment last year and is expected to receive about $3 billion during this fiscal.

However, most of the foreign investment came either in the financial sector or oil exploration and telecommunications.

The investment in a cigarette manufacturing company could lead to diversification of foreign investments.

"Our additional investment in Lakson Tobacco gives the PMI a significant presence in one of the top 20 cigarette markets in the world," said Andre Calantzopoulos, President and Chief Executive Officer of the PMI.

"Lakson Tobacco is a very well established and managed company with a strong brand portfolio, including the market leader Morven Gold. This transaction provides the PMI with an excellent opportunity to further develop Lakson Tobacco's brands and to deploy its international portfolio in Pakistan."

http://www.dawn.com/2007/01/20/ebr1.htm


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## Neo

January 20, 2007 

*$100m Swiss ethanol plant likely at PQ*

By Mohammad Yasin

ISLAMABAD, Jan 19: Switzerland intends to invest $100 million for setting up a maize-based ethanol plant near Port Qasim for export of ethanol to international destinations by enhancing adequate availability of fuel-grade ethanol locally, besides exploring various other options for investment in oil and gas sector in Pakistan.

This was stated by Mr Gilbert Brunner, managing director, Fair Energy, Switzerland , during his meeting with the Senate chairman, Mohammedmian Soomro, here on Friday at the Parliament House. Mr. Brunner is currently visiting Pakistan with a delegation of Swiss investors.

The chairman Senate said: "The demand for energy is increasing to sustain the growth momentum in the economy and it is imperative to look for alternate sources of energy in the backdrop of high petroleum prices."

While assuring the delegation of all-out support in setting up the prospective plant, the chairman advised its members to coordinate with the Board of Investment and Planning Commission officials to work out details.

He said that the idea of blended fuel is an innovative one and certainly worth a try.

The leader of the Swiss delegation said they were particularly impressed by the policy of privatisation and opening up of economy to foreign investors and entrepreneurs in Pakistan.

Later, the managing director, Shell Pakistan Limited, Mr. Zaiviji Ismail Bin Abdullah, and Mohammad Shahani bin Baba of Kumplan SPL Development SDN, BHD Dar-ul-Ehsan Malaysia also called on Chairman Senate, and discussed investment prospects in petroleum, housing and health sectors.

The leader of the Malaysian investors delegation, Mr. Mohammad Shahani bin Baba said they were currently exploring the possibility of setting up a health city in the country, having a medical university, hospital with state-of-the art facilities.

He said their country is also interested in real estate and housing sectors, particularly to cater to the needs of fixed and low-income groups.

The chairman Senate said that the country was currently facing a shortage of six million units and it is desperately trying to remedy the situation by securing additional investment.

http://www.dawn.com/2007/01/20/ebr2.htm


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## Neo

*Tatas reach Pakistan via Korea *

Mumbai, Jan. 19: The Tatas might be struggling to secure approvals for their investments in strife-torn Bangladesh,

but they have established a beachhead in Pakistan where no Indian automobile company has gone yet.

Tata Motors is entering Pakistan through its subsidiary Tata Daewoo Commercial Vehicle Company (TDCV). 

Afzal Motors (Pvt) Ltd of Pakistan has commissioned a truck and bus assembly plant in Karachi to assemble heavy-duty trucks of TDCV.

The two companies have signed a technical assistance agreement to this effect. The plant, which has a capacity of 3,000 vehicles a year, will assemble heavy-duty trucks of TDCV and also buses from the Daewoo Bus Company, South Korea.

Suzuki Motors, which has a controlling interest in Maruti Udyog, has a joint venture in Pakistan, which makes models that closely resemble the Zen and the Alto. But no Indian automobile manufacturer has a direct or indirect presence in that country.

While Tata cars, buses and trucks are being marketed to Europe, Africa, West Asia, South Asia, Southeast Asia and Australia, the group has been aggressively going global in all its major businesses.

In 2004, Tata Motors took over Daewoo Commercial Vehicles, KoreaÃ¢â¬â¢s second-largest truckmaker for $102 million. Later, it acquired a 21 per cent stake in Hispano Carrocera SA, the well-known Spanish bus company. Last year, the company acquired NissanÃ¢â¬â¢s South Africa plant for an undisclosed amount. the compant already had a greenfield bus-making unit in Johannesburg.

Recent reports say that Tata Motors is bidding for Daewoo Automobile Romania, which can produce 100,000 cars, 150,000 engines and 200,000 trans-axles. 

It is also believed that Tata Motors is planning to use Fiat's production facility in Cordoba, Argentina, to manufacture 1-tonne pick-ups, which will be sold in various Latin American and overseas markets under both Tata and Fiat brands.

In 2007-08, TDCV trucks are expected to garner a market share of about 30 per cent in Pakistan, a Tata Motors statement said. TDCV, which is a 100 per cent subsidiary of Tata Motors, has a modern manufacturing facility at Gunsan. It is also the largest exporter of heavy-duty trucks from South Korea, accounting for about two-thirds of the export of such vehicles from the country. 

In 2005-06, TDCV posted a turnover of Rs 1,584 crore, a growth of 34.5 per cent, and a profit of Rs 58 crore, a growth of 160 per cent.

Prime Minister of Pakistan, Shaukat Aziz, formally inaugurated the plant, in the presence of senior management of TDCV and Afzal Motors. 

http://www.telegraphindia.com/1070120/asp/business/story_7286968.asp


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## Neo

*China Co Signs Deal To Build Pakistan Gas-Fired Pwr Plant *

BEIJING -(Dow Jones)- State-owned China National Chemical Engineering Group said Friday it signed a $139 million contract to build a gas-fired power facility in Pakistan as it actively seeks overseas engineering projects to boost its profits.

The facility will have a capacity of 230 megawatts and construction will be completed in 25 months, the company said in a statement on its Web site, without disclosing its location or where the gas would be sourced from.

The contract was signed Jan. 14.

The plant will provide electricity to Pakistan's national grid, it added.

The company said its profits in 2006 were estimated at CNY340 million ($43.7 million), up 57% on year, while revenue was estimated at CNY15.3 billion, up 14% .

Pakistan is suffering a shortage of electricity due to insufficient generation capacity. 

http://www.nasdaq.com/aspxcontent/N...CQDJON200701190317DOWJONESDJONLINE000391.htm&


----------



## Contrarian

Great news! 
Another one, a bit old, but important nonetheless:

*
Cafe Coffee Day warms up to Pak*

BANGALORE: IndiaÃ¢â¬â¢s biggest coffee-cafe chain Cafe Coffee Day (CCD) opened its first cafe in PakistanÃ¢â¬â¢s commercial capital of Karachi on Wednesday. CCDÃ¢â¬â¢s first outlet has opened for business in KarachiÃ¢â¬â¢s Zamzama Commercial Area, famous for its designer outlets and vibrant cafe-culture.

Within the next 12 months, CCD plans to open four more cafes in Karachi and expand into Lahore and Islamabad. CCD is planning 25 cafes in Pakistan over the next few years. Ã¢â¬ÅWe feel that an Islamic country with a booming economy like Pakistan has great potential for consumption of non-alcoholic brews,Ã¢â¬Â Cafe Coffee Day director Naresh Malhotra said here on Thursday.

CCDÃ¢â¬â¢s entry into Pakistan is through the franchise route. Ã¢â¬ÅWe have tied up with a leading industrial house owned by a reputed business family. I cannot tell you who it is as the announcement will be made in Pakistan by the group who is our master-franchisee for our expansion plans there. The baristas Ã¢â¬â those who brew and serve the coffee Ã¢â¬â are all from Ã¢â¬â Pakistan and have come here for training,Ã¢â¬Â Mr Malhotra said.

Cafe Coffee Day now has 364 cafes in India and three abroad, two in Vienna and one in Karachi. While Europe will be the biggest region for CCDÃ¢â¬â¢s expansion plans abroad, Pakistan could over the next few years have more CCD outlets than any other foreign country.
Asked whether Coffee Cafe Day would be looking at other neighbouring countries, Malhotra says: Ã¢â¬Å

Our focus will be on Pakistan which we feel is a far more challenging market in terms of risks and opportunities. The area where we have opened our first cafe in Karachi is familiar to me since I have stayed in a guest-house there while working for Sheikh Bukhatir, the man who brought cricket to Sharjah.Ã¢â¬Â Familiarity breeds content and expansion!
http://economictimes.indiatimes.com/articleshow/661251.cms


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## Owais

*Shaukat says H1 revenue collection up 27 percent 
*

KARACHI (updated on: January 20, 2007, 21:31 PST): Prime Minister Shaukat Aziz has said that there has been a 27 percent increase in the revenue collection in the first six months of the current financial year, compared to the figures for the corresponding period in the previous fiscal year.

He was speaking as chief guest at the Convocation 2007 of the Institute of Business Administration (IBA) Karachi held at its City Campus on Saturday.

The Governor of Sindh Dr. Ishratul Ebad Khan who is also the patron of IBA and Chairman Central Board of Revenue Abdullah Yousuf were also present on the occasion.

The degrees of MBA in Tax Management were conferred on the occasion.

Shaukat Aziz pointed out that in the first six months of the current fiscal year, total revenue of Rs 410 billion has been collected.

In the last financial year's first six months the revenue collection was Rs 323 billion.

He said the 27 percent increase is the highest ever, adding that the target was 17 percent growth. He attributed the growth to reduced tax rate, buoyancy in the economy and simplification of procedures.

"We have a lot of work to do in this are and in the sphere of customs," he said, referring to new reforms in customs.

"We will have to make our customs procedures modern, relying more on intelligence and less on physical checking."

He stated that change was necessary and that was being done step by step.

Citing some of the corrupt practices in the department, Shaukat Aziz said that in many cases there were more refunds than the collection and that there were cases in which no exports were made but refunds were given.

Shaukat Aziz said that slowly the government is building processes which will not allow this to happen.

brecorder.com


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## Owais

*PSA to invest $550 million to run Gwadar port *

ISLAMABAD (January 21 2007): The Gwadar Port Implementation Authority (GPIA) and the Port of Singapore Authority (PSA) have finalised terms of the Concession Agreement under which PSA will invest $550 million in five years to make the port functional and expand its infrastructure.

The government in December 2006 selected SPA out of four finalist international seaport operators to run the strategic Gwadar deep seaport. Official sources told Business Recorder here on Saturday that the two sides have agreed on 17 terms of the agreement in just 2 days of the negotiations.

The PSA negotiating team has expressed complete satisfaction over the co-operative manner and cordial atmosphere in which parleys were held. They said that terms of the concession agreement related to the establishment of Free Trade Zone, waiver from duty for 20 years, development of infrastructure, SPA's right of tariff, land acquisition, sharing of profit etc.

They said that prior to signing the Concession Agreement, Prime Minister Shaukat Aziz would on Tuesday preside over a meeting of the Gwadar Port Policy Board, which will also be attended by ten federal ministers to approve the agreement. Sources said that SPA would make the port functional by 23rd March 2007 when President Musharraf inaugurates the port with arrival of a merchant ship.

They said that SPA would run the port on corporate structure with three companies ie Marine Security Co, Business Co and Business Development Co while GPIA will act as catalyst for these activities. They said that the SPA had been elected because of its international standing, sound financial position with a vibrant cluster of maritime activities and technical and management skills.

They said that Singapore merchant fleet is the largest in Asia and fourth biggest in the world and spearheads attractive programmes for maritime industry. It is noted for its wide range of maritime services, including towage, heavy lift services, offshore support, salvage work, freshwater supply, crew change, ship supplies and slop disposal.


http://brecorder.com/index.php?id=519728&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Cement production likely to go beyond 45 million tons in two years *

ISLAMABAD (January 21 2007): The government hopes that cement production will go beyond 45 million tons per year in the next two years, as the existing 28 units are planning to further enhance their output capacity.

Sources in the Ministry of Industries and Production said that a couple of new plants may be set up, as three investors from UAE, Egypt and Qatar are exploring the opportunities to invest in this sector. However, they have not yet made up their mind, and decision is likely to be taken in the first quarter of this year.

The demand for sulphur-resistant (SR) cement, white cement and blast furnace slag cement from Middle East is on the rise whereas demand for ordinary Portland cement is also up from Afghanistan. Efforts are underway to meet the demand of both sides.

More than 45 million tons production is anticipated from the existing 28 units. If any new plant is added during this time, the production will surpass 45 million tons.

However, the biggest cement market, Afghanistan, is becoming hard to capture because of the growing competition among Central Asian States, Iran and Pakistan. Pakistan is still in a better position due to low transportation charges. The cement sector has seen splendid production during last four months bringing the total production in October to 33 million tons from 21 million tons in January, 2006.

Attock Cement has completed its expansion program, and the expansion of Bestway Cement would be completed soon. D G Khan Cement's new unit in Chakwal is likely to start production soon, whereas the other units have either started their capacity enhancement program or are planning to do so.

The cement manufacturers see the demand of the commodity growing at home days ahead when expected dams construction projects would begin and reconstruction activities in Afghanistan gather momentum. The prices of cement, as a result of government intervention, have also been brought down.

"The government hopes that cement prices will remain under control because of the commitment of the manufacturers to raise the level of production and increase the production capacity," sources said.

http://www.brecorder.com/index.php?id=519718&currPageNo=2&query=&search=&term=&supDate=


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## Neo

Sunday, January 21, 2007 

*Textile exports: 19% a month growth needed to achieve target*

By Hamid Waleed

LAHORE: The textile sector would have to grow at the rate of 19 percent per month to achieve rest of the export target of $11.5 billion [14.6 percent higher than last fiscal yearÃ¢â¬â¢s $10.04 billion] for 2006-07, as the half-year figures suggest that the industry with a growth of 4.3 percent is still short of over $400 million to the actual target.

The government has fixed a target of $11.5 billion for textile sector exports during fiscal year 2006-07 against $10.04 billion of 2005-06, ie, a growth of 14.6 percent on year-on-year basis. The exports figures, released a day earlier, shows that the textile sector has witnessed a growth of 4.3 percent during the first half of the current fiscal year (July-December 2006-07) at $5.318 billion, against last yearÃ¢â¬â¢s $5.097 billion, depicting an increase of $220.493 billion.

Exports of four textile sectors, raw cotton, cotton cloth, bed wear and made-up articles, fell to 23.53 percent, 10.50 percent, 6.41 percent and 6.87 percent, respectively, during this period. Experts believe that the decline in cotton exports is understandable, as thereÃ¢â¬â¢s no place for trashy cotton with a recovery ratio of 80 percent against 90 percent in competitive countries in the world market. However, the decline in both fabric and bed wear is worrisome, as it shows that managing their industrial competitiveness is easy for the competitors and the cost-push factors are not as aggressive to them as in Pakistan. 

The report of the National Textile Strategy Committee has also pointed out that the cost of production is 10-15 percent higher in Pakistan against the immediate competitors and the government should take measures to bring the industry at par with them. 

The start of fiscal year 2006-07 was depressing for the textile sector and it lost sharply during July-October despite the announcement of Rs 25 billion-relief package by the government. However, a sudden jump of 22 percent in exports in November 2006 against November 2005 [when textile exports declined sharply against an average rate of growth for the whole fiscal] suggested to the government to hold back the next phase of much-awaited relief package. The textile minister had told Daily Times that the earlier relief package has started showing results and further improvement is expected in December 2006 against the corresponding period. The December 2006 exports figures ($111.467 million) show an increase of 12.89 percent against the corresponding period of fiscal year 2005 that proves the fact that numbers have started showing strength gradually despite an overall shortfall of over $400 million.

But the industrial circles believe that a marginal growth of 4.3 percent in the first half of the fiscal year does not mach the real potential of the textile sector that has attracted an investment of over $5 billion in the recent past.

http://www.dailytimes.com.pk/default.asp?page=2007\01\21\story_21-1-2007_pg5_8


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## Neo

*Pakistan, $5.4bn in remittances*

Saudi Arabia:

Pakistan is expecting to receive $5.4bn in remittances in the fiscal year ending June 30, significantly above the anticipated target of $4.6bn, reported Bloomberg citing State Bank of Pakistan figures. Funds transferred from areas such as the Gulf and the US by the end of December had reached $2.6bn, a rise of 25% over the same period last year. Pakistan needs the funds to boost its foreign currency reserves.

http://www.ameinfo.com/108217.html


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## Contrarian

Neo said:


> *Pakistan, $5.4bn in remittances*
> 
> Saudi Arabia:
> 
> Pakistan is expecting to receive $5.4bn in remittances in the fiscal year ending June 30, significantly above the anticipated target of $4.6bn, reported Bloomberg citing State Bank of Pakistan figures. Funds transferred from areas such as the Gulf and the US by the end of December had reached $2.6bn, a rise of 25% over the same period last year. Pakistan needs the funds to boost its foreign currency reserves.
> 
> http://www.ameinfo.com/108217.html



LOL, this is one benifit of having a huge population!!


----------



## Owais

*$14.5 billion textile export target possible: FPCCI*

KARACHI (January 22 2007): Pakistan can surpass textile export target of $14.50 billion in three years by focusing on value addition, Tanvir Ahmed Sheikh, President Federation of Pakistan Chambers of Commerce and Industry (FPCCI) told Business Recorder. He said that value addition was the only possible way to increase exports of textiles.

Continuing he said that textile exports were growing at a reasonable pace all over the world. Presently, textile exports are around $350 billion and were expected to increase to $800 billion in 2014. Pakistan's share in the world markets was about 3 percent. In view of the global competition, the country has set a target of exports of textiles at $14.50 billion by 2010.

"I am of the opinion that the expected investment of $6 billion in three years will enable us to achieve this target. However, if we desire to achieve or beat this target, we will have to focus on value addition and this is the only possible way to increase exports of textiles," he said. He said that the industry would have to promote garment sector and improve quality of the products and designing skill as well. He said that the first quarter of the current fiscal year witnessed a sharp decline of 10.29 percent in textile exports to $2.449 billion.

However, the improvement by more than 20 percent in the October-November 2006, if not connected with political upheavals in Bangladesh, is a green signal that Pakistan may achieve the textile export target, envisaged for the current fiscal year.

But a detailed overview of the textile exports shows that Pakistani exporters are facing serious challenges in the international market.

Commenting on the less than expected textile exports, he said that the basic reason was the strong competitive pressure from China, India and Bangladesh. Antidumping duties and loss of preferential access under the Generalised System of Preferences (GSP) in the European Union (EU) market are some of the other major factors that affect Pakistan's exports adversely.

Some internal factors, including increasing cost of production, higher mark-up rates, reduction in domestic cotton production, non-adjustment of currency exchange rates, non-availability of technical staff etc also hit the textile exports.

He mentioned that the textile industry was confronted with numerous problems, including increase in the cost of production that made the industry less competitive in the global market.

Input cost especially utilities and interest on bank loans had also increased, especially during the last one and half years.

"We have lost the advantage of indigenous production of cotton in the past as its local consumption has increased to 16 million tons while production stands at 12.5 million tons and that the balance has to be imported at higher cost, he said.

He was of the considered view that the current rise in the textile exports was not due mainly to the provision of 5 percent research and development (R&D) assistance to the textile industry.

He said, "if 5 percent R&D support is spent on the specific purpose for which it is provided, it may bring positive results. We can use this facility for enhancing our total factor productivity, which is lower as compared with the competing countries like China, India, Bangladesh and Indonesia.

The government subsidy to exports in form of R&D, rebate in taxes announced last year is not helping to raise the quality of the products fetching higher prices, he added.

FPCCI President said that like various developing countries, access to finance was a serious problem in the growth of small businesses as indicated in a UNDP report 'unleashing entrepreneurship'. The basic reason for non-availability of finance is that a large number of small businesses are being operated informally, on account of which banks do not provide the required finance.

Finance was provided to SMEs on high mark-up rate. "Although SME Bank and Khushhali Bank are providing finance to the promote SMEs, still the benefit is limited."

He said that the industry had invested heavily on import of modern textile machinery, adequate availability of skilled manpower to run the machinery was not available, which was one of the major impeding factors in the growth of the sector.

"During the last five years about $5.6 billion have been invested in the textile sector. We are expecting more investment in balancing, modernisation & restructuring (BMR), however there is a dire need for the training of the staff in line with the modern techniques. There is a need for the establishment of textile related vocational and training institutions in the country so that we could produce the required skilled labour, with improved productivity."

Pakistan is presently fourth largest producer of cotton in the world. This crop provides raw material to 337 textile mills, 1500 ginning factories and 5000 oil mills. The local cotton yield is less than 20 mounds per acre although in the neighbouring country with similar soil conditions and resources the yield is more than 40 maunds per acre. In spite of cotton, Pakistan is considered as one of the largest exporters of textile items in most of the developed countries like EU, USA, and Canada.

In 2005, Pakistan stood fifth in the export of textile products to the European Union. Share of Pakistan's textile products in the United States' total textile import is 7.6 percent and ranked sixth largest exporter, Tanvir Sheikh said.

Pakistan's performance in clothing sector is not that good as in textile sector. However clothing and readymade garment is a high potential sector in which Pakistan can increase its export share in the world market by many folds.

In respect of BMR and new machinery in the textile sector, about $550 million have been invested. We are expecting more investment in the remaining six months.

The post quota scenario has dramatically altered the global trading pattern. With the complete phasing out of quotas, the textile and clothing sector has been experiencing another global revolution. With the opening of world markets and increased global competition, new focus is required for textile industry to compete globally. In this context, both the government and the textile manufacturers will have to work together to come out with a workable solution to enhance productivity and to reduce cost of doing business so that they become competitive in global market and increase their market share.

Replying to a question whether Pakistan can achieve current fiscal year's target of textile exports, he said that if the rise in exports of textile during October-December 2006 continued, the target could be achieved.

"However, I emphasise on the need to promote value addition if we wish to achieve the target. If, we are not able to achieve the target, it may negatively affect the overall export targets of Pakistan."

He recommended that there was an urgent need for the improvement in the textile sector as more than 60 percent of our export depends on textile sector.

To make our textile sector compatible with the post quota situation, textile sector should be declared as a priority sector for application of a separate lower gas tariff as they have done in Bangladesh.

A strategy should be devised to bring down price of furnace oil for power generation. A 10 percent financial support for capital investment in textile sector should be devised. Customs duty on import of textile machinery, spare parts and generators of textile machinery should be reduced to zero. Withholding tax on exports of textile should be at 0.25 percent. Modern techniques should be employed to increase the yield of cotton. Some long-term strategies require to be implemented for the improvement of textile sector including establishment of textile training institutes, agriculture research support institution and compatible infrastructure etc.

http://brecorder.com/index.php?id=519971&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*World Bank differs with Pakistan over poverty reduction figures*

ISLAMABAD (January 22 2007): In a draft on "Pakistan promoting rural growth and poverty reduction" the World Bank has sharply differed with the government of Pakistan over estimates of poverty reduction. It said the poverty reduction in Pakistan between 2001-02, and 2004-05, have been 5.2 percentage point bringing it down from 34.4 percent to 29.2 percent at national level and 39.1 to 34 (5.1 percentage point) for rural households.

The government estimates for the same period showed a decline of 10.6 percent and 11.2 percent for the national and rural poverty respectively.

The official figures show that between 2001-02 and 2004-05, rural and national poverty reduced from 39.3 percent to 28.1 percent and 34.5 percent to 23.9 percent respectively.

The draft noted that the government of Pakistan's estimates for poverty reduction was different from the World Bank due to variation in inflation rates used to determine poverty line.

Business Recorder managed to get the copy of the draft, which was circulated by the World Bank to the concerned divisions/ ministries last week.

The draft said the estimates of poverty in Pakistan are particularly sensitive to differences in methodology because a high percentage of rural households have per capita expenditures close to the official poverty line. 10.9 percent of rural households in 2001-02 had per capita expenditures within (+/-)5 percent of the official poverty line; in 2004-05, 8.95 percent of rural households were within (+/-) 5 percent of the Planning Commission official poverty line (Rs878.6). It said small changes in calculated real income (expenditures), whether do to actual changes in expenditures, price deflators or other methodological issues related to updating a poverty line, can lead to misleadingly large changes in poverty estimates.

To minimise this effect and to avoid debates on the definition of the poverty line, the analysis in this chapter focuses on the bottom 40 percent of the per capita household expenditure distribution.

The grouping nonetheless is similar to the definitions of the poor using various food consumption needs-based poverty lines in Pakistan.

The rural poverty in Pakistan, which declined sharply in the 1980s, remained stubbornly high in the 1990s. In the 1980s rapid growth in agricultural GDP of 3.9 percent contributed to a steady decline in rural poverty from 49.3 percent in 1984-85 to 36.9 percent in 1990-91.

In spite of substantial growth in agricultural, real GDP in the 1990s (4.6 percent), however, rural poverty did not decline. Instead, the percentage of poor was essentially unchanged between 1990-91 (36.9 percent) and 1998-99 (35.9 percent). Several factors help explain the stagnation in the rural poverty in the 1990s

Despite substantial agricultural growth, including over estimates of livestock income growth, rise in the real consumer price of major staples, and the skewed distribution of returns to land coupled with a declining share of the crop sector in the overall GDP.

The draft said since 1998-99, real household incomes, income-based poverty indicators and agricultural output have fluctuated sharply, with only slow improvement over the medium term. Recent household survey results indicate sharp reductions in rural poverty in Pakistan over the 2001-02 to 2004-05 period. Long-term trends are less encouraging, though, suggesting no major changes in real expenditures of the poorest 40 percent of households between 1998-99 and 2004-05. The changes in agricultural output due in large part to weather, mirror the changes in rural real incomes, over these periods but like real expenditures of the poor, agricultural output and incomes have increased only modestly over the period. Other factors outside agriculture, especially increases in workers remittances have also contributed to increased incomes since 2001-02.

In the medium-term, however, econometric evidence suggests that investments in human capital and physical infrastructure have been among the most important determinants of increased real incomes in rural Pakistan.

It added that preliminary analysis of 2004-05, Pakistan Social Living Standards and Measurement Survey (PSLM) data indicates that both rural and urban poverty have declined since 2001-02. The Planning Commission's estimates based on poverty line in 2001-02 suggests that poverty fell by 10.6 percentage point, from 34.5 to 23.9 percent between 2001-02 and 2004-05. Their estimates of rural poverty show a decline of 11.2 percentage point, from 39.3 percent in 2001-02 to 28.1 percent in 2004-05.

http://brecorder.com/index.php?id=519974&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*China Mobile acquires Paktel&#8217;s 89&#37; shares *


SHANGHAI: China Mobile Communications Corp. has agreed to buy 88.86 percent of shares in Paktel Ltd, a subsidiary of Germany based Millicom International Cellular, in Pakistan, the company's listed unit said Monday. 

The deal values Paktel at US$460 million (euro355 million), China Mobile Ltd. said in an announcement. 

It said the deal was subject to regulatory approval but was expected to be completed by late February. 

China Mobile had tried to acquire the company in July last year but the bid was failed at that time. 

China Mobile has a mobile network in 16 countries of America and Africa. 

http://geo.tv/geonews/details.asp?id=1100&param=3


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## Owais

*Cotton production target enhanced to 12.5 million bales *


MULTAN: The Cotton Crop Assessment Committee, set up by the federal government, has enhanced the country&#8217;s cotton production target for the current year by 60,000 bales.

The Committee meeting presided over by the Federal Minister for Food and Agriculture, Sikandar Hayat Bosan held here, assessing countrywide production of cotton this year at 12.5 million bales on the basis of the data provided by the Pakistan Cotton Ginners Association (PCGA), has upped the country&#8217;s current year cotton production target from 12.44 million bales to 12.5 million bales, which included 10.1 million bales from Punjab, 2.3 million bales from Sindh, while 0.1 million bales of cotton production of Balochistan and NWFP. 

The Committee, taking notice of the January 17 PCGA survey report stating that the Ginneries across the country have already received 11.55 million bales of cotton until January 15, assessed that the upward revised target of 12.5 million bales of cotton production would be achieved, despite pests and virus attack on the crops. 


http://geo.tv/geonews/details.asp?id=1059&param=3


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## Neo

malaymishra123 said:


> LOL, this is one benifit of having a huge population!!



Correct, India is getting six times as much!


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## Contrarian

Neo said:


> Correct, India is getting six times as much!



I dunno what the pop gap between the number of expats of India and Pak.
But i mean generally, S.A countries all have a high pop. and send a good number of their children abroad 

BWT I hope Neo, your sending money back as well


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## Neo

*Monetary policy: rising inflation and difficult choices*

By Yousuf Nazar

MAKING the half-yearly monetary policy statement, State Bank Governor Shamshad Akhtar told a press conference last Thursday that the central bank will maintain its (tight) monetary policy stance while Ã¢â¬Åeffective administrative measuresÃ¢â¬Â are needed to control food prices.

The SBP appears to be saying it has done as much as it can to control inflation and it is now up to the government to take corrective measures on the administrative or supply-side to bring down food price inflation that has led to Pakistan's overall inflation rate to accelerate to a twelve-month high of 8.9 per cent in December. The Governor left the benchmark policy rate (3-day Repo Rate) unchanged at 9.5 per cent.

The monetary policy statement of the State Bank of Pakistan (SBP) makes two other important points: (a) inflation remains stubbornly high and is likely to exceed the 6.5 per cent target for the current fiscal year, and (b) the monetary policy continues to be supportive of the economic growth as threshold level of inflation for a stable economic growth. in the range of 4-6 per cent..

The assertion that Pakistan, being a developing country, needs a high inflation rate (6 per cent or so) to support a 6-8 per cent GDP growth is seriously questionable and is not supported by hard evidence from the most recent comparable GDP growth and inflation data of some major emerging markets as shown in graph 1.

Pakistan stands out with the highest inflation rate and the only country in the group whose inflation rate (8.9 per cent) is more than its GDP growth rate (6.6 per cent). This suggests that either there is something so unique about the structure of PakistanÃ¢â¬â¢s economy that the divergence of its GDP growth and inflation data from the norm of even other developing and oil importing countries (leave aside those of the developed markets) has a valid and legitimate reason or the data itself is questionable.

However, even if we take data at its face value, the graph shows that most of these developing countries are growing at around six per cent or more while their inflation rate is around four per cent or thereabouts. The only exception is India whose inflation rate is 6.7 per cent but then its current GDP growth rate of 9.2 per cent is also significantly higher than PakistanÃ¢â¬â¢s 6.6 per cent. The monetary policy statement does acknowledge that the inflation is relatively higher compared to its competitors and trading partners and this higher domestic inflation has offset the gains emanating from nominal depreciation of the rupee against other currencies. Is it making a case for an accelerated depreciation of rupee in the coming months because the monetary policy has failed to achieve the inflation target?

When most of major developing countries are recording healthy GDP growth while keeping overall inflation (this includes food and energy inflation) under five per cent, should not the government set five per cent inflation rate as target for the next fiscal year? This assumes additional significance - aside from domestic economy and political considerations in an election year - since the relatively higher inflation is hurting competitiveness and exports growth instead of supporting the declared policy objective of encouraging economic growth.

Still, it is fair to say that the SBP, primarily through open market operations and changes in the reserve ratios, has managed to bring down the overall growth rate in the private sector borrowings. Based on the monthly average loans outstanding of the scheduled banks, the loan growth during the six months to December 2006 was 14.5 per cent compared to 25.3 per cent growth during the previous year.

However, the impact of the overall tightening in the credit supply has been somewhat diluted by a Rs34.7 billion increase in loans under Long-term Financing for Export Oriented Projects (LTF-EOP) and R26.8 billion increase in loans under Export Finance Scheme (EFS), both offered at concessional or reduced rates.

The combined increase in loans under these financing schemes accounted for 54 per cent of the Reserve Money (M0) growth during the first half of the current fiscal year. Although there may be legitimate reasons for offering export financing at concessional rates, the reports about the abuse of such facilities abound with money being diverted to real estate and stock market investments. Such schemes can offset the benefits of a monetary tightening and derail the progress made in since late 2004. Given their large proportion in overall money supply growth, it is fair to argue that their rapid build-up may have adverse effects on the core function of the monetary policy, that is, achieving low inflation in the next 12-18 months.

Notwithstanding this, the impact of the monetary tightening is visible in rising interest rates and a deceleration in the principal indicator of the money supply, that is M2, during the first six months of FY2006-07. The three-month Karachi interbank offered rate (KIBOR) averaged 10.39 per cent during December 2006 compared to 8.98 per cent during January 2006. While raising interest rates is a perfectly legitimate response to building inflationary expectations, there is an other side to it.

If real interest rates, that is, nominal interest rates minus inflation, are higher compared to a countryÃ¢â¬â¢s competitors, they can hurt growth, particularly exports. Some policy makers argue that the local businesses and industrialists should not just look at the lower nominal interest rates in India because PakistanÃ¢â¬â¢s inflation rate is higher. Simple enough, but a comparison of the real interest rates between Pakistan and India reveals a somewhat different and more complex picture.

Graph 2 shows real interest rates in Pakistan and India. The monthly averages of 3-month KIBOR and 3-month MIBOR (Mumbai interbank offered rate) and monthly inflation (CPI) rates were used to calculate the real rates. The graph shows the real interest rates in Pakistan have stayed generally higher during 2006 compared to IndiaÃ¢â¬â¢s. Although it is difficult to quantify the impact, higher real interest rates do contribute to higher cost of production and hurt international competitiveness.

Moreover, the data has some difficult implications from a monetary policy standpoint. The real interest rates in Pakistan depict a declining trend since mid-2006 while those in India show an upward trend.

Declining real interest rates can portend a higher inflationary environment 18 months down the road, as monetary tightening takes at least that long to make a dent in inflation. Here, it is relevant to note that the SBPÃ¢â¬â¢s last Thursday statement starts with a rather bold assertion that Ã¢â¬Åmonetary policy measures adopted in July 2006 augmented earlier tightening and reduced core inflation (Non-Food Non-Energy Ã¢â¬â NFNE) to 5.5 per cent by December 2006 from 7.4 per cent a year earlier.Ã¢â¬Â

Given the widely accepted view, acknowledged even by the SBP Governor, that monetary policy takes 18 months or so to impact inflation rate; it is not clear how the July tightening has caused headline inflation to drop in just 6 months? While this may be excused as a statement made more for public consumption rather than on a serious note, more important issue is the recent and growing trend of emphasising core inflation as opposed to overall inflation that includes food inflation. Maybe it is just a better number to talk about because it looks good.

On the other hand, one may argue that core inflation is also followed closely in the developed economies such as the United States. However, there is a major difference between PakistanÃ¢â¬â¢s inflation (CPI) measure and those of the developed world. Food inflation is the single largest component of PakistanÃ¢â¬â¢s CPI and constitutes 40 per cent of this index compared to only 17 per cent or so in the U.S. and some other developed markets.

Together with energy, food inflation accounts for almost 48 per cent of the CPI or overall inflation in Pakistan. Therefore, in PakistanÃ¢â¬â¢s context, core inflation (that is, Non-Food Non Energy inflation) is not as meaningful a measure as in some other developed countries. While supply-side factors do play a role in inflation, this should not detract the central bankers from targeting the overall inflation rate as the primary focus of the monetary policy. Monetary tools, such as margin requirements, do play a role in commodity financing and should be used appropriately to respond to the financing needs of essential items.

Moreover, while financial deregulation and innovation have made the money supply harder to interpret in the developed markets, domestic money supply control can be a relatively more effective tool of monetary policy in economies like Pakistan where private sector access to foreign borrowing and markets is fairly limited. The fact that a large sector of the economy is undocumented has little to do with the effect of money supply growth on inflation as has been well established in high inflation developing countries like Brazil and Turkey.

The SBP maintains it is capable of skilful management of the often difficult and complex objectives of meeting national growth priorities, liquidity and demand management, and controlling inflation. As central bankers around the world know too well from history, it is difficult to manage just one goal Ã¢â¬â low inflation Ã¢â¬â let alone many.

Given the propensity of the borrowers in Pakistan to abuse concessional credits and the difficulties in managing multiple and some times conflicting near-term policy objectives, the SBP will be better off to make achieving an inflation rate of five per cent or less as its core target for next 12-18 months. That by itself will facilitate growth and price stability. Failure to achieve low inflation will hurt growth and exports down the road as monetary policy mistakes can take up to 18-24 months to show up in even higher inflation numbers. But by then, elections will be over.

The writer is a former head of Emerging Markets Equity Investments, Citigroup.

http://www.dawn.com/2007/01/22/ebr1.htm


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## Neo

*National Savings rates to be raised by 1pc*

By Ihtasham ul Haque

WITH the increase in profit on Pakistan Investment Bonds (PIB), the Central Directorate of National Savings (CDNS) has decided to offer additional average one per cent profit on all its products in order to provide some benefits to its depositors.

The CDNS has sent a formal proposal to the finance ministry for approval and the issue is expected to be settled soon. However, commercial banks are opposing the move and have approached the central bank to look into the issue.

While the State Bank has allowed commercial banks to earn unchecked profit, the latter are reluctant to permit the government securities to extend any increase in the rate of interest for their depositors. Commercial banks have informed the officials of central bank that the market trend would be disturbed if the CDNS is allowed to revise its interest rate upward.

"We have proposed certain increase in the interest rate of our products, and hopefully a decision in this regard will be taken by the government within one month,Ã¢â¬Â disclosed Director General of CDNS Ahmad Owais Pirzada. He defended the CDNSÃ¢â¬â¢ decision to offer additional profit to its depositors and said that like banks, government securities should also have the right to revise their interest rates from time to time to ensure healthy competition in the market.

Some officials in the finance ministry have supported the CDNS, which will be shortly converted to Pakistan Savings, to revise its interest rates upward. However, they were not sure what would happen as the banks were applying all sorts of pressure to stop the directorate from getting its decision implemented.

They maintained that banks were making 100 per cent profit for the last many years and had earned a record profit of over Rs90 billion in 2006 which was 104 per cent. Under these circumstances, the government should allow the CDNS to revise its interest rates upward which currently averaged about 11 per cent.

"There is a need to review the overall strategy to check the exploitation of the commercial banks who were indulging in illegal activities like offering luxury cars and other benefits to their chief executives and senior officials,Ã¢â¬Â said an official of the finance ministry. While, he favours approving the recommendations of the CDNS to allow additional profits to its depositors, he did not think the government would reject the views of the commercial banks and the central bank over the issue.

Pakistan is among the few countries in the world which has the most lucrative banking returns, he said. These banks did not want the oppressed and hard pressed segments of the society to get some benefit through various national saving schemes of the CDNS, he added.

He was of the view that the central bank should convene a meeting of the banks and other government securities including the CDNS to discuss their rate of profit for next two years, five years or even for 10 years.

Another official said that although the government was not supposed to indulge and try to control the market by implementing its decisions and directives, it needed to play some role to remove distortions in the market to avoid exploitation of the traders and banks in terms of checking inflation.

"Unless the government asks all the market players to enforce their new strategy, banks will continue minting more and more profits and small depositors of government securities would not be able to earn genuine profits,Ã¢â¬Â the official said. He said there was a need to ensure conformity so that all the market players could have a level playing field.

Asked about the position of the CDNS, Mr Pirzada said this organisation had raised over Rs21 billion in the first half of the current financial year and that its products were more economical as compared to other fund-raising sources.

"When we compare the NSS source with foreign borrowing, the non-banking is a better option, therefore, the NSS source should not only be strengthened but its rates should not be less than any compatible products available in the market, he said.

Ã¢â¬ÅThis will not only be in public interest but will also be beneficial for the six million plus people having their savings in NSS,Ã¢â¬Â the CDNS Director General said.

The World Bank and the Asian Development Bank are believed to have offered loans to the CDNS for its restructuring and improvement in corporate functioning, but the CDNS has declined the offer saying it could run its financial affairs without foreign assistance.

The officials of the ADB met Secretary Finance Naveed Ahsan last week and discussed with him plans to restructure the CDNS. They also offered loan on low mark up but the CDNS officials declined the offer saying they were comfortable with their present financial position.

The ADB officials, it is believed, also inquired as to why the CDNS had not been converted into Pakistan Savings despite the approval of the idea by the prime minister about a year ago, they said the file was still lying in the finance ministry for perusal.

The prime minister had also approved conversion of the Monopoly Control Authority (MCA) into a competition commission which too was being opposed by the law minister.

Generally, it is said that the affairs of the ministry of finance were not getting adequate attention as the decision making did not rest with one official. There is a prime minister's advisor on finance and then a state minister for finance, a secretary general and a finance secretary.

"Among the four people, nobody knows who is calling shorts but in the process the work of the ministry is suffering", said an insider.

http://www.dawn.com/2007/01/22/ebr3.htm


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## Neo

*Services sector to lead growth*

By Sabihuddin Ghausi

THE ServicesÃ¢â¬â¢ sector is being summoned again for the third consecutive year in 2006-07, for, Ã¢â¬Åturning in above the target growthÃ¢â¬â¢Ã¢â¬â¢ so that the overall national economy shows seven per cent growth by the end of June next.

The national economy, now in second half of the fiscal, carries a drag of below-target harvest of major kharif crops. The large scale manufacturing industry has shown an impressive growth of 9.7 per cent in the first quarterÃ¢â¬âJuly-September 06Ã¢â¬âbut it is too narrow based and there are visible dark shadows of power shortages in the coming days, besides the capacity constraints and the State Bank of Pakistan considers achievement of 13 per cent target ``a difficult jobÃ¢â¬â¢Ã¢â¬â¢.

Overall, industrial growth at 7.1 per cent during the first quarter of 06-07 is a little lower than 7.9 per cent rise witnessed in same period of 05-06. This is because of a slow growth in electricity generation and gas extraction attributed to disturbances in Balochistan.

Coming out with a second report within a span of 40 days,--the first quarterly report of 06-07 released on Thursday after launching of annual report of 05-06 on December 2, 2006Ã¢â¬âthe State Bank of Pakistan seems too ambiguous in its reporting. This ambiguity raises the question of sustainability of national growth as the current SBP report does not elaborate how an over-stretched services sector, with already a big base, would be able to show growth that would compensate for the shortfalls in agriculture and industry in the current fiscal year.

`` The likelihood of achieving seven per cent growth rate remains strong, despite visible challenges in meeting growth target in industry and agricultureÃ¢â¬â¢Ã¢â¬â¢, says the SBP reports in its latest review of the national economy while pinning hopes on the services sector. But it does not mention which segments of service sector show prospects of growth.

Inflationary pressures are found to have been eased a bit in the current fiscal year, but this downward trend is unstable as Consumer Price Index (CPI) jumped up to 8.9 per cent in August 2006 before dipping to 8.1 per cent on year-to-year basis in October that remained at the same level in November.

``The State Bank of Pakistan has a mandate to maintain price stability with growth in the national economyÃ¢â¬â¢Ã¢â¬â¢ Dr Shamshad Akhtar told journalists while releasing the first quarterly report and mid- term review of 06-07 Monetary Policy. Her presentation gives an impression as if inflation was a number one issue and growth is relegated to second position in importance., she was told.

Tight monetary policy of the State Bank, she said is expected to contain core inflation in the remaining months of the 06-07 year. However she stressed that it was important to supplement this impact by the measures to address food inflation and high energy prices. ``Volatile, double digit food inflation is particularly undesirable in view of its greater impact on low income groupsÃ¢â¬â¢Ã¢â¬â¢, the report observes.

One of the few factors causing inflationary pressures is the government borrowing from the banks which was found to be `higher and volatileÃ¢â¬â¢Ã¢â¬â¢. ``The high government borrowings and the resulting rise in reserve money, has the potential of re-igniting inflationary pressuresÃ¢â¬â¢Ã¢â¬â¢, says the report while giving a loud signal to both--private sector and the government in case high interest rates are maintained.

In sharp contrast, private sector has responded to State BankÃ¢â¬â¢s tight monetary stance and high interest rates. Private sector credit demand in first five months (July to November 06-07) rose by 5.9 per cent as against 10.9 per cent which is bound to have an impact on growth.

Agriculture performance calls for serious thinking. Water availability improved, farmersÃ¢â¬â¢ access to bank credit made easier and fertiliserÃ¢â¬â¢ prices brought down. But all major kharif crops failed to achieve target harvests. Cotton, rice and maize production remained lower. The State Bank report does not mention about sugar cane which showed better harvest but its prices have become a issue between the powerful farmersÃ¢â¬â¢ lobby and equally influential millers. Both-- farmers and sugar --are well entrenched in the federal/ provincial governments and in the legislatures but it is surprising that sugar crisis is lingering on for four years. It reflects governmentÃ¢â¬â¢s incapacity in bringing about a reconciliation between the conflicting interests which have started impacting both industry and agriculture.

Dismal performance of agriculture also demands a hard look at the land holding structure , particularly in Sindh and Seraiki belt of Punjab to assess how much of the cultivable land is being utilised and performance of small owners-farmers and their access to bank credits and other facilities.

Large scale manufacturing growth of 9.7 per cent during July - September owes much to phenomenal rise of about 42 per cent in electronics as against only nine per cent in same period last year. The report observes that the continued strong demand for consumer electronics reflects strong income growth , better access to credit and improvement in transmission and distribution of electricity by the utilitiesÃ¢â¬âWapda and the KESC--.

How could one reconcile with the SBPÃ¢â¬â¢s observation on the looming electric power shortages in coming months that would have an adverse impact on industrial growth. Who would question governmentÃ¢â¬â¢s policy of initiating consumerism of electronics and auto cars when petrol prices are sky-high and electric generation has become a costly affair.

An interesting and somewhat startling disclosure on public finances during the first quarter in State Bank report regarding an ``unidentified expenditureÃ¢â¬â¢Ã¢â¬â¢ of Rs33 billion which is 751.5 per cent higher than earmarked Rs3.9 billion in 06. The public financing included ``un-identified expenditureÃ¢â¬â¢Ã¢â¬â¢ of Rs12.3 billion in 2003, Rs14.5 billion in 04 and Rs6.8 billion in 05.

``The classification of 0.4 per cent of total first quarter un-identified expenditure hampers a more meaningful analysisÃ¢â¬â¢Ã¢â¬â¢ says the SBP report while pointing out that 11.1 per cent growth in expenditure seems quite reasonable. But when it is added with unidentified expenditure the ratio jumps to a ``disturbing 23.9 per centÃ¢â¬â¢Ã¢â¬â¢. One wonders whether the graduate legislators will take up this issue of unsolved puzzles in governmentÃ¢â¬â¢s book keeping and accounting.

The State Bank has taken notice of outflows of the profits and dividends from foreign investment in Pakistan which has started pinching the finances. No details have been given about the outflow from the privatised entities, banks owned by foreign sponsors and other external enterprises but the warning bells have started ringing. `The year 2006-07 will be through somehow, but the future poses a big question mark as many present liabilities have been deferred.Ã¢â¬â¢, observes an economist.

http://www.dawn.com/2007/01/22/ebr15.htm


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## Neo

*Rs 4.5 billion projects in industrial areas to be completed this year: Kamal *

KARACHI (January 22 2007): City Nazim Karachi Syed Mustafa Kamal said on Sunday the city government had started development projects in all four industrial zones with the estimated cost of Rs 4.5 billion which would be completed by the end of this year.

Addressing a press conference at the Civic Centre here, the City Nazim said after the completion of these projects, these industrial areas would be known as developed industrial zones in the world as they would bring economic revolution in Pakistan.

Syed Mustafa Kamal said huge development projects in the city would bring a positive impact on entire country as every countryman would be benefited through these projects at any level. He said no government in the past paid any heed to resolve basic problems in these industrial zones but this government was fully committed to redress these issues.

He said his government had started special uplift projects worth billions of rupees for the industrial zones including Korangi, Landhi, Federal 'B' Area and North Karachi, which would be completed by the end of this year. The city government was installing high quality imported sewerage GRP (Glassfibre Reinforced Plastic) pipes as they were durable and strong enough to meet the sewerage needs of industrial area for a period ranging between 50 to 100 years, he said.

He also said the city government had spend Rs 50 million to install new sewerage system in Jaffer Tayyar Society within 28 days to address 37-year old problem. He also informed that a huge new state-of-the-art laboratory was in its final stages at Abbasi Shaheed Hospital which would be functional after two months as equipment worth million of rupees had been procured.

Kamal said the city government had also kick off the study for storm water drainage system in the city. Answering a question, Syed Mustafa Kamal said the city government on the directives of court had vacated the school building in Firdaus Colony and the children would be shifted in the nearby schools. Regarding the U-turn on University Road near Ashfaq Memorial Hospital and Mumtaz Manzil, he ensured to conduct a study through city government's engineers.

http://www.brecorder.com/index.php?id=520033&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*FDI up 67 percent in H1 of 06/07: SBP *

KARACHI: January 22, 2007: The country's Foreign direct investment (FDI) rose 67 percent to $1.87 billion in the first half of the 2006/07 fiscal year, led by inflows into the communications, energy, and banking and financial services sectors, official figures show.

Data released by State Bank of Pakistan on Monday showed that the FDI for the July-December period rose from $1.12 billion in the corresponding period last year.

Inflows from foreign portfolio investment during the six months were $627 million, up from $359 million in the corresponding period last year.

The United States led the list of foreign investors with direct investment of $468 million during the period, followed by the United Kingdom with $460 million and the United Arab Emirates with $251 million.

Inflows generated by privatisation amounted to $133 million in the six month period, compared with $254 million in the year-ago period.

The banking and financial services sectors attracted the most foreign investment during the period, $517 million, followed by $495 million invested in the communications sector, and $315 million in oil and gas exploration.

Asia-focused Standard Chartered's $487 million take-over of Union Bank Ltd. accounted for most of the funds attracted by the financial sector, though not all the money paid has come to Pakistan.

http://www.brecorder.com/


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## Owais

*24-hour cargo clearance from February 1 *

ISLAMABAD (January 23 2007): The Central Board of Revenue (CBR) will launch a new cargo clearance system from February 1, 2007 which will remain operative 24 hours, seven days a week, at all airports and sea ports.

Revenue Division Secretary-General and CBR Chairman M. Abdullah Yusuf announced the launching of the new system at the quarterly conference of collectors of customs and collectors (Appeals) on Monday.

Official sources told Business Recorder that CBR has finalised arrangements for launching of the new cargo clearance system. In this regard, the CBR has approached National Bank of Pakistan (NBP) for working on 24 hours basis. A detailed meeting of CBR and NBP officials was recently convened at Karachi.

Responding to CBR's request, the NBP agreed to open all its branches for seven days on 24 hours basis for customs purposes. The branches would facilitate the clearance process on regular basis, sources said.

Meanwhile, CBR Chairman informed the collectors' conference that the new cargo clearance system would facilitate trade, both imports and exports. It would not only save time to a large extent but would also considerably reduce the cost of doing business. The CBR Chairman said that the "new initiative is in the best interests of trade. All clearance points will work 24 hours in all seven days of a week."

Emphasising execution of the system in an efficient manner, he advised the collectors that there must not be any let-up from any side. The decision of the government must be implemented in its true spirit, as it would facilitate the traders tremendously, he added.


http://brecorder.com/index.php?id=520223&currPageNo=1&query=&search=&term=&supDate=


----------



## Owais

*Privatisation sends 0.6 million workers home *


KARACHI (updated on: January 23, 2007, 11:56 PST): About 0.6 million Pakistani workers have been rendered jobless because of government's privatisation policy started in 1990, said a research study on privatisation in Pakistan. 

The research study titled "The Politics of Privatisation" was carried out by Actionaid International Pakistan. 

Terming the retrenchment of 0.6 million workers in 16 years alarming, it said that civil society should display strong reaction over it. It said all over the world, protests are being lodged, rallies taken out and the process of privatisation being resisted by workers, NGOs and members of civil society.

"The people are constantly criticising institutions like the World Bank and IMF. The policies of the World Bank and IMF in the name of privatisation, downsizing and rightsizing have been completely rejected by the common man, as they have brought nothing but deprivation for poor men and women."

It said that many studies conducted by independent scholars show that privatisation has left devastating effects on the vulnerable segments of society. 

Referring to the study of noble laureate Joseph Stigliz titled "Globalisation and its discontents" it said that it was proved that so-called 'stabilisation prescription' offered by IMF were counterproductive and had completely failed to yield expected results.

"The dreams of open market economy have proved unrealistic and there is a widespread anxiety in global economy due to privatisation."

It said one wonders why the government of Pakistan is preaching the gospel of privatisation when it has already failed to yield the expected results. "The answer may be the nefarious designs of the ruling clique that wants to plunder national assets through different means of corruption and kickbacks in the name of privatisation.

In this regard the report of Auditor General of Pakistan 2002 speaks volumes about the so-called transparency of the privatisation process. The report pointed out that a whopping Rs 70 billion that the government earned from privatisation had gone missing and no one had a clue where the money had gone."

It added the international experience of privatisation had also been dismal. Globally privatisation is increasing poverty, inequality, decreasing quality, intensifying corruption, shrinking opportunities for employment and concentrating wealth.

"Chile is considered a successful case of privatisation but there have been serious charges that cronyism and favouritism won the day in privatisation process. Similar charges of crony capitalism were levelled in Argentina where privatisation proved an exercise in futility."

It said in Russia rapid pace of privatisation at behest if IMF has led to sharp economic decline. Chile and Argentina may be quoted as examples because privatisation in both the countries has been associated with giving away expensive public assets at cheat rates to political cronies. 

The experience of privatisation in Latin American countries has met utmost failure and the concept of 'welfare state' is re-emerging. Workers in these countries are demanding re-nationalisation of private sector.

The report said no doubt under the advise of IMF, World Bank, multinational capital and the Western governments, the state in Pakistan is rapidly shedding its primary responsibilities towards citizens vis-&#224;-vis their basic needs and welfare, as subsidies are slashed, state enterprises privatised, taxes cut and investment 'incentives' enhanced. Resultantly, people find themselves worse off than before.

It said that repressive arm of state was providing protection to the machinations of foreign capital in the country. "Creating a 'favourable investment climate' means crushing dissent and systematically corruption or destroying movements that seek to protect the rights of working class."

The report said privatisation cast horrible impacts on poor and working class people. It diminishes quality of life, besides lowering employee morale and hence productivity. After privatisation workers are being exploited through lower wages. It also increases discrimination against women and children.

According to the report privatisation in long run means loss of government control and sovereignty, loss of control and accountability, increased corruption, bribery and kickbacks and increased conflicts, strikes, grievances and arbitration.

The report suggested that the privatisation needs to be resisted out-rightly without indulging in discussion of 'profit-making or loss-making' paradigm. The practical alternative to privatisation can be fund in fundamental reforms of public sector. This is a challenge to management and public employees' unions. 

Reviving and strengthening trade union culture, ensuring openness and transparency, making public sector especially services sector responsive to public needs and by giving the citizens participation priority in decision-making at all levels can help to improve the public sector and eliminate need of privatisation.


brecorder.com


----------



## Owais

*UAE to expand investment in Pakistan *

ISLAMABAD (January 23 2007): United Arab Emirate's investment in Pakistan will witness a major boost in 2007 in various sectors such as energy, investment, trade, and manpower. UAE is the largest foreign investor in Pakistan's public and private sectors, with $1.456 billion investments, a private news channel reported.

These investments will expand to areas such as agri-business, tourism, hospitality services and food packaging. Pakistan has developed a strong base of trained, educated, skilled and professional manpower, which could meet the growing workforce needs of the UAE. Pakistan expects $5 billion FDI inflows in the current fiscal year 2007, up from $3.8 billion in 2006.


http://brecorder.com/index.php?id=520264&currPageNo=1&query=&search=&term=&supDate=


----------



## Owais

*Islamabad and Tokyo agree on free trade accord *

KARACHI (January 23 2007): Business leaders of Pakistan and Japan have agreed to make efforts to move toward free trade agreement, promote joint ventures, initiate partnership, provide technical expertise and introduce licensing possibilities to enhance trade volume in coming years.

Pakistan Japan Business Forum (PJBF) and the Japan Pakistan Business Co-operation Committee (JPBCC) issued a joint declaration at the conclusion of the fourth Pakistan Japan joint business dialogue on Monday and stressed the need for taking forward the existing trade relations between the two countries.

Abdul Kader Jaffer, President, Pakistan Japan Business Forum and Tohru Tsuiji, chairman, Japan Pakistan Business Co-operation Committee signed the Joint declaration at a simple ceremony at the residence of Japanese Consul General Shoichi Nakano. The Ambassador of Pakistan to Japan Kamran Niaz and the Ambassador of Japan to Pakistan signed the declaration as witnesses. Members of PJBF and JPBCC were also present.

A strong team of businessmen had come from Japan to Pakistan to have business to business dialogue under the leadership of Tohru Tsuiji, chairman, Japan Pakistan Business Co-operation Committee. It has been agreed between the two organisations that both organisations should maximise trade and commerce information sharing that could lead to further increase in bilateral trade and investment between Pakistan and Japan.

Both the organisations have agreed that in view of the time-tested, pragmatic and advantageous relationship of both the countries, they desire to further cement this by reviewing friendly and cordial relations between the two organisations through an increased co-operation mode among the industrialists, businessmen and entrepreneurs of the two countries.

The two organisations have also agreed to set up a Pakistan Japan study group on trade and investment. The study group would keep the JICA report on "Direction of Industrialisation in Pakistan - Towards Vision 2030" as its main lead.

The study group will consider further steps toward reaching a free trade agreement, as early as possible, by both governments. The study group will constitute representatives from business, industries and academia and work in close collaboration with both governments as observers.

The two organisations agreed unequivocally to call upon the governments of both the countries that sincere efforts should be made to achieve the goals as included in the JICA report as well as the recommendations. The fifth Japan Pakistan joint business dialogue would be held in Japan in 2008.


http://brecorder.com/index.php?id=520267&currPageNo=1&query=&search=&term=&supDate=


----------



## Owais

*'Canada ready to equip Pakistan with technologies' *

LAHORE (January 23 2007): Canada is ready to equip Pakistan with latest technology in oil/gas and power sectors to overcome the shortage of energy being faced by the country. President Pakistan-Canada Business Council Anwar Merchant stated this while speaking at Lahore Chamber of Commerce and Industry (LCCI) on Monday.

LCCI Acting President Mubasher Sheikh, former LCCI president Mian Misbahur Rehman, former SVPs Sohail Lashari, Abdul Basit, former VP Mohammad Ali Mian and convenor SME standing committee Rehmatullah Javed were also present on the occasion.

Anwar Merchant, who spoke at length on various issues, said that there are a number of other sectors wherein joint ventures could be initiated between the two countries in the larger interests of the people living in this part of the world. He said that the rapid economic growth of Pakistan has started making ripples in the outer world and a large number of Canadians are planning to make investment in Pakistan so this is high time that the Pakistani businessmen should avail the opportunity.

While paying tributes to present government, particularly Punjab Chief Minister Chaudhry Pervaiz Elahi for bringing consistency in policies, he said that in the coming years Pakistan would be a hub of business activities and standing tall among the comity of nations.

Speaking on the occasion, LCCI Acting President Mubasher Sheikh said that there is a great scope of cooperation in various industrial sectors between the two countries. "The possibility of undertaking joint ventures in areas like pharmaceuticals, electrical appliances, food stuff, leather, textiles, engineering goods, agro-based industries, chemicals, fertilisers, mineral and mineral based industries, oil and gas exploration, telecommunication, seaport development, dams, power generation, areas related to education, health and environment are very bright," he added.

He said that Pakistan is planning to establish 13 nuclear power plants and is ready to give them under the supervision of International Atomic Energy Agency. Canada may seriously consider setting up such plants in Pakistan. He said that the trade between the two countries has averaged around 436 million dollars over the last three years. "During this period Pakistan's total exports amounted to 584.7 million dollars against its import of 723.3 million dollars. While Pakistan's import from Canada had grown by 56 percent during this period, its exports to Canada had increased by only 15 percent. The trade deficit of Pakistan with Canada needs to be narrowed down," he added

http://brecorder.com/index.php?id=520237&currPageNo=2&query=&search=&term=&supDate=


----------



## niaz

Owais said:


> *Privatisation sends 0.6 million workers home *
> 
> 
> KARACHI (updated on: January 23, 2007, 11:56 PST): About 0.6 million Pakistani workers have been rendered jobless because of government's privatisation policy started in 1990, said a research study on privatisation in Pakistan.
> 
> The research study titled "The Politics of Privatisation" was carried out by Actionaid International Pakistan.
> 
> Terming the retrenchment of 0.6 million workers in 16 years alarming, it said that civil society should display strong reaction over it. It said all over the world, protests are being lodged, rallies taken out and the process of privatisation being resisted by workers, NGOs and members of civil society.
> 
> "The people are constantly criticising institutions like the World Bank and IMF. The policies of the World Bank and IMF in the name of privatisation, downsizing and rightsizing have been completely rejected by the common man, as they have brought nothing but deprivation for poor men and women."
> 
> It said that many studies conducted by independent scholars show that privatisation has left devastating effects on the vulnerable segments of society.
> 
> Referring to the study of noble laureate Joseph Stigliz titled "Globalisation and its discontents" it said that it was proved that so-called 'stabilisation prescription' offered by IMF were counterproductive and had completely failed to yield expected results.
> 
> "The dreams of open market economy have proved unrealistic and there is a widespread anxiety in global economy due to privatisation."
> 
> It said one wonders why the government of Pakistan is preaching the gospel of privatisation when it has already failed to yield the expected results. "The answer may be the nefarious designs of the ruling clique that wants to plunder national assets through different means of corruption and kickbacks in the name of privatisation.
> 
> In this regard the report of Auditor General of Pakistan 2002 speaks volumes about the so-called transparency of the privatisation process. The report pointed out that a whopping Rs 70 billion that the government earned from privatisation had gone missing and no one had a clue where the money had gone."
> 
> It added the international experience of privatisation had also been dismal. Globally privatisation is increasing poverty, inequality, decreasing quality, intensifying corruption, shrinking opportunities for employment and concentrating wealth.
> 
> "Chile is considered a successful case of privatisation but there have been serious charges that cronyism and favouritism won the day in privatisation process. Similar charges of crony capitalism were levelled in Argentina where privatisation proved an exercise in futility."
> 
> It said in Russia rapid pace of privatisation at behest if IMF has led to sharp economic decline. Chile and Argentina may be quoted as examples because privatisation in both the countries has been associated with giving away expensive public assets at cheat rates to political cronies.
> 
> The experience of privatisation in Latin American countries has met utmost failure and the concept of 'welfare state' is re-emerging. Workers in these countries are demanding re-nationalisation of private sector.
> 
> The report said no doubt under the advise of IMF, World Bank, multinational capital and the Western governments, the state in Pakistan is rapidly shedding its primary responsibilities towards citizens vis-&#224;-vis their basic needs and welfare, as subsidies are slashed, state enterprises privatised, taxes cut and investment 'incentives' enhanced. Resultantly, people find themselves worse off than before.
> 
> It said that repressive arm of state was providing protection to the machinations of foreign capital in the country. "Creating a 'favourable investment climate' means crushing dissent and systematically corruption or destroying movements that seek to protect the rights of working class."
> 
> The report said privatisation cast horrible impacts on poor and working class people. It diminishes quality of life, besides lowering employee morale and hence productivity. After privatisation workers are being exploited through lower wages. It also increases discrimination against women and children.
> 
> According to the report privatisation in long run means loss of government control and sovereignty, loss of control and accountability, increased corruption, bribery and kickbacks and increased conflicts, strikes, grievances and arbitration.
> 
> The report suggested that the privatisation needs to be resisted out-rightly without indulging in discussion of 'profit-making or loss-making' paradigm. The practical alternative to privatisation can be fund in fundamental reforms of public sector. This is a challenge to management and public employees' unions.
> 
> Reviving and strengthening trade union culture, ensuring openness and transparency, making public sector especially services sector responsive to public needs and by giving the citizens participation priority in decision-making at all levels can help to improve the public sector and eliminate need of privatisation.
> 
> 
> brecorder.com



This is an age old debate. I have witnessed first hand nationalization of Industries by the Bhutto regime. Unions literally sold machines worth crores for peanuts. Machinery worth millions rotted. Privatization causes job losses, because too many people are hired in the first place, a lot of them thru 'Nepotism' and produce nothing. Look at all the Govt owned industries in Pakistan, starting from PIA. Railways, WAPDA, Steel Mill etc.

All of these are white elephants and a drain on the public exchequer. No country, even in the West has successfully run government enterprises in the black or break -even.

What ever temporary hardships, in the long term, any commercial enterprise has to be in the black. If Pakistan has to progress, there is only one way. Production of goods and services by its work force and no " Charity or Hand Outs". 

Regretably, too many people are used to just going thru the motions and getting paid at the end of the month. Some don't even bother go to work ( All the stories about ghost schools). This was true even in the police, authorities were forced to make a rule that one had to come and sign for one's salary and they found 'ghost' policeman in Karachi.

Articles such as above are inspired by vested interest and those who want to exploit temporary harship for political gains.


----------



## Neo

*China Mobile to take 89pc stake in Paktel*

By Aamir Shafaat Khan

KARACHI, Jan 22: China Mobile Communications Corporation (CMCC) is all set to buy majority stake in the Paktel held by the Millicom International Cellular SA (MIA). The Millicom International signed an agreement on Jan 21 for the sale of its 88.86 per cent shareholding in the Paktel Limited to China Mobile.

The total cash consideration payable to the Millicom as a result of the transaction (including the repayment of inter-company debt) is approximately $284 million.

According to an announcement here, completion of the transaction is subject to certain regulatory approvals and procedures. If such approvals are obtained, completion is expected to occur in late February 2007.

According to a press release of the MIC available on its website, the transaction implies an enterprise valuation for the Paktel Limited of $460 million.

Merrill Lynch and KASB Securities were advising China Mobile on this transaction, being considered as the first real Chinese strategic investment activity in Pakistan&#8217;s cellular market.

Millicom is a global telecommunication investor with cellular operations in Asia, Latin America and Africa.

It currently has cellular operations and licences in 17 countries. The group&#8217;s cellular operations have a combined population under licence of approximately 433 million people.

According to Invest Cap, Millicom wanted to sell its Pakistani unit as soon as possible after concluding it would not get the return on its investment because of challenging business conditions and frequency interference issues.

Meanwhile, a source in the Pakistan Telecommunications Authority (PTA), who asked not to be named, said he had only seen the information available on the website of Millicom -- but till Monday the PTA did not receive any intimation or information from any of the buyer and seller over the huge sale of stake in the Paktel.

Market sources said the operators of Paktel had not planned their marketing strategies in view of rising competition in the already overheated mobile phone market which further charged with the entrance of Telenor, Warid etc. Besides, Paktel was already facing stiff competition with Mobilink and Ufone.

http://www.dawn.com/2007/01/23/ebr1.htm


----------



## Neo

*Two wind power plants initiated* 

Jhampir: The ground breaking ceremony of first two wind power plants of the country was held at Jhampir in Thatta some 110 kilometres off Hyderabad.

The plants costing Rs12 billion will be producing 50 Mega Watt of electricity each and start functioning by the end of 2007. The federal water and power minister termed the ground breaking ceremonies as milestone in the history of country that according to him would significantly help in meeting power shortfall.

A Turkish company Zorlu Enerji invested in first 50 MW wind power generation project while Masters Foam is making the second 50 MW wind power plant under the government Alternative Energy Development Board (AEDB) program.

The Federal Water and Power Minister Liaquat Ali Jatoi along with representatives of both investors and chairman of AEDB Air Marshal (Retd) Shahid Hamid performed groundbreaking ceremonies.

The Consul General of Turkey at Karachi, federal water and power secretary Ashfaq Mahmood and other concerned officials of AEDB and locals of the area also attended the ceremony. The federal minister speaking at the occasion said that the groundbreaking ceremonies of wind power projects are a proof of governmentÃ¢â¬â¢s commitment towards exploring alternative energy sector in the country. He said that under the leadership and vision of President Gen Pervez Musharraf and Prime Minister, the AEDB is working extensively to exploit the alternative energy sector and brining investment both foreign and locals in this sector.

He said that the production of wind power would help in meeting the shortfall of electricity in the country and more investment is being expected in this sector. Liaquat Jatoi said that cheap electricity would be produced out of these wind power projects and asked the people of the country to conserve energy and sought the consumers help to stop power theft.

The minister further said that the investors have been asked to complete these projects on schedule. Ã¢â¬ÅWe will support the investment and investors would be provided with facilities,Ã¢â¬Â he said.

He said more wind power plants would be set up to generate cheap electricity and improving the living standard of the people. Chairman of AEDB Shahid Hamid addressing the ceremony said that these wind power projects are being installed at the government land of 5 thousand acres.

He said that machine installation for these wind power plants would be started soon and investors have been asked to give jobs to locals on top priority and added that the area would be developed after the completion of project.

He said that the Turkish investors have assured that first production of electricity would be started by the yearend and added that the entire country would benefit of these winds power projects including the local areas.

According to officials of the Turkish company, first cement was laid on Monday with wind measuring station of the plant and total cost of the 50MW plant is expected to be around $80 to $90 million.

They claimed that first production of the plant would be started at the end of 2007 and through its built own and operate project Zorlu Energy would continue to contribute to PakistanÃ¢â¬â¢s electricity generation for 20 years.

The expansion of the plant to up to 300 MW was also submitted to AEDB and hoped that this project would not only increase the countryÃ¢â¬â¢s electricity production but would also open new employment opportunities.

http://www.thenews.com.pk/daily_detail.asp?id=39944


----------



## Neo

*Pakistan may not achieve textile export target *


KARACHI: Country may not succeed to achieve textile export target of $11.5 billion for fiscal 2006-07. 

Federal Secretary Textile Masood Alam Rizvi said this at certificate distribution ceremony at Knitwear Institute of Pakistan Hosiery Manufacturers Association (PHMA) here on Monday. Ã¢â¬ÅIn view of current export statistics it seems that textile industry will not be able to achieve textile export target for current fiscal.Ã¢â¬Â 

He added that exports of the country slightly increased during July-December 2006 which was not satisfactory. He maintained that textile sector was under pressure due to rising competition with other countries in the region in post-quota regime but dispelled the impression that sector was in crisis-like situation. 

It may be noted that government had fixed a target of $11.5 billion for textile exports during fiscal year 2006-07 against $10.04 billion of fiscal 2005-06, but export figures, released by the FBS a couple of days back showed that the textile exports grew by 4.3 per cent during first half of current fiscal at $5.318 billion, against last yearÃÂ­s $5.097 billion. 

Exports of raw cotton, cotton cloth, bed wear and made-up articles, fell to 23.53 per cent, 10.50 per cent, 6.41 per cent and 6.87 per cent, respectively, during this period. However, Masood Alam Rizvi said, India, China, Bangladesh made extra preparations for quota-free market but Pakistan lagged behind in making strategy to meet the challenges in open market competition which brought adverse effects on textile sector of the country. 

Ã¢â¬ÅCountry is also facing shortage of skilled labour thatÃÂ­s why the wastage of textile sector is more than its production,Ã¢â¬Â he pointed out and added that there was also a shortage of recognised training institutes which was the main cause of dearth of effective workforce in the country. 

He said that textile ministry was committed to improve skill development institutions in collaboration with private. He said that Prime Minister Shuakat Aziz would inaugurate Lahore Garments City in Sundar Industrial Estate by the end of January or early March this year and added that 40 acres of land had been acquired for Faisalabad Garments City whereas City District Government Karachi (CDGK) had allocated 300 acres of land near Port Qasim and 300 acres near Baldia Town for the proposed garments cities in Karachi.

Moreover, work on proposed Textile City of the country near Port Qasim was underway and 700 acres of land had been acquired out of total 1,250 acres for the said project which would create 80,000 new jobs for skilled and unskilled workers. 

http://www.pakistaniforcesforum.com/newreply.php?do=newreply&noquote=1&p=45633


----------



## Neo

*$2.36b record investment received sans privatisation*

* Total foreign investment up 68.6% in July-Dec 
* Portfolio investment increases by 74.5%

By Arshad Hussain

KARACHI: It is the first time that the countryÃ¢â¬â¢s total foreign investment has surged to a record level by 68.6 percent to $2.496 billion without privatization proceeds in July-Dec 2006-07 compared with $1.481 billion received in the same period last year.

Portfolio investment surged by 74.5 percent to $627.1 million in the first half against $359.3 million received by the local bourses last year. Pakistan received direct investment of $1.869 billion with privatization proceeds in July-December after surging by $748.3 million, or 66.7 percent, according to data released by the State Bank of Pakistan (SBP) here on Monday.

During the period, the government received only $133.2 million from the privatization proceeds in the telecommunication sector from the United Arab Emirates (UAE).

In spite of frequent decline at the local bourses, portfolio investment has not only significantly improved during the last six months, analysts said, but also indicates stability in the coming six month.

An analyst said: Ã¢â¬ÅDirect investment figures announced by the central bank are encouraging for the government and its policies. The country has received an amount of $1.736 billion in the last six months, which shows that the government could easily achieve its FDI target of $4 billion for the current fiscal year.Ã¢â¬Â 

The data of the central bank shows that the SBP has received only $223.5 million from the UK under the portfolio investment. This amount could be of the Global Depository Receipt (GDR) of the Oil and Gas Development Company Limited (OGDC) at the London Stock Exchange (LSE) held in October or November last year. The Privatization Commission has completed its first GDR by selling its share of around $812 million. Ã¢â¬ÅIt would be the highest ever figure of direct investment received during the last six months as compared with the last few years,Ã¢â¬Â the analyst said. Last year, the country had received $1.8 billion from privatization proceeds out of the total foreign investment of $3.872 received in 2005-06.

Recently, the Privatization Commission has announced that it will hold GDR of the governmentÃ¢â¬â¢s holdings in National Bank of Pakistan, Habib Bank and Allied Bank to raise foreign investment.

News coming from the Privatization Commission said the GDR of these banks would be held in the current fiscal year, but did not give the exact date, the analyst said.

The Privatization Commission is also finalizing the sell-off of Pakistan State Oil (PSO), the countryÃ¢â¬â¢s largest oil marketing company, by March.

Portfolio investment from the USA shot up to $302 million in July-Dec 2006-07 compared with $230 million in the same period last year. Major investment at the local bourses was from Singapore, which stood at $107.7 million in July-Dec 2006 compared with the withdrawal of one million US dollars in the same period last year. 

In direct investment, the European Union invested of $541 million in the last six months compared with only $194 million in the same period last year. The United Kingdom invested $460 million in the last six months, while such investment stood at $87 million in the same period last year. During the first half of the current fiscal year, the financial business sector of the country remained on top that received $517 million, the telecommunication sector got $472 million, the storage facilities sector received $495.2 million and the oil and gas exploration sector received $315 million.

http://www.dailytimes.com.pk/default.asp?page=2007\01\23\story_23-1-2007_pg5_2


----------



## Neo

*ADB to study power trade to Afghanistan, Pakistan*

ISLAMABAD: An Asian Development Bank (ADB) funded feasibility study will prepare a proposed power trading project that would, in its initial stages, earn revenues for the Kyrgyz Republic and Tajikistan by allowing them to initially export 1,000 megawatts of electricity to Afghanistan and Pakistan, where there are significant energy shortages.

In this regard, ADB is providing a $3 million technical assistance grant to study the potential for regional electricity trading that would help optimise the utilisation of power resources in both Central and South Asia, according to an ADB decision made public on Monday.

The ADB, European Bank for Reconstruction and Development, Islamic Development Bank, and World Bank along with bilateral and private sector stakeholders have been participating and assisting the Multi-Country Working Group in their consideration of the project.

Ã¢â¬ÅThe Multi-Country Working Group has taken important steps toward regional cooperation in power trade and ADB is pleased to contribute through this study to support their efforts to progress to the next stage in project development,Ã¢â¬Â says F. C. Kawawaki, an ADB Senior Investment Specialist.

Ã¢â¬ÅAlthough there is some existing interconnection between Afghanistan and Central Asia, and additional bilateral projects are under development, there is considerable scope for expansion of regional cooperation in the power sector. This project marks the beginning of the process to bring the demand and supply sides together.Ã¢â¬Â

The study will look into the feasibility and viability of the proposed project, including assessment of power availability and demand in the countries, possible transmission routes, economic and financial costs, and environmental and social safeguard assessments.

The countries have also requested World Bank to provide technical assistance focusing on the Commercial Assessment study, which together with ADBÃ¢â¬â¢s assistance will be utilized by the four countries to determine the way forward.

http://www.dailytimes.com.pk/default.asp?page=2007\01\23\story_23-1-2007_pg5_3


----------



## Neo

*Lubricant Marketers Should Not Overlook Pakistan as Alternate Source of Growth, According to Kline Study*
January 17, 2007 

LITTLE FALLS, January 17, 2007 -- While many of the world's lubricant marketers focus on opportunities in India, Pakistan should not be overlooked as an alternate source of growth and a key player in the region's future economic success, according to a recently published study by Kline & Company. 

Data from the study, BUSINESS OPPORTUNITIES IN THE EMERGING LUBRICANT MARKETS OF SOUTH ASIA, THE MIDDLE EAST, AND NORTHERN AFRICA, 2005-2015, shows that Pakistan will exhibit the highest growth rates for lubricant consumption in the region over the next decade, albeit from a smaller base than the Indian market. 

"Lubes marketers shouldn't write off Pakistan just because it's not on the scale of India," says Geeta Agashe, director of Kline's Petroleum and Energy Practice. "Pakistan is still a sizable market, has less competition and fewer barriers to entry than India, and has the best projected growth rates for lubricant consumption in the region." 

In South Asia, a region that includes India, Pakistan, Nepal, Bangladesh, and Sri Lanka, Pakistan accounts for less than 20% of total lubricant consumption and is a distant runner-up to India, which accounts for 75%. However, Kline predicts that lubricant consumption in Pakistan will advance by more than 5% annually over the next ten years, exceeding 550 kilotonnes a year by 2015. 

Despite Pakistan's past conflicts with India and the political instability in Afghanistan that has entangled Pakistan's government, its economic growth potential, open markets, and less crowded playing field should warrant serious consideration from lubricant marketers looking for another growth arena. While Pakistan State Oil Company controls a significant market share, Shell, Caltex, and Total all have a significant presence. 

These multinationals are servicing the needs of Pakistan's growing population of foreign-made vehicles that require sophisticated, higher-quality oils. Kline's study indicates that there is currently a large unorganized market segment for reclaimed, adulterated, and counterfeit oil, but as the country's vehicular base moves further toward motorcycles, cars, and trucks that use higher-quality lubricants, a prime opportunity exists for grabbing significant new market share as the unorganized market is unable to serve those vehicles. 

Overall, Pakistan's consumption of lubricants is largely for products made from Group I basestocks, and this is expected to remain the case through 2015, making the country an all-around good target for marketers of base oils, additives, and finished lubricants. 

"If you're a supplier that is new to the region, Pakistan has lower barriers to entry than India or China in many respects and could be a better entry point. And if you're a major lubes company that's already doing business in the region, it's important that you don't let the bright light of India obscure the opportunities for growth in Pakistan," says Bill Downey, vice president and head of Kline's Petroleum & Energy consulting practice. 

BUSINESS OPPORTUNITIES IN THE EMERGING LUBRICANT MARKETS OF SOUTH ASIA, THE MIDDLE EAST, AND NORTHERN AFRICA, 2005-2015 is a series of country and supplier profiles for these developing regions, including information on market segments, trends, developments, forecasts, supplier market shares, distribution channels, leading end-use segments, promotional techniques, and other topics. The report includes 10 country profiles and 8 profiles of leading multinational lubricant suppliers to these regions. 

http://www.chempoint.com/industrynewsdetails.asp?DocumentName=20070117_Lubricants&index=8


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## Neo

*Pakistan reaches 48.21 million mobile subscribers*

Monday 22 January 2007

The number of mobile phone subscribers in Pakistan rose to 48.21 million in December 2006, from 46.42 million in November. Mobilink remained the largest operator with 22.38 million subscribers at the end of the year versus 22.03 million in November. Ufone grew to 10.02 million users from 9.65 million the previous month, while Warid remained in third place, with 7.61 million versus 7.28 million in November. Telenor grew to 6.62 million customers in December from 5.833 million a month earlier, while Paktel's base fell to 1.33 million from 1.38 million. 

Over the year 2006, the total number of mobile subscribers grew from 36.78 million in July to 48.21 million in December. The mobile density increased to 31.02 percent of the population in December 2006 from 29.87 percent in November and 23.67 percent in July.

http://www.telecompaper.com/news/article.aspx?id=154924&nr=&type=&yr=


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## Neo

*Telecom imports breach $1 billion mark in July-December *

KARACHI (January 24 2007): The country's telecom imports during the first half of the current fiscal year exceeded the dollar-one-billion mark on the back of high mobile phone demand, whose imports went up by 46 percent as compared to the same period last year.

According to the data provided by the Pakistan Federal Bureau of Statistics, the telecom imports reached $1.0834 billion during 1HFY07, registering an increase of 25 percent as compared to $867.286 million in the same period previous year.

The major contributor to this remained the cellular phones whose imports reached $445.257 million, registering an increase of 46 percent as compared to $305.9 million in the same period previous year.

While the imports of other telecom-related apparatus registered a growth of 14 percent to reach $638.13 million against $561.39 million during 1HFY06 The market experts have defined the tremendous growth in the country's cellular industry to be the major reason behind the elevating imports of mobile phones.

According to the Pakistan Telecommunication Authority (PTA), about 30 percent of Pakistan's 169 million population had mobile phones at the end of November 2006, compared with 22 percent in June. While the number of cellular subscribers rose to 46 million at the end of December 2006 from 12.8 million a year earlier, it said.

The spokesman for the Karachi Electronics Dealers Association (Keda) said the tough competition among the telecom operators had brought the cellular tariffs within the reach of a common man, which was one reason of escalation in the tele-density. Besides the service, the technology was getting cheaper day by day and a new mobile phone set could be purchased for less than Rs 2000.

He said the trend of changing cellular sets was very much in these days, as this had become a status symbol. On the back of this tendency of changing cells and keeping more than one cell had raised the demand manifolds. He said in order to meet the demand, the cellular sets were being imported from China and USA mainly and the rest of the world as well.

In addition to this, almost all the telecom operators in the country are going through expansions requiring advanced equipment and apparatus, which is imported from various countries thus adding to the import bill.

http://www.brecorder.com/index.php?id=520604&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Readymade garment exports up 15 percent in December *

KARACHI (January 24 2007): Country's ready-made garment exports was up 15 percent during December 2006 due to increasing demand in the international market as compared to the same period last fiscal year, official statistics revealed on Tuesday.

According to the current statistics, during the month of December 2007 country's readymade garment exports stood at $132.26 million as compared to $114.969 million during the same period of the last fiscal year 2006, denoting an increase of $17.291 million or 15.04 percent during December 2006.

In December 2006, readymade garment exports also showed an increase of $31.994 million or 32 percent against November 2006 during which country's textile exports were recorded $100.266 million. During the first half (July-December) of the current fiscal year country's ready-made garment exports have increased by around 3 percent, as compared to the same period of the last fiscal year.

Readymade garment exports stood at $691.928 million during the first half (July-December) of the current fiscal year as compared to $675.108 million exports during the same period of the last fiscal year, depicting an increase of $16.82 million.

Chairman Pakistan Readymade Garment Association (PRGMEA) Ijaz Khokhar told Business Recorder that this sudden increase in the value-added garments had occurred only due to Christmas. "It is not a positive indicator for the textile sector because during the same season it goes upward every year," he said.

He pointed out that current figures should be compared with the next two months figures to assess the situation of the textile exports. He said readymade garment would certainly go down during next two months owing to decreasing sales of textile items and other products in the West.

This boost in the readymade garments exports also did not take place due to continued political turmoil in Bangladesh, because foreign textile orders diverted from their to Pakistan would come into effect three months from now, he added.

Khokhar said that the continuously increasing utility charges should capped on a permanent place to allow the exporters to make their export deals for at least one year in advance.

http://www.brecorder.com/index.php?id=520608&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*International property show attracts $50 million business *

KARACHI (January 24 2007): The first international property expo has attracted around $50 million business in terms of bookings and confirmations, said a press release received here on Tuesday.

The exhibition 'Metro World' held on January 20-22 at the Karachi Expo Centre, which was attended by foreign exhibitors from Gulf region and shown their gratitude. Over 25,000 Karachiites visited the Metro World exhibition and took keen interest in projects by local and foreigner builders and developers.

The exhibition was also participated by real estate agents, commercial and residential property developers, construction companies, consultants, architects and designers, interior decorators, property marketing companies, hotels and resorts, leisure clubs, farms, officer towers, shopping malls and investment companies.

The exhibition provided a highly effective networking opportunity for international and local exhibitors to showcase their projects and services on a unique platform with a truly international appeal.

http://www.brecorder.com/index.php?id=520681&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*KPT to build deep seaport on self-finance basis *

ISLAMABAD (January 24 2007): Pakistan will have another port soon as the government decides to build Karachi groyne as a deep seaport, a few kilometres away from the exiting Karachi Port, to handle long liners/vessels and provide the best facilities to the regional countries for international trade.

The survey and other initial work have confirmed that water depth at the selected site for Karachi groyne is ideal for the deep seaport and it will be developed on fast track basis. The new port will cost the KPT billions of dollars. However, KPT is confident to complete the mega project on self-finance basis.

Sources said the Karachi Port Trust (KPT) had presented the plan of the new deep seaport at a meeting chaired by Prime Minister Shaukat Aziz, sometimes back. Minister for Ports and Shipping, Babar Khan Ghauri, Naval, KPT and other security agencies' chiefs and senior officials of the concerned departments/ministries attended the meeting.

Sources added that the KPT authorities informed the meeting that it has sufficient funds to finance the Karachi groyne project and would complete it within the given timeframe of 5 to 6 years without any financial help of the federal government.

Sources said the Prime Minister approved the plan and directed the KPT authorities to float the international tender to hire consultants for preparing design and other works of the project.

Sources said the Karachi groyne would be developed in two phases. The first phase will be developed up to 14 meters depth and in the second phase it will be further developed up to 18 meters depth.

The sources added that KPT would utilise its financial resources to build the project and complete it by 2012-13.

They said the construction of the Karachi groyne would make Pakistan even more important strategically. The Karachi groyne project will be the alternative source for Pakistan to handle long liners after Gwadar Port.

Gwadar Port is becoming operational by March this year and it's going to be the deepest port in the region. Pakistan is expecting great commercial activities when its Gwadar Port becomes fully operational.

http://www.brecorder.com/index.php?id=520615&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*UAE to expand investment in Pakistan *

ISLAMABAD (January 23 2007): United Arab Emirate's investment in Pakistan will witness a major boost in 2007 in various sectors such as energy, investment, trade, and manpower. UAE is the largest foreign investor in Pakistan's public and private sectors, with $1.456 billion investments, a private news channel reported.

These investments will expand to areas such as agri-business, tourism, hospitality services and food packaging. Pakistan has developed a strong base of trained, educated, skilled and professional manpower, which could meet the growing workforce needs of the UAE. Pakistan expects $5 billion FDI inflows in the current fiscal year 2007, up from $3.8 billion in 2006.

http://www.brecorder.com/index.php?id=520264&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*Record FDI expected this year: Zahid *

KARACHI: Ã¢â¬ÅPakistan is heading for new records for total Foreign Direct Investment (FDI) this year, which has already exceeded $3.3 billion during the first half of the current financial year. 

Zahid Hamid, Federal Minister for Privatisation & Investment and Chairman of Privatisation Commission stated this while addressing the Privatisation Commission Board meeting at Islamabad on Tuesday.

The minister informed the PC Board that Foreign Investment figures continued to reach record levels during the current financial year. The FDI during the first half July-December 2006 was $1.87 billion, which is 69 per cent higher than the amount during the corresponding period last year. Portfolio investment in this period was $627 million while GDR receipts of MCB and OGDCL are $150 million and $731 million respectively. Hence total Foreign Investment during the first half of FY 2006-07 exceeded $3.3 billion, he said.

The PC Board reviewed the progress regarding privatisation of Pakistan State Oil Company Limited (PSO) through the proposed sale of 51 per cent shares along with management control. 

The PC Board expressed satisfaction over encouraging response from reputable local and foreign investors to the PC notice inviting fresh EoIs, which was an indication of their appreciation of the countryÃ¢â¬â¢s economic performance and confidence in the privatisation and investment policies of the government.

Board constituted a six-member Transaction Committee to supervise various stages of the process including pre-qualification of parties to enable them to enter into the data room for necessary due diligence. The Committee will make every effort to expedite the process so as to bring the transaction to the bidding point as soon as possible.

Meeting noted with appreciation that the domestic retail offering of OGDCL have been oversubscribed by 38 per cent following the successful GDR offering last month. The Board reviewed the progress on transactions relating to IPO of HBL and GDRs of UBL, NBP, KAPCO and HBL and gave necessary directions to expedite the same.

The Jamshoro Power Company transaction was also discussed in depth and it was decided to expeditiously resolve all pending matters so as to bring it to the bidding stage.

The Board was informed that the PC had received ten Expressions of Interest (EoIs) and Statements of Qualification (SoQs) from the interested parties to participate in the privatisation process of Heavy Electrical Complex (HEC), while eight EoIs and SoQs had been received in respect of Hazara Phosphate Fertilizers Ltd (HPFL).

The Board was also informed that the process had been initiated for the privatisation of Pakistan Mineral Development CorporationÃ¢â¬â¢s (PMDC) Coal and Salt mines by inviting EoIs for appointment of Financial Advisor.

The PC Board also discussed the work of the Ã¢â¬ËFuture Portfolio CommitteeÃ¢â¬â¢ constituted to formulate recommendations for processing new transactions from the approved list of the Council of Common Interests (CCI).

The PC Board members and senior representatives of the respective ministries and departments were present in the meeting.

http://www.thenews.com.pk/daily_detail.asp?id=40076


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## Neo

*Pak-UAE trade to reach $5bn *

ISLAMABAD: Trade between Pakistan and the UAE is set for a major growth and to reach $5.1 billion by the end of June, a 20 per cent increase over $4.1 billion in 2005-06. Pakistan embassy commercial attache Bilal Khan Pasha is quoted to have said in a report in the Gulf News. The first six months of this financial year have yielded a strong performance. Exports to the UAE have risen to $700 million compared with $1.3 billion for full-year 2005-06, a private TV News channel reported. During the last fiscal year the UAEÃ¢â¬â¢s exports were $2.8billion and imports from Pakistan were $1.3 billion. PakistanÃ¢â¬â¢s exports to the UAE were petroleum products worth $400 million, rice $250 million, textiles $200 million, engineering $60 million, leather $120 million and others. The growth trends in two-way trade are very encouraging and both governments are determined to work closely with the private sectors to enhance co-operation in trade, commerce, investments and other sectors.

http://www.thenews.com.pk/daily_detail.asp?id=40097


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## Neo

*Government wants to develop investor-friendly environment: Sindh Revenue Minister visits CDC* 

KARACHI (January 25 2007): The government intends to develop a clean, safe and investor-friendly environment in the country to attract more foreign investment, especially in Karachi which is the investment hub of the country.

This was stated by Sindh Minister for Revenue Dr Irfan Gul Magsi on his visit to Central Depository Company of Pakistan Limited (CDC) on Wednesday. He met representatives from the capital market for an informal discussion on matters of mutual concern.

He appreciated the efforts of CDC for development of the capital market and investor-protection and the extension of investment facilities all over the country by opening branches in cities like Hyderabad. He encouraged CDC to open more offices in cities like Sukkur, etc. He also deeply appreciated CDC's Investor Account Services meant for retail investors and said that these services should be promoted further. He said that the expected revenue from stamp duty on shares was insignificant and the negative perceptions in the market were based on misconception. However, the government has decided to withhold the imposition of stamp duty for two years, ha added.

Moreover, Dr Magsi remarked that the government would seek help from CDC in developing its IT infrastructure owing to CDC's experience as a large IT-based organisation of the country. Hanif Jakhura, CEO of CDC, briefed minister and others about the core functions and developments in CDC. He also thanked the government for putting the levy of stamp duty in abeyance.

He said that CDC has come a long way on its road to progress since it became operational. Time and again, it has proved as adherent of good corporate governance by continuously adapting its services to emerging market needs as well as equipping the present and potential generation of investors with knowledge and convenience in order to broaden the country's investor base, he said.

From holding educational road shows on capital market investment in distant cities of the country as well as in the UAE, CDC has come as far as hosting events of international significance like the recent, widely-acclaimed 10th Annual Meeting of Asia Pacific Central Securities Group (ACG). CDC is also acting as Secretariat of the ACG for this year.

CDC Chairman Basheer Janmohammed extended a hearty welcome to the minister appreciating his visit and praised him for his concern for the investment sector.

Jakhura said that CDC started operations in 1997, introducing paperless and instantaneous settlement of securities' transactions carried out at the country's stock exchanges by means of an electronic book-entry system offering the following benefits through its state-of-the-art IT infrastructure:

Reduced workload & manpower requirements due to paperless settlement Instantaneous transfer of ownership & direct credit of bonus, rights and new issues:

-- No risk of damage, loss, forgery or duplicate certificates

-- No impact in case of sudden increase in settlement volumes

-- Convenient pledging of securities

Today, the Central Depository Company is the only depository and one of the largest IT based companies in Pakistan, boasting over 37 billion securities worth over 1 .2 trillion rupees in its Central Depository System(CDS), which is around 73 percent of the total issued capital at KSE (excl GoP holdings).

Owing to its consistent efforts towards achieving the goal of a thriving capital market in the country, CDC boasts a position of prestige in the financial sector as the 'The Ultimate Custodian' of securities. The future seems even more promising for CDC as it is adhering to its core values of 'Reliability, Integrity, Transparency and Efficiency' and boasts a position of prestige in the financial sector remaining at the forefront of the capital market development.

http://www.brecorder.com/index.php?id=521285&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Mega project for skill development to be launched: Cheema *

RAWALPINDI (January 25 2007): The Punjab government has planned to launch a mega project for skill development in non-industrial areas within a month besides encouraging cottage industries in the rural and suburban areas of the province, said Provincial Minister for Commerce and Industries Suhail Zaffar Cheema here on Wednesday.

"This project would help create over 70,000 jobs in every district, besides setting up 7,000 small industrial units and improving the living standards of the people in these areas."

The minister said this while talking to senior executives and members of the Rawalpindi Chamber of Commerce and Industry (RCCI) during his visit to chamber. RCCI president Hasan Sarosh Akram and senior executives welcomed the minister and apprised him about the problems of the business community in Rawalpindi.

The minister said the Punjab government has decided to constitute a think tank to gear up efforts for industrialisation in the province. People from every region of the province would be included in the think tank to make a policy suitable to the industrial sector.

Suhail stressed the need for making dedicated efforts for human resource development. Once growing population was a problem for China while after human resource development this population became strength for the country and took it to new heights of industrial development, he said.

He said his ministry was a facilitator for the industrial and commerce sector and provides all possible facilities to the business community. We will hold exhibitions round the world to introduce our industrial products. We will help industrial community to explore new markets for their products, he added.

He assured the business leaders of Rawalpindi that he would resolve all their problems. He said the matters of Rawat Industrial Estate, Chamber plots and commercialisation of chamber building would be discussed with Chief Minister.

Earlier, in his welcome address, Chamber president Sarosh Akram said chamber was acting as a bridge between business community and government. He said chamber used all its efforts for industrialisation in the region so that it has launched first ever private sector industrial estate in Rawalpindi.

He informed the minister about the problems of Rawalpindi chamber saying that chamber is facing problems in commercialisation of its building. Industries Department demands a fee of Rs 4 million and matter was raised with Chief Minister who assured to provide Rs 5 million grant but the department has raised the fees to Rs 7 million.

He sought help of the minister in provision of gas to Rawat industrial estate saying the Prime Minister had announced provision of gas but no progress was made so far.

http://www.brecorder.com/index.php?id=521356&currPageNo=1&query=&search=&term=&supDate=


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## Owais

* UAE's Mashreqbank eyes expansion in Pakistan or India*


DAVOS (updated on: January 25, 2007, 09:31 PST): Mashreqbank, the United Arab Emirates' fifth-biggest lender by market value, could spend up to $1 billion to buy a local bank in India or Pakistan to expand its business, its chief executive officer said on Wednesday.

Mashreqbank already has two branches in India and a representative office in Pakistan.

"But we think India is a huge continent you can't work with two branches. We are looking at a local acquisition or a joint venture because I think we can bring our Middle Eastern connection and our technology," Abdul-Aziz Abdulla Al-Ghurair told Reuters on the sidelines of the World Economic Forum.

"I'm looking for the market cap of $100 million to $1 billion," said Ghurair, among the richest men in the world who is believed to be worth about $2 billion.

He added that the bank's target areas of expansion start in the neighbouring Gulf Arab region, then the wider Arab world, followed by the two South Asian countries.

"We will not like to go beyond this ... We need to concentrate. The world is too big. We want to spread our network in the region, rather than having a scattered strategy here and there," Ghurair said in the Swiss ski resort where more than 2,400 business and political leaders are gathering.
DIVERSIFICATION

Ghurair said the bank was hardly hit by the 2006 Gulf stock market crash, which wiped capitalisation of the region's markets by $500 billion at one point, as its investment in equities accounts for only 2 percent of the total portfolio.

"Markets have come to their senses. It was overheated," he said, adding, "Looking at multiples they look reasonable. Companies are doing well, compared with three years ago when they are making less and the multiples were higher. We have learned the lesson."

Gulf markets have an estimated total capitalisation of $850 billion, about 15 percent of the value of all emerging markets.

Ghurair said Mashreqbank allocates around 80 percent of its total investment portfolio to bonds. Eighty percent of the entire portfolio is invested in US dollar-based assets, such as US Treasuries.

"We use investment as a surplus liquidity. We use it as a liquidity cushion. We are looking for a big return. We are targeting around 1.5-2 percent," Ghurair said.

Six countries of the Gulf, including the United Arab Emirates, have worked towards introducing a single currency by 2010.

But cracks are appearing with Oman recently saying it would not abide by the deadline by the Gulf Co-operation Council and Saudi Arabia saying the group might need to review the date.

Ghurair said business can afford a couple of years of delay.

"2010 or 2012, it doesn't matter as long as there's direction they've agreed to move towards. The delay won't be long because there is a political decision to move forward," he said. "Once you get in, there is no way out. Let them be comfortable and let them be clear on what they are doing. Let them take two moreyears."

There have been also some talks the GCC might ditch a dollar peg for the new currency.

Ghurair was in favour of the peg.

"It's a peace of mind. We don't have to worry about currency fluctuations," he said.

brecorder.com


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## Neo

*Textile exports fetch $5.3bn in 6 months*

KARACHI, Jan 24: Textile products are gradually catching up with their half-yearly proportionate export targets fetching a total amount of $5.34 billion in July-December 2006 as against a projection of $5.53 billion, the other products -Ã¢â¬â leather, sports goods, surgical instruments, petroleum products, molasses, fish, fruits and vegetables, chemicals, gems and jewellery appear to be quite off the mark indicating that these will not be able to earn projected $7 billion at end June next.

As the trend appears, the analysts believe that textiles in the current fiscal year may end up showing more than 65 per cent of total exports, while all other products and commodities will generate about 35 per cent of export earnings. This will make PakistanÃ¢â¬â¢s export structure further narrow-based and more vulnerable to pressures of foreign buyers.

A delayed pick-up of textile exports has given all hints of this trend gaining further momentum in remaining period of 2006-07. It has also given the government all reasons to take credit of attributing it to the incentive package of about Rs25--30 billion given to textile sector.

The textile business has been given 6 per cent cash rebate on export of garments, 5 per cent rebate on home textiles and 3 per cent on fabrics, a generous swap of high-interest bearing loans with concession rated loans given to export-oriented units and reduction in export refinance.

Ã¢â¬ÅA textile exporter is now getting Rs65 to Rs66 on his one dollar export earning because of all these concessions and incentives,Ã¢â¬Â an analyst estimated. But textile exporters want Rs70 plus for every dollar they earn.

Officials are now of the view that textile does not need any more concession but there is a convincing case of incentives and concessions for other sectors to diversify exports. There is already a lot of heart burning among the exporters of leather, sports goods, surgical instruments, cutlery, engineering goods on textile exporters being pampered and given all concessions at their cost.

An official analysis of the official export statistics, already declared controversial and unreliable by the State Bank of Pakistan in its recent quarterly report, shows that yarn has exceeded its proportionate export target of $724 million in six months and fetched $742 million.

Officials projected a total export earning of $11.5 billion from cotton and textile products in the current fiscal year after having shown actual exports of more than $10 billion in the year 2005-06. Cotton export was projected to earn $70 million, which now is being ruled out because its crop production has remained below than 13.8 million bales. Cotton crop expectations are now around 12 million bales.

Yarn export is expected to earn $1.65 billion against which $741 million have already been realised and exporters are confident of netting in about $1 billion more in the remaining period of the current fiscal year.

Officials fixed an export target of $2.48 billion for fabrics against which $963 million have been earned in first half 2006-07. Garment is projected to realise $3.41 billion against which 1.72 billion has already been netted. Textile made ups are likely to earn $2.77 billion against which actual earnings in July to December 2006 is $1.16 billion.

Rice has shown better performance and has netted $529 million in first half as against $1.27 billion for the whole year. But export of leather products are far behind their target of $1.12 billion as these could earn only $429 million in first half of the current fiscal year.

Sport goods export fetched only $124 million against a target of $350 million, carpets $114 million against $280 million, surgical instruments $55 million as against a target of $180 million, petroleum products $354 million against $840 million, fish $95 million against $210 million, fruits and vegetables $58 million against $150 million, engineering goods $97 million against $235 million, and gems and jewellery only $9 million against $35 million.

The government fixed a total export target of $18.6 billion for the current fiscal year against which actual exports in first half is $8.81 billion that indicates 96 per cent performance. Actual export performance in previous years show that exports exceed the 100 per cent projection of later half periodÃ¢â¬â-January to JuneÃ¢â¬â-because of the availability of textile products and a few other items

Imports were originally projected at $30 billion when oil price was high at $68 a barrel. Now that oil prices are down to $51 a barrel, the government still waits for a further drop before hedging it at a level for the remaining period of the year.

http://www.dawn.com/2007/01/25/ebr2.htm


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## Neo

January 25, 2007 

*Marble exports to touch $500 millin in five years*

ISLAMABAD, Jan 24: Minister for Industries, Production and Special Initiatives Jahangir Khan Tareen said on Wednesday that the government planned to enhance the export of marble and granite to $500 million in the next five years.

He stated this after inaugurating the newly established office of Pakistan Stone Development Company (Pasdec) here at Islamabad Chamber of Commerce and Industry building.

Secretary Industries Shahab Khawaja, Chairman Pasdec Ehsanullah Khan and Ms Amy Meyers, director of economic growth office of USAID and members of the business community were also present on the occasion.

He said that government was taking special steps for the promotion of stone industry and an amount of Rs2 billion had been allocated for development of industrial parks for stone mining and marble and granite cities. Another Rs2 billion would be spent on the development of infrastructure in the sector.

He appreciated USAID for its assistance in the development of this sector.

The minister said that Pakistan was rich in marble and granite resources and these were available in remotest areas of the NWFP, Fata, rural Sindh and Balochistan.

He added that the government was striving hard to explore these resources for the benefit of the people living in these areas by creating employment opportunities.

This, he said, would not only help ameliorate the lots of the common man in these remote areas of the country but would also enhance export of marble and granite for the economic development of the country.

Tareen asked the business community to come forward and take maximum advantage from government's initiatives being made for the development of the stone sector.

He regretted that in the past marble and granite sector was not truly exploited adding that the present government is focusing on the development of this sector.

He said that by introducing latest technology in marble and granite mining, Ã¢â¬Åwe can get rid of the traditional mining method of blasting and could save these precious stones from going waste and causing financial losses,Ã¢â¬Â he added. Wastage in mining of stones in the country is the highest in the world, he added.

He expressed the hope that the strategy being devised by Pasdec would help promote the sector and prevent the wastages.

Ms Amy Meyers of USAID in her remarks appreciated the efforts of the government for the development of stone mining sector in the country.

She stressed the need for public-private sector partnership for the development of the sector.

Chairman Pasdec Ehsanullah Khan said that during the first five months of current financial year the exports of marble and granite to USA has increased to 100 per cent.

Later an MoU was signed between National Industrial Parks Development Authority and Pasdec.

http://www.dawn.com/2007/01/25/ebr17.htm


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## Owais

*IPI project gas supply likely from 2015 *

KARACHI: The provision of gas from Iran, Pakistan and India (IPI) gas pipeline project is likely from 2014-15.

Talking to Geo News, Munawar Baseer Ahmed, Managing Director of Sui Southern Gas Company (SSGC) said on Wednesday that after the resolution of gas price row, contract, design and other essential work would take one to two years; subsequently, the pipeline would be laid.

Briefing on the developments in project of LPG import, he said that its tender would be approved in the session of cabinet&#8217;s committee for economic coordination being held on February 1st 2007.

In first phase, 500 million cubic feet of LPG would be imported, Munawar Baseer said adding that two years after this, another tender would be given for the import of 500 million cubic feet LPG. 

http://geo.tv/geonews/details.asp?id=1210&param=3


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## Owais

*146.1 bln sales tax collected in first half of current FY *

ISLAMABAD: Secretary Sales Tax & Federal Excise Wajid Ali, has said that the total sales tax collection in first half of the current financial year (July-December) was Rs. 146.1 billion as compared to Rs. 132.6 billion in the corresponding period of last year indicating a growth of 10.2&#37;.

He was addressing the Conference of Collectors of Sales Tax and Collectors (Appeals) in Islamabad.

In his presentation on the overall performance of sales tax & federal excise collectorates, he informed that some of the revenue spinners have shown a remarkable growth which include POL products (15.5%), telecom (44%), sugar (35%), LPG (22%), Electricity (77%), services (12%), cigarettes (33%) etc.

Similarly, total federal excise collection in first six months was Rs. 5.9 bn as compared to Rs. 4.3 bn in the corresponding period of last financial year showing a growth of 36%.

Growth in major federal excise earning items was, cigarettes (18%), cement (22%), POL products (34%), Beverages (37%) and Cosmetics (40%) he added. 

http://geo.tv/geonews/details.asp?id=1182&param=3


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## Neo

Thursday, January 25, 2007 

*Pakistani industry should not depend on China: Jica*

* Japan International Cooperation Agency says Pakistanis may not survive even in domestic market by doing this

By Fida Hussain

ISLAMABAD: The Pakistani manufacturers would not be able to survive even in the domestic market if they continued to imitate the Chinese strategy and to import components from China, said a study conducted by the Japan International Cooperation Agency (JICA).

JICA has conducted the study after it was asked by the government to prepare a strategy for the manufacturing sector in Pakistan. JICA is of the view that when trade with China expands in the process of globalization, it is unavoidable that Pakistani products will face severe competition with Chinese products in the domestic market. 

Though the quality of these Chinese products is not fully satisfactory, the local demand is likely to increase, the study says. In fact, some Pakistani manufacturers have already started making cheap and low quality goods by imitating the Chinese. Ã¢â¬ÅWe do not think that this is an appropriate strategy for the Pakistani industry,Ã¢â¬Â the JICA study says. 

The study was discussed with, and submitted to, the government at the business dialogue that concluded here on Tuesday. If cheap, low quality, and counterfeit products are easily available in the market, it is very difficult to promote high-value, high-tech and internationally competitive manufacturing in the domestic industry. 

Pakistanis had better introduced a strategy focusing on manufacturing high-value and highly quality products and made its own brands recognized in the market, the study informs. According to the study, Pakistani manufacturers must avoid direct competition with Chinese industry and promote an integral type of manufacturing. The integral type production, which promotes assembly-type manufacturing such as motobikes, automobiles and electronics. Under this type, product quality heavily depends on intimating coordination of each production process, or component designing. The relationship between functions and components of the integral manufacturing is highly intricate. Each component affects each other and determines the quality of final products. Automobile is a typical example, the study says. 

The other option available is modular-type manufacturing. The important characteristic of this type of products is that the relationship between the function and the component is simple and close to one to one, the study says. 

Japan has advantage in integral manufacturing, so their automobiles and motorbikes are much competitive internationally. The US has advantage in module manufacturing. China is relatively good at modular-type manufacturing and Chinese manufacturers are producing labour-intensive products by mobilizing cheap labour force. 

Integral manufacturing seems to be suitable for Pakistan. Moreover, East Asian countries such as Thailand and Malaysia carefully avoided direct competition with China and achieved rapid industrial growth, by introducing the integral-type manufacturing of Japanese manufacturers, the study says. 

According to the study, one possibility is that the Pakistani industry would decide whether to become a subcontractor of the Chinese industry by introducing the same modular-type manufacturing or to promote the integral-type manufacturing to avoid direct competition with the Chinese industry. 

Commerce Minister Humayun Akhtar Khan had asked Japan on Tuesday to sign a free trade agreement (FTA) with Pakistan. He had expressed the opinion that following the implementation of FTA with China, most machinery and raw material from China would now be imported duty free, but the same would attract normal duty on imports from China.

http://www.dailytimes.com.pk/default.asp?page=2007\01\25\story_25-1-2007_pg5_2


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## Neo

Thursday, January 25, 2007 

*India, Pakistani agree on Ã¢â¬ËaffordableÃ¢â¬â¢ gas*

ISLAMABAD: India on Wednesday endorsed the Pakistani view on gas prices at the fourth meeting of the working group on Iran-Pakistan-India (IPI) gas pipeline. It said the buyers should get the gas on Ã¢â¬Åaffordable pricesÃ¢â¬Â. 

The three countries began discussions after a gas pricing report presented by consultant Gaffiney Cline. Dr Ghanimi Fard, special representative of the Iranian minister for petroleum, said that Iran had the largest gas reserves in the region and was looking forward to meet the energy requirements of Pakistan and India through the IPI pipeline. He hoped that the working group meeting would finalise the gas pricing mechanism. Ahmad Waqar, the Pakistani petroleum and natural resources secretary, said Pakistan was keen to implement the project as quickly as possible. According to a message from Tehran, the talks will continue on Thursday. 

NNI adds: Managing Director of IranÃ¢â¬â¢s National Gas Exports Company Nasrollah Seifi has said that Tehran was not amenable to the proposed price. Ã¢â¬ÅIf New Delhi is to bring IranÃ¢â¬â¢s gas into India, it (New Delhi) should pay the cost of the transfer via Pakistan,Ã¢â¬Â he said. Iran has proposed a Ã¢â¬Åfloating price,Ã¢â¬Â which it says is necessary because of the volatility of crude oil prices, said the official. 

Asked if the meeting was held under external pressure, the official said that India and Pakistan have Ã¢â¬Åstrongly responded to external pressure and have not been influenced by such pressureÃ¢â¬Â. 

Seifi said that comments by India and Pakistan on the issue indicate they take into account only their own interests. He said that although India and Pakistan differ widely in their economic situations, they act as a Ã¢â¬Åsingle clientÃ¢â¬Â when it comes to the purchase of Iranian gas, Seifi stressed. Asked if sanctions sought to be imposed on Iran would have a negative effect on the project, the official said, Ã¢â¬ÅNo instance of a negative effect has been observed so far.Ã¢â¬Â Seifi was optimistic that of the parties failed to reach an agreement in the current meeting, oil ministers of the three countries would agree on another meeting. The official said that Iran has the capacity to export some 90 million cubic meters of gas to India and 60 million cubic meters to Pakistan on a daily basis once the pipeline became operational. 

Stressing that transfer of gas to India and Pakistan by land would be the best option for the two countries, Seifi said that the pipeline, dubbed the `Peace PipelineÃ¢â¬â¢, would traverse 1,100 kilometres of Iranian territory, 1,000 kilometres of Pakistani territory and 500 kilometres of Indian territory.

http://www.dailytimes.com.pk/default.asp?page=2007\01\25\story_25-1-2007_pg7_17


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## Neo

*TenXc to open development centre in Pakistan*
By Krystle Chow, Ottawa Business Journal
Thu, Jan 25, 2007 

Wireless systems developer TenXc Wireless Inc. is partnering with Pakistani company Coherent Designs Pvt. to establish a joint development centre for wireless products in Pakistan's capital. 

Ottawa-based TenXc will be expanding its existing research and development capabilities through the new development centre in Islamabad. The centre will collaborate with TenXc's development team in Canada to design fourth-generation wireless access systems such as mobile WiMAX. 

TenXc's vice-president of marketing Ross Ernst said the company chose to build its development centre in Pakistan to allow for around-the-clock development of their products, thus speeding up the process of getting their systems to market. 

He added that Pakistan has been one of the leading early adapters of mobile WiMAX technology, while also providing a pool of well-educated and highly skilled engineers to work with. 

"We've found a lot of demand for our current and new products in this region," said Mr. Ernst, who added that the global WiMAX market was worth $1.1 billion in 2006 and is expected to grow to $3.3 billion by 2009. 

"With a rapidly growing wireless industry and early lead in global mobile WiMAX deployments, Pakistan makes a natural choice as the site of our first external development operation outside North America," said TenXc chief executive Joe Hickey in a statement. "The demand we're experiencing throughout the region for our current Intelligent RF products demonstrates the leading role countries such as Pakistan are playing on the path to mobile broadband." 

http://www.ottawabusinessjournal.com/288049054867310.php


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## Janbaz

*Country needs Rs2.9 trillion to upgrade infrastructureÃ¢â¬â¢*
By our correspondent

KARACHI: The State Bank of Pakistan (SBP) has estimated that countryÃÂ­s financing needs to upgrade present infrastructures will be Rs2.9 trillion.

Muhammad Arif, Joint Director, Financial Markets Strategy and Conduct Department of the Central Bank, while presenting his paper on Sukuk, at a 2-days international conference at a local hotel on Wednesday detailed following break up.

Ports: Rs104 billion; Aviation: Rs133.9 billion; Energy: Rs1102 billion for private sector and federal government; Karachi Electric Supply Corporation: Rs58 billion; water resources: Rs219 billion.

In fuel sector the public sector will need Rs219 billion and private sector financing needs will be Rs174 billion.

He said the issuance of Sukuks is the best financing option.

He suggested five-point way forward for achieving the financing targets:

Creation of primary sovereign Sukuk Market.

Creation of critical mass in sovereign market to the level of Rs30 billion. This would enable Islamic banks to meet their reserve requirements leaving some mass to secondary market trading.

Creation of Repo market by innovating some model in accordance with Shariah requirements and devising documentation and drafting of master Repo agreement.

Making Islamic financing activities part of Monetary Policy Operations. This can be done through introduction of short-term Islamic Money Market instrument mimicking features of Treasury Bills.

Price dissemination mechanism be installed.

He disclosed that SBP is coordinating with international financial institutions in developing Islamic Money Market and Sukuk Market.

SBP has also formed a task force to develop Islamic Money Market and to suggest Government of Pakistan regarding structuring and issuance of Sovereign Domestic Sukuk.

SBP is also coordinating with SECP to develop corporate bond market by making them cost effective and by providing requisite market infrastructure.

According to him this would facilitate corporate Sukuk Issuance as well.

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=40228


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## Janbaz

*Citibank likely to acquire Soneri Bank
*
JAVED MAHMOOD
KARACHI - Citibank is likely to acquire Soneri Bank Limited that would another major merger in the banking sector in the country in case both the banks succeeded in striking a deal, banking sector sources privy to this under-consideration development told The Nation on Wednesday.
These days the high ups of the Citibank were probing the worth of Soneri Bank to find out whether or not the latter bank is feasible for merger with the former bank, said sources.
If both the financial institutions developed initial understanding in coming days, their managements would intimate the Karachi Stock Exchange and State Bank of Pakistan (SBP) about formal discussion of Soneri BankÃ¢â¬â¢s merger with Citibank, sources added.
The experts of the Citibank would also seek a formal permission from the SBP for the due diligence of Soneri Bank.
Soneri Bank is listed at Karachi Stock Exchange. Its share closed at 48 rupees at KSE on Wednesday. Capital market sources said that the foreign banks in Pakistan are rapidly expanding their network in the country by opening new branches and acquiring small and medium banks, especially those, which are financially weak and are unable to meet the SBPÃ¢â¬â¢s requirement of enhancing the paid up capital over year.
Recently the Standard Chartered Bank Limited has acquired the Union Bank Limited and merged it into the SCBL as a result the Standard Chartered Bank Pakistan has become the fifth largest bank in the country.
Similarly, ABN Amro bank is also in the process to acquire Prime Commercial Bank and both the financial institutions are close to finalise the deal,said sources.
Meanwhile, NIB Bank of Singapore is also acquiring major stake in the Pakistan Industrial Credit and Investment Corporation (PICIC).
According to capital market sources, this deal is also at an advanced stage and if it materialized, it would greatly expand the scope of operations of the NIB Bank in Pakistan.
Similarly, another impending amalgamation in the financing sector is between KASB Bank and the International Housing Finance Limited. The KASB Bank is shortly acquiring IHFL to enhance its operations and outreach.
Capital market experts said that around one dozen small and medium size local banks were facing merger as they were not in a position to meet the SBPÃ¢â¬â¢s legal requirement of increase in their paid up capital limit. Similarly, SBP has directed the foreign and Pakistani banks, operating in the country, to increase the number of their branches to provide financial services to maximum number of people.

The Nation.
http://www.nation.com.pk/daily/jan-2007/25/bnews1.php


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## Janbaz

*Textile industry to face turmoil in 2008
*
MONEM FAROOQI
LAHORE - In the absence of proper planning and focus on the emerging world textile scenario, the local textile industry foresees a turbulent and a disastrous era in 2008 when China will fully avail WTO quota free benefits.
Talking to the Nation, the industry leaders expressed the view that lack of interest on the part of government vis-a-vis textile industry including the value-added textile sector, would make the country face a debacle. China at present is growing at a rate of 8% per annum.
Ã¢â¬ÅWe have only the current year left to set our house in order as there was urgent need to strengthen apparel industry which could face the challenge of 2008 when China fully comes to avail the free market access under WTO quota free regime,Ã¢â¬Âsaid textile industry leaders.
China and India followed by Bangladesh and Sri Lanka have already penetrated into world market of value-added textiles, whereas Pakistan even today is standing on the sidelines as far as apparel goods are concerned, Chairman Pakistan Readymade Garment Manufacturers And Exporters Association (PRGMEA), Ijaz A. Khokhar said. He further told that despite being the fourth largest cotton producing country, Pakistan had failed to get due benefit from its indigenous raw material.
He said that it was a well known fact that when a country exports raw cotton, it earns around 40 to 50 cents from one pound of cotton but when same was converted into yarn it earns $1 to $1.5 per pound. 
However, if further value addition was made and converted the fabric into apparel it fetches $5 to $10 per pound. Countries like China, India and Bangladesh are mostly involved in value addition.
He further said that the country had become a semi-finished raw material source for the nations involved in value addition and apparel production. 
It could also be said that Pakistan was serving other nations to earn more foreign exchange on export of value-added products.
Ijaz said that we could not compete other nations without well thought-out plans and focused approach from government and industry. Consequently, the PRGMEA chief said that Pakistan was now the only country, which was weak in apparel and strong on semi-finished raw materials such as yarn and fabric.
APTMA, chairman, Shafqat Ellahi Sheikh feared that up coming times for textile industry might prove a debacle.
The exports were not zero rated as being claimed by the government, Shafqat said adding that the exporters were being charged around 3 pc taxes in 13 different forms including turn over tax, withholding tax,, EOBI, EDS, social security, cotton cess, stamp duty, electricity duty, professional tax, capital value tax (cvt), textile cess WWF and WPPF.
He said that the local textile sector could not come into competition with Inflationary cost pressures, indirect taxes, inefficient ports & inland transport, flawed quota policy militated against value addition, over valued exchange rate and travel advisory.

The Nation.
http://www.nation.com.pk/daily/jan-2007/25/bnews5.php


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## Owais

*Liquid reserves of Pakistan cross $ 12.9 bln mark * 

KARACHI: The total liquid foreign reservesof the country crossed 12,952.8 million dollars mark on January 20, 2007, State Bank of Pakistan announced here Thursday. 

According to the break up, dollars 10,596.2 million were held by the central bank whereas other banks held dollars 2,356.6 million on the said date 


http://geo.tv/geonews/details.asp?id=1262&param=3


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## Owais

*Pakistani raw cotton buyers diverting to India *

KARACHI (January 26 2007): Leading foreign buyers of Pakistani raw cotton are diverting to India and USA due to high contamination ratio. As a result, 23 percent decline has been noted in Pakistan's raw cotton export during the first half (July-December) of the current fiscal year as compared to the corresponding period last year.

Pakistan's raw cotton exporters are facing challenges of quality in the international market as such, Pakistan's raw cotton export is declining, benefiting India and the USA.

According to official statistics, Pakistan's raw cotton export stood at $25.365 million during the first half (July-December) period of the current fiscal year as compared to $33.172 million during the same period last fiscal year. This accounts for a decrease of $807 million. In term of quantity, raw cotton export to different countries has declined by 23 percent.

During the first half of the current fiscal year, Pakistan has exported 23,781 tonnes of raw cotton as compared to 30,892 tonnes during the same period last year, denoting a decline of 7,111 tonnes.

Much before the official statistics were made available, Naseem Usman, a leading trader of the Karachi Cotton Exchange (KCE), told Business Recorder that buyers of Pakistani raw cotton including Malaysia, Indonesia, Vietnam and Bangladesh are now avoiding. The reason he quoted was high contamination ratio, which tilted the Indian and US buyers' decision.

He said that contamination ratio in the Pakistan's raw cotton is higher than the other competing countries, as a result, the Pakistani exporters are loosing buyers. Statistics of raw cotton exports also showing a decreased of 9 percent during December 2006 as compared to the same period last year.

Pakistan exported worth $6.947 million raw cotton during December 2006 as against $7.640 million in the same period last year. In terms of quality, during December 2006, Pakistan exported 6,510 tonnes raw cotton as compared to 7,132 tonnes in the corresponding period of the last fiscal. That accounts for a decline of 622 metric tonnes.

Naseem Usman said that although Pakistan's raw cotton prices are lower than that of US and India in the international market, but exporters are facing challenges of cotton quality, which benefits India and other countries against Pakistan.

Price of the Pakistani cotton is 52 cent per pound while the Indian cotton costs 56 cent per pound and USA at 58 cent per pound in the international market, he said.

He said that although this year government has taken some steps to increase contamination free cotton production up to 0.1 million tonnes, but this is grossly inadequate to meet international demand.


http://brecorder.com/index.php?id=521613&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Domestic debt swells to Rs 2.406 trillion: SBP *
ISLAMABAD (January 26 2007): Pakistan's total outstanding domestic debt has risen to Rs 2.406 trillion recorded at the end of November 2006 from Rs 2.293 trillion at the end of June 2006 showing an increase of Rs 113.18 billion (4.94 percent) in five months, the State Bank of Pakistan (SBP) reported on Thursday.

The interesting feature of the provisional data issued by the SBP reveals that the increase in the domestic debt during the first five months (July-November) of the fiscal 2006-07 was mostly due to rise in the stocks of floating and unfunded debt. The permanent debt declined rapidly during the period under review.

During the period, the floating debt increased by Rs 95.498 billion and unfunded debt by Rs 20.82 billion, whereas the permanent debt declined by Rs 3.137 billion.

The permanent domestic debt, comprising medium and long-term market loans, federal government loans, special government loans, federal instruments and prize bonds, stands at 497.01 billion, which was Rs 500.15 billion at the end of the fiscal 2005-06.

The floating domestic debt, mainly comprising short-term debt instruments and market treasury bills, maintaining a rising trend, was recorded at Rs 940.23 billion at the end of June 2006. And, during the following five months, it went up to Rs 1.035 trillion.

The data further shows that the unfunded domestic debt comprising National Saving Schemes (NSS) stands at Rs 873.32 billion. It grew by Rs 20.82 billion from Rs 852.49 billion at the end-June 2006.

However, it revealed that the net mobilisation under all instruments of the NSS were once again negative during the period but not so huge as recorded in the corresponding period last year.

The saving instruments ie Bahbood Saving Certificates, Postal Life Insurance and Pension Benefit Accounts and Mahana Amadani accounts increased. Net investment in NSS is gradually increasing because of increasing profit rate on these instruments.

Of these, three most popular instruments of the NSS ie 10-year Defence Saving Certificates (DSCs), five-year Regular Income Certificates (RICs) and three-year Special Saving Certificates (SSCs), net withdrawals were only Rs 8.58 billion in five months of this fiscal year.

It reveals that the erstwhile popular instruments - the DSCs, SSCs, and RICs - were comparatively attractive for investors during the period under review. Besides, withdrawals from special saving accounts and general provident fund during the period under study were Rs 22.4 million and Rs 1.079 billion, respectively.

The SBP data shows that Bahbood Saving Certificates and Pensioners Benefit Accounts attracted net fresh investment of Rs 24.49 billion and Rs 5.58 billion, respectively, while no investment was witnessed in Postal Life Insurance.


http://brecorder.com/index.php?id=521640&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Pakistan and Nepal sign accord to enhance cooperation *

ISLAMABAD (January 26 2007): Pakistan and Nepal on Thursday signed an agreement to enhance co-operation in agriculture. Muhammad Ismail Qureshi, secretary, Ministry of Food, Agriculture and Livestock and Ganesh Kumar K.C, secretary, Ministry of Agriculture & Co-operative of Nepal signed the agreement on behalf of their respective governments in Kathmandu.

Under the agreement, the agriculture ministries of the two countries would cooperate in promoting agriculture development and would work in association with other scientific research and development institutions, said a message of the Pakistan Embassy.

The areas of co-operation also include exchange of experts and literature, sharing of knowledge and technologies, human resource development, mountainous areas farming development, conservation and management of soil and water, watershed management, farm/social forestry and range-land management, cold water fisheries/aquaculture, apiculture and forests products, livestock breed improvement and feed production.

The agreement would also encompass any other area of co-operation in the field of agriculture including livestock, fisheries, food technology and forestry related research and development.

Both the countries have agreed to establish linkages between their respective institutions and facilitate the exchange of researchers, extension workers and stakeholders, the statement said.


http://brecorder.com/index.php?id=521685&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Pakistan to become economic hub of South Asia: minister *

ISLAMABAD (January 26 2007): Pakistan has the potential to become economic hub of South Asia in near future with the development of Gwadar Port and laying of Havelian-Kashghar (China) and Quetta-Quandhar (Afghanistan) railway track, said Minister for Railways, Sheikh Rashid Ahmed.

He said this while talking to the outgoing Chinese Ambassador Zhang Chun Xiang who called on him here on Thursday. The minister further said that Pakistan would emerge as the energy and economy corridor for Central and South Asia linking with Europe and rest of the world through road and rail network.

"China being an economic giant would heavily rely on Pakistan for export of its commodities to the world through this strategic route", he added. Rasheed appreciated the work done by Chinese firms in manufacturing of locomotives and passenger coaches in Pakistan Railways Carriage factory.

He further said that keeping in view the rising economy of Pakistan the load of freight movement has increased manifold in the last few years. To cope with the emerging and projected situation in term of goods transportation, Pakistan Railway direly needed locomotives, freight coaches and new rail tracks.

He encouraged the Chinese Entrepreneur to join Pakistan Railways in materialising these projects. Highlighting the significance of Havelian-Kashghar rail network, Railways Minister told the Ambassador that feasibility study on this new track was underway, which would practically start at the end on next month.

As a result of the last visit of the Chinese President Hu Jintao to Pakistan, the co-operation between China and Pakistan on railways has become manifold, he added.

He said different avenues of mutual co-operation has been marked that also included extending railway line to China, introduction of new signal system and construction of mass transit train systems.

He also invited the Chinese firms to participate in mass transit train projects and revival of Karachi Circular Rail (KCR) system. Sheikh Rasheed Ahmed appreciated the efforts of the outgoing Chinese Ambassador in consolidation of Pakistan-China relations.

http://brecorder.com/index.php?id=521734&currPageNo=3&query=&search=&term=&supDate=


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## Neo

January 26, 2007 
*3 accords signed with Canada: Information technology*

ISLAMABAD, Jan 25: Three agreements were signed between Pakistan and Canada in the IT sector here on Thursday.

The agreements were signed by the representatives of the signing companies in the presence of the Canadian High Commissioner in Pakistan and Premier Dalton McGuinty of Ontario, Canada, according to a statement issued by the Board of Investment.

The signatories of these agreements are TenXc Wireless, Canada with Coherent Designs, Pakistan, Research in Motion, Canada, with Innovs Limited, Pakistan; Pathways Group, Canada with Si3, Pakistan.

Oober Inc. of Richmond Hill, Ontario, also announced that it was opening its software development centre in Islamabad.

Earlier, speaking at a breakfast meeting arranged by the Board of Investment in honour of the visiting delegation from Ontario, Canada in a local hotel in Islamabad, Ms Sandra Pupoatello, Minister of Economic Development and Trade Minister Responsible for WomenÃ¢â¬â¢s Issues, said that Pakistan had undergone a remarkable economic transformation which had put the country on the radar of international investment.

"Pakistan is not what we read about it, Pakistan is what we have seen here during our visit. It is the future investment destination and a time will come in near future when everybody will say, "the world is in Pakistan, where are we," she added.

Appreciating the investor-friendly policies of the government, she said this was the first delegation from Ontario, which has visited Pakistan and we have seen immense opportunities in almost every sector of economy.

Emphasising upon the investment opportunities in IT, infrastructure, power, health, agriculture and livestock, oil and gas and housing and construction, she asked the members of her delegation to take full benefit of these for mutual benefits.

She also stressed the need for more interaction and cooperation between the two countries.

Mr Omar Ayub, minister of state for finance, in his address said that as a result of macro-economic reforms, PakistanÃ¢â¬â¢s economy was now booming at fast growth rate.

The rising Foreign Direct Investment figures are a proof of increasing investments in all sectors of economy in Pakistan.

This all, he said, has been possible because of conducive investment climate created through liberal policies of the government.

Highlighting the vast potential that exists in Pakistan in all sectors, he called upon the Canadian investors to invest in any sectors they like as all sectors were available for investment where no government permission was required.

Earlier, BOI secretary, Mr Talat Miyan, said the investment policies of Pakistan were the most liberal in the whole region and all sectors of economy were open for 100 per cent foreign equity.

The secretary briefed them about the investment incentives and opportunities available in Pakistan.

He assured all support from Government of Pakistan and BOI to Canadian investors and told them that this was the right time to invest in Pakistan.

http://www.dawn.com/2007/01/26/ebr2.htm


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## Neo

January 26, 2007 
*Auto makers plan to invest Rs225bn*

ISLAMABAD, Jan 25: The auto industry will invest Rs225 billion in the next few years to achieve a new target of 500,000 cars a year, generating more than 30,000 jobs. At the current rate, Pakistan by 2010 would make 500,000 cars a year and pay Rs100 billion in taxes, provided the government ensures a long-term and consistent policy to protect the interests of local industry and to attract fresh investment.

Briefing newsmen here on Thursday, director, corporate planning and customer relations, Indus Motor Company (IMC), Shah M Saad Hussain, said that the auto industry had shown an average growth of about 25pc per annum over the last three years.

During the fiscal year 2006-07, the growth is expected to be between 10 and 15 per cent.

The import of used cars, he said, was hurting both local car manufacturers and vendors, and it would also bring down revenue collection.

To a question, he said import of used cars was not a threat to local production. In countries, like India and Thailand, customs duty on import of used cars was much higher than Pakistan.

Sharp demand for automobiles in the last five years has been spurred by a positive economic outlook and political stability, he said.

Mr Hussain said the proposed policy should be framed in a way it protects the national interests.

He elaborated that encouragement of local production would help generate more employment.

The government had already worked out tariff structure under the new auto policy, which would be presented for approval at the next meeting of Economic Coordination Committee (ECC) of the Cabinet.

To a question, he replied that the price of cars depends on the localisation of the maximum parts of the cars. He said 35 per cent parts are still being imported for assembling local cars. Replying to a question, he said that the auto manufacturers are of the view that we do not have any law to control prices of cars.

He said there is an understanding to increase the local production in the next few years for its subsequent exports.

Until 2000 Pakistan had been producing around 40,000 vehicles annually, but production has grown four times to around 160,000.

He said after 9/11, purchase of cars had increased tremendously because of financing by banks and growth in economy.

http://www.dawn.com/2007/01/26/ebr4.htm


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## Neo

Friday, January 26, 2007 

*VIEW: Recent economic developments Ã¢â¬âShahid Kardar*

The real unknown is the state of the poor. The evidence on the growth in their real incomes and purchasing power is at best anecdotal and somewhat murky. There are huge and widening disparities in incomes and wealth between the rich and the poor

Recent economic data indicates a decline in the core inflation rate by two percentage points. Although this is welcome news, it will bring little comfort to the poor for whom inflation in essential food items continues to be in double digits. Prices of goods like oil and food tend to be affected more by supply and demand conditions than by monetary policy and by way of carrying more weight in the Consumer Price Index (of 40 percent), impact overall inflation and expectations regarding inflation more heavily. This suggests that the prices of essential wage goods are key factors in determining inflationary pressures and that monetary policy is not a major determinant of inflation in Pakistan.

Another welcome development of the State BankÃ¢â¬â¢s tightening policy is the deceleration in the rate of increase in imports. This has been due in no small part to the downslide in the international price of oil and to some slowing down in imports of investment and other goods, the latter partly owing to the fact that the base of imports had become rather large for their increase to continue at rates of 30 percent per annum.

However, the adverse impact on the balance of payments will not be reduced substantially because the growth in exports has also decelerated. We are likely to still encounter the prospect of a huge trade deficit by the end of the financial year, perhaps even larger than the one witnessed last year. This gap in the external account will be financed by the surge in remittances, liberal availability of concessional aid and external borrowings at worldwide low interest rates. The rest of the chasm will be filled by GDRs (global depositary receipts) of OGDC, UBL, etc and proceeds of some other privatisations. The latter option is clearly not sustainable since we will at some point run out of assets to sell. 

Some of the woes of the export-manufacturing sector are because of poor managerial practices, failure to revamp organisations to remain competitive in the new world order. However, the public sector must also share a large portion of the blame that has resulted in continued high costs of doing business for the private sector, thus compromising its competitiveness.

Apart from failing to provide decent quality infrastructure of roads and ports it either administers the prices of some key inputs like that of oil (which it had, until this week, maintained at a high level although its international price had fallen some time ago) or actually provides/produces them, like energy and fuel (electricity and gas) whose availability, prices, reliability and quality are critical ingredients in the cost structure of the industry. It also guides a taxation system of non-adjustable turnover and withholding taxes or levies that operate as taxes, raising the cost of production. Also required are timely decisions by the government in a rapidly changing global trading environment, another area in which Islamabad fares poorly.

While the value of the rupee has depreciated over the course of the year against other currencies Ã¢â¬â and despite the pressure in the international currency market on the US dollar Ã¢â¬â it continues to be artificially higher against the dollar. While the standard line by the government that market forces determine the value of the rupee makes amusing reading, it brings little relief to the export sector. The latterÃ¢â¬â¢s cost curve, for reasons mentioned above, has shifted above to a higher level with a rising gradient.

Even if the governmentÃ¢â¬â¢s contention about the market forces were accepted, is it a defensible strategy, considering that our domestic rate of inflation is significantly higher than that of our trading partners and competitors? The lowering of profitability levels in the export and modern sectors of the economy dampen the incentive to invest in these sectors. Hence, the shift into non-productive activities like real estate and the stock exchanges, and to some extent in manufacturing for the domestic market in the more protected industries.

If China were to follow this advice the value of the RMB would be appreciating. Both India and China, by not choosing to sharply revalue their currencies upwards and maintaining highly competitive currencies have made it exceedingly difficult for our exports to compete internationally. When we eventually decide to adjust the value of the rupee (perhaps when there are no privatisation proceeds to finance part of the trade deficit), others would have captured some of our export markets. It would be awkwardly difficult, if not impossible, to regain those markets. Of-course, adjusting the value of the rupee would add to inflation to some extent, but this would be for a short-term and the impact would not be that debilitating (manufacturers cannot pass on the entire increase in costs). 

The other area of concern is the governmentÃ¢â¬â¢s budgetary deficit, reflected in the increasing resort to direct ad hoc borrowings from the State Bank (reflecting poorly on the latterÃ¢â¬â¢s claims of independence), as well as from the banking and non-banking sectors. The example of the latter is the use of national savings schemes to raise money from institutions (ostensibly to force commercial banks to pay higher interest rates on deposits).

In the opinion of this writer, the availability of consumer finance and the possible ill-advised easing of interest rates some time in early 2007 will ensure continued healthy growth in the manufacture of durable goods financed from this source of funding. Hence, we are likely to soon see the production of motor cars rise to 350,000, that of motorcycles to 1 million and that of TV sets to 1 million and beyond, and a similar spurt in the demand and supply of refrigerators and washing machines.

The progress of the domestic manufacturing sector producing other consumer goods will depend upon the ability of domestic industry to compete with imports through efficiency improvements, entrepreneurial willingness to narrow gross profit margins and the ability of the CBR to check under-invoicing of imports, etc.

That part of the domestic retail sector providing luxury goods and services to the more privileged households, who have made lots of money in the last 3-4 years (from the temporary boom in the real estate and stock market and the increased production of goods funded by consumer finance), will also continue to thrive in the near future.

The real unknown is the state of the poor. The evidence on the growth in their real incomes and purchasing power is at best anecdotal and somewhat murky. There are huge and widening disparities in incomes and wealth between the rich and the poor (with inflation worsening these imbalances), who also seem to be polarised along ethnic and regional lines). This has been the major cause of the deterioration in the law and order situation, growing alienation, disaffection and social discontent. In this context it is important to bear in mind that the greater the income and wealth inequality the more difficult it will be to reduce poverty through economic progress.

The author is a former finance minister of the Punjab

http://www.dailytimes.com.pk/default.asp?page=2007\01\26\story_26-1-2007_pg3_2


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## Owais

*WEF helps project 'Brand Pakistan': Prime Minister *

DAVOS (January 27 2007): Prime Minister Shaukat Aziz has said that the annual meeting of the World Economic Forum (WEF) has helped us project 'Brand Pakistan' as it remained a centre of attraction for world business leaders and heads of states.

"We had meaningful, positive and constructive interaction with over a dozen heads of states, and big number of world business and political leaders," Prime Minister Aziz said this while addressing a press conference at the conference centre of World Economic Forum.

The Prime Minister maintained that during his interactions with politicians, business leaders and representatives of civil society at the meeting he successfully projected 'Brand Pakistan'.

He said the forum focused on how Asia is becoming more important, and Pakistan has emerged as one of the leading country of Asia. "In over 45 meetings and interactions here at the WEF, I had discussed issues related to investment, trade, terrorism, and nuclear related issues."

Shaukat Aziz said the founder and Executive Chairman WEF Klaus Schwab, who met him earlier in the day has agreed to organise regional Economic Forum in Pakistan next year.

"This further confirms the growing importance of Pakistan as a key regional economic player with China and India."

To a question regarding Pak-India trade relations and implementation of Safta, Prime Minister said South Asia can change its destiny if they move fast on dispute resolution.

"Progress on Kashmir issue will further improve trade," He said and added that Pakistan is already a country with lowest tariffs in the region and a recognised country having liberal investment and trade policies. However, Prime Minister maintained that India should move fast on removing of non-tariff barriers.

To a question whether Pakistan has achieved its objectives at WEF annual meeting, Prime Minister said objectives were multi-pronged main aim was to build the Pakistan Brand, invite people to Pakistan since it is considered as an attractive investment destiny.

He said besides many other subjects, the issue of Doha Round in the window of WTO was also discussed in the WEF and there was unanimity of views that it should be continued to promote trade relations.

To a question about Pak-China economic relation and how does Pakistan view China's accumulating high foreign exchange reserves, Prime Minister Aziz said that Pakistan has excellent strong and cordial relations with its neighbour China. "China is the first country with whom we have signed Free Trade Agreement (FTA) and we have started moving on it with Early Harvest programme."

Prime Minister Aziz maintained we are happy on the successes of China. "We have always appreciated the successes of our friends." Furthermore, China is emerging as a new trade centre, which will lead to a balance with the other world's big trade centres.

To a question regarding establishing diplomatic relations with Israel, Prime Minister Aziz said that it would only be considered after the resolution of the Palestinian issue.

To a question if Pakistan's relations with Iran would be affected due to new legislation by US regarding sanctions on the issue of inadequate measures taken for war against terrorism, the Prime Minister said bilateral relations are not based on the interference of priorities of other countries. He said Pakistan has bilateral relations based on mutual interest, respect and dignity.


http://brecorder.com/index.php?id=522217&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*World Bank to give $45.65 million for Punjab land record management *

ISLAMABAD (January 27 2007): The World Bank has approved $45.65 million concessionary credit to Pakistan for 'Land Record Management and Information System Project (LRMIS)' aimed at improving land record service delivery in Punjab contributing to long-lasting tenure security thus creating an enabling investment environment.

According to World Bank, the project would help in reducing litigation and introduce a reliable land registration procedure to farmers and other end users in the most agrarian province of Pakistan.

The amount would come from the Bank's concessionary International Development Association (IDA) with 35 years maturity and a 10-year grace period. Under the project, service centres would be established where land records would be maintained and made available to the public in digital form and pilot linkages between the land records system and the system for registration of deeds.

The existing dispersed status and non-transparent nature of land record makes land rights uncertain and negatively impacts economic development and threatening mainly the vulnerable and the poor whose rights remain virtually unprotected.

The Bank says that land transactions are relatively high cost, and disputes about land rights are caused, among others, by the inefficient and archaic land records system, which has undergone very little change since the 19th century. This constrains the efficient operation of land markets and results in land prices that are in excess of the discounted value of potential agricultural earnings from the land.

Under the project, extracts from land records (fards) will be provided within 30 minutes of application at the Service Centres. Under the current system it frequently takes weeks for this process to be completed. The total transaction costs associated with obtaining land record extracts are expected to be reduced by 80 percent.

"Land is at the heart of agriculture and the rural economy in Punjab. Land ownership and administration issues are vital," said John Wall, World Bank Country Director for Pakistan. "By improving tenure security, this project will increase access to land and credit especially for the poor whose rights remain largely unprotected."

The project will help improve business processes and increase institutional capacity at the provincial, district, and lower administrative levels, and put in place an automated land record system. It will also include a set of public outreach activities. The goal will be improve service delivery to the people.

"The Government of Punjab is committed to improving the quality of land records services provided to the population," said Edward Cook, World Bank Senior Land Administration Specialist and project team leader. "The Project will provide for the institutional capacity building and application of modern technologies to allow this to happen."


http://brecorder.com/index.php?id=522328&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Iran, India and Pakistan agree on gas pricing formula *

TEHRAN (January 27 2007): Officials from Iran, India and Pakistan have agreed on the pricing formula for export of gas from Iranian to meet India's burgeoning energy demands, an Iranian oil official said on Friday.

"After years of efforts, we could reach an understanding in terms of a pricing formula," Hojatollah Ghanimi-fard, director of international affairs at the National Iranian Oil Company told the state radio.

"The three sides will take this proposal, this agreement, to their (governments) and we hope to take the next steps after they give their opinions," Ghanimi-fard said after three days of negotiations with Indian and Pakistani officials here.

"The three sides have one month to respond," he added, without elaborating on the terms of the accord. He hoped that the three countries can "take all other measures" by the end of June in the next round of discussions.

Talks on the proposed multi-billion dollars pipeline --to supply Iranian gas to India through a 2,600-kilometre (1,600 miles) pipeline via Pakistan --began in 1994.

Indian oil ministry sources said the price quoted by Tehran was about seven dollars per million British thermal unit of gas which includes the cost of transportation. New Delhi, which is anxious to exploit new sources of energy to fuel its booming economy, deemed this too steep, and was unwilling to pay more than 4.25 dollars per unit.

http://www.brecorder.com/index.php?id=522254&currPageNo=1&query=&search=&term=&supDate=


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## Contrarian

Cheers then! I hope the pipeline proposal bcomes a reality


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## Neo

malaymishra123 said:


> Cheers then! I hope the pipeline proposal bcomes a reality



You're the first Indian (internet) supporter of the IPI line.
Congrats!


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## Contrarian

Neo said:


> You're the first Indian (internet) supporter of the IPI line.
> Congrats!



Huh?? How's that possible. I thought Everyone'd want the oil pipeline. Why would any Indian oppose it?


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## salman77

*Pakistan, Switzerland agree to start negotiations on FTA​*Sunday, 28 January 2007

DAVOS, Jan. 28 (APP): Pakistan and Switzerland Sunday decided to initiate the negotiations for Free Trade Agreement in order to promote trade and economic relations and further strengthen bilateral relations.
The decision was taken during the meeting between Prime Minister Shaukat Aziz and Ms. Micheline Calmy-Rey, President of the Swiss Confederation, who called on him here on the sidelines of annual meeting of World Economic Forum. Both the leaders discussed bilateral relations, regional and international situation with reference to further enhancing the cooperation for world peace, progress and prosperity.
They also agreed to further strengthen the trade and economic relations between the two countries.
http://www.app.com.pk/en/index.php?option=com_content&task=view&id=2949&Itemid=2


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## Neo

malaymishra123 said:


> Huh?? How's that possible. I thought Everyone'd want the oil pipeline. Why would any Indian oppose it?



The 'P' word in the IPI seems to be the problem. Many Indians fear that India would put herself in a vulnerable position if her future oil artery runs thru Pakistan.
In times of crisis, Pakistan could cut off the supply.

There's heavy lobby for a direct pipeline from Qatar to India thru the Arabian Sea, an option that is much more expensive than the IPI.


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## Neo

*'Provinces agree on five major dams'* 

ISLAMABAD (January 28 2007): Provinces have agreed in principle on the implementation plan of five major dams. 'Consensus' report of the committee on dams calling for completion of the projects till 2016 as announced by the President and approved by the federal cabinet, said Mohammad Asif Sheikh, spokesman for the Planning and Development Division on Saturday.

The committee, headed by secretary water and power, submitted the report to the Central Development Working Party (CDWP), which met with Deputy Chairman Planning Commission Dr Akram Sheikh in the chair.

The spokesman, however, admitted that there were certain irritants in the implementation of the five major dams that include Kalabagh, Diamer-Basha, Akhori, Munda and Kurram Tangi Dams.

"Now, these projects will be referred to the Executive Committee of the National Economic Council (ECNEC) in next meeting for final approval," he said. Flanked by Dr Asad Ali Shah and Lieutenant General Mohammad Zubair (Retd) members of the Planning Commission, he said that the concerned authorities have reached a technical consensus. "It will be ECNEC to create a political consensus," said Mr Zubair.

"Yes, it is a breakthrough in a sense that the dams have been declared feasible on technical grounds," he said. He said the construction of Diamer Basha and Munda dams might be prioritised. However, the committee has recommended that all the dams must be completed by 2016, as the President announced. He said that CDWP had instructed the committee to prepare the reverse implementation plan of the projects.

The committee will prepares the report in two-month time. Dr Asad Ali Shah said that Economic Affairs Division (EAD) had already been tasked to arrange funding for the projects.

The projects would need US $25 billion. The EAD task force will definitely seek funding from a large number of donors, he added. In the second report of the committee, which comprised additional chief secretaries from Sindh, NWFP, Balochistan, chief planning Punjab besides member infrastructure of Planning Commission, will inform about what would be the actual funding requirement on year-to-year basis.

Asif Sheikh said that the size of the Public Sector Development Programme (PSDP) would be increased to 1.4 trillion in 2009-10 from the current Rs 272 billion. Some funding will also be made available from the PSDP, too for important projects.

The CDWP also approved 27 projects costing Rs 31.3 billion including foreign exchange component of Rs 2.9 billion. This was the sixth meeting of the current financial year, and in the earlier meetings, 171 projects costing Rs 175.9 billion were approved.

In addition, the projects of establishment of Pak-China Friendship Center in Islamabad costing at Rs 1.5 billion and Capacity Building of Emergency Services of government of Punjab costing Rs 5.25 billion were conceptually cleared.

The planning body approved 10 projects costing Rs 3.1 billion for Punjab and 4 projects costing Rs 1.1 billion for Sindh. One project each for NWFP, Balochistan, FATA and AJK were also approved.

As many as nine projects costing Rs 22.3 billion were approved all over all. Four projects for Punjab have been approved on 50:50 cost sharing basis. Of four projects in Sindh, two projects costing Rs 1.5 billion will be shared on 50:50 basis. The net federal government share would be Rs 28.4 billion for all approved projects. Four projects costing Rs 24.1 billion will be placed before the ECNEC for approval.

http://www.brecorder.com/index.php?id=522607&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*WEF moot to help promote investment in Pakistan: Humayun *

DAVOS (January 28 2007): Federal Minister for Commerce Humayun Akhtar on Saturday said the annual meeting of World Economic Forum would play an important role in promoting investment in Pakistan. Talking to newsmen the Commerce Minister said the forum was an important place where world leaders, representatives of leading companies and financial experts gathered and exchanged views and ideas to promote development in the developing countries.

Replying to a question, the Minister said he had held many meetings with representatives of several countries attending the forum and discussed bilateral trade relations with them.

To a question about setting up proposed US sponsored Reconstruction Opportunity Zones in Pakistan's bordering areas, the Minister said the required legislation for establishing of these zones is expected to be tabled in US Congress by March this year.

The Minister said these ROZs are expected to be established in bordering cities of Balochistan and NWFP and Fata and the products prepared in these zones would be exported to US and other markets.

He said October 2005 earthquake hit cities in Azad Kashmir and NWFP would also be included in the areas where these ROZs would be established. He said, "Though the sites for these ROZs are not yet finalised but existing industrial cities in these areas are also expected to be declared ROZs."

About various Free Trade Agreements, Humayun Akhtar said that agreements with Malaysia and Singapore would be signed soon as the process is in final stages.

http://www.brecorder.com/index.php?id=522652&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*'China aims to double trade with Pakistan' *

KARACHI (January 28 2007): "China considers Pakistan's interest and benefits very close to its heart and is committed to making Pakistan strong and prosperous. There is lot of potential in Pakistan and it is our aim to double bilateral trade on a fast track and therefore it is imperative that Pakistani businessmen take advantage of the Pak-China FTA to enter the Chinese market."

Zhang Chun Xiang, the outgoing ambassador of China declared during his meeting with Majyd Aziz, president and members of the Karachi Chamber of Commerce and Industry at KCCI on Saturday. The Chinese envoy, who had come to say good-bye after a long tenure of over 26 years, further stated that Pakistani companies should take up the challenge to make their products more competitive and this can be done by introducing high tech machinery, equipment, and processes in their industries.

He said that until 1985, Pakistani textile products were much better than Chinese products but after that the Chinese textile products have excelled and left Pakistani products far behind. Xiang disclosed that the FTA took two years to negotiate and this is the first FTA signed by China with any South Asian country.

He said that a well thought of step-by-step scenario has been agreed upon so as to protect the Pakistani industries otherwise Chinese goods would have flooded the local market.

The ambassador further added that Pakistan and China have agreed upon a five-year Economic Planning Programme that is also another first by China for any country. He said that Pakistani businessmen must try their utmost to target economic, investment, and trade activities especially now when globalisation is in full swing.

He added that the time for action is now and we should talk less and act more if bilateral trade has to double from the present $5.250 billion. The outgoing ambassador said that 40 Chinese motorcycle manufacturers are in Pakistan and the possibility of joint ventures in motorcycle is possible since there is already one in Lahore for the last eleven years.

Xiang also assured KCCI that Chinese businessmen would have a strong participation in the 'My Karachi' exhibition organised by KCCI this year and declared that he would ensure that one whole pavilion is reserved for Chinese exhibitors. He praised KCCI for organising such an event every year and termed it as a very pragmatic endeavour.

He also said that KCCI recommendations for visas are very important and considered with esteem. He said that there are no problems for granting visas as long as an invitation is sent by a Chinese enterprise or an organisation.

This is in the larger benefit of genuine businessmen. He also deplored the smuggling and under-invoicing of goods from China and stated that the trade figures from China are more accurate and represent the true state of affairs.

He said that Pakistan Customs should update its system of tabulating the figures of trade. Earlier, Majyd Aziz while welcoming the Chinese ambassador and officials recommended investment possibilities and reiterated the commitment of Pakistani businessmen to enhance trade with China. He said that the Indo-China trade should be made a model and emulated.

He called for large investments in infrastructure, textiles, fisheries, automotive, and chemical plants, among other projects that are viable for Chinese investors. He paid glowing tributes to the ambassador for his yeoman services to further develop Pak-China relationship. Siraj Kassam Teli also expressed his appreciation for the valuable assistance and co-operation given by the Chinese Commercial Office in Karachi. A Abdullah Zaki, senior vice president, Saqib Naseem, vice president, and members of the Managing Committee attended the farewell meeting.-PR

http://www.brecorder.com/index.php?id=522689&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Karachi accepts challenges of globalisation: Kamal *

DAVOS (January 28 2007): City Nazim Syed Mustafa Kamal has said the citizens of Karachi have accepted the challenges of globalisation and also are fully co-operating with the government in the way of development. President Pervez Musharraf, Prime Minister Shaukat Aziz and Founder of Muttahida Qaumi Movement Altaf Hussain have a vital role in the development of Karachi.

He was expressing these views while addressing in the ongoing World Economic Forum on the subject of 'Management Rapid Urbanisation in Developing Economy' at Davos, Switzerland on Saturday. Earlier, the Chief Minister of New Delhi, India Shella Dickshat, Mayor of Tayjen, China Feung Long, General Secretary of International Transport Workers Federation Cock Rose, Chairman

Harvard School of Public Health America David Bloom, Director for International Development, John of Canady Institute, Ricardo Housmin, President Inter-American Development Bank Lios Morino and other international IT and investment companies presidents.

It is the first time the World Economic Forum has invited any mayor from Pakistan and also invited as a speaker. In his presentation, the City Nazim said the city of Karachi has started its journey of development in right direction to incorporate in the most developed cities of South Asia and in the region. Elaborating the ongoing development projects and strategy of City District Government Karachi, he said the development projects, during the last 14-months initiated in Karachi was exemplary as there is no any evidence not only in Pakistan but also in South Asian cities. "It is the first time that the city of Karachi has been included into the list of Mega Cities and acknowledge as international trade centre due to the development projects taken by the government in the last 14-months," he said.

He added that through the World Economic Forum he got the opportunity to build image of Pakistan, Karachi and Muttahida Qaumi Movement (MQM) and also get rid of the misconception against the Pakistan, Karachi and MQM. He also said after 9/11, the Pakistan had become allied with the world, which was exemplary.

He said the Karachi was also damaged by the international terrorism but the citizens of Karachi and the City District Government Karachi had faced all challenges as the Federal and Provincial governments also accompanied in this way.

http://www.brecorder.com/index.php?...69&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Government support sought to surpass export target *

SIALKOT (January 28 2007): President Sialkot Chamber of Commerce and Industry (SCCI) Sheikh Abdul Waheed Sandal has said that local exporters were fully committed to achieve the export target set by the government.

Talking to Business Recorder here on Saturday he added that if government extend support and full backing, the exporter community would surpass the target. Without the support of government, industrial growth and economic progress is never possible for which he said that government must make determined efforts for weeding out the all obstacles and irritants in the way of business and provide necessary technical and financial support.

President SCCI said that commerce and trade activities in the city were growing at a stable pace and there is great prospective of rapid growth through investment in several potential sectors. With more foreign and local investment, boom in the business and trade could be expected and in this regard government's help in more direct foreign investment in Sialkot is sought. Waheed Sandal said that in order to cope with growing business activities in this export-oriented city "Sialkot Business and Commerce Centre" was being constructed at a cost of Rs 140 million, to showcase the Sialkot made products under one roof so that the visiting foreigner, diplomats and government officers may have a glimpse of the products.

The SCCI president said that we had planned this project to be a model in the public-private partnership adding that Sialkot Business and Commerce Centre project started but unfortunately shortage of funds was hindering the project. He seeks government support and co-operation for providing long-term interest-free loan for the completion the project of Sialkot Business and Commerce Centre in public-private partnership.

He said that in order to fulfil requirements and standards of foreign buyers, CE marking had become vital requirement for exporting products to the European Union. The SCCI president called upon the Punjab government to expedite the process of acquiring land for the testing laboratory adding that the business community of Sialkot was grateful to Punjab government for allocation of four million dollars for setting up international accredited laboratory in Sialkot.

The current route of Sialkot-Lahore Motorway on western side of Daska, near village Ranjhai is not suitable for the inhabitants of Sialkot he said. He suggested the realignment of the motorway on the Eastern side of Daska to pass through near village Jaisarwala and MR link canal that would benefit people of Sialkot, Pasrur and Daska evenly. He was of the opinion that with the establishment of projects of Engineering University Sialkot, Sialkot Business and Commerce Centre and Testing Laboratory, vertical export growth would become a reality and the export target of two billion dollars annually would be achieved in next few years.

http://www.brecorder.com/index.php?id=522679&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Pak-Korean firms to invest $500 million in construction sector *

LAHORE (January 28 2007): Chosun Construction of South Korea and Shafsal Limited of Pakistan will jointly invest US $500 million to develop various commercial and residential projects in Pakistan. Addressing a joint news conference at Lahore Press Club on Saturday.

Myung Kim, chief executive of Chosun Construction, and Muhammad Saleem Bhatti, chief executive of Shafsal Limited, said both sides had agreed to jointly develop various projects, including residential complexes, shopping malls, country clubs, fitness centers in Lahore and Islamabad.

These projects worth about 500 million dollars will be of international standard and incorporate earthquake proof design constructions, they added. They said that the joint initiative augured well for the real estate sector in Pakistan, which had come under pressure in the recent months following an unprecedented boom. It will also encourage other South East Asian companies to explore the Pakistan real estate market, they viewed.

"It is my first visit to Pakistan and I see good potential in construction sector here," Myung Kim said. He added that they would try their best to provide world standard facilities in all the projects to be undertaken for residential as well as commercial purposes.

Chosun Construction has been working in the areas of real estate development for the last 30 years and besides South Korea has undertaken various projects in China, Muhammad Saleem Bhatti said. "Initially we will start our projects in Islamabad and Lahore while the scope will extend to their cities, subsequently", he added.

To a question, he said residential facilities would comprise big and small apartments spreading over an area of 1250 square feet (5-marla) and above. The price of a five marla apartment will be around Rs 750,000. "We have acquired land to build some 42-storey buildings in the federal capital, he added. To a question about financing of these projects, he said all our projects will be self-financed without assistance from any bank or financial institution.

The chief executive of Shafsal announced that they would allocate 10-percent quota for journalists in the residential projects, which they will be provided at concessional rates.

http://www.brecorder.com/index.php?id=522658&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Karachi has become centre for trade activities *

KARACHI: Sindh Minister for Industries, Commerce, Transport and Labour, Adil Siddiqui said that Karachi has become a centre for trade and industry related activities during the last four years on account of improved peace and order. 

Addressing a press conference here in connection with the three-day World Health Updates conference, he said the country had received foreign investment as a result of the conferences and exhibitions held in Karachi. 

He said a Family Health Festival will be the part of the event, which would create awareness among the public about health. He said Sindh Social Security Institution was joining, for the first time, an international labour conference. He said this conference would help create awareness about social security among the labourers. 

He said the conference was the first of its kind in the country wherein local and foreign experts from Britain, US, Germany, Singapore, Sri Lanka, Bangladesh and other countries were participating. Experts of nursing and dentistry are also taking part in the conference and delivering their lectures and papers. 

http://www.thenews.com.pk/daily_detail.asp?id=40660


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## Neo

January 28, 2007

*27 projects costing Rs31.3bn approved*

ISLAMABAD, Jan 27: The Central Development Working Party (CDWP) on Saturday approved 27 projects costing Rs31.3 billion including a foreign aid component of Rs3 billion.

The CDWP meeting was held here under the chairmanship of State Minister and Deputy Chairman Planning Commission Dr Muhammad Akram Sheikh.

Later briefing the newsmen, a spokesman of the Planning Commission, Asif Sheikh, said that it was the 6th meeting of the CDWP in the current financial year and a total of 171 projects worth Rs175 billion were approved.

In todayÃ¢â¬â¢s meeting apart from the 27 approved projects two more development projects were conceptually cleared and it means that these had been approved in principle, he added.

The projects, he said included the establishment of Pak-China Friendship Centre Islamabad at a cost of Rs1.5 billion and Capacity Building of the Emergency services of Government of Punjab at a cost of Rs5.3 billion.

The spokesman giving details of the projects said that 11 infrastructure projects worth Rs25.4 billion, 13 social sector projects at a cost of Rs5.3 billion and three projects in other sectors costing Rs0.6 billion were approved by the CDWP.

For Punjab province 10 projects at a cost of Rs3.1 billion, four projects in Sindh costing Rs1.1 billion, one project each in NWFP (Rs2.3bn), Balochistan (Rs1.5bn), FATA (Rs0.4bn), Azad Kashmir (Rs0.5bn) and nine other projects costing Rs22.3 billion were approved, he elaborated.

He said that four projects located in Punjab had been approved on 50:50 cost sharing basis. The federal government would meet Rs0.5 billion and the balance would be borne by the government of Punjab.

The spokesman said four projects located in Sindh would also be shared on 50:50 basis and the federal government would contribute Rs0.7 billion for these projects.

He said that four projects costing Rs24.1 billion would be placed before the Executive Committee of the National Economic Council (ECNEC) for approval.

Replying to a question the spokesman said that allocation for the Public Sector Development Programme (PSDP) would be increased to 6.3 per cent of GDP by the year of 2009-10.

Speaking on the occasion Lt Gen (Retd) Muhammad Zubair, Member Implementation and Monitoring, said that the technical committee on water reservoirs constituted by the government under the chairmanship of secretary water and power submitted its report to the CDWP in the meeting.

All the provinces have agreed that all five major dams announced by President Musharraf and approved by the federal cabinet would be built by the year 2016, he added.

He said the provinces had also agreed to the fact the building of the five major dams were vital for the country and should be completed by the stipulated time.

He added the report would also be submitted to Ecnec.

Member Projects Planning and Development Commission Dr Asad, Chief Population Planning Jalil Minhas, Members Water and Power Mr Amanullah and Naseer Gillani were also present on the occasion.

http://www.dawn.com/2007/01/28/ebr1.htm


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## Neo

Sunday, January 28, 2007 

*20 skill development companies planned: minister*

LAHORE: Federal Minister for Industries, Production and Special Initiatives, Jahangir Khan Tareen Friday said the government is planning to set up 20 skill development companies to impart skills and training to the youth in different sectors of national economy.

"Funds ranging between Rs 5 to 10 billion will be allocated in the Public Sector Development Programme (PSDP) of the federal budget for the year 2007-08," he said while talking to newsmen after chairing a meeting with stakeholders at a local hotel under the newly launched Skills Development Initiative.

Federal Secretary for Industries, Production and Special Initiatives, Shahab Anwar Khawaja, former Federal Industries Minister, Abdul Razzak Dawood, Managing Director Technology Upgradation and Skill Development Company (TUSDEC), Suhael Ahmed, officials of German Technology Assistance Agency, GTZ and representatives from different industrial sectors were present on the occasion.

Jahangir Tareen said that the skill development companies would set up centres of excellence, technical training institutes and vocational training institutes for the respective sectors. "These companies will not only provide hands-on training to workers of different industries, but will also have placement bureaus to assist newly trained youth in getting jobs," he added.

He said that no fee will be charged from apprentices, rather, they will be provided stipend of Rs 1000 per month. The minister said that the operational cost of the companies being set up on public-private partnership basis, would be met by the Workers Welfare Fund (WWF) pool. In addition to these 20 entities, another company would be set up to train the trainers for the sectors identified for the project.

The sectors for which companies are being set up include chemical and fertiliser, textile, home textile, construction, furniture, engineering, auto-parts, dairy and oil and gas etc.

Tareen expressed hope that the initiative will help produce 700,000 skilled persons annually against the present level of 300,000. "NAVTEC will coordinate these efforts," he said.

About the management of the companies, Tareen said that the champions of the particular sector of the economy would run the companies. app

http://www.dailytimes.com.pk/default.asp?page=2007\01\28\story_28-1-2007_pg5_7


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## Neo

*Major crops share in GDP hits alarmingly low level: World Bank *

ISLAMABAD (January 29 2007): The World Bank has cautioned that Pakistan's share of major crops in GDP was down to an alarming level and suggested the government that it needs to go for diversification into high value crops and livestock to increase the rural income for a quick U-turn in this key area.

The World Bank report on the Pakistan's agriculture sector output mentions a number of reasons of farms shrinking share in GDP and suggests various measures to face the challenge upfront.

It says agricultural growth in Pakistan throughout most of the last three decades has depended to a large extent on the major crops (wheat, rice, cotton and sugarcane).

It notes: "The share of major crops in total GDP in Pakistan has fallen dramatically (from 0.234 in 1970 to 0.091 in 2000) and direct effect of a 10 percent gain in major crop production is smaller: equivalent to 2.3 percent of GDP in 1970, but only 0.9 percent of GDP in 2000."

It says that assuming an unchanged value-added multiplier, total effects (including multiplier effects) on the rest of the economy are also smaller (4.6 percent of GDP in 1970 compared with 1.5 of GDP in 2000). The report mentions that for increases in production of major crops, future increases in agricultural productivity and rural incomes will need to rely more on diversification into high-valued crops and livestock.

The report adds that Pakistan needs to restructure research and extension services to meet the needs of a more diverse agriculture, including provision of region-specific information packages. It says facilitating the new contracting arrangements and investments by super markets will also facilitate marketing of highly valued fruits, vegetables and animal products.

It also recommended investment in irrigation and drainage, together with reforms in irrigation management are also crucial to arresting environmental degradation, especially in some major irrigated areas of Punjab and Sindh. Expanded use of water-conserving technology, such as drip irrigation, can increase the efficiency of use of scarce available water.

It claims that Pakistan needs to resources for the provision of research, extension and veterinary services for livestock, particularly for larger animals. The poultry sector is already expanding rapidly, including both substantial rise in maize production (a major feed) and in poultry and egg production. It says productivity gains in the livestock sector are especially important for pro-poor rural income growth since the distribution of livestock in rural Pakistan is more equitable than the distribution of land.

http://www.brecorder.com/index.php?id=523129&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Travel barriers: garment industry missing $600 million orders annually *

KARACHI (January 29 2007): The export-oriented readymade garments industry of Pakistan is missing around worth $600 million orders annually, due to travel barriers mainly in the United States region, sources in trade told Business Recorder on Sunday.

Leading exporters said the local exporters often find difficulties during their visits, particularly to United States, as there was stiff immigration procedures on arrival, resulting in wasting of several precious hours of visitor.

"Besides high production costs, the ratio of textile exports has also scaled down by $ 600 million or 20 percent annually due to travel barriers," said Ijaz Khokhar, Chairman, Pakistan Readymade Garments Manufacturers and Exporters Association (Prgmea) when contacted over telephone.

"Foreign buyers from United States and European Union are also advised by their respective travel advisory boards to avoid travelling to Pakistan, which also diverts fresh orders from local exporters to other regional countries, bringing the already declining textile exports further down," he remarked.

Gurus of readymade garment exports pointed out that travel barriers, since 9/11, had badly hit the flow of textile orders in value-added garments from the US-based interested parties. "We are now practising the least effective way of attracting foreign orders these days," exporters said, adding the local exporters mostly finalise orders from US buyers through phone and faxes, which were believed to be the least effective ways to attract foreign customers.

The Prgmea chairman was of the view that the rising textile export deficit could be stemmed by around 30 percent by exploring new avenues and markets in the world and the government should support and encourage readymade garments exporters by giving them incentives.

"African and South American regions are the potential markets of our textile products, which is thought to help augment domestic production and exports manifold, despite being faced with a continuous failure in the western markets," he added.

He also stressed on setting up of innovative trends in the production of readymade garments with a view to lure the buyers from across the globe, which would not only help augment their exports but also enable them to compete with the regional competitors in the world market.

Ijaz called upon the government to evolve a long-term plan for the increasing of textile exports, adding that consulates could play a vital role to help the country's exporters establish their domains in various EU and other Western countries, besides US.

Regarding the country's image building, he urged upon government and its consulates abroad to play their due role to dispel misconception about Pakistan as it was being depicted in the West through its electronic and print media, also called for an exhaustive plan to encourage foreign customers.

He said, "Setting up outlets in western markets is the expensive venture and requires capital in million of dollar, which is unaffordable for most of the exporters".

He also called for travelling support fund, and urged the government to evolve a serious plan to support textile exporters in the course of their travel to EU and US. The exporters also highlighted the issue of deteriorating law and order situation in the country, which restricts the foreign buyers from coming to country to place fresh orders.

http://www.brecorder.com/index.php?id=523126&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*50 projects to generate 13,400 MW power by 2016 *

ISLAMABAD (January 29 2007): Around 50 projects of private sector are in the pipeline to generate 13,400 Megawatt of electricity by 2016 at an estimated cost of 12.847 billion dollars.

Giving year-wise details of the Independent Power Plant projects, sources at the Ministry of Water and Power Sunday said 10 projects with 2,255 MW capacity including six oil and four pipeline quality gas dual-fuel are expected to be completed by 2008 with an investment of $1.691 billion.

The sources said that out of the six oil projects during the year 2008, the main project is Capacity Expansion from Existing IPPs. This is near Lahore with 405 MW capacity. This project would cost $304 million dollar.

During the year 2009, eight projects have been planned to generate 1764 MW electricity with an investment of $1.323 billion. These include three oil and five dedicated gas field projects.

The sources said in year 2010, seven projects of 1,321 MW capacity including two hydel, one oil, three pipeline quality gas dual-fuel and one dedicated gas field would be completed with the cost of $1.096 billion.

Likewise, in year 2011, three hydel projects with generating capacity of 284 MW, costing $355 million would be completed.

The sources further said in year 2012, seven projects having capacity of 2,726 MW including three hydel and four coal projects would be completed with the cost of 2.320 billion dollars.

In year 2013, five projects including four hydel and one coal would be completed to generate 1,986 MW electricity. These projects will cost 2.233 billion dollars. The sources said three hydel projects having 1,443 MW capacity are likely to be completed in 2014 with the cost of $1.804 billion.

Similarly, in year 2015 and 2016 seven hydel projects are planned to generate 1620 MW electricity and would cost $2.025 billion. The sources further said to meet growing power needs of the country, recently five agreements have been concluded with different parties for generation of about 1,300 megawatt electricity.

The tariff for coal-based power plants in Thar has been determined and hoped the Chinese company would respond positively for setting-up of plants there.

Power projects with a total capacity of 6,000 MW are in different stages of approval. These include 550 megawatt of wind power projects.

http://www.brecorder.com/index.php?id=523095&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Pakistan fifth in GCI ranking: HBS *

DAVOS (January 29 2007): Pakistan has been included in the top five countries of the world in terms of competitiveness by securing twenty positions ahead against the last year's General Competitive Index (GCI) ranking. Professor Michael Potter of Harvard Business School (HBS) informed who called on Prime Minister Shaukat Aziz on Sunday. He met Shaukat Aziz on the sidelines of the World Economic Forum.

Potter said that Pakistan was consistently doing well for the last three years and was also ahead of its neighbouring countries in terms of dynamism, and reduction in poverty and unemployment.

He said Pakistan was being viewed at the right track and the reform agenda are paying dividend.

Potter appreciated the economic reforms of Pakistan and said however, there was a need to improve the legal system that directly relates to a country's economic system.

Prime Minister Aziz said Pakistan will try to further improve its competitiveness and had launched an ambitious programme to impart skills to improve manpower and logistics throughout the country.

http://www.brecorder.com/index.php?id=523156&currPageNo=2&query=&search=&term=&supDate=


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## Neo

January 29, 2007 

*Growing appetite for acquisitions*

By Sabihuddin Ghausi

THE appetite of foreign investors for acquisition of running business is growing with three more deals under negotiations, involving more than $800 million reported last week in the media.

The stipulated acquisitions comprise:

* 50 per cent shares of a tobacco company by a US-based global tobacco giant with an indicated investment of about $339 million which will raise the buyers stake in the firm to 90 per cent. * about 89 per cent share of a cellular phone firm, being sought by a Chinese company for cash consideration of $284 million . * a local bank at a price which is just second to nearly $500 million offered by a British bank for another local bank.

A pronounced trend of acquisitions and mergers was set last year when as many as eight local banks were taken over by giant European banks and Saudi investors group in 2006.

Foreign investors were tempted to buy banks for two reasons. First is the phenomenal profits made by banks over last three years. Second, the State BankÃ¢â¬â¢s condition for commercial banks to have a minimum of Rs8 billion capital base by next year which is inducing managements of smaller banks to look for a buyer.

While the Pakistan market is upbeat on these acquisitions, the SBP has another story to tell. In its recent quarterly report, the central bank cautions about Ã¢â¬Åan unusual rise in the income account deficit arising from a higher direct investment income outflows.Ã¢â¬Â

The outflow of profit and dividend on investments during July- November 2006 increased by $57 million to $$74 million. This figure is bound to go up manifold in coming months as banks and many companies with foreign investment will start declaring profits in the first and second quarters of 2007.

Private banks and firms have been acquired and mergers have taken place. The public sector monopolies like PTCL and KESC and big banks have been privatised. Never before, Pakistan's business landscape was swarmed by as many foreigners as a website report suggests. Out of 40,000 registered companies, 675 are foreign entities. Many local companies have foreign stakes. And as government continues to encourage foreign investment, the trend is set for further inflow of foreign companies in years to come.

How this influx of foreign companies is going to affect the external sector? Will these companies repatriate their profits and dividends back home or plough back in expansion and in new projects? Two sharp conflicting views are offered. ``Foreign investors earn in Pakistan in local currency and remit their profits and dividends in dollars,'' Taj Haider, a former PPP Senator said.

Dr Shahid Hasan Siddiqui, a former banker is convinced that as the outflow of profits and dividends from foreign investments swells, pressure on the rupee will increase and adversely affect its exchange value. Any dramatic fall in the rupee value can trigger a chain reaction that can put Pakistan in a tight spot. Another economist said ``the government will have no option but to approach the IMF.'' The IMF's balance of payment support for any country in distress has its own implications.

``No doubt, the outflow of profits and dividends from foreign investment in the first five months of the current fiscal is unusual and high but absolutely not alarming'' says Qazi Sajid who heads the Pakistan-German Business Council said. Even this unusual outflow has largely been mitigated by capital and financial transfers that has not only offset but improved the overall external account position. According to the SBP report, the current account deficit increased from $3.1 billion to $4 billion during July-November, indicating a rise of 29.1 per cent, but the external account deficit shrank to $0.73 billion compared to $0.88 billion in 2005-06.

The bulk of the 35.4 per cent year to year increase in the aggregate surplus in the capital and financial accounts during first five months of 06-07 was contributed by foreign investment.

Qazi Sajid says that repatriation of profit and dividends by foreign investors is sending correct signals. It shows that Pakistan is a place to do business and earn profit and there is no restriction on remission of profits. Until five years ago, foreign companies were allowed to remit their profits with SBP permission After the year 2001, companies were allowed to remit profits directly through banks.

The liberal investment environment has led to a dramatic increase in the inflow of direct foreign investment. The Privatisation Minister, Zahid Hamid gave last week a figure of $3.3 billion foreign investment for first half of the current fiscal year.

The direct foreign investment increased by 69 per cent to $1.87 billion while the portfolio investment was recorded at $627 million. More than $880 million were mopped up by offering GDRs of Muslim Commercial Bank and OGDCL.

Foreign investors are showing interest in privatisation of big ticket entities like PSO, PPL, utilities and other public sector. They not only participate in privatisation process but also put money in infra structure projects. Only this week, the prime minister approved in principle the handing over of Gwadur port operations to a Singapore company under a multi- million dollar contract. An SBP director indicated total future financing requirement of about Rs3 trillion in the infra structure projects

The World Bank has already offered $6 billion investment in development of a National Trade Corridor that seeks to upgrade port operations, shipping, trucking, road transport, rails and other allied services. A comprehensive $10 billion plan for this purpose is to be finalised this year. The corridor will integrate Pakistan with Middle East via Iran and Gulf, Central Asia and West China and ultimately provide overland access to Europe.

As many as 150 international companies are reported to have shown willingness to join the effort in implementation of the trade corridor project. The multinationals expect a good response from those attending the World Economic Forum session in Davos where Prime Minister Shaukat Aziz is set to meet top executives of many global companies.

`Ã¢â¬ÂPakistan faces three big challenges"", an executive of a multinational said. The first and foremost is the perception about lawlessness, corruption and bureaucratic delays. But the second generation of reforms the government plans to take up in near future will address police, judiciary and government functioning. ``Let's hope that government takes up job of improving law and order seriously'' and also addresses the problems in judiciary.

The second challenge is the scarcity of skilled manpower. The massive development job cannot be taken up without educated and skilled manpower. Foreign companies say that Germany, France and Australia are coming up with projects of higher learning and advanced technical training. Germans are said to be setting up an institution in Punjab and the French and Australians in Karachi. Simultaneously, crash programmes are also being planned for technicians in Gwadur and other areas.

The third challenge is from political disharmony which needs to be addressed. Political tension saps energy and so much time is wasted for nothing. Time has come that all those represented in the assemblies and Senate should sit together and chalk out a national agenda.

The recent consensus between the government and the opposition in the Senate to hold a pre-budget session has been noticed by the executives of many multinationals. ``It augurs well,'' said one of the business executives and added that political leadership should give some time to debate on hard economic issues.

The three trade bodies of the foreign investors-Overseas Investors Chamber of Commerce and Industry (OICCI), the Pakistan German Business Council and American Business Council (ABC) are carrying out a survey about their membersÃ¢â¬â¢ perception on business environment in 2006 and their expectations for the current year. There is a lot of opportunities for these companies in various projects coming up,says a multinational executive.

http://www.dawn.com/2007/01/29/ebr1.htm


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## Neo

Monday, January 29, 2007 

*New export plan likely before next budget*

* Export target $43.3 billion by 2013

By Sajid Chaudhry

ISLAMABAD: A major incentive-based export plan for 2006 to 2013 to overcome trade imbalance and increase exports from $16.5 billion to $43.3 billion will be approved before the 2007-08 budget, Planning Commission Chairman Dr Akram Sheikh told Daily Times on Sunday. 

Dr Sheikh, who is also the chairman of the committee that finalised the draft Ã¢â¬ËExport Plan PakistanÃ¢â¬â¢ (EPP), said the plan would now incorporate the views of the Ministry of Commerce, the Ministry of Industries, Production and Special Initiatives, and the Ministry of Textile Industry. The EPP would then be presented to Prime Minister Shaukat Aziz for approval, he said, before the budget for the next fiscal year. The plan had nothing to do with the budget, he said however. 

According to officials, the Planning Commission has finalised the EPP draft to enhance the current exports from 13 percent of the GDP to 15 percent of the GDP by 2013. 

The prime minister had formed the committee to prepare a plan for increasing exports, during a meeting for the preparation of Trade Policy 2006-07.

The draft plan reveals that the GDP, which currently stands at $128.9 billion with exports-to-GDP ratio of 13 percent, is expected to grow up to $288.70 billion with exports-to-GDP ratio of 15 percent by year 2013, they said. The exports are to be enhanced with Annual Compound Growth Rate (ACGR) percentages under the EPP.

The exports from textile and garment sectors are projected to be increased from $9.98 billion in the fiscal year 2006 to $24.36 billion by fiscal year 2013 with an ACGR of 14 percent per annum. Rice exports, which currently stand at $1.11 billion, would be enhanced to $2.5 billion by year 2013 with annual ACGR of 12 percent. 

Leather and leather products exports had fetched $1.09 billion last fiscal year, which would be increased to $2.26 billion with annual ACGR of 11 percent. The current $0.21 billion exports of engineering sector would be enhanced to $2.40 billion with ACGR of 42 percent by year 2013. 

Fruits and vegetables from $140 million to $370 million with an ACGR of 15 percent, meat and meat preparations from $20 million to $100 million with a 26 percent ACGR, fish and fish preparations from $200 million to $990 million with a 26 percent ACGR, carpets, rugs and tapestry from $250 million to $370 million with a 6 percent ACGR, sports goods from $350 million to $920 million with an ACGR of 15 percent, surgical instruments from $160 million to $420 million with a 15 percent ACGR, cutlery from $30 million to $110 million with a 20 percent ACGR, furniture from $10 million to $500 million with annual growth rate of 75 percent, pharmaceutical products from $80 million to $290 million with a growth rate of 20 percent, marble and granite from $20 million to $680 million with a growth rate of 66 percent and gems and jewellery from $20 million to $690 million with 12 percent ACGR, and other products, including services and defence exports, from $2.89 million to $6.32 million with a 12 percent ACGR.

The Planning Commission has identified factors, which are impeding the countryÃ¢â¬â¢s exports and has suggested measures to remove the bottlenecks in the way of enhancing exports to the level envisaged in the EPP. 

The countryÃ¢â¬â¢s declining export share in the international trade has irked the economic managers to prepare a medium-term export development plan to bridge the increasing gap between exports and imports.

http://www.dailytimes.com.pk/default.asp?page=2007\01\29\story_29-1-2007_pg7_13


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## salman77

West Sumatra imports onion from Thailand and Pakistan​
PADANG, West Sumatra (Antara): West Sumatra has to import onion from Thailand and Pakistan because of unsmooth supply from Java.

"Over the past few days, red onion imported from Thailand and Pakistan has been flooding markets in Padang," Yanmul, an onion trader, was quoted by Antara news agency as saying.

Onion supplies from Java were halted two weeks ago. Imported onion was estimated to remain on offer in West Sumatra's markets for the next two or three months pending the time local farmers can harvest their own onion.

Padang has been importing red onion from Thailand, Pakistan, India, and China for certain periods over the past 10 years.

Normally, daily demand for red onion in Padang reaches around three tons while daily demand for garlic is around two tons.
http://www.thejakartapost.com/detaillbus.asp?fileid=20070127162204&irec=4


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## salman77

*TDAP to take trade delegation to Saudi Arabia*​Sunday, January 28, 2007

KARACHI: The Trade Development Authority of Pakistan (TDAP) will take a trade delegation to Saudi Arabia to participate in Saudi Healthcare Exhibition at Jeddah from May 20 to 23.

A TDAP official said here Saturday that Saudi Arabia is an attractive market for medical equipment and pharmaceutical and meets 90 percent of its pharmaceutical requirements through imports.

The demand is growing for healthcare after the addition of new hospitals and introduction of healthcare insurance for expatriates in the Kingdom.
http://www.dailytimes.com.pk/default.asp?page=2007\01\28\story_28-1-2007_pg5_12


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## niaz

Neo said:


> *Major crops share in GDP hits alarmingly low level: World Bank *
> 
> ISLAMABAD (January 29 2007): The World Bank has cautioned that Pakistan's share of major crops in GDP was down to an alarming level and suggested the government that it needs to go for diversification into high value crops and livestock to increase the rural income for a quick U-turn in this key area.
> 
> The World Bank report on the Pakistan's agriculture sector output mentions a number of reasons of farms shrinking share in GDP and suggests various measures to face the challenge upfront.
> 
> It says agricultural growth in Pakistan throughout most of the last three decades has depended to a large extent on the major crops (wheat, rice, cotton and sugarcane).



As someone from a village from the heart of Punjab ( Sargodha area) I can tell you that reason for this decline are three:

1. Lack of water - There has not been sufficient water to meet all of Punjabs needs for the last ten years. This has resulted in zero increase in total area under cultivation. Farmers simply area switch between crops, so if there is more wheat, there is less suger cane or cotton and so on. Pakistani people will however not agree to building Dams !!!. ( specailly Kala Bagh)

2. Lack of sufficient fertilizers and pesticides at cheap prices. After paying all the costs there is simply not enough return from the agriculture.

3. Lack of power avails. Farmer use tube wells to make up for the lack of canal water. Electricity outage is so much, specailly during the Rabi ( winter) crops that crops never get properly irrigated.

Every knows this, but do you think any one cares ???


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## Neo

niaz said:


> As someone from a village from the heart of Punjab ( Sargodha area) I can tell you that reason for this decline are three:
> 
> 1. Lack of water - There has not been sufficient water to meet all of Punjabs needs for the last ten years. This has resulted in zero increase in total area under cultivation. Farmers simply area switch between crops, so if there is more wheat, there is less suger cane or cotton and so on. Pakistani people will however not agree to building Dams !!!. ( specailly Kala Bagh)


Agree on all accounts.
Water and power shortage is the key issue here.
Last dam was built three decades ago and further delay in construction of new dams will only result in desertification of our soil and create severe food shortage.



> 2. Lack of sufficient fertilizers and pesticides at cheap prices. After paying all the costs there is simply not enough return from the agriculture.


US and many other countries have switched over to GM crops with higher yield.
Government should do more to promote GM cultivation, specially in arid area's where the yield is lower than average due watershortage.



> 3. Lack of power avails. Farmer use tube wells to make up for the lack of canal water. Electricity outage is so much, specailly during the Rabi ( winter) crops that crops never get properly irrigated.


Again the solution is building of those dams by 2015, more water more electricity.


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## Neo

*Germany, Canada, Italy and Norway swap $750 million debt *

ISLAMABAD (January 30 2007): Germany, Canada, Italy and Norway have so far swapped their $750 million loans for social, rehabilitation and infrastructure development in Pakistan.

Officials of Economic Affairs Division told Business Recorder here on Wednesday that Germany has debt swapped Euro 105 million through four separate agreements while it has offered fifth debt swap for Euro 20 million for which government of Pakistan has given its concurrence.

The earlier four Debt Swap agreements were (a) Euro 25.56 million for education in the Punjab province (b) Euro 25.56 million for education in NWFP, Euro 30 million for infrastructure in NWFP and Euro 25 million for construction of Middle schools in NWFP.

They said that Canadian Debt Swap was the first debt swap concluded with any government worth C$449 million for education sector particularly for teachers training. There are separate components for Federal Government and al the provinces for which PC-1s have been approved and assignment account are being opened.

Officials said that Italy has swapped/cancelled $170 million through two separate agreements. Under the first agreement Italy cancelled its loan of $85 million in lieu of the expenditure incurred on Afghan refugees. Under the second swap agreement government of Pakistan will utilise Swap funds of $85 million on projects in areas of rural development and poverty reduction.

They said that Norway has swapped $20 million that would be spent through Pakistan Earthquake fund (PEF) established at ADP in four equal instalments of $5 million each.

http://www.brecorder.com/index.php?id=523349&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pakistan and Belgium to expand trade relations *

BRUSSELS (January 30 2007): Pakistan and Belgium on Monday decided to expand co-operation for increasing their political, diplomatic, trade, economic and cultural relations for the benefit of people of two countries.

The decision was made during a meeting between Prime Minister Shaukat Aziz and Prime Minister of Belgium Guy Verhofstadt, held here at the office of Prime Minister in Brussels.

Both the leaders discussed bilateral relations, regional and international situation with special reference to Middle East, Lebanon, Iraq and Afghanistan situation. The prime ministers of the two countries also discussed trade and economic co-operation and Prime Minister Aziz said there is a great potential for trade and investment by Belgian private sector in Pakistan due to liberal economic policies.

Shaukat Aziz said Pakistan wanted to sign Free Trade Agreement (FTA) with European Union and wanted support and co-operation from Belgium in this regard.

He also gave an over view of economic development and said that size of the economy has doubled and Pakistan received $3.5 billion in the first six months. The figure will touch $5 billion by the end of current fiscal year as compared to just dollars 300 million seven years ago.

The Belgian Prime Minister appreciated the progress made by Pakistan in the economic sector and assured his country will extend full support and co-operation to Pakistan for entering FTA with EU.

Both the leaders agreed to further promote trade and investment between the two countries. Shaukat Aziz said one third of Pakistan's trade is with the European Union and the government wanted to promote it further.

They also discussed regional situation and Prime Minister Shaukat Aziz underscored Pakistan's interest in the stability and security of Afghanistan.

He briefed the Belgian Prime Minister about Pakistan's efforts to ensure peace and stability in the region. He said that Pakistan wants a stable, strong and developed Afghanistan as it is in the interest of Pakistan and the region.

He said Pakistan has deployed 80,000 troops along Pak-Afghanistan border and now considering selective fencing to stop movement of unwanted elements.

Giving more details about these measures, the Prime Minister said Pakistan has also given $300 million financial aid to Afghanistan, despite being a non-aid giving country. He said a new biometrics system was also being introduced to check the movement in the border area.

The Prime Minister said there is a need to adopt economic strategy through a Marshal type development plan for development in Afghanistan. He also mentioned the nexus between opium dealers and terrorists as it is very dangerous not only for the area but for the whole world. The Belgian Prime Minister said Pakistan has to play an important role in Afghanistan.

The Belgian Prime Minister appreciated the role of Pakistanis working in Belgium. They are playing a very effective and important role in the Belgian economy, he said.

Pakistan and Belgium also signed Debt Swap Agreement for euro 30 million assistance being provided by the Belgium government to Pakistan, following the October 2005 earthquake for the rehabilitation and reconstruction in the affected areas.

Prime Minister Shaukat Aziz thanked the Belgian government for assisting Pakistan in the rehabilitation and reconstruction in the earthquake-affected areas.

The Debt Swap Agreement, was signed by Minister of State for Economic Affairs of Pakistan Hina Rabbani Khar and Deputy Prime Minister and Finance Minister of Belgium Didier Reynders on behalf of their respective governments, in the presence of Prime Minister Shaukat Aziz and Belgian Prime Minister Guy Verhofstadt and other members of the delegation.

Under the agreement, the Belgian government has written off the euro 30 million loan given to Pakistan, which was to be paid in 30 years. Under the agreement signed today between Pakistan and Belgium, the amount of euro 30 million swap-generated funds shall be allocated to earthquake fund of the Asian Development Fund for rehabilitation and reconstruction efforts in the affected areas of NWFP and Kashmir.

Members of Pakistan's delegation including Trade Minister Humayun Akhtar, Railways Minister Sheikh Rashid Ahmed, Minister of Privatisation and Investment Zahid Hamid and Minister of State for Economic Affairs Hina Rabbani Khar also participated in the talks.

http://www.brecorder.com/index.php?id=523327&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'Pakistan now better placed for foreign investors' *

LAHORE (January 30 2007): Reforms introduced in last three years have transformed Pakistan into an attractive destination for foreign investment and the country is attracting foreign investment as compared to other countries of the world.

In the WB report, which takes into account overall ease of doing business, based on a number of factors, including the degree of difficulty in starting a business, employing workers, protecting investors, trading across borders, and enforcing contracts, Pakistan scored better than even Italy, Greece and Brazil, it noted.

The financial sector reforms were providing a lot of incentives to the potential investors from across the globe, said official sources talking to Business Recorder.

"Pakistan is among the most dynamic countries which have grown rapidly during the past few years. Pakistan is one of the four or five countries that show most dynamism now in the global economy,' they said".

According to them, Pakistan is persistently showing good performance and moved upwards around 20 ranks during the past two to three years. Pakistan's policy of deregulation, a talented workforce and ease of doing business make it investment-friendly. They said Pakistan's leadership under President Pervez Musharraf has taken steps to deregulate Pakistan's telecom sector, facilitating companies to conduct business. The World Bank in its report, titled Doing Business 2007, showed Pakistan is in a better position than other regional economies.

http://www.brecorder.com/index.php?id=523373&currPageNo=2&query=&search=&term=&supDate=


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## Neo

January 30, 2007 
*Malaysian company to complete $100m project*

By Shahid Iqbal

KUALA LUMPUR, Jan 29: Malaysian telecom giant is set to complete its $100 million country-wide fibre optic project in Pakistan by October this year. Telekom Malaysia (TM), a company worth $1.4 billion, has found tremendous potential in Pakistan and is interested in buying the Pakistan Telecommunications Company (PTCL). It is also keen to buy Paktel, a cellular company which was recently bought by a Chinese company.

Ã¢â¬ÅWe will complete our joint venture as Ã¢â¬ÅMultinetÃ¢â¬Â in Pakistan by October this year,Ã¢â¬Â said TM International chief executive Yousuf Annuar Yacob, who looks after international operations of the company.

Speaking at a press conference attended by media men from eight countries, he said the quantum of investment was around $80 to $100 million, which would be the largest fibre optic network in Pakistan.

Multinet is a licensed electronic information services (EIS) and data network operation services (DNOPS) provider in Pakistan. Its activities include local loop, LDI and other value-added services, such as DSL, broadband, gigabit metro area broadband, wireless broadband and allied services.

The TM International has investment in nine countries, including Pakistan, Sri Lanka, Bangladesh, Cambodia, Singapore, Indonesia, Thailand, India and Iran. In February 2005, it announced a joint venture fibre optic backbone project with Multinet. The deal concluded in April 2005.

Ã¢â¬ÅCellphone is the fast growing sector in Pakistan and has enormous potential for investors,Ã¢â¬Â said Telekom Malaysia group chief executive Mr Wahid.

Overseas investments of the company contribute 30 per cent profits to the TM group which is substantially high, especially when the TM has monopoly in the fixed telephone sector. It has over 90 per cent share in this sector and 35 per cent in the mobile phone sector within Malaysia.

http://www.dawn.com/2007/01/30/top20.htm


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## Neo

Tuesday, January 30, 2007 

*Pakistan to face shortage of capable workforce: report*

By Fida Hussain

ISLAMABAD: Pakistan will face serious challenges in retaining talented and keen minds necessary for future economic development and the government will be required to give incentives for attracting human talent from other countries and retaining intellects from among own people, said a draft report of the Planning Commission.

The report titled Ã¢â¬ÅVision 2030Ã¢â¬Â said that apart from natural resources, the battles of the future would be battles for talents among companies and countries. Talent hunt is the highest priority everywhere and is at its fiercest in high-tech industries.

The report has been submitted to the line ministries and organizations for their inputs and comments and is expected to be approved by the National Economic Council (NEC) during the last quarter of the current financial year. Ã¢â¬ÅLegal frameworks notwithstanding, knowledge and information flow to places where demand is the highest, the barriers are lowest and merit is appreciated,Ã¢â¬Â said the report.

Attracting keen minds from other countries would be necessary. The immigrants are generally more productive and innovative. The report argued that intangible assets accounts for more than half of the market capitalization. Many corporations have started moving better jobs offshore, capitalising on high-grade workers with local knowledge. There could be a challenge for the country if the companies and foreign corporations faced with talent shortages, said the report.

The governments across the world have got the talent bug, and rich countries have progressed from simply relaxing their immigration laws to actively luring highly qualified people. The challenges as well as opportunities for Pakistan are very real, according to the report.

Pakistan must stress on vocational and technical education by keeping in mind the successful example of Ireland. Ireland is becoming a hub for high technology good and servicesÃ¢â¬âa shift away from a rural economy to one with highest growth of industrial productivity and technology in Europe. The key driver of this transition has been the change in educational attainment in the Irish work force, from predominantly primary education to one with higher tertiary skills.

The report called for enhancing the scale and quality of education in general and the scale and quality of scientific/technical education in Pakistan in particular. Pakistan must increase public expenditure on education and skills generation from present 2.7 percent of GDP, to 5 percent of the GDP by 2010 and further doubling by 2015.

The report opines that it is imperative that employment and employability of scientists in industry should be increased substantially. One reason is that strategic organizations, mostly in public sector, cannot continue to absorb the scientists to absorb them indefinitely. The existing engineering universities have been totally ineffective in inculcating or sustaining a culture of research and development due to absence of a strong programme in the basic sciences at their campus, which deprives them of core competency and confidence in physics, mathematics, chemistry and even biology.

http://www.dailytimes.com.pk/default.asp?page=2007\01\30\story_30-1-2007_pg5_5


----------



## Janbaz

*Japan to assist in transport sector*

HAQ NAWAZ
ISLAMABAD - Japan has shown willingness to provide financial and technical assistance to Pakistan for the launching of mega projects of intra-metropolitans and long distance inter-cities tunnel train services to reduce burden on the transport sector, a government official told TheNation.
The private sector companies from Japan, having expertise in tunnel train services, are taking interest in investing in the railway sector, especially of jointly initiating the ventures of intra-cities tunnel train service. They have also indicated to invest in the long-distance tunnel train service among the various major cities. 
The official said the Japanese investors have communicated to government of Pakistan about their interests in the said areas to help both financially and technically in setting up such train services. The proposal in this respect has been under review in the Ministry of Railways and the experts are looking its feasibility and also viability. The decision will be taken shortly after discussing every aspect of these projects.
He maintained the investorsÃ¢â¬â¢ interest in these railways projects reflects the stability in the construction sector as such projects are directly linked with the availability of construction materials like cement. The huge construction projects of building tunnels required larger stocks of cement and the government is confident to fulfill the needs of the investors. Ã¢â¬ÅIf the production of cement, the main component in construction, continued at this level then there would more investors to come in Pakistan,Ã¢â¬Â the official hoped.
Train service in Pakistan is totally under state control due to its strategic importance and the government has not yet put Pakistan Railways on the privatisation list and no sign in the near future. Pakistan Railways still maintains its significance of larger network and accessibility to various small towns and villages across the country, especially in Sindh and Punjab. 
Carrying goods from various major important trade centres like Karachi and Lahore etc to other parts of the country presently uses railways service. Pakistan Army is also using train service for mobilization and supplying of goods from one place to other. 

The Nation.
http://www.nation.com.pk/daily/jan-2007/30/bnews1.php


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## Owais

*Govt to establish four industrial zones at Faisalabad, Sialkot *


LAHORE: Chief Minister of Punjab Chaudhry Pervaiz Elahi has said four industrial zones were being established in Faisalabad and Sialkot after an industrial estate in Lahore, to accelerate the trade activity in the area. 

He said that the government&#8217;s measures and projects for the industrial and social development have started yielding results. 

He was talking to reporters after his visit to the Sundar Industrial Estate. He said the estate was the best in the country and it would directly create 60,000 jobs and 0.6 million indirectly. He said industrial estates were being established across the province to spur development and generate jobs. 

&#8220;The industrial development and the provision of employment are part of the government&#8217;s Vision 2020,&#8221; he said, adding that according to the Vision, one million jobs would be generated every year. He said the industrial estate sprawling over 1,500 acres had been provided with the state-of-the-art infrastructure. &#8220;

Pharmaceutical, chemical, pesticides, plastic, food, beverage and other industries are being set up in the industrial estate,&#8221; he added. 

The CM said work on the M-III Industrial Estate, Faisalabad was on the progress. &#8220;The M-III Industrial Estate will spread over 4,500 acres. The Chinese will invest $200 million in it,&#8221; he added. 

He said three industrial zones were being established along the Lahore&#8211;Sialkot motorway to accelerate the trade activity in the nearby areas. He said that a university would be set up near Sialkot. An industrial park spread over 100 acres would be set up besides the university. &#8220;The university will be a milestone in the promotion of the technical sector.&#8221; 


http://geo.tv/geonews/details.asp?id=1459&param=3


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## Janbaz

*Liquid reserves of Pakistan cross $ 12.9 bln mark *

KARACHI: The total liquid foreign reservesof the country crossed 12,952.8 million dollars mark on January 20, 2007, State Bank of Pakistan announced here Thursday. 

According to the break up, dollars 10,596.2 million were held by the central bank whereas other banks held dollars 2,356.6 million on the said date .

Geo TV.
http://www.geo.tv/geonews/details.asp?id=1262&param=3


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## Owais

*Belgium turns $13 million Pakistani debt into quake aid 
*

ISLAMABAD (updated on: January 31, 2007, 16:11 PST): The Government of Belgium has agreed to cancel about 10 million euro based on net present value (about US$13 million) in debt owed by Pakistan, which will in turn transfer the equivalent funds into ADB's Pakistan Earthquake Fund (PEF).

"We are very pleased to conclude this innovative co-financing approach with Belgium to finance additional reconstruction works particularly in the health and education sector," says Werner Liepach, Principal Director of ADB's Office of Co-financing Operations in a release from Manila on Wednesday.

The earthquake that struck the northern areas of Pakistan in October 2005 was the most devastating in its history. Official figures estimate that at least 80,000 people were killed and more than 200,000 were injured in the North West Frontier Province and Azad Jammu and Kashmir (AJK).

Some 2.6 million were left without shelter and an estimated 1.6 million without adequate food security or means of livelihoods. There was extensive damage to economic assets, and infrastructure, with hospitals, schools and transport systems debilitated or destroyed.

A preliminary damage and needs assessment report prepared by ADB and the World Bank only 19 days after the quake estimated that about $5.2 billion was needed to effectively carry out a relief, recovery, and reconstruction strategy.

During the donor conference of 19 November 2005, ADB pledged $1 billion for Pakistan's reconstruction efforts from the quake. Before the conference, ADB had reallocated $80 million from various ongoing projects and also established PEF, which included an initial contribution from ADB of $80 million in grants.

Similar to ADB's Asian Tsunami Fund, PEF aims to pool and promptly deliver grant financing for projects that support immediate reconstruction, urgent rehabilitation, and other associated development activities.

Belgium's debt-for-development swap, totalling 9.92 million euro based on net present value in debt owed by Pakistan, follows a similar move in December by Norway, which cancelled $20 million equivalent in debt to be remitted to the PEF. Agreements have also been signed with Finland to contribute $12 million and Australia $15 million to the PEF. 

brecorder.com


----------



## Owais

*AlBaraka bank to double branches in Pakistan *


LONDON (updated on: January 31, 2007, 21:05 PST): Bahrain-based AlBaraka Islamic Bank (AIB), a division of the AlBaraka Group, plans to almost double its branch network in Pakistan to 20 over the next year, the bank's general manager said on Wednesday.

'Outside (of Bahrain) we have branches in Pakistan. Right now we have 11 branches and we hope to bring it up to 20 branches within one year. It is a little bit ambitious,' said Salah Zainalabedin, general manager of AIB.

"In Bahrain we have currently three branches and we are planning a couple more .... Another three branches in the next three to four years," he told Reuters on the sidelines of an Islamic finance conference in London.

AlBaraka said in December it plans to float 25 percent of its unit in Pakistan to bring its capital to $100 million.

brecorder.com


----------



## Owais

*CFH, PEL to invest $200 million in exploration, power sectors *


ISLAMABAD (updated on: January 31, 2007, 17:59 PST): President of Canadian Frontier Holdings (CFH) Nigel McCue accompanied by Chairman Petroleum Exploration Limited Zaheeruddin called on Minister for Petroleum and Natural Resources Amanullah Khan Jadoon here on Wednesday and briefed him about the joint venture investment plan of $200 million in oil and gas exploration and power sectors.

During the meeting, Nigel McCue informed the minister that the CFH has entered into partnership with a Pakistani company Petroleum Exploration Limited (PEL) that has resulted in acquiring working interests in seven concessions held by the PEL.

He told that the joint venture intends to set-up a power plant of 60-120 MW at Sukkur based on the huge low BTU reserves of its Kandra gas field.

He said the development of Kadra gas field resources of 3.4 trillion cubic feet will be main source of gas supply to the power facility.

They have also planned the drilling of development wells with a view to ensuring a sustained gas supply to power plant by investing $ 160 million, which is expected to be commissioned in 2009 involving further investment of $60 million.

Chairman PEL Zaheeruddin informed that the Canadian company would not only bring new technology to Pakistan but also utilise its expertise in drilling a number of exploration development wells during next three years in concessions blocks required by the Joint Venture.

Welcoming the Chief Executives of Canadian Frontier Holdings and PEL, the minister said the government was taking concrete steps to exploit the untapped hydrocarbon resources in order to meet the growing energy needs of the country.

He said that the government was opening new blocks in the coming days which would promote the oil & gas exploration in the country. 

Jadoon appreciated the PEL's contribution for promoting the oil and gas exploration activities in the country and invited the joint venture to avail the investment opportunities in the upcoming projects for the mutual advantage.

Minister of State for Petroleum and Natural Resources, Mir Muhammad Naseer Mengal, Additional Secretary, Shaukat Hayat Durrani, Director General (Petroleum Concession), Naeem A. Malik were also present during the meeting.


brecorder.com


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## Owais

*Rs200 million export order received from USA: minister *


LAHORE (updated on: January 31, 2007, 17:52 PST): Punjab Minister for Industries Muhammad Ajmal Cheema said on Wednesday the response of 'one dollar shop programme' is positive and this programme is going on successfully and the export order from USA has been increased upto Rs 200 million so far.

Talking to a delegation at his office here on Wednesday, he said a number of industrialists showed great interest in 'one dollar shop programme' and now it was decided to increase the sphere of this programme.

He said more seminars are being organised for awareness of this programme, in which investors would be provided necessary information about the utility of this programme and manufacturing of various items so that they could get information regarding items which are being exported to USA.

He said more exhibitions regarding 'one dollar shop programme' are being arranged, adding that one dollar shop seminar will be held at Rawalpindi Chamber of Commerce and Industry on February 3.

The minister said training and facilities are being provided to investors regarding 'one dollar shop programme'. He said China was moving toward high tech industry from small items and Pakistan investors should come forward to fulfil this gap.

He said with the successful implementation of this programme, not only the foreign exchange reservoirs of the country would be increased but also new job opportunities would be created.

brecorder.com


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## Neo

January 30, 2007 

*200,000 cusecs of water going to waste*

ISLAMABAD, Jan 29: About 200,000 cusec of water fell into the sea without being utilised for irrigation purposes during the last 10 days of the ongoing Rabi season owing to negligence on the part of Punjab and Sindh and electricity requirements of Wapda, it is learnt.

Sources at the Indus River System Authority (Irsa) said the two provinces had been placing indents since January 19 but did not utilise their water share and as a result about 0.4 million acre feet (MAF) of water has been wasted since then. Additionally, about 12,000 cusec of water was released for power generation by Wapda early last week.

This irresponsible approach of the two provinces and the power utility for not observing the approved water discharge plan and resultant wastage has worried the Irsa authorities, raising fears that such an attitude could result in water shortage by the end of the season or leave no carryover for the Kharif season.

The Irsa has convened a meeting of its advisory committee on February 1, 2007 to take stock of the situation and prevail upon the provinces not to seek withdrawals higher than their genuine irrigation requirements so that such a trend is stopped forthwith.

"The flow of 0.4 MAF of water below downstream Kotri and that too, in this season is nothing but criminal indifference towards prudent utilisation of natural resource," an official of the water and power ministry told Dawn. He said Irsa had projected water shortages for the season in the early days of Rabi, but later it emerged that there was no shortage. "But that does not mean the provinces and Wapda create shortage just because of their irresponsible behaviour," he said.

Informed sources said Irsa had recently written separate letters to the Punjab and Sindh irrigation authorities, conveying that "such wastages are unacceptable" and asked them to draw water according to their genuine needs.

The sources said Sindh had placed before Irsa an indent of 40,000 cusec for the last 10-daily withdrawal plan. However, SindhÃ¢â¬â¢s water utilisation hovered between 23,000 and 30,000 cusec in the last 10 days and sizeable water quantities went downstream Kotri.

Similarly, the provincial irrigation authorities had informed Irsa that canal closure schedule in Punjab had come to an end and that it started withdrawing substantial quantities from its reservoirs. However, Irsa found out later that PunjabÃ¢â¬â¢s canal closure was still in place.

Likewise, on the request of the Punjab irrigation authorities, Irsa had reduced releases from the Mangla dam in the aftermath of a breach of Taunsa-barrage embankment about two weeks ago to about 16,000 cusec from 23,000 cusec. However, it later emerged that the Wapda authorities had released up to 28,000 cusec of water even a day after a cut was imposed, thereby wasting about 12,000 cusec of water.

Irsa has estimated about 14 per cent water shortage at the start of the Rabi season this year but timely rains at the sowing stage later resulted in improvement in the situation. Subsequently, the shortage estimates were brought down to zero and it was expected that even the next season would start with a carryover stock of about a million acre feet or so.

The power utility, which has been facing power shortages this year, has been minimising loadshedding through management of provincial water shares in the peak hours and in some cases went beyond the provincial requirements to contain blackouts.

The canal closures in Sindh and Punjab were put to an end from January 19 onwards, although the provinces have been drawing minor water quantities even during the closures.

http://www.dawn.com/2007/01/30/top6.htm


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## Neo

Wednesday, January 31, 2007 

*OMV Boosts Production at Pakistan's Sawan Gas Field *

Oil and gas company OMV said its unit OMV (Pakistan) Exploration has increased turnover at the Sawan onshore gas field by 15 percent to 66,700 barrels of oil equivalent a day (boe/d). 

As the largest foreign gas field operator in Pakistan, OMV (Pakistan) acts as plant manager in the Sawan field, in which it has a 19.74-percent holding. Other sizeable stakeholders in the joint venture are Italy's Eni AEP and Pakistan Petroleum Ltd, with holdings of 23.68 percent and 26.18 percent, respectively. 

Operating in Pakistan since 1991, OMV (Pakistan) Exploration Ltd is a wholly owned unit of Austria's OMV and provides 16 percent of the country's gas needs. 

http://www.rigzone.com/news/article.asp?a_id=40651


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## Neo

1/31/07 

*Iran-Pakistan-India gas pipeline may not be a pipe-dream anymore *

Islamabad, Jan 31, IRNA-Strong positive indications have emerged recently that the multi-billion Iran-Pakistan-India (IPI) gas pipeline will go ahead, a leading Pakistani analyst has said. 

With a thaw in India-Pakistan relations, and flexibility on the part of Iran on the pricing issue, the pipeline may not be a pipe-dream anymore, as some cynics have been commenting, Rasool Bakhsh Raees has said. 

One can catch a dreaming glimpse of regional cooperation in the report that Iran, India and Pakistan have finally agreed on a pricing formula after years of haggling, Raees said in an article published in" Daily Times". 

Describing the project as being of vital importance for three countries, he said it will allow Iran to gain access to one of the largest markets for energy resources. 

India and Pakistan with their growing economies will have secure and long-term supplies to meet their increasing need, he argued. 

Talks on building the Iran-Pakistan-India gas pipeline began in 1994, more than twelve years back but progress on this multi-billion- dollar project has been held hostage to India-Pakistan tensions, Raees observed. 

He said that energy cooperation would create and deepen intra-state and intra-regional interdependence. 

Energy cooperation and mutual interdependence between India and Pakistan would create a better environment for resolving old conflicts and create more avenues of openness, he said. 

Raees said that Pakistan stays committed to allowing this pipeline to cross through its territory. 

He said India's participation in IPI will send a positive signal to banks and companies that may invest in this project. 

There are a number of multinationals in the field from the US, Netherlands and Australia that have shown tremendous interest in this and similar projects and are willing to build the pipelines. 

http://www.payvand.com/news/07/jan/1358.html


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## Neo

*EU offers 200 million euros aid package to Pakistan*
31 January 2007

(BRUSSELS) - The European Commission on Wednesday proposed a 200-million-euro (260-million-dollar) aid package to Pakistan over four years, much of it to be spent on rural development.

Commissioner for External Relations and Neighbourhood Policy, Benita Ferrero-Waldner, presented visiting Pakistani Prime Minister Shaukat Aziz with details of the package, which requires European parliamentary approval.

A major portion is earmarked for rural development in the North West Frontier Province and Baluchistan -- poor, tribal areas bordering Afghanistan -- "to strengthen natural resources management, develop community physical infrastructure and to improve livelihoods and employment opportunities, thus contributing towards enhancing Pakistan's economic and social cohesion."

The second focus area is education and human resources development "to help advance access to education and better service delivery," the Commission said in a statement. Particular care will be taken for women and girls to benefit from these activities. 

"We have proposed to significantly step up our assistance to Pakistan in the next years," Ferrero-Waldner said.

"The overall aim of European Commission operations in Pakistan is to fight poverty and to help Pakistan in following a sustainable growth path and a stable development.

"Rural development, natural resources as well as education and human resources development are vital areas towards this aim."

From 2002-2006, the European Commission, apart from contributions from individual EU member states, provided a total of 125 million euros in development funding to Pakistan, of which most was spent on education, financial sector reforms and trade development.

Following the devastating earthquake of November 2005, the Commission committed an additional amount of 98.6 million euros for humanitarian relief and reconstruction. 

Text and Picture Copyright 2007 AFP. All other Copyright 2007 EUbusiness Ltd. All rights reserved. This material is intended solely for personal use. Any other reproduction, publication or redistribution of this material without the written agreement of the copyright owner is strictly forbidden and any breach of copyright will be considered actionable.

http://www.eubusiness.com/news_live/1170270078.99


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## Neo

*Indonesia backs Pakistan bid to be ASEAN partner *

01/31/2007

JAKARTA -- Indonesian President Susilo Bambang Yudhoyono said Wednesday he supports Pakistan's bid to become a dialogue partner of the Association of Southeast Asian Nations (ASEAN) later this year.

"Indonesia...supports Pakistan becoming a full dialogue partner of ASEAN, which is something that will be discussed in the ASEAN forum," he said at a joint press conference with his visiting Pakistani counterpart Pervez Musharraf.

Musharraf said he brought up the issue during talks on economic and diplomatic issues.

"I raised this issue of Pakistan's desire to become a full dialogue partner within the ASEAN and I must express my gratitude to the president for his expression of support... during the summit meeting this year," he said.

The two leaders also agreed to enhance economic cooperation.

"Bilaterally, we agreed to intensify our economic cooperation, particularly on trade and investment and, given the impressive economic growth of Pakistan, which can be combined with Indonesia's growth, there will be a lot of opportunities to come out of this intensified cooperation," Yudhoyono said.

He said they did not discuss specific economic issues.

Indonesia is Southeast Asia's largest economy and the most populous member of ASEAN, which groups the country along with Brunei, Cambodia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam

http://newsinfo.inquirer.net/breakingnews/world/view_article.php?article_id=46730


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## Contrarian

Cheers! Hope the IPI pipeline materialises!


----------



## Neo

Cheers!  

Is India ready to go ahead with the project despite growing pressure from Washington to isolate Iran?
Pakistan would go ahead with the project with or without US' blessing.


----------



## Janbaz

*Agriculture performance remains below target*

ZAMIR SHEIKH
KARACHI - The agriculture performance remained below the expected target fixed by the government during FY 06 as production of three major cash crops sugarcane; cotton and wheat, decreased as compared to the last fiscal.
Although the 13 million bales output in FY06 is the second largest cotton crop harvest in PakistanÃ¢â¬â¢s history, it was 9.1 per cent lower than the record output of 14.3 million bales seen in FY05. 
Cotton holds a key position in the agriculture sector as well as in the economy and it directly contributes 8.6 per cent to agriculture value addition and 1.9 per cent to the GDP. It is also a major industrial input and contributes to the larger part of the countryÃ¢â¬â¢s exports. This decline in the cotton production was due to the combined impact of a fall in planted area and yield per hectare. 
Sugarcane was the other major Kharif crop that witnessed a decline in area under cultivation during FY06. This was mainly due to the disappointing prices received by farmers in the preceding two years as well as a fall (at sowing time) in availability of irrigation water. As a result, sugarcane production witnessed a fall of 5.3 per cent to 44.7 million tons during FY06, compounding the impact of the significant 11.6 per cent fall in the preceding year. 
The wheat harvest decreased by 1.4 per cent in FY06 to 21.3 million tons, which was also 3.6 percent below the annual target fixed for the year.
Provisional estimates suggest that the wheat harvest fell by 1.4 per cent in FY06 in contrast to a remarkable 10.8 per cent increase in FY05. The decline was mainly attributed to a 2.6 percent fall in the wheat yield during FY06. 
The State Bank data shows that decline in yield is a function of delayed sowing of wheat crop due to the late crushing of sugarcane and extended cotton picking season and adverse weather conditions. 

The Nation.
http://www.nation.com.pk/daily/feb-2007/1/bnews3.php.


----------



## Janbaz

*Ferozsons lab signs deal with Biocon-India*
MASHIUR RAHAMAN
KARACHI - Ferozsons Laboratories Limited has recently signed an agreement with Biocon-India for the Pakistan commercial rights to monoclonal antibody product, Biomab EGFR, The Nation learnt on Wednesday.
In accordance with regulation no. 28 of the Listing Registrations of the Stock Exchange, the Ferozsons Laboratories had conveyed relevant information to the Karachi Stock Exchange. According to the notice, the Biocon-India, which is the largest biotech company in India has signed above agreement with the Ferozsons Laboratories for the commercial rights to monoclonal antibody product, Biomab EGFR. The product is indicated for the treatment of head and neck cancer and being studied in global clinical trails for colorectal, lung cancer, glioma and pancreatic cancers. 
The products which has been developed by Cuba&#8217;s Center for Treatment of Immunology (CIMAB), is being commercialised in the region by Biocon under a 50-50 joint venture with the CIMAB. Approximately 25,000 patients are diagnosed annually with head and neck cancer in Pakistan, according to the notice.
This signed agreement is likely to enhance the Ferozsons Laboratories reputation in laboratory business and its share in Pakistan stock market is likely to grab market players attention beside developing cancer treatment in Pakistan, concerns stated. 
Ferozsons Laboratories board of directors meeting on January 27 announced company&#8217;s individual profit and loss account for the second quarter ended Dec 31.
The earning per share was announcer at Rs 4.54 where it was Rs 4.21 per share during the same period of 2005. The net profit after taxation was announced at Rs 54million for the same period. On the other hand, the IGI Investment Bank Limited recently has decided to issue 100 per cent right share into the open market, The Nation learnt on Wednesday. 
The IGI Investment Bank Limited (Formerly First International Investment Bank Limited) held its board of directors meeting last week, which reached to the decision of issuing 100 per cent right share at per Rs 10 per share, that is one share for every existing share, in compliance with section 5 of the companies (issue of capital) rules, 1996.
Beside those, according to a notice issued by the NIB Bank Limited, it has cancelled its scheduled board meeting on Feb 01. &#8220;Due to certain reasons beyond our control, we will not be able to hold the board meeting. The new date of meeting will soon be rescheduled,&#8221; said the notice.

The Nation.
http://www.nation.com.pk/daily/feb-2007/1/bnews4.php.


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## Janbaz

*Mobilink and RIM promoting trade in Pak*

OUR STAFF REPORTER
ISLAMABAD - Mobilink participated as a business partner, in the event organised by Research in Motion Ltd (RIM) BlackBerry, Ontario a company statement said here on Wednesday.
The High Commissioner of Canada HE David B. Collins hosted a luncheon in honor of Premier of Ontario, Dalton McGuinty, and his trade delegation. The Premier led a trade mission to Pakistan on an invitation by the Punjab Government, with the aim of bringing Ontario and Pakistan based firms together to promote trade. Pakistani and Ontario based companies signed various agreements, it added.
Research in Motion Ltd (RIM) Blackberry service is offered exclusively in Pakistan by Mobilink, and has gained widespread acceptability in corporate Pakistan. BlackBerry is a leading wireless enterprise solution offered by RIM and has been introduced by Mobilink in Pakistan. This platform provides users around the world with convenient and wireless full access to business applications that include Email, Phone, SMS, Web, and Organiser features.
, Mobilink CEO Zouhair A. Khaliq said that Mobilink has established itself as a favourite cellular service of Pakistan while Research in Motion is a leading designer, manufacturer and marketing organisation for innovative wireless solutions for the world mobile communications market. 
Both brands are market leaders in their respective areas, which makes a natural partnership that has great potential to create the most powerful state of art communication tool, he added. 

The Nation.
http://www.nation.com.pk/daily/feb-2007/1/bnews7.php.


----------



## Owais

*July-January revenue target surpassed: Rs 457.5 billion collected *

ISLAMABAD (February 01 2007): The Central Board of Revenue (CBR) has collected Rs 457.5 billion in July-January 2006-2007 against Rs 369.8 billion in the corresponding period last fiscal, denoting an increase of Rs 87.7 billion. According to the provisional figures released on Wednesday, the board has surpassed the revenue target set for the first seven months of 2006-2007.

The provisional tax collection indicates a cumulative growth of 23.7 percent. The break-up revealed that the revenue on account of direct taxes was Rs 184 billion in July-January 2006-2007 against Rs 114.4 billion collected in the same period last fiscal, showing growth of 60.9 percent.

Sales tax collection has reached Rs 169.5 billion against Rs 154.9 billion, indicating a growth of 9.4 percent. The growth in sales tax collected at the import stage was 4.3 percent, while the domestic sales tax collection has witnessed a growth of 17 percent.

The collection of Federal Excise Duty (FED) was Rs 34.6 billion in July-January 2006-2007 against Rs 29.5 billion in the same period last fiscal, showing an increase of 17.4 percent. The collection of customs duty was Rs 69.3 billion during the first seven months of current fiscal against Rs 71 billion in July-January 2005-2006, reflecting a negative growth of 2.4 percent.

The Central Board of Revenue has attributed this decrease in collection due to declining imports during the period under review. The provisional collection was Rs 47 billion during January 2007, which is expected to further increase in coming days after compilation of final figures, the Central Board of Revenue added.

http://brecorder.com/index.php?id=523980&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Country losing $2.5 billion annually to inefficient road freight industry *

KARACHI (February 01 2007): The inefficiencies of country's road freight industry are costing roughly Rs 150 billion, or $2.5 billion, annually to the national exchequer. The present industry structure cannot integrate into international trucking nor can support the country's projected economic growth and, unfortunately, the trade would stay reliant on such industrial infrastructure due to the absence of alternative options.

According to documents available with Business Recorder, there are three major areas identified for such losses of inefficient road freight sector, which are Rs 60 to 90 billion per year spent on extra fuel cost and subsidies on the use of diesel, Rs 30 to 35 billion in additional road user costs and about Rs 25 billion contributed to the infrastructure deficit. A highway constructed for 10-year efficient life for freight traffic has been damaged only in 18 months period.

Low quality of service is impeding the country's trade competitiveness for imports and exports. Freight sector demands are unbalanced, and majority of consumers is not aware of 'externalities' unwilling to pay the right price.

The industry is responding by over-supplying of illegal and unregulated services. Competing in an 'illegal market' is keeping the freight industry from responding appropriately.

Experts believe that as far as structure of road freight industry is concerned, the domestic demand is much higher than the international demand and 90 percent or more of all land freight in the country is 'trucked' and this would double in the next ten years.

They say that segmentalisation of demand is very weak and poor; reliance on 'inter-modalism' as railways is not delivering the adequate service levels for speedy freight movement.

Almost all trade is conducted through two seaports in the south, and one out of every three truck trips is for agricultural sector use. The geographical distribution of demand is uneven due to major share of Punjab in both internal and external trade. The consumer tariffs, which have consistently fallen in real terms over the last 20 years, are among the lowest in the world.

Majority of the consumers, further negotiating down rates with little or no expectation for improvement, is stuck in a rut. The share of manufacturers and general merchandise is rising rapidly and these (and other) high-value exporters and customers are willing to pay higher.

The current available capacity is higher than demand, but this availability is illegal. The trucking equipment is under-developed and outmoded and the same holds true for all not significant road infrastructure, freight stations, terminals, trailers, sales, service, support and driver training.

Another aspect of cargo safety is under-developed cargo insurance practices and absence of mechanisms for access to finance at the right cost. The country's trucking industry is not practically deregulated. In reality, it is poorly regulated as per the market trends for owning the vehicles.

The experts say that the freight sector is superficial and a very fragmented industry, but few informal financiers consolidate it at the back, though. The absence of appropriate standards, registration and fitness certification system has distorted supply side incentives, and ill-informed industry and trade associations do not have the professional service users' control rates.


http://brecorder.com/index.php?id=524008&currPageNo=2&query=&search=&term=&supDate=


----------



## Owais

*Investment in oil and gas exploration and power sectors *

ISLAMABAD: Canadian Frontier Holdings and Petroleum Exploration Limited would invest $200 million in oil and gas exploration and power sectors in Pakistan under joint venture investment plan.

President of Frontier Holdings, Nigel McCue accompanied by Chairman, Petroleum Exploration Limited, Zaheeruddin called on Minister for Petroleum and Natural Resources, Amanullah Khan Jadoon here and briefed him about the investment.

During the meeting, Nigel McCue informed the Minister that Frontier Holdings has entered into partnership with a Pakistani company Petroleum Exploration Limited (PEL) that has resulted in acquiring working interests in seven concessions held by the PEL.

He told that the joint venture intends to set up a power plant of 60-120MW at Sukkur based on the huge low BTU reserves of its Kandhra gas field.

He said the development of Kadhra gas field resources of 3.4 trillion cubic feet would be main source of gas supply to the power facility.

They have also planned the drilling of development wells with a view to ensuring a sustained gas supply to power plant by investing $160 million, which is expected to be commissioned in 2009 involving further investment of $60 million. 

http://geo.tv/geonews/details.asp?id=1549&param=3


----------



## Neo

*Unemployment rate goes down: minister *

ISLAMABAD (February 01 2007): The government on Wednesday claimed that its pro-poor policies had generated five million job opportunities in the country during last two years to help reduce the unemployment rate from 7.7 per cent in 2003-04 to 6.2 percent in 2005-06.

Addressing a news conference here, Federal Minister for Labour and Manpower Ghulam Sarwar Khan said that due to provision of equal job opportunities for males and females, the unemployment ratio had reduced significantly among both sexes.

Statistics he came up with indicated the unemployment rate for males and females had decreased from 6.6 per cent to 5.4 per cent and 12.7 per cent to 9.3 per cent respectively.

Referring to a survey, the minister said that employed labour force in the country was 42 million in 2003-04 that had now reached at 47 million with an average growth rate of 5.7 per cent. He added that estimated labour during 2004-05 was 45.5 million that had gone up to 50 million in 2005-06 and this 4.5 million rise in labour force indicated and average growth rate of 4.9 percent that was result of excellent economic growth rate of around 7 percent.

Talking about various sectors, the minister said that agriculture was still the largest employment-absorbing sector with about 43 percent followed by industry with 20 percent. Sarwar asserted a significant rise had also been observed in the number of Pakistanis going abroad in the year of 2006.

A total number of 184,274 proceeded abroad for employment during 2006 as compared to 142,135 during 2005, an increase of 28.57 percent. The main destination of Pakistani labourers was UAE where 100,207 workers were recruited.

A substantial number of 45,594 Pakistanis proceeded to Saudi Arabia, 12,614 to Oman, 10,545 to Kuwait, 4,757 to Malaysia, 2,247 to Qatar, 1,741 to United Kingdom (UK), 1,630 to Bahrain, 1,082 to South Korea and 202 to USA.

The figure reflects high concerns of the government to export it manpower. High level bilateral contacts had been established with Saudi Arabia, Bahrain, UAE, Qatar, Kuwait, and South Korea for import of manpower from Pakistan, he added.

To enhance the capability of skilled labour proceeding to South Korea, the minister had arranged Korean language course at Islamabad and all provincial capitals, the minister said.

The other steps in this regard were the activation of Community Welfare AttachÃÂ© (CWA) officers in the countries with which MoUs had been signed and removal of security related concerns of employers.

The category wise break of worker who went abroad in 2006 was: labourers 74,157, drivers 14,084, agriculturist 10,762, mason 9,695, carpenter 8,819, technicians 8,152 and steel fixer 6,310.

http://www.brecorder.com/index.php?id=524038&currPageNo=1&query=&search=&term=&supDate=


----------



## Neo

*PEL, Canadian JV to invest $200m in oil, power sectors *

ISLAMABAD: President of Canadian Frontier Holdings, Nigel McCue accompanied by Chairman, Petroleum Exploration Limited, Zaheeruddin called on Minister for Petroleum and Natural Resources, Amanullah Khan Jadoon here on Wednesday and briefed him about the joint venture investment plan of $200 million in oil and gas exploration and power sectors.

During the meeting, Nigel McCue informed the Minister that Frontier Holdings has entered into partnership with a Pakistani company Petroleum Exploration Limited (PEL) that has resulted in acquiring working interests in seven concessions held by the PEL.

He told that the joint venture intends to set up a power plant of 60-120MW at Sukkur based on the huge low BTU reserves of its Kandra gas field.

He said the development of Kadra gas field resources of 3.4 trillion cubic feet would be main source of gas supply to the power facility.

They have also planned the drilling of development wells with a view to ensuring a sustained gas supply to power plant by investing $160 million, which is expected to be commissioned in 2009 involving further investment of $60 million.

Chairman, PEC, Zaheeruddin informed that the Canadian company would not only bring new technology to Pakistan but also utilize its expertise in drilling a number of exploration development wells during next three years in concessions blocks required by the Joint Venture.

Welcoming the Chief Executives of Canadian Frontier Holdings and PEL, the Minister said the government was taking concrete steps to exploit the untapped hydrocarbon resources in order to meet the growing energy needs of the country.

He said that the government was opening new blocks in the coming days, which would promote the oil & gas exploration in the country.

Jadoon appreciated the PELÃ¢â¬â¢s contribution for promoting the oil and gas exploration activities in the country and invited the joint venture to avail the investment opportunities in the upcoming projects for the mutual advantage.

http://www.thenews.com.pk/daily_detail.asp?id=41056


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## Neo

*Pakistan ranked higher than neighbours: Zahid *

KARACHI: International business community ranked Pakistan much higher than its neighbours and praised the recent mergers and acquisitions in the financial and telecom sectors in the country at World Economic Forum (WEF) recently concluded at Davos.

Zahid Hamid, Federal Minister for Privatisation & Investment and a member of Prime MinisterÃ¢â¬â¢s official entourage said this in a statement after his return from Brussels, Belgium on Wednesday.

He termed Prime Minister Shaukat AzizÃ¢â¬â¢s participation at WEF meeting and his official visit to Brussels remarkably successful.

He said that foreign investors expressed great interest in Pakistan and appreciated the investment-friendly policies and outstanding economic performance of the country during last several years particularly rate of growth and record levels of foreign investment.

In a meeting with the Prime Minister, renowned Professor Michael Porter of Harvard Business School disclosed that according to a recent survey Pakistan was ranked much higher than its neighbours in so far as dynamism, competitiveness and ease of doing business are concerned.

He said that foreign investors expressed great interest in Pakistan and appreciated the investment-friendly policies and outstanding economic performance of the country during last several years particularly rate of growth and record levels of foreign investment.

The recent mergers and acquisitions in the financial and telecom sectors in Pakistan in particular were frequent topics of conversation among the international business community.

Zahid Hamid said that Pakistan was now very prominent on the radar screen of international investors and they were closely monitoring its progress and development on the economic and investment front.

The Chief Executives of a number of leading institutions appreciated the governmentÃ¢â¬â¢s economic reforms and expressed their intentions to either make fresh investment or further increase their investment in Pakistan.

Carlyle Group of UK, which manages a major private equity fund, indicated that they would be earmarking funds for investment in Pakistan. Similarly, Chief Executive of Nestle informed the Prime Minister of their plans to substantially enhance their operation in Pakistan by increasing their investment. Metro Cash & Carry also plans to establish retail outlets all over the country. Unilever and Seimens also discussed future plans involving enhanced investments. 

Elucidating details of the WEF meeting, Zahid Hamid said that the Prime Minister had 45 meetings with heads of states, chief executives of MNCs and representatives of civil society and media. 

The Prime Minister participated in panel discussions on terrorism, nuclear proliferation, womenÃ¢â¬â¢s empowerment and inter-religion harmony.

He further informed that the Prime Minister had a number of useful meetings in Brussels with overseas Pakistanis and foreign investors and delivered major policy addresses to European UnionÃ¢â¬â¢s Committee on Foreign Affairs of the European Parliament.

http://www.thenews.com.pk/daily_detail.asp?id=41057


----------



## Neo

Thursday, February 01, 2007 

*Foreign investments in Pakistan likely to grow*

* PMÃ¢â¬â¢s foreign visits fruitful: minister

ISLAMABAD: Prime Minister Shaukat AzizÃ¢â¬â¢s visit to the World Economic Forum (WEF) in Davos and the official visit to Brussels were remarkably successful, said Zahid Hamid Privatisation and Investment Minister and a member of the prime ministerÃ¢â¬â¢s official entourage, on his return from Brussels, Belgium here Tuesday.

He said that foreign investors expressed great interest in Pakistan and appreciated the investment-friendly policies and outstanding economic performance of the country during last several years particularly rate of growth and record levels of foreign investment. 

The recent mergers and acquisitions in the financial and telecom sectors in Pakistan in particular were frequent topics of conversation among the international business community. In a meeting with the prime minister, renowned Professor Michael Porter of Harvard Business School disclosed that according to a recent survey Pakistan was ranked much higher than its neighbours in so far as dynamism, competitiveness and ease of doing business are concerned.

Zahid Hamid said that Pakistan was now very prominent on the radar screen of international investors and they were closely monitoring its progress and development on the economic and investment front.

The chief executives of the a number of leading institutions such as Carlyle Group, Barclays, Metro Cash & Carry, Nestle, Nike, Unilever, Seimens and others appreciated the governmentÃ¢â¬â¢s economic reforms and expressed their intentions to either make fresh investment or further increase their investment through expansion in their operations in Pakistan, thereby taking advantage of the investment friendly, attractive and liberal economic policies, which provided remarkable incentives to the investors for growth of their businesses.

Carlyle Group of UK, which manages a major private equity fund, indicated that they would be earmarking funds for investment in Pakistan. Similarly, Chief Executive of Nestle informed the Prime Minister of their plans to substantially enhance their operation in Pakistan by increasing their investment. Metro Cash & Carry also plans to establish retail outlets all over the country. Unilever and Seimens also discussed future plans involving enhanced investments.

Elucidating details of the WEF held in Davos, Zahid Hamid said that the prime minister held 45 important meetings in three days with the heads of state and governments, chief executives of multinational companies and representatives of non-governmental organizations, civil society and print and electronic media.

The prime minister participated in panel discussions on terrorism, nuclear proliferation, womenÃ¢â¬â¢s empowerment and inter-religion harmony. He also held meetings with the president of Switzerland and the prime ministers of Malaysia, Egypt, Vietnam and Ukraine apart from many other diplomats and political leaders.

Zahid Hamid further informed that the prime minister had a number of useful meetings in Brussels with overseas Pakistanis and foreign investors and delivered major policy addresses to European UnionÃ¢â¬â¢s Committee on Foreign Affairs of the European Parliament and NATO Council and met with the European Union president, and EU high representatives on foreign and security policy, and commissioners on trade and external relations.

http://www.dailytimes.com.pk/default.asp?page=2007\02\01\story_1-2-2007_pg5_14


----------



## Neo

*Serious efforts on in Pakistan to end poverty : Maleeha Lodhi *

Thursday February 1

London, Feb.1 (ANI): Pakistan's envoy to Britain, Dr. Maleeha Lodhi, has said that strong economic growth and a people-centred development strategy have enabled the country to launch a serious attack on poverty. 

Participating in a debate organized by Britain's Department for International Development (DFID) in Birmingham, Lodhi said that the combination of high growth, structural reforms, enhanced spending on the social sector and poverty alleviation programmes has begun to yield robust early results. 

This, she said, is evidenced by the improvement in social indicators and poverty figures. 

Dr. Lodhi flagged five areas of improvement. They included the decline in overall poverty from over a third of the population in 2001 to less than a quarter in 2005, rise in literacy rates, rise in per capita income, and improvements in overall access to sanitation and immunization coverage of women and children. 

The DFID event was also addressed by Secretary of State for International Development, Hilary Benn who spoke about DFID's programme in Pakistan, as well as by Yusuf Samiullah who heads the office in Islamabad. The purpose of the meeting was to invite suggestions from a cross section of Birmingham's Pakistani community about what they would like to see the UK doing in Pakistan. 

Benn told the audience that included NGOs and Councillors that Pakistan is set to become of the biggest recipients of direct UK aid, which will help to support the government in improving healthcare, getting 8 million children, mostly girls into school and make sure everyone has clean drinking water. He also said that "Pakistan is making great progress in tackling poverty and is becoming increasingly prosperous with a growing economy". 

Dr. Lodhi described the consultations with the Pakistani diaspora as an excellent and timely initiative. She said that as the 60th anniversary of Pakistan's independence approaches this milestone will be marked both by celebrating what has been achieved and reflecting and debating on the challenges that still lie ahead.

She said that the high growth trajectory and transformative reforms have set off a strong economic rebound in Pakistan, but there is no room for complacency. Sustaining growth and poverty reduction over the long run is tough. But, she stressed, it can be done. Explaining why Pakistan's development partnership with the UK is so important, she said that DFID's support for the reform process and the country's strategic priorities has been immensely valuable, especially the budgetary support provided for poverty reduction expenditures. But it is the fact that DFID's interventions are embedded in Pakistan's priorities that makes it a unique development partner. 

Dr. Lodhi emphasized that DFID's strong engagement in health, education, population welfare, governance reforms and its role in capacity building especially to improve the efficiency of public service delivery to the poor, are all areas of high priority for the government of Pakistan.he also stressed that many challenges lie ahead and what has been attained so far is only a start, although it has been a strong start.

She said that the critical lesson learnt from recent experience is how critical holistic, home grown reforms are, designed and implemented by Pakistanis themselves.

She thanked Minister Benn and his department for the assistance being provided to Pakistan adding that the magnitude of the challenge of achieving the Millennium Development Goals (MDGs) requires sustained support from development partners.

The audience in Birmingham was also shown a short film about DFID's work and projects in Pakistan and a lively discussion followed, in which MP Khalid Mahmud also participated.

According to The Nation, Hilary Benn invited the audience to come forward with ideas on how best the UK can target its support to ensure that British aid is delivered in the right way and tackles the right issues.

Members of the community appreciated the process of consulting them on issues of development in Pakistan.

Secretary of State for International Development Hilary Benn in his speech kicked-off a series of nationwide debates on how the UK can best fight poverty in Pakistan. He asked Muslim leaders, NGOs, councillors and a cross section of Birmingham's Pakistani community about what they would like to see the UK doing in Pakistan.

"Pakistan is making great progress in tackling poverty and is becoming increasingly prosperous with a growing economy. But with nearly a quarter of the population living on less than 50 pence a day and 1 in 10 children dying before their fifth birthday, big challenges still remain," Benn said.

"Pakistan is set to become one of the biggest recipients of direct UK aid, which will help us support the Government in improving healthcare, getting 8 million children, mostly girls, into school and make sure everyone has clean drinking water. We want people's ideas on how best we can target our support to ensure UK aid is delivered in the right way and tackles the right issues," she added. 

http://in.news.yahoo.com/070201/139/6bpe1.htmlhttp://in.news.yahoo.com/070201/139/6bpe1.html


----------



## Janbaz

*State Bank mops up Rs70.35bn*

By Our Staff Reporter

KARACHI, Jan 31: The State Bank on Wednesday sucked in huge liquidity through auction of treasury bills but the cut-off yields on all maturities remained unchanged.The realised amount was much higher than the target of Rs30 billion. Bids received were also on the higher side at Rs83 billion and the expected inflows were Rs60 billion while the SBP picked up Rs70.358 billion.

Market experts see shortage of liquidity and expected a slight increase in the money rates.

The SBP sold Rs98.05 million of three-month bills, Rs9.15 billion of 6-month and Rs61.11 billion of 12-month papers.

The cut-off yields were kept unchanged at 8.8142 per cent for six-month, 8.6417 per cent for three-month and 9.0046 per cent for 12-month papers.

Analysts said that the big participation of banks reflected their confidence over the tight monetary policy and stable interest rate.

The Dawn.
http://www.dawn.com/2007/02/01/ebr9.htm.


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## Janbaz

*Revolutionary plan for dairy, livestock: CM*

OUR STAFF REPORTER
LAHORE - Punjab Chief Minister Ch. Pervaiz Elahi has said that a revolutionary action plan is being implemented for the development of livestock and dairy sector and effective measures have been taken for livestock breeding, feeding, marketing and its protection from various diseases.
He was presiding over a high level meeting at Chief MinisterÃ¢â¬â¢s Secretariat, here on Thursday, which reviewed the pace of progress on various development projects in livestock and dairy development sector.
He said that keeping in view the importance of livestock for national economy and poverty alleviation, a huge amount was being spent on the uplift of the sector. He said that livestock was an important source of income of poor cultivators, therefore government was providing loans worth Rs4.75 billion to cattle farmers for purchasing buffaloes.
Provincial Minister for Livestock, Haroon Sultan, Chief Secretary Punjab, Salman Siddique, Chairman Planning & Development, Suleman Ghani, Secretary Finance, Suhail Ahmed, Secretary Livestock, Babar Yaqoob Fateh Muhammad, President Bank of Punjab, Hamesh Khan, Vice Chancellor Agriculture University Faisalabad, Dr. Muhammad Bashir, Vice Chancellor, Veterinary University Lahore Manzoor Ahmed Qureshi and other senior officers were also present on this occasion. 
Ch Pervaiz Elahi said that government was implementing a master plan for increasing milk and meat production and had decided to establish Punjab Meat Development Company for that purpose. 
He said that livestock sector would be reorganised so that it could meet the challenges regarding livestock breeding, feeding and marketing through modern methods of management.
He said that dispensaries were being set up initially in 18 districts of Punjab including Okara, Sahiwal, Jhang, Muzaffargarh, Gujranwala, Gujrat, Chakwal, DG Khan, Bahawlapur, Bahawalnagar, Kasur, Pakpattan, Sheikhupura, Hafizabad, Sargodha, Layyah, Rawalpindi and Nankana Sahib at union council level where sufficient presence of veterinary doctors and other facilities would be ensured.
He said that mobile dispensaries and veterinary hospitals were also being established at tehsil headquarters in the above mentioned districts and a veterinary doctor would be available round the clock.
He said that effective measures had been adopted for provision of infrastructure and breeding of pedigree cows in Cholistan besides centres for milk collection are also being established in the area for ensuring due returns to the farmers for their milk production. The Chief Minister further said that milk processing plants and milk collection centres wre being set up in Layyah, Sialkot and other areas. 

The Nation.
http://www.nation.com.pk/daily/feb-2007/2/bnews10.php.


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## Janbaz

* CBR nets Rs457bn revenue *

ISLAMABAD: The Central Board of Revenue (CBR) has realised Rs457.5 billion in tax collection, surpassing the target for July to January 2006-07.

Provisional tax collection indicated a cumulative growth of 23.7 per cent, a CBR statement said. The net collection during the period has been Rs457.5 billion against Rs369.8 billion in the same period last year.

The revenue on account of direct taxes has shown a remarkable increase of 60.9pc at Rs184 billion against Rs114.4 billion. Sales tax collection reached Rs169.5 billion against Rs154.9 billion, indicating a growth of 9.4pc. The growth in sales tax collection at import stage has been 4.3pc while domestic sales tax increased by 17pc. Receipts on account of excise duties recorded an increase of 17.4pc. The collection reached Rs34.6 billion against Rs29.5 billion in the corresponding period last year.

Finally, revenue from customs duties decreased by 2.4pc over the corresponding period last year due to declining imports. The tax collection has been Rs69.3bn against Rs71bn last year.

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=41060.


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## Janbaz

*SBP sees 2006-07 inflation above target *

GENEVA (February 02 2007): Higher food prices will likely push Pakistan's inflation rate above the country's 6.5 percent target for the 2006/07 fiscal year, State Bank of Pakistan Governor Shamshad Akhtar told journalists on Thursday.

"We are doing pretty well on the core inflation given the monetary tightening we have had, but it is quite possible because of the food prices being somewhat on the uppish that the average inflation rate could be above the inflation target rate," she said before giving a lecture on banking reform at a Geneva university.

In her speech, Akhtar said the increased presence of foreign banks in Pakistan and a recent spate of mergers were due to "high investor confidence and economic prospects".

"The current merger and acquisition (wave) is also being triggered by the need for banks to meet higher capital requirements and also growing competition which will make (it) increasing(ly) difficult for small banks to survive," her speech text read.

Business Recorder.
http://www.brecorder.com/index.php?id=524390&currPageNo=1&query=&search=&term=&supDate=.


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## Neo

February 02, 2007 

*Portfolio investment may touch $2bn this fiscal*

By Shahid Iqbal

KARACHI, Feb 1: The rising foreign portfolio investment in the country is expected to break the earlier record of 1994 by a big margin, experts anticipate.

They said the portfolio investment could reach to record $2 billion mark by the end of the current fiscal mainly on account of huge inflows through the Global Depository Receipts (GDRs) of two Pakistani entities.

The half-yearly portfolio inflows have already reached $627 million while the addition of $150 million GDR of Muslim Commercial Bank and $800 million of Oil and Gas Development Company (OGDCL) would push the total to cross the early record of 1994.

In the fiscal 1994 the portfolio investment had reached around $1 billion and this was also because of GDR of Pakistan Telecommunication Company (PTCL).

Ã¢â¬ÅThe listed companiesÃ¢â¬â¢ GDRs are included in the portfolio inflows, which will certainly increase the shares of foreign investment into the market capitalisation,Ã¢â¬Â said Mohammad Imran, head of research at First Capital Securities.

Market capitalisation of foreign portfolio investment has reached four per cent while it reached 16 per cent on the basis of free float.

Ã¢â¬ÅThe market capitalisation on free float basis has significantly increased and it could reach up to 18 or 19 per cent by the end of the current fiscal,Ã¢â¬Â said Imran.

He said India was the real beneficiary of the portfolio investment in the region and flows in the Indian capital markets were much higher than Pakistan.

The latest data issued by the State Bank on Thursday showed that during the month of January total portfolio investments were up to $103.6 million, indicating a rising trend for the Pakistani capital market. However, the United States alone invested $118 million, while the UK withdrew huge amount of $30.7 million. Hong Kong was another major country, which invested up to $12 million during the same month.

During July-December, the portfolio investment reached $627 million compared to $359 million during the corresponding period of last year.

Analysts said the widening current account deficits would force the government to find more options to earn foreign exchange and the GDRs have been providing a decent way to help out the government to meet the gap.They said the government had found alternate way to get cheaper foreign exchange through issuance of GDRs. They said the response to MCB and OGDCL GDRs has encouraged the government to come out with more GDRs.

The trade gap might reach over $13 billion by the end of this fiscal as the growth in exports was much lower than the target, while the imports were on rise.

Ã¢â¬ÅThere is a strong possibility for issuance of GDR of National Bank of Pakistan and it could happen during the current fiscal,Ã¢â¬Â said sources in the banking sector. However, they said no size or time was decided.They further said the government had been analysing ways on how to yield maximum from the issuance of GDRs and a series of these should be expected in the coming two or three years.

http://www.dawn.com/2007/02/02/ebr6.htm


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## Neo

Friday, February 02, 2007 

*Cement exports expected to reach 2.5m tonnes*

By Sajid Chaudhry

ISLAMABAD: Due to increasing demand in Afghanistan, UAE and Bangladesh, the cement exports of the country are expected to reach 2.5 million tonnes by end of the fiscal 2006-07. 

With a total 3.2 million tonnes surplus wheat stocks, the export of wheat from Punjab has started with an export of 0.125 million tonnes, while Sindh and PASSCO are in a process to export surplus wheat.

This was informed to the Economic Coordination Committee of the Cabinet during a presentation on wheat stocks and cement industry here on Thursday. The ECC was informed that due to the encouraging government policy and a turnaround in the cement industry during the last seven years, the annual cement production, which was 15.72 million during year 2001-2002, has increased to 33 million tonnes during the current fiscal year.

The meeting was informed that the production has doubled during the last seven years. The local consumption of cement was 9.8 million tonnes, some seven years back, which has reached to 17 million tonnes in the last fiscal year 2005-06. The local cement consumption has increased to 9.9 million tonnes due to the earthquake reconstruction process and other construction activities across the country during the first 6 months of the current fiscal year 2006-07.

The meeting was also informed that Pakistan had exported 0.107 million tonnes cement in the fiscal year 2000-2001 and the country has exported some 1.5 million tonnes cement in the last fiscal year 2005-06. The exports of cement during the first six months (July-December) of the current fiscal year 2006-07 have witnessed good growth and have crossed 1 million tonnes. The meeting was informed that due to the demand in the said markets, the exports of cement could reach at 2.5 million tonnes by the end of this fiscal year. The price of 50kg cement bag was recorded at Rs 214 on average in the country against Rs 353 per bag in April 2006. The increase in the cement production has benefited the consumers as well as the industry.

The meeting was also informed that according to the stock position of Jan 31, the country has some 3.2 million tonnes wheat in its stocks against 3.1 million tonnes in the same period last fiscal year. Punjab is carrying a stock of 1.745 million tonnes, Sindh has 0.345 million tonnes, NWFP is carrying some 0.17 million tonnes, Balochistan has a wheat stock of 0.0547 million tonnes and 0.889 million tonnes wheat stock is available with PASSCO. Punjab has started export of wheat and the exports of wheat stands at 0.125 million tonnes at present. Sindh and PASSCO are in a process of exporting wheat from the country. The ECC had allowed the private sector to export wheat from country fixing an export target of 0.5 million tonnes in its last meeting.

The meeting was also informed that the sugar stocks in the country as of Jan 31 stands at 1.238 million tonnes and crushing season is on its peck in the country. The average per kilogram price of sugar in the country is Rs 31.

http://www.dailytimes.com.pk/default.asp?page=2007\02\02\story_2-2-2007_pg5_1


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## Neo

Friday, February 02, 2007 

*Pakistan sees globalisation as opportunity: PM*

ISLAMABAD: Prime Minister Shaukat Aziz said on Thursday Pakistan considers globalization an opportunity and not a threat and offers a level playing field to local as well as foreign investors without any discrimination.

He was talking to a French media delegation that called on him here at the Prime MinisterÃ¢â¬â¢s House. The prime minister said that as a result of the government's economic reforms based on the policies of liberalization, privatization and deregulation, the country expects to attract around $5 billion in foreign direct investment this year, which ranged between $250 and $350 million before 1999.

He said the size of the economy and per capita income has doubled in the last five years, with sustained 7-8 percent growth rate during the last four years.

The prime minister said due to increased economic activity that generated ample employment opportunities, the rate of unemployment in Pakistan has come down to 6.2% at present from 8.7% in fiscal year 2000, despite increase in population.

He further informed the delegation that five million new jobs were created during the last few years, with around 70% of them filled with women.

The prime minister said due to increased economic, development and construction activity, the country is facing a shortage of skilled manpower, which is a sign of high growth.

He said owing to increased construction activity in Pakistan, the growth of cement sector has doubled during the last five years.

The prime minister also mentioned reconstruction activities in the earthquake affected areas and said the fast pace reconstruction and recovery of the affected areas is a model for others.

He said the objective was to build better, so that housing, schooling, health and other vital facilities are better than as it were before the earthquake.

The prime minister said the government, with the help of army, NGOs and the international community, managed this tragedy and trauma so effectively that no single person died of hunger, cold or malnutrition.

He also mentioned the strong democratic system in Pakistan with full functioning parliament, free media and active opposition parties and said it augurs well for the country's future.

The prime minister gave an overview of his recent visit to Davos and Brussels and his hectic engagements there, including his interaction with the NATO secretary-general and the address to the NATO Council.

He said Pakistan wants a strong and stable Afghanistan, as it is not only in its own interest but is vital for peace and stability in the region.

The prime minister said with 80,000 troops deployed by Pakistan along the 1,700 miles of porous border, three million Afghan refugees still being hosted, and introducing the latest biometrics system at the Chaman crossing, the country is doing enough to check the illegal movement along the border with Afghanistan.

The prime minister also mentioned the recent statement of the NATO secretary-general at a joint press conference with him in Brussels, in which he agreed that all sides have to do more and that the blame-game should end.

He also briefed the delegation about Pakistan's relations with other neighbouring countries, including India and Iran, and said Pakistan wants a peaceful solution of the core Kashmir dispute that fulfils the wishes and aspirations of the Kashmiris.

Regarding Iran, the prime minister said Pakistan does not support nuclear proliferation by any country but, at the same time, it considers that every nation has the right to peaceful use of nuclear technology.

The prime minister also responded to queries of the French media delegation. 

http://www.dailytimes.com.pk/default.asp?page=2007\02\02\story_2-2-2007_pg5_14


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## Neo

Friday, February 02, 2007 

*Annual car production to rise to 500,000:*

Five-year auto policy okayed

* Investment in auto industry to increase to Rs 225 billion
* No cut in duty on cars of up to 1500cc in CBU condition 

By Sajid Chaudhry

ISLAMABAD: The Economic Coordination Committee (ECC) of the cabinet on Thursday approved a new five-year Ã¢â¬ËLong Term Auto Policy 2007-2012Ã¢â¬â¢ that envisages taking the annual production of cars in Pakistan from 200,000 to 500,000 by 2012.

The ECC also approved corporate tax exemptions, import duty, and local and provincial taxes for 20 years for the three companies to be formed by the Port of Singapore Authority, which would invest $550 million in the next five to ten years to operate Gwadar port for the next 40 years as well as to develop the Gwadar Special Economic Zone. 

After the ECC meeting, which was presided over by Prime Minister Shaukat Aziz here, Dr Ashfaque Hassan Khan, advisor to the Ministry of Finance, told reporters that the new policy would encourage existing auto manufacturers to increase production and expand their manufacturing capability and also encourage new entrants to invest in the auto industry in Pakistan. 

He said the ECC had approved five years tariffs for cars and light carriage vehicles. The tariff on import of non-localised parts for cars in CKD (complete knocked down) condition, currently at 50%, would be brought down to 35% by 2012, and on localised parts from the existing 45% to 30%. Cars in (completely built up) CBU condition of up to 1500cc would continue to be importable at 50% duty for the next five years. Import duty on cars from 1500cc to 1800cc would be brought down five percent to 60% duty by 2012, and on cars above 1800cc from 75% to 70% by 2009-2010. The tariff structure approved for light carriage vehicles seeks their import in CKD condition, with localised parts to be importable at 45% duty by 2012 against the existing 50%, and duty on non-localised parts to be brought down from 70% to 60&% by 2012. 

Dr Khan said the auto industry produced 30,000-32,000 cars in 1999-2000, 161,000 in 2005-06, and was expected to produce some 200,000 cars during current fiscal year 2006-07. The policy has set a target of producing 500,000 cars by 2012. Investment in the auto industry, which stands at Rs 98 billion today, would increase to Rs 225 billion by 2012. The auto industryÃ¢â¬â¢s share in GDP is projected to grown from the current 2.8% to around 5.6% by 2012, and its share in manufacturing from 16% to 25%. The industry, currently contributing Rs 63 billion in direct taxes, would give Rs Rs.190 billion by 2012. Jobs in the industry would increase from the existing 192,000 to 250,000 in five years. 

The ECC also approved a sale price of Rs 7 million per acre for non-transferable plots in downstream industrial estates to be established on non-core land of the Pakistan Steel Mills. 

The committee also approved the exploration and development of coal bed methane in Sindh. The Sindh government is to carry out due diligence with M/s Cathy for the purpose. 

The ECC allowed Sui Southern Gas Company (SSGC) to establish a liquefied natural gas (LNG) plant at Port Qasim in collaboration with the private sector for import of 3.5 million tonnes of LNG annually by 2010-2011, with transportation and distribution to be taken care of by the private sector. This would be phase one of the LNG project and it would be extendable till 2012-2013 with an additional import limit of 3.5 million tonnes. 

The ECC approved guidelines for companies wanting to import and distribute LNG through mobile units in areas where laying gas distribution lines is impossible or unfeasible. 

It also approved the transfer of two independent power producers, Foji Korangi Power and Western Electric Power Project, from Karachi Electricity Supply Company jurisdiction to WAPDA jurisdiction, after the former refused to purchase power from the two IPPs.

http://www.dailytimes.com.pk/default.asp?page=2007\02\02\story_2-2-2007_pg1_1


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## Owais

*ECC approves long-term auto policy: Gwadar Port operators get tax relief *

ISLAMABAD (February 02 2007): The Economic Coordination Committee (ECC) of the Cabinet on Thursday approved long-term auto policy and gave tax exemptions and incentives to operate Gwadar Port to be given to Singapore Port Authority (SPA).

Presided over by the Prime Minister Shaukat Aziz the ECC also approved First LNG project by SSGC and Exploration of Coal Bed Methane (CBM) gas by Sindh government.

After the meeting, Dr Ashfaque Hasan Khan, Economic Advisor to the Finance Ministry briefed the journalists that the five-year policy has been designed in way that it should not hurt local industry but attract new investment. However, the government has decided not to change current import policy so that consumers' interests could be protected.

"Cars import policy will continue in its existing shape and if premium becomes a public issue again, the government will take appropriate measures to protect the consumers interest," he added.

He said that with the implementation of five-year auto policy, 0.5 million new cars would be manufactured per year by 2011-12 against the current production of 0.2 million. He said total investment in car manufacturing would reach Rs 225 billion by 2011-12 as compared to Rs 98 billion in 2005-06 while this sector's share in GDP would touch 5.6 percent against the current share of 2.8 percent.

He said contribution of auto sector in the manufacturing sector would increase to 25 percent in five years from its existing share of 16 percent while its share in indirect tax would reach Rs 190 billion in 2011-12 against Rs 63 billion.

The sector is presently providing employment to 192,000 people and the number would increase to 2,50,000 by 2011-12, he added. The ECC has approved 50 percent tariff for localised parts of cars in 2006-07, followed by 50 percent in 2007-08, 50 percent in 2008-09, 47.5 percent in 2009-10, 45 percent in 1010-11 and 45 percent in 2011-12.

Tariff for non- localised parts has been proposed by 35 percent in 2006-07, followed by 35 percent in 2007-08, 32.5 percent in 2008-09, 32.5.5 percent in 2009-10, 30 percent in 2010-11 and 30 percent in 2011-12.

In CBU condition, the ECC approved 50 percent tariff for cars up to 1500cc till 2011-12. Cars of 1500 to 1800 cc would have 65 percent duty till 2008-09, followed by 60 percent till 2011-12 while 75 percent duty has been proposed for the cars exceeding 1800 cc till 2008-09 and 70 percent till 2011-12.

The ECC approved 50 percent duty on LCV (CKD kits localised parts) for three years ie up to 2008-09 followed by 47.5 percent in 2009-10, 45 percent in 2010-11 and 45 percent in 2011-12 while duty would remain 20 percent for non -localised parts till 2011-12.

According to the five-year plan tariff for CBU condition LCVs would be 60 percent till 2011-12. The ministry has also been asked to prepare action plan by March 31 in the light approved policy.

Dr Ashfaque Hassan Khan said the Gwadar Policy Board, chaired by the Prime Minister, has already approved in principle concession agreement for fifty years of operation of Gwadar Port proposed to be signed with the Port of Singapore Authority. The operator would initially make an investment of $550 million over the next ten years.

The incentives approved by the ECC for the port operator include tax holiday to corporate income for 20 years, exemption of import duties on materials and equipment for construction and operation of the port and development of Free Economic Zone for 40 years. It also envisages exemption of local and provincial taxes for 20 years, which has already been approved by the Balochistan government.

The ECC approved first LNG project of Sui Southern Gas Company (SSGC) as part of the long-term energy security plan. It envisages import of 3.5 million tons of LNG per annum up to 2010-11, he said adding 5.3 million tons by 2012-13, adding that 5.3 million tons LNG is equal to 500 mmcfd.

He said 53 companies had shown interest of which 36 submitted (EoI). However 14 companies submitted Statement of Qualification (SoQ). The ECC approved completely integrated option and rejected unbundled option given some of the companies.

Based on the proposed approach, the consultants ie ABN Amro and Poten and Partner would select the companies for issuance of licence. Persian LNG, British Petroleum would be entitled to supply LNG to Shell Limited, ENI, AES and Sojtiz and a few other companies, he said adding that the port expenses would be finalised in consultation with Ports and Shipping Ministry.

The ECC also approved relocation of two IPPs from the KESC areas to Wapda as the former refused to purchase power from both the projects. He said that the ECC has approved expansion in the land to be leased out for setting up new industries in the PIDC from 291 acres to 423 acres, which is partially developed.

The ECC has also added 1000 acres of undeveloped land to be sold to the industrialists at Rs 7 million per acre, which would be non-transferable without the permission of competent authority. Dr Ashfaque Hasan further said that National Industrial Park Development would make binding recommendations in this regard which would approve its Board of Directors.

Replying to a question, he said that the ECC allowed Sindh government to start exploration and development of Coal Bed Methane (CBM) to M/s Cathy Oil and Gas Company with the directions to the provincial government to undertake proper due diligence before granting license to the company.

Prime Minister Shaukat Aziz briefed the meeting about his visit to Davos to attend the World Economic Forum meeting. Chief Executives of top multi-national companies, who called on the Prime Minister there, showed their keen interest to make investment in Pakistan. Chief Executive Officer of Nestle would visit Pakistan soon to inaugurate the largest milk plant of the company in the country.

The ECC was informed that the tax collection by CBR increased by 23.7% in seven months of the current financial year. It collected 457.5 billion rupees in taxes as compared to 369.8 billion rupees in the corresponding period last year. The meeting was told that the sensitive price index showed that downward trend for five weeks and food inflation has substantially declined.

The meeting noted that despite 13% increase in the production of Moong pulse, its prices have not come down and warned that strict action would be taken against hoarders.

It also noted that the country has sufficient stocks of wheat that stood at 3.2 million tons on 30th of January as compared to 3.1 million tons on the same day last year. Punjab has exported 1,25000 tons of wheat.

The ECC observed that no head of the government took this much interest in improving performance of Utility Stores Corporation as is being evinced by the incumbent Prime Minister. The USC has played vital role in stabilising prices especially that of sugar and it sold 0.5 million tons of the commodities on subsidised rates since March 2005. The country has a stock of 1.238 million tons of sugar and its average price is 31 rupee a kilo.

It was observed that prices of 14 essential items in Pakistan was on the average 26 percent lower than India; prices of 10 items 26 percent lower than Bangladesh and prices of 15 items 34 percent lower as compared to Sri Lanka.

The meeting was informed that the installed capacity of cement that stood at 15.72 million tons in 2001-02 has more than doubled to 33 million tonnes in 2006-07. Its domestic consumption has increased from 9.8 to 17 million tons during the period and the existing prices compare with 2003.

Pakistan also exported 1.5 million tons of cement, mostly to Afghanistan, UAE and Bangladesh, during last year and this year the export is likely to touch 2.5 million tonnes

http://brecorder.com/index.php?id=524347&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Government preparing integrated package for textile sector *

ISLAMABAD (February 02 2007): Minister for Textile Industry Mushtaq Ali Cheema has said that government is finalising an integrated package for reviving the textile sector.

He said this while presiding over a meeting with Vice President Werner International Gian Mario Borney, who gave presentation on the marketing plan here on Thursday, to expedite the exports of the textile industry which is facing sharp decline since expiry of quota regime on December 31, 2004.

Among the textile chain, Gian Borney said, garment sector is the most important, which need special attention on account of value-addition. He suggested that it should be treated on top priority and should be exempted from all kind of taxes like Export Processing Unit (EPU).

He also talked about various proactive measures to enhance productivity, coupled with emerging global marketing trends, supply chain models and market liberalisation dynamics amidst the highly competitive global arena. These phenomena underline the need for enhancing productivity, cost-effectiveness and enhancing exports to survive and thrive in the new export paradigm, he added.

He said that China and India are emerging as strong exporters of the textile sector and by 2010 China would capture 50 percent of textile share and India 25 percent, while Bangladesh is also coming up fast.

There is acute need for reviving this sector in Pakistan as the global trends foresee other countries boosting their textile growth like China, India and Bangladesh, where governments are facilitating the industry to the maximum. He insisted that government of Pakistan should also facilitate the sector to remain competitive.

Talking about the declining exports in the sector, he said that there is need to improve the image of the country, develop human resource and increase government support to get the desired results.

The minister for textile said that steps are being taken by the government to bridge the gap between existing productivity and emerging global trends, adding that the government was preparing an integrated package for the textile sector, which is near finalisation.

Advisor to Prime Minister for Finance Dr Salman Shah said that the government is making efforts to resolve the textile crisis and to provide a conducive environment that is globally competitive, so as to help textile sector maintain and achieve real growth in the long run.

It was learnt that sectoral wise analysis of the textile chain would resume from next month. It may be mentioned here that the Werner International is already carrying out benchmarking studies of each sector of textile individually. There are ten sectors in the chain and eight units would be analysed for each. Benchmarking study of the weaving and spinning has already been done.

The meeting was also attended by CEO Trade Development Authority (TDAP) Tariq Ikram, Secretary General CBR and Secretary Textile Ministry including major textile sector figureheads.


http://brecorder.com/index.php?id=524327&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Pakistani trade team to visit Kuwait and Saudi Arabia *

LAHORE (February 02 2007): A 12-member trade delegation will visit Kuwait and Saudi Arabia from March 1. According to Trade Development Authority of Pakistan (TDAP) sources here on Thursday, members of the trade team representing different sectors of Pakistani industry including pharmaceuticals, surgical, rice and fruit & vegetables.

The members will have meetings with their Kuwaiti and Saudi counterparts with the objective to boost the country's exports to these oil rich Gulf states. Director TDAP Lahore, Ikramullah will lead the delegation during the eight-day visit.

http://brecorder.com/index.php?id=524415&currPageNo=1&query=&search=&term=&supDate=


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## Neo

Thursday February 1, 2007

*Pakistan set to tender for first LNG terminal*

ISLAMABAD, Feb 1 (Reuters) - State-run Sui Southern Gas Co. Ltd. (SSGC) has gained government approval to seek bids to build and to supply Pakistan's first liquefied natural gas (LNG) terminal, a government official said on Thursday. 
"The ECC has allowed Sui Southern to go ahead with the project and issue a tender," said Ashfaque Hasan Khan, an adviser at the Finance Ministry. 

The ECC, or Economic Coordination Committee of the cabinet, is Pakistan's country's highest economic decision-making body. 

"It will be an integrated project with one company building the plant as well as supplying LNG," Khan told Reuters. 

Industry sources estimate the plant's development will cost $300 million to $400 million, while the project cost would be more than $15 billion, including a long-term LNG supply contract. 

The plant is expected to have an initial import capacity of 3.5 million tonnes a year of LNG. It will turn frozen LNG back into gas for piping to consumers. 

"The first phase of the project is expected to provide 3.5 million tonnes of LNG per annum in 2010 and 2011," Khan said. 

He said SSGC will be allowed to expand the project in a second phase, under which it could bring in an additional 3.5 million tonnes of LNG a year by 2012 and 2013. 

SSGC has already short-listed international companies, including Persian LNG, BP Plc , Royal Dutch Shell , ENI and several others for the project. 

Dutch bank ABN AMRO is the financial adviser for the project. 

http://asia.news.yahoo.com/070201/3/2wrbz.html


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## Owais

*50 percent decline in fruit export feared *

KARACHI (February 03 2007): The country may suffer considerable loss in the foreign exchange earnings this fiscal, as the fruits exports would be around 50percent lesser than the previous year. According to data provided by the Federal Bureau of Statistics, fruits exports registered a decline of 37.43 percent during July-December FY07 as compared to corresponding period last year.

Fruits exports stood at $48.155 million during the above-mentioned period against $62.056 million during the corresponding period last year. Chairman Fruit Exporters Association of Pakistan, Abdul Wahid giving reasons for this decline said that shortage of fruits, particularly mango and citrus due to lesser production were responsible for this slump in export.

He maintained that the prime reason was the alternate bearing, as the crops remained on higher and lower ends each alternate year. Previous year was on the higher end as far as production was concerned, as the country witnessed bumper mango and citrus crops.

Adding to the misfortune this year, the weather conditions, which remained unfavourable for the fruit crops. Although, the mango exports achieved the target of 80,000 tonnes, however, it was 20 percent less than the previous year's target of 100,000 tonnes, which was surpassed by around 10,000 tonnes.

Abdul Wahid categorically said that viruses that attacked the crops also caused serious production loss. He regretted that the government and the concerned ministries/departments launched no awareness campaigns against virus and pest attack, which were rigorously undertaken in the case of cotton and other cash crops.

"Fruits are equally important cash crops, as they contribute reasonable share in the foreign exchange earners and these should be given equal treatment like cotton," he said and added that the fruit crops monitoring centres and concerned agencies should be more proactive.

It is impossible to match previous year's fruit exports earnings this fiscal. The statistics for the first half already suggest a decline of over 22 percent in terms of dollars and citrus are the chief fruit exports of Pakistan coupled with very smaller quantity of apple, grape and pomegranate etc. Abdul Wahid said that mango exports had already remained around 30,000 tonnes lower while the citrus export target was impossible to achieve.

Pakistan Horticulture Development and Export Board has set a target of 220,000 tonnes for citrus export this year against a target of 200,000 tonnes last year, which was surpassed.

Wahid said that this was an unrealistic target as the citrus crops met a disaster this season. "Kinnow is presently available for Rs 750 per 40kg against Rs 180 per 40 kg last season, which shows the scarcity of the commodity," he remarked adding that so far some 55,000 tonnes kinnow had been exported and the shipments would continue for another month. "Hardly, we would be able to export 100,000 tonnes of the fruit," Wahid observed.

Chairman Fruit Exporters Association of Pakistan, Abdul Wahid urged the Chairman PIA to instruct relevant quarters that once a cargo quota was allowed to the fruit exporters, the cargo must not be off-loaded.

http://brecorder.com/index.php?id=524742&currPageNo=2&query=&search=&term=&supDate=


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## Owais

*Pakistan's debts reduced to half in seven years: Prime Minister *

ISLAMABAD (February 03 2007): "Pakistan's external and internal debts have been reduced to half during the past seven years", Prime Minister Shaukat Aziz said here on Friday. He gave facts and figures about the performance of Pakistan's economy for the past seven years at a book launching at the Prime Minister House.

He said that in 1999 Pakistan's external debt was 51.7 percent of the GDP, which came down to 26.3 percent of the GDP in September 2006. In 1999, the debt was 300 percent of the foreign exchange earnings, which is now 111.7 percent. The debt was 19 times of the foreign exchange reserves in 1999; now it is 3 times.

Similarly, internal public debt has also been reduced to half. The Prime Minister said: "Our economy has doubled during the past 5 years with an average yearly GDP growth of 7 percent, making Pakistan as one of the most attractive countries for foreign investment."

He said that Pakistan is one of the few countries which have adopted 'fiscal responsibility laws' to ensure openness, financial discipline and transparency for all times to come. He said that in a short span "we have regained our economic sovereignty and said goodbye to the International Monetary Fund for borrowing on its terms and conditions." He said that investors from USA, EU, Middle East and Far Eastern countries were rushing to Pakistan for investment, "as Pakistan is a market of 160 million hard working, intelligent and peaceful people".

He said that the present government believes in freedom of the press and welcomes criticism of its policies. Earlier, the author of the book titled 'Pakistan - Sovereignty Lost', veteran journalist Shahid ur Rehman spoke about the dismal performance of previous successive governments in Pakistan, leaving the people high and dry. The ceremony was attended by Minister for Information & Broadcasting, Mohammad Ali Durrani, economists, senior government officials, intellectuals and journalists.

http://brecorder.com/index.php?id=524797&currPageNo=1&query=&search=&term=&supDate=


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## Neo

February 03, 2007 

*Donors to fund Bhasha dam*

By Khaleeq Kiani

ISLAMABAD, Feb 2: The World Bank and the Asian Development Bank (ADB) have agreed to finance the construction of $6.5 billion Diamer-Bhasha dam and increase overall funding to Pakistan to about $4 billion.

Prime Minister Shaukat Aziz told Dawn on Friday that he had meetings with presidents of the two institutions during his recent visit to Davos and both agreed to fund the mega dam.

He said the ADB had agreed to enhance its annual funding to Pakistan to about $2 billion and the World Bank would also be catching up.

The ADBÃ¢â¬â¢s annual financing to Pakistan currently stands at $1.45 billion as part of three-year country assistance strategy while the World Bank provides about $1.25 billion per annum. As such, the total annual funding from the two institutions currently stands at about $2.7 billion.

The government has estimated a total foreign exchange requirement of $17 billion for big dams. This includes $2.964 billion for Bhasha dam alone.

The prime minister said the overall needs would be spread over many years.

The government had decided to develop big hydel projects in the public sector if the private sector investment was not available because of long gestation period, he said after presiding over the first meeting of the cabinet committee on energy (CCE) earlier in the day.He said Bunji power project alone had the capacity to produce 5000MW electricity.

He said he had also issued instructions for restoration of the 1995 hydel power policy to encourage investment in this sector. He, however, said the construction of small hydel projects would not solve the energy problem on long-term basis and hence big projects would have to be taken in hand.

Mr Aziz said he had expanded the composition of the CCE. The chairmen of the National Electric Power Regulatory Authority (Nepra) and Oil and Gas Regulatory Auhtority (Ogra) and heads of Sui Southern and Sui Northern gas companies had now been added to the committee, he added.

He said he had directed the relevant ministries and the utilities to refine and update demand assessment technologies and prepare accordingly for supply arrangements. He said it was not prudent to add power generation plants much earlier than actual demand and keep on paying for just 12 or 15 per cent capacity utilisation while delayed capacity addition could choke economic growth. Therefore, he said, the relevant ministries should prepare a comprehensive policy keeping a balance between actual requirement and timely capacity availability.

He said he was excited by the plans presented to him about the upcoming projects to overcome power shortage in the longer run while temporary arrangements were being made through rented power plants to meet immediate needs.

The prime minister said the two rented power projects of 150MW capacity each had already been imported. Similarly, he said, the number of time-of-day meters for agriculture tubewells was being increased substantially so that the tubewells could meet their requirements in the night hours.

An official statement quoted Mr Aziz as saying that the government was making all-out efforts to bridge the gap between demand and supply that had emerged as a result of robust economic growth.

The prime minister said the CCE would make focused efforts for energy management and take policy initiatives to meet the demand and encourage investments. It would take holistic approach to energy sector planning to ensure adequate and secure supply of energy, he added.

Wapda presented an update on its hydropower development programme envisaging power generation capacity addition of 10,000MW by 2015. Wapda is also undertaking feasibility studies of hydropower projects, including Dasu, Bunji and Kohala, with a potential of 11,000MW.

The Private Power and Infrastructure Board (PPIB) briefed the CCE regarding the status of thermal and hydel projects in the private sector and said it was expecting thermal power generation capacity addition of 2,000MW by 2008, and a total of 4,500MW by 2009.

The PPIB also expects hydel capacity addition of 4,900MW by 2015. It will be awarding a feasibility study for a 1,000MW power plant based on imported coal shortly.

This would be in addition to ongoing feasibility studies for 550MW of generation capacity based on domestic coal.

http://www.dawn.com/2007/02/03/top7.htm


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## Neo

February 03, 2007

*17 blocks to be opened for oil, gas exploration*

ISLAMABAD, Feb 2: Federal Minister for Petroleum and Natural Resources Amanullah Khan Jadoon has said that the government is opening 17 new blocks for oil and gas exploration in onshore and offshore areas.

The minister was talking to the President of Rally Energy Corporation of Canada, Mr Abby Badwi, who called on him on Friday and discussed with him investment potential in the oil and gas sector.

Mr Jadoon said there was a lot of potential for foreign investors in the upstream and downstream petroleum sector and invited the Rally Energy to participate in the biddings for promoting friendly relations between the two countries.

The minister said that the government was formulating a new petroleum policy containing attractive incentives for the prospective investors in the onshore and offshore oil and gas exploration being announced shortly.

During the meeting, Mr Abby Badwi briefed the petroleum minister about profile and oil and gas activities being carried out by the Rally Energy in Egypt, Western Canada and Pakistan.

He said the Rally Energy had working interest in Safed Koh Block in Dera Ghazi Khan where the joint venture had made successful discovery of gas reserves.

Mr Badwi appreciated the speedy growth of petroleum sector in Pakistan during the last few years and assured that the Rally Energy would continue to avail investment opportunities for mutual advantage.

Additional secretary petroleum Shaukat Hayat Durrani, director-general (Petroleum Concessions), Mr M. Naeem Malik, and vice-president of Rally Energy in Pakistan, Mr A. Faheem, were also present during the meeting.

http://www.dawn.com/2007/02/03/ebr2.htm


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## Neo

February 03, 2007 
*Vision-2030 calls for steps to boost industrial exports*

By Ihtasham ul Haque

ISLAMABAD, Feb 2: The manufacturing and industrial sector of Pakistan is suffering from various structural problems, resulting in slow growth rate of output and exports, low level of investment and high concentration of the manufacturing industries.

The working draft of the Vision-2030 finalised by a committee of the Planning Commission, has called for industrial diversification to compete with other developing countries for increasing exports, particularly through value-addition and quality control.

It said that technical inefficiencies, poor quality of products, low level of research and development (R&D) activities have resulted into slow growth of productivity, making the Pakistani products "uncompetitive" in the world market.

The traditional industries such as food and textile still account for an overwhelming share of the manufacturing output; food industries accounted for 13.8 per cent and industries for 24 per cent of the total manufacturing of value added products.

On the other hand, industries for machinery both electrical and non-electrical, and automobile accounted for just 4.4 per cent and 4.7 per cent of value added, respectively. Even though chemical industries accounted for around 15.2 per cent of manufacturing output, most of the chemical industries output is concentrated in low-tech and low value added industries.

The draft calls for massive structural changes rather than a marginal change, a shift in the production paradigm to technology and knowledge-based industrialisation, with a focus on the quantitative and qualitative growth of an integrated and competitive industry in the private sector.

The inefficiencies of import substitution must give way to an export-led strategy, and to diversification away from traditional industries and services.

In this regard, the draft said that four sectors with the largest share in world trade are machinery/semi-manufacturers, electronics and electrical, pharmaceuticals, automobiles, and agriculture products, in that order with the last classified as low technology.

Pakistan's strength at present lies in textiles (excellent local and foreign markets); however, the automotive sector (just coming up to the right economies of scale), pharmaceuticals (large domestic market and just beginning exports) and electronics/electrical/home appliances, (growing fast, with large local demand, and some exports) are showing great promise on the basis of a fast growing middle class, consumer financing and capacity utilisation.It said that the share of agriculture in GDP has fallen from 39 per cent in 1969-70 to 21.6 per cent in 2005-06. During the same period, share of the services sector increased from 38.4 per cent to 52.3 per cent and manufacturing from 15.9 per cent in 2001-02 to 18.2 per cent during 2005-06.

To reach the quantitative targets of 30 per cent GDP share by 2030, within an overall average GDP growth rate of seven per cent until 2030, the manufacturing sector needs to grow at an average rate of just under 10pc.

Taking about cost of doing business, the working draft vision said that one window operations have been promised for a long time, but have only now reached fruition with an excellent public private partnership for creating industrial zones, industrial estates and industrial corridors, where skills and physical and administrative infrastructure can be clustered and matched for greater efficiency.

This will further reduce the cost of starting new enterprises. A textile city in Karachi and garment cities in Lahore and Faisalabad are current projects in exploiting cluster strengths in key sectors.

It also said that small and medium enterprises (SMEs) are an integral part of the country's manufacturing supply chain in all sectors. They are also major players in industrial chain, producing a wide variety of products such as sports goods, bed wear, towels, surgical instruments and marble fire places, large share of which are exported.

In this behalf, the draft proposed that with SMEs as the focus in order to improve quality of processes, products and management; this will be coupled with incentives for those who undertake such upgrades.

This needs to be implemented as on-the-job training for those businesses having up to 10 employees, but it will have to be based in a formal environment for medium sized organisation having 10-50 employees.

http://www.dawn.com/2007/02/03/ebr5.htm


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## Neo

*US Senate bill recommends $3 billion assistance to Pakistan *

WASHINGTON: A bill moved in the US Senate on implementation of recommendations of the9/11 commission report, recommends to the president to provide $3 billion in assistance to Pakistan for the next five years.

The bill says that "it is the sense of Congress that the commitment of the President to provide $3 billion in assistance over the next 5 years to Pakistan should be commended." 

A bill recently moved in the US House of Representatives conditioned the military and other aid to Pakistan with anti-terror cooperation. 

The Senate bill says that the Government of the United States should provide assistance to Pakistan to improve PakistanÃ¢â¬â¢s basic education system and to emphasize development. The Bill urges Pakistan to increase its efforts against terrorism but contains no conditionality, as does a proposed legislation of the US House of Representative. 

The US administration has expressed its strong support for PakistanÃ¢â¬â¢s efforts against terrorism under President Pervez Musharraf and said the country continues to demonstrate commitment to cooperation with US counterterrorism efforts. 

The US officials have said the administration will work with Congress for removal of certain provisions vis a vis assistance for Pakistan from the proposed House legislation. 

The bill recently moved in the US House of Representatives had recommended conditions for military and other aid to Pakistan.

According to the US legislative process the two versions of a bill are eventually reconciled between the two chambers. 

http://www.thenews.com.pk/updates.asp#17271


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## Janbaz

*Several options to meet energy needs, says PM*

OUR STAFF REPORTER
ISLAMABAD - Prime Minister Shaukat Aziz on Saturday said there is surge in the energy demand as a result of the high growth achieved by the country during the last few years.
&#8220;The government is focusing both on increasing indigenous production and import of gas to bridge the gap between demand and supply,&#8221; he said while chairing a meeting at the PM&#8217;s House to review the government&#8217;s energy strategy. The government is weighing various options to meet the energy needs of the country in an optimum manner, he added. 
Ministry of Petroleum and Natural Resources made a presentation about the status of Iran-Pakistan-India gas pipeline project and briefed the Prime Minister about its negotiations with the Iranian authorities on the subject. 
Aziz said that in view of the high growth projections for the future, in all sectors of economy, the energy requirements are expected to rise further and the government is making focussed and concerted effort to increase our capacity in the energy sector to maintain the momentum of growth. 
He said achieving energy security is among the major global challenges as energy security will be the key for future growth. In the gas sector, the Prime Minister said, the government is taking measures to use all options including pipeline gas, LNG, LPG to provide gas to domestic and commercial consumers in a cost effective manner. 
The Ministry also apprised the Prime Minister about the status of other projects to increase the production of natural gas in the country. 
Aziz instructed the ministry to take further steps to increase exploration and drilling activities. 
The meeting was attended among others by Minister for Petroleum and Natural Resources Amannullah Khan Jadoon, Adviser to the Prime Minister on Finance Dr Salman Shah, Minister of State for Petroleum and Natural Resources Muhammad Naseer Mengal and seniors officials. 

The Nation.
http://www.nation.com.pk/daily/feb-2007/4/bnews4.php


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## Janbaz

*Pak to export 2.5 million tons of cement in FY07*

LAHORE (APP) - Federal Minister for Industries, Production and Special Initiatives Jahangir Khan Tareen Saturday said that Pakistan would export 2.5 million tonnes of cement during the current fiscal year.
&#8220;Cement production has doubled from 11 million tonnes over the last four years. This is going to give a fillip to construction industry,&#8221; he said while addressing a press conference at SMEDA head office here.
Tareen said that the government would not allow artificial hike in the prices of cement and would protect the consumers&#8217; interest like it took action by providing subsidy on import when the cement prices significantly shoot up in recent past. 
&#8220;We have month wise details of cement prices during the last four years, which reveal that the present prices are the same as those prevailed four years ago&#8221; he added. Stability in cement prices is an outcome of the government&#8217;s balanced and even-handed policies, he maintained.
Tareen said that the Economic Co-ordination Committee approved 5-year auto policy for car manufacturers, which would help bring fresh investment in this vital sector that had shown substantial growth. 
Similarly, Ministry of Industry is working on a long-term policy for the manufacturing of buses and trucks and later it would take up motorcycles&#8217; policy, he added. 
The auto policy envisages five-year road map, which will enable the industrialists to make investment plan and implement it. Besides, the auto policy would give break-through to the vendor industry, which is based on small and medium enterprises, he maintained.
Expressing his optimism, the minister said that Pakistan would be producing 200,000 cars this year and if growth continues with the same pace, the production would increase to 500,000 by the year 2011-12. 
To a question, he said the government&#8217;s policies are aimed at bringing industrial development and protecting rights of the consumers. As a result of these policies, not only the delivery period of cars reduced but premium has also declined.
&#8220;We found unreasonable premium on Honda Civic and already warned the manufacturer to enhance production to overcome the supply-demand gap issue,&#8221; Tareen said. He said that the ministry had also asked manufacturer of Suzuki car to increase its production and added that the company has started working on it.
He said that Suzuki had acquired more land for capacity enhancement and was likely to increase its production from 150,000 to 200,000 units in next year. After expansion, Suzuki would be producing up to 300,000 units, he maintained.
Pakistani car manufacturers wanted continuation of deletion programme but due to enforcement of WTO, the government had recently introduced a tariff-based system.
To a question, he said the government would take action against those car manufacturers, which failed to increase production of cars as per targets given by the government. 
About the National Industrial Park in Karachi, Jahangir said that it would be replica of Sunder Industrial Estate Lahore, which would be set up at downstream area of Pakistan Steels and would be managed through public-private partnership. Sunder Industrial Estate is the success story of Punjab which we took to Karachi and would also replicate in other cities of the country. The Park would be completed in 18 months of time over an area of 1000 acres and developed plots would be provided at a cost of Rs 7 million, which also include land cost of Rs 1.5 million. He categorically said the allottees would not be allowed speculation and allotment of plots would be canceled immediately.
Responding to a question, he said the land on downstream to Pakistan Steels would not be acquired for the Park and we would ensure availability of land to the extent of Pakistan Steel expansion up to 5 million tonnes. He hoped that the Pakistan Steels could be privatized through initial public offering (IPO). 

The Nation.
http://www.nation.com.pk/daily/feb-2007/4/bnews8.php.


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## Janbaz

*Barclays and Malaysian 'May' on course to buy some Pakistani banks *

IQBAL MIRZA 
KARACHI (February 03 2007): Several foreign banks, including Barclays and May Bank of Malaysia, are discussing joint venture and buy-out arrangements with some Pakistani banks. According to sources, of late some leading foreign banks have been showing interest in buying over or taking majority stakes in Pakistani banks due to heavy profitability in the banking sector.

The lead banks, like Muslim Commercial Bank (MCB), National Bank of Pakistan (NBP), and Allied Bank of Pakistan (ABL) have shown high growth, especially NBP and MCB, and the 'Earning Per Share' (EPS) of these two banks is expected to be around Rs 30 per share.

The largest sale, involving more than $400 million, of Pakistan Industrial Credit & Investment Corporation (Picic) and Picic Commercial Bank by Temasek group of Singapore, it is reported, is going smoothly. It is learnt that a data room has been established by Picic and Picic Commercial Bank at a neutral place, and KPMG, a leading chartered accountants firm, is co-ordinating due diligence. AG Ferguson & Co is also involved in due diligence.

Picic is the largest conglomerate of financial institutions in Pakistan, having a commercial bank, a huge asset management company, and an insurance company. It is expected that due diligence will be completed in four to six weeks' time and change of hands may take place in March, 2007. It is also understood that the price agreed between Temasek group and the sponsors is around Rs 85 per share.

Earlier it was reported that Shaukat Tareen, an experienced banker, had finalised a deal to take over more than 51 percent shares of MyBank from its sponsors. But it seems that no final arrangement has been reached and no final agreement has been accomplished, nor any due diligence has started. According to market reports, the deal is yet to go through.

Similarly, almost eight months back, an agreement was reached between ABN Amro and Prime Bank, but it is now learnt that the deal has not yet been finalised in spite of the fact that due diligence has been carried out. Difference of opinion is reported to have emerged between the sellers and buyers.

Market sources have further confirmed that some huge banks are also finalising joint venture arrangements with Pakistani banks, and many groups have shown interest in taking over commercial banks, investment banks and other financial institutions of international repute operating in Pakistan.

Business Recorder.
http://www.brecorder.com/index.php?id=524694&currPageNo=1&query=&search=&term=&supDate=.


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## Janbaz

*Pakistan suffers $600m deficit *

HINA ALI
KARACHI - Pakistan&#8217;s balance of trade with Europe witnessed the negative trend in the first five months of current fiscal year. 
The imports from Europe amounted to $ 2.470 billion during the first five months of current fiscal year against the exports of $ 1.865 billion during the same period of time.
Europe has been the Pakistan&#8217;s largest trading partner over the years. During the period of July to Dec 2006 the overall volume of trade between Europe and Pakistan stood at $ 4.335 billion. Trade with Pakistan is clearly in Europe&#8217;s favour. 
Pakistan&#8217;s import bill of European countries has disappointingly mounted over the course of the last three fiscal years from $ 2.991 billion in 2003-04 to $ 4.447 billion in 2004-05 and up to $ 6.137 billion during 2005-06. Exports witnessed a slow rise from $ 3.716 billion in 2003-04 to $ 4.306 billion in 2004-05 and $ 4.324 billion in 2005-06.
Pakistan holds good prospects for European markets but due to non-compliance with sustainable business practices for example; environment friendly policies and quality packaging have turned The European buyers to the other potential markets.
Pakistan&#8217;s export to Europe have shown a wavy trend over the period during Jul-Dec 2006 $ 350.311 million in July, $ 393.703 in August, $ 381.444 million in Sep, $ 374.618 in Oct and $ 364.959 million in the month of November. The same trend has also been seen in imports from Europe over the said period of time $ 564.048 million in July, $ 417.938 million in August, $ 547.850 million in Sep, $ 408.942 million in Oct and $ 531.548 in Nov 2006.
Pakistan&#8217;s trade with the Europe is mainly composed of textiles, which account for over 50 per cent of the total Pakistani exports to the Europe, followed by leather products. 

The Nation.
http://www.nation.com.pk/daily/feb-2007/4/bnews1.php


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## Janbaz

*PTA to establish 400 telecentres in rural areas *

ISLAMABAD (February 03 2007): Pakistan Telecommunication Authority (PTA) has launched a telecenter project to provide modern telecommunications and Internet facilities in rural and far-off areas.

Under the project titled 'Rabta Ghar,' 400 telecenters would be established in the first phase for which the equipment worth Rs 50,000 each would be provided free of cost. Applications have been invited from eligible candidates.

These telecenters will be provided to those individuals who are unemployed with at least intermediate qualification. They will arrange a shop or room of the size of 10x12 ft (minimum). Females of rural areas fulfilling the criteria may also apply.

According to PTA here on Friday, individuals from those villages and union councils will be considered for "Rabta Ghar" where the population is 4,000 to 10,000 and no public telephone or net cafe facility in the radius of 5 km is available.

In case of Balochistan, applications can also be forwarded at Tehsil level. If more than one application is received from an area, the most suitable applicant will be selected.

In the first phase of the project, PTA with the support of telecom operators, will establish 400 "Rabta Ghar" all over the country. Telecom operators have pledged their support to PTA for setting up these "Rabta Ghar" including PTCL (100), Mobilink (100), Ufone (50), Instaphone (15), Intel (10), Worldcall (Payphones in all Rabta Markaz) while PTA will be sponsoring 125 "Rabta Ghar" bringing the total to 400.

PTA has also arranged free delivery, installation and training of the "Rabta Ghar" equipment on the premises/location of the selected individuals by Intel through its Genuine Intel Dealers (GIDs). PTA has prepared training CD/manual for the selected "Rabta Ghar" owners and the GIDs will provide the basic necessary training to them.

Applications can be submitted on the prescribed application forms through mail before February 15 to Deputy Director (Rural Cell), PTA H/Qs Building, F-5/1, Islamabad.

PTA's Zonal Offices will verify the details provided in the application forms and after proper verification the list of selected individuals will be displayed on PTA's website. In addition, PTA Zonal Office will notify the selected individuals. Further information can be obtained from Telephone Nos. PH: 051-9225329-31 Ext: 147 or email address: rabtaghar@pta.gov.pk.

It may be added that a "Rabta Ghar" (Telecenter) is a small business set up that provides PCO, Internet, Fax, Printing and Scanning services to small communities. A "Rabta Ghar" owner can earn approximately Rs 5,000 per month.

Business Recorder.
http://www.brecorder.com/index.php?id=524811&currPageNo=1&query=&search=&term=&supDate=


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## Janbaz

*Rs 420 million allocated for three gas supply projects *

KASUR (February 04 2007): Punjab chief minister has approved an initial grant of Rs 30 million for the Tehsil Complex building in Kot Radha Kishan, work on which will commence within a few days, while a Rs 420 million gas supply project is in the pipeline.

This was informed by National Assembly's standing committee for Railways Chairman Tufail Ahmed while addressing a meeting of local Nazims at Kot Radha Kishan. He said a special package of Rs 420 million had also been approved for provision of Sui gas to Kot Radha Kishan, Raja Jang and Mustafa Abad areas, with work on the Raja Jang project to commence in March.

"Local governments are playing a pivotal role in planning and executing development projects according to the requirements of the people and the area," he said, adding that positive government policies had ensured national uplift at the grassroots level and a better life to the masses everywhere.

Business Recorder.
http://www.brecorder.com/index.php?id=525180&currPageNo=1&query=&search=&term=&supDate=


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## Janbaz

*US investors exploring textile sector*

By Sabihuddin Ghausi

KARACHI, Feb 3: Rolling in liquidity and confident of unlimited demand growth in their domestic market, a few American companies are exploring investment opportunities in Pakistani textile business through acquisition and joint ventures.

The names of at least two companies are being taken that are reported to have negotiated in Karachi, Faisalabad and Lahore.

West Point Stevens and Danz River are the two USA-based textile sourcing companies that are reported to have entered into negotiations with a few textile companies in Lahore, Karachi and Faisalabad to explore acquisition possibilities and joint ventures. These two companies are involved in multi-billion dollars textile business and are exploring investment opportunities in India, China and Vietnam also.

A Karachi-based textile group &#8212; said to be one of the six biggest in the country that has a big stake in cement too &#8212; was initially targeted by the American companies and local business circles even mentioned a sum of $200 million for the deal.

However, one of the co-owners of the same Karachi company denied any such possibilities while maintaining that &#8220;we want to expand and diversify our business,&#8221; ruling out any indication of company changing hands.

Business circles, however, do not give any weight to this denial and insist that negotiations are still on and &#8220;for entirely business considerations, the Pakistani company in Karachi wants to keep a cover till something is finalised.&#8221;

While confirming the interests being shown by the American companies in acquisition and joint venture arrangements with Pakistan&#8217;s textile business, an official in the government said that under the changed rules the present government had allowed foreign investors 100 per cent acquisition of any business, including textile and full repatriation of profit.

&#8220;Not only this, the military led government is most obliging to business and more particularly to the foreign investors in Pakistan to give them all freedom of profit making,&#8221; remarked an independent economist and consultant, who said never before in last 60 years the profiteers, speculators and big business were given such taxes relief and price fixation liberties as by the present one.

Textile business sources say that quite a few American and European companies have closed down their business in their home countries and shifted their units to India and China. &#8220;Pakistan offers much more tempting environment for business than India,&#8221; remarked a senior official and made it clear that any negotiations between the European or American companies with Pakistan textile businesses enjoys full government patronage.

Senior textile businessmen recall that way back in decade of eighties when Suzuki set up a joint venture automobile project in Karachi, the Japanese investors then showed interest to set up joint venture in readymade garments in Lahore with a well known local business group. &#8220;But that group did not have the capacity or vision for such a project,&#8221; he said while pointing that the Japanese returned disappointed.

Since eighties, Japanese entered into joint venture arrangements also set up textile manufacturing units in China and now China is the biggest source of supply of high value textile products to Japan.

&#8220;Acquisition or joint venture with American or European companies will give access to Pakistani business to markets in USA and Europe where textile business volume is expected to touch $800 billion in next few years,&#8221; the official said.

&#8220;Textile business grammar has changed a lot after 2005,&#8221; a local garment exporter said adding, &#8220;The buyers in USA and Europe now want delivery of textile products at their doorsteps and on time. For this you have to have warehousing and outlet facilities in USA and Europe.

In last five years or so, the Indian textile business is going in a big way to enter into joint venture arrangements for setting up warehousing and outlet facilities in USA and Europe.

Pakistan is also taking up specific textile projects on joint venture arrangements on a rather bigger scale with China in next few weeks when Prime Minister Shaukat Aziz visits Beijing with a big delegation of businessmen.

On Saturday, Federal Textile Secretary Mr Masood Alam Rizvi held a meeting in Karachi with about two dozen leaders of textile and textile related businesses to discuss the projects that can be explored with Chinese investors either late March or early April when the prime minister visits Beijing.

The areas of collaboration in textiles are being identified under a five-year bilateral economic cooperation agreement signed between China and Pakistan when Chinese President last visited Pakistan.

The agreement covers a large area for mutual cooperation in which China has committed to provide investment, know how, production and marketing techniques, technical assistance, training and education in many areas, including textiles.

&#8220;Recognising Pakistan&#8217;s need for improving cotton growing and processing technology, developing chemical fibre industry, upgrading textile equipment and technology, boosting the international competitiveness of its products, China is willing to intensify cooperation with Pakistan in the above mentioned areas and to encourage business investment and technology collaboration in this regard,&#8221; reads one of the articles of the agreement.

&#8220;China will assist Pakistan in the whole chain of textile production from spinning to finished textile goods,&#8221; declares the agreement, which the officials in Saturday meeting said was a challenge to Pakistan textile business to demonstrate their capacity for acquiring skills and technology now being offered to them generously rather than begging for loan concessions and financial incentives.

Sources said that the meeting identified areas of textile machinery fabrication, dyes chemicals, textile technical education, polyester fibre, development of infra structure and many other related areas for drawing up specific projects that would be taken up for discussion with Chinese investors.

The Dawn.
http://www.dawn.com/2007/02/04/ebr1.htm


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## Neo

*Over 26 mega projects completed in one year: Nazim *

KARACHI (February 04 2007): City Nazim Syed Mustafa Kamal has said the city government in the last one year has not only completed six mega projects of signal-free corridor but also over 26 other mega projects have been finished/underway which is a record in the history of Pakistan. We had done all tasks to complete these projects from its planning to provide resources.

Mustafa Kamal said this while chairing a high-level meeting at Karachi Water and Sewerage Board office at Karsaz on Saturday. The meeting was held to discuss the ongoing and completed projects by city government during the last one year and start more projects in future. The meeting was also attended by Additional Vice Chairmen of KWSB Imamuddin Shahzad, DCO Karachi Fazlur Rehman, EDO Revenue Saleh Ahmed Farooqi, EDO Master Plan Iftikhar Qaimkhani, heads of different departments of the city government besides water board.

Kamal said "We had planned thoroughly and started different mega projects on rapid pace to meet the needs of citizens' demands which they face in 2030." He pointed out that when they started work on signal-free corridor, some of the people had objected and said the city government had dug up the entire city but this was initiated to complete all projects on this corridor simultaneously. "If we had not started these projects at the same time then the corridor could be completed in 10 years not in 10 months," he said.

He said it is history-making effort in Pakistan that any district government had completed over two dozens mega projects within record one-year time period to spend billion of rupees. Elaborating the development projects, Kamal said the city government had completed six mega projects on signal-free corridor. Work is in full swing to complete road 5000 in New Karachi, Pak Colony road, Shahrah-e-Orangi, road 8000 in Koragni, Abul Ispahani road, road 12,000 in Korangi, New M.A. Jinnah Road, ALtaf Hussain Brelvi road, Shahrah-e-Pakistan, Garden road, Business Recorder road, Sadiq Wahab road Lyari, Shahrah-e-Qazafi Orangi.

He added the lingering issue of water and sewerage in Jaffer Tayyar Society for over 30 years, construction and provision of Gulistan-e-Johar, new pipeline to supply 6 million gallons in Lyari, construction of five stadiums on international standard, Sohrab Goth bridge, Malir bridge, storm water drain in Clifton and in Bath Island, completion of Bagh-e-Ibn-e-Qasim, improvement of Abbasi Saheed Hospital, Trauma Centre, Karachi Institute of Heart Diseases and Spencer's Eye Hospital.

He also added the work to install infrastructure in all four industrial zones of Karachi was also started during this period. He sai it is our vision to ease the life of common man in the city to provide all basic civic facilities as the ongoing and completed projects will bring more benefits and change the life style of every citizen in the city.

http://www.brecorder.com/index.php?id=525164&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Chamalang coalfield mining to start from February 8 *

QUETTA (February 04 2007): Mining in one of the largest coalfields of Asia, Chamalang coalfield, will start from February 8. All arrangements have been finalised in this connection. The security of the coalfield has been handed over to 750 jawans of newly raised Marri Force.

This was informed at a meeting of Chamalang Coalfield Action and Implementation Committee held here on Saturday with its chairman Brigadier Nazeer Ahmed in the chair. The sixty kilometre long and seven kilometre wide coal-field, which is situated 45 kilometre north of Kohlu in Loralai district and was discovered in 1973, *would produce 6,000 tons of coal daily with an annual revenue generation of Rs 30 billion.*

The meeting was further informed that Loralai-Chamalang road has been cleared of landmines and the security situation is now satisfactory. Chamalang would be linked with Kingri and Mekhtar telephone exchanges for which arrangements have been made on emergency basis. A bank will also be opened in the area.

For this purpose National Bank and Askari Bank authorities will be contacted, it added. It was also informed that the Chamalang technical committee has approved Rs 1.319 billion project under which a labour colony, a hospital and a school would be established in Chamalang.

The survey in this regard would begin on February 6 while a project officer would also be appointed to implement the project. The meeting was told that Balochistan government has also approved installation of four tube wells in the area to ensure supply of clean drinking water to the area people.

Later, talking to newsmen, Brigadier Nazeer said four committees have been formed to run the affairs of Chamalang coalfield project. These include technical, action and implementation, finance and pay and collection committees, he added. He said the government has provided uniforms to 1,200 personnel of Marri Force free of cost. The elders of Marri tribe would also be included into the force with the consent of Marri and Luni tribes who would take over administration of the force on payment of regular salaries, he added.

"Two tents have been given to every platoon of the Marri Force while the treatment facilities will initially be provided to them by Pakistan Army which will be later given by the provincial government," he said. A police or levies station would also be set up in the area to maintain peace, he said, and added 60 Marri youths would be provided technical training in EME Centre Quetta with a monthly stipend of Rs 1000.

"These youths will either be given jobs in various departments or loans to start their own business after completion of training," Brigadier Nazeer said and added that the poor youths of Luni and Nasir tribes would also be included in this training programme.

http://www.brecorder.com/index.php?id=525125&currPageNo=1&query=&search=&term=&supDate=


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## Neo

February 04, 2007
*Formal accord on Gwadar Port on 6th*

By Shamim-ur-Rahman

KARACHI, Feb 3: A formal agreement for handing over operating rights of the Gwadar Port to the Port of Singapore Authority, envisaging a 40-year tax relief, will be signed on Tuesday in the presence of Prime Minister Shaukat Aziz.

The port is expected to be inaugurated by President Pervez Musharraf some times in March.

This was stated by the federal minister for Ports and Shipping Babar Ghauri in a news conference at the Karachi Press Club on Saturday.

Dispelling all criticism of concessions to the PSA, he said that the process was transparent and operators from private sectors were involved in the negotiations.

The federal minister said that Pakistan needs to develop third and even fourth port to handle future trade which, he said, was growing at over 10 per cent per annum.

He said the KPT and the PQA had their own limitations of draught and availability of port land.

Three companies have been set by the operators. One of them would deal with cargo handling while the second would be responsible for infrastructure development, and the third will be responsible for developing free zone.

Under the agreement, government of Pakistan would be entitled to have nine per cent of the revenue from the first two companies and 15 per cent from the third. Operators were expected to invest $3 billion annually in the project that would help Pakistan earn up to $4 billion through operations.

Under the agreement operators would have full authority, but in case of national security, the government would be able to use the facilities.

The federal minister said that Gwadar Port would serve as an international Hub, and claimed that contrary to 40-year concession given to the operators by the present government, former rulers had envisaged identical concessions spread over 50 years. Senator Ghouri said that apprehensions were wrong that due to Gwadar Port, Port Qasim and Karachi Port would be affected.

Gwadar, he said, would serve as centre for transshipment where mother ships would unload cargo which would then be shipped to other ports by feeder ships.

Justifying concessions to operators, the minister said that Gwadar would be competing with Dubai port which is a tax- and-duty-free port.

But the minister did not explain as to how investors would choose that destination for transshipment and setting up industries in the free zone when there was no infrastructure Ã¢â¬â water, electricity, roads and adequate settlements for living.The minister was confident that the port would provide large-scale employment, and value of land would further increase, and there would be other income generating activities for local people.

When asked that why Balochistan government was deprived of revenue as local and municipal taxes were also revoked, Federal Shipping Minister said that the decision of exemption was taken by the Balochistan government itself and announced by the chief minister of Balochistan. The federal government, he said, had nothing to do with this decision.

http://www.dawn.com/2007/02/04/ebr4.htm


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## Neo

Sunday, February 04, 2007 

*Gwadar revenue to be shared with Balochistan: Babar*

* President Musharraf to inaugurate Gwadar port on March 22 or 24

KARACHI: Shipping and Ports Minister Babar Ghouri has said that Gwadar Port which has been leased to a Singapore firm would earn a handsome revenue of $40 billion, which would be shared with the Province of Balochistan.

While addressing a press conference at the Karachi press club on Saturday, he informed that the inaugural for the 40-year lease would be signed on March 22 by PM Shaukat Aziz, and Balochistan would be given due share, talks for which are underway between the federal and provincial government.

He said that government efforts are specifically aimed at reducing the poverty in the Province, and announced that all employments of grades 1 to 16 would belong to thje locals, who would also be given a sizeable quota from within Upper grade officers.

He said that Gwadar Project was not being opposed by general provincial masses, but rather by some miscreant elements, and also claimed that despite some corrigible reservations, "nationalist elements" were also quite in favor of the project.

Replying to a question he said that Gwadar Port would be used solely for commercial and trade activities, however in case of any untoward emergency it can be and would be used for security purposes as well.

He denied that the construction of the Port would harm other ports of the country, since the port stands to compete with Dubai port. While replying in reference to another question about the port regarding fraudulent registration of estates he said that, he has no knowledge whatsoever about the issue, since it is a provincial issue and could be answered by the provincial government.

Pakistan plans in March to inaugurate a new port, built with Chinese help and to be operated by Singapore's PSA International, at Gwadar.

Pakistan has grand plans to turn the port into a major energy and container transport hub to open up trade routes with Central Asia. 

"President Pervez Musharraf will inaugurate Gwadar port on March 22 or 24," Babar Khan Ghauri, Minister for Ports and Shipping, told a news conference on Saturday. 

He said a formal agreement with PSA International, owned by the Singapore government investment holding Temasek, for handling port operations will be signed on Tuesday. 

In December, a consortium led by PSA won the contract to operate the deep-sea port on the Arabian Sea, about 450km (280 miles) west of the city of Karachi and about 70km (45 miles) east of the Iranian border. 

Under the agreement, PSA will run the port for 40 years, during which time it will be exempted from corporate tax, Ghauri said. 

"Also, no duty will be imposed on any equipment and machinery imported to develop the port during this period," he said. 

PSA has envisaged investing $3 billion in the project, of which $550 million would be invested in the first five years. Pakistan's AKD Group is part of the Singaporean consortium. 

http://www.dailytimes.com.pk/default...4-2-2007_pg5_1


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## Neo

Sunday, February 04, 2007 

*External debt fell to 111.7% from 300% this fiscal: PM*

ISLAMABAD: Prime Minister Shaukat Aziz said Friday that the external debt and liabilities as percentage of foreign exchange earnings have registered a sharp and remarkable decline from around 300 percent in 1999-2000 to 111.7 percent by the end of the first quarter of the current fiscal year (2006-07).

The government believes in the freedom of expression and free press, with all respects for difference of opinion and constructive criticism. "We are trying to work for a better Pakistan, and the world recognises that Pakistan has moved a long distance in the last several years," he said while speaking at the launching ceremony of a book titled "Pakistan-Sovereignty Lost" here at the PM House.

The PM terming the book written by Shahid ur Rehman, a healthy activity, however maintained that it contains some inaccuracies and misinterpretations about the country's debt profile as well as its management.

He said, the country's economic numbers are available at the concerned offices, as there is nothing secret unlike the past when there has been a black box approach.

Giving the highlights of the country's debt profile, the PM said that Pakistan's total foreign debt has declined in absolute and relative terms, with coming down to $37.3 billion by September 2006 from $38.9 billion in 1999.

He further informed that Pakistan's external debt and liabilities as percentage of GDP have declined from 51.7 percent in 1999-2000 to 26.3 percent by end September 2006.

The external debt and liabilities as percentage of foreign exchange earnings have registered a sharp and remarkable decline from around 300 percent in 1999-2000 to 111.7 percent by the end of first quarter of current fiscal year (2006-07), the PM added.

Similarly, he said, the country's public debt which was over 100 percent of GDP in 1999 has declined to around 50 percent by September 2006. 

The PM said, these facts are also recognised, endorsed and monitored by the international financial institutions and multilateral agencies.

He maintained that the publication of economic data by Pakistan was in line with the international practices, as "we deal in the international market and with multilateral agencies."

The PM also referred to the enactment of a historic Debt Limitation and Fiscal Responsibility Law by the present government as well as getting rid of the IMF as remarkable achievements and said these were meant to strengthen the country's sovereignty and integrity. "Debt must be within your capacity to pay", he said and added the new law would enable the country to remain within its fiscal limits and only the parliament has the authority to amend it. 

The PM, however, added when the economies grow their borrowing capacity also increases. He also clarified that any direct borrowing by provinces is done only after approval of the federal government. He said that owing to the government's reforms measures the country has achieved macro-economic stability during the last seven years, with all economic indicators moving towards positive direction. The PM said that Pakistan has become an investment-friendly destination, with Foreign Direct Investment (FDI) pouring in from across the world including from US, EU, Middle East and Far East countries.

The PM maintained that the country's sovereignty was very robust, with the government trying to build a better Pakistan, which is strong and stable with peace, progress and prosperity.

Earlier, the writer of book, Shahid ur Rehman presented a copy of the book to the PM and in his remarks on the occasion thanked him for his gesture of presiding over the launching ceremony.

Minister for Information & Broadcasting, Muhammad Ali Durrani and Special Assistant to the Prime Minister, Commander (Retd) Khalil-ur-Rehman were also present on the occasion.

http://www.dailytimes.com.pk/default.asp?page=2007\02\04\story_4-2-2007_pg5_2


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## Neo

Sunday, February 04, 2007 

*Overcoming power shortage: Pakistan needs to import 3-4 million tonnes of coal*

By Fida Hussain

ISLAMABAD: Pakistan will require to import three to four million tonnes coal for generating over 1000 MW thermal power to bridge the gap between electricity demand and supply, a senior government official told Daily Times.

This will increase PakistanÃ¢â¬â¢s dependence on imported energy as the government has failed to develop its coal reserves for electricity generation, the official said. Ã¢â¬ÅIf the government had developed its coal reserves, the country would need not to import coal for power generation,Ã¢â¬Â the official said. Pakistani coal of around five to six million tons would be enough to generate the required power, he added.

According to initial estimates, for thermal power generation, which has already been planned by Private Power Infrastructure Board (PPIB) in collaboration with private sector, the country would need around three to four million tons of coal, the official said.

He said that government has already faced a huge surge of 1,536,000 metric tons (MT) in furnace oil import in the first six months of the current fiscal year due to deteriorating situation of water availability in reservoirs.

The furnace oil import has increased by 436 percent in quantity and 428 percent in value in the first six months of the current fiscal. Besides this, the overall import of petroleum products has increased by 16 percent in value and 10 percent in quantity in the first six months of 2006-07. The import bill valued at 3,447 million US dollars in the review period of the current fiscal against $2,968 million in the same period of the last fiscal.

Water releases have actually increased during the current fiscal, but WAPDA could not take any benefit due to lack of coordination between the Indus River System Authority (IRSA) and provinces. The official said that WAPDA should have been informed so that it could have generated electricity from enhanced water releases from reservoirs by timely operating power plants.

The Planning and Develop-ment (P&D) Division, which initially opposed the coal import, agreed to one of major demands of Water and Power Ministry and Water and Power Development Authority (WAPDA) of importing coal for exclusive use of electricity generation.

It is regrettable that Pakistan is using only two percent of the existing coal reserves. The country would have been better positioned after development of Thar coal to generate around 20,000 megawatts for almost 40 years. However, the coal mining in Thar could not achieve required a phased investment of $4 billion, the official added.

http://www.dailytimes.com.pk/default.asp?page=2007\02\04\story_4-2-2007_pg5_4


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## Neo

February 04, 2007 
*Pakistan asks US to share ROZs draft law*

ISLAMABAD, Feb 3: Pakistan has expressed the hope that Washington will share draft legislation with Islamabad before placing it in the US Congress for approval to establish Reconstruction Opportunity Zones (ROZs) in the economically deprived areas on both sides of Pakistan-Afghan border.

A senior official told Dawn on Saturday that the USTR officials in the last meeting with Pakistani counterparts had agreed that the draft law will be placed before US Congress in February 2007 for legislation.

The law will indicate exact locations of the ROZs mostly to be located in the tribal areas and products to be manufactured there for duty free export to US market, the official added.

Ã¢â¬ÅWe hope that Washington will share with us the draft legislation formally before it was placed in the US Congress,Ã¢â¬Â a senior official in the commerce ministry n condition of anonymity told Dawn.

He said that all details about the ROZs had already been finalised by officials of the USTR in consultation with a private firm hired for the purpose.

To a question the official said that the current proposed amendment in the US Congress will have no impact on trade relations or the establishment of ROZs.

US President George W. Bush had accepted the Pakistani proposal of ROZs in his last visit to Pakistan. Mr Bush had announced that the trade zones established in the remote areas (tribal and border) would get duty free access on goods exported to the US market.

http://www.dawn.com/2007/02/04/ebr2.htm


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## Owais

*No blanket sales tax relief for Pak-China investment company *

ISLAMABAD (February 05 2007): The Central Board of Revenue (CBR) has expressed inability to grant blanket exemption of sales tax on imports being made by Pak-China Joint Investment Company for promotion of joint ventures between the two countries. Sources told Business Recorder on Sunday that CBR had examined the draft, of Joint Venture Pak-China Agreement, for exemption of duties and taxes.

Under the proposed agreement, the only issue relating to sales tax exemption has been specified on import of equipment, materials and means of transport, imported to meet the requirement of the JV company. The import of plant, machinery and equipment has been zero-rated for sales tax purposes.

However, the scope of exemption, laid down in the agreement, is vague and no authority has been specified to determine the requirement of JV company. Therefore, the CBR would not support giving total exemption of sales tax on imports made by the JV company to meet its requirements, sources said.

Pakistan and China are set to enter into implementation phase of the first Five-Year Trade and Economic Cooperation Action Plan. The implementation phase includes cooperation in areas of Pak economy, establishment of Pak-China Joint Investment Company, upgradation of Pak-China Avoidance of Double Taxation Agreement, incentive package for Chinese companies to invest in petroleum exploration and production sector and re-positioning of the over-capacity of Chinese petroleum services industry in Gwadar Port Energy Zone.

The five-year trade and economic cooperation plan is in furtherance of the Framework Agreement on Expanding and Deepening Bilateral Economic and Trade Cooperation between China and Pakistan which was signed on February 20, 2006 during President Musharraf's visit to China. The framework agreement aims to create a favourable environment for Chinese enterprises in major areas of Pakistan's economy.

These are agriculture, plant protection, breeding, fisheries and processing. On the manufacturing side are light industry textile, electromechanical projects, infrastructure and public engineering construction, exploring mineral resources, cooperation in the energy sector, information technology and telecommunication sector, development of tourism, banking, insurance and transportation and low-cost housing and other areas of interest. For financing Chinese projects, Pak-China Joint Investment Company, a federation or a consortium, would be established, sources added.


http://brecorder.com/index.php?id=525376&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*China and US eye Pakistan's textile industry *

KARACHI (February 05 2007): The Pakistan Cotton Ginners' Association (PCGA) released its fortnightly cotton arrival and disposal figures up to 31st January, 07 on last Saturday. According to this report, total arrivals are reported at 11,928,506 local weight bales, total sales (mills and exporters) is 10,104,968 bales and total unsold stock is 1,739,607 bales.

Now, it appears quite certain that total crop would cross the level of 12.5 million bales and finally may finish closer to the level of 13.0 million bales.

Some of the factories in lower Sindh are still operating and receiving truckloads of seed-cotton at rates around Rs 900 per 40 Kg ex-gin. Thus, these ginning factories are making fabulous profits, one insider said. The ginners of Southern Punjab and Upper Sindh are holding larger stocks of unsold cotton but do not seem worried. The Spinner- buyers are forced to pay the ginner's asking price around Rs 2,600 - 2.625 for better quality cotton.

Some sales of lower grade have been reported at rates lower than Rs 2,300. Lower grade cotton may be under selling pressure and its prices may go below the present level. Some ginners are upholding the sales of better quality cotton and want to dispose of lower grade cotton first. The cost of carrying charges is very high up to Rs 50 per maund per month so it does not appear viable to carry lint cotton bales for months as the expected increase in lint price may hardly meet the extra carrying charges.

If the prices of lower grade cotton come down to the level of Rs 2,200 per maund, it may attract foreign buying. To meet the increasing local mill demand of lint cotton, some 2.5 million bales are likely to be imported during this season as so far about 1.6 - 1.8 million bales have already been booked from different sources especially from India, CIS and African countries. Some of the local mills have made direct connection with Indian exporters and have deputed their selectors for selection of lint cotton.

It appears that in the near future Indian cotton would largely be imported into Pakistan in view of advantage of suitability of cotton, low shipping cost, shorter shipment period and competitive price. Prominent cotton exporting houses of USA and India have established their office and warehouse to sell their cotton in China.

Some of the prominent retail chain stores in US are planning to source their requirement of textile and apparel goods from Pakistan. As such, some of the groups are in the process of negotiations with the local textile groups for entering into a joint-venture business or to establish their own industry for manufacturing textile and apparel goods required by their chain stores.

Apparently, it is good for the economy of Pakistan that foreign investment would come into Pakistan but if the investment is made on larger scale then our textile industry would be high-jacked by multinational companies and keep our textile entrepreneurs on wages instead of profit as is in Bangladesh.

The Western and American countries fear that in the long run, their retail market would mainly dependent on textile and apparel supplies from countries like China, India, Pakistan, Bangladesh, Vietnam, and Sri Lanka all falling in Asian continent. Taking advantage of the free-trade and to counter the fears they are planning to tap our resources to the benefit of their people. The multinational retail stores and companies may manage to avail better facilities of infrastructure. These MNSs would bring their own funds at very low interest rates and may install their own power plants to make the business more competitive and profitable than that of the local manufacturers.

Of course, foreign companies are making huge investments through buying important industries, financial institutions and other business concerns in Pakistan but all profit would be transferred to their respective countries while local entrepreneurs re-invest the profit in Pakistan. Beside, the MNCs / MNSs would be at liberty to take their investment back to their countries if they do not find business conditions conducive. Thus all that glitters is not gold. The concerned authorities should keep close watch on the situation and take only such decisions, which serve the interests of Pakistan and not those of others.

Pakistan is a single industry country ie, the main industry is textile which earns up to 66 percent of the total annual foreign exchange earnings. Pakistan is more independent economically than politically and we keep it intact. When Pakistan's Prime Minister visited China a couple of months back, he had signed with the Chinese Prime Minister a five-year bilateral economic cooperation agreement identifying textile as area of collaboration between the two countries.

China is interested in joint venture business investment and technology collaboration in areas of cotton growing and processing, development of chemical fibre industry, upgrading textile equipments and technology, boosting market competitiveness internationally in textile products. China is the biggest player in cotton textile industries and is the largest importer of raw cotton and we cannot export any cotton to China as we are already short by some 2.5 million bales annually.

What we need is the assistance and cooperation of China and USA in improving our efficiency and competitiveness in textile sector for staying competitive in the world market and not over-taking our textile industry for own benefits. The next few years are very crucial for Pakistan's politics and economy as well.


http://brecorder.com/index.php?id=525402&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*7,000 small industrial units planned *

KASUR (February 05 2007): The Punjab government will establish 7,000 small industrial units in the province, which would help overcome unemployment and poverty problem. Provincial Minister for Public Health Engineering, Sardar Hassan Akhtar Moakal said this while addressing a function here on Sunday.

He said the government had approved a national internship programme under which the unemployed youth below 25 years of age would get stipend of Rs 10,000 per month.

The provision of employment to youth is a part of the agenda of President General Pervez Musharraf and Prime Minister Shaukat Aziz, he added.

He said the provision of clean potable water was priority of the government and work on water supply schemes worth Rs 539 million was in progress in 10 cities of the province.

http://brecorder.com/index.php?id=525419&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*SSGC crew installs 62-metre steel bridge for gas line *

HYDERABAD (February 05 2007): The installation of 62-metre long steel structure bridge for placing 42-inch gas pipeline at the site of Pakistan Steel sea water intake in the Bin Qasim industrial Area, currently in its final stage of completion, *is an incredible feat of engineering, unprecedented in the history of Pakistan's energy sector.*  

The pipeline, largest diameter gas pipeline ever commissioned in Pakistan, would eventually serve the Bin Qasim thermal power station and the Pakistan 'Mashal' LNG project in the proposed Bin Qasim Area, and qualifies to be one of the greatest achievements of Sui Southern Gas Company (SSGC).

SSGC Managing Director Munawar Baseer Ahmad, along with his senior management members visited the site to inspect the completion work of the steel bridge. Terming the project as "another feather in the cap of SSGC", he appreciated the efforts of the on-site engineers and construction crews for completing the work on fast track basis.

This single-span steel bridge, that weighs 113.1 tons, has a width of 2.75 metres and height of 4.87 metres. This very massive structure is supported on concrete piles of 30 inches diameter each, constructed for the 42-inch overhead pipeline crossing. The methodology involves placing fabricated supports, with the rollers fixed on floating platforms and piles, by using 'rolling & pulling' skills. All the rollers, floating platform with a carrying capacity of about 70 tons as well as other auxiliaries were designed and fabricated at SSGC workshops.

The highly experienced and devoted construction team of SSGC's P & C Department has achieved the milestone as per target, without procuring any outside assistance.

The construction of this bridge was started some four months back. It is similar to another one of SSGC's massive projects, the 30-inch dia overhead crossing at Indus River, near Jamshoro, on a vertical loop, with a clearance of 70 feet. The task was laborious, requiring tremendous amount of fabrication and welding in different stages and has only been possible due to the tenacity and professionalism of SSGC engineers and construction crews.

http://brecorder.com/index.php?id=525442&currPageNo=1&query=&search=&term=&supDate=


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## Neo

February 05, 2007 
*Funds for Neelum-Jhelum project*

By Khaleeq Kiani

ISLAMABAD, Feb 4: Pakistan is expected to finalise by early next month a $1.4 billion financing arrangement with China and Qatar to start construction of a much-delayed 969MW Neelum-Jhelum Hydropower Project in Azad Kashmir.

A project of Water and Power Development Authority (Wapda), the project has been in doldrums for six years and is considered crucial to secure Pakistan's priority rights over Neelum waters - a tributary of the river Jhelum - threatened by the Indian move to use its waters for power generation and diversion.

Prime Minister Shaukat Aziz told Dawn that his government had decided to construct the project in the public sector and he had issued instructions last week to make financing arrangements. "I have set a deadline of six weeks to finalise everything", he said.

His advisor on Finance Dr Salman Shah said that the government of Qatar had committed to invest $2-2.5 billion in Pakistan and there was an option to include Neelum-Jhelum project in their investment programme. "They can finance construction of the project". Secondly, the company selected by Wapda has also provided the option of financing the project through the Bank of China on buyer's credit.

Responding to a question if a financing offer for the project from the US-based YRM could also become part of the overall foreign funding, Mr Shah said the government of Pakistan could not confirm credibility and funding viability of the US firm. Also, credible sources like the Bank of China and Qatar government were better options. "We will finalise funding arrangement within four-weeks", he told Dawn on Sunday.

Responding to another question if the government would also issue bonds to raise funds for the project, he said if the financing programme (from the

China and Qatar) comes with the contract then there will be no need for bonds. However, there may be a need for bonds at a later stage if the project specific company was to be set up to run it.

An official at the private power and infrastructure board (PPIB) said the PMÃ¢â¬â¢s advisor on Finance would be holding a meeting of all the stakeholders in a couple of days to examine all options in detail. He said a $300 million credit line from the Bank of China has been lying unutilised for quite sometime and could also be considered for the same project.

The bidding for the construction of the project had been held seven months ago. Since then, the government has been contemplating arranging one billion dollars foreign exchange following Wapda's inability to secure the lowest bid with financing facility.

Wapda has been seeking about $600-800 million buyer's credit as part of the engineering, procurement and construction (EPC) contract for the construction of $1.4 billion project. The project has already been delayed by more than six years due to lack of public-sector allocations for the project. Several rounds of bidding have been held and cancelled for one reason or the other.

The project should have been started in 1999 as originally planned. It is estimated to take at least seven years for completion. Currently, officials of the Finance and Economic Affairs Division are evaluating terms and conditions of the Chinese and Qatari financing.

The mode of foreign financing was earlier changed by the government from supplier's credit to buyer's credit which would mean that Pakistan's sovereign guarantees would be provided for the loan. The supplier's credit project-financing is usually based on the credit guaranteed by the export credit guarantee agency of the offering country while buyer's credit project-financing by a sovereign guarantee issued by the recipient country.

A few months ago, Wapda received three bids for the construction of the project. The lowest $1.3 billion bid from a consortium of China Gezhouba Group of China and the CMEC China was recommended by Wapda to the federal government for approval.

The bid from a consortium of Vinci of France and the Frontier Works Organisation (FWO) that had offered to provide $800 million credit on soft terms was rejected on technical grounds because the FWO did not have relevant experience as lead contractor.The China International Water & Electric Corporation emerged as runner-up with a contract price of $1.8 billion to complete the project and also offered financing facility of $800 million but the bid money was too high.

Pakistan had stopped India about a year ago from completing a 22km tunnel that sought to construct a storage-cum-power project and divert Kishanganga (Neelum) waters to Wullar Lake in violation of the Indus Waters Treaty 1960. Later, India offered to alter its project design but Pakistan rejected that plan as well. Like the Chenab, Jhelum River of which Neelum is an integral part belongs to Pakistan under the 1960 treaty. Under the treaty, India cannot divert waters from Jhelum and Chenab rivers.

Under the treaty India could not change the flow of Jhelum River even for power generation that may affect any Pakistani power project. But if Islamabad fails to construct the project and there is no power project in Pakistan that could be affected on that particular river, India could divert the river for run-of-the river project but without any storage.

Under the treaty, Pakistan has exclusive rights to use water of western rivers - Indus, Jhelum and Chenab - while eastern rivers - Ravi, Sutlej and Beas - have been assigned to India.

http://www.dawn.com/2007/02/05/top6.htm


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## Neo

February 05, 2007 

*Flashlight on Pakistan*

By Afshan Subohi

THE people of Pakistan should brace themselves for a major spur in the economic activity in the years ahead. Private business should also shipshape to survive in a more challenging domestic environment as the international capital flexes muscles to enter and/or increase their stakes in Pakistan in a variety of sectors.

Even the record quantum of $3.5 billion foreign direct investment in the country over the first half of the current fiscal year look measly when judged against the interest shown by the overseas investors in the country during the past week in Davos.

Here 75 of 100 top companies participated at a gargantuan event of the annual meeting of the World Economic Forum that attracted more than 2,000 leaders drawn from across the world from business, politics, academia, the media and civil society.

During the course of the five days January 24-28, aside from formal and informal interaction at planned events a number of corporate heads of giant companies called on the leader and members of Pakistani delegation and divulged their plans to enter the country in a big way or increase their investments manifolds.

On their part the high powered Pakistani officials and delegation leader Prime Minister Shaukat Aziz projected the country as an attractive destination for the world investors looking eastward.

Unlike India, Latin America or currently Thailand which seemed to be selective in extending their support to the flow of international capital, the government of Pakistan scarcely hid its commitment to the liberal economic philosophy that advocates free cross border movement of capital.

In its effort to prove more liberal than the liberal philosophy, they bent backwards in order to accommodate demands of international investors. There are many examples where this attitude was demonstrated. Etisalat deal (PTCL privatization) merit a special mention here.

From the government side, it is argued that flexibility is required to attract funds roaming the world in search of the right investment options. Examples of India and China with more cautious and calculated approach is presented by the critics who feel that the government should negotiate from a position of strength with intending overseas investors confident of rich dividends that the country has the potential to offer.

There is no denying the fact that international companies bring with them modern corporate culture necessary to operate in increasingly globalised world. In countries where foreign investors are encouraged to transfer technology in weaker areas of the native economy, it most certainly has played a very vital role in transforming the work environment and development of both tangible and intangible assets. China is a case in point.

The confidence over the role of foreign investment especially in capital market as a dependable source for development, however, was shaken in mid 90s when footloose foreign capital suddenly moved out of Far East and Asian tigers were left gasping to fend for themselves. It took affected countries about a decade to re-emerge. So a word of caution is not so much out of place in an environment where the government is keen to woo the international capital.

The question is: How much the people, local industry and services sector stand to gain from increased foreign investment? It is too early to comment on that. Much will depend on the quality and quantity of investment, its correlations with existing players and its forward and backward linkages in the economy.

But one thing is for sure that in the absence of correction required to check lopsidedness in the economy growing size will not rectify the inherent structural flaws. The economy is so structured that it rewards the privileged and discriminates against the vulnerable. Besides, negligence of certain high potential sectors such as agro-based industry, shipping, mining, etc. for a variety of reasons has led to waste of countryÃ¢â¬â¢s precious resources.

With increased foreign investment, the pie will grow larger but will it also lead to increased share to peopleÃ¢â¬â¢s frustration of not being able to share under the current arrangement is hard to tell. A more in-depth study of sectors where investment is coming in and terms and conditions offered to investors is required to make a credible comment on the issue.

In the words of Prime Minister Shaukat Aziz,the world saw Pakistani leadership in action at WEF. All crisp and smart Prime MinisterÃ¢â¬â¢s performance on stage was strikingly good. The Prime Minister was seen rushing and rubbing shoulders with rich and mighty in the lobbies and lounges of the congress centre. The themes of panel discussions where he was one of the speakers were, however, focused directly on politics. One was on terrorism and the other on the issue of nuclear proliferation.

Notable of those whom he met during his stay in Davos included big wigs such as heads of Bata Shoe Foundation, Gulf International Bank, Artoc Group for Investment and Development, Metro Cash and Carry International, Emirates Telecommunication Corporation, Citibank, Taib Bank, Gulf Investment Corporation, National Bank of Kuwait, Peremba Group of Companies, Hamza Alkholi Group, Xenel Saudi Company, Goldman Sachs International, Dallah Al Baraka Holding Coca-Cola Company and Bahrain Petroleum Company.

He met David Ruenstein, CEO Carlyle Group, a private equity fund, who indicated that the company has planned to set up an office in Pakistan as a part of their larger investment plan worth several billion dollars for the region.

Chairman Nestle also called on prime minister and told him that his company would invest more in Pakistan taking advantage of its investment friendly and liberal economic policies.

Prime minister also held one to one meeting with Robert E Diamond Jr., President, Barclays, UK and Grant Kvalheim, C-President, Barclays Capital, USA. He also met Hans-Joachim Korber, Chairman and CEO, Metro and Thomas M Hubner, CEO, Metro Cash and Cary International. Carlos Ghosn, Chairman Renault, Patric Ceseau, Group CEO, Unilever Food Global also called on the PM and discussed issues related to their business prospects in Pakistan. Charles O Prince and Clark B. Winter threw a reception and hosted dinner for the PM and his team.

There is little doubt that Western governments find Pakistan a risky place. Pakistani businesses spare no chance to list problems they are faced with in conducting their affairs in the country. But the corporate giants looking eastward are charmed by the countryÃ¢â¬â¢s untapped potential and PakistanÃ¢â¬â¢s accommodating gestures.

Ignoring travel advisories and shyness of local players they find profit margins, liberal policies, untapped resources and growing market reasons good enough to take serious interest in the country. Journalists attending the high-profile economic gathering at Davos could easily conclude that for the private capital seeking destinations, Pakistan is more than just another country in the conflict stricken region of South Asia.

http://www.dawn.com/2007/02/05/ebr2.htm


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## Neo

February 05, 2007 
*Expanding frontiers of economic freedom*

By Dr Mahnaz Fatima

According to the 2007 Index of Economic Freedom (EFI) prepared jointly by The Heritage Foundation and the Wall Street Journal, Pakistan ranks 89th ahead of many regional economies. That is, Pakistan offers a lot more Ã¢â¬Åeconomic freedomÃ¢â¬Â than many other countries in the region. India is ranked 104 out of 161 countries. Let us see how this so-called economic freedom is gauged by these prestigious institutions.

According to this index, freedom is gauged as fiscal freedom, business freedom, freedom from government, and labour freedom and Pakistan Ã¢â¬Åscores wellÃ¢â¬Â on all of these scales. Basically, it gauges economic freedom in terms of Ã¢â¬Åease of doing business, regulations, investment freedom, financial freedom, fiscal freedom, property rights, trade freedom etc.Ã¢â¬Â The long and the short of it is that this EFI is based on freedom to make profits by the trading and business classes. In the process, a whole lot of other freedoms may be denied or trampled upon that this EFI ignores or sweeps under the rug.

What is fiscal freedom in a country where tax evasion goes unchecked mostly? According to a renowned development economist, tax evasion in Pakistan is of the order of five per cent which if controlled will wipe off the fiscal deficit. So, fiscal freedom is a lot about denying freedom to evade taxes with an iron hand that this EFI does not reflect.

What is business freedom in a country where there is freedom to hoard and jack up prices as in sugar and cement occasionally or to hike milk and vegetable prices without effective restraint? Or, to keep increasing the support prices of wheat that is basic diet of all and that then spirals into increasing inflation that none tries to bring down. This business freedom to increase food and consumable prices by fair means or foul denies the freedom of food. Freedom to eat and live and to live well, ala Amartya Sen, is a very basic human freedom.

Our so-called business freedom usurps this fundamental freedom to eat by eating into the food share of the deprived or even the middle classes in the country. If business freedom denies the right to eat and live, there is something seriously amiss in the economic policy outlook that this so-called Economic Freedom Index promotes in the interest of the dominant global elite network.

The token petroleum product price decrease in election year is a pittance if compared with a fall in the international oil price level from over $70 a barrel to around $50. This small mercy will feature in policy makersÃ¢â¬â¢ rhetoric for a long time to come.

Under the weight of this favour, will we be expected to crumble when we are already crumbling under the weight of unbridled price increase in nearly all items of daily use including food, pharmaceuticals, travel, healthcare, education, utilities, and housing to name a few ? Does any one listen at all to a groaning public in this Ã¢â¬ÅdemocraticÃ¢â¬Â dispensation?

With rising healthcare costs, it is freedom from disease, ala Amartya Sen, or freedom to live a healthy life that is denied? With rising educational expenditures, it is freedom to see light that is denied to vast majority of the population that dies in ignorance. Freedom to have basic amenities of life is denied with costly utilities and roof required essentially over the head. So, whose freedom does the Economic Freedom Index portray? Of those who already have most freedoms on earth by virtue of the wealth they are born in and who keep claiming successfully a bigger and a bigger share of the same by virtue of their headstart!

To give high marks on labour freedom is certainly a mockery of the state of Ã¢â¬Ålabour freedomÃ¢â¬Â in Pakistan. With retrenchments, layoffs, and downsizing on the rise; labour are losing the freedom even to work according to their choice in an environment that does not have many choices to offer. Freedom to work according to capability is not available to the educated and professionally qualified either who have to put up with discrimination and exploitation at work places because the external environment does not offer many alternatives.

Employers may carry on with their discriminatory practices knowing all too well the constraints within which the employees work. So, where is the economic freedom for labour of various shades if they do not have freedom to choose or have a very limited freedom to choose a desirable workplace?

The more courageous may choose to migrate. This, however, entails huge human costs and suffering in terms of separated families. People then do not even have the freedom to live happily together as a family in close proximity just because of non-availability of appropriate economic opportunity and freedom to work as per oneÃ¢â¬â¢s liking in the homeland.

And, when the most deprived cannot provide the bare minimum of food, shelter, and clothing to their off-springs; some start trading them at a very young age for small sums of money. Consequently, we are known for providing camel riders for the sheikhs in Dubai which is a horrendous practice in usurping basic freedom of the child to be raised well and respectably that the policy makers give no thought to at all nor did the prestigious institutions that rank us decently on the Ã¢â¬Åeconomic freedomÃ¢â¬Â index.

Then, there is the huge supply of internal child labour to households, motor mechanic workshops and other vocations, retail trade, carpet manufacturing units, and brick kilns to name a few. A sizeable percentage of the population does not have the economic freedom to bloom. Many a potential stars fade away before growing into robust, happy, and willing input providers to our economy that fails to realise its full potential year after year after year as we begin wasting our precious human resource from their very young age.

Even though there is great emphasis on exploitation of Ã¢â¬Ånatural resourcesÃ¢â¬Â such as water, wind, mineral, and even solar energy; not a thought goes towards developing the human resource that gets wasted primarily because of the lack of economic freedoms that they must have from day one. From day one, they must have freedom to drink milk. Milk prices skyrocket as traders/businesses have a lot of freedom according to none other than the worldwide Economic Freedom Index. But, countries underprivileged, underfed, and undernourished mothers suffer as do their babies born to experience one denial of economic freedom after another throughout their existence on our part of earth.

And, the cheek of it all is the Ã¢â¬Åfreedom from governmentÃ¢â¬Â that this economic freedom index also boasts of. Which country on earth is free from government or should be free from government? The very presence of governments means that the societies are not self-governing. That is, governments are required. If governments are required, they must govern well. Good government does not mean interference in all business and socio-economic activity.

However, it does mean effective intervention wherever and whenever societal segments fail to make good of their freedom from government. And, this failure is writ large as depicted herein already. It is, therefore, incumbent upon the government to discharge its responsibility. It is further incumbent upon the government to provide us with roads, electricity, gas, healthcare, education, and all the infrastructure that the society needs without

burdening the salaried taxpayers unduly. Taxes must be shared equitably horizontally and vertically.

None must have freedom from tax payment no matter how wealthy or privileged socially. Ã¢â¬ÅFreedom from government,Ã¢â¬Â in our environment, is actually freedom for the government to be in government without doing what a government is supposed to do. This freedom cannot be allowed to governments that have yet to discharge for the benefit of all alike without discrimination.

Unless the above economic freedoms come to prevail through governments that are not left free to offload to those who already hog the financial resources, economic performance will only be gauged by growth rates for the benefit of economic policy makers and the beneficiaries of such policies. The vast majority will continue to standby idly due to a gross lack of economic freedoms. A Ã¢â¬ÅboomingÃ¢â¬Â economy must provide economic freedoms to all even-handedly otherwise it is non-performing. The much avowed correlation between Ã¢â¬Åeconomic freedomÃ¢â¬Â and Ã¢â¬Åeconomic performanceÃ¢â¬Â must then be qualified to be considered true for a select minority segment only that may not stand the test of justice and equity now or in the future in Pakistan if we Ã¢â¬Åstay the course.Ã¢â¬Â

http://www.dawn.com/2007/02/05/ebr3.htm


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## Neo

*Pakistan-Iran trade reaches $1 billion*

Monday, February 05, 2007

Tehran, -- SPA -- Trade exchange between Iran and Pakistan will reach one billion U.S. dollars during this year, the Islamic Republic of Iran News Agency (IRNA) reported today.

The existing trade exchange volume between the two countries has reached currently $650 million. 

Iran mainly exports to Pakistan steel, crude oil, gas, cotton, fruit and vegetables, sailboats, spare parts, chemicals and construction materials, saffron. 
http://www.dailystar.com.lb 

On its part, Pakistan exports to Iran rice, machines, food-seeds, sport tools, medical instruments and carpets. 

http://www.dailystar.com.lb/article.asp?edition_id=10&categ_id=3&article_id=79243


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## Neo

Monday February 5, 2007

*Doosan Heavy wins $150 mln plant order in Pakistan*

SEOUL, Feb 5 (Reuters) - South Korea's Doosan Heavy Industries & Construction said on Monday it has won a $150 million order to build a power plant for Pakistan's Fauji Foundation. 

Doosan said in a filing with the Korea Exchange it would build the 175-megawatt power plant in Daharki, located in the southern Pakistani province of Sindh, by April 2009. 

http://asia.news.yahoo.com/070205/3/2wx3f.html


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## Neo

*Chinese firms join solid waste management project in Pakistan *
2007-02-05 

Two Shanghai-based companies have signed an agreement with Pakistan's biggest city to build a 100-million-U.S.-dollar solid waste treatment project. 

The scheme included the construction of facilities for garbage collection and transportation, recycling and sanitary backfilling of garbage, said Qian Yulin, general manager of Shanghai Shengong Environmental Protection Co. Ltd. 

Shanghai Shengong, which designed the project, China Shanghai (Group) Corporation for Foreign Economic and Technological Cooperation and the Karachi city government would jointly invest in the two-year project. 

The two Shanghai companies would run the plant after its completion. The Karachi city government would earmark waste treatment fees and special subsidies for the plant. 

The garbage treatment process would produce fertilizer and methane, said Qian. The methane would be used to produce electricity. 

Karachi, a sister city of Shanghai, has a population of about 20 million and produces 8,000 tons of urban garbage a day. 

http://en.ce.cn/National/environment/200702/05/t20070205_10321920.shtml


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## Janbaz

*EU direct investment in Pakistan soars*

ISLAMABAD (APP): European Union (EU)&#8217;s direct foreign investments here witnessed an unusual surge during the first six months of the current fiscal year.
Private TV channel quoting SBP data reported that the EU direct foreign investments in Pakistan during the first six months of the current fiscal year soared by two and a half times as compared to the previous year&#8217;s same period.
The EU member countries during July-December, 2006 made direct foreign investments here amounting to $547 million, while it was limited to $194.1 million only during the same period previous year showing a substantial rise by $346.6 million during the period under review. 

The Nation.
http://www.nation.com.pk/daily/feb-2007/6/bnews8.php


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## Janbaz

*In Short: Pakistan's IT firm launches Microsoft centre *

LAHORE (February 05 2007): A Pakistani software development firm, Systems Limited has opened three technology centers to leverage its global expertise in delivering the Microsoft development platform to its mortgage lending and servicing clients. The centres are located in Cranbury, N.J., USA Bangalore, India and Lahore, Pakistan.

A typical lender and servicer manage at least 50 service providers on a transaction level, NET based platforms enable quicker and faster deployment of SOA based applications to lower integration and management costs while reducing the mortgage processing time.

Business Recorder.
http://www.brecorder.com/index.php?id=525531&currPageNo=1&query=&search=&term=&supDate=


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## Introvert

*Bahrain businessmen to take part in Pakistan gala​*

MANAMA: Bahrain-based investors are being wooed to key events in Pakistan, one of which begins next week.

Several Bahrain-based businessmen and government officials have already confirmed they will be travelling to the events, which aim to highlight investment opportunities in Pakistan and elsewhere, Pakistan Embassy Minister-Deputy Head of Mission Shaukat Ali Mukadam said.

The Muslim Business and Investment Gala (BIG) will be held in Karachi from Saturday to next Monday, with the aim of providing a platform for investors to explore joint venture, investment and trade opportunities in Muslim countries as well as other participating countries.

"We'd like to extend an open invitation for investors from Bahrain to attend," said Mr Mukadam.

Economic Development Board (EDB) deputy chief executive officer Dr Zakaria Hejris and senior officer, business development Mazen Al Hili are due to attend, along with Bahrain Chamber of Commerce and Industry board member and Asian Committee chairman Othman Al Rayes and businesswomen's committee member Hoda Sankor.

Mr Mukadam also invited traders to Expo Pakistan 2007, which will also be held in Karachi from March 29 to April 1.

The event will cover high-tech products (IT and services, engineering goods, automobile parts), healthcare (surgical goods, cutlery, chemical, pharmaceutical and hospital goods), food products (fruit, processed food, rice, wheat and others), home dÃÂ©cor (furniture, carpets, handicrafts and textiles) and fashion (garments, knitwear, woven garments, leather products and more).

"There were seven Bahraini businessmen who visited the expo last year and were highly impressed by the quality of the products and services," said Mr Mukadam.

"We have informed the BCCI and expect a large number of visitors form Bahrain to attend this high profile exhibition."

Bahrain-based Pakistanis or Bahrainis of Pakistani origin are also invited to the Overseas Pakistan Investment Conference in Islamabad on March 5 and 6.

"The objective is to attract foreign direct investment from overseas Pakistanis by highlighting the opportunities and incentives available in Pakistan, said Mr Mukadam.
http://www.gulf-daily-news.com/Story.asp?Article=169373&Sn=BUSI&IssueID=29323


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## Owais

*Gwadar Port to contribute $42.2 billion in 40 years: concession agreement to be inked today *

KARACHI (February 06 2007): The Gwadar Port will contribute $42.2 billion, in terms of investment, revenues and income received from its entire operations to the exchequer, over a period of 40 years. According to sources, the concession agreement is going to be inked on Tuesday, February 6, between the Gwadar Port Authority (GPA).

Which represents the Government of Pakistan, and the Concession-Holder Company (CHC), which is a subsidiary of PSA (Port of Singapore Authority) International PTE Limited.

The agreement has a duration of 40 years. Besides, it regulates the rights and obligations of both parties. The GPA will receive revenues (not profit) from the PSA over a period of 40 years. The investment, revenues and income received from Gwadar port's entire operations are between $23.6 billion to $42.2 billion.

Firstly, the GPA expects $5 billion to $8 billion foreign investment in the area of Multi-purpose (MP) terminal and related equipment's to cost PSA at Gwadar Port which would be $1 billion to $1.5 billion; container terminal and others $2billion to $4 billion; the cost of Free Zone development $1.5 billion to 2.5 billion; while the marine services and others would cost $0.5 billion.

Secondly, the GPA to receive revenues from CHC over next 40 years is expected between $17 billion and $31 billion. The expected revenues generated from containers and others would be $10 billion to $18 billion; Free Zone to generate $3 billion to $6 billion; while the MP terminal and others would produce $4 billion to $8 billion revenues during the period.

Thirdly, the GPA would receive income from PSA over the period of four decades between $1.6 billion and $3.2 billion, in which the CHC of containers and others would give $0.9 billion to $1.6 billion (9 percent of CHC revenue); Free Zone $0.45 billion to $0.9 billion (15 percent of CHC revenue); and the MP terminal and others would provide $0.36 billion to $0.72 billion (9 percent of CHC revenues).

The Concession-Holder Company (CHC) will establish separate three operating companies for each of the above business areas. Where appropriate, the CHC can cooperate with strategic partners at the level of the operating companies.

The Port-CHC manages terminal and cargo operation. The CHC will take over the marketing and operations of the current terminal area, which provides 602 metres of berthing and will invest in and expand berthing space in line with demand during the concession period up to a total maximum of berthing space of 14 berths at an area of 4.2 km. These facilities will cater for container cargo and miscellaneous cargo.

The Marine CHC services consist of piloting, tugging, mooring, and vessel traffic control and anchorage management and related marine services, such as bunkering facilities. The CHC shall expand the fleet of pilot and tugging vessels in line with demand.

The AKD Group would have majority CHC and operate the 'Free Zone CHC' and shall develop and operate this area and market its facilities and services. The area set aside within this concession for Free Zone activities related to the port has a size of approximately 923 hectares.

THE ROLE OF GPA: As Port Authority, it will remain responsible for the development and maintenance of common port infrastructure, such as access channels, breakwaters and access roads as well as navigational safety and port security.

The terminal areas under the concession, two terminal areas will be developed including multipurpose terminal area. This terminal includes the existing facilities and the areas will be expanded in easterly direction up to a total length of 4.2 km. It caters for various types of cargoes.

The container terminal area is located along the western and north-western coastline of the 'East Bay' and is to be developed by the CHC. The financial arrangements between the parties are simple and the CHC will pay a fixed share of its revenues to the GPA.

For the cargo operations and for marine services, this percentage is set at 9 percent of the revenues. For the Free Zone business, the percentage is set at 15 percent of revenues. The tax incentives for the CHC are given a complete tax holiday for the first 20 years of the concession. This applies to federal, provincial and local taxes.

The materials and equipment that will be used in the construction and operations of the port will be kept free of taxes. Likewise, the bunker oil used in the port or sold to visiting ships will be kept free of duties. These privileges will remain throughout the concession period.

The purpose of the Free Zone is to develop and operate facilities and businesses that are conducive to and dependent on the development of the port. The companies and business activities that are targeted for operations in the Free Zone, which is a customs-bonded area within the land area of the port, will be given a tax holiday of 20 years.

The concession holder will develop at least 20 percent of required facilities within the Free Zone area. The remainder will be developed by either the concession holder or by other investors.

The exports of goods from the 'Free Zone' into Pakistan are subject to normal import duties. Exports of goods from Pakistan into the Free Zone are subject to normal export duties, if any.

The imports and exports of goods that are only moving through the Free Zone, but do not enter Pakistan (transit and transhipment), are kept free of duties, which is in line with normal practices for such facilities.

THE START-UP: The concession holder has committed that the first ship and the first cargo will be handled in Gwadar port in March 2007. The concession holder has committed to install two additional quayside gantry cranes for the handling of containers within nine months period.

THE SELECTION AND NEGOTIATIONS PROCESS: The international management-consulting firm of Arthur D. Little has overseen the entire process and has acted as technical advisor to GPA during the process. This consulting firm has extensive global experience and expertise in port planning and in negotiations with port and terminal concession holders.

The selection process has followed the normal procedure of invitations for expressions of interests (EoIs), pre-qualification and short-listing of bidders, issuance of tender documents and technical and financial evaluation of tender proposals, followed by negotiations with the winner of the tendering process.

The tender proposals were received on December 4, 2006 and the negotiation process started on December 27, 2006. The entire selection process was started on September 27, 2006, and completed on February 5 this year.

http://brecorder.com/index.php?id=525606&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Garment export target in jeopardy *

KARACHI (February 06 2007): The country's readymade garments exports target of $3,410 million for the current fiscal year (2006-07) is in jeopardy mainly due to the tough competition in international market and high cost of production, trade sources told Business Recorder on Monday.

"Fiscal year target is not possible to be achieved as the readymade industry is faced with tough challenges and increasing problems which have scaled down its export ratio and put a negative impact on its manufacturing growth," an exporter said.

"The aggregate exports of readymade garments from the country currently stand at $1724 million and we have still to fill the remaining gap of $1686 million in five months of the current fiscal year. That is difficult enough," he said.

He said that high cost of production, ie increasing utility charges including gas, electricity, and water, have led the garment industry to a decline, while export duties are also a contributing factor in the declining readymade exports.

"Despite the fact that the exports ratio has gone up by 15 percent during July-December 2006-07 against the corresponding period of last fiscal year, the fiscal target is still difficult to be attained in the remaining months," he observed.

Within two months--February and March--the increasing export graph will certainly plunge because the earlier growth occurred during the peak buying season in the West, while the remaining five months of the fiscal year are believed to be the lean period for garment exports, he said.

"The growth in garment export failed to be capitalised on the high sales season in the West, namely, on Christmas event, and remained lower than expectations. It should have been manifold higher," he added.

Another exporter said that lack of new designs in the readymade products was also one of the genuine reasons that regressed its marketing in the world market. "New designs in readymade garments are believed to be prerequisites for marketing the products in the international market, which is badly missed in our case," he added.

He said that the country's readymade garments are normally refused by the international buyers due to same reason, whereas the other regional countries, including India and Bangladesh, were receiving an extraordinary response in the world market because they had expertise and latest technology in the field of value-added textile sector.

He said that new markets in the world must be explored and in this regard the government should give the exporters incentives with a view to augment textile export manifold and help minimise the growing export decline.

"The new markets of the world could be the Latin America, Caribbean countries and Central American region where so far none of the exporters has marketed readymade garments from Pakistan," he said. Regarding travel barriers in these regions, he said that unlike EU and US, in the said regions no such problems of travelling and immigration were likely to occur.


http://brecorder.com/index.php?id=525636&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Trade deficit likely to peak at $8.8 billion: IMF *

KARACHI (February 06 2007): The International Monetary Fund (IMF) has forecast that Pakistan's trade gap could swell further, and hinted a 5 percent increase in it to $8.8 billion-highest level so far--at the end of the current fiscal year, it is learnt.

According to IMF statistics, despite all efforts of the government, the trade deficit could not be controlled. As a result, it might increase by $337 million and touch the highest level so far of $8.819 million by the end of the current fiscal year 2006-07. The country's deficit was 8.442 million in 2005-06.

IMF said that its projections on trade deficit and exports were based on a staff scenario of monetary and fiscal tightening. During the current fiscal year Pakistan's exports would reach $18.819 billion, while imports could amount to $27.467 billion, the report said.

Last year's results also showed that Pakistan had faced highest deficit of the history, which was $8.442 billion. During the current fiscal year (2006-07), Pakistan might achieve its export target of $18.648 billion, increased by around $2.142 billion, or 13 percent, against $16.506 billion of last, estimated statistics said.

Imports might touch the $27.467 billion mark this year against last year's $24.948 billion, depicting an increase of $2.519 billion, or 10 percent. Leading economic analysts have also indicated that during the current fiscal year Pakistan's trade deficit would be higher than last year. They said that the government has failed to control increase in imports, the chief contributing factor to the growing trade deficit.

http://brecorder.com/index.php?id=525621&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*$1 billion may be raised with bond issue: foreign banks' advice to government *
ISLAMABAD (February 06 2007): International banks and financial institutions have informed government economic managers that Pakistan can raise $800 million to $1 billion from the global market by issuing sovereign bond to plug the current account deficit.

Government officials are engaged in communication with representatives of international banks and financial institutions for the last three weeks. They want to consult them on the international market hunger for bonds before issuing the sovereign bond.

Talking to Business Recorder on Monday a senior official, part of the economic team engaged in consultations, said: "We have received very encouraging response from the international banks and financial institutions' representatives for going into the international market for yet another sovereign bond before the closing of the current fiscal year."

After conceiving the idea of plugging the current account deficit by capping money from the sovereign bond, the government had invited officials of 12 international banks and financial institutions.

These included ABN Amro Bank, Citi Bank, American Express Bank, Grindlay's Bank, Deutsche Bank and Standard Chartered Bank. The government plans to select more than one bank from the short-listed ones to act as lead manager for the bond issue. Since the government is facing huge current account deficit this year, it is looking for various options to plug the gap. The bond is an easy way to get some portion of the required money.

The government has already secured from the international market $813 million through OGDC's global depository receipts (GDRs) and another $200 million through MCB's shares, but it still needs at least $1 billion from other than traditional sources to plug the gap for the current fiscal year.

Government officials are, however, giving the impression that they want to float the bond before the closing of the current fiscal year to stay in the world market. But the factual situation demands such move to keep the ball rolling for the economic managers of the government who are making desperate efforts to keep the current account deficit at an acceptable level.

http://brecorder.com/index.php?id=525624&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Pakistan and Iran for early execution of IPI project *

TEHRAN (February 06 2007): President General Pervez Musharraf on Monday proposed a plan of action to bring about unity in the ranks of Ummah and to address major decisive issues in the region particularly Palestine, Lebanon and Iraq.

The President in his talks with the Iranian President Mahmoud Ahmedinejad at the presidential complex in Tehran said unity among the ranks of Muslim Ummah will also defuse confrontation between Iran and the United States of America.

Giving details about the talks Pakistan's Ambassador to Iran Shafqat Saeed said bilateral matters between Pakistan and Iran particularly the gas pipeline project was also discussed.

The Iranian President expressed the willingness to initiate implementation of the project immediately. Since the two countries have worked out the pricing mechanism Iran and Pakistan will discuss an early implementation of the pipeline project.

The two leaders also discussed other regional issues including security in the Gulf and Afghanistan. President General Pervez Musharraf is visiting Iran and Turkey to discuss with them the situation in Middle East, particularly with a view to resolve the issue of Palestine.

The two leaders held formal talks, which lasted about seventy-five minutes. These were followed by a one-on-one meeting that covered wide-ranging issues.

The Iranian President welcomed plan and assured the President of all possible assistance on the part of Iran to make it a success.

Later, the Iranian President hosted luncheon in the honour of the President Musharraf and members of his delegation. After the lunch, President Pervez Musharraf along with the Iranian President, met the Iranian supreme leader Ayatullah Ali Khemnai.

During the meeting with Supreme Leader, the President also reviewed the problems being faced by Muslim Ummah. He apprised him of his recent visit to Middle East and South Eastern countries. The supreme leader welcomed Pakistan's efforts to strengthen unity amongst the Muslim countries.

Later, the President left for Turkey. He was seen off at the airport by Iranian Minister for Housing and Urbanisation, Pakistan's Ambassador to Iran and senior officials. Foreign Minister Khurshid Kasuri and Foreign Secretary Riaz Mohammad Khan are accompanying the President.

http://brecorder.com/index.php?id=525612&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*EU direct investment in Pakistan soars * 
KARACHI: European Union (EU)&#8217;s direct foreign investments in Pakistan witnessed an unusual surge during the first six months of the current fiscal year.

State Bank of Pakistan (SBP) released data stated that the EU direct foreign investments in Pakistan during the first six months of the current fiscal year soared by two and a half times as compared to the previous year same period.

It further said that the EU member countries during July-December, 2006 made direct foreign investments in Pakistan amounting to $547 million, while it was limited to $194.1 million only during the same period previous year, which showed a substantial rise by $346.6 million during the period under review. 

http://geo.tv/geonews/details.asp?id=1708&param=3


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## Owais

*British direct investments surge in Pakistan *

ISLAMABAD: British direct investments in Pakistan during the first six months of the current fiscal year increased manifold. 

Government released figures stated that the Britain made direct investment of $460 million in Pakistan during the first six months of the current fiscal year as compared to its mere $87 million direct investments in the same period previous year, which showed a speedy and substantial rise by $373.2 million during the period under review. 
http://geo.tv/geonews/details.asp?id=1705&param=3


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## Neo

*Export to Switzerland up by 45.5pc*

ISLAMABAD, Feb 5: Pakistan's exports to Switzerland grew by 45.5 per cent in 2006 over the previous year after remaining stagnant for the last several years.

Official figures compiled by the commerce ministry indicated that exports rose sharply during 2006 to 67 million Swiss francs (CHF) in 2006 from 46 million Swiss francs in 2005.

A positive aspect of this growth was manifold increase in export of non-traditional items.

These included ethanol, which jumped from Swiss Francs 25,400 in 2005 to Swiss Francs 12 million in 2006, a surge of 47,500 per cent.

Dried mushrooms and truffles were other important items whose exports increased by 153 per cent to reach Swiss Francs 6.3 million.

As a result, Pakistan became the second largest supplier of these products to Switzerland after China.

Textiles remained the largest exports with 50 per cent share which increased from Swiss Francs 24.9 million in 2005 to Swiss Francs 33.1 million in 2006.

Home textiles and clothing (other than knitwear) were the main items. Swiss companies imported these items from Pakistan, selling them in Switzerland and Europe under their own brand names and designs. Rice export increased by 36.5 per cent to Swiss Francs 1.2 million in 2006.

Leather items, especially bags and gloves, increased modestly by 5.5 per cent to Swiss Francs 1.9 million, sports goods and footwear, including gaiters and parts, both increased substantially by 72 per cent to Swiss Francs 2.2 million and Swiss Francs 1.2 million, respectively.

The statistics showed that in 2006, Swiss exports to Pakistan fell by 6.2 per cent to Swiss Francs 336 million.

The main Swiss exports to Pakistan were machinery and parts, pharmaceuticals, chemicals, watches, and electronic and other equipment.

These five sectors represented over 80 per cent of exports to Pakistan.

There is a great scope that bio-products offer the best opportunity for Pakistani exporters to Switzerland, as these products are in great demand and most are imported.

Some examples of products that Pakistan should consider are bio-rice, bio-mangoes or bio-cotton, giving particular attention to certification and control of bio brands and quality of products.

http://www.dawn.com/2007/02/06/ebr3.htm


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## Neo

*Govt trying to introduce drip irrigation in Thar *

By Shahid Husain

MITHI: The government of Pakistan has initiated 40 pilot projects on drip irrigation in Tharparkar in February this year in order to resolve water scarcity problem, Dr Sono Khangharani, Chief Executive Officer, Thardeep Rural Development Programme (TRDP), told The News. Ã¢â¬ÅWhen you will visit Tharparkar next year, you will find great transformation in the impoverished land,Ã¢â¬Â he remarked.

He said that a survey in district headquarters Mithi, Nagarparkar and other areas has already been conducted and pilot projects would help estimate the cost of implementing drip irrigation in Tharparkar, which borders the Great Indian Desert where it is already being used successfully. The consultation in drip irrigation will be provided by India while an American company, Acumen will act as a go-between India and Pakistan.

A pilot project on drip irrigation with the help of TRDP, a non-profit and non-governmental organisation, has already been started in Mithi. Drip irrigation, it may be pointed out, is also known as trickle irrigation or micro-irrigation and is an integrated method that applies water slowly to the roots of the plants, by depositing water either on the soil surface or directly to the root zone, through a network of valves, pipes, tubes and emitters.

The goal is to minimise water usage. Drip irrigation may also use devices called micro-spray heads, which spray water in a small area, instead of emitters. These are generally used on tree and vine crops.

Subsurface drip irrigation (SDI) uses permanently or temporarily buried dripper line or drip tape. It is being more widely used for row crop irrigation, especially in areas where water supplies are limited.

After careful study of all the relevant factors like land topography, soil, water, crop and agro-climatic conditions, the most suitable and scientific drip irrigation system and its components are selected for installation. 

Drip irrigation was used in ancient times by filling buried clay pots with water and allowing the water to gradually seep into the soil. Modern drip irrigation began its development in Germany in 1860 when researchers began experimenting with sub-irrigation using clay pipe to create a combination of irrigation and drainage systems.

In 1913, E B House at Colorado State University succeeded in applying water to the root zone of plants without raising the water table. Perforated pipe was introduced in Germany in the 1920s and in 1934; O E Robey experimented with porous canvas hose at Michigan State University. With the advent of modern plastics during and after World War II, major improvements in drip irrigation became possible. A new technology of drip irrigation was then introduced in Israel. The method was very successful and subsequently spread to Australia, North America and South America by the late 1960s.

Today drip irrigation is widely used across the globe to accrue benefits with minimum use of water. It is already being used in Balochistan, especially in orchards and offers great scope in other parts of the country.

Ã¢â¬ÅThe farmers will get loans through micro-credit schemes and wells, hand pumps and tube wells will be used as extraction sources of water,Ã¢â¬Â says Khangharani. Experts believe that given the acute shortage of irrigation water, Pakistan urgently needs to adopt drip irrigation. Ã¢â¬ÅIn other countries, 90 per cent of agriculture is based on drip irrigation,Ã¢â¬Â says Peter Bosshard, Policy Director, International Rivers Network (IRN), an independent, non-profit organisation based in California.

With 40 per cent of water being wasted in Pakistan, essentially due to mismanagement and theft, fresh water availability in the country has fallen from 5,200 cubic metres per capita in 1947 to less than 1,000 cubic metres currently, making it one of the most parched nations in the world. No wonder, the Pakistan Council of Research in Water Resources (PCRWR) has come up with a media campaign of Rs155 million for water conservation in the country.

http://www.thenews.com.pk/daily_detail.asp?id=41622


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## Neo

Tuesday, February 06, 2007 

*Pak energy demand to reach 361MT of oil equivalent by Ã¢â¬â¢30*

By Fida Hussain

ISLAMABAD: PakistanÃ¢â¬â¢s energy demand has been estimated to reach 361 million tonnes of oil equivalent (MTOE) by 2030 and this huge surge could pose a serious threat to the future development programmes, a senior government official told Daily Times.

Without ensuring the security of energy supplies, the development programmes would collapse, said the official. The cumulative oil and gas exploratory effort in Pakistan so far has been very small. He said that an official study indicated that less than one well per 1000 kms is drilled in Pakistan against the world average of 10 wells in the same distance.

The official said that 302 wells have been drilled during the last 14 years around 22 well per year, which resulted in a net addition of 13.7 MTOE in oil reserves and 125.3 MTOE gas reserves. Under the governmentÃ¢â¬â¢s energy security plan 2005, the government is planning to drill approximately 990 exploratory wells during 2005-30. The government will also intensify the offshore exploration efforts, the official said.

According to a recent study of the Planning Commission (PC), due to the rising oil prices in the international market, the oil and gas exploration will become an attractive sector for foreign as well as the local companies.

Pakistan has onshore and offshore sedimentary area of 827,268 square km, according to the PC. The conventional recoverable oil and gas resources potential of Pakistan, based on volumetric yield method, has been estimated as 3,622 MTOE or 27 billion barrels of oil and 6,8850 MTOE or 282 trillion CFT of gas. This oil and gas potential corresponds to 0.75 percent, respectively of the world resource potential.

According to the study, some three percent of the estimated oil and 15 percent of the estimated natural gas potential resources have been discovered so far in Pakistan from some 620 exploratory well drilled over the past 40 years. The study says that if cumulative production was allowed, the remaining recoverable proven reserves of oil are only 41 MTOE while that of the natural gas are significant at 612 MTOE.

More than 85 percent of oil and 50 percent of coal used in Pakistan is imported. The use of coal, nuclear and new renewable energy sources of wind and solar is small compared to the present world average shares, the study says.

The expansion of production by the major oil suppliers would require capital investment in Africa and the Middle East (ME) alone of $45 billion a year over the next three decades, up from the current $8 billion a year. This is a huge amount, and the oil rich African and Middle Eastern countries will need foreign partners to bridge the funding gap and spread the investment risk, the study says.

PakistanÃ¢â¬â¢s appetite for energy is a part of AsiaÃ¢â¬â¢s growing demand for reliable flow of reasonably priced oil and gas. AsiaÃ¢â¬â¢s oil consumption will surpass North AmericaÃ¢â¬â¢s consumption by 2010, reaching nearly half of the total world demand by 2020. This realisation has generated an intense race buying into reserves in present and future oil and gas producing fields.

http://www.dailytimes.com.pk/default.asp?page=2007\02\06\story_6-2-2007_pg5_1


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## Neo

*H1 earnings to be announced today: Indus Motors expected to post growth of 12 percent*

By Farhan Sharif

KARACHI: Indus MotorÃ¢â¬â¢s board meeting for the announcement of the earnings of the first half of the financial year 2007 results is scheduled to be held on Tuesday.

The research analyst and market participants expect the half-year earnings to be higher from comparable period, however a decline is likely in second quarter of the current financial year.

Ã¢â¬ÅFor the first half we expect Indus Motor to post net income of Rs 1.2 billion versus that of Rs 1.07 billion previously, with a growth of 12 percent,Ã¢â¬Â said Farhan Aziz, an analyst at Jahangir Siddiqui Capital Markets Limited.

This translates into earning per share of Rs 15.3 compared to Rs 13.66 recorded during the first half of the financial year 2006. With the announcement of financial results an interim cash dividend of Rs 6 per share is also likely as against Rs 5 per share previously. 

The volumetric sales growth of 21 percent in first half of the current financial year over the corresponding period of previous year would be the main driver behind earnings growth, while the gross margins are expected to show slight increase amid some improvement in the rupee against yen parity. 

Alone in the second quarter of the financial year 2007, the company is expected to announce net profit of Rs 573 million with earning per share of Rs 7.30 versus Rs 607 million with Rs 7.72 earning per share, representing a decline of 6 percent.

Lower earrings in second quarter of the current year would mainly arrive from the expected fall in the other income in the wake of decline in customersÃ¢â¬â¢ advances. 

Besides, on quarter-on-quarter basis, the second quarterÃ¢â¬â¢s profits would be down by 9 percent versus Rs 629 million with earning per share of Rs 8.01 posted in first quarter of the current financial year.

This decline is attributable to lower unit sales 13 percent down on quarter on quarter basis, as the production activity at Indus Motor plant was halted due to a maintenance shutdown in the month of December.

http://www.dailytimes.com.pk/default.asp?page=2007\02\06\story_6-2-2007_pg5_6


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## Neo

Tuesday, February 06, 2007 

*Ã¢â¬ËPak can upgrade competitiveness ranking soonÃ¢â¬â¢*

By Sajid Chaudhry

ISLAMABAD: Pakistan can upgrade its world competitiveness ranking from the existing 91 spot to 60-65 by 2010, with an improvement of 6-8 rankings per year during 2006-2010, Arthur Bayhan, Chief Executive Officer Competitiveness Support Fund informed Daily Times on Monday

The Competitiveness Support Fund (CSF) is an independent body established to reposition the PakistanÃ¢â¬â¢s economy on a more competitive global footing. It is a joint venture of PakistanÃ¢â¬â¢s Ministry of Finance and the United States Agency for International Development (USAID) USAID has contributed nearly $12 million to the fund for initial three years.

He disclosed that the CSF is supporting to improve competitiveness of PakistanÃ¢â¬â¢s industrial products but would also extend cooperation to improve the competitiveness of PakistanÃ¢â¬â¢s growing services sector. The Competitiveness Support Fund has developed an action plan to improve PakistanÃ¢â¬â¢s ranking on the Global Competitiveness Index (GCI). Globalisation is a reality that countries can no longer escape and competitiveness is the only way to benefit from globalization and not become a victim, he added.

The World Economic ForumÃ¢â¬â¢s Global Competitiveness Report is the most influential ranking of country competitiveness and affects PakistanÃ¢â¬â¢s image in the world among business, government and financial leaders, he said. The true understanding and monitoring the rankings is important because improved competitiveness leads to sustained economic growth, which has proven to be effective in poverty reduction.

He informed that according to the World Competitiveness Ranking 2006 report out of total 125 countries Pakistan is ranked at 91 with India at 43, Turkey 59, China 54, Kazakhstan 56, United States 6 and Finland 2. He informed that global competitiveness index components for 2006 in Pakistan reveals that its institutions are ranked at 79, infrastructure at 67, macro economy at 86, market efficiency at 54, technological readiness at 89, innovation at 60, business sophistication at 66 and Education at 104 out of 125 countries.

Pakistan ranked 67th on the Business Competitiveness Index of Michael Porter. However, Pakistan ranked 91st on the Global Competitiveness Index up from 94th place in 2005.

The lower rankings on the GCI reflect inclusion of low health and education indicators in the country. He said that Pakistan can improve by 6-8 rankings per year and its rankings can improve 60-65 by 2010. He said that the CSF has developed an action plan to improve PakistanÃ¢â¬â¢s global competitiveness ranking which includes initiatives like promoting broad understanding and support for governmentÃ¢â¬â¢s economic reform agenda, holding provincial government leadership workshops, arranging presentations on competitiveness to business leaders and orientations for local and international press, communicating priorities to the relevant ministries and institutions and ensure timely provision of data to international sources and ensuring accurate implementation of the executive opinion survey for the next global competitiveness report by March 2007.

The focus of the CSF activities on high impact areas is to prepare and publish the first annual State of PakistanÃ¢â¬â¢s Competitiveness Report and carry out competitiveness analysis to recommend specific actions with high potential impact beginning with: motorcycle industry, food processing sector, fishery, automotive industry and gender contribution to economic growth.

He informed that CSF has signed MoUs for cooperation with the Higher Education Commission to commercialise research for knowledge-based enterprise development. The MoU with Pakistan Agriculture Research Council is for cooperation in the area of agribusiness. The MopU with government of Sindh is on cluster development and with World Economic Forum. The CSF-HEC joint initiatives are to commercialise the applied research and link the private sector with university research, promote the knowledge-based enterprise sector by facilitating international patent registrations from Pakistanis and Pakistani institutions and to organise for the first time, trade fairs highlighting the science and technology-based projects developed at the universities to attract private-sector investors looking for innovative products and systems to commercialise.

http://www.dailytimes.com.pk/default.asp?page=2007\02\06\story_6-2-2007_pg5_12


----------



## Janbaz

*LTU collects Rs50bn revenue *

By Mushfiq Ahmad
KARACHI: The Large Taxpayers Unit (LTU) Karachi has almost reached the target of revenue collection set for the fiscal 2006-07 in the first six months, according to final statistics available here.

The LTU Karachi posted a phenomenal growth of 116 per cent in net collection of income tax in the first six months of current financial year compared to the corresponding period of previous year.

The net collection of LTU Karachi neared Rs50 billion in July-December period of 2006-07 against Rs23 billion collected in the same period of previous year. The whole fiscal year&#8217;s target is Rs51 billion.

The growth is much larger than the growth of revenue collection recorded at the national level during the period under review.

The collection of income tax on different heads registered growth. Refunds also remained on the higher side. Officials attributed the strong growth in the collection of income tax to booming economy as well as the culture of facilitation at LTU Karachi.

They said the taxpayers had become more inclined to pay taxes and the department did not have to run after taxpayers. They said that especially the major companies&#8217; enhanced profitability contributed significantly to the growth in tax collection.

Besides tax reforms introduced by the government, the establishment of LTU was a landmark step to facilitate the taxpayers, they added. The high growth in income tax collection, they said, was evidence that the stakeholders were satisfied and accepting the policies of the government, particularly the tax reforms.

The figures indicate that collection of advance tax posted a phenomenal growth of 187 per cent in the first six months, rising to Rs32.046 billion from Rs11.147 billion collected in the same period of previous year.

The collection of tax with returns also registered an increase of 58 per cent in the period under review by shooting up to Rs17.551 billion from Rs11.120 billion collected the previous year.

The recovery of withholding tax was Rs5.722 billion, depicting a growth of 62 per cent over Rs3.538 billion collected in the corresponding period of previous year.

The number of refunds issued during the period under review showed growth of 28 per cent. The LTU Karachi issued Rs8.336 billion in refunds in the first six months compared to Rs6.503 billion issued last year.

The major heads of tax collection of LTU are salary, dividends, securities, non-resident services, supply/contract/services, rent, petrol pump operators, brokerage/commission, stock exchange commission, cash withdrawal from banks and transport.

The LTU Karachi has more than 500 major income taxpayers of the country. On the other hand, gross collection of sales tax registered an increase of 6.2 per cent, rising to Rs12.272 billion from Rs11.552 billion in the same period of previous year.

However, it fell short of the target of Rs13.317 billion for the first half of the current financial year.

The collection of federal excise duty (FED) was also up by 39.5 per cent from previous year, as it rose to Rs8.42 billion from Rs6.041 billion. The LTU failed to achieve the target under this head as well.

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=41776


----------



## Janbaz

*Pak exports world's largest sugar mill to US*

OUR STAFF REPORTER
ISLAMABAD - Pakistan will make history on Saturday by exporting the world&#8217;s largest sugarcane crushing mill, SKODA 55"x95"x4 to Louisiana, USA, the government announced Tuesday. 
The mill manufactured by a private sector Lahore-based company, Qadbros Engineering, which specializes in manufacturing of big sugar mills. Besides being the leading manufacturers for most of the 85 sugar factories within the country, Qadbros Engineering has been exporting heavy plants and equipment for sugarcane crushing to customers spread over five continents of the world including North America, Central and Latin America, Africa, Europe and South East Asia for the last 5 years. 
The rapidly intensifying energy crisis that grips the world today has generated tremendous worldwide interest in renewable sources of energy. One of the major sources of renewable energy is the cane processing and distillation industry, which produces ethanol as a by-product or as its main product. 
Accordingly, the world&#8217;s cane processing and distillation industry is witnessing an upheaval in terms of new capacity addition. With Brazil leading the increase in sugarcane crushing and distillation capacity worldwide, this scenario has led to an unprecedented increase in the demand for cane crushing plant and equipment. 
According to a conservative estimate, the world&#8217;s sugarcane crushing capacity will increase up to over 200 million tons by the year 2012. 
This tremendous increase in the demand for sugarcane factory plant and equipment is shaping up at a time when most of the few remaining recognized European, American and Australian manufacturers of sugarcane crushing plant and equipment have closed their shops. After long years of recession within the world sugarcane industry resulting from depressed sugar prices, high cost of heavy equipment manufacture, and environment issues confronting the metallurgical foundry sector in the west. Over the years, that situation forced the world&#8217;s major sugarcane equipment manufacturers and technology companies to seek technology partnership with Asian manufacturers. 
Federal Minister for Industries, Production and Special Initiatives Jahangir Khan Tareen will be the chief guest on the unveiling ceremony, arranged by the manufacturers. Senior government officers including State Bank Governor, Chairman CBR, Deputy Chairman Planning Commission, Federal Secretary Industries, Chief Executive Officer Engineering Development Board (EDB), foreign diplomats, leading engineering sector manufacturers, and prominent figures of sugar sector are expected to attend the ceremony. 

The Nation.
http://www.nation.com.pk/daily/feb-2007/7/bnews1.php


----------



## Janbaz

*Sixfold increase in call centres *

ISLAMABAD (APP) - About six fold increase has been witnessed in the number of call centres in the country in a period of last two years due to investment friendly policies of the government, Minister for Information Technology Sardar Awais Ahmed Leghari said Tuesday.
He said that due to persistent policies, maximum facilities offered coupled with cheap labour the number of registered call centres in the country have surged up to 400 from mere 65 in 2005. Significant growth has also been witnessed in terms of number of seats in each call centre. 
Adequate space would be provided to the investors. Problems of call centres including their regulatory issues would be resolved, he added.
Human resource development issue is being aggressively resolved. Special funds have been allocated to ensure provision of skilled and cheap labour force to call centres, he said. Country&#8217;s big advantage is cheap human resource as compared to neighbouring countries especially India as the Indian IT experts are becoming more and more expensive.
Various programme are being launched to enhance students&#8217; software skills development capabilities and other IT enabled services in the country. A huge internship and apprenticeship programme would also be launched aiming to absorb IT students into job market after proper training. 


The Nation.
http://www.nation.com.pk/daily/feb-2007/7/bnews9.php


----------



## Owais

*US Administration proposes $785 million aid for Pakistan in 2008 *

WASHINGTON (February 07 2007): The US Administration has proposed $785 million in assistance for Pakistan in the 2008 financial year beginning from October 1. Randall L. Tobias, Director for US Foreign Assistance and USAID Administrator said at the State Department that Pakistan's assistance will increase to $785 million from more than 700 million in the current year.

The assistance will be part of dollar three billion package covering five years, which was reached between the two countries in 2003, during President Musharraf's visit to Washington.

http://brecorder.com/index.php?id=525945&currPageNo=1&query=&search=&term=&supDate=


----------



## Owais

*Pakistan signs 100 megawatt power purchase deal with Iran *

LAHORE: WAPDA has signed an agreement with an Iranian company to buy 100-megawatt power from Iran for Gwadar Port. 

The Water and Power Development Authority (WAPDA) inked an agreement with the Iranian firm at Wapda House Lahore on Wednesday.

Member Power Wapda Anwar Khalid and head of the Iranian firm Mendies Ismail Mohsini signed the agreement, while Chairman Wapda Tariq Hameed was also present in the signing ceremony. 

Iran will supply power to Gwadar Port from January 2009 under the agreement. 

The Iranian company will invest US $ 26 million and the National Transmission and Dispatch Co. Wapda would provide US $60 millions for the project costing total 86 million dollars.


----------



## Neo

*Kindly request all active members in this thread to be utmost selective with posting news.

Unfortunately the thread is getting flooded again with insignificant economic newsarticles!*


----------



## Spring Onion

Neo said:


> *Kindly request all active members in this thread to be utmost selective with posting news.
> 
> Unfortunately the thread is getting flooded again with insignificant economic newsarticles!*



 i liked that  

it will happen when u dont specify what to post in the thread. 

There should have been sub-threads under Economy like 
separte for investment pleadges and contracts and for exports there shud have been separate one


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## Neo

Jana said:


> i liked that
> 
> it will happen when u dont specify what to post in the thread.


Jana ji,
Check the first post in this thread. 1 

http://www.pakistaniforcesforum.com/showpost.php?p=39946&postcount=1



> There should have been sub-threads under Economy like
> separte for investment pleadges and contracts and for exports there shud have been separate one


No, we can discuss major issues here. Unfortunately all we see is news articles and links but no debate.


----------



## Janbaz

Neo said:


> Jana ji,
> Check the first post in this thread. 1
> 
> http://www.pakistaniforcesforum.com/showpost.php?p=39946&postcount=1
> 
> 
> No, we can discuss major issues here. Unfortunately all we see is news articles and links but no debate.



Brother, please start the debate of and people will engage!:toast: You are the economics professor here.


----------



## Janbaz

Neo said:


> No, we can discuss major issues here. Unfortunately all we see is news articles and links but no debate.



Brother please kick the debate off! You are the economics master here so people are sure to engage afterwards.


----------



## Bull

Neo, do you remember where we had that discussion about Gwadar? I cant find that thread, I want to continue that.


----------



## Bull

ok got it its here..

https://defence.pk/forums/showthread.php?p=48453#post48453


----------



## Neo

Bull said:


> Neo, do you remember where we had that discussion about Gwadar? I cant find that thread, I want to continue that.



Thats an ole thread, probably resting in trashcan. 
What you need it for? :s


----------



## Neo

*Salman eyes 50 percent rise in foreign investment for FY2006/07 *

KARACHI: February 07, 2007: Foreign investment in the country is likely to jump more than 50 percent to nearly $6 billion this year, lured by sweeping reforms that have helped turn the economy around, a senior government adviser said on Wednesday.

Salman Shah, adviser on finance to Prime Minister Shaukat Aziz, said foreign stakes in the country's financial sector, especially its banks, were growing and several foreign banks were interested in the Pakistani market.

"This year we will cross almost $6 billion of foreign investment which is a healthy amount compared with our GDP," Shah told a seminar on capital markets in Karachi.

Foreign investment in the country was $3.87 billion in the last fiscal year.

"We have had several very major transactions, which have covered the manufacturing as well as the financial sectors and this is going to be a trend, which I hope, will continue in the future," Shah said.

Foreign direct investment in the country rose 67 percent to $1.87 billion in the first half of the 2006/07 fiscal year (June/July), led by inflows into the communications, energy, and banking and financial services sectors, central bank figures show.

The banking and financial services sector attracted the most foreign investment during the period, $517 million, followed by $495 million invested in the communications sector, and $315 million in oil and gas exploration.

Standard Chartered Bank (Pakistan) Ltd., which acquired a 95.37 percent stake in Union Bank for $487 million last year, plans to more than double its network in Pakistan in five years, a senior government official said last month.

Singapore state investor Temasek Holdings is set to take a controlling stake in Pakistan Industrial Credit Investment Corp. (PICIC) in a deal valued at about $300 million.

Foreign banks, including Barclays Plc, ABN AMRO and HSBC are also eyeing investment opportunities in the country, attracted by economic reforms that have laid the platform for rapid growth and rising incomes.

*"ECONOMY TRANSFORMED"*

Shah said the reform process, started almost seven years ago when President Pervez Musharraf took over in a military coup, had transformed the economy.

It grew by an estimated 6.6 percent in the financial year that ended on June 30, after expanding by 8.6 percent the previous year, making the country one of the world's fastest-growing economies.

"The privatisation, deregulation, and liberalisation policies have paid very rich dividends," Shah said.

Pakistan sold several big state-run firms, including its biggest privatisation of all, the $2.6 billion sale of a controlling 26 percent stake in Pakistan Telecommunication Co Ltd, to Emirates Telecommunications Corp in June 2005.

http://www.brecorder.com/


----------



## Neo

*200 expatriates to attend investment conference *

ZIA M KHAN 
ISLAMABAD (February 07 2007): Nearly 200 Overseas Pakistanis with an estimated investment potential of $27 billion have so far confirmed their participation in a conference the government plans to hold here early next month, a top official said.

Almost the same number of local entrepreneurs will also participate in the conference to have an interaction with expats to guide them on investment incentives in Pakistan. "The response to our initiative is overwhelming," Muhammad Aslam Sanjrani, secretary, Overseas Pakistanis Division, told Business Recorder here on Tuesday.

Titled as "Opportunities that Belong to You", the first ever "Overseas Pakistanis Investment Conference (Opic)" scheduled for March 5-7 is being conceived as an opportunity for the countrymen living abroad to get a glimpse of future investment prospects. According to the figures, Aslam provided to Business Recorder, 36 Pakistanis from Saudi Arabia had so far confirmed their participation in the event.

United States with 29 confirmed participation, the United Kingdom (UK) 22 and United Arab Emirates (UAE) with 16 were the other major countries from where Pakistanis would be heading homeland to explore investment opportunities.

Similarly, 12 participants from Qatar, seven from Bahrain, four from Italy, two each from Germany, Australia, Holland, Jordan and Japan would also attend the event.

These Pakistanis want to invest in agri-farming, livestock and dairy, information technology and telecom, power generation, real estate, construction, housing and engineering sectors, said Aslam Sanjrani.

Sanjrani said the Overseas Pakistanis Division was giving final touches to the arrangements for a 'productive and result-oriented' gathering of potential expatriate Pakistani investors and local entrepreneurs under one-roof. "I think it will be a great opportunity for both investors and the (government)," he remarked.

"They will know how and where from can they take advantage of lucrative investment opportunities in their own country...and obviously it will help Pakistan too if proves handy in achieving desired results," Sanjrani added.

He said three-day conference would primarily focus on how investment in Pakistan by its citizens residing and earning their livelihood abroad could be beneficial to themselves and the country.

The plenary and working session on the second day would cover topics like policies for small and medium investors, their financing, import and export-oriented industries and opportunities in agri business, information technology, telecommunications, housing, health, education, and capital market.

http://www.brecorder.com/index.php?id=525949&currPageNo=1&query=&search=&term=&supDate=


----------



## Neo

*Shaukat terms auto sector key economic driver*

KARACHI, Feb 6: Prime Minister Shaukat Aziz has said that the government attaches great importance to the growth and development of auto industry as it is a key driver of economic growth, technology transfer and a creator of jobs.

He was speaking as the chief guest at the inauguration ceremony of production capacity expansion facilities of Pak Suzuki Motor Company Limited here on Tuesday.

Sindh Governor Dr Ishratul Ibad Khan, Chief Minister Dr Arbab Ghulam Rahim, Federal Minister for Information and Broadcasting Senator Muhammad Ali Durrani, Federal Minister for Industries and Production Jehangir Khan Tarin and Ambassador of Japan to Pakistan Seji Kojimi were also present on the occasion.

Mr Shaukat said the expansion of Pak SuzukiÃ¢â¬â¢s production capacity to 150,000 vehicles per year was indeed laudable.

Ã¢â¬ÅToday I have visited Pak SuzukiÃ¢â¬â¢s plant and observed various products being manufactured and assembled under the supervision of dedicated engineers and trained workers on modern equipment and machinery,Ã¢â¬Â the prime minister remarked.

He pointed out that automobile industry was playing a vital role in the economy and was rightly called the mother of all industries and the engine for growth.

Ã¢â¬ÅWe have seen tremendous growth in the automobile industry due to private sector investment facilitated by supportive policies of our government,Ã¢â¬Â he said.

The premier said that the government expected that the auto industry to position itself to become regional hub and a part of global supply chain by enhancing exports to the countries of the region.

The auto industryÃ¢â¬â¢s share in total manufacturing sector in 2005-06 was 16 per cent as compared to 6.7 per cent during 2001-02.

He said the challenges posed by globalisation, liberalisation and increasing competition required a strategic direction and policy framework for sustainable growth of the domestic automobile sector.

He pointed out that the auto industry had already switched over from deletion programmes to a transparent and competitive TBS environment and had now come up with a clearly spelt out tariff policy for at least five years and a support programme for its safe transition through a long term auto policy.

Mr Shaukat said that the government support and incentives would aim at increasing the scale of operations, expanding industry linkages and development of local vendors.

Ã¢â¬ÅThese linkages will facilitate domestic industry in adopting best practice management, processes and procedures to deliver higher quality standards that are necessary in assessing international markets,Ã¢â¬Â he added.

He said that efforts were underway to diversify the industrial base of the country and termed this as a major policy initiative of the government.

Ã¢â¬ÅThis year Mashallah in the history of Pakistan will be one of the record years for the foreign direct investment,Ã¢â¬Â the prime minister remarked.

He pointed out that for the first six months the country attracted $3 billion in FDI.Ã¢â¬âAPP

http://www.dawn.com/2007/02/07/ebr2.htm


----------



## Neo

Wednesday, February 07, 2007 

:flag: *Deal signed for rail link to Sino-Pak border* :ChinaFlag: 

* Tender for pre-feasibility report on Lahore-Rawalpindi bullet train to be given to Austrian and Spanish firms next week

LAHORE: The Pakistan Railways (PR) has signed an accord with Chinese firms for a pre-feasibility study Ã¢â¬â made ahead of the project concept (PC-I) report Ã¢â¬â on a rail link between Havelian in Pakistan and the Khunjrab Pass on the Pak-China border, said Federal Railways Minister Sheikh Rashid Ahmed at a press conference here on Tuesday. 

The distance between Havelian and the Pak-China border pass is around 750 kilometres, and the link is expected to increase trade between the two countries. 

Ahmed said the ministry had granted a tender for the report to the Dongfang Electric Corporation and Second Survey and Design Institute of China, on President Pervez MusharrafÃ¢â¬â¢s directive. Ã¢â¬ÅBoth companies will prepare the pre-feasibility report within nine months at a cost of around Rs 700 million,Ã¢â¬Â he said. Ã¢â¬ÅA tender for a pre-feasibility report on the Lahore-Rawalpindi bullet train project will be given to Austrian and Spanish firms next week. This report will be completed in nine months, and will cost Rs 250 million.Ã¢â¬Â 

He said the ministry would invite tenders for the privatisation of the RailwaysÃ¢â¬â¢ five power stations next week. He said it had also been planned to auction five more commercial plots of the Railways for five-star hotels, and the government was looking to investors from Dubai, Qatar and Saudi Arabia for participation in the bidding. 

The minister said that the Indian Railways authorities had assured Pakistan that the Khokrapar-Munabao train service would be launched on February 17. He said Pakistan railways had spent a large sum on the track for this service. 

Replying to a question, Ahmed said that a Bahawalpur incident in which six children were overrun by Karachi Express was a result of parents and localsÃ¢â¬â¢ negligence. 

Ã¢â¬ÅTo prevent such incidents, the authorities are planning to seek proposals on the construction of gates at 4,000 railway crossings. Proposals on the construction of 300 underpasses and fencing along railway tracks that pass through thickly populated areas will be presented at the next cabinet meeting,Ã¢â¬Â he said. 

Ã¢â¬ÅThe ministry has directed all Railways staffers and policemen not to allow passengers to travel on roofs of trains.Ã¢â¬Â

http://www.dailytimes.com.pk/default.asp?page=2007\02\07\story_7-2-2007_pg7_29


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## Janbaz

I have a question? How will they build the rail through Karakorams, they are inaccessable. Lots of live will be lost you know as the Korakoram Highway. The altitude is extremely high for Khunjerab.


----------



## Janbaz

*Pak, Sri Lanka ink accord on trade and investment*

HAQ NAWAZ
ISLAMABAD - To come out of the existing poor state of bilateral trade and investment situation, Pakistan and Sri Lanka Wednesday vowed to speed up process to initiate new joint ventures in different sectors including aviation, manufacturing, textile and tourism.
This was agreed between the senior investments officials of both the countries during a two-day (February 6-7) detail discussions held here. Secretary Board of Investment Pakistan Talat M Miyan and Chairman BOI Sri Lanka Prof. Lakshman R. Watawala have signed a Memorandum of Understanding (MoU) respectively on behalf of their governments. Dr Sarath Amunugama, Minister for Enterprise Development and Investment Promotion Sri Lanka was also present on occasion. 
Other members of the Sri Lankan delegation are Mano Wijeratne, Minister of Enterprise Development, T Hewage, Secretary, Ministry of Enterprise Development and Investment Promotion, Prof. Lakshman R Watawala, Chairman BOI, Dr. Nihal Samarappuli, Executive Director (Research), BOI and Duminda Ariyasinghe (Promotion) BOI. 
Both sides also agreed to further simplify the visa regime for the tourists and businessmen. They clarified that the visas to tourists are being issued on the demand and at the arrival at entry points for 3 months period.
Speaking on the occasion, Dr Sarath told reporters that both sides agreed on a various points to improve the bilateral trade and investment relations. 
They decided, as the MOU reads, to exchange information on investment policies/projects, share information on investment related areas, cooperation in research and development, organize and conduct investment seminars and conferences in two countries.
He said both friendly countries want to improve and extend cooperation in opening aviation, agriculture, manufacturing, textile, hotel industry, tourism, and retail sectors etc.
&#8220;A leading Sri Lankan retail company- ARPCO, recently visited here, is interested to invest in this sector and it will visit again to formally submit its plant with the government of Pakistan,&#8221; he said.
The Sri Lankan Minister also informed that the mutual investment in the aviation sector was also needed to increase the number of flights of public-private sector between both the countries. 
Both countries should allow wider access to the flights operations in almost all the major cities, he urged.
When he presented the statistics of bilateral trade between Pakistan Sri Lanka even having Free Trade Agreement (FTA), the picture emerged was very discouraging as the total trade volume had reached to only US $ 173 million. &#8220;Presently, the trade balance is in Pakistan&#8217;s favour with exports to Sri Lanka is US $ 115 million and flow from Sri Lanka at only US $ 58 million,&#8221; the visiting minister noted.
He also hoped that at least the capitals of the 7-member countries of SAARC should be well connected through one link, which has already been recommended by the Aviation Panel of SAARC.
Secretary BOI Talat M Miyan briefly expressed his comments on the occasion that Pakistan and Sri Lanka were good friendly countries and were committed to increase the level of bilateral trade and investment.
Chairman BOI Sri Lanka Prof. Lakshman R. Watawala during the press briefing invited Pakistani manufacturers especially in textile, fabric, garment, cement, hotel, education, Information Technology, software development and tourism sector to invest there and establish their units to help them improving the export side of Sri Lanka.
&#8220;Some 10 projects in different sectors worth US $ 11 million have been carried out by the Pakistani Investors and the investment from Pakistan may go up in near future. However, the FDI from Sri Lanka is very low and now the businessmen there want to invest in Pakistan,&#8221; he maintained. 

The Nation.
http://www.nation.com.pk/daily/feb-2007/8/bnews5.php


----------



## Owais

*Pakistan to buy power from Iran for Gwadar port *


LAHORE (updated on: February 07, 2007, 21:59 PST): Iran will provide electricity to Gwadar deep-sea port in Balochistan according to an agreement signed here on Wednesday.

The state-run Water and Power Development Authority (Wapda) inked an agreement with Iranian company Tanvair at Wapda House under which Pakistan will buy 100-megawatt power from Iran for Gwadar port.

Wapda member Anwar Khalid and head of the Iranian firm Mendies Ismail Mohsini signed the agreement.

Chairman Wapda Tariq Hameed giving details of the deal said that Iran will supply power to Gwadar port from January 2009 under the agreement.

The Iranian company will invest $26 million and the National Transmission and Dispatch Co. Wapda would provide $60 million for the project costing total 86 million dollars.

He said that tariff for one year has been fixed at 6.25 cent per unit. Tariff will be reviewed after one year.

He said that two grid stations of 220 KV will be installed, one in Gwadar and another in Iran's Polan area.

Wapda will lay 100 kilometres while Iran will lay 70 kilometre transmission line.

Mohsini said that Iran is already providing 35 megawatt to Pakistan and will now supply 100 megawatt more.

brecorder.com


----------



## Owais

*UK termed world's best business partner for Pakistan *

KARACHI (February 08 2007): United Kingdom is world's best business partner for Pakistan in the areas of financial services and business education. This was stated by the Lord Mayor of City of London, Alderman John Stuttard.

While speaking at a seminar on 'Education, training and qualifications in the financial services sector' held here at Institute of Chartered Accountants of Pakistan on Wednesday.

Lord Mayor who is the ambassador for UK financial, maritime and business services, said that London was the home of financial and business education adding that a large number of students from around the world were being benefited from the professional institutions of UK.

To a question, he said that "On getting back home, I will inform the financial institutions and business communities about my experience that would further improve the image of Pakistan and pave for investments," he maintained.

Lord Mayor, however, said that business ties were quite cordial between UK and Pakistan and referred to the acquisition of Union Bank by the Standard Chartered and listing of two Pakistani companies with the London Stock Exchange in this regard. "London possesses a very favourable environment for investors and businessmen from abroad particularly concerning equity capital and bond finance," he observed.

To a question pertaining to outsourcing of accounting services to Pakistan, he said that this issue could be taken up. Chairman City of London-City of Learning, Sir Paul Judge delivering his presentation on 'Getting the right skills' said that there has been a high expansion in the higher education sector in Pakistan.

He said that competitive firms needed international benchmarked business qualifications while Pakistan was a strong market for UK professional business qualifications. Kate Holroyd of Institute of Chartered Accountants of England and Wales (ICAEW) giving her presentation described the increased flexibility at ICAEW offering new qualification to the most ambitious and talented students. Michael Forbes of Chartered Institute of Arbitrators and others also spoke on the occasion.

http://brecorder.com/index.php?id=526340&currPageNo=1&query=&search=&term=&supDate=


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## Neo

Janbaz said:


> I have a question? How will they build the rail through Karakorams, they are inaccessable. Lots of live will be lost you know as the Korakoram Highway. The altitude is extremely high for Khunjerab.



Its one of greatest construction works in modern history, most of the hard job was done by the military but ofcourse civilians were involved aswell.

Many lost their lives and you can see their graves alongsde the highway all over the place.

Here's a nice link with pics:

http://www.answers.com/topic/karakoram-highway


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## Neo

*Publicity campaign insufficient for attracting foreign investment *

KARACHI (February 08 2007): Pakistan's publicity campaign to attract foreign investment has been far from sufficient, in comparison with the East Asian countries. This has been stated in a report titled 'Towards A Vision 2030: Direction of Industrial Development in Pakistan', prepared by the Japan International Cooperation Agency (Jica) and International Development Centre of Japan.

The report says that development of industrial infrastructure and improvement of institutional setting for the investors should be given top priorities.

Commenting on auto vendor industry, the report noted that it was too easy to think that foreign vendors would inevitably start investing in Pakistan soon after the number of production reaches a specific volume. The auto industry in Pakistan does have advantage, in terms of technology up-gradation, as the biggest issue in the current industry is technology up-gradation. While technical collaboration with foreign companies and technical assistance from assemblers is effective, their level of technology is still behind the international standard.

There is not sufficient competition in the domestic market where the number of vendors, who can supply specific components, is limited, sometimes only one. The reject rate for Pakistani parts is generally high, and the quality of products is poorer than that of vendors in other countries.

The stagnated market had also retarded development of ventures and technology collaboration with foreign companies. Japanese vendors would not go into ventures with local vendors until the size of local automobile market reaches to the annual production of 500,000 units. Coupled with other factors, such as Japanese economic slump and the remote image of Pakistan, Japanese vendors were reluctant to collaborate with Pakistan vendors, even for technical collaboration, it said. Moreover, the influence of the tariff policy for auto parts is also considerable. After the tariff starts, it is possible for assemblers to obtain auto parts from around the world as long as they pay customs.

The report said that Indian government, for instance, introduced various non-tariff barriers before implementing the tariff of auto parts, and has shown reluctance in opening domestic auto part market.

However, in the case of Pakistan, the government has had no intention to protect domestic market of auto parts by any non-tariff barriers. The auto part market is open without any protection.

Domestic vendors have been forced to compete in the international market, and foreign vendors have become their competitors, including Japanese, Chinese and Thai vendors.

The report noted that at present around 200 Pakistani vendors supply auto parts to local assemblers, but this number is expected to be halved in the near future. The domestic vendors feel a sense of crisis, and start making utmost efforts to improve their technological capability.

As long as the country has fragile and fragmented auto parts industry, the automobile industry would never generate high-value-added and considerable employment. Strategic and continuous efforts are required for the vendors to improve their technical capability, the report added.

http://www.brecorder.com/index.php?id=526372&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Global banks acknowledge Pakistan's economic policy: Ashfaq *

ISLAMABAD (February 08 2007): Advisor to the Finance Ministry, Dr Ashfaq Hassan on Wednesday said that Pakistan's economic performance in the past five years has been commendable and global investment banks acknowledged economic policy of the country.

Talking to a private TV news channel he said, international investment banks acknowledged that GDP growth is higher, poverty rates are down, inflation is lower, FDI is up and fiscal deficits are down and these are good comments which are being given by international investment banks. Now, they have such views about Pakistan, he said adding this is very encouraging for us in Pakistan.

He further said, "Our efforts are for the maintenance of the trend. We should continue to maintain this trend. This is the way forward. We are trying hard for fiscal, monetary or exchange rate policies, they should be aligned to achieve higher economic growth in a stable macro economic environment," he added.

He said, these are our objectives and, "We are working on it."

To a question, he said, core inflation has been controlled considerably. Presently, inflation being confronted in the country is food driven and particularly, it is of some perishable items like onion, tomato, potato, milk or pulses, he added.

These products have higher weight in consumer basket that is why higher inflation is being noticed in the country. But, now declining trend is being noticed in it, particularly from past few weeks.

To another question he said seasonal element is also involved especially in vegetable items availability which positively or negatively affect price. Now availability of food items has improved, he added.

He further said, "I think, monetary policy stance of State Bank should continue." State Bank has already issued a monetary policy statement under which existing monetary stance will continue. They have released statement for January to June.

He said, State Bank monitors things and result of measures taken by State Bank is being seen. Advisor to finance ministry said, "I think, monetary policy statement of State Bank is in the right direction and existing policy will continue."

http://www.brecorder.com/index.php?id=526358&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Salman sees growth rate exceeding 7pc *

Lord Mayor of London lauds GDP ratio of Pakistan and brilliant performance of KSE; says more investors are coming.

KARACHI: PakistanÃ¢â¬â¢s economic growth is excellent at present and it would exceed seven per cent this year, Adviser to the Prime Minister on Finance, Dr Salman Shah said on Wednesday.

He was talking to reporters after the inaugural session of a seminar on Ã¢â¬ÅCapital Markets - An international perspectiveÃ¢â¬Â organised jointly by JS ABAMCO and KASB Securities in collaboration with British High Commission.

The seminar was organised on the occasion of visit of Lord Mayor of London Alderman John Stuttard and a financial, banking and educational delegation.

Responding on chances of huge trade deficit during the current financial year, Dr Shah said economic growth in the county remained enormous and was expected to cross set target of 7 per cent during the current fiscal year.

Dr Shah pointed out that foreign direct investment (FDI) was also very strong and in the first six months the FDI was to the tune of about $3.5 billion.

He said that the position of remittances was also very good. Ã¢â¬ÅOur financial flows and numbers are very healthy. The balance of payments surplus would also be healthy,Ã¢â¬Â the Adviser remarked.

Replying to a question regarding the bond issues, he said Ã¢â¬Åwe go to the international capital markets every year under a long-term strategy.Ã¢â¬Â Last year, Ã¢â¬Åwe had issued bonds for 10 and 30 years.Ã¢â¬Â

Dr Shah further stated Ã¢â¬Åwe are also examining bond issuance this year. The size of the issue or terms are decided after roadshows.Ã¢â¬Â He said that the bonds would also be issued this year as had been done last year.

Replying to a question whether there may be any downward revision of bonds by the rating agencies in the wake of coming general elections and some recent incidents of suicide bombings, the Adviser said that there could not be any such thing as the elections were a normal phenomenon and these were held in every country.

He said that the coming general elections in Pakistan would be held in a free and fair manner and that it would be a good thing for the countryÃ¢â¬â¢s rating and would have a positive impact.

Dr Shah said that the bombing incidents were isolated ones. Ã¢â¬ÅGovernment obviously is concerned about these and these would be checked so that there may not be any impact on the countryÃ¢â¬â¢s ratings.Ã¢â¬Â

To another question, he stated that GDR issue of three banks and KAPCO was on target and would be completed within this fiscal year.

Shah said all provinces must develop broad consensus on NFC Award. He termed President MusharrafÃ¢â¬â¢s decision on new NFC award an optimal solution within the framework of the Constitution.

To another question, the Adviser said that the core inflation is quite less and under six percent. Food inflation is also coming down. The prices of perishable items have reduced substantially such as potatoes and onion etc.

He said that if the energy prices remained stable and the international oil prices come further down then we would be able to meet our inflationary targets as well.

The advisor said the seminar had shown that Pakistan was emerging as a dynamic international market and potential investors were showing great interest in investing here. He emphasized on imparting skill-based education especially in financial studies to create market leaders.

Lord Mayor John Stuttard said basic aim of his visit was to deepen existing relationship of London and Karachi.

He said 5-10 years before China and India emerged as fastest growing economies but now Pakistan and Gulf countries had emerged as strong economies.

Lauding growth in GDP ratio of Pakistan and brilliant performance of Karachi Stock Exchange, he said more and more investors were turning to Pakistan.

He said 40 per cent of GDP across globe, while 70 per cent in European Union, was based on capital markets. He noted main reason of making London the worldÃ¢â¬â¢s leading international financial centre was openness of its market, which attracted investors from all parts of world.

He placed emphasis on skill-based education, saying there were about one million financial experts in London playing an important role in development of economy. He said good economy was linked to development good corporate governance system.

On occasion, he gave scholarship of Business School of Oxford University to a Pakistani student Asia Basher, as part of scholarship program of the Mansion House.

The delegation member gave presentations during seminar. Anthony Bellchambers, CEO Futures and Options Association, gave presentation on Regulatory Theme, Hugh Sandeman, Head of Business Development South Asia, London Stock Exchange, on Listing at London Stock Exchange, Najam Ali, Chairman Mutual Funds Association of Pakistan, on PakistanÃ¢â¬â¢s Capital Market, and Dr Bishakha Mukherjee, Advisor Aureos Company, on Private Equity.

http://www.thenews.com.pk/daily_detail.asp?id=41921


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## Neo

*Higher growth, lower sharing*

By Sultan Ahmed

Dr Salman Shah, the vocal advisor to the prime minister on finance, says if the economic policies that are being followed by the government are sustained they will take the growth level to 10 per cent in the days to come.

Meanwhile, he says, the growth rate of 6-8 per cent fixed for the current year will not only be achieved but may be exceeded. These days, he says, during the first half of the current financial year $3.5 billion had come into the country and that may rise to $5-6 billion by the end of the financial year. That will largely be the result of the stepped up privatisation and the sale of the global depositary receipts of $ 800 million by the OGDC and more by the private sector MCB bank.

Of course heÃ¢â¬â¢s calculating without counting the deterrent particularly the shortfall of power by 2000 MW, shortage of water and other infrastructural bottlenecks, which may become more acute in summer. The weather is warming up much earlier than usual. For comparison, India achieved a growth rate of 9.2 per cent last year and China 10.4 per cent. India may this year do better than China as Beijing is holding back the growth rate to prevent overheating of the economy.

While the officials are talking glibly of the great times to come with the high growth rate, the prices of essential items are going up all around. The 16 items whose prices have gone up include milk, pulses, chicken and vegetable oil. The sensitive price index which covers 53 essential items shows a rise of 12.55 per cent last year with a higher rate for larger income group. The rise in pulse prices is indeed stiff along with the increase in sugar prices in the retail by two rupees per kilo.

India has reduced import duty on palm oil as world prices have shot up. There has been a demand in Pakistan for a substantial price reduction. In fact, the government will not lose revenues by reducing the import duty, but only forfeit the extra gain from the rise in duty in monetary terms. But the government does not want to forfeit that despite the vast improvements in the revenue collection between July and January of this financial year. The government should now reduce the import duty on palm oil as it has nothing to lose by that.

The World Bank has alerted the government against an alarming and sustained fall in the share of major crops in the GDP and suggested it should go for high value crops and livestock to increase the rural earnings and for a quick U-turn in this area. Meanwhile, there is a great deal of Euphoria in official circles and in some commercial quarters over the scheduled commencement of operations by the Gwadar port from March 23 following its inauguration by President Musharraf. It has been described a free port in the sense the operators and managers of the port, the port of Singapore authority, will enjoy tax exemption for 40 years.

The PSA will invest 550 million dollars in five years and erect 14 berths to add to the three already there. Minister for Ports and Shipping Baber Ghauri expects a contribution of $40 billion to the economy when the port is fully developed.

A free port usually means one in which the users do not pay duties and not necessarily one where the management does not pay taxes. Such exemption had to be given to make a new port popular particularly in view of the political uncertainties in Balochistan and the competition between ports in the area. The government has grandiose plans for Gwadar and it really has to interest its users in the port on the basis of commercial merit.

Meanwhile, Dubai next door is opting for an economic growth target of 11 per cent and a per capital income of $44,000 by 2015 compared to $31,000 in 2005. Its 2010 planned targets have already been exceeded so Dubai needs a new development plan, says its ruler. DubaiÃ¢â¬â¢s economy grew by 16 per cent in 2005 according to figures not adjusted for inflation. So 11 per cent growth is not too difficult to achieve and sustain for a while.

Pakistan with its per capita income of $800 has a long way to go to catch up with its Arab neighbours. DubaiÃ¢â¬â¢s population is too small compared to PakistanÃ¢â¬â¢s 160 million which makes its per capita income very small, though it is far better than $500 a few years ago.

While foreign investment flows are rising, the State Bank of Pakistan is trying to curtail the bank credit for the private sector to keep check on inflation. But it had no impact on the rising inflation of 8.9 per cent as the supply side of the economy is not organized enough to hold down the prices. Cement prices have risen by eight rupees per bag in spite of the rise in output. Minister for industries says he will not allow cement prices to rise to Rs300 per bag. Meanwhile the cement manufacturers are trying to raise the price to rupees 280 per bag.

If as the minister says cement exports will rise to 2.5 million tones, prices of cement will rise further particularly when the government does not follow up its strong words with adequate or timely action. Another area of official failure is the unwillingness of the banks to pay fair returns to their savings depositors.

Despite frantic appeals of the governor of the State Bank Dr Shamshad Akhtar and her warning to the delinquent banks not to withhold fair returns to the depositors, the banks have not done that. In fact, the difference between the banksÃ¢â¬â¢ high lending rate and the low deposit rate rose by 110 basis points in 2006 to 7.4 per cent. This gap in 2005 was 6.3. With the understated inflation at 8.9 per cent the depositor is the loser when he gets 2 or 3 per cent on his savings with a good many deductions. He would only be a nominal gainer if he gets a 10 per cent return on his deposits.

With the banks too openly defiant and giving better dividends to only long term depositors -- up to 5 years, what is the State Bank going to do to make the banks fall in line. Basel II which is being enforced now cannot take care of such wronged depositors.

With the banks playing such negative roles, how can savings in a country which are too low rise high enough to finance the large development projects. Giving a fair return to the savers will also reduce inflation. The State Bank should hence act positively to help the depositors and make its threats to the erring banks real.

Meanwhile, the banks are showing very large profits. A 100 per cent profit is nothing exceptional. Not only have the prices of their shares been going up, but foreign banks are too keen to take them over as they are making large profits.

Following the take-over of the Union Bank by Standard Chartered bank a good many foreign banks are showing interest in taking over Pakistani banks. The Citibank for example is supposed be taking over the Soneri Bank. There is a great deal of domestic takeover of banks as well. Mr. Shaukat Tarin who sold off Union Bank, which he founded, is now trying to buy over Ã¢â¬ÅMy BankÃ¢â¬Â. If the banks will not give a fair return on savings in a period of substantial inflation, how can savings, investment and development be promoted despite the urgings of the World Bank, IMF and other donors to make use of more of the local resources for development.

Excessive dependence on foreign direct investment is not desirable or safe particularly when the foreign investors make very large profits and remit most of that home aggravating the large current account deficit. Unilever for example has declared a final dividend of 114.

The IMF says the external trade deficit in this financial year would ultimately be $ 8.8 billion which is high but only slightly higher than the 2005-06 deficit of $ 8.44 billion.

Exports this year would be $ 18.82 billion and imports $ 27.467 billion leaving behind a record deficit of $ 8.8 billion. The final figure would depend on the world oil prices which are rising again.

Meanwhile, the parleys among Iran, Pakistan, and India for the seven billion dollar gas pipeline from Iran have continued smoothly after Pakistan and India received the undisclosed price formula. While Pakistan has accepted the formula, India says it needs more time to study the formula because of its implications.

There are now reports that the Pakistan government has put off disinvesting Sui northern and Sui Southern gas companies as it wants all the details of the sale to be studied in full, and not make the kind of haste the privatization commission showed in the aborted Pakistan steel mills sale.

Meanwhile OGRA has raised the price of LPG by 12 per cent which is not acceptable to its distributors but eventually the will fall in line. Arrangements are also being made for large scale imports of LPG as that makes driving of cars far cheaper than by petrol in a period of high world price of oil. We should use far more of LPG for a variety of good reasons. LPG, it has been demonstrated, is far less offensive to the environment than petrol or diesel oil.

It has also been proved by the UN agencies that human beings contributed to the increase in heat in the atmosphere. We have 160 million people and we add to that 2.1 per cent or more each year and when our cities have clogged drains and broken waste water pipes and Katchi Abadis galore, the environment is outraged further. So the developing countries which have too many people and too much of violation of the environment have to assert themselves far more to clean up their system than the advanced countries. And they must opt for the alternative energy in a big way instead of using more of fossil fuel or other elements which violate the environment.

http://www.dawn.com/2007/02/08/ed.htm#4


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## Neo

*Injaz Mena makes USD250 million dollar investment in Pakistan*

Injaz Mena Investment Company PSC has joined with UK-based Global Haly Investment Limited to develop a landmark USD250-plus million shopping mall and office complex in Defence, a prime area of Karachi, Pakistan's largest city.

United Arab Emirates: 8 Feb, 2007:
Mr Shariq Azhar (Director-General of Injaz Mena), Mr Ahmed Al Dhahry (CEO of Injaz Mena), Mr Shahid Choudri (President of Global Haly Investment Ltd), HH Dr Sheikh Sultan Bin Khalifa Bin Zayed Al Nahyan, Mr Elahi Baksh Baluch (Global Haly Investment Ltd) and Mr Mubarak Bin Fahad (Chairman and CEO of Global Haly Development (Pvt) Ltd) pictured, from left, to mark the occasion of the signing of a joint venture contract for a US$250 million-plus shopping mall and office complex in Karachi, Pakistan. 

The complex will be situated next to the Creek Golf Club along the Arabian Sea coastline. The project was awarded by the Defence Housing Authority, Karachi, to Global Haly Investment Ltd, which was the highest bidder among seven international consortia that participated in the bidding. 

The joint venture project was officially announced this week under the key sponsorship of HH Dr Sheikh Sultan Bin Khalifa Bin Zayed Al Nahyan. 

Injaz Mena CEO Mr Ahmed Al Dhahry said that 'with a projected IRR well in excess of 35%, the project was in high demand with investors'. He added that commitments from investors exceeding the offered subscription amount for this unique opportunity were received within a week as a result. 

The planned complex will provide high quality shopping as well as premium office space on 5.3 acres of land. It will have a total built-up area of about 1.7 million sq ft of which some 600,000 sq ft will be saleable space. The complex will have three basement levels for parking, ground floor, mezzanine and five upper floors, offering approximately 350,000 sq ft of dedicated retail space and the balance of the area will be for offices. 

The land has already been acquired by Global Haly Development (Pvt) Limited, a joint venture company that was established in Pakistan to develop the project. 

The Board of Directors of Global Haly Development (Pvt) Ltd comprises Mr Mubarak Bin Fahad, who will also serve as Chairman and CEO, Mr Shariq Azhar, Director General of Injaz Mena, Mr Shahid Choudri, President of Global Haly Investment Ltd and Mr Elahi Baksh Baluch. 
Development of the complex will be managed by Injaz Mena through an off-shore special purpose subsidiary, Injaz Pakistan Development Company I Ltd. 

Project plans and architectural design for the complex are presently at the initiation stage. Construction of the complex is expected to commence around mid 2007, while its completion is scheduled to take approximately three years. 
Deutsche Bank will perform the fiduciary functions on behalf of investors as the Custodian and Administrator of Injaz Pakistan Development Company I ltd.

http://www.ameinfo.com/110155.html


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## Owais

*Petrobras joins OGDCL in offshore venture *


KARACHI (updated on: February 09, 2007, 19:46 PST): Brazilian Petrobras Oil and Gas B.V has joined Oil and Gas Development Co. Ltd. (OGDCL) to explore for oil and gas off the country's coast, latter said on Friday.

Petrobras had acquired 50 percent of OGDCL's working interest in Block 2265-1 Offshore Indus G, a deep water exploration licence in the Indus basin of Arabian Sea, it said.

"The execution of the agreement with Petrobras forms an integral part of the government's drive to attract foreign investment in the oil and gas sector," OGDCL said in a statement.

The company did not say how much OGDCL and Petrobras would invest to explore the 7,466 sq km (2,883 sq mile) block.

The country's liberal exploration policy has attracted interest from foreign firms in recent years, making oil and gas one of the largest foreign investment areas, though most offshore wells drilled by local and foreign firms have turned out dry.

French oil major Total, Pakistan's Petroleum Ltd. and Premier Oil Pakistan made unsuccessful attempts in the past few years to find hydrocarbons in deep water off Karachi.

Pakistan imports 85 percent of its energy needs, including about $6.5 billion worth of oil in the fiscal 2005/06 (July/June), and is struggling to increase domestic oil production of about 65,000 barrels a day.

It hopes to produce 100,000 barrels a day within five years.

brecorder.com


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## Owais

*Issuance of LoIs for seven hydropower projects approved *

ISLAMABAD (February 09 2007): The Private Power Infrastructure Board (PPIB) held a meeting with the Minister for Water and Power Liaquat Ali Jatoi, in the chair on Thursday and approved issuance of Letters of Interest (LoI) to seven hydropower projects with a cumulative capacity of 1,620 MW.

The projects include 197 MW Kalam-Asrit Hydropower Project, and 209 MW Asrit-Kedam Hydropower Project to be located in district Swat. The 548 MW Kaigah Hydropower Project to be located in district Kohistan. The 240 MW Karot Hydropower Project at district Kotli, AJK, 65 MW Sehra Hydropower Project at District Poonch AJK, 222 MW Azad Pattan Hydropower Project at Sudhnoti, AJK and 139 MW Chakothi -Hattian Hydropower Project at Muzzaffarabad, AJK.

Additionally, the board approved issuance of LoIs to two companies for establishing 1,000-1,200 MW power projects each based on imported coal near Karachi. The issuance of LoIs to these projects had been submitted to the PPIB after proper evaluation.

The board also announced to relocate 450 MW Uch-II Power project in Balochistan for the development of the province and catering for its much-required power needs. However, it was not clear if the project would be awarded on International Competitive Bidding (ICB) or negotiated deal as there were divergent views on this issue.

Keeping in view the energy requirements of the province, Wapda was directed to install 100 MW power plant on fast-track basis at Khuzdar to improve supply situation in the remote area. The board also directed Wapda to prepare long- term demand supply projection and submit it to the next meeting of PPIB.

Jatoi also held a meeting with a business delegation from London which expressed its strong desire to invest in the power sector through public-private partnership to further boost the economic ties between the two countries. The delegation led by Lord Mayor of London, Honourable Alderman John Stuttard, expressed interest to invest in hydro, wind, solar and thermal power projects.

Discussing the carbon credit through renewable energy projects, the delegation said that most of the trading of carbon credit is being made by London Stock Exchange (LSE) and offered to arrange equity financing both for Pakistani and foreign investors.

http://brecorder.com/index.php?id=526611&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Forex reserves hit record $13.254 billion, FDI increases 67 percent *


KARACHI (updated on: February 09, 2007, 16:22 PST): The foreign exchange reserves hit a new high of $13.254 billion in the week ending on Feb. 3, thanks to higher remittances from Pakistanis abroad and rising foreign investment, the central bank said on Friday. 

Reserves held by the State Bank of Pakistan (SBP) jumped to $10.845 billion from $10.579 billion a week earlier, while those held by commercial banks rose to $2.409 billion from $2.378 billion, the central bank said in a statement.

The previous all-time high level of reserves was $13.137 billion, reached in June last year.

"Foreign exchange inflows have been robust in recent times due to healthy remittances from overseas Pakistanis, as well as a substantial rise in foreign direct investment," said chief central bank spokesman Syed Wasimuddin.

Foreign direct investment rose 67 percent to $1.87 billion in the first half of the 2006/07 fiscal year, led by inflows into the communications, energy, and banking and financial services sectors, official figures show.

Inflows from foreign portfolio investment during the six months were $627 million, up from $359 million in the corresponding period last year.

During the period, remittances sent by Pakistanis abroad were recorded at $2.57 billion, up from $2.05 billion in the year-ago period.

Wasimuddin said a fall in international oil prices had also resulted in some reduction in the country's oil import bill, thus strengthening reserves.

brecorder.com


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## Owais

*Foriegn investment increased to 1200pc in Pakistan: Musharraf *

KARACHI: President Pervez Musharraf said here on Thursday that Pakistan offers the best investment environment of high profitability in the region.

&#8220;The investment has grown by 1,200 percent since 1999 and this will cross $4 billion this year,&#8221; the president told a select gathering at the ground-breaking ceremony of Rs 11 billion twin-tower building Karachi Financial Tower (KFT), being built by Enshaa NLC, a joint venture between UAE Enshaa Holding Ltd and National Logistic Cell (NLC) at the Governor House.

Sindh Governor Dr Ishrat-ul- Ebad Khan, Chief Minister Dr Arbab Ghulam Rahim, Federal Ministers Sheikh Rashid Ahmed and Babar Khan Ghauri were also present on the occasion. The president said investment was the cornerstone of economic growth in Pakistan and it has grown in four digits. He was of the opinion that investment will keep coming with the continuation of existing government policies of deregulation, liberalisation and privatisation of the economy.

&#8220;We have created an investment-friendly environment in Pakistan. We have changed our rules and regulations to suit the investors coming to Pakistan. We have created more comfort so that he (investor) feels confidence that Pakistan is a venue for investment to earn money,&#8221; Musharraf added. He said the investors will have a maximum profitability with the economic upsurge in Pakistan which raised the growth and doubled the per capita income of its people. Pakistan is now categorised as a middle income country, he added. President Musharraf noted that profitability increases due to increase in the purchasing power and also due to a supply and demand gap.

He pointed out that Pakistan with a big market of 160 million people is the hub of this entire region of South Asia and Central Asia. Therefore, Pakistan should to be seen as hub and not as a standalone country, he added.

He said the government was trying to project Pakistan in its correct perspective. He said the tremendous amount of interest is shown internationally and there is a tremendous amount of influx of investors in Pakistan.

The president said hotel occupancy in Pakistan was more than 90 percent and most of them are foreign investors. He expressed his pleasure over maturing of Pakistan&#8217;s policies and producing results to attract investors and sustain the economic growth in Pakistan and then in turn benefitting the people of Pakistan.

Musharraf pointed out that building and construction activity was being specially emphasised in Pakistan in our planning because this is labour intensive activity. It generates economic activity as well as maximum number of jobs for skilled and unskilled labour, he added. This industry encourages 50 down-stream industries and thereforethe government was facilitating this sector to the maximum.

Musharraf noted that tremendous amount of construction activity was going on in Karachi, Lahore and Islamabad where five 5-star hotels would be coming up in the forthcoming years alone. He said the Railways was launching 55 hotels of 3-4 stars dimension all over Pakistan. He invited the investors to come to Pakistan and said there will be a win-win situation for both investors as well as Pakistan.

The president said the government was encouraging skill development through triangular synergy between the industry, universities and technical institutions.

Referring to the land allotted to Enshaa-NLC joint venture, the president said the government had resolved this matter through a sharing formula where the Railways will get 60 per cent of the value while the Sindh government will take 40 per cent. Earlier, Railways Minister Sheikh Rashid Ahmed said the Railways has provided land to the project in accordance with the vision of President Musharraf to grant surplus land of the Railways for development purposes. 
http://geo.tv/geonews/details.asp?id=1880&param=1


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## Janbaz

*Malaysian company to invest $100m*

OUR STAFF REPORTER
LAHORE - Provincial Minister for Housing & Urban Development, Syed Raza Ali Gillani has said that Punjab Housing and Town Planning Agency will set up a housing scheme at Jhelum in collaboration with a Malaysian construction company. The foreign company will invest 100 million dollars in the scheme. MoU will soon be signed in this regard, he added. 
He was speaking at a briefing given by a 7-member Malaysian delegation headed by Datuk Mohamed Zaini Amran, Chief Executive of Bumihiway Group Malaysia which is currently on a visit to Pakistan to explore investment opportunities in residential projects for low-income people. 
The Minister during a meeting with the delegation said that real estate sector is fast expanding in the country and investment in residential schemes has become a profitable business. He said that government is endeavouring to provide relief to the low-income people by providing them affordable residential facilities. 
Syed Raza Ali Gillani said that after the enforcement of WTO, Punjab has become an ideal place for investment in South Asia as the government is providing a number of incentives for this purpose. 
The Malaysian delegation assured its full cooperation for developing low-cost residential schemes. The members of the delegation said that they would again visit Pakistan for signing of MoU in this regard. 

The Nation.
http://www.nation.com.pk/daily/feb-2007/9/bnews9.php


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## Janbaz

*OGDC, Petro Brass finalize agreement for oil exploration*

ISLAMABAD: Oil and Gas Development Company (OGDC) and the largest petroleum company globally, Petro Brass have finalized an agreement for offshore oil exploration. 

OGDC sources said that the Government Holding Private Limited, OGDC and Petro Brass would be exploring oil in the Indus Offshore Block 1-2265 over a radius of 7466-kilometres, which is owned by OGDC 100 percent presently.

Petro Brass is in operation in 170 blocks out of the 357 blocks of 35 countries across the world, while the company&#8217;s per day oil production works out to 2 million barrels. 

On the other hand, OGDC has 100 percent ownership of 27 blocks in Pakistan, while the 13 exploration blocks were being run under partnership. 

The News.
http://thenews.jang.com.pk/updates.asp#17550


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## Janbaz

Awesome, oil exploration deal. With the reserves in FATA and if oil is found in the Indus Block areas it will be a mojor breakthrough for the economy and may boost(transform) the outlook in the coming years.:flag:


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## Neo

*New possibilities emerge in trade with China: Elahi *

LAHORE (February 09 2007): Punjab Chief Minister Chaudhry Pervaiz Elahi on Thursday said that there had been expansion and new possibilities emerging in trade between China and Pakistan. This he stated while, meeting Haijuzeng Senior Advisor and head of 34-member delegation of Ningxia Hui province of China here on Thursday.

The CM said there had been increased interest of Chinese investors in Pakistan and with facilities provided in Sundar Estate, M-3 Industrial Estate and other industrial Estates their interest had compounded. He said that besides China, Saudi Arabia, UAE, Qatar and Germany other countries were making investments in Punjab. The leader of Chinese delegation thanked Punjab CM for providing support to Chinese investors in Punjab.

http://www.brecorder.com/index.php?id=526641&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'Government to produce 50,000 skilled workers yearly' *

ISLAMABAD (February 09 2007): The government is working on a strategy to produce 50,000 skilled persons per year over a period of three years to meet the need of industrial needs. Jahangir Khan Tareen, Minister, said this for Industries, Production and Special Initiatives while chairing a meeting on Skill Development Initiatives here on Thursday.

The meeting was attended by Shahab Khawaja Secretary, Industries Ministry, Altaf Saleem Chairman NAVTEC, Sadruddin Hashwani Chairman Hashoo Group, Tariq Saigol Chairman Maple Leaf, Arshad Nasir Chairman OGDC, Ahsan Saleem CEO Crescent Steels, representatives of industry and JICA, says a press release.

The minister said that there was a huge supply and demand gap as far as the skilled manpower is concerned and this may become one of the impediments in industrialisation. Realising the importance of skilled manpower for the industry, President Musharraf has tasked M/O IP&SI to launch a Skill Development Initiative for producing enough skilled workforce so as to meet the growing needs of the industry, he added.

Tareen said that 20 different companies for the industries/trades like oil & gas, textile, tourism, hospitality, construction, furniture, sports, chemical/fertiliser, electronics etc will be set up on the basis of public-private partnership.

These companies will start functioning from the next financial year. Each company will produce 2500 skilled workers per year. The companies will set up technical and vocational training institutes across the country, said the minister adding that these institutes will be set up in all parts of the country so that each part becomes an important and integral part of the industrialisation process. The students enrolled in these institutes will get a stipend of Rs 1000/ per month, said the minister.

Altaf Saleem Chairman NAVTEC told the meeting that the NAVTEC is working to impart technical and vocational training to the people. New institutes are being set up and the existing ones are being overhauled, he added.

http://www.brecorder.com/index.php?id=526677&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*UAE and UK firms team up for over $250 million DHA project *

ABU DHABI (February 09 2007): Injaz Mena Investment Company has teamed up with United Kingdom-based Global Haly Investment Limited to develop a landmark 250-plus million dollars shopping mall and office complex in Defence Society in Karachi. The complex will be situated next to Creek Golf Club along Arabian Sea coastline, said a senior official.

It was awarded by Defence Housing Authority Karachi to Global Haly Investment Ltd, highest bidder among seven international consortia that participated in bidding. The joint venture project was officially announced this week under key sponsorship of Dr Shaikh Sultan bin Khalifa bin Zayed Al Nahyan.

Injaz Mena Chief Executive Officer (CEO) Ahmed Al Dhahry said "with projected IRR well in excess of 35 percent, project was in high demand with investors". The commitments from investors exceeding offered subscription amount for this opportunity were received within a week as a result.

The complex will provide high quality shopping and premium office space on 5.3 acres land, having total built-up area of about 1.7 million square feet, of which some 600,000 sq ft will be saleable space.

It will have three basement levels for parking, ground floor, mezzanine, five upper floors, offering about 350,000 sq ft of dedicated retail space, while balance of area will be for offices.

Land was acquired by Global Haly Development (Pvt) Limited, a joint venture company established in Pakistan to develop the project. Its Board of Directors has Mubarak Bin Fahad, who will also serve as chairman and CEO, Shariq Azhar, director general Injaz Mena, Shahid Choudri, president of Global Haly Investment Ltd and Elahi Baksh Baloch.

Complex development will be managed by Injaz Mena through off-shore special purpose subsidiary, Injaz Pakistan Development Company I Ltd Project plans and architectural design are at initiation stage. Construction is expected to commence around mid 2007, with completion due to take about three years. Deutsche Bank will perform fiduciary functions on behalf of investors as Custodian and Administrator of Injaz Pakistan Development Company I Ltd.

http://www.brecorder.com/index.php?id=526588&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Pakistan, China to boost IT cooperation *

KARACHI: Pakistan and China have agreed to enhance collaboration in information technology trade, venture capital funds and IT parks to strengthen partnership in technology, an official statement said on Thursday.

Ã¢â¬ÅThis was decided in the first meeting of Pakistan-China Joint Working Group on Information Technology,Ã¢â¬Â said a Pakistan Software Export Board (PSEB) statement. The Chinese delegation comprised 17 members, including senior officials of the Ministry of Information Industry, led by Zhao Wenzhi, Deputy Director General, Foreign Affairs Department while Yusuf Hussain, MD PSEB led the Pakistani side.

It said the working group reviewed the current status and future direction of the IT industry of both countries.

Ã¢â¬ÅThe Chinese IT industry has achieved rapid growth in the last four years with domestic revenue at $48 billion,Ã¢â¬Â it said. Ã¢â¬ÅIT exports and outsourcing in China have also experienced rapid growth and crossed the billion dollar mark.Ã¢â¬Â

It said Pakistani IT industry had also experienced remarkable growth over the last three years, adding total industry size including global receipts of Pakistani IT companies, domestic revenue, hardware and IT services had crossed $2 billion.

Ã¢â¬ÅThe Joint Working Group members believe that collaboration between Pakistan and China in IT will be highly beneficial to both countries and will help them in becoming a world force in IT,Ã¢â¬Â it said.

Ã¢â¬ÅThe brotherly countries of Pakistan and China are poised to become world leaders in IT. We are eager to work closely with Pakistan to our mutual benefit,Ã¢â¬Â the statement quoted Zhao Wenzhi as saying.

MD PSEB Yusuf Hussain said China had experienced enormous growth over the last two decades and was poised to become a global IT leader. Pakistan had also shown tremendous economic growth and stability over the last few years, he added.

http://www.thenews.com.pk/daily_detail.asp?id=42046


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## Neo

February 09, 2007 
*$5.4bn power plan approved*

By Khaleeq Kiani

ISLAMABAD, Feb 8: The government on Thursday approved a plan to set up 11 power projects to cope with expected energy shortage of about 2000MW in coming years.

A mix of hydel-, coal- and gas-based projects, the $5.4 billion power projects would generate about 4,200 MW of electricity in three to seven years.

A meeting of the Private Power and Infrastructure Board (PPIB) presided over by Minister for Water and Power Liaquat Ali Jatoi decided to issue letters of interest to AES Corporation of the United States and Mitsui Corporation of Japan to conduct feasibility studies and then set up two power projects of 1000-1200MW each to be based on imported coal.

The coal-based projects would take about five years to start production with an estimated cost of $2.5 billion. The sponsors would be required to complete their feasibility studies in about one year and then complete construction of projects in about four years.

The board directed Wapda to instal a 100MW power plant in Khuzdar on a fast-track basis to improve the power supply situation in Balochistan, particularly in the Khuzdar area.

The meeting also approved a decision of the prime minister to set up another 450MW power plant based on low quality gas from the Uch field in Balochistan, instead of Sindh. These two projects are estimated to cost about $550 million.

The board approved issuance of letters of interest to various local and foreign firms to set up seven hydropower projects in the NWFP and Azad Kashmir with a total investment of about $2.4 billion. These projects would generate about 1620MW of power.

These include 197MW Kalam-Asrit Hydropower Project, and 209MW Asrit-Kedam Hydropower Project (both to be located in Swat) and 548MW Kaigah Hydropower Project (district Kohistan) NWFP.

The hydro projects to be located in Azad Kashmir include 240MW Karot Hydropower Project, Kotli, 65MW Sehra ÃÂ Hydropower Project, District Poonch, 222MW Azad Pattan Hydropower Project at Sudhnoti, and 139MW Chakothi Hattian Hydropower Project at Muzzaffarabad.

The meeting had been convened as a follow-up of an earlier meeting presided over by Prime Minister Shaukat Aziz a few days ago that had decided to speed up implementation of projects which had been in the pipeline for quite some time to meet energy shortages rising continuously by 10 to 12 per cent per annum.

While a number of projects -- mostly high-cost thermal -- have been lined up for commercial production after 2008, the immediate shortages expected to be up 2000MW in coming summer season could partially be met through about 300MW to be generated by two power projects recently imported form the United States on rental basis.

The tariff, however, of almost all the thermal power projects would average between 13 to 18 cents per unit on a levelized basis. Their tariff would, however, keep on going up continuously to reach about 29 cents per unit after 20 years or so, translating into Rs17 per unit from the current rate of about Rs4 per unit.

http://www.dawn.com/2007/02/09/top2.htm


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## Neo

February 09, 2007 
*Economy faces serious risks*

KARACHI, Feb 8: Pakistan's economy faces serious risks and challenges and desperately needs basic infrastructural changes. During the last two and a half financial years, many economic indicators are showing negative trends. The current account and trade deficits numbers are too high and the national exchequer is suffering a loss of Rs725 billion per month due to corruption, tax evasion, exorbitant expenditures and poor performance of public sector enterprises.

This was stated by Dr Shahid Hasan Siddiqui, a renowned economist and chairman of the Research Institute of Islamic Banking and Finance. He was speaking at a seminar on Ã¢â¬ÅWhere is Pakistan's economy headingÃ¢â¬Â which was organised by the Department of International Relations, University of Karachi on Wednesday.

Expressing concern over the economic scenario, Dr Saddiqui said that it was important to note that the situation today was far worse as compared to the state of affairs in 1999 when Pakistan was penalised with sanctions for going nuclear.

Giving a comparison between the 1999 and 2006 situations, he said inflation rate was 5.7 per cent in June 1999 and was over eight per cent in 2006; unemployment rate was 5.8 per cent in 1999 and 6.5 per cent last year; trade deficit was $1.5 billion in 1999 and $12 billion last year; the current account deficit was $1.8 billion in 1999 and over $5.2 billion last year. During the same period, the health expenditure as percentage of GNP had also gone down despite the fiscal space provided by 9/11.

The educational expenditure had not shown any improvement.

Banks had reduced their rate of returns from 6.5 per cent in 1999 to 2.5 per cent. That means they had enhanced their profitability tremendously, but were paying very less to the depositors. From 2000 to till to date, Rs450 billion had been paid less to the depositors, he said.

To improve the economy, he said, the policy of consumption led growth should be changed to production led growth. Consumer finance schemes should be banned and banks be directed to offer a minimum return of one per cent over the inflation rate to the saving bank account holder.

For the time being unless the tax GDP ratio was raised to 15 per cent in the shortest possible time, which would mean an increase of about Rs350 billion in the next financial year, the government can neither bridge the current deficit nor can provide development expenditures for education and health.

Dr. Siddiqui also criticised the government for selling profitable units to foreigners and maintained this could result in what he called re-colonisation. The government, he said, had violated law by using the money from the sale proceeds to meet the budge deficit, a product of corruption and tax evasion.

Referring to the initiatives for poverty alleviation, he said that it was ironic that in Pakistan Rs150 billion were given every year in charity, but that money was wasted in a sense that nobody came out of poverty.

There are reports that from the Zakat deducted by the government, about Rs6 billion are being used by senators to perform Umra every year.

http://www.dawn.com/2007/02/09/ebr3.htm


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## Janbaz

*Banks provide Rs231 billion to private sector*

ERUM ZAIDI
KARACHI - The domestic banks have provided Rs 231 billion credit to the private sector from July to January 21, 2007 as against Rs 273 billion credit provided in the corresponding period of last fiscal.
The SBP latest profile of monetary assets indicate that the commercial banks have provided Rs 225 billion credit to the corporate sector and individuals while the specialised banks extended Rs 5.40 billion credit during the said period of this fiscal.
The reason for this is that the impact of monetary tightening stance pursued in FY06 as well as the policy signals through the FY07 changes, has made evident in the slowdown in the private sector credit growth, which dropped to 5.9 percent during Jul-Nov FY07 against the10.9 per cent growth witnessed in the corresponding period of FY06.
A review of monthly trends in private sector credit shows that the slowdown is largely concentrated in the month of September 2006. Trends during October-November 2006 period depicts presence of strong demand for private sector credit in the economy. While the nominal lending rates are rising, the real lending rates are still very low. The real lending rates under export finance facility are even negative. Though the overall demand for credit by the private sector has decelerated, the slowdown is not broad-based. This shows that monetary policy would remain tight.
However, while the transmission of the monetary policy on lending rates has improved over the last year, the impact on deposit rates has been less than desired, contributing to an unhealthy high banking spread.
The available evidence shows that banks are mobilising deposits at higher returns and the share of such deposits has been rising. Since the long-term deposits lower the maturity mismatch for banks and reduce liquidity risks, it was expected that the banking spread would decline. But in the meanwhile, lending rates have also risen thereby leading to a sharp rise in the banking spread (calculated on the basis of incremental loans and deposits) in recent months. Such a large spread can have a dampening effect on economic growth by discouraging savings.
The available evidence suggests that the slowdown in private sector credit is not broad-based as the increased net retirement, particularly by the sugar manufacturers during Jul-Nov FY07 contained the growth in private sector credit and deceleration in bank credit against equities. The government borrowings from the banking system are higher and volatile. 

The Nation.
http://www.nation.com.pk/daily/feb-2007/10/bnews8.php


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## Owais

*Qatar Islamic Bank eager to invest in Pakistan *

DOHA: Qatar Islamic Bank (QIB) is interested to expand their banking operation by making investment in the banking sector of Pakistan.

A Qatar newspaper said that the QIB, the 4th largest ranked bank in Qatar, was keen to make investment in the baking sector in Karachi, Lahore and Islamabad.

State Bank of Pakistan for the issuance of license allowing Islamic banking in Pakistan requires the minimum of $67 million investment, which would be enhanced to $100 million by 2009.

The newspaper said that Pakistan since 2005 witnessed an unprecedented progress in the Islamic banking and the Islamic banking system was working in complete Sharia compliance. According to QIB report Pakistan GDP growth rate during the last three years recorded exceptional performance 

http://geo.tv/geonews/details.asp?id=1898&param=3


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## Neo

*Local cars' sales, production moving up *

KARACHI (February 10 2007): The production and sale of cars during the seven-month period (July - January FY07) were up by 5 percent and 7 percent to 86,992 units and 88,031 units respectively, while the statistics for the month of January alone suggest a single digit growth.

According to the data issued by the Pakistan Automotive Manufacturers Association (PAMA), tractor production and sales were up by 4 percent and 2 percent to 29,268 units and 28,675 units respectively. Trucks in the current year surpassed last year's production and sales by 4 percent and 6 percent to 2,551 units and 2,460 units. A jump was witnessed in LCV's whose production and sales posted a growth of 13 percent and 14 percent to 19,199 units and 19,195 units respectively.

Buses and motorcycles registered a decline in sales by 4percent and 12percent to 507 units and 263,698 units respectively. Overall units sold by the assemblers listed below during 7M/FY07 were up by 7percent to 134,418 units as against 125,629 units in the same period last year. However on m-o-m basis the unit sales were up by half a percent to 18,583 units (18,491 units in FM/FY06).

Those companies who performed better month-on-month registered a decline in the seven-month period and vice versa except Indus Motors and Millat Tractors. Pak Suzuki registered a sales growth of 27percent y-o-y and 8percent decline m-o-m basis.

Sales of 8,035 units in the month of January 2007 took the cumulative seven-month figures to 62,720 units. Indus Motors sales on m-o-m and y-o-y basis were up by 28percent and 18percent to 3,797 units and 26,802 units respectively. Dewan Motors sales during the seven month period of FY07 were down by 28percent to 6,186 units, however it managed to increase its sales by 5percent m-o-m to 905 units.

Al-Ghazi tractor managed to post a growth of 11percent to 15,379 units while Millat Tractors sales declined by 6percent to 13,296 units during July-January FY07.

Pak Suzuki's decline in sales on month-on-month basis can be attributed to the unhealthy performance of its newly introduced Suzuki Liana. Liana registered a decline of 84percent to 137 units during January 2007 when compared to 851 units in December 2006, said Hettish Karmani of Atlas Capital Markets.

Sales of Suzuki Jeep and Suzuki Ravi were also down by 49percent and 33percent, however better sales performance of its lower end segment cars Cultus and Alto led cumulative sales to increase during the period.

Indus Motors has rolled out all its inventories of Hilux with the remodelled brand coming up soon. On m-o-m basis sales of Corolla posted a healthy surge of 46percent whereas Cuore sales declined by 12percent. Dewan Motors hasn't produced Santro since last two months whereas Shehzore continues to be its leading brand.

Al-Ghazi leads the tractor assemblers segment in terms of market share with a 54percent share of the pie, rest being acquired by Millat Tractors. On m-o-m basis Al-Ghazi and Millat Tractors both registered a decline of 23percent and 16percent to 1,962 and 2,053 units respectively.

"When the capacities were intact and no expansions took place, the market share of individual car manufacturers was more-or-less constant over the years. However, realising the potential of Pakistan automobile sector and low motorization level the car assemblers carried out significant expansions during the last two years as a result a quantum jump can be witnessed in their market shares," the analyst added.

Plant capacity of Pak Suzuki has reached 150,000 units and the same for Indus Motors has crossed 50,000 hence enhancing their respective market shares by 8pps and 5pps in FY07 at the expense of others in the industry. It was also learnt that IMC is also launching Toyota Camry to be assembled at IMC plant. "It is crucial to maintain competitiveness in the automobile sector in the long term.

Transition from deletion program to a transparent and competitive TBS environment - a paradigm shift in the auto industry. Now, with a clearly spelt-out tariff policy for at least the next five years and a support program for its safe transition through a long-term auto policy, it's necessary for the assemblers to reach half a million capacity by 2012. The first advantage has already been taken by IMC and PSMC," Hettish added.

http://www.brecorder.com/index.php?id=527030&currPageNo=2&query=&search=&term=&supDate=


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## Neo

February 10, 2007 
*Trade moot to attract $3.375bn investment*

ISLAMABAD, Feb 9: The government is organising an Overseas Pakistanis Investment Conference (OPIC) here in the first week of March to attract over $3 billion investment mostly by Pakistanis living abroad.

Ã¢â¬ÅSome 257 overseas Pakistanis have shown interest to invest over $3.375 billion in different sectors in Pakistan, including real estate, communications, telecommunications, information technology, agriculture, health, education and in capital markets,Ã¢â¬Â minister for labour, manpower and overseas Pakistanis, Ghulam Sarwar Khan, told a press conference on Friday.

The event, to be held on March 5-6, will be attended by both President General Pervez Musharraf and Prime Minister Shaukat Aziz.

He said some 36 businessmen from Saudi Arabia were willing to invest $300 million, 55 from US have shown interest to invest $1.129 billion, 38 investors form UK will make an investment of $935 million and 18 businessmen from UAE wanted to invest $84 million.

"We have invited overseas Pakistanis across the world but a good number of foreign investors are also interested to come and invest in the country," the minister said.

He expressed the hope that the conference will help encourage and facilitate effective participation of overseas Pakistanis who were keen to take part in the country's economic development.

Ã¢â¬ÅThe conference is being held in view of an extremely favourable investment climate in the country,Ã¢â¬Â he said.

"It will also provide a platform to overseas Pakistanis to interact with the private sector and policy-makers in the country, besides, being instrumental in attracting direct foreign investment in Pakistan", he added.

Mr Khan said PakistanÃ¢â¬â¢s foreign missions had been requested through foreign office to send details and particulars of the potential investors in the two categories --- those who could invest $1 to 5 million and others who have potential to invest over $5 million.

The conference, he said, will provide an opportunity to interested parties to display their products and services at the exhibition pavilion of Jinnah Convention Centre.

He said Pakistan International Airlines (PIA) had offered 30 per cent discount for the registered participants of the conference.

The minister appreciated the efforts of Overseas Pakistanis Division and said they were playing role for the development of the country.

http://www.dawn.com/2007/02/10/ebr12.htm


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## Neo

*New power plan*

MORE power to the government if it can pull it off. On Thursday, the Private Power and Infrastructure Board approved of an ambitious but necessary $5.4 billion power plan that aims at adding some 4,200MW to the countryÃ¢â¬â¢s existing generation capacity in three to seven years. According to the Economic Survey of Pakistan, total installed generation capacity stood at 19,439MW in 2005-06. This figure is only 10 per cent higher than what it was in 1999. Fuelled by rapid economic expansion and a growing population, demand for electricity has been rising by more than eight per cent a year and now exceeds summertime supply by nearly 2,000MW, a shortfall that could to increase to 5,300MW by 2010. Over 60 per cent of the projects envisaged under the new plan will be based on coal and natural gas, with hydropower schemes in the NWFP and Azad Kashmir accounting for 1,620MW of the total output. Though relatively expensive to operate, thermal power projects have become inevitable in the short term, courtesy the authoritiesÃ¢â¬â¢ abject failure over the last eight years to plan for the future. Still, it is encouraging to note that coal-fired plants are being given due emphasis. Although they will be run on imported coal, the electricity generated should be significantly cheaper than what is produced by oil-based plants. Ultimately, one hopes, the countryÃ¢â¬â¢s vast indigenous coal deposits will be the source of supply for all such projects.

Along with thermal and hydropower plants, the government must accelerate efforts to fully exploit renewable energy sources. While solar energy is still an expensive proposition, wind and biomass power have already proven their cost-effectiveness in other countries. Geothermal power is another option that ought to be explored in earnest. Increasing generation capacity is, however, only one side of the coin. Transmission and distribution losses must also be tackled forthwith. WapdaÃ¢â¬â¢s T&D losses stood at 21 per cent in 2005-06, while 34.4 per cent of the KESCÃ¢â¬â¢s total available units were lost in transmission and distribution. This wanton waste of a precious resource is unacceptable. The transmission network must be overhauled and electricity thieves dealt with an iron hand.

http://www.dawn.com/2007/02/10/ed.htm#2


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## Neo

Saturday, February 10, 2007 

*Ã¢â¬ËEnergy consumption grew by 5.4% annually in 5 yearsÃ¢â¬â¢*

By Farhan Sharif

KARACHI: Increasing gap between energy consumption and supplies will continue to favor local Energy and Production (E&P) sector, according to a report compiled by Jahangir Siddiqui Capital Markets Limited.

By posting a five-year (from financial year 2002 to financial year 2006) compound annual growth rate (CAGR) of 6.1 percent, energy consumption, due to broad based economic growth, has outpaced supplies, which grew by 5.4 percent annually in this period.

In financial year 2006, while energy supplies grew by 4.2 percent, energy consumption rate, once again, beat the supply rate and recorded a growth of 5.7 percent.

In financial year 2006, PakistanÃ¢â¬â¢s primary energy supplies grew by 4.2 percent to 57.9 million toe (tons of oil equivalent) from that of 55.5 million toe in financial year 2005. The growth rate is lower than the preceding two-year 8.0 percent during financial year 2004 and 9.2 percent in financial year 2005 increase. The decline in growth rate was due to slowdown in the growth of gas coupled with falling high speed diesel (HSD) demand and reduction in coal imports by Pakistan Steel. Once again increase in energy supplies in financial year 2006 was mainly contributed by gas, given its highest share, followed by oil and hydel power.

According to the report, gas supply was up by 4.4 percent to 29.2 million toe while oil witnessed a nominal 0.5 percent increase to 16.4 million toe. Hydel power showed a healthy growth of 20.2 percent to 7.4 million toe, which was attributable to better availably of water in reservoirs. Oil share in domestic energy mix during financial year 2006 was 28.4 percent. This has been on the declining side since financial year 2000, when it used to be 43 percent. Despite rise in hydel generation, furnace oil usage grew by 11 percent to 4.92 million toe, which is an indication of growing energy appetite. Final energy consumption in financial year 2006 reported an increase of 5.7 percent to 33.9 million toe. With rising economy, energy deficiency is also widening with demand growing at faster pace than the supply.

Faraz Farooq, an analyst at Jahangir Siddiqui Capital Markets Limited said, in overall pie of energy supplies, the contribution made by the indigenous supplies was 74 percent in financial year 2006 against 72 percent in financial year 2005. The indigenous resource utilization ratio has been on rise in last five years as in financial year 2001 this ratio was 61 percent mainly due to rising gas supply. While gas demand is being met through local sources, domestic oil production of 3.2 million toe in financial year 2006 was only 21 percent of its demand. And the country imported 15.1 million toe of crude oil and refined products worth US$6.6 billion in financial year 2006.

Mr Farooq said natural gas is the mainstay of PakistanÃ¢â¬â¢s energy mix with a share of 50 percent in the overall energy pie. This is because PakistanÃ¢â¬â¢s exploration acreage is largely skewed towards gas. In Asia Pacific region, Pakistan ranks sixth in terms of balance recoverable gas reserves. In India, gas occupy only 9 percent share with major reliance on coal. In Asia Pacific region, gas accounts for 11 percent of the primary energy supplies.

Ã¢â¬ÅSituation favours the E&P companies,Ã¢â¬Â he said. With oil and gas occupying 80 percent share in primary energy supplies, the rising energy consumption is a positive development for the E&P firms. Besides local oil production meets only 21 percent of its demand, Pakistan is also pursuing a gas supply shortage of around 1,000mmcfd by financial year 2010. Thus, the situation favors the E&P sector and provides an opportunity to enhance exploration activities and realize the upside potential in their asset portfolios, according to Mr Farooq.

http://www.dailytimes.com.pk/default.asp?page=2007\02\10\story_10-2-2007_pg5_6


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## Janbaz

*Breakthrough in engineering exports *

By our correspondent

LAHORE: Pakistan has emerged as a potential supplier of cane crushing machines in global sugar industry after the sale of 20,000 tonne capacity sugarcane crushing plant to a US based sugar manufacturer.

This was stated by the chairman Engineering Development Board Imtiaz Rastgar while talking to the media during the visit of the mill that succeeded in marketing its plant for the first time to a sugar mill of developed country. He said Pakistan&#8217;s engineering potential was not exploited earlier due to lack of marketing skills.

He said sugar industry is expanding at a very rapid pace globally as it also provides bio-fuel that is in great demand after increase in crude oil rates. He said global sugarcane crushing capacity has increased from 132 million tonnes in 1999-2000 to 150 million tonnes in 2005-06. He said the capacity is projected to increase to 200 million tonnes by 2012.

He advised the Pakistani manufacturers to exploit the global market through dedicated marketing to major sugar producing countries like Brazil, India and Indonesia. He said Engineering Development Board that would soon be converted in to an autonomous authority would fully facilitate the engineering sector in exploring global markets. 

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=42322


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## Janbaz

*Major financial institutions satisfied with Pak performance*

Staff Report

ISLAMABAD: Three reputed international financial institutions such as Citigroup, JPMorgan and Merrill Lynch&#8217;s have expressed satisfaction with Pakistan&#8217;s economy and indicated that the economic policy will achieve its medium-term goals and growth rate, according to Update on Pakistan&#8217;s Economy released by Debt Office, Ministry of Finance here on Saturday.

The report says that the first week of the month of February 2007 has been highly encouraging for Pakistan&#8217;s economy as three international financial institutions released their reports/economic analysis on Pakistan&#8217;s current and future economic outlook. JPMorgan market primer entitled &#8220;Pakistan: Just Push Play&#8221; gives a comprehensive outlook of the Pakistani economy in the New Year.

This was followed by another document by Citigroup entitled &#8220;Asia Sovereign Monthly-Finding Value in a Frothy Market&#8221;. In this update Citigroup reviewed the performance of Pakistan&#8217;s economy and future prospects.

Finally, Merrill Lynch&#8217;s economic analysis on Pakistan entitled &#8220;2007 to be a Challenging Year for Pakistan&#8221; was also unveiled. This Report reviewed the economic environment in Pakistan. All the three economic analysis have many good things to say on Pakistan&#8217;s economy and its future prospects. According to the JPMorgan, Pakistan&#8217;s economic performance in the past five years has been commendable. The industrial sector has performed well in recent years, growing at close to a double digit pace. The start of 2006-07 has been good with July-Sep. manufacturing growth is around 11.2&#37;. JPMorgan believe that manufacturing will continue to post double-digit growth in the medium term, as new capacity comes on line in key sectors.

Rivalling the strong growth in industry is the recent track record in services. This is particularly true of growth in telecom and financial sectors. Pakistan&#8217;s financial sector has seen tremendous growth in the past few years and has been the driving force behind sustained above average services sector growth. The banking sector profitability has broken its own record year after year.

The boom in mobile phone subscribers and the number of motor vehicles on the road have provided the impetus for value addition in transport, storage, and communications sub sectors. Driven by these two sectors, the overall services are likely to continue to increase its weight in GDP in the medium-term.

The inflation in Pakistan has stayed persistently high, with the most recent reading in Dec. 2006 jumping to 8.9%. Surging exports, and an expansionary fiscal stance, and abundant liquidity have underwritten rapid output growth over the last three years.

These factors, together with the rapid rise in the energy cost have fuelled the country&#8217;s high inflation rate. The monetary policy, which had been very accommodative since 2001-02, gradually began to tighten starting in mid 2004. While the headline CPI remains alleviated, core inflation has fallen to 5.5% in Dec. 2006 from 7.4% a year earlier. The higher level of CPI stems from higher food prices still prevalent in the economy. Pakistan&#8217;s external account has seen significant swings, first into large surplus and now deficits of a similar magnitude.

On the other side of the balance of payments, the surge in capital inflows has been more than sufficient to cover the alleviated current account deficit, allowing foreign exchange reserves to be stable-to-higher.

Over the medium term, financing the current account deficit will require sustained inflow non-debt creating capital. This means that the recent success of the privatisation programme must continue, as must Pakistan&#8217;s increased attractiveness to foreign investors. In addition, Pakistan has shown the ability to access international capital markets at attractive spreads over low US treasury yields. The IMF, in its recent assessment has stated that it believes that Pakistan&#8217;s external financing prospects can remain favourable for several years.

According to the Citigroup Report, macroeconomic trends are supportive of an improving credit story in Pakistan, which is already increasingly reflected by its recent out performance of its dollar bonds (particularly the Pakistan 2036). In addition, Pakistan has succeeded in bringing down public debt from more than 90% of GDP in 2000-01 to an estimated 56% in 2005-06, which is estimated to further fall to about 53% in 2006-07. Pakistan this year again has been dogged by persistently high inflation of 8.9%, which is hence accompanied by a tight monetary policy by the SBP. Citigroup has also mentioned about the widening of current account deficit on the back of a strong aggregate demand. However, both JPMorgan and Citigroup agree that large inflows on the financing side of balance of payment including foreign direct investment has ensured a full financing of the current account deficit in 2005-06 and added to foreign exchange reserves. The prospects for a similar outcome in 2006-07 and beyond looked good according to these institutions.

According to Merrill Lynch, the strength of Pakistan&#8217;s economy in the face of various exogenous shocks in 2005-06 and the country&#8217;s future prospects in 2006-07 appears to be on track. In their opinion, the continuation of positive structural trends of Pakistan&#8217;s economy is due to the government&#8217;s far reaching macroeconomic and structural reforms initiated over the last several years, which subsequently have propelled the economy to an annual expansion of about 7 percent over the last five years. A new dynamism has taken hold in economic activity and social indicators have improved which together augur well for continued rapid development, said the Analysis. Merrill Lynch estimates that Pakistan&#8217;s economy is likely to grow by 7-7.5 percent in 2006-07 &#8211; backed by robust domestic consumption. They also see great progress in reducing inflation from 9.3% in 2005-06 to 7.75% in 2006-07.

Daily Times.
http://www.dailytimes.com.pk/default.asp?page=2007\02\11\story_11-2-2007_pg5_11


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## Owais

PM says PSO sell-off with maximum return soon 


LAHORE (updated on: February 11, 2007, 02:39 PST): Prime Minister Shaukat Aziz on Saturday said that Pakistan State Oil (PSO) was the next state owned enterprise to be privatised.

'This is a national asset, government is trying to get maximum return for it,' he said while talking to mediamen at Governor's House here.

He said that the privatisation process was going on according to schedule.

About government's efforts to keep the prices of commodities stable, Shaukat Aziz said that government was taking necessary measures to keep the prices of daily use items at a reasonable level.

He referred to government's action to bring down the prices of cement and added that government had convened the meeting of the stakeholders to address the situation arising after the recent increase in the prices of the commodity.

On the current wet spell, Shaukat Aziz said the rains were going to have salutary effects on the crops especially wheat.

"I congratulate the entire nation on the in time rains," he said.

brecorder.com


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## Owais

*Need stressed to raise level of trade between EU and Pakistan *

KARACHI (February 11 2007): Despite gradual removal of barriers and liberalisation granted to Pakistan by the European Union it accounts for 0.3 percent of EU exports and imports.

Sabastian Edathy, Chairman of the Home Affairs Committee of the German National Parliament, speaking on "Regional Co-operation in South Asia in the German and European Perspective" at a local hotel on Saturday said that there was need to raise the level of trade and commerce between the EU and Pakistan. Karachi Council on Foreign Relations, Economic Affairs and law had organised this lecture.

Edathy said that EU is Pakistan's largest trading partner, accounting for 28 percent (3 billion Euro) of its export and 17 percent (2 billion Euro) of its imports in 2004. Pakistan is, however, only the EU's 43rd trading partner accounting for 0.3 percent of EU exports and imports. Germany consumed around 4.8 percent of Pakistan's exports which consisted mainly of textiles, clothing and agricultural products.

He said that while Pakistan's main export to EU were textiles, clothing and agricultural products, the EU's main export items were machinery (45 percent of 1.3 billion Euro) and chemicals (18 percent or 525 million Euro).

He said that in view of Pakistan's contribution in fight against international terrorism, from 2002 onwards the EU had lowered tariffs on Pakistan textile exports to the benefit of Pakistan's economy. "Both parties signed a co-operation agreement in 2001 which took effect from 2004 onwards and are currently negotiating the third generation of an agreement."

He said that Pakistan's exports to the EU had been increasing in recent years (7.3&#37; in 2004, 3 percent in 2003, 3.8 percent in 2002 and 8.4 percent in 2001) but a lot was yet to be done to make it grow and become self-sustaining.

He said that the EU is a strong advocate for fostering regional co-operation and integration. "Pakistan on the other hand has also engaged in regional co-operation for quite some time."

Edathy said that Pakistan had been on the forefront of regional integration in Asia, which was evident from its role in Saarc, its accession into the Commonwealth of Nations in 2004 and becoming a member of Asean Regional Forum.

He said, "The EU takes the view that it can help consolidate the ongoing integration process through its economic influence in the region, its own historical experience of economic and trade integration and of dealing with diversity, and its interest in crisis prevention."

He said that the European Commission, the EU executive body, was in the process of designing a new. Broader programme of co-operation with Saarc, which should notably seek to promote the harmonisation of standards: facilitate trade, raise awareness about the benefits of regional co-operation, and promote business network in the Saarc area.

Talking about the assistance package given in January 2007 by the EU commissioner for external relations and neighbourhood policy, Benita Ferrero-Waldner, to Prime Minister Shaukat Aziz, said that it had been proposed to give 200 million Euro over the next four years.

"A major part of 200 million Euro will be spent on rural development in the NWFP and Balochistan to strengthen natural resource management, develop community infrastructure and to improve livelihoods and employment opportunities, thus contributing towards enhancing Pakistan's economic and social cohesion."

He said that the overall aim of EC operations in Pakistan was to fight poverty and to help Pakistan in following a sustainable growth path and a stable development.

Over a five-year period from 2002-2006, the European Commission has provided a total of 125 million Euro in development co-operation funding to Pakistan.

He said that the European Union was still in need of a common constitution and foreign policy without which its effectiveness would remain diluted. "There are issues that the member states have to sort out to avoid such difference of opinion as was witnessed on the question of Iraq - who should support the USA stand and who should not."

He said, "After what amounts to half a decade of European integration, the EU is now at a crucial point. Over the last 50 years it has grown almost fivefold in terms of member's states, and has been a major force in pacifying and sustaining economic growth in the region which has almost 500 million inhabitants. It is an economic heavy weight and aspires to become a political heavy weight, too."

Chairman of the Karachi Council on Foreign Relations, Economic Affairs and Law retired justice Saeed-uz-Zaman Siddiqui in his brief remarks spoke about the ineffectiveness of the EU in matters of trade and commerce vis-&#224;-vis Pakistan.

http://brecorder.com/index.php?id=527369&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pakistan going through exciting period: London Mayor *

LAHORE (February 11 2007): London Lord Mayor Alderman John Stuttard has said that there is a huge untapped potential to further increase co-operation between Pakistan and the United Kingdom, particularly in the areas of trade and investment.

He stated this while speaking at the Lahore Chamber of Commerce and Industry (LCCI) on Saturday. LCCI President Shahid Hassan Sheikh, Senior Vice President Yaqoob Tahir Izhar and Vice President Mubasher Sheikh also spoke on the occasion.

Alderman John Stuttard appreciated the economic stability achieved by Pakistan during the recent years and said that Pakistan stands out within Asia as an example of economic growth. "Pakistan is going through an exciting period. Improvement in economy, high growth, increase in GDP and political stability achieved during the last seven years are unrivalled in its history and contributing to elimination of poverty," he added.

According to him, the openness of economy has encouraged global investors and international companies to expand their operations in Pakistan. The success of Pakistan's reform agenda has not been fully brought to the attention of the world. The success of Pakistan's reform agenda is a hidden secret, which needs to be publicised more.

Talking about Pakistan's efforts to promote regional co-operation, Shahid Hassan Sheikh said that Pakistan is ideally situated to be a regional anchor for peace and stability. Pakistan, he said, provides the shortest access to the sea for the landlocked Central Asian States as well as western China through Karachi, Bin Qasim and Gwadar Ports. He said that the economy of Pakistan has undergone a structural change under the present regime. "Pakistan's strength at present lies in textiles, however the automotive sector, pharmaceuticals and electronics/electrical/home appliances are showing great promise on the basis of a fast growing middle class, consumer financing and capacity utilisation," he added.

He further said the share of agriculture in GDP has fallen from 39 percent in 1969-70 to 21.6 percent in 2005-06. During the same period share of services sector has increased from 38.4 percent to 52.3 percent and manufacturing to 18.2 percent. This robust growth has mainly been contributed by wholesale and retail trade, transport and communications and finance and insurance sub-sectors, he said, adding, the finance and insurance sub-sectors registered a growth of 23 percent during last year.

Although it was a little lower than 29.7 percent of the previous year it was still a significant improvement. There was a considerable improvement in the profitability of the commercial banks and insurance companies. The financial institutions of the country have never had it so good. Their profits are at record levels due to high banking spread and unprecedented consumer financing, he added.

"The UK is the third largest country, which has made investment in Pakistan. British investment in Pakistan stood at US $224.5 million, which was six percent of total foreign investment made in Pakistan up to the end of 2005-06. About 70 British multinationals have invested in various sectors such as food, tobacco and cigarettes, textiles, chemicals, petroleum refining, oil and gas, pharmaceuticals, cosmetics, cement, power, communications, financial services, etc. The Lahore Chamber is particularly keen in British investments that could provide transfer of technology to Pakistan and help Pakistan become a knowledge-based economy," he told the Mayor.

LCCI Senior Vice President Yaqoob Tahir Izhar said that the Higher Education Commission of Pakistan is revamping the higher education in the country and setting up Technical Universities. "UK is the major source of knowledge and the Pakistanis would appreciate if the UK could consider setting up some state-of-the-art scientific and technical universities in Pakistan in consultation with the HEC besides setting up chairs of some universities of UK in the engineering universities of Pakistan. The UK may also consider granting of generous scholarships to Pakistani students. The Pakistanis living in the UK who have become an integral part of the British community are not only contributing to the British economy but have also been a major source of foreign remittance for Pakistan," he added.

LCCI Vice President Mubasher Sheikh said that London has a population of over 7.5 million but the local government system of the City of London is so deep rooted and disciplined that every civic responsibility is being discharged most efficiently. He observed that there are no traffic jams, no violations of traffic, no pollution, no littering of streets with dust and garbage etc. Lahore has almost the same population. He urged the delegation to extend co-operation so that Pakistan could be able to streamline its civic services.

http://www.brecorder.com/index.php?id=527409&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Lahore-Rawalpindi bullet train: Railways signs feasibility study deal *

ISLAMABAD (February 11 2007): Pakistan Railways on Saturday signed an agreement with an Austrian and Spanish-based consortium to carry out feasibility study for high-speed train between Rawalpindi and Lahore. The study for laying high- speed track, to be completed in nine months, was signed at the Ministry of Railways here.

Minister for Railways Sheikh Rashid Ahmed and Secretary and Chairman Railways Shakil Durrani were present. General Manager Railways Assad Saeed signed the agreement. Managing Director Mr Santiago represented the consortium, M R Consult.

Officials from the embassies of Austria and Spain also were present there to witness the signing ceremony. Pakistan Railways has planned to start high-speed train service between Rawalpindi and Lahore before 2010. The train's speed is estimated at 250 to 300 kilometres per hour.

M R Consult is the firm which has won the contract for quoting the lowest rates of Rs23.97 million among eight bidding companies from USA, China, France, Sweden, Austria and Spain.

http://www.brecorder.com/index.php?id=527437&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*'Laws to be changed to suit investors' *

ISLAMABAD (February 10 2007): The government on Friday promised outright changes in such laws which are being seen by international organisations, like the World Bank, as hurdle to foreign investment in Pakistan.

At a news conference here, Labour Minister Ghulam Sarwar said that the government was contemplating many options to consolidate laws, especially those related to hiring and maintaining industrial labour.

He told media that suggestions from potential overseas Pakistani investors in the process would be given due consideration at a conference here early next month. "We (government) would certainly be moulding laws in such a way that could attract more and more foreign investment," he said.

Many international organisations, including World Bank (WB), have of late been critical of what they call too many and too confused labour laws in Pakistan. They have several times pressed Pakistan government to consolidate such legislation's.

Sarwar said that the first ever 'Overseas Pakistanis Investment Conference', scheduled for March 5-7 in Islamabad, would provide guidelines to initiate altering these laws. More than 250 potential overseas Pakistanis have confirmed their participation in the conference being conceived as an opportunity for them to explore investment prospects back home.

Around 200 entrepreneurs from within the country would also attend the conference, titled as 'Opportunities that Belong to You' and being organised by Overseas Pakistanis Division.

Thirty-six participants will come from Saudi Arabia, 29 from UK, 22 from UAE, 12 from Qatar, and some foreign investors (partners of overseas Pakistanis) have also shown interest to attend the conference.

http://www.brecorder.com/index.php?id=527072&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*Analysts suggest caution as KSE touches 9-month high *

By Salman Siddiqui

KARACHI: The outgoing week (February 06-09) is the seventh in sequence of closing the Karachi bourse on positive note. However, the process of much awaited technical correction was initiated on weekend.

KSE 100-Index moved ahead by another 255.01 points on week-on-week basis and closed above nine-month high record at 11,844.65 points despite of the bearish resistance it faced during week.

To calculate the future movement of the benchmark, it is worth mentioning here that 100-Index breached through 12,000 points on aggressive buying on Friday, but market failed to sustain this level. Corrections reversed the earlier gains after touching 12,047.72 points peak level this week. 

Moreover, 100-Index has surged by 1,804.15 points or approximately 18 per cent in calendar year 2007 to date.

On the other hand, free float shares based 30-Index breached through 15,000 points level for the first time in its brief history, adding another 408.34 points during the week and closed at 15,023.93 points. It hit the intra week high of 15,336.87 points in the last twin-trading session at KSE.

Market on Monday (February 05) remained closed on account of Kashmir Day. It saw only four sessions all were volatile. Out of four, first three sessions of the week managed to close in green, while weekend twin-trading session closed in red.

Ã¢â¬ÅA deeper correction is expected in initial sessions of coming week that is still overdue, but in the long run market would sustain well above 12,000 points level in the ongoing financial results announcement seasonÃ¢â¬Â, said Ahsan Mehanti of Shazad Chamdia Securities.

The daily turnover in the ready market remained above nine month high in their respective single sessions. The average daily turnover in this market increased significantly from 380.270 million shares of the last week to 433.815 million shares this week, therefore, the total turnover of the proceeding week stood at 1.735 billion shares.

Prominent buying in telecom and cement sectors besides uploading of other stocks injected another Rs69 billion in overall market capitalisation that reached to Rs3.226 trillion this week.

Ali Khizar of JS Research observed that unlike last few weeks, where heavy weight E&P and Banks rallied the market, telecom and cement sectors were the main drivers of the indices this week. Although the oil prices rebound to $60 per barrel in the international markets, E&P sector under performed the market by 3.1 per cent. PTCL was the best performer amid foreign buying and gained 12 per cent, thereby, leading the sector to outperform the market by 9.3 per cent, he added.

In cement, sector record high dispatches and rising prices kept the investors on the toes and the sector outperformed the market by 7.6 per cent. Moreover, PSO remained hot on the basis of news on the privatisation front as the scrip price has soared by 4.5 per cent on week on week basis, he added. 

Muhammad Sohail, Head of JS Research, said, Ã¢â¬ÅIt is hard to measure the investment strategy of foreign fund managers in conformity with sentiments prevailing at Karachi bourse. But persistently increasing inflow of foreign portfolio investment, that surged by another $110.055 million only in February 2007, gave a guess that they would continue to invest here.Ã¢â¬Â

Special Convertible Rupee Accounts (SCRAs), which is the foreign portfolio investment account managed by SBP, reached record high at $491.693 million from July 2006 to date, according to SBP website.

Moreover, All Pakistan Cement Manufacturers Association (APCMA), at a meeting with Federal Minister for Industries and Special Initiatives, Jehangir Tareen Khan, fixed average retail price of cement at Rs260 per 50 kg bag on Saturday, would play its role but positive, another analyst said.

Cement price at preset stood at Rs275 per bag that surged from Rs180 per bag in a short span. Rs15 per bag is not a deeper cut and is not likely to affect market sentiments badly, he added. 

The Continuous Funding System (CFS) value showed a marginal decline of Rs300 million and was recorded at Rs51 billion on Friday. This shows that genuine buyers are entering the market replacing the weak holders. Average CFS rates on the other hand, was recorded at 17.6 per cent - up by 103 bps.

On the future counter, open interest in FebruaryÃ¢â¬â¢s contract swelled by 18 per cent to Rs9.3 billion, whereas, cost of carry was down by 190bps to 3.2 per cent at the end of the week. Thus, some shifting from CFS to futures was also observed.

http://www.thenews.com.pk/daily_detail.asp?id=42317


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## Neo

*IFIs paint rosy picture of Pak economy *

By Khalid Mustafa

ISLAMABAD: Three international financial institutions (IFIs) including JP Morgan, Citigroup and Merrill Lynch have painted a rosy picture of PakistanÃ¢â¬â¢s economy, saying the GDP growth is higher, poverty rates are down, FDI is up and fiscal deficits are down.

However, in their analysis and reports about PakistanÃ¢â¬â¢s economy, the three IFIs mentioned that the current account balance had shown deficit, although overall external balances are healthy.

According to Update PakistanÃ¢â¬â¢s Economy, the first week of the month of February 2007 has been highly encouraging for PakistanÃ¢â¬â¢s economy as three international financial institutions released their reports and economic analysis on the countryÃ¢â¬â¢s current and future economic outlook.

JP Morgan market primer entitled Ã¢â¬ÅPakistan: Just Push PlayÃ¢â¬Â gave a comprehensive outlook of PakistanÃ¢â¬â¢s economy in the new year. This was followed by another document by Citigroup entitled Ã¢â¬ÅAsia Sovereign Monthly-Finding Value in a Frothy MarketÃ¢â¬Â. In this update, Citigroup reviewed the performance of PakistanÃ¢â¬â¢s economy and future prospects.

Finally, Merrill LynchÃ¢â¬â¢s economic analysis on Pakistan entitled Ã¢â¬Å2007 to be a Challenging Year for PakistanÃ¢â¬Â was also unveiled. This report reviewed the economic environment in Pakistan.

All the three reports and economic analysis have many good things to say on PakistanÃ¢â¬â¢s economy and its future prospects. According to JP Morgan, PakistanÃ¢â¬â¢s economic performance in the past five years has been commendable. GDP growth is higher, poverty rates are down, inflation is lower, FDI is up and fiscal deficits are down. However, the current account balance has turned towards deficit, although overall external balances are healthy.

Driving all of these improvements has been an environment of relative political stability under the pro-reform administration of President Musharraf and Prime Minister Shaukat Aziz.

PakistanÃ¢â¬â¢s economy grew 6.6 per cent during 2005-06 - the third consecutive year of GDP growth exceeding 6 per cent compared to the rest of emerging Asia. Recent track record puts PakistanÃ¢â¬â¢s GDP growth rate solidly in the top half of the regionÃ¢â¬â¢s fast growing economies.

PakistanÃ¢â¬â¢s government is targeting a 6-7 per cent range for real GDP growth over the medium term. Though this target may seem aggressive against a 10-year historical average of close to 5 per cent, recent structural reforms and privatisations have improved the overall business and investment climate substantially.

The industrial sector has performed well in recent years, growing at close to double-digit pace. The start of 2006-07 has been good with July-Sept manufacturing growth around 11.2 per cent.

JP Morgan believes that manufacturing will continue to post double-digit growth in the medium term, as new capacity comes on line in key sectors.

Rivaling the strong growth in industry is the recent track record in services. This is particularly true of growth in telecom and financial sectors. 

PakistanÃ¢â¬â¢s financial sector has seen tremendous growth in the past few years and has been the driving force behind sustained above average services sector growth. Banking sector profitability has broken its own record year after year.

The boom in mobile phone subscribers and the number of motor vehicles on the road have provided the impetus for value addition in transport, storage and communications sub-sectors.

Driven by these two sectors, overall services are likely to continue to increase its weight in GDP in the medium term.

Inflation in Pakistan has stayed persistently high, with the most recent reading in December 2006 jumping to 8.9 per cent. Surging exports, an expansionary fiscal stance and abundant liquidity have underwritten rapid output growth over the last three years. These factors, together with the rapid rise in energy cost, have fueled the high inflation rate.

Monetary policy, which had been very accommodative since 2001-02, gradually began to tighten in mid-2004. While headline CPI remains elevated, core inflation has fallen to 5.5 per cent in Dec 2006 from 7.4 per cent a year earlier. The higher level of CPI stems from higher food prices still prevalent in the economy.

PakistanÃ¢â¬â¢s external account has seen significant swings, first into large surplus and now deficits of a similar magnitude. On the other side of the balance of payments, the surge in capital inflows has been more than sufficient to cover the current account deficit, allowing foreign exchange reserves to be stable-to-higher.

Over the medium term, financing the current account deficit will require sustained inflow of non-debt creating capital. This means that the recent success of the privatisation programme must continue, as must PakistanÃ¢â¬â¢s increased attractiveness to foreign investors.

In addition, Pakistan has shown the ability to access international capital markets at attractive spreads over low US treasury yields. The IMF, in its recent assessment, has stated that it believes that PakistanÃ¢â¬â¢s external financing prospects can remain favourable for several years.

According to the Citigroup report, macroeconomic trends are supportive of an improving credit story in Pakistan, which is already increasingly reflected by the recent outperformance of its dollar bonds (particularly the Pakistan 2036).

In addition, Pakistan has succeeded in bringing down public debt from more than 90pc of GDP in 2000-01 to an estimated 56pc in 2005-06, which is estimated to further fall to about 53pc in 2006-07.

Pakistan this year again has been dogged by persistently high inflation of 8.9pc, which is hence accompanied by a tight monetary policy by the SBP.

According to Merrill Lynch, the strength of PakistanÃ¢â¬â¢s economy in the face of various exogenous shocks in 2005-06 and the countryÃ¢â¬â¢s future prospects in 2006-07 appear to be on track. In their opinion, the continuation of positive structural trends of economy is due to the governmentÃ¢â¬â¢s far-reaching macroeconomic and structural reforms initiated over the last several years, which subsequently have propelled the economy to annual expansion of about 7 per cent over the last five years.

A new dynamism has taken hold in economic activity and social indicators have improved, which together augur well for continued rapid development, said the analysis.

Merrill Lynch estimates that PakistanÃ¢â¬â¢s economy is likely to grow by 7-7.5 per cent in 2006-07, backed by robust domestic consumption. They also see great progress in reducing inflation from 9.3pc in 2005-06 to 7.75pc in 2006-07. 

http://www.thenews.com.pk/daily_detail.asp?id=42323


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## HASEEB66

KARACHI AND LAHORE ESPECIALLY KARACHI NEEDS UNDERGROUND TUBE SYSTEM AND ALL OTHER CITIES NEED ESPECIALLY MIDDLE SIZE CITIES LIKE HYDERABAD SUKKUR FAISALABAD SIAKKOT GUJRAWALA..BAHAWALPUR..NEED RING ROADS..


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## Owais

*World Bank cautions against go-slow towards dams *

ISLAMABAD (February 12 2007): The World Bank's visiting team has cautioned that Pakistan's go-slow policy for construction of the new water reserviours could threaten the country's very survival. The delegation, headed by World Bank senior advisor on water and other related issues, David R.C. Grey, held detailed discussions with the officials on 'The future progress in water sector including implementation of water country strategy and note on Indus 21'.

The delegation came to Pakistan on February 7 and held detailed discussions with the officials of the Ministry of Water and Power, Economic Affairs Division (EAD), Ministry of Finance and Advisor to Prime Minister Dr Salman Shah till February 10.

Sources told Business Recorder on Sunday that the World Bank delegation presented the strategy paper to the officials during the meetings, which covered Pakistan's key issues relating to water. These in particular included the quickly shrinking water availability to farms; wastage of water and its improper utilisation; poor distribution system; and construction of the new big water reserviours.

Sources said that the officials presented details of the steps taken by the government for improvement in water utilisation and construction of new dams. The delegation was also given a comprehensive briefing on five mega dams under process for construction to increase water storage capacity to an optimal level.

The strategy paper also covers challenges confronting Pakistan as far as construction of mega dams, including Kalabagh and Basha dams.

They said that the delegation wanted implementation of the country's water strategy as a whole to help Pakistan address its water related issues.

The strategy said that Pakistan is an arid country. The balance between population and available water already makes Pakistan one of the most waterstressed countries of the world. It said that with rapid population growth it would soon enter a condition of absolute water scarcity. In the cultivable plains, rainfall ranges from about 500 mm a year along the Punjab border with India (which receives some rainfall from the summer monsoon) to only 100 mm a year in the western parts of Pakistan. These low precipitation levels mean that rain-fed, or barani, agriculture is not possible on a large scale in Pakistan.

Throughout history, people have adapted to the low and poorly distributed rainfall by either living along the river banks or by careful husbanding and management of local water resources. One of the greatest of human civilisations - the Indus Valley (Mohenjodaro and Harappa) civilisation flourished along the banks of the Indus. But, under natural conditions, population densities were necessarily low.

It counted challenges confronted by Pakistan and said that the first challenge for Pakistan is a political challenge which arose because the hastily-drawn lines of Partition severed the irrigated heartland of Punjab from the life-giving waters of the Ravi, Beas and Sutlej rivers (Figure).

The second challenge is a hydraulic challenge, because there is now a mismatch between the location of Pakistan's water (from the Indus, Jhelum and Chenab, the so-called western rivers) with the areas that had previously been irrigated from the Ravi, Beas and Sutlej (which are now 'India's rivers').

The third challenge is neither political nor hydraulic, but ecological. It is this last reality which gives rise to the third major water challenge which Pakistan has to face at and after Independence. Hundreds of billions of cubic metres water is now stored in the naturally-deep aquifers of Punjab alone. The groundwater table rose dramatically and in many areas water tables now reach the level of the land. And, these waters are rich in salts, which have been absorbed from the soil. After the water evaporated, the land is covered with a crispy layer of life-suppressing salt.

In the early 1960s it appeared that Pakistan was doomed, ironically, to a watery, salty grave. It added that the response of public and infrastructure partition both created Pakistan and did it in such a way that the very survival of the country was put in jeopardy.

http://brecorder.com/index.php?id=527623&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*779 percent increase in July-November trade deficit with India *

KARACHI (February 12 2007): Pakistan's trade deficit with India is likely to cross $1 billion this fiscal year, as it was already over $416 million during July-November 2006 against $47 million in the same period of last fiscal year, depicting an increase of $369 million or 779 percent.

The State Bank of Pakistan statistics show that trade with India is not in favour of Pakistan and the country faces huge deficit. Statistics shows that Pakistan trade deficit with India has been reached to $ During this period, Pakistan's imports from India amounted to $495 million, while exports remained to only $78 million.

According to SBP statistics, Pakistan's exports to the India during July-November 2005 were around $127.59 million (Rs 7.665 billion), while imports were up at $174.31 million (Rs 10.458 billion), depicting a deficit of $47 million. During first two months of current fiscal year (July-August 2006), trade deficit with India amounted to $248 million--$101 million in July, and $147 million in August.

During September 2006, the deficit was of $65.8 million; October $65.7 million; and in November $35.5 million.

During last fiscal year (2005-06) Pakistan's total trade deficit with India was $506 million, but economic analysts' fear that at the end of the current fiscal year Pakistan's trade deficit with India may touch all-time high, crossing $1 billion.

Traders said that rising food items imports from India had put a negative impact on the balance of trade with India, causing gradual increase in Pakistan's trade deficit with that country.

They said that during last two years the government had taken some steps to boost the bilateral trade with India, but only India was getting benefit of these steps.

http://brecorder.com/index.php?id=527626&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Shaukat sees $6 billion FDI during current fiscal year *

ISLAMABAD (February 12 2007): Prime Minister Shaukat Aziz Sunday said due to liberal, consistent and investment friendly economic policies of the government, there will be a record foreign direct investment of over six billion dollars during the current fiscal year.

Talking to a group of newsmen here at Prime Minister House, he said Pakistan, is fast becoming a regional hub for investment and attracted $3.2 billion foreign direct investment last year - the largest in the country's history, which is expected to increase $6 billion.

The Prime Minister said that in the last seven years the size of the country's economy and its per capita income have doubled and increased to dollars 846. He said due to over 7 per cent growth in the economic sector in the last five years, job opportunities have been increased and middle class is expanding.

Shaukat Aziz said there has been a huge potential for investment in many sectors including baking, services, information and technology and infrastructure improvement.

He said the international organisations have also ranked Pakistan as the top reformer in South Asia and tenth in the world.

Shaukat Aziz said due to its geographical location and its presence at the crossroad of South Asia, Central Asia and other countries of the region, Pakistan has a unique location for foreign investment.

He said the government has given importance to ensuring continued stability, consistency and continuity of policies and good governance so that the country can reach its full potential.

The Prime Minister said that the benefits of economic development and growth have started reaching the people and the government is making every effort to bring about a meaningful and positive change in the life of the common man.

He said Pakistan has been making efforts for energy, food and water security with the help of other neighbouring countries, as these are most important to promote progress and development.

He said that political and economic stability in the country is the result of the reform initiated and introduced by President Pervez Musharraf.

The Prime Minister said the parliament is functioning well, the opposition is playing its due role, and the media is free.

He especially mentioned over 50 TV channels working in the private sector and the freedom of press being enjoyed by the media.

The Prime Minister said Pakistan is also committed to ensure peace in the region and working with the world community as strong partner in the war against terrorism.

He regretted that some elements are wrongly associated Islam with terrorism saying that Islam is a religion of peace and promote interfaith harmony.

He said Pakistan and India are engaged in dialogue process to resolve the core issue of Kashmir according to the aspirations of the Kashmiris in a peaceful manner to ensure peace and security in the region.

The Prime Minister while referring to the recent visits of President General Pervez Musharraf to many Arab and neighbouring countries of Palestine, said Pakistan has been making sincere efforts to resolve the Palestine issue peacefully. He said there is need to promote interfaith harmony so that the gap between the West and Islam could be bridged.

The Prime Minister said root causes of the terrorism should be identified and resolve so that the efforts in the war against terrorism could be succeeded.


http://brecorder.com/index.php?id=527596&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Macroeconomic indicators favourable for poverty reduction in 2005-06: report *
FAISALABAD (February 12 2007): The macroeconomic indicators have in general been favourable for poverty reduction as, despite rising oil prices, the widespread damage caused by the earthquake of October 8, 2005 and the rising domestic interest rate, 12.78 million people were brought out of poverty in the last four years.

For instance, the real GDP growth increased monotonically from 3.1 percent in 2001-02 to 8.6 percent in 2004-05, the year when poverty declined sharply. Although the real GDP growth of 6.6 percent in 2005-06 was less than the target of 7 percent, it surpassed the PRSP projected target of 6 percent.

According to Annual Progress Report 2005-06, released by PRSP Secretariat - Finance Division, the government has set the GDP growth target of 7 percent for FY07, which seems to be achievable.

Poverty Reduction Strategy, initiated in 2001, has been successful in reducing unemployment and poverty in both urban and rural areas of the country primarily due to high sustained growth during last four years.

PRSP expenditures were in line with Fiscal Responsibility and Debt Limitation Act 2005. They increased by 37.4 percent in FY06 with respect to FY05 to Rs434.6 billion. Increase in PRSP expenditures was seen in all regions in FY06 as compared to FY05.

PRSP expenditures, as percentage of GDP, increased from 3.8 percent in FY02 to 5.6 percent in FY06. To achieve universal primary education by 2015, there was a trend of spending largest proportion of pro-poor expenditures on education and largest proportion of education expenditure on primary education. Direct transfers, amounting to Rs 13.7 billion, were made to 5,363,000 beneficiaries in FY06. However, there is a need to enhance further micro facilities so that it can cater to all the poor and needy persons in the country.

Regarding the progress in intermediate indicators, the number of total functional public schools observed a decline since FY02. They declined by 5,130 schools since FY02 to 141,186 in FY05. Provision of basic facilities in public schools was dismal; urgent measures should be taken to improve them. Coverage of LHWs has been increasing since 1994. In 2006, 75 percent of target population was covered by LHWs.

Results of PSLM 2004-05 at district level have been discussed for the first time in this report, although comparable data for previous years for all indicators discussed are not available. Results are mixed. However, the analysis shows that a belt of districts, starting from Lahore in Punjab to Abbottabad in NWFP, Karachi, Hyderabad and Sukkur in Sindh and Quetta in Balochistan were much better than rest of the districts in the country in health, education and water supply and sanitation sectors.

These intra-district gaps may be narrowed down through investing more in districts with low levels in socio-economic indicators

Rebuilding in earthquake affected areas took off at a good pace, as the government of Pakistan's strategy avoided the mistake made in the post-tsunami regions, where governments relied on relief agencies and local officials, and the results proved slow and inefficient. ERRA released housing subsidy amounting to Rs 29.3 billion to 415,900 beneficiaries by November 2006.

The experience of monitoring the PRSP progress provided a good base, but surely it needs to be strengthened. Evaluation component of the M&E system needs to be strengthened.

Rising trends in poverty during the 1990s led to the launch of 'Interim Poverty Reduction Strategy Paper' (I-PRSP) in 2001. The full PRSP (or PRSP-I) was launched in 2003, which completed its tenure in June 2006.

PRSP-II for the 2006-09 period was under preparation and was expected to be launched very soon. This is the fifth annual report of the PRSP, which has monitored the progress in input, intermediate and output indicators during the fiscal year 2006 (FY06). While PRSP-I has completed its tenure, an attempt has also been made in this report to give an overview of the PRSP progress since its inception.

According to the report, PRSP initiative was successful on many fronts, although several challenges remain. GDP grew on average by nearly 7 percent during the last four years.

This recent growth is broad-based, and it has been underpinned by the macroeconomic policies of the government. Visible progress has also been made in reducing macroeconomic imbalances, reducing debt burden and accelerating efforts towards privatisation.

High economic growth created job opportunities and consequently unemployment rate declined from 8.3 percent in 2001-02 to 7.7 percent in 2003-04, which further declined to 6.5 percent during July-March 2005-06 period. Both the high growth and the decline in unemployment, along with considerable increase in pro-poor expenditure during the PRSP process, rise in per capita income, large inflow of remittances and direct transfers to the poor through zakat, Pakistan Bait-ul-Mal and micro-credit contributed in 10.6 percentage points decline in absolute poverty from 34.46 percent in 2000-01 to 23.9 percent in 2004-05. Although poverty reduced substantially, income inequality increased marginally during the same period.

According to Fiscal Responsibility and Debt Limitation Act 2005, poverty alleviation expenditures are not to be reduced below 4.5 percent of estimated GDP for any given year. PRSP expenditures adhered to this Act. These expenditures as percentage of GDP consistently increased from less than 4 percent in FY02 to 5.63 percent in 2005-06. The spending level on health and education sectors also showed considerable improvement. These high levels of spending contributed to improving the social indicators. The net primary enrolment ratio, adult literacy, and child immunisation increased substantially and a reduction in infant and child mortality was also witnessed. Access to safe drinking water also showed upward trends.

In short, the current economic and social conditions in Pakistan were better than in 2001 when the PRSP process was initiated.

However, there are many challenges ahead. High sustained economic growth is required for longer period to achieve the MDG/PRSP targets by 2015. There is a need to broaden the inclusiveness of economic growth to reduce income inequality level in the country. Despite a sharp decline in rural poverty, it is still almost double the poverty levels in urban areas. The challenge of further reduction in poverty particularly in rural areas requires more targeted interventions. Gender gaps still persist in literacy and primary school enrolment. District level variations are also high in literacy, school enrolment, child immunisation, pre- and post-natal consultation and water supply and sanitation. The Government of Pakistan is aware of these challenges and these would be addressed in PRSP-II.


http://brecorder.com/index.php?id=527688&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*779 percent increase in July-November trade deficit with India *

KARACHI (February 12 2007): Pakistan's trade deficit with India is likely to cross $1 billion this fiscal year, as it was already over $416 million during July-November 2006 against $47 million in the same period of last fiscal year, depicting an increase of $369 million or 779 percent.

The State Bank of Pakistan statistics show that trade with India is not in favour of Pakistan and the country faces huge deficit. Statistics shows that Pakistan trade deficit with India has been reached to $ During this period, Pakistan's imports from India amounted to $495 million, while exports remained to only $78 million.

According to SBP statistics, Pakistan's exports to the India during July-November 2005 were around $127.59 million (Rs 7.665 billion), while imports were up at $174.31 million (Rs 10.458 billion), depicting a deficit of $47 million. During first two months of current fiscal year (July-August 2006), trade deficit with India amounted to $248 million--$101 million in July, and $147 million in August.

During September 2006, the deficit was of $65.8 million; October $65.7 million; and in November $35.5 million.

During last fiscal year (2005-06) Pakistan's total trade deficit with India was $506 million, but economic analysts' fear that at the end of the current fiscal year Pakistan's trade deficit with India may touch all-time high, crossing $1 billion.

Traders said that rising food items imports from India had put a negative impact on the balance of trade with India, causing gradual increase in Pakistan's trade deficit with that country.

They said that during last two years the government had taken some steps to boost the bilateral trade with India, but only India was getting benefit of these steps.

http://www.brecorder.com/index.php?id=527626&currPageNo=1&query=&search=&term=&supDate=


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## Neo

February 12, 2007 

*Pricing scarce industrial land*

By Sabihuddin Ghausi

THE Punjab government is offering land to investors in Sunder industrial estate at Rs3.5 million an acre along with all the infrastructure facilities. The Economic Coordination Committee of the federal government also recently decided to offer 1,000 acres of Steel Mill land at Rs7 million per acre to investors reportedly along with infrastructure that does not match the quality being offered by the Punjab government. This is the same land acquired by the Steel

Mill way back in 1974 at the rate of Rs 3,600 an acre from Sindh government.

``Sindh may not be a well-governed province and Karachi may have many property ownership problems and yet a piece of land here fetches the highest price as compared to other parts of the country, Ã¢â¬â¢Ã¢â¬â¢ a senior bureaucrat remarked. He says that Rs7 million for an acre of developed land near Pakistan Steel is ``too a low price. A land without any infrastructure facility located around Port Qasim now costs at least Rs10 million.

The escalating cost of Karachi land is discouraging the genuine investors. Imagine, an acre of land in SITE Manghopir being quoted at Rs60 million, at Korangi anywhere between Rs40-50 million and in any of the half a dozen industrial estates in and around the city for no less than between Rs25-Rs30 million an acre.

The Sindh government issued an ordinance offering industrial/commercial land at 25 to 50 per cent less than the market price to ``genuine investorsÃ¢â¬â¢Ã¢â¬â¢. However, no rules were drawn up by the Provincial Industries Department or the Provincial Committee on Investment that operates from the Chief Minister House.

The ordinance has lapsed as it was never taken up by the Sindh Assembly for discussion. Neither the components of ruling coalition or the opposition considered it worth noticing. Now it is back to square one. While speculators keep the industrial investors away from the biggest city of Pakistan where an estimated an army of 1.5 to 2 million unemployed young men and women-- many educated and skilled--roam in search of jobs.

Three years ago, the federal Industries, Production and National Initiatives Minister Jahangir Tareen in an media interview promised to ``restore Karachi back to its leadership positionÃ¢â¬â¢Ã¢â¬â¢ in economic development and industrial progress. But during the period, banks and running business in Karachi attracted foreign investors but no new projects or ventures came to light.

``We intend to make the National Industrial Park (NIP) operative in the near future, Ã¢â¬â¢Ã¢â¬â¢ the minister told this correspondent by telephone from Islamabad. NIP is a government body with public money but wholly run by private sector which has managed a 248-acre plot near Korangi previously owned by the Pakistan Industrial Development Corporation. This will be the first phase of the project before the NIP moves to a 1,000-acre plot of Pakistan Steel. ``The plot will remain under the ownership of Pakistan Steel but will be managed by the NIPÃ¢â¬â¢Ã¢â¬â¢, a source said.

The NIP has 12 directors on the board of which nine are from private sector. It has a capital base of Rs325 million and it will generate more funds by selling of industrial plots.

According to its Chief Executive, Zubair Habib, the board of directors is in process of drawing up the rules for investors and working out prices of 4-5 acre plots to be offered mainly to small and medium entrepreneurs. Projects pertaining to light engineering, value added textile, information technology and gems and jewellery will be given preference.

It will also be ensured that any investor, given plots, completes civil work and commissions the projects within a prescribed time. A tools and equipment centre is about to start enrolling trainees, drawn mainly from the industries for exposing them to latest computer run state of art machines. Muneer Bana-- also from private sector-- has been given the task to run this institute which will enroll 550 students in its first year.

The local polytechnic and engineering colleges are said to be equipped with machines which have become outdated. The managers of the industryÃ¢â¬âmostly sons of the previous owners educated abroadÃ¢â¬âcomplain that engineers and technicians who come for jobs are not good operators of machines and equipment they have imported to upgrade production.

Ã¢â¬ÅUnemployment of the educated is a two pronged issue, Ã¢â¬â¢Ã¢â¬â¢ said an industrialist. The young boys and girls seeking jobs lack exposure to modern equipment. It is the governmentÃ¢â¬â¢ s as well as the industrialists duty to work out crash programmes for these young men and women so that they would manage the new machines efficiently.

While all the reforms and a high economic growth has placed Pakistan on international investorsÃ¢â¬â¢ radar, the focus is on acquiring the running business and banks. Acquisition and mergers do not generate many jobs and the ranks of unemployed keeps swelling

With no employment exchanges in operation or any agency monitoring unemployment, the growing lawlessness in the streets give some indication of desperation of the unemployed.

Jobs being created from public sectorÃ¢â¬â¢s infrastructure development programmes like building of roads, dams etc are temporary and do not offer career opportunities. Career jobs come from investment in real sectors. But for a few sectors like telecommunication, it is not coming through direct foreign investment said to be at $3.5 billion in last six months.

Meanwhile the Sindh government remains divided into two camps which are indifferent to each other, even if not hostile-- which has created a diarchic situation with two power centres. There is an industries minister who hardly interacts with the businessmen and his department has no idea about functional or idle industries in the city or in the province.

There is a Provincial Committee on Investment said to be a private sector arm of the Board of Investment in each of the four provinces. There are 40 members on the Board in Sindh. This Committee met only a few times when Mian Mohammad Soomro was the governor and Hafeez Sheikh the finance minister of the province.

It was sometimes in 2001 when an economic revival programme for the province was launched and even a monitoring committee was announced to oversee the implementation. The then federal commerce minister Razzak Dawood convened a meeting of provincial investment committees of all the four provinces. Each of the provincial committee enjoyed a separate status.

But for now the biggest problem for the Sindh government is to contest EEC decision to dispose off Steel Mill land at Rs7 million and it has expressed its strong disapproval of this decision.

All other arguments notwithstanding, Sindh has a strong point. Provinces be given the right of ownership on their land so that they could offer it to investors on prices and terms which would attract business. Land is a tool that can be used for a healthy competition. The leaders in Sindh already feel bitter on the disposal of two Karachi islands to a foreign construction company.

With elections round the corner and if the statements of the big and small leaders of the federal and provincial governments are to be believed, one wonders how would they face voters who are groaning under high inflation, unemployment, closed industries and a an agriculture that has virtually now growing.

http://www.dawn.com/2007/02/12/ebr2.htm


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## Neo

*Jan trade deficit widens to $1.13 billion* 

KARACHI: February 12, 2007: The country's trade deficit widened to a provisional $1.13 billion in January from $1.05 billion in December and $919.65 million in January 2006, official data showed on Monday.

The trade deficit for the first seven months of the 2006/07 fiscal year, that ends on June 30, widened to a provisional $7.59 billion from $6.52 billion in the corresponding period last year, the Federal Bureau of Statistics said.

Exports in January fell marginally to $1.20 billion, compared with $1.22 billion in January 2006, while imports stood at $2.33 billion, up from $2.14 billion in the corresponding month last year.

For the July-January period, exports were recorded at $9.63 billion and imports at $17.22 billion.

Exports and imports in the corresponding period last year stood at $9.27 billion and $15.79 billion respectively.

"Although oil prices have been falling, the quantity of oil being imported is rising, mainly due to growing electricity needs," said Ali Hussain, research head at brokers Invest Capital and Securities.

The statistics bureau has yet to release a break-up of the exports and imports.

Pakistan, which produces just over 65,000 barrels of oil a day, relies heavily on imported oil.

The country is expected to buy 25 percent more fuel oil for the current financial year because of higher demand from the power sector, according to industry estimates.

The country's total power generation capacity stands at 21,000 MW, of which 39 percent is by fuel oil.

"For the full year, the trade deficit will come around $12 billion to $13 billion," said Hussain.

Analysts said slow growth in exports was also a reason for the widening trade deficit.

http://www.brecorder.com/


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## Neo

*Over $110 million foreign investment in local bourses *

ISLAMABAD: February 12, 2007: Huge investment of over 110 million dollars were made in stock markets during the current month.

Private TV News channel quoting statistics of State Bank of Pakistan reported that investments of $491.6 million have so far been made at the stock exchanges of the country during the current fiscal year.

USA has again topped the investing countries and they have so far invested $294.5 million in Pakistani markets.

During February, the British investors unexpectedly dominated the scene with the investments of $72.7 million whereas the Americans came second with $53.2 million.

http://www.brecorder.com/


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## Neo

*50 Power and Gas projects to be completed in next 9 years *
Monday February 12, 2007

ISLAMABAD: Aiming to meet the electricity and gas needs in the country, the private sector would complete 50 more projects in the next nine years which would produce 13399 megawatt electricity . 
Local and foreign companies would make investment worth of 12847 million dollars for this purpose and all matters in this regard have been finalized between these companies and Ministry of Water and Power and Private Power Infrastructure Companies. 

According to a report of Ministry of Water and Power, 6 projects with the total cost of 1016 million dollars would be started in the next year which would produce 1355 megawatt electricity. 

The report further said that 8 projects would be started in 2009, 7 in 2010, 10 in 2011, 5 in 2013, 3 in 2014, 6 in 2015 and 1 project would be started and completed in 2016.

http://www.paktribune.com/news/index.shtml?168674


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## Owais

*Baglihar dam design violates treaty: World Bank *

ISLAMABAD (February 13 2007): The World Bank's neutral expert on Baglihar dam, Professor Raymond Lafitte of Switzerland, has declared the design of Baglihar hydroelectric project, being constructed by India on the River Chenab in Indian Occupied Kashmir, in violation of the Indus Water Treaty of 1960.

Addressing a crowded press conference on Monday, the Minister for Water and Power, Liaquat Ali Jatoi, who flew in here all the way from Karachi particularly to announce the much-awaited decision, urged the Indian government to respect the neutral expert's verdict, which is also binding on both parties, and praised the World Bank for providing the services of the neutral expert.

He, however, did not agree with the expert's recommendations on spillways, saying that Pakistan would observe and assert its rights in accordance with the existing treaties.

He did not very clearly convey to India that Pakistan would go for arbitration if Delhi did the same, but an official present on the occasion told Business Recorder that Pakistan would adopt the policy of 'wait and see'.

If India challenged the decision to prolong the case in a bid to complete the construction of the dam by December this year, as was announced by Indian officials, Pakistan would also take the same course.

Sources said that Pakistan was still unsure if India would implement the decision of the neutral expert, "which is somehow binding on both countries", and asked the World Bank to take punitive action against India in case it failed to implement the verdict.

"The decision made by the neutral expert upholds Pakistan's contention that India's design is not in conformity with the design criteria on three of the four design features of the dam, which were objected by Pakistan," the minister said.

Flanked by the senior officials of the Ministries of Water and Power, Foreign Affairs and Information, Jatoi said that the final determination of the points of difference raised by Pakistan on the project was the success of Pakistan's principled stand.

The points of difference on the design of the project essentially pertained to four physical features of the dam. Pakistan's view was that: 

(i) The free board for the dam was excessive, and provided capability to India for raising artificially the water level in the operating pool above the full pondage level (so its free board should be reduced).

(ii) The location of intake for the power plant was not at the highest level as required in accordance with the provisions of the Indus Waters Treaty, 1960 (so it should be raised).

(iii) The pondage in the operating pool, determined by India, was excessive (so it should be reduced).

The location of the spillway gates below the dead storage level was not at the highest level. Pakistan's view was that the location of the gates of the spillway, 27 metres below the dead storage level, was unnecessary.

Either an un-gated spillway or a surface gated spillway could be provided with the bottom of the gates at the highest level (dead storage level means, the level below which the water cannot be drawn down or depleted except in unforeseen emergencies).

The Treaty prescribes a comprehensive mechanism to process the differences and disputes for resolution between the parties under Article IX of the Treaty. India had shared the design of the project in 1992 to which Pakistan raised objections. It was Pakistan's contention that the Indian design was not compliant with the design criteria given in the Treaty. All efforts were made by Pakistan to settle the issues bilaterally at the level of the Indus Waters Commissions, Secretary Water and Power and at the highest political level.

In 2000, India started the construction work on the project without addressing Pakistan's concerns. Pakistan lodged a strong protest on further construction activity without addressing the issues, as it constituted a breach of the Treaty.

Since 1992, there had been several meetings between the Indus Waters Commissioners, which remained inconclusive. Subsequently, at the request of the Indian government, two meetings were also held at the secretaries' level.

The matter was also raised by the President and the Prime Minister of Pakistan with the Indian Prime Minister during their visits to India in 2005. During the meetings, it was emphasised that any breach of the Treaty would generate tension and would not be in the interest of peace.

As bilateral negotiations between the two countries were not making any headway while the construction work of the project continued uninterrupted, Pakistan was compelled to seek World Bank's intervention, as stipulated in the Treaty, to appoint a neutral expert to settle the issues.

Initially, India resisted the appointment of a neutral expert to settle the issue. However, the World Bank, upholding Pakistan's stance, appointed a neutral expert in accordance with the procedure laid down in the Treaty.

The neutral expert was appointed in May 2005. He obtained detailed information about the plant's design and respective point of view along with technical analysis from both parties. He also visited the site of the project.

The neutral expert has made specific recommendations for the changes as under: 

(I) FREE BOARD: The neutral expert found that India's calculation on free board were inaccurate. He determined that crest level should be set at lowest level by India. He has accordingly directed India to reduce the free board from 4.5 metres to 3 metres (33 percent reduction).

(II) LEVEL OF POWER INTAKES: The neutral expert determined that the location of intake, stipulated by India, was not at the highest level, as required in accordance with the Treaty.

He has, therefore, decided that instead of locating the intakes at the elevation of 818 metres, it should be located at the elevation of 821 metres. In other words, three metres raise in the power intakes.

PONDAGE He has determined that the calculation methodology used by India was not in conformity with the Treaty. He has accordingly directed that India should reduce the pondage from 37.722 mcm to 32.56 mcm.

In respect to location of spillway gates, he has held these in conformity with international practice and state-of-the-art. However, he has observed that India's design and analysis is incorrect.

He has concluded that India is neither correct in analysis nor in calculations. The results of the model tests are also not "representative of reality" and are "illusory".

Pakistan's view is that the expert should have gone strictly by the Indus Waters Treaty, as any other practices are not relevant. Pakistan, therefore, reserves its right to pursue the matter further in accordance with provisions of the Treaty.

Pakistan had also challenged India's estimate of the maximum flood discharge at the site and in the decision the neutral expert has decided to retain India's value of design flood in view of the uncertainties of flood analysis.

By taking up the matter to the neutral expert, following have been accomplished: Established that the Indian design was a violation of the Treaty; and ensured the sanctity of the Treaty and demonstrated Pakistan's resolve to pursue its objectives on the basis of international legality and bilateral agreements.

The minister said that the government also wished to thank the neutral expert for the efforts and time devoted by him in formulating his determination. "We will carefully examine the determination and take appropriate steps in accordance with the Treaty to protect our interests," he said. He said that the neutral expert "has clearly stated" that India should modify the design of the dam.

"We received the verdict a short while ago and are still examining it in detail," he said, in reply to a question. The minister claimed that the neutral expert had allowed the height of spillways at 808 metres. "However, Pakistan has the right to pursue the matter in accordance with the treaty," he added.

He said: "If India would not have insisted on the same position, neither it would be a violation of the Treaty nor the people in Indian Occupied Kashmir would be deprived of electric power."

India has to demolish civil works it has already completed in violation of the Treaty and it would be again a success of Pakistan. Regarding Kishanganga dam, another controversial hydroelectric project, the minister said that once Pakistan challenged the Baglihar project, Indian cabinet decided to modify the design of Kishanganga, and no physical work has yet been started.

"We appreciate the efforts of the World Bank for providing the services of the neutral expert and our options are open on the issue of spillways," he added.

In reply to another question, he said: "When any donor, like the WB, which extends financial support to Pakistan and India, gives any decision, it is the moral obligation of that country to implement it".

He said: "Pakistan's options are open, and our legal experts are examining the case, and I urge upon the Indian government to respect the verdict of the neutral expert, which is in accordance with the Treaty." He added that India could boycott the proceedings of the expert, but it participated with full arguments.


http://brecorder.com/index.php?id=528073&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*China asked to allow market access to Pakistan's products *
KARACHI (February 13 2007): A great number of people belonging to different walks of life visited Muslim Big, Business and Investment Gala at the Expo Centre and showed their keen interest in the stalls set up there. A large number of women also thronged the gala.

Speaking at a conference on "Investment Promotion of Ningxia Hui Autonomous Region China," Patron-in-chief of Pak-China Business Council, Tariq Sayeed said that trade between Pakistan and China had witnessed a steady improvement.

He said the trade volume, which was accounted for $600 million a decade ago, now had reached $3.17 billion, depicting an increase of 50 percent per year during the last 10 years.

He said China was now the second largest trade partner of Pakistan after the USA. However, he said, the share of Pakistan's exports to China was only 0.5 percent of its total imports, despite the fact that both the countries had been enjoying cordial relations.

He said there was an urgent need for China to allow greater market access to Pakistan's various products, which meet global quality standards and have won international recognition. "We are confident that if the importers in China gave preference to buy Pakistani items, it would not only increase our exports manifolds but also reduce our trade deficit," Tariq Sayeed said.

He said in 2005, China and Pakistan signed a landmark treaty of friendship and cooperation, whereby they committed that neither party would join any alliance or bloc, which infringes upon the sovereignty, security and territorial integrity of either country, while simultaneously positing that both parities would not conclude treaties of this nature with any third party.

He said China had provided technical and financial assistance to Pakistan in some of its major projects like Karakoram Highway, Heavy Mechanical Complex, Forge and Foundry Project, Heavy Rebuild Factory, Guddu-4 Thermal Power Stations, Heavy Electrical Complex near Haripur, Saindak Project in Balochistan and transfer of technology in 300 agro-based projects under its Spark Programme.

Consultant of the Peoples' Government of Ningxia Hui Autonomous Region, Hai Juzeng, in his speech said that Muslims were brothers and the traditional friendship and close ties between Muslims of Pakistan and Ningxia Hui Autonomous Region had been instrumental in further expanding economic and trade relations between them.

Director General, Board of Investment, Karachi, Arif Elahi said that it makes no difference if money comes from China to Pakistan or goes from Pakistan to China.

He said the government of Pakistan was now taking itself aside and providing opportunities to the private sector to make business, as this was not the job of the government to do business. Highlighting the boom of business activities in Pakistan, he said last year the Expo Centre remained occupied for more than 200 days.
http://brecorder.com/index.php?id=528143&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*'Pak-Iran Investment firm to operate from March' *

KARACHI (February 13 2007): The Iran-Pakistan Investment Company will start operations in March from Karachi. This was stated by Iranian Consul General Seyed Musa Hosseini during meeting with Federation of Pakistan Chamber of Commerce and Industries (FPCCI) members led by FPCCI Vice President Zubair F. Tufail in Federation House, here.

The company will play its role in the development of basic infrastructure in Pakistan. Seyed Musa Hosseini, who is returning to Iran after serving as Iranian CG in Karachi for about three years, recounted the efforts made by him to promote economic cooperation between Pakistan and Iran.

Hosseini, who speaks fluent Urdu, said the selection of Pakistan for the diplomatic assignment was his personal choice because of friendly and brotherly ties between both the countries and wanted to contribute economic cooperation between them.-PR
http://brecorder.com/index.php?id=528151&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Gas supply from Iran by 2011 *

ISLAMABAD: Gas supply from Iran will commence by 2011 provided the agreement between Iran, Pakistan and India on the gas pipeline project is signed in June this year.

Participating in the Geo News programme &#8220;Tezi Mandi&#8221;, Managing Director Northern Gas Pipeline Rasheed Lone told that the price of gas has been determined under this agreement.

According to the formula, the gas price has been linked with the price of Japanese crude, from which gas is obtained and the per unit price of this gas is same or less equivalent to the price of locally obtained gas.

Rasheed Lone said that if each of these three countries lay their own pipelines then this project will easily be completed by 2011. 

http://geo.tv/geonews/details.asp?id=2109&param=3


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## Neo

*World Bank and Norway to finance community-based renewable energy project *

FAISALABAD (February 13 2007): The World Bank and Royal Norwegian Embassy will provide financial assistance of $6.67 million and $1.64 million respectively, for Community-Based Renewable Energy Development in Northern Areas and Chitral. This project will be completed with total cost of $14.97 million.

Jeremy Levin, project leader of the World Bank said that the proposed development objectives of the Carbon Offset Project are; to reduce global emissions of carbon dioxide and increase access to modern energy from renewable energy sources.

The project will provide additional support to (a) develop hydropower potential in an environmentally and socially sustainable manner to meet local electricity demand, (b) improve access of rural areas to modern electricity services, and (c) improve standards of living for the poor through provision of community level infrastructure.

In his project study, Jeremy Levin said that this project would facilitate greenhouse emission reductions and support the development of the international market mechanism for trading Emission Reductions (ERs) developed in the framework of the Kyoto Protocol. The project consists of sale of ERs to the Community Development Carbon Fund (CDCF), which provides carbon finance to small-scale CDM projects in the least developed countries and poorer areas of all developing countries.

Operational since July 2003, the CDCF actively seeks to reach countries and communities that are neither presently benefiting from development through carbon finance nor likely to benefit greatly from it in the future, he added.

http://brecorder.com/index.php?id=528085&currPageNo=1&query=&search=&term=&supDate=


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## Neo

February 13, 2007 
*Trade deficit soars to $7.595bn*

ISLAMABAD, Feb 12: PakistanÃ¢â¬â¢s trade gap widened 16.43 per cent to $7.595 billion during the first seven months (July-January) of the current fiscal year compared to $6.52 billion in the corresponding period of last year.

In January the trade deficit grew by 23.18 per cent over January 2006 as exports dipped while imports rose at higher rate, according to official statistics released by Federal Bureau of Statistics (FBS) here on Monday.

Merchandise exports up marginally at 3.86 per cent to fetch a total $9.630 billion during the July-Jan period as against $9.271 billion the same period last year. An export target of $18.6 billion has been set for FY07.

Imports climbed by 9.05 per cent to $17.225 billion during the period under review as against $15.795 billion over the same period of the last year.

This high import growth has resulted in pushing the trade deficit further higher. The government has projected import bill at $28bn for the current fiscal.

Commerce Minister Humayun Akhtar Khan told Dawn that January was historically a slow month for exports. He, however, did not elaborate the reasons for this trend.

Mr Khan hoped that exports would pick up in coming months.

Answering a question the minister said that the export target would not be revised downward. Ã¢â¬ÅWe will achieve the target,Ã¢â¬Â the minister resolved.

Analysts said that the trade policy announced for the current fiscal would not help in reducing the imports and boosting the exports.

They said in case the trends continued for another few months it would have a serious impact on the countryÃ¢â¬â¢s balance of payment.

They warned that the higher trade deficit would also have a negative impact on the health of the rupee. They said that for the current fiscal year this impact might be very nominal, which could be grave from the next fiscal year in case the current trend in the growth of imports remained the same.

http://www.dawn.com/2007/02/13/ebr7.htm


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## Neo

*Current account deficit up by 46pc in 6 months*

By Shahid Iqbal

KARACHI, Feb 12: Higher foreign investment may provide some relief to government, but the rising current account imbalance has posed a serious threat to the economy.

The current account deficit of the country increased by over 46 per cent during the first half of the on-going fiscal 2006-07 and the figure rose to $4.209 billion.

Though it is not surprising that the current account deficit has increased, the rate of its increase is a matter of concern.

The main reason for the large current account deficit is the rising trade gap. The balance sheet showed that in all major sectors, the country was on the negative side.

Trade gap during the same period rose by 22.7 per cent to $5.034 billion as against $4.102 billion in the corresponding period last year.

The worst part of the trade deficit was unexpected low export growth and high import growth.

It also reflects slow industrial and manufacturing activity which would generate unemployment.

The imbalances in services sector were also significant during the period as services credit were much lower than the services debit which means higher outflows and lower inflows in respect of services.

The latest figures of foreign investment issued by the State Bank showed that the foreign investment rose by 68 per cent during July-December.

Substantial high foreign investment is quite eligible to help the government to meet the current account gap. Ã¢â¬ÅThe unreliable foreign investment is not the answer to the question of ever-increasing current account deficit,Ã¢â¬Â said an analyst, adding the high export growth was the only reply to this serious threat.

Since investors have all rights to withdraw their investment and take back out of the country without any legal hurdle, it is unreliable, he said.

Foreign portfolio investment rose to $620 million during the six months and foreign direct investment reached $1.872 billion.

Interestingly, there were no inflows through privatisation which had been a part of foreign direct investment.The government has sold Global Depository Receipt (GDRs) of Oil and Gas Development Company (OGDCL) to earn about $800 million and the amount was shown as foreign private investment.

Prime Minister Shaukat Aziz had stated recently that the foreign investment would reach $6 billion by the end of this fiscal. This will be highly encouraging for the government as the rising current account deficit has been posing serious challenges for last five years.

Ã¢â¬ÅForeign direct investment is still focused to just few sectors which require to be diversified and it can only happen once all major sectors, including agriculture sector, attract foreign investment,Ã¢â¬Â said Aamir Aziz, an analyst.

http://www.dawn.com/2007/02/13/ebr4.htm


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## Neo

*Australia to help boost mango output *

MULTAN: Australian government would offer 34 million Australian dollars assistance to execute a three-year mango project in Pakistan. This was stated by the officials in a meeting chaired by City District Nazim Mian Faisal Mukhtar.

Horticulture Department of University of Queens Land, Australia, would execute the project aimed at enhancing mango production, post-harvest handling of the fruit including processing and grading, and finding cure for different diseases through research, says an official release.

Mango Growers Association (MGA) President Syed Zahid Hussain Gardezi, Vice President Muzaffar Hayat Khakwani, chief executive business development international Ettore, Dr Jahanzeb and mango growers attended the meeting.

Italian companyÃ¢â¬â¢s head Ettore gave a briefing to the meeting about two mobile mango processing plants his company was intended to set up in Multan as pilot project under a Memorandum of Understanding (MoU) the company had signed with the city district government Multan (CDGM) few months ago. One processing plant would have the capacity to process 3000 kilogram mango per hour while the other 500 kg mango per hour. 

http://www.thenews.com.pk/daily_detail.asp?id=42522


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## Neo

*Doing business becomes easier in Pakistan: World Bank *

LAHORE (February 14 2007): Doing business has become easier in Pakistan in 2005-2006 as reforms have reduced the time, cost, and hassle for businesses to comply with legal and administrative requirements. This was stated in a new report on 'Doing Business in South Asia 2007', which was released by the World Bank and its private sector arm IFC on Tuesday.

The report maintained that out of the six major Pakistani cities covered by the report, Karachi has the most business-friendly regulations as measured by the Doing Business reports, while Quetta imposes the most complex and costly administrative barriers. Faisalabad, Lahore, Peshawar and Sialkot rank in between.

The report compares business regulations in the World Bank's South Asia region with 175 economies around the world. Pakistan, the runner-up reformer in South Asia, implemented reforms to simplify cross-border trade and reduce corporate tax rates.

*THE TOP RANKED COUNTRIES IN THE REGION ARE:* Maldives (53) and Pakistan (74), followed by Bangladesh (88), Sri Lanka (89), Nepal (100), India (134), Bhutan (138) and Afghanistan (162).

*According to the report, recent reforms have resulted in a drop in the number of days required to import in Pakistan: from 39 to 19 days.* Pakistan now ranks *51st world-wide* in time to import, based on a concerted effort to complement trade liberalisation with improved trade logistics. Pakistan also reformed positively in the area of taxation by steadily reducing its corporate tax rate, from 39 percent in 2004 to 37 percent in 2005 and 35 percent in 2006.

Like most other countries in the region, Pakistan scores well on the indicators related to starting a business (54th out of 175) and protecting investors (19th out of 175).

It observed that despite these improvements and recent reforms, Pakistan could do better on the overall ease of doing business. It finds that the greatest remaining obstacles for the country include enforcing contracts through courts, labour regulations, and paying taxes.

"For example, it takes 880 days or about 2.5 years in Karachi to resolve a commercial dispute. Despite the reduced tax rate, businesses must still spend about two months per year or 560 hours to comply with all tax regulations. And an employer who is faced with less demand for the products he sells must pay an average of 90 weeks of salary to make a worker redundant," the report said.

"Different provincial and municipal level regulatory requirements, as well as differences in the implementation of national-level regulations, either enhance or constrain local business activity.

This explains, for example, why in Sindh (Karachi), it only takes six procedures and 50 days to register property, whereas it takes 12 procedures and 96 days in Balochistan (Quetta), with the provinces of Punjab (Faisalabad, Lahore, Sialkot) and NWFP (Peshawar) falling in the middle," World Bank stated this in its report.

According to it, the provinces could learn from each other in the areas of business regulation where there are important regional variations. In Lahore, for example, starting a business is easiest; in Peshawar, resolving a commercial dispute through court is easiest and in Karachi, registering property could serve as best practice.

"One of the most interesting findings of the report is how Pakistan could improve significantly if it simply adopted the best practices in business regulation that already exist within the country. Pakistan could jump from its current position at 74th to 52nd on the Doing Business rankings," said Caralee McLiesh, one of the authors of the report.

Meanwhile, 'Doing Business in South Asia 2007' is the third report in a series of South Asia regional reports based on the methodology of the annual global Doing Business report.

Doing Business tracks a set of regulatory indicators related to business start-up, operation, trade, payment of taxes, and closure by measuring the time and cost associated with various government requirements. It does not track variables such as macroeconomic policy, quality of infrastructure, currency volatility, investor perceptions, or crime rates. This year's report covers six Pakistani cities in four different provinces.

The Doing Business project is based on the efforts of more than 5,000 local experts, business consultants, lawyers, accountants, government officials and leading academics around the world, who provide methodological support and review.

http://www.brecorder.com/index.php?id=528399&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Slow growth in exports: seven percent GDP target may not be achieved *

ISLAMABAD (February 14 2007): The Planning Commission has expressed fear that the government may not achieve current fiscal year's Gross Domestic Product (GDP) target of 7 percent due to slow growth in exports, official sources told Business Recorder here on Tuesday.

"There is likely a shortfall of $1 billion in exports target of $18.6 billion which will result in GDP growth rate slippage, though only marginal," sources quoted a recent analysis conducted by the Planning Commission on the country's foreign trade and the constraints impeding exports.

They said that the shortfall in exports would be mainly attributed to high cost of doing business, stiff competition with neighbouring countries' exporters who get benefit from their governments in the shape of subsidies and other incentives.

"This situation will lead to closure of firms, especially in the textile sector and increase in portfolio loan, making their revival costlier," sources added. The Planning Commission is also of the view that Pakistan would lose international market, difficult to recapture in future, they said.

"Based on the analysis of the recent declining trends in textile and opportunity analysis in some key sectors, support should be extended to the selected industry to the tune of Rs 3 to 4 billion," sources quoted the Planning Commission as suggesting to help out the textile sector.

It has also proposed that electricity, gas and water tariff be capped for at least two years, in addition to market access support at the rate of 5 percent FOB to offset discrimination in tariff rates in importing countries and adverse travel advisories.

The Planning Commission further said that the mark-up rates on pre- and post-shipment export refinance should be suitably reduced and knitwear/garment industry may be charged @ B-4 tariff of Wapda, irrespective of existing sanctioned load.

According to sources, the PC has also recommended to the government to constitute a 'National Export Strategy Team' (NEST) comprising all key stakeholders (TDAP to serve as secretariat), which may design medium- and long-term export strategies.

The PC is also of the view that a specific strategy for each priority product and each targeted country should be adopted to define and justify export priorities on the basis of realities in the international marketplace, domestic supply capabilities and competitiveness.

"The government should critically assess the level and quality of financial, institutional and personnel resources that are available within the country to implement a national export development strategy," sources added.

http://www.brecorder.com/index.php?id=528415&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Chinese study confirms enough coal in Thatta: SCA *

KARACHI (February 14 2007): A Chinese study has confirmed sufficient coal availability for mining and power plants at Sonda-Jherruk, Thatta. Sources in the Sindh Coal Authority (SCA) on Tuesday said.

The China National Machinery Import and Export Corporation (CMC) had completed detailed coal geological investigation (DCGI) and confirmed one billion tonnes of coal available at Sonda-Jherruk, Thatta for mining purpose and feeding power plants.

The company had planned to set up two 300 mw coal-fired power plants in the area and in this regard started investigation in early December 2006. The company drilled 20 holes in the area and coal availability found below than the required level. The underground coal mining was known as difficult task, but the company claimed that they had capability of overcoming this, sources said.

The Chinese company had signed an agreement with the Sindh government on November 25, 2006 to conduct DCGI for coal mining and set up two 300 mw coal-fired power plants in Sonda-Jherruk. Sindh Mines and Minerals Development Secretary Abdul Hameed Akhund and CMC Vice President Shan Wei signed the agreement at the provincial minister's office.

According to t6hye agreement, the company had to complete geological investigation on 56.7 sq. ft area in three months and later they would start coal-mining and set up two 300 mw coal-fired power plants. The Chinese company had to bear the cost of the DCGI.

The identified reserves at Sonda-Jherruk, the second largest in Sindh, comprising more than seven billion tonnes of coal, is located at a distance of around 150-km to north-east of Karachi and about 30-km to south-east of Hyderabad, where all required infrastructures have been made by the provincial government, sources said.

The company had also signed another memorandum of understanding (MoU) in July 2006 with the SCA to conduct detailed feasibility study for the development of a coal-mine of one million tonnes of coal annual production capacity.

http://www.brecorder.com/index.php?id=528458&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*UK network buys Pakistani satellite services *

ISLAMABAD (February 14 2007): PAKSAT International, Pakistan's national communication satellite, has leased out a bulk of its services to a British network, officials said here on Tuesday.

PAKSAT International has successfully concluded an agreement with Skyvision/Primera Networks of the UK for the lease of multiple C-band transponders, said Usman Bajwa, CEO of PAKSAT-1 International, in a statement issued here.

The satellite capacity will be utilised for providing internet, IP and data connectivity services across Africa and Middle East. "This is a landmark agreement for PAKSAT, and signifies the attractive value proposition PAKSAT-I offers for service providers and enterprises looking for satellite connectivity in Africa, Middle East, South Asia, Central Asia and Southern Europe" said Bajwa.

PAKSAT-I that operates at an orbital location of 38 degrees East, offers C and Ku coverage in over 75 countries across Europe, Africa, Middle East, South and Central Asia. The satellite is currently serving a number of local and international customers, including TV broadcasters, telecom companies, data and broadband internet service providers as well as government organisations.

Bajwa said the contract with the British networks for the lease of up to six extended C-band transponders on PAKSAT-1 would hold for a period of three years but it would help fetch more such deals in future. "We believe this is an important landmark for PAKSAT not merely in terms of its commercial viability, but also as a means to penetrate other international markets," he added.

Officials at the Primera Networks also lauded the deal, calling it a move towards designing cost-effective solutions. "We are very pleased to conclude this contract with PAKSAT it will enable our customers to design cost effective solutions for markets in Africa and Middle East without compromising on the quaality of service" said Abu Shafquat, Principal Partner Primera Networks.

http://www.brecorder.com/index.php?id=528499&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Plan outlined to convert transport sector into industry *

ISLAMABAD (February 14 2007): The government has outlined a plan to convert the informal transport sector into an industry, proposing that small and large companies be formed and registered to avail soft-loan and tariff incentives, Business Recorder learnt on Tuesday.

The government believes that the sector's inefficiencies were costing annually Rs 150 billion in fuel, road, and infrastructure deficit, thus resulting in low quality of service impeding Pakistan trade competitiveness. The existing industry structure neither integrate into international trucking nor supports Pakistan's projected economic growth.

The government has asked the transporters to establish small and large companies to convert their businesses into formal industry, which would enable them to get bank financing and tax incentives. They have been assured, once they convert their business into formal sector, the government would direct banks to offer soft loans with less interest and long stretch apart from tax incentives.

Moreover, the government may also come up with a scheme to buy all 1,500,000 truck operating to replace them with the modern ones for meeting the international standards in view of National Trade Corridor Program for which efforts are being made to upgrade infrastructure.

The Engineering Development Board (EDB) here on Tuesday organised a workshop on modernising the trucking sector, which was attended by all the stakeholders, including truck manufacturers, consumers, individual transporters, truck-bus body makers and others.

The workshop aimed at formulating comments by all the stakeholders to form a policy was addressed by Industries and Production Minister Jehangir Khan Tareen, Communication Minister Shamim Haider and Planning Commission Deputy Chairman Engr Dr Akram Sheikh.

Talking to Business Recorder, EDB CEO Imtiaz Rasgrar said the government sees a huge potential of the sector with the operation of Gwadar deep seaport, which would open new avenues for transport business. The policy for modernisation of trucking sector, he hoped, would be finalised in a month time.

He said the plan is to develop Pakistan's trucking industry on modern lines from existing five to 25 percent under National Trade Corridor (NTC) program. The modernization of trucking sector without hoods will reduce 15 to 20 percent fuel consumption and road maintenance by $1 billion, he hoped. These include financiers involved in purchase hire-payback of vehicle fleet and equipment, suppliers of vehicle fleet, local assembly and imports and spare-parts and operators, service-providers as haulage enterprises. Under the NTC, the government is addressing issues confronting the country's road freight sector, which carries almost 95 percent of the country's overland freight.

The strategy has been targeted to increase the share of prime movers/trailers to 10 percent from 5 percent by June 2010. This overland freight traffic, domestic and international, is responsible for almost 96 percent of the total tons/kms and dominates the market owing to weak and unreliable railways. Almost 70 percent of the trucking fleet comprise two axle trucks while the estimated figure show that the road freight traffic will grow by 6 percent.

Therefore, the need to modernise the trucking fleet was felt that resulted in framing a strategy to facilitate the expanding trade activities and overcoming the losses caused by the sector's inefficiencies.

http://www.brecorder.com/index.php?id=528450&currPageNo=2&query=&search=&term=&supDate=


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## Neo

14, 2007 Wednesday 
*Sindh plans to explore hydel power*

By Sabihuddin Ghausi

KARACHI, Feb 13: The Sindh government plans to explore hydel source as one of the many alternate energy sources in the province indicated in a feasibility done as far back as decade of late 80s by German engineers.

Preparations are afoot to update this feasibility with a fresh survey to be done by experts to be engaged by the Sindh Power Development Cell.

The German feasibility identified five perennial canals in Sindh that have many locations of waterfall to generate electric power. These are canals on either side of Guddu Barrage, the Nara and Rohri Canal of Sukkur Barrage and the Gujju Canal that brings water to Karachi round the year. In addition, there is a natural Gaj waterfall near Dadu, the home-town of the Federal Power and Irrigation Minister, Mr Liaquat Jatoi.

Well-placed sources in Sindh government said Mr Jatoi is keen to explore the potential of hydel power generation at these spots in Sindh and particularly near his home-town Dadu, but is handicapped because of the limited capacity of the province to take up such projects.

The cell was set up in 2004 and has since remained a one-room and virtually a back room office of the Sindh Irrigation Department. It has rudimentary staff, headed by a deputy secretary of grade 18. But it has a full-time minister, Mr Altaf Unar, while his cabinet colleague, Mr Nadir Akmal Leghari, looks after the Irrigation Department Ã¢â¬â one of the most sought after green pasture that offers unlimited opportunities Ã¢â¬â to all those who come to serve here at various positions. Landlords in Sindh are chronic defaulters of water bills and actual recovery is not even one-tenth of that is being spent on irrigation water distribution system.

The cell has been given Rs28 million to engage experts for carrying out fresh feasibilities of hydel power projects in Sindh. Potential investors will be asked to bid only after the feasibilities are carried out and specific locations of waterfall are identified.

Ã¢â¬ÅWe can issue licences for projects up to 50 megawatt power generation,Ã¢â¬â¢Ã¢â¬â¢ one of the sources disclosed. The investor will have the choice to sell this power to local distributor which in case of Sindh would be Hyderabad Electric Supply Company (Hesco) or Wapda. But investor can also explore transmitting and distributing this power to adjoining villages or a small town provided he sets up a small distribution and transmission network and is able to find consumers who pay bills regularly.

The investor may also be given the choice of setting up a hybrid power generation plant. It is hydel-based power plant, supported by a gas-based or thermal plant, to keep generation going when water flow may get low or scarce in certain period of time.

The cell also plans to carry out feasibility for wind, solar, coal and gas-based electric power generation projects up to 50 megawatt. The idea is to decentralise electric power generation, transmission and distribution and get away from the over-centralised corrupt system of Wapda.

While the entire coastal belt from Karachi to Thatta and Badin is said to be ideal for wind-generation plants, there are more than half a dozen districts where solar-based plants can be established.

Ã¢â¬ÅThese projects may be capital intensive but by all means are feasible if consumers pay their bills regularly.The rich landlords do not pay water charges, taxes on their agricultural income, electricity bills and all other government levies. But the small farmers, if empowered and given opportunities to prosper will pay taxes and bills is the expectation.

However, the cell is expected to appoint a full time project director, plus a few others by June next. In case, no director is appointed, the allocated funds will lapse.

Balochistan is said to have successfully set up a few hybrid power projects in some parts but is facing recovery of bills problems from consumers.

http://www.dawn.com/2007/02/14/ebr4.htm


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## Neo

February 14, 2007 
*Bourses receive record foreign investment*

By Shahid Iqbal

KARACHI, Feb 13: Pakistani bourses have received record inflows of foreign investment as the total amount reached all time high in any financial year.

Market analysts said that the petrodollars were being recycled to invest in the emerging markets like Pakistan and pinned hopes for more inflows.

The foreign investment directly invested in the shares market totaled $519 million since July 2006 to date which never happened before in the countryÃ¢â¬â¢s history.

However, portfolio figure which includes GDRs (Global Depository Receipts) was much higher.

They said that the oil price boom created huge liquidity in the global market and the surplus incomes of the Middle Eastern countries were invested in the United States and Britain or kept in saving products of the two countries. These petrodollars have also found investment opportunities in Pakistan and other countries.

Only during the first 13 days of February, the foreign exchange inflows in the shares market reached $137.7 million reflecting the trend and confidence of the foreign investors.

Analysts said if the inflows continued to flow with the same pace the figure would cross $200 million during February, which would be another record.

The details of these investment showed that most of the funds had been coming from the United States and the UK. The USA invested $77.2 million during the 13 days of the current month while the UK poured $67.6 million during the same period.

The other country, which invested, was Hong Kong and the amount was more than $7.4 million.

The highest outflows were of Switzerland, which reached over $9.8 million during the same period of 13 days.

Some analysts said the investment of foreign funds directly into the shares market had boosted the sentiment and a number of unattractive shares found better place to get higher price.

Ã¢â¬ÅAsian bourses are the prime recipient of the petrodollars as the emerging markets used to have enough potential to reap maximum from the investment,Ã¢â¬Â said Saqib Umar, an analyst.

He said during the first seven months (July-Jan) the shares market received $382 million while the inflows during 13 days of February account for 27 per cent of the total $519 million.

Ã¢â¬ÅThe average per day inflow is $10.5 million, which is very high and could reach $250 million if the inflows continue with the same speed,Ã¢â¬Â he said.

During the first six months the portfolio investment, which included $150 million GDR of MCB Bank, reached $620 million.

However, GDR of Oil and Gas Development Company (OFGCL) has not been included in the portfolio investment.

Experts and analysts said the investment in the shares market was highly encouraging, especially when the country was heading towards general elections, which might bring some political instability in the wake of change of government.

http://www.dawn.com/2007/02/14/ebr5.htm


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## Neo

February 14, 2007 Wednesday 
*ADB to give $534m for hydel power plants*

By Ihtashamul Haque

ISLAMABAD, Feb 13: The Asian Development Bank (ADB) has agreed to offer $534 million through "its soft loan" window to help generate additional 480-mw of electricity and thus reducing growing power shortages in the country.

Official sources told Dawn on Tuesday that Water and Power Development Authority (Wapda) has identified 730 potential sites in Punjab for installing a number of hydel power plants, each having up to 50-mw at different canals and distributaries.

The ADBÃ¢â¬â¢s technical experts have approved 730 sites which included 324 potential and 306 raw sites for building small hydel power plants in the province.

The ADB funding is part of the governmentÃ¢â¬â¢s plan to save foreign exchange by not importing fuel that is used in alternate thermal plants. Also, the purpose is to replace expensive thermal plants by hydro power plants in a medium to long term scenario, providing cheaper renewable hydropower resources.

Sources said that this will also help increase hydel share in generation mix to reduce the prevailing high tariff rates of electricity.

Overall Wapda has firmed up a study which said that Punjab has a hydel potential of 5,895-mw along rivers and existing canal falls and barrages with medium and small heads. In this regard, Wapda officials are further exploring new possibilities for mobilising substantial funding from other international donor agencies especially the World Bank.

The financial analysis has been carried out with transmission line cost for generating additional 480-mw of hydel power. The financial internal rate of return (FIRR) with transmission line is 13.73 per cent which according to the ADB experts makes the project attractive.

The project is expected to create employment opportunity during the construction and operation phase directly. However, indirectly other related construction industry, supply of material, workforce in transportation, etc., will get the benefit.

The main objective is to

generate electricity and lay down track for hydel project implementation in the near future in Punjab. It has been planned that five powerhouses will be constructed after detail design and tenders were approved according to the ADB guidelines.

Sources said that the implementation time is estimated 57 months which includes pre-construction time, land acquisition and compensation, site installation, mobilisation, de-mobilisation, testing and commissioning.

Concerned officials said that energy demand is increasing at 8 to 10 per cent annually and Pakistan is still a net importer of energy.

The gap between the demand and supply in the past was met through installation of thermal power projects based on costly imported fuel. This situation, according to them, disturbed the hydel-thermal mix ratio from 65:35 to 35:65 which had resulted into unbearable increase in electricity tariff besides increasing dependency on imported fuels for meeting the energy needs.

http://www.dawn.com/2007/02/14/ebr9.htm


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## Neo

*Verdict on Baglihar dam*

PAKISTAN has reasons to believe that the World Bank expertÃ¢â¬â¢s landmark decision has vindicated its position on the Baglihar dam, IndiaÃ¢â¬â¢s own victory claim notwithstanding. Calling the verdict a Ã¢â¬Ågreat victoryÃ¢â¬Â, Water and Power Minister Liaquat Ali Jatoi said that India now had a Ã¢â¬Åmoral, legal and political obligationÃ¢â¬Â to accept and implement the expertÃ¢â¬â¢s judgment. By accepting three of PakistanÃ¢â¬â¢s four objections to the dam built by India on the Chenab in occupied Kashmir, the World Bank expertÃ¢â¬â¢s decision holds New Delhi responsible for violating the 1960 Indus water treaty, because the Indian design of the dam was incorrect. The expert did not uphold PakistanÃ¢â¬â¢s argument with regard to the spillway, but Mr Jatoi said Islamabad reserved its right to appeal against this part of the verdict. Now India must abide by the judgment and reduce the damÃ¢â¬â¢s height by 1.5 metres. This will mean additional problems for India when it goes about reducing the damÃ¢â¬â¢s height and undertakes new construction.

The entire process has some lessons for the two countries. When India began constructing the dam on the Chenab in the 1990s, Pakistan exercised considerable restraint and took up the issue bilaterally as provided for in the 1960 treaty. However, bilateral talks proved infructuous and India continued with the construction of the dam in disregard of the 1960 treaty provisions, forcing Pakistan to go to the World Bank in 2005. MondayÃ¢â¬â¢s decision not only partially upholds PakistanÃ¢â¬â¢s position on the Baglihar hydroelectric plant, it also emphasises that solutions to Indo-Pakistan problems can be found by peaceful means. India has welcomed the verdict, claiming that the dam structure will remain intact, the alterations will be minor and the power-generation capacity will remain unchanged. This is a strange reading and interpretation of an otherwise simply worded and forthright verdict. 

The Baglihar decision is expected to have a positive effect on the controversial dam India is building on the Neelum river. The Indian cabinet has already decided not to proceed with its construction further without vetting the damÃ¢â¬â¢s design. ThatÃ¢â¬â¢s the right approach. The Indus waters treaty is a monumental accord. By giving Pakistan the exclusive rights to the three western rivers, the treaty removed a major source of conflict between Pakistan and India. The follow-up to the treaty had a positive impact on PakistanÃ¢â¬â¢s economy, for massive construction projects were undertaken in the form of the Tarbela dam Ã¢â¬â the worldÃ¢â¬â¢s biggest earth-filled dam Ã¢â¬â and the link canals. The two projects brought vast tracts of land under the plough and phenomenally increased the quantum of power-generation. Pakistan, therefore, naturally wants a continued adherence to the treaty, because 90 per cent of agriculture in Pakistan Ã¢â¬â unlike that of India Ã¢â¬â is dependent on the three western rivers for irrigation. This should make India realise why Pakistan attaches so much importance to this treaty and how any violation of it is bound to seriously undermine relations between the two countries.

http://www.dawn.com/2007/02/14/ed.htm#1


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## Neo

Wednesday, February 14, 2007 

*$671m shortfall in July-Jan: $18.6b export target unlikely to be achieved*

By Sajid Chaudhry

ISLAMABAD: The annual export target of $18.6 billion is becoming increasingly difficult to achieve as the countryÃ¢â¬â¢s trade managers have missed the export target of $10.304 billion fixed for first seven months (July-Jan) period of the current FY2006-07 by $671 million.

The actual exports of the country managed to reach $9.633 billion against the target of $10.304 billion leaving a shortfall of $671 million in the first seven months of the current fiscal year, a ministry official told Daily Times on Wednesday.

The export target fixed for the month of January was $1.494 billion and the actual exports managed to reach $1.971 billion, resulting in a shortfall of $297 million, the official added.

According to official data, PakistanÃ¢â¬â¢s exports stood at $9.633 billion during the July-January period of the current fiscal year against the exports of $9.271 billion in the same period of the last fiscal year 2005-06, projecting an increase of just 3.86%.

The imports of the country stood at $17.225 billion during the July-January period of the current fiscal year, as compared to imports of $15.795 billion in the same period of the last fiscal year, projecting an increase of 9.05%. The trade deficit during the July-January period of the current fiscal year amounted to $7.595 billion projecting a growth of 16.43% against the trade deficit of $6.523 billion in the same period of the last fiscal year.

The data relating to the month of January 2007 reveals that the total exports of the month stood at $1.197 billion as compared to exports of $1.224 billion in the same period of last fiscal year showing a decline of 2.24%. However, the imports during January witnessed a growth of 8.66% with total monthÃ¢â¬â¢s imports of $2.33 billion as compared to the imports of $2.14 billion in the same month last fiscal year.

The trade deficit during the month of January 2007 rose by 23.18% to $1.132 billion as compared to a deficit of $919.651 million in the same month last fiscal year. The data relating to exports during the last two months (Dec to Jan) also shows a dismal picture of the countryÃ¢â¬â¢s trade.

Around 21.10% decline has been witnessed in the exports during January 2007 with the total exports of $1.197 billion against the exports of $1.517 billion in December 2006. However, the imports of the country during January 2007 witnessed a decline of 9.13% with the total imports of $2.330 billion against the imports of $2.564 billion in December 2006. The trade deficit of $1.132 billion during January 2006 was 8.22% more against the deficit of $1.046 billion in December 2006.

http://www.dailytimes.com.pk/default.asp?page=2007\02\14\story_14-2-2007_pg5_1


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## Neo

Wednesday, February 14, 2007 

*Services sector: Trade deficit widens by 21.57%*

By Tanveer Ahmed 

KARACHI: The trade deficit in services sector further widened by 21.57 percent to $237.62 million during the first half (July-December) of the current financial year compared with $195.46 million in corresponding period of previous year.

The export of services in the July-December period of 2006-07 declined by 12.15 percent to $178.97 million, compared to the $203.73 million of services exported during the same period of the financial year 2005-06.

The import of services depicted a growth of 4.36 percent during the period under review to stand at $416.60 million compared to $399.19 million worth of services imported in the corresponding period of the previous year, the latest statistics of external trade of services showed on Tuesday.

The major source of concern is the huge deficit in the services sector during the month of December alone, due to declining exports and burgeoning imports, following the growth in the export of services in month of October this fiscal year.

The exports in services under-performed heavily during the month of December, which were otherwise on the higher side in the initial months of the current year. The services exports stood at $24.892 million, registering a massive decline of almost 56 percent compared to last December, when they were at $56.07 million.

Also the export performance in December registered a steep decline compared to the preceding month of November and was almost 50 percent down at $49.31 million.

The import of services during the months of December was slightly up by 0.41 percent to $76.35 million compared to $76.04 million in the same month of previous year and was down by 3.95 percent compared to $79.49 million in the preceding month of September.

Analysts said that the performance of export of services in December was dismal, which further widened the deficit following its recovery in October of the current fiscal, which helped to restrict the trade deficit in services to some extent.

They said that the share of country in the world services sector has been stagnant and could not grow beyond 0.23 percent due to a number of factors.

Analysts believed that there is a vast potential for trade services like financial, construction and other business such as computer, technology, engineering, legal, accounting and other services.

The countryÃ¢â¬â¢s services export are confronted with a number of issues, which obstructed in tapping the vast potential of export in this sector like quality, acceptance of professional credentials, visa problems and the most importantly the image problem, which the country has been confronting since long.

Ã¢â¬ÅAny further growth in the export of services would depend on how we tackle the issues in the coming days, particularly to improve the countryÃ¢â¬â¢s image abroad to penetrate both in the developed and developing markets,Ã¢â¬Â they added.

The government has started releasing the external trade data of the services sector from this financial year, which was not the practice in the previous years.

According to an international study, Pakistan has a very tangible share in export of information technology related services sector. There are many shortcomings in the sector, which has made it less competitive with those of other countries. There is a lack of skilled labour, quality educated professionals, lack of basic infrastructure, training of human resources, lack of research and development, low-extent fibre optic connectivity to more location in Pakistan and piracy.

http://www.dailytimes.com.pk/default.asp?page=2007\02\14\story_14-2-2007_pg5_9


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## Neo

Wednesday, February 14, 2007 

*World Bank credit of $138m for quake relief*

WASHINGTON: The World Bank approved on Tuesday a $138 million credit to the Pakistan Poverty Alleviation Fund (PPAF) to complete housing reconstruction in areas struck by the earthquake of October 2005.

The additional financing to the Second Poverty Alleviation Fund Project (PPAF), is designed to help finance Stage II and III house reconstruction payments to the 90,000 currently eligible households, as well as to finance community level infrastructure such as link roads and water and sanitation services for earthquake affected communities.

Ã¢â¬ÅThe scale of the devastation left entire communities gravely affected and in need of rehabilitation. PPAF mobilised within hours of the earthquake and managed various relief, reconstruction, and rehabilitation initiatives in a coordinated manner,Ã¢â¬Â said John Wall, World Bank country director for Pakistan. Ã¢â¬ÅThis additional financing will enable the PPAF to continue its vital work in rebuilding lives and homes in the affected areas.Ã¢â¬Â

The Bank said the new financing will also allow PPAF to address long term needs of reviving social, physical and economic structures of affected communities through intensive social mobilisation processes and asset building of vulnerable households. The earthquake affected communities will continue to be mobilised into community organisations by partner organisationÃ¢â¬â¢s of the PPAF and will be provided with housing compensation and training in seismic house reconstruction. 

http://www.dailytimes.com.pk/default.asp?page=2007\02\14\story_14-2-2007_pg7_33


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## Neo

Wednesday, February 14, 2007 

*WAPDA to complete Kachhi Canal by 2010*

LAHORE: The Water and Power Development Authority (WAPDA) will complete the Kachhi Canal water project by 2010, while the phase-I of the project will be completed by the end of 2008.

WAPDA Chairman Tariq Hameed said this while briefing the States and Frontier Regions (SAFRON) minister on water projects here on Tuesday, according to an official statement.

Hameed said that the Kachhi Canal would solve the problem of water shortage in many areas of Balochistan. He added that 300 kilometres of the 500-km Kachhi Canal would run in Punjab, and the rest would be in Balochistan.

He said that the Sabakzai Dam in Balochistan would be completed by the end of March and formally inaugurated in April. Important water projects in Balochistan would be started soon after the groundbreaking ceremony of the Winder Dam in June whereas work on Suklaji Dam will start by December this year, said the WAPDA chairman. In his presentation, WAPDA Member (Water) Mushtaq Chaudhry said that 26 percent of development work on phase-I of Kachhi Canal has been completed and the rest would be accomplished by the end of 2008. He added that the canal would irrigate 713,000 acres of land and thousands of families would benefit from this project. 

http://www.dailytimes.com.pk/default.asp?page=2007\02\14\story_14-2-2007_pg7_17


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## Neo

*Portfolio investment at year-high *

KARACHI (February 15 2007): Portfolio investment, as represented by Special Convertible Rupee Accounts (SCRAs) reported daily by the State Bank, touched the highest of the year. According to the latest (13th February) update, it reached $519.3 million on February 12, 2007 including $27.7 million (mainly USA and Hong Kong) received on 12th alone. It was $359.7 million on January 22.

In between the two dates, it declined to $346.8 million on January 24 before rising to $358.5 million on 26th. Come February and it rose to $387 million on February 2; stood around that level by the 6th; and then jumped to $491.6 million on the 9th before surging to a new record level of $519.3 million on February 12. Between the two highs of January and February so far, it has recorded a rise of $159.6 million in just about 20 days.

The increase of $159.6 million between January 22 and February 12 was shared among USA (up $105.5 million raising its total to $318.6 million), UK (up $62.4 million to $96.8 million), Hong Kong (up $3.9 million to $25.4 million) and Singapore (up $0.4 million to $110.4 million). All the four countries occupied the first four positions with USA leading the list followed by Singapore, UK and Hong Kong. The investment level of Kuwait, the fifth highest investor, remained unchanged at $13.2 million.

Among others, seven reporting countries recorded withdrawals of varying magnitude. That includes $7.3 million by Switzerland, by far the largest dis-investing country raising its total withdrawals to $33.2 million by 12th of February 12. This was followed by UAE (down $3.9 million to minus $6.1 million), Australia (down slightly less than $1.2 million to minus $1.2 million). Luxembourg (down $0.1 million to minus $1 million), Germany (down $0.04 million to $0.6 million). And, Qatar (down $0.03 million to minus $0.06 million) besides a rather minor withdrawal by Guernsey.

Portfolio investment made by all other reporting countries remained unchanged at the level attained on 22nd January. On the stock market, invariably affected by the changes in the portfolio investment, the most representative KSE-100 Index, which had risen to 10,706 points on January 22, rose further to reach the record high level of 11,867 points on February 8 before gradually reclining to 11,630 points in the following days in response to moderate profit-taking.

http://www.brecorder.com/index.php?id=528762&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*over 0.5 million tons of wheat.*

"Some Indian importers have contacted us to import Pakistani wheat, said a leading wheat exporter, adding: "We are ready to export the commodity to India at lower rates." He said more than six Indian importers have approached and still trying to finalise deal with Pakistani traders. If a deal is finalised, it would be the first time in the history of Pakistan that India will import Pakistani wheat, he added.

"We have offered wheat to Indian importers at $240 per tonne, but they want the commodity at $170 per tonne," said a leading exporter. "Currently, they are importing wheat from Australia at $220 per ton, as Australian wheat is the best in the world, while Indian sells it after blending it with domestic wheat," he added.

http://www.brecorder.com/index.php?id=528795&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*FDI rises 10 times in seven years: Zahid *

ISLAMABAD (February 15 2007): Minister for Privatisation and Investment Zahid Hamid said that the Foreign Direct Investment (FDI) has increased ten times during the last seven years due to good economic policies of the present government.

It was only in the region of $320 million in the year 2000 and in 2006 it crossed $3.5 billion dollars, the Minister told BBC Television. He said the analysts who compare flow of foreign investment in Pakistan should know that it has to be done in terms of the percentage of GDP.

For example, he said the amount of 3.5 billion dollars FDI registered in Pakistan last year was in the region of 3 percent of the GDP, which is a very high and higher than our neighbours. He said that the government of Pakistan is pursuing a liberal and attractive investment policy and the feed back is encouraging. To a question he said that Pakistan has in fact, one of the most successful privatisation programmes in the region. He said that during the past 15 years, from 1991 to 2007 when the country started privatisation more than $7billion dollars were realised in about 163 transactions.

http://www.brecorder.com/index.php?id=528817&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pakistan becoming trade, manufacturing hub in region: Musharraf *

ISLAMABAD (February 15 2007): President General Pervez Musharraf has said that with opening of all economic sectors, investment-friendly policies, conducive environment and geo-strategic location, Pakistan can serve, and is fast becoming trade and manufacturing hub in the region.

Giving an interview to a private TV channel aired on Wednesday, the president said his strategy was to make the country a manufacturing nation, as it was industrial sector which helps reduce poverty, creates jobs and checks unemployment. The President said Pakistan's trade and economy were based on agriculture sector, adding but only 6 percent of the world trade is driven by textile sector, with 61 percent by the manufacturing, engineering and heavy industries.

He said, "we have to make a gradual shift from agriculture to industrial sector" with efforts to strengthen the manufacturing strategy being implemented since 2000.

Asked as if the country would depend on imported raw material in manufacturing sector, the President said, the country has a lot of potential in raw material and we have to explore and exploit this potential for industrial requirements.

He further said that the dispute resolution between Pakistan and India could also help reduce the problem of raw material, as the two sides can benefit from each others potential.

President Musharraf said, cement industry was also attracting investment and mentioned a recent $100 million investment in this sector. About the rising prices of everyday commodities and the recent increase in sugar and cement, President Musharraf said the government was fully alive to the situation and taking corrective measures.

He said there were certain cartels who manipulate at time and stressed more regulations to counter such trends. To a question about terrorism, the President said it was a serious threat and efforts were being taken to address the issue.

He said Pakistan was pursuing a middle course that moved on to the path of modernisation. To a question about President's election, he said, it would be according to the constitution.

http://www.brecorder.com/index.php?id=528753&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Fata to emerge as model of development by 2015: Aurakzai *

PESHAWAR (February 15 2007): NWFP Governor Lieutenant General Ali Muhammad Jan Aurakzai (Retd) has said that by the year 2015, the tribal area would emerge as a model of development through Sustainable Development Plan, which he added envisaged spending Rs 130 billion on multi-sectoral development of Fata over the next nine years.

He was addressing a group of 88 officers from National Defence College, here at the Governor House on Tuesday evening. The governor in his address informed the group, comprising allied officers from armed forces, civil service and friendly countries about the current situation in tribal areas, its historical and strategic importance, and mode of governance, development strategy and the govt's reformation policy with regard to Fata.

He said that after 9/11, the area got importance both at the national and international level, bringing enormous opportunities of progress and development to this backward region.

The governor said that over the period of past five years the annual development budget for Fata had been raised from Rs 800 million to Rs 6.2 billion, whereas presently over Rs 9 billion were being spent in Fata, including Rs 3 billion special development packages and programmes.

The governor said that in order to make space for spending such a huge amount, the Fata secretariat had been expanded and a separate Fata Development Authority formed. The Authority being a semi autonomous body, he added also envisaged the involvement of private sector through joint ventures.

The governor said that FDA had come out with its first mega project of establishment of Marble City in Mohmand Agency for which a MoU was signed on Tuesday. He said that establishment of Marble City was a landmark achievement, which when fully operational would bring enormous economic opportunities for the Fata people.

In the Marble City, he added the investors would get many incentives and facilities including free of cost land to potential investors and uninterrupted supply of electricity.

Responding to various questions asked by the participants, the governor highlighted the steps taken by the government for improving law and order, restoring confidence of the tribesmen and reviving the authority of the political administrations saying that supporting strategies adopted in this regard had proved very effective.

He explained the circumstances in which the historical peace agreement was signed with the tribes of North Waziristan. Regarding jirga process in Afghanistan, the governor said that separate jirga commissions had been formed in Afghanistan and Pakistan for evolving the mechanism. He hoped that both the countries would be able to constitute a jirga to further initiate the dialogue process and resolve the problem politically.

http://www.brecorder.com/index.php?id=528889&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*LoI issued to Chinese firm for $350 mln MTC: CDGK *

ISLAMABAD: February 15, 2007: City Nazim Karachi Syed Mustafa Kamal on Thursday said that Mass Transit Corridor (MTC) project in the city is no more a dream now because practical work on it would commence during the current year.

Talking to a private television channel he said the study of the project has been completed and Letter of Intent (LoI) has been issued to a consortium of Chinese company which is due here soon to begin work.

He said it will be a big project worth $350 million providing instant travelling facility from Sohrab Goth to Tower area. The project was being talked about for the past 35 years but credit goes to local, provincial and the central governments that the long-standing dream of Karachiites will now materialise.

He said the federal government has committed sovereign guarantee of $150 million in the project adding the talks are underway with Karachi Port Trust (KPT) and Railways for the allocation of land for setting up of yard by the contractors.

The master plan for renovation of Karachi city is 99 percent complete and documents have been handed over to different stake holders to seek their opinion, he said.

He said that de-congestion of old areas, an industrial zone around every residential area, new airport, development of sea beach, provision of basic living facilities and services to the residents are some of the salient features in the plan.

The Asian Development Bank has pledged $800 million funding for the development of Karachi. He said with pragmatic approach of the city government, the ADB has found the master plan appropriate and we have given that plan to their consultant.

Karachi is presently an ideal place where massive infrastructure development is taking place. Keeping aside the assistance of ADB the city government is making efforts with the collaboration of provincial and central governments for infrastructure development, the nazim said.

A number of projects are presently under the process and massive economic activity is going on in the city, he said. He said three big underpasses and three bridges of international standard were built during the past eight months for smooth flow of traffic in the city.

The foreign direct investment worth $1.2 billion has been attracted in the city for three mega projects including 25.5 km Elevated Expressway with the cost of $350 million, Information Technology Tower worth $200 million, Mass Transit Corridor worth $350 million etc, he informed.

He said the mega projects are being run by the city government with fiscal assistance of provincial and central governments. The central government has allocated Rs. 6 billion while the provincial Rs. 5 billion in this respect, he added.

To a question he said there is no hard and fast rule to alleviate poverty overnight adding enhanced economic activity and infrastructure development are the steps which will bring vivid change in the living conditions of the people.

http://www.brecorder.com


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## Neo

*Qatar keen to invest over $7 billion in Sindh, Ebad told *

KARACHI: February 15, 2007: A high-level delegation of investors of Qatar, called on Sindh Governor Dr Ishrat-ul-Ebad Khan at the Governor House on Thursday and hinted at making an investment of over seven billion dollars in the province.

The delegation which was headed by Shaikh J. Yusuf Al-Thani and included Nasir Al-Ansari, Saifur Rehman and others.

Chief Secretary Fazlur Rehman, City Nazim Syed Mustafa Kamal, Principal Secretary Mohammed Saleem Khan, member Land Utilisation, Secretary Livestock and other officials were also present on the occasion.

The governor apprised the delegation about available investment opportunities in various sectors in the province.

The delegation showed interest in making investment in 7 and 5-star hotels, modern shopping plaza, offices and residential apartment buildings, 47-storeyed IT Tower, Mass Corridors and Cement Plants.

The officials identified the land for these projects which was liked by the investors.

The delegation also talked about a Dairy Project on 2000 acres of land in the interior of Sindh.

Governor Ishrat-ul-Ebad informed about the planning for six mass corridors as well as available facilities for dairy farming and cement plant.

Agreeing in principle to the aforesaid projects, decision was taken for undertaking joint ventures and early completion of other formalities.

The governor informed that for industrial purposes, land is being provided at only 25 percent price of market rate while steps have been taken for simplification of laws and regulations and provision of infrastructure.

http://www.brecorder.com


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## Neo

*ABN AMRO to fund PNSCÃ¢â¬â¢s $150m ships deal *

CBR exempts the corporation from income tax

By Azhar Mahmood

KARACHI: ABN AMRO bank has agreed to finance up to 90 per cent of total $150 million purchases of two Aframax oil tankers and one Panamax bulk carrier for the state-controlled Pakistan National Shipping Corporation. 

Ships classified as Panamax are of the maximum dimensions that will fit through the locks of the Panama Canal. An Aframax is an oil tanker with capacity between 80,000 dwt and 120,000 dwt. It is mostly employed at harbours that are too small to accommodate VLCCs or very large crude carriers.

Sources of banking industry said on Wednesday in order to lower the cost of financing, Central Board of Revenue (CBR) has approved grant of income tax exemption to PNSC.

The CBR has also tax exempted Ã¢â¬Åprofit on debtÃ¢â¬Â earned by ABN AMRO. All over the world, the purchase of all types of ships automatically gets exemption from payment of both direct and indirect taxes.

Since the clause 72-1 of agreement and exemption granted pursuant to it constitute a special incentive measure designed to promote economic development, the Ã¢â¬Åprofit on debtÃ¢â¬Â qualifies for tax sparing credit set forth in article 22-4 of the agreement.

The tax exemption under these financing arrangements has been granted under Article 22-4 of the agreement for avoidance of double taxation inked between Pakistan and Netherlands.

Sources said the Finance Division, Ministry of Finance has informed the CBR that the nature of the loan will be commercial and it has approved granting of income tax exemption by also concurrently invoking clause 72-1 of part-1 of the second schedule of the income tax ordinance, 2001.

This implies that Ã¢â¬Åall payments (of the loan) to be made by the PNSC under the loan agreement would be exempted from income tax.Ã¢â¬Â

This special clause of the income tax ordinance was inserted as an incentive for projects of national importance and promoting economic development following industrial investment, expansion and modernization.

Consequent upon approval from the ministry of finance, the income from Ã¢â¬Åprofit on debtÃ¢â¬Â of ABN AMRO Bank has been exempted from tax.

ABN AMRO funding will be in foreign currency and it will constitute 90 percent of the total acquisition cost.

Government of Pakistan has not granted its guarantee to the loan, which means that the foreign bank has accepted the commercial viability of the state controlled Shipping Corporation.

By 2010, PNSC has to meet the International Maritime Organization regulations and the purchase of oil tankers is necessary and PNSC to induct to double hull oil tankers.

At present federal government controls, 89.13 percent shareholdings of the PNSC, .

To meet the countryÃ¢â¬â¢s bulk imports of raw materials such as coke, coal, iron ore and grains, PNSC requires more bulk carriers in its fleet.

PNSC has one bulk carrier and the bulk trade handling is being managed through foreign flag vessels, resulting in outflow of foreign exchange.

The acquisition of these new carriers will enhance the share of PNSC in total sea borne trade of the country.

http://www.thenews.com.pk/daily_detail.asp?id=42802


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## Janbaz

*China Mobile invests $800m in Pakistan*

ISLAMABAD (APP) - China Mobile has formally acquired Pakistan&#8217;s fifth largest cell phone carrier Paktel, offering an investment of about $800 million.
In this connection, the acquisition ceremony was held at the Chinese embassy that was addressed among others by Federal Information Technology Minister Awais Ahmad Khan Leghari, Minister of State Ishaq Khan Khakwani, Chinese Ambassador Zhang Chunxiang and China Mobile Communication Corporation Chief Executive Wang Jianzhou.
Awais Leghari pointed out that it was highest-ever foreign investment by the Chinese company, to help Pakistan to further develop its telecom industry. This major project between the two countries was matured due to personal interest taken at the level of the President Pervez Musharraf and the Chinese President Hu Jintao.
&#8220;It also reflects the growing strategic partnership between the two friendly countries,&#8221; the minister said and hoped that more Chinese investment would be coming in Pakistan this year.
Reiterating strong desire of his country&#8217;s maximum participation in socio-economic uplift of Pakistan, the Chinese ambassador said their economic partnership would further boost in the years to come, covering all areas of common interest. In this connection, some other major projects are already in the pipeline, he added.
Chief of China Mobile lauded Pakistan rapid economic growth, and said it was attracting Chinese companies to expand their business network in Pakistan.
China Mobile paid $ 400 million in acquiring the Paktel, while it will invest another $400 million this year on running expenditure and for the expansion of the existing mobile network. China Mobile Communications Corp will buy 88.86 per cent of shares in Paktel Ltd, Pakistan&#8217;s fifth largest mobile carrier, the company&#8217;s listed unit.
As of Sept. 30, Paktel had 1.53 million total subscribers, up 62 percent from 944,718 the year prior, placing it fifth in terms of active subscribers. 
China Mobile, how now acquired the Paktel with a commitment to provide best possible service to the subscribers, making it more efficient and effective. China Mobile Corporation had struck a deal with Millicom International Cellular under which the company would by 88.86&#37; shares of Paktel limited.
The sources told APP that China Mobile Communications made its first cross-border acquisition, buying Paktel in Pakistan at an enterprise value of $460 million. It will pay Millicom of Sweden - which owns 88.86% of Paktel - a cash consideration of $284 million. The deal has been concluded in almost record time since Millicom announced it in November last year.
China is the world&#8217;s largest cell phone market measured in terms of number of users and China Mobile is at the forefront of that revolution with the world&#8217;slargest mobile subscriber base. It provides mobile telecommunications and relatedservices in 31 provinces in mainland China.
China Mobile China Mobile Communications is the largest mobile phone
operator in the world. This is the first entrance of any Chinese mobile company in the Pakistani market. Beijing is encouraging its leading business organizations to expand their businesses. As a result, China Mobile is expandingits operations and Paktel is its first successful acquisition, the sources added.
The sources further said that this is the first time that China Mobile has acquired a foreign telecommunication company of &#8220;strategic significance&#8221;. Last year, the Chinese telecommunication giant acquired all shares of Hong Kong&#8217;s fourth largest mobile operator.

The Nation.
http://www.nation.com.pk/daily/feb-2007/15/bnews2.php


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## Neo

*ADB To Provide $3 Billion To Improve Pakistan's Power, Water Systems *

KARACHI -(Dow Jones)- The Asian Development Bank, or ADB, will provide $3 billion to Pakistan over the next three years to improve the country's power and water infrastructure, a government statement said Thursday.

Peter Fedon, the Manila-based bank's country director, made the commitment during a meeting in Islamabad with Liaquat Ali Jatoi, Pakistan's minister for water and power, Pakistan's Ministry of Water and Power said in a statement.

The statement quoted Fedon as saying that the ADB's assistance will include $ 500 million for renewable energy development, $1.2 billion for power transmission enhancement, $800 million for water irrigation and $250 million for power distribution enhancement.

The rest of the money will be given for a number of technical assistance programs for capacity building and relevant studies, it added. 

-By Imran Maqbool; Dow Jones Newswires; +92300-8229939; imran.maqbool@ dowjones.com 

http://www.nasdaq.com/aspxcontent/N...CQDJON200702150953DOWJONESDJONLINE000740.htm&


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## Janbaz

*Canadian firm may invest in oil *

ISLAMABAD: President of Canadian Mustang Global Group Sheldon E Benson accompanied by members of his delegation called on Minister for Petroleum and Natural Resources, Amanullah Khan Jadoon here on Thursday and expressed his company&#8217;s desire to invest in fuel-related technologies. The Minister said the government was specifically focusing on the promotion of the oil and gas sector on modern lines and exploiting the indigenous resources aimed at cutting down the oil import bill. He said in order to overcome the environment pollution problems the government was encouraging the use of low sulphur content petroleum products in the country for achieving the Millennium Development Goals by December 2008. 

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=43017


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## Janbaz

*'Trade between Pakistan and Switzerland up 50 percent during last year' *

RECORDER REPORT 
KARACHI (February 16 2007): Under Secretary of State of the Swiss Federal Department of Economy, Monika Burzi has said that Pakistan and Switzerland enjoyed good business relationship and the bilateral trade had grown at a rate of 50 percent during the past year. She is heading a high-level four-member trade delegation from Switzerland, which is visiting Pakistan.

In a media briefing, she said her visit was a fact finding mission about the business opportunities for Swiss businessmen in Pakistan. Swiss ambassador to Pakistan Markus Peter and Swiss Consul General in Karachi Martin Bienz were also present. The delegation spent a busy day in Karachi on Thursday, she said and added that the delegation called on Overseas Investors Chamber of Commerce & Industry (OICC&I) chief Salman Burney, who gave a presentation.

In presentation, Burney said the volume of investment in Pakistan has increased. He said legislation and its market size made the country the infrastructure. He said huge funds are assigned to upgrade facilities in industrial zones. These measures had made Karachi an ideal place to set up industries. The delegation met prominent businessmen of the city at a lunch where Karachi Chamber of Commerce and Industry President Majyd Aziz briefed them about what the city had to offer foreign investors.

The Swiss team also called on Chairman, Trade Development Authority of Pakistan (TDAP) Tariq Ikram, who briefed the Swiss visitors and said TDAP was set up to facilitate the trade and assist the businessmen explore and achieve new economic opportunities. He asked the Swiss team to tell the world that Pakistan was an excellent place for investments. He also asked the under-secretary of State of the Swiss Federal Department of Economy to inform Swiss businessmen about the opportunities in Pakistan.

Business Recorder.
http://www.brecorder.com/index.php?id=529188&currPageNo=1&query=&search=&term=&supDate=


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## Janbaz

*Czech investors keen to invest in various sectors: envoy *

RECORDER REPORT 
PESHAWAR (February 16 2007): The ambassador of Czech Republic Alexander Lange said on Thursday that Czech investors are keen to invest in energy, hydropower generation, mines & minerals, oil & gas, textile and marble sectors.

Addressing a meeting of businessmen here at Sarhad Chamber of Commerce & Industry (SCCI) he said that Northern Areas (NAs) in general and some areas of NWFP in particular enjoy big potential for promotion of tourism. However, he called for taking measures for improvement in law & order and initiating of effective steps for provision of security to foreign tourists.

The SCCI president, Liaquat Ahmad Khan presided the meeting while senior vice president, Haji Mohammad Israr Saraf, members of executive committee, industrialists, traders and exporters also attended.

The Czech ambassador while expressing apprehensions regarding law and order situation said that the Republic of Czech termed incidents as accidents while in Pakistan every terrorist act has been linked with the activities of al Qaeda resulting in creation of concern amongst foreigners interested in coming to Pakistan.

He agreed on promotion of bilateral trade between Pakistan and Czech Republic and said that barter trade and imports would strengthen the economies of both countries. On recommendation of SCCI, he announced the issuance of Czech visas to the local business community on priority bases.

In his welcome address, the SCCI president, Liaquat Ahmad Khan said that as both countries had restored diplomatic relations with opening of embassies, therefore, the exchange of trade delegations, promotion of investment opportunities and co-operation in other sectors was also need of the hour.

He invited Czech investors to invest in marble, gems & jewellery, minerals, hydropower generation and other important sectors, saying Pakistan in general and NWFP in particular offer vast potential of investment in these sectors.

The SCCI chief stressed for simplification of the issuance of Czech visas for the investors of NWFP for promotion of trade relations between both states. He said that the promotion of trade relations would help improve economic and financial ties between both friendly countries.

Liaquat Ahmad Khan said Peshawar enjoy the status of golden gateway for trade relations with Afghanistan and Central Asian Republics (CARs). He said that a large number of daily use goods and construction materials are exported to Afghanistan every day from NWFP.

Business Recorder.
http://www.brecorder.com/index.php?id=529171&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Plan to enhance motorcycle manufacturing, export *

ISLAMABAD (February 16 2007): The government has started negotiations with the stakeholders of motorcycle industry to develop a long-term plan, similar to the automotive policy, giving a clear roadmap for enhancing both the production and exports to the regional and African countries, sources told Business Recorder on Thursday.

To this effect, they said a meeting with the representatives of industry was held here at the Engineering Development Board (EDB) to discuss and workout a plan with a five-year pre-announced tariff policy.

When contacted, the sources in the industry said they were utilising less than half of the installed production capacity and sought reduction in input cost for export competitiveness. The industry has said they could enhance motorcycles export from 10,000 to 100,000 units by next five years, provided input cost was decreased, they added.

The government may also extend freight subsidy to the motorcycle industry on exports besides research and development allowance as the matter will be taken up with the Pakistan Trade Development Authority, Planning Commission and Competitiveness Support Fund, a joint fund developed by the Ministry of Finance and USAID to develop different sectors.

The EDB following a demand by the industry had prepared the freight subsidy proposal and sent it to the Ministry of Commerce. The motorcycle industry also sought research and development allowance at least five percent of the freight on board (FOB).

The Honda Japan had allowed the Honda Atlas Pakistan to export to the regional countries and the EDB wanted to get some freight subsidy for the company enabling it to increase its exports. An official of the EDB said the motorcycle was a heavy commodity and could be exported only in limited numbers with a huge cost impact. Hence, a proposal of getting some freight subsidy on the export of motorcycle was put up, he added.

They said that the motorcycle industry had outlined a five-year investment plan worth Rs 16.5 billion to raise its production to 1.2 million units by 2010-11. The plan is to export at least over 0.1 million by 2011 to Saarc, Gulf and African countries. At present, a limited volume of motorcycles, 7,062 are being exported to Bangladesh and export to Afghanistan will start soon.

The total strength of the industry, according to the statistics, is 48 assemblers and 1,530 vendors that employee 9,000 direct and 200,000 indirect employees for the production target of 740,000 units by 2006-07 with an investment of Rs 2 billion. The projected demand for 2007-8 is 830,000 and industry estimates another Rs 2 billion investment to meet the demand.

http://www.brecorder.com/index.php?id=529139&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*'Pakistan needs to improve image abroad to attract investment' *

KARACHI (February 16 2007): German Consul General Hans-Jhoschin Kiderlen has said Pakistan needs to improve its image abroad to attract investment and recognition as a liberal, modern and progressing state.

He was talking on "Perception of Pakistan in German Public Opinion" at the SZBASIT Institute of Science and Technology on Thursday to highlight the weaker areas where co-operation was needed to augment relationship between Pakistan and Germany.

He said Pakistan doesn't carry a good image in Germany, as it is not exposed fully. The media of the two countries were still to work hard and project Pakistan. He said the German media covers Pakistan on specific occasion, which is not sufficient to depict the right picture of the country.

He said Pakistan is an ideal destination for investment but German investors know little about it. They need guidance and support, he added. The CG said Pakistan's image was bleak at the moment as people who matter didn't know about 'this' country and the potential it had which could be explored for mutual interest.

He said a country, which had not preserved its cultural heritage and had failed to come up to the international standard, needed a lot of support. "You have not been able to preserve your architecture and monuments. This may not be a worrisome situation for you but abroad it has its impact. People think a country unable to protect its cultural past is likely to be unable to maintain contacts with its friends."

He said, "Conserve your past, your monuments and your culture and projects it abroad so that your image could be changed." The CG said lack of interest in your own culture is a negative signal for outsiders. He said, "You need to project your culture to create interest in it among others." It would increase tourism, trade and commerce and would go a long way in changing perception of Pakistan among the people of Germany.

The consul general spoke at length about students, German language, need to learn it and exchange of opinion leaders among the two countries. "This will serve as ambassadors from one country visiting another," he added.

The CG said that media of the two countries should play its role and project Pakistan in Germany and Germany in Pakistan so that the people of the two countries could be educated properly. He said Pakistan's role in the fight against terrorism has been recognised in Germany. "But still a lot has to be done."

He said efforts should be made to portray a positive image of Pakistan highlighting the efforts against terrorism, its role in Afghanistan and its desire to develop an Islamic society tolerant to alien ideas in Afghanistan and in Pakistan. He said Pakistan was a misunderstood country. Little had been done to portray its image, which was correct, and existed in reality.

He said there should be exchanged of people specially students, media men and opinion leaders to foster relationship, and to facilitate depiction of right image of the two countries.

Kiderlen said he wanted improvement in the system so that the academics from Pakistan could get recognition in Germany. Dr Javaid Leghari, vice president and project director, SZABIST, also spoke on the occasion.

http://www.brecorder.com/index.php?id=529172&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'Pakistan ranks 91 among 125 states in global competitiveness' *

ISLAMABAD (February 16 2007): Pakistan's competitiveness is ranked 91 among 125 countries of the world. Its rating can improve by six to eight rankings annually, if it follows Competitiveness Support Fund's (CSF) Action Plan.

This was stated by CSF Chief Executive Officer Arthur Bayhan, while addressing a seminar at Pakistan Institute of Development Economics (PIDE) on "Initiative to upgrade competitiveness of Pakistan's economy" here on Wednesday.

According to the Global Competitiveness Report, Pakistan's position was 94 in 2005. It can achieve 60-65 ranking by the year 2010, with smooth progress of 6-8 ranking improvement per year, he added.

Competitiveness is very important and is the only answer for sustained economic growth as the world has entered globalisation and to tackle poverty, economic growth is the only solution, he stressed.

He said the World Economic Forum (WEF) and other such institutions provide a platform, which could help Pakistan improve its ranking. The Davos moot, regularly attended by the President Pervez Musharraf or Prime Minister Shaukat Aziz is encouraging and would help Pakistan achieve sustainable economic growth.

Presently, Pakistan's economic growth is advancing at 6.57 percent each year. This has an impact on the poverty by 1 percent every year, which means 1.6 million people each year come out of poverty.

He disclosed that first Competitiveness Report on Pakistan would be launched on March 3, 2007.

He said, the governments should not involve themselves in the business and termed the nationalisation of industry in Pakistan in 1970 as a big mistake. This, as a result, sent a negative message across the world that Pakistan is still a "poor" country, he added.

He pointed out that data dissemination in Pakistan is very poor and departments hesitate in supplying correct information. This attitude must be changed for identifying the problems, he said.

He presented analysis of the Pakistan's competitiveness ranking based on individual components: institutions-79; infrastructure-67; macro economics-86; market efficiency-54; technical readiness-89; innovaiton-60; business sophisticaiton-66 and education-104.

The ranking of health, he added, is also close to education.

When asked how market efficiency is placed better in the ranking, he said, there is dynamism in the private sector. Despite low rating, Pakistan business has dynamism, ability of innovation and business sophistication, which are good signs. Institutions, infrastructure, technical readiness and macro economy need more focus.

Giving some comparisons, he said, according to Global Competitiveness Index, Switzerland is number one, Finland 2, USA 6, Thailand 35, India 43, China 53 and Turkey 59.

While comparing with India on individual components of competitiveness, he said, it stands at 49th position in education, 31 in macro economy, 21-market efficiency, 26-innovation, 25-business sophistication and 49-education. However, in terms of infrastructure, India is ranked close to Pakistan showing 62nd position.

India is looking forward to achieving GDP growth of double-digits by virtue of accelerating its economic growth.

The comparison reveals that Thailand, which holds 35th ranking and has very improved status in most of the components, lacks in macro economy and its position is 88. Macro-economy is directly related to inflation, Bayhan said. Answering a question, he believed 85 percent of these indicators were correct.

Talking about CSF Action Plan, it aims at promoting broad understanding and support for government's economic reform agenda including provincial government leadership workshops, presentation on competitiveness to business leaders and orientation for local and international press. Moreover, it looks forward communicating priorities to relevant ministries and institutions ensuring timely provision of data to international sources. It is also meant ensuring accurate implementation of Executive Opinion Survey for the next Global Competitiveness Report-March 2007 and to focus CSF activities on high impact areas.

Giving details of CSF working, he said it focuses on three windows: technical assistance (sectoral and regulatory), matching grants (cluster development) and business incubators (venture capital). CSF is incorporating government, industry and academia in its projects for sustainable economic growth.

Under technical assistance, it focuses on removing obstacles from motorcycle industry, food processing units, fisheries, automotive industry and gender contribution to economic growth.

On a question, why textile is not included in its projects, he remarked that textile sector is standing on its own and is an established sector. Moreover, lot of investment has been made in this sector and it is not wise to put all your resources in one entity, he added. He stressed on human development skills, which are urgently required to meet the economic growth goals.

Responding to a question on skills of gems cutting, design, he said, CSF is running seven projects of technical institutes of gems cutting, design in Balochistan, marble in NWFP, and surgical instruments in Sialkot.

He strongly condemned private sector of always blaming and criticising the government for its non-supportive attitude and urged them to adopt research and training and having middle and long-term strategies to remain competitive internationally.

He said government role in business is only to provide conducive environment to business operated under regulatory frameworks. When asked if education alone is looked after properly, would Pakistan's ranking improve, he said that health and education both have 15 percent weightage and Pakistan lacks behind in both. If these two sectors are focused upon, Pakistan can achieve much better position in the competitiveness index. However, sustainable economic growth is possible when a balance between all components is maintained.

Arthur Bayhan said competitiveness of the country is measured through innovations and foreign investments. He said CSF is working with Smeda, Chambers of Commerce, corporate sector etc and also assisting regulating authorities and SECP etc for creating a better business environment.

http://www.brecorder.com/index.php?id=529158&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*UK to provide ÃÂ£480 million to fight social ills *

ISLAMABAD (February 16 2007): The British government on Thursday praised Pakistan's economic management and progress on poverty alleviation initiatives and economic growth, but feared that the risk of corruption is substantial. The country still has a daunting task ahead to fight illiteracy, high mortality rate and pulling 38 million population out of poverty, it hinted.

Dr Yousaf Samiullah, the head of Department For International Development (DFID) while briefing newsmen here at his office said to fight these social ills, the British government, for the period 2008-11, would provide about million 480 pound sterling, but with some conditionalities, which Yousaf termed as benchmarks ie ensuring meeting Millennium Development Goals (MDGs), human rights and accountability.

Illiteracy is rampant in Pakistan; 30,000 maternal deaths occurs each year; polio cases resurfaced and over half a million children die each year before reaching their fifth birthday. DFID want to bring it to zero, Yousaf said and negated a common conception found among some poor segments by saying "polio eradication is not a western domination plan".

DFID and Pakistan have recently signed a ten-year Memorandum of Understanding (MoU) according to which the former would provide financial assistance for poverty reduction in the country. This is a roll on plan, and its financing would depend on meeting some social obligations regarding MDGs, human rights and anti-corruption activities.

To a question, he said that 'war on terror' was not an explicit part of the plan and DFID is regulated for sustainable poverty alleviation through enhancing literacy, health and other social interventions. Yousaf said that during the last five to six years in Pakistan, accountability, responsiveness and service delivery has comparatively sound and the general trend is moving in right direction.

http://www.brecorder.com/index.php?id=529214&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Shell to invest Rs 3 billion in retail stations' expansion *

KARACHI (February 16 2007): Shell Pakistan Ltd will invest Rupees three billion in the expansion and upgrading of its retail stations in Pakistan. The managing director Shell Pakistan Zaivji Ismail Bin Abdullah stated this while briefing the newsmen about company's new future strategy here on Thursday.

He said Shell Pakistan will soon launch an exciting initiative for the motorists using compressed natural gas (CNG) in the country. He said Shell has been leading the way amongst the major oil marketing companies to meet the growing demand of CNG customers. The CNG expansion programme continues to be a part of Shell Pakistan's core strategy, he added.

He said, recently Shell Pakistan has also introduced the first ever state of the art CNG quantity assurance and systems at its CNG sites across the country.

http://www.brecorder.com/index.php?id=529176&currPageNo=1&query=&search=&term=&supDate=


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## Neo

February 16, 2007 
*Abu Dhabi to set up $5bn oil refinery*

By Shahid Iqbal

KARACHI, Feb 15: Abu Dhabi will establish a $5 billion crude oil refinery in Pakistan, having a refining capacity of over 100 million barrels per year, reported Middle EastÃ¢â¬â¢s leading newspaper Arab News on Thursday.

The newspaper quoted a senior official of the Consulate-General of Pakistan saying that Abu Dhabi-owned International Petroleum Investment Company (IPIC) will establish a $5-billion crude oil refinery in Pakistan.

A powerful delegation from Pakistan, led by the petroleum secretary, Ahmed Waqar, held talks with high-ups in the IPIC.

The newspaper quoted Press Consul Dr Mohammad Zafar Iqbal as saying that the Abu Dhabi IPCI agreed to set up Khalifa Coastal Refinery in Hub, Balochistan.

The refinery will have a capacity to refine 102.7 million barrels of crude oil per annum.

The IPIC will hold 74 per cent while the Pakistan government will own 26 per cent stake in the project, Iqbal said.

The ground-breaking ceremony of the project will take place next month. General Shaikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, is expected to visit Pakistan to lay the foundation for the mega project.

Iqbal said the refinery would substantially boost PakistanÃ¢â¬â¢s capacity to refine crude and also create job opportunities for thousands of skilled and unskilled people in the country.

Iqbal said the ground-breaking ceremony would be attended by senior officials from the UAE, including Abu DhabiÃ¢â¬â¢s Crown Prince.

Pakistan Ambassador to the UAE Ahsanullah Khan, PakistanÃ¢â¬â¢s Ministry of Petroleum director-general Sabar Hussain, Parco Managing Director Rasheed Jhang and senior IPIC officials, including Khadim Al-Kubeisi, attended the meeting.

The economic growth in Pakistan has created vast opportunities for oil refining companies to make money as energy demand is rising sharply. It is not only the oil and gas but the power sector has also great potential to yield huge profits for investors.

Pakistan mostly depends on imported crude oil to get refined products.

Experts said that Pakistan provides great support to refineries as the government does not tax crude oil at import stage and tax is imposed on sales in the market. Pakistan pays largest import bill to import petroleum products.

Pakistan is also desperately looking for huge investment in power sector as the demand for electricity is increasing and may turn into crisis if the demand is not met by 2009-10.

http://www.dawn.com/2007/02/16/ebr2.htm


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## Owais

*Indian cotton demand in Pakistan increasing: huge shipments ordered *

ISLAMABAD (February 16 2007): Pakistan textile industry prefers Indian lint over local cotton as almost all major groups are placing orders to Indian traders for huge cotton shipments. Indian cotton costs more in Pakistan but better quality and comparatively more finished product in term of weight makes it attractive for the textile industry.

A textile industrialist said, "The Indian cotton costs Rs 150 to Rs 200 per maund more in Pakistan but it gives a fine product at the end with better weight and these things are now increasing Indian cotton demand in Pakistan."

Indian cotton shipments are making their way into Pakistan through Mumbai-Oman-Karachi route as option of Wagah route is still not available for cotton trade between India and Pakistan. Nishat Textile Mills and Riaz Textile Mills purchased 50,000 tonnes in two different deals from Indian Cotton Houses and their partial shipments have already reached Pakistan.

Sources said Nishat Textile Mills used Wagah border option and its shipment was withheld by the Customs at the border. The controversy persisted for three weeks. The importer took the matter up with the higher authorities in Islamabad, whose intervention worked in his favour and finally the customs allowed entry.

This has given hopes to other Pakistani textile groups that the government may allow import of cotton from India via Wagah once the local picking season ends by the end of the current month.

The textile industrialists claim that they prefer Indian cotton over the local production this year for two reasons-better quality and less contamination. Quality matter to textile industry perhaps more than other sectors and for the same reason major Pakistani textile groups are looking towards India and other markets such as Brazil and South Africa to get better quality cotton for making quality products.

Quality cotton is a question mark for Pakistan, although the government tried invain recently to educate the growers and ginners to produce contamination free cotton. Their end result was zero. The government growers and ginners blame each other for the failure but the fact is that contaminated cotton is harming their interest.

http://brecorder.com/index.php?id=529118&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*OGDCL H1 net seen rising over 20 percent *


KARACHI (updated on: February 16, 2007, 14:35 PST): Higher oil prices and increased output are expected to boost half-year earnings for the country's top listed firm, Oil and Gas Development Co. Ltd. (OGDCL), by over 20 percent.

State-run OGDCL, which has a market value of $8.7 billion, produces 59 percent of the country's oil and 25 percent of its natural gas.

The firm is expected to post a net profit of between 24 billion and 26.2 billion rupees for the six months to December 31, according to five analysts surveyed by Reuters. It earned 20.3 billion rupees in the year-ago period.

Analysts also expect OGDCL, which is due to release results on February 21, to set an interim cash dividend of 1.75 rupees to 2 rupees.

The company's crude oil production surged 7 percent to 41,033 barrels per day (bpd) in the first half, while gas output rose 3 percent, said Qasim Shah, an analyst at Global Securities.

"In addition to higher production, the sale prices of oil and gas also jumped 17 percent and 12 percent, respectively," Shah said.

Under a government-regulated wellhead pricing formula, prices that distributors pay for gas from OGDCL's operated Qadirpur, Loti and Dhodak fields have risen over 12 percent in the first six months.

Gas prices paid by distributors are revised every January and July.

EXPLORATION PLAN

OGDCL plans to invest about $2 billion over the next three years on exploration and production activities, with a target to drill 41 new wells in 2006/07.

The company also hopes to enter its first overseas exploration venture in 2007.

"The company has a strong balance sheet with a 32 billion rupees in cash (as of June 2006), which provides enough room to increase its exploration activities," said Faraz Farooq, an analyst at brokerage JS Global Capital Ltd.

Analysts expect a strong set of figures for the full-year, given an aggressive exploration plan.

The firm became the largest company on the Karachi Stock Exchange after listing in January 2004, and has a 8.71 percent weighting in the main index.

The government sold a total of 10.5 percent of OGDCL in two domestic public offerings in November 2003 and January 2007.

The stock stood at 122.65 rupees at 0903 GMT, down 0.55 rupees from Thursday, but up 7 percent since the start of the year. OGDCL shares shed 2.8 percent in 2006, underperforming a 5 percent gain in the broader market.

The state-run firm has estimated proven plus probable reserves of 9.228 trillion cubic feet of natural gas and 164.25 million barrels of oil. It operates 37 wells and 17 exploration sites and has interests in 28 non-operated leases.

OGDCL's key competitors in the exploration business include BP Plc, Pakistan Petroleum Ltd., Pakistan Oilfields, and Italy's ENI.

brecorder.com


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## Neo

*Worker remittances up 20.96 percent in July 06-January 07 *

KARACHI: February 16, 2007: Pakistan received an amount of $2,959.35 million as workers' remittances during the first seven months (July 2006-January 2007) of the current fiscal year as against $2,446.52 million in the corresponding period last year registering an increase of $512.83 million or 20.96 percent.

The amount of $2,959.35 million includes $1.40 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

The inflow of remittances during the first seven months of the current fiscal year from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $768.01 million, $552.53 million, $443.87 million, $407.36 million, $247.86 million and $85.61 million respectively as compared to $695.43 million, $384.29 million, $359.85 million, $325.63 million, $236.45 million and $70.71 million during the same period last fiscal year.

Remittances received from Canada, Australia, Norway, Switzerland, Japan and other countries during the first seven months amounted to $452.71 million as compared to $363.72 million in the corresponding period of the last fiscal year.

The monthly average remittances for the period July 2006-January 2007 comes out to $422.76 million as compared to $349.50 million during the same period of the last fiscal year registering an increase of 20.96 per cent.

During last month (January 2007), Pakistani workers remitted $391.33 million as against $391.32 million in January 2006.

According to the break up, Pakistan received workers' remittances during January, 2007 from USA ($108.74 million), Saudi Arabia ($69.21 million), GCC countries - including Bahrain, Kuwait, Qatar and Oman ($48.78 million), UAE ($46.84 million), UK ($29.19 million) and EU countries ($10.72 million) as compared to the corresponding receipts from the respective countries during January, 2006 i.e. $109.39 million, $49.05 million, $48.84 million, $58.06 million, $34.77 million and $13.24 million.

Remittances received from Canada, Switzerland, Australia, Norway, Japan and other countries during January 2007 amounted to $77.79 million as compared to $77.52 million during January 2006.

brecorder.com


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## Janbaz

*World Bank ready to finance all mega water projects*

SHAHBAZ RANA
ISLAMABAD - The World Bank hinted at financing all mega water projects including Diamer Basha Dam and Kalabagh Dam to meet ever-increasing energy requirements of the country. 
The outgoing Country Director of World Bank, John Wall hinted this while speaking to the journalists on the sideline of &#8220;Art for Education&#8221; exhibition held at the Country office of the World Bank here on Friday.
&#8220;World Bank always supported Pakistan in building major infrastructure including all dimensions of water and we would continue doing this in future and all adequate arrangements would be made in this regard&#8221;, replied John Wall on the question of financing the mega water projects in the country.
While commenting on World Bank appointed expert&#8217;s verdict about Baglihar Dam dispute, he said that the outcome of the verdict appeared to be useful whereas both the countries seem to be satisfied with the outcome, and they (Pakistan & India) should utilize this opportunity to resolve their differences. 
John Wall showed his satisfaction on the pace of development in the country and said that Pakistan has learned how to make progress and World Bank would continue to assist the country in this regard.
Commenting on economic growth in Pakistan, he said domestic and foreign investment has increased many folds, the process of privatization is accelerating and reforms in major areas including telecom, information technology and education have been initiated. 
Describing Pakistan&#8217;s future as &#8220;bright&#8221;, John Wall said that Pakistan has improved its image abroad and the confidence of investors has been restored.
&#8220;I have achieved all my targets that I set forth while coming to Pakistan and I am very delighted on my performance&#8221; answered the outgoing Country Director on asking about his experience while staying in Pakistan. 
The new country head of World Bank, Yousufa Crooks- a Muslim and Zambian by origin, would formally take up his responsibilities on March 1st. He reiterated to continue programmes of the outgoing country head and promised to deliver for the betterment of the country. 

The Nation.
http://www.nation.com.pk/daily/feb-2007/17/bnews3.php


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## Janbaz

*Pak economy moving towards stability: ML*

Erum Zaidi
Karachi - Merrill Lynch, renowned global rating agency, has observed that the ongoing economic reforms remain a core priority in Pakistan and this should sustain high economic growth and lead to further financial stability, despite market has under appreciated.
In its report issued on Friday titled the Gross Prophet and Regional Strategy, Merrill Lynch has said that best stocks in Pakistan are Adamjee Insurance, MCB, United Bank and Fauji Fertiliser bin Qasim.
Merrill Lynch hosted the annual New Frontiers Conference in Singapore, with over seven hundred one-on-one meetings between investors and companies from Pakistan, Sri Lanka, Vietnam and Mongolia.
Report said that all the four countries have privatization programs that are helping to boost growth, and stock coverage by brokers remains far behind the rest of the region. 
Investors held meetings with the corporate and government officials from Pakistan, Vietnam, Sri Lanka and Mongolia. 
The four countries shares in common GDP growth close to +8&#37; this year, above the regional average of +6.7%, but below China, where we expect +9.6%, and India, where we expect +8.6%. 
Report said that in Pakistan, one can own 100% of any company in any sector, and in the past 18 months, Standard Chartered has bought Union Bank, China Mobile bought Paktel, and Philip Morris bought Lakson Tobacco. 
This year Pakistan State Oil is to be privatized. The banks have been pretty much taken over by foreign players, and all five cellular operators are foreign-owned. Amongst the frontier market Pakistan remains a key OW. In particular the sustained high level of economic growth (+7% plus) is preferred. Its strong demographic potential for consumption also helps while the combination of minimal foreign investment restrictions and an aggressive privatisation program has increased
Pakistan&#8217;s access to global capital and improved the country&#8217;s financial stability to boot.
Barring an unlikely change to key government and economic personnel in the run up to this year&#8217;s elections, Reports foresees no change in the pace of Pakistan&#8217;s economic reforms. Under this current assumption of ongoing improvements in Pakistan&#8217;s financial stability, it is believed that the market is mis-priced and under-valued. Ideas to fous on would be rural expansion focused companies; Adamjee Insurance, Fauji Fertiliser bin Qasim, MCB and United Bank.
The private sector has enjoyed greater involvement in the running of the economy, resulting in a stronger, more sustainable economic growth. Recognition of this can be witnessed by changes to the slowdown in fiscal expenditure has allowed Pakistan four credit rating upgrades. 
Pakistan&#8217;s public debt to GDP ratio has now fallen to 54% (was 100% plus) and through continued support of the Fiscal Responsibility Act will fall further. Annual FDI has risen over ten-fold and now stands at USD3.5bn for the first six months of FY07. 
After Standard Chartered&#198;s purchase of Union Bank, most of the banking system is in foreign hands. Unlike in India or Vietnam, there are no foreign ownership restrictions. Foreign companies continue to buy Pakistani companies with recent examples being China Mobile and Philip Morris. 
The KSE100 Index has risen from 1,500 in 2001 to over 12,000 now. 
There is greater transparency, low valuations while yields remain exceptionally high. Recent significant events include; MSCI recognition (June 2006), Moody&#8217;s rating upgrade to B1 and large over-subscribed GDR issues in MCB (December) and OGDC. The government will return to the global bond markets with an issue in February.
Privatisation of state assets is now one of the most advanced globally (2006 IPOs equaled USD1.5bn and in 2007 it will be higher still). Appetite for equities remains high. Pakistan State Oil is next to go while we learnt that the state-owned insurance companies will be available for sale as well. 

The Nation.
http://www.nation.com.pk/daily/feb-2007/17/bnews5.php


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## Janbaz

*PTCL inks accord with Siemens *


RECORDER REPORT 
KARACHI (February 16 2007): The Pakistan Telecommunication Company Limited (PTCL) has signed contract for a SAP based Enterprise Resource Planning (ERP) system with Siemens engineering company of Pakistan here on Thursday. SAP is the premier provider of ERP solutions world-wide. Under this contract Siemens will implement an SAP based ERP system in PTCL, Ufone and Paknet.

PTCL currently relies on legacy processes and disparate legacy systems most of which are not fully automated. PTCL management views the ERP implementation as an opportunity to revamp the business processes of the company to bring them in line with the requirements of modern telecommunications service provider.

The ERP implementation would touch financial management, supply chain management, human capital management, network lifecycle management, planning and business process optimisation, said a PTCL spokesman.

The entire project was expected to take 20 months. The implementation of ERP was a significant step towards making PTCL an agile enterprise, he added. Additionally, with the ERP system in place, PTCL will make significant gains in making the business of PTCL transparent and consistent, PTCL will have proper controls on budgets and expenditures, inventories and procurement.

Business Recorder.
http://www.brecorder.com/index.php?id=529166&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Industrialisation to check unemployment, poverty: Musharraf *

LAHORE (February 17 2007): President General Pervez Musharraf on Friday said that the government was tackling the problems of unemployment and poverty by accelerating the process of industrialisation in the country. "Public sector should formulate the policies and facilitate the private sector in strengthening the industrial base," he said while inaugurating the 'Sundar Industrial Estate', some 25km from here.

Punjab Governor Khalid Maqbool, Chief Minister Pervaiz Elahi, Federal Minister for Industries Jahangir Khan Tareen and a large number of members of business community were present on the occasion.

Terming the 'Sundar Industrial Estate' (SIE) a public-private partnership model in Pakistan, the President said that while setting up industrial estates this model should be emulated in other provinces of the country. He said that Pakistan had become an attractive destination for foreign investment due to incentives offered by the government. He said that availability of cheap and skilled manpower in Pakistan was one of the key attractions for foreign investors.

Stressing the need for diversification of Pakistan's industrial base he said that focus on textiles, which forms only 6 percent of total world trade, would not help in boosting the country's exports. He emphasised the need to give importance to other sectors, like engineering, that accounts for 61 percent of world trade.

Musharraf said that Pakistan could benefit from the system of segmentation of supply chain by producing parts of automobiles and machinery being produced in other parts of the world, especially n the developed nations.

About the potential in dairy and livestock sectors, he said that agri-business sector needed to be developed through research and development and value-addition techniques.

He said that world-renowned dairy firm, Nestle, was setting up the world's biggest milk plant in Kabirwala, near Khanewal. He said that Pakistan is the largest milk producer in the world. He asked the dairy sector people to go for value-addition in its products so that it could earn quantum jump in foreign exchange through exports.

Referring to the establishment of Embryo Transfer at Technology Centre in Okara, he said that adoption of latest technology could help increase milk production in the country threefold. He said that promotion of livestock sector in Balochistan and Cholistan (Punjab) would not only enhance meat and milk production in the country but would also help improve the life of the common man in those areas.

Talking about the need to keep the current account of the country in the positive, the President said that remittances from abroad, which stood at a meagre level of $900 million in 1999-2000, were likely to touch $5 billion mark this year. He said that the country was all set to attract foreign direct investment worth $5 billion during the current fiscal year.

He said that exports of South East Asian countries were same as those of Pakistan in 1960s, but now the exports of these nations stood at $100 billion each, he added. He stressed that the country should not show complacency and should make efforts to enhance exports to the level of $100 billion, as it was quite possible.

About economic growth rate, Musharraf said Pakistan would maintain the economic growth rate of 7-8 percent. About the revenue collection target, he expressed optimism that revenue collection would reach the level of Rs 900 billion during the current fiscal year against the target of Rs 815 billion.

On next year revenue target, he hoped that the country would achieve the target of Rs one trillion next year. He said that there was need to broaden the tax base while bringing down the tax rates. Referring to total outlay of Public Sector Development Programme (PSDP), which hovered around Rs 70 billion during 1990s, he said it has shot up to the level of Rs 415 billion during the year 2006-07. Referring to the use of revenue generated in the country, he said that all revenue collected was being spent on the development in the country.

http://www.brecorder.com/index.php?id=529493&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*New petroleum policy to attract huge investment: minister *

ISLAMABAD (February 17 2007): Federal Minister for Petroleum and Natural Resources Amanullah Khan Jadoon has said that the new petroleum policy would attract huge investment in onshore and offshore exploration sector as a result of providing more incentives and facilities to the investors.

Presiding over a high level meeting to give final touch to the drat Petroleum Policy - 2007 here on Friday, the minister expressed satisfaction over the ongoing oil and gas exploration and production activities in onshore and offshore areas of the country.

He said that opening of new seventeen blocks would further accelerate the development activities in the petroleum sector providing enormous opportunities of investment to the investors.

He said that all out efforts would be made to accomplish the target of drilling of 100 wells during the current year which would not only help to enhance the oil and gas productivity but also to cut down the oil import bill of the country to great extent.

Advisor to the Prime Minster on Energy Mukhtar Ahmed, Secretary Petroleum Ahmad Waqar, Director General (Oil) Sabir Hussain Director General (Gas) Saeedullah Shah, Chief Executive Officer, Government Holdings Khurshid Anwar and senior officials of the ministry also attended the meeting.

http://www.brecorder.com/index.php?id=529593&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*PPIB to produce 34,885 MW power by 2020 *

ISLAMABAD (February 17 2007): Planning has been finalised to generate 34,885 MW power through 59 projects of various nature by 2020, Private Power Infrastructure Board (PPIB) Chairman Khalid Rehman said on Friday.

Talking to CNBC Pakistan, he said an investment of around $34 billion is expected in the power sector during the next 13 years. 47 projects having ability to generate 11,000-mw power through hydro, thermal, gas, and coal would start production by 2016.

He said first project having capacity of 1500 mw would be operational in 2008. While another 500 mw power-producing plant would be ready by the first quarter of 2009. As many as 40 percent local and regional businessmen are among the investors. Currently feasibility study of five plants was continuing and that of seven more will be undertaken soon.

According to estimates the country has the potential to produce 40,000 MW power through hydel source. Currently only 5000 to 6000 mw power is being produced through this source.

http://www.brecorder.com/index.php?id=529604&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Poland keen to invest in coal mining *

KARACHI (February 17 2007): Poland is keen on investing in several projects particularly coal mining in the country. Poland Consul General Ireneusz Maklas said this at a meeting with Irfanullah Khan Marwat, Sindh Minister for Mines and Minerals here on Friday.

Maklas said that his country was interested in investment and establishment of joint ventures with Pakistani companies as well as supply of mining machinery. Maklas said: "Poland wish to return in Pakistan to become active after 20 years in mining sites of Sindh and Balochistan."

Sindh Minister gave a detailed briefing to the diplomat on coal, granites and marble reserves in Sindh. He welcomed the Polish investment offer and assured of assistance in this regard. The foreign investment would generate employment opportunity and benefit the people of the province, he added. The minister said that Pakistan and Poland have 45 years of cordial relations and co-operation.

"Pakistan is very important partner for Poland in South Asia while Poland is interested in further development of relations with Pakistan in all fields," he said.

Marwat said that Polish company Kopex SA specialised in complex realisation of investment starting from projects management through building, modernisation, providing with machinery and equipment.

He said that a delegation of Polish businessmen interested in import of granite and marbles would visit Karachi in March or April. The delegation is also interested in establishing joint ventures and delivering special machinery to cut granite and marble, he said.

http://www.brecorder.com/index.php?id=529521&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Musharraf opens Sundar Industrial Estate *

LAHORE: President Pervez Musharraf has declared that the Sundar Industrial Estate is of highest global standard and an example of industrial vision of the government, which it aims to replicate in other provinces of the country.

He was speaking at the inauguration of the Sundar Industrial Estate. He said this estate has already attracted investment from many multinationals. He said the government has initiated such mega industrial estates on the strength of its economic policies that has put Pakistan on an accelerated growth path.

Musharraf said a dent has been made on poverty but more efforts are needed to eradicate it. He said industries in Sunder would provide employment to 700,000 people that would divert unemployed attention from extremism towards constructive activities.

The president praised Punjab Chief Minister on completion of industrial estate in record time. He said this is without doubt the best industrial estate of the country. He appreciated the installation of water treatment plant in Sunder that would keep the environment clean. He asked the industrialists to pay higher wages to the workers in the new industries being established besides ensuring better education and health facilities for them and their families.

He hoped that people would have access to better education after establishment of new universities in Punjab.

Earlier, Punjab Chief Minister Chaudhry Pervaiz Elahi said that the Sunder Industrial Estate was established in accordance with the industrial vision of the president. He said 55 industries in the just completed estate are operational including $30 million industry established by Pepsi International.

He said many pharmaceutical, chemical, pesticide, plastic and food beverage industries have also started production in this estate. He said many multinationals are establishing their plants here.

http://www.thenews.com.pk/daily_detail.asp?id=43155


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## Neo

*Pak spinning mills efficient than India, China *

Some deficiencies still remain

By Mansoor Ahmad

LAHORE: Werner International has termed the productivity, technology, testing equipment and wastage recovery the main strengths of the local spinning industry while labour productivity, quality control and raw material utilisation are its main weaknesses.

The US-based consultants were assigned the task by the federal government to assess the strengths and weaknesses of the spinning, weaving, processing and knitwear sectors of the textile industry in a bid to find out reasons for low exports of textiles. 

Werner consultants, who visited a cross-section of spinning mills having modern and old machines and technology, found that 49 per cent of the spinning machines were less than five yearsÃ¢â¬â¢ old, 14 per cent had age of 5-10 years and only 20 per cent were more than 15 yearsÃ¢â¬â¢ old. 

The efficiency and working hours of spinning machines were found to be above global benchmark and much above those attained by spinners in China, India and Turkey.

The consultants declared that globally mills were equipped with new technology with half the spinning industry had machines aged less than five years. They said that except for blending (polyester yarn), technology was perfectly suitable and efficient.

Ã¢â¬ÅIt has good spinning geometry for medium to fine counts. Spinners have installed foreign material detection system and their combing production is excellent. Carding of yarn is good.Ã¢â¬Â However, the consultants pointed out that the use of Chinese rings affected the quality.

The report appreciated the fact that all mills had well-equipped laboratories, but said there was excessive testing in some mills. 

The process control standards were either absent or had wide standards and quality management ranged from reasonable to unimpressive. It stressed the need of training personnel in quality control aspects.

The report was critical of preventive maintenance, declaring that there was no long-term planning as everything was based on monthly overhauling. The consultants were convinced that the instructions of machine manufacturers were not being followed.

Ã¢â¬ÅThere is no record of interventions and overhauling practices were obsolete for modern machines, though barring one mill the machines were in good order.Ã¢â¬Â Overstaffing in maintenance was also pointed out.

The consultants were also highly critical of raw material management. They pointed out lack of care in managing expensive raw materials that frequently lay outside without protection.

Ã¢â¬ÅOnly 3-4 per cent of the cotton bales are tested and the storage is by lots instead of quality. The control of characteristics is done only at the time of issuance of bales. With limited blend engineering, there is no blending method to ensure consistency.Ã¢â¬Â

Energy consumption efficiency, according to the report, is below 60 per cent of international benchmark, while labour productivity is less than 30 per cent of best international standard.

Labour efficiency, according to industry experts, is low because automated operations were not adopted in Pakistan due to availability of cheap labuor. Complete automation reduces the labour force by 10 times from 500 to 50.

The News has learnt that the consultants made their assessment after a survey of eight units in each sector over three days. The consultants, according to sources, are to be paid $3,000 per unit. The total fee for 32 units would come to $96,000.

The fee for the spinning and weaving sectors would be shared evenly by the All Pakistan Textile Mills Association and Export Development Fund. The total consultancy fee for processing and knitwear sectors would be provided by the EDF.

It was further learnt that the assessment of spinning and weaving sectors had been completed and reports submitted to the government. The reports on processing and knitwear sectors were pending.

Two weeks ago, Federal Textile Minister Mushtaq Cheema told Lahore media that final decision on the proposed textile package would be taken after receiving the reports of foreign consultants.

http://www.thenews.com.pk/daily_detail.asp?id=43161


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## Neo

Saturday, February 17, 2007 

*PakistanÃ¢â¬â¢s competitiveness: CSF report sets 60-65 rank target by 2010*

By Sajid Chaudhry

ISLAMABAD: The Compe-titiveness Support Fund (CSF) has set a goal of moving Pakistan from its rank of 91 in the world to a rank ranging between 60 to 65 by the year 2010.

The State of PakistanÃ¢â¬â¢s Competitiveness Report 2007 released by Competitiveness Support Fund (CSF) recently has suggested for improved competitiveness and a comprehensive approach in this regard.

The State of PakistanÃ¢â¬â¢s Competitiveness 2007 report has stressed upon the need to keep inflation within the single digit figure, reduction in budget deficit and continued growth in foreign currency reserves to ensure financial security of the country.

Pakistan can position itself in the world economy as a country in full compliance with the international standards. This will also help improve PakistanÃ¢â¬â¢s image and Ã¢â¬Åbrand nameÃ¢â¬Â abroad.

The report has presented a snapshot of PakistanÃ¢â¬â¢s competitiveness in year 2007. It has indicated both countryÃ¢â¬â¢s strength and weaknesses. It has suggested a comprehensive approach for improving the competitiveness of Pakistan. The report reveals that improvement in competitiveness, in turn, will enable the government to achieve its ambitious target of high economic growth, increased employment and continued rapid progress in poverty reduction. The report has suggested that a series of presentations should be made based on the results and findings of this study and feed back from these groups should be elicited. 

This input should be incorporated into revised set of priorities and initiatives for a proposed Ã¢â¬ÅCompetitiveness Agenda 2007-2008Ã¢â¬Â.

The report says that it is important to reduce the obstacles to formation of new businesses and growth of small and medium enterprises. The time and cost of bringing things from port of Karachi to the factory floor must be reduced.

It further states that the government should focus on continued progress in judicial reforms and effective application of rule of law to commerce, including enforcement of contracts and the fair resolution of disputes. It says to begin with preparing a new generation of business managers and entrepreneurs who can lead Pakistan forward to new levels of competitiveness in coming years. Pakistan firms must lead the way as export champions and position themselves as compliant with global labor, consumer and environmental standards.

Failure to adopt world-class labour standard will risk erosion of confidence from international investors and buyers, who increasingly insist on rigorous adoption and enforcement of such standards.

The framework for competitiveness requires active efforts by both government and private sector. While the government implements its reforms in the macro-economic and microeconomic business environment, private sector leaders must also respond improving business strategies and operation including corporate governance, compliance with global standards and human resource management.

It will require that business leaders reposition their companies and their industries in the world markets. At the same time, it is necessary to begin preparing a new generation of business managers and entrepreneurs who can lead Pakistan forward to new levels of competitiveness in coming years. 

The leaders in the banking industry must build on impressive recent gains in efficiency that has resulted in lower spreads between deposit rates and loan rates. They must develop new products that further improve access to credit that can expand home ownership, free up dead capital and allow families to improve their dwellings and standard of living.

The financial access should be expanded without risking the health of the financial sector, by improving credit risk reporting through means such as credit bureaus. This will require revisiting federal legislation and credit bureau regulation.

The industries and their education and training providers need to work together to define skills gap, skill standards, current deficiencies and new training programs. All universities and vocational training schools need to improve their placement programs and industry out reach. Support for patent registration will help Pakistan individuals and institutions to register international patents and to boost their investment in research and development. Policies also required to lead to rapid expansion in utilization digital technologies, in this regard Pakistan must join the international Ã¢â¬Åone child one computerÃ¢â¬Â programme.

http://www.dailytimes.com.pk/default.asp?page=2007\02\17\story_17-2-2007_pg5_1


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## Owais

*$11.3 billion foreign exchange inflows seen in 2006-07* 

ISLAMABAD (February 18 2007): $11.3 billion foreign exchange inflows - about $6 billion in foreign private investment and $5.3 billion through workers remittances - are expected during FY 2006-7. This was stated by Economic Advisor and head of the Data Office of Ministry of Finance Dr Ashfaque Hasan Khan while giving an exclusive interview to the Business Recorder here on Saturday evening.

Because of strong foreign exchange inflows, the widening current account deficit is not a problem since the country's balance of payment has been surplus, he maintained "The government acknowledges that due to domestic demand supporting growth momentum in the neighbourhood of 7 to 7.5%, the current account deficit has widened," he added.

"But as long as this deficit can be financed preferably through non-debt creating inflows such as foreign direct investment (FDI) portfolio investment, GDRs, privatisation proceeds, and grants and assistance, there is nothing to worry about external side of the economy," the advisor emphasised.

He said that large current account deficit could be a problem if it could not be financed through inflows and foreign exchange reserves used to meet the external account gap, resultantly the foreign exchange reserves decline."

"In Pakistan, we are witnessing massive surge in foreign private investment of about $6 billion which is not only financing the deficit but also adding to foreign exchange reserves this year," Dr Ashfaque asserted.

He said that the inflows of the worker's remittances in the first seven months of the current year, amounting to $2.959 billion also remained extremely buoyant showing an increase of 21% comparing with the corresponding period of the last year.

He said that total foreign investment in Pakistan during July-December 2006 amounted to $2.496.7 billion, whereas excluding the privatisation proceeds, it amounted to $2. 363.5 billion. When viewed against last year's figures for the same period the current performance appeared to present a totally different picture as total investment with and without privatisation registered an impressive growth of 68.6% and 92.8% respectively, the advisor said.

He said that portfolio investment on the other hand stood at $627.1 million as against $359.3 million last year - an increase of 74.5%; US has been the largest investor in Pakistan, accounting for 31.9% of the total FDI in the first six months followed by UK (24.7%), UAE (10.8%), Switzerland (3.7%), Kuwait (2.2%), Netherlands (2.0%) and other states.

He said that financial businesses along with communication sector have been the major attractions of foreign investors in Pakistan, accounting for 27.6% and 26.5% respectively, followed by energy sector (oil & gas and power) 21.7% and trade 5%. Three-fourth of the FDI has therefore, come to these sectors.

http://brecorder.com/index.php?id=529814&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Telecom sector attracts $9 billion investment: Prime Minister *

ISLAMABAD (February 18 2007): Prime Minister Shaukat Aziz has said that as a result of government's policies of deregulation, privatisation and liberalisation the telecom sector has attracted an investment of 9 billion dollars, which includes the cost and up-gradation of equipment, equity and license fee.

The Prime Minister said this while reviewing the performance of the telecom sector in a high-level meeting which was attended by Minister for Information Technology Awais Ahmed Leghari, Minister of State for Information Technology Ishaq Khakwani, the Secretary Information Technology and other senior officials.

The Prime Minister said the telecom sector has become a major employer of skilled jobs as its exponential growth has resulted in creation of 80,000 jobs directly and 500,000 jobs indirectly.

He appreciated the efforts of the Ministry of IT and the regulatory authority for their systematic and sustained implementation and management efforts to totally transform and modernise the telecom sector.

The Prime Minister said people are the major beneficiaries of the telecom sector's success story as 70 percent of the country's population has access to improved telecom services at substantially reduced tariffs.

He said the apprehension that privatisation of the PTCL will turn a public monopoly into a private monopoly has also proved to be totally unfounded. The public now has the choice of multiple telephone service providers at competitive rates, he added.

The Prime Minister said it is not often realised that access to telecom services gives a sense of pride and confidence to the people as it provides instant connectivity across the country and the world.

During his presentation about the telecom sector, Secretary IT said the telecom sector constitutes 2 percent of the GDP which is expected to rise to 3 percent in the next three to four years. The country has 50 million phones including cellular and fixed lines, he added. He informed the meeting that the teledensity has increased from 4 percent in 2003 to 35 percent in 2007.

The Secretary IT informed the meeting that the current revenue of Rs 200 million from the telecom industry is expected to increase at a rate of 20 percent per annum. The government receipts from the telecom sector in the shape of taxes, dividends and indirect revenues amount to Rs 80 billion per year, he added.

http://brecorder.com/index.php?id=529866&currPageNo=2&query=&search=&term=&supDate=


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## Owais

*Portfolio investment up $28.5 million in a single day *

KARACHI (February 18 2007): Portfolio investment, as represented by Special Convertible Rupee Accounts (SCRAs), increased by about $28.5 million on February 15 and reached another record level of $535.3 million, according to SBP February 16 update on the subject.

Earlier, it had reached the year's highs of $519.3 million and $523 million on February 12 and on 13, respectively, before dipping to $506 million on February 14 due to continued profit taking at the stock market.

On February 15, over $18 million was invested by US investors, followed by $10 million by UK and $0.2 million by Hong Kong investors, besides a small amount from Qatar. However, Switzerland withdrew about $0.1 million on the same date. Total fresh investments during the first half of February are reported to be around $154 million, shared by USA ($117.3 million) and UK (over $57 million), besides a small contribution originating from Qatar.

The overall positive impact of these fresh investments was partly neutralised by disinvestment amounting to $20.5 million, including those by Swiss investors ($12.8 million), UAE ($3.5 million), Hong Kong ($1.8 million) and Australian and Singapore ($1.2 million each) besides a small amount by German investors.

On the stocks market front, the usually representative KSE-100 Index, which had stood at 11,105 points on January 1, reached a record high of 11,867 points on February 8 but continued slipping thereafter to reach 11,630 points on February 12 and further to 11,510 points on February 15 as selling pressure held its sway in the country's bourses during the intervening days. The foreigners preferred to buy shares at the ruling low prices expecting revival of the market in coming days.


http://brecorder.com/index.php?id=529826&currPageNo=2&query=&search=&term=&supDate=


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## Owais

*$5 billion investment from Qatar likely in 3-4 years* 

ISLAMABAD (February 18 2007): Pakistan is likely to attract investment of $4-5 billion from Qatar during next 3-4 years as Pakistan and Qatar have reached a broad-based understanding on most of the issues, sources told Business Recorder.

They said that the Board of Investment (BoI) and the concerned officials in Qatar had held several rounds of talks and Pakistan was hopeful that the public and private sectors of Qatar would invest four to five billion dollars in oil and gas, telecommunication, roads infrastructure, power, and other sectors.

Sources said that government agencies were finding it hard to convince foreign investors to invest in Pakistan due to energy crunch the country is currently facing. Power shortage is fast becoming a major hurdle in the way of the overall investment, especially the foreign direct investment.

They said the upward trend in prices of utilities, especially gas and real estate, were seen as major challenges for policy makers in attracting foreign investment.

They said that the available gas reserves have already been committed to various industries and at present no gas was available for new investors. Pakistan would welcome foreign investment in energy sector at this critical juncture.

However, an official in BOI said that energy crunch was a challenge as well as an opportunity, for the rising demand of energy would help the government attract investment in the sector. He said there were greater opportunities for the investors in the shape of higher returns on less investment.

He said that the increase in the visits of public and private sectors from the West and the Middle East to the East, especially Pakistan, reflected the interest of the investors here. During the last one-year, or so, 60 full-fledged official delegations and 300 other delegates visited BOI and expressed their willingness to invest here.

He said that it would be a major achievement of Pakistan if it succeeded in attracting this big chunk of investment from Qatar. "The inflow of the investment is in the pipeline. There is likelihood that Pakistan enters into joint ventures with the public and private sectors of Qatar."

The official said that Pakistan would also look into the possibility of foreign investment in Pakistan's planned mega cross-border gas projects including Iran-Pakistan-India (IPI) gas pipeline, gas pipeline from Turkmenistan to Pakistan and also gas import from Qatar. Pakistan must implement at least one of these projects as early as possible and it is essential for maintaining the GDP growth at around 7 percent per year, the official added.


http://brecorder.com/index.php?id=529812&currPageNo=1&query=&search=&term=&supDate=


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## Cheetah786

Merrill Lynch bullish on Pakistan




By Dilawar Hussain

KARACHI, Feb 17: Ã¢â¬ÅSell Indonesia, buy PakistanÃ¢â¬Â, the international financial services firm, Merrill Lynch (ML) recommends Pakistan, Sri Lanka, Vietnam and Mongolia as Ã¢â¬Ënew frontiersÃ¢â¬â¢ in their latest regional investment strategy report released on Thursday (Feb 15).

Among the four countries, Spencer White, the strategist who prepared the report says: Ã¢â¬ÅPakistan remains one of our highest conviction overweight recommendationsÃ¢â¬Â. He reasons that the on-going economic reforms remains a core priority and that it should sustain high economic growth and lead to further financial stability, something which ML Ã¢â¬Åfeels the market has under-appreciatedÃ¢â¬Â. Best exposure to Pakistan has been recommended on rural expansion focus companies, which ML identifies as Adamjee Insurance; MCB; United Bank and Fauji Fertiliser Bin Qasim.

Talking about the region, ML says preference is shifting from China to Korea and Taiwan and the cyclic rotation from Singapore and Indonesia to Thailand.

Ã¢â¬ÅIndia remains unlovedÃ¢â¬Â, declares White. Finding commonalities in the four countries of the new frontiers (Pakistan, Sri Lanka, Vietnam and Mongolia), ML lists the following: All have GDP growth close to plus 8 per cent this year; privatisation across various segments of these economies is the key; This privatisation is a reflection of these smaller countriesÃ¢â¬â¢ strong desire to Ã¢â¬Åkeep up with the JonesesÃ¢â¬Â and all four countries fits the bill where Ã¢â¬Åmarkets are better than broking, not the broking better than the marketÃ¢â¬Â.

The ML report discusses in detail why even among the four Ã¢â¬Ënew frontierÃ¢â¬â¢ countries, it considers Pakistan to be the Ã¢â¬ÅwinnerÃ¢â¬Â. The report narrows down the choice between Pakistan and Vietnam.

It states that while ML likes Vietnam and had been overweight on that market for over a year, but its move from 300 to over 1,000 in the past 12 months meant it no longer was cheap. Almost three times as expensive as Pakistan and in spite of its improved turnover, Vietnam traded a sixth of what Pakistan does.

Showing almost a Ã¢â¬ËcrushÃ¢â¬â¢ on Pakistan, ML report mentions that Pakistan has the best privatisation-liberalisation programme of all four markets. Ã¢â¬ÅUnlike in India and Vietnam, there are no foreign ownership restrictions in Pakistan and you can own 100 per cent of any company in any sectorÃ¢â¬Â. In the past 18 months, Standard Chartered has bought Union Bank; China Mobile has bought Paktel and Philip Morris has bought Lakson Tobacco.

This year Pakistan State Oil (PSO) is to be privatised. The banks have been pretty much taken over by foreign players and all five cellular operators are foreign-owned, the report says.

In particular, says Merrill Lynch, we like the sustained high level of economic growth (plus 7 per cent) and PakistanÃ¢â¬â¢s strong demographic potential for consumption.

As regards demographics, Merrill Lynch mentions that Pakistan has one of the worldÃ¢â¬â¢s biggest populations. Of the 160 million, over 100 million are under the age of 21. And the report concludes: Ã¢â¬ÅThis group will not retire until 2060 and will help power domestic consumption, which is already strong (e.g. growth in consumer staples, autos and telephony)Ã¢â¬Â.
http://www.dawn.com/2007/02/18/ebr2.htm


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## Neo

*Telenor adds 2.1m users *

KARACHI: Telenor Pakistan added 2.1 million subscriptions during fourth quarter of 2006 while achieving the highest sales among all mobile operators in the country during the month of December 2006, said a company press release.

Referring to latest figures presented to 3GSM Conference in Barcelona, Spain, it said Telenor PakistanÃ¢â¬â¢s estimated market share surged 3 percentage points and its contribution to Telenor GroupÃ¢â¬â¢s net additions last quarter worldwide hit the 21 per cent mark.

Telenor PakistanÃ¢â¬â¢s CEO Tore Johnsen said: Ã¢â¬ÅToday we have the second largest network with widest GPRS and EDGE capability, the most diverse product portfolio, the fastest growing distribution, and one of the strongest organisations in the industry.Ã¢â¬Â

Revenue of Telenor Group in the fourth quarter of 2006 increased by 30 per cent to NOK 24.5 billion over same period of last year while full year revenues increased by 37 per cent to NOK 91.1 billion as compared to previous year. Its mobile subscriptions worldwide now stand at 115 million.

http://www.thenews.com.pk/daily_detail.asp?id=43318


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## Neo

February 18, 2007 
*US firm sets up $60m textile venture*

By Sabihuddin Ghausi

KARACHI, Feb 17: A well-known US textile company - West Point - has set up a giant integrated textile mill on a 100 acres plot in Lahore in equal partnership with a local businessman to manufacture and export top-quality towels that has potential to fetch about $80 to $90 million a year.

Ã¢â¬ÅWe signed the joint venture agreement in October 2006 for an investment of $60 million with equal equity shareholding,Ã¢â¬Â Irfan Ahmad, the chief executive of the project informed Dawn by telephone from Lahore.

This is the first textile joint venture set up with an American investor in Pakistan by a local business group. None of any government agency played any role in this joint venture as according to Irfan Ahmad, the West Point was their trade partner for long.

The American textile companies had started moving out of South and North Carolina Ã¢â¬â two traditional textile centres in USA Ã¢â¬â more than a decade ago. West Point, too, explored to outsource its business in Pakistan. For towels, the choice of American investors is Indus Dyeing. The Pakistani business group, too, was looking for an American partner, who may help them to get them an access to the US market.

Ã¢â¬â Ã¢â¬ÅThe project is in production and is operating at about one-third of the installed capacity,Ã¢â¬Â the project chief executive said, who disclosed that the optimum level of production capacity will be reached by next September when more than 100 looms will be in operation to produce 850,000 pounds a week.

Pakistani partners are confident of making good money from towels export to USA in face of the high rate of import duty in USA for home textiles that ranges between 8 to 16 per cent.

But for circumventing duty on home textiles in local market, the American company has acquired a textile mill Ã¢â¬â Panama Ã¢â¬â in Bahrain from where the textile products are imported at zero rates. Ã¢â¬ÅSo American textile groups are planning to come in a big way into Pakistan,Ã¢â¬Â a local textile businessman said.

Market reports suggest that quite a few Pakistani textile operators have acquired well-known American brand names of textile products and plan to set up delivery infrastructure in the USA in collaboration with American partners.

The West Point is reported to be in negotiation with PakistanÃ¢â¬â¢s top textile houses in Lahore, Karachi and Faisalabad to outsource is bed sheet business in partnership.

Another American textile company Ã¢â¬â Springs, which has been taken over and shifted to Brazil is also reported to be making investigations in Pakistan.

Ã¢â¬ÅNone of PakistanÃ¢â¬â¢s official agencies Ã¢â¬â Board of Investment Ã¢â¬â and others ever made any effort to market Pakistan as an investment place for textiles, which is the fourth largest producer of cotton in the world,Ã¢â¬Â a local leader of All Pakistan Textile Mills Association (Aptma) said.

Pakistan, he asserted, offers investment opportunities from cotton plantation to ginning, spinning fine count yarns, weaving good quality fabrics, towels and bed sheets and other products of home textiles and garments.

There is a tradition of textiles in Pakistan dating back to Moenjo Daro times 5,000 years ago and a cheap labour that can acquire skill with training. The government needs to develop infrastructure facilities, ensure good governance that is found most wanting at present, particularly in respect of law and order situation and curtailing of corruption from top to bottom level.

Pakistani business groups need to develop management skills and an enlightened view that should take care of consumers and employees.

http://www.dawn.com/2007/02/18/ebr1.htm


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## Neo

February 18, 2007 
*Plans for engg sectorÃ¢â¬â¢s growth awaiting govt approval*

By Ihtashamul Haque

ISLAMABAD, Feb 17: The government is considering a set of proposals to accelerate slow pace of growth in engineering sector.

Official sources told Dawn on Saturday that President Gen Pervez Musharraf has directed the ministry of industries, production and special initiatives to incorporate the joint recommendations of the Higher Education Commission (HEC) and the Pakistan Institute of Development Economics (PIDE) in the new engineering vision for accelerating the sluggish growth of the engineering sector.

According to them, one of the many reasons for slow growth of engineering sector is lacking long- term vision for development. There is hardly any integrated and consistent approach towards the engineering sector.

Ã¢â¬ÅThe productive sectors have been marred with irrational tariff structure", said an expert who was part of formulating recommendations to the government to promote the engineering sector.

However, he regretted that joint recommendations of the HEC and the PIDE are still to be approved by the government and placed before the president for a final approval, as originally planned.

The progress of Pakistan's engineering sector has been described as "less than satisfactory."

The contribution of engineering industry to the GDP is currently only $2 billion and it provides employment to a mere 600,000 people.

Pakistan saves $3.75 billion per annum through import substitution.

The rising trade deficit has been attributed by both HEC and PIDE mainly to engineering sector imports which are worth more than $2 billion (Rs132 billion).

The present share of the engineering industry in meeting the total demand is merely 25 per cent while the remaining demand is met through imports which have almost doubled over the last eight years. Its share in total imports has varied from 33 per cent to 42 per cent. The share of engineering goods in Pakistan's exports is only three per cent.

Pakistan exports $0.27 billion worth of engineering goods which is negligible in the world trade.

Major areas of imports include equipment for textile industry, energy sector, cement plants, agricultural machine, electrical machinery and automobiles etc.

According to the joint report of the HEC and PIDE, the potential to increase production of the engineering industry is large, and over the last one year engineering industry has done well, mainly due to rising domestic demand, emanating from consumer credit at lower interest rates.

But they said the regulatory mechanism was missing. The large-scale smuggling of electrical goods, such as air-conditioners, motors, fans, and household appliances, automotive parts and steel products etc., has also hit the engineering industry.

The local consumption of steel, which is one of the major indicators of industrial development, did not rise due to high prices of steel.

Moreover, for most of the engineering industries, effective protection was non-existent.

The main reason for the negative protection was high duties on inputs whereas outputs were generally imported duty-free under various concessionary tariff regimes or outright smuggled.

Therefore, local engineering industry has been deprived of a major business opportunity. The main causes of poor performance of engineering sector was absence of integrated approach for balanced growth of all economic sectors; lack of consistent policies and political will to develop local industry manifested in widespread smuggling of engineering goods; ad-hoc approach in policy formulation and preferences for turn-key import of plant and machinery; irrational and discriminatory tariff structure with relatively high import tariff on inputs and low zero rates on output/finished goods, along with cumbersome procedures for custom clearance of imported inputs; priority to less value-addition areas for investment and tariff support and lack of incentives to attract investment in high value-added sectors; lack of institutional support and incentives for acquisition and absorption of foreign technologies.

Unfavourable cost structure was due to lack of economy of scale in production, high financing cost, high inventory carrying costs, low labour productivity, high utility costs and high cost of local inputs, particularly steel products, lack of research and development and design, quality standards and engineering support which were resulting in inadequate vending, sub-contracting facilities; and lack of entrepreneurship and management skills.

"Pakistan needs to draw upon the experience of Malaysia and Korea by developing, strong technical manpower which can take the responsibility for absorbing and adopting technologies to produce products of high quality and improving the productivity levels".

In 1995, the government had set up the Engineering Development Board (EDB) for providing policy direction and impetus for growth of the engineering sector. The mandate of the Board was to suggest policy initiatives, provide leadership role, and act as a bridge between the government and the entrepreneurs / investors in this sector to ensure achievement of set objectives.

This step has made a beginning to create a policy environment which is more conducive for survival and growth of local engineering industries, a lot still has to be done for achieving the potential growth rates.

Both the HEC and PIDE believe that a result-oriented policy package, fully backed, strengthened and implemented in its true spirit with an integrated approach focusing on overall development of all sectors of economy is required.

"Obviously it will only be possible if there is a strong political commitment at the highest level for development and growth of engineering sector."

The most important step for promotion of engineering sector in Pakistan is to allocate more resources to basic and technical education.

The existing institutions are not fully equipped to provide requisite skilled manpower for producing quality products. There are only 10 universities and colleges which offer degree courses to engineering students. Enrolment in these colleges and universities is less than 20,000.

Another component of the engineering education is the polytechnic diploma which trains associate engineers. There are a total of 58 polytechnic institutes in the country which provide three-year diplomas to students. The total enrolment in these institutes is 75,000.

The vocational training institutes are also limited in number. The country has only 364 such institutions which provide one and two years certificate and diploma courses to students. The enrolment in these institutions is only 11,500. However, most important is the fact that the graduates produced by these institutions are not in line with the demand.

Just by banning the imports of turn-key imports in power sector in 1992, the local industry benefited tremendously and it resulted into more indigenisation and technology transfer.

As a result of the decision, local manufacturers were awarded business for Muzaffargarh Unit-4, being set up by Chinese.

Long-term plan was also drawn for indigenisation under consortium arrangement with reputable foreign technology partners to achieve a deletion level of about 55 per cent over a period of five to seven years.

"For development of engineering sector, enhanced private sector participation not only in production, but also in the training of workers is crucial".

The role of public sector, the HEC and PIDE report said, should be confined to providing conducive and enabling environment through provision of appropriate physical, as well as human resource infrastructure.

Public sector should provide vision, policy direction and policy instruments and help develop design engineering capabilities, databases and infrastructure: create testing labs and instruments and start projects with the private sector partnership.

"The private sector should innovate and develop new products and processes."

http://www.dawn.com/2007/02/18/ebr4.htm


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## Neo

*Cotton production to enhance 20.70 million bales by 2015 *

ISLAMABAD: February 18, 2007: Cotton, a major crop of the country, is a source of production for textile sector and earns foreign exchange for the country.

The cotton production is gaining momentum and registering new records with the passage of time due to use of new varieties and modern techniques of cultivation.

The government is taking affective measures to increase cotton production in the country and enhance crop's yield to 20.70 million bales by the year 2015, said agriculture development commissioner Qadir Bux Baloch.

He said the decision to this effect has been taken after thorough study and consideration of various options for production enhancement. It is realised that a production level of 20.70 million bales could be achieved by 2015 with a modest increase of 25,000 acres.

The area under the crop increased to 3.32 million hectares as against the estimates of 3.22 million hectares for 2005-06, showing an increase of 3 per cent. The hectare yield also increased to 1,060 kilograms from the provisionally estimated yield of 686 kilograms for the current season.

The plan titled "Cotton Vision 2015 Targets" has been initiated after taking into account the future prospects for a sustained growth in cotton sector and the possible improvement in the quality of raw cotton.

The targets of the plan also envisages increase of cotton yield per acre to 1,060 kilograms from current estimate of 686 kilograms, Mill Consumption of Cotton to 20.10 Million Bales, Exportable Cotton Surplus to 0.60 Million Bales, Improved Yarn Recovery Rate to 92 per cent from current average of 84 per cent.

The plan has been designed to achieve higher production of clean cotton to obtain advantages of assured supply of clean, graded and contamination free cotton to the domestic textile industry.

It may also helpful to get higher recovery rate, hence more yarn, improved reputation of Pakistan's cotton and its products in the world market and substantial additional foreign exchange earning through better unit values.

During the decade ending 2004-05, cotton production in the country registered an annual growth of 6 per cent, realised through 2 per cent increase in area and 4 per cent increase in hectare yield. The raw cotton consumption by the textile industry at the same time is increasing by 4 per cent annually.

The textile industry placed the current consumption of raw cotton at around 15 million bales based on certain assumptions, whereas the Textile Commissioner's Organisation estimated it at 12.5 million bales for 2004-05.

However, cotton consumption in the country during the last decade registered a growth rate of about 4% annually on average basis.

Based on a similar growth pattern in years to come the mill consumption requirements are estimated to be 18.5 million bales i.e. 42 per cent higher than the current level of consumption, said Hafeezullah a textile mill owner.

The likely consumption by 2015 may also be considered on the basis of growth in the working spindles during the last 10 years which averaged at 3.16 per cent annually.

Taking this growth rate into consideration and a maximum of 1.5 bales consumption per spindle, the requirements by 2015 work out to be 17 million bales.

The working group constituted by the MINFAL for projecting the demand of raw cotton by the domestic textile industry have also envisaged the minimum mill consumption of raw cotton by 2015 at 18.5 million bales.

All Pakistan Textile Mills Association (APTMA) has, however, recommended to place the textile industry's raw cotton requirements by 2015 at 20.10 million bales, comprising of medium staple (66), long staple (26%) and the extra long staple (8%).

It is realised that the varieties in vogue as well as in the pipe line would sufficiently meet the medium, medium long and the long staple requirements of the textile industry in future.

For attaining the above envisaged cotton production target, besides ensuring adequate and timely availability of necessary inputs, production loans and technology transfer at the grass root level with particular reference to the scientific crop and pest management, the research institutes are required to expedite development of cotton leaf curl virus resistant varieties, transgenic cotton varieties (Bt cotton) and cotton hybrids, said Ahmed, a cotton grower from Rahim Yar Khan.

Despite being hand picked, the raw cotton produced in the country is contaminated with different types of non-lint contents due mainly to improper picking and handling practices and the absence of quality based marketing system.

The government has taken several measures in the meantime to encourage cotton pricing and marketing on the basis of quality considerations. The Pakistan Cotton Standards Institute has already developed the cotton standardisation and grading system which is yet to be implemented at the grassroots level, Qadir Bux Baloch said.

The marketing mechanism of cotton may be improved through enforcement of provisions of the Pakistan Cotton Standardisation Ordinance 2002, Baloch said adding, under this the Pakistan Cotton Standards Institute should concentrate on technical aspects such as preparation of grade boxes, training of graders, fibre testing facilities and the arbitration services, etc. whereas implementation of the grading system and certification may be carried out by the private sector inspection companies as per provisions of the above said ordinance.

The private sector may be encouraged for developing a net work of fibre testing laboratories for instrumental evaluation of raw-cotton throughout the cotton belt.

At the same time, the Pakistan Cotton Standards Institute should expedite setting up of the five fibre testing laboratories in major cotton growing districts for which a project has already been approved under the public sector development program.

http://www.brecorder.com/


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## Neo

*India, Pakistan trade potential more than $9 bn: WB director*

HT Correspondent

Mumbai, February 18, 2007

World Bank managing director Graeme Wheeler said on Sunday that India-Pakistan trade has the potential to cross $9 billion in the next five years from the current $1 billion, if barriers relating to policies, infrastructure, corruption and red-tape are addressed.

Ã¢â¬ÅEveryday we see obstacles Ã¢â¬â protective policies, poor infrastructure, corruption and red-tape. Trade between India and Pakistan is about $1 billion a year. Without barriers, it could be $9 billion within five years,Ã¢â¬Â Wheeler said at the SAARC business leaderÃ¢â¬â¢s conclave here.

Citing geography and its young population as the two major weapons to fight poverty, he said South Asian nations needed to integrate for the economic betterment of the region. Pointing out that severe infrastructure bottlenecks impede the regionÃ¢â¬â¢s growth, he urged countries to share energy and water resources.

Ã¢â¬ÅTrade integration is a major opportunity. But regional cooperation in energy and water could produce even bigger returns. India, one of the most energy-hungry nations in the world, sits next to three energy-surplus countries namely, Bangladesh, Nepal and Bhutan. Yet, except for Bhutan, energy trade between them is miniscule,Ã¢â¬Â Wheeler observed.

He said that for South and East Asia to be the growth hubs of global economy, countries in the region should transfer their dynamism in services sector to manufacturing.

However, when asked about the threats posed by a two-year high rate of inflation in India and expectations of a higher current account deficit fuelled by high domestic demand for imported goods, he declined to comment.

Speaking at the conclave, the former chairman of the US Federal Reserve, Paul Volcker, who had led the UN investigation into the IraqÃ¢â¬â¢s food-for-oil scam that threw up the name of former external affairs minister Natwar singh, stressed on the need to deal with corruption and implementation of a more transparent regime in developing countries.

Ã¢â¬ÅCorruption is a tax on the poor. Lack of transparency and corruption are pervasive and if not curtailed would be self-defeating. Strong responses to specific instances of corruption is warranted,Ã¢â¬Â he said.

Commenting on the worrisome rate of inflation the country is facing, Volcker said that surging inflation in India was a matter of concern, but added that the response of the Reserve Bank of India was on track.

IndiaÃ¢â¬â¢s rate of inflation had of late hit a two-year high of 6.73%, well above the central bankÃ¢â¬â¢s projection of 5-5.5%, thus forcing it to hike the cash reserve ratio of banks by one per cent in the last three months.

http://www.hindustantimes.com/news/181_1931279,0002.htm


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## Janbaz

*Japan keen to invest in Pakistan&#8217;s energy projects *

ISLAMABAD: Japan has said that it desires to invest in the energy projects of Pakistan, but it would not provide funds for the construction of Pak-Iran-India Gas Pipeline project.

In a briefing to the newsmen here, Japanese Ambassador, Seiji Kojima said that his country was aware of Pakistan&#8217;s energy requirements. He said that Japan could provide help to Pakistan in all sorts of energy sources except the nuclear energy. Japan has given $430 million loan to Pakistan during the last two years and it wanted to extend the development help to $500 million.

Japanese Ambassador told that the Japan-Pakistan talks on anti-terrorism measures would be held some time in April in Islamabad. The agreement to end double taxation between the two countries was also expected, for which, Pakistan finance ministry officials would be visiting Japan next week. 

Geo TV.
http://www.geo.tv/geonews/details.asp?id=2282&param=3


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## Janbaz

*Pakistan to become main energy artery of region: Shaukat inaugurates oil and gas moot *

ISLAMABAD (February 19 2007): Prime Minister Shaukat Aziz on Sunday highlighting the importance of energy security and its relevance to progress said that the government has been working with a vision to meet Pakistan's growing energy needs through exploring all types of energy including gas, oil, hydel, winds, solar and coal.

He was addressing the inaugural session of third Pakistan Oil and Gas Conference 2007, here at local hotel which was attended by the representatives of oil and gas industry besides over 30 delegates from abroad.

The Prime Minister said water, energy and food security are the most important elements and the government taking measures to ensure these securities in the country.

Shaukat Aziz said, "We are also working to leverage our potential to become a main energy artery of the region as Pakistan enjoys pivotal position at the crossroads of three vital regions of the world, South, Central and West Asia."

He said development of intra-regional gas pipelines, investment in upstream industries and harnessing alternative source of energy is of the crucial importance for ensuring energy supply to meet the growing demand in the country.

The Prime Minister said talks on the multi-billion dollar gas pipeline from Iran are positive as the negotiations on tariff and volume between Pakistan and Iran are in the final stages.

He said Pakistan has also invited India to join this gas pipeline but added that if India will not join, Pakistan will definitely finalise the deal with Iran.

The Prime Minister said in the regional context, due to consistent high economic growth in Pakistan, India and China are spurring an unprecedented energy demand as these are the biggest markets in the region.

He said, "We, therefore, need to exploit all available resources of commercially viable energy-both domestically and as well as from abroad-and demonstrate a greater commitment to energy efficiency and conservation."

He said the energy consumption in the developing countries including Pakistan is roughly growing at double the global average rate and it is estimated to rise by more than 100 percent by 2010 from the existing levels. Pakistan, he said, is also negotiating on gas pipeline from Turkmenistan and other regional countries to meet its growing demands.

Referring to deep-sea port at Gwadar, the Prime Minister said, it had the potential of providing an outlet to Central Asian oil and gas for consumption in other countries of Asia. He said Gwadar would be made an energy city.

He said, "We are encouraging construction of oil refineries and large-scale storage of petroleum products in Gwadar and added that a mega-refinery is being set up at Khalifah Point by Abu Dhabi."

LPG POLICY: 

Prime Minister Shaukat Aziz said due to Liquefied Petroleum Gas (LPG) policy announced by the government, the prices of LPG have been decreased in the market.

He said the government announced LPG Policy 2006, which envisages continuation of deregulation and fixing of LPG prices by companies on a competitive basis.

The LPG policy, he said, proved very effective in reducing the prices.

The Prime Minister said due to LPG policy its import has been opened up which decreases the prices of the LPG in the market. He said an investment of Rs 9 billion has already been made so far in this sector and there is a big market in Pakistan where LPG would be used as a preferred domestic fuel.

The Prime Minister said in order to ensure that the energy supplies should keep pace with the rising economic activities, and to ensure that the energy supplies continue to support economic growth, the government on the one hand is targeting to enhance the local production of hydrocarbons through increased exploration and on the other hand aiming to materialise plans for the import of natural gas from Iran and other Central Asia.

Earlier, Minister for Petroleum and Natural Resources Aman Ullah Jadoon speaking on the occasion highlighted the liberal policies of the government in the oil and gas sector. He said the needs of the country have been increasing and it would be more than double by 2020, therefore, Pakistan is making efforts to explore all possible means of energy.

Vice President of Shell, Martin Trachael presenting keynote address highlighted the increasing demand of energy and possible ways to import it from other countries to meet its growing needs.

Petroleum Institute of Pakistan Chairman Munsaf Raza speaking on the occasion said the main purpose of the conference is to discuss and find ways and means to meet the growing demands of Pakistan.

Business Recorder.
http://www.brecorder.com/index.php?id=530086&currPageNo=1&query=&search=&term=&supDate=


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## Janbaz

*Country expects $6 billion foreign investment this year: Tareen *

ISLAMABAD (February 19 2007): Pakistan was expecting a record foreign direct investment of around six billion dollars this year owning to its liberal, consistent and investment-friendly economic policies.

Minister for Industries Jehangir Khan Tareen on Sunday told Radio Pakistan that country was becoming a regional hub for investment where multi national companies were taking keen interest to invest in different fields.

A chain of Industrial estates like Sunder Industrial State is being established in four provinces to steer the nation to the path of rapid industrialisation.

The government is committed to streamline all available resources to ensure rapid development and prosperity of common man.


Business Recorder.
http://www.brecorder.com/index.php?id=530165&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Establishment of plasma gasification plant on cards *

KARACHI (February 18 2007): City District Government Karachi (CDGK) is considering setting up a power plant called 'Plasma Gasification' in collaboration with a Malaysian firm at the cost of $70 million in the metropolis. A senior CDGK official told Business Recorder on Saturday that initially the Malaysian firm had presented its idea of the project.

The proposed plant will be established on 40 acres of plot within two years, which will generate 31-MW electricity through converting waste into energy, he added. Technology, which was called Plasma Gasification, had been introduced in 1962 for the first time and now it was being used for energy generation in different countries of the world, he told.

It was new idea for the city government and it needed to be studied thoroughly, he clarified. The CDGK will take decision in this regard soon after the final report of the project is submitted to the City Nazim Syed Mustafa Kamal, he said. However, he ruled out any early agreement between CDGK and the Malaysian firm on the installation of the proposed plant.

"CDGK is not fully aware of the project as it is new to it, however it will look into the project's viability whether or not it is feasible to be installed in the city," he added.

The official said that CDGK had some reservations over the technical design of the plant. "The CDGK wants a by-product of around 8000 to 10,000 ton garbage being produced in the city on a daily basis and this kind of plant could provide us with an opportunity to meet energy needs of the city," he said.

http://www.brecorder.com/index.php?id=529848&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Govt working with vision to meet Pak's growing energy demands: Aziz *
Monday February 19, 2007 

ISLAMABAD: Prime minister Shaukat Aziz Sunday expressed the hope that the work on multi-billion dollargas pipelines from Turkmenistan and Iran will start at the earliest, which will open doors of prosperity and development for people living in this region. 
Addressing Oil and Gas Conference here, the prime minister said in view of the fact that energy security remains vital to progress and development, our government has been working with a vision to meet Pakistan's growing domestic energy requirements over the short, medium and long term. 

"We are also working to leverage our potential to become a main energy artery of the region. Pakistan enjoys a pivotal position at the crossroads of three vital regions of the world - South Asia, Central Asia and West Asia. No other country is strategically better located than Pakistan to become a safe and short energy supply corridor," he held. 

The premier said today one of the biggest global challenges that humanity faces is how to meet the rapidly growing energy demand, which is crucial for sustaining our progress and development. Soaring energy consumption, coupled with high oil prices, has compounded this challenge. Energy consumption in the developing world is roughly growing at double the global average rate. It is estimated to rise by more than 100 percent by 2020 from the existing levels. 

In our regional context, he said consistent high economic growth in Pakistan, India and China is spurring an unprecedented energy demand. We, therefore, need to exploit all available resources of commercially viable energy - both domestically as well as from abroad - and demonstrate a greater commitment to energy efficiency and conservation. 

The prime minister said the energy requirements of Pakistan itself are rising sharply on the back of increased economic activity and growth, which has been in the region of 6 to 8% in the last few years. 

"We hope to sustain this level of economic growth. However, we need to ensure that our energy supplies keep pace with the rising economic activity. Pakistan's energy demand is set to increase by 8 to 10 percent annually. By 2020, our primary energy needs are likely to more than double to 177 million TOE (Tonnes of Oil Equivalent) from today's 58 million TOE," he maintained. 

He added: "We are meeting a major portion of our commercial energy needs from domestic resources and the gap is being filled through import of petroleum products. 

To ensure that our energy supplies continue to support economic growth, the premier said our government on the one hand is targeting to enhance the local production of hydrocarbons through increased exploration and on the other hand aiming to materialize plans for the import of natural gas from Iran and Central Asia. 

To meet the growing demands of power plants / IPPs and industrial consumers, additional gas supply is being arranged through import of LNG (350 - 500 mmcfd). Our Government has also approved LPG Policy 2006 which envisages continuation of deregulation and fixing of LPG prices by companies on a competitive basis. An investment of Rs. 9 billion has already been made so far in this sector. There is a big market in Pakistan where LPG would be used as a preferred domestic fuel. 

Today one of the biggest global challenges that humanity faces is how to meet the rapidly growing energy demand, which is crucial for sustaining our progress and development. Soaring energy consumption, coupled with high oil prices, has compounded this challenge. Energy consumption in the developing world is roughly growing at double the global average rate. It is estimated to rise by more than 100 percent by 2020 from the existing levels. 

The premier went on to say that Pakistan has constructed a new deep-sea port at Gwadar which has the potential of providing an outlet to Central Asian oil and gas for consumption in other countries of Asia. We are encouraging construction of oil refineries and large-scale storage of petroleum products in Gwadar. 

"A Mega-Refinery is being set up at Khalifah-Point. Our government is providing all the necessary incentives, regulatory framework and infrastructure facilities in Gwadar to ensure that it becomes one of the key regional ports and economic hubs in the shortest span of time," he held. 

We are trying to diversify the sources of energy and maximize output from hydro-power and other alternate energy sources including solar, wind, bio-gas and bio-diesel. Our government is also actively planning to launch major coal-based power projects, especially in Sindh province, where we have large deposits of coal. Import of electricity from Iran and Central Asia is also under process. We have a large piped gas network in our country. Our vision is to improve technologies that can help make all energy resources compatible with an efficient market and help us ensure a clean environment. 

He also said that the promotion of clean fuels is essential to stop environmental degeneration and to curtail the emission of poisonous gases in the atmosphere. Environmental preservation remains high on our agenda. 

"In order to improve the specifications of petroleum products in line with international standards and introduce environment-friendly fuels, we have taken various steps. Mono Grade 87 Octane Motor Gasoline has been introduced throughout the country, which has eliminated the menace of adulteration. Unleaded Gasoline has also been introduced. All refineries have been advised to install desulphurization plants and commence production of Euro-III standard HSD with effect from 1st January, 2008," he noted. 

The premier said Pakistan is one of the most attractive destinations for foreign investment in the oil and gas sector. The foreign companies, which operate in Pakistan, have expanded rapidly. This should give confidence to other investors who can avail the opportunities available here. 

"We seek more and more partnerships with international oil and gas exploration and production companies. In the 21st century, public-private partnership offers the main business model that is now central to any successful strategy at a time when exploration has become a high-stake venture. Partnerships between Pakistani and international companies are already bringing latest, cutting-edge technology. They are also providing invaluable services in human resource development. The government will continue to encourage this trend," he held. 

The sound energy management and application of new environmental technology, he said is not just discovering and exploiting new energy resources, but also protecting and using them judiciously. This is imperative to protect our environment and sustain the pace of progress and development for our present and future generations.

http://www.paktribune.com/news/index.shtml?169459


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## Janbaz

*Cellular subscribers top 50 million *

All set to launch MNP on March 23

By Imran Ayub

KARACHI: Cellular subscriber base has crossed the 50 million mark and experts see the service adding another 10 million users by the end of current financial year.

Latest figures compiled by the Pakistan Telecommunication Authority (PTA) suggest the total number of cellular service users stood at 50.75 million by January 2007, which were 34 million by end-June 2006.

&#8220;In absolute terms, total number of cellular subscribers stands at 50,756,502 (50.75 million), which shows an increase of 47 per cent during the first seven months of the current fiscal,&#8221; said an official at the PTA.

&#8220;There is also a 4.1 per cent increase if we compare such figures with the previous month (December 2006). In fact, there is an exceptional jump in cellular subscriber numbers.&#8221;

He said in the calendar year 2006 almost 29 million new connections were sold by the six cellular companies on comparatively cheaper tariff offers and increased network reach of the service providers.

&#8220;So there was over 147.44 per cent rise in the cellular subscriber base in a single calendar year,&#8221; said the PTA official. &#8220;Four major companies - Mobilink, Ufone, Al Warid and Telenor - got better market share during the first seven months of 2006-07, who attracted subscribers with different tariff packages and incentives.&#8221;

The PTA figures show by January 2007 Mobilink led the market with 23.29 million subscribers, followed by Ufone, which was serving 10.55 million people across the country.

With the arrival of the UAE-based Al Warid Telecom and Norway&#8217;s Telenor, both competition and subscriber base grew at a much faster pace, as they attracted 7.9 million and 7.6 million subscribers respectively by the end of January 2007.

The cellular density witnessed a phenomenal jump in the last two years as the mobile phone subscriber base grew by a staggering 170 per cent during 2005-06, outnumbering almost six-decade-old fixed-line telephone service by more than 500 per cent in 16 years of operation.

Analysts see the cellular service growth in line with expectations, but say 2007 appears to be challenging for the cellular companies, when the MNP (mobile number portability) system is expected to be put in place.

&#8220;The cellular operators may continue such growth for the next few months,&#8221; said Anwaar Ahmed Khan, Head of Research at Inter Securities Management Limited. &#8220;In fact, reduced tariff and increased number of destinations have made the cellular service within reach of the low income group.&#8221;

The cellular operators expect a cutthroat competition after the MNP system is implemented across the country.

&#8220;The MNP would decide the real market leader. After the MNP implementation, the companies must have to improve their service quality in order to keep their subscribers,&#8221; said a senior official of one of the companies.

The MNP is a system that enables a mobile phone subscriber to carry the same number while changing the service provider. The system, which requires an investment of over Rs500 million, was originally due in November 2005 but was delayed for more than a year by the operators.

Now the companies have set March 2007 as the new deadline for project completion and seem confident to meet it.

&#8220;The MNP is almost ready to be launched,&#8221; said the cellular company official. &#8220;There were some complications in the project, which have been removed and proper service would be available to the subscribers from March 23, 2007.&#8221;

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=43574


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## Janbaz

*Ministry sets $1 billion IT export target by 2010 *

ZAHEER ABBASI 
ISLAMABAD (February 20 2007): The Ministry of Information Technology has set $1 billion export target of IT-enabled services by 2010 and asked the China to construct IT parks each in Islamabad, Lahore and Karachi on Built Operate and Transfer (BOT) basis, it is learnt.

Sources said that these parks would be built to accommodate about 200,000 IT graduates in next three to four years to meet the set export targets. The ministry has also discussed the idea of setting up IT parks with the Prime Minister.

They said that the IT exports as reported by the State Bank of Pakistan (SBP), were $72.210 million during 2005-2006 which grew up to $48 million in the first half of 2006-07 ie till December 2006. A 17-member Chinese delegation led by Zhao Wenzhi, Deputy Director General, Foreign Affairs Department of the Ministry of Information Industry included senior officials of Chinese Ministry of Information Industry and leading executives of ICT companies from China held talks with the IT Ministry officials and Managing Director Pakistan Software Export Board, Yusuf Hussain.

It was learnt that the Chinese delegation was shown sites selected for IT parks and asked to invest on BOT basis and import IT-enabled services from Pakistan instead of other countries. The IT Ministry will invite interested parties through advertisement if a positive response was not received from China which was offered for investment.

Presently, the USA, Canada and Europe are the major destinations of Pakistan IT enabled export. "The PSEB, working on different thrust areas, also took the issue of skilled manpower with the Higher Education Commission (HEC) and asked it to improve the standard of IT education. The bandwidth quality is another issue needed to be addressed if the target is to be achieved," they added.

They said that the Pak-China Joint Working Group on Information Technology had also agreed to enhance collaboration in IT would evolve strategies to target global markets and also increase trade between the two countries.

The meeting noted that the Chinese IT industry has achieved rapid growth in the last four years with domestic revenue at $48 billion. IT exports and outsourcing in China also witnessed a rapid growth.

Talib Baloch Secretary PSEB talking to Business Recorder said officials of both the countries recognised that Pak-China collaboration in Information Technology would benefit both the countries. He said that the eight strategic areas have been identified as facilitation, human resource development, industry finance, marketing, office space provision, public policy, quality and telecom bandwidth provision to achieve the target.

Business Recorder.
http://www.brecorder.com/index.php?id=530358&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Uzbekistan and Turkey keen to promote trade with Pakistan *

PESHAWAR (February 20 2007): Uzbek and Turkish ambassadors on Monday vowed for promotion of bilateral trade, exchange of trade delegation and signing of agreements to promote investment with Pakistan in general and NWFP in particular.

The two Islamabad-based Uzbek and Turkish envoys during their visit to Sarhad Chamber of Commerce & Industry (SCCI) also agreed for facilitating business communities of both sides and promoting close relations among the chambers of commerce and holding of production exhibitions and business conferences.

Uzbek ambassador, Oybek Arif Usmanove and Turkish ambassador Rauf Engin Soysal separately visited the Sarhad Chamber and hold different meetings with the SCCI officials. Acting President, Sarhad Chamber of Commerce & Industry, Haji Mohammad Israr Saraf presided the meeting.

SCCI vice president, Haji Manzoor Ahmad Paracha, Ghulam Sarwar Khan Mohmand, Zahidullah Shinwari, Sharafat Ali Mubarak, Shaukat Ali Khan, members of the executive and prominent industrialists and traders attended the meeting.

The Uzbek ambassador addressing the meeting said the exchange of trade delegations could help promote bilateral trade between the two Muslim states. He hinted at signing of agreements for promotion of cooperation in different sectors between Uzbek and Sarhad Chamber. "For this purpose the SCCI members would be welcomed to Uzbek embassy in Islamabad, whenever they like," added Oybek Arif Usmanove. He said that Uzbekistan was ready to offer cooperation for development of agriculture sector in Pakistan.

Turkish ambassador Rauf Engin Soysal vowed for taking all possible measures to promote bilateral trade between Turkey and Pakistan, saying the exchange of trade delegations would be ensured to bring business community of both countries closure to each other. The NWFP, he said, was geographically situated in a very important region of world, saying that a group of Turkish businessmen would soon visit Pakistan.

In his two separate but identical welcome addresses, acting president of SCCI, Haji Mohammad Israr Saraf stressed for promoting business and economic relations with both Muslim states. He said that initiating of joint ventures could play important role in promotion of investment.

Talking to Uzbek envoy, he called for holding a conference in Peshawar to promote trade contacts between both countries. He also suggested for holding an exhibition of Turkish products in Pakistan.

http://brecorder.com/index.php?id=530413&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Lucky Cement earns Rs 791.503 million after-tax profit in July-December *

KARACHI (February 20 2007): The Lucky Cement on Monday announced its profit after-tax of Rs 791.503 million translating an earning per share (EPS) of Rs 3.01 for the first half of current fiscal year as compared to Rs 855.136 million, EPS of Rs 3.25 in FY06. This was recommended by the board of directors of the company in a meeting held here on Monday.

According to the financial results, the company''s operating profit stood at Rs 1,401.078 million in the six-month period (from July to December 2006) as compared to Rs 1,209.693 million in the same period in 2005. The profit before tax was Rs 1,009.683 million in the period under review against Rs 1,125.818 million previously.

http://brecorder.com/index.php?id=530362&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Banks disbursed Rs 80.97 billion farm loans in 7 months *

KARACHI: The commercial banks disbursed an amount of Rs 80.977 billion agriculture credits in July-Jan 2006-07 against its full-year target of Rs 160 billion.

&#8220;The commercial banks provided Rs. 9.29 billion farm credits in January 2007 only, the State Bank spokesman Syed Waseemuddin told Geo News.

The five major banks disbursed Rs 37.91 billion agriculture credits in July-Jan 2006-07 period against their full-year target of Rs 80 billion.

Zarai Tariqati Bank Limited (ZTBL) disbursed credit of Rs 27.190 billion against its full-year target of Rs 48 billion, while Punjab Provincial Cooperative Bank disbursed Rs 4.039 billion against its full-year target of Rs 9 billion, the official said.

However, fourteen other private banks, which were given Rs 23 billion disbursement target for 2006-07, have provided credit of Rs 11.831 billion in July-Jan this year. 
http://geo.tv/geonews/details.asp?id=2396&param=3


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## Neo

*
17 oil, gas exploration blocks to be offered in next bidding: official *

ISLAMABAD: February 20, 2007: The government will offer 17 onshore blocks for oil and gas exploration for bidding this month, a senior government official said on Tuesday.

Sher Mohammad Khan, director for exploration and concessions at the Ministry of Petroleum and Natural Resources, said the blocks to be offered are in four zones.

"We plan an open bidding and local and well as international firms will be allowed to participate," Khan told reporters on the sidelines of an oil and gas conference in Islamabad.

"The bidding will be held this month."

"Those blocks are other than the 33 we already awarded for exploration since January 2007," he said.

Pakistan's liberal exploration policy has attracted interest from foreign firms in recent years, making oil and gas one of the largest foreign investment areas.

Total (TOTF.PA) of France and Austrian OMV (OMVV.VI) are among the foreign firms involved in exploration and production of hydrocarbons.

Pakistan imports 85 percent of its energy needs, including about $3 billion worth of crude a year, and is struggling to increase domestic oil production of about 65,000 barrels a day.

It hopes to produce 100,000 barrels a day within five years.

Pakistan also produces little over 3.5 billion cubic feet of natural gas a day, which meets 50 percent of its total energy needs.

Khan said the government will also sell one offshore bock in the Indus Basin, off southern Sindh province.

"The bidding for Indus Basin block will be held on February 27," he said.

"We expect some good response from the investors in both the biddings."

The government has set a target of drilling 100 exploratory wells each year, compared with an average of 60 a year previously.

However, most offshore wells drilled by Pakistani and foreign firms have turned out dry.

Total, Pakistan's Petroleum Ltd. and Premier Oil Pakistan made unsuccessful attempts in the past few years to find hydrocarbons in deep water off Karachi.

*Pakistan's proven oil reserves stand at 800 million barrels. It has and scientifically estimated potential reserves of 27 billion barrels.*

*Proven gas reserves are 45 trillion cubic feet while its scientifically estimated reserves are 450 trillion cubic feet.*  

http://brecorder.com


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## Neo

*Efforts underway to increase indigenous oil production: PM *

ISLAMABAD: February 20, 2007: Prime Minister Shaukat Aziz has said that strenuous efforts were underway to increase indigenous oil production upto 100,000 barrels a day to meet domestic needs and bring down oil import bill.

*"The country's oil production will be increased upto 100,000 barrels from 70,000 barrels per day as it enjoys encouraging successful exploration ratio of 25 percent," he told a private TV channel.*

Presently, the government has planned to drill at least 100 new wells to explore for oil and gas.

Various companies have already been allowed to explore and scores of local as well as foreign companies are showing interest in investing the country's oil and gas sector, he said.

New LPG policy has helped in decreasing its prices, the prime minister said, adding that more and more CNG outlets are being established across the country to provide cheaper energy and reduce pollution.

Commenting on Iran-Pak-India (IPI) gas pipeline project, he said things were moving in the right direction and negotiations were underway to devise an agreeable price formula.

An Indian delegation would soon visit Pakistan to hold talks on the project, the prime minister added. 

http://brecorder.com


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## Neo

*SBP governor stresses need to diversify economy *

ISLAMABAD (February 20 2007): State Bank of Pakistan Governor Dr Shamshad Akhtar has said that Pakistan will have to diversify its economy to sustain, for a longer period, the momentum of growth it has gained over the past few years.

"We realise this (the diversification) will not happen overnight, but it is imperative," she was quoted as telling the senators on Monday in a briefing ahead of the debate in the Upper House to forward suggestions for the coming budget.

A member told Business Recorder, after the meeting, that the SBP Governor appeared convinced that reliance on a few sectors for a prolonged period could have adverse impact on overall economy. Dr Shamshad came out with a suggestion that the government must now start looking for some unconventional sectors to keep the momentum of economic growth going.

Pakistan has been able to sustain a GDP (Gross Domestic Product) growth rate around seven percent for the past three-four years, but its economy is largely being oxidised by only three sectors, like agriculture, large-scale manufacturing, and services. Experts argue that the trend of economy revolving around some sectors can fire back at some stage.

Senators also endorsed the SBP Governor's point of view and called for outright changes in the pattern of economic growth for diversifying the economy. Dr Akhtar said the SBP would continue to strike a fine balance that could help control the inflation, and maintain a reasonable growth rate.

Meanwhile, a statement issued here said that members of the Senate were briefed by State Bank of Pakistan Governor Dr Shamshad Akhtar on monetary policy. The Governor highlighted the transparent manner in which the SBP and the government had chalked out their policies.

Pakistan's economy has shown strength and resilience despite the external shocks in the form of rising oil prices and the devastating earthquake of October 8, 2005, it emphasised. It was the resilience of the economy brought about by the sound structural reforms that allowed economy to withstand the challenges, the statement said. The senators appreciated the working of the SBP.

The SBP Governor informed the senators of the increase in Foreign Direct Investments (FDIs) and the confidence the international markets had shown in Pakistan's economic progress.

http://brecorder.com/index.php?id=530336&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Karachi stocks breach 11,500 barrier * :flag: 

KARACHI: Merrill Lynch positive outlook for PakistanÃ¢â¬â¢s economy with Ã¢â¬ËbuyÃ¢â¬â¢ at Pakistani bourse suggestion was well heeded. Institutional buying at dips empowered bulls that placed 100-index well above 11,500-point psychological level.

Aggressive buying helped 100-index recover 198.36 points and closed at 11,577.76 on the first day of rollover week, on Monday. Junior 30-index also managed to regain 282.94 points to 14,627.12 after remaining in negative column for the last three-day long sessions.

Ã¢â¬ÅMerrill Lynch in its last report praised Pakistan for its ongoing economic reforms, liberal economic policies with consistency and privatisation programmes that all were helping to boost the countryÃ¢â¬â¢s economy furthermore,Ã¢â¬Â a leading analyst summarised the report.

He quoted excerpt of the report says, Ã¢â¬ÅIn the past 18 months, Standard Chartered has bought Union Bank, China Mobile bought Paktel, and Philip Morris bought Lakson Tobacco. And this year Pakistan State Oil is to be privatised.Ã¢â¬Â

The beginning of the rollover week played its traditional role of mounting selling pressure by mid of the session at KSE, but institutional buying on dips placed index in upper green territory, another analyst said.

Buyers felt relax to invest with borrowed money, as Continuous Funding System (CFS) had came below Rs50 billion on last Friday. The hectic buying increased CFS value from Rs49.46 billion to Rs50.88 billion.

Simultaneously, the amount in overall market capitalisation surged by Rs50 billion to Rs3.156 trillion. Ahsan Mehanti of Shahzad Chamdia sees no crackdown of the ongoing rollover week in short term and expects that market would continue moving up because of Merrill Lynch buying stance at the local bourse that has potential to be grown up significantly.

Muzammil Mussani of JS Research said that initially dull activity was seen in the market due to lack of interest by both retail and institutional investors. The news of train incident and suicide bombing in Quetta over the week kept the investors away from the market. However, with the result announcement of Lucky Cement, sentiment geared up.

Lucky Cement announced its first half of fiscal year 2007 result with EPS of Rs3.01, which was above the market expectation. Amid higher than the expected result helped closing Lucky Cement on its upper circuit breaker at Rs68.5, he noted.

Better corporate result of Lucky Cement impacted positively on its fellow scrip ie DKGC that also closed at its upper circuit breaker. Announcement of the result changed market behavior the other (positive) round. Moreover, some rumours of foreign interest in OGDC also led the market to move up, he added.

On the contrary, the overall volumes in the ready market were not as healthy as they were in recent astonishing days. The turnover of the session stood at 180.602 million shares that was a little bit higher than 146.159 million shares changed hands on Friday.

The positive sign dominated on board, as 174 scrips finished up the day business in positive column against 143 stocks closed in negative zone. Therefore, the value of 30 scrips remained unchanged with total 347 active counters in the broader market.

Oil and Gas Development Company was the day volume leader with 23.271 million shares. The scrip recovered Rs2.80 at Rs126.30, followed by National Bank that regained Rs7.80 at Rs294.80 with 12.539 million shares.

Pak Petroleum rose by Rs8.80 at Rs263.50 with 11.809 million shares turnover. DG Khan Cement improved by Rs3.90 at Rs82.75 with 10.846 million shares turnover.

Lucky Cement enhanced by Rs3.25 at Rs68.50 with 8.863 million shares turnover. Callmate Telips lower by 50 paisa at Rs47.50 with 8.215 million shares turnover.

Fauji Cement rose by 80 paisa at Rs17.55 with 7.700 million shares. Bank Alfalah increased by Rs1.10 at Rs52.50 with 7.226 million shares.

Pakistan Telecommunication Company surged by Rs1.15 at Rs58.45 with 6.116 million shares turnover. Bank of Punjab improved by Rs1.25 at Rs125.25 with 5.289 million shares turnover.

Forward Counter: OGDC-FEB led the list of actives on this counter, firmed by Rs3.25 at Rs126.50 on seven million shares followed by NBP-FEB, which rose by Rs6.95 at Rs295 on seven million shares, HUBC-FEB improved by 45 paisa at Rs31.95 on six million shares, HUBC-MAR enhanced by 75 paisa at Rs31 on six million shares, FFBL-FEB increased by 86 paisa at Rs32.06 on five million shares.

http://www.thenews.com.pk/daily_detail.asp?id=43569


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## Neo

*PARCO to export 250,000T gasoline *

ISLAMABAD: PakistanÃ¢â¬â¢s biggest refinery will export up to 250,000 tonnes of gasoline in 2007 after increased use of compressed natural gas led to a sharp decline in consumption, a refinery official said on Monday.

The refinery will issue quarterly tenders for international buyers for its surplus, said Muhammad Rasheed Jung, managing director of state-run Pakistan Arab Refinery (PARCO). The refinery, in Mehmood Kot in the central province of Punjab, annually produces about 650,000 tonnes of gasoline, while PakistanÃ¢â¬â¢s annual demand is about 1 million tonnes.

Ã¢â¬ÅThe export of motor gasoline from the mid-country refinery is not a viable business proposition, but we have no choice other than to sell it abroad as we have surplus production,Ã¢â¬Â Jung told Reuters on the sidelines of an energy conference in Islamabad.

Ã¢â¬ÅWe plan to export 250,000 tonnes annually for the next four to five years,Ã¢â¬Â he said. Jung said a government campaign to replace petrol with compressed natural gas in vehicles had been hurting the industry. 

http://www.thenews.com.pk/daily_detail.asp?id=43577


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## Neo

February 20, 2007 
*Saudi group to acquire 68pc stakes in CCBL*

KARACHI, Feb 19: Saudi investor Samba Group will acquire 68 per cent stakes in the Crescent Commercial Bank Limited (CCBL) after getting 600 million new ordinary shares of the bank.

This was decided in the extra-ordinary general meeting of the CCBL held on Feb 9, and a special resolution was passed, by which the authorised share capital of the bank was increased.

The resolution further authorised to issue 600 million ordinary shares of Rs10 per share to the Samba Financial Group of Saudi Arabia.

In November 2006, the CCBL board of directors had approved an investment of Rs6 billion in the bank by the Samba group.

The deal will be completed after the approval of the State Bank of Pakistan, the Security Exchange Commission of Pakistan and the Saudi Monetary Authority.

On completion of the deal, the bankÃ¢â¬â¢s issued and paid-up capital will increase to Rs8.8 billion. The shares, to be issued to the Samba, are ordinary shares in a single transaction, resulting in Samba owning 68 per cent of the bankÃ¢â¬â¢s equity.Following the investment, the bankÃ¢â¬â¢s board will be re-constituted accordingly to reflect the revised ownership structure and will be in accordance with the requirements of Pakistani and Saudi regulatory authorities.

Samba is a premier financial group of Saudi Arabia with a market capitalisation of $22.4 billion and shareholders equity of $3.9 billion.

http://www.dawn.com/2007/02/20/ebr2.htm


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## Neo

Tuesday, February 20, 2007 

*Pak-India trade may rise to $9b in 5 years: WB MD*

* Corruption is a tax on the poor. Lack of transparency and corruption are pervasive, and if not curtailed would be self-defeating: Volcker

MUMBAI: World Bank Managing Director Graeme Wheeler said on Sunday that India-Pakistan trade has the potential to cross $9 billion in the next five years from the current $1 billion, if barriers relating to policies, infrastructure, corruption and red tape are addressed. 

"Everyday we see obstacles, protective policies, poor infrastructure, corruption and red-tape. Trade between India and Pakistan is about $1 billion a year. Without barriers, it could be $9 billion within five years,Ã¢â¬Â Wheeler said at the SAARC business leaderÃ¢â¬â¢s conclave here.

Citing geography and its young population as the two major weapons to fight poverty, he said South Asian nations needed to integrate for the economic betterment of the region. Pointing out that severe infrastructure bottlenecks impede the region's growth, he urged countries to share energy and water resources.

Ã¢â¬ÅTrade integration is a major opportunity. But regional cooperation in energy and water could produce even bigger returns. India, one of the most energy-hungry nations in the world, sits next to three energy-surplus countries namely Bangladesh, Nepal and Bhutan. Yet, except for Bhutan, energy trade between them is miniscule,Ã¢â¬Â Wheeler observed.

He said that for South and East Asia to be the growth hubs of global economy, countries in the region should transfer their dynamism in services sector to manufacturing.

However, when asked about the threats posed by a two-year high rate of inflation in India and expectations of a higher current account deficit fuelled by high domestic demand for imported goods, he declined to comment.

Speaking at the conclave, a former chairman of the US Federal Reserve, Paul Volcker, who had led the UN investigation into the Iraq's food-for-oil scam that threw up the name of former external affairs minister Natwar Singh, stressed on the need to deal with corruption and implementation of a more transparent regime in developing countries.

"Corruption is a tax on the poor. Lack of transparency and corruption are pervasive and if not curtailed would be self-defeating. Strong responses to specific instances of corruption is warranted," he said.

Commenting on the worrisome rate of inflation the country is facing, Volcker said that surging inflation in India was a matter of concern, but added that the response of the Reserve Bank of India was on track. 

India's rate of inflation had of late hit a two-year high of 6.73%, well above the central bank's projection of 5-5.5%, thus forcing it to hike the cash reserve ratio of banks by one percent in the last three months. courtesy hindustan times

http://www.dailytimes.com.pk/default.asp?page=2007\02\20\story_20-2-2007_pg5_14


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## Neo

Tuesday, February 20, 2007 

*Pak-India trade rose by 129% in April-Oct 06-07*

NEW DELHI: There has been a phenomenal increase of 129% in India's trade with Pakistan in April- October 2006-07. The two-way trade has reached record figure of $977.03 million. This comprises India's exports to Pakistan valued at $789.13 million and Indian imports from Pakistan valued at $187.90 million. India's imports from Pakistan have been growing at a steady pace 87% in 2005-06 and 86% in April- October (2006-07). This was indicated at a meeting between Minister of State for Commerce Hamid Yar Hiraj and Indian Minister of Commerce & Industry Kamal Nath here on Monday, an Indian statement said. Hiraj is leading a 187-member business delegation to India, the largest ever business delegation from Pakistan to India. The two ministers underlined desire on both sides to boost bilateral trade and promote economic and commercial cooperation within framework of composite dialogue.

http://www.dailytimes.com.pk/default.asp?page=2007\02\20\story_20-2-2007_pg5_15


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## Janbaz

*Thar coal mining to start this year: Marwat *

By Adeel Pathan

HYDERABAD: Sindh Minister for Mines and Mineral Irfanullah Khan Marwat on Tuesday informed The News that mining in Thar coalfield would start this year.

&#8220;The ground water study of Thar coal is complete and two new blocks have been added that makes a total of six blocks for exploration of coal in Thar,&#8221; the minister told this correspondent.

He was talking to The News after speaking at the inaugural ceremony of Postgraduate Level 18-day course on Rock Mechanics Design Mining and Civil Engineering at Mehran University of Engineering and Technology (MUET).

The Department of Mining MUET organised the program sponsored by the Higher Education Commission (HEC) British Council and Joint Higher Education Links Programme. 

To a question, the minister said that feasibility studies of Thar coal was complete but added that international companies are feeling shy to exploit the coal reserves.

Addressing the MUET he said the government has finally decided to establish a company in collaboration with Sindh and federal government with an investment of $250 million to exploit Thar coal for power plants.

He said that Sindh has sixth largest coal reserves in world with 190 billion tonnes of coal available for exploitation.

A recent study by a Chinese company proved that there is a reserve of 16 billion tonnes of granite available in Thar as against previous estimates of one billion tonnes, he informed.

Irfanullah Khan Marwat revealed that an agreement with Chinese company would be signed to explore china clay in the province.

Supporting his stance of coal power projects, the minister said that Sindh government would not allow construction of Kalabagh dam and has taken bold stand on this issue and called for looking into other resources for production of electricity other than hydel. 

He said at the government level, we are in a process of setting up coal fired power projects at Thar, Lakhra and Thatta-Sonda. 

He said that Germans and Chinese companies have completed two mining feasibility studies and a number of exploration studies have already been launched. 

The provincial minister went on saying that it would be ensured during these projects that employment would be provided to people of Sindh and added that natural resources benefits would be shared among the people of the province.

He said that government would take a decision within 15 days about the usage of methane gas that was found in abundance in Thar.

He said that government is alive with the problems of the province would not let down its people.

Sindh Minister said that thousands of qualified and highly trained engineers will be required in Thar Coal project and was happy to see that MUET is putting their extra efforts to improve the quality of education at the level of international standards. 

He said that Sindh government is ready to provide all possible assistance to the students and graduates of MUET for their field training and would welcome such schemes.

The minister was of the view that Sindh has big reeves of coal deposits, which are sufficient to meet the energy demands for decades but unfortunately we have not yet been able to tap this energy resource.

Professor Abdul Qadeer Khan Rajput, Vice Chancellor MUET said that we are launching a postgraduate level course on Rock Mechanics Design in Mining and Civil Engineering as part of three-year linkage program between Mehran University and University of Nottingham. Dr. Rajput said that provincial and federal government are in process of establishing integrated coal fired power projects at Thar through foreign investment.

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=43730


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## Janbaz

*Pakistan ideal country for foreign investors*

OUR STAFF REPORTER 
LAHORE - Pakistan is an ideal country for foreign investors due to conducive business atmosphere created by the reforms initiated by the government in recent years.
Member Board of Directors Warid Telecom Parvez Shahid stated this, while speaking at Lahore Chamber of Commerce on Tuesday. The Warid Telecom CEO Hamid Farooq, LCCI President Shahid Hassan ,SVP Yaqoob Tahir Izhar, VP Mubasher Sheikh and former SVP Sohail Lashari also spoke on the occasion.
Parvez Shahid said that a number foreign research reports have revealed that Pakistan which is fast becoming economic leader in the region and would perform better in longer term. He said that the WaridÃ¢â¬â¢s investment in Pakistan depicted that the foreign investors were keen to invest in Pakistan. He said that Warid Telecom is one of the success stories of this country as one million connections are adding up every year.
He said that Pakistan has completed 85 per cent privatization in telecom sector and the teledensity is bigger than all the regional countries. He said that it was not correct to draw a comparison between Pakistan and European countries or
the United States in terms of business atmosphere. Speaking on the occasion, the LCCI President Shahid Hassan said that Pakistan had a lot of potential besides having an important location in the region. He said that Telecom sector has seen immense development over the last couple of years. 
As a result of governmentÃ¢â¬â¢s policies of deregulation, privatisation and liberalisation the Telecom sector has attracted an investment of $9 billion, which includes the cost and up-gradation of equipment, equity and license fee. Warid is one of the largest telecommunication companies, which has made investment in Pakistan.
He said that telecom sector had become a major employer of skilled jobs as its exponential growth has resulted in creation of 80,000 jobs directly and 500,000 jobs indirectly.
The telecom sector constitutes 2 percent of the GDP, which is expected to rise to 3 percent in the next three to four years.
The country has 50 million phones
including cellular and fixed lines. The teledensity has increased from 4 percent in 2003 to 30 percent in 2007. Seventy percent of the countryÃ¢â¬â¢s population now has access to improved telecom services at substantially reduced tariffs.
Earlier, the Warid Telecom also announced a special package for the LCCI members and its staff. 

The Nation.
http://www.nation.com.pk/daily/feb-2007/21/bnews3.php


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## Janbaz

*ADB help to be sought for mega projects in cities: Prime Minister *

RECORDER REPORT 
KARACHI (February 21 2007): Prime Minister Shaukat Aziz has said the federal government would seek financial assistance from the Asian Development Bank (ADB) to develop mega projects in cities so that the people in rural and urban Pakistan get proper feel of the overall developmental effort of 'their' government.

Shaukat was speaking at a PML (Q) dinner meeting held at the Chief Minister House on Tuesday. Host, Chief Minister Sindh, Dr Arbab Ghulam, Federal Information Minister Mohammed Ali Durrani, provincial ministers, advisers, MNAs, MPAs, Senators, City Nazims and local leaders of the PML (Q) were also present.

The Prime Minister said the PPP had lost Sindh card and it was now with the PML (Q) as the common man had identified them as their "true party" that would bring them prosperity, happiness, better health care, education and improved rural economy.

He said the present government would continue to invest in rural development. He said recent bye-election in Sindh had proved PML (Q) popularity. The elections were fair and transparent. It provided people a chance to elect their true representatives. "I congratulate the successful candidates, people who voted for them, people who worked for them and PML (Q) leadership that worked hard to earn this victory."

He said: "The year 2007 is election year. We should forget our differences and gather at one platform. Hold fast each other's hand and move forward. It will be only through unity PML (Q), along with its coalition partners, would sweep coming general elections. We will also elect President Pervez Musharraf president for the next term from this national and the four provincial assemblies. This will provide security and continuity to all our polices necessary for the development and progress of Pakistan." He said there would be no deal with anyone. "Our deal is with our people and with no one else."

He once again expressed his condolences over the death of people in Samjhota Express tragedy and said he had talked to Indian Prime Minister Manmohan Singh and requested him for investigation into the act of terrorism and informs Pakistan about its findings. "I have asked him to review his security measures and tighten them further."

He said he had asked staff at the Pakistan Embassy in Delhi to visit the site of accident and provide necessary assistance to victims of the accident. He said airforce planes were ready to fly to India and bring the bodies. "Some dead bodies have been shifted to Pakistan but still a few were yet to be identified and brought to Pakistan.

He said the government had already announced Rs 500,000 for the families of the dead and Rs 100,000 for the injured people. He did not mention about the proposed construction on two islands near Port Qasim but obliquely referred to the project and said that investment would create asset, which would remain in Pakistan. "The ownership may change and some money may go out but the asset would remain in Pakistan. It would be yours."

He counted a number of benefits of the project and said the government was doing its best for Pakistan and for the people of Pakistan. Shaukat said during the last seven years lot of development work had been done. "It is for the first time that Sindh Government is in surplus of Rs 30 billion. In the past it was always indebted to banks. Those days of indebtedness are over. Now we have money to spend on your welfare. It would be spend on rural development."

He referred to schemes launched for the betterment of young and educated unemployed men and women, availability of small loan for business, efforts in respect of poverty alleviation, reduction in prices of agricultural inputs and rationalisation in prices of agricultural produce and said the government would continue to support people so that they prosper.

Earlier, Federal Minister for Information Mohammad Ali Durrani addressed the meeting and said all deals were over. There is only one deal and that was "to fight general election in collaboration with our coalition partners. These elections will be held in 2007. We will elect President Pervez Musharraf next president through these assemblies."

Chief Minister Dr Arbab Ghulam Rahim gave an account of PPP-PML (Q) tiff over the question of transparency of the recently held bye-elections and said they should prepare for the coming general elections and forget what happened in the bye-elections. He called upon his party men to remain united and prepare, along with their coalition partners, for the coming elections.

Rahim criticised PPP and accused them of looting and plundering of national wealth. He advised them to ponder over their past when the people were deprived of their rights and only a selected few ruled over their voters and that too for their personal interest.

He said after indulging into sinful acts they ran away and left their voters alone. "We are with our people. We are determined to serve people of Sindh without any discrimination."

Business Recorder.
http://www.brecorder.com/index.php?id=530678&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Trade deficit reaches $6.450 billion during first half, Senate told *

ISLAMABAD (February 21 2007): Senate was informed on Tuesday that trade deficit has reached 6.450 billion dollar during the first half (H1) of the current fiscal year. On a written question of Senator Mohammad Anwar Bhinder, the Trade Ministry has informed the House that during the first half of the current fiscal year the trade deficit has touched 6.450 billion dollar.

The House was also told that the trade deficit increased due to importing of inelastic nature of import including food and machinery groups, petroleum product and raw material for industrial consumption.

It was also stated that the petroleum prices in the world market have increased resulting in higher import bill, which touched 3.711 billion dollar during the first half of the current fiscal as compared to 3.04 billion dollar in the corresponding period of the last year.

The Senate was also informed that Pakistan is following a liberal trade regime in line with the WTO and restricting imports is neither feasible nor beneficial for the economic health of the country. To a written question, Finance Ministry informed the House that the annual lending rate of China, Indonesia, and Japan is 6.12 percent, 15.82 percent and 1.682 percent, respectively.

On the other hand, lending rate of Habib Bank of Pakistan is 7.03 percent by on one million, 8.84 percent on 10 million and 7.04 percent on 100 million per annum. National Bank's rate of lending is 7.92 percent on one million, 9.75 percent on 10 million and 10.60 percent on 100 million per annum. United Bank rate is 13.33 percent on one million, 9.60 percent on 10 million and 7.92 percent on 100 million.

The House was also informed that 41 employees are working in overseas branches of the National Bank of Pakistan. As per details, out of them, 19 are from Punjab, 14 from NWFP, 6 from Sindh, one each from Balochistan and Fata.

However, people from Sindh and Balochistan expressed their resentment over their less representation in these banks. State Minister for Finance and Revenue, Omar Ayub Khan said as per international standard, appointments are being made in purely on the basis of workers' performance and not on the basis of provincial quota.

Finance Ministry also informed the House that 547 persons were appointed in the Ministry during the last five years. Of them all 68 were recruited on contract.

Senate was also informed that Central Board of Revenue (CBR) collected Rs 2689.11 billion through different taxes during the last four years. As per provincial break up, Rs 1542.28 billion from Sindh, Rs 1004.51 from Punjab, Rs 100 billion from NWFP and Rs 42.39 billion from Balochistan.

http://www.brecorder.com/index.php?id=530751&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Thar coal mining to start this year: Marwat *

HYDERABAD: Sindh Minister for Mines and Mineral Irfanullah Khan Marwat on Tuesday informed The News that mining in Thar coalfield would start this year.

Ã¢â¬ÅThe ground water study of Thar coal is complete and two new blocks have been added that makes a total of six blocks for exploration of coal in Thar,Ã¢â¬Â the minister told this correspondent.

He was talking to The News after speaking at the inaugural ceremony of Postgraduate Level 18-day course on Rock Mechanics Design Mining and Civil Engineering at Mehran University of Engineering and Technology (MUET).

The Department of Mining MUET organised the program sponsored by the Higher Education Commission (HEC) British Council and Joint Higher Education Links Programme. 

To a question, the minister said that feasibility studies of Thar coal was complete but added that international companies are feeling shy to exploit the coal reserves.

Addressing the MUET he said the government has finally decided to establish a company in collaboration with Sindh and federal government with an investment of $250 million to exploit Thar coal for power plants.

He said that Sindh has sixth largest coal reserves in world with 190 billion tonnes of coal available for exploitation.

A recent study by a Chinese company proved that there is a reserve of 16 billion tonnes of granite available in Thar as against previous estimates of one billion tonnes, he informed.

Irfanullah Khan Marwat revealed that an agreement with Chinese company would be signed to explore china clay in the province.

Supporting his stance of coal power projects, the minister said that Sindh government would not allow construction of Kalabagh dam and has taken bold stand on this issue and called for looking into other resources for production of electricity other than hydel. 

He said at the government level, we are in a process of setting up coal fired power projects at Thar, Lakhra and Thatta-Sonda. 

He said that Germans and Chinese companies have completed two mining feasibility studies and a number of exploration studies have already been launched. 

The provincial minister went on saying that it would be ensured during these projects that employment would be provided to people of Sindh and added that natural resources benefits would be shared among the people of the province.

He said that government would take a decision within 15 days about the usage of methane gas that was found in abundance in Thar.

He said that government is alive with the problems of the province would not let down its people.

Sindh Minister said that thousands of qualified and highly trained engineers will be required in Thar Coal project and was happy to see that MUET is putting their extra efforts to improve the quality of education at the level of international standards. 

He said that Sindh government is ready to provide all possible assistance to the students and graduates of MUET for their field training and would welcome such schemes.

The minister was of the view that Sindh has big reeves of coal deposits, which are sufficient to meet the energy demands for decades but unfortunately we have not yet been able to tap this energy resource.

Professor Abdul Qadeer Khan Rajput, Vice Chancellor MUET said that we are launching a postgraduate level course on Rock Mechanics Design in Mining and Civil Engineering as part of three-year linkage program between Mehran University and University of Nottingham. Dr. Rajput said that provincial and federal government are in process of establishing integrated coal fired power projects at Thar through foreign investment.

http://www.thenews.com.pk/daily_detail.asp?id=43730


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## Neo

Wednesday, February 21, 2007 
* 
Experts want focus on oil, gas transmission, refining*

By Sajid Chaudhry

ISLAMABAD: Participants of the Third Pakistan Oil and Gas Conference have expressed concern over only visioning exploration and production aspect of the petroleum sector in the forthcoming petroleum policy and have suggested that oil and gas transmission, transportation and refining should be also be focused. 

As an alternative, the participants proposed that for the development of oil and gas transmission, transportation and refining separate policies be announced. 

The conference also recommended to the government to notify policies to make them legally binding, write transnational laws for cross-border gas trade and signing of Energy Charter Treaty and facilitate and allow diesel to CNG conversion for heavy vehicleÃ¢â¬â¢s use in the country. 

The conference, which deliberated on issues relating to the oil and gas sector of the country in the context of achieving energy security for the country, ended here on Tuesday with a host of recommendations for the forthcoming policy as well as for different sectors. 

Minister for Petroleum and Natural Resources Amanullah Khan Jadoon chaired the concluding session with host Syed Munsif Raza, Chairman of the Petroleum Institute of Pakistan. 

Presenting recommendations of the conference, Mr Raza informed the minister and the participants that these recommendations would provide a sound basis for the development of this vital sector of the economy. 

Exploration and Production: In order to enhance the indigenous resources on fast-track basis by local and foreign companies, the conference called for improved fiscal terms and fiscal incentives. The conference was of the view that due to the improved fiscal terms and incentives Pakistan would be competitive with international opportunities for foreign operators. It also called for extra incentives for local companies for their encouragement. 

The participants also demanded provision of security to the exploration and production companies on affordable rates in the remote areas of the country. 

Regulatory & Legal Framework: The participants of the conference called for improved regulatory and legal framework for the oil and gas sector. They stressed on the need for improvement in the area of gas allocation management, LNG policy and improved institutional support. They recommended that policies be notified to make them legally binding, write transnational laws for cross-border gas trade and signing of Energy Charter Treaty. 

Long-Term Energy Needs: Petroleum sector experts recommended to the government to encourage and facilitate development of diversification of coal, hydel, LPG, CNG, nuclear, renewable energies (wind and solar) and alternative fuels such as bio-fuels and GTL. Implement gas pipeline projects for import of natural gas and LNG and facilitate increasing refining capacity of the country, especially at the ports and strategic locations.

Refining: The conference called for removal of tax distortions, provision of policy framework to address and facilitate POL infrastructure development and considerable cost. Provision of policy incentives to consider current production capacity of refineries and consumption than to reduce one product consumption. Overall cost benefit to exchequer should be the basis for incentives. Discouraging motor gasoline, which is surplus at present and substitute it with CNG and LPG. Subsidy on ethanol is transfer of tax burden which should not to be allowed on specific fuels. 

Harnessing Coal Reser-ves: The conference recommended the establishment of separate commercial enterprises for coal mining and power generation. The government should take initiative in setting up of first coal-based power plant to encourage investors and coal methane needs to be established through internationally experienced consultants. 

CNG-LPG Market: The conference asked the government to finalize an early CNG policy, enact law for LPG policy and facilitate and allow diesel to CNG conversion for heavy vehicles use in the country. 

Coal Gasification: It was also recommended to the government facilitate coal gasification through appropriate measures to reduce dependence on imports. 

The minister for petroleum, in his concluding remarks, assured the participants that the recommendations finalized at the three-day conference would be the guiding principles for the policy-makers and would be made the basis for the future petroleum vision. He said that provision of energy on affordable rates is the key priority of the country to achieve sustained growth. He said the government believes that success in hydrocarbon exploration and production will act as a signpost to stimulate national industrial development by guaranteeing ready access to reliable and reasonable priced success of indigenous energy.

http://www.dailytimes.com.pk/default.asp?page=2007\02\21\story_21-2-2007_pg5_3


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## Neo

Wednesday, February 21, 2007 

*Over 2,600 IT employees may become surplus*

By Tanveer Ahmed 

KARACHI: A massive downsizing may take place in the Southern Region of Income Tax Karachi after the establishment of Regional Tax Office (RTO), the Daily Times learnt on Tuesday.

According to sources in the Southern Region Karachi, under the roll-out plan for the RTO, over 2,600 employees of the department could not find place in the RTO Karachi as the plan envisages only around 1,000 employees against the current strength of over 3,500 employees.

The sources said that about 2,665 employees would be placed in surplus pool after the establishment of RTO. Ã¢â¬ÅThe high-ups of the Central Board of Revenue (CBR) have also decided that this surplus staff would be given golden handshake and other offers to quit the departmentÃ¢â¬Â, the sources said.

RTOs are being established across the country as part of reforms in the CBR to improve its working and enhance the capabilities of its employees under the assistance of an international financial institution. Downsizing had been recommended by that institution, and according to it, the CBR was overstaffing, the sources said.

According to the sources, downsizing would not only be confined to the income tax offices of Karachi but under the same reforms programme, surplus staff in CBR offices may be laid off in other parts of the country.

The sources said that the rollout plan envisaged only around 800 employees in the non-officer grade and over 200 in officer grade, which meant the surplus staff would resultantly become surplus. The sources said that surplus staff would be laid off in phases over several months.

The establishment of the RTO Karachi is expected in the next month and till the renovation work is completed at the main income tax building, it will function at the present temporary set-up at Hashoo Center, Saddar.

After the establishment of RTO, the sources said, the surplus staff would be accommodated at the corporate office, where they would stay until their removal.

The sources said the CBR authorities were reluctant to reveal the rollout plan and were waiting for an appropriate time to kick the plan into action.

The sources said CBR high-ups were following the dictates of the international financial institution, which was behind the reforms programme and providing assistance for the purpose. According to an official in the department, the CBR needs more hands to increase revenue collection and to enlarge the tax base, but it is planning to do the reverse. Ã¢â¬ÅThe planned downsizing is causing anxiety among the employees,Ã¢â¬Â he said.

http://www.dailytimes.com.pk/default.asp?page=2007\02\21\story_21-2-2007_pg5_7


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## Neo

Wednesday, February 21, 2007 

*2.755m acre land available for allotment to peasants*

ISLAMABAD: Over 2.755 million acres of government land is available for allotment to landless peasants in the country, Parliamentary Affairs Minister Dr Sher Afgan Niazi told the Senate on Tuesday.

According to province-wise breakdown of the land available for the allotment, Balochistan topped the list with 1.418 million acres of land, Sindh stood second with 0.732 million acres, NWFP third with 0.52 million acres while Punjab had only 0.078 million acres of such land.

Ã¢â¬ÅThe government land is being allotted to the landless peasants by the provincial governments through different policies formed under the Colonisation of Government Lands Act, 1912,Ã¢â¬Â the minister said. Balochistan senators disputed the figures mentioned in the breakdown. 

Senator Azam Khan Swati said NWFP should be called Pukhtoonistan. State Minister for Finance Omar Ayub Khan objected to the demand, saying he himself was a Pukhtoon but he would not accept SwatiÃ¢â¬â¢s suggestion.

He said that the total annual budget of the National Commission for Human Development (NCHD) was Rs 2.703 billion and that the commission fell under the jurisdiction of the auditor general of Pakistan (AGP).

He said that the commission had started nine different plans for education, health, community development and capacity building in different fields.

Senator Hameedullah Jan Afridi criticised the government for not including details of loss of life and property in government records that was damaged in rains last year in FATA.

According to details, 330 people were killed and over 35,000 houses were damaged during rains in 2006. The Senate was told that victims of natural casualties in NWFP and Punjab had been compensated but the process was underway in Balochistan and Sindh.

http://www.dailytimes.com.pk/default.asp?page=2007\02\21\story_21-2-2007_pg7_42


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## Neo

*FDI up 70 percent to $2.79 billion in seven months *

KARACHI (February 22 2007): Foreign Direct Investment (FDI) in Pakistan rose by 70 percent to $2.7934 billion during the first seven months of the current fiscal year 2007. Data released by the central bank on Wednesday showed that the total FDI including privatisation proceeds rose by $1.1482 billion for the July-January period and reached $2.7934 billion for the July-January period as compared to $1.6452 billion during same period of the last fiscal.

Exclusive of privatisation proceeds FDI showing an increase of 91 percent to $2.6602 billion during July-January of fiscal year 2007 as previously stood at $1.3902 billion, depicting an increase of $1.270 billion during the first seven months of the current fiscal year.

During July-January privatisation proceeds have declined by $121.8 to $133.2 million during the first seven months of the current fiscal year as compared to $255 million during the same period of the last fiscal year.

Foreign Direct Investment (FDI) with privatisation proceeds has increased by 68 percent to $2.096 billion during July-January period of the current fiscal year previously stood at $1.2447 billion during the same period, indicating an increase of $851.3 million during first seven months of current fiscal year.

Portfolio Investment (PI) has gone up by 74 percent during the first seven months of 2006-07, as a result, the portfolio investment reached $697.4 million during July-January as compared to $400.5 million in the corresponding period last fiscal year, growing by $296.9 million.

Official figures shows that during July-January 2006-07, US led in the list of foreign investment with total investment of $917.6 million as compared to $589.1 million during the same period of the last fiscal year. US portfolio investment and FDI stood at $404.7 million and $512.9 million respectively during the first seven months of the current fiscal year.

While, the United Kingdom is the second in the list with $734.1 million including $488.2 million of FDI and $246 million of portfolio investment. In addition, United Arab Emirates (UAE) is at number three in the list with $310 million investment including $295.9 million of FDI and $14.9 million of PI during the same period.

Singapore has invested $126.5 million, Switzerland $91.7 million, Netherlands $60.5 million, Mauritius $54.4 million, Kuwait $55.1 million, Australia $43.4 million and Germany $22.1 million during July-January. Data shows banking and financial services sector attracted the highest foreign investment of $553.6 million, while $546 million has invested in the communications sector, and $328 million in oil and gas exploration.

http://www.brecorder.com/index.php?id=531071&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Government fixes 8 percent annual growth target during next five years, Senate told *

ISLAMABAD (February 22 2007): State Minister for Finance and Revenue Omar Ayub Khan on Wednesday winded up debate in Senate on the next budget by informing the House that the government has fixed target of 6 to 8 percent annual growth rate during the next five years.

However, he believes that a growth of this magnitude would not be achievable automatically and to sustain the growth in the range of 6 to 8 percent per annum would require 'growth critical' reforms.

He informed the House that the government reform agenda for the next five years include: strengthening institutions, improving the competitiveness of industry, building a robust financial system in an environment of global restructuring, further strengthening of tax administration and improving fiscal efforts, promoting transparency in economic policies, further reform in capital market and strengthening the country's physical and human infrastructure.

The State Minister also assured the lawmakers to consider their recommendations and proposals in the next budget which were for the first time forwarded by the elected representatives before the budget making process.

He informed the House that sustaining the ongoing growth momentum in an environment of macro-economic stability is the biggest challenge in moving forward. Other challenges he mentioned were job creation, further reducing poverty, and improving social indicators.

Earlier, on the last day of the debate, a number of senators from treasury and opposition benches participated the debate and majority of lawmakers were unanimous that the country is in the grip of unprecedented inflation, poverty, unemployment and social injustices.

They asked the government to impose the direct taxes, broaden tax net by bringing stock exchange, real estate and other sectors, which are still out of it.

They also agreed to reduce GST in the range of 5-7 percent. Most of the members from both sides of the aisle showed resentment over the present law and order situation in the country fearing that in such an environment investment would not come to Pakistan and recommended that an handsome amount should be earmarked to maintain writ of the law.

Later, the Upper House passed the Law Reform Bill, 2007, and the Bill to further amend to Federal Public Service Commission (Amendment) Bill 2007, which were already passed by the National Assembly.

http://www.brecorder.com/index.php?id=531126&currPageNo=1&query=&search=&term=&supDate=


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## Neo

February 22, 2007 
*Foreign lenders give $1.2bn in 8 months*

By Sher Baz Khan

ISLAMABAD, Feb 21: Pakistan received $1.203bn loans from the Asian Development Bank (ADB) and World Bank (WB) just in the last eight months.

Minister of State for Economic Affairs and Statistics Hina Rabbani Khar informed the National Assembly in a written reply here on Wednesday that of the total amount $956.2m were borrowed from the ADB and $247.2million from the WB.

The Asian Development Bank provided $30.2m from its Asian Development Fund (ADF) with an interest rate of 1 per cent during the grace period and 1.5 per cent thereafter.

The ADB provided another $926.2m from its Ordinary Capital Resource (OCR) on London Inter-Bank Offered Rate (LIBOR) for six months in US dollars plus 60bps.

The WB provided $22.2m on 0.75 per cent interest rate, $200m on LIBOR six months and $25m on LIBOR 12 months.

In response to a similar question, Minister of State for Finance Omar Ayub Khan told the Parliament that the government obtained Rs13bn from domestic sources between January to June last year.

The countryÃ¢â¬â¢s foreign debt and liabilities increased by 5.73 per cent on June 30, 2006 compared to the outstanding stock by the end of December 31, 2005. During this period, the country received $880m from China, Japan, ADB and other financial institutions.

Ms Khar said the Pakistan had not provided any loans to Afghanistan and neither the country had received any demand from the Afghan government in this regard.

However, Pakistan had earmarked $300m for the reconstruction and rehabilitation of the war-torn country.

In reply to a query, she said Japan had provided $411.61m to Pakistan during the last five years of which $150m was non-project grant aid (NPGA) and $261.6m project grant aid.

Answering a question regarding the Rozgar Scheme, Omar Ayub said the government had allocated Rs250m for the scheme in the current yearÃ¢â¬â¢s budget through a supplementary grant. The National Bank of Pakistan (NBP) was granting loans to the applicants from its own resources and the federal government would contribute towards interest rate subsidy and disability insurance and credit loss.He said the NBP had also publicised the details of the scheme through media advertisements in the national press, TV channels and NBP website.

http://www.dawn.com/2007/02/22/ebr2.htm


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## Owais

*PSO, other oil and gas sector sell-offs before June 30: Prime Minister *

ISLAMABAD (February 22 2007): Prime Minister Shaukat Aziz on Wednesday announced that Pakistan State Oil (PSO) and other major oil and gas sector transactions will be completed before June 30. He spoke on privatisation of major public sector entities and other key issues relating to economy while addressing a two-day Euromoney conference held here.

The event is organised by Euromoney Investment Inc and its local sponsors BMA, Citigroup, Standard Chattered, JS, BOI and MCB Bank. Around 600 delegates are participating and 160 are from abroad.

Shaukat Aziz told the participants that Pakistan's success story for a turnaround in economy is unique on various accounts. It enjoys an ideal strategic location with unique potential for attracting the investors. He cited a number of areas, which were open for investment and asked the investors to come and invest in Pakistan to get good dividend on their money. These were telecom, communications, agribusiness, retail and whole sale business, banking sector, infrastructure and livestock.

The Prime Minister said Pakistan travelled a long and hard journey during the last seven years to achieve financial sovereignty and its reforms' programme worked as a catalyst to help it emerge as a strong economy on the world map.

Shaukat was upbeat about Pakistan's future, said that in next few years he could foresee Pakistan as a stronger regional player, having a promising market for trade and investment.

He said that doing business in Pakistan was now much easier as all the departments including CBR were facilitating the investors and businessmen in identifying potential areas for investment. He said the reforms' agenda helped Pakistan change a peculiar mindset of the bureaucracy to make it feel that sovereignty and state interest were not fragile things, which one could steal away in a briefcase.

The Prime Minister also spoke on challenges confronted by Pakistan and said that like many other countries Pakistan also faces challenges and making all out efforts to improve the situation in different areas. He referred to infrastructure and other facilities, which play an important role in securing investment. He said Pakistan is a country of 160 million friendly people and asked the participants particularly the foreigners to move around and see Pakistan's its real image.

He said today Pakistan is open to all kind of investment and trade and its global partners have great confidence in its economic growth and prosperity. He referred to the increasing foreign direct investment (FDI) during the last few years in support of his arguments.

Later on, the Prime Minister told a questioner that any foreign company irrespective of its business concern in any other country including India could come to Pakistan and invest in any sector of its choice.
http://brecorder.com/index.php?id=531050&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Large deposits of soapstone found in Kurram Agency *
PESHAWAR: Large deposits of soapstone have been found in Kurram Agency and authorities working over mining and international marketing of about 3.6 million tons deposits. 

A meeting was held in Peshawar in connection with mining and international marketing of Kurram Soapstone. 

The meeting was attended by officials of FATA Development Authority (FDA), Maniar group of companies and HZM U.F Minerall of Italy. 

The meeting was told that Maniar Group was arranging a visit of experts of Mondo Mineral of Germany to the area to work out the reserves of soapstone and enhance its production. 

The company informed that they had already secured an annual export order of 10,000 tons soapstone and they were planning to increase the quantum of export to 1,00,000 tons annually through application of modern mining techniques and machinery. 

It is to be pointed out that world-class soapstone deposits of about 3.6 million tons are available at an altitude of 10,000 feet, which remain snow covered for more than five months a year and thus the use of conventional machinery is a problem. The company is now planning to import all weather mining machinery. 
http://geo.tv/geonews/details.asp?id=2490&param=3


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## Neo

*Foreign power co to invest $400 million in Uch, $220 million in KAPCO, PM told *

ISLAMABAD: February 22, 2007: Prime Minister Shaukat Aziz said on Thursday the demand in power sector is growing by 9.5 percent annually mainly due to high growth achieved by the country and the government is engaged in tapping all available sources to keep a balance between demand and supply. 

He was talking to Vince Harrris, Executive Director Asia, International Power Ple who called on him here. 

Vince Harrris is visiting Pakistan to attend Euro Money Conference. 

The PM said that the surge in demand of power is mainly due to better living standards, growing middle class, electrification of rural areas and increase in irrigation and industrial demand; all of which necessitates more electricity generation. 

Underlining the importance of energy security for high growth, sustaining progress and development, the PM said the government is trying to diversify the sources of energy and maximise output from hydro power and other alternate energy sources including solar, wind, biogas and bio-diesel. 

Under the energy security strategy, Aziz said, government will exploit all available resources of commercially viable energy both domestically as well as from abroad. 

In the oil and gas sector, he said the government is focusing both on enhancing the indigenous capacity as well as on importing gas from the neighbouring countries. 

The PM said that the private sector is contributing in the government's efforts to bridge the gap between demand and supply in the power sector. 

He said that the government is encouraging investments by the private sector and a level playing field has been provided to local and foreign investors. 

Vince Harrris said he was impressed by the rapid pace of growth in Pakistan. 

He appreciated the investment friendly policies of the government and the enabling environment created by it to facilitate the investors. 

Vince Harrris said his group is planning to expand their operations in Pakistan and they will invest $400 million in Uch Power Plant and $ 220 million in the KAPCO. 

The meeting was attended among others by Minister for Water and Power Liaquat Ali Jatoi and senior officials

http://www.brecorder.com/


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## Neo

*NIKE to import 0.1 million Soccer Balls monthly from Pakistan *

ISLAMABAD: February 22, 2007: NIKE has placed a tender for importing 100,000 Soccer Balls monthly from Pakistan.

Federal Minister of Labour Manpower & Overseas Pakistanis Ghulam Sarwar Khan said while addressing the two-day "Stake holders Workshop-Sialkot Soccer Ball Industry-Partnership and Ways Forward", conducted jointly by the Government and ILO here on Thursday. 

The minister informed the gathering this development was the outcome of meeting of Prime Minister Shaukat Aziz with President of NIKE at Davos last month. 

He said the government was committed to strictly follow "Decent Work Agenda". 

Ghulam Sarwar Khan said the government is strictly implementing international standards and labour laws pertaining to workers rights and working conditions in the industrial sector. 

He said National Policy on Child Labour, Bonded Labour, Labour Inspecting Policy and Labour Protection Policy are the proof that the government was providing full protection to the workers. 

He expressed hope that Sialkot Chamber of Commerce and Industry would seize this opportunity to meet export orders of NIKE and enjoy international recognition of meeting International labour Standards besides providing substantial number of jobs to workers in soccer ball industry. 

The minister thanked ILO Executive Director Kari Taiola, FIFA, Employers Federation of Pakistan, Employees Federation of Pakistan and other national and international stakeholders to play a pivotal role in the efforts to address the problems of sports goods manufacturing industry. 

http://www.brecorder.com/


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## Neo

*Temasek keen to invest $300 million in banking sector, PM told *

ISLAMABAD: February 22, 2007: Temasek, owned by the government of Singapore will make an investment of $300 million in Pakistan's banking sector, CEO Asia Financial Holdings Francis A Rozario informed Prime Minister Shaukat Aziz on Thursday.

Francis A Rozario, also the Chairman NIB Bank who is visiting here to attend the Euro Money Conference called on Prime Minister Aziz at the PM House today.

Rozario informed the Prime Minister that Temasek held 74 percent shares of NIB Bank and was working to acquire all financial entities of PICIC Commercial Bank.

He said his group intended to set-up a universal bank in Pakistan, which will serve the middle and low-income group customers and the self-employed people. He said his group would particularly focus on lending to small and medium enterprises.

Prime Minister Shaukat Aziz welcomed Temasek's investment in Pakistan and said it reflected the growing confidence of international community on the success of economic and structural reforms implemented by the government during the last seven years.

The prime minister appreciated the growing economic ties between Pakistan and Singapore and said the recently signed agreement between Gwadar Port Authority and Port of Singapore Authority would give tremendous boost to financial and industrial activities in the area.

Aziz mentioned the banking industry which had been transformed from a state-owned sector to a vibrant private sector industry and needed to come up with new products and services.

He said the government's strategy for improving investment climate in the country was multi-pronged marked by financial sector and taxation reforms, dismantling of archaic procedures, better enforcement of civil contracts and documentation of property rights, infrastructure development and consistency.

The meeting was also attended by President and Chief Executive Officer NIB Iqbal Hasan and senior officials.

http://www.brecorder.com/


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## Neo

*ADB to extend $800 million loan for Pakistan's power sector *
Thu, 22 Feb 2007 

Islamabad, Feb 22 (Xinhua) The Asian Development Bank (ADB) is extending a loan of up to $800 million over the period 2007-2016 for Pakistan's power transmission growth.

The assistance will be used in upgrading power distribution systems and transmission lines in order to increase system efficiency and stable supply of electricity to consumers besides major rehabilitation and infrastructure projects in the water sector, Director General of ADB's Central and West Asia Department Juan Miranda was quoted by APP as saying in Islamabad.


The ADB official said that in the first phase, the ADB will focus on financial assistance of extension of Pakistan's existing 220 KV and 500 KV sub-stations and construction of associated transmission lines.

Accordingly, ADB also agreed in principle to finance 10 MW pilot wind power plant and technical assistance for overall studies related to wind potential in various wind corridor of the country.

The bank also assured its strong support for financing mega water reservoir projects and infrastructure development projects in water sector.

Talking to the ADB delegation on Thursday, Pakistani Federal Minister of Water and Power, Liaquat Ali Tatoi said that Pakistan' s power sector was currently undergoing reforms and restructuring and necessary ground work had been done in this regard, which were fully supported by the ADB. 

http://www.earthtimes.org/articles/show/33342.html


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## Owais

*Etisalat announces to invest $500 mln in Pakistan * 
ISLAMABAD: Chairman of Etisalat International, Mohammad Hassan Omran, has announced to invest 500 million dollar while a plan to widen PTCL fixed-line network by knitting one million more PTCL telephones has also been made in Pakistan. 

Addressing a fucntion here Tuesday, he said the economic stability achieved by Pakistan has created a productive atmosphere for investment. He added that Etisalat was impressed with the performance and quality of employees of PTCL and has posted a number of them in their overseas operations. 

He said Etisalat is committed to transform PTCL into a world class company and it will bring expansion in areas of fixed lines, cellular phones, broad band, domestic and long distance calls. 


http://geo.tv/geonews/details.asp?id=2485&param=3


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## Owais

*Pakistan and Saudi Arabia to establish special economic partnership *

ISLAMABAD (February 23 2007): Pakistan and Saudi Arabia have decided to establish special economic partnership for co-operation in health, education, railway, food and agriculture, religious affairs, science and technology, labour and manpower, tourism, trade as well as industry.

The agreement was made in the 8th session of the Pak-Saudi Joint Ministerial Commission headed by Commerce Minister Humayun Akhtar Khan and Minister of Commerce and Industry of the Kingdom of Saudi Arabia Dr Hashim A Yamani at the conference palace in Riyadh on Wednesday, says a message received here on Wednesday.

Both the sides agreed to hold the 9th session of Saudi-Pakistan Joint Commission in Islamabad in 2008 on a date to be mutually decided through consultation. Both states noted that to balance the bilateral trade, which is heavily in favour of Saudi Arabia and Pakistan offered export of ready-made garments, cotton products, engineering goods, consumer goods, pharmaceutical, rice, textile fabrics, sports goods, and surgical instruments.

Both the sides expressed their hope to reach on agreement between GCC and Pakistan to create a free-trade area which covers trade in goods and services by the end of 2007.

Pakistan and Saudi Arabia also agreed to arrange roads shows and exhibitions to showcase the products of both the countries encourage business to business interaction and visa facilitation. The Saudi government was requested to relax and rationalise their standard requirements and duties on export from Pakistan and allow Pakistan private investment in the free re-export zone of Saudi Arabia,

Both sides agreed to enhance co-operation in the field of manufacturing of medical/surgical equipment, which includes hospital supplies (beds, stretchers, bedpans, crutches, walkers, and wheel chairs etc).

Pakistan offered free of cost training facilities for the Saudi doctors and nurses in the field of therapeutic and diagnostic services, neuro-surgery, cardiovascular surgery and Pediatrics. Pakistan and Saudi Arabia also agreed for establishing academic linkage between Quaid-e-Azam University and National Institute of Science & Technical Education, Islamabad, with Saudi Arabia and exchange visits of academicians, scholars and teachers and exchange of printed material of education interests and to initiate joint programmes, chalked out with mutual consultation, in the field of emerging technologies such as VOIP, NGN (Next generation network), WLL (wireless local loop).

Pakistan offered training facilities to Saudi Railways personnel in various disciplines of railways and asked the Saudi side to identify the fields of their interest.
http://brecorder.com/index.php?id=531435&currPageNo=1&query=&search=&term=&supDate=


----------



## Owais

*Inflation rate 8 &#37; in 1st quarter *
KARACHI: During the first seven months of the current fiscal year, the rate of inflation remained eight per cent while the rate of increase in eatables has been 10.3 per cent.

According to the Inflation Monitor released by the central bank, during the period of July to January the rate of inflation was 8.12 per cent whereas the rate recorded in food inflation was 10.3 per cent and non-food inflation was 6.6 per cent.

As per the State Bank of Pakistan, prices of eatables were increased due to the difference in demand and supply while prices like milk, meat, pulses, vegetable ghee and sugar, which were included in the 124 items of food index, increased from 10 to 60 per cent.
In January, food inflation was from 10 to 13 per cent in 12 cities of the country.

Food items in Okara and Quetta proved more costly while they can be considered cheaper in Sukkur and Abbottabad where food inflation remained four per cent. 
http://geo.tv/geonews/details.asp?id=2514&param=3


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## Neo

*Inflation gradually reducing, says Shaukat *

ISLAMABAD (February 23 2007): Prime Minister Shaukat Aziz Thursday said that inflation has started to gradually reduce in the country through effective use of monetary policy by the State Bank and better efforts to ensure smooth availability of supplies and improving the overall logistics chain.

The Prime Minister said this during a meeting with Governor State Bank, Shamshad Akhtar who called on him here at the PM House on Thursday afternoon. The Prime Minister said that timely and effective use of the monetary policy is critical to control.

He said that it is gratifying that the current trends look positive with inflation gradually reducing. He welcomed various initiatives taken by the State Bank. Governor State Bank also presented the Prime Minister with a copy of the new Rs 1,000 note and briefed him about its security features.

The Prime Minister said that the well-designed reform agenda has put the banking sector on sound footing. He, however, emphasised the need for the banking sector to cater to the under-served members of the society particularly low income people, small and medium enterprises, self-employed people, youth and farmers. The meeting also discussed the financial sector and banking reforms which have enabled the banking sector to attract investment from all over the world.

http://www.brecorder.com/index.php?id=531462&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pakistan and Saudi Arabia to establish special economic partnership *

ISLAMABAD (February 23 2007): Pakistan and Saudi Arabia have decided to establish special economic partnership for co-operation in health, education, railway, food and agriculture, religious affairs, science and technology, labour and manpower, tourism, trade as well as industry.

The agreement was made in the 8th session of the Pak-Saudi Joint Ministerial Commission headed by Commerce Minister Humayun Akhtar Khan and Minister of Commerce and Industry of the Kingdom of Saudi Arabia Dr Hashim A Yamani at the conference palace in Riyadh on Wednesday, says a message received here on Wednesday.

Both the sides agreed to hold the 9th session of Saudi-Pakistan Joint Commission in Islamabad in 2008 on a date to be mutually decided through consultation. Both states noted that to balance the bilateral trade, which is heavily in favour of Saudi Arabia and Pakistan offered export of ready-made garments, cotton products, engineering goods, consumer goods, pharmaceutical, rice, textile fabrics, sports goods, and surgical instruments.

Both the sides expressed their hope to reach on agreement between GCC and Pakistan to create a free-trade area which covers trade in goods and services by the end of 2007.

Pakistan and Saudi Arabia also agreed to arrange roads shows and exhibitions to showcase the products of both the countries encourage business to business interaction and visa facilitation. The Saudi government was requested to relax and rationalise their standard requirements and duties on export from Pakistan and allow Pakistan private investment in the free re-export zone of Saudi Arabia,

Both sides agreed to enhance co-operation in the field of manufacturing of medical/surgical equipment, which includes hospital supplies (beds, stretchers, bedpans, crutches, walkers, and wheel chairs etc).

Pakistan offered free of cost training facilities for the Saudi doctors and nurses in the field of therapeutic and diagnostic services, neuro-surgery, cardiovascular surgery and Pediatrics. Pakistan and Saudi Arabia also agreed for establishing academic linkage between Quaid-e-Azam University and National Institute of Science & Technical Education, Islamabad, with Saudi Arabia and exchange visits of academicians, scholars and teachers and exchange of printed material of education interests and to initiate joint programmes, chalked out with mutual consultation, in the field of emerging technologies such as VOIP, NGN (Next generation network), WLL (wireless local loop).

Pakistan offered training facilities to Saudi Railways personnel in various disciplines of railways and asked the Saudi side to identify the fields of their interest.
Pakistan and Saudi Arabia to establish special economic partnership 
ISLAMABAD (February 23 2007): Pakistan and Saudi Arabia have decided to establish special economic partnership for co-operation in health, education, railway, food and agriculture, religious affairs, science and technology, labour and manpower, tourism, trade as well as industry.

The agreement was made in the 8th session of the Pak-Saudi Joint Ministerial Commission headed by Commerce Minister Humayun Akhtar Khan and Minister of Commerce and Industry of the Kingdom of Saudi Arabia Dr Hashim A Yamani at the conference palace in Riyadh on Wednesday, says a message received here on Wednesday.

Both the sides agreed to hold the 9th session of Saudi-Pakistan Joint Commission in Islamabad in 2008 on a date to be mutually decided through consultation. Both states noted that to balance the bilateral trade, which is heavily in favour of Saudi Arabia and Pakistan offered export of ready-made garments, cotton products, engineering goods, consumer goods, pharmaceutical, rice, textile fabrics, sports goods, and surgical instruments.

Both the sides expressed their hope to reach on agreement between GCC and Pakistan to create a free-trade area which covers trade in goods and services by the end of 2007.

Pakistan and Saudi Arabia also agreed to arrange roads shows and exhibitions to showcase the products of both the countries encourage business to business interaction and visa facilitation. The Saudi government was requested to relax and rationalise their standard requirements and duties on export from Pakistan and allow Pakistan private investment in the free re-export zone of Saudi Arabia,

Both sides agreed to enhance co-operation in the field of manufacturing of medical/surgical equipment, which includes hospital supplies (beds, stretchers, bedpans, crutches, walkers, and wheel chairs etc).

Pakistan offered free of cost training facilities for the Saudi doctors and nurses in the field of therapeutic and diagnostic services, neuro-surgery, cardiovascular surgery and Pediatrics. Pakistan and Saudi Arabia also agreed for establishing academic linkage between Quaid-e-Azam University and National Institute of Science & Technical Education, Islamabad, with Saudi Arabia and exchange visits of academicians, scholars and teachers and exchange of printed material of education interests and to initiate joint programmes, chalked out with mutual consultation, in the field of emerging technologies such as VOIP, NGN (Next generation network), WLL (wireless local loop).

Pakistan offered training facilities to Saudi Railways personnel in various disciplines of railways and asked the Saudi side to identify the fields of their interest.
Pakistan and Saudi Arabia to establish special economic partnership 
ISLAMABAD (February 23 2007): Pakistan and Saudi Arabia have decided to establish special economic partnership for co-operation in health, education, railway, food and agriculture, religious affairs, science and technology, labour and manpower, tourism, trade as well as industry.

The agreement was made in the 8th session of the Pak-Saudi Joint Ministerial Commission headed by Commerce Minister Humayun Akhtar Khan and Minister of Commerce and Industry of the Kingdom of Saudi Arabia Dr Hashim A Yamani at the conference palace in Riyadh on Wednesday, says a message received here on Wednesday.

Both the sides agreed to hold the 9th session of Saudi-Pakistan Joint Commission in Islamabad in 2008 on a date to be mutually decided through consultation. Both states noted that to balance the bilateral trade, which is heavily in favour of Saudi Arabia and Pakistan offered export of ready-made garments, cotton products, engineering goods, consumer goods, pharmaceutical, rice, textile fabrics, sports goods, and surgical instruments.

Both the sides expressed their hope to reach on agreement between GCC and Pakistan to create a free-trade area which covers trade in goods and services by the end of 2007.

Pakistan and Saudi Arabia also agreed to arrange roads shows and exhibitions to showcase the products of both the countries encourage business to business interaction and visa facilitation. The Saudi government was requested to relax and rationalise their standard requirements and duties on export from Pakistan and allow Pakistan private investment in the free re-export zone of Saudi Arabia,

Both sides agreed to enhance co-operation in the field of manufacturing of medical/surgical equipment, which includes hospital supplies (beds, stretchers, bedpans, crutches, walkers, and wheel chairs etc).

Pakistan offered free of cost training facilities for the Saudi doctors and nurses in the field of therapeutic and diagnostic services, neuro-surgery, cardiovascular surgery and Pediatrics. Pakistan and Saudi Arabia also agreed for establishing academic linkage between Quaid-e-Azam University and National Institute of Science & Technical Education, Islamabad, with Saudi Arabia and exchange visits of academicians, scholars and teachers and exchange of printed material of education interests and to initiate joint programmes, chalked out with mutual consultation, in the field of emerging technologies such as VOIP, NGN (Next generation network), WLL (wireless local loop).

Pakistan offered training facilities to Saudi Railways personnel in various disciplines of railways and asked the Saudi side to identify the fields of their interest.

http://www.brecorder.com/index.php?id=531435&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pharma companies fear Chinese entry into Pak markets *

By Muhammad Yasir

KARACHI: PakistanÃ¢â¬â¢s pharmaceutical companies seek immediate steps to check the flood of imported medicines.

Nearly 150 multinational companies have submitted inquires to the ministry concerned (Drug Control Authority) during the last four months and they could be awarded the licence to import medicines after successfully qualifying the criterion of the Health Ministry.

Pharmaceutical manufacturers said that about 80 per cent of the interested foreign companies would be importing products already being manufactured by many local companies.

Presently, pharmaceutical products from the US, UK, India, Spain, Australia and some other countries are imported. However, these products are limited to medicines not manufactured locally. The pharma manufacturers fear a liberal import policy.

Again China has emerged as a threat to the Pakistani industrial sector. Chinese pharmaceutical companies have signed about 250 inquires of different products following a Free Trade Agreement inked in November last year.

China with its cheap prices will knock down national companies, which are still facing losses, a leading pharmaceutical manufacturer said on condition of anonymity.

The rising cost of production, particularly utility, land prices and miscellaneous taxes is the main grievance of the industry, which is not leveraging them to further their growth. 

He said the government is unable to stop Chinese products owing to signing of FTA, however, the government could endeavour to arrange export of medicines to China, which could balance the trade between the two sides.

He added that Chinese markets could be lucrative for Pakistani pharmaceuticals if the products are exported, but the criterion, process and fees charged by China are the strong barriers in the way of Pakistani companies.

Dr Farnaz Malik, Secretary Drug Control Authority said that inquiries relating to price and quality of Chinese and other foreign products are under process.

She added that government would not allow import of basic products being prepared locally. 

However, Pharmaceutical manufacturers said the basic products are very limited in categories and restricting the import of these basic medicines could not protect countryÃ¢â¬â¢s pharmaceutical sector. Chairman Pakistan Pharmaceutical Manufacturer Kaiser Waheed suggested the government should only allow import of medicines not manufactured in Pakistan instead of opening doors for foreign makers.

Ã¢â¬ÅImports of vaccines and medicines not available in the country are acceptable and these should be imported according to the countryÃ¢â¬â¢s requirement,Ã¢â¬Â he added. 

He said the government should encourage the domestic industries by providing special incentives to the pharmaceutical sector in order to get self-sufficient in this sector.

Pakistan also imports pharmaceutical products from USA, UK, India, Spain, Australia and some other countries.

http://www.thenews.com.pk/daily_detail.asp?id=44034


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## Neo

*Auto industry needs Rs250bn investment: Tareen *

KARACHI: Federal Minister for Industries Jehangir Khan Tareen has said the government envisages annual production of cars in the country to be around 500,000 after five years, which would require investment of Rs250 billion.

Ã¢â¬ÅHowever, we would ensure that with rising numbers the quality does not go down. Quality is our slogan now,Ã¢â¬Â he said while talking to reporters after inaugurating the PAPS 2007, an international exhibition organised by the Pakistan Association of Automotive Parts and Accessories Manufacturers at the Expo Centre here on Thursday.

He said the government wanted the manufacturers to produce vehicles of the same quality as Japanese manufacturers. He said the government wanted to support the manufacturers and vendors because their industries were labour-intensive, providing hundreds of thousands of jobs.

Ã¢â¬ÅWe are going to form a company, which would be tasked with skill development of youngsters, to prepare them for auto partsÃ¢â¬â¢ industry,Ã¢â¬Â Tareen said. Ã¢â¬ÅWe have a long-term goal of making our vendors competitive in the world.Ã¢â¬Â

To a question, he said the governmentÃ¢â¬â¢s first priority was to meet the demand for cars through local manufacturing, but it had to allow import of cars because of the problems of waiting period and premium. Ã¢â¬ÅWhen the local industry is able to meet the whole demand, there shall be no import.Ã¢â¬Â

To another query, the minister said the government had first asked the cement manufacturers to cut prices, when they were rising fast. Ã¢â¬ÅNow the government has instructed them to bring down the prices to the level from where they had started,Ã¢â¬Â he said.

Ã¢â¬ÅIf the manufacturers do not do that we may withdraw the rebate we are offering on cement exports, we may ban exports and as a last resort allow import of cement,Ã¢â¬Â he said.

Chairman of the association, Shariq Suhail said with registered membership base of 278 members and general manufacturersÃ¢â¬â¢ base of over 1,200 companies, the PAAPAM had under its wings manufacturing companies, making parts for Pakistani cars, motorcycles, tractors, trucks and busesÃ¢â¬â¢ assemblers. Ã¢â¬ÅThe investment now exceeds $1.5 billion.Ã¢â¬Â

He said the PAAPAM member firms manufactured sophisticated parts like pistons, engine valves, gaskets, camshafts, shock absorbers and struts, steering machines, cylinder head, wheel hubs, brake drums, wheel bumpers, instruments and instrument panels, gears of all types, radiators, cylinder liners, blinkers and lights, door locks, auto air conditioners, etc.

The industry has been by and large developed by indigenous resources. Some units have been set up through technical tie-ups with well-known multinationals, both Japanese and western.

Shows like PAPS are aimed at showing the strength of the industry to the government and public and create a positive perception. Its objectives include providing information to policy-makers, creating awareness among general public and seeking the government support in terms of growth-oriented consistent policies.

PakistanÃ¢â¬â¢s auto manufacturers are facing a number of problems mainly because of inconsistent government policies. PartsÃ¢â¬â¢ manufacturers specialise in production of tools of local vehicles only. If the demand for local vehicles goes down, the demand for parts will also go down.

http://www.thenews.com.pk/daily_detail.asp?id=44035


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## Neo

*IT industry aims to gain from global expertise *

KARACHI: Pakistan is keen to work with regional and international telecommunication bodies to benefit from global expertise being extended to member countries through various well-targeted programmes, a senior official said on Thursday.

Ã¢â¬ÅThe government as well as cellular industry can benefit immensely from the global expertise being offered by organisations such as GSMA to help member countries further the pace of growth in the field of telecommunication,Ã¢â¬Â a telecom ministry statement quoted federal Secretary Farrakh Qayyum as saying.

It said the secretary expressed these views after his return from Barcelona where he had gone as the head of a delegation, including senior government officials and representatives of mobile phone companies, to participate in the 3GSM World Congress, the premier event of the GSM Association (GSMA) which represents over 700 cellular phone operators worldwide.

Ã¢â¬ÅPakistan would actively work with the GSMA by being part of various future joint programmes and pilot projects of the association to make sure that all possible benefits of mobile phone coverage are leveraged for further growth of the market and for the ultimate benefit of the whole cross-section of Pakistani consumers,Ã¢â¬Â he added.

He said the global telecom community as well as the GSMA leadership had hailed what they saw as a conducive environment provided by the government for the telecom sector and especially for the cellular industry.

He said PakistanÃ¢â¬â¢s delegation attended and actively participated in various forums such as leadership summit, government mobile forum, panel discussions and other important congress events besides holding meetings with the GSMA leadership and heads of various companies involved in mobile banking value chain, including CEO of SMART Communications Philippines who had been successfully running such applications.

Ã¢â¬ÅIt was agreed that joint work will be undertaken to explore implementation possibilities for an improved system in Pakistan,Ã¢â¬Â added the secretary. 

http://www.thenews.com.pk/daily_detail.asp?id=44048


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## Neo

Friday, February 23, 2007 

*Ã¢â¬ËFDI has reached $3.5b in H1 of current fiscalÃ¢â¬â¢*

ISLAMABAD: Prime Minister Shaukat Aziz on Thursday said that the deep and comprehensive reforms in the financial services sector have been greatly instrumental in encouraging Foreign Direct Investment (FDI) in Pakistan.

FDI from an average of $300 million per year in the 90s has reached $3.5 billion in the first half of the current financial year. The PM said this while talking to Global Banking Asia Pacific Citi Group Vice-Chairman Shengman Zhang, who called on him at PM House.

The PM said that the FDI is expected to surpass the $5 billion mark by the end of the year and it has started coming in from all over the world especially from the Far East as a result of PakistanÃ¢â¬â¢s Look East policies.

Pakistan is also working on demutualisation of the capital market and the stock exchange is encouraging Pakistani companies to seek foreign equity and debt globally. The Security Exchange Commission of Pakistan (SECP), he said has been strengthened to provide good corporate governance and comply with international accounting standards.

http://www.dailytimes.com.pk/default.asp?page=2007\02\23\story_23-2-2007_pg5_8


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## Neo

*Banking industry is attracting unprecedented high foreign investments: PM Aziz *
Friday February 23, 2007 

ISLAMABAD: Prime Minister Shaukat Aziz has said that the banking industry which has gained strength as a result of the financial sector reforms is attracting unprecedented high foreign investments and significant expansion is taking place in the financial sector. 
The Prime Minister was talking to Mr. Francis A Rozario, Chairman NIB Bank and CEO, Asia Financial Holdings who called on him here on Thursday. Mr.Francis A Rozario is visiting Pakistan to attend the Euro Money Conference. 

The Prime Minister emphasized that the banking industry which has been transformed from a state owned sector to a vibrant private sector industry needs to come up with new products and services to serve the less privileged sections of society. 

Mr. Francis A Rozario informed the Prime Minister that Temasek, which is owned by the government of Singapore, will make an investment of $ 300 million in Pakistan. It now holds 74 percent shares of NIB Bank and working to acquire all the financial entities of PICIC Commercial Bank. 

He said his group intends to setup a truly universal Bank in Pakistan, which will serve the middle & low-income group customers and self employed people. He said his group would particularly focus on lending to small and medium enterprises (SMEs) 

Mr. Francis A Rozario said the success of a broad based reform agenda of the Pakistan government has created tremendous potential in the financial sector of Pakistan and Asia Financial Holdings is keen to expand its operations in Pakistan. 

The Prime Minister welcomed the investments by Tamasek in Pakistan and said this reflects the growing confidence of international community in the success of the economic and structural reforms implemented by the government during the last seven years. 

The Prime Minister appreciated the growing economic ties between Pakistan and Singapore. He said the recently signed agreement between Gwader Port Authority and Port of Singapore Authority will give a tremendous boost to the financial and industrial activities in and around Gwader. 

The Prime Minister said Pakistan of today and tomorrow is entirely different from the Pakistan of yesterday. Today, it is recognized as a leading emerging nation of the world, rapidly transforming into a major market economy with large products, services and labours market and a world class manufacturing and servicing sector of the region. 

He said our strategy for improving investment climate in the country is multi-pronged marked by financial sector and taxation reforms, dismantling of archaic procedures, better enforcement of civil contracts and documentation of property rights, infrastructure development and above all, ensuring consistency and continuity of government policies which is yielding positive results. 

The meeting was also attended among others by President and Chief Executive Officer NIB Mr. Iqbal Hasan and senior officials. 

http://www.paktribune.com/news/index.shtml?169901


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## Neo

*India, Pakistan agree on gas, not costs *
Fri, 23 Feb 2007 

ISLAMABAD, Pakistan, Feb. 23 India and Pakistan on Friday agreed to share gas from Iran, but there was still no understanding on transportation and transit costs.

At the end of the two-day meeting between the two sides in Islamabad, Pakistan's Petroleum Secretary Ahmad Waqar said the two countries agreed to receive 60 million standard cubic meters of gas per day and share 30 mmscmd each in the first phase. The rest would be shared in the project's next phase.

We have agreed to complete documentation and we will be able to sign the final document by June 2007, he said. He said Pakistan agreed in principle to the formulation of transportation costs involved in carrying the gas from the Iran-Pakistan border to the Pakistan-India border.

We agreed with India (on the formulation). However, final tariff will be based on actual technical and financial inputs to be worked out by officials in coming weeks, he said. There was no understanding, however, on transport and transit fees.

Indian Petroleum Secretary M.S. Srinivasan said Pakistan's proposed tariff was up to2 ÃâÃÂ½ times more that what is usually applied to similar distances. And on transit fees, Pakistan wanted 57 cents per million British thermal unit, while India said it will pay 15 cents per mBtu.

The $7 billion pipeline would run from Iran to India via Pakistan. The South Asian rivals both have rapidly growing economies and need the energy to fuel economic growth. The United States opposes the deal because it says it will embolden Iran, which is facing international scrutiny for its nuclear program.

The IPI pipeline, as it is known, also faces other hurdles, including financing. It is unclear if the political situation in the region is stable enough for the pipeline to receive funding from 

http://www.earthtimes.org/articles/show/33656.html


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## Janbaz

*NBP to disburse Rs105b under Rozgar Scheme*

MASHIUR RAHAMAN
KARACHI - National Bank of Pakistan (NBP) would provide a huge amount of Rs 105 billion loans under Rozgar Schemes for 2 to 5 years terms.
The bank would charge a fix rate of return of 6 per cent plus 2 per cent KIBOR on loans, to be provided to unemployed persons for creating business opportunities in the country and to reduce the impact of poverty. It was officially disclosed by the Chairman and President NBP Ali Raza in a press briefing on Friday.
According to him, NBP has been an important contributor to PakistanÃ¢â¬â¢s economy, which has witnessed unprecedented growth during the last few years. In order to translate the benefit of the countryÃ¢â¬â¢s macro economic stability to reduce unemployment and poverty alleviation, NBP has structured commercially viable products, which are expected to contribute to the growth of the bank, its stakeholders and most importantly the nation. 
Here, NBP and GOP in line with PresidentÃ¢â¬â¢s vision have launched the Rozgar Scheme at NBP. The scheme is being marketed under the brand name of Ã¢â¬ÅNBP-KAROBARÃ¢â¬Â by NBP. It is open for all banks equally to participate.
However, the scheme was test launched in October 2006 from 125 NBP branches throughout Pakistan. Full launch of the scheme is planned for March 31, 2007 in approx. 1000 branches. Currently NBP is offering five financing products under NBP Karobar as NBP Karobar Utility Store (under a Franchise with Utility Stores Corporation) to provide financing facility up to a maximum amount of Rs 200,000 for a maximum period of five years. 
Secondly, the NBP Karobar Mobile General Store (without USC Franchise), which has been designed on the similar pattern of Mobile Utility Store with the liberty of procuring stock/supplies/grocery items from open market. Under this product maximum financing amount of Rs 200,000 will be provided. 
The Third Scheme is the NBP Karobar Transport, which is designed to finance 4 stroke PetroVCNG/LPG Vehicle (Rickshaw) for providing less expensive environment friendly transport facility. 
Under this product maximum financing amount of Rs 200,000 will be provided.
Fourthly, the NBP Karobar PCO, designed to finance setting-up a PCO. It will be providing finance for the purchase of Mobile/Wireless/Desktop Telephone Set(s) with connection, Credit Balance(s). Financing for multiple telephone sets is also allowed along with credit balance i.e. customer can avail maximum of five (5) telephone sets in each finance with credit balances. The maximum financing amount under this product is Rs 50,000. Finally the NBP Karobar Tele-center which has been designed to finance setting-up a Tele-center. 
NBP will be providing financing for the purchase of Mobile/Wireless /Desktop Telephone Set with connection, Computer, Printer cum Fax machine cum Photocopier cum Scanner alongwith accessories, both to be establish Tele-center on a rented shop or owned premises. Under this product five (5) different financing packages are available ranging from Rs 42,500 to Rs 193,800.
According to information provided by the NBP officials, just like any other voluminous/retail product, NBP-Karobar is going through a test or a learning phase and will take time to generate pace as evident from an another product of NBP Ã¢â¬ÅAdvance SalaryÃ¢â¬Â, which has created history in Pakistan with disbursements of over Rs 86 billion to over 1.1 million customers in little over four (4) years. 
In NBP-Karobar, customer is learning that it is not a handout and only eligible applicants fulfilling requirements will get the loan and Bank is learning that some of the requirements may be relaxed without jeopardizing BankÃ¢â¬â¢s interest. 
For example, NBP has relaxed the requirements of age, driving license, education, character certificate, guarantors and reduction in down payment to 10 per cent from 15 per cent. Now the eligibility criteria are age between 18-45 years, having CNIC, resident of area for the last 2 years and must be unemployed.
No security required other than financed assets. 

The Nation.
http://www.nation.com.pk/daily/feb-2007/24/bnews1.php


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## Janbaz

*Large deposits of soapstone found in Kurram Agency *

PESHAWAR: Large deposits of soapstone have been found in Kurram Agency and authorities working over mining and international marketing of about 3.6 million tons deposits. 

A meeting was held in Peshawar in connection with mining and international marketing of Kurram Soapstone. 

The meeting was attended by officials of FATA Development Authority (FDA), Maniar group of companies and HZM U.F Minerall of Italy. 

The meeting was told that Maniar Group was arranging a visit of experts of Mondo Mineral of Germany to the area to work out the reserves of soapstone and enhance its production. 

The company informed that they had already secured an annual export order of 10,000 tons soapstone and they were planning to increase the quantum of export to 1,00,000 tons annually through application of modern mining techniques and machinery. 

It is to be pointed out that world-class soapstone deposits of about 3.6 million tons are available at an altitude of 10,000 feet, which remain snow covered for more than five months a year and thus the use of conventional machinery is a problem. The company is now planning to import all weather mining machinery.

Geo TV.
http://www.geo.tv/geonews/details.asp?id=2490&param=3


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## Owais

Neo said:


> *Pakistan and Saudi Arabia to establish special economic partnership *
> 
> http://www.brecorder.com/index.php?id=531435&currPageNo=1&query=&search=&term=&supDate=



Duplicate post bro.


----------



## Owais

*EU to ban most Pakistan Airlines planes: source *


BRUSSELS (updated on: February 23, 2007, 21:46 PST): The European Union is set to ban most of Pakistan International Airlines' fleet from flying to the 27-country bloc because of safety concerns, an EU source said on Friday.

The source said a committee of experts had decided to block all but seven planes of the airline's 40-plane fleet from flying to Europe for failing to meet international safety standards.

"Only those seven will be allowed to make flights to European Union countries," the source said. "The rest of the fleet will be blacklisted."

The decision is likely to come into force in about 10 days, the source said, once made official by the European Commission.

He said the decision could cause disruptions to passengers because the airline had flight connections to Britain, France, Germany, Greece, Italy and the Netherlands.

Last year the Commission banned nearly 100 airlines from operating in the bloc, targeting mostly African carriers after a spate of fatal crashes involving European passengers.

brecorder.com


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## Neo

*PPIB considers setting up 450 MW project for Faisalabad *

ISLAMABAD (February 24 2007): The Private Power Infrastructure Board (PPIB), which met with Minister for Water and Power, Liaquat Ali Jatoi, in the chair, considered the setting up of 450 MW power project to be located at Faisalabad, which will be the first project to be based on international competitive bidding (ICB) for procurement of electricity in the country.

The project would be run on dual-fuel system, that is, it would use gas and oil, and would be based on combined cycle technology. The project had earlier been marketed in international road shows on ICB basis, as a result of which international and local players of power sector had shown interest and, after undergoing a transparent process, seven companies of international repute have been pre-qualified for the bidding process.

The Board has allowed the pre-qualified companies to submit proposals on a pre-defined pattern and, after due evaluation, the project would be assigned to the qualifying bidder.

The consortium led by Citigroup, which is advisor for the project, also attended the meeting, and made a detailed presentation on various schedules of the bidding process from submission of proposal to financial close.

The Board noted that the issue of tariff for extension of power capacity by the existing IPPs, namely, Kohinoor Energy Limited, Tapal Energy Limited and Japan Energy Limited, have also been settled, and directed PPIB to expedite the process for its approval through ECC. Jatoi stressed the need to process the power projects on fast track basis, and instructed the advisors to shorten the time frame of the process involved for the 450 mw Faisalabad power project, so that the required power capacity could be provided to the national grid as soon as possible, which is very vital for boosting the economy of the country.

He said that establishment of the new power project in the country would help to meet the future rapidly increasing demand for power and also create job opportunities.

http://brecorder.com/index.php?id=531823&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Mass transit or more cars - setting the right priorities *

By Mushfiq Ahmed

KARACHI: The Engineering Development Board, a subordinate organisation of the Ministry of Industries, Production and Special Initiatives, is working on a plan envisaging annual production of 500,000 cars after five years.

It sounds good that our country is going to be able to produce such a large number of cars. However, the question arises are we setting the right targets and priorities. Perhaps not. Seeing the situation at roads in every major city of this country one comes to the conclusion that the country does not need more cars. It needs more buses for the poor that constitutes the largest class of the society. The expansion of the auto sector may provide a few thousand people with employment opportunities and improve their living standard, but the rest of the millions of people would have no benefit. They would have benefited had the government drawn some plan to increase the production of buses, which is the conveyance of the poor. 

If the government focuses on production of more buses, it will not only provide employment opportunities to more people, but it would also provide relief to millions of people who have to travel by decades-old and massively overcrowded buses, minibuses and coaches to get to their workplace and back home. 

A number of studies have found that Karachi needs thousands of buses to replace the old ones. In addition, it needs thousands more new ones to cater to the requirement of ever-expanding population of this metropolis. 

The buses that we currently have in the city are in pathetic conditions. Almost all minibuses have got such small seats that would accommodate only primary school children properly. The space between the seats is hardly 2 ft. During rush hour there are two rows of people standing holding on to the metal pipes in the wagons. And then the conductor moves in this overcrowded bus, pushing every one in his way. 

Coaches and wagons plying in Karachi are generally built on Mazda T3500 chassis. These vehicles are not built as per manufacturers advice rather Ã¢â¬Ëbody shopsÃ¢â¬â¢ make the coach or wagon as per desires of the transporters.

These coaches have low-roofs. A person with an average height of 5 ft. 8 inches is unable to stand upright and has to bow in abject recognition of his inability to afford personal transport.

What our large cities need is not cars, but large size buses. We need to introduce such comfortable buses that should make even a rich person travel by public transport. This is the only way to solve the problem of traffic jams.

Building flyovers can solve the problem only partly and that too, for a short term. With the number of cars that the government wants the local assemblers to churn out, even the newly built flyovers would be crowded within a few years. But it seems that the people at the helm of affairs look at the problems separately.

When they speak of producing 500,000 cars they forget that the infrastructure of our cities cannot carry this burden. They also fail to bear in mind what actually the common man of this country needs. They feel proud in telling everybody around that we are going to produce 500,000 cars after five years. So five years down the road we may see families that have car to drive but no bread to eat. 

http://www.thenews.com.pk/daily_detail.asp?id=44169


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## Neo

*Japan eyes Pak banking, insurance industry *

By Azhar Mahmood

KARACHI: Japanese investors want to enter into Pakistani banking and insurance industry besides stock exchanges in a big way and this week the Japanese Ministry of Finance has submitted a new draft of avoidance of double taxation with Pakistan.

The draft of the treaty contains 30 articles and it specifically seeks exemption from taxes on investments made by the Bank of Japan, The Japan Bank for International Cooperation and Nippon Export and Investment Insurance.

The Bank of Japan wants to invest in emerging Pakistani Sukuk market whereas the other two Japanese government entities extend direct investment, financing for Japanese commodities and insurance coverage.

The last agreement was signed in the mid-50s which was meeting the present investment requirements.

The initiative of revising old and pathetic tax protocol was taken by the policy-makers of the Central Board of Revenue, but the main worry of Japanese investors was that Pakistani financial and portfolio market had been dominated by western investors since the beginning of 2000.

The draft has also envisaged the establishment of Pak-Japan Investment Company at the government level and for that purpose a special section has been incorporated into the draft.

The draft carries many provisions with regard to interest payments, which indicates that the Japanese wants to enter into Pakistani corporate sector.

These proposed provisions will also ensure that already established Japanese companies in Pakistan will re-invest their interest earnings here, thus besides having peace of mind, they will not have to face long gestation period of establishment and incorporation each time a specific company for the specific purpose is set up.

The entry of Japan Bank for International Cooperation will usher in a new era of Japanese infrastructure investment in Pakistan.

However, Article number 11 has been specifically drafted to provide safeguards to the Japanese bank, insurance company and a securities dealer.

The draft has also sought tax exemption for Japanese shipping companies and aviation industry.

At present, Japanese shipping and aviation industry has insignificant business relationship with Pakistan compared to western world.

The most important provision of the draft has sought tax protection for two types of Japanese warehousing companies, namely warehousing-cum-manufacturing and warehousing companies.

Another positive feature of the protocol for the younger generation of Pakistan is that the Japanese want to enter into the education and training sector and for this purpose the protocol has sought tax exemption.

Sources said the Pakistani side and senior Japanese officials had started discussions on the draft and it was likely that the draft would be finalised and notified in coming weeks.

http://www.thenews.com.pk/daily_detail.asp?id=44171


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## Neo

*CBR sees tax to GDP ratio at 14.2pc *

ISLAMABAD: Chairman Central Board of Revenue (CBR) and Secretary Revenue division, M Abdullah Yusuf said on Friday that his organisation has devised a ten-year vision plan aiming at to enhance current tax to GDP ratio from 9.2 per cent to 14.2 per cent.

He stated this while addressing a press conference at CBR House on Friday.

The chairman told newsmen that President General Pervez Musharraf and Prime Minister Shaukat Aziz held a meeting with the entire economic team of the government here the other day where the performance of CBR and its reforms process and future plans were thoroughly discussed.

Yusuf said that the president and the prime minister were appraised of the performance of the CBR so far achieved and its future plans and reform process which is critical for the success of the organisation.

He said that unless and until if the tax machinery is not properly gear up, equipped and tools of business are not provided whether it is infrastructure or other-thing which it requires you cannot achieve the objective successfully.

The chairman said that his organisation has for the first time produced a medium to long strategy as a recommendation for the government to consider.

He said that under the strategy the CBR has set some projections for the next ten-year tax to GDP ratio will be increased to 5 per cent enhancing the current ratio of 9.2 percent to 14.2 per cent.

He added that if this plan is successfully enforced and implemented the government would be able to achieve the projected target in the next 10-year.

Yusuf said that this will also prove a historic change in the revenue base of the country.

He added the strategy was shared with the president, prime minister that what do Ã¢â¬Åwe visualised in terms of the revenue generation and what do we plan in terms of revenue generationÃ¢â¬Â.

Yusuf said, Ã¢â¬ÅBy and large we were meeting the nominal growth of GDP from year to year our level of mobilisation of revenue was around the same level and that since the independence of Pakistan there was no material difference in the tax to GDP ratioÃ¢â¬Â.

The chairman said that keeping in view this situation this plan is forward-looking and progressive in achieving our goals.

http://www.thenews.com.pk/daily_detail.asp?id=44180


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## Neo

February 24, 2007 
*ADBÃ¢â¬â¢s help to reform pension, insurance system sought*

ISLAMABAD, Feb 23: Prime Minister Shaukat Aziz has asked Asian Development Bank (ADB) to help Pakistan in restructuring of pension fund and insurance system on fast track.

The prime minister stated this while talking to ADB Director General Juan Miranda, who called on him here on Friday. The ADB delegation agreed to the suggestions made by the prime minister. Juan Miranda told the prime minister that ADB would enhance its role in a number of areas and would provide $400 million soft financing for earthquake housing and $800m for building Expressway in Karachi.

The ADB DG said that his bank would also assist Pakistan in urban development and would assist fund programmes related to water, waste and sewerage management and urban management in Karachi and some towns of Sindh.

An official announcement said that the prime minister told the ADB director general that the successful implementation of wide-ranging structural reforms had put the economy back on the track of sustainable development.

Banking and financial sectors have made good progress and pension and insurance reforms are part of the second generation reforms being pushed by the government, he added.

He asked the ADB to enhance its role in the infrastructure strengthening and construction of water storages. He said the government was focusing on improving logistics chain to improve the competitiveness of local products.

The completion of National Trade Corridor (NTC) and building of North South Corridor will speed up the countryÃ¢â¬â¢s industrial development, he added.

He said the government would build a series of industrial zones, cold chains and warehouses alongside the highways to expedite industrialisation.

He said Pakistan was using its unique geo-strategic location to promote regional cooperation.

Ã¢â¬ÅWe are developing a network of infrastructure to leverage our position as a bridgehead for multiple corridors of cooperation involving energy, trade and transportation corridors,Ã¢â¬Â the premier said.

http://www.dawn.com/2007/02/24/ebr5.htm


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## Neo

Saturday, February 24, 2007 

*Export of services unable to sustain growth pattern in Dec*

By Tanveer Ahmed 

KARACHI: The export of services was not able to sustain the growth pattern in December of the current financial year, compared with its preceding month of November, as export of major categories registered a substantial downturn.

The robust growth in the month of November in the export of government services and royalties & license fees, had helped to reduce the growing trade deficit in foreign trade of services to some extent.

According to the latest details of the services sector export released by the Federal Bureau of Statistics (FBS), the export of government services, which saw phenomenal gains in November, slumped heavily in December and was down by almost 90 percent.

The breakup of export of services in the first-half of the current financial year also showed a dismal performance, due to under-performance of the services export in December.

Overall, the total services export dipped by almost 50 percent in December 2006 compared to its preceding month, while in the first six months, it fell by 12.15 percent compared to the corresponding period of the previous year.

Details show that export of government services, travel services, transportation services and financial services stood in deficit by registering a major fall in December 2006.

The export of communication services, construction services, computer and information services, royalties & licenses, other business services recorded gains in the period under review.

Transportation services export posted a negative growth 7.28 percent in month of December, travel services by 8.30 percent, construction services by 0.82 percent and government services by almost 90 percent.

Communication services export increased by 28.43 percent, insurance services by 4.52 percent, computer and information services by 22.47 percent and other business services by 72.55 percent.

An analyst of foreign trade said that the export performance of services sector in the month of December reflected that strategies to enhance the export of this sector were unable to work out, despite the fact that there is vast potential to increase export in this regard.

Pointing out a number of issues confronting the countryÃ¢â¬â¢s export of services, he said that the big hurdle so far continued to be the image of the country abroad, which is hindering its growth.

He particularly referred to financial, construction and some business such as computer and information technology, engineering and legal and accounting services, which are in big demand around the world, however the countryÃ¢â¬â¢s share is almost negligible.

He said that although there was some recovery in the month of November, the dismal performance of the export of services in December depicted that there is lack of sustainability in it and policies regarding it are inadequate.

An analyst said that so far, this sector has remained narrow-based as only government services make a major part in it, which depend largely on defence services, whereas other potential areas in this regard remained untapped.

He pointed out that thriving economic activities also contribute in attracting foreigners to visit the country as more people visit in these conditions, resulting a boost in services export.

The countryÃ¢â¬â¢s services export is confronted by the issues like quality, acceptance of professional qualifications, visa restrictions and above all the image of the country in the world. Also, the tariff and non-tariff barriers are also big hurdles in the way of PakistanÃ¢â¬â¢s services providers to penetrate in the international market.

http://www.dailytimes.com.pk/default.asp?page=2007\02\24\story_24-2-2007_pg5_2


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## Neo

Saturday, February 24, 2007 

*ADB to provide $1200m for uplift projects*

ISLAMABAD: The Asian Development Bank (ADB) will provide $400 million in soft loans for earthquake housing projects and $800 million for an expressway in Karachi and various programmes related to water, waste and sewerage management, ADB Director General, Juan Miranda, said Friday.

He said this while speaking during a meeting with Prime Minister Shaukat Aziz. The prime minister said that the successful implementation of wide-ranging structural reforms had put the economy back on the track of sustainable development. Ã¢â¬ÅBanking and financial sectors have made good progress and pension and insurance are part of the second-generation reforms being pushed by the government,Ã¢â¬Â he said. 

The PM asked the ADB to enhance its role in strengthening infrastructure development projects. He said that the government was focusing on improving the logistics chain to improve the Ã¢â¬Åcompetitiveness of productsÃ¢â¬Â. The completion of the National Trade Corridor Plan and the building of the North South Corridor will remove roadblocks in industrial development and trade enhancement, Aziz said, adding that the government will build a series of industrial zones and warehouses alongside highways in order to expedite industrialisation. 

http://www.dailytimes.com.pk/default.asp?page=2007\02\24\story_24-2-2007_pg7_34


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## Neo

*Pakistan to achieve seven percent GDP growth target: S&P *

KARACHI (February 25 2007): Standard and Poor's has forecast that Pakistan's growth prospects would remain strong during the current fiscal year and it would achieve its Gross Domestic Production (GDP) growth target of 7 percent.

The report on Pakistan's economy, issued on Saturday, said that Pakistan would achieve real GDP growth of more than 7 percent, against 6.6 percent of last fiscal year. However, current fiscal year growth would depend on the continuation of structural reforms and higher private investment, it added. Standard & Poor's Ratings Services reaffirmed its 'B+' for foreign currency and 'BB' for local currency long-term ratings and its 'B' short-term sovereign rating for Pakistan.

In the medium term, the economy should be able to grow at about 7 percent, as structural reforms, privatisation, and the gradual deepening of external trade links are likely to produce incremental gains, the report added.

Growth prospects are also underpinned by the rising participation of foreign direct investors in the economy, which yields knowledge transfer and efficiency gains. The report emphasises, that to boost the growth rates beyond these levels, the government would have to address still significant infrastructure and power supply deficiencies, bureaucratic red tape, and security concerns to improve investor confidence.

It says that during the current fiscal year 2007 Pakistan's exports growth would be 8 percent as compared to 12.9 percent during last fiscal year, while the unemployment rate would be lower than 2006 to 7.1 percent from year's 7.7 percent.

In addition, the country's real investment and consumer price index growth would be 5.7 percent and 6.5 percent, respectively, as compared to 10.3 percent and 8.1 percent, respectively, in same period of last year.

The report said that during 2006-07, Pakistan's growth rate eased back to a still stronger 6.6 percent following the record 8.4 percent in 2005-06. "Pakistan economy's structural transformation thus appears well advanced, and the expectation is that the process will continue under the current administration. Results of these reforms are manifested in the robust growth rates of recent years as compared to the stagnancy of the 1990s, with GDP growth averaging 4.3 percent during past five years," the report said.

It said that despite the fast pace of per capita GDP growth over recent years, Pakistan remains a low-income country with per capita GDP of $806 at the end of fiscal year 2006.

It said that it also reflects the likelihood that Pakistan will continue to enjoy the economic benefits of its close political relationship with the US, including support from official creditors. Looking ahead, the report says that the rating of 'B+' can improve if the government can sustain structural reforms so as to create a virtuous cycle of economic growth, job creation, poverty reduction, and a falling debt burden.

http://www.brecorder.com/index.php?id=532426&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'Uplift package to herald new prosperous era' *

ISLAMABAD (February 25 2007): Prime Minister Shaukat Aziz on Saturday said the unprecedented development package announced by the government for Islamabad will usher in a new era of prosperity in the federal capital and its adjoining areas. He was talking to Dr Muhammad Amjad President, PML Islamabad who called on him this evening.

The meeting was also attended by Chief Whip, Sardar Nasrullah Khan Dareshak and Special Assistant to the Prime Minister, Commander Khalil-ur-Rahman(Retd). The PM said Islamabad being the federal capital along with its surrounding rural areas which are part of the federal capital territory is a focus of government's attention.

He said massive programmes have been initiated for building roads and underpasses and providing basic necessities of health care, education, clean drinking water and sewerage to the people in these areas.

Shaukat particularly mentioned that the development package for Islamabad which totals Rs 8.3 billion provides ample funds for the rural areas of Islamabad as well as the city. He said this will transform the face of the city and make all modern facilities available to its residents both in the rural as well as urban areas.

He said the government is also working on improving traffic management system in the city. He said several new hotels are being constructed in Islamabad which will made the city a hub of conferences, tourism and commercial activity.

He said because of increased development activity in Islamabad, in both urban and rural areas employment opportunities for the people are being created and their access to basic necessities of life is being improved.

Dr Amjad updated the Prime Minister on PML's activities in Islamabad including provision of facilities to the residents, the enrolment drive and the public contact campaign in both urban and rural areas.

http://www.brecorder.com/index.php?id=532463&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*July-Jan 06/07 export increased by 3.86 percent *

KARACHI: February 24, 2007: Pakistan's exports during July-January, 2006-2007 recorded an increase of 3.86 percent to $9.630 billion over last year's $9.272 billion.

According to the provisional figures compiled by the Federal Bureau of Statistics, exports from Pakistan, exports decreased by 21.10 percent in January, 2007 to $1.197 billion when compared with December, 2006 $1.517 billion and by 2.24 percent as compared to January, 2006 $1.225 billion.

Exports during July-January, 2006-2007 totalled at Rs 583.521 billion as against Rs 553.873 billion during the corresponding period of last year showing an increase of 5.35 percent. 

During January, 2007, exports amounted to Rs 72.887 billion as against Rs 92.389 billion in December, 2006 and Rs 73.284 billion during January, 2006 showing a decrease of 21.11 percent over December, 2006 and of 0.54 percent over January, 2006. 

Main commodities of exports during January, 2007 were bedwear (Rs. 8,355 million), cotton cloth (Rs.8,322 million), knitwear (Rs.7,948 million), readymade garments (Rs.6,489 million), cotton yarn (Rs.6,238 million), rice basmati (Rs.3,100 million), art, silk and synthetic textile (Rs.2,929 million), rice others (Rs.2,590 million), madeup (Rs.1,945 million and towels (Rs.1,902 million). 

Imports during July-January, 2006-2007 totalled at $17.225 billion as against $15.795 billion during the corresponding period of last year showing an increase of 9.05 percent. 

In January 2007, imports decreased by 9.13 percent to $2.330 billion as compared to December, 2006 $2.564 billion but increased by 8.66 percent as compared to January, 2006 $2.144 billion. 

Imports during July-January, 2006-2007 totalled Rs 1.044 billion as against Rs 943.599 billion during the corresponding period of last year showing an increase of 10.62 percent. 

Imports during January, 2007 amounted to Rs 141.851 billion as against Rs 156.128 billion in December, 2006 and Rs 128.316 billion during January, 2006 showing a decrease of 9.14 percent over December, 2006 but an increase of 10.55 percent over January, 2006. 

Main commodities of imports during January, 2007 were petroleum crude (Rs.15,194 million), petroleum products (Rs.13,171 million), other apparatus (telecom) Rs.7,409 million), plastic materials (Rs.5,819 million), raw cotton (Rs.5,597 million), iron and steel (Rs.5,130 million), aircraft, ships and boats (Rs.4,164 million), palm oil (Rs.3,757 million), mobile phone (Rs.3,598 million) and electrical machinery and apparatus (Rs.3,190 million). 

The balance of trade figures cumulative from July-January, 2006-2007 were (-) 460,314 billion in terms of Rupees and (-) 7.595 billion in US dollars. 

Based on the provisional figures of imports and exports the balance of trade in January, 2007 was (-) 68.964 billion in terms of rupees and (-) 1.133 billion in US dollars.

http://www.brecorder.com/


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## Neo

*HSBS to invest $20 million in Pakistan *

KARACHI: February 24, 2007 Hong Kong Shanghai Bank Corporation (HSBC) is planning to invest $20 to 25 million in next two years in Pakistan to enhance its presence in this fast growing market.

This was stated by the deputy chairman and CEO of HSBC Middle East, Niall S K Booker during a meeting with the chief executive, Trade Development Authority of Pakistan (TDAP).

According to TDAP here Saturday, he discussed the plans of the bank for strengthening its market share and presence in Pakistan over the next 18-24 months.

He said that HSBC had already opened a branch in Clifton as part of their expansion program in Pakistan.

Booker said that HSBC was renowned the world over for its innovative and trade friendly financial products it provides in the export driven economies.

He suggested that Pakistan should have a comprehensive program of managing perceptions about the country's image which will have a direct bearing on its trade promotion success

http://www.brecorder.com/


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## Neo

February 25, 2007 
*Hubco to set up new 210mw power plant*

By Dilawar Hussain

KARACHI, Feb 24: The Hub Power Company Limited (Hubco) last week forwarded to the Private Power and Infrastructure Board (PPIB) the pre-feasibility documents for setting up a 210MW new power plant.

The company already operates the countryÃ¢â¬â¢s biggest independent power plant (IPP) with net capacity of 1,200mw located in tehsil Hub, district Lasbela, Balochistan.

A senior official confirmed that all formalities on the part of the company had been completed and he expected PPIB/Nepra to extend the necessary Letter of Support (LoS) within the next 15 days to a month. He said that for fast-track projects, the upfront tariff was 11.9713 cents, but the company would expect an upward revision in case other competitors were offered higher tariffs. At least five other parties are understood to be looking up for setting up IPPs of their own.

Chief Executive of Hubco, Mr. Javed Mahmood, in answer to a query said that world-wide it was the sellersÃ¢â¬â¢ market for power generation machinery since it was the manufacturers who dictated costs and terms. He said that Hubco would have edge in acquisition as well as delivery due to the good reputation that the company and its parent enjoy in skill, efficiency and reliability.

The CEO of Hubco would not disclose the location of the new plant but hinted that it would neither be in Karachi, nor in Balochistan. He also did not say what the cost of the project would be. Ã¢â¬ÅIt is material information and would be disseminated to all at the right time,Ã¢â¬Â he said. But Mr. Mahmood emphasised: Ã¢â¬ÅWe are absolutely committed to Pakistan and would like to expand our activities in this country.Ã¢â¬Â

In his annual report for the year ended June 30, 2006, issued on Aug 10, 2006, Chairman of Hubco, Mohammed A. Alireza wrote: Ã¢â¬ÅThe company is looking forward at active participation in the competitive bidding for the three power projects (in Uch 2, Faisalabad and Lahore) launched by the government last year for which we are already qualified.Ã¢â¬Â

The chairman also said that the company in association with other international companies had submitted documents for pre-qualification in the forthcoming privatisation of Sui Southern Gas Company (SSGC).

The Hubco CEO, Mr Mahmood observed that in case of a new IPP, the pre-development costs were very high. So the question is: Does Hubco has the means to be able to finance all its ambitious projects?

Analysts at Arif Habib Securities in their February 8 report reviewing companyÃ¢â¬â¢s HY07 accounts, wrote: Ã¢â¬ÅHubco is a cash rich company and profit distribution to its shareholders is based on the free cash flows of the firm (after retiring the financial obligations) instead of following the conventional accounting approach (based on earnings)Ã¢â¬Â

The analysts noted: Ã¢â¬ÅAs per FY06 accounts, the company has low-leveraged balance sheet with long-term debts accounting for 31 per cent of balance sheet items and the debt to equity ratio at 45:55, hence providing the company ample opportunity for debt financing projects.Ã¢â¬Â

But most analysts thought that the company would not want to rely on just one but opt for a mix of debt and equity.

http://www.dawn.com/2007/02/25/ebr1.htm


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## Neo

February 25, 2007 
*Export of major items down by 20pc*

By Mubarak Zeb Khan

ISLAMABAD, Feb 24: Exports of traditional domestic items like rice, carpets, sports goods, surgical instruments, leather, and footwear declined by more than 20 per cent during the first seven months (July 2006-January 2007) of the fiscal 2006-07 against figures for the same period last year.

However, data compiled by the commerce ministry showed an upward trend in exports of other commodities like cement, gur and gur products, jewellery, precious and semi-precious gems and engineering goods. These productsÃ¢â¬â¢ export recorded a double-digit growth during the same period by comparison with last yearÃ¢â¬â¢s figures.

Pakistan, once renowned for its exports of high-quality of traditional products like footballs and surgical instruments and leather products, has been losing its foothold in international markets for the past couple of years, but the government has not yet taken any remedial action like granting subsidies to these sectors. At present, subsidy is only allowed to textile-based industries.

Official figures showed that the export of rice, with the exception of Basmati, dipped by 2.87 per cent during the period under review. The export of Basmati rice, however, soared by 24.39 per cent. Export of other rice, however, dropped by 22.67 per cent during the same period.

The export of sports goods declined by 18 per cent during the first seven months of the outgoing fiscal against figures for the same period last year. Football export declined by 20.67 per cent but exports of gloves surged by 120.23 per cent during the same period.

The export of carpets, rugs and mats recorded a negative growth of 13.92 per cent, and leather goods (garments and gloves) by 33.21 per cent during the first seven months of the current fiscal year over the last yearÃ¢â¬â¢s figures. Leather garmentsÃ¢â¬â¢ exports declined by 32.33 per cent, leather gloves 27.28 per cent and other leather goods by 51.65 per cent.

Footwear export declined by 17.30 per cent during the July 2006-Jan 2007 over the same period last year. Of these, exports of leather footwear dipped 18.34 per cent, canvas footwear 27.49 per cent and other footwear 6.63 per cent. Exports of surgical instruments and medical equipment declined by 34.81 per cent.

The data compiled by the commerce ministry also showed that the exports of engineering goods rose up by 3.76 pc, automobile parts 12.61 per cent, cement 18.85 per cent, gems 14.02 per cent, jewellery 25.41 per cent, gur and gur products 18.62 per cent and molasses 26.36 per cent during the seven-month period of over the last yearÃ¢â¬â¢s figures.

http://www.dawn.com/2007/02/25/top4.htm


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## Neo

*A groundbreaking deal*

ITÃ¢â¬â¢S a win-win situation: the signing of an accord on Friday between Pakistan and India in Islamabad on sharing equal quantities of natural gas to be piped in from Iran in the first phase of the trilateral project is a significant step towards regional cooperation. IranÃ¢â¬â¢s representative was also in Islamabad to witness the groundbreaking India-Pakistan accord. Now that this tricky hurdle has been removed, work on laying the pipeline through PakistanÃ¢â¬â¢s territory is to begin any time soon. The first phase of the project is expected to be implemented in about three yearsÃ¢â¬â¢ time, enabling Pakistan to right away plug into an additional supply of 1.05 billion cubic feet (BCF) of natural gas on a daily basis. This will ease the burden placed on indigenous natural gas whose supplies are depleting as a result of rising demand. The 2,200 kilometre gas pipeline through Pakistan will also enable India to plug into an equal share of a total of 2.1 BCF gas to be supplied by the project initially. India plans to obtain a total supply of 3.2 BCF for the next 30 years, which will necessitate the expansion of the gas pipeline in the second phase of the project.

Pakistan, Iran and India have over the preceding years struggled to arrive at an acceptable formula to see the mega energy project through. Besides an evasive agreement on gas pricing, it was primarily politics that hampered progress on the project for months. India had concerns over the passage of the pipeline through Pakistani territory and an uninterrupted gas supply, for which Iran became a neutral guarantor. This, as in the case of World Bank arbitration through a neutral expert in the Baghlihar Dam dispute, goes to show that involving a third party can help bridge the confidence gap that exists between Pakistan and India. Once both countries accepted IranÃ¢â¬â¢s role as a guarantor of the pipeline, differences with Tehran over pricing were resolved to the satisfaction of all three parties. IranÃ¢â¬â¢s concession over gas pricing to the South Asian neighbours came as a counter move to the pressure the US tried to exert on India and Pakistan, asking them not to go through with the deal. It is good that both Islamabad and New Delhi stood up to American pressure and dismissed any backtracking on a project vital to both the countriesÃ¢â¬â¢ existing and future energy needs. Not doing so would have made South Asia a party to WashingtonÃ¢â¬â¢s row with Iran over the latterÃ¢â¬â¢s nuclear programme which Tehran insists has no military dimension.

The building of the pipeline through Pakistani territory is estimated to cost around seven billion dollars in the initial phase, a project that the country will be able to fund through transit fees to be generated in the initial years by the Indian component of the deal. Any future expansion based on IndiaÃ¢â¬â¢s growing needs for energy could likewise be financed, leaving Pakistan with no extra burden in the form of loans from international financial institutions, which are readily influenced by Washington. The successful completion of the Iran-Pakistan-India pipeline project will also mark a new beginning towards regional development and cooperation sidelining the global political ambitions of the sole superpower trying to reshape the world to suit its own exigencies.

http://www.dawn.com/2007/02/25/ed.htm#1


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## Neo

Sunday, February 25, 2007 

*Work on three coal-fired power plants in Sindh begins*

KARACHI: Three coal-fired power plants would start operation in Sindh in the next two and half a year, as the physical work on these power plants in Thatta, Jamshoro and Tharparkar district has started.

The physical work on 300MW power plant at Sonda coalfield near Jhirak, district Thatta at a cost of $450 million, 150MW power plant costing $250 million at Lakhra coal field, district Jamshoro and 1000MW power plant costing $1.2 billion in Tharparkar has started.

Sindh Governor Dr Ishratulul Ibad Khan and Provincial Minister for Mines & Mineral Development Irfan Marwat Saturday in a meeting reviewed the progress of the projects.

The foreign investors working on these projects have been made to provide job opportunities essentially to the locals. In case skilled workers are required, the investors would also impart training to the local people.

Governor Ibad said that at least eight thousand people would directly get the jobs after the three projects become operational.

http://www.dailytimes.com.pk/default.asp?page=2007\02\25\story_25-2-2007_pg5_4


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## Neo

*UAE trade with Pakistan to hit $5.1 billion by June*
BY MUZAFFAR RIZVI 

25 February 2007 

DUBAI Ã¢â¬â Trade between the UAE and Pakistan is likely to post significant growth during the current financial year to cross $5 billion mark by June following a surge in exports to the UAE.

"The UAE-Pakistan trade is set to reach $5.1 billion (Dh18.71 billion) by the end of June, increased by 20 per cent over $4.1 billion in 2005-06," a senior official said.

"Pakistan's exports to the UAE have risen to $700 million during first half of current fiscal year (2006-07) as compared to $1.3 billion for full-year in 2005-06," he added.

Pakistan's exports to UAE were petroleum products worth $400 million, rice $250 million, textiles $200 million, engineering $60 million, leather $120 million and others.

During the last fiscal year the UAE's exports were $2.8 billion and imports from Pakistan were $1.3 billion, keeping the trade balance in favour of the UAE.

Bilateral trade volume between the two countries surged to $4.5 billion from $1.5 billion within the last five years.

The official further said that growth trends in two-way trade are very encouraging and both governments will continue to work closely with the private sectors to enhance co-operation in various sectors. 

Major investment boost: "The UAE's investments in Pakistan will witness a major boost in 2007 in key sectors like energy, investment, trade, and manpower," he said.

A delegation of Pak-UAE Business Council will soon visit UAE to attract top businessmen to benefit from business opportunities in Pakistan. The delegation will specifically discuss opportunities in livestock, dairies, fisheries and mining sectors and invite the UAE businesses to invest in these sectors, he added.

The UAE has already been investing billion of dollars in housing, telecommunication, hotel and banking sectors of Pakistan. It also contributed $1.5 billion in foreign direct investment last financial year out of the total amount of $3.8 billion.

"Major UAE groups are actively participating in Pakistan's privatisation programme in general and energy sector in particular," he said adding that the two countries are also increasing their relations in the manpower sector.

Manpower export: Pakistan has developed a strong base of trained, educated, skilled and professional manpower, which could meet the growing workforce needs of the UAE. The two countries signed MoU in the field of manpower in December last that would enable Pakistan to increase manpower export to the UAE.

"Pakistan exported 166,451 skill oriented persons during the last 11 months, out of which 91,675 went to UAE," a senior government official said. 

http://www.khaleejtimes.com/Display...usiness_February749.xml&section=business&col=


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## Owais

*Pakistan on high growth trajectory, says Prime Minister *
ISLAMABAD (February 26 2007): Prime Minister Shaukat Aziz has said that the success of wide ranging structural reforms, consistency and continuity of policies have put Pakistan on a high growth trajectory leading to sustainable development and prosperity.

Talking to a delegation of DLA Piper Associates led by Lord Clement Jones, Member House of Lords at the PM House, he said the economic stability achieved by the country has enabled the government to regain its economic sovereignty and the independence to make decisions which are in the best interest of the country.

According to a press release, the Prime Minister said as a result of the multi-pronged strategy of the government and the enabling environment created by it, Pakistan is fast emerging as a destination of choice for investors and foreign investment reached its highest ever level of $3.8 billion last year.

He said in the first half of current year "we have received foreign investment of over $3 billion and by the end of the current financial year it is expected to cross $5 billion."

Prime Minister said Pakistan is one of the fastest growing economies in the region and hopes to sustain a growth rate of 6 to 8 percent.

He said Pakistan has a big demographic dividend, which is creating a middle class, high demand and high growth. He said this growing middle class with increased buying power presents a lucrative investment opportunity.

He said the success of the reform agenda is being increasingly recognised by various stakeholders and Pakistan has been included in the world's 10 best reformers by many surveys.

The delegation appreciated the progress made by Pakistan in the economic and social fields. They specifically mentioned the investment and privatisation policies pursued by the government and said that the country's economy is showing healthy results, which are globally appreciated.

The meeting was also attended by Minister of State for Information Tariq Azeem, Special Assistant to the Prime Minister Khalil-ur-Rehman and other officials.

http://brecorder.com/index.php?id=532707&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*9.14 percent increase in SPI over last year *

ISLAMABAD (February 26 2007): The Sensitive Price Indicator (SPI) for the week ending on February 22 surged by 9.14 percent as compared to the corresponding week of last year. There was increase of 0.54 percent in the SPI from the previous week, which was 8.59 percent.

The income group up to Rs 3000 showed 10.62 percent increase on YoY, for Rs 3000-Rs 5000 10.14 percent, Rs 5000-Rs 12000 9.99 percent and group above Rs 12000 showed 8.15 percent increase. The Federal Bureau of Statistics (FBS) bulletin, based on 53 essential daily-use items from 17 urban centres, showed that 20 items showed increase in prices, six posted decrease, while 27 items did not show any change during the week.

Onions further increased by two percent from last week and showed 179 percent increase over the corresponding week of last year. Few other items of concern to poor were vegetable ghee, cooking oil and firewood, which were dearer by 12 percent, 12 percent and 13 percent respectively, YoY. Rice Basmati broken, rice Irri-6 have also seen some increase of 6 percent and 4 percent over the week and are higher by 21 percent and 25 percent respectively on YoY. Reports published on Sunday speak of Rs 10 per kg increase in different varieties of rice, though later there was minor decrease of Rs 2 per kilo at the end of the day.

However, tomatoes and potatoes were cheaper by 10 percent and 2 percent over the week and 62 percent and 24 percent respectively, on YoY.

The price of LPG cylinder, though lower during the week, was higher on YoY by 8 percent Its price has dropped by Rs 38 over a week from Rs 641 to Rs 603. But in Quetta it is Rs 670, Sukkur and Larkana also observe high price of Rs 660. The lowest price of LPG is in Karachi ie Rs 517.

Out of 53 items, 45 were costlier on Y-o-Y, of which 27 items showed double-digit increase. The significant items consumed by the lower income groups, which are dearer on Y-o-Y basis are: salt 19 percent; garlic 16 percent; gram pulse 50 percent; moong 21 percent; mash 37 percent; gur 6 percent; milk 13 percent; curd 11 percent; tea 13 percent; match box 23 percent; kerosene 7 percent and gas by 10 percent.
http://brecorder.com/index.php?id=532677&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Pakistan to achieve seven percent GDP growth target: S&P *

KARACHI (February 25 2007): Standard and Poor's has forecast that Pakistan's growth prospects would remain strong during the current fiscal year and it would achieve its Gross Domestic Production (GDP) growth target of 7 percent.

The report on Pakistan's economy, issued on Saturday, said that Pakistan would achieve real GDP growth of more than 7 percent, against 6.6 percent of last fiscal year. However, current fiscal year growth would depend on the continuation of structural reforms and higher private investment, it added. Standard & Poor's Ratings Services reaffirmed its 'B+' for foreign currency and 'BB' for local currency long-term ratings and its 'B' short-term sovereign rating for Pakistan.

In the medium term, the economy should be able to grow at about 7 percent, as structural reforms, privatisation, and the gradual deepening of external trade links are likely to produce incremental gains, the report added.

Growth prospects are also underpinned by the rising participation of foreign direct investors in the economy, which yields knowledge transfer and efficiency gains. The report emphasises, that to boost the growth rates beyond these levels, the government would have to address still significant infrastructure and power supply deficiencies, bureaucratic red tape, and security concerns to improve investor confidence.

It says that during the current fiscal year 2007 Pakistan's exports growth would be 8 percent as compared to 12.9 percent during last fiscal year, while the unemployment rate would be lower than 2006 to 7.1 percent from year's 7.7 percent.

In addition, the country's real investment and consumer price index growth would be 5.7 percent and 6.5 percent, respectively, as compared to 10.3 percent and 8.1 percent, respectively, in same period of last year.

The report said that during 2006-07, Pakistan's growth rate eased back to a still stronger 6.6 percent following the record 8.4 percent in 2005-06. "Pakistan economy's structural transformation thus appears well advanced, and the expectation is that the process will continue under the current administration. Results of these reforms are manifested in the robust growth rates of recent years as compared to the stagnancy of the 1990s, with GDP growth averaging 4.3 percent during past five years," the report said.

It said that despite the fast pace of per capita GDP growth over recent years, Pakistan remains a low-income country with per capita GDP of $806 at the end of fiscal year 2006.

It said that it also reflects the likelihood that Pakistan will continue to enjoy the economic benefits of its close political relationship with the US, including support from official creditors. Looking ahead, the report says that the rating of 'B+' can improve if the government can sustain structural reforms so as to create a virtuous cycle of economic growth, job creation, poverty reduction, and a falling debt burden.

http://brecorder.com/index.php?id=532426&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Over 4 percent agriculture sector growth likely *

ISLAMABAD (February 26 2007): Pakistan agriculture sector is set to recover slightly this year with prospects of a moderate growth of four to five percent due to reasonable cotton output and encouraging wheat production.

Besides improvement in major crops like cotton, wheat, sugarcane and rice, some minor crops including lentil, potato and mash are also on the recovery track and will contribute to boost agriculture sector growth.

Last fiscal was a bad year for Pakistan agriculture as the sector that contributes highest (21 percent) in the country's Gross Domestic Product (GDP) grew at 2.5 percent against a 6.7 percent in 2004-05.

In 2004-05, the main contributors in an impressive agri sector growth were major crops that grew at 17.6percent as the cotton recorded all time high figures of 14.6 million bales.

But a year later the trend reversed totally as major crops collapsed and their growth went into negative mark (-3.6), mainly due to a shortfall in cotton production that remained at 12 million bales. "We hope this year major crops will do the miracle," Agriculture Development Commissioner (ADC) Dr Abdul Qadir Bux Baloch remarked.

Cotton production had gone slightly up and hoped it would touch 13 million bales this year. Wheat was also set to break the record with over 22 million tonnes against the achievement of 21.708 million tonnes in 2005-06, the official added.

He also used an increase in sugarcane from 45.295 (in 2004-05) to 51.80 million tonnes this year as a strong argument to prove his point.

Some grey areas are, however, still there to create enough doubts about the sustainability of agriculture sector growth. One such problem is the shortfall in the rice production target.

In 2006-07, the target for rice production was set at 56.93 million tonnes but the achievement was 54 million tones, a shortfall of around three million tonnes.

The real situation will, however, be clear at the Federal Committee on Agriculture (FCA) meeting by end March when the final figures of production will be announced.

http://www.brecorder.com/index.php?id=532692&currPageNo=1&query=&search=&term=&supDate=


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## Neo

February 26, 2007 
*Investing remittances more productively*

By Mohiuddin Aazim

OVERSEAS Pakistanis continue to send larger amounts of foreign exchange back home.. And this, coupled with greater inflows of foreign direct investment, strengthens the balance of payments. That, in turn, keeps the rupee and foreign exchange reserves stable.

But when larger inflows of foreign exchange sent back home by expatriates are converted into rupees, it raises money supply. That often fuels inflation because so far Pakistan has not been able to fully absorb these inflows in productive sectors. And a number of recipients of the money at home, indulge in a spending spree.

When this money is used in buying of imported goods like mobile phones and plush carsÃ¢â¬âthe end result is worse. It causes imported inflation and widens the trade deficit. So, there is a strong case for Pakistan not only to maximise the inflow of these remittances but also to use them efficiently for production, development, job creation and poverty reduction.

The government is expecting $5.5 billion remittances in the current fiscal yearÃ¢â¬âan increase of about 20 per cent over the last fiscal. But many reckon that Pakistan can attract up to $10-12 billion through remittances every year.

There are some four million Pakistanis living abroad and if, on average, each one of them sends home $2500-$3000 dollars per year, the country should get $10-12 billion..

The government is holding a two-day Overseas Pakistanis Investment Conference at Islamabad next month where top overseas businessmen/ professionals will interact with officials of the federal and provincial governments to identify potential areas for forming trade and joint venture partnerships.

Major topics for the conference include investment policy for small and medium investors; financing for small and medium enterprises ( SMEs) , investment in export-oriented industries, in capital markets and mutual funds.

The government has already identified agri-business sector, IT and telecommunications, housing and commercial properties and health and education sector as potential areas for such investment. If the government and the private sector can engage overseas Pakistanis in big housing/town-building and commercial property development, it would attract additional foreign exchange and keep the balance of payments in shape. On the other, hand it would give a real boost to industrial production.

Construction provides business to 40 odd supporting industries like cement, iron/steel, paints, glass, sanitary and hardware etc. Besides, it creates a lot of jobs directly and indirectly for skilled, semi- skilled and non-skilled workers. Construction industry employs some six per cent of workforce comprising 44 million people.

Once the country absorbs the inflows of remittances in a productive manner, the rise in rupee liquidity due to additional inflows would be less inflationary.

Late last year, the Reserve Bank of India allowed non-resident Indians (NRIs) to repatriate up to $1 million a year from the sale of properties in India. Earlier, they were supposed to keep these proceeds within the country for 10 years.

This is one of the several things India is doing to seek enhanced investment from NRIs. Overseas Pakistanis are already allowed to repatriate the sale proceeds of the real estate in Pakistan to the host countries. Ã¢â¬ÅBut there is a need to make repatriation of the profit a bit easier,Ã¢â¬Â says Hafeezur Rehman Butt, chairman of the Association of Builders & Developers.

Overseas Pakistanis need prior permission from the State Bank to repatriate the profits earned on the sale of real estate, he said.

Mr Rehman is due to present a detailed paper on the scope of investment in real estate by overseas Pakistanis at the proposed investment conference. He told Dawn that he would raise this issue in the conference.

Ã¢â¬ÅIn any housing project an average 30-35 per cent investment is made directly or indirectly by overseas Pakistanis,Ã¢â¬Â says Mr. Rehman adding the percentage varies depending upon the nature and the locality of the project.

Ã¢â¬ÅPerhaps we need to involve overseas comptriots in development of new exclusive housing schemes in areas like Defence,Ã¢â¬Â says Zubair Shaheen, an official of Defence Clifton Real Estate Agents Association. Ã¢â¬ÅWe also need to involve groups in construction of commercial plazas across Pakistan,Ã¢â¬Â

Broadly speaking, there is need to devise a comprehensive strategy to maximise the inflow of remittances and to use it efficiently in as many sectors of the economy as possible. The government, the State Bank, the private sector and overseas PakistanisÃ¢â¬âall must evaluate who can do what to attain this objective.

The State Bank should find a way to reward the banks that handle more of remittances and are known for taking lesser time than others in collecting the remittances from abroad and releasing them to the beneficiaries. This would encourage other banks to follow suit and ensure larger inflows of such remittances through the official channel.

Ã¢â¬ÅBesides, the Central Board of Revenue must allow similar tax exemption on workersÃ¢â¬â¢ remittances sent home through foreign exchange companies like it does on remittances routed through banks,Ã¢â¬Â says an official of Exchange Companies Association of Pakistan. This would help these companies handle more of these remittances, thus curbing transfer of foreign exchange through hundi/hawala.

Association officials estimate that exchange companies handle 10 per cent of the total amount of remittances. They say the percentage would rise once the CBR provides incentives.

Meanwhile, the government may add a new product to National Saving Scheme exclusively designed for the beneficiaries of remittances and offer a better rate of return on it. This would discourage consumer spending. And any sizable investment in this instrument would also reduce the governmentÃ¢â¬â¢s borrowing from the central bank or from the banking systemÃ¢â¬âboth of which are regarded as more inflationary than its borrowing from the non-bank sources.

One major issue in ensuring a sustained high growth in remittances is simultaneous export of manpower. In 2006 more than 183,000 people proceeded for overseas jobs. The number shows a handsome increase of 41,000 or 29 per cent over 2005 when 142,000 Pakistanis had left home to get a job abroad. The number must grow on sustainable basis if a better share in the global job market is to be secured.

The country, however, must ensure to export the right mix of manpower. The government may draw up an incentive plan to retain highly skilled people having expertise in the areas where finding their substitutes is difficult. A large number of semi-skilled and non-skilled people need to be trained in the disciplines where there is a demand in global job market. Then, the export of such manpower must be given top priority.

http://www.dawn.com/2007/02/26/ebr3.htm


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## Neo

February 26, 2007 
*Upgrading national trade corridor*

By Jamil A. Siddiqui

IN just six years, foreign trade has increased from less than $20billion per annum to more than $45 billion in 2005-2006 in an economy with $140 billion plus GDP. If this trend is to be sustained, a functionally efficient and commercially viable logistics system has to be developed. It should cover the entire range of services for the mobility of goods, from the producer to the importer/consigneeÃ¢â¬â¢s warehouse.

Success in global trade substantially depends on competitive prices that is made up of production and transport logistic costs from origin to destination. The economy must have equally competitive and efficient productive and logistics sectors.

The inland transport network in the form of national trade corridor must match the international transportation system in quality and efficiency. Out-dated, dysfunctional and inadequate inland transport system may hamper the trade. Adequacy, reliability, efficiency, commercial viability and speed of inland transport network act as a catalyst in the promotion and expansion of a countryÃ¢â¬â¢s foreign trade. No wonder, countries displaying impressive foreign trade performance, possess equally impressive national transport corridors. Transport system provides basic infrastructure for the logistics system of an economy.

Pakistan being at the cross-roads of South Asia, Central Asia and Middle-east offers promising trade and investment opportunities, including transit trade, that need to be exploited fully.

As identified by the Planning Commission, inadequacy and inefficiency of transport system annually costs the economy more than Rs220 billion. It also constrains economic growth, reduces export competitiveness and hinders social development.

Documentation, clearance, movement, and electronic data interchange require modernisation of the transportation. The vision for the sector is establishment of a well-integrated transport system.

The strategic thrust is on optimal utilisation of the existing capacity, improved management for maintenance and operation and coordinated use of various modes of transport.

As an important sector of the economy, the sector contributes 10 per cent of the GDP and 17 per cent of the gross capital formation (GCF) , and covers road transport, railways, ports, shipping and aviation. Facing challenges of todayÃ¢â¬â¢s global trade presupposes availability of a modern and comprehensive infrastructure.

To meet the futuristic requirement, a plan has been devised under the name of National Trade Corridor (NTC). Estimated to cost $6 billion, NTC is envisaged to ensure transportation time for containers and trucks of not more than 36 hours from Karachi to Peshawar, for meeting the domestic requirements and for providing transit facilities to Central Asia, Western China, Afghanistan and Iran.

The World Bank has offered $1.8 billion and the Asian Development Bank (ADB) has agreed to provide $1 billion for the NTC plan which is . expected to be implemented in about five years. According to official statement it is estimated to save $5--7.5 billion annually.

NTC is essential for supporting 7-8 per cent of the sustained economic growth annually. The plan envisages improving PakistanÃ¢â¬â¢s share of world trade from 0.2 to 1 per cent by 2030 and increasing its exports from $17 billion in current FY to $250 billion by 2030.

It will enhance regional connectivity through trade links and energy and transport corridors with China, the Central Asian Republics (CAR), Afghanistan and Iran. Mention may be made of the Himalaya Pipeline, proposed by Pakistan to China, linking Gwadar Port , carrying Middle-east crude to the western border of China and avoiding the narrow piracy-prone Malaca Straits, with 80 per cent Chinese oil imports passing from there.

Chinese have shown interest in this proposal. Both the governments have agreed to upgrade Karakoram Highway and the pipeline would go in tandem with that. Both sides have also agreed to extend PakistanÃ¢â¬â¢s railways up to the Chinese border. All these developments are up-hill tasks, but with the support of China it appears to be achievable.

Seaports as interface between national and international segments of logistics will play a key role in achieving the goals of NTC. KPT as the prime seaport that handled a total cargo volume of 32 million tons, including 1.144 mio.TEUÃ¢â¬â¢s during 2005-06, plans upgrading of the port infrastructure, as well as the development of a new state-of-the-art facilities.

Under the up-gradation, KPT is poised to undertake a massive reconstruction. In all, 13 berths will be reconstructed and deepened up to 16 metres, at an estimated cost of Rs4.5 billion. Further, a 10-berth container terminal has been planned, with 18 metre draft alongside, costing $1.2 billion, envisaging completion by 2010-12, with annual total capacity of 1.5 millionTEUs, capable to berth container vessels with carrying capacity up to 14000 TEUs, to be constructed at east of Keamari Groyne.

The first phase is to be operational by June 2009, with four berths of total 1500 metre quay length, 700 metre wide turning basin, navigational aids and protection works, estimated to cost around $530-550 million. The terminal will be connected with KPT cargo village to be set up on an area of 1303 acres through reclamation of land in the Western Backwaters providing modern facilities to the trade.

The PQA--the countryÃ¢â¬â¢s first industrial port-- is planning to raise its annual cargo handling capacity from current 30 to 50 million tons. In August 2006, PQA signed contract with Dubai Port World (DPW), whereby DPW will invest $211 million on the development of second container terminal Ã¢â¬â extension of the present QICT at PQA, marking a 1.15 million TEUÃ¢â¬â¢s growth, enhancing total TEUÃ¢â¬â¢s capacity of the port to 1.75 million TEUÃ¢â¬â¢s annually.

The DPW has bought P&O, the majority share holder as well as operator of QICT at PQA. Gwadar Port, at the mouth of Persian Gulf, expected to start operation in a matter of weeks, has been assigned to Singapore Port Authority (SPA) for operation on long-term basis. SPA holds enviable position of being the top or the runner-up container port of the world in competition with Hong Kong.

Pakistan Railways--as its contribution to the goals of NTC--, in its modernisation programme is augmenting its fleet of freight wagons (FW) for which the government has approved Rs5.33 billion with Rs2.967 billion as foreign exchange component. IDB has approved $39 million loan to modernise its fleet of high capacity FW, plus use of $16 million left-over from an on-going loan.

Under this project, the PR will procure 300 high capacity FW in CBU and 700 FW in semi/complete knock-down(SKD/CKD) to be manufactured in Mugalpura Workshop (Lahore). About 64 per cent of the FW fleet has become obsolete.

Gwadar is planned to be linked with Quetta at a cost of Rs40 billion. As to the road infrastructure, the federal minister of communication, has stated that 46 highways are under construction at a cost of Rs400 billion, with broadening of main highways, including Karakoram Highway and extension of Gwadar Highway to Hub Road. Super Highway connecting Karachi with Hyderabad is being upgraded to 6-lane motorway status at a cost of Rs7 billion. In Karachi, Northern Bypass and Lyari Expressway, along with a number of flyovers, underpasses, and development of elevated highway from Jinnah Bridge to Quidabad for providing signal-free movement between KPT and PQA, would enormously add to the speed and efficiency of NTC.

http://www.dawn.com/2007/02/26/ebr14.htm


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## Owais

*ECC approves package for Chinese economic zones: no system devised against cement price hike *

ISLAMABAD (February 27 2007): The Economic Coordination Committee (ECC) of the Cabinet on Monday failed to formulate any mechanism to punish the 'unjustified' profit making cement sector, and, rather used lip service by saying that "we will never tolerate any artificial increase in cement prices".

Presided over by Prime Minister Shaukat Aziz, the ECC meeting approved a policy package for 300 acres land for economic zone, to be designed near Kala Shah Kaku Interchange (M 2 Motorway), exclusively for Chinese investors and Pak-China joint ventures.

After the ECC meeting, Dr Ashfaque Hasan Khan, Economic Advisor to Finance Ministry, told journalists that the ECC meeting had discussed cement prices issue in detail and observed that prices were manoeuvred for one week (February 1 to 8) which hiked the average prices from Rs 229 to Rs 271 per bag.

He was of the view that there was a lot of variation in prices in one week as on February 1, the price of a bag was Rs 210 at Lahore which rose to Rs 300, while in Rawalpindi/Islamabad it touched Rs 292 on February 8. "Sudden increase was absolutely unjustified because this was not based on the principle of demand and supply," he argued.

He claimed that the Prime Minister had taken strong exception to this situation and made it clear that "we will never tolerate any artificial increase in cement prices". Dr Ashfaque said that the Ministry of Industries had been directed to monitor movement of cement prices continuously and place the information before the ECC.

Cement prices were between Rs 235 and Rs 245 per bag on Sunday. The Monopoly Control Authority (MCA) has also been asked to investigate the matter and submit its report to the Prime Minister. Asked what mechanism the government has formulated to take action against the responsible cement makers or dealers, Ashfaque said that he did not know about the action, as he was there to tell about the decisions.

The ECC meeting also took serious note of sudden increase in flour prices in the country and especially when wheat stocks stood at 2.4 million tons as of February 24 and wheat production target of 22.5 million tons was expected to be achieved.

"There are indications that we will be achieving production target; there is no justification of any increase in flour prices and the government will not allow flour mills to fleece the public," the ECC said, according to Dr Ashfaque.

He said that the Principal Secretary to Prime Minister has been directed to write letters to the Chief Ministers to hold meetings with representatives of flour mills associations and resolve the issue immediately. Minister for Food, Agriculture and Livestock would co-ordinate between the provinces and flour mills associations, he added.

The ECC also noted that the prices of tomato had declined substantially and, on Sunday, the price was one rupee per kg in Thatta. He said the ECC has directed Minfal and Ministry of Industries and Production to invite prospective investors for setting up tomato paste industry so that prices should not widely fluctuate.

All financial incentives designed for economic zones would also be available to the joint venture of Ruba Group Pakistan and Haier Group of China, he said.

The policy package, finalised after threadbare discussions at different forums, included import of plant, machinery, equipment and accessories for zone development, and the projects in the zone to be fully exempted from duties and taxes.

The CPEZ will also enjoy tax holiday for a period of five years for projects in the zone from the date of starting commercial operations. This shall also be available to the developers in the zone. Moreover, existing initial depreciation allowance of 50 percent shall be considered enhanced to 100 percent.

He said that normal incentives for exports, as available to projects established anywhere in the country, would be applicable to exports from the projects in the zone. Dr Ashfaque said that the federal government/agencies would provide gas, electricity and other utilities at the zero-point of the zones while captive power generation will also be allowed to developers of the zones.

He said that provincial governments would be directed to construct approach roads up to zero-point of the zone while concerned agencies will establish their offices within the zones to provide one-window facility. The management of the zone shall provide office accommodation along with the utilities.

They said that service delivery to complete required processing/procedures within the zones will be provided at the doorsteps of the investors, besides free facilitation service and guidance to investors by the Board of Investment.

The projects or joint ventures can be set up in the zones by Chinese, Pakistanis and investors from other countries in accordance with Pakistan's investment policy.

Dry port facility would be provided in the zone to facilitate imports and exports while Punjab government would facilitate Haier-Ruba Group to acquire land for SEZs, he added. The federal government may make up the amount for land acquired for the SEZs from the Federal PSDP, he said.

Dr Ashfaque said that the President during his visit to China in November 2003 had desired the establishment of China-specific industrial and high-tech zones in Pakistan. He said that total investment during the first seven months of current fiscal year was $3.674 billion against $1.64 billion of same period of last year, which showed 123.3 percent increase.

Regarding new Gwadar international airport, he said that Planning Commission Deputy Chairman has been asked to discuss the issue with Balochistan Governor and resolve the issue of land and price.

Answering a question, he said that the ECC did not agree with Defence Ministry's proposed airport, saying that such a big airport was not required for the time being. The ECC rejected a payment rescheduling request by BNP (Pvt) Limited, as proposed by Capital Development Authority (CDA), directing that the issue should be dealt at Board level.
http://brecorder.com/index.php?id=532934&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*US warned against aid suspension *

ISLAMABAD (February 27 2007): President General Pervez Musharraf has warned Washington against possible legislation to cut off funding to Pakistan by the Democrat-Congress under the influence of western media spreading misperceptions about Islamabad's commitment to fight terrorism.

In his meeting with visiting US Vice President Dick Cheney here on Monday, President Musharraf expressed concern over the "proposed discriminatory legislation regarding US aid to Pakistan and misperceptions being created by the western media about the country's vital efforts in fight against terrorism," said a press statement.

Musharraf's remarks seemed to have been provoked by a New York Times report conveying that US President Bush had decided to tell his Pakistani counterpart that the Congress might cut off funding to Pakistan if military regime did not accelerate its drive in hunting down al Qaeda and Taliban operatives.

US Vice President Dick Cheney, who flew in here unannounced en route to Kabul, called on President General Pervez Musharraf and stayed with for about two hours. The two leaders discussed a number of regional and international issues including Tehran's nuclear stand-off and Taliban's would-be spring offensive.

The US vice president's visit coincided with the trip to Islamabad by British foreign secretary Margaret Beckett who also called on President Musharraf and apprised him of her government's position on Afghan imbroglio where the Taliban insurgency is said to be acquiring the status of a national liberation war.

The President told Cheney that the international community was collectively responsible for defeating the scourge of terrorism and curbing militant activities inside Afghanistan. "Pakistan has done maximum in the fight against terrorism and stressed joint efforts to achieve the desired objectives," the statement added.

During the meeting Musharraf emphasised that "most of the Taliban activities originated from Afghanistan and the solution of the issue also lies within that country".

He said that Pakistan was a victim of the spill over of Taliban influence in the Fata and in Afghan refugee camps in Balochistan. The President underlined that Pakistan, Afghanistan, US forces, Nato and ISAF will have to take the joint responsibility to stop illegal crossings along the over 2400-km long border in an inhospitable terrain.

He said Pakistan had deployed over 80,000 troops and set up 1000 check posts along the porous border in contrast to only 100 posts on the Afghan side. According to the statement, the US Vice President appreciated Pakistan's pivotal role in the fight against terrorism, underscored that sustainable mutually beneficial multifaceted ties should be further augmented.

But he also expressed "US apprehensions of regrouping of al Qaeda in the tribal areas and called for concerted efforts in countering the threat". He expressed serious US concerns on the intelligence being picked up of an impending Taliban and al Qaeda 'spring offensive' against allied forces in Afghanistan, the statement added.

About the peace agreement with tribal elders in North Waziristan, the President said it was the way forward. Musharraf said that political, administrative steps taken in the tribal areas would help curb al Qaeda and Taliban activities and avert any Talibanization in the area.

He stressed the need for weaning away the majority of moderates from the militants and that could only be achieved through intensified economic activities coupled with strong administrative and political measures.

The President also called for swift setting up of Reconstruction Opportunity Zones (ROZs) in FATA to generate more economic activity for job creation and poverty reduction which, he added, would strike at the core of extremism and terrorism.
http://brecorder.com/index.php?id=532931&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*India snaps trade ties with Pakistan under Safta *
ISLAMABAD: India has snapped trade ties with Pakistan under the South Asia Free Trade Agreement (Safta), as it has unilaterally withdrawn tariff concessions that it extended to Pakistan under the regional agreement, which is effective since July 1, 2006.

However, Pakistan expressed regret over the development and termed it sheer violation of Safta. Since July 1, 2006, New Delhi has been complaining against Islamabad that Pakistan is not extending equal treatment to India as it is extending to other Saarc countries under Safta. In return Pakistan is seeking a level-playing field from India and removal of para-tariffs and non-tariff barriers (NTBs).

However, Kamal Nath, the Indian commerce minister, lost patience and announced the decision of unilateral withdrawal of tariff concessions to Pakistan from Tuesday during the second meeting of the Safta Ministerial Council (SMC) in Kathmandu on Monday.

Commerec Minister Humayun Akhtar Khan represented Pakistan at the conference. Pakistan&#8217;s Commerce Secretary Asif Shah informed the press about the Indian decision at a briefing, saying it is a violation of Article 7 of the Safta agreement. Pakistan reserves the right to act under the provisions laid down in Article 20 of Safta.

He said under the article, all options would be exhausted to settle the issue, and a strategy would be evolved when the commerce minister lands here from Kathmandu today (Tuesday), in consultation with the top leadership of the country and foreign office. When asked if Pakistan will take punitive action to reduce or erase the positive list regime under which trade is under way with India, he said: &#8220;We would prefer to act under the provisions laid down in Article 20 of Safta.&#8221;

Responding to a question, he said Pakistan would not review its tariff concessions extended to all member countries, including India under Safta. He said Pakistan remains committed to the trade liberalisation programme as stipulated in the Safta agreement.

He said during the ministerial conference Pakistan distributed the non-paper among the Saarc ministers about the reasons for not extending equal treatment to India. In the non-paper, Pakistan has highlighted the massive restrictive tariff regime of India, which is why Pakistan&#8217;s exports are not making any room in the Indian markets.

Pakistan in its non-paper mentioned that India has imposed on the goods of Pakistan and other countries para-tariffs, countervailing duty (CVD), Special CVD, national calamity duty, additional duty of excise, education cess.

India has also imposed massive non-tariff barriers, owing to which Pakistan has no level-playing field with it to increase its exports to India. Asif said India has termed the positive list regime as non-tariff barrier of Pakistan.

Online adds from Kathmandu: India and Pakistan have agreed to hold a bilateral meeting within next six months to resolve their differences over Safta. Commerce Minister Humayun Akhtar Khan and his Indian counterpart, Kamal Nath, stated this at separate press meetings they held in Kathmandu on Monday.

Though agreeing to discuss the disputed issues, the two countries, however, remained deadlocked, apparently due to their disagreement over the Kashmir dispute though neither side referred to the issue directly. &#8220;Pakistan and India have different positions on certain implementation and market access issues, like the non-tariff barrier,&#8221; Humayun said. &#8220;Both countries disagree on these issues. If there are more discussions (between the two countries), it will help the Safta process.&#8221;

Admitting that Safta success depends on the success of Indo-Pak ties and trade, Khan said Islamabad was optimistic of better business with India in future. &#8220;That is why the leaderships of the two countries are engaged in a composite dialogue. It includes both political and trade issues and the two areas are moving in tandem.&#8221;

The minister said a joint study group, comprising joint secretaries of both countries, will be formed to discuss how to extend bilateral ties. &#8220;We recognise the potential to increase trade in the region and that India and Pakistan have a key role to play,&#8221; Khan said.

According to him, Pakistan was concerned over the non-tariff barriers imposed by India though New Delhi had given the most favoured nation status to Islamabad. &#8220;In the last few years, trade has been increasing in India&#8217;s favour,&#8221; he said.

India, on the other hand, accuses Pakistan of not complying with the Safta agreement. &#8220;There can&#8217;t be qualified or limited ratification (by Pakistan) where India is concerned,&#8221; Nath said and added, &#8220;Pakistan has to comply with the Safta agreement.&#8221;

The Indian minister said India was committed to reducing non-tariff and &#8220;perceived&#8221; barriers and was participating in Safta to provide greater market access. However, Pakistan had not complied with the treaty and where India was concerned, it had only issued a small, positive list of goods that could be treated, Kamal Nath said. &#8220;Pakistan&#8217;s non-compliance is an issue that fractures the solidarity of Saarc,&#8221; he said adding, &#8220;We do hope Pakistan recognises the benefits to its domestic market.&#8221;

As a sign of India&#8217;s desire to see Safta succeed, Nath said India was not withdrawing the concessions given to Pakistan. &#8220;Since Pakistan has not complied (with Safta provisions), we are entitled even today to deny Pakistan such benefits,&#8221; he said. &#8220;But we are not doing it.&#8221; 
http://geo.tv/geonews/details.asp?id=2697&param=1


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## Owais

*Growth rate target of 7 percent would be achieved: Omar Auyb * 
DUBAI: Federal State Minister for finance, Omar Ayub Khan has said that the rate of inflation would be squeezed down to 7 percent by the end of the current fiscal year, while the economic growth rate target of 7 percent for this fiscal year would be achieved.

In an interview to a foreign news agency, Omar Ayub said that the economic development in the country triggered prosperity and, thereby, an enhanced purchasing power of the people unleashed increasing demand for food and beverage items, which was one the reasons of high inflation rate emanating from high demand as compared to the supply.

However, the prices of food and beverage items were expected to mellow down by the increasing competition in the retail sector and the investment in food storage sector, which would finally pave the way for bringing the inflation rate down to the level of 7 percent by the end of current fiscal year, he elaborated.

Omar Ayub said that the foreign investment in Pakistan during the current fiscal year was likely to double to reach $6 billion, which again would help achieve fulfilling the set target for economic growth. 
http://geo.tv/geonews/details.asp?id=2711&param=3


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## Janbaz

* Inflation to drop below 7pc*

DUBAI: PakistanÃ¢â¬â¢s inflation rate should fall below seven per cent by the end of current fiscal year, helped by competition in the retail sector which will check increases in food prices, Minister of State for Finance Omar Ayub Khan said on Monday.

The country is on track to meet its target of seven per cent growth in gross domestic product for the fiscal year which ends in June, he said. Pakistan set an inflation target of 6.5 per cent for the year.

Ã¢â¬ÅWe are trying our best to achieve this,Ã¢â¬Â Khan told Reuters in an interview in Dubai. The consumer price index rose 6.64 per cent in January from a year earlier, recording the slowest inflation rate for nine months, in part due to falling food prices. Food and beverages account for 40.34 per cent of the index.

Despite this easing of price pressure, the central bank has forecast that inflation will overshoot the 6.5 per cent target. Khan said the main driver of inflation was demand for food, which was outpacing supply as economic growth increases wealth.

The proportion of Pakistanis living below the poverty line fell to 23.9 per cent in 2004-05 from 34.5 per cent in 2000-01. Competition in the retail sector and investment in food storage facilities in provinces would help ease shortages and bring prices down, he said.

GermanyÃ¢â¬â¢s biggest retailer, Metro, opened a store in Pakistan last year. Ã¢â¬ÅInternational players are coming to Pakistan and their prices are 30 per cent below (the) market,Ã¢â¬Â he said. Ã¢â¬ÅThe provinces are also investing in their retail and vegetable markets.Ã¢â¬Â

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=44600


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## Janbaz

*Petronas and MCB to buy PSO*

ZAMIR SHEIKH
KARACHI - MCB Bank has entered into an agreement with Malaysian oil giant Petronas to jointly participate in bidding to acquire 51 per cent majority stake in Pakistan State Oil along with its management control, MCB officials said on Monday.
The Privatisation Commission is privatising the PSO by June this year. PSO, the largest public sector oil giant in Pakistan with annual turnover of over $ 5.8 billion, is engaged in storage, distribution and marketing of petroleum products.
MCB Bank and associates, comprising Nishat Mills Ltd, Nishat Chunian Ltd, DG Khan Cement and Adamjee Insurance, were among the groups that have submitted their statement of qualifications in the privatisation commission for PSO in Jan 2007.
It is believed that the MCB Bank has joined hands with PETRONAS to meet the official mandatory requirement of having exposure in the oil sector before acquiring the PSO.
PETRONAS, Petroliam Nasional Berhad, was incorporated on 17 August 1974 under the Companies Act 1965. It is wholly owned by the Malaysian government and is vested with the entire ownership and control of the petroleum resources in Malaysia through the Petroleum Development Act 1974, an Act of Parliament. At present, PETRONAS has 51 producing oil fields in Malaysia. These oil fields produce five blends of crude: Tapis, Labuan, Miri, Bintulu and Dulang. All these blends are of high quality and generally command a premium price over benchmark Brent crudes on the world market.
PSO currently has around 3,700 retail outlets across Pakistan, with another 209 outlets operating on lease. The company enjoys 78 per cent share of the black oil market and 57 percent of the white oil market in the country. PSO has a net worth of 0.34 billion dollars (Rs20.8 billion) and market capitalization of around 0.9 billion dollars (Rs59 billion).
PETRONAS is fully-integrated oil and gas corporation with total assets of 73 billion dollars and a turnover of over 44 billion (FY ended 31st March 06). A fortune 500 company, it is engaged in the entire spectrum of oil and gas business from exploration to marketing, both in Malaysia and globally, with operations in over 31 countries. 
PETRONAS, currently produces an average of 24 million standard cubic feet of gas per day in Pakistan and is involved in three upstream blocks in the country. Interest in onshore Mubarak Block, Sindh Province. Completed the construction of Rehmat Gas Plant that is now supplying processed gas to the pipeline and the refinery.

The Nation.
http://www.nation.com.pk/daily/feb-2007/27/bnews1.php


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## Neo

*2005-06 PRSP spending exceeds budget provision *

ISLAMABAD (February 27 2007): A total expense of Rs 434.591 billion has been spent on Poverty Reduction Strategy Paper (PRSP) during 2005-06, disclosed in PRSP Draft Annual Progress Report. The expenditure was far above the budget provision of Rs 324 billion.

The draft report was presented in a PRSP workshop on "Structural Issues in Poverty Reduction" organised by PRSP Secretariat, Ministry of Finance and Asian Development Bank, Pakistan Resident Mission, held here on Monday.

State Minister for Economic Affairs Hina Rabbani Khar, who presided over the concluding session, said PRSP has served Pakistan well. The poverty has been brought down to 23.9 percent, it was 34.5 percent in 2000-01.

Moreover, she said, some prerequisites are essential to bring structural changes in alleviation of poverty, which are linked with country's growth mentioning of new vistas of employment opportunities and income generation.

State Minister said poverty is not related to money only but other factors like education and accessibility also counts a lot. There is lot of work to be done to achieve the goals of PRSP and it is a difficult task. There are numerous challenges ahead like education, health, and employment etc, she added.

Deputy Director General, Central and West Asia Regional Department ADB Xianbin Yao said, Pakistan has come a long way from regional instability, economic growth, decline in poverty and this workshop would provide opportunity and help to resolve many issues, he added.

These events, he said, develop integration, innovation and inclusiveness. Explaining that Yao said that innovation would come from technology and institutions and community participation and involvement is important for persistent economic growth.

Speaking on the operational challenges, he said the strong commitment of the government to undertaking wide-ranging reforms, improved macroeconomic fundamentals including high sustained growth that reached 8.4 percent in FY 2005 as well as enhanced debt sustainability, and the current and emerging development needs of the economy, have all set the stage for high levels of ADB assistance to the country.

Joint Secretary External Finance and Policy, Ministry of Finance Ahmed Farooq said that PRSP was preceded by Interim-PRSP that was instituted in November 2001 to arrest the high and rising trend of poverty in Pakistan at the start of the new millennium. It changed to full-fledged PRSP in 2003.

He said Pakistan in the region has an edge over other countries of social mobilisation, which would be included in PRSP-II, he added. He said PRSP presents a comprehensive strategy for poverty alleviation encompassing both broad macroeconomic and growth framework along with targeted micro level interventions, based on the four pillars: accelerating economic growth while maintaining macroeconomic stability, improving governance, investing in human capital and targeting the poor and vulnerable.

He said economic growth is obvious from many point of views like, even the lower class have a mobile, banks have expanded, foreign investment has increased. If the country, he added, was not progressing, how the industrialists and foreign investors would had been interested in investing more, they are sharp enough to assess and invest in safe ventures.

By virtue of this economic growth, 38 million people have been taken out of poverty, he concluded. The workshop paid lot of emphasis on the monitoring of the data, which is a basic need and a very important aspect to read the ground reality and economic situation.

Apart from the above, the report also unveils that 81.07pc and 25.63pc expenses on administrative of justice and law and order respectively have increased from the previous year.

Deputy Secretary, Ministry of Finance, Babur Beg said the budget for PRSP for 2005-06 was Rs 324 billion, BUT IT exceeded, mainly due to natural calamities in the form of earthquake, which struck the nation on October 8, 2005. The expenses of natural calamities in the budget as shown in the draft are 1976pc more than the previous year.

http://www.brecorder.com/index.php?id=532961&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'One village-one product': Smeda to execute 100 pilot projects under Ahan *

LAHORE (February 27 2007): The Small and Medium Enterprises Development Authority (Smeda) in collaboration with the Business Support Fund, established by the Government of Pakistan, has planned to execute 100 pilot projects in two years under 'Aik Hunar-Aik Nagar' (Ahan) programme so as to replicate successful models of 'one village-one product' adopted by Japan and Thailand to give boost to their exports.

As many as 50 pilot projects would be executed in each year for which products and areas have already been identified, sources told Business Recorder here in Monday.

They said Ahan seeks to modernise micro and small enterprises in rural and peri-urban areas through business development services leading to creation and diversification of sustainable income earning opportunities, particularly for landless, women, and wage earners.

After his visit to Japan and Thailand, Prime Minister Shaukat Aziz had asked Smeda to evolve comprehensive strategy for adopting models of 'one village-one product' in Pakistan so that hidden potential in various towns could be exploited by providing technical skill, improving designs of the products which would not only help alleviate poverty but also fetch precious foreign exchange for the national exchequer.

The pilot methodology prepared for the execution of projects include area identification, product studies, product development and quality assurance, focus groups formation, capacity building, technology up-gradation, promotion and market linkages. The range of products selected for the pilot projects are: traditional handicrafts, decoration pieces, items of daily or occasional use, any other product, which, if developed, can bring income to its poor community.

The targeted cities/towns in Punjab for the potential products that have been selected included; Sillanwali for handicrafts (lacquer work), Multan/Dera Ghazi Khan and Bahawalpur for embroidery, Karror Pacca for block/screen printing, Murree/Kotli for work 'gabba' (woolen embroidery, Chiniot for wooden furniture, Multan for blue pottery, 'Khussa', camel bone, Kamalia for 'Khaddar', Gujranwala for 'Khais', Jhang for basket making, Rawalpindi and Multan for 'Gota' work, Rawalpindi for doll-making and 'Moti Karrai', Chakwal and Rawalpindi for crochet, Multan and Ghakkar for 'Darree' weaving, Taxila for stone work, Kasur for 'Khussa' and Khushab has been identified for 'Lungi'.

In Sindh, Hyderabad has been identified for bangles, Khyber (Near Hala) for 'Ajrak', Khairpur for hand-made silk, Theri (near Khairpur for dates processing, Shikarpur for pickle, Nasarpur for ceramic tiles, Mirpur Khas and Islamkot for carpets (handlooms), Larkana/Thattta/Hala for cap, Hala for heritage furniture, Rali, ceramic, clay products and Thar for 'Rilli'.

Similarly, the towns/cities from NWFP-Northern Areas and AJK identified for various products, including Swat for 'Topi', 'Khes', shawls, embroidery/'Khaddar' weaving and Swati 'Pulkari', Charsada/Kohat for 'chappals', 'Khaddar' weaving, Peshawar for brass work, wax work, Gullman for rugs, Dera Ismail Khan for heritage furniture, 'Zari' work, 'Tagar' weaving, mirror work, 'Dukki and dates, Muzaffarabad for paper Mache, Chitral/Gilgit for thread weaving, Mardan for Khaddar weaving, and Hunza for Sharma weaving.

While the cities identified from Balochistan are; Loralai, Kalat, Mastung, Changhai, Quetta, Qila Abdullah, and Lehri for handmade carpets, knives, daggers and guns, Pishin, Khuzdar, Khulo, Loralai, Zhob, Musakhel, Barkhan, Muslim Bagh, Dera Bugti, Sui, Mustung, Kharan, Punjgar, Mitheri and Quetta for embroidery, Dera Bugti, Sui, Jaffarabad, Pishin, Khuzdar, Kalat, Barkhan, Loralai, Quetta for 'Chappals',

Quetta, Mustung, Kalat, Sibi, Lorali for silver jewellery, Sibi, Bakhtiarabad and Quetta for clay pots, Qila Saifullah, Barkhan Lorali and Quetta for woolen blankets and leather embroidery.

The project of silverware has already been initiated in Bahawalpur in collaboration with the Beacon House National University, the Jewellers Association, and the Bahawalpur Chamber of Commerce and Industry. A 12-day course was launched that benefited 10 craftsmen and 300 others indirectly.

http://www.brecorder.com/index.php?id=533011&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Emerging business opportunities, risks elaborated *

KARACHI (February 27 2007): Rohit Talwar, an internationally renowned futurist and business strategist from UK, said there were four key factors, which would dominate the business environment in the period to 2020.

According to a press release on Monday, he was addressing an exclusive corporate gathering on the key issues of building organisations that could create global impact.

Rohit, in his talk during the first exclusive visit to Pakistan, focused on how companies could address emerging opportunities and risks, develop powerful and inspiring future visions and create organisations capable of achieving and sustaining peak performance in a fast changing environment. He has consulted and spoken in over 20 countries and his clients include ABN Amro, BBC, BAT IBM, Intel, Nokia, Novartis, Shell and many more.

http://www.brecorder.com/index.php?id=533013&currPageNo=2&query=&search=&term=&supDate=


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## Janbaz

*Orascom completes $750 million bond offering*

ISLAMABAD (February 27 2007): Orascom Telecom Holding S.A.E., the parent company of Mobilink recently announced that it had successfully priced and placed 750 million dollars of Senior Notes due 2014 (the "Notes").

The transaction was increased from 500 million dollars due to favourable pricing and very strong investors' demand. The offering is a milestone for Orascom Telecom, for Egyptian corporate issuers and for emerging markets in Europe, the Middle East, Africa and Asia.

The placement of the Notes is one of the most successful debt capital markets transactions of its kind and sets a benchmark in the market in several respects, including first international corporate bond issuance by an Egyptian corporate since 1999, the largest ever debut bond for sub-investment grade issuer in Eastern Europe, the Middle East and Africa and the largest ever sub-investment grade corporate bond in the Middle East and Africa to date.

The bond received tremendous response with fund managers buying 60 percent, banks and retail intermediaries 30 percent and insurance companies 10 percent. More than 400 accounts participated. The attraction was driven by a company that is developing a mobile empire whose six main operating subsidiaries are in Algeria, Tunisia, Iraq, Egypt, Pakistan and Bangladesh. Pakistan's Mobilink offered the best comparable, having issued bonds last year with an 8-5/8 percent coupon but trading some 100bp tighter - 238bp over mid-swaps - as Orascom prepared to launch last week. ABN Amro and Deutsche Bank were joint books and Citigroup and Credit Suisse co-leads for Mobilink, while ABN and Deutsche were co-leads on last week's bond, reversing roles for banks that have all lent money to Orascom.-PR

Business recorder.
http://www.brecorder.com/index.php?id=532975&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'Growth benefits upper class onlyÃ¢â¬â¢*

ISLAMABAD: The gap between the rich and poor has widened in Pakistan during the rule of the incumbent regime, as the higher growth trajectory provides benefits only to the upper class compared to the poorest segments.

This was the crux of the discussion held during a workshop organised by the Asian Development Bank (ADB) in collaboration with PRSP Secretariat, Finance Ministry on Ã¢â¬ÅStructural Issues in Poverty ReductionÃ¢â¬Â here on Monday.

Minister of State for Economic Affairs Hina Rabbani Khar told the participants in the concluding session that the higher growth was not enough condition to bring the chronic poor out of poverty line.

Dr Talat Anwar who is currently working in the State Bank of Pakistan as Joint Director and previously affiliated with Centre for Poverty Reduction and Income Distribution (CPRID) of the Planning Commission, said that during the period from 1998-99 to 2004-05, the growth effects remained dominant, the redistribution seems to have benefited only in urban areas. On the other hand, redistribution seems to have adversely affected the poor in rural areas. The growth strategy is important for poverty reduction in Pakistan but the redistribution in favour of poor should not be ignored if the government intends to enhance the effect of growth on poverty reduction.

Ã¢â¬ÅThere are some studies which show that there is an increase of one per cent amongst the poorest population of the country between 2001-02 to 2004-05. This growth strategy is resulting into exclusion of poorest from the whole thinking of the government and there is need to adopt targeted approach to protect the poorest segments of the society,Ã¢â¬Â he added.

Dr GM Arif from Pakistan Institute of Development Economics (PIDE) said that the unemployed educated youth was a matter of concern especially in NWFP and Balochistan. He said the tackling of chronic poor would be the main issue for the government in years ahead.

Dr Sarfraz Qureshi said on the occasion that there is lack of Independent research institutions in Pakistan. He said the nature of prevailing poverty does not know by anyone in the country and without having in-depth analysis it will not be easy to tackle this complex problem.

The chronic poverty, he said, will remain there as the government in last seven years have done all easier things but the difficult decisions are lying ahead. He said all safety nets have lowest coverage and funding and there are also problems of leakages.

Mohammad Saleem said in his presentation that there are 52 million illiterate people in the country. The government, he said, is planning to bring changes in the definition of literate population as currently all those are literate who can read and write. He said the government will change this definition and all those will be considered literate who can read a paragraph of English with understanding and be able to do simple calculations.

With the existing definition of literate persons, he said the literacy ratio stood at 54 per cent at the moment. The economists also recommended the government to adopt targeted cash transfers for alleviating poverty.

An independent economist Dr Kaisar Bengali said on the occasion in most of the presentation the data and analysis was done on the districts of Punjab, which cannot be replicated for whole Pakistan. 

He also criticised the term community participation in development strategy is continuously misused in the context of Pakistan as during the Social Action Program the feudal prevailed on the name of community participation resulting into failure of that scheme. 

http://www.thenews.com.pk/daily_detail.asp?id=44594


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## Neo

Tuesday, February 27, 2007 

*Poverty likely to persist in Pakistan: ADB official*

ISLAMABAD: Pakistan has made a significant achievement in poverty reduction, but the outcome has not been consistent and sustainable over a long period of time.

There is a close correlation between economic growth and reduction in absolute poverty; and due to this reason, poverty may persist in Pakistan unless strong economic growth is sustained. The absolute poverty would stay relatively high by 2015.

Senior Public Resource Management Specialist of the Asian Development Bank (ADB) Dr Emma Fan told a Workshop on Ã¢â¬ÅStructural Issues in Poverty ReductionÃ¢â¬Â Organized by the ADB and PRSP Secretariat Ministry of Finance here on Monday.

The GDP per capita of $596 in Pakistan is relatively low against lower middle-income countries having GDP per capita of $1612, and the world at $5656.

The growth in GDP per capita in Pakistan was moderate 2.3%% per annum during 1980 to 2005 and Pakistan has not achieved high and sustained growth. Economic growth in Pakistan during 1980 to 2005 was moderate, which stood at 5% compared with 9.5% in Peoples Republic of China.

She said that economic growth is, on average, pro-poor. The policies that promote growth, such as increasing openness, labor force participation and financial liberalization are conducive for poverty reduction. The complex dynamics of change in inequality make it difficult to target it as a policy objective. Policies to promote growth and reduce poverty are more likely to achieve desired results.

Talat Anwar in his paper on Ã¢â¬ËRole of growth and inequality in explaining poverty in PakistanÃ¢â¬â¢ recommended that economic growth as a strategy is important for poverty reduction for Pakistan, the contribution of redistribution in favor of poor should not be ignored, if the government intends to enhance the effects of growth on poverty reduction.

Ghulam Muhammad Arif, World Bank consultant in his paper on Ã¢â¬ËDemographic transition, education and youth unemployment in PakistanÃ¢â¬â¢ disclosed that working age population particularly youth is rising and child dependency is on decline as well. This bonus phase is likely to continue for the next two to three decades when old age dependency will start rising. He said that the benefits of the bonus phase for a country are associated with development of human capital and placement of youth in productive employment. He recommended a strong youth employment policy in Pakistan. 

Muslehudin in his presentation on Ã¢â¬ËAn analysis of PakistanÃ¢â¬â¢s growth experienceÃ¢â¬â¢ outlined that short term growth out look does not seem encouraging as many risks loom large that may weaken the economic growth momentum; and these include persistently high inflation, burgeoning current account deficit, recent decline in exports amid growing concerns about exports competitiveness, and heightened political uncertainty ahead of forthcoming elections.

Furthermore, there is risk of a slowdown in both private consumption and investment in rising interest rates environment that may force households and business to cut back on their spending and investment plans.

In a longer term perspective, growth looks vulnerable owing to a number of macroeconomic and structural weaknesses in the economy; the most important being low savings and investment, weak human capital base, lack of industrial and export diversification, low agriculture productivity, in adequate physical infrastructure and weak institutions and governance.

While addressing the structural weaknesses for long-term sustainability of growth is a challenging task, there are grounds for optimism too.

http://www.dailytimes.com.pk/default.asp?page=2007\02\27\story_27-2-2007_pg5_12


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## Neo

Tuesday, February 27, 2007 

*Oil and gas production declined by 4.8% in H1*

By Tanveer Ahmed 

KARACHI: The total oil and gas production decreased by 4.8 percent during the first half of current financial year compared with the corresponding period of last year due to a decline in output by some major fields.

The oil and gas production totaled at 58.5mnboe in July-December period of 2006-07 against 61.3mnboe oil and gas produced in the same period of previous year, the latest data of production made available to Daily Times indicate.

During the period under review, gas production declined by 5.8 percent to 50.52mnboe as compared with 53.34mnboe in the corresponding period of 2005-06, while oil production increased marginally 0.1 percent 7.98mnbbl against 7.97mnbbl of previous year.

The analysts of oil and gas sector attributed the decline in total production to the decline in the output by the Pindori, Pirkoh, Uch and Loti fields.

However, the start of the production by some newly-made discoveries in the oil and gas sector, are expected to increase the total production of the sector in the coming days, Hussain Yasar, an analyst at Firstcapital believes.

The countryÃ¢â¬â¢s oil and gas sector, especially the listed companies of the sector, has been making windfall in the recent times due to high international prices of crude oil with the growing profitability of these companies.

The exploration and production sector registered a healthy earning growth of 22 percent due to high crude oil prices in the first half of current financial year compared to same period of previous year.

Due to this strong earning growth, all the listed companies of the sector has shown positive growth in the profitability as total profitability of the sector reflecting a growth of 22 percent in the profitability. The total profitability of the sector stood at Rs.35.3 billion in the first half of the 2006-07 compared to Rs 28.9 billion during the same period of last year.

The growth in profitability of the sector has been attributed to a combined effect of higher international oil prices and relatively sustained production levels.

Also, the other income of the sector also depicted 22 percent growth due to the increase in the rates of return on short-term investments and secondly to rendering more geophysical services to outside parties.

The OGDC remained the largest contributor to the overall profitability of the sector by holding a share of 65 percent while the other two listed PPL and POL have respectively contributed 24 percent and 11 percent to the profitability.

Hussain Yasar noted that the sector holds strong prospects of future growth on back of higher energy prices and ongoing exploration & development activities. During the last few years, the government of Pakistan has continuously been focusing on the sector by sketching attractive policies in order to increase exploration and development activities.

During the first half, a total of five discoveries made were made in oil & gas sector, out of which three were by the OGDC as against last yearÃ¢â¬â¢s overall three discoveries. Ã¢â¬ÅWe expect the full year profitability of the sector to depict 29 percent growth as compared to the last yearÃ¢â¬Â, the analyst added.

http://www.dailytimes.com.pk/default.asp?page=2007\02\27\story_27-2-2007_pg5_2


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## Neo

*Privatisation is the key to Pakistan's economy*
BY LUCIA DORE (Senior Correspondent)

27 February 2007 

DUBAI Ã¢â¬â "The doors to Pakistan are open. There is a lot of hectic activity. If you see traffic jams and cranes in Dubai, you will soon see them in Pakistan too," said Pakistan's Minister of State for Finance, Omar Ayub Khan, at the Middle East IPO Summit being held in Dubai.

The privatisation of Pakistan's key industries is one of three pillars on which the continued growth and diversification of the country's economy depends, he said. The other two pillars are deregulation and liberalisation.

By formulating economic policy based on these three pillars the government has been able to boost growth, reduce poverty and improve income distribution, as well as diversify the economy, he said. The contribution of the agricultural sector to GDP is diminishing while the services sector is expanding. Consequently, the size of the middle class has grown which has a greater "propensity to consume," he added. 

Pakistan's GDP is forecast to expand 7 per cent in the fiscal year that began July 1, from 6.6 per cent in FY 2006 to reach about $135 billion. Foreign direct investment is forecast to reach $6 billion for fiscal year 2007 and "already it has already crossed $3 billion", said Khan. 

Pakistan's trade liberalisation and privatisation programmes are based primarily around the banking, electricity, telecommunication and energy sectors. Over the past 15 years, Pakistan has raised more than $6 billion selling state assets to help repay $36 billion of overseas debt. Among the assets that are currently up for sale are shares of four banks and a stake in PSO, which will be sold by June. The country will also sell shares of Habib Bank in an initial public offering by April. And there are plans to sell global depositary receipts in the bank, as well as in United Bank and National Bank of Pakistan, by June. 

Pakistan's economic performance continues to generate a great deal of interest, said Khan, and investors from the Middle East and Dubai, in particular, are looking for key investments in the country. The recent visit by His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, is an indication of this, he said.

Going forward, Pakistan would strengthen its competitiveness by continuing to create industry clusters, which help to promote knowledge transfer and build human capital. Pakistan's young population will also propel Pakistan's economic growth and will enhance its competitiveness against countries such as China and India. 

Speaking about capital markets and regulatory reforms he said countries "have to compete on global standards or be marginalised," and emphasised the importance of having a regulatory model that is "responsive and flexible". 

http://www.khaleejtimes.com/Display...usiness_February812.xml&section=business&col=


----------



## Janbaz

*Germany dissatisfied with investment mechanism*

OUR STAFF REPORTER 
ISLAMABAD - Germany expressed its dissatisfaction over the mechanism of dispute resolution, which discourages its companies and investors to come and invest in Pakistan, an official of German Embassy said on Tuesday. 
The issue was highlighted the issue by Patrick Heinz, Head of Economic Section of German Embassy in a meeting with the Nasir Khan, president Islamabad Chamber of Commerce and Industry (ICCI) here on Tuesday. 
He was also flanked by Johann Klomfass, Commercial Attache of the embassy in his visit to the chamber.
According to press statement of ICCI, the meeting reviews in details the bilateral trade relations between Pakistan and German. They vowed to take steps in promoting the trade between the two countries. 
The president of ICCI Nasir Khan urged the German government to play its good offices in initiating the Free Trade Agreement (FTA) between Pakistan and European Union (EU) and reminded that the EU-India FTA will leave negative affects on PakistanÃ¢â¬â¢s trade with Germany and other member countries of the bloc.
Patrick Heinz while assuring to play a role in promotion of trade, commended PakistanÃ¢â¬â¢s foreign investment policy. However, in addition he pointed, Ã¢â¬ÅGerman companies are facing problems in Pakistan as the dispute resolution mechanism is not effective,Ã¢â¬Â the statement quoted Heinz as saying.
He said Germany is offering Senior Expert Service (SES), and under this scheme German experts can visit Pakistan to give advice for the installation and expansion of projects. 
He also urged Pakistan to develop proper set up to promote tourism in the country. Ã¢â¬ÅPakistan has beautiful landscape and sites but security situation is one of the concerns for the tourists,Ã¢â¬Â he indicated. 

The Nation.
http://www.nation.com.pk/daily/feb-2007/28/bnews5.php


----------



## Janbaz

*IDB kicks-off $10b fund in May to reduce poverty*

JAVED MAHMOOD
KARACHI - Islamic Development Bank is set to kick-off a special fund with contributions from the member countries to launch poverty-reduction programmes in the member nations of the bank, The Nation learnt on Tuesday.
The fund of $10 billion would be launched in May this year at the 32nd annual general meeting of the Board of Governors of the bank, scheduled to be held in Senegal. 
The proposed fund has already received contributions from 21 member countries including Saudi Arabia and Kuwait, which have generously pledged one billion dollars and 300 million dollars respectively. The Fund, envisaged to take the form of a Waqf, is scheduled to start operations immediately after adopting its regulations at the 32nd AGM of the Board of Governors of the IDB in May 2007.
In line with the mandate given to the Islamic Development Bank within the framework of the Ten-Year Program of Action the member countries entrusted the IDB Board of Executive Directors and the Management to undertake necessary steps to establish a special fund for reducing poverty for the member countries. 
The objectives of the Fund include reducing poverty; eliminating illiteracy; eradicating major communicable diseases such as malaria, Tuberculosis and AIDS; and building the human and productive capacities particularly in the least developed OIC countries. The idea of launching the Fund was also well received by the United Nations General Assembly to which the IDB was invited in November 2006. 
It was learnt that a delegation of the IDB led by Abdoulaye Diop, the special envoy of the President of the Republic of Senegal and the current Chairman of the IDB Board of Governors, accompanied by Dr Ahmad Mohamed Ali, President of IDB, are currently on a tour of several member countries starting with Iran, Algeria, Libya, etc., to meet with the heads of states for resource mobilization for the Fund. 
The high level delegation will apprise the heads of states of the status of establishment of the Fund and solicit generous financial support of the member countries towards the realization of the Fund. 
Given the objectives and the gravity of poverty in the least developed countries, member countries will be urged to commit their contributions with immediate effect in order to enable the Fund to start operations immediately after the annual meetings of the Board of Governors scheduled to take place in Dakar, Senegal during 29-30 May 2007. 
Islamic Development Bank Vision-2020 presents a unique approach by making human dignity the cornerstone of the bankÃ¢â¬â¢s development agenda. It includes Ã¢â¬ËempowermentÃ¢â¬â¢ as a core value; makes Ã¢â¬Ëreducing povertyÃ¢â¬â¢ its strategic objective; and identifies Ã¢â¬Ëhuman developmentÃ¢â¬â¢ among its priority areas. The IDB has provided 4.2 billion dollars to finance various projects, half of which were for pro-poor activities. 

The Nation.
http://www.nation.com.pk/daily/feb-2007/28/bnews4.php


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## Neo

*CDWP approves 40 projects worth Rs 16.6 billion: panel to work out interest subsidy on CNG bus loans*

ISLAMABAD (February 28 2007): The Central Development Working Party (CDWP) on Tuesday constituted a Steering Committee to finalise Rs 5 billion interest subsidy on loans for facilitating the CNG buses project to be launched for plying 500 to 600 vehicles in Karachi, Lahore, Peshawar and Islamabad each by private sector and setting up of CNG stations in big cities.

CDWP approved some 40 projects worth Rs 16.6 billion and forwarded for approval three major and eight other development projects to the Executive Committee of the National Economic Council (ECNEC). The central development working party, which met here with Dr Akram Sheikh, Deputy Chairman Planning Commission in chair approved 21 infrastructure projects of Rs 9.6 billion, 14 projects of Rs 4.7 billion in the social sector and five projects costing Rs 2.3 billion in other sectors.

Area-wise allocation of the projects were ie seven projects for Punjab Rs 1.9 billion, two for Sindh (Rs 0.2 billion), two for NWFP (Rs 0.4 billion), seven for Balochistan (Rs 4.7 billion), two for Fata (Rs 0.5 billion), two for AJ&K (Rs 0.7 billion), six for Northern Area (Rs 0.6 billion) and 12 other projects for the country, costing Rs 7.6 billion.

The spokesman for the Planning Commission, Asif Sheikh, while briefing the newsmen after the CDWP meeting told that the government has decided to facilitate private sector to come forward, establish companies and ply CNG buses in four major cities and also set up CNG stations in the country.

In this regard, he said that the government would share interest on loans to be obtained by these companies from banks. The government would provide Rs 5 billion-interest subsidy on the loans to these private companies.

He said that the ratio of bank loan and investment by the private sector companies to be decided by the Steering Committee, comprising representatives from federal government, provinces and private sector, constituted by the CDWP. Other modalities of this project would also be finalised by the said committee to materialise the project, which would provide environment-friendly transport service to the big cities.

To provide a legal framework to put in place pre-emptive measures against H5NI virus, or bird flu, through establishing laboratories, increasing surveillance and awareness at grass root levels, it approved Rs 1.2 billion. It also approved Rs 1.924 billion scholarship schemes for providing free education in other provinces to the outstanding students from Fata and Balochistan.

Under the Rs 1.2 billion bird flu prevention project, 10 provincial coordination offices, 40 regional surveillance units in the country would be established. Besides, it would up-grade national laboratories and research in poultry diseases.

CDWP has also approved Rs 1.924 billion projects relating to scholarships for 5,500 outstanding students from Fata and Balochistan. Some 3,300 students would be selected from province of Balochistan and 2,200 students from Fata.

Under the project federal government would provide per month scholarship ranging Rs 900 to Rs 25,000 to male and female students of class 8th to professional studies in the universities in public as well as private sector in other provinces. At least 20 percent scholarships would be ensured for female students from both the areas.

A competition will be held among the students in both areas to decide the final students qualifying for the said scholarship. The scholarship aims provision of Rs 8,700 for cadet collages, Rs 6,000 for medical collages, Rs 4,600 for engineering collages, Rs 900 for technical education, Rs 5,800 for professional institutions, and students qualifying for higher studies would be paid up to Rs 25,000.

About Public Sector Development Programme (PSDP) funds utilisation, Asif informed that Rs 88 billion were utilised during first six months July-December 2006-07 against the release of Rs 90 billion out of total Rs 213 billion allocations in the PSDP.

http://www.brecorder.com/index.php?id=533289&currPageNo=1&query=&search=&term=&supDate=


----------



## Neo

*'Great scope of boosting Pak-UK trade'*

KARACHI (February 28 2007): There is a great scope for accelerating trade and investment activities between Pakistan and UK. This was observed by International Associate of Chamber Management Services and leader of a trade delegation from Yorkshire, Mohammed Ahmed, while addressing members of Korangi Association of Trade and Industry (Kati) here on Tuesday.

He stressed the need for carrying out intensive tours of trade delegations to further strengthen relations and to boost the two-way trade.

The Executive Director, Leeds Chamber of Commerce and Industry, Gery Williamson, said that the delegation includes members who are interested in establishing wind power generating units in collaboration with Pakistani counterparts. He said that the members of the delegation were also examining the possibility of collaboration in education, construction and other sectors and having joint ventures.

Zulfiqar Hussain said that there is a lot of difference between perception and reports. "We have found Pakistan a really different country. People are friendly-business, activities are going on as normal, and there is no danger while moving in the city", he said.

Welcoming the guests, Kati Chairman Masood Naqi said that exchange of delegations is inevitable as it brings the prospective businessmen closer on one table and, therefore, gives an opportunity to understand each other's needs better.

He said that the trade ties between Pakistan and UK are well-knitted, and many UK-based companies are working in Pakistan for quite some time and enjoying doing business in Pakistan.

http://www.brecorder.com/index.php?id=533352&currPageNo=1&query=&search=&term=&supDate=


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## Neo

* Govt to take oil output to 100,000 bpd, gas to 5 billion cfpd*

ISLAMABAD: February 27, 2007: The government is making out efforts to increase domestic oil and gas production to 100,000 barrels per day from existing 66,000 barrels per day and natural gas production to 5 billion cubic feet per day from 3.8 billion cubic feet at present.

"We are targeting to raise the number of exploratory wells per year to 100 from 21 wells drilled last year in bid to enhance domestic oil and gas production," official sources in the ministry of petroleum and natural resources said on Tuesday.

There is a huge potential for oil and gas exploration in Sindh and Balochistan provinces as well as in the deep-water Indus delta.

Therefore, the government has provided an enabling environment to both local and foreign oil and gas exploration and production companies, the sources added.

According to the sources, a new petroleum policy is being prepared and will be unveiled later this year.

The objective of the new policy will include acceleration of exploration and production activities in the country, promotion of foreign investment and involvement of local companies in upstream activities, and encouraging training of Pakistani professionals.

About LPG situation, the sources informed that the country is producing about 1500 tonnes of LPG per day while its demand is about 4500 tonnes per day.

The supply situation has improved due to better policies and now the prices are stable in the market. The terminal for import of LNG would soon be constructed.

The LPG policy approved by the government in 2006 also envisages continuation of deregulation and fixing of LPG prices by companies on a competitive basis.

An investment of Rs. 9 billion has so far been made in LPG sector while there is a big market in the country where LPG would be used as a preferred domestic fuel.

Brecorder.com


----------



## Janbaz

*Investment moot to attract overseas Pakistanis: PM *

ISLAMABAD: Prime Minister Shaukat Aziz on Tuesday said that the forthcoming Overseas Pakistanis Investment Conference (OPIC) being held here should effectively be used to galvanise maximum number of overseas Pakistanis to invest in Pakistan.

The prime minister said this while chairing a briefing on the Overseas Pakistanis Investment Conference by Minister for Labour, Manpower and Overseas Pakistanis Ghulam Sarwar Khan at the PM House.

Shaukat said that overseas Pakistanis are encouraged to invest in the country because it offers attractive investment climate in the country as borne out by the record Foreign Direct Investment of 3.8 billion dollars in the country last year.

Another factor that has evinced the interest of overseas Pakistanis is the fact that Pakistan offers level-playing field both to Pakistani and foreign investors without discrimination, he added.

He said that the conference will provide an opportunity to overseas Pakistanis to benefit from conducive environment provided by the government to invest in the country. He said the overseas Pakistanis are already remitting over 4 billion dollars to Pakistan which helps towards its economic development.

Ghulam Sarwar updated the prime minister about preparation to hold the OPIC on March 5-6, 2007.

He said that a large number of overseas Pakistanis keen to invest in the sectors like IT, construction, agro-farming, light engineering and services sectors would attend the conference with an investment potential of about 3 billion dollars.

He said that participants from 26 countries including the US, UK, Europe, Middle East, Canada, Far East and other regions have shown their interest to attend the conference.

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=44730


----------



## Janbaz

*Pakistan and Britain discuss trade ties*
ISLAMABAD: The foreign ministers of Pakistan and Britain discussed the possibility of further increasing their existing bilateral trade of $ 1.7 billion in a meeting on Monday.

Foreign Minister Khurshid Kasuri told reporters after the meeting with his British counterpart Margaret Beckett that trade between the two countries had doubled over the last four years. Britain was one of the largest investors in Pakistan, but British investment did not match the record rise in total foreign investment in Pakistan over the last few years. He hoped that a recent major investment by a UK bank would be a trendsetter. The two sides agreed that a proposed investment conference called by the mayor of London would help promote bilateral investment.

Kasuri welcomed BritainÃ¢â¬â¢s increase in development assistance to Pakistan from 236 million pounds to 480 million pounds over the next three years. During the talks, Pakistan proposed fostering greater cooperation to strengthen higher education institutions. Pakistan also pushed for equitable market access in the European Union through a free trade agreement, which would help sustain PakistanÃ¢â¬â¢s high rate of economic growth and fight poverty. Kasuri also updated the British foreign secretary on the Pakistan-India dialogue process. staff report
Courtesy DailyTimes.com.pk

Pakistan Link.
http://www.pakistanlink.com/Headlines/Feb07/27/09.htm


----------



## Owais

*Microfinance sector to have 3mln borrowers, LUMS meet told *


LAHORE (updated on: February 27, 2007, 19:40 PST): The microfinance sector is expected to reach at least three million borrowers by 2010 from the current one million, putting pressure on the microfinance institutions.

This was noted at a roundtable meeting of the country's leading microfinance providers held at Lahore University of Management Sciences (LUMS) here to discuss the growing need for middle management staff development.

The projected growth implies that the microfinance sector will need a total of about 20,000 trained professionals across the various organisational tiers, up from the current 6,500, noted the roundtable, attended by senior managers of the country's leading microfinance providers including banks, NGOs, donors and training institutes.

Participants also acknowledged that the number of middle management staff will need to grow four-fold from the current less than 1,000 to 4,000 by the year 2010, for the micro-credit programme alone.

They concluded that external training providers have the opportunities to meet the short-term need of microfinance providers to train master trainers, to disseminate managerial training within their own institutions.

They also agreed that long-term middle management capabilities need to be met by a sector-wide initiative that will contribute to increasing the supply of middle managers for the entire financial sector.

The roundtable titled 'Preparing Microfinance Sector Middle Management for Growth: Building Capacity and Leadership,' was organised under the USAID-funded microfinance project 'Widening Harmonised Access to Microfinance' (WHAM) by ShoreBank International Ltd.

WHAM is a three year $5 million project funded by USAID, which aims to expand the outreach of credit services to the "missing middle" of micro and small enterprises and improve the overall effectiveness of microfinance in Pakistan.

To achieve these goals, WHAM engages in commercial bank downscaling, microfinance institution upscaling and a range of industry strengthening initiatives involving research and awareness raising on issues critical to the development of the microfinance sector through activities like the roundtable.


brecorder.com


----------



## Owais

*OGDC and US company joint venture gets 70 percent interest in Guddu Block *
ISLAMABAD (February 28 2007): The Oil & Gas Development Company Limited (OGDC) has announced acquisition of 70 percent working interest, along with operatorship, in Guddu Block, for IPR Transoil Corporation (IPRTOC). Guddu block covers an area of 2093.4 sq km over Sindh and Punjab provinces.

The Block lies in the Middle Indus Basin within the largest gas producing fields of Pakistan ie, Sui, Qadirpur, and Man. The joint venture of OGDC, IPRTOC and Government Holdings Private Limited (5 percent carried) is committed to drill and open exploratory well in the said block during the current calendar year.

IPRTOC is a multinational US-based company in Dallas, USA. It is currently operating in Egypt. USA, Mexico and Pakistan. The company has built-in significant acquisitions, including the Alamein Concession in Egypt's Western Desert, which consists of a major shipping terminal and pipeline infrastructure.


http://brecorder.com/index.php?id=533334&currPageNo=2&query=&search=&term=&supDate=


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## Owais

*Commerce fails to block China-Pak zones package *

ISLAMABAD (February 28 2007): The Commerce Ministry has not succeeded in blocking the proposed incentives package for the China-Pakistan Economic Zone (CPEZ) because of the overwhelming support by the Planning Commission, the Board of Investment (BoI), Industries Ministry, the Textile Ministry and the provincial governments, official sources told Business Recorder.

The package was approved by the Economic Coordination Committee (ECC) of the Cabinet in its meeting on Monday, February 26. "The proposed package will be a deviation from the declared investment policy in the context of 'Most Favoured Nation' (MFN) clauses of Bilateral Investment Treaty (BIT) signed with other countries," sources quoted the Commerce Ministry as saying in its comments.

Sources familiar with the incentives package said that initially the Punjab government has been asked to pay upfront cost of the required land, but its response was in the negative.

It had been proposed that Punjab government would acquire around 3000 acres land, near Kala Shah Kaku Interchange on Lahore-Islamabad Motorway as identified by Ruba-Haier Group, a joint venture of Pakistani and Chinese company. They said that the joint venture had been asked to identify alternative land in lieu of the land identified by Ruba-Haier Group, but the federal government backed the investors.

However, it has been decided that Punjab would facilitate Ruba-Haier Group in acquiring land for the Special Economic Zones (SEZs). Sources said that the BoI was of the view that the federal government would provide additional funds to the provincial governments, from the privatisation proceeds, to meet the cost of land.

It has been proposed that five percent of privatisation proceeds may be allocated for development of industrial infrastructure, which would ultimately help in creating jobs and alleviating poverty. However, the cost of the land would be recovered from the developers, within 10 years, which would start after five years of the project take-off, with five years grace period.

After detailed discussion, it was decided that the federal government would arrange funds, for acquiring SEZs land, from the Public Sector Development Program (PSDP), whereas the proposal of allocating five percent privatisation proceeds was deleted from the original plan.

Sources said that the incentives available to exporters would also be admissible to projects in the zones. However, CPEZs would be allowed to sell their products in Pakistan also, without any restriction on payment of sales tax. According to sources, 20 Chinese companies have committed to invest in the zones, and more were contacting the government.

Prime Minister Shaukat Aziz, who is expected to visit China in April 2007 to participate in the BOA conference, would like to apprise the Chinese President regarding the success of the project, which was jointly inaugurated by them.
http://brecorder.com/index.php?id=533276&currPageNo=1&query=&search=&term=&supDate=


----------



## niaz

Neo said:


> * Govt to take oil output to 100,000 bpd, gas to 5 billion cfpd*
> 
> ISLAMABAD: February 27, 2007: The government is making out efforts to increase domestic oil and gas production to 100,000 barrels per day from existing 66,000 barrels per day and natural gas production to 5 billion cubic feet per day from 3.8 billion cubic feet at present.
> 
> "We are targeting to raise the number of exploratory wells per year to 100 from 21 wells drilled last year in bid to enhance domestic oil and gas production," official sources in the ministry of petroleum and natural resources said on Tuesday.
> 
> There is a huge potential for oil and gas exploration in Sindh and Balochistan provinces as well as in the deep-water Indus delta.
> 
> Therefore, the government has provided an enabling environment to both local and foreign oil and gas exploration and production companies, the sources added.
> 
> According to the sources, a new petroleum policy is being prepared and will be unveiled later this year.
> 
> The objective of the new policy will include acceleration of exploration and production activities in the country, promotion of foreign investment and involvement of local companies in upstream activities, and encouraging training of Pakistani professionals.
> 
> About LPG situation, the sources informed that the country is producing about 1500 tonnes of LPG per day while its demand is about 4500 tonnes per day.
> 
> The supply situation has improved due to better policies and now the prices are stable in the market. The terminal for import of LNG would soon be constructed.
> 
> The LPG policy approved by the government in 2006 also envisages continuation of deregulation and fixing of LPG prices by companies on a competitive basis.
> 
> An investment of Rs. 9 billion has so far been made in LPG sector while there is a big market in the country where LPG would be used as a preferred domestic fuel.
> 
> Brecorder.com



Earler report by Tanvir Ahmad also posted by Neo says that during July-Dec 2006, total oil and gas production declined from 61 mboe to 58.5 mboe. The same post also states that total gas production during the period was 50.52 mboe. This means that crude oil production was 8.0 mboe.

mboe translates into million barrels oil equivalent. Simple arithematic calculation will convert this data into total oil and gas production at 320,000 barrels per day ( assuming 182.5 days in 6 month period) and gas producation at 276,000 barrels per day oil equivalent. By difference we come to crude oil production at 44,000 barrels per day. The article quoted above says that total domestic oil and gas production is 66,000 bls per day. 

What is right ???. Standard of journalism is Pakistan is abyssmal to say the least. People simply quote statistics without doing any research.


----------



## Introvert

*Export of Pakistan's Engineering Goods to increase to $ 1 Bln by 2010*​

ISLAMABAD: The government plans to increase export of engineering goods to $ one billion by 2010.

In recent years, private engineering companies have succeeded in finding new markets particularly in the United States and Europe for their products, a private tv channel reported quoting official sources.

For instance, recently a company exported a sugarmill plant to America. The plant is one of the biggest in the world.

According to Rizwan Qadri, Director Qadbros Engineering, the participation of Pakistani companies in Hanover industrial fair for the last two years has opened new doors for them resulting in new buyers of their products and services.

Syed Nabeed Hashmi, who runs Thermosole Industries, said his company is manufacturing components for black taxis in London.

Ã¢â¬ÅWe ourselves designed this component, got its approval from engineers abroad and now hold its patent,Ã¢â¬Â he added.

CEO Engineering Development Board Imtiaz Rastgar said the engineering sector holds great potential and Pakistani companies can expand their exports through better marketing of their engineering products.

Exports of mechanical, electrical, electronic goods can be a potent way to increase overall volume of exports.
http://www.pakistantimes.net/2007/02/28/business3.htm


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## Neo

niaz said:


> Earler report by Tanvir Ahmad also posted by Neo says that during July-Dec 2006, total oil and gas production declined from 61 mboe to 58.5 mboe. The same post also states that total gas production during the period was 50.52 mboe. This means that crude oil production was 8.0 mboe.
> 
> mboe translates into million barrels oil equivalent. Simple arithematic calculation will convert this data into total oil and gas production at 320,000 barrels per day ( assuming 182.5 days in 6 month period) and gas producation at 276,000 barrels per day oil equivalent. By difference we come to crude oil production at 44,000 barrels per day. The article quoted above says that total domestic oil and gas production is 66,000 bls per day.


Thanks for the explanation Sir, I hadn't gone into the calculation.



> What is right ???. Standard of journalism is Pakistan is abyssmal to say the least. People simply quote statistics without doing any research.


Poor journalism indeed, though Brecorder.com and Dawn have more professional coverage.
I believe the 66.000 barrel fig is correct, there is slight decrease in production.


----------



## Neo

February 28, 2007 
*Irri-6 worth $160 million exported in 5 months*

By Parvaiz Ishfaq Rana

KARACHI, Feb 27: The country earned around $160 million by exporting 0.7 million tons of Irri-6 rice at an average price of $226 per ton (fob) during the last five months (Oct to Feb).

The new crop size has been estimated at 2.2 million tons which is going to fetch sizeable foreign exchange earning because over 0.7 to 0.8 millions tons would still remain as exportable surplus.

After hitting supply problem owing to winter rains which created high moisture in paddy, many export shipments faced snags in late December and early January.

Consequently, short supply during this period surged Irri-6 prices in the domestic market to Rs14075 per ton from earlier rates of Rs11,750 per ton.

Rice traders and exporters told Dawn that around 0.536 million tons of Irri-6 had been exported in bulk and about 75,000 tons through containers during this period.

It has been further disclosed that on average around 15,000 tons per month was exported in containers to East African countries, including Kenya, Uganda and Zambia. Furthermore, around 0.1 million tons found its way to Iran and Afghanistan through border trade.

A sudden surge in prices for a short period also pushed world market prices higher and Irri-6, which was being sold at around $215 to $218, soared to $245 per ton (fob).

Pakistan, having advantage of earlier paddy harvest, helped avert huge losses to exporters because major players in rice like China, Vietnam, Indonesia and Thailand, enter the world market late after harvesting their winter paddy in March.

According to rice exporters, for a short period when paddy was in short supply and middlemen were unable to maintain supply of Irri-6, it resulted in soaring prices as many exporters, in order to meet shipping schedule and to avoid heavy demurrage, indulged in panic buying.

The Irri-6 prices, which were initially stable at Rs11,750 per ton, started to move higher as a ship anchored at Karachi harbour for loading rice faced short supply and exporters who were involved in shipment went panicky and in order to avoid heavy demurrage rushed to cover their position from open market which pushed rice prices in the domestic market.

Normally a chain of ships keeps arriving at countryÃ¢â¬â¢s ports to load rice during peak season, but somewhere late in December and early January, smooth supply or Irri-6 was disrupted owing to high moisture content created by heavy rains in paddy.

As a result of this situation, middlemen were unable to maintain supply of paddy to processing mills which disconnected the supply chain.

In the meantime when a ship faced with short supply while waiting at the harbour, 10 more ships reached the outer anchorage to load rice.

As a result of this, exporter came under tremendous pressure fearing $15000 per day demurrage, therefore, they indulged in panic buying which soared Irri-6 price to Rs1,475 per ton.

Exporters told Dawn that in peak season when every next day a ship arrives to load rice, a short supply to any of them would mean that a large number of ships would be detained at a time.

In this situation, around 0.360 million tons export contracts belonging to 10 exporters were put to jeopardy.

In case of breach of export contracts, exporters would also have faced GAFTA agreement (Grain & Food Trade Agreement) which could even resulted in cancellation of their licenses or payment of heavy penalties.

However, exporters said on improved supply, prices of Irri-6 rice have started to come down and are presently being quoted below Rs14000 per ton.

There is a strong demand that dryers should be installed in paddy growing areas and the natural method of dry should be done away to meet rapid movement of commodities in free world trade.

http://www.dawn.com/2007/02/28/ebr3.htm


----------



## Neo

*CBR eyes Rs1 trillion revenue next fiscal *

By Azhar Mahmood

KARACHI: A record tax collection target of Rs1 trillion is likely to be set for the new financial year.

This ambitious tax collection target will be in line with new tax strategy approved by President Pervez Musharraf.

Official sources said on Tuesday however the tax authorities would be trying their best to provide tax relief to common man during next federal budget.

Sources said besides this during next financial year, new budgetary measures will be taken to bring transport sector as a whole and retail sector under tax net.

At present from manufacturing-cum-imports to local sale, the transport sector is not contributing to national exchequer as per the share of the transport sector in national economy.

Sources said the budgetary measure for retail and transport sub-sectors will be rationalization of tax rates.

The most important measures will be empowering administrative machinery with legal authority to ensure the writ of tax collectors.

Sources said that to improve the tax compliance and collection from corporate sector four major changes have been proposed in the Statutory Auditors Report.

Under the proposed draft, the auditors of the corporate sector will certify that:

1. In our opinion, income tax deductible at source has been deducted and deposited in the treasury, as required under the income tax ordinance, 2001.

2. In our opinion, all federal taxes, which the company is required to collect or deduct under various statutes and regulations applicable to the company, have been collected, or deducted, and have been deposited in the treasury.

3. We conducted our audit in accordance with auditing standards as applicable in Pakistan.

4. These standards require that we (auditors) plan and perform the audit to obtain reasonable assurance about whether the above statements are free of any material misstatement.

An audit (of accounts) includes examination, on test basis, evidence supporting the amounts and disclosure in the above said statements.

An audit also includes assessing the accounting policies and significant estimates made by the management (of company), as well as evaluating the overall presentation of the above statements.

The auditors would therefore have to certify that their audit includes an evaluation of entityÃ¢â¬â¢s compliance with applicable laws and regulations.

Sources said if implemented, these regulations will improve tax compliance levels of the corporate sector of the country.

http://www.thenews.com.pk/daily_detail.asp?id=44731


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## Neo

*Pak to attract five bln dollars worth of investment in telecom sector*
Karachi News.Net
Wednesday 28th February, 2007 (ANI)

Islamabad, Feb.28 : Pakistan's Information Technology Minister Awais Ahmad Khan Leghari on Wednesday said the government is expecting an investment of five billion dollars in the country's telecom sector over the next two to three years. 

Addressing reporters after the signing of separate contracts by Telenor Pakistan with Nokia and Siemens for the extension of ongoing frame agreements involving deployment of radio network equipment, core network elements and other services until 2009, Leghari was quoted by The News as saying that the arrival of world's biggest phone company China Mobile in Pakistan had further established the fact that the Pakistan telecom sector is an ideal place for investment for big players.

Wednesday's agreements are likely to bring in 750 million dollars in orders from Nokia to the two vendors. Leghari said the Rs.45 billion contract between Telenor Pakistan and the world's two telecom giants was testimony to the nature and potential of growth expected in coming days. 

He said the telecom sector was riding a crest wave, with 300,000 jobs created directly or indirectly during the last few years which had also seen the mobile phone users going from a mere 2.8 million to 50 million. He stressed the exponential growth in telecom sector owed a lot to what he called the consistent backing and pushing from the president and the Prime Minister to the ministry of information technology for liberalizing and deregulating the sector to ensure an open competition. 

Leghari said the number of cell sites in Pakistan had crossed the 10,000 mark and in the next couple of years 90 per cent of the country's population would have access to phone coverage.

http://www.karachinews.net/story/231197


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## Owais

*Plan to set up gold refinery in Karachi *

KARACHI: Tessori Group in collaboration with the Kuwait Investment Group would soon kick off a project relating to the setting up of a gold refinery with a production capacity of 300 tons annually.

Tessori Group&#8217;s Director, Imran Tessori told Geo News that the government has already provided land on 99-year lease on the National Highway in this regard, while the Kuwait Group would be making 70 percent of this project&#8217;s investment.

He told that the gold dust would be imported in Pakistan, which would later be exported after refining, while the efforts were afoot for taking UBS and other world-renowned brands for the processed gold here.

Imran Tessori told that the project would cost up to $50 million, which was expected to go into production by the end of the current year. 

http://geo.tv/geonews/details.asp?id=2749&param=3


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## Owais

*21pc increase in revenues in first 8th month of current FY *
ISLAMABAD: Central Board of Revenue (CBR) managed to collect an amount of Rs507.8 billion during July-February 2006-07 showing an increase of 21.1&#37; over the corresponding period of the last year. 

CBR had collected an amount Rs419.3 billion in the same period of the last year. 

The revenue on account of direct taxes has shown a remarkable increase of 57.1% by collecting Rs196.2 billion against Rs124.9 billion during last year. 

The sales tax collection has reached Rs192.2 billion against Rs178.5 billion, indicating a growth of 7.7%. 

Whereas the growth in revenue collection at sales tax import stage has been recorded at 3.7%, the domestic sales tax collection has increased by13.5%. 

The tax receipts on account of excise duties have recorded an increase of 18.8%. The collection has reached Rs40.9 billion against Rs34.4 billion in the corresponding period of last year. 

Finally, revenue from customs duties has decreased by 3.6% over the corresponding period of last year due to declining imports. The tax collection has been recorded at Rs78.6 billion against Rs81.5 billion last year. 

The provisional collection of federal taxes for February, 2007 is Rs45.2 billion, which is expected to increase further in coming days when provisional figures are finalized. 
http://geo.tv/geonews/details.asp?id=2774&param=3


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## Owais

*Japanese financial help for PTC expansion in Karachi *
KARACHI: Japan has provided a financial assistance of $7.3 million for the expansion of the Plastic Technology Centre (PTC) at the Korangi Industrial Area here.

Addressing at the inauguration ceremony of the PTC expansion work, Japanese Ambassador, Seiji Kojima told that the facility of testing high grade plastic products would locally made available following the installation of the high-tech testing machinery at the PTC here.

He said that the auto industry spare parts, water and sewage pipes and other plastic products, which were earlier imported, would now be made in Pakistan. 
http://geo.tv/geonews/details.asp?id=2757&param=3


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## Owais

*World Bank warns Pakistan against rising trade gap: $46 million loan deal signed* 

ISLAMABAD (March 01 2007): The World Bank has shown concern over Pakistan's soaring trade deficit and cautioned, if not capped it may hurt country's economic growth sustainability.

John Wall, the World Bank's Country Director while speaking to newsmen here on Wednesday after the signing of $46 million loan for Punjab Land Records Management System Project (PLRMSP), suggested Pakistan to take appropriate measures to augment its exports to achieve sustainability in economic growth.

He also said that though trade deficit is considered as a good omen for growing economy (rapid growth) yet in Pakistan's case it is very large and required immediate attention. Besides, he also advocated tight monetary policy to check inflation. About the decline in textile exports, he described China as a cause being a big competitor in this sector.

While, on the other hand, the economic managers are of the view that Pakistan is enjoying an economic boom and the trade deficit was manageable. There is no threat to economic growth sustainability, they added.

It is important to note that Pakistan's trade deficit during July-Jan 2006-07 has increased to $7.6 billion from $6.5 billion recorded in corresponding period last fiscal, depicting an increase of 16.92 percent. During the period under review, exports stood at $9.6 billion and imports $17.2 billion.

The $46 million project agreement was signed by Akram Malik, Secretary Economic Affairs Division, Shahid Mahmood, Secretary Planning & Development Department Punjab and John Wall.

It was the last official assignment of the Bank's out-going country director, as he would retire soon after spending seven and half years in Pakistan.

The loan would come from the Bank's concessionary International Development Association (IDA) with 35 years maturity and a 10-year grace period.

The project aims at improving land record service delivery in Punjab contributing to long-lasting tenure security thus creating an enabling investment environment.

According to World Bank, it would help in reducing litigation and introduce a reliable land registration procedure to farmers and other end users in the most agrarian province of Pakistan.

Under the project, service centres would be established where land records would be maintained and made available to the public in digital form, pilot linkages will be established between the land records system and the system for registration of deeds.

http://brecorder.com/index.php?id=533666&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Shortage of qualified manpower: IT-related foreign investors holding back* 

KARACHI (March 01 2007): Several foreign information technology (IT) related organisations, particularly from United States, which are eager to invest in Pakistan, are holding back due to shortage of qualified manpower.

A National Database and Registration Authority (Nadra) official, referring to a survey conducted in Islamabad, told Business Recorder that 82 percent of the IT graduates possess the required skill and are aware of what is expected of them in the job market.

But, on the other hand, only 34 percent of non-IT graduates and non-graduates have some IT exposure and understanding of what their potential employers would expect from them.

This, the official said, was not very encouraging for the IT related organisations. As far as non-IT qualified staff is concerned, they obviously are not required to do research, development, providing technical assistance, but at least they must know how to carry out their everyday task using IT resources. "But, unfortunately, that is not the case here," he added.

He urged the IT organisations to step up and prepare a strategy for provision of training to both IT and non-IT graduates, and undergraduates enabling them to fill the vacancies in this rapidly growing field.

Nadra, as a pure welfare measure, has launched a countrywide computer literacy drive by starting short but compact computer training courses, which would make them a proficient data entry operator within a short span of four weeks.

The contents of the curriculum of the course have been so designed that it will not only meet the demand of the local industry, NGOs and other government departments but also the foreign NGOs would be too eager to hire these qualified boys and girls trained by the most qualified staff of Nadra using modern techniques and tools in use world-wide for training.

The course would not only teach the students to undertake the multifaceted data entry operations but would also focus on a better code of conduct, which would help them in getting prepared for diversified nature jobs available in the country as well as abroad.

These courses would be conducted in phases, with Rawalpindi/Islamabad, Lahore and Karachi in the first phase and Peshawar, Sargodha, Multan, Sukkur and Quetta in the second phase.

The network of this computer training outfit will be further expanded to other towns in the near future. Nadra has planned to establish around 80 such training centres all over the country.

Preparation of a database of the citizens of Pakistan, introduction of machine-readable passport, automation of border control on basis of bio-metric facial and fingerprints and creating public convenience by introducing utility bill machines, preparation of database of more than 1.2 million people of earthquake-affected areas in a record time of five months speak of the quality of data entry operators (DEOs) Nadra has trained and subsequently employed.

The official said that Pakistan's information technology market is rapidly growing and going to emerge as an internationally recognised leading IT destination. Starting from a relatively low base in 2003, Pakistan's IT industry has developed into a $2 billion market and is still growing. Unlike India, which had the IT manpower and specific marketing strategies by 1950 and had funding management techniques by 1980, Pakistan's skilled IT manpower achieved a good position by 2000. "But, can Pakistan sustain this growth?" he asked.

Due to proper management of the industry in 2003, Pakistan had been one of the leading destinations for some leading businesses. Some of the multinational giants, like NCR, IBM and Chinese ZTE, have grown over 400 percent, in terms of human resource and office space.

The biggest IT organisation in Pakistan is Nadra, with more than 9,000 qualified persons of all shades of expertise in information technology.

The expansion of IT related field has always been the focus of attention of the Government, giving rise to more demands and creating more vacancies in IT related organisations.

But, still, various IT based organisations in the country keep on hunting for talented young boys/girls qualified in IT related field who are either in short supply or, due to financial constraints, cannot afford to acquire skills which would provide them a reasonable job in the market.
http://brecorder.com/index.php?id=533688&currPageNo=2&query=&search=&term=&supDate=


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## Owais

*Two double-hull Aframax tankers: PNSC looking for investor, shipyard *

KARACHI (March 01 2007): The Pakistan National Shipping Corporation (PNSC) is looking for potential foreign financier and reputed shipyard for the construction of two double-hull Aframax oil tankers for its fleet.

The national flag carrier has invited Expressions of Interest (EoIs) from reputable shipyards, shipbrokers with Baltic Exchange membership and/or any company, entity having extensive international experience in shipbuilding and ship financing for providing finance and construct two double-hull 'Aframax' class tankers for PNSC group of companies.

Earlier last month, the government had decided to grant exemption of income tax to PNSC on its financing arrangement with ABN Amro Bank for the acquisition of two 'Aframax' oil tankers and one 'Panamax' bulk carrier, worth $135 million.

According to details, three PNSC subsidiary companies - Karachi Shipping (Private) Limited, Quetta Shipping (Private) Limited and Lahore Shipping (Private) Limited - are acquiring state-of-the-art two Aframax oil tankers and one Panamax bulk carrier at a cost of approximately $150 million.

The acquisition is being financed through foreign currency funding arrangement from ABN Amro Bank N.V., the Netherlands (ABN) to the extent of 90 percent of the total cost of purchase, while the remaining 10 percent would be contributed by the Corporation.

The loan between the bank and the Karachi Shipping (Private) Limited, Quetta Shipping (Private) Limited and Lahore Shipping (Private) Limited has been arranged without any government guarantee.

The national flag carrier has planned to replace its ageing oil tankers, as its first oil tanker would be out of business in 2007, under restrictions of International Maritime Organisation (IMO), while other three tankers will fall under IMO restriction in 2010.

Lack of adequate fresh tonnage (new ships) due to past financial constraints has resulted in gradual deterioration of the PNSC's fleet in terms of age profile and, unless the trend is reversed, foreign vessels would grab a bigger chunk of the country's sea-borne trade.

The age profile of the fleet, however, is gradually deteriorating as, in terms of dead-weight tonnage (dwt), over 62 percent of the fleet, totalling 15 ships of about 645,466 dwt, is over 26 years of age, while the remaining 38 percent is between 23 to 18 years old.

Given this age profile, it has been estimated that over 60 percent of its fleet needs to be replaced within a period of four to six years. The PNSC has decided to operate ships till the age of 30 years, except the oil tankers, which would come under the IMO restrictions from next year.
http://brecorder.com/index.php?id=533629&currPageNo=2&query=&search=&term=&supDate=


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## Owais

*Germany to improve trade with Pakistan *

KARACHI (March 01 2007): Germany has planned to improve bilateral trade with Pakistan, which stood at $1.863 billion in 2005-06. Federation of Pakistan Chambers of Commerce and Industry (FPCCI) officials told Business Recorder on Wednesday.

A three-member German delegation, including Hans Joachim Kinderlene, Consul-General of Germany in Karachi, Rabbow, representative of Federation of German Chambers of Commerce & Industry, and Stefan Rolle, representative of Ministry of Commerce of Germany, visited the Federation House a day earlier and discussed bilateral trade with FPCCI office-bearers.

FPCCI officials said that the German government wants to establish more economic relations with developing countries, including Pakistan, and opening German Trade Office in Karachi was part of the German policy initiatives.

The Karachi office will help increasing the level of interaction between Pakistan and German businessmen, which is vital for promotion of commercial linkages between the two countries.

Zubair Tufail, FPCCI Vice President, said that he assured the delegation of full support and informed its members that, in Europe, Germany was the leading trade partner of Pakistan, and the second leading export destination of Pakistan's goods in the European region.

He said that the volume of bilateral trade between Pakistan and Germany increased by more than 112 percent during last six years from $877.58 million in 2000-01 to $1.863 billion in 2005-06.

The growth was mainly due to increase in the trade of boilers machinery and mechanical appliance, telecommunication appliance/equipment, article of apparel/cloth access, made up textile articles, rags etc and cotton yarn and woven fabrics.

During 2000-01 to 2002-03 the trade balance was in favour of Pakistan. However, due to increase in the imports of telecommunication appliance/ equipment and boilers machinery and mechanical appliance Pakistan faced trade deficit during last three years.

According to statistics, Pakistan's exports to Germany registered growth of 38.95 percent from $494.63 million in 2000-01 to $687.296 million in 2005-06. Germany is a major buyer of Pakistan's article of apparel/cloth access, which contributes 32.83 percent in total exports to Germany, followed by made-up textile articles, rags etc 23.58 percent, leather and leather manufactures 10.65 percent, cotton yarn & woven fabrics 10.24 percent and furniture, mattress etc is 0.06 percent.

Imports of Pakistan from Germany increased by 207.21 percent from $382.95 million in 2000-01 to $1.176 billion in 2005-06.

The major import items from Germany included boilers machinery and mechanical appliance, which contributed 32.91 percent in total imports from Germany, followed by telecommunication appliance/equipment 24.34 percent, iron and steel 5.31 percent, etc.

Tariq Sayeed, a former President of FPCCI said he appreciated the German approach for prompting its products through fairs and exhibitions and emphasised the establishment of Joint Business Council of Pakistan and Germany.
http://brecorder.com/index.php?id=533735&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Rs 6.14 billion construction, mining machinery imported in 7 months *

KARACHI (March 01 2007): The country has imported construction and mining machinery to the tune of Rs 6.14 billion during the last seven months. According to Federal Bureau Statistics (FBS), imports of construction and mining machinery during July-January 2006-07 increased to Rs 6,143 million or 11.57 percent against Rs 5,506 million during the same period 2005-06.

Market sources on Wednesday said that due to standardisation and quality conscious in the construction industry had resulted in growth of machinery imports.

Similarly, imports of machinery in the mining industry have also registered growth after the government provided several incentives. A leading builder said that several mega projects initiated in the country, including industrial estates, underpasses and over-head bridges, which required machinery to speed up their completion.

Duty concession was given by the government had attracted contractors to use latest machinery in their projects.

The builder said that several construction works, which were done manually previously now being carried out through cutters to save time and for quality production.

To plug the housing backlog, which stood at 6.19 million at present, government and private sector had initiated several housing projects across the country and asked contractors to complete them on a priority basis. The contractors resorted to import machinery for the completion of housing projects on time.

Sources in mining industry said that Pakistan has possessed quality stones particularly granite and marble but share in world exports was very low.

The government has realised the importance of this industry and provided several incentives, which encouraged the miners to import machinery for better return to their finished products.

Pakistan Stone Development Company had also invited tenders to import latest machinery to materialise over $500 million export target, sources said.
http://brecorder.com/index.php?id=533694&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Canadian firm to set up chain of departmental stores *

KARACHI (March 01 2007): A Canada based company plans to establish a chain of more than 30 departmental stores at the estimated cost of Rs 300 million in parts of Sindh province, including Karachi to provide public with essential commodities at reasonable prices.

Addressing a press conference at Karachi Press Club (KPC) on Wednesday, Anjum Laiq, chief executive officer (CEO) of Dollar Bazaar and Convenience 2U Inc, said that his firm was going to open first in the series of departmental stores in the city in July.

Regarding investment plan, he said it would depend on investors that how much investment would they invest on the project.

However, he said that, if his firm failed to find such investors for setting up franchises then it would itself establish the same in the city.

He said all essential commodities would be available under one roof at prices lower than the market ones. "Some 48 essential items will be sold at affordable prices which are presently being sold at higher prices in the local market," he added. Anjum apprised that his firm had an expansion policy to South Asia and in the first phase, departmental stores would be set up in Pakistan. He added that in the later phases, Dollar Bazaar would establish its franchises in Sri Lanka and India.

Around 30 to 40 such franchises would be set up in parts of Sindh province, as a part of expansion policy of the firm in Pakistan, he added. He said 200 to 400 departmental stores were planned across the country if the government continued its support in setting up of franchises.

He said that establishment of franchises would help improve quality of public life. He said around 40 essential daily use items would be imported from China and would be sold at reasonable prices at the stores. He ensured that monopoly would be discouraged and no one would be allowed to derail the proposed system of departmental stores by purchasing more than one store in the country.

Each store will be set up on 4000 to 5000 sq feet of land, in areas like Nazimabad, Azizabad, Gulshan-e-Iqbal, Federal B area, North Nazimabad, Liaquatabad, Landhi, Malir, Model Town, Guru Mandir, Lesbela, and Soldier Bazaar.
http://brecorder.com/index.php?id=533731&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*ADB funding to be sought for Rs 22 billion Faisalabad Motorway *

ISLAMABAD (March 01 2007): Pakistan has decided to approach the Asian Development Bank (ADB) for funding the Rs 22 billion Faisalabad-Khanewal Motorway (M-4) project, as the Malaysian government has categorically refused to undertake the project on BOT basis.

Sources in the Communications Ministry told Business Recorder that Malaysian government's refusal has taken the concerned authorities back. Pakistan and Malaysia had signed a Memorandum of Understanding (MOU) for construction of the 184 km long Faisalabad-Khanewal Motorway at an estimated cost of Rs 17 billion.

The Malaysian government had once again renewed its pledge to make M-4 project, but it was not ready to construct the highway on BOT basis. After talks, Pakistan government was optimistic that the Malaysian side had reviewed its decision and was willing to undertake the project.

Sources said that the Malaysian side even at that time was reluctant as it believed that the project was not viable. Interestingly, there has been an increase of Rs 5 billion in the estimated cost of the project, that now stands at Rs 22 billion.

When contacted, Communications Minister Shamim Siddiqui confirmed that Pakistan government had approached the ADB to seek financial help for the project.

He said they were going to meet ADB officials in July to arrange Rs 22 billion funding for the motorway. He said that Malaysian authorities were not willing to BOT option as they believed it was not financially viable for them. He dispelled the impression that it was some kind of 'backtrack', saying that they had showed inability due to financial constraints.

The Minister said that still there would be a Malaysian contractor who would construct the 184-km road. The plan is to construct Faisalabad-Khanewal Motorway in four years time. It would have four lanes, with the provision of upgradation to six lanes.

The designed speed limit on the M-4 will be around 120 miles/hour. There would be 25 bridges, two major bridges, 85 subways, 436 culverts, 42 flyovers and five service areas. The plan has seven interchanges--at Faisalabad, Painsara, Gojra, Toba Tek Singh, Shorkot, Abdul Hakeem and Khanewal.

http://brecorder.com/index.php?id=533683&currPageNo=2&query=&search=&term=&supDate=


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## Janbaz

Owais said:


> *Canadian firm to set up chain of departmental stores *
> 
> KARACHI (March 01 2007): A Canada based company plans to establish a chain of more than 30 departmental stores at the estimated cost of Rs 300 million in parts of Sindh province, including Karachi to provide public with essential commodities at reasonable prices.
> 
> Addressing a press conference at Karachi Press Club (KPC) on Wednesday, Anjum Laiq, chief executive officer (CEO) of Dollar Bazaar and Convenience 2U Inc, said that his firm was going to open first in the series of departmental stores in the city in July.
> 
> Regarding investment plan, he said it would depend on investors that how much investment would they invest on the project.
> 
> However, he said that, if his firm failed to find such investors for setting up franchises then it would itself establish the same in the city.
> 
> He said all essential commodities would be available under one roof at prices lower than the market ones. "Some 48 essential items will be sold at affordable prices which are presently being sold at higher prices in the local market," he added. Anjum apprised that his firm had an expansion policy to South Asia and in the first phase, departmental stores would be set up in Pakistan. He added that in the later phases, Dollar Bazaar would establish its franchises in Sri Lanka and India.
> 
> Around 30 to 40 such franchises would be set up in parts of Sindh province, as a part of expansion policy of the firm in Pakistan, he added. He said 200 to 400 departmental stores were planned across the country if the government continued its support in setting up of franchises.
> 
> He said that establishment of franchises would help improve quality of public life. He said around 40 essential daily use items would be imported from China and would be sold at reasonable prices at the stores. He ensured that monopoly would be discouraged and no one would be allowed to derail the proposed system of departmental stores by purchasing more than one store in the country.
> 
> Each store will be set up on 4000 to 5000 sq feet of land, in areas like Nazimabad, Azizabad, Gulshan-e-Iqbal, Federal B area, North Nazimabad, Liaquatabad, Landhi, Malir, Model Town, Guru Mandir, Lesbela, and Soldier Bazaar.
> http://brecorder.com/index.php?id=533731&currPageNo=1&query=&search=&term=&supDate=



Man, this chain should have been Zellers, the proud Canadian competitor to Wal Mart. The stuff they retail which varies from electronics to clothes from stationarey to auto parts is better built then Wal Mart. Plus they are quite competitve pricers and offer excellent benifits for employees. I just wish it was them with their flagship store The Bay!


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## Janbaz

*Cars import declines by 26 per cent*

ERUM ZAIDI
KARACHI - The import of motor cars under the category of completely build unit has declined by 26.27 percent while the import of motor cars in CKD (completely knocked down) and SKD during the month of January 2007 has decreased by 10.29 percent. The import of auto parts and accessories has declined by 30.44 percent, the Nation learnt on Wednesday.
During the month of January, the overall imports of vehicles of different categories and engine power have decreased by 34.46 percent.
Market sources told The Nation that present declining trend in import of cars is expected to continue in the coming months of current fiscal because under the Auto Industry Development Program (AIDP), the government has restricted import of more than 5 years old small cars. 
On the other hand, sources in Pakistan Automotive Parts Accessories Manufacturers (PAAPAM) said that auto manufacturers were facing a number of problems mainly because of inconsistent government policies. The demand of vehicles in the country is much higher than their production capacity.
Source further said that local investment in auto sector has exceeded $ 1.5 billion. Automative industry has grown at an average rate of 30 percent per annum for the last 4 to 5 years. He urged the PAAPAM member firms should manufacture sophisticated parts like pistons, engine values, gasket, camshafts steering mechanism etc. Small second hand cars having engine capacity of 800cc or below are being imported mainly from Japan and these cars are much expensive in Japan in terms of cost. 
They told that the decision to control import of used cars would be better for the local auto industry as well as for the government in terms of controlling the rising trade deficit. 
Mid range capacity cars are more commonly imported. The brands that witnessed most of the imports were Toyota Vitz , Toyota Corrola and Mitsubishi Lancer. 

The Nation.
http://www.nation.com.pk/daily/mar-2007/1/bnews5.php


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## Janbaz

*$600m plan to explore and mine uranium*

By Ihtasham ul Haque

ISLAMABAD, Feb 28: The government has prepared a $600 million extensive plan for exploring and mining uranium deposits in the country to fuel future nuclear power plants (NPPs).

Informed sources told Dawn on Wednesday that uranium deposits so far discovered in `Siwalik rocks&#8217; in some parts of central Punjab were of low grade. However, by applying new mining technique, good quality uranium could be produced at a competitive rate with a view to progressively developing the uranium mining sector.

The mineral sector is required to produce 350 tons of yellow cake (U3O8) per year by 2015 for meeting one-third requirements of the planned NPPs.

The mining of uranium will be undertaken at three sites -- Bannu Basin, Suleman Range-3 and Suleman Range-4 in Dera Ghazi Khan -- to produce the required fuel for NPPs. Through these NPPs, the government wants to produce 8,800mw of electricity by 2030.

The sources said that Pakistan had been forced to develop its own uranium resource programme as none of developed countries was ready to supply the required amount of uranium to help feed Pakistan's reactors.

The directorate general of mining projects has been entrusted with the task of developing new uranium resources. He will ensure indigenous source of fuel supply for nuclear power plants.

All the needed management structure and manpower requirements, including specialised skills, will be provided to the director general of mining projects during execution and operational phases.

The Dawn.
http://www.dawn.com/2007/03/01/top5.htm


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## Janbaz

*UK investor shows interest in CSIBL*

By Nasir Jamal

LAHORE, Feb 28: A Gujrati-speaking UK based investor is said to have shown keen interest in the acquisition of Crescent Standard Investment Bank Limited (CSIBL), which is in dire need of an urgent equity injection for survival.

Ã¢â¬ÅThe prospective buyer is very keen on acquiring the bank,Ã¢â¬Â Crescent StandardÃ¢â¬â¢s administrator Badr-Ud-Din Khan told Dawn by telephone on Wednesday, rejecting the perception that the bank was struggling to survive.

He said the investor had already completed due-diligence of the bank. The process of due diligence, which was allowed after the prospective buyer opened an account of 100,000 euros as an evidence of his interest in the bank, took almost one month to complete, he said.

The interested group is at present said to be preparing its offer with necessary documentation, including a comprehensive business/action plan demonstrating the feasibility of its proposal that will guarantee the protection and payment of depositors and creditors and also ensure long-term solvency of the bank,Ã¢â¬Â a press announcement said. The administrator said the announcement would facilitate this process through direct contact with the entities concerned.

The announcement warned that the Ã¢â¬Åaccomplishment of the acquisition essentially warrant full understanding and agreement of all stakeholders, especially depositors and creditorsÃ¢â¬Â.

Mr Khan said the negotiations concerning acquisition had progressed well so far and the bank administration was optimistic about a positive result. He did not disclose the name of the interested group or the details of the ongoing negotiations with it. He also refused to say anything on the amount of equity injection the bank requires for long-term survival.

Ã¢â¬ÅThe interested group does not like to disclose the details at this stage,Ã¢â¬Â he said. The announcement said Ã¢â¬Åas the negotiations involve sensitivity of crucial nature, disclosure of further information at this stage may be detrimental (to the deal)Ã¢â¬Â.

The Securities and Exchange Commission of Pakistan (SECP) on August 30 last year appointed administrator for the Crescent Standard and suspended its board of directors and restrained Anjum Salim from officiating as its CEO.

The unprecedented action was taken under Sections 282E and 282F of the Companies Ordinance, 1984 after months of exhaustive investigations into the bankÃ¢â¬â¢s affairs, which revealed severe and deliberate violation of the legal requirements and serious financial irregularities including but not limited to illegal maintenance of parallel accounts, concealment of the bankÃ¢â¬â¢s assets, unauthorised massive funding of group owned companies, unlawful investments in real estate and stock market, etc., the commission said in its press announcement issued to explain the reasons behind its action.

The SECP said the administrator had been appointed with a view to taking immediate action for protecting the interests of depositors and stakeholders and for stemming the fast eroding asset base of the bank, and for ensuring that the bankÃ¢â¬â¢s affairs were managed in a clean, transparent and professional manner.

The Dawn.
http://www.dawn.com/2007/03/01/ebr2.htm


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## Janbaz

*New Islamic bank launched*

By Our Staff Reporter

KARACHI, Feb 28: Another Islamic Bank, Emirates Global Islamic Bank (EGIBL), has been launched with six branches in Pakistan.

The official launch was celebrated in Karachi and the Governor State Bank, Dr Shamshad Akhtar, was invited as the chief guest.

The bank has been sponsored by the Emirates Investment Group of UAE and Al-Rajhi family of Saudi Arabia.

Chairman of the bank, Sheikh Tariq bin Faisal Al Qassimi of the ruling family in Sharjah, and other dignitaries attended the launching ceremony.

Dr Akhtar praised the banking industry and expressed satisfaction over the foreign investment in the banking industry.

Ã¢â¬ÅWe wish to become leading Islamic commercial bank in Pakistan by developing a profitable domestic business capable of being leveraged for international opportunities,Ã¢â¬Â said President and CEO Syed Tariq Husain of the bank.

The bank has entered a technical cooperation agreement with RHB Islamic Bank Berhad, the fourth largest bank in Malaysia.

The Dawn.
http://www.dawn.com/2007/03/01/ebr8.htm


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## Janbaz

*Rural economy rapidly expanding: PM *

By our correspondent

ISLAMABAD: Prime Minister Shaukat Aziz has said that rural economy in Pakistan is rapidly expanding as reflected in the increased demand for goods particularly cell phones, motorcycles and consumer goods in the rural areas. 

The Prime Minister said this while talking to a delegation led by the Chief Executive Officer of Telenor Pakistan, Tore Johnsen, at the PM&#8217;s House Wednesday. 

The Prime Minister said that government has provided an investor-friendly environment, as all sectors of the economy are open for business. With a population of 160 million and a growing middle class, Pakistan is fast turning into a major market economy and a manufacturing and servicing destination in the region, he said. 

The Prime Minister said that government&#8217;s philosophy of deregulation, liberalization and privatisation coupled with transparency and openness of government&#8217;s policies and the level playing field provided to investors has made Pakistan an investment friendly country and investments today are at an all time high. 

The Prime Minister was informed that Telenor had invested about $950 million in Pakistan by the end of last year, and has plans to invest more than $500 million this year. He also said that the company has more than 11,500 direct and indirect employees and has launched services in more than 1100 destinations within two years. 

He said telecom is among the fastest growing sectors of Pakistan&#8217;s economy and constitutes two per cent of GDP, which is expected to rise further. The country has 50 million phones including cellular and fixed lines and the teledensity has increased from four per cent in 2003 to 35 per cent in 2007, he said. 

The Prime Minister said that because of consistency in policies, teledensity in the country has reached 35&#37; and the telecom sector has attracted an investment of over $2 billion, creating thousands of jobs. He said we are expecting an investment of about $4-5 billion in the next five years. 

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=44886


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## Janbaz

*Telecom investment reaches Rs550bn: Awais *

By our correspondent

ISLAMABAD: Telenor Pakistan on Wednesday signed extension of an ongoing frame agreement with leading telecom manufacturers Nokia and Siemens involving deployment of radio network equipment, core network elements and other services until 2009. The agreement is likely to result in extension of $750 million orders to the two vendors.

Under the agreement, Nokia will increase Telenor Pakistan&#8217;s network coverage and capacity in most of Punjab, North-West Frontier Province, AJK and northern regions of Pakistan, including Islamabad.

Nokia will provide Telenor Pakistan with its state-of-the-art radio and transmission network, including microwaves. A wide range of services will support the radio network roll-out and operation, including turnkey maintenance services, hardware support services, and services for the deployment of the GSM network, including network planning, site acquisition, civil works and telecom implementation.

&#8220;The agreement with Siemens will allow Telenor Pakistan to market value-added services for its customers and open up new ways of further increasing its subscriber base in Pakistan,&#8221; said Vice President & GM Siemens Networks GMBH & Co KG Headquarters Middle East Dr Jan Cron while speaking on the high profile occasion attended by two ministers and PTA Chairman Shahzada Alam.

Speaking on the occasion, Minister for Information Technology Awais Ahmad Khan Leghari claimed that Pakistan&#8217;s telecom sector had received about Rs550 billion investment so far while Rs300 billion were likely to be added to the sector in the coming two to three years.

He said the arrival of world&#8217;s biggest phone company China Mobile in Pakistan in recent days had further established the worth of country&#8217;s telecom sector as an ideal place for investment for big players who were now converging on Pakistan to participate in the phenomenal growth being recorded on a consistent basis.

He said the pace of growth in telecom sector was likely to step up in coming days with the arrival of China Mobile in the cellular market and the government also firmly poised to spend millions of dollars from the Universal Service Fund to add up about 1000 new BTSs (basic transmission stations) and cell sites in remote areas which were not commercially attractive for the existing players.

Minister for Investment and Privatisation Zahid Hamid said the $750 million contract between three leading telecom players reflected confidence in the investment climate offered to them in the country.

Shahzada Alam Malik said the telecom sector currently constituted 2 per cent of the GDP which was expected to rise to 3 per cent in the next three to four years.

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=44889


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## Janbaz

*'Pak-UK economic ties may create more jobs' *

LAHORE (March 01 2007): Punjab Chief Minister Chaudhry Pervaiz Elahi has said that further promotion of educational and economic ties between the Britain and Pakistan would result large scale job opportunities to the people of both the countries, which would help eliminate poverty and ensure prosperity of the people.

He stated this in a meeting with a delegation of investors of Britain led by Treasurer of Liberal Democratic Party of UK, Lord Clement Johns. Provincial Minister for Law Raja Muhammad Basharat, Chief Secretary Punjab Salman Siddique and other high-ranking officials were also present.

The Chief Minister informed British Lord about foreign and local investment, budget making, financial system and procedure of recovery of taxes. He informed the delegation that implementation of reforms in all sectors has been made possible through good governance and better financial management in the province.

Chaudhry Pervaiz Elahi said that vast opportunities of socio-economic development are present between UK and Pakistan and atmosphere is conducive for foreign investment in the province. He said that government is focusing on industrial development through public-private partnership for providing job opportunities and eliminating poverty in the province. He said that local and foreign investment is being increased through establishment of industrial estates in Lahore, Faisalabad, Sialkot and other cities.

Chaudhry Pervaiz Elahi said that free treatment facilities are being provided to the patients in emergency wards of 11 teaching hospitals under Health Sector Reforms Programme whereas free treatment facilities are also being provided in Basic Health Units (BHU) in rural areas. He said that in the past there were no doctors in these BHUs but due to attractive package of transport, residence and salary to the doctors given by present government, 95&#37; doctors have reached in these BHUs and people of far-flung areas are getting health facilities at local level. He said that through Emergency Ambulance Service 1122, patients are being shifted to the hospitals within 7 to 10 minutes as a result of which thousands of patients are receiving timely medical aid.

The Chief Minister said that a mega project costing Rs 6 billion is being implemented for the conservation of historical places and cultural heritage in Walled City of Lahore. He said that this project would promote tourism and beautification of old Lahore. In addition, four five-star hotels are being constructed in Lahore through foreign investment so that facilities of international standard could be provided to the increasing number of tourists, he added.

Chaudhry Pervaiz Elahi said that Pakistanis living in Britain are playing an important role in the development of the country. He said that with the visit of Lord Clement, relations between Pakistan and UK would further be promoted.

On this occasion, Lord Clement said that UK-based Pakistanis are playing a vital role for the socio-economic and cultural development of Britain which has provided an opportunity to the people of both the countries to benefit from each other experiences. He lauded the measures taken by the Punjab Chief Minister for the development of the province and said that new vistas of development and prosperity will open due to these measures.

Lord Clement further said that he is willing to set up an international company about legal matters in Pakistan, on which Chief Minister assured his full cooperation.

Business Recorder.
http://www.brecorder.com/index.php?id=533901&currPageNo=1&query=&search=&term=&supDate=


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## Neo

March 01, 2007 
*FDI to reach $6bn: minister*

ISLAMABAD, Feb 28: Minister of State for Finance Omar Ayub Khan said on Wednesday that privatisation of Pakistan's key industries is one of three pillars on which continued growth and diversification of country's economy depends.

Speaking at the Middle East IPO summit being held in Dubai, Omar Ayub Khan said the other two pillars are deregulation and liberalisation.

By formulating economic policy based on these three pillars the government has been able to boost growth, reduce poverty and improve income distribution, as well as diversify economy, he said, adding, the size of middle class has grown which has a greater Ã¢â¬Åpropensity to consumeÃ¢â¬Â.

Pakistan's GDP is forecast to expand seven per cent in the current fiscal year from 6.6 per cent in 2006 to reach about $135 billion. Foreign direct investment is forecast to reach $6 billion for fiscal year 2007 and it has already crossed $3 billion, Omar said.

Pakistan's trade liberalisation and privatisation programmes are based primarily around the banking, electricity, telecommunications and energy sectors.

Over the past 15 years, Pakistan has raised more than $6 billion selling state assets to help repay $36 billion of overseas debt.

Among the assets that are currently up for sale are shares of four banks and a stake in PSO, which will be sold by June. The country will also sell shares of Habib Bank in an initial public offering by April.

And there are plans to sell global depositary receipts held by United Bank and National Bank of Pakistan by June.

Omar said Pakistan's economic performance continues to generate a great deal of interest and investors from the Middle East and Dubai in particular are looking for key investments in the country.

The recent visit by Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and ruler of Dubai, is an indication of it, he said.

He said, Pakistan would strengthen its competitiveness by continuing to create industry clusters, which help to promote knowledge transfer and build human capital. Pakistan's young population will also propel Pakistan's economic growth and will enhance its competitiveness against countries, such as China and India.

http://www.dawn.com/2007/03/01/ebr5.htm


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## Neo

March 01, 2007 

*ADB help sought on water losses*

By Khaleeq Kiani

ISLAMABAD, Feb 28: The Indus River System Authority (Irsa) has sought Asian Development Bank's help to ascertain water losses in Pakistan's irrigation system and a new computerised system for regulating provincial water shares, it is learnt.

Informed sources told Dawn on Wednesday that the ministry of water and power and Irsa had held a few meetings with ADB experts recently to finalise a set of projects to strengthen Irsa and its regulatory system. These projects will be funded by the ADB under its $400 million water sector development programme during the current year.

The government has requested the ADB to conduct a study on PakistanÃ¢â¬â¢s overall water losses which are considered very high and sometimes cross 40 per cent in Sindh. The provinces have been blaming each other for water theft because of these losses.

A couple of months ago, an Irsa investigation team had reached a conclusion that a countrywide study should be conducted to ascertain actual losses in rivers and canals.

The study would determine causes of water losses and their quantum and then suggest how to reduce these losses to a reasonable level as the country is heading for acute water shortage.

The government has decided to appoint an independent consultant to identify faults in the Rs350 million telemetry system which has not been able to provide accurate data on water discharge and distribution since its inception in 2003.

Water and Power Minister Liaquat Ali Jatoi has recently announced to hold contractors accountable for the faulty system after independent investigations.

Based on the final report of the international consultant, the Asian Development Bank would support the project financially and technically for an error-free telemetry system to achieve its objectives.

Irsa wants to overcome all these problems before the start of next Kharif season.

The sources said the World Bank had recommended three names of international experts for appointment as a consultant to study the existing faulty telemetry system. These names are currently under consideration. Irsa sources said the consultant was likely to start working on the study within a month.

Irsa has also requested the ADB to prepare a model that could help Irsa in determining how much water was flowing in countryÃ¢â¬â¢s rivers on a daily basis, what is the share of each province on the basis of this availability at a given time and which province was getting what quantities on a real-time basis for better regulation and management. To be monitored from IrsaÃ¢â¬â¢s headquarters in Islamabad, this model would also provide updates on flood situation and water inflows in rivers.

http://www.dawn.com/2007/03/01/top4.htm


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## Introvert

*Pakistan to export 3.6 million tons rice this year *​
ISLAMABAD: Pakistan will export more than 3.6 million tons of rice during the current year.

Talking to Geo News, Federal Agricultural Commissioner Inayatullah Khan said Indian rice production declined by 20 to 25 per cent this year; whereas the rice demand in the world market increased.

The agriculture official said Pakistan exported 500,000 tons of Basmati rice from July 1, 2006 to January 31, 2007- 23 per cent more than the last year in same period.

Inayatullah Khan said farmers are being paid Rs350 to Rs400 per 40 kilograms of Irri-6 and Rs750 to Rs800 for the same weight of Basmati rice.

The total rice production in the country has hit 5.4 million tons this year.

http://www.geo.tv/geonews/details.asp?id=2817&param=3


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## Neo

*Mills produce 1.9m tonnes of sugar *

By Shahzad Anwar

KARACHI: The sugar mills produced more than 1.92 million tonnes of white refined sugar till February 15 by crushing 23.53 million tonnes of sugarcane.

The Pakistan Sugar Mills Association (PSMA)Ã¢â¬â¢s Punjab members contributed more than half of the total production as figures showed that the sugar mills there produced 1.26 million tonnes by crushing around 15.17 million tonnes of sugarcane.

In Sindh, 28 sugar mills produced 0.60 million tonnes by crushing 7.11 million tonnes of sugarcane. In the North West Frontier Province (NWFP), the sugar mills produced 0.09 million tonnes in the period under review. 

The PSMA sources said that this year average sucrose recovery level was recorded at around 8.17 per cent. The break-up showed that recovery in Punjab was around 8.06 per cent, Sindh 8.48 per cent and NWFP 7.58 per cent.

This year, sugarcane was cultivated over an area of 1,033 million hectares, of which 209 million hectares were sown in Sindh, 718 million hectares in Punjab and 106 million hectares in the NWFP.

In respect of per hectare yield of sugarcane, Sindh came on top with 54 tonnes, followed by Punjab at 48 tonnes and the NWFP 44 tonnes.

A high official of the Ministry of Food, Agriculture and Livestock has said sugarcane crushing is in full swing, which may continue till the second week of April.

He said till the middle of February, sugar production had crossed the level of 2.1 million tonnes and estimated total cane production at 51.4 million tonnes and sugar output at 3.4 to 3.5 million tonnes this year.

He said the PSMA had produced 1.6 million tonnes of sugar during the same period last year. Ã¢â¬ÅThis is a peak season as mills operate at full capacity during February and March.Ã¢â¬Â

Last year, the country produced around 2.8 million tonnes of sugar against domestic consumption of 3.8 million tonnes. Though sugar was available at wholesale markets as well as retail outlets, the prices surged to an unprecedented level of Rs45 per kg on the pretext of low production.

The government then allowed duty-free import of sugar to the private sector, besides the Trading Corporation of Pakistan (TCP) in order to bridge the demand and supply gap. However, the governmentÃ¢â¬â¢s efforts failed to bring the prices of the commodity down in the local market. 

In the previous season, the TCP imported around 0.815 million tonnes of white refined sugar from worldwide sources, of which around 0.4 million tonnes are still lying in its godowns.

http://www.thenews.com.pk/daily_detail.asp?id=44880


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## Neo

Thursday, March 01, 2007 

*Task force on remittances formed*

By Sajid Chaudhry

ISLAMABAD: Prime Minister Shaukat Aziz has constituted a task force on remittances with a mandate to streamline transmission of remittances from countries where Pakistani banks are not available, a senior government official told Daily Times.

The officials at Ministry of Finance are of the view that by providing maximum facilitation to the overseas Pakistanis, remittances can be enhanced to $8 billion in next few years.

Moneychangers across the country are still involved in the practices like Hundi and Hawala, and these channels are considered illegal and against the international obligations. Due to lack of incentives in Pakistan in comparison with regional countries, a large number of overseas Pakistanis opt for Hundi and Hawala over the remittance through normal banking channels.

Ghulam Sarwar Khan, Federal Minister for Labor, Manpower and Overseas Pakistanis has been appointed as chairman of the task force and its members include Minister of State for overseas Pakistanis, Governor State Bank of Pakistan, President National Bank of Pakistan, Secretary Overseas Pakistanis Division, Secretary Ministry of Finance, Secretary, Revenue Division, Secretary Labour and Manpower Division and Managing Director, Overseas Pakistanis Foundation. The Overseas Pakistanis Division would serve as the secretariat of the task force.

The task force would be recommending ways and means to encourage the overseas Pakistanis to remit their earnings to Pakistan through normal banking channels without any difficulty. The difficulties faced by the overseas Pakistanis would be listed and an action plan would be finalised and submitted to the relevant forum for approval.

The task force has been assigned to the task force is mainly to find possible ways and means to streamline transmission of remittances from countries and cities where Pakistani banks are not available.

The task force has also been directed to check possibility and feasibility of mobile teams of banks to visit the areas of overseas Pakistanis concentration abroad, develop a special mechanism in collaboration with foreign banks and develop a mechanism for quick delivery of remittances in remote areas of the country.

The task force would recommend to the government ways and means for the simplification of banking system, procedure to remit and receive the remittances, reduction in bank charges, fees to remit the overseas Pakistanis earnings through normal banking channel and also suggest the features of Ã¢â¬ÅProud Pakistani Remitter Award SchemeÃ¢â¬Â which would be launched in collaboration with private sector.

The Ministry of Finance has said recently that an increase of 21% in the first seven months of the fiscal year suggests that the remittances target of $5 billion would not only be achieved but would also be surpassed. Expectations are that remittances would touch the $5.5 billion mark in the current fiscal year 2006-07.

During the first seven months (July-January) of the current fiscal year workers` remittances amounted to $ 2959.35 million, depicting an increase of 21.0% over the corresponding period of the last fiscal year.

Pakistan received $4.6 billion remittances in the last fiscal year (2005-06). It has set a target of $5 billion for the current fiscal year thereby showing an increase of 8.7% over last year. An increase of 21.0% in the first seven months of the fiscal year suggests that the remittances target can not only be achieved but can also surpass the target for the year.

The United States continued to be the largest source of workers` remittances accounting for 26% ($768.01 million), followed by Saudi Arabia ($552.53 or 18.7%), UAE ($443.87 or 15%), other GCC countries ($407.36 or 13.8%), UK ($247.86 or 8.4%) and $364.86 or 12.3% from rest of the world.

http://www.dailytimes.com.pk/default.asp?page=2007\03\01\story_1-3-2007_pg5_1


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## Neo

March 01, 2007 

*Chinese group interested in setting up trailers plant*

KARACHI: A Chinese group is interested in setting up a plant for manufacturing of trailers initially, according to a statement issued here on Wednesday.

It said that a delegation of Chinese auto manufacturer-Zhengzhou Hongda Automobile, visited Auto Corporation of Pakistan (ACP) Pakistan Engineering Works (PEW) and Master Motors, along with their local partner- Globuiss Technologies and Trading, to assess the facilities and standard of work of these organizations.

The statement pointed out that the Chinese group is interested in setting-up a plant for manufacturing of trailers initially and later specialized vehicles. 

In the third phase they plan to start manufacturing light trucks, it was further pointed out.

http://www.dailytimes.com.pk/default.asp?page=2007\03\01\story_1-3-2007_pg5_11


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## Introvert

*Metro to open stores in Pakistan​*Metro would soon open stores in Pakistan as most of the work to open stores are completed. A delegation of Metro visited pack house of Sadruddin & Co., and discussed bi-lateral benefits including supplies to local stores and Metro stores in Germany. Metro appreciated quality Kinnow mandarins of Pakistan and are interested for a promotional program in Germany. A group of processors and exporters has supported this program with help of Government support and might do a sampling early next season.
http://www.freshplaza.com/2007/0301/1-1_pk_sadruddin.htm


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## Janbaz

*11 countries eject $57m from stock market*

R M SAQIB
KARACHI - Eleven countries have ejected investment from Pakistan&#8217;s stock market, amounting to $57 million, from July-February period of the current financial year, it was learnt on Thursday.
Switzerland took lead in the withdrawal of investment and their investors ejected $39.5 million dollars. It was followed by UAE that withdrew $6.775 million from stock market in eight months of FY07. Similarly, Australia ejected $5,247,475, France $2,177,742, Luxembourg $995,360, Saudi Arabia $423,696 while Bahamas withdrew $535,221. From July-February FY07, the inflow of portfolio investment at stock market in Pakistan amounted to $543.23 million by Feb 27.
Stock market sources said that the withdrawal of foreign investment had dampened trading at the Karachi Stock Exchange and other two exchanges in Lahore and Islamabad, creating a recession in the trading activity. According to sources, the United States appears the top investor as the stock market received $375.121 million investment from the US in eight months of this financial year.
Singapore emerged the second largest investors. Investors from Singapore invested $101.229 million at stock market.
Similarly, the remaining leading investor countries at stock market were the United Kingdom $88,301,647, Hong Kong $21,494,062, Kuwait $13,237,549 and Germany $646,000. 
In February alone, the inflow of portfolio investment from the US amounted to $133776 million, making the US the largest investor country in Pakistan. The second in row is the UK with its total portfolio investment of $59,144,635 followed by Hong Kong with $3,561,481 investment. While, on the other side, Switzerland had withdrawn the largest amount of money from Pakistani markets amounted $ 16,079,915 in the month of February 2007 followed by Swiss withdrawal of $16,079,915 amount and Singapore with $9,774,410 in one month. 
It is mentioned here that the federal government had targeted the inflow of more than one billion dollars in 2006-07 due to the launching of the global depository shares of banks by June 2007. For the first time portfolio investment in Pakistan would surpass one billion dollars in FY-7 with the key factor of the sale of GDRs of the OGDCL and banks, said sources. 

The Nation.
http://www.nation.com.pk/daily/mar-2007/2/bnews1.php


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## Janbaz

*14 banks earning surges by Rs 60 billion profit in 2006*

JAVED MAHMOOD
KARACHI - Fourteen key listed commercial banks have announced their full year 2006 results which indicate an increase of 32 per cent in their earnings in 2006, amounting to Rs 60.10bn. This growth is slightly lower than expectations of 40&#37; mainly due to lower than expected results of National Bank of Pakistan (NBP) and United Bank Limited (UBL). This has been disclosed in a report released by the JS Research Department on Thursday.
Amongst 22 listed banks in Pakistan, the JS Research selected 14 banks for analysis. As the remaining 7 relatively small & medium sized banks have yet to announce their results. While Bank Islami has not been included since 2006 was its first year of operations. The sample banks as on Sep 30, 2006, represent 69% and 67% of the total banking sectors deposits and assets versus all listed banks deposits & assets share of 75% and 72%, respectively.
Banks&#198; earnings growth continued in 2006: In 2006, positive earnings growth of listed banks in Pakistan continued as their profitability went up by 32% to Rs60.1bn (US$990mn) versus Rs45.6bn (US$751mn) in 2005. This is the fifth consecutive year of positive profitability growth posted by the banking sector of Pakistan.
And was driven mainly by the rising net interest income of the banks which from Rs86bn (US$1.42bn) in 2005 rose by 33% to Rs115bn (US$1.89bn) in 2006. In contrast with 2002 to 2004 net interest income increase, where growth was mainly driven by the rising advances of the sector, in 2006 growth in net interest income came from the higher spreads between lending and deposits rates. As according to SBP data, banking sector average spread went up by 110bps to 7.4% while growth in advances was 18%.
or Rs365bn (US$6bn).
Non interest income of our sample banks, on the other hand, grew by 29% to Rs43.2bn (US$713mn). In which, although major contribution came from fee income (36% share in the total non interest income), its growth remained subdued as it grew by only 1% to Rs15.6bn (US$257mn). Dividend income, nevertheless, show growth of 60% driven mainly by the record payout by mutual funds & others corporates. Dividend income of the banking sector rose to Rs7.1bn (US$117mn) in 2006. While due to the dull stock market performance in 2006 capital gain income of the banking sector declined by 12% to Rs3.8bn (US$63mn) from Rs4.3bn (US$72mn) in 2005. 

The Nation.
http://www.nation.com.pk/daily/mar-2007/2/bnews4.php


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## Neo

*Portfolio investment jumps to $557 million *

KARACHI (March 02 2007): Portfolio investment, as represented by Special Convertible Rupee Accounts (SCRAs), increased by about $14 million on 28th February to reach another record level of $557 million as on that date, according to the latest SBP update (1st March) on the subject.

Earlier on, it reached the year-highs at least on four occasions during February viz. $519 million on 12th, $523 million on 13th, $535 million on 15th and $543 million on 27th before jumping to $557 million on 28th February.

Between the highs of $535 million and $543 million, it dipped to $524 million on 16th and further to $515 million on 20th, $516 million on 21st before plummeting to $505 million and $509 million on 22nd and 23rd respectively.

The largest chunk of fresh investment of about $26 million poured during the last two days of February, $12 million on 27th and $14 million on 28th. On 27th February, over $5.5 million were invested by US investors followed by over $4 million by Hong Kong and $3 million by UK investors.

Switzerland, however, withdrew about $0.4 million on the same date. On 28th February, about $12 million came from UK, about $4 million from USA and over $2 million from Hong Kong. These positive flows were, however, neutralised to the extent of over $3 million by withdrawals of over $2 million by Singapore investors, about $1 million by Switzerland, $0.2 million by UAE and a small amount by Qatar.

Total fresh investments during the month of February are reported to be around $175.6 million shared by USA ($137 million), UK (over $71 million) and Hong Kong ($5.7 million) besides two small contributions originating from BV Island and Qatar. The overall positive impact of these fresh investments was partly offset by disinvestments amounting to about $38 million during the month including those by Swiss investors (about $17 million), Singapore (about $12 million), Australian (about $5.3 million) and UAE ($3.7 million) besides smaller withdrawals by Luxembourg and German investors.

All in all, by 28th February, the largest investor during FY07 so far was USA ($378 million) followed by UK ($100 million), Singapore ($99 million), Hong Kong ($23.6 million), Kuwait ($13.3 million) and relatively smaller amounts by Germany, Bahrain and Qatar. Withdrawals of $40.4 million by Switzerland, $7 million by UAE, $5 million by Australia, $2 million by France and smaller amounts by Luxembourg, Bahamas, Liberia, Guernsey, Saudi Arabia, BV Island, and Qatar during the year partly neutralised the impact of above mentioned positive flows.

On the stocks front, the widely used KSE 100 Index, which stood at a record high level of 11,864 on 8th February started losing ground thereafter reaching the lowest of 11,379 on 16th February and touching again the highest of 11, 608 on 23rd before dipping to 11,394 on 26th. 11, 376 on 27th and 11,180 on 28th February as concerns about possible slowdown in Chinese and US economies sent shock waves causing stocks in Asia and Europe tumble down. (Report by research.dept@aaj.tv)

http://www.brecorder.com/index.php?id=534023&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Power demand growing by 9.5 percent annually: Shaukat *

ISLAMABAD (March 02 2007): Prime Minister Shaukat Aziz has said that demand in power sector is growing by 9.5 percent annually and the government is encouraging local and foreign private sector investments to keep a balance between demand and supply.

He was talking to President and Chief Executive Officer, TNB Liberty Power of Malaysia Dato' Sri Che Khalib Bin Mohammad Noh who called on him here on Thursday. Liberty Power Limited, a government of Malaysia owned company established a power plant in Pakistan in 1995.

The Prime Minister said that the surge in power demand is mainly due to better living standards, growing middle class, electrification of rural areas and increase in irrigation and industrial demand, all of which necessitates more electricity generation.

The Prime Minister said that in view of the high growth projections for the future in all sectors of economy, the energy requirements are expected to rise further and the government is making focused and concerted effort to increase capacity in the energy sector to maintain the momentum of growth.

He said the government is encouraging private sector participation in the power sector. To meet its future power needs through the private sector investors, the government announced a policy for power generation projects in 2002, which received encouraging response.

The Prime Minister said consistency and continuity of policies and transparency are the hallmarks of the government and we will continue to apply the policies with equity and justice. The government will continue to extend incentives to the potential investors in a non-discriminatory manner, the Prime Minister added.

The Prime Minister said that Malaysia has made significant contribution in the power sector of Pakistan and Liberty Power is an example of Pakistan-Malaysia co-operation in the power sector. He invited the delegation to participate in the upcoming power projects in Pakistan.

The delegation appreciated the efforts made by Pakistani leadership for promoting investments in Pakistan.

http://www.brecorder.com/index.php?id=534070&currPageNo=1&query=&search=&term=&supDate=


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## Neo

March 02, 2007 
*PM reviews progress on trade corridor*

ISLAMABAD, March 1: Prime Minister Shaukat Aziz said on Thursday the National Trade Corridor (NTC) will require an investment of $1 billion per year over a period of next four to five years to link PakistanÃ¢â¬â¢s major ports in the south with its major cities and trade routes to the north.

Chairing a meeting to review progress on building of the NTC, he said the ports, roads and railways along this corridor handle 95pc of external trade and 65 per cent of our total land freight.

Ã¢â¬ÅThis is a major strategic initiative to improve the logistics chain throughout the country and to interlink it with all three adjoining regions of South Asia, Central Asia and West Asia,Ã¢â¬Â he said.

An official announcement issued here said an efficient logistics chain comprising roads, railways, ports and airports is a critical element to reduce the cost of business, improve competitiveness and enhance productivity of goods in the country.

He pointed out that all stakeholders including Civil Aviation Authority, National Highway Authority and Pakistan Railways should constantly benchmark their performance against global standards as it will provide critical feedback to judge the quality of the improvement in the logistics chain. He also asked these organisations to improve their marketing strategies by hiring consultants from the private sector.

He said all out efforts were needed to ensure timely completion of all projects related to the NTC. He also emphasised the need to meticulously maintain and optimise the existing infrastructure while expanding the logistics chain in the country.Mr Aziz said to speed up the process of infrastructure development the government had adopted a public private partnership model whereby the government and the private sector could work together for implementation of projects requiring significant capital investments.

He also emphasised the need for improvement in inter-ministerial coordination to achieve maximum results from the improved logistics chain.

The deputy chairman, Planning Commission informed the meeting that an energy logistics committee has been set up under secretary petroleum, which will prepare an action plan by next month to carry out assessment of energy requirement together with the identification of its resources.

He said there was a huge potential of about $7 billion savings resulting from efficiency in the private sector logistics such as warehousing, shipping, inventory control and efficient administration. The potential should be fully tapped, he directed.

Federal Minister for Railways Sheikh Rashid Ahmed told the meeting that Pakistan Railways had increased its freight carrying capacity by 12 per cent last year with the induction of three new freight trains. The fourth one, he said, would be started soon. The prime minister said that RailwaysÃ¢â¬â¢ long-term target should be to capture 30 per cent of the country's freight volume.

http://www.dawn.com/2007/03/02/ebr11.htm


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## Neo

March 02, 2007 
*Sindh seeks Rs11.6bn to improve irrigation*

By Ihtasham ul Haque

ISLAMABAD, March 1: The Sindh government has sought from the centre additional Rs11.6 billion urgent funding for the rehabilitation of its ageing irrigation system.

Officials told Dawn on Thursday that the provincial government was ready to provide Rs1.5 billion from its own resources for improving the irrigation infrastructure, including main and branch canals, distributaries and minors.

The Sindh government maintained that it needed the additional amount to enhance long-term sustainability of developing institutions by improving operation and maintenance of the irrigation system and cost recovery.

The immediate objective is to improve efficiency and effectiveness of irrigation water distribution in three Area Water Boards (AWBs) of Ghotiki, Nara and Left Bank. It also covers areas for improvement under the jurisdiction of the Sindh Irrigation and Development Authority (Sida), AWBs of Ghotki feeder, Nara canals in Khairpur, Sanghar, Mirpurkhas and Umerkot and Left Bank (canals) in Tando Mohammad Khan, Hyderabad and Badin and areas where barrages are located i.e. Guddu, Sukkur and Kotri.

The improved water management, Sindh believed, would lead to increased agricultural production, employment and income over an area of about 1.837 million hectares or more than 30 per cent of the irrigated areas.

The project would supplement efforts which are presently underway, including the World Bank-assisted Sindh On-Farm Water Management project, Revamping/Rehabilitation of Irrigation and Drainage System project, National Drainage Programme (Reprogramming) and Lining of Distributaries and Minors project in the province.

Benefits include annual incremental agriculture production with an estimated value of Rs3.4 billion (June 2006 prices) and creation of 4.39 million workdays per year of farm labour at full development due to increased cropping intensity and yields.

It will also help achieve self-reliance in agricultural commodities, ensure food security and improve productivity of crops.

The Centre was informed that Sindh had evolved an interim strategy that would yield quick dividends while building the foundation for the longer term strategy.

The interim strategy has three inter-related elements -- fostering an institutional, policy and operational framework conducive to efficient and self-sustaining operation and management of the irrigation system, supporting farmersÃ¢â¬â¢ organisations in implementing high payoff infrastructure improvements needed for improved water management, and enhancing agricultural productivity and incomes by introducing improved technology, 'agronomic' practices and information/knowledge system.

To ensure the quality of civil work construction, the federal government was informed that works would be packaged for bidding purposes to attract qualified contractors, while contract management and construction supervision would be carried out with the assistance of qualified engineering firms.

http://www.dawn.com/2007/03/02/top5.htm


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## Janbaz

*Punjab industrial estates reap fruit of improved infrastructure *

By our correspondent

LAHORE: Public-private partnership has improved investment climate in Punjab as all industrial estates of the province have seen improvement in infrastructure, law and order and rehabilitation of closed industries.

Almost all industrial estates of the province are operating under private sector representatives with Sunder the only exception where private sector CEO has been replaced by former Nespak chief. A study by The News revealed that small and medium industries at the renovated Multan Industrial Estate have revived with more than three dozen green projects in leather, food and agricultural implants commencing their production.

Similarly more than 50 new projects including two multinationals have started operating at the newly-built Sunder Industrial Estate. More than 100 new industries are under different stages of completion. They include pharmaceuticals both domestic and multinationals, textile, particularly knitwear and garment, and auto-parts manufacturers.

The most astounding success was however achieved at Quaid-e-Azam Industrial Estate (formerly Township Industrial Estate). It was until the establishment of Sunder the largest industrial estate of the province. When this 565-acre industrial estate was managed by public sector, it was plagued by broken roads, destroyed sewerage network and alarming law and order situation. Two years back the average dacoities in this industrial area were three per week. Industrialists were closing their units.

A new board of management of this industrial estate was constituted two years back comprising public-private sector representatives with private sector representative as its head. The new board gave security the first priority and collaborated with Lahore Police in this regard. The police provided the personnel while vehicles, drivers and petrol were provided by QIE for 24-hour surveillance. The police employees are provided three times meal, snacks and regular washing of their uniform. According to president QIE Nauman Kabir there has been no incidence of dacoity or theft during the past 16 months.

The board then revamped the internal road structure of the QIE along with a refurbished sewerage system. Better infrastructure resulted in rehabilitation of 35 industrial units while 14 new industries were established, including a multinational beverage company. QIE president said at present 435 SMEs are in operation, employing over 45,000 workers. He said improved security encouraged women workers to seek employment in QIE. He said currently more than 9000 workers in QIE are women. 

The powers for transfer of property had been handed over to QIE board two years back. The board reduced transfer fee by half but has settled all but 18 of the 197 property transfer cases during two years. 

The 18 unresolved cases are pending in courts. The QIE established its own solid waste management system. Its staff and vehicles pick garbage round the clock and keep the sewerage system clean. The board has also established water supply system through its own water tank and has established its own fire brigade station.

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=45077


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## Neo

*Pakistan eyes $100 bln foreign investment in next ten years: Salman *

ISLAMABAD: March 02, 2007: Advisor to the Prime Minister on Finance and Revenue, Dr. Salman Shah said on Friday that Pakistan expects $100 billion foreign investment in Construction and other sectors during the next ten years as its economy is growing on fast track.

'The construction sector activities in Pakistan are growing at a pace Karachi, Lahore, Rawalpindi, Islamabad and other parts of the country which requires a lot of investment in the sector', he told APP in a panel interview here on Friday.

Salman said that government is also initiating low cost housing projects for overcoming shortage of housing in the country.

He added that Foreign investment is rising and workers remittances have also increased due to prudent economic policies of the government.

Salman Shah said that consistency and continuity of economic policies and investment-friendly policies bring pursued by the government during the past six years have restored the confidence of investors.

They are now keen to invest in various sectors of the economy." Dr. Shah said that 150-200 investors will attend the Overseas Pakistanis Investment Conference (OPIC) here from March 5. "The conference will bring more foreign investors and joint ventures in the country," he added.

He said that all sectors of the economy, including agriculture, are performing well and expressed the hope that Pakistan's GDP would cross 7 percent during the current financial year.

He added that financial sector investors are also taking keen interest in establishing Banks and expansion of their network in Pakistan.

Citing examples, he said that Standard Chartered Bank has purchased Union Bank adding said that this is a long term investment which would benefit the country in the long run. Tamasec of Singapore investment company is also buying a bank, he added.

He said that private sector is participating in the privatisation programme of the country and making investments in large industries in the country. 

Shah said that EMAAR Group and NAKEL group are also investing a huge amount in the country's construction sector.

Shah said one of the best companies in the world has shown interest in the purchase of Pakistan State Oil (PSO) company.

There is no shortage of capital for investment in the country and Dr Shah expressed the hope that huge investments would lead to further socio economic prosperity.

He said if Pakistan sustains its GDP growth at 7-8 percent, maintains consistency and continuity in the economic policies and invest more on the human capital there is no reason why Pakistan cannot progress like China and east Asian Countries.

He said that few years back the foreign investment in Pakistan was only US $ 250 million and today it has reached to US $ 6 billion.

Dr. Salman Shah said it is firm commitment of the government to reduce inflation as it is affecting the masses specially the poor segment of the society.

He added that government is focusing on pro-poor economic policies adding said that core inflation has reduced to 5.5 percent and food inflation is around 8 percent.

He said that government is also concentrating on the development of agriculture sector in the country.

He regretted that after Tarbela dam no major reservoir was built in the country. 

"Had we built more such dams in the past, Pakistan would have produced food which was enough for its own needs and also for export," he said.

Salman said that Pakistan has advantage of being rich in water resources adding that Kalabagh dam would benefit Sindh province the most.

He added that Pakistan will attract over $6 billion during the current financial year and expatriates remittances have also registered 25 percent growth in the seven months of the current financial year.

Shah said that government has announced establishment of a special economic zone at Kala shah kaku (Punjab) covering an areas of 3000 acres for Chinese investors and their joint ventures.

The Advisor to the prime minister said that the government under a comprehensive plan is establishing special industrial parks, and business centres for industrialisation of the country.

Talking about government's efforts for the development of National Trade Corridor, he said this would be a major strategic initiative to improve logistics chain throughout the country adding said that through provision of road infrastructure from Karachi-Khunjerab via KKH and Karachi to Gwadar ports would be modernised according to international standards to reduce cost of transportation.

He added through this project Pakistan would be able to save US $ 7 billion per annum.

He termed NTC programme as one of the biggest infrastructure development programme in the country's history adding that this would greatly benefit the people and improve their quality of life beside creating more job opportunities for them and also play an important role in the socio economic development.

Salman said that in Public sector Development Programme (PSDP) for the year 2006-07, the government has allocated Rs.435 billion adding apart from it the Higher Education Commission (HEC) would establish ten engineering universities in the country.

He added government has also decided to bring improvement and quality in education system and a huge amount is being spent on human resource development sector.

Shah said for skill development of the young generation and creating employment opportunities for educated youth, under the special directives of prime minister Shaukat Aziz and comprehensive training programme called National Vocational and Technical Education Commission (NAVTEC) has already been launched.

He said there is shortage of skilled manpower with tremendous opportunities in various sectors including construction sector.

He added that under the programme short courses and long term technical courses would be provided and skill training to create employment opportunities within the country and abroad to at least one million people in next two years.

He said these persons will be given training in the fields of electrician, livestock, health, domestic appliances, construction, food preparation, domestic services, paramedics, beauty and health, livestock, agriculture and services sectors.

Shah said that President and Prime Minister have directed Central Board of Revenue (CBR) to take steps for the collection of more revenue to meet social sector development and infrastructure requirements for socio economic development and improving quality of life of the people by providing them maximum opportunities in the development process.

Shah said that development of health, education and infrastructure sectors are top most priorities of the government adding that more funds would be allocated to these sectors in the forthcoming budget.

He added that government is also focusing on improving the law and order situation so that these could not be a hurdle in the way of country's economic progress.

Brecorder.com

:flag: :flag: :flag: :flag: :flag:


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## Neo

*Trade volume between Pakistan and UK to double *

LAHORE: March 02, 2007: Trade volume between Pakistan and the United Kingdom is bound to double in near future as consistency in policies and economic reforms in Pakistan are sending positive signals to the foreign investors. 

This was stated by Mohammad Ahmad, leader of 14-member strong business delegation from Yorkshire while speaking at the Lahore Chamber of Commerce and Industry (LCCI) on Friday. 

Mohammad Ahmad said Yorkshire is one of the fastest growing economic areas in the United Kingdom with solid industrial base.

Yorkshire is a region of exciting opportunities for being gateway to 370 million customers in Europe and having a huge potential in Engineering, Information Technology, Biotechnology, Healthcare, Education and Tourism for Pakistani businessmen.

The head of the delegation, who spoke at length on various issues, was of the view that visit of a large number of UK delegations to Pakistan is enough to prove that the level of trust of the foreign investors is going up with every passing day.

Mohammad Ahmad, who has been instrumental in building key partnerships with SMEs and multinational corporations world-wide, said there is a need that some high-powered sector-specific delegation from the Lahore Chamber of Commerce and Industry should visit Leeds to have first-hand knowledge about the businesses and for initiating joint ventures with their British counterparts.

UK Deputy High Commissioner Hamesh Danial said this delegation is part of Chamber Management Services Overseas Market Visit Programme and would help boost the image of Pakistan.

He said Britain, being the largest investor in Pakistan, wants to multiply its investment and is taking all necessary steps in this regard. He assured participants that the British government would continue to facilitate Pakistani businessmen for the promotion of trade between the two countries.

Speaking on the occasion, the LCCI President Shahid Hassan Sheikh invited the UK businessmen to invest in low-cost housing sector as there is a shortage of over 5 million houses in Pakistan.

Hassan said a lot of progress could be made on trade front through identification of new tradable items and this is possible through the active engagement of the Chambers of Commerce and Industry of the two countries and by arranging single country exhibitions and also by holding socio-cultural programs in each other's country.

Participation of Pakistani exporters in the international trade fairs in UK and vice versa can also expand trade between the two countries.

He said Pakistan offers good scope for investors in information technology, telecommunication, infrastructure, textiles (value addition), oil and gas, water and power, food and food processing, SMEs, engineering, tourism and services.

"We are particularly keen in British investments that could provide transfer of technology to Pakistan," he added.

Brecorder.com


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## Neo

March 02, 2007 Friday 
*Pakistan, EU to discuss market access issues: Joint commission formed*

ISLAMABAD, March 1: Pakitan and the European Union (EU) have decided to set up a joint commission under the third-generation agreement Ã¢â¬â a trade plus treaty Ã¢â¬â to discuss market access issues for enhancing trade, said commerce minister Humayun Akhtar Khan here on Thursday.

Both the sides have nominated members of the joint commission under which a working group on trade will be established in spring next, said commerce minister while speaking at a press conference here on Thursday.

Mr Khan said Pakistan and the European Union agreed that the working group would start discussion on market access not precluding a free- trade agreement.

The European Union parliament has already ratified the agreement, added the minister.

This does not mean that the EU and Pakistan have agreed to talk on the FTA, like they had with India, but a forum has been designated by the EU and Pakistan to start discussion on market access, the minister said, quoting the relevant part of the agreement.

Responding to a question, the minister said Pakistan cannot say that the European Union has declined to talk to Islamabad on FTA.

He ruled out such kinds of reports, which, he said, were factually incorrect.

The EU has apparently made economic criteria for selection of country to negotiate a free-trade agreement with them.

This criterion includes tariff barriers and non-tariff barriers and size of economy. On the basis of this approach, the European Commission has picked up a few countries to negotiate FTA with them.

The EC has announced that they would start negotiations on FTA with four to five countries, including South Korea, Asean and India, etc., though negotiations have not yet started.

To a question, the commerce minister said that Brussels has not said that they would not go for an FTA with Pakistan.

We are trying to tell the European Union about the economic advantages to be accrued out of this agreement in addition to political requirements for Pakistan to improve its economy for having a better market access for its products. The dialogue is very much on the issue, the minister said.

The minister said that the government at a higher level had already been lobbying with the EU states to seek their support on the issue.

I am not saying we do not want unilateral concessions from the European Union under the FTA.

We will also give similar concessions to the EU. We have given concessions to China on equipment under FTA, which would replace the import of machinery imported from Europe.

It is in the EuropeÃ¢â¬â¢s interest to consider Pakistan for the treaty, the minister asserted.

Answering a question, the minister said that Pakistan hoped that the US would soon table a legislation for establishment of reconstruction opportunity zones.

He said his ministry was also working on a plan to enhance growth in export of commodities.

To a question, he said many steps would be taken for increasing trade with Afghanistan.

http://www.dawn.com/2007/03/02/ebr3.htm


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## Neo

March 02, 2007 
*US firm plans 11 gemstone training centres*

ISLAMABAD, March 1: Federal Minister for Petroleum and Natural Resources Amanullah Khan Jadoon has said that the government is taking concrete steps to explore precious stones and other metallic and non-metallic deposits in the Northern Areas, AJK, NWFP and other parts of the country.

The minister was talking to the president of WorldÃ¢â¬â¢s Gold and Diamonds Company of US, Mr Nasiruddin Rupani, who called on him here on Thursday and briefed him about his companyÃ¢â¬â¢s plan to set up 11 gemstone cutting and polishing training centres in the Northern Areas and other parts of the country by investing $4 million.

The minister said that the government had already set up three training centres to train unemployed youth in gemstone-cutting and polishing trade.

The minister said that the government would launch a programme to train youth in precious stones cutting, polishing and marketing with a view to give a boost to export of finished precious stones in world market.

He said the government would encourage and facilitate the WorldÃ¢â¬â¢s Gold and Diamonds Company in setting up gemstone training centres and mining of deposits on scientific lines.

The president of WorldÃ¢â¬â¢s Gold and Diamonds Company informed the minister that the company had already imparted training to 100 unemployed youth, enabling them to earn their livelihood in a dignified manner.

He said that Pakistan was endowed with vast mineral deposits and his company would make further investment in the days ahead for the mutual advantage.

Director-general (Minerals), Mr Irshad Ali Khokhar, and other officials of the ministry were also present during the meeting.

http://www.dawn.com/2007/03/02/ebr1.htm


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## Owais

*Pakistan's foreign exchange reserves hit fresh high *
KARACHI (March 03 2007): Pakistan's foreign exchange reserves increased by $62 million to another new high of $13.343 billion in the week ending on February 24, the central bank said on Friday.

Reserves held by the State Bank of Pakistan (SBP) rose to $10.998 billion from $10.929 billion, however, those held by the commercial banks fell marginally to $2.345 billion from $2.352 billion, the central bank said in a statement.

Pakistan's foreign exchange reserves have grown sharply in recent months, from healthy remittances from overseas Pakistanis, and a rise in foreign direct investment.

Foreign direct investment rose more than 69 percent to $2.1 billion in the first seven months of the 2006/07 fiscal year (July-June), led by inflows into the financial, communications and energy sectors, official figures show.

Inflows from foreign portfolio investment during July-January were $697.4 million, up from $400.5 million in the corresponding period last year. During the period, remittances sent by Pakistanis abroad were recorded at $2.96 billion, up from $2.44 billion in the year-ago period.

http://brecorder.com/index.php?id=534318&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Exports to grow at four percent this year: minister *

KARACHI (March 03 2007): Federal commerce minister Humayun Akhtar has said that country's export will continue to grow at four percent average during the coming months of current financial year.

Responding to queries of newsmen at a press conference on Friday, minister did not see any negative impact on the whole year export target because of major slump of 22 percent in the export of textile products in month of January compared to its preceding month of December.

"This decline was because of bulk buying for new year and Christmas season in month of December compared to January, when this buying spree came to end", he pointed out and sounded optimism about the achievement of export target at the end of current fiscal.

Humayun Akhtar talked at length on the issues ranging from Free Trade Agreements (FTAs) with various countries to textile sector and issues related to trade with India especially the recent Safta-related tariff concessions.

About the possibility of signing of FTA with European Union (EU), he said that a trade working group will be established under joint commission of Pakistan and EU would provide a forum to discuss the bilateral trade issues not precluding FTA.

Signing of FTA with Gulf Co-operation Council (GCC), minister said that there is problem on part of Pakistan, but it is GCC Secretariat, which is moving slowly in this regard. "During my visit to Saudi Arabia, I discussed it with my Saudi counterpart and urged to expedite the process in this connection", he told the reporters.

On a question related to market access, he declared that there is no issue of market access of the country products to various markets. The trade diplomacy in the last few years has worked well.

The FTA with China, Reconstruction Opportunities Zones (OPZs), Safta in South Asia, PTA with Iran are reflective of this trade diplomacy. Besides, we are also going to sign FTA with Asean. Humayun said that government is studying issues related post-quota regime, and added that we are benchmarking the textile sector to determine the current situation.

In reply to query about high cost of production in the country due to high charges of gas and electricity, minister claimed that the rates of gas and electricity are less than India, Sri Lanka and China. "I say with authority that Pakistan is not the most expensive country as far as the rates of gas and electricity are concerned", he added.

About the Safta, minister said that non-tariff barriers (NBTs) on part of India are big hurdles in implementation of this agreement. India says that Pakistan is not compliant with this agreement, which is not correct, minister asserted.

http://www.brecorder.com/index.php?id=534315&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*US pressure can destabilise Pakistan: Mahmud *

WASHINGTON (March 03 2007): US pressure, including congressional threats to cut or put conditions on billions of dollars in aid, could destabilise Pakistan and maybe even bring down President Pervez Musharraf, Islamabad's envoy to Washington said on Thursday.

In an interview with Reuters, Ambassador Mahmud Ali Durrani expressed concern that anti-terrorism co-operation among the United States, Afghanistan and Pakistan was eroding and rejected what he said were attempts to unfairly blame Islamabad for an upsurge in cross-border violence.

Tampering with US aid levels will fan anti-Americanism, strengthen the extreme right and Taliban supporters, be counterproductive, and "create problems for Musharraf to be able to continue the way he is," Durrani said.

Asked if it might trigger Musharraf's ouster, he replied: "I don't know. Possibly it could bring him down. It could destabilise the whole country. It could cause mega-problems there. That is possible."

His comments came after top American intelligence officials said the front-line US ally in the war on terrorism had allowed a resurgence of al Qaeda and Taliban forces and training camps in Pakistani tribal areas that could someday lead to another September 11-type attack on the United States.

"What I'm worried about today more than anything else is this unhinging of the co-operative relationship ... In this very critical field of (co-operation on) counter-terrorist operations there seems to be a problem. We need to fix it," Durrani said.

US Vice President Dick Cheney visited Afghanistan and Pakistan earlier this week and urged Musharraf to take tougher action against militants on his side of the lawless border. He also called attention to efforts by the US Congress to restrict or alter billions of dollars in annual US aid to Pakistan.

On Thursday, Pakistani security forces captured a high-ranking Taliban leader in the south-western city of Quetta, a senior Pakistani security official and Taliban sources reported.

The Bush administration considers Musharraf a key ally who has taken great risks to help defeat Afghan-based militants after the September 11 attacks, including by providing access to bases and over-flight rights. But with continued instability in Afghanistan and reports that extremists are building new bases in Pakistan possibly abetted by Pakistani intelligence services, many in Washington wonder whether a new strategy is needed.

A recent report by experts at the Center for Strategic and International Studies questioned whether the US alliance with Musharraf has "run its course," while acknowledging there is no obvious successor to lead nuclear-armed Pakistan as a moderate Muslim state.

Durrani argued that the United States, "distracted" by Iraq, failed to finish the job in Afghanistan and is now looking for someone to blame. He acknowledged problems in Pakistani tribal areas, including "a possibility of some presence of al Qaeda, definitely some presence of Taliban" but he insisted 90 percent of the violence stems from Afghanistan.

Some US experts have questioned whether more than $10 billion in aid to Pakistan over the past five years may be too heavily weighted towards military operations and should focus more on education and other "softer" projects, but Durrani said the mix should not be changed. He urged Washington to expedite delivery of attack helicopters and night vision devices in time for an expected Taliban spring offensive.

http://www.brecorder.com/index.php?id=534338&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*External debt reaches $38.42bn *  

By M Israr Khan

ISLAMABAD: PakistanÃ¢â¬â¢s total outstanding external liabilities - external debt plus foreign exchange liabilities - during the first half of the current fiscal swelled by $1.159 billion to $38.42 billion from $37.26 billion. While, the official liquid reserves declined by $126 million to $10.639 billion from what it was at the end of June 2006 ($10.765 billion).

Of the total liabilities, the external debt has surged by $1.228 billion to $36.907 billion at the end of December 2006, against $35.68 billion recorded at the end of June, 2006. While, the foreign exchange liabilities declined to $1.517 billion as compared to $1.586 billion recorded at June 2006.

Finance ministry, especially the Debt Office (responsible for managing debt), looks reckless about huge borrowing and claim that it was not a bad sign for the economy to borrow more. While, on the other hand, in its Ã¢â¬ËDebt Policy Statement 2006-07Ã¢â¬â¢ which it (Debt Office) unable to present to the National Assembly at the due date (January 2007), blaming past governments for excessive borrowing and says that it has curtailed their ability to invest in social sector ie education, health, population planning, nutrition and employment creation.

It is pertinent to note that during the last five years, the countryÃ¢â¬â¢s public and publicly guaranteed debt (including multilateral and bilateral debt) has been on the rise.

On June 30, 2003, it was $29.23 billion, at the end 2004 ($29.87 billion), 2005 ($31.08 billion) and the end of the same month of 2006 it increased to $32.603 billion. And now, after six months at the end of December 2006, the publicly guaranteed debt further inched up to $33.739 billion.

In public and publicly guaranteed debt, the medium and long-term debt (more than one year) during the period under review augmented by $1.282 billion to $33.739 billion as it was $32.407 billion at the end of June 2006.

According to the break-up of the medium and long-term debt, the multilateral debt by end-December, 2006 grew by $1.226 billion to $17.75 billion and bilateral debt up by $93 million to $940 million compared to June 2006 when these stood at $16.527 billion and $847 million respectively.

While, during the period under review, the volume of military debt declined by $40 million to $90 million, Paris club debt increased by $24 million to $12.855 billion and Euro bonds/Saindak bonds declined by two million dollars to $1.906 billion as compared to $130 million, $12.83 billion and $1.908 billion recorded in June 2006.

The Sate Bank of Pakistan (SBP) data revealed that the short-term external debt (less than one-year) from Islamic Development Bank (IDB) declined by $221 million to only $50 million at the end December 2006, as at the end of last fiscal, it was $ 196 million.

The private non-guaranteed debts (more than one-year) during the period increased to $1.706 billion from $1.585 billion at the end of FY 2005-06.

The State BankÃ¢â¬â¢s data also depict a decline of about $29 million in the International Monetary Fund (IMF) debt. At the end of December 2006, it declined to $1.462 billion as compared to $1.491 billion recorded six months back (June 2006).

The foreign exchange liabilities excluding foreign exchange bearer certificates, foreign currency bearer certificates and dollar bearer certificates (which stand at $6 million) declined by $69 million during the period under study to $1.517 billion from $1.586 billion at the end June 2006.

Of this, the special US dollar bonds declined by $48 million to $199 million, as it was $247 million at the end of last fiscal 2006. Besides, foreign currency bonds (NHA/NC) declined by $21 million to $88 million from $109 million end June last fiscal.

While the central bank deposits, NBP/BOC deposits and other liabilities (SWAP) remained unchanged for the last three years at $700 million, $500 million and $30 million respectively.

http://www.thenews.com.pk/daily_detail.asp?id=45233


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## Neo

March 03, 2007 
*Basmati crop damage causes $260m loss*

By Parvaiz Ishfaq Rana

KARACHI, March 2: The country has suffered a huge loss of around $260 million (Rs15.782 billion) owing to severe damage caused by strong winds coupled with rains and fog to the standing paddy of Basmati in the Punjab this season (2006-07).

Private estimates put the damage as high as 20 per cent or around 0.4 million tons of the estimated total production of 2 million tons harvested this season. The rapidly changing climatic patterns with rising trend in accumulation of condensed fog during harvesting season of paddy crop is being taken as a major factor for higher damage.

On an average there had been 10 to 15 per cent wastage to Basmati paddy due to host of factors but lately with growing problem of fog resulting in higher moisture during the harvesting season the damage ratio has doubled and is likely to grow in years to come.

Presently Basmati rice in the world market is being quoted at around $650 per ton and this means that the cost of 0.4 million tons would come to around $260 million or Rs15.782 billion.

Major cause of recording higher wastage in Basmati paddy this season is strong winds coupled with rains which dropped the fresh but matured husk of the standing paddy on soil and could not be harvested mechanically. However, part of the fallen husk (fresh) could be picked up manually but yet it would lose its quality on absorbing moisture from the ground.

Due to condensed fog during the harvesting season of Basmati paddy there is higher content of moisture in the atmosphere and the husk which is dried in the open (natural way) retains some moisture which does not allow proper threshing thereby results in higher wastage and also affects quality of the grain.

In order to resolve the issue and save the country from losing huge foreign exchange by incurring high percentage of wastage in a cash crop like Basmati rice, exporters demand of the government to set up silos with public and private partnership in all the major crop markets in Punjab.

Talking to Dawn leading exporter of Basmati rice Haji Abdul Majeed said that if we check high percentage of wastage the country could earn $260 million more and this will also help grower to get proper return for the crop by minimising damages and wastage to such a high valued produce.

The cost of these silos having a storage capacity of around 0.2 million tons each is much less than what the country is presently losing in foreign exchange, he maintained.

He further said that mechanised dryers should also be installed in order to avoid age-old system of drying paddy in the open which causes higher wastage and damage to the rice in the process of threshing and processing.

In order to get good price the Basmati rice has to be seasoned at least for a year and this also requires proper storage facilities which is presently lacking. In the past the damage and wastage in Basmati rice was at around 10 per cent but due to rapidly changing climatic conditions and higher fog there is urgent need to set up silos so that they could be rented out to growers to save their cash crops such as Basmati.

The Irri-6 rice which is mostly grown in Sindh and Okara in Punjab after harvesting is immediately exported as it does not need seasoning and Pakistan normally harvests around 2.2 million tons out of which over 1.5 million tons are exported after meeting domestic demand.

Rice exporters are also demanding of the government to immediately stop rice exports on Draft at Sight (DA) as it is a cash crop and this could be verified from the fact there had never been any carry-over stocks of Basmati or Irri-6 rice ever since their exports came to private sector. Export of rice should be only on opening of LCs which will also ensure remittances of export proceeds.

http://www.dawn.com/2007/03/03/ebr3.htm


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## Janbaz

In post 589 it is said that the external debt has soared. What is external debt, it is same as trade deficit and why isn't it eliminated by the growing economy?


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## Janbaz

*UK keen to multiply investment *

By our correspondent

LAHORE: Yorkshire is a region of exciting opportunities for being gateway to 370 million customers in Europe and having a huge potential in engineering, information technology, biotechnology, healthcare, education and tourism for Pakistani businessmen.

This was stated by Mohammad Ahmad, leader of a 14-member business delegation from Yorkshire, while speaking at the Lahore Chamber of Commerce and Industry (LCCI) on Friday.

Ahmad said that Yorkshire is one of the fastest growing economic areas in the United Kingdom with solid industrial base.

He said that the volume of trade between Pakistan and the United Kingdom is bound to double in near future as consistency in policies and economic reforms are sending positive signals to the foreign investors.

UK Deputy High Commissioner Hamesh Danial said the UK being the largest investor in Pakistan, wants to multiply its investment and is taking all necessary steps in this regard.

LCCI President Shahid Hassan Sheikh invited the UK businessmen to invest in low-cost housing sector as there is a shortage of over 5 million houses in Pakistan.

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=45240


----------



## Janbaz

*Govt encourages private power generation *

By our correspondent

ISLAMABAD: Prime Minister Shaukat Aziz has said that the government is encouraging private sector participation in the power sector in order to meet the future needs. The government has announced a policy for power generation projects that has received encouraging response, he said. He was talking to DatoÃ¢â¬â¢ Sri Che Khalib Bin Mohammad Noh, President and Chief Executive Officer, TNB Liberty Power Ltd, Malaysia who called on him here on Friday. Liberty Power Ltd, Malaysia government-owned company established a power plant in Pakistan in 1995. Demand in power sector is growing by 9.5 per cent annually and the government is encouraging local and foreign private sector investments to keep a balance between demand and supply of electricity, the prime minister said. 

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=45247


----------



## Janbaz

*Pakistan faces trade deficit with India*

OUR STAFF REPORTER
KARACHI - Federal Trade and Commerce Minister Humayyun Akhtar has said that Pakistan is facing problems in trade with India due to the imposition of non-tariff barriers on Pakistani products.
He was speaking at a press conference here on Friday. He said that Pakistan&#8217;s exports to India remained $350 million while imports from the said country amounted to $1 billion in this fiscal that led to more than half billion dollars deficit to Pakistan.
Humayun Akhtar was of the opinion that India, in spite of its MFN status given to Pakistan, was not reducing its non-tariff barriers on Pakistani products while Pakistan wants to resolve such trade related issues through the dispute resolution mechanism for which it has also voiced at South Asian Free Trade Agreement (SAFTA) meeting recently held at Kathmandu. 
He also said that Pakistani products got the market access in last five years due active trade diplomacy of Pakistan and is also going to conclude Free Trade Agreements (FTA) with the countries of ASEAN including Malaysia, Indonesia and China. He added that negotiations are in pipeline for FTA with Thailand. &#8220;Pakistan&#8221;, he said &#8220;is also willing to sign free trade agreements with the countries of Gulf Cooperation Council (GCC) and for that purpose we have urged Saudi Arabia to use its good offices for the conclusion of this agreement&#8221;. Humayyun Akhtar also said that under the Third Generation Agreement with European Union (EU), the working group on trade of joint commission of Pakistan-EU is to discuss the trade related issues but still EU is not ready to sign FTA with Pakistan as these talks will not cover FTA talks. 
Federal Minister observed that the global pattern of trade and commerce have exclusively changed and Pakistani products are facing stiff competition in international markets. He said that for enhancing the quality of Pakistani products, government has increased the Research and Development budget enormously and also ready to give all possible support to the exporters.
He further said that Pakistan has increased 110 percent of its overall export from 1999. He hoped that Pakistan will be able to reduce its trade deficit and observed that whenever the economy of a country show robust growth, the country had to face certain challenges which Pakistan is also facing like inflation, trade deficit and fiscal deficit. He also pointed out that the electricity rates are much cheaper in Pakistan than the regional countries like India, Sri Lanka and China while exporters must standardized the quality of their products. 

The Nation.
http://www.nation.com.pk/daily/mar-2007/3/bnews2.php


----------



## Contrarian

Yes, Pakistan will sign FTA with every country in the world EXCEPT India. And India is so bloody keen on it.


----------



## Neo

Janbaz said:


> In post 589 it is said that the external debt has soared. What is external debt, it is same as trade deficit



External debt is the part of a country's *debt owed to creditors outside the country*. This includes debt owed to private commercial banks, governments, or international financial institutions such as the IMF and World Bank.



> ...and why isn't it eliminated by the growing economy



You raise a very interesting question here. Before we restored the 'democracy' in 1988 our external debt stood at around $18 billion. Thanks to national corrupt crooks like BB and NS and Co the External Debt skyrocketed to $38 billion with 11 years and we became one of the most indebted countries in the world!!!

Once Mushrraf took over, his main concern was to reduce the debt remboursement by atleast 50&#37; within ten years.

To achieve this goal he appointed internationally known banker Shaukat Aziz and put him incharge. At the same time he implemented FRL - Fiscal Responsibilty Law. The FRL is to prevent acquiring international credit without Parliamentry fiat. NA's aproval is required for any external loan so we won't have BB or NS era kind of monetary mismanagement by future governmets.

Then 9/11 happened and US initiated WoT. Ironaically Pakistan became one of the countries that took benefit from this development. Paris Club endorsed many of our heavy credits, waived some $4 billion and reschedulled a great part against soft terms. This was a major relief since billions that were lost from the budget as repayments could now be used to finance development projects.

To finance ongoing projects Pakistan still needs foreign credit as we simply can't pull it off from our own resources yet. Much of the short term loan, usually a very expensive loan due high interest, has been repayed by funds that bacame available by selling government assets, i.e. privitisation.

Aziz' economic reforms are designed to bring back the credit to $20 billion by 2015. I'm pretty optimistic he'll succeed.

Hope this answers your question.


----------



## Janbaz

Thank You for the reply brother. It gives me a clue of what it is.


----------



## Janbaz

*Govt facilitating private sector *

OUR STAFF REPORTER
LAHORE - Advisor to Prime Minister on Finance and Economic Affairs Dr Salman Shah said that the government was doing its job by facilitating the private sector.
Now the private sector has to come up with high quality of professionalism and innovations to compete in the changing global scenario, he said.
He said that government would provide subsidy in order to offset increase in international price of edible oil and price at national level would be maintained at the current level. Talking about the increase in the energy prices, he said that the energy price in the country was at higher than China and India. The advisor said that the 10 percent increase in electricity tariff was necessary following an increase Wapda&#8217;s input cost. 
Earlier, addressing the function, the advisor appreciated the efforts made by CBR and its field formations. Giving a historical view of the economy he said that the county had come a long way form the brink of bankruptcy to a strong position in the international capital market.. He acknowledged the efforts of CBR in the public sector reforms programme. 
While comparing the economy of Pakistan on the global level, Salman Shah remarked that Pakistan was now equated with the fast growing economies like China and India is maintaining growth rate at 7-8 percent. 
Achieving 4.5-percent growth in agriculture sector is a big task which means we have to improve our resources improvement and modernise wholesale and retail markets, infrastructure and human resource management etc. We need to double our growth in all sectors after every 7-8 years. 
Talking to journalists after attending a presentation at Regional Tax Office (RTO) on tax reforms, here on Saturday,he said that the role of CBR was very crucial. Highlighting the role of CBR, presently contributing 10-percent of the GDP, he stressed the need to improve it to 4-18 percent in next 10 years. 
In order to achieve this objective he said that the ongoing 150 million dollar reforms programme in CBR is aimed at improving its systems and procedures, provision of world calls facilities to the taxpayers in the workforce along with enhancement in professional skills was a step in right direction. 
Earlier, Regional Commissioner of Income Tax (RCIT) Haji Ahmed gave a detailed presentation on restructuring and automation. He underlined the commitment and determination of the government to launch comprehensive reforms in the CBR. 

The Nation.
http://www.nation.com.pk/daily/mar-2007/4/bnews1.php


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## Janbaz

*Clifton the sleepy town of yore turns into commercial hub *

By Muhammad Yasir

KARACHI: Clifton one of the most posh, prestigious and peaceful localities of the city is witnessing rapid commercialisation and has become a bustling shopping hub of the city.

In an interview with The News Syed Izhar Ahmed a real estate consultant and Director of Clifton Estate infomed about the rising commercial activities and value of real estate in different blocks of Clifton.

Syed Izhar Ahmed said entrepreneurs see this area as best place for business. The area between Schon Circle and Three Swords is the most valuable and expensive commercial area of Clifton, he said.

The area around Schon Circle to Three Swords and from Dehli Colony roundabout to Boat Basin is being developed under a plan to build up big shopping centres and office plazas. Therefore the real estate prices in these areas have skyrocketed, he informed.

&#8220;Land facing main roads (near Schon Circle and Three Swords) has a current cost Rs0.25 million per sq. yard which was Rs40,000 per sq. yard five years back and it would increase with the passage of time,&#8221; he added. 

He also said that the offices situated adjacent to these places are also very costly and being sold at Rs700 to Rs1000 per square feet, while the rental value has reached Rs0.3 million for 500 square feet.

These are the ideal places for shopping centres, fast food, cell phone franchises, banks, showrooms and departmental stores. Owing to relaxed regulations of Clifton Town administration and CDGK it is now a common trend that people are running their offices in residential houses.

Clifton being secure, un-polluted, and without parking and traffic jam hassles is very alluring for businessmen for establishing their offices, he said. Izhar Ahmed attributed the commercial trend to the rising rental value of homes, which has reached to lakhs. Homeowners take advantage of soaring rental value put up their houses on rent and live somewhere else enjoying attractive returns on their property.

Clifton being the oldest posh locality of the city had some very old and dilapidated houses with owners living in new homes or overseas. Shrewd investors started tapping this treasure a few years back, Izhar said. Investors purchased old rundown houses renovated or rebuilt the whole structure and placed them on rent.

Clifton developed for the British and their coterie of Nawabs and Sardars had plot sizes measuring 2000 to 5000 square yards, which were bifurcated over the generations to smaller and smaller sizes.

&#8220;The rental value of a 500-yard home starts from Rs40,000 per month and reaches up to Rs0.3 million per month according to its condition and location. The rental values were Rs15,000 to Rs0.1 million per month three years before,&#8221; he said. 

Regarding value of shops, he termed that Zamzama is the best and expensive place because the business runs in full swings in the shopping plazas of this place.

Zamzama is known as the fashion hub of the new generation. He evaluated that small traders seek better revenue earning opportunities besides other shopping areas of the city so they are shifting their business to Clifton&#8217;s shopping centres thus increasing the demand for shops.

The land prices in Clifton block seven and eight are high and available at Rs150 million to Rs300 million per 500 sq. yard while the prices of land in block four, five, six are relatively moderate at Rs100 million to Rs150 million per 500 sq. yard. Moreover, the prices of land are lowest in Clifton Block one and two the least commercialised and the oldest of the vicinity. Here land is available at Rs8 million to Rs10 million per 500 sq. yard. Director Clifton Estate said the rate of land transaction is very low as compare to the transaction of houses and offices in Clifton, adding the demand of rental offices and shops is surging.

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=45364


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## Neo

Janbaz said:


> Thank You for the reply brother. It gives me a clue of what it is.



FRL works as I explained earlier:



> *Fiscal responsibility law: ministry claims public debt targets achieved *
> 
> ISLAMABAD (March 04 2007): The Ministry of Finance has claimed that the targets of public debt, under the Fiscal Responsibility and Debt Limitation (CDRL) Act, 2005, have been achieved and, in certain cases, exceeded.
> 
> A 26-page 'Fiscal Policy' and 29-page 'Debt Policy' statements, issued by the Debt Policy Co-ordination Office (DPCO) for 2006-07, say that the targets of reducing revenue deficit, ensuring that public debt does not exceed 60 percent of total GDP and higher expenditures on social sector have been successfully met.
> 
> It claims that Pakistan has made considerable progress in fiscal consolidation over last six years and it has undoubtedly contributed to a sharp recovery in economic growth within a stable microeconomic framework.
> 
> The report on compliance with the FDRL Act 2005 requires the measures by the federal government to reduce total public debt and maintain it within prudent limits thereof and identify targets to reduce the revenue deficit to nil till June 13, 2008 and thereafter maintain a revenue surplus.
> 
> Revenue balance (Total Revenue minus current expenditure) averaged 0.4 percent of GDP for last four years (2003-04 to 2006-07). However, it is fractionally in deficit by 0.2 percent of GDP but budgeted 0.6 percent of GDP in surplus for 2006-07. It implies that the government has already eliminated revenue deficit ahead of target date 2007-08 envisaged in FRDL Act 2005.
> 
> FDRL Act requires to ensure "that within a period of ten financial year, from July, 1 2003 to June, 2013, the total public debt at the end of the tenth financial year does not exceed 60 percent of the estimated GDP for that year and thereafter maintaining it (public debt) below 60 percent of GDP) for any given year."
> 
> The Ministry claims that the government has already met, and actually exceeded, the requirement on the level of public debt as a percentage of GDP. Further, this limit has been realised within three financial years, instead of 10 years, as envisaged by the FRDL Act.
> 
> At the beginning of July 2003, the total public debt stood at 75.1 percent of GDP while at the end of June 2006, the same item stood at 56 percent of GDP. By end-September 2006, the public debt-to-GDP ratio stood at 50.1 percent of the projected GDP for 2006-07.
> 
> The Act requires to ensure "that in every financial year, beginning from the first July, 2003, and ending on June, 13, 2013, the total public debt is reduced by no less than two-and-a-half percent of the estimated gross domestic product for any given year, provided that social and poverty alleviation related expenditures are not reduced below 4.5 percent of the estimated gross domestic product for any given year and budgetary allocation to education and health, will be doubled from the existing level in terms of percentage of gross domestic product during the next 10 years."
> 
> The government has successfully met and exceeded this requirement in fiscal year 2005-06. Public debt stood at 61.5 percent of GDP by end-June 2005 and declined to 56.0 percent of GDP by end-June 2006, which implies 5.5 percentage points reduction in public debt to GDP ratio against specified target of 2.5 percentage points. By end-September 2006, the public debt-to-GDP ratio further went down to 50.1 percent, which implies a further reduction of 5.9 percent of GDP in one quarter of 2006-07. This is an indication that the government is fiscally prudent as required by the FRDL 2005. The important thing about this fiscal prudence is that it is not achieved at the expense of reduction in social sector and poverty related expenditure. These expenditures are 4.9 percent of GDP in 2005-06 and are targeted to rise further to 5.1 percent of GDP in 2006-07. It means legal obligation to keep these expenditures at 4.5 percent of GDP is well taken care of.
> 
> Expenditures on education and health are also growing briskly. "New guarantees, including those for rupee lending, bonds, rates of return, output purchase agreements and all other claims and commitments that may be prescribed, from time to time, for any amount exceeding two percent of the estimated gross domestic product in any financial year: Provided that the renewal of existing guarantees shall be considered as issuing a new guarantee."
> 
> The government met and exceeded this requirement for fiscal year 2005-06 where the total number of new guarantees issued amounted to Rs 14 billion or 0.18 percent of GDP which is fraction of what is required by FRDL 2005.
> 
> The Ministry says that a sound fiscal policy is essential for preventing macroeconomic imbalances and realising full growth potential. Pakistan has made considerable progress in fiscal consolidation over the last six years. The overall fiscal deficit is down from an average of 7.0 percent of GDP in the 1990s to 3.4 percent last year (2005-06) and underlying fiscal deficit is still below 4 percent of GDP in 2006-07. The associated public debt burden also declined sharply from over 100 percent of GDP to close to 50.1 percent in the same period.
> 
> It claims that the fiscal consolidation has undoubtedly contributed to a sharp recovery in economic growth within a stable macroeconomic framework. Every effort will be made to continue to improve the fiscal balance, notwithstanding the pressure generated by the earthquake of October 2005. Revenue performance on the other hand is better than the target and will help ease some pressure on the earthquake-related spending. Going forward, Pakistan will have to allocate substantially large resources for strengthening the country's physical and human infrastructure to sustain the growth momentum.
> 
> The challenge will be to significantly enhance Pakistan's tax-to-GDP ratio in order to generate the resources required to finance the development of both human and physical infrastructure.
> 
> The government will, therefore, have to make efforts to broaden the tax base ie to hitherto untaxed or under taxed sectors. Broadening of tax base will enable the government to reduce marginal tax rates, which will help further stimulate investment and production and will promote voluntary tax compliance.
> 
> Broadening of tax base will also ensure fair distribution of the tax burden among various sectors of the economy. The overall services sector including wholesale and retail trade as well as agriculture are potential candidates for broadening the tax bases, it said.
> 
> http://www.brecorder.com/index.php?id=534717&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Government hopeful of $6 billion investment by expatriates *

ISLAMABAD (March 03 2007): The government is anticipating an investment of $6 billion by overseas Pakistanis, for which government provides a conducive atmosphere to attract more investment, said Minister for Labour, Manpower and Overseas Pakistanis Ghulam Sarwar Khan in a press briefing here on Friday.

A two days Overseas Pakistanis Investment Conference commencing from March 5 is the reflection of the government's initiative taken due to interest shown by overseas Pakistanis, he added.

The minister believed the conference would be a great success as they have received encouraging response from overseas Pakistani businessmen from 35 countries. About 454 overseas Pakistanis were registered for the conference, out of which 222 have confirmed their participation, who are likely to invest $6122 million, he added. He attributed an excess of $5 billion remittances expected this year from overseas Pakistanis.

Speaking on the incentives, the minister said, the government has kept a low figure of $2 million as minimum investment to encourage maximum overseas Pakistani investors. It has also invited local businessmen to set up joint ventures. Moreover, all stakeholders including, high government officials, industrialists, chambers of commerce and industries, and others who could facilitate the process are invited to attend the conference, he added.

Sarwar Khan said, the overseas Pakistanis are interested in 30 business areas, of which, main are: Power plants, construction, agro-farming, services, tourism light engineering, information and technology, pharmaceutical and export sectors.

The largest investment, he said, $500 million has been indicated in power sector, $496 million in construction, and $372 million in agro-farming. Whereas, a total of $906 million investment is conceived through services, tourism, light engineering, information and technology, pharmaceutical and export sectors, he added.

The largest number of confirmed participants is coming from USA, which is 64 followed by UK confirming 55 participants. The other important countries are from Middle East such as Saudi Arabia, UAE, Bahrain, Qatar, Oman etc. Investors from Italy and Canada are also participating in the conference.

He said, about 200 local businessmen have approached to participate in the forthcoming conference. One of the purposes of this conference is to provide opportunities to local businessmen for setting up their interaction with overseas Pakistanis.

He said that conference would provide an ideal opportunity to bring together all relevant stakeholders from federal and provincial governments, local business people and potential overseas investors for identifying areas of investment opportunities and forming trade and joint ventures partnerships.

Answering a question of providing incentives and a conducive environment, he said government has initiated a 'one window' operation for the convenience of investors and also assured for providing all kind of facilities like electricity, gas, roads etc.

To another question of security risks and law and order situation, he said, would be given special attention to build the confidence of the investors. However, he said, these are Pakistanis having deep roots in our society and are well aware of its culture. It would not be difficult for them to cope with the situation, but the government would do its best to encourage them and remove all their fears.

He quoted Bestway Group as a very good example of overseas Pakistani's investment, whose business in Pakistan has flourished enormously. Now they are going to install another cement plant that would be fourth to their credit in Pakistan. Such success stories would help investors a lot, he added.

Talking to Business Recorder, the minister said, there is no restriction of manpower export to Libya and we would be having agreements with them also. There is scope of teachers and paramedical staff in Libya, but the people are not keen to go to Libya, as the salary package is not very attractive as compared to Middle East, he added.

However, Libya discourages Pakistani labour on the ground as they misuse their entry as transit for European countries, he added. Federal Secretary Ministry of Labour, Manpower and Overseas Pakistanis Malik Asif Hayat and Managing Director OPF Mushtaq Ahmad were also present in the press conference.

http://www.brecorder.com/index.php?id=534327&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*Infrastructure financing to enhance public debt *

By Mehtab Haider

ISLAMABAD: PakistanÃ¢â¬â¢s public debt is set to increase in coming years owing to borrowing requirements for financing the upcoming bigger infrastructure projects in the next decade, said Fiscal Policy Statement 2006-07 issued by Ministry of Finance on Saturday.

Ã¢â¬ÅAlthough public debt is now on a solid downward footing, sustaining the momentum will be a continuing challenge,Ã¢â¬Â the report states. The coming years, the report said, will see an increased borrowing requirement particularly in the foreign currency component to finance the infrastructure development program. The large infrastructure projects envisaged in the next decade will increase the debt burden if sufficient revenues are not generated from within the country.

The report says as a result of slower pace of growth in pubic debt as against GDP growth rate, public debt as a percentage of GDP has continued its declining trend. Public debt as share of GDP fell from 61.5 percent at the end of June 2005 to 56 percent at the end of June 2006, which is similar to the level of debt during the 1970s.

In another report of Debt Policy Statement, the finance ministry states at the end of FY06 total domestic debt stood at Rs2,312 billion which is 30 percent of GDP. The net increase in domestic debt was Rs153 billion from end of FY05 where domestic debt was Rs2158 billion. This represents a growth rate of 7.1 percent, which is slightly higher than the average growth rate since FY00 of 6.6 percent.

Therefore, a supportive yet prudent fiscal policy based on principles of sound macroeconomic fundamental is crucially important to lead the country to a higher growth trajectory.

Fiscal consolidation has undoubtedly contributed to a sharp recovery in economic growth within a stable macroeconomic framework. Every effort will be made to continue to improve the fiscal balance, notwithstanding the pressure generated by the earthquake of October 2005. Revenue performance on the other hand is better than the target and will help ease some pressure on the earthquake-related spending.

Going forward, Pakistan will have to allocate substantially large resources for strengthening the countryÃ¢â¬â¢s physical and human infrastructure to sustain the growth momentum. The challenge will be to significantly enhance PakistanÃ¢â¬â¢s tax-to-GDP ratio in order to generate the resources required to finance the development of both human and physical infrastructure.

The government, the report said, will therefore, have to make efforts to broaden the tax base i.e. to hitherto untaxed or under taxed sectors. Broadening of tax base will enable the government to reduce marginal tax rates, which will help further stimulate investment and production and will promote voluntary tax compliance.

Broadening of tax base will also ensure the fair distribution of the tax burden among various sectors of the economy. The overall services sector including wholesale and retail trade as well as agriculture sector needs to be fully taxed.

Total revenue for the fiscal year 2006-07 is estimated at Rs1163.0 billion as against Rs1,087.0 billion in the previous year (2005-06) thus projecting a growth of 7.0 percent. Tax revenue, accounting for 76.1 percent of total revenue is targeted at Rs885.7 billion, which is 15.5 percent higher than last year. Tax collection by the Central Board of Revenue (CBR) is targeted at Rs835 billion and accounts for 94 percent of the total tax revenue. The CBR tax collection is projected to rise by 17.0 percent over last year.

During the first quarter (July-September) of the current fiscal year (2006-07) total revenue amounted to Rs255.7 billion as against Rs236.6 billion in the same period last year, thus registering an increase of 8.1 percent. Tax revenue stood at Rs191.6illion, which is 20.9 percent higher than the corresponding period of the last year. Similarly, non-tax revenue amounted to Rs64.0 billion and declined by 10.7 percent in the same period. CBR tax collections are important component of tax collections and account for lions share in overall tax collection.

The Government is moving ahead on its agenda to improve expenditure management and fiscal transparency. The New Accounting Model (NAM) has been used for 2004-05 federal budget. However, because of capacity constraints at the provincial level the NAM is used in parallel with the existing model except only in the North West Frontier Province (NWFP), while implementation in other provinces will take some time.

The overall fiscal deficit is targeted at Rs373 billion or 4.2 percent of the projected GDP. On the basis of the developments on revenue and expenditure front, the overall fiscal deficit during the first quarter (July-September) stood at Rs86.7 billion or 1pc of GDP.

http://www.thenews.com.pk/daily_detail.asp?id=45358


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## Neo

March 04, 2007 
*Banks earn huge profit in 2006*

By Shahid Iqbal

KARACHI, March 3: Banks in 2006 continued to make huge profits, higher than last year, but most of their income remained dominant of high banking spread which means positive for banks and negative for depositors.

The listed banksÃ¢â¬â¢ earnings in 2006 grew by 32 per cent to reach Rs60.1 billion. This is lower than previous year in terms of percentage, but higher in terms of cash.

Last year banks posted a rise in profit by 40 per cent and 82 per cent in 2004 and 2005, respectively. However, banking spread remained the highest. The banking spread was 7.4 per cent. The average spread for the year 2005 was 6.3 per cent as compared to 4.1 per cent in the year 2004, an increase of 220bps.

In 2006, earnings growth of listed banks continued as their profitability went up by 32 per cent to Rs60.1 billion versus Rs45.6bn in 2005.

The profits were driven mainly by the rising net interest income of the banks which rose by 33 per cent to Rs115bn in 2006 as compared to Rs86bn in 2005.

This was in contrast with 2002 to 2004 net interest income increase where growth was mainly driven by rising advances of the sector.

In 2006, growth in net interest income came from higher spreads between lending and deposit rates of the banking sector.

According to the SBP data, banking sector average spread in 2006 went up by 110bps to 7.4 per cent while growth in advances during 2006 was 18 per cent or Rs365bn.

According to a research report prepared by the JS Research, a brokerage house, non-interest income of the banks grew by 29 per cent to Rs43.2bn.

Although major contribution came from fee income (36 per cent share in the total non-interest income), its growth remained subdued as it grew by only one per cent to Rs15.6bn.

Dividend income showed a growth of 60 per cent, driven mainly by the record payout by mutual funds and others corporate.

Dividend income of the banking sector rose to Rs7.1bn in 2006 and capital gain income of the sector declined by 12 per cent to Rs3.8bn from Rs4.3bn in 2005.

Ã¢â¬ÅThis is the fifth consecutive year of positive profitability growth posted by the banking sector of Pakistan,Ã¢â¬Â said the JS report.

However, depositors were neglected by the banks as they kept most of profits by themselves as reflected in the high banking spread.

Despite concerns showed at the top level in Islamabad, nothing went in favour of depositors. The governor of State Bank, Dr. Shamshad Akhtar, promised during the last month for the year 2006 to bring some correction for providing relief to depositors, but nothing changed.

Banks have started offering higher returns, but they want to engage deposits for a longer period, which a common small deposit-holder canÃ¢â¬â¢t afford.

In 2006, National Bank earned a profit-after-tax of Rs17.022 billion, MCB Bank Rs12.142 billion, United Bank Rs9.468 billion, Allied Bank Rs4.397 billion, Bank of Punjab Rs3.804 billion, Faysal Bank Rs2.817 billion, Askari Commercial Bank Rs2.250 billion, Habib Metropolitan Rs2.096 billion, Bank Al-Falah Rs1.763 billion, Bank Al-Habib Rs1.761 billion, Soneri Bank Rs985 million, PICIC Commercial Bank Rs969 million, Mybank Rs493 million and NIB Bank Rs126 million.

http://www.dawn.com/2007/03/04/ebr4.htm


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## Owais

*Economic policies attracting foreign investment: minister *
SIALKOT (March 04 2007): Federal Privatisation and Investment Minister Zahid Hamid has said the foreign investors are making huge investment in the country due to prudent economic policies of the present government. In an interview with APP at Sialkot Public School here on Saturday.

He said government had made investment friendly policies to provide equal opportunities to the foreign as well as overseas Pakistanis to invest in Pakistan. Zahid Hamid revealed that due to good policies of government foreign investment amounting to more than 3.50 billion dollars had been made while more foreign investment is expected in a couple of months in the country.

The minister further stated that the process of privatisation was being carried out in a transparent manner in the country and as many as 163 transactions had so far been accomplished as a result of which government had obtained US 7 billion dollars through the business deals.

He disclosed that privatisation of Pakistan State Oil, Habib Bank Limited, United Bank Limited and National Bank would be undertaken within couple of months. Besides, the privatisation of Jamshoro power project, hotels and coalmines were in the pipeline, the minister added. Zahid Hamid said the government had made privatisation policy transparent and crystal clear keeping in view the national interests.

He said due to solid policies of the govt, the national economy had improved a lot, adding with the passage of time it will further be strengthened. Earlier, addressing annual sports day of Sialkot Public School the Privatisation Minister disclosed that the development work on cadet college Pasrur had been initiated and its inaugural ceremony would be held soon

http://brecorder.com/index.php?id=534758&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*SPI up 8.52 percent on year-on-year *

ISLAMABAD (March 04 2007): The weekly Sensitive Price Indicator (SPI) for the week ending on March 1--SPI on Year-on-Year (YoY)--has gone up by 8.52 percent as compared to the corresponding week of last year, but it has decreased against 9.14 percent increase posted last week. After a long time, all income groups experienced a single-digit increase, indicating some stability in prices.

The income group up to Rs 3000 shows 9.84 percent increase YoY; Rs 3000-Rs 5000 9.38 percent; Rs 5000-Rs 12000 9.32 percent; and the group above Rs 12000 shows 7.73 percent increase. The Federal Bureau of Statistics (FBS) bulletin, based on 53 essential daily-use items from 17 urban centres, showed that 14 items showed increase in prices, 12 posted decrease, while 27 items remained unchanged during the week.

Among those registering increase were tomatoes, eggs, rice (basmati broken and Irri-6), firewood, mash pulse all of concern to the poor segment of society. Similarly, some of the daily-use items showing decrease during the week were onions, potatoes, garlic, gur, sugar, masoor, gram, moong, and LPG. But all the items were costlier YoY, except for tomatoes and sugar.

Out of 53 items, 43 were costlier on YoY with 29 by double-digit. The significant items consumed by the lower income groups, which were dearer on YoY basis were: onions 141 percent; rice basmati broken 24 percent; rice Irri-6 17 percent; salt 19 percent; garlic 15 percent; vegetable ghee 22 percent; gram pulse 46 percent; moong 21 percent; mash 38 percent; gur 6 percent; milk 13 percent; curd 11 percent; tea 13 percent; match box 23 percent; firewood 13 percent; kerosene 7 percent and gas by 10 percent.

However, a few items like tomatoes by 67 percent, potatoes by 26 percent, and sugar 13 percent have shown considerable decline in their prices over the corresponding week of last year.

The items of importance having substantial difference in their minimum and maximum prices from different cities are: onions (Rs 16 - 40 per kg), potatoes (Rs 8 - 20 per kg), wheat (Rs 11 - 15 per kg), masoor (Rs 36 - 56 per kg), moong (Rs 50 - 65 per kg), mash (Rs 60 - 84 per kg), gram (Rs 40 - 52 per kg), rice basmati (Rs 20 - 32 per kg), rice irri-6 (Rs 15 - 24 per kg), sugar (Rs 29 - 36 per kg), gur (Rs 30 - 50 per kg), eggs (Rs 42 - 55 per dozen), LPG (Rs 550 - 660 per 11-kg cylinder), and firewood (Rs 120 - 280 per 40-kg) etc.


http://brecorder.com/index.php?id=534737&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*NFC award on equalisation basis demanded *

ISLAMABAD (March 04 2007): The nationalist leaders on Saturday demanded that National Finance Commission award not be allocated on the sole criteria of population but on the basis of equalisation where under developed areas that are rich in resources should get a bigger share.

They also urged the government to transfer all the subjects to provinces except defence, foreign affairs and currency to strengthen the federating units. They were speaking at a roundtable discussion on 'Federation in Pakistan and the Conflict in Balochistan' organised by the National Democratic Institute (NDI) in collaboration with the Strengthening Participatory Organisation (SPO).

The speakers included Dr Abdul Hayee Baloch, Hasil Bazinjo, Senator Aga Shahid Bugti, Senator Abdul Rahim Mandokhail, Amanullah Karnani, Naila Qadri, Dr Kaiser Bengali while spokesman of Balochistan government Raziq Bugti and Senator Dilawar Abbas represented the government.

Comparatively analysing the situation, former Canadian Minister for Justice and National Revenue Martin Cauchon said that in the Canadian Constitution, provinces have numerous taxation powers while the federal government only has the right to impose personal and corporate taxes.

He said that Canada is following the principle of equalisation to ensure equal benefits to all its citizens, regardless of which province they live in.

Cauchon also shared the experience of Quebec as a unique province in Canada that attained provincial autonomy over language, culture, and a separate legal system.

Renowned Economist Kaiser Bengali suggested that Federal Divisible Pool (FDP) should be distributed horizontally rather than vertically keeping in view the level of deprivation and underdevelopment of the small provinces.

He said that out of the total revenue collection of Rs 716 billion, Rs 307 billion are generated from non-tax revenue, which is not included in the FDP and recommended for its inclusion.

He added that of the total non-tax revenue of Rs 307, almost 10 percent (Rs 30 billion) is contributed only by Pakistan Petroleum Limited, which is in Balochistan. He further said that out of the 45 percent provincial share in the FDP, Balochistan is getting only 5 percent due to its distribution on population basis, which he termed unjust.

Besides, Sindh is not getting its due share from the NFC award due to its distribution on the basis of population despite contributing highest contributor of total taxes, he maintained. Kaiser further said that Gwadar Port is not economically feasible for Balochistan, as there is no interline of the port in the province, whereas there is neither industry nor any export base in Balochistan to be benefited from the port.

Out of the total length of Kachi Kanal, two-third falls in Punjab and only one third in Balochistan, he said and added that Coastal Highway is also constructed for strategic purpose and hence not beneficial for the local population. He added construction of Kalabagh dam would badly affect the livelihood of Baloch fishermen, he observed.

Pakistan National Party secretary general and Baloch leader Mir Hasil Bazinjo said that before the creation of Pakistan, there were five nations - Baloch, Pushtoon, Sindhi, Seraiki and Begalis - who were enjoying all the fundamental rights, which should be restored to strengthen the federating units.

He regretted that agreements regarding the fate of Balochistan were made without taking the provincial assembly and people of Balochistan into confidence. Even the provincial cabinet and the government is formed by the Inter Service Intelligence here in Islamabad, he alleged.

Senator Abdul Rahim Mandokhail of the Pakhtoonkhwa Milli Awami Party said that except currency, foreign affairs and defence, all other subjects should be transferred to provinces.

Naila Qadri said that funds should be distributed according to the backwardness of the provinces rather on the basis of population. She alleged that for the first time Baloch women were killed, raped and harassed by the government officials.

In the name of mega development schemes, another type of colonial infrastructure is being developed in the province to transfer its resources to other areas, she maintained.
http://brecorder.com/index.php?id=534776&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Plans to build 'Marble City' in Risalpur *
ISLAMABAD (March 04 2007): Pakistan Stone Development Company (PASDEC) and NIP jointly presided over stakeholders meeting for the development of the first Marble City in Risalpur, at the PASDEC office in Islamabad.

Pakistan Stone Development Company (PASDEC) is committed to development of the dimensional stone sector in Pakistan, laying special stress on the introduction of modern quarrying techniques, up gradation of existing quarries, and the establishment of Marble Cities with common facility training centers. Leading stakeholders from across the nation were invited to discuss their needs and put forward their requirements for first the marble city whose modalities are currently in the development/finalisation stage.

"Once the sector is organised and we are able to show the world the finest marble and granite processing in this Marble City, we will be able to attract joint ventures. This will be in form of direct foreign investment as well as partnerships in trading abroad," said the Chairman PASDEC, Ihasan Ullah Khan. He also formed committees to discuss and put forwards legitimate view-point and incorporate stake holders input in the upcoming marble city, in Risalpur.

Mohsin Syed, Director General North, National Industrial Parks Management Company (NIP) was of the view point that stake holders should come forward and optimise their capabilities in the first Industrial Estate of its kind in the marble & granite sector in Pakistan, where as PASDEC in co-operation with NIP would provide all out support in terms of banking, technical assistance, human resource, and export marketing.

The stakeholders also put forward some demands that include lower interest rates on borrowed capital, government subsidies, and security of investment. They showed un-wavering confidence in PASDEC's efforts and the leading role being played by its Chairman. They also showed confidence in the leadership of Mr Mohsin Syed for his proven track record. The next meeting is scheduled to be held in Khairabad, NWFP on the March 15, 2007.-PR
http://brecorder.com/index.php?id=534789&currPageNo=2&query=&search=&term=&supDate=


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## Janbaz

*Super Highway being converted into six-lane Motorway *


ISLAMABAD (updated on: March 04, 2007, 14:14 PST): Hyderabad-Karachi Super Highway will be converted on to six-lane Motorway (M-9) within two years, a source in National Highway Authority told APP on Sunday.

He said the road would form part of a wider network connecting the principal and populous cities of the country. The project will cost Rs6.3 billion and the scope of works includes expansion of the road from four to six lanes and provision of service areas.

The source said the authority had signed a concession agreement for the construction of 136km M-9, with the Standard Construction firm in September last year. But there had been some objections over the approval of the project.

However, on January 16, 2007 after a comprehensive briefing by the NHA on this project National Highway Council (NHC) approved the M-9 project.

It may be mentioned here that M-9 will be country's first major project built on build, operate, transfer (BOT) basis whereby the contractor would construct the project and operate it for 25 years before handing it over to the government.

The project would generate Rs9 billion under collection of toll tax, while the revenue share of NHA would be Rs20 billion in 25 years. Eleven interchanges and 10 pedestrian underpasses would be built along the motorway.

Business Recorder.
http://www.brecorder.com/


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## Neo

Sunday, March 04, 2007 

*Ã¢â¬ËIf there is a war-like situationÃ¢â¬â¢: CountryÃ¢â¬â¢s economy may be affected adversely: adviser*

LAHORE: Adviser to Prime Minister on Finance Dr Salman Shah said Saturday that any war-like situation in the region may have a negative impact on PakistanÃ¢â¬â¢s economy.

Ã¢â¬ÅThe whole region, right from Central Asia to Western China, is booming with economic growth and any disturbance in the peace of the region would affect it badly,Ã¢â¬Â he said, adding: Ã¢â¬ÅPresident Pervez Musharraf has recently conducted an extensive visit of the region including the Middle East to avoid any such conflict in the region.Ã¢â¬Â

He was responding to media queries after being briefed by Regional Commissioner Income Tax Haji Ahmed Khan, on the operations of the Regional Tax Office Lahore

However, he said, PakistanÃ¢â¬â¢s economic growth is more dependant on domestic factors, therefore it would be resilient to any such shock, but still Pakistan is trying hard to avoid any turmoil in the region. When pointed out that major industrial sectors like textile, sugar and cement are terming the governmentÃ¢â¬â¢s present approach of shifting its reliance on other sectors like construction, telecom, automobile and chemicals etc as Ã¢â¬ËhostileÃ¢â¬â¢, Dr Shah said that such shifting of reliance cannot be avoided by any developing country, as it happened in Japan, Korea and other countries.

He said the industrialists should understand that competition is the hallmark of a free market economy and they would have to compete in order to survive. When pointed out that the industrialists are under the impression that the government has failed to facilitate them like the competitors, Dr Shah said that the government has done its best to facilitate the industry but it cannot offer a Ã¢â¬Ëmonthly chequeÃ¢â¬â¢ to them in the name of facilitation.

Ã¢â¬ÅWe are trying to minimize the problems faced by the industry, but the industrialists should understand that thereÃ¢â¬â¢s no room for subsidies now,Ã¢â¬Â he added.

On energy prices, the adviser said that they are equal to the competing countries and the latest increase of 10 percent in the electricity tariff is introduced after freezing it for the last three years that skyrocketed the WAPDA losses. He expressed the hope that foreign direct investment (FDI) would reach to $6billion at the end of this fiscal year. When he was asked about the rising trade gap, Dr Shah commented: Ã¢â¬ÅIt is manageable.Ã¢â¬Â

He said the government would not allow increase in ghee and flour prices and proper interventions would be made to stabilise the market. Earlier, he applauded the role played by the Central Board of Revenue (CBR) in generating substantial revenues, after introducing an across the board reforms in the department. 

While mentioning that the government was spending $150 million on reforms process, Dr Shah said the economic turnaround in Pakistan was due to the impressive performance of the CBR and the 9/11 incident.

http://www.dailytimes.com.pk/default.asp?page=2007\03\04\story_4-3-2007_pg5_5


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## Neo

Sunday, March 04, 2007 

*Pakistan slams ECÃ¢â¬â¢s trade policy*

* Declining share in exports to Europe discriminatory, points out ambassador

ISLAMABAD: Pakistan has criticised the European UnionÃ¢â¬â¢s tariff peaks and tariff escalations, especially in textile, clothing and leather products at the World Trade Organisation, while highlighting the dichotomy in the European trade regime.

During the trade policy review of the European Commission, Pakistan questioned the ECÃ¢â¬â¢s trade regime. Pakistan said that the European trade policies tended to undermine the multilateral trading system, and that while they helped some developing countries in some kind of trade preferences, they discriminated against the remaining developing countries.

PakistanÃ¢â¬â¢s Ambassador to WTO, Geneva, Dr Manzoor Ahmed, while commenting on the ECÃ¢â¬â¢s trade regime, said that the EU is PakistanÃ¢â¬â¢s single largest trading partner, accounting for 26% of our total exports and 17% of our total imports. However, more recently, our trade with the EU has not been keeping pace with our international trade growth. The EUÃ¢â¬â¢s share in PakistanÃ¢â¬â¢s global exports has declined from 28% to 26% per annum, as our exports to Europe came down from $4.20 billion in 2004 to $3.83 billions in 2005.

He said that our overall exports during 2005 declined by 9%, while exports of textile and clothing declined by 15%, despite the fact that the EUÃ¢â¬â¢s import of these items increased by 7%. This is obviously having an adverse impact on our industrial growth, economic stability, employment generation and social security.

Dr Manzoor mentioned that our exporters attribute this fall in exports, which is only restricted to the EU market, to what they claim as Ã¢â¬Ådiscriminatory and unstable trade policiesÃ¢â¬Â being adopted by the EU. There is a common perception in Pakistan that the EC trade policy has recently undergone a clear shift in treating similarly placed countries differently.

In addition to tariff peaks on products of our export interest, our competitive exports are repeatedly subjected to anti-dumping duties. Except for short periods, our bed-linen exports have been subjected to anti-dumping investigation or anti-dumping duties for the last 14 years. Perhaps this is a record period for an anti-dumping duty.

He said when our exporters found a niche and started exporting value added ethanol instead of the raw material molasses, which they had been doing for a long time, they found themselves faced with several hurdles. Not only duty concession was withdrawn but they were also subjected to anti-dumping investigations. After one year of investigations, the EU dropped its claim. However, in the meantime most of our newly established distilleries got shot down. As a result our exporters are back to export of raw material for the EU distilleries.

Stringent and frequently changing regulations on TBT and SPS measures are also among the main factors hampering our trade with the EC Member states. Our products like fish, fruits and vegetables are the hardest hit in this regard, he added.

Our business community is finding increasingly hard to get visas for business trips. The new entrepreneurs making exploratory and matchmaking deals are routinely refused visa for not having traveled to Europe before, he said.

http://www.dailytimes.com.pk/default.asp?page=2007\03\04\story_4-3-2007_pg5_6


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## Janbaz

*Rice exports to remain above $1b despite high prices*

Javed Mahmood looks into the ongoing rice prices trend and its impact on exports in FY07. Iran and Dubai have emerged as two leading buyers of Pak rice from July-Dec 2006 period
Despite rapid increase in the domestic prices of rice, the exports of the commodity are set to surpass one billion dollars in financial year 2006-07. Rice exports details obtained by Money Plus show that from July-January period of the FY07 the country had fetched 603 million dollars by exporting rice. Although there had been overall decline of 2.87 per cent in the exports of rice in value from July-January FY07, the export of basmati rice has marked a substantial increase of 24 per cent in foreign exchange and 23 per cent in quantity during the period under review.
The non-basmati rice, however, has depicted 28 per cent decline in quantity and 8 per cent decline in dollars terms.
In seven months of this fiscal the rice export in quantity stood at 1.647 million tons as against 1.974 million dollars rice exported during the corresponding period of last financial year. The country had sold overseas 0.565 million tons basmati rice and 1.081 million tons non-basmati rice.
In 2005-06 the total rice exports amounted to 1.2 billion dollars for the first time and in 2006-07 the exporters are in a bid to raise more foreign exchange than the previous financial year&#8217;s benchmark as the demand of basmati has suddenly shot up in the international market.
Country-wise rice export details show that Pakistan has generated 495 million dollars by exporting basmati and non-basmati rice to more than 120 countries in the world from July-December period of FY07.
Interesting to note is that the rice exports have edged up by 100 million dollars from July-December period of FY07 as during the same period of previous financial year the rice exports attracted 395 million dollars.
Dubai and Iran have emerged as the two leading buyers of Pakistani rice. Pakistan has exported 115 million dollars rice to Dubai in six months of this fiscal, whereas rice export to Iran showed over 100 per cent increase and amounted to 76 million dollars, from 32 million dollars in the corresponding period of last financial year.
The other major importers of Pakistani rice are the United States 10.22 million dollars, Yemen 14.52 million dollars, United Kingdom 14.40 million dollars, Sharjah 11.15 million dollars, South Africa 12 million dollars, Bahrain 10.30 million dollars, Oman 19.42 million dollars, Qatar 12.515 million dollars, Saudi Arabia 15.60 million dollars, Mauritius 12.60 million dollars, Kuwait 11.63 million dollars, Kenya 28.76 million dollars, Kuwait 11.63 million dollars, Iraq 3.533 million dollars, Canada 7.27 million dollars, China 3.11 million dollars, Croatia 14.05 million dollars while France has imported 3.24 million dollars.
There is a long list of countries that have imported rice from Pakistan having value of six million dollars a less than it.
Regarding rice exports to Iran, the exporters said that traditionally Iran authorities are shy of importing rice from Pakistan in bulk. But in FY07 the Iranian authorities concerned have placed more orders for the import of rice from Pakistan that has been evident from surprising increase in exports to the said brethren country in six months of this financial year.
During recent bilateral parleys Iranian authorities have shown interest to importing about half a million tons of rice from Pakistan this year that would ultimately boost the overall rice exports.
Meanwhile, rice exporters and dealers said that for the first time the domestic prices of different varieties of rice have increased by 8-10 rupees per kg during the past few weeks on the ground that the demand and export of rice have marked a significant increase in the current financial year.
The price of aromatic old basmati price has increased to 50-55 rupees per kg in Karachi from 40-45 rupees previous benchmark at the retail stage while in Lahore the retail price of basmati rice has increased from 32 to 40 rupees a kg.
Surprisingly, the new crop of basmati rice is being sold by the domestic retailers between 35-40 rupees per kg in Lahore and 40-45 rupees a kg in Karachi while old basmati rice, which is more tasty than new crop, is being sold above 50 rupees a kg in Karachi and 40-45 rupees in Lahore.
In 2005-06 the total output of rice stood at 5.35 million tons out of which 2.7 million tons were exported that generated 1.2 billion dollars worth foreign exchange. The export of basmati rice amounted to 0.9 million tons while non-basmati rice export in quantity remained at 1.8 million tons.
It is no more a secret that during the past few years the aromatic Pakistani basmati rice is penetrating rapidly in different countries because of its taste and unique aroma.
The new entrant in basmati rice import from Pakistan is Tunisia. In December 2006 for the first time Tunisian companies have imported 600 metric tons basmati rice from Pakistan and the companies have pledged to import more rice from here as they have found Pakistani basmati matchless in taste, size and aroma.
Exporters said that in collaboration with foreign missions of Pakistan they were introducing basmati rice by offering gift packs and inviting foreigners at dinners and luncheons where the delicious variety of rice is served to the guests.
This business tactics has proved very effective in enhancing exports of basmati rice to different countries, which used to eat non-basmati rice or inferior quality and tasteless basmati rice.
Exporters say that within the food group the rice sector has emerged as a leading sector in raising foreign exchange through exports. For example, the food group had attracted 1.1 billion dollars through exports and the rice sector alone had fetched 603 million dollars from July-January FY07, the largest amount of foreign exchange raised by any food item or sector.
They have maintained that by introducing value addition in exports of rice the exporters could generate much more than one billion dollars through rice exports every year. They have pointed out that a few years ago the rice exports had stuck up to around 600 to 650 million dollars. But with the introduction of brand-name and value addition the overall exports of rice have steadily increased to 1.2 billion dollars in 2005-06.
They are of the view that the government should offer incentives to stakeholders in rice sector such as millers, dealers and farmers so that this sector could be developed further to enhance production of rice and its exports in the years to come. 

The Nation.
http://www.nation.com.pk/daily/mar-2007/5/bnews2.php


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## Janbaz

*Poor in Pakistan must have access to microcredit: Nobel laureate suggests *

ISLAMABAD (March 05 2007): Bangladesh Nobel laureate Professor Muhammad Yunus has said that the Pakistan government has done a lot of things in micro-finance sector for poverty alleviation and uplift of the poor. In a program 'A conversation with Professor Yunus' held here, he said the measures included creation of microfinance and Khushali Bank, political support and the friendly policies of its central bank.

He suggested that Pakistan "has to ensure access to microcredit to the poor" to achieve the desired result in the right direction. In Bangladesh, he said, 80 percent poor people have access to micro credit. As many as 1.2 billion people around the planet lack access to basic necessities, and microfinance could be their pathway out of despair, he added.

Yunus runs Bangladesh's Grameen Bank, a leading advocate for the world's poor that has lent more than $5.1 billion to 5.3 million people. The bank is built on Yunus's conviction that poor people can be both reliable borrowers and avid entrepreneurs. According to the 2005 State of the Microcredit Summit Campaign Report, in 1997 only about 7.6 million families had been served by microcredit world-wide, and as of December 31, 2004, some 3,200 microcredit institutions reported reaching more than 92 million clients. Almost 73 percent of them were living in dire poverty at the time of their first loan, he said.

Professor Yunus was awarded Nobel Peace Prize 2006, pioneers of the microfinance movement and long-standing allies of the United Nations in the cause of development and the empowerment of women.

An energy enterprise, Grameen Shakti sells around 1,500 home solar-panel systems per month throughout rural Bangladesh and is growing 15 percent a year without subsidies, he said. Professor Yunus said Grameen has initiated a project called Struggling Members Program that serves 55,000 beggars.

Meanwhile, Minister of State for Finance Omer Ayub Khan held an informal meeting with the visiting Bangladesh Nobel Laureate, Professor Muhammad Younas.

Both leaders discussed matters of mutual interest and the prevailing economic situation in the two brotherly countries, Pakistan and Bangladesh. Younas expressed satisfaction over the pace of growing economic and developmental activities in Pakistan. He was of the view that if this economic development process continued, Pakistani people would achieve more progress and prosperity in the days to come.

Omar, while welcoming the guest, said that Pakistan's prudent economic policies have started to produce results and the country is progressing on fast track. He gave an overview of Pakistan's fast growing economy and improvement in macro economic indicators achieved by the present government after introducing structural reforms covering various sectors including fiscal, financial, tax and banking.

He said that there is consistency in the policies and the government is determined to continue to follow the path of privatisation, de-regulation and liberalisation. Later, he hosted a lunch for the visiting distinguished guest at the lush green Daman-e-Koh.

Professor Muhammad Younas is the pioneer of micro-financing in Bangladesh. He introduced concept of loaning to the poor, and set up Grameen Bank to lend small loans to enable the poor entrepreneurs to establish their business to earn livelihood in an easy way.

A large number of high-ups and senior government officials, including Advisor to Ministry of Finance Dr Ashfaque Hasan Khan, Secretary Finance Tanvir Ali Agha, Chief Executive Officer of Pakistan Poverty Alleviation Fund Dr Kamal Hayat, President of Khushhali Bank Ghalib Nishtar, senior official of World Bank, Asian Development Bank and Ministry of Finance were present on the occasion.

Business Recorder.
http://www.brecorder.com/index.php?id=535218&currPageNo=1&query=&search=&term=&supDate=


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## Janbaz

*Tourist traffic increased manifold: minister *

ISLAMABAD (March 05 2007): Minister for Tourism Nilofar Bakhtiar has said on Sunday that the number of foreign tourists coming to Pakistan had increased manifold. She, however, called for enhancing security measures to effectively market country's treasures archaeological, adventure, religious. The minister was addressing a seminar on Security of Tourists.

She said President General Pervez Musharraf and Prime Minister Shaukat Aziz were providing all out support to promote tourism in the country. Nilofar called upon the participants to put forth recommendations that would guarantee more tourist traffic flow to the country.

Tourism is a growing industry in Pakistan, based on its diverse cultures, peoples and landscapes. The variety of attractions range from the ruins of ancient civilisations such as Mohenjo-daro, Harappa and Taxila, to the Himalayan hill stations, which attract those interested in field and winter sports.

Pakistan is a home to several mountain peaks over 7000m, which attracts adventurers and mountaineers from around the world, especially K2, Nanga Parbat, GI, GII, and Broad Peak.

Business Recorder.
http://www.brecorder.com/index.php?id=535265&currPageNo=1&query=&search=&term=&supDate=


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## Janbaz

*Pakistan achieves cotton production target* 
S. A. AZIZ SHAH 
KARACHI (March 05 2007): The much awaited periodical cotton report was released the other day by the Pakistan Cotton Ginners' Association according to which by 1st of March, 07, seed-cotton equivalent of 12.240 million local weight bales against 12.386 million local weight bales same period last year.

The shortfall is 1.187 percent. Total unsold stock of lint cotton has been mentioned at 1.206 million bales. This time, local mills have purchased 10.927 million bales against 10.495 million bales same time last year ie 4.12 percent increase. This time, unsold stocks are higher than last year. Finally, cotton crop would close around 12.5 million bales and the government's target of 12.5 million bales would be achieved.

Encouraged by better return, cotton growers would be tempted to grow more cotton next season. In Sindh, area under so called Bt. Cotton varieties is increasing year by year on higher yield (good for the growers), higher Ginning Out-turn (good for the ginners) and better fibre properties (good for the spinners). Now, the government appears quite serious in adoption of GMO technology which would increase cotton productivity and production remarkably.

Pakistan has to adopt all necessary measures to increase its cotton production to the level of domestic cotton consumption. Cotton scenario has changed in the last seven years. Annual domestic cotton consumption has increased to the level of 15.5 - 16.0 million bales in 2006-2007 whereas cotton production is at 12.5 million bales.

Thus, cotton shortfall of around 3.0 million bales is met from imported cotton. Instead of making expansion in forward process, greater expansion has been made in back process ie spinning sector. To reap the benefits of free trade policies under World Trade Organisation (WTO), Pakistan should move fast in forward process of manufacturing finished goods like textile products including apparels and garments.

The increase in cost of production is making spinning sector uncompetitive and unviable. In case of slump in textile market, sale of yarn becomes very difficult and unsold stock accumulate to such an extent that production is reduced and mills occur losses. However, production of finished goods can absorb increase in production cost to a greater extent in view of higher return. It appears quite difficult for Pakistan's textile sector to live more on production of yarn and grey cloth than on production of finished products and garments as the return ratio between yarn and garments is around 1:20.

Therefore, it becomes imperative that Pakistan textile sector must go for maximum value-addition for creating greater employment opportunities and strengthening its economy failing which textile giants of the region such as China, India, Sri Lanka, Bangladesh and Vietnam would make Pakistan as the raw material producing and warehousing country.

Lint cotton prices in the local market remained steady and the ginners did not show any relaxation in prices despite slow buying by the mills. This season, local spinning mills purchased some 0.432 million bales more cotton than last season and are now slow in buying. Better grade cotton is selling between Rs 2,550 and Rs 2,600 while average grade cotton between Rs 2,450 and 2,550 while low grade down to Rs 2,300 per maund ex-gin. There are reports in the market that some exporters have also made sales of about 10,000 bales of cotton mostly low grade to India at rates around US Cents 50.50 - 51.50 on CNF Mumbai basis. Mills are holding large stocks of unsold yarn / cloth which is moving slowly. Cotton market has not as yet found any definite direction although there are some indications of firming up of lint cotton prices. India's famous variety Shanker-6 is now quoted higher at US Cents 58 / 59 CNF Karachi. Now reports of next crop sowing intentions, weather forecasts and crop forecasts would be the guiding factors in determining cotton prices in the next couple of months. The cotton outlook has released estimates of cotton area, production and yield of cotton producing countries in 2007-2008 season. Cotton trade expect reasonable increase in cotton prices in next season on cotton statistics of some prominent cotton countries.

Business Recorder.
http://www.brecorder.com/index.php?id=535302&currPageNo=1&query=&search=&term=&supDate=


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## Janbaz

*Rs 96 billion may be spent on power distribution *

LAHORE (March 05 2007): The government plans to spend about Rs 96 billion for improvement of power distribution system over next two years in the country. Chairman Wapda Tariq Hameed said the project to be undertaken by National Transmission and Despatch Company is aimed at removing shortcomings in power supply system.

It will help address grievances of domestic and commercial consumers besides reducing line losses. He said Asian Development Bank (ADB) is providing bulk of financial assistance for improving power transmission system.

About power generation projects, Tariq Hameed said Wapda has been entrusted with task of completing mega hydel projects.

Business Recorder.
http://www.brecorder.com/index.php?id=535278&currPageNo=1&query=&search=&term=&supDate=


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## Janbaz

*We&#8217;ve raised people&#8217;s buying power: PM*

Daily Times Monitor

LAHORE: Through the consistent policies of the government, which are a hallmark of the current administration, Pakistan has been able to increase the disposable income available to the people, which in turn has enabled consumer industry to flourish in the country, said Prime Minister Shaukat Aziz. 

Speaking during &#8216;Round Table: The Way Forward&#8217;, an interactive session hosted by CEO WorldCall Salmaan Taseer (to be telecast on Business Plus tonight at 8pm), he said that in order for any industry &#8211; be it automobiles, telecommunication or banking &#8211; to progress, consumers must have the purchasing power necessary to buy the products or services offered by various sectors. 

Talking to the heads of major Pakistani companies that were also present in the programme, he said that one of the major problems facing Pakistan was the lack of trained and skilled manpower. He said that with the recent expansion in the hospitality, automobile, construction and telecom industries, the availability of trained professionals was a major issue that needed to be addressed. He said reforms had helped industry grow to the point where Pakistan had moved from 3 percent to 45 percent teledensity in a span of three years and 93 percent of automotive parts were being manufactured within Pakistan. 

He said that the government was working on to develop five-year plans for specific industries and then share those plans with all stakeholders and develop it with their consent, so that progress could be achieved hand-in-hand with the private sector. 

Mobilink CEO Zohair Khaliq, CEO Glaxo Smithkline Salman Burney, CEO Habib Bank Zakir Mehmood, CEO Atlas Honda Saqib Shirazi and JS Bank President Jahangir Siddiqi were also present in the discussion.

Daily Times.
http://www.dailytimes.com.pk/default.asp?page=2007\03\05\story_5-3-2007_pg1_2


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## Owais

*250 expatriates to attend investors conference*
ISLAMABAD (March 05 2007): The Ministry of Labour, Manpower and Overseas Pakistanis is holding a two-day 'Overseas Pakistanis Investment Conference' here from Monday. The main objective is provide a platform to overseas Pakistanis to interact with the private sector and policy makers in the country, besides being instrumental in attracting foreign direct investment (FDI) in Pakistan, an official told APP here on Sunday.

Highlighting the features of the Conference, he said that the conference would also provide an ideal opportunity to bring together all relevant stakeholders from federal and provincial governments, local business people and potential overseas investors for identifying areas of investment opportunities and forming trade and joint venture partnership.

So far, he said, around 250 overseas Pakistani investors have confirmed their participation in the moot, while, more than 200 local businessmen have shown interest to participate in the conference. Due to the policies and efforts of the government, he said, the overseas Pakistanis in different part of the world including the UK, US, Europe and the Middle East and Far East regions are keen to invest in Pakistan.

He said that 64 Pakistani investors from US would attend the conference, 55 from United Kingdom, 9 from Canada and 3 from Italy. He said that the response from Middle East has been satisfactory as 23 and 19 overseas Pakistani investors are coming from Saudi Arabia and UAE. Remaining are from other countries.

The official said that Pakistani investors had shown interest in 30 areas, and the highest indication of their investment is of $500 million, $496 million and $372 million was recorded in power plants, construction and agri farming, respectively, while an investment of $906 million was offered in services, tourism, light engineering, information technology, pharmaceutical and export sectors.

Top bosses of the Ministry of Labour, Manpower and Overseas Pakistanis, including Minister Ghulam Sarwar Khan, would highlight the plans, efforts and achievements of the Ministry and its departments, the official added. A number of technical sessions will be also held during the moot in which Minister for Privatisation and Investment Zahid Hamid, Chairman National Vocational and Technical Education Commission Altaf Saleem and other senior officials would participate.

"The four provinces and interested parties have also been asked to announce incentives and bring projects to the conference, which could be of interest to expatriates", he said.
http://brecorder.com/index.php?id=535216&currPageNo=1&query=&search=&term=&supDate=


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## Janbaz

* Musharraf for innovative micro-financing methods to eradicate poverty*

RAWALPINDI (updated on: March 05, 2007, 20:10 PST): President General Pervez Musharraf has directed the country's finance managers to develop innovative methods for extending micro-finance credits at the grassroots level to help enhance job opportunities and eradicate poverty.

The president said this during a meeting with Managing Director of Grameen Bank of Bangladesh, Dr. Mohammad Yunus who called on him here at his Camp Office on Monday.

Advisor to PM on Finance Dr. Salman Shah, Minister of State for Finance Omer Ayub Khan, Secretary General Finance Naveed Ahsan and President Khushali Bank Ghalib Nishtar were also present during the meeting.

General Pervez Musharraf directed the finance team to exchange ideas with the Grameen Bank so that its successes could be replicated in Pakistan. He said that the poorer sections should benefit sooner rather than later from the economic turnaround in the country and must have the resources to stand on their own feet.

He said with the availability of financial resources people can be empowered to set up their small scale businesses, which on the one hand would bring a perceptible change in their living and on the other create greater employment opportunities.

Business Recorder.
http://www.brecorder.com/


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## Janbaz

* ABN Amro to buy 93.4 percent stake in Prime Bank*

KARACHI (updated on: March 05, 2007, 16:01 PST): Dutch bank ABN Amro agreed to buy a 93.4 percent stake in Prime Bank for 13.8 billion rupees ($227 million), the latest in a series of acquisition by foreign banks in Pakistan.

Foreign banks have been attracted to Pakistan's financial sector by reforms that have laid the platform for rapid growth and rising incomes, analysts say.

Major banking reforms pushed through by Prime Minister Shaukat Aziz, the finance minister President Pervez Musharraf poached from Citibank and then promoted to premier, have helped the economy's rehabilitation.

ABN Amro, which started a due diligence review of the mid-sized Pakistani lender in October last year, will also launch a tender offer for all remaining shares of Prime Bank, it said in a statement.

With 52 billion rupees worth of assets and 41 billion rupees in deposits, Prime Bank is Pakistan's 19th largest bank. It has a network of 69 branches in 25 Pakistani cities, ABN Amro said.

The price represents over four times the net asset value of Prime Bank, as of the end of September 2006, and values the bank at about $243.66 million.

The price of 54 rupees per share of Prime bank is about 2 percent higher than its last closing of 53.00 rupe

Business Recorder.
http://www.brecorder.com/


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## Neo

March 05, 2007 
*Cost of wheat production*

By Jumo Bajkani & Muhammad Afzal Qaisrani

WHEAT is the staple food of the people. Pakistan ranks 10th among the wheat-producing countries of the world with an average per annum yield of 22 million tons.

Wheat crop area in the country during 2003-04 was 8.2 million hectares with a production of 19.5 million tons averaging 2,373kg per hectare. The area growing wheat in Balochistan was 0.34 million hectares with a production of 0. 663 million tons which averaged 1,946 kg per hectare during the same period. The province has an area of 4.1 per cent under wheat cultivation with a production of 3.4 per cent of the countryÃ¢â¬â¢s yield.

The province produces 60 per cent of its requirement, while the deficit is met through imports from other provinces. There has been considerable decrease in yield because of late sowing of the crop, non-availability of improved quality of seeds, shortage of fertiliser, poor management practices, less rain during early stage of the crop and high temperature at the time of formation of grains.

Balochistan has been endowed with a variety of environmental condition which favours growing of a large number of crops. The major wheat-producing districts are Nasirabad, Jaffarabad, Bolan, Loralai, Khuzdar, Kharan and Kachhi. Among them, Nasirabad and Jaffarabad have the largest canal-irrigated land and Loralai is a rain-fed wheat-producing district.

Of the area under wheat cultivation in the province about 0.311 million hectares are canal irrigated and 0.30 million hectares rain-fed. In rain-fed areas, wheat is cultivated at the end of rainy season which occasionally receives winter showers. The farmers are mostly unaware of how much they are spending on the cultivation of the crop and what is their income from the crop.

A study was carried out to ascertain the cost of wheat production in irrigated (canal & tube well) and rain-fed farming system. The objective of this study was to review the current status of wheat production system, to estimate the cost of production in irrigated and rain-fed areas and to analyse the benefit-cost ratio.

The study was focused on Nasirabad and Loralai districts of Balochistan as representatives of irrigated and rain-fed areas. Sixty wheat growers were selected randomly and interviewed on their respective farms. Thirty growers were selected from each district for the collection of data.

The results presented in the table below show the total cost of production, gross revenue, net revenue, cost-benefit ratio and input cost. Furthermore, revenue per rupee of input cost and per crop day (rupee) was also calculated.

The total cost of production was estimated and determined to appraise output and input relationship. Moreover cost of production calculated in tube well- irrigated area was Rs7,328 followed by Rs2,954 in rain-fed in Loralai, and Rs6,742 in canal-irrigated area of Nasirabad district. The results of non-irrigated areas are similar to those obtained by Akhtar and Zia (1995). They studied wheat production and related input situation in different ecological zones of the Punjab and found almost similar production cost in barani areas. The average gross revenue was Rs10,025, Rs9,485, Rs4,080 in canal-irrigated, tubewell and rain-fed areas respectively.

The inter-district comparison shows that the net return was Rs2,151 from irrigated land followed by Rs1,126 from non-irrigated land in Loralai and Rs3,283 in Nasirabad district.

The cost-benefit ratio was 1:1.4, 1:1.2 and 1:1.3 in Nasirabad and Loralai irrigated and rain-fed districts, respectively. The revenue per rupee of input cost computed for district Nasirabad and Loralai (irrigated and non-irrigated) was 2.88, 2.44 and 2.51 respectively. Similarly, revenue per crop day was Rs62.66, Rs49.92 and Rs21.47 in Nasirabad and Loralai (irrigated and non-irrigated) districts respectively. It is evident that our farmers are not achieving the potential yield. However, in the broader sense, two possible options either through better crop management or intensification, the yield can be increased without bringing more area under cultivation. The following recommendations/ suggestions have been made for the improvement of better yield.

Wheat growers should be encouraged to adopt better management practices and motivated to adopt scientific methods from local and available sources such as, research stations, progressive growers and extension agents. Particularly, they should be educated about timely planting of wheat, appropriate use of fertiliser and ways to get rid of weeds.

The government must play an important role in training of the farmers on crop management through agriculture extension department.

Majority of farmers were not satisfied with the quality of seed in the study area. They complained that non-availability of improved, disease-free certified seeds of high yield wheat varieties were the main constraint in growing wheat on a large-scale in the province. The agriculture extension department should provide improved and certified seeds to wheat growers in close collaboration with research institutes.

Load shedding was yet another problem hampering wheat cultivation in the study area. The period of load shedding ranged between 10 to 15 hours within 24 hours. The duration of load shedding must be reduced. On the other hand, introduction of rainwater harvesting technique can enhance water availability for farmers.

The rainwater losses are enormous in the study area, which can be controlled by building dams, mini-dams and water reservoirs to increase underground water table.

Timely credit facilities must be provided to the farmers for purchase of inputs so that they cultivate the crop in time. Wheat growers normally purchase inputs from commission agents on high prices in absence of credit facility.

http://www.dawn.com/2007/03/05/ebr7.htm


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## Neo

March 05, 2007 
*Diversifying items and destinations for export*

By Mohiuddin Aazim

BETWEEN July 2006-January 2007, PakistanÃ¢â¬â¢s exports increased to $9.63 billion from $9.28 billion a year ago, showing an increase of 3.8 per cent. The full fiscal year target is $18.6 billion. But the State Bank of Pakistan has forecast export earnings of $17.9 billion, up from $16.5 billion in the last fiscal year.

Destination-wise data for July-January 2006-07 is still awaited but July-December 2006 data shows an increase in exports to six out of the top 10 destinations.

Pakistan exported more to such top buyers as the USA and the UK, Hong Kong, Italy, China and Spain. But its exports to UAE, Afghanistan, Germany and France declined (See Table I).

Between July-December 2006, exports to China grew to $245 million from $190 million in July-December 2005, showing an increase of about 29 per cent. Exports to China more than doubled in the last four years as the dramatic surge in the Chinese economy led to additional demand for foreign goods (See Table II).

The items whose exports to China have increased include cotton yarn, leather and leather products, carpets, rice, fish and fish preparations, readymade garments, surgical instruments, cutlery, petroleum products and marble.

During this fiscal year, exports to China may fetch half a billion dollars but business leaders say this could be easily doubled in a few years. Ã¢â¬ÅIf we seriously strive to meet quarantine and other standards of China we can easily double our exports there within a year or two,Ã¢â¬Â says Chaudhry Muhammad Saeed, ex-president of the Federation of Pakistan Chambers of Commerce & Industry.

China offers a huge market for Pakistani rice, fruits and herbal medicines that remains untapped because Ã¢â¬Åwe cannot meet their standards,Ã¢â¬Â says Saeed.

Pakistan exports eastern and herbal medicines to China in the raw form through its northern land route but the merchandise fetch very little foreign exchange. Ã¢â¬ÅChinese process these raw medicines, value add, package and market them around the globe Ã¢â¬âand earn 20 times more.Ã¢â¬Â

In November last year, Pakistan and China signed a free trade agreement during the visit of the Chinese President Hu Jintao. He told top business leaders that China imports half-a-billion dollars worth of citrus fruits from Thailand suggesting that Pakistan could also export more citrus fruits to China after meeting the quarantine standards.

During the first half of this fiscal year, exports to the US, the UK and Hong Kong have also shown a rising trend. For long the UK has been the second largest destination for Pakistani exports after the USA though now the UAE is set to snatch this position.

The items whose exports to the US and the UK have recorded increase include bed wear, knit wear, readymade garments, cotton fabrics, towels, rice, sports goods, surgical instruments, silk and synthetic textures and footwear etc.

Exports to the US during this fiscal year may cross four billion dollars whereas exports to the UK should be over $900 million. In fiscal year 2005 exports to the UK reached a billion dollars but fell to $900 million the following year.

As for Hong Kong, our exports to the island country have been on the rise for some years. And the trend continued in the first half of this fiscal year also.

The items whose exports to Hong Kong have increased include cotton yarn and fabrics, leather and leather clothing, fish and fish preparations, sports goods, bed wear, chemical and chemical products, readymade garments, precious stones, surgical instruments and metal manufactures etc.

Italy and Spain are the remaining two countries out of the top six where PakistanÃ¢â¬â¢s exports have shown an increasing trend in the first half of this fiscal year. Exports to these two European countries have been showing consistent and substantial growth over the past few years.

The items whose exports to these countries have risen over the years are: cotton yarn and fabrics, rice, molasses, carpets, bed wear, hosiery, precious stones, fish and fish preparations, fruits, jewellery, engineering and sports goods, surgical instruments, cutlery and leather gloves.

The decline in exports, seen in the first half of this fiscal year, to the UAE, Afghanistan, Germany and France has not been consistent with the past trend. For the past four years, exports to each of these countries have rather witnessed a rise (See Table II).

It is encouraging that PakistanÃ¢â¬â¢s exports to top 10 destinations have risen over the years.

But Pakistan has so far not fully exploited the potential export market in any Saarc country. Three countries in the South Asian Association for Regional Cooperation i.e. India, Bangladesh and Sri Lanka may easily become major buyers of Pakistani goods and services (the other three i.e. Nepal, Maldives and Bhutan are too small economies).

In the first half of this fiscal year, PakistanÃ¢â¬â¢s exports to India fell to $121 million from $129 million a year ago.

Exports to Bangladesh and Sri Lanka, however, rose to $128 million and $79 million respectively in July-December 2006 from $105 million and $59 million in July-December 2005.

Ã¢â¬ÅIf we are serious in increasing our exports to India, we need to look beyond New Delhi and explore export potential in each city of India,Ã¢â¬Â opines Chaudhry Saeed. Ã¢â¬ÅBoth the private sector and our High Commission in India should do hectic networking with the Indian entrepreneurs spread across India.Ã¢â¬Â

The signing of a shipping protocol with India last year is likely to help Pakistan boost its exports to India.

As for Bangladesh and Sri Lanka, exports to the two countries are picking upÃ¢â¬âthanks to a free trade agreement with Sri Lanka and the beginning of non-traditional and more value added exports to both countries. Pakistan needs to increase its export of non-traditional items and value-added traditional items to the two countries to compete with India and the Asian giant China.

Exports to Bangladesh and Sri Lanka mainly consist of raw cotton, cotton yarn, cotton fabric, surgical instruments, and sports goods. However, lately exports of non-traditional items like cement, engineering goods, chemicals and chemical products and cutlery has also started, which need to be boosted further. Exports can be broadly classified into two categories i.e. textiles and garments and non-traditional or developmental items. In seven months of this fiscal year i.e. between July-January 2006-07 exports of nine out of 13 items in textiles and garments category grew by 17 per cent to $3.7 billion whereas exports of the remaining four items declined by eight per cent to $2.5 billion.

The overall export earnings from all the 13 items of this category stood at $6.2 billionÃ¢â¬âor a staggering 65 per cent of the total exports of $9.6 billion.

Exports of seven out of 13 developmental items grew by 12 per cent to $363 million whereas exports of the remaining six items declined by 24 per cent to $301 million. The items whose exports increased included engineering goods, fish and fish preparations, cement, marble/granites and onyx, gems and jewellery, and meat preparations. And the items whose exports declined included chemical and chemical products, fruits, cutlery, furniture, vegetables and poultry.

Total export earnings from all the 13 development items stood at $664 million or seven per cent of the overall exports.

http://www.dawn.com/2007/03/05/ebr16.htm


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## Neo

March 05, 2007 
*Potential for development of dairy sector*

By Dr Alamdar Hussain Malik

IN the global context, the performance of Pakistan dairy sector appears impressive in terms of livestock population and total milk production, but in terms of productivity it is extremely poor. The main reasons for low yield are shortage of feed and fodder, lack of timely and good animal health care and breeding services, and paucity of credit. The average annual milk production per animal in our country is far below the world average.

In 2003 over 32 million tons of milk was produced in our country, which amounted to six per cent of the world production. Over two-thirds of milk is produced by buffaloes. Pakistan has over three times as many Ã¢â¬Ëdairy animalsÃ¢â¬â¢ as Germany, the vast majority (over 80 per cent) being kept in herds of one to three animals. Comparison of average milk yields across various countries shows that one New Zealand dairy animal produces as much milk as three Ã¢â¬Ëdairy animalsÃ¢â¬â¢ in Pakistan; while one American cow produces as much as seven Pakistani cows. This vast difference in productivity is due to a variety of factors (genetics, management, technology, etc.) Fortunately, many of these factors have been identified, which means that there is vast potential for development of local dairy sector.

Only 40 per cent of surplus milk, left from calves suckling, home consumption and indigenous home processing, finds its way to urban markets. Up to 20 per cent milk is being wasted due to non-availability of proper cooling and storage facility. About three per cent of milk in urban markets flows through formal processing channels while the remaining 97 per cent is consumed raw and informally marketed through local milkmen (Gawallas).

Milk production here has increased by 17 percent from 1996 to 2002. This increase in production was achieved mainly by a growth in the number of dairy animals (15 per cent for the same period) with only slight gains in milk yield per animal with the use of artificial insemination techniques for improved breeding.

Agriculture and livestock in our country is controlled by the federal government, while provincial governments are responsible for the development of this sector. Despite the importance of dairying in our economy, especially for the livelihood of resource-poor farmers and landless labourers, government policy towards this sector has suffered for lack of a clear and strong thrust and focus.

The concerned government agencies should ensure a policy conducive to white revolution. Primary focus should be on enactment of legislations that should provide support to white revolution. Although, the dairy sector occupies a pivotal position, and its contribution to the agricultural sector is the highest, the investment plan made so far does not commensurate with its contribution and future potential for growth and development. However, in most cases, the bulk of budget allocation to this sector is consumed by wages and other administrative costs of the government departments.

Lack of proper monitoring, controlling and evaluation at various levels at timely intervals and inability to review the progress and give appropriate feedback are some of the factors contributing to the failure of the white revolution in our country. In choosing the project areas, the implementing agencies need to ascertain the suitability of the areas on the basis of project objectives and resources. There is no information on the economic and social cost-benefit of these projects. Consequences in terms of output, employment, consumption, savings, income distribution and other tangible benefits are to be estimated. The consequences brought out must be evaluated from all dimensions which are essential for making sound development policy.

Management of human resources is very important in any organisation and it is a fundamental aspect in dairy development programmes. The white revolution can be achieved through modern knowledge and technologies. Therefore, one of the most important tasks of achieving excellence in our dairy development programme is to develop well-trained personnel of the proper size.

The white revolution is anchored on four development strategies:

(i) Increasing the volume of local milk production will hinge principally on the quantity and quality of dairy animals. This can be achieved through the development and implementation of a unified system of dairy herd upgrading, embryo transfer, gene pool, contract breeding and importation.

(ii) processing is the central component of dairy development. The required post-production infrastructure must be in place, capable of absorbing the local production within a specified timeframe. Public investment in providing milk plants, milk collection centres and packaging equipment will be needed

(iii) Milk feeding shall be institutionalised with a corresponding funding support. This will result in significant gains in efforts aimed at raising the nutritional well-being of millions of Pakistani children. It will also create a stable market for local milk producers. Corollary to this, commercial market niches for locally manufactured dairy products will be established.

(iv) Human resource development shall empower farmer-co-operators, local government units, non-government organisations, government personnel and other entities involved in propelling dairy industry development. A programme of trainings, technology transfer and immersion, as well as local and foreign exchanges shall be integrated into all activities of the programme.

One of the major lacunae is the neglect of buffaloes and failure to exercise the control over the implementation of breeding policy evolved which has led to the creation of crossbred with varying inheritance level and performance. Pakistan has seen a slight increase in milk yields, both in buffaloes and cows. This is due to limited impact of breading schemes through selection and artificial insemination, etc.

Little attention has been paid to the impermanent of local cattle, except for their use as a genetic resource pool for cross-breeding with exotic dairy breeds for the supply of crossed cows.

A local cattle breed of Sahiwal, Cholistani and Red Sindhi has practically disappeared in their pure form, which were quite adoptable to local conditions. Sahiwal cows have produced up to 5,000 kg of milk in on lactation. Crossbred is not a permanent solution to increase milk yield in the country as the exotic blood exceeds the level of 50 per cent then it starts declining in terms of productivity and greater susceptibility to disease and adaptability to climatic stress of heat and humidity.

Despite being the 5th largest milk producer in the world, PakistanÃ¢â¬â¢s per capita availability of milk is around 230 kg per year which is lowest in the world, and still below the world average of 285 gm per day and the minimum nutritional requirement of 280 gm per day as recommended. There are also wide variations in per capita availability of milk in the country. The average per capita consumption of milk and dairy products is lower in rural areas than in urban areas, even though milk is produced in rural areas.

Milk production is considered a livestock enterprise, in which small-scale producers which currently from the backbone of the dairy sector can successfully engage to improve their livelihood. Given its high income elasticity, the demand for milk and dairy products is expected to grow rapidly. Further increases in per capita income and changing consumption patterns would lead to acceleration in demand for milk and other livestock products in Pakistan and thus would give a boost to this sector, as the white revolution shares the national efforts to address poverty and malnutrition and ensures a better quality of life for Pakistan.

http://www.dawn.com/2007/03/05/ebr6.htm


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## Neo

*Musharraf discusses micro financing initiatives with Bangladesh's Mohammad Yunus*
Karachi News.Net
Monday 5th March, 2007 

Islamabad, Mar. 5 : Pakistan President Pervez Musharraf today directed the country's finance managers to develop innovative methods for extending micro-finance credits at the grassroots level to help enhance job opportunities and eradicate poverty. 

The direction was given after a meeting with the Managing Director of the Grameen Bank of Bangladesh, Dr. Mohammad Yunus, who called on Musharraf at his Camp Office in Rawalpindi on Monday.

Advisor to PM on Finance Dr. Salman Shah, Minister of State for Finance Omer Ayub Khan, Secretary General Finance Naveed Ahsan and President Khushali Bank Ghalib Nishtar were also present during the meeting. 

Musharraf directed the finance team to exchange ideas with the Grameen Bank so that its successes could be replicated in Pakistan.He said that the poorer sections should benefit sooner rather than later from the economic turn around in the country and must have the resources to stand ontheir own feet. 

He said with the availability of financial resources people can beem powered to set up their small scale businesses, which on the one hand would bring a perceptible change in their living and on the other create greater employment opportunities. 

Musharraf said the people of Pakistan and Bangladesh enjoy very close relations in all fields and these would be further strengthened in the years to come. 

Musharraf congratulated Dr. Yunus on winning the prestigious Nobel Award in recognition of his services to humanity.

http://www.karachinews.net/story/232187


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## Janbaz

*Expats urged to help country fight poverty, extremism *

ISLAMABAD: President Pervez Musharraf on Monday wooed the Overseas Pakistanis Investors to contribute to the national economy, fight poverty and extremism by entering joint ventures in heavy engineering, energy, high-tech industry and food processing.

&#8220;Help us to alleviate poverty, improve economy, generate employment and bring a long-term change in Pakistan,&#8221; the president said while inaugurating the two-day moot of Overseas Pakistanis.

He urged them to go for the Small and Medium Enterprises to create more jobs, invest in value addition of food items, dairy products, building and construction, energy sector, IT and Telecom besides concentrating on the downstream industries. &#8220;With more factories, there will be more employment, lesser poverty and lesser the chances of extremism,&#8221; the president added.

He said Pakistan wanted to generate electricity through all means without involving oil use, and cited the example of one investor who was setting up electricity generation through wind mills in Badin to produce 100MW.

About growing construction activities he said, &#8220;We are going to build more dams, including the Kalabagh dam.&#8221; The president asked the Overseas Pakistanis to diversify and invest in heavy and high-tech industry. He said the past strategy of concentrating only on textiles that is only six per cent of the international trade, was flawed. &#8220;Pakistan provides an investor friendly environment, level playing field for all and all sectors were open for investment.&#8221;

He said the government was setting up more industrial estates along the Motorway at several interchanges like Chakri and Lilla and mentioned the Sundar and M-3 estates that were already operational. The president, acknowledging the role of Overseas Pakistanis, urged them to increase the remittances and investment into the country. 

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=45647


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## Janbaz

*'Billions of rupees being spent to end backwardness, poverty' *

RECORDER REPORT 
SIALKOT (March 06 2007): The National Assembly Speaker Chaudhry Amir Hussain has said that all democratic institutions are functioning successfully, and the parliament will complete its constitutional tenure for the first time in the history of the country.

Addressing a big public meeting in the village of Korepure on Sunday evening, he added the government was serving the people with missionary zeal and making all out efforts to resolve the people's problems.

The speaker said the government was mobilising billions of rupees to banish backwardness and poverty and to provide basic facilities to the masses in far-flung areas of the country. The development work on big and medium projects was being carried out for bringing revolutionary changes in social set-up of the country, he asserted.

The facilities of telecommunication, Sui gas, electricity, health, education and communication had been provided to remote and ignored rural areas for the first time, he said. Chaudhry Amir Hussain further said that the government wanted to develop backward areas and to bring them at par with the developed areas of the country.

He underscored the need for making collective efforts for purging politics from corruption and nepotism and for promoting democracy and unity among different groups of the society. The speaker said the government had adopted numerous measures for curtailing the ratio of unemployment through the establishment of maximum industries aimed at generating the employment opportunities in the country.

He said that vocational training institutions were being set up at Tehsil and district headquarters produce skilled persons that would meet the requirements of the industrial sector.

Business Recorder.
http://www.brecorder.com/index.php?id=535583&currPageNo=1&query=&search=&term=&supDate=


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## Janbaz

*$18 billion export target may not be achieved: KCCI *

RECORDER REPORT 
KARACHI (March 06 2007): Karachi Chamber of Commerce and Industry (KCCI) President Majyd Aziz has expressed the view that Pakistan may not achieve the $18 billion exports target this year. Addressing a delegation of the newly posted Pakistani commercial officers in different countries, led by Mohammed Irfan Tarar, Commercial Consular in Casablanca.

He noted that after passing so many years Pakistan, especially Karachi, does not have proper infrastructure, including power, water and gas, to run the industrial units properly, which is necessary to achieve the exports targets and value-addition.

He said that beside this the image of Pakistan was also playing a big role in keeping away the importers of Pakistani goods. The KCCI president advised the newly appointed commercial councillors to make efforts to improve the image of Pakistan in the eyes of foreign buyers and play their role in providing market access to Pakistani exporters.

He said that they should provide information related to trade, imports, and goods which can be exported from Pakistan, and other such information which may help boost Pakistan's exports. He said that in the present situation unless one is a top exporter one can not export goods. Medium and small exporters are facing lot of problems in export markets, he added.

He said that the officials have no national urge to boost exports. They only think of revenue generation. The KCCI chief said, "We have to change our mindset. We must concentrate on job creation, rather than revenue generation."

He said that geopolitical situation with Iran and Afghanistan is very disturbing and this may hit Pakistan's economic and trade activities. "Our success lies in peace in the region", he added. Commenting on the coming general elections in the country, he said that economic activities should not be disturbed with the elections in progress.

Business Recorder.
http://www.brecorder.com/index.php?id=535511&currPageNo=1&query=&search=&term=&supDate=


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## Janbaz

*Six firms keen to set up waste-to-energy plant *

ANWAR KHAN 
KARACHI (March 06 2007): As many as six foreign private firms, including US, UAE, Kuwait, Malaysian, Australian and Chinese have expressed keen interest in setting up a waste-to-energy plant in Karachi. A senior official of the City District Government Karachi (CDGK) said that many of the foreign firms had floated their ideas regarding the establishment of plant in the city.

They had contacted CDGK through their consultants, who apprised it about the project, however, they had been asked to finalise their project proposals with the final cost estimates, he added.

He said that firms had initiated their studies on the project and set different time period for the project implementation.

Some of them would complete the waste-to-energy plant in one year while others in two and three years, therefore, their cost would also vary with the extent of completion period of the project, he maintained.

He said waste-to-energy plant would require a huge sum of money, which was the primary concern for all the firms to overcome it during the plant establishment process.

They would have to meet their expenses on the project, as it was an expensive venture, he added.

He turned down any early agreement between the CDGK and these firms to take place on the installation of the proposed plant.

He said the CDGK had not decided yet to which firm it would assign the task. "It is quite premature to assess the project, as all of the firms are keenly interested in the project," he added.

He said that CDGK was not aware of the project, hence it would look into the project's viability whether or not it was feasible to be installed.

He said the CDGK had asked the interested firms to complete their homework on the project so that it could also be able to decide whose proposal was the best to be implemented. Waste-to-energy plant had been established in 1962 in the developed world. However, it was new for CDGK to set up in Karachi, therefore, it was needed to be studied thoroughly, he said.

Business Recorder.
http://www.brecorder.com/index.php?id=535524&currPageNo=1&query=&search=&term=&supDate=


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## Janbaz

*Rs 3.94 billion being spent on uplift projects in Sialkot *

RECORDER REPORT 
SIALKOT (March 06 2007): Sialkot district government is spending about Rs 3.945 billion for different development projects in the district. This was stated by the District Nazim Muhammad Akmal Cheema while talking to newsmen here on Sunday.

The district Nazim said that more than Rs 1.75 billion is being spent for the promotion and expansion of education in its Tehsils - Sialkot, Daska, Pasrur and Sambrial.

He said that there are 2,400 primary school in the district and every union council had been provided Rs 20, 000 for undertaking the development work and other requirements of schools. Cheema said that Punjab government had catered Rs 650 million for furniture, additional classrooms, boundary walls and washrooms in existing schools.

The district government had evolved a strategy for improving the district road network costing Rs 2 billion for improving the means of communication in the district. He disclosed that funds amounting to Rs 100 million had been released for the up-gradation of Civil Hospital Daska while Rs 55 million allocated for widening BRB canal bridge near Daska City for ensuring smooth traffic flow on Daska-Gujranwala road.

The Nazim said that 67 watercourses - 17 in Barani and 50 in canal areas - would be completed costing Rs 40 million in the district. The completion of watercourses would play an instrumental role in the promotion of agriculture while sufficient water would be available to tail-end farmers, he added.

Business Recorder.
http://www.brecorder.com/index.php?id=535584&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Banking reforms start bringing fruits: Shaukat Aziz *


LONDON (updated on: March 06, 2007, 10:54 PST): Confidence is strong in Pakistan's banking sector following reforms that have helped make the country a serious destination for investors, Prime Minister Shaukat Aziz told the Financial Times. 

The reforms 'have repositioned Pakistan's banking sector and several banks are looking at Pakistan seriously,' Aziz said in an interview published on Tuesday.

"Our balance of payments are comfortable, exports are up and growth remains strong. Obviously, this is noticed by foreign investors," he said.

"Today, there is a lot of confidence in the banking system. In the coming years, there will be growing opportunities for trade and investment. Banks see promising prospects for the future."

Aziz, who previously worked for Citibank, has pushed through major banking reforms that have helped the economy's rehabilitation.

Dutch bank ABN Amro said on Monday it had agreed to buy a 93.4 percent stake in Pakistan's Prime Bank for 13.8 billion rupees ($227 million), the latest in a series of acquisitions by foreign banks in Pakistan.

brecorder.com


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## Owais

*Pakistanis wasting lot of foreign exchange on imports of eatables *

ISLAMABAD (March 06 2007): Pakistanis are wasting a lot of foreign exchange on import of edible items, as a huge amount of Rs 46.43 billion had been spent on sugar and sugar confectioneries in 2005-06, which exceeded by 413 percent previous year's imports amounting to Rs 9 billion.

Though, this enabled the exchequer earn revenue in sales tax of Rs 6.68 billion, against Rs 1.36 billion of previous year's--an increase of 391 percent--at the import stage, the trend cost huge foreign exchange to the exchequer. This also shows state of wealth with the affluent people and their rising dependence on imported products.

It may be pointed out that this amount is bigger than spent on import of many other items, like oilseeds (Rs 18.36 billion), coffee, tea & spices (Rs 16.7 billion), rubber & articles (Rs 19 billion), articles of iron & steel (Rs 21.76 billion), paper & paperboard (Rs 19.5 billion), and miscellaneous chemical products (Rs 22 billion).

Except for a few items, mentioned out of 15, all have seen a sharp increase in their percentage. Among those which remained unchanged were organic chemical increased by 1.2 percent, coffee, tea & spices by 5.1 percent, and miscellaneous chemical products 6.7 percent. POL products showed highest import value of Rs 380.863 billion in 2005-06 against Rs 223.095 billion in the previous year, an increase by 70.7 percent.

Similarly, vehicles, iron and steel also showed high percentage increase of about 50 percent each during 2005-06 from previous year's. Their imports valued Rs 105.84 billion and Rs 97.02 billion respectively for the year under discussion.

The Fiscal Policy Statement (2006-07), released by the Ministry of Finance, showed total import value of Rs 1715.7 billion for 2005-06 against Rs 1306.52 billion in 2004-05, showing an increase of 31.3 percent. Total sales tax collected CBR from imported items at the import stage was only 18.5 percent higher than previous year, which was Rs 171.76 billion.
http://brecorder.com/index.php?id=535527&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Pakistani products: Jordan can serve as gateway to Europe and Gulf *

KARACHI (March 06 2007): Pakistan should improve trade relations with Jordan so that it could be used as an export window to Europe and the Gulf States. This was discussed at a meeting of Mohammad Akhtar Tufail, ambassador-designate to Jordan with Federation of Pakistan Chambers of Commerce and Industry (FPCCI) office bearers recently.

FPCCI emphasised on using Jordan as trade gateway for Europe and Gulf that would helpful increasing Pakistan's exports on several destinations, FPCCI officials said on Monday. Pakistan's exports to Jordan increasing in the last six years to $16.452 million in 2005-06 as compared with $14.391 million in 2004-05, which was stood at $9.201 million in 2000-01.

While, substantial growth registered in imports from Jordan in the last six years, which was currently $28.58 million in 2005-06 as compared with $20.59 million in 2004-05. Officials said that the diplomat had assured the country would take initiatives to improve trade balance with Jordan.

According to FPCCI statement the ambassador-designate to Jordan said, "Promotion of bilateral trade relations between Pakistan and Jordan will be my foremost priority during my tenure as ambassador of Pakistan." In the present era economic diplomacy determined the level of political relations between the countries, he said.

"My focus, therefore, would be on strengthening Pak-Jordan commercial relations by providing optimum facilitation to the business community of Pakistan," he said. Tanvir Ahmad Sheikh, president FPCCI hoped that the Embassy of Pakistan in Amman would be instrumental in promoting bilateral trade and help unleashing the potential of Jordanian market, which so far has not been tapped in true perspective.

Although Jordan was not a big market, it could be utilised as the gateway to Europe and the Gulf, he said. Asad Sajjad, Chairman Pak-Jordan Business Council said that EU and USA have already signed Free trade Agreement with Jordan under which 4,600 items were allowed to be exported to EU and USA. If Pakistani industrialists use Jordan as a base of production, they will have duty free access to EU and USA.

He said that many Iranian companies now have shifted their business to Jordan and with the start of rebuild Iraq project, there existed vast potential for Pakistan to export construction material, food stuff, fabrics and clothing, light engineering goods, furniture, tiles and ceramics, spices, rice, pulses, surgical equipment and leather products.

He added that FPCCI in conjunction with TDAP, arranged a single country exhibition "Made in Pakistan" in Jordan last November, which was a great success. He requested the ambassador to help in arranging this exhibition as a regular feature of Pakistan.

http://brecorder.com/index.php?id=535528&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Inactive loans soar by Rs43 billion *
KARACHI: Inactive loans during the quarter ending September 30, 2006 mounted by Rs43 billion, which works out to 2 percent of the aggregate banking loans.

State Bank of Pakistan said that the net-inactive loans had increased by Rs480 during the quarter ending June 30, 2006, while the volume of actual inactive loans at the quarter ending September 2006 reached at Rs187 billion. Specialized banks&#8217; inactive loans during the period under review calculated at 17.3 percent of their total loans, while those of DFIs at 8.8 percent, public sector commercial banks&#8217; at 1.6 percent and the private banks total loans&#8217; 1.5 percent as inactive loans.

Besides, the growth rate in inactive loans of the foreign banks remained at &#8211;0.7 percent. Banks in September quarter recovered Rs6.61 billion out of the inactive loans, while the local private banks made topmost recovery of Rs3.77 billion from their inactive loans. 
http://geo.tv/geonews/details.asp?id=2898&param=3


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## Neo

March 06, 2007 
*Alcohol worth $100m exported in 2006*

By Parvaiz Ishfaq Rana

KARACHI, March 5: The country earned over $112 million on export of around 190,585 tons of alcohol during 2006-07. The value-addition in molasses through its conversion into alcohol has enabled exporters to earn eight to ten times more foreign exchange.

The different grades of alcohol are being produced from molasses with a ratio of 1:5 meaning one ton of alcohol is being produced out of five tons of molasses. Presently, around 16 distilleries are operating in the country with a 60 per cent capacity of converting on average 1.8 million tons of molasses.

According to the details available, the country exported around 167,610 tons of alcohol during 2006 and about 22,975 tons during first two months of this year, thereby brining the total to around 190,585 tons. The average price fetched by exporters for different grades of alcohol ranged between $560 to $680 per ton.

As a result the country earned around $100.6 million on export of 167,610 tons in 2006 and $11.5 million on export of 22,975 tons in Jan- Feb this year

With the start of the sugarcane crushing season each year the country had been exporting millions of tons of molasses at a throw away price to European countries and Japan. However, for the last couple of years it is being converted into three grades of alcohol i.e. fuel or anhydrous, neutral or extra-neutral (ENA) and industrial or rectified ethanol (REN).

The fuel grade alcohol fetches highest price as it is being growingly used for mixing up to 10 per cent in petroleum products the world over to ease the pressure of increasing oil prices. The fuel grade alcohol needs 99.80 per cent purity on conversion from molasses while neutral (ENA) is purified up to 96.20 per cent and is used by pharmaceutical industry and in the making of wine. The industrial grade, also known REN, requires 94 per cent purification and is used by the industry.

Chairman Terminals Association of Pakistan (TAP) Mohammad Qasim told Dawn that the country would easily manage to export a little over two million tons of alcohol during current 2006-07 sugarcane crushing season on getting around 1.8 to 2 million tons of molasses. This would mean that a balance of around 0.5 to 0.6 million tons of molasses would be exported.

He said that after recent rains export of both molasses and alcohol slowed downing as crushing was affected on slow arrival of cane from the fields. However, he hoped the momentum will be regained soon as the cane harvest is better than last year.

Mr Qasim appreciated the Karachi Port for providing excellent facilities at the bulk oil piers for export of these two value-added commodities Ã¢â¬â alcohol and molasses. He said that in coming years export of alcohol would rise further as more distilleries were coming up, which will enable the country to convert entire molasses production into alcohol.

He suggested that legislation should be introduced for use of fuel grade alcohol in the country to give some relief to the common man by using it mostly in public transport system.

Responding to a question the TAP chief said that the country would produce sufficient sugar this season to meet the domestic demand particularly when sizable stocks are also lying with the Trading Corporation of Pakistan (TCP). He further said that India had also good sugarcane harvest and would have surplus sugar this year.

Referring to world sugar market Mohammad Qasim said that the prices had crashed because almost all the sugar producing countries have good cane harvest and there is going to be surplus sugar available. He said that about a fortnight ago sugar was being quoted at around $330 per ton (fob) against $515 per ton about 15 months back.

http://www.dawn.com/2007/03/06/ebr3.htm


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## Neo

*Strategy to raise exports up to $45 billion approved
*

ISLAMABAD (March 07 2007): Prime Minister Shaukat Aziz on Tuesday approved a strategy to increase the country's exports from $16.5 billion in 2006 to $40-45 billion by 2013. The strategy was approved at a high level meeting chaired by the Prime Minister in which Deputy Chairman Planning commission Dr Akram Shaikh presented a detailed strategy to enhance the country's export.

The prime minister said the government was pursuing a demand-driven strategy to enhance exports, which have become the lifeline and a major mechanism to drive the economy, earn foreign exchange and generate employment.

He said that exports had become more than double in the last seven years from $7.8 billion to about $16.5 billion and further steps needed to be taken to increase exports from the present 13 percent to 15 percent of the GDP.

Shaukat Aziz said with globalisation the entire economic paradigm had shifted and with quotas gone there was an urgent need to find new markets, diversify them and export value-added goods.

He said that improved competitiveness and productivity were critical to increase exports and with this view the government had embarked upon an ambitious programme to imparting skills and improving the logistics chain within the country and with the adjoining regions of Central Asia, West Asia and Western China.

He said the government had launched a comprehensive economic diplomacy and has recently signed an FTA with China, which is a landmark as it gives the country access to a huge market. The government was also making efforts to conclude FTAs with the US and the European Union, he added.

The prime minister said the government was in the process of finalising the Reconstruction Opportunity Zones (ROZs) to gain access for the goods produced in the less developed areas to the United States on preferential basis. He said the government's job was to open market access as exports were done by the private sector.

He said the private sector needed to increase its competitiveness and productivity and ensure quality and standardisation of products without which a quantum leap in exports is not possible.

Deputy Chairman Planning Commission presented a detailed strategy and action plan to increase exports, made a detailed review of all major sectors of the economy, highlighted constraints impending further growth and presented a strategic framework to achieved a quantum jump in exports.

He said to achieve the export target the government needs to focus on creating enabling policy environment, human capital development, strengthening of physical and technological infrastructure, improvement in logistics chain, investment and trade facilitation, production of high quality products and marketing of products.

He emphasised the need of consistency, stability and continuity of economic policies, higher investment in manufacturing and agriculture, setting up of state-of-the-art infrastructure and technology support centers, simplification of labour laws and building of strong confidence between government, private sector and academia.

The prime minister complimented the deputy chairman and the Planning Commission on presenting a well-thought out export strategy based on inputs from the relevant government agencies and the private sector organisations.

The meeting was attended among others by Federal Minister for Commerce Humayun Akhtar Khan, Minister for Industries and Production Jahangir Kahn Tareen, Minister for Textile Mushtaq Ali Cheema, Adviser to the Prime Minister on Finance Dr Salman Shah, TDAP chief Executive Tariq Ikram and senior officials.

http://www.brecorder.com/index.php?id=535817&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Investment moot ends with doubts over attracting $3 billion
*
ISLAMABAD (March 07 2007): The two-day overseas Pakistanis investment conference concluded here on Tuesday with doubts over government's expectations of attracting $3 billion investment from the expatriates. The conference, hosted by Labour, Manpower and Overseas Pakistanis Ministry, was attended by over 400 prospective investors, including 250 expatriates.

The government's expectations of fetching $3 billion investment was based on figures provided by the participants in the registration forms they had to fill for attending the conference. However, talking to Business Recorder here, a number of expatriates said that they had filled the registration forms, including details about the size of the amount they intended to invest, as a formality.

They said that they would invest, in actual terms, only following the incentives the government would offer to them at the conference. However, talking to a cross-section of participants this reporter gathered that the investors were still concerned about certain issues, including law and order situation and the taxation system.

Shamshad Ali Siddique, from Saudi Arabia, said he had expressed intention to invest $300 million in the construction sector here in the registration forms. However, he added that it was not confirmation, but "just an intention". He would make the actual investment only when his concerns were addressed, he said.

Highlighting his issues, Siddique said that law and order situation and taxation system were the major hurdles in Pakistan for investors. "There are so many agencies involved here, at least 22 of them at federal, provincial and district levels, that catch the new investors before even they settle their businesses," he added.

"We have been hearing of one-window operation for some time, but I have not yet seen that window," he said. Khalid Mehmood Chaudhry, President of Investment Forum, Saudi Arabia, said he did pledge some investment in textile sector in Pakistan but it would materialise only when he felt his capital was safe.

Chaudhry Ghulam Haider, who recently launched his construction company in Pakistan while winding up his fashion design business in UK, complained about lack of skilled manpower in the country. "I brought earthmoving machinery here in Pakistan, but unfortunately I have not yet found persons to operate it," he said.

He said that the government would have to think beyond the major cities and must also concentrate on rural areas where communication had been the cause of concern.

http://www.brecorder.com/index.php?id=535866&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Ayyan International to invest $200 million on power generation from solid waste*

ISLAMABAD (March 07 2007): Ayyan International, a private sector firm, will be investing 200 million dollars within next couple of years to produce 100 megawatt electricity from solid waste in six major cities.

The firm formally announced to start its project on Monday night after it was issued letter of intent by the government and has awarded the contract to a Swiss firm to prepare feasibility report of the project within next two to three months.

"We hope the feasibility study would be completed within next two to three months," said firm's Chief Executive Wajid Naseem Rana while talking to journalists after announcement of the project.

Contract for feasibility study has been awarded to SWECO, a leading Swiss waste management consultant. "We hope the project will start functioning within next couple of years," Rana said. Stressing the need for exploring more energy generation options, Advisor to the Prime Minister on Energy Mukhtar Ahmed said the government would be facilitating all possible help for the project.

"What I can assure at this juncture is every possible support of the government," Mukhtar said, calling upon the Alternate Energy Development Board to explore all avenues to meet future energy needs of the country.

"We are facing eight to 10 percent increase in demand of energy every year that needs multi-faceted policies," he said, underlining the need to use agriculture waste for energy production.

"Our target is affordable, adequate and secure energy for Pakistan and serious efforts are made to achieve this goal," he said. Giving an overview of the energy needs and the project profile, Ayyan International Chairman Brigadier Manzoor Abbasi (Retd) said the project would not only produce electricity for the people, but would also help improve the environment.

Spelling out the scope of the project, he said that six cities, including Lahore, Faisalabad, Sheikhupura, Gujranwala, Sialkot and Multan, had been identified for setting up plants of various capacities bringing to a total of 100 MW electricity production.

He warned against harmful effects of the waste, including human, industrial, hospital and other kinds of solid waste being dumped in open air, and said the project would resolve the dilemma of uncollected solid waste. He said using one tonne solid waste for electricity producing could save 0.3 million tonne coal and one-barrel oil.

http://www.brecorder.com/index.php?id=535903&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Pakistan, Uzbekistan to boost cooperation in farm sector *
LAHORE: Pakistan and Uzbekistan have agreed to cooperate for agricultural and livestock sector development. 

This was decided at a meeting between a delegation of Uzbekistan headed by S Ismaoilov, Minister for Agriculture and Water Management, Deputy Minister for Foreign Economic Cooperation and other members of Uzbek delegation who met Arshad Khan Lodhi, Minister for Agriculture, Punjab. 

They discussed various avenues for mutual cooperation to develop agriculture sector. They also agreed to formalise exchange programme for scientists and farmers to benefit from research and mutual experiences. 

Lodhi welcomed the delegation and appreciated their interest and proposal to cooperate particularly in the areas of conventional breeding, hybridation and bio-technology for developing agriculture. 
http://geo.tv/geonews/details.asp?id=3074&param=3


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## Owais

*FDI to set new records in FY 2006-07: Zahid *


ISLAMABAD (updated on: March 07, 2007, 00:32 PST): Zahid Hamid Federal Minister for Privatisation and Investment said that Pakistan was all set to make new record as regard to Foreign Direct Investment (FDI) in Financial Year 2006-07.

He said addressing the preliminary session of Overseas Investment conference here on Tuesday.

Giving details of the achievements, Hamid said that Pakistan's investment friendly policies have yielded record results as witnessed during the past FY 2006, which touched the record level of $3.9 billion.

He added this accelerating trend has also been witnessed during the first half of the current fiscal year 2006-07 by setting new record of FDI till December 2006 as close to $3.5 billion, which was going to increase further in coming half, heading to set another new record.

He said that Pakistan has comprehensive and broad based Privatisation Programme, which provided exciting and attractive opportunities and PC Ordinance 2000 has given statuary cover to the whole process, he added.

He informed the participants that liberal investment policy included 100 percent foreign equity in all economic sectors, with attractive incentives like remittances of capital, profits, royalty, technical and franchise fees without obtaining permission from the government.

The foreign investment was fully protected under Foreign Private Investment (Promotion & Protection) Act 1976 and Protection of Economic Reforms Act 1992, he stated.

He further said that continuity and consistency of the policies was hallmark of the government.

The privatisation of public sectors entities has confined the government's role to policy making, good governance and has fostered competition and increased efficiency and revenue.

Exciting investment opportunities in an environment of level playing field for both local and foreign investors, effective regulatory framework with liberal policies have made Pakistan an attractive destination for investment, which has also given boost to the investors confidence, he added.

Giving an overview of Pakistan's economy and the salient features of achievements as a result of the economic reforms.

Hamid said that Pakistan's GDP growth exceeding 7 percent, which was second to Indonesia and Turkey.

Three pillars of Pakistan's economy deregulation, liberalisation and privatisation have yielded encouraging results.

These major economic reforms have been termed as role model in the World Economic Forum's discussions while TFC and World Bank has declared Pakistan as the top reformer in the South Asian Region and 10th in the World in a report titled, "Doing Business in 2006: South Asian Countries Pickup Reform Pace", he said.

The minister informed that in FY 2000 the public debt was 96 percent, which has declined to 54 percent in FY 2006, Export growth has accelerated to $16.5 billion in FY 2006, which was $3.5 billion in FY 2000, the Equity market was out performing with market capitalisation to the tune of around $50 billion.

He urged overseas Pakistanis to invest in Pakistan to respond to the call of the motherland as this land has given them identity, of which we all were proud and everybody among us was determined to serve the nation and country to rebuild Pakistan with a sense of dedication.

brecorder.com


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## Owais

*Duty-free economic zones to be setup near Gwadar port: Prime Minister *

ISLAMABAD (March 07 2007): Prime Minister Shaukat Aziz said that the pace of development in Balochistan had increased substantially due to several infrastructure projects as well as further investment in education, healthcare, provision of clean water and other basic services to directly benefit the people.

He was talking to Balochistan Chief Minister Jam Muhammad Yousuf, who called on him at the PM House here on Tuesday, a press release said. The prime minister said that infrastructure projects like Gwadar Deep Sea Port, Mirani Dam, Coastal highway and other projects had created a large direct and indirect job opportunities.

He said the government was also encouraging investment in mining, energy, agriculture and fishing. The President's Rozgar scheme and the National Internship Programme would provide self-employment opportunities and jobs to thousands of youth all over the country, including Balochistan.

He said Balochistan had been neglected in the past hence the government was making all out efforts for socio-economic uplift of the province and striving to bring it at par with the more developed areas of the country.

Specifically mentioning Gwadar Deep Sea Port, the prime minister said its inauguration by President General Pervez Musharraf later this month would fulfil another commitment of the government to the people of Balochistan and would usher in a new era of development and prosperity. He said the Port would generate immense opportunities for the people of Balochistan, as thousands of jobs and new businesses would be created in Gwadar.

He said the duty-free economic zones to be set up near the Port to boost the exports would help harness the vast potential in natural resources of the area and would also lead to development of heavy and large-scale industries, petrochemicals and manufacturing sector.

The chief minister of Balochistan said that the people of the province were highly appreciative of the initiatives undertaken by President General Pervez Musharraf and Prime Minister Shaukat Aziz by taking personal interest in the development and prosperity of Balochistan.

He said the Gwadar Port would change the fate of the area. Jam Muhammad Yousuf updated the prime minister about PML's enrolment drive in the province and other party matters. He also briefed him about the pace of implementation of the ongoing development projects and the law and order situation in the province.
http://brecorder.com/index.php?id=535855&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Pak IT industry all set to catch up with regional players *


LAHORE (updated on: March 07, 2007, 00:08 PST): Pakistan with good human resource base is all set to catch up with the major regional players in the field of information technology within five years.

"With more and more companies bracing latest technology and making software exports to US and other western countries, Pakistan has all the capabilities to come at par with the countries like India in five years," predicted Alexander Lee, Country Sales Manager of world's leading software solutions firm, SAP.

Talking to newsmen at a local hotel, he said that Pakistan's 60 big firms including Pakistan State Oil, Bosicor, Engro Chemical, Packages, Pakistan Petroleum Limited, SABRO and ICI were now using SAP solutions for maintaining their financial matters.

He said that tax holiday to the companies engaged in technological up-gradation could help expedite the process of technological diffusion in this part of the world.

Alexander Lee said that SAP had the ability to provide financial software solutions to Pakistan's industry in Urdu language. "We are already providing the solutions in more than 20 languages including Farsi," he said.

He said that SAP was ahead of other competitors in Pakistan, a major country in the emerging markets.

Responding to a question, the SAP official said that the company was presently engaged in partnership talks with the companies like NetSol.



brecorder.com


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## Introvert

*Pakistan bilateral trade with Ireland, Germany swells to US$ 4.88 billion​*Wednesday, 07 March 2007

ISLAMABAD, Mar 7 (APP): Pakistan bilateral trade with Ireland and Germany have significantly increased to US$ 4870.488 million during last three years's.

Commerce ministry sources told APP here Wednesday that major exports to Germany and Ireland included cotton fabrics, made-ups articles of textile material,clothing and textile fabrics, carpets, Rugs and medical and surgical instruments.


The official sources told APP here Wednesday that Pakistan's major imports from Germany and Ireland included Machinery and parts, Chemicals, Iron& Steel and manufacturers thereof and manufacturers of non-ferrous metals.


He said that during last three years the bilateral trade between Pakistan and Germany was US$ 4667.623 million in last three years.The sources said that during 2003-04, Pak export to Germany was US$ 606.694 million while the import was US$1218.532 million.


During 2004-05 Pak export to Germany was US$ 688.588 million while the import was US$ 896.582 million. in year 2005-06 the Pakistan export was US$ 687.368 million while the import substantially increased to US$ 1176.553 million.


He said that during last three years the bilateral trade between Pakistan and Ireland was recorded US$ 202.865 million. During 2003-04 the Pak- Ireland bilateral trade was US$ 48.29 million which includes US$31.097 million export and US$17.193 million import. In 2004-05 the Pak export to Ireland was US$34.803 million while import was 37.752 million. During 2005-06 Pak export was US$ 42.794 million while import from Ireland was US$ 39.226 million.


The sources said that Pakistan's major exports to Germany includes clothing of textile fabrics, manufactures of leather, cotton fabrics, made up articles of textile materials, toys, games & sporting goods and synthetic artificial fibre etc. Germany and Ireland are members of European Union custom Unions, which are Pakistan's major trading partner.


Pakistan is a beneficiary of "EU Generalized system of Preferences (GSP) Scheme", which allows 20% tariff reduction on Most Favored Nation (MFN) duties on textile and clothing and 3.5 percentage reduction on MFN duties for other eligible products. Pakistan was included in the current GSP Scheme of the EU on January 1, 2006.
In the previous GSP Scheme of the EU Pakistan textile and clothing sector was graduated. The re-inclusion of Pakistan in EU GSP Scheme represents a credible achievement as textile and clothing products account for 65% to 70% of Pakistan's total exports to EU.

Despite Government's best efforts Pakistan would not qualify for Special Incentive Arrangement for Sustainable Development and Good Governance (GSP plus) scheme of the EU which grant tariff free treatment to imports.
Pakistan feels that exclusion of Pakistan from

the GSP plus scheme is discriminatory therefore Pakistan has challenged the GSP plus Scheme of the EU in the Dispute Settlement Body of the WTO.


About Pakistan-EU Free Trade Agreement (FTA) he said the ministry of Commerce with the approval of the Prime Minister has formulated a strategy to persuade EC to initiate FTA negotiation with Pakistan.


The strategy, he said includes lobbying with stakeholders including EU member governments, members of the EU parliament and trade associations in EU countries.


About the reduction in antidumping duty on Pakistan's bed linen, he said earlier EU-imposed 13.1% duty on import of bed linen from Pakistan on the basis of incomplete investigations by EU authorities. Subsequently due to concerted efforts of Ministry of Commerce the antidumping duty was reduced to 5.8 per cent w.e.f. May 6,2006.
He said that the causation analysis conducted by EC investigation authorities is faulty. In order to avoid future antidumping action by the EU, Ministry of Commerce has challenged the imposition of current antidumping duty on bed linen export from Pakistan to EU in Dispute Settlement Body of WTO.
http://www.app.com.pk/en/index.php?option=com_content&task=view&id=5337&Itemid=2


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## Neo

*Pakistan to boost economic ties with Saudi Arabia *

ISLAMABAD (March 07 2007): The government is seeking to further strengthen economic relations with Saudi Arabia in various sectors such as pharmaceutical and railways. Pakistan's exports to Saudi Arabia have amounted to 500 million dollars, while imports amounted to 2.5 billion dollars last year, a private TV reported.

Pakistan would offer its expertise to participate in the development of the Saudi economy. Last year, Saudi Arabia and Pakistan signed an agreement to promote trade between the two countries.

http://www.brecorder.com/index.php?id=535935&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Neelum-Jhelum power project: Centre refuses contract to US-based company *

ISLAMABAD (March 07 2007): The federal government has refused to award the contract of 969 MW Neelum-Jhelum hydropower project to a US-based firm, just saying the sponsors had no track record and failed to inspire confidence, official sources told Business Recorder.

The sources said that former Minister of State for Privatisation and Investment, Umar Ahmad Ghumman was backing the firm M/s YRM for this project but the proposal was rejected a few weeks before his reportedly forced resignation.

Chairman, Wapda, Tariq Hamid had informed the Cabinet Committee on Energy (CCE) in its first ever meeting on February 2 that due diligence had been carried out regarding the interest expressed in the project by a private company. "The sponsors had no track record and did not inspire confidence," the sources quoted Tariq Hamid as informing the committee.

The sources said that Prime Minister Shaukat Aziz, who was chairing the meeting, desired that decision may be conveyed to the sponsors and the issue be treated as closed. According to sources a committee was constituted under the chairmanship of Prime Minister's Advisor on Finance, Dr Salman Shah comprising Deputy Chairman Planning Commission Dr Akram Sheikh, former Chairman BoI, Umar Ahmad Ghumman and Secretary Water and Power. They were to examine the BoI's proposal regarding financing of the lowest bidder for the Neelum- Jhelum hydropower project to be undertaken by M/s YRM on Built-Operate and Transfer (BOT) basis.

The sources said that the BoI was reluctant to forward the committee's assessment report on the firm track record even to the chairman of the committee for information. The sources claimed that differences surfaced between Umar Ghumman and some of the top government managers on the issue of YRM and ultimately the State Minister was asked to resign.

The $1.6 billion Neelum-Jhelum hydropower project is very important and any further delay in starting work on this project will deprive Pakistan of the prior right to the Neelum river. This is because India is also planning to construct the Kishanganga hydropower project on the same river but now with modified design after the World Bank's expert gave its verdict on the controversial Baglihar hydroelectric project.

The sources further said that the Water and Power Development Authority (Wapda) had also pressed the government to award the project to any internationally reputed firm so that it could be completed as early as possible. The project was initially approved by Ecnec on December 31, 1989 at a cost of Rs 15.012 billion, which was revised at a total cost of Rs 84.5 billion with FEC of Rs 46,667.70 million.

Local component of cost was to be met from Wapda's own resources while FEC through foreign aid. The gross head of the project is 420 feet and will generate 969 MW of electricity. The sources said that the project is expected to be awarded to a Chinese consortium as Wapda has finalised the evaluation of tender for the project on priority basis.

http://www.brecorder.com/index.php?id=535841&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*IPI gas pipeline to be built in parts *

NEW DELHI (March 07 2007): The over $7 billion Iran-Pakistan-India (IPI) gas pipeline is likely to be built in parts with three nations deciding to construct segments of pipeline falling in their territory independently.

"Iran will build pipeline segment in its territory and Pakistan responsible for construction of section falling in its territory. Indian firms will lay pipeline from Indo-Pak border to their consumption centers," Press Trust of India reported quoting a top petroleum ministry official.

India will enter into agreement with Iran for purchase of gas at its border and responsibility will be fixed on Islamabad for safe passage of pipeline, uninterrupted supplies and delivery of gas at Indian border.

Official said setting up of international consortium, comprising state firms of three countries and global energy majors, for construction and operation of the world's most valuable project could be a non-starter due to political and legal opposition from the US, including threat of invoking sanctions under Iran-Libya Sanctions Act (ILSA).

The project may be executed separately by three states in their own territories to protect it from US sanctions, he said. India will sign a "supply-or-pay" agreement with Iran with a provision on alternative supplies during disruptions. With three countries separately executing it in their territories, it will be protected from US sanctions and even enable American consultants and contractors to participate in portions of project.

Iran will lay 56-inch pipeline up to its border with Pakistan, from where diameter will reduce to about 40-48 inches to carry 60 million standard cubic meters per day of gas that will be split equally between India and Pakistan.

Official said India was likely to suggest a tripartite monitoring mechanism - a technical committee made up of representatives of three national gas companies to oversee technical aspects of project and officials committee to ensure smooth progress in different aspects as well as steering committee at ministerial level that will address political and other issues.

India & Pakistan last month reached agreement on quality of gas to be transported through pipeline in initial phase, but differed on transportation charges and transit fee payable to Islamabad for using its territory.

Technical level talks between two sides will try to reach consensus on route, transportation tariff and transit fee before bilateral meet sometime in April 25. If all goes well, a ministerial tripartite meeting in June may ink pipeline deal.

http://www.brecorder.com/index.php?id=535856&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Investment sought in hydel projects *

LAHORE (March 07 2007): Punjab Minister for Power, Chaudhry Armaghan Subhani has said that the Power Department has urged upon the overseas as well as local investors participating in Overseas Pakistanis Investment Conference to invest in hydel projects of 2 mega watts to 50 mega watts at 38 selected falls on 23712-long canal system of the province.

The invitation if picked up by the investors will open the corridor of an estimated minimum investment of Rs 95 billion. He told this in a meeting, held to review the probability of investment in hydel projects in Punjab, in his office on Tuesday.

Besides others, Chief Engineer (Power) Muhammad Yaqoob, Director Technical Iftikhar Ahmad Randhawa, Assistant Director, Punjab Power Development Board, Muhammad Ali Kausar and President Licensing Board, Muhammad Rahat Khan were present in the meeting. Armaghan Subhani said that the good thing associated with hydel projects is that they merely require running water to get operated rather than costly fuel, resulting in production of low cost electricity. He said that the details of these 38 potential spots at canals had already been uploaded on government's website for the convenience of investors.

He said that the website also contains specimen agreements of power purchase, implementation and water utilisation. He said that the power department has also offered land on lease for 50 years to the investors along with franchise opportunities with government for interested parties.

http://www.brecorder.com/index.php?id=535911&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pakistan to seek funds for dams from PDF creditors* 

By Mehtab Haider

ISLAMABAD: Pakistan Development Forum (PDF) will be held next month from April 25 to 27 in the federal capital for presenting an overall economic situation before the creditors and seeking multi-billion dollar funds for various sectors. 

Representatives from multilateral and bilateral creditors will attend the upcoming PDF moot and it is expected that the government will apprise them of the future requirements for next five to ten years in shape of mega dams and other infrastructure. Ã¢â¬ÅThe government is in the process of finalising the theme for upcoming PDF moot in which multi-billion dollars funds will be sought from the donors for the development of FATA, construction of five dams and other infrastructure-related requirements of the country,Ã¢â¬Â high-level sources in Economic Affairs Division told The News on Monday. 

The government, sources said, has conveyed dates for the upcoming PDF moot, the theme of which is yet to be finalised. 

When this scribe visited the office of Secretary EAD for comments, his staff told that the secretary had left for abroad and would be back in a few days. 

The PDF moot is an annual event which was started in Pakistan five years back. Earlier, this event was held in foreign country under the aegis of donorsÃÂ­ consortium for Pakistan in order to streamline assistance for the country. 

The government has prepared National Trade Corridor (NTC) plan which, according to the latest estimates, requires around $10 billion. The government had informed the donors in the last PDF moot that it required $6 billion to modernise its roads, ports and airports infrastructure. 

The NTC will establish road, sea and air links with neighbouring states enabling Islamabad to give impetus for boosting countryÃÂ­s exports. ÃÂ¬We have included many more things in NTC which have resulted into scaling up the funding requirements,ÃÂ® said the sources and added that the government would update the donors on this issue. 

The World Bank and Asian Development Bank are jointly working on NTC along with the government for meeting huge funds requirements, added the sources. The government will also seek multi-billion dollar funds for the development of FATA during the upcoming moot of PDF. 

According to sources, the initial estimates, conveyed to the donors, indicate that Pakistan will require around $5 billion for accomplishing FATA development over the period of 5 to 10 years. The development work in tribal areas, near Afghanistan, has gained immense importance in the wake of so called war against terrorism. 

The government, sources said, is approaching two-pronged strategy, as on one side the military is flushing out supporters of Taliban and on the other, they also planned to initiate development work for catering genuine needs of the area. However, according to the sources, for FATA development package, PakistanÃ¢â¬â¢s government will also allocate certain amount from its own budgetary allocations in years ahead for meeting the financing requirements.

http://www.thenews.com.pk/daily_detail.asp?id=45760


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## Neo

* PakistanÃ¢â¬â¢s micro-finance at take-off stage: Yunus *

KARACHI: The foundation for a vibrant micro-credit finance sector has been laid in Pakistan and with necessary legislative work done, it is now at a Ã¢â¬Ëtake-off stageÃ¢â¬â¢, said Nobel Laureate Prof Muhammad Yunus, Managing Director of BangladeshÃ¢â¬â¢s Grameen Bank, here on Tuesday.

Talking to media after an exhaustive workshop session organised by the State Bank of Pakistan (SBP), he said that his bank was associated with PakistanÃ¢â¬â¢s micro-finance sector development from day one in one way or the other. Ã¢â¬ÅWe have exposed persons from Pakistan to systems of Grameen Bank and have offered turnkey operations,Ã¢â¬Â he said. 

Prof Yunus said he has been advocating for making SAARC an area of peace. Ã¢â¬ÅWe need to have enlightened leadership meaning serious business, really caring for its people and not only lip service,Ã¢â¬Â he added.

Yunus said that poverty in the region (SAARC) is enormous. It is hub of global poverty and it is time to find a solution, the Nobel laureate said, adding that Ã¢â¬Åwe need to change the system, the institutions like banking as it is not reaching the people (poor section of the population)Ã¢â¬Â, he added. 

Earlier, sharing his experience, Prof Yunus said that his initial ideas were not welcomed by bankers as he was very aggressive in criticising the standard banking operations and procedures. 

Ã¢â¬ÅI declared the banking system as unjust, unfair and deliberately designed to reject the bulk of population from access to banking system. It was unjust as it rejected or disqualified womenfolk from borrowing,Ã¢â¬Â he said.

http://www.thenews.com.pk/daily_detail.asp?id=45765


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## Neo

*WAPDA to have 350 MW more power by May *

LAHORE: Though the Water and Power Development Authority (WAPDA) would add 350 MW of electricity to its system by May this year, its main thrust would be on conservation as no new power plant is expected to be installed in the next two years.

Chairman WAPDA Tariq Hameed stated this while addressing a seminar on energy crisis and its conservation.

He said the WAPDA being a transmission and distribution company was well aware of the looming energy crisis, adding his predecessor had warned the government in 2002 there would be shortage of electricity in 2006.

He said the government took a policy decision 10 years ago that all future thermal power projects would be commissioned by the private sector. But the private sector did not respond as they probably wanted inflated rates for electricity.

However, by 2006 they saw an opportunity, he said, adding Ã¢â¬Åthermal electricity investors now desire guaranteed average price of US$0.12 per unit for 10 years, which is more than double the price at which the WAPDA sells electricity.Ã¢â¬Â However, he said, the WAPDA did not determine the purchase or selling price. He said the WAPDA had chalked out a plan to manage judicial use of electricity in such a way that would not hit growth and domestic consumers.

He said the industry in many cities had been persuaded to stagger their weekly holiday and textile units had been asked to reduce load by 25 per cent during peak hours and preferably shift to their own captive power plants during high-load hours.

http://www.thenews.com.pk/daily_detail.asp?id=45766


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## Neo

March 07, 2007 
*Pakistan losing markets in EU states *

By Mubarak Zeb Khan

ISLAMABAD, March 6: Pakistan is steadily losing market for its products in the 27-member European Union (EU) Ã¢â¬â one of the single largest trading partners, despite Islamabad's frontline role in war on terror.

While European countries imports from other countries of the region witnessed more than double digit growth during the last few years, PakistanÃ¢â¬â¢s trade with the bloc has not been keeping pace with the countryÃ¢â¬â¢s international trade growth.

Official statistics compiled by commerce ministry indicated that the EUÃ¢â¬â¢s share in Pakistani global exports declined from 28 per cent to 26 per cent per annum, as exports to European countries came down to $3.83 billion in the fiscal year 2005 from $4.20 billion in the year 2004.

The overall exports during 2005 declined by 9 per cent, while exports of textile and clothing declined by 15 per cent; despite the fact that the EUÃ¢â¬â¢s import of these items increased by 7 per cent. This is, obviously having an adverse impact on Pakistan's industrial growth, economic stability, employment generation and social security.

The EC is Pakistan's single largest trading partner accounting for 26 per cent of the total exports and 17 per cent of the total imports. However, exporters attributed this fall in exports to EU to what they claimed as "discriminatory and unstable trade policies" being adopted by the EU.

Pakistan's Ambassador to WTO Dr Manzoor Ahmad in the country's statement issued on the EU trade policy pointed out that there was a common perception in Pakistan that the EC trade policy has recently undergone a clear shift in treating similarly placed countries differently.

"In addition to tariff peaks on products of our export interest, our competitive exports are repeatedly subjected to anti-dumping duties. Except for short periods, our bed-linen exports have been subjected to anti-dumping investigation or anti-dumping duties for the last 14 years. Perhaps this is a record period for an anti-dumping duty," the envoy said.

Mr Manzoor further pointed out that when Pakistani exporters found a niche and started exporting value-added ethanol, instead of the raw material molasses, which they had been doing for a long time, they found themselves faced with several hurdles.

"Not only the duty concession was withdrawn but they were also subjected to anti-dumping investigations. After one year of investigations, the EU dropped its claim. However, in the meantime most of our newly established distilleries got shot down. As a result our exporters are back to export of raw material for the EU distilleries," the ambassador pointed out.

Mr Manzoor said stringent and frequently changing regulations on technical barriers to trade and sanitary and phyto-sanitary measures are also among the main factors hampering trade with the EC member states. "Our products like fish, fruits and vegetables are the hardest hit in this regard," he said.

He further said that Pakistani business community was finding it increasingly hard to get visas for business trips. The new entrepreneurs making exploratory and matchmaking deals are routinely refused visa for not having travelled to Europe before.

http://www.dawn.com/2007/03/07/ebr1.htm


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## Neo

Wednesday, March 07, 2007 

*US to broaden commercial ties with Pakistan, says Crocker *

BAHAWALPUR: The US is committed to broadening its commercial ties with Pakistan and the Bilateral Investment Treaty (BIT) is an important step towards a growing economic relationship, said US Ambassador to Pakistan Ryan C Crocker on Tuesday, while speaking to the Bahawalpur Chamber of Commerce and Industry.

He said that the United States had provided $ 3 billion to Pakistan during the last five years to strengthen PakistanÃ¢â¬â¢s economic sector and security system. Crocker said the US had also provided an assistance of $ 500 million for the rehabilitation and reconstruction of earthquake affected areas. A proposal to create Reconstruction Opportunity Zones (ROZs) in the earthquake area was also presented.

The envoy said the US was encouraging Pakistani students to pursue higher studies in USA and that his country had launched the largest Fulbirght scholarship programme for this purpose with an amount of $ 115 million for a five-year period. Appreciating the quality of mangoes grown in Bahawalpur, the US ambassador announced measures to export mangoes from Bahawalpur to the Untied States by next year. Bahawalpur Chamber of Commerce and Industry President Ch Abdul Jabbar in his welcome address earlier said that Bahawalpur was known as the cotton and wheat belt producing 34 percent and 20 percent of the countryÃ¢â¬â¢s cotton and wheat. Jabbar also presented the chamberÃ¢â¬â¢s crest to the US ambassador.

http://www.dailytimes.com.pk/default.asp?page=2007\03\07\story_7-3-2007_pg7_2


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## Neo

Wednesday, March 07, 2007 

*CitigroupÃ¢â¬â¢s report lauds Pakistani bondsÃ¢â¬â¢ performance*

ISLAMABAD: CitigroupÃ¢â¬â¢s Ã¢â¬ÅAsian Sovereign Strategy ReportÃ¢â¬Â has said that that PakistanÃ¢â¬â¢s bonds have been steadily outperforming comparable bonds in Philippines and Indonesia, since Aug-SeptÃ¢â¬â¢ 2006.

The Citigroup has released the Asian Sovereign Strategy Report on March 5, analyzing the current and future economic outlook for the ten Asian emerging economies including Pakistan.

On Pakistan, the Citigroup is upbeat on the current economic situation and has positive views on the economic outlook. Ã¢â¬ÅWe saw a significant deceleration of inflation in Jan 07 (6.6 percent from 8.9 percent in Dec 06), largely due to the normalisation of food prices from previous double digit growth rates, but non-food inflation and core inflation also continued to show a decelerating trend,Ã¢â¬Â says the report.

This is also consistent with monetary aggregates released by the central bank, which also shows a slowdown of private sector credit growth (+10.8 percent as of YtD 10 Feb FY07 versus 16.7 percent growth in the same period in FY06), the major drivers of monetary expansion in the previous fiscal year.

On the fiscal outlook, the report says that Pakistan has succeeded in significantly bringing down public debt from more than 90 percent of GDP in FY01 to an estimated 56 percent in FY06, and the IMF estimates it to fall to about 53 percent in FY07, well within the 60 percent of GDP target supposed to be achieved by 2012-13 set by the Fiscal Responsibility and Debt Limitation Act, 2005. The Citigroup is also encouraged by the fact that the Central Board of RevenueÃ¢â¬â¢s (CBR) preliminary tax collection figures for the first eight months of FY07 was reportedly above target and up by 21 percent Year on Year basis.

On external liquidity, the report sees a diminishing concern, at least for the near term, confirming the relatively firm performance of the Pakistan rupee year-to-date (YtD) despite a widening current account deficit. Gross official reserves (SBP reserves) have gradually climbed up 2 percent YtD in FebruaryÃ¢â¬â¢07 to $10.85 billion, helped by strong FDI inflows, which rose 70 percent to $2.8 billion in the last seven months of FY07.

What is noteworthy about the FDI figure says the report, is that contrary to perception, this is not driven by privatisation Ã¢â¬â 95 percent of FDI is not privatisation proceeds. The Government is targeting $6 billion (4.25 percent of GDP) of inflows from direct and portfolio investment flows this fiscal year versus $3.87 billion (3 percent of GDP) inflows in previous period.

On privatisation, the report suggests that public de-leveraging should continue given progress on privatisation, with reportedly strong interest in the 51 percent stake of Pakistan State Oil (PSO) whose sale is targeted for completion in June, and plans to hire adviserÃ¢â¬â¢s for overseas listing of its stakes in Habib Bank and United Bank, the countryÃ¢â¬â¢s second and third largest banks.

On the performance of PakistanÃ¢â¬â¢s sovereign in international capital market the report says that PakistanÃ¢â¬â¢s bonds have been steadily outperforming comparable bonds in Philippines an Indonesia since Aug-Sept 06.

http://www.dailytimes.com.pk/default.asp?page=2007\03\07\story_7-3-2007_pg5_5


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## Owais

*Prime Minister's visit to China: ministries and provinces told to finalise MoUs, deals *

ISLAMABAD (March 08 2007): Advisor to the Prime Minister on Finance, Dr Salman Shah, has directed all ministries and provincial governments to finalise the Memorandums of Understanding (MoUs) and other agreements on the new economic projects to be signed with China during Prime Minister Shaukat Aziz's visit to Beijing in April 2007.

Sources told Business Recorder on Tuesday that Pakistan would request the Chinese government to hold Joint Economic Commission (JEC) meeting a week before the PM's visit to China, for which instructions have been issued to economic ministries.

Recently, a meeting was held to discuss the work/implementation plan of five-year development programme on trade and economic co-operation between Pakistan and China.

The Advisor discussed the respective sectors/areas of the five-year plan with the representatives of agriculture, manufacturing, textile, industry, nuclear energy, infrastructure, ports and shipping, railways, housing, urban infrastructure, minerals, energy, water and power, oil storage/refining, education and IT.

The Advisor, while discussing the sectors spelled out the 5-year programme and proposals put forth by ministries directed them to clearly enlist and prioritise their individual work areas.

He directed that the departments must clearly identify areas of co-operation, priority projects and implementation mechanism besides identifying their counterparts both in public and private sectors.

He also directed all ministries to prepare specific MoUs/LOEs/agreements etc which may be signed during PM's visit to China, and submit them to Economic Affair Division (EAD) within one month.

The Economic Affair Division also circulated the list of 25 projects, out of the 61 agreed projects, indicated in the development plan provided by Pakistan's Ambassador in China with the request to furnish project details. The Advisor also directed EAD to request the Chinese government to hold JEC meeting one week before PM's visit.

DR SALMAN HAS ISSUED THE FOLLOWING INSTRUCTIONS TO EACH MINISTRY: Board of Investment: BOI has been directed to make a list of investors of private sector who may accompany the Prime Minister during his visit to China and sign MoUs/LOEs etc, with their Chinese counterparts, and hand it over to EAD within one week. It has also been advised to advertise various projects indicated in the 5-year programme document within one week for 'expressions of interest' of private sector Pakistani investors.

MINISTRY OF LABOUR AND MANPOWER: The Ministry of Labour and Manpower has been asked to invite a team, before the PM's visit, from China to identify gaps in vocational training with advice to improve the techniques to train manpower/infrastructure/buildings etc.
http://brecorder.com/index.php?id=536173&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Mercosur keen to sign FTA with Pakistan *

ISLAMABAD (March 08 2007): Mercosur, a regional group of four Latin American countries, has expressed its willingness to sign a free trade agreement (FTA) with Pakistan. Mercosur comprising Argentina, Paraguay, Uruguay and Brazil is an emerging trading bloc, which is also known as Southern Common market in Latin America.

Delivering a lecture here on Wednesday at the Institute of Strategic Studies (ISS) on "Argentina and the Latin American region", Chairman of Foreign Affairs Committee of the Argentine Chamber of deputies Dr Jorge M Arguelio said South American countries saw Pakistan as a 'gateway to East Asia.'

Therefore, Argentina, the second largest Mercosur nation, along with its other member countries wanted to have free trade agreement with Pakistan, he added. He recalled the visit of President General Pervez Musharraf to Buenos Aires in December 2004 during which both countries had shown interest in improving relations in economic and trade sectors.

He noted that an agreement already in place between the two countries on enhancing trade and economic ties would bolster mutually beneficial cooperation for the well being of the people of two nations. Dr Arguelio, who is heading a parliamentary delegation, dwelt at length on the changes, which took place during last two decade in South America including in Argentina.

"Argentina has come a long way following the political and economic crises at the advent of new century," he told the audience, saying now his country's economy was stabilising with an average growth of 9 percent. Mercosur countries are looking to promote their regional grouping on the patron of European Union, he pointed out.

"The time has gone now when South American countries were backyard of United States." Talking about Pak-Argentina relations, Dr Arguelio maintained that both countries had enjoyed commonality of views on number of regional and international issues particularly on UN reforms.

"We both (Pakistan and Argentina) want UN reforms in a way that discourages creation of more centres of power," he added. In his welcome address, Chairman ISS and former foreign secretary Inamul Haq said Latin American region had long been ignored here in Pakistan.

"We neglected Argentina, Brazil, Venezuela and other countries in the region at our own cost." However, Haq expressed his satisfaction that now Pakistan had realised the vitality of forging closer ties in economic and other fields with the Latin America.

http://brecorder.com/index.php?id=536174&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Expo Pakistan 2007 success doubted *

KARACHI (March 08 2007): Fears are being expressed that 'Expo Pakistan 2007' might suffer due to the ongoing rift between the officers of Export Promotion Bureau (EPB) and Trade Development Authority of Pakistan (TDAP).

Sources told Business Recorder that the biggest challenge facing the success of TDAP were the bureaucratic hurdles on the part of EPB officers, who "are active to make TDAP a flop story". It may be mentioned here that the transformation of TDAP as an independent body is underway at the moment. Formerly, it used to be EPB.

There is a severe rift going on between the government officers of EPB and the TDAP officers recently inducted from the private sector on market competitive remuneration packages. 'Expo Pakistan 2007' is likely to suffer in the first instance as an outcome of this rivalry, sources said.

Expo Pakistan 2007, to be held in Karachi, is a gateway to the true commercial and cultural richness of Pakistan. It is an ideal one-stop sourcing event, showcasing the premium and value-priced products of Pakistan and would act as a global marketplace for interaction.

The success of this mega event is doubtful, as the event manager has so far been able to book less than 40 percent of the stalls. Karachi Expo Centre has a capacity to accommodate around 375 stalls, while so far only 150 stalls have been booked by export-oriented businesses, and only three weeks have been left to the inauguration of the mega event, which is scheduled to be held from March 29, 2007.

According to sources, the appointment of the event manager was made quite late, and was also controversial, as it was given the contract for three years despite opposition by some members of the steering committee of the Expo Pakistan, including Major General Absar of DEPO.

It may be mentioned here that the said firm had also been the event manager of the 'IDEAS' exhibition, which is another major event, held recently. But after the event the DEPO, being not satisfied with the event managers, ended the contract, sources said.

It is worth mentioning here that a few foreign delegates had sent their confirmation to attend the event. "None from EU and USA has confirmed its presence so far, and its seems that no more than 300 foreign delegates would be coming," sources added.

A TDAP officer admitted that there were some hurdles, which the Authority, being in a transformation phase, was encountering on the part of former EPB officers and the ministerial bureaucracy as well. However, the Board members and the Commerce Minister had pledged their full support.

The Export Promotion Bureau, first time in the history of Pakistan, had held the 'Expo Pakistan', a mega trade event, in February 2005 without any event manager. Expo Pakistan 2005 provided an ideal window for the businesses around the world to look more closely into Pakistan's industrial capabilities and explore further opportunities to make business partners with Pakistan for above the edge market superiority in their country.

That event was a resounding success as more than 1200 foreign visitors from 77 countries, Ministers for Trade and Commerce of 15 countries and delegates of 38 Chamber of Commerce assessed the quality 'Made in Pakistan' products displayed by 450 export oriented businesses of Pakistan.
http://brecorder.com/index.php?id=536254&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*$10 million ADB loan to help in Karachi development *
ISLAMABAD (March 08 2007): A $10 million loan from ADB will help address the long-term development needs of the city of Karachi, contributing to a sustainable improvement in the quality of life of its residents. Karachi, the capital of Sindh province, is home to more than 12 million people.

As the commercial hub and gateway of Pakistan, it accounts for 95 percent of Pakistan's foreign trade, and contributes 30 percent of Pakistan's industrial production, according to a report aired by a private TV channel.

Given the magnitude of the city's investment requirements, the loan would support a series of integrated actions that together would act as a catalyst to speed up the development process in Karachi.

The project will provide resources for Karachi City District Government, the town municipal administrations, and utilities to improve their city planning, management, and financing, as well as in applying commercial principles in the provision of infrastructure and services.

It will then help prepare projects for expanding and improving the mega city's infrastructure and services that may be funded by ADB in its lending program for Karachi over the next four years.

Priority projects, to be prepared, cover water, sewerage, and drainage, solid waste management, roads and transport and upgrading of informal settlements (Katchi Abadis). The project will establish an innovative financing vehicle for the mega city's infrastructure and services that will act as a means to channel development funds to the city, a catalyst for reforming the city agencies, and an agent to mobilise funds from non-government sources for large-scale capital investment needs.

ADB's loan will cover 75 percent of the project's total estimated cost of $13.33 million. The loan comes from ADB's concessional Asian Development Fund and carries a 32-year term, including a grace period of 8 years.

Interest is to be charged at 1 percent per annum during the grace period and 1.5 percent per annum thereafter. The government will contribute the balance of $3.33 million equivalent.
http://brecorder.com/index.php?id=536253&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*UK investors invited to invest in ports *

ISLAMABAD (March 08 2007): The government on Wednesday invited British investors to invest in Pakistan's fourth port to be launched soon. Federal Minister for Ports and Shipping Babar Khan Ghauri extended the invitation to British High Commissioner Robert Brinkley during a meeting here.

Talking to reporters after the meeting, Ghauri said he briefed the High Commissioner about the development taking place in the country's ports and shipping sector vis-&#224;-vis the infrastructure development projects.

There is a conducive climate for foreign investors in Pakistan especially at ports, including Port Qasim and Gwadar Port, he said. Replying to a question, Ghauri said that over a hundred British private companies were already operating in Pakistan and they had also shown their keen interest to take part in the development of Gwadar port.

He said the British High Commissioner was briefed about the fourth port that would soon be launched and it was an opportunity for British investors to come forward and take advantage of government's investment-friendly policies.

When asked, Ghauri said the government had decided to further deepen the Port Qasim by 14.5 meter and work would be kicked off by the end of the current year. The government, he continued, would soon approach World Bank or any other international bank to arrange the loan for the purpose. To another question, he said the government had finalised the modalities to purchase a bulk-carrier and two oil tankers during the current fiscal.

http://brecorder.com/index.php?id=536218&currPageNo=2&query=&search=&term=&supDate=


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## Owais

*President not to inaugurate island project until conflict settled down: Arbab *
KARACHI: Sindh Chief Minister Dr Arbab Ghulam Rahim has said that President Musharraf has assured him that until the islands project issue is settled between Sindh and the federal government, he would not inaugurate the project.

Speaking at the day-long interactive dialogue on &#8220;Provincial Autonomy&#8221;, Dr Arbab criticised opposition political parties for not attending the &#8216;all parties conference&#8217; (APC) on provincial autonomy, saying that they speak of democracy and provincial autonomy but refuse to give proposals and recommendations on the issue through an &#8216;appropriate&#8217; platform.

The dialogue was organised by the Inter-Provincial Coordination Department Sindh, here at a local hotel on Wednesday. 

The CM termed the conference a &#8216;highly successful&#8217; and said that the proposals and recommendations floated during the conference would be dispatched to the federal government.

Dr Arbab said that the recommendations made by politicians, intellectuals, lawyers, former judges, journalists and others during the conference on provincial autonomy, would be sent to the federal authorities for implementation.

&#8220;I don&#8217;t think that hundred per cent suggestions or demands of Sindh would be accepted or entertained but if even some of them are entertained, it would be a big success for the people of Sindh&#8221; he said.

&#8220;The provinces have also been allowed to generate up to 50 megawatts of electricity, which reflects the government&#8217;s intention to give more autonomy to the provinces&#8221; he added.

He opined that water and power departments should also remain with the federal government.

Leader of the Jamiat Ulema-e-Islam (JUI-F), Senator Khalid Mahmood Sommro, who attended the conference along with his party men, told newsmen that his party was invited to the dialogue and they conveyed their concerns and suggestions on the issue of national importance.

Parliamentary leader of the Muttahida Qaumi Movement Dr Farooq Sattar told newsmen that his party was in favour of complete provincial autonomy except for Defence, Currency and Foreign Affairs.

Those who also spoke on the occasion included Abdul Qadir Halipota, Justice (retd) Saeed-uz-zaman Siddiqui, Syed Ghulam Shah, Syed Zain Shah, Hussain Haroon and others.

http://geo.tv/geonews/details.asp?id=3106&param=1


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## Neo

*28 projects worth Rs 106 billion approved* 

ISLAMABAD (March 08 2007): The Executive Committee of National Economic Council (Ecnec) on Wednesday approved 28 projects of Rs 106.6 billion with a foreign exchange component of Rs 18.7 billion including Diamer/Basha dam engineering design project of Rs 1.7 billion.

Briefing the newsmen deputy chairman Planning Commission, Dr Mohammad Akram Shaikh said the 3rd Ecnec meeting of the current financial year held with Prime Minister Shaukat Aziz in the chair approved these projects.

Giving details, he said that the meeting approved 25 new projects at a cost of Rs 100.9 billion and infrastructure development was given foremost importance with 17 projects of Rs 62.2 billion followed by 10 social sector projects of Rs 41.4 billion.

These include: infrastructure, transport and communication energy, physical planning and housing, water, social and agriculture sectors besides the cost of three ongoing projects was revised from Rs 3.3 billion to Rs 5.7 billion.

Ongoing projects included ground water recharge of Quetta, Pishn, Mustang and Mangochar valleys of Rs 1.1 billion, extension of Pat Feeder Canal for utilisation of Indus Water in Balochistan 3.9 billion and women health project Sindh of Rs 731.856 million.

The new projects for transport and communication include: rehabilitation, upgradation and conversion of 400 coaches of Rs 3.43 billion, rehabilitation of telecom system and SCO infrastructure damaged due to earthquake of 8th October 2005 of Rs 630 million, dualisation of Lahore Kasur Road Khana to Kasur from 26.65km to 55.00km Length of Rs 2.1 billion, construction of Chaudhry Zahoor Ellahi Shaheed Bridge over River Chenab at Shahaz Pur in District Gujrat of Rs 1.13 billion, construction of dual carriageway from Gujrat to Salam interchange (Motorway) through Mandi Bahaudin (96.4km) of Rs 2.9 billion, improvement of 78.2km sections of National Highway N-45 of Rs 2.4 billion, dualisation of Kasur Ganda Singh Road Section from 55km to 68.10km in district Kasur of Rs 545.274 million, bridge over River Indus connecting Larkana and Khairpur district of Rs 4.8 billion, construction of additional carriageway of Indus Highway (N-55), Sehwan-Khairpur Nathan Shah-Ratodero Section (200km) of Rs 12.3 billion, rehabilitation and reconstruction of 175km of damaged section of national highways in the earthquake affected areas of Rs 5.97 billion.

The Ecnec also approved detailed engineering design and tender documents of Diamer/Basha Dam Project of Rs 1.7 billion. Physical planning and housing sector projects included water supply scheme from Shalman to Landi Kotal, Khyber agency of Rs 579.19 million, construction of eastern and expansion of southern sewage treatment plants, Hyderabad of Rs 915.300 million and preparation for Punjab Irrigated Agriculture Improvement Programme (PIAIP) project of Rs 609 million and Lower Bari Doab Canal Improvement Project (LBDCIP) of Rs 17.20 billion.

The meeting also approved three projects of education sector including reconstruction of middle schools buildings damaged by earthquake in the districts of Abbotabad, Manshera, Batagram, Kohistan and Shangla of NWFP of Rs 2.01 billion, Balochistan Education Support Programme of Rs 1.5 billion and establishment and operation of basic education community school in the country of Rs 7 billion.

Health sector projects included establishment of medical tower at Pakistan Institute of medical Sciences (PIMS), Islamabad of Rs 2.2 billion, construction of 2nd floor Sheikh Zayed Hospital main building of Rs 841.939 million, construction of new medical tower at JPMC Karachi, (expansion of tertiary care) of Rs 3.3 billion and National Maternal, Newborn and Child Health (NMNCH) programme of Rs 19.1 billion.

Higher education project included establishment of medical college, university of Sargodha with a cost of Rs 802.158 million while information technology project of Land Records Management and Information Systems at a cost of Rs 3.1 billion. The meeting also approved a project of agriculture research for Agriculture Development Programme of Rs 3 billion.

http://brecorder.com/index.php?id=536131&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pakistan favours Energy Ring *

NEW DELHI (March 08 2007): Amanullah Khan Jadoon, Minister for Petroleum and Natural Resources said that Pakistan was strong advocate of energy cooperation in South Asia for economic development of the region. He was speaking at the second meeting of Saarc energy ministers here on Wednesday which concluded after adopting the report prepared by the officials of the Saarc member states on Tuesday.

The minister said high economic growth demanded high energy inputs. "There is big challenge ahead of us. We are keen to exploit all opportunities of regional and international cooperation to meet our increasing energy deficit. Cooperation within the Saarc region figures at the top of our regional energy cooperation," he said.

Pakistan was strongly in favour of the concept of Energy Ring as maintained by the 12th Saarc Summit, the minister said and hoped that Saarc Energy Centre established in Pakistan, as approved by the first Saarc energy ministers meeting, would develop into a regional institution of excellence for the initiation, coordination and facilitation of Saarc programmes in energy.

Amanullah Jadoon said Saarc countries could benefit from each other's special achievements and expertise in rural electrification, hydropower, CNG, renewables, coal development and utilisation, natural gas development and distribution, energy efficiency and conservation.

To meet its ever growing energy needs, Pakistan was mobilising all its capacity and resources to increase its indigenous production of energy and was seeking foreign investment and regional cooperation.

The minister said Pakistan was examining three gas import options from the gas rich neighbouring countries and importing LNG in addition to development of indigenous resources. Amanullah Jadoon hoped that the Saarc meeting would set a roadmap for further strengthening regional cooperation in energy sector.

Earlier, in his inaugural address the Indian Union Minister for Power Sushikumar Shinde said the vision of the Saarc charter of promoting the welfare of the people of South Asia would be fulfilled only if Saarc countries were able to give access to commercial energy to their people.

http://brecorder.com/index.php?id=536175&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*KESC chief promises 780 MW power by 2008 *

KARACHI (March 08 2007): Chief Executive Officer (CEO), Karachi Electric Supply Corporation, (KESC) Frank Scherschmidt, has said that power generating capacity will be increased by 780 MW after commissioning of two new upcoming units by July 2008.

Addressing members of Site Association of Industry (SAI) on Wednesday, he said that 220 MW Korangi power units is expected to be commissioned by August 2007 and another 560 MW unit at Bin Qasim is likely to be commissioned by July 2008. He said that besides this, around 80 MW power supply will be added from desalination plant coming up at DHA.

The CEO said that yet another 1,000 nuclear power generating unit coming up at Kanupp is likely to be commissioned by 2015. He said at present KESC getting a total of 2,439 MW powers supply from different sources including Kanupp, Wapda, IPPs, and its own power generating units. Whereas total demand in peak season of summer is expected to be around 2,500 MW which shows a shortfall of round 61 MW. He assured the business community that power shortage would be met and there would be no load shedding during summer in the industrial areas.

The CEO said that the KESC has planned to close down 42-year- old Korangi power generating units, as it has become a junk. He said that intensive repair and maintenance work has been carried out at power generating units that have improved their efficiency.

He said that 900 transformers have been replaced and around 1,000 more will be replaced in the near future, network has been improved to improve transmission and distribution. He said that power demand is increasing at the rate of 8 percent per year in the city.

Whereas during winter power consumption dropped by 600 MW as air-conditioners remain off. Welcoming the guests, Chairman, SAI, Imran Shaukat highlighted the problems faced by industrialists in getting news connections, enhancing load, multiple meters in one premise, B2-ROD meters etc.

http://brecorder.com/index.php?id=536248&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Govt fails to assess quarterly growth *

By Mehtab Haider

ISLAMABAD: The governmentÃ¢â¬â¢s plan to calculate GDP growth on provincial and quarterly basis has hit snags owing to its inability to collect data of all sectors on timely basis, official sources confided to The News.

Pakistan was eyeing to adopt Generalised Data Dissemination System (GDDS) placed by the International Monetary Fund (IMF), but Islamabad failed to move ahead with the desired objectives owing to certain difficulties in shape of different pattern of major crops, which created hindrance in the way of calculating contribution of agriculture sector to GDP growth on quarterly basis.

Ã¢â¬ÅFrankly speaking, almost all sectors of economy are not ready to share their data with the government on such frequent basis,Ã¢â¬Â Ministry of Finance sources said and added the government was unable to accomplish this task which resulted into halting this project without completion.

When Advisor to Ministry of Finance Dr Ashfaque Hassan Khan was contacted for comments, he conceded that there are certain difficulties for finding out GDP growth numbers on quarterly basis as the crop pattern does not allow to release GDP growth figures on quarterly basis. Ã¢â¬ÅWe are finding out ways and means to overcome this difficulty,Ã¢â¬Â he concluded.

However, the sources said the IMF had imposed three conditions for complying with GDDS that included the provision of GDP growth, unemployment ratio, and wages numbers on quarterly basis. Ã¢â¬ÅThe IMF did not give waiver to Pakistan as it did not comply with two conditions,Ã¢â¬Â added the sources.

Pakistan has recently released unemployment figures on quarterly basis after conducting Labour Force Survey (LFS) on all four quarters and it can be compared with apple to apple. But other two conditions in shape of GDP growth and wages data could not be released on quarterly basis in accordance with the international standards, added the sources.

The sources also said that Punjab was still striving hard to calculate its own GDP growth figures and they have offered a lucrative salary package to one of the officer working in National Accounts in the Statistics Division.

Punjab has prepared its numbers related to its contribution in overall GDP growth of the country but it required a technical hand to move towards the desired objective.

All other three provinces, the sources said, have remained unable to move towards calculating their contribution in overall GDP growth of the country.

According to another senior official, when the government started to collect data on quarterly basis, it succeeded in collecting 30 to 35 percent data at the initial stage but this exercise proved futile as this ratio declined significantly in the second quarter mainly because no one was ready to share data frequently.

Ã¢â¬ÅThere are certain sectors of our economy, which send data once in a year that too after several reminders from the government,Ã¢â¬Â said the official and added until and unless the countryÃ¢â¬â¢s tax system gets streamlined the data collection will remain a major problem for policymakers.

http://www.thenews.com.pk/daily_detail.asp?id=45910


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## Neo

I was expecting this delay in GDDS as our data collection system is not ready to process and provide information on growth and results.

Frankly I think it might take a few years to set up a digitalised databank, our infractructure is just not ready for this.

What do guys think?


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## Neo

March 08, 2007 
*Plans to develop chemical industry*

By Ihtashamul Haque

ISLAMABAD, March 7: The government is considering establishing a Ã¢â¬Åfully integrated chemical industry in PakistanÃ¢â¬Â to achieve higher economic growth and lessen foreign dependence on import of a vast range of chemical products.

The ministry of petroleum and natural resources, in partnership with the private sector, has been proposed to undertake an action plan which would cost Rs72 billion to also help achieve self-sufficiency and development of agriculture sector.

Ã¢â¬ÅThere are many proposals currently being looked into to set up a fully integrated chemical industry,Ã¢â¬Â said a source.

However, he said the federal government would have to consult all stakeholders, including the provinces, before finally arriving at any consensus about setting up of a fully integrated chemical industry in the country.

The Pakistan Institute of Development Economics (PIDE) and the Higher Education Commission (HEC) have formulated recommendations to improve the overall economy, including promotion of an effective chemical industry.

Both the organisations believe that local chemical industry should be based both on domestic demand as well as export of surplus production to maintain full capacity utilisation of the plant.

There is also a need to examine optimum utilisation of the gas condensates presently being used as domestic fuel as alternative feed stock for the petro-chemical industry.

In this regard, it was stated that a world scale naphtha cracker requires more than a million tons of naphtha per year which should be made available through restructuring of existing refineries and new refineries.

Basic research should be handled separately by research institutes which have the expertise, resources and facilities to undertake such research.

These institutes be funded adequately to do a high quality job.

Rest of research and development should be focused on applied technology and transfer of technology integrated closely with the national industrial development projects.

Naphtha cracker is said to be critically important for indigenous manufacturing of a large number of chemicals and pharmaceuticals.

This includes manufacturing of rubber, polymers (like PVC LDPE / HDPE, polyester, PET etc.), synthetic fibres (nylon, PSF, PFY, etc.), pharmaceutical raw material (MEG, PAN, LAB, etc).

The inter-action of the local chemical industry and research and development centres must be created to proceed to indigenisation of technology.

The R&D institutes should be supported and strengthened and their linkages with the industry should be systematised.

Increasing the plant capacity, improved process control, reducing operational and maintenance costs, improving power and cooling water usage efficiencies, improving product quality and thus reducing fixed cost have been proposed as long-term measures for establishing a fully integrated chemical industry in the country.

It was also proposed by the PIDE and HEC that the chemical industry and the government should lay more emphasis on technology as an instrument of growth rather just addition of productive capacities and that innovation towards high performance products, concentrated brands and non-dusting brands should also be taken into consideration.

The PIDE and the HEC also proposed measures for effective development of Pharma industry for which human resource development is pre-requisite.

http://www.dawn.com/2007/03/08/ebr3.htm


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## Owais

*FDI gets a new spur into Pakistan *
KARACHI: The foreign investment in Pakistan went up to $2.7934 billion during the first seven months of the current fiscal year. This volume is 69.8 per cent more than it was last year during the same period.

According to State Bank of Pakistan statistics, foreign direct investment worth 2.096 billion came to Pakistan during the period---from July 2006 to January 2007; whereas, during the same period last year, it was 1.64 billion. Thus, the foreign direct investment (FDI) soared up by 68.4 per cent.

In the same period, Pakistani stock markets and other securities attracted $697.4 million as foreign investment.

During January 2007, $300 million came under FDI head, while portfolio investment in Pakistan remained at $77.1 million. 
http://geo.tv/geonews/details.asp?id=3130&param=3


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## Owais

*Fourth port to be announced soon, says Babar Ghouri *
ISLAMABAD: Federal Port and Shipping Minister Babar Ghouri said Wednesday that the fourth port would soon be announced to be built in the country that would be a free port.

Talking to Geo News, the federal minister said the first ship will anchor at Gwadar Port in the third week of the current month; whereas, all roads linking to Gwadar Port would be completed by 2009.

The federal minister said the government has no monopoly over the oil transportation and the government would welcome all private and foreign shipping companies.

Babar Ghouri said by the end of the current year, Karachi Port and Port Qasim would be upgraded. 
http://geo.tv/geonews/details.asp?id=3094&param=3


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## Neo

*Leader Universal developing power plant in Pakistan*

PENANG: Leader Universal Holdings Bhd is developing a US$204mil heavy fuel oil diesel engine power plant in Gujranwala near Lahore in Pakistan, and construction is expected to commence next year. 

Leader managing director Sean H'ng said at a press briefing that the tariff is being finalised now. 

"We have been in negotiations with international banks. Seventy-five percent of project cost amounting to US$153mil would be raised via project finance. 

"We expect to commence construction of the power plant next year. The target date for commercial operation is either in late 2009 or early 2010," he said. 

H'ng said the power plant project was a joint-venture project undertaken with Gulshan Spinning Mills Limited, a member of the Gulistan group of companies in Pakistan. 

The Gulistan group is one of the three large industrial business houses invited by the Government of Pakistan to fast track the development of new power generation plants, as the country needs an additional 5000 megawatts of power by year 2010. 

"A company, Gujranwala Energy Limited, has been established to undertake the project. 

"Leader holds a 49% equity stake in the company, while our partner holds the remaining 51%. 

"The power generated will be sold to the National Transmission and Dispatch Company of the Pakistan government. 

"The tenure of the power purchase agreement, in the form of 'take or pay' agreement, is for 25 years. 

"The 'take or pay' agreement means that the Pakistan government will pay us regardless of whether they require us to generate electricity from the power plant. 

"The estimated revenue from the project is about US$160mil per annum," he said. 

http://biz.thestar.com.my/news/story.asp?file=/2007/3/8/business/20070308183927&sec=business


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## Janbaz

*Trade deficit touches $8.8bn *

By Israr Khan

ISLAMABAD: Pakistan&#8217;s trade deficit has gone up sharply to a new record high of $8.89 billion during the first eight months of the current fiscal year, which is about 18.47 percent higher than the corresponding period of last fiscal ($5.604 billion), The Federal Bureau of Statistics (FBS) reported on Thursday. 

During July-February 2006-07, Pakistan&#8217;s exports totalled $10.90 billion and imports $19.79 billion against $10.5 billion and $18 billion, respectively recorded during the same period last year. 

The provisional FBS data released reveal that during the period under review, Pakistan economy pulled in 9.95 percent more imports over the same period last fiscal, while, its exports rose only by 3.86 percent. Each month, the import growth exceeds exports steadily widening the trade gap. 

It is important to note that previously, in its trade policy for the fiscal 2006-07, the government targeted imports at $28 billion and exports $18.6 billion with a trade deficit of $9.4 billion.

The current trend of fast growth in imports and slow pace of exports indicates that the country would be unable to meet export target and surpass import target resulting in higher than expected trade gap.

In the first half of current fiscal, the country achieved 48.63 percent of exports and 70.70 percent of imports target. The huge import pressure and low exports growth envisages that by the end this fiscal the trade deficit would exceed the set target of $9.4 billion. It is pertinent to note that during the last fiscal 2005-06, the government had missed its exports target of $17 billion by a margin of $531 million.

The World Bank last week has also shown concern over Pakistan&#8217;s soaring trade deficit and cautioned, if not capped it may hurt sustainability of economic growth.

John Wall, former country director World Bank suggested Pakistan to take appropriate measures to augment its exports to achieve sustainability in economic growth.

Though trade deficit is considered as a good omen for growing economy (as our economic managers think) yet in Pakistan&#8217;s case John Wall said it is very large and requires immediate attention. 

During February 2007, the local goods worth $1.29 billion have been exported, recording an increase of 5.45 percent against exports of $ 1.23 billion in the same month last year.

Imports have been recorded at $2.57 billion during February 2007, an increase of 16.37 percent as compared to $1.21 billion registered in February 2006. 

However, comparing exports of February 2007 with the previous month, the bulletin reveals an increase of 8.24 percent as against exports of the previous month, which stood at $1.19 billion. While, the imports increased by 10.39 percent from $2.33 billion in January 2006.

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=46061


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## Janbaz

Bad stuff, trade deficit hikes are not cool. 18.47&#37; increase is just too much, better strategies should be initiated. If this goes on our growing economy will bear huge debts in the future? How can all this be balanced in harmony with our economic development?


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## Owais

*Sino-Pak trade crosses $5 billion mark in 2006 *


BEIJING (updated on: March 10, 2007, 01:15 PST): The Sino-Pak trade crossed the $5 billion mark in the year 2006. According to figures provided by China Customs to Pakistan Mission here, Pakistan's exports to China registered a 21 per cent increase from $832 million in 2005 to over $1 billion in 2006.

The China's export to Pakistan also increased by 24 percent, from $3.42 billion in 2005 to $4.24 billion in 2006.

The major items that contributed to the export from Pakistan included Fish Product 18 percent , Leather and Leather goods 20 percent, Textile, Cotton and Cotton products 22 percent, plastic and articles 63 percent, ore and minerals 20 percent, Sports goods 39 percent, while copper registered 53 percent increase.

According to Commercial Counsellor, one of the reasons of the quantum leap in the trade between China and Pakistan was the successful implementation of Early Harvest Programme by the two countries.

brecorder.com


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## Owais

*Minfal to facilitate $2 billion rice exports *

KARACHI (March 10 2007): The Ministry of Food, Agriculture and Livestock (Minfal) has announced concrete measures, including an awareness campaign, to facilitate the achievement of $2 billion rice export target.

The media campaign is soon going to be launched to create awareness among farmers and all other stakeholders to get better yield and quality for export of cotton and rice and to earn more foreign exchange.

Minfal Minister Sikandar Hayat Khan Bosan during a meeting with members of Rice Exporters Association of Pakistan (Reap) announced allocation of required funds for the media campaign.

Mehboob Ahmed, Reap Managing Committee member briefed the minister about the issues regarding rice sowing, harvesting, milling, trading and exporting. He said that the Reap performance remained exceptionally well as the country's rice export crossed $1 billion mark during last fiscal year. New markets were explored and now the Pakistan's rice is being exported all over the world. The defunct Rice Export Corporation of Pakistan (RECP) had faced huge losses. However the Reap members paid millions of rupees to government on account of taxes.

He said that the Reap members had created 'export culture' in the country, especially in the villages. New opportunities were created for business and jobs in the country. The rice exporters also provided support to other related industries as the rice is packed in bags made of jute and cloth. "Indirectly, we are also exporting cloth and jute-made products and earn more foreign exchange for the country", he added.

Mehboob, who is also a leading rice exporter, said that the country's rice production was badly effected due to some reasons including poor shelling and milling, defective harvesting, deteriorating quality of seed and cultivation of different un-approved varieties of seeds.

He suggested that both rice research institutes should be run under private-public partnership. He said that absence of consistency in brand development was one of the major reasons, which was badly effecting rice exports. "The rice exporters develop a brand of rice and when it becomes popular the cultivation of the branded rice is ended", he said, and added that this was the major reason that Pakistani rice could not develop any permanent brand of rice in the international market.

The minister assured the rice exporters that the government would take all necessary steps to resolve these issues. He urged the exporters to ensure quality standard of rice to maximise exports from the country.

The minister said that meetings with the officials of Research Council and all stakeholders of rice would be called in next few days in Islamabad and Karachi to consider progress in research work on farming, harvesting, transportation, availability of quality seed and milling of rice in order to resolve the issues of all stakeholders, as the government intends to evolve a system where in all stakeholders would remain satisfied. Rice Commissioner Inayatullah Khan, Reap Chairman Abdul Aziz Maniya and other leading rice exporters were also present in the meeting.
http://brecorder.com/index.php?id=536829&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Gawadar port to be functional by March 20: Ghauri *
GWADAR (March 10 2007): Federal Minister for Ports and Shipping Babar Ghauri on Friday said the Gwadar Deep Sea Port would be functional from March 20. Talking to journalists during his visit here, he said on March 19, 2007 a meeting of the federal cabinet would be held at Gwadar with Prime Minister Shaukat Aziz in the chair.

He said that on March 20, 2007 after formal inauguration, the Gwadar Port would be functional. He said that a PNSC ship Sibi carrying cargo from Western Africa would anchor at the port.
http://brecorder.com/index.php?id=536888&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*July-February trade deficit stands at $8.89 billion: exports post 3.86 percent growth *

ISLAMABAD (March 09 2007): The country's exports have posted $406 million or 3.86 percent growth while trade deficit has been $8.899 billion during the first eight months (July-February) of the current fiscal against the corresponding period last year.

The provisional foreign trade figures released by the Statistics Division here on Thursday show that exports attracted $10. 907 billion as compared to $10.501 billion of the same period last year indicating $406 million increase or 3.86 per cent growth.

Imports, which are on the high side for the last one-year, showed a growth of 9.95 per cent to $19.797 billion against $18.006 billion, adding $1.97 billion in the total volume against the corresponding period of last fiscal. The data indicates that trade deficit has increased by 18.47 per cent to $8.899 billion as compared to $7.505 billion during this period.

The comparison of February with January shows 8.24 per cent growth in exports to $1.293 billion from $1.197 billion while imports took away $2.572 billion from $2.330 billion, showing an increase of 10.4 per cent. This indicates trade deficit of 12.67 per cent from $1.133 billion to $1.276 billion.

However, exports improved by 5.46 per cent to $1.296 billion from $1.229 billion when data of February is compared with January, while imports increased by 16.37 per cent.

The soaring oil prices import of machinery for textile and power sector and mobile devices, besides raw material took the trade deficit to unprecedented level. Official sources told Business Recorder that the authorities had discussed a long- term exports policy at a meeting with Prime Minister Shaukat Aziz a couple of days ago wherein exports target of 15 per cent of the GDP is thought to be achieved after investment in the key sectors.

Asked how much investment is required to achieve $45 billion exports mark, one federal minister said that this is yet to be finalised. But according to him, a fundamental change can be seen in government's thinking in this regard. " It is good that exports are increasing but now we have to improve our quality and move forward," he added.

Deputy Chairman Planning Commission, Dr Akram Sheikh has prepared a long-term export policy but without consulting the Secretary of the Planning Division. "We have to look into the mechanism how exports would grow by 15 per cent of the GDP and how much investment is required in different sectors," an official quoted Prime Minister Aziz as saying in the meeting on exports strategy.

http://brecorder.com/index.php?id=536485&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*PPL plans to add new reserves in 10 years *

LAHORE (March 09 2007): Pakistan Petroleum Limited (PPL) has chalked out a 10-year strategic plan encompassing various spheres, including exploration of new wells and developing the existing exploration/production facilities with a view to improving financial health of the company, during 2007-2016-17.

PPL authorities believe the successful implementation of the plan will add new reserves of 9.079 TSCF of gas and gas equivalent during the stratplan period, with the expected remaining reserves of about 7.554 TSCF at the end of the plan period.

According to information made available to Business Recorder, the company has asked all its operating departments to provide financial data for incorporating in financial projections for the envisioned strategic plan. The proposed plan would be presented before the board of directors of the company for approval expected to meet in April this year.

After approval of the board, work to implement the plan will kick off that includes vigorous exploration and development programmes and addition of new oil and gas reserves.

Under the exploration programme, the company over the next 10 years will acquire over 18,886 line km 2D and 10,740 square km 3D seismic, both in existing and new areas. The company will also drill 100 exploratory (50 operated and 50 non-operated), including six offshore wells, with expected discoveries in 27 areas and acquisition of around 2.2 TSCF reserves.

Under the development programme, it plans drilling 69 development wells in operated areas and 143 wells in non-operated areas; work over 42 wells in operated areas and 27 wells in non-operated areas.

The Company's exploration strategy is aimed at replenishing and if possible increasing its existing petroleum reserves through continuation of its vigorous exploration efforts, both within and outside the country. PPL also plans acquisition of new areas to maintain a manageable portfolio of about 20 to 25 exploration areas at any point of time (10-15 each in operated and non-operated areas). Drilling 100 exploration wells, of which 50 are planned as operated wells in the next 10 years, is also part of the strategy.

PPL further envisages continuing with the evaluation of international new business opportunities, both in the direction of new venture exploration, as well as buying undeveloped and developed reserves of around 2.2 TSCF, which will enable it to secure additional reserves, enabling the country to earn valuable foreign exchange.

The company's Production and Development Strategy is meant for optimising reservoir recovery in most efficient manner by using latest technological advancements to achieve operational excellence. As a result of exploration efforts, 27 new oil and gas fields are expected to be discovered. It is planned to bring the oil discoveries on-stream within 18-24 months and the gas discoveries within 24-36 months. It is further planned to drill 212 development wells and 69 workovers during next 10 years.

To maintain the objective of maximum gas production from the Sui Gas Field, the largest gas producer in the country, the strategy to be implemented for the plan period includes:

Filling/workover of seven wells, two vertical and five horizontal wells in Sui Main Limestone (SML) and Sui Upper Limestone (SUL) formation; two vertical wells in Pab formation; three development wells; and workover of 21 wells. Besides other initiatives, due to high pressures and different composition of Pab gas, an independent 16" diameter pipeline is proposed to be laid parallel to the existing SML Western Gas Gathering Main for Pab gas.

Procurement is planned in the year 2009-10 and installation / commissioning in the year 2010-11. Kandhkot gas field is the second largest gas production site of PPL and contributes 13 percent to its total gas production.

To efficiently drain the reserves by the expiry of extended lease in 2022, efforts will be made to increase current gas production from 118 MMscfd (average) to 200 MMscfd for the Plan Period. Drilling of three horizontal wells in SML / SUL formation; and work over of 12 wells.

To have 100 percent standby capacity of the Dehydration Plant, the company, according to the strategy, plans installation of an additional unit of 130 MMscfd capacity. The unit will be commissioned by the year 2008-2009.

To enhance gas sales to 200 MMSCFD a purification plan of 110 MMSCFD capacity of raw natural gas will be installed for which the Front End Engineering Design (FEED) will be completed in 2007-08.

One Development Well (MAZ Well-4) during 2007-08; workover of one well (Well - 3) in 2007-08 to rectify the downhole leakage problem, while two workovers are also planned for Mazarani Field.

Similarly, at Qadirpur Field, drilling of 8 development wells; workover of three wells are confirmed while nine workovers are anticipated. For Miano Gas Field, drilling of two development wells, three workovers are anticipated while filed compression will be completed in 2009-10.

Meanwhile, drilling and workovers of wells and other activities are also to be carried out at Sawan Gas Field, Block-22, Tal Block, under the envisioned strategy.

Under the plan, the company will lay emphasis on human resource and information technology development to effectively manage the business growth in a more regulated and competitive corporate environment.

http://brecorder.com/index.php?id=536562&currPageNo=1&query=&search=&term=&supDate=


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## Neo

March 10, 2007 
*Chinese firm keen to invest in minerals*

ISLAMABAD, March 9: President of MCC Tongsin Resources of China Zou Jianhui has expressed the desire to further invest in mineral projects of Pakistan.

Mr Jianhui who called on Federal Minister for Petroleum and Natural Resources Amanullah Khan Jadoon here on Friday informed the latter that China Metallurgical Construction Company (MCC) has set up a subsidiary company - MCC Tongsin Resources, which would participate in metallic and non-metallic projects in Pakistan to be financed by the China Development Bank.

He said that MCC Tongsin Resources and Pakistan had recently signed a draft MoU in Beijing to cooperate in the mineral sector, which would be finalised during the forthcoming visit of Prime Minister Shaukat Aziz to China. Under the agreement a consortium comprising MCC tongsin Resources, China Development Bank and Pakistan would be formed.

Welcoming Mr Jianhui, the minister said that Pakistan and China enjoyed historic friendly relations, which had strengthened and flourished with the passage of time.

He said that there existed a lot of investment opportunities for Chinese companies in mining of huge deposits of iron ore, granite, lignite and precious stones found in various parts of the country. He said that Tongsin Resources`s investment in the mineral projects would be warmly welcomed.

Senior Joint Secretary (Development) Jehangir Khan and other officials of the ministry were also present in the meeting. Ends.

http://www.dawn.com/2007/03/10/ebr5.htm


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## Neo

Saturday, March 10, 2007 

*Trade deficit in services sector fell by 63.65% in Jan*

By Tanveer Ahmed 

KARACHI: The trade deficit in services decreased by 63.65 percent to $172.66 million during the month of January in the current financial year, as against $474.93 million in the corresponding month of the previous year.

The export of services in January 2006-07 registered a phenomenal growth of almost 160 percent to $517.46 million, as compared with $199.21 million of services exported during the same month of the financial year 2005-06.

However, import of services depicted a marginal increase of 2.37 percent during the month under review to $690.12 million, as compared with $674.14 million worth of services imported in the corresponding month of the previous year, the latest statistics of external trade of services showed on Friday.

The export of services in January recorded an unprecedented increase of 108 percent against the preceding month of December, which earned $248.92 million worth of exports. 

The import dipped by almost 10 percent in January as compared with December, when $763.56 million worth of services were imported.

Based on the strong performance of exports in January, the deficit in services trade rose only by five percent in the July-January period of the current financial year, as compared with the same period of the previous year. The deficit stood at $2.54 billion in the period under review, over $2.42 billion of the corresponding period of the previous year.

The export of services in the first seven months of this financial year stood at $2.30 billion, as against $2.23 billion of the same period of the previous year, registering a growth of 3.16 percent.

The import in the said period also grew by 4.07 percent to $4.85 billion, over $ 4.66 billion worth of imports in the same period of the previous year.

The strong performance of export of services in January minimized the negative impact of the poor performance of this sector in December, when it registered a substantial fall.

Analysts said that although, the performance of export was remarkable in January, there is a need to sustain this trend in the coming months.

Ã¢â¬ÅThe export performance was higher compared with previous months, however it is still below the huge potential that exists in this sector for export,Ã¢â¬Â Samiullah Tariq, an analyst at Invescap noted.

He believed that as major investments have been pouring in the banking and communication sectors, especially IT call centres, further growth in exports is expected.

The share of country in world services sector has remained around 0.23 percent over the years.

The countryÃ¢â¬â¢s services export are confronted with a number of issues, which obstructed to tap the vast potential of the export in this sector like quality, acceptance of professional credentials, visa problems and the most importantly the image problem, which the country has been confronted with since long.

http://www.dailytimes.com.pk/default.asp?page=2007\03\10\story_10-3-2007_pg5_1


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## Neo

Saturday, March 10, 2007 

*Report on PakistanÃ¢â¬â¢s competitiveness on Monday*

ISLAMABAD: The first ever report on the State of Pakistan's Competitiveness will be launched here on March 12.

Official sources told APP here on Friday that the report has been prepared by the Competitiveness Support Fund (CSF), a joint initiative of the Ministry of Finance, Government of Pakistan and the U.S. Agency for International Development (USAID).

The economists and industry experts, both in and outside Pakistan, have been eagerly waiting for such a document, which can put light on Pakistan's competitiveness and the report is expected to identify the current strengths and weaknesses in Pakistan's competitiveness standing, they added.

Official sources believed that the report would be highlighting areas where Pakistan has improved as well as lagged behind in the nine pillars of the World Economic Forum, namely; institutions, infrastructure, macro economy, health and primary education, higher education and training, market efficiency, technological readiness, business sophistication and innovation. The report also compares Pakistan's progress in terms of other countries in the region.

The World Economic Forum recognised the economic achievements of the Government of Pakistan in its latest Global Competitiveness Report, in which Pakistan ranked 66th on the Business Competitiveness Index, showing its market efficiency.

In the 2006-2007 Global Competitiveness Report, it ranked 91st out of 125 countries on the Global Competitiveness Index that includes governance, health and education.

Sources further said that the ceremony would be attended by cabinet members, corporate and business leaders, legislators, senior civil servants and intellectuals from academia and research institutes. 

This will also provide a platform to address the competitiveness issues to the key stakeholders in Pakistan, the sources added. 

http://www.dailytimes.com.pk/default.asp?page=2007\03\10\story_10-3-2007_pg5_2


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## Neo

Saturday, March 10, 2007 

*Export Plan Pakistan: Rs 45b exports targeted by 2013, says official*

By Sajid Chaudhry

ISLAMABAD: Planning and Development Commission (P&D) Deputy Chairman Dr Akram Sheikh has said that the Export Plan Pakistan aims at enhancing current exports-to-GDP ratio from 13% to 15% of GDP or $16.5 billion to $45 billion by 2013. 

He said that the Export Plan Pakistan would help develop the countryÃ¢â¬â¢s export base to diversify and be competitive. This would also provide a sound base for the development of exports in short, medium and long-term.

Akram Sheikh, head of the committee which finalized the Export Plan Pakistan, told Daily Times that Prime Minister Shaukat Aziz has approved the Export Plan Pakistan which would provide a short, medium and long-term road map for enhancing the countryÃ¢â¬â¢s exports from $16.5 billion to $45 billion during 2006-2013, through diversification and achieving competitiveness.

Prime Minister Shaukat Aziz would assign, within next two weeks, relevant ministries targets for implementation of Export Plan Pakistan 2006-2013, which would be implemented in true spirit.

Talking to this scribe, Dr Akram Sheikh said that he has utilised all of his 45-year experience in planning and development to finalise the plan. He hoped that this plan would ensure availability of legal and administrative infrastructure for rapid export growth.

The PM has approved all measures and incentives proposed in the draft plan which would help the country to achieve its desired results. About the implementation of the export plan, he informed that the PM would assign individual assignments to the relevant ministries and divisions within next two weeks and would also fix deadlines for implementation of targets.

He informed that along with existing export base, the plan would ensure development of other sectors, where Pakistan has competitive edge over the competitors. This would diversify export base through development of non-traditional products along with capacity enhancement of existing export sectors.

In the Export Plan Pakistan, it has been estimated that at present, the GDP stands at $128.90 billion with export to GDP ration of 13%, which will be growing and is expected to reach at $288.70 billion with exports to GDP ration of 15% by year 2013.

The exports are to be enhanced with Annual Compound Growth Rate (ACGR) percentages under the Export Plan for Pakistan 2006-2013.

The textile and garment sectorÃ¢â¬â¢s exports are projected to increase from $9.98 billion in the fiscal year 2006 to $24.36 billion by fiscal year 2013 with ACGR 14% per annum. Rice exports, which stand at present at $1.11 billion, would be enhanced to $2.5 billion by year 2013, with annual ACGR of 12%.

Leather and leather products had fetched $1.09 billion last fiscal year, which would be increased to $2.26 billion with annual ACGR of 11%. The exports of engineering sector, which at present stand at $0.21 billion, would be enhanced to $2.40 billion with ACGR of 42% by year 2013.

Fruits and vegetables would be enhanced from $140 million to $370 million with ACGR of 15%, meat and meat preparations from $20 million to $100 million with 26% ACGR, fish and fish preparations from $200 million to $990 million with 26% ACGR, carpets, rugs and tapestry $250 million to $370 million with 6% ACGR, sports goods from $350 million to $920 million with ACGR of 15%, surgical instruments from $160 million to $420 million with 15% ACGR, cutlery from $30 million to $110 million with 20% ACGR, furniture from $10 million to 500 million with annual growth rate of 75%, pharmaceutical products from 80 million to 290 million with growth rate of 20%, marble and granite from $20 million to 680 million with growth rate of 66% and gems and jewelry $20 million to $690 million with 12% ACGR and other products including services and defence exports from $2.89 million to $6.32 million with 12% ACGR.

http://www.dailytimes.com.pk/default.asp?page=2007\03\10\story_10-3-2007_pg5_3


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## Neo

Saturday, March 10, 2007 

*Ã¢â¬ËPunjab to be hub of Chinese investmentÃ¢â¬â¢*

LAHORE: Senior Advisor, Nanjing Municipal people's government, Nanjing City, Jiangsu, Miao Helin, has said that Punjab will become a hub of Chinese investment in the near future, as both the governments of Jiangsu province and Punjab had already signed an MoU to this regard during Chief Minister Chaudhry Pervaiz Ellahi's visit to Jiangsu.

Miao Helin expressed these views while speaking at Lahore Chamber of Commerce and Industry on Friday. LCCI President Shahid Hassan Sheikh, Senior Vice President Yaqoob Tahir Izhar, Vice-President Mubasher Sheikh and former Senior Vice-President Sohail Lashari also spoke on the occasion.

Miao Helin said that Jiangsu, for being the fastest growing province of China, has a large number of opportunities for Pakistani businessmen who can initiate joint ventures in various sectors with their Chinese counterparts. He said that textile equipment, appliances manufacture and agriculture sector are potential areas, where businessmen from both the sides can join hands for the rapid economic growth of Pakistan and China. 

http://www.dailytimes.com.pk/default.asp?page=2007\03\10\story_10-3-2007_pg5_9


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## Neo

*US Congressional bill may impact Iran-Pak-India gas pipeline *
Saturday March 10, 2007 

WASHINGTON: A bill has been introduced in the US Congress aimed at enforcing punitive action against companies doing business with Iran that may impact Indo-US nuclear pact and create obstacles for Iran-Pakistan-India gas pipeline. 
Chairperson of the US House Foreign Affairs Committee Tom Lantos introduced the Iran Counter Proliferation Act of 2007 yesterday that will plug loopholes on allowing the US administration to waive sanctions and get tough with companies doing business with Iran. 

The Iran Counter-Proliferation Act (H.R. 1400) will "exponentially increase economic pressure on Iran and empower our diplomatic efforts by strengthening the Iran Sanctions Act," Lantos said. 

"Until now, by shamelessly exploiting its waiver authority and other flexibility in the law, the Executive Branch has never sanctioned any foreign oil company which invested in Iran. Those halcyon days for the oil industry are over," the California Democrat said. 

The proposed legislation will also prohibit nuclear cooperation between the US and any country that provides nuclear assistance to Iran. 

It will also increase economic pressure on Iran by expanding the types of investment subject to sanctions, severely limiting the export of US items to Iran, ending all imports from Iran, and preventing US subsidiaries of foreign oil companies that invest in Iran`s oil sector from receiving US tax benefits for oil and gas exploration. 

"Iran`s theocracy must understand that it cannot pursue a nuclear weapons programme without jeopardising the political and economic future of the Iranian state," Chairman Lantos said in a statement. 

http://www.paktribune.com/news/index.shtml?171449


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## Neo

*Alarm bells over economyÃ¢â¬â¢s slide *
Saturday March 10, 2007 

KARACHI: After some dire warnings by economic experts, the major donor agencies ÃÂ± IMF and World Bank Ã¢â¬â too have sounded alarm bells over the pathetic state of PakistanÃ¢â¬â¢s economy during the current fiscal year. 
John Wall, the World BankÃ¢â¬â¢s country director, has very recently showed his concern over the burgeoning trade deficit and dwindling textile exports. 

John Wall has cautioned the Pakistan government to take appropriate measures to augment its exports to achieve sustainability in economic growth. He further said that PakistanÃ¢â¬â¢s trade deficit is very large and if not capped it will hurt the nationÃ¢â¬â¢s economy. 

While pointing to the downslide in textile exports, which remains an area of chief concern, he also advised putting in place a tight monetary policy to arrest the ever-rising inflation. 

According to the figures released by the Federal Bureau of Statistics (FBS) on Thursday, trade deficit has climbed to $8.899 billion during the first eight months (July-February) of the current fiscal against the corresponding period of last year. 

The provisional foreign trade figures released by the Statistics Division here on Thursday show that exports attracted $10.907 billion as compared to $10.501 billion in the same period last year, indicating $406 million increase or 3.86 per cent growth. 

As compared to a meager increase in exports, the imports, which were on the high side for the last one year, showed even a higher graph as the total volume was worth $19.797 billion, a jump of $1.97 billion or 9.95 per cent over last yearÃ¢â¬â¢s total of $18.006 billion 

The data indicates that trade deficit has increased by 18.47 per cent to $8.899 billion as compared to $7.505 billion during this period. 

The economic experts have blamed free import-oriented policies of the present government for causing the worst-ever trade deficit in PakistanÃ¢â¬â¢s 58-year history. 

Ã¢â¬ÅEven bread, cakes, fish, beef, hotdogs, butter, cheese, fruits, cereals, canned foods, all kinds of general merchandise, footwear, and stationery items are being imported into the country and in return we are selling our precious assets like PTCL, PSO, Steel Mills, Railway land, refineries and now the national carrier ÃÂ± PIA - is being destroyed to sell it cheap,Ã¢â¬Â said Chairman, Union of Small and Medium Enterprises, Zulfikar Thaver. 

He said that it is very disturbing and shameful to see that even bread and cakes are being imported in bulk from various countries and in view of the alarming increase in luxury and non-productive imports the trade deficit has risen to 18.47 per cent and if this trend is not discouraged, the local industries would have a very serious setback. 

Experts wonder where the economy is headed, and lament that even after witnessing the disturbing trends the government has failed to come out with any concrete policy to arrest the declining textile exports and mounting imports in order to minimize trade deficit. 

The government had given a task to the Planning Commission to formulate a plan to boost the countryÃ¢â¬â¢s exports to $45 billion in next five years. But even after a lapse of few months the Deputy Chairman Planning Commission, Dr Akram Shaikh, is yet to come out with any blueprint to give exports the much-needed shot in the arm. 

The newly-established Trade Development Authority (TDAP) too has miserably failed to make any positive contribution as much-touted export promotion activities and market research at the organization have yet to bear visible fruit. 

The performance of our trade negotiators posted in European Union, WTO, USA, etc. is often called into question. 

EU has refused to sign a free trade agreement with Pakistan on a vague reason. 

Is it not high time Pakistan reviewed the performance of its trade negotiators posted in the strategically important world capitals? 

http://www.paktribune.com/news/index.shtml?171474


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## Owais

*FDI may cross $6 billion by year-end: Advisor *

LAHORE (March 11 2007): Dr Salman Shah, Advisor to Prime Minister on Finance and Revenue has said that foreign direct investment (FDI) that was not more than 300 million dollars in 1999 is likely to cross 6 billion dollars by the end of this financial year.

While addressing the members of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) zonal office here on Saturday, he said that Pakistan's economy size has increased more than double from 60 billion dollars in 1998 to 140 billion dollars. Our economy is bigger than the Egypt, Taiwan, Saudi Arabia, UAE, Iran and Middle East despite the fact that Middle Eastern countries have oil reserves.

He said the construction of mega dams is inevitable for maintaining the present growth rate. The economy is growing at an average rate of 7 percent for the last five years and hydel electricity is must for the sustainability of economic growth. "We are trying to bring down fiscal deficit from four to three and half percent" he maintained. He said that only cheap electricity could slash the cost of doing business to compete the international market.

Dr Salman urged the businessmen to tap the potential of 700 billion dollars Chinese market and free trade agreement between the two countries could facilitate enhancing exports from Pakistan. 'Pakistan government is setting up investment companies having equity share ratio of 60:40, through joint ventures with the Chinese counterparts under five-year economic co-operation plan and Chinese would run these companies', he added.

Highlighting salient features of the economy, the advisor said the rate of interest on Pakistan Investment Bond has declined by half percent for the first time. However, the food inflation that is about 9 percent needs to be reduced which could only be possible through strengthening supply side. He stressed the need for expanding tax base and said that Pakistan is the only country in the region with lowest tax to GDP ratio of 10 percent and needs further improvement in it.

Talking about potential in infrastructure sector, Dr Salman Shah said that under North Transport Corridor project, infrastructure worth 6 billion dollars including roads, motorways and ports would be completed by the Chinese firms, who have asked us to identify the locations for setting up industrial parks and industrial zones along the motorways which would provide access from Karachi to Khyber.

According to conservative estimates, an amount of Rs one trillion would be spent on infrastructure projects, he added. He also urged the local firms to come forward to exploit the existing potential. About the financial sector, the advisor said that foreign banks are buying local banks and setting up hundreds of new branches like Standard Chartered and ABN Amro etc. Similarly, a Chinese company has purchased Paktel while another wanted to buy PTCL. This reflects the potential that exists in Pakistan, he added.

The government's objective is to focus on investment in education and health sectors. The spending on education including technical and vocational has been increased to Rs 600-700 billion. He invited the private sector to invest in this sector of vital importance. He said that Pakistan, blessed with opportunities, is witnessing rapid growth in its economy.

The demographic situation in Pakistan ensure sustainability of demand for which private sector should invest to harness the potential, he maintained. Our growth is determined by the local market and if we start increasing exports, the growth rate would go up in double digit. The economic growth is a strategy for poverty alleviation and private sector, which is main source of creating jobs, should come forward to play its role in this regard, Dr Salman said.

About the cement and other items' price hike, he said that Monopoly Control Authority is responsible to ensure that the industry may not indulge in cartelisation but it has no power to impose heavy penalties to check manipulation. Responding to newsmen in this regard, he maintained that competition commission is being set up in place of Monopoly Control Authority so that business malpractice's should be checked.

Earlier, speaking on the occasion, President FPCCI, Tanveer Ahmad Sheikh expressed his concern over rising mark-up rate and said that the present mark up has made our products uncompetitive in the world market.

He urged upon the government to take measures for lessening the cost of doing business and said the government must announce some incentives and provide level playing field to the business community.

Meanwhile talking to newsmen, he said that the removal of chief justice of Pakistan would not affect the foreign direct investment and maintained that the foreigners would see that everything in the country is being done in principle.
http://brecorder.com/index.php?id=537218&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*PPIB plans 10 projects to produce 2255MW electricity *


ISLAMABAD (updated on: March 10, 2007, 21:10 PST): The Private Power and Infrastructure Board (PPIB) is planning to commission ten new power projects to private sector which will produce 2255 MW electricity at a cost of $1.691 billion.

According to the PPIB sources, the process to commission these projects is expected to complete in 2007-08 as the processing of these have already been started by the Board.

Giving details, they said among the ten power projects being built by private companies included Orient power project which build the plant at Baloki which will produce 225 MW electricity, at a cost of $169 million.

The other project which will cost $169 million and produce 225 MW electricity will be located at Muridke, Punjab and would be established by the Muridke (Sapphire) power project.

The sources said the third project, to be based in Rawalpindi would produce 150 MW power at a cost of $113 million. Attock General Power Project Company will set up this plant.

Bhikki (Halmore) Power Project Company will set up 225 MW power project at Bhikki which will cost US$169 million. The project is expected to start by December 2008.

The sources said Warda Power Project Company will build this project in the suburb of Lahore Metropolitan at a cost of $150 million. The plant will produce 200 MW electricity to cater local needs.

Another power project by Nishat Chunian a known private company in the textile sector will build a plant of 200 MW at a cost of $150 million in Lahore.

Shiekhupura (Atlas) Power Project will set up the plant between Shiekhupura and Lahore and will produce 200 MW electricity at a cost of $150 million. Gujranwala (Gulistan) power project which will set up the plant in the city. The power plant will produce 200 MW electricity. The project will cost $150 million, the sources said.

PPIB sources said other project will be built at Sahiwal by Sahiwal (Saif) power project which will produce 225 MW and at a cost of $169 million.

The sources said another project is to expand existing IPPs near Lahore and will enhance 405 MW power. The expansion project will cost $304 million.

About the facilities offered to the private sector the officials said that the PPIB has provided "One Window "facility to private sector investors in matter concerning establishing power projects and related infrastructure.

Giving the details of the facilities, the officials said that these matters includes negotiation of the implementation Agreement (IA), provide support to the power purchaser and fuel supplier while gas supply agreement (GSA), other related agreements.

The PPIB will play a role of liaison with the concerned local and international agencies for facilitating and expediting progress of private sector power projects.

brecorder.com


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## Owais

*Pakistani banks to start operations in China soon: Kasuri *

LAHORE (March 11 2007): Pakistani banks will soon start their operations in China and Chinese banks would have presence in Pakistan, while China also expressed readiness for setting up economic zones and Information Technology (IT) parks in Pakistan.

Foreign Minister Khurshid Mehmood Kasuri stated this while speaking at a reception hosted by the Ministry of Foreign Affairs in honour of Consular Corps, here at State Guest House, on Saturday. Honorary Consulates of different countries as well as US Principal Officer, Bryn Hunt attended the reception.

Khurshid Kasuri maintained that Pakistan is committed to developing and strengthening trade and economic relations with the rest of the World, both bilaterally and multilaterally. 'Pakistan has played a pioneering role in the development of regional agreements like Economic Co-operation Organisation (ECO), Saarc and Developing-8 (D-8). We have joined Asean Regional Forum (ARF) and are working towards membership of some of the other regional frameworks or economic co-operation,' he said.

Kasuri further said Pakistan's independent position on issues of international importance like Lebanon, Iraq, the Iranian nuclear issue, Iran-Pakistan-India Gas Pipeline, Pakistan's membership of the Asean Regional Forum, increasing engagement with the Shanghai Co-operation Organisation and the conduct and management of difficult relationships with Afghanistan and India, are all signs of an active and independent foreign policy. So far, he said Pakistan has skillfully navigated through these turbulent times. 'We have managed to maintain and improve our relations with all the major powers even though their interests may not always coincide with ours. However, given the dynamics of the international system, we are continuously examining our options to protect and promote our national interests in the face of developments that pose new challenges and our policy of proactive engagement in a changing world will remain unwavering,' Kasuri said.

Talking about Pak-US relations, he said since 9/11, Pak-US relations have undergone a profound change. 'The engagement today is both deeper and broader, going well beyond counter-terrorism co-operation. Whenever Pakistan and the US have worked together, both countries and the world have benefited. Whenever Pakistan-US relations have frayed, the interests of both countries have been hurt (such as in the post-Soviet Afghanistan),' he said. "We believe Pak-US relationship is vital to a durable structure of peace, stability, economic growth and prosperity at regional and international levels."

Answering a question, Kasuri said legislation made by the US House of Representative is a matter of concern for the National Assembly Defence Committee and public circles. However, he hoped that US Senate will not approve the law being against the US interests. "It was in the US interests that feelings of lacking trust about US should not arise among the Pakistani people," he said.

Answering another question, he said Pakistan wants "negotiated solution" of Iranian nuclear programme. "We stand firm against aggression on Iran and our deeds speak lauder than words," he replied.

About Indo-Pak relations, Kasuri said as a result of peace process started in January 2004 and the Composite Dialogue, there has been significant improvement in the atmospherics between the two countries. The bilateral trade has increased from around 200 million dollar to more than 1000 million dollar, almost a billion.

Regarding Jammu and Kashmir, Kasuri said: "We have made clear to India that there is a need to move from conflict management to conflict resolution. Both sides have agreed to the need to build on convergence's and narrow down divergences on Kashmir".
http://brecorder.com/index.php?id=537255&currPageNo=2&query=&search=&term=&supDate=


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## Introvert

*Ã¢â¬ËPakistan Steel to earn Rs 2b profit this fiscalÃ¢â¬â¢​*
KARACHI: Pakistan Steel will have an operating profit of Rs 1.5 billion to Rs 2 billion, with record sales of products worth Rs 29 billion, during the current fiscal year.

Pakistan Steel Chairman Maj Gen (Retd) Mohammad Javaid told journalists at a press conference that in previous fiscal year, the organisation suffered a loss of Rs 1.8 billion and Rs 20 billion product sales.

In Feb 2007 alone, the PS sales were worth Rs 2.95 billion and in March it is expected to be Rs 3 billion, both highest in the history of the largest industry of the country. The chairman hoped that in the year 2006-07, production capacity would be about 85-90 percent as against 62 percent during the corresponding year.

He spoke in detail about Rs 4 billion ongoing capital repairs of the PS, bulk with foreign collaboration, which after completion, would make it rejuvenated and integrated, having sustained production of 1.1 million tonnes per annum for next 15 to 20 years.

http://www.dailytimes.com.pk/default.asp?page=2007\03\11\story_11-3-2007_pg5_8


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## Neo

*Measures being taken to provide relief to low-income group: Prime Minister *

LAHORE (March 11 2007): Prime Minister Shaukat Aziz has said that due to economic self-reliance, the government is now in a position to provide more resources for development projects and record funds have been allocated for health, education and infrastructure development sectors.

He expressed these views during a meeting with Punjab Chief Minister Chaudhry Pervaiz Ellahi here on Saturday, disclosed an official. Organisational affairs of Pakistan Muslim League, overall political situation of the country, law and order as well as development projects in Punjab were discussed in the meeting. Punjab Governor Lieutenant General Khalid Maqbool (Retd) was also present on the occasion.

The Prime Minister said that direct measures are also being taken to provide relief to the common man especially low-income group. He said that Atta, sugar and pulses are being provided to the citizens at concessionary rates through utility stores. "The PML has been organised tremendously under the leadership of Chief Minister Chaudhry Pervaiz Ellahi in Punjab and would achieve a landslide victory in the next general elections," he added.

The chief minister said that concerted efforts are being made for organising PML at every level and all wings of the party have been activated. He said that party office-bearers, Nazims and assembly members are striving collectively for the provision of relief to the masses and implementation of reforms agenda. "The office-bearers and workers of other political parties are joining PML in large numbers, as they are deeply impressed with the development strategy, reforms agenda and public service programme of Punjab government," he added.

According to him, there is a great deal of enthusiasm in the people for receiving membership of Muslim League, due to which party network is fast expanding. Effective measures have been taken for provision of essential items to people at reasonable rates and stabilising prices of Atta. Sasta ration scheme is running successfully in the province and thousands of poor families are benefiting from this programme. Administrative machinery has been geared up and mega projects are being completed expeditiously in the province while transparent utilisation of development funds has been ensured through financial discipline.

Prime Minister Shaukat Aziz appreciated the development strategy adopted in Punjab and expressed his satisfaction over the pace of development activities in the province.

http://www.brecorder.com/index.php?id=537269&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Rs nine billion earmarked for Fata schemes *

PESHAWAR (March 11 2007): A comprehensive plan is being followed for the fast development of Fata to address the basic needs of the masses particularly in education, health and drinking water supply sectors.

This was stated in a presentation on Fata given to the participants of Armed Forces War Course 2006-2007 of National Defence University Islamabad at Governor's House here on Saturday. Secretary to Governor Azmat Hanif and Secretary Law and Order Fata Arbab Muhammad Arif conducted the presentation.

The participants were briefed on the history, geographical importance, legal and administrative systems in the tribal areas and the key challenges that the government was facing in the aftermath of 9/11.

They were informed that a substantial increase had been made in the development budget of Fata recently. Rs 9 billion had been earmarked for developmental schemes in different sectors in order to remove the backwardness of the area besides creating economic opportunities for the tribal people.

Tribal areas are laden with mineral resources, whereas high quality marble has been found in Mohmand Agency. The available mineral potential is being exploited through improved mining practices, and a Marble City was also being established in Mohmand Agency.

Extension of Rural Support Program in Fata and establishment of Fata Development Authority would further boost govt efforts for fast track development in the tribal areas. The participants were also told about the new and innovated development initiative of Sustainable Development Plan (Vision 2015). Under this comprehensive plan, Rs 130 billion would be spent over a period of nine years and all the projects under this plan would be formulated through a consultative process.

http://www.brecorder.com/index.php?id=537277&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Private sector to set up 10 power projects *

ISLAMABAD (March 11 2007): The Private Power and Infrastructure Board (PPIB) is planning to commission 10 new power projects to the private sector that will produce 2,255 MW electricity at a cost of $1.691 billion. According to PPIB sources the process to commission these projects is expected to complete in 2007-08 as the processing have already started.

Giving details, they that among the ten power projects being built by the private companies Orient power project at Baloki will produce 225 MW electricity at a cost of $169 million.

The other project which will cost $169 million and produce 225 MW electricity will be located at Muridke Punjab and would be established by the Muridke (Sapphire) power project. The sources said the third project to be based in Rawalpindi would produce 150 MW power at a cost of $113 million. Attock General Power Project Company will set up this plant.

Bhikki (Halmore) Power Project Company will set up 225 MW power project at Bhikki will cost $169 million. The project is expected to start by December 2008.The sources said Warda Power Project Company will build this project in the suburb of Lahore Metropolitan at a cost of $150 million. The plant will produce 200 MW electricity to cater to the local needs.

Another power project by Nishat Chunian a known private company in the textile sector will build a plant of 200 MW at a cost of $150 million in Lahore. Shiekhupura (Atlas) Power Project will set up the plant between Shiekhupura and Lahore and will produce 200 MW electricity at a cost of $150 million. Gujranwala (Gulistan) power project will set up the plant in the city. The power plant will produce 200 MW electricity. The project will cost $150 million, the sources said.

PPIB sources said other project would be built at Sahiwal by Sahiwal (Saif) power project will produce 225 MW at a cost of US $169 million. The sources said another project is to expand existing IPPs near Lahore and will enhance 405 MW power. The expansion project will cost US $304 million. About the facilities offered to the private sector the officials said that the PPIB has provided "one-window facility.

http://www.brecorder.com/index.php?id=537243&currPageNo=1&query=&search=&term=&supDate=


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## Neo

March 11, 2007 
*Coal share in energy mix to be augmented*

By Ihtashamul Haque

ISLAMABAD, March 10: The government has decided to enhance the share of coal in overall energy mix from 7 per cent to 20 per cent for generating additional 20,000 megawatts of electricity in next 20 years.

According to the official sources the objective was to restrict the unfavourable impact of high cost of imported energy to the national economy and improve the energy supply by developing coal as strategic national asset in line with the Energy Security Plan.

However, they admitted that it was becoming difficult for the government to attract foreign investment in the coal mining sector due to countless problems including inadequate institutional arrangements, no focus for coal development and harsh climate conditions.

Ã¢â¬ÅNo real success has so far been achieved to attract sizable investment in the coal mining despite offering adequate incentives to the investors,Ã¢â¬Â an official said. Law and order problem, he said was also one of the main reasons while perhaps more fiscal incentives need to be offered to the international companies for effectively developing coal industry in Pakistan, he said.

The ministry of petroleum and natural resources has informed the higher authorities that large capital was required to have any integrated coal and mining and power generation programme to remove the growing power crisis in the country.

It said that there was no industrial support services existed and that there was also a need for clean coal technologies and developed human resource base to attract investment in the mining field.

The ministry conceded that Pakistan had no mechanised coal mining and that the human resources were needed to be developed within the country to harness the coal reserves of 175 billion tons in Thar subsequently.

Considering various problems, the federal government and the Sindh government have agreed to jointly establish Thar Coal Mining Company to develop coal as Ã¢â¬Åstrategic national assetÃ¢â¬Â.

Sindh is expected to receive a large sum as royalty from coal beside inexpensive electricity by attracting foreign investment in coal mining through the proposed mining company.

One of the major objectives of establishing the company was to encourage Independent Power Producers to plan commissioning of power plants on Thar coal.

The ministry of petroleum and natural resources and the government of Sindh will be the equity holder partner of the proposed company.

The plan is to produce and market the planned quantity of coal and coal products efficiently and economically with due regard to safety, conservation and quality.

The main thrust of the company will be making its operations as per market requirements besides maintaining at the same time financial viability to meet the resource need. Also, the company will develop available cost efficient clean coal technologies for harnessing Thar coal for other utilisation option like liquefaction, co-generation and extraction of high unit value chemicals.

It will develop an open cast mine on an evaluated coal Blocks at Thar having capacity of minimum 6 million tons annually for supply to 1,000-mw power plants.

The geopolitical events of new millennium, sources said, highlight the fragility of the worldÃ¢â¬â¢s energy supply system and volatility of prices. Ever-increasing crude oil prices have constrained the world at large to develop their indigenous energy resources for energy security.

Sources said that Pakistan has witnessed an accelerating development during the last few years. However, its power growth could not commensurate with the development of other sectors.

http://www.dawn.com/2007/03/11/ebr4.htm


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## Neo

March 11, 2007 
*Need for huge investment in human resource development*

LAHORE, March 10: Advisor to Prime Minister on Finance and Economic Affairs Dr Salman Shah on Saturday stressed the need for more investment in human resource development saying a better demographic profile could prove a major strength of the country.

Ã¢â¬ÅWe can transform this comparative advantage into economic strength of the country by putting in more money into human resource development,Ã¢â¬Â he said while addressing the members of business community at Zonal Office of the FPCCI here.

FPCCI President Tanvir Ahmad Sheikh and Vice-President Azhar Saeed Butt were also present on the occasion.

The adviser said that the ever-increasing middle class coupled with rapid urbanisation process had given a fillip to demand of consumer items in the country, adding that the presence of a large young population promised further expansion in the middle class.

Dr Shah said that the government was planning to raise the allocations for education and health sectors as a part of socio-economic uplift efforts.

He said that competitiveness and productivity had to be increased to put the country on the track of rapid growth.

He said that Pakistan had to boost its exports to the countries like China.

Ã¢â¬ÅWe should look at China as market, not only as a donor. This country made imports worth $700 billion last year,Ã¢â¬Â Dr Salman Shah said.

He hoped that the Pak-China Economic Zone being developed near Lahore would attract huge investment from China.

Dr Shah hoped that the foreign direct investment (FDI) would touch the mark of $6 billion during the year 2006-07.

Talking about governmentÃ¢â¬â¢s efforts to construct more dams in the country, he hoped that the construction of mega water reservoirs would go a long way in bringing more prosperity to the country.

He said that the government was committed to constructing five new dams by the year 2016.

Ã¢â¬ÅAn enhanced storage capacity can help have more predictable water resources and sustainable agriculture in the country,Ã¢â¬Â the advise said.

He said that generation of more hydel power was necessary as rapid economic growth had taken the annual power consumption growth rate to double digits.

He said that there was need of doubling the allocation for Public Sector Development Programme (PSDP) as Pakistan needed to spend 8 to 10 per cent of GDP on the development of its infrastructure to ensure sustainable economic development.

Responding to a question, he said that Monopoly Control Authority (MCA) was being transformed into Competition Authority with an objective to check the process of cartelisation.

http://www.dawn.com/2007/03/11/ebr5.htm


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## Neo

*Projects being completed as per international standards *

LAHORE (March 12 2007): Punjab Chief Minister Chaudhry Pervaiz Elahi has said that the government is providing additional resources to pace up work of development projects being under way in the province.

He stated this while chairing a high-level meeting to review performance of various departments such as agriculture, livestock, communication and works, irrigation, information technology, forests, wildlife and fisheries at Chief Minister House here on Sunday.

The Chief Minister said that an effective monitoring system has been evolved under project management units to ensure quality work and timely execution of uplift projects. He said the PMUs have improved efficiency of all departments, while Planning and Development Department is also extending consultancy services regarding management and its role in the preparation and approval of developmental schemes is commendable. For the first time in Punjab's history, the uplift projects are being completed as per international standards, he said and asked the departments to adopt effective strategy and modern techniques to take forward the economic agenda of the government, he added.

Chaudhry Pervaiz Elahi said a satellite hub is being established at a cost of Rs 450 million to ensure access to inter-net at low rates, while Software Information Technology Park is another hallmark, which will expedite economic activities and help create employment opportunities. He said police patrolling posts are being automated to improve their performance as well as maintain criminals' record properly and 1124 Helpline being set up to help out the masses.

He further said the obsolete system of land and revenue record is being replaced with new management information system, which will remove the people's problems of property mutation, documentation and other related matters.

The Chief Minister directed the IT Department to chalk-out a comprehensive strategy for its promotion. The government also took solid steps to promote agriculture and improve financial conditions of the growers, and a new system of agri products marketing will be introduced to facilitate the farmers, he maintained.

He said Agri Research Board is reconstituted so as to keep the growers abreast about new agri researches to get enhanced yield. The Chief Minister said the government is expanding the road network under a comprehensive programme that will definitely pace up trade activities. He also directed the departments' concerned to ensure quality of work in the road and infrastructure projects.

He said the government's effective programme to curb water theft is bearing fruit and now the tail-end growers are getting adequate irrigation water. Hefty grants are being spent on canal lining, renovation of barrages and brick-lining of water courses to put the irrigation system on modern lines, he added.

http://www.brecorder.com/index.php?id=537521&currPageNo=1&query=&search=&term=&supDate=


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## Neo

March 12, 2007 
*Achieving the $45 billion export target*

By Sultan Ahmad

A LEAP in exports from $16.5 billion last year to $40-45 billion by 2013 would be a big jump. But it would be achievable only with better strategy and aggressive efforts.

While during the last seven years the export rose from $7.8 billion to $16.5 billion (110 per cent) as the prime minister claims, then the new target is achievable and can become a reality, says Commerce Minister Humayun Akhtar. At present export is growing at the rate of only four per cent.

But almost tripling the exports target would certainly demand far greater ingenuity, wider imagination and aggressive efforts on a sustained and escalating basis.

Prime Minister Shaukat Aziz approved the export plan presented by Deputy Chairman of the Planning Commission Dr Akram Sheikh, who had worked hard on it with inputs from the relevant ministries including those of commerce, industry and textiles.

With the end of the textile quota system and increased globalisation of economy with new players like Vietnam and Cambodia entering the export arena vigorously, the global economic paradigm for a textile-exporting country like Pakistan has to be changed to keep pace with the developments.

The government is trying to enter the Free Trade Agreements with major and minor countries. It has signed FTA deal with China which offers great opportunities to Pakistan exports. A similar deal is being negotiated with the US, the European Union and the Gulf Cooperation Council. It has already signed an FTA with Sri Lanka which has become operational. Negotiations for such a deal are also going on with Bangladesh, Nepal, Malaysia and Jordan.

These agreements would open up vast markets with large demands, particularly in China. Pakistan should have surplus to meet their needs. If that is not done, goods from other countries with no or nominal tariff would flood our markets, as Chinese goods are doing at highly competitive prices. So we have to defend our own markets through open market mechanism and try to export more and more.

We have in addition the Reconstruction Opportunity Zones option offered by the US to export goods produced in the earthquake zones and in underdeveloped zones of the country like the tribal areas to be exported tax-free. We have to make best use of this and profit by it promptly.

To enlarge the exports to $45 billion by 2013 we have to first fix the annual targets of an escalating scale and send them to the Federation of Chambers of Commerce and Industry and its constituent chambers to make them full partners in the grand effort and prod them to do the best they can.

Exports, as the prime minister says, is the lifeline of the country which has to be raised from 13 per cent of its GDP to 15 per cent. With the GDP growing fast at 6-7 per cent annually or more, the volume of each percentage will be increasing heavily and we have to meet the challenge year after year.

While the government is trying to open new markets by seeking FTA with many countries, the exporters have to explore their own markets in them and firm them up through mutually binding arrangements.

We have to diversify our exports vigorously by including a large number of unconventional items instead of concentrating excessively on the textile sector beginning with raw cotton and coarse cotton yarn.

We have to make our textiles as well as leather exports more value-added. The fact that Pakistan earned $1.2 billion from rice exports last year suggests that we could earn more from agricultural exports if we develop them properly and promote their sale.

Exporters have to focus on garments and make them increasingly value-added and their brands have to earn a name abroad for quality, style and packaging.

Today the value addition of garments in Bangladesh is higher than value-addition in Pakistan not to speak of the Indian output which is higher than Bangladesh garments. This situation must change and the Pakistan government should work hard to export more garments and earn more foreign exchange.

To achieve such ends, Pakistan needs highly skilled workers and in large numbers. The prime minister says the government is training workers in large numbers to meet the future needs of the industry .It is hoped that efforts would produce enough workers to produce quality goods to boost export.

Of course, the industry, as a whole, and the export industry in particular need a steady supply of adequate power and gas. Their demand would go on increasing and that has to be met.

Water is the other necessity of the industry which should be met by the government. In fact, the infrastructure as a whole should be earnestly taken care of by the government.

The gas pipeline from Iran could solve the energy problem to some extent. But the project may not start functioning until the fag end of the seven year export documentation plan.

The export canÃ¢â¬â¢t be raised to $45 billion if approached in conventional manner, but with vigorous effort it is achievable. The exporters have to play a much larger role and consistently.

There is need for extensive research by official institutions and non-official bodies like the Chambers of Commerce. FPCCI should play a larger role in promoting such research and the commercial secretaries abroad should be made to report to them as well.

The FPCCIÃ¢â¬â¢s prime function should not be handing over scores of export trophies to exporters each year and holding dinners and lunches for top officials including the ministers. The FPCCI and its affiliate chambers should play a larger role in exploring new markets for Pakistani goods and for new items in new areas.

Participation of our exporters in some trade exhibitions abroad is not enough. The FPCCI should play an active role in research with adequate subsidy from the government which is going in that direction now.

The number of holidays should be reduced and declaration of holidays suddenly should be avoided. Workers going on protest should avoid violence, disruption and interruption in the flow of exports.

Above all, the exporters should not seek a high-rate of profit which they can ensure in local market through cartel like arrangements. Over here they can create artificial shortages through such cartels and profit a great deal.

They canÃ¢â¬â¢t do that abroad and hence have to be content with a lower rate of profit that may discourage them from participating in the export market. That should not happen now as the big exporters are the ultimate gainers.

There have been increasing reports of misuse of export refinance at concessionary rate of interest. The latest is the misuse of export refinance for rice. Such exporters are reported to have caused shortages in the market of course along with high prices. Such abuses of export refinance should be eliminated.

The $40-45 billion target to be achieved within seven years from now when the export moving at a nominal rate of only four per cent ,is a real challenge. Neither the government nor exporters can afford to fail or have setbacks as in the past when the gaps between the targets and the reality were very large.

http://www.dawn.com/2007/03/12/ebr13.htm


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## Neo

*Rising trade deficit: solutions*

TRADE deficit surged in the first eight months of the current fiscal year to a new record of $8.890 billion, up 18.47 per cent, as compared to the same period last year. With this trend persisting and getting more pronounced, the trade gap soared from a mere one billion dollars in 2003 to $12 billion in 2006, hitting new highs every year. It is the outcome of abnormal annual fluctuations in export earnings and import bills. A positive development this year is the drastic fall in import growth from last yearÃ¢â¬â¢s 38.8 per cent to the current 9.95 per cent -- a factor which, unfortunately, has been more than neutralised by the dismal export performance. The export growth plummeted from 14.3 per cent to less than four per cent in the same period.

The government and the business have both failed to tackle the worsening problem though both are engaged in considering the subsidy required to give the textile exports a competitive boost. Just this week, the ministry of textile reportedly recommended Rs29.76 billion tax incentive but a final decision is yet to be taken. The subsidy would not be a permanent solution as it would adversely affect the already deteriorating terms of trade. The textile industry would need to do without its crutches as quickly as possible and to improve productivity by seriously addressing its own structural problems. It suffers from low-scale operations, deficient labour and management skills, poor quality of goods and slow movement from the middle to high value-added chain. The clothing industry is not integrated into global distribution system under which direct involvement of retailers helps exporters acquire the competitive skills. Similarly, at home the big industrial units are not integrated into organised production network through strategic alliances, sub-contracting and outsourcing that could provide small and medium-size industries markets through improved productivity. The industry needs a higher per capita output, on-job training, skill upgradation and dissemination of new knowledge and technique about changing fashions and shifting markets. Many experts have come to believe that the textile industry has is a weak case for subsidies as it cannot even compete with newcomers like Bangladesh and Vietnam. A view gaining ground is that the government being too focused on textiles has neglected many other sectors with potential for export. About 75 per cent of the exports originate from four basic sources: cotton, leather, rice and sports goods. Exports are concentrated in few items and few countries. Diversification in terms of items and destinations needs a sound and effective strategy for export-oriented industrialisation. Unless export earnings rise at the required pace, trade deficits would be difficult to manage with the external financial flows drying up sooner or later if foreign exchange earnings do not keep pace with hard currency spending.

While boosting exports, there is also a need to conserve foreign exchange earnings by reducing imports, wherever possible. The current level of imports at over $28 billion indicates the potential for increasing indigenous production that could meet much of the rising domestic demand in areas of comparative advantage. This opportunity is being neglected by business. Import substitution and boosting exports should be the core element of any effective trade policy. Foreign direct investment that involves transfer of technology, skill development and marketing should be attracted in export-oriented industries, which is not the case now.

http://www.dawn.com/2007/03/12/ed.htm#1


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## Owais

_*Pakistan ordnance factory ordered to pay Rs 140 million sales tax *_

ISLAMABAD (March 12 2007): The Customs, Central Excise and Sales Tax Appellate Tribunal, Islamabad, has directed Pakistan Ordnance Factory (POF), Wah Cantt, to pay Rs140 million on the supply of electricity to its subsidiaries used for production of arms and ammunition during 1999 to 2001.

Member, Technical, Muhammad Wali Khan, has recently issued a judgement against the factory upholding the order of the Collector, Adjudication, Rawalpindi. The case of POF was pleaded by Ijaz Akbar, Chartered Accountant, while departmental representative submitted its case on behalf of CBR.

Details showed that the Collectorate of Sales Tax, Adjudication, had detected certain irregularities during audit of the factory record pertaining to August 1999 to May 2001. It detected that the factory had supplied electricity to its subsidiaries without charging sales tax. Total 207,587,492 units of electricity were supplied to its subsidiaries during this period. The market value of such supplies comes to Rs 978,456,130.00 by multiplying units supplied with market price. Thus, sales tax not deposited comes to Rs 146,768,419.00, which reflected that the factory had contravened certain provisions of Sales Tax Act, 1990.

Secondly, the unit had failed to issue serially numbered tax invoices at the time of supply. The factory failed to provide data of power generation and its supply during the period under review, as tax on electricity was imposed from August 16, 1999. Keeping this in view, the Collector, Adjudication, issued a show-cause notice to the factory.

Adjudication officials observed that the factory should pay the principal amount of sales tax along with additional tax penalty. Against the decision of the Collector, Adjudication, the unit filed an appeal with the tribunal to set aside the order passed by adjudication authorities.

The factory's lawyer opined that the order of adjudication officer was vague, which did not mention any sections of the Sales Tax Act for recovery of sales tax. He further pleaded that the entire electricity generated was self-consumed, ie, used in the production of arms and ammunition, which are exempt under the sales tax law. Moreover, generation of electricity and its self-consumption by the factory did not attract the provisions of section 3 of the Sales Tax Act, 1990 as the element of transfer of property from one person to another was lacking and hence no sale/supply took place, the factory lawyer said.

The Tribunal quoted a judgement of a sugar mill, saying, "Once a taxable goods has been supplied by a registered person to itself it would fall within the definition of taxable supply".

The Tribunal said that it was clear that the exemption of one product, which is exempt or non-taxable, did not exclude the production of another product from the ambit of taxable activity of goods. The Tribunal referred to a number of judgements, including an order of the Supreme Court of Pakistan.

The Tribunal concluded that, "the factory's consultant has argued at the bar on minor and curable defects of the show-cause notice issued to the appellants (factory). In this case the onus of proof was on the factory that there was no in-house or self-consumption of the electricity so generated contained as has rightly been pointed out by the department.

They never informed this tribunal the position, which is contrary to the stand taken by the revenue department, and failed to discharge their burden as to the quantum of usage of electricity on commercial basis or using the same for the purpose of manufacture/production of taxable goods or exempt goods." The Tribunal would not distribute the order of the Collector, Adjudication, the judgement added.

http://brecorder.com/index.php?id=537476&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Foreign exchange: SBP asked to furnish details about investment *

ISLAMABAD (March 11 2007): Senate Standing Committee on Finance, Revenue, Economic Affairs and Statistics has directed the State Bank of Pakistan (SBP) to furnish complete details about the investments it made through utilising foreign exchange reserves.
 
During committee's meeting on Saturday, Senator Ahmed Ali, chairman of the committee informed the members that SBP would provide information about the rationale behind these investments in foreign exchange.

The SBP has been asked to submit the following information to the standing committee: How much investment has been made in foreign exchange, where and at what rates, currency in which investment is made and who is managing this investment.

Committee's chairman said that they have been in contact with the SBP for obtaining requisite information. In this regard, the SBP would provide complete data to the committee.

Appreciating the CBR performance and outcome of reforms, the committee chairman said that the tax authorities are going on the right rack for smooth implementation of reform projects surpassing revenue targets. The Secretary General, Revenue Division and Chairman CBR, M. Abdullah Yusuf briefed the Senate committee on CBR's performance.

He said that the board has collected Rs 513.6 billion in first eight months (July-February) of the current financial year against Rs 419.3 billion in the same period last fiscal, reflecting a growth of 22.5 percent. The revenue collection during this period is Rs 19 billion more than the target set for the first eight months of 2006-2007.

Giving details of improvement in voluntary compliance in July-December 2006, as compared to the corresponding period of 2005, the Chairman said that CBR has achieved a growth of 19 percent in number of returns filed (1.5 million v/s 1.3 million), 94 percent in payments with returns (Rs 45 billion v/s Rs 23 billion) and a growth of 131 percent achieved in advance tax payments (Rs 59 billion v/s Rs 26 billion).

He said that the number of returns filed now were 1.6 million, which are growing at the rate of 20% per annum for the last three years. On Tax Administration Reforms Programme (TARP), CBR Chairman informed the committee that the steps taken under this programme have already yielded encouraging results.

The steps included successful implementation of Universal Self-Assessment Scheme (USAS) across all taxes, simplification and improvement in laws of income tax, federal excise, customs and sales tax.

He said that the CBR Headquarters, Income Tax structure, Audit and Inspection, Training, Intelligence and Valuation Directorates have been transformed and started working on functional lines. Sales Tax system was already operating on functional lines, he added.

Regarding establishment of model units under TARP, the Secretary General, Revenue Division informed the committee that 2 out of 3 Large Taxpayers Units (LTUs) have already been established in Karachi & Lahore. Third LTU is under construction in Islamabad and it will start working by June, this year. Besides, 6 Medium Taxpayers Units (MTUs) have been established in major cities of the country. Similarly, 4 out of 13 Regional Tax Offices (RTOs) have started operations. Moreover, Model Customs Collectorates (MCCs) have been operating since 2004.

On current status of initiatives, chairman CBR said that after extensive business process re-engineering, the pilot project Pakistan Customs Computerised System (PaCCS) has been launched. This automated system has reduced the average cargo clearance time from 5 days to 4 hours for imports and to one hour for exports. The PaCCS operations have now been extended from KICT to QICT and PICT, Karachi. It is hoped that this system would not only save the time of importers/exporters but also considerably reduce the cost of doing business, he added.

On income tax and sales tax side, Tax Management System (TMS) and Sales Tax Management (STMS) have been introduced in model units, which will eventually be taken over by Integrated Tax Management System (ITMS) to ensure international standards.

He said, e-filing of tax returns across taxes has already been started. He informed the committee that CBR has developed a Computerised System of Tax Payment Receipts (CPR) in collaboration with National Bank of Pakistan (NBP) and State Bank of Pakistan (SBP), which has been endorsed by the Ministry of Finance, AGPR and CGA. Now all information regarding CBR staff are available through the newly developed system of Human Resource Information System (HRIS).

CBR Chairman said that board was paying special attention to the capacity building and welfare of its employees. In this connection, he mentioned the training, internal job posting, special emphasis on integrity management and performance related pay and promotions and employees' welfare programme.

He opined that the CBR was a key financial institution because it collects 90 percent of the total revenue of the country, contributes in tax plus non-tax revenue around 65 percent and covers nearly 50 percent of the federal government's expenditure needs.

Talking about the challenges and constraints being faced by CBR, the Secretary General Revenue Division mentioned low Tax-to-GDP ratio, mismatch in sectoral contribution to GDP and taxes, low level of compliance, wide-ranging tax and duty exemptions and large underground and informal economy.

He showed commitment to deal with all the issues through an efficient, fair and equitable system. He said that CBR would continue to be critical institution of the state for smooth economic management and promoting economic growth. Commenting on the performance of CBR, Senator Ahmed Ali congratulated Yusuf on successful implementation of Customs Administrative Reforms (CARE).

Senator Professor Khurshid Ahmed, member of the committee, also congratulated the CBR Chairman for bringing considerable improvement in the CBR in the last few years. He said CBR's reform direction was correct.

However, he said that the CBR needs to take steps to check tax evasion and expand tax base. Senator Safdar Abbasi and Pari Gul Agha also lauded the efforts of CBR Chairman in bringing a visible improvement in CBR's performance and enhancing revenue collection. Legislators, however, were of the opinion that 15 percent GST needs to be revised downward.

While thanking the legislators for appreciating the performance of CBR, Yusuf gave its credit to the present government for taking practical steps including initiation of Tax Administration Reforms Programme for upgrading and improving the taxation system to enable the board to play its due role in rapid economic development of the country. The CBR has presented a detailed report on the import and valuation of batteries by the customs department.
http://brecorder.com/index.php?id=537207&currPageNo=2&query=&search=&term=&supDate=


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## Owais

*Pakistan bad performer in 40 areas: competitiveness support fund report released *

ISLAMABAD (March 13 2007): The Competitiveness Support Fund (CSF) has reported that Pakistan is a bad performer, as compared with India, in 40 areas, including market access, business sophistication and technology application. However, it gave Pakistan better ranking than its archrival in government efficiency having less red-tapism and influence of the powerful in policy making.

The CSF report on Pakistan competitiveness released here on Monday, said that India showed better performance in willingness to delegate authority, staff training, reliance on professional management, incentive compensation, regional sales, research & development and capacity for innovation.

India also outperformed Pakistan in efficiency of corporate boards, staff training, technology transfer, quality of management schools, local competition, buyer sophistication, supplier quantity, venture capital availability and degree of customer orientation.

India also has better basic requirements for institutions, infrastructure, macroeconomic and health and primary education. The areas wherein Pakistan has shown improvement include public trust in government, ethics and corruption, favouritism of government officials, efficiency, undue Influence and interest rates.

Pakistan also outperformed India in other areas such as hiring and firing practices, time required to start business, interest rate spread, real effective exchange rate, macro economy, quality of electricity supply, malaria prevalence and government surplus/deficit.

While releasing the report, Prime Minister Shaukat Aziz said that the CSF report was a wakeup call for the government as well as the private sector, and they should go hand in glove to rise to the challenges confronting its economy. He added that competitiveness is the cornerstone of economic growth which generates more employment and reduces poverty. He said that all arms of the government and the private sector would have to be involved to improve Pakistan's ranking in the global competitiveness index.

Mission Director USAID Pakistan, Jonathan Addleton, reiterated on the occasion USAID's long-term support for competitiveness and economic growth activities in Pakistan.

Arthur Bayhan, CEO of the Competitiveness Support Fund, in his presentation, briefed the audience about the World Economic Forum's Global Competitiveness Report on Pakistan and other countries. In particular, he highlighted the importance of the provincial and local leaders to be part of the competitiveness dialogue. The Competitiveness Support Fund is working directly with each region in addressing the key competitiveness issues at the regional level.
http://brecorder.com/index.php?id=537688&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Strong banking system essential for successful economy: PM *


ISLAMABAD (updated on: March 13, 2007, 03:12 PST): Prime Minister Shaukat Aziz on Monday said that a strong banking system is an essential ingredient for a successful economy. He was talking to Dr. Shamshad Akhtar, Governor State Bank, who called on him here at the prime minister House this afternoon.

The prime minister said the reforms undertaken in the banking sector during the last seven years have produced excellent results in improving service to customers, introducing new products, use of technology and catering to needs of all sectors including micro-finance, auto leasing, housing, industrial sector, SMEs and trade.

He said that the improvement in the banking system has encouraged several global banks to acquire Pakistani banks which augurs well for the country.

Governor State Bank, Shamshad Akhtar briefed the prime minister on the various monetary policy measures undertaken to control inflation which is showing a positive trend.

The prime minister said that controlling inflation and prices is essential so that the benefits of economic growth are transferred to the people.

He said in addition to the monetary policy, supply side measures and reforms have resulted in reduction of prices of cement, LPG, sugar, ghee and pulses and the government is keeping a close watch on the prices of every day use.

The Governor State Bank also updated the prime minister on the developments in banking system, the operations of State Bank, growth in foreign exchange reserves and the stability in exchange rate.

The prime minister complimented Shamshad Akhtar for making the State Bank an effective regulator and an important part of the overall economic management team of the government. 
brecorder.com


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## Owais

*Malaysia likely to increase investment in Pakistan *

ISLAMABAD (March 13 2007): Malaysia is expected to increase its investments in Pakistan, particularly in food manufacturing and oleo chemicals. So far, Malaysia's Felda has been playing a lead role in Karachi with three major projects of combined investments of RM155 million, private TV reported.

The first joint venture in 1995, between Pakistan's Westbury Group of Companies, Felda and IOI Group, was for a storage facility of edible oils at Port Qasim. About RM25 million is being invested in these storage tanks to expand the capacity to 100,000 tonnes by December this year, from 78,000 tonnes currently.

The second collaboration took the form of a modern edible oil refinery that can process 240,000 tonnes of palm oil and 60,000 tonnes of soyaoil, sunflower oil, canola oil and cottonseed oil a year.

Major shareholders Westbury, Felda and Kuala Lumpur Kepong Bhd have invested RM60 million in the refinery, which started operations in July last year. The third joint project between Felda and Westbury involved a liquid cargo terminal at Port Qasim. More than RM70 million has been pumped into this infrastructure, which is expected to start operations by December.

On ways to promote palm oil consumption in Pakistan a 50-member delegation of Malaysia would be leading to Karachi from April 17 to 21 to participate in the Malaysia-Pakistan Palm Oil Trade Seminar (POTS).

This is the third edition of the POTS series organised by the Malaysian Palm Oil Council to generate greater global recognition of the nutritional benefits of palm oil. It is expected that Malaysian palm oil exporters will consider setting up food manufacturing and oleo chemical businesses in Pakistan.


http://brecorder.com/index.php?id=537814&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Japanese-Pakistanis for intermediary facility at Gwadar *


LAHORE (updated on: March 13, 2007, 03:05 PST): The Pakistani expatriates in Japan have sought government's help for establishment of an intermediary facility at Gwadar Deep Seaport for the re-export of Japan-made vehicles to the other parts of the world.

An eight-member delegation headed by President Pakistan Association Japan, Behlum Shahzad Ali, was talking to LCCI President Shahid Hassan Sheikh here on Monday.

Shahzad said that at the moment the whole business of used vehicles was being carried out in Dubai but Pakistanis in Japan want to make Gwadar a hub of such activity.

The delegates from Japan also showed a keen interest in making investment in petrochemicals and plastic raw materials, as Pakistan has no manufacturing facility in this sector so far.

They were of the view "The land mafia in Pakistan is quite active to undo the efforts of the government which is taking all measures to convert it into an investment-friendly country. There is a need that the government should take all necessary steps to curb these evils once for all."

LCCI president Shahid Hassan Sheikh briefed the delegation on investment scenario in Pakistan. He said that Pakistan is now on the road to economic stability and it needs a positive response of foreign investors to prove its worth as an attractive investment destination.

He said that development of Gwadar Deep Sea Port and industrial estates all over the country provide best possible infrastructural facilities to foreign investors.


brecorder.com


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## Owais

*Exports showing four percent growth: Humayun *

LAHORE (March 13 2007): Commerce Minister Humayun Akhtar has said that there is no decline in the country's exports, rather there has been 4 percent growth in exports so far, which would rise further in the remaining five months of the current financial year.

He stated this while talking to newsmen after chairing the 19th meeting of the Board of Directors of Pakistan School of Fashion Design (PSFD) at the Trade Development Authority of Pakistan (TDAP) office here on Monday.

He said that imports have shown growth rate of 9 percent. Regarding Indian allegations of non-compliance of Safta, he said that Pakistan was fully complying with it, and would settle all other issues, including non-tariff issues, with India bilaterally.

About the PSFD, he said the institution would be reorganised in two phases. In the first phase, a new campus would be constructed, at a cost of Rs 669 million. In the second phase, Rs 800 million would be spent on training, development of curriculum, etc. The project would be completed by 2008, he added. He said the insurance sector was being revamped, and soon a presentation in this regard would be given to the Prime Minister.

About slowdown in textiles, the Minister said that this sector contributes 60 percent of total exports, and the government was looking into the factors that led to recession in this sector.

Earlier, the Principal of PSFD briefed the Board members on financial updates as on February 28, 2007, award of Federal Charter, construction of new campus at Johar Town, Lahore, and establishment of campuses at Islamabad and Karachi.

The Minister, who is also Chairman of the Board, appreciated the performance of the PSFD and advised it to expedite the formalities regarding award of Charter to PSFD.

http://brecorder.com/index.php?id=537791&currPageNo=1&query=&search=&term=&supDate=


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## Janbaz

* Current account deficit crosses $5bn *

By our correspondent

ISLAMABAD: Fuelled by huge trade deficit, Pakistan&#8217;s current account deficit (CAD), excluding official transfers, during July-January 2006-07 has reached a worrisome level of $5.029 billion or 3.5 percent of the gross domestic product (GDP). 

The CAD is rising at an alarming pace and it is feared that if the current pace persists it would breach the government&#8217;s set target of $6.3 billion or 4.3 percent of GDP by the end of this fiscal. 

The State Bank of Pakistan (SBP) data released Monday revealed that the current account imbalance was due to trade deficit (in goods and services) jumping to $8.66 billion during July-January 2006-07 from just $7.35 billion during same period of the last fiscal. The trade deficit figures are evaluated by using the free-on-board value of imports and exports.

A larger current account deficit, as a share of economy and in dollar terms may pose threat to the economy simultaneously on both internal and external fronts. During seven months, CAD has grown by more than 39.31 percent to $5.029 billion as against $3.61 billion recorded in corresponding period of last fiscal. 

It is worth mentioning that last year, owing to higher than expected trade deficit, the Finance Ministry had revised target for current account deficit and set it at $5.137 billion (4.2 percent of GDP) against $2.7 billion (2.19 percent of GDP) for the FY 2005-06. 

Independent economists say that this external disequilibrium may also affect economic activity and growth. While, on the other hand the government&#8217;s economists are of the view that Pakistan is enjoying an economic boom and the current account was manageable. 

The Central Bank&#8217;s data revealed that imports stood at $15.81 billion whereas exports totalled $9.71 billion thus leaving a trade imbalance of $6.11 billion. The services account also witnessed a large imbalance of $2.557 billion during July-January 2007 as inflows under this account stood at $2.305 billion whereas outflows totalled $4.86 billion.

The factors responsible for this huge deficit included higher outflows on account of transportation, travel, insurance, construction services, royalties and licence fees. Pakistan had to spend $1.847 billion on transportation account whereas its earning under this head was only $673 million. Thus, the net deficit in the service account due to chartering of vessels for imports, exports shipment was $1.174 billion.

Another factor responsible for big services&#8217; account deficit was a net outflow of $842 million on account of overseas travelling. Pakistan had to spend $998 million to finance personal and business-related travelling abroad of individuals and groups whereas it earned only $156 million under this account. Hence the services account deficit in July-January 2007. The same applies on spending on insurance and royalties and licence fees paid to international organizations and their employees operating in Pakistan. 

The imbalances in the trade and services were so large in July-January 2007 that the current account turned negative despite a strong build-up in current transfers. Net current transfers rose to $5.92 billion during the period, from $5.52 billion in corresponding period last fiscal. 

Current transfers went up as Pakistan received $2.96 billion in workers&#8217; remittances or foreign exchange sent back home by overseas Pakistanis during this period, up from $2.45 billion in a year-ago period. However, the foreign currency deposits held by the resident deposit holders declined to only $51 million against $295 million in corresponding period.

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=46591


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## Janbaz

Why, everyday we say some deficit on the climb. This is worrysome as the economy growth and the hike in deficits might catch up and damage future plans. Can anyone clarify this.


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## Neo

*CSF sets goal to achieve 60th rank in GCI *

ISLAMABAD (March 13 2007): Pakistan's global competitive index (GCI) can improve from the present 91 to 60 by 2010 provided the government takes several steps to improve its competitiveness. These steps include, among other things, active efforts by the government and private sector.

But a large number of the suggestions are not more than generalities so often agitated the multilateral agencies, the government itself and a plenty of development economists. The Competitive Support Fund (CSF), a joint initiative of the Ministry of Finance and the USAID aimed to shape a more competitive economy, on Monday released its 86page report on the State of Pakistan's Competitiveness 2007, amidst considerable fanfare.

The Competitiveness Support Fund has set the goal of moving Pakistan from its rank of 91 to a rank between 60 and 65 by 2010 by improving its competitiveness.

On behalf of the government, the Fund has suggested that it should implement reforms in the macro and micro economic business environment, and the private sector should improve its business strategies and operations, compliance with global standards and that business leaders should reposition their industries and companies in world markets. It is also necessary to prepare a new generation of business managers and entrepreneurs.

It states that by improving its competitiveness, higher growth and higher level of employment would be ensured. As regards improving the Macroeconomic Environment it suggests the Ministry of Finance, must maintain and improve the sound macroeconomic policies. To achieve higher rates of growth, inflation must be kept within single digit; the budget deficit must now be reduced; fiscal and monetary policy should help in increasing federal savings and investment as a percentage of GDP. Increased foreign remittances and increased foreign investment will ensure growth in foreign currency reserves and improve balance of payment position.

It adds, through tax modernisation, the government will be seeking increased revenues while lowering the rates and expanding the base and simplifying compliance. This will set the macroeconomic environment for growth.

With a good macro economic environment, it is also essential to have an excellent microeconomic environment. This can be achieved by reducing the obstacles to the formation of new business and the growth of small and medium enterprises. Smeda is playing a very useful role in fostering development of competitive industry clusters and growth of small businesses.

The government will need to focus on continued progress in judicial reforms and the effective application of the rule of law to commerce, including the enforcement of contracts and the fair resolution of disputes.

The country must improve enrolment rates at all levels of education while improving the relevance of this education. Schools should focus on equipping students with marketable skills, as it is important to equip young people with the aptitudes as well as the attitudes needed to secure employment. Education leaders have a vital role to work more together to define skill gaps, skill standards, current deficiencies and new training programmes.

It further suggests that technological readiness and innovation can be fostered by improved linkages, among research institutes and their respective industries. Policies need to be in placed that lead to rapid expansion of digital technologies. The government should follow the Chinese example of one child one computer.

In the words of the report, the private sector has critical role to play. Productivity can only be delivered by real individuals that improve their productivity and real companies that improve their strategies and operations. Therefore, private firms must play a leadership role in boosting Pakistan's competitiveness. Corporate governance and accountability must improve among Pakistan's private companies.

The Government can reform its tax policy, lower rates and reduce the cost of compliance, but the private sector must respond to this with a culture of voluntary compliance. Private companies need to modernise their use of human resources, use incentives and invest in training.

Pakistani firms must lead the way as export champions and position themselves as compliant with global labour, consumer and environmental standards. It warns that failure to adopt world class labour standards will risk erosion of confidence from international investors, and buyers. Since these are being demanded by the foreign investors and buyers, Pakistan can position itself in the world economy as a country in full compliance with such standards.

http://brecorder.com/index.php?id=537692&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*President directs completion of small power projects *

ISLAMABAD (March 13 2007): President General Pervez Musharraf has directed the Ministry of Water and Power to expedite completion of small power generation projects to help meet the demand of expanding industrial and agriculture sectors on fast track basis.

Chairing a meeting on the status of short-term energy projects in Rawalpindi here on Monday he stressed the need for facilitating the private sector, including local and foreign entrepreneurs, in setting up small power plants in the short term.

The President underlined that these new units should be completed within the stipulated period for continued supply of energy to the industrial units.

He said that industrial and engineering sectors were rapidly expanding, resulting in steep increase in the demand for electricity. He said energy would also be imported from the regional countries and alternative sources, including coal, residual fuel oil, and wind mills would be utilised to ensure supply of energy on sustainable basis for the country's economic development.

The President was informed that several foreign companies were planning to set up power plants to generate around 1100 mw additional electricity by the end of this year.

Official sources told Business Recorder that the meeting was further informed that these projects would help meet the country's rising energy demand due to the booming industrial sector and would help reduce load shedding for domestic consumers. Import of electricity from Iran would be increased to around 600 mw to meet the requirements in the bordering areas.

Minister for Water and Power Liaquat Ali Jatoi later told reporters that the rise in demand of electricity was due to the influx of foreign investment in various sectors and new units for fertilisers and cement that were being set up in the private sector.

He said that for the first time private investors have been invited to invest in hydel energy projects. He said the robust industrial growth was the result of President Musharraf's vision of an industrially developed Pakistan.

http://brecorder.com/index.php?id=537718&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*9,100 villages provided electricity in last 7 months *

LAHORE (March 12 2007): Wapda on the special directive of the Prime Minister Shaukat Aziz has provided electricity to a record number of 9,100 villages during the first seven months of the current fiscal year.

Member (Power) Wapda Engineer Chaudhry Muhammad Anwar Khalid told APP here on Sunday that out of total annual target of 15,000 villages, 9100 have so far been provided electricity, which reflects the excellent performance of the Wapda.

He hoped that annual target of village electrification will be achieved comfortably. He said that the chief executives of the all power distribution companies have been directed to ensure the timely achievements of the targets set by the authority.

*FOLLOWING IS THE BREAK UP OF THE VILLAGE ELECTRIFICATION UP TO FEBRUARY 2007: *

Fesco 1568 Gepco 205 Iesco 799 Lesco 440 Mepco 3217 Hesco 1208 Pesco 1156 Quesco 507.

About the grant of new tubewell connections during the period under review, he said that a record number of 9,128 tubewell connections out of a total annual target of 12,000 for agriculture purpose have been given throughout the country.

http://brecorder.com/index.php?id=537523&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Food inflation close to double digits*  

By Israr Khan

ISLAMABAD: Though, the general inflation measured by Consumer Price Index (CPI), is still on the decline, the food inflation is hovering about in double digit and snatching the purchasing power of the low-income group, which is a challenge for the economic managers.

The Federal Bureau of Statistics (FBS) on Monday reported that the CPI in February 2007 stood at 7.39 per cent against what it was 8.05 per cent during the corresponding month of the last year, while the inflation of eight-month (July-February 2006-07) has gone down to 8.04 per cent over the corresponding period of last year (8.42 per cent). 

More interestingly, the food and beverages, having 40.34 per cent weightage in CPI basket, is unevenly affecting the purchasing power of low-income group, increased by 1.42 per cent in February 2007 over January 2007. 

The monthly CPI bulletin further reveals that besides other commodities, the prices of food and beverages; education and medicare charges; fuel and lighting and house rent year-on-year basis during February were exorbitant as compared to the corresponding month of last year.

According to the data, in February 2007, prices of food and beverages rose by 9.99 per cent, education was expensive by 8.32 per cent, medicare charges rose by 9.32 per cent, fuel and lighting 6.53 per cent and house rent increased by 6.27 per cent over February 2006.

In one month, general inflation increased by 1.04 per cent, food inflation by 1.42 per cent, apparel textile and footwear increased by 2.15 per cent, fuel and lighting 1.40 per cent and education expenses rose by 0.95 per cent in February 2007 over previous January. 

Detailed analysis of CPI data showed that under food and beverages, the items, which became dearer in February 2007, were: fresh fruit 18.86 per cent, chicken (farm) 11.4 per cent, rice 8.48 per cent, spices 5.57 per cent and the price of onions increased by 5.44 per cent in one month over January 2007.

The other indicator of inflation i.e. the general wholesale price index (WPI) was satisfactory during February 2007 (5.09 per cent) over the corresponding month of the last fiscal. However, prices of some commodities are still high i.e. the prices of food increased by 8.70 per cent, raw materials 13.09 per cent and building materials were expensive by 11.58 per cent over same month of the last fiscal.

The FBS data revealed that the WPI during February 2007 was up by 0.51 per cent over previous month. However, during the month under review, it declined to 5.09 per cent over corresponding February 2006 (9.94 per cent), which signifies decline in the coming months. This indicates that in the coming months the prices of raw materials and its products and the cost of construction building would go up and be out of the grasp of common man.

http://www.thenews.com.pk/daily_detail.asp?id=46587


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## Neo

Janbaz said:


> Why, everyday we say some deficit on the climb. This is worrysome as the economy growth and the hike in deficits might catch up and damage future plans. Can anyone clarify this.



March 13, 2007 
*Changes in monetary policy suggested: Deficits unsustainable*

By Ihtashamul Haque

ISLAMABAD, March 12: Pakistan's current account and trade deficits are "unsustainable" in the long run and will require adjustments in monetary or exchange rate policies, says a latest Pakistan-USAID joint report.

The report Ã¢â¬ÅState of Pakistan's Competitiveness-2007Ã¢â¬Â, prepared by the Competitive Support Fund (CSF), launched here on Monday by Prime Minister Shaukat Aziz at the PM Secretariat, warned that continued vigilance, discipline and careful management were required to lower the twin deficits.

The CSF report, a joint venture of the ministry of finance and the United States Agency for International Development (USAID) said, "High growth of domestic demand has led to a significant increase in the current account and trade deficits.

Ã¢â¬ÅCurrently the deficits are being financed through one-off investment flows- this is unsustainable in the long run".

It also said that despite recent improvements in the poverty picture, nearly one-quarter of Pakistan's population continued to live below the poverty line, and reducing this figure constitutes the foremost challenge for the authorities.

It further said that the weak points in the private sector are related to corporate governance and modern management and motivation of the workforce.

"It appears that the private sector also needs some reforms, especially in the area of corporate governance and modern approaches to the workforce".

The report believed that macroeconomic and governance issues were affecting all the provinces to more or less the same degree.

However, each province was also affected by factors that were specific to it, such as location, in relation to the main markets, distance from the sea, the area of the province, the size of its population, the status of its human development indicators and access to natural resources.

It said that GDP growth must be higher in order to cut the backlog of unemployment.

"At some risk of oversimplification, therefore, one could say that the overall challenge for the provinces is to increase their GDPs to around 6.5 per cent annually."

Pakistan's energy supplies were highly dependent on oil imports, the cost of which accounted for a large share of the country's total import bill. In addition, national power demand is outstripping supply. This is a trend likely for some time, given that Pakistan's productivity capacity needs are projected to reach a level of 162,590 megawatts by 2030, from a level of 15,500 MW in 2005.

Only 55 per cent of Pakistan's population has access to electricity from the national grid.

"In fact, Pakistan has one of the lowest per capita consumption of energy in the world", the report added.

The prime minister in his speech noted that the first State of Pakistan's Competitiveness Report was an important step to focus the energies of the nation around the common goal of making the country a stronger economy.

He also said that CSF would work in partnership with the World Economic Forum (WEF) and the US Competition Council and the Lisbon Agenda of the European Union (EU).

Prof. Michael Porter, Harvard's expert on competitiveness and engineer of one of the business competitiveness index said Pakistan showed impressive movement in some of the most dynamic indicators which boded well for future economic growth.

Prime Minister's Advisor on Finance Dr Salman Shah said on that CSF sought to finance practical initiatives to reposition Pakistan's economy regionally and globally and set it on more competitive footing.

"The results will be higher productivity, increased innovation and an economy that is integrated into global value chains and can compete internationally", he said.

Mr Arthur Bayhan, CEO of the CSF in his presentation briefed the audience about the WEF's global competitiveness report and other countries.

In particular, he highlighted the importance of the provincial and local leaders to be part of the competitive dialogue.

The CSF, he said, was working directly with each region in addressing the key competitiveness issues at the regional level.

"The challenge of building competitiveness went beyond what could be accomplished by the government's economic team alone and required the active support and participation of regional and local leaders, academia and the private sector", noted Bayhan.Pakistan, he said, was consistently improving in terms of competitiveness and dynamism.

However, he said that the private sector of Pakistan needed to work more on developing the medium and long term strategies as one of the many steps to improve its competitiveness.

He also urged the government agencies and NGOs to update the data and submit it to international source.

http://www.dawn.com/2007/03/13/ebr1.htm


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## Neo

Tuesday, March 13, 2007 

*Oil and gas production increases marginally*

KARACHI: Oil and gas production has increased marginally during the first seven months of the current financial year.

It stood at 157.14mnboe as against 155.99mnboe during the corresponding month of the previous year, registering a growth of 0.74 percent. 

According to data released by Pakistan Petroleum Information Service (PPIS), the flat production growth is even because of lower increase in the countryÃ¢â¬â¢s gas and oil production during the period under review. Gas output remained at 143mnboe, 0.7 percent higher as against 142mnboe previously. The depletion of Sui gas field output, lower production from the Pindori and shutdown of other fields like Uch etc were the major reasons behind overall stagnant gas production figures. However, this negative impact, to some extent, is being offset by the increase in the production from Adhi and Tal block. 

Oil production also remained intact at 14.14mnbbl, depicting a one percent increase as compared with 13.99mnbbl previously. During the period, the production from Pakistan OilfieldsÃ¢â¬â¢ Pindori field has declined mainly because of problem in water flow. 

Analyst Hussain Yasar at Firstcapital attributed this marginal growth in oil production to increased production from existing fields like Tal Block, Adhi, Chanda etc. Furthermore, LPG production of the country improved by two percent to 323bntons as against 317bntons in the same period last year.

The month-wise figures show that oil and gas production witnessed a slight increase in January, depicting an increase of two percent to 24.32mnboe as compared with 23.84mnboe during December 2006. Oil production depicted a growth of three percent while gas production showed a modest growth of two percent. However the production during January 2007 was the highest during the current financial year. 

The production in January 2007 was two percent higher as against 23.82mnboe in the same month of the last fiscal. During the month, oil production increased by two percent to 2.11mnbbl while gas output at 22.21mnboe was also up two percent as against 21.76mnboe. According to report prepared by Ambereen Jiwani at Investcap, the Oil production of Pakistan Oilfields Ltd. (POL) declined by 13.1 percent during July-January of this fiscal. 

The decline has been attributed to production enhancement process underway and water spill issues in POLÃ¢â¬â¢s two major fields (Pindori & Pariwali), which have been operating at a slower pace. The process has been completed in Pariwali and increase in production has been witnessed since November. The gas production of POL has increased marginally by 1.1 percent. The four percent increase in oil production of Oil & Gas Development Co. Ltd. (OGDCL) was mainly due to higher production from its major oil fields (Bobi, Chanda, Kunnar, Sono, Pasakhi North and East). Gas production on the other hand, declined by 2.7 percent during the period due to maintenance shut down in Uch and Pirkoh during the first two months of this year. However, the production has picked up since then. 

The Pakistan Petroleum Ltd (PPL)Ã¢â¬â¢s oil production grew significantly by 31.7 percent to 2.5k bpd during the seven months of this as compared with 1.8k in the corresponding period last year. Higher production from Adhi and the impact of production from Makori field in the Tal block are the major contributors towards the growth. 

While the decline in gas production is due to declining production in Sui, analyst said.

http://www.dailytimes.com.pk/default.asp?page=2007\03\13\story_13-3-2007_pg5_3


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## Owais

*Pakistan, Uzbekistan to augment trade, transport, energy, security coopeartion *


TASHKENT (updated on: March 14, 2007, 02:08 PST): Pakistan and Uzbekistan on Wednesday vowed to enhance co-operation in three vital areas of trade, transport and energy, besides strengthening ties in diplomatic, political matters and collaboration in security issues.

Prime Minister Shaukat Aziz held an informal round of talks immediately after his arrival at the historical city of Tashkent with his Uzbek counterpart Shavkat Mirziyayev.

The two leaders noted that there was wide scope of further strengthening co-operation in economic areas and said their strong relations need to be translated into deeper interaction.

The Uzbek Prime Minister termed Prime Minister Aziz's visit a "landmark' in their ties and said both need to bring in their private sectors for the benefit of the two countries. He said both the countries could learn a great deal from each others' experiences. He said at the time of his country's independence it only exported raw material, but was now setting up industrial units. 

Prime Minister Aziz informed the Uzbek leader of the economic reforms over the past six years and said these were part of an unending process. 

Earlier the Prime Minister was accorded a warm reception and a red carpet rolled out as he arrived here Tuesday for a two- day official visit. He was received here at the airport by Prime Minister Shavkat Mirziyayev and members of the Uzbek cabinet and senior officials. 

Uzbekistan with a 27 million population is a dry, landlocked country. It is world's second-largest cotton exporter and fifth largest producer; it relies heavily on cotton production as the major source of export earnings. Other major export earners include gold, natural gas, and oil. Along with Liechtenstein it is one of the only two doubly landlocked countries in the world. 

President General Pervez Musharraf visited Uzbekistan in 2005 and later there was a follow up visit by President Islam Karimov last year. The two countries have signed several agreements to boost their economic and trade ties. 

Pakistan provides multiple corridors for co-operation in energy, trade and transportation sectors, which would create opportunities for the entire region including Uzbekistan. 

Tashkent has also been supportive of Pakistan's full membership to the Shanghai Co-operation Organisation. 

Uzbek ambassador to Pakistan, Oybek Arif Usmanov earlier told APP that the two countries have signed at least 29 agreements of co-operation in various fields. 

He said that at present three direct flights from Lahore to Tashkent had been initiated, while similar flights from Karachi to Tashkent were on the cards. 

Pakistan and Uzbekistan have also agreed to establish joint ventures in pharmaceutical industry, manufacturing of medical equipment and exchange of technology in health sector during the 3rd session of Pakistan-Uzbekistan Joint Ministerial Commission (JMC). During the meeting Pakistan offered export of engineering goods, medical equipment, sports goods, and textile fabrics, while the Uzbek side offered export of cotton fibre, silk, minerals, fertilisers, cables, construction material, agriculture machinery, chemicals and aircraft to Pakistan. 

The Pakistan side also invited Uzbek investors to join hands with Pakistani businessmen in Oil and Gas, Textiles, Agriculture, Leather, Banking and Finance, Sports goods, Pharmaceuticals, Surgical goods, Furniture, Gemstone, Jewellery, Marble and Food processing sectors. Both sides agreed to take necessary measures to facilitate the private sector interaction.


brecorder.com


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## Owais

*Singapore operator to take over Gwadar Port today *

KARACHI (March 14 2007): Port of Singapore Authority (PSA) will formally take over the assets and management of Gwadar Port on Wednesday to formally start its operation in the third week of March. In this regard, an eight-member team of PSA Gwadar Limited, led by Managing Director of Teh Lim Chai would arrived at Gwadar on Wednesday morning to take charge of the port premises, equipments and buildings.

Sources told Business Recorder on Tuesday that PSA Gwadar Limited would start port operations on March 20, after its formal operation commencement by President of Pakistan General Pervez Musharraf.

Sources said that the assets and equipments include two shore cranes of 40-ton capacity, one crane of 25-ton capacity, two cranes of 15-ton capacity, two Rubber Tyre Gantries (RTG), eight bagging plants, one reach stacker, two pilot boats, two tugs of 26 Bollard Pull Towage, one survey boat, one mooring boat and one working boat.

The other assets include desalination plant, control tower, office building, gatehouse, two multi-purpose berths of 602 metres length, 100 RoRo berth and 10 metres service berth and three mega watt generator with another backup generator of 450kv.

The PSA Gwadar has also ordered equipments for the handling of transshipment of containers, which would arrive at the port before August this year from Singapore. The equipment includes two Post Panamax Gantry Cranes of 45 tons capacity, four Rubber Tyre Gantries (RTGs), six tractor-trailers and one reach stacker, sources said, adding that the port equipment refurbishment is going on presently by specialised companies.

The dredging of Gwadar Port's 4.5 km approach channel has been completed in mid-February and the berth draught is 14.5 metres. The China Harbour has also deployed navigational buoys including fairway buoy. The Concession-Holder Company (CHC), PSA Gwadar Limited has been established and three separate operating companies formed which includes, PSA Gwadar Terminals Limited, Gwadar Marine Services Limited and Gwadar Free Zone Company Limited.

Sources said that the Gwadar port is ready to handle fertiliser and rice shipments for export, as proper bagging infrastructure is available at the proximity of the port. The Gwadar Port will contribute $42.2 billion, in terms of investment, revenues and income received from its entire operations to the exchequer, over a period of 40 years.

The concession agreement was inked on February 6 between the Gwadar Port Authority (GPA) representing Government of Pakistan, and the Concession-Holder Company (CHC), which is a subsidiary of PSA (Port of Singapore Authority) International PTE Limited.

The agreement has a duration of 40 years. Besides, it regulates the rights and obligations of both parties. The GPA will receive revenues (not profit) from the PSA over a period of 40 years. The investment, revenues and income received from Gwadar port's entire operations are between $23.6 billion to $42.2 billion.

Firstly, the GPA expects $5 billion to $8 billion foreign investment in the area of multi-purpose (MP) terminal and related equipment's to cost PSA at Gwadar Port which would be $1 billion to $1.5 billion; container terminal and others $2billion to $4 billion; the cost of Free Zone development $1.5 billion to 2.5 billion; while the marine services and others would cost $0.5 billion.

Secondly, the GPA is expected to receive between $17 billion and $31 billion revenues from CHC over next 40 years. The expected revenues, generated from containers and others, would be $10 billion to $18 billion. Free Zone will generate $3 billion to $6 billion; while the MP terminal and others would produce $4 billion to $8 billion revenues during the period.

Thirdly, the GPA would receive income from PSA over the period of four decades between $1.6 billion and $3.2 billion, in which the CHC of containers and others would give $0.9 billion to $1.6 billion (9 percent of CHC revenue); Free Zone $0.45 billion to $0.9 billion (15 percent of CHC revenue); and the MP terminal and others would provide $0.36 billion to $0.72 billion (9 percent of CHC revenues).
http://brecorder.com/index.php?id=538028&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*$700 million pumped into Pakistan: CEO China Mobile *


ISLAMABAD (updated on: March 14, 2007, 02:50 PST): China Mobile has already pumped $700 million into Pakistan's telecom sector after taking over the Paktel operations in the country.

"We have come to Pakistan with serious business plans to ensure that Paktel emerges as one of the leading telecom operators in the country within the next couple of years," informed Chief Executive Officer (CEO) China Mobile Pakistan, Guo Yonghong to Minister for Information Technology, Awais Ahmad Khan Leghari in a meeting held here on Tuesday.

The CEO China Mobile briefed the minister about his company's plans for infrastructure development and investment in the expansion of Paktel which has recently been taken over by the China Mobile.

He said his company believed in a healthy competition and quality of service being offered to the subscribers and added the company had already made plans to add around 2500 new basic transmission stations every year to achieve maximum coverage and make itself competitive in the market.

Guo Yonghong told the minister that China Mobile considered Pakistan a valuable partner and the company would work towards strengthening this relationship further in the coming days. He lauded the support and incentives offered by the government to the telecom players already active in the market.

Awais Leghari welcomed China Mobile's decision to come to Pakistan in a big way and assured all possible support and help to the company in extending its operations and its day-to-day interaction with the civic agencies for the purpose of building company's infrastructure in the country.

He said Pakistan's telecom sector was growing at a fast pace with new exciting opportunities coming up for big players like China Mobile to capitalise on a growing hunger for value-added telecom services in the country.

"As the market grows, issues such as quality of service and the provision of value-added services are bound to define the nature of competition that is set to sweep the telecom sector with the arrival of world's biggest telecom company China Mobile in Pakistan," Awais said.

Secretary IT Farrakh Qayyum, Member Telecom Nooruddin Baqai and senior officials from the ministry were also present.

brecorder.com


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## Owais

*Pakistan, South Africa to enhance bilateral ties *


ISLAMABAD (updated on: March 14, 2007, 02:53 PST): Pakistan and South Africa Joint Commission agreed to further enhance the bilateral co-operation in fields of education, culture and tourism, defence and intelligence and security co-operation in drug related issues.

The Joint Commission was established between Pakistan and South Africa on March 9, 1999.

The Inaugural session of the Joint Commission was held here on 12-13 March 2007.

Riaz Muhammad Khan, Secretary Ministry of Foreign Affairs led the Pakistan delegation while Dr. Ayanda Ntsaluba, Director General South African Department of Foreign Affairs led the South African side.

At the conclusion of the Join Ministerial Commission both the sides also signed the agreed minutes of the commission meeting and exchanged documents between the two countries in this regard.

According to the agreement, in order to enhance the level of bilateral trade both sides agreed to finalise the trade agreement by end of May, 2007.

The South African side would undertake a technical visit to Pakistan shortly to explore the available opportunities of investment and this visit will form the basis of more detailed work programme between the two countries.

It was agreed to encourage respective private sectors to explore establishment of a Joint Business Council to institutionalise mutual interaction amongst the private sectors.

To unlock the potential in vestment and industrial co-operation both sides agreed to identify areas of synergies and complementarities in facilitating focused business co-operation.

The Pakistan side requested the visiting South African delegation to expedite the initiation of the agreement relating to co-operation in Science and Technology, within two months.

Both sides agreed to enhance the co-operation in the field of agriculture with special focus to livestock, rinderpest, quarantine matters, exchange of various seeds, pesticides, export of fruit/vegetables and Vapour Heat Treatment (VHT).

Both sides agreed to share the experiences of each other in the areas of coal gasification technology, value addition in mineral and power generation, including information sharing on the Pebble Bed Modular Reactor initiative for mutual benefits.

Both sides also agreed to finalise the MoU on maritime co-operation and extradition treaty at the earliest.

Both sides expressed concern over the increasing trend of drug trafficking between both the countries and agreed to finalise Memorandum of Understanding for intelligence and security co-operation in drug related issues.

As an important manufacturer of pharmaceutical items and surgical equipment, the Pakistan side undertook to provide a list of these items and equipment for possible export to South Africa.

The Pakistan side offered the services of highly skilled, semi-skilled and unskilled labour to South Africa in different fields.

Both sides agreed to constitute a joint committee comprising specialists from each side to discuss and finalise agreement regarding immigration, consular affairs and visa requirements.

Both sides agreed to further enhance the bilateral co-operation in the field of education, culture and tourism.

Pakistan proposed an MoU for promotion of tourism between the two countries.

It was also agreed that a technical team from South Africa will visit Pakistan in July as a follow up and identify the sectors of trade and investment between the two countries.
brecorder.com


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## Owais

*Foreign investment to reach $6 billion this year: Salman *

KARACHI (March 14 2007): Adviser to Prime Minister on Finance, Revenue and Economic Affairs, Dr Salman Shah, has said that the inflow of foreign investment in the country is likely to touch six billion-dollar mark this year. Addressing the ACCA Pakistan's CFO Conference's inaugural session as chief guest at a local hotel here on Tuesday.

Shah said that foreign investment played an important role in the economy of Pakistan, as the country had ample manpower and the inflow of capital triggered generation of employment opportunities.

"We have a very stable economy today and the government aims to maintain and entrench the hard won economic stability. We all aim to make Pakistan a true economic power, for that it has to be a centre of enterprise and innovation. The government's vision for Pakistan is to be location of choice and the place for business. This is possible but for that we need strong public-private partnership. The government and business need to be working on shared national economic purpose," the adviser said.

To a question about the GDRs of United Bank Limited (UBL), National Bank of Pakistan (NBP) and Kapco, to be launched in the international markets, he said these were in process and as soon as the process was completed, the GDRs would be launched, hopefully this fiscal year.

He said that efforts would be made to complete the GDRs within this financial year but this would depend on the pace of processing by the Privatisation Commission. Dr Shah expressed satisfaction over the performance of the Central Board of Revenue (CBR), adding that the government was endeavouring to broaden the tax base, as unless and until the base was expanded, the rate of tax could not be brought down.

About the export target, the adviser said that the target was achievable, adding that Pakistan was strongly competitive in the textiles market while the government was also taking concrete measures to widen the export base and addressing the weak quarters to achieve the 45 billion-dollar export target by 2013.

Pakistan was situated at such a strategic location between the Asian economic giants, ie India and China, that left the country at an ideal location to serve as the logistic chain and trade corridor, he said, adding this was a high potential area attracting large-scale investment.

Dr Salman Shah appreciated the ACCA Pakistan for holding such a conference. Finance and accounting high-ups have gathered from far and wide in Karachi to participate in the CFO Conference, organised by ACCA Pakistan.

ACCA President Dennis Yeates, in his speech said: "The key lesson to learn from the major financial debacles is the need for a top to bottom ethics-based culture. And these are mirrored in the views of CFOs in this region with more than half believing they are responsible for promoting an ethical culture and should set a good example".

He further said: "Ethics is at the core of ACCA's reputation and influence around the world. This is why we ensure that our ethical code complies with the IFAC code of ethics for professional accountants and will always comply with that code". ACCA Pakistan President Arif Masud Mirza presented the welcome address.

APP ADDS: Dr Salman Shah said Pakistan's development programme was growing very rapidly, adding that there was a need of expanding tax base, which would help enhance the revenues to be utilised for development purposes. He pointed out that the country's development programme is growing very rapidly and that the construction of schools, hospitals and road etc, would be from the revenues generated by the CBR.

"However, this does not mean to recover more tax from those who are already paying the taxes", Dr Salman remarked adding that this means that the tax base be expanded as far as possible so that there could be contribution of all for the development of the country. Replying a question, Dr Salman said that the existing current account deficit was because of the rapid economic growth of the country.

He stated that in the import bill, the imports machinery, raw materials, energy etc, were being financed. He was of the view that the country's balance of payment would be in surplus and the reserves would go up. Dr Salman said that efforts were aimed at meeting the exports target for this year. In a longer time frame, the country's economy had a lot of resilience and many of the sectors could come in exports.

Value addition can be undertaken in certain areas of food products and that there can be expansion in the engineering products besides the information technology-related programmes.

Replying a question, Dr Salman said that the allocation of resources to the provinces was being made in accordance with the amended NFC award by the President of Pakistan. This would continue to be done till a new NFC award was made and for this the role of the provincial governments was more than that of the federal government, he added. He said that if the provinces through consensus come up with a formula, which was a better one then this would be implemented.

At the moment the amended award given by the President is a better one and under this all the provinces are being given substantially increased resources and there is no particular complaint from anyone.
http://brecorder.com/index.php?id=538057&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Pakistan's economic growth attracts more UAE investors *

ABU DHABI (March 14 2007): The economic relations between the United Arab Emirates (UAE) and Pakistan witnessed remarkable growth, with surge in Emirati investors looking to take advantage of growth opportunities taking place in Pakistan.

Emirates Investment Group is now considered one of the largest investment companies in Pakistan with its recently launched financial towers in Karachi. Emirates Global Islamic Bank, launched by major Gulf investors, is considered one of the most modern Islamic banks in the country, strength of Islamic banking facilities and technical investment infrastructure provided to Pakistan banking sector.

In this regard, significant role was played by Sheikh Tariq bin Faisal Al Qasimi, Chairman Emirates Investment Group and Chairman Emirates Global Islamic Bank, in developing these new investment sectors and introducing modern concepts to business sector of Pakistan.

Sheikh Tariq Al Qasimi said: "Diversification is important requirement in any investment portfolio. This helps us create and take advantage of opportunities that can benefit from managerial skills that utilises a long vision of economy; resulting from a strong familiarity with economic rules and regulations," he said. He spoke of how a revolution it its economy now had helped it to be on a par and take advantage of global growth opportunities.

Gulf investors and businessmen are playing major role in development, increase of economic, financial arena, industrial, banking foundations where Pakistan hopes to achieve positive results from rapid economic plans with the UAE in particular and the Gulf Cooperation Council (GCC) states in general.

http://brecorder.com/index.php?id=538148&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Germany ready to help enhance product competitiveness *

KARACHI (March 14 2007): Consul General of the Federal Republic of Germany, Hans-Joachim Kiderlen has said Germany is ready to help Pakistan where it wants to enhance its products compatibility in the European Union (EU) countries' markets. Speaking at a meeting of Karachi Chamber of Commerce and Industry (KCCI) on Tuesday, he said that Free Trade Agreement (FTA) with India would not hit Pakistan.

He also hoped that Pakistan and Indian both will fully employment South Asian Free Trade Agreement (SAFTA) as well as resolve the issue of Kashmir. He said that the EU is also trying to become a partner of SAARC countries. He appreciated Pakistan's act of taking back its national landed on the EU soil illegally.

Speaking on the occasion, British Deputy High Commissioner. Hamish ST Clair Daniel, OBE, said that in the last three years a number of British trade delegations visited Pakistan and now enjoying business with Pakistani counter parts.He assured the members of KCCI that the British companies would participate in the coming KCCI exhibition in June 2007 Consul General of Poland, Ireneusz Makles said that Pakistan is a very important country for the EU in South Asia. He praised quality of Pakistan products and said that they are of high quality and offered at reasonable price. Pakistan is also a fast developing country, he added.

He said that a high powered delegation of mining industry will visit Pakistan in next month to see the environment of co-operation and establishing joint venture units.

He said that both the countries have lot of potential to boost two way trade.

Consul General of France, Pierre Seillan said that the EU countries are in a process to have a constitution. He said that there are 27 members of the EU and agreeing on one constitution is a difficult task but not impossible. Every country has its own problems and thinking, he added.

Welcoming the guests, President, KCCI, Majyd Aziz said that EU countries relocating industrial units due to high cost of production and suggested that they should consider Pakistan as one of the best place for relocation.


http://brecorder.com/index.php?id=538085&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Pakistan eyeing $300m United Bank share sale *

HONG KONG/KARACHIMarch 14, 2007: The government plans to sell a stake worth up to $300 million in United Bank Ltd (UBL) through a global share sale, and it has invited six investment banks to pitch for the deal, people familiar with the matter said on Wednesday.

Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan and Merrill Lynch are all bidding for the $200 million to $300 million global depository receipt (GDR) sale, the sources said.

A government source said the decision for the deal's lead manager would be made by early April, and the deal should be completed by the end of June. The government is only selling part of its roughly 45-percent stake in UBL.

UBL shares fell 2.15 percent, while the Karachi 100 Index was down only 1.09 percent.

The government has been trying to offload part of its stake in UBL since June 2005, when it tried to sell 15 percent through an initial public offering that eventually failed to draw enough subscribers.

A consortium of UAE-based Abu Dhabi Group and British conglomerage Bestway Group bought 51 percent of UBL from the government in 2002.

The government was planning a 20 percent stake sale in February 2006, according to a government source, but the deal never made it to the market.

Pakistan is being tipped by foreign investment bankers as a potential hotbed of equity issuance activity as the country's economy is growing at nearly 7 percent and the government is pushing to privatise some of its biggest companies.

The country's largest listed firm, the Oil and Gas Development Co, raised $813 million through a GDR sale in December, and the government is also planning a stake sale of top oil marketing firm Pakistan State Oil.

The Karachi 100 is up 12 percent this year after a 5 percent increase in 2006. Pakistan began popping up on the radar screens of foreign investors after the index soared 54 percent in 2005.

Pakistan's liberal foreign investment rules, which can be rare in emerging markets, are a further draw to overseas buyers.

http://www.brecorder.com/


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## Neo

Wednesday, March 14, 2007 

*Feasibility studies of 10 hydropower projects finalised*

By Sajid Chaudhry

ISLAMABAD: Feasibility studies of ten hydropower projects have been finalised to make sure availability of 11635-megawatt electricity in the system upon completion in next three to seven years.

According to Medium Term Development Framework 2005-2010, total electricity demand in the country, which stands at 16,600 megawatt in fiscal year 2006-07, would be around 21,500 megawatt in fiscal year 2009-10. The power demand in the fiscal year 2009-2010 is estimated at 9,531 megawatt for domestic, 1408 megawatt for commercial, 2097 megawatt for agriculture, 9,267 megawatt for industrial and 1341 megawatt for other consumers in fiscal year 2009-2010.

According to a project performance report of March 10, 2007 available with Daily Times, the feasibility study of Dasu hydropower project has been completed that would make addition of 3700-megawatt electricity in the system and expected to be completed in 7 years. The study on cost of the project is underway, however, offices of consultant and field offices have been established. The consultant has submitted inception report.

Study on $117 million Golan Gol hydropower project is also completed and this project would make available 106-megawatt electricity in the system upon completion in 4 years. Financing for these projects are available Kuwait Fund has provided $37 million, Saudi Fund $40 million and OPEC $30 million. Consultants are being engaged for preparation of detailed design and tender documents.

Bunji hydropower projectÃ¢â¬â¢s feasibility study is in hand which is worth $3.865 billion and would contribute 5460-megawatt electricity in the system upon completion in next 7 years. Consultants are being engaged to implement this project.

The feasibility study of Keyal Khwar hydropower project is also completed, its estimated cost has been worked out to be $120 million and would make addition of 130-megawatt electricity in the system on completion in next four years. This feasibility study is being upgraded with financial assistance of the Kuwait Fund.

Feasibility study of the Lawi hydropower project has been finalized however cost estimates are being completed. This project would make addition of 90-megawatt power in the system in next four years. PC-II and detailed engineering design of the project is under preparation. A 545-megawatt Spat Gah hydropower projectÃ¢â¬â¢s feasibility study is in hand, however, cost estimates are being finalized. M/S ILF of Germany have been appointed as the project consultant and this project would be completed in next five years.

Feasibility study of the Palas Valley (Chor Nallah) is being carried out with financial assistance from Kuwait Fund grant. Cost of the project is being finalised and this will make addition of 386-megawatt hydropower in the system when completed in next five years.

Kohala hydropower projectÃ¢â¬â¢s feasibility study is in hand and cost estimates are also under study. This project would make an addition of 1100-megawatt hydropower in the system in next 5.5 years. Appointment of consultants is underway.

Feasibility study of Phandar hydropower project has been completed by HEPO and ZTZ. This project would be completed with a cost of $53 million in next three years and would make an addition of 80-megawatt power in the system. PC II for detailed design and tender documents have been submitted to the Ministry of Water and Power on January 20, 2007.

Feasibility study of the Basho hydropower project has been completed and $27.35 million to be the cost of the project. This project would make an addition of 28-megawatt power in the system in next three years. PC II for detailed design and tender documents has also been approved. Expression of Interest (EOI) for short listing of consultants issued on February 22 and last date for submission is April 3, 2007.

http://www.dailytimes.com.pk/default.asp?page=2007\03\14\story_14-3-2007_pg5_1


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## Janbaz

*Chinese co to set up mobile phones plant*

OUR STAFF REPORTER
Karachi - Advisor to the Prime Minister on Finance Dr Salman Shah has said that government has decided to permit a Chinese company to establish a mobile phone manufacturing plant in Pakistan.
He was talking to the media men here on Tuesday. Dr Salman said that keeping in view the import bill of $1billion of mobile phones of the country, the government had decided to allow Chinese company to establish a mobile cell plant in Pakistan. He said that government was trying to expand the tax net to reduce the burden on the existing taxpayers. He also said that the Central Board of Revenue (CBR) remained quite successful in few years in expanding its tax base by improving the revenues. He further said that the CBR was using those revenues to improve the basic infrastructure in country. 
Salman Shah also pointed out that Foreign Direct Investment (FDI) in Pakistan would hit US $6 billion in current fiscal year. He was of the view that the current account deficit and balance of trade against Pakistan was the manifesto of the robust economic growth as huge machinery and other equipments were being imported in large amount to give boost to the industrial sector. He hoped that Pakistan would regain its current account deficit and balance of payment surplus also. Answering to a query, he said that the government was committed to get the export target of $45 billion in the year 2013, for this purpose government was diversifying the export base as well to include food products, engineering items and IT products side by side with the textile sector&#8221;. 
About the National Finance Commission (NFC) awards, he said that the provinces had full freedom to formulate any formula acceptable to all but he was of the view that till now, the formula presented by President General Pervez Musharraf was the most suitable in this regard. He further said that GDR of HBL, UBL and CAPCO would be completed in this fiscal. He said that government was also working to improve the rating of Pakistan on World Economic Forum (WEF).
Addressing to the ACCA Pakistan Conference on &#8220;CFOs: Challenges and Opportunities&#8221;, he said that the rapidly growing public and corporate sector of Pakistan needed professional accountancy and financial up gradation. He said that this type of conferences helped to bring innovativeness in the economic field. He appreciated the initiative by ACCA Pakistan of arranging a CFO conference that provided an opportunity to the accounting and finance professionals of Pakistan to listen to a number of international and corporate sectors of Pakistan.
ACCA President Dennis Yeates said that the key lesson to learn from the major financial debacles was the need for a &#8216;top to bottom&#8217; ethics based culture and these were mirrored in the views of CFOs in this region. He said that the ACCA ensure ethical code complies with the IFAC Code of ethics for professional accountants and would continue to comply with that. 

The Nation.
http://www.nation.com.pk/daily/mar-2007/14/bnews1.php


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## Owais

*50 exploration companies bidding for 17 gas fields *

ISLAMABAD (March 15 2007): Fifty world reputed gas exploration and production (E&P) companies have submitted bids with the ministry of Petroleum to contest for 17 onshore and offshore blocks for gas production.

The office of the director general Petroleum Concession (DGPC) is processing the applicants' bids and their work plan for gas exploration in Pakistan and it will hold open bidding for allotment of blocks once the spadework is over.

Petroleum Minister, Amanullah Khan Jadoon, gave detail of the bidding for the new blocks and the new Petroleum Policy during a meeting with OMV's senior vice president who called on him here on Wednesday.

He said that the new petroleum policy would entail lucrative incentives for the prospective local and foreign investors in the onshore and offshore oil & gas exploration.

The minister said that Pakistan has a vast onshore & offshore sedimentary area 827,000sq km out of which around 25 percent was under exploration. He said that the government was taking concrete steps to exploit the untapped hydrocarbon and coal reserves to meet the growing energy need of the country. He said that 17 new blocks in offshore and onshore areas were being opened shortly which would boost the oil & gas exploration activities in the country.

The Minster appreciated OMV's contribution for promoting the oil & gas industry in Pakistan and invited the company to make more investment for the mutual advantage. He lauded the company's interest to increase its oil & gas exploration involvement in collaboration with the local companies.

Wolfgang briefed the minister about OMV's world-wide involvement in the oil & gas exploration activities including in Pakistani areas of district Khairpur, Sindh from where it has been producing about 550 million cubic feet gas daily by investing $450 million.

The managing director of Fugro Robertson who also called on the minister said that his company is providing consultancy to OGDCL in Pakistan basins study project aimed to identify petroleum prospects of different sedimentary basin of the country which would help to promote exploration activities. He told that the company would be participating in new blocks bidding which were under evaluation.

http://brecorder.com/index.php?id=538373&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Economy growing in spite of trade deficit: CBR chairman *

FAISALABAD (March 15 2007): Economy is growing in spite of trade deficit, however, exporters have to overcome their inherent weaknesses and deficiencies to face the future challenges and survive in the competitive international markets, said Central Board of Revenue (CBR) Chairman Abdullah Yousuf.

He was addressing the exporters and businessmen in the conference ball of Pakistan Textile Exporters Association (PTEA) here on Tuesday. He said our economy had successfully absorbed the repeated crisis, fomented by record increase in oil prices coupled with shocking earthquake of October 8. "It would be difficult for us to survive with previous fragile economy," he added.

The chairman said that exports were only solution to overcome trade deficit and asked the exporters to play their role in increasing national exports, adding that first of all exporters should overcome their own weaknesses and deficiencies to survive in the international markets.

Abdullah Yusuf said we had potential to double our textile exports from existing 10 billion dollars to 20 billion dollars and in this connection private and public sector had to move ahead with unanimity of purpose.

He said we needed local and foreign investment to increase our production capabilities, and added that government was already making efforts to facilitate the exporters and investors.

He further said that we had some difficulties in facing challenges of quota -free regime, however, time had come to take bold steps to produce quality products with lowest possible production cost. In this connection, he particularly mentioned Human Resource, weaknesses of labour deficiency of technology management failure, high logistic cost and many other factors to become cost effective.

The second option would be merger of various organisations to survive economically in this world, he said, adding we must work hard with a futuristic vision to remain competitive and to arrest poverty and unemployment.

He said exports in Pakistan had already been declared zero-rated and old pending sales tax cases were being resolved on top priority basis. Responding to a question, the CBR chairman said that some proposals had been received to replace some pre-emptive with actual taxes, however, no final decision had yet been taken.

Earlier, PTEA Chairman Zahid Aslam in his address of welcome explained in detail the problem being confronted by the exporters. Later, Faisalabad Industrial Estate Development and Management Company Chairman Mian Muhammad Latif presented a shield to the chairman.

http://brecorder.com/index.php?id=538431&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*US to give Pakistan $750 mln for tribal areas uplift *

ISLAMABAD: March 15, 2007: The United States is to give Pakistan 750 million dollars over five years to develop its troubled tribal areas bordering Afghanistan, a senior US official said on Thursday.

US Assistant Secretary of State for South and Central Asian Affairs Richard Boucher announced the funding after holding talks with President Pervez Musharraf, a lynchpin in the US-led "war on terror".

"I am pleased to announce I was able to confirm to the government of Pakistan that we will be providing 750 million dollars over five years to support the tribal area development strategy," Boucher told reporters.

"This commitment to the development of Pakistan, this commitment to the long-term relationship, is another example of the very broad and deep relationship we have," he added.

The administration of US President George W. Bush will seek the approval of Congress for the aid, Boucher said.

"This is a good plan, a comprehensive plan to provide economic development, education and other opportunities to the people who live in the border regions of Pakistan, the tribal areas in particular," he added.

The Pentagon was also asking the US Congress for 75 million dollars to upgrade the Frontier Corps, Pakistan's paramilitary border force that has borne the brunt of the fight against militants, he said.

Islamabad launched military operations in 2003 to clear the tribal areas of hundreds of Al Qaeda and Taliban militants who fled Afghanistan after the fall of the Taliban regime in late 2001.

But after the deaths of hundreds of soldiers and around 1,000 militants it signed peace deals with tribal elders and militants in Waziristan. US officials in Afghanistan say attacks on foreign forces have since increased.

US Vice President Dick Cheney paid a surprise visit to Musharraf last month during which he urged him to crack down on militant safe-havens in the tribal areas, saying that the Taliban and Al Qaeda were regrouping there.

Boucher however defended Musharraf's performance.

"President Musharraf has been a very strong ally, Pakistan has been a very strong ally... we work closely with President Musharraf and the Pakistan government because we have common interest," he said.

The US official, who arrived in Islamabad on Wednesday from Kabul, was cooler on Pakistan's plans to fence part of the border with Afghanistan to stop the movement of militants. Afghan officials have rejected the move.

"Militarily, fencing may have a role, that is something that is best worked out in a common discussion. We hope that discussions will take place -- we can help with that," Boucher said. 

http://brecorder.com


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## Neo

*120MW gas-fired power plant to be set up in Sukkur *

ISLAMABAD (March 15 2007): The Petroleum Exploration (Pvt) Limited (PEL) and Frontier Holdings Limited, a Canadian exploration and production company, will invest $120 million for setting-up a 120 MW gas-fired power plant at Sukkur. The joint venture will use low BTU gas from its Kandra gas field, having as low as 140 to 200 BTU gas for power generation.

PEL and its joint venture partners - Frontier Holdings Limited and Government Holdings (Pvt) Limited (GHPL) - have signed an agreement to develop Kandra field and gas produced from it will be used for power generation to help the government overcome electricity shortage.

Kandra gas field has 140 to 200 BTU gas, and the joint venture will apply very scientific process for improvement of gas value. The joint venture will bring into Pakistan state of the art technology and equipment for its power generation project.

Its gas-fired project will be the first ever in Pakistan's history, which will consume low BTU gas for power generation. It's the government policy to encourage low BTU gas for power generation.

Since Pakistan is facing power shortage due to fast growing economy and demand of electricity the government is using all possible options for power generation. The gas-fired project is one of its options.

The Economic Co-ordination Committee (ECC) of the federal cabinet has already allocated five million cubic feet high BTU gas for co-mingling with Kandra gas to be used for power generation. The joint venture will use modern technology for improvement of gas from 140 to 300 BTU to make it useful for power generation. The joint venture is actively engaged in development of its development of Kandra gas field.

http://brecorder.com/index.php?id=538435&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Kanupp loses generation capacity *

By Khalid Mustafa

ISLAMABAD: Karachi Nuclear Power Plant (Kanupp-1), the nationÃ¢â¬â¢s first nuclear power unit installed in 1970 to provide electricity to Karachi, has alarmingly lost its generating capacity from an original 137 megawatt to only 40 megawatt now, as the authorities concerned have failed to maintain it over the years.

According to a senior official, the Kanupp-1 was installed with the generating capacity of 137 MW of electricity, but the plant is now left with a capacity to generate only 40 MW, which is ample evidence of the authoritiesÃ¢â¬â¢ incompetence.

The government is also planning to install Karachi Nuclear Power Plant-2 (Kanupp-2) with a generation capacity of 600 MW with the help of China. Negotiations are under way for the purpose.

Ã¢â¬ÅKarachi Nuclear Power Plant-1 will be retired by 2019 and the dismantling of the plant, keeping in view the nuclear emissions factor, will be a test case of the ability and capacity of PakistanÃ¢â¬â¢s Nuclear Regulatory Authority,Ã¢â¬Â the official remarked.

The official said the authorities concerned are trying to increase its generation capacity to the extent possible and within days it could be able to enhance its generation capacity to inject more power in the cityÃ¢â¬â¢s system, which is facing electricity deficit. 

It is strange as to why the authorities concerned have wasted too much time in enhancing the generation capacity of the nuclear power plant, which has actually been reduced from 137 MW to 40 MW.

However, at long last, the authorities concerned have made a plan to attain the generation capacity up to 70 to 80 MW as it is not possible to retrieve the total generation capacity lost because many of the parts being used in the plant have become outdated. In this connection, the authorities are in talks with the Canadian government for importing some key parts of the plant.

http://www.thenews.com.pk/daily_detail.asp?id=46851


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## Neo

*More investment expected in telecom *

By Imran Ayub

KARACHI: Orascom Telecom, parent company of the largest cellular service provider Mobilink, is likely to inject another $291 million to renew its licence for the next 15 years when it expires in July 2007.

A top official confirmed the companyÃ¢â¬â¢s plans pinning hopes on growing cellular subscriber base in the country with expansion in coverage areas.

Ã¢â¬ÅObviously, we have plans to renew licence and the decision in this regard has been made,Ã¢â¬Â Zohair A Khaliq, President and CEO Mobilink told The News in a brief response. Ã¢â¬ÅWe are very much committed to the Pakistani industry and looking forward to strengthen our operations across the country.Ã¢â¬Â

Meanwhile, sources in the industry and Pakistan Telecommunication Authority (PTA) with disclosure of such plans said Mobilink would be the second cellular company, which is poised to renew its licence.

Ã¢â¬ÅBefore that only Instaphone renewed its licence in 2005 at $291 million,Ã¢â¬Â said a source. Ã¢â¬ÅThe PTA in 2004 awarded two cellular licences to foreign companies (Telenor and Warid) at $291 million each in an open bidding, which was set as a benchmark for cellular licence fee and incorporated in the Cellular Mobile Policy 2003.Ã¢â¬Â

He said as per the Cellular Mobile Policy 2003 each company had to pay the sum equal to the highest bid of $291 million at the time of its licence renewal. However, the Mobilink chief said his company would invest with conditions agreed with the telecom authorities.

Ã¢â¬ÅThere is a huge potential in Pakistani cellular market,Ã¢â¬Â he said. Ã¢â¬ÅWe have already half a billion dollar investment plans and determined to follow that in line with the conditions agreed with the government,Ã¢â¬Â Khaliq said without elaborating such conditions.

Out of total six cellular operators, licences to Instaphone, Paktel and Mobilink were awarded free of any charge when they launched their services in 90s. The PTA billed a nominal Rs50 million to Ufone for the issuance licence to operate till 2015. Paktel, however, acquired licence for GSM (global system for mobile communications) operations in 2004 at $291 million.

Huge injection of investment by cellular companies through licence fee has lifted authoritiesÃ¢â¬â¢ hopes, which expects the telecom sector continue to more than a billion dollar next fiscal mostly by wireless local loop (WLL) operators and cellular companies.

Ã¢â¬ÅThe figures may even go up from $1 billion by June 2008,Ã¢â¬Â said a PTA official. Ã¢â¬ÅIt includes both local and foreign investment. The major chunk of the amount is expected in WLL and cellular segments.Ã¢â¬Â

Quality conscious cellular companies have already in a new kind but stiff competition, which makes the country to win around $2 billion dollars investment pledges during 2006-07 for their network expansion.

Four major GSM operators - Mobilink, Ufone, Warid and Telenor - service operators with foreign stakes and management controls have chalked out their plans for network expansion, which would help these companies to increase subscriber base with.

Ã¢â¬ÅThe cellular companies are likely to grow for the next few years, which demands investment to improve quality service,Ã¢â¬Â said Anwaar Ahmed Khan, Head of Research at Inter Securities Management Ltd. 

Ã¢â¬ÅIn fact reduced tariff and increased number of destination has made the cellular service within the reach of low income group and thatÃ¢â¬â¢s why it is rising with such staggering pace.Ã¢â¬Â

http://www.thenews.com.pk/daily_detail.asp?id=46854


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## Neo

*Foreign debt at 56 per cent of GDP *

By Aftab Maken

RAWALPINDI: The governmentÃ¢â¬â¢s strict legislation for financial discipline has brought foreign debt down by 2.5 per cent per annum and would not exceed 60 per cent of GDP, said Dr Ashfaq Hassan Khan, Adviser to Prime Minister.

Addressing a seminar on Ã¢â¬ÅEmerging Challenges in Pakistan Banking and its Effects on Economy and Role in National BuildingÃ¢â¬Â organised by Institute of Banking in Pakistan (IBP) at State Bank building, he said that at present the foreign debt is 56 per cent of GDP and it would be brought down to 53.5 per cent by the end of this year.

He said that government would not give guarantee for any private or public sector direct borrowing, which would be more than 2 per cent. Parliament also instructed the government to make sure the allocation of 4.5 per cent of GDP for social sector spending.

In the past, only upper and industrial class was using bank finance while introduction of consumer finance by this government in 2002, middle class and lower income groups have also go benefited, he said.

Dr Khan said that at the time when this unique idea was floated people criticised it and termed it a flop one. But, he added that time has proved that this sector has flourished and helped in eradication of unemployment and poverty besides improved living standard of people.

He said that in East Asia 67 per cent of economy lies on consumer financing while in US it is more than 75 per cent. He said that banks provided financing to consumers for purchase of automobile, electronics and electric appliances, which has helped to boost local industry and enhanced economic activities.

Ã¢â¬ÅSixty per cent parts of car are being manufactured locally when production of cars increased from 30,000 units to 200,000 units per annum, it need more units and working hands,Ã¢â¬Â he added.

http://www.thenews.com.pk/daily_detail.asp?id=46862


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## Neo

March 15, 2007 
*Pakistan set to harvest 22m tons of wheat*  

By Sabihuddin Ghausi

KARACHI, March 14: Amid an indicated shortfall of five to seven per cent in the global wheat production this year that also includes an expected deficit of three to five million tons in the neighbouring India, the growers in Pakistan are all set to harvest a record bumper crop of about 22 million tons, creating good export prospects.

Ã¢â¬ÅRains have so far not done any substantial damage to the wheat cropÃ¢â¬â¢Ã¢â¬â¢, Sufi Bilal, a senior leader of the millers, informed from Lahore by telephone on Wednesday, but warned that more rains could affect the crop by reducing the size of the grain.

He indicated good prospects of wheat exports from Pakistan in the coming months as reports suggest some shortfall in wheat production in Australia, Canada and India.

In India, he said the indications are that wheat production this season will be less than 70 million tons as against its demand of 73 million tons plus. Bilal is not happy with wheat export these days as international prices have crashed from a peak a few months ago.

Traders in Karachi are too exploring wheat export prospects in India and other countries, but millers want government to come out with a comprehensive policy for wheat and bakery products export that should give incentives to value-added products.

Ã¢â¬ÅNovember and December are appropriate months for export, if silos are constructed in Sindh and Punjab according to international standards to stock wheat, and if State Bank gives a proper credit policy to finance,Ã¢â¬â¢Ã¢â¬â¢ said a local trader.

For bakery products export, the government needed to carry out a market survey in UAE, Saudi Arabia and African countries.

Reports emerging from Islamabad suggest that the federal government intends to come out with a long-term wheat export policy in anticipation of a bumper crop harvest for the second consecutive season this year.

PakistanÃ¢â¬â¢s domestic demand is estimated at around 20 million tons. A strategic reserve stock of one million ton that is disposable through export at the end of any season is being considered a safe option if prospects of next crop remain bright.

But with improper mechanism of crop estimation, insufficient stocking arrangements, bad roads to connect fields with markets and above-all a high cost of production, a long-term wheat export policy will always remain an elusive dream.

Ã¢â¬ÅThe wheat is a sensitive item, and its scarcity is fraught with frightening consequences of political destablisation,Ã¢â¬â¢Ã¢â¬â¢ remarked a bureaucrat who once remained associated with the food department in Sindh government. The memories of hunger marches, protest rallies and countrywide agitations in 1997 because of wheat flour price spiral, still haunt bureaucrats. Then a few years later, the government exported some wheat in anticipation of harvesting a bumper crop and faced an acute supply and high price problem.

In the current season, the government expects to harvest 16 to 17 million tons in Punjab, 2.3 to 2.4 million tons in Sindh and two to three million tons are likely to be procured from NWFP, Azad Jammu and Kashmir and Balochistan. The Sindh is planning to procure about 0.7 million tons from growers in next few weeks.

Ã¢â¬ÅWe are seeking a Rs7.5 billion financing from banks to launch our procurement in the next one or two seeksÃ¢â¬â¢Ã¢â¬â¢, said an official of the Sindh food department.

The banks are now asking for 10.50 per cent interest on borrowings as against 10.25 per cent in the last quarter. The Sindh food department claims to have paid back a substantial amount of Rs7 billion borrowed for procurement in the last season and officials say that hardly Rs30 million remain to be paid back.

Millers in the city complain that wheat being made available from government stocks is of inferior quality. The government storage is of substandard quality and unable to preserve the grains.

The wheat flour price did rise in the market because of what was said rising cost of electricity, but wheat price in the open market is gradually coming down.

http://www.dawn.com/2007/03/15/ebr1.htm


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## Neo

March 15, 2007 
*Investors worried about political instability*

By Shahid Iqbal

KARACHI, March 14: Foreign investors are showing signs of anxiety over the prospects of political stability in Pakistan. What foreign investors have started asking from their advisers was quite interesting and at the same time a message for the economic and political managers of the country.

The Pakistani private sector advisers, who protect the interest of the foreign entities and investors, said they cannot afford to give a false picture to their clients as Ã¢â¬Ëit is the business of true information.Ã¢â¬Â

What used to be the first question of a foreign investor? Ã¢â¬ÅWill President Musharraf continue to rule the country?Ã¢â¬Â Analysts, who sell their knowledge and skills in the form of Ã¢â¬Ëworking papersÃ¢â¬â¢ said the reply was easy a year before. But the question became more and more difficult in the election year.

They said general elections had been a sign of political instability in Pakistan as the country witnessed frequent change of governments during late eighties and nineties resulting in Ã¢â¬Ëabrupt policy changes on economic side.Ã¢â¬â¢

Ã¢â¬ÅAs the time approaches closer to general elections, it appears that the elections are rather a problem that became bigger with the dispute of re-election of the president,Ã¢â¬Â said Abbas Jameel, a business analyst.

He said the analysts have to sell complete knowledge about the political scenario and possibilities of changes in future to their overseas clients or investors.

A leading researcher said that investors had become more inquisitive about the political change expected by the end of this calendar year.

Ã¢â¬ÅThe question regarding the future of President Musharraf has been increasing in number while its convincing reply to give them a positive picture is becoming more difficult,Ã¢â¬Â said the researcher.

Ã¢â¬ÅIn fact, the foreign investors are interested in persistency of the economic policies and they feel that persistency is linked with the current setup of the government,Ã¢â¬Â he said.

The foreign investments have been increasing in the country and it apparently dispels the impression that the foreign investors are concerned over the political situation.

Ã¢â¬ÅPakistan may end up with record foreign direct investment in the current fiscal year till June 2007 but the impact could be felt in the fiscal 2007-08, which will cover the expected troubled period of general elections and the new setup of government in Islamabad,Ã¢â¬Â said Saqib Aleem, a researcher.

He said it was also difficult to answer that whether the economic policy would continue to prevail or not Ã¢â¬Ëas we are in the dark about the future set up of the governmentÃ¢â¬â¢

However, they used to convince the investors that Pakistan is a part of global economy and it is extremely difficult to leave the track on which the economy is growing with a rate of 7 per cent annual growth.

The second question being asked by the foreign investors is about independence of institutions in Pakistan. Ã¢â¬ÅThey used to ask that whether the institutions are free from the government influence or not,Ã¢â¬Â said Jameel. Ã¢â¬ÅOur answer is clear that we have free institutions and that are free from the government influence,Ã¢â¬Â he said.

However, the third main question, which the foreign investors used to ask is about the independence of central bank (State Bank of Pakistan).

Ã¢â¬ÅWhen we reply that the SBP is independent and autonomous central bank, they like to know who appoints the governor of the SBP,Ã¢â¬Â he said.

When they are told that the president of the country appoints the governor of SBP, the foreign investors refuse to accept the independence of the central bank and its policies.

He said the recent dispute regarding the Supreme Court has also started attracting attention of the foreign investors and they are watching it closely.

http://www.dawn.com/2007/03/15/ebr7.htm


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## Neo

March 15, 2007 
*Govt plans $300m UBL GDR sale*

HONG KONG, March 14: PakistanÃ¢â¬â¢s government plans to sell a stake worth up to $300 million in United Bank Ltd. (UBL) through a global share sale, and it has invited six investment banks to pitch for the deal, people familiar with the matter said on Wednesday.

Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan and Merrill Lynch are all bidding for the $200m to $300 million global depository receipt (GDR) sale, the sources said.

A government source said the decision for the deal's lead manager would be made by early April, and the deal should be completed by the end of June. The government is only selling part of its roughly 45 per cent stake in UBL.

PakistanÃ¢â¬â¢s government has been trying to offload part of its stake in UBL since June 2005, when it tried to sell 15 per cent through an initial public offering that eventually failed to draw enough subscribers.

A consortium of UAE-based Abu Dhabi Group and British conglomerate Bestway Group bought 51 per cent of UBL from the government in 2002.

The government was planning a 20 per cent stake sale in February 2006, according to a government source, but the deal never made it to the market.

Pakistan is being tipped by foreign investment bankers as a potential hotbed of equity issuance activity as the country's economy is growing at nearly 7pc and the government is pushing to privatise some of its biggest companies.

The country's largest listed firm, the Oil and Gas Development Co. (OGDCL) raised $813 million through a GDR sale in December, and the government is also planning a stake sale of top oil marketing firm Pakistan State Oil.

http://www.dawn.com/2007/03/15/ebr16.htm


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## Neo

*Musharraf for value addition to boost economy *

GUJRANWALA: March 15, 2007: President General Pervez Musharraf on Thursday called for creating synergy between industry and the educational institutions to help expedite the process of economic development in the country.

Addressing the inaugural ceremony of sub-campus of Punjab University here, he said, "Natural resources alone are not sufficient to bring about prosperity in a country; We have to go for more value addition and optimisation of resources as these are pre-requisites for an economy in the present-day knowledge driven world."

Earlier, the President unveiled a plaque to inaugurate the sub-campus and also planted a sapling there. 

Punjab Governor and PU Chancellor Lt. Gen. (r) Khalid Maqbool, Chief Minister Chaudhry Pervez Elahi, Vice Chancellor Arshad Mahmood, Gugranwala Campus DG Prof. Dr. Liaqat Ali, Registrar, Prof. Dr. Naeem and other faculty members as well as students in a large number attended the ceremony. 

President Musharraf said that the Punjab University was the oldest seat of learning in the sub-continent, adding that the establishment of new sub-campuses was indeed a great step. 

He said that 13 campuses of various universities had been set up in Punjab, which would definitely help ensure provision of quality education to the people of the province. 

The President said that huge funds were being spent for the improvement of education and health sectors which had become possible only due to better performance of national economy with an average growth rate of 7% over the last four years. 

He announced Rs 5 million grant for the Gujranwala sub-campus of the Punjab University. 

"I have directed the chairman of Higher Education Commission (HEC) to support and provide funds to the new campuses," he said, adding that HEC was receiving Rs 600 million annually till the year 1999. However, he said, the annual budget of the commission had reached up to Rs 22 billion this year, reflecting a 4,600 per cent increase in the allocations. "I think this amount for education is still less. We will increase this fund every year. Currently, 2.7 per cent of the GDP is being spent on education and we will enhance it up to four per cent," he said.

He also commended the initiative of online lectures at the campus and said this should be replicated at other educational institutions of the country as well.

Lectures through video conferencing is an effective means to use faculty properly and to impart education to a maximum possible number of students at the same time, he added.

President Musharraf congratulated the PU Chancellor and VC for their efforts in establishing the sub-campus and lauded the Chief Minister for support and keen interest in acquisition of land and building for the sub-campus and hoped that he would continue with the same spirit for acquisition of land for other campuses.

President Musharraf said Punjab University is focusing well on increasing capacity as well as disciplines.

The University has enhanced its capacity from 45,000 to 120,000 students, and increased various academic disciplines from 43 to 68, he said. New courses such as polymer engineering, ceramics, metallurgy and agricultural technology etc. are being taught at the university. 

The President observed that value addition resources is a must to achieve economic prosperity. 

He said big Islamic countries have $ 200 billion GDP and the entire Muslim world has two trillion dollars economy with 70 per cent natural and 40 per cent energy resources. Contrary to this, Germany alone has $ 3 trillion economy and other small European countries have up to $ 400 billion GDP, he said, pointing out that they have achieved this economic development through knowledge and value addition. 

Unfortunately, no attention was paid to this important factor of value addition in Pakistan for 50 years and the focus was on textile and agriculture while ignoring all other sectors, he said. 

He said the country has best gemstones and marble but lacks proper infrastructure for their mining, cutting and polishing. 

Similarly, Pakistan is one of the major milk-producing countries in the world but the value-added dairy products like cheese, butter and yoghurt are not being exported. 

"Where we have resources, we will have to develop expertise in those fields to ensure prosperity and economic development in the country and we have strategized the way forward." 

President Musharraf said that nine new universities were being established with the assistance of Germany, France, Sweden, China, Italy, Austria, Japan and South Korea. These universities would issue degrees to students in Pakistan, which would be equal to those being issued in their parent countries. 

He said these new universities would create a competitive environment which would help improve quality of education in all the educational institutions, especially of public sector. The government would spend Rs 250 billion on public sector universities in next ten years and technology parks would also be set up in these institutions. 

The President said, "I have launched National Internship Programme the other day, which will help reduce poverty and unemployment in the country." 

Under this programme, a graduate, who has a degree from any HEC recognised university, would be given job at Rs 10,000 per month in public sector offices, ministries and institutions at province and district level for one year. During this period their performance would be monitored and 20,000 graduates would be provided jobs, he said.

http://www.brecorder.com/


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## Janbaz

*Pak seeks access to EU market*

OUR STAFF REPORTER
ISLAMABAD - Foreign Minister Khurshid Kasuri on Wednesday asked for equitable access for Pakistan in the EU market while emphasising the need for a Free Trade Agreement between the two sides. Austrian Foreign Minister, Dr Ursula Plassnik, who is currently in Islamabad for the first ever visit of an Austrian Foreign Minister to Pakistan, met Foreign Minister Kasuri, said a Foreign Office statement issued here. 
The talks, which lasted nearly three hours, covered the whole gamut of Pakistan - Austria relations as well as regional and international issues of mutual interest, it added.
Within the context of bilateral relations, the discussions focused on enhancing economic and development cooperation. The two Foreign Ministers welcomed the significant rise in bilateral trade in the recent years. 
Pakistan and Austria also have meaningful cooperation in diverse fields including railways, oil and gas exploration, power generation, Education and Tourism Development. 
About 150 Pakistan students are studying in Austrian universities under a joint arrangement. 
The two countries have also entered into a partnership to establish a University of Engineering Sciences and Technology (UESTP) in Lahore. 
It was agreed to further strengthen the ongoing development cooperation as well as educational and technological exchanges.
Kasuri appreciated Austrian support to Pakistan within the EU. He underscored the need for equitable access for Pakistan in the EU market particularly in the form of a Free Trade Agreement between Pakistan and EU.
He updated Ursula Plassnik on Pakistan-India relations and the composite dialogue for resolution of all outstanding issues including the Jammu and Kashmir dispute. The Afghanistan situation was discussed in detail and Kasuri underlined Pakistan &#8216;s commitment towards Afghanistan &#8216;s stability, progress and reconstruction, which was in Pakistan &#8216;s own national interest. 
Among the other issues discussed included Iran, Iraq, interfaith harmony, and counter terrorism. 

The Nation.
http://www.nation.com.pk/daily/mar-2007/15/bnews3.php


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## Janbaz

*$65bn investment needed over six years *

By Mansoor Ahmad
LAHORE: Though Pakistan is diversifying its export markets, it needs investments of $65 billion in the next six years with an average growth rate of six to eight per cent to achieve the export target of $40 to $45 billion by 2013.

A study of the presentation of the next six years&#8217; export targets made by Deputy Chairman Planning Commission Akram Sheikh to Prime Minister Shaukat Aziz early this month reveals that the achievement of 2013 export target is tied to many conditions.

It includes factors like macro-economic stability to diversification of export products and markets. The achievement of the export target is also linked to sector-specific measures that the government is required to take in one to two years.

According to the presentation, Pakistan&#8217;s dependence on the US market would remain almost the same as its exports are projected to increase from $4.2 billion last year to $11 billion in 2013. The share of Pakistani exports to the US would remain the same at roughly 25 per cent of total exports.

This increase in exports to the US is based on the assumption that earthquake-affected regions of Pakistan would get a duty-free access to the US market. As a result, the planners expect enhancement of the product range from textiles and carpets to sports goods, gems and jewellery, marble and granite and furniture.

The exports to the European Union are projected to increase from the current $4.5 billion to $9.5 billion by 2013. 

The biggest increase in exports may be to China from the current $500 million to $5 billion by 2013. In this way, the share of exports to China will rise from 3.5 per cent to 8.5 per cent of total exports.

According to the presentation, Afghanistan would replace the UAE as the third largest market of Pakistani products after the US and the EU. Exports to Afghanistan are projected to move up to $3.2 billion, three times the current level of $1.1 billion. Exports to the UAE are likely to double from $1.3 billion to $2.6 billion by 2013.

Planners have pinned their hopes on textiles and clothing to lead the exports in the next six years, expecting their exports increasing from $9.89 billion to $22 to $25 billion by 2013. The highest increase in exports may come from the engineering goods from the current $208 million to $2.4 to $3 billion, a ten times&#8217; increase.

The exports of rice, fish and fish preparation, sports goods, fruits and vegetables are projected to cross the $1 billion mark each.

In order to achieve the export targets, the planners have underscored the need of fresh investment in every export sector plus sector-specific human resource capacity enhancement and some vital government interventions and facilitations.

Out of $65 billion fresh investments required in export-oriented sectors, the textile sector would need at least 30 per cent or $22 billion.

The engineering sector would require $16 billion investment to boost its exports to the level of $2.4 billion by 2013. Chemicals and pharmaceuticals would need investment of $8-12 billion; leather goods, sports and surgical instruments $5-10 billion by 2013.

The Planning Commission&#8217;s presentation also attached the achievement of the export target to average growth of six to eight per cent and inflation rate of seven per cent over the period under review.

However, it failed to touch the interest rate scenario. Investment under the current interest rate scenario is on the decline, particularly in the key textile sector. The interest rates are not likely to fall much, but these may not turn out to be the main impediment in the way of investment.

The Planning Commission also warned of greater competition from China, India and Bangladesh. It pointed out that in the post-quota era, China and India had grabbed a major share of the textile and clothing markets, whereas amongst other Asians, Pakistan is the loser. One reason for that was irrational price reduction by the exporters that should be curbed.

The Commission hoped Pakistan&#8217;s total GDP would jump from the current $128 billion to $270-280 billion if the country maintained its current growth rate.

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=47017


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## Janbaz

*Great scope for Pakistan exports to Cuban market *

Our Staff Reporter
LAHORE - The Cuban Ambassador in Pakistan Mr. Gustavo Machin Gomez has said that there is a huge potential of Pakistani rice, textiles, leather and sports goods in Cuba and Pakistani businessmen can avail the opportunity with the help of Cuban embassy in Pakistan. The ambassador was talking to LCCI President Shahid Hassan Sheikh and Senior Vice President Yaqoob Tahir Izhar at Lahore Chamber of Commerce and industry on Thursday.
The Ambassador said that the Chamber of Commerce and Industry in Cuba was ready to sign MoU with Lahore Camber of Commerce and Industry to further strengthen the bilateral relations and to ensure the exchange of information between the two sides. The Ambassador, who spent well over an hour with the LCCI office-bearers and the Executive Committee, was of the view that the Lahore Chamber of Commerce and Industry should arrange a delegation to Cuba so that the Pakistani businessmen could have first-hand
knowledge about the available opportunities there. He said that Cuba has a history of 52 years of excellent relations with Pakistan and this is the high time the business communities of both the sides should join hands in the larger interest of the peoples of the two countries. Speaking on the occasion, the LCCI President Shahid Hassan Sheikh welcome the Cuban diplomat for his first-ever visit to the Lahore Chamber of Commerce and Industry and assured him of his full cooperation for strengthening the bilateral relations between Pakistan and Cuba. 
He said that there is a little trade between Cuba and Pakistan. During the year 2005 goods worth only $ 1.78 million were traded between two countries. Only 3 items were exported by Pakistan to Cuba, which were textile articles ($ 0.20 million) cotton ($0.16 million) and optical photo, technical & medical apparatus ($ 0.13 million). The only item, which Pakistan is importing from Cuba is pharmaceuticals products.
He said that in addition to that Pakistan could supply good quality products of daily use such as electric fans, washing machines, sports goods, leather products, pottery, furniture, cutlery, carpets etc. being produced in Lahore, Sialkot, Gujrat, and Gujranwala. 
In return Pakistan could import more pharmaceutical products, nickel & articles thereof, inorganic chemicals, ores, copper & articles thereof etc. from Cuba. This is possible through exchange of trade delegations, interaction between the Chambers and Diplomatic Missions of the countries. 

The Nation.
http://www.nation.com.pk/daily/mar-2007/16/bnews6.php


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## Janbaz

Very nice, another market for our products. Pakistan and Cuba both can benifit alot with increased trade and i would love cooperation in military sectors if rrelations with US sour. Nothing like antics to piss Uncle Sam off. Also it can be noted that Pakistani products will reach Latin America and the Carribean with ease after Cuba. It is a region untouched by us and i hope that we proceed with better policies in the coming years.


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## Owais

*President performs ground-breaking of 500 KV grid station *


GUJRANWALA (updated on: March 15, 2007, 23:31 PST): President General Pervez Musharraf on Thursday performed the ground-breaking of a 500 KV grid station, to be built at Gakhar at a cost of Rs. 4.5 billion.

The project, to be completed in a period of one and a half years, will help improve the smooth supply of electricity in the rural areas of Narowal and Hafizabad, the President said while addressing a big public meeting here.

The President assured that every village in District Gujranwala having over 10 houses would be provided electricity.

Governor Punjab, Lt. Gen. (R) Khalil Maqbool, Chief Minister, Chaudhry Pervaiz Illahi and District Nazim Gujranwala, Muhammad Fiaz Chatha also addressed the public meeting, which was attended by a number of federal and provincial ministers, parliamentarians, Tehsil and Union Council Nazims.


brecorder.com


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## Owais

*President announces Rs7 billion for Gujranwala uplift *


GUJRANWALA (updated on: March 15, 2007, 23:36 PST): President General Pervez Musharraf on Thursday announced a Rs. 7 billion package for Gujranwala for development of roads, sanitation, disposal of solid-waste, parks and library facilities.

Addressing a big public meeting here, the president also announced Rs. 10 million for each Union Council of Gujranwala district for increased development works in rural areas.

Every Union Council will get Rs. 5 million during the on-going fiscal year, while Rs. 5 million would be made available to them in the next financial year, he said and added the government would provide more resources for development as per requirement.

Governor Punjab, Lt. Gen. (R) Khalil Maqbool, Chief Minister, Chaudhry Pervaiz Illahi and District Nazim Gujranwala, Muhammad Fiaz Chatha also addressed the public meeting, which was attended by a number of federal and provincial ministers, parliamentarians, Tehsil and Union Council Nazims.

The president said it was the right of people to demand funds for development and the government was duty-bound to provide the same, adding, the present government has ample resources unlike the past when the national kitty was empty.

He also announced the provision of sui gas supply to Francis Town, a residential colony of minority community and said the country's minorities have also equal rights on resources.

He said, owing to the present government's prudent economic policies the national economy has been strengthened and unlike past now there are abundant resources for development.

The president said, in contrast to the 1988-99 period when the development budget was to the tune of around Rs. 70 billion, the present government has allocated Rs. 415 billion for development during the current fiscal year.

Only Punjab province has Rs. 100 billion for development, he said and remarked that in the past there were only empty slogans. 

The president said as against the past, the democratic system has strengthened, with true democracy where women have secured their due status in the political arena and the development works for communication system, roads, highways, sea-ports, airports, dams etc. going on across the country at a fast pace.

He in this respect also mentioned the mega development projects like Gawadar Seaport, Gawadar Airport, Islamabad Airport, night landing facility at Quetta airport, Dams and Water Storages.

The president said the Mangla Raising project, to be completed by the end of current year, will help improve the water availability for irrigation purposes.

President Musharraf said the present government also started a Rs. 66 billion project for lining of 86,000 water courses across the country, adding, the work on 40,000 water courses has been completed with the spending of Rs. 30 billion so far while the remaining work would be completed in two years.

The president said the government was committed to transform the benefits of economic growth to masses.

He said, the government has also initiated a big programme of skills enhancement and vocational training across the country to enable the unemployed youth to get suitable jobs.

Besides, the president also referred to the National Internship Programme launched by him on Wednesday and said under the programme 20,000 masters degree holders would be provided jobs at Rs. 10,000 per month salary, adding, billions of rupees would be spent on this programme.

He also called upon the people to benefit from the government's Rozgar Scheme under which up to Rs. 100,000 easy loans are available for small businesses like Riksha, Mobile Utility Stores and PCOs.

This programme will help check the unemployment and poverty, particularly in rural areas, he added.

The president said the government was committed to provide electricity and gas facility across the country, adding, work is in progress to provide gas facility to every Tehsil and the villages that come in the way of gas pipeline.

Similarly, he said, the government will provide safe and clean drinking water and water filtration plants would be installed in every village across the country having over 100 houses.

The president said, various projects of health and education are being carried out in every part of the country.


brecorder.com


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## Owais

*Iran offers help in oil and gas exploration *

PESHAWAR (March 16 2007): The ambassador of Islamic Republic of Iran, Masha Allah Shakeri, on Thursday offered that his country could help Pakistan in exploration of gas and oil and other allied activities for its industrial and economic development.

Talking to Chief Minister Akram Khan Durrani here at Frontier House, he termed friendly ties between the two countries as a good omen for the entire Ummah. The Iranian envoy was accompanied by Peshawar-based Iranian Consul General Mohammad Eghbal Ali Asghari. He said Iran was utilising oil and gas deposits for betterment and development of its people and there was a great potential of town planning expertise in the country.

The Iranian government, he said attaches great values to its relations with Pakistan and its people particularly and emphasised on further bolstering bilateral ties between the two brotherly Islamic neighbours. He said Iran after Islamic Revolution had gained progress in various spheres of life and the country was generating hydel power from its small dams with use of modern technology.

They remained with Chief Minister for some time and discussed matters of mutual interests in particular reference to situation in Afghanistan and the problems the Ummah confronting with.

Speaking on the occasion, Chief Minister Akram Khan Durrani stressed for co-ordinated efforts by Pakistan and Iran for the resolution of Afghan issue and stop 'outsiders' from materialising their interests in the region.

"Non-stop violence in Afghanistan is a clear evidence of the fact that use of force is no more worthy to bring normalcy to the war-shattered country. It is a high time for international community to choose the path of negotiation and dialogue otherwise there is no hope for peace in neighbouring country," Durrani suggested.

The chief minister said that the enemies of Islam would never want to see the Muslim countries get united and they were out to enlarge the gulf among them by creating misperception and misconceptions against each other through different means.

He said that Pakistan and Iran were enjoying cordial and friendly relations and the people of both the countries were tied with unbreakable religious, cultural and political bonds, adding development or destruction of one country has a direct bearing on another. Durrani said that in the prevailing international circumstances, strong and friendly relationship between the two countries was the need of hour.

He said Iran-Pakistan-India gas pipeline project was in the larger interest of all the stakeholders and it would lead to bring positive changes in the lifestyle of the people of Pakistan. Durrani told the guests that there was a complete religious harmony in Frontier province, adding with formation of Muttahida Majlis-i-Amal (MMA) the religious harmony in the country had further groomed.

He said other Islamic countries should also form such religious alliances in order to reduce threats of sectarian clashes in their respective countries and discourage the elements fuelling such clashes among different sects for their own vested interests.

The chief minister said his government came into being after striking unity among religious groups and he wanted to see the entire Ummah get united and suggested exchange of high level delegations among Islamic states to help reduce misunderstandings against each other and put positive signs on unity efforts.

http://brecorder.com/index.php?id=538724&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Pakistan has achieved good economic growth rate: Omar *


KARACHI (updated on: March 16, 2007, 02:36 PST): State Minister for Finance, Omar Ayub Khan has asked the banking sector to open up its mind and look for the entire market in the country.

"Identify the diamond and educate the management's because clients of today will become the better clients of tomorrow", he said while speaking at the launching of Reliance Income Fund by Noman Abid Investment Management Limited here on Thursday.

He pointed out that de-regulation, liberalisation and privatisation were the major corner stones of the government's economic policy and philosophy. "Government is putting importance to open up its economy, trying to be transparent and reliable", he added.

The minister said the world was moving fast and the globalisation offered the best opportunity for progress if availed.

He said that Pakistan has achieved a good economic growth rate.

Now it is 6 to 8 percent per anum. While GDP has doubled during the past seven years rising from $ 60 billion to $ 135 billion.

Omar Ayub Khan noted that country's all economic sectors including services, industrial and agricultural were producing added values, which meet the criteria of WTO.

He said that human resource development, infrastructure and energy resources were the key factors for development and the government was focussing of the development of these sectors.

Referring to energy requirements, he said cheapest source of energy are the dams. "Government is determined to construct more and more dams and becomes self-sufficient in energy production. ECNEC has also approved the different development projects including the water dams and has allocated funds for them", he added.

He said the government was also negotiating Pak-Iran Gas pipe line and exploring other sources which will help Pakistan in achieving economic stability.

Chairman of Noman Abid, Investment Management Limited Adnan Abid in his welcome address appreciated government policies regarding banking sector. He read out the message of Prime Minister of Pakistan Shaukat Aziz.

brecorder.com


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## Owais

*Qatar to construct City Centre in Karachi *


KARACHI (March 16 2007): Government of Qatar will construct City Centre, a grand commercial centre in Karachi with the estimate investment of 2 billion dollar including the seven star hotel, shopping centre and offices. This was stated by ambassador of Qatar Hamad bin Ali Al-Hinzab who called on City Nazim Syed Mustafa Kamal in his office on Thursday.

He also presented invitation of Qatar to City Nazim from the Ruler of Qatar Sheikh Hamad bin Khalifa Al-Thani. The ambassador of Qatar while talking to newsmen said the co-operation of trade and investment are being increasing between the two countries which will also extend maximum facilities to the citizens of Pakistan and Qatar.

He said the visit of Qatar's Amir of Pakistan is expected soon and he will visit Karachi to lay down foundation stone for the projects of Qatar's government. He further said the invitation from Qatar's Amir have been given to City Nazim Syed Mustafa Kamal and hoped that he will visit Qatar soon which will increase relations between these two countries.

The City Nazim Syed Mustafa Kamal on this occasion said the Amir of Qatar is being visiting Pakistan on the invitation of President of Pakistan and he will lay down foundation stone for City Centre in Karachi. The project of City Centre, a grand commercial centre will be completed with the estimated cost of 2 billion dollar by Qatar government.

He also assured that he will visit Qatar before the Amir of Qatar and it is expected in this current month. He further mentioned that during his visit to Qatar, the projects of Qatar government to invest in Karachi will be finalised.

He pointed out that this will be a major investment in Karachi which is also being made on the present government's policies of public/private partnership.

He also mentioned that the City District Government Karachi under the public/private partnership will grant land for the purpose of constructing City Centre and it will be a joint venture to increase revenue for city government while commercial and trade activities in city will boost. He further added that the work on this project will start within weeks.-PR


http://brecorder.com/index.php?id=538790&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*Growth rate rises to eight percent: Omar *  

KARACHI (March 16 2007): The State Minister for Finance Omar Ayub Khan has said that Pakistan has a good economic growth rate which is now 6 percent to 8 percent per annum, while economy has doubled during the past seven years from $60 to $135 million.

Speaking at the inauguration ceremony of Noman Abid Investment Management Limited (NAIML) and celebration of the successful launch of its first mutual fund, Reliance Income Fund, at a local hotel on Thursday.

Pakistan's all economic sectors like services sector, industrial sector, agricultural sector, etc are producing added values, which meet the criteria of WTO. He said that deregulation, liberalisation and privatisation were the ethics of the government's economic policy and philosophy. Government is putting importance to open its economy to be transparent and to be reliable.

"World is moving fast and the globalisation is the best opportunity for progress, if we availed it", he added. The minister said that human resource development, infrastructure and energy resources were the key factors for development and the government was putting importance on the development of these sectors.

Pakistan has immense Human resources and infrastructure while it needs energy sources. Cheapest source of energy are the dams. Government is determined to construct more and more dams and becomes self-sufficient in energy constraints. ECNEC has also approved the different development projects including the water dams and has allocated funds for them, he added. He said that government was also negotiating Pak-Iran gas pipeline and exploring other sources which would help Pakistan in achieving economic stability.

The Minister also said that banking sector had to open its mind, look the whole market, identify the diamond and educate the management because today's clients could be better ones for tomorrow.

The state Minister lauded the efforts of President General Pervez Musharaf and Prime Minister Shaukat Aziz whose untoward efforts have gained economic stability for the country and an information technology boom occurred in Pakistan. Now the youth of Pakistan had excess to the world and could explore more and more opportunities for Pakistan, he said.

The state Minister emphasised on the business community to be competitive and comparative with the economy of China. The minister congratulated NAIML for its achievement in such a brief period of time. The Minister stressed on the importance of the mutual fund sector for the development of the economy and appreciated the transformation of the sector from a state domination to an increasingly efficient, competitive and thriving industry. The minister reminded the audience about the proactive stance of the government in supporting this sector and announced the promulgation of regulations for Real Estate Investment Trusts, shortly.

He said that the government was aware of the need to increase the number of listed companies, in specific the Privatisation Commission was cognisant of this issue and was working on this in letter and spirit. He noted with satisfaction the improvement in corporate governance in the financial sector.

Adnan Abid, Chairman NAIML in his speech said that the Noman Group had over three and a half decades of business experience in Pakistan and the group was presently operating in three areas including; financial services, real estate investments, construction & development and education.

In the financial sector, Noman Group activities include Equity & Money Market Investments, Equity brokerage, investment banking, private equity, underwriting, private placement, portfolio management and asset management. The group's financial services side, presently has assets under management of about Rs 3 billion and client advisory assets of over Rs 20 billion.

The group rose to prominence in the construction and development industry in the late 80's and has sustained its dominance in this sector. The group has expertise in the construction of commercial and residential complexes and has directly and indirectly constructed over 10,000 units.

The group has also extended its construction activities to the Middle East where it has recently launched a residential project. It is also coming up with a commercial project in Clifton, Karachi worth Rs 1.5 to Rs 2 billion. In education industry, the group has established the Institute of Business and Technology (Biztek), which is one of the top ten universities in Pakistan. Biztek has been ranked as category "A" by the Higher Education Commission (HEC), given its excellence in Business and Technology education.

The group's investment in this sector is approximately to the tune of Rs 1 billion. The institution is managed by the Global Educational Consultants (GEC) Society and the Sindh Governor, Dr Ishrat-ul-Ibad is the patron of the university.

NAIML is licensed by the Securities and Exchange Commission of Pakistan (SECP) to carry out asset management activities and it commenced formal operations in April 2006 and floated its first mutual fund in October 2006. The fund presently stands at about Rs 1 billion.

The company's core strengths are a professional management team and an experienced board of directors. NAIML is in the process of floating its second fund, viz Reliance Balanced Fund, a closed-end fund, expected by early April. In addition, NAIML intends to float a second open-end Islamic Fund, by the end of the current fiscal year.

In future NAIML has plans to float REITS, Private Equity Fund, Principal Guaranteed Fund and such other sophisticated investment products. Sardar Azmat Babar, CEO of NAIML also spoke on this occasion while the ceremony was attended by a number of dignitaries, senior corporate executives and executives from the financial industry. The minister distributed momentos to representatives of investors in Reliance Income Fund, eg National Bank of Pakistan, Allied Bank, Bank of Punjab, Fauji Fertiliser Bin Qasim, Orix Investment Bank, etc.

http://www.brecorder.com/index.php?id=538772&currPageNo=1&query=&search=&term=&supDate=


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## Neo

March 16, 2007 
*Govt consolidating banking reforms*

RAWALPINDI, March 15: Adviser to the Ministry of Finance and Economic Affairs Dr. Ashfaq Hassan Khan has said that while the implementation of reforms in the banking sector continues, the government is now moving towards consolidating these reforms.

CountryÃ¢â¬â¢s economy has now become resilient and quite able to sustain shocks, he said while referring to the earthquake of October 2005 and three-fold increase in oil prices in the international market.

While the economy is growing, challenges are also increasing. In an environment of shocks the challenge is big to sustain the economic growth, he said adding that a certain level of inflation was necessary for growth of economy.

Dr Khan was speaking at a seminar organised by the Institute of Bankers Pakistan (IBP) on Ã¢â¬ËEmerging challenges in Pakistan banking, their effects on economy and role in nation-buildingÃ¢â¬â¢ held at the State Bank of Pakistan in Rawalpindi.

In his 90-minute presentation Dr. Ashfaq focused his address on consumer financing, saying that there was a direct link of the development of banking sector with the growth of economy. Ã¢â¬ÅFinancial sector is the lifeblood of economy, and if it is bleeding, economy is weak,Ã¢â¬Â he remarked.Referring to the presence of more and more foreign banks in Pakistan, the adviser said this investment was an example of confidence in economy. Dr. Khan made an analysis of the performance of Pakistani banks during pre-reforms period before 1988 when banking sector was operating on a very different mode following selected credit target.

The reforms shifted the operation of banking sector from selected control monetary policy to an era of open market competition. In other words, direct control of money supply has now been converted into indirect control supply, he said.

He said that reforms in the banking sector, which has brought a healthy competition will continue. As a result of reforms, the government has started to privatise banks in the public sector. Over 85 per cent of banks are now in the hands of private sector, while 100 financial institutions were in operation throughout the country, he said.

Dr Khan explained in detail the merits of consumer financing and said benefits of such financing had now been brought down to the level of common people resulting in the growing of consumer financing.

Explaining the fruits of consumer financing, he said it has brought change in the quality of life, growth of income and tax culture, picking up of industrial growth, creation of employment opportunities and many other benefits.

Dr. Khan also spoke on micro financing saying that these will bring changes in the life pattern of low income group. About four to five micro financing banks were operating while more are in the pipeline, he said.

Talking about inflation, he said a certain level of inflation was necessary for the growth of economy. The governmentÃ¢â¬â¢s monetary and fiscal policies are designed to contain the rate of inflation at certain level so that the economy and the people should remain unaffected, he said adding people should understand the difference between prices and inflation.

Taslim Kazi, chief manager SBP Rawalpindi, who is also director of IBP, spoke on aims and objectives of the institute and its programmes to develop human resources in the banking sector.

http://www.dawn.com/2007/03/16/ebr3.htm


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## Neo

March 16, 2007 
*Harbour pollution costs navy $1bn a year*

By Sher Baz Khan

ISLAMABAD, March 15: Severe pollution in Karachi harbour, caused by untreated industrial affluent and municipal waste, is not only taking its toll on marine life and civilian population but also causing $1 billion worth of losses to Pakistan Navy (PN) every year.

All the navy platforms including surface ships, fleet tankers, mine hunters and missile boats berthed at KarachiÃ¢â¬â¢s upper harbour and PN Dockyard had been severely damaged by the seawater, the composition of which has changed for the worst due to unbridled pollution in recent years, Commander PN Rear Admiral Mehmood Ahmed Khan told the Senate Standing Committee on Defence here on Thursday.

He expressed fears that some of the vital PN assets would not be available to it at Ã¢â¬Ëcrucial timesÃ¢â¬â¢ if the low conductivity and increased chloride and sulphate in seawater continued to inflict damages.

He said Indian navy had the edge to move from east to west and south while the PN was mainly dependent on the Karachi harbour.

Ã¢â¬ÅThis is indicative of losses. If we count on other variables, the losses can be in billions and billions of dollars,Ã¢â¬Â Secretary Defence Tariq Wasim Ghazi said, expressing concerns that the pollution could damage the defence capability of not only the PN but the PAF as well.

Air Vice Marshall Rao Qamar Sulaiman said the failure of the Ministry of Environment as well as provincial and city governments to implement the Pakistan Environmental Protection Act, 1997 in letter and in spirit had converted Karachi into one of the most polluted cities of the region.

He said Karachi was a strategic target for the enemy due to its industrial and commercial importance. He feared that due to air pollution, the PAF could face sever difficulties in defending this vital city in times of wars.

He said due to solid waste, industrial affluent and illegal mushrooming of slaughter houses and poultry farms, the Karachi skyline was full of smoke and big birds. The PAF had lost 10 aircraft and three pilots since 1985 in some 3,500 accidents caused by birds, he said, adding that in financial terms, the air force suffered losses to the tune of $200 million due to damage to its aircraft.

Senators Dilawar Hussain and Prof Khurshid Ahmed described as Ã¢â¬ËshamefulÃ¢â¬â¢ and Ã¢â¬ËhorribleÃ¢â¬â¢ the air and water pollution in Karachi and their damages to the national defence capabilities, marine life and civilians.

The committee also formed a taskforce that would complete recommendations for checking environmental degradation in Karachi and its harbour. The taskforce will hold its meeting next week and complete recommendations within two months. Cases against the industries and authorities responsible for pollution in Karachi would also be filed by the PAF and the PN in environmental tribunals.

The committee and defence ministry asked for a complete damage assessment survey of the pollution in Karachi. It feared that the real picture could be even more gruesome and the damages beyond thinking.

Minister of State for Environment Malik Ameen Aslam Khan drew the attention of the committee towards a recent World Bank report that stated that every year the losses caused to Pakistan by pollution were equivalent to 3-5 per cent of its Gross Domestic Product (GDP).

Ã¢â¬ÅThis is alarming for a country which has a GDP growth of just 7 per cent,Ã¢â¬Â Mr Khan said, expressing resentment over the performance of the Pakistan Environment Protection Agency. He said the government was facing losses worth billions of dollars every year due to its inability to spend just millions of rupees for controlling pollution.

According to PN officials, the National Environmental Coordination Committee (NECC) had been formed in September 2001 after the abolition of the Marine Pollution Control Board (MPCB).

http://www.dawn.com/2007/03/16/top10.htm


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## Neo

March 16, 2007 
*Qatar gas pipeline project shelved*

By Khaleeq Kiani

ISLAMABAD, March 15: The $3.5 billion plan for importing natural gas from Qatar through a 1,830-kilometre-long pipeline has been put on hold because of *Ã¢â¬Ånon-availability of required gas quantitiesÃ¢â¬Â.*

Ã¢â¬ÅIt is not on the forefront,Ã¢â¬Â said Secretary Petroleum Ahmed Waqar, adding: Ã¢â¬ÅWe are concentrating on IPI (Iran-Pakistan-India pipeline project) at the moment.Ã¢â¬Â

The sources said that India had not yet taken a decision whether to join the IPI project at a delivered price of $4.25 per MMBTU (million British thermal unit) on its border. They said Pakistan had agreed with Iran on gas pricing formula based on Japanese crude oil that roughly translated into less than $3.85 per MMBTU. It involved indexation at $10 change in Japanese crude price with a crude price band of $30-70 per barrel. Mr Waqar declined to comment about the formula.

Sources in the petroleum ministry, however, told Dawn that the project sponsors Ã¢â¬â Crescent Petroleum of Sharjah Ã¢â¬â had informed the government of Pakistan that gas quantities required for the project were not available in Qatar in the next 8-10 years. They said Qatar had long-term commitments for liquefied natural gas (LNG) exports and could not spare enough volumes for a pipeline project.

Pakistan, the sources said, had asked Qatar to enhance gas availability for the project up to 2.6 billion cubic feet of gas per day (BCFD) but it was not ready to go beyond 1.6 BCFD. A gas sales and purchase agreement (GSPA) has been under consideration of Pakistan government for the past few years but it could not be signed.

The gas import plan from Qatar was originally floated by the Sharjah-based Crescent in 1999 but talks failed in 1995 over gas tariff between the two nations and the project could not take off. The project re-emerged and in 2000 Crescent Petroleum signed a fresh heads of agreement for exclusive rights with Qatar government to export of gas to Pakistan.

It did not get top priority in Pakistan because of its relatively higher cost and technical complexities because of its deep sea route when compared with its competing import pipeline options from Iran and Turkmenistan.

Mr Waqar said that Pakistan was still in the process of in-house consultations on the question of transit fee to be charged from India to let the gas pipeline pass through over 650-km territory in Pakistan.

Another official said a separate idea floated by Iran a few years ago of common user gas highway to dovetail QatarÃ¢â¬â¢s gas with Iranian for transportation to Pakistan and India had also been shelved.

PakistanÃ¢â¬â¢s current gas shortfalls hover around 300-350 mmcfd (million cubic feet of gas per day) and are likely go up to 778 MMCFD by 2009-10 and rising to more than 11,000 MMCFD by 2025 because of rising needs and slowing down supplies at home coupled with no discoveries expected to be on line in the short-run.

http://www.dawn.com/2007/03/16/top9.htm


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## Neo

Unexpected development which hopefully will boost the IPI paipeline.  

India has been pushing for its own direct link to Qatar via the Arabian Sea, a plan likely to be affected by this news.


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## Janbaz

Neo said:


> Unexpected development which hopefully will boost the IPI paipeline.



How will the IPI work? Meaning who will give gas to whom and how the payment system will work?


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## Neo

Janbaz said:


> How will the IPI work? Meaning who will give gas to whom and how the payment system will work?


IPI - Iran - Pakistan - India gas line will run from eastern Iran via Pakistan to India. Both India and Pakistan will be buying directly from Iran via a quite complicated pricing system that is still under study and being negotiated by the three parties.

India will have to pay a slightly higher price since Pakistan will be earning $0.7 - 1.0 billion per annum in transit fee...


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## Janbaz

*Pakistan studying options to buy gas from Uzbekistan: PM*

16.03.2007 14:24:42
Pakistan was studying several options to meet its growing energy requirements and was interested in buying gas from Uzbekistan, Prime Minister Shaukat Aziz said. 

Addressing a press conference here late Wednesday night, the Prime Minister said Pakistan was keen to utilize the surplus gas reserves in Uzbekistan however pointed that stability and peace in Afghanistan was vital to achieve this objective. 

Uzbekistan is the eighth-largest producer of natural gas in the world. Pakistan is currently discussing the laying of over US seven billion dollars gas pipeline from Iran to Pakistan, going up to India, besides another one from Turkmenistan, passing through Afghanistan to meet the demands for its growing industry. 

"We would like to see a stable, peaceful Afghanistan as it is the conduit for transport, energy and trade between Pakistan and Uzbekistan," the Prime Minister added. 

He said peace in Afghanistan was not only vital for Pakistan, but also for the regional countries. He said Afghanistan has a "major role to play" to ensure that the economic and trade linkages for trade and energy cooperation in the region were possible in a conducive and peaceful environment. 

Prime Minister Shaukat Aziz who is on a three-day visit to Uzbekistan said his talks with Prime Minister and President Islam Karimov were very "constructive" and both the countries expressed their desire to expand relations in a broad range of areas including banking, investment, agriculture and transportation. 

He said both sides realized that the existing low levels of trade between the two countries need to be enhanced. 

About his meetings, he said the tension over the Iranian nuclear issue, the OIC and the SCO and other issues of common concern came under discussion. To a question about SCO, the Prime Minister said Pakistan shared its vision how to help the organization achieve its objectives. 

The Prime Minister said Pakistan was one of the member states with observer status along with Iran, India, Mongolia and others and it was Pakistan's policy to join any organization that has an important position in the region, was working for economic growth, prosperity and peace in the region and was fighting extremism. 

About OIC, the Prime Minister said Pakistan believed that the member states must stand together to resolve the disputes facing them. He said Islam is a religion of peace, abhors violence and extremism and propagates harmony and brotherhood. 

The Prime Minister said in his talks both the sides noted that the quantum of trade between the two countries was very little and there was wide scope of expanding it through greater interaction between the two private sectors, joint ventures and investment. 

He said the two sides also identified several new areas for cooperation which can be further explored for helping the two growing economies and for the mutual interest of their people. 

He said Pakistan desires that Uzbekistan also benefits from the quadrilateral road transportation arrangement it has with China, Kazakhstan and Kyrgyzstan, through the Karakoram Highway, besides utilizing the facilities at the newly constructed Gawadar and Karachi Port. 

Blend of Education 

Prime Minister Shaukat Aziz on Thursday called for a blend of religious, spiritual and academic education to bring greater harmony and moderation in the Ummah. 

Talking to reporter here after visiting the 16th century complex, built along the ancient silk route and housed a grand mosque and an adjacent 'madrassa', the Prime Minister said this combination of education was very powerful and lead to creation of a more tolerant society. 

He said Pakistan too was trying to mainstream its madrassas * schools of religious education, by imparting the young children a balanced education covering all aspects of modern life and scientific knowledge. 

Shaukat Aziz said such a form of education was the first step towards creation of a society that excels in all areas including sciences and arts. He mentioned the great Muslim scholars of the past who made tremendous strides in all areas. 

About his visit to Samarkand and Bokhara the Prime Minister said the region has produced great scientists, mathematicians and religious scholars and Sufis who spread Islam and promoted harmony and tolerance. 

"These are the values that the entire Muslim world has to learn from and practice because Islam is our faith and propagates peace and harmony and is against violence and extremism." 

He said this is what we have to let the world know and our people so that the world of tomorrow is far better and more prosperous, he added. 

The Prime Minister soon after his arrival in Bokhara visited the Bahauddin Naqshbandi Complex. He paid his respects at the Mausoleum of great religious leader and founder of the Naqshband school of thought. 

He prayed for progress, prosperity of Pakistan and the Muslim Ummah. 

Keepint the traditions two lambs were also sacrificed for blessings of the Allah Almighty. 

The Prime Minister also visited the Mausoleum of Ismail Samani, another religious scholar popular for his Islamic teachings. 

Pak-Uzbek Tourism 

Prime Minister Shaukat Aziz Thursday said there was a great potential of boosting tourism between Pakistan and Uzbekistan and both the countries were working on it to achieve this objective. 

Talking to newsmen here after visiting "Rajestan" - a group of ancient 'madrassas' dating back to 15th and 17th century, the Prime Minister said a number of flights have started between the two countries and said with more flights trade and tourism between the two countries will further intensify. 

The Prime Minister said both the countries have so much in common including their heritage, ancient links and a history that they share. 

"It all is well worth the visit to each others' country and shows the bonds and ties which existed centuries ago." 

He recalled visits of President Pervez Musharraf and that of Islam Karimov preceding his that will bring the two countries further closer. 

"Visit to Uzbekistan would not be complete without visiting Samarkand - an ancient capital and on silk route and manifestation of Islamic teachings, thought, philosophy. Contributions made by scientists, scholars and thinkers from this part of the world to the entire world is very significant," he said. 

The Prime Minister commended the government of Uzbekistan for maintaing the sites in an excellent manner and promoting the heritage and history for the entire Muslim world. 

The Prime Minister said the people of Uzbekistan are warm and friendly and tourists from each country should visit the other. 

He pointed that Pakistan's history stretching back to the Harrapa and Gandhara civilisations was a favourite for tourists interested in world history. 

He said Pakistan offers a rich mosaic of natural beauty, history and culture that needs to be seen and invited tourists from Uzbekistan to visit. He also said Pakistani tourists can visit the historic places in Samarkand and Bukhara only a few hours away from their homes. 

The Prime Minister soon after his arrival in Samarkand visited the Musoleum of Hazrat Imam Bokhari the renowned writer of Hadith. Penning down his impressions on the visitors book, the Prime Minister described it as a "real privilge". 

"He was a scholar, researcher and religious leader who spent forty years collecting and authenticating the Hadith, covering the life and sayings of Holy Prophet (Peace Be Upon Him)." 

Aziz lauded the Uzbek government for mainting this "precious site of our history". "We all need to follow Islamic teachings of brotherhood, peace, harmony an tolerance," he stated. 

The Prime Minister, accompanied by the Governor of Samarkand also visited the Quran Museum and saw the artifacts and copies of Holy Quran from all over the world. 

Uzbekistan was overrun by Genghis Khan in 1220. In the 1300s Amir Timur or Tamerlane the Great (1337-1405) built an empire with its capital at Samarkand, founded after conquering what is today known as Iran, Iraq, Syria, Turkey, the Caucasus, Northern India and the Golden Horde of Mongols. 

His capital was a welcome abode for for scholars and artists. 

Prime Minister Shaukat Aziz and members of his delegation later visited the famous observatory made by Timur's grandson Mirzo Ulugbek, who also was the first to design a sextant. He was briefed about the working of the observatory, termed by some as one of the world's wonders, and was used to precisely measure the movement of stars and planets. 

Ulugbek is known in the world of science as one of the greatest in Middle Ages, astronomer and sponsor of art and knowledge. 

Uzbekistan was one of the 15 member Republics of the Soviet Union between 1922 and 1991. In September, 1991 following the collapse of the Soviet Union, Uzbekistan became one of Central Asian Republics to proclaim independence. Uzbekistan's heritage goes back about 2,500 years. Besides its economic importance, it flourished as the medieval intellectual center of the Muslim world. 

UzReport.
http://business.uzreport.com/uzb.cgi?lan=e&id=29220


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## Owais

*Musharraf opens Asia's largest milk processing plant *


KABIRWALA (updated on: March 16, 2007, 20:47 PST): President General Pervez Musharraf has said that the country's economy is doing well and the benefits of the economic turnaround are being passed on to the common man.

He was speaking at the inaugural ceremony of Asia's largest state-of-the-art milk processing plant here on Friday.

Nestle Pakistan, a subsidiary of Nestle S.A. Switzerland, has made an investment of $70 million for this project.

The ceremony was attended among others by Punjab Governor, Lt. Gen (R) Khalid Maqbool, Chief Minister Chaudhary Pervaiz Elahi, Federal Minister for Food, Agriculture and Livestock, Sikandar Hayat Bosan, Industries Minister, Jahangir Khan Tareen, provincial ministers and district nazim, Khanewal, Sardar Ahmad Yar Harraj.

President Musharraf said that the dairy development was a guarantee to the uplift and prosperity of the rural population in the country.

He said that the government had recently introduced a new livestock and dairy development policy with an objective to exploit the real potential of this vital sector of the national economy and help sustain a high economic growth rate.

The president said that Pakistan Dairy Development Company and Livestock and Dairy Development Board had been set up to expedite the process of development in the dairy sector.

He said that artificial insemination centres had been set up across the country to help improve the breed of the milch animals.

He said that embryo transfer technology centre had also been established to achieve this goal.

President Musharraf urged the rural community to adopt new techniques of dairy management to raise for their own economic benefits and the national development.

brecorder.com


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## Owais

*From textile to heavy industry: Planning Commission backs diversification idea* 

ISLAMABAD (March 17 2007): The Planning Commission has strongly supported the diversification of investment in engineering goods, electronics, automobiles, machinery and supporting industries to broaden the country's industrial base in the next 20-25 years.

In a draft study the Commission says that diversifying investment from textile to other sectors could only ensure sustainable economic growth in the next over two decades.

The study says that exports of machinery, engineering and other manufacturing goods have 65 percent share in the total world exports whereas the share of engineering goods in Pakistan's exports is only 3 percent. The major component of our exports remains cotton-based and low technology products where we have the potential to compete, but world trade is shifting towards medium and high technology goods and services, according to the study.

Pakistan's traditional industries such as food and textile units still accounts for 13.8 percent and 24 percent of the total manufacturing value addition respectively. On the other hand, industries for machinery, electrical, non-electrical and automobile accounts for just 4.4 and 4.7 percent of the value addition respectively. Even though chemical industries accounted for around 15.2 percent of the manufacturing output most the chemical product are low-tech, according to the study.

Pakistan requires massive structural changes rather than a marginal change, a shift in the production paradigm to technology and knowledge-based industrialisation, with a focus on the quantitative and the qualitative growth of an integrated and competitive industry in the private sector. The inefficiencies of import substitution must give way to an export led strategy. Therefore, the investment must be diversified from traditional industries and services.

The Commission is of the view that diversification is unlikely to take place without government action and policies to embed private initiative within a framework of public action that encourages restructuring and diversification. The key instrument in this regard must be introducing the concept of pioneering industry which encourage new investments, increased productivity and diversification into areas such as machinery, electronics, biotechnology, industrial automation, food processing, pharmaceuticals and vaccines.

Pakistan's strength, at present, lies in textiles. However, the automobile sector, pharmaceuticals, electronics, electrical and home appliances are showing great promise on the basis of fast growing middle class, consumer financing and capacity utilisation. The prospect of exporting these goods also looks promising in the future, said the study.

According to the study, Pakistan is blessed with extremely large deposits of several important and strategic minerals. Copper is one such mineral and it is quite possible for Pakistan to be called a "copper country" 8 -10 years down the line than a "cotton country."

http://brecorder.com/index.php?id=539081&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Pharmaceutical sector open for 100 percent foreign equity: minister *

ISLAMABAD (March 17 2007): Minister for Privatisation and Investment Zahid Hamid said on Friday that numerous opportunities exist in pharmaceutical sector of the country and this sector is open for 100 percent foreign equity.

He stated this in a meeting with Director, Glaxo Smith Kline (GSK) Biological, Belgium Stefan Vranckx, Chairman, GSK Pakistan Salman Burney and Trade Commissioner Abid M Hussain who called on him today in Board of Investment (BoI).

The minister assured all support and assistance from the government to Belgium Investors. He said the macro economic indicators are improving every year. He briefed them regarding increasing FDI inflows.

The delegation leader Stefan Vranckx speaking on the occasion said that they are willing to invest in the field of vaccine production in Pakistan on Private Public Partnership basis as Pakistan has quite big market for the product. They are also studying the potential of investing in dairy and gems and jewellery, he added.

Delegation leader said that GSK is one of the world's leading vaccine manufacturers. They are discovering new vaccines and developing more cost effective and convenient combination products to prevent infections that cause serious medical problems world wide, he added.

http://brecorder.com/index.php?id=539135&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Oil consumption rises 17.6 percent in eight months *

KARACHI (March 17 2007): The oil consumption in the country has increased by 17.6 percent to 11.116 million tons in the first eight months of FY07 as compared to 9.452 million tons in the same period last fiscal. According to figures available here the consumption of MS stood at 738,000 tons in the first half of FY07 as compared to 788,000 tons in the same period in FY06, down by 6.3 percent.

Kerosene consumption stood at 141,000 tons against 152,000 tons, down by 7.5 percent. JP-1 consumption was 694,000 tons against 754,000 tons, down by 3.1 percent and HSD consumption declined by 3.1 percent to 4,643,000 tones against 4,793,000 tons. On the other hand LDO consumption increased by 20.4 percent in the first eight months of FY07 to 98,000 tons against 82,000 tons in the same period in FY06. Fuel Oil 4,663,000 tons against 2,786,000, increased by 67.4 percent. The consumption of other oil products increased by 43.7 percent to 140,000 tons in the first eight months of FY07 against 97,000 tons in the same period in FY06.

Khurram Schehzad, an analyst at Invest Capital Securities said that Black Oil demand has been continuing its upward march with a stunning 66 percent growth on year-on-year basis. FO consumption has increased due to galloping electricity demand (rising by more than 10 percent per annum).

LDO demand rose due to improved agricultural activities observed in Rabi season. Conversely, the demand for White oil products (MS, HSD, JP-1-8, HOBC and Kero) continued their decline of 3 percent on year-on-year basis in the first eight months in FY07.

Continuous decline in HSD and Mogas is attributed to muddy rains and continuous penetration of alternates like CNG and LPG. Also, the smuggled Iranian cheaper Mogas in Balochistan/South region has also tarnished local Mogas consumption.

JP-1's decline has been aggravated due to sealing of Islamabad airport (in recent past) and change in flights schedules. JP's exports were also halted due to documentation anomalies at Afghanistan's border.

February-07 volume maintains 18.9 percent growth YoY: During February 2007, the overall petroleum products' volume stood at 1.31 million tons against 1.10 million tons recorded in February 2006. Consumption of Black Oil (up 66 percent) in February 2006 has driven the uninterrupted growth.

PSO recorded a 66 percent market share in the eight months of FY07, down from 70 percent observed in seven months of FY07. APL has also shown a shave-off in its market share to 4.2 percent in the eight months of FY07. Shell's market share settled at 14 percent.

Soaring electricity demand (with gas shortages to power plants) and inadequate water reserves coupled with Parco's shutdown would keep FO demand in the high range in the coming months as well. This trend would likely continue until gas supplies by way of imports or local discoveries are restored. In contrast, the demand for major white oil products' like Mogas and HSD would continue to decline amidst alternate fuel's presence, Khurram Schehzad added.

http://brecorder.com/index.php?id=539055&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*WorkersÃ¢â¬â¢ remittances up by 21.82pc in eight months *

KARACHI: Pakistan received an amount of $3,416.53 million as workersÃ¢â¬â¢ remittances during the first eight months (July 2006 - February 2007) of the current fiscal year as against $2,804.65 million in the corresponding period of last fiscal year, registering an increase of $611.88 million or 21.82 per cent. 

The amount of $3,416.53 million includes $1.55 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

A press note issued by the central bank on Friday said that inflow of remittances during the first eight months of the current fiscal year from USA, GCC countries (including Saudi Arabia, United Arab Emirates (UAE), Kuwait, Oman, Qatar and Bahrain), UK and EU countries amounted to $891.97 million, $640.79 million, $513.69 million, $467.86 million, $281.50 million and $97.50 million respectively as compared to $785.41 million, $443.09 million, $419.29 million, $371.36 million, $266.72 million and $77.83 million during the same period last fiscal year. Remittances received from Canada, Australia, Norway, Switzerland, Japan and other countries during the first eight months amounted to $521.67 million as compared to $430.38 million in the corresponding period of the last fiscal year.

The monthly average remittance for the period July 2006 - February 2007 comes to $427.07 million as compared to $350.58 million during the same period of the last fiscal year registering an increase of 21.82 per cent.

During last month (February 2007), Pakistanis working in foreign countries remitted $457.18 million as against $358.13 million in February 2006, depicting an increase of $99.05 million or 27.66 per cent. 

According to the break up, Pakistan received workersÃ¢â¬â¢ remittances during February, 2007 from USA ($123.96 million), Saudi Arabia ($88.26 million), UAE ($69.82 million), GCC countries - including Bahrain, Kuwait, Qatar and Oman ($60.50 million), UK ($33.64 million) and EU countries ($11.89 million) as compared to the corresponding receipts from the respective countries during February, 2006 i.e. $89.98 million, $58.80 million, $59.44 million, $45.73 million, $30.27 million and $7.12 million. 

http://www.thenews.com.pk/daily_detail.asp?id=47129


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## Janbaz

*Micro credit schemes to assist low-income groups *

KABIRWALA (APP) - President General Pervez Musharraf has said that the country&#8217;s economy is doing well and the benefits of the economic turnaround are being passed on to the common man.
He was speaking at the inaugural ceremony of Asia&#8217;s largest state-of-the-art milk processing plant here on Friday. Nestle Pakistan, a subsidiary of Nestle S.A. Switzerland, has made an investment of $70 million for this project. The ceremony was attended among others by Punjab Governor, Lt Gen (R) Khalid Maqbool, Chief Minister Chaudhary Pervaiz Elahi, Federal Minister for Food, Agriculture and Livestock, Sikandar Hayat Bosan, Industries Minister, Jahangir Khan Tareen, provincial ministers and district Nazim, Khanewal, Sardar Ahmad Yar Harraj.
President Musharraf said that the dairy development was a guarantee to the uplift and prosperity of the rural population in the country. He said that the government had recently introduced a new livestock and dairy development policy with an objective to exploit the real potential of this vital sector of the national economy and help sustain a high economic growth rate. 
President said that Pakistan Dairy Development Company and Livestock and Dairy Development Board had been set up to expedite the process of development in the dairy sector. He said that artificial insemination centres had been set up across the country to help improve the breed of the milch animals. He said that embryo transfer technology centre had also been established to achieve this goal.
President Musharraf urged the rural community to adopt new techniques of dairy management to raise for their own economic benefits and the national development. President Pervez Musharraf said the government was introducing micro credit schemes to assist the low-income groups in rural areas for livestock farming and dairy business. 
He urged the farmers to utilise the facility of chillers for the storage of milk so that they could sell their produce to the milk plants at price higher than the one in the local market.
General Musharraf said the poverty would be eliminated by the masses themselves. However, the government would facilitate them through all the possible means. 
Talking about government&#8217;s efforts to improve water availability in the country, he said that all dams including Kalabagh Dam would be constructed to enhance country&#8217;s water storage capacity for irrigation use.
He said the Mangla dam upraising project would increase the storage capacity by three million acre feet. The President said the Nestle milk processing plant at Kabirwala (district Khanewal) is the largest milk plant in Asia with world&#8217;s largest milk collection centre. 

The Nation.
http://www.nation.com.pk/daily/mar-2007/17/bnews2.php


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## Janbaz

*President inaugurates mega pipeline project*

Pakpattan (PR) - President General Pervez Musharraf has inaugurated a mega pipeline project undertaken by Sui Northern Gas Pipelines Limited for the supply of natural gas to the southern districts of Punjab, said a press release issued by SNGPL Managing Director here on Saturday.
This project is of significant importance and a milestone towards government&#8217;s commitment for the welfare and prosperity of people of Pakistan, as it would not only supply gas to three district namely Pakpattan, Bahawalnagar and Vehari, but would also benefit twelve tehsils It is estimated that about 1.3 million people of the area will benefit from the facility of natural gas, which would enable them to change their living style. The proposed project will enhance industrial and commercial development in the area including setting up of numerous CNG filling stations for providing less expensive and environment friendly fuel to the masses.
Energy plays a vital role in the national development. The present government has kept it on top of its priority list. The government has framed petroleum policies, which facilitate and encourage foreign companies to invest in Pakistan&#8217;s energy sector. The government is trying its best to provide energy resources to maintain the GDP growth of 6.5-8 per cent in the country.
The Ministry for Petroleum and Natural Resources is playing a significant and important role in our national development and has made sure that the governmental policies are properly implemented, so that the common man benefits from these policies. As a result of promising and successful petroleum policy, the indigenous gas production has increased from 2.3 billion cubic feet per day to 4 billion cubic feet per day during the last 7 years. 
The use of natural gas in a country reflects its growth of national economy. At present, natural gas is contributing about 51pc of Pakistan&#8217;s primary energy requirements. The location of Pakistan has its strategic importance. Iran, having world&#8217;s second biggest gas reserves, is located in the South West of Pakistan. India, the second biggest population in the world and energy deficient, is located in its east, whereas China and Central Asian States are located in northern borders of Pak. As such, Pakistan is being termed by the energy experts as the future &#8220;Energy Hub&#8221;. 
By virtue of its geographical location, Pakistan can act as energy corridor for supply of gas from Iran to India as well as China, after meeting its own requirements. A considerable work towards proposed Iran - Pakistan -India (IPI) pipeline project has been done and recently the pricing mechanism of gas has been agreed by the three stakeholders. On the other hand, the newly developed Gawadar port can conveniently be used for the export of natural gas to the Far East in the form of LNG. Similarly, energy resources from Central Asian States can be brought to Pakistan and Gawadar through Afghanistan for export to Far East countries.
The present Government is committed to supply gas, electricity and safe drinking water to the people of Pakistan. In terms of gas supply projects the government has funded projects worth Rs 30 billion comprising 1900 schemes on which the work is in progress at more than 700 locations. Both the Sui companies are engaged in the implementation of these projects under government&#8217;s Khushhal Pakistan Schemes.

The Nation.
http://www.nation.com.pk/daily/mar-2007/18/bnews1.php


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## Janbaz

*Foreign investment to cross $5bn: PM *

ISLAMABAD: Prime Minister Shaukat Aziz on Saturday said that Pakistan has become a destination of choice for foreign investment which is expected to cross $5 billion this year, highest in the country&#8217;s history.

He was talking to Dr Yousef Al-Zalzala, Chairman of Kuwait Gulf Link Petroleum Company, who called on him here at the Prime Minister House on Saturday. The prime minister said that the sharp upsurge in foreign investment witnessed by the country was due to the successful structural reforms, high growth and macroeconomic stability, achieved by the country.

He said that consistency, continuity and transparency of policies have given confidence to the private sector to plan for future, which has contributed to fast growth and development of the country.

The prime minister said that acting in line with the requirements of the free market economy, the government is facilitating the private sector to play pro-active role while providing necessary regulatory framework and enabling environment for the business community. 

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=47273


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## Janbaz

*Pak goods in great demand in Gulf * 

LAHORE: There is a huge demand for Pakistani products in the Gulf markets especially Saudi Arabia and Kuwait, said Ikramullah, Director TDAP and the leader of Pakistan&#8217;s business delegation which returned home after a visit to Gulf states.

&#8220;We visited chambers of commerce in Makkah, Jeddah and Riyadh besides meeting businessmen in Kuwait city,&#8221; he said while talking to APP here on Saturday. Pakistan&#8217;s 12-member trade delegation, arranged by Trade Development Authority of Pakistan (TDAP) had representation from the sectors including pharmaceuticals, surgicals, rice and fruit and vegetables. Ikramullah hoped that the visit would help boost Pakistan&#8217;s exports to Saudi Arabia and Kuwait significantly. 

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=47293


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## Neo

*From textile to heavy industry: Planning Commission backs diversification idea *

ISLAMABAD (March 17 2007): The Planning Commission has strongly supported the diversification of investment in engineering goods, electronics, automobiles, machinery and supporting industries to broaden the country's industrial base in the next 20-25 years.

In a draft study the Commission says that diversifying investment from textile to other sectors could only ensure sustainable economic growth in the next over two decades.

The study says that exports of machinery, engineering and other manufacturing goods have 65 percent share in the total world exports whereas the share of engineering goods in Pakistan's exports is only 3 percent. The major component of our exports remains cotton-based and low technology products where we have the potential to compete, but world trade is shifting towards medium and high technology goods and services, according to the study.

Pakistan's traditional industries such as food and textile units still accounts for 13.8 percent and 24 percent of the total manufacturing value addition respectively. On the other hand, industries for machinery, electrical, non-electrical and automobile accounts for just 4.4 and 4.7 percent of the value addition respectively. Even though chemical industries accounted for around 15.2 percent of the manufacturing output most the chemical product are low-tech, according to the study.

Pakistan requires massive structural changes rather than a marginal change, a shift in the production paradigm to technology and knowledge-based industrialisation, with a focus on the quantitative and the qualitative growth of an integrated and competitive industry in the private sector. The inefficiencies of import substitution must give way to an export led strategy. Therefore, the investment must be diversified from traditional industries and services.

The Commission is of the view that diversification is unlikely to take place without government action and policies to embed private initiative within a framework of public action that encourages restructuring and diversification. The key instrument in this regard must be introducing the concept of pioneering industry which encourage new investments, increased productivity and diversification into areas such as machinery, electronics, biotechnology, industrial automation, food processing, pharmaceuticals and vaccines.

Pakistan's strength, at present, lies in textiles. However, the automobile sector, pharmaceuticals, electronics, electrical and home appliances are showing great promise on the basis of fast growing middle class, consumer financing and capacity utilisation. The prospect of exporting these goods also looks promising in the future, said the study.

According to the study, Pakistan is blessed with extremely large deposits of several important and strategic minerals. Copper is one such mineral and it is quite possible for Pakistan to be called a "copper country" 8 -10 years down the line than a "cotton country."

http://www.brecorder.com/index.php?id=539082&currPageNo=2&query=&search=&term=&supDate=


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## Neo

March 18, 2007 
*Tremendous growth seen in petroleum sector*

ISLAMABAD, March 17: Minister for Petroleum and Natural Resources Amanullah Khan Jadoon said on Saturday that as a result of vibrant policies of deregulation liberalisation and privatisation, the petroleum sector has witnessed a tremendous growth in the last few years.

Talking to the managing director of Hungarian MOL Company, Janos Feher, who called on him to discuss matters pertaining to promoting cooperation in the oil and gas sector, the minister said that the government would encourage and facilitate prospective investors in onshore and offshore oil and gas exploration.

He said that the new petroleum policy would give impetus to the ongoing oil and gas exploration.

He appreciated the MOLÃ¢â¬â¢s contribution for boosting the oil and gas exploration activities in NWFP and asked the company to participate in other parts of the country for the mutual advantage.The MD of MOL briefed the minister about the oil and gas exploration activities being undertaken by his company in the NWFP.

He lauded the investor-friendly policies being pursued by the government attracting investment in the country.

Petroleum secretary Ahmad Waqar and member of MOL delegation were present in the meeting.


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## Introvert

* Pakistan, Kuwait Agree to Enhance Trade, Investment *
By Sheeraz Aslam 'Pakistan Times' Special Correspondent

ISLAMABAD: Pakistan and Kawait here on Saturday emphasized on translating the excellent brotherly relations with identity of views on all issues and cultural affinity between them into an equally strong economic relationship.

Dr. Yousef Al-Zalzala, Former Minister of Commerce and Member of Parliament of the State of Kuwait along with a two-member delegation called on Zahid Hamid, Federal Minister for Privatisation and Investment here today.

Zahid Hamid briefed the delegation regarding the privatisation and investment polices and said that there are numerous investment opportunities in Pakistan and all economic sectors were open for 100% foreign equity and investors were free to transmit as much profit or equity without any permission. He said that Pakistan&#8217;s GDP growth is exceeding 7%.

He assured all support and assistance from Government of Pakistan to Kuwaiti Investors.

The Minister presented the macro economic indicators, which were improving every year and also briefed them regarding increasing FDI inflows, which touched the record level of US $ 3.5 billion in year 2005-06 and this upward trend was being witnessed during the current fiscal year July 2006-January 07, which stood US $ 3.6 billion including US $ 2.1 billion direct investment, US $ 697 million portfolio investment and US $ 811 million of OGDCL GDR proceeds.

This trend is continuing and will set new FDI record by the close of this fiscal year. He also briefed them about the investment opportunities in various sectors with special reference to PSO and PPL Privatisation.

Both sides emphasized on translating the excellent brotherly relations with identity of views on all issues and cultural affinity between Pakistan and Kuwait into an equally strong economic relationship.

They also agreed on further improving the investment climate beneficial to both the countries and to facilitate business groups of both the countries.
http://www.pakistantimes.net/2007/03/18/top9.htm


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## Janbaz

Gosh the fuel and energy sector have been booming over some time now. The IPI in its final stages, the discussion to get gas from Uzbekistan and now a booming petroleoum sector are all great signs. Like the Hibernia in Canada, if offshore oil is found it will be a great boost and along side the reserves in F.A.T.A will transform much of the momentous economy!:flag:


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## Owais

*'Economic sectors open for 100 percent foreign equity' *
ISLAMABAD (March 19 2007): There exist numerous investment opportunities in Pakistan and all economic sectors are open for 100 percent foreign equity and investors are free to transmit as much profit or equity without any permission, said Zahid Hamid, Federal Minister for Privatisation and Investment on Saturday.

He was briefing Dr Yousef Al-Zalzala, former Minister of Commerce and Member of Parliament of Kuwait who called on him along with a two-member delegation here, says a press release.-PR
http://brecorder.com/index.php?id=539971&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Inflation and account deficit threats to economy: EIU *

KARCHI (March 18 2007): Inflation, a widening current-account deficit and internationally high oil prices remain the biggest threats to Pakistan economy, said The Economist Intelligence Unit (EIU) UK. The Economist Intelligence Unit (EIU) on Saturday has issued a detail report on Pakistan's economy.

In which they have forecast that real GDP growth will slow from 6.6 percent during the current fiscal year to 6 percent in 2007-08, largely owing to a slowdown in the services sector.

Growth will be driven by the continued expansion of textile production and other manufacturing output. The strength of the industrial sector will in turn stimulate growth in service output, particularly in the commerce, trade and transport sub sectors, the report added.

Agricultural growth will also remain fairly healthy throughout the forecast period and the improving outlook for the monsoon has resulted in forecast for real GDP in 2006-07 being revised up from 6.4 percent in October to 6.6 percent currently, as growth in the agricultural sector is now expected to be more buoyant in that year.

Inflationary pressures and a widening current-account deficit remain the biggest threat to economic growth. Monetary tightening by the central bank in July will assist in controlling consumer price inflation, report said.

Year-on-year inflation rose from a low of 6.2 percent in April 2006 to 8.9 percent in August, while it then remained above 8 percent for November and December but fell sharply in January to 6.6 percent.

The EIU forecast said that a slowdown in economic growth and an improvement in food supplies will contribute to a further slowing of inflation in the forecast period. On balance, consumer prices are expected to rise by an average of 7.4 percent in 2007, with inflation falling to 5.5 percent in 2008.

Report said that Pakistan's economy is expanding rapidly, but international oil prices and domestic inflation are high at present, and could undermine macroeconomic stability and economic growth prospects.

Action to stem the rising trend in consumer price inflation came late and this lack of timely action, coupled with an overheating economy, is the main source of economic policy risk in 2007-08.

Nevertheless, Pakistan's policymakers have in the past few years created an environment within which the private sector has begun to thrive. These measures include substantial privatisation, reforms in the banking and utility sectors and efforts to reduce red tape.

The EIU quoted that the World Bank's doing Business reports has said that Pakistan rose to 74th position out of 175 from 126th out of 151 the previous year, with the authors noting that customs and tax reforms had benefited business.
http://brecorder.com/index.php?id=539725&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Planning Commission finalises 'Vision 2030': NEC approval likely on March 27 *

ISLAMABAD (March 19 2007): The Planning Commission has given final shape to the 'Vision 2030' for final approval by National Economic Council (NEC). It foresees Pakistan as a regional hub for industry, trade and education in the next two decades.

Planning Commission Deputy Chairman Dr Akram Shaikh presided over the 6 hours long meeting which gave the final shape to the 'Vision' for the NEC meeting. Earlier the NEC was scheduled to meet on March 22, but it was deferred on Saturday and now it is likely to meet on March 27. Prime Minister Shaukat Aziz would preside.

The working draft of the 'Vision' says that by 2030 Pakistan will be the world's fifth most populous country (around 230 million people), with an economy whose absolute size will be among top two dozen countries, on the basis of only a 6 percent sustained growth, and around 12th on purchasing power parity (PPP). Its people in under-25 age group will have an average of 10 years of education, while tertiary enrolments will be nearly 20 percent of the 17-23 age cohort. It will also be a major regional hub for industry, education, services and arts.

The 'Vision' gives importance to the globally integrated economy, saying that "it appears that the most predictable state of affairs in 2030 will be that of a globally integrated economy". The industrial economy will be transformed inexorably into yet undefined morphologies on the shoulders of the information revolution.

It adds that economies are likely to diffuse across national boundaries into truly global supply chains, whether industrial, services or ownership. This dispersal of work and strategic linkages across national boundaries, coupled with information integration, and a shift in the technological content of world trade towards high technology, will be the most conspicuous feature of globalised economy in the future.

According to the 'Vision', the most abrupt transformation will occur in Asia, which is expected to be the engine of global growth and consumption. This will see a continuation of relocation of manufacturing and an increasing share of design and services from the developed countries. If some emerging economies in Asia can sustain their growth for several decades, then three of the four largest global economies will probably be Asian in 2030 and 2050. Pakistan's economy, currently ranking 39th in size (24th on PPP), could similarly rise to 23rd (12th on PPP) with a sustained growth of 6 percent, it adds.

The 'Vision' maintains that opening of markets in the wake of trade liberalisation would imply fierce competition in both domestic and external markets. The role of the multinationals and regional supply chains will also have expanded, not only in industry but also in agriculture and services.

Attracting and retaining relocation activities and investments, and developing into regional or global hubs, would be the major goals of companies and national policies. In some newly industrialised Asian countries, such activities have already generated major global players and conglomerates. They now offer complete end-to-end services in the supply chain, whether as manufacturers of piece parts and systems, or providers of manufacturing related services.

It has noted that Pakistan needs to put in place the infrastructure and matching of skills with demand, within the country as well as those of transnational agents.

It says that emerging electronically networked world economy is creating a new economic landscape that highlights a shift from geographical industrial cluster to virtual cluster, driven by digital innovation. These clusters are emerging in the new competitive space offered by a Web-based business world, where 'how you do business' is more relevant than 'where you do business'. This requires Pakistan to operate the next generation communication networks, which combine convergence with speed, stability, security, and flexibility. In this regard, globally powerful cities will be competing with nation states, it foresees.

http://www.brecorder.com/index.php?id=539932&currPageNo=1&query=&search=&term=&supDate=


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## Neo

March 19, 2007 
*Choices for small investors*

By Mohiuddin Aazim

AS PakistanÃ¢â¬â¢s economy continues to grow, many people find surplus funds at their disposal but there are not many areas of profitable yet risk-free modes of investment available to them.

Keeping money in bank accounts or parking it in the National Saving Schemes (NSS) is the safest way of investment but for some years banks have been offering a real negative rate of return on deposits i.e. lesser than the rate of inflation. For example, the average rate of return on one-year fixed deposit stood at 5.26 per cent at the end of the last fiscal year, when inflation that year was 7.9 per cent.

Investment in NSS has been a bit more profitable than the bank deposits but the real return on NSS too is barely a few percentage points above inflation on certificates of 10 years. For example, the return on 10-year Defence Saving Certificates (DSCs) stood at 9.46 per cent till the end of the last fiscal year slightly higher than the inflation for that year.

Investment in stocks and in the real estate yields far better returns than bank accounts and NSS. But both modes of investment are chiefly speculative and much less secured than bank accounts and NSS.

Bank deposit: Whereas bank accounts can be opened with Rs10,000 and minimum investment required in DSCs and special saving certificates (SSCs) is Rs500, one needs much more money to enter into the stock market or in the real estate.

At the end of June, total bank deposits stood above Rs2817 billion and the total number of bank accounts exceeded 26.3 million. Statistics compiled by the State Bank show that more than 47 per cent of the total deposits (Rs1332 billion) were in saving accounts on which the average return was only 1.67 per cent. Senior bankers often quote high concentration of bank deposits in saving accounts as a prime reason for very low average return on overall bank deposits. That is true. But what is equally true is that even the fixed term deposits have not been attracting a reasonable rate of return. See the table.

As the Table shows, the average return on fixed deposits of over one year to over five years ranged between 5.26-5.57 per cent.

Detailed analysis of deposit rates beyond June 2006 is not available but a nominal increase in the weighted average return on fresh deposits has been witnessed afterwards. The latest SBP data reveal that the average return on fresh deposits mobilised in January 2007 crawled up to 5.05 per cent from 4.72 per cent in June 2006.

The weighted average return on overall deposits of the banking system, however, stood at 3.72 per cent in January 2007 up marginally from 2.89 per cent in June 2006.

National Saving Scheme: Compared to very low profits on bank accounts, NSSÃ¢â¬â¢s offer better returns to investors.

The scheme covers five major saving instruments namely DSCs, , SSCs, regular income certificates (RICs), Bahbood (Welfare) Saving Certificates (BSCs) and Pensioner Benefit Accounts (PBAs). The last two have been tailor-made for the widows, senior citizens over 60 years of age and pensioners. The DSCs, BSCs and PBAs are of 10-year maturity whereas SSCs and RICs are three-year and five-year papers.

Till end-June 2006, the return on DSCs was 9.46 per cent whereas it was 11.04 per cent on BSCs and PBAs. And SSCs and RICs offered 8.74 and 8.88 per cent return respectively.

From July 2006, the government increased the rate of return to 10 per cent on DSCs and to 11.52 per cent on both BSCs and PBAs. The return on SSCs and RICs was increased to 9.34 per cent 9.24 per cent respectively.

These rates of return are applicable on full maturity and investors get lesser if they make premature withdrawals, yet the effective rates of return even on these withdrawals remain higher than the rates of return on fixed bank deposits.

For example, if one redeems DSCs on the completion of the fifth year, he gets eight per cent interest, which is far higher than the average return of 5.57 per cent on five-year fixed bank deposits. And in case of SSCs, profit is paid at the rate of nine per cent on the completion of the first six months out of the full maturity period of three years. This is almost double than the average return of 4.64 per cent on six-month fixed deposits.

Apart from higher returns, NSS are better than fixed bank deposits also because the minimum investment required is much lower than in fixed term deposits. Minimum investment for DSCs and SSCs, for example, is Rs500 only. Contrary to this, in most of the fixed deposits, people need to keep money in multiples of Rs10,000 or in multiples of Rs100,000.

Stock Market: Perhaps, the stock market offers a better alternative in terms of high dividends combined with appreciation in the stock value. But not everybody can make money out of stocks for the lack of the expertise needed for it. Those of the small and ordinary investors who dare invest into the stock market are benefited primarily with the dividends because the kind of speculative activities going on in the market makes it difficult for them to earn net price differentials in a given time. Long -term investors, however, not only earn dividends but also benefit from the appreciation in the stock value.

According to a study carried out by Jehangir Siddiqui, the estimated average annual return on stock investment stood at 11.14 per cent in the outgoing year. The researchers have arrived at this number by averaging out the dividends paid out by 60 leading companies in 14 listed sectors of the Karachi Stock Exchange.

The average dividend can differ with the change in the JS index but since the list of the 60 companies include every big market player there are least chances for a major change in it. Though the mutual fund industry is still in its infancy yet various mutual funds have also been offering better-than-banks returns to their investors over the years.

For those who cannot afford to invest directly in the stock market for the lack of expertise or time management, mutual funds are the best alternative but what irks most investors is that these funds often issue right or bonus shares instead of handing out cash dividends.

Real Estate: Investment opportunities abound in the real estate market but for wealthier people. Small investors stand no chance in this field as prices have skyrocketed in the past few years. Besides, most investment in the real estate is for speculative purposes thereby making this a doubly dangerous proposition for small investors. However, if the Real Estate Investment Trusts become a reality, small investors too, may be able to park their surplus funds in this area. Once established, these trusts would be working like mutual funds pooling the money of a number of investors for buying a piece of land and then distributing the profit proportionately as the market price of the land moves up.

http://www.dawn.com/2007/03/19/ebr2.htm


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## Neo

March 19, 2007 
*Macro-economic targets unlikely to be met*

By Khaleeq Kiani

ISLAMABAD, March 18: Pakistan is likely to miss some major macroeconomic targets this year, but high agriculture output will enable national economy to show much higher than envisaged seven per cent growth rate, it is learnt.

As a result, the government is expected to revise annual targets for the current year Ã¢â¬â downwards in areas like foreign trade, current account and prices and upwards in agriculture and services output Ã¢â¬â in the next few weeks.

Official sources said the government was expecting a bumper wheat crop Ã¢â¬â reasonably higher than targeted 22 million tons of produce. This, coupled with better production in some other crops and higher livestock production, was expected to put agricultural growth at five per cent, instead of the original target of 4.5 per cent.

The sources said the government was also expecting better results in the services sector. However, the targets for wholesale and retail trade sector are being reduced to 7.2 per cent compared with the original annual target of 8.8 per cent growth.

They said the government had fixed an annual growth target of 7.1 per cent on the basis of six per cent growth in transport and storage, 12 per cent in finance and insurance, 3.5 per cent in housing ownership, 3.7 per cent in public administration and 5.6 per cent in social and personal services.

They said the government had set an inflation target of 6.5 per cent, but this was unlikely to be achieved.

On the basis of seven months data, the annualised rate of inflation as measured by consumer price indicator has stood at 8.14 per cent as against 8.48 per cent during the corresponding period last year. Food inflation has increased from last yearÃ¢â¬â¢s 7.6 per cent to 10.33 per cent this year and non-food inflation has come down to 6.60 per cent from 9 per cent last year.

Similarly, the sensitive price indicator on annualised basis has almost doubled to 11.84 per cent in the first seven months from 6.58 per cent of the same period last year. Wholesale price index, however, declined to 7.44 per cent compared with 10.97 per cent in the last seven months of last year.

The sources said the government had set export target of $19.8 billion for the current year against $16.8 per cent of the last fiscal year, envisaging 18 per cent growth rate. This target is very unlikely to be achieved given the export performance so far. In the first seven months of the current year, exports have struggled at $9.6 billion, which is only 3.86 per cent higher than last yearÃ¢â¬â¢s $9.27 billion.

Imports for the current fiscal year were also projected to grow at 16 per cent to $27.4 billion. In the first seven months, however, imports have stood at $17.2 billion against $15.8 billion of the same period last year, recording a growth rate of 9 per cent.

As a result, the trade deficit touched a record $7.6 billion in the first seven months Ã¢â¬â a figure the government had projected for the whole year. The trade deficit has touched $8.9 billion in the first eight months and is likely to cross $13 billion by the year end. Similarly, the current account deficit is also expected to touch $8.8 billion or so against an annual target of $6.3 billion.

The sources, however, said higher foreign direct investment, remittances coupled with better agricultural output and relatively higher manufacturing growth would enable the GDP not only to achieve 7 per cent growth rate but also take it to near 8 per cent if the current trend continued. However, the current political situation could hamper the growth estimates, they added.

http://www.dawn.com/2007/03/19/top12.htm


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## Neo

*IFC To Help Boost Pakistan's Housing Finance Market *

ISLAMABAD -(Dow Jones)- Pakistan's housing finance market could grow to PKR140 billion ($2.33 billion) by the end of this decade if it is properly developed, an International Finance Corporation official said Thursday.

"There is huge unmet demand for housing in the country," said Syed Farhan Fasihuddin, IFC's Program Manager for Housing Finance.

"Potentially, housing finance can go from 1% of GDP to 4-5% of GDP in three to four years," he added.

Fasihuddin said Pakistan faces a shortage of 6 million houses while just 300, 000 are built each year.

IFC, the private-sector arm of the World Bank group, has been working to develop Pakistan's real estate finance market, particularly in terms of financing for the low income group.

Among its initial goals is to restructure government-owned House Building Finance Corporation, with which it signed an agreement last June.

IFC intends to take an equity stake in HBFC, Fasihuddin said. 

http://www.nasdaq.com/aspxcontent/N...CQDJON200703160531DOWJONESDJONLINE000467.htm&


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## Owais

*Fiscal year 2007 July-December corporate sector profits down 10 percent *

KARACHI (March 20 2007): Profitability of the country''s corporate sector (71 companies, having market capitalisation of over 80 percent of KSE-100 index), declined by 10 percent to Rs 93 billion in the first half of FY07 from Rs 104 billion in the same period in FY06.

The best performing sectors during the first half of current fiscal year were E&P and Banking, whose profitability grew by 22 percent and 8 percent, respectively, while the worst performers were the downstream oil chain ie refinery and OMCs, whose profitability witnessed respective plunge of 120 percent and 69 percent, with the refineries suffering a net loss, a research team at Atlas Capital Markets said.

Exploration & Production (E&P) sector ( three companies) earned Rs 35,308 million in the first half of FY07 as compared to Rs 28,976 million in the same period of FY06 with a growth of 22 percent, and the Banking sector (18 companies) earned Rs 28,891 million in this period against Rs 26,865 in the same period of last year with a growth of 8 percent.

Auto assemblers'' (six companies) earnings declined by 11 percent to Rs 3,270 million in the first half of FY07 against Rs 3,671 million in the same period in FY06. Textile sector (five companies) earnings declined by 18 percent to Rs 1,054 million against Rs 1,293 million. Telecom Sector (two companies) earnings declined by 20 percent to Rs 8,752 million against Rs 10,922 million. Fertiliser sector (four companies) earnings declined by 21 percent to Rs 6,209 million against Rs 7,897 million. Gas sector (two companies) earnings declined by 32 percent to Rs 1,670 million against Rs 2,461 million.

Power sector (two companies) earnings declined by 32 percent to Rs 3,569 million against Rs 5,284 million. Chemical sector (four companies) earnings declined by 50 percent to Rs 1,425 million against Rs 2,840 million. Cement sector (18 companies) earnings declined by 62 percent to Rs 2,211 million against Rs 5,810 million. OMC sector (three companies) earnings declined by 69 percent to Rs 1,581 million against Rs 5,14. Refinery sector (four companies) earnings declined by 120 percent to Rs 581 million (loss) in the first half of FY07 as compared to Rs 2,876 million profit in the same period in FY06.

E&P Sector: The E&P sector (OGDC, POL and PPL), simply put, was plain lucky to get away with 11 percent higher crude oil prices on the international front on year-on-year basis despite a 14 percent drop during the second quarter. On the other hand, their total production of both crude oil and gas remained more or less flat. Additionally, POL contributed by way of a one-time reversal on its exploration cost while PPL enjoyed a lower effective tax rate, inflating its earnings and therefore taking total industry profitability to Rs 35.3 billion, up 22 percent from Rs 28.976 billion previously.

BANKING SECTOR: The banking sector''s profitability witnessed a growth of just 8 percent to Rs 28.891 billion in the first half of FY07 (excluding BankIslami, Bank of Khyber and Crescent Commercial Bank). The reason for low growth was tight monetary growth target of 13.5 percent set by the State Bank of Pakistan for FY07 as compared to 15.2 percent observed in FY06. Total advances of scheduled banks grew by 13.3 percent to Rs 2.4 trillion in December 2006 as against Rs 2.1 trillion in June 2006 as compared to 16.2 percent rise in the same period last previous year, whereas deposits surged by 7.6 percent to Rs 3.0 trillion in the first half of FY07 as against 12.0 percent upsurge in the last comparable period. The interest rates spreads in the first half of FY07 stood at 7.45 percent as against 7.16 percent in the first half of FY06. Besides this, the equity market also did not perform well in the period under review thus resulting in low growth in non-core business income.

Automobile Assemblers: Profitability of the automobile assemblers, which includes four car assemblers (PSMC, INDU, HCAR and DFML) and two tractor assemblers (AGTL and MTTL), was down by 11 percent to Rs 3.27 billion in the first half of FY07 as against Rs 3.67 billion in the same period in FY06. Disintegrating the two, the earning of the car assemblers was down by 17 percent to Rs 2.34 billion as against Rs 2.81 billion whereas the earning of tractor assemblers was up by 8 percent to Rs 929 million against Rs 859 million. Major reason for the decline in profitability was the lesser growth in sales volume because of rising car financing rates; plant shutdowns because of capacity expansion; surging prices of raw materials ie steel; rising financial charges mainly to fund their expansions and decline in other income because of reduced delivery periods.

Textile sector: Textile sector''s profitability reduced by 18 percent totalling to Rs 1,053 million as compared to Rs 1,293 million for the corresponding period of last year for the five major companies in the sector(NML, NCL, KTML, CHBL and ADM). The most common reason behind this decline can be attributed to the sharp increase in cost of sales for the textile sector. This increase was due to the total cotton consumption rate ie Rs 2,451 per maund as compared to Rs 2,329 per maund in the corresponding period of last year. Similar trend was observed for imported cotton for which rate of consumption is Rs 3,422 per maund as compared to Rs 3,196 per maund for the corresponding period half year. Apart from this, minimum wages, fuel and power cost and financial charges also increased by great extent.

Telecom Sector: The telecom sector, constituting PTCL and WorldCall Telecom, adversely performed in the first half of FY07, depicting a decline of 20 percent in net earnings to Rs 8.8 billion in the first half of FY07as compared to Rs 10.9 billion in the first half of FY06. Continuously reducing international tariffs and decline in domestic prices due to high competition were among major reasons of the fall. PTCL observed a decline of 23 percent in profitability as the revenues declined by 6 percent and the operating costs surged by 24 percent because of high provisions of doubtful debts. WTL, on the other hand, posted growth of more than three times in profits to Rs 386 million in the first half of FY07 as against Rs 88 million in the first half of FY06 owing to stable revenues and Rs 16 million reduction in the operating costs as a result of cost optimisation strategy.

Fertilizer Sector: The core to the agricultural growth and hence to the economy witnessed a depressed financial performance in the first half of FY07. Cumulative profitability of the listed manufacturers ie. FFBL, FFC, DAWH and Engro fell by 21 percent to Rs 6.2 billion from last year''s Rs 7.9 billion. The major culprits for the decline in the earnings were higher cost because of rising cost of fuel and surging financial charges because of higher interest rates. This double-digit decline can also be attributed to the extraordinary gains by DAWH in previous half year as it divested some of its stake in SNGP and PTA.

Gas Sector: Overall profitability of the sector fell by 31 percent in the first half of FY07 as compared to the corresponding period of last year. Earnings of SNGP plunged considerably by 43 percent while SSGC surged by 34 percent as a result of increase in operating profitability of SSGC emanating from an increase in operating assets. However, the adjustment in UFG target set by Ogra and increase in financial charges did not increase the profitability by the growth in operating assets for SNGP. Furthermore, SNGP''s immense decline in profitability was also a result of increase in effective tax rate which stood at 35 percent for the first half of FY06 as compared to 26 percent last year.

Power Sector: Profitability of the two biggest independent power plants ie. Hubco and Kapco declined by 32 percent to Rs 3.56 billion as against Rs 5.28 billion in the same period last year. Hubco witnessed a marginal decline of a percent while Kapco, whose earning declined by 40 percent mainly because of imposition of normal corporate tax rate as its tax exemption period expired on June 26, 2006 contributed the most to the decline in industry profitability.

Chemical Sector, including ICI, DSFL, IBFL and PPTA, saw decline in profitability during the first half of FY07 by 50 percent to Rs 1.4 billion as against Rs 2.8 billion in the same period in FY06. Although the core operation performance was well above par it were the one-time gains of ICI and PPTA in terms of deferred taxation last year and loss of DSFL this year which led to the overall earnings to half.

Cement sector: During the first half of FY07 total dispatches recorded a growth of 26 percent to 11.04 million tons in the first half of FY07, which in the same period last year stood at 8.75 million tons in which local cement dispatches were 9.976 million tons, up by 25 percent and exports were up by 37 percent to 1.061 million tons. This growth in sales was offset by the depressed scenario in the cement prices, which hovered at around Rs 180-220 per 50 kg bag during the period under review. Total profitability of the cement sector fell considerably by 62 percent as a result of tumbling prices along with higher financial charges as a consequence of expansion taken up by several cement manufacturers.

Oil Marketing Companies: PSO, Shell and APL''s combined profits for the half year ended December 2006 fell by a massive 69 percent to Rs 1.58 billion compared to Rs 5.15 billion recorded during the corresponding period of last year. The reasons for the decline were: ex- refinery product prices on a weighted average basis for the industry rose by approximately 10 percent on year-on-year basis; decline in oil prices during the phase of first half of FY07 on the international front led to inventory losses; change in pricing formula applicable to OMCs led to a deterioration in their margins and a significant hike in financial charges of the industry was observed due to build-up of outstanding receivables from the government.

Refineries: The first half of the current fiscal year, particularly the second quarter, was the worst the sector as a whole witnessed since FY03 when refinery dynamics were modified. The combined bottom line turned negative for the first time during the second quarter of FY07 standing at Rs 629 million, taking the first half of FY07 loss to Rs 581 million, down 120 percent from a profit of Rs 2,876 million posted during the corresponding period of last year.

A plunge in earnings during the period under review was witnessed across the board during the first half of FY07. NRL, ARL, PRL and BPL depicted a decline of 36 percent, 82 percent, 221 percent and 873 percent respectively with PRL and BPL incurring a cumulative loss. Losses overshadowed the sector on the back of a decline in Gross Refining Margins (GRMs) following a plunge in global oil prices coupled with inventory losses.
http://brecorder.com/index.php?id=540751&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Pak-Chinese trade for mutual benefit stressed *
LAHORE (March 20 2007): Chinese and Pakistani traders should initiate joint planning to promote trade and investment for mutual benefit of the two countries. Punjab minister for trade and investment Dr Sohail Zafar Cheema said while talking to a delegation of Chinese investors here on Monday stated a handout.

Trade minister revealed that in 2003-04 trade volume between the two countries stood at 1,442 million dollar and in 2005-06 it increased to 3,170 million dollar showing an increase of 120 percent. However, he said that government is working to improve the trade balance between the two countries. Pakistan, because of its ideal location, can serve a gateway to international markets and also fulfil the required energy needs of industries in South Asia.

He said the government's foreign investment policy is providing a lot of opportunities to investors in various sectors. He said that investment and joint productions are possible in areas such as energy, machinery, chemicals, building material, textile, electronics, leather, surgical instruments, paper etc.
http://brecorder.com/index.php?id=540816&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*'Gwadar port to change fate of Balochistan' *
ISLAMABAD (March 20 2007): Pakistan's first deep seaport, Gwadar would become functional in a next few days, and would change the fate of the area by transforming its socio-economic landscape. Gwadar Port would generate tremendous opportunities for the people of Balochistan as thousands of jobs and new business will be created by it, PTV reported.

It would fulfil another commitment of the government to the people of Balochistan and would usher in a new era of development and prosperity.

Free economic zones would be set up near the port which would help harness vast potential in natural resources of the area.

This port would also lead to the development of heavy and large-scale industries, petrochemicals and manufacturing sector. Pakistan has already strategically located and this seaport has increased this importance and would make the access to the Central Asian States easier.

Singapore Port Authority, which would look after Gwadar, port for 25 years is running ports in almost 9 countries and would invest almost 3 billion dollars for the development of this port.

This port had been declared tax-free for 40 years and it is estimated that almost 50 million-ton cargo would go through this port in next 10-15 years. It is almost 14.5 m deep and was completed with the cooperation of China in record time period of three years and costs almost Rs 16 billion.

As soon as it becomes functional, it would give boost to the economy of the country and Pakistan would become the economical and trade hub of the region. The people of Balochistan are highly appreciative of the initiatives undertaken by government for the development and prosperity of Balochistan, which remained neglected in the past.

http://brecorder.com/index.php?id=540853&currPageNo=2&query=&search=&term=&supDate=


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## Owais

*President to inaugurate Gwadar Port today *
ISLAMABAD: President Pervez Musharraf would formally inaugurate in a splendid ceremony the mega project Gwadar Port today (Tuesday). 

A Chinese delegation has already arrived in Pakistan to attend the ceremony. 

In this connection, several programmes including musical shows, Basant and other recreational programmes for the amusement of guests have been arranged. 

The Gwadar Port has been given on lease to a Company of the Singapore for 40 years. 

About 40 billion dollars income besides, 4 billion dollars annual revenue is expected from the Port. Balochistan would get its share from the income of Gwadar Port. 
http://geo.tv/geonews/details.asp?id=3623&param=1


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## Owais

*World Bank asks Pakistan to cut transportation cost *

DUBAI: The World Bank has asked the Pakistan government to lower the transportation cost, saying it is severely constraining the economic growth and making the country's exports uncompetitive. 

According to sources, the government had been advised to remove 'inadequacies' of the transport system that was resulting in an annual loss of Rs220bn or 6% of the Gross Domestic Product (GDP). 

Inadequate physical capacity, inadequate maintenance system, poor targeted priorities of investment, operational and financial inefficiencies of the public investment, lack of private sector participation and environmental impact were identified as serious issues which needed to be sorted out for improving the performance of the transportation system. 

An official study, 'Industrial Vision and Strategy for Pakistan's Socioeconomic Development,' submitted to the government for approval, called upon the authorities to overhaul and revamp the transport sector, particularly by modernising the maintenance system.

It said the current system was inadequate and needed major improvements. The government was asked to encourage the private sector to make sizable investment in the sector. The report said incentives should be offered to encourage the private sector to participate in road projects. 
The study said the share of railway in public investment had drastically declined mainly due to aging of the assets, long delays in arrival and departure, frequent accidents, lack of locomotives and insufficient train speed. 

The major goal was to revitalize the railway and make it the choice of the commuter and freight haulers through a service-friendly environment, it said. 

The public sector investment could be used for strengthening the transport capacity through improvement of facilities, including doubling tracks, electrification, rehabilitation of tracks, revamping of signalling and repair of bridges, it said. 

The main issue in air transportation, the study said, was poor quality of the services and airport facilities. 

The goal was to improve the service standard to passengers by private sector participation in the industry. Besides, the operational efficiency of Pakistan International Airlines (PIA) needed to be improved, including cost control, reduction of manpower-aircraft ratio, aircraft renewal and higher rate of aircraft utilisation, it said. 

The assessment of roads done by a joint study of the World Bank and the National Highway Authority (NHA) indicated that 37% of the national highways were in poor condition and only 28% were in good condition.

A major cause of the deterioration of the road network was the rapidly increasing traffic volume. 
http://geo.tv/geonews/details.asp?id=3611&param=3


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## Neo

March 20, 2007 
*Rs1.4bn investment likely to enhance jewellery export*

By Ihtashamul Haque

ISLAMABAD, March 19: The government plans to enhance export of gems and jewellery from $29 million to $1.5 billion annually by 2017 through a new Rs1.4 billion investment.

Official sources told Dawn on Monday that a decision has been taken to develop an internationally competitive gems and jewellery industry by removing various impediments in it.

They said Pakistan's gems and jewellery industry suffers from limited investment in research, product development and training, low levels of technology, traditional mining techniques, underdeveloped lapidary facilities and skills, high raw material costs, poor international marketing and branding.

The industry also suffers from underdeveloped designing capabilities, limited linkages with domestic and international support infrastructure, limited identification and certification, and lack of hallmarking.

With new project, they said, there would be a significant impact on value-addition, productivity, income levels and exports.

Exploration and exploitation of gemstone resources and value-addition based on them is a part of medium-term development framework (MTDF).

The proposed project is based on a comprehensive plan and strategy for upgrading the gems and jewellery industry in Pakistan.

It will focus on establishing common facility training and manufacturing centres to upgrade existing technology and processes and jewellery manufacturing.

It also seeks to establish gem identification and certification laboratories to ensure better understanding of gemstones and their properties, along with establishing gem exchange centres to facilitate linkages between buyers and sellers.

Despite its abundant reserves of precious and semi-precious gemstones and rich history of jewellery manufacturing, Pakistan has been unable to develop an internationally competitive gems and jewellery industry.

Capitalising on its vast natural resources, low labour costs, and skilled craftsmen and growing national and international demand, Pakistan has the potential to position itself as regional hub for precious stones cutting and jewellery manufacturing.

"Developing this potential will have a significant impact on Pakistan's economy in terms of increase in employment and entrepreneurship, income-generation, export, revenue and poverty alleviation" said a document submitted to the Planning Commission by Pakistan by the Gems and Jewellery Development Company (PGJDC).

The project will introduce modern know-how and practices and equipment, both for jewellery manufacturing and gemstone mining and processing/cutting, to finished products for local and export market.

Foreign experts would be engaged which include sector experts, master trainers and geologists, along with the transfer of technology.

Gemstone deposits are concentrated in NWFP, Northern Areas, Azad Kashmir and Balochistan. Most gemstone processors are clustered in Karachi and Peshawar with smaller clusters in Lahore, Quetta and Islamabad.

Consisting of mainly small and medium entities, growth of this sector will also have positive externalities for social indicators, such as heath and education, the Planning Commission was informed.

Current mining technology and processes are considered rudimentary and unscientific resulting in significant wastage at the extraction stage.

Indiscriminate blasting damages the gemstone crystals and mineral specimen, thus drastically reducing their value. In a majority of the mines, basic machinery and equipment, like compressors and drill sets, are not available.

"A large number of mines are currently inactive due to lack of equipment". Training in modern mining practices will reduce wastage and improve the quality of extracted gems, thereby, increasing the income in productivity and consequently in salaries.

Access to mining equipment will rehabilitate closed mines which will have an immediate impact on employment levels.

"Due to lack of adequate processing infrastructure and skills, approximately 75 per cent of Pakistan's exports are in un-worked stones, representing a significant loss in value-addition".

With the up-gradation of gemmological and lapidary training and processing infrastructure, a higher volume of exports will be in processes stones, leading to tremendous value-addition.

By enhancing the income levels of those directly involved in mining and trading, it will have a spin-off effect for the entire region, the Planning Commission was further told.

http://www.dawn.com/2007/03/20/ebr13.htm


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## Neo

March 20, 2007 
*Core inflation down to 5.4pc *  

By Mubarak Zeb Khan

ISLAMABAD, March 19: The core inflation Ã¢â¬â non-food non-energy Ã¢â¬â has declined to 5.4 per cent in February 2007 from 8.2 per cent during the same month of the last year owing to tight monetary policy of the State Bank of Pakistan (SBP).

This sharp reduction in core inflation pushed down the overall inflation, which registered a healthy decline in the month of February, 2007 as against the corresponding month of last year.

The overall inflation declined to 7.4 per cent in February as against 8.05 per cent in the corresponding month of last year, according to the finance ministry fact-sheet issued here on Monday.

Tight monetary policy pursued by the countryÃ¢â¬â¢s central bank is mainly responsible for secular decline in core inflation. Non-food inflation also exhibited the same declining trend Ã¢â¬â it stood at 5.6 per cent in February, 2007 as against 8.4 per cent in the same month last year.

Food inflation, on the other hand, has shown a trivial increaseÃ¢â¬â it was 7.5 per cent in February, 2006 and has increased to 9.9 per cent in February, 2007.

During the first eight (July-Feb) months of the current fiscal year the average inflation stood at 8.04 per cent as compared to 8.42 per cent last year.

The non-food inflation declined to 6.47 per cent as compared to 9 per cent earlier and most importantly, core inflation averaged 5.9 per cent in the first eight months of the current fiscal as against an average of 9.1 per cent in the same period last year.

Food inflation on the other hand witnessed increase during the period. It was 10.3 per cent in the first eight months of the current fiscal as against 7.6 per cent in the same period last year.

The major contributor to the sharp pick up in food prices include the rise in the prices of pulses, milk, meat, chicken, potatoes, tomatoes, onion, beverages etc on account of imbalance in the demand and supply of these commodities.

With recent improvement in supply of these commodities their prices have started declining. With food inflation expected to decelerate and core inflation already trending downward the overall inflation target of 6.5 percent is likely to be achieved.

http://www.dawn.com/2007/03/20/ebr10.htm


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## Neo

Tuesday, March 20, 2007 

*Export target to be achieved: minister*

KARACHI: The country will be able to achieve the export targets in the remaining months of the current financial year.

Although, the growth in the exports so far has remained below expectations, however, it still depicted a growth pattern compared to the last fiscal, Federal Commerce Minister Humayun Akhtar Khan stated here on Monday.

Talking to newsmen following fourth meeting of steering committee of Expo Pakistan at the Federation House, the commerce minister spoke on countryÃ¢â¬â¢s trade sector as well about Expo Pakistan exhibition scheduled to be held by end of this month.

The ban on fish exports by the European Union (EU), he said, came due to tough guidelines concerning fisheries export. However, he said that it is a temporary ban and would come to an end as soon as the upgradation at the harbour is completed. Ã¢â¬ÅA three-member committee has been formed to look into the matter and suggest ways and means to end this ban,Ã¢â¬Â he added.

Regarding the upcoming Expo Pakistan, the minister said that so far the response has been tremendous from the local and international sides.

http://www.dailytimes.com.pk/default.asp?page=2007\03\20\story_20-3-2007_pg5_11


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## Janbaz

*Development of agri sector a must to keep economy moving * 

By our correspondent
LAHORE: The Provincial Minister for Food, Syed Hussain Jahania Gardezi, has said that development of Food & Agriculture sector is necessary to keep the economy moving. The government is concentrating on exploiting comparative advantage in exports for earning foreign exchange through diversification of agricultural production into high value crops. 

The provincial minister was speaking at a workshop on Ã¢â¬ËManagement of WTO Food, Agriculture & Trade ChallengesÃ¢â¬â¢ jointly organised by the Lahore Chamber of Commerce and Industry and Agriculture Department. LCCI Senior Vice President Yaqoob Tahir Izhar, Provincial Secretary Agriculture Fayyaz Bashir also spoke on the occasion. 

The minister said that major advances in technology and the emergence of new players on the global scene underscore the need to initiate the dialogue on WTO, with reference to the standards impacting PakistanÃ¢â¬â¢s trade opportunities. 

He said that the developing countries, particularly those with agro-based economies like Pakistan, are facing troubles in order to cope with the challenge of conforming to the standards of developed countries to which they intend to export goods.

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=47542


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## Janbaz

*Engro Chemical among top five notable COPs in chemical sector *

By our correspondent
KARACHI: United Nations Global Compact (GC) has listed Engro Chemical Pakistan Limited for providing one of the five best notable Communications on Progress (COP) in chemical sector from around the world. This has placed a Pakistani company for the first time in top five companies of the world having submitted the notable COPs with the Global Compact. 

A ceremony in this regard was organised by the United Nations Global Compact Local Network Pakistan in association with Employers&#8217; Federation of Pakistan in which Engro was presented with the shield for being among the world&#8217;s top 5 UN Global Compact Notable COPs in the Chemical Sector. 

The award was presented by the Chairman of UNGC Pakistan Network Ashraf W Tabani to Tahir Jawaid, General Manager of Engro Chemical Pakistan Limited where Fasih Karim Siddiqui, Secretary, Global Compact Pakistan Local Network and Wajid Hussain Junejo, Public Affairs Manager, Engro Chemical were also present. 

It may be recalled that the former Secretary-General of the United Nations, Kofi Annan had announced &#8220;The United Nations Global Compact&#8221; initiative in 1999 to bring companies together with UN agencies to support universal environmental and social principles. 

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=47552


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## Janbaz

*Humayun optimistic of controlling trade deficit*

R M SAQIB
KARACHI - Federal Commerce Minister Humayun Akhtar has hoped that Pakistan would regain its trade deficit of current fiscal in remaining months of FY-07. He said this while addressing a media briefing at FPCC Federation House here on Monday. He said that 74 countries over the globe would participate in Expo Pakistan 2007 exhibition. 
He said that in upcoming Expo Pakistan-2007 exhibition at Karachi Expo Centre from 29th of this month, more than 800 foreigners have confirmed their arrival while a delegation from India would also participate in the exhibition. He further said that 75 per cent of stalls at exhibition have been booked so far and the target set by the ministry for sponsors have already been achieved. He said that in recent period the country have got much success in every sector of trade and industry and the economy has progressed tremendously. 
While answering a query about the establishment of sugar mills in cotton growing areas of Punjab, he said that the legality of those sugar mills have been tested by the court and this depend upon farmer whether he want to grow cotton or sugar or any other crop.
He was of the view that the rate of growth in textile sector, the leading sector of country&#8217;s economy, was not as much as was expected this year. Humayun Akhtar also stated that the Trade Organization Ordinance- 2006 is now in place.
Answering to another question, he elaborated that India has stated that it has right to withdrew or review the South Asian Free Trade Agreement (SAFTA) but Pakistan want to resolve the underlined issues in implementing SAFTA on bilateral level, on which no progress has been made so far. 
On the issue of banning Pakistan International Airlines (PIA)&#8217;s traffic to Europe, he said that only few planes of the national airline have been banned as they do not meet the requirements set forth by European Commission. He hoped that the administration of PIA would soon be able to meet those requirements to resume its full fledge operation in the continent. 

The Nation.
http://www.nation.com.pk/daily/mar-2007/20/bnews6.php


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## Janbaz

*Rs15.8bn for clean drinking water* 

CDWP approves 45 projects worth Rs49.3 billion
By Mehtab Haider

ISLAMABAD: The federal government on Tuesday approved Rs15.843 billion for Clean Drinking Water for All (CDWA) project for installing filtration plants all over Pakistan.

Both the president and prime minister have promised with the nation that the government would provide clean drinking water to all within this year and before the upcoming general elections. 

The federal government also approved Rs955 million under Clean Drinking Water Initiative with revised PC-1 as the government intends to establish 409 filtration plants at Tehsils and towns in the first stage. The government wants to spread water filtration plants up to village level in the second phase.

The Central Development Working Party (CDWP), which met with Deputy Chairman Planning Commission Dr Akram Sheikh in the chair, approved 45 development projects with total revised cost of Rs82.2 billion including Sindh Water Sector Improvement by allocating Rs10.675 billion. 

Net total cost of 45 projects approved in Tuesday&#8217;s meeting is Rs49.3 billion.

Prime Minister Shaukat Aziz had switched over CDWA project from Ministry of Environment to Ministry of Industries in the recent past mainly because the former failed to deliver on the ground for a variety of reasons.

&#8220;The World Bank will provide $150 million (around Rs9 billion) for Sindh water sector improvement project,&#8221; Member Infrastructure Dr Asad told reporters in a press briefing after the Central Development Working Party (CDWP) meeting held here on Tuesday.

The CDWP is authorized to approve development projects costing up to Rs500 million. The ones worth more than this amount can be forwarded by this body to the ECNEC for approval.

Flanked by Planning Commission&#8217;s Member Monitoring Gen (Retd) Mohammad Zubair and others, PC spokesman Asif Sheikh said the CDWP had approved special initiatives for industrial sector, including establishment of company for development of gems & jewellery with a total cost of Rs1.4 billion. 

For development of marble granite sector, the government has allocated Rs1.976 billion.

The CDWP also approved Rs194.472 million for construction of Aiwan-e-Quaid at F-9 Park Islamabad. Some 60 to 70 gallery buildings will be constructed in it. The federal government had already purchased two acres of land for Aiwan-e-Quaid and the allocated amount will be spent for its construction only.

The meeting approved 21 projects of infrastructure sector with total cost of Rs24.4 billion including Rs9.4 billion as foreign exchange component. The government approved 13 projects of social sector having total cost of Rs46.1 billion including Rs10.8 billion in the shape of foreign exchange component. 

The remaining 11 projects of various sectors were approved with allocation of Rs11.7 billion.

Out of total 45 approved projects, there are 4 projects of Punjab with total cost of Rs1.7 billion, Sindh&#8217;s 6 projects with cost of Rs11.8 billion, NWFP&#8217;s 6 projects with cost of Rs8.3 billion and Balochistan&#8217;s 7 projects with allocation of Rs4.5 billion.

There were 21 development projects spread all over Pakistan with total cost of Rs55.6 billion and one project was from the AJK government with total cost of Rs300 million.

The meeting also approved three projects for Sindh under Thar Package announced by Prime Minister Shaukat Aziz worth Rs1.1 billion.

The meeting also okayed Rs500 increase in salaries of Lady Health Workers which was already announced by the premier. It would cost the public purse Rs5 billion.

The meeting also directed the Ministry of Health for tabling new project before the body for continuation of Lady Health Workers Programme in the country.

For physical planning and housing, the meeting approved Rs102 million for construction of a complex for National Highway and Motorway Police at Rahim Yar Khan and Rs452 million for construction of Petroleum House in Islamabad. The CDWP also okayed Rs119.567 million for creative works for national monument museum.

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=47661


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## Owais

*Balochistan to have second seaport in Sonmiani: Musharraf inaugurates Gwadar Port *
GWADAR (March 21 2007): Pakistan's third modern port at Gwadar started operation after its formal inauguration by President Pervez Musharraf at an impressive ceremony here on Tuesday. The port operation commenced with the unloading of cargo from three ships, which had anchored earlier.

Addressing a big gathering, attended by people of the area, the President termed the opening of Gwadar Port an historic event. He announced that Balochistan would have its second port, and fourth of Pakistan, at Sonmiani, about 100 km from Karachi, and its foundation stone would be laid this year.

Declaring that the present government "is committed to the development of Balochistan", President Musharraf said that Gwadar would be made an industrial hub, a centre for container handling, and an energy corridor. He pointed out that development projects, costing Rs 130 billion, "are being implemented in Balochistan at present". The President told the gathering that six months back the area was almost a desert and it was the present government, which embarked upon its development.

First of all, he said, the work started with the construction of Coastal Highway at a cost of Rs 12-13 billion, "as roads bring prosperity wherever constructed". He said that fish, which used to go waste, "is now being marketed" in Karachi, fetching higher price because of this vital road link, "and the people of the area are now growing prosperous".

General Musharraf said that Gwadar Port was envisioned so that there would be development and prosperity in Gwadar and, resultantly, the entire Balochistan. He announced that the Coastal Highway would now be further extended to link Gwadar with Central Asia, China, Iran and Turkmenistan, and this area would prove to be a trade corridor, and importance of Gwadar would increase further in coming years.

Assuring that there would be more prosperity here in the coming days, the President told the area people to have confidence in him, and his government, "which is committed for your welfare".

He lauded the commendable role of China in the construction of Gwadar Port and said that now Singapore Port Authority would run its operation which would help enhance its significance in the region as well as in the world.

He said that the present government is endeavouring for the development of Balochistan and its every district has been provided Rs 100 million for development schemes in respective areas. "Besides, every Tehsil has been given Rs 10 million for the same purpose".

The President announced that a 'Marine College' would be built in Gwadar, and its cost would be shared by Balochistan and Federal governments. The President also announced Rs 10 million for education, health and sewerage schemes in Gwadar.

He said that the government has development plans for rural areas of the province as well and announced Rs 50 million for the purpose. He said a Fishermen Colony would be provided in Gwadar, and asked the Balochistan Governor and Chief Minister to execute this scheme. Besides, he announced a fishermen's training centre in Gwadar where modern fishing methods would be taught.

The President declared that Balochistan's destiny "is linked with Pakistan, and the two are inseparable". Balochistan, he said, suffered from backwardness and poverty for long, and no one in the past 50 years thought of its development.

"Our government considered development of this province six years ago, and we planned the communication system, roads, rail and airport", he said, and added that "our government gave strategic Coastal Highway, and now the 950 km Gwadar-Turbat-Khuzdar-Ratodero highway is being constructed and will be completed in two-and-a-half years, after which Gwadar will be connected with entire Pakistan".

He said that yet another important road link, from Gwadar to Kohlu, would also be provided, while a new airport would be constructed in Gwadar. He referred to a study initiated on Gwadar to Dalbandin and Qandhar railway line and thus, he said, a network of communication system would be laid in the province, which would come on the ground in the next 5-6 years.

General Musharraf said that irrigation system was also being streamlined. Mirani dam has already been constructed, which will bring 35,000 acres land under irrigation, while Subakzai dam was also ready and he would perform its inauguration in a few months, while Katchi Canal is being constructed which will bring 0.7 million acres land under cultivation.

He said that watercourses in the province are being lined, for which, Rs 5 billion has been allocated. This scheme would take 2 years to complete. The President said that electricity and gas would be supplied to villages of Balochistan and gas line was being taken from Zarghoon to Quetta.

He said there are some elements who speak against Punjab, but they should know that the government and the people of Punjab advocate investment and development in Balochistan.
http://brecorder.com/index.php?id=541099&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*PNSC enters Indian freight market after 30 years *

KARACHI (March 21 2007): After an interval of over 30 years, under the amended shipping protocol between Pakistan and India, Pakistan's national flag carrier Pakistan National Shipping Corporation (PNSC) has delivered liquid and general cargoes at two Indian ports.

Sources told Business Recorder on Tuesday that oil tanker MT Lalazar recently delivered 92,000 tons crude oil at new Mangalore, while consignments of general cargoes were delivered at Gujarat's Bedi port by MV Bolan and MV Chitral.

They said that the Corporation had competed in an open international bidding for the one-time crude oil transportation contract offered by state-owned Indian Oil Company from Iranian port of Kharj Island to New Mangalore port for Mangalore Refinery.

The Corporation was among four to six competitors, mostly Greek shipping companies, for the crude oil contract, source said, adding that PNSC has expanded its wings to the Indian freight market, especially for potential oil transportation segment for the neighbour country.

They said that the Corporation also successfully acquired another one-time contract, to be delivered on March 26, from United Arab Emirates Abu Dhabi port to Tamil Nadu's Chennai (Madras) port.

http://brecorder.com/index.php?id=541136&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Textile export crosses $7 billion mark *

KARACHI (March 21 2007): Country's textile export witnessed a straight jump of 6 percent during the first eight months of the current fiscal year 2006-07, as it crossed the $7 billion mark, official statistics revealed on Tuesday.

According to statistics, Pakistan's textile exports have been increased by 6 percent during the first eight months (July-February) of the current fiscal year, as compared to the same period of the last fiscal year.

Textile export stood at $7 billion during July-February of the current fiscal year as compared to $6.609 billion exports during the same period of the last fiscal year, depicting an increase of $397 million. Month-on-month basis, country textile exports have risen by 6.23 percent during the February 2007, against the same period of last fiscal year.

Statistics shows that during the month of February 2007, country's textile exports stood at $788.561 million as compared to $742.048 million during the same period of the last fiscal year 2006, indicating an increase of $46.513 million or 6.23 percent during February 2007.

In February 2007, textile export also showed an increase of $24.392 million or 3.19 percent against the January 2007 during which country's textile exports were recorded $764.169 million.

Four textile items including raw cotton, cotton cloth, cotton carded and bed wear exports have decline during July-February 2007, while other products' exports including readymade garments, yarn, knitwear, art and silk shows raised. During July-February of the current fiscal year, knitwear moved up by 16 percent, yarn by 140.46 percent, and towels by 2 percent.

Similarly, exports of tents increased by 167 percent, readymade garments by 8 percent, art and silk by 164 percent, yarn other than cotton yarn by 153 percent, made-up articles by 3 percent, whereas exports of other textile sectors registered 26 percent growth. Raw cotton exports have declined by 18 percents, cotton cloth by 9 percent, cotton-carded exports showed a decline of 56 percent, bed wear by 5 percent.

"Despite 6 percent growth in textile export during the first eight months of the current fiscal year, we will not achieve textile export target of $10.15 billion," said Zubair Motowala, a leading exporter. He said that major increase has recorded in the exports of textile raw materials, not in the finished products.

He said that post quota regime and international competition have put a negative impact on the country's textile export, resulted a decrease of 1.12 percent during the first five months July-November of the current fiscal year 2007.
http://brecorder.com/index.php?id=541088&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Over 0.1 million workers sent to UAE during 2006 *

ISLAMABAD (March 21 2007): Pakistan has sent more than 0.1 million workers to the United Arab Emirates (UAE) during 2006 alone after it early last year signed with the Gulf state a Memorandum of Understanding (MoU) for manpower export, a top official says.

"The agreement we (government) has singed with the UAE authorities has produced desired results. Around 100 thousands workers have flied to the state in 2006 and many more will be going this year," State Minister for Overseas Pakistanis Raza Hayat Hiraj told a Senate committee.

The Senate Standing Committee on Labour, Manpower and Overseas Pakistanis met here on Tuesday to review manpower export and human trafficking from Pakistan. The meeting Presided over by Senator Naeem Hussain Chattaha,

Raza Hayat told members Democratic Peoples Republic of Korea had for the first time in the history included Pakistan in the source countries for importing skilled and unskilled workers. He claimed that his ministry was pursuing a dynamic strategy for increasing manpower export from Pakistan.

Hayat, however, could not defend his ministry for what it was doing to secure favourable or at least reasonable working conditions and salaries for Pakistani workers abroad especially in some of Gulf States.

A few members alleged that employers in these countries exploit poor workers they hired from Sub-Continent. Most of the time, members blamed, they backtracked from their commitment and did not offer what was claimed at the time of hiring. Senators said they had received complaints of inhuman treatment by employers in Dubai and other UAE states.

Raza seemed to have no answer for these reservations. At times, he appeared agree with what members blamed. The minister, however, could not come out with a firm commitment to raise these issues with UAE authorities.

He also informed the committee the investment promotion conference organised by the ministry last year was highly successful as overseas Pakistanis from 35 countries attended and helped to formulate the recommendations.

The committee directed the ministry to redouble its efforts for increasing export of manpower from Pakistan and by taking tangible steps for improving the skill levels of workers with a view to enhance their competitiveness in the international markets.

The committee also called for stringent measures to curb human trafficking by improving inter-ministerial co-ordination and creating greater public awareness on the issue. Some members of the committee demanded a complete ban on special Hajj passports, alleging that the facility was being misused grossly by corrupt persons.

The committee also directed the FIA to publish a complete list of human smugglers arrested/prosecuted since 2002 along with their names and addresses so that the general public might be more careful in dealing with them in future.
http://brecorder.com/index.php?id=541210&currPageNo=1&query=&search=&term=&supDate=


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## Neo

March 21, 2007 
*IFC to offer $1bn loan for private sector*

By Ihtashamul Haque

ISLAMABAD, March 20: The International Finance Corporation (IFC) plans to offer $1 billion new lending to Pakistan's private sector to further promote its telecommunications sector and help meet the growing energy requirements of the country.

Informed sources told Dawn on Tuesday that the IFC, a member of the World Bank Group, has also identified tourism, health and infrastructure as new sectors which will be provided increased lending during 2007 and onward.

The corporation would increase the current level of its assistance from $400 million to $1 billion, beside helping attract Foreign Direct Investment (FDI) in the country, particularly from the Middle East.

The executive vice president of IFC, Mr Lars Henrik Thunell, will arrive here on Wednesday to meet the president, the prime minister, his advisor on finance and other senior government officials to discuss the IFC's new plan to offer $1 billion lending to Pakistan's private sector.

Sources said during his meetings with senior Pakistani officials, the idea of supporting Pakistan's public-private sector business ventures will also come up for detailed discussion.

"So far, the IFC has provided loans to the private sector only, but now it can consider funding public-private joint ventures as well," said a source, adding the IFC was very much interested to enlarge its operations in Pakistan.It has, so far, offered $2 billion to the country's private sector.

Pakistan, he said, was a capital-constrained country, which needed to be extensively supported in the coming years.

The track record of Pakistan's private sector was very good in terms of timely paying back its loans to the IFC due to which it was decided to offer sizable new loaning to investors.

It was also learnt that the first-ever "mediation centre", being supported by the IFC is expected to be fully functional soon in Karachi to provide an effective and institutionalised dispute resolution mechanism to investors.

Initially, the centre being funded both financially and technically by the World Bank's private sector arm -- IFC, will focus on commercial cases and its activities will be limited to Karachi only as being the pilot project. But later it will be stretched to other cities as well.

The centre is being set up with the help of London-based "centre for effective dispute resolution" which is providing technical expertise to have a set of trained mediators in Pakistan for resolving disputes.

According to IFC officials, the centre would offer international standard mediation through a group of trained experts. This would be a real alternate dispute resolution forum which would facilitate the concerned parties and investors to sit down and settle their disputes without seeking the indulgence of courts.

"It is not an arbitration, but a mediation to encourage the investors to settle disputes peacefully and amicably", a source said.

The centre, he said, would work as a "neutral party" whose findings cannot be discussed or used as reference in the courts.

All the process will be conducted voluntarily, but if both sides are not convinced and do not reach any dispute-resolution mechanism, they can go back to litigation. "But both sides will be bound not to disclose the proceedings of the mediation in any court," he clarified.

This was how it was expected that the backlog of thousands of cases could be cleared. The IFC has provided $1 million for the training of judges and improving the processes of the courts.

The IFC's assistance to South Asian clients expanded this year to help expand capacity and develop new products and services. Infrastructure development where progress is critical to economic growth and quality of life is another focus of IFC's investment strategy, particularly in Pakistan, sources said.

"Our focus is key business lines where we have a competitive advantage," says a latest IFC document.

"We improve our standards for social and environmental performance of our investments and new policy to disclose more information and activities," it said.

This year, the IFC introduced, a new development outcome tracking system for investment operations to measure and track results throughout the life of a project.

http://www.dawn.com/2007/03/21/ebr12.htm


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## Neo

*Mixed economic trends*

THE government believes that an estimated bumper crop of 22 million tons of wheat, a better than expected rise in informal livestock production and the expansion of the services sector would push up the narrow-based economic growth above the targeted 7.1 per cent this year. While missing out on some of the key macro-economic targets and suffering from chronic structural imbalances, the economy seems to be growing faster than the expectations of the policymakers and official forecasts. However, the economyÃ¢â¬â¢s performance cannot be assessed based on the GDP criteria alone, when some vital but negative economic trends are becoming more pronounced while social indicators are not strong enough to make the growth socially sustainable. The official estimate that agricultural growth would touch five per cent against this yearÃ¢â¬â¢s target of 4.5 per cent has to be seen against the background of the weak performance of three major crops Ã¢â¬â cotton, rice and maize Ã¢â¬â which overshadowed the impact of a rise in sugar production. The size of crops fluctuates from year to year and differs widely from initial to final estimates. An accurate assessment of livestock production is not so simple because much of it is in the informal sector.

In its first quarter report 2007, the State Bank recognised the Ã¢â¬ÅchallengesÃ¢â¬Â facing industry and agriculture, adding that Ã¢â¬Åthe achievement of the annual growth target will require the service sector to turn above the target growth rate.Ã¢â¬Â The report was based on the lacklustre performance of kharif crops and a slower increase in the Industrial Production Index at 7.6 per cent against 7.9 per cent in the same period last year. The State Bank also questioned the official data on a supposedly big jump in textile (sub-group) output when its export growth had slumped. Textiles, the largest industrial segment that contributes the bulk of export earnings, is in distress and looking for an official bailout. Its bank credit offtake is much less than originally estimated. The overall exports are currently growing at 3.89 per cent against the targeted 18 per cent. This indicates the sluggish rise in export-oriented production. In the first quarter, the growth in automobiles, fuelled by domestic demand, slumped to 11.1 per cent against 33.1 per cent during the comparable period last year. Corporate profits are on the decline. The growth in wholesale and retail trade is now estimated at 7.2 per cent against the original target of 8.8 per cent. Sectoral imbalances are also mounting. In the first quarter of 2007, the consumer goods industries grew at 13.1 per cent as compared to 9.5 per cent in the same period last year; and the capital goods output registered a much lower growth of 9.6 per cent, down from 30.1 per cent Ã¢â¬â a single digit growth for the first time since 2004.

Though buoyant, the external sector is far from robust. With the worsening trade and current account deficits, the risks to the economy are mounting. Inflation is affecting export competitiveness. The trade deficit touched a record $8.9 billion during July-February 2007 and the current account deficit is expected to reach $8.8 billion Ã¢â¬â up from the $6.3 billion target. The model of economic growth being pursued is widening the gap between the rich and the poor, with food inflation of 10.33 per cent eating into the purchasing power of the vulnerable. It is time to focus on social indicators, poverty alleviation, food security and on correcting economic imbalances. Without equity, GDP growth alone, though important, is not enough.

http://www.dawn.com/2007/03/21/ed.htm#1


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## Neo

Wednesday, March 21, 2007 

*CDWP okays 45 uplift projects worth Rs 82.2b*

By Sajid Chaudhry

ISLAMABAD: The Central Development Working Party (CDWP) on Tuesday approved 45 development projects worth Rs 82.2 billion including the Rs 10.675 billion Sindh water sector improvement project and Rs 197 million for establishment of a 132 KV grid station and a electric transmission line for the New Islamabad International Airport.

The meeting also approved Rs 15.843 billion for Clean Drinking Water for all Project and Rs 955.1 million for Clean Drinking Water Initiative Project (second revised PC-1 for 409 plants in tehsils and towns).

Asif Sheikh, spokesman for the Planning and Development Division in a media briefing told reporters that the CDWP met under the chairmanship of the Dr. Akram Sheikh, Deputy Chairman Planning Commission and discussed 55 projects and approved 45 projects included in the agenda. Ten projects were deferred due to the non-availability of complete documents and concerned officials in the meeting.

He said 21 projects worth Rs 24.4 billion for infrastructure development, 13 projects worth Rs 46.1 billion for social sector and 11 projects worth Rs.11.7 billion for information and broadcasting, science and technology and industries have been approved. On area-wise projects and their allocations, he informed that four projects worth Rs 1.7 billion for Punjab, six projects worth Rs 11.8 billion for Sindh, six projects of Rs 8.3 billion for NWFP, seven projects worth Rs 4.5 billion to Balochistan, one project worth Rs 300 million for AJ&K and some 21 projects worth Rs 55.6 billion located all over the country were approved.

The important projects in the transport and communication include construction of fish landing jetty and allied harbor facilities at Surbandar East Bay Gwadar worth Rs 672.674 million, construction of fish landing jetty and allied harbor facilities at West Bay Gwadar Pishukan worth Rs 628.570 million.

In the water sector, the CDWP approved World Bank funded Rs 10.675 billion Sindh water sector improvement project. The meeting also approved Rs 1.4 billion for creation of Gems and Jewellery Development Company, Rs 280 million for Ceramics Development Centre and Training Center and Rs two billion for Marble Granite Development Company. Under Pakistan Industrial development Company (PIDC). He said that the meeting has allocated Rs 194 billion for establishment of Aiwan-e-Quaid at F/9 part area on 40,000 square feet area. After completion, it would be managed by Nazrea-e-Pakistan Council.

The CDWP revived the existing lady health workers (LHW) programme with an addition of Rs five billion, because of an increase in the salaries of lady workers from 1800 to 2300 per month. The existing programme will end in 2008 with the number of workers at around 96,000 in the country.

The meeting asked the authorities concerned to prepare a new LHW programme to improve further the reproductive health facilities in the country. The meeting has allocated Rs 452 million for the construction of Ã¢â¬ÅPetroleum HouseÃ¢â¬Â at Islamabad so that all the offices of petroleum ministry could be shifted to new office.

Five projects for information and broadcasting were approved in the meeting with an allocation of Rs 1.905 billion, which include LED (Light Emitting Diod) Mobile screen system, 1000 KW MW transmitting section for Lahore, 1000 KWMW transmitting section for Umerkot, replacement plan of MW transmitters phase-1 and electronic news gathering.

Member Infrastructure, Planning and Development Division informed the media that a high-power delegation from World Bank has visited Pakistan and discussed long-term water needs of the country including construction of dams.

The issues which were discussed with the WB delegation were improvement in water usage efficiency, improvement in ground water levels, increase in water storage capacity, institutions strengthening and an over all assessment of increase in population as well as decrease in availability of water. This delegation also visited Basha Diamer Dam site. 

On completion of their visit, the WB delegation discussed with Pakistani officials the initial findings of their visit and now they would prepare a detailed report on Pakistan to help develop water sector. He clarified that WB delegation had nothing to do with funding of these dams, nor they denied such funding.

http://www.dailytimes.com.pk/default.asp?page=2007\03\21\story_21-3-2007_pg5_1


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## Neo

*Kuwait Fund Provides $37.5 Million Loan For Pakistan Power Project *

ISLAMABAD -(Dow Jones)- The Pakistani government signed a $37.5 million loan agreement Wednesday with Kuwait Fund for Arab Economic Development for building a hydropower project in the north of the country.

The 106-megawatt Golen Gol Hydroelectric Power Project will help meet growing demand for electricity in the North-West Frontier Province.

Construction of the PKR7.2 billion ($117 million) project, which comprises three hydroelectric generation units, will start this year and is expected to be completed by the end of 2011.

The loan is for a 25-year period with a 6-year grace period. Interest is repayable semiannually at a rate of 2.5% per annum.

The project will also be financed by other foreign loans and government funding.

Kuwaiti Fund for Arab Economic Development, which extends loans and aid to Arab and other developing countries, has provided Pakistan with KWD84 million ($ 286 million) in 13 loans for financing of various sectors. 

http://www.nasdaq.com/aspxcontent/N...CQDJON200703210532DOWJONESDJONLINE000423.htm&


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## Janbaz

*Pak exports only 2pc of world textile sector'*

HAQ NAWAZ
ISLAMABAD - Coming down hard on the governmentÃ¢â¬â¢s blue-eyed textile sector, the Consultant and Economist of Planning Commission, Dr Aqdas Ali Kazmi, was not ready to accept the notion that the cotton was the main pillar of the national economy but actually it was driving the economy down.
Dr Kazmi expressed these views here on Tuesday while speaking on the textile sector and key policy issues in connection with a dialogue on Ã¢â¬ÅThe Elimination of Textile Quotas and Pakistan-EU trade.Ã¢â¬Â Social Policy and Development Centre (SPDC) has organized the dialogue to discuss in detail the European Union funded study.
In support of his point, Dr Aqdas argued that it was highlighted of having 65 per cent share of textile goods in the overall countryÃ¢â¬â¢s exports but when this share was compared in global scenario, PakistanÃ¢â¬â¢s textile share is only 2 per cent in the $500 billion world textile exports. Ã¢â¬ÅThis shows a poor picture and the textile sector should look into this area,Ã¢â¬Â he added.
He was of the view that textile sector is actually undermining the national economy of Pakistan. Ã¢â¬ÅPakistanÃ¢â¬â¢s Gross Domestic Production (GDP) growth is cradled by the cotton sector,Ã¢â¬Â he kept on bashing this sector considered as the sole pillar of the economy.
However, he suggested the private sector to invest more in the research and development areas, improve the state of technology by replacing the oldest one and concentrate on skills development to enable this sector more competitive internationally.
Speaking on the occasion, Thorsten Bargfrede, First Secretary in European Union (EU), delegation of the European Commission to Pakistan, assured that EU would continue providing assistance to Pakistan for strengthening the trade sector to meet the challenges in the post-quota regime.
Ã¢â¬ÅTalking politically, EU has been given preferential market access with major tariff concessions to Pakistani goods since 2001. 
However, commenting cautiously on PakistanÃ¢â¬â¢s repeated requests to extend trade facilities to its goods under the Generalized System of Preference (GSP) plus, he stated.
that Pakistan did not qualify for this scheme, meant for the Least Development Countries (LDCs).
Earlier in her opening remarks, Managing Director, SPDC, Dr Khalida Ghaus, remarked the researchers for completing such a timely study on a subject needed more exploration.
She urged for a full-fledged policy dialogue on the issue of impact of elimination of quantitative restrictions on textile sector.
Ã¢â¬ÅDesires are there at the top government level to take extra measures for the textile sector but these measures are not translated into actions,Ã¢â¬Â Dr Khalida pointed out.
Presenting the main features of the study, one of the researchers and senior economists in SPDC, Iffat Ara, said that the study was aimed at initiating a policy dialogue on this important subject of post-quota regime and implications on PakistanÃ¢â¬â¢s textile sector.

The Nation.
http://www.nation.com.pk/daily/mar-2007/21/bnews5.php


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## ghazi52

(APP): Mobilink would invest dollars 550 million here this year.

This was stated by a senior official of the company on Wednesday.

He said with this amount the total investment of Mobilink would be more than dollars 2.5 billion since 1994.

He said this yearÃ¢â¬â¢s investment of dollars 550 million would be in infrastructure, human resource development, franchise network development and customersÃ¢â¬â¢ facilities.

It was also pointed out that the number of Mobilink subscribers across Pakistan is now about 24 million.


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## Neo

*Pakistan and China agree to strengthen economic underpinnings *

BEIJIGN (March 22 2007): Foreign Minister Khurshid Mahmood Kasuri has said that his meetings with Premier Wen Jiabao and Foreign Minister Li Zhaoxing were very productive and successful, as both the sides agreed on the need of strengthening economic underpinnings to their existing very strong political and defence relationship.

In an interview with APP at the end of his official visit to Beijing, he said that his tour was a success, reflecting the feelings of the close brotherhood and friendship between Pakistan and China.

Kasuri said that he was touched by the fact that the Chinese Premier Wen Jiabao during his meeting on Tuesday particularly recalled memorable visit to Pakistan and felt the sort of affection he had received.

During his meeting with Foreign Minister Li Zhaoxing, he thanked for the singular honour being the first foreign leader provided opportunity to visit the China's highly safeguarded space facilities.

Kasuri said that Premier Wen Jiabao during his meeting remarked not many leaders in China had been allowed to visit that space facility.

The fact that he was allowed to visit the China's top facility in space exploration was an indication of the closeness of the relations between the two countries, he said. The minister expressed the hope that during the upcoming visit of Prime Minister Shaukat Aziz, the process for cooperation for peaceful use of space would be carried further.

He said that during his meetings with the Premier and the Foreign Minister Li Zhaoxing both was agreed to strengthen economic underpinnings to their very strong political and defence relationship.

Both sides reiterated their conviction, implementation of 5-year Economic and Trade Programme, the Free Trade Agreement and the Joint Investment Company. These accords were the landmark documents and would pave the ground for further Chinese investment in major projects in Pakistan.

He said that both the sides felt that during the last 2-3 years the relationships, which were always very close in various areas had acquired a new momentum in the economic sector.

The foreign minister pointed out that Pakistan would soon open the Consulate General in Chengdu. "This will yet be another example of Pakistan desire to forge ever closer relationship with China.

China has expressed satisfaction with the induction of JF-17 in PAF while both sides agreed to develop border region by creating trans-border economic zone and on the need for framework agreement on cooperation in mineral and cooperation in banking sectors.

Kasuri said after holding talks with his Chinese counterpart Li Zhaoxing that lasted approximately three hours here on Tuesday.

The two Foreign Ministers expressed, in the spirit of the talks that Foreign Minister Kasuri had with the Chinese Prime Minister, a desire to upgrade Pakistan-China relationship to new heights.

The Foreign Minister Kasuri mentioned the inauguration of first phase of Gwadar Port and thanked China for its assistance in building the deep-sea Port.

The Chinese Foreign Minister Li congratulated the government and people of Pakistan on this development. It may be recalled that China had sent Minister of Communications as a Special Envoy to attend the inauguration ceremony held at Gwadar on Tuesday.

Foreign Minister Li expressed satisfaction on induction of two JF-17 aircraft in Pakistan Air Force. The aircraft has been jointly built by Pakistan and China.

More JF-17 aircraft are under production and these will become the mainstays of Pakistan and Chinese Air Force. The two JF-17 aircraft will fly during the National Day parade to be held on March 23. Foreign Minister Li, in response to a proposal from Foreign Minister Kasuri about developing trans-border economic zone between Pakistan and China on the model of China-South East Asia Economic Cooperation told Kasuri that it was a good model to replicate in respect of China and Pakistan also and said that the experts from two countries would study the proposal.

The two Foreign Ministers held a comprehensive exchange of views on regional and international issues of mutual interest which included the composite dialogue between Pakistan and India aimed at addressing all outstanding issues including the issue of Jammu and Kashmir, the Iran nuclear issue, situation in Afghanistan, Six-party talks on North Korea and a number of other issues. The Chinese Foreign Minister complemented President Pervez Musharraf and the government of Pakistan for showing leadership and vision with respect to Pakistan-India peace process.

http://www.brecorder.com/index.php?id=541936&currPageNo=1&query=&search=&term=&supDate=


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## Neo

Thursday, March 22, 2007

*IT industry grows 50pc *

KARACHI: The countryÃ¢â¬â¢s IT industry has registered more than 50 per cent growth over the last one year, the board of directors of Pakistan Software Export Board was told on Wednesday.

Ã¢â¬ÅPakistanÃ¢â¬â¢s IT industry has grown to a size of $2 billion, using WTO formula mode 2, the same formula used by India and other countries to calculate the industry size,Ã¢â¬Â said Yusuf Hussain, Managing Director PSEB in a presentation to a board of directorsÃ¢â¬â¢ meeting, chaired by Awais Ahmed Khan Leghari, Federal Minister for IT and Telecom. He said the PSEB had over 900 member companies including some world-class companies like MIXIT, Scrybe, NetSol, TPS, Pixsense, Folio3 and Si3.

Ã¢â¬ÅThese companies have benefited from various PSEB initiatives which have helped them track international clients. Some of these companies have also set up their offices in various parts of the world,Ã¢â¬Â a PSEB statement quoted the MD as saying. He mentioned the strategic programmes implemented by the PSEB to promote the industry, which included marketing and PR, industry HR development, company capability development, IT parks, strategy and research, industry finance and public policy. As a result of these programmes, there were more than 125 ISO and CMMI certified IT companies in Pakistan, he added.

The meeting was told the PSEB had also launched apprenticeship and internship programmes for the industryÃ¢â¬â¢s HR development and more than 2,500 students had benefited from the programme.

http://www.thenews.com.pk/daily_detail.asp?id=47921


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## Neo

Thursday, March 22, 2007 

*Pak IT industry has grown to $2b: PSEB*

ISLAMABAD: The board of directors of the Pakistan Software Export Board (PSEB) was informed here on Wednesday that tremendous growth of 57% was seen in the IT sector over the last one year and PakistanÃ¢â¬â¢s IT industry has grown to a size of two billion dollars.

The meeting of board of directors of the Pakistan Software Export Board (PSEB) was held here at the PSEB head office and was chaired by Federal Minister for Information Technology and Telecom Awais Ahmed Khan Leghari.

Yusuf Hussain, Managing Director, PSEB presented a strategic road map for Pakistan IT Industry. While presenting the profile of the IT industry, Yusuf Hussain highlighted the tremendous growth of 57% in the sector over the last one year. He added that Pakistan IT industry has grown to a size of two billion dollars (using WTO formula mode 2 - the same formula used by India and other countries to calculate the industry size).

The PSEB has over 900 member companies including some world-class companies like MIXIT, Scrybe, NetSol, TPS, Pixsense, Folio3 and Si3. These companies have benefited from various PSEB initiatives, which have helped them track international clients. Some of these companies have also set up their offices in various parts of the world.

Yusuf Hussain mentioned the following strategic areas implemented by PSEB to promote the industry. These include Marketing & PR, Industry HR Development, Company Capability Development, IT Parks, Strategy & Research, Industry Finance and Public Policy. As a result of these programs, there are more than 125 ISO and CMMI certified IT companies in Pakistan.

http://www.dailytimes.com.pk/default.asp?page=2007\03\22\story_22-3-2007_pg5_3


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## Neo

Thursday, March 22, 2007 

*Ã¢â¬ËStrong market makes Pakistan easier sell abroadÃ¢â¬â¢*

HONG KONG: Pakistan, which saw foreign investors flee in the wake of the September 2001 attacks on the United States, is an easier sell these days as a bull market enters a sixth year on strong economic growth, privatisations and foreigner-friendly policies. 

Ã¢â¬ÅItÃ¢â¬â¢s the bad perception that is the hurdle,Ã¢â¬Â said Mohammed Sohail, director of equity broking at Karachi-based JS Global Capital Ltd., one of PakistanÃ¢â¬â¢s largest brokers, during a roadshow in Hong Kong to meet fund managers and brokers. While investors still worry about geopolitical instability, sentiment is improving as privatisations move forward, big firms sell stocks and bonds abroad, and overseas companies invest. 

Ã¢â¬ÅThe focus has shifted more towards macroeconomic factors and less towards the political,Ã¢â¬Â Sohail said over lunch. 

The benchmark KSE-100 share index has risen nearly nine-fold since the start of 2002.

Foreigners, who do not face ownership caps, account for about 5.5 percent of market capitalisation compared with 3 percent a year ago, and increasingly drive sentiment, Sohail said. 

Net foreign portfolio inflows totalled $697.4 million during the July-January period, according to central bank data. 

Last month, JPMorgan reopened its equity brokerage in Pakistan, making it the first foreign house to return since leaving earlier this decade. Standard Chartered Plc and ABN Amro recently bought lenders in the country. Privatisations have pushed the marketÃ¢â¬â¢s free float up to 24 percent from 20 percent a year ago, compared with about 50 percent in typical emerging markets, according to JS Global. 

About 70 percent of foreign funds invested in Pakistan through JS Global originate in the United States or Britain, but a large chunk of those orders are routed through Hong Kong given the time difference. While President Pervez Musharraf is expected to win another five-year term later this year, some investors worry the ruling coalition could be weakened, potentially disrupting ongoing pro-market policies. 

And resentment among some in Pakistan to MusharrafÃ¢â¬â¢s alliance with the United States against the Taliban, as well as two assassination attempts, also give investors pause. 

But market players hope the government has succeeded in entrenching reforms that will last whether Musharraf is in power or not. Ã¢â¬ÅIf the opposition comes into power, the economic policies will be the same,Ã¢â¬Â said G.M. Malkani, chief executive of JS Global. 

JSÃ¢â¬â¢s top picks for 2007 are National Bank of Pakistan, Bank of Punjab, Oil & Gas Development Co , Pakistan Oil Fields, and Pakistan State Oil. 

http://www.dailytimes.com.pk/default.asp?page=2007\03\22\story_22-3-2007_pg5_9


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## Owais

*EU seafood orders diverted to India and Bangladesh *

KARACHI (March 22 2007): Due to European Union (EU) ban on Pakistan's seafood, its export orders are being diverted to India and Bangladesh, sources told Business Recorder on Wednesday. There are two peak seasons of seafood exports.

One is during August-October and the other in March-May every year, but this year it seems impossible for exporters to export seafood to EU countries in the second peak season due to EU ban, sources said.

"We exporters were expecting around $20-25 million more export orders from EU countries during current fiscal as compared to previous fiscal year but after EU ban now these are diverting to India and Bangladesh," said an exporter. He said that after the EU ban, not a single order has been placed by the EU importers with Pakistani exporters. He said Indian seafood price is around 5-10 percent higher than Pakistan's.
http://brecorder.com/index.php?id=541828&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Sofitel Tower's groundbreaking: Shaukat for articulately designed tourism packages *

KARACHI (March 22 2007): Prime Minister Shaukat Aziz has said that articulately designed tourism package should be offered to outside world where people wait to receive information about a destination which offers, business potential recreation, information and relaxation.

He was speaking at the groundbreaking ceremony of a five star hotel 'Sofitel Tower Karachi' held at the Governor House on Wednesday. Sindh Governor Dr Ishratul Ibad Khan, Chief Minister Dr Arbab Ghulam Rahim, State Minister for Tourism Nilofar Bakhtiar, Sindh Industries Minister Adil Siddiqui, and a large number of business and trade representatives attended the ceremony.

The Prime Minister said that tourism and hotel industry go hand in hand. Better facilities attract business and encourage others to come up with investment proposals.

He said that Pakistan is blessed with abundant historic, religious, picturesque and business sites. "We should package our tourism offer as historic tourism, religious tourism and business tourism and hotels with exquisite cuisine and world class services."

He said that Sofitel would add to the city skyline and showcase the potential of the city to others who are still in the process of making investment decision, or a visit plan.

He said, "Pakistan needs to rebuild its brand as a peaceful destination for business and recreational activities."

He said along with five star hotels there is need of two and three star hotels to suit different pockets. It is availability of affordable hotels that attracts tourism. He asked Sofitel to come up with proposal of cheaper hotels.

Referring to Gwadar Port the Prime Minister said it would change the entire Gwadar City and its adjoining areas. There would be a world class new city humming with business activities.

He said inspired by the success of Gwadar Port the Sindh Chief Minister has asked me to consider KT Bander as the next port site. The Prime Minister said feasibility study would be conducted and if feasible, KT Bander would be the next port in Sindh.

He said that Law and order is improving, business activities are taking place, investment is coming and there should be no doubt about the stability of the government. The Prime Minister also talked about the ongoing protest of lawyers and asked them to maintain the decorum of protests.

This hotel will be in heart of Clifton area at the site of Mideast Hospital. It will have 28 floor, 216 rooms, and parking space for 600 cars. It is the first building of this magnitude in the past 30 years that had been taken up in local and foreign partnership.

http://brecorder.com/index.php?id=541895&currPageNo=2&query=&search=&term=&supDate=


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## Owais

*France keen to invest in automobile sector *

ISLAMABAD (March 22 2007): France has decided to resume negotiations with Pakistan on the possibility of investment in automobile sector by a renowned French car manufacturing company. The negotiations would be held in light of recently approved New Auto Policy, sources told Business Recorder on Wednesday.

The French government, Renault Company and the ministry of industries had earlier abandoned negotiations without reaching any agreement in the absence of New Policy, which is first official document to have determined long-term tariff lines for the existing car assemblers and the new entrants.

In this regard, an important meeting is expected today (Thursday) between French Ambassador and Minister for Industries, Production and Special Initiatives, Jahangir Khan Tareen. This would be the first meeting between the two sides after the approval on the new policy, the sources said.

They said that le ading car manufacturers had shown interest in investing in the automobile sector following the introduction of new policy. Renault is one of these companies and the French envoy's meeting is first step in this regard, the sources said.

A government official said that the French embassy in Pakistan wanted a briefing on new policy. Since French government holds a considerable shares in Renault, it was expected that the company's plan might be discussed once again at the meeting.

He said that new policy offers considerable tariff incentives for new entrants. The French government would be interested in knowing more about the incentives pledged in the policy, he added.

He explained that the policy allows new entrants assembling cars in Pakistan through import of 100 percent CKD (complete knock down) kit at the rate of duty applicable to non-indigenised parts. However, the new entrants must have to provide a commitment to develop and purchase local parts for fitting in local assembled cars.

The new entrant means a potential manufacturer of car/LCV who has no direct or indirect relationship with any of the present assemblers in Pakistan, the official added.

Renault's high ups are of the view that demand for Logan model was strong and Renault International was consequently looking at increasing production capacity for the budget car.

The company is vying for new markets and it eyes on the markets such as South Africa and the Asean [Association of Southeast Asian Nations] region along with India and Pakistan.

Renault and Japanese car maker Nissan already have a global alliance, and Nissan South Africa confirmed in 2005 it would not renew the assembly and parts and distribution agreement it had with Fiat Auto South Africa that was due to expire in July 2008.

According to some media reports, the contract started in July 1998 and the companies jointly announced last year the early termination of the agreement this August, leading to speculation that Nissan SA was about to start making Renault cars.

http://brecorder.com/index.php?id=541915&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*New gas reserves discovered in Sindh *

ISLAMABAD (March 23 2007): OMV Aktiengesellschaft, Central Europe's oil and gas group, on Thursday announced a discovery of gas in Latif 1 exploration well in Sindh province. This is an additional discovery to OMV's two major gas fields - Miano and Sawan, which were brought on stream in 2001 and 2003 respectively.

Latif 1 operated by OMV (Pakistan) Exploration GmbH, opens potential of further discoveries in the area close to India Pakistan border in Pakistan. The announcement made by OMV led joint venture said that Latif 1 pressure reached a total depth of 3,520 m and encountered a total of 18.7 meter net gas/condensate pay in three layers at depths of 3,200 to 3,450 meter.

It added that two intervals were successfully tested in February last, confirming potential of the new reservoir units. Preliminary results showed that the well is capable of flowing over 10 MMSCFD from the tested zones. The JV-partners envisage further appraisal activities, including production testing, drilling and acquisition of additional 3 D seismic to delineate the extent of this stratigraphic discovery.

The Joint Venture of the Latif Exploration Licence consists of OMV (33.4 percent operator), ENI (33.3 percent) and PPL (33.3 percent). The new discovery and the existing infrastructure of Sawan, Kadanwari and Miano fields are located directly between the markets of the two Pakistani gas transmission and distribution companies, Sui Northern Gas Pipelines and Sui Southern Gas Company, which enables OMV to deliver to both networks.

http://www.brecorder.com/index.php?id=542184&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Foreign investment reaches record high of $3.952 billion *

KARACHI (March 23 2007): The foreign investment (FI) in Pakistan has touched all-time high of $3.952 billion denoting 98 percent increase during the first eight months of the current fiscal. In the first eight months of the last fiscal, the total FI was $1.992 billion. This has also broken the last fiscal year's record of $3.872 billion.

The portfolio investment also reached all-time high of $981.2 million (including $150 million MCB Bank GDR) during the first eight months of current fiscal as compared to $351 million during the fiscal year of 2005-06.

"Although foreign investment figures are healthy but it will not put a positive impact on the GPD or on the economy," said Muzamil Hussain, economist at KASB securities. He said that during the current fiscal no green field investment has taken place, huge investment has gone into the existing businesses in the country.

The statistics released by the central bank on Thursday showed that the total FI including privatisation proceeds rose by $1.959 billion during the July-February period and reached all-time high of $3.952 billion as compared to $1.992 billion during the same period of the last fiscal.

In the last fiscal year (2005-06) all-time high FI of $3.872 billion was recorded, but this has broken all-time record and FI has reached $3.952 billion during the July-February of the current fiscal 2006-07, depicting an increase of $170 million during the eight months as compared to last fiscal 2005-06.

Exclusive of privatisation proceeds FI shows an increase of 133 percent to $3.818 billion during July-February of the current fiscal as previously stood at $1.638 billion, depicting an increase of $2.180 billion during the first eight months of current fiscal year.

Muzamil said that the actual portfolio investment stood at $616 million but the central bank data shows $981 million portfolio investment in which the central bank has included GDR of MCB bank and many other transactions.

During the current fiscal, foreign investors bought Lackson Tobacco and some other running institutions, which means that no fresh industry has been set up and the current foreign investment failed to bring about a positive change in the GDP, he added.

Privatisation proceeds have declined by 62 percent or $220.8 to $133.2 million during the first seven months of the current fiscal year as compared to $354 million during the same period of the last fiscal year.

Total FI compiled on $2.97 billion (including $133.2 million privatisation proceeds) of foreign direct investment (FDI) and $981.2 million (including $150 million MCB Bank GDR) of portfolio investment during July-February 2006-07.

Foreign Direct Investment (FDI) with privatisation proceeds has increased by 95 percent to $2.97 billion during July-February period of the current fiscal year. Previously it stood at $1.521 billion during the same period, indicating an increase of $1.449 billion.

The FDI without privatisation proceed has increased by 143 percent to $2.837 billion during first eight months of fiscal year 2007 as compared to $1.167 billion during July-February period of last fiscal, showing an increase of $1.67 billion during July-February of current fiscal year.

The portfolio investment has surged by 108 percent during July-February of 2006-07, as a result, the portfolio investment reached $981.2 million during the first eight months of the current fiscal year against $470.9 million in the corresponding period last fiscal year, denoting an increase of $510.3 million.

The official figures shows that during the July-February 2006-07 United States (US) is the leading investor in the list of foreign investors with total investment of $1.100 billion as compared to $721.5 million during same period last fiscal year. US portfolio investment and FDI stood at $538.5 million and $562.1 million respectively during the first eight months of current fiscal year.

The Western Europe is second in the list with $1.10 billion investment including $278.1 million portfolio investment and $822.2 million FDI. United Kingdom investment stood at $875 million including $547 million of FDI and $328 million of portfolio investment during the first eight months of the current fiscal.

Similarly, the European Union has invested $988.9 million as compared to $237.3 million last fiscal, China also led with $678.5 million against $1.5 million during the July-February last fiscal.

The United Arab Emirate (UAE) has invested $328.2 million, Singapore $214.5 million, Switzerland $86.5 million, Netherlands $71.5 million, Mauritius $60.6 million, Kuwait $56.1 million, Australia $44 million, Bahrain $37.7 million, Japan $39.3 million and Oman $17.9 million during July-February of the current fiscal.

http://www.brecorder.com/index.php?id=542163&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Eight percent GDP growth in 2007-08 envisaged *

ISLAMABAD (March 23 2007): The Planning Commission has envisaged 7.5-8 percent GDP growth in 2007-08 due to strong pick-up in domestic and foreign direct investments and excellent performance of agriculture, manufacturing and services sectors, official sources told Business Recorder.

The Planning Commission (PC), in its mid-year review (July-December 2006) of Medium Term Development Framework (MTDF) to be discussed at a meeting of National Economic Council (NEC) chaired by the Prime Minister Shaukat Aziz on March 27, is confident of achieving 7 percent GDP growth target set for the current fiscal year.

However, the PC has expressed its dissatisfaction over the growth rate of services sector but at the same time termed the information insufficient to assess the overall performance of the sector.

"At present, among the various services sub-sectors, growth of wholesale and retail trade has been revised to 7.2 percent as compared to annual plan target of 8.8 percent," the sources added.

In the annual plan, the GDP growth for 2006-07 was projected at 7 percent, contributed by sectoral growth rate of 4.5 percent in agriculture and 13 percent in Large Scale Manufacturing (LSM) while the services sector growth was projected at 7.1 percent. It is interesting to note that the PC has also projected 2 percent decline in LSM growth to 11 percent against the target of 13 percent.

To attain the projected GDP growth, an investment of Rs 1895.4 billion (21 percent of GDP) was envisaged. About 72 percent of fixed investment was estimated to come from the private sector and remaining 28 percent from the public sector. The national savings were estimated at 17.2 percent of the GDP.

The PC, which in its export strategy papers had projected 6.5 percent GDP growth due to declining exports, is now saying the country would achieve 7 percent GDP growth, which is contrary to its earlier claim.

GDP growth for 2006-07 is estimated to be 7 percent on the basis of preliminary assessment of agriculture growth, LSM data for July-September 2006 and import data for July-January 2006-07.

The sources said the Ministry of Food, Agriculture and Livestock (Minfal) has projected 5 percent growth in agriculture due to bumper wheat crop and accelerated livestock production against the target of 4.5 percent.

They said, the growth of eight manufacturing sector items declined, high-speed diesel by 15.6 percent; furnace oil 12.7; phosphatic fertiliser 7.8; electric meters 19.9; electric fans 9.1; electric bulbs 10.4; TV sets 31.3 and bicycles 1.4 percent.

The PC has also termed the current account deficit not in line with the current year's projections saying that it is likely to surpass the annual plan target of $6.3 billion as it was $4.4 billion during July-December 2006.

http://www.brecorder.com/index.php?id=542209&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*IFC to provide $125 million loan to KESC *

KARACHI (March 23 2007): The International Finance Corporation (IFC), the private sector arm of the World Bank Group has signed an agreement to provide $125 million loan to the Karachi Electric Supply Corporation (KESC).

The financing will also support KESC's capital investment programme of $809 million, designed to increase the company's power generation capacity by up to 795 megawatt (MW) in addition to rehabilitation of its existing generation by 220MW and to improve the quality of service to its consumers.

The electricity shortages in the metropolitan have been widespread, with the summer of 2006 proving to be a period of particularly lengthy power outages. The corporation is committed to improve service to its customers and has embarked on a sizeable investment programme to increase its generation capacity and improve transmission and distribution network.

The corporation's investment programme is the largest in country's power sector since the mid-90s and would add 220MW to its existing facility at Korangi and up to 575 MW to its existing facility at Bin Qasim power plant.

The IFC is committed to assisting in a successful turnaround of corporation, which will improve quality of service to consumers and demonstrate the benefits of power sector privatisation.

The IFC has played a lead role in arranging the long-term financing packages for the corporation with a lender group that is expected to include the Asian Development Bank, National Bank of Pakistan, Habib Bank Limited, United Bank Limited and MCB Bank Ltd.

Access to long-term debt to match the long-term nature of its project assets is important for the viability of KESC's investment programme. In addition to its role in the financing, the IFC has shared with the KESC its global experience in investing in recently privatised power utilities and has helped KESC upgrade its environment and social practices.

After the signing ceremony, IFC's Executive Vice President, Lars Thunell said: "IFC is very pleased to be supporting KESC's investment programme, which will play an important role in improving the reliability and quality of service of Karachi's power supply, a city that accounts for a significant share of Pakistan's industrial and economic activity."

http://www.brecorder.com/index.php?id=542169&currPageNo=2&query=&search=&term=&supDate=


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## Neo

March 23, 2007 
*Pakistan offers bright chances for US entrepreneurs*

WASHINGTON, March 22: Pakistan's continued high growth and attractive business prospects have bolstered international investors' confidence and expanded US-Pakistan cooperation in various fields can help realise the South Asian country's enormous economic potential on modern lines, American and World Bank experts said at a discussion.

Ã¢â¬ÅThe United States cooperation can be very helpful in building infrastructure in Pakistan, diversifying exports, improving tax system and can also help promote security and stability in the region,Ã¢â¬Â said K. Alan Kronstadt, a specialist in Asian Affairs for the Congressional Research Service.

The discussion on Ã¢â¬ÅSustaining Economic Reform in PakistanÃ¢â¬Â was jointly sponsored by the Pakistani American Leadership Centre and the SAIS South Asia Studies Programme at Johns Hopkins University.

Kronstadt noted that Pakistan has sustained good macro-economic trends and underscored that human capital development and continuity of reforms would further spur economic prospects in the long-term. In the context of regional stability, he said the US involvement can help facilitate resolution of outstanding issues between Pakistan and India.

Esperanza Gomez Jelalian, executive director of the US-Pakistan Business Council observed that Pakistan's impressive growth rate at an average of 7 per cent of GDP in the last few years was a testimony to its economic potential. She said the council was fully supportive of US-Pakistan strategic dialogue for expanding cooperation in energy, education, science and technology areas.

Ã¢â¬ÅAmerican entrepreneurs eye a lot of trade and business opportunities between the two countries,Ã¢â¬Â she said and listed oil and gas, surgical instrument manufacturing, information technology and engineering as among the most prospective sectors.

She noted that all sectors of the economy were open to foreign investment and the entrepreneurs can have 100 per cent equity and Pakistan has a huge market of 160 million people.

Jelalian expressed the council's support for Pakistan-US bilateral investment treaty. She informed the gathering that Pakistan drew $3.5 billion in foreign investment last year and this year the figure is expected to boost substantially.

In the question-answer session she observed that political stability in recent years had been a factor in Pakistan's consistent growth, which she said would touch 7 per cent of GDP this year.

She welcomed the initiative of setting up Reconstruction Opportunity Zones and said these zones would offer hope and economic opportunities to the people.

The participants discussed fiscal and trade reforms, the importance of good governance, transparency and second generation reforms in the context of Pakistan's continued economic progress.

Adnan Hassan, a senior adviser at the World Bank, said Pakistan was witnessing a decline in poverty as was evident in the unprecedented production and spiralling sales of vehicles, TV sets, motorbikes, refrigerators, cell phones and other necessities of modern life.

Pakistan has seen the emergence of a large middle class in urban areas, he said and was confident that it would propel economic growth in Pakistan in the years ahead, laying the basis for sustainable industrial progress.

Ã¢â¬ÅThe economic reality of Pakistan has a lot of good news to offer: the poverty is reducing, the middle class is growing and a widely spread out organised banking system offers a basis for sustained and fast-paced growth.Ã¢â¬Â

In this respect, he also highlighted the importance of human resource development, particularly quality education and training for Pakistani youth, pinpointing that as much as 50 per cent of its population is below the age of 19 years.

Responding to a question he remarked that the entrepreneurs kept existence of business and growth opportunities as their uppermost consideration. He said Pakistan ranked higher than many major regional economies in terms of ease of doing business.

He said with investors from the Far Eastern countries like Malaysia, European countries and South Africa planning to open up their businesses in Pakistan in a host of sectors. Early elements are in place for Pakistan to grow into a regional hub of trade and economic activity like Dubai.

Gary Clyde Hufbauer, a senior fellow at Peterson Institute for International Economics, saw a good possibility of a free trade agreement between Pakistan and the United States but said that would happen step-by-step and the two countries should first sign bilateral investment treaty.-

http://www.dawn.com/2007/03/23/ebr2.htm


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## Neo

March 23, 2007 
*IFC plans to invest $300m in Pakistan*

ISLAMABAD, March 22: The International Finance Corporation (IFC) will invest around $300 million in various projects in Pakistan during the current fiscal year. This was disclosed by Chief Executive Officer of IFC Lars Henrik Thunnell during a meeting with Prime Minister Shaukat Aziz on Thursday at Prime Minister House.

An official announcement said that Mr Thunnell informed the premier that IFC was supporting the private sector in various sectors including banking, infrastructure, hotel industry and energy. He congratulated Pakistan on the progress the country had made in improving the investment climate during the last seven years.

Prime Minister Shaukat Aziz said that the governmentÃ¢â¬â¢s economic strategy had envisaged a greater role for the private sector in all sectors of the economy and IFC could play the role of a catalyst to enable private sector drive the economic development.

He said that as a result of consistency of economic policies and the provision of level-playing field, there was a substantial increase in investment leading to the generation of economic activities, jobs creation and better growth.

Mr Aziz said government welcomed local and foreign investors to take advantage of the improved investment climate in the country.

He said there were opportunities for local and foreign companies to set up asset management activities in Pakistan.

He said that Pakistan had vast potential in the fields of housing and real estate, power generation, oil and gas development, IT and telecom, agribusiness, tourism, coal mining and engineering sectors.

http://www.dawn.com/2007/03/23/ebr8.htm


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## Neo

Friday, March 23, 2007 

*Pak economic growth has bolstered intÃ¢â¬â¢l confidence: WB*

WASHINGTON: Pakistan's continued high growth and attractive business prospects have bolstered international investors' confidence and expanded US-Pakistan cooperation in various fields can help realize the South Asian country's enormous economic potential on modern lines, American and World Bank experts said at a discussion.

"The United States cooperation can be very helpful in building infrastructure in Pakistan, diversifying exports, improving tax system and can also help promote security and stability in the region," said K. Alan Kronstadt, a specialist in Asian Affairs for the Congressional Research Service.

The discussion on "Sustaining Economic Reform in PakistanÃ¢â¬Â was jointly sponsored by the Pakistani American Leadership Center and the SAIS South Asia Studies Programme at Johns Hopkins University.

Kronstadt noted that Pakistan has sustained good macro-economic trends and underscored that human capital development and continuity of reforms would further spur economic prospects in the long-term. In the context of regional stability, he said the US involvement could help facilitate resolution of outstanding issues between Pakistan and India.

Esperanza Gomez Jelalian, Executive Director of the US-Pakistan Business Council, observed that Pakistan's impressive growth rate at an average of 7 percent of GDP in the last few years is a testimony to its economic potential. She said the council is fully supportive of US-Pakistan strategic dialogue for expanding cooperation in energy, education, science and technology areas.

"American entrepreneurs eye a lot of trade and business opportunities between the two countries," she said and listed oil and gas, surgical instrument manufacturing, information technology and engineering as among the most prospective sectors.

She noted that all sectors of the economy are open to foreign investment and the entrepreneurs can have 100 percent equity and Pakistan has a huge market of 160 million people.

Jelalian expressed the Business Council's support for Pakistan-US bilateral investment treaty. She informed the gathering that Pakistan drew US dollars 3.5 billion in foreign investment last year and this year the figure is expected to boost substantially.

In the question-answer session she observed that political stability in recent years has been factor in Pakistan's consistent growth, which she said would touch 7 percent of GDP this year.

She welcomed the initiative of setting up Reconstruction Opportunity Zones and said these zones would offer hope and economic opportunities to people. The participants discussed fiscal and trade reforms, the importance of good governance, transparency and second generation reforms in the context of Pakistan's continued economic progress. Adnan Hassan, a senior advisor at the World Bank, said Pakistan is witnessing a decline in poverty as is evident in the unprecedented production and spiraling sales of vehicles, TV sets, motorbikes, refrigerators, cell phones and other necessities of modern life. Pakistan has seen the emergence of a large middle class in urban areas, he said and was confident that it would propel economic growth in Pakistan in the years ahead, laying the basis for sustainable industrial progress. "The economic reality of Pakistan has a lot of good news to offer the poverty is reducing, the middle class is growing and a widely spread out organized banking system offers a basis for sustained and fast-paced growth."

In this respect, he also highlighted the importance of human resource development, particularly quality education and training for Pakistani youth, pinpointing that as much as 50 percent of its population is below the age of 19 years.

Responding to a question he remarked that the entrepreneurs keep existence of business and growth opportunities as their uppermost consideration. He said Pakistan ranks higher than many major regional economies in terms of ease of doing business.

He said with investors from the Far Eastern countries like Malaysia, European countries and South Africa planning to open up their businesses in Pakistan in a host of sectors "early elements are in place" for Pakistan to grow into a regional hub of trade and economic activity like Dubai.

Gary Clyde Hufbauer, a senior fellow at Peterson Institute for International Economics, saw a good possibility of a free trade agreement between Pakistan and the United States but said that would happen step-by-step and the two countries should first sign bilateral investment treaty. 

http://www.dailytimes.com.pk/default.asp?page=2007\03\23\story_23-3-2007_pg5_16


----------



## Owais

*Forex reserves ascend to $13.5065 billion record level *

KARACHI: Pakistan&#8217;s foreign exchange reserves in the week ending March 17 further swelled by $89.7 million mounted to a new record of $13.5065 billion.

State Bank of Pakistan (SBP) released data showed that the forex reserves on March 10 stood at $13.4168 billion, which swung up to $13.5065 billion on March 17. 

Central Bank&#8217;s existing forex reserves during this period rising by $65.8 million pegged at $11.2446 billion, while the reserves with the banks also rose by $3.9 million to reach at $2.2619 billion. 

http://geo.tv/geonews/details.asp?id=3765&param=3


----------



## Owais

*Kuwait to provide $37 mln loan for Hydropower project *
ISLAMABAD: Pakistan and Kuwait Fund signed a loan agreement amounting to $37 million for a Hydropower project here on Wednesday. 

Secretary of Economic Affairs Division, M. Akram Malik told Geo News that Kuwait will provide $37 million loan for the Golan Gol Hydropower project in Chitral. 

The Golan Gol is a 106-megawatt Hydropower project, located on the Golan Gol River about 25 kms from Chitral city. The total cost of the project is estimated $117 million 
http://geo.tv/geonews/details.asp?id=3688&param=3


----------



## Neo

Owais said:


> *Kuwait to provide $37 mln loan for Hydropower project *
> ISLAMABAD: Pakistan and Kuwait Fund signed a loan agreement amounting to $37 million for a Hydropower project here on Wednesday.
> 
> Secretary of Economic Affairs Division, M. Akram Malik told Geo News that Kuwait will provide $37 million loan for the Golan Gol Hydropower project in Chitral.
> 
> The Golan Gol is a 106-megawatt Hydropower project, located on the Golan Gol River about 25 kms from Chitral city. The total cost of the project is estimated $117 million
> http://geo.tv/geonews/details.asp?id=3688&param=3



Owais,

You have already posted this news and I've deleted it TWICE already due double post! :wall: 
Do care to read the thread before posting, I have better things to do than to delete your posts on daily base!


----------



## Owais

Neo said:


> Owais,
> 
> You have already posted this news and I've deleted it TWICE already due double post! :wall:
> Do care to read the thread before posting, I have better things to do than to delete your posts on daily base!



opps!
my mistake
I will be carefull next time


----------



## Neo

Owais said:


> opps!
> my mistake
> I will be carefull next time



Thanks bro!  

(Don't make me come to Karachi to beat you up the next time  )


----------



## kidwaibhai

that is great news


----------



## Janbaz

kidwaibhai said:


> that is great news



What? Sir Neo going to beat brother Owais!


----------



## Janbaz

*FDI rises to $2.97bn* 

KARACHI: Foreign direct investment (FDI) in Pakistan almost doubled to $2.97 billion in the first eight months of the 2006-07 fiscal year (July-June), with the communications sector attracting most, official figures show.

Data posted by the State Bank of Pakistan on its website on Thursday showed FDI for the July-February period rose 95.4 per cent from $1.52 billion in the corresponding period last year.

Inflows from foreign portfolio investment during the eight months were $981.2 million, up from $470.9 million in the corresponding period last year.

The United States maintained its lead in the list of foreign investors with total investment of $1.1 billion during the period, followed by Britain with $875.8 million, China with $678.5 million and the United Arab Emirates with $328.2 million.

Inflows generated by privatisation amounted to $133.2 million in the eight-month period, compared with $354 million in the year-ago period. The communications sector attracted $1.28 billion, outdoing all other sectors, followed by banking and financial services at $572.8 million.

In these eight months, $352.7 million were invested in oil and gas exploration. Pakistan is expecting a jump of more than 50 percent in foreign investment to nearly $6 billion in 2006/07, lured by sweeping reforms that have helped turn the economy around. Foreign investment in Pakistan was $3.87 billion in the last fiscal year. 

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=47946


----------



## Neo

*$4.6 billion FDI received in eight months: advisor *

ISLAMABAD (March 24 2007): The country has attracted $4.6 billion foreign direct investment (FDI) during the last eight months as compared to $1.89 billion during the same period of last year, Economic Advisor, Ministry of Finance, Dr Ashfaq Hassan Khan said.

A surge of 147 percent has been recorded in FDI in the country during last eight months. In February alone, it was $1 billion, he told a private TV channel. The country's foreign debt burden decreased to 28 percent in December 2006 from 66 percent of GDP in June 1999.

The unemployment ratio has been brought down to 6.2 percent in 2005-06 from 8.3 percent in 2003-04, he said. Due to rapid development, electricity consumption has been persistently increasing by 10.5 percent per annum during last couple of years as compared to only 3 percent seven years ago. Efforts are underway to meet the demand by producing more and more electricity, as 60 percent increase has already been registered in imports of furnace oil during last seven months.

Commenting on the overall performance of economy in last 60 years, he said that Pakistan has managed an average growth ratio of five percent per annum in last six decades. Cotton production has been increased to 13 million bales from 10 million bales while wheat production has been augmented to 22 million tonnes from 13 million tonnes.

Production of sugarcane has escalated to 50 million tonnes from 46 million tonnes during the past six decades. Responding to a question, he said that the country's per capita income is far better than India, as it is $660 there, and Pakistan's average income is $847.

http://www.brecorder.com/index.php?id=542534&currPageNo=1&query=&search=&term=&supDate=


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## Owais

kidwaibhai said:


> that is great news



:what1: 
are you anarchist?? 



neo said:


> Thanks bro!
> 
> (Don't make me come to Karachi to beat you up the next time )



haha now you will come to karachi just for me??


----------



## Owais

*Ministry seeks Rs 28 billion for execution of uplift programme *

ISLAMABAD (March 24 2007): The Ministry of Housing and Works has demanded Rs 28 billion for its development programme in 2007-08 that includes a mega project of water supply to federal capital from Ghazi Barotha, sources told Business Recorder.

The total cost of the project had been estimated at Rs 46 billion and after its completion the water requirements of Islamabad Capital Territory (ICT) would be fulfilled till 2050, the sources added. They said that Capital Development Authority (CDA) had informed the Planning and Development (P&D) division that the work on the project would be started next fiscal year.

In the first year of implementation, an amount of Rs 14 billion would be required, as estimated by the ministry and the CDA, the sources said. According to them, it was one of the major development projects that the Ministry of Housing and works wanted to start work on during next fiscal year, which increased the total demand of the ministry for allocation under the budgeted Public Sector Development Programme (PSDP) 2007-08.

The housing ministry had taken up the case with the P&D, said an official in the ministry. He said that there was urgent need to launch some important schemes from the next fiscal year. The ministry estimates that the federal government is required to approve the development plan along with the required funding, he added.

The P&D has initially informed the ministry that the allocations under the PSDP 2007-08 must be kept between Rs nine to 10 billion and the ministry should concentrate more on the implementation of their new and ongoing projects in order to ensure their timely completion, the official said. The P&D was of the view that the housing ministry should go to the meeting with a demand of Rs 9 to 10 billion.

The P&D's priority committee would commence regular meetings from April 2 to 14 and they would recommend the proposed allocations for the ministries in 2007-08 PSDP to the Annual Plan Coordination Committee (APCC). The APCC would refer its recommendation to the National Economic Council (NEC), which is the final authority to approve the allocations for the ministry under the budgeted PSDP.

They said the P&D and the Ministry of Finance had been urging all the ministries to improve the implementation process of the projects. Around 20 to 25 percent of more than 1,500 projects had already been declared slow moving. The slow-paced projects cause huge losses to the national exchequer, they added.

http://brecorder.com/index.php?id=542538&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Plan to boost exports of precious stones, jewelries * 
ISLAMABAD: Boosting of Pakistan exports of precious stones and jewelries up to $1.5 billion by 2017 is being planned.

Ministry of industry and production officials here told that the Pakistan&#8217;s exports of precious stones and jewelries currently valued at only $25 million and a plan was underway for raising it up to $1.5 billion in the next ten years.

Officials told that the Planning Commission has approved the setting up of a gems and jewelry company at the cost of Rs1.40 billion. The company, besides providing training for jewelries and precious stones making, would also conduct research on latest technology for this sector. 

http://geo.tv/geonews/details.asp?id=3802&param=3


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## Neo

Saturday, March 24, 2007 

*Bio-energy production: Govt plans to use biomass plants*

By Sajid Chaudhry

ISLAMABAD: The government plans to produce bio-energy by utilising biomass plants, residues like wheat straw, rice husk, cotton sticks, corn cobs, kallar grass and other salt tolerant plants.

The project is proposed to be completed during 2007-2010, with an estimated cost of Rs 295.4 million. The production of bio-energy from plant residues is in vogue in many countries like United States of America (USA), Brazil, Northern America and European Union.

According to the sponsoring agency of the project ministry of science and technology, the project would carryout research on meaningful utilization of plan residual mater to convert into bio-fuel to be used as an alternative source of energy.

Crop residuals, which remain unutilized and wasted in the country, would have their best alternative profitable use and it will increase the profitability of the farming sector.

The project envisages utilizing the experience already gained to develop economically feasible production of bio-fuel from biomass. Further research and development studies would be undertaken on the conversion of plant residues like wheat straw, rice husk, cotton sticks, corm cobs, kallar grass and other salt tolerant plants into ethanol or biogas so as to use it as an alternate source of energy.

The objectives of the project are production of thermostable and high specific activity celluloses at a minimum cost, pretreatment of plant biomass including kallar grass, bagasse, corn cobs for saccharification by enzymes, utilization of sugar in fermentation process to produce alcohol by action of yeast; development of microbial consortia for economic conversion of the pentose rich residual matter to produce methane gas; undertaking study the possibility of using the nitrogen-rich residual mater obtained from methanogenic as a fertilizer; scaling up the processes of pretreatment, enzyme production, saccharification, alcohol fermentation and methanogenic fermentation for ultimate large scale operation; and development of feasibility for large-scale application on the basis of the results obtained from implementation of this project for perspective entrepreneurs.

The proposed executing agencies of the project include National Institute for Biotechnology and Genetic Engineering, Faisalabad, School of Biological Sciences, Lahore, Institute of Biotechnology, Lahore, Biotechnology and Food Research Centre, Lahore and Shakarganj Sugar Mills Ltd Jhang. Under the project, additional laboratories would be established and properly equipped at the respective campuses of executive agencies.

The project document reveals that the technical expertise and other facilities of the Shakarganj Sugar Mill shall be available for implementation of many aspects of Research and development activities. The mills would not be benefited by Government of Pakistan funds. Monitoring of the project implementation would be done by a Steering Committee headed by the Member, Food and Agriculture, Planning Commission with members from implementation agencies, Alternate Energy Board and Hydrocarbon Development Institute.

The technical appraisal of the production of bio-energy from plant residues highlighted that some important aspects which include the production of bio-energy from plant residues is in vogue in many countries like United States of America (USA), Brazil, Northern America and European Union. The sponsor may indicate the unit cost of the bio-energy produced in those countries to access its viability in Pakistan.

The biogas technology was introduced during 70s but it could not make headway on large-scale production and adoption by the public. The sponsor may take in to account the reasons for its low adoptability and indicate steps to be undertaken to ensure its widespread adoption. Moreover, social acceptability may be assessed by the sponsors.

http://www.dailytimes.com.pk/default.asp?page=2007\03\24\story_24-3-2007_pg5_1


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## Neo

Saturday, March 24, 2007 

*NBP to set up own IT systems costing $40m*

By Arshad Hussain

KARACHI: National Bank of Pakistan (NBP) is going to establish its own IT systems and procedures with a cost of $40 million and would be completed in next two years.

Ã¢â¬ÅThe management has the right intentions and has already contacted a short list of vendors and the final decision and systems design and implementation will require many months,Ã¢â¬Â a source said.

According to initial estimates provided by bank management, the total IT upgrade plan would cost of $40 million and would be completed in phases over a two-year time. While full benefits are expected to be reflected once the system has been fully installed.

NBP plans to roll out relevant services in the interim as and when modules come online, the source added.

A conservative management practices were to blame earlier, the crippling factor for NBP in view which is restricting it from a major move into consumer finance is the lack of requisite IT systems and procedures. The majority of NBPÃ¢â¬â¢s operations are still operating on legacy IT systems, which are not powerful enough to support the development of a dynamic consumer finance platform.

Furthermore, being a government owned organisation, the decision makers are very sensitive to making sure that the proper procedures are followed and that the overall process is transparent.

National Bank of PakistanÃ¢â¬â¢s earnings soared by 35% YoY to Rs17.0bn in FY06 as compared with Rs12.6bn during FY05. This translated into an EPS at Rs24.01 as against Rs17.84 during the preceding year. Growth in the core earnings was primarily attributable to increased profitability of the bank. Net mark-up income of the bank increased by 29% to Rs30.1bn as against Rs23.3bn last year. Non mark-up income during the year also increased by 29% to Rs12.1b on the back of 68%, 25% and 253% increment on account of dividend income, fee, commission and brokerage income and other income to Rs 2,892m, Rs 6,145m and Rs 628m respectively. On the other hand, a 19% increment in the non interest expenses and 189bps hike in the effective tax rate to 35.3% during the year restricted the due growth in bottom-line.

National Bank of Pakistan (NBP) FY06 earnings announcement was 9% below the general market anticipation. The financials of the bank accompanied a final cash dividend at 40% for the year. Furthermore, the board of directors also announced to issue bonus shares at 15%.

http://www.dailytimes.com.pk/default.asp?page=2007\03\24\story_24-3-2007_pg5_3


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## Neo

*Telecom sector attracted $9 billion in three years: Shaukat *

ISLAMABAD: March 24, 2007: Prime Minister Shaukat Aziz on Saturday said the telecom sector which was getting negligible investment only a few years back has attracted $9 billion foreign investment in the last three years and expects to get another $4 billion during the next 3-4 years.

He was talking to Rob Conway, Chief Executive Officer of GSMA Association who called on him along with CEOs of Warid, Mobilink, Ufone, Telenor and Paktel here.

GSMA is a global trade association representing more than 700 GSM mobile phone operators across 217 territories and countries of the world.

The prime minister said Pakistan has become a hub of activity for international and local telecom companies and unprecedented amount of foreign investment flowed into the sector due to the well thought-out telecom policy, which was prepared after intensive discussions and debates involving all stakeholders.

He said Pakistan has bright prospects for attracting foreign investment as the economy is growing fast and demand is increasing with a flourishing middle class and the improved capacity of the people to pay.

The prime minister said telecom is one of the fastest growing sectors of the country and the combined teledensity has increased from 4.5 percent of the population two years ago to about 40 percent at present.

The number of subscribers of fixed and mobile telephony has increased from 8 million in 2003 to over 50 million in 2006 and the market has the potential to reach 80 million mobile in 2 to 3 years, he added.

The prime minister said that the telecom sector has become a major employer of skilled jobs as its exponential growth has resulted in creation of 80,000 jobs directly and 500,000 jobs indirectly.

He said people are the major beneficiaries of the telecom sector's success story as 70 percent of the country's population has access to improved telecom services at substantially reduced tariffs.

The prime minister said the government is implementing legislation for developing Universal Service Fund (USF) framework to enhance rural teledensity and to provide basic telecom services to the under/and unserved areas.

He said the government is also evolving comprehensive framework for aligning regulatory framework for leveraging mobile technology for improving access to financial services.

This will bring low income cash dependent segment into the banking network and hence make provision of full range of micro-finance services possible, the prime minister added.

Rob Conway appreciated the reforms-oriented policies of the government. He said the level playing field and the facilitating environment created by the government has encouraged investors and Pakistan is attracting significant foreign investments, he added.

Rob Conway commended the positive and co-operative attitude of the government functionaries and said every possible effort is being made to facilitate the private sector to grow.

The meeting was attended among others by Minister for IT & Telecom Awais Ahmed Leghari, Senior Vice President Public Policy GSM Ricardo Tavares, CEO Wand Telecom (Pvt) Ltd Hamid Farooq, CEO Mobilink Zouhair Khaliq, CEO UFONE Mubashir Naqvi, CEO Telenor Tore Johnson, CEO Paktel Guo Yong Hong and senior officials.

http://www.brecorder.com


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## Neo

*Four-year draft plan to expand IT industry discussed *

ISLAMABAD (March 22 2007): Ministry of Information, Technology discussed a four-year draft plan to expand IT industry from $2 billion to $10 billion by 2010 here on Wednesday. Sources said that the Pakistan Software Export Board (PSEB) had proposed a four-year draft plan to increase the IT industry's size to $10 billion by 2010, suggested eight thrust areas and identified annual targets.

The PSE Board of Directors met with its chairman IT Minister Awais Ahmed Khan Leghari and discussed the thrust areas ie facilitation, human resource development, industry finance, marketing, office space provision, public policy, quality and telecom bandwidth provision, to achieve the target.

The meeting also called upon the minister to muster support of CDA, CBR, PTA SECP, SBP and HEC, as their facilitation was vital for IT promotion in the country.

PSEB MD said that the IT Ministry had set one billion dollar export target of IT-enabled service by 2010 and to construct IT parks each in Islamabad, Lahore and Karachi on Built Operate and Transfer (BOT) basis the government was negotiating with China and Malaysia.

IT exports, as reported by the State Bank of Pakistan (SBP), were $72.210 million during 2005-2006 which grew up to $48 million in the first half of 2006-07, he added. He said these parks would be built to accommodate about 200,000 IT graduates in next three to four years to meet the set export targets.

Meanwhile, a statement of IT Ministry said that the Minister has called for a massive marketing drive to showcase the strength and potential of Pakistan's IT industry at the global level.

He said Pakistan's IT sector was registering excellent growth figures but it had not been able to claim its rightful place as one of world's leading destinations for business and product development.

He was addressing the Board members of PSEB. IT secretary Farrakh Qayyum, PSEB managing director Yusuf Hussain, PASHA president Ashraf Kapadia and other members of the board were also present. The board meeting was called to discuss a strategic roadmap prepared by the Pakistan Software Export Board for the country's IT industry.

Presenting a picture of the IT industry, Yusuf Hussain highlighted the tremendous growth of 57 percent in the sector over the last one year. He added that Pakistan IT industry had grown to a size of $2 billion according to the standards used by WTO and applied by several countries, including India.

He said the PSEB had over 900 member companies, including some world class companies like MIXIT, Scrybe, NetSol, TPS, Pixsense, Systems, Folio3 and Si3. "Many of these companies have benefited from various PSEB initiatives which have helped them attract international clients and these companies have grown to a size which has enabled them to set up their offices in major capitals of the world," he said. Hussain said the PSEB had chalked out a comprehensive roadmap to promote the industry as many activities were already in full gear and the board had been able to help 125 local companies achieve ISO and CMMI certifications.

"The board has also launched apprenticeship and internship programmes for the development of human resource required by the industry and more than 2500 students have already benefited from the programme," he added.

He said that yet another area the board was aggressively working on was the setting up of IT parks in all major urban centres, including Islamabad, Lahore and Karachi. He said PSEB had acquired 13.6 acres (65,824 sq. yards) of land in the federal capital to develop a state-of-the-art IT park which would provide around 1.5 million sq. ft. of office space within a unique working environment equipped with modern hi-tech facilities and entertainment spots under one roof. The minister appreciated the performance of PSEB over the last one year and assured his support for ongoing PSEB programmes.

http://www.brecorder.com/index.php?id=541881&currPageNo=1&query=&search=&term=&supDate=


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## Neo

March 25, 2007 
*Kuwait, Qatar to invest $4 billion*

By Ihtashamul Haque

ISLAMABAD, March 24: Qatar and Kuwait have decided to make $4 billion new investment in Pakistan's power, hotel, insurance and oil refinery sectors, said minister for privatisation and investment Zahid Hamid.

"While Qatar is finalising arrangements to make up to $3 billion investment in hotel, power and insurance sectors, Kuwait is all set to establish a new oil refinery for which it has been offered land at two different places", he told a news conference on Saturday.

Similarly, he said the United Arab Emirates (UAE) was in the process of establishing an oil refinery in Pakistan to help export refined petroleum products after meeting certain domestic demand.

"We have received a very encouraging response from all the three governments for the early setting of their projects", Zahid Hamid said.

"Pakistan is attracting highest level of Foreign Direct Investment (FDI) and this is due to our highly attractive investment policy," he said adding deregulation, liberalisation and privatisation together with transparency, good governance and continuity and consistency, have helped attract foreign investment in this part of the world.

He said there was a record level of foreign investment in Pakistan during February 2007, totalling $1.15 billion. Out of this amount, FDI was $875 million and net portfolio investment was $274 million, he said.

He pointed out that the total foreign investment for the first eight months of the 2006-07 was $4.62 billion, comprising FDI amounting to $2.97 billion and net portfolio investment of $1.65 billion, including OGDCL's $731 million GDR receipts.

"Keeping in view the major privatisation transactions that have been planned for the remaining four months before the end of June 2007, including the sale of PSO and GDRs of UBL and Kapco, it is apparent that Pakistan will attain record new heights of foreign investment during 2006-07," he asserted.

Prime minister Shaukat Aziz, he said, believed that $5 billion foreign investment would be made during the current financial year. However, the minister said this FDI amount was going to be much higher eventually.

Answering a question, the minister for privatisation and investment said that the bulk of the FDI had gone into communications sector -- $1.28 billion (43 per cent). The financial business sector has received $573 million (19.3 per cent) and oil and gas exploration sector $353 million (11.9 per cent).

The US has invested $562 million (18.9 per cent) while the UK has made an investment of $547 million (18.4 per cent) and in both cases, "this is the highest level of investment ever. The UAE has invested $316 million or 10.6 per cent of the total."

"The perception about Pakistan is changing and that is why we are getting increased foreign investment," Zahid Hamid said.

He told a reporter that the government was not allowing privatisation of the country's strategic assets and the defence sector.

The minister clarified that although the there was a decision of the Council of Common Interests (CCI) taken in 1997 to also disinvest bigger state sector units, like Railways, PIA, etc, the government was not actively considering their privatisation.

Asked about the reasons of delays in the signing of a Bilateral Investment Treaty (BIT) with the US, Zahid Hamid said there involved certain legal issues which needed to be first sorted out between the two countries.

But he said talks between the two sides were continuing at a higher level to conclude the treaty soon.

He said that both the sides have decided to maintain "privacy and confidentially" about their talks over the issue of BIT.

The minister for privatisation and investment did not agree with a reporter that "inequality" was increasing in the Pakistan society. In this regard, Mr Hamid said poverty had reduced from 34 per cent to 24 per cent.

He said reforms have resulted in very impressive economic growth over the last seven years, with "dramatic improvement" in all major economic indicators which have completely transformed the economy and placed it on the path of rapid growth."

The minister said that the GDP growth rate has averaged more than 7.5 per cent during the last three years. Similarly, GDP per capita had doubled over the last seven years to $847 million and poverty has declined from 34 per cent in 2001 to under 24 per cent in 2006, he added.

He said that the government was making allout efforts to facilitate and encourage local and foreign investors and for this purpose it has formulated a liberal and attractive investment policy in consultation with businessmen, investors, chambers of commerce, trade associations, representatives of international companies and other stakeholders.

The minister said the government was providing a level-playing field to local and foreign investors and that all economic sectors were open to foreign investment. These foreign investors have been allowed up to 100 per cent foreign equity and no government permission is required.

He said attractive tax and tariff incentives packages have been offered to the foreign investors. "There is no restriction on remittances of capital, profit, royalties or fees."

A network of export processing zones and industrial estates has been made available to investors while statutory protection for foreign investment has been assured, apart from bilateral agreement, he said.

http://www.dawn.com/2007/03/25/ebr1.htm


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## Neo

March 25, 2007 
*Rs15.42bn disbursed in R&D support*

KARACHI, March 24: The State Bank of Pakistan has so far disbursed over Rs15.42 billion as Research and Development (R&D) support against 163,000 claims to the exporters of garments, home textiles, fabrics and leather footwear.

Of this amount, Rs7.94 billion was released to exporters in Karachi, Rs3.57 billion in Lahore and Rs3.01 billion in Faisalabad and the remaining amount to exporters of other cities.

With a view to enhance the efficiency of the process, the State Bank from the start has streamlined its internal procedure for evaluating and settling claims regarding R&D support and remains constantly in touch with the officials of the concerned ministries.

In order to facilitate the exporters, the State Bank has set up Help Desks at its field offices. Besides this, awareness/training sessions have also been arranged for exporters at different cities to enable them to understand documentation requirements for claims.

It may, however, be pointed out that the claims being submitted by the exporters include those for ineligible commodities or countries or pertain to period which is ineligible for claims or claims based on false documents.

http://www.dawn.com/2007/03/25/ebr9.htm


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## Neo

*Pakistan to raise hydel power by 8,000 MW *

LAHORE: Pakistan is expected to increase hydel electricity generation by 8,000 MW by 2016 and atomic power generation by another 8,000 MW by 2020, which would bring stability in power rates.

Chairman Water and Power Development Authority (WAPDA) Tariq Hameed stated this while addressing the market representatives of Qaumi Tajir Itehad.

He said Ã¢â¬ÅPakistan is currently producing 350 MW of electricity through atomic power stations,Ã¢â¬Â while another 300 MW would be added with Chinese assistance very soon. Pakistan, however, needed much more than that.

He said China was earlier producing atomic generators of 300 MW capacity only, but Ã¢â¬Ånow it is producing 600 MW capacity reactors.Ã¢â¬Â He said the Pakistan Atomic Energy Commission expected to increase atomic power generation to 8,000 MW by 2020.

He said Bhasha dam with 4,500 MW power generation capacity would be completed in 2016 while Kalabagh dam would take seven years after the start of its construction and it would produce 3,500 MW of electricity.

He said although go-ahead signal for Kalabagh dam had not yet been given, the government had allowed acquisition of land required for the dam.

Chairman WAPDA said the demand-supply gap between electricity production and consumption was widening, which in the short-term could only be managed through prudent utilisation, before projects in the pipeline came on stream.

Knowing fully well that increase in electricity rates encouraged power theft, he said the WAPDA kept the tariff frozen for more than three years, before increasing it by 10 per cent due to extraordinary rise in prices of important inputs, like furnace oil and gas.

He said electricity tariff was structured on the instructions of the rulers, who desired that the Ã¢â¬Åconsumers pay according to their capacity instead of lower rates on higher consumption.Ã¢â¬Â This benefits 2.9 million households which pay electricity charge at the rate of Rs1.40 per unit. 

On the other hand, commercial users would be paying Rs7.50 per unit after the recent increase.

He said the WAPDA added 3,000 MW of electricity to the system by buying 100 per cent production of independent power producers (IPPs) and utilising idle production of the authorityÃ¢â¬â¢s thermal stations.

Ã¢â¬ÅElectricity demand is increasing by 1,000 MW every year,Ã¢â¬Â he said, adding the WAPDA had no magic wand to raise production immediately. 

However, he added, the crisis could be averted through judicial use of electricity.

He said Lahore and adjoining industrial cities, for instance, consumed 2,050-2,100 MW of electricity at peak hours.

He said the demand would increase by another 200 MW this summer and the industry had been requested to stagger their weekly holidays and evenly divide them over all seven days of the week. 

Ã¢â¬ÅThis request has been accepted by the industrialists,Ã¢â¬Â which would help save 100 MW of electricity in Lahore, he added.

He said tube wells had been offered 25 per cent tariff discount if they operated between 10 pm and 6 am, adding the process had started, which would result in saving of 50 MW of electricity in and around Lahore.

He welcomed the tradersÃ¢â¬â¢ offer of opening markets early and closing them early, which would help the WAPDA to better manage power distribution. He assured the traders that all their genuine problems would be solved.

http://www.thenews.com.pk/daily_detail.asp?id=48225


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## Neo

Sunday, March 25, 2007 

*Rising FDI to help increase exports: Zahid*

ISLAMABAD: Zahid Hamid, Minister for Investment and Privatization, has said that foreign direct investment in oil refineries, China Special Economic Zones and dairy sector would help the country to increase its exports. 

Keeping in view the major privatization transactions PSO, GDR of UBL and KAPCO it is apparent that Pakistan would attain record new heights of foreign direct investment over and above $5 billion target for the current fiscal year 2006-07. 

Addressing media briefing here on Saturday, the minister said that many countries are planning to invest in Pakistan and are actively finalizing their investment modalities with government of Pakistan. Qatar to invest $3 billion in banking and insurance sectors, investors from Kuwait to invest $1 billion in hotel industry, Saudi investors are investing in setting up of five star hotels in Islamabad and Lahore, some 40 projects are being finalized for Pak-China Economic Zone, Canadian investors are planning to invest in oil and gas sector and British investors are interested in wing energy projects. 

Out of the total FDI of $2.97 billion, 23% or 679 million is from China, 562 million or 18.9% from USA, and $547 million from United Kingdom. The bulk of FDI has gone into the Communications sector of $1.28 billion, financial business sector has received $573 million and oil and gas exploration sector has attracted $353 million by end February, the minister added. 

He said that total foreign investment during July-February period of current fiscal year stood at $4.62 billion, comprising foreign direct invest of $2.97 billion, portfolio investment of $1.65 billion including OGDCL GDR receipt of $731 million. He said that foreign investment of $4.62 billion is 148% higher than the $1.87 billion in the corresponding period of last fiscal year. Foreign Direct Investment (FDI) of $2.93 billion is 95% higher than last years $1.52 billion. Net portfolio investment of $1.65 billion is 378% higher than last years $345 million. 

The minister said that there are mergers and acquisitions in the banking sector including Standard and Chartered and Union Bank, NIB and PICIC and ABN AMRO bank and Prime Bank. 

He said that UAE and IPIC are setting up oil refinery at Khalifa point and this project is at advance stage. He said that all the sectors are open for foreign direct investment and privatization program of the country is also providing best investment opportunities both foreign as well as local investors. 

He said that negotiations on Bilateral Investment Treaty (BIT) are at advance stage and legal experts from both the country are engaged in finalizing remaining issues. He informed that Pakistan and United States are keen to finalize BIT as soon as possible. 

Executive Director Board of Investment while replying to a question said that although FDI in export oriented industries is low, however, he said existing refineries are meeting the national requirement and all new refineries which are being set up would be contributing in exports. He mentioned that there are 40 projects have been identified for Pak-China Economic Zone and production from this zone would be available for exports. He said that Pakistan and China have agreed to take bilateral trade to $15 billion by next five years. The minister also added that newly inaugurated AsiaÃ¢â¬â¢s biggest milk plan would not only meet the local needs but would also contribute in exports of the country. 

The minister said that from 1991 to 2007 the country has generated $7 billion through privatization of national assets and $61 billion were generated during 1999 to 2007 or 87% by privatizing national entities.

http://www.dailytimes.com.pk/default.asp?page=2007\03\25\story_25-3-2007_pg5_3


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## Neo

Sunday, March 25, 2007 

*PakistanÃ¢â¬â¢s seafood exports to EU reach $43 million *

KARACHI: Chairman Pakistan Seafood Industries Association M Hanif Khan said that Pakistan exported seafood worth $ 43 million to EU last year when the total seafood exports stood at $ 196 million.

In a statement he said, "we have exported 69,977 metric tons of seafood worth $121.335 million during July-February 2007.

Pakistan is likely to face an overall decline of $ 30 million in its seafood exports during the current fiscal year after EU ban, effective from April 12, 2007, exporters said.

This year, we will lose seafood export worth $ 15 million to EU alone. In addition, the overall value of Pakistani seafood export will go down by another $ 15 million due to EU ban, he added. 

Khan said during April and May, Pakistan export cuttle fish, squid and large (pink) shrimp to EU at good prices. We will not be able to fetch half of the prices, if we will export these items to other markets, he noted.

Similarly, there is no market for small shrimps other than European Union. These shrimps are exported to EU between August to October every year and we sell these shrimps at 2 to 3 dollars per kilo while we will get half the price in other markets.

Meanwhile, Hanif Khan said that if EU ban continues next year, Pakistan will face a fall of at least $ 40 to 45 million during 2007-2008. Ã¢â¬ÅWe will try to explore other markets like China and South Korea for our seafood exports, but these markets offer lesser values", he observed.

A leading seafood exporter Captain Akhlaq Husain said that some other factors will have a negative consequences on Pakistani exports. He said that EU had earlier imposed a ban on Pakistani seafood exports in 2005, but seafood country's exports did not sustain any negative impact. In fact, our seafood exports surged during that period, because deep sea tuna trawlers exported tuna worth $20 million during that period, he added.

However, this year, tuna export from deep sea trawlers was not available and therefore, overall seafood export will decline. 

http://www.dailytimes.com.pk/default.asp?page=2007\03\25\story_25-3-2007_pg5_4


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## Neo

March 26, 2007 
*Upgrading insurance, pension and savings systems*

By Ihtasham ul Haque

THE Asian Development Bank (ADB) is expected to offer $150-200 million "multi-tranche facility" to help improve financial management that includes the insurance, pension and savings systems.

The government has formally sought the ADB facility, for which initial discussions were held between Prime Minister Shaukat Aziz and bank's director-general Mr Juan Miranda when he visited Pakistan last month.

According to an ADB official working in the local office, the details of the loan are still to be worked out but the bank has agreed to offer funding for bringing improvements in the insurance, pension and savings systems.

The government anticipates that new tranche facility could be up to $200 million as the bank was ready to fund the programme preferably during 2007.

Initially the bank will provide $3 million technical assistance (TA) to fund a study.

According to the ADB, the Ã¢â¬Ågovernance" issues in the pension, insurance and savings systems needed to be sorted out to make it efficient.

The countryÃ¢â¬â¢s pension system is "fragmented" and without a central framework for regulation or supervision, to encourage retirement savings and protection for beneficiaries. It is, therefore felt appropriate to support development of a programme that will encourage retirement savings through appropriate regulation and incentives.

The proposed study will examine the constraints on the National Savings Scheme (NSS) and the merits and feasibility of moving towards a funded scheme managed with a well-conceived investment policy in government securities. The ADB will also support streamlining, modernisation and computerisation of operations already initiated by Central Directorate of National Savings (CDNS).

The objective is to assess key issues in managing pension and saving liabilities, recommend solutions to improve sustainability, and strengthen key public sector institutions involved in pensions, insurance and savings mobilisation.

The study will focus on setting up of an overall policy framework for pension provision, financial assessment of civil and military pension schemes, institutional reform and strengthening of Employee's Old-age Benefits Institution (EOBI), capacity building for investment management of State Life Insurance Corporation (SLIC),institutional reform and strengthening of the Central Directorate of National Savings (CDNS).

The ADB maintains that the country/sector strategy and well as the government's development agenda has accorded high priority to poverty reduction through private sector-led pro-poor economic growth, social sector development and improved governance.

Within this framework, the bank believes, the financial sector has an important role to play to increase resource mobilization, improve efficiency of allocation, enhance access to financial products and services, contribute to the sustainability of social safety nets and safeguard economic stability.

Given the critical importance of SECP for capital and non-bank financial markets, it is important that it has adequate capacity Ã¢â¬â skills, systems, and procedures Ã¢â¬â to effectively discharge its functions. The ADB helped SECP put in place the basic strategic, management, and administrative foundations. It also helped to raise prudential standards of key market participants and develop a national clearing and settlement system.

Despite these positive developments, the bank believes, the regulatory framework and institutional structure require flexibility to adapt rapidly to changing circumstances and emerging challenges. Given the fast changing nature and increasing complexity of modern financial markets, there is a need to further support the industry regulator and market participants by upgrading its skill base.

The objective is to support the sound and sustainable development of non-bank financial markets, application of proper risk management practices and protection of investors and policyholders.

The study will include a review and update of the legal and regulatory framework as required, and building capacity within SECP for effective regulation though advice and training for on site and off-site surveillance, including Non-Bank Financial Institutions (NBFIs), supervision of the reformed and new exchanges, insurance and pension industry and the derivatives market.

In addition, there is also bank's assistance available to SECP and the stock exchanges in developing and implementing a plan for demutualisation of the exchanges, and support measures to upgrade skills of market participants.

The programme comprises four components: Upgrading of the legal and regulatory framework, capacity building of SECP with particular attention to its enlarged mandate for regulation and supervision of non-bank financial institutions, insurance and pensions, support for restructuring of stock exchanges; and establishment of sustainable mechanisms for skills development and training.

http://www.dawn.com/2007/03/26/ebr14.htm


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## Neo

*Pakistan PM Forecasts More Foreign Investment In Telecoms *

ISLAMABAD -(Dow Jones)- Pakistan's telecom sector is likely to attract $4 billion in foreign direct investment over the next few years, Prime Minister Shaukat Aziz forecast Saturday, although mobile phone operators said lowering the tax on activating new subscribers was key to further increasing phone usage.

"The telecom sector, which was getting negligible investment only a few years back, has attracted $9 billion foreign investment in the last three years and expects to get another $4 billion during the next 3-4 years," Aziz told a delegation of local mobile phone operators.

Among recent investments, China Mobile Communications Corp. bought 88.86% of Paktel Ltd.'s shares for $284 million. Other deals have involved China's Huawei Technologies Co., Germany's Siemens AG and Finland's Nokia Corp.

Penetration of fixed and mobile telephony combined increased from 4.5% two years ago to about 40% of Pakistan's population of 160 million.

The authorities believe the country has the potential to add 30 million users in the next three years, but telecoms companies say the government needs to do more to encourage the use of mobile phones.

The GSMA Association, representing more than 700 GSM mobile phone operators across 217 countries, and five local telecoms companies are pressing the government to eliminate an activation tax of PKR500 (US$8.3) per connection in the June budget.

"The mobile industry can connect the unconnected in Pakistan, but lowering the cost of entry is essential to do that. The activation tax is significant barrier for people looking to own a mobile phone," said Rob Conway, chief executive officer of the GSMA Association. "Pakistan is a leader in mobile usage in South Asia. The next step is to build on that achievement and how to connect the next 50 million people."

Aziz said the government was working to enhance rural phone usage and to provide basic telecom services to areas where it is lacking. 

http://www.nasdaq.com/aspxcontent/N...CQDJON200703260104DOWJONESDJONLINE000011.htm&


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## Janbaz

*Debt repayments to resume after 5 years *

By Mehtab Haider

ISLAMABAD: Pakistan will soon face serious pressure of foreign loan repayments as the post-9/11 period of Paris Club rescheduling is going to end by May this year.

&#8220;The country&#8217;s fiscal space because of Paris Club debt rescheduling is going to end by May this year, as Islamabad will have to resume loan repayments worth millions of dollars to the creditors after a gap of five years,&#8221; official sources confided to The News here on Monday.

The Paris Club had rescheduled $12.5 billion loan of Islamabad in December 2001 in the aftermath of 9/11 when Musharraf decided to side with the Bush administration in the so-called war on terror. 

The Paris Club loans are in the shape of two components &#8212; Official Development Assistance (ODA) and Non-Official Development Assistance. Pakistan&#8217;s debt rescheduling in the form of non-ODA stands at around $4.4 billion and its installments worth $230 million for 2007 will be resumed from May this year, said the sources. 

The major chunk of Paris Club loan is in the shape of ODA, which stands at two-thirds of the total outstanding amount, added the sources. Islamabad has estimated debt servicing to hover around Rs295.8 billion during the current fiscal year as against the revised amount of Rs304.8 billion in last financial year. 

&#8220;The Paris Club loan repayments on account of non-ODA will not affect us and we can manage it easily,&#8221; added the official sources. Pakistan, the sources said, will have to start repayments of non-ODA from the current fiscal year. However, the rescheduling of ODA loan agreement allows Islamabad to keep enjoying the available fiscal space over the coming years, which consists of a major chunk of the total Paris Club loan obtained by Pakistan, largely on concessionary terms.

When a high-level official in the Economic Affairs Division was contacted for comments, he told this reporter on condition of anonymity that Pakistan has not contacted the Paris Club for seeking any extension in loan repayments as there is no need to do that mainly because Pakistan can easily repay any due loans.

&#8220;There is no need for seeking any extension in loan repayments,&#8221; the official added. Asked for his comments over stagnant reserves position despite piling up of external loans over the last three to four years, the official said there was no need to see external debt in totality but it should be analyzed in terms of external debt to GDP ratio, which was showing a declining trend over the last few years.

Pakistan&#8217;s foreign currency reserves were in the range of over $11 billion in March 2004, which now hover around the same range. However, on the other side, the country&#8217;s external debt reached the level of $38 billion in 2007 against $33 billion a few years back.

While commenting on stagnant reserves and growing external debt, the official said Pakistan&#8217;s economy absorbed two shocks i.e. the earthquake and skyrocketing oil prices. &#8220;These two factors should be kept in mind when analyzing Pakistan&#8217;s economy,&#8221; the official added.

Efforts to get EAD&#8217;s official comment did not meet with success, despite several attempts. The Paris Club is an informal group of official creditors, mostly industrial countries, that seeks solutions for debtor nations facing payment difficulties. The Club creditors agree to reschedule debts due to them. Although the Paris Club has no legal basis, its members agree to a set of rules and principles designed to reach a coordinated agreement on debt rescheduling quickly and efficiently.

This voluntary gathering dates back to 1956, when Argentina agreed to meet its public creditors in Paris. Since then, the Paris Club, and related ad hoc groups, has reached over 400 agreements covering 84 debtor countries. The Paris Club and the IMF have extensive contact, since the Club normally requires countries to have an active Fund-supported program in order to qualify for a rescheduling agreement.

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=48499


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## Janbaz

*Telecom attracts record investment *

ISLAMABAD: President General Pervez Musharraf on Monday said owing to the government&#8217;s prudent economic policies over the last seven years the telecom sector had achieved unprecedented growth and attracted record investment.

He was talking to Chief Executive Officer of GSMA Association Robert G Conway, who called on him here at the Aiwan-e-Sadr. Minister for IT and Telecom Awais Ahmad Leghari and Chairman PTA were also present in the meeting.

The president said Pakistan had become a hub of activity for international and local telecom companies and unprecedented amount of foreign investment flowed into the sector due to well-thought-out telecom policy, which was prepared after intensive discussions and debates involving all stakeholders.

He said Pakistan offered a conducive investment environment and the telecom sector was attracting huge foreign direct investment. The president said he desired to see more development and growth in the telecom sector, which had become one of the most attractive investment sectors during the last few years. 

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=48516


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## Janbaz

*Unprecedented growth in last 7 years, says PM*

ISLAMABAD (APP) - Prime Minister Shaukat Aziz has said the country has witnessed unprecedented growth and development in the last seven years, as a result of the reform agenda implemented by the government that will also ensure continuity of policies to maintain the momentum of growth.
He said this while talking to a delegation led by FPCCI President Tanvir Ahmad Sheikh who called on him here.
The prime minister said the consistency and continuity of the development-oriented policies of the government had changed the economic landscape of the country.
There is vibrancy in economy, liquidity in the markets; we have come out of the low growth, low investment syndrome and the positive trends in the economy will be further consolidated, he said.
He said the size of the economy and per capita income doubled during the last seven years. The 7.5 per cent average growth achieved during the last three years has positioned Pakistan among the fastest growing economies of Asia and provided a solid foundation for continued growth and prosperity of the people, he added. Aziz pointed out that the middle class was growing and demand was increasing both in urban and rural areas as the investment-friendly policies have increased the scope and potential for investment. 
This year higher than targeted growth is expected, as all economic indicators are robust, he said.
Shaukat Aziz said that the government was making efforts to build Pakistan brand and increase competitiveness and productivity of our products. He said the government was taking every step to facilitate the private sector to grow.
It believes in consultation with all the stakeholders on major policy matters and will continue to pursue this policy, he added. 
He said the industrialists and businessmen expressed full confidence in the policies and leadership of President Pervez Musharraf, adding that the reforms undertaken by the government had created unprecedented opportunities for the growth of private sector. 
The delegation said peace and stability were important for the private sector to grow and the consistency and continuity of policies had given a confidence to plan for future. 
The meeting was attended among others by Commerce Minister Humayun Akhtar Khan, Minister for Law and Justice Muhammad Wasi Zafar and senior officials. 

The Nation.
http://www.nation.com.pk/daily/mar-2007/27/bnews2.php


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## Owais

*Pakistan to award mandate for sovereign bond of $1 billion *


KARACHI (updated on: March 27, 2007, 18:53 PST): Pakistan will issue a sovereign offshore bond this fiscal year ending on June 30 and a mandate to manage the transaction will be awarded this week, a senior government official said on Tuesday.

'We have already shortlisted six investment banks and a final decision on the mandate will be made this week,' said Ashfaque Hasan Khan, director general of the Finance Ministry's debt office.

Khan declined to give any names but said the six were shortlisted out of 13 banks that had made presentations for managing the transaction over the past couple of months.

The planned issue will be the country's fourth foray into the international debt market since 2004, when it returned to the arena for the first time since economic sanctions were imposed for conducting nuclear tests in 1998.

Last year Pakistan sold $800 million in a dual-tranche sovereign bond, comprising $500 million in a 10-year issue and $300 million in 30-year paper.

Khan did not give any detail about the type and size of the transaction, saying it would be decided after consultation with the lead managers.

But banking sources said the government was likely to opt for 144A-type paper -- a clause that makes the securities eligible for purchase and trade by institutional US investors -- while the size was likely to be between $800 million and $1 billion.

They said the government was expected to select at least two investment banks to manage the transaction.

The government is also likely to test a different point in the yield curve this time, and thus it may go for a 15- or 20-year issue, analysts and bankers said.

In 2004 Pakistan issued a $500 million, five-year eurobond, while in 2005 it floated a $600 million Islamic bond, also for a five-year term.

brecorder.com


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## Owais

*Banks' foreign exchange dealings limit raised by $100 million *

KARACHI (March 27 2007): The State Bank of Pakistan has enhanced the banking sector's existing foreign exchange dealing capacity by $100 million in order to ultimately permit oil import payments to be met from this forex inflow, instead of SBP's own forex reserves.

In a circular issued on Monday, the SBP said it had enhanced the capacity of the banks to manage increased volume of forex market transactions with the growth in trade volume from 10 to 15 percent of the paid-up capital of each bank.

The existing cap of one billion rupees on banks with higher paid-up capital has been revised to Rs 1.5 billion. This capping is necessary in order to avoid distortions in the Net Open Position (NOP) until the paid-up capital in all the banks is aligned at Rs 8 billion by 2007.

In 1999, the International Monetary Fund (IMF) had recommended fixation of the aggregate forex exposure limit at 20 percent of the paid-up capital. But the SBP had fixed it at 10 percent, with a capping at one billion rupees.

One billion Pak rupees cap at that point permitted the banks to undertake both-way transactions of around $10 million. Later, it was enhanced to $15 million, but the foreign banks were restricted to within $8 million.

Volume enhancement forex dealings will now allow individual bank to meet chunky payments without huge movements in daily rupee-dollar parity. Presently, volatility is checked through SBP intervention. According to informed sources, the current aggregate of NOP's is around $190 million. The enhancement by SBP raises the NOP aggregate to about $290 to $300 million.

Banks such as Standard Charter and the ABN Amro merged with Prime Bank have very large paid-up capital. Without capping at Rs 1.5 billion, their NOP could be 25 percent of the total aggregate. In order to avoid a dominant position to a single player, the capping was considered essential by the central bank.

The following circular was issued by SBP: "Please refer to PE Circular No 12 dated May 29, 1999 in terms of which aggregate Foreign Exchange Exposure Unit of scheduled banks was set as 01% of their Paid-up Capital under which they were asked to conduct their foreign exchange operations.

"To further enhance the capacity of Authorised Dealers in order to manage increased volume of FX Market and to match future demand in the wake of growth in trade volumes, it has been decided to revise the Foreign Exchange Exposure Limit from April 02, 2007. Accordingly, new aggregate Foreign Exchange Exposure Limit of scheduled banks would now be calculated as 15% of their Paid-up Capital with a maximum cap of PKR 1,500 million. The assigned capital required to be maintained by branches of foreign banks in Pakistan under section 13 (3) of Banking Companies Ordinance, 1962 shall be deemed paid up capital for the purpose of this circulation, in the case of banks incorporated in Pakistan the limit would cover all the branches including overseas branches if any. "The guidelines for calculating the exposure limit as conveyed in Para 4 of the aforesaid circular would remain unchanged.

"In case of increase in paid-up capital of a bank it may apply for the enhancement of its exposure limit to the State Bank of Pakistan. "New exposure limits would be advised to each bank individually through separate letters."
http://brecorder.com/index.php?id=543519&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Bank Alfalah deposit reaches Rs.239.5 billion *
KARACHI: Bank Alfalah Limited has posted a gross profit of Rs 3.264 billion during the 2006. 

According to an announcement here Tuesday, bank's deposit on December 31, 2006 grew by 7.7 percent to Rs 239.5 billion compared to Rs 222.3 billion. 

The annual general meeting of the bank which was under the chairmanship Abdullah Khalil Al Mutawa in the absence of H. E. Sheikh Hamdan Bin Mubarak Al-Nahayan, noted that the foreign trade figures stood at Rs 119.9 billion for imports and Rs 70.8 billion for export. 

Similarly, the gross advances accumulated to Rs. 152.2 billion during the period under review. 

The AGM maintained that the bank will continue to invest further in modern banking, which included Islamic banking, SME, home loans and other areas of product development to provide higher levels of services and value to its customers. 
http://geo.tv/geonews/details.asp?id=3961&param=3


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## Neo

*Pakistan set for 7.0 percent growth rate: Asian Development Bank *

ISLAMABAD: March 27, 2007: Pakistan's economy is projected to post a growth rate of about 6.5 percent to 7.0 percent in 2007 and 2008, reflecting some strengthening in agriculture and manufacturing sectors, the Asian Development Bank (ADB) said on Tuesday.

The Pakistani economy is expected to pick up slightly in financial year 2007, the ADB said in its annual 'Asian Development Outlook 2007' report which reviews the recent economic performance of 43 developing countries.

The report noted "strengthening in agriculture and manufacturing" sectors and said that inflation was set to moderate after further tightening of monetary policy.

"The medium-term outlook for the Pakistani economy remains positive, but macro-economic stability has to be maintained and structural issues addressed," it said.

"Pakistan is projected to post a growth rate of about 6.5 percent to 7.0 percent in 2007 and 2008," it said.

Buoyant growth, improved macro-economic fundamentals and strengthened international credit ratings had been the "hallmarks" of Pakistan's economy in recent years, the report said.

However the report noted that the South Asian country's growth rate slowed in 2006 to a "still brisk" 6.6 percent from an average 8.0 percent in the preceding two years, due to bad weather affecting agriculture.

"The robust expansion of the services sector failed to offset the sluggish performance of the agriculture and manufacturing sector," it said.

The report said that the economies of South Asian region grew by 8.7 percent, supported by growth in consumption and investment.

"The region has averaged more than 7.5 percent growth since 2003, allowing it to reduce poverty levels in India, Pakistan and Bangladesh. Every economy in the region posted growth of more than 6.0 percent in 2006, except Nepal, which suffered in the wake of political unrest," it said.

http://brecorder.com/


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## Neo

Tuesday, March 27, 2007 

*PM okays Export Plan Pakistan:*

*Govt plans to increase textile exports to $25b*

* The plan has highlighted that against the total requirement of 12,750 technical graduates in various fields of textile only 7,950 are available and the industry is faced with a shortage of 4,800 graduates

By Sajid Chaudhry

ISLAMABAD: Prime Minister Shaukat Aziz has approved and has directed the implementation of the Export Plan Pakistan for textile and clothing sectors aimed at increasing textile exports from $9.8 billion to $22-$25 billion during 2006-2013, a senior official at the Ministry of Textile Industry told Daily Times on Monday. 

The implementation action plan for textile and clothing sectors include incentives and facilitation measures for human resource development, availability of raw materials, cluster development, energy generation distribution and conservation, setting up of joint ventures, economies of scale, high value addition, setting up of laboratories and marketing plan.

The plan has highlighted that against the total requirement of 12,750 technical graduates in various fields of textile only 7,950 are available and industry is faced with a shortage of 4,800 graduates. The action plan has directed the exporter associations to hire immediately foreign technicians to fill the skill gap. Incentives for this initiative include the government to reimburse 50% of the cost and insurance and exemption from government taxes, including income tax on foreign technicians. 

To meet the acute shortage of trained shop floor manpower in the textile chain, especially for value-added garments and made-ups. The action plan includes provision of incentives for creation of Modal Garment Factories by reputed Chinese garment manufacturers using Chinese management to serve as demonstration projects. Garment training institutes would be established to attract women workforce at the village and town level within one to two years time period. 

It has been pointed out in the plan that know-how for synthetic weaving, processing, dyeing and finishing is limited. To meet this challenge the plan seeks to establish world class training institutes and upgrade existing ones with need based curricula. The government would provide funding to existing universities, collages for their development to international standards. The government would establish steering committee represented by stakeholders for guidance management of this initiative.

The plan points out that right quality and quantity of cotton is not available due to issues such as likely shortage of quantity by 20%, contaminated raw cotton, absence of sufficient varieties of cotton and inadequate supply of ELS, organic and naturally coloured cotton in the country. The action plan seeks to ensure production of contamination free cotton as it increases foreign exchange earnings by 10%-20%. Organic cotton production to be encouraged in the country because it is twice valuable as compared with traditional one. The government to resolve all impediments to ensure widespread cultivation of bio-tech cotton. The Plant Protection Act and Rules would be updated to eliminate non-tariff barriers to import. The government to ensure strict enforcement of provincial cotton standardization Acts for production of standardized clean cotton. 

The plan has highlighted that usage of synthetic filament are nominal in Pakistan. Duties on synthetic material are discouraging its use. The action plan would help consolidation of cotton research facilities and the Pakistan Cotton Committee to be restructured. The government to allow zero rating of all synthetic fibers used in the textile exports. The government is to strengthen synthetic fiber research institutes at Karachi and would establish new institutes at Faisalabad and Lahore. 

The export plan has viewed that textile industry is scattered. It militates against natural synergies to reduce the cost of production and meet environmental standards. Under the action plan, all existing industrial concentrated areas would declared as Industrial Parks under the industrial Cluster Development Program (CDP). Investment in common energy generation and distribution facilities and waste affluent plants through the private sector consortia would be encouraged. The government is to ensure uninterrupted gas supply to industrial parks and an energy conservation program would be augmented to achieve efficiency in energy use and it has been directed to hire international consultants for batter planning and execution of industrial parks. 

In the area of production, the action plan seeks to encourage joint ventures with some internationally reputed textile firms in bleaching, dying, printing, designing and finishing. 

In the area of economies of scale, the action plan directs to provide incentives to facilitate merger companies by way of merger tax credit of 15% on merger asset value. A study to be initiated to ascertain and enforce minimum capital requirements in textile companies within three years.

The EPP has highlighted that capacity of weaving is low and not sufficient to feed installed capacity of dyeing and printing, this results in intra-sectoral imbalance which affects total chain particularly value added sector. To these challenges, the action plan aims at weaving; primarily the unorganized sector would be encouraged to become formal one. This will enhance its productivity and access to institutional financing. Dedicated financing line would be established for weaving at concessionary rates to incentivize investment. To acquire state-of-art weaving technology, a technology up-gradation fund is to be created and size of the fund and modalities of its disbursement would be determined by the textile industry. 

Because of shortage of quality laboratories in the country, the action plan seeks to establish accredited laboratories at common facilities centres. 

The private sector has been asked to identify and transfer or relocation of infrastructure of closing research institutes and laboratories from the Western countries. In the area of marketing, the action plan aims at interaction with internationally known companies, holding of roadshows for investment and development of linkages with France, Italy, and Japan for the establishment of joint ventures with mega buyers and producers. International cotton merchants would be encouraged to establish cotton warehouses in Pakistan. Integrated supply chain warehouses abroad to be established to promote generic advertisement to help companies address marketing challenges. To be competitive, R&D support is needed to produce specialized value-added products to have a chance to go to the upper market and create a niche.

http://www.dailytimes.com.pk/default.asp?page=2007\03\27\story_27-3-2007_pg5_1


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## Neo

Tuesday, March 27, 2007 

*Indo-Pak trade: favour or benefit?*

The Indian foreign minister, Pranab Mukherjee, says India is ready to consider some Ã¢â¬ÅunilateralÃ¢â¬Â steps to address the concerns of Pakistan in order to operationalise the South Asia Free Trade Area (SAFTA). He says Pakistan has been insisting that its trade with India is Ã¢â¬Ånot freeÃ¢â¬Â and therefore it wants to trade on the basis of a Ã¢â¬Åpositive listÃ¢â¬Â of goods. Therefore he thinks India should look into the issues raised about SAFTA by Pakistan and try to remove them Ã¢â¬ÅunilaterallyÃ¢â¬Â, perhaps meaning that India should do so without asking for a quid pro quo.

Mr Mukherjee has also dwelt on the importance of Ã¢â¬ÅconnectivityÃ¢â¬Â between the two countries by air, road and railroad. He pointed to an old problem: the goods of Afghanistan go to India by road (up to the Wahga Border, near Lahore) but no Indian goods can go back to Afghanistan by the same trucks. India has to trade with Afghanistan via Karachi on the Pak-Afghan Transit Trade terms. Clearly the Indian foreign minister wants a road link to Afghanistan.

The above observations are obviously meant to anticipate the coming South Asian Association for Regional Cooperation (SAARC) summit, April 3-4, in New Delhi. India says it will be discussing proposals to boost trade and ease travel restrictions within South Asia. Of course, as usual, attempts will be made to resolve the perennial problem of visa restrictions while the people of South Asia look on in wonderment because such Ã¢â¬ÅremovalsÃ¢â¬Â of restriction take but a bomb blast to be put back in short order.

The Indian foreign minister, who was once IndiaÃ¢â¬â¢s finance minister and knows the trade issue well, wants Pakistan to implement SAFTA and drop its objections to the non-tariff barriers that India has erected to gain competitive advantage and which are seen to be unfair by its neighbours. If he is able to persuade his side to resolve the issue even Ã¢â¬ÅunilaterallyÃ¢â¬Â, this would be a wise step forward. PakistanÃ¢â¬â¢s objections to some of the Indian inputs into production fall in the category of subsidies and must be seen as such. Who will want to trade if it brings nothing but internal economic damage and no advantage?

Outside South Asia, experts wonder at India and PakistanÃ¢â¬â¢s inability to take advantage of each otherÃ¢â¬â¢s proximity and increase the bilateral volume of trade in order to take advantage of low transportation cost. According to them the biggest barriers to trade are political. Because of IndiaÃ¢â¬â¢s market size and central location, 80 percent of intra-regional trade in South Asia is to or from India. All of IndiaÃ¢â¬â¢s neighbours share a concern about being overwhelmed by Indian goods. Ã¢â¬ÅDecades of mutual political hostility and suspicion compound the challenges in trying to build strong trade relations between India and PakistanÃ¢â¬Â.

Significantly, both sides tend to see progress on issues like trade as a Ã¢â¬ËfavourÃ¢â¬â¢ to the other country rather than a benefit to oneÃ¢â¬â¢s own country. Pakistan, moreover, has been reluctant to move too fast toward normalisation of trade and other relations with India lest the issue of Kashmir gets left behind or is sidetracked. But this may no longer be the case as the people in Pakistan have lost the stomach for war with India and wish to rely on normalisation rather than conflict to solve the Kashmir problem. India should now take a close look at what Pakistan really wants and see if the complaint is genuine on the basis of a purely economic argument.

The two sides need to advance quickly on their separate tracks: India must rationalise its unfair competitive advantage in trade with Pakistan; and Pakistan must set aside its residual hesitation about normalisation by removing the conditionality of Ã¢â¬ËKashmir firstÃ¢â¬â¢. It must reform its regional attitude and move towards becoming a Ã¢â¬Ëtrading hubÃ¢â¬â¢ affording road and rail links to Central Asia. It would be far easier for Islamabad to discuss transit trade with India than bilateral trade while India keeps on subsidising the economy to some extent.

On the other side, the mind must be clear about how India wants to reach Central Asian markets. If the idea is to go via Iran by building and using a new port at Chah-Bahar, then talking to Pakistan, as Mr Mukherjee does, about Ã¢â¬ÅconnectivityÃ¢â¬Â is of little use. Of course, one doesnÃ¢â¬â¢t mean that Pakistan should be given a monopoly of transit trade; India must make up its mind over whether it wants to use the Chah-Bahar port as an alternative against Pakistan or as a parallel route that it might need if trade volumes increase in the coming years.

Not trading freely is simply unnatural. India and Pakistan still trade but in a roundabout way through the ports of UAE, increasing the cost and not really benefiting the consumers. But more lethally, the two engage in contraband trade or smuggling to the tune of $2 billion a year. Sadly, so far the attitude on both sides is that of mistrust, with each side waiting for the other to back off. This hasnÃ¢â¬â¢t worked in the past and it will not work in the future. *

http://www.dailytimes.com.pk/default.asp?page=2007\03\27\story_27-3-2007_pg3_1


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## Neo

*ADB plans $200m multi-tranche facility for Pakistan*

27 March 2007 

ISLAMABAD Ã¢â¬â Asian Development Bank (ADB) plans to provide $150-200 million "multi-tranche facility" to help strengthen the country's insurance, pension and savings systems.

Pakistan has formally sought the one time multi-tranche facility from the bank, the initial details of which were reportedly discussed between Prime Minister Shaukat Aziz and ADB Director General Juan Miranda when he visited Pakistan last month.

According to an ADB official, the full details of the loan were still to be worked out but the bank has agreed to offer considerable funding for bringing improvements in the insurance, pension and savings systems.

The government anticipates that new one tranche facility could be up to $200 million. However, the bank has assured that it will initially provide a $3 million technical assistance to fund a study on the issue.

According to the ADB, there are "governance" issues in the pension, insurance and savings systems which needed to be sorted out to make them highly efficient.

Pakistan's pension system at present has been described by the bank as "fragmented" without a central framework for regulation or supervision to encourage retirement savings and protection for beneficiaries. It is, therefore, appropriate to support the development of a policy that will encourage retirement savings through regulations and appropriate incentives. The technical assistance will assess institutional constraints of the National Savings Scheme (NSS) and recommend measures to improve transparency in financial management. It will also assess the merits and feasibility of moving towards a funded scheme managed with a well-conceived investment policy in government securities. It will also support streamlining, modernisation and computerisation of operations already initiated by Central Directorate of National Savings (CDNS).

The bank believes, the financial sector has an important role to play to increase resource mobilisation, improve efficiency of allocation, enhance access to financial products and services, contribute to the sustainability of social safety nets and safeguard economic stability.

Regulation and governance of Pakistan's capital market and the corporate sector, the bank maintained, gained some credibility with the commencement of the Securities & Exchange Commission of Pakistan's (SECP) operations at the beginning of 1999. SECP's role was further enhanced in 1999 when it was assigned regulatory responsibility for private pensions and other non-bank financial institutions including leasing, housing and investment banks. Given the critical importance of SECP for capital and non-bank financial markets, it is important that it has adequate capacity Ã¢â¬â skills, systems, and procedures Ã¢â¬â to effectively discharge its functions.

http://www.khaleejtimes.com/Display...h/business_March725.xml&section=business&col=


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## Janbaz

In post 823 it is said that Pakistan was to achieve 7% growth in the next couple of years. If that is so then will our rankings change globally and will we be amongst the fastest growers? Just a thought!


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## Neo

We already belong to that exclusive club of fastest growing econmies, 7% is good and only a few rise above 8% and we're able to sustain it.

I expect the GDP to grow above the projected 7% due good amount of rain and a bumper wheat and cotton crop and ca 15% growth in LSM. In a few years, probably by the end of the next five year plan 8-10% growth target well be met if the next government doesn't screw up things.


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## Janbaz

*Current account deficit a potential threat: ADB* 
*Outlook report forecasts 6.8pc growth for Pak economy in FY 2007*

By Israr Khan

ISLAMABAD: Despite Pakistan&#8217;s better economic prospects for 2007, the economy would continue to face some potential threats, including growing current account deficit, continuing high inflation and the emerging power and gas shortages, the Asian Development Bank (ADB) reported on Tuesday.

In its Asian Development Outlook (ADO) 2007, the bank has forecast that by end of this fiscal Pakistan would achieve 6.8 percent economic growth on the back of sharp rise in investment last year and moderation in oil prices. The economy&#8217;s main pillar &#8212; agriculture &#8212; would grow by four percent, large-scale manufacturing by 8.6 percent and services sector by more than seven percent in FY 2007, somewhat off last year&#8217;s fast pace.

However, shortages of natural gas and suspension of its supply to a number of industrial units to meet the rising demand for household consumption (because of exceptionally cold weather) will likely depress industrial growth, which along with the ongoing slowdown in exports will dampen the expansion.

The potential risk to economy ÃÂ³ the current account deficit &#8212; is projected to edge up to $6.5 billion or 4.5 percent of GDP in FY 2007. Inflation is expected to decline further but because of the upsurge in food prices and higher prices of raw materials, it is projected at 7 percent, above the central bank&#8217;s target of 6.5 percent.

The bank further says that despite a decrease in the domestic oil price, the petroleum levy will likely continue to yield significant income, as will receipts from the US for logistics support operations for Afghanistan. Current expenditures, though, are expected to exceed the budget estimate, because of expected overruns in the interest payment on domestic debt. On balance, the fiscal deficit is likely to rise to 4.5 percent of GDP in FY2007, coming in at the planned level.

The bank has also warned that any deterioration in the security environment would be another risk to the economy. In addition, the ending in 2008 of China-specific safeguards imposed by the US and EU against textile and clothing imports could further weaken Pakistan&#8217;s textile export prospects. 

The Asian Bank has also pinpointed some important structural challenges, which it says should be tackled promptly to sustain the present growth trend. Despite healthier investment, the investment-to-GDP ratio is still low relative to countries that have experienced sustained strong growth. Even if investment in the country is underestimated, gross capital formation in 2004 was less than half of that in the PRC and about 60 percent of that in India or Thailand. Total factor productivity has improved, but insufficiently either to compensate for low investment or to sustain high growth. Similarly, gross savings as a share of GDP need to pick up substantially.

About the banking sector, the report says: &#8220;Over the last three years, improved business confidence and rising inflows of foreign direct investment (FDI) have buoyed private investment, but negative real interest rates on bank deposits and rising consumer demand have helped push down national savings, further widening the investmentÃÂ±savings gap. 

With a sharp rise in the current account deficit, the contribution of net exports of goods and non-factor services became negative for the first time in 6 years.&#8221; Another structural issue is the narrow industrial base, which is linked to the lack of a diversified export base, which in turn must cope with rising international competition.

Human capital development remains a major structural challenge. Despite the recent rise in pro-poor spending, historical under-investment in human capital has critical implications for growth and competitiveness. Public spending on education was only two percent of GDP in 2004, compared with six percent in Malaysia, four percent in Thailand, and three percent in China and India.

Finally, critical physical infrastructure bottlenecks impede high growth. The government is tackling these structural challenges over the medium term by committing to reform, by strengthening the enabling environment for investment, and by prioritising resource allocation for infrastructure development and the social sectors.

Growth in textiles and clothing, however, is expected to soften, on lower than targeted output of cotton and weakening export demand. The significantly larger public sector development program, reconstruction of earthquake-affected areas, and greater supply of cement will all boost construction output in the outgoing fiscal.

Import growth is set to decelerate in FY 2007, on account of moderation in the oil import bill, weaker demand for consumer durables, and some rundown from an apparent buildup of inventories in FY 2006. Nevertheless, sustained growth and the forecast rise in investment are projected to keep import growth at about 9 percent. 

Exports too will rise, but the high domestic cost of production in the textile and garment sector as well as stiff competition from the People&#8217;s Republic of China (PRC) and India are likely to restrict total export growth to about 8.0 percent.

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=48628


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## Janbaz

*Inflation runs loose from economic managers&#8217; grip* 
*Mismanaged economy leads to price hike of essential commodities available in abundance*

By Mansoor Ahmad

LAHORE: The economic managers seem to have loosened their grip on the economy with prices of ghee, sugar, rice, milk, fruits and vegetables hitting historic peaks in recent months while the industrial sector remained sluggish. 

There is no rationale behind increase in prices of different commodities. Economists are at a loss to find what is driving the rates up. Is it the greed of the entrepreneurs? Or the cost of production has suddenly increased? Is it due to supply-demand gap or flaw in government policy? It seems to be a mixture of all.

Economy is growing at a high rate of seven per cent, but at the expense of consumers. When onion was available in Lahore at Rs50 per kg, it was abundantly available in Rajanpur at Rs12. It was a matter of transferring the vegetable from high supply to deficit region. 

It did happen but under the patronage of hoarders who minted money by controlling release of stocks. The government lacks credible institutions to control hoarding and facilitate prudent distribution of commodities.

Pakistani consumers are paying higher prices of sugar, as the government desires to protect this highly influential industry. The millers have held back payments to the farmers as a safeguard to prevent government&#8217;s efforts to lower sugar rates. Their threat is open and clear if sugar rates fall, there would be no payment to the farmers. This case relates to the absence of government&#8217;s writ. 

Pakistan had adequate basmati rice production last year. The farmers parted with their produce by selling it at government prescribed support price. The rates have doubled as hoarders increased rates on higher export demand. This is case of supply and demand and supply. 

In an effort to open the economy the government has reduced duties on the finished products without bothering to adjust the duty structure for imported raw materials and other inputs for locally produced goods. 

The duties on imported inputs of locally manufactured rubber solution, leather, artificial leather and many other local products are higher than the duty government charges on the imported products. India faced the same situation and rectified it immediately to ensure survival of the local industry. This example relates to irresponsible governance.

Rates of locally produced printing paper used for note books and school books have increased in recent months by Rs8000 per tonne. There is no rationale behind this increase. It is a clear case of excessive profiteering. The inaction on government&#8217;s part cannot be justified. 

Local milk processors have increased the rates of their packs and powdered milk by hefty margin twice in past six months. The government takes action against milk retailers if they increase their rates but overlooks excessive price hike by corporate sector. This shows that government penalizes the weak and patronizes the rich. 

Cooking oil and ghee rates have increased in the local market due to increment in the global rates of edible oils. These rates could be brought down by reducing the government levies on the product that averages Rs23 per kg. The government has not done so indicating its insensitivity towards consumers. 

Some multinationals have been resorting to outsourcing manufacture of shampoo sashay (small 5cc plastic pouch) to Vietnam and other Far East countries. The cost of producing them outside Pakistan should definitely be lesser that prompted the companies to out source them. In this case it is due to higher cost of doing business in Pakistan.

Banking sector of the country is booming. Banks are making hefty profits. They are providing loans at very high rates and are paying nominal mark-up to their depositors. This calls for better regulatory role of the central bank.

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=48629


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## Owais

*Macroeconomic growth buoyant: Asian Bank pinpoints structural challenges *

ISLAMABAD (March 28 2007): The Asian Bank's Annual Development Outlook 2007 has pointed out that a number of structural challenges face Pakistan despite buoyant macroeconomic growth in recent years. The growing current account deficit, continuing high inflation, and the emerging power and gas shortages are potential risks to the country's medium-term economic prospects.

Any deterioration in the security environment would be another. In addition, the ending in 2008 of PRC-specific safeguards were imposed by the US and EU against textile and clothing imports could further weaken Pakistan's textile export prospects.

Despite sound macroeconomic management policies and pursuit of structural reforms in key areas, the report says. Important structural challenges remain and have to be tackled promptly to sustain the present growth trend, it added.

Despite healthier investment, the investment-to-GDP ratio is still low relative to countries that have experienced sustained strong growth. Even if investment in the country is underestimated, gross capital formation in 2004 was less than half of that in the PRC and about 60% of that in India or Thailand. Total factor productivity has improved, but insufficiently either to compensate for low investment or to sustain high growth.

Similarly, gross savings, as a share of GDP needs to pick up substantially. In recent years, the demand-driven growth and negative real interest rates on bank deposits have contributed to low savings.

Another issue is the narrow industrial base, which is linked to the lack of a diversified export base, which in turn must cope with rising international competition.

Human capital development remains a major structural challenge. Despite the recent rise in pro-poor spending, historical under-investment in human capital has critical implications for growth and competitiveness. Public spending on education was only 2.0% of GDP in 2004, compared with 6.0% in Malaysia, 4.0% in Thailand, and 3.0% in the PRC and India. Unsurprisingly, the human development index rating was the lowest among these countries as well.

The government has, however, announced its commitment to increasing education expenditures to 4.0% of GDP. Finally, critical physical infrastructure bottlenecks impede high growth. The government is tackling these structural challenges over the medium term by bringing reform, strengthening the environment for investment, and by prioritising resource allocation for infrastructure development and the social sectors.

The main issue is exports' heavy reliance on textiles as well as limited geographic diversification. Between them, textiles and clothing, cotton, leather, rice, and sports goods account for over three-quarters of total exports - textiles and clothing alone for three fifths. Thus a downturn in these segments has a significant overall impact.

Another issue is that the bulk of Pakistan's trade is with a handful of countries, particularly in Europe and North America. It is expected that the growth in trading volumes in those regions will decline in 2007, hitting Pakistan's exports there.
http://brecorder.com/index.php?id=543866&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*37 percent rise in July-February duty-free imports *

ISLAMABAD (March 28 2007): Duty-free imports during July-February (2006-07) have shown 37 percent increase against the corresponding period of last fiscal year. Sources told Business Recorder on Tuesday that during the period under review major items of duty-free imports included mobile phones and raw materials/inputs of industrial sectors.

Giving a comparison of dutiable and duty-free imports, sources said that dutiable items showed growth of 4 percent during eight months of current fiscal year against last year. Contrary to this, duty-free imports increased considerably in 2006-07.

They said that decrease in customs duty collection in 2006-07 has been witnessed due to massive tariff rationalisation in the last budget. The Board had worked out revenue implications of Rs 6.7 billion due to change in customs duty structure in 2006-07 budget.

The revenue loss of customs duty during the period under review would be compensated by the growth in domestic taxes. The reduced rates of duty on a number of items had encouraged investment, reduced the cost of doing business in many sectors making them internationally competitive. The growth in sales tax and income tax had resulted due to massive tariff rationalisation in the budget.

Meanwhile, CBR analysis has shown that the gross and net collections of customs duties realised during July-December 2006 stood at Rs 68.7 billion and Rs 60.7 billion, respectively. The difference between gross and net collections, amounting to Rs 8 billion, has been paid back as refund/rebate.

The decline by 3.9 percent and 1.2 percent in the gross and net collections of customs duty was mainly due to drop in the volume of dutiable imports by 1.3 percent. Due to shrinking of the base, the customs duty target of Rs 70.9 billion was missed by 14.3 percent during first half of 2006-07.

The growth in imports during previous fiscal year was nearly 35 percent and of dutiable imports 31 percent. This growth dwindled substantially during the first six months of 2006-07. The customs duty target for 2006-07 had assumed 15 percent growth in the value of imports and dutiable imports.

It is estimated that if the current trend continues during the remaining months of current fiscal year, the gap between the target and collection of customs duty would widen to about Rs 20 billion, which needs to be plugged. Considering this changing scenario, the target of customs duty needs revision but without altering the overall revenue target, the report added.
http://brecorder.com/index.php?id=543891&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Portfolio investments up by over $100 million *

KARACHI (March 28 2007): In terms of balances placed under Special Convertible Rupee Accounts (SCRAs), latest data on which were released on March 24, 2007, portfolio investment in Pakistan increased by $100.7 million, to $649.9 million, during the fortnight ended on March 22.

On March 9, the level was estimated at $549.2 million, indicating a net disinvestment of $8 million since March 1, when the level stood lower at $541.3 million. Earlier on, portfolio investment had reached the year-high level of $557.2 million on February 28, including $176 million received during February alone. Between March 9 and 22, the position, except for a couple of minor downward movements, improved consistently to its present level.

Total fresh investments during March so far were around $93 million distributed among USA $78.3 million, the Netherlands $41.2 million, Malaysia $32.9 million, Hong Kong $6.2 million and Kuwait $2.1 million, besides a minor inflow of $0.2 million originating from UAE, partly offset by disinvestments amounting to over $68 million during the same period, effected by Singapore investors (about $27.5 million), Swiss investors (about $20.5 million), UK (over $18 million), and BV Island (about $1.4 million). A few minor disinvestments were recorded in the case of Australia, Luxembourg and Qatar.

Overall, by March 22, the largest investor during FY07 so far was by USA ($454 million) followed by UK ($81.4 million), Singapore ($71.6 million), Malaysia ($33 million), Hong Kong ($29 million) and relatively smaller amounts by Germany, Bahrain and Oman.

Withdrawals of about $61 million by Switzerland, $6.7 million by UAE,, $5.8 million by Australia, $2.2 million by France, $1.7 million by BV Island, $1 million by Luxembourg and smaller amounts by Bahamas, Liberia, Guernsey, Saudi Arabia and Qatar during the year partly neutralised the impact of the above-mentioned inflows.
http://brecorder.com/index.php?id=543899&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Credit Suisse in Pakistan soon *

HONG KONG: Head of the Credit Suisse Asia, Oswald J. Gubel on Tuesday said his company will soon start its operations in Pakistan. Talking to newsmen after a meeting with PM Shaukat Aziz here, he said Pakistan has made tremendous progress in the economic sector and there is a vast scope for international financial associations to invest in the country. He said that Pakistan has very strong fundamentals in the economic sector which are important for foreign investment. 

http://www.thenews.com.pk/daily_detail.asp?id=48649


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## Neo

March 28, 2007 
*Corporates unfold plans to invest $6.4 billion* 

By Dilawar Hussain

KARACHI, March 27: Top twenty companies listed on the Karachi Stock Exchange (ranked by market capitalisation) have already unfolded plans to invest about $6.4 billion in the next four years.

Does that reflect long-term confidence in the country and economy? May be Ã¢â¬â at least up to this point in time. Corporates are probably putting in more money in horizontal and vertical expansion of their units now than in the last five years.

But due to the recent street hullabaloo, investors are biting their finger nails, lest some of those companies decide to put their plans on the hold.

Stock market listed companies are as few as 655 and as everyone knows; two-thirds of them are either dead or dying. So how about the non-listed companies, the figures of which runs over 40,000?Ã¢â¬ÅThe investment intentions of large non-listed corporates (including new foreign investors) are even more impressive,Ã¢â¬Â says Ahsan Chishty, analyst at BMA Capital. Estimates vary from $54 billion to $73 billion over the next 4 years. Some part of those plans was reflected in overseas investment flows during the current calendar year.

Foreign investment has been a significant portion of total investment in FY07, which investors hope to lead to the governmentÃ¢â¬â¢s goal of 7 per cent GDP growth for the current fiscal to end-June 2007.

Foreign direct investment (FDIs), which in July-Feb 2007 period stood at $2,971m against $1,522 million same period last year Ã¢â¬â represented an increase of 95.2pc year-on-year. Domestic investment has also taken a significant leap. Public investment, targeted at close to USD6bn, stood at USD2.4bn in the first six months of the financial year.

Ã¢â¬ÅPrivate domestic investment is harder to gauge given the extent of under-reporting of balance sheets by SMEÃ¢â¬â¢s in the country,Ã¢â¬Â says the analyst.

In the share of fixed investment advances, which constituted 21 per cent of total banking sector stock in September 2006, against 21.6 per cent in December 2005, the fixed investment advances taken by SMEs have remained steady at 1.7 per cent.

An interesting development in the current fiscal year has been the rising incidence of portfolio investment as a percentage of total foreign investment. Since 2001, FDI has constituted almost 89pc of total foreign investment.

In contrast, portfolio investment in the July-Feb FY07 period stood at $1,649 million, representing 35.7 per cent of total foreign investment. But as significant portion of that amount emanates from the Global Depository Receipts (GDRÃ¢â¬â¢s) of OGDC and MCB Bank Ã¢â¬â which aggregate to $900 million, the actual component of Ã¢â¬ËhotÃ¢â¬â¢ money flows was still low at 16.2 per cent of the total foreign investment.

After a dismal 2006, when the KSE provided a pittance of about 3 per cent return on equity investment, stock strategists are confident of a good year (2007) given the low valuations of stocks and alluring emerging markets.

Nothing can be as risky as investing in equities and overseas fund managers would have to be convinced of a greater potential for higher returns in the countryÃ¢â¬â¢s stock markets over their risk perceptions. Prime Minister Shaukat Aziz is at the moment using his banking skills in Hong Kong to lure foreign investors to Pakistan for both business and investment.

Addressing business community at the Hong Kong General Chamber of Commerce he talked about investment friendly and consistent economic policies being pursued by Pakistan and the level-playing field that he said was Ã¢â¬Åavailable for all local and foreign investors in all fieldsÃ¢â¬Â.

One may have no truck with that, but his assertion that per capita income in Pakistan has increased to $846 (which translates to Rs50,760 per head) may have been taken with a pinch of salt by some members sitting at the breakfast table with the PM in Hong Kong on Tuesday morning!

http://www.dawn.com/2007/03/28/ebr1.htm


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## Neo

March 28, 2007 
*Rising inflation multiplying poverty*

By Shahid Iqbal

KARACHI, March 27: Why poverty is rising despite high growth in the country is obvious from the State BankÃ¢â¬â¢s latest report which says that the extent of one-month (February 2007) increase in food inflation is close to five-times of the five-year January-February increase.

This calculation showed that the buying power of poor eroded by the sudden rise in food prices, which is the basic real cause of unchecked multiplying poverty growth.

The SBP issued Ã¢â¬ÅInflation MonitorÃ¢â¬Â on Tuesday which said that year-on-year the CPI inflation rates in February 2007, when compared with the rates in January 2007, showed upward movements in overall inflation as well as in its two broad components of food and non-food inflation.

Ã¢â¬ÅThis is mainly due to an unusually high one-month increase (February over January) in CPI and its components. Overall CPI increased by 1.0 per cent, which is twice the five-year average of January-February increase,Ã¢â¬Â said the SBP report.

It said the increase in one-month non-food inflation is one-third higher than the respective five-year average.

The food inflation rose to 10.0 per cent in February 2007 from 7.5 per cent last year. The food inflation was also higher than January when the food inflation was 8.7 per cent.

January was the only month after August 2006 when the food inflation slipped to single digit but in February it again reached double digits.

The headline CPI inflation though declined to 7.4 per cent in February 2007 on year-on-year (YoY) basis from 8.0 per cent registered in the same month of last year, but rose against 6.6 per cent in January.

The main contributing factor for this rise was food inflation which was 1.3 percentage points more than that of the previous month. Non-food inflation also increased and was recorded at 5.6 per cent.

The increase in YoY inflation is due to a rise in prices of some major food items and some components of fuel & lighting group, specifically electricity charges, said the report.

The contribution of food items in the basket of CPI has been increasing and has gone almost by 45 per cent since last year.

The report said the contribution of food group in overall inflation was 55.4 per cent in February 2007 which was marginally higher than that of January 2007 (1.6 percentage points), but was significantly higher than 38.3 per cent contribution of food during the corresponding month last year.

Like food inflation, non-food inflation also increased from 5.2 per cent in January 2007 to 5.6 per cent in the month of February 2007. This marginal rise in inflation is primarily due to an increase in almost all groups of non-food group including fuel & lighting, apparel, textile & footwear, education, house rent index, household furniture & equipment, transport & communication, cleaning and laundry & personal appearance.

http://www.dawn.com/2007/03/28/ebr4.htm


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## Neo

March 28, 2007 
*EC offers to send technical adviser: Seafood exports to EU*

By Aamir Shafaat Khan

KARACHI, March 27: The European Commission (EC) has offered to provide a technical adviser to the Ministry of Food, Agriculture and Livestock (Minfal) to guide the government on certain corrective measures which can be taken to resume seafood exports to European Union countries.

Ã¢â¬ÅWe are ready to accept the EC offer of an adviser who will be a foreigner,Ã¢â¬Â a senior official in the Minfal told Dawn on Tuesday. He, however, said that the government would first ensure before calling up the foreigner in our land that how maximum the adviser could be helpful in resuming seafood exports to the European countries. The official said the government is yet to fix any specific time-frame in this regard.

PakistanÃ¢â¬â¢s seafood exports suffered a setback when the EC de-listed 11 fish processing plants from exporting seafood to the European countries. The delisting of units came as a result of inspection by the Food and Veterinary Office (FVO) officials of the EC in the last week of January 2007.

The EC had informed the government that no consignment of fish products would be allowed entry to the EU states after April 12.

Ã¢â¬ÅThe Minfal and the Sindh government are jointly making efforts to ensure that the country again starts exporting seafood products within next four to five months,Ã¢â¬Â the official said.

He said a meeting was held on Tuesday with the Sindh government officials and fish exporters in Karachi to review the strategy and discuss as to how deficiencies pinpointed by the EC officials at the processing plants could be overcome. The federal government would remain in touch with the Sindh government till the ban is lifted by the EC, he added.

The official said Pakistan would definitely lose its 20 to 25 per cent share to the EU markets out of its total export of fish and fish products and exporters might not get competitive prices in other countries.

Meanwhile, chairman, Pakistan Seafood Industries Association (PSIA), Mohammad Hanif Khan, said Pakistan might not be fetching the same price as of the EU in other countries.

As far as cuttlefish and squid are concerned, whose landing at the harbour gears momentum in the end of March to end of May, they can be diverted to Far-Eastern markets, but these items would get low prices as compared to high prices offered by the EU buyers.

Similarly, kiddy shrimp, whose peak export season begins from August to October, will remain idle due to ban on EU states. There would virtually be no foreign buyer of kiddy in bulk shipments, besides exporters will be getting low prices as compared to EU in case they make shipments to other countries in low quantities.

He said the EU buyers of Pakistani seafood products are now diverting towards India, Thailand and Bangladesh but they may face problems as exporters of these countries would demand higher prices to cash the situation.

http://www.dawn.com/2007/03/28/ebr3.htm


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## Neo

March 28, 2007 
*PakistanÃ¢â¬â¢s exports to Australia declining*

ISLAMABAD, March 27: Pakistan is steadily losing its export share in the Australian market due to high tariff walls and non-tariff barriers for the past few years, officials told Dawn on Tuesday.

Bilateral trade has not grown much, hovering around half a billion US dollars per annum, with a significant trade deficit, owing to various reasons, particularly high tariffs and NTBs on the products of PakistanÃ¢â¬â¢s export interest.

Official figures, available with Dawn, showed even when the average MFN tariffs are as low as 1.5 per cent and 4.1 per cent for agricultural and non-agricultural products, respectively, Pakistan faced pronounced tariff walls and NTBs on the exportable products.

The applied tariffs on textiles, clothing and footwear are still maintained at 17.5 per cent, which poses a challenge of competition to Pakistani exports against the imports from countries with similar level of socio-economic development indicators but enjoying zero duty and other preferential benefits.

An official said Pakistan had requested Australia in September last to reconsider their preferential scheme to have WTO compatible objective, transparent and non-reciprocal criteria.

The business community has already shown their concern with the stringent sanitary and phyto-sanitary standards in Australian market, thereby affecting export of fruits, vegetables and other agricultural products.

Australia has limited imports of fruits and vegetables from most countries, including Pakistan, due to strict SPS rules and regulations. This restricts market access for Pakistan.

The official said Pakistan has sent draft agreement on cooperation between Pakistan and Australia, which is under consideration of Australian Department of Agriculture. However, reasons for delay in finalisation of the agreement are not clear yet.

In temporary movement of natural persons, it was felt that despite having no country quota for skilled persons, the Australian visa control policy accords equal treatment to all, but less equal to some.

Pakistan had raised these queries at a recently held trade policy review of Australia in Geneva. A list of some written questions has also been submitted to Australia.

Australian tariffs on primary products are considerably lower than on semi-processed goods. Thus, tariff escalation constitutes a potential obstacle for industrialisation of developing countries, including Pakistan.

AustraliaÃ¢â¬â¢s revised offer in Mode 4 of Services is appreciated as one in which efforts have been made to cover developing countriesÃ¢â¬â¢ demands.The coverage states that market access recorded is to the extent of the list of gazetted occupations and their immigration website gives the lists, which include professional services covering most sectors, though not fully, as this is a positive list approach.

However, the requirement of sponsorship, as well as requirement of contract in their revised offer, made during the period under review, lack clarity.

Both ensure that a temporary person has legitimate means of support and someone is responsible for the stay. In other words, a person in the possession of a valid job contract is as good as sponsored or vice versa.

There is a need to explain the difference between a valid job contract that includes terms and conditions, salary package and duration of job and a Ã¢â¬ËsponsorshipÃ¢â¬â¢ in the context of a temporary service provider, added the officer.

http://www.dawn.com/2007/03/28/ebr12.htm


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## Neo

March 28, 2007 
*Inflation and gas, power shortage pose risks: ADB*

By Ihtasham ul Haque

ISLAMABAD, March 27: The growing current account deficit, continuing high inflation, and the emerging power and gas shortages are potential risks to the country's medium-term economic prospects, warns the Asian Development Bank (ADB).

Any deterioration in the security environment would be another danger. In addition, the ending in 2008 of PeopleÃ¢â¬â¢s Republic of ChinaÃ¢â¬â¢s specific safeguards imposed by the US and EU against textile and clothing imports could further weaken Pakistan's textile export prospects, maintains the Asian Development Bank Outlook 2007, issued here on Tuesday.

It says that still important structural challenges remain and have to be tackled promptly to sustain the present growth trend. Despite healthier investment, it notes that the investment-to-GDP ratio is still low in comparison to countries that have experienced sustained strong growth.

Similarly, gross savings as a share of the GDP needs to pick up substantially. In recent years, the demand-driven growth and negative real interest rates on bank deposits have contributed to low savings. Another issue is the narrow industrial base, which is linked to the lack of a diversified export base, which in turn must cope with rising international competition, the outlook notes

It says human capital development remains a major structural challenge. The government is tackling these structural challenges over the medium term by committing to reform, by strengthening the enabling environment for investment, and by prioritising resource allocation for infrastructure development and the social sectors.

About the future economic prospects, the ADP says the prognosis for 2006-07 and 2007-08 is based on assumptions that the authorities will continue, or perhaps strengthen economic reforms of recent years, and they will press on with relieving the macroeconomic stresses that have emerged in the last couple of years.

It is assumed that the central bank will continue its tight monetary policy and pursue a flexible exchange rate policy. Globally, economic growth in the United States and the European Union, the country's two largest trading partners, is assumed to slow somewhat, as is the growth of world trade volume, the report observes.

It says the sharp rise in investment last year and moderation in oil prices are expected to boost growth in 2006-07. However, shortages of natural gas and suspension of its supply to a number of industrial units to meet the rising demand for household consumption (because of exceptionally cold weather) will likely depress industrial growth which, along with the ongoing slowdown in exports, will dampen the expansion.

The report says that agriculture and manufacturing sectors have improved in the first half of 2006-07 and services appear to be growing robustly, but somewhat less quickly than last yearÃ¢â¬â¢s.

With developments to date, the economy is projected to grow by 6.8 per cent in 2006-07, a solid expansion, but essentially unchanged from a year ago. In agriculture, production of the major summer crops in 2006-07 has shown improvement. The higher offtake of fertilizers and a substantial increase in production loans for agriculture, as well as greater availability of water, all augur well for winter crops.

http://www.dawn.com/2007/03/28/top13.htm


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## Neo

Wednesday, March 28, 2007 

*Headline inflation fell to 7.4% in Feb*

By Arshad Hussain

KARACHI: The headline CPI inflation declined to 7.4 percent in February 2007 on a year-on-year (YoY) basis from 8 percent registered in the same month of last year. During January, the inflation was around 6.4 percent.

The countryÃ¢â¬â¢s food inflation has once again touched a double digit to 10 percent in Feb 2007, as compared with 8.7 percent in January, driven mainly by an increase in prices of different types of rice, fruits including kinnow, mausambi and apple.

A report prepared and released by the State Bank of Pakistan (SBP) on Tuesday said: Ã¢â¬ÅThe weight of these items is 4.6 percent of the total food group. Food inflation has been within double-digit range apart from remaining at single digit only during January 2007 since August 2006.Ã¢â¬Â The main contributing factor for this rise in the CPI was food inflation, which was 1.3 percentage points more than that of the previous month.

The headline CPI inflation declined to 7.4 percent in February 2007 on a year-on-year (YoY) basis from 8 percent registered in the same month of last year. During January, the inflation was around 6.4 percent.

The SBP said food inflation rose to 10 percent in February 2007 from 7.5 percent last year, while non-food inflation declined to 5.6 percent in February 2007 from 8.4 percent a year earlier.

The report said eight-month annualized period average rate of CPI also showed a decline in overall inflation during July-February 2006-07, as compared with the same period last year. However, similar to YoY trend in February 2007, period average indicated a rise in food inflation and a fall in non-food inflation.

Year-on-year CPI Inflation rates in February 2007, when compared with rates in January 2007, show upward movements in the overall inflation as well as in its two broad components of food and non-food inflation. This is mainly due to an unusually high one-month increase (February over January) in CPI and its components. Overall, CPI increased by 1 percent, which is twice the five-year average of January-February increase. The extent of one-month increase in food inflation is close to five-times of the five-year January-February increase, the report said.

The SBP said increase in one-month non-food inflation is only one-third higher than the respective five-year average

Core inflation (non-food non-energy) also declined to 5.7 percent in February 2007 from 7.0 percent in February 2006 on YoY basis, while core inflation based on 20% trimmed-mean CPI remained the same during this period. Nevertheless, the declining trend in both measures of core inflation is clearly visible in terms of eight-month annualized period average rates as well as twelve-month moving average rates.

The wholesale price inflation (WPI) declined to 5.1 percent in February 2007 on YoY basis from 9.9 percent in the corresponding month last year. This significant decline in WPI was due to sharp deceleration in non-food inflation during February 2007 compared to the corresponding month of last year. In contrast with CPI and WPI, sensitive price indicator (SPI) increases to 8.8 percent in February 2007 on YoY basis from 7.4 percent in February 2006.

Trend rates of inflation continue to be on a downward direction, although the pace of downtrend remains sluggish. Twelve-month moving average rates in overall CPI and its broad categories of both food and non-food indices share this direction, unlike the YoY and period average rates that showed an upward movement in food inflation, the SBP said. Trend rate in CPI declined to 7.7 percent in February 2007 from 8.9 percent a year earlier.

http://www.dailytimes.com.pk/default.asp?page=2007\03\28\story_28-3-2007_pg5_1


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## Neo

Wednesday, March 28, 2007 

*ADB sees PakistanÃ¢â¬â¢s growth rate at 6.5%-7% in 2007 and 2008*

By Sajid Chaudhry

ISLAMABAD: PakistanÃ¢â¬â¢s economy is projected to post a growth rate of about 6.5% to 7% in 2007 and 2008. The economy is expected to pick up slightly in FY2007, reflecting some strengthening in agriculture and manufacturing. Inflation is set to moderate after a further tightening of monetary policy. Spurred by an expansionary pro-growth fiscal policy, the budget deficit will widen slightly as will the current account deficit.

This has been highlighted in Asian Development Outlook (ADO) 2007 released on Tuesday. The report of Pakistan projects that the prognosis for FY2007 and FY2008 is based on the assumptions that the authorities will continue, or perhaps strengthen, the economic reforms of recent years, and that they will press on with relieving the macroeconomic stresses that have emerged in the last couple of years. It is assumed that the central bank will continue its tight monetary policy and pursue a flexible exchange rate policy. Globally, economic growth in the United States (US) and the European Union (EU), the countryÃ¢â¬â¢s two largest trading partners, is assumed to slow somewhat, as is the growth of world trade volume.

The sharp rise in investment last year and moderation in oil prices are expected to boost growth in FY2007. However, shortages of natural gas and suspension of its supply to a number of industrial units to meet the rising demand for household consumption (because of exceptionally cold weather) will likely depress industrial growth, which along with the ongoing slowdown in exports, will dampen the expansion. Agriculture and manufacturing have improved in the first half of FY2007, and services appear to be growing robustly, but somewhat less quickly than last year.

With developments to date, the economy is projected to grow by 6.8% in FY2007, a solid expansion but essentially unchanged from a year ago. In agriculture, production of the major summer crops in FY2007 has shown improvement. The higher off take of fertilizers and a substantial increase in production loans for agriculture, as well as greater availability of water, all augur well for winter crops. The new package of incentives for livestock, announced in the FY2007 budget, and high prices of livestock products throughout last year, will also boost livestock production. Agriculture is projected to grow by 4.0% in FY2007.

Large-scale manufacturing, which constitutes almost half of the value added in industry, is expected to grow by 8.6%, supported by incentives provided in this yearÃ¢â¬â¢s budget. Growth in textiles and clothing, however, is expected to soften, on lower than targeted output of cotton and weakening export demand. Hydropower generation will be bolstered by greater rainfall and availability of water in the two main water reservoirs. In all, industrial growth should pick up to 8.6%.

In services, rising foreign investment in telecom and privatization of the Pakistan Telecommunication Company last year will help sustain vigorous growth. Strengthened by reforms, privatization, and ongoing mergers and acquisitions, the financial sector is expected to stay lively. It will be further spurred by the planned flotation of new global depository receipts for some financial institutions. However, the growth of wholesale and retail trade will slow because of decelerating exports and imports. Services as a whole is projected to grow by more than 7% in FY2007, somewhat off last yearÃ¢â¬â¢s fast pace.

In FY2008, on the back of the expected continuing strength in services and stable growth in manufacturing, GDP is projected to slow slightly to 6.5%. This is still solid performance but less than the projected 7.6% in the GovernmentÃ¢â¬â¢s Medium-Term Development Framework. The buildup of macroeconomic imbalances and the consequent tight monetary conditions, emerging capacity constraints, infrastructure bottlenecks, and issues of competitiveness in exports of textiles and clothingÃ¢â¬âon which the economy is over dependent are some of the key constraints to reaching the FrameworkÃ¢â¬â¢s target.

Inflation is expected to decline further in FY2007, under the weight of continued tight monetary conditions. After resisting demands for cutting domestic prices of petroleum products for 9 months, the Government finally lowered these prices in January 2007. This will have a damping effect on prices throughout the economy in the coming months, as will the slower monetary growth last year. But, because of the upsurge in food prices and higher prices of raw materials, inflation is projected at 7.0%, above the central bankÃ¢â¬â¢s target of 6.5%. Sustained tight money is likely to take inflation down to 6.5% in FY2008.

With projected strong GDP growth, ongoing tax reforms, extension of the tax net to real estate transactions, and higher tax rates on some financial services in the FY2007 budget, tax receipts are expected to maintain double-digit growth and be above the budget target. Despite a decrease in the domestic oil price, the petroleum levy will likely continue to yield significant income, as will receipts from the US for logistics support operations for Afghanistan. Current expenditures, though, are expected to exceed the budget estimate, because of expected overruns in the interest payment on domestic debt. On balance, the fiscal deficit is likely to rise to 4.5% of GDP in FY2007, coming in at the planned level. 

Import growth is set to decelerate in FY2007, on account of moderation in the oil import bill, weaker demand for consumer durables, and some rundown from an apparent buildup of inventories in FY2006. Nevertheless, sustained growth and the forecast rise in investment are projected to keep import growth at about 9%. Exports too will rise, but the high domestic cost of production in the textile and garment sector as well as stiff competition from the PeopleÃ¢â¬â¢s Republic of China (PRC) and India are likely to restrict total export growth to about 8.0%. The current account deficit is projected to edge up to $6.5 billion, or 4.5% of GDP in FY2007. With the expected stabilization in GDP growth, cooling demand for consumer durables (on higher interest rates), and softening in oil prices, import growth is likely to be moderate in FY2008. As a result, the current account deficit could decline to $6.0 billion, or 3.9%.

In an environment of pro-growth government policies, a continuous increase in the public sector development program, and the projected rise in investment, the medium-term outlook for the economy is positive. Greater trade volumes with countries in the region, including the PRC, will also help. The boom in banking and telecom is likely.

Over the past 5 years, merchandise exports have delivered over 12% average annual growth, as they have benefited from an enabling policy environment, low inflation, the low cost of credit, and general upturn in economic activity. In FY2005 and FY2006, they grew by 16.6% and 15.4%, respectively, but started decelerating in the second half of FY2006, to just over 6.5%, and to 5.0% in the first half of FY2007. Some of the deceleration stems from the high base effect, but the underlying causes appear structural. 

The main issue is exportsÃ¢â¬â¢ heavy reliance on textiles as well as limited geographic diversification. Between them, textiles and clothing, cotton, leather, rice, and sports goods account for over three quarters of total exportsÃ¢â¬âtextiles and clothing alone for three fifths. Thus a downturn in these segments has a significant overall impact.

Conversely, immediately after the ending of quotas, textile exports accelerated strongly, to 16.8% in FY2006 from 6.6% the year before. Increasingly, however, textile exports have come under competitive pressure from 

Bangladesh, PeopleÃ¢â¬â¢s Republic of China, and India, specifically in the higher value-added categories that have traditionally not been a strength of the Pakistani textile sector. This pressure, in turn, has led to a fall in international export prices. Consequently, Pakistani textile exports increased by only 4.3% by value in the first half of FY2007 (Box table). The low expected cotton production in 2007 would further hit textile exports, as will the removal of restrictions on textile exports from the PeopleÃ¢â¬â¢s Republic of China in 2008.

Another issue is that the bulk of PakistanÃ¢â¬â¢s trade is with a handful of countries, particularly in Europe and North America. It is expected that the growth in trading volumes in those regions will decline in 2007, hitting PakistanÃ¢â¬â¢s exports there.

Thus, lack of export diversificationÃ¢â¬âfor products and marketsÃ¢â¬âis the main reason for recent sluggish performance. Trade policy should therefore focus on developing strategies for diversification and enhancing export competitiveness.

Export growth of major commodities to continue, as the policy environment for these sectors is favorable. Foreign hydrocarbons investments in recent years will have an output payoff. Finally, significantly strengthened through reforms and mergers and acquisitions, the banking system is well positioned to better channel savings to productive uses. The growing current account deficit, continuing high inflation, and the emerging power and gas shortages are potential risks to the countryÃ¢â¬â¢s medium-term economic prospects. Any deterioration in the security environment would be another. In addition, the ending in 2008 of PRC-specific safeguards imposed by the US and EU against textile and clothing imports could further weaken PakistanÃ¢â¬â¢s textile export prospects.

http://www.dailytimes.com.pk/default.asp?page=2007\03\28\story_28-3-2007_pg5_2


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## Neo

Wednesday, March 28, 2007 

*Ã¢â¬ËPakistan an economic success storyÃ¢â¬â¢*

NEW YORK: PakistanÃ¢â¬â¢s permanent representative to the United Nations said on Monday that as a result of economic policies and structural reforms over the last few years, there had been a 7 percent growth in PakistanÃ¢â¬â¢s economy, revenue collection had increased and poverty has fallen from 35 percent to 24 percent. 

Ambassador Munir Akram Ã¢â¬â attending a discussion as a keynote speaker on Ã¢â¬ËInside PakistanÃ¢â¬â¢, organised by Pakistani students from the City College of New York and the Pakistani-American Leadership Centre at the Columbia University Ã¢â¬â said that a business could now be established in Pakistan within 24 days. He said that foreign investorsÃ¢â¬â¢ confidence in PakistanÃ¢â¬â¢s economy could be determined from the fact that nearly $3.9 billion had been received as foreign direct investment over the last nine months, and the UAE alone had committed to invest $50 billion in the country over the next five years. Ã¢â¬ÅWe need to expand exports by diversification and value addition,Ã¢â¬Â he added. 

Akram said Pakistan was now the fifth largest country in terms of population, a nuclear weapons state and a strong military power capable of defending its national frontiers. 

He said that women in Pakistan enjoyed representation in all tiers of the government, and referred to recent legislation aimed to remove injustices against women. 

Progress had also been made in education, and efforts were being made to build a moderate, tolerant and progressive Islamic society as envisioned by Quaid-e-Azam, he said. Ã¢â¬ÅWe are an Islamic state, not a theocratic state. We are playing a leading role in the global war on terror,Ã¢â¬Â he said, adding that the Al Qaeda network had been dismantled, and Pakistan was now engaged in dealing with the resurgent Taliban. The Pakistan governmentÃ¢â¬â¢s agreement with tribal elders from North Waziristan Ã¢â¬â essentially an exchange of peace for development Ã¢â¬â was Ã¢â¬Åworking and has brought relative calm to the areaÃ¢â¬Â. 

He said that the surge in Taliban attacks had no connection with the North Waziristan agreement. The ambassador said that while PakistanÃ¢â¬â¢s location provided great economic opportunities, it was also faced with huge challenges, both external and internal. He briefed the audience on the progress made in the Indo-Pak composite dialogue process, citing a number of confidence-building measures agreed by the two. 

Kashmir was the most difficult of the issues, he said, adding that President Gen Pervez Musharraf had floated several ideas to break the deadlock. He was hopeful that the two countries would find a mutually acceptable solution to the dispute. 

Replying to a question about a presidential reference against suspended Chief Justice Iftikhar Mohammed Chaudhry, Akram said that the president had acted according to the constitution, and now the matter was in the hands of the Supreme Judicial Council. He said that Pakistan was concerned over the Tehran-Washington confrontation, and hopes that the problems between the two countries would be resolved through diplomacy. 

http://www.dailytimes.com.pk/default.asp?page=2007\03\28\story_28-3-2007_pg7_13


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## Neo

*Trade deficit projections expanded to $13.4 billion *  

ISLAMABAD (March 29 2007): The government has once again revised trade deficit projections to $13.4 billion against the original target of $9.4 billion set for the current fiscal year.

Official documents, prepared separately by Commerce Ministry and Planning Commission, copies of which are available with Business Recorder, suggest that monetary policy is one of the major reasons behind this soaring trade deficit.

Commerce Ministry, which is apparently being kept away from the decision-making process on monetary policy, has projected imports of $31 billion during the current year.

"If the average trend in July-February 2006-07 remained intact during the coming months of the current fiscal year, imports may reach $31 billion against the projections of $28 billion," Commerce Ministry documents say.

The Planning Commission has expressed serious concerns over the slow growth in exports, which has mainly contributed to high cost of doing business, stiff competition between the competitors over government subsidies and other incentives.

"About $1 billion shortfall is likely in exports against $18.6 billion target for the current year," the Commission anticipated in its documents. The Commission has also expressed apprehension that the current state of exports, high cost of doing business, and some other factors might slacken the GDP growth rate, though only marginally.

The Commission is also of the view that several firms, especially in the textile sector, might be closed down, leading to increase in portfolio of non-performing loans, and their revival would be a costlier proposition.

If the picture remains the same, as the Planning Commission has painted in its documents, Pakistan's share in the international market would further dip and then it would be difficult to recapture it in the future.

While justifying unforeseen growth in imports, Commerce Ministry has argued that Pakistan's economy has been growing at a high rate for the last couple of years, as the GDP growth in 2005-06 was 6.6 percent, with 7 percent projection for 2006-07. The Ministry has further elaborated that with the increase in disposable income, demand for imports would also increase.

"Our imports are inelastic because they consist mainly of machinery, raw material, petroleum products and food items which cannot be curtailed without impacting economic growth and prices. These imports are essential for sustaining economic growth and stabilisation of prices by augmenting the supply position," Commerce Ministry said.

As Pakistan is following a liberal trade regime, in line with the World Trade Organisation (WTO) system, restriction on imports are neither feasible nor beneficial for the economic health of the country, it opines.

Commerce Ministry, which is not being consulted on monetary policies, has made it clear that fiscal, monetary and exchange rate policies are formulated by other ministries and organisations, such as Finance Ministry and State Bank of Pakistan, keeping in view the overall economic position of the country.

http://www.brecorder.com/index.php?id=544234&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Increased foreign debt not to upset debt-GDP ratio: SBP governor *

KARACHI (March 29 2007): The Governor of State Bank of Pakistan, Dr Shamshad Akhtar has said that the increasing government borrowing is not a matter of concern for the economy as it is procured on relaxed conditions and more importantly, not causing any increase in the debt-GDP ratio.

"As long as the debt is cost effective and the debt-to-GDP ratio is not rising, it is not an issue to worry about. Our debt is increasing but the GDP is also increasing, so it is not at all alarming for the economy," she remarked.

Talking to APP, Dr Akhtar said the government, after achieving sufficient fiscal space, went for aggressive public investment program of 7.3 billion dollars, a growth of 32.2 percent in real terms, which constituted 28 percent of the total expenditures.

At the same time, liberal and diversified availability of private sector credit stimulated growth across the board in a number of sectors. The emergence of Pakistan economy as one of the most growing economies of this region is the result of all this development, she added.

She said growing investment and consumption demands and requirements have widened trade deficit, as imports grew by over 35 percent in the preceding two years (FY05-06). While macroeconomic imbalances enhanced demand pressures, they have stimulated economic growth to 7.4 percent on average over FY05-07.

Dr Akhtar stated that a combination of policies and availability of foreign inflows supported by enhanced investor confidence and presence of global liquidity helped manage macro-economic stability. Talking about the impact of the availability of the credit to the private sector and other segments of the economy, the Governor SBP said the private sector credit has grown over Rs 400 billion, creating enormous demand and growth of corporate sector.

http://www.brecorder.com/index.php?id=544240&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'New technologies to soar discoveries rate of oil, gas' *

ISLAMABAD (March 29 2007): Minister of State for Petroleum and Natural Resources, Mir Mohammad Naseer Mengal on Thursday called upon the petroleum engineers and geo-scientists to equip them with latest technologies and advancement emerging on the globe to increase the existing success rate in oil and gas discoveries.

"This would help minimise the expense on exploration and production activities," he said this while addressing the concluding session of a two-day Annual Technical Conference of Society of Petroleum Engineers (SPE) and Pakistan Association of Petroleum Geo-scientists (PAPG) here.

The conference was attended by more than 1000 petroleum engineers and geo-scientists from home and abroad besides heads of geological and petrochemical department of the universities and students.

The Minister said the government has embarked upon an ambitious energy plan to meet the growing energy demand by utilising the untapped hydrocarbon and alternate resources for sustaining the GDP upward trend.

He said the country has still 6,27,000 sq km sedimentary unexplored onshore and offshore area and the geo-scientists and petroleum engineers should employ their best abilities to identify and discover the hidden potential for accelerating the pace of socio-economic uplift.

In his concluding remarks, Chairman, Pakistan Association of Petroleum Geo-Scientists Tariq Khamisani said there was a need to establish "centres of excellence" in this country which can produce top-quality professionals in the fields of petroleum engineering and geology.

Later, the Minister gave away cash awards to students of petroleum engineering belonging to Mehran University and University of Engineering Technology for presenting papers.

http://www.brecorder.com/index.php?id=544318&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*500 MW of electricity to be imported from Iran *

ISLAMABAD: Prime Minister Shaukat Aziz has accorded approval to carrying out a feasibility study for the import of 500 megawatt (MW) of electricity from Iran to cater to the nationÃ¢â¬â¢s increasing energy demands.

The government is likely to enhance the import of electricity from Iran up to 1000 MW over time. The Ministry of Water and Power has convened an important meeting of WapdaÃ¢â¬â¢s top officials on Friday to discuss the nitty-gritty of this major project.

Water and Power Minister Liaquat Jatoi would chair the meeting. Ã¢â¬ÅOut of 500 MW, some electricity may be allocated to Gawadar port,Ã¢â¬Â the official said.

Pakistan has already inked a deal to import 100 MW electricity from Iran at the rate of 6.25 cents per unit. However, Ã¢â¬Åwe are currently importing 39 MW of electricity from Iran at the revised rate of 5 cents per unit for Taftan and Mashkhail ÃÂ³ the border areas of Balochistan.

Ã¢â¬ÅWe have started negotiations with Iran for import of 500 MW more in view of the massive demand of electricity in the duty-free Gwadar Port in the years to come,Ã¢â¬Â sources in Wapda told The News. 

Apart from this, the government is also planning to install a 100 MW power generation plant in Gwadar port. Ã¢â¬ÅWe are vigorously working on this scheme.Ã¢â¬Â 

To a question, the official said that Pakistan had first imported electricity sometime in 2002 at the rate of 3 cents. After the three-year contract, Iran has now raised power tariff by 5 cents per unit.

Ã¢â¬ÅCurrently we are importing 39 MW of electricity exclusively for the border areas of Balochistan where WapdaÃ¢â¬â¢s power transmission and distribution network is not available,Ã¢â¬Â he said.

Ã¢â¬ÅNow we have recently inked the deal to import 100 MW of electricity from Iran for which the ECC has also approved the purchasing rate of 6.25 cents.

The official said that the former WAPDA chairman Lt-Gen (retd) Zulfiqar Ali Khan first visited Iran in July, 2002, to negotiate the tariff rates and ultimately struck a deal for electricity import at 3 cent per unit (Rs1.80 per unit) under the three-year contract. Ã¢â¬ÅAfter the expiry of the contract, the tariff has been revised up to 5 cents.Ã¢â¬Â

http://www.thenews.com.pk/daily_detail.asp?id=48776


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## Neo

*India outpaces Pakistan in boosting cotton yield *

By Mansoor Ahmad

LAHORE: India, using hi-tech cotton research, has increased its cotton production by more than 200 kg per hectare since 1991 while Pakistan during this period could be able to raise cotton production by 54 kg per hectare.

Cotton is the only crop where Pakistan enjoys huge productivity advantage over India. The International Cotton Advisory Committee, in its data, reveals that in 1991 average per hectare yield of cotton in India was 267 kg compared to 615 kg in Pakistan. In 2006, per hectare production of India shot up to 470 kg while Pakistan boosted the yield to 679 kg. This shows that India is rapidly narrowing the production gap with Pakistan.

Presentations made by various cotton research institutes of Pakistan to the spinners and farmers reveal that the main thrust of these institutes is still on developing normal pest-resistant varieties that after a few sowings become vulnerable to pest attack, which can destroy a sizable chunk of the crop.

The data provided by Pakistani scientists reveals that after India Pakistan has the lowest per hectare yield of cotton. Pakistan obtains 679 kg of cotton lint per hectare compared to 1,864 kg in Australia, 1,571 kg in Syria, 1,312 kg in Mexico and 1,289 kg in Turkey.

Cotton crop in Pakistan is cultivated by using normal seeds and biotech cotton has not yet been introduced in the country. India has an area of 3.8 million hectares cultivated with BT cotton.

Indian farmers, according to Dr Yusuf Zafar of PAEC Faisalabad, have additionally benefited to the tune of $463 million by growing biotech cotton as its yield has increased by 46 per cent in the last five years. He said that Pakistan was still in the process of awarding regulatory approval for sowing BT cotton.

However, most of the cotton-growing countries have shifted 30 to 40 per cent of the crop to BT cotton.

The condition of soil in Pakistan is far from satisfactory as it has an adverse impact on all crops including cotton. Director Cotton Research Institute Multan Muhammad Arshad said most of the soil in the country was affected by saline. Shortage of irrigation water leads to more sowing on saline soils while 70 per cent of underground water is marginally fit for irrigation purpose. To tackle the situation, he called for immediate corrective steps to improve the quality of soil.

Cotton scientists and researchers have given a detailed analysis of the current cotton crop situation and its future prospects, saying the local industry would need 20 million bales of cotton by 2020.

There are 10 cotton research institutes and sub-stations operating in Punjab. Except for one or two, most are still conducting research to develop normal seed varieties for cotton.

Comparing cotton yields of different provinces, it becomes evident that cotton yield in Punjab is lower than that of Sindh. In 2006-07, Sindh increased its yield to 895 kg per hectare while Punjab could obtain 689 kg.

As far as research is concerned, the activity to develop normal disease-resistant cotton varieties seems to be very slow as since the year 2000 only three new seed varieties have been released by researchers for cultivation.

In 2006-07, cotton has been sown over 2.951 million acres against the target of 3.25 million acres. Total production is estimated at 12.41 million bales against earlier projection of over 13 million bales.

Despite current gloomy situation, the researchers expect Punjab will produce 16 million bales of cotton by 2014 and its yield will increase from 22 maunds per acre to 33 maunds.

Pakistan made rapid gains in cotton production from 1947 to 1991 during which output increased four times from 160 kg per hectare to 615 kg. After that, the increase in production has been painfully slow.

http://www.thenews.com.pk/daily_detail.asp?id=48781


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## pma_lc120

HI GENTLEMEN.....HOW ARE YOU?????


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## EagleEyes

pma_lc120 said:


> HI GENTLEMEN.....HOW ARE YOU?????



Looks like your new to this. Check the FAQ mate.

https://defence.pk/forums/faq.php

Thanks.


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## Janbaz

*Exports to Switzerland up by 45.5 per cent*

ISLAMABAD (APP) - Pakistan&#8217;s exports to Switzerland grew by 45.5 per cent in 2006 over the previous year after remaining stagnant for the last several years.
Figures compiled by the commerce ministry indicated that exports rose sharply during 2006 to 67 million Swiss francs (CHF) in 2006 from 46 million Swiss francs in 2005. A positive aspect of this growth was manifold increase in export of non-traditional items, private TV channel reported.
These included ethanol, which jumped from Swiss Francs 25,400 in 2005 to Swiss Francs 12 million in 2006, a surge of 47,500 per cent. As a result, Pakistan became the second largest supplier of these products to Switzerland after China.
Textiles remained the largest exports with 50 per cent share, which increased from Swiss Francs 24.9 million in 2005 to Swiss Francs 33.1 million in 2006. Home textiles and clothing (other than knitwear) were the main items. Swiss companies imported these items from Pakistan, selling them in Switzerland and Europe under their own brand names and designs.
Leather items, especially bags and gloves, increased modestly by 5.5 per cent to Swiss Francs 1.9 million, sports goods and footwear, including gaiters and parts, both increased substantially by 72 per cent to Swiss Francs 2.2 million and Swiss Francs 1.2 million, respectively. 

The Nation.
http://www.nation.com.pk/daily/mar-2007/30/bnews7.php


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## Arjun Singh

i think forneigner should invest in pakistan..there is general concept that pakistan is a dangerous country..but the reality is that its not as dangerous as it is portraiyed...


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## Janbaz

Arjun Singh said:


> i think forneigner should invest in pakistan..there is general concept that pakistan is a dangerous country..but the reality is that its not as dangerous as it is portraiyed...



Totally agree with you. The country yes is a bit shaky politically but that should not harrass investors. As they can see the country has experinced tremendous growth over the past few years and is predicted to grow further. The Gwadar port will allow us to dominate over some of the world's most valueable trade routes and with the railway being built with China we are only expected to progress further.:toast:


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## Janbaz

*Indo-Pak trade may touch $9bn* 

By Khalid Mustafa
ISLAMABAD: The trade between India and Pakistan could be as great as US$9 billion against the existing annual trade of $1 billion, the bulk of which is routed through Dubai, in case the existing barriers are lifted. 

The World Bank said this in its special web page that has highlighted the challenges and opportunities for closer regional cooperation in South Asia ahead of the SAARC Heads of State Summit in New Delhi on April 3 to 4. &#8220;Trade between South Asian countries would grow substantially if they just open borders to each other on a genuine Most Favoured Nation (MFN) basis.&#8221; 

The Bank also pinpoints that in the case of India and Pakistan, political tensions virtually closed official international trade between them. The web page also highlights that the cost of trade across borders in South Asia is the highest in the world. &#8220;Intra-regional trade is less than 2 per cent of GDP, compared to more than 20 per cent for East Asia. 

It takes on average more than 33 days to export from South Asia compared to 12 days from OECD countries and more than 46 days to import into South Asia compared to 14 days for OECD. 

Mentioning about the opportunities in the trade, the Bank said: &#8220;Trade within South Asia can be more than double if appropriate regional agreements on roads, rail, air, and shipping are put in place.&#8221; 

About challenges, the Bank says: &#8220;The manufacturing sector in South Asia must become more competitive and grow more rapidly. India&#8217;s and Bangladesh&#8217;s share of industry in GDP is around 20 per cent; in Korea, it&#8217;s 41 per cent; in China, 48 per cent.&#8221; 

More workers could be hired in South Asia&#8217;s manufacturing sector. Employment in Indian manufacturing actually fell between 1996 and 2002. Restrictive labour regulations were the main cause. A high proportion of firms in Sri Lanka hire fewer than 15 workers in order to avoid paying an average of 175 weeks of severance pay to separate workers. 

A substantial share of South Asia&#8217;s labour force is relatively low skilled, living in rural areas, and involved with agricultural activities. For South Asia to successfully shift underemployed workers out of agriculture into higher productivity activities in the manufacturing and services sectors, it will need to make investments to increase both physical and human capital stocks. 

Without the appropriate physical infrastructure, and human skills, the structural transformation of South Asia will be hampered. Growth rates of about 6 per cent per year in South Asia are consistent with maintaining investment rates o f 23-24 per cent of GDP, the average in recent years. However, increasing the region&#8217;s growth rate to 10 per cent will require increasing the investment rate to more than 35 per cent. 

With regard to challenges about infrastructure, it said: &#8220;South Asia ranks the last among all world regions in terms of road density, rail lines, and mobile tele-density per capita.&#8221; 

&#8220;Many of the region&#8217;s competitors have dramatically reduced customs and port clearance times. South Asia risks being left behind. Poor transport and communications still hinder the integration of many rural areas into the wider economy.&#8221; 

Presently, the trucks of one country are not allowed across the border to deliver cargo, with the exception of Nepal, which allows Indian trucks to stay for 72 hours. 

Bilateral or regional arrangements are needed which allow the vehicles of one country to collect/deliver cargo. The special web page maintained that perhaps the most important, but also the most difficult, is negotiation of effective bilateral and multilateral trade and transit agreements. These would facilitate trade in a more diverse range of goods. 

On challenges about water issues in South Asia, the World Bank says: &#8220;The South Asia region is characterised by numerous international river basins, many of which are shared with countries beyond the region.&#8221; 

Cooperation is an important objective that will support growth and peace. Cooperation can yield major benefits from the river including increased irrigated agriculture and hydropower production. 

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=48962


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## Janbaz

*Private sector expects stable growth: survey *

By Mehtab Haider
ISLAMABAD: A survey conducted by state-owned Pakistan Institute of Development Economics (PIDE) reveals that private sector firms expect stable growth in the coming six months but feared inflationary pressures and growing wages to stay.

Vice Chancellor, PIDE, Dr Nadeem Ul Haq, released Business Barometer conducted on the basis of a sample survey during a press conference here on Thursday.

The questionnaire was sent to all the firms listed in the Securities and Exchange Commission of Pakistan (SECP). The respondents were from the banking sector, textile, sugar and allied industries, cement, oil and gas exploration companies, automobile, pharmaceuticals, chemicals, vanaspati, food and personal care products and glass and ceramics.

Answering a query regarding inflationary pressure, Dr Nadeem Ul Haq said monetary policy is directly linked with the prices and growth in money supply needs to be curbed for controlling inflation. On the other side, the government&#8217;s economic wizards believe that constraints in supply chains are fuelling food prices and core inflation has already brought down with the help of monetary policy.

Looking at last six months, the survey says that 59 per cent firms saw stable economic growth while 32 per cent reported slower growth than the previous year. Only 8 per cent of the respondents indicated a faster growth in economy during the survey period.

In terms of their perception regarding the economic growth in the next six months, 73 per cent reported that it will grow at the same pace while only four per cent expected to grow at a faster rate.

When asked their production level, the responses indicate that during July-Dec 2006, 43 per cent had a higher level of production as compared to first half of the same year. While 32 per cent indicated no change in the volume of production and production of 24 per cent firms remained lower than the first half of the year.

For next six months, 65 per cent responded that they expect their production to increase, 32 per cent expected a fall in their production.

In last six months, 45 per cent firms indicated that their sales in the domestic market were higher than the previous half of the year. There are 19 per cent firms which recorded decrease in their sales. However, there is no change in the sale of 33 per cent firms.

Majority of firms (68%) are expecting that their sales will grow in coming six months, 7% expected a fall and 24% expected to remain in the same range. In international market, 40% reported a decrease in their sale, 36% showed increase and 23% reported no change in it. These results are very much in line with the exports figures of the country in last six months.

The inflationary expectations remain robust in coming six months, according to the survey results. About 80% of the respondents indicated that during the last six months the general price level increased as compared to the first half of the current year. There are 12% which reported that it stayed the same while 7% indicated that it declined. For the first half of the year 2007, 75% are anticipating an increase in the general prices, 20% are expecting the same while only 5% are hoping a fall in general prices.

Firms are feeling the price pressure on the input side which is forcing them to raise their own final goods prices. None of the respondents reported a decrease in the prices of their input. 92% firms indicated that their input price increased in the last half of 2006 while 8% reported no change. For the coming six months, 78% expect a rise in the prices of their input, 22% expect to stay at the same. None of the firm expects a fall in the prices of their input.

In keeping up with the inflationary expectations, wage pressures appear to be building up. Neither any of the firms saw a wage decline in the last half of 2006 nor any of them are expecting wages to decline in the coming six months.

Regarding constraints on firm growth, 64% think that insufficient demand of their product is the most important constraint, 57% consider lack of capital as constraints, 54% in shape of skilled workforce, 43% access to credit and 25% access to imports which are hurting their businesses.

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=48966


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## Neo

*Two more ships to anchor at Gadani *

ISLAMABAD (March 30 2007): Two more ships with 35,000 tonnes weight will anchor for breaking at Gadani beach next week. Chairman Gadani ship breaking industry Azam Malik while talking to a private channel said that the industry was suffering slump for last many years but now the bad patch seemed to be replaced by boom referring arrival of five ships for breaking at Gadani within past three months.

http://www.brecorder.com/index.php?id=544694&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Pakistan committed to achieve MDGs: prime minister *

ISLAMABAD: March 30, 2007: Prime Minister Shaukat Aziz Friday reiterating Pakistan's commitment to achieve the Millennium Development Goals (MDGs) said there has been tremendous success in different sectors especially reduction in poverty, improvement of health and educational facilities for the people in the last couple of years.

Addressing the launching ceremony of 3rd Pakistan Millennium Development Goals Report 2006 here at Prime Minister Secretariat, he said, the government is determined to improve social indicators in the shortest possible time.

He said with major achievement by reduction of poverty by ten percentage point from 34 to 24 while there has been progress on all other indicators included in the MDGs.

The prime minister said although the government has taken effective steps in various spheres to meet these goals but there is no room for complacency and more efforts would be made to achieve these goals according to schedule. 

He said more funds would be allocated to achieve these goals through proper and effective implementation of resources. 

The prime minister appreciating the indication of less developed districts and areas in the report stressed upon the provinces and district governments to play a major role in implementing all the programmes envisaged in the MDGS to improve the life of the people. 

Shaukat Aziz said Pakistan is heading in all indicators set by the United Nations for human development in a positive way but there is still need to pay special attention to meet these objectives in the given time-frame with the help of civil society. 

He said sharing of best practices with other countries can also be helpful to produce good results and Pakistan has the capability to adopt new ideas. 

The prime minister said the country's economy has been doubled during the last five years, and expressed the confidence that this year Pakistan will again be in the top growing economies of Asia. 

He said, "The government takes human development indicators seriously and is making all out efforts to ensure equitable distribution of resources with a view to accelerate and sustain the economic growth." 

The prime minister said education and women development play vital role in national development therefore the government has taken different measures in this regard and concentrated on promoting education from primary to higher level besides empowering women to eliminate gender discrimination. 

He said besides legislation to ensure empowerment of women and giving them equal status to prevent them from discrimination, the government has also increased the quota in the jobs for the women. 

Referring to health sector improvements, the prime minister said special attention is being paid on reducing child and mother mortalities besides ensuring provision of best healthcare facilities to the people. 

He said various awareness, prevention and treatment programmes have been launched successfully to control HIV AIDS, Malaria, Hepatitis, TB and other diseases. 

Shaukat Aziz said clean environment is also imperative for sustained socio-economic development therefore the government has launched aggressive programme to ensure clean environment. 

The prime minister said an aggressive population welfare programme has also been launched with an objective to bring down population growth rate and improve health services for the people. 

He said devolution programme and empowering people at the grass roots level has proved to be instrumental in improving the access of basic services to the local communities and resolve their problems besides improving education and health services in the rural areas. 

He said there is a need to prepare aggressive and pro-active policies to advance the social economic, political and cultural causes of people based on the promise of providing implementing and economic opportunities to the people irrespective of gender, cast, creed or region. 

The prime minister expressed the hope that report of MDGs 2006 will act as a spring-board for localising MDGs at the district level by identifying progressive and lagging districts. 

He said the progressive districts can act as good practice districts and serve as models for replicating social services in other districts. 

Shaukat Aziz said, "I am confident that local level empowerment, rising awareness and financial autonomy will go a long way in helping us achieve the MDGs by 2015." 

The prime minister said human development is the most important factor for any government, therefore, the government has been taking measures to improve living standard of the people. 

He said the improvements in education, health, population welfare and water and sanitation sectors are essential for labour productivity and are the important indicators of MDGs. 

Shaukat Aziz said the improvements in access to health, education and basic facilities by low-income households speaks of the government's unflinching commitment to improving the social indicators and living conditions of people across the social spectrum. 

He said special emphasis was being given on other indicators of MDGs including universal primary education especially female education. 

The prime minister said the success in attaining MDGs by 2015 will depend crucially upon following a set of consistent policies, which will continue to promote equitable growth and investment in human capital. 

He said there is need to prepare aggressive and proactive policies to advance the social, economic, political and cultural cause of the people, based on the premise of providing employment and economic opportunities to the people, irrespective of gender, cast, creed or region. 

The prime minister highlighting the co-operation between public and privates sector said, the government, the private sector, the civil society, the development partner should have to work together to steer the process of human development and achieve MDGs. 

Referring to the implementation on the recommendations of UN Reforms Panel, in Pakistan, the prime minister said, UN family is major contribution in the improvement of living conditions of the people. 

Deputy Chairman Planning Commission Dr. Muhammad Akram Sheikh in his speech highlighted the key objectives of the MDGS and future direction to achieve these goals. 

He said out of 34 indicators, Pakistan is heading in seven, it is on the track in 15 and lagging behind in 12 indicators. 

He expressed the confidence that with the implementation medium term development frame work and long term development plans, Pakistan will be able to achieve MDGs by 2015. 

Secretary Planning Commission Zia ur Rehman speaking on the occasion it is third report being prepared by the Planning Commission to highlight the progress made towards MDGs 2015.

He said poverty reduction from 34 to 24 per cent is one of the salient feature of the achievements of MDGs by Pakistan while the government is also giving due consideration on education and health sectors. 

Acting United Nations Resident Co-ordinator Dr. Khalif Bile speaking on the occasion appreciated the progress in MDGs in Pakistan. 

http://www.brecorder.com/


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## Neo

March 30, 2007 
*Govt focusing on US, EU markets: PM: Expo Pakistan inaugurated*

KARACHI, March 29: Prime Minister Shaukat Aziz said here on Thursday that the government was improving communication, infrastructure, reforming investment regulations and facilitating export industry to accelerate economic development in the country.

He said this while inaugurating the third Expo Pakistan 2007 at the Expo Centre on Thursday evening in Karachi, whose main objective is to promote Pakistan's exports and project the country's soft image in the international market.

Later talking to newsmen, the Prime Minister said it was Ã¢â¬Åvery encouragingÃ¢â¬Â that standard of Pakistani products was improving and the country was gaining new markets all over the world.He also visited several stalls set up by the companies representing different sectors of economy and industry.A large number of national manufacturers and exhibitors from seventy countries of the world are participating in the mega event.

Earlier, the Prime Minister inaugurated the show by cutting a ribbon. He was informed that more than 200 Pakistani companies were displaying a wide rang of products at the exhibition.Shaukat Aziz said that production will also be enhanced as country's exports would increase with the passage of time. Ã¢â¬ÅThis will create more jobs and foster prosperity in the country,Ã¢â¬Â he noted.

He said that the government was pursuing a policy of creating market access for Pakistani products in US, European Union and other country for boosting exports.Ã¢â¬ÅWe are also negotiating free trade agreements (FTAs) with different countries. We have concluded FTA with China and other countries to open doors for our goods in these markets,Ã¢â¬Â he opined.He said that the Trade Development Authority of Pakistan (TDAP), the host of Expo Pakistan, was trying to arrange meetings of Pakistani exporters with the foreign buyers so that more products are exported from Pakistan.

He said that private sector has an important role in boosting country's exports as they are the producers of exportable items. Ã¢â¬ÅWe are trying to help them,Ã¢â¬Â he added.

Talking of the various steps taken for improving competitiveness and productivity, Shaukat Aziz said that the government has also improved working at ports and simplified procedures to ensure smooth flow of exports to different destinations and exporters should not feel difficulties.

He pointed out that exports have played a vital role in the development of developed countries. Export will also play a key role in Pakistan's development as well, he added.

http://www.dawn.com/2007/03/30/ebr4.htm


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## Neo

*Current account deficit, GDP growth depends *

KARACHI (March 31 2007): The State Bank of Pakistan (SBP) has projected a current account deficit of 4.5 percent of GDP against the original target of 4.3 percent for the current fiscal year denoting more than $6.5 billion. The deficit for the July-January period was $4.81 billion.

"The current account deficit is projected to widen during FY07 as, despite a sharp fall, growth in imports remains higher than that of exports," SBP said. The second quarterly report 2006-07 issued by the SBP says that it appears that the current account deficit might have peaked, if exports improve even moderately, the declining trend in the current account would continue.

The declining trend in exports persisted through most of July-January FY07 with the exception of the month of November when YoY monthly exports growth jumped. The country's central bank has stressed the need to focus more strongly on strategies to promote exports.

As a direct consequence of the strong aggregate demand as well as some commodity price shocks. Average inflation for FY07 is forecast to remain in the 6.7-7.5 percent range, well above the annual target of 6.5 percent, although still substantially lower relative to the 7.9 percent in the preceding year. Inflation, as measured by the consumer price index, averaged 8.04 percent during July-February from the same period a year earlier. This compared with 8.42 percent in the year ago.

The SBP projections indicate that FY07 real GDP growth is likely to grow in the range of 6.6 - 7.2 percent, close to the annual target of 7.0 percent and above the desired 6.0 percent long-term growth for the economy.

The achievement of the upper bound of the forecast however, would be critically dependent on a strong performance by the large-scale manufacturing and the livestock sub-sector (where investments have increased).

Foreign direct investment (FDI) has risen more than 95 percent to $2.97 billion in the first eight months of 2006/07, led by inflows into the financial, communications and energy sectors, official figures show.

The SBP stressed the need for a focused policy to take advantage of growing investment flows to stimulate industrial growth and diversification, as well as to help remove infrastructure gaps and bottlenecks.

"In particular, agriculture policy will need to focus on encouraging investment for the implementation of large water resource projects as well as improvements in transportation and storage infrastructure," it said.

"Similarly, investment in industry has to be encouraged to support value-addition in textiles, increase agri-product processing and allow the country to diversify production into the medium- and high-end technology products."

While the fiscal deficit is expected to be contained within the annual target, it is significant that the aggregate expenditure growth has been much greater than budgeted, and the growth of the deficit has been contained only due to extraordinarily strong direct tax receipts.

Fortunately, the government is already seeking to explore options to widen the tax net to under taxed areas in to raise the tax-to-GDP ratio. The SBP has said that given the importance of long-term debt markets to support investment, particularly in infrastructure projects, to increase domestic savings, and to improve the risk profile of commercial banks (which currently face mismatches in lending and deposit profiles), Pakistan needs to foster the development of a long-term institutional savings industry (pension and provident funds, mutual funds etc).

Implementation of the capital market reforms, aiming to encourage investment rather than speculation and improving risk management would also improve financial sector stability, it added.

http://www.brecorder.com/index.php?id=544985&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Curtail inflation to boost exports *

KARACHI (March 31 2007): The State Bank of Pakistan has once again emphasised the need for curtailing inflation as it is eroding the competitiveness of Pakistani exports. During last eight months, says SBP, Pakistani rupee versus the US dollar remained broadly stable and depreciated by nominal 0.80 percent.

The Real Effective Exchange Rate (REER), however, appreciated by 2.5 percent due to 5.2 percent growth in relative price index - despite a 2.6 percent depreciation in nominal effective exchange rate, said SBP report, issued on Friday.

This gain in nominal depreciation of the weighted index was offset due to higher inflation in Pakistan compared to its primary trading partners and competitor countries. During July-February FY07 the exchange rate stability was maintained despite SBP shouldering $305 million - up front oil bill per month.

Strong vigilance by the Central Bank prevented speculative attacks or volatility and appreciation that emerged during the course of the year, self corrected itself given the changing inflationary trends in domestic and trading countries, said SBP.

External current account deficit for July-February FY07 is 3.8 percent of GDP as against a target of 4.4 percent with trade deficit close to $6.9 billion. The current account deficit has narrowed from month to month due to facilitation from home remittances and forex inflows of $4.6 billion as against $1.9 billion in the corresponding period a year ago.

SBP expects the inflows to go up further with two commercial bank GDRs, sovereign bond issues and quick disbursing assistance that could cumulatively amount to $1.5 to 2.0 billion.

The fall in import growth, say SBP, is in line with expectations. Lower oil prices and absorption of one-off impact of structural changes such as opening the telecom and auto sectors, the slow down in import growth was expected.

As a result the trade deficit was expected shrink. But due to slower than expected growth in exports the trade deficit continued to widen, albeit at a much slower pace, SBP added.

http://www.brecorder.com/index.php?id=544983&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'GDP growth from 2000-06 stands at 5.6 percent' *

ISLAMABAD (March 31 2007): Pakistan's average GDP growth from 2000-2006 stands at 5.6 percent but to achieve constant economic growth and to bring stability in the growth pattern, governance would be a prime factor. This observation was made during a presentation in a seminar on "Growth Diagnostic in Pakistan" at PIDE on Friday.

The authors Idrees Khwaja, Dr Abdul Qayyum and Asma Hyder noted Pakistan experienced the highest growth of 6.77 percent in 60's. It was 6.45 percent in the 80's and the growth rate of 5.6 percent during 2000-2006 showed some decline. However the average growth from 2003 to 2005-06 is 6.8 percent.

However, to sustain this economic growth and to stabilise its growth pattern, governance is one of the prime factors. According to international competitiveness report, Pakistan is placed at 77th position among 102 countries, each in respect of judicial independence, irregular payments in tax collection and corruption.

In the presentation, M. Idrees Khwaja focused on various factors responsible for growth, and said that the cost of finance, savings, infrastructure, low human capital, macroeconomic environment are at their acceptable levels, while governance, institutions (financial, legal, and labour market) and innovations are below acceptable limits.

The paper written by Dr Abdul Qayyum, M Idrees Khawaja and Asma Hyder noted that the institutional scenario is not very encouraging, as Pakistan is placed at 78th position. Only 15 percent of the Pakistani firms sponsored training of their employees. Besides there exists lot of disparity in the educational systems observing O/A level, Public/Private English medium schools, Urdu medium schools and Madressas, which create social differences and hamper human capital growth.

Similarly, the Innovation criteria is another negative factor, where Pakistan is declared as 94th among 102 nations. Lack of innovation is due to rent seeking behaviour of the industries like seeking subsidies, tariff protection and erstwhile bank loan defaults. Lack of research worsens the situation.

Regarding infrastructure, an important factor of development and economic growth, the authors referred to the Global Competitiveness Report 2006-07. Here Pakistan is rated parallel to India and China with a score of 3.4. However, it is well behind Malaysia, Thailand, Korea, Taiwan and Hong Kong, which are quite ahead with scores of 5.7, 5, 5.1, 5.4, and 6.4 respectively.

It was noted during discussion that post 9/11 era produced high growth due to rapid rise in remittances by the Pakistanis abroad and US financial support (recorded and unrecorded) on account of terrorism and other related challenges.

The participants agreed this was a temporary arrangement, and in a volatile environment, future economic growth is unpredictable. To make it sustainable, a lot has to be done in governance, innovations, and institutionalisation of departments.

In response to a question by this scribe Dr Abdul Qayyum expressed the view that if governance had been good in Pakistan, Pakistan would have benefited much like China and India as the global trends had favoured robust economic growth in Asia. He added that the continuous focus and interest of the developed countries might as well benefit Pakistan, and sustain its growth. Though gross savings were 23.6 percent of GNI the net savings at 15.4 percent, is not a favourable indicator.

The authors referred to a recent study of World Bank, which sees great potential for growth in five major sectors of Pakistan's economy like fisheries, mining, readymade garments, light engineering and dairy. But these face several serious constraints due to high freight, electricity outages, delay in rebate collections, government's involvement in cotton seeds, bribes at the harbour and customs, ill-defined fishing policy, non-transparent leases of marble mines, and poor property rights and short-term leases.

http://www.brecorder.com/index.php?id=545088&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*LSM grows by 9.8 percent in first half *

KARACHI (March 31 2007): Large Scale Manufacturing (LSM) sector growth has recorded 9.8 percent during the first half of the current fiscal year, which is 1.1 percentage point higher than the last year by breaking last year's growth rate of 8.7 percent.

The SBP's quarterly report issued on Friday said that the LSM data of 100 items was not received by the Federal Bureau of Statistics (FBS) after September 2007 to make it possible to assess the industrial performance.

In the absence of any indicators of aggregate manufacturing the following analysis focuses essentially to production trends in individual large scale manufacturing industries, based on limited data received from various industrial associations and committees.

Therefore, this analysis may not be representative of developments in the overall LSM, and it may also not be consistent with the trends reported in the preceding SBP reports. The report said that the LSM data for quarter one and limited information for quarter two of the current fiscal 2007 suggests that the LSM growth is slightly higher the first half of the current fiscal as compared to the corresponding period of last fiscal.

Due to the unavailability of usual data, the analysis is limited to the sugar, automobile, cement, fertiliser, and petroleum products industries (that certainly is not representative of developments in the overall LSM, the report added.

According to the limited available information, the cement industry showed remarkable growth in production during July-December of fiscal year 2007. This was mainly attributed to enhance installed capacity during the last five years and rise in local as well as external demand.

Similarly, the sugar industry recorded 15.5 percent rise in production during the first half of fiscal year 2007 against a fall of 40.5 percent during the same period of the last fiscal. This rise mainly reflects the 15.2 percent increase in the sugarcane harvest during kharif of 2007.

The reports mentioned that the automobile sector recorded a growth of 6.8 percent during July-December, which is significantly lower than the 28.6 percent seen in the same period of the last fiscal and the lowest during the last five years.

This slowdown is largely a result of capacity constraints, slowing demand growth, and imports of used vehicles, the report added. Fertiliser industry is facing capacity constraints due to rapid growth in the production in recent years. The reasons were temporary shutdown of a plant for capacity expansion and revamping, and slowdown in urea demand due to sustained rise in the prices of urea amidst delay in the purchase of fertiliser during July-October 2006 in anticipation of subsidy on non-urea.

As in fertiliser, petroleum production also declined by 6.6 percent in the first six months of the current fiscal year as against a moderate growth of 2.5 percent in the corresponding period of the preceding year.

The slowdown was mainly attributed to the mismatch in production mix and the demand growth patterns. The refining operations produce various products in broadly fixed ratios, the demand growth has centered principally on diesel (as it is cheaper relative to petrol) and furnace oil (as demand for thermal electricity surged following a drop in hydro-electricity production).

The consumption growth of petrol is also weakened due to substitution with CNG. Thus in order to avoid surpluses in other products, refineries chose to operate at lower capacities.

The report said that electricity generation is not part of the LSM but this analysis is based on the information received from FBS. Electricity generation recorded a growth of 9.7 percent during first half as compared with 12.9 percent growth during the same period last year.

Despite high growth, country is facing acute energy shortages, which further augmented due to sustained high growth. In this background, the government of Pakistan has announced a "policy for development of renewable energy for power generation" to overcome the energy shortage in the economy.

Delay in release of usual monthly data set (of about 100 items) on large scale manufacturing by the Federal Bureau of Statistics after September 2007, makes it impossible to assess industrial performance.

The failure to provide timely data is quite troubling, not only for the implications for macroeconomic decision-making but also for the damage to the credibility of the institution and official statistics.

http://www.brecorder.com/index.php?id=545017&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Pakistan should diversify exports to China: KCCI *

KARACHI (March 31 2007): "Traditionally, throughout in its trade relations with China, Pakistan has had a chronic trade deficit. It is primarily because China is a competitor in most of the major sectors of Pakistan's potential export areas." This was stated by Danish Saeed, Chairman of the Special Committee on Regional Economic Affairs, while addressing the meeting of the sub-committee.

He added that after formal signing the Pakistan-China FTA, bilateral trade between the two countries surged by 44 percent over the previous fiscal year. He said that although the bilateral trade has increased but the balance remains overwhelming in China's favour, whose exports to Pakistan amounted to $2.7 billion, compared to Pakistan's exports $464 million in 2005-06, whilst was $525 million and $303 million respectively in 2000-01. This is a very critical situation, which depicts that Pakistan is increasingly becoming only an importing partner of China.

He said that enhancement and diversification of export items from Pakistan to China in the traditional and non-traditional items could lead to narrowing down the trade imbalance by utilising the border routs.

He also expressed grave concern that Pakistani business community is ignoring the exports potential to China and has remained content with their established export destinations ie, US and the Western Europe, and hardly made serious efforts either to diversify the export base or to explore other areas and regions for enhancing the exports volume. This fixed mind-set with the Western markets and non-innovative export approach has constantly been undermining country's export potential, he added.

The participants also noted that China offers huge market for Pakistani rice, fruits and herbal medicines that remain untapped because of inability to meet their standards. Pakistan exports eastern and herbal medicines to China in the raw form through northern land route but these fetch little foreign exchange while Chinese process these raw medicine, value add, package and market them around the world and earn 20 time more.

http://www.brecorder.com/index.php?id=545045&currPageNo=2&query=&search=&term=&supDate=


----------



## Neo

*Doing business becomes easier in Pakistan: World Bank*

31 March 2007 

ISLAMABAD Ã¢â¬â Pakistan has been urged by the World Bank/IFC to direct its Security and Exchange Commission of Pakistan (SECP) to do more to increase compliance with respect to immediate disclosure of large party related transactions, beneficial ownership and control by shareholders and companies.

"More effective enforcement has helped improve compliance", the bank said in a "Doing Business in South Asia 2007" new report released yesterday. It said that access to information about specific transactions by minority shareholders prior to filing a lawsuit can also be strengthened. The burden of proof for holding directors liable is generally high.

"Pakistan needs to strengthen compliance with its rules governing annual general shareholder meetings. Some companies still do not hold them, or hold them in difficult to reach or obscure locations. This is particularly important because the law does not allow voting by mail or electronically". 

Pakistan is runner-up reformer in region, Karachi has the country's most business-friendly regulations. Doing business became easier in Pakistan in 2005-06, the new report by the World Bank and its private sector arm Ã¢â¬â International Finance Corporation (IFC) said. Two reforms in Pakistan reduced the time, cost, and hassle for businesses to comply with legal and administrative requirements. Out of the six major Pakistani cities covered by the report, Karachi has the most business-friendly regulations as measured by the Doing Business reports, while Quetta imposes the most complex and costly administrative barriers. Faisalabad, Lahore, Peshawar, and Sialkot rank in between.

The report compares business regulations in the World Bank's South Asia region with 175 economies around the world. Pakistan, the runner-up reformer in South Asia, implemented reforms to simplify cross-border trade and reduce corporate tax rates. The top ranked countries in the region are the Maldives (53) and Pakistan (74), followed by Bangladesh (88), Sri Lanka (89), Nepal (100), India (134), Bhutan (138), and Afghanistan (162). 

Doing Business in South Asia 2007 is the third report in a series of South Asia regional reports based on the methodology of the annual global Doing Business report. Doing Business tracks a set of regulatory indicators related to business start-up, operation, trade, payment of taxes, and closure by measuring the time and cost associated with various government requirements. It does not track variables such as macroeconomic policy, quality of infrastructure, currency volatility, investor perceptions, or crime rates. This year's report covers six Pakistani cities in four different provinces.

Recent reforms have resulted in a drop in the number of days required to import in Pakistan: from 39 to 19 days. Pakistan now ranks 51st worldwide in time to import, based on a concerted effort to complement trade liberalisation with improved trade logistics. Pakistan also reformed positively in the area of taxation by steadily reducing its corporate tax rate, from 39 per cent in 2004 to 37 per cent in 2005 and 35 per cent in 2006. Like most other countries in the region, Pakistan scores well on the indicators related to starting a business (54th out of 175) and protecting investors (19th out of 175).

"Despite these improvements and recent reforms, Pakistan can do better on the overall ease of doing business", the report said. It finds that the greatest remaining obstacles for the country include enforcing contracts through courts, labour regulations, and paying taxes. For example, it takes 880 days or about 2.5 years in Karachi to resolve a commercial dispute. Despite the reduced tax rate, businesses must still spend about two months per year or 560 hours to comply with all tax regulations. And an employer who is faced with less demand for the products he sells must pay an average of 90 weeks of salary to make a worker redundant.

Different provincial and municipal level regulatory requirements, as well as differences in the implementation of national-level regulations, either enhance or constrain local business activity. This explains, for example, why in Sindh, it only takes six procedures and 50 days to register property, whereas it takes 12 procedures and 96 days in Quetta, with the provinces of Punjab (Faisalabad, Lahore, Sialkot) and NWFP (Peshawar) falling in the middle.

"Provinces can learn from each other in the areas of business regulation where there are important regional variations", the report added. In Lahore, for example, starting a business is easiest; in Peshawar, resolving a commercial dispute through court is easiest; and in Karachi, registering property can serve as best practice.

One of the most interesting findings of the report is how Pakistan could improve significantly if it simply adopted the best practices in business regulation that already exist within the country.

Pakistan could jump from its current position at 74th to 52nd on the Doing Business rankings, said Caralee McLiesh, one of the authors of the report. 

http://www.khaleejtimes.com/Display...h/business_March833.xml&section=business&col=


----------



## Janbaz

*Government to expand microfinance coverage*

OUR STAFF REPORTER
ISLAMABAD - Prime Minister Shaukat Aziz on Saturday said that the government is making all out efforts to expand microfinance coverage and its out reach from the present 1 million to 3 million households by 2010. 
&#8220;Microfinance is an important pillar and integral part of Pakistan&#8217;s poverty reduction strategy and the government is expanding its coverage,&#8221; the prime minister said while talking to Sam Daley Harris, Director Micro Credit Summit Campaign who called on him here.
Aziz maintained that micro-credit is the best way of reaching out the marginalized and the forgotten and can change the destinies of the people of developing and under-developed countries. He said the government is making multiple interventions to cause a dent in poverty. 
As part of our lasting and sustainable poverty reduction strategy, the prime minister said, we are focusing on creating income-generating avenues for the poor and disenfranchised and specially the women through micro credit institutions. 
Aziz said the government has adopted a holistic and all-inclusive strategy for the spread of micro-credit. The government, he said, is promoting public-private partnership and encouraging civil society organizations and enterprising philanthropists to come forward and involve themselves in organizing microfinance credits to the less privileged sections of the society. 
The prime minister said the banks and entrepreneurs should also setup micro finance institutions to help the less privileged sections of society to improve their living standards. 
He said in Pakistan microfinance is poised for growth, as the regulatory environment for Micro Finance Institutions (MFIs) in the country presents all the major features of a conducive and enabling policy environment for MFIs. 
This includes sustained commitment and substantial investment by the government to help develop the sector, a responsive regulatory framework and an apex institution to extend on-lending and institutional building funds to NGO & MFIs. 
He said there is a growing trust between policy makers and practitioners to work jointly to develop the sector. 
Giving an overview of the economic situation, the prime minister said as a result of the efforts made during the last seven years, the economic landscape of the country has completely transformed. The size of economy and per capita income has doubled and poverty declined by 10 percentage points. 
He said the government is acting on a policy of growth with equity. It has undergone a paradigm shift in its approach to planning and policy formulation. The shift is towards formulating people centric plans and policies that benefit the common at the grass roots level. 
He said the thrust on Millennium Development Goals (MDGs) with emphasis on growth and enhanced pro-poor allocations is an important part of the vision 2030 adopted by the government. The government, the Prime Minister said is focusing on eradication of poverty and hunger, universal primary education, gender equality and women empowerment, reduction in child mortality, better maternal health and on ensuring environmental sustainability. He said during the last four years public expenditure on education and health has grown by 21 per cent and 19.5 per cent respectively.
Sam Daley Harris appreciated the efforts made by Pakistan to upscale the outreach of microfinance. 
He said Pakistan is effectively using microfinance for income generation and employment creation opportunities for the deprived sections of the society. 
The meeting was attended among others by Secretary General Finance Nawid Ahsan, Principal Secretary to the Prime Minister Khalid Saeed and senior officials. 

The Nation.
http://www.nation.com.pk/daily/apr-2007/1/bnews2.php


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## Janbaz

*FDI may touch $7 billion mark this year: Dr Shamshad *

RECORDER REPORT 
KARACHI (April 01 2007): State Bank of Pakistan Governor Dr Shamshad Akhtar has said that the influx of foreign direct investment (FDI) is likely to touch $7 billion by the end of the current fiscal year. Addressing a seminar, titled 'Economic Profile of Pakistan', at Karachi Expo Centre.

She said that foreign investors were taking interest in various sectors, particularly the banking and energy. She said that acquisitions of local banks by foreign banks, and GDRs would take the inflow of FDI to $7 billion by the end of this fiscal year and added that Samba group had recently remitted $100 million in connection with the acquisition of Crescent Commercial Bank.

She said that Pakistan was situated at a strategic geographical location in the region, and coupled with structured reforms and macro economic stability the country provided lucrative opportunities to investors. The country provides conducive and friendly environment for both local and foreign investors, she remarked.

The Governor of the central bank also mentioned the facilities and incentives the country is offering to exporters and foreign investors. Dr Shamshad in her keynote speech discussed several facets of Pakistan in its stride towards attracting more FDI. She said that that the government was implementing friendly and open policies to facilitate foreign trade and investment.

Commerce Minister Humayun Akhtar said that "having been only three years since it was implemented the first time, Expo Pakistan has become the leading brand of Pakistan's exports".

He said that he had instructed the newly formed TDAP to register the 'Expo Pakistan' name as a trademark. The conference was also addressed by Salim Raza, CEO of Pakistan Business Council. He spoke on 'Evaluation of Sectoral growth & Investment Opportunities in Pakistan with special reference to export promotion'.

Dr A.R Kemal, Consultant to SBP Governor (Academia Perspective) spoke at length on the potential of FDI in export-oriented manufacturing industries. The gathering was lso addressed by Nasir Vohra, Convenor Banking, APTMA (Business Community Perspective).

Business Recorder.
http://www.brecorder.com/index.php?id=545423&currPageNo=1&query=&search=&term=&supDate=


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## Janbaz

*World Bank likely to assist in FATA development* 

ABDUL QADOOS 
PESHAWAR (April 01 2007): The World Bank is likely to extend assistance in the development of the Federally Administered Tribal Area (FATA) for poverty reduction and bringing the backward parts at par with other developed areas of the country.

This was hinted in a meeting between Paul Wade, Senior Country Economist for poverty reduction and economic management, South Asia, and the officials of the Federation of Pakistan Chambers of Commerce & Industry (FPCCI) here at the zonal office of the apex trade body.

Those present on the occasion were FPCCI vice president Fazal Elahi, president of Industrialists Association, Peshawar (IAP) Nauman Wazir, senior vice president of Tribal Area Chamber of Commerce & Industry (FPCCI) Abdul Hakeem Shinwari, Convenor of Women Chamber of Commerce & Industry (WCCI) NWFP Farah Naz, Faiz Rasool Khan and Riaz Arshad. Regional Chief of Small & Medium Enterprise Development Authority (Smeda) Javid Khattak also attended the meeting.

The trade bodies' officials briefed the World Bank officials about the potential and problems of trade and industry in the province and of the tribal belt. Paul Wade told the businessmen that he would take up the matter with senior World Bank officials in Islamabad as well as in headquarters. "I would talk to World Bank officials and will try to mobilise the management," he said.

However, he added that the Bank would require comprehensive data and survey on the potential sectors and situation in the tribal belt. He said that he was working with NWFP government and Sarhad Chamber of Commerce & Industry (SCCI) for the last six years, and would also work with Tribal Area Chamber for the preparation of a strategy which would be completed within two years.

He said that Tribal Chamber, in collaboration with FPCCI and Smeda, would work out what should be done for the development of tribal area. The World Bank, he said, would analyse the economic growth of NWFP and would hold negotiations with different stakeholders from both public and private sectors to seek their opinion on the improvement of business environment in the province.

He said that the bank would also conduct a survey of different sectors of the province to look into their contributions towards economic development. He said that the bank was also looking to form a working group comprising key sectors, stakeholders from private sector and concerned government organisation.

The World Bank official was appreciative of the measures taken by the provincial government for economic development and giving more space for private sector.

Business Recorder.
http://www.brecorder.com/index.php?id=545464&currPageNo=1&query=&search=&term=&supDate=


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## Janbaz

*'Rs 200 million biotechnology project being launched' *

RECORDER REPORT 
LAHORE (April 01 2007): Punjab Minister for Agriculture Arshad Khan Lodhi has disclosed that a biotechnology project worth of Rs 200 million has been launched to develop new varieties of crops having maximum per acre yield. These varieties would be free from disease also, he added.

The minister was talking to a four-member delegation of agri-scientists of Ayub Research Institute at his office on Friday, said a departmental spokesman. The minister said that with active utilisation of biotechnology the new varieties, earlier took 10 to 15 years time to develop, could now be brought out in a short time.

The minister disclosed that two new improved variety of cotton and three new varieties of wheat were soon going to be developed and the formal approval would be granted in a meeting of Punjab Seed Council in near future.

The Punjab government is striving hard to feed the rapidly increasing population through the introduction of newest agro-based technology and help increasing per acre yield so that the farmers can get more profits. He expressed his satisfaction over that the progressive farmers for producing the wheat yield of 60 to 70 maunds per acre. He said that we were proud of those farmers who were getting maximum yield of every crop. He advised the farmers to get benefit from the expertise of the agriculture department for increasing yield.

Business Recorder.
http://www.brecorder.com/index.php?id=545527&currPageNo=1&query=&search=&term=&supDate=


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## Janbaz

*Rs 15 billion gas projects being completed in Punjab, NWFP: Jadoon *

ISLAMABAD (April 01 2007): Minister for Petroleum and Natural Resources, Amanullah Khan Jadoon said on Saturday that gas projects worth Rs 15 billion were being completed by Sui Northern Gas Pipelines Limited (SNGPL) in Punjab and NWFP.

Presiding over a high level meeting here to review goals and targets set by the government in the gas sector, he said these projects, when completed, would usher in an era of rapid economic development in the country.

The minister said on the directives of President General Pervez Musharraf and Prime Minister Shaukat Aziz, the government was taking concrete steps to provide gas facility to every nook and corner of the country.

He said provision of gas facility in difficult and high mountain areas was a dream for the people of Murree which had come true by the strenuous efforts of the government which completed the gigantic task at a cost of Rs 800 million.

Amanullah Jadoon said all out efforts were being made to provide gas facility to quake affected areas at a cost of Rs 3.5 billion in shortest possible time. Managing Director, SNGPL Rashid Lone briefed the meeting about gas development projects being undertaken by the company.

He informed that work on 703 gas projects in the province of Punjab and NWFP was in progress. He said that 16 inches diameter gas pipeline had been laid from Hattar to Abbottabad costing to Rs 8 billion. The meeting was also attended by the Additional Secretary Petroleum, Shaukat Hayat Durrani, Director General (Gas), Saeedullah Shah and senior officials of the Ministry and Sui Northern Gas Company.

Business Recorder.
http://www.brecorder.com/index.php?id=545534&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*OGDCL and NBP among world's 2000 high performers *

LAHORE (April 01 2007): Two Pakistani companies have been included in 2000 high performing companies in the world for faring well in terms of turnover, profits, assets and market value. According to 'Global 2000' ranking released by American magazine, "Forbes," this week, the companies included in the list are Oil and Gas Development Company Limited (OGDCL) and National Bank of Pakistan (NBP).

Forbes Global 2000 enlists world's largest companies based on composite ranking of sales, profits, assets and market value. Most of the high-ranking companies belong to the United States with Citigroup on the top of the table.

http://www.brecorder.com/index.php?id=545456&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Pakistan, China to enter Transit Trade Agreement *

By Khalid Mustafa

ISLAMABAD: Pakistan and China are to kick off parleys for joint study to enter into Transit Trade Agreement (TTA), on April 10-12 in Beijing besides initiating talks for FTA in services sector. 

Under the TTA both the countries would be able to use each otherÃ¢â¬â¢s territory for transit of their goods for export to other countries. Both the sides will discuss the entry and exit points, mode of transportation of goods and security of containers under customs procedures. For this particular purpose, both the countries would carry out study on Transit Trade Agreement. 

Pakistan wants to grab the Central Asian markets by using the transit route of China and in return Beijing would be allowed to use Gwadar port and Karachi port for export of its goods to other countries. 

Both the countries have taken this initiative after the Quadrilateral Transit Trade Agreement (QTTA) signed in 2004 between Pakistan, China, Kyrgyzstan and Kazakhstan. 

Since the initiation of trade under QTTA, only 8 trucks have been passed on through PakistanÃ¢â¬â¢s territory. He highlighted as to why the trade under QTTA could not pick up mentioning the irritant, which include visa and quarantine issues. Keeping in view the no progress in trade under QTTA, both Pakistan and China have decided to enter into bilateral Transit Trade Agreement. 

Ã¢â¬ÅThis will be the second Transit Trade Agreement which Islamabad would enter, as Pakistan and Afghanistan have already had Pak-Afghan Transit Trade Agreement (ATTA).Ã¢â¬Â 

Pakistan and Afghanistan signed the Afghan Transit Trade Agreement in 1965. According to the agreement, the goods can be transited through only two land routes ie Peshawar-Torkham and Chaman-Spin Baldakh. Now both the countries are pondering to revise the Transit Trade Agreement, as such agreement needs to be revised after every 10 years, but the existing ATTA is operational since 1965.

http://www.thenews.com.pk/daily_detail.asp?id=49227


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## Neo

*Exporters ignore Chinese market *

KARACHI: Traditionally, throughout in its trade relations with China, Pakistan has had a chronic trade deficit. It is primarily because China is a competitor in most of the major sectors of PakistanÃ¢â¬â¢s potential export area, said Danish Saeed, Chairman of the Special Committee on Regional Economic Affairs. He was addressing a meeting of the committee at the Karachi Chamber of Commerce and Industry. Saeed added that after formal signing of Pakistan-China FTA, *bilateral trade between the two countries surged by 44pc *in the previous fiscal year. But the balance remains overwhelmingly in ChinaÃ¢â¬â¢s favour, whose *exports to Pakistan amounted to $2.7bn, compared to PakistanÃ¢â¬â¢s exports worth $464m in 2005-06.* Ã¢â¬ÅThis is a very critical situation, which shows that Pakistan is increasingly becoming an importing partner of China.Ã¢â¬Â He expressed grave concern that business community is ignoring the export potential to China and focusing on its established export destinations ie US and Western Europe.

http://www.thenews.com.pk/daily_detail.asp?id=49250


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## Neo

Sunday, April 01, 2007 

*Pakistan unlikely to give India Ã¢â¬Ëmost favoured nationÃ¢â¬â¢ status*

By Sajjad Malik 

ISLAMABAD: Pakistan is unlikely to grant Ã¢â¬Ëmost favoured nation (MFN)Ã¢â¬â¢ status or other trade-related concessions to India under the South Asia Free Trade Agreement (SAFTA) during the 14th SAARC summit in India on April 3-4, sources told Daily Times. 

The sources said that although trade talks would be central to the summit, the dream of a free-trade area would continue to remain hostage to the rivalry between Pakistan and India for the foreseeable future, as Pakistan had made it clear that trade depended on the resolution of outstanding issues. 

Ã¢â¬ÅBut as a face saver, Pakistan will never say at the SAARC forum that progress on SAFMA should be linked to progress on the core issues, including Kashmir,Ã¢â¬Â said the sources, adding that Pakistan had been discreetly exploiting various technical issues to withhold the MFN status for India. 

When Daily Times asked an official about PakistanÃ¢â¬â¢s obligations under SAFTA and its comparison with the signing of a free-trade agreement with China, he said, Ã¢â¬ÅNo SAFTA and MFN status for India, as Pakistan would suffer. No comparison with the agreement signed with China, as it does not make things that can compel us culturally to buy. The Indians can use airwaves to change consumer patterns. Secondly, China is not a strategic competitor.Ã¢â¬Â 

The sources said that IndiaÃ¢â¬â¢s non-tariff barriers, hidden levies and surcharges had been helping Pakistan confront its assertions. India has one of the most secretive non-tariff barriers, and many countries, including the US, have already sued it at the WTO, they said. 

SAFTA came into force on July 1, 2005, and aims to establish free-trade areas by 2015. So far, tariffs have been reduced twice among the SAARC members, and a third cut in rates will take place on July 1. Where other countries apply across-the-board tariff cuts, Pakistan only reduces taxes on a list of 1,074 items from India. 

The sources said that IndiaÃ¢â¬â¢s efforts to bring Pakistan into a trading arrangement to blunt political issues would certainly fail, but Pakistan had apparently no objections to easing travel restrictions. 

Ã¢â¬ÅAn important agenda item of SAARC would be multi-model transportation across the region, which would facilitate road, air and rail links, and Pakistan has shown willingness to hold talks on it,Ã¢â¬Â they said.

http://www.dailytimes.com.pk/default.asp?page=2007\04\01\story_1-4-2007_pg7_25


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## Neo

Sunday, April 01, 2007 

*Microfinance integral to Pakistan&#8217;s poverty reduction strategy, says Shaukat Aziz*

ISLAMABAD: Prime Minister Shaukat Aziz has said that microfinance is an integral part of Pakistan&#8217;s poverty reduction strategy, and that the government is making all out efforts to expand this programme from the present 1 million to 3 million households by 2010.

Talking to Micro-Credit Summit Campaign Director Sam Daley Harris, who called on him here on Saturday, the prime minister said that micro-credit was the best way to reach out to the marginalised and could change the destinies of people in developing and underdeveloped countries.

&#8220;The government is making multiple interventions to reduce poverty. We are focusing on creating income-generating avenues for the poor and the disenfranchised, especially women, through micro-credit institutions,&#8221; said Aziz.

The prime minister said the government was promoting public-private partnerships and encouraging civil society organisations and enterprising philanthropists to organise microfinance for the society&#8217;s less privileged sections.

He said Pakistan&#8217;s regulatory environment presented all the major features of an encouraging policy environment for microfinance institutions (MFIs), including the government&#8217;s sustained commitment and substantial investment to help develop the sector, a responsive regulatory framework and an apex institution to extend on-lending and institutional building funds to NGOs and MFIs. There is a growing trust between policy makers and practitioners to work jointly to develop the sector, he added. 

http://www.dailytimes.com.pk/default.asp?page=2007\04\01\story_1-4-2007_pg7_16

*Microfinance important pillar, integral part of Pakistan`s poverty reduction strategy: PM Aziz *
Sunday April 01, 2007

ISLAMABAD: Prime Minister Shaukat Aziz has said that microfinance is an important pillar and integral part of Pakistan`s poverty reduction strategy and the government is making all out efforts to expand its coverage and out reach from the present 1 million to 3 million households by 2010. 
The Prime Minister was talking to Mr. Sam Daley Harris, Director Micro Credit Summit Campaign who called on him here on Saturday 

"Micro-credit is the best way of reaching out the marginalized and the forgotten and can change the destinies of the people of developing and under developed countries", the Prime Minister said. 

The Prime Minister said the government is making multiple interventions to cause a dent in poverty. As part of our lasting and sustainable poverty reduction strategy, the Prime Minister said, we are focusing on creating income-generating avenues for the poor and disenfranchised and specially the women through micro credit institutions. 

The Prime Minister said the government has adopted a holistic and all-inclusive strategy for the spread of micro-credit. The government, he said, is promoting public-private partnership and encouraging civil society organizations and enterprising philanthropists to come forward and involve themselves in organizing microfinance credits to the less privileged sections of society. 

He said the banks and entrepreneurs should also setup micro finance institutions to help the less privileged sections of society improve their living standards. 

He said in Pakistan microfinance is poised for growth, as the regulatory environment for Micro Finance Institutions (MFIs) in the country presents all the major features of a conducive and enabling policy environment for MFIs. This includes sustained commitment and substantial investment by the government to help develop the sector, a responsive regulatory framework and an apex institution to extend on-lending and institutional building funds to NGO & MFIs . He said there is a growing trust between policy makers and practitioners to work jointly to develop the sector. 

Giving an overview of the economic situation the Prime Minister said as a result of the efforts made during the last seven years, the economic landscape of the country has completely transformed. The size of economy and per capital income has doubled and poverty has declined by 10 percentage points. 

He said the government is acting on a policy of growth with equity. It has undergone a paradigm shift in its approach to planning and policy formulation. The shift is towards formulating people centric- plans and policies that benefit the common at the grass roots level. 

He said the thrust on Millennium Development Goals (MDGs) with emphasis on growth and enhanced pro poor allocations is an important part of the vision 2030 adopted by the government. The government, the Prime Minister said is focusing on eradication of poverty and hunger, universal primary education, gender equality and women empowerment, reduction in child mortality, better maternal health and on ensuring environmental sustainability. 

He said during the last four years public expenditure on education and health has grown by 21% and 19.5% respectively. 

Mr. Sam Daley Harris appreciated the efforts made by Pakistan to upscale the outreach of microfinance. 

He said Pakistan is effectively using microfinance for income generation and employment creation opportunities for the deprived sections of the society. 

The meeting was attended among others Secretary General Finance, Mr. Nawid Ahsan, Principal Secretary to the Prime Minister Mr. Khalid Saeed and senior officials. 

http://www.paktribune.com/news/index.shtml?173790


----------



## Owais

*EXPO to signify national progress: Humayun *
KARACHI: Federal Minister for Commerce, Humayun Akhtar Khan has said that the objective of EXPO Pakistan 2007 was to introduce foreign investors and businessmen with progress in Pakistan. 

He was speaking at a banquet hosted by Sindh Governor Dr. Ishrat ul Ebad Khan in the honour of foreign delegates here. 

Humayun Akhtar said: &#8220; We want to inform the world about changing life of the people in Pakistan.&#8221; Amid the event seminars would also held to underline economic profile of the country, he said. 

Akhtar said that the visit of Pakistan would definitely change views of newcomers about the country and its people. 
http://www.geo.tv/geonews/details.asp?id=4116&param=3


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## Janbaz

*Domestic debt up by Rs85.150 billion*

ZAMIR SHEIKH
KARACHI - The domestic debt has increased by Rs 85.150 billion during the current fiscal year. The domestic debt which stood at Rs 2.384 trillion during June 30, 2006 to Jan 07 against Rs 2.299 trillion during the same corresponding period of the last fiscal, showing upward trend to the tune of Rs 85.150 billion.
In percentage, the domestic debt had shown 3.69 per cent increase in seven months of the current financial year. In foreign exchange, the growth in domestic debt is higher by over $ 1 billion from July-January 2007. 
The domestic debt comprises three major categories; permanent debt, floating debt and unfunded debt.
The permanent debt consists market loans, federal government bonds, income tax bonds, government bonds, special government bonds for SLIC (Original), special government bonds for SLIC (capitalization), bearer national funds bonds (BNFB), special national fund bonds, government bonds (issued to HBL for settlement of CBR refund), federal investment bonds (auction), federal investment bonds (TAP), Pakistan investment bonds (PIBs) and prize bonds. The floating debt that was registered at Rs982.70 billion in 30 June2006 to Jan 07 against Rs940.23 billion during the comparable corresponding period depicting an increase of Rs42.472 billion. The unfunded debt consisted of defence saving certificates, national deposit certificates, khas deposit certificates, special saving certificates (Reg), special saving certificates (bearer), regular income certificates, bahbood saving certificates, khas deposit accounts, saving accounts, special saving accounts, mahana amdani accounts, pensioner&#8217;s benefit accounts, postal life insurance and GP funds.
The unfunded debt which was recorded at Rs 887.714 billion during June 30 2006-Jan 07 against Rs 859.16 billion during the same last correspond period showed an increase of Rs 28.552 billion.
The federal government moped up Rs 14.177 billion through issue of Special Saving Certificates during June 30, 2006-Jan 2007 as compared to Rs 13.984 billion during the corresponding period of last fiscal, showing an increase of Rs1.938 million.
The Federal government wants to maintain domestic debt within the prescribed limit in the current budget. In the past the annual growth of domestic debt had been around 10 per cent, but it had now dropped to below five per cent. 

The Nation.
http://www.nation.com.pk/daily/apr-2007/3/bnews3.php


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## Janbaz

*Pak-China bilateral trade volume may hits $15 billion* 

RAWALPINDI (updated on: April 02, 2007, 23:27 PST): President Pervez Musharraf on Monday expressed the hope that the volume of bilateral trade between Pakistan and China will reach $15 billion from the existing $5 billion after the signing of a free trade agreement (FTA).

He was talking to Chinese Foreign Minister Li Zhaoxing who called on him here.

The president said Pakistan-China friendship is all weather and time tested and expressed the hope that it will further flourish with the passage of time.

He particularly referred to Gwadar port project and the production of latest fighter aircraft JF-17 Thunder as a shining example of strong Pakistan-China friendship.

The president conferred Hilal-e-Pakistan on Chinese Foreign Minister in recognition of his services for promoting Pakistan-China relations.

The Chinese foreign minister said China is proud of having a friend like Pakistan. He said multifaceted co-operation with Pakistan will continue in future as well.


http://www.brecorder.com/


----------



## Neo

*IMF rates Pakistan after India on budget openness *

ISLAMABAD (April 03 2007): Pakistan stands next to India in the region on open budget index prepared by the IMF to rate countries on how open their budgget books are to the citizens Pakistan, India and Sri Lanka scored 51, 52 and 47 percentage points respectively and achieved while Bangladesh scored 40 percent. However, UK scored 88 percent and USA scored 81 percent.

The IMF Budget Transparency and Accountability provides minimal, some, substantial and extensive rating on percentage of scores a country achieves out of 100. Pakistan and India have been bracketed in "some" category while Britain and US in the "extensive" category.

The index evaluated the quality of information provided to the citizens in the seven key budget documents including pre-budget statement, executive budget proposal, citizens' budget, in-year reports, mid-year review, year-end review, auditors report that all government should enable public during the course.

Pakistan's performance indicates that the government provides citizens with some information on the central government's budget and financial activities, but there is much room for improvement.

The executive budget proposal is one of the most important documents released during the budget year. Pakistan's proposal provides some information to the public, scoring 59 percent out of 100 percent information needed to present the public with a comprehensive picture of the government's financial activity. This suggests that there is substantial room for improvement.

The IMF suggest in its new imitative that "Pakistan should report to citizens regularly during the budget year on their spending, revenue collection and borrowing in yearly reports. Pakistan provides some information in its in-year reports, but it would greatly strengthen public accountability by publishing more comprehensive in-year reports as well as mid-year reviews".

This document provides the public with updates on what can be expected for 'some' in rating during the second half of the budget year. A year-end report by the executive is released in a timely manner, but lacks some details needed to facilitate comparisons between enacted levels and actual outcomes.

While Pakistan does make its audit report public, it does not provide any information on whether the audit report's recommendations are successfully implemented. Citizens require both accesses to information, and opportunities during the consideration of the budget to use that information to ensure their informed participation in budget debates.

Pakistan's score on the Open Budget Index suggests that the public's access to information could be improved. The researcher also found that opportunities for citizen participation could be increased. For example, the legislature does hold public hearings on the budget-but there are no hearings in which the public can participate.

Research to complete the open Budget Questionnaire was undertaken by: Dr Qazi Masood Ahmed, Associate Professor Institute of Business Administration; and Technical Advisor, Social Policy and Development Centre. When contacted, Qazi Masood said that he has been striving to have a seminar on open budget index in Pakistan. He hoped that the seminar could be held in a month's time.

http://www.brecorder.com/index.php?id=545717&currPageNo=1&query=&search=&term=&supDate=


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## Neo

April 03, 2007 
*Causes for slow performance in export identified*

By Mubarak Zeb Khan

ISLAMABAD, April 2: The lack of export diversification Ã¢â¬â for products and markets Ã¢â¬â is the main reason for recent sluggish performance in PakistanÃ¢â¬â¢s merchandise exports, said Asian Development Bank report.

Trade policy should therefore focus on developing strategies for diversification and enhancing export competitiveness. There is also a need to devise a comprehensive policy for increasing production of various products, which currently is highly concentrated on textile products.

According to the report, Asian Development Outlook 2007, PakistanÃ¢â¬â¢s textile export prospects could further weaken in the wake of abolishing of China specific safeguards in the year 2008 imposed by the US and EU against textile and clothing imports.The main issue is exportsÃ¢â¬â¢ heavy reliance on textiles as well as limited geographic diversification. Between them, textiles and clothing, cotton, leather, rice and sports goods account for over three quarters of total exports. Thus a downturn in these segments has a significant overall impact.

Conversely, immediately after the ending of quotas, textile exports accelerated strongly, to 16.8 per cent in fiscal year 2006 from 6.6 per cent the year before.

Increasingly, however, textile exports have come under competitive pressure from Bangladesh, China and India, specifically in the higher value-added categories that have traditionally not been strength of the Pakistani textile sector. This pressure, in turn, has led to a fall in international export prices.

Consequently, Pakistani textile exports increased by only 4.3 per cent by value in the first half of fiscal year 2007. The low expected local cotton production in 2007 and removal of restrictions on textile exports from China in 2008 will further hit Pakistan textile exports.

Similarly, the export of rice grew by 1.2 per cent during the period under review. However, export of leather and its products dipped by 26.3 per cent and sports goods by 14.4 per cent, respectively.

Another issue is that the bulk of PakistanÃ¢â¬â¢s trade is with a handful of countries, particularly in Europe and North America. It is expected that the growth in trading volumes in those regions will decline in 2007, hitting PakistanÃ¢â¬â¢s exports there.

Exports too will rise, but the high domestic cost of production in the textile and garment sector as well as stiff competition from the China and India is likely to restrict total export growth to about 8 per cent.

Over the past five years, merchandise exports have delivered over 12 per cent average annual growth, as they have benefited from an enabling policy environment, low inflation, the low cost of credit, and general upturn in economic activity.

In fiscal year 2005 and 2006, they grew by 16.6 per cent and 15.4 per cent, respectively, but started decelerating in the second half of fiscal year 2006, to just over 6.5 per cent, and to 5 per cent in the first half of fiscal year 2007. Some of the deceleration stems from the high base effect, but the underlying causes appear structural, added the report.

http://www.dawn.com/2007/04/03/ebr2.htm


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## Neo

*Impact of inflation*

THE second quarter report of the State Bank of Pakistan released on Friday shows that while the broad inflationary pressures on the economy have somewhat eased, the consumers continue to suffer from rising food prices. The food inflation rate, which dipped in January, returned to double-digit level in February. The average annual inflation as measured by Price Consumer Index (CPI) during July-February 2007 at 7.7 per cent is above the official target of 6.5 per cent set for the current fiscal year. The high food inflation price is attributed mainly to an increase in the prices of rice, flour, some vegetables and fruits. Abnormally high food prices have kept the CPI inflation above eight per cent for most part of this fiscal year. While the tight monetary policy has helped subdue the non-food and non-energy inflation, government policies have failed to tackle the high consumer prices and have left the middle and lower income groups at the mercy of a volatile market. To manage trade and current account deficits, the government is focusing on foreign capital and financial inflows that are creating excess liquidity. These depress the rate of savings for financing investment and contribute to inflationary pressures on the economy. In its report, the central bank has stressed that inflation needs to be contained to provide positive real returns to savers that would lower the countryÃ¢â¬â¢s dependence on what the regulator describes as Ã¢â¬Åpotentially fickle foreign investment.Ã¢â¬Â It is the small savers who provide the bulk of the money for investment.

There is also so much excess money in the domestic market unable to find productive outlets and is parked in speculative trading in commodities, stocks and real estate. Unfair trade practices which contribute substantially to a high inflation rate have been normally curbed by imports to improve supplies in a market cornered by hoarders and speculators. But the government continues to drag its feet on promulgating a competition law and setting up of a Competition Commission to tackle monopolies, cartels and oligopolies indulging in rampant market abuse. While inflation is eroding the purchasing power of the rupee in the domestic market, its real effective exchange rate index has appreciated by 2.5 per cent during the first eight months of the current year because of rising inflows of loans, foreign investments and remittances. The State Bank says that it indicates the loss of external competitiveness of the rupee and reinforces the need for bringing down domestic inflation. Much neglected, the problem needs to be tackled properly and on a priority basis, particularly when the growth in exports has plummeted to a mere four per cent.

In the absence of effective social safety nets and any policy on income distribution and not enough jobs, the overarching issue is the misery that a persistent high rate of inflation inflicts on the fixed income groups particularly the poor. The vulnerable are getting more impoverished and their quality of life is deteriorating. Many often go without meat for weeks. With all hopes dashed, some commit suicide in desperation. The development strategy needs to be reviewed and altered to ensure a high growth rate with low inflation. The poor and vulnerable do not have a voice in the military-led government to seek solutions to their problems as the regime is not accountable to the people. Democracy is very much a bread and butter issue for the ordinary citizen.

http://www.dawn.com/2007/04/03/ed.htm#1


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## Neo

Tuesday, April 03, 2007 

*Pakistan Steel sales cross Rs 3.3 billion*

KARACHI: Pakistan SteelÃ¢â¬â¢s sales during the month of March of the current year, has crossed the Rs 3.3 billion mark, which is great landmark achievement in the history of this vital national institution. 

A press statement issued here Monday, said the sale figures for the third quarter of fiscal year from January, to March 2007, stood at Rs. 8614.88 million which is the highest ever sale figure achieved during any third quarter of previous financial years. The previous highest for this quarter was Rs 7762.68 million.

The total sale during JulyÃ¢â¬â06 to MarchÃ¢â¬â07 stood at Rs 21035 million whereas the sale of corresponding period of the previous fiscal year was Rs 13113 million. The sale of for the current year is higher by more than 60% as compared to corresponding period of last year.

http://www.dailytimes.com.pk/default.asp?page=2007\04\03\story_3-4-2007_pg5_5


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## Neo

*Shaukat presents liberal trade roadmap: Saarc summit opens *

NEW DELHI (April 04 2007): Prime Minister Shaukat Aziz on Tuesday, addressing the Saarc summit here, presented a roadmap based on a liberal trade regime for more and open trade and putting in place an effective mechanism for resolution of disputes through dialogue to secure a bright future for the South Asia region.

The roadmap calls for promotion of an environment of genuine peace and security in South Asia and for solution of the differences and disputes among member countries through dialogue and compromise. It attaches great importance to mutual trust and confidence for meaningful cooperation in the region.

It calls for reinforcement and upholding the principles of peaceful coexistence, especially to ensure respect for sovereign equality among Saarc members. It recommends for building up of inter-dependencies and sharing of best practices to help each other and calls for practical steps to make Saarc agenda of cooperation and ground reality It stresses need for a level playing field for effective regional division of labour and production. It also calls for true and open environment for regional trade through level playing field, market access and requirements of development in each member state. It also calls for cooperation to improve infrastructure for region-wide transportation and communication links and promotion of energy security.

Prime Minister Shaukat Aziz highlighted Saarc's importance and said it was high time to make the dream of putting the South Asia region on a course of peace and development.

He said he was all out for meaningful use of the Saarc forum to change the destiny of its over billion people. He said: "Let's use the potential that South Asia is blessed with, and make it free of hunger and disease."

He recalled that Saarc has achieved much but has potential to achieve even more. He called for an independent analysis of strength and weaknesses and said that it was necessary to seize the moment to leverage potential and overcome the challenges confronted by South Asia.

The Prime Minister said that Pakistan was committed to the Saarc process and it was member states' collective responsibility to demonstrate courage and commitment, and the wisdom and foresight, to transform South Asia into a vibrant, progressive and prosperous region. He said that the achievement of the goals would require a paradigm shift in the thinking and attitudes of Saarc countries' leadership.

He expressed confidence that South Asia's ingenuity, determination and imagination would transform to make it an ideal region for other regions. He said that islands of affluence and centres of excellence already exit in the region. Saarc was attracting remarkable interest and support from many countries and welcomed Afghan President Hamid Karzai's participation in Saarc summit.

He said that historical linkages and cultural affinities with the region made Afghanistan a natural and indispensable ally. He said he hoped for a very positive role from Afghanistan for making Saarc more effective in the future.

He also welcomed China, Japan, Korea, the United States and European Union for formal association with Saarc and said that their participation in the Saarc summit underscored growing relevance. He added that Pakistan always advocated such interaction, as it believes that Saarc expansion would open up vast possibilities and opportunities for mutually beneficial cooperation.

He said that Saarc should focus on social uplift, poverty alleviation, enhanced people-to-people contacts, establish a free trade regime and environmental protection. He said that Saarc has travelled a long distance, but much remains to be accomplished. He said that progress remains short of aspirations, as South Asia is yet to forge quality and intensity of regional cooperation that exits in many other regions to bring about revolutionary transformation in the lives of their people.

He observed that Saarc was slow in catching up with other regional organisations, and linked it to disputes and mistrust. He listed poverty alleviation and promotion of health and education as high priority areas and stressed for achievement of these goals through Saarc framework. He suggested setting up of a Saarc 'Food Bank' for achieving food security in the region.

http://www.brecorder.com/index.php?id=546070&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Metro Cash & Carry to invest euro 150 million *

LAHORE (April 04 2007): Provincial Minister for Industries, Muhammad Ajmal Cheema has said that German's multi-national company "Metro Cash & Carry" would invest 150 million Euro in Pakistan by setting up 10 wholesale stores in big cities besides Lahore.

He expressed these views while talking to a 5-member delegation of Metro which called on him at his residence, here on Tuesday. Ajmal Cheema said that the ground-breaking ceremony of first wholesale store of German's multi-national company "Metro Cash & Carry" will be held on April 4. The Chief Minister of Punjab Chaudhry Pervaiz Elahi will be the chief guest on the occasion.
http://www.brecorder.com/index.php?id=546144&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*IPIC plans to build refinery with Parco *

DUBAI (April 04 2007): IPIC plans to build a new 260,00 bpd refinery with Pakistan's Pan-Arab Refinery (Parco). In November last year, a Pakistani diplomat estimated the refinery would cost $4-$5 billion. The IPIC sources on Tuesday declined to give an updated cost estimate and said it hopes to award a feasibility study for the project soon.

IPIC was also looking at other potential refinery investments globally, they said. "We are downstream investors, and actively looking at more refinery projects world-wide," the source said. Among the projects IPIC was studying is to build a new refinery in Morocco's port of Jorf Lasfar. It was too early to give details on the size or cost of that refinery, he said.

The company aims to complete an oil pipeline that will bypass the shipping checkpoint of the Strait of Hormuz by 2010, one source said. The 1.5 million bpd, 320 km pipeline will allow the United Arab Emirates to pump more than half of its crude exports to the port of Fujairah, outside the Strait, direct from Abu Dhabi National Oil Company's Habshan oilfields. Around 20 percent of the world's daily crude supply passes through the Strait.

Germany's ILF will manage construction of the pipeline. The line will be built by China Petroleum Engineering Construction Corporation. IPIC is reviewing its 70 percent stake in South Korea's Hyundai Oilbank, but is pleased with the way the asset has performed, one source said. "We are committed to our investment in Korea," he said. "It's part of our strategy keep our portfolio under constant review as any investor would."

Last year, an industry source said IPIC was in talks to sell a 20 percent stake in Hyundai to Conoco. Hyundai is South Korea's fourth largest refiner. IPIC has held a stake in Hyundai since 1999. It raised its stake to 70 percent from 50 percent in February 2006.

IPIC invests in oil-related projects for the government of Abu Dhabi, the capital of Opec member the UAE and the emirate which controls more than 90 percent of the state's oil reserves. Abu Dhabi's IPIC will go ahead with plans to build a new oil refinery in the United Arab Emirates despite reservations from partner Conoco Phillips, the sources said. Conoco Chief Executive James Mulva said on Monday that construction would be delayed and that his company might withdraw from the project due to rising costs.

http://www.brecorder.com/index.php?id=546131&currPageNo=1&query=&search=&term=&supDate=


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## Neo

April 04, 2007 
*234,000 tons of ethanol exports likely in Ã¢â¬â¢07*
By Parvaiz Ishfaq Rana

KARACHI, April 3: Rising oil prices in the international market are encouraging distilleries to convert larger volumes of molasses into ethanol which equally gets higher prices.

Use of ethanol as an alternative fuel is rapidly rising the world over, and Brazil has made it mandatory upon sugar mills to convert 70 per cent of their production into ethanol.

There is a higher volume of conversion of molasses into ethanol and according to estimates, the industry is expected to produce around 234,000 tons in 2007 as compared to 165,405 tons produced in 2006 which fetched $100.6 million at an average rate of $570 to $590 per ton.

Presently, most of the vehicles in Brazil are run on ethanol fuel and with latest technology, it is producing larger volumes through direct conversion of sugarcane into fuel grade ethanol.

The ministry of petroleum has suggested that in Pakistan at least 10 per cent blending should be made in regular fuel for public transport, but so far it has not been implemented.

However, the sugar industry is continuing to convert larger volume of molasses into ethanol having three grades, fuel (anhydrous), neutral (ENA) and industrial (REN). The entire production of ethanol is presently exported to European markets.

Dwindling export of molasses shows that the industry is now converting larger volumes into ethanol which fetches higher prices with the rise in oil prices in the world market.

Last year exporters managed to get higher prices close to $600 per ton for ethanol when world oil prices touched $60 a barrel. However, prices are presently hovering around $560 to $580 per ton in corollary with world oil prices.

According to official figures, there had been a consistent increase in ethanol exports for the last six years which indicates that distilleries are converting larger volume of molasses into value-added product of ethanol.

In 2000, the country exported around 20,841 tons of ethanol and next year it exported 32,800 tons. During 2002 and 2003, export of ethanol rose to 34,888 and 61,710 tons, respectively.

Similarly, there was a leap jump in export of ethanol in 2004 when exports touched 99,711 tons and in the following year, exports further rose to 122,104 tons. However, last year ethanol exports increased to 165,406 tons. The estimates for current year have been put by the industry at 234,000 tons.

Presently 16 distilleries are operating in the country with a total production capacity of 410,400 tons. Besides, there are four other units in the pipeline and after their coming into production, the total ethanol production capacity in the country would rise to 632,400 tons.

The production ratio of molasses to ethanol is 5:1 ton, meaning that five lakh tons of molasses will produce one lakh tons of ethanol.

This means that for producing the entire existing capacity of ethanol of 410,400 tons, the industry would require 2.052 million tons of molasses. However, after the addition of the four units, the ethanol production will rise to 632,400 tons and it would require around 3.162 million tons of molasses for conversion.

And to produce the estimated production of 234,000 tons during current year (January to December 2007) the industry would require around 1.25 to 1.3 million tons of molasses and there are strong indications that ethanol production would even exceed this volume.

The export of molasses is declining day-by-day and out of the estimated production of 1.8 million, less than 0.3 million would be exported during the current year.

A leading molasses and ethanol exporter Mohammad Kasim told Dawn that presently distilleries are operating at 60 per cent of their capacity and once there is larger volume of molasses, these units can enhance their production.However, he said ethanol production entirely depends on world oil prices.

Despite the fact that sugar industryÃ¢â¬â¢s profitability has improved after entering into ethanol production, the viability of producing more and more ethanol depends on world oil prices as it is being used as an alternative fuel to supplement regular POL products, he said.

Mr Kasim said during the last three months, the country managed to export or enter into export contracts of around 108,000 tons of ethanol, whereas last year the entire export volume was at 165,406 tons.

He further said during last five days, exporters received export contract prices in the range of $540 to $550 per ton of ethanol. Against this, molasses is being quoted at around $61 per ton in the world market. He expressed the hope that higher volumes of ethanol will be produced after looking at the rising world oil prices which are presently being quoted at $67 per barrel.

Last year Mohammad Kasim said the industry got better price at $620 per ton for ethanol and after looking at the developing scenario in the oil market, ethanol prices seem to firm up in sympathy.

Being an inflammable commodity, he said, ethanol needs extra care in the process of transportation as well as storage stages. There are special and expensive ships with a loading capacity of not more than 3500 to 4000 tons.

Similarly, he said at storage, extra care has to be taken and tanks have to be segregated by walls as a safety measure in case of fire. Moreover, storage areas be fully equipped with fire-fighting equipment to meet any eventuality.

http://www.dawn.com/2007/04/04/ebr4.htm


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## Neo

Wednesday, April 04, 2007 

*22.5m MT wheat output target to be crossed: MINFAL*

* No inter-provincial and inter-district ban will be implemented on movement of wheat

By Sajid Chaudhry

ISLAMABAD: The ministry of food, agriculture and livestock (MINFAL) announced on Tuesday that wheat production target of 22.5 million metric ton set for this fiscal year would be surpassed and there would be no inter-provincial and inter-district ban on the movement of the wheat. 

The government would not allow the market to crash and to ensure availability of Rs 425 per ton support price the government would continue to procure wheat up to the last available grain. The private sector would be allowed to export wheat according to a target to be set by the Economic Coordination Committee of the Cabinet (ECC). 

This was said by Sikandar Bosan, Minister for Food, Agriculture and Livestock along with Secretary Food Ismail Qureshi during a media briefing Tuesday. The export of surplus wheat by the private sector would be allowed for which formal announcement would be made once the final figures of the crop are available. He said that private sector is expected to play an active role during the procurement drive, as liberal financing with the ratio of 90:10 would be made available to them through policy intervention by the State Bank of Pakistan.

He said that we are announcing allowing wheat export by the private sector in advance so that private sector could make it possible to export required quantity of wheat that would be available for export. 

He said that Pakistan is all set to have a record wheat production. This achievement is primarily due to huge subsidy leading to balance use of fertiliser, adoption of good agri-practices by farmers and favorable weather condition. He said that to ensure that the farmers get adequate return on their produce and the market prices do not fall below the minimum price the PM has approved many steps. Elaborating these steps he informed that provinces and PASSCO have been advised to make adequate arrangements for the procurement of wheat, bandana, financing and establishment of procurement centres.

They have been given wheat procurement target of minimum 5 million metric tons and advised that these targets are indicative in nature and they should be ready purchase more than the target if needed. Punjab has reaffirmed its commitment to purchase all wheat offered for sale by the farmers up to the last available grain.

Sindh will at least purchase 0.7 million metric tons but will increase to 1 million tons dependant on the availability of wheat with farmers for sale. PASSCO would also make arrangements to purchase at least 1.3 million tons. He said that current wheat policy would remain in operation for the next wheat year to ensure that there are no inter-provincial and inter-district restrictions on the movement of wheat and non-coercive measures are taken while procurement. 

He said that some 0.6 million tons wheat stock would be available by April 15, 2007. He said that government had allowed 0.8 million tons wheat export during last few months and no up date figure for the actual export is available. The minister informed that the government has enhanced the subsidy from Rs 250 to Rs 400 per bag on the phosphatic fertilisers with effect from April 3, 2007. This would help farming community to continue the balanced use of urea and phosphatic fertilisers for enhanced production in the country. He informed that in the international market, the prices of phosphatic and potassic fertilisers have increased from $250 FOB in January 2007 to $415 FOB in March, 2007 with the result that the landed cost of DAP bag is now around Rs.1500-1550, which used to be around 1100 in the recent past. He informed that subsidy on fertiliser for the current fiscal year would be around Rs 15 billion.

http://www.dailytimes.com.pk/default.asp?page=2007\04\04\story_4-4-2007_pg5_1


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## Owais

*Pakistan and India agree to speed up IPI gas line project *

NEW DELHI (April 05 2007): Pakistan and India on Wednesday reaffirmed unflinching commitment to complete Iran-Pakistan-India (IPI) gas line project on fast track basis and to ensure an additional source of import to meet their growing energy needs.

Prime Minister Shaukat held a meeting with his Indian counterpart Manmohan Singh at the latter's residence here, for 50 minutes, before the start of the second day Saarc Summit.

After the meeting, Shaukat told a press conference at Taj Maan Singh Hotel, where he stayed with his entourage, that his meeting with Indian Prime Minister was very fruitful and they discussed all important, bilateral, regional and international issues.

He said that IPI is a major project and Pakistan and India are equally committed to take it forward on fast track basis, and complete it in the shortest possible time. He said Indian Oil Minister Murli Deora had held a detailed meeting with the senior officials of his ministry and discussed different issues relating to the IPI project.

The Prime Minster said that he also discussed progress in the composite dialogue process which, of course, covered the core issue of Kashmir. He expressed confidence that the composite dialogue process was going to take Pakistan and India to a logical conclusion for amicable solution to Sir Creak, Siachen and Kashmir.

Shaukat told a questioner that work on the Kashmir issue was in progress at different levels, which also include backdoor channels. He also announced to reciprocate Indian Prime Minister's assurance for release of 540 prisoners who at present are in Indian jails by releasing Indian fishermen who were caught by Pakistan authorities for violating its territorial waters.

He said Indian Prime Minister had assured him to consider Pakistani prisoners on case-to-case basis. He added that Indian Prime Minister gave an assurance to provide Pakistan investigation progress in Sumjhota Express blast case which killed many Pakistani travellers.

He said Pakistan and India would hold Secretary level talks on Defence-related controversial issues. The two Prime Ministers also agreed that Pakistan and India would reciprocate each other for opening bank branches and also further facilitate people-to-people contact.

The Prime Minister added that he also held a meeting with Bangladesh administrator who is representing that country at Saarc, and discussed different issues of bilateral interest. He said Pakistan would give $10 million for import of food items, probably wheat.
http://brecorder.com/index.php?id=546419&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*PQA sees $4 billion FDI in various projects *

KARACHI (April 05 2007): The Port Qasim Authority (PQA) is expecting $4 billion foreign direct investment (FDI) in its various projects to be constructed in the proximity of the port. The PQA has earmarked an investment of Rs 8 billion in various development plans in the port.

This was stated by the Chairman PQA, Vice Admiral Asad Qureshi while speaking at the launch of PQA's Procurement Manual with the help Transparency International Pakistan. He said, the Port Qasim Authority (PQA) contributed Rs 72 billion of revenues to the national kitty last year.

Admiral Asad Qureshi appreciated the TI Pakistan for the assistance it has been providing for the transparency in its procurement procedures. The PQA used the services of TI Pakistan to have their tender documents vetted to comply to the Public Procurement Regulatory Authority (PPRA) rules 2004.

He said, the authority would ensure that all procurements would be most transparent, so that they could obtain the best at the least price. The PQA's staff to study and follow the Procurement Manual in totality, he advised. The Chairman of Transparency International (TI) Pakistan, Syed AdiI Gilani explained the history as to how TI Pakistan was involved in the development of the National Anti Corruption Strategy, the promulgation of the Pakistan Regulator Authority and the formation of the PPRA rules 2004.

"The implementations of these rules are mandatory in all procurements of the Federal and Sindh Government," he pointed out. He said that the TI Pakistan had signed Memorandum of Understandings (MoUs) with a number of government agencies and the TI Pakistan were assisting these agencies in building their capacities to comply to the PPRA rules.

In this regard, a workshop had already been conducted to train procurement officials from a number of government departments, he added. The Procurement Manual comprises of all the standard bidding documents on procurement of works, goods and service based on international standards of the World Bank.

The International Federal of Consulting Engineers (FIDIC) and the Pakistan Engineering Council duly amended to comply with transparent procurement procedures, recommended by the National Accountability Bureau (NAB) in the National Anti Corruption Strategy of 2002, and fully compliant to the Public Procurement Rules (PPR) of 2004.

Director General of NAB, Sindh, Major General Mukhtar Ahmad appreciated both PQA and TI Pakistan on successfully developing the Procurement Manual. He said that this would enhance the capabilities of the PQA Procurement Staff.

He further said that the present government was determined to implement transparent procedures in all its dealing and was paying special attention to Transparent Procurement.

He assured that the NAB would comply with the provisions of the Procurement Manual while examining all contracts, especially those projects worth over Rs 50 million, as mandated by law. He explained that the NAB had circulated an evaluation form, which has to be completed by all federal agencies and forwarded along with contract documents of all its procurement.
http://brecorder.com/index.php?id=546536&currPageNo=2&query=&search=&term=&supDate=


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## Neo

April 05, 2007 
*Power shortfall surges to 1,100MW*

LAHORE/ISLAMABAD, April 4: With the domestic power shortage surging to 1,100 megawatts, the Water and Power Development Authority (Wapda) decided on Wednesday to correspondingly increase the quantum of load-shedding.

According to a Wapda official, the demand on Wednesday increased up to 12,000MW against a supply of 10,900MW. The deficit, he said, was mainly caused by a decrease in water releases by the Indus River System Authority (Irsa).

Ã¢â¬ÅThe country would be producing surplus energy if water releases by Irsa are increased,Ã¢â¬Â they said. Ã¢â¬ÅPower generation is only a by-product and irrigation requirements dictate the water releases.Ã¢â¬Â

Due to the water restrictions, Tarbella Dam contributed only 700MW against its installed capacity of 3,400MW. Similarly, Mangla Dam contributed only 900MW against the installed capacity of 1,000MW. The Ghazi Barotha Hydro-Project (GBHP) was restricted to 1,100MW against its capacity of 1,450MW.

The water releases are the decisive factor in current shortages, they insisted.

Meanwhile, the provinces on Wednesday jointly rejected a Wapda request seeking a daily increase in water discharge capacity by an average of 22,000 cusec from major dams for power generation to offset the shortage.

The consensus of the provinces emerged at a meeting of the Irsa advisory committee that finalised water availability estimates and distribution plan for Kharif 2006-07. The meeting was presided over by Irsa Chairman Muhammad Khan Memon and was attended by all Irsa members and representatives of the provinces and Wapda.

The Wapda authorities said that additional supplies would enable it to reduce the shortage by 500-600-megawatt. They had proposed to increase releases from Tarbela dam from 15,000 cusec to 30,000 cusec and from 28,000 cusec to 35,000 cusec from Mangla dam.

Ã¢â¬ÅThe provinces turned down the request with consensus,Ã¢â¬Â an official who attended the meeting told Dawn. The provinces took the position that an unprecedented quantity of water had been carried forward this year but it was specifically meant for irrigation and it Ã¢â¬Åcould not be allowed to be wastedÃ¢â¬Â for power generation.

The meeting noted with satisfaction that there would be no water shortage in the Kharif season and the provinces would get full indented supplies from April to September. The meeting also finalised the anticipated water availability for the season and noted that about 4.1 million acre-foot (MAF) of water was carried forward by Wednesday.

The total water availability was estimated at 124 MAF for the season, of which about 76 MAF would be provided to the provinces in Kharif. The provinces did not have the capacity to use more water, the sources said. About 28 MAF of water would be used for escapages below Kotri while system losses would amount to 10 MAF. The remaining 10.5 MAF would be carried forward into the next Rabi season through storages.

The committee allocated 37.9 MAF of water for Punjab, 34.4 MAF for Sindh, 0.82 MAF for the NWFP and 2.85 MAF for Balochistan.

The meeting also noted with satisfaction that it had correctly predicted a 14 per cent water shortage in the just-concluded Rabi season and hoped that its estimates for the current season were even better.

Meanwhile, Minister for Water and Power Liaquat Ali Jatoi also confirmed that the country was facing a power shortage.

Speaking to journalists at the ground-breaking ceremony of Irsa building, he said the government was in the process of finalising an energy conservation plan for the current year and hoped that about 1200MW capacity addition would take place by next year.

He said that an independent consultant was being hired to investigate the failure of telemetry system and fix responsibility. He said the Rs340 million project had been initiated under the directives of the President Gen Pervez Musharaf but there were some outstanding issues. He said the project would soon be made operational.

http://www.dawn.com/2007/04/05/top10.htm


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## Neo

*Non-life insurance sector depicts tremendous growth in 2006 *

KARACHI (April 05 2007): The non-life insurance sector depicted tremendous growth in 2006 as the combined profitability of the top 15 non-life insurance companies (having 88 percent share of the market capitalisation) stood at Rs 6.2 billion as compared to Rs 3.8 billion in 2005, with a growth of 65 percent.

The sector profits from the underwriting business surged by 14 percent, whereas, the major chunk in profitability was shared by investment income which soared by 66 percent to Rs 5.5 billion.

The net premium of the sector grew by 35 percent and reached Rs 15.3 billion in 2006 versus Rs 11.3 billion previously. However, this growth was not fully translated into the underwriting profits due to the higher claim ratio of 64 percent in 2006 as compared to 62 percent previously. Combined ratio (expense ratio + claim ratio) of the sector, on the other hand, stood at 83 percent which was due to lower expense ratio of 19 percent witnessed in 2006.

"While looking at the segment wise break-up of net premium we see that motor business contributed 54 percent in net premium of the sector followed by marine segment 18 percent, fire segment 17 percent and miscellaneous & treaty segments 11 percent", Haris Dagia, an analyst at JS Global Capital Limited said.

According to the figures available here earnings snapshot of key non-life insurance companies remained as diluted earning per share (EPS) of Adamjee Insurance grew by 36 percent in 2006, Askari Insurance 27 percent, Atlas Insurance 18 percent, Central Insurance 274 percent, Century Insurance 2 percent, EFU General Insurance 51 percent, East West Insurance -46 percent, Habib Insurance 306 percent, I.G.I Insurance 11 percent.

http://brecorder.com/index.php?id=546469&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Finance refuses to fund thermal power plants *  

ISLAMABAD (April 05 2007): The Finance Ministry has expressed inability to provide funds for setting up 450mw thermal power station at Chichoki Malian (Sheikhupura district) and 100mw station in Khuzdar (Balochistan) in the public sector, official sources told Business Recorder.

Earlier, the government had decided in principle that three thermal power stations of 200mw each would be established in Sheikhupura, Faisalabad and Khuzdar, but the decision was changed at a recent Cabinet meeting. However, the basic issue was arrangement of finances for two projects, as the Finance Ministry had refused to facilitate the utility, sources said.

They said that Finance Ministry said that it had no objection to the establishment of thermal power stations, but for financing, Wapda should arrange it from its own resources.

The Private Power Infrastructure Board (PPIB), however, has conveyed to the concerned quarters that if the government, or Wapda, or both were unable to arrange financing, it was ready to offer these projects for international competitive bidding (ICB). Sources said that dispute over financing is still unresolved, and the authorities may take more time to reach any conclusion.

PPIB was also under severe criticism for not making any progress on hydel or thermal power projects despite knowing that the country would face crisis-like situation in 2007-08, if additional generation is not inducted into the system.

In September last year, the Prime Minister had directed the Ministry of Water and Power and Wapda to ensure availability of energy to maintain the momentum of projected economic growth.

"Concerted efforts be made to increase power generation capacity from hydel, thermal, alternative energy and nuclear power supply as well as required mix be ensured to meet peak and lows in demand, both seasonal and locational," sources quoted the Prime Minister as directing the concerned departments.

They said that a committee on power demand-supply position, headed by the Water and Power Secretary Ashfaq Mahmood had recommended that public sector Gencos should make investment for two 450 mw combined cycle power plants which would reduce the time spent on arranging financing and tariff negotiations. But at the same time it was also observed that it would be a departure from the existing approach of inducting private power units.

However, Wapda Chairman observed that the schedule proposed by the committee was tight, and proposed commissioning dates of the units on open cycle by September 2007, and combined cycle by March 2008.

Later, Prime Minister Shaukat Aziz decided that no thermal power plant would be set up in the public sector, but when it was felt that the situation was going worse, the earlier decision was declared nullified, sources said. It is worth mentioning that the whole country is experiencing both announced and unannounced power load shedding.

http://brecorder.com/index.php?id=546438&currPageNo=1&query=&search=&term=&supDate=


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## Neo

Thursday, April 05, 2007 

*CDGK to set up 350MW power plant over 20 acres in Bin Qasim Town*

KARACHI: The city government in collaboration with the Port Qasim Authority and a foreign firm plan to set up a power generation plant that will have the capacity to generate 350MW electricity to cater to the cityÃ¢â¬â¢s growing needs. 

Ã¢â¬ÅFor this purpose the government of Dubai is giving a suitable number of turbines as a gift to the city government. These turbines will be installed in the power generation plant in Bin Qasim Town,Ã¢â¬Â said City Nazim Syed Mustafa Kamal, while addressing a press conference at the Camp Office located on Club Road Wednesday.

According to Kamal, the first phase of the plantÃ¢â¬â¢s construction will begin soon. The plant will be set up on 20 acres. In the future, it will be expanded to generate 1,800MW of electricity. The city government will provide land while other parties of the consortium will bear the expenditure to set up it. The electricity will be sold to KESC. 

Responding to a question, he said that some three months ago he had called the higher-ups at KESC and asked them to improve their system before the summer season. He urged KESC to expand its self-generation capacity.

The nazim added that presently there were dozens of water and sewerage related projects underway at an estimated cost of Rs 16 billion. Ã¢â¬ÅDuring the last couple of months, the city government has installed and started the supply of water in many areas,Ã¢â¬Â he explained. Ã¢â¬ÅSome of these areas had been deprived of a regular water supply for the last 20 years. These areas including Jaskani Mohalla, Muslim Colony in Keamari Town, and Manzoor Colony, in which potable water was supplied after 38 years.Ã¢â¬Â

He mentioned that the projects that will be completed within the current year include the water supply projects in Gulistan-e-Jauhar, Clifton, Lyari and others. Ã¢â¬ÅWe plan to provide potable water to the residents of Clifton, Saddar and old areas of city,Ã¢â¬Â he mentioned. Ã¢â¬ÅTo achieve this, the work on a 38-inch diameter pipeline in three phases is in full swing and will be completed within two to three months at the estimated cost of Rs 280 million to Rs 320 million.Ã¢â¬Â 

All ongoing road projects including Shahrah-e-Pakistan, the Sohrab Goth Flyover, University Road from Jail Chowrangi to Hasan Square, Road 5000 in North Karachi, Road 12000 and Shahrah-e-Orangi in Orangi Town, Altaf Hussain Barelvi Road and Malir Bridge will be completed before 2008.

Also, the city government is building PakistanÃ¢â¬â¢s first major blood bank near the QuaidÃ¢â¬â¢s mausoleum. Three satellite centres for cardiac patients in Shah Faisal, Landhi and on the border of Orangi and Baldia town will be established within a few more months.

http://www.dailytimes.com.pk/default.asp?page=2007\04\05\story_5-4-2007_pg12_10


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## Neo

*Pakistan rated 84th in terms of IT growth *

By Imran Ayub

KARACHI: Pakistan has been rated 84th in a pool of 122 nations in terms of growth in information technology by a world-recognized body, giving a serious setback to the governmentÃ¢â¬â¢s claims, which counts the sector growing at a faster pace with an industry size of $2 billion.

The Global Information Technology Report 2006-2007 prepared and issued by the World Economic Forum (WEF) selected 122 countries in a broad sample to study their growth in IT and potential to further excel in the sector in the years to come.

Ã¢â¬ÅWith record coverage of 122 economies worldwide and published for the sixth consecutive year, The Global Information Technology Report (GITR) has become the worldÃ¢â¬â¢s most respected assessment of the impact of information and communication technology (ICT) on the development process and the competitiveness of nations,Ã¢â¬Â said the WEF in comments tacked with the report.

Ã¢â¬ÅThe Networked Readiness Index (NRI) measures the propensity of countries to leverage the opportunities offered by ICT for development and increased competitiveness. It also establishes a broad international framework mapping out the enabling factors of such capacity.Ã¢â¬Â

The report suggests PakistanÃ¢â¬â¢s IT sector fell 17-time further than previous year, as in the report for 2005-06 the country managed to retain 67th position in the worldÃ¢â¬â¢s leading player of the sector.

Ã¢â¬ÅUnder the theme, Ã¢â¬ËConnecting to the Networked EconomyÃ¢â¬â¢, The Global Information Technology Report appears at a critical juncture in the evolving role of ICT in the world economy, when access to the global network is increasingly perceived as an important cornerstone for the development of economies and societies,Ã¢â¬Â said the WEF.

Denmark, Sweden and Singapore slotted top three positions in the IT world while IndiaÃ¢â¬â¢s position declined to 44th against 40th ranked last year. Recognised as the most respected and authentic document, the reportÃ¢â¬â¢s findings about Pakistani IT industry are bound to prompt the authorities to think again before devising a growth strategy.

The countryÃ¢â¬â¢s software exports crossed $70 million during 2005-06, registering for the first time a 50 per cent growth, as western firms started turning more and more to Pakistan for IT-enabled services to cut costs and raise profits.

The officials and industry players believed the rising export figures showed Pakistan was catching up fast in the race for software development and at such rate, the countryÃ¢â¬â¢s global IT revenue should reach almost $9 billion by the end of 2009-10. However, the latest WEF report obliges the authorities to work harder and draw up plans which win the country a better position among competing countries.

Ã¢â¬ÅThe Networked Readiness Index examines the preparedness of countries to use ICT (information and communication technology) effectively on three dimensions: the general business, regulatory and infrastructure environment for ICT; the readiness of the three key stakeholders Ã¢â¬â individuals, businesses and governments Ã¢â¬â to use and benefit from ICT; and their actual usage of the latest information and communication technology available,Ã¢â¬Â said the WEF following the reportÃ¢â¬â¢s release.

Countries from Asia and the Pacific continue to do well this year, with Hong Kong, Taiwan, Japan, Australia and Korea occupying 12th, 13th, 14th, 15th and 19th positions, respectively, although Taiwan and Korea are losing some ground from last year (down 6 and 5 positions respectively). 

The WEF says India and China show both a downward trend, with India 4 positions down to 44th and China 9 positions down to 59th.

Ã¢â¬ÅNotwithstanding some specific clusters of ICT excellence in both countries (China and India), their performance overall in leveraging ICT for increased development appears to be particularly hindered by weak infrastructure, with a very low level of individual ICT usage for India and of individual and business readiness and usage for China,Ã¢â¬Â it added.

http://www.thenews.com.pk/daily_detail.asp?id=49628


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## Neo

*Provinces receive Rs167.18bn from FDP *

By Mehtab Haider

ISLAMABAD: Four provincial governments have so far received Rs167.185 billion in shape of Federal Divisible Pool (FDP) during the current fiscal year, it is learnt.

Out of total budgetary estimates of Rs321.078 billion transfers in shape of FDP, the federating units have received Rs167.185 billion in the first seven months (July-Jan) of the current financial year.

According to official data obtained by The News, Punjab received Rs94.073 billion during the first seven months through FDP transfers against budgetary estimate of Rs180.240 billion for the whole fiscal 2006-07.

In divisible pool, Punjab got Rs35.827 billion in shape of its share in income tax collection against estimate of Rs57.685 billion for 2006-07. The provincial government led by Ch Pervaiz Elahi received Rs18.672 billion in shape of its share in sales tax collection against total estimate of Rs38.763 billion.

It received Rs12.389 billion in shape of 2.5 per cent of GST during the first seven months against budgetary estimate of Rs26.695 billion. It received Rs6.086 billion in shape of its share in federal excise duty, Rs15.965 billion through customs duty, Rs4.417 billion through GST (VAT), Rs687.052 million through CVT and Rs28.126 million in wealth tax.

Total releases to Sindh stand at Rs42.400 billion in the first seven months of FY 2006-07 in shape of FDP. The Sindh government received Rs14.809 billion in shape of its share through income tax against budgetary estimates of Rs23.844 billion. In shape of sales tax, the provincial government received Rs7.718 billion against budgetary estimates of Rs16.023 billion.

The Sindh government led by PML(Q), MQM and other allies got Rs8.635 billion in shape of 2.5pc of GST in first seven months of the current fiscal. Sindh also received Rs2.515 billion in shape of Federal Excise Duty, Rs6.599 billion through customs duty, Rs2.838 billion as GST (VAT), Rs283.996 million as CVT and Rs11.626 million through W tax. 

The MMA led NWFP government received Rs22.141 billion in shape of FDP during the current fiscal year. The provincial government received Rs8.632 billion in shape of income tax in first seven months against budgetary estimate of Rs13.898 billion for 2006-07. The provincial government obtained Rs4.498 billion in shape of sales tax, Rs2.460 billion as 2.5 per cent GST share, Rs1.466 billion through Federal Excise, Rs3.846 billion as customs duty, Rs1.064 billion GST (VAT) and CVT Rs165.534 million. 

The cash-starved Balochistan received Rs8.570 billion in shape of FDP during the current fiscal year. The provincial government obtained Rs3.191 billion in shape of income tax during the first seven months of the current fiscal year. 

Balochistan got Rs1.663 billion in shape of sales tax in current fiscal against envisaged budgetary estimate of Rs5.139 billion. The provincial government received Rs1.663 billion as 2.5% GST share, Rs542.192 million as Federal Excise, Rs1.422 million as custom duty, Rs393.543 million as GST (VAT), Rs61.207 million as CVT and Rs2.506 million as W Tax in July-Jan period of the FY 2006-07. 

http://www.thenews.com.pk/daily_detail.asp?id=49629


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## Neo

*Foreign banks may buy 47pc of Pak units *

LAHORE: Foreign banks are likely to acquire 47 per cent of PakistanÃ¢â¬â¢s banking assets by the end of this year, which will increase competition and make the sector more efficient.

Governor State Bank of Pakistan Dr Shamshad Akhtar stated this while talking to newsmen at a prize distribution ceremony of the Institute of Bankers Pakistan on Wednesday.

She said foreign banks had acquired smaller efficient domestic banks that were unable to meet capital requirements of the State Bank. The acquired Pakistani banks, she added, would become part and parcel of their parent banks that were operating on global standards.

She said these banks would bring in new technology and raise the standard of banking in the country.

Earlier in her address to the bankers, Dr Shamshad Akhtar said the banking sector was the biggest success story of PakistanÃ¢â¬â¢s economy. The World Bank in its latest report has termed PakistanÃ¢â¬â¢s banking sector the Ã¢â¬Ëbest in the regionÃ¢â¬â¢. Talking about inflation, she said core inflation had dropped to 5.7 per cent, which was even below the budgetary target of 6.5 per cent. Ã¢â¬ÅThis is the success of the bankÃ¢â¬â¢s monetary policy.Ã¢â¬Â

Food inflation, however, was due to supply constraints, she said, adding the government had taken steps to plug supply-demand gap, which would give good results.

She said the central bank would continue its tight monetary stance till the inflation was brought down to the desired level. 

The monetary policy was largely market-driven and short-term interest rates and open market operations were prudent instruments utilised by the SBP, she added.

Regarding low deposit rates, she said besides the central bank it was also the duty of the depositors to demand higher mark-up, adding commercial banks had introduced some new attractive products for the depositors that they should avail.

She said no unlicensed dealer was allowed to collect deposits from the public and warned the bank would take strict action against those found indulging in that practice.

In the end, Shamshad Akhtar distributed awards among those who completed their courses at the institute.

http://www.thenews.com.pk/daily_detail.asp?id=49633


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## Neo

*Pakistan's electricity theft, system losses estimated at Rs80b*

5 April 2007 

ISLAMABAD Ã¢â¬â Pakistan is losing Rs80 billion annually on account of electricity theft and system losses in the power sector. A day long workshop here yesterday called upon the government to reduce power losses to greatly overcome the growing power crisis in the country.


Some of the participants wondered why the power utilities and distribution companies have not been able to reduce their system losses and that the government should look into the issue seriously.

The workshop also recommended for mandatory display of energy efficiency labels on electric equipment, subsidising energy efficient equipment, a proper policy on energy saving devices. They also discussed introducing time of day metres for all the sectors of consumers thereby fixing higher charges for peak hours and less in off-peak use

It also called for introducing a system of punishing consumers for use of low-quality electrical material and equipment as a tool for energy conservation to overcome the growing power crisis in the country.

This is one of the many proposals the policy makers are considering at the moment. If approved, this would need appointment of new workforce on the pattern of electricity inspectors to check consumer premises to ensure quality of wire, equipment and materials to reduce system losses, even though the consumers pay for these losses.

This was the gist of a day-long workshop in which the ministries, the power regulator and the power distributors agreed that conservation and demand side energy management was the only solution to an immediate energy crisis arising out of more than 2,000mw of electricity supply shortage this summer. They recommended a long list of measures for conservation and demand side energy management - ranging from two weekly holidays to early closure of commercial activities. But most of their recommendations were focused on energy savings from the point distribution companies supply electricity to consumers, rather than from policy making to delivery point except energy loss reduction programme.

The workshop "Conservation of Energy and Demand side management" was organised by National Electric Power Regulatory Authority (Nepra) and attended by ministries of water and power, petroleum and natural resources, National Energy Conservation Centre (Enercon), Pakistan Engineering Council and all power distribution companies participated. There was no representation from the planning commission.

A representative of the GTZ of Germany and an official of a distribution company Ibrahim Khattak asked the policy makers to show on televisions and in real life top government functionaries like the prime minister and his ministers conserving energy who enjoyed free electricity that would send a positive signal to the people.

Chairman National Electric Power Regulatory Authority (Nepra) Lt. Gen. (retd) Saeed-uz-Zafar said two weekly holidays, apart of saving a lot of energy, could be a very good alternative to early closure of commercial activities to make up for reduction in commercial hours. He said a committee comprising distribution companies, Nepra and other related agencies would make recommendations to the government on the subject. 

Managing director of Enercon Pervez Tahir told the workshop that the country would be facing electricity shortage of more than 2000mw this summer and everybody should get ready to share it. Asked as to why the government agencies have not been able to do supply side management to overcome shortage instead of suppressing demand, Tahir said the government agencies were asking for efficient use of energy which was not demand suppression.

Secretary water and power Ashfaq Mehmood said a combination of house keeping measures besides options like pricing as a tool to demand side management, education and awareness could be considered to overcome the shortage. He said the government did not support subsidising energy saving devices and it should be seen by the consumers as a business benefit. He did not comment on supply side measures to overcome shortage. 

While the participants exchanged views on conservation, some of them on the sidelines also discussed that Chairman of Wapda who practically heads distribution and generation companies of Wapda chartered a special plan from Lahore to reach Islamabad the same day to meet secretary water and power. 

They proposed that consumers should be made through the electricity metres to use good quality cables and equipments and replace them after some time because a lot of energy was lost by old cables and equipment. This, they said, be done by re- introducing electricity test certificates before new connections Ã¢â¬â a practice the Wapda's military management had done away with on the grounds that it encouraged corruption. The workshop recommended that energy advisors should be appointed to convince consumers about conservations. 

http://www.khaleejtimes.com/Display...l/business_April110.xml&section=business&col=


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## Neo

*ABN Amro increases stake in Prime Bank *

KARACHI (April 06 2007): ABN Amro has increased its stake in Prime Bank to 96.17 percent following the expiration on Thursday of its cash tender offer. A press release issued here said that at the close of the tender offer, ABN Amro had obtained additional 7,581,894 shares, representing 2.77 percent of the issued share capital of Prime Bank.

This marks the completion of the transaction. The Prime Bank remains listed on three stock exchanges in Pakistan and ABN Amro plans to merge its Pakistan operations into the Prime Bank in future.

http://www.brecorder.com/index.php?id=547194&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*'Vision 2030 to help move towards prosperity' *

KARACHI (April 06 2007): The Vision 2030 compilation process encompasses different issues of population growth, health, education, livelihood, irrigation, infrastructure, alternate energy sources, environment and other problems identified during the many consultations that have taken place.

The Vision 2030 document will enable the government of Sindh to plan accordingly and subsequently move towards the ultimate goal of prosperity and development. This was stated by Ghulam Sarwar Khero, Additional Chief Secretary (ACS), Planning and Development at the concluding consultative workshop held here to deliberate upon the characteristics of the vision 2030 for Sindh.

He emphasised on population growth, either through natural births or from an influx of people from other provinces of Pakistan and from neighbouring countries. He shared statistics on population influx and quoted past studies on this subject stating that in the 70's the government of Sindh incurred about Rs 11,000 per person annually for different services and infrastructure. This figure had risen considerably over the last 35 years due to inflation and devaluation.

The ACS emphasised the problems of law and order that were also attributable to huge influx of people into Sindh. He criticised compartmentalised planning by different district governments instead of coordinating efforts to pool resource for collective and efficient development, because ultimately we are dependent upon each other.

He emphasised upon the need to explore alternate energy resources to meet the looming energy crisis and water shortages. He welcomed all participants from Thatta and Karachi and appreciated their willingness to contribute to the compilation process.

These consultations were the initiative of the planning & development department that included representatives from civil society organisations, elected representatives, industrialists, businessmen, agriculturists and professionals from all walks of life.

A lively discussion took place on the occasion, which highlighted the core concerns of the government. These included excessive expenditures by the provincial government on immigrants from other provinces. Issues relating to poverty reduction and marginalised communities and access to opportunities were also discussed at length.

The participants felt it essential to start with baseline data so that planning can be realistic. Consistency in government policy was highlighted for achieving success in the social projects in particular.

Industrialist Nisar Shekhani shared experiences of industrial development in different countries and suggested the urgent need for proactive measures and plausible incentives for this sector. He emphasised upon the need to ensure law and order across the province.

Lala Hassan Pathan of Aurat Foundation emphasised the need for standardised and accessible judicial system for all citizens including men and women. He stood for an immediate ban on Jirga system and other alternate/parallel judicial systems.

Water expert, Qazi Abdul Majeed emphasised the need to ensure water distribution according to the 1991 Accord and suggested that deliberations to be focused on the need to generate coal and wind energy and to avoid construction of any dam on river Indus. The workshop was held here following a series of consultative workshops held in Hyderabad, Mirpurkhas, Nawabshah and Sukkur.

Presenting the outcome of group deliberations were senior environmentalists, Muhammad Ali Khaskheli, Chief Economist Sindh, Manzoor Hashmi, Chief Vision 2030, Hussain Tawawalla of National Management Consultants (Pvt) Ltd, Adam Malik of Action Aid International, Nasir Panhwar of IUCN, Shoukat Memon of Sindh Graduates Association and Ibad ur Rehman of Cleaner Production Institute besides senior government officials, civil society activists and people from different walks of life.

Earlier consultations in February involved all secretaries, senior officials and heads of sections of P&D department. National Management Consultants (Pvt) Ltd was retained by Sindh government to organise the consultations and to help prepare Sindh Vision 2030 document.

http://www.brecorder.com/index.php?id=547286&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Acer to promote IT in Pakistan *

KARACHI: Jacob Varghese, Regional Country Manager of Acer Computer Middle East announced Acer Company will take measures to promote Information Technology in Pakistan. Talking to newsmen here at a local hotel, he said Pakistan holds a key position regarding IT and there are many opportunities to invest in this field. He said the company has decided to invest in Pakistan. In this connection, Repair and Drop Services would be provided in the first phase including LCD Monitors and Projectors while details are being worked out, he added.

http://www.thenews.com.pk/daily_detail.asp?id=49794


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## Neo

April 06, 2007 
*LSM growth target may not be achieved*

By Khaleeq Kiani

ISLAMABAD, April 5: Large-scale manufacturing growth has slowed down in the last few months owing to capacity-constraints in some of the leading industries and slower demand in others, showing signs that 13 per cent LSM growth target for the current fiscal year may not be achieved.

According to the official data available with Dawn, the LSM has grown at a rate of 9.98 per cent in the first seven months (July-January) of the current fiscal year.

The statistics collected by the ministry of industries and production directly from industrial units are based on 37 leading industrial sectors, which account for 45 per cent of the overall manufacturing.

Traditionally, LSM data is compiled and made public by the Federal Bureau of Statistics on a monthly basis.

Therefore, the data has been used to determine trends, given the fact that firm data on manufacturing output is not available beyond first three months of the fiscal year.

According to the State Bank of Pakistan, the delay in the release of usual monthly data on LSM by the Federal Bureau of Statistics after September 2007, was making it impossible to make any assessment of the industrial performance.

Ã¢â¬ÅThis failure to provide timely data is quite troubling, not only for the implications of macroeconomic decision-making, but also for the credibility of the institutions and official statistics.Ã¢â¬Â

The ministry of industries data suggests that many industries showing substantial growth in the first quarter (July-September) performed dismally in the next four months, and it was resulting in a significant fall in the overall output.

For example, cotton cloth, cotton yarn, caustic soda, cars and jeeps and tractors grew at the rate of 14.3 per cent, 13.3 per cent, 12.4 per cent, 12.7 per cent and 7.4 per cent, respectively, in the first three months of the current fiscal,but their growth rate slowed down to 9.6, 11.5, 7.3, 5.32 and 2.81 per cent, respectively.

Overall, automobile sector grew by 6.8 per cent, which was significantly lower than 28.6 per cent growth of the same period last year and lowest in the last five years.

This slowdown, according to the central bank, was due to capacity-constraints, slowing demand growth and imports.

Moreover, growth of cares and jeeps in the first six months decelerated to 8.4 per cent as compared to 30.5 per cent of the same period last year.

Similarly, some industries which were growing slower than last year remained dull even at the end of seven months. These also included almost all petroleum products, fertilisers, electricity meters, fans, bulbs, television sets and bicycles.

The statistics indicate that the entire fertiliser sector was no more growing because of capacity-constraints and the situation would remain so even next year.

The fertiliser sectorÃ¢â¬â¢s production declined by 3.1 per cent in the first seven months and stood at 3.598 million tons compared with 3.713 million tons of the same period last year.

Of this, urea production reduced nominally by 0.65 per cent, while ammonium nitrate dropped by 6.3 per cent. The nitrogen phosphate fell by a drastic 22 per cent to 169,000 tons in seven months of the current year compared with 216,000 tons last year.

Likewise, NPK production dropped by more than 46 per cent while nitrogenous and phosphatic fertilisers decreased by 2.2 per cent and 4.6 per cent, respectively.

Sugar production in seven months increased by more than 23 per cent to 1.66 million tons compared with 1.347 million tons last year. The production of cigarettes has increased by 1.35 per cent, while cotton yarn and cloth production grew by 11.5 per cent and 9.57 per cent, respectively.

The production of paper dropped by more than four per cent in the first seven months. A simultaneous reduction in output was also witnessed in printing, writing and packing to the extent of 4.4 per cent, 3.1 per cent and 5.7 per cent, respectively. Production of chip-board also declined by 4.7 per cent. On the other hand, production of paperboard increased by 7.47 per cent.

The production of soda-ash fell by 1.6 per cent, but that of caustic soda increased by 7.26, although its pace of growth declined from 12.4 per cent when compared with first three months of the current year.

According to an official summary, the items which have shown a decline even in first three months are high- speed diesel (15.6 per cent), furnace oil (12.7pc), phosphatic fertiliser (7.8pc), electricity meters (19.9 per cent), fans (9.1pc), bulbs (10.4pc), TV sets (31.3pc) and bicycles (1.4pc). By the end of seven months, the bicycle production reduced further to 24.5pc.

The government in the annul plan 2006-07 had based its economic growth forecast of seven per cent on the hope that Ã¢â¬Åautomobiles, petroleum products, chemicals, cement, cotton yarn and cloth, textile made-ups, engineering goods, ACs, motorcycles, fertilisers and electronic itemsÃ¢â¬Â¦ would be the main growing industriesÃ¢â¬Â. It has, however, emerged that the growth of these areas has been slower than last year, lower than the target.

In construction material, glass-sheet production dropped by 12.1 per cent, but cement production increased by 22.69 per cent in seven months to 12.74 million tons.

Similarly, production of coke, pig-iron, rolled billet and HR coils increased significantly by 47 per cent, 51 per cent, 122 per cent and 56 per cent, respectively, while production of inguts and billets, CR coils and galvanised products declined by seven per cent, two per cent, five per cent and 2.6 per cent, respectively.

http://www.dawn.com/2007/04/06/ebr1.htm


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## Neo

Friday, April 06, 2007 

*Weak judiciary, law & order, sleaze hurdles to investment: US report*

ISLAMABAD: Businesses operating in Pakistan have repeatedly called for strengthening law and order. Corruption and a weak judicial system remain recurrent and substantial disincentives to investment and the contract enforcement can be difficult for the US and other foreign investors in Pakistan. 

Market leaders in the cement and sugar industries are alleged to have formed cartels. In late 2004, the United States and Pakistan launched negotiations on a Bilateral Investment Treaty (BIT), which would provide US investors in Pakistan with significant legal protections. While negotiations continue, differences persist on issues of importance to the United States. 

This has been highlighted in the National Trade Estimate 2007 report released by the United States Trade Representative office this week, which details significant barriers to US trade and investment and the broad array of US actions to reduce and eliminate those barriers. 

The US reportÃ¢â¬â¢s chapter on Pakistan has identified that on June 24, 2006 the Supreme Court of Pakistan declared the privatization of Pakistan Steel Mills Corporation, the countryÃ¢â¬â¢s largest steel mill, unconstitutional and illegal. The Privatization Commission has filed a review petition ( that is, an appeal) in response to the Supreme Court action. 

The US report said the court decision may adversely impact the privatization process by casting doubts on whether the government will be able to fully carry out its ambitious privatization agenda. Nonetheless, the governmentÃ¢â¬â¢s commitment to continued privatization of its holdings appears firm. 

Businesses operating in Pakistan have repeatedly called for strengthening law and order. Corruption and a weak judicial system remain recurrent and substantial disincentives to investment, it mentioned. Pakistani laws targeting corruption include the 1947 Prevention of Corruption Act, the 1973 Efficiency and Discipline Rules, and most recently the 1999 National Accountability Bureau (NAB) Ordinance. Previously, NAB, the Federal Investigation Agency (FIA), and provincial Anti-Corruption Departments shared official responsibility for combating corruption. In October 2002, PakistanÃ¢â¬â¢s cabinet approved a National Anti-Corruption Strategy (NACS) that identified areas of pervasive corruption and recommended time-barred measures and reforms to combat corruption. The NACS also named NAB the sole anticorruption agency at the federal level, says the US report. 

The US report pointed out that contract enforcement can be difficult for the US and other foreign investors in Pakistan. Citing an example, a long- standing investment dispute between a major US multinational company and a local partner has raised concerns about the sanctity of international arbitration awards regarding contracts between private parties. In June 2005, the Lahore Civil Court ruled in favour of the US multinational company, upholding the original arbitration settlement. The local partner has exercised its right to file an appeal in the Lahore High Court, which is still pending, the report added. 

In 2004, PakistanÃ¢â¬â¢s Cabinet approved the countryÃ¢â¬â¢s joining the 1958 New York Convention on Recognition and Enforcement of Foreign Arbitral Awards (New York Convention). PakistanÃ¢â¬â¢s Cabinet ratified the New York Convention on July 14, 2005 and conveyed the instrument of ratification to the United Nations Secretary-General, who is the depository of such instruments. To implement the convention, Pakistan issued an ordinance, valid for only 120 days, that has been re-promulgated three times. The government intends to continue renewing the ordinance until parliament approves implementing legislation. Legislation to implement the convention is currently with the National Assembly, the lower house of parliament. PakistanÃ¢â¬â¢s ranking in the Transparency Internationals Corruption Perceptions Index dropped from 129th out of 145 countries in 2004, to 144th out of 158 countries listed in 2005. Pakistan scored 2.1 points (on a scale of 0-10) on Transparency Corruption Perception Index in 2005. 

Foreign investors are generally free to establish and own business enterprises in Pakistan, with the exception of five restricted areas: arms and munitions, high explosives, currency/mint operations, radioactive substances, and new non-industrial alcohol plants. While foreign ownership of agricultural investments may not exceed 60 percent, there are no ownership limits in other sectors of the economy except PakistanÃ¢â¬â¢s foreign equity limits in banking and insurance. There is no minimum investment requirement for manufacturing, a $150,000 minimum foreign investment requirement in non-financial services and a minimum investment requirement of $300,000 in agriculture, infrastructure projects, and social services such as education and health.

To comply with its TRIMS obligations, Pakistan has eliminated all local content requirements, including those in the automobile sector. The automobile sector was the only sector that was subject to the so-called deletion program mandating the use of domestic inputs. 

Competition Policy and Privatization: Although Pakistan has enacted a Monopolies and Restrictive Trade Practices Ordinance, and established the Monopoly Control Authority (MCA), regulatory oversight suffers from resource constraints. Moreover, state-owned firms are exempt from the provisions of this law. Thus, in Pakistan, where state-owned firms dominate several sectors, competition regulation remains underdeveloped. At present, the MCA is engaged in finalizing a competition law with technical assistance from the World Bank. This will entail capacity building and creation of a new Competition Authority. The state-owned Water and Power Development Authority (WAPDA) retains control of power transmission and distribution throughout much of the country outside of Karachi and continues to be highly subsidized. In the financial year ending June 2006, the Privatization Commission privatized eight entities, including the Pakistan Telecommunication Company (PTCL), Karachi Electric Supply Corporation (KESC) and United Bank Ltd (via an initial public offering). The sale of these major state assets has reduced the governmentÃ¢â¬â¢s role in power and telecommunications, the report said. 

The report further identified that the state, however, continues to hold important equity stakes in the oil and gas, civil aviation, electric power and steel sectors. In FY2007, the government of Pakistan plans to privatize 26 companies, including: Sui Northern Gas Company (PakistanÃ¢â¬â¢s largest gas company), Sui Southern Gas Company, Pakistan State Oil (PSO) (PakistanÃ¢â¬â¢s largest gasoline retailer), and Pakistan Petroleum, Ltd. The government has offered global depository receipts of the Oil and Gas Development Company (PakistanÃ¢â¬â¢s largest energy exploration company) in international securities markets. 

In an effort to create market competition in former monopoly sectors, the government of Pakistan has already issued licences to long-distance and local telephone operators, as well as to cellular and wireless local loop operators, ending the PTCLÃ¢â¬â¢s monopolies. It has licensed three private airlines to compete with state-owned Pakistan International Airlines. In retail food sales, the government has used pricing in its chain of several hundred Utility Stores to create price competition in essential foodstuffs such as flour, rice and lentils. However, market leaders in the cement and sugar industries are alleged to have formed cartels.

http://www.dailytimes.com.pk/default.asp?page=2007\04\06\story_6-4-2007_pg5_3


----------



## Neo

*Pakistan urged to improve IPR, dispute settlement mechanisms*

6 April 2007 

ISLAMABAD Ã¢â¬â Pakistan has been advised by its strategic planners to urgently improve Intellectual Property Rights (IPR) and dispute settlement mechanisms for attracting substantial Foreign Direct Investment (FDI) in the country.

Official sources said that the government was urged to take into account the approach of China who invited FDI manifold by improving IPR practices and by establishing commercial courts for timely dispute resolution.

Sources said that one of the main impediments that was blocking the signing of the much delayed Bilateral Investment Treaty (BIT) with the United States was the failure in improving intellectual property rights.

The government has already announced lucrative incentives for foreign investors. But the response of foreign investors remains lukewarm because of the concerns about business climate and security. It is, therefore, essential to create a business friendly environment that is conducive for both domestic and foreign investment particularly in the electronics sector, the planners further recommended.

The government was urged to help develop the electronic industry by attracting foreign investment in the field like many other South East Asian countries. Electronics is a highly innovative field where new developments are taking place at a very fast pace. In today's globally competitive business environment, electronics firms are under relentless pressure to provide innovative products in shorter time cycles at reduced costs, and with improved quality. 

The electronics industry is driven by demands for products that are smaller, lighter, cheaper, and better than the ones they replace. In this scenario, countries like Pakistan that have yet to make their mark in the field of electronics have to go a long way before an electronics industry that is capable of attaining international competitiveness can be developed. 

With this background, the objectives of a development strategy for the electronics sector are to; Build on the existing capabilities in electronics; Attract FDI in electronics sector to facilitate the transfer of technology; Strengthen the capability in assembly and testing of electronic components; Develop and enhance value added in the industry by moving into activities such as research and design; Support the development of indigenous supply chain; Raise the share of electronics in the output of the manufacturing sector from under 3 per cent at present to 10 per cent in 2010 and to 20 per cent in 2020. It was also said that in order to achieve the broader objective of developing and sustaining an electronics sector that has the potential to emerge as one of the key drivers of economic growth, a coherent action plan is needed that assigns a leading role to the private sector while emphasizing the role of the public sector as a facilitator.

The first step is to foster the existing firms in the electronics sector through supportive public policies. The private sector often complains about the inconsistency of government policies regarding the electronics industry. While the government has taken steps to ensure policy consistency, the private sector remains skeptical. There is, therefore, a need to restore the confidence of the public sector in the continuity of public policies, the planners proposed.

The electronics activities in the country are mostly assembly and repair oriented. A few manufacturers are making a narrow range of electronics gadgetry such as security systems, payphones, electronic sign-hoards, stabilisers, uninterruptible power supplies, inverters, radio and cassette-players, and dish receivers etc. The government, the official planners believed, can encourage these businesses by removing the customs duty on the import of electronics components. There is no dual use of these components and their cheap import will enable the industry to increase its scale of operations.

Large scale smuggling of electronics products has hindered the growth of domestic electronics industry. Urgent steps were proposed to curb this practice in order to provide a level playing field to domestic producers.

The global electronics production is controlled by multinationals that possess the necessary product and process technologies. Their innovative capabilities allow them to develop new electronics products at a very fast pace, so that older product lines are becoming obsolete faster than ever before. 

Southeast Asian economies developed their electronics industries first by attracting foreign direct investment in low cost assembly operations and then by developing their design and manufacturing capabilities through the transfer of technology. If Pakistan is to develop its electronics industry, it must attract foreign direct investment in the electronics sector. 

Electronics is a knowledge intensive industry. The Southeast Asian economies supported their electronics industries through massive investment in human resource development. 

http://www.khaleejtimes.com/Display...l/business_April131.xml&section=business&col=


----------



## Neo

*U.S. may aid Pakistan on power*

ISLAMABAD, Pakistan, April 6 (UPI) -- The United States has said it is prepared to offer financial and technical support to Pakistan to solve its energy problems. 

"The next three years are going to be very difficult and challenging for Pakistan to resolve its energy crisis for which we are ready to offer our financial and technical support," said Gordon Weynand, an energy expert with the U.S. Agency for International Development. 

The comments, made in Islamabad, were reported Friday by the Dawn newspaper. 

Pakistan is looking at a number of options to meet its rapidly growing energy needs, including the controversial gas pipeline from Iran to India via its territory. The United States opposes that deal because of international scrutiny of Iran's nuclear program. 

Pakistan is also looking to import gas and power from Central Asia. Weynand said Washington would help Pakistan import electricity from Tajikistan. 

"Our mission is to put together economic growth strategy for Pakistan for the next five years and to see how energy fits into the Pakistani economy," he said.

http://www.upi.com/Energy/view.php?StoryID=20070406-115526-8366r


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## Janbaz

*Plan okayed to explore new biofuel sources* 

By Aftab Maken
ISLAMABAD: To diversify the energy basket and lessen dependency on imported fuels, the Planning Commission has approved a project worth Rs295 million to explore new sources of biofuels.

Besides determining key parameters, the project with the collaboration of private and public sectors would also work on the production of ethanol and methane gas from lingocellulosic biomass over the next three years.

Four major labs of National Institute for Biotechnology and Genetic Engineering (NIBGE), Faisalabad; School of Biological Sciences, University of Punjab, Lahore; Institute of Industrial Biotechnology, GCU, Lahore; PCSIR laboratories, Lahore and Shakarganj Sugar Mills Ltd, Jhang would take part in the research process, reveals an official document available with The News on Friday.

The Economic Coordination Committee (ECC) of the cabinet had approved E10 fuel (90 per cent gasoline and 10 per cent ethanol) on experimental basis in Islamabad and Karachi a few months ago. A few sugar mills are already producing ethanol from molasses.

It is roughly estimated one tonne of biomass can produce 200 litres of bio-ethanol from the prevailing technology, but the yield could be enhanced to the level of 350-400 litres per tonne of biomass by doing research and developing new techniques.

The document foresees shortfall in the availability of ethanol when the existing system for production of ethanol runs on full capacity.

The European Union is currently meeting four per cent of its energy needs from biomass and expects more than double its ethanol production from the existing level of 69 million tonnes of oil equivalent to 185 MT in 2010.

Pakistan has abundant available sources for biomass in the form of agriculture residue such as wheat straw, rice straw, cotton sticks, bagasse, corn stover, corn cobs and various other crops.

As the biogas plants have been installed in India, China and other countries in the region like Nepal, and Sri Lanka, Pakistan, which is producing more than one billion gallon of ethanol annually from the molasses, would also develop a process from laboratory to pilot-scale for the conversion of biomass to ethanol.

The use of biogas is helpful in improving the quality of household life further. It can partially replace the diesel to run IC (Internal Combustion) engines for water pumping, small industries like floor mills, saw mills, oil mills. It would reduce carbon pollutants as well.

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=49913


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## Janbaz

*Economy hits $135bn mark* 

LAHORE: State Minister for Finance, Omar Ayub Khan on Friday said the total size of Pakistan&#8217;s gross domestic product (GDP) has risen to the level of $135 billion from $62 billion over a period of seven years. 

&#8220;The consistent growth of national economy is just due to the efforts made by the present government to put the country on the path of high growth,&#8221; he said while inaugurating a two-day seminar on &#8216;Value Addition through Internal Audit&#8217; at a local hotel. 

Omar Ayub Khan said country&#8217;s economy had been growing at a rate of 7 per cent over the last several years and hoped that it would post the same growth rate this year. He said there is great potential for growth in the agriculture sector especially in the milk production. He said Swiss milk processing firm, Nestle has set up Asia&#8217;s biggest plant in Pakistan to benefit from the business opportunities. 

&#8220;More and more foreign companies are planning to invest in Pakistan due to the enabling environment and a big consumer base,&#8221; he said. Auditor General of Pakistan, Muhammad Younis Khan, Conference Chairman Iftikhar A Chaudhary, US Internal Audit expert, John White and Director General Works Audit, M Jamil Bhatti were present on the occasion.

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=49924


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## Janbaz

*Pakistan to have $2,250 per capita income in '20: report*

SHAHBAZ RANA
ISLAMABAD - Pakistan would be having $ 2,250 per capita income per annum in 2020, projected a report by Eminent Persons Group which was presented to the Asian Development Bank.
"Towards a New Asian Development Bank in a New Asia", report painted a rosy picture as saying, " by 2020 we envision a dramatically transformed Asia. It will have conquered widespread absolute poverty in most countries, with more than 90 per cent of its people living in middle-income countries".
Pakistan's per capita income per year is around $ 850 and to achieve the milestone of over $ 2000 in next 12 years, the country has to take major initiatives that requires not only to maintain the pace of current economic growth but also to enhance it further in the coming years.
However, recently released Asian Development Outlook projected GDP growth in the year 2008 at 6.5 per cent against government's own target of 7.6 percent in Medium Term Development Goals. 
The report says that by 2020 Asian per capita income would be comparable to Latin America's per capita income and its share of global GDP would reach 45 percent, whereas, its share of world trade would approach to 35 percent. Furthermore, the capital surplus in the region will remain a magnet for private capital flows and it will become a major factor in global issues. 
However, the report highlights that the region would continue to face many decades of major development challenges, depending on developments in Bangladesh and Pakistan as between 200 to 400 million Asians would still be living in low-income countries. 
The report says that Asia would become a larger user of natural resources including energy, other minerals and forest products, adding, this would continue to haunt the people around the world due to environmental issues. 
The report also recommends ADB to be more focused by adapting three strategies in a new outlook including, moving from fighting extensive poverty to supporting faster and more inclusive growth, from economic growth to environmentally sustainable growth and from a primary national focus to a regional and ultimately global focus. 

The Nation.
http://www.nation.com.pk/daily/apr-2007/7/index12.php


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## Janbaz

*Pak suffers $1.72 billion deficit in trade with china*

JAVED MAHMOOD
KARACHI - Pakistan sustained a huge deficit of $1.724 billion in bilateral trade with China in the calendar year 2006, The Nation learnt on Friday.
In 2006 Pakistan had imported 2.23 billion dollars worth various items from China while exports to the said country amounted to only 506 million dollars last year. Country&#8217;s annual imports from China have settled well above two billion dollars mark in 2006 because of free trade agreement enforced between the two friendly countries early last year.
Details show that the country&#8217;s imports from China were sharply growing during the last couple of years that was evident from 1.142 billion dollars imports in FY04 which now have surged to 2.23 billion dollars.
The quantum of trade deficit had also been growing in parallel with imports from China. For example in 2004-05 the two-way trade between the two countries caused 1.246 billion dollars deficit to Pakistan and this trade imbalance widened to 1.59 billion dollars in FY06.
China&#8217;s major exports to Pakistan are machinery, chemicals and auto parts and agricultural items. imilarly, Pakistan&#8217;s key exports to China are cotton yarn, fabrics, surgical equipment. 
Foreign trade experts said that China was among five leading trade partners with whom Pakistan had been sustaining a huge trade deficit every year. The other deficit-oriented trade partners are Saudi Arabia, Kuwait, the United Arab Emirates and Japan.
They said that country&#8217;s more than half of the total trade deficit was the outcome of heavy imports from the said countries. Experts said that instead of signing a free trade agreement with those leading trade partners from where Pakistan&#8217;s had been earning a substantial trade surplus, the Ministry of Commerce had signed FTA with China that magnified growth in the trade deficit of the country.
Experts were of the opinion that before implementing a full-fledged free trade agreement with China the Pakistan government should review the list of trade-able items to reduce deficit and to promote exports from the country.
In last financial year the trade deficit of Pakistan had hit the record high point of 12.20 billion dollars while in FY07 once again the quantum of the trade deficit was being seen around 12 billion dollars or even beyond it. In Eight months of FY07 Pakistan had already suffered more than 8.6 billion dollars trade deficit. 

The Nation.
http://www.nation.com.pk/daily/apr-2007/7/bnews2.php


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## Neo

Janbaz said:


> *Economy hits $135bn mark*
> 
> LAHORE: State Minister for Finance, Omar Ayub Khan on Friday said the total size of PakistanÃ¢â¬â¢s gross domestic product (GDP) has risen to the level of $135 billion from $62 billion over a period of seven years.
> 
> Ã¢â¬ÅThe consistent growth of national economy is just due to the efforts made by the present government to put the country on the path of high growth,Ã¢â¬Â he said while inaugurating a two-day seminar on Ã¢â¬ËValue Addition through Internal AuditÃ¢â¬â¢ at a local hotel.
> 
> Omar Ayub Khan said countryÃ¢â¬â¢s economy had been growing at a rate of 7 per cent over the last several years and hoped that it would post the same growth rate this year. He said there is great potential for growth in the agriculture sector especially in the milk production. He said Swiss milk processing firm, Nestle has set up AsiaÃ¢â¬â¢s biggest plant in Pakistan to benefit from the business opportunities.
> 
> Ã¢â¬ÅMore and more foreign companies are planning to invest in Pakistan due to the enabling environment and a big consumer base,Ã¢â¬Â he said. Auditor General of Pakistan, Muhammad Younis Khan, Conference Chairman Iftikhar A Chaudhary, US Internal Audit expert, John White and Director General Works Audit, M Jamil Bhatti were present on the occasion.
> 
> The News.
> http://thenews.jang.com.pk/daily_detail.asp?id=49924



Thats great news, but we'll still belong to low incomes group. What we need to do is control population growth, half it by 2020 and atleast try to reach a double digit economic growth thruout the next decade.


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## Neo

*Prime Minister approves development of new port city in Balochistan *

ISLAMABAD (April 07 2007): Prime Minister Shaukat Aziz has approved in principle the concept for the development of a new self-contained port city on the Balochistan coast, which will provide business, tourism, housing and industrial development opportunities to Pakistani and foreign investors.

The prime minister was chairing a presentation on the proposed port city called Alladin Cove at the PM's House on Friday. The actual city would be located at Miani Hor on the Balochistan coast.

He said that the decision to develop the new port city with world class infrastructure, including roads, airport, hotels, IT, banking, industrial parks and oil refineries had been taken in pursuance of the announcement made by President General Pervez Musharraf to develop a new city on March 20 during his visit to Gwadar to inaugurate the Deep Sea Port.

During his presentation, the Chairman Karachi Port Trust, Vice Admiral Ahmed Hayat told the meeting that Pakistan's fourth sea port of the country would be developed at Miani Hor a lagoon near Sonmiani, which is located 80-km North West of Karachi.

The prime minister said that the selected area should be clearly delineated and acquired and the services of a world-class developer should be sought through international tenders to prepare a master plan for the proposed city.

He said that in addition to being a port the new city would be a tourist resort and an industrial hub and would open new vistas of economic opportunities and create thousands of jobs, which would benefit not only Balochistan but the entire country.

He appreciated the positive role of Chief Minster Balochistan, Jam Mohammad Yousaf and the provincial government in facilitating yet another mega project, which would benefit the people of Balochistan.

http://www.brecorder.com/index.php?id=547502&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*'UK keen to invest in AJK' *

ISLAMABAD (April 07 2007): Andrew Wallace, Lord Mayor of Bradford, UK, said on Friday that they were interested in investing in Azad & Jammu Kashmir and wanted to build airport at Mirpur, which would be a mega project and to be established by overseas Pakistanis like Sialkot airport, which had been set up by the private sector.

Wallace said this during a meeting chaired by Talat Miyan, executive director general, Board of Investment here. Fazal Hussain, Member of Asian Business Forum also attended the meeting, says a press release.

He said, "There are enormous investment opportunities in power, financial, education, social and construction sector in Pakistan especially Azad Kashmir and Northern Areas and we would like to benefit from these by building strong economic relationship for investment."

Talat Miyan briefed the delegation about the friendly-investment environment in Pakistan. The investment policies of Pakistan were the most liberal in the whole region and there was unlimited potential in power, tourism and construction sectors, he said.

He told them about the investment in Kashmir like construction of tourist hotels, Neelam Jehlum Power Project, airport at Mirpur, and education & health centres.

He assured full support from Pakistan government to UK investors. A detailed presentation on Pakistan's investment climate was given by Azhar Hafeez, Project Co-ordinator/Desk Officer UK. Other senior and young executives of BOI also attended the meeting.

http://www.brecorder.com/index.php?id=547604&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*NTCHIP: World Bank and Asian Bank to provide $1910.5 million up to 2009 *

FAISALABAD (April 07 2007): World Bank and Asian Development Bank will provide $1910.5 million for "National Trade Corridor Highway Investment Programme (NTCHIP)" up to 2009, which will increase the trade competitiveness and regional cooperation.

According to official sources, NTCHIP Project will assist the Pakistan government in developing National Trade Corridor Highway Network. NTCHIP will also contribute to the economic growth by developing connectivity assets. This will increase the trade competitiveness and regional cooperation.

According to ADB sources, NTCHIP program will invest in over 800 km of the NTC network. This will also reduce the travel time from Karachi to Peshawar by half and provide faster access to the borders with Afghanistan, the People's Republic of China (PRC), and Central Asia.

NTCHIP will be contributed to the economic growth by developing connectivity assets. This will increase the trade competitiveness and regional cooperation. Sustainable development of the network will be enhanced through continued policy reform and private sector participation. The investments will lead to better road safety and application of safeguards. NTCHIP will further develop capacity at NHA.

At first stage, ADB will provide $890 million from Ordinary Capital Resources, while Asian Development Fund will provide $10 million for National Trade Corridor Highway Investment Program (NTCHIP) during 2007 along with Techhnical Assistance Special Fun $500,000 for NTC Logistics Strategy Programme.

ADB will provide $360 million for first phase of the project from its Ordinary Capital Resources. During 2008 and 2009, ADB will release $250 million and US $100 million from Ordinary Capital Resources.

Furthermore, International Bank for Reconstruction and Development will provide $300 million for National Trade Corridor Improvement Program (NTCIP) to reduce the cost of trade and transport logistics and bring services' quality to international standards in order to reduce the cost of doing business in Pakistan and ultimately enhance export competitiveness and accelerate industrialisation. The Pakistan government will achieve these objectives through a comprehensive multi-sector reform program aimed at streamlining procedures and improving services and physical infrastructure. The scope of the current program includes: railways, the road transport industry, ports, trade facilitation and air transport.

At the end of the reform program, the following outcomes are expected: Reduced share of domestic transport and cost of non-factor services in the total value of commodities; Overall reduction of transport and transit costs and times for goods using the National Trade Corridor; Increased rail share of long distance freight traffic; Reduction in the operating deficit of railways, with objectively determined and targeted subsidies; Better corridor user satisfaction; Improved safety and reliability of transport operations; and Improved procurement practices and enhanced accountability of the entities involved in NTCIP.

According to World Bank sources, the proposed NTCIP's objectives are consistent with the CAS for FY'06-09, which reflects the high priority assigned to sustaining growth and improving competitiveness. The CAS estimates that modernisation of the National Trade Corridor alone will require investment of about $1 billion per year over the next 5 to 6 years. In addition, the repair of critical road links, destroyed or damaged in the October 2005 earthquake, is an urgent priority. There is strong demand for increased lending in the transport sector during the coming CAS period. The CAS proposes follow-on investment lending for highways and trade facilitation is expected along the National Trade Corridor with an increasing emphasis on private sector participation in operation and management. In railways, the CAS envisages a combination of development policy lending and investment projects should the government commit to a medium term reform program to commercialise Pakistan Railways.

In the port sector the CAS proposes Bank support for the move towards landlord ports and professional management, combined with a modern institutional and legal framework for port operations that would open the way for investment lending to upgrade port infrastructure. Commenting over the collaboration with other development partners, sources mentioned that NTCIP as medium-term transport master plan for the country provides the basis for donor engagement in the sector and is supported by the donor community. The Asian Development Bank (ADB) will be a strong partner for the implementation of NTCIP. The financing plan for the highway component of NTCIP envisages that ADB's contribution will amount to $1.1 billion, about 30 percent of the total cost of the component.

http://www.brecorder.com/index.php?id=547560&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*Pakistan to purchase 1,000MW of Iran's electricity * 

TEHRAN, April 7 (Mehr News Agency) Ã¢â¬â Iran's Energy Minister Parviz Fattah and Pakistan's Federal Minister for Water and Power Liaquat Ali Jatoi here Saturday reached an agreement on exports of 1,000MW of Iran's electricity. 

With a 162 million people population, Pakistan is in dire need of electricity to develop its industries. 

Pakistan's current nominal power production is 18,000MW, of which 13,000MW is exploitable. 

Giving 12 to 15 percent of consumption growth rate into the consideration, Pakistan plans to put 20 of its dam building projects to national and international tenders. 

http://www.payvand.com/news/07/apr/1082.html


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## Neo

*Gold import comes to a halt *

KARACHI (April 08 2007): Gold import has almost halted, declining by 99 percent against last year, as only 12 kgs gold was imported in February 2007, due to its rising prices in the international market.

Importers say that during last few months gold prices in the international market have been moving upward and now its price in the international market has become higher than local market, which brought its import down.

According to official figures, during February 2007 Pakistan imported gold worth $ 0.231 million as compared to $ 40.665 million in February 2006, registering a decrease of $ 40.434 million.

Just 12-kg gold was imported in February 2007 against 3,011-kg in February 2006.

During July-February of the current fiscal year, Pakistan's gold imports declined by 50 percent, to $ 151.482 million against $ 305.119 million of the same period of last fiscal year, witnessing shrinkage of $ 153.637 million. During July-February of the current fiscal year 8704-kg gold was imported against 305,119-kg in the same period of last year.

After rise in the prices of gold in the international market importers shunned from placing huge orders, which brought gold import to the lowest level, a leading gold trader, Haroon Chand, said.

He said that gold import had almost halted, as it has become impossible to import it on such high price, and added that locally gold prices are lower than world markets. "There is no shortage of gold in the local market. So, importers are reluctant to import gold at high rates," he said.

He said that gold prices in the local market are also going up gradually and have reached Rs 13,100 per ten gram. Statistics showed that gold import has also declined by 89 percent during the February 2007 as compared to January 2007 and some 117-kg gold worth of $ 2.168 million gold has imported during January 2007.

Haroon Chand said that current tussle between USA and Iran is a major reason in raising the gold prices in the international market.

Although, at present, marriage season is going but there is no any demand is seen in the local market, which have created an other crisis in the local market, Haroon Chand maintained. He said that huge taxes on the import of gold are another factor of declining import of the gold during last few months.

"We are paying Rs 150 per tola withholding tax and Rs 80 per tola as federal tax on the import of the commodity, which have further raised the imported gold price" he added.

He said after the paying tax the imported gold price is Rs 380 per tola is higher than local gold. Gold prices in the international market are still in upward trend. The gold price has reached $ 675 per ounce by rising $ 3 per ounce during last one week in the international market.

http://www.brecorder.com/index.php?id=547856&currPageNo=1&query=&search=&term=&supDate=


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## Neo

Why are we still importing gold? There are proven reserves and productive mines in Pakistan.

Last year new discovery was made worth $72 billion in copper and gold, we should be exporting it by 2010 when the field is developped.


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## Neo

*President for initiation of FTA talks with US *

RAWALPINDI (April 08 2007): President General Pervez Musharraf on Saturday stressed the need for initiation of negotiations for a Free Trade Agreement (FTA) between Pakistan and the United States to strengthen the bilateral relations by boosting trade and investment links.

Talking to a seven-member bipartisan congressional delegation, led by Congresswoman Nita Lowey, the President underlined that the US Congress must continue to support initiatives to broaden and deepen Pakistan-US relations in diverse areas.

He said it was also essential to ensure that any legislation adopted by Congress should reinforce, and not undercut, the strategic co-operation between the two countries.

President Musharraf underlined the importance Pakistan attaches to a broad-based and long-term relationship with the United States. He noted with satisfaction that the multifaceted co-operation in various fields was increasing and underscored the significance of expanding bilateral trade and economic relations.

Congresswoman Lowey is a member of the House Committee on Appropriations and is Chairperson of the Subcommittee on Foreign Operations Appropriations. She is also a member of the House Committee on Homeland Security.

The Members of Congress underscored the strategic importance of Pakistan-US relations. They expressed appreciation for the efforts being made for the socio-economic development of Pakistan.

The Members of Congress recognised the value of expanded bilateral economic relationship and conveyed support for measures to create economic opportunities for the people. During the meeting Pakistan-US relations and matters of common interest, including Afghanistan, were discussed.

President Pervez Musharraf reaffirmed Pakistan's resolve to fight extremism and terrorism. He stressed that members of Congress should play an important role in fostering better understanding of Pakistan's strong efforts to fight extremism and terrorism and enhancing counter-terrorism co-operation between the two countries.

The members of Congress lauded Pakistan's contribution to countering terrorism and extremism. They appreciated the bilateral counter-terrorism co-operation and conveyed that the US would continue to support Pakistan in these endeavours.

The President apprised the congressional delegation of the comprehensive approach combining military, political, administrative, and socio-economic aspects being pursued by the government to effectively address the challenges of extremism and terrorism.

In this context, the President highlighted the importance of creating economic opportunities in the tribal areas and mentioned the Sustainable Development Plan for Fata. President Musharraf stressed the vital stake Pakistan has in a peaceful and stable Afghanistan. The President noted the measures taken by Pakistan to strengthen security along the Pakistan-Afghanistan border.

The Members of Congress appreciated Pakistan's efforts to promote peace and stability in Afghanistan. The President also apprised the congressional delegation of the steps taken to promote sustainable democracy in the country.

He said that the government was committed to holding free and fair elections. The President also outlined the government's actions to improve the access and quality of education at all levels as well as for the empowerment of women.

The other members of the congressional delegation included: Congressman Ed Royce member House Committee on Foreign Affairs, Committee on Financial Services; Congressman Adam Schiff member, House Committee on Appropriations, House Judiciary Committee; Congressman Steve Israel member House Committee on Appropriations, House Committee on Armed Services; Congressman Ben Chandler member House Committee on Appropriations, House Committee on Science and Technology; Congressman Tim Ryan member House Committee on Appropriations; and Congressman Cliff Steams member House Committee on Energy and Commerce, House Committee on Veterans' Affairs. During the meeting, Foreign Minister Khurshid M Kasuri and the US Embassy's Charge d' Affaires, Peter W Bodde were also present.

http://www.brecorder.com/index.php?id=547902&currPageNo=1&query=&search=&term=&supDate=


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## Neo

April 08, 2007 
*Pakistan may become wheat flour exporter*

By Parvaiz Ishfaq Rana

KARACHI, April 7: Pakistan can become a new market leader in wheat flour exports on harvesting bumper wheat of around 22.5 million tons as per government estimates. After meeting the domestic demand of around 19 million tons, the country would still have a surplus of more than 3.5 million tons.

However, all this depends upon the government how it tailors its wheat export policy, or would it continue with the traditional way of disposing of surplus stocks in bulk which would not earn much foreign exchange or create consistency in export market of value-added wheat products.

Despite the fact that there is going to be lesser demand by five per cent of wheat flour during 2006-07 in the world market as forecast by the International Grains council (IGC), but still Pakistan could have its share provided the government encourages export of value-added wheat products, particularly wheat flour which has a world market of over 9.25 million tons.

Besides the bumper wheat crop of around 22.5 million tons, there is a sizable quantity of carry-over stocks from last year which would mean that the country will have to take full benefit from its surplus wheat stocks, particularly when there is a big demand of wheat flour even from neighbouring countries, like India and Australia, who are witnessing a short crop.

The IGC forecasts 2006-07 world flour trade at 9.25 million tons, wheat equivalent, down 5.4 per cent from the 2005-06 estimates of 9.78 million. The 2006-07 forecast also is down from the 9.724m tons shipped in 2004-05, but is higher than the recent low of 8.583 million in 2001-02.

Drop in IraqÃ¢â¬â¢s wheat flour imports in 2006-07 are forecast at one million tons, compared with 1.5 million estimated in 2005-06. At one million tons, Iraq would be the worldÃ¢â¬â¢s second-largest importer, falling from the top spot in the 2005-06 season, and Libya would regain the number one position it held in recent years. Libyan imports in 2006-07 are forecast at 1.15 million tons, the same as in 2005-06, as demand should remain strong, the IGC said.

Wheat exporters told Dawn that a lot of enquiries are daily dropping in their offices from these countries, including Indonesia, Malaysia and Sri Lanka, and world traders are presently focusing on Pakistan for meeting wheat and wheat flour demand in the world market.

Turkey, which became world leader in wheat flour exports in 2005-06 on exporting around 2.245 million tons, is being forecast by IGC to reel back to second position after European Union as its exports would drop to 1.9 million in 2006-07.

The EU is expected to recapture its position as the worldÃ¢â¬â¢s largest exporter on exporting around two million tons of wheat flour in 2006-07.

Presently wheat flour exports from Pakistan are being quoted at $255 to $265 (fob) per ton and if the country even manages to export a modest quantity of 0.5 million tons, it would earn a huge foreign exchange of around $130 million. However, if the country manages to export around two million tons, it would earn around $520 million.

According to wheat flour exporters, the cost of processing wheat flour of export quality comes at Rs14,500 per tons and if Rs1,500 are added towards the incidental cost, the total estimated cost of wheat flour for export will come to Rs16,000 per ton or $253 per ton. There is a demand of grade one wheat flour (maida) in the world market which is a little higher in cost compared with plain wheat flour (atta) used in the country.

Though the government has fixed wheat procurement prices at Rs11,260 per ton, with the start of new crop harvesting in Sindh from late last month, prices in the open market came down to Rs11,150 to Rs11,200 per tons for Karachi delivery.

Market analysts feel that with the start of harvesting in Punjab in the middle of this month, wheat prices would further come down to Rs11,050 in the open market.

However, trade circles have appreciated the State Bank of PakistanÃ¢â¬â¢s decision to extend bank finances for wheat procurement up to Jan 31, 2008. This will help growers to get better prices as this will encourage higher involvement of private sector in wheat trade.

Similarly, the government has extended wheat export deadline from April to June 30, but exporters have demanded that there should be no deadline for wheat flour exports.

A leading wheat flour exporter, Johar Ali Kandhari, told Dawn that if the government comes out with a policy of encouraging export of value-added wheat products, it will enable the country to capture large export market, particularly of wheat flour, at a time when there is a short crop of wheat in many countries, including India and Australia, who had been net exporters of wheat and wheat flour.

He asked the government to give freight subsidy or support of $10 per ton on wheat flour exports and also ensure availability of wheat throughout the year for producing flour for exports. Once we managed to send message in the world market that Pakistan could be a reliable and permanent source of wheat flour, it will enable us to capture big chunk of world wheat flour market, he added.

Mr Kandhari also asked the Trade Development Authority of Pakistan (TDAP) to sponsor wheat flour delegations foreign visits and provide other assistance for promotion of export of wheat flour because the country can do better by exporting value-added products, such as Samolina (Sujee), wheat bran (chokker) and vermicelli (Pasta).

http://www.dawn.com/2007/04/08/ebr1.htm


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## Neo

April 08, 2007 
*US likely to delay BIT with Pakistan*  

ISLAMABAD, April 7: The United States is likely to further delay the Bilateral Investment Treaty (BIT) with Pakistan rather than softening its stance on certain clauses, as the two sides have failed to strike a deal on controversial clauses of the agreement, Dawn has learnt.

The two sides held several rounds since the year 2004 for reaching conclusion to ink the agreement, which was termed as a first step for the initiation of talks on a free trade agreement (FTA) between the two countries.

Well-placed sources told Dawn that the two sides seemed no where closer on the five clauses of the agreement - scope and coverage, transparency, claims on behalf of an enterprise, investment agreements and arbitration rules.

Ã¢â¬ÅUntil we reach at some closer point, it is unlikely to move forward on singing the agreement,Ã¢â¬Â the sources said, adding Ã¢â¬Åthe US is also now seemed less interested in fast tracking the agreement with PakistanÃ¢â¬Â.

The sources said that Islamabad lost its hope on early finalisation of the agreement as the USTR officials has yet to announce a date for further negotiation to be held in Washington on the remaining clauses.

The US President Trade Policy Agenda 2007 and 2006 annual report, released recently also mentioned that the USTR continued bilateral efforts to finalise BIT, which would provide US investors in Pakistan with significant legal protections. A small but significant number of differences have persisted on issues of considerable importance to the US.

Ã¢â¬ÅDiscussions on the BIT are expected to continue in 2007,Ã¢â¬Â the report added.

According to the sources, the draft agreement on the data protection is being under consideration of the cabinet, which will have a far reaching impact on the forwarding of negotiation on BIT.

According to the US report, Pakistan continued to take noticeable steps during 2006 to improve copyright enforcement, especially with respect to optical disc piracy. Nevertheless, Pakistan did not provide adequate protection of all intellectual property. Book piracy, weak trademark enforcement, lack of data protection for proprietary pharmaceutical and agricultural chemical test data, and problems with PakistanÃ¢â¬â¢s pharmaceutical patent protection remain serious barriers to trade and investment, the report added.

When asked a senior government official about the possible impact of President George W. Bush special powers under fast-track trade promotion authority to be expired in three months, he said it would have a minimal impact on the finalization of the BIT agreement.

Ã¢â¬ÅIt will be very difficult to predict exact date for the conclusion of the agreement. We will continue to work with US colleagues in future and try to conclude it in distinct future,Ã¢â¬Â the official added.

http://www.dawn.com/2007/04/08/ebr3.htm


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## Neo

*Pakistan's GDP growth is on track, SBP warns of emerging gray areas*
By M. Aftab (Analysis)

8 April 2007 

WHILE the GDP growth is on track, the central bank warns of emerging gray areas in the Pakistani economy. The exports are moving slowly, but spiraling imports are widening the trade deficit, State Bank of Pakistan (SBP) the central bank, also says in its report for the half year ended December 31, and projecting economyÃ¢â¬â¢s future course.

The report, mandated by the Parliament, warns the government of Pakistan of four gray areasÃ¢â¬âincluding (1) high inflation, (2) large current account deficit, (3) fiscal risks like low tax-to-GDP ratio, and low savings, and (4) the capacity to repay short-term foreign liabilities. These repayments, against debts rescheduled by foreign donors and international financial institutions (IFIs) in the wake of 9/11, are coming due within the next year. 

The expected large fiscal and current account deficits (CAD) notwithstanding, PakistanÃ¢â¬â¢s debt profile is forecast to improve during the current fiscal 2007 which will also see a continuing decline in the debt-to-GDP ratio. SBP project the CAD to widen during 2007 because, in spite of a decline in imported oil prices, "growth in imports at 10 per cent remains higher than exports increase at 4.0 per cent. But, exports growth is way down than last yearÃ¢â¬â¢s 18.8 per cent and imports of 46.3 per cent. SBP projects 2007 exports at $ 17.2 billion against the actual of $ 16.5 billion in 2006. Imports will be $ 30.7 billion against the actual of $ 28.6 billion in 2006. 

SPB, however, recommends a turnaround in export which are growing only at 4.0 per cent compared to fiscal 2006. Exports should be assisted in order to reduce the cost of doing business, improve competitiveness, raise productivity, upgrading quality, striving for economies of scale, product and geographical market diversification, cut unnecessary regulations and red tape, finish off multiple taxes, supply-chain improvements, and provision of flexible labour market. ThatÃ¢â¬â¢s a hell of a lot to ask for and implementÃ¢â¬â knowing the sluggishness of the government and most Pakistani entrepreneurs, who normally art not pro-active. But, usually they do deliver in their own interest when they face domestic and exogenous shocks. The case in point is their slow reaction to face up to massive Chinese, Indian, Bangladesh and even Vietnam textiles competition in the global market place. The industry invested $ 5.0 billion in up-gradation and product diversification, over the last three years as textiles, which contributes 67 per cent to overall export earning came under threat, with textile quotas gone. 

On the forex front, the central bank reported, the real effective exchange rate (REER) of Pakistani rupee, during seven months ended February 2007, appreciated 2.5 per cent seen against a basket of currencies mainly because of a weak US dollar compared to other major currencies abroad. The REER index indicated a depreciation of 2.6 per cent in the same period. "This gain in the form of a nominal depreciation of the weighted index was offset due to relatively higher inflation in Pakistan, compared to its primary trading partners and competitors." As a result, the net outcome was the cumulative appreciation of REER index by 2.5 per cent in eight-month that ended February 2007. "It indicates the loss of external competitiveness of Pakistani rupee." The situation "reinforces the need to bring down the domestic inflation." The official forex reserves with SPB, at end-February were $ 13.4 billion better than $ 11.5 billion in the like period last year. 

Home remittances sent by overseas Pakistanis, particularly those working in the UAE, Gulf, Saudi Arabia, UK and Northern America, up to February were $ 3.4 billion up from $ 2.8 billion in the like period of 2006. The central bank estimates 2007 will close with home remittances rising to a record $ 5.0-5.5 billion, up from the actual of $ 4.5 billion in fiscal 2006. 

Foreign investment rose to $ 3.5 billion during seven months that ended January, up from $ 1.6 billion in the like period of 2006. The increase this year is attributable to among other fields, the booming telecom sector, particularly cellular phones. But some of it was one-time investment in telecom network. One of the reasons that SBP and the government are confident to meet the rising bill of imports and cover the widening CADS is this increased inflow of foreign investment and home remittances. The report also says, the present forex reserves are enough to foot the import bill for 26.3 weeks, up from 24.9 weeks in November, 2006. 

There is an improvement in PakistanÃ¢â¬â¢s capacity to repay its short-term liabilitiesÃ¢â¬â- that are due within a year. The overall amount is small. This is because a substantial amount of newly acquired loans have a long-term duration. But, there is a caveat. SBP says, if external flows fail to keep pace with the expected rise in short-term liabilities when the grace period on old rescheduled debt ends, there can be problems. The economy is transmitting positive signals, too. SPB says it "strongly" continues on a growth trajectory. "IT does not pose a macroeconomic risk over the short term, particularly due to availability of foreign debt on favourable terms and strong investment flows." It forecasts the GDP growth in 2007 at 6.6-7.2 per cent"close to the annual target of 7.0 per cent, and above the desired long-term growth for the economy. The large scale manufacturing (LSM) industry 

recorded a 9.8 per cent growth, during the half year ended December 31, up from 8.7 per cent in the like period of fiscal 2006. The analysis, the bank said, is somewhat limited in scope as it mainly covers autos, sugar, cement, fertiliser, and petroleum products. 

Auto production rose 6.8 per centÃ¢â¬âdown from 28.6 per cent in 2006. The slowdown is due to capacity constraints, slowing demand and imports of used autos. The government has allowed this facility on the persistent demand by overseas Pakistanis who wish to import cheaper cars for their own use or to gift to others. A mismatch in the production mix and the demand growth pattern resulted in an output decline of 6.6 per cent in petroleum products. 

Cement production showed a remarkable growth mainly because of capacity expansion, and a rise in domestic and external demand. Sugar output rose 15.5 per cent, on the back of a 15.2 per cent increase in sugarcane production, compared to a decline of 40.5 per cent in the like period of fiscal 2006. 

The year-on-year growth in private sector credit take off was 15.7 per cent on February 24, 2007. In order to speed up investment and to stimulate industrial sector, its up-gradation and diversification, SPB has asked the government to remove infra-structural gaps and bottlenecks. Shortage of electricity and outages is one such case. The governmentÃ¢â¬â¢s agricultural policy, it also said, should focus building large water reservoirs to increase supply irrigation water to farmers. Commodity future markets should also be established so that farmers receive market-based prices. 

The report says, the average inflation has declined to 7.7 per cent, but is still higher than the official projection of 6.5 per cent for the year. Food inflation continues to be higher than this core inflation, over which the SBP has warned the government to take corrective measures, including increase in supplies of various food items, and putting an end to "collusive behaviour " of business and their price-fixing catels. 

SBP has asked the government to take steps to implement capital market reforms. The reforms should aim at "encouraging investment rather than speculation, and improving risk management to ensure financial sector stability." The central bank lays great emphasis on gearing up savings Ã¢â¬â the mother of all financing and investmentÃ¢â¬â to move the economy on a fast track. 

Inflation should be contained to bring real and positive returns to savers. The present profit rates average 3.14 per cent, or below Ã¢â¬â mean a negative return. They man a negative return to savers, whose deposits are getting eroded, and discourage savings. SPB has, however, failed to push commercial banks to cut down their present 7.5 per cent spread and to offer higher profit rates to savers. The lending rates range 13-14 per cent. Higher profit rates to savers, SBP insists, will "encourage domestic savings to rise from the current low level, reducing PakistanÃ¢â¬â¢s dependence on potentially fickle foreign investment." 

http://www.khaleejtimes.com/Display...l/business_April160.xml&section=business&col=


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## Neo

Sunday, April 08, 2007 

*PakistanÃ¢â¬â¢s exports to US increased by 17.5% in 2006: report*

By Sajid Chaudhry

ISLAMABAD: PakistanÃ¢â¬â¢s exports to the United States increased by 17.5% with total exports worth 3.8 billion dollars in 2006.

PakistanÃ¢â¬â¢s imports from the US also witnessed an increase of 51.6% with total imports worth $1.9 billion as compared with last year. The US goods trade deficit with Pakistan amounted to $1.9 billion in 2006 against a deficit of $2 billion in the year 2005, showing a decrease of $78 million, according to the US National Trade Estimates (NTE) Report 2007. 

Import policies: The report further analyzes that since 1998, Pakistan has progressively and substantially reduced tariffs and liberalized imports. This effort culminated in June 2002 with the establishment of four maximum import tariff bands of 5 percent, 10 percent, 20 percent and 25 percent. Generally, PakistanÃ¢â¬â¢s applied tariffs are below World Trade Organization (WTO)-bound commitments, with its simple average applied tariff at 16.5 percent. In 2005, Pakistan further reduced duties on imported automobiles to between 50 and 75 percent from the previous range of 75 percent to 150 percent. It imposed a 55 percent duty on imported automotive parts that are also manufactured domestically and a 35 percent duty on those automotive parts that Pakistan does not manufacture domestically.

Pakistan also further reduced duties on instant print film and instant print cameras to 5 percent from the prior 30 percent to 200 percent range in order to eliminate incentives for smuggling. In its 2006-2007 budget, the government eliminated customs duties on agricultural tractors. US-made textile products may be imported into Pakistan, although the tariff on certain synthetic fibers (scheduled to expire in 2008) remains relatively high. 

Pakistan continues to ban the import of 30 items, mostly on religious, environmental, security and health grounds. Pakistan also allows only 1,073 items to be imported from India, including 300 items that were added to the list in 2006. Pakistan says further opening up of trade with India is contingent upon progress on the status of Kashmir.

The government of Pakistan reserves the right to grant sector-specific duty exemptions, concessions, and protections under the Statutory Regulatory Orders (SROs). The government, in 2006, exempted all domestically produced and imported pharmaceutical-related inputs from its general sales tax. An SRO issued in August 2002 excepted the following items from the value-added tax: imported filled infusion solution bags; scrubs, detergents and washing preparations; soft soap or no-soap soap; adhesive plaster; surgical tapes; liquid paraffin; disinfectants; cosmetics and toilet preparations; and absorbent cotton wool. In recent years, the use of SROs has decreased. 

In January 2000, the Pakistan government began implementing a transactional valuation system, under which 99 percent of import valuation is based on invoice value, in accordance with the WTO's Customs Valuation Agreement. Currently, about 90 percent to 95 percent of imports are assessed duties pursuant to the transactional valuation system, including PakistanÃ¢â¬â¢s major imports such as industrial and power equipment, petroleum and petroleum products and chemicals. A number of traders in food and nonfood consumer products, however, report the system is not uniformly applied. These products account for close to 4-5 percent of PakistanÃ¢â¬â¢s imports.

A US freight forwarding company reported in 2005 that Pakistan imposed a new SRO requiring that the commercial invoice and the packing list be included inside a container. The SRO is still legally valid but is not being enforced due to practical difficulties. The inclusion of invoice and packing lists is difficult in situations when shipments originate from a location that is different from where the invoice and packing list are created; when, for security, invoices are created after the shipment departs; or, when several companies are involved.

Export subsidies: Pakistan actively promotes the export of Pakistani goods with measures such as tariff concessions on imported inputs and income and sales tax concessions. Subsidies in FY 2006 were confined mostly to wheat and totalled roughly $15.9 million, according to government sources. The government also provides freight subsidies to some products and these subsidies totalled close to $18.3 million in FY 2006. Pakistan established its first Export Processing Zone (EPZ) in Karachi in 1989, with special fiscal and institutional incentives available to encourage the establishment of exclusively export-oriented industries. The government subsequently established additional EPZs in Risalpur, Gujranwala and Sialkot in Punjab, and Saindak and Duddar in Balochistan. Principal government incentives for EPZ investors include an exemption from all federal, provincial and municipal taxes for production dedicated to exports, exemption from all taxes and duties on equipment, machinery, and materials (including components, spare parts and packing material), indefinite loss carry forward and access to Export Processing Zone Authority Ã¢â¬ÅOne-WindowÃ¢â¬Â services, including facilitated issuance of import permits and export authorizations.

http://www.dailytimes.com.pk/default.asp?page=2007\04\08\story_8-4-2007_pg5_2


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## Neo

Sunday, April 08, 2007 

*Hydropower projects in AJK: IT waiver in offing*

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet is expected to allow income tax exemption to hydropower projects located in Azad Jammu and Kashmir, initiated by companies registered in Pakistan, a government official told the Daily Times on Saturday. 

In this regard a proposal to amend the second schedule of the Income Tax Ordinance of 2001 would be submitted to the ECC at its next meeting to save the local as well foreign investors from hardships caused by tax authorities to them, the official added.

The Central Board of RevenueÃ¢â¬â¢s (CBR) proposal relating to limiting or withdrawal of income tax exemption to the hydropower projects located in Azad Jammu and Kashmir initiated by companies registered in Pakistan had caused problems to the future of these multi-million-dollar important power projects. 

The CBR was of the view that to avail of the income tax exemption on hydropower projects located in AJK, the investors should be asked to register their companies in AJK instead of Pakistan. 

In response to this, the Private Power Infrastructure Board (PPIB) was of the opinion that many companies incorporated in Pakistan and developing projects in AJK may need to wind up and transfer all documents, title deeds of assets including land acquired, all financial arrangements, etc in the name of new company.

The process can substantially delay the financial close and construction start for such projects.

The PPIB, in a reference submitted to the federal government, had warned that withdrawal or limitation of exemption at this stage would send a wrong signal to the investors, which could adversely affect the much-needed private investment in the power sector. Secondly, the application of income tax was a pass-through item in the electricity tariff, and would ultimately result in higher tariff for power consumers, which could necessitate an increase in governmentÃ¢â¬â¢s subsidy to the power sector, the official added.

Companies located in AJK sign an Implementation Agreement (IA) with the government of AJK, and as per Power Policy 2002, and the government of Pakistan also signs an IA to guarantee the obligations of the government of AJK. In this scenario, if companies are not incorporated in Pakistan, there could be possible complications with regard to governing law, jurisdiction issues, etc relating to disputes within the government of AJK and the government of Pakistan guarantees, the PPIB said. 

The Pakistan government has signed bilateral tax treaties with many countries that say that foreign investors from these countries are not likely to be eligible for relief on tax deducted from dividends paid by an AJK company, it added.

Foreign investors, relying on investment protection treaties between their respective governments and Pakistan, may lose such protection if the companies are incorporated in AJK.

The PPIB had highlighted that AJK companies may face impediments in the way of implementation of the commitments provided in the IA in relation to repatriation of funds, dividends, availability of foreign exchange for debt servicing, opening of foreign currency accounts outside Pakistan, etc. Concessions related to import duties are provided to companies incorporated in Pakistan, and AJK-registered companies may face problems.

In addition to all the above, it is clearly a perception issue for investors and lenders for making investments in Pakistani companies vis-ÃÂ -vis AJK companies. As Pakistani companies would provide more comfort and confidence to foreign investors, as well as the benefit of bilateral and investment protection treaties between foreign countries and Pakistan, the proposed change to income tax law would facilitate the harnessing of AJK hydropower generation potential. 

Furthermore, income tax exemption has already been granted under the 1994, 1995 and 2002 Power Policies. These policies have been widely advertised, and projects approved are currently being processed under them. The policies of both the governments of Pakistan and AJK clearly provide this income tax exemption, and now there is a need to set the legal framework right for successful implementation of these policies.

The law and justice division has rightly pointed out that amendments to the Income Tax Ordinance of 2001 for accommodating the aforementioned change will not be required; section 53(2) of the ordinance empowers the federal government to make amendments to the second schedule of the ordinance through issuance of a notification in the official gazette.

The PPIB had strongly supported the proposed changes to the income tax ordinance and was of the opinion that these changes are essential for successful and timely implementation of the government of PakistanÃ¢â¬â¢s approved and announced power policies. The PPIB had also called for similar changes to the AJK income tax law to complete the process of income tax exemption. sajid chaudhry

http://www.dailytimes.com.pk/default.asp?page=2007\04\08\story_8-4-2007_pg5_11


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## Owais

*World Bank not satisfied with power sector investment pace *

ISLAMABAD (April 09 2007): The World Bank is not satisfied with Pakistan's pace of investment in the power sector and wants that the government should inject more funds to improve electricity generation, distribution and transmission systems. The Bank also desires effective implementation of reforms program for power sector to make it efficient and viable.

It has demanded acceleration of the key reforms in the energy sector to cut down line losses and power theft. The World Bank's report on Pakistan's power sector claims that access to electricity remains a major challenge in many rural villages and small towns, and even among enterprises with access, reliability of supply is uncertain.

The median number of days with power outages in a typical month was reported as being 20 days in villages and 15 days, while power outages in a typical month was reported as being 20 days in villages and 15 days in small towns.

It has called for provision of better infrastructure, particularly road, and reliable electricity, which in its view can reduce operating and marketing costs, making investment in enterprises in rural areas and small towns more profitable.

The report also paints very bleak picture of access and use of telecommunications among enterprises, terming it as surprisingly limited. It said that only 31 percent of entrepreneurs in small towns owned fixed line phones or cellular phones.

It suggests that the government should put all things in order to ensure better road maintenance and extension of basic motorable access. It also wants improved institutional arrangements for ownership, management and financing of the rural transport system in accordance with the realities of devolution.

The bank has demanded of the government for promoting community involvement in planning and managing transport infrastructure improvements to ensure that the infrastructure meets local needs.

It says that increased public expenditures are particularly important in health, education and population. It adds that in spite of improvements since 2001-02, Pakistan's expenditures and outcomes in health and education have remained low in comparison with other South Asian countries. It says that education and health areas also appear to be under-funded, relative to other public expenditures that are less pro-poor.

The report calls for substantial investments in education and health to increase human capital and income-earning potential in order to break the inter-generational poverty trap.
http://brecorder.com/index.php?id=548571&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Chinese firm to set up truck manufacturing plant in Pakistan *
ISLAMABAD (April 09 2007): A Chinese firm would invest $100 million for setting up of first-ever heavy-duty truck, dumper and carrier manufacturing plant in Pakistan, said Ma Xiaoyan, representative of China National Heavy-Duty Truck Group Company (CNHDTGC).

"Seeing the market demand, our company is considering to invest $100 million for manufacturing of heavy-duty vehicular transport in Pakistan," he said while briefing newsmen at the launch of warehouse of the company here on Sunday.

He said Sino Pak Truck Private Limited had been established in Pakistan for the introduction of wide range of heavy-duty vehicles manufactured by CNHDTGC, meeting demand in oil, construction, food (cold storage), logistics, sundries, and military sectors.

"Our company manufactures 100 types of heavy-duty transport vehicles sufficing needs of almost every sector," he said.

The company, which has been manufacturing heavy-duty transport vehicles for the last five and a half decades, holds a number of international certifications like, ISO-9001 (Quality Assurance), American Bureau of Shipping Marine Container Certificate, Germany TVU Certificate and Chinese State Class High Technology Enterprise Certificate.

Xiaoyan said only during the last year the company had exported 10,000 trucks to Iran, and 30,000 containers to APL USA while a number of supply orders were in-hand with CNHDTGC, which he said manufactures highly cost effective dumpers, carriers and prime movers.

He said Pakistan had a vast scope for the use of such heavy transport vehicles as the country was showing progress by leaps and bounds in every sector. Due to this reason, he said, the company had been planning to make such a huge investment in the field of transport manufacturing.

He said the company was initially in the process of setting up of mechanism for supply of spares and certain consumable besides provision of after sales services.

In reply to a question, he said a number of deals for the supply of heavy-duty vehicles were being negotiated with certain firms and departments in Pakistan. He said the supplier had already won orders for provision of a considerable number of trucks and dumpers from various organisations working in logistics sector.
http://brecorder.com/index.php?id=548591&currPageNo=2&query=&search=&term=&supDate=


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## Owais

*KSE market capitalization surge by over Rs100b *
KARACHI: Karachi Stock Exchange (KSE) market capitalization this week soared by Rs111 billion.

KSE released figures showed market capitalization this week aggregating to Rs3176 billion as compared to Rs3065 billion in the previous week. In terms of dollar market capitalization worked out to $52.93 billion as against $50.49 billion. 
http://www.geo.tv/geonews/details.asp?id=4424&param=3


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## Janbaz

Neo said:


> Thats great news, but we'll still belong to low incomes group. What we need to do is control population growth, half it by 2020 and atleast try to reach a double digit economic growth thruout the next decade.



Population won't be controlled with ease, people tend to think backwards and poorer families have more kid's to sustain themselves. So, unless we adress the root causes we will have on going troubles. Investment should be increased especially in high tech industries, ensure growth in this sector the same way the Saudi's are doing it. One thing that bugs me though is that corruption is so widespred in the upper chambers of the society, which hurts the ordinary citizen. "Rishwat" is a comodity that should be checked and those with ill doings must be kept under check. that is way to prosper in these times of massive growth!


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## Neo

April 09, 2007 

*Trade with India rising despite hurdles*

By Sabihuddin Ghausi

THE two-way trade between Pakistan and India continues to surge, showing a four-time growth in the last five years, despite manybarriers in movement of goods and people.

The bilateral trade swelled from $235.74 million in 01-02 to more than $1 billion last fiscal year. Trade analysts see further volume growth as Pakistan has expanded its positive list of import trade with India that now includes machinery/equipment, raw materials, chemicals and accessories of a number of manufactured items which are in great demand in local market.

Opening of banks in Pakistan and India, resumption of shipping services and an improvement in road and rails transport between the two countries is bound to give a further boost to their bilateral trade.

``Businessmen of India and Pakistan now trade almost 2,000 items in more than 25 categories'', Raees Ashraf Tar Mohammad, a leader of Pakistan Grocers Association said This has built mutual confidence and communication between businessmen of the two countries. We book orders on telephone or on fax and rest of the formalities follow. In the last ten years or so ``not a single dispute'' was reported.Ã¢â¬Â

According to a trade analyst, the share of Pakistan's exports to India in overall exports increased from a mere 0.5 per cent in 01-02 to 1.8 per cent in 05-06. ``This is a six-time increase in Pakistan's exports to India during last five years, a leader of Karachi Chamber of Commerce and Industry said while pointing out that Pakistan's exports to India have increased from less than $50 million in 01-02 to about $300 million in 05-06.

Simultaneously, imports from India into Pakistan too surged from $186.52 million to $802 million, up from 1.8 per cent to 2.8 per cent Pakistan's global imports.

In all, these five years, the balance of bilateral trade remained in favour of India. In the year 2005-06, it rose up to more than $500 million.. This came a rude shock to the Ministry of Commerce in Islamabad.

In July 2006, when the federal commerce ministry issued a notification to implement concessional tariffs under South Asia Free Trade Agreement (SAFTA), India was omitted from the list of Saarc countries. The Indian Commerce Minister, Mr Kamal Nath raised this issue in the Inter Ministerial conference at Khatmandu, giving a veiled threat that India might review the tariff concessions being offered to Pakistan under SAFTA.

``We are not withdrawing these tariff concessions'', said the Indian High Commissioner in Pakistan while replying a query of a businessman at the Karachi Chamber of Commerce and Industry early March. But at the same time, he declared: ``India does have the option to take back all these tariff concessions if SAFTA was not implemented in letter and spirit''. ``We are not applying this option on Pakistan is another matter'', he added.

``Our trade relations with India are based on a positive list of about 1,078 items'', said the Federal Commerce Minister, Humayun Akhtar Khan. This has been well elaborated in Pakistan's Import Policy Order. India wants the most favoured nation (MFN) status which is in fact a WTO issue where India can agitate.

So far as implementation of SAFTA is concerned, the minister said that India can raise this issue bilaterally at the Committee of experts or at the Inter-Ministerial committee level. Pakistan is not happy with non- tariff barriers and overall Indian trade policy. Indian contention is that whatever the non-tariff barriers or other policy issues of their trade, `these are not Pakistan-specific and are meant for global imports''.

But Pakistan has taken a position saying that quite a few of NTBs hurt its imports-- mainly textiles into Indian market. In a detailed rejoinder, Pakistan has filed 26 objections on non-tariff barriers and has mentioned seven instances of para-tariffs that affect Pakistan's imports into India. For example, India has a set of restrictive rules on fabrics in which AZO dyes are used.

Pakistan has banned AZO dyes but has complained that the Indian authorities subject import consignments from Karachi to all such tests which take seven days to three months to complete and the cost is 10 per cent of the value of consignment. ``The complex set of regulations discourage exporters, affect cost competitiveness of exports to India and delay clearance at the customs'', PakistanÃ¢â¬â¢s commerce ministry maintains.

Indian administrative departments and divisions and its various states have an elaborate list of separate rules, regulations, restrictions, conditions, tariff rates for movement of goods which causes uncertainties and delays and discourage exporters and hence serve as non-tariff barriers.

Exchange of these notes between the commerce ministries of India and Pakistan has apparently not affected the bilateral trade so far. Though there have been some concerns in the official quarters in Islamabad on the `yawning trade gap'' with India, trade does not share this view.

It is argued that the imbalance in trade with India may widen further. Ã¢â¬ÅIndia is a close neighbour supply source of textile machinery and equipment'', a local leader of textile industry said. A few local textile industrialists imported Indian machinery via third country-Dubai, Hong Kong or Singapore. They consider these machineries relatively less expensive and more efficient than what they were buying from Japan or European countries.

Another advantage of buying Indian textile equipment and machinery is that engineers involved in installation and trial running do not cost as much as Japanese or European consultants. ``Indian engineers are just a telephone call away and their demand for fees and boarding is not as high as of others'', he said.

Two countries have been helping each other over the last few years to overcoming their shortages of agricultural products. Pakistan supplied chickpeas, pulses, grains and sugar when these were short in supply in India. India supplied onions, potatoes, pulses and other food items. Market report suggests that Indian experts are ready to work out a joint plan to exploit fisheries and export value added fish products.

Engineering sector is one area where Pakistan stands to gain a lot from India. Indian engineering goods exports now exceed $10 billion mark. Pakistan meets its 25-30 per cent requirements of engineering products from imports. India can be a good source of engineering products with freight advantage and relatively easy and quick delivery and after-sales service

In automobile India has emerged as a major component supplier to some of the world's largest auto players like General Motors, Volvo, Toyotas and Hondas and is reported to be manufacturing 275 auto parts, many of which are relevant to Pakistan.

In 1991, the intra-Saarc trade as a proportion of trade with rest of the world was three per cent. It increased to only 4.7 per cent by the year 2004. Intra- regional trade in South Asia is only 0.8 per cent of their GDP.

This slow growth is being attributed to unending tensions between the political leadership of India and Pakistan.

http://www.dawn.com/2007/04/09/ebr2.htm


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## Neo

April 09, 2007 
*Political economy model, instability*

By Yousuf Nazar

THE lawyersÃ¢â¬â¢ community has shown a remarkable unity in rising against the unprecedented actions against the Chief Justice of Pakistan. The political parties are calling it an assault on the judiciary while the government has maintained that the opposition is politicising, what it calls, a Ã¢â¬Ëconstitutional matterÃ¢â¬â¢. This characterisation is an oxymoron because politics, by definition, concerns all matters concerning governance and the three branches of government including the judiciary. The media has been outspoken in its coverage. Prominent former judges have termed this crisis as a defining moment in the history of Pakistan.

Some analysts have described it as a pre-emptive strike by General Musharraf to continue to don the uniform and tighten his grip on power in the backdrop of growing unease in the West over his failure to stop the Taliban insurgency but more importantly the perception that his support in Washington may be waning.

This article argues that military rule, by systematically damaging the rule of law, has imperilled PakistanÃ¢â¬â¢s development prospects and the current crisis needs to be debated in that broader and fuller context. It is old news that the PakistanÃ¢â¬â¢s military rulers have always operated above the law and have never been accountable to the courts despite pretensions to the contrary. The conquest of the judiciary will remove even that pretence and will destroy whatever is left of that institution.

The business community seems to be watching from the sidelines hoping that this crisis will somehow get resolved and it will be `business as usualÃ¢â¬â¢. PakistanÃ¢â¬â¢s successive ruling establishments, business elites and many former World Bank trained economists have been admirers of the economic growth achieved during different military regimes and point to the higher levels of aid flows, in particular the aid from the United Stated, as an important element of Ã¢â¬ÅbetterÃ¢â¬Â economic performance.

The role of economic aid has been exaggerated and is not supported by facts. From 1980 to 2007, remittances from Pakistanis abroad accounted for a much greater share of external financing requirement than foreign aid and borrowings from all sources combined. For example, while the US aid package for General ZiaÃ¢â¬â¢s regime was $3.2 billion during 1982-1987, remittances were five times as high at $15.2 billion during this period. Further more, it must not be forgotten that the remittances during the five years post 9/11 reached an aggregate of $22 billion compared to just $5.3 billion during the five-year period before 9/11.

While it is true that since 9/11, US military aid alone totalled almost $4.75 billion from October 2001 to August 2006 in addition to the $3 billion five-year economic assistance package, one cannot build a model of political and economic development that involves a continuous state of external conflict be it the Ã¢â¬ÅjihadÃ¢â¬Â against the Soviets in the 1980s or the Ã¢â¬Åwar on terrorÃ¢â¬Â since 2001.

It can be argued that costs of the conflict, that is, the breakdown of the rule of law, criminalisation of society due to drugs and arms trafficking, and the decline of the state power due to the rise of powerful non-state actors such as violent extremist groups, have far outweighed the economic benefits that may accrue from such Ã¢â¬ËaidÃ¢â¬â¢. Equally importantly, the Ã¢â¬Ëaid addictionÃ¢â¬â¢ has encouraged the governments not to undertake critical economic reforms. For example, Pakistan will hardly need any external aid if it could increase its tax-to-GDP ratio from a lowly 10 to 15 per cent.

Going beyond the issue of aid, the question that has not received the level of in-depth attention it deserves is whether the model of the political economy of a security state that Pakistan has followed since the late 1950s, except through a brief interlude during 1972-1977, can survive in the 21st century?

The role of the government, super power or not, is shrinking and the private capital has emerged as a powerful driver of economic change in an increasingly globalised economy with international competitiveness emerging as a measure of a nationÃ¢â¬â¢s strength and not its military prowess. The net aid flows to the developing countries account for just 10 per cent of private capital flows.

The power of the World Bank and the IMF is on the decline, the future of multilateral institutions like the Asian Development Bank is being questioned, and the United States has resorted to the use of military power, in part, because its economic power has declined over the past two decades. The spectacular growth of China and India has been underpinned by stable political systems and skilled human resources and not by arbitrary governance, aid, or nuclear weapons.

For those who believe that Pakistan can progress under a military or quasi-military rule supported by the US, the supremacy of the Constitution and the rule of law have been largely academic questions. This school of thought believes that so long as the military can maintain law and order - a euphemism for an autocratic rule - and allow the private sector to do business and make money, Pakistan can do without the Ã¢â¬ËluxuriesÃ¢â¬â¢ like a sovereign parliament, an independent judiciary and the rule of law. Hence, it has never objected to the gradual and systematic emasculation of the judiciary. A top industrialist remarked that he is not concerned about this crisis and only thing that matters is that uncertainty is removed as soon as possible otherwise the economic growth may suffer. But GDP growth is not the most meaningful measure of progress and development.

PakistanÃ¢â¬â¢s average GDP growth rate was 6.66 per cent during the five-year period from 1963 to 1968. The GDP growth rate was 9.79 per cent in the fiscal year 1969-70, the highest ever in the last 50 years. Within the next two and half years, neither the Ã¢â¬Ërecord GDP growthÃ¢â¬â¢ nor the military or the famous tilt of President Richard Nixon towards Pakistan could save the country from dismemberment and a complete collapse.

Thirty seven years later, some of us do not appear to have learned that the military and the support of a super power cannot ensure the survival let alone success of a state. In the absence of a truly representative and sovereign parliament, an accountable executive, an independent judiciary and a genuinely free media there can be no hope of building a sustainable politico-economic system that can compete in todayÃ¢â¬â¢s highly competitive global markets.

The Global Competitiveness Report (2006-2007) published by the World Economic Forum-- the elite club of WorldÃ¢â¬â¢s political and economic leaders-- states that while factors underlying competitiveness of nations are as diverse as they are numerous, the presence of macroeconomic stability is not enough. The report argues that equally important is Ã¢â¬Åthe institutional environment within which economic actors operate, including the protection of property rights, the quality of judicial system, even-handedness in the political process, and the reining in of corruption.Ã¢â¬Â

The report lists the institutional environment as among the most basic and critical pillars of development for poor countries like Pakistan; even more important than business sophistication and innovation. Pakistan is ranked 93rd out of 122 countries on the basic requirements while the report lists government instability/coups, corruption and policy instability as the top three most problematic factors for doing business in Pakistan.

Why then Pakistan has received a record amount of foreign investments in the last few years? The answer is not that difficult. The period since 2000 has seen the highest ever level of global liquidity accompanied by an all time high global GDP growth since the 19th century industrial revolution. But even during this period of extraordinary benign global economic environment, foreign investment flows into Pakistan have remained concentrated in three sectors (telecommunications, financial sector, and oil and gas) and have largely come from oil-rich states.

These investment flows together with the US aid seem to have convinced the current establishment that Pakistan does not really need a real democracy and the rule of law. This is a short-sighted and dangerous view and suggests that those who so fondly remember Ayub KhanÃ¢â¬â¢s economic performance have not learned the lesson that growth without development of the people but more importantly growth without building strong democratic institutions and establishing the rule of law could not be sustained and failed to stop the precipitation of the crisis that had been brewing under the Field Marshall for a decade and ultimately led to PakistanÃ¢â¬â¢s dismemberment soon after he left the stage.

http://www.dawn.com/2007/04/09/ebr1.htm


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## Neo

April 09, 2007 
*Rice ratooning: a technology to increase production*

By Hafeez ur Rehman, Dr Muhammad Farooq and Dr Shahzad M.A. Basra

RICE occupies a conspicuous position in our agro-based economy. It has emerged as a major export commodity contributing about 13 per cent to the total foreign exchange earnings of the country, 6.1 per cent value-added in agriculture and 1.3 per cent in GDP in the country.

Rice is grown here on an area of over 2.5 million hectares with an average yield of 2,117kg per hectare. The country ranks 9th with respect to area and 14th for yield per hectare in the world. There is 50.42 per cent gap between the actual and potential yield. The reason for this gap in yield is the poor rice production practices adopted by farmers and rice-growers of the area.

Rice ratooning is one of the potential and attractive alternative technologies to increase rice production. Based on land and water management, rice ecosystem is mainly divided into lowland, upland and deep water or floating rice. Rice ratooning is mainly practiced on lowland rice ecosystem.

Rice ratooning is not a new practice with farmers. It has been successfully adopted in many countries including India, Japan, USA, Philippines Brazil, Thailand and Taiwan. In India, of the 40mha under rice, about 18.9mha constitute the ratooning under lowland.

Rice ratooning can be practised as an alternative to double cropping in areas of available water after the main crop season, particularly it is suited to hilly, tropical areas with heavy rainfall and under rain-fed conditions to tide over moisture stress because no other crops except rice can be grown under the climate and moisture limitations.

Advantages: The main advantage of rice ratooning is that in areas where rice is the main crop, double crop of rice can be grown for additional returns. The ratoon crop matures earlier, it has been reported that days to maturity of the ratoon crops are 65 per cent less than the main crop. It requires 50 to 60 per cent less labour. Require less water inputs, water use efficiency is high and crop uses 60 per cent less water than the main crop. The production cost is lower due savings in land preparation, transplanting or direct seeding and crop maintenance during early growth. This system requires short duration, creating possibility for growing another crop in the same cropping year and offers an opportunity to increase cropping intensity per unit of cultivated areas. The yield is up to 50 per cent of the main crop. Rice varieties differ in their ratooning ability. In case of Ratoon crops from early maturing varieties, better performance in temperate is reported.

However, intermediate to late maturing cultivars are required for raising a good crop. The general trend is that intermediate to late maturing varieties produce higher yields than early maturing varieties. Hence, there are no set rules with regard to choice of cultivar regarding ratooning. Good agronomist of the area can be a good ratooner. Many factors like variation in soil, water, light, and temperature greatly influences the ratooning ability. These interactions are needed to be studied properly for manipulating ratooning ability agronomically.

Rice ratooning depends on the ability of dormant buds on the stubbles of the crop to remain viable, the buds may be at different stages of development or similar in length. Auxiliary buds that developed at those bud nodes grew into ratoon tillers. Tillers regenerated from higher nodes formed more quickly, grew faster and mature earlier. The panicles from ratoon coming from lower nodes produced more grains per panicle than those from upper nodes, but their fertility percentage decreases. However panicles from upper nodes contribute more to ratoon yields than those from lower nodes.

The best time to harvest the main crop for raising a good ratoon crop is when its culms are still green; stalks should be cut before the main crop is fully matured. The better yield from ratoon crop is reported if main crop stubble is left with 2-3 nodes. Sowing time, temperature, day length and other factors have a profound influence on main crop duration, harvest date of the main crop and its effect on the rice ratooning also vary. Very little work has been done on this aspect. However, any delay in planting the main crop will delay the harvest and effects ratoon crop yield as well.

The success of a good ratoon crop depends on the care with which the main crop is cultivated in the growing season. Agronomic practices and the care with which the main crop is protected against insect pests and diseases determine the success of ratooning and crop yields in ratoonable cultivars. Reduction in tilling ability and yield of the ratoon significantly are reported by low temperature at post maturity, similarly, blast incidence on the main crop can carry over to the ratoon resulting in total failures. Ratooning provides higher resource use efficiency per unit time and per unit land area. However, better yield of ratoon crop is possible by adopting appropriate management practices for main crop as well as for ratoon crop.

These management practices include land preparation, adequate plant density and spacing, use of appropriate cultivars, water management, application of adequate rate of fertilisers, appropriate height of cutting, and control of diseases, insects and weeds.

Following strategies should be followed for improvement of rice ratooning crop:

The prospects of ratooning should be studied under rain-fed conditions to over moisture stress during later growing phases of the crop than irrigated rice.

Major emphasis and systematic breeding efforts should be undertaken to synthesise cultivars especially for rationing. Cultivars suitable for different climate, altitude and purpose should be identified to optimise ratoon rice yields.

Efforts should be made to screen for rationing ability of rice resistance to insects, pests and diseases, tolerance for low temperature especially during early seedling stage and for drought during later stages of the crop.

Post harvest technologies including seed viability and milling quality should be studied. Development of low-cost technology in terms of bio-fertilisers, weed management to minimise cultivation cost is necessary to make ratoon rice a profitable enterprise.

http://www.dawn.com/2007/04/09/ebr4.htm


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## Neo

*Pakistan and Russia to enhance economic cooperation: foreign office *

ISLAMABAD (April 10 2007): Pakistan and Russia are expected to reactivate the inter governmental commission on trade, economic, scientific and technical cooperation during the Russian Prime Minister's visit this week, foreign office spokesperson Tasnim Aslam said here on Monday.

The Russian Prime Minister Mikhail E. Fradkov who will be visiting from 11 to 13 April, is the first Prime Minister of the Russian Federation to visit Pakistan. Earlier Premier Alexey Kosygin visited Pakistan in May 1969 as Prime Minister of the Soviet Union.

President Pervez Musharraf visited the Russian Federation in February 2003. Prime Minister Fradkov and Prime Minister Shaukat Aziz have met on two previous occasions during the Shanghai Cooperation Summits in October 2005 in Moscow and September 2006 in Dushanbe.

The spokesperson said that the Russian Prime Minister would hold in-depth discussions with Prime Minister Shaukat Aziz. He will also call on the President and address a gathering of businessmen. She said that the major focus of the visit would be on bilateral relations with particular emphasis on ways and means to enhance economic cooperation.

She said that the two countries are committed to establish a strong relationship based on solid foundations. There are a number of opportunities for Russian participation in various projects in Pakistan. The emphasis during the visit would be on establishing a substantive economic agenda to mutual benefit of both the countries.

She said that both sides are cognisant of each other's importance. Russia is a major international player. It is a permanent member of the United Nations Security Council and of the G-8. Russia's clout and influence has considerably been enhanced in the last few years. Today Russia is in the midst of remarkable economic recovery. There is a growing convergence of interests between the two countries on issues of regional and international importance.

Bilateral trade presently stands at $520 million, which is heavily in Russian favour. She said that good prospects exist of joint collaboration between Pakistan and Russia in sectors such as oil and gas, railways, construction of coal, thermal and hydel power generation.

A number of agreements are expected to be signed during the visit relating to Railways, Narcotics control and exchanges in cultural, educational, sports and scientific fields.

AFP adds: Foreign ministry on Monday denied reports that a Briton held over a plot to bomb transatlantic jets would be extradited to Britain in exchange for six separatist leaders.

The arrest of British national Rashid Rauf in August by Pakistan sparked a world-wide security alert and arrests in Britain amid fears of a conspiracy to blow up airliners flying from London to the United States. Rauf's family last week filed a legal petition alleging that Islamabad was negotiating with London to extradite him in return for six wanted Baluch nationalists who are based in Britain, and seeking to stop such a move.

"No," foreign ministry spokeswoman Tasnim Aslam replied when asked if Pakistan had any such plan, which was first reported by Britain's Guardian newspaper in March. Aslam said that currently Pakistan and Britain had no extradition treaty but that a draft accord was in its final stages. The 25-year-old Rauf faces charges including impersonation, carrying a fake identity card and fake documents, which he denies. He is still being held by security forces under special anti-terror legislation.

http://www.brecorder.com/index.php?id=548935&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*World Bank to launch $60 million for mine and mineral project *

KARACHI (April 10 2007): The World Bank is planning to launch about $60 million mine and mineral developmental project in Pakistan. Sources told Business Recorder on Monday that the WB would start $60 million project to develop country's mine and mineral sector.

The core objective of the project is to assist the government to implement strategy to accelerate sustainable mineral sector development by strengthening governance, transparency, and capacity in the management of mineral resources. The emphasis on community development, environmental compliance, and equitable sharing of mineral resource benefits, sources said and added the aim was also at attracting private sector mining investment.

The provincial level reforms will be implemented in Balochistan as a pilot case, and will aim to provide a demonstrative effect so that other provinces follow with similar reforms. The project is expected to yield the outcomes ie increased private-sector investment in the mineral sector as a result of collection and dissemination of the basic geo-data, and improved investment-enabling climate through enhanced legal and fiscal frameworks in line with international practices.

The improved institutional capacity at the federal and the provincial levels to manage the mineral sector, increased taxes/royalties revenues at the federal and local levels and to formulate policies on mitigation of potential impacts of mining on associated communities and on increased benefit sharing at the community level.

This would also improve efficiency and transparency of licensing process through a harmonised mineral licensing system. About $50 million to be spent at provincial level for production and management of geo-data, includes establishment of a mineral resource information centre for the management and dissemination of mineral resource information.

The compilation of existing and collection of new basic geo-data and activities to support sector promotion. A Provincial Regulatory Framework and Institutional Strengthening to include restructuring of provincial regulatory and fiscal frameworks relating but not limited to licensing, cadastral services, environmental compliance, mine health and safety, inspection and training, and institutional modernisation and strengthening.

Mining and Community Development to include development and implementation of overarching policies for improved sharing of resource benefit streams, mining & community development programs, improved environmental and social performance, and community wellbeing pilot projects.

At the federal level approximately US $8-10 million to be spent for improvement of the Federal Legal/Regulatory Framework, Fiscal/Taxation Regimes, and Institutional Framework, which would include modernisation and strengthening legal and fiscal frameworks, monitoring of industry activities, enforcing regulatory and environmental compliance, and institutional modernisation and strengthening as well as technical and non-technical capacity building.

Development of a Template for Provincial Mineral Concession Rules and Regulations would include development of standardised rules and regulations for the award, renewal, cancellation and administration of mineral rights, and co-ordination of standardised mineral cadastre system at the provincial level.

Formulation of National Sector Policies for Sustainable Development to include modernisation and strengthening of existing policies using international best practice duly adjusted to local conditions and formulation of consultation and planning frameworks to ensure community well-being for both large and small-scale mining.

Co-ordination and Promotion of Mineral Sector Development and Dissemination of Basic Geo-Data to include establishment of a national mineral resource information centre and institutional strengthening and capacity building of the Geological Survey of Pakistan, sources said.

The project will be implemented in both urban and local areas. The federal level components will be implemented in Islamabad and at provincial level in Quetta and other locations in Balochistan, which will be selected during the project implementation based on criteria established for these purposes, sources said. The project will help prepare environmental frameworks, and formulate policies for community development, including on environmental impacts.

http://www.brecorder.com/index.php?id=548872&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'Kotler's interaction useful for Pakistan's business community' *

LAHORE (April 10 2007): Professor Philip Kotler, world's top most marketing Guru's interaction with Pakistan's business community will prove to be a major breakthrough in the field of modern marketing in the country.

Sultan Tiwana, General Manager, Business & Sector Development Services of the Small and Medium Enterprise Development Authority (Smeda) stated this while addressing a press conference here on Monday.

Dr Fahim Raza Kibria, CEO Centre of Management and Marketing Excellence (Comme) also spoke on the occasion. Sultan Tiwana, while speaking on behalf of Smeda's CEO highlighted the significance of Dr Kotler's marketing concepts for SMEs of Pakistan. He said that the SMEs in Pakistan needed to fill in the knowledge gap with world's business community so as to gain international competitiveness.

He termed Kotler's attention to Pakistan a major breakthrough in this direction and hoped that the first-ever interactive workshop to be conducted by Dr Kotler himself for Pakistan will not only transform value added marketing knowledge to Pakistan but will also help divert world's attention towards Pakistani market. That is why the real marketing experts and business community consider Dr Kotler's interaction with Pakistan a historical event, he added.

Dr Fahim Raza Kibria, while giving a brief profile of Dr Philip Kotler said that Dr Kotler is a distinguished professor of international marketing at the Kellog School of Management at Northwester University, and has hailed by the Management Centre Europe as 'the world's foremost expert on the strategic practice of marketing'. Dr Kotler has provided consultancy services to many major US and foreign companies including IBM, Michelin, Bank of America, Merck, General Electric, Honeywell and Motorola - in the areas of marketing strategy, planning, marketing organisation and international marketing.

"Holistic Marketing Paradigm" is a specially designed content in which Philip Kotler will be holding a live interactive session for the first time, not only on international and multinational brands but also the local brands operating in Pakistan. The seminar will teach you how to apply the dynamics of international marketing practices with relevance to Pakistani market and brands. It will develop a global mindset so that future leaders can address the challenges of global competition, he added.

The event will be conducted via video conferencing from Florida, USA, simultaneously in an interactive session in Karachi, Lahore and Islamabad and a captive audience in Quetta, Multan and Peshawar on April 27, 2007.

http://www.brecorder.com/index.php?id=548945&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Wheat output target set at 23 million tonnes *

ISLAMABAD (April 10 2007): The government on Monday set 23 million tonnes estimated wheat production target for 2006-07 against last year's 21.7 million tonnes. The cotton production target has been fixed at 14.14 million bales cotton output target for 2007-08 against 13 million bales for 2006-07.

The Federal Committee on Agriculture (FCA) in its 86th meeting here reviewed the performance of agriculture sector in 2006-07 and set target for Kharif 2007-08. The meeting noted that the sector grew by around 4 percent during the last four years, said the Minister for Food, Agriculture and Livestock, Sikandar Hayat Khan Bosan while addressing a news conference along with the secretary following the meeting.

To a question, the Minister said that the government would export wheat over and above the domestic requirement of 20.5 million tonnes without specifying any country and arrangements in this connection. He, however, underlined the need for paying more attention to the basic issue of seed where the flow of investment is urgently required.

Giving details of the decisions taken in the FCA, the Minister said that the (2006-07) wheat production estimate is 23 million tonnes, which indicates 6 improvement against 21.7 million tonnes for last year. The production level also surpassed the set target of 22.5 million tonnes by 2.

The gram (2006-07) production is 846,500 tonnes with an increase of 76.5percent against 479.5 000 tons for last year as the production is 20percent above the set target of 706.5 000 tons. Lentil (2006-07) production estimate is 24,240 tonnes showing an increase of 35.4 percent against 179,000 tonnes with 9.2 percent increase. The Potato (2006-07) estimated production is 2.43 million tonnes whereas onion at 1.6 million tonnes with a decline against last year's 2.0 million tonnes target.

The Kharif 2007 (April-September) water prospects are quite encouraging with provincial allocation at 76 Million Acre Feet (MAF). The availability of cottonseed is 53 percent of the total seed requirement of 62,000 tonnes and fertiliser availability against the expected consumption of 2.5 million tonnes of urea during Kharif 2007 more than 2.70 million tones will be available leaving a surplus of approximately 200,000 tonnes.

For 2006-07 agricultural credit disbursement target has been set at Rs 160 billion. The credit disbursement for the last 8 months (July-February) is Rs 92 billion. The credit improvement of 14 percent in disbursement compared to the same period of last year disbursement of Rs 81 billion.

Cotton production targets for 2007-08 crop are fixed at 14.14 million bales from an area of 3.26 million hectares whereas the sugarcane (2006-07) production is estimated at 52.9 million tonnes. This indicates improvement of 18 percent over the last year's achievements of 44.7 million tonnes. Targets for 2007-08 crop are fixed at 54 million tonnes from an area of 1.015 million hectares.

Rice production targets from 2007-08 crop are fixed at 5.72 million tonnes from an area of 2.6 million hectares. Maize production targets for 2007-08 crop are fixed at 3.2 million tonnes from an area of 1.0 million hectares. Mung production targets from 2007-08 crop are fixed at 162,000 tonnes from an area of 262,000 hectares. Mash production targets for 2007-08 crop are fixed at 20,000 tonnes from an area of 38,000 hectares. Chillies production targets for 2007-08 crop are fixed at 130,000 tonnes from an area of 66,000 hectares.

http://www.brecorder.com/index.php?id=548839&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*IT sector growing at incredible rateÃ¢â¬â¢ *

KARACHI: The IT sector in Pakistan is growing at an incredible 50 per cent per annum, and the Networked Readiness Index rankings published in the Global Information Technology Report are often misleading, especially when reported in the context of developing countries, said a statement issued by the Pakistan Software Houses Association (PASHA) on Monday.

Ã¢â¬ÅThe IT sector in Pakistan is growing at a rate far faster than ever before, at a phenomenal 50 per cent year-on-year,Ã¢â¬Â the statement quoted Ashraf Kapadia, the PASHA president, as saying.

Ã¢â¬ÅThis is supported by the figures published by the State Bank for remittances made by IT firms during the last 3 years. The sector comprises more than 900 IT & ITeS companies operating in Pakistan, of which more than 125 are either ISO-certified or CMMI-appraised.Ã¢â¬Â It said the IT industry in Pakistan was estimated to be $2 billion per year with almost $1 billion of it being export related. The industry employs a workforce of over 90,000 professionals which is also growing exponentially, added the statement.

Ã¢â¬ÅMany PASHA member companies have developed and are exporting world-class products which are acknowledged leaders in their domain,Ã¢â¬Â said the PASHA statement. The PASHA chief said the most fundamental measure of IT readiness was the telecom infrastructure and the reach of network services, and the bandwidth consumption in Pakistan had increased from 800MB in 2003 to 2,500 MB.

Ã¢â¬ÅThis indicates a robust growth and is extremely encouraging for PakistanÃ¢â¬â¢s readiness for the networked world,Ã¢â¬Â he added. Ã¢â¬ÅIn terms of IT awareness, most private schools are well equipped with IT facilities and the government has also provided computer labs and staff to 1,100 government schools.Ã¢â¬Â

He said large private sector organisations were using state-of-the-art IT solutions as IT usage in the business sector in Pakistan had proliferated and even small establishments were using IT for competitive advantage. Ã¢â¬ÅUse of IT in the public sector has also grown significantly and the IT spend by the government has registered a healthy growth,Ã¢â¬Â said Kapadia. 

http://www.thenews.com.pk/daily_detail.asp?id=50429


----------



## Neo

April 10, 2007 
*Pakistan eyeing Indian cement market*
By Dilawar Hussain

KARACHI, April 9: Cement manufacturers are paving the road of Ã¢â¬Åconfidence buildingÃ¢â¬Â measures with India through exports. An official statement issued in New Delhi by the Indian Prime MinisterÃ¢â¬â¢s office on April 4, following a meeting between Prime Minister Shaukat Aziz and his counterpart Manmohan Singh on the sidelines of the 14th summit meeting of Saarc, Mr Shaukat had expressed PakistanÃ¢â¬â¢s readiness to export cement to India.

The country aimed at taking advantage of the Indian Finance MinistryÃ¢â¬â¢s decision of only a day earlier, to abolish 16 per cent countervailing duty and 4 per cent special duty on cement, to make import of the construction material duty free.

Under those happy happenings, a report last Friday by a little-known Mumbai-based paper that cement consignments of 125 tons imported in five containers from Pakistan were awaiting at Nhava Sheva port for want of quality clearance certificate from Bureau of Indian Standards (BIS) had raised many eyebrows. But Mr Abur Razzak Thaplawala, executive director at Lucky Cement contradicted the report saying that the consignment was only 50 tons in one container shipped a week ago. He said that the formalities required by the BIS had been completed, which included making an application; appointment of agent, etc.

Mr Thaplawala was confident of release of consignment to the importer in a day or two.

The executive director claimed credit for 85 per cent of cement exported by sea from Pakistan. He said that to facilitate handling of bulk exports, his company had imported 25 Ã¢â¬ËbulkersÃ¢â¬Â from Germany, which were employed for loading cement on ships in bulk quantities.

He said that the companyÃ¢â¬â¢s expansion plant at Karachi was operating at full capacity. Besides the captive markets of Afghanistan and Iraq, Mr Thaplawala counted at least a dozen destinations where Pakistani cement had made their first foray. Those included: Abu Dhabi; Qatar; Yemen; Morocco; Muscat; Iran; Dubai; Turkey; South Africa; Madagascar; India; Sri Lanka; Djibouti and Umul Qasr.

As for India, D.G. Khan Cement had earlier exported a consignment of 1,500 tons through GujaratÃ¢â¬â¢s Mundra port. Where exports were concerned, Askari, Bestway; Pioneer; Maple Leaf and others big fish in the industry shared the pie.

Figures released recently by All Pakistan Cement ManufacturersÃ¢â¬â¢ Association (Apcma) showed highest ever local and export sales for any single month in March 2007 at 1.9 million tons and 371,000 tons, respectively.

Ã¢â¬ÅExport dispatches have accelerated further on the back of increase in bulk shipments through sea route. Stable prices and commencement of peak construction season (March-Sept) also saw strong local cement demand,Ã¢â¬Â stated a report by AKD Securities.

Another report by Taurus Securities commenting on company-wise performance said: Ã¢â¬ÅLucky remained the market leader and sold around 2.5m tons in the local market while exported nearly a million tons (including clinker) during nine months (July-March) of FY07. This increased its market share in both local and export markets to 16.0pc and 42.8pc during the period under review respectively compared to 11.0pc and 22.2pc in FY06.

D.G. Khan retained its second position in the local market with sales of 1.7m tons and market share of 10.9pc followed by Askari Cement with sales and market share of 1.5m tons and 9.8pc respectively. Furthermore, Bestway Cement captured second position in exports with export sales of 229,000 tons followed by Askari Cement with 140,000 tons of exportsÃ¢â¬Â.

On account of its burgeoning demand Pakistani exporters of cement had come to dictate prices and terms. Ã¢â¬ÅOn average our export prices range between $64-65 per ton,Ã¢â¬Â says Mr Thaplawala.

Industry sources pointed out that only four months ago in Jan, importers were willing to pay no more than $47 Ã¢â¬â 48 per ton for cement from Pakistan.

http://www.dawn.com/2007/04/10/ebr3.htm


----------



## Neo

Tuesday, April 10, 2007 

*Cement sales, exports set to rise this fiscal*

By Tanveer Ahmed 

KARACHI: On the back of upbeat local demand and bright export prospects, the cement sector is expected to have another windfall year in sales as well as in exports.

Analysts and industrialists of the cement sector say the last quarter of fiscal year has always proved a boon for the industry because of an increase in construction and development activities across the country with the onset of the summer season.

Due to strong expectations of high consumption in the days to come, the estimates for the whole-year sales are being revised upwards. 

Based on the cement dispatches in the first nine months of the current financial year, the full-year cement sales is being forecast at 24-24.5 millions tons against earlier estimates of 23.5 million tons of sales in the whole year.

The local demand for cement is expected to remain upbeat as usually in the fourth quarter (April-June) of fiscal year demand peaks with the start of summer season, which also brings major infrastructure and construction activities in the country, analyst Atif Malik at Jahangir Siddiqui Capital Markets believes.

The government is likely to try to utilize the maximum of record development budget in the remaining months of the current financial year and would initiate and complete a number of development projects, which would be consuming more cement.

On the export side, the shortage of cement in the region also bodes well for Pakistani cement manufacturers, which would not only result in export of a major quantity, but would also bring in high export price. The country exported 1.305 million tons of cement in the first eight months of the current financial year, showing a 16 percent growth compared with the corresponding period of the previous year.

Ã¢â¬ÅCement export will pick up in next few moths with the high export price, and the consumption of cement in the country is also set to register a rise in the coming daysÃ¢â¬Â, Abdul Razzaq Thaplawala said.

He also expressed optimism that Pakistani cement would also find its way into neighbouring India, which has abolished countervailing duty and additional customs duty on cement imports in a bid to curb local cement prices in the country. Ã¢â¬ÅThis bodes well for Pakistani cement manufacturers as with removal of these duties, the Pakistani cement would become competitive in the huge Indian market,Ã¢â¬Â analysts noted.

They calculate that the landed cost of Pakistani cement in India would come to around $93-107 tons at retail, which would be competitive compared with Indian cement at $109 dollar per ton in the northern parts of India and $95 dollar per ton in southern parts. 

Investor confidence in the booming cement sector was also reflected in MondayÃ¢â¬â¢s trading at the Karachi Stock Exchange (KSE), where cement scrips dominated trading with huge trading volumes. 

The three top volume leaders in the stock trading on Monday were from the cement sector with total four cement sector companies in the top 10 volume leaders in the session.

Analysts also recommend buying shares of major cement companies listed at the stock market because of burgeoning sales and high earnings in coming months, which is likely to attract investors.

http://www.dailytimes.com.pk/default.asp?page=2007\04\10\story_10-4-2007_pg5_1


----------



## Neo

04/10/07 

*Chinese firm may set up truck manufacturing plant in Pakistan*

Islamabad (ANTARA News/Asia Pulse) - A Chinese firm is considering investing US$100 million to set up the first-ever heavy-duty truck, dumper and carrier manufacturing plant in Pakistan, Ma Xiaoyan, representative of China National Heavy-Duty Truck Group Company (CNHDTGC) said at a briefing for reporters Sunday. 

Ma said Sino Pak Truck Private Limited had been established in Pakistan to introduce a wide range of heavy-duty vehicles manufactured by CNHDTGC, meeting demand in oil, construction, food (cold storage), logistics, sundries, and military sectors. 

The company has been manufacturing heavy-duty transport vehicles for the last five and a half decades.

Source:
Business in Asia Today - April 10, 2007

http://www.antara.co.id/en/arc/2007...set-up-truck-manufacturing-plant-in-pakistan/


----------



## Janbaz

Neo said:


> *Pakistan and Russia to enhance economic cooperation: foreign office *
> 
> ISLAMABAD (April 10 2007): Pakistan and Russia are expected to reactivate the inter governmental commission on trade, economic, scientific and technical cooperation during the Russian Prime Minister's visit this week, foreign office spokesperson Tasnim Aslam said here on Monday.
> 
> The Russian Prime Minister Mikhail E. Fradkov who will be visiting from 11 to 13 April, is the first Prime Minister of the Russian Federation to visit Pakistan. Earlier Premier Alexey Kosygin visited Pakistan in May 1969 as Prime Minister of the Soviet Union.
> 
> President Pervez Musharraf visited the Russian Federation in February 2003. Prime Minister Fradkov and Prime Minister Shaukat Aziz have met on two previous occasions during the Shanghai Cooperation Summits in October 2005 in Moscow and September 2006 in Dushanbe.
> 
> The spokesperson said that the Russian Prime Minister would hold in-depth discussions with Prime Minister Shaukat Aziz. He will also call on the President and address a gathering of businessmen. She said that the major focus of the visit would be on bilateral relations with particular emphasis on ways and means to enhance economic cooperation.
> 
> She said that the two countries are committed to establish a strong relationship based on solid foundations. There are a number of opportunities for Russian participation in various projects in Pakistan. The emphasis during the visit would be on establishing a substantive economic agenda to mutual benefit of both the countries.
> 
> She said that both sides are cognisant of each other's importance. Russia is a major international player. It is a permanent member of the United Nations Security Council and of the G-8. Russia's clout and influence has considerably been enhanced in the last few years. Today Russia is in the midst of remarkable economic recovery. There is a growing convergence of interests between the two countries on issues of regional and international importance.
> 
> Bilateral trade presently stands at $520 million, which is heavily in Russian favour. She said that good prospects exist of joint collaboration between Pakistan and Russia in sectors such as oil and gas, railways, construction of coal, thermal and hydel power generation.
> 
> A number of agreements are expected to be signed during the visit relating to Railways, Narcotics control and exchanges in cultural, educational, sports and scientific fields.
> 
> AFP adds: Foreign ministry on Monday denied reports that a Briton held over a plot to bomb transatlantic jets would be extradited to Britain in exchange for six separatist leaders.
> 
> The arrest of British national Rashid Rauf in August by Pakistan sparked a world-wide security alert and arrests in Britain amid fears of a conspiracy to blow up airliners flying from London to the United States. Rauf's family last week filed a legal petition alleging that Islamabad was negotiating with London to extradite him in return for six wanted Baluch nationalists who are based in Britain, and seeking to stop such a move.
> 
> "No," foreign ministry spokeswoman Tasnim Aslam replied when asked if Pakistan had any such plan, which was first reported by Britain's Guardian newspaper in March. Aslam said that currently Pakistan and Britain had no extradition treaty but that a draft accord was in its final stages. The 25-year-old Rauf faces charges including impersonation, carrying a fake identity card and fake documents, which he denies. He is still being held by security forces under special anti-terror legislation.
> 
> http://www.brecorder.com/index.php?id=548935&currPageNo=1&query=&search=&term=&supDate=



I just love a increase of trade with Russians! They are a very strong economy and Pakistan a benifit a lot form their ties to Eastern European nations. Also if we get closer to them we can acquire military equipment from their firms like MIG, Sukhoi etc besides gaining a lot in the business sector. The Russians can prove to be a very beificial strategic, economic and military ally in the 21st century with China. :flag:


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## Janbaz

*Pakistan loses ground to India in poultry export*

OUR STAFF REPORTER
LAHORE - The poultry industry representatives have expressed their concern over bird flu discovery in Pakistan once again, arguing that the industry already bruised after the February 2006 scare cannot withhold any new crisis. 
They feel that; what they called unsubstantiated claims can play havoc with the industry, still recovering from losing ground to India.
Poultry farmers told The Nation said that the industry was still recovering from the last year bird flu crisis and could not withhold another shock. Abdul Basit who deals in the one-day poultry production said that the last scare cost many potential export destinations for poultry products. Elaborating his point Basit said that before the February 2006 crisis, Pakistan was exporting eggs to Afghanistan, Saudi Arabia, Iran, Yemen and UAE with an average price of 22 to 24 cents. After the crisis Basit argued that the ban on Pakistan based products opened opportunities for the Indian poultry industry, selling the same eggs at 36 cents per one egg.Unlike India, Pakistan has no quality certification infrastructure for poultry products in place. 
The reason that despite the fact Indian and Pakistani climatic conditions are the same, the Indian poultry exports have been able to get through by the dint of the fact that the Indians have been able to convince the importing countries about the health quality of their poultry products. 

The Nation.
http://www.nation.com.pk/daily/apr-2007/11/bnews3.php


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## Janbaz

*Reserves to touch 14.3 billion dollars by June*

SYED JAFAR ASKARI
KARACHI - The country&#8217;s foreign exchange reserves are expected to further surge to 14.3 billion dollars by June 2007, The Nation learnt on Tuesday.
The federal government is launching international bonds and GDRs of the United Bank Limited in next few days that would further augment the foreign exchange reserves by June 2007.
From January-March 2007 the foreign exchange reserves of the country had already increased by $ 677 million as reserved mounted to $ 13.624 billion by March 31, 2007, from $12.947 billion in Dec 2006. The statistics showed that out of $13.624 billion total reserves, State Bank of Pakistan (SBP) holds $ 11.329 billion and domestic banks of the country hold the rest of the foreign reserves worth $ 2.295 billion. 
While, three months back in Dec 2006 the SBP had $ 10.630 million and the banks had $ 2.316 million out of total liquid reserves of $ 12.947 million. The statistics also revealed that the total foreign liquid reserves in January, the seven month of the current FY-2007, were $13.212 billion, while on Feb 3, 2007 the reserves increased to $13.253 billion. The foreign exchange reserves were also increased on Feb 17 and on Feb 24 as $ 13.280 million and $ 13.342 million respectively in current FY-2007. 
The experts are of the view that increase in the outflow of remittances, foreign investment and launching of GDRs of OGDC and MCB Bank are the main factors causing for considerable increase of reserves in the country. In eight months of FY07 the country had received $ 3.414 billion on account of home remittances in the current year, while this figure was $ 2.794 billion in the same period of last fiscal. However, $ 620 million was augmented in the country on account of home remittances during last three months. It is expected that the home remittances will reach $ 5 billion dollar by June 2007.
The foreign investment, including portfolio and foreign direct investment is the important factor causing for notable increase in foreign exchange reserves of the country. While, the foreign investment is expected to touch $ 6 billion by June of this year. In eight months of FY07 the country had already received $ 3.952b, showing about one hundred per cent increase when matched with $1.96b foreign investment received during the corresponding period of FY06.
The country had received more than $ 900 million form the sale of GDRs of the OGDCL and MCB Bank, which stabilised investment and augmented the foreign exchange reserves.
The government is floating international bonds that would also help in raising foreign exchange and stabilising the reserves at the end of current FY-2007. 

The Nation.
http://www.nation.com.pk/daily/apr-2007/11/bnews5.php


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## Janbaz

*Pak, Iran to hold talks on mega projects*

JAVAID-UR-RAHMAN
ISLAMABAD - Pakistan will enter into dialogue with Iran to develop the coordination and research work on different mega projects.
In this regard Federal Communication Minister Shamim Siddiqi is leaving for Tehran on a three-day official visit to attend Joint Ministerial Meeting at Tehran to be held from April 13-16. The Minister is leading a 10-member delegation.
&#8220;Both government will discuss the maritime issues, Pak-Iran bus service and other related projects&#8221;, said Federal Minister Shamim Siddiqui while addressing a high-level meeting comprised representatives of different Ministries. 
The Minister said that imparting Railway training by Pakistan would also be discussed in the Joint Ministerial Meeting. &#8220;Both the governments intend to develop coordination and research work on maritime issue&#8221;, he added.
It also came under discussion in the meeting that the issue of 65 kilometers missing railway link (which Iran has already offered) would be raised in the meeting. 
&#8220;If this railway gap is filled then the trade between the two countries would be more comfortable&#8221;, he said, adding that the Iran and Pakistan are brotherly countries and would become stronger with the passage of time.
Pakistan and Iran agreed to run the bus service for which the initial modalities have already been settled and the final date to start the bus service will be announced in the Joint Ministerial Meeting.
The NHA representative informed the meeting that the work on Quetta-Noshki road is under way with full pace and will be completed as early as possible.
Discussing the trade issues, the Minister said, &#8220;To meet the future trade challenge, our trucking industry should also be equipped with modern fleet.&#8221; 

The Nation.
http://www.nation.com.pk/daily/apr-2007/11/bnews9.php


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## Janbaz

*Govt in the dark about poor growth in exports*

JAVED MAHMOOD
KARACHI - The Commerce Ministry has kept the Federal government in the dark about poor growth in exports in the current financial year, The Nation learnt on Monday.
The exports of the country have shown only 3.86 per cent growth in first eight months of the current financial year as against the 14 to 15 per cent average per annum growth during the previous three financial years. In foreign exchange the exports stood at 10.906 billion dollars from July-February 2006-07 as against 10.50 billion dollars in the corresponding period of previous financial year, depicting a paltry increase.
Official sources disclosed that growth in the exports of Pakistan started showing deterioration from September 2006.
During a high-level meeting in Islamabad that was chaired by Prime Minister Shaukat Aziz, the Commerce Ministry promised to update the high ups of the federal government in October or November last year about the factors that have dampened growth in the exports of the country. However, despite the lapse of five months, the ministry had neither informed President Pervez Musharraf nor Prime Minister Shaukat Aziz nor the economic team of the government about the causes of slowdown in exports in the current financial year.
Sources said that the country would lose around one billion dollars worth foreign exchange in FY-07 as the exports had been showing much below the projected growth.
In the current budget, the government had estimated 12-14 per cent growth in exports, but during first eight months of FY07 (July-Feb period) the exports have shown only 3.86 per cent growth. The exports were projected at $ 18.60 billion in FY07 as against $ 16.40 billion in FY06. But, the current trend of less than four per cent growth in exports indicates that the overall exports would remain much below the desired target in this financial year.
Believe it that in its recent quarterly report the State Bank of Pakistan had used the word of &#8216;puzzle&#8217; about the poor growth in exports, said sources, adding that the Ministry of Commerce must have apprised the key officials of the government about the factors that have pre-empted expected growth in exports.
The poor growth in exports would give boost to the trade deficit in this fiscal that had already expanded to 8.8 billion dollars in eight months and further expected to surge to 12-13 billion dollars by June 2007, said the officials. The foreign exchange reserves would also remain under pressure because of the widening trade imbalance and current account deficit.
&#8220;Our trade deficit and current account deficit could have shown a minimum decline of one billion dollars in FY07 had the exports shown projected 12-14 per cent growth,&#8221; said the official. Had the Commerce Ministry intimated the government well in time (at the start of this financial year) about the key factors that have decelerated growth in exports, the government could have taken remedial measures to achieve the target, official further said. 

The Nation.
http://www.nation.com.pk/daily/apr-2007/11/bnews1.php


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## Neo

*Trade deficit swells to $9.985 billion *

KARACHI (April 11 2007): The country's trade deficit further widened by 15.1 percent to $9.985 billion during the first nine months (July-March) of the current fiscal year as compared to $8.674 billion during the same period of the last financial year.

According to the official statistics made available to Business Recorder, total exports of the country amounted to $12.435 billion during July-March period of current fiscal year as compared to the exports of $12.014 billion in the same period last fiscal year 2005-06, projecting a nominal increase of 3.5 percent.

While the imports of the country for the period jumped by 8.9 percent to $22.420 billion as against the imports of $20.688 billion in the same period of last fiscal year.

However, the deficit declined by 6.8 percent during March 2007 with a deficit of $1.090 billion as compared to the trade deficit of $1.169 billion in March 2006. The exports of the country during the month of March 2007 were 1.533 billion as compared to the exports of $1.513 billion in March 2006 indicating an increase of just 1.3 percent.

Imports of the country during March 2007 were $2.623 billion as compared to the imports of $2.682 billion in March 2006, showing a decrease of 2.2 percent. Exports of the country have increased by 18.3 percent in March 2007 with total exports of $1.533 billion as compared to the exports of $1.296 billion in the month of February 2007.

Imports growth have shown declining trend in March 2007 with total imports of $2.623 billion as compared to imports made during February of $2.572 billion projecting a marginal increase of 2 percent. Trade deficit of the country declined by 14.6 percent during March 2007 with a total deficit of $1.090 billion as compared to a deficit of $1.276 billion in the month of February 2007.

The exports of the country remained at 66.6 percent during July-March period of the export target of $18.6 billion fixed for the current fiscal year 2006-07. However, the imports have surged to 80.1percent of the target of $28 billion fixed for the current fiscal year.

An analyst of the foreign trade said that although the imports showed declining growth trend with a nominal increase of 2 percent, but if imports continue to grow the whole year trade deficit would not only be higher compared to last year, but would also exceed the projected trade deficit for the current financial year.

He said that if this trend continues in the coming months, it would have a serious impact on the country's balance of payment, as well as having a negative impact on the health of the rupee. However, he said that increase in foreign direct investment and growth in remittances would help in making up the losses caused by this burgeoning trade deficit.

Although the category-wise data of the export would be released later in the month, the analyst said that figures indicated that there was some improvement in the export as it grew by 18.3 percent compared to the preceding month. The accomplishment of the whole year export target would depend on how the export grow in the coming months.

Soaring trade deficit has further aggravated the situation of country's negative current account balance threatening to even offset the positive impact of foreign direct investment and inflows by the overseas Pakistanis. The experts have expressed concerns that in the wake of rising foreign debt and slow export growth, the widening of current account deficit could create unbearable burden on the economy.

http://www.brecorder.com/index.php?id=549179&currPageNo=1&query=&search=&term=&supDate=


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## Neo

Janbaz said:


> I just love a increase of trade with Russians! They are a very strong economy and Pakistan a benifit a lot form their ties to Eastern European nations. Also if we get closer to them we can acquire military equipment from their firms like MIG, Sukhoi etc besides gaining a lot in the business sector. The Russians can prove to be a very beificial strategic, economic and military ally in the 21st century with China. :flag:



I know what you mean, I too am optimistic about this visit and new opportunities that it will bring.
Lets peneterate Russia and get closer.  



> *Russian Prime Minister's visit to open huge business avenues *
> 
> ISLAMABAD (April 11 2007): Russian Prime Minister Mikhail Fradkov's two-day visit beginning today (Wednesday) will open many business avenues for companies of the two countries besides making significant progress in bilateral relations.
> 
> Official sources told Business Recorder that this is for the first time after 39 years that a high level official Russian delegation is visiting Pakistan which also includes a large number of Russian businessmen.
> 
> They said Evgeny V. Dod, Director General of Inter Rao UES, Russian energy giant, along with the top managers of his company are also part of the Premier Fradkov's delegation.
> 
> Inter Rao UES is one of the leading companies of the world with a turnover of $30billion in its business of export and import of energy. Russian energy firms including Inter Rao UES have expressed deep interest in investment opportunities in Pakistan particularly in Hydel power sector.
> 
> Sources said that in continuation of sound relation building process with Pakistan's power sector through earlier visits starting two years back, Evgeny V. Dod will be meeting Federal Minister for Water and Power, Liaqat Jatoi. He will also meet federal Minister for Privatisation and Investment Zahid Hamid, Chairman WAPDA and Chairman Private power Infrastructure Board to discuss prospects of co-operation between Pakistan and Russia in energy sector.
> 
> The Russian Prime Minister will hold in-depth discussions with Prime Minister Shaukat Aziz to set a substantive economic agenda for mutual benefit of both the countries. He will also call on the President and address a gathering of businessmen.
> 
> A number of agreements are expected to be signed during the visit relating to Railways, Narcotics control and exchanges in cultural, educational, sports and scientific fields.
> 
> Sources said that good prospects exist of joint collaboration between Pakistan and Russia in sectors such as oil and gas, railways, construction of coal, thermal and hydel power generation. Pakistan and Russia are also expected to reactivate the inter-governmental commission on trade, economic, scientific and technical co-operation during the Russian Prime Minister's visit.
> 
> http://www.brecorder.com/index.php?id=549159&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*IT industry worth $2 billion now, says Shaukat *

ISLAMABAD (April 11 2007): Prime Minister Shaukat Aziz on Tuesday said that Information Technology (IT) industry, which was virtually non-existent seven years ago, has grown to be worth US $2 billion of which US $1 billion is export related.

The Prime Minister made these remarks while presiding over a meeting held here to review the profile and performance of the country's IT industry.

Shaukat Aziz said that information and communication technology is the wave of the future and Pakistan is well positioned to become a major global player.

He said that US $10 billion is our export target for IT and telecom services which will be achieved by developing adequate human capital, improved fiscal regime, necessary infrastructure and an enabling environment for ICT companies. The Prime Minister said that the sector is open to local and foreign companies.

He approved in principle the setting up of a Venture Capital Fund in the private sector.

The Prime Minister said IT Ministry should make efforts to attract venture capital in the IT sector and reputed international companies should be approached for this purpose.

Shaukat Aziz said that all-out efforts are needed to provide IT skills to the youth as Pakistan will need 2,30,000 trained IT personnel by 2010. Presently, the sector employs 90,000 professionals, he said. Shaukat said that the IT industry is growing at 50 percent per year, which is truly phenomenal and one of the fastest in the world.

He said there is a need to promote the vast potential of software export and also to promote domestic software houses, which is a huge source of job creation. The Prime Minister said that the services and expertise of the Pakistani community living abroad should be leveraged to further expedite the growth of IT in the country.

Shaukat Aziz appreciated the excellent work done by the ministry to promote IT industry in the country. Minister for Information Technology Awais Ahmed Leghari informed the meeting that the IT Ministry has set up a special fund to provide and enhance IT skills to the youth.

He said that the Ministry has an excellent internship programme under which IT companies are imparting training to the youth, expenditure for which is being borne by the Ministry. All IT related services have also been outsourced, he said.

Managing Director of Pakistan Software Export Board Yousaf Hussain in his presentation informed the meeting that the IT sector comprises over 950 companies of which 125 are either ISO certified or CMMI appraised. He said that bandwidth consumption in Pakistan has increased from 800MB in 2003 to 2.5GB at present.

The meeting was attended among others by Minister of State for Information Technology Ishaq Khan Khakwani, Secretary IT and Telecommunications Farrakh Qayyum and senior officials.

http://www.brecorder.com/index.php?id=549164&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Decrease in tax-to-GDP ratio: World Bank advisors helping CBR to identify factors responsible *

ISLAMABAD (April 11 2007): World Bank (WB) advisors on tax policy are assisting Central Board of Revenue (CBR) to identify key factors responsible for decrease in tax-to-GDP ratio in Pakistan. Sources told Business Recorder on Tuesday that World Bank experts have convened meetings with CBR Members to collect data on various taxes and trends in different sectors.

It is a tax policy mission to give advice on measures to raise tax-to-GDP ratio. Primarily, the mission would identify reasons responsible for low tax-GDP ratio. However, this mission has nothing to do with Tax Administration Reform Project (TARP), as it is exclusively helping the tax authorities in policy matters.

In the first phase of technical assistance program, Professor Jorge Martinez Vazquez, Georgia State University had visited Pakistan and submitted the preliminary report, "preliminary assessment of tax system in Pakistan". The report concluded that there was a need for medium and long-term tax policy reforms in Pakistan.

In the second round of technical assistance program, Kaspar Richter, Senior Economist World Bank is working on modern long-term tax policy reforms in Pakistan.

Sources said that the WB has given a detailed preliminary assessment of tax system and also compared it with the taxation models of countries having similar economic situation. The assessment focused on analysis of the tax-GDP ratio and documentation of Pakistan's economy.

Meanwhile, official spokesman of CBR, Habib Fakhruddin, said that Tax Administration Reform Program was going on in full swing and a number of reforms units have already been put in place and started functioning which include establishment of Large Taxpayers Units (LTUs) at Karachi and Lahore, Regional Tax Offices (RTOs) at Rawalpindi, Abbotabad and Peshawar, Medium Taxpayers Units at Lahore, Faisalabad, Quetta and Karachi, a fully automated Pakistan Customs Computerised System (PACCS) at KICT, PICT and QICT, Karachi.

Besides, a number of initiatives have been taken under reforms programme which included Self-Assessment Scheme, automation of reform units, e-filing of returns, introduction of One-Customs, simplification of rules and procedures, facilitation and taxpayers' education, introduction of Alternate Dispute Resolution System etc. These measures have already produced very encouraging results in promotion of tax culture in the country, elimination of corruption, reduction in human intervention and resultantly enhancement in revenue collection.

Moreover, many initiatives are in progress like refurbishment of remaining RTOs which are at different stages of completion, nation-wide roll out of PACCS, acquisition of integrated Tax Management System for domestic taxes (Income Tax, Sales Tax & Federal Excise), etc.

The spokesman said that TARP, funded by the World Bank, DIFD and Government of Pakistan, was being implemented with the required pace and would be completed by December 2009.

He said that the WB has not expressed dissatisfaction over the programme, or stopped its funding. Rather, in its recent meeting with CBR authorities, it expressed complete satisfaction over the pace of its implementation, he added.

http://www.brecorder.com/index.php?id=549215&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*First time after 1950s: wheat export to India to restart this week *

KARACHI (April 11 2007): After a long gap of almost half a century, Pakistan will be exporting wheat to India from this week. The Indian traders have approached Pakistan's wheat exporters, as India is reportedly facing acute shortage of wheat, of nearly 5 million tons, traders here told Business Recorder on Tuesday.

"We were approached by some Indian traders in March. They said they wanted to purchase Pakistani wheat, which is being offered at an attractive price, as far as quality is concerned," said a trader.

He said that India is currently facing at least 5 million tons wheat shortage and this wide gap has to be filled through imports. He said that after discussion with Indian importers, a deal of 3,000 tons wheat export to India was finalised, after almost 50 years' gap, as last time when Pakistan had exported wheat to India was in mid-1950s.

Later, a virus, namely 'Karnal Bhand' became a major hurdle in wheat import or exports between the two neighbouring countries. However, now, after 1950s, wheat export to India will be resumed as the first shipment of the commodity would sail to India in the second week of April, he said.

Wheat export deal with Indian importer has been finalised by a Karachi based exporter at the average rate of $218 fob per ton. The wheat would be exported via sea, in containers, which would be loaded from Karachi port and Bin Qasim port and would reach two different ports of India Kandla, he added.

Around 125 containers of wheat would be shipped to India during next one week and first shipment of 45 containers would sail in next two or three days, which would reached India within 24 hours.

India imported around 6 million tons wheat last year, and in the current year it is expected to import more than 5 million tons wheat, as shortfall in wheat production has been forecast there. "This would not be first and the last deal with India, and we are expecting more export orders from there," he said.

He said that indentors have received dozens of wheat import inquiries from Indian buyers and are trying to finalise deals with Pakistani traders. Before Indian wheat export order, Pakistan's exporters had finalised wheat export deals at the price of $215-220 per ton, mainly from Indonesia, Malaysia and Vietnam, in addition to a huge consignment of 0.125 million tons from Dubai, he said.

http://www.brecorder.com/index.php?id=549201&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Cement sector achieves 35 million tons production capacity *

ISLAMABAD (April 11 2007): The cement sector has acquired annual production capacity of 35 million tons, with the addition of 2 million tons to be produced by the newly established DG Khan Cement plant at Chakwal, Business Recorder learnt on Tuesday.

Now, total 29 cement plants are in operation, with the addition of DG Khan Cement at Chakwal, and the plant, currently being pre-tested for a month, would contribute to the existing production of 2.2 million tons monthly by 28 units.

The government hopes to achieve over 45 million tons annual production from these units in the next couple of years, as the investors are exploring opportunities for setting up new plants in the sector.

The demand for sulphur-resistant (SR) cement, white cement and blast furnace slag cement from Middle East is on the rise, whereas demand for ordinary Portland cement from Afghanistan is also increasing. Efforts are underway to meet the demand of both sides, sources said.

However, the biggest cement market, Afghanistan, is hard to capture because of the growing competition among Central Asian States, Iran and Pakistan. Pakistan is still in a better position due to low transportation charges. The cement sector has seen splendid growth, bringing the total production to 33 million tons, from 21 million tons in January, 2006.

Attock Cement has completed its expansion program, and the expansion of Bestway Cement would be completed soon. D G Khan Cement's new unit in Chakwal is likely to contribute from next month, whereas other units have either started their capacity enhancement program or are planning to do so.

Cement manufacturers see the demand of the commodity growing at home, days ahead with the materialisation of envisaged construction projects and reconstruction activities in Afghanistan. The prices of cement, as a result of government intervention, have also been brought down. The government hopes that cement prices will remain under control because of capacity enhancement by the manufacturers to increase production.

http://www.brecorder.com/index.php?id=549208&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Coal power, gasification: Jadoon seeks Japanese firm's cooperation in projects *

ISLAMABAD (April 11 2007): A three-member delegation from Japanese Itochu Corporation, headed by Chief Executive Hideaki Hirako, called on Minister for Petroleum and Natural Resources Amanullah Khan Jadoon here on Monday and discussed with him investment potential in hydrocarbon and coal projects.

Welcoming the Japanese delegation, the minister said that Pakistan had 175 billion tonnes of coal deposit in Thar area of Sindh and sought Itochu cooperation in coal-based power generation and gasification projects as they possessed hi-tech and expertise in that fields.

He said the government was taking concrete steps for exploiting the untapped oil and gas deposits in 6,27,000 square kilometres sedimentary areas in order to meet the growing energy need of the country.

He informed that the government was also working on the gas and LNG imports from the neighbouring countries to sustain the seven percent per annum gross domestic product growth rate of the country. The Chief Executive of Itochu Corporation appreciated the investor-friendly policies being pursued by the government of Pakistan in the oil and gas sector.

The delegation evinced keen interest in coal power generation refineries and trans-national gas projects. Petroleum Secretary Ahmad Waqar, Senior Joint Secretary (Development), Director General (Minerals) and members of the Itochu delegation were also present during the meeting.

http://www.brecorder.com/index.php?id=549282&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Mobile phone import up six times in 3 years *

By Shahid Hussain

LAHORE: Due to increase in cellular subscribers, the import of mobile phones has increased almost six times over the last three years. 

During July-November 2006 of last year, mobile phones worth $294.7 million were imported in the country as compared to $51.3 million during the same period in 2003. 

The import of advanced technology and sophisticated sets with camera and music facility are on top while Pakistan Telecommunication Authority (PTA) says that this trend looks to grow in the next one year as these features have become standard.

Mobile phone companies have reduced the rates of sets boosting the trend of replacing old mobiles with new ones. Retailers believe that the number of handsets imported currently in the country has crossed the figure of one million per month.

According to an estimate, there are more than 1,50,000 mobile phone shops across Pakistan generating employment for over 6,00,000 people. Mobile phone shops include high end franchise show rooms to small kiosks in markets and shopping malls.

The total value of handsets imported in Pakistan during the last fiscal year crossed $1 billion and expected growth in imports is 25 per cent. The import of other telecom equipment has also increased due to the expansion of telecom network and services.

Nokia is leading in the market as it has holding more than 50 per cent share in the market while Sony has more than 20 per cent users. 

According to the figures issued by the State Bank of Pakistan, $268 million was spent on the import of mobile phone and other apparatus during July-November 2004. Mobile phone and other apparatus worth $451 million were imported between July-November 2005. 

A cell phone retailer at Hall Road said that the sale of used mobile has dropped after the launch of IMEI system which blocks the snatched mobiles. He said that the people were reluctant to use the old mobile phone as it could create a problem for them. He said that many shopkeepers selling used mobiles, also gave guarantee to remove apprehensions from the minds of customers. 

A senior PTA official said that the manufacturing facility of mobile handsets and other telecom equipments was lacking in the country so the entire burden was on the foreign exchange reserves of the country. In view of huge trade deficit of Pakistan, it was need of time to promote and facilitate local manufacturing of telecom equipment, he said and added that the government should attract foreign companies to invest in this area as there was continuous demand for telecom equipments in the country which would decrease the burden on foreign exchange and create further employment.

http://www.thenews.com.pk/daily_detail.asp?id=50477


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## Neo

*14.14m cotton bales expected next year *

KARACHI: Pakistan expects a cotton crop of 14.14 million bales during the 2007-08 fiscal year (July/June), an increase of over 1 million bales from this yearÃ¢â¬â¢s output, an agriculture official said on Tuesday.

Better water supplies during the sowing period was the main reason for the expected bumper cotton harvest next season, said Food and Agriculture Ministry Commissioner Qadir Bux Baloch.

Ã¢â¬ÅThe sowing area will remain the same as last year, at 3.26 million hectares, but we expect better yield next season because of sufficient water during the crop season,Ã¢â¬Â Baloch told Reuters.

Cotton output in Pakistan, the worldÃ¢â¬â¢s fourth-largest producer, reached 12.8 million bales in the current year against a target of 12.1 million bales on improved yield. Cotton and textiles account for about 60 per cent of PakistanÃ¢â¬â¢s exports. Domestic consumption is expected to be 15 million bales in the season that started in July, in line with recent years.

Baloch said water authorities indicated that at least 76 million acre feet of water would be available at the beginning of the summer crop season an increase of at least 25 to 30 per cent from the previous year.

The agriculture sector, the largest contributor to PakistanÃ¢â¬â¢s gross domestic product (GDP), would also get a boost from higher sugar and rice crops, Baloch said.

Ã¢â¬ÅAgriculture growth this year is likely to be in the range of 4 to 4.2 per cent and we hope to repeat this performance next year,Ã¢â¬Â he said. Agriculture accounted for 21.6 per cent of GDP during the2005/06 fiscal year.

PakistanÃ¢â¬â¢s farm area is about 113.7 million acres (46million hectares) and 60 per cent of its 160 million people are linked to agriculture.

The economy grew by 6.6 per cent in 2005-06 and the government is aiming for growth of about 7 per cent this year.

The government has set a target for sugar cane output of 54 million tonnes, up from 52.9 million tonnes last season. The rice crop is expected to come in at 5.7 million tonnes, up from 5.4 million tonnes. Baloch said this yearÃ¢â¬â¢s wheat crop had reached 23 million tonnes, compared with a target of 21.5 million tonnes.

Wheat is PakistanÃ¢â¬â¢s main staple, with domestic demand of 22.5 million tonnes a year.

Ã¢â¬ÅA final crop estimate will be available in June and we hope the crop size will further increase by 3 to 4 per cent,Ã¢â¬Â he said.

Pakistan now has a surplus of more than 2 million tonnes of wheat and agriculture officials said the government would export supplies over and above the domestic requirement of 20.5 million tonnes. The government lifted a two-and-a-half year ban on exportsin January when it allowed private traders to sell 800,000 tonnes overseas.

The government set a deadline of June to ship the 800,000 tonnes. So far, deals for up to 200,000 tonnes have been finalised.

http://www.thenews.com.pk/daily_detail.asp?id=50484


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## Neo

*Pak privatisation plan highlighted *

By our correspondent

ISLAMABAD: Pakistan has carried out 61 privatisation transactions amounting to $6 billion (Rs363 billion) during the last seven years (1999-2006) and these proceeds are 86 per cent of the total amount of $7 billion realised since the Privatisation Commission was established 15 years ago.

Federal Minister for Privatisation and Investment, Zahid Hamid stated this while inaugurating the first meeting of the High Level Experts Group of Economic Cooperation Organisation (ECO) on the subject of privatisation and private sector development here on Tuesday.

The meeting was being attended by delegations from the member countries ie Afghanistan, Azerbaijan, Iran, Kazakhstan, Tajikistan, Turkey, Turkmenistan and Uzbekistan. They decided to hold next ECO moot at Baku, Azerbaijan in June this year.

PakistanÃ¢â¬â¢s privatisation policy and programme had made a significant contribution to building foreign investor confidence in the reform process and in investment opportunities in the country, Zahid Hamid said.

He said Pakistan had a very liberal and attractive investment policy, which provided a level-playing field for domestic and foreign investors ie equal investment opportunities for both in all the economic sectors with foreign equity up to 100 per cent without the governmentÃ¢â¬â¢s permission or sanction.

Besides, he added, remittances of capital, profits, dividends and royalties, technical and franchise fees were freely allowed with attractive tax and tariff incentives.

Pakistan was implementing a very comprehensive and broad-based privatisation programme which included different types of transactions for a wide range of public entities. These included strategic sale of oil and gas exploration, production and distribution companies, initial and secondary public offerings of shares of banks and an oil refinery, Global Depository Receipts (GDR) listing in London of three banks and a power generation company, and sale of coal and salt mines and small tourist motels and restaurants, he informed.

He said Pakistan was proud of its successful privatisation record and would be willing to share its experience and expertise with member states in line with the principal objectives of ECO, which included fostering economic development of member states, removing trade barriers, promoting intra-regional trade and stimulating economic liberalisation, privatisation and gradual integration of the region into the global economy.

The minister said under the procedure laid down in the governing law, the Privatisation Commission Ordinance 2000 and rules and regulations prescribed thereunder, 90 per cent of total privatisation proceeds were required to be utilised for retirement of government debt and 10 per cent for poverty alleviation programme.

Mustafa Demirezen, Deputy Secretary General ECO Secretariat, in his opening remarks said the ECO was focused on cooperation among member states in the field of privatisation and private sector development as one of the priority sub-sectors in industrial activities. 

http://www.thenews.com.pk/daily_detail.asp?id=50488


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## Neo

*Ã¢â¬ËGovt wants industrial revolutionÃ¢â¬â¢ *

LAHORE: Punjab Minister for Information Technology Abdul Aleem Khan has said that the government wants industrial revolution in the country and it is making sincere and serious efforts to make that happen.

The provincial minister was speaking at the Annual General Meeting of Lahore Township Industries Association (LTIA) on Tuesday. 

He said maximum funds are being provided to the industrial estates to equip them with all necessary facilities. Special attention is also being given to the development of infrastructure to make it of international standards so that foreign investors could get benefit of available business opportunities, he added.

Speaking on the occasion, LCCI President Shahid Hassan Sheikh paid rich tributes to Chief Minister Punjab Ch Pervaiz Ellahi for expediting public-private partnership in the province. 

He said that the Quaid-i-Azam Industrial Board has done a marvelous job by spreading a network of roads. He said that the industrial community should work in unison in the larger interest of the country.

The newly-elected President of Lahore Township Industries Association, Fida Hussain, promised to continue work for the betterment of industrialists of the area. He said the LTIA is thankful to the Quaid-i-Azam Industrial Board for improving the law and order in the area.

http://www.thenews.com.pk/daily_detail.asp?id=50491


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## Neo

11/04/2007

*Agriculture is no exception to overall economy *
By Farhan Bokhari, Special to Gulf News

The Pakistani government announced this week its forecast of a recovery in the agricultural sector, which is expected to grow by four per cent up from 2.5 per cent last year. 

But by no means is it certain that this recovery will be sustained in the coming years, as the south Asian country lags behind on a number of vital reforms, which afflict the long-term growth of this sector.

Agriculture remains central to the prospects surrounding the Pakistani economy. Almost a quarter of Pakistan's annual gross domestic product is driven by agricultural incomes, while almost half the country's workforce directly or indirectly benefits from farm incomes. 

The agricultural sector remains central to industry as well, since the country's largest industry is textiles based on domestically-produced cotton. 

The fortunes now expected to surround this year's lift in farm incomes, come mainly from higher than expected rainfall in the past six months which has improved overall prospects for growth. 

This week, the Pakistani minister for agriculture and livestock, Sikandar Hayat Khan Bosan, claimed the government was stepping up investments in areas such as increased capacity for grain storage and production of certified seeds as well as fodder, in order to give further impetus to agriculture. But long-term followers of Pakistani agriculture remember other policymakers in the past having made similar claims though without success in future. 

The challenge for Pakistan's agricultural sector hinges upon three main factors.

First, the country's long-term failure in reforming its energy supply sector, most notably the electricity transmission network, has come to haunt the agricultural sector in a significant way. Farmers need electricity in order to lift subsoil water. But the spiralling costs of electricity have often made it virtually impossible for farmers to afford escalating bills. 

Pakistan's largest power transmission company which provides electricity to almost 90 per cent of the population remains surrounded by continuing issues. 

The state-owned Water And Power Development Authority (Wapda) continues to be run with the reputation of being saddled with widespread corruption especially through its lower echelons, and considerable inefficiency. Consequently, consumers including farmers have to bear the financial cost of ever rising expenditure on running of this company, though Wapda remains to be reformed. An estimated loss of more than 25 per cent of Wapda's electricity put through its transmission systems is something that consumers including farmers have to live with and pay for.

Second, Pakistani farmers face a major challenge when it comes to dealing with the poorly-run irrigation system. 

It was the recent rainfall which helped to lift farm incomes. On the contrary, if Pakistan would have been in the midst of an unusually dry season, its farm incomes would just not have been similarly robust.

Finally, Pakistan's farmers face the difficult matter of dealing with input costs that have risen considerably over time. The failure of successive governments in allowing some affordability when it comes to prices of inputs like fertilisers, pesticides and seeds, only complicates the debate surrounding Pakistan's farm sector. 

The latest turnaround in Pakistan's agriculture this year is more the consequence of luck and fortune coming to aid the country's farmers than any set of reforms unleashed by any government including the present day one.

http://www.gulfnews.com/business/Comment_and_Analysis/10117357.html


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## Neo

*Indo-Pak trade on a high*
10 Apr, 2007 

ISLAMABAD: Trade between India and Pakistan is surging despite problems in movement of goods and people. 

Pakistan registered a six-fold hike in its exports to India in the last five years. It is expected to go up further with new trade concessions announced by India last week. 

Bilateral trade swelled from $235.74 million in 2001-02 to more than $1 billion last fiscal year. The balance of trade remains in India's favour. 

Trade analysts see further growth as Pakistan has expanded its positive list of import trade with India to include machinery/equipment, raw materials, chemicals and accessories of a number of manufactured items in great local demand. 

Both countries have indulged in protectionism. Their governments are trying to remove the various barriers to better trade. 

In recent times, India and Pakistan have opened banks in each other's territory, resumed shipping services and improved cross-border road and rail transport. 

"Businessmen of India and Pakistan now trade almost 2,000 items in more than 25 categories," said Raees Ashraf Tar Mohammad, a member of the Pakistan Grocers Association. 

"This has built mutual confidence and communication between businessmen. We book orders on telephone or fax and the rest of the formalities follow. In the last 10 years or so not a single dispute was reported," the Daily Times quoted him as saying on Tuesday. 

According to a trade analyst, the share of Pakistan's exports to India in overall exports increased from a mere 0.5 percent in 2001-02 to 1.8 percent in 2005-06. 

"This is a six-time increase in Pakistan's exports to India in the last five years," an official of the Karachi Chamber of Commerce and Industry said. 

Pakistan's exports to India have increased from less than $50 million in 2001-02 to about $300 million in 2005-06. 

Simultaneously, Indian exports to Pakistan too surged from $186.52 million to $802 million, up from 1.8 percent to 2.8 percent Pakistan's global imports. In these five years the balance of bilateral trade remained in favour of India. In 2005-06, it rose up to more than $500 million. 

"(The deficit) came as a rude shock to the commerce ministry in Islamabad," the newspaper noted. 

In July 2006, when the commerce ministry notified to implement concessional tariffs under the South Asia Free Trade Agreement (SAFTA), India was omitted from the list of South Asian countries. Indian Commerce Minister Kamal Nath then issued a veiled threat at a conference at Kathmandu that India might review the tariff concessions offered to Pakistan under SAFTA. 

"We are not withdrawing these tariff concessions," said the Indian high commissioner in Pakistan in the Karachi Chamber of Commerce and Industry in March. At the same time, he said, "India does have the option to take back all these tariff concessions if SAFTA was not implemented in letter and spirit. (That) we are not applying this option on Pakistan is another matter." 

"Our trade relations with India are based on a positive list of 1,078 items," said Pakistan Commerce Minister Humayun Akhtar Khan. 

India wants the most favoured nation (MFN) status that Pakistan has consistently refused, contending that it is a WTO (World Trade Organisation) issue where New Delhi can fight it out. 

So far as implementation of SAFTA is concerned, the minister said that India could raise this issue bilaterally at the committee of experts or at the inter-ministerial committee level. 

Pakistan is not happy with non-tariff barriers (NTBs) and the overall Indian trade policy. India's stand is that whatever the NTBs or other policy issues of trade, "these are not Pakistan-specific and are meant for global imports". 

Despite these differences, the two countries have been helping each other over the last few years to overcome agricultural shortages. 

Pakistan supplied chickpeas, pulses, grains and sugar when these were in short supply in India. India supplied onions, potatoes, pulses and other food items to Pakistan. 

Market reports suggest that Indian experts are ready to work out a joint plan to exploit fisheries and export value-added fish products. 

India's exports of engineering goods now exceed $10 billion. Pakistan meets its 25-30 percent requirements of engineering products from imports. India can be a good source of engineering products with freight advantage and relatively quick delivery and after-sales service.

http://timesofindia.indiatimes.com/...ak_trade_on_a_high/rssarticleshow/1884286.cms


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## Neo

April 11, 2007 
*China, Pakistan to facilitate trade cooperation *

China and Pakistan have wrapped up a meeting in Beijing on boosting economic,trade, scientific and technological cooperation, the Ministry of Commerce said Tuesday. 

Chinese Commerce Minister Bo Xilai and Dr. Salman Shah, advisor to the Prime Minister of Pakistan on Finance, exchanged views during the meeting on expanding trade, facilitating investment and implementing a development plan on Sino-Pakistan trade which was put to effect last year. 

Bo said China hopes to increase imports from Pakistan to promote trade balance and encourages Chinese companies to invest in this South Asian country. 

China will also continue to encourage the two countries' small-medium sized companies to strengthen cooperation on agriculture, manufacturing and the service industry, he said. 

Dr. Shah said that Pakistan welcomes investment from China, especially in infrastructure facility, water resources, mineral, farming and services industries. 

The two countries reached a free trade agreement last year and China established its first overseas trade and economic cooperation zone, Haier-Ruba Economic Zone, in Pakistan. 

Dr. Shah said he believes the economic zone, which mainly produces household appliance, would help promote the economic and technological cooperation between the two countries. 

The trade volume between the two countries hit 5.25 billion U.S. dollars last year, up 23.1 percent year on year. It is estimated that the volume will increase to eight billion by the end of 2008. 

Source: Xinhua 

http://english.people.com.cn/200704/11/eng20070411_365325.html


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## Introvert

*Sri Lanka to import Basmati rice from Pakistan​*Wednesday, April 11, 2007, 13:34 GMT, ColomboPage News Desk, Sri Lanka.

Apr 11, Colombo: Sri Lanka will import 5,500 tonnes of Basmati rice duty free from Pakistan for the year 2007 under the Free Trade Agreement (FTA) with that country.

Sri Lanka public sector is to import 500 tonnes while the rest is imported by the private agencies liable to a Ã¢â¬Åcertificate of originÃ¢â¬Â issued by Trade Development Authority of Pakistan. Sri Lankan importers can now apply for the issuance of letter of recommendation to import Basmati rice through the Ministry of Finance.
http://www.colombopage.com/archive_07/April11133419SL.html


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## Neo

*UBL to issue $250 million bonds to raise Tier II capital *

KARACHI (April 12 2007): United Bank Ltd (UBL) plans to issue an overseas bond worth up to $250 million to raise Tier II capital, a senior official at the country's third largest bank said on Wednesday. Aameer Karachiwala, group chief financial officer of UBL, said plans for the issue to raise Tier II capital were at the final stage.

"We plan to raise $200 million to $250 million in the international market, and it will be done through a bond issue," he told Reuters. "We are looking to closing it in the next two to three months, and will be awarding a mandate in this regard very soon."

According to banking sources, Deutsche Bank is most likely to get the mandate for the transaction. The bond plan comes days after the government appointed Merrill Lynch and KASB Group to manage a global share sale of UBL, to be completed before the 2006-07 fiscal year ends on June 30.

The government, which is only selling part of its roughly 45 percent holding in the bank, is expected to sell a stake worth $200 million to $300 million. Earlier in the day, banking sources said Pakistan's denim maker, Azgard Nine, was also planning to issue a $200 million dollars-denominated bond in the July-September quarter. Citigroup has been mandated to manage this transaction, they said.

http://www.brecorder.com/index.php?id=549547&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*'US providing $600 million grants yearly since 2005' *

ISLAMABAD (April 12 2007): National Assembly Standing Committee on Economic Affairs Division was told that in addition to loans, the USA was providing grants to the tune of $600 million each year since 2005. The secretary Economic Affairs Division informed the committee, which met in the Parliament House here on Wednesday that UK's share in this was 100 million pounds sterling each year.

It was also informed that Pakistan is paying interest at the rate of 7.125 percent. Secretary EAD added that Pakistan's current rating in the financial sector was B. The committee constituted a sub-committee to examine the loans for the projects of earthquake, Rawalpindi environmental improvement and Pakistan Railways.

http://www.brecorder.com/index.php?id=549566&currPageNo=1&query=&search=&term=&supDate=


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## Neo

April 12, 2007 
*New $500m bond for budgetary support*

By Khaleeq Kiani

ISLAMABAD, April 11: Pakistan will shortly make another issue of global dollar bonds to raise over $700 million funds for general budgetary support, according to an official statement.

Ã¢â¬ÅPakistan will return to the international financial market with a Rule 144A/Regulations dollar bond issue for general budgetary support,Ã¢â¬Â announced the ministry of finance here on Wednesday. This rule makes the securities eligible for purchase and trade by institutional US investors.

It said the securities will not be and have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Act, the statement added.

The statement is a pre-requisite under the US laws before floating bonds in New York where Pakistan plans to issue its sovereign bonds worth $500 million or above according to market conditions.

A team comprising Adviser to the prime minister on Finance Dr Salman Shah, secretary finance and economic adviser to the finance ministry have already left for the United State to attend spring meetings of the International Monetary Fund (IMF) and the World Bank and to try to trigger interest for the Pakistani paper.

Finance Ministry has selected three banks as lead managers for the transactions, including Citibank, Deutsche Bank and HSBC Bank. The government plans to float these bonds in New York most probably in May. The finance ministry has been holding continuous meetings with these fund managers on the subject over the last few weeks.

This will be PakistanÃ¢â¬â¢s fourth international bond in the last five years. Last year, Pakistan sold $800 million in a dual-tranche sovereign bond, comprising $500 million in a 10-year issue and $300 million in 30-year paper. The proposed new sovereign bond is likely to be for 15 and 20 years maturity period.

In 2004 Pakistan raised $500 million through five-year sovereign Eurobond and in 2005 it issued $600 million five-year Sukuk (an Islamic bond) against which it had to pledge certain sections of the Motorway project.

http://www.dawn.com/2007/04/12/ebr9.htm


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## Neo

April 12, 2007 
*Engineering sectorÃ¢â¬â¢s development assured*

ISLAMABAD, April 11: Abdul Hafeez Chaudhary, chief executive officer, Engineering Development Board, has assured that the government will continue policy initiatives taken for development of the engineering sector.

The CEO was addressing officers of the board here on Wednesday for the first time after taking over the charge of the post. He added that the Ministry of Industries, Production and Special Initiatives was keen to improve its interaction with the engineering sector and in pursuance of this policy, former CEO, EDB, Imtiaz Rastgar, an industrialist, has been inducted in advisory council of the ministry.

This will not only ensure continuation of policies but ensure close liaison between the government and the industry. He also underlined the need for completing the ongoing projects with devotion and dedication.

He called upon the officers of the board to work on a team and take a new start for improving the working of EDB.

Referring to his future plans, he said he would hold shortly sectoral meetings to identify problems and remedies. Later, he went round various sections and expressed satisfaction over the facilities available.

http://www.dawn.com/2007/04/12/ebr18.htm


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## Neo

Thursday, April 12, 2007 

*Pakistani PC, server market suffered setback in 2006*

* 15% GST slowed down PC market growth significantly

By Hamid Waleed

LAHORE: Springboard Research, a leading innovator in the IT Market Research industry, announced on Wednesday that according to its Asia Emerging Countries (AEC) Quarterly Tracker, PakistanÃ¢â¬â¢s PC and server shipments grew just 16.4% in 2006. The lower than expected market performance in 2006 is attributed to the 15% goods and services (GST) imposed in June 2006, resulting in higher prices for IT products. 

Although the Pakistani government has implemented IT development measures such as infrastructure building and automation, its policies to support fair market competition have been undermined by the 15% GST.

Ã¢â¬ÅThe GST tax imposition is being perceived within the IT industry as a serious setback, which will particularly impede hardware market growth,Ã¢â¬Â noted Rehan Ghazi, Springboard ResearchÃ¢â¬â¢s Pakistan-based Market Analyst. Ã¢â¬ÅThe tax will raise the cost of hardware and the cost of doing business in the IT sector.Ã¢â¬Â 

The new tax imposition comes at a time when PakistanÃ¢â¬â¢s IT industry is at a growth stage. Massive investments in IT infrastructure are being planned by the financial services and telecommunication industries, and the new GST could delay their ambitious plans. The fast-growing software export market is also expected take a hit due to rising operational costs.

Other fallout from the recently imposed tax includes an increase in smuggled components into Pakistan. Springboard reports a 10-15% increase in the grey market business and this trend is expected to gain momentum in the future. In addition, the refurbished market is expanding its presence in the country. 

Local IT companies will suffer most from PakistanÃ¢â¬â¢s current market conditions, because in addition to the 15% GST, the government has withdrawn the 3.5% sales tax exemption previously given to local vendors.

In 2006, the multinational corporations led the market with HP at 5.4% of total PC shipments, followed by Lenovo and Dell. Leading local brands Inbox and Raffles contributed a combined 4.6% share to total PC shipments. 

SpringboardÃ¢â¬â¢s AEC report data further showed that PakistanÃ¢â¬â¢s portable segment experienced the highest growth in 2006 with a 30.4% increase in business, followed by desktop and X86 Server products. Among the application segments, the large enterprises, especially telecom and banking, invested in IT, receiving 24.3% of total PC shipments in 2006, followed by the government and home sectors. Small- and medium-sized business (SMB) showed less IT spending in 2006, and seem to be waiting for the Pakistani government to abolish or reduce the 15% GST. 

In its 2007 market forecast, Springboard Research predicts the market to grow 17.4% - less than expected - due to the increased tax burden and decreasing imports. Nevertheless, Springboard anticipates the government will take some positive steps in promoting healthy competition in the domestic market by abolishing or reducing the tax.

http://www.dailytimes.com.pk/default.asp?page=2007\04\12\story_12-4-2007_pg5_2


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## Neo

Thursday, April 12, 2007 

*Export target for IT services to be attained*

ISLAMABAD: Prime Minister Shaukat Aziz has said the $10 billion export target for IT and telecom services will be achieved by developing adequate human capital, improved fiscal regime, necessary infrastructure and an enabling environment for ICT companies.

The IT industry, which was virtually non-existent seven years ago, has grown to be worth $2 billion of which $1 billion is export related. 

The prime minister was presiding over a meeting to review the profile and performance of the countryÃ¢â¬â¢s IT industry.

He said information and communication technology was the wave of the future and Pakistan was well positioned to become a major global player. He said the sector was open to local and foreign companies. 

He approved, in principle, the setting up of a Venture Capital Fund in the private sector. The IT ministry should make efforts to attract venture capital in the IT sector and reputed international companies be approached for this purpose, he said.

Mr Aziz said allout efforts were needed to provide IT skills to the youth as Pakistan would need 230,000 trained IT personnel by 2010. Now the sector employed 90,000 professionals.

The prime minister said the IT industry was growing at the rate 50 percent per year which was truly phenomenal and one of the fastest in the world. He said there was a need to promote the vast potential of software export and also to promote domestic software houses, which was huge source of job creation.

He said services and expertise of the Pakistani community living abroad should be leveraged to further expedite the growth of IT in the country. He praised the excellent work done by the ministry to promote IT industry in the country. 

Minister for Information Technology Awais Ahmed Leghari informed the meeting that the IT ministry had set up a special fund to provide and enhance IT skills of the youth. He said the ministry had an excellent internship programme under which IT companies were training the youth, expenditure for which was being borne by the ministry.

All IT-related services had also been outsourced, he said. 

The managing director of the Pakistan Software Export Board, Yousaf Hussain, in his presentation informed the meeting that the IT sector comprised over 950 companies of which 125 were either ISO certified or CMMI appraised. He said bandwidth consumption in Pakistan had increased from 800 MB in 2003 to 2.5 GB at present.

http://www.dailytimes.com.pk/default.asp?page=2007\04\12\story_12-4-2007_pg5_8


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## Neo

*Pakistan's Energy Ministry Unveils New E&P Policy To Spur FDI *

SINGAPORE -(Dow Jones)- Pakistan's energy ministry unveiled a draft oil and natural gas exploration policy Thursday that includes allowing foreign and domestic exploration and production companies to sell oil and gas at higher prices in the domestic market.

Energy analysts said the approval could pave the way for increased foreign investment in oil and gas exploration, which has languished due to a lack of adequate incentives.

Pakistan is experiencing a severe energy shortage and imports over 80% of its oil.

The draft policy, approved by the cabinet earlier this week, pegs natural gas sold in the domestic market to an oil price band of $10-$45 a barrel. Under the current policy, it is pegged to an oil price band of $10-$36 a barrel.

With crude oil futures traded on the New York Mercantile Exchange currently hovering around $62 a barrel, the current band is considered too low, making it difficult to attract foreign direct investment, energy ministry officials said.

In addition to the revised gas pricing formula, the policy also permits E&P companies to build, own and operate pipeline infrastructure, though it gives third-party access to the pipeline system.

The draft policy is now up for comments from industry groups as well as other government ministries and will be submitted to the Cabinet's Economic Coordination Committee in May.

A committee that will oversee and implement the new policy will also be set up. 

http://www.nasdaq.com/aspxcontent/N...CQDJON200704120309DOWJONESDJONLINE000417.htm&


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## Neo

*London to host Pakistan Investment Conference in September *

By ANI 
Wednesday April 11, 2007

London, Apr.11 (ANI): London will play host to an international conference on investment in Pakistan in September to highlight the business opportunities in the country.

This was stated on Tuesday by the Lord Mayor of London, John Stuttard, at a debriefing on his recent visits to Pakistan, Kuwait, Qatar and United Arab Emirates held at the Asia House here.

The Lord Mayor paid a six-day visit to Pakistan with a large business delegation from the City's financial district.

Stuttard said the conference, scheduled for September 10 and 11 will be organised by the City of London which will be attended by members of the Pakistani business community and Government leaders.

He noted exceptional economic reforms over the past six years which have led to increase in the size of the middle classes and the flow of foreign investment is helping build infrastructure.

Stuttard said the business friendly policies of the Government is driving up the standards and efficiency and drawing in investment notably in energy, banking, real estate and communications.

The Mayor also spoke about women empowerment in Pakistan and said the female graduates in that country have high education qualities. He said the Pakistanis were keen to acquire British education and professional skills.

Pakistan's Acting High Commissioner to the UK Abdul Basit was also present on the occasion. (ANI)

http://in.news.yahoo.com/070411/139/6eef3.html


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## Owais

*UAE invest $3.2 billon on 'Flower of Asia' project in Gwadar *


QUETTA (updated on: April 12, 2007, 21:37 PST): Balochistan government and UAE entered into an agreement under which HRC Pakistan Ltd and Gwadar Coast Center Ltd will invest 3.2 billion dollars on setting up Oil & Gas service, supply, fabrication and maintenance base in Gwadar city, if was officially announced here on Thursday. 

The agreement was signed by representatives of HRC Pakistan, Gwadar Coast Center Ltd (GCC Group) and Balochistan Development Authority at the Governor House. The project to be called "the flower of Asia" will be one of the largest and most important single developments in Pakistan history and will be ready by the end of 2014.It will be joint venture between GRCP, GCC and BDA. 

The Chairman HRC Pakistan Sheikh Nahyan Bin Zayed Al-Nahyan and company's associated partners strongly believe in the vision and leadership of Pakistan President Gen. Pervez Musharraf and his continues efforts in making Pakistan and Gawadar into one of the most important port in the World, the announcement said. 

The GCC Base will be a one-stop-business-hub for all oil and gas services for the entire region, and will secure new exploration projects in Pakistan. It will be a high-technological and state-of-the art supply base for the entire Gulf region. It will be an ultra-modern, sustainable community that reflects on the international demands for amenities, environment sensitiveness, Health and Security. 

The GCC will be a marketplace spread over 1.087 hectares and will hold a 6.5 to 7 kilometer sea front. The project is beautifully architecture within what the GCC Group has defined as the Industrial Village and the Commercial Village. Additional 200 acres will be sought for building wind farms, gasification and desalination plants using reverse osmosis and some 180 acres will be adjacent for special community landscaping. 

HRCP Ltd has also joined hands with Green Energy Development PLC to develop and build a Renewable Energy city in the same facility to establish a complete research and manufacturing Industry to produce turn-key wind turbines and solar panel systems made in Pakistan under license by world class suppliers. 

Building on the proven and successful role model of Dubai and Abu Dhabi, Gwadar Coast Center will comprise small strategic developments all integrated into the vast Master Plan 

The Industrial village will have a pure industrial zoning for Polluting Industry, Dense Industry, Light Industry, a separate residential zone beautifully situated on a proposed 50 acre reclaimed peninsula and a dedicated fabrication zone for a complete and full service on-shore and off-shore oil and gas maintenance, service and supply station built using latest environment sensitive technologies. 

In addition HRCP Ltd will develop a special industry technology center for developing a regional educational, training research and development institute. HRCP will also build an advanced University that will encourage and stimulate international companies to promote their special programs and courses to be held in Gawadar ultimately making Pakistan and export nation for highly skilled labor to special industries within Oil and Gas. 

The Commercial village will include special zoning for Media village, finance village, medical village Internet village, Knowledge, Service Village and a beautifully landscaped Residential zone with all known community developments, including a PGA-built and certified 18-hole international standard Golf course. 

Both the BDA and GCC Group stated "we have had very productive and encouraging meetings and we have achieved the success we came for tenfold, we are very excited about the future. Together we will build a city inside Gawadar". 

Through out GCC, HRCP Ltd will develop numerous parks, botanical gardens, ponds and artificial lakes connected by paved walkway and palms creating picturesque and tropical scenery. The development is proposed to facilitate marinas, shopping malls, hotel resorts, business hotels, trade centers, equestrian, amusements etc. 

The project will bring housing and accommodation for more than 50,000 people, attract more than 1500 international companies and create thousands of new jobs


brecorder.com


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## Owais

*ADB to provide financial assistance for construction, energy, other sectors *


KARACHI (updated on: April 12, 2007, 21:47 PST): Asian Development Bank (ADB) will provide financial assistance for the construction, infrastructure development, irrigation and energy sectors of Pakistan, a report said here on Thursday. 

According to ADB's fact sheet about Pakistan, the multi-lateral institution will continue to support the rehabilitation of barrage system and construction of small water storage dams to improve availability of fresh water in the country. 

ADB will also assist Pakistan in improving its national and provincial highways' networks to cut inefficiencies, long waits and travel time. 

Similarly, ADB's projects in energy sector will address constraints in the overstressed transmission and distribution systems and rehabilitate and modernise the power infrastructure to meet the growing energy needs. 

ADB is also providing support for Karachi to improve the provision of infrastructure and services. 

For private sector development, ADB will approve new investments in the areas of copper mining, thermal power and coal power till 2008. 

During 2005, ADB had approved 776 million dollars for eight projects including 200 million dollars each for Punjab Resource Management Programme II and Balochistan Devolved Social Services Programme. 

Agri business project costing 31 million dollars, a technical assistance loan of 25 million dollars for infrastructure development and Rawalpindi Environment Improvement Project worth 60 million dollars were also included in the approved financing. 

It may be noted that Pakistan has received 25.39 billion dollars in total assistance from ADB between 1966 to 2005, of which 10.31 billion dollars were disbursed till end of 2005. 

Energy, agriculture and natural resources sectors are the major recipients, constituting 40 per cent share of the total funding from ADB. 

Energy sector received 47 loans worth 3.099 billion dollars while agriculture and natural resources secured 50 loans worth 3.008 billion dollars till December 31, 2005. 

Other sectors included finance (1.878 billion dollars), multi-sector (1.789 billion dollars), transport and communication (4 1.607 billion dollars), industry and trade (1.29 billion dollars), law, economic management and public policy (1.187 billion dollars), education (501 million dollars), water supply, sanitation and water management (444.5 million dollars) and health, nutrition and social protection (229.4 million dollars). 

According to ADB, the success rate of projects in energy, transport and communication sectors was 82 percent followed by agriculture and industry and multi-sector with 60 percent each. 


brecorder.com


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## Owais

*Pakistani overnight rates rise; rupee up vs dollar *


KARACHI (updated on: April 12, 2007, 17:58 PST): Pakistan's short-term money rates rose on Thursday following outflows of more than 71 billion rupees from the market, and dealers said rates were likely to hold around current levels in the near-term.

Overnight call rates ended at around 8.0 percent, up from 5.0 percent the previous day.

During the day, there were outflows of 52.1 billion rupees for the settlement of a State Bank of Pakistan Treasury bills auction on Wednesday.

Also during the day, the central bank mopped up 19.5 billion rupees through four-day repo contracts.

"There were inflows of around 59 billion rupees today, and since outflows were more than that, rates went up," said a local bank dealer.

Dealers said rates were likely to hold firm around current levels in the near-term, as no inflows from maturing government securities were due before next week.

In the currency market, the Pakistani rupee gained against the dollar on soft demand for the US currency from importers, and dealers said healthy dollar inflows were likely to keep the local unit stable in coming days.

The rupee closed at 60.72/74 to the dollar, compared with 60.81/83 on Wednesday.

"The rupee was under slight downward pressure in the last few days because of higher dollar demand," said a dealer.

"But since dollar inflows are pretty healthy, the rupee is likely to hold steady in weeks ahead."

brecorder.com


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## Owais

*Fiscal Year 2008 PSDP allocation may go up by 17 percent *

ISLAMABAD (April 12 2007): The size of the Public Sector Development Programme (PSDP) for federal programmes in the next fiscal year is expected to be increased by 12 to 17 percent and could be close to Rs 315 billion compared to Rs 270 billion in the current fiscal year, sources told Business Recorder on Wednesday.

Sources, however, said that actual size of the PSDP for 2007-08 would be proposed to the Annual Plan Co-ordination Committee (APCC) after the mid-year review of the PSDP of 2006-07, which is scheduled to begin from April 16.

The Planning and Development (P&D) Division would be in a better position to propose the PSDP allocation in the next budget after evaluating the exact position of the PSDP spending in the first nine months of the current fiscal year. In the first six months of the current fiscal year, the PSDP spending was Rs 99 billion, which is not up to the mark, they said. Sources said the actual funding available for federal projects in the current fiscal is Rs 250 billion, as Rs 20 billion has been estimated to be consumed as operational shortfall.

According to the sources, the ministries have increased their demands for development projects to be taken up under the PSDP 2007-08. The initial demand of the ministry of water and power, including Wapda is Rs 100 billion for the development projects in the next fiscal year. If this demand is accepted as it is, the government will be required to increase water and power allocations by around 109 percent as the allocation for the ministry in the current fiscal year is Rs 47.7 billion, they added.

The housing and works division is seeking an amount of Rs 28 billion in the PSDP 2007-08, which is many times higher than the current allocation of Rs 1.3 billion. The ministry of food, agriculture and livestock (Minfal) is also seeking an allocation of a little over Rs 20 billion in the next fiscal year against this fiscal year allocation of Rs 11.8 billion, the sources said.

The communication division has also enhanced its demand by more than 100 percent from the current fiscal year allocation of Rs 25.5 billion. Generally, according to the sources, the demands of the ministries for PSDP allocation are not accepted in toto. The P&D always cut their demands in accordance with the availability of funds, they added.

Sources said after the mid-year review the P&D would know the exact position to propose the actual size of the PSDP as there could be some unspent money under the current year development programme.
http://brecorder.com/index.php?id=549564&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*'US providing $600 million grants yearly since 2005' *

ISLAMABAD (April 12 2007): National Assembly Standing Committee on Economic Affairs Division was told that in addition to loans, the USA was providing grants to the tune of $600 million each year since 2005. The secretary Economic Affairs Division informed the committee, which met in the Parliament House here on Wednesday that UK's share in this was 100 million pounds sterling each year.

It was also informed that Pakistan is paying interest at the rate of 7.125 percent. Secretary EAD added that Pakistan's current rating in the financial sector was B. The committee constituted a sub-committee to examine the loans for the projects of earthquake, Rawalpindi environmental improvement and Pakistan Railways

http://brecorder.com/index.php?id=549566&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*PPL may ink oil exploration agreement with Australian firm *
KARACHI: Pakistan Petroleum Ltd. (PPL) and Australian company may reach to an agreement next month for oil exploration in Yemen. 

Chairman PPL Munsif Raza talking to Geo News here said that PPL talks with the Australian company were in final stage and a formal agreement can be reached in the next month. 

Pakistan Petroleum Ltd. in the annual company report had indicated that talks were underway with Australian company OMZ for oil exploration at Block-29 in Yemen. 

Yemen oil exploration project would significantly affect the PPL revenues, analysts said. 
http://geo.tv/geonews/details.asp?id=4641&param=3


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## Neo

*China, Pakistan team up on energy*

A new China-financed port on Pakistan's coast ups the ante in the new 'Great Game' for energy resources in the Middle East and Central Asia.

By David Montero

ISLAMABAD, Pakistan If China is to become the economic powerhouse it envisions, the road to its new future could run, literally, through Pakistan.

Or so the two nations hope. Last month, they inaugurated Gwadar Port in Pakistan's Balochistan Province, the first step in an elaborate "energy corridor" that will one day ship Persian Gulf oil from Gwadar overland through Pakistan to China. China bankrolled the $200 million port and plans to put billions more into railways, roads, and pipelines linking Gwadar to China. Pakistan hopes it will generate $60 billion a year in transit fees in 20 years' time. 

The deal could point to new fortunes on the horizon. But many observers wonder what price the two nations will pay for such inextricable energy ties.

Gwadar shines a spotlight on a little-studied dimension of the global showdown for the world's depleting oil. Pakistan, with Chinese money, hopes to reinvent itself as one of the region's largest energy players  but it could also become a victim of the new Great Game, some observers say, crushed in the squeeze between the American and Chinese race for influence in volatile, lucrative Central Asia.

As China positions itself as Pakistan's chief patron, that could tilt Pakistan's center of political gravity, observers add, outweighing US influence dollar for dollar  and without the strings of human rights, democracy, and counterterrorism attached.

"The Americans come with a great deal of ideological baggage. There's none of that with the Chinese," says Richard Russell, a professor of national security affairs at the National Defense University in Washington. "[Pakistan's] interactions with the Chinese are not nearly as radioactive as with the US."

Analysts have long fretted over a possible collision course between the US and China over energy. China is now the world's second-largest consumer of oil after the US. Its consumption is expected to double by 2025, with 70 percent coming from the Middle East. Both giants are competing for finite supplies.

"I think most security experts are looking at this very closely because this is the closest access point China has to the Persian Gulf," says Gal Luft, executive director of the Institute for the Analysis of Global Security in Washington. "I don't know that this is something the US particularly likes."

Pakistan could be crucial to China's bid for regional influence. Transporting oil is currently a long, expensive, and dangerous process for Beijing, traversing some of the most pirated seas in the world. For that reason, China is rapidly diversifying its sources, cutting billion-dollar deals from Sudan to Iran and scoping out alternative transport routes through Burma (Myanmar), Thailand, and Bangladesh.

Pakistan is likely to be among the most important routes.

Sitting at the mouth of the Persian Gulf, the Gwadar Port, which becomes fully operational next year, will provide an overland energy corridor connecting the Middle East to Xinjiang, China's future energy base. That will cut transport by 12,000 miles, shaving a month off the journey's time and 25 percent off the fees. Washington speculates that Gwadar could also be part of China's push to protect its growing energy system with a robust Navy.

For Pakistan, Gwadar is a chance to refashion itself a global energy player  a dream in the making for several decades. The potential is rich, given its prize location near the Gulf, at the feet of the energy-rich Central Asian states, and in the shadow of South and Southeast Asia, which houses a third of the world's population and where energy demands are expected to soar.

Given the energy game's high stakes, some wonder if Gwadar will set off alarm bells in Washington. Last April, while hosting the China-Pakistan Energy Forum in Pakistan, President Pervez Musharraf was asked as much by a visiting delegate. But to a roar of applause, he quickly deflected the question: "I do not care about pressure from major powers. If Pakistan suffers pressure from certain major powers, I believe China will come forward to help us apply pressure on the other side."

Still, the opening of Gwadar is indicative of how China's largesse in Pakistan is coming into open competition with the US  and how that could alter the region's political landscape.

China's investment in Pakistan stands at more than $4 billion, with at least 114 projects under way, according to 2004 figures publicized by Pakistani Prime Minister Shaukat Aziz. That's analogous to the more than $6 billion Washington has given Pakistan since 9/11, although Uncle Sam's money is earmarked for counterterrorism, not energy.

Last March, China seemed to one-up the US. It announced that it would invest another $12 billion in Pakistan. There was no mention of human rights, democracy, or terrorism. The Democrat-led Congress, meanwhile, is threatening to pull funds if Mr. Musharraf doesn't deliver more.

The contrast in policy objectives is telling, analysts say. The more money China dishes out, the more Pakistan is likely to gravitate toward Beijing as a countervail to US influence, given that Islamabad is increasingly pummeled to do more in the war on terrorism.

"[It's] a no-brainer," says Mr. Russell. "[Pakistan's] winning ticket over the long run is the Chinese."

It's a drift that Washington will certainly monitor, but ultimately may not mind, Russell adds. "India is going to play a greater role in democracy in the region and the Middle East," he says. "The US has more vested interests in India than Pakistan."

http://abcnews.go.com/International/...ory?id=3036249


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## Neo

April 13, 2007 
*Pakistan GDP seen growing at 7.5 per cent*

KARACHI, April 12: Pakistan economic growth could expand by more than what the government estimates and it could be 7.5 per cent, Merrill Lynch said in a report released on Thursday.

The report did not consider the recent difficult political situation as hinder for the economic growth and expected that the GDP growth to sustain in 2007 and 2008 at 7.0-7.5pc and 6.8pc, respectively.

This will happen owing to robust consumption growth, supported by higher remittances from workers (up 21pc) and foreign investments (up 147pc), it said.

The report said that the investors to remain upbeat in the coming months, backed by withdrawal of expected monetary aggression by State Bank of Pakistan, expected concessions to the corporate sector in the next budget and the governmentÃ¢â¬â¢s decision to reduce its public sector holding through GDR.

The Merrill LynchÃ¢â¬â¢s expectation of GDP growth was more than the State Bank estimates which put it in the range of 6.6 to 7.2 per cent while the government expects 7pc growth.

However, the report said that the likelihood of hitting the upper limit depends on the performance of livestock farming, which comprises approximately 50pc of the agriculture sector.

Ã¢â¬ÅProspects of agriculture growth recovery appear bright on account of the timely rains, sufficient water reservoirs, availability of subsidised agriculture inputs, and higher agriculture commodities support prices,Ã¢â¬Â said the report adding that countrywide rains are likely to boost the output in livestock farming.

Ã¢â¬ÅPakistanÃ¢â¬â¢s politics has been in the headlines of international press and we think issues have been exaggerated,Ã¢â¬Â said the report, adding that President Musharraf will remain firmly at the helm of what is the best privatisation and deregulation story in Asia.

The political turmoil seen in the last few months has been unable to hamper investments in the country, as reflected in foreign flows. Foreign inflows surged 147pc to $4.6bn during July-Feb FY07 and are expected to expand further to $6bn (or 4pc of GDP) by the end of this fiscal.

Ã¢â¬ÅDespite adversities in domestic politics, foreign private investments have risen by 147pc and continue to be a dominant feature over the last three months. This reflects investorsÃ¢â¬â¢ confidence on PakistanÃ¢â¬â¢s future economic growth,Ã¢â¬Â said Merrill Lynch.

The report expects that the fiscal deficit to be contained at 4.5pc and current account deficit at 4.8pc of GDP on account of unexpected slowdown in exports.Rising foreign investments should continue to correct macro imbalances and help sustain economic growth, however, rising foreign inflows will continue to pose a challenge for SBP.

The report said that the rupee was overvalued by two per cent against the US dollar.

Ã¢â¬ÅIn trade weighted index rupee is overvalued by 2pc. We maintain our rupee verses US$ exchange rate forecast of Rs62.20 by June 30, 2007Ã¢â¬Â said the report.

The report said that the robust foreign exchange flows in the past few months have protected exchange rate from downward revision.

http://www.dawn.com/2007/04/13/ebr2.htm


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## Neo

*KSE breaches 11,900 barrier with modest gain *

KARACHI: The positive outlook of Merrill Lynch about the Pakistani economy amid likely increase in oil and gas price at the domestic market thrilled brokers to breach through the romantic level of 11,900 points at Karachi bourse.

KSE 100-share price index managed to post another modest increase of 10.96 points on sixth consecutive bull-run session and closed at 11,905.92 in an extremely volatile session on Thursday.

Ã¢â¬ÅDespite the fact that sharesÃ¢â¬â¢ prices have reached the burning levels on across the board, market players showed their courage and extended their positions in fundamentally strong stocks. Therefore, 100-index resisted hard and succeed to cross another barrier of 11,900 points at KSE, a leading analyst said.

The junior 30-index also registered another fresh surge of 9.61 points and closed at 14,830.06.

Analysts observed that Merrill Lynch forecasting of witnessing 7.5 per cent growth rate in the PakistanÃ¢â¬â¢s economy by the end of ongoing fiscal year 2006-07 created another small room for bulls to keep their journey continue to north.

Analysts noted that Merrill Lynch forecast was higher than the government of PakistanÃ¢â¬â¢s claims of registering seven per cent growth in its economy this fiscal year was surprising for them, they added.

Moreover, the news of allowing local and foreign exploration and production companies to sell oil and gas at higher prices in the domestic market strengthened positive sentiment for the relevant scrips at KSE, they further said.

Equity market, therefore, maintained its recent timesÃ¢â¬â¢ tradition of opening on a positive note. It commenced the day business with extended gains beyond 11,900 points level.

Though market maintained in green throughout the day except closing hour, however, indices witnessed sharp ups and downs during the session.

By mid of the session, it hit intra-day high of 11,964.08 points, recoding the day maximum gain of 69.12 points in the 100-index from pre-opening level of 11,894.96 points.

Closing hours witnessed sharesÃ¢â¬â¢ trading two sides of the fence, as index first shed 87.84 points from the peak level to 11,876.24 points intra-day low. And then recovered intra-day losses to close session in positive column with modest gains.

Session started with a day earlier bullish trends, as buying was seen in almost all the sectors at KSE. Later on, selling of stocks near their fair values and buying on dips kept market players active throughout the day.

Small and medium size banks remained the day volume leaders in green while majority of the cement scrips closed in negative column on account of profit booking.

On the other hand, NBP, PPL and PTCL, three most speculative stocks, also closed in red region following profiteers performed for the sake of short-term gains on price differentials.

An analyst observed institutional and foreign buying in some of the fundamentally strong and potential stocks (especially banking) at the local bourse. He argued that balances in SCRA (Special Convertible Rupee Account) registered an increase of US$7.5 million in a single day on Thursday.

The SCRA balances stand at $585.539 million to-date from $578.012 million a day earlier, according to SBP website.

He maintained that Friday twin-trading sessions might play a role of reducing their (investors) high holdings due to overbought stocks market where hearing of Ã¢â¬Ånon-functionalÃ¢â¬Â Chief Justice case might substantiate the deceptive role of bears as well.

Ready market failed to generate as good turnover as it were a day earlier at 310.776 million shares. Turnover reduced to 297.829 million shares on board.

Modest buying infused more Rs16 billion in the overall market capitalisation that stood at Rs3.252 trillion.

It was somehow a balance market, as 158 companiesÃ¢â¬â¢ stocks closed in the positive column against 171 stocks concluded in negative column. Therefore, the value of 39 scrips closed pegged with total 368 active counters on board.

Highest volumes were witnessed in Bank of Punjab at 34.515 million closing at Rs96.30 with a gain of Rs2.20 (2.34 per cent), followed by Lucky Cement at 25.159 million closing at Rs96.85 with a gain of Rs1.25 (1.31 per cent), Askari Bank at 21.866 million closing at Rs87.20 with a gain of Rs1.50 (1.75 per cent), Bank Al-Falah at 18.295 million closing at Rs48.40 with a gain of 60 paisa (1.26 per cent) and DG Khan Cement at 17.296 million closing at Rs94.85 with a decline of Rs1.70 (1.76 per cent).

http://www.thenews.com.pk/daily_detail.asp?id=50851


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## Neo

Friday, April 13, 2007 

*Pakistan has potential to solve energy problems: USAID*

ISLAMABAD: Pakistan has many trained energy professionals and significant financial resources to develop its energy sector, according to United States Agency for International Development (USAID) Senior Energy Adviser, Gordon W. Weynand.

Gordon W. Weynand, who recently visited Pakistan to study prospects for further USAID support for the countryÃ¢â¬â¢s energy sector, expressed his satisfaction over the energy prospects of Pakistan.

Ã¢â¬ÅOne of my strongest impressions from Pakistan is that although there are many complex energy challenges, the people in the government of Pakistan seem to have strong potential to solve those problems and a ready willingness to try and use new approaches,Ã¢â¬Â he said at the conclusion of his visit, says a statement of USAID.

During his two-week stay, Weynand visited Lahore, Karachi, Sialkot and Islamabad along with USAID PakistanÃ¢â¬â¢s Economic Growth Team.

Ã¢â¬ÅUSAID is exploring the possibility of including energy sector development in its future economic growth strategy,Ã¢â¬Â said Amy Meyer, the Director for USAID PakistanÃ¢â¬â¢s Economic Growth Office.

Ã¢â¬ÅUSAID is particularly interested in exploring this area where government and private sector actors are willing to partner with USAID in financing this assistance.Ã¢â¬Â

Since its start in 2004, USAID PakistanÃ¢â¬â¢s Economic Growth program- mainly focusing on business development initiatives, financial services, and agriculture and science & technology development-has also included interventions in the countryÃ¢â¬â¢s energy sector.

The US-Pakistan Science and Technology Partnership Program is funding a project on Ã¢â¬ÅImproving the Lifestyle of Villagers in Remote Areas of Federal Administered Tribal Areas of Pakistan Using Renewable EnergyÃ¢â¬Â with the aim to provide solar water pumping capabilities for five villages in the Federally Administered Tribal Areas (FATA) of northwestern Pakistan.

These USAID efforts in the energy sector also include the South Asia Regional Initiative for Energy (SARI/Energy), an eight-country program promoting energy security across Afghanistan, Pakistan, India, Nepal, Bhutan, Bangladesh, Sri Lanka and the Maldives.

SARI/Energy is completing both wind and solar maps of Pakistan and has also assisted Pakistan in the development of a strategic and business operating plan for the South Asian Association for Regional Cooperation (SAARC) Energy Center (SENTER) that was set up in Islamabad in December 2006.

http://www.dailytimes.com.pk/default.asp?page=2007\04\13\story_13-4-2007_pg5_3


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## Neo

*Rs one trillion revenue target likely for 2007-08 *

ISLAMABAD (April 14 2007): Despite decline in customs duty and sales tax collection at the import stage, the Central Board of Revenue (CBR) is committed to meeting the estimated revenue collection target of around Rs 1 trillion for the next financial year.

Sources told Business Recorder on Thursday the projected target of Rs 1 trillion was discussed threadbare during the last board-in-council meeting chaired by CBR Chairman M. Abdullah Yusuf.

The issue came to the limelight when CBR Member Fiscal Research and Statistics (FRS) informed the council about the negative growth in customs duty and sales tax collected at the import stage during March 2007. The FRS member had highlighted the facts and figures about the tax-wise performance of collection in March.

Responding positively to the presentation, tax authorities told CBR members that the board has committed with the President General Pervez Musharraf to collecting Rs 1 trillion in fiscal 2007-08. Thus, all CBR Wings should seriously start preparing policy proposals to increase revenue collection and broaden the tax-base. The CBR will not rollback from this promise made with the President and the necessary plan must be chalked out to collect Rs 1 trillion in fiscal 2007-08 for raising tax-GDP ratio.

Sources quoted the CBR chief as saying during board-in-council meeting that the board would not only surpass the set target of Rs 835 billion for fiscal 2006-07, but would also devise a plan to cross Rs 1 trillion in next fiscal. The President had approved the CBR 10-year taxation plan, "Vision-2017" taking total revenue collection to Rs 4.3 trillion and tax-GDP ratio to (14.5-15 percent) by 2016-17.

The "Vision-2017" is a 10-year programme for raising revenue collection through broadening the tax-base and raising tax-GDP ratio. The vision envisages 10-year revenue projections starting from fiscal 2007-08 to 2016-17 and strategy to meet these targets. Under the programme, the CBR will achieve 5 percent growth in Tax-GDP ratio by tapping potential sectors in the next 10 years.

http://www.brecorder.com/index.php?id=550212&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Enough funds available for uplift projects: Musharraf *

RAWALPINDI (April 14 2007): President General Pervez Musharraf Friday said the government is committed to provide all basic needs of life to the people, particularly in the far-flung and under developed areas of the country to bring them at par with the developed areas.

He was talking to Federal Minister for Political Affairs Engineer Amir Muqam, who called on him here at President's Camp Office. The President said due to prudent economic policies pursued in the last seven years, the government has sufficient funds for the development projects throughout the country. He said there is no shortage of funds for any type of development project for any area.

The President said provision of gas, electricity, clean drinking water and other basic needs of life to the people are at the top of the government agenda.

"The government has been taking practical measures seriously for the development projects so that the people should be provided all amenities of life at their doorsteps without any delay as it is their basic right," said the President.

President Musharraf on the request of Amir Muqam emphasised the need for early completion of Islamabad-Peshawar Motor Way, saying that it is an important link between Peshawar and other parts of the country.

The President also discussed other development projects under process in different parts of the NWFP with Engineer Amir Muqam and added the completion of these projects would bring about revolution in these areas. He said unprecedented funds are being spent on the development projects in different parts of the country without any discrimination and prejudice and it was possible due to better economy and improved economic situation of the country.

Various other projects including roads in Malakand, Lowari Top and reopening of Saidu Sharif airport were also discussed during the meeting. Engineer Amir Muqam, who is also president of Pakistan Muslim League NWFP and in charge of the development projects of the federal government in NWFP, discussed the pace of the work of these projects with President Musharraf.

He said during the tenure of President General Pervez Musharraf concrete steps have been taken by the government for the welfare, progress and prosperity of the people and they have been empowered at grass roots level. The political situation of the NWFP was also discussed during the meeting.

http://www.brecorder.com/index.php?id=550206&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*India eyes 150,000 tons Pakistani wheat *

MUMBAI (April 14 2007): Indian grain traders have contracted to import 20,000 tonnes of Pakistani wheat and they are waiting for New Delhi to issue import permits before starting shipments, a leading regional grains trader said on Friday. "The permits could come anytime now," Vijay Iyengar, managing director of Agrocorp International Pte Ltd, told Reuters in an interview.

"There is a possibility that up to 150,000 tonnes of Pakistani wheat will come to India." Pakistan, seeking to cut bulging wheat stocks, is seen offering up to 2 million tonnes of the grain for export this year. It has already allowed the sale of 800,000 tonnes by private traders and removed a 15-percent duty on exports.

Pakistan had stopped wheat exports in May 2003 after domestic supplies ran short. Last year, Indian authorities suggested bartering their sugar for Pakistani wheat, but the proposal did not go anywhere.

Pakistan did buy half its sugar imports from India that year, following the removal of a four-year ban on Indian sugar after an improvement in relations between the countries. "There are a lot of inquiries from Indian traders for Pakistani wheat. The bulk the wheat from Pakistan is expected to come in containers," Iyengar said. He added that most deals for Pakistan wheat were expected to be finalised around $230 a tonne, including cost and freight.

http://www.brecorder.com/index.php?id=550261&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Pakistan and Russia pledge to boost economic ties *  

ISLAMABAD (April 13 2007): Pakistan and Russia on Thursday signed a memorandum of understanding (MoU) for avoidance of double taxation, promotion and protection of investment to enhance bilateral trade. The two sides also signed a MoU for cultural co-operation as well as a protocol for co-operation in combating illicit trafficking and abuse of narcotics drugs and psychotropic substances.

After MoUs signing, at the Prime Minister House, Prime Minister Shaukat Aziz and his visiting Russian counterpart, Mikhail Fradkov held a joint press conference here. They showed firm commitment to take bilateral trade to new heights saying that trade and economic co-operation between Pakistan and Russia was much less than actual potential.

Shaukat Aziz welcomed Russian companies' participation in tendering process for Pakistan Steel Mills Corporation (PSMC) expansion and lying down of Iran-Pakistan-India gas pipeline. He said work for both mega projects will be granted through a competitive process and the government will welcome Russian companies' participation. He said Pakistan was open for all kinds of investment and Russian companies should take its full advantage.

Russian Prime Minister stressed the need of exploiting trade potential between Pakistan and Russia for economic growth. Later on, he addressed the leading Pakistani businessmen at a luncheon meeting organised by Privatisation Minister Zahid Hamid.

Russia Prime Minister expressed firm commitment to enhance bilateral relations with Pakistan saying establishing a substantive economic agenda would mutually benefit the two countries. Fradkov termed his meeting with Prime Minister Shaukat Aziz an "important step" in strengthening bilateral relations between Pakistan and Russia with special focus on cementing economic ties. He urged the need for improving business-to-business contacts between the two countries for the exchange of essential trade information.

In his welcome address, Zahid Hamid said Pakistan attaches high importance to its relations with Russia and termed Russian Prime Minister's visit to Pakistan as an indication of the growing relationship based on mutual trust and co-operation. He welcomed Russian companies' participation in various sectors including oil and gas. He mentioned Gazprom interest for investing in Pakistan's oil and gas sector in particular. He said bilateral trade between the two countries presently stood at $520 million, which was in favour of Russia, adding there was a considerable scope for increasing Pakistan export to Russia.

DINNER RECEPTION 

APP ADDS: Prime Minister Shaukat Aziz on Thursday said Pakistan and Russia will succeed in creating greater linkages and inter-dependencies to benefit of the people of the two countries and contribute towards further strengthening Pakistan-Russia ties. He was addressing a banquet hosted in honour of visiting Prime Minister of Russian Federation Mikhail Fradkov, which was attended by the members of the Russian delegation, federal ministers, high officials and diplomats.

Prime Minister Shaukat Aziz while referring to the visit of Russian Prime Minister to Pakistan after 40 years said it would pave the way to promote and strengthen the bilateral relations. He said: "Russia-Pakistan strategic partnership will not only serve our bilateral goals but is also in the interest of peace, progress and prosperity of our region."

Referring to the talks held in morning, Shaukat Aziz said, these talks have brought to the fore the close convergence of view between the two countries on a broad range of regional and global issues. The Russian Prime Minister Mikhail E. Fradkov, responding to the banquet speech of Prime Minister Shaukat Aziz said that his visit to Pakistan would further promote bilateral relations.

http://www.brecorder.com/index.php?id=549841&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*World Bank and US officials apprised of strong Pakistan's economic growth *

WASHINGTON (April 14 2007): Advisor to Prime Minister on Finance and Revenues Dr Salman Shah, as the head of a Pakistani delegation attending annual spring meetings of the World Bank and International Monetary Fund, held useful and productive meetings with WB leaders and senior United States officials.

The delegation of top economic managers met WB President Paul Wolfowitz, Vice President Praful Patel and members of the WB team. Dr Shah also led the delegation at meetings with US Senator Judd Gregg, ranking member appropriations committee, Deputy Secretary, Treasury, Robert Kimmit, and Assistant Secretary of State for South Asia Richard Boucher.

Pakistani delegation includes State Bank of Pakistan Governor Dr Shamshad Akhtar, Advisor to the Finance Ministry and Director General, Debt Office, Dr Ashfaque Hassan Khan, and Finance Secretary Tanvir Ali Agha.

During the meetings, the Advisor to the Prime Minister apprised them of Pakistan's strong economic growth achieved on the back of sustained reforms and consistently pursued policies. About the economic progress, Dr Shah referred to the government's focus on socio-economic development of people and also spoke about continued reforms, future economic growth and development projects.

Speaking about international investors' growing confidence in continued policies and their interest in the country's development potential, he said Pakistan was on course to attracting a record more than six billion dollars in foreign direct investment (FDI) during the current year.

http://www.brecorder.com/index.php?id=550251&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Kuwaiti company to invest $1 billion on oil refinery *

KARACHI (April 13 2007): The Nur Financial Investment Company of Kuwait plans to set up an oil refinery and a financial harbour in Karachi with a huge investment of one billion dollar.

Deputy Chairman and the Managing Director of the company Naser Al-Marri said this in a meeting with Director General of the Board of Investment (BoI), Pakistan (Sindh Balochistan), Arif Ellahi, at his office here on Thursday.

Naser A-Marri said that his company already had an investment of one billion dollar in Karachi Electric Supply Corporation (KESC), Al-Meezan Bank, Arif Habib Trading, Meezan Trading and Pak-Kuwait Takaful.

"We intend to invest four billion dollars in other projects, including a refinery and a financial harbour," he added. The BoI Director General assured him of every possible assistance and provision of facilities on behalf of the government. He said the land was available for refinery under a project of Port Qasim Authority and Sindh Board of Revenue, and asked the Kuwaiti company official to arrange visit of their experts for selecting the suitable land.

Arif Ellahi said there could be a number of locations for establishing financial harbour. The Kuwaiti delegation also held discussion with PQA Chairman, Deputy Governor of the State Bank of Pakistan and Secretary, Board of Revenue.

http://www.brecorder.com/index.php?id=549910&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pakistan can generate 50,000 megawatts by using wind power *

BERLIN (April 13 2007): A German model of generating power through wind energy can help developing countries including Pakistan to strike a 'needed' balance between growing energy demand and environmental protection, experts believed.

They said using renewable energy sources like wind is less threatening to the ecology and can help the world reduce the risk of damage by global warming. Germany started establishing wind power generation parks some 25 years ago. At the moment, 5.5 percent of the country's total electricity consumption comes from wind energy and it is being anticipated that the figure will go up to 20 percent by 2020.

The need for energy has gone up manifold in Pakistan due to the industrial expansion-a major push to sustain over 6 percent growth during the past few years.

But like elsewhere in the developing world, there has not been much diversification in the pattern of energy utilisation and power generation in Pakistan.

The country's reliance on coal and water for power generation is still very high. Almost 64 percent of the power consumption come from hydropower, 33 percent from thermal sources and 3 percent from nuclear technology.

The use of wind energy for power generation is still a rare practice despite huge potential. According to official estimates, Pakistan can generate up to 50,000 megawatts by using wind, but only few micro plants with a capacity between 300 and 500 megawatts are actually operating in the country.

http://www.brecorder.com/index.php?id=549879&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Govt to encourage low-delta crops *

By Aftab Maken

ISLAMABAD: The government is considering preparing necessary legislation to restrict the cultivation of high-delta crops in the newly-developed areas of Balochistan.

The completion of Kachhi canal and Mirani dam would help cultivate nearly 800,000 acres of additional land, but the Ministry of Food and Agriculture was making special arrangements to utilise the area for crops requiring low quantity of water, official sources told The News.

The Mirani dam in Balochistan, being built at an estimated cost of Rs5.81 billion with storage capacity of 0.302 million acre feet of water, will irrigate 3,320 acres to produce low-delta crops like wheat, cotton, sunflower and others. Similarly, the Kachhi canal, which will be completed by June this year at a cost of Rs31.2 billion, will irrigate 713,000 acres.

âThe ministry is making efforts and considering necessary legislation for sowing this extra land with low-delta crops like cotton and wheat, as the prospects of water availability in future are dim and no mega dam will be operational before 2015,â said a senior ministry official seeking anonymity.

The food ministry was also pursuing the provincial governments concerned to either ban high-delta crops like sugar and rice particularly in the riparian areas of Sindh and Balochistan along the River Indus or allow limited sowing of these crops, the official added.

The Punjab government had taken a lot of measures to discourage sowing of high-delta crops, which included restricting new sugar mills and capacity enhancement of existing mills, the official said.

Another official of the food ministry said the cotton production was below the target set by the government this year and the target set for the next year (2007-08) would also not meet the domestic consumption needs. Therefore, the millers would depend on imported cotton. To overcome this situation, the ministry was exploring new sources of land for cultivation of low-delta crops, he added. Giving the reasons for the move, the official said it would help cultivate only those crops which had high value-addition and could earn more foreign exchange with less efficiency.

When asked about enhancing the per acre yield from the existing land, he said âthe ministry is working on it, but we wanted to add more areas for those crops which require less water, seeing less availability of water in the coming years.â

The ministry is also working on the Cotton Vision 2015 for achieving the production target of 20.7 million bales.

http://www.thenews.com.pk/daily_detail.asp?id=51049


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## Neo

April 14, 2007 
*Export-based industrial policy under study*

ISLAMABAD, April 13: The government is considering an "export-oriented industrial policy" which seeks further tariff rationalisation and proposes freight subsidy and duty-free import of raw material.

Informed sources told Dawn here on Friday that a presentation has been given to both President Gen Pervez Musharraf and Prime Minister Shaukat Aziz over the proposed policy to significantly encourage exports which were declining particularly due to tough competition being given by the Chinese and Indian products.

The officials concerned have been told to partially incorporate various recommendations of the export-oriented industrial policy in the medium-term development framework (MTDF-2006-2011).

Sources said that a final presentation is likely to be given to the president and the prime minister soon to formally approve the policy.

This policy also seeks to offer subsidies in the participation of fairs and exhibitions and holding specific fairs for Pakistan.

Likewise, subsidy for introducing products in the export market and the assistance of the embassies in locating the demands for products have also been sought in the export-oriented industrial policy.

Tariff rationalisation, a source said, was needed to considerably benefit the export industry.

"All imported raw material must be zero-rated," he said, adding the basic materials, including that of steel and plastic, caustic soda, should be allowed duty free to help the weakening export industry.He said a few old industries were allowed to import some kinds of duty-free raw material, but the facility needed to be offered to new industries also.

Asked about the opposition by the World Bank and the Asian Development Bank (ADB) for offering subsidies, the source said that Pakistan would have to consider its own interest which demanded such facilities to exporters.

Pakistan has pursed an import-substitution policy that has resulted in high cost and low quality products. Export orientation ensures low-cost and good quality products because otherwise the country would not be able to compete.

The source referred to some proposals, contained in a study, and related to restructuring of industries for which the government has been urged to select few economic activities in consultation with the private sector.

The study proposed that besides the manufacturing sector and traditional industries of food, textiles and leather, the government should focus on chemicals, electronics, electrical and non-electrical machineries.

Since basic strategy is the promotion of the private sector who should make an optimal choice of economic activities, the study proposed a four-pronged strategy.

Firstly, protection to various economic activities should be neutral and let the private sector decide where to invest. Secondly, with a view to providing equal effective protection rates to various sub-processes, proper cascading of tariffs, should be ensured. Third, the basic raw materials and marginally processed raw materials and import machinery should be duty free. Fourth, fiscal incentives should be used for diversification of activities towards those that have high growth potential.

The government should provide maximum fiscal incentives to pioneer industry, high technology industry and strategic industries. Pakistan used to have five-year tax holiday for pioneering industry in the 1980s and 1990s but hardly any investor made any use of it.

"This may be reintroduced and provided to the industries using new and emerging technologies", the study said.

Similarly, higher incentives should also be provided to strategic projects that involve products or activities of national importance.

These include heavy capital investment with long gestation periods, have high levels of technology, and are integrated, generate extensive linkages, and have significant importance on the economy.

http://www.dawn.com/2007/04/14/ebr9.htm


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## Neo

April 14, 2007 
*Gas discovery*

SUKKUR, April 13: The OMV has successfully discovered and tested gas in its Latif 1 exploration well in the Latif Exploration Block in Northern Sindh. This is an additional discovery in an area where OMV has discovered two major gas fields before, Miano and Sawan, said an announcement on Friday. The exploration well reached a total depth of 3,520m and encountered a total of 18.7m net gas/condensate in three layers at depths of 3,200m to 3,450m.

http://www.dawn.com/2007/04/14/ebr12.htm


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## Introvert

*Mexico allows rice export from Pakistan*

ISLAMABAD: Pakistan and Mexico here on Friday signed an agreement under which the later has allowed rice export from Pakistan.

Minister of State for Economic Affairs, Hina Rabbai Khar signed agreement to this effect on behalf of Government of Pakistan while the visiting Vice Minister of Foreign Affairs of Mexico, Maria De Lourdes Aranda Bezaury inked the MoU on behalf of her country.

Secretary Economic Affairs Division, Muhammad Akram Malik was also present on the occasion.

Maria De Lourdes Aranda Bezaury is currently visiting Pakistan from April 12-14 for holding discussions with the officials of the Ministry of Foreign Affairs on bilateral issues of mutual interest.

During her stay in Pakistan Bezaury also called on Minister of State for Economic Affairs Division, Hina Rabbani Khar here on Friday.

During the meeting both sides reviewed the existing level of bilateral economic cooperation between the two countries and also signed a Memorandum of Understanding (MOU) on export of rice to Mexico.

The signed MOU would allow Pakistan to export its rice to Mexico.

The understanding reached during the meeting and the initiating of the MOU on rice export would provide a strong impetus to bilateral relations in trade and economic cooperation.

Speaking on the occasion, Hina said that rice is an important agricultural commodity of Pakistan and expressed the hope that allowing Pakistani rice export to Mexico would lead to increase the level of bilateral cooperation.

She said that currently Pakistan-Mexico bilateral trade is only $60 million and the exports of rice would help further enhance the trade relations between them.

Maria said Mexicans like rice and import of rice from Pakistan would benefit both the countries.

She called for exploring new avenues of cooperation in agro-business adding said that Mexico would ready to help and cooperate with Pakistan in seed research. Later Hina Rabbani Khar and Maria De Lourdes exchanged the documents.
http://www.thenews.com.pk/daily_detail.asp?id=51051


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## Neo

*Indus Refinery to start commercial production in March 2009 *

KARACHI (April 15 2007): The Indus Refinery Limited (IRL) will start commercial production of petroleum products in March 2009 at a cost of $750 million. The Chairman of IRL, Muhammed Sohail Shamsi, told Business Recorder on Saturday after the signing a Memorandum of Understanding (MoU) with Descon Engineering Limited, which would execute civil works for IRL's 100,000 barrel per day petroleum refinery in the proximity of Port Qasim Authority (PQA).

Keeping in view the declining demand of motor gasoline in the country, he said, the new refinery was eyeing export of these products. He said that the refinery would produce one million tons kerosene per annum and 1.5 million tons high-speed diesel (HSD). The IRL would also produce 500 tons liquefied petroleum gas (LPG) per day, he added.

Sohail said, "The refinery is being constructed to produce maximum yields of profitable products. The products produced will meet the deficit requirements of Pakistan, with any surplus to be exported." Thus, the country would save foreign exchange in terms of import substitution and it would also earn from exports of surplus products, he added.

"By March 2009 this mega project would produce 30,000 barrels more, which will further strengthen the company's position in the sector," he said, adding that as a refinery, IRL would produce propane, butane, LPG, high quality unleaded gasoline, kerosene, aviation fuels, low sulphur high speed diesel. The IRL foreign shareholders have 86.7 percent shareholding while local sponsors have a 13.3 percent shareholding.

Earlier, the IRL--a joint venture between Middle East-based investors and local sponsors--inked an MoU with Descon Engineering Limited which would provide civil works for IRL.

Descon will provide all personnel, equipment and services to complete IRL's earthworks, grading, paving, underground piping, underground electrical trenches, tank dikes, concrete foundations and slabs. The work is expected to take 18 months to complete and is scheduled to allow for ongoing mechanical re-erection and electrical and instrumentation work.

Chief Executive Officer of IRL, Peter J. Hamill, said, "It is a landmark occasion for IRL and a significant development in the oil and gas sector of Pakistan." IRL has also engaged world class engineering firm SNC Lavalin to act as project manager, Ventech Engineers International as process engineer and advisory firms Jacobs Consultancy and Vitol to ensure a successful project, he added.

During construction the refinery will provide lots of jobs to locals and, when completed in early 2009, it would provide over 600 jobs to permanent skilled workers, he said.

Amer Kamran Khuaja, Director, Business Development, Descon said, "With a rich experience of over 30 years in plant construction and all disciplines, we are pleased to be part of this mega project. We will be utilising a fully integrated information technology (IT)-based systems, custom developed by our wholly-owned division, Descon IT 24." He said that the system was fully integrated, from proposal to preparation to project progress and cost control.

IRL has taken the initiative to relocate, reconstruct and operate refinery to become the sixth petroleum refinery in the country, enabling it to be one of the top two largest refineries. The IRL has a design capacity of 100,000 BPCD or 93,000 BPSD, which is equal to the country's current largest refinery.

In September last year, the Indus Refinery inked a MoU with Fauji Oil Terminal Company (FOTCO) for the development and construction of an additional oil jetty at Port Qasim. The new oil jetty will be equipped with modern operating equipment and is expected to be completed by the third quarter of 2008.

On completion of the two-year project, the oil jetty will be the focal point of activity for IRL for the import and export of POL products.

The new jetty will handle all of IRL petroleum, oil and lubricants products enabling the new refinery in the private sector to have convenient access for the import and export of POL products. The new facility will provide logistics support to IRL thus facilitating the company to reduce operational costs and increase production.

http://www.brecorder.com/index.php?id=550605&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Rs one trillion revenue target likely for 2007-08 *

ISLAMABAD (April 14 2007): Despite decline in customs duty and sales tax collection at the import stage, the Central Board of Revenue (CBR) is committed to meeting the estimated revenue collection target of around Rs 1 trillion for the next financial year.

Sources told Business Recorder on Thursday the projected target of Rs 1 trillion was discussed threadbare during the last board-in-council meeting chaired by CBR Chairman M. Abdullah Yusuf.

The issue came to the limelight when CBR Member Fiscal Research and Statistics (FRS) informed the council about the negative growth in customs duty and sales tax collected at the import stage during March 2007. The FRS member had highlighted the facts and figures about the tax-wise performance of collection in March.

Responding positively to the presentation, tax authorities told CBR members that the board has committed with the President General Pervez Musharraf to collecting Rs 1 trillion in fiscal 2007-08. Thus, all CBR Wings should seriously start preparing policy proposals to increase revenue collection and broaden the tax-base. The CBR will not rollback from this promise made with the President and the necessary plan must be chalked out to collect Rs 1 trillion in fiscal 2007-08 for raising tax-GDP ratio.

Sources quoted the CBR chief as saying during board-in-council meeting that the board would not only surpass the set target of Rs 835 billion for fiscal 2006-07, but would also devise a plan to cross Rs 1 trillion in next fiscal. The President had approved the CBR 10-year taxation plan, "Vision-2017" taking total revenue collection to Rs 4.3 trillion and tax-GDP ratio to (14.5-15 percent) by 2016-17.

The "Vision-2017" is a 10-year programme for raising revenue collection through broadening the tax-base and raising tax-GDP ratio. The vision envisages 10-year revenue projections starting from fiscal 2007-08 to 2016-17 and strategy to meet these targets. Under the programme, the CBR will achieve 5 percent growth in Tax-GDP ratio by tapping potential sectors in the next 10 years.

http://www.brecorder.com/index.php?id=550212&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*Pak-Russia cooperation in IT, energy and mining to be increased: Soomro calls on Fradkov *

ISLAMABAD (April 15 2007): In the meeting between Senate Chairman Mohammadmian Soomro and Russian Prime Minister Mikhail Fradkov, when the former called on the Russian Prime Minister on Friday, it was agreed that co-operation would be increased in the fields of IT, power generation, oil and gas, mining and railways.

The two leaders remarked that joint co-operation in these fields would be a good beginning in furthering the existing bilateral ties. Soomro suggested a series to exchanges to strengthen economic co-operative relations, provide institutional linkages and to promote bilateral relations.

Chairman of Senate foreign relations committee Mushahid Hussain presented the standing committee's report on Pak-Russia relations to the Russian Prime Minister. Fradkov spoke of the fruitful meetings he had with Pakistani leaders during which he became aware of ways on promoting economic relations. Practical action taken in this direction would bring good results, he remarked.

http://www.brecorder.com/index.php?id=550558&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pakistani exporters asked to explore huge Chinese market *

KARACHI (April 15 2007): Newly appointed Consul General of China in Karachi Chen Shan Min said on Friday that China had a potentially huge market and its exports would exceed 1,000 billion dollars by the year 2010.

Speaking at a reception, hosted in his honour by Ijara Financing Inc at a hotel, the Chinese Consul General said competitive products of Pakistan could enter the Chinese markets with joint efforts of both the countries.

He pointed out that presently China's exports to Pakistan stood at four billion dollars, whereas Pakistan exported more than one billion dollar worth of goods to China.

"There is an imbalance in our trade," Chen Shan Min said, and wanted Pakistan to embark upon an aggressive advertisement campaign to introduce its products in China. "Let the Chinese people know you have better products", he added. He said the total trade value of the two countries reached 5.247 billion dollars in 2006.

The Chinese Consul General suggested that Pakistan should arrange a trade fair in China to showcase its top brand of products. He also invited businessmen from Pakistan to China to participate in their biggest trade fair organised twice a year - one from April 15 to 30 and the other from October 15 to 30.

"I will also encourage Chinese companies to come to Pakistan," he said, adding China had sent a large delegation of businessmen to Karachi international trade fair.

He said products like traditional garments (Shalwar-Kameez), bronze items and other handicrafts would get better response from Chinese people. "We should also work towards promotion of border trade and tourism," the Chinese Consul General stressed.

He said he would encourage Chinese companies to invest in Pakistan where there was conducive business climate, better security and friendly environment. China's steady economic success was attracting a number of other countries to enter into its markets for exploring new business and trade opportunities besides developing economic co-operation with China, he said.

Federal Tax Ombudsman Justice Munir A. Shaikh, Consul Generals of Saudi Arabia, United Arab Emirates (UAE), Switzerland, Bangladesh, Sri Lanka, Honorary Consul Generals of Yemen and Morocco, Mirza Ikhtiar Baig and Mirza Ishtiaq Baig, Karachi Chamber of Commerce and Industry President Majyd Aziz, Ijara Financing Inc Managing Director Farrukh Ansari, business elite and others were present.

http://www.brecorder.com/index.php?id=550561&currPageNo=1&query=&search=&term=&supDate=


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## Neo

April 15, 2007 
*Investment under CFS close to Rs50bn*

KARACHI, April 14: The CFS investment on the Karachi Stock Exchange last week swelled to Rs49.7 billion and actively supported the prevailing bull-run. Owing to sustained run-up on the stock market notably during the last couple of sessions, the demand for fresh funds remained on the higher side, analysts said.

The investment under the CFS during the last couple of weeks dropped to around Rs46bn from the ceiling of Rs55 billion, reflecting the depressed market conditions before the current bull-run, they said.

âBut the developing political situation is fraught with high risks,â warned Ambreen Jiwani, a stock analyst, adding âthere are more than one negatives, notably SECP presentation on the market crash of 2005 to the national assembly committee, which could take their toll in the coming weeksâ.

Total open interest on the forward counter in April contracts rose to Rs9.8bn from the previous weekâs Rs8.7bn but on the other hand spreads between the ready and forward counters fell to 4.86pc from the last weekâs 8.16pc.

http://www.dawn.com/2007/04/15/ebr6.htm


----------



## Neo

Neo said:


> *Pakistani exporters asked to explore huge Chinese market *
> 
> KARACHI (April 15 2007): Newly appointed Consul General of China in Karachi Chen Shan Min said on Friday that China had a potentially huge market and its exports would exceed 1,000 billion dollars by the year 2010.
> 
> Speaking at a reception, hosted in his honour by Ijara Financing Inc at a hotel, the Chinese Consul General said competitive products of Pakistan could enter the Chinese markets with joint efforts of both the countries.
> 
> He pointed out that presently China's exports to Pakistan stood at four billion dollars, whereas Pakistan exported more than one billion dollar worth of goods to China.
> 
> "There is an imbalance in our trade," Chen Shan Min said, and wanted Pakistan to embark upon an aggressive advertisement campaign to introduce its products in China. "Let the Chinese people know you have better products", he added. He said the total trade value of the two countries reached 5.247 billion dollars in 2006.
> 
> The Chinese Consul General suggested that Pakistan should arrange a trade fair in China to showcase its top brand of products. He also invited businessmen from Pakistan to China to participate in their biggest trade fair organised twice a year - one from April 15 to 30 and the other from October 15 to 30.
> 
> "I will also encourage Chinese companies to come to Pakistan," he said, adding China had sent a large delegation of businessmen to Karachi international trade fair.
> 
> He said products like traditional garments (Shalwar-Kameez), bronze items and other handicrafts would get better response from Chinese people. "We should also work towards promotion of border trade and tourism," the Chinese Consul General stressed.
> 
> He said he would encourage Chinese companies to invest in Pakistan where there was conducive business climate, better security and friendly environment. China's steady economic success was attracting a number of other countries to enter into its markets for exploring new business and trade opportunities besides developing economic co-operation with China, he said.
> 
> Federal Tax Ombudsman Justice Munir A. Shaikh, Consul Generals of Saudi Arabia, United Arab Emirates (UAE), Switzerland, Bangladesh, Sri Lanka, Honorary Consul Generals of Yemen and Morocco, Mirza Ikhtiar Baig and Mirza Ishtiaq Baig, Karachi Chamber of Commerce and Industry President Majyd Aziz, Ijara Financing Inc Managing Director Farrukh Ansari, business elite and others were present.
> 
> http://www.brecorder.com/index.php?id=550561&currPageNo=1&query=&search=&term=&supDate=



April 15, 2007 

*China to increase imports from Pakistan*

KARACHI, April 14: Consul General of Peopleâs Republic of China Chen Shanmin has assured to encourage Chinese companies to import more from Pakistan to reduce the trade imbalance, which is presently heavily in favour of China. For achieving this goal, he said visit of trade delegations and holding of fairs in both the countries will be undertaken.

Speaking at a dinner reception organised by Ijara Finacning Inc the newly designate Chinese diplomat said that the trade growth between China and Pakistan increased by a big margin of 30 to 40 per cent per annum. Last year, he said, the volume of two-way trade swelled to $5.247 billion, which was in favour of China.

There were exports to the tune of $4.424 billion against imports of partly amount of $1.007 billion. In order to correct the situation Chen Shanmin listed a number of measures, including encouraging Chinese companies to visit Pakistan, import more and actively participate in Pakistanâs trade fairs.

The Chinese diplomat also asked Pakistani businessmen to visit China and participate in such trade fairs like Canton for exploring Chinese markets. He said that Canton fair is the biggest trade fair held in China twice a year, from April 15 to 30 and from Oct 15 to 30.

Mr Shanmin also suggested that Pakistani business community should organise single country exhibition in China to introduce their products to the Chinese people. He said border trade and tourism will also be promoted to match the strong bondages being enjoyed by both the countries in political and diplomatic relations.

He said globally it is being seen that China hold bright prospects in future development and many nations are interested in entering Chinese market. Many nations are in favour of strengthening their economic relations with China but some are suspicious as they only want to enjoy the profit from cooperation with China and are equally afraid of its development and economic strength.

However, the Chinese diplomat cautioned that peaceful development of China will be more beneficial for the world as it will contribute towards security and stability. China accounts for one fifth of world population with 1.3 billion people bordering 14 neighbouring countries.

Ever since joining the WTO in 2001, China imported foreign goods worth $500 billion every year, thereby creating 10 million job opportunities for the countries and regions concerned.

Chen Shanmin said that in 2010, Chinaâs import will exceed $1,000 billion. He said his country provides cheap and good quality products, which benefit consumers of importing countries.

In his address of welcome Farrukh Ansari, the chief executive officer of Ijara Financing spoke about strong and time-tested bondage between Pakistan and China. He also briefly highlighted the role being played by his institution in promoting trade and industry by arranging funds for the corporate and private sector entities.

Federal Tax Ombudsman Justice (retd) Munir A Sheikh also addressed the select gathering which was also attended by diplomats from European and Middle Eastern countries.

http://www.dawn.com/2007/04/15/ebr11.htm


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## Neo

Sunday, April 15, 2007 

*World Memon Organisation: Pakistan to be one of higher economic growth countries: PM*

KARACHI: Pakistan will be, this year again, one of higher economic growth countries in Asia.

Prime Minister Shaukat Aziz declared this here on Saturday. He was speaking as chief guest at the inaugural session of Fifth Annual General Meeting of the World Memon Organization (WMO) at a local hotel on Saturday.

The PM said the country achieved this growth owing to the present governmentâs policies and reforms.

Shaukat Aziz said that almost eight years ago when President Pervez Musharraf took charge, the countryâs situation was not good and it was going nowhere and we were worried about paying next monthâs bills and that we were at the brink of what could have been a serious situation. âBut we took the challenge,â he remarked adding that we joined the team of President Pervez Musharraf with the aim of restoring the glory of the country.

âToday by the grace of Almighty Allah Pakistan is Mashallah Pakistan is stronger and growing,â he added.

The PM declared that Pakistan this year again would be one of the higher growth country in Asia.

He recalled that couple of years ago, people would say that this economic improvement was 9/11 related. The 9/11 has come and gone and the people have forgotten it and Pakistan is still growing.

About the role of the government in the world of today and tomorrow, Shaukat Aziz said his role is to create opportunities for the people and it is up to them to take advantage. He pointed out that because of governmentâs reforms and improvements that have been brought about the country is heading in the right direction. There is creation of wealth and jobs as well as opportunities, which were never seen before.

The PM pointed out that more than 60 percent population lives in rural areas and added that this year we will see one of the highest growth in the rural economy ever in the countryâs history.

He said we are heading for bumper crops, which will create income for the farmers, and this is good news for the country and the people. Shaukat Aziz said that we are creating a larger middle class and reducing people living in poverty.

He said we still have 25 percent people living in poverty and need to improve their future and give them a better future. The PM announced that our target of seven percent growth this year would be met and this would be met which will create more investment than before.

He pointed out that level of investment was up to 20 percent of the GDP, which is the highest in history since the countryâs independence. The PM announced that the country will have the higher foreign investment this year which will be close to five billion dollars which is the highest since the Pakistan became independent 60 years ago.

He said that now we have to make sure that we give the people better education, healthcare, infrastructure, law and order and security.

http://www.dailytimes.com.pk/default.asp?page=2007\04\15\story_15-4-2007_pg5_5


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## Neo

*Islamabad and Beijing to sign 20 MoUs: Shaukat *

ISLAMABAD (April 16 2007): Prime Minister Shaukat Aziz on Sunday said that Islamabad and Beijing would sign 20 Memoranda of Understanding (MoUs) during his six-day visit to China. Talking to reporters, he said a high-levelled delegation comprising ministers and businessmen would visit China on Monday.

China has invited Pakistan to attend the BOAO Economic Forum besides Nobel laureate Dr Younas, Philippines' President and Bill Gates. Prime Minister Shaukat Aziz would be the keynote speaker at the Forum.

The Prime Minister said he would also hold a series of bilateral meetings with Chinese officials and businessmen. Terming his visit as 'significant,' Shaukat Aziz said the Memoranda of Understanding (MoU) would be signed in various fields including energy, defence, security, commerce, science and technology, culture and trade. He said that he would also visit defence installations and witness the making of JF-17 Thunder aircraft.

He told reporters that Pakistan would open new consulate general's office at Chengdu. He said that Pakistan and China have time tested ties and were eager to further cement their relations. Aziz said private businessmen from Pakistan were also visiting China and they would also materialise their plans of co-operation with the Chinese authorities.

Prime Minister Shaukat Aziz who is starting his five-day visit to China (April 16-21) to China would witness manufacturing process of JF-17 Thunder aircraft in Chengdu, official sources told Business Recorder.

Prime Minister would be accompanied by a strong delegation comprising private as well as public sector representatives.

Official sources told Business Recorder that Prime Minister's visit would mainly focus on three tiers ie Free Trade Agreement (FTA) promotion, special economic processing zones and financial joint investment banking.

They said that Secretary Commerce, Secretary Board of Investment (BoI) and Secretary Finance had been assigned the responsibility to finalise the agreements with Chinese counter parts.

According to sources, the Prime Minister had asked the commerce ministry and the Trade Development Authority of Pakistan (TDAP) to recommend 20-25 businessmen for accompanying him during the visit.

The Prime Minister has also agreed to consider creation of an Economic Minister's post in the embassy in China to facilitate investors.

http://www.brecorder.com/index.php?id=551309&currPageNo=1&query=&search=&term=&supDate=


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## Neo

April 16, 2007 
*Coping with record trade deficit*

PAKISTAN has incurred a deficit of $10 billion in its external trade in the first nine months of the financial year â an average deficit of over a billion dollars a month.

That has happened as imports during the period rose to $22.42 billion while exports just increased to $12.345 billion -- a nominal increase of 3.5 per cent against the federal budget projection of 12 to 14 per cent rise.

The situation began deteriorating from September last after the year began well and improved marginally last month, but there is no assurance of improvement being sustained during the last quarter of the financial year. After the first nine months exports recorded a deficit of $9.985 billion. The fear is that the total deficit for the year may reach $12 to $13 billion by June, close to the foreign reserve.

Commerce minister Humayun Akhtar says the situation is not that bad as the exports this year are still larger than last year, but the fact is that the deficit has increased by 15.1 per cent from $8.687 billion this time last year.

The export performance is far less than what the country desperately needs. The scope for exports is far larger if approached the right way. Anyway Pakistan cannot afford to lose its markets to China, India and Bangladesh.

The large trade deficit which has also created a record current account deficit is now covered by the inflow of home remittances from Pakistanis overseas, foreign investment and privatisation funds. But this year the grace period extended by the group of 26 Paris Consortium after 9/11 comes to an end and the lenders expect us to resume the scheduled repayments. That will exercise pressure on the balance of payments of the country and the World Bank has reminded Pakistan of that now.

Meanwhile, the rise in trade deficit is caused by the high price of oil, which may cost $7 billion this year and the rising international prices of many essential imports, including all metals led by steel and major food items like powder milk and vegetable oil, particularly palm oil.

In the area of exports, after the European Union has cancelled fish imports from Pakistan due to unhygienic conditions at the fish harbour and diverting its fish imports to India and Bangladesh, we are losing poultry exports as well because of bird flu. Already 47,500 birds have been culled in Karachi alone to avoid bird flu.

Now while Pakistan is seeking FTA agreements with China, US and other countries, we are thinking only of the larger opportunities for exports to their markets and not of the possibility of tax-free or reduced tariff goods from those countries flooding our markets. That is happening already in respect of Chinese goods in Pakistan and Pakistan has been forced to levy heavy anti-dumping duties against two kinds of very cheaply sold tiles.

We have to be ready for protective measures against cheap imports as well and have to reduce our cost of production and sale of goods so that we can withstand imported competition as well while competing with foreign goods abroad successfully. Our businessmen have to learn to accept moderate rates of profits instead of opting for high profits all the time.

Meanwhile, there are rejoicings in Malaysia over the non-conclusion of negotiations for the FTA before the US deadline for reaching the agreement expired. And there are widespread protests in South Korea over the FTA agreement which has concluded by its powerful trade unions for fear of massive loss of jobs. The agreement is concluded but is not ratified by the parliament of the two countries.

In Pakistan there is utter complacency or lack of understanding over the full implications of FTA agreements with developed countries. The FTA is a sharp double- edged sword. It offers as many opportunities for larger exports as it offers to the other parties for exporting tax-free or reduced tariff items to Pakistan in plenty.

At the same time, we have made a mess of our fish exports risking $80 million export earnings because of our cussedness and the belief that anything can pass despite stern earnings from the European Union. We have now placed the responsibility for managing the fisheries on the provinces. Let us hope they will do better than under the divided management.

We are also hoping to export wheat to India after an interval of 50 years. Our wheat production is expected to rise to 23 million tones with two million tones surplus while the Indian deficit is five million tones. It is hoped that a good use of the situation would be made. We are also trying to export cement to India after the first consignment ran in to some difficulties.

If we have to achieve our export target of $18.6 billion we have to try far harder and rationally than we have been doing and try to limit our imports to the ceiling of $28 billion.

We do not know at the moment how far the Chinese industrial estates, which are to come up in Pakistan in collaboration with Pakistani businessmen, will be helpful in increasing our exports particularly to China. It depends on the kind of industries on which the Chinese invest and develop competitively.

While the import budget at $28 billion is very large, the government does not want to reduce it as apart from oil, it consists of industrial machinery, electrical equipment, raw material for industries and automobiles which bring large revenues to the state. Reducing imports would also mean a drop in the revenues which the government does not like but also the reduction in the import of machinery and raw materials will affect economic growth and increase unemployment which the government cannot risk.

But it is wrong to say that the key players in the government do not know the reasons for the small exports and its creeping increase and the commerce officials have kept the government in the dark regarding the real reasons. The newspapers are full of the reasons why the exports are poor. And the top officials are told the reasons at numerous seminars workshops they attend which include the high cost of production in Pakistan and the heavy price of doing business.

The international financial institutions have spot lighted the reasons for the poor exports and have offered financial help to implement the necessary reforms. The fact is that while there is so much talk about reforms, first generation reforms and second generation reforms, there is a reluctance to change, to break away from old habits and bureaucratic traditions. There is a reluctance to trust non-officials despite massive privatisation programme of the government and the new public-private partnership.

A report on the state of commerce in Pakistan, largely in respect of the private sector, has been on the table of the commerce minister for two years he says, but since decisions have not been taken on the report, it has been gathering dust although it may be the first official study of the domestic commerce which needs detailed scrutiny now.

Radical changes are essential in the commercial sector, both on the part of the government and the private sector. The earlier such changes occur the better, in a highly competitive international market world where the weak and the vacillating are left far behind.

http://www.dawn.com/2007/04/16/ebr11.htm


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## Neo

*Kuwait Energy To Invest In Pakistan Oil, Gas Operations -Pakistan *

ISLAMABAD -(Dow Jones)- Kuwait Energy Co. will invest $45 million in oil and gas exploration in Pakistan, Pakistan's Petroleum Ministry said Monday.

Kuwait Energy Chairman Manssour Aboukhamaseen met with Pakistan's Petroleum and Natural Resources Minister Aman Ullah Jadoon Monday about investing in the country.

He expressed his company's "keen interest in investing $45 million in oil and gas exploration activities in Pakistan," the ministry said in a statement.

Pakistan has a vast onshore and offshore sedimentary area spanning 827,000 square kilometers, of which around 25% is under exploration, according to the minister.

Last week Pakistan unveiled a draft oil and natural gas exploration policy that includes allowing foreign and domestic exploration and production companies to sell oil and gas at higher prices in the domestic market.

http://www.nasdaq.com/aspxcontent/N...CQDJON200704161244DOWJONESDJONLINE000476.htm&


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## Neo

*Highest raise in remittances during March *

ISLAMABAD (April 17 2007): Workers' remittances registered the highest ever increase in Pakistan's history when a record amount of 520.24 million dollar was remitted last month (March 2007) as against 423.56 million dollar in March 2006 showing a jump of 96.68 million dollar or 22.83 percent.

The previous highest amount remitted in a single month was recorded in May 2006, when an amount of 506.57 million dollar was received in the country from overseas Pakistanis.

Pakistan received an amount of 3,936.77 million dollar as workers' remittances during the first nine months of the current fiscal year (July 2006 - March 2007) as against 3,228.21 million dollar received in the corresponding period of the last fiscal year registering an increase of 708.56 million dollar or 21.95 percent.

The amount of 3,936.77 million dollar includes 1.90 million dollar received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

The monthly average remittances for the period July 2006 - March 2007 was 437.42 million dollar as compared to 358.69 million dollar during the same period of the last fiscal year depicting an increase of 78.73 million dollar or 21.95 percent.

The inflow of remittances into Pakistan from all countries of the world increased last month (March 2007) as compared to March 2006. Remittances from USA Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to 142.72 million dollar, 92.69 million dollar, 82.29 million dollar, 70.43 million dollar, 37.75 million dollar and 12.88 million dollar respectively as compared to 108.13 million dollar, 72.50 million dollar, 71.96 million dollar, 57.96 million dollar, 38.63 million dollar and 9.79 million dollar in March 2006.

Remittances received from Canada, Australia, Norway, Switzerland, Japan and other countries during last month (March 2007) amounted to 81.13 million dollar as against 64.47 million dollar in March 2006.

The inflow of remittances during the first nine months of the current fiscal year from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to 1,034.69 million dollar, 733.48 million dollar, 595.98 million dollar, 538.29 million dollar, 319.25 million dollar and 110.38 million dollar respectively as compared to 893.54 million dollar, 515.59 million dollar, 491.25 million dollar, 429.32 million dollar, 305.35 million dollar and 87.62 million dollar during the same period last fiscal year.

Remittances received from Canada, Australia, Norway, Switzerland, Japan and other countries during the first nine months amounted to 602.80 million dollar as compared to 494.85 million dollar in the corresponding period of the last fiscal year.

http://www.brecorder.com/index.php?id=551545&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*IFIs extol Pakistan's macro-economic stability *

WASHINGTON (April 17 2007): The International Financial Institutions (IFIs) view with great appreciation Pakistan's macro-economic stability and attractive conditions for doing business, adviser to Prime Minister on Finance and Revenues Dr Salman Shah said.

Record inflows of foreign investment into Pakistan signify global investors' growing trust in the long-term strength of the country's economy, he said while briefing journalists about his meetings with officials of the World Bank, IMF and other financial institutions.

Shah, who is heading a delegation of economic managers at the annual spring meetings, described his interaction as very positive.

He said the International Finance Corporation officials told him that they see Pakistan as having best indicators for doing business in the South Asian region. They are also studying the reforms that have helped Pakistan facilitate doing business in the country.

On the state of the economy, the country is on course to recording a robust 7 percent growth this year while foreign exchange reserves will touch an unparalleled US dollars 15 billion mark. Strong foreign and portfolio investments are pouring in and will cross US dollars six billion for the first time. Exports have shown a 6.5 percent growth, a little below the target. The core inflation is down to 5.5 percent. Shah particularly highlighted the importance of foreign investment being widespread, taking place in several sectors of the economy including banking, finance, oil and gas, energy, telecommunication, manufacturing and construction.

Dr Shah, flanked by Dr Ashfaque Hassan Khan, Adviser Finance Ministry and Director General Debt Office.

Pakistan is poised to attract huge investments in the years ahead as fundamentals of the economy are strong, reforms are underway and new initiatives are being taken, he stated. He referred to Prime Minister's visit to China, during which Dr Shah said Pakistan would particularly stress interaction with the Chinese corporate sector.

About the current account deficit, he said it is manageable and has increased due to enormous economic activity which has seen rising oil and machinery imports to propel further growth. On the agrarian side, he said this year the country will be having a bumper crops of wheat, sugar cane as well as pulses. The wheat production will be 23 million tones, according to conservative estimates, he said and added this has been possible due to a combination of factors including wider usage of fertilisers, timely announcement of support price and good weather.

The adviser said senior IMF leaders the delegation met have commended Pakistan's debt profile and added that debt to GDP ratio is 53 percent, better than India, Egypt and Turkey and other economies in the category.

Pakistan, he stated, will reap demographic dividends as global investors not only eye its 160 million population market but also realise that about 100 million people are under the age of 25 years. The investors look at their economic life cycle and the government is committed to developing its tremendous human resources as well as putting in place requisite infrastructure for fast-paced development.

However, he said, every segment of the society owes a role in making Pakistan an attractive and congenial destination for investment. Regarding improvement in PIA, he said the government intends to revamp PIA and replace its fleet of old planes over a period of time and has devised a five-year plan to improve its efficiency. The PIA, he said, has potential to be a major airline as it has committed customers who prefer to fly it.

Dr Shah underlined the importance of power sector in sustaining higher economic growth in industrial and agricultural sectors and said water projects are the best as they provide both water and energy. He saw increasing prospects for investment in small hydel projects.

http://www.brecorder.com/index.php?id=551625&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pak, China sign 15 cooperation agreements* 

BEIJING: Pakistan and China Tuesday inked 15 private sector agreements for constructing a new Gwadar airport and an automobile plant besides collaboration in tourism, agro industry and housing sectors. 

The agreement signing witnessed by ministers from both the countries also deal with establishment of technology and Industrial zone, and Pakistan and China Friendhsip Park, black plates shipment, power, housing and mega infrastructure. 

Minister for Industries, Production and Special Initiatives Jehangir Khan Tareen speaking on the occasion urged the Chinese investors to come forward and avail the opportunities offered to them in various sectors in Pakistan. 

He said that under the FTA 85% of goods traded between the two countries will be either totally tariff free or under preferential tariff and added this will greatly expand the scope for further growth in trade and investment. 

"We have not stopped at the EHP and the FTA, but have also taken further steps to increase cooperation and both the government in this regards have signed the 5 year programme for Trade and Economic Development under which both governments will encourage their private sectors. He said that 61 projects have been enlisted in which public and private sector companies from both countries can participate. 

The minister pointed out that Pakistan has also approved preferential policies for Chinese businessmen investing such Industrial Parks, which include total exemption of customs duties on import of machinery and equipment and Income Tax Holiday for 5 years. He said Pakistan has announced a number of preferential incentives for Chinese investors and added that the two governments have also agreed to establish a Pak-China Joint Investment Company with a capital of US $ 200 million. 

Elaborating further, Tareen said that this company will have equal partnership of Pakistan and the China development Bank and will play a leading role in facilitating Chinese enterprises to come and invest in Pakistan. 

"Private sector has been a major factor in the rapid economic growth of Chinese economy and the All Chinese Federation of Industries and Commerce (ACFIC) being the representative body of the nearly two million Chinese enterprises can play a very important role in expanding the cooperation between the private enterprises of both the country", the minister said. 

Referring to the rapid economic development of China, the minister said that it has not only brought prosperity to the Chinese people but it also acted as an engine of growth for the global economy and said that the economic growth of China will contribute to greater stability in the world. . 

He said last November Chinese President Hu Jintao visited Pakistan and now Prime Minister of Pakistan Shaukat Aziz is visiting China. 

http://www.thenews.com.pk/updates.asp?id=21023


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## Neo

* Pak economy far better than India: Ishrat *

Tuesday, April 17, 2007

KARACHI: Chairman National Commission for Government Reforms Dr Ishrat Hussain has said the performance of Pakistanâs economy is far better than India if compared in relative terms instead of absolute terms. 

Speaking at a luncheon meeting with the members of American Business Council on Monday, he said Pakistanâs exports were larger than Indiaâs if difference of their size and population is considered. âIf our export today stands at $18 billion, theirs should be at $144 billion. But they are standing at $95 billion,â he said.

Similarly, he said, Pakistan had been more successful than India in attracting foreign direct investment. âAs we are likely to have received $5 billion as FDI by the end of this fiscal, India should attract $40 billion, but its FDI stands only at $12-15 billion,â he said. 

Hussain said it was easier in the first three years of Musharraf government to get things done because there was no elected government. âWe took many decisions in that period and implemented them very easily through ordinances,â he said. âNow the situation is quite different. It looks like a one-man dictatorship from outside, but the fact is that everything is discussed in cabinet committee and the cabinet. It also goes through standing committees of parliament and is debated on the floors of Senate and National Assembly, which takes a lot of time. However, we have to respect the authority of the elected representatives.â

He said the ultimate aim of the NCGR is to make the lives of ordinary citizens easier by ensuring better education, health and other services to them through reforms at the government level. 

The former governor of SBP said there are too many ministries and then these ministries have different departments. âIn Islamabad officers keep holding meetings all the time to coordinate their matters, but that coordination is difficult to achieve. There is too much fussiness today; we need clarity,â he said. âWe have decided the areas of education to be overseen by different levels of government. Higher education is to be overseen by federal government, college level education by provincial governments and primary level education by district level governments,â he said. 

He said that there was need to replicate the experience of petroleum ministry in the other ministries. He said petroleum ministry had given autonomy to public sector corporations like OGDC and SSGC and had formed OCAC to decide prices. It is now concerned only with policy-making and in projects like IPI gas pipeline, he said. He said the governmentâs only job should be to plan, make policies, implement and monitor their respective areas. It should not be involved in running enterprises, he said.

The chairman NCGR said there were some commercial services being run by officers who were unable to compete because of government restrictions. He said there was no need to retain the civil servantsâ groups of commerce and trade, postal service and railway.

He said officers should be paid according to market conditions and their performance instead of grades. âThese things may have worked in 1950s, but you cannot solve todayâs problems with instruments of the past,â he said. 

He advised the ABC members to form a group, which should identify problems companies face in dealing with ministries and make recommendations for his commission. President ABC Iqbal Bengali said the ABC members wanted the government to ensure protection for intellectual property rights, patents, and trademarks and eliminate counterfeits. He said the government must also work towards ensuring data exclusivity. 

He stressed level playing field for market players and said for this the government must eliminate smuggling. He said the ABC members advocate access to information and expect transparency in the government decisions. 

http://www.thenews.com.pk/daily_detail.asp?id=51563


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## Interceptor

Neo said:


> R & D is yet another sector that needs serious attention since demand for consumer goods will increase due growing desposible incomes.
> 
> We want to learn from the mistakes of other growing economies where this aspect has caused chaos and pollution due negligence.



Pakistan developed the Adam car which is said to be a Pakistani car but after studying the report the engine is chinnese origin but it also said that the Pakistani engine factory is in development and later the car will have a pakistani engine. My view is that if the engine is forign origin than it is in my sense a forign car even though the entire car was built in Pakistan. The report was a few mounths ago so the factory must have been developed by now. There are alot of Pakistani car manufacturers that have developed energy saving cars, hope this carries on. The R&D this has been a problem in the past but I hope they are spending more on the R&D sector for better quality and more reliance.


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## Interceptor

This agian a historic agreement with China a long time friend, this has made both counteries more closer, the implecation of this agreement can help Pakistan make more bigger impact in its economy. More companies can be created as money is coming in to the country it will help create more jobs in Pakistan.


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## Interceptor

I wont entirely agree with the the source but I believe it good thing that Pakistan has competition with its Bigger neighbor India it will encourge Pakistanis to struggle and aim higher for the more brighter future for Pakistan. The details indicating the export is very good news for Pakistan.


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## Neo

Interceptor said:


> This agian a historic agreement with China a long time friend, this has made both counteries more closer, the implecation of this agreement can help Pakistan make more bigger impact in its economy. More companies can be created as money is coming in to the country it will help create more jobs in Pakistan.



China is a timetested all weather friend of Pakistan and the best is yet to come. New proposals by Hu-jintao ti extend bilateral trade to approx 20 billion by 2015 would cereate millions of jobs throught the country. Proposed energy corridor is another mega project designed to enhance trade bewteen the countries and the region.


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## Neo

*27 accords, MoUs signed with China *

BEIJING (April 18 2007): Pakistan and China on Tuesday signed 27 agreements and memorandum of understandings (MoUs) in the public and private sectors besides extending co-operation in defence, space technology, establishment of a joint investment company and avoidance of double taxation.

However, Pakistan side remained tight-lipped on issues like setting up of more nuclear power stations and the fate of much delayed 969 mw Neelam Jhelum hydropower project in AJK.

"We are re-energising our existing relations and my one on one talks with the Chinese premier were very constructive and productive," said Prime Minister Shaukat Aziz, while briefing journalists after his first day of hectic engagements. Foreign Affairs Secretary Riaz Muhammad Khan and Pakistan Ambassador to China Salman Bashir were also present in the press conference.

Shaukat Aziz, who was looking very happy after the meeting, said the issue of Thar coal and railway engines did not come under discussion, but he asked Chinese banks to invest in Iran-Pakistan-India (IPI) gas pipeline which is a viable project.

Asked if Pakistan discussed establishment of more nuclear power plant, the prime minister said that both sides discussed several issues, but these discussion held within the room.

Fourteen agreement and MoUs which were signed between the two governments are: Co-operation between the Karachi Stock Exchange (KSE) and the Shanghai Stock Exchange (SSE), MoU on construction of cable system between China and Pakistan, treaty on mutual judicial assistance in criminal matters, agreement on implementation regulation for five-year development programme on economic co-operation.

MoU on co-operation between the National Development and Reform Commission (NDRC) of China and the Planning Commission of Pakistan, Protocol-2 to the agreement on avoidance of double taxation, MoU on co-operation between the Ministry of Industry and Production and the NDRC, framework agreement between China National Space Administration (CNSA) and Suparco on deepening co-operation in space science technology.

Both countries also inked MoU on co-operation between the Foreign Service Academy and the Chinese University of Foreign Affairs, MoU on establishment of Pakistan Study Center at the Peking University, agreement on economic and technical co-operation, and MoU on establishment of engineering university in Pakistan.

"We had written things as I read before my counterpart said OK and even at some stage when I missed one thing he reminded me," he added. Shaukat Aziz said that both countries would achieve the target of $15 billion bilateral trade in five years as trade and investment relations are becoming more stronger.

He also met with the heads of Bank of China, China Development Bank(CDB) and Exim Bank and invited them to invest in Pakistan. The CDB governor, in his remarks, said that there was a broad range for co-operation between the two countries and a consortium could be formed for joint investments in various areas.

The prime minister was of the view that there was need for close co-operation between the private sector of both the countries, adding that Chinese private sector is very keen to invest in Pakistan.

Shaukat Aziz, who held 40 minutes one on one talks with Chinese Premier Wen Jiabao was more than happy with the outcome of the meeting. "Today, I will meet Chinese President and the Vice Prime Minister to discuss further co-operation in different fields," he said.

The prime minister also held a meeting with CEOs of China mobile and telecom operators who showed interest in investing in Pakistan. "We are open economy and welcomes investors, providing a level playing field to both the local and foreign companies," he maintained.

Both Wen Jiabao and Shaukat Aziz also discussed Pak-India relations, international issues like Iran, Afghanistan, North Korea and terrorism. "We are very close in several areas and have similar thing on issues like Iran," he said, adding that both countries would work together in such matters.

Earlier, the private sector of China and Pakistan signed 13 agreements for setting up automobile plant, power, industrial zone, construction of new Gwadar airport dairy development, power sector besides collaboration in agro industry, real estate tourism and other mega infrastructure projects.

The agreement signing ceremony was witnessed by Industries and Production Minister Jahangir Khan Tareen and Chinese Deputy Minister Huang Yue Jin. Speaking on this occasion, Tareen said the private sector has been a major factor in rapid economic growth of Chinese economy and the All China Federation of Industries and Commerce (ACFIC) being the representative body of the nearly two million enterprises could play a very important role in expanding co-operation between the private enterprises of both the countries. He also said that 61 projects have been enlisted in which public and private companies from both countries could participate.

Tareen said that Pakistan has also approved preferential policies for Chinese businessmen investing in such industrial parks, which include total exemption from customs duty on import of machinery and equipment and income tax holiday for five years.

He emphasised that the private sector of both the countries should take advantage of the opportunities available and create win-win situation both for their businesses as well as for their respective countries.

Earlier, the Chinese Deputy Minister of the United Front Work and Deputy Chairman of China society of promotion of the Guangcai programme said that the friendship of both the countries is time-tested. Privatisation and Investment Minister Zahid Hamid, Planning Commission Deputy Chairman Akram Shaikh, Navtec Chairman Altaf Saleem were also present during the agreement signing ceremony.

http://www.brecorder.com/index.php?id=551976&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Shaukat wants CDB to invest more in Pakistan *

BEIJING (April 18 2007): Prime Minister Shaukat Aziz said on Tuesday that Pakistan was keen to see more investment from the China Development Bank (CDB) into infrastructure development, energy, banking, dams and agro industry for the mutual benefit of the two countries.

Talking to CDB Governor Chen Yuan, Prime Minister Shaukat Aziz expressed confidence that its co-operation with Pakistani banks and financial institutions would be very beneficial for the two countries. The CDB Governor said there was a broad range for co-operation between the two countries and a consortium could be formed for joint investments in various areas.

Prime Minister Aziz, appreciating the CDB's interest in Pakistan, said there was a need to identify long-term and sustained co-operation between the two countries. He said he was on one of his longest foreign visits, as it was part of the vision of both the countries to increase collaboration in all areas and the two enjoyed a strategic partnership.

He said about 50 percent of the banks in the country were in private hands and the overall reform in the financial sector had helped attract huge foreign direct investment (FDI) of over 5.5 billion dollars during the current financial year.

He also appreciated the signing of a memorandum of understanding (MoU) between the Karachi Stock Exchange and Shanghai Stock Exchange for enhanced co-operation.

http://www.brecorder.com/index.php?id=552015&currPageNo=1&query=&search=&term=&supDate=


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## Neo

Interceptor said:


> Pakistan developed the Adam car which is said to be a Pakistani car but after studying the report the engine is chinnese origin but it also said that the Pakistani engine factory is in development and later the car will have a pakistani engine. My view is that if the engine is forign origin than it is in my sense a forign car even though the entire car was built in Pakistan. The report was a few mounths ago so the factory must have been developed by now. There are alot of Pakistani car manufacturers that have developed energy saving cars, hope this carries on. The R&D this has been a problem in the past but I hope they are spending more on the R&D sector for better quality and more reliance.



*July-February car industry FDI far less than needed *

ISLAMABAD (April 18 2007): The inflow of foreign direct investment (FDI) in the local car manufacturing sector has been recorded at $26.7 million during July-February period of the current fiscal year, which is far less than the investment required for expansion of the industry to bridge the demand-supply gap, sources told Business Recorder.

"The FDI volume in local car manufacturing is not sufficient to bridge the gap between demand and supply of cars, especially the small units," sources said. This would dent government efforts of persuading the local car manufacturers to increase their yearly production capacity to 500,000 units in the next few years.

For this purpose, the local car industry is required to invest around Rs 250 billion by the year 2011. Keeping this figure in view, the car industry is required to invest around Rs 50 billion per year.

However, in the first eight months of the current financial year, the investment under the expansion plan has been far less than government expectations, sources said. This would not help the government to give any kind of relief to the consumers, who have been facing delays in vehicles' delivery by local car companies, they added.

The government plan has received a serious setback despite the fact that it has already approved the first ever long-term Auto Policy, which has been a longstanding demand of the car industry. Under the plan, investment by car industry was also required for improvement in quality of the product. "The government actually wants the manufacturers to produce vehicles of the same quality as produced by the Japanese manufacturers," sources said. However, the amount of investment suggests that the car assemblers are "not really interested" to consider even this very important issue, they added.

However, an official in Pakistan Automobile Manufacturing Association (Pama) told Business Recorder that the inflow of investment in car manufacturing was slow due to the fact that long-term Auto Policy was yet to be implemented in full spirit. "It is encouraging that Auto Policy has been approved. However, the car industry is yet to have it as final document for implementation," he said.

Sources said that in the last fiscal year, around $26.6 million was invested in local car industry. The volume of FDI in the same sector in the first eight months of the current fiscal year suggests that local car manufacturers have been least moved by the long-term Auto Policy, they added.

They said that investment in motorcycle manufacturing actually declined to $0.7 million. An investment of $3.4 million was recorded in motorcycle manufacturing in the last fiscal year. The FDI in buses, truck and van making was slightly up at $5 million, which was also not up to the expectations of the government, sources said.

http://www.brecorder.com/index.php?id=551968&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Karachiites facing severe power outages *  

KARACHI (April 18 2007): The power demand of country's economic engine touched 2200 mega watt (MW) on the start of summer season that compelled the city to remained electricity deficient which looms between 120 to 150 MW on Tuesday.

Due to this situation, the people experienced sudden power breakdowns that hit the metropolis during the last 48-hour resulting in low voltage and leaving citizens at the mercy of power utility which is presently managing group-wise load-shedding for their consumers.

The power utility - Karachi Electric Supply Corporation (KESC) is conducting group-wise load-shedding as during the day (Tuesday) the electricity shortage recorded at 120MW and after 7pm evening, the demand increased to 150MW restraining the utility to opt for load-sharing.

The month started with a big bang as far as power supply from Water and Power Development Authority (Wapda) is concern as on April 2, KESC received sudden cut of about 350 megawatts shortfall from the authority compelling it to immediately resort to load-shedding for one to one-and-a-half hours on a rotation basis in the metropolis.

Since then, the corporation remained handicapped from the authority's side to receive less power that the Wapda was supplying to the KESC. The authority (Wapda) was given deadline by the federal government to streamline transmission-system before May 1, after that the authority has to supply 700MW of electricity to the corporation.
http://www.brecorder.com/index.php?id=552020&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Mobilink to invest $700m *

KARACHI: President and CEO Mobilink Zouhair A Khaliq said on Tuesday the company had planned to invest US$700 million in the next 18 months in Pakistan to meet capital expenditure.

Addressing newsmen after the closure of Rs7.5 billion syndicated loan facility for the company, he said the capital increase would be used to expand and enhance capacity.

He said the company had planned to cover new cities and emphasis would be on rural areas of the country.

Replying to a host of questions, he said signal towers of mobile phone companies did not pose any health problems to residents, adding there was no scientific reason that SMS or mobile phones were injurious to health.

However, he admitted the spread of rumours initially hit the number of calls, but after two to three days normal call traffic was restored. He described the rumours as a âbad jokeâ.

President and CEO MCB Bank Aftab Manzoor called the mobile phone company a leader in the telecommunications industry and congratulated it on successful completion of the loan facility.

Out of two syndications, Rs4 billion medium-term financing has been exclusively arranged by MCB Bank through participation of more than 14 financial institutions. The remaining Rs3.5 billion syndicated finance has been jointly arranged by MCB, Habib Bank, United Bank, Allied Bank, HSBC and NIB.

http://www.thenews.com.pk/daily_detail.asp?id=51697


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## Neo

Neo said:


> *Karachiites facing severe power outages *
> 
> KARACHI (April 18 2007): The power demand of country's economic engine touched 2200 mega watt (MW) on the start of summer season that compelled the city to remained electricity deficient which looms between 120 to 150 MW on Tuesday.
> 
> Due to this situation, the people experienced sudden power breakdowns that hit the metropolis during the last 48-hour resulting in low voltage and leaving citizens at the mercy of power utility which is presently managing group-wise load-shedding for their consumers.
> 
> The power utility - Karachi Electric Supply Corporation (KESC) is conducting group-wise load-shedding as during the day (Tuesday) the electricity shortage recorded at 120MW and after 7pm evening, the demand increased to 150MW restraining the utility to opt for load-sharing.
> 
> The month started with a big bang as far as power supply from Water and Power Development Authority (Wapda) is concern as on April 2, KESC received sudden cut of about 350 megawatts shortfall from the authority compelling it to immediately resort to load-shedding for one to one-and-a-half hours on a rotation basis in the metropolis.
> 
> Since then, the corporation remained handicapped from the authority's side to receive less power that the Wapda was supplying to the KESC. The authority (Wapda) was given deadline by the federal government to streamline transmission-system before May 1, after that the authority has to supply 700MW of electricity to the corporation.
> http://www.brecorder.com/index.php?id=552020&currPageNo=1&query=&search=&term=&supDate=



18, 2007 
*Markets suffer huge losses due to power cuts*  

By Aamir Shafaat Khan

KARACHI, April 17: Shopping centres and bazaars in Karachi are facing massive power breakdowns and according to representatives of various market associations shopkeepers are reporting 40-50 per cent drop in sales, especially in peak business hours, which start after the sunset due to scorching heat wave.

On the contrary except for two industrial areas -- Site and Korangi, industrial areas like North Karachi and F.B. Area are facing power breakdowns. Representatives of various market bodies said that very few shopkeepers had stand-by generators and UPS but they did not work in longer duration of power failures. Even low voltage and power fluctuations had almost suspended the working of lifts and air conditioners. They said that traders return their home without any substantial income from sales.

Chairman Tariq Road Action Committee (TRAC) Siddiq Memon said that the area had been suffering six-hour power outages daily for the last one week.

Even at the peak hours of shopping when consumers throng the markets after sunset the area plunges into darkness. Tariq Road has 40 shopping centres and 45 different kinds of bazaars. As many as 250,000 workers are employed in these markets and bazaars. âThe cumulative loss of all shopkeepers in the area comes to Rs50 million a day,â he added.

âOnly 30 per cent shopkeepers have power generators but one cannot run these for the whole day as it consumes petrol and diesel whose prices are also high,â he said adding that out of 40 some six shopping centres have power generators.

The Tariq Road traders have given 72 hours ultimatum to the KESC to rectify the situation otherwise traders will bring out rallies to record their protest, he said.

Chairman Alliance of Market Association (AMA) Atiq Mir said that cityâs markets undergo load shedding three times a day of various durations. âShopkeepers have lost 40 per cent of their business,â he said. He claimed that hardly five per cent shopkeepers in cityâs total 500 markets have got their own generators while there are hardly few shop owners who rely on UPS. The loss per day in terms of sales ranges between Rs1 billion to Rs1.5 billion due to load shedding.

President Saddar Cooperative Market Society Mohamamd Feroz said that the market has been facing twice load shedding of two hours each (morning and evening at peak business hours). Out of 900 shops, including the basement â some 70-80 shops have generators while the Society has also got the market generator but it cannot be run for longer hours.

Senior Vice-Chairman Saddar Alliance of Market Association Abdul Samad Khan said that hardly 10 per cent shopkeepers on Abdullah Haroon Road and Zainbunisa Street have their own generators. Areas like Zainab Market, Victoria Centre, Panorama Centre and Rex Centre have been facing three to four hours power failure twice a day including one after the sunset. âOur business has reduced by 50 per cent,â he added.

INDUSTRY: Chairman Site Association of Industry Imran Shaukat said that Site area has so far been free from any load shedding.

He added that the KESC higher ups had planned to maintain frequent power supply to the industrial areas aimed at maintaining a momentum in daily productivity. Site has 3,500 industrial units in which 15-20 per cent large units have power generators.

Chairman Korangi Association of Trade and Industry (KATI) Masood Naqi said that the area has not been facing load shedding. Even on Tuesday power supply has been normal and satisfactory.

President Karachi Chamber of Commerce and Industry (KCCI), Majyd Aziz said that the Chamber has invited the new KESC boss to discuss the future strategy aimed at controlling frequent power breakdowns and voltage fluctuations.

Chairman North Karachi Association of Trade and Industry (NKATI) Faraz Mirza said that there have been power breakdowns of three hours twice a day. He said out of 2,000-2,500 units only 40 per cent units have power generators.

Vice-Chairman F.B. Area Association of Trade and Industry (FBATI) Muzzamil Hussain said that area has been facing one and a half hour power failure twice a day. He added that there has been a problem of voltage drop in which sophisticated machines cannot be operated.

http://www.dawn.com/2007/04/18/ebr3.htm


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## Neo

April 18, 2007 
*Pakistan to get equal export opportunities*

LAHORE, April 17: World Trade Organisation Director General Pascal Lamy has said that Pakistan will be provided a level-playing field for marketing its agriculture products in the developed world.

At a meeting of the Lahore Chamber of Commerce and Industry here on Tuesday, he appreciated Pakistanâs role in all areas of negotiations, and said he fully understood the sensitivities of the country, and would be extending all-out support on the issue of tariff cuts on its exports such as textiles and clothing in current negotiations.

He said though there was not much progress made on issues in Doha Round, a five-year programme had been chalked out to deal with 20 items directly related to environmental goods. âThe programme aims at facilitating reduction in tariffs on environmental goods and services. The discussion on industrial and agricultural tariffs as well agricultural subsidies have picked up momentum that would have a visible bearing on the trade of many countries,â he said and added that the WTO was trying to reach out all stakeholders to take them on board on the new developments.

He said there was a strong camp pushing for removal of subsidies on agriculture and fisheries sectors which was being resisted by some countries.

He suggested countries like Pakistan that have great potential to enhance their trade must prepare themselves to reap benefits of tariff reductions and removal of agriculture subsidies. He, however, made it clear that unless and until the US and the United Kingdom cut rate of subsidies and tariffs, the WTO Agri-talks would not move ahead.

He also urged Brazil, India and China to curtail their industriesâ tariffs. âThe issues of subsidies and industry and agriculture tariffs should be resolved in the larger interest of the developing world,â he said.

Expressing his concern over delay in provision of a level-playing field to the developing countries for marketing their agricultural products to the developed world, the LCCI President Shahid Hassan Sheikh said that Pakistan had fundamental interests in further strengthening the rules governing international agricultural trade, as agriculture was the backbone of its economy.

He said Pakistan enjoyed comparative advantage with regard to a number of agricultural commodities such as wheat, rice and cotton. However, the country had not been able to translate the advantage into enhanced production and exports due to inadequate infrastructure, lack of value addition technologies and restricted access to markets of developed countries, such as USA and EU.

He said Pakistanâs agricultural exports faced competition from the local products in developed countries, which were subsidised not only at the market stage but also at the production level. Besides these subsidies, he said, the developed countries had high tariff and non-tariff barriers that barred Pakistan from increasing its agricultural exports to these countries.

He said anti-dumping duty were another area of serious concern for Pakistani business community. âWe are often been subjected to anti-dumping duties. How can the private sector industries sell below cost?. We hope that the Doha round can make the necessary changes so that there is no arbitrary levy of anti-dumping duties.â

http://www.dawn.com/2007/04/18/nat5.htm


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## Neo

*UN Says Pakistan Needs Reforms To Sustain High Econ Growth *

ISLAMABAD -(Dow Jones)- Pakistan needs more reforms to maintain high gross domestic product growth ranging from 6% to 8% and reduce poverty, the United Nations said in a report published Wednesday.

"Reform needs to be maintained to sustain high growth and rapid poverty reduction," the Bangkok-based U.N. Economic and Social Commission for Asia and the Pacific (ESCAP) said in its Economic and Social Survey of Asia and Pacific 2007.

"With fiscal adjustment still a challenge, more progress is needed in tax collection and resource mobilization to reduce large budget deficits," it said.

These reforms would allow redirecting resources from servicing public debt to economic development and social progress, while at the same creating an enabling environment for private investment, it said.

In the 2006 fiscal year, Pakistan's fiscal deficit was estimated at 4.2% of GDP, higher than the 3.3% posted in the previous year due to an increase in spending on reconstruction following the October 2005 earthquake.

Following a debt reduction strategy, the country's public debt-to-GDP ratio fell to 59% in June 2006, from 65% in June 2005, and 85% in June 2000.

"Growth prospects for Pakistan are fairly promising and an increase to 7% or even higher in 2007 is expected following a recovery in agriculture and improved performance of the manufacturing sector," the U.N. survey said.

"To sustain future growth rate of 7-8% more investment is needed to develop human resource and physical infrastructure", survey indicates.

Pakistan is also striving to keep a lid on inflation.

"Increase in consumer prices is a genuine concern in most countries in South Asia," the U.N. said.

"In Pakistan, the government's anti-inflationary policies included effective managing of supply and demand for essential consumer goods and raw materials by means of a liberal imports policy and strengthening of the public distribution system through the Utility Stores", it said. 

http://www.nasdaq.com/aspxcontent/N...CQDJON200704181117DOWJONESDJONLINE000839.htm&


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## Neo

*OGDCL Reports Gas, Condensate Discovery in SE Pakistan *

Wednesday, April 18, 2007 

Oil and Gas Development Company (OGDCL) has discovered Gas & Condensate from its Chak 66 North East Exploratory Well No. 1. The well is located in Sinjhoro Block in District Sanghar of Sindh Province, Pakistan. The Sinjhoro Block is held by a joint venture comprising Oil & Gas Development Company Limited (Operator), Orient Petroleum Limited International Inc., and Government Holdings (Pvt.) Limited having 76%, 19% and 5% (carried) pre-commercial working interest, respectively.

Chak 66 North East Well No. 1 was drilled down to its Target Depth 3435 meters. Based on electric logs, geological & drilling data the production testing was started on 16th April 2007. Initial short duration test of 41 meters interval on Â½" choke size has produced condensate having an API gravity of 50.56o and gas at a wellhead flowing pressure of 1400 psi. The short-duration preliminary testing results are as follows:
--Choke size: 32/64"
--Gas (MMSCFD): 4.14
--Quantity of water (BWPD): 38
--Quantity of condensate (BCPD): 1600

Build up is in progress, one more zone is yet to be tested.

OGDCL is the largest petroleum exploration and production, or E&P, company in the Pakistan oil and gas sector, with a primary focus on gas. It holds the largest portfolio of the recoverable hydrocarbon reserves of Pakistan, at 32% of gas and 37% of oil, respectively, as of June 30, 2006, and contributed 22% of the country's total natural gas production and 48% of its oil production for the year ended June 30, 2006 on a net basis (based on data compiled by the Directorate General of Petroleum Concessions, or DGPC).

With a portfolio of 46 exploration licenses, the company has the largest exploration acreage in Pakistan, covering 39% of the total awarded as of June 2006. While its focus to date has been on onshore exploration, the company has also recently begun conducting offshore exploration activities, an area that the company believes has significant untapped potential.

OGDCL had a net profit PKR 45.8bn for the year ended June 30, 2006 and PKR 12.0bn for the three months ended September 30, 2006. 

http://www.rigzone.com/news/article.asp?a_id=44030


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## Interceptor

Pakistan has been in this political problem for building energy sources like Dams or Nuclear Power by corrupt people in the country not wanting these systems to increase the Pakistani need for electricity, the few dams built and planned during 1971 are the main suppliers of electricity in the country comparing other counteries to Pakistan ability to build dams is shocking, India and China have build allot of dams for their need because of their fast growing economy, if Pakistan is fast growing economy then it needs the fuel to do so this should be the governments first objective to build more dams and power stations if Pakistan is to overcome the huge need of electricity shortage, in some parts of the country there has not been electricity since independence.


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## Neo

Interceptor said:


> Pakistan has been in this political problem for building energy sources like Dams or Nuclear Power by corrupt people in the country not wanting these systems to increase the Pakistani need for electricity, the few dams built and planned during 1971 are the main suppliers of electricity in the country comparing other counteries to Pakistan ability to build dams is shocking, India and China have build allot of dams for their need because of their fast growing economy, if Pakistan is fast growing economy then it needs the fuel to do so this should be the governments first objective to build more dams and power stations if Pakistan is to overcome the huge need of electricity shortage, in some parts of the country there has not been electricity since independence.



Unfortunate but true.  
Last mega dam was built three decades ago and despite having enormous hydro potential provinced haven't been able to put their indifferences aside and come forward with a workable solution resulting in serious shortage in power supply including their own.  

Mush if he's allowed to stay longer, which I certainly hope happens, will move ahead with the proposed five mega dams.
Other alternative is full utilisation of coal reserves in Sind, est 145 billion ton to generate electricity.


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## Neo

*Growth prospects promising *

ISLAMABAD (April 19 2007): Growth prospects for Pakistan economy are fairly promising and an increase to 7 percent, or even higher, in 2007 is expected based on strong recovery of agricultural sector and improved performance of manufacturing sector, Sarfraz Khan Qureshi, Chief Executive of Innovative Development Strategies, said here on Wednesday.

He was addressing a press conference on the occasion of the launching of 'Economic and Social Survey of Asia and the Pacific' (Escap). The Escap survey stated that large-scale manufacturing grew by 9 percent, down from 15.6 percent in the previous year. Services improved from 8 percent in 2005 to 8.8 percent in 2006, and investment hit a record high of 20 percent of GDP.

It added that to sustain future growth rate of 7-8 percent, more investment was needed to develop human resources and physical infrastructure. Highlighting the major problems to the economic growth of the country, he said that increasing population, high inflation and poverty were the main obstacles.

"Striking an appropriate balance between promoting economic growth and price stability remain as challenge because inflationary pressures accompany rapid economic expansion. Moreover, the current account deficit will have serious negative effect on the balance of payments", he added.

The survey 2007 states that Pakistan's economy grew at an average of more than 7.5 percent over the last three years, although it moderated to 6.6 percent in 2006. The slowdown in 2006 reflected the extraordinary surge in oil prices, the devastation caused by the October 2005 earthquake, and adverse weather conditions.

Agriculture grew at just 2.5 percent in 2006, down from 6.7 percent in 2005, with negative downstream impacts on the textile and sugar industries. Large-scale manufacturing grew by 9 percent, down from 15.6 percent in the previous year. Services improved from 8 percent in 2005 to 8.8 percent in 2006 and investment hit a record high of 20 percent of GDP.

It added that most countries in South Asia felt inflationary pressures in 2006 on the back of high oil prices. Consumer prices in Pakistan rose to 7.9 percent as a result of higher aggregate demand compounded by shortages of principal commodities.

Food prices also rose significantly, hurting the poor particularly. Prices of some essential food items such as sugar, pulses, milk, beef, mutton and some vegetable items witnessed sharp increases.

Most of the items are part of minor crops, livestock and dairy products. The survey stressed that these sub-sectors of agriculture should be given due importance as they play an important role in stabilising overall inflation in general, especially food inflation.

To contain inflation, most countries in the subregion pursued tighter monetary policies. In Pakistan, the Government's anti-inflationary policies included effective managing supply and demand for essential consumer goods and raw materials by means of a liberal imports policy and strengthening the public distribution system through Utility Stores.

The survey added that in fiscal year 2006, Pakistan's fiscal deficit was estimated at 4.2 percent of GDP, higher than the 3.3 percent of GDP in the previous year. The higher deficit in 2006 owed to an increase in expenditure following the October 2005 earthquake. Following the debt reduction strategy, the public debt-to-GDP ratio fell from 85 percent in June 2000 to 65 percent by June 2005 and to 59 percent by June 2006.

In Pakistan, exports and imports continued to grow at double-digit rates in 2006. The trade deficit widened to a record $8.4 billion in 2006, with 45 percent of the increase due to the higher import bill for crude oil and petroleum products. Imports of raw material and machinery also increased sharply.

The current account continued to benefit from large remittances from expatriate workers, estimated at $4.6 billion in 2006. On the financial account, foreign direct investment, at $3.5 billion in 2006, was the highest ever recorded.

Reform needs to be maintained to sustain high growth and rapid poverty reduction. With fiscal adjustment still a challenge, more progress is needed in tax collection and resource mobilisation to reduce large budget deficits.

This will allow redirecting resources from servicing public debt to economic development and social programmes, at the same time creating an enabling environment for private investment.

Increase in consumer prices is a genuine concern in most countries in South Asia. Striking an appropriate balance between promoting economic growth and price stability remains a challenge because inflationary pressures accompany rapid economic expansions.

As the current account deficit is becoming a serious concern, this will have implications for the balance of payments. If oil prices remain high, there will be need to devise ways to contain the current account deficits, the survey said.

Sarfraz said that the Asia-Pacific region is losing $42 billion to $47 billion per year because of the lower labour force participating rates of women and another $16 billion to $30 billion per year only because of gender gaps in education resulting in lower productivity of women.

"The results in Pakistan regarding this issue are encouraging as it is among the six countries in entire Asia having shares of women in parliament equal to or exceeding 20 percent", he said.

http://www.brecorder.com/index.php?id=552737&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Prime Minister seeks China's help to increase export *

BEIJING (April 19 2007): Prime Minister Shaukat Aziz has asked the Chinese government to help increase Pakistan's exports under the Free Trade Agreement (FTA) to give it due share in trade for achieving $15 billion trade target.

Talking to Pakistani media after a day-long engagements especially after having met with Chinese President Hu Jintao, Vice Premier Wu Yi and the commerce minister, Shaukat Aziz expressed satisfaction over the progress he made during these high contacts.

The prime minister said the Chinese president was also satisfied with the progress both Pakistan and China made during formal talks between the two premiers a day earlier. The Chinese president has termed the meeting between them (Shaukat Aziz and Wen Jiabao) as very productive and positive from all aspects, he added.

The main focus of his meetings was on enhancing co-operation in trade, business and investment besides, space science and technology, which according to Prime Minister Shaukat Aziz was far ahead of launching of a joint satellite in space. "Projects like Paksat-IR are far behind the co-operation we discussed in the meeting and my visit to Chinese space facility," said Shaukat Aziz, adding that progress made by China in space technology was very impressive.

Asked how many satellites Pakistan would purchase from China, the prime minister said that the numbers of satellites would be negotiated by Suparco and the Chinese Space Centre for which a working group would be established. China is committed to forging strategic relations between the two countries and President Hu Jintao went on to say "Pakistan and China are all-weather friends and strategic partners."

Referring to his meeting with Chinese Vice Premier Wu Yi, he said: "We discussed issues like implementation of FTA, investment in mega dams especially Diamar-Bhasha dam, China-specific industrial zones and opening of Chinese banks branches in Pakistan." With regard to China-specific economic zones, Chinese vice premier expressed that let the first zone be successful and then establish new ones.

When Shaukat Aziz was asked if he took up the issue of illegal trade of Chinese goods to Pakistan, he replied in negation and also clarified that he would say nothing about those issues, which he did not discuss. An official told Business Recorder that Pakistan and China would start negotiations on services in August for which a Pakistani delegation would visit Beijing.

Addressing a dinner hosted by Pakistani Ambassador Salman Bashir, he said he invited Chinese investors to come to Pakistan and invest as they would be provided incentives.

The dinner was attended by a large number of Chinese businessmen and officials, a majority of businessmen were already familiar with Pakistan. Replying to a question, he said that Pakistan would attract $1.8 billion investment to be made by the Chinese companies as a result of agreements and MoUs signed a day earlier.

Earlier, addressing the Chinese Party School, Prime Minister Shaukat Aziz said that Sino-Pak relationship now spans over five decades that had stood with the test of time and remained unshakeable in the face of international vicissitudes. "It is characterised by harmony, vibrancy and vitality and in essence, it is a living example of the Confucian philosophy of harmony without uniformity," he added.

The topic of Aziz's speech was "Pakistan-China Partnership for Harmonious Development in the 21st Century." He said that our friendship has over the years, matured into a comprehensive strategic partnership and is a source of peace and stability not only for Asia, but also beyond it.

"We must endeavour to create a prosperous and harmonious Asia, at peace with itself and the world. We must work towards a framework for Asia-wide co-operation", he said. He pointed out that the present leadership of both the countries continues to enjoy close relations and this expresses the deep-rooted nature of our bilateral ties.

Shaukat Aziz said that friendly relations between Pakistan and China are based on principles of peaceful co-existence. He said Pakistan is becoming economic, energy, trade and communication hub linking the neighbouring regions of South Asia, Central Asia and West Asia and we are actively promoting multi-sectoral and intra-regional co-operation.

Regarding Sino-Pak economic co-operation, the prime minister said there are some 100 Chinese companies functioning in Pakistan while over 3,000 engineers, technicians and Chinese entrepreneurs are working on various projects.

He said t like China, our national priority is socio-economic development and wished to create an environment of peace and stability for ensuring unimpeded progress. On Pakistan's role on fight against terrorism, he said that Pakistan remains in the forefront of the international campaign against terrorism and the fight against terrorism and extremism is in line with our national interest.

"Terrorism, in fact, has become a global problem which is responsible for destabilising societies, engenders fear and destroys individual lives and its pernicious effects were being felt all over the globe", he said. He said that more than ever before, there is a need to promote global harmony and understanding and build bridges between different cultures, countries and the people.

The prime minister while welcoming China in Saarc said that Pakistan hopes to realise co-operation in the field of energy, poverty alleviation and a free trade regime under the auspices of Saarc.

"We are engaged in promoting peace and security in South Asia and have taken several initiatives to that end. Pakistan is engaged in dialogue with India to address all issues, including Jammu and Kashmir, he said.

On Afghanistan, Shaukat Aziz said that we desire to see a peaceful and stable Afghanistan, which is in the vital interest of the region. Pakistan, he said, wishes to play a constructive role in promoting security in the Indian Ocean and continues to contribute positively to the Asia-Pacific security.

The jam-packed audience listed speech of the prime minister with pin-drop silence. Earlier, an MoU on co-operation between Communist Party of China School and the National Defence University was signed. Chinese Communist Party School Executive Vice President Professor Su Rong, in his address of welcome highlighted the deep-rooted relations between Pakistan and China.

http://www.brecorder.com/index.php?id=552706&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Dewan group to set up world class super stores *

KARACHI (April 19 2007): Dewan Group, Pakistan's major investment group, has planned to invest three to four billion rupees in the establishment of world-class Dmart super stores all over the country. The group has already invested Rs 500 million in the establishment of three Dmart outlets in the city at Bahadarabad, Defence and in Millennium Mall.

Speaking as the chief guest at a trail motorcycle balllot ceremony at Bahadarabad Dmart outlet, Dewan Mohammed Yusuf Farooqui, Managing Director Dewan Mushtaq Group and a former Provincial Minister, said the group would establish three more outlets in the city at Clifton, Gulshan-e-Iqbal and Federal "B". Area.

http://www.brecorder.com/index.php?id=552758&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*UAE, Pakistani groups may acquire ISPs *

By Imran Ayub

KARACHI: Business groups of Pakistan and the United Arab Emirates have entered into a deal with a local telecom consultant to explore investment opportunities in the country with $275 million in purse.

The groups of two different destinations have finally come up with plans of investment in Pakistani telecom which industry sources believe may trigger competition of a new kind and witness stakesâ sell-off by local companies.

âThere are strong chances of these two groups acquiring local and small ISPs (Internet Service Providers),â said a source privy to two different deals but wanted to keep the concerned parties unnamed.

âThe two groups have committed $55 million each over a period of five years as per business plans agreed by the concerned parties.â He said the two business groups hired the services of the local consultant, who would pinpoint potential areas in the telecom sector of Pakistan with history of higher returns and services of higher demand.

âPotential areas in Pakistan are Internet broadband, data communication services and managed IT and telecom services,â said the source. âBut the groups would solely rely on the feedbacks and studies carried out by their consultant. It may take a month or more before a clear picture could emerge.â

Telecom has emerged as one of the fastest growing areas in the country over the last more than three years as it attracted more than $3.5 billion since late 2003 mainly by the cellular companies.

âThe telecom shared more than 2 per cent in the overall GDP growth during 2005-06,â said the source citing official figures. Analysts say 2005-06 witnessed a little decline in telecom development compared to previous fiscal but it still offers a lot as the majority of the rural areas in the country lack basic telecom facilities, which attract the attention of both local and foreign operators.

âWhile being the worldâs most rapidly growing market for mobile telephony, Pakistan still has among the worldâs lowest penetration rates for the Internet and broadband,â said Ansar ul Haq, an expert in Internet and data communication industry.

âOverall Internet and broadband penetration is very low due to limited fixed-line infrastructures, high domestic and international bandwidth tariffs, inadequate focus of the authorities on Internet and broadband, numerous PTCL (Pakistan Telecommunication Company) issues, but demand is high, and the proliferation of broadband using various mediums including new technologies is expected to deliver a major boost.â

He said local and foreign investment was flowing in as this sector offered significant growth opportunities to service providers, equipment vendors and investors. âBut 2006-07 could prove different in terms of telecom development and its share in GDP growth, as the companies in the deregulated environment would focus more on better infrastructure to improve service quality,â Haq added.

The telecom sector topped with the energy sector in attracting foreign and local investment during last financial year, which led to a rise by over 100 per cent in foreign direct investment. The boom in telecom sector managed to attract more than $1.10 billion as total foreign direct investment from July 2005 to June 2006, out of a total of nearly $3 billion, the Board of Investment (BoI) figures show.

http://www.thenews.com.pk/daily_detail.asp?id=51859


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## Neo

Thursday, April 19, 2007 

*Pak growth rate to decline in 2007: UN*

By Irfan Ghauri

ISLAMABAD: The United Nations Economic and Social Survey Report for Asia and Pacific, which was released on Wednesday, predicts that Pakistanâs economic growth rate was will decline during 2007. 

The report, which projected the average economic growth of Asia and Pacific region at 7.4 percent, stated six points that could disturb the economies of the entire region including oil price stocks, abrupt cooling of housing markets in the US, a reversal of the sustainability of the Japanese economic recovery, economic âoverheatingâ in China and an avian flu pandemic. It stated that the emerging Pakistan and Russian economies were the most vulnerable to these.

The report stated that Pakistanâs economy has grown at an average rate of more than 7.5 percent over the last three years and has slowed down to 6.6 percent in 2006. The decline in 2006 was caused by the surge in oil prices and the devastation caused by the October 2005 earthquake, it stated.

The report stated that low agriculture growth of 2.5 percent in 2006 from 6.7 percent in 2005, with negative downstream impacts on the textile and sugar industries and decline in large scale manufacturing from 15.6 percent in 2005 to 8.9 percent also contributed significantly to the declining trend. In fiscal 2006, Pakistanâs fiscal deficit was estimated at 4.2 percent of GDP, up from 3.3 percent of GDP in 2005. 

The report said prices for food items in Pakistan rose by 7.9 percent with higher aggregate demand compounded by shortage of principal commodities. Shortfall in cereal production contributed to inflation in neighbouring Afghanistan.

The report said that while the current account continued to benefit from large remittances from expatriate workers, estimated at $4.6 billion, and the highest ever foreign direct investment of $3.5 billion, the trade deficit increased to a record $8.4 billion, with 45 percent of the increase due to a higher import bill for crude oil and petroleum products.

It stated that reforms were needed to sustain high growth and poverty reduction. With fiscal adjustment a challenge more progress is needed in tax collection and resource mobilisation to reduce large budget deficits, it added. This, the report stated, would allow redirecting resources from servicing public debt to economic development, while at the same time creating an enabling environment for private investment.

The report mentioned an increase in consumer prices as a âgenuineâ concern in most countries of South Asia. It called for building physical infrastructure in rural areas, as it would promote growth.

The report termed the pricing of power as âcomplexâ and said tariff rates should be competitive and reflect market conditions, with some provisions for poor households. The tariff rates of electricity should be kept affordable for small consumers, the report said, and suggested that a more targeted approach of giving vouchers to the poor so that they can pay electricity bills at market rates is worth considering. Poor households can be asked to pay fixed a percentage of the electricity bill, with the remainder covered through the voucher, it suggested.

http://www.dailytimes.com.pk/default.asp?page=2007\04\19\story_19-4-2007_pg7_3


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## Introvert

*Pakistan, Switzerland to Accelerate Trade​*
HYDERABAD: The Consul General of Switzerland Martin Bin has said that there is a great scope to accelerate bilateral trade, relation between Pakistan and Switzerland.

He maintained this during his meeting with District Nazim Hyderabad Kanwar Naveed Jameel here at the Circuit House on Wednesday.

MPA advocate Pervez Aslam, Taluka Nazim Hyderabad City Javed Jabbar, Taluka Nazim Latifabad Sabir Hussain Qaimkhani and other officials concerned were present on the occasion.

The Consul General of Switzerland said Pakistan and Switzerland enjoy strong bilateral trade relations which need to be strengthened in a sustainable manner.

He said there were a number of Swiss companies functioning across Pakistan including Hyderabad and Jamshoro.

Martin Bin said Hyderabad was more suitable city for foreign investment as compared to other cities of Sindh due to its peaceful atmosphere.

The Swiss Consul General assured that recommendations will be made for Swiss investment in Hyderabad.

Talking about successful functioning of Swiss pharmaceutical and chemical companies in Jamshoro, he said dozen of Swiss firms were successfully working throughout Pakistan.

He said the Swiss investors intended to establish more industries in Pakistan.

Swiss CG Martin Bin pointed out that trade relations between the two countries have strengthened further during the last few years.

He said Switzerland imports textile garments from Pakistan and exports textile machinery, medicines and chemical to Pakistan.

Evincing interest in archaeological sites of Hyderabad, he suggested to restore the beauty of the sites for promoting tourism at international level.

District Nazim Hyderabad briefed the guest about the ongoing development projects being executed by the district government.

He said development projects at an estimated cost of Rs 6 billion have been launched to revamp the entire infrastructure of the district.
http://www.pakistantimes.net/2007/04/19/top12.htm


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## Introvert

*Pakistan, Thailand have potential to boost economies​*
LAHORE: Thai Commerce Minister Krirk-Krai Jirapaet has said that both Pakistan and Thailand have very strong credentials including good geographical location to give new strength to their respective economies as safe-havens for investment.

He expressed these views while speaking at the Lahore Chamber of Commerce and Industry on Wednesday. He said that being a member of ASEAN, Thailand offers a 500 million consumer market to Pakistan as the ASEAN would be a common market on the pattern of European Union by 2015. He said that Thailand is a trading nation and it is doing business with the whole of the world. Only last year, Thailand exported goods worth $130 billion to the world.

The minister said that Thailand retains a rising economy with 7.5 million tons of rice export annually but he accepted that Pakistani rice has no match in the world. The minister said that the present high-level visit of Thai businessmen was enough to make the point that it was serious to achieve the goal in economic terms.

Earlier, Lahore Chamber of Commerce and Industry signed an MoU with Thailand Chamber of Commerce and Industry. Thailand Chamber of Commerce and Industry was represented by its Vice Chairman Somkiat Anuras while LCCI Senior Vice President Yaqoob Tahir Izhar inked an agreement on behalf of LCCI.

Speaking on the occasion, the LCCI President Shahid Hassan Sheikh said that the import and export profiles of both sides indicate that there is a potential for increasing Pakistanâs export to Thailand, to $2.78 billion, while Pakistan has a potential for importing goods from Thailand to the extent of $11.55 billion. He said that business-to-business contacts and one-to-one meetings are the most productive means of marketing a countryâs products. He said that the trade between the two countries has grown from $332.5 million to $717.6 million over the last three years indicating an increase of 115.8 per cent.
http://www.thenews.com.pk/print1.asp?id=51870


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## Janbaz

Neo said:


> Other alternative is full utilisation of coal reserves in Sind, est 145 billion ton to generate electricity.



Sir, i say we try to utilize/invest more and more in green energy. Tidal, Wind, Biofuels like Ethanol etc should all be thought of when considering future strategies. These steps might be hard to work upon now but we will be the big winners in the long run leaving behind a much cleaner country for our children. :flag:


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## Janbaz

*Trade with China to touch $15b, says PM*

DILSHAD AZEEM
BEIJING-Prime Minister Shaukat Aziz held an important meeting with Chinese President Hu Jintao here on Wednesday mainly focusing on defence and satellite cooperation between the two friendly countries.
âNot only we agreed on promotion of our relations but also on transfer of technology to Pakistan,â the prime minister told media persons after he had almost one-hour meeting with the Chinese President.
Aziz parried a question when asked about the details of space and satellite cooperation on which both sides have also signed an agreement. However he mentioned that the whole range was covered as far as the satellite cooperation was concerned as he personally visited the space plants of China.
To another question, the prime minister said that the 27 agreements, inked on Tuesday and one on Wednesday, would attract US dollar 1.8 billion investment in Pakistan. â As a result of the agreements and the cooperation, we will be able to increase the trade volume between China and Pakistan from the present US $ 5 billion to US $ 15 billion in next five years.â
During the meeting, both sides also brought under discussions other issues including Pak-India relations, Iranâs nuclear issue, Middle East situation and President Musharrafâs initiatives aginst terrorism, and for promotion of trade and investment. âInternationally and regionally important areas amongst the issues were taken up during the meeting,â he said.
âI told the Chinese President that Pakistan is very much concerned over nexus between drug money and terrorism in Afghanistan. We firmly believe that a strong Afghanistan is not only in the interest of Pakistan but also of the whole worldââ he added.
Aziz said both the sides also inked an agreement for Project Implementation Regulation in order to move forward in practical terms on the agreements and the MoUs signed during his two-day official talks with the concerned government functionaries of China.
The Bank of China and ICBC are ready to invest in Pakistan in various projects including those related to the water and power sector, he said, adding, his talks with the private as well as the government officials remained substantial, productive and result-oriented.
Shaukat Aziz, along with his entourage, will visit Chengdu today (Thursday) where he would examine the production of JF-17 Thunder, which Pakistan obtained from China in the recent months.

The Nation.
http://www.nation.com.pk/daily/apr-2007/19/index8.php


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## Neo

*$25 billion foreign investment expected in Punjab *

KASUR (April 20 2007): Foreign investment of up to 25 billion dollars is expected in the Punjab province, which will ensure economic growth, promote local industry and create jobs for thousands of people. This was told by Punjab Minister for Public Health Engineering (PHE), Hasan Akhtar Mokal while talking to APP.

He said that there had been a 120 percent increase in trade with China. He said that the Punjab government was providing health facilities, including provision of clean drinking water, to the masses at grassroots level.

As many as 1,000 water schemes costing rupees five billion were being completed in the province, including water treatment plants and testing laboratories were being established.

Through another project, old and eroded pipelines for drinking water, and for sewerage system, were being replaced. The work would be completed by the end of this year, he said.

http://www.brecorder.com/index.php?id=553195&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pakistan and Iran agree to allow each other transit facility *

ISLAMABAD (April 20 2007): Pakistan and Iran have agreed to allow use of each others' territory for transit facilities, a top government official said on Thursday. Under a new initiative, Tehran would provide Islamabad access to Central Asian states, Turkey as well as Russia to transport its cargo.

"We have agreed to allow each other transit facility to boost our trade ties," Communication Minister Shamim Siddiqui said in a news conference here after attending a three-day first Joint Comprehensive Transport Meeting in Tehran. Representatives of ministries of Defence, Communications, Railways and Ports and Shipping were also part of the high-level Pakistani delegation.

He said the two sides have also agreed to launch a cross-border bus service between Quetta and Mashhad to facilitate pilgrims. Shamim Siddiqui told newsmen that Pakistan and Iran have inked International Road Transport Agreement.

Spelling out its salient features, the minister said Pakistan would provide its territory to Iran for transit facility to those countries with whom Islamabad has bilateral agreements like China, Kazakhstan and Kyrgyzstan. Similarly, Tehran would allow Pakistan to use its territory for transporting cargo to and from Central Asian states and Turkey.

"It would boost our exports of fruits and vegetables. This year, Tehran has imported 0.1 million tonnes potatoes from us," said Shamim Siddiqui. The minister said that Pakistan and Russia would also start trade via Iran, adding: "Now Pakistan can start trade with Russia via Iran. I have visited Tehran's port at Caspian Sea as well. Besides Russia, they (Iran) are trading with Azerbaijan, Turkmenistan, and Kazakhstan."

About cross-border bus service, the minister said they have agreed to launch a bus service between Quetta and Mashhad. Initially, it was decided to start a bus service between Quetta and Zahedan, but the two sides have now mutually agreed to extend it up to Mashhad.

Replying a query, he said operators from both sides would meet on May 15 to finalise all the modalities vis-Ã -vis frequency of buses and fares whereas the Pakistan government would complete its bus terminal at Taftan this December.

The minister hoped that the launch of bus service would not only enhance people-to-people contacts, but it would also help business community of the neighbouring states. He said the two sides have underlined the need for increasing the frequency of airlines and launching of a joint shipping company to cement maritime relations.

When asked, Shamim said Pakistan had no pressure from United States over launching cross-border bus service with Tehran. "We are promoting our relations. No country should have concerns in this regard," he said in reply to a question.

http://www.brecorder.com/index.php?id=553134&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*Gas discovered in Tando Alam *

KARACHI (April 20 2007): The Oil and Gas Development Company Limited has discovered gas in its Dhachrapur exploratory Well No 1 in Tando Alam, Sindh. In a notice to the Karachi Stock Exchange (KSE) it was stated that Dhachrapur well No 1 was drilled down to the depth of 3,495 meters. Based on drilling and electric log data, two zones were selected for testing.

Production testing of zone-1 (massive-sands) of Lower Goru Sand member started on April 16, 2007, which proved productive. The short duration initial testing results at a wellhead flowing pressure of 2400 PSI as the choke size is 28/64 inches, gas 9.25 mmscfd while quantity of water 140 bwpd.

The potential of additional zone-2 of Lower Goru Formation in the well will be tested shortly. Faraz Farooq an analyst at the First Capital Equities Limited said that OGDCL holds 100 percent stake in Tando Alam, ML. Based on testing results, the per share impact is worked out to be Rs 0.07 for OGDCL on annualised basis.

http://www.brecorder.com/index.php?id=553119&currPageNo=1&query=&search=&term=&supDate=


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## Neo

Is this the same discovery reported two days ago? The figures don't match nor does the location.

Imho this is the second discovery in a week.


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## Neo

* Kabulâs port access demand rejected *

KARACHI: Pakistan has rejected Afghanistanâs demand for a direct access to its ports to lift cargoes imported under a transit facility on security grounds. Islamabad also believes that if this demand was fulfilled, it would eliminate local operatorsâ role and thus put more than 100,000 jobs on the line.

Sources in Afghan Transit Trade (ATT) said both the ministries of communications and commerce opposed this proposal coming from the Afghan government and traders.

âActually the government believes that the involvement of Afghan transport to lift ATT cargoes could cause several problems,â said a source close to the negotiations between the two sides. âWith the Afghan transport the trend of smuggling is feared to pick up while there would also be chances of influx of products which are not required.â

He said though the Afghan side didnât define the way they wanted to lift the cargoes from Pakistani ports, it seemed that they would like their own transport to enter Pakistan, load the cargo and then get back to Afghanistan.

Afghanistan recently sought direct access to Pakistani ports to lift cargoes imported from different countries under a transit facility, through its own transport. A delegation of Afghan traders and officials recently visited Pakistan and held meetings with authorities concerned and local custom agents, who facilitated ATT from Pakistan.

One of the major demands the Afghan team made before the Customs official and CBR was to have a direct role of Afghan importers and government in transportation of ATTA cargoes from Pakistan to their final destination in Afghanistan. âThere are also concerns raised from local Customs agents, who facilitate ATT transportation from the ports here to Afghanistan,â said the source. âSuch process involves more than 90,000 people to generate their employments and itâs a proper regulated business in Pakistan. If the government allows the Afghan transport, it means an end to their role and business.â

He said the Pakistani side was more interested in making the existing ATT system more transparent and the recent meeting with the Afghan delegation was part of the same objective.

The country in late 60s entered into an Afghan Transit Trade Agreement (ATTA) with Afghanistan, which allowed goods bound for the landlocked neighbour to transit Pakistan free of duty.

Initially the trade was restricted to a few products, as it carried a negative list of more than 50 products, on fears of smuggling, which could trigger a flood of smuggled goods into the local market.

However, rising demand in the neighbouring country has convinced the authorities to remove most products from the negative list, which has now been reduced to four, which include cigarettes, cigars, automobile parts and right-hand drive vehicles.

âCurrently, Pakistan and Afghanistan are drafting an agreement to enhance ATT with focus on volume increase and minimum documentation requirements,â said the source. He said the agreement was due to be signed within next few weeks and it required a nod from the high-ups of both sides.

âThe proposed agreement offers benefits to the ATT with incentives from both sides of the border, which would expedite trade process and ultimately cut transportation cost of consignments,â he added.

Imports under ATTA started increasing some three years back as construction activity picked up in the landlocked country.

The imports under ATTA crossed almost Rs30bn by the end of June 2006.

http://www.thenews.com.pk/daily_detail.asp?id=52030


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## Neo

* âMalaysia to help develop Pak palm oil industryâ *

KARACHI: Owing to the policies being pursued by the governments of Pakistan and Malaysia, the two countries enjoy very good political and trade ties. 

Malaysian Minister for Plantation Industries and Commodities Datuk Peter Chin Fah Kui said this while addressing a press conference here at a local hotel on Thursday. 

He particularly referred to the palm oil industry which falls under the purview of his Ministry, and added that various steps have been initiated to further enhance the cooperation between the two countries. 

Datuk Peter spoke of the increasing trade volume between Pakistan and Malaysia because of the good liaison between the two countries. He said that both the countries should avail opportunities to strengthen cooperation in the palm oil sector. The establishment of Pak-Malaysia joint ventures in bulking installation, refinery and the latest being the liquid jetty indicate mutual understanding between the two countries. 

The minister hoped that both Malaysian and Pakistani counterparts can explore more downstream business partnership in areas such as advanced food applications, energy and telecommunication etc. He said that Malaysia will continue to support the development of palm oil industry in Pakistan. The minister said that on Friday he would visit Port Qasim to initiate a project there. 

Dr Salmiah Ahmad of the Malaysian Palm Oil Board and Long Rashid, the Consul General of Malaysia in Karachi, were also present on the occasion.

http://www.thenews.com.pk/daily_detail.asp?id=52033


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## Neo

April 20, 2007 
*Plan to seek investment in agriculture*

ISLAMABAD, April 19: Official planners have finalised an "action plan" that sought to attract sizable local and foreign investment by removing impediments in industry, agriculture and the services sectors.

Official sources told Dawn here on Thursday that the action plan - contained in a detailed report - is expected to be discussed and approved in the next cabinet meeting. It has been jointly prepared by the Planning Commission, Higher Education Commission (HEC) and Pakistan Institute of Development Economics (PIDE).

Sources said that before the cabinet meeting, President Gen Pervez Musharraf would also be briefed about the report.

"This is a very important report, which aims at improving all the major sectors of the economy by implementing a number of proposals," federal minister and the chairman of HEC Prof Dr Atta-ur-Rehman told Dawn.

The report, he said, carries out an in-depth analyses of the major sub-sectors of all the three productive sectors of the economy - agriculture, industry, and services - and within each sub-sector identifies key issues and challenges, sets out strategic objectives and targets, and spells out a detailed action plan to realise the major economic objectives of the government.

The two major themes of the report, he said, are human resource development and research and development to provide incentives to the private sector to invest in various potential sectors of the country's economy.

According to the report, which was also shared with this correspondent, a sustained growth rate of five to six per cent in agriculture is imperative to ensure a rapid growth in national income, macroeconomic stability, improvement in distributive justice and a reduction in poverty.

This can be realised by exploiting the potential of all the sub-sectors of agriculture, diversifying agricultural production towards high value crops, and conserving land and water resources.

The textiles sector, the report added, is facing a number of challenges including a low technological base, lack of research and development, lack of trained manpower, low quality standards, concentration in low value-added products, and too much reliance on cotton.

To address these challenges and to facilitate the transformation of the textile sector into a strong, dynamic, and internationally competitive industry led by the private sector, the public sector must create an enabling environment through a business friendly regulatory framework, appropriate incentives to the private sector, institutional support and provision of quality infrastructure.

Leather and leather products play a significant role in Pakistan's economy. The leather industry is mainly export-oriented and has a potential to grow rapidly, provided measures are put in place to encourage value addition as well as to improve product quality.

Environmental pollution is a major issue and non-compliance with environmental standards could hamper Pakistan's exports. There is a need for national environmental legislation to curb the growing tannery effluent problem.

The report recommends a number of measures for the development of materials utilising the indigenous resources, exploitation of minerals, and development of new materials, especially the composites.

"There is a need to diversity into fast growing sectors like engineering and electronics." Engineering industry is one of the most dynamic industries in world having great potential for growth.

The most important step for the promotion of engineering sector in Pakistan, the report believed, is to allocate more resources to technical education, the lack of which has been identified as one of the reasons for the limited progress in the engineering sector.

There is also a need to develop design engineering capabilities, databases and infrastructure, create testing laboratories and instruments, and initiate public-private partnership in projects leading to innovation of new products and processes.

"The goals of the industrial vision cannot be realised without an effective energy sector," it said adding that the supply-demand analysis shows that even the modest economic growth, the current rate of change in supply will result in power shortages in Pakistan, adversely affecting the growth process.

Therefore, Pakistan needs to concentrate not only on the expansion of energy resources but also on improving efficiency of resource use. For expansion of power supply it is important to increase the supply of power from traditional resources like hydel, thermal and nuclear and from other sources like building micro/mini hydel power units.

For safe and efficient transportation network a number of measures are proposed including: modernisation of the maintenance system; introduction of user charges; human resource development through training in transport management and maintenance standards; enhanced participation of the private sector in transport projects.

The report recommends the revival of Karachi Circular Railway and introduction of light rail transit system in Lahore as part of measures to improve urban transportation.

http://www.dawn.com/2007/04/20/ebr9.htm


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## Neo

Friday, April 20, 2007 

*CBR plans to achieve 1.72m taxpayersâ target*

LAHORE: The Central Board of Revenue (CBR) is endeavouring to take the number of taxpayers in the country to the level of 1.725 million by the end of current fiscal year from 1.65 million.

"The annual growth in the number of tax payers has lately been 20 percent," Member CBR (Direct Taxes), Salman Nabi said while speaking at a pre-budget seminar organized by ACCA at a local hotel on Thursday.

Director General Regional Tax Office (RTO), Haji Ahmad and other CBR officials were present on the occasion.

Quoting a report of State Bank of Pakistan (SBP), Salman Nabi said that tax base in the country could be broadened to the level of 3 million payers.

He said that only 22 percent of Pakistan's population was economically active.

About the direct taxes target for the year 2006-07, he said that the CBR had already crossed the target within first nine months of the year.

âDirect taxes now form 42 percent of the total revenue collection,â CBR member said.

He said that the CBR had paid back Rs 90 billion refund amount during the last 33 months.

In addition to 1.65 million income tax, 2.7 million electricity consumers, 28 million bank account holders, 5.5 million landline phone users and 52 million mobile phone users were paying taxes in one way or the other, he explained.

He said that CBR had made the tax administration faceless during the last three years.

Salman Nabi said that Pakistan had signed Avoidance of Double Taxation agreements with a number of countries.

About real estate, he said that CBR was getting all the information about the property transactions in Karachi through online system and added that similar system would also be introduced in other towns of Pakistan soon.

Responding to a question about the issuance of SROs, he said that subordination legislation takes place everywhere in the world.

He said that CBR was trying to create a fear of law, adding that an audit plan based on 13 parameters had been prepared to achieve this objective.

He said that CBR had also developed software programme, Nexus to further streamline the tax collection system.

Muhammad Arshad, Head Internal Audit and Taxation, First Fidelity Leasing Modaraba, Irfan Ilyas, Partner Ilyas Saeed & Co and former President Lahore Chamber of Commerce and Industry (LCCI), Yawar Irfan Khan also spoke on the occasion.

http://www.dailytimes.com.pk/default.asp?page=2007\04\20\story_20-4-2007_pg5_4


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## Neo

Friday, April 20, 2007 

*Earthquake reconstruction: Creditors disbursed $1.762b of $6.730b pledges till Jan 17*

ISLAMABAD: The international creditors and donors have disbursed till January 17 this year $1.762 billion of the $6.730 billion they had pledged for reconstruction and rehabilitation of the Oct. 2005 earthquake-affected areas, it is learnt.

According to documents available with Daily Times, the multilateral creditors have disbursed $815.493 million of total pledges of $2.946 billion. The disbursed amount includes $86.6 million in grants and the remaining in loans. 

The bilateral pledges, which mostly came from individual countries and organisations, amount to $3,784 billion, which include $1.275 billion in grants and the rest in loans. The government of Pakistan has also discussed several projects with the donors for providing funds through different monetary institutions and non-governmental organisations (NGOs). 

Over 73,000 people were killed and another 100,000 injured when an earthquake of magnitude 7.6 wreaked havoc in parts of North West Frontier Province (NWFP) and Azad Jammu and Kashmir (AJK) on October 8, 2005, prompting the world to rush to Pakistan for help.

The bilateral donors included World Bank (WB), Asian Development Bank (ADP) and Islamic Development Bank (IDB), while the government had rejected $375 million loan offered as Poverty Reduction and Growth Facility by the International Monitory Fund (IMF). The WB has disbursed $651.614 million, including $45 million grants, of its total $1.07 billion pledged. 

The ADB has disbursed $111.54 million of total pledged $1 billion, of which $920 million is loan. The disbursed amount includes $80 million in grants. The IDB had pledged $501.6 million and disbursed $51.433 million, including $1.6 million grants.

Of the bilateral donors Saudi Arabia committed $573 million, including $253 million grants, but had not disbursed any amount till Jan. 17 this year. However, Pakistan has signed an agreement with the Saudi government to provide $133.3 million for governance, education and health projects. Another $187 million agreement has also been signed. 

The United States had committed $500 million and disbursed $293 million in grants, which was spent on relief operations. The UK had pledged $256 million in grants and disbursed $105million.

The UAE had committed $200 million (all in grants) and had not yet disbursed any amount but committed $100 million for Rawalakot hospital. Japan has pledged $192 million that includes $92.338 million in grants. It has so far disbursed $37.62 million.

Turkey has pledged $150 million grants and has disbursed $100 million for District Complex, Muzaffarabad. The other countries who had made pledges in grants include Libya ($100m), Canada (114.28m), Germany ($65.44m), World Food Programme ($62.38m), Australia ($62.38m), Agha Khan Foundation (453.50m), Switzerland ($40m), Qatar ($30m), Spain ($25.13m), India (25.03m), Finland ($22.3m), Denmark ($18.5m), Italy ($12.24m), Ireland (412m) and Belgium ($8.142m). 

Oman, Bahrain, Malaysia, Ukraine, Greece, Luxemburg, Austria, Bangladesh, Morocco, Azerbaijan, Afghanistan, Indonesia, Algeria, Jordan, Singapore, Brunei, New Zealand, Czech Republic, Thailand, Bhutan, Cyprus, Mexico and Mauritius have also contributed small amounts in grants to help the earthquake- affected people.

http://www.dailytimes.com.pk/default.asp?page=2007\04\20\story_20-4-2007_pg7_15


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## Neo

Friday, April 20, 2007 

*Learning from India and China*

Prime Minister Shaukat Aziz was in India early April attending a SAARC summit; he is now in China. With India he âpostponedâ the expansion of trade relations; with China he has gone to request more economic involvement. India is next door to Pakistan but hostile; China is also next door but Pakistanâs best friend. Both India and China have populations of over a billion people each. The economies of both are growing at record rates. They are expanding trade relations with each other too.

Mr Aziz signed a large number of treaties with China during his visit. But of course, much will depend on how he is able to create the right conditions for Chinese investment and expertise in Pakistan. China is the only country keen enough at the official level to come and invest in Pakistan. It is no surprise, therefore, that they have been targeted by militants or terrorists, twice in Balochistan and once in the Federally Administered Tribal Areas (FATA). The came into the copper project in Balochistan at Saindak but were chased away a long time ago. Now they are back.

Mr Aziz met the Chinese President Hu Jintao and thanked him and the people of China for initiating joint mega projects in Pakistan, such as Gwadar, Chashma Power Plant, Saindak, and Karakoram Highway. Pakistanâs demand list was for ten nuclear power plants after Chashma but the Chinese have so far not acceded to it in deference to their partners in the Nuclear Club. Pakistan in return is home to cheap Chinese goods, a fact of which Mr Aziz boasted in New Delhi while refusing to open up trade with India. Presumably he was suggesting that India too could benefit from Pakistanâs market if it settled its political disputes with Islamabad first. 

Pakistan too is growing at a good rate and Mr Aziz should be complimented on it, but there are certain areas that should worry him. The world no longer compares Pakistan with India which is now moving into the league where China finds itself. Mr Aziz knows this and yet he shows no public signs of breaking the mould of Pakistanâs stunted reflex on trade. He said nothing new that could break the monotony of yore when he told the Indian Prime Minister Mr Manmohan Singh that India should first sort out the Kashmir problem.

In China, Mr Aziz seems completely transformed. He says all the right things. He knows China is the fourth largest economy in the world and is growing at 9 percent annually. It is buying up commodities at such speed that a sucking sound is produced in the steel and oil markets at the global level. It has built an infrastructure to astound the world and is going out and buying up oil wells to secure its energy supply for a future where Pakistan and others will look around helplessly. It has disputes with India of a territorial nature but has set them aside to become its important two-way trade and investment partner, India being the investor.

India has democracy tied to its ankle like a steel ball burnished with anachronistic communist parties that hug state-owned enterprises and want everything subsidised. But India, led by a man of economics, has been realistic rather than âhigh-principledâ with China. It has forgotten its revisionism with Beijing over territory it thinks China has grabbed forcibly and has instead plumped for trade. Indiaâs high growth rate is not coming from a narrow curve restricted to computer electronics. It is on the way of reducing its poverty levels like China where millions have already come out of it. On the other hand, Mr Shaukat Azizâs Pakistan has still not taken off after a measure of stabilisation.

What Pakistan needs badly is foreign investment despite its bad infrastructure that it shares with India; and despite the fact that it has a bad law and order situation, political instability and creeping anarchism known as Talibanisation. Not much foreign investment in the manufacturing sector is coming in, barring some Arab money in the service sector because it canât be parked anywhere else. In fact some Pakistani investment is going out to the UAE where stable conditions of a market economy are available. Mr Aziz knows that Pakistan could lose its newly gained momentum unless he takes some radical steps.

Mr Aziz simply has to learn from India and China if original thinking is banned in Pakistan. Devaluation is staring us in the face because of the yawning trade deficit and overvalued rupee. He knows that if he canât get money injected into Pakistan quickly enough Pakistanâs growth will falter. On top of that Pakistan could become politically dysfunctional if the next year or so is not managed with wisdom. If the idea is to thwart any move forward with India on trade and investment till the elections are here and over, it is a wrong idea. 

The judiciary, badly treated by the prime minister, is taking revenge on the economy by blocking privatisation, which is one way of getting someone to bring in some money. Given these circumstances, Mr Aziz should have taken off his various masks, come into his own, and agreed with India to embark on a new trade and investment relationship without asking India to cough up Kashmir first. The people of Pakistan would have loved it. If Bangladesh can receive $2 billion in investment from just one Indian corporation Tata, why canât Pakistan? 

At the beginning of the new millennium a new kind of urgency faces the states of South Asia. These states have struggled with democracy since the mid-20th century but canât seem to make out what it is all about. A message from China and the East says if you have your economy running right you can learn democracy at leisure. Becoming politically dysfunctional is not as dangerous as becoming economically dysfunctional. For Mr Aziz there are two models, that of China, which he views with feelings of friendship, and the other of India, which he regards through someone elseâs spectacles. Both models have much to teach Pakistan. *

http://www.dailytimes.com.pk/default.asp?page=2007\04\20\story_20-4-2007_pg3_1


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## Neo

Friday, 20 April 2007 

*Protests over Karachi power cuts * 

Protests have become a regular feature of the Karachi summer 
There have been protests in several parts of Pakistan's biggest city, Karachi, over continued power cuts. 
The protests follow a fresh night of shortages in many parts of the city. 

Religious and business leaders are threatening a city-wide campaign to persuade people to stop paying their electricity bills. 

Power shortages have also affected many other parts of Pakistan, at a time when temperatures have been rising well above 40C (104F) 

"We have been spending a better part of the nights during the past week out on the pavements because the heat is unbearable and the fans don't turn," Azhar Qureshi, a resident of the eastern Malir district of Karachi, told the BBC. 

Fahim Lodhi, a student from the Gulistan-e-Jauhar area, said the shortages were playing havoc with his studies. 

"The high school exams are on but there is no question of studying in this suffocating heat and darkness." 

More acute 

The largest demonstration in Karachi was organised by the Islamic MMA alliance outside a mosque in the Gulshan-e-Iqbal area. 

Members of the All Pakistan Small Business Association (APSBA) also demonstrated in central Karachi. 

Repeated power failures have also affected water supplies and sewerage pumps as well as business and industry. 


Power cuts happen regularly in the Pakistani summer, but consumers say they are more acute this year. 

Most areas in major cities have gone without electricity for anywhere between three to six hours every day, they say. 

The federal Water and Power Development Authority (Wapda) announced plans for scheduled power cuts on 31 March but has not issued timings for different areas. 

Consumers say power outages often catch them by surprise and recur several time a day. 

Localised protests have been reported from dozens of cities across the country since early April, often leading to clashes with the police and electricity company staff. 

The southern city of Karachi, with its 15m population, is the worst hit. 

'Inefficient' 

Mohammad Adil Siddiqui, the provincial minister for industries, has said that traders and manufacturers in Karachi are incurring daily losses of one billion rupees ($16m). 

He says Karachi needs 650 megawatts of power for daily consumption, but that Wapda is only supplying 300mw to the city. 

However, Wapda officials say they are supplying 625mw of power to the recently privatised Karachi Electric Supply Corporation. 

Wapda says that the country generates a total of 11,200mw power but that total consumption needed during the summer rises to 12,500mw, causing power failures. 

Critics say Wapda has failed to tap all available resources or augment its distribution network, which they say is very inefficient. 

Power theft by major consumers, often with the connivance of Wapda staff, is another problem which has prolonged Wapda's financial woes, they say. 

http://news.bbc.co.uk/2/hi/south_asia/6577135.stm


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## Interceptor

Arabtec Holding PJSC and AMN Mauritius LLC (a sister Company of Abraaj Capital) signed a joint venture agreement to set up Arabtec Construction Mauritius LLC in Pakistan with a shareholding of 60 per cent and 40 per cent respectively.

The objective of the company is to execute construction contracts in Pakistan.

This strategic Joint Venture combines strengths in construction expertise with exceptional knowledge of the Pakistani market with the intention of securing the construction of major developments in all major regions of Pakistan.

The first project awarded to Arabtec Pakistan is the prestigious Karachi Financial Towers for ENSHAANLC. The value of the project is over Dhs.500million and comprises 2 state of the art 37 floor Office Towers, which when completed will be the tallest structures in Karachi.

______________________________________________________________


Pakistan Joint ventures with UAE based company called Arabtec the company is joint venturing with a Pakistani based construction company.

UAE a major investor in Pakistan's economy has yet again shown its all weather friendship, regarding the earthquake funing the endorsement of many projects in Pakistan. UAE has been a friendly nation and has contributed to Pakistan. The Late ruler of UAE who has a few residences in Pakistan and a little airport he would come to Pakistan to relax like it was his second home.


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## Introvert

* French envoy stresses on strengthening of trade ties between Pakistan- France * 

Saturday, 21 April 2007

KARACHI, April 21 (APP): The Head of French Embassy&#8217;s Economic Mission for Islamabad and Kabul, Jean-Philippe Quercy has stressed on further strengthening of trade ties between Pakistan and France. He said at present trade between the two countries stands at one billion Euros while 32 French companies are working in Pakistan, most of them being in Karachi.

In a meeting with Naib Nazim Karachi Nnasrin Jalil at her office here Saturday, Jean-Philippe said that a big French trade delegation will visit Pakistan in June 2007. He said the French wants to work in the field of solid waste management.

He informed that UBI France, a French Company is successfully working in the field of solid waste management in Beijing and Hong Kong.

The French Economic Mission head, through Naib Nazim, extended an invitation to Nazim Karachi for a visit to Beijing and Hong Kong to see UBI France working on Solid Waste Management there.

Naib Nazim welcomed Jean-Philippe in Karachi and said the City Government is paying special attention on cleanliness and sanitation and after registering record success in the implementation of development projects, and in health, recreation and other fields during the last 18 months, is initiating new measures with regard to health and sanitation.

She informed that during this month Rs 720 million worth vehicles and machineries have been given to Municipal Services department for improvement in sanitary conditions.

The city government, Nasrin Jalil said, wants to ensure lifting of some 8000 tons of garbage generated here to landfill sites. 
http://www.app.com.pk/en/index.php?option=com_content&task=view&id=8057&Itemid=2


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## Neo

*Pakistan may consider Middle East-to-China gas passage project: Shaukat seeks more Chinese investment *

CHENGDU (April 21 2007): Prime Minister Shaukat Aziz on Friday asked the United States to avoid use of 'discriminatory criteria' in the provision of civilian nuclear technology to Pakistan. He also announced that Pakistan would consider transportation of gas from Middle East to China.

"US has announced lifting of the three-decade old embargo on India on cooperation in civilian nuclear technology. We favour non-discriminatory criteria, which will offer equal opportunity to both Pakistan and India to access civilian nuclear technology by meeting the relevant benchmarks," he said while delivering a speech here at the Sichuan University, one of the highest rankings of higher learning in China.

The Prime Minister said that there should be level playing field for access to civilian nuclear technology. About proliferation of weapons of mass destruction, he said that it was an equally serious threat to international peace and security, and reiterated Pakistan's support to the global non-proliferation objectives and expressed hope that the Nuclear Suppliers Group(NSG) countries would adopt objective criteria based approach in this respect.

"Pakistan's policy centres are maintaining a minimum credible nuclear deterrent and the establishment of a strategic restraint regime between India and Pakistan, and the two countries have recently signed an agreement on 'Reducing the Risk from Accidents relating to Nuclear Weapons',"he added.

Talking on other international issues, he said that threats of terrorism, proliferation of weapons of mass destruction and 'clash of civilisations' required 'collective response', more tolerance and understanding of each other's political and social systems, cultures and values.

He said that all outstanding conflicts and disputes between states must be settled on the basis of equity and justice, and called for a just and equitable economic order, tolerance and understanding of other political and social systems and of cultures and values.

Shaukat said that no single country or group of nations alone could address and resolve the threats to international peace and security, and added that common threats and challenges called for collective responses "to work to build a peaceful, prosperous and harmonious world."

The function was largely attended by members of faculty and students including Pakistani students studying in this prestigious university. The Prime Minister covered wide-ranging issues including relations with neighbours, country's role at the global level and issues confronting the world including terrorism and extremism.

About terrorism, he said that Pakistan "is resolved to fight terrorism" firmly and consistently and, for this purpose, it believes that an effective counter-terrorism strategy, including military, political, economic and social dimensions, should be adopted.

He also called for recognising and addressing the root causes and said that the conditions of poverty, deprivation, under-development and longstanding disputes resulting in desperation and hopelessness needed to be resolved for sustainable progress.

He said that Pakistan's geo-strategic environment is currently marked by turmoil on the one hand and vast untapped economic potential on the other. He said that Pakistan has suffered the most from continuing instability in Afghanistan following the Soviet invasion in 1979.

"Our society was deeply affected by the influx of over three million refugees, narcotics production and trafficking, gun-running, and recruitment and training of 'mujahideen' for Afghan 'jihad'," he said.

He said that the real factors of instability lay inside Afghanistan, including "a weak state structure, nexus between narcotics and terrorism, warlords, corruption and inefficiency, and slow pace of reconstruction". He said that since early 2004, Pakistan is engaged in a multi-track dialogue process with India encompassing confidence building measures and a composite dialogue.

"The improved relations between the two countries and conducive international environment provide a unique opportunity that must be seized to resolve Kashmir and ensure a bright future of cooperation, understanding and prosperity in South Asia," he stressed.

He said that China today is the flag-bearer of peace, development and cooperation. The principle of "peaceful development" at the core of China's foreign policy is inspiring and worthy of emulation.

He said that Sichuan is one of the vital economic and cultural centres of China and, as the centre of Ghana's Western development strategy, occupies an important position in efforts to further solidifying the strong friendship.

He informed the students about the desire to establish a 'Pakistan Study Centre' in the University to serve as a repository of knowledge on Pakistan and play its due role in strengthening people-to-people contacts.

Shaukat also had an interactive question-answer session and responded to queries of inquisitive students. He also witnessed the signing of the agreement between Punjab University and Sichuan University, and inaugurated 'Pakistan Study Centre'.

University's President Heping Xie and Vice Governor of Sichuan province Huang Xiaoxiang thanked the Prime Minister for his visit and said that it would further strengthen Pak-China friendly relations.

Earlier, Prime Minister Shaukat Aziz invited the business community of China and of Sichuan province to invest in Pakistan and avail the business-friendly policies offered to foreign investors. He said that FTA provides attractive incentives to the traders to do business with each other country.

The Prime Minister pointed out that there were many entrepreneurs from Sichuan province already active in Pakistan and, as a result of the Joint Investment Company, more investment opportunities would be available for them.

http://www.brecorder.com/index.php?id=553463&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pakistan and China to broaden strategic economic engagement *

BEIJING (April 21 2007): Pakistan and China expressing determination to further elevate their all-weather friendship and strategic partnership, have decided to further deepen and broaden the strategic economic engagement for achieving common development and welfare of their people.

In a joint statement issued at the conclusion of Prime Minister Shaukat Aziz's official visit to China from April 16 to 20 at the invitation of Premier Wen Jiabao, both sides reiterated that the time honoured and traditional friendship between China and Pakistan, is a model of friendly co-existence between developing countries and between neighbouring countries.

Official talks were held with Premier Wen Jiabao. Prime Minister Aziz also met with President Hu Jintao and other state leaders. He also visited Chengdu and inaugurated new Consulate General of Pakistan and Pakistan Study Centers in Peking University and Sichuan University. He had a wide ranging interaction with Chinese corporations and financial institutions.

Talks between the Prime Minister of Pakistan and the Chinese State leaders were characterised by great warmth and friendship. Both were proud of their all weather friendship and all dimensional co-operation.

China considers Pakistan as a good neighbour, good friend, good partner and good brother and views its relations with Pakistan from a strategic and long-term perspective. Friendship with China is the corner stone of Pakistan's Foreign Policy. This time-tested and evergreen friendship is rooted in the hearts of the people of Pakistan. Both sides are determined to further elevate their friendship and strategic partnership.

Pakistan firmly upholds the one China policy and considers Taiwan an inseparable part of the People's Republic of China. China is firmly committed to support Pakistan's efforts to safeguard its sovereignty, territorial integrity and independence, the joint statement said.

In this context, they attached great importance to the 5-year Development Programme on Economic Co-operation, the bilateral FTA, the Joint Investment Company, the Services Sector negotiations and further enhancement of project co-operation, joint ventures, investments and financial and banking sector co-operation.

They attached importance to the early completion of the Joint-Study on China-Pakistan Economic and Trade Co-operation. Both sides agreed to take further effective and pragmatic steps to promote project co-operation under the 5-year development programme on economic co-operation especially in agriculture, manufacturing, automotive, textiles, infrastructure and public works, minerals, energy, IT & telecom services, commerce and education sectors.

Both sides noted with satisfaction the substantive outcome of the 13th session of the Joint Committee on Economic, Trade, and Scientific and Technical co-operation, held in Beijing on April 9, 2007.

They welcomed the signing of the Projects Implementation Regulation for the 5-year Development Programme on Economic Co-operation, which is another major step to promote wider, deeper and higher level China-Pakistan trade and economic co-operation with a view to achieving the goal of mutual benefits, win-win and common development.

Both sides agreed to develop an over-arching framework for different forms of project financing. The two sides will actively facilitate co-operation between the financial institutions of both countries and make effective use of the capital markets of the two countries.

Both sides agreed to hold regular meeting of the Economic Co-operation Group for effective follow-up and implementation of the Five-year Plan.

According to the joint statement, Chinese corporations and financial institutions would be encouraged to participate in the development of hydro-power projects in Pakistan and the Pakistan side would provide detailed information on the concerned projects.The two sides greatly valued the bilateral co-operation in investment and agreed to launch the Pakistan-China Joint Investment Company in July, 2007. It was decided to establish working links between the China Investment Promotion Agency and Pakistan Board of Investment.

It was also agreed to enhance project co-operation in the energy and minerals sectors

Both sides welcomed the commencement of negotiations on trade in services and resolved to speed up the process of negotiations. The FTA on goods will be operationalised on July 1, 2007. It was also agreed to promote balanced growth of trade in an effort to achieve the trade target of $15 billion by 2010. It was agreed to establish electronic data interchange (EDI) system to facilitate the development of trade.

To deepen and broaden their strategic economic engagement with a view to promoting common development, a Co-operation and Consultation mechanism was agreed upon between the National Development and Reform Commission of China (NDRC) and the Planting Commission of Pakistan.

To fully leverage the natural economic complementarities between Pakistan and China, the two sides agreed to work towards promoting the development of adjoining regions. Pakistan would provide overland access to Chinese exports and imports through Pakistani ports. It was agreed to enhance "connectivity" by strengthening communication and transportation networks.

Recognising the importance of promoting financial and banking sector co-operation, both sides agreed to encourage their respective financial and banking institutions to establish co-operative links. Chinese banks were invited to establish operations in Pakistan. The two sides welcomed the signing of a Co-operation Agreement between the Shanghai Stock Exchange and Karachi Stock Exchange.

Pakistan side expressed its gratitude to the Chinese government and people for the humanitarian and reconstruction assistance in the wake of the earthquake and welcomed the decision of the Government of China to support reconstruction projects for Muzaffarabad, utilising the $300 million preferential export buyer's credit. It was further agreed to speed up the construction of school and hospital in Mansehra District.

Both sides agreed to facilitate and strengthen private sector co-operation. The Chinese side will encourage and support competent Chinese enterprises to invest in Pakistan particularly in the areas of auto industry, chemical, fertiliser, light industry, textile, home appliances and machinery.

Pakistan and China agreed to enhance their co-operation in the fields of High Technology and agreed to develop close co-operation between relevant institutions in the field of marine and space sciences, promote joint scientific research and development and its applications in industry and agriculture. It was agreed to implement the project for the upgradation and strengthening of seismic network.

Both sides attached great importance to broadening exchanges and co-operation in education and human resource development. China will extend 130 training facilitate to Pakistan in the field of economic management, trade and investment, finance, tourism and contractual projects. China will also help Pakistan set up an Engineering Technology University.

The two sides will take positive consideration of increasing the number of students and visiting scholars in the exchange programmes as conditions permit. They welcomed the establishment of the Pakistan Study Centers at the Peking University and the Sichuan University and collaborative links between the Punjab University and Sichuan University, Chinese Foreign Affairs University and the Foreign Service Academy of Pakistan and the CPC Party School and the National Defence University of Pakistan.

Two sides agreed to further enhance cultural contacts and co-operation. In this context, they welcomed Pakistan's intention to set up an Arts, Film and Cultural Academy in China and establishing of China Friendship Center and Confucius Institute in Pakistan.

With a view to enhancing people-to-people contact and to develop two-way tourism, it was agreed to further develop bilateral tourism co-operation and expand the tourism market in an effort to achieve common development of their tourism industries.

Both sides expressed satisfaction on the close co-operation between their Defence Ministries. The two sides would further enhance exchanges and co-operation in the defence and military fields as well as co-operation between their respective defence industries.

Both sides reiterated their commitment to combat all forms and manifestation of terrorism and to adopt comprehensive measures in this regard signed the Treaty on Mutual Judicial Assistance in Criminal Matters.

Both sides had a commonality of views on international and regional issues. They agreed to work especially at the United Nations and in other multilateral fora to promote global peace, stability and for the just resolution of conflicts and disputes in various parts of the world. The two sides will closely cooperate and co-ordinate on all important regional and international issues, including United Nations Reforms.

During the visit, following documents were signed: 

1. Agreement on Mutual Legal Assistance in Criminal Matters between the Government of the People's Republic of China and the Government of the Islamic Republic of Pakistan.

2. Agreement on Economic and Technical Co-operation.

3. Projects Implementation Regulation for the Five-year Development Programme on Economic Co-operation.

4. The Second protocol to the agreement between the two governments for the Avoidance of Double taxation and the prevention of fiscal evasion with respect to taxes on income.

5. MoU for Co-operation between National Development & Reform Commission of the People's Republic of China and Planning Commission of Pakistan.

6. MoU on Co-operation between the National Development & Reform Commission of the People's Republic of China and Ministry of Industries, Production and Social Initiatives of Pakistan.

7. MoU between Ministry of Education of China and the Higher Education Commission of Pakistan on establishment of an Engineering Technology University in Pakistan.

8. Framework agreement between Pakistan Space and Upper Atmosphere Research Commission (Suparco) and National Space Administration (CNSA) on deepening co-operation in space science and technology.

9. MOU between Pakistan Space and Upper Atmosphere Research Commission (Suparco) and China Great Wall Industry.

10. MOU between Shanghai Stock Exchange and Karachi Stock Exchange.

11. MOU for construction of cross border cables system between China and Pakistan.

12. MOU on the establishment of Center for Pakistan Studies, Peking University through the Support of Pakistan Embassy, Beijing.

13. MOU on co-operation between China Foreign Affairs University and Foreign Service Academy of Pakistan.

http://www.brecorder.com/index.php?id=553505&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pakistan emerging economy: IBR * :flag:

ISLAMABAD (April 21 2007): The latest findings from the Grant Thornton International Business Report (IBR) have identified Pakistan, Mexico, Indonesia and Turkey as the next generation of emerging economies set to have significant impacts on the world economy.

These countries may match or even overtake some of the commonly identified BRIC economies (Brazil, Russia, India and China) which are expected to join the global economic powers, a private TV news channel reported.

According to global leader of privately held business services for Grant Thornton International; "Indonesia and Pakistan, with their large populations, have the potential to grow their labour-intensive exports and could capitalise on the process of low-cost production that mainland China has so successfully exploited."

http://www.brecorder.com/index.php?id=553529&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*World Bank releases $45.65 million for land record computerisation *

LAHORE (April 21 2007): The World Bank has released a grant of $45.65 million for the first phase of Land Revenue Record Computerisation project. Punjab Minister for Revenue, Relief and Consolidation, Gul Hameed Khan Rokhari said while talking to different delegations in his office here Friday, stated a handout.

The Executive Committee of the National Economic Council (Ecnec) has subsequently approved the first phase of the larger project to computerise land record of 18 districts of Punjab.

Revenue minister said that approximately Rs 6 billion would be spent on the project, adding he said that the Board of Directors of the World Bank has approved the loan for this purpose. He said that necessary arrangements have been finalised to initiate first phase of the project in which land revenue record of 18 districts would be computerised.

http://www.brecorder.com/index.php?id=553581&currPageNo=2&query=&search=&term=&supDate=


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## Neo

* Govt aims to lift Pak ranking *

KARACHI: Minister of State for Finance Omar Ayub Khan has said that the government aims to take Pakistan from the current position of 91 on the competitiveness ranking list to among top 60. 

Addressing the members of Overseas Investors Chamber of Commerce and Industry on Thursday, he said that the private sector should not give up its habit of demanding subsidies and incentive packages and be competitive in the world. 

He listed three challenges for Pakistan in its way to be competitive. Firstly, he said that the country needs to improve its infrastructure. Secondly, Pakistan has to secure energy supplies for its industry. Thirdly, the country has to develop a skilled and qualified workforce.

He said that the Competitiveness Support Fund has approved projects to be financed in different sectors including gems and jewellery and pharmaceuticals.

He spoke at length about the governmentâs second generation economic reforms and the progress made to date. 

Earlier, President OICCI Zubyr Soomro said that Pakistan lacked an effective bankruptcy law and proposed that some thinking should be done in this direction. 

He also said that the government should identify and select a few promising non-governmental organisations from among hundreds to be funded for running social uplift programmes. That would be an effective way of delivering service to people, he said.

Secretary General OICCI Adnan Afridi said the country needs to improve infrastructure, secure energy supplies, enforce IPR and invest in human resource development in order to be competitive.

http://www.thenews.com.pk/daily_detail.asp?id=52183


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## Neo

*Exhibitors see $200m orders *  

LAHORE: Pakistani exhibitors, who participated in the five-day engineering exhibition in Hanover, are optimistic about obtaining orders worth $150-200 million as their regular participation has instilled confidence among importers. Syed Nabeel Hashmi, who has been participating in the exhibition for the last four years, said many Pakistani manufacturers could easily meet the quality requirement of foreign buyers. He said they need to participate in international exhibitions in large numbers as the foreigners do not visit Pakistan due to travel advice from their countries. He said as a result of the coordination developed among the various exhibitors of the world, Pakistan would be able to secure export orders of $150 million to $200 million. The marketing manager of Syed Bhais was more specific as he disclosed that the company has got orders worth $25 million from Poland. 

http://www.thenews.com.pk/daily_detail.asp?id=52195


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## Neo

April 21, 2007 
*Fate of mega projects hangs in the balance*

KARACHI, April 20: Has anyone in the country taken care to keep a track on the implementation phases and flow of funds for the mega development projects in different parts of Pakistan? How many of these have been completed and at what cost â at original cost or at inflated cost.

What are the economic benefits and income generation from these projects? A multi billion dollar question is what will be the fate of incomplete projects, if people of Pakistan decide to vote out this government and bring a new one in late 2007 or early 2008?

For more than four years, both the president and the prime minister have been visiting at regular intervals various places in the country, more, particularly Balochistan, either to inaugurate or just review the pace of work of a âmega projectâ.

The two top Pakistani leaders signed countless agreements, contracts, memoranda of understandings with the governments and private institutions in foreign countries during last four years.

In May 2005, the government spelt out an investment plan of $41 billion for mega projects at the Pakistan Development Forum. Formerly known as World Bankâs Aid to Pakistan Consortium, the rechristened PDF meeting in May 2005 witnessed pledge of several billion dollars by the participants.

Pakistan indicated investment requirement from 2005 to 2008 and beyond. These included $33 billion for the water sector till 2025. A sum of $12 billion was the requirement for the five years - 2006 to 2011. How much of these funds have come and what are the projects? No answer was ever given of this question.

Within days after the PDF in May 2005, the international media reported that donors were demanding strong guarantees and explanation as to how the Pakistan government would pay the loans. âFor next 10 years, the donors want sustainable economic growth rate at 6 to 8 per cent each year, narrowing down of trade and current account deficit, stabilisation of inflation and lessening of growing economic disparities,â an official was quoted.

Thanks to the expansion and growth of services sector in last four years, Pakistan has managed to maintain a 6.5 per cent annual growth rate but the trade deficit, the current account imbalance and inflation are showing no signs of respite. The poverty rate might have come down or not but social and economic disparities are becoming more and more pronounced with every passing day.

It was in May 2005 that Pakistan indicated investment requirement of $10 to 17 billion to increase electric power generation by 6,000 megawatts in next five years. The electric power supply in summer 2007 is worse than 2005.

About seven or eight weeks ago Babar Ghouri, the federal minister from Karachi wanted the postponement of general elections till such time all these projects are completed. But no one in the government offered any time schedule and list of mega projects.

While the ministers and leaders of public opinion were giving their views on this proposal, when the events, triggered by a March 9 handout of the government that declared Chief Justice of Pakistan non functional, overtook abruptly the debate and an altogether new situation emerged in which mega projects have been pushed behind some smoke screen.

A 1,400 feet high âPort Tower Complexâ project to be built with active collaboration of a Qatar concern at a cost of Rs20 billion (more than $310 million) was a gift from Babar Ghouri for the people of Karachi. It was to be amongst ten tallest buildings of the world.

The project included an Expo centre, low and high residential complexes, community centre, club house, shopping galleries. Does anyone remember when was ground breaking ceremony or foundation stone was laid. The total 90 acres of land for the project was to be reclaimed from the sea. Did anyone take into consideration the environmental hazards from such a project?

A lot has been said and written on the environmental hazards and sufferings of people living in Sindh delta region because of two mega projects â Left Bank Outfall Drainage and the Right Bank Outfall Drainage (LBOD and RBOD).

The two institutions â World Bank and Asian Development Bank - have been criticised for designing bad projects, which have caused miseries to the million of people.

These days, the cities and villages in Pakistan are plunged into darkness after sunset, because the public sector Wapda and the privatised KESC are competing with each other to keep light away from the people. A Rs13 billion investment plan was underway in KESC to upgrade transmission and distribution facilities. What happened to that programme?

The Sindh Finance Minister in his last budget speech in June 2006 announced a development investment of Rs117 billion during last three years. The Sindh government in its rejoinder to a World Bank report on provincial economy gave a figure of Rs133 billion development investments in last four years.

It was in last two to three years that people in Hyderabad and Karachi died of drinking contaminated water. The summer rains literally inundated Karachi and lack of drainage facilities in Hyderabad and other parts made the life of hundreds and thousands of people miserable.

The rural Sindh still reports the lowest enrolment of children in primary schools. The basic health care facilities in many parts of rural Sindh are still missing.

At present there are 10 federal funded projects in Sindh with a total outlay of over Rs103 billion. In last four years, only a sum of Rs28.8 billion has been released from Islamabad. Delay in release of committed funds cause a run over expense, which pushes up the cost.

The much publicised Lyari Expressway was originally designed to cost Rs2.87 billion. More than Rs4 billion has been spent on this project which was expected to complete in the year 2006. It is still incomplete and require more than Rs700 million.

Drainage is the main problem caused by construction of barrages and dams on upper riparian. Slight rains inundate cities and villages. The RBOD was originally designed with an investment of Rs14 billion. It will now cost more than Rs29 billion and only Rs6 billion were released so far. Similarly for revamping drainage and irrigation in Sindh, the federal government released only Rs3.85 billion against an indicated cost of Rs12.96 billion.

Tameer-e-Karachi, Hyderabad and many other mega projects are trailing behind their schedule and showing a rising run over cost and aggravating problems in cities and villages.

http://www.dawn.com/2007/04/21/ebr1.htm


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## Neo

April 21, 2007 
*Pakistan has low export potential for China*

ISLAMABAD, April 20: Pakistan has the lower potential in the Asia Pacific region for exploiting the increasing export opportunities to China despite the fact that the two countries have a preferential trade arrangement for the last couple of years, says a UN report.

The report came at a time, when the two countries are ready to implement a comprehensive free trade agreement (FTA) covering trade in goods and investment to be effective from July 1, 2007. The services sector, which is being under negotiation, will also be made part of the agreement.

According to the UN report on âEconomic and Social Survey of Asia and the Pacific-2007â released recently, the high and middle-income regional economies have great opportunities to export to China.

This increase in potential for export is measured by a complementarityâs index that shows the overlap between a countryâs export profile and Chinaâs import profile. A high index level indicates a higher potential for trade.

The highest overlap is for Japan, the Republic of Korea and Singapore, followed by the middle-income ASEAN economies of Thailand and Malaysia. The lowest overlap is for Mongolia and Pakistan, followed by Indonesia.

Pakistan was the second country after Chile to sign a FTA with China. No other countries of the world have even so far thought about to have an FTA with China because of the cheap labour and high subsidised market of China.

Analysts described the FTA with China a political decision as it did not involve any economics because Pakistani products are not capable to compete with those coming from other countries of the region or with the local Chinese products.

According to the report, China has emerged as a major importer of natural resource related and agriculture products. Major resource exporters include Indonesia, Mongolia and the Russian. Agriculture is a major export for countries such as Thailand, and Indonesia as well as for many low income countries such as Pakistan in the region.

China is still not specialised in sophisticated hi-tech products, for which the high income economies of Japan, Korea and Singapore are the largest exporters and are, therefore, best placed to benefit.

According to the report Pakistanâs exports and imports continued to grow at double digits rates. The trade deficit widened to a record $8.4 billion in 2006, with 45 per cent of the increase due to a higher import bill for crude oil and petroleum products.Imports of raw material and machinery also increased sharply. Even so, the current account continued to benefit from large remittances from the expatriate workers, estimated at $4.6 billion in 2006. On the financial account, foreign direct investment, at $3.5 billion in 2006, was the highest ever recorded.

http://www.dawn.com/2007/04/21/ebr6.htm


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## Neo

Saturday, April 21, 2007 

*Indus Refinery to invest $750 million*

ISLAMABAD: Indus Refinery Limited Chairman Mohammad Sohail Shamsi Friday said that the Indus Refinery is planning to invest $750 million in oil sector of the country.

Talking to a private TV channel, he said production would be started in March 2009 and it will produce 4.5 million tonnes LPG.

He said that "we are the first one who came into the field of production and producing 11 million tonnes and no one came before us, adding, it would encourage investment in the country".

While discussing the ongoing projects, Sohail Shamsi said that besides oil refinery project, we are working on cement plant, methanol plant and a construction project. As far as the construction project is concerned, it will be started in a couple of months and methanol and cement project would take one year to start, he added. 

http://www.dailytimes.com.pk/default.asp?page=2007\04\21\story_21-4-2007_pg5_11


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## Neo

Saturday, April 21, 2007 

*&#8216;Pakistan-China friendship a model of coexistence&#8217;*

BEIJING: The time-honoured friendship between China and Pakistan is a model of friendly coexistence between developing and neighbouring countries, a joint statement released by Pakistan and China on Friday stated. 

The statement was issued at the conclusion of Prime Minister Shaukat Aziz&#8217;s official visit to China. During the visit, Aziz met with Premier Wen Jiabao and President Hu Jintao. He also visited Chengdu. China considers Pakistan a good friend, the statement continued. Friendship with China is the cornerstone of Pakistan&#8217;s foreign policy and both sides are determined to further elevate their friendship and strategic partnership. Great importance was attached to the five-year &#8216;Development Program on Economic Cooperation&#8217;, the bilateral FTA and the Joint Investment Company.

Both sides agreed to develop an over-arching framework for different forms of project financing. The two sides will actively facilitate cooperation between the financial institutions of both countries and make effective use of the capital markets of both.

According to the joint statement, Chinese corporations and financial institutions will be encouraged to participate in the development of hydropower projects in Pakistan. Working links between the China Investment Promotion Agency and the Pakistan Board of Investment will also be established. Both sides reiterated their commitment to combat all forms and manifestations of terrorism and shared views on international and regional issues.

Agreements on mutual legal assistance in criminal matters between the governments and the &#8216;Projects Implementation Regulation&#8217; for the five-year development programme on economic cooperation were signed. 

Aziz signed the second protocol to the agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income between the governments of China and Pakistan. An MoU between the National Development and Reform Commission of China and the Planning Commission of Pakistan was also signed as well as a MoU on cooperation between the National Development and Reform Commission of China and the Ministry of Industries, Production and Social Initiatives of Pakistan.

A MoU was also signed between the Chinese Ministry of Education and the Pakistani Higher Education Commission for the establishment of an engineering university in Pakistan. The Pakistan Space and Upper Atmosphere Research Commission also signed agreements with the China National Space Administration and the China Great Wall industry for deepening cooperation in space science and technology. The Shanghai Stock Exchange and the Karachi Stock Exchange also signed a MoU along with the governments signing one for cross-border cables construction.

Finally a MoU was signed for the establishment of the Centre for Pakistan Studies in Peking University and a MoU on cooperation between the Chinese Foreign Affairs University and the Foreign Service Academy of Pakistan was also signed. 

http://www.dailytimes.com.pk/default.asp?page=2007\04\21\story_21-4-2007_pg7_22


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## Neo

Saturday, April 21, 2007 

*$1.288 billion returned in eight months*

ISLAMABAD: Pakistan has repaid $1.288 billion in foreign debts from July 2006 to February 2007, which included $483 million in interest paid back to 35 multilateral and bilateral creditors, according to documents made available by federal government officials to Daily Times.

The total foreign debts due against Pakistan stood at $36.907 billion on December 31, 2006. During these eight months, the World Bank was paid back a total amount of $240.46 million including a $171 million principal amount and a $69.87 million mark-up.

A sum of $187.37 million was returned to the Asian Development Bank that included $144.14 million in original loans and a $43.22 million mark-up. The European Investment Bank was paid back $2.88 million â $0.90 million principal amount and $1.99 million interest. 

Pakistan also returned $139.55 million to private bondholders of which $24.92 million was the principal amount and $114.63 million was the mark-up. Commercial banks were paid back $29.26 million of which $21 million was the principal amount and $8.26 million the interest. The government retired $120.02 million of International Development Assistance including a $82.98 million principal and a $37.05 million mark-up.

The Islamic Development Bank received $189 million â a $175.19 million principal amount and $14.53 million mark-up. China was paid back $64.46 million â a $52.16 million principal amount and $12.30 million interest.

France and Germany were also paid back some debt owed, with France receiving $58.33 million, of which $14.60 million was the principal amount and $43.74 million the mark-up, while Germany was paid $23.43 million â a $7.82 million principal amount and $15.61 million interest.

Japan was paid back $77.90 million â a $30.13 million principal amount and $47.77 million mark-up, South Korea got $47.67 million â a $28.18 million principal amount and $19.49 million interest and the United States was paid back $53.19 million â a $20.38 million principal amount and $32.81 million mark-up.

In certain cases the interest on debts were more than double those of the principal amount paid back during the eight months as Austria was paid $2.46 million of which the principal amount was $530,000 and the mark-up was $1.93 million.

Canada was paid back $3.27 million, comprising $470,000 of the original amount and $2.80 million in interest, Finland received $210,000 with a $300,000 principal amount and $180,000 mark-up and Italy got $540,000â $130,000 loan and $410,000 mark-up.

http://www.dailytimes.com.pk/default.asp?page=2007\04\21\story_21-4-2007_pg7_9


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## Neo

Saturday, April 21, 2007 

*PM wants Pak access to civil N-technology*

* Says Iran pipeline could encourage peace between India and Pakistan

CHENGDU: Prime Minister Shaukat Aziz on Friday called for a level playing field for access to civilian nuclear technology and urged members of the Nuclear Suppliers Group to adopt an objective criteria-based approach to end discrimination.

Delivering a talk on âPakistanâs perspective on Contemporary Issues of Peace, Security and Developmentâ at the Sichuan University, the PM said, âPakistan favours a non-discriminatory, criteria-based approach that will offer equal opportunities to both Pakistan and India for access to civilian nuclear technology by meeting the relevant benchmarks.â

Discussing terrorism, the PM said it was the most formidable threat to the world. He said, âPakistanâs resolve to fight terrorism is firm and consistent with our own national interests. We believe an effective counter-terrorism strategy must have military, political, economic and social dimensions.â He said sustainable success against terrorism required recognising and addressing root causes like poverty, deprivation and under-development that resulted in desperation and hopelessness.

Concerning the Pakistan-India dispute, Aziz said Pakistan was pursuing the peace process with renewed vigour for settlement of all disputes including Kashmir, restraint and security balance in South Asia and cooperation for the economic development of the region.

Aziz termed friendship with China as the cornerstone of Pakistanâs foreign policy. He said Pakistan firmly believed in the âOne Chinaâ policy and recognised the Peopleâs Republic of China as the sole legal government representing the whole of China. In a question-answer session with students, the PM said Sino-Pak relations could be further strengthened through economic ties. 

Speaking to the Associated Press later that day at the Boao resort, Aziz said the pipeline that would supply natural gas from Iran to South Asia was critical to Pakistanâs economic growth and political stability. He said the project could help strengthen rapprochement between India and Pakistan. Aziz said, âWhenever you create situations where you create linkages and interdependencies, it helps develop the overall atmosphere between two countries,â he added.

The PM said that with Pakistanâs economic growth at about 7 percent annually, its energy needs were growing at 10-12 percent a year, far outstripping domestic gas supplies.

http://www.dailytimes.com.pk/default.asp?page=2007\04\21\story_21-4-2007_pg1_8


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## Interceptor

*450MW power plant to benefit factories
*

By Our Correspondent

FAISALABAD, April 20: A new power plant having a capacity of 450 megawatts will soon be installed in the district to help avert power outages.

Faisalabad Electricity Supply Company (Fesco) chief executive Ahmed Saeed said this while talking to representatives of industrial units here on Friday.

Sources privy to the meeting said that industrialists gave vent to their disquiet over unscheduled load shedding.

They also asked the authorities concerned to set a timetable for power suspension because the industry, in most of the cases, had to suffer an irreparable loss. Besides a heavy monetary loss, they said the persistent unscheduled load shedding might leave countless people jobless.

The Fesco chief, sources said, apprised visitors of the arrangements being made by the company and urged them to follow the schedule of staggering holidays prepared with the consultation of industrialists.

He said the Fesco had been facing problems because most of industrialists were defying the schedule.

Mr Saeed said that Fesco was also well aware about the power crisis and problems faced by industrialists as a result.

He said the governmentâs plan to install a power plant with public-private partnership near steam power station would help overcome the energy crisis in future.

In addition, he said the government was also considering setting up a power plant of 500 megawatts to fulfill the need of the M-3 Industrial Estate.

About the purchase of surplus electricity from the private sector, he said that Fesco had reached an agreement with the two companies.

Putting forward various suggestions to overcome the power crisis, industrialists said that Fesco should make agreements with private entrepreneurs for the purchase of electricity.

Those who met the Fesco chief executive include, All Pakistan Textile Processing Mills Association regional chairman Mian Aftab Ahmed, secretary Muhammad Ashraf, All Pakistan Sizing Industry Association chairman Shafiq Ahmed, Shahid Ahmed and Amjed Saeed.

http://www.dawn.com/2007/04/21/nat11.htm


Its about time something happened.


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## Neo

*Pakistan PM Eyes 7%-8% Inflation In 2007; Keeps GDP Forecast *

BOAO, China -(Dow Jones)- Pakistan Prime Minister Shaukat Aziz said Saturday the inflation rate in his country will likely slow to between 7% and 8% this year.

"But we feel we should do more, so we tighten monetary policy. Interest rates are up a bit, and that is having the desired effect," he said.

Aziz also reiterated Pakistan's economy will likely grow 7% to 8% in 2007, maintaining the country's steady economic expansion over the past few years.

He was speaking at the Boao Forum for Asia, a gathering of government and business leaders on the southern Chinese island of Hainan. 

http://www.nasdaq.com/aspxcontent/N...CQDJON200704210923DOWJONESDJONLINE000398.htm&


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## Neo

*Heavy participation witnessed in PIB auction: Rs 15 billion accepted *

KARACHI (April 22 2007): Heavy participation was witnessed in the 38th Pakistan Investments Bond (PIB) auction, the fourth in the current fiscal year, while all were reopening of previous issues. The SBP almost maintained its given PIB target amount of Rs 15 billion.

The accepted amount was Rs 15.45 billion against total offered amount of Rs 49.1 billion. The total realised amount was Rs 14.877 billion. For 3-, 5- and 10-year bonds it was the fourth issue. For 3-year bonds, market's offered amount was Rs 6.35 billion, which has a remaining life of 25 months. The accepted amount was Rs 1.05 billion at a cut-off yield of 9.3315 percent against last cut-off yield of 9.3690 percent.

For 5 years, which shaved off 14 basis points (bps) from last cut-off yield of 9.7652 percent to 9.6197 percent, the accepted amount was Rs 800 million, against market's offer of Rs 10.1 billion; and for 10-year paper, which has a total life of 9 years and one month, the cut-off yield fell to 10.1332 percent against last cut-off yield of 10.1988 percent. The accepted amount was Rs 6.65 billion against market offer of Rs 20.5 billion.

Major bidders in 15- and 20-year papers were pension fund and corporate sector, which was re-opening of 3rd issue of October 31 2006, which also meant that its life has been shortened by six months. In 15-year, the cut-off yield remained unchanged at 10.98 percent, and the accepted amount was Rs 950 million versus offered amount of Rs 1.65 billion.

In 20-year, which had been rejected in the previous auction, the cut-off yield fell to 11.1999 percent versus December 22, 2006 PIB auction cut-off yield of 11.4203 percent. Similarly, 30-years paper, which was also a rejected in the March 5, 2007 auction, is 2nd re-opening of December 22, 2006 issue. The accepted amount was Rs 4.5 billion at a cut-off yield of 11.5906 percent.

The last cut-off yield on December 22, 2006 was 11.7006 percent. In tenors, from 3 years to 30 years, the market witnessed fall in PIB yields. This was no change in the market sentiment, but the real cause of fall in yield was the shortened life of the papers of various tenors. The basis of yield calculation was based on yield to maturity with the days of maturity, or YTM versus DTM.

Due to demand for long-term government paper, it would be interesting to see if the SBP comes up with another PIB auction before the end of the current fiscal year, which ends in June. Therefore, the announcement could only be possible before mid-June, as trading period for when issued paper requires 15 days.

It seems that there is no set defined target for PIBs, because in current year's budget the provision for PIB was for Rs 3 billion only, which also means that with Rs 42 billion maturity, the expectation was to raise Rs 45 billion through PIBs auction. So far, borrowing through PIBs target amount has exceeded the original target amount by Rs 23 billion to Rs 68 billion.

Looking at the initial plan for borrowing for budgetary support it was Rs 120 billion, and in 9-months the borrowing has jumped to Rs 123 billion, suggesting further rise in borrowing numbers. It is about time that in an emerging market like ours, the country's financial managers should be prudent in their approach and instead announce a realistic number to manage its long-term borrowings.

This would also help the government in diversifying its domestic debt portfolio in a proactive way. A ratio of borrowing against long-term bond of something like 40/60 looks more appropriate.

While majority of the money market analysts are of view that the general perception of easing of rates amongst money dealers was due to softening of inflation number, what is more important is the fall in inflation number, which is still far above its original target of 6.5 percent.

The central bank is aware that the drop in inflationary figure is also due to number of steps taken at all levels, including administrative measure, which is also one of the causes of pushing current account deficit number higher.

The biggest problem that the central bank faces is the inflow of liquidity. Market estimates that on monthly basis roughly around Rs 15 billion to Rs 20 billion is flooded in the market, which requires regular mopping up through Open Market Operation (OMO) and draining of excess funds through fortnightly Treasury bills.

On Monday, the market is expected to remain long by Rs 10 billion to Rs 15 billion, due to two OMOs maturing amount of Rs 30.4 billion. SBP may prefer short dated mopping through OMOs due to coming fortnightly T/bills auction, due on Thursday, which has Rs 600 million maturity, while it is expected that because of government salary payments Rs 10-12 billion will drain out by the month-end.

Meanwhile, after the rise in FEEL, the interbank foreign exchange market is getting used to market volatility. The market has to prepare for small moves in the foreign exchange market to get it tuned, so that when the central bank decides to allow banks to make oil payments, forex market is prepared to absorb the shocks. The size of annual oil bill could range between $6.5 billion to $7 billion, or over 0.5 billion on monthly basis.

In one-month to six-month tenors, swap points lost 5 to 10 paisa. Exporters sold their forward dollars holding to take advantage of swap premium. The market is keenly watching the strength of Indian rupee, which has gained 5.8 percent since March 2007 to close at 41.60 per dollar. Many dealers are of view that Pakistan's central bank may have to follow the Indian currency, which also helps to contain inflation. Near term, the likely ranges could be between 60.50 to 60.85.

http://www.brecorder.com/index.php?id=553835&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Nine-month textile exports cross $8 billion *

KARACHI (April 22 2007): Pakistan's textile exports crossed $8 billion mark registering a growth of 7 percent during first nine months (July-March) of the current fiscal year (2006-07), according to official statistics on Saturday.

According to statistics, textile exports remained at $8.027 billion during nine months of the current fiscal year were higher by $525.682 million against $7.501 billion of the same period of last fiscal year (2005-06).

Month on month basis, the country's textile exports witnessed 11 percent rise at $987.484 million in March 2007, depicting an increase of $95.27 million, against $892.214 million of March 2006. Textile exports in March 2007 also showed an increase of $198.923 million, or 25 percent, against $788.561 million recorded in February 2007.

Leading textile exporters are of the view that textile exports have started to rise after 5-6 percent research and development (R&D) support announced by the government on export of textile, knitting and some other textile products. Major increase has been recorded in the raw material products like yarn and cotton yarn, they said.

They said that 7 percent growth in textile export during July-March was still below the target of 18 percent growth. "Current statistics show that despite all efforts we will not achieve the textile export target of $10.15 billion," they added.

Statistics show that out of 12, only four textile products, including raw cotton, cotton cloth, cotton carded and bed-wear exports have decline by 2-51 percent during July-March 2007, while other products' exports including readymade garments, synthetic textile, yarn, knitwear, art and silk exports rose by 2-159 percent. Raw cotton exports declined by 15 percent; cotton cloth by 7 percent; cotton-carded 51 percent and bedwear by 2 percent.

However, synthetic textiles have shown record growth of 159 percent to $377.949 million. Cloth exports rose by 3.41 percent, yarn by 145 percent, knitwear by 15 percent and towels by 2 percent during this period.

Similarly, made-ups exports increased by 5 percent, tents by 133 percent, readymade garments 9 percent, and exports of other textile sectors registered 21 percent growth. Exporters said that growth in textile exports did not show good performance of industry and if the R&D support would not continue, textile exports would again start declining.

http://www.brecorder.com/index.php?id=553809&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Gujranwala and Narowal to get new industrial estates *

SIALKOT (April 22 2007): The Punjab government has initiated a new action plan for the development of small and medium entrepreneurs (SMEs) in the province. Official sources told Business Recorder here on Saturday that the measures had been taken to accelerate the pace of export activities.

Under this action plan, new industrial estates would be set up in Gujranwala and Narowal districts. Over 1,000 acres of land on Kamoki-Eminabad road near Gujranwala has been selected for this purpose.

In order to bring industrial revolution in the province, the provincial government would provide all modern facilities to investors for setting up new industries, sources said. The government has allocated Rs 8 billion for extending loan facility to the SMEs and newcomers for upgrading and setting up their industrial units in the province.

In addition to this, special attention had been focused on the "women entrepreneurship" and a number of steps had already been taken for facilitating the businesswomen in the Punjab. The government will provide all facilities including financial assistance to the willing individuals for manufacturing non-traditional products.

Apart from this, the government is also catering loan facilities for the advancement and expansion of agro-based industries, dairy development, and engineering and information technology in the province. The government is making hectic efforts and mobilising all available resources for motivating and attracting Overseas Pakistanis and foreign investors to invest in export processing zones especially in Sialkot and Gujranwala.

http://www.brecorder.com/index.php?id=553859&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Niltar power project to be completed soon *

ASTORE (April 22 2007): The present government is paying special attention to the development of Northern Areas and has launched record development schemes in the area. This was stated by the spokesman of Construction and Works (C&W) department NAs, while talking to APP here on Saturday.

He said the government is spending Rs 235 million on various power projects to ensure smooth supply of power to the people of the area and after completion of these power projects, not only the power crisis would be overcome but also it will change the fate of people of Northern Areas, besides also meet the power needs of the region.

He said the big project of hydel power at Niltar, which would generate 18 mw electricity would be completed by the end of April, this year adding that tender would hopefully be invited for new power projects soon.

The spokesman said that the government is working on emergent basis for the provision of electricity to the people of Northern Areas to bring progress and prosperity in the area.

http://www.brecorder.com/index.php?id=553888&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pakistan reforming capital markets: PM *

BOAO: Prime Minister Shaukat Aziz on Saturday said Pakistan was regularly reforming the countryâs capital markets by undertaking more reforms including de-mutualisation besides having stronger regulatory regimes.

Talking to Chairman of Merrill Lynch here on the sidelines of the Boao Asia Forum 2007, the Prime Minister said more companies were being encouraged to list in the market and raise equity through public offerings. 

He said many larger Pakistani companies were tapping the global markets and the government was also encouraging these to raise equity in the market. He said greater participation of foreign and local investors in the equity market was being encouraged to create growth and allow Pakistan to tap the huge pools of liquidity that exist in the market today. 

The Chairman of Merrill Lynch said his company was very bullish on Pakistanâs equity market and said more investment will come as the market was still undervalued and there was lot of interest from all over the world in Pakistani equities. 

A latest research by Merrill Lynch described Pakistan as its favourite Asian market. It stated that in Pakistan foreigners can own only 4 per cent of the stock market, but its turnover was USD 400 million per day. It also described Pakistanâs privatisation program as the best in Asia and companies like Standard 

Meanwhile, the Chairman Microsoft Bill Gates assured that for the promotion of IT, his company would provide technical expertise for establishment of R&D centres in Pakistan.

Bill Gates was talking to the Prime Minister at the sidelines of Boao Conference. Aziz said Pakistan wants to establish a strong and long-term relationship with the Microsoft to promote IT culture and IT literacy in the country.

He said Pakistan is planning to set up Research and Development centres in IT and will invite experts from Microsoft and wants to establish strategic relationship with Microsoft to develop its IT infrastructure.

He said that Pakistan wants to position itself as a regional hub for outsourcing and software development and is introducing the IT education to the youth at school level.

Efforts are being made to provide IT access easily to the youth so that they could play their due rule even at the world level, headed.

âIt is the age of Information and Microsoft which has tremendously promoted computer and IT technology. Therefore we want Microsoft to have more involvement in Pakistan,â the Prime Minister said.

He said that Pakistan would enhance its contacts with the Microsoft for the promotion of IT education among the youth. 

http://www.thenews.com.pk/daily_detail.asp?id=52334


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## Neo

*US security steps impact badly on Pak exports *

By Mehtab Haider

ISLAMABAD: The security measures placed by the US administration on Pakistani made-ups are negatively impacting the nationâs stagnant exports, it is learnt. 

A Study on Logistics Security Assessment of Exports from Pakistan says terrorism is normally against people and not against goods. 

A report titled âGlobalization and Its Impact on Poverty in Pakistanâ prepared under contract with the United Nations Development Programme for Pakistan, while citing above-mentioned study, says the terrorists target people whom they do not like or use explosives to kill large number of innocent people in order to create scare and hit the headlines. So far there has been no explosion in any of the containers or export goods being shipped from Pakistan.

In fact, there have been no terrorist attacks anywhere in the world on merchandise cargo. Hence international commerce has so far been extremely safe from any terrorist activity and commerce from Pakistan has been no exception to this international behavior.

Knitwear exporters, struggling for survival in the wake of plunging unit prices of their products in the US and Europe, are trying hard to comply with the security requirements of buyers. 

âTo meet the security requirements of the US administration is a bit difficult for many exporters, especially the smaller ones, as it involves additional investments and costs,â it added.

There is a paradox with respect to Pakistanâs exports. Its exports, which were stagnating for many years before 9/11, rose by 33 percent during the first two years following 9/11.

Similarly, in the 1990s when Pakistan continued to devalue its currency the exports failed to rise. Yet exports surged sharply after appreciation of the Pakistani rupee. There is, however, no doubt that with better security perception about Pakistan, exports would have risen more, especially to the USA.

âMore importantly more foreign traders could have visited Pakistan and this could have resulted in larger orders. There is a great need to make Pakistani ports and our cargo transit security compliant to ensure our share in the global markets,â it maintained.

There are several aspects of these UNDP studies that need consideration. As in most other aspects of the trade area there is a disconnect between the research and the formulation and actual implementation of policy.

The studies themselves are generally done in isolation with no regard to the holistic integration of the major recommendations within the framework of globalization. The recommendations themselves are in most cases quite general and the next step to translating these into action is found missing.

Developing countries, the study states, need to ensure competitiveness of their enterprises in the global economy. This requires reasonably good investment climates in which firms, particularly small domestic firms, can start up, prosper, and expand. Good governance Ã³- control of corruption, well-functioning bureaucracies and regulation, contract enforcement, and protection of property rights Ã±- is an important pre-condition without which globalization cannot achieve growth and poverty reduction.

If workable social protection measures are not put in place then not only significant sections of society are at risk but also the whole process of integration because of the erosion of confidence based on the inability to provide for the inevitable marginalization of a few, it further states.

The process of globalization is bringing the people of the world together to realize their common goals and challenges. One large challenge is that of addressing global and national poverty.

Pakistan has been an active participant of the WTO for the last decade. It has endorsed the fundamental reforms in agriculture trade; phasing out quotas on developing countries exports of textiles and clothing; reductions in customs duties on industrial products; expanding the number of products with bound custom duty rates under the WTO, making increases in the import duty rates difficult.

Despite liberalization under the WTO over the last 10 years, there are still several challenges to increased market access. These include, among others, exceptionally high tariffs on products of export interests of developing economies; tariff escalation impacting adversely the exports of value-added products; subsidies on agriculture sector, indiscriminate use of antidumping and countervailing duties, etc. 

http://www.thenews.com.pk/daily_detail.asp?id=52335


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## Neo

*Exploiting wind power*

THE official obsession with mega projects often comes in the way of less grandiose solutions to pressing problems. Besides lack of vision and a penchant for pomposity, the potential for graft is clearly a factor in a country that ranks high on the global corruption scale â the bigger the project, the larger the kickback. In the energy sector, however, the prospect of a crisis that could cripple industry by 2010 is forcing a change in both attitude and official policy. Large hydropower dams are still very much part of the plan but even the most realistic of the lot, Diamer-Bhasha, will take about a decade to come on line. As such, the focus now is on power plants that can be set up in relatively short time, such as thermal units. At the same time, the government has finally woken up to the vast, hitherto untapped potential of renewable energy. The first major step in this connection came in December last year with the approval of the countryâs first renewable energy policy â a move rewarded almost immediately by the Asian Development Bank which offered a $510 million loan facility for developing clean and efficient sources of power.

While the ADB facility will initially focus on small and medium-sized hydropower plants in the NWFP and Punjab, private investors are now showing considerable interest in proposed wind farms along the Sindh coastline. The Alternative Energy Development Board has issued letters of interest to 81 local and foreign firms, of which 15 have already acquired land in a project area situated between Gharo and Keti Bandar. How much power these wind farms will collectively generate is still unclear, but some are expected to be operational by the end of next year. However, there is no doubt that Sindhâs exploitable wind power generation potential is enormous â 11,000MW, according to a recent government-funded study. While this figure is still a distant dream, realisation of even a fraction of the potential output can go a long way in easing the current energy crisis. A clean and infinitely renewable form of energy, wind power is where the future lies and every effort must be made to expedite its harnessing.

http://www.dawn.com/2007/04/22/ed.htm#2


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## Neo

Sunday, April 22, 2007 

*7m tonnes of surplus cement by June-end*

By Hamid Waleed

LAHORE: Pakistanâs cement industry is likely to produce 7 million tonnes surplus cement by the end of current fiscal year ending June 2007, followed by another 12 million surplus production during next fiscal year 2007-08.

Sources in the cement industry told Daily Times that the industry is estimating at shipping some 10 million tonnes cement to India through Dubai or directly across the border. According to them, the latter would be a better option, as it would become more economical for the Indian manufacturers, which despite fantastic results are not able to maintain prices due to higher interest rates there.

They added that shortage phenomenon in India could be assessed from the fact that the Indian government has withdrawn excise duty on cement bags besides declaring cement import duty free in the country. 

It may be noted that sources in the finance ministry said that Pakistan government is likely to allow cement exports to India through Wagha border. The industry sources had also confirmed the development while adding that the issue came under discussion between the prime ministers of both countries during recently held SAARC conference in India.

According to the industry sources, countries like Dubai, Iraq, Iran and Kuwait are other likely destinations of surplus productions of the industry in the days to come.

Meanwhile, industry sources told that the clearance process from Bureau of Indian Standards for exports of Pakistan cement might take two months, as the representatives of the said Bureau issue clearance certificate after inspecting the said plants, ensuring quality of cement as well as shelf life of the cement. 

âApplications for clearance certificate are filed with the Bureau some 10 days earlier and completion of inquiry can take another 50 days,â said the industry sources, adding, âNo further consignment of Pakistani cement is likely to cross the border for at least during the inspection period.â

http://www.dailytimes.com.pk/default.asp?page=2007\04\22\story_22-4-2007_pg5_6


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## Neo

*Pakistan prepares action plan to attract investment*

21 April 2007 

ISLAMABAD â Pakistan government is considering a set of proposals to attract substantial local and foreign investment by offering new incentives and by drastically improving regulatory framework for various sectors.

Official sources said that an "action plan" has been firmed up for attracting investment specially by removing impediments in industry, agriculture and services sectors. 

The action plan contained in a detailed report is expected to be discussed and approved in the next cabinet meeting. It has been jointly prepared by the Planning Commission, Higher Education Commission (HEC) and Pakistan Institute of Development Economics (PIDE).

Sources said that before the cabinet meeting, President General Pervez Musharraf would also be briefed about the report. 

"This is a very important report which aims at improving all the major sectors of the economy by implementing a number of proposals", federal minister and the chairman of HEC Prof. Dr Atta-ur-Rehman said.

The report has, he said, carried out an in-depth analyses of the major sub-sectors of the three major productive sectors of the economy â agriculture, industry, and services â and within each sub-sector identified key issues and challenges and suggested a detailed action plan to realise the major economic objectives of the government.

The two major themes of the report, he said, are human resource development and research and development to provide incentives to the private sector to invest in potential sectors of the country's economy.

According to the report, a sustained growth rate of five to six per cent in agriculture is imperative to ensure rapid growth in national income, macroeconomic stability, improvement in distributive justice and reduction in poverty. This can be realised by exploiting the potential of all the sub-sectors of agriculture. 

A higher level of investment in agricultural research and development activities supported by favourable policy instruments, human resource development and necessary physical and institutional infrastructure can prove a catalyst towards achieving enhanced productivity and a desired growth rate.

The textiles and clothing sector is the mainstay of Pakistan's economy. With a 24 per cent share in the manufacturing sector, the textiles sector employs 38 per cent of the workforce in the industrial sector and constitutes roughly 70 per cent of total exports. The textiles sector, the report added, is facing a number of challenges including a low technological base, lack of research and development, lack of trained manpower, low quality standards, concentration in low value-added products and too much reliance on cotton. To address these challenges and to facilitate the transformation of the textile sector into a strong, dynamic, and internationally competitive industry led by the private sector, the public sector must create an enabling environment through a business-friendly regulatory framework, appropriate incentives to the private sector, institutional support and provision of quality infrastructure.

Key elements of the proposed action plan for the textiles sector include: improving the regulatory and policy framework; human resource development through improvement the HRD institutions and encouraging the private sector to invest in skill enhancement; promoting research and development through strengthening the existing institutions and establishing new institutions in the areas of garments, knitwear, sample development and CAD/CAM centres; technology upgradation; rewarding value addition; ensuring quality standards and establishing common facility centres.

Leather and leather products play a significant role in Pakistan's economy. The leather industry is mainly export-oriented and has a potential to grow rapidly, provided measures are put in place to encourage value addition as well as to improve product quality.

"There is a need to diversify into fast growing sectors like engineering and electronics". Engineering industry is one of the most dynamic industries in world having great potential for growth. The strategic focus in the engineering sector is on bridging the widening technological gap with the developed countries by providing conducive environment including the required technological, financial and physical infrastructures, and creating a seamless integration with emerging trends of global production systems. 

The most important step for the promotion of engineering sector in Pakistan, the report believed, is to allocate more resources to technical education. There is also a need to develop design engineering capabilities, databases and infrastructure, create testing laboratories and instrument and initiate public-private partnership in projects leading to innovation of new products and processes. 

http://www.khaleejtimes.com/Display...l/business_April508.xml&section=business&col=


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## Neo

*China Mobile to invest $400 million in Pakistan *

By Reuters
Sunday April 22, 2007

BOAO, China, April 22 (Reuters) - China Mobile Ltd., the world's top cellular carrier by subscribers, plans to spend $400 million this year to expand its network in Pakistan, the firm's Chairman Wang Jianzhou said. 

China Mobile already has a foothold in Pakistan, which has more than 52 million mobile users, after it agreed earlier this year to buy an 89 percent stake in money-losing operator Paktel Ltd. for $284 million, its first acquisition outside its home market. 

Wang said that China Mobile had invested $460 million in Paktel to date, but he did not elaborate, according to the official Webcast of comments he made at the Boao Forum for Asia being held on the southern island province of Hainan. 

Wang said that China Mobile would make further investments next year focused on improving Paktel's sales systems and building new brands. 

He also said China Mobile was hoping to garner experience from the venture that it could apply to further overseas expansion. 

Separately, speaking with reporters on the sidelines of the forum, Wang reaffirmed that China Mobile planned to list shares on mainland China bourses, but he declined to give any detailed timeframe. 

Pakistani Prime Minister Shaukat Aziz told the opening session of the forum on Saturday that he saw China's rapid economic growth as a model for other Asian countries. 

He said he saw trade between Pakistan and China growing to $15 billion a year within five years. 

Aziz also said that he expected Pakistan to take in about $6 billion in foreign direct investment this year, reaffirming an existing estimate. 

http://in.news.yahoo.com/070422/137/6euo1.html


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## Neo

*Investment under CFS hits Rs 54.5 billion *

KARACHI (April 23 2007): Total investment under Continuous Funding System (CFS) at the Karachi share market touched an all time high of Rs 54.5 billion on Thursday, however, settled at a slightly lower amount of Rs 54.4 billion on Friday as compared to Rs 49.7 billion on the same day last week.

The CFS rate also rose steadily on week-on-week basis, reaching 11.86 percent on Friday compared to 11.74 percent last Friday. An Analyst said the CFS rate is expected to rise in the coming week should rally continue. Of the total CFS investment, about 50 percent (Rs 27 billion) is concentrated on the five stocks namely PPL, OGDC, NBP, POL and DGKC. Interestingly, the investment in the new comer, DG Khan Cement, increased by 47 percent to reach Rs 3.3 billion compared to Rs 2.2 billion last Friday (April 13).

Total open interest in the April counter decreased to Rs 9.5 billion on Friday as compared to Rs 9.8 billion last Friday. On week-on-week basis, futures spread remained depressed at 1.21 percent on the last day of the outgoing week as compared to 4.86 percent on the same day last week. The good spirits of the ready market failed to increase activity in the futures market as both the open interest and spreads declined. The top five companies, OGDC, NBP, POL, PPL and MCB, in terms of investment contributed around 60 percent to the total open interest.

The next week is the rollover week where an outstanding amount of Rs 9.5 billion needs to be rolled over from April to May contracts. This rollover amount is on the higher side in contrast with its historic values, where open interest in futures market on average stood between Rs 7 billion and Rs 8 billion a week ahead of the rollover week.

http://www.brecorder.com/index.php?id=554600&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Per capita income to be $1000 in fiscal year 2008, says Shaukat *

ISLAMABAD (April 23 2007): Prime Minister Shaukat Aziz has hinted above 7 percent GDP growth during the current fiscal year and in rural areas it would be more impressive than urban areas. "We set the target of 7 percent GDP for current fiscal (year) and it will be above our expectations," he said while addressing a press conference here on Sunday evening.

Aziz, who covered all the relevant issues in the press conference including his recent visit of China, judicial crisis and politics, hoped that there will be record economic growth and the share of rural areas would be higher than other areas.

Replying to a question he said that the per capita income would increase to $1,000 in next fiscal as compared to $900, which according him, is current per capita income.

When his attention was drawn towards power crisis in the country, he said that he has called a meeting of all the stakeholders to review the situation and strategy to deal with growing demand supply gap.

He said that Iranian gas and imported LNG would also be used in power generation.

Regarding power crisis in Karachi he said that KESC system had been improved but the current management is engaged in its maintenance and hoped that it would be complete soon.

Asked if President would shed off his uniform in December, he said it is up to him to take this decision and clarified that the Supreme Court of Pakistan had allowed him to keep dual offices.

In reply to another question, he said that the present assemblies would elect him as President. Asked if the government would take action against those judges of high courts who participated in functions arranged for the 'non-functional' Chief Justice Iftikhar Mohammad Chaudhry, he kept himself away from commenting on, saying that it was a sub judice issue but added "we want supremacy of law and no on is above the law".

APP ADDS: Prime Minister Shaukat Aziz said his five-day visit to China has opened new avenues of cooperation between the two countries in different fields. He said, Pakistan and China have signed 25 agreements in public and over 15 in private sector during this visit, to promote trade, economic and investment opportunities in Pakistan.

The Prime Minister said he exchanged views with Chinese leadership to further promote political, economic and diplomatic relations.

He said he has the honour to address the Communist Party School. He said he also visited Chengdu, where he inaugurated new Consulate General of Pakistan, which is the third consulate.

The Prime Minister said the visit would also follow up to Five Year Development Programme on Trade and Economic Cooperation and Free Trade Agreement signed on the occasion of President Hu Jintao's visit to Pakistan in November last. He said under FTA, the volume of trade would be increased to dollars 15 billion in next five years and service sector has also been included in the FTA.

ELECTIONS ON TIME; NO CABINET RESHUFFLE: 

Prime Minister Shaukat Aziz said the next general elections would he held on time after the completion of the tenure of the present assemblies.

He said that there will be no change in the cabinet and dispelled the reports about any reshuffling in the portfolios of the ministers.

He said Pakistan Muslim League and its allied parties would contest the election on a single platform.

Rejecting any deal with Pakistan Peoples Party, the Prime Minister said there is no deal with any party and PML has the deal with the masses on the basis of their welfare.

Answering a question about provincial autonomy, the Prime Minister said the government is committed to give full provincial autonomy. He said a parliamentary committee headed by senator Wasim Sajjad is working on it and he will review its work next week.

NFC AWARD: 

Answering a question on NFC award, the Prime Minister said due to the interim award, the financial position of the provinces has been improved.

He especially referred to the financial position of Sindh province and added that Sindh government has Rs 20 to 25 billion as reserve and there is no feeling of inferiority among the provinces on the issue of their share from the federal government.

http://www.brecorder.com/index.php?id=554575&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*UAE firm to produce low-cost solar plants *

ISLAMABAD (April 23 2007): Asharq Al-Awsat- leading UAE-based Dhabian group of companies will set up a manufacturing unit to produce high quality but cheaper small solar and wind power plants in Gwadar industrial area. The Norwegian technology will be used to produce small solar and wind power plants which cost around $1000 each.

Each plant will generate electricity, sufficient to cater to the requirements of one village at a low cost, private TV channel reported.

http://www.brecorder.com/index.php?id=554674&currPageNo=1&query=&search=&term=&supDate=


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## Neo

April 23, 2007 
*Record wheat harvest, exports*  

This summer, farmers are reaping a record wheat harvest of 23 million tons plus which, when translated into hard cash at the rate of officially fixed procurement price of Rs425 for 40 kg or Rs10.62 per kg is expected to inject more than Rs230 billion in the rural economy.

It comes as a big opportunity for the government in an election year but is also likely to prove a challenge for the political leadership and bureaucrats to manage. How a challenge comes from a situation of plenty, was well articulated in the last annual report of State Bank of Pakistan (SBP). ``Domestic wheat prices may rise despite an anticipated bumper crop, if speculators seek to take advantage of the rising international prices, the central bank warned the government as far back as in December 2006 when farmers were looking hopefully at their fields after a tiring plantation job in the autumn.

The SBP then urged the government to ensure that, ``the benefit of higher prices should accrue to farmers and it also pointed out that, ``an excessive rise due to speculative activities can lead to a net welfare loss to the economy.â The SBPâs advice was meant to caution the government against the speculators by ensuring availability of sufficient buffer stocks with the government agencies. It forcefully urged the government to defer export of wheat, until size of crop in known and buffer stocks are in place.

While the government has raised its wheat crop estimate from earlier projection of 21.5-23 million tons, the commodity traders predict a much more optimistic export outlook and are convinced that in the final count, the crop would exceed even 24 million tons. Their optimism is based on the international media reports that the size of wheat crop in Australia and few other countries is not up to the expectations. Traders say their offices are being flooded with wheat demand from India, Bangladesh, Sri Lanka, Indonesia, Malaysia, UAE and many African countries.

Reports of a bumper wheat crop had already brought down prices in the open market to Rs1,050 and Rs1,100 for a 100 kg bag in late March which is a shade above the officially fixed procurement price of Rs 1,062. Procurement operations were delayed because of rains while farmers were getting restive. During last one week or so when Sindh government was going ahead with its procurement and traders are said to be buying wheat for export in the open market, the prices gradually crept up to Rs1,150 a bag. A week ago the wheat was being quoted at Rs1,120 for a 100 kg bag.

By April 19. officials in Sindh reported procurement of 212,000 tons. Punjab is about to begin its procurement from today. But media reports say that a ship carrying a small quantity of Pakistani wheat has already sailed off to India on April 16. ``A Pakistani trader has contracted 25,000 tons of wheat export to India, Bilal Sufi a senior leader of millers in Lahore informed this correspondent on telephone.

``The best time for wheat export was in October-November 2006 when world grain prices were $280 a ton (about Rs16,800 a ton) and we carried plenty of stocks from the previous crop, Bilal said adding that the demand for wheat is there but prices are not attractive.

Traders in Karachi confirmed that about 250,000-300,000 lakh tons of wheat has already been shipped or is in final stages of shipment to African countries (Somalia, Kenya etc.), Yemen, UAE, India and other countries and orders for additional 300,000 tons are being booked or are in advance stages of the negotiations. Pakistani wheat is considered to be the best for its nutritional value, grain taste and other qualities. Traders are getting $209-216 a ton on their export orders.

Exporters are said to have booked orders for `unprocessed wheat at $180-190 a ton. It means that wheat is being exported at Rs12,960-12,540 a ton as against local official price of Rs10,620. Traders meet all their incidental expenses including interest rates on bank loans, transportation and handling within this margin of Rs1,900- 2,300 on a ton and making some good money. The margin is the difference between the purchase price and export price.

Market watchers are apprehensive of these hectic activities of commodity traders in the domestic market. A local analyst said the global food companies are the deadliest sharks in international business making huge profits from distress imports and exports particularly in the developing countries like Pakistan where regulatory frameworks are virtually absent and legal and administrative structure is too weak to withstand the pressures of money.

These companies have a vast network of their business representatives in almost all the developing countries and enjoy good amount of influence on the political leadership and bureaucrats. ``They know how to play and make good profits when it is a situation of plenty or scarce, the analyst said.

Pakistan lacks an effective and accurate system for estimating a crop. In these days when even many developing countries employ satellite technology to predict weather changes and crop estimate, Pakistan depends on `patwaris of the area to assess any particular crop. Samples are designed on tehsil and district basis. But these samples designed for such monitoring and subsequent information gathering also remain mere a guess work.

There have been many instances in the past when initial estimate of plenty ended up in scarcity and scarcity into plenty. A glaring example was the Spring 1997 when Nawaz Sharif was elected with a big majority and one of the first his first decision was to increase official price of wheat in the face of the general expectations of a bumper crop.

Whether that was a bumper wheat crop or not remains an unanswered question till this day. However it proved to be one of the worst years in the history Pakistan when wheat flour prices went up to Rs24-25 a kg and there were demonstration on the streets of Peshawar and other Northern cities. Flour mills and wheat stocks were set on fire in many places by the angry mob.

The anti climax came when the then Punjab Food minister reported that he saw himself flour bags of Pakistan mills in stores of Moscow and many Central Asian cities during his visit that summer. Since the year 2002, the flour prices in retail have never been stable. With the arrival of Ramzan every year, the supply of wheat flour, sugar, pulses, cooking oil and vegetable ghee becomes scrce and prices of these commodities shoot up never to come down. .

Officials in Sindh government said that a high level meeting with Prime Minister Shaukat Aziz in chair recently took stock of the wheat situation. Sindh has been asked to procure 0.7 million tons but it should procure 0.3 million tons more to maintain a buffer stock of one million tons. The PASSCO has been given the job to purchase 1.3 million tons and Punjab government will procure 2.5-3 million tons.

However the lobby of rich farmers has been successful in persuading the government to ignore the SBPâs warning and go for immediate export so that wheat prices start moving up in the market. The government has initially fixed an export target of 0.8 million tons for private sector but there is no benchmark export price to prevent a cut-throat competition. As the indications are, the initial export target of 0.8 million tons would be met in a week or 10 days. Traders are coming with demand to unfreeze this cap of 0.8 million tons export.

http://www.dawn.com/2007/04/23/ebr3.htm


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## Neo

April 23, 2007 
*An uplift programme for Fata*

A nine-year ambitious uplift plan for the Federally Administered Tribal Area (Fata), estimated to cost $2.6billion, was unveiled at a donors conference held on April 12. Representatives of different agencies, UN bodies, humanitarian organisations and diplomats attended.

According to Arbab Muhammad Arif, Secretary Security (Fata), the idea behind the programme is the creation of a peaceful and equitable society in the tribal belt in order to curb militancy.

Fata wants the donors to share 50 per cent of the programme cost. An amount of $1.3 billion would be arranged by the federal government and will also come from the resources to be generated by Fata.

The programme will tackle problems in such areas as education, health, rural development, agriculture, livestock, housing, forest, irrigation and roads. Officials say plan will also be presented at the Pakistan Development Forum on April 27 at Islamabad.

Fataâs social and economic development has never been a priority for successive rulers in spite of these areas on Afghanistan border being of special interest to international and regional players.

However 9/11 has forced the government as well as donor agencies to earmark more resources for the social uplift of the tribal area. Since 2000-01, the Fata ADP has jumped from Rs1.2 billion to Rs10 billion in current fiscal year.

Fata covers a total area of 27,220 sq km with a population of 3.1 million living in seven agencies and six Frontier Regions. The government says it intends to bring the tribal area at par with rest of the country. However, so far no significant achievement has been witnessed towards this end. The Fata literacy ratio is hardly 17 per cent (against the nationâs 45 per cent) which include 29.51 per cent for males and just three per cent for females.

Indicators on health sector too depict a dismal picture, where for 2179 persons only one bed and for 6762 persons only one doctor is available. However, the security situation does not offer ideal environment for unhindered development. In most of the tribal agencies, skirmishes between militants and security forces and inter-tribal feuds are a routine affair. But the conflict may not go away easily if the tribal areas remain under-developed.

Apart from law and order, there has been an absence of coherent overall development plan âsomething that restricts the benefits of public investment to specific areas. The project selection criteria is at the core of the faulty development agenda.

Most of the projects whether part of Annual Development Programme (ADP) or any special initiative are not on the need basis and priorities of the communities.

Governance in tribal areas is altogether different from the settled parts of the country where Political Agents with the help of some Maliks (tribal elders) ensure government writ. These Maliks help the administration in maintaining its authority, while, in turn, the Political Agents award them with development projects. In addition to routine stipends, the Maliks are also awarded development projects and offer employments in these projects.

Most of such development projects ,soon after their completion, become useless because of absence of a proper monitoring mechanism. In most of the cases, buildings are abandoned or converted into Hujra[community centre] of the Maliks. Officials appointed in such projects do not attend to their duties but draw salaries regularly.

Lack of maintenance and repair of the public infrastructure is another issue that impacts on the development process in the tribal areas.

Sufficient funds are not allocated for routine maintenance and repair, which ultimately destroys the infrastructure of roads, irrigation and buildings in the tribal areas. Fata officials associated with development planning complain that during last 60 years, countless buildings have been built for housing schools, hospitals or vocational centres but these do not serve any public good.

Apart from new projects, the renewal of the existing infrastructure facilities should not be neglected. Lack of capacity of the implementing agencies is also a major constraint in Fataâs development.

At the Agency level, the government has set up planning and finance departments, but they do not function properly because of the absence of an effective financial management system.

Lack of coordination between various departments and the donor agencies also cause duplication of work and leads to financial wastage and administrative failures.

Similarly, the community participation approach needs to be introduced in Fata. In recent past, the government tried to undermine the role of Maliks in project selection and making the process more participative by involving the Agency Counsellors, majority of whom are selected by the Political Administration.

At the policy formulation level, the Counsellors are authorised to select and recommend the execution of development plans, but in reality no heed is paid to their recommendations.

The planners believe that without putting in place an institutionalised mechanism for project selection, designing and implementation, sustainable development in FATA would not be possible.

http://www.dawn.com/2007/04/23/ebr7.htm


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## Neo

April 23, 2007 
*Power mess and energy conservation*

By Dr Javaid Laghari

AS summer approaches and temperature sizzles, the people will find no respite and continue to endure longer hours of power failure due to failed policies of the present government over the last eight years.

Despite countless warnings, news reports and comments, the government, Wapda and the Kesc have failed to take notice and adopt measures to provide relief to the public at large.

With the power structure in a shambles, there has been no improvement in the networks, and no maintenance has been carried out during the last six months. There has also been no addition of power to the national grid. The result is that even in the winter months, the demand-supply gap has widened to 1300 MW, creating 11 per cent power shortage, and resulting in three to four hours of loadshedding in large cities, and upto six hours in the rural areas.

The situation is expected to worsen in the coming days with the rise in temperature. As the power demand increases, the demand-supply gap will widen to 3000 MW during the peak summer months, resulting in longer hours of unscheduled load-shedding and power failures, hitting hardest during the peak hours of evening.

The privatisation of Kesc was yet another fiasco like the Steel Mill, and a failed policy of the government. Despite tall claims of the government that Kesc would invest over $500 million during the next three years, including $75 million in 2005 â 2006 alone, none materialised.

The Kesc was handed over to a group which did not have any experience of running a large power utility. And Karachi is not only large, but the economic hub of Pakistan. Continued power failures will further cripple the national economy.. Industries are already agitating the high electricity tariffs. It will result in rising inflation, already above nine per cent. The agro-based industries will be hit harder by longer hours of power failure and load shedding.

Despite numerous solutions presented to the government through the press and seminars, the government has lent a deaf ear and has continued with expensive solutions, including setting up of rental power plants in the Punjab at much higher tariffs than conventional rates. The government continues to pursue expensive options as they lead to higher kickbacks. There are a number of low cost efficient solutions available, including converting the old fashioned conventional steam power plants to combined cycles. Yet another solution could have been to opt for co-generation in new power plants. Unfortunately, it is the people of Pakistan who will pay these high tariffs.

Wapda has already drained the government of Rs84 billion in the form of subsidies, deferred debts and equity injections. The oil shipment bill for 2007 is expected to exceed $8 billion (at the current oil prices). With the trade deficit exceeding $12 billion, and with the changing geopolitical scenario, there could be further increase in oil prices, and the economy could suffer further by the end of the year. Solutions are urgently needed to overcome power shortage.

The only option available to save the public at large, from the looming crisis, is conservation. Conservation will also contribute to climate control and lessen the stress on global warming. Each one of us must play a role in this direction.

Take the typical case of Karachi. Since privatisation, the breakdowns have become frequent from 4,000 to 6,000, some times exceeding 30 per day. Also at times, we have experienced power shortages of over 400MW last summer during peak hours as a result of breakdowns, load shedding and non-supply of electricity by Wapda. This is expected to worsen this year and may exceed 600 MW.

Consumers need to take remedial measures in their own hands by conserving power. This will reduce power failure and load-shedding. If the usage of individual air- conditioners in Karachi is reduced by one-third, about 200 MW alone would be saved. If all customers switch off only one 100W light bulb, 100 MW would be saved.

If all TV sets were not on standby, 20 MW would be saved. If the evening shops and commercial plazas were asked to cut down their lights to half as much as what they use, another 10 MW would be saved. By turning lights, fans and air-conditioners off while leaving a room or not in use, and such other conservation measures, will save yet another 30 â 40 MW.

One can easily conserve over 350 MW in Karachi alone by adopting these measures. Applied on a national scale, it may conserve up to 3000 MW nationwide. This can only be the first step so that this summer can pass comfortably for all of us. Beyond this we expect the government, Wapda and Kesc to have put in sound and inexpensive policies, and implement them successfully to fulfil the shortage of 3000 MW this year alone, and plan for an eight per cent growth every year beyond this.

Senator Dr Javaid R. Laghari is a member, Senate Standing Committee on Water & Power.

http://www.dawn.com/2007/04/23/ebr12.htm


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## Neo

April 23, 2007 
*A multi-dimensional approach to tackle inflation*

The State Bank of Pakistanâs has made it quite clear that the tight monetary policy has helped in bringing down the non-food/non-oil inflation in recent months but it would be difficult to achieve the overall inflation target of 6.5 per cent set for 2006-07, because of the higher food inflation. The SBP estimate that the inflation rate to range between 6.7-7.5 per cent this year.

The main factor behind the current stubborn inflationary trend is the food inflation which has been running into double digits. However now the prices of some food items such as sugar, potato, onion, wheat flour and certain varieties of pulses have, registered some decline due to improvement in their supply position. But prices of some other items namely rice and vegetable ghee have risen sharply in recent weeks, thus maintaining the pressure on family budget. The government hopes that food prices may decelerate in the coming months due to increase in agricultural production including a bumper wheat crop of 23 million tons and a 76 per cent increase in grams production. That has yet to be seen.

Recent increases in food prices were attributed to a host of factors such as decline in the production of certain items, misleading estimates about agricultural production, delay in import of items in short supply, smuggling, speculative hoarding and profiteering, upward revision of procurement prices of agricultural crops, increase in import value of certain raw materials and finished products, increase in demand due to increase in population as well as increase in incomes and impact of taxes and duties levied on food products. It can not be denied that unfair trade practices namely speculative hoarding and profiteering figured prominently in the list of factors pushing up the prices.

The producers, wholesale and retail markets, dealing in food items act like a cartel or oligopoly. They fix their prices at a level which would give them maximum profits. Besides charging higher prices, wholesalers and retailers also create an artificial shortage in order to earn as much as possible on their investment.

First of all, an effort has to be made to achieve self-sufficiency not only in wheat, rice and sugar but also in pulses and all sorts of vegetables such as potato, onion, garlic and ginger etc. Pakistan has a population of more than 160 million people, which continues to increase and the demand for all food items is growing accordingly.

In such a scenario, to meet the local demand through imports of items such as pulses, on a regular basis, is not advisable. Pakistan is predominantly an agricultural country and we can easily increase production of pulses and vegetables manifold if sincere efforts are made in that direction. Only a breakthrough in local production can ensure abundant supplies of these items and their availability to consumers at reasonable prices.

It would be equally important to improve the distribution system and make it consumer-friendly, by injecting competition into wholesale/retail markets. Competition not only helps in bringing down prices but also results in improvement in quality. In the telecom sector, for instance, competition has helped in bringing down the international call charges to as low as Rs2 per minute and the caller can now make an international call directly without involving the telephone exchange. Similarly, prices of many other items such as motorcycles, footwear and certain medicines have registered marked decline due to imports from China.

How can we inject competition into the wholesale and retail markets, in particular food markets? The government has already been trying to do this through procurement of wheat etc. The government is planning to procure five million tons of wheat, while it has directed PASSCO to buy 200,000 tons of grams during the grams season. This will help the government to guard against gram hoarding. The government may also ask PASSCO and the Utilty Stores Corporation (USC) to procure masoor during the season. According to an estimate, the production of masoor has gone up by about 50 per cent.

The provincial governments, PASSCO and the USC should, in the meantime, take appropriate measures to improve storage facilities, on scientific basis, at their disposal so that wheat, grams etc. stored therein do not get damaged.

All possible efforts may be made to increase the number of utility stores as quickly as possible. The objective can be achieved by encouraging borrowers under the Presidentâs Rozgar scheme to open franchise utility stores throughout the country. To facilitate this, the government/NBP may consider simplifying the procedure.

In addition, the use of a tight monetary policy by the SBP may continue, for the time being, in order to check on the demand-pull inflation. At the same time, the fiscal policy needs to be pro-poor and consumer-friendly. As the revenue collection grows, the government may consider withdrawing/reducing taxes and duties levied on consumer goods of daily use to provide relief to the common man.

Also, there is a need to make consumer protection laws more effective. Simultaneously, the authorities entrusted with the task of consumer protection should also be fully equipped and empowered to deal with monopolies and cartels and protect the consumers against all unfair trade practices. The anti-competitive law should be promulgated and enforced as soon as possible.

Any counter-inflationary strategy would be incomplete if it does not include consumerâs resistance. Economists have called it, âthe most powerful weapon to combat inflationâ. Consumerâs resistance can be particularly effective in averting undue increase in the prices of perishable commodities. By giving up the use of an item for a short time or cutting its demand, consumers can force dealers to charge reasonable prices.

Consumerâs societies/groups can also decide to purchase in bulk from wholesale markets if the retail prices in their areas are not fair. The government should, therefore, make an effort to develop consumerâs resistance.

Since inflation can cause considerable harm to the economy by reducing savings and exports and eroding the purchasing power of a large segment of population belonging to the fixed income groups and lower income categories, it needs to be dealt with on a top-priority basis.

http://www.dawn.com/2007/04/23/ebr13.htm


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## Neo

April 23, 2007 
*Plan to revive old power projects*

THE government has directed Wapda officials to overcome the existing 1247MW power shortfall by rehabilitating old power projects on "fast track basis". They have also been asked to line up considerable funding from local banks as it might take time to seek any financial support from the World Bank, the Asian Development Bank or any other agency for the rehabilitation of these projects.

At the same time an "action plan" has been envisaged for the removal of power shortages which need expansion in the supply of hydropower by undertaking short- and medium-term development projects. The plan is expected to be considered in the next cabinet meeting likely to be held after the arrival of Prime Minister Shaukat Aziz from China next week.

A senior government official told Dawn that the action plan also sought to reinvigorate the engineering and industrial sectors, besides offering suggestions how to overcome the growing power crisis. He said availability of alternative sources of energy like nuclear, wind and solar were also critical for providing sustainable power to remote areas. The cost of power generation was very high and with the rising price of furnace oil, it might not be possible to supply power at a lower cost. As coal was an important input in the process, its beneficiary should reduce the cost, he added.

Nuclear power, he said, was another source in power supply which was expensive in installation, but the generation cost was low and declining gradually. Currently expansion in this area required technologies in all segments of nuclear fuel cycle such as mining/processing of uranium, its conversion into fuel bundles, production of heavy water and design and manufacturing of reactors, he added.

At present total installed capacity of the system is 17,400MW. The maximum available capacity recorded ending June 2005-2006 was 13,847MW. Thus there was a deficit of 1247MW which is being met by load shedding and load management.

Another concerned official said that a capacity in power generation was urgently required, besides construction/up-gradation of transmission system in order to overcome the shortfall.

The future loads of all types of categories were calculated on the basis of present pattern of power consumption, taking into consideration industrial and agricultural development programmes, future GDP growth and other economic factors. As a first step, he said, Wapda had been asked to rehabilitate the Jabban Hydroelectric Power Station in the NWFP on fast track basis. The Jabban station had become redundant due to a fire on December 11, 2006. It will cost little over Rs1 billion.

This power station is considered highly beneficial due to less project cost as the existing civil works are being reused. Moreover, the capacity of the plant is being increased from 19.6MW to 22MW, having an annul energy output of 122GWh due to the new electro-mechanical equipment of better efficiency.

The calculated financial benefits over the project life of 30 years depict an internal Financial Rate of Return (IFRR) at 21.53 per cent which makes the project viable. The generation cost worked at Rs0.72/KWh (1.201 US cents) over the useful life of the project and cost per KW installed capacity being Rs47,275 ($788) are also very attractive to reflect the financial benefits of the project. It will help reduce load shedding and will generate revenue of Rs.269.121 million annually.

Construction of the project would likely take 36 months, including designing, preparation of tender documents, awarding of contract, construction and testing and commissioning of the plant.

All the four turbines inlet valves, governors, generators, control panels, instrumentation and control, and all other related accessories will have to be replaced. Emergency values will be replaced by spool pieces of equal dimensions.

The Jabban Hydroelectric Power Station is located in District Malakand, NWFP at a distance of 45 km from the city of Mardan and 7 km upstream of 20MW Dargai Hydroelectric Power Station. The Jabban Station since its commissioning in 1937 and addition of two units in 1952 has been playing a vital role in providing low cost energy to the national grid. The plant has already outlived its useful life and needs rehabilitation.

The 70-year-old power station was badly damaged in a fire incident. The extent of damages is such that it is not possible to restore operation of the existing units. The situation has necessitated carrying out its rehabilitation on fast track basis by installation of new machines of higher efficiency at the same site. After its rehabilitation, it would be in a position to supply consistent power to the National Gird for at least for another 50 years.

WAPDA officials have also started construction of another hydropower station called as Malakand-3 on the Upper Swat Canal which will be fed from auxiliary tunnel. The water of the upper Swat canal will be shared between the Jabban/Dargai hydroelectric stations and the incoming Malakand-3 hydropower station, according to the water share agreement between Wapda and the NWFP government.

During lean water months, water supply to the Jabban station will reduce considerably due to the allocated share of Malakand-3, resulting in reduced generation of both the Jabban and Dargai.

The NWFP government has agreed to compensate Wapda for the loss of generation of the Dargai and Jabban power stations after operation of Malakand-3 hydropower station project and 59 MKWh energy will be supplied free of cost to Wapda every year as compensation out of which 29 MKWh will be for Jabban.

http://www.dawn.com/2007/04/23/ebr15.htm


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## Neo

*Pakistan's Warid Telecom Gets $240 Million Via IFC, Syndicated Loans *

ISLAMABAD -(Dow Jones)- The International Finance Corporation, the World Bank's private sector investment arm, will extend a $100 million loan and arrange a syndicated loan of $140 million for Pakistan's Warid Telecom.

According to an IFC document seen by Dow Jones Newswires on Saturday, Warid Telecom is seeking the loans to finance the construction, expansion and operation of a nationwide mobile telecommunications network employing GSM technology.

The project, which began in June 2006, is estimated to cost $1.4 billion. The targeted completion date is June 2009.

The document said Warid Telecom would provide the rest of the funding through equity contributions, local finance and an export credit agency's guaranteed international loan facility.

Warid Telecom signed the $500 million export credit facility in November 2006 to pay for the services of Sweden's Telefon AB LM Ericsson in building and operating the nationwide network. Exportkreditn&#228;mnden of Sweden was a major contributor to the facility.

Lahore-based Warid Telecom, part of the Abu Dhabi group, has a 16% share of Pakistan's 52 million mobile phone subscribers. 

http://www.nasdaq.com/aspxcontent/N...CQDJON200704230237DOWJONESDJONLINE000049.htm&


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## Introvert

*Japanese overseas Pakistani to invest $ 20 billion​*LAHORE (updated on: April 24, 2007, 22:24 PST): Japanese Overseas Pakistani will make an investment of $ 20 billion in the country and the government will provide all the facilities to these investors in launching their projects.

Punjab Minister for Trade and Investment, Dr. Zafar Suhail Cheema expressed these views while talking to a delegation of overseas Pakistani here Tuesday.

He said that the industrial sector has witnessed a remarkable progress due to the investors friendly policies of the government and added the big multi national companies of the world are making investment in the country.

He told the delegation that in next three years foreign investors will make an investment of $ 25 billion in the Punjab ,particularly in Lahore. Due to this, not only the economy of the province will improve but also thousands of people get job, he added.

He said that inauguration of the first store of German company Metro Cash and Carry will be held in next two months,whereas Makro,a Holland based company has already established its store here.

He said that the government is also paying attention on the uplifting of infrastructure besides provision of other facilities to the foreign investors
www.brecorder.com


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## Introvert

*Pakistan-Iran Bilateral Trade to achieve Target of US$ 1 Billion​*
ISLAMABAD: Chairman Pakistan Iran Business Council Tariq Sayeed has expressed optimism that Pakistan and Iran will achieve the target of bilateral trade of one billion dollar by end of this year. He was speaking at a meeting with Ahmad Fasihi, Commercial Attache of Iran in Karachi.

Tariq Sayeed said that the present volume of bilateral trade of 638 million $ between Pakistan and Iran should be further enhanced between the two countries.

To achieve the set target of bilateral trade, Tariq Sayeed suggested that Pakistan and Iran should encourage border trade by establishing customs ports at borders.

He further suggested that Pakistan and Iran should also establish banks in each other countries to facilitate operating of LCs.

Tariq Sayeed said that Pakistan Single Country Exhibition in Iran is overdue and added that with the help of Commercial Attacheâ FPCCI will organize Pakistan Single Country in Tehran in the last quarter of 2007.

Sayeed appreciated the role of the Commercial Section and Commercial Attached of Iran Consulate particularly in terms of facilitating the business community of pakistan having 350 meeting with them during 5 months.

He said that the opening of Commercial Attache office in Karachi was a positive steps in promotion of bilateral trade and Pakistan should also open a separate Commercial Attache Office Tehran which is an international policy being adopted by all Embassies and High Commissions.

While making the suggestions for the promotion of bilateral trade Tariq Sayeed emphasized on the need of exchange of information between the business community of the two countries.

He said that Pakistan and Iran should make a joint study on their bilateral trade relations and their share in global trade. He suggested that both the countries should identify the potential items of import and exportable between the two countries and give it wide publicity.

He further suggested that both the countries should also identify potential ares of joint ventures particularly in ares where they can complement each other.

He said that according to the agreement between the two countries Iran has reduced import duty on 339 items while Pakistan has reciprocated the same on 309 items.

Ahmad Fasihi Commercial Attache welcomed the proposals made by the Chairman Pakistan Iran Business Council.

He said that the Pakistan Single Country Exhibition in Iran will go a long way in promotion of bilateral trade and economic relations.
http://www.pakistantimes.net/2007/04/25/business1.htm


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## Neo

*Foreign investment reaches $5.56 billion in nine months *

KARACHI (April 24 2007): For the first time in Pakistan's history, Foreign Investment (FI) has crossed five billion dollar to $5.56 billion during the first nine moths of the current fiscal year, statistics revealed on Monday. According to the central bank statistics, during the first nine months (July-March) of the current financial year.

The total FI has increased by 67 percent to $5.5609 billion against $3.3201 billion during the same period of the last fiscal, denoting an increase of $2.2408 billion.

Total FI compiled on $1.7018 billion portfolio investment (including $675 million of OGDC GDRs) and $3.8591 billion foreign direct investment (FDI) including 133.2 million privatisation proceeds. Government has set target of $6 billion foreign investment for the current fiscal year 2007 and after $5.5 billion investment during nine months, now it is expected that current fiscal target would be achieved next month.

"Foreign investment, that is coming to Pakistan is not quality investment and it would not benefit the economy," said Dr Shahid Hassan Siddique an expert on political economics. He said that foreign investment is mostly coming in telecom and banking sector and rates of profit offered by Pakistan are the highest in the banking sector, while the return is also 34 percent annually on equity.

He said that another cause is that although investors is investing one time and income in these sectors would be in Pak rupee, but the rate of profit will be high, which will be remitted in foreign currency year after year. As a result, there will be serious pressure on current account deficit and foreign exchange reserve, he cautioned.

Statistics show that portfolio investment (PI) has crossed one billion marks and now it has reached $1.7018 billion during July-March of fiscal year 2007 as compared to $1.0774 billion during the same period of last fiscal.

Communication sector has attracted $1.053 billion foreign investment, while financial business with $265 million, power sector with $304 million, oil and gas sector with $217 million are leading sectors in foreign investment.

Exclusive of privatisation proceeds FDI shows an increase of 72 percent to $3.8591 billion during July-March of current fiscal as previously stood at $2.2427 billion during corresponding period last fiscal, depicting an increase of $1.6164 billion.

During March 2007, net foreign investment has recorded $934 million including $888.3 million FDI and $45.7 million portfolio investment. Dr Shahid Hasan said that this is fact that such investments neither enhance export nor reduce imports, these investments can not be termed as quality investment and are worrisome investment.

He said that due to deteriorating law and order situation, political concentration, on going protest on the streets, unannounced loadshedding, poor infrastructure and corruption at high levels are the chief hurdles in foreign investment. The negative attitude of bureaucracy and high cost of doing business in Pakistan are some other factors that discourage quality investment in Pakistan, he added.

http://www.brecorder.com/index.php?id=555213&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Pakistan now Rs 90 billion pharmaceutical market *

KARACHI (April 25 2007): The country has become Rs 90 billion pharmaceutical market and about 85 percent of the business is concentrated amongst 50 companies. Haseeb Ahmed Khan, former chairman Pakistan Pharmaceutical Manufacturers Association (PPMA), stated this while inaugurating a three-day Pak Pharma Expo, jointly organised by PPMA and Prime Corporation, here on Tuesday.

Haseeb said that among 50 pharmaceutical companies about half of them were multi-national and the remaining 25 are local. He said that Karachi has become the hub of pharmaceutical business as 40 largest firms were operating from the metropolis and has grip on over 78.5 percent business.

Former vice chairman PPMA Zahid Saeed said that export of pharmaceutical products had shown significant growth and currently it surged at 25 to 30 percent.

Later, the participants visited the stalls where companies from China, India, Germany, Korea and other countries have set up their stalls.

http://www.brecorder.com/index.php?id=555630&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Chinese seeks investment in plastic and pharmacy sectors *

LAHORE (April 25 2007): The Chinese investors have shown interest in initiating joint ventures with Pakistani businessmen in plastic and pharmaceutical sectors. Vice-President Lahore Chamber of Commerce and Industry (LCCI) and head of 12-member LCCI delegation, Mubasher Sheikh revealed this on his return from a seven-day tour to China and Thailand.

He said that the Chinese investors were ready to make investment in Pakistan because of its business-friendly policies. He hoped that in the result of his delegation's visit to China and Thailand, the level of foreign investment from these countries would touch new peaks. The delegation, besides holding one-to-one meetings with their counterparts in both the countries, also visited various government departments in China and Thailand.

The main objective of the visit was to attract foreign investment and seeking joint ventures with businessmen in China and Thailand besides highlighting the soft image of the country.

http://www.brecorder.com/index.php?id=555680&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*NWFP reactivates two emerald mines in Swat *

PESHAWAR (April 25 2007): The Directorate of Mine and Minerals NWFP has reactivated mining in two emerald mines in the province after 10 years. The two emerald areas at Gujjar Killi and Shamozai in district Swat were auctioned in February 2007 for Rs 44million and Rs 95 million respectively. The third most prominent area for emerald at Fiza Gat, Mingora is being auctioned shortly.

Talking to Business Recorder, Director General (DG) Mines and Minerals NWFP Engineer Mian Farooq Iqbal said that during the last fours years the exploration promotion division (EPD) of the DGMM has completed the first pass exploration coverage of northern part of NWFP over an area of 40,000 square kilometer for gold and base metals anomalies. The project, he said, have identified 34 targets areas for follow-up exploration to attract investment.

Exploration of Swat emerald belt by identifying additional emerald prospects along the belt in the vicinity of known deposits and exploration of gemstones in Chitral and project has made new discoveries of gemstones (aquamarine and tourmaline) in Garam Chashma, Kalash and Darosh localities.

The project also includes evaluation of marble and granite potential in the NWFP and has estimated the marble resources to the tune of 3 billion tones in addition to their dimensional stone resources ie granite etc of abundant occurrence.

The directorate has also established Gem Testing Section in MTL to facilitate the exploration, mining and trading of gemstone in the province, strengthening of mineral processing section in MTL to facilitate the studies on processing of metallic minerals.

Similarly, it has also established resource mapping section and information services and promotion by acquiring the latest techniques of GIS and RS techniques. This will strengthen the EPD for systematic exploration and assessment of mineral resources in the province with a view to facilitate the regulation of mineral development and private investment (local, international and multinational.

The provincial government, he said, has also notified the NWFP Mining Concession Rules 2005 entrusting the Directorate General of Mines and Minerals with responsibilities of granting mining concessions for Minor Minerals. A separate wing has been established to deal the affairs of Minor Minerals to facilitate the process of expedient grant of minor mineral cases.

The wing is imparting commendable results besides being severely deficient with support staff. "The directorate has effectively achieved the fiscal targets and the wing is poised to given better results provided, it is strengthened accordingly," the DG MM added.

The Safety Division of DGMM has initiated a scheme in the year 2004-05 for establishment of a Mines Rescue, Safety & Training Station in Jalozai, District Nowshera at a cost of Rs 34.2725 million to fulfil the requirements of the availability of skilled and trained mining crew.

The scheme, he said, would serve effectively in providing training facilities on modern and safe mining methods, mine ventilation, mine support, short firing, rescue operations and first aid to supervisors/miners for safe mining in the underground mines.

The facility, he added would impart training to 200 miners annually. The Directorate of the Mines and Minerals, he said on the directives of the provincial government while considering the peculiar strategic location, traditional environment and immense mineral potential framed new rules in line with the NMP-1995 through notifying the NWFP Mining Concession Rules-2005.

http://www.brecorder.com/index.php?id=555652&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Inefficient water use may cause Rs70bn loss *

ISLAMABAD: The inefficient use of water is estimated to cause a loss of Rs70 billion to the national kitty, which is 1.5 per cent of the GDP and 6.8 per cent of the agricultural GDP.

âCurrent pattern of water use is resulting not only in significant environmental degradation, but also causes a loss of soil fertility, which is mainly due to soil salinity and erosion,â says a World Bank report released here the other day.

The inefficiencies in water allocation had reduced the crop productivity both at the head-end due to over-use of water and water-logging and tail-end due to water shortages, the report added. 

The report suggested that shifting of 60 per cent sugarcane-cultivated area to a wheat-maize rotation or shifting of one quarter of rice land to maize would save enough water to meet the current needs of Karachi city.

âWater-use efficiency can be improved by making investments to improve water delivery, better water management and efficient use of water at farm level,â it said, adding âthis can be achieved by drainage, control structure, conveyance mechanism and adaptation of water-saving technology.â

It also suggested that water-use efficiency could be improved by reviewing charges for canal water (abiana) and developing markets for tradable water rights. This could be implemented by passing laws and strengthening local markets.

http://www.thenews.com.pk/daily_detail.asp?id=52760


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## Neo

*Pak engineering potential surprises Germans *

HANOVER, Germany: The German entrepreneurs of small and medium enterprises in the engineering sector who participated in the biggest industrial exhibition of Europe have discovered Pakistanâs potential here at Hanover, saying they have come to know for the first time that the country is making sizeable engineering products. 

âEarlier I was not aware of the fact that Pakistanâs SMEs are manufacturing very important engineering products because of no coordination among the concerned entrepreneurs, but when I came here and observed the countryâs engineering products displayed at various stalls, then got elated at discovering Pakistan in the exhibition,â Rumi Moiz, Managing Director, Research and Development Engineering Company, told The News. 

The Ministry of Industries and Engineering Development Board had taken the initiative of participating in the Hanover exhibition in 2005 to get Pakistan a substantial share in global industrial sector. Under this initiative Pakistan participated in the Hanover Messe 2007. Many of the companies which are persistently participating in the exhibition have managed to get orders from serious buyers which have helped increase businesses of the said companies by 20 to 30 per cent. 

Faish H Agha, Director of Transmission Engineering Industries Ltd was the only Pakistani entrepreneur who successfully managed to allure the attention of most of the international participants and visitors as he displayed at his stall a Bay Delivery Van Ã± 100 per cent indigenously manufactured in Pakistan. 

He made this very unique product for delivery of goods within the city at the cost of 2,040 Euro. Many people showed keen interest in the product. He expressed his optimisim saying that he will be able to get a substantial order of his product. 

He said at present he is in trade with USA on gearing industry. Agha said he got tremendous exposure in the exhibition and this practice should continue as this is the only way to increase the exports of Pakistani industrial products. He said it is the high time for policy makers to make coherent policies for paying more heeds to the development of Industrial sector. 

Furrukh Jamal, Group Director of Aftab Companies and MD of SimCon, said his company is IT based and operational at Karachi that provides solutions to SMEs from concept to manufacturing stage. âIn addition, our company has expertise in making dies and molds.â 

Jamal said this is his second participation in the Hanover industrial exhibition and a German team has shown keen interest for training from SimCon on engineering solution products. He said: âHowever, we have not managed to strike a deal with regard to exporting our products, but we have received tremendous response over the products that we have displayed and made new and precious contacts with international buyers.â 

âWe have got exposure owing to which we have decided to introduce in house changes to improve the efficiency of the company at part with international standards,â he added. 

Abbas Mooraj, Chairman of Nazer and Co, known for making machinery for textile, jute, synthetic and knitted fabrics industry, told The News he got international exposure and have obtained opportunity to mingle with people concerned with the focused approach. 

He said Pakistan's engineering development is based on the focus by the government which is not being paid as all the focus exists on textile products 

http://www.thenews.com.pk/daily_detail.asp?id=52765


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## Neo

April 25, 2007 
*Financing for 225-mw power plant*

KARACHI, April 24: The Halmore Power Generation Company has mandated the HSBC Bank Plc, Czech Export Bank and Askari Commercial Bank Limited to arrange a comprehensive debt financing package for a power plant.

The proposed 225-mw combined cycle power plant to be set up near the town of Bhikki, Sheikhupura.

The Halmore Power is owned by a London-based Pakistani businessman and real estate developer Dr Mian M. Sharif.

Enerpro (Private) Limited, a specialised Consulting Company for Energy Projects had been engaged for developing the project. HPGCL has recently signed an engineering, procurement and construction contract for the project with Kodaexport Company Ltd of the Czech Republic, says a press release of HSBC Holdings.

The major portion of the $150 million project debt was expected to be supported by the Export Guarantee and Insurance Corporation, the official export credit agency of the Czech Republic. The remaining debt requirement will be provided by a syndicated term loan facility denominated in local currency.

This project will be the first under the 2002 power policy to be financed with ECA supported foreign debt and the successful conclusion of the financing will define the level of future interest in the sector from the international project finance community.

http://www.dawn.com/2007/04/25/ebr9.htm


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## Neo

April 24, 2007 
*Non-textile products export declining*

ISLAMABAD, April 23: The export of non-textile products dipped by 2.32 per cent to $4.407 billion during the first nine months (July-March) of the current fiscal as against $4.512bn the same period last year.

The government policies are focused at promoting export of textile products have resulted into substantial reduction in export potential of the traditional products like carpets, leather, sports, surgical and other primary commodities.

However, the growth in export of non-textile products was more than 17 per cent during the same period last year. This showed that lack of any subsidy or any other financial assistance had rendered the traditional products less competitive with those coming from China, India etc., in international market.

Products wise analysis showed that the export of rice declined by 3.31 per cent to $818.157 million as against $846.164 million in the corresponding period last year. However, the export of basmati rise rose by 20.04 per cent.

The export of sport goods recorded a fall of 16.41pc to $193.901 million during July-March as against $231.956m the same period last year. Of these, export of footballs declined by 23.26pc while gloves rose by 182.96pc during the period.

The export of footwear products dipped 21.18 per cent to $83.373 million as against $105.783 million the same period last year. Of these, the export of leather footwear decreased by 19.50pc followed by 39.87pc in canvas footwear and 27.17pc in other footwears.

The export of leather products plunged 33.64pc to $369.296 million as against $556.474m last year. Of these, exports of leather garments fell 32.61 per cent, leather gloves 31.85pc and other leather products 45.26pc.

Exports of surgical goods and medicinal instruments declined 27.32 per cent to $86.595 million during the nine months of this fiscal as against $119.153 million over the corresponding period last year. The export of carpets, rugs and mat reached to $168.067 million, down 13.01pc from $193.210m the same period last year.

The commodities which recorded a negative growth in their export during the period under review included: furniture (9.73pc), molasses (14.39pc), handicrafts (63.46pc), fruits (8.55pc), sugar (100pc), etc.

There were few products which witnessed a marginal growth in their export including auto parts (18.50pc), engineering goods (6.14pc), meat (113.80pc), jewellery (82.89pc), gems (24.92pc), wheat (100pc), etc.

http://www.dawn.com/2007/04/24/ebr11.htm


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## Neo

*Govt to welcome Kuwaiti Midrock $2 billion investment in Lube Refinery, Naptha Cracker projects: Jadoon *
Wednesday April 25, 2007 

ISLAMABAD: President of Kuwait Midrock Tussanina Company Sheikh Humoud Al Sabah called on Federal Minister for Petroleum and Natural Resources Amanullah Khan Jadoon here on Tuesday and briefed about his company's $2 billion Petrochemical Complex at Port Qasim Karachi. 
During the meeting, President of Midrock informed the minister that the government of Sindh had allocated 500 acres of land at Port Qasim for the proposed Lube Oil Refinery, Naptha Cracker and petrochemical complex. He said Midrock was also looking to invest in Oil Refinery and LPG terminal projects at Gwadar. 

Welcoming the Kuwaiti Midrock delegation, the minister said that there existed a lot of potential for the investors in oil and gas projects and the government would facilitate them in this regard. 

He said that the government was exploiting the untapped hydrocarbon deposits and alternate energy resources to sustain the GDP growth rate of above 7 percent per annum of the country, which was paving way to uplift the socio-economic conditions of the masses. 

He said that President Musharraf's visit to Kuwait in December 2005 had opened up new avenues of multi faceted cooperation between the two brotherly Muslim countries. The minister said that the government would welcome the Midrock investment in the petroleum projects and assured his cooperation in this regard. 

Ambassador of Kuwait Faisal A Mulafi, Additional Secretary Petroleum Shaukat Hayat Durrani and members of Midrock delegation were also present during the meeting.

http://www.paktribune.com/news/index.shtml?176167


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## Neo

*Qatar Telecom makes first acquisition in Pakistan*
25 April 2007 


DUBAI - Qatar Telecommunications Co. (Qtel) said on Wednesday it agreed to buy a telecom operator in Pakistan, its first in the country, as it seeks to expand outside its home base where it is losing its monopoly.

State-controlled Qtel and Saudi Arabiaâs A.A.Turki Corp. for Trading and Contracting (Atco) agreed to buy 75 percent of Pakistanâs Burraq Telecom for $12.3 million, the companies said in a statement. The deal still needs regulatory approval.

Burraq Telecom offers international calling, wireless telephone and broadband Internet services, according to its Web site.

âThe price is very reasonable to access to the Pakistani market, which is a fast-growing market with huge potential,â said Marc Hammoud, a telecom analyst at Dubai-based investment bank Shuaa Capital. âThey can do a quick return on investment on this.â Pakistan is Asiaâs fourth-most populous country.

As competition has risen at home, Gulf Arab telecom operators have been hunting for foreign assets. Asia is a top priority, Hammoud said.

Emirates Telecommunications Corp. (Etisalat) bought a 26 percent stake in Pakistan Telecommunication Co. Ltd. for $2.6 billion in 2005, and this year started a telecom software unit in India.

Qtel is expanding outside Qatar as the Gulf Arab state prepares to sell a second mobile phone licence this year, ending the last Arab monopoly. Qatar will also sell a second fixed-line licence.

In Asia, Qtel bought a 25 percent stake in Asia Mobile Holdings Pte. Ltd., a unit of Singapore Technologies Telemedia, in January.

It also took control of Kuwaitâs National Mobile Telecommunications Co. (Wataniya) in March for $3.72 billion, the largest Gulf Arab telecom acquisition, giving customers in Kuwait, Saudi Arabia, Tunisia, Algeria, the Maldives and Iraq.

Qatar, home to 840,000 people and with a mobile penetration of more than 100 percent, invited expressions of interest in the countryâs second-mobile licence this week. 

http://www.khaleejtimes.com/Display...l/business_April632.xml&section=business&col=


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## Neo

*Pakistan shelves $3.5b plan to import natural gas from Qatar*
24 April 2007 

ISLAMABAD â Pakistan government has shelved, at least for the time being, $3.5 billion plan that envisages import of natural gas from Qatar through 1830-km pipeline due to "non-availability of required gas quantities".

"It is not on the forefront", said secretary petroleum Ahmed Waqar adding "we are concentrating on IPI (Iran-Pakistan-India pipeline project) at the moment", he told this correspondent. 

Sources in the petroleum ministry, however, said that the project sponsors Crescent Petroleum of Sharjah had informed the government of Pakistan that gas quantities required for the project were not available in Qatar in the next 8-10 years. They said Qatar had long term commitments for Liquefied Natural Gas (LNG) exports and could not spare enough volumes for a pipeline project.

Pakistan, these sources said, had asked Qatar to enhance gas availability for the project up to 2.6 billion cubic feet of gas per day (BCFD) but it was not ready to go beyond 1.6 BCFD. A gas sales and purchase agreement (GSPA) has been under consideration of Pakistan government for the last few years but it could not be signed for some reasons.

The gas import plan from Qatar to Pakistan through an offshore pipeline was originally floated by Sharjah based-Crescent in 1999 but talks failed in 1995 over gas tariff between the two nations and the project could not take off. The project re-emerged and in 2000 Crescent Petroleum signed a fresh heads of agreement for exclusive rights with Qatar government to export of gas to Pakistan.

It did not get top priority in Pakistan because of its relatively higher cost and technical complexities because of its deep sea route when compared with its competing import pipeline options from Iran and Turkmenistan.

Waqar said that Pakistan was still in the process of in-house consultations on the question of transit fee to be charged from India to let the gas pipeline pass through over 650-km territory in Pakistan.

Another official said a separate idea floated by Iran a few years ago of common user gas highway to dovetail Qatar's gas with Iranian for transportation to Pakistan and India had also been shelved even before serious discussions on the subject. 

Pakistan's current gas shortfalls that hover around 300-350 mmcfd (million cubic feet of gas per day) are likely go up to 778 MMCFD by 2009-10 and rising to more than 11,000 MMCFD by 2025 because of rising needs and slowing down supplies at home coupled with no discoveries expected to be on line in the short-run. 

Even with two gas pipeline projects and liquefied imports projected to materialise in the second half of the next decade, the country would still suffer more than 4,000 MMCFD of gas shortage between 2018 and 2025. New gas finds are not likely to be commercially productive before 2010-11. 

The country's gas demand this year stands at about 4,000 MMCFD and will increase to 4,492 MMCFD in 2008 and further to 5,086 MMCFD in 2010. Compared with this, total supplies at 3,666 MMCFD this year would rise to 4,184 MMCFD next year and 4,308 in 2010. This means that the shortfall would range between 300 and 350 MMCFD in the next two years and increase to 778 MMCFD in 2010.

http://www.khaleejtimes.com/Display...l/business_April583.xml&section=business&col=


----------



## Interceptor

Neo said:


> *UAE firm to produce low-cost solar plants *
> 
> ISLAMABAD (April 23 2007): Asharq Al-Awsat- leading UAE-based Dhabian group of companies will set up a manufacturing unit to produce high quality but cheaper small solar and wind power plants in Gwadar industrial area. The Norwegian technology will be used to produce small solar and wind power plants which cost around $1000 each.
> 
> Each plant will generate electricity, sufficient to cater to the requirements of one village at a low cost, private TV channel reported.
> 
> http://www.brecorder.com/index.php?id=554674&currPageNo=1&query=&search=&term=&supDate=



Thats a lie I have seen cheaper solar penals and wind turbines else where.


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## Interceptor

If they just spend 3.5Bn$ on education that would give great improvements in economy.


----------



## Owais

*Unemployment rate reduced to 6.2 percent: Shaukat *

ISLAMABAD (April 26 2007): In his inaugural address at Pakistan Development Forum (PDF) 2007, Prime Minister Shaukat Aziz has said efforts were underway to make Pakistan a modern Islamic state having sound economy with a leading role in the new global world.

He said Pakistan has undergone a positive transformation, comprehensive and far-reaching reforms, which contributed to make the economic story of Pakistan turn-around a reality. He added that the government transformed a sagging economy and put it on the radar screen of the world in the last seven years.

The Prime Minister said "Pakistan has become one of the faster growing economies of Asia, sustaining robust growth rate of 7 percent for the last four years and this year it looks like that we will be even higher. He added that during the last five years Pakistan's economy size grew by 100 percent, per capita income was increasing.

He said Pakistan rate of investment in 2005-06 was 20 percent - the highest ever in last 12 years. Foreign investment touched highest level of 3.9 billion dollar in our history. and will reach 6 billion dollar by the end of the fiscal year. He added that Goldman Sachs in a recent study have included Pakistan in the Next-11, a group of eleven countries with a high growth potential.

He said the government was following paradigm of shared and equitable growth and fruits of economic growth were reaching to all segments of society. He claimed that unemployment rate in Pakistan has reduced from 8.3 percent in 2001-02 to 6.2 percent in 2005-06 and about 5 million new jobs were added during 2003-06.

The Prime Minister said sustained economic growth has led to the emergence of a growing middle class and a significant reduction in poverty. The number of people below the poverty line has declined from 34.5 percent in 2001 to 23.9 percent in 2005 - in urban areas from 22.7 percent to 14.9 percent and in rural areas from 39.3 percent to 28.1 percent. In absolute terms, 13 million people have been lifted out of poverty, out of which 10.5 million belong to the rural areas.

The Prime minister maintained that rural landscape of Pakistan was changing fast as a result of rising income levels. It was evident from improvements in crop productivity - driven by government interventions to ensure balanced supply of fertiliser, efficient and equitable distribution of water, and increased credit availability - are augmenting agricultural incomes and benefiting all sections of the rural population.

Similarly, he said in the livestock sector, there has been a significant improvement in terms of number of animals and productivity. According to the Livestock Census 2006, which will be released soon, the number of cattle registered an annual increase of 4.5 percent. Major initiatives to boost meat and milk production are under way, which will open avenues of additional income for the rural population.

He said the government was committed to fostering a framework of grassroots institutions to bring more households in the organised fold through the process of social mobilisation.

He said Pakistan has become the fastest growing mobile phone market after China - with tele-density rising from 3 percent to over 35 percent. Similarly, motorbike sales are registering record levels in the rural areas. Rising incomes and new opportunities unleashed by economic growth are bringing a silent revolution in every nook and corner of the country.

Shaukat said "We have come a long way but still we have a long way to go. Significant progress has been achieved in all sectors of economy and governance, but new challenges are also emerging together with new opportunities. We believe in nimble and proactive governance and want to fully leverage our strengths and advantages."

He said strategic concept of National Trade Corridor - involving huge investment and public-private partnership - is being implemented. The project aims at upgrading and expanding our rail, road, air and port network as well as streamlining processes to save time and hassle.

This will reduce by half the travel time of commercial vehicles from Karachi to Peshawar as well as decrease operational cost and accidents rate. A number of mega projects are also in progress to ensure energy, water and food security.

He thanked the international donors for their valuable contribution in Pakistan's economic turnaround and hoped that they will keep on supporting it by financing the projects for even quicker progress to address the key issues like poverty and unemployment.
http://brecorder.com/index.php?id=555929&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Water releases raised to generate extra power *

ISLAMABAD (April 26 2007): The federal government has decided to equalise inflows and outflows from Terbela reservoir immediately to generate additional 250 MW electricity without consulting with the provincial governments.

"We have decided to increase outflows to 60,000 cusecs daily against current outflows of 55,000 cusecs to meet national energy crisis," an official told Business Recorder. The official said that outflows would be taken to 65,000 cusecs in Terbela but there would be no change in outflows from Mangla.

The decision was taken at a meeting chaired by the Minister for Water and Power Liaquat Ali Jatoi which discussed possibility to enhance power generation through release of additional water from Terbela and Mangla dams in view of the forced outages at a number of plants of Wapda at Guddu, Jamshoro and Tarbela. Chairman Indus River System Authority (Irsa) brought out the total availability of water at 5.12 MAF, which is six times more than the previous year.

The inflows at Terbela and Mangla are very good and level is about 17 feet and 13 feet at both reservoirs, respectively above the maximum estimated level, he informed. The chairman and members of Irsa have agreed in view of the national requirements of power and to alleviate the difficulties of the consumers. Accordingly, the release of water will be increased so that additional 250 MW be available for hydel generation. This will reduce today's shortage to 350 MW from 600 MW.

Asked if any decision has been taken regarding release of more water from Mangla reservoir, the official said that there would be no change in this case. In reply to a question whether the provincial government have been taken into confidence before reaching this decision, the official said that how provinces could differ from this decision when the country is facing worst ever energy crisis.
http://brecorder.com/index.php?id=555990&currPageNo=2&query=&search=&term=&supDate=


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## Owais

*Kuwaiti-Saudi group to invest in various sectors *
ISLAMABAD (April 26 2007): A Kuwaiti-Saudi Group Midroc Tussonia (Pvt) Limited has initiated to invest $1.5 billion to $2.5 billion in power, oil & gas and real estate sectors over a period of next five to seven years.

Sheikh Humoud Al-Sabah President of the group informed during a meeting with Zahid Hamid, Federal Minister for Privatisation & Investment while heading a delegation here on Wednesday.

Zahid Hamid assured the delegation full assistance in the completion of their projects, which were at an advanced stage. He said that the improved macro economic indicators have created investors-friendly atmosphere and made Pakistan a safe haven for investors from around the globe. Pakistan and Kuwait enjoyed very close, historic and brotherly relations, which were being further strengthened and cemented through trade and investment activities between both the countries, he stated.

The minister informed the delegation that Pakistan accorded equal treatment and level playing field to both local and foreign investors. He further stated that liberal investment policy included 100 percent foreign equity in all economic sectors, with attractive incentives like remittances of capital, profits, royalty, technical and franchise fees without obtaining permission from the government. The foreign investment was fully protected and has statutory cover under Foreign Private Investment (Promotion & Protection) Act 1976 and Protection of Economic Reforms Act 1992, he stated.

He said that total foreign investment for the first nine months of the current financial year 2006-2007 ie from 1st July 2006 to 31st March 2007 was $5.56 billion, 67.5 percent more than the amount ($3.32 billion) during the corresponding period last year.

FDI of $3.86 billion was 72 percent higher than the amount ($2.24 billion) in the same period last year. Net portfolio investment of $1.70 billion including QGDC GDR receipts of $738 million was 58 percent higher than the amount ($1.08 billion) last year.-PR
http://brecorder.com/index.php?id=556071&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Pakistan and EC close to finalising Third-Generation Agreement *

ISLAMABAD (April 26 2007): Pakistan and the European Commission have reached very close to finalisation of Third-Generation Agreement, said Thorsten Bargfrede, First Secretary, EU Delegation of the European Commission to Pakistan on Wednesday.

Speaking at the launching ceremony of a report on 'Trade-Related Challenges Facing Exporters in Pakistan', he said that EU and Pakistan would finalise the agreement by the end of next month. He did not go into further details.

However, officials told Business Recorder that under the Third-Generation Agreement, illegal Pakistanis living in EU countries would be extradited and, in return, the EU could possibly provide market access to Pakistani goods. Some officials are also of the view that EU could provide some assistance--either financial or technical--to Pakistan for rehabilitation of Pakistanis to be sent back from the EU countries.

Bargfrede said the EU has been providing assistance to Pakistan for maintaining quality standards, capacity-building for compliance on the issues related to World Trade Organisation (WTO) and Intellectual Property Rights (IPR). He indicated that EU's economic assistance to Pakistan for these issues could be tripled in the next seven years, or so.

Dr Nadeemul Haq, Vice-Chancellor of Pakistan Institute of Development Economics (PIDE), said that Pakistan's export has grown during last couple of years in terms of numbers. Its share in GDP is still very low, he added. "The need of the hour is to deregulate the local market, and the government should retreat from the market," he said. Despite the considerable jump in the volume of exports serious challenges are still there, he added.

Federal Minister for Science and Technology Nauraiz Shakoor Khan said that the increasing focus on 'behind the border' measures, such as sanitary and phytosanitary (SPS) regulations and other technical barriers to trade represented serious challenges.

"Simply having lower tariffs in international market is not a sufficient solution for increasing exports by the Third World countries," he said as chief guest at the ceremony to launch the report.

He said that the new requirements have potentially far-reaching implications for domestic institutions and policy makers. He hailed the report for its suggestion of strengthening the Ministry of Science and Technology institutions like Pakistan Standards and Quality Control Authority (PSQCA), Pakistan National Accreditation Council (PNAC), National Physical and Standard Laboratory (NSPL), testing laboratories of Pakistan Council of Scientific and Industrial Research (PCSIR) and testing laboratories of Pakistan Council of Research in Water Resources (PCRWR).

He said his Ministry would endeavour to promote the growth of a competitive and internationally recognised laboratory testing, certification and accreditation services as well as supporting facilities including internationally traceable measurement services.

"Through these serious efforts, we will ensure the availability of internationally recognised conformity assessment services to support the exporting sector in Pakistan," the Minister added.
http://brecorder.com/index.php?id=555946&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*World Bank supports Sindh coastal area development *

KETI BUNDER (April 25 2007): To review the progress of development work being undertaken there by Aga Khan Planning and Building Service, Pakistan (AKPBS,P), with the support of Pakistan Poverty Alleviation Fund (PPAF), World Bank Vice President for South Asia, Praful Patel, accompanied by other senior dignitaries of the Bank, on Tuesday visited Keti Bunder, Thatta.

A press release issued here said that as part of PPAF's Sindh Coastal Area Development Programme, AKPBS-P was undertaking an integrated area development programme for Keti Bunder and surrounding villages.

Not only infrastructure is being provided for water, sanitation, drainage, solid waste management, street pavement and lighting and playgrounds, but government is also being supported in their efforts to improve education and health facilities and operations.

The idea is to take a holistic approach to development so that tangible results are obtained and all aspects of people's lives are improved simultaneously for maximum complementarities and effectiveness.

Further, in order to ensure sustainability, the model requires that the communities are motivated to become the change agents and take the lead in implementing the development work by managing the execution as well as contributing partial cost of the project.

PPAF, with World Bank contribution, provides the rest of the fund and AKPBS,P supervises the project and provides technical assistance to the communities.

Patel noted that even though the project is still under implementation, there is visible change in both the physical condition of the town as well as, and more importantly, in the attitude and motivation of the people.

He was informed that the people, who used to move away from the town in the past, are now returning; health condition in the town is beginning to improve and the environment, which used to be polluted with stagnant sewerage water, is now clean and healthy.

People used to spend over 25 percent of their income on buying polluted water but will soon get water supply from a government project. Slow sand filter built by the project will make this water potable. Performing the opening ceremony of a children play area, Patel said: "Children are the future of any society and provision of recreational facilities for them along with basic amenities like clean drinking water, health care, education and sanitation ensures a vibrant community poised to realise its potential".

Earlier, community representatives welcomed the visitors and proudly showed them around the town. Praful met separately with the male and female community representatives and asked them various questions.-PR

http://brecorder.com/index.php?id=555629&currPageNo=3&query=&search=&term=&supDate=


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## Owais

*Pakistan needs investment on human resources: WB official *
ISLAMABAD: World Bank has emphasized investment in human resources and broader training opportunities for gradual poverty-reduction in Pakistan. 

Vice President of World Bank Praful Patel addressing the inaugural session of Pakistan Development Forum here said rural development and manpower training in rural areas is essential for transfer of Pakistan&#8217;s economic gains to lower echelon of the population. 

Emphasizing the importance of sustaining the progress he said the macroeconomic stability is and must remain the strategic foundation for Pakistan&#8217;s enhanced growth and poverty reduction prospects. 
http://www.geo.tv/geonews/details.asp?id=5219&param=3


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## Neo

*ADB to invest up to $3 bln in Pakistan in 2007 *  

ISLAMABAD: April 26, 2007: The Asian Development Bank (ADB) said on Thursday it plans to provide funding of up to $3 billion for various infrastructure projects in Pakistan in 2007, doubling the amount loaned last year.

So far ADB has lent $16 billion to Pakistan, $6 billion of which is being spent on ongoing projects as the bank supported government policies that have helped transform the country into one of the fastest growing economies in the world.

"Last year, we supported Pakistan by the amount of $1.5 billion. This time we will go over that amount. Maybe we are going all the way to $2 to 3 billion in 2007," ADB vice president Liqun Jin told Reuters.

He said this year's funding would include $400 million to help rehabilitate parts of Kashmir and North West Frontier Province devastated by an earthquake in October, 2005, that killed 73,000 people in Pakistan.

Jin praised the government's second generation of economic reforms, though he added that Pakistan needed to further improve governance, the regulatory framework, and open its markets. "I would say the country should be more open because being open could help the country to be more competitive. By being open your private sector could be improving its efficiency internationally."

Pakistan averaged growth of 7 percent during the last four years and the government expects the economy will grow by between 7.0 and 7.7 percent this year.

"I think we have reason to believe that the growth is sustained," Jin said.

"Ever since I think since 1999, the growth of the economy seems to be on the very sustainable basis," he said referring to the year that General Musharraf came to power in a coup and appointed ex-Citibank executive Shaukat Aziz as finance minister, before promoting him to prime minister in 2004.

Jin said major investment was needed in the tribal areas where the government is struggling to counter sympathy for the Taliban insurgency in neighbouring Afghanistan.

"My personal view is, we should believe the majority of the people want development. They want peace for life. They would like to see there would be future for their children and they would co-operate closely with the donor community."

http://www.brecorder.com/


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## Neo

*Donors term poverty, high inflation as major threats *

ISLAMABAD (April 26 2007): The World Bank and other international donors on Wednesday termed poverty, high inflation, widening trade and current account deficit as Pakistan's major challenges, and suggested to the policy-makers that they should adopt a pro-poor approach to ensure that all segments of the society equally benefit from the economic prosperity.

The donors told the participants of Development Forum (PDF) 2007, of demographic divide and unleashing human capital can backfire if Pakistan failed in trickling down benefits of economic growth to downtrodden rural poor.

The World Bank Vice President, South Asia region, Praful Patel painted a very gloomy picture of the rural poor and claimed in his address at PDF inauguration session that rural poor in Pakistan were facing worst kind of poverty and the government should take them on board by passing on the benefits of economic development.

Patel said: "I visited Keti Bunder the other day and met many people who earn less than one dollar a day and I believe this would be true in many other areas of Pakistan as well." He said the question arises who is benefiting from the economic growth and why the poor were left out.

He said the government of Pakistan should do more to address the issue of hard core poverty by providing education, health and other basic facilities to the rural poor. He said Pakistan was reaping reforms' reward. Its cost of doing business is decreasing, and international investors are coming to Pakistan for investment.

But the lack of world class infrastructure in some sectors remains a concern. He said the National Trade Corridor Improvement Program (NTCIP) was Pakistan major initiative to improve ports, roads, rail and other linkage. He also termed power shortage as a big challenge for Pakistan.

He said the poor of Pakistan want to know how they benefit from a well managed current account deficit or investment in ports and dams. These are the citizens of Pakistan living day-to-day and struggling - and they need to see the links between the macro and the micro.

He said the people of coastal Sindh are among the poorest in the country. Asian Development Bank (ADB) Vice President Liqun Jin said Pakistan was committed to good governance and economic reforms, as well as sound macroeconomic management.

But it was facing serious challenges such as rising inflation rate and low investment in key areas such as education and health. He also demanded that Pakistan should do more to improve the living standard of low-income groups.

He said the benefit of growth should translate recent macroeconomic improvements into substantive betterment in the quality of lives of the poor. He added that it was encouraging that the Poverty Reduction Strategy Paper (PRSP) articulates a comprehensive strategy for poverty reduction.

He reiterated firm commitment that ADB would provide financing to Pakistan for rehabilitating and upgrading of existing infrastructure in irrigation, roads, and urban centres, as well as addressing critical gaps in the power sector. He said in addition to the approximately $840 million for transport sector during 2001-04, ADB will provide an additional $2.7 billion for the infrastructure sector during 2005-08.

He said ADB's involvement would help formulate sound policies to facilitate private-sector investment, improve access of SMEs to technical support services and financing in rural areas, facilitate market development for diversified rural-based and labour-intensive products, strengthen institutional capacity, and develop rural industry standards. "We are of the view that only a holistic approach could address the entrenched poverty and livelihood dynamics of Pakistan's rural areas."

Islamic Development Bank (IDB) President Dr Ahmed Mahammad Ali appreciated Pakistan's economic performance besides counting the challenges Pakistan was confronted with. He said it was collective responsibility of all stakeholders to help Islamabad achieve its MTDF goals.

He also demanded that Pakistan should do more for providing benefits of its economic turnaround to the poor and downtrodden segment of the society. He also suggested that Pakistan needed to invest in human resources to harness their full potential.

Dr Ahmed said IDB committed $502 million to Pakistan for earthquake rehabilitation and reconstruction and its 70 percent disbursement would complete by the end of 2007.

http://www.brecorder.com/index.php?id=555967&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Trade with China to treble in five years *  

ISLAMABAD (April 26 2007): Pakistan's trade with China is to treble in the next five years, from five billion rupees to 15 billion rupees, as part of the consolidation of the 'time-tested, all-weather relationship with China.

According to private television channel report, 27 agreements were signed during the visit of Prime Minister Shaukat Aziz to China, during which he held discussions, focusing on military and satellite cooperation with President Hu Jintao.
http://www.brecorder.com/index.php?id=556076&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Action plan on card for industrial growth *

ISLAMABAD (April 26 2007): Minister for Science and Technology Chaudhry Nouraiz Shakoor Khan Wednesday said a national action plan will be prepared during Medium Term Development Framework (MTDF) period (2005-10) for rapid industrial growth through industrial technology development.

"The government is well aware of the challenges posed by the globalisation and the importance of export promotion in achieving the goals of economic development and prosperity." He was addressing a launching ceremony of a report on "trade related challenges facing exporters in Pakistan" here at Ministry of Planning and Development.

The minister said over the MTDF period, an average annual growth rate of 11.6 percent is envisaged in the manufacturing sector. A focused policy thrust would be adopted for raising the threshold levels of technology base, industrial diversification, value addition, productivity and product quality, physical and social infrastructure and standardisation and certification to match the growth requirements.

He said the present urban and industrial centres are not sufficient to support the envisaged large growth of the industrial sector. A number of industrial estates would be set up in every province with the necessary infrastructure and self-contained utilities and ancillary facilities, including common technology support centres, he added.

Nouraiz said small and medium industries have an important role in strengthening industrial linkages, in penetrating markets, generating export earnings and preparing future entrepreneurs.

The government is making all out efforts to create an enabling environment for producers and exporters, he said while urging the private sector to seize up the opportunity and rise up to the challenges posed by a highly competitive global economic environment. Referring to the report, he said it would be helpful in devising policies aimed at improving trade capacity of local exporters.

He assured his ministry through technological institutions and in close association with Pakistan development partners endeavour to promote the growth of a competitive and internationally recognised laboratory testing, certification and accreditation service.

Earlier, UN Industrial Development Organisation (UNIDO) representative in Pakistan Shadia Yousif Bakhait briefed the participants about the survey being conducted by Pakistan Institute of Development Economics and Federation of Chambers of Commerce and Industry (FPCCI).

She said over the last 10 to 15 years, Pakistan has taken concerted efforts to liberalise its international trade. Yet, Pakistani exporters continue to face trade related challenges due to longstanding structural weakness in the industrial and exporting sectors. The survey identified main constraints faced by Pakistani exporters in achieving compliance with international market requirements.

The report analyses the exporting behaviour of firms and the challenges pertaining to supply side, standards capacity and trading policy. It then provides possible options to alleviate them.

The report will be utilised to provide guidance in developing policy and capacity improvement strategies on how best Pakistan industrialists and exporters can meet trade restrictions and compliance requirements to address barriers to international trade.

The main recommendations of the report include issues relating to creating a conducive business environment, establishing conformity assessment infrastructure, strengthening supply capacity, trade facilitation measures and sectoral policy initiatives for textile, leather, agro process and fisheries sectors.

http://www.brecorder.com/index.php?id=556112&currPageNo=1&query=&search=&term=&supDate=


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## Neo

Another find, third this month!  



> *Gas and condensate discovered *
> 
> KARACHI (April 26 2007): The Oil and Gas Development Company Limited (OGDCL) has made a gas and condensate discovery from its exploratory well Kunnar West Well No 01A. The well is located at a distance of 577 meters in the west of Kunnar West Well No 01.
> 
> According to the company announcement sent to the Karachi Stock Exchange here on Wednesday, it was stated that Kunnar West Well No 01A structure was delineated in Kunnar mining lease area and the well was drilled down to a depth of 4065 meters. On the basis of open hole logs, two zones of massive sands of Lower Goru Formation were selected for testing. Production testing of Zone-1 (massive sands) of Lower Goru Formation started on April 23, 2007, which proved productive.
> 
> The short duration initial testing results are as choke size 32/64 inches, WHFP (PSI) 2480, condensate 170 bpd, gas 11.02 MMSCFD, water 20 BWPD and API gravity 44. The potential of additional zone-2 (massive sands) of Lower Goru Formation in the well will be tested shortly.
> 
> http://www.brecorder.com/index.php?id=555943&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*220MW power plant in Korangi by next year *

ISLAMABAD (April 26 2007): Karachi Electric Supply Corporation (KESC) spokesman Syed Sultan Hassan on Wednesday said that KESC had started work on 220MW power plant project in Korangi, which would be completed next year. Talking to PTV, he said it was expected that it would produce 50MW electricity in August.

Besides this, KESC had planned to establish Lower Power plants for the production of electricity, he added. He said the KESC was making efforts to fill the gap between demand and supply of electricity of the city.

Sultan Hassan said KESC provided 50 percent of the total electricity used in Karachi and rest of 50 percent was obtained from other sources like IPP and Wapda. A broad outline had given to the people from the day one when load shedding was started after April 2, he added.

He said the major reason for shortage of electricity was phenomenal growth of economy, increased use of air-conditioners and electric appliances, demand of tube wells and aggressive village electrification.

http://www.brecorder.com/index.php?id=556111&currPageNo=1&query=&search=&term=&supDate=


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## Neo

Thursday, April 26, 2007 

*2,500 tonnes of Pakistani wheat reaches India *  

NEW DELHI: About 2,500 tonnes of wheat from Pakistan reached Indian shores on Wednesday and the consignments have been sent for quality tests, flour millers said. 

âWe look forward to import more from Pakistan as rising rupee has made imports from Pakistan attractive,â S. Pramod Kumar of Roller Flour Millers Federation of India, said. The Indian rupee strengthened past 41 per dollar for the first time in nine years on Wednesday, buoyed by robust capital inflows and as exporters hedged against further appreciation. 

The wheat, which arrived at the southern Indian port of Tuticorin, was bought at $232 a tonne on cost and freight basis, Kumar said. 

Indian grain traders have contracted to import 20,000 tonnes of Pakistani wheat, Vijay Iyengar, managing director of Agrocorp International Pte. Ltd, had told Reuters earlier this month. 

There is a possibility of up to 150,000 tonnes of Pakistani wheat coming to India, he said. 

http://www.dailytimes.com.pk/default.asp?page=2007\04\26\story_26-4-2007_pg5_6


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## Neo

Thursday, April 26, 2007 

*Per capita income will cross $1,000 next year, says PM*

ISLAMABAD: Prime Minister Shaukat Aziz said on Wednesday that Pakistanâs per capita income was $847 last year, is expected to be around $950 this year and will surpass $1,000 next year. Speaking at the inaugural session of the Pakistan Development Forum 2007 he said the number of people below the poverty line had decreased from 34.5 percent in 2001 to 23.9 percent in 2005 â in urban areas from 22.7 percent to 14.9 percent and in rural areas from 39.3 percent to 28.1 percent. 

In absolute terms, 13 million people have been lifted out of poverty, out of which 10.5 million belong to rural areas, the PM said. âMarket surveys indicate a significant increase in the sale of consumer goods in rural areas, which has a direct bearing on the quality of life for the people,â said Aziz. Pakistan has become the fastest growing mobile phone market after China, he said. 

Similarly motorbike sales are registering record levels in rural areas, he said. Aziz said that in order to meet the shortage of skilled manpower in Pakistanâs rapidly growing economy, the government is implementing a comprehensive programme of technical and vocational education aimed at maximum utilisation of existing facilities as well as creating new ones. 

The National Vocational and Technical Education Commission has been set up as an apex body at the national level, he said. At present 350,000 students per year are being imparted various skills and it is expected that 1,000,000 students will be studying at the institute per year by 2010. Pakistan has made significant strides in the last seven years in higher education, the PM said. âThe thrust of our strategy is to improve the quality sof, and access to higher education, particularly science and technology, which directly contribute to economic development.â Nine new universities are being established in collaboration with renowned world institutions, he added. 

The PM said one of the biggest challenges facing mankind today is to build a world where the goals of environmental conservation and economic development do not conflict with each other. âPopulation growth, increasing urbanisation, global warming, and natural disasters pose grave threats to environmental sustainability,â he said. 

http://www.dailytimes.com.pk/default.asp?page=2007\04\26\story_26-4-2007_pg7_36


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## Neo

Thursday, April 26, 2007 

*Additional 250MW of power generation starts*

ISLAMABAD: The Indus River System Authority (IRSA) has agreed to release more water from Tarbela and Mangla dams for generating an additional 250 megawatts (MW) of electricity from Wednesday. This would reduce the existing electricity shortage from 600MW to 350MW. 

This was decided in a meeting between Water and Power Minister Liaquat Ali Jatoi and the IRSA chairman and members on Wednesday. The meeting assessed the possibility of release of additional water from Tarbela and Mangla dams for additional power generation in view of the forced outage of a number of plants of the Water and Power Development Authority (WAPDA) at Guddu, Jamshoro and Tarbela. The IRSA officials agreed to start instant provision of additional water for power generation. 

The IRSA chairman told the meeting that currently the total available water was 5.12 million acre feet (MAF), which was six times more than the previous year. He said that the water level at Tarbela and Mangla was 17 feet and 13 feet above the maximum estimated levels and inflows at both dams were good.

http://www.dailytimes.com.pk/default.asp?page=2007\04\26\story_26-4-2007_pg7_22


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## Neo

*ADB Sees Pakistan Economy Growing in '07*
Thursday April 26, 2007
By Stephen Graham, Associated Press Writer 
Asian Development Bank Official Says Pakistan Economy Will Grow by More Than 7 Percent in 2007 


ISLAMABAD, Pakistan (AP) -- Pakistan's economy will grow by more than 7 percent this year, a senior Asian Development Bank official said Thursday, urging the government to invest in education and health to sustain that rate.

Private consumption and investment is powering a boom in Pakistan, despite concerns about the threat of Islamic militancy and the country's slow transition from military rule to democracy.

Liqun Jin, vice president of the ADB, a major donor to Pakistan, said government investment in infrastructure such as roads, water and power projects were laying the groundwork for future prosperity.

After 6.6 percent growth in 2006, "this year, I think they shouldn't have any difficulty achieving 7" percent, Jin told The Associated Press in an interview on the margins of a development conference.

Jin said he was optimistic about Pakistan's commitment to economic reforms, which have included privatization and a tax shake-up.

However, he urged officials to do more to foster research and help Pakistani companies develop higher-value export products and create jobs for Pakistan's youthful and fast-growing population of about 160 million people.

"The young population could be positive, powerful, productive forces if investment in education, in health will be there," Jin said. "Or, if not handled well, (there) could be a big challenge for an economy if there are not sufficient job opportunities."

President Gen. Pervez Musharraf has announced plans to build five new dams in order to capture more water for Pakistan's irrigation-dependent agriculture and to supply galloping demand for power from both industrial and private users.

Jin said the bank was open to requests for funding for the dams.

He said bank officials had already had "some discussions" about the proposed Bhasha Dam across the Indus River, high in the mountains near divided Kashmir.

However, he cautioned that the bank would set tough conditions, for instance on environmental impact and resettling local residents.

"We want to make sure, if we do finance a project of that kind, it should be done on a sound basis," he said.

http://biz.yahoo.com/ap/070426/pakistan_economy.html?.v=1


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## Neo

*Portfolio investment at its new high *

KARACHI (April 27 2007): The balances placed under Special Convertible Rupee Accounts (SCRAs) representing portfolio investment in Pakistan, which stood at $649.9 million on March 22 have surged by $50.473 million to touch the record high of $700.4 million on April 23, 2007.

Earlier, on April 9, the cumulative net flow stood at $575 million, showing a net disinvestment of $74.9 million compared with the level achieved on March 22. Between March 22 and April 9, the position showed generally a downward trend, showing at one time a disinvestment of about $100 million compared with the earlier record of $673 million. The decline was in line with the developments in the stock market.

Subsequently, on April 20, the portfolio investment posted a gain of $102.4 million to touch a volume level of $677.4 million. The ongoing surge continued, as the cumulative net flow reached another landmark on April 23 showing a net investment of $23 million in just three days to reach the new high of $700.4 million. Total fresh investment since March 22 has been estimated around $125.3 million.

Overall, by April 23, the largest investor during FY07 so far was USA ($480 million) followed by UK ($162 million), Netherlands ($44 million), Malaysia ($33 million), Hong Kong ($23 million) Kuwait ($15 million) and Germany ($7 million) respectively.

Among the major disinvestors during April so far were Singapore ($61 million) and Hong Kong ($8.7 million). It may be recalled that the largest disinvestor during April had been the largest investor during the initial months of FY07. The largest disinvestor during the year, however, was Switzerland withdrawing $60 million. Other major disinvestors included Austria ($6 million), France ($2 million), B V Island ($1.7 million) and Luxembourg ($1 million) respectively.

http://www.brecorder.com/index.php?id=556368&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pakistan and Iran set to achieve $1 billion trade target *

KARACHI (April 27 2007): Pakistan and Iran will achieve the target of bilateral trade of one billion dollars by the end of 2007 or in first quarter of 2008. This was revealed in a meeting between Pakistan-Iran Business Council Chairman Tariq Sayeed and Commercial AttachÃ© of Iran in Karachi Ahmad Fasihi.

Tariq Sayeed said that the present volume of bilateral trade between the two countries ie 638 million dollars, was not the true reflection of their brotherly relations.

To achieve the set target of bilateral trade, Tariq Sayeed suggested that Pakistan and Iran should encourage border trade by establishing customs ports at borders. He further suggested that Pakistan and Iran should also establish banks in each other's countries to facilitate opening of letter of credits (LCs).

http://www.brecorder.com/index.php?id=556390&currPageNo=1&query=&search=&term=&supDate=


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## Neo

April 27, 2007 
*Investment to GDP ratio may rise to 22.8pc: Target for five years*
By Khaleeq Kiani

ISLAMABAD, April 26: The government targets national economy to grow at a sustainable level of 7.5 per cent in five years and limit inflation at five per cent, supported by an increase in investment-to-GDP ratio to 22.8 per cent.

Minister of state for finance Omar Ayyub Khan presented a draft summary of the poverty reduction strategy paper (PRSP-II) to the participants of the Pakistan Development Forum that included foreign diplomatic corps based in Islamabad and multilaterals, like the World Bank and the Asian Development Bank.

The PRSP-II would be finalised in July after incorporating input form development partners.

The future economic policy would revolve round this document that has focus on unleashing demographic dividend through skill development and knowledge-based economy.

The draft PRSP-II forecasts that the inflationary pressure will be 6.5 per cent during 2006-07, 5.5 per cent in 2007-08 and will remain five per cent in the coming years till 2010-11.

âChallenges are several, but there are opportunities as well,ââ he said and added that the proposed growth would be driven by agriculture, services, infrastructure, manufacturing and development of big cities.

âThis will lead to elimination of core poverty by 2015, which is defined as people with less than $1 a day earnings.â

He said Pakistan has made a remarkable progress in its economic performance, undertaken wide-ranging structural reforms, achieved both macroeconomic stability and strong growth and sharply reduced poverty but the government was cognizant of the fact that there was no room for complacency.

âThe government estimates the economy will grow by seven per cent this year, compared with 6.6 per cent of the last year. The spending on poor would be increased from 5.6 per cent now to 6.2 per cent of the GDP by 2009.

âThe population living in poverty reduced to 24 per cent in 2005 from 34 per cent in 2001, helped by an average seven per cent growth in the past four years,â he said.

Agriculture sector has been targeted to grow an annual 4.5 per cent for the next five years under the PRSP-II. The government will build road, rail and airports to link the country's ports with industrial cities, reducing transportation cost and time as part of infrastructure development, says the PRSP.

Mr Ayyub said the ratio of investment to GDP was expected to rise to 22.8 per cent by 2011 and per capita income is estimated at $1,253 in four years, from current 20 per cent and $847 respectively. The budget deficit has also been forecast to be reduced to 3.3 per cent from current 4.2 per cent.

Pakistanâs tax revenue is expected to grow up to Rs1.065 trillion in 2007-08, Rs1.255 trillion in 2008-09, Rs1.469 trillion in 2009-2010, and 1.722 trillion in 2010-11.

There will be a total expenditure of Rs2.601 trillion by 2010-11 against total revenues of Rs2.125 trillion.

The development expenditure will be jacked up to Rs479.5 billion in 2007-08, Rs556.8 billion in 2008-09, Rs655.2 billion in 2009-10 and Rs770.9 billion in 2010-11. The government will increase spending on the poor to 6.2 per cent of the GDP by 2009 from the current 5.6 per cent, it said.

The diplomatic representative of Norway in her presentation asked Pakistan to get ownership of National Assembly and provincial assemblies on this crucial PRSP-II document.

She also said that the consultative process held in preparation of PRSP did not reflect in the presented draft report. Advisor to Prime Minister on Finance Dr Salman Shah said that inequalities increased in Pakistan with the higher growth rate, but it was less than China and many other countries.

He said the increase in per capita income also posed certain challenges to Pakistan.

Mr Asim Baksh from Karim Baksh Ltd in his presentation said the prime minister has talked about per capita income touching $1000 but that meant the people will come out with money in their hands, but they would not find out space to buy things.

http://www.dawn.com/2007/04/27/ebr1.htm


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## Neo

Friday, April 27, 2007 

*Economic growth, poverty reduction:*

Input sought from donor community to improve policies

By Sajid Chaudhry

ISLAMABAD: The government of Pakistan has sought input from the donor community for improvement in the policies being developed for higher economic growth and reduction in poverty. 

Omer Ayub Khan, Minister of State on Finance and Revenue stated this on the second day of the Pakistan Development Forum (PDF) 2007. He said Competitive Support Fund is initiating a study on Special Economic Zones (SEZs), objective in this study is to cover these issues utilising recently completed benchmarking studies of SEZs from countries with similar conditions and then relating the findings to Pakistanâs current and future strategy. 

On draft PRSP II outlined its objectives and said that input by the donor community would help government of Pakistan to improve it further. Altaf Saleem said that some 20 years old curriculum of the training institutes in the country can not meet the present day needs. He said revamping of curriculum would help achieving knowledge based economy and workforce. 

Razi-ur-Rehman, Chairman Securities and Exchange Commission of Pakistan (SECP) informed the participants of the PDF 2007 reforms carried out by the regulator to improve the monitoring stock market and enforcement of laws for its development. He informed that to facilitate transparent and efficient financing for stock market, the SECP has proposed authorisation of direct leverage finance in the form of CFS Mk II by eligible brokers, banks and non-banking financial institutions. To provide level playing field for the Lahore and Islamabad stock markets the Centralised CFS Mk II would be developed at the National Clearing Company Pakistan Limited. 

He said to introduce much needed avenues of leverage financing in the market derivative products are being developed which include cash settlement future contracts, index futures, options on individual securities. SECP has proposed to the stock exchanges the establishment of trading floors in Peshawar and Quetta. A new NBFC law is being developed, as the ordinance does not appropriately cater for the regulatory needs of the NBFC sector. He said stamp duty on transfer of shares is being deferred for two years. He also disclosed that new computerised system is being installed for monitoring of stock markets, which would be installed in next three to four weeks. Some 200 professionals are being inducted in SECP for proper implementation and enforcement and monitoring of sectors being governed by the regulator. 

Dr Salman Shah, Advisor to Prime Minister on Finance and Revenues while chairing the session on âfinancial deepening and development reforms and governanceâ informed the participants that governmentâs role in remaining banks would also be reduced. He said National Bank of Pakistanâs shares are already with the public and now the government is planning for its GDR and provincial banks would also undergo GDR process through which the ownership of the banks would be shared with private sector. 

In his presentation, representative from State Bank of Pakistan informed the donor community that road map developed for the regulatorâs activities during next five years also include a set of reforms. While outlining the road map, he informed that it include increasing outreach of micro finance banks for low income groups, development of payment systems, financial diversification to cater to variety of consumers and their needs, introduction to universal banking based on new set of opportunities and challenges, entering into emerging regional markets.

http://www.dailytimes.com.pk/default.asp?page=2007\04\27\story_27-4-2007_pg5_1


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## Neo

Friday, April 27, 2007 

*US firm plans to invest $500m in power generation*

ISLAMABAD: MG Power Systems, USA, has planned to set up 750 MW Power Generation Units in Pakistan by investing US $ 500 million. 

This was stated by the visiting delegation of the company, which led by President of MG Power Systems, USA, W. Glenn Jackson called on the Minister of State for Petroleum and Natural Resources Mir Muhammad Naseer Mengal here on Thursday.

They discussed investment potential in oil and gas sector of the country. W. Glenn said his company had a vast expertise in the power generation and both the countries would benefit to learn a lot from each otherâs experience in the field of energy.

The minister said the government was focusing on the promotion of energy sector on modern lines to meet the growing energy needs for sustaining the GDP growth rate of above 7 percent per annum. He said the country was endowed with huge coal deposit of 185 billion tons and the government was taking concrete steps to produce 20,000 mega watt coal based power by 2016. 

He said the government had deregulated the petroleum sector and provided the investors a level playing field in a competitive and business friendly environment.

The minister said the government was also making concerted efforts to exploit the untapped hydrocarbon deposits and considering to import gas and LNG from the neighbouring countries to bridge the supply demand energy gap. Secretary Petroleum Ahmed Waqar, Joint Secretary Moosa Raza Effendi,

Director General (Oil) G.A. Sabri, Director General (Gas) Saeed Ullah Shah were also present in the meeting. 

http://www.dailytimes.com.pk/default.asp?page=2007\04\27\story_27-4-2007_pg5_3


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## Neo

*Pakistan has 55.62 million mobile subscribers*
Friday 27 April 2007 

The Pakistan Telecommunication Authority (PTA) has recorded a total of 55.62 million mobile subscribers in Pakistan as on 31 March 2007. Comparatively, the number of mobile subscribers totalled 52.88 million in February 2007. Mobilink had the highest number of subscribers with 24.65 million subscribers, followed by Ufone with 11.60 million subscribers, Telenor with 9.07 million subscribers, Warid with 8.96 million subscribers, Paktel with 1.03 million subscribers and Instsphone with 0.31 million subscribers. The mobile density was 35.79 in March 2007 compared to 34.03 in February 2007.

http://www.telecompaper.com/news/article.aspx?id=166157&nr=&type=&yr=


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## Neo

*India's trade with Pakistan tipped to touch 1.5 billion dollars*

New Delhi, Apr 27: Trade between India and Pakistan has shown enormous buoyancy and is expected to cross 1.5 billion dollars in 2006-07. 

Exports to Pakistan in April-December (2006-07) stood at 980.33 million dollars while imports were US $ 247.48 million during the same period. 

A business delegation led by Muhammad Nasir Khan, President of Islamabad Chamber of Commerce & Industry, called on Kamal Nath, Union Minister of Commerce & Industry, here this evening and expressed hope that the economic ties between the two countries would strengthen in the near future to benefit both countries, according to an official statement. 

Kamal Nath highlighted the many benefits that could accrue to both India and Pakistan if trade relations improve, as it would make both countries more competitive in an increasingly globalised economy. He expressed hope that Pakistan would grant the much awaited most favoured nation status (MFN) to India and said that the segment of trade between two nations that currently took place through third countries would then be replaced by direct trade. 

The Pakistan delegation requested the Minister to ensure easing of visa regime for Pakistani businessmen by the Indian government.

Kamal Nath assured that Government of India was committed to strengthening economic ties with its neighbour and this issue would also be taken care of in due course. 

The main commodities of exports to Pakistan include sugar, dyes, plastic & petroleum products and cotton while main import items from Pakistan are petroleum & crude products, fruits & nuts (excluding cashew nuts), cotton yarn & fabrics and organic chemicals. 

http://www.newkerala.com/news.php?action=fullnews&id=23139


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## Introvert

*Pakistan sells 45,000 tons wheat to Yemen​* ISLAM ABAD, April 29 (Saba)- A global trading firm has sold 45,000 metric tons Pakistan-origin wheat to a buyer in Yemen at around $240/ton, cost and freight, a senior company executive said.

"One of the shipments has already reached Yemen while another is on its way," the official said, requesting anonymity for herself and her company. 

http://www.sabanews.net/view.php?scope=f9129&dr=&ir=&id=130344


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## Neo

*Asian Bank sees growth lower than seven percent target *

ISLAMABAD (April 28 2007): Pakistan's economy in 2006-07 is projected to grow by 6.8 percent, less than government target of 7 percent, as the agriculture sector is expected to grow by 4.0 percent, services by 7 percent and manufacturing sector by 8.6 percent, according to Asian Development Bank (ADB) on Friday.

The Bank in its 'Economic Update' said that Pakistan's economy maintained strong growth in the first half of 2006-07, catalysed by improved performance of commodity producing sector and robust growth in the services sector. However, some macroeconomic fundamentals remained strained. On the back of a tight monetary policy, inflation declined but still remained high. The current account deficit rose further on account of weak export performance and the government maintained an expansionary fiscal policy.

However, the ADB warned that slowing exports, growing current account deficit, continuing high inflation, and the emerging power shortage were potential risks to the country's medium-term economic prospects. The end of the China-specific safeguards imposed on Chinese exports by the USA and EU in 2008 may further weaken Pakistan's trade balance. The current expansionary fiscal policy, if continued, may weaken the budgetary position, said the Bank.

*DOMESTIC SECTOR *

*GROWTH:* In the first half of 2006-07, agriculture and manufacturing picked up and expanded at a faster pace than in the same period of 2005-06. Sugarcane production, one of the four major crops, is estimated to be significantly higher than last year. The cotton crop, estimated at 12.5 million bales, is also marginally higher. The quantum index of large scale manufacturing sector showed a higher increase (9.7 percent) in the first quarter of 2006-07 than the increase (8.7 percent) recorded in the same period of 2005-06. The services sector also continued to expand in the first half of 2006-07, with the telecom and financial services maintaining strong growth.

*PRICES AND MONETARY POLICY:* Inflation declined, but was still high at 7.6 percent in the first eight months of 2006-07. In view of persistent high inflation, the State Bank of Pakistan (SBP) further tightened monetary policy in July 2006. Among other measures, the discount rate was raised from 9.0 to 9.5 percent. The private sector demand for credit declined to Rs 241.6 billion in the first eight-and-a-half months of 2006-07 from Rs 330.5 billion in the same period of 2005-06. However, the overall monetary growth in the first eight-and-a-half months of 2006-07 was higher than last year.

*FISCAL POLICY:* The government continued to pursue an expansionary fiscal policy, and the fiscal deficit in the first half of 2006-07 remained more or less at the same level as in the first half of 2005-06. Both expenditure and revenue increased by 23.5 percent. Tax revenue, collected by the Central Board of Revenue, increased by 27.0 percent, with a particularly sharp increase in direct taxes. The ratio of tax receipts to GDP increased from 4.4 percent to 4.9 percent.

*EXTERNAL SECTOR *

*MERCHANDISE TRADE:* Growth of both exports and imports decelerated further in the first eight months of 2006-07. Export growth declined to only 3.9 percent and import growth to 9.9 percent from 20.2 percent and 46.9 percent, respectively, in the first eight months of last year. The sharp slowdown in exports was due to decline in volume. The decline in import growth was attributable to lower international oil prices and substantial slowdown of domestic demand for consumer durables due to rising interest rates. Import of motor vehicles declined by 9.2 percent.

*CURRENT ACCOUNT:* The current account deficit increased by 43.3 percent to $5.8 billion in the first eight months of 2006-07. With import growth outstripping the export growth, the trade gap widened by 24.9 percent.

The income account recorded a 40.4 percent larger deficit than last year, and the deficit in the services account also was 6.4 percent higher. Increasing deficits on trade, services, and income accounts were partly offset by higher surplus in current transfers, including remittances, which increased sharply by 21.8 percent to $3.4 billion.

Despite deterioration in the current account, the overall balance of payments recorded a surplus of $158 million, because of a substantial improvement in the financial account.

Foreign exchange reserves held by SBP increased by $263 million to $11.0 billion at end of February 2007, sufficient to finance 4.7 months' imports. The exchange rate depreciated to Rs 60.73/$ at the end of December 2006 from Rs 60.16/$ at the end of June 2006. External debt increased by $1.2 billion to $36.9 billion in the first half of 2006-07. However, as percentage of GDP, external debt continued to decline, and was 25.4 in December 2006 compared with 27.8 in June 2006.

*OUTLOOK *Main commodity producing sectors are expected to pick up, and the services sector is likely to maintain its robust growth of 6.8 percent in 2006-07. Due to a sharp increase in import of agricultural machinery last year, as well as the package of incentives for the crop and livestock sub-sectors announced in the 2006-07 budget, the agriculture sector growth is projected to increase 4.0 percent in 2006-07.

The manufacturing sector is expected to expand by 8.6 percent, supported by a substantial increase in import of capital goods in the past several years and particularly heavy investments last year in capacity expansion in cement and fertiliser industries. The expected further easing of oil prices in the second half of the year will also help.

In the services sector, substantial foreign investment in telecom in recent years, along with the privatisation of the Pakistan Telecommunication Company, will help the sector maintain robust growth in 2006-07. Strengthened by reforms and privatisation and ongoing mergers and acquisitions, the financial sector will also maintain robust growth.

However, growth of the wholesale and retail trade will be lower due to deceleration of exports and imports. The services sector, as a whole, is projected to grow by more than 7 percent in 2006-07.

Inflation is expected to decline further in 2006-07 due to the lagged effect of significantly lower monetary growth than the growth of nominal GDP in 2005-06, further tightening of monetary policy in 2006-07, and easing of oil prices. Inflation in 2006-07 is expected to decline to 7.0 percent, but will remain higher than the targeted 6.8 percent.

With the projected high GDP growth, extension of the tax net to real estate transactions and increase in tax rates on some financial services, tax receipts are expected to increase at a robust double-digit rate in 2006-07. Current expenditure is expected to exceed the budget target because of a likely overrun in defence expenditure and higher domestic debt servicing due to higher interest rates. On balance, the fiscal deficit is likely to increase to 4.5 percent of GDP in 2006-07.

Import growth is likely to decelerate in 2006-07, because of expected easing of oil prices in the second half of the year and lower demand for import of consumer durables because of higher interest rates. However, the projected high economic growth and substantial increase forecast in investment will still sustain at 10.0 percent.

Despite a continued robust growth in global trade and continued China-specific safeguards imposed by the USA and European Union (EU) on import of textiles and clothing (T&C), textile and clothing exports are expected to witness a slowdown and overall export growth is projected to decline to 6.0 percent. Both trade and services deficits will widen, increasing the current account deficit (excluding official transfers) to $7.0 billion, or 4.8 percent of GDP.

With pro-growth government policies, continuous increase in the Public Sector Development Program, and the projected increase in total investment, the medium-term outlook for the economy is positive, and the growth target of 7 to 8 percent looks feasible.

Increasing trade with countries in the region, including China, will also help the economy. The boom in banking and telecom is likely to continue. Investments in the oil and gas sector will also start paying off.

A possible further increase in the oil price, in case of escalated tensions on Iran's nuclear issue, or on account of other adverse developments in the region, could hurt Pakistan's economic prospects. In the longer run, the overall continuing low level of savings and investment could depress the economic growth, the ADB 'Economic Update' said.

http://www.brecorder.com/index.php?id=556735&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*Fata development plan unveiled *

ISLAMABAD (April 28 2007): Pakistan on Friday unveiled a $2.06 billion Federally Administrated Tribal Areas (Fata) development plan at Pakistan Development Forum (PDF) and sought $1.06 billion financing from the donors and development partners to implement it on top priority.

The plan comprises a long-term strategy with main focus on building-up of basic infrastructure such as roads, communication and other linkages between Fata and other parts of Pakistan, besides providing resources to the people for income by setting-up industrial zones and promoting cottage industry. NWFP Governor, Aurakzai presented Fata development plan before PDF participants and later on shared its details with them at a special session.

The sector-wise details of the plan indicated that Fata's water supply and sanitation need $54 million, rural development $25 million, agriculture $100 million, livestock ad poultry $25 million, forestry and fisheries $100 million, irrigation, water management and power $100 million.

It also indicated that for physical planning and housing Fata needs $50 million, water and power $54 million, industry $143 million, mining $55 million, trade and commerce $0.6 million.

It also counts key challenges confronted with Fata. These included poor access to public services, socio cultural barriers, limited livelihood opportunities, depleting natural resources, capacity constraints, availability of base line data, skewed development interventions.

The goals and objectives to be achieved for Fata by implementing the development plan included promotion of just, peaceful and equitable society, basic social needs/disparities institutional and financial capacities, expansion of opportunities, increased livelihood security and monitoring and evaluation.

The governor told the participants that the government was actively pursing an agenda of bringing deprived and underprivileged people into main stream by providing them basic facilities. He demanded that Pakistan's development partners should come up with generous financing support to help Islamabad implement its agenda.

He was of the view that Fata traditions and rules will be followed in development process to make the people of that area feel that their were on board for consultative process for the plan. He said employment and hope for better future could help change thinking of youth in Fata and less developed areas of Pakistan and shun away extremism. He said the development agenda will change the lives of the people in less developed areas and encourage them to participate in healthy activities.

The participants of the forum were informed about the step taken to improve law and order situation in Fata. Japanese ambassador was told in response to his question that NWFP and political agents in Fata will facilitate visit of a Japanese fact-finding mission to see the realities on ground in that area.

http://www.brecorder.com/index.php?id=556703&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*US working on five-year financing plan for Fata *

ISALMABAD (April 28 2007): The United States Agency for International Development (USAID) senior deputy assistant administrator Asia and Near East Bureau, Mark Ward, on Friday said that Washington was working on a five-year financing plan for Federally Administrated Tribal Areas (Fata) and other bordering regions of Pakistan and Afghanistan.

He told a press conference here that US fully endorses Pakistan's strategy that extremism is directly linked with poverty and only a job-oriented multi-pronged strategy could address the related issues to bring the people of affected areas into mainstream.

He said that a legislation was before the US Congress for approval and as soon as it would be cleared the US would push forward Fata development plan. He added that US does not want Taliban-like action from Afghan authorities to stop poppy cultivation. He said US was making huge investment in Afghanistan.

Earlier, Ward issued a statement at Pakistan Development Forum reiterating unflinching US support for Pakistan and its northern bordering region in particular Fata.

The statement said the US pledged $1.5 billion five-year development assistance program to Pakistan. USAID is a vital development partner in delivering the assistance. Other US government agencies provide a range of other assistance related to food assistance, refugees and other areas. It said the core US development assistance program in Pakistan focuses on four main areas: education, health, good governance and economic growth.

All four areas are vital to Pakistan's future. It is no accident that the program includes a heavy emphasis on key social sectors, including health and education. The statement added that the US applauds Pakistan's ongoing efforts to both increase investments in these two areas while also improving the quality of services, and looks forward to greater investments in education and health in the near term.

It noted that in keeping with the precepts of the Paris Declaration, US appreciates Pakistan's efforts for setting development priorities and in working with its international partners to achieve them. The US also noted that, at an operational level, US development support to Pakistan demands significant element of budget support aimed at promoting macro economic stability while also increasing investments in the social sectors, including health, education and water.

It said that for 18 months, two additional areas of US interest and support have emerged. First, in the immediate aftermath of the October 2005 earthquake that devastated parts of northern Pakistan, the US public and private sectors responded with more than $300 million in immediate emergency relief.

The statement said it was now year two of follow-up of earthquake reconstruction program to which the US is contributing an additional $200 million. It said the US commends the Erra for commitment and dedication in pursuing Pakistan's "build back better" objectives in the earthquake affected areas.

Second, the US acknowledges the government of Pakistan's new initiative for the Federally Administrated Tribal Areas (Fata) development and brining it on this years PDF agenda. It said the US strongly supports the initiative and looks forward to work with Pakistani partners and other donors in the future in support of their effort to improve the lives and livelihoods of the people living in this important area.

http://www.brecorder.com/index.php?id=556849&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*US and UK investment crosses $1 billion mark *

KARACHI (April 29 2007): The US and the UK's investment in Pakistan have crossed $1 billion, reaching all-time high level during July-March. Similarly, the share of both the countries in overall investment in Pakistan also reached 41 percent as compared to 25 percent during the last fiscal year.

Pakistan is the strategic partner of the United State of America (USA) in the war against terror, contributing increased US investment in the last few years. Statistics show that after the 9/11 and since war against terrorism, for the first time during the current year Pakistan is benefited by USA and the United Kingdom (UK) through their investments.

The UK and the USA's share in foreign investment has risen by 16 percent to $2.2606 billion, which is 40 percent of the total investment during July-March of the current fiscal. It was only 25 percent or $841.4 million of the total investment during the last fiscal year 2006.

According to the central bank statistics, during the first nine months of the current year, the USA has invested $1.240 billion as compared to $710 million during the fiscal year 2006, denoting a rise of 75 percent or $530 million against 2006.

In 2001-02 fiscal year, when war against terrorism started, US investment in Pakistan stood at $324.7 million and has been rising gradually, which has now touched a new peak of one billion dollar.

The US investors have invested $604.9 million in the term of portfolio investment and $935.8 million as foreign direct investment (FDI) during July-March of the current fiscal year 2007.

UK is the second leading country in foreign investment as its investment grew by 676 percent or $888.4 million during the first nine months of the current fiscal. UK's investors have invested some $1.019 billion during the first nine months of the current fiscal year as compared to $131.4 million during complete last fiscal year 2006.

FDI by UK has witnessed a growth of 407 percent or $556.9 million to $693.6 million during the current fiscal, while portfolio investment has taken place after one-year gap, it was $0.3 million in fiscal year 2004-05 and during July-March of the current fiscal it has recorded $326.3 million.

Other leading countries in foreign investment are China, Netherlands, United Arab Emirate, Saudi Arabia, Singapore and Switzerland. China is on the third position with $708.4 million investment, while Netherlands has invested $500.9 million, United Arab Emirate $362.3 million, Singapore $191.5 million, Saudi Arabia $105.1 million, Switzerland 67.3 million investment during July-March of the current fiscal.

http://www.brecorder.com/index.php?id=557121&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Government committed to achieve MDGs by 2015: Shaukat *

ISLAMABAD (April 29 2007): Prime Minister Shaukat Aziz on Saturday said Pakistan was committed to achieve millennium development goals (MDGs) by the end of 2015 and was moving ahead in the right direction. He was addressing the inaugural session of two-day international conference on "Governing for MDGs"-with focus on incentives, ownership and institutions.

The event was organised by the National Reconstruction Bureau and the World Bank Institute and sponsored by the government of Japan (PHRD Programme), Canadian International Development Agency (CIDA) and United Nations Development Programme (UNDP).

Shaukat Aziz said, "Our government is pursuing a national agenda and national priorities and not personal agenda or priorities in everyday affairs." He said the government through "good governance and transparency" was moving forward rapidly to pursue and achieve the MDGs and had undertaken a series of reforms dealing with improvements in all sectors.

The eight millennium development goals (MDGs) respond to the world's main development challenges and include eradication of extreme poverty, universal primary education, gender equality, reduction of child mortality, maternal health, HIV/AIDS and other diseases, environmental sustainability and developing a Global Partnership for Development.

The Prime Minister spoke at length about the progress Pakistan had made in each of these areas and said unless "there is a sense of ownership in the home-grown policies and self-reliance, it is difficult to achieve these ambitious goals."

He attributed the success to the "continuity and consistency" in the policies of the government to reform country's political, economic, trade, banking and other sectors.

He admitted that there were still challenges in some areas, but said with a clear sense of direction and sincerity of the leadership, these would be met. "We have a long way to go and undertake more reforms in every facet of society," he said.

He said a strong nation was built on the foundations of a strong economy and during the past eight years the government had succeeded in macro-economic policies.

He said Pakistan from an "anaemic and over-borrowed economy" now has a robust financial status with a growth rate of 7 per cent. He said the target for this year looked strong, as it was a good year for the agriculture sector, while the manufacturing sector was also likely to go into double digits.

He said the size of the economy had doubled, the per capita income this year was likely to go up to $950 and cross $1000 mark next year-the highest in South Asia.

Aziz said at the same time the poverty declined from around 34.5 per cent to 24 per cent. He said the urban poverty dropped from 20 per cent to 15 per cent, while the rural from 39 per cent to 28 per cent and 13 million people have come out of the vicious circle of poverty.

However the Prime Minister said the benefits of the economic growth need to be distributed across all segments of the society. He said the higher yield of crops this year was due to the balanced use of fertilisers where the farmers were advised to use both nitrogenous and phosphates. He said brick lining of watercourses, availability of agro credit, better seeds and the helpful mother nature all played their part in this respect.

The Prime Minister said the construction of the new Bhasha dam will increase country's water storage capacity manifold, help meet country's energy needs, prevent silting at Tarbela and add around 2 per cent to country's GDP.

The Prime Minister said the government was continuing with the reforms and was doing well in some areas, while in others more efforts were being made. He said the reform process was very challenging as people are comfortable with status quo.

"If you want to change, if you want to get people doing things differently, it means lot of effort, lot of leadership and then you start getting the results." Shaukat Aziz also mentioned the reforms in the taxation sector and said revenue collection has gone up by 25 per cent, despite the initial criticism.

He said the country's development momentum was way above from where it was some years back and the budget in this regard was much higher than it was a few years back. Prime Minister Aziz said the government was according high priority to education at all levels. He said the public private partnership was a big success.

He acknowledged the role of 'madaris', religious seminaries, in imparting education and said the government was mainstreaming these schools by asking them to impart formal education in all subjects. "Though a very few of these 'madaris' got carried away, yet the bulk was an important part of Pakistan's education system."

"Every faith has seminaries and we are not apologetic about these," he added. He said the government has also initiated short courses to impart various skills to the people.

The Prime Minister said the government has empowered women at all tiers and their job quota has gone up. He said they were being empowered politically and economically and more facilities were being provided to them in education and income generation schemes.

"No nation can progress, unless its women were part of its development," Aziz said and mentioned the high representation of women at national, provincial and local government levels in the country.

On environmental issues the Prime Minister said the government was conscious of the impact of the global warming and said a Centre on Climate Change was conducting research to monitor the impact on Pakistan.

He said the government was also aware of the demographic dividend and said it was investing more in healthcare and education. He said unlike the large ageing population in the developed world, the young Pakistani generation was all poised to play a leading role in the country's development. He said Pakistan was also now part of N-11 group and was part of high potential countries.

The Prime Minister said the media in the country was growing rapidly, creating more jobs and opportunities. Prime Minister Aziz also mentioned the phenomenal growth in the telecom sector and said its tele-density has risen from 4 per cent to 38 per cent and brought in direct and indirect investment of US 7 to 8 billion dollars.

He said the government would continue to work on all areas, as it believes that the people need to feel a change in their lives. "People have to feel a change, look forward to a better tomorrow and we are committed to provide it to them," he added.

He said for the accomplishment of the MDGs it was vital that a sense of ownership is created through various facets of society and government where both the host country and its development partners work together. The Prime Minister later launched the MDG countdown timer, showing 8 years and 248 days remaining till the deadline.

http://www.brecorder.com/index.php?id=557120&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Consortium working on 1800 megawatt power for Karachi *

KARACHI (April 29 2007): A consortium of investors from Abu Dhabi, Singapore and Italy and the City District Government are jointly working on a 1800 mw power generation project to ease electricity shortage in Karachi, it was learnt on Saturday.

The project would be set up near Port Qasim Authority for which land has already been acquired. Since the project is being set up near the sea, it would use seawater to meet plant need. Along with electricity, sizeable quantity of desalinated potable water would also be available to meet the need of the upcoming industrial site in Port Qasim.

Members of the consortium comprising Tanveer Zaidi from Abu Dhabi, serving as co-ordinator of the group, Stefano Gianati from Italy, Giovani Palo and Larry Salam from Singapore under the leadership of Naib Nazim Nasreen Jalil called on Sindh Governor Dr Ishratul Ibad Khan and briefed him on the project.

The consortium informed the governor that the government of Abu Dhabi had given as gift a few heavy-duty generators to the city government. By next year these generators would generate 320-mw power. More plants to produce 1000-mw are on their way to Pakistan.

To implement the project companies from Singapore and Italy have set up a joint company and named it as 'Portec. This company would take care of operational and maintenance responsibilities and finances would flow from Abu Dhabi.

The governor had asked the consortium to work on the project on priority basis and install all units without loss of time. He assured the consortium of full assistance in their venture.

The governor informed the consortium that power needs of the city were on the increase as more industrial units were being established and commerce and trade activities are expanding. He said that there was constant expansion in civic needs and there was overall growth in industrial activities in the city and around it.

He said that only two years ago there were 40 industrial units in Port Qasim area whereas the number of units had gone up to 100. All these units were operational now, he added. The governor said that to create facility for industrial units 800 acres of land had been acquired in the Port Qasim area.

He said that a new industrial site was in the offing in that area. With the increase in industrial units more jobs would be available and considerable activity in the housing sector would begin. To meet electricity needs of this site where industrial units, housing and commerce would increase, new areas for power generation would have to be explored.

http://www.brecorder.com/index.php?id=557098&currPageNo=1&query=&search=&term=&supDate=


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## Neo

April 29, 2007 

*$160 million floating LNG terminal at Port Qasim*

KARACHI, April 28: Port Qasim Authority (PQA) and Pakistan Gas Port on Saturday signed an implementation agreement for setting up a floating LNG terminal at the Port Qasim at an estimated cost of $160 million on BOT basis, having a capacity of three million tons per annum.

PQA chairman vice admiral M Asad Qureshi and Pakistan Gas Port chairman Iqbal Z Ahmed signed the agreement on behalf of their respective organisations in the presence of minister for ports and shipping Babar Khan Ghauri.

Speaking on the occasion, the minister said that the country needed rapid advancement, and it was necessary that there was no negative propaganda.

He said his ministryâs performance had been appreciated by the US diplomat who stated that the ministry was a role model for others.

Mr Ghauri said in a recent meeting in Islamabad when a question was raised that how quick a piece of land is allotted for setting up an industry, his reply was only 24 hours. However, he said it was unfortunate when you work efficiently, it was branded with such negative remarks that some speed money may have been used to fasten the process, etc.

The minister said that Pakistanis had played a major role in the development of Dubai where trades, like banking, airlines and many other projects and systems, were developed by our nationals, but unfortunately in Pakistan when anyone works hard and delivers goods, he is branded as corrupt, and other negative remarks are given against him.

There was a time, he said, when there was a flight of capital from Pakistan and many Pakistanis even today have overseas setups and houses, but today under the vision of the president and the prime minister, investment is coming to the country and job opportunities were being created.

Mr Ghauri lauded the role of the board of directors of the PQA and said their cooperation and guidance had played a great role in fast progress of the port.

The PQA, he said, was being run on landlord concept and the chairman and his team are dedicated to rapid industrialisation of the port area and upgradation of port facilities to meet the growing demand of port users.

In his address of welcome, the PQA chairman said there was little difference between Dubai and Port Qasim as both were having only sand dunes, but after 30 years the port has become fully operative and a large number of big industrial units, including Pakistan Steel, are functioning in its vicinity.

Presently, he said 10 private sector projects are in the process of being set up at an estimated cost of $4.5 billion.

After deepening the channel, he said freight charges are expected to come down by $2 to $8 per ton.

Similarly, he said PQA contributed highest revenue at Rs70 billion to the national exchequer in the year 2005-06.

Natural gas plays a key role in countryâs energy and accounts for more than 50 per cent of its requirement.

With accelerating economic growth and rapidly rising demand of energy, there would be acute shortfall in power and gas.

The projects is expected to come into operation by March next year.

The floating storage and re-gasification terminal by the Pakistan Gas Port is the first of its kind in the country and second in the world.

The project is a green field development, inclusive of financing, construction, operation and maintenance of floating LNG terminal, including de-gasification, storage of gas, dredging from navigation channel to the terminal, all equipment and pipelines.

http://www.dawn.com/2007/04/29/ebr2.htm


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## Neo

April 29, 2007 
*India to import cement*

ISLAMABAD, April 28: India is considering a proposal to import cement from Pakistan to meet its local shortage, said President Islamabad Chamber of Commerce and Industry (ICCI) Nasir Khan.

He said the proposal was discussed at length during a meeting with Indian Commerce Minister Kamal Nath in New Delhi recently. The delegation also discussed five-year multiple visa for Pakistani businessmen.

According to a press release of the chamber, the Indian minister informed the delegation that annual production of cement in India was around 120 million tons, whereas the demand is about 140 million tons.

He said that India was facing shortage of 20m tons of cement per annum and is looking to import cement from Pakistan. Mr Nath said that India was not installing any cement plant in next 3-4 years, whereas the demand is increasing by 11pc a year and asked the Pakistani cement manufacturers for supply of cement to India.

The delegation also took up the matter of 500 tons consignment of Lucky Cement, which was stopped at the Indian port due to inspection by Indian agencies. The Indian minister on the request of ICCI immediately ordered the release of the consignment.

He promised to look into the ICCI proposal for the inspection of cement consignment by International agencies like Cotecna, SGS etc instead of inspection by the Indian agencies.

http://www.dawn.com/2007/04/29/ebr10.htm


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## Neo

Sunday, April 29, 2007 

*Pak-India trade expected to cross $1.5b in 2006-07*

NEW DELHI: Trade between India and Pakistan has shown enormous buoyancy and is expected to cross $1.5 billion in fiscal year 2006-07.

Exports to Pakistan in April-December (2006-07) stood at $980.33 million while imports were $247.48 million during same period, according to Indian official figures. A business delegation led by president of the Islamabad Chamber of Commerce & Industry Muhammad Nasir Khan called on Indian Minister of Commerce & Industry Kamal Nath here, and expressed hope that economic ties between the two countries would strengthen in the near future.

Kamal Nath highlighted many benefits to both India and Pakistan if trade relations between them improve, as it would make both countries more competitive in an increasingly globalised economy.

He hoped that Pakistan would grant the much-awaited âmost favoured nationâ status to India and said that trade between the two nations that currently takes place through other countries, would then be replaced by direct trade. The Pakistani delegation requested to ensure easing of visa regime for Pakistani businessmen by the Indian government. Kamal Nath assured that the government of India was committed to strengthening economic ties with its neighbour and this issue would also be taken care of in due course.

The main commodities of exports to Pakistan include sugar, dyes, plastic products, and cotton, while the main import items from Pakistan are petroleum and crude products, fruits and nuts (excluding cashew nuts), cotton yarn and fabrics, and organic chemicals. 

http://www.dailytimes.com.pk/default.asp?page=2007\04\29\story_29-4-2007_pg5_3


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## Neo

Sunday, April 29, 2007 

*Import of agri & other chemicals drops by 3.15%*  

KARACHI: Pakistanâs import of agricultural and other chemicals stood at US$ 3,098,410 during July â March 2006-07 as compared to US$ 3,199,339 in the same period of last year, showing a decline of 3.15 percent.

Fertiliser manufactures comprise the major portion of agricultural chemicalsâ import. Importers shipped a quantity of 920,477 metric tons (MT) fertiliser manufactures at US$ 258,955 in the first nine months of this fiscal year as compared to 1,950,704 MT at US$ 543,597 imported in the corresponding period last year. 

A quantity of 20,394 MT insecticides worth US$ 73,377 was imported in the first nine months of this fiscal year as compared to 25,812 MT imported at US$ 88,682, registering a decline of 17.26 percent.

However, a substantial rise was observed in the import of plastic material, medicinal and other chemical groups. Total import of plastic material increased up to 10.47 percent during July â March 2006-07 as importers shipped a quantity of 601,163 MT at US$ 845,776 as compared to 624,923 MT at US$ 765,630 imported last year. 

Medicinal import increased up to 18.65 percent. Importers shipped a quantity of 8,743 MT at US$ 297,543 as compared to 7,951 MT imported at US$ 250,773. 

While an increase of 4.65 percent was observed in other chemical groups.

http://www.dailytimes.com.pk/default.asp?page=2007\04\29\story_29-4-2007_pg5_8


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## Neo

Sunday, April 29, 2007 

*ADB to help Pakistan enhance exports*

By Sajid Chaudhry

ISLAMABAD: A high level advisory group of the Asian Development Bank (ADB) would help Pakistan to identify areas for investment and products which could be produced on competitive basis for enhancing exports. 

ADB high level advisory group comprising experts of international repute would start working and within next six months would recommend Pakistan what is best possible to produce to enhance exports from Pakistan.

Juan M Miranda, Director General, Central and West Asia Department, Manila based ADB disclosed this during an interview with Daily Times. Mr Miranda is visiting Pakistan on an official tour to attend Pakistan Development Forum and consultation with Pakistani authorities on issues of mutual interest. 

Advisory group would also look into what are the options available for reforms in the important new areas for improvement to improve Pakistan âs export base and competitiveness regionally and internationally, he added.

âPakistanâs export base is narrow and diversification of export base is the need of time to tap opportunities that are available and would be available to Pakistan by conclusion of Doha Development negotiations.â

Replying to a question on causes of negligible foreign direct investment in export oriented industries of Pakistan he said, non-availability of required infrastructure is the major bottleneck in attracting foreign direct investment in export-oriented industries. 

âAvailability of infrastructure for setting up of export industries is pre-requisite for attracting foreign direct investment and competitiveness of the export oriented unit.â 

Investors do not find it feasible to invest in a sector where they are not competitive as compared to other regional competitors, he mentioned. 

Pakistan has huge potential to attract foreign direct investment in export-oriented industries if government is able to provide required infrastructure, which includes availability of roads, transportation facilities, security, utilities, raw materials, easy access to domestic as well as to international markets, he said.

Trade and current account deficit are the areas, which need the government attention; however, he said that higher budget deficit is due to earthquake expenditures. 

Replying to a question on state of economy in Pakistan, he said, âWe are optimistic about Pakistan âs economic future and hope that this country would be able to maintain its current growth level through ensuring ongoing reforms.â 

Pakistan has been in difficulties in the past, but now its over. Pakistan has sound basis for economic growth and to reap the benefits of its reforms process. Second generation reforms that are the outcome of the first phase of reforms need to be implemented to ensure sustained economic growth. 

Pakistan is the fastest growing economy in the region and its future growth prospects are bright. Elaborating this, he mentioned that commitment by the government of Pakistan to follow reforms is essential and rewarding for the country as well its population. 

He said Pakistanâs economy could perform much better if the connectivity of the country with regional markets is further improved; investment in manpower increased to fill the skill gap and investment environment is further improved.

On Pakistan and ADB relations, he said Pakistan is an active partner of the bank and is benefiting from its services. ADB wants to serve each deserving segment of society of the country through project financing, technical assistance and grants. He expressed satisfaction on the implementation of ADB funded projects and said completion of such would bring a major positive change in the life of the peoples of Pakistan and its economy.

http://www.dailytimes.com.pk/default.asp?page=2007\04\29\story_29-4-2007_pg5_9


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## Neo

Saturday, April 28, 2007 

*âRecord $5b FDI to boost worldâs confidence in Pak economyâ*

LONDON: Pakistan High Commissioner to Britain, Dr Maleeha Lodhi has said a record foreign direct investment of around US$ 5 billion this year will boost greater international confidence in Pakistan's economy.

Speaking at a largely attended seminar on private equity investment organised by a top law firm in the city, SJ Berwin, Dr Lodhi said investment flows into Pakistan are at a record level. 

Nevertheless, she pointed out, Pakistan's remarkable economic turn around remains under reported and under recognised in the western media.

In her presentation titled 'Why Invest in Pakistan', Dr Lodhi said that Pakistan's economic reforms and growth path had acquired an autonomy from partisan politics, and was in any case underpinned by a consensus among political parties about the content and direction of economic policy.

Dr Lodhi said there were over 600 multinationals operating in Pakistan which was testimony to the country's investor-friendly climate. "Today foreign investors are very upbeat about Pakistan's economic future." 

"Recent months have seen major new investment flows into Pakistan. While Pakistan's international bond issues and equity floatation through GDRs having been consistently oversubscribed and are priced at fine margins."

Pakistan, she asserted, had achieved a decisive transition from a vulnerable to a resurgent and viable economy. "The country's strong recovery is predicated on domestic demand sustaining the growth momentum." 

Pakistan's envoy said in the past, geo-strategic location had been a challenge, but in future Pakistan wanted to convert this into an asset. As a country of about 160 million people with a growing middle class, Pakistan also serves as a gateway to the markets of Central Asia and the adjacent Middle East, she added. 

She cited several factors as to why Pakistan should be considered an attractive option for foreign investment. This included consistency of policy, a stable exchange rate and the capacity and resilience the economy had developed to meet exogenous shocks and mitigate event risks.

Dr Lodhi said Pakistan had an open and foreign investor-friendly trading and production regime in which investors could freely choose which sector they wished, with no government sanction required. Addressing attention to the level playing field provided to investors, she said, equal treatment is given to foreign and domestic investors, with uniformity in rules and regulations applicable to all. 

She also spoke about the standards of corporate governance that have been strengthened and enforced, which should give foreign investors greater reassurance. 

In conclusion, Dr Lodhi quoted a recent World Bank report, Doing Business 2007 that ranks Pakistan higher than the countries in South Asia in terms of ease of doing business.

http://www.dailytimes.com.pk/default.asp?page=2007\04\28\story_28-4-2007_pg5_3


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## Neo

April 28, 2007 

*PIAC suffers Rs 3.95b loss after tax*

KARACHI: Pakistan International Airlines Corporation (PIAC) has incurred Rs 3.95 billion loss after tax in the first quarter ended March 31, 2007.

The losses in the first quarter were higher by 38 percent against Rs 3.08 billion, it suffered in the same quarter of the last year.

The financial results for the said quarter were approved by PIAC board of directors in its meeting, a notice to Karachi Stock Exchange stated here on Friday.

The net turnover showed growth as it stood at Rs 17.67 billion as compared to Rs 16.93 a year earlier. The cost on fuel head indicated decline and stood at Rs 7.42 billion in the period under review as against Rs 8.03 billion a year earlier. The administrative expenses increased to Rs 969 million in the said period compared with Rs 786 million a year back.

Financial costs also rose to Rs 1.56 billion against Rs 906 million a year back and loss from operations also went up to Rs 2.50 billion as against Rs 2.11 billion in the said period of previous year.

Attock Cement reported 63 percent decline in its net profit during the quarter ended on March 31, 2007. It earned Rs 112 million in the said quarter as against Rs 183 million in the corresponding period of previous year. However, Attock Cement posted 12 percent growth in its net profit in the first nine months of current financial year. The net profit was Rs 612 million in the period under review as against Rs 545 million in the same period of previous year.

The net sales of the company stood at Rs 1.22 billion in the first quarter of 2007 compared with Rs 849 million in the same period of previous year and earnings per share came to Rs 1.56 in the said period against Rs 2.55 a year earlier.

The Indus Motor Company Ltd earned a net profit of Rs 1.9 billion in the first nine months of current financial year as against Rs 1.8 billion in the same period of previous year, posting a growth over five percent due to increase in sales volumes, optimization of cost and favourable exchange rate.

The net sales of the company stood at Rs 28.28 billion in July-March 2006-07 compared to Rs 25.35 billion in the same period of last year and earnings per share came to Rs 24.53 in the said period.

Arif Habib Securities Ltd has earned a profit after tax of Rs 440 million in the quarter ended on March 31, 2007, aggregating to Rs 2.5 billion in the first nine months of 2006-07. This profit translates into a basic and diluted earnings per share of Rs 4.40 and Rs 25.07 respectively on the enhanced capital of Rs 1 billion compared to Rs 270 million for the corresponding period of previous year.

The company announced a bonus share of 200 percent, two shares for every one share held in addition to the interim cash dividend and two bonus issues declared earlier during the current financial year. 

JS Bank Limited (JSBL) has declared a pre tax profit of Rs 8.7 million and a post tax profit of Rs 7.4 million for the first quarter ended March 31, 2007.

http://www.dailytimes.com.pk/default.asp?page=2007\04\28\story_28-4-2007_pg5_4


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## Neo

*Pakistan's auto industry plans to invest Rs225b*

29 April 2007 

ISLAMABAD â Pakistan's auto industry plans to invest Rs225 billion in the next few years to achieve the new target of 500,000 cars a year, generating more than 30,000 jobs in the sector.

At the current, rate by 2010, Pakistan would make 500,000 cars a year and would pay Rs100 billion in taxes provided the government ensured a long-term and consistent policy for protecting the interests of the local industry and to attract fresh investment. 

Officials concerned said the auto industry has shown an average growth of about 25 per cent per annum over the last three years. During the fiscal year 2006-07, the growth was expected to be between 10-15 per cent.

The import of used cars was continued to hurt both local car manufacturing firms and vendors, an official said adding that it would also severely affect revenue collection. 

To a question, he said that the import of used cars was not a threat to local production. He added that in the neighbouring countries including India and Thailand the customs duty on import of used cars was much higher than in Pakistan. 

The demand for automobiles in the last five years has been spurred by a positive economic outlook and political stability, he said.

He said the proposed policy should be framed in such a way to protect the national interests. Encouragement to local production would help in generating more employment in the country, he added.

The government had already worked out a tariff structure under the new auto policy, which would be presented for approval at the next meeting of the Economic Co-ordination Committee (ECC) of the Cabinet.

He said the prices of cars depend on the localisation of the parts manufacturing sector. He said 35 per cent of parts are still being imported for assembling local cars.

He said that auto manufacturers alleged that the government did not have any law to control the price of cars.

Until 2000 Pakistan was producing around 40,000 vehicles annually but production has since grown four times to around 160,000. He said after the 9/11 incident, the purchasing of cars has increased tremendously because of introduction of car financing schemes by various banks and overall growth in the economy.

http://www.khaleejtimes.com/Display...l/business_April701.xml&section=business&col=


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## Neo

*MONEY WEEK: surge in money supply continues *

KARACHI (April 30 2007): A month ago, on March 17, the incremental money supply during FY07 stood at Rs 335.5 billion or 9.82 percent after having dropped from Rs 350.2 billion or 10.25 percent on March 10. It was hoped that growth in money supply would still continue though it may not reach or exceed the year-end target of Rs 460 billion.

A month afterwards, on April 14, it had expanded by 11.63 percent or Rs 397.2 billion, an increase of Rs 62.3 billion on the March 17 level. The entire expansion effect originated from government/private sectors on the credit side (whose borrowing/credit utilisation reached Rs 129.6 billion and Rs 266.4 billion respectively) and a net build-up of assets of Rs 72.7 billion on the NFA side.

The increase in money supply would have been higher but for the contraction effect of credit to PSEs (which showed a net retirement of Rs 2.3 billion) and changes on account of other items (net) or OINs (which showed higher liabilities than assets to the extent of some Rs 69.5 billion) which neutralised the expansion impact of above sectors to some extent.

Nearly, 30 percent of all incremental money supply consisted of increase in currency in circulation (up Rs 119 billion representing government borrowing from the SBP and rupee counterpart of increased home remittances) and another 70 percent by deposit money, including demand deposits (up Rs 1,313 billion representing private sector borrowing), time deposits (down Rs 1,037 billion reflecting depositors disenchantment about bank profits) and RFCDs (up Rs 1.7 billion).

At its present level, it appeared well nigh possible that by the end of the year not only that money supply would catch up the target, it may even exceed it except that the government receives some foreign exchange through privatisation, floating of Euro bonds or successful listing of GDRs of government-owned companies at foreign stock exchanges to cut to size its bank borrowings and simultaneously the resultant surge in foreign assets of the system is neutralised as economic agents surrender cash funds to buy additional foreign exchange to finance their increased trade bills.

Meanwhile, the government borrowing, which stood increased to Rs 73 billion during the year on March 17, shot up to Rs 129.6 billion on April 14, suggesting increased pressure on money supply originating from the government sector which understandably has inflationary implications.

Enhanced government borrowing was entirely on account of budgetary borrowing (up Rs 180.3 billion on April 14 as against the whole year target of Rs 120.1 billion) as borrowing for official commodity procurement especially wheat still stood at Rs 50.5 billion in the wake of the beginning of the harvest of an expected bumper crop of wheat in Punjab, Sindh, NWFP and Balochistan though harvest in NWFP and upper Punjab starts late.

The rise in budgetary borrowing, however, was entirely on account of the federal government whose net borrowing on April 14 stood at Rs 185.5 billion, while provincial governments borrowing showed a net retirement of credit to the extent of Rs 5.2 billion on the same date.

The private sector credit which during FY07, showed an expansion of Rs 246.6 billion up to March 17, rose further in the subsequent weeks and stood at Rs 266.4 billion on March 14, showing an increase of about Rs 20 billion during the last one month. At this speed, it is nearly an impossibility that the private sector credit would reach its whole year target of Rs 390 billion.

The growth in credit to the private sector which showed deceleration as year-on-year basis, it rose by 12.57 percent during July 1-April 14 (FY07) compared with the growth of 19.84 percent during the same period last year. The data on the sector-wise growth in the private sector credit are not available though available information for the period July-February FY07 showed that credit to the business sector grew by 13 percent compared with 14.8 percent in the corresponding period last year.

Within it, credit for working capital (including trade financing) grew by 15.8 percent compared with 15.4 percent in FY06 while credit for fixed investment grew by 6.7 percent compared with 13.7 percent in FY06. Also, credit to textile sub-sector grew by 8.1 percent compared with 17.2 percent in the corresponding period last year.

Within it, credit for working capital (including trade financing) rose by 15.7 percent compared with 23.7 percent in FY06 while credit for fixed investment decreased by 10.5 percent compared with a rise of 3.3 percent in FY06.

The credit to business (excluding textiles) increased by 15.1 percent compared with 13.8 percent in FY06 and, within it, the credit for working capital (including trade financing) rose by 15.8 percent compared with 12 percent in FY06, while the credit for fixed investment increased by 13.8 percent compared with a rise of 18.8 percent in FY06. It may be seen that the slowdown primarily stemmed from a deceleration in fixed investment loans (particularly in the textile sector) as the working capital requirements actually accelerated.

According to the latest SBP quarterly report, the deceleration in demand for fixed investment loans is mainly due to structural problems in the real sector of the economy that reduced its ability to absorb additional credit at the same pace as in the past two years. Excluding the textile sector, the growth in the rest of business sector advances seemed to have increased.

According to the latest SBP report data on sectoral distribution of credit revealed that during July-January FY07 major slowdown was witnessed in the commerce and trade sector, the growth of which was only one-thirds of the growth in the preceding year.

Further, the growth in personal sector advances during July-January FY07 was almost half the growth during July-January FY06. Within personal loans, all consumer financing products registered slowdown, with loans for consumer durables showing a net retirement which expected because of accelerated retirement of maturing past consumer loans.

In line with the position of NFA of the banking system, liquid foreign exchange reserves, which stood at $13,506.5 million on March 17 ($11,244.6 million with the SBP and $2,261.9 million with the scheduled banks) have been reported to have risen to $13,590.7 million on April 14 ($11,421 million with the SBP and $2,169.7 million with the scheduled banks). (For comments and suggestions research.dept@aaj.tv)

http://www.brecorder.com/index.php?id=557701&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Annual coal production in Punjab rises to 600,000 tons *

LAHORE (April 30 2007): Punjab Minister for Mines and Minerals (M&M) Muhammad Sibtain Khan has said that the overall annual production of coal has increased up to 600,000 tons in Punjab which would be further increased by discovering new reserves in various areas.

Addressing a high level meeting of M&M department, the minister said that the work to explore new area of coal had been speeded up and the services of private sector were being utilised for this purpose. He said that the consumption of coal was increasing day by day. The minister further said that during one year, more than 129 licenses had been issued for the exploration of coal in various areas and 332 leases had been granted the concerned people.

http://www.brecorder.com/index.php?id=557731&currPageNo=1&query=&search=&term=&supDate=


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## Neo

April 30, 2007 
*Drastic energy-saving measures on the cards*
By Khaleeq Kiani

ISLAMABAD, April 29: The government is set to introduce this week drastic measures for energy conservation, including closure of commercial activities after sunset and possibly two weekly public holidays, to overcome the energy crisis in the country.

This is part of a larger âdemand management planâ which will be announced on Monday in Karachi by Minister for Water and Power Liaquat Ali Jatoi and come into force the following day for about four months, subject to approval by Prime Minister Shaukat Aziz.

A senior official told Dawn on Sunday that the prime minister had gone through the plan before leaving for the countryâs commercial and industrial capital where he would hold two meetings â one on the Karachi Electric Supply Corporation situation and the other on energy demand management.

âDemand management is inevitable now because of a wide gap in energy demand and supply,â the official said, adding: âDemand management is better than loadshedding because it allows people to adjust accordingly, instead of living in uncertainty.â

He said industrial concerns would be required to stagger their weekly holidays on Fridays and Saturdays. This would enable power utilities to supply similar quantities on most days of the week, instead of the lean day on Sunday, he said.

An official close to the secretary for water and power said the ministry had also proposed two weekly holidays â Saturday and Sundays â in the public sector. This will not only be an energy-saving measure but also an alternative for business and commercial concerns against their loss arising out of business closure after sunset. All markets and commercial centres would close at 8pm.

There will be no power supply to wedding halls after 10pm and they will have to arrange their own generators if they desired to prolong their functions. Likewise, public street-lightening will be cut by 50 per cent to save another 25MW of electricity every day.

Various programmes and advertisements will be run on the print and electronic media to persuade the general public to save energy. The government hopes that the measures will effectively bridge the gap between demand and supply and there will be only limited scope for loadshedding.

With a demand of about 16,000MW, Pakistan currently faces a shortfall of about 1,000MW, which is partially offset by excessive release of water from two reservoirs without provincial demands for irrigation. Luckily, hydrological conditions are better this year and, according to an estimate, water availability has been at its highest in 12 years. The power shortage, however, has been estimated to reach 2,500MW in June-July.

The demand and conservation plan has been prepared in consultation with power utilities, National Electric Power Regulatory Authority, National Energy Conservation Centre (Enercon) and other stakeholders. The Alternate Energy Development Board and Enercon are also separately working on another plan to encourage use of energy-saving devices through different kinds of subsidies.

The government has not been able to plan for the future despite repeated warnings from Nepra and Wapda and failed to firm up enough power generation capacity as the demand continued to increase and the pace of unplanned village electrification was pushed up on political considerations. Installation of two old and rented power stations of about 300MW is the only capacity addition that has taken place in seven years.

Last year, loadshedding was restricted to two-three hours daily in rural areas and between half and one hour daily in most of major cities. The shortage this year has gone up significantly.

http://www.dawn.com/2007/04/30/top9.htm


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## Neo

*Govt aims to achieve 10pc growth *

LAHORE: Pakistan is likely to achieve a sustainable growth rate of 10 per cent after the completion of National Trade Corridor, building of dams and improvement in the private sectorâs efficiency.

Adviser to the Prime Minister on Finance Dr Salman Shah stated this while addressing a pre-budget seminar on Monday. He said the economy had reached a stage where achieving seven per cent growth target would pose no problem. He said the government wanted the private sector to play its due role in accelerating the growth through higher productivity, which was only 37 per cent in textiles when compared with the productivity of China.

He said after globalisation the domestic producers would become efficient not only in the international but also local market. He said there was no room in the current global trading scenario for negligence or inefficiency.

He said neither exchange rate nor any other policy incentive was as important in lowering the cost of doing business as productivity. He said âwater is a major competitive commodity available in Pakistan and there is a need to utilise this advantage by eliminating wastages in its use and building large reservoirs.â

He said the developed nations at the Pakistan Development Forum, held recently, had agreed to provide funds for developing water resources. Salman Shah said Pakistan was committed to reforms as it was the top South Asian and among top ten global reformers in 2006.

He said Pakistan had the advantage of a huge working age population that should be nourished to unleash the economic potential of the country. However, he admitted education and skill development needed more attention and said the government aimed to increase education spending to four per cent of the GDP.

He said the government had resources, but the institutions lacked capacity to use the amount. Speaking at the seminar, the Adviser to the Ministry of Finance Dr Ashfaq Hasan Khan wondered where the textilesâ competitive edge had gone. 

He said the exports were increasing by 14-16 per cent till June 2006 and then the exports started declining. How the competitiveness could be eroded overnight, he questioned. 

Former caretaker finance minister Shahid Javed Burki advised the government not to distort the statistics and rejected its claim that per capita income had doubled in the last five years. To achieve that growth, he said, the rate should have been 14.5 per cent.

He said the real GDP growth in the past five years averaged 6.7 per cent while per capita income increased by 4.4 per cent, which was commendable. Former finance minister Sartaj Aziz warned that sustainable growth of seven per cent would not be possible at current investment rates of 16 to 17 per cent of the GDP. 

These could generate a growth of four to five per cent and for achieving sustainable growth of seven per cent the country would need investment rate of 28-30 per cent, he added. Textile tycoon Tariq Saigol called for increasing investment ratios in the productive sectors, particularly exports. He pleaded for a more active and result-oriented energy policy.

http://www.thenews.com.pk/daily_detail.asp?id=53694


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## Neo

*Uncertain economic outlook*

THE presentations made at the annual Pakistan Development Forum meeting in Islamabad indicate that the governmentâs assessment of the economyâs performance during the fiscal year 2007 and its future outlook are not fully shared by the multilateral donors. They differ on the specifics as well as the macroeconomic trends that they represent. With a track record of nearly seven per cent growth over four years, the government perhaps suffers from an irrational exuberance while the lending institutions are trying to focus on changing realities. The daunting risks on which the donors tend to focus raise a question mark against the official target of 7.5 per cent GDP growth per annum over the next half a decade. But first the specifics for this year. The officially estimated economic growth at over seven per cent does not tally with the Asian Development Bankâs forecast of 6.8 per cent. The ADB sees inflation at seven per cent, higher than the targeted 6.5 per cent. It further says that government expenditure is likely to exceed the budgeted target because of an overrun in defence spending and high domestic interest rates, with the fiscal deficit surging to 4.5 per cent of GDP. The revenue-expenditure gap may further widen because of non-transparent government spending in an election year.

The State Bankâs second quarterly report 2007 sent to parliament on March 30 notes that âunidentified expenditure was very high, at Rs54.4 billion (0.6 per cent of GDP) which adds considerable uncertainty to the analysis of fiscal trends.â The tax-to-GDP ratio is not improving in any significant way despite an increase in absolute numbers. The multilateral donors have also identified a number of big challenges facing the economy. The World Bank vice-president, Praful Patel, says the countryâs ârural poor are facing the worst kind of poverty.â The government has responded by claims that five million new jobs were created during 2003-06. The key question is whether high economic growth, important for reducing poverty, is out of the boom-and-bust cycle and on the path of sustainable growth. The Asian economies with sustainable high growth rates have been driven primarily by high domestic rates of savings financing robust levels of investment, unlike Pakistan which depends heavily on external capital and financial inflows.

While the six billion dollars in foreign investment expected this year may be good news for the policymakers, it includes an increasing volume of portfolio investments which disappear at the first sign of any economic downturn. And foreign direct investment is not export-oriented. The lack of a world-class infrastructure in critical areas makes export uncompetitive in the international market. Power shortage is a big problem. In spite of rising remittances, now at five billion dollars, the countryâs own foreign exchange earnings are not enough to manage trade and current account deficits. It cannot be denied that Pakistan has the unrealised potential to achieve a high economic growth rate on a sustainable basis. But what makes it uncertain is the model of political economy being currently pursued. A paradigm shift is required to adjust to the changing realities. The first step the government needs to take is

to heed the advice of a representative of a Norwegian delegation attending the PDF meeting, that the Poverty Reduction Strategy Paper II (PRSPII) should be presented to the national and provincial assemblies for their âownershipâ. The parliamentary oversight of the executiveâs policymaking and performance needs to be made meaningful.

http://www.dawn.com/2007/05/01/ed.htm#1


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## Neo

Tuesday, May 01, 2007 

*Govt plans expansion in micro finance network*

By Hamid Waleed

LAHORE: Advisor to Prime Minister on Finance Dr Salman Shah has hinted at establishing an extensive network of micro finance institutions by next fiscal year.

âAn extensive network of micro finance would be ensured in the country under a strategy that finance should reach to the area wherever it is needed,â he said.

Dr Shah was addressing a pre-budget seminar at a local club where Secretary General Finance Naveed Ahsan, Economic Advisor to the Ministry of Finance Dr Ashfaque Hasan and leading economic experts including Sartaj Aziz, Shahid Javed Burki and a good number of industrialists and parliamentarians also spoke.

âNew Poverty Reduction Strategy Paper is under preparation, which takes financial sector as an important pillar of growth,â he said, adding: âThe purpose is to reach out three million beneficiaries immediately.â Dr Shah said anyone could open micro finance bank at the district or provincial level and those who were interested should contact Ministry of Finance.

Dr Shah also made the point that textile was not the only representative of the industry in the country and the industrial base had expanded to the banking, telecom, power generation, information technology and many other areas. 

He warned to the sitting entrepreneurs that there was no room for the inefficiency, bad management and poor business policies under the globalisation and the new business benchmarks had become very tough. 

He said private sector had to play vital role under the new rules of game and government was fully ready to facilitate the industrial sectors for further growth and stability.

The Advisor said the privatisation and liberalisation policy of the government would reach to the logical conclusion and major reforms were required to stimulate further financial, telecom and agriculture sectors.

http://www.dailytimes.com.pk/default.asp?page=2007\05\01\story_1-5-2007_pg5_2


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## Neo

Tuesday, May 01, 2007 

*First fibre link with India to start functioning on 3rd*

By Nauman Tasleem

LAHORE: The first direct fibre optic link between Pakistan and India will start functioning on May 3, sources in the PTCL told Daily Times on Monday.

âThe cable will join the two archrivals through Wagah. It will provide an additional link for faster data and voice communication. It will benefit the people of the two countries because it will help reduce call rates,â said the sources. 

PTCL completed laying the fibre optic cable in April 2006 and only needed governmentâs approval to open the link with India. âPTCL senior officials and staff of Optical Fibre Network Solution Central will make the link operational at Wagah,â a PTCL official said.

In February 2006, the Information Technology Ministry had directed PTCL to carry out a survey for the project. OFNSC was tasked with completing the project. 

From Wagah, the 12-fibre cable reaches the PTCLâs Egerton Road exchange through the Batapur exchange. A coaxial cable was already operating between the two countries. The fibre optic cable will improve the data and voice communication speed. 

Pakistan will also get an additional link for its international communication. âCurrently, Pakistan is linked through South East Asia, the Middle East and Western Europe-3 (SEAMEWE-3) and SEAMEWE-4. The new cable will provide an additional link with other countries,â the sources said, adding that the link would also reduce call rates for India. 

âCurrently, data traffic between the two countries is routed through landing stations in a third country, which drives up cost,â the sources added. Federal Information Technology Minister Awais Ahmed Khan Leghari said the delay was from the Indian side because âthey were reluctant in starting the link because of pressure from their corporate sectorâ. 

The minister said Pakistanâs corporate sector would also benefit from the link because it had only two submarine links now. âIn case the two links are disturbed the third one will keep us in contact with the world. India has six submarine cable links. Pakistan will be able to use these links,â Leghari said. A couple of years ago, one of Pakistanâs submarine cables was cut and the corporate sector, including call centres, faced huge financial loses due to unavailability of data transfer.

http://www.dailytimes.com.pk/default.asp?page=2007\05\01\story_1-5-2007_pg7_6


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## Neo

Tuesday May 1, 2007

*Pakistan's Indus Motor Sells 144,072 Vehicles In 9 Months*

KARACHI, May 1 Asia Pulse - Indus Motor Company (IMC), manufacturers of the Toyota and Daihatsu brands in Pakistan, convened their Board of Directors meeting on Friday (April 27) to review the company's performance for the quarter and nine months ending March 31, 2007.

The sale of locally assembled passenger cars and light commercial vehicles grew by 8 per cent to 144,072 units for nine months ended March 31, 2007. The sale during the quarter also stood at 51,740 units versus 47,814 units sold during the same period last year, a company handout said. 

The combined sale and production of Toyota and Daihatsu brands for the nine months to March 2007 was 36,704 units, up 21 per cent, and 34,819 units, up 16 per cent, respectively.

The sales revenue for the year to date at Rs28.3 billion (US$466.2 million) is a new record and is up 11 per cent over Rs25.3 billion achieved for the same period last year.

The after-tax profit was Rs1.9 billion for the nine months ended March 2006 compared to Rs1.8 billion for the same period last year, primarily due to increase in sales volumes, optimization of cost and favorable exchange rate.

Indus Motor continues to make major investments to expand its plant facilities, including the acquisition of a co-generation facility, construction of a mini global production center for hands-on skill training of employees and extension of CBU yard to cater for increased production volume.

"As a good corporate citizen, the company also participates in various social causes under its slogan, Concern Beyond Cars. Apart from contributing in many health, education, environment and community development projects, Indus is at the forefront in several road safety initiatives," the press release said.

As a member of the United Nations Global Compact, during the UN Global Road Safety Week (April 23 29, 2007), the company recently organized the first National Road Safety Conference, bringing together different stakeholders related to Road Safety. This was in addition to initiatives like the Road Traffic Injury Research Project (with JPMC, AKUH, NED), Road Safety School Campaign organized for 20,000 children, Free Safety Checkup of Vehicles at Toyota authorized dealerships, etc.

http://au.news.yahoo.com/070501/3/13aye.html


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## Neo

*8.6 percent growth in major items exports to EU: TDAP *

KARACHI (May 02 2007): The export of major exportable items ie textile and garments products posted growth in the first eight months of current financial year, the Trade Development Authority of Pakistan (TDAP) said. According to a presentation by CEO, TDAP, Tariq Ikram, to Ministry of Commerce.

The export to European Union (EU) grew by 8.6 percent to $2.8 billion in July-February period of 2006-07, over the corresponding month of previous year. The growth in terms of value registered an increase of $228 million during the said period to EU, a major trading partner of Pakistan.

The analysis of trade statistics indicates that exports of readymade garments, artificial silk and synthetic textile, bedwear, cotton yarn, yarn other than cotton, knitwear, raw cotton, tents and canvas and other textile products to EU posted growth in this period.

The amount of exports of readymade garments was $78 million during the period, artificial silk and synthetic textile at $445 million, bedwear at $32 million, cotton yarn at $26.8 million, knitwear at $9.8 million, raw cotton at $4.9 million, tents and canvas at $3 million and other textile products $6.3 million.

Export of towels, made-up textiles, knitted crocheted and cotton fabric decreased during the period to $11.1, $3.0, $1.6 and $1.0 million respectively.

The exports to major trading partners in EU block--United Kingdom (UK), Italy, Spain, Turkey, Belgium, Germany, and France--increased during this period whereas the exports to Netherlands recorded decrease during the period under review.

The exports to UK increased by $49.7 million, or 13 percent, during July-February 2006-07 over the same period of previous year. The export of bedwear rose to $19.5 million, readymade garments to $19.5 million, knitwear to $17.7 million, artificial silk and synthetic textile to $6.6 million, towels to $3.6 million, raw cotton to $1.2 million, tents and canvas to $0.9 million.

The exports of cotton fabrics to UK declined to $15 million, of made-ups of textile to $2.2 million and cotton yarn to $1.8 million. The exports to Italy increased by $34.9 million or 9.4percent with readymade garments increasing by $9 million, cotton yarn by $8 million, cotton fabrics by $6.8 million, artificial silk and synthetic textiles by $7.3 million, bedwear by $2.9 million, non-cotton yarn by $2.6 million etc.

Whereas the exports of knitwear decreased by $4.1 million and marginal decline in towels and others. The export to Spain grew by $30.6 million or 8.2 percent during the period with readymade garments, artificial silk and synthetic textiles, knitwear, bedwear registering growth and cotton fabric registering decline.

The exports to Belgium rose by $18.7 million or five percent with bedwear, readymade garments, cotton fabrics, cotton yarn and few other registering growth and towels recording registering decrease. The export to Germany registered growth of $17.4 million or 4.7 percent with readymade garments and few others registering growth knitwear and towels recording decrease. The export with France saw and increment of one million dollar.

http://www.brecorder.com/index.php?id=558675&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Gaddani ship-breaking industry a potential source of employment *

QUETTA (May 02 2007): Pakistan's ship-breaking industry at Gaddani along Balochistan coast close to Karachi has a potential for gainful employment of one hundred thousand people. The industry also has huge potential to enhance more revenue to the national wealth in future, a spokesman of the Pakistan Ship-breakers Association (PSA) told PPI in an interview here on Tuesday.

He said ship-breaking industry of Gaddani could be improved if present government continued with no change in duty and tax structure on the industry. The spokesman also said that the association neither sought any tax relaxation nor undue incentives and facilities in the federal and Balochistan budgets for the financial year 2007-08.

He said that the association simply demanded 25 percent regulatory duty on the import of steel junk and illegal imports of substandard material and its easy access to Pakistan Steel Markets. The association said that the government should restrain the use of construction bars made from substandard material, which did not meet PSI standard.

He claimed that steel and other material available from the dismantled ships at Gaddani did not only meet PSI standard but were internationally acknowledged as quality steel scraps for the steel and building sectors.

Besides high quality steel, Gaddani dismantled ships also provided cheapest possible non-ferrous material such as copper, brass, aluminium, machinery, generators, boilers, wood and tools of international standard for country's ever growing sectors of industry and commerce.

The spokesman said that in 1970s Gaddani ship-breaking industry was second in the world after Taiwan. Gaddani beach handled 150 ships for dismantling at a time, meeting country's most demand for steel and steel related consuming sectors, he said.

Asked for the catastrophic downturn in the performance of Pakistan ship-breaking industry at Gaddani, the spokesman said negative policy and programme pursued by former President General Ziaul Haq and former Prime Ministers Nawaz Sharif and Benazir Bhutto hard hit the rock bottom of industry.

There was a time, he said, when Gaddani ship-breaking industry had contributed to the national exchequer Rs 5.3 billion under head of tax revenue in one fiscal year but later annual revenue fell to Rs 160 million only because of federal government's flawed policy and programme mostly politically motivated move to harm Gaddani ship-breaking industry. The spokesman said that President General Pervez Musharraf's vision and Prime Minister Shaukat Aziz 's present government policy have set shipping industry on sound footing for forward looking move.

http://www.brecorder.com/index.php?id=558749&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Why exports slumped and remittances soared? *

Commerce ministry to try and solve this enigma at a presentation tomorrow

By Khalid Mustafa

ISLAMABAD: The top officials of the Ministry of Commerce will be making a much-delayed presentation at the PM Secretariat on Thursday (tomorrow) to try and solve the enigma as to why exports witnessed a slump even as remittances soared.

It is pertinent to mention that the premier had given the assignment to the commerce ministry some time in September to fathom out reasons behind the slow growth in exports, but the ministry took about nine months in preparing its presentation which will now be tabled before Mr Shaukat Aziz on Thursday (tomorrow).

When contacted Asif Shah, the Commerce Secretary, said the prime minister would be given the presentation on exports strategy. However, he expressed his inability to share some of the salient features of the much-awaited presentation, saying it is confidential.

However, according to an official source, Pakistan has not been able to increase its production base and in case it gets orders even then it is a remote possibility that the businesspeople will be able to grasp the opportunity.

The ministry will brief the meeting that the textile sector has been given assistance to the tune of Rs15.4 billion and even then it failed to perform and increase exports up to the mark. The source said that the textile cartel wants more subsidies, which is why it is deliberately showing a slump in exports growth. âHowever, the ball is in the governmentâs court as to how to tackle the issue.â

The source quipped that the inefficient sector is accustomed to the opium of subsidy and this time it should be denied it. âThe government has already asked the World Bank to carry out an in-depth study to solve the puzzle of slow growth in exports and steep increase in remittances,â a senior government official at the Ministry of Finance told The News.

âSince the government lacks the ability to resolve this issue, it has been decided that the World Bank should be entrusted with the task to conduct the study.â However, background interviews with senior officials of the finance ministry reveal that major textile exporters have parked their maximum dividends against their exports somewhere abroad this time and brought in profits in the shape of remittances, illegally saving billions of rupees. This may be mentioned that there is no income tax on remittances. 

The government in the budget for 2006-07 announced to quash rebate system for 5 industries. âThis has actually annoyed the exporters owing to which they have adopted a unique way of compensating themselves by inflicting injury to the national kitty,â they said. However, it is very difficult to establish it with facts and figures and punish the culprits, which is why World Bank has been asked to carry out the study on this particular issue. 

http://www.thenews.com.pk/daily_detail.asp?id=53814


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## Neo

* Pakistan may join âBRICsâ *  

LONDON: Mexico, Turkey, Indonesia and Pakistan are the next generation of emerging markets with the capacity to match or even overtake some of the âBRICâ power houses, accounting firm Grant Thornton said in a report on Tuesday. The report is a follow-up of Grant Thorntonâs annual International Business Report (IBR) that is based on a survey of business leaders in 32 countries. The firm predicted the BRICs â Brazil, Russia, India and China â will account for almost half the worldâs gross domestic product by 2050 but said some other emerging economies were progressing fast. 

http://www.thenews.com.pk/daily_detail.asp?id=53833


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## Neo

May 02, 2007 
*âTrade deficit to reach $13.9bn by June-endâ*  

By Mubarak Zeb Khan

ISLAMABAD, May 1: Exports would have touched $20 billion mark by the end of June 2007 and trade deficit reduced by $5 billion, had the government gradually depreciated rupee against dollar six months ago, said a report conducted by independent economists.

Since the decision has not been taken at that time, the trade deficit is now estimated to climb to $13.9 billion by end of June next with exports at $17.2 billion and import bill at $31.18 billion during the period under review.

The government, however, was reluctant to take such a step for obvious reasons as it would lose a handsome amount in the shape of revenue.

The Central Board of Revenue (CBR) raises more than 46 per cent of its total revenue from imports.

The study revealed that with the 10 per cent devaluation, it was estimated that export value would grow by $2.041 billion, import bill would reduce by $2.418 billion. The accumulative impact on trade deficit would be over $4.5 billion.

Hence the exchange rate of the rupee will rise to Rs67.1 to a dollar from Rs61. However, the external debt liability in rupee term would increase by Rs231.8 billion. The next increase in the budget expenditure would be around Rs30.739 billion after the devaluation, the study revealed.

The lack of pressure on rupee currently is anomalous. It is due to non-recurring foreign exchange flows in the inter-bank market, and, therefore, not sustainable.

When these flows are no longer there, rupee will be under pressure.

The rupee slide would also enhance the countryâs external debt liability in rupee term. However, it would remain the same in dollar term.

An official source in the finance ministry told Dawn that the tussle on the extent of over-valuation of rupee was mainly on methodology, weights used and time period of comparison.

He said the results are also different according to the selection of these indicators.

The State Bank of Pakistan (SBP) considered the rupee over-valued by 2-4 per cent compared with July 2002 by end of June 2006, IMF considered the rupee overvalue by 10 per cent and the World Bank estimated the over-valuation at 17.5 per cent.

Based on a series of background interviews with some economists and insiders in the finance ministry, the rupee is over-valued in the range of eight to 10 per cent compared with inflation abroad â US 3-4 per cent and EU 2-2.5 per cent -- due to lack of timely adjustments in response to market forces, exchange rate of Pakistani rupee is biased against growth of exports making them expensive.

They said the large trade deficit is partly the result of macro policy focus on growth, fiscal deficit and debt, which makes export expensive and imports cheaper, hurt industrial investment and trade competitiveness.

Indirectly, the policy focus has led to inflation and over-valuation of rupee, reinforcing the foregoing phenomenon.

The slide in rupee would also result into pushing up inflation as prices of imported goods would witness upward trend besides an increase in the budgetary expenditure.

For controlling this, the SBP would have to further tighten the monetary policy besides government would have to mobilise their resources for meeting the rising expenditure.

Some analysts said it could also be achieved by cutting the questionable PSDP projects, unjustified subsidies and wasteful current expenditure.

Rupee slide could be achieved by SBP intervention in the market to buy dollars, which would result in the increase of SBP reserves and subsequently using such enhanced reserves to sell dollars in the market when increasing demand of foreign exchange puts pressure on the Pakistani rupee.

The seven to eight per cent per annum GDP growth can only be sustained through a 20 to 25 per cent per annum growth in exports.

Even if exports in textiles and clothing sector continue to grow more than the international average, a formidable challenge, such an export growth rate could not be achieved unless the export growth in non-textile sector is accelerated in

Pakistan.

The current account deficit is growing and reaching unsustainable levels and is being financed through inappropriately by using FDI in services sector, privatisation proceeds, portfolio investment and GDR issues.

This deficit will rise when Pakistan runs out of selling public assets.

In addition to maintaining high level of GDP growth, the management of trade deficit, which includes growth in exports and reduction in imports, is also required to provide a sustainable mechanism to reduce the current deficit.

The key element to achieve sustainable and rapid export growth would be to address the issues of export competitiveness.

A realistic exchange rate is also required to achieve export growth. Such policies have been followed by many East Asian tigers in their earlier years of export and even today by China.

http://www.dawn.com/2007/05/02/ebr6.htm


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## Neo

Wednesday, May 02, 2007 

*Higher yield of crops expected in 2007-08 season*

KARACHI: The production of various crops will see a higher growth during 2007-08 sowing season on back of improved utilisation of outputs and better management, farmers said.

A representative of the farming industry Maroof Siddiqui said that the country has improved the production of various crops in 2006-07 such as wheat, gram, potato, lentil, sugarcane, cotton, maize and moong; as well as the livestock sector

Maize and moong production in 2006-07 is estimated at 3.3 million tonnes and 138,000 tonnes respectively. In this respect, maize and moong outputs indicate an improvement of 6.5 and 21 percent respectively, as compared with 2005-06. The livestock sector accounts for nearly half of the value-added agriculture. Growth targets for milk and meat production, as well as the productivity, have been aligned with the mid-term development framework, and are expected to yield a growth of 6-8 percent, he added.

He said 23 million tonnes wheat production is expected in 2006-07, which indicates a six percent improvement against last yearâs production of 21.7 million tonnes. He said this is the highest-ever wheat production in Pakistan, as it has surpassed the set target of 22.5 million tonnes by two percent. Gram production during 2006-07 is recorded at 848,000 tonnes, which is an increase of 77 percent against last yearâs 480,000 tonnes. This production is 20 percent above the set target of 707,000 tonnes.

The estimated production of potatoes in 2007-08 is around 2.56 million tonnes. In 2006-07, the production stood around 2.47 million tonnes, which is 57 percent more than the last yearâs 1.57 million tonnes. The production of sugarcane in 2006-07 has improved by almost 23 percent at 54.9 million tonnes as against 44.7 million tonnes in 2005-06. A stakeholder Ghulam Rabbani said that cotton production is expected to increase around 3-4 percent in 2007-08 season.

http://www.dailytimes.com.pk/default.asp?page=2007\05\02\story_2-5-2007_pg5_8


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## Neo

*CBU imports up 83 percent: auto imports breach $1 billion *

KARACHI (May 03 2007): The import of road motor vehicle surged by 23 percent (MoM) in March to reach $121.992 million taking the total imports during July-March 2006-07 to $1.037 billion. In February this year the road motor vehicle imports were registered at $99.157 million.

This growth may be attributed to the rising interest of buyers in the imported vehicles due to availability of spare parts and stable re-sale value. The data issued by the Federal Bureau of Statistics (FBS) proves this situation, as the import of Completely Built Units (CBUs) surged by 83 percent to reach $48.243 million in March 2007 as compared to $26.378 million in February.

According to the statistics, imports of completely build-up units, which include both new and used vehicles, were down three percent as compared to $49.608 million in March 2006.

Diminishing interest of buyers in the imported cars had been observed in past few months because of low resale value, problems in the availability of spare parts and rising rates of interest on leasing.

However, the buyers have now again started to opt for the imported and reconditioned cars, as the spare parts are now available. It was learnt that although the brand new spare parts are not easily available in the market, however, the parts taken out from the imported used vehicles are available in the market.

Another reason for this switch may also be attributed to the falling quality of locally assembled cars, as the quality complaints are going up. A car showroom owner dealing in both new and used cars said that the local assemblers were unable to meet the demand due to which the 'premium' factor existed.

He added that the Minister for Industries and Production, Jehangir Tareen had made it clear that unless and otherwise this menace ended the imports of cars would continue. Therefore the local assemblers were focussing more on quantity instead of quality. 

The CBU import bill for the period under review includes units of trucks and buses, motorcars and motorcycles contributing $11.534 million, $36.66 million and $49,000 respectively. CKD/SKD imports during March went down by 18percent reaching $60.716 million against $51.143 million in February 2007. Under the parts and accessories head, the imports during the month of March were down by 41percent on MoM basis to reach $9.392 million as compared to $15.972 million.

http://www.brecorder.com/index.php?id=558973&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Saif Power inks 225 megawatts accord with NTDC *

ISLAMABAD (May 03 2007): The Saif Power Ltd (SPL) has signed its power purchase agreement (PPA) with NTDC, for its 225 mw power project to be located at Sahiwal. The PPA document was signed and exchanged between SPL Director Omar Saifullah Khan, and Rana Muhammad Amjad, general manager, WPO in the presence of other senior officials.

Earlier, in January this year, the gas supply agreement (GSA) was signed between the SPL and the SNGPL, while the implementation agreement had already been initiated with the PPIB. The signing of the PPA concludes the package of agreements ie, IA, PPA and GSA, as per requirements of the 2002 power policy, after which the company will proceed with its financial closure and thereafter the construction of the power complex.

Targeted to start its commercial operations in 2009, the power plant is estimated to be established at a cost of $200 million. The power plant is based on combined cycle/gas turbine technology, and capable of operating on dual fuel, it will use gas as the primary fuel.

http://www.brecorder.com/index.php?id=558970&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*'Pak-US FTA after striking investment deal' *

ISLAMABAD (May 03 2007): The United States intended to go ahead to the free trade agreement (FTA) with Pakistan after striking a mutual investment deal. Acting US Ambassador to Pakistan Peter Bodde told a local private news channel that the headway in mutual investment agreement had been made, however, finalisation of its details would take time.

Negotiations regarding the FTA would be made afterwards. Peter Bodde said that after the installation of control system at Port Qasim, the scanning of a container would benefit Pakistani exporters as well as it would boost trade between the two countries.

http://www.brecorder.com/index.php?id=559016&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Doing business in Pakistan: CSF points out problem areas *

ISLAMABAD (May 03 2007): In a presentation to the ministry of Labour and Manpower, the Competitiveness Support Fund (CSF) termed Illiterate workforce, poor work ethics and labour restrictions as problematic factors in doing business in Pakistan. It has suggested that the government should take the private sector on board to sustain the current pace of economic growth.

The CSF delegation comprising CEO Arthur Bayhan and Abdul Basit, a senior official of the Prime Minister's Special Programme Wing, Ministry of Finance identified different areas in the presentation where Pakistan was not performing satisfactorily.

Secretary Labour and Manpower, Malik Asif Hayat chaired the meeting Hayat informed CSF delegation about a number of new initiatives that the ministry is undertaking to improve the labour productivity in Pakistan. These included a joint initiative with the International Labour Organisation (ILO) on Women Empowerment, developing a mechanism to create more co-ordinated efforts at the federal and provincial levels to address the labour issues.

The meeting was informed that the ministry is also launching "Labour Market Information System" to disseminate detailed information about the labour market. Asif Hayat, also informed the delegation that, the government's emphasis was on actively involving the private sector in increasing the labour productivity in the country.

CSF CEO briefed the government officials on strength and weaknesses of Pakistan's market. He told the meeting that Pakistan needs to create more synergies through public-private partnerships to enhance productivity and efficiency. Should be co-operating closely on the new initiatives of the ministry of labour and manpower in improving Pakistan 's ranking on the market efficiency and labour productivity indicators.

The presentation highlighted the competitiveness aspects of the labour and manpower issues in Pakistan with respect to the Global Competitiveness Report (GCR) of the World Economic Forum and the State of Pakistan's Competitiveness Report of CSF.

CSF delegation was also told that under the apprenticeship law, all firms having more then 50 employees are required to provide internship opportunities. CSF CEO said the private sector lack willingness to comply with improvement in labour laws.

Bayhan emphasised the importance of strengthening the public-private partnerships to promote vocational schools. He said that Pakistan needs quality business and management schools CSF is a part of $1.5 billion five years programme meant to improve economic growth, education, health, and governance in Pakistan.

http://www.brecorder.com/index.php?id=559013&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*UK grant doubled to Â£480 million *

KARACHI (May 03 2007): British Deputy High Commissioner Hamish Daniel has said that the British government has doubled its grant aid framework for Pakistan to 480 million pounds for the period of 2008-11. Addressing members of Site Association of Industry (SAI) on Wednesday, he said that funds of this grant are managed by Department for International Development (DFID).

He said DFID is currently preparing its new country assistance plan (CAP) for Pakistan for the period 2008-2013. This will set out how available resources will be used to help in education and reducing poverty in Pakistan.

DFID is consulting widely with the federal and provincial governments, private sector, and civil society organisations to prepare its actin plan. In the next few days DFID will carry out a consultative excise in Sindh. It has already completed consultative excise in Punjab, he said.

Regarding fish exports and anti-dumping duty on Pakistani products to European Union (EU) countries, he said that "there are certain standards, which we have to meet". However, he added that a meeting would be held soon to discuss the issue.

Hamish said that EU is the largest market of Pakistani products. Britain in one of the biggest supporters of Pakistan on the issue of market excess to EU countries.

Referring to two-way trades, he said that it is slightly in favour of Pakistan. Total exports from Pakistan amount to 523 million pounds, whereas imports amount to 489 million ponds. Last year, Pakistan's exports to UK increased by 5 percent, he added.

He said that the British consulate makes efforts to encourage UK business community to visit Pakistan and see the existing opportunities of investment and increasing two-way trade. He noted that in the last few months around 10 UK missions visited Pakistan to discuss ways and means to increase two-way trade and investment.

About UK visa, he said that some new rules have been introduced and now visa seekers have to go for Tuberculosis (TB) test if they intend to stay more than six months there. Welcoming the guests, SAI Chairman Imran Shaukat brief the UK Deputy High Commissioner about SAI and its functions.

http://www.brecorder.com/index.php?id=559004&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*NWFP to promote private investment in mineral sector *

PESHAWAR (May 03 2007): The government of NWFP is likely to constitute a Mine Facilitation Committee under the supervision of the provincial secretary industries to promote private investment in the mine and mineral sectors in the province.

Talking to Business Recorder, Director General, Mines and Minerals NWFP, Mian Farooq Iqbal said that the proposed facilitation committee would have 10 representatives of the private sector to resolve problems confronting mining sector in the province. He said that for the promotion of investment in the sector, the provincial government has brought transparency in auction of the leases of different mines.

The said that the auction of the two emerald mines of Gujjar Killi and Shamozai, district Swat held in presence of the officials of National Accountability Bureau (NAB) to guarantee transparency and fairness in the deals. The two mines have been auctioned for Rs 44 million and Rs 95 million respectively in February this year.

"One of the mine has been leased out to a multinational, Luxury International while the second to a local firm," the DG mine and mineral informed adding that the third emerald mine at Fiza Gat, Mingora, Swat would be auctioned shortly.

Mian Farooq Iqbal said that the reforms introduced for the purpose of the promotion of investment has helped in maximum increase in the collection of royalty and other receipts of the department. The royalty of Rs 150.801 million collected in financial year 2003-04 during last four years jumped to Rs 240.804 million during last financial year. During last eight months of the current financial year the directorate had collected Rs 179.025 million and likely to surpass the target of Rs 230 million for the whole financial year.

http://www.brecorder.com/index.php?id=559006&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Drug expenditure to touch $1.82 billion *

KARACHI (May 03 2007): Pakistan's drug expenditure is expected to touch $1.82 billion mark with per capita spending to be over $10 in next three years. According to international report on Pakistan Pharmaceutical and Healthcare domestic drug sector was still striving to modernise.

The Business Monitor International (BMI) report said that the country had around 400 licensed pharmaceutical companies, including 30 multinationals.

Foreign drug-makers account for the majority of drug market in value terms, with a 53 percent share, although domestic companies are dominant in volume terms.

Despite having a large population, Pakistan's share of the global pharmaceutical market remains relatively low.

Meanwhile, the small-scale nature of the pharmaceutical manufacturing sector and the fact that production consists mainly of basic medicines has meant that Pakistani drug exports are relatively minimal.

However, the government is encouraging this sector by offering incentives to local exporters and supporting the improvement of domestic production standards.

Entrance to the WTO would also help drug exporters by opening up markets across the globe, the report said. BMI's adjusted Business Environment Rankings for Asia reveal that Pakistan's position was unchanged in 14th place.

"This is primarily due to the country's poor regulatory system, which we rate as one of the worst in the region," the report said.

The government seems to be making some efforts to improve this situation and has recently increased the number of courts dealing with counterfeit drugs from nine to 20. It is hoped that efforts to battle fake and substandard products would boost foreign investors' confidence and stimulate local production.

The country's long-term political risk rating has improved slightly as compared to the previous quarter.

Pakistan is going ahead with plans to implement a new autonomous drug authority. The organisation's main function will be to help streamline the registration process for pharmaceuticals and healthcare ensuring the quality of all medicines. Pakistan has several problems with counterfeit drugs and the World Health Organisation (WHO) estimates that between 40-50 percent of drugs in the market are fake or substandard.

http://www.brecorder.com/index.php?id=558989&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Abu Dhabi gifts power plant to CDGK *

KARACHI (May 03 2007): The 320MW power plant gifted by Abu Dhabi government to City District Government Karachi (CDGK) would be operational by next year. Sindh Governor Dr Ishratul Ibad Khan, who presided over a meeting held to review the pace of work. He stressed on expediting the work, a release from Governor`s Secretariat said on Wednesday.

Governor Ibad said every possible resources should be arranged to enhance electricity production to meet city requirement. He also thanked Abu Dhabi government for providing a power plant for Karachi. The project co-ordinator Tanveer Zaidi informed at the meeting that Abu Dhabi has decided further investment for this gifted power plant as more power plants are coming to increase generating capacity to 1800MW.

He said a joint company PORTEC of Singapore and Italy is executing the project. Meanwhile, a delegation of Al-Rajhi Group of Saudi Arabia called on Sindh Governor Dr Ibad at Governor House. The delegation consisting of Abdullah Hegeali and Zubair Darowala showed keen interest in investing in real estate sector here. They told that their company has talked to CDGK, Civil Aviation and PA in this connection.

http://www.brecorder.com/index.php?id=559041&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pak, Iran oil ministers agree to speed up IPI project *

ISLAMABAD: May 03, 2007: Pakistani and Iranian oil ministers met Thursday in Riyadh on the sideline of an Asian energy conference and agreed to speed up the Iran-Pakistan-India (IPI) gas pipeline project, according to message received from Saudi Arabia.

Federal Minister for Petroleum and Natural Resources Amanullah Jadoon and Iranian Oil Minister Seyed Kazem Viziri Hamaneh are attending the 2nd Asian Energy Ministerial Roundtable in the Saudi Arabian capital.

During the meeting the two ministers emphasised that IPI would create linkages and interdependencies leading to a win-win situation for all and promote peace in the region.

They expressed satisfaction at the progress so far achieved on the IPI project and agreed on its early implementation.

Amanullah Jadoon said Pakistan and Iran enjoy deep rooted cordial and brotherly relations based on Islamic fraternity, culture and commonality of views on regional and international issues.

He briefed his Iranian counterpart about the steps being taken by the Pakistan government for promoting the energy sector on modern lines and efforts to explore the untapped hydrocarbon and alternate energy resources.

The ministers agreed that there exists a lot of potential and opportunities for expanding bilateral co-operation and exchanged views on avenues of co-operation in various fields, particularly in the oil and gas sector.

The Iranian minister said that Iran attaches great importance to its brotherly relations with Pakistan which were growing in multi-dimensional fields.

He said expeditious implementation of IPI gas pipe line project would promote peace and prosperity in the region and bring the people closer.

http://www.brecorder.com/


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## Neo

* Telecom top earner of FDI with $1.4bn inflows *

By Israr Khan

ISLAMABAD: Pakistanâs communication sector has attracted Foreign Direct Investment (FDI) of $1.41 billion including $133.2 million privatisation proceeds during the first nine months of 2006-07 followed by financial businesses with $696 million and oil and gas exploration $420 million. 

Between July-March 2006-07 the inflows in communication sector, financial businesses and oil and gas exploration grew by 34 percent, 162 percent and 93 per cent respectively over corresponding period of 2005-06 when these were recorded at $1.025 billion, $265.5 million and $216.9 million respectively, the central bankâs data reveals. 

FDI inflow is climbing and governmentâs economic managers are hoping for further growth in current fiscal. They expect that the foreign investment in Pakistan would breach six billion dollar mark by the year-end. 

It is also pertinent to note that during the whole fiscal 2005-06, total investment in communication sector was $1.94 billion, financial businesses $329.2 million and in oil and gas exploration foreign investment was $312.7 million.

Investment in tobacco and cigarettes also increased substantially to $387.3 million from only $1.9 million recorded in corresponding period of the last fiscal. 

Trade and construction sectors also fetched sizeable investment of $128.4 million and $114.4 million against $81.9 million and $54.4 million respectively in corresponding period of the last fiscal.

Investment in petroleum refining stood at $98.7 million, beverages $88.4 million, textile $47.1 million, transport equipments (automobiles) $36.7 million, and in chemicals FDI stood at $27.3 million. 

However, on the other hand the data gives a bleak picture, as in power and cement the main sectors, which facilitate jacking up the economy the inflows were declining. In power sector the inflows declined by about 58.8 percent to $125.1 million and in cement sector it dipped by 60 percent to $13.4 million. In corresponding period of the last fiscal, the inflows were $304 million and $33.6 million respectively. 

The inflows in tourism were also not satisfactory which stood at $2.2 million against $2.5 million in corresponding period of the last fiscal. Foreign Direct Investment in food sector also declined by 71 percent to $13.1 million.

Economists believe that if the inflow of direct investment in the country remained strong, it would give a big boost to Pakistanâs economy by improving per capita income and accelerating the government efforts in bringing down poverty level. Besides, it would work as a cushion against the external shocks and would mute the pressure of climbing current account deficit. 

http://www.thenews.com.pk/daily_detail.asp?id=53970


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## Neo

May 03, 2007 
*Aptma offers 250MW power to Wapda*

LAHORE, May 2: Textile mills have offered to provide up to 200-250MW of electricity from their furnace oil-fired power units to Wapda on a 30-day notice provided the utility agrees to pay a price of Rs1.31 per unit on top of the cost of fuel.

âWeâve for long been discussing with Wapda the possibility of selling electricity to it so that the public utility can bridge the current gap between the demand and supply of electric power, which has led to widespread load-shedding around the country,â Punjab Aptma Chairman Samir Saigol told a press conference here on Wednesday.

He said the textile industry had furnace oil fuelled captive power plants with a capacity of about 400MW lying idle since the mills had already shifted to gas-fired power generation to reduce their generation costs.

He said the industry had been negotiating with Wapda the price, which was far below the rates at which the public utility purchases power from any existing or proposed independent power producer (IPP) generating electricity from furnace oil.

âWhat we are asking is Rs1.31 per unit from Wapda, exclusive of the cost of furnace oil used. This is quite reasonable because a major chunk of it would be used for covering the maintenance of the power units and other operational expense. However, Wapda has so far not shown any signs to accept the offer,â he said.

Wapda is currently facing a gap of about 1,500MW in demand and supply of electricity, which has forced it to go for what the utility calls as load management. Reports suggest that Wapda is resorting to two-hour load-shedding daily in the urban areas alone. The situation in the rural areas is described to be even worse.

If Wapda agrees to purchase power from the textile industry, it will help it bridge the power shortages by up to 17 per cent. âBesides, it will also help the mills recover to some extent their investments on installation of power generation capacity, which is lying idle for years after those shifted to gas generation,â Samir said.

He said though the industry had an accumulated idle generation capacity of 400MW, not all units are in an operational condition. âA contribution of 200-250MW should not be taken as a small gesture in a situation where the country is faced with huge power shortage,â he added.

http://www.dawn.com/2007/05/03/ebr1.htm


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## Neo

*Progress on IPI pipeline*

GIVEN the pressure that America has traditionally brought to bear on the workings of the World Bank and the International Monetary Fund, the WBâs verbal offer to âseriously considerâ funding for the IPI gas pipeline comes as a pleasant surprise. Americaâs 30-year-old adversarial inimical relationship with Iran has nosedived in recent years, with Tehran refusing to abandon its uranium-enrichment programme and Washington threatening to let loose the dogs of war. A military attack on Iran was always going to be unfeasible given how troubled US forces are in Iraq and Afghanistan, not to mention Washingtonâs failure to rally international support for such action. However, the US did succeed in arm-twisting the UN Security Council into imposing tougher military and nuclear sanctions on Iran in March this year. Seen against this backdrop, it is intriguing that the World Bank has chosen to focus on the IPI projectâs financial viability instead of being guided to by the geopolitical interests of the United States. Coming at a time when the WB is headed by a diehard neoconservative like Paul Wolfowitz, the views expressed on Tuesday by the bankâs vice-president for South Asia are indeed heartening. Pakistan is yet to request financial assistance for the IPI pipeline, he said, but stressed that such a request was likely to be viewed favourably.

Mr Praful Patel, the visiting World Bank VP, accurately summed up the countryâs energy woes when he said that Pakistan was standing on the deck of a burning ship. Both industrial and domestic users have already been hit hard by the electricity shortage, and there are fears that productivity in the manufacturing sector may shortly suffer a crippling body blow if generation capacity is not increased substantially. The IPI project is of vital importance in this context. Indigenous gas supplies are overstretched as it is and are clearly insufficient to meet the need of additional power plants that are so urgently required. Oil-fired units will have to meet the need in the short term but this is not a prescription that Pakistan can afford to follow indefinitely. If all goes according to plan from this point onwards, the $7.4 billion, 2,600-kilometre IPI project will take between three and five years to materialise. The tariff issue has already been sorted out by the three countries involved, and Pakistan and India are also in agreement over the gas-sharing formula. At the same time, progress is being made on the transit charges that New Delhi must pay Islamabad. Both Pakistan and India need the IPI pipeline if they are to sustain their economic growth of recent years. Islamabad also stands to make substantial monetary gains from the annual transit fee.

Besides the economic benefits accruing to all concerned, the IPI pipeline offers a golden opportunity to strengthen regional bonds in a unipolar world. Both Pakistan and India need their strategic and economic ties with the US but that does not mean that Pakistan should be subservient to Washington and fail to stand by its neighbours. Moscow has also shown keen interest in the IPI pipeline and the involvement of an energy giant like Russia bodes well not just for the projectâs financial viability but also for its sustainability in the event of US or western European opposition. Pakistan and India must stand firm and look to their own interests first and foremost.

http://www.dawn.com/2007/05/03/ed.htm#1


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## Neo

Thursday, May 03, 2007 

*Potential exists to irrigate extra 9m acres: MINFAL*

By Sajid Chaudhry

ISLAMABAD: The estimates of the Ministry of Food, Agriculture and Livestock (MINFAL) show that the country has potential to extend irrigation facilities to additional 9 million acres of land for enhancing agriculture produce. 

All on-going and planned water development projects would provide additional irrigation facility of around 4 million acres and 2 million acres increase in cropped area. There is also potential of developing around 5 million acres of land by using flood water of hill-********. 

According to a MINFAL report the government is progressing well in the direction for extending irrigation facilities and improving water efficiency. 

Diamer Bhasha Dam, Kalabagh Dam, Kurram Tangi Dam, Munda Dam, Akhori Da, are among big dams to be constructed by 2016. The construction of these dams would enable the agriculture managers to utilise additional water resources for agriculture development. 

The ongoing water sector projects are Mangla Dam Upraising project, Gomal Zam Dam, Mirani Dam Project, Sabakzai Dam project and Satpara Dam Project. Feasibility studies are also being arranged on Sukleji Dam, Winder Dam, Naulong Dam, and Hingoli Dam. 

The government is pursuing an aggressive water sector development agenda under which dams are being planned to increase water availability in the country for agriculture. Some 2 million acres of land would be available through the development of Mangla Upraising project and construction of three canals Kacchi Canal , Rainee canal and Greater Thal canal. 

The programmes being implemented for improving irrigation efficiency through lining of canals, judicious use of surface and tube well water, increased investment in water usage efficiency and experimentation with sprinkle and drip irrigation. 

The future growth of the agriculture sector aimed at the development of the livestock, dairy, agri-business and horticulture sectors. The livestock is emerging as a key sector of growth and there is still a huge un-realised potential of livestock and dairy. 

The government has adopted livestock growth strategy to address the constraints like in adequate feed resources, unavailability of superior germplasm, epidemics of infectious diseases, poor marketing infrastructure, poor institutional framework and out dated regulatory framework. 

The report also sheds light to key policy goals for growth of the agriculture sector through diversification to horticulture, livestock and fisheries, narrowing yield gap by enhancing productivity especially of small farmers, promoting demand driven research and adoption of new technologies, ensure fair price to farmers and be compliant with WTO regulations, especially international quality standards to avail more share in the global agriculture market.

http://www.dailytimes.com.pk/default.asp?page=2007\05\03\story_3-5-2007_pg5_1


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## Neo

*Five million tonnes wheat to be exported in 2007 *

ISLAMABAD (May 04 2007): The government has decided to export 5 million tonnes of wheat in 2007 through the private sector, announced Sikandar Hayat Khan Bosan, Federal Minister for Food, Agriculture and Livestock, at a press conference held here on Thursday. He said that the decision was taken at a meeting with Prime Minister Shaukat Aziz.

As the country is expected to be surplus in wheat this year, therefore, it has also been decided to allow its export through sea and land routes to all countries including India. But no subsidy would be given to the exporters", he stressed.

Continuing he said, "In this respect, the Indian government has floated international tender to buy wheat. This year we have successfully achieved the wheat production target of 22.5 million tonnes and it seems that we will exceed the target by a considerable margin", the minister said.

He highlighted that the wheat crop area has increased from 8.355 million hectares in 2005-06 to 8.420million hectares in 2006-07. He told the journalists that the country is going to export wheat after 50 years.

He explained that the factors that led to the record production of wheat include increase in minimum support price from Rs 415 last year to Rs 425 per 40 kg this year. The subsidy of billions of rupees on the import and production of DAP and other phosphatic and potassic fertilisers, the adoption of good agricultural practices (GAP) by the farmers and also the good weather conditions.

He said that the government believes in farmer-friendly policy. He disclosed the government has given as a toll free number to farmers to make calls against any injustice by the dealers. Besides, payments would be made to the farmers within 48 hours.

He hoped that due to record production, the price of wheat flour in the local market would be low. "The prices of our wheat flour in the local market are less than any other country of the region like India, Afghanistan, Bangladesh and Dubai for the last two 2 years", he emphasised.

http://www.brecorder.com/index.php?id=559315&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Power load management plan approved: shops to be closed at 8pm *

ISLAMABAD (May 04 2007): The government has approved, in principle, a load management plan including closure of shops at 8pm to overcome power shortage. It would, however, not apply to medical stores, restaurants and petrol pumps.

"We have asked Discos to prepare 'zoning plans' of their respective areas based on 'equal shortage sharing' for categories of consumers," said Ashfaq Mahmood, Secretary Water and Power while briefing newsmen along with Advisor to Finance Ministry Dr Ashfaque Hasan Khan here on Thursday.

He said, Minister for Water and Power Liaquat Ali Jatoi would announce the plan in the next few days after consultations with the provinces and other stakeholders. The plan also envisages closure of advertising signs after 8 pm.

"We do not want to go for forced load shedding but in case of non-cooperation by the consumers, government will have no other option but to take such a decision," he added. Secretary said regional power utilities have been asked to discuss with local industry for staggering of weekly industrial holidays. He said already a consensus has emerged under which industrialists would ensure 25 percent reduction in power consumption in the evening.

He appealed to 17 million power consumers to switch off one 100 Watts bulb daily to conserve 1700 MW of electricity. Similarly, he hoped people and owners of marriage halls would also cooperate by reducing or discarding lighting during ceremonies at peak hours.

Replying to a question, Ashfaq Mahmood said there was no plan for two-day weekend for the government offices. Similarly, he said street-lights would not be switched off because of its negligible impact on the overall energy situation and security concerns.

He said, as of now the capability of the entire system was 14500 MW as against demand of 15476 MW. The existing deficit of 976 MW would increase during the next few weeks and start decreasing thereafter due to increased water availability in dams and re-starting of some thermal power plants, which were closed down for necessary maintenance.

He said the demand of electricity was increasing due to unprecedented economic growth, village electrification and tubewell connections. Last year 13,000 villages were electrified while 10,400 have been electrified during the current financial year. Similarly, about 30,000 tubewell connections were given during this period.

He said water availability has increased due to rising temperature and reservoirs have five times more water as compared to April last year. Ashfaq Mahmood said government has taken a firm decision to provide all necessary funding for constructing water reservoirs. He said the government is determined to make necessary finances available to initiate work on the crucial Neelum-Jhelum hydroelectric project.

He said Wapda has identified a number of sites for generating hydel power on run-of-the-river. The total capacity of such sites comes to about 15000 MW. In replying to another question, he said that KESC is now facing only 90 MW shortage as Wapda is supplying 715 MW electricity at peak hours and 550MW at the daytime.

He was of the view that the government is making efforts to save Karachi from loadshedding and for this purpose prevailing situation has been discussed in details. Briefing newsmen on the occasion, Dr Ashfaque Hassan Khan said the country's foreign exchange reserves increased by $390 million during March and April this year. The reserves stand at $13.752 billion as of 30 April.

He said exchange rate remained stable during these two months while market capitalisation of the stock exchange increased by nine billion dollars during the period. KSE index rose by 1162 points in March and April. Dr Ashfaque Hassan said road shows for floating bonds in the international market would begin this month.

He said in its assessment Goldman Sachs, a global investment bank, has included Pakistan in the list of eleven countries the economy of which would be on the top in the world by 2050.

Ashfaque negated a statement attributed to Governor State Bank, in which she was quoted as saying that the International Monetary Fund (IMF) has expressed concern over some of the actions taken by the government. "It does not make any sense, if IMF has any concern, it should have been conveyed to the government not the Governor SBP," he concluded.

http://www.brecorder.com/index.php?id=559295&currPageNo=1&query=&search=&term=&supDate=


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## Neo

Hmmm...not sure if that's the right thing to do. It will reduce revenue generation, hit the business community, specially the SME.


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## Neo

*Cotton output target not achieved *

KARACHI (May 04 2007): The country has missed its set cotton production target of 13 million bales for the 2006-07 by some 0.589 million bales as the major cotton producer-Sindh and Punjab were hit badly by uneven weather conditions. The process of cotton bales arrival in to the ginning factories has been completed, depicting a drastic shortfall.

"This year outcome is'12.41 million bales, which is short by last 0.589 million bales against the revised target of the 13 million bales and now process of phutti arrival from up country in the ginning factories has completed".

Of total production of 12.41 million bales, 0.117 million bales have been exported and 11.88 million bales sold to the textile mills, while the unsold stock stands at 0.396 million bales, Pakistan Cotton Ginners Association (PCGA) said.

Ginning factories of Punjab produced total 10.09 million bales, while some 2.32 million bales has been produced in the ginning factories of Sindh, it added. However, current year cotton production is 0.12 percent as compared to the corresponding period last year, last year total production stood at 12.394 billion bales.

Ghulam Rabbani a leading trader said that heavy monsoon rains has badly hit the cotton crop at final stage of phutting and we were expecting more losses but due to the sowing of BT cotton in different parts of the country, losses were under control.

Up-till the last month government officials were defending that country will achieve a bumper cotton crop of 13 million bales despite uneven climate and heavy rains on the most fertile cotton belts and areas of the country.

Sikindar Heyat Bosan federal minister for food agriculture and live stock during his visit of Karachi cotton Exchange in March also claimed that "country will surpass the cotton target of 13 million," while traders were insisting that target would not be achieved.

On Thursday PCGA released final statistics of cotton production that cotton production is 5 percent lower than target. Although these are not official statistics but it is believed authentic, all the stakeholders including KCA, All Pakistan Textile Mills Association (APTMA) are members of the collection committee therefore they are agreed on these statistics.

Ghulam Ranbbani said that there are some other factors including uncertified seeds low quality medicines and late availability of Diammonium Phosphate (DAP) fertiliser are some other reason of missing the target, he added.

He said that crop medicines, which are available in the markets are not as per standard and some of them were expired. The government should ensure that fertiliser availability on time and quality seeds and medicine to achieve next year cotton target, he added.

http://www.brecorder.com/index.php?id=559304&currPageNo=1&query=&search=&term=&supDate=


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## Neo

May 04, 2007 
*Factors for slow export growth analysed: PM chairs meeting*

ISLAMABAD, May 3: Pakistan will have to improve its productivity level, ensure quality and concentrate on value-added products for achieving the desired level of export share in international trade.

This was observed in a high-level meeting chaired by Prime Minister Shaukat Aziz on Thursday to consider various factors responsible for slower than expected growth in the country's exports in the first nine months of the current financial year.

An official announcement issued here said that the ministry of commerce had made a detailed presentation to the prime minister, analysing the factors underlying the export performance during the current financial year.

The meeting was informed that from reports of reputed international consultants it emerged that the incentives regime available to the Pakistani exporters was at par with and in some cases even better than regional competitors.

In terms of various costs, like workers wages, electricity, gas and POL prices, container cost and price of cotton, Pakistan is cheaper as compared to most countries of the region.

Similarly, in industrial tariffs and long-term normal financing for exports, Pakistan is among the cheapest in the region. Pakistan is the only country that provides R&D at the time of export of textile products.

The prime minister observed that the need now was for all stakeholders, including the government, industry, labour and the trading community, to play their role in taking full advantage of opportunities available in export markets.

He emphasised the need for skill development programmes on a war footing to solve the problem of low productivity. Such skill development programmes were already being undertaken by the government, but needed to be intensified in partnership with the private sector.

He said that the government would continue to provide all necessary incentives to the private sector to help and encourage it to enhance the export of value-added products. He said there was an urgent need to find new markets and diversify exports as the regime of quotas has disappeared with globalisation.

Mr Aziz said that the signing of a FTA with China was a landmark development which needs to be leveraged by the private sector as it provides a huge market geographically contiguous to the country.

He said that government was making efforts to concluded FTAs with the US and the European Union.

http://www.dawn.com/2007/05/04/ebr1.htm


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## Neo

Friday, May 04, 2007 

*Countryâs IT revenue crossed $2bn in â05-06*

ISLAMABAD: Pakistanâs total information technology industry revenue crossed two billion dollars in FY 05-06, while its total exports crossed one billion dollars in the same period, which was measured using a methodology developed by the WTO and the IMF that is also used by other countries like India in reporting the IT industry size.

Furthermore, growth in exports in each of the last three years has been around 50 percent, while the domestic market has grown at 33% per year, according to the study.

âThe study shows that Pakistan is now on the world IT map and more international customers can feel comfortable in outsourcing work here,â said Ashraf Kapadia, President of the Pakistan Software House Association (PASHA).

These benchmarks were established following preliminary studies undertaken by the PSEB and have been fully endorsed by the PSEB board of directors.

More exhaustive studies in collaboration with the Gartner Group, State Bank of Pakistan and Statistics Division are underway. 

âThough the IT industry has made significant strides over the last few years, we are future-focused on the immense potential that yet needs to be realised, said Yusuf Hussain PSEB MD. He further said: âWe must work hard with other government departments to continue to support the IT industry in areas like human capital development, it park construction and marketing.â

http://www.dailytimes.com.pk/default.asp?page=2007\05\04\story_4-5-2007_pg5_8


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## Neo

Friday, May 04, 2007 

*Pakistan not afraid of Indian businesses: high commissioner*

* Malik says trade can be sustained only after resolution of Kashmir 

By Iftikhar Gilani

NEW DELHI: Pakistan is not afraid of competition from Indian business, the Pakistan High Commissioner Shahid Malik said on Thursday. He offered to export wheat and cement to India and in turn import tea to Pakistan.

Participating in an interactive session with members of the Punjab-Haryana-Delhi Chamber of Commerce and Industry (PHDCCI), Malik asked the Indian government to provide a level playing field for Pakistani products by removing tariff and non-tariff barriers, minimising agriculture subsidies and reviewing the budgetary support extended to public sector undertakings.

He also said that the resolution of all outstanding political disputes, including Kashmir, was necessary for normal and sustained trade relations. He complained that imports in India were subject to meeting excessive standardisation requirements and procedural formalities. Over 500 tonnes of Pakistani cement is lying at the Mumbai port awaiting clearance, he said. âThis is a detriment to bilateral trade.â

The envoy said Pakistan would like to enhance trade with India in a business-like manner. âWe are ready to float a tender, ask India what it needs and just get on with it,â he said, dispelling concerns that Pakistan was holding back bilateral trade promotion.

Besides cement, Malik said Pakistan was negotiating to export 60,000 tonnes of wheat to India. He said Pakistan was willing to import tea that it presently gets from Kenya, from India. He said Pakistan currently has 40 million metric tonnes of surplus wheat, which could be supplied to India with a price advantage.

He said Pakistan was not blocking bilateral trade by refusing to grant India âMost Favoured Nationâ status. âThe MFN is a misnomer.â He said the MFN did not make any material difference in the flow of bilateral trade, adding that Indiaâs exports to Pakistan were over three times Pakistanâs imports to India last year, even without the MFN. On the opening of the Wagah route for trade, he said it was a sensitive issue and needed to be approached through the composite dialogue mechanism. âWe are aware of Indian views and are willing to discuss them with the Indian government along with the issues pertaining to non-trade barriers faced by Pakistani exports to India,â he told members of the PHDCCI.

The high commissioner said Pakistanâs economy was growing at 7 percent, the flow of foreign direct investment (FDI) constituted 3.6 percent of total GDP and customs duty had been progressively reduced to expose Pakistani businesses to international competition. Second-generation reforms, which are addressing infrastructure bottlenecks, human resource development and creation of a knowledge-based economy, would further increase the competitiveness of Pakistanâs economy, he added.

Malik also expressed satisfaction over the steady growth of bilateral trade, which grew by 370 percent between 2002-03 and 2005-06. He, however, lamented that the present level of intra-SAARC trade was at just 5 percent and called for more proactive steps to enhance intra-region trade.

http://www.dailytimes.com.pk/default.asp?page=2007\05\04\story_4-5-2007_pg7_18


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## Neo

Friday, May 04, 2007 

*500,000 tonnes wheat export to India allowed*  

KARACHI: Pakistan on Thursday allowed the export of an additional 500,000 tonnes of wheat in the hope of making inroads into the lucrative Indian market, a senior government official said. 

âThe government of Pakistan allowed export of 500,000 tonnes of wheat to India, especially in view of the tender floated by the State Trading Corporation,â Ismail Qureshi, food and agriculture secretary, said. âThe export will be undertaken by the private sector by sea and land route, that is railways.â 

An expected bumper harvest of 23 million tonnes this 2006/07 crop year allowed Pakistan in January to lift a two-and-a-half year export ban intended to protect domestic supplies. 

The country, seeking to cut bulging wheat stocks, had already allowed export of 800,000 tonnes by private traders and removed a 15-percent duty on exports. The government set a deadline of June to ship the 800,000 tonnes. So far, deals for up to 400,000 tonnes have been finalised, while a big quantity had also been sold to local flourmills. Pakistani traders are fearing that a delay in releasing additional quantity may prevent them from participating in an Indian import tender, which will be closed on May 10. Agriculture Ministry officials said the government was holding more than 2 million tonnes of wheat stocks in excess of buffer norms and more arrivals had created a storage problem. 

http://www.dailytimes.com.pk/default.asp?page=2007\05\04\story_4-5-2007_pg7_8


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## Introvert

*Cement exports surge over 50 percent​* KARACHI: Pakistanâs cement exports during July-April in the current fiscal year soared by 50 percent.

All Pakistan Cement Manufacturers Association (APCMA)âs available data showed that the cement manufacturing companies last year in the same period had exported 1.02 million tons, which has shot up to 2.015 million tons in the current year.

Cement exports in the month of April alone boosting up by a record 500 percent amounted to over 30,000 tons. Overall cement sale during July-April swelling up by 33 percent pegged at 19.7 million tons, according to APCMA data. 
http://www.geo.tv/geonews/details.asp?id=5567&param=3


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## Neo

*Net credit to private sector grows by over Rs 266 billion: SBP governor lauds role of banking sector *

KARACHI (May 05 2007): Governor, State Bank of Pakistan, Dr Shamshad Akhtar appreciated the role of banking sector and expressed satisfaction over the growth in credit disbursement to private sector during July-April FY07 where net credit to private sector grew by over Rs 266 billion (or 12.6 percent) against Rs 339 billion (or 19.8 percent) in the corresponding period of FY06.

The SBP governor stated this while presiding over the first meeting of the Private Sector Credit Advisory Council (PSCAC) here on Friday, a press release issued here said.

PSCAC has replaced the National Credit Consultative Council (NCCC) as a consequence of the decision taken in NCCC's meeting of 4th July, 2006 to redefine objectives and functions of PSCAC in line with deregulated policy environment for the banking sector, which requires more consultation and interaction with the private sector to assess their credit requirement and better understanding the constraints facing the credit delivery.

The meeting dwelt at length on issues relating to availability of credit to the private sector and impediments, if any, in the way of enhancing credit disbursement to key sectors in the economy.

The SBP governor pointed out that despite ample liquidity in the system, commercial banks had not been able to expand lending due to low demand for private sector's credit that had borrowed quite heavily in the last few years. "While there was growth in working capital finance, the demand for fixed investment credit was subdued."

In some cases, corporate sector is meeting the requirements through retained earnings or foreign borrowings. In some sectors, banks have deliberately slowed down to re-assess and develop their own capacities to lend more prudently. The process of mergers and acquisition in a number of banks also impacted private sector credit as most "acquired banks" slowed down their business."

The governor discussed sector wise disbursement of credit, specially to corporate, consumer, SME, infrastructure, housing, agriculture segments and the issues/constraints facing credit delivery. She informed the meeting that SBP had already submitted microfinance strategy to the prime minister for which he had issued instructions for development of an action plan.

Regarding strategies for the development of infrastructure, housing, SME and Islamic banking, SBP has formed various working groups. These groups would soon submit their recommendations. Similarly, the Agricultural Credit Advisory Committee (ACAC) had submitted its report on constraints facing agricultural credit and provided effective recommendations, she added.

The SBP governor asked the council members to share their views on issues likely to be faced in the growth of private sector lending over the next five to ten years. The substantial growth in credit disbursement will be a challenge for the banking industry unless the real sector problems are addressed. The members discussed in detail the impediments in credit disbursements and suggested ways and means for their redressal in this regard.

National Bank of Pakistan gave a brief of bank's experience in outsourcing certain aspects of the Rozgar Scheme, which proved very successful. The bank has already disbursed an amount of Rs 1.3 billion under the scheme to 13,000 applicants.

On consumer financing, the governor said that despite some apprehensions in consumer financing in some circles, the delivery of credit to household sector was a positive development but both central bank and banks needed to enhance vigilance to avoid over leveraging of individuals/ households, which might enhance the probability of default.

She also conveyed wide spread public concerns regarding high bank service charges and procedural issues related to credit cards. She recommended to the Pakistan Banks' Association (PBA) to consider adoption of a standard schedule of charges and procedures with appropriate flexibility to banks to charge rates within a pre-defined range.

FPCCI's representative stated that while LTF-EOP scheme had provided relief to the Textile sector, spinning sector had been ignored where maximum fixed investments were made and suggested a moratorium of two years on principle amount of debt in the spinning sector be allowed by the banks.

PBA Chairman responded by conveying PBA's inability to accept the proposal in any form and that such moratoriums were neither feasible nor provisions of subsidies to any particular sector could be accommodated as it was against the spirit of open market economy.

On issues raised by the representatives of Pakistan Trade Development Authority relating to need for trade related product development, it was decided that a working group might be formed with PBA's participation to specifically evaluate related possibilities.

Azhar Kureshi, Executive Director Development Finance Group, Directors of Banking Policy & Regulations, SME & Microfinance, Monetary Policy, Agricultural Credit Departments of SBP, heads/ representatives of commercial banks, Pakistan Banks' Association, Federation of Pakistan Chambers of Commerce and Industry, Agriculture Chambers, representatives of federal and provincial governments and other trade bodies attended the meeting.

http://www.brecorder.com/index.php?id=560081&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*President for setting Rs one trillion revenue target for next year *

KARACHI (May 05 2007): President General Pervez Musharraf has said the revenue collection target for the next year should be Rs one trillion and that the aim for next 10 years is to cross the mark of Rs four trillion. He was addressing as chief guest at the concluding session of National Conference on Tax Administration at a hotel here, on Friday evening.

The two-day moot was organised by the Central Board of Revenue (CBR). The President said "now we are targeting a revenue collection of Rs 835 billion but we expect Rs 900 billion and it is hoped that the target would be met".

He stressed that "we have to increase the revenue collection and pay the taxes". Musharraf said "even now our tax to GDP ratio is low however, we can proudly say that the revenue has risen from Rs 304 billion over the years and now we are targeting Rs 835 billion".

He stressed that next year "we must cross Rs one trillion of revenue collection". The President said with all the reforms and plans that have been chalked out, "in the coming 10 years we are targeting to cross Rs four trillion".

President Musharraf said the taxes must not be increased, because there is a tremendous capacity within the country to increase the revenue. He pointed out that there are people who are minting money but not paying the taxes and are not even in the tax net.

President Pervez Musharraf said we managed to increase the revenue by more than Rs 400 billion and increased the PSDP by Rs 350 billion. Therefore, the money that was raised was utilised for development purposes in the country, he added.

The President said the government is doing a lot of development work and 20 mega projects are being carried out. These include projects like the Katchi Canal, Gwadar Port, Reini Canal, Mangla Dam Raising, improvement of the railways system and brick lining of water courses.

Therefore, he said the taxes should be paid and the target of Rs four trillion should be met in the coming 10 years and if we manage this then Pakistan would all together be a different country.

President Musharraf said the government followed the policies of deregulation, liberalisation and privatisation and created an investors' friendly environment, besides bringing about a lot of banking reforms.

He pointed out that the banking sector is a success story of Pakistan. The President said after the reforms, the country's economy is doing exceptionally well by averaging a growth of seven percent over the last five years.

He said never in the country's history the exports touched dollars 18 billion mark. Our remittances would Inshallah cross dollars five billion mark too, he added. The Foreign Direct Investment which at one stage was dollars 300 million, is going to cross dollars six billion.

President General Musharraf said the benefit of upsurge of economy would be transferred to the people of Pakistan, specially the poor. He said the focus of the government is poverty alleviation, provision of utility services - gas, electricity, safe drinking water and human resource development, health and education.

The President pointed out that poverty has reduced from 34 per cent to around 24 per cent. President General Pervez Musharraf has said that in the reference filed against Justice Iftikhar Muhammad Chaudhry, he took a decision, which is legal and according to the Constitution.

He was speaking at the concluding session of a conference on Tax Administration Reforms Programme organised by the Central Board of Revenue here on Friday. He said now he left it to the judiciary to decide the matter. The President said the reference came from the Prime Minister. He said it was a serious reference and the person concerned was confronted and shown.

The President said he had satisfied himself that this reference was correct. He said the Chief Justice used to visit his home. But now if some reference comes and there are some serious observations, it is the demand of his (President's) position like any leader to keep personal matter aside and see on merit what has to be done.

In such a case one has to rise and go beyond self and beyond relationship and decide on merit and with justice in state decisions. The President said here was a situation when statecraft demanded that he left personal relations aside and he took that decision, which was legal and constitutional and he left it to the judiciary to decide.

http://www.brecorder.com/index.php?id=560034&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Karachi stocks hit fresh all-time high *  

KARACHI (May 05 2007): The local share market witnessed another bullish session on the back of fresh institutional and foreign buying and the benchmark KSE-100 index breached thorough the 12,500 psychological barrier to close *at its highest ever level of 12,512.08 points* with a net gain of 81.92 points on Friday.

The junior free float market capitalisation based KSE-30 index also closed at its all-time high level since its launch on September 1, 2006 at 15,656.39 points level, up 104.33 points.

The market opened on a strong positive note and remained bullish during both the sessions of the day and at one time the KSE-100 index hit 12,534.02 points intra-day high, the highest ever intra-day high level of the index.

The market saw heavy trading as the ready market volume significantly increased to 343.005 million shares as compared with 309.078 million shares and the futures market turnover surged to 54.939 million shares against 54.055 million shares traded a day earlier. The overall market capitalisation increased by Rs 28 billion to Rs 3.642 trillion. Trading took place in 349 scrips out of which 199 scrips closed in the positive column and 109 in the negative while the value of 41 scrips remained unchanged.

D. G. Khan Cement was the star performer of the day with 38.779 million shares and the scrip surged by Rs 2.55 to close at Rs 103.05 followed by OGDC which gained Rs 1.45 to close at Rs 124.30 with a total volume of 36.845 million shares.

The cement sector performed exceptionally due to record imports as Lucky Cement, Pakistan Cement and Fauji Cement surged by Rs 1.25, Rs 0.10 and Rs 0.35 to close at Rs 106.80, Rs 12.90 and Rs 20.05 respectively.

Nishat Mills also performed well and the scrip surged by Rs 3.80 to close at Rs 120.70. In the other top ten volume leaders, Askari Bank gained Rs 0.65 to close at Rs 94.45, POL surged by Rs 6.70 to close at Rs 357.20, WorldCall Telecom remained up by Rs 0.20 to close at Rs 14 however Fauji Fertiliser Bin Qasim lost Rs 0.15 to close at Rs 36.25.

Unilever and Rafhan Maize were the highest gainers which gained Rs 90 and Rs 78.05 to close at Rs 2200.00 and Rs 1652.00 respectively while Treet Corp and Arif Habib were the highest losers which lost Rs 7.50 and Rs 6.50 to close at Rs 211 and Rs 290.00 respectively.

Faisal Shaji an analyst at Capital One Equities said that although the Karachi share market one of the cheaper markets in the region however the investors should take cautious stance at the present levels. The market is up as compared with the FY07 and FY08 earnings valuation and a correction is expected.

He said the cement sector is performing well on the back of its record exports. The demand of Pakistani cement is increasing in Middle East and Afghanistan and cements exports could increase by 35 percent to 40 percent.

Ahsan Mehanti at Shehzad Chamdia Securities said that the KSE-100 index has reached its all-time high level on the back of fresh funds injection by foreign investors and institutional support. The SCRA balances have reached at its highest-ever level of $719 million and the cement sector's record export also aided to the flurry of fresh buying.

Hasnain Asghar Ali at Aziz Fidahusein Securities said that despite negative rumours circulating pertaining to standing committee's stance on the stock market March crisis hearing and likely delay of PSO's privatisation the bull run continued at the local bourses.

KSE-100 index after witnessing consolidation led by the cement and fertiliser stocks charged major resistance of 12,490-12,496, the rally stick was then handed over to the oil and gas exploration stocks, the rally then made possible an intra-day high of 12,533, up 101 points.

The concern expressed by the Prime Minister over the performance of textile sector and commitment expressed by him on subsidising the sector for better performance tempted fresh funds in the textile stocks leading from the front was NML.

The announcement of the likely date upcoming budget seems to have prepared the bulls for connecting the ongoing rally with the pre-budget rally. Timely decision of the regulator to address the issue of CFS amount enhancement of cap in accordance with the market demand will allow the index a smooth movement towards north.

Technically, ability of the index major resistance stays at 12,670-12,677 while the support has moved up to 12,325-12,333. The stocks trading at low multiples can be looked for trading and placement while commitments of cement exports by the regional importers can allow the rallying cement stocks further highs despite high multiples.

http://www.brecorder.com/index.php?id=560062&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*Saudi group keen to invest in Punjab *

LAHORE (May 05 2007): Punjab Minister for Industries, Muhammad Ajmal Cheema said that Pakistan had unlimited opportunities for investors and due to the investment-friendly policies of the government, industrial sector had shown rapid boom and world's renowned multi-national companies were coming to Pakistan for investment.

He stated this while talking to a delegation of Al-Rajhi Investment Group of Saudi Arabia, which called on him at the head office of Punjab Small Industries Corporation, here on Friday.

The minister said that various foreign investors would invest more than 20 billion dollars in Punjab especially in Lahore during next three years, which would further boost the economy of the province and thousands of new job opportunities would be created.

He said that after Dutch Company "Makro", German's Multi-National Company "Metro" Cash & Carry had also started its operation in Lahore and first store of Metro would be opened in next few months.

He said the government was also paying full attention on road infrastructure and a number of new projects had been started. Ajmal Cheema said that construction work on Lahore-Sialkot Motorway would start soon and this Motorway would consist of eight lanes.

He said that Al-Rajhi Investment Group wanted to invest in real estate sector, and the government would provide all possible facilities to the foreign investors in this connection. On this occasion the delegation said that they had already invested in various Arab countries and now they wanted to invest in Pakistan.

http://www.brecorder.com/index.php?id=560169&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pakistan fifth among 20 states with highest piracy rates *  

LAHORE (May 05 2007): Pakistan ranks at number five among the top 20 countries with the highest piracy rates while Vietnam with 90-percent piracy rate is ahead of all countries in the world. Piracy rate in Pakistan is on declining trend over the last 12 years, which moved down from 96 percent in 1994 to 86 percent in 2005.

If Pakistan is to achieve the maximum economic benefits of software development, the piracy level must be brought down drastically, said Aly Harakeh, a spokesman of Business Software Alliance (BSA) while talking to Business Recorder.

"Once the piracy is reduced, a greater amount of foreign investment will come to Pakistan from the BSA member companies," he added.

Prior to year 2005, Pakistan had become one of the world's leading producers and exporters of pirated optical discs. The country had been identified as a major source of infringing products and harming markets in USA, Europe, Middle East and Africa, he added.

The international software companies are reluctant to share their "source code" with a company, if they suspect that their intellectual property will be pirated. Therefore, when software houses belonging to a country like Pakistan with a high piracy rate of 86 percent bid for foreign projects they are at a disadvantage, he opined.

Aly Harakeh disclosed that nine known facilities in Pakistan produced about 230 million optical discs in 2004, nearly all illegal and most of these were being exported around the world to at least 46 countries.

Pakistan was also placed on the Priority Watch List of the United States Trade Representative (USTR). The USTR has created a "Priority Watch List" and "Watch List". Placement of a trading partner on the Priority Watch List indicates that particular problems exist in that country with respect to IPR protection or enforcement or market access for persons relying on intellectual property. Countries placed on the Priority Watch List are the focus of increased bilateral attention concerning the problem areas, he maintained.

The Central Board of Revenue (CBR) has already issued a directive requiring customs officers to inspect every shipment for export to ensure it contains only Pakistani repertoire. The customs authorities of Karachi enforced this directive and pirate exports were disrupted, although small scale smuggling of optical discs continues in hand luggage and courier services, he said.

"We are also keeping the prices of BSA member companies products in the local market lower than the developed countries," he maintained. In its efforts to develop IT industry in Pakistan, Microsoft, one of the BSA members, is fully helping the students and educational institutions in installing reliable software by giving them up to 90 percent discounts on the original prices, he added.

In Pakistan, like many developing countries, copyright law is not fully enforced to punish the pirates, who continue to steal the intellectual property of the talented people. Counterfeiting and piracy in most countries around the world was a high margin low risk activity, he added.

He said piracy also discouraged the creative people and the talented people avoid putting in their energies in producing software and prefer to leave the country, which resulted in brain drain and further shortage of the skilled workers.

Brain drain is also of great concern because a big proportion of those who study locally, at a considerable cost to the country resources, migrate abroad to take up well-paying jobs. Majority of the IT graduates from Pakistan's best institutions left the country for employment opportunities abroad, he added.

Most of the companies, those are based in the developed parts of the world, prefer to select those software houses based in developing countries, which use licensed software for processing and where anti-piracy laws are strongly implemented.

When there were big business investments in a country like Pakistan, a greater number of IT experts would get employment, there would be greater exports and tax revenues for the government would also increase, resulting in accelerated socio-economic development in the country, he concluded.

http://www.brecorder.com/index.php?id=560176&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*77 development schemes completed under MPAs Priority Programme *

LARKANA: May 05, 2007: A huge amount was released to execute 77 development schemes in various sectors in Larkana district under MPAs Priority Programme 2006-07.

According to details, Rs 4.997 million were incurred to complete seven water and sewerage schemes recommended by MPA Dr. Hameeda Khuhro in drainage sector, Rs 2.882 million were spent to execute five schemes recommended by MPA Haji Munawar Ali Abbasi in education, road and drainage sectors, which are near completion, work on 15 schemes proposed by MPA Aziz Ahmed Jatoi worth Rs 4.178 million were underway in road, education and drainage sectors.

Most of the schemes have been completed and remaining work is near completion.

Similarly, 29 schemes recommended by MPA Nisar Ahmed Khuhro have been completed under MPAs Priority Programme in road and drainage sectors, two schemes of road sectors recommended by MPA Altaf Hussain Unar with an approved cost of Rs 5.000 million have also been completed under the above programme. 

Besides, 16 schemes costing Rs 5.000 million recommended by MPA Mohammad Ayaz Soomro were completed in education and drainage sectors and remaining work is near completion, while two schemes of road sector costing Rs 1.000 million were also completed under above programme recommended by MPA Najamuddin Abro in district Larkana, a report stated here.

Brecorder.com


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## Neo

*
 China Mobile adopts Pak identity as CMPak*

ISLAMABAD: *Phone subscribers would reach 100 million in next three years Minister for Information Technology, Awais Ahmad Khan Leghari said at unveiling of China Mobileâs new company name, CMPak Limited here on Friday.*

Awais expressing hopes that CMPak would be providing quality cellular services to their clients assured on part of government that Pakistan is a lucrative destination offering a level playing field to all investors.

Zahid Hamid, Minister for Privatisation and Investment said that Pakistan has tremendous potential of robust growth for telecom sector and CMPakâs ambitious plans would further develop the sector.

With the liberal policies of the government, the foreign investment in the first nine months touched $5.6 billion mark, as it was only $3.9 billion in 2005-06, he added.

Guo Yonghong, CEO of CMPak limited, said âIt would be our prime objective to be rated as the best cellular service provider by expanding our service area to every corner of the country which is to be backed by excellent after-sales services. We have awarded contract to four different vendors in Pakistan who will simultaneously help us with the most aggressive network expansion in the history of the country.â

He said, âIt is China Mobileâs part of HR policy to retain and recruit the local employees, which would benefit both the parties, thus we would be contributing in reducing the unemployment rate in the country by providing new job opportunities and the opportunities of training and development.â

China Mobile took over Paktel on February 13, 2007 with 89.86 percent shares. The acquisition of Paktel is China Mobileâs first venture outside of China.

Guo Yonghong said, âThe Company has acquired Paktel for over $460 million enterprise value while $700 million worth of FDI has already been made in the country and on top of that we will be investing millions of dollars in the future â

âChina Mobile is here to stay and we restarted sales to resume business as usual as soon as we arrived in Pakistan. China Mobile has the resources and technical expertise to become one of the largest operators of the country,â he added.

The company plans to increase coverage in several thousands of cities, locations and roads with the capacity of 20 million subscribers, which will be enhanced, with the passage of time.

http://www.thenews.com.pk/daily_detail.asp?id=54305


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## Neo

Saturday, May 05, 2007 

*Awais sees 100m mobile phone users by 2010*

ISLAMABAD: Minister for Information Technology, Awais Ahmad Khan Leghari Friday projected a growth of 100 million mobile phone users within next three years due to what he called "a hunger for telephony and innovative services being introduced by operators."

He said a fast-paced progress and investment trends in the telecom sector were likely to continue for the next few years with major benefits accruing to the phone users.

He stated this while unveiling CM Pak Limited - a company launched by China Mobile to run the erstwhile Paktel's operations in Pakistan. "The entry of world's largest telecom company China Mobile into Pakistan's telecom market sends the right kind of signals for the nature of healthy competition and innovative services, the phone users are going to benefit from in the coming years," he added.

He opined that while mobile companies were expected to be embroiled into a stiff competition in the days ahead, the ultimate winners would be market players excelling in content provision which had the potential to drive the appetite for phones in coming years. 

He said the launch of CM Pak was a historic occasion as it was for the first time that China Mobile had come out of China to invest into another country and it also marked a shift in the attitude of Chinese companies which had begun to invest in the service-based sector in Pakistan instead of looking merely for contracts for providing vendors' services. Mr Awais observed that while the progress in telecom sector owed largely to the general appetite for better telephony, the credit was also due for the transparent policies introduced in the sector. 

"At no stage during the deregulation process or afterwards, there was any effort from any quarters within the government to bend rules and reward a sweetheart company or individual. 

http://www.dailytimes.com.pk/default.asp?page=2007\05\05\story_5-5-2007_pg5_5


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## Neo

Saturday, May 05, 2007 

*Energy: signs of tough times ahead*

Are we already in the middle of the countrywide power crisis the experts had predicted down the years? The federal water and power secretary, Ashfaq Mehmood, announced Thursday that Pakistan faced a shortage of 978 megawatts of electricity and this could jump to 1,500 MW in the next three weeks. How will we cope with this power gap? Apparently, by âload-managementâ, which will save us barely 550 MW, while the rest will be made up with âload-sheddingâ.

This year April temperatures were the highest in history. This means that climate change is also upon us even as we mull the energy problem in an economy that wishes to grow at over 6 percent indefinitely. But the heat will play havoc with the not-so-rich in Pakistan and the poor will stand no chance of bettering their quality of life as we rely on measures of âload-managementâ that damage the economy. Closing shops at 8 pm will mean curtailment of commerce; in our hot summers no one shops during the day anyway. 

The government will apply closure to urban commerce at 8 pm, and also ask farmers to run their tube-wells only during the day. By so demanding it hopes that industries will get the power they need for production. But load-shedding will go on as always and might even increase, as figures of April show. Consumption through air-conditioners will jump up and load-shedding will be lengthened as power falls short. Will the river flows during summer come to our rescue? No, they wonât, because we donât have enough water storage capacity to catch the water for balanced releases later on. 

Climatic change is upon us for many reasons, some of our making and some global, but we have not been able to act providentially in this regard too. We have quarreled over the dams and found no solution. Indeed, there is uncertainty looming over the dams planned under the Musharraf government that may not come on line till 2015 or even later. In Karachi, the street scenes during power outages foreshadow increasing bouts of trouble for the government. And the trouble may be starting from this year! Our electricity is already more expensive than the economies we want to compete with, even after consuming our gas at one-third the international price. The economy is unviable! 

Pakistan produces about 19,500 MW of electric power; WAPDA provides about 11,363 MW, or 58 percent of this. The remaining power is supplied by the KESC, nuclear and the private sector companies called the IPPs. Currently there is load-shedding of up to 700 MW a day because of shortage and poor transmission. Electricity demand is expected to grow by 8 percent a year till 2015 by which time the price of oil will climb to $100 a barrel â requiring an annual installation capacity of about 2000 MW for the next 10 years. 

Pakistanâs power production is 48 percent from gas; 33 percent from hydroelectricity; 16 percent from oil; 2 percent from nuclear power stations, and 0.2 percent from coal. According to the World Bank, the worldwide electricity production is: 40 percent coal; 19 percent gas; 16 percent nuclear; 16 percent hydro; and 7 percent oil. We cannot exploit our hydro potential because of internal strife, we are stymied in our nuclear power because of external impediments, and we have not woken up to coal although we have a major deposit of it in South Asia. Other methods are too expensive for us.

Regarding coal power generation, the US produces 51 percent of its power using coal, Poland 96 percent, South Africa 94 percent, India 68 percent, Australia 77 percent, China 79 percent, Israel 77 percent, UK 35 percent, Japan 28 percent, while Pakistan produces only 0.2 percent of its power through coal. Compared to India, this low level is quite alarming, especially when Pakistan has the worldâs seventh largest reserves of coal in Thar. Given our national pattern, Balochistan is protesting because of the way it has been mishandled by Islamabad and we have jeopardised gas reserves because of the trouble there. Indeed, even the coal in Sindh could actually give a big push-up to Sindhi separatism because of lack of democracy in the country. 

Pakistan is ill-prepared to face the future. Everyone thought it was India and its low-growth economy that would go under, but it has been growing at the rate of 9 percent every year in recent times, thus bracing itself for the troubles lying ahead. While this was happening, Pakistan was playing its jihad card at the cost of its economy which plunged to under 3 percent when the political system collapsed under the weight of jihad in 1999. We took 3 million Afghans to facilitate our âstrategic depthâ nonsense; who will take the 150 million we have neglected at home? *

http://www.dailytimes.com.pk/default.asp?page=2007\05\05\story_5-5-2007_pg3_1


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## Neo

*Pakistan soon to begin rice exports to Iran *

ISLAMABAD (Khaleej Times) â Pakistan would soon be exporting different varieties of rice to Iran to help increase trade between the two countries.

Pakistan's Agriculture Storage and Supplies Corporation (PASSCO) is finalizing its plan to initially export irri-9 and Basmati to Iran as per arrangements with Iran's Government Trading Company (GTC) at preferential duty.

Though with the abolishing of rice Export Corporation of Pakistan (RECP) few years ago, the private sector had already crossed one billion dollar rice export mark last year but the government still wants to encourage yet another government department to enter into the business.

Technically, PASSCO's role would be limited to purchase of rice, if the private sector is not able to procure and purchase at the support price. Now, rice is being sold domestically at much higher than the support price.

The proposed move of the government will discourage rice export from the private sector.

Pakistan's Commercial Counselor based in Tehran has sent a letter to the Agriculture Ministry to examine whether it would be possible for PASSCO to enter into the business of rice export with GTC.

According to the letter, the GTC will import the rice at a rate of four percent customs duty as against the private sector import duty of around 150 percent. The GTC feel more easy and safe, while dealing with a government department as heavy transactions are involved.

The chairman of GTC visited Pakistan in last December and offered to purchase 400,000 metric tons of rice. Of these, agreement regarding 20,000 metric tons has so far been signed with the GTC, the letter said.

In response to this letter, the Ministry Of Agriculture has sent a letter to the chairman of Rice Exporters Association (REAP) seeking views and comments from the stakeholders for allowing PASSCO to export rice to Iran.

The Agriculture Ministry letter also sought views from the stakeholders regarding possibilities for export of rice to Iran on their terms and conditions from the private sector.

Surprisingly, while the letter from the Agriculture Ministry to chairman of REAP inquires about terms and conditions for export of rice to GTC that is acceptable to private sector exporters, the actual letter from Pakistan Embassy to the Ministry Of Agriculture (Minfal) asks a completely different question to examine the issue of allowing PASSCO to export rice to Iran. A leading rice exporter said that the private sector must oppose any move to revive the ghost of RECP in the shape of PASSCO or any other body.

"We should not agree for sale of rice to GTC Iran through any government body such as PASSCO, TCP or anyone else. Only private sector should remain in the rice export business and no government body should be allowed to export rice," he stressed.

According to the exporter, a lot of rice is reportedly being smuggled from Pakistan to Iran evading import duty. Some rice is exported through under-invoicing to avoid or reduce the high duty.

http://www.tehrantimes.com/Description.asp?Da=5/5/2007&Cat=9&Num=9


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## Neo

May 05, 2007 
*Vibrant health sector vital to improve competitiveness ranking*

Karachi, May 4: Health scenario in Pakistan is dismal. The situation has reached a pass where an international economic watchdog has identified it as one of the major factors impacting business environment negatively.

Pakistanâs overall ranking on health and primary education was placed at 108 among its 125 competitors, while Sri Lanka registered the highest ranking (36) according to a report on comparative competitiveness of World Economic Forum.

The health indicator identifies the assessment of the medium-term impact of tuberculosis on doing business and showed a major change in ranking from 51st in 2005 to 99th in 2006.

Prevalence of reported HIV cases increased enough to cause Pakistan to move from 5th place to 26th. Rankings for malaria and tuberculosis have also showed some backward movement. 

This is despite the fact that in Pakistan health is one of the most lucrative sectors of the economy. Health professionals, private sector hospitals and drug companies businesses are roaring, posting impressive profits. This, however, has not been translated into better health of an average Pakistani.

Most Pakistanis, especially those living in backward areas and belonging to deprived segments endure additional stress and suffering for health cover cbaters to people in urban centres and privileged classes.

The access to health facilities has actually shrunk over the years as public health centres and government hospitals continue to cut a sorry picture of neglect by the government and apathy of the civil society.

Declining national health graph belies government claims of poverty reduction. It also put advocates of free market in Pakistan in a tight corner as the case of leaving essential utilities to market forces in a society inflicted with disparities is weakened.

The state of Pakistanâs Competitiveness Report of the Competitiveness Support Fund (CSF) and the World Economic Forum in its annual Global Competitiveness Report have identified health as one the most important factors in Pakistanâs low ranking on the Global Competitiveness Index.

A delegation of the Competitiveness Support Fund (CSF), in a recent special presentation to the ministry of health in a meeting attended by the ministryâs hierarchy advocated that besides taking necessary steps to improve performance of the health sector in Pakistan there is a need to update data on the primary health and education indicators and provide it to the international sources.

The presentation was a part of the exercise to bring all the line-ministries on board to address the competitiveness issues of Pakistanâs economy. The prime minister launched the State of Pakistanâs Competitiveness Report in March and termed competitiveness as the corner stone of Pakistanâs growth strategy.

The CSF head Arthur Bayhan, in the meeting discussed in detail the reasons for Pakistanâs low ranking on the Global Competitiveness Index (GCI) of the World Economic Forum. The meeting was chaired by Khushnood Akhtar Lashari, secretary health.

Abdul Basit, joint secretary, Prime Ministerâs Special Programme Wing, ministry of finance also accompanied the CSF delegation.

Arthur Bayhan in his presentation briefed the ministry on the strengths and weaknesses of the âHealth Pillarâ of the Global Competitiveness Report. Pakistan was ranked at 91 among 125 countries on GCI.

Infant mortality scores in many countries are being reduced and Pakistan will need to make even greater effort to improve its scores relative to other countries. Bayhan explained the rational behind the indicators and pointed out that the data used for these indicators is not up-to-date.

Mr Lashari informed the CSF delegation about health policy and the governmentâs strategies to address the primary health issues in the country. He said, âOur aim is to improve the efficiency of the healthcare services and to enhance the quality of citizensâ livelihood in the most economically vulnerable segment.

He informed the delegation about the continuation of ministryâs programmes for the control of tuberculosis (TB), HIV/AIDS and malaria.

He also briefed the meeting about the new initiatives on National Maternal and Child Health Program (NMCH) and the Prime Ministerâs Programme for Prevention and Control of Hepatitis in Pakistan.

The ministry of health has made a commendable improvement in the percentage of TB cases detected and cured. The national programme for TB control has been very successful in detecting and curing 176,000 patients out of 240,000 registered in 2006 whereas only 60,000 patients were cured in 2001.

Secretary Health Mr Lashari also expressed his keen interest in assisting the CSF for the State of Pakistan Competitiveness Report for 2008. It was agreed that the ministry of health will be working closely with the CSF in improving Pakistan Global Competitiveness Rankings on the health indicators.

http://www.dawn.com/2007/05/05/ebr1.htm


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## Neo

*Pakistan To Sell 47.75% Of NITL In Three Equal Portions *

ISLAMABAD -(Dow Jones)- Pakistan government will sell 47.75% of almost PKR79 billion ($1.3 billion) of National Investment Trust Limited, or NITL, in three equal parts to three parties at the highest bid price, says an official statement.

A statement issued by Pakistan's Privatization Commission says in this way no party could purchase more than 16% holdings.

"According to the approved transaction structure, 47.75% of the total NITL units would be divided into three equal parts and management rights of each part sold to three different parties at the highest bid," says the statement.

NITL is country's largest mutual fund in asset base and still needs some issues to be resolved before going in new hands.

"The timing of transaction, pre-qualification of bidders and others are under consideration in consultation with concerned ministries and are expected to be resolved soon where-after final date of bidding would be announced," says the statement.

In a previous Pakistan Steel Mill privatization case Supreme Court blocked the transaction citing irregularities also raising questions on Arif Habib Group which was a party in successful consortium.

The same group is also in bidding process to buy NITL, for Arif Habib qualification Privatization Ministry has sought clearance from Law Ministry, whose suggestion is still awaited.

Opposition political parties criticized Friday the government for pre- qualifying Arif Habib Group in NITL bidding process.

The ministry said the transaction procedures was processing on track in a transparent manner following procedures.

Privatization Commission conducted pre-bid meeting of NITL on April 24 and expects very competitive bidding process.

The net assets on NIT have increased from PKR61.0 billion as on June 30, 2005 to PKR79.08 billion as on December 31, 2005, reflecting a growth of 29.64%.

NITL is an open end mutual fund, having approximately 53,000 unit holders and 19 branches across Pakistan. Its investment is in 435 out of a total of 659 listed companies. 

http://www.nasdaq.com/aspxcontent/N...CQDJON200705050931DOWJONESDJONLINE000373.htm&


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## Neo

*Pakistan can export more cement if India removes curbs*

PTI MAY 03, 2007

NEW DELHI: Pakistan on Thursday asked India to remove non-tariff barriers so that it could significantly enhance cement exports to the country facing a severe shortage of the key building material. 

"Imports in India are subject to meeting excessive standardisation requirement and procedural formalities. Cement is one such case in point. These work as a detriment to bilateral trade," Pakistan High Commissioner Shahid Malik said. 

Over 500 tonnes of Pakistan cement is lying at the Mumbai port awaiting clearance. 
However, the Joint Study Group is looking into all these aspects, Malik said at a PHD Chamber seminar. 

He said Pakistan would like to enhance trade with India in a business-like manner. "We are ready to float a tender, ask India what it needs and just get on with it," he said, allaying concerns that Pakistan was holding back the bilateral trade promotion. 
Besides cement, Pakistan is keen on selling its surplus wheat to India while it may import tea from its neighbouring country, Malik said. At present, Pakistan imports tea from Kenya but if it gets the beverage from India at a cheaper price, it would be open to the idea. 

He rejected the notion that Pakistan was blocking bilateral trade by not granting India the much-talked about 'Most Favoured Nation' status. "MFN is a misnomer," he said. 

He said the Pakistan business community expected a level playing field with India and this could be granted if the non-tariff barriers were removed. 
Bilateral trade was 1.2 billion dollars in 2006-07. According to a World Bank report, potential exists to take it to nine billion dollars. 

http://economictimes.indiatimes.com...f_India_removes_curbs/articleshow/1999246.cms


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## Introvert

*Al-Rajhi Group Seeks to Invest in Pakistan*

(MENAFN - Arab News) Chairman of Al-Rajhi Investment Group and the CEO of Al-Rajhi Bank Abdullah Suleman Al-Rajhi has expressed keen interest in bringing more investment to Pakistan.

He made these observations during his meeting with Prime Minister Shaukat Aziz here on Thursday. Aziz told Al-Rajhi that Pakistan has become a lucrative destination for foreign direct investment in view of the availability of skilled manpower, the comparative low cost of production and a level playing field available in both foreign and local investors. Aziz said Pakistan and Saudi Arabia have close relations based on shared faith and values.

Aziz told Al-Rajhi that Pakistan has enormous potential in real estate, telecom, banking, oil and gas, textiles, cement, power generation, agriculture, transport and the hotel industry. Al-Rajhi Group expressed interest in banking and real estate sectors.

Aziz also said that Pakistan would welcome businessmen from Bahrain to invest in Pakistan.
http://www.menafn.com/qn_news_story_s.asp?StoryId=1093151981


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## Introvert

*Rice exporters likely to meet $1.3b target one month ahead*

KARACHI: Pakistan&#8217;s rice export graph has been rapidly going up for the last two years, and this year the exporters are expected to achieve $1.3 billion target one month ahead.

According to a leading rice exporter, rice growers are earning a handsome profit, therefore, it is expected that exports will hit $1.5 billion in 2007-08.

The rice export target was $1.2 billion in 2005-06.

A former chairman of Rice Exporters Association of Pakistan (REAP), Rahim Janoo, told Daily Times that REAP was looking for new markets due to increase in rice production. For the purpose an eight member delegation led by Abdul Aziz Maniya, chairman REAP, is expected to leave on May 15 to explore new markets in Eastern Europe, he told. In the first phase the delegation will visit Poland, Hungary and Romania, India has a very strong hold in East European region, and to compete with them REAP has to work hard as the demand of Basmati rice is rapidly increasing in the international market.

The prices of Basmati rice have surged by 35 to 40 percent in the international market since November 2006 due to low crop production in leading rice producing countries.

This season China, Thailand, Vietnam, India and Sri Lanka have reported crop shortage particularly in coarse rice. This situation is benefiting Pakistan where rice production is sufficient enough to export higher quantity of this staple crop.

According to chairman REAP, &#8220;the average price of Basmati is $850 per tonne now, rising from $650 per tonne last year.

Similarly, 30 percent broken Irri-6 is exported at $265 per tonne. This was $215 per tonne at the start of the season,&#8221; he added.

At the same time, prices of rice in the local market are still rising. An increase of 10 percent in Basmati rice&#8217;s price and 6 to 7 percent in non-Basmati rice&#8217;s price is recorded in the first week of May as compared to first week of April.
http://www.dailytimes.com.pk/default.asp?page=2007\05\06\story_6-5-2007_pg5_10


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## Neo

*Musharraf for using Thar coal for energy production *

NAUKOT (May 06 2007): President Pervez Musharraf Saturday said the government is sincerely working for the welfare of the people and announced a number of development projects for Thar including full utilisation of coal reserves present in the area.

He was addressing a mammoth public meeting at Naukot Fort in the remote town of District Tharparkar where hundreds of thousands of people from Thar and other parts of Sindh gave standing ovation to the President when he entered the arena.

He said the government has been working hard to bring in European and Chinese companies to explore coal reserves of Thar and set up power generation plants using coal. This will benefit the people of Thar as well as the whole country, he noted.

The President, amid thunders of applause and slogans of "long live Pervez Musharraf, long live Pakistan" said he would bring about revolutionary development in the backward area of Sindh. President Musharraf said that previous governments were not sincere to undertake development projects in the less developed areas.

President General Pervez Musharraf warned the lawyers community to desist from using the reference against Justice Iftikhar Muhammad Chaudhry for political gains and let the Supreme Judicial Council (SJC) tackle the case in accordance with the law and the Constitution. He said some elements, particularly a group of lawyers were making a purely constitutional and judicial issue, a political issue.

He asked the people to beware of such elements, who are using the reference case against Justice Iftikhar for their personal and political interests and not to follow them. President Musharraf said: "It is purely a constitutional and judicial matter and let the Supreme Judicial Council decide the issue according to the Constitution."

He asked the lawyers not get political mileage of this issue and remain peaceful and avoid confrontation. The President said the people are conscious and would not be misled by the lawyers, who are using the reference case for political purposes. The mission of few lawyers, who want to get political benefit from the reference case, would not succeed, he added.

Paying tributes to the people of Thar and other parts of Sindh for according unprecedented welcome, Musharraf said he had never seen such a huge public meeting.

He especially mentioned the development projects in Thar including improvement of irrigation system through lining of distributaries and watercourses, expanding road network, construction of schools and drinking water supply network. President Musharraf said that entire Thar area would get electricity supply while railway link has been established upto the Indian border.

The President said 86,000 watercourses would be lined at a cost of Rs 12 billion in Sindh, besides the lining of 514 distributaries. President Musharraf while referring to large number of minorities in interior Sindh said that minorities were enjoying all rights as equal citizens. They are Pakistanis whether they are Hindus or Christians, he added.

The President said the government has worked a lot for the betterment of minorities and introduction of joint electorate system for them is one of the examples in this regard. President Musharraf asked the people of Thar to go for dairy and cattle farming to enhance their income and to contribute to government's effort to promote a white revolution in the country.

The President said communication projects were being undertaken in Sindh, including M5 which was being doubled and two lanes were added to Super Highway between Karachi and Hyderabad. The President said that SSGC would be asked to broaden its pipeline network to Mirpurkhas and supply gas to Tharparkar. He said that natural gas and electricity would be provided to every tehsil and village.

President Musharraf said that ZTBL will write off loans up to Rs 0.1 million in Thar. He also announced to provide Rs 50 million to Nazim Tharparkar for development projects and the people responded with a thunder of applause and chanted slogans "Jiay Musharraf, Jiay Musharraf".

http://www.brecorder.com/index.php?id=560421&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Two-hour loadshedding daily from May 7 *  

LAHORE (May 06 2007): Chairman Wapda Tariq Hameed on Saturday announced a new plan of a 2-hour loadshedding in the urban and the rural areas of the country in 24 hours, from Monday, May 7. This announcement came after the government gave a load management plan from Monday.

Under the plan, electricity will be switched off after every 6 hours for half an hour in both rural and urban areas of the country while the shops will be closed after 8pm, said Wapda Chairman Tariq Hameed, talking to newsmen, here on Saturday.

He said that restaurants, medical stores, bakeries hotels, and corner shops would be exempted from this restriction and could remain open till late night. He said that farmers could also take the advantage of the Wapda offer for the utilisation of tube-well for irrigation purpose. Wapda would charge only 75 paisas per unit during 10pm to 6am, he added.

The chairman said that after the implementation on the new plan Wapda would be able to save 500 MW electricity. He said that the federal government had issued a notification to the provincial government to ensure the implementation of the schedule under the "Shop and Establishment Labour Act" from Monday (tomorrow).

He said that Wapda had produced more electricity as compared to the previous year but the consumption had also increased this year and people were purchasing more domestic appliances. For example, he said, according to facts and figures, 2.8 million air conditioners were sold this year while the figure was 2.2 million in the previous year, he pointed out.

He said that 0.75 million washing machines were sold this year and 0.6 million were sold in the previous year. In reply to a question he said that All Pakistan Textile Mills Association (Aptma) offered to sell 400MW electricity to Wapda was not feasible because they were offering it at Rs 6.80 per unit. Wapda is already purchasing from various private companies at Rs 6.20 per unit.

However, the negotiations between Wapda and Aptma were going on, and a favourable outcome would be seen soon, he added. The chairman said that Wapda had invested Rs 28 billion on the transmission system and more development projects were in the pipeline.

He said that the markets and the shops in the Defence and in the cantonment area would not be exempted form the rules of shop closure at 8pm. When it was asked that all the restrictions and rules were applied on the common and the middle class and government offices and officers' residences were normally exempted form it, he said that the federal government had issued the notice to the provincial governments to reduce their electricity consumption.

The chairman said that 15000 villages would be provided electricity at the end of this year and approximately 400,000 people would get the benefit from it and only 150MW electricity would be sufficient for the new electrified villages. He said that 10 oil-based projects had been started which would be completed till 2009.

http://www.brecorder.com/index.php?id=560428&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Sugarcane output fixed at 55 million ton for next year *

ISLAMABAD (May 06 2007): The Federal Committee on Agriculture (FCA), which met recently, has fixed sugarcane production target of 55 million tonnes next year, while the sugarcane in the current year is 54 million tonnes, showing an increase of 1.8 percent only.

It may be stated that sugarcane production in 2006-07, at 54 million tonnes was higher by 22.8 percent as compared with 44 million tonnes in 2005-06. The FCA meeting highlighted the overall performance of the agriculture sector. It said this sector had made gradual improvements in the sugarcane crop.

In 2005-06, the production of the crop was 44 million tonnes, in 2006-07; the production of the crop was recorded 54 million tonnes, while for 2007-08 the production of the crop is expected to be 55 million tonnes.

The FCA found that in 2006-07, its production increased by 22.8 percent as compared to 2005-06. It announced that in 2007-08, the crop would be sown at an area of 1,039.5 thousand hectares and the yield of the crop would be 53.8 tonnes per hectare that is 1.3 percent more than 2006-07.

The share of Punjab in its production in 2007-08, would be 37 million tonnes, 13 million tonnes of Sindh, 5 million tonnes of NWFP and 0.02 million tonnes of Balochistan.

It is noteworthy that the share of Punjab in the production of the crop would decrease by 0.1 percent as compared to 2006-07, the share of Sindh up by 5.08 percent, contribution of NWFP would increase by 6.9 percent, while Balochistan did not have any contribution in 2006-07, but in 2007-08, its share is estimated to be 0.22 million tonnes.

http://www.brecorder.com/index.php?id=560445&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Hasan Associates ready to set up power plant in Thar *

ISLAMABAD (May 06 2007): Hasan Associates Limited has convinced Prime Minister Shaukat Aziz that it is in a position to set up 1000 MW integrated power plant in Thar even not having net worth required in the power policy, official sources told Business Recorder. The sources said, Farooq Hasan, Chairman Hasan Associates met Prime Minister on April 10 to brief him on the proposal to develop Thar coal power project.

They pointed out that according to the power policy the net worth of main sponsors is required at $30 million and main sponsors together with other sponsors (ie 51 percent of total equity) to have $114 million for execution of the project. However, Hasan Associates net worth is lower than that is laid down in by the power policy.

"To move forward on Thar coal project for which few investors are really coming forward. Farooq Hasan along with Hasan Associates be considered as main sponsors and they should jointly and severally be responsible for the development of the project," the sources quoted Farooq Hasan as saying.

He was of the view that Hasan Associates have financial resources to undertake the project for which lease has been provided by the Government of Sindh (GoS). The sources said that the Prime Minster appreciated the interest of Hasan Associates for the development of 1000 MW power project in a remote area of Pakistan.

After detailed discussion, the Prime Minister directed the Private Power Infrastructure Board (PPIB) to examine the proposal wherein Farooq Hasan together with Hasan Associates is considered as main sponsors and are jointly and severally responsible for undertaking project.

Hasan Associate had also been asked to submit a detailed proposal to PPIB clearly identifying time line of various activities for undertaking the feasibility study for 1000 MW power project based on Thar coal. The proposal should not be open-ended.

The Prime Minister said that there would be no special tariff for the project, the sources said. According to sources, the Prime Minister asked Energy Advisor to co-ordinate all activities related to the development of the power project by Hasan Associates whereas Ministries of Water & Power, Petroleum, PPIB and Wapda to facilitate Hasan Associates within the realm of reasonableness in the development of their project.

http://www.brecorder.com/index.php?id=560492&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*âCotton output of 20m bales to be achievedâ *

VEHARI: The government is making strenuous efforts to enhance cotton production with a target of 20 million cotton bales in focus, said Managing Director of Punjab Seed Corporation (PSC) Brig Iftikhar Ahmad Khan on Saturday.

Addressing a national cotton seminar at Jinah Hall here, he said: âWe will soon achieve the 20 million cotton bales target that will not only enhance contribution to the national economy but also improve financial conditions of growers.â 

He said cotton was being utilized as raw material or yarn by over 1000 ginneries, over 500 textile mills, 250,000 powerlooms, hundreds of hosiery, bedlinen industry units, thousands of dress making units besides offering raw material to ghee industry. 

The PSC chief said that the nation earns foreign exchange through export of textile products. He advised small farmers to unite in the form of cooperative societies, adding that it will help them apply modern agronomic techniques to enhance their production. 

He said that PSC has recently launched a model project under rural support programme in six villages to enhance agriculture production by offering seed to growers at low price, fertilizers free-of-cost, pesticides, micronutrients and modern technology from sowing to harvesting process. 

This scheme resulted in phenomenal enhancement in wheat production from 24 maunds per acre to 62 maunds per acre, he added.

He said that Ali Akbar Group, Agri Forum Group of Pakistan, Fauji Fertilizers Company and KASB Bank have offered assistance to execute this scheme. He said that rice and cotton would also be included in this scheme which would be expanded from six to 100 villages in the country. 

He said that sale of unapproved varieties should be discouraged, adding that such practices leave the varieties ineffective at the initial stages. He asked growers to beware of those elements who had been trying to sell fake varieties in the name of Bt cotton. Use of such seed not only provoked CLCV disease but also affected quality of cotton.

Progressive grower Syed Sajid Saleem Mehdi lauded federal minister for food Sikandar Hayat Bosan, saying that the minister was promoting grower-friendly policies.

http://www.thenews.com.pk/daily_detail.asp?id=54472


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## Neo

May 06, 2007 
*Shift from low to high value crops key to rural prosperity*

By Afshan Subohi

KARACHI, May 5: Pakistan, a predominantly agrarian country, is still struggling to achieve food autarky and provide a decent living to its rural population. A recent study suggests changes in the cropping pattern in Pakistan to achieve better returns from rural economy.

The State of Pakistanâs Competitiveness Report by Competitive Support Fund (CFS) suggests a few reforms in the agriculture sector, including shifting of production structure toward rice and cotton, while ensuring a moderate growth in wheat production in Punjab.

Rural power structure, policy failures, low credit access, mismanagement, weak market operations, low per acre yield with a host of other related problems plague the sector that continue to perform much below its actual potential.

The aforementioned report emphasises on government investment in irrigation, water management and agriculture research. An important area for increasing the competitiveness of the agricultural sector is the reform of wholesale markets. An efficient marketing system is a pre-requisite for the agricultural diversification that forms an important plank of the development strategy.

The current Pakistan Economic Survey admits: âAgriculture and particularly its crop sector could not perform up to the expectation, especially when major crops registered a 3.6 per cent contraction in growth.

Livestock, a major component of agriculture, exhibited strong showing and pulled the overall growth in agriculture to 2.5 per cent as against the target of 4.2 per cent. Livestock has been the only saving grace as far as the performance of agriculture is concerned this year.

The State of Pakistanâs Competitiveness Report of the Competitiveness Support Fund (CSF) and the World Economic Forum in its annual Global Competitiveness Report has identified improvements of the agriculture sector in Pakistan.

âPakistan must update its data on all the agriculture segments indicators and provide it to the international sources,â this was stated by Arthur Bayhan, CEO of the CSF. The CSF delegation was making a special presentation on Friday to the ministry of food, agriculture and livestock (Minfal) as a part of exercise in which the other relevant ministries will also be visited.

In the meeting the CEO briefed the ministry on the strengths and weaknesses of the global indicators related to the food, agriculture and livestock of the Global Competitiveness Report. He explained the rationale behind the indicators and pointed out that the data used for these indicators is not up-to-date, says a press release of CSF.

Mr Bayhan said that the Minfal has a role to play in boosting the productivity of farmers and enhancing the competitiveness of Pakistanâs agricultural sector and food industry. This can be done by connecting agricultural research more closely to the needs of the farmers and the food industry.

The benefits will accrue to both producers in terms of efficiencies and to consumers in terms of lower prices and better quality. Assisting farmers to migrate from low-value products to high-value products will also assist in improving rural prosperity.

Mr Ismail Qureshi, secretary MINFAL informed the CSF delegation that Pakistan is one of the unique countries in the world, which provides negative subsidy to the agriculture sector in view of the WTO. He further pointed out that the major difficulties for agriculture are the tariff and trade barriers, stopping Pakistanâs agribusiness to compete in the international market.

Qureshi also suggested that the ministry of agriculture should work closely with CSF on food safety and standards, fisheries, horticulture and feed side for the livestock. He also urged CSF to establish formal cooperation with the ministry.

Mr Qureshi told the meeting that Pakistanâs future lies in agribusiness and âwe should not only add value but create value as well.â He also suggested that the Minfal and CSF should work together on food processing, fisheries, horticulture, meat processing and specifically on the feed side for the livestock.

The meeting chaired by secretary Minfal was attended by several high ranking officers. CSF also provides technical assistance and co-financing for initiatives related to entrepreneurship, business incubators and private-sector-led initiatives with research institutes and universities that contribute to creating a knowledge-driven economy.

http://dawn.com/2007/05/06/ebr3.htm


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## Neo

Sunday, May 06, 2007 

*âPunjab to attract $20b investment in three yearsâ*  

LAHORE: Punjab, particularly Lahore, is likely to attract an investment of more than $20 billion in next three years.

Punjab Minister for Industries Mohammad Ajmal Cheema told this in a meeting with a delegation of Al-Rajhi Investment Group of Saudi-Arabia on Friday. 

The provincial minister said Pakistan has become the land of unlimited opportunities for investors as industrial sector has shown rapid growth and worldâs renowned multi-national companies have come Pakistan for investment due to the investment friendly policies of the present government.

He said after Dutch company Makro, German multi-national company Metro has also started its operations in Lahore and its first store would be opened soon. 

He said government was paying due attention on road infrastructure development and a number of new projects were undertaken. 

He assured Al-Rajhi Investment Group of all out support for investment in real estate sector, and said government would provide all possible facilities to the foreign investors in this connection. 

On the occasion, the delegation told that they had already invested in various Arab countries and now they wanted to invest in Pakistan, especially in Punjab.

http://www.dailytimes.com.pk/default.asp?page=2007\05\06\story_6-5-2007_pg5_11


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## Neo

*Pakistan Expects Foreign Investment to Jump to Record *

By Cherian Thomas

May 6 (Bloomberg) -- Pakistan's government expects foreign direct investment to jump to a record $6.5 billion this year as faster economic growth attracts companies including Philip Morris International and Standard Chartered Plc. 

Overseas investments in Pakistan in the year ending June 30 may double from the previous year as the $129 billion South Asian economy expanded an average 7.5 percent in the past three years, Ashfaque Hasan Khan, the government's chief economic adviser, said today. Khan said the government wants to sustain that pace of growth for a decade. 

``Pakistan needs investments,'' Khan told a seminar at the annual general meeting of the Asian Development Bank in Kyoto. ``The government will provide a macroeconomic environment that will be conducive to business.'' 

Pakistan is relying on foreign inflows to develop roads and power stations to foster growth and eradicate poverty. The Asian Development Bank estimates Pakistan's economy may slow to 6.5 percent in the year starting July 1 from 6.8 percent in the previous year because of inadequate infrastructure. 

``Investors all over the world are very interested in Pakistan right now,'' said Ping Chew, managing director, Asia corporate and government ratings at Standard and Poor's. ``There are tons of privatizations, tons of asset sales happening.'' 

*Asset Sales *

Pakistan's government, which is selling assets to help repay $36 billion of overseas debt, estimates it will raise as much as $15 billion in five years by selling shares in state-owned companies. The government has raised more than $6 billion selling assets in the past 15 years. 

A quarter of Pakistan's 160 million people live on less than a dollar a day, the World Bank estimates. 

The Altria Group Inc.'s Philip Morris said in January it will buy a majority stake in Pakistani cigarette maker Lakson Tobacco Co. for $338.9 million. 

Standard Chartered Plc, the U.K. bank that makes two-thirds of its profit in Asia, in September completed a $487 million purchase of Union Bank Ltd., the biggest acquisition in Pakistan's banking history. 

Pakistan this year also asked China's two biggest lenders, Bank of China and the Industrial & Commercial Bank of China, to start operating in the country. 

Investors are also pouring money into Pakistan as peace talks with rival India have been strengthening over the past four years. 

*Peace Talks *

The South Asian nuclear-armed neighbors began improving ties in 2003 after coming close to a fourth war in 2002, pledging to engage in a ``composite dialogue'' aimed at ending all disputes, including Kashmir. 

The two countries have restored diplomatic, sporting and transport ties since 2003. They started a fourth round of the so-called composite dialogue in March. The negotiations are designated as composite because they encompass talks on a range of issues that divide the nations. 

Kashmir, at the heart of the dispute between the South Asian neighbors, was the cause of two of the three wars between them since independence in 1947 from British rule. India accuses Pakistan of backing the separatist groups and their terrorist activities. Pakistan denies the accusation, saying it only lends moral support to a freedom struggle. 

``Relations between India and Pakistan have never been so good,'' Omar Ayub Khan, Pakistan's deputy finance minister, told the same seminar in Kyoto. ``Economic activity will accelerate if we make progress.'' 

To contact the reporter on this story: Cherian Thomas in Kyoto at cthomas1@bloomberg.net 

http://quote.bloomberg.com/apps/news?pid=20601087&sid=ak.hiCcsYdEE


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## Introvert

*Russian team seeks trade promotion with Pakistan*

FAISALABAD (May 07 2007): Exchange of delegation is imperative to promote bilateral trade between Pakistan and Russian Federation, said Alexander Karyukin senior export trade representative of the federation. He was addressing a meeting of the Faisalabad Chamber of Commerce and Industry (FCCI) after visiting Faisalabad Expo-2007 in Bohranwali ground here Saturday.

He said that Russian traders are interested to purchase of raw material from Pakistan. He underlined the need to joint ventures between the two countries and said that a Joint Economic Committee has already been constituted to facilitate the joint ventures.
http://www.brecorder.com/index.php?id=561016&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Economy grows 7 percent over last four years: PRSP II *

FAISALABAD (May 07 2007): Prudent macroeconomic policies as documented in Poverty Reduction Strategy Paper-II (PRSP-II) and wide-ranging structural reforms underpinned Pakistan's economic turnaround. Seven years of consistent and transparent economic policies along with economic reforms have strengthened Pakistan's economy.

According to "Draft Summary of the Poverty Reduction Strategy Paper-II", released by Ministry of Finance, Pakistan's economy has grown at an average rate of almost 7 percent per annum over the last four years and positioned as one of the fastest growing economies in the Asian region.

The size of its economy has more than doubled (from $58 billion to $132 billion) and per capita income almost doubled (from $438 to $847) during the last seven years.

It has succeeded in reducing unemployment and poverty. The fiscal and external account balances have improved vastly and consequently there has been a sharp reduction in public and external debt burden. Pakistan also succeeded in building foreign exchange reserves, which provided much needed stability in its exchange rate.

It has now emerged as an attractive destination for foreign investment which is expected to touch the unprecedented level of $6.0 billion this year from a tiny $400 million in 1998-99 - a five times increase in foreign investment in just eight years.

Pakistan continued to pursue its privatisation programme with major strategic sales taking place during the last seven years.

It completed the Poverty Reduction and Growth Facility (PRGF) arrangement with the Fund ahead of time, did not draw the last trench, and exited from a financial relationship with the Fund. Pakistan has entered international capital markets to showcase its continuously improving credit story.

It has also entered international equity markets through the listing of the shares of public and private sector enterprises in international stock exchanges.

Most importantly, it has not only succeeded in reducing both urban and rural poverty but all attendant key social sector indicators have witnessed significant improvement during the last seven years.

Pakistan's Poverty Reduction Strategy has thus been a great success. It has witnessed an impressive economic turnaround in a relatively short span. The economic landscape of the country has changed and therefore, its challenges are also different now. How to sustain the ongoing growth momentum within a stable macroeconomic environment is the biggest challenge going forward.

Linked with this are the challenges of job creation, further reducing poverty and meeting the MDGs targets, strengthening the country's physical infrastructure to support 7-8 percent growth in the medium-term and, most importantly, how to reap the benefits of demographic transition that is currently taking place in Pakistan. With a view to addressing these challenges, the government has prepared a new Poverty.

Reduction Strategy - commonly known as PRSP-II. The lessons from the last PRSP clearly suggest that strong economic growth on a sustained basis in a stable macroeconomic environment is critical for job creation, poverty alleviation and improving social indicators.

The new PRSP (or PRSP-II) is built around the lessons learnt from the last PRSP but in a global setting, that is, capitalising on the gains of globalisation while minimising its negative spill over.

According to official sources, the paper in its present form is the abridged version of the new PRSP. The detailed version of the new PRSP will be released after further consultation with all stakeholders. This has been prepared after a consultative process with all stakeholders, involving numerous workshops and dialogues with communities.

Prudent economic policies and bold, wide ranging structural reforms over seven years have changed the complexion of Pakistan's economy. The economy is no longer fragile. It is healthier today than ever before; a $60 billion economy seven years ago, is now over $140 billion; private sector is buoyant, industry, exports, imports are growing at respectable rates; domestic markets have expanded on the back of strong consumer spending; the country's debt burden is reduced to one-half; foreign exchange reserves are at an all time high; foreign investment reaching levels never reached before, the confidence of foreign investors in future prospect is strong; credit ratings have continuously improved; and most importantly, unemployment and poverty have declined significantly and social indicators have also witnessed appreciable improvements. In short, a sea change has taken place in every aspect of the economy in a short span.

The journey from low growth and macro economic stability and then onwards to recovery growth and poverty alleviation has been an arduous one but the ingenuity, skills, determination and unwavering commitment of the leadership to a home grown national vision has transformed Pakistan's economy from fragility to a resurgent one.

The poverty headcount that stood at 34.5 percent in 2000-01 has come down to 23.9 percent by 2004-05 - a substantial decline of 10.6 percentage points. In absolute numbers the count of poor persons has fallen from 49.23 million in 2000-01 to 36.45 million in 2004-05 - a fall of 12.8 million.

Rural areas of the country have witnessed a higher fall in poverty, where the percentage of population living below the poverty line has declined from 39.3 percent in 2000-01 to 28.1 percent by 2004-05, while urban poverty fell from 22.7 percent to 14.9 percent during this period.

This substantial decline in poverty has been made possible by robust economic growth, combined with the rising expenditures on the 17 pro-poor sectors identified in the PRSP.

PRSP budgetary expenditures on the 17 pro-poor sectors amounted to Rs434.6 billion in 2005-06, while cumulative PRSP expenditures (budgetary as well as non-budgetary) during 2001-06 amounted to Rs1,441 billion, with the budgetary expenditures averaging 4.7 percent of the GDP during this five-year period.

http://www.brecorder.com/index.php?id=560947&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*OGDC and PPL get go-ahead to restart exploration work in Balochistan *

ISLAMABAD (May 07 2007): The federal government has finally given a go-ahead to the Oil and Gas Company Limited (OGDC) and the Pakistan Petroleum Limited (PPL) to restart exploration activities in Balochistan to find the new oil and gas reservoirs.

The law-enforcement agencies will provide security to oil and gas exploration companies for exploration work. The concerned authorities have given more than one presentations to the governor and the chief minister of Balochistan on overall law and order situation in the province and termed the security arrangements as fool-proof for protecting the oil and gas exploration companies field staff.

Sources said following the central government direction, the OGDC, the public sector E&P, has mobilised its field staff and machinery to undertake drilling work at Jhall Magsi field in Balochistan.

Sources told Business Recorder on Sunday the OGDC technical team and machinery have already reached Jhall Magsi to undertake initial work for drilling.

The OGDC intends to utilise all the available resources to complete drilling work at Jhall Magsi as early as possible. Jhall Magsi will be followed by other drilling activities at other potential fields in Balochistan.

The OGDC has an ambitious plan for exploration in Balochistan. It has exploration plan for the current fiscal year includes 9 wells in Balochistan. However, the pace of exploration work was linked with improvement in law and order situation of the province.

Balochistan is enriched with oil and gas. PPL's major discovery at Sui, a major source so far for the last over five decades is its ample proof. However, unrest and law and order problems kept oil and gas companies away from that province. Things turned worse some two to three years back due to war-like situation between the law-enforcement agencies and some tribes chiefs, including deceased Nawab Akbar Bughti of JWP.

The OGDC and PPL, which were actively engaged in the province to explore new reserviours had to pack-up after some untoward incidents. The E&P and gas distribution companies have suffered financial loss due to heavy firing at their fields and pipelines blasts in the recent past. However, with the changing political scenario in that province, the OGDC and other E&P companies are hopeful of good time in Balochistan now onward.

http://www.brecorder.com/index.php?id=560923&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*ADB to fund Rs 4 billion hydel power projects in Punjab *

LAHORE (May 07 2007): The Punjab government under Renewable Energy Sector Development Programme has taken up preliminary tasks of establishment of Punjab Power Development Company (PPDCL) and construction of 5 Hydel Power Projects in the province to enhance the energy production in the country. The loan negotiations for financing of Rs 4 billion have already been completed.

The Punjab government will contribute 20 percent whereas, rest of the amount would be provided by the Asian Development Bank, says a handout issued here on Sunday.

Punjab Minister for Power, Chaudhry Armaghan Subhani disclosed this in a meeting held to review the pace of establishment of PPDCL in his office on Saturday. He said that as per loan negotiations, Punjab government intended to establish a corporate body of PPDCL for the construction of five hydel projects, which would be fully functional before June this year.

He said that it would also be given financial and operational independence by the said date. He said that the company would devise a business plan and strategic development roadmap, so that a single corporate body should be held responsible for given assignment not later than June 30, 2008.

The minister said that the Company would carry out its operations on war footing basis so that the development of renewable energy resources could be taken up on fast track.

He said that the government would also seek cooperation from private sector in order to get maximum output. He said that the Company would not only look after the construction work of the Hydel Power Projects in the province but it would further point out the potential sites along with the preparation of their feasibility reports.

Chaudhry Armaghan Subhani directed the Chief Engineer (Power) to ensure the in-time establishment of the Power Company and keep him updated by submitting a weekly progress report on regular basis in this regard.

http://www.brecorder.com/index.php?id=560948&currPageNo=1&query=&search=&term=&supDate=


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## Neo

May 07, 2007 
*Improving sugar recovery*

By Bilal Hassan

THE sugar content recovery of sugarcane cultivars grown in the country varies from 7.5 to 8 per cent, far away from international standards. Keeping this in view, the Pakistan Sugar Mills Association has put forward a proposal to develop local cane varieties with better yield and sugar contents. The association has also recommended importing varieties and technology from Australia to bring cane yield at par with the international levels.

Importantly, the low yields of sugarcane variety SPF-238 has played havoc with sugarcane in most areas of Punjab, except southern district of Rahim Yar Khan and Rajanpur. So SPF-238 needs to be abandoned by growers of upper and central Punjab. For that stringent efforts are required to bring sugar industry out of crisis. On one hand, it requires to trigger research system to come up with varieties of high sugar contents and yield. At the same time, management of sugarcane crop is essential to enhance per acre yield.

At present, average production of sugarcane in Pakistan is 22,000 kg per acre which is below the potential. Agronomic factors like preparatory tillage, bed preparation, planting techniques, planting time, availability of irrigation water, application of fertilisers, management of ratoon crop, harvesting time, type of cultivars, plant protection measures significantly affect cane yield per hectare. Yield of sugarcane and sugar recovery in main sugarcane growing countries of the world is given in the table for comparison purpose.

It is appropriate to discuss various agronomic factors contributing to low cane yield. Preparatory tillage includes initial ploughing with a tractor-mounted mouldboard plough which is considered essential and should be done extensively. The use of a subsoiler after every four or five years improves the soil considerably by breaking the hardpan.

Sugarcane is a deep-rooted plant that requires a well-worked and fully pulverised seedbed. Fine seedbed can be prepared by ploughing with a furrow-turning plough to a depth of about 20-25 cm particularly when soil is clayey. Six to eight subsequent ploughings followed by planking are enough to achieve a good pulverised seedbed free of clods and weeds. Therefore, use of seedbed preparatory implements is extensive. It is important that seed bed preparation with adequate moisture gives boost to tillering, essential to obtain optimum number of plants per acre.

Timely sown crop yields more tillers because of soothing effect of temperature. Day length is also an important factor associated with vegetative and reproductive growth..Two planting season of sugarcane crop are fall and spring. Planting is done on both dry and wet seedbed depending upon the soil condition, water availability, planting time, etc. Double-cut sets are placed end to end in furrows at a depth of 8-12 cm and covered with 5-6 cm soil. In the dry method, immediate irrigation is essential, with subsequent irrigations at short intervals.

Adequate and healthy seed ensures optimum plant population, a factor significantly affecting cane production. Optimum plant population depends on appropriate seed rate and spacing but the growers often ignored them, which is the key factor in lowering sugarcane production. The seed rate and spacing between rows differ with variety. Eight to nine tones of stripped cane per hectare for thick varieties, and six to seven tones for medium to thin varieties is sufficient to produce a desired plant population of about 0.15 million canes/ha.

Sugarcane is a perennial crop and water requirements on an average varies from 120-160 centimetres for the spring crop and 200-250 centimetres for the autumn crop depending upon planting season, the fertility of the soil, and the variety of cane. Autumn planting requires a higher quantity of water than spring planting. During the dry period, sufficient water should be applied at relatively short intervals to avoid moisture stress.

Toward the end of the growing season, the length of the intervals should be increased, with irrigation ceasing 25-30 days before harvest to induce normal maturity. Total expenses on irrigation are, therefore, highest.

Soil fertility and productivity significantly affect cane production. The nutrient requirements of sugarcane, especially NPK, are higher than those of any other commercial crop because of its high dry matter production per unit area. Moreover, it is an exhaustive crops like wheat, rice, maize etc. that uptake huge amount of nutrients. It requires macro-as well as micro nutrients. Each fertiliser elements plays its role in the development and production of a normal cane crop. Nitrogen is essential for plant growth; phosphorus for developing roots, influencing the ripening process, and purifying the juice; and potassium for promoting cell activity and growth, increasing resistance to infection and lodging, and improving sucrose content.

Sugarcane is heavily attacked by insects, pests and diseases at various stages of growth. Even sugarcane can be damaged from the first stage of growth by insects. Termites, pink sugarcane mealy bug, sugarcane borer, top borer, root borer, armyworm, Indian sugarcane leafhopper, sugarcane white fly, white woolly aphid and field cricket. Insects/pest cause damage to roots, foliage, bud and shoot. Non-control of insects/pests, therefore, leads to significant reduction in cane yield. The extent of damage varies depending upon crop cultivar and management practices.

http://www.dawn.com/2007/05/07/ebr4.htm


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## Neo

May 07, 2007 
*Tackling trade deficit with China*

By Sultan Ahmed

PRIME Minister Shaukat Aziz has a lot of expectations from the five-year trade pact with China and the free trade agreement (FTA) signed during the visit of President Hu Jintao to Pakistan. He expects the trade between the two countries to grow from the present $5 billion to $15 billion in five years.

But during the meeting last week between the two countries in Beijing on extending the FTA to the services as well, the Pakistan side said that total trade between the two countries stood at $3 billion, while the Chinese side claimed that it was $5.3 billion. Researchers on both sides have agreed to work out the figures and reconcile the large difference.

Is it a case of under-reporting or under- invoicing imports from China to evade duties as is common in Pakistan? The Central Board of Revenue recently uncovered a gross malpractice with regard to imports from China and found that payments of duties were far less than it should have been.

The Islamabad dry port, known as Margalla dry port, was used for the purpose by senior customs officials. It was a massive scandal which was exposed. Are their more such cases ? While efforts are being made to expand the scope of FTA between China and Pakistan, the Asian Development Bank has come up with a cautionary note to Pakistan. As the prime minister talks of expanding trade with China five-fold in five years, the ADB says the expiry of the Chinaâspecific safeguards imposed by the US and the European Union on Chinese textile exports may further weaken Pakistanâs balance of trade.

That means with the increase in Chinese textile exports to the US and European Union, Pakistan will have fewer opportunities to export goods to them unless special protective measures are taken.

At the same time Pakistan and the European Union are close to finalising the third generation agreement which provides Pakistan with more facilities. And yet the issue of fish exports to the EU remains pending as Pakistan has not made enough efforts to allay the fears of the EU about the hygienic condition prevailing on the Karachi fish harbour where the fishing plants are located.

Pakistanâs exports to China in the first six months of the financial year were for $500 million while the Chinese exported goods worth $2.226 billion. There were varieties in the Chinese exports which included machinery, electronics, chemicals, pharmaceuticals, and other manufactured goods, while Pakistan exported primarily cotton yarn and cotton cloth.

Will Pakistan be able to produce large varieties of goods and that too in plenty to increase its exports to China to balance trade when it reaches $15 billion?

Pakistan cannot afford to lose when it already has a large trade deficit and on that account a sizable balance-of-payments deficit. China wants to help Pakistan in every possible way. Particularly in the economic sector it wants to help Pakistan as much as it can.

China is now open to trade with all countries and is signing FTA with them. It is also signing FTA with Australia during the forthcoming visit of Chinese President Hu Jintao to Australia.

We have to compete with Chinese goods both in quality and in price to boost our exports. For that matter we will have to compete with the goods of other countries in each market. The foreign investors in China are able to export much of their products to the world using cheap and trained labour. We too could induce foreign investors in Pakistan to export some of their products if the cost of production is low and the cost of doing business is not high. As at present they are not, they prefer selling their products in the local market at higher prices. Pakistan compares prices of their goods with the prices of goods in India and feels disappointed.

Meanwhile, Sri Lanka is moving towards implementing the FTA with Pakistan which it signed two years ago. It was the first FTA which Pakistan had signed and had great hopes in it. But the Sri Lankan government, preoccupied with internal problems, has taken too long to implement it and it is now expected to implement it later this year.

Pakistanâs basic problem is the lack of large exportable surplus and variety in exports which are focused too much on textiles. Dr. Nadeem-ul-Haque, Chancellor of the Pakistan Institute of Development Economics, says that Pakistanâs exports have increased a great deal but is still a small part of its GNP. That is because of Pakistanâs large population and high consumption.

The solution lies in curtailing population growth and reducing its consumption. Prime Minister Shaukat Aziz says the population growth will be brought down by 1.3 per cent by 2020 and that is a long way from now, and precipitate action is not possible in the present context of religious extremism.

The government may think of the FTA as a magic wand for accelerating exports but in fact it is a double-edged weapon which if not handled deftly, can cut the hand that wheels it.

The focus has to be on producing a variety of large exportable surpluses, high quality goods at competitive prices and smart salesmanship. Otherwise the FTA we sign will have little to feed on.

http://www.dawn.com/2007/05/07/ebr15.htm


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## Neo

May 07, 2007 
*Potential of dates export*

DATE palm is well known for its nutritional and therapeutic qualities. It has very high fruit contents of carbohydrates (about 65-75 per cent). On the basis of nutritive value, it may yield three times more food per unit area than wheat.

One kilogramme of date can supply human body with 2500-3000 calories of energy. In addition, the fruit is easily digestible, promotes more blood formation and also possesses protein, fat, salts, carbohydrates and vitamins in an easily assimilative form.

The fruit is a good source of vitamin A, B and C and has high mineral contents. According to a bulletin on food composition issued by the US Department of Agriculture, dried date contains 1.9 per cent protein, 70.6 per cent carbohydrates, 2.5 per cent fat, 13 per cent water, 1.2 per cent minerals and 10 per cent fibre.

Pakistan is the fifth largest producer of dates in the world, with an area of about 82,000 hectares and a yield of 427,000 tons. Balochistan is the major date-producing province providing 225,000 tones of dates from an area of 46,000 hectares and contributing 53 per cent to the total national output.

At present, 54 date processing units are working in the country.. The most important processors are Pak-Iran International (Pvt) Ltd and Panama Impex Agency in Karachi; Panjgur Date Industries and Pullain Baloch Zamindar Zara in Panjgur; Prime Dates Products (Pvt) Ltd., Sham Traders, Shama Fruit Co. and Syed International in Sukkur. Other processing units located in Lahore, Turbat, Quetta and D.I.Khan.

The export of dates almost exclusively takes place from Khairpur in Sindh (Assil date) where processing facilities exist. In addition, three dates processing plants, one each in Khairpur, D. I. Khan and Turbat along with cold storage facilities are also being developed under the Trade Policy 2003/04 Initiatives.

Pakistan exports fresh dates to Bangladesh, Canada, Denmark, Germany, India, Indonesia, Malaysia, South Africa, Sri Lanka, USA, UK and dried dates to Afghanistan, Bangladesh, Canada, Denmark, Germany, India and Japan. Dates have sufficient shelf-life and are thus shipped by sea. Annual export of fresh dates is 12,000 tones and that of dried dates is about 255,000 tones..

Being the most nutritious and medicinal fruit, date palm is the most potential horticultural commodity. Relentless efforts are required to harvest nature blessed fruit by applying post-harvest management and processing techniques and ultimate qualifying the international standards. A number of countries have formulated and applied date standards at the national level (e.g. USA, Canada, Israel, Algeria, Tunisia and Oman) both for locally produced and imported dates. Unfortunately, Pakistan is lacking such type of systems and standards.

research: For better growth and yield of dates there is a need of detailed research studies based on larger sample size; adoption of better crop husbandry and improved production technology; provision of financial facilities at the door step; use of up-to-date infrastructure, committed and strong organisational set-up; development of defined methods of operation and pre- and post-harvest care.

Needed are procedures to match with international requirements of sanitary and phyto-sanitary (SPS) measures; selection of disease-free plants; screening out of bad varieties pre- and post-harvest management; processing and behavioural trainings of the employees/staff for their role in the system; integrated supply chain (from farm to fork) for handling, processing, packing, marketing and export of dates and date products. Other measures include setting up of advanced date processing and preservation units, improved/standardised packaging and presentation, national branding and promotion and market diversification (access to new markets) and establishment of modern marketing system.

http://www.dawn.com/2007/05/07/ebr6.htm


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## Neo

*Expert says situation of country's economy 'alarming' *
Monday May 07, 2007 

KARACHI: Renowned economist, Dr Shahid Hassan Siddiqui has said that despite of selling off of major national assets the local and foreign national debt had piled up during the last few years. 

He said this during a lecture in the weekly lecture program running at the Pakistan Peoples Party Secretariat. The topic of his lecture was "Grave Economic Dangers facing the Economy of Pakistan". 

Leader of the Opposition in the Sindh Assembly, Nisar Ahmad Khuhro presided over the program. 

Dr. Shahid Hassan said that the policies of the regime not made for the benefit of people of Pakistan but for the benefit of financial imperialism. 

"These policies are a total failure and had resulted in grave losses and damage to the country. This damage has occurred in spite of the breathing space provided by debt rescheduling, proceeds received from privatization and the huge aid received from the West", he added. 

The regime policies are appeared to be aimed at patronizing bank defaulters and the rich and even the ex-governor of State Bank Dr. Ishrat Hussain had to write in an article that the poor of the country had to undergo enormous sufferings as a result of the economic policy of the last 7 years, he asserted. 

The unemployment has soared and the gap between the rich and the poor has dangerously widened, while the inflation is sky, he added. 

DR Siddiqui said that the trade deficit was touching 14 billion dollars and it was almost as much as the country's total exports. Banks had played a most exploitative role by writing off loans of 100 billion rupees and bring the returns to depositors to ridiculously low levels, and by terminating the services of about 50, 000 trained and skilled employees. 

In spite of selling national assets and receiving 5 billion dollars for them the foreign debt had gone up by 5 billion dollars since November 1999. The local debt had shown an increase of 1, 000 billion rupees and had gone up from 1, 392 billion rupees to 2, 400 billion rupees during the same period. The per capita loan on the country had gone up and was one of the highest in the world. The overall situation of the economy was indeed very alarming, he asserted. 

It has been claimed time and against that that the International financial institutions had praised the economic growth of Pakistan, but the fact is that these institutions even after our total subservience to them had been highly critical of our performance, DR Siddiqui said. 

According to Dr. Shahid Hassan, tax evasion, corruption, financial and intellectual misconduct and cheating, exorbitant expenditure of the state, bad governance and other such factors were eating at the roots of our economy and society. 

The loss to national exchequer on these accounts was not less than 1000 billion rupees per year, he revealed. 

He maintained that the so-called growth of economy was in the banking sector where the profits had multiplied through exploitation and the automobile sector. Both of these were unsustainable and did not benefit the poor in any way. 

He foresees very serious problems in the future when the moratorium on debt rescheduling expired and the growing trade deficit had to be made good by our own earning instead of selling of further assets. 

There were hardly any assets left to be sold, he pointed out. 

In his presidential remarks Mr. Nisar Ahmad Khuhro said that leave aside the working classes of Pakistan who were being pushed to the very edge, even the business community was showing widespread disappointment over he policies of the government. 

There was a complete anarchy in the national economy where only the dishonest and unscrupulous elements could prosper like never before and those who wanted to observe healthy practices were going down the drain, claimed. 

Commenting on the priorities of the government he said that the government could confiscate 6, 000 busses to carry people by force to the public meeting of General Musharaf while like the previous years children were dying of gastro disease and medicines and beds were not available at hospitals.

http://www.paktribune.com/news/index.shtml?177374


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## Neo

He has a few valid points, rising trade dificit and foreign debt need to be dealt with properly to sustain growth.


----------



## Contrarian

Neo,. one question.

Why Pakistan is keen on signing FTA with China and many countries? Pakistan mainly has a trade deficit with all these countries. Having an FTA with them would only increase the trade deficit, and hurt Pakistani economy more. The local industry would suffer by the removal or trade barriers from Chinese goods, which would definitely flood the market.


----------



## Introvert

*Metal goods production line to be set up: Govt to provide Rs500m*

ISLAMABAD, May 7: The government has decided to establish a metal products production line to help produce state-of-the art metal products to boost exports.

Official sources told Dawn here on Monday that metal products used in automobile, textile machinery, tractors, trucks, cookware, sanitary fittings, valves and other similar products will be manufactured as per international standard under the new project to be set up at Daska, Punjab.

The federal government will provide special Rs500m funding for the project.

The local engineering industry has failed to achieve the target set for deletion of import parts as the metal industry was unable to manufacture quality products due to use of out-dated techniques. This can be greatly improved through use of state-of-the art techniques and equipment.

The metal products production line has been proposed by utilising and sharing trained manpower, product design, development and other infrastructure facilities to be set up for both import substitution and export promotion by introducing high quality metal products in the international market.

The production line will also help the local industry to assimilate new technologies.

It was stated that local manufacturing industry lacks modern production (forging and precision casting) facilities due to lacking intensive initial investment in this area.

There will be quality assistance for non-destructive testing according to international requirements.

As Pakistan is in the process of enhancing its exports, it is apparent that the country should concentrate on engineering sector and on its metal industry to enhance its exports through production of value-added high quality metal products.

The establishment of multipurpose manufacturing facilities can play a vital role in promotion of metal products exports. Development of these facilities for manufacturing ferrous and non-ferrous (wrought and cast) components would be utilised by local industries and markets and a lot of foreign exchange would be saved.

"Most of our local small and medium industries are not equipped with modern manufacturing techniques and equipment," says a document submitted to the Planning Commission by the Ministry of Science and Technology which is the sponsoring agency for the project.

The establishment of this project for production of metal products would be very useful for both import and export purposes.

The establishment of metal products production line would also act as a modal project for other local and foreign investors to execute such activities in this sector.

Manufacturing industry is a key to development of a country. However, selection of engineering material and manufacturing processes, especially for auto industries, sanitary fittings, gas pipeline fitting, valves, textile parts and their value-added metal products must conform to standard specifications with highest degree of quality.

Without possessing the multiple manufacturing processes and techniques, commercial manufacturing cannot take part in the national endeavour for attainment of self-reliance in the field of quality metal products for import substitution and export of various metal products.

http://www.dawn.com/2007/05/08/ebr1.htm


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## Owais

*$6.5 billion record FDI likely this year *
ISLAMABAD (May 08 2007): The government expects record foreign direct investment (FDI) of 6.5 billion dollars this year, as faster economic growth attracts companies, including Philip Morris International and Standard Chartered Plc.

Overseas investments in Pakistan in the year ending June 30 may double from the previous year's 129 billion dollars, as the country's economy expanded at an average of 7.5 percent in the past three years, a private TV channel reported.

Pakistan is relying on foreign investments to develop roads and power stations to foster growth and eradicate poverty. The government, which is selling assets to help repay 36 billion dollars of overseas debt, estimates it will raise as much as 15 billion dollars in five years by selling shares in state-owned companies.

The government has raised more than six billion dollars by selling government owned entities in the past 15 years. The Altria Group Inc's Philip Morris said in January it would buy a majority stake in Pakistani cigarette makers, Lakson Tobacco Company for 338.9 million dollars. Standard Chartered Plc, the UK bank that makes two-thirds of its profit in Asia, in September completed a 487 million dollars purchase of Union Bank Ltd, the biggest acquisition in Pakistan's banking history.
http://brecorder.com/index.php?id=561162&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Chinese business team may visit Pakistan *

KARACHI (May 08 2007): A business delegation from Wenzhou city (Zhejiang province), China, is likely to visit Pakistan in the second half of the current year. Wenzhou is one of the largest production base of light industrial products such as spectacle frames, pens, cigarette lighters, badges, valves, magnetic pumps, leather shoes, garments, low voltage electrical items, etc.

The purpose of this visit, which is being organised by Pakistan Consulate General, Shanghai in collaboration with the local China Council for the Promotion of International Trade, is to increase the imports of leather and products from Pakistan and also to explore the possibilities of investment in the following sectors:

Leather shoe garments, magnetic pumps, low voltage equipment, and other products of interest to Pakistani businessmen. Meanwhile, Ceylon Chamber of Commerce and Industry (CCCI), in collaboration with the Board of Investment of Sri Lanka, is organising a high level economic summit in Colombo on June 6 and 8. The summit is an annual event to showcase Sri Lanka as a centre for investment and trade, which will be organised on the lines of India economic summit and the World Economic Forum.

The sessions will cover the Sri Lanka economy, investment opportunities, trade (including FTSs and GSP plus scheme), sectoral investment sessions on tourism, ICT, industry, finance and public-private partnership, infra-structure development, competitiveness and productivity, agro-based industries, apparel and garments, and will provide information opportunities

http://brecorder.com/index.php?id=561257&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*'Government plans to further boost exports in sustainable way' *

FAISALABAD (May 08 2007): The government is implementing a comprehensive programme to further boost exports in a sustainable way, based on improving long-term competitiveness. These efforts include expanding market access on favourable terms to world markets such as the EU, USA and key Asian markets, modernising special economic zones, export processing zones.

Industrial parks and IT-parks and encouraging linkages between export-oriented industries and their respective education and training providers. Official sources admitted that integration with global markets through international trade and investment had been an engine of growth in many of the world's economies.

China's value added in most of its export industries is around 25 percent. It has been China's ability to link with other nations in international production chains that has facilitated its dramatic increase in exports. Pakistan has achieved considerable success in global markets in recent years as measured by the growth rate in exports. Pakistan, like many other countries, including China, has adapted to globalisation and created healthy, growing and competitive industries.

Pakistan has engaged in a number of free trade agreements (FTAs) on both the regional and bilateral basis. The agreements include the South Asian Free Trade Agreement (Safta) and FTAs with Sri Lanka, China and Malaysia. The US government is considering an arrangement for preferential market access to the goods produced in the reconstruction opportunity zones (ROZs), to be located in the tribal and other backward areas of Pakistan, through legislation in the US Congress.

The creation of ROZ's would encourage investment by granting duty free entry into United States for certain goods produced in designated territories. Meanwhile, Pakistan's manufacturing exports have grown at an average of just over 7 percent per annum during the last couple of years while global manufacturing exports have grown at 8 percent per annum. The growth in international export markets represents an opportunity to harness these powerful global market forces in ways that could create jobs for Pakistan's workforce.

A domestic market expands in response to growing consumption demand, the production of manufacturing items will increase thereby creating economies of scale. This scale will provide competitive edge to our industries, which will help them to move from basic textile exports to more value added textile items. Therefore, the expansion of domestic market will be a stepping stone into global market, which will help create jobs and reduce poverty.

Pakistan is witnessing the emergence of a strong middle class with growing purchasing power, supporting domestic demand expanding domestic markets, and ultimately emerging as a critical driver of economic growth.

Increase in consumer finance has been recorded at 38.8 percent for FY 06. The growth in consumer loans in 2005-06 remained robust and their scale expanded by 27 percent.

Increased demand for a product elicits a supply response, which generates employment, tightens the labour market, and improves the conditions of employment, principally the wages, as observed. A consumption and export led growth policy will therefore serve to generate employment and decent work quite well.

The intense economic activity in the country has increased per capita income of the people thus raising their standards of living and bringing them prosperity. Some of the important sectors providing the bulk of the supply include agriculture, manufacturing and services.
http://brecorder.com/index.php?id=561192&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Rs339 billion loans disbursed to private sector *


KARACHI: Loans amounting to Rs339 billion were issued to the private sector during July-April current fiscal year, which is higher by 19.8 percent as compared to the last year in the same period.

State Bank of Pakistan (SBP) Governor, Dr. Shamshad Akhtar was told this here, while presiding over a maiden meeting of the Private Sector Credit Advisory Council.

Briefing the SBP Governor, it was said that the loans disbursed to the private sector during July-April surged by 12.6 percent. Last year during the same period Rs266 billion loans were issued.

NBP officials in the meeting apprised the Governor of the details of progress as regards to the employment scheme. The Governor was told that the loans valuing Rs1.30 billion were issued to 13,000 applicants thus far under this scheme. 

http://geo.tv/geonews/details.asp?id=5609&param=3


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## Neo

malaymishra123 said:


> Neo,. one question.
> 
> Why Pakistan is keen on signing FTA with China and many countries? Pakistan mainly has a trade deficit with all these countries. Having an FTA with them would only increase the trade deficit, and hurt Pakistani economy more. The local industry would suffer by the removal or trade barriers from Chinese goods, which would definitely flood the market.



Malay,

FTA is tricky business, it may add up to trade dificit with some countries who have better competative industry like China, therefor you have the BIT agreement which is promoted by the governments to encourage bilateral investments.
Local industry will have to improve quality to stay in the competition whcih again could harm a percentage of the business entities but will have a better overall effect on the economy.

FTA is mainly targetted towards markets where we have quota restriction, once thats gone we'll have a wide range of variety of products which are cheaper and competitive in quality.
Think of bigger consumer markets as EU, USA/Canada and Japan.


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## Neo

*'Load shedding to help save 500 megawatt' *

ISLAMABAD (May 08 2007): The government is expected to save 500-megawatt electricity through load shedding, said member, Power, Water and Power Development Authority (Wapda) Fazal Ahmad Khan on Monday. Speaking in a PTV programme, he said the Wapda was planning load management according to the instructions of the government, which would help to overcome electricity shortage.

He said that whenever there was a difference between the demand and supply, they planned to overcome it by load management that was the reason the government had ordered closure of all markets at 8 pm to save energy for domestic purposes. He said that the farmers were given instructions to operate their tubewells from 10 pm to 6 am adding if every consumer switched off one bulb, it could save thousands of mega-watt electricity.

By the implementation of these steps, the government would be able to maintain the demand and supply of electricity, he added. Fazal Khan said that the programme of load shedding would be properly advertised through newspapers, adding it would be for two hours and mostly would be observed during peak hours between 7 pm and 11 pm. To overcome the line losses, he said, the surveillance teams were working actively and now this trend was downwards and the Wapda had successfully overcome this issue.

http://www.brecorder.com/index.php?id=561244&currPageNo=1&query=&search=&term=&supDate=


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## Neo

May 08, 2007 
*Metal goods production line to be set up: Govt to provide Rs500m*

By Ihtashamul Haque

ISLAMABAD, May 7: The government has decided to establish a metal products production line to help produce state-of-the art metal products to boost exports.

Official sources told Dawn here on Monday that metal products used in automobile, textile machinery, tractors, trucks, cookware, sanitary fittings, valves and other similar products will be manufactured as per international standard under the new project to be set up at Daska, Punjab.

The federal government will provide special Rs500m funding for the project.

The local engineering industry has failed to achieve the target set for deletion of import parts as the metal industry was unable to manufacture quality products due to use of out-dated techniques. This can be greatly improved through use of state-of-the art techniques and equipment.

The metal products production line has been proposed by utilising and sharing trained manpower, product design, development and other infrastructure facilities to be set up for both import substitution and export promotion by introducing high quality metal products in the international market.

The production line will also help the local industry to assimilate new technologies.

It was stated that local manufacturing industry lacks modern production (forging and precision casting) facilities due to lacking intensive initial investment in this area.

There will be quality assistance for non-destructive testing according to international requirements.

As Pakistan is in the process of enhancing its exports, it is apparent that the country should concentrate on engineering sector and on its metal industry to enhance its exports through production of value-added high quality metal products.

The establishment of multipurpose manufacturing facilities can play a vital role in promotion of metal products exports. Development of these facilities for manufacturing ferrous and non-ferrous (wrought and cast) components would be utilised by local industries and markets and a lot of foreign exchange would be saved.

"Most of our local small and medium industries are not equipped with modern manufacturing techniques and equipment," says a document submitted to the Planning Commission by the Ministry of Science and Technology which is the sponsoring agency for the project.

The establishment of this project for production of metal products would be very useful for both import and export purposes.

The establishment of metal products production line would also act as a modal project for other local and foreign investors to execute such activities in this sector.

Manufacturing industry is a key to development of a country. However, selection of engineering material and manufacturing processes, especially for auto industries, sanitary fittings, gas pipeline fitting, valves, textile parts and their value-added metal products must conform to standard specifications with highest degree of quality.

Without possessing the multiple manufacturing processes and techniques, commercial manufacturing cannot take part in the national endeavour for attainment of self-reliance in the field of quality metal products for import substitution and export of various metal products.

http://www.dawn.com/2007/05/08/ebr1.htm


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## Neo

May 08, 2007 
*14.1m lint bales target set for next year*

LAHORE, May 7: The government has set cotton target of 14.1 million bales for the next year, says Federal Minister for Food, Agriculture and Livestock Sikander Hayat Bosan.

Talking to newsmen after inaugurating a workshop on âDrip Irrigationâ, here on Monday, the minister said the cotton vision would be launched this year aimed at enhancing cotton production.

The cotton production had fallen to 12.5 million bales last year, dropping from 14.6 million bales in 2004-05. This year, the yield had gone up to 13 million bales and the country would easily cross 14 million bales next year, he hoped.

The minister said that 50 per cent of watercourses would be lined by June this year, which would restore around two million acre feet of water. He said that the government wanted to build new dams, but do so with consensus.

Taking about drip irrigation, he said that a pilot project had been launched to install system at 300,000 acres. The government was bearing 80 per cent of installation cost. The provincial governments had told to identify areas for installing the system, he added.

http://www.dawn.com/2007/05/08/ebr10.htm


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## Neo

May 08, 2007 

*Lingering projects may be removed from PSDP*

By Sajid Chaudhry

ISLAMABAD: The Planning Commission (PC), while expressing serious concern over the slow implementation of federal projects by the provincial governments, has warned that the federal government would be forced to remove such projects from the Public Sector Development Programme (PSDP), a senior official told Daily Times on Monday. 

The PC issued this warning to the provinces during the third quarterly review meeting of the PSDP, which concluded recently. The meeting was chaired by Deputy Chairman of the Planning Commission Dr Akram Sheikh and participated by representatives from provincial governments, federal ministries and departments.

The federal government had approved Rs 435 billion for the PSDP at the time of the announcement of the federal budget 2006-07. The federal share in the PSDP was Rs 270 billion, and an amount of Rs 115 billion was to be spent by the provincial governments through their own Annual Development Programmes.

According to the official, the deputy chairman of the PC during the third quarterly review of PSDP expressed his concern over the slow implementation of federal projects by provincial governments, especially the water sector projects. He observed that the federal government is financing provincial projects to assist the provincial governments. Despite availability of financial resources, the projects are not moving fast and the federal government would be forced to remove such projects from the PSDP, the official added.

The deputy chairman of PC reiterated the earlier decision of the Central Development Working Party (CDWP) and Executive Committee of the National Economic Council (ECNEC) that on all such projects that are being financed on cost-sharing basis between the federal and provincial governments, any increase in cost would be borne by the respective provincial governments, the official disclosed.

The federal government had allocated Rs 47.749 billion for the water sector related projects for the fiscal year 2006-07, including water sector projects of the Water and Power Development Authority (WAPDA). The fund allocations made for important water sector projects were: Mirani Dam Rs 750 million, Sabakzai Dam Rs 300 million, Kurran Tangi Dam Rs 2.7 billion, Satpara Multipurpose Project Rs 500 million and Gomal Zam Dam Rs 3 billion. Fund allocations for projects relating to canals were: Greater Thal Canal Rs 1.5 billion, Kachhi Flood Canal Rs 5.5 billion and Rain Flood Canal Rs 300 million.

Fund allocations for drainage related projects were: Left Bank Outfall Drain Stage-1 Rs 300 million, Lower Indus Right Bank Irrigation and Drainage Project (RBOD-1) Rs 1.5 billion, National Drainage Program (NDP) Rs 3 billion and Extension of Right Bank Outfall Drain from Sehwan to Sea (RBOD-II) Rs 3 billion.

Fund allocations for projects related to upgradation of irrigation systems in the provinces were: Lining of Distributaries and Minors in Sindh Rs 800 million, Irrigation System Rehabilitation Punjab phase-1 Rs 2.787 billion, Lining of Irrigation Channels in Punjab Rs 1 billion, Punjab Barrages Rehabilitation Modernisation Project phase-1 Rs 150 million, Lining of Irrigation Channels in NWFP Rs 750 million and construction of 20 small dams in NWFP Rs 50 million.

Fund allocations for some 22 new projects were also made at the announcement of the PSDP for the fiscal year 2006-07.

http://www.dailytimes.com.pk/default.asp?page=2007\05\08\story_8-5-2007_pg5_1


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## Neo

Tuesday, May 08, 2007 

*Closure time for markets now 8:30pm*

LAHORE: The Water and Power Development Authority (WAPDA), following the demand made by the Lahore Chamber of Commerce and Industry (LCCI), has extended the closure time for markets, shopping malls and departmental stores by half an hour, and now all markets would close by 8:30pm instead of 8pm. The LCCI had requested WAPDA Chairman Tariq Hameed to extend the marketsâ closure time by at least an hour (up to 9pm), as during summer, the 8pm closure time is too early for commercial entities to close their businesses. However, WAPDA authorities, accepting the LCCI demand, have given half hour extension to all markets. Earlier, the federal minister for water and power had clarified that the orders regarding the closure time would not apply on Saturdays, as people generally prefer to stay out late on weekends. WAPDA is also launching an awareness campaign to educate people about conserving electricity.

http://www.dailytimes.com.pk/default.asp?page=2007\05\08\story_8-5-2007_pg5_3


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## Neo

*Pakistan to Market Bonds as Economic Growth Speeds Up *

By Denise Kee and Mike Firn

May 8 (Bloomberg) -- Pakistan will start marketing foreign-currency bonds for the fourth time in three years as accelerating economic growth spurs interest in the South Asian nation. 

``It will be a benchmark transaction,'' Ashfaque Hassan Khan, the government's economic adviser, said in an interview. The size of the borrowing hasn't yet been decided, he said. 

The government, which expects the economy to expand by as much as 8 percent annually over the next five years, will use the money to build roads, ports, dams and other infrastructure. The nation's dollar-denominated debt returned 11.8 percent in the past year, the third-best performing in Asia after the Philippines and Indonesia, according to indexes compiled by JPMorgan Chase & Co. 

``The growth prospect of the country is there,'' said Clifford Lau, a Singapore-based portfolio manager at Pramerica Fixed Income who helps manage $7.6 billion of emerging market assets. ``Pakistan will benefit from investors' hunger for yield.'' 

Junior Finance Minister Omar Ayub Khan said in his budget speech in June that the nation plans to sell as much as $500 million of foreign-currency bonds to overseas investors before the end of next month. The government this year hired Citigroup Inc., Deutsche Bank AG and HSBC Holdings Plc to manage the sale. 

The nation's debt equals half the $129 billion economy. 

*Narrowing Spread *

Pakistan raised $800 million in March 2006 selling bonds maturing in 10 and 30 years. The yield on the nation's 7.125 percent bonds due in March 2016 has narrowed to 1.83 percentage points more than U.S. Treasuries of similar maturity, from 2.4 percentage points when they were sold more than a year ago. 

The country's debt ratings were raised one level to B1, four levels below investment grade, by Moody's Investors Service in November, helping reduce the government's borrowing costs as it signals lower risk of a default. 

Government officials will meet investors in Singapore, Hong Kong, Dubai, Bahrain, London and the U.S. this month, Khan said in an interview in Kyoto, where he attended the Asian Development Bank's annual meeting which ended yesterday. 

Pakistan may need to offer additional yield to compensate investors for the nation's political and security risks, Pramerica's Lau said. 

*Bombings *

Interior Minister Aftab Sherpao was among 52 people injured in a suicide bombing that killed 28 people in April. Shiite and Sunni Muslim factions bombed each other in January. Assassination attempts on President Pervez Musharraf and Prime Minister Shaukat Aziz also highlight Pakistan's security risks, S&P said in February. 

``Pakistan is located in a troubled region and headlines of political conflicts there bother investors,'' Lau said. ``Investors buying the bonds have to weigh in the risk.'' 

Pakistan's stocks dropped 3.5 percent yesterday, the most in eight months, after Aziz said the constitution gives the government the right to declare a state of emergency to quell protests against the removal of the nation's top judge. 

Chief Justice Iftikhar Muhammed Chaudhry's removal by Musharraf on March 9 sparked nationwide protests by lawyers and opposition members that grew into anti-government rallies over the president's continued rule in Pakistan. Chaudhry was scheduled to hear a case to determine whether Musharraf can legally run for election for a second term, Pakistan's Dawn daily newspaper reported March 12. 

*Eliminating Poverty *

Pakistan's stock index climbed to a record on May 4, closing at 12,512.08. Overseas investment in Pakistani equity stood at $720 million as of May 2, according to the data posted on the Web site of the country's central bank. 

Aziz is targeting annual economic growth of as much as 8 percent for the next five years, up from 6.6 percent in the latest fiscal year. The government aims to eliminate poverty by 2015 in a country where about a quarter of the 160 million people now live on less than $1 a day. 

Pakistan plans to reduce its budget deficit to 3.3 percent of gross domestic product by 2011, from a forecast 4.2 percent in the year ending June 30. Government revenue is estimated at 14.7 percent of gross domestic product in the current fiscal year, according to Standard & Poor's. 

The government is planning a natural gas pipeline from Arabian Sea to China, the world's second-largest energy consumer. China is helping Pakistan build its third port at Gwadar in Baluchistan. 

To contact the reporter on this story: Denise Kee in Kyoto at Dkee2@bloomberg.net 

http://www.bloomberg.com/apps/news?pid=20601080&sid=azzUisgZ1aFk


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## Introvert

*Pakistan&#8217;s Lucky Cement plans shipments to India*

Karachi: Lucky Cement Ltd, Pakistan&#8217;s biggest maker of the building material plans to ship as much as 200,000 metric tons of cement to India in the next 12 months to take advantage of a supply shortage in South Asia&#8217;s biggest economy.
&#8220;A team from the Bureau of Indian Standards will visit our plant soon to conduct a quality control test required by the government before allowing imports,&#8221; Abdul Razzaq Thaplawala, executive director at Karachi-based Lucky Cement said in a phone interview from Karachi yesterday.
India, the world&#8217;s second-most-populous nation, plans to invest $320 billion (Rs13,10,727 crore) on roads, ports, dams and power stations by 2012. Cement makers are investing Rs450 billion ($10 billion) on adding almost 100 million tons of capacity, the government said on 6 March.
&#8220;Exports to the Middle East and Afghanistan account for most of Pakistan&#8217;s cement sales overseas but exports to India are likely to overtake soon,&#8221; said Haris Dagia, research analyst at JS Global Capital Ltd, in Karachi.
Pakistan&#8217;s cement exports doubled in the 10 months ended 30 April, because of higher demand from Afghanistan, India and the Middle East.
Pakistan sold 2.45 million metric tons of cement overseas in the July-to-April period, compared with 1.21 million metric tons a year earlier, according to the Lahore-based All-Pakistan Cement Manufacturers Association.
http://www.livemint.com/2007/05/09154614/Pakistans-Lucky-Cement-plans.html


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## Neo

*LoI issued for setting up 1000 megawatts project *

ISLAMABAD (May 09 2007): The Private Power Infrastructure Board (PPIB) on Tuesday approved issuance of Letter of Interest (LoI) to M/s Hassan Associates Ltd (HAL) for setting up 1000 MW power project based on Thar coal valuing approximately $1.5 billion.

The exploration licence for an area of 64-km at Thar coal field has been issued by the Sindh government to the sponsors of the project, who are local investors, and their proposal has been evaluated by PPIB. The decision was taken in the 69th meeting of the PPIB, which met under the chairmanship of Federal Minister for Water and Power Liaquat Ali Jatoi.

Hasan Associates Limited has already convinced Prime Minister Shaukat Aziz that the company is in a position to set up 1000 MW integrated power plant in Thar without having net worth laid down in the power policy.

According to the policy, the net worth of main sponsors is required as $30 million and main sponsors together with other sponsors (ie 51 percent of total equity) to have $114 million for executing the project, however, Hasan Associates net worth is lower than that given in the power policy.

Jatoi said that due to the booming economy of the country, power requirements are also growing at a fast pace. We have to handle the situation with a two-pronged approach; while we need to take measures to conserve energy, and avoid its wastage, sincere efforts are required to add affordable and reliable energy into the system.

It was appreciated that PPIB was making sincere efforts to tap the hydel resources of the country for power generation, and a total of 22 hydropower projects of around 5,700 MW are being processed.

Since most of the hydropower resources are concentrated in the province of NWFP, the sincere support of the Government of NWFP was highly appreciated for development of these projects.

Chief Secretary NWFP has said that the government would fully facilitate the project developers. This is not only vital for the power demands of the country but also beneficial to the local communities who will be provided with job opportunities, resulting in economic development.

The meeting also resolved the long-standing issues in gas sale agreements between Mari Gas and M/s Star Power and Fauji Foundation Power. This will help expedite the commissioning of additional 336 MW capacity based on natural gas.

Besides others, the meeting was attended by Irfanullah Khan Marwat, Sindh Minister for Mines and Mineral Development, Federal Secretary for Water and Power, Federal Secretary for Petroleum and Natural Resources, Chairman Wapda, Chief Secretary NWFP and Managing Director PPIB.

http://www.brecorder.com/index.php?id=561493&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*World Economic Forum: Pakistan urged to improve global competitiveness index *

ISLAMABAD (May 09 2007): "Pakistan must capitalise on its strengths and improve on its weaknesses on the Global Competitiveness Index of the World Economic Forum", Arthur Bayhan, CEO of the Competitiveness Support Fund (CSF), stated this on Tuesday.

The CSF presentation was a part of CSF's initiative to bring all the line-ministries on board to improve Pakistan's ranking on the Global Competitiveness Index (GCI) of the World Economic Forum. Pakistan is ranked 91 on the GCI in 2006, where Pakistan showed improvement of 3 rankings from 94 to 91 in 2005.

Speaking on the occasion, Abdur Rauf Chaudhry, Secretary of the Housing and Works Ministry, informed the CSF delegation that his Ministry launched the National Housing Policy in 2001 and it is now co-ordinating with CBR and the provincial governments on various issues concerning the housing sector. He also said that, "the ministry is undertaking initiatives to provide appropriate housing for the low income groups".

CEO of the CSF in his presentation briefed the ministry on the strengths and weaknesses of the global indicators related to the housing sector in the Global Competitiveness Report (GCR) of the World Economic Forum. He further elaborated the rational behind the indicators and pointed out that the data used for these indicators is not up-to-date. He said that the government made tremendous progress in the last four years and improved almost all the indicators.

Abdul Basit, Joint Secretary, Prime Minister's Special Programme Wing, Ministry of Finance informed the meeting that the Prime Minister's Special Programme Wing (PMSP) has been tasked to co-ordinate with all the ministries for a close interaction to work with the CSF on improving Pakistan's competitiveness ranking. He also pointed out that other countries in the region are improving their competitiveness by investing in their infrastructure and Pakistan should not be left behind.

CSF is a joint initiative of the Ministry of Finance Government of Pakistan and the United States Agency for International Development (USAID) CSF Supports Pakistan's goal to be of a more competitiveness economy by providing input into policy decisions, working to improve regulatory and administrative frameworks and enhancing public-private partnerships within the country.

CSF also provides technical assistance and co-financing for initiatives related to entrepreneurship, business incubators and private-sector-led initiatives with research institutes and universities that contribute to creating a knowledge-driven economy. Support for SCF is part of the $1.5 billion in aid that the US Government is providing to Pakistan over five years to improve economic growth, education, health, and governance.

http://www.brecorder.com/index.php?id=561582&currPageNo=1&query=&search=&term=&supDate=


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## Neo

May 09, 2007 
*Centre plans to launch Rs500bn uplift plan: Fiscal year 2007-08*

By Sabihuddin Ghausi

KARACHI, May 8: The federal government is indicating to launch a huge development programme of about Rs500 billion during next fiscal 2007-08 which is an election year.

It will be almost one-third of about Rs1.5 trillion proposed budget of 2007-08, and about 45 per cent more than the public sector development programme of Rs270 billion of the current fiscal year 2006-07.

âThe launching of this public sector development programme for next fiscal year, sometimes in the first or second week of June, will mark commencement of election campaign by the government,ââ a well-placed source in the Sindh government disclosed.

In this election campaign, the government will offer to public Rozgar scheme, being implemented by the National Bank of Pakistan, functioning of the Gawadar Port in Balochistan, improvement in government revenue collection to more than Rs835 billion in the current fiscal year which is expected to go beyond one trillion rupees in the next fiscal year, plus a few cosmetic development schemes in the election campaign.

Frequent power breakdowns and a virtual blackout in every city and village of the country after sunset at the end of a seven-year rule of the present government is something that haunts everyone, from top to low level functionary, in the present setup.The government faces a tough job to explain the yawning trade gap of more than $14 billion in the current fiscal year.

In last three years, the country suffered more than $35 billion trade imbalance or Rs1.2 trillion trade losses.

Unemployment, uncontrollable price-spiral, deteriorating hygienic conditions that have caused about two dozen deaths from cholera just in one week of summer and growing lawlessness that has made street crimes the most thriving and flourishing trade and industry in cities, like Karachi and Lahore, are the issues that government will face in the next election campaign.

Outlines of the Rs500 billion, plus public sector development programme being proposed for 2007-08, will be presented in the two days session of Annual Plan Coordination Committee (APCC) scheduled on May 21 and May 22 in Islamabad,ââ a well-placed source disclosed who indicated that the National Economic Council (NEC) may hold its annual session sometimes in last week of the current month as 2007-08 budget is due sometimes in second week of June.

The NEC was scheduled to hold a mid-term economic performance review of 2006-07 on March 27 initially which was later put off for first week of April and it was finally called off because the government was bogged down under the situation arising out from the massive public and legal community outcry against maltreatment to Chief Justice of the country and the Lal Masjid issue.

Official documents reveal that the total development outlay for 2006-07 amounted to Rs385bn which included Rs115bn for the provincial annual development programme and Rs270bn federal development programme.

The federal PDSP showed an operational shortfall of Rs20 billion. From Rs250 billion, the government released Rs99 billion during July to December 2006.

From this released amount of Rs99 billion, various agencies are said to have utilised Rs87.4bn in first half of the current fiscal year.

The governmentâs claim is that it has steadily been increasing size of public sector development programme and also improving the utilisation capacities of government agencies every year.

http://www.dawn.com/2007/05/09/ebr1.htm


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## Neo

May 09, 2007 
*Pakistan may export 1m tons wheat to India*

ISLAMABAD, May 8: With a bumper crop this year Pakistan is likely to export up to one million tons of wheat to India through rail and sea routes, Dawn has learnt.

âThe government has already allowed the private sector to export up to 500,000 tons of wheat that India could import by sea or by rail,â Secretary Food and Agriculture Muhammad Ismail Qureshi told Dawn. He said the total wheat export could reach up to a million tons this year.

He said India had floated tenders for import of a million tons of wheat and that Pakistanâs private sector would be in a better position to compete with international wheat prices due to its lower transportation costs. Also, there is no tax or duties on export of wheat, he added.

Agricultural Development Commissioner Qadir Bakhsh Baloch told Dawn that this was the first time that Pakistan had allowed wheat export to India. Last week, Prime Minister Shaukat Aziz had formally approved the export of 500,000 tons of wheat to neighbouring countries, including India and Afghanistan.

The government is moving carefully with export projections so that domestic wheat and flour prices are not increased artificially by black marketers, another official said, adding that domestic prices could crash down to less than Rs425 per 40 kg if exports are delayed.

âWe will announce a new plan for more wheat exports after finalisation of crop figures,â Minister for Food Sikandar Hayat Bosan said last week.

The government is expecting wheat production to convincingly exceed 23 million tons, surpassing the current 22.5 million-ton target. Last year, the country had produced 21.7 million tons of wheat. Domestic wheat consumption is little over 22 million tons. The country also has carry-over stocks of about 1.5-2 million tons from last year.

Mr Baloch said the private sector had been asked to procure 300,000 tons of wheat from the Pakistan Agricultural Storage and Supply Corporation (Passco) and 400,000 tons from the Punjab food department. He claimed that Pakistan had a confirmed demand of one million tons of wheat from India.

Sources said the State Trading Corporation of India had floated wheat import tenders of one million tons to meet its rising demands. Besides, transportation costs, India would also save on time by importing wheat from Pakistan via Lahore and Karachi to Delhi and Mumbai through the rail and sea routes.

http://www.dawn.com/2007/05/09/ebr2.htm


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## Neo

May 09, 2007 
*Sino-Pakistan group gets Jordan contract*

AMMAN, May 8: A consortium of Chinese-Pakistani-Jordanian companies has won a contract to build a railway aimed at relieving congestion in Amman, according to Jordanian Tranport Minister Saud Nusseirat.

âThe consortium will build a railway line between Amman and Zarqa within two-and-a-half years at a cost of between 170 and 180 million dinars (240-255 million dollars),â the official Petra agency quoted Nusseirat as saying on Tuesday.

About half of Jordan's population of 5.7 million lives in Amman and Zarqa, which is 27 kilometres North of the capital. The new trains are set to carry 100,000 people a day.

http://www.dawn.com/2007/05/09/top11.htm


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## Neo

Wednesday, May 09, 2007 

*âOver 8pc economic growth required to achieve millennium development goalsâ*

ISLAMABAD: Over eight percent growth in the economy would be required during the next five years for the improvement of social indicators of the country. 

Out of the total 34 indicators, the government is ahead in seven, on-track on implementing 15 and behind in implementing 12 indicators set to achieve seven major Millennium Development Goals (MDGs). 

Planning Commission Deputy Chairman Dr Akram Sheikh said this at a press conference after the conclusion of the first meeting of re-structured Social Sector Coordination Committee of the Cabinet. Prime Minister Shaukat Aziz chaired the meeting in which officials from all federal ministries and divisions presented details about the progress on implementation of social sector projects, especially the MDGs. 

The indicators that need to be improved relate to universal primary education, maternal health, reduction in mortality rate from 300 to 140 and environment stability. 

Sheikh said the federal governmentâs new social protection strategy aimed at bringing into social safety nets some 6.2 million households in the next five years by extending the out reach of the governmentâs existing programmes. 

He said the meeting decided to adopt coordinated and integrated approach for improvement of the social indicators so that the impact of the government initiatives is seen in the country. 

He said the meeting decided to constitute an inter-ministerial committee for better coordination among ministries and divisions for uplift of the social sector, especially education, health and vocational training. He said the meeting was informed that draft of the Social Protection Strategy had been finalised and would be announced next month. He added that the meeting also decided to start the Tawana Pakistan and other nutrition programmes from the next fiscal year. 

He said that efforts would be made to increase the vocational training facilities in the country so that skilled manpower was made available to meet the requirements of the growing economy. 

Sheikh said the literacy rate in Pakistan had increased to 60 percent and the government wanted it to reach 80 percent by 2015. He said Vision 2030, which would be finalised by end of May, aimed at increasing the education budget from 4 percent of the GDP to 7 percent, and overall pro-poor expenditures from 7 percent of the GDP to 9 percent. 

Addressing the meeting, Prime Minister Shaukat Aziz said high growth, decline in unemployment and higher allocations by the government on poverty-related projects have contributed to 10.6 percentage point decline in absolute poverty. 

The ongoing reforms in social sector and social protection would further improve countryâs social indicators and help reduce poverty, Aziz said.

http://www.dailytimes.com.pk/default.asp?page=2007\05\09\story_9-5-2007_pg7_2


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## Neo

Wednesday May 9, 2007
*Pakistan plans first three 3G licenses this year*

ISLAMABAD, May 9 (Reuters) - Pakistan plans to issue its first three licenses for third generation (3G) mobile telecoms service by the end of this year in a cellular market of more than 55 million users, a government official said on Wednesday. 
High-speed 3G transmission would allow cell phones to better provide services such as photos and the Internet in Pakistan, one of the fastest growing cellular markets in Asia. 

"We are working on the plan, and 3G spectrum would be allocated to three companies for launching 3G mobile phone services in Pakistan," said a PTA official, who declined to be identified. 

"The 3G licenses are expected to be issued by the end of this year and will be offered only to existing mobile phone operators for a period of 15 years." 

The official telecommunications watchdog, Pakistan Telecommunication Authority (PTA), recorded 55.61 million mobile phone users in the country by March 31, up from 12.77 million in 2005. 

Pakistan's existing operators include Mobilink, a unit of Egpyt-based Orascom Telecom , Norway's Telenor and Warid Telecom of the United Arab Emirates. 

Other operators are Ufone, a subsidiary of Pakistan Telecommunication Ltd. , Instaphone owned by a private Pakistani group, and CM PAK, previously known as Paktel that China Mobile Communication Corp. recently acquired from Sweden's Millicom. 

The number of mobile phone users has gone up rapidly after the government gave licenses to Telenor and Warid in 2005, bringing the total number of operators to six. 

The existing policy, introduced in 2004, provided for the government not to license any more operators for five years. 

Mobile teledensity, or cellular phone users out of the total population, in Pakistan rose to 35.79 percent in March from 8.30 percent in 2005. Pakistan has a population of over 160 million.

http://asia.news.yahoo.com/070509/3/31js2.html


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## Neo

08/05/2007
*Qatar likely to finance $1.5b plant in Pakistan *

(MENAFN) An official at the Pakistani government said that several Middle Eastern countries are willing to finance a project for the country's Water and Power Development Authority (WAPDA) to build a $1.5 billion hydropower plant in Neelum-Jhelum, Khaleej Times reported.

The official pointed out that the Pakistan government is currently facing difficulties undertaking the huge project on its own, especially after failing to award contract for the construction of the dam to which Pakistan could loose its priority rights over Jhelum waters. 

He also added that the contract could not be signed with the lowest bidder that quoted $1.3 billion price for the project because it failed to arrange required buyer's credit, which is a pre condition under the bidding. 

http://www.menafn.com/qn_news_story_s.asp?StoryId=1093152334


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## Neo

*July-April trade gap crosses $11 billion *  

KARACHI (May 10 2007): The widening gap between the imports and exports has dragged the country's trade deficit to $11.08 billion during the first 10 months (July-April) of the current fiscal year. According to official figures the deficit has widened by around 17 percent as compared to $9.48 billion during the corresponding period last year.

Although on MoM basis the deficit was marginally down by 1.2 percent, however if compared with the previous year, trade deficit went up by 32 percent to $1.076 billion in April. The figures show that the exports reached $13.90 billion mark in ten months (July-April) as against the whole year's target of $18.6 billion.

In April, export grew by 3.73 percent to $1.49 billion compared to $1.44 billion in the same month of the previous year. Therefore, the export target is $4.7 billion short to be accomplished in two months. The export decreased by 2.35percent to $4.49 billion in April compared to the preceding month of March, when export totalled at 1.53 billion.

Imports grew by 8.92 percent to $24.99 billion during these ten months compared to $22.94 billion over the same period of the last year. Whereas the import were up by 13.94 percent to $2.57 billion in April compared to $2.25 billion of the same month of previous year.

An analyst of the foreign trade said that although the imports showed declining growth trend, but if imports continue to grow the whole year trade deficit would not only be higher compared to last year, but would also exceed the projected trade deficit for the current financial year.

He said that if this trend continued in the coming months, it would have a serious impact on the country's balance of payment, as well as having a negative impact on the health of the rupee. However, he said that increase in foreign direct investment and growth in remittances would help in making up the losses caused by this burgeoning trade deficit.

"The marginal growth in export shows that the steps announced in the trade policy of this year either have not been implemented or have not worked out to register a quantum jump in the export", an other expert noted.

Since the beginning of the current financial year, the average growth in the export has hovered between three to four percent and if the exports continued to grow at the same pace, the full year's target for the export would hard to be achieved.

Based on the analysis of the trade deficit so far in this year, experts forecast that it would come around $14 billion at the end of the current year, which would be over the projected target of trade deficit.

Government projected import bill at $28 billion for the current financial year whereas the export target was set at $18.6 billion for the whole year. Although the category-wise data of the export would be released later in the month, however analyst said that figures indicate that the growth in export is not picking up and also worrisome is the fact, that it decreased by 2.35 percent in April compared to preceding month.

http://www.brecorder.com/index.php?id=561857&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Factors impeding 10 percent growth listed *

ISLAMABAD (May 10 2007): Advisor to Prime Minister on Finance Salman Shah has said that crippled infrastructure, exorbitant utilities costs, unskilled human resource and governance issue are some of the major challenges being faced by Pakistan to achieve 10 percent growth for competing with the regional economies.

He said this while addressing a seminar on "Policy Framework for Public Utilities Management" jointly organised by the Centre of Research for Development and Policy Studies and International Islamic University, here on Wednesday.

Salman Shah, however, said that the government is working on a long-term strategy that includes good governance, improving competitiveness in all sectors of economy besides developing human resource and world class infrastructure to achieve high growth rate and improve living standards of the people. He said that 10 percent growth rate is important to move along the regional countries.

The government, he said has been bearing Rs 300 billion losses annually because of poor infrastructure besides giving Rs 200 billion subsidy to the power sector whereas exorbitant utilities rates have been affecting industry's competitiveness in the global market.

Salman Shah said that Pakistan, being sixth largest population in the world, could become sixth economy by developing infrastructure like motorways and construction of major dams with in next ten years. He said that construction of major water reservoirs was essential not only to meet future energy needs but also to maintain agriculture growth and ensure cheap power supply to the industrial sector to make it competitive in the world market.

He said that restructuring of power sector, initiated in 1992 to unbundle Wapda into different generation and distribution companies, is yet to be completed. He said the government is investing a huge amount in the health and education sectors and has allocated unprecedented amount for the promotion of higher education.

Salman Shah said that our social protection network is well instituted and most effective as compared to the neighbouring countries. He, in this regard, referred to the Civil and Military pension schemes, Employees Old Age Benefit Institutions, Workers Welfare Fund, Benevolent Fund, Group Insurance besides Bait-ul Mal, Zakat and Poverty Alleviation Fund and the President's Rozgar Scheme.

Representative of Friedrich Naumann Foundation Islamabad Peter Adreas Bochmann also addressed the seminar while some scholars also presented their papers on different subjects. Speakers were of the view that the country may face serious water, food and power shortages after 2010 and recommended construction of storage reservoirs at least three big reservoirs on the Indus.

http://www.brecorder.com/index.php?id=561860&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*1000 megawatts additional power to be generated by year-end *

ISLAMABAD (May 10 2007): The government will generate 1000 MW of additional electricity by the end of the current year through its energy conservation plan and completion of ongoing power projects in the public and private sector. The additional power generation will help overcome the present shortage of 1000 MW and the load-shedding problem.

An unprecedented growth in purchasing power of the people and rapid industrial growth has led to an additional load on the country's power system. The government has taken a number of steps to produce electricity, which is necessary for sustaining the country's economic growth. Simultaneously a plan for improvement and extension of transmission and distribution network is also being implemented to ensure smooth power supply to consumers.

The short and medium term steps are designed to bridge the gap between demand and supply in the power sector. The demand for electricity is growing by 10% per annum and the government is focusing both on additional electricity generation as well as on better load management to maintain the growth momentum.

As a result of the various initiatives taken by the government a number of power projects are at various stages of completion in the public and private sectors. The government is working with 'demand management option' to overcome the situation. A balanced approach is needed for sustainability besides medium and long term plans, said an official of the Ministry of Water and Power.

To cater to the energy needs of the developing economy, power generation resources have to be developed to keep pace with the rapid economic development, he added. Collaboration among all stakeholders will enable mutual consultation on issues and challenges for improving power generation infrastructure, he said.

The Ministry of Water and Power has initiated several plans to meet the growing electricity demand in the country by expediting work on mega power projects. The government has assigned high priority to the development of water resources of the country and decided to construct five large dams, by the year 2016.

According to the Ministry of Water and Power about 1200MW to 1400MW more will be generated up to 2008 which will help reduce power shortage problem in the country.

The ministry has already directed WAPDA to speed up work on mega water projects including Neelum-Jhelum Hydro Power Projects, Diamir-Bhasha Dam, Kurram Tangi Dam, Sabakzai Dam and Kachi Canal Project. The ministry has stressed the need to quickly complete the formalities and start construction work as soon as possible.

The work on Kachi Canal project is on schedule and it would be completed in the target time by December 2008 while the work on Subak-Zai Dam in Balochistan would be completed this year at a cost of Rs 1.576 billion. In order to overcome power shortage problem, new power plants will be installed in the country, besides other mega projects to produce more electricity.

Around 50 projects of private sector are in the pipeline to generate 13,400 megawatt of electricity by 2016 at an estimated cost of 12.847 billion dollars. Ten projects with 2255 MW capacity including six oil and four pipeline quality gas dual-fuel are expected to be completed by year 2008 with an investment of 1.691 billion dollars.

Out of six projects during the year 2008, the main project is for capacity expansion of existing IPPs near Lahore with 405 MW capacity. This project would cost 304 million dollars. Similarly, during the year 2009, eight projects have been planned to generate 1764 MW electricity with an investment of 1.323 billion dollar. These include three oil and five dedicated gas field projects.

In year 2010, seven projects of 1321 MW capacity including two hydel, one oil, three pipeline quality gas dual-fuel and one dedicated gas field would be completed at a cost of 1.096 billion dollars. Similarly, in year 2011, three hydel projects with generating capacity of 284 MW, costing 355 million dollars would be completed.

In year 2012, seven projects having capacity of 2726 MW including three hydel and four coal projects would be completed with the cost of 2.320 billion dollars.

In year 2013, five projects including four hydel and one coal would be completed to generate 1986 MW electricity. These projects will cost 2.233 billion dollars.

Three hydel projects having 1443 MW capacity are likely to be completed in 2014 with the cost of 1.804 billion dollars while in year 2015 and 2016 seven hydel projects are planned to generate 1620 MW electricity and would cost 2.025 million dollars.

To meet growing power needs of the country, recently five agreements have been concluded with different parties for generation of about 1300 megawatt electricity. Power projects with a total capacity of 6000 MW are in different stages of approval, including 550 megawatt of wind power projects.

http://www.brecorder.com/index.php?id=561878&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*'New Punjab budget to focus on poverty alleviation' *

KASUR (May 10 2007): The new fiscal budget of Punjab (2007-08) will be people-friendly with special focus on poverty alleviation and employment opportunities. This was stated by Chairman of Punjab NA Standing Committee for Finance, Chaudhry Sibghatullah while talking to newsmen here in Pattoki on Wednesday.

He said the budget would extend benefit to all sections of the society, including farmers, traders as well as government servants. To ensure healthy participation of masses in the development process, he said, the government had already initiated various projects for addressing poverty issues and unemployment.

He said that more technical institutions would be set up to provide skill training to jobless persons so that they could get loans under "Khud Rozgar Scheme" for self-employment. He said that the government was also introducing different projects of women development to encourage their role in mainstream national development.

Talking about investment, he said that during the current year, foreign investment worth 500 million dollars was expected in the province, largely because of the Chief Minister's investor-friendly policies. The development budget for the current year is Rs 100 billion, the Chairman added.

http://www.brecorder.com/index.php?id=561979&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'Pakistan needs to improve its ranking on GCI' *

ISLAMABAD (May 10 2007): Pakistan needs to update and submit its data on economic indicators to the international sources to reflect country's progress in real term on the Global Competitiveness Index of the World Economic Forum. This was stated by Arthur Bayhan, Chief Executive Officer of the Competitiveness Support Fund during the presentation at the Statistics Division here on Wednesday.

The meeting with the Federal Bureau of Statistics was a part of CSF's initiative to bring all the ministries on board to improve Pakistan's ranking on the Global Competitiveness Index (GCI) of the World Economic Forum.

Speaking on the occasion, Asad Elahi, Secretary Statistics Division, informed the CSF delegation that with organisational restructuring his institution has adopted a pro-active strategy to make the Statistics Division more effective and efficient.

He said the Statistic Division is moving from an annual reporting structure to the quarterly reporting structure. This new approach will help the decision-makers to improving overall competitiveness of Pakistan.

Asad also informed the delegation that the Division is undertaking several initiatives to improve the level of professionalism in the organisation through training workshops and short courses.

In this regard the FBS has conducted more than 40 courses and has trained 800 people. Around 20 international experts from the US Statistic Bureau, GTZ of Germany and experts from Europe on energy and WTO have conducted these workshops.

He also indicated that the prime objective of his team is to make the timely availability of the data in a user friendly manner. Elaborating on the future plans for the Statistics Division, he informed the delegation on the establishment of 'Business Registers' in the private sector with the assistance of CSF. He said the biggest challenge for his team is to gather the reliable data from the private sector.

http://www.brecorder.com/index.php?id=561930&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Strategy prepared for private sector's development *

FAISALABAD (May 10 2007): Federal government has prepared a new strategy for the development and enhancing role of the private sector and decided lowering the barriers to development of small and medium enterprises. According to official sources, the private sector will play an increasing role in driving growth and creating job opportunities.

A strong Private Sector Development (PSD) strategy will therefore be an important element in enhancing the competitiveness of the private sector. The features of the new strategy are:

1) lowering the barriers to development of small and medium enterprises; 2) developing a modern financial sector with a view to providing a wide range of financial services; 3) removing irritants and impediments to private sector growth; 4) strengthening the country's physical and social infrastructure 5) consistency and continuity of economic policies.

Official sources hoped that all these measures are expected to improve Pakistan's investment climate, reduce the cost of doing business for the private sector, thus contributing to enhancing the competitiveness of the private sector.

An Economic Reforms Unit (ERU) has been set up in the Ministry of Finance, which will perform two basic functions. Firstly to prepare a comprehensive PSD and secondly, to streamline and simplify processes, procedures and regulations at all levels of government. Both functions will be carried out in close partnership with the private sector and all stakeholders at the federal, provincial and local levels of government.

Official sources disclosed that a better Business Advisory Council (BAC) will be set up to identify issues and then to formulated and implement remedial measures. In addition, the government is in the process of revamping the existing Monopoly Control Authority (MCA) into a Competition Commission, the draft law of which has already been finalised. At the heart of the Commission's work will be a competition policy that lays down a framework for enhancing competition in the economy.

A forward looking PSD strategy, official sources stated, supported by a vastly improved regulatory environment, processes and procedures will go a long way in freeing the private sector from constraints that impede its growth. This will create an enabling environment that will allow the private sector to focus on productivity, innovation and growth, responding to opportunities in the national and global markets.

According to official sources, Private Sector Competitiveness is also being enhanced by taking into account the recent findings on the State of Pakistan's Competitiveness Report by the Competitiveness Support Fund and released by the Prime Minister.

The Competitiveness Support Fund is a joint initiative of the Ministry of Finance, Government of Pakistan and the United State Agency for International Development. It has been established to support repositioning of Pakistan's economy on a more competitive global footing. The government is already providing support from the fund to gems and jewellery sector, pharmaceutical and agro-based industries to improve their competitiveness with a view to preparing them as export items of Pakistan, sources explained.

These are being used to implement an initiative to improve corporate governance, enhance transparency, protect minority shareholders rights, assist companies in being able to list shares on the stock market, raise capital and improve the use of Boards of Directors. An initiative to help companies invest in human resources and improve the motivation of employees and apply modern management will also be undertaken. Finally, companies will be assisted to register patents, acquire and license technology and improve their access to the latest technology.

According to official sources, the government is following a policy of intensifying deregulation, privatisation and liberalisation with a view to transforming Pakistan's economy into a truly private sector market economy which is highly competitive, fuelling growth, creating gainful employment, generating wealth and most importantly, reducing poverty. As part of overall liberalisation policy, the government is also pursuing trade liberalisation policy to encourage exports and provide consumers with access to imports from the global market at reasonable prices. Sustained export performance is a key priority. The government will also continue to liberalise its import regime while continuing its efforts on enhancing market access for its exports for both traditional and non-traditional items.

The government seeks to promote a globally competitive economy by reducing public and private barriers that hinder development. The present Government's reforms implemented in Pakistan are based on liberalisation, deregulation, privatisation, and good governance. Policies adopted include opening markets for imports and foreign investment, encouraging exports and linkages with multi-national enterprises, lowering administrative controls and reducing government ownership. The government understands that improved competitiveness derives from the introduction of best practices, a focus on human development, making up the value added chain and improved logistics.

About trade, official sources mentioned, Pakistan's access to global agricultural commodity markets is often restricted. Given the country's position as a major agricultural exporter and importer, the Government will strengthen every aspect of rules governing agricultural trade, eliminating distorting subsidies and significantly improving market access.

The focus on improved competitiveness has made it essential to improve the functioning of factor markets. The privatisation of large parts of the financial sector has strengthened Pakistan's banking and financial sector. The attention given to this area will be matched by reforms in the labour and land markets. Additional reforms will be undertaken to reform laws governing labour welfare and to rationalise the labour levies system. Health and safety at work regulations also need to be tackled. Another challenge is to ensure clear title for land transactions.

Competitiveness relies on ensuring that the population is healthy, secure (in both civil and criminal aspects of society) and capable of sustaining the basic requirements of life through improved education, infrastructure and a stable macro-economic climate. It is further enhanced by the provision of world-class tertiary education and vocational skills training and the development of a knowledge economy based on a fully developed Information and Communications Technology (ICT) infrastructure.

Improved competitiveness leads to sustained economic growth, which has proven to be effective in generating employment and reducing poverty. Therefore, the Government recognises improving competitiveness as a cornerstone of its economic growth strategy. The economy has responded well to the structural reforms carried out in the last 7 years and has emerged as one of the stronger growing economies of Asia.

Although, as a result, Pakistan has significantly improved its position in the Global Competitiveness rankings of the World Economic Forum, much more needs to be done. The Government will therefore continue to implement its second generation reforms in addition to the private sector specific reforms listed above.

Poverty and in particular the nutrition of a large proportion of the population will continue to be focused upon by the government. It is a key element of government attention because it believes that poor nutrition adds to costs of healthcare and reduces labour productivity. Fundamental improvements in the access to education, nutrition, and health are key elements in the government's approach to enhancing competitiveness.

http://www.brecorder.com/index.php?id=561981&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*ABN Amro opens Islamic branch in Pakistan *

KARACHI: May 10, 2007: Dutch bank ABN AMRO on Thursday opened its first Islamic banking branch in Pakistan, as the market for sharia-compliant assets hots up, the head of the bank's Asia operations said.

"We are now seeing demand for (Islamic) financial products and services among our core mid-market client base, and we are responding to that demand through dedicated branches," Jeroen Drost, ABN Chief Executive for Asia, told reporters here.

Islamic banks, with assets of about 100 billion rupees ($1.65 billion), have a nearly 3 percent share of the country's total banking industry.

Drost said his bank had selected Pakistan as the first country to launch a dedicated Islamic banking branch on the back of rising demand for sharia-compliant assets in the country.

"We are optimistic about the potential, and it will be a multitude of what you see today," he said.

Drost said ABN plans two more Islamic banking branches in the country this year.

"We intend to add two more exclusive Islamic banking branches to the network and Islamic banking windows in six to eight branches by the end of 2007," he added.

Islamic banking has gained in popularity in the Muslim country, because charging interest, the backbone of conventional banking, is forbidden.

Islamic law also forbids fixed-interest returns on investments, and account holders in Islamic banks reap profit from approved investments only.

At present, Pakistan has six fully fledged Islamic banks, of which four are fully operational. In addition, 13 conventional banks also operate Islamic banking branches.

There are about half a dozen Islamic mutual funds, while licences have been issued to two companies for takaful business -- the Islamic alternative to insurance.

ABN is the second-largest foreign bank in Pakistan, with 83 branches after the acquisition of Prime Bank in March.

ABN is also looking into setting up dedicated Islamic banking branches in Dubai, Indonesia, Malaysia and other parts of the Muslim world.

http://www.brecorder.com


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## Neo

*Talks on Pak-Czech investment treaty under way *

ISLAMABAD: Prime Minister of Czech Republic Mirek Topolanek has assured Pakistan that being the European Union member, Prague would play its role in strengthening Islamabad's relations and striking a Free Trade Agreement with the bloc.

The visiting premier said that negotiations on Bilateral Investment Treaty (BIT) and agreement for avoidance of double taxation between the two were also underway. The talks on this particular issue would soon end on a positive note.

Addressing a Pak-Czech investment conference here on Wednesday, organised by Board of Investment (BoI), Mirek Topolanek said that various issues including market access and EU anti-dumping duty on Pakistan's bedlinen were also being negotiated.

Praising Pakistan's economic performance, he said that the country's economic achievements were remarkable and it had the ability and potential to become an economic leader in the region.â 

Topolanek hoped that trade, investment and business relations between the two countries would further grow and strengthen, which would make Pakistan a major Asian partner.

He pointed out that a favourable trend was evident from the three-fold increase in trade to over $70 million between Czech Republic and Pakistan since 2000. This increasing trend continued in the first two months of 2007 when Czech exports to Pakistan were worth $11.1 million and imports stood at $8.3 million. "An increase of 200 per cent in Czech exports to Pakistan is expected this year," he stated.

Federal Minister for Privatisation and Investment, Zahid Hamid, in his welcome address, underlined that there existed huge potential to strengthen economic ties between the two countries, especially bilateral trade. 

Direct interaction between the business communities would enable them to better understand and realise the opportunities and prospects of cooperation in various fields.

He said that Pakistan would benefit from Czech's knowledge and expertise in the field of energy in view of its rapidly increasing need.

The minister appreciated Czech participation through direct capital investment or provision of technical expertise and know-how in various upstream and downstream projects in the oil and gas, mining and power sectors and welcomed signing of a contract by SKODA for supplying machinery for a power project.

Pakistan's investment policy was one of the most liberal and attractive in the region and there was a level-playing field for both foreign and local investors, Zahid Hamid added.

All economic sectors were open to foreign investors, who could invest up to 100 per cent equity. No government sanctions or permissions were required and remittance of capital, profits and fees were allowed and foreign investment also had statutory protection. 

That resulted in a dramatic improvement in the country's economic performance with a significant increase of more than 10 times in foreign investment from only $300 million in 2000-01 to $3.9 billion last year. This year, foreign investment would set a new record and surpass $6 billion, he said.

Highlighting the promising areas of investment, the minister said that there were opportunities for joint ventures in the information technology, automotive and precision engineering sectors, as well as in textiles, railways and infrastructure development.

http://www.thenews.com.pk/daily_detail.asp?id=55090


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## Neo

May 10, 2007 
*Current account deficit up by 43pc*

By Shahid Iqbal

KARACHI, May 9: The current account deficit of nine months has gone up further to $6.015 billion making it more difficult to meet the gap as the governmentâs dependence on foreign inflows and borrowings is on the rise.

Despite high foreign flows in the form of remittances and foreign investment, the rising current account deficit poses a threat to the governmentâs ability to pay back its foreign bills and this may result in further borrowings from the market.The increased trade imbalance has sharply reduced the governmentâs ability to pay import bills for a longer period.

Just a couple of years ago, the government could pay import bills through its reserves for eight to nine months, but now State Bankâs reserves are hardly enough for five months.

The latest official data issued on Wednesday showed that the current account deficit during July-March 2007 was 43 per cent higher than the deficit during the same period last year.

Another data issued the same day showed that the trade deficit of 10 months has reached $11.083 billion, far from the governmentâs target of $9.4 billion for the whole year.

The real cause was the much below export growth and higher import growth despite decline in petroleum prices.

The import bill is rising on account of a number of products, which could be avoided, like huge import of luxury cars, vegetable and vegetable products, fruits and dry fruits, and a number of agricultural products.

Analysts said the 10-month trade deficit, which crossed $11 billion mark, would further increase the current account deficit. They said it was threatening the countryâs ability to pay the rising import bill.

âWe are obviously going to borrow more to meet the rising demand of dollar for import bills and debt-serving but the more we borrow, the more we need dollars to service the debt burden,â said Anees Alam, an economist.

He said the countryâs exports have been facing serious challenges since the end of MFA (Multi Fiber Agreement) which eroded the boundaries for textile exports.

âIt was known 10 years before the end of the MFA that China and India would pose a real threat to the only large textile sector of Pakistan, but the government failed to make any strategy for the times to come,â said Anees.

Pakistan is facing a cut-throat competition in the world textile market and Bangladesh has also emerged as the main competitor of Pakistan and has captured a sizeable place, replacing Pakistan from its traditional markets of Europe and America.

The data also showed that Pakistan has been paying more in services than it receives in this account. Pakistan paid $6.249bn for services and received only $2.780 billion in the same account.

http://www.dawn.com/2007/05/10/ebr1.htm


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## Neo

May 10, 2007 
*Plan for 7pc GDP growth finalised*

By Ihtasham ul Haque

ISLAMABAD, May 9: The government has finalised a five-point plan to achieve 7 per cent GDP growth in the next budget, which is estimated to be of Rs1.5 trillion. âOur new budget strategy is to de-regulate the economy further by effectively promoting the private sector, creating special economic zones and industrial parks, offering more incentives to the Small and Medium Enterprises and creating special estates for developing the agriculture sector,â the Prime Minister's Adviser on Finance Dr Salman Shah told Dawn on Wednesday.

In fact, he said, the focus of the next five budgets will be on achieving the five point strategy for which substantial funding will be made available, including from external resources.

âIn real terms, over 7 per cent GDP growth has been planned during the next financial year,â he said.

There will be a 4 per cent fiscal deficit target in the budget 2007-08 to be achieved by maintaining strict fiscal discipline, he said.

The CBR revenue will be Rs1 trillion while the Public Sector Development Programme (PSDP) has been estimated to be Rs535 billion, an increase of Rs100 billion over the current budget of Rs435 billion, the adviser said.

Mr Shah said that since the fiscal deficit target for the next financial year had been estimated at 4 per cent, Rs60 billion foreign borrowing will be required in the new budget. âRest of the 96 per cent financial resources will be arranged by the government and I find no difficulty in this behalf,â he said.

The target for inflation in 2007-08 is 6 per cent. âBut for the current year, 7 per cent inflation rate is being expected by June 30 this year against the target of 6.5 per cent.â For medium term, he said, the government was hoping for 5 per cent inflation during 2007-08, Mr Shah said.

http://www.dawn.com/2007/05/10/top12.htm


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## Neo

Thursday, May 10, 2007 

*âDebt servicing, defence eat up big share of revenueâ*

LAHORE: Punjab Minister for Finance, Hasnain Bahadur Dareshak, said Wednesday that debt servicing and defence expenditure eat up a whopping share of revenues.

He was addressing a pre-budget seminar organised by the Institute of Cost and Management Accountants of Pakistan (ICMAP). 

President, Lahore Chamber of Commerce and Industry (LCCI) Shahid Hassan Sheikh, was the chief guest. Naveed A Andrabi, President, All Pakistan Tax Bar Association, Prof Dr Khawaja Amjad Saeed, Principal, Hailey College of Banking and Finance and former President, ICMAP, Muhammad Azam Khan Shad, Honorary Treasurer, ICMAP and Mirza Munawar Hussain, Member National Council of ICMAP made presentations on the occasion.

The minister said inspite of the fact that a lot of funds are arranged through deficit financing, still a very little is left for development and revenue expenditures. âThe government is alive to the state of the affairs and is in the process of taking a number of measures to put our financial and fiscal house in order,â he added. 

He said, âthe ground reality is that we usually find it difficult to generate enough revenue and increase exports whereas the expenditure position has all along been getting inflated due to inflationary trends. In short the economy has been virtually in shambles.â

Shahid Hassan Sheikh, speaking on the occasion, said there has been considerable improvement in the macroeconomic indicators due to concerted efforts by the present government.

Prof Dr Khawaja Amjad Saeed, the keynote speaker, said the results of the fiscal policy adopted by the present government have yielded positive results and national economy is now treading fast towards economic prosperity. Muhammad Azam Khan Shad, FCMA recommended that government should provide funds for Kalabagh dam, allocate sufficient funds and provide technical expertise for development of Lakhra/Thar coal fields on fast track basis.

http://www.dailytimes.com.pk/default.asp?page=2007\05\10\story_10-5-2007_pg5_4


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## Neo

Thursday, May 10, 2007 

*Punjab, Karachi allow 9pm closure*

LAHORE/KARACHI: The Punjab cabinet and Sindh governor have allowed business centres and markets to open for an extra hour until 9pm under the new energy conservation programme. âWe have taken this decision after consultation with the business community,â Punjab Chief Minister Chaudhry Pervaiz Elahi told the provincial cabinet at a meeting on Wednesday, APP reported. He said all government departments would not use power for one hour every day. He directed the chief secretary to ensure that air conditioners are used in offices for the minimum possible time. Sindh Governor Ishratul Ibad has allowed markets in Karachi to remain open until 9pm on weekdays and up to 11pm on Saturdays, said Majid Aziz, president of the Karachi Chamber of Commerce and Industry. Karachi markets would also be allowed to remain open on Sundays. 

http://www.dailytimes.com.pk/default.asp?page=2007\05\10\story_10-5-2007_pg1_5


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## Neo

*Pakistan's Federal Budget Due June 9 Says Government Official *

ISLAMABAD -(Dow Jones)- Pakistan's government will present its *2007-08 federal budget, worth an estimated PKR2 trillion*, to parliament June 9, said a government official Thursday.

"The budget will be presented on June 9, which will focus on growth sustainability and poverty reduction measures", Salman Shah, financial advisor to the prime minister, told a television program.

Pakistan's fiscal year ends June 30 and each annual budget is presented to the parliament in June.

The budget will offer incentives for new investment through tax credits, new listings on the stock market and depreciation allowance on machinery imports, said Shah.

New rules for real-estate investment trusts will also be announced, Shah added.

Last year's budget was worth an estimated PKR1.315 trillion. The budget deficit was 4.2% of gross domestic product.

http://www.nasdaq.com/aspxcontent/N...CQDJON200705101329DOWJONESDJONLINE001118.htm&


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## Neo

*Upcoming budget to further promote growth: PM *

ISLAMABAD: May 10, 2007: The upcoming budget will further promote growth, industrial development, jobs creation and will reflect consistency and continuity of the policies, Prime Minister Shaukat Aziz has said.

Talking to several group of PML parliamentarians at his chamber in the Parliament House Thursday, the prime minister said we will contest the next general elections on the basis of our track record and the party is confident that the public will cast a vote of confidence in our favour. 

The prime minister said we have done away with politics of confrontation and have promoted an atmosphere of congeniality to strength democracy in the country. The prime minister said PML government has set new traditions in the political arena as we believe in solving all national issues through negotiations and consultation. 

The parliamentarians expressed their unflinching support to the Party, government and the prime minister. They said the development projects launched by the government have started impacting the lives of people in a positive way. 

The prime minister said while during our initial years in office the government relatively focused more on achieving macro economic stability to take the country out of crisis, it gradually increased allocations for bringing improvement in the social sector. As a result the benefits of growth started trickling down to the grass roots level and people now have better facilities of education, health, drinking water and infrastructure. 

The prime minister said during the period 2001-02 to 2005-06, the country has spent close to Rs. 1,480 billion on social sector and poverty-related programmes. The overall pro-poor expenditures, as percentage of GDP, increased from 4.0 percent in 2001-02 to 6.1 percent in 2005-06. In monetary terms these expenditures have increased from Rs. 180 billion in 2001-02 to Rs. 464 billion in 2005-06 showing an average annual growth of 27 percent, the prime minister added. 

He said that the government increased expenditure on social sector i.e. education, health, population welfare and social welfare and safety net at an annual average rate of 22 percent during the period 2001-02 to 2005-06. These expenditures increased from Rs. 103.1 billion in 2001-02 to Rs. 227.7 billion in 2005-06, he added. 

The prime minister said it is heartening to see that poverty has declined in both rural and urban areas. He said high growth, decline in unemployment and higher allocations by the government on poverty related projects have contributed in 10.6 percent point decline in absolute poverty. The poverty head count, which was 34.4 percent in 2001, came down to 23.9 percent in 2005, he added. 

The prime minister said the bumper crop of wheat this year and the ongoing reforms in social sector and social protection would further improve social indicators and help reduce poverty in both urban and rural areas. 

The prime minister said the government is proud of its achievements but we are not complacent. He said the challenge is to further reduce poverty eliminate inequalities in income and maintain the momentum of growth. 

He said as part of its exit strategy for poor, the government is working to provide better opportunities for livelihood though more jobs and increasing the out reach of micro finance. It is also making targeted interventions for the poor through Pakistan Bait-ul-Mal, Zakat system among others, the prime minister added. 

The parliamentarians discussed with the prime minister the development projects launched by the government in their constituencies and submitted proposals for the upcoming budge. 

Brecorder.com


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## Introvert

*Pak-Uzbek joint venture in leather sector on cards*
LAHORE: Punjab Minister for Industries, Muhammad Ajmal Cheema has said that the investors of Pakistan and Uzbekistan would soon enter into a joint venture in leather sector, hoping that the collaboration would help enhance the trade between the two nations in leather and other sectors of economy.

He expressed these views while talking to a 7-member delegation headed by Obek Arif Usman, Ambassador of Uzbekistan in Pakiatan, and Iskandar Attanof, Chairman, Leather Association of Uzbekistan who called on him here on Wednesday. The minister said that Pakistan and Uzbekistan are enjoying very cordial relations and these ties would further be cemented in the coming days. He said investors of Uzbikstan should come forward and avail the opportunities being given to foreign investors by Pakistan especially Punjab government.

He said there would soon be exchange of delegations between both the sides which would hold single country exhibitions. He said Leather Association of Pakistan would soon visit Uzbekistan.
http://www.thenews.com.pk/daily_detail.asp?id=55094


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## Neo

*ECC allows gas firms to set up power plants *

ISLAMABAD (May 11 2007): The Economic Co-ordination Committee (ECC) of the cabinet on Thursday allowed gas companies to set up power plants by using their own low BTU gas as part of the government's strategy to generate more power from where it is available.

Presided over by Prime Minister Shaukat Aziz, the ECC also approved 8.842 cents tariff for setting up 450 MW thermal power station at Chichoki Malian (Sheikhupura) besides allowing phase-wise import of cotton through land route and as a first step only import of long staple cotton.

After the meeting Dr Ashfaque Hasan Khan, Economic Advisor to the Finance Ministry briefed the journalists that the first priority would be given to gas companies to set up thermal power stations using available low BTU gas.

"If gas companies are unable to give go ahead signal within three months' prescribed time, then other parties will be considered," he added. The ECC gave go ahead to phase-wise cotton import through land route for which Ministry of Food, Agriculture and Livestock (Minfal) has been asked to set quarantine facility at Wagha border.

In the first phase only long staple cotton could be imported after which the government would conduct study that import of short staple cotton is not harmful for the local farmers and then establish quarantine facility at Chaman and Turkham.

He said after a record cotton production of 14.4 million bales of cotton in 2004-05 it decreased to 12.8 million bales in 2005-06 and further reduced to 12.5 million bales this year. On the other hand spinning capacity over the last few years has developed up to 16 million bales.

ECC also decided to extend R&D support to dyed/printed fabrics, white home textiles and dyed/printed home textiles from eight countries of Central America. These countries are Nicaragua, Costa Rica, Belieze, Guatemala Al-Salvador and Honduras. The proposal had been submitted by the Commerce Ministry.

He said, ECC also approved Wapda's proposal for setting up a combined cycle thermal power plant of 450 MW at Chichoki Malian as the proposal PPIB's for setting up three power plants of 200 MW each has been shelved because of higher tariff ranging from 11.1 to 11.1 cents.

In response to Wapda's international bid, Alstom, a US-based company and Merubeni of Japan offered lowest bid of 8.842 cents per unit but at a later stage Qatar government showed interest to become part of this consortium.

He further said, ECC also decided to continue ban on export of pulses after reports that some of the parties procured gram at higher rates as part of their strategy to export it, as prices its price in the international market is higher than Pakistan.

"Gram crop is very good but export of pulses will not be allowed," he continued. He further said that the ECC also directed the Security and Exchanges Commission of Pakistan (SECP) to resolve all issues relating to equity and Real Estate Investment Trust (REIT) before budget with the consultation of SBP or any financial institution.

He said that the purpose of REIT is to provide cheap housing facilities to low income groups. Dr Ashfaque Hasan further said that the ECC has allowed foreign insurance companies to arrange equity of $4 million from where they want and erased the condition of equity from local market.

He said the ECC has allowed the Central Board of Revenue (CBR) to approve the names of investors who intends to import accessories for the services industry like hotels and chain stores. Dr Ashfaque said that inflation during the first 10 months (July-April) stood at 7.9 percent.

Earlier, ECC had directed CBR to bring the names of those investors before the ECC who are being allowed to import accessories at 5 per cent duty for one time exemption.

He said, a proposal of Defence Ministry has been deferred regarding exemption from sales tax on electrical power generated by the Pakistan Ordinance Factories (POFs). In this regard CBR has been asked to examine the proposal and submit report to the ECC in the next meeting.

The Ministry of Ports and Shipping withdrew a summary regarding establishment of Single Point Moording (SPM) facility at Khalifa point Hub (Balochistan). Dr Ashfaque said that 2.595 million tons wheat has been procured so far against the target of 5 million tons, which is 52 per cent of the total target set for the current year.

The Punjab procured 1.325 million tons of wheat against the target of 3 million tons followed by Sindh, 0.51 million tons against 0.7 million tons and Passco 0.76 million tons against 1.3 million tonnes targets.

http://www.brecorder.com/index.php?id=562222&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Rs 505 billion PSDP for 2007-08 likely *

ISLAMABAD (May 11 2007): The government is going to increase Public Sector Development Programme (PSDP) by 35 percent over the last year to take its size to around Rs 505 billion for 2007-08. The Planning Commission and other government ministries/divisions and provincial concerned departments have been working on the enhanced PSDP for the next fiscal year to ensure adequate funding for the ongoing and new development projects.

According to a senior official engaged in budgetary work, the federal PSDP for 2007-08 will increase by Rs 75 billion to take its size from last year's Rs 270 billion to Rs 345 billion and the provincial share from divisible pool with 35 percent increase to Rs 160 billion. The provinces share in last year's PSDP was Rs 115 billion.

The corporations' allocations for development programme for the next fiscal year is also likely to go up proportionately. Sources said the major share of PSDP 2007-08 will go for development of infrastructure such as roads, railway linkages as the government intends to undertake several new mega infrastructure-related projects.

Besides completing the ongoing projects on top priority basis to build up a countrywide linkage for better transportation facilities and quick handling and supply of shipments from ports to different parts of the country, they added.

Pakistan's ambitious plan to become a corridor for energy, transportation, and regional business also demand a strong network. The federal and provincial PSDP with project-wise detail will be presented before the Annual Plan Coordination Committee (APCC) meeting here on May 21-22.

Sources said the Planning Commission has already issued directions to the federal and the provincial governments to come up with details of the projects for the APCC meeting they want to fund from the PSDP. The APCC will also review the progress of the ongoing projects and make it a criterion for allocation of funds from the next year's PSDP.

The Planning Commission will also make sure that the federal as well as the provincial governments accord priority to complete the ongoing projects rather than leaving them incomplete and embarking upon the new ones for the same sector. APCC's recommendations will be presented to the National Economic Council (NEC) for approval and making an approved PSDP a part of the next year's budget.

The government has undertaken a number of mega projects particularly for water sector besides allocating a sizeable portion of the PSDP for Pakistan Khushhali Programme (PKP) and their share in the next PSDP will be increased to expedite work on these projects.

The government is also going to increase funding for health, education, and other social sector programmes by increasing their allocation in next year's PSDP. Sources said allocation of funds from the PSDP for initial work on identified dams will also be increased to ensure that such projects complete in time.

http://www.brecorder.com/index.php?id=562248&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*MoU signed for 225 megawatts plant at SIE *

LAHORE (May 11 2007): Punjab Industrial Estates (PIE) and a Kuwaiti investment group working with the US energy company have signed a Memorandum of Understanding (MoU) to develop a 225 mega watt combined power plant at a cost of $200 million at Sundar Industrial Estate (SIE), Lahore.

Sabir Chohan inked MoU on behalf of PIE while Grayson P Wolf represented American Energy Company and Amwal international Investment Company of Kuwait. In case of further requirements, the company would set up another 225 MW power plant in the second phase.

A company in the name of PIE-AmPower would also be set up in this regard. The investing company would mobilise about $50 million in equity through Amwal and approximately $150 million in debt finance from a combination of commercial banks and multilateral financial institutions. Construction work is likely to be completed in two and a half years while commercial operations are expected to start by the end of 2009.

http://www.brecorder.com/index.php?id=562345&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Integrated industrial uplift plan for AJK evolved *

MIRPUR (May 11 2007): The Industrial Investment Board would be reactivated in order to give an impetus to the business activities in Azad Jammu & Kashmir, official sources said.

The sources told APP here on Thursday that the AJK Council is taking necessary steps to provide quick and comfortable means of communication through construction of a dual carriageway from G.T. Road Dina to Mirpur to encourage and facilitate the intending private sector local and foreign investors including overseas Pakistanis and Kashmiris intending to invest in the industrial sector in the fast growing industrial district of Azad Kashmir.

Mirpur already have two major industrial estates furnished with required infrastructure including water and power and Sui gas network being laid under a phased programme. The AJK government has already chalked out an integrated plan for the speedy industrialisation and economic progress of Azad Jammu Kashmir in letter and spirit, official sources said.

In the inaugural phase of the plan a high level committee, headed by the chairman AJK board of investment, has already been constituted for the revival of over 70 percent of the existing total number of sick industrial units located in the industrial districts of Mirpur and Bhimbher, the sources said.

The AJK government, the sources revealed, has also started the implementation of the industrial development plan in AJK under the phased programme besides resolving the matters relating to the revival of sick industrial units in Mirpur, recent emergence of the Azad Jammu Kashmir Bank, installation of TOU/TOD electricity meters in the industrial concerns to assess the time of usage and registration of firms and constitution of a joint coordination committee for resolution of issues/problems related to the AJK council.

The AJK government is monitoring the ongoing pace of industrial progress in Azad Jammu & Kashmir coupled with the aim to remove the bottlenecks in way of the industrialisation of the liberated area.

The AJK government is providing required infrastructure, facilities to the existing and intending entrepreneurs for the promotion and establishment of maximum industrial units in AJK. According to the sources most of the already approved seven new grid stations have been established in various parts of Azad Jammu Kashmir under phased programme to ensure the smooth and stable supply of power to the consumers. The sources said that this gigantic development plan will also help to reduce the line losses of the electricity in AJK.

The government has also decided to furnish the existing and upcoming investors from the private sector with all necessary facilities for encouraging maximum local and foreign investment besides for the promotion of country's exports from this fast expanding business terrain of AJK, the sources added.

http://www.brecorder.com/index.php?id=562352&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'Pakistan can import power from Tajikistan' *

RAWALPINDI (May 11 2007): Pakistan can import electricity from Tajikistan to meet its energy requirements under the MoU signed by joint ministerial commission last year for power supply to Pakistan, said Saidov Saidbeg, Ambassador of Tajikistan on Thursday.

He was talking to Dr Hasan Sarosh Akram, President, Rawalpindi Chamber of Commerce and Industry (RCCI) and members of the chamber during his visit. Tajik Commercial counsellor Ahsan Shariatmatari and Secretary Yuliya Iskanova briefed the business leaders about trade and business opportunities in their country.

Tajik envoy invited Pakistani business community to explore the Central Asian market by investing in Tajikistan. "Our country is a gateway to Central Asian Republics and Russia where huge market would receive your products with appreciation," he said adding that people of Tajikistan have high regard and love for Pakistan hence they like Pakistani products.

Pakistani businessmen should set up joint ventures in mining, hydropower generation, health, agriculture and agri-products, textile and textile garments, food processing and tourism, he said that Tajik government has formulated business-friendly laws providing all facilities to the investors.

He admitted that due to lack of communication link the economic co-operation between the two countries could not flourish at a rapid pace. But after completion of the bridge on Wakhan strip, two countries would get an easy access for enhancing trade and cultural co-operation, he said.

He said Lahore Chamber has organised two exhibitions of Pakistani products in Tajikistan. Tajik people liked Pakistani products. At present Chinese products have captured the market and if Pakistani products reach there they could capture a good market chunk as well, he said.

Speaking on the occasion, RCCI President Dr Hasan Sarosh Akram said Pakistan and Tajikistan governments should take measures to establish air and road links to enhance trade and economic ties.

He called upon Tajik businessmen to invest in Pakistan, which would provide them access big markets of South Asia, Middle East, Far East, besides an opening to the rest of the world through its ports.

He said that as a result of prudent economic policies, deregulation and liberalisation of trade, Pakistan has emerged as a fast growing economy in the region. Tajik investors would find huge opportunities of trade besides setting up of joint ventures in different industrial and services sectors, he said. He invited the Tajik industrialists to take part in three-day industrial exhibition to be held in September.

http://www.brecorder.com/index.php?id=562287&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Thar coal: local power company to generate 1,000 megawatts in three years *

KARACHI (May 11 2007): Country's national power grid to get 1,000 Mega-Watt electricity in three years from coal-fired power plants to be established by local company in the vicinity of Thar. Hassan Associates (Pvt) Limited will be able to provide 1,000 MW electricity in 38 months after depositing bank guarantee of $7 million in coming weeks.

Irfanullah Khan Marwat, Sindh Minister for Mines and Mineral Development at a press conference on Thursday said that the company had shown commitment to materialise the coal-fired power project and the government after assessing the company issued the first Letter of Interest (LoI) for coal-fired power plants.

He said that issuance of LoI indicated that government had full confidence over the company and it had completed all required procedure to start the project. On May 8, 2007 the Private Power Infrastructure Board (PPIB) approved issuance of Letter of Interest (LoI) to Hassan Associates for setting up 1000 MW power project based on Thar coal worth $1.2 billion.

Earlier, Sindh government had awarded exploration licence for an area of 64-km at Thar coal field to the local investors and proposals had been evaluated by the PPIB. Sindh minister said that the company could enhance power generation capacity from 1,000 MW to 1,800 MW in future. He said that Sindh government had provided all required infrastructure at coalmines sites and ready to provide necessary requirements to any intended company to set-up coal mining and power generation.

About the tariff issue, he said that the Sindh Mines and Mineral Development had suggested the federal government to re-activate the committee, which had settled the tariff for China based company.

To another query, he rejected the use of imported coal on the project and said that the available coal at Thar is lignite quality, a soft coal, and boilers were being set up according to the quality while the imported coal known as hard coal. Therefore, it was impossible to use both qualities of coal at the same boiler, he added.

He said that proposed coal mining and power generation in the Sindh desert was environment friendly. Marwat said that other local and international companies were also engaged in various coal-fired projects. Power generations at Sonda-Jherruk, Thatta would be started soon, which is being carried out by a Chinese company.

http://www.brecorder.com/index.php?id=562262&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Auto sales and production growth declines *

KARACHI (May 12 2007): Declining trend in the growth of production and sale of locally assembled cars has been observed during the ten-month period from July to April of the current fiscal year, as the production and sales stood at 130,841 units and 131,962 units respectively.

According to figures released by Pakistan Automotive Manufacturers Association (PAMA), the production was up by 2.4 percent and sale by 5.4 percent, which means that the growth in car sales has been there but the rate has declined. Industry sales depicted negative growth at 2 percent primarily due to decline in motorcycles and relatively lower growth in car sales.

Overall, industry sales figures during July-April (2006-07) dropped by 5 percent, to 588,731 units, against 618,395 units of last year. The overall performance of listed cars and LCV manufacturers (PSMC, INDUS, HCAR, DFML) remained somewhat unattractive with overall growth during the ten months at 8 percent to 160,358 units.

Pak Suzuki managed to increase its sales by 25 percent to 96,584 units while Indus Motors sold 39,608 units, up by 20 percent. "If we encompass overall unit sales by the listed car assemblers then we come to the conclusion that Pak Suzuki leads with a market share of 60 percent, followed by Indus Motors at 25 percent, and the rest being shared by Honda Atlas Cars and Dewan Motors," said Hettish Karmani at Atlas Capital Markets.

Talking particularly about the car segment then once again Pak Suzuki enjoyed a handsome lead over others with a market chunk of 57 percent, followed by Indus Motors at 30 percent, the rest being taken over by other two listed assemblers, he added.

However, the analysis of individual performances of companies showed that PSMC and INDUS had performed well during the period while the overall lacklustre growth was due to dismal performance of HCAR and DFML. After incorporating the latest available sales figures, PSMC remained the market leader in the combined cars and LCV segment of the automobile industry.

The manufacturers of Toyota Corolla, Indus Motors, seated second in the race with 25 percent of the total market share. The auto industry is well poised towards growth and would be undergoing expansion in the coming years as outlined and scheduled under Auto Industry Development Program (AIDP). However, influx of imported vehicles continues to be a major threat to the industry.

http://www.brecorder.com/index.php?id=562639&currPageNo=1&query=&search=&term=&supDate=


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## Neo

May 12, 2007 
*Inflation exceeds budgetary target: Up by 8.1pc in 10 months*

ISLAMABAD, May 11: Inflation rose by 6.92 per cent during the month of April 2007 over the same month of the last year mainly because of stable oil prices in domestic market, Federal Bureau of Statistics (FBS) said on Friday.

This would be the second lowest increase in inflation so far recorded in any month of the current fiscal year because of the falling oil prices in international market. In January 2007, the growth in inflation was 6.6 per cent. The average increase in inflation during the last 10 months was 8.14 per cent.

The statistics showed that inflation measured through Consumer Price Index (CPI) was up by 0.31 per cent in April 2007 over the previous month of March 2007. The inflation was up by 7.89 per cent in the first 10 months of the current fiscal year as against the same period of the last year.

The government expected that the end year inflation would be around seven per cent this year as the government found it very difficult to keep inflation below six per cent - a target set in the last budget despite the tight monetary policy of the State Bank of Pakistan.

The slowdown in inflation during the month under review was mainly due to constant decrease in prices of POL products. It is clear from the fact that transport and communication prices witnessed a negative growth of 2.39 per cent during the month under review over the last year.

The food inflation witnessed a growth of 9.41 per cent during the month of April 2007 over the same month of last year. This showed that food prices are still higher as the supply of essential commodities like potato, onion etc might decrease in the market.

Among the food items the price of tomatoes was up by 22.65 per cent, vegetables 7.83 per cent, fresh fruits 6.43 per cent, vegetable ghee 5.98 per cent, cooking oil 4.97 per cent, chicken (farm) 4.39 per cent, mustard oil 2.10 per cent, beverages 1.46 per cent, milk powder 1.31 per cent, rice 1.29 per cent, dry fruit 1.21 per cent, wheat flour 1.01 per cent, milk fresh 0.72 per cent and meat 0.61 per cent.

The house rent was constantly on the rise during the last 10 months. It rose by 0.43 per cent in April as against March 2007. An average growth of 0.4 per cent was recorded in house rent during the last 10 months of the current fiscal year. The government remained silent about this phenomenal increase in the house rent, which would have serious implications on the monthly budget of the low income group and the middle class.

Similarly, the doctor's fees and medicines are also witnessing a steady upward increase during the last 10 months. It recorded the highest increase of 10.08 per cent in April 2007 over the same month of the last year.

Another important area from consumersâ point of view - education fee and textbooks - was also under tremendous inflation. The education sector recorded an average growth of over 6 per cent during the last 10 months of the current fiscal year.

http://www.dawn.com/2007/05/12/ebr3.htm


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## Neo

*Private sector to establish 28 Thermal power stations: Jatoi *
Saturday May 12, 2007 

ISLAMABAD: Federal Minister for Water and Power Liaquat Ali Jatoi informed the National Assembly on Friday that private sector would establish 28 power thermal stations in the upcoming few years. 
He said the Private Power Infrastructure Board (PPIB) was scrutinizing the entire process. The projects would generate 7679 mega watt electricity that would be sold to Water and Power Development Authority (WAPDA). 

In question hour, the federal minister said that electricity was being purchased from Iran and other countries. National Electric Power Regulatory Authority (NEPRA), he said, would fix electricity tariff of every project. 

Jatoi told the house that private sector would install solar energy street lights under the Alternate Energy Development Board (AEDB) for which tariff has been settled that would save electricity. Solar energy projects would be launched in the areas where transmission lines did not exist. 

Responding to a question, the federal minister said that line losses were being reduced. He said the line losses of Hyderabad Electric Supply Company (HESC) remained 34.2 percent during 2005-06. He said the Wapda line losses have been reduced from 22.8 percent to 20 percent. He said the losses could be reduced if people do not use loose connection. 

The federal minister said electricity in Pakistan was cheaper than India and Sri Lanka. Wapda, he said, purchases electricity with 5.2 rupees per unit and sell with 4.2 rupees. 

To a question, he said, India was establishing Lower Jhelum Hydro Power project on Jhelum River and New Delhi had already informed Islamabad about the project. He said the project would have no effect on Pakistan, therefore, there was no need of any action against India. 

Liaquat Ali Jatoi said Pakistan had won the case over Bhaglihar Dam. He said the verdict of neutral expert would be implemented. In this connection, he said, talks with India were underway and we would not withdraw from our right. India, he said, had started changing design of the Dam after the objection of Pakistan. 

He said several dams including Bhasha would be constructed to increase power generation. At present, he said, the private sector was working on 16 power projects. 

Minister of State for Information Tariq Azeem informed the House that TV boosters in Boni and Drosh areas of Chitral had been installed. He said more boosters would be installed throughout the country for clear transmission of PTV. 

Minister incharge cabinet division, Sher Afgan Khan Niazi told the House that army officers were appointed in civil services through Federal Public Service Commission (FPSC).

http://www.paktribune.com/news/index.shtml?177935


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## Neo

*Trade, industrial activities come to complete halt: Rs eight billion loss to national economy *  

KARACHI (May 13 2007): Trade activities in the financial hub of the country, Karachi, was completely paralysed, causing over rupees eight billion loss to the national economy due to violence on Saturday, it is learnt.

Two different rallies were organised by ruling coalition party Muttahida Qaumi Movement (MQM) and opposition parties, including Pakistan Peoples Party and Muttahida Majlis-i-Amal (MMA) to accord welcome to Chief Justice Iftikhar Muhammad Chaudhry to address the golden jubilee of Supreme Court of Pakistan on Saturday.

For the last three days, the situation in the city was tense and on Saturday people preferred to stay at home. As a result, the attendance in the offices and factories was thin due to non-availability of transport.

Meanwhile, the government of Sindh also announced a public holiday on May 12, which badly hit the business activities in the major commercial centres and industrial areas in the metropolitan.

Due to thin labour attendance and tense situation in the city, production process came to a complete halt in the five major industrial areas, including SITE, Korangi, Federal "B" Area, North Karachi and Landhi industrial area.

"We have faced losses of over Rs 20 billion during the last two days as on Friday, only 25 percent industries worked, while there was 100 percent halt on Saturday," said President of Karachi Chamber of Commerce and Industry (KCCI) Majyd Aziz, while talking to Business Recorder.

Explaining, he said closure of industries for just an hour resulted in the loss of Rs 500 million to the gross domestic product (GDP). "So the last two days' losses are not less than Rs 20 billion," he said. "Our industries are closed for the last two days and now it would be closed for the next two days, ie on Sunday because of strike call by the opposition parties and on Monday," he added.

Majyd Aziz said though the industrialists had faced huge financial losses due to political activities in the city, the most disturbing thing was that the country's image was damaged, which higher than the financial losses.

"We have restored a good image of the country on the international front during the last three years, which was eclipsed in just a day," he said, and added this was a negative indicator and a wrong way, which might multiply the losses in future.

"We are expecting that law and order situation will be controlled within three or four days, but the impact of Saturday's will be felt till May end," he said.

Former Chairman of SITE Association of Industry Zubair Motiwala said that only on Saturday the government suffered a loss of Rs 1.5 billion in term of taxes, while other losses, including production and exports, are not less than rupees five billion.

He said political activities in the city had badly hit the export process and export consignments could not be shipped due to the tension in the city, he added.

Motiwala said that international exporters had always criticised our country's image and now the prevailing law and order situation would strengthen their views about the country.

Chairman of Korangi Association of Industry Masood Naqi claimed that Korangi industrial area had faces a loss of rupees two billion in the term of production, while the government exchequer lost Rs 250 million in the term of taxes.

He said that there was 100 percent shut down in the Korangi industrial area due to the tense situation in the city and local holiday announced by the Sindh government on Saturday.

"Over 2000 industrial units' production was zero and despite the last working day of shipment, not a single export cargo was shipped on Saturday," said Chairman of Federal "B" Area Association of Trade and Industry Masroor Alvi.

He said: "We don't have any figures, but losses are in billions, which could not be recovered even in few months."

http://www.brecorder.com/index.php?id=562983&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Moot on launch of solar map for Pakistan, Afghanistan from June 25 *

KARACHI (May 13 2007): A conference on the launching of wind and solar maps for Pakistan and Afghanistan will commence on June 25. The two-day moot is being organised by the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) in collaboration with the SAARC Chamber of Commerce and Industry (SCCI) and South Asia Regional Initiative for Energy.

Federal Minister for Water and Power, Liaquat Ali Jatoi, will chair the inaugural session of the moot to be held in Islamabad. The purpose of the conference on innovative issue in Pakistan is to introduce and distribute the wind and solar maps and Geographic Information System (GIS) data products for Pakistan and Afghanistan. It was further pointed out that the conference is expected to be attended by the representatives of companies to which the Government of Pakistan has given the letter of intent for installing projects of alternative energy resources in Pakistan.

http://www.brecorder.com/index.php?id=563018&currPageNo=1&query=&search=&term=&supDate=


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## Neo

May 13, 2007 
*Cellphone users jump to 52m from 1.2m in 2002*

KARACHI: Deregulation of the telecom sector and intense competition between the PTCL and mobile phone operators have proved beneficial to the telephone users.

There has been a massive growth in subscribers of mobile phones with the arrival of Telenor and Warid after Mobilink, Ufone, Paktel (now CMPak Limted) and Instaphone.

Currently, the total cell phone subscribers stand at over 52 million, of which Mobilink has over 23 million users followed by Ufone 11 million, Waridâs eight million and Telenorâs nine million. In 2002, cell phone users were only 1.2 million.

Manager Public Relations Mobilink Omar Manzur said that till 2004 the industry was paying activation tax of Rs2,000 per new connection. But now âwe are paying Rs500 as activation taxâ. There is 9.09 per cent advance income tax being charged to every customer coupled with 15 per cent sales tax levied on all services used. For every Rs100 consumed by a subscriber only Rs79 is used for telecommunication service.

He said the prices of telecom services have been reduced significantly. For instance, the rate of a local call on the Mobilink network in 2004 was Rs5.75 per minute. Today a NWD on the same network costs as low as Rs1.80 per minute.

The cut in activation tax came as an encouragement from the government that increased the upfront cost of a mobile connection to the end user. The reduction of tax enabled a larger number of low income customer to join the network.

He said the tariff reduction was based on three factors. The telecommunication base increasingly started addressing the lower income segments of the society. For this it was important that the prices of telecommunication be reduced so as to increase the access to the service.

The liberalisation of the telecommunication market led to a more efficient back-end infrastructure and lowered input cost for the customers. Increased competition led to a reduction in prices as two new operators entered the market, he added.

However, he said that a further decrease in activation tax is important as it would allow even the lower segment to enter the market. The operators have taken up the case with the government on periodic basis.

Giving a history of activation tax, he said Rs2,000 tax imposed vide SRO. 390(I)/2001 dated June 18, 2001 and on June 12, 2004, it was reduced to Rs1,000 followed by another cut to Rs 500 on June 6, 2005.

Chief of Customer Operations Ufone Naved Butt said that the company now charged a unified call rate of 99 paisa per 30 seconds as compared to Rs five per minute (company to company) and Rs6.60 per minute on other operatorsâ network in 2002.

He said that the operators want elimination of activation charges in order to lure more customers.

In telephone, there has been nine per cent decline in call rate to Rs2.3 per minute in 2007 as compared to Rs2.5 per minute in 2002. Currently, the government nets 0.47 paisa per minute in terms of taxes. -âASK

http://www.dawn.com/2007/05/13/ebr13.htm


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## Neo

Sunday, May 13, 2007 

*âSteel mill project to be operative in two yearsâ*

ISLAMABAD: A state-of-the-art modern steel mill project, to be established with an investment of $96 million, will be operative in the next two years and produce 220,000 tonnes of quality steel sheets, Japanese investors told PM Shaukat Aziz on Saturday.

A delegation of Japanese investors and Pakistani investment banks led by president of the Universal Metal Corporation of Japan and CEO of Aisha Steel Mills, Haseeb Rehman, called on the PM.

Prime Minister Shaukat Aziz said that Pakistan welcomes investment in the manufacturing sector and Pak-Japan joint ventures in steel manufacturing will be an excellent symbol of cooperation in expanding steel production in the country. 

The PM said that as a result of increased economic activity in all sectors of the economy including construction, engineering and manufacturing, the demand and consumption of steel is rising in the country. The growth in steel demand is an indicator of the growth momentum of Pakistanâs economy, the PM added.

The PM said that the government is encouraging increase in steel production with special focus on plant modernisation and increasing efficiency. 

He said that steel industry should upgrade and modernise its plants, as outdated plants cannot achieve the required efficiency needed for a highly competitive market.

The PM said that foreign investment of more than $6 billion is expected in the country in the current financial year which will create more job opportunities, increased production and overall growth of economy. 

Terming economic growth to be the core of progress, prosperity, peace and security the PM said that economic strength is the key to Pakistanâs positive image to the world.

Briefing the PM on the details of the project, Haseeb Rehman said that the state-of-the-art modern project to be established with an investment of $ 96 million would be operative in the next two years producing 220,000 tonnes of quality steel sheets.

The delegation appreciated the investor friendly policies of the government and told the PM that all formalities for setting up the project have been completed. They said that this joint venture of the private sectors of Pakistan and Japan would lead to many more investments in the manufacturing sector from Japan.

http://www.dailytimes.com.pk/default.asp?page=2007\05\13\story_13-5-2007_pg5_3


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## Neo

220.000 ton per year? This has got to be the smallest steel mill in the world. 
Why aren't we building larger mills since we import millions of tonnes of steel from abroad?


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## Neo

Sunday, May 13, 2007 

*Musharraf inaugurates 165MW power plant project*

By Sajid Chaudhry

ISLAMABAD: President General Pervez Musharraf on Saturday performed ground breaking ceremony of $160 million 165 MW power plant of Attock Gen Limited, the first power sector venture of the Attock group of companies. 

The president unveiled the plaque of the power plant at an impressive ceremony at Morgah, Rawalpindi, in the presence of governor Punjab, federal ministers, a large number of government officials and other dignitaries.

Addressing a select gathering, president Musharraf termed Attock Gen Limitedâs power plant as a project of vital national importance at this critical point in time when Pakistan needs additional power supply to meet the continuously rising demand. 

He paid glowing tributes to the leadership of Dr Ghaith R Pharaon, chairman, Attock group of companies, Shuaib A Malik, group regional chief executive, Attock group and appreciated Attock groupâs contributions to the economy of Pakistan. 

The economic performance of Pakistan, he said, had been very impressive over the past five years, and a healthy GDP of over seven percent was real confirmation of the same as also the confidence shown by the international investors in the country. 

The president congratulated Attock group for coming up with the first power plant based on indigenously produced environment friendly fuel.

Minister for water and power, Liaqat Jatoi stated that the government was committed to meet the energy requirements, and that a sense of urgency prevailed in all their endeavors to take timely actions to avoid adverse impacts of the energy deficit. All efforts were being made to encourage the local as well as foreign investment in this sector because it was vital for the economic growth of Pakistan, he added. 

He expressed hope that AGLâs power plant would be commissioned in time. Dr Gaith R Pharaon, Chairman, Attock group of companies, while giving vote of thanks, congratulated the president and his government for successfully implementing modern and visionary policies. Because of these policies, Dr Pharaon stated, investments in Pakistan were one of the safest and the best in the world. 

Dr Pharaon expressed his intention to set up two more power plants of 200 MW at Karachi and Hub, Balochistan. 

He cited the $200 million pipeline project from Machike near Lahore to Taru Jabba near Peshawar which awaits a few government approvals that he requested be expedited. 

The group has come up with a 165 MW power plant which will be the first to be commissioned under the government of pakistanâs power policy-2002 and first ever IPP located north of Lahore, and 75 percent component of estimated $160 million for this project comprises foreign direct investment

Earlier, M Adil Khattak chief executive officer, Attock Gen limited and Attock Refinery, briefing on AGLâs project stated that the fast growing gap between supply and demand for electricity is perhaps the greatest threat and challenge faced by national economy.

http://www.dailytimes.com.pk/default.asp?page=2007\05\13\story_13-5-2007_pg5_6


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## Neo

*Pakistan emerging as major cement exporter: Prime Minister *

CHAKWAL: May 14, 2007: Prime Minister Shaukat Aziz on Monday said Pakistan was emerging as a major cement exporter for the neighbouring countries and the Middle East 

He was speaking here at the inauguration of DG Khan Cement's Khairpur environment-friendly plant around 150 km south of capital Islamabad and having a production capacity of 7000 tons per day.

The prime minister said the operationalisation of three cement plants in the area within two years spoke of the government's successful policies that have brought in an investment of around Rs 500 million.

He said owing to the consistency and continuity in policies, record investments had been brought in and hundreds of industrial units were rapidly coming up all over the country.

The prime minister, who laid the foundation stone of three cement plants near Chakwal two years ago, said commissioning of these modern plants generated numerous employment opportunities and created several associated industries.

The prime minister earlier unveiled plaques of the cement plant, a 33 MW power plant and a plant for production of over 350,000 paper bags per day for the cement industry.

Prime Minister Aziz appreciated the Nishat Group for its role in the country's development and progress and noted that around 70 per cent of the plant's machinery was locally manufactured.

He said the positive impact of the industrial growth will trickle down to lower tiers of the society and it will be a win-win for all.

The prime minister said though there were several challenges, efforts were underway to cut poverty. He said the growth this year was expected to be around 7 per cent this year, with per capita income of US 950 dollars.

The prime minister announced upgradation of Kallar Kahar - Choa Saidan Shah road and Khairpur - Bhaon road, as well as a development package for the Chakwal district.

He said the government was encouraging competitiveness and productivity of the private sector as it believed that use of cutting-edge technology and not tariff controls could help them in a world of growing competition.

The prime minister said the prices of cement will further stabilise with increased production and provide quality product not only to meet the increased demand within the country, but also for Afghanistan, India and Middle East.

He was also appreciative of the measures taken to meet environmental standards, to cut pollution and to use minimum possible energy in a most modern plant.

Governor Punjab Lt Gen (R) Khalid Maqbool described Nishat Group as a development partner in Pakistan's progress and said the plant will generate employment and business activity in the area.

He appealed to the people to work for political stability in the country and reject those who wanted to bring instability.

Head of EU delegation to Pakistan Jan De Kok, who was also representing the European Investment Bank, said the project will further cement relations between Pakistan and the EU.

He said the EU will continue to help Pakistan in its political, economic and social development. He said subject to negotiations the EU has decided last week to triple assistance to Pakistan and it was largest provider of grant assistance.

The Chief Executive Officer Raza Mansha of DG Khan Cement said the three plants run by different groups will jointly establish a campus of the University of Engineering and Technology at Taxila, besides providing health facilities for the locals.

He said the Nishat group will spend Rs. one billion in next three years by setting up a 400 MW power plant, a cement plant and port facilities for export in Balochistan and a five star hotel in Punjab.

He appreciated the assistance provided by District Nazim Sardar Ghulam Abbas in making a dream come true.

Brecorder.com


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## Neo

*Rs 13.25 billion utilised on 5955 schemes in Sindh under ADP *

HYDERABAD (May 14 2007): The executing authorities have utilised Rs 13.255 billion on 5955 ongoing development schemes under Annual Development Programme (ADP) 2006-2007 from July 1 to March 31, 2007 in all the 23 districts of Sindh province.

According to official statistics, under ADP 2006-2007, the provincial government allocated Rs32000 million for utilisation on 4832 ongoing development schemes of District governments and 1123 ongoing development schemes of the Provincial government. Out of this Rs22261.376 million were released in all 23 districts of the province and up to March 31, 2007, Rs13255.049 million were spent by the executing authorities on the ongoing development schemes.

The district-wise allocations, releases of grants and their utilisation shows that in Matiari district, Rs148.621 million were utilised against the released amount of Rs159.942 million on 65 ongoing development schemes in the district. In Tando Muhammad Khan District, the executing authorities utilised Rs92.326 million against the released amount of Rs99.657 million on 76 development schemes in the district.

In Dadu district, the executing authorities utilised Rs367.694 million against the released amount of Rs403.296 million on 110 development schemes in the district.

In Kambar-Shahdadkot district, the executing authorities utilised Rs117.799 million against the released amount of Rs134.569 million on 137 development schemes. In Sukkur district, the executing authorities utilised Rs140.310 million against the released amount of Rs165.116 million on 485 development schemes.

In Sanghar district, the executing authorities utilised Rs227.619 million against the released amount of Rs267.961 million on 346 development schemes.

In Ghotki district, the executing authorities utilised Rs265.034 million against the released amount of Rs316.451 million on 187 development schemes in the district.

In Jacobabad district, the executing authorities utilised Rs183.879 million against the released amount of Rs219.924 million on 170 development schemes.

In Thatta district, the executing authorities utilised Rs262.643 million against the released amount of Rs327.501 million on 547 development schemes. In Umerkot district, the executing authorities utilised Rs103.408 million against the released amount of Rs132.657 million on 120 development schemes.

In Kashmore district, the executing authorities utilised Rs218.246 million against the released amount of Rs300 million on 97 development schemes in the district. In Shikarpur district, the executing authorities utilised Rs178.392 million against the released amount of Rs247.731 million on 158 development schemes. In Khairpur district, the executing authorities utilised Rs179.667 million against the released amount of Rs261.521 million on 475 development schemes in the district.

In Jamshoro district, the executing authorities utilised Rs63.079 million against the released amount of Rs91.944 million on 137 development schemes.

In Hyderabad district, the executing authorities utilised Rs97.219 million against the released amount of Rs142.994 million on 129 development schemes. In Mirpurkhas district, the executing authorities utilised Rs75.299 million against the released amount of Rs144.745 million on 225 development schemes.

In Tharparkar district, the executing authorities utilised Rs166.114 million against the released amount of Rs393.779 million on 136 development schemes.

In Naushero Feroz district, the executing authorities utilised Rs163.762 million against the released amount of Rs262.310 million on 217 development schemes.

In Badin district, the executing authorities utilised Rs134.170 million against the released amount of Rs215.720 million on 88 development schemes.

In Larkana district, the executing authorities utilised Rs90.854 million against the released amount of Rs152.594 million on 170 development schemes in the district.

In Nawabshah district, the executing authorities utilised Rs153.996 million against the released amount of Rs273.759 million on 286 development schemes.

In Tando Allahyar district, the executing authorities utilised Rs55.143 million against the released amount of Rs102.541 million on 108 development schemes.

Under Annual Development Programme 2006-2007, the executing authorities have so far utilised Rs1041.355 millions against Rs1643.690 million, which were released by Sindh government.

http://www.brecorder.com/index.php?id=563963&currPageNo=1&query=&search=&term=&supDate=


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## Neo

May 14, 2007 
*Major structural imbalances*

By S. M. Naseem

Pakistanâs economic growth continues to be celebrated among official circles, despite increasing concerns about its sustainability. The marked rise in the stock market index is once again the main cause of the euphoria, not unlike the one two years ago, whose sudden collapse remains an unresolved mystery, despite the investigation by a parliamentary task force.

While the stock market collapse of 2005 was triggered by the manipulations of a few brokers and bankers, the current stock market surge seems to be caused more by the inflow of portfolio capital particularly from neighbouring Gulf states flushed with current account surpluses following the boost in oil prices.

It has continued to feed on snowballing expectations about the future * based on the assumption that General MusharrafÂ¹s regime will continue well-beyond its current Â³mandateÂ², with the continued US support and substantial progress in its relations with India. Some of these assumptions are already being undermined by developing events, both at home and abroad. The public protests over the removal of the Chief Justice continue to gather momentum and could possibly take a sudden turn for the worse if an amicable solution of the crisis does not emerge soon.

Similarly, the pressure from the US Congress to tie future US financial assistance to Pakistan to the restoration of democracy, combating religious extremism and ensuring nuclear non-proliferation could result in a serious setback to the inflow of capital and overall economic performance, notwithstanding the best efforts of a former state bank governor and a world bank mandarin to allay these fears.

The lack of any significant progress on economic and trade issues in our negotiations with India could also serve to send negative vibes about the long-run prospects of development in the South Asian region. All these factors, individually and together, could put a brake on the current surge in investment inflows.

The economic prospects for this fiscal year are already indicating a deceleration in the rate of GDP growth, which had spurted to over eight per cent blip two years ago, is forecast to grow by 6.8 per cent this year, slower than an earlier estimate of seven per cent. That compares with an 8.4 per cent pace for Asia's developing nations and well below that of China and India, the leading dynamos of the Asian region. Thus, PakistanÂ¹s growth sustainability canât be ensured by mere reforms in macroeconomic management but also structural changes in the economy, which are much more difficult to undertake.

At a time when the economy is experiencing the worst trade, current account and rising budgetary deficits, such long-term issues need to be addressed less cavalierly than by the present regime.

The forthcoming budget is likely to focus more on short-term palliative measures to attract votes from its favourite constituencies than to address the need for investment in physical and social sector for sustaining these high growth rates.

Much is being made of the large increase in the amount of foreign direct investments (FDI)s in the last two years, just as the euphoria often spun around remittances, portfolio capital and foreign exchange reserves. However, a close look at the sources, magnitude and composition of these flows do not necessarily indicate the health of the economy or the sanguineness of their impact on the sustainability of growth. Although the FDI flows have recently taken a large jump, it is not yet certain whether this is indicative of a stable trend.

Rising from a modest $1 billion in fiscal 2001, they are expected to have reached over $3 billion in fiscal year 2005-2006. The 2006-2007 estimates are likely to increase to over $5 billion as FDI flows from Qatar and Kuwait in the power, hotel, insurance and oil refinery sectors.

The factors that have propelled the growth of FDI flows in the last two years have both domestic and external origins. On the domestic side, the main attraction of FDI has been the privatisation of a large array of public enterprises.

The major foreign factor contributing to the growth of FDIs has been the sharp rise in oil prices since 2003, which caused an unprecedented rise in the current account surpluses of the neighbouring Middle Eastern oil producing countries, especially UAE, Kuwait and Qatar, who are looking for investment opportunities in the region, primarily in the real estate sector. The oil price increase has also attracted FDIs from large oil exploration companies in the United States and Europe.

In terms of sectoral composition, the FDIs are mainly concentrated in the oil and gas exploration, financial services (including the acquisition of a domestic private bank) and communication (including telecommunications). Very little identifiable industrial investment, which is the main source of technology transfer, seems to have taken place through the FDIs.

Much of the FDIs are in the nature of addition to old capacity (Â³brownfield) FDI to privatised or acquisitioned enterprises, rather than investment in new enterprises (greenfield FDI) which have a greater developmental impact through technology transfer. The FDI inflows primarily target the domestic rather than the export market (e.g. telecommunications and real estate) and thus have a low potential for improving the balance of payments.

The outflows of profit repatriation have steadily increased over time and reduced the net flow by more than half a billion dollars. The euphoria about the increased FDI inflows needs to be tempered by these basic characteristics. Besides, continued large FDI inflows, such as those from China and other East and Southeast Asian countries are crucially dependent on three factors: an improvement in the domestic political and law and order situation, an improvement in the political and economic relations with India and, last but not least, the human development base.

A major downside of the current spurt in FDI inflows has been the complacency that seems to have crept into policy circles about the trade balance which has deteriorated sharply in the last few years. Despite its much more permissive trade and regulatory policies and a more open economy, PakistanÂ¹s export/GDP ratio lags behind those of the much larger and previously much less open economies of India and China, because of its inability to diversify its exports in the last decade or so.

While exports doubled from a little over $4 billion in 1989 to over $8 billion in 1999, they are currently hovering a little over $16 billion. Despite various cosmetic measures and grandiose plans, economic managers have been unable to make any significant breakthroughs in diversifying exports, which remains heavily dominated by cotton and cotton-based manufactures.

The textiles continue to receive ever-increasing fiscal and monetary concessions * while the share of higher and medium technology products in all exports of manufactures remains well below those of most dynamic economies of our region. These are symptoms of the Dutch disease which economic managers have been unable to combat, preferring the increasing dependence on capital inflows to greater competitiveness and diversification of exports.

The external economic imbalances, in the pursuit of high growth rates which are now under threat from a likely reduction or withdrawal of large inflows of US aid are the focal point of current economic concerns. However, the central problem of the economy are the increased domestic imbalances being created by the non-inclusive growth pattern. While poverty alleviation has been the pet theme of most donor agencies and government plans in recent years, without having made much dent into poverty incidence, the real problem facing the economy is the increasing economic inequality and polarisation in the society.

Although it is a clichÃ© to say that growth is a necessary condition for alleviating poverty, the high rates of growth being attempted to achieve, is creating conditions for widening the chasm between those privileged with the fruits of growth and those being crushed with poverty.

While data on economic growth, poverty incidence and income inequality are often doctored by the official agencies in an effort to show high growth rates and low levels of poverty and inequality, this attempt to achieve better economic performance and reduce poverty by edict is seldom successful and continues to be exposed by analytical studies.

A recent study by Dr Talat Anwar, analysing the data from household surveys held in fiscal 2001-2002 and 2004-04 shows that inequality worsened during the period.

While the richest 20 per cent of the population gained their share in total income, the poorest 70 per cent lost their share during the period. An interesting conclusion of the study on the long-term relationship of growth and inequality is that the degree of inequality has increased, regardless of the changes in economic growth.

The increasing income inequality in recent years reflects that one of its major sources is the enormous capital gains due to rising property values. The stock market has quadrupled in less than half a decade and a small number of investors have benefited from the often manipulated gyrations of the stock market.

There is a need to tap the windfall gains from both the real estate and stock market sectors, which are lightly taxed. Taxation of agricultural incomes, along with land reforms, have been put on hold, because of their assumed infeasibility on political grounds. Apart from raising questions of equity, it has also frozen the power structure in the rural areas.

An urgent need for effective reduction in poverty is of the initiation of employment guarantee schemes in rural areas. The main hindrance to the adoption of such a programme is the political capture of development funds by those allied to incumbent regimes. The basic prerequisites for the success of such a scheme are the existence of local level participatory institutions and the right to information legislation for ensuring the transparency and equity of the employment guarantee scheme

Another serious issue is the provision of public goods, especially education and health, without discrimination and differentiation relating to their economic or social situation or location. There has been a steady incursion of the private sector in the field of social services which has largely benefited the middle classes and has marginalised the poor, who have access only to the degraded public sector facilities.

PakistanÂ¹s record in meeting most of the MDGs and especially in meeting the goal of primary education for all has been one of the worst among developing countries. The MDGs do not include the goal of reducing economic equality and ensuring a common public educational system, with equal access to all, although in PakistanÂ¹s context they are among the most urgent social needs and should receive high priority.

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## Neo

May 14, 2007 
*Economy: a reality check*  

By Yousuf Nazar

SEVENTY FOUR per cent of Pakistanâs population survives on a daily income of less than Rs120 (or $2) a day according to the recently released World Bankâs World Development Indicators.

While the government uses a different definition of poverty, the international definition of extreme poverty implies daily income of less than $1 and that of moderate poverty, income of $1 to $2 a day. The percentage of Pakistanis living below the poverty line (income of less than $2 a day) is much higher compared with 58, 43 and nine per cent in Kenya, the Philippines and Malaysia respectively.

Given that 74 per cent of people survive on less than the official minimum wage of Rs.4000, it is rather hard and even absurd to argue that any one living on an income of less than the minimum wage is not poor. But that has not stopped the government from claiming a figure of 29 to 34 per cent as the one representing those who are poor.

Furthermore, since even the official inflation rate has doubled from 3-4 per cent in 2002-03 to 7-8 per cent in 2006-07, the claims about any significant poverty reduction appear to be far removed from reality because the poor are most vulnerable to inflation particularly food price inflation which has been persistently higher than the overall consumer price inflation (CPI), which remains stubbornly high at eight cent and is unlikely to come down to this yearâs original target of 6.5 per cent despite the central bankâs tight monetary policy.

The debate about the actual poverty levels points to the difficulty of commenting on the true state of the economy and development in a country where the statistics about even some key indicators like the GDP growth, employment, public sector spending, livestock and industrial production are not prepared and published on a quarterly basis; a norm in many developed and developing countries including India, Thailand and Vietnam for example. In the absence of transparent, reliable and regular flow of information, the discussions about the economy can often be quite subjective.

Most official estimates put current fiscal yearâs GDP growth to be around seven per cent, driven principally by the services sector and to a lesser degree, by livestock and wheat production. However, other economic indicators like private sector credit, exports, foreign exchange reserves, textile production, and development spending show a deteriorating overall trend that stands in marked contrast to the rosy picture being painted by the government.

The textile industry - with slowing exports, heavy debt-burdens and declining profits - is struggling against its more efficient international competitors although growing cement sales do point to a rise in construction spending. However, the electricity generation â an important indicator of overall economic activity- recorded a slower growth of 9.7 per cent during the first half of FY 2006-07 as compared with 12.9 per cent growth during the same period of last year.

Thanks to a double-digit growth in the banking, telecommunication, and oil/gas industries in FY 2005-06, the tax revenues in the current fiscal year are expected to cross their target of Rs.835 billion. However, the development expenditure for the first half of FY 2006-07 has achieved only 34 per cent of its annual target compared to 45 per cent during the corresponding period in FY 2005-06.

The defence spending appears to be flat but it is not clear how the government accounts for about Rs60-70 billion per year in defence assistance that it receives directly from the United States. On the other hand, the government has not supplied any explanation for the lower level of the development expenditure during the current year. Still, it claims that the fiscal deficit will remain within the target of 4.2 per cent of the GDP. It is possible that the development spending (including spending on higher education) has been curtailed to meet this target.

Also significant is the drop in the bank-lending growth to around three per cent in real terms. A liquidity boom, best represented by a surge in the bank lending and consumption levels, has driven the GDP growth since 2002. During the period July 2006-April 2007, the bank lending growth slowed down to 12.6 per cent in nominal terms compared to 19.8 per cent a year earlier. If one agrees that the bank lending is one of the most critical economic indicators in Pakistanâs context, the economy is likely to slow down in the next fiscal year.

The current account deficit for the first nine months of the current fiscal year has widened to $6 billion ($4.3 billion in the corresponding period last year) and may reach around $8 billion or 5.4 per cent of the GDP â its highest percentage level since 1996-97. This has been caused by 15 per cent deterioration in the trade deficit to about $11 billion during July 2006-March 2007 from $9.6 billion a year earlier, as exports growth of 3.6 per cent has fallen behind an eight cent growth in imports.

However, the record foreign direct investments of $3.9 billion during the first nine months of the current fiscal year ($2.2 billion in the corresponding period last year), $1.7 billion in overall portfolio investments ($1.1 billion last year) and remittances of $3.9 billion ($3.2 billion last year) have prevented a deterioration in the foreign exchange reserves position and have limited the depreciation of Pakistan rupee to only 0.7 per cent against the dollar since July 2006.

The stock market has hit an all time high with foreign investments setting another record of $770 million during a single fiscal year, notwithstanding slower corporate earnings growth. However, the privatisation process â a key driver of the stock market performance since 2002 - appears to have come to a grinding halt, the bidding for the sale of Pakistan State Oil Company has run into legal and other problems, and it now looks improbable that it will be privatised by the next month as was planned.

The Prime Minister and his economic managers maintain that Pakistan is all set to become an Asian tiger with the GDP growth to continue at the rate of 6 to 8 per cent or even higher in the foreseeable future. Some international institutions (some respectable and some with questionable credentials) have also come up with favourable views about the current economic situation and the outlook. Some of the Worldâs most famous and powerful investment banks have tarnished their reputations in the past by presenting rosy prospects of the issuers whose paper (company shares or bonds) they were trying to sell. It is therefore important to take note of the latest World Bank report on Pakistan (released on March 30) that maintains that the rural growth is crucial to Pakistanâs future since âtwo-thirds of the countryâs population and 80 per cent of the poor live in rural areas; unless there is sustained progress in these areas, rapid overall economic growth and poverty reduction are impossible.â

The report observes, ânot all improvements in incomes are the result of government policies or sustainable increases in private-sector productivity.â It maintains that the âimpressive gainsâ in agricultural output and real incomes of the rural poor relative to 2001-02 levels is in part a reflection of low output and incomes in that year due to drought and other adverse shocks. It points out that the longer term agricultural GDP per capita growth rate (1999-2000 to 2004-05) was only 0.3 per cent annually and much of the improvement in total incomes can be attributed to a steep rise in net private unrequited transfers from abroad (including workersâ remittances). By 2006-07, these transfers rose to more than Rs. 3,000 per person for Pakistanâs entire population, equivalent to more than two-thirds the real output of crop agriculture or livestock production. Yet, these transfer incomes may not continue to grow at the rates of recent years.

Hence, the discussions about the potential âpopulation dividendâ appear to be out of touch with ground realities. Pakistan has received a massive liquidity injection of about $50 billion in remittances, aid, debt relief, earthquake assistance and privatisation proceeds during the last five years, and a cyclical consumption boom accompanied by an extraordinary rise in the real estate prices in the urban areas has created an illusion of progress.

However, highly speculative stock and real estate booms and busts cannot enable Pakistan to compete with Indiaâs 8-9 per cent GDP growth rate. A reality check: our national primary school enrolment rate for girls is only 48 percent (42 percent in rural areas), compared to 86 percent in India. High growth rate is impossible without greater female literacy and participation in the work force. Infant mortality â a key health indicator - per 1000 live births is 82 in Pakistan (88 in rural areas), compared to only 62 in India, 56 in Bangladesh and 12 in Sri Lanka.

Another reality check: on April 27, Pakistan made a request for a loan of $17 billion from international lenders for the construction of Diamer-Bhasha, Kalabagh and Akhori dams by 2016 to âavert flood, drought and energy crisisâ according to the officials.

In conclusion, the economy is likely to slow down in 2008 onwards as the liquidity- consumption-driven growth cannot last for more than a few years and is unlikely to sustain the current growth rate in the backdrop of growing political instability, worsening energy crisis, shortage of skilled and educated workers, and a protection-addicted private sector â often lacking management depth - that is struggling to compete internationally.

The writer is a former head of Emerging Markets Equity Investments, Citigroup. yousufnazar@yahoo.com

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## Neo

May 14, 2007 
*Badly neglected and mismanaged social sector*

By Naseer Memon

SOCIAL sector has remained the most neglected sector. Riddled with bad governance, the country has been ignoring this sector. Carrying a history of wrong choices and inappropriate priorities, poverty has become an integral part of lives of a vast majority of citizens.

An analysis of budget figures from 1947 to 2,005, shows that development has received the lowest budget allocations, whereas combined expenditure on defence and debt servicing has been eating away the larger part of the pie.

During 1990-2005, the average share of health as per cent of GNP was 0.68 per cent and that of education 1.99 per cent, whereas defence spending stood at 4.6 per cent. Pakistan is ranked ninth among 117 market economies in terms of percentage of expenditure allocated to defence. Among 34 poorest economies, the country is ranked 17th in education and the last i.e. 34th in health in terms of allocations against total expenditure.

Education, health, drinking water and sanitation are major problems, yet they find the least attention of our policy-makers..

Multilateral donors have been extending loans to boost social sector allocations. However, wrong choices of decision makers, poor monitoring and regulation by donors and absence of vigilant civil society has resulted in less than desired outcomes.

The Asian Development Bank conducted an evaluation of its social sector lending of 20 years i.e. from 1985 to 2004. The report titled âSector Assistance Programme Evaluation for the Social Sectors in Pakistanâ confirms that huge loans and amounts spent did not matched the unsatisfactory physical performance..

The frequent change of governments also obviously left negative impact on continuity of policies and service delivery.

The ADB approved $11.9 billion of public sector loans for Pakistan over the 20-year period 1985â2004. At $1.9 billion, social sector approvals were 16 per cent in shape of 28 projects -- 10 educational ($470 million), five health and population ($198 million), four urban development and housing ($232 million), five water supply and sanitation ($323 million), and four multi-sector ($670 million).

The evaluation results reveal that out of 24 social sector projects assessed only eight per cent were judged to be successful and none was highly successful, with one third declared unsuccessful (33 per cent) and 58 per cent partly successful.

From a total approved amount of $1.9 billion for social sector operations, about $0.9 billion has been disbursed (excluding disbursements from approvals prior to 1985) and the remaining $1 billion being either cancelled or not yet disbursed.

The evaluation report identifies a list of causes of such poor performance of social sector loans. Some of them are as under:

There has been a general lack of meaningful government and other stakeholder involvement in project designâthe involvement that occurred was insufficient to generate ownership and commitment. This lack of engagement during design contributed to delays in effectiveness (senior government officials only focus on the project after its approval by ADB) and, ultimately, a failure to fully achieve objectives.

All projects suffered implementation delaysâthis is, in part, a consequence of the lack of government engagement during design. That delayed implementation continues to be the norm indicates that this reality is not being addressed in project design.

There is a lack of analytical underpinning and problem analysis for projects is evident in project design documents, which results in projects not always addressing the real causes of the identified problems, or not addressing them in a sufficiently comprehensive manner to achieve the desired results.

Lessons from previous projects have not been fully incorporatedâthey may be acknowledged, but significant design changes or innovations to avoid past problems are usually not made. Follow-on projects are usually designed without an evaluation of the predecessor project, despite the obvious partial success of these in many cases.

There is a lack of clarity regarding the role of ADB in project administration vis-Ã -vis that of the government, with consequent unclear accountability.

There is no meaningful external funding agency co-ordination in education sector projects beyond avoidance of the worst duplication of effort. There is a lack of clarity among all parties about what donor co-ordination means in terms of outcomes. True co-ordination can only come from the government.

Successive projects were funded to increase the number of classrooms and to train teachers. However, the existence of hiring bans made it difficult, if not impossible, to increase the overall number of teachers. Consequently, the new facilities almost always operate well below capacity.

Under the primary education (girls) sector project, 80 per cent of the funds for physical infrastructure were used but only 28 per cent of those allocated for institutional development.

With little variation similar reasons have been identified as responsible for the poor performance. Interestingly institutions like the World Bank and the ADB approve project designs and a large of amount is often pocketed by their consultants yet they do not take responsibility of design failures.

The long process of project approval provides ample opportunity to vet all the project designs. Also all operational policies of the lending agencies are strictly ensured by the implementing agencies. During the project life, several missions of lending agencies also do visit projects. Given these realities, one can not simply blame the government departments for all failures.

Some other very important factors have also been highlighted where external agencies truly have very little control and these factors are critical for project performance.

Delay in project completion, which also results in cost over run, is a major cause of less than desired delivery of social sector projects. According to the ADB report, the average extension for all sectors in Pakistan was 2.3 years, the worst of any developing member country. Social sector loans performed slightly better-yet not satisfactory--had an average extension of 2.2 years. Of the 16 social sector loans approved since 1985 that have closed, all but one required one or more extensions to the loan closing date. The average number of extensions was 2.7 with an average total time of extension of 2.8 years (2.2 years for loans outside the social sector), which represents a 48 per cent time overrun on average.

Part of the reason loan closing dates need to be extended is the very long time required for approved loans to become effective. Tedious process of project approval and post-approval activities always makes projects victim of delayed start. Across all sectors, the average time for loans that became effective over 1985â2004 was 249 days. ADB expects that loans will become effective in 90 daysâthe actual time taken for education, health and population, and water supply and sanitation loans were 333, 443, and 295 days, respectively.

Rampant corruption of all sorts is another major cause of project failures and under-performance. Bureaucracy and other vested interested have invented highly sophisticated forms of corruption. Lack of transparency and absence of institutional accountability has made this country a heaven for money makers at the cost of development of poor citizens. The ADB Project Completion Report acknowledges corruption in one the projects- the Middle School Project which suffered from financial mismanagement involving an embezzlement of $1.03 million. The recently constructed schools are already looking dilapidated with cracks in walls and ceilings, broken flooring pitted with holes and grounds left rough and underdeveloped.

According to ADB report, the informants in the health sector indicated that commission payments for securing contracts were usually of the order of 20â35 per cent although this was a general observation not linked to any project in particular. Corruption also affects the public provision of social services. Of patients visiting hospitals, 65 per cent reported irregular admissions and 96 per cent of those who were admitted said they were victims of corruption. Hospital staff was identified as the key facilitators of corruption by 65 per cent of the users and direct extortion was reported in 60 per cent of the total cases of corruption. Lack of accountability and monopoly power were quoted as key contributing factors.

These examples are merely a few examples. With this state of affairs achieving the Millennium Development Goals seems a remote possibility.

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## Neo

May 14, 2007 
*Stubborn inflation*

y Mohiuddin Aazim

Inflation, in nine months of this fiscal year, rose at an average rate of eight per cent against the full year target of 6.5 per cent. A senior official of the ministry of finance said, inflation might decline in the remaining three months. âBut it would settle around 7.5 per cent at the end of the year.â

The State Bank of Pakistan (SBP) said in its second quarterly report that overall inflation might range between 6.7--7.5 per cent. The SBP Governor, Dr Shamshad Akhtar told Dawn that average inflation might close somewhere between 7-8 per cent by year-end. (See box)

The Asian Development Bank has projected seven per cent inflation. And this projection takes into account the impact on the price-line of reduction in domestic petroleum prices in January and continued tightening of the monetary policy.

Pakistan is experiencing a high inflation not only as a by-product of a faster GDP growth but also due to rise in food prices and as a result of an expansionary fiscal policy.

Food pricesâ inflation rose 10.34 per cent in July-March FY07, against 7.37 per cent a year ago. Average inflation measured by Wholesale Price Index was 8.52 per cent during this period, up from 7.48 per cent. Since half of the increase in WPI inflation originated from higher prices of raw materials it continues to trickle down on consumer prices as well. The government would set major macroeconomic targets including that of inflation for FY08 later this month.

Official of the ministry of finance say that inflation target might be set at six per cent. But the SBP governor says it might be 6.5 per cent. However, the people would like to know, however, how the government and the SBP would contain inflation in the next fiscal year after they have failed in this task during this year.

Concerns on high inflation are growing also because low-income groups often suffer higher than average inflation. (Sometimes the trend changes âbut only briefly like it did in March 2007 when inflation for the highest income group was higher than the overall CPI inflation).

Many a time, inflation measured by Sensitive Price Index (SPI) remains higher than the benchmark CPI inflation. This also indicates that the poor suffer from higher incidence of inflation.

It is true that the government can keep the prices of essential items stable through supply-side management and administrative measures. But the tendency of the central bank to watch core inflation more closely affords the government the laxity with which it deals with the issues that directly affect prices of the items of daily use including food and fuel.

The SBP tries to keep a balance between inflation and growth rather than just ensuring price stability and it tends to take credit in keeping core inflation in check.

In practice, people are concerned with the overall inflation. And they are even more concerned about which sub-indices of CPI push up inflation. The contribution of food group was 57.4 per cent in overall CPI inflation in March 2007, up from 32.6 per cent in March 2006. This again indicates that the poor are hit harder by inflation.

In the next fiscal year, keeping food prices stable would be a key challenge for the government because there is no hope for a dramatic rise in agricultural output. And attempts to supplement local food supplies with imports would further expand the trade deficit that is already at historic highs and creating problems in balance of payments management.

For the central bank, the most important challenge in the next fiscal year would be to curb demand pressures in the backdrop of a populist budget and expansionary fiscal policy. Prime Minister Shaukat Aziz has already said the government would not only improve the pay structure of its employees but would also set a higher benchmark for minimum wages.

Moreover, further spending on resettlement and rehabilitation of the October 2005 earthquake victims and initiation of big infrastructure projects would make fiscal policy all the more expansionary. And as such, the role of the monetary policy in fighting inflation would be central.

SBP Governor Dr Shamshad Akhtar has, however, made it clear that monetary policy alone would not be able to contain the rise in inflationary pressures. Speaking at the FPCCI on April 30 she said: âThe government will need to continue to alleviate supply-side constraints because of problems of market structure and distribution system.â

She went on to say that âsuccess in containing inflation further depends on continued effective monetary management which requires minimising the governmentâs recourse to central bank borrowing, mitigating the monetary pressures arising from the surge in capital flows ensuring that these are sterilised.â

Dr Shamshad also revealed on this occasion that SBP would be launching preparatory work on inflation targeting to curb inflation more effectively. But before that there will be a need for introducing supportive legal and regulatory framework which allow for targeting inflation and for greater operational independence to the central bank.

She almost stunned the audience when she revealed that between July 1, 2006-April 14, 2007 the government borrowing from the SBP stood at Rs180 billion compared with only Rs37 billion in a year-ago period.

Officials of the ministry of finance say that the government has started reducing its borrowing from the central bank and it is now borrowing more from banks and non-bank sources. They say that this trend would continue in the next fiscal year. (On April 28, 2007, government borrowing for budgetary support from the SBP sank to Rs3 billion but its borrowing from the banking system shot up to Rs171 billion surpassing the full fiscal year target of Rs120 billion).

Officials say that National Saving Schemes (NSS) have once again become an effective tool to borrow from non-bank sources, which is least inflationary. In nine months of this fiscal year, NSS attracted net inflow of Rs44.6 billion. In the last fiscal year net inflow in NSS was Rs6 billion and a year before there was a rather net outflow of Rs50 billion.

As for checking volatile food prices, the government says it would further strengthen the concept of consumer courts and price magistrates besides offering incentives to farmers to produce more food crops. âI cannot give you the details, but you will see in the budget these and other measures that would be taken to keep inflation in check through supply-side management,â said a ministry of finance official.

He admitted that by keeping the interest rates high, the SBP has left no room for hoarding and unnecessary inventory building which was a cause for pushing inflation up in FY05 and before. âNow itâs our turn to curb hoarding through administrative measures and we are committed to doing that,â he said.

He made a quick reference to the plans for making Monopoly Control Authority a more powerful body âthat would not allow distortions in the market that do many harms and eventually lead to inflation.â

Keeping a balance between a desired level of growth within a targeted level of inflation would be a challenge in the next fiscal year for another reason.

Since Pakistan has started experiencing huge trade deficit, imported inflation would keep creeping in. And as the government would seek larger foreign exchange inflows to keep its balance of payments in shape these inflows if not sterilized efficiently, would push up inflation.

In fact, one of the reasons for inflation remaining high during this fiscal year is a build- up in net foreign assets on the back of unexpectedly high foreign exchange inflows through workersâ remittances and foreign investment. Between July 1, 2006 and April 28, 2007 NFA grew at the rate of 12 per cent showing a 100 per cent increase over its growth rate of six per cent a year ago.

Also, currency in circulation grew at the rate of 13.4 per cent, up from 12 per cent in a year-ago period. This faster growth in CiC needs to be checked effectively without which it would be very difficult for the central bank to fight inflation effectively.

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## Neo

May 14, 2007 
*More consumption, less exports*

By Sultan Ahmad

PAKISTANâS external trade deficit within the first 10 months of the financial year has soared to over $11 billion, which is 16.8 per cent higher than it was in the same period last year.

With exports inching up by only 3.36 per cent to a total of $13.3 billion in 10 months, the fear is that total deficit for the year will be $14 billion as compared to the last yearâs deficit of $12.13 billion.

Even otherwise, a large deficit of $9.4 billion was originally projected, with exports fetching $18 billion. But imports, which have been rising by 9 per cent, have given rise to the fear that the import bill may this year jump to $30 billion, leaving a deficit of $14 billion and that will be in excess of the foreign exchange reserve of $13.7 billion now.

That has resulted in a current account deficit of over $6 billion in the first nine months of the financial year, which is straining the governmentâs capacity to meet its external commitments in the short-term. The Asian Development Bank had already cautioned the government about it.

The big current account deficit is despite home remittances by overseas Pakistanis to the tune of over $4 billion and foreign direct investment to the same extent.

The State Bank of Pakistan, however, says that textile exports have grown by 10.3 per cent during JulyâMarch. So the government has allowed import of long staple cotton from India via land route-- Wagah border-- instead of sea which would have cost Rs200 more per bale. The textile industry has reasons to be happy over this development.

The Economic Coordination Committee (ECC) of the cabinet has also decided to allow gas companies to set up power plants using low BTU gas.

Trade and industry want the government to help them compete in the international market. But the government is taking it easy because of $6.5 billion foreign direct investment it expects this year and the total home remittances of over $5 billion.

The government has promised more relief to exporters, particularly of textiles. What kind of relief is provided to the exporters in the forth coming budget remains to be seen.

Earlier, the government was confident it could manage such situations because of its sizable foreign exchange reserves. The reserve could then meet eight to nine monthsâ imports but now it could meet only five to six months of imports bill, which is rather small in view of the soaring import bill.

Meanwhile, Pakistan has opened free trade agreement negotiations with Egypt, a tough customer, and Malaysia, with whom we have been having FTA negotiations, wants Pakistan to reduce heavy import duty on palm oil if the latter wants concessions in textile exports to that country (Malaysia).

You sign an FTA at a price. It is not one-way traffic but a two-way operation. But Pakistanâs basic problem is its small exportable surplus compared to its large needs. And that arises out of its small industrial base and a narrow base with its focus on textiles, and the large population with as many conspicuous consumers, added to that is the higher prices of Pakistanâs exports because of the high cost of production which reduce their competitiveness abroad. At the same time Pakistan needs a variety of imports which inflates its import bill.

The largest single item of import now is oil with its high prices. The oil import bill is expected to rise to $7 billion while the earlier estimate was $6 billion. Much of the oil is used in producing power by the government power agencies as well as the privately owned power producers.

The need for furnace oil and diesel is increasing with the 12 per cent rise in power consumption annually. If 2.3 million air-conditioners are added every year, the magnitude in the rise of power consumption is understandable.

The second item of import is machinery for industrialisation and replacement of old equipment. Lately machinery import has declined as compared to earlier years of industrial rehabilitation and expansion.

The third major item of import is industrial raw materials to feed industries mainly export-oriented industries.

Cars import alone costs over a billion dollars and it is also a major source of revenue for the government so despite falling rate of customs duty, the custom revenue has been rising.

There are also a large number of items of import to feed the demands of the expanding consumer credit. The expanding pop music industry also calls for large imports. And homes and housing societies need a great deal of imported fittings and fixtures ranging from fancy light fittings to modern water equipment.

Some of these items are smuggled into the country but more and more are coming through imports. Import of such expensive items is increasing as more and more housing societies come into existence in Islamabad, Karachi and Lahore.

Imported TV sets are getting larger and larger, in addition to a great many steel and aluminium fittings imported for such expensive housing. Most of such luxury housing accessories are acquired through quickly-earned money such as through stock exchange or real estate or through corrupt income from official deals.

What we are developing is not a real economy but a substantially phoney one marked by its glitter and glamour. The government wants this process to continue as it regards it as a process of continuous growth and does not want to arrest it.

When it comes to foreign direct investment, not only the profits are repatriable but also the capital should be well spent and the country should gain by that to make such repatriation easy.

It is imperative now that the industrial base should be broadened and industrial production increased manifold, using mostly indigenous raw materials. The frenzy for consumption should come down, and the focus should shift to production.

Conspicuous consumption should be discouraged in a country in which, according to official figures, 25 per cent of the people live below the poverty level of a dollar-a-day.

We have a large population and there is not enough for consumption for all unless we produce far more than we do now.

http://www.dawn.com/2007/05/14/ebr11.htm


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## Neo

May 14, 2007 
*Social relief fund for the poor*

By Sabihuddin Ghausi

The Sindh government is setting up a Rs70 billion Pension Fund, Rs50 billion General Provident Fund and a Rs40 billion Social Relief Fund to finance income-generating projects for the poor.

âWe have already made a substantial headway in achieving all this'', a senior official of the government revealed while disclosing that more than Rs22 billion have been squeezed out from the last three yearsâ budgets including the current 2006-07 to set up these three funds.

Under its Accelerated Debt Retirement Programme, the Sindh government in last four years adjusted

Rs15.58 billion cash development and market loans. Only recently in April this year, it retired Rs5.81 billion debt from its cash balance. About Rs1 billion interest has been paid in debt servicing. Not only that Rs1 billion is being saved on account of debt clearance, the Sindh government is earning about Rs1 billion a year from parking of Rs22 billion fund in various banks at competitive rates.

The officials are confident that they would clear Rs28.6 billion remaining CDLs in next four or five years from the foreign loans expected to be flowing in for various mega projects. While these foreign loans will add to the liabilities to the level of discomfort, the Sindh government wants to create fiscal space in the future budgets by clearing CDLs and setting up funds to pay pensions and provident funds.

``A Pension Fund of Rs11.3 billion has already been instituted'', the official said while disclosing that a high level committee headed by the Chief Secretary and several secretaries with representatives the from Securities Exchange Commission of Pakistan and the National Investment Trust has been formed. The government received 15 bids in response to the invitation for expression of interests. .

The committee will examine the bids to appoint a fund manager. The idea is to have an independent pension fund for which the target is Rs50--70 billion, he said. The government squeezed out Rs3 billion from the current budget and plans to take out Rs5 billion every year from the future budgets. In the meanwhile, the government is preparing a directory of all the retired employees.

The officials are also taking on priority basis, the task of setting up a General Provident Fund. So far Rs4.5 billion have been provided for this fund but the officials want to raise amount up to Rs50 billion. The income to be generated from this fund will be utilised for payment of provident fund to the employees who retire. Independent fund manager/managers will be appointed for the purpose.

The Social Security Relief Fund is a new concept being introduced as a poverty alleviation programme. In last two years, the government has earmarked Rs6 billion for this programme while the target is to create a fund of Rs40 billion. A high level committee will manage and administer the fund.

Not only this, the government has started looking after health care of its Karachi secretarial staff by entering into an agreement with a foreign insurance company. ``We will gradually extend this coverage to all parts of the province'', the official said.

While the ambitions are high and the goals lofty, the affairs are going do not seem to be very encouraging. After an investment of Rs53 billion (Rs35 billion by Sindh government plus Rs18 billion from the federal government) in development programme in the province during the current fiscal year, people continue to die of cholera and water-borne diseases, rains inundate cities and villages because of lack of drainage, the number of school-going children remain pathetically low, poverty is too gruesome in rural areas, unemployment is high and law and order is gradually assuming proportions that threatens the social stability Sindh's senior minister Syed Sardar Ahmad in his budget speech in June 2006 had disclosed investment of Rs117 billion in development of the province in last three years of which Rs53 billion came from the federal government. It means that over the last four years-2003-04 to 2006-07 about Rs170 billion has been invested in Sindh. For last four years the Sindh government has given up the practice of releasing a report of budget and economic analysis.

At the beginning of the year, it was claimed to usher in a `white revolution' in the rural areas by promoting livestock and dairy farming. At the end of the day, the prices of milk in Karachi has shot up to Rs34 a litre from Rs28 a year ago, mutton Rs260 a kilogram from Rs220 a kilo and beef about Rs200 a kilogram from Rs140 a kilo.

âDevelopment investment takes time to give results in terms of economic benefits, service delivery and improvement in agricultural and industrial output'', a senior official remarked when asked, `where has all the money gone, he claimed that many abandoned school and dispensary buildings in the rural areas have been put to proper use. Teachers have been recruited, students are being provided with a set of books and a free meal at selected places and medicines are being supplied to the dispensaries and hospitals.

âWe have released bulk of the budgeted development funds to the relevant departments and to the districts'', an official said who was unable to explain the utilisation and implementation status of development schemes. A conversation with the officials brought forth that the ruling coalition has managed to bring about some order in sharing of development funds. In the year, 2003-04 and then in 2004-04 the politicians demanded more funds. For this many new schemes were taken up. So much so that 46 per cent of funds went for new schemes and the remaining for the on going schemes.

The World Bank in its report took a notice of dispersal of funds in many new schemes. In the current fiscal year now approaching its fag end, the officials claim that the 75 per cent of the development funds have been allocated to ongoing schemes with more focus on those that are close to final stages of completion and only 25 per cent for the new schemes.

However, political leadership has preferred to remain silent on budgetary and development issues of the province. For the whole year, there has been no official briefing on the review of Rs32 billion annual development programme for this year. There was no explanation as to why Rs32 billion ADP is being expanded to Rs35 billion to accommodate Karachi's Nazim demand for money for certain priority projects. The Rs35 billion has two components. It has Rs8 billion development outlay for 23 district governments and Rs27 billion for the provincial government.

Many district Nazims come from the traditional feudal families. They have their own set of priorities which are to construct roads, irrigation facilities and other projects that benefit them directly or their families and their supporters. The collective interest of the poor people does not figure in their agenda and their political opponents are denied the benefits of irrigation water, electric supply and other facilities.

All said and done, the government is closing the year 2006-07 with a note of satisfaction as it has a cash balance of about Rs15--20 billion after having released all funds for the development. It even met on its own Rs3 billion increase from Rs32 billion to Rs35 billion of the ADP.

Except for tax on agricultural income, hotels and on electricity, the provincial government collected almost 92 per cent of budgeted revenue of over Rs15 billion. The provincial government set a farm income tax revenue target of Rs450 million against which the Board of Revenue mopped up hardly Rs83 million in first eight months. Officials are confident of recovering about Rs150 million in April and May to collect a total of about Rs300 million.

Not only that landed gentry is not paying taxes but is also showing no inclination to pay for the irrigation water being used by them. Against a target of Rs550 million for the entire year, the government collected about Rs160 million in first eight months. Irrigation is one department which is heavily subsidised by the public money. But overall, the non-tax revenue collection of Sindh has remained satisfactory. From a budgeted target of Rs6.70 billion, the provincial government has recovered 74 per cent or Rs3.3 billion.

The planners are now engaged in preparing about Rs210--215 billion budget for the next fiscal year in which the annual development outlay is likely to be around Rs40 billion. Unlike Punjab, where Punjab Development Forum provides an opportunity to bring donors, economists, politicians, civil society on a platform to air views on budget making, Sindh does not have such a platform.. In fact there is no attempt from government to seek views of the business, trade unions, economists, opposition political parties and legislators and civil society.

http://www.dawn.com/2007/05/14/ebr10.htm


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## Neo

May 14, 2007 
*The flip side of the economy*

By M.Ziauddin

President Musharraf kicked off the budget season by announcing earlier this month that the revenue collection target for the next year should be Rs1 trillion and that the aim for next 10 years is to cross the mark of Rs4 trillion.

He did admit that the tax-to-GDP ratio was low but hoped that current yearâs target of Rs835 billion surpass the Rs900 billion mark.

The president said that the Public Sector Development Programme (PSDP) had gone up to Rs415 billion last year from a mere Rs70 billion indicating perhaps that next year the PSDP would perhaps be more than the Rs500 billion.

Earlier, in April, Prime Minister Shaukat Aziz claimed that Pakistan's per capita income will cross $1000 next year. It was $847 last year, and is expected to be around $950 this year. According to his estimate, nearly 13 million people have been lifted out of poverty, out of which almost 11 million belong to rural areas.

However, it would not be out of place here in this budget season to have a look at the flip side of the coin as well in order to test the above claims and optimistic assertions for the benefit of the authors of the next yearâs budget.

The rural poor: According to a latest World Bank report released in early April unequal distribution of land and access to water for the rural poor limit the scope for agricultural growth alone to rapidly reduce poverty in rural Pakistan. Around 35 million people in rural areas remain poor, representing about 80 per cent of the poor.

The report says, Pakistanâs rural non-farm sector faces numerous constraints, particularly related to access to credit and inadequate infrastructure. According to the 2000 Agricultural Census, only 37 per cent of rural households owned land, and 61 per cent of these land-owning households owned less than five acres. Access to usable water is also unbalanced. Because of this skewed distribution of ownership and access to productive assets, much of the direct gains in income from crop production, particularly irrigated agriculture, accrue to higher income farmers.

In most of rural Pakistan, the impact of agricultural growth on rural poverty is limited for two reasons. First, much of the gains in rural incomes are spent on urban goods and services. Second, growth-linkage gains to non-agricultural incomes and employment in rural areas are shared among a large number of rural poor.

The report says that a major reason for the limited impact of rural development efforts is a lack of participation and influence of rural poor households. This limits effective demand for public services and reduces the efficiency in development programmes. Although inclusive economic growth should be the main mechanism for reducing poverty, increased social protection efforts are needed to protect the most vulnerable.

The benefits of broad economic growth trickle down very slowly when the poor have little access to key physical, social, and financial endowments. To overcome highly unequal distribution of these endowments and achieve rapid pro-poor growth, poor people need new opportunities to organise, to generate business, and to link with mainstream development activities.

The real economy: And in order to understand what is happening on the front of the real economy as opposed to the one which is shaping into a bubble one needs to go through an internal report of an international investment bank in early March.

The recent upsurge in FDI, according to this report, is comprised mainly of merger and acquisition (M&A) activity in the financial, telecom, and consumer (FMCG) sector. However, in the longer term prospects it would be unlikely for the current quantum of M&A-driven inflows to be sustained. In one or two cases, the gross inflow is likely to be soon followed by lumpy outflows, as offshore entities repatriate their share of profit/capital as major share holders.

Another important contributor to the recent accretion in foreign exchange as been a sharp increase in portfolio inflows ($557 million between July 2005 to end-February 2007, according to SBP data). The rising stock of portfolio investment is potentially adding to the vulnerability of the external account, by exposing it to âsudden stopsâ. Portfolio flows can be capricious, as painfully underscored by the price action in global equity markets over the past month.

In the longer run, the fact that FDI inflows are concentrated in the services sector-as opposed to manufacturing âposes a challenge. Unlike FDI in the export sector, which can be expected to generate a stream of foreign exchange inflows over the life of the project, foreign investment in non-tradable services generally produces a one-time inflow, followed by steady outflows on account of profit/capital repatriation.

The report said that with the rise in privatisation-related inflows as well as cross-border M&A activity, foreign exchange payment liabilities to foreigners are being created. Under the base case forecast for the external account, we expect profit repatriation by foreign-invested enterprises (FIEs) to increase from $443 million in FY06 (actual) to over $1.1 billion in FY8, and to approximately $1.5 billion by FY10.

â Finally, two potential sources of payment stress in the 1-2 year horizon that need to be factored in include the resumption of servicing of debt rescheduled under Paris Club-III (an incremental $430 million in FY08), and the scheduled end in 2008 of safeguards against Chinese textile and apparel imports imposed by the US and EU. The latter development could pose a further challenge for Pakistan's textile and clothing exports,â said the report.

The bubble: So, the economy is growing at the rate 6.5-7 per cent and the per capita is increasing so robustly actually on the flows of foreign aid, mergers and acquisitions, remittances, telephony, real estate and the stock market. Nothing is happening on the front of real economy except capacity production of white goods and four and two wheelers which are being sold to mostly lower-middle income group consumers on costly credit whose ability to repay is highly doubtful threatening them with bankruptcy all the time.

And at the same time, both budgetary deficit and current account deficit are expanding at unsustainable rates. Investment rates are stagnating at around 16 per cent while exports have been hovering around 11-12 per cent of the GDP for the last five years. And the export economy is still dependent on just one itemâtextile. This is the reason why the foreign exchange reserves have fallen to the level of four months of import bill. And very soon, they are going to go further down and rapidly as expanding dividends and profits start getting repatriated by those who have set up mobile telephony and banks and bought financial institutions and the rescheduling bonanza comes to an end.

Meanwhile, the power and water shortages are going to start impacting adversely more seriously both on our agricultural production and industrial potential.

The military-led government has been promising the nation scores of mega water, power and other infrastructure projects since it took over some seven years ago. But so far neither has it been able to add one single megawatt of electricity to the already existing capacity, nor has it resolved the looming water crisis. So, in the years ahead the import bill is expected to go up steeply as more and more oil and gas will needed to be imported to power the wheels of industry and pump out water for irrigation which are threatened with shut down as supplies of both water and power outstrip even the existing demand.

http://www.dawn.com/2007/05/14/ebr16.htm


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## Neo

May 14, 2007 
*Strategy for reducing poverty*

By Dr Mahnaz Fatima

Does the federal budgetary exercise conducted every year with great fanfare mean anything for the countryâs poor?

With almost 45 per cent of total expenditure going towards defence and debt servicing, another over 44 per cent towards development expenditure, grants, and subsidies, there is just nine per cent that goes towards general administration that includes law and order, social, economic, and community services. Almost 89 per cent expenditure is allocated for creating an enabling and a conducive production climate with less than nine per cent aimed directly at the uplift of the poor.

Direct beneficiaries of the production climate that the budget focuses on are the upper income groups whose lot is more a function of budgetary outlays as compared to that of the poor who are expected to wait for the âbenefits to trickle downâ to them at an unknown point in time in the future. The government insists that their strategy is pro-poor growth and has benefited the poor which assertion requires closer examination to assess the effectiveness of the pro-poor growth slogan.

The policy makers are all out to prove that with their less than nine per cent federal expenditure on social, economic, and community services and some âtrickle down effect,â the poverty picture has improved. According to official estimates, percentage of population below the poverty line has declined from 34.46 in 2001 to 23.9 per cent in 2004-05, that is, a decrease of 10.56 percentage points. Rural poverty decreased by 11.16 percentage points and urban poverty by 7.79 percentage points, according to official claims. While the above may look encouraging on the surface, it is important to know the poverty line that cuts off the poor from the non-poor. The latest inflation adjusted poverty line is Rs878.64 per adult equivalent per month (Pakistan Economic Survey[PES] 2005-06). For an average household size of 6.55, it may translate approximately to Rs5755 per month. Who would believe that an income of Rs6000 per month for a family of 6.55 would lift them out of income poverty or private consumption poverty?

It does not matter whether the officially defined poverty level is 34.46 or 23.9 per cent for as long as the percentage of population between the official poverty line and the poverty line above which the people would actually be lifted out of consumption or income poverty is unknown. That is the percentage of population with monthly household incomes roughly between Rs5755 and Rs15000 needs to be known, failing which, our poverty estimates will be grossly under estimated. Even at Rs15000 per month, a household of 6.55 will barely get by. There is actually a sea of poverty with whose severity cannot be reduced no matter how much the volume is scaled down in imagination for rosy paper presentations.

Before yet another attempt is made to force fit the reality to what might be desired on policy paper, it is important to take a look at the Household Integrated Economic Survey (HIES) 2004-05 used to support poverty estimates. Its sample of 14706 households is considered ârepresentativeâ in a country with almost 23.5 million households (population of 153.96 million and average household size of 6.55). That is, HIES was based on 0.06per cent households in the country when there were about 8.0 million poor households with poverty level above 34 per cent population. That is, a study of only 0.18 per cent poor households can hardly be used to generalise for the whole country. If poverty for countryâs 0.18 per cent poor households has reduced by almost 11 per cent, it cannot be deduced that poverty has also reduced for all the remaining 99.82 per cent poor households also.

For, what is true for a part may not be true for the whole. To conclude improvement in the poverty picture on the basis of only a small fraction of countryâs households is to commit fallacy of composition that will not help the reality on the ground even if it makes one look good for a short period of time. People are quick to detect the actual situation as the World Bank too is now beginning to see.

Small percentage of total expenditure is not likely to make a real dent into poverty that not only remains visible to the naked eye but is also not ruled out by an analysis of figures presented officially.

According to the household survey figures presented in the PES 2005-06, the richest 20 per cent spent almost thrice as much on food in 2005 as was spent by the poorest 20 per cent. Even then the food expenditure of the richest 20 per cent increased by 19 per cent from 2001 to 2005 whereas that of the poorest 20 per cent gained 11.6 per cent in food consumption expenditure during the same period. In fuel and lighting, the richest 20 per cent gained 20.9 per cent during 2001-2005 whereas the poorest 20 per cent gained only 5.7 per cent during the same period.

The expenditure on personal care articles/service, clothing, and education decreased for the poorest 20 per cent during 2001-05 whereas expenditures on the same heads increased significantly for the richest 20 per cent during the same period. The only head under which the expenditure of the richest 20 per cent decreased during the period 2001-05 was medical care whereas expenditure on medical care increased by 14.6 per cent for the poorest 20 per cent during the same period. This may indicate the state of health that may have improved for the richest 20 per cent due to their better living conditions and quality of life as compared to that of the poorest 20 per cent.

The above shows a rich-poor gap not likely to close in the near future. There is an attempt to touch the tip of the multi-dimensional poverty pyramid by increasing consumption expenditures on basic necessities such as food, clothing, education, and personal care items. While the situation of 99.82 per cent poor households is not even known, the situation of 0.18 per cent poor households gauged does not show improvement on all fronts that it should without which the possibility of sinking back below the officially defined poverty line remains high.

Important question is whether poverty reduction is a mere function of social, economic, and community expenditures? If yes, a lot more needs to be spent to bring all the poor households above the poverty net. Financial resource mobilization would then remain an even more huge task. While tax evasion needs to be plugged that remains a daunting challenging, horizontal equity in taxation structure is long overdue. Agriculture contributes 22.5 per cent to GDP but its share in taxation is ridiculously low at 1.2 (PES 2005-06). Wholesale and retail tradeâs share in GDP at 18.6 per cent is higher than that of manufacturing at 17.9 per cent (PES 2005-06).

While manufacturingâs share in taxes is 62.2 per cent, that of wholesale and retail trade is only 2.8 per cent (PES 2005-06). Transport, storage, and communication also contribute disproportionately less in taxes as compared to their share in GDP. These inequities in taxation need to be removed on a war footing failing which the financial resources needed to address social, economic, and community issues of the poor will remain unavailable.

Poverty is not an issue that can be addressed through borrowed money. Also, poverty is not an issue that can be addressed on a sustainable basis by only pouring money into the segment without building capacity of the poor to generate own incomes. This virtuous cycle requires government intervention also through an earnest attempt to reduce asset poverty of the poor. Without land to the small farmer and extension services aimed at building small peasantsâ resources and capabilities, asset poverty will remain. It will keep feeding back into their income and consumption poverty that cannot always be addressed by constantly replenishing their incomes from national resources â internally generated or externally funded.

Prophet Muhammad (PBUH) had himself made an axe from an income-poor manâs hidden asset and encouraged him to use the axe to generate income instead of asking for financial help. The poor manâs income had thus increased manifold and the Prophet (PBUH) had said that that was the best form of life. Lesson for us is that asset distribution and availability remains at the centre of a sustainable poverty reduction effort.

And, land assets might be aplenty and under-unutilised in rural agricultural sector whose equitable distribution require a definite resolve to kick start a poverty reduction programme to address poverty issues meaningfully. Otherwise, attempts to make a poverty situation look good only on paper will remain a hard sell internally as well as externally.

http://www.dawn.com/2007/05/14/ebr13.htm


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## Neo

May 14, 2007 
*Robust corporates keep investors in the arena*

THE Karachi Stock Exchange 100-share index last week confidently stood well above the recently broken psychological barrier of 12,000 points despite some massive jolts in between as positive news on the corporate front did not allow investors to leave the arena.

Leading bulls assisted by some foreign investors are eyeing the widely speculated index level of 14,000 points during the next couple of weeks if all goes well with the Saturdayâs massive rallies by lawyers and the MQM in a highly charged atmosphere.

According to some leading foreign investors, oil, bank and cement shares at current levels still provide them attractive bait for enhanced capital gains as well as are ideal for long-term investment.

Despite early week massive shakeout caused by fear of imposition of emergency, the share market managed to pull itself out from the initial lows but failed to make further gains as widely speculated, owing to sudden change in the backgrounds leading to the absence of foreign investors.

After official denial with regard to imposition of emergency, the market did recover from the early lows and sustained the index level above the barrier of 12,000 points, but bull-run faded under the crossâcurrent of negative news.

The KSE 100-share index managed to finish well above its weekly low of 12,079.75 at 12,367.62, off 144.46 points on strong mid-week short-covering at the lower levels, trading volume showed a sizable contraction. The market capital also suffered a fall of about Rs42 billion at Rs3,601 billion. The KSE 30-share index was off 293.01 points at 15,663.38.




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âThe sanity to stock trading is expected to return by next week as some of the steps taken by the Supreme Court to defuse the prevailing tension between the contenders of power on the judicial crisis are expected to reduce the tensionâ, a leading analyst Hasnain Asghar Ali, said.

Although the corporate results season for the quarter ended March 31, is over, but investors are lining up stocks of those companies whose board meetings are due, higher capital gains being the motive behind the fresh covering.

Oil, bank, cement and leading shares on some other counters are expected to lead a decisive recovery beyond the index level of 12,000 points possibly by next week.

The chief inhibiting factor behind the relative slow down in the share trading was fears linked to the Supreme Court Chief Justiceâs arrival in the city and MQMâs rally on the same day and rumours of violence.

But as far as corporate fundamentals are concerned they are positive and the market is capable of resuming its upward drive beyond the recently established all-time peak index level of 12,512.08 by next week if all goes well with the Saturdayâs rallies.

Earlier, the KSE index crashed from the recent all-time high of 12,512 points by 432.33 points or 3.43 per cent at 12,079.75 points on massive selling triggered by fears of imposition of emergency and that the SECP has sought rationale behind the proposed increase in CFS limit.

It was the current yearâs biggest single session plunge but not all-time lower as it has had already fallen by 468 points in March 2005 crash and 491.02 points or 4.43 per cent on March 8, 2006 on selling fuelled by tax on shares.

But what seems to have accelerated the pace of early panic selling was heavy unloading by foreign investors on the perception that massive welcome to the Supreme Court Chief Justice during his Saturdayâs Lahore visit could lead to political uncertainty.

âIt was, however, not a single factor behind the market plungeâ, analyst Ahsan Mehnati said adding a hint by the prime minister about imposition of emergency had also contributed to the fall.

But some others said it appears to be brokersâ manoeuvering or a silent protest to SECP refusal to accept their demand for the increase in the existing CFS ceiling of Rs55 billion to Rs65 or Rs70 billion to meet the growing market demand.

All the leading base shares fell in unison under the lead of OGDC, National Bank, Pakistan Petroleum, D. G. Khan cement, and Bank of Punjab but most of them recovered and some even higher from early lows on strong short-covering at the lower levels.

Forward Counter: Barring Nishat Mills and some others, which managed to finish modestly higher on active short-covering, all leading shares fell on profit-selling.

Leading among the losers were OGDC, Pakistan Oilfields, Pakistan Petroleum, National Bank, MCB, Bank Alfalah and Fauji Fertiliser Bin Qasim.âMuhammad Aslam

http://www.dawn.com/2007/05/14/ebr17.htm


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## Neo

May 14, 2007 
*Investments of scheduled banks increase by Rs47 billion*

On May 9, the State Bank of Pakistan raised Rs19.51 billion through the auction of 3, 6 and 12 month T-bills. The SBP had set a target of Rs15 billion.

According to the Statement of Affairs of the State Bank of Pakistan, for the week ended July 2April 28, 2007, both notes in circulation and those issued decreased in the week. Notes in circulation stood at Rs882,947.379 million against earlier weekâs figure of Rs890,260.950 million, a fall of Rs7,313.571 million. When compared to the corresponding week a year ago when it was Rs783,483.478 million, the current weekâs figure is higher by Rs99,463.901 million.

Total notes issued also decreased in the current week over preceding weekâs level. At Rs883,146.782 million it was smaller by Rs7,217.624 million over the figure of Rs890,364.406 million recorded a week earlier. In the corresponding week last year it amounted to Rs783,656.834 million, which shows current weekâs figure to be higher by Rs99,489.948 million over last yearâs corresponding figure.

Approved foreign exchange increased in the week to Rs601,012.279 million or by Rs7,623.254 million over preceding weekâs figure of Rs593,389.025 million. When compared to the corresponding week a year ago, when the figure was Rs536,378.400 million, the current weekâs figure is higher by Rs64,633.879 million.

Balances held outside Pakistan in approved foreign exchange declined in the week under review. It stood at Rs125,611.001 million over preceding weekâs figure of Rs131,523.808 million, a fall of Rs5,912.807 million. Compared to last yearâs corresponding figure of Rs132,237.907 million, the current weekâs figure is smaller by Rs6,626.906 million.

Loans and advances of scheduled banks to the three sectors â agricultural, industrial and export showed a mixed trend in the week under review. The agricultural sector received Rs60,183.529 million, similar to preceding weekâs figure. The current weekâs figure is smaller by Rs1,467.394 million over last yearâs corresponding figure of Rs61,650.923 million.

There was an inflow of Rs41,776.558 million to the industrial sector during the week under review, a rise of Rs73.693 million against preceding weekâs figure of Rs41,702.865 million. When compared to last yearâs corresponding figure of Rs6,113.726 million, the current weekâs figure is higher by Rs35,662.832 million.

The export sector received Rs138,363.958 million against previous weekâs figure of Rs137,844.206 million, a rise of Rs519.752 million. Current weekâs figure was larger by Rs29,333.844 million over last yearâs corresponding figure of Rs109,030.114 million.

According to the weekly statement of position of all scheduled banks for the week ended April 28, 2007, deposits and other accounts of the scheduled banks stood at Rs3,177.075 billion, higher by Rs17.586 billion over preceding weekâs figure of Rs3,159.489 billion. Commercial banks deposits showed a rise of Rs17.561 billion over the week to Rs3,165.922 billion, against preceding weekâs Rs3,148.361 billion, while of specialized banks it fell by Rs0.025 billion to Rs11.153 billion, over previous weekâs Rs11.128 billion.

Borrowings by all scheduled banks increased during the week over preceding weekâs figure. It rose to Rs426.994 billion over preceding weekâs figure of Rs408.218 billion, a rise of Rs18.776 billion. This was primarily due to an increase in the borrowings by commercial banks, which rose to Rs344.073 billion against previous weekâs Rs325.025 billion, or by Rs19.048 billion, while borrowings by specialised banks stood at Rs82.921 billion, against preceding weekâs figure of Rs83.193 billion, showing a decline of Rs0.272 billion.

Gross advances stood at Rs2,387.597 billion in the week under review, an increase of Rs11.328 billion over preceding weekâs figure of Rs2,376.269 billion. Advances by commercial banks rose to Rs2,293.356 billion against earlier weekâs figure of Rs2,282.064 billion, or by Rs11.292 billion, while of specialized banks it stood at Rs94.242 billion against preceding weekâs Rs94.206 billion, showing a rise of Rs0.036 billion.

Investments of all scheduled banks increased in the week by Rs47.468 billion to Rs1,022.787 billion against preceding weekâs figure of Rs975.319 billion. Commercial banks investment rose to Rs1,012.484 billion, from earlier weekâs Rs964.716 billion, higher by Rs47.768 billion, while of specialized banks it stood at Rs10.304 billion against previous weekâs Rs10.602 billion, lower by Rs0.298 billion.

Cash and balances with treasury banks of all scheduled banks decreased by Rs5.968 billion during the week to stand at Rs320.915 billion against earlier weekâs Rs326.883 billion. The figure for commercial banks stood at Rs318.716 billion against preceding weekâs figure of Rs324.725 billion, a fall of Rs6.009 billion. For specialised banks there was a rise of Rs0.041 billion to Rs2.199 billion, against earlier weekâs figure of Rs2.158 billion.

Total assets of scheduled banks stood at Rs4,297.101 billion, higher by Rs45.314 billion, over preceding weekâs figure of Rs4,251.787 billion. Meanwhile, commercial banks assets stood at Rs4,185.388 billion, higher by Rs45.693 billion over previous weekâs figure of Rs4,139.695 billion. Specialized banks assets fell by Rs0.379 billion to Rs111.713 billion against previous weekâs Rs112.092 billion.

http://www.dawn.com/2007/05/14/ebr18.htm


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## Neo

May 14, 2007 
*Power shortage will grow to 2,500MW in 2 months*  

By Khaleeq Kiani

ISLAMABAD, May 13: The current spate of energy shortage would more than double to 2500MW in the next two months and the deficit would remain unmet even in the coming winter when demand for power falls drastically.

There will be no let-up in the load-shedding â described as load management in official jargon â both in summers and winters although it will fluctuate between 1400 to 2500MW beyond 2008-09. This shortage would prevail despite significant investments in system rehabilitation and load-management practices. The crisis may subside in financial year 2009-10.

This has been estimated by the government and Water and Power Development Authority (Wapda) on the basis of economic growth rate of 7-8 per cent and after taking into account planned investments for power generation and system improvement over the medium term.

Background discussions with government officials on these projections suggest that next capacity addition will be in January 2008 when two public sector projects of 80MW each start commercial operation. This (160MW) will be the only improvement in capacity throughout the financial year 2007-08 although demand during the period is likely to surge by more than 1000MW.

The household power consumers are currently facing a load-shedding between two to four hours in cities, except some posh areas, and up to eight hours in rural areas, like parts of Azad Kashmir and interior of Punjab and Sindh. This is in addition to business closure after sunset, staggering of industrial activities and use of tube-wells in the night.

Estimates put the shortage at 1320MW in June this year, rising to 1430MW in July before peaking at 2400MW in August. The shortfall will come down to 800MW in October but will rise again to 1360MW in November-December and cross 1800MW in January next year.

The government expects that a total of 22 projects -- both in public and private sector -- would start production during September 2008 to June 2009 to enhance generation capacity by 4700MW that would take total installed capacity to 22400MW. As a result, November and December of financial year 2008-09 would be the only time when there will be no power shortfall. But in January 2009 there will again be a shortfall of 1520MW that will subside to 330MW in June 2009.

These projections suggest that there will be no shortage during July 2010 to June 2011 because of about seven projects with a generation capacity of 1180MW would come into commercial production during September 2009 to June 2010. However, there would again be major energy shortfalls -- rising from 600MW in July 2011 to 2000MW in July 2013 and staying there throughout the financial year 2013-14.

The government expects that a 1000MW project based on imported coal would come into production in June 2012, followed by Kalabagh dam that would start producing about 2400MW of electricity in July 2014. Among the major projects, Kalabagh dam will be followed by 969MW Neelum-Jhelum Project in July 2015 and then 2250MW of Bhasha dam in January 2016. Bunji power project with an expected capacity of 2700MW would come on stream in December 2016.

By December 2016, Pakistanâs total generation capacity would reach 43,300MW and the country will have a surplus capacity of more than 3000MW provided all the plans envisaged for completion in the next 10 years are materialised.

http://www.dawn.com/2007/05/14/top7.htm


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## Neo

*Growth without equity*

While the worsening economic indicators are signalling a slowdown, the government has pitched the GDP growth rate at 7.2 per cent for the next fiscal year. The second Poverty Reduction Strategy Paper stipulates growth in excess of seven per cent over a five-year period. The economy has expanded on rising investment, surging exports (up to December 2005) and a significant increase in consumer spending, facilitated by easily available cheap bank credit and a rising inflow of remittances. But for the remittances, there are visible signs of reversible growth trends in these areas. In the first ten months of this fiscal year, private sector credit expansion dropped sharply to 12.6 per cent from 19.8 per cent in the corresponding period last year. Demand for fixed investment (creation of new industrial capacity) remained subdued. Unless the real sector problems are addressed, bank credit may be made to carry more than normal banking risks. With a dismal savings rate, also eroded by a high rate of inflation (currently at eight per cent) and a sharp rise in interest rates, consumer financing is becoming a more risky business for lenders as well as borrowers. Debt-default cases are on the rise. Consumer spending with low savings is turning out to be a short-term option. Finally, export growth has plummeted to 3.6 per cent this year.

Export-oriented industrialisation has suffered under a faulty foreign trade policy. With production lagging behind domestic demand, shortages are met through huge imports â estimated at $30 billion this year â that provide jobs to foreigners and make a negative contribution to the GDP. The surging trade and current account deficits are met by capital and financial inflows that include $1.7 billion portfolio investment or hot money. Foreign direct investment is not export-oriented and remittances of profits and dividends are going up. The pressure on the overall external sector is mounting. To boost the GDP growth rate, the government reportedly plans to increase development spending to Rs500 billion from the current yearâs Rs415 billion. But the pace of fund utilisation is slow and only 34 per cent of the annual financial target was achieved during the first half of the current fiscal year as compared to 45 per cent last year. The tardy pace of implementation of foreign-aided projects locks up substantial sums of money. Delays and cost overruns widen the gap between the financial and physical targets. Often the planning, designing, implementation and monitoring of major development projects is faulty.

In the absence of governmental reforms, the delivery system is pretty weak. Although the poverty reduction strategy stipulates pro-poor growth, the yawning gap between the poor and the rich is widening despite a high growth rate over the past four consecutive years. The governmentâs failure to recognise that it is the source of economic growth â whether production is driven by technology that creates redundancies or if it is labour-intensive which creates jobs â that determine how the fruits of economic development are shared. A high growth, though important, can be without equity in the current development phase that tends to weaken the trickle-down effect and promotes social exclusion. It is time to consider using development with social indicators as the yardstick to measure social and economic progress. In the long term, growth without equity is neither economically nor politically sustainable.

http://www.dawn.com/2007/05/14/ed.htm#1


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## Neo

*Rs 2.1 trillion outlay for next budget worked out *

ISLAMABAD (May 15 2007): The government on Monday worked out an outlay of Rs 2.1 trillion for budget 2007-08, and set a target for Central Board of Revenue (CBR) of Rs 1.12 trillion of tax collection at a meeting held here. PM's Adviser on finance Dr Salman Shah was in the chair.

The senior officials of Finance, Water & Power, Commerce ministries; Central Board of Revenue (CBR), Planning Commission, Economic Affairs Division (EAD) and other ministries and divisions attended the meeting.

Sources said CBR Chairman Abdullah Yousaf gave a presentation to the meeting on revenue collection of the first 10 months of the current fiscal year and conveyed that the CBR may cross the target of Rs 835 billion by June 30. He said that projected revenue collection target of Rs 1.12 trillion for the next fiscal year was achievable subject to inclusion of some new areas in tax net.

Sources said Dr Salman Shah hinted at positive response to the CBR call for bringing the new areas under tax in the forthcoming budget. He said the matter will be discussed at the highest level before giving it final shape for announcement.

The meeting also reviewed Public Sector Development Programme (PSDP) for the next fiscal year. It was told the PSDP for the next year will be increased considerably to ensure adequate funding for a number of big projects and initiate some new plans to expedite the process of development in both rural and urban areas.

Sources said Dr Salman Shah endorsed the PSDP size of Rs 505 billion for the next fiscal year and asked the authorities concerned to present it before the Annual Plan Co-ordination Committee (APCC) meeting here on May 21-22. The APCC will discuss nitty-gritty of the next years budget and finalise it for the National Economic Council (NEC), which is likely to meet on May 30. Prime Minister will chair the meeting.

The meeting was told that a major portion of PSDP 2007-08, will go to the provinces for meeting demands for their developmental projects. The federal government's projects like National Safe Drinking Water, Child and Mother Care, HIV and Hepatitis Control Programme and other mega water-related projects will be completed on priority basis.

http://www.brecorder.com/index.php?id=564498&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Shenhua group rolls back 1,000 megawatts coal-fired plants *

KARACHI (May 15 2007): A Chinese state-run company, Shenhua Group Corporation has decided to roll back its plan for setting up 1,000 Megawatts (MW) coal-fired power plants worth $1 billion at Thar.

Sources told Business Recorder on Monday that the decision came at a meeting held in China recently attended by high-powered Pakistani delegation, including Pakistan's ambassador to China, in which the Chinese side withdrew its power generation at Thar coal-sites.

Sources said that the company was not happy over power tariff rates offered by the Government of Pakistan saying it was not enough to continue power generation. Security and domestic workload were also quoted as reasons that forced the company to surrender the plan, sources added.

The government had re-established contacts in October 2006 after 2002 with Shenhua group to start its work at Thar coal sites and also attracted by offering increased rates of purchase of power. Since it was made compulsory that tariff once agreed would not change for 30 years, so the company was insisting to increase the tariff, which would be viable enough to run the business.

The company had already made the decision for not pursuing the project because it had shifted all machinery to another China-run company, working at Sonda-Jherruk, Thatta, sources said. They said this decision would be a major set back for the country as it was facing serious power shortage. After re-establishing contacts with Shenhua it was hoped that about 1,000 MW would be added to the national power grid in three years.

Sources said the failure would harm the other ongoing Chinese projects particularly in coal mining and power generation sectors. Government officials in Sindh Mines and Mineral Department said that in the past that Shenhua company was engaged in China to facilitate electricity generation for the Olympic games, therefore, the company would start work after completion of the task.

Shenhua has vast experience in generating electricity from coal-fired power plants and completed detailed feasibility in collaboration with Geological Survey of Pakistan, sources said and added the other company, which was awarded contracts might not accomplish the work as per requirements.

Sources said that uniformed pricing formula for electricity purchase is needed to guarantee foreign investors for setting up coal-fired power plants in the country as was done for wind-based power generation. This was the only way the government could increase share of coal in country's energy mix to at least 19 percent by 2030 and 50 percent by 2050.

Sources said that several foreign and local companies had prepared feasibility reports in the past and confirmed availability of coal deposits but they were reluctant to start power generation due to unfair pricing formula for coal fired power generation.

http://www.brecorder.com/index.php?id=564484&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Karachi losses estimated at Rs 20 billion *

KARACHI (May 15 2007): Economy faces losses over Rs 20 billion, as the trading and industrial activities in the economic hub of the country, Karachi, were suspended completely for the last three days due to political unrest and violence across the city.

Karachi being the major engine of country's economy, where around more than 14,000 large industrial units are operating and contribute 68 percent to the national exchequer.

"Out of 14,000 industries, none has been operating since Friday evening, halting production process completely in all the five major industrial areas including SITE, Korangi, F.B area, North Karachi and Landhi industrial area of Karachi due to unavailability of labour," an industrialist said.

Pakistan's per day economic activities generate around $500 million out of which Karachi contributes at least 25 percent or $150-175 million per day, therefore, Karachi has faced with around $300-350 million (Rs 18-21 billion) due to suspension of two days' economic activities, said economist Muzamil Aslam.

Shahid Hasan Siddique another economist said, "Karachi's industries suffered production losses over Rs 12 billion due to violence, deteriorating law and order situation for the last three days, tarnishing country's image internationally."

He forecasts that economy faces further direct and indirect financial losses in the shape of dim prospects of foreign investment due to political turmoil and increasing security concerns.

"Twelve billion rupees is the estimated figure of financial losses, while the long-term losses are higher than these," he added. He said that international media have widely covered the Karachi violence on Saturday that has confirmed Western media reports that Karachi is an unsafe city for investment.

It is also expected that now foreign investors will also avoid visiting Pakistan especially Karachi due to new travel advise issued by different countries, he added.

"Karachi contributes Rs 1.25 billion per day in term of taxes to the national exchequer and during the last three days not a single penny has been paid in taxes," said Zubair Motiwala former chairman SITE Association of industry. He said that national exchequer has suffered loses of Rs 3 billion only due to the suspension of industries and trading activities in the metropolitan.

Political activities in the city have badly hit the export process and shipments have not been dispatched since Friday due to political tension in the city, he added.

Masood Naqi chairman Korangi association of industry said that export oriented industries of Korangi industrial area remained completely shut during the last three days. He claimed that Korangi industrial area has faced financial losses over Rs 3.5 billion in the terms of production, besides Rs 750 million taxes.

Small traders have claimed that they have suffered losses over Rs 5 billion in terms of sales. Atiq Mir chairman Alliance of Market Associations said that more than 500 trading market and around 25,000 shops remained closed since Friday, while more than 10 shops of small traders have been torched during the violence. Other than traders, the daily wagers have been affected losing source of income during the period.

Transporters also have suffered huge financial losses as more than 25 busses have so far been set ablaze by the mob during the violence in the city on Saturday and Sunday. They informed that we are compiling exact figures and will release them today, which approximately stand at Rs 20 billion. The port sources also confirmed that port activities have come to a halt as not a single export shipment has yet reached the harbour for export during the last three days.

http://www.brecorder.com/index.php?id=564481&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*KPT seeks $79 million from World Bank for KDLB closure *

KARACHI (May 15 2007): Karachi Port Trust (KPT) has finalised negotiations with the World Bank for $79 million loan agreement as direct borrower for closing the Karachi Dock Labour Board (KDLB), it is reliably learnt.

The KPT was assigned by the Ministry of Ports and Shipping to negotiate with the World Bank the KDLB issue in line with the overall objective of National Trade Corridor Improvement Programme (NTCIP) for its closure to reduce the cost of port handling.

This was also part of the government's comprehensive plan for ports improvement and modernisation to reduce dwell time for cargo at lower charges. The negotiation process between KPT and World Bank was also witnessed by Economic Affairs Division (EAD), Ministry of Finance and co-ordinated by Ministry of Ports and Shipping.

The ministry of ports and shipping (MOPS) has sent the summary of the discussions between the KPT and World Bank to the Ministry of Finance for onward submission to the Prime Minister. Once the Prime Minister clears the summary, the matter will be considered at the next available meeting of World Bank Board in Washington via the Bank's Islamabad office.

Sources told Business Recorder that out of $79 million loan, an amount of $73 million would be spend on providing financial package to remaining 3,272 dock workers. While the rest $6 million would be spend on labour redeployment services and counselling etc.

According to documents made available, the mission expressed concern about the appropriate timing of the Statutory Rule of Order, and emphasised the need to ensure that labour redeployment services and social assessment as well as monitoring procedures be in place before dock workers are de-registered and the KDLB disbanded.

The mission also noted to identify how the physical assets of KDLB like officer, training center, medical services would be handled. Identify a feasible scheme for the commutation/continuation of accrued pensions and assess the legal status and compensation benefits applicable to KDLB officers and staff.

In an agreements, it was agreed that the KPT would provide a draft SRO to the mission for review and comment by February 24, the mission would respond by March 2, and the KPT would finalise and forward the SRO to the Government by March 10.

The SRO would not be formally issued and KDLB disbanded until the project unit is established and labour redeployment services and social assessments are organised. The KPT, at the time the SRO was enacted would issue administrative regulations requiring all 'Stevedoring Companies' employing dock workers, as a condition of gaining entry to the docks to place workers under labour contracts and register them with health and pension systems (ie, Sessi and EOBI).

The KPT will inform the WB on how the disposition of KDLB physical assets (ie, administrative building, hospital, training center and others - including equipment) would be handled by March 30. The KPT's legal counsel will expand their legal opinion and provide an assessment on the pending legal issues summarised above by February 26, 2007.

STATUS AND AGREEMENTS ON LOAN FINANCING: From the discussion regarding the financing the loan, two options are envisaged; firstly, financing from the WB to the Government, with on-lending to KPT (however this could entail high on-lending costs to KPT).

Secondly, direct lending from the WB to the KPT, with a Government guarantee. As far as repayment of financing loan, three options for financing loan repayment were discussed including, Ministry of Finance from the budget, KPT from its own resources and continuation of a 'CESS' which would share repayment between KPT, Shipping Agents and Stevedore Companies that are already contributing to the 'KLDB CESS'.

The first option does not appear viable under the current government policy. KPT expressed reluctance over the second option due to the need for resources to finance proposed port investments. The mission expressed concern over the third option as it may not result in as large or immediate reduction in port labour costs as other options.

It was agreed that the option for direct lending from WB to KPT would be exercised providing government and WB policy allows and repayment would be accomplished by continuation of a modified CESS, provided that the CESS would be disassociated with KDLB. With the understanding that the labour costs would be accrued immediately at the port as the revised CESS would be less than the existing KDLB CESS.

The and actual dock workers costs would be considerably reduced with the disbanding of KDLB, due to the elimination of oversize gangs and reduction of actual labour costs for individual dock workers. The KDLB management offered twice the Voluntary Retirement Scheme (VRS) to its workers.

The Karachi Dock Workers Scheme (Regulation of Employment) was promulgated through an ordinance in 1973 which was eventually passed as an Act in 1974.

http://www.brecorder.com/index.php?id=564468&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*'Exports to traditional markets remain marginal' *

KARACHI (May 15 2007): Country's exports to its traditional markets North America, European Union and Middle East remained marginal in first eight months of current financial year, region-wise export figures said. Although Pakistan could not post high growth in its export to these markets.

However, there was impressive growth to some non-traditional markets but due to low volumes of export to these regions, the growth could not boost the overall exports much.

According to details, the overall exports to traditional markets like North America increased by 2.8 percent whereas exports were up by only 3.5 and 8.6 percent to its other major trading partners Middle East and European Union (EU) respectively.

On the other hand, the growth to its non-traditional markets was quite encouraging and impressive as there was increase of 43 percent to South America, 54 percent to Central America and 21 percent to Eastern European region during the first eight months of current financial year.

The export figures suggest that export of the country to African market was almost negligible, as there was only 0.54 percent growth in its export to countries of Africa. Whereas there was 7.3 percent decline in export to Asian countries other than the Middle East during the period under review and export dipped by 6.7 percent in Oceania region in this period.

The country-wise exports also showed mixed trend during the first eight months of current financial year. A quick look on country-wise export shows that the exports to USA, the major trading partner of Pakistan was up by 8.2 percent during this period.

http://www.brecorder.com/index.php?id=564513&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Oil and gas discovered in Khipro *

ISLAMABAD (May 15 2007): Orient Petroleum International inc (OPI led joint venture partners BowEnergy Resources (Pakistan) (SRL) Zaver Petroleum Corporation Limited and the Government Holdings (Private) Limited on Monday announced positive testing of Rahim well 1 in block 2568-6 (Khipro), Sindh.

An announcement made by the joint venture partners said that the well flowed around 800 barrels per day of oil and 0.35 MMscfd of gas at a fixed choke of 20/64" with a flowing wellhead pressure of around 730 psig. The calorific value of the gas is 1054 btu/ft3. Its sixth major discovery at Khipro block and 11in Mirpur Khas and Khipro blocks of the joint venture.

Orient Petroleum International Inc is the operator of Mirpur Khas, Khipro Blocks, Sakhi Sarwar, Maharvi and Marwat Exploration Blocks and is producing from ten discoveries from ten discoveries in Mirpur Khas and Khipro Blocks. In addition, OPII is also operator of three producing properties located in the northern region of Pakistan namely Dhurnal, Ratana and Soan.

http://www.brecorder.com/index.php?id=564476&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*New technologies to enhance oil and gas discovery rate: Jadoon *

ISLAMABAD (May 15 2007): Chairman of Dynavest Company of Switzerland, Dr Anton E. Schraff accompanied by members of his delegation called on Minister for Petroleum and Natural Resources, Amanullah Khan Jadoon here on Monday. During the meeting, both sides discussed matters related to investment potential in the exploration sector.

The minister said the government was according priority to tap the unexplored sedimentary area of 6,27,000 sq. km. aimed at accelerating the exploration activities in onshore and offshore blocks. He said, "Pakistan is an ideal place for the foreign investment in oil and gas exploration and production having excellent discovery rate."

The government has introduced far- reaching policy of deregulation of the petroleum sector and foreign participation in oil and gas exploration activities was being encouraged, he added.

Jadoon said the government would welcome Dynavest's co-operation in oil and gas explorations possessed with high technologies in the drilling and reservoir fields which was pre-requisite for achieving high success in drilling wells. Dr Anton briefed the minister about his company's profile and world-wide activities in the drilling field.

He said that Dynavest intends to introduce new technologies in Pakistan for achieving high success rate in the oil and gas exploration activities. Secretary Petroleum Ahmed Waqar, Chairman OGDCL Arshad Nasar and senior officials were also present.

http://www.brecorder.com/index.php?id=564548&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*CDWP to approve 52 projects worth over Rs37bn *

By Khalid Mustafa

ISLAMABAD: The Central Development Working Party (CDWP) that will meet on May 17 with deputy chairman of Planning Commission Dr Akram Shiekh in chair is likely to accord approval to 52 projects of paramount importance valuing Rs37.893 billion.

According to the agenda of the meeting available with The News, in Transport & Communications sector, the meeting will take up 15 projects of Rs27.796 billion including the upgrading and realignment of Karakuram Highway (KKH) by National Highway Authority keeping in view the construction of Diamer-Bhahsa dam. The realignment of Karakuram Highway will cost Rs13.844 billion.

Other projects in Transport & Communications sector that will be taken up for approval include 1) setting up optical imaging payload facility, 2) setting up of design, development & testing of special metallic joint, 3) Attitude & Orbital Control System Centre, 4) Remote sensing data transmission facility, 5) Development of dynamic system test facility, 6)Design & development of a compact antenna test range, 7) Construction of Bostan-Zhob narrow gauge section into broad gauge, 8) Provision of railway tracks for setting up dry port at Prem Nagar, including acquisition of land, 9) Construction of grade separated interchange at Nagan Chorangi, 10) Construction of back top road from Tellimute to Doli Post and others.

In water sector, the meeting would take up four projects of Rs2.03 billion for approval including Resettlement Action Plan for Mirani Dam of Rs1.184 billion, Construction of Lougher dam and Karak dam in district Karak, and Darmalak dam in district Kohat. In the Physical Planning and Housing sector, the CDWP meeting is likely to approve nine projects.

In the energy sector, the meeting is to approve the construction of 132 KV grid stations in sector 1-16 Islamabad with the cost of Rs323.69 million. In Health sector, the meeting is likely to accord approval to two project of worth Rs918.861 million which include 1) Provision of sterotactic radio surgery system at JPMC Karachi, 2) Construction of surgical medical block, JCO ward and other allied facilities in Karachi.

The meeting will also approve the most important project about strengthening of regulatory infrastructure by applying innovative radioactive waste management technology that will cost Rs338 million.

In higher education sector, the meeting will take up three projects of Rs1.835 billion for approval that include 1) establishment of national law university, Islamabad, 2) strengthening of departments of Economics Business Administration, Commerce & Applied Economics Research centre at university of Karachi and 3) Provision of Higher Education opportunity for students of Balochistan and FATA.

http://www.thenews.com.pk/daily_detail.asp?id=55855


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## Neo

*Chinese group eyes Pak steel sector *

ISLAMABAD: The government is negotiating with China 40 new public and private sector joint venture projects in power, social and infrastructure sectors, to be executed in five years, boosting mutual trade and economic cooperation. 

A visiting Chinese delegation of Shanghai Baosteel Group Corporation, Monday expressed their keen interest in investing Pakistanâs steel sector. The company is already in the process of setting up joint venture with a Pakistani company Sapphire Group in the field of steel manufacturing. 

Federal Minister for Privatisation and Investment, Zahid Hamid while meeting the visiting delegation led by Feng Aihua, Vice Director of Business Development Department stated that Pakistan encourages private sector joint ventures for economic interaction and development of private sectors of the two countries.

Chinese public and private companies are already cooperating with Pakistan in executing 42 projects in the fields of fertilizers, mining, PVC integrate, light rail mass transit, motherhood TV Channel, technology transfer & industrial, friendship park, construction, power, housing, mega infrastructure, automobile, Gawadar airport, pesticides, hotels, cement plants, tourism, software maintenance.

Besides, the two countries are working jointly in the fields of oil & gas exploration, auto-motorcycle, production of human vaccines, bio pharmaceuticals, dairy, textile, steel mills, heavy duty trucks, communication towers, production of hybrid rice seed, manufacturing of 4-stroke CNG auto rickshaw, cellular phone company projects etc. 

The Minister also informed that 33 JVs were also underway between the private sectors of Pakistan and Japan, Malaysia, Egypt, Kuwait, UAE, Thailand, Qatar and Kingdom of Saudi Arabia.

http://www.thenews.com.pk/daily_detail.asp?id=55861


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## Neo

May 15, 2007 
*IPPs given extension to set up new projects*

ISLAMABAD, May 14: The government has overruled power regulatorâs reservations and has granted about five-month extension to the existing independent power producers (IPPs) to set up three fresh thermal projects of about 400-500 MW at a tariff exceeding 11 cents per unit, it is learnt.

Informed sources told Dawn that a recent meeting of the Economic Coordination Committee (ECC) of the cabinet had allowed the Private Power and Infrastructure Board (PPIB) to sign agreements with these IPPs on the basis of their bids that offered tariff at 11.11 cents per unit.

Under the original plan, Kohinoor Energy and Japan Power were to set up their residual fuel oil based projects of 143 MW and 100-200 MW capacity respectively near Lahore by October 2008 while Tapal Power was to set up a 161 MW project near Karachi. The three companies are already operating comparatively smaller of 126 MW, 107 MW and 120 MW respectively that were set up under the 1994 power policy at an average tariff of 5.7 cents per unit.

The sources said the PPIB had informed the ECC that these projects should be given an extension in commercial operation date (COD) until March 2009 ' instead of October 2008 ' and their tariff offer of 11.11 cents per unit be approved.

The PPIB had also informed the ECC that their tariff was lower than 11.87 cents per unit tariff that the Nepra had allowed to some IPPs through the hearing process under the tariff rules.

The National Electric Power Regulatory Authority (Nepra) had expressed reservations over the tariff on the grounds that power tariffs for these projects should follow tariff rules under the 1997 Nepra Act that envisaged a proper process of public hearing.

The Nepra had opined that the bidding for these projects was allowed as a special case and was subject to their commercial operation by October 2008 to overcome shortages on a fast track basis.

It said since the objective of "fast track development" had not been achieved, they should be asked to follow normal procedure of tariff setting through public hearing.

The Nepra believed that the three sponsors already had their infrastructure available and it was just capacity addition at the existing site which meant that their tariffs could come down by slicing some of the elements of tariffs which they were charging through their existing plants.

Led by Prime Minister Shaukat Aziz, the ECC, however, overruled the Nepraâs reservations and allowed the PPIB to sign implementation agreements with the three sponsors so that they are able to immediately start construction of the expansion projects and start commercial operation by March 2009.

Meanwhile, a government spokesman said on Monday that the country currently faced a gap of about 800 MW between demand and supply, which may not cross the figure of 1,100 MW during the peak summer season, according to latest actual projection.

The spokesman said due to better management, reduction of forced outages in generation companies and energy conservation measures, the power deficit may not exceed 1000 to 1,100 MW during peak hours.

http://www.dawn.com/2007/05/15/ebr3.htm


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## Neo

Tuesday, May 15, 2007 

*Gartner toconduct study on Pakistani IT industry*

ISLAMABAD: The Pakistan Software Export Board (PSEB) signed a contract with Gartner Inc, the worldâs leading information technology research and advisory company, to conduct a study on the Pakistani IT Industry. 

The contract was signed at PSEB head office here in the presence of IT secretary, PSEB MD, PASHA president and VP Gartner Consulting. Dr Tony Murphy, Vice-President, Gartner Consulting arrived here on 13th May, to deliver the technology related insight need to boost the IT Industry in Pakistan.

He will be in Pakistan from May 14th to 19th 2007, to undertake a review and study of the existing conditions of the Pakistani IT sector with particular emphasis on the software and IT services sector. The study will also develop a practical strategic blueprint for the sector to achieve a step-change improvement in the performance of the IT Industry. 

Dr Tony Murphy would act as engagement manager and chief author for this study. His recent book âAchieving Value from Technology: A Practical Guide for Todayâs Executiveâ (Wiley/Gartner Press) has become an international best seller and is becoming standard practice for many organisations worldwide.

His new book âSucceeding in the Knowledge Economyâ lays heavy focus on developing a national ICT sector and also investigates why some regions have succeeded in the knowledge economy and others have lagged. He assisted a number of software companies in the Gulf region in their product planning, marketing and corporate development strategies. 

http://www.dailytimes.com.pk/default.asp?page=2007\05\15\story_15-5-2007_pg5_7


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## Neo

*Budget to have enough for poor: Shaukat *

LAHORE (May 16 2007): Prime Minister Shaukat Aziz on Tuesday said that the 2007-08 budget would have enough for the betterment of poor segments of the society. "The allocation of more funds for development projects will also generate more jobs and elevate socio-economic condition of the poor strata of the society," he said while speaking at the LCCI Achievement Awards-2007 ceremony held at Governor's House here this evening.

Punjab Governor Lieutenant General (Retd) Khalid Maqbool, Chief Minister Chaudhary Pervaiz Elahi, Federal Minister for Privatisation and Investment, Zahid Hamid, Federal Minister for Industries, Production and Special Initiatives, Jahangir Khan Tareen, President Lahore Chamber of Commerce and Industry (LCCI), Shahid Hassan Sheikh and Iftikhar Ali Malik, former Federation Chairman and Co Chairman businessmen panel and leading members of business community were present on the occasion.

The prime minister said that Pakistan's per capita income is all set to rise to the level of $950 by the end of current fiscal year from the present level of $846.

"Hopefully, it will cross the mark of $1000 next year, enabling Pakistan to join the group of countries with better income," he said. The prime minister said that Pakistan would have bumper crops this year that would generate more disposable income in the rural areas.

He said that increased income would ultimately lead to more consumption, thus enhancing the production in the manufacturing sector. He said, apart from increase in the per capita income, the middle class in the country was also growing.

He said that the steps taken by the present government had helped bring down the incidence of poverty and illiteracy rate in the country. However, he said, a lot more had to be done in this regard.

Talking about government's efforts to provide enabling environment to the business community, Shaukat Aziz said that government was playing the role of formulating policies and facilities the business community to do business in a hassle-free environment.He said that government was pursuing the policies of deregulation, liberalisation and privatisation. " Our policies are very transparent and consistent as any U-turn can harm the economy," he added.

http://www.brecorder.com/index.php?id=564799&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pakistan pleads for initiating FTA with EU states *

ISLAMABAD (May 16 2007): Commerce Minister Humayun Akhtar Khan has pleaded for better European market access to Pakistani products and initiation of Free Trade Agreement (FTA), with EU member states.

Humayun, who is in Paris as part of the government's strategy to lobby for FTA with European countries, met a business delegation at Medef International-the French Business Confederation that represents around 800,000 large, medium and small French enterprises in all sectors (industry, commerce and services). Representatives of 25 major French companies, including Alcatel, Alstom, BNP Paribas, Accor and Danone participated in the discussions.

The Commerce Minister highlighted existing business opportunities in Pakistan's market and cited contents of World Bank study on 'doing business' in which Pakistan ranks 74 on a scale of 1 to 175. He asserted that Pakistan was a business-friendly country, which offers liberal investment and trade regime.

He was of the view that emerging middle class was broadening the consumer spending base and creating inelastic demand for quality goods. It's the best time for investment as there were numerous prospects for international and local businesses, he added. He also mentioned Goldman Sachs' classification of the 'next 11' fast emerging economies, which includes Pakistan.

Humayun highlighted the need for establishing linkages between the French and Pakistani companies in the textile sector. Pakistan's ambassador to France, Asma Anisa in her address briefed the participants about the overall trade and economic relations between the two countries.

A number of French companies were increasing their presence in Pakistan, which had rapidly increased trade between the two countries crossing $1 billion mark, she said.

Perigot, Chairman of Medef International welcomed the minister and recounted Medef's initiatives to bring together French and Pakistani businesses. He stated that Medef's forthcoming mission to Pakistan in June 2007 would be an important next step in the on-going exchanges.

He also pointed out that there was a lot of scope and potential for cooperation and to further develop trade and investment relations between France and Pakistan, particularly in infrastructure development and energy sectors. Senior representatives of important companies like Accor and Alcatel presented testimonies of their experience of doing business in Pakistan.

They termed the business environment as dynamic and positive. They also informed the meeting about their business expansion plans in Pakistan. The representatives of French companies present in Pakistan expressed satisfaction over security situation. "We feel secure in Pakistan", remarked Accur representative.

http://www.brecorder.com/index.php?id=564941&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Paris Chamber to send trade mission to Pakistan *

ISLAMABAD: Paris Chamber of Commerce and Industry (PCCI) will send a 15-20 member trade mission to Pakistan in September this year with a view to developing deep contacts with companies in Pakistan and to promoting bilateral trade between both the countries. 

The Paris chamber, a premier trade body in France with over 300,000 members, is also considering sending a business delegation to Expo Pak next year.

This was disclosed by President Paris Chamber of Commerce and Industry Pierre Simons in a meeting with Minister for Commerce Humayun Akhtar in Paris on Tuesday at the chamberâs office, says a message received here. 

The minister and president PCCI discussed possibility of exchange of students programme in business education that would help in developing a better understanding of each otherâs business environment for the young business managers of both the countries and will be useful in promoting bilateral trade and investment. 

The Paris chamber manages two business schools including HEC, the number one business school in Europe. 

It was also decided that both the sides would start working towards formulating an institutionalised arrangement between the business schools in Pakistan and the schools of the Paris chamber. 

The minister appreciating the efforts of the chamber to promote bilateral trade relations, identified other areas where cooperation could be enhanced. 

He highlighted Pakistanâs capabilities in the field of textile industry, after elimination of quotas, where there are ample opportunities for French companies for acquiring brands, sourcing from Pakistan and to make their production base in the country. 

Other potential sectors included telecom, wholesale and retail, service sector, power generation, light engineering and infrastructure development. 

While discussing, global, regional and bilateral trading agreements, the minister highlighted the need for improved market access for Pakistan to the EU and to start negotiations on a Free Trade Agreement with the EU.

http://www.thenews.com.pk/daily_detail.asp?id=56061


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## Neo

*Foreign investment in manufacturing stressed *

By Mansoor Ahmad

LAHORE: Foreign direct investment in Pakistan this year would simply facilitate the government in balancing the current account deficit caused by higher growth, but it would not have much impact on job creation.

Economists point out $6 billion FDI, which Pakistan expects to receive by the end of current fiscal year in June, would mostly go to the services sector, led by telecommunications, or the investment would come in the shape of privatisation proceeds from the sale of public enterprises and recent surge in takeover of many small domestic banks by foreign banks. There is no significant foreign investment in the manufacturing sector.

An economist and chartered accountant Naveed Anwar Khan, commenting on the situation, said the quality of FDI received during recent years had not been impressive. Investment in the stock market is a new addition to foreign investment, but is fraught with risk as it could be used for speculation because of the local law that allows investors to take out money any time.

He said the Indians, who received a large amount of foreign investment in the capital market, had made it mandatory for investors to keep their money invested for a considerable period before pulling out. âThis effectively checks speculative investment,â he added.

A Certified Chartered Accountant Asif Ali Shahid said the telecommunication sector had attracted highest FDI this year and availability of a top-class telecommunications network was essential for sustained economic growth in the country.

He said the telecoms would facilitate supply chain links for the manufacturing and export sectors. The telecom industry has grown more rapidly than the manufacturing sector where investment was almost negligible in hi-tech value added industries.

He said jobs to be created through $6 billion worth of FDI would be less than those created during Nawaz governmentâs last tenure when less than $2 billion of FDI came to Pakistan in more than three years.

Economists caution the current investment trend promotes growth, but excludes majority of the population. They said investment in the capital market, telecommunications and oil and gas exploration was necessary and would improve the economy. However, these investments are not likely to improve the lot of lower strata of society.

They said fruits of these investments would be exclusively enjoyed by the rich. The poor need jobs and investment in the manufacturing sector even at slightly lower economic growth would be more productive.

They said the shortage of skilled labour should not be a barrier to an all-inclusive economic growth. The government should evolve short, medium and long-term strategies. In the short term, labour-intensive industries should be promoted for which low skills are required.

In the medium term, short courses to produce medium skilled labour should be introduced to provide manpower to the industries with relatively lower technologies.

In the long term, efforts should be made to produce highly skilled manpower for hi-tech manufacturing.

They point out Nobel laureate Joseph Stilitz, in his recent visit to India, advised the economic planners to facilitate the construction industry that could absorb low-skilled labour. This could be true for Pakistan as well.

In fact, the governmentâs claim of poverty reduction in Pakistan emerged after heavy construction activities in the earthquake-affected areas and recent arrival of many foreign 

http://www.thenews.com.pk/daily_detail.asp?id=56064


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## Neo

May 16, 2007 
*Exports to Georgia up by192.8pc*

ISLAMABAD, May 15: Pakistanâs exports to Georgia recorded a 192.8 per cent growth during the fiscal year 2006 to $1.233 billion as against $685 million over the previous year.

This was stated by Commerce Minister Humayun Akhtar Khan in reply to a question by MNA Nawab Abdul Ghani Talpur seeking year-wise details of trade volume between Pakistan and Georgia during the last three years.

He said Pakistanâs major exports to Georgia include cotton fabrics, madeups articles of textile material, clothing and textile fabrics, cotton yarn and carpets and rugs. Pakistanâs major imports from Georgia include machinery and parts, chemicals and iron.

The minister informed the national assembly the trade between the two countries was insignificant. Georgia is a member of the former Soviet Union and is heavily under the influence of the Russian Federation.

He said Pakistan is currently negotiating a FTA with Russia. The FTA when finalised and implemented will also help increase trade with Georgia.

To another question, the minister replied that Pakistanâs exports to Armenia recorded a negative growth of 50 per cent to $186 million in the fiscal year 2006 as against $280 million over the corresponding year.

The minister said Pakistanâs major exports to Armenia include cotton fabrics, made-ups articles of textile material, chemicals and sports goods. The minister, however, did not mention the reasons for the significant fall in exports to the country. He presented the same recipe of saying that the proposed FTA with Russia would help increase trade with Armenia.

http://www.dawn.com/2007/05/16/ebr7.htm


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## Neo

Wednesday, May 16, 2007 

*Only 1.4% rise in oil, gas output*

* Dull production not meeting energy needs

By Tanveer Ahmed 

KARACHI: The local production of oil and gas has not reflected substantial growth as it grew it marginally by 1.4 percent in nine months of the current financial year.

The production in gas and production is almost flat and is not catching up with the fast growing energy needs of the country.

According to the data released by the Pakistan Petroleum Information Service (PPIS), the oil and gas production during July-March of the current fiscal totalled at 688kboepd (thousand barrels of oil equivalent per day), depicting a marginal increase of 1.4 percent as compared with the corresponding period last year. The data shows that oil production grew by 1.7 percent and gas production by 1.3 percent in the period under review over the same period of last year. 

Local gas production increased to 3.9bcfpd (billion cubic feet per day) against 3.8bcfpd produced during the same period of the last fiscal. On the other hand, oil production stood at 66.4kbpd (thousand barrels per day), as against 65.4kbpd. 

The country depends heavily on imported oil to meet its energy needs due to insufficient indigenous supplies. Because of more reliance on the imported fuel to cater the growing energy requirements, the import bill of the oil is soaring with each passing day. As the international price of the oil shot up in the last two years, the import bill of the oil has also gone up by tremendously, topping the import categories for the last few years.

Similarly, the gas production also could not keep up the pace with the increasing requirements, particularly by the industrial sector, which switched over to gas to meet needs.

The production data indicates that oil and gas production of Oil and Gas Company Ltd (OGDCL) remained flat at 190.5kboepd during the first nine months of 2006-07, as against 190kboepd in the corresponding period of last year.

Oil production alone, posting an increase of seven percent, stood at 40.8kbpd over 38.0kbpd in the same period last year. However, gas production declined by two percent, which stood at 0.93bcfd versus 0.95bcfd previously. Pakistan Petroleum Ltd (PPL) oil and gas production posted a decline of 1.6 percent to 160kboped from 163kboepd during the same period last year. Gas production during the period stood at 0.98bcfd versus 1.0bcfd â a decline of 2 percent on a year-on-year basis. Oil production of the company registered a growth of 41 percent, raising the oil production to 2.6kbpd in the period under review, as against 1.8kbpd previously.

The oil and gas production of Pakistan Oilfields Ltd (POL) stood at 13.7kbpeod as against 14.6kbpeod in the corresponding period last year, posting a decline of 6.2 percent. Gas production of the company, registering a marginal growth of 0.5 percent, rose to 0.05bcfd. However, oil production of POL registered a decline of 13 percent and stood at 6.2kbpd.

http://www.dailytimes.com.pk/default.asp?page=2007\05\16\story_16-5-2007_pg5_6


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## Neo

Wednesday, May 16, 2007 

*Punjab launches Drip Irrigation System project*

LAHORE: The government has planned to launch a project of Rs 6.8 billion for installation of Drip Irrigation System on 100,000 acres in the province during the next five years.

Punjab Agriculture Minister Arshad Khan Lodhi stated this on Tuesday considering the severe water shortage in the province and embedded benefits of drip irrigation. He was addressing a seminar on the concluding ceremony of International Training Course on Drip Irrigation Technology arranged with the collaboration of government of Punjab and Ministry of Science and Technology government of China. 

He said that in order to cope with the food requirements of the increasing population, we have no other option except to increase crop production by judicious use of our scare resources through enhancing productivity per unit of inputs especially water.

http://www.dailytimes.com.pk/default.asp?page=2007\05\16\story_16-5-2007_pg5_10


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## Neo

*China Mobile Parent Buys 100% Of Pakistan Paktel For US$460 Million*

HONG KONG -(Dow Jones)- China Mobile Ltd., the country's biggest mobile-phone operator by subscribers, said Wednesday its parent, state-owned China Mobile Communications Corp., bought 100% of Pakistan telecommunications operator Paktel Ltd. for US$460 million and renamed it CMPak Ltd.

"The parent company plans to invest US$400 million in Pakistan this year to expand the (CMPak) networks," China Mobile Ltd.'s chairman, Wang Jianzhou, said after the company's annual general meeting.

Wang said China Mobile Ltd.'s parent made the acquisition as investors in the listed unit were wary of risk, but China Mobile Ltd. might acquire the Pakistan operation from its parent in the future.

Wang said China Mobile Ltd. doesn't have a timetable to buy CMPak.

China Mobile Communications Corp. said in March it had bought 88.9% of Paktel.

http://www.cellular-news.com/story/23781.php


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## Introvert

*Pakistan: Mango exports may jump by 30%*

The exports of mango Ã± the king of fruits Ã± are expected to jump by 25 to 30 per cent on the back of a bumper crop in the current season. At the season&#8217;s onset, the exporters have dispatched around 500 tonnes of some early-grown varieties of mango to the United Arab Emirates as fresh harvest has started reaching the local market.

In fiscal year 2005-06, local exporters had shipped only 0.088 million tonnes of mangoes of different varieties to various destinations, including the European Union, US and UAE due to short production caused by multiple reasons.

Compared to this, a year before the country had produced huge quantity of mangoes leading to good exports at 0.110 million tonnes.

This year, the government has changed packaging criteria for mango exports as exporters have been allowed to ship the fruit in one to 10 kilogramme packets. Earlier, they could export the fruit in 1.25 to 1.5kg packets, which increased the packaging cost.

Fruit exporters have welcomed the latest decision, which could save additional cost earlier incurred on small packages.

However, a bad news for exporters is that the airlines have increased freight charges to Rs92 per kg for mango shipment to Europe and US from Rs85 last year.

&#8220;The Ministry of Food, Agriculture and Livestock (MINFAL) and Trade Development Authority of Pakistan (TDAP) have not announced freight subsidy on mango exports while last year the ministry had given 15 per cent subsidy per kg. &#8220;TDAP has also withdrawn 25 per cent freight subsidy on mango exports on the pretext of duplication, pushing up the cost for exporters,&#8221; Chairman Pakistan Fruits and Vegetable Exporters Association Abdul Wahid Memon said.

He dismissed the reason of freight subsidy duplication, saying MINFAL had granted 15 per cent subsidy only for one year, which was not renewed next year.

The exporters allege that despite allocation of Rs250 million for freight subsidy, the ministry did not even release Rs160 million under that head last year.

Exporters are also facing difficulties in monitoring and subsequent planning of fruit exports as Pakistan Revenue Automation Ltd does not release fresh fruit export data on time and the exporters have to rely on data collected by Federal Bureau of Statistics (FBS).

&#8220;Despite the assurance given by Chairman CBR Abdullah Yousuf, a mechanism could not be evolved by PRAL to provide data to the exporters every two weeks, which is imperative for the growth of exports,&#8221; Abdul Wahid Memon said.
http://www.freshplaza.com/news_detail.asp?id=1536


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## Neo

*Socio-economic uplift: Chinese firms given powers to reject projects *

ISLAMABAD (May 17 2007): Pakistan has given discretionary powers to Chinese companies to select or reject any project proposed under five-year development programme to be jointly implemented for socio-economic uplift of Pakistan, well-placed sources told Business Recorder here on Wednesday.

The Economic Affairs Division (EAD) has issued project implementation regulations for the development programme, according to which Beijing would finance 61 mega projects in different sectors. The operating procedures were signed during the recent visit of Prime Minister Shaukat Aziz to China, but details had not been made available by the government.

According to the agreed procedure, Pakistan would propose the projects along with pre-feasibility or feasibility study to China-Pakistan Economic Co-operation Group (ECG), which would select projects through or periodic technical committee meeting review.

Projects would include those already enlisted under the development program or included subsequently, the sources added. The selection criteria of the ECG says the group would transfer projects with feasibility study to China Chamber of Commerce for Import & Export of Machinery & Electronic Products and China International Contractors Association as facilitators would be responsible to short list the enterprises that could undertake the projects.

The list would be submitted to both the governments and would simultaneously place the shortlist on the relevant websites. For the projects without feasibility study, ECG would ask Pakistan side to do the needful.

Upon the request by the Pakistan, Chinese side would recommend the competent Chinese consulting companies to carry out the feasibility study whereas Pakistan side would select Consultant Company and have the feasibility prepared. The cost of feasibility study will be borne by the project authorities.

To identify enterprises for project implementation, the facilitators would shortlist the related Chinese enterprises that would be qualified to participate in bidding process keeping in view the feasibility studies and company qualifications and inform Pakistani side, the sources continued.

Pakistan side would choose the enterprise from the list for project implementation through a bidding process and inform the facilitators accordingly. Upon request, Chinese side would render assistance to the Pakistan during the bidding process.

The facilitators would recommend the feasibility study reports and the list of enterprises finalised to implement the projects to relevant Chinese financial institutions for project evaluation, which would inform about the evaluation results to the facilitators.

During regular meetings and technical committee meetings, ECG would select and delete projects according to the following principles: 

i) The projects, which qualify the evaluations by relevant Chinese financial institution, would be added to the development programme.

ii) The projects enlisted in the development programme, which the related Chinese enterprises decide to quit or not to participate in, would be deleted from the list.

The new list of projects in the form of ECG agreed minutes would be deemed as the supplementary document of the development programme. The sources further said that relevant Chinese financial institutions would facilitate the financing of the projects evaluated by them through commercial loan, preferential loan, mixed loans, etc and the financial terms of such loans would be mutually agreed between the two sides.

OTHER PROJECTS The Pakistan side would stipulate the implementation of projects without Chinese financial institutions' support.

These regulations would apply to both public and private sector projects, requiring Chinese financial support, the projects would be processed and approved by the domestic authorities where so required, under the rules and laws of both countries, in an expeditious manner. The sources said that these regulations could be amended on the request of either side through mutual discussion and agreement.

http://www.brecorder.com/index.php?id=565217&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Strike, violence: textile industry misses orders worth $70 million *

KARACHI (May 17 2007): The country's export-oriented textile industry has missed the potential foreign orders worth at least 70 million dollars due to three days' violence, riots and shutter down strike in the industrial hub of the country, trade sources Business Recorder.

Last week on May 12, the ruling and the opposition parties staged rallies on the arrival of Chief Justice of Pakistan Iftikhar Muhammad Choudhry and Karachi was made to bleed. The violence of the worst kind during the rallies claimed about 45 lives and left over 100 injured, followed by riots and shutter down strikes.

Trade and commercial activities along with export process came to a standstill, besides industrial production in all major industrial areas. Trade sources said that not a single export consignment reached the ports during the three days from May 12 to May 14.

Export consignments to USA, Europe and other countries could not be shipped on time, which inflicted worth millions of dollars due to expiry of 'Letter of Credit' (LCs), while some export orders have been cancelled for delay in shipments, they added.

It is estimated that textile exporters have lost approximately $70 million export orders during the same period in the shape of expiry of LCs and cancellation of shipment date, they said. "We have contacted with our foreign buyers and trying to resettle the export orders and to issue new LCs," they added.

Majeed Aziz president KCCI also confirmed that country has lost million dollars textile export orders in the wake of turmoil in the metropolis. He said that local exporters are striving hard to extend the export dates and in this connection talk with them are underway with foreign buyers.

"It is expected that some export orders would be restored in the future but it needs detail negotiation with foreign buyers and assurance of timely delivery in future," he added.

Naqi Bari, chairman Pakistan Hosiery Manufacturers and Exporters Association (PHMA) said that hosiery exporters have lost around $15 million export orders due to deteriorating law and order situation in the city since May 12. He said that the most of the industries are located in Karachi, and since Friday not a single consignment could reach the ports.

"Our industrialists were not able to even go to their factories and in this situation how was it possible for us to ship our consignments," he added. Readymade garment exporters claimed that they have suffered $20 million losses export orders due to law and order situation in the economic hub of the country.

"We were trying to achieve the readymade garment export target of $3.4 billion but three days, law and order situation in Karachi has badly hit the export process," said Aijaz Khokhar chairman Pakistan readymade garments manufacturers and exporters association.

He said that textile export target is already in jeopardy due to government policies and now the law and order situation is the chief factor behind export regression. Some 50 percent industries of readymade garments are in the Karachi, which completely failed to ship their export consignments in that three days.

"Our foreign buyers are reluctant to visit Pakistan after the last week incident and now we are bound to settle our business deals in Dubai," he added.

Farooq Bhura a leading bed-wear exporter said he failed to dispatch his export consignments worth $0.35 million to Europe due to political activities and chaos in the city. "These shipments were due on Saturday but due to unavailability of labour and transport, my export consignments could not reach the ports, as result, LCs have expired,' he added. The exporters have failed to fulfil their export commitments and it is estimated that around $10-12 million export orders have been cancelled or delayed for a long time.

Exporters said that other textile exports including towel, raw cotton, Art, Silk, Synthetic textile and Knitwear exports also have been badly hit due to the Karachi violence. They have demand that the government should follow other countries' example and should make exigency plans for exports that despite violence export consignments can be shipped.

"We are alone in this crisis and no any government official has contacted to resolve these matters," they added. They said that exporters would bear 9 times high cost if they dispatch their export consignments via airbus, which is not possible for them.

http://www.brecorder.com/index.php?id=565195&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Trade cooperation with Pakistan growing: UK High Commissioner *

LAHORE (May 17 2007): British High Commissioner to Pakistan Robert Brinkly and his wife called on Punjab Chief Minister, Chaudhry Pervaiz Elahi at Chief Minister's Secretariat, here on Wednesday. First Secretary of British High Commission James Revill was also present on the occasion.

Talking to the distinguished guests, the Chief Minister said that there were historic and friendly relations between Pakistan and Britain, economic and trade co-operation between the two countries was growing. He appreciated co-operation of Britain towards strengthening of health sector in Punjab.

He expressed gratitude for the assistance extended by Britain for the rehabilitation of earthquake victims in Pakistan. He said that Punjab government was implementing a massive programme for the strengthening of health sector and provision of modern health facilities to the masses.

He said that rural and basic health centers were being upgraded and availability of doctors, medical equipment and medicines were being ensured in these centers. He averred that emergency service had been modernised and free treatment facilities were being provided in emergency wards of all hospitals.

The CM said that in addition to Lahore, new hospitals were also being set up in other cities of the province while a huge amount was being spent on the provision of modern health facilities to the people of Southern Punjab.

He said that special attention was being paid to the training of nurses for their capacity building and centers for training of nurses were being set up throughout the province.

Chaudhry Pervaiz Elahi said that promotion of education could help in ensuring peace, security and tolerance as well as poverty alleviation and achievement of desired results of economic development programme. Therefore, he said, government was paying special attention to the uplift of education sector and through an effective system of monitoring, missing facilities were being provided in 64 thousand educational institutions of the province under Education Sector Reforms Programme.

He said that distribution of free textbooks, stipend to girl students and provision of missing facilities in schools had resulted in increase in the rate of enrolment and lakhs of new students who had have got admission in schools under educational programme of the government. He said that required standard of construction and timely completion of development projects in education, health and other sectors was being ensured through an effective system of monitoring.

He said that international financial and economic institutions were making huge investment in Punjab due to investment-friendly atmosphere prevailing in the province, which had helped in overcoming unemployment problem.

The Chief Minister further said that a strong economy, poverty alleviation and development of education sector could help in elimination of extremism. He said that strengthening of education sector was essential for economic development, establishment of peace and promotion of progressive trends in the society.

He deplored the incidents of terrorism and extremism and said that these were aimed at creating political and economic instability. The CM warned that elements involved in such incidents would never succeed in the achievement of their nefarious designs.

British High Commissioner Robert Brinkly lauded effective implementation of educational programme in Punjab and observed that it had shown positive results. He said that it was his first official visit to Lahore and he was deeply impressed with the cultural heritage of the city. He said that trade and economic relations between Pakistan and Britain were strengthening.

http://www.brecorder.com/index.php?id=565242&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'Energy Plan offers opportunities to investors' *

KARACHI (May 17 2007): Pakistan's indigenous gas resources are insufficient and unlikely to meet the increasing demand of gas beyond 2009-10 with demand projections for gas in the energy plan indicating an increase in the requirement of natural gas from 1.5 tcf/year currently to 4.5 tcf/year in 2025.

In this regard, Pakistan has formulated a comprehensive 25-year Energy Plan outlining sectoral demand that presents a window of opportunities to global investors.

This was stated by SSGC Managing Director Munawar Baseer Ahmad, while inaugurating the fifth Pakistan Oil and Gas Conference (Pogee) as its chief guest. Baseer was nominated by the Ministry of Petroleum and Natural Resources to represent the Ministry for the inaugurating the exhibition as its chief guest.

Munawar Baseer Ahmad said that keeping in view the present gas demand-supply and future requirements, the import of gas has become a necessity to cover the demand-supply gap beyond 2010. Gas import options range from developing LNG terminals to transitional pipelines, he explained.

He said Pakistan by way of being uniquely placed geographically is an ideal point of convergence for major transitional oil and gas pipelines in the region.

Pakistan's growing demand for energy, lends support to the idea for it to assume the role of an effective and cost-efficient energy hub for India, China and other landlocked Central Asian Republics (CARs), which are home to 50 percent of the world's gas reserves and 70 percent of the oil reserves, he said.

Cumulatively, Asia's demand for energy will exceed more than that of Europe and the USA combined and that is a point to ponder for the conference delegates, he said.

He said that with the development of the Gwadar port, the concept of energy corridor will gain further strength and the budding port city will transform into the most convenient location for presenting upstream and downstream opportunities for foreign investors in the form of refineries, LNG plants and mega-storage facilities for sectoral products.

Munawar Baseer Ahmad also dilated on Pakistan's first LNG project, known as Pakistan `Mashal' LNG project for which the Government of Pakistan has appointed the SSGC as the facilitator/project proponent. The LNG-1 project has been conceived to supplement Pakistan's natural gas supply in 2011 by 500 mmcfd equivalent to 3.5 mtpa LNG which is planned to be followed by LNG-II with an additional capacity of 3.5 mpta, he explained. The LNG sector opens numerous opportunities for foreign investors interested in setting up terminals and laying pipelines, he said.

There is a world of opportunity for equipment suppliers, engineering consultants, pipeline companies for the Iran, Pakistan and India (IPI) pipeline which without India envisages an investment of $1 to $1.5 billion and if India decides to join it there would be a further investment of $500 million, he observed.

He said the government of Pakistan has provided 1,000 acres of land free of cost as an incentive for setting up a $3 billion coastal refinery project, which is a joint collaboration of Parco and Abu Dhabi joint venture partners.

Munawar Baseer Ahmad said the SSGC is proceeding ahead with its five-year strategic Rs 45 billion rolling plan laid out in fiscal 2004-05 for developing both gas distribution infrastructure and ensuring an adequate transmission network in Sindh and Balochistan.

Earlier, in his inaugural address, Asim Siddiqui, chairman and managing director, Pegasus Consultancy, said that Pogee, now in its fifth year, has become the perfect interactive platform in bringing together the leading suppliers of machinery and technology for this emerging regional energy industry. Later, he presented a memento to the chief guest after which Munawar Baseer Ahmad visited the entire stalls set up in the four halls of the Expo Centre.

http://www.brecorder.com/index.php?id=565320&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pak-US investment treaty in doldrums *

By Israr Khan

ISLAMABAD: The proposed Pak-US Bilateral Investment Treaty (BIT) is in the doldrums as the two sides have differences in certain areas and are showing no flexibility in their stances. 

A number of differences persist on issues of considerable importance to Islamabad. The United States wants Pakistan to include in the draft treaty some aspects which the latter is not ready to accept. As a result, both have failed to strike a compromise formula.

The Bush administration is asking Islamabad to accept its version on major issues, including reinvestment, arbitration mechanism, intellectual property rights and grant of MFN status.

Negotiations on Pak-US bilateral investment treaty, as a stepping stone towards an FTA, have been quite problematic. 

During President George Bushâs visit to Pakistan in March 2006, it was anticipated that the BIT would be sealed, but it did not, and to-date lies in cold storage.

Following this visit, two ministerial-level meetings took place: United States Trade Representative (USTR) Susan Schwab met Pakistanâs Commerce Minister Humayun Akhtar Khan in August 2006, and again in Cairns (Australia) in September 2006 in this regard.

Then in October 2006, Assistant United States Trade Representative (AUSTR) Douglas A. Hartwick co-chaired the second meeting of the US-Pakistan Trade and Investment Framework Agreement (TIFA) Council in Islamabad with Pakistanâs Commerce Secretary Syed Asif Shah. 

It focused on a number of issues, including Reconstruction Opportunity Zones (ROZs), Generalized System of Preferences (GSP), textiles, workers rights, services, facilitation of Pakistan-Afghan Transit Trade and agriculture.

But no negotiations have taken place ever since, nor an exchange of delegations occurred. Progress on the treaty is at a standstill, a well-placed source told The News on Wednesday.

The US wants hard conditionalities to be attached to the treaty, which effectively means it has no intention of entering into a deal, an official remarked. 

Under Pakistanâs liberal investment policy, all economic sectors are open to foreign direct investment, 100 per cent foreign equity is allowed, with foreign investment fully protected in the country. 

Conditionalities under the treaty were not in the best interest of Pakistan, however; Islamabad wants a treaty which promotes its interests. 

A BIT is set to open the door for Free Trade Agreement (FTA) between the two countries. It promises to enhance trade volume, generate more employment and spur business activities.

Since restructuring its investment ties with the entire world, the United States has so far inked BIT with only one state â Paraguay (a banana state). 

Despite the fact Pakistan became a US ally in 2001 in its so-called war on terror, it has failed to attract sizeable investment from the US. It could not even gain easy access to the US markets. In contrast, the country suffered a lot in terms of lost investment opportunities and social unrest.

The US also questions Pakistanâs commitment to providing adequate protection to intellectual property. It has concerns about book piracy, weak trademark enforcement, and pharmaceutical patent protection. These issues remain serious barriers to trade and investment.

However, it still praises Islamabad for taking significant steps to shut down optical disc production and export of pirated optical discs over the last two years, and for creating the Intellectual Property Rights Organization (IPO).

http://www.thenews.com.pk/daily_detail.asp?id=56229


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## Neo

*Gartner Inc to conduct study on Pak IT industry *

KARACHI: Pakistan Software Export Board (PSEB) has signed a contract with Gartner Incorporated the worldâs leading information technology research and advisory Company to conduct a study on the Pakistan IT Industry.

âThe contract was signed in the presence of Secretary IT, MD PSEB, President PASHA and VP Gartner Consulting,â said a PSEB statement issued on Wednesday.

âDr Tony Murphy, Vice President, Gartner Consulting arrived in Islamabad to deliver the technology related insight need to boost the IT Industry in Pakistan. He will undertake a review and study of the existing conditions of the Pakistani IT sector with particular emphasis on the software and IT services sector,â the statement read.

It said the study would also develop a practical strategic blueprint for the sector to achieve a step-change improvement in the performance of the IT Industry.

âDr Tony Murphy would act as Engagement Manager and Chief Author for this study. His recent book âAchieving Value from Technology: A Practical Guide for Todayâs Executiveâ has become an international best seller and is becoming standard practice for many organisations worldwide,â added the statement.

âWe are extremely happy with this success in bringing the worldâs leading IT research company to Pakistan.â the statement quoted Yusuf Hussain, Managing Director PSEB as saying.

Dr Murphy said the technology based businesses would be the key to national success in the coming years. He said Pakistan had ambitious plans in this regard and Gartner was pleased to assist the country achieve its objectives.

http://www.thenews.com.pk/daily_detail.asp?id=56241


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## Neo

May 17, 2007 
*Steel mills to use iron ore found in Balochistan: Tuwairqi contacts mining firm*

KARACHI, May 16: Two steel mills â the state-owned Pakistan Steel of over one million tons capacity and the upcoming private sector project - Tuwairqi Steel Mills - with same production capacity are exploring the possibility of using local iron ore available in Balochistan as input.

Reports suggest that a third upcoming private sector steel mill project, with a half a million tons production capacity to be built in close vicinity of the two big steel mills, is also exploring to use local iron ore. âThis is bound to cut down import bill and help in the development of iron ore mining in the area,â a senior official of the Pakistan Steel said.

The sponsors of all these steel mills are obviously encouraged by the reports coming from the mining area in Balochistan about relatively good quality of iron ore and the Balochistan Mining Company is said to have signed early this month an agreement with a German consultant to carry out engineering studies for setting up a beneficiary plant.

Chairman of Pakistan Steel Major General (retd) Javed said that engineers were in close contact with the officials of the mining company to evaluate industrial worthiness of iron ore and had carried out tests, which appear to be encouraging.

But Project Director of Tuwairqi Steel Mr Zaighan Adil Rizvi was more candid on the issue of exploring the use of Balochistan iron as input on completion. As he puts it the project is based on midrex technology and will require 1.92 million tons of iron ore with minimum of 66 per cent ferrous content annually to produce 1.28 million tons steel products based on Directly Reduced Iron (DRI).

Engineers and research scientists of the steel mills project disclosed that a resource of 50 million tons of magnetite iron has been established at two specified locations at Chigendik and Pachinkoh, North West of Nokundi in Chaghi district of Balochistan.

The lease holder is Balochistan Mining Enterprises, which is a joint venture of Balochistan and the federal government and the PPL. The Tuwairqi Steel is negotiating with the Balochistan Mining.

The company has shown willingness to supply 350,000 tons of lump concentrate and 50,000 tons of sinter concentrates every year for next 9 to 10 years. Subsequently, 400,000 tons of concentrate can be supplied.

âWe are very keen to utilise maximum quantity of the indigenous iron ore for our project in Karachi,â Zaigham Adil Rizvi said while making it clear no compromise will be made on production quality.

He said the implementation of the project was well on track and he was confident of putting into operation the first private sector project of steel mill by the second half of next year.

The implementation of the project, he said, is exposing young Pakistani civil, electrical and mechanical engineers to new experiences and is creating a new talent pool that will be an asset for the country in the future.

His engineers â a Japanese and a European â explained that the DRI (Direct Iron Reduction) method on which the plant production is based is now producing about 60 million tons of steel in the world.

Shortage and higher prices of scrap in the world is said to be the main driving force to popularise the DRI technology in which gas and electricity are the main inputs. The production cost depends on the price of gas and electricity.

âNow that steel structures are fast replacing masonry works, steel industry has a big role to play in future,â a steel engineer said while pointing out that many international airport buildings and other structures are all steel built.

http://www.dawn.com/2007/05/17/ebr2.htm


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## Introvert

*Pakistan to export 1,25,000 tonnes mangoes to Middle East *
KARACHI: Pakistan has started mango exports to Middle East region after bumper crop in the country. The authorities have set 1,25,000 tonnes export target for the Gulf region.

The exporters have started mango shipments to Middle East and have sent about 500 metric tonnes of the fruit since last week, exporters told Geo News on Wednesday.

An export target of 1,25,000 tonnes has been fixed for the Middle East region, 37,000 tonnes more than the previous year, exporters said.

The region consumes one million tonnes mangoes in a year with exports from Pakistan, India, Brazil, Mexico and Australia. 
http://www.geo.tv/geonews/details.asp?id=6107&param=3


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## Neo

*$4.5 billion record remittances received in July-April *

KARACHI (May 18 2007): A record amount of $4.450 billion were received as workers remittances during the first 10 months (July 2006-April 2007) of the current fiscal year as against $3.629 billion in the corresponding period last year, registering an increase of $820.44 million or 22.60 percent, according to figures released by the State Bank of Pakistan (SBP) here on Thursday.

The amount of $4.450 includes $2.24 million received through encashment and profit earned on the foreign exchange bearer certificates (FEBCs) and the foreign currency bearer certificates (FCBCs). During the last month (April 2007), Pakistani workers remitted $513.35 million as against $401.47 million in April 2006, depicting an increase of $111.88 million or 27.87 percent.

The inflow of remittances during the first 10 months of the current fiscal year from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait Qatar and Oman), UK and EU countries amounted to $1,176.12 million, $827.60 million, $673.51 million, $609.88 million, $354.60 million and $123.08 million, respectively as compared to $994.78 million, $584.64 million, $555.84 million, $477.30 million, $346.40 million, and $97.06 million during the same period last fiscal year.

The remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the first 10 months, amounted to $683.09 million as compared to $562.85 million in the corresponding period last fiscal year, showing an increase of $120.24 million or 21.36 percent.

The monthly average remittances for the period July 2006 - April 2007 come to $445.01 million as compared to $362.97 million during the same period last fiscal year, registering an increase of 22.60 percent.

The inflow of remittances into Pakistan from most of the countries of the world increased last month as compared to April 2006. According to the break-up, remittances from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $141.43 million, $94.12 million, $77.53 million, $71.59 million, $35.35 million and $12.70 million, respectively as compared to the corresponding receipts from the respectively countries during April 2006 ie $101.24 million, $69.05 million, $64.59 million, $47.98 million, $41.05 million and $9.44 million.

The remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during April 2007 amounted to $80.29 million as compared to $68 million during April 2006.

http://www.brecorder.com/index.php?id=565525&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*President for cut in inflation rate *

ISLAMABAD (May 18 2007): President General, Pervez Musharraf, on Thursday directed the government to take strict measures in 2007-08, budget to bring down inflation rate, besides creating more jobs to address the issues of poverty and unemployment.

He said next budget should reflect the government's economic achievements in real terms by further reducing poverty and unemployment, besides putting in place a mechanism for ensuring availability of essential items to the poor and low-income group at subsidised rates. The President expressed these views during a meeting held here to give him the first presentation on forthcoming budget.

He wants reasonable increase in the government employees' salaries and retired employees' pension in the budget.

The President asked the authorities to make Utility Store Corporation (USC) network more effective across the country to cater the needs of the people in urban and rural areas. He also wants more funds in the next budget for Bait-ul-Mal to support the deserving people by paying them some amount on monthly basis.

Sources said the President was told by the authorities that economic indicators were showing positive trend and they will finally help the government sustain the current pace of economic growth. The President was informed that this year Pakistan is having record FDI and remittances as well, besides getting sizeable investment from privatisation proceeds.

He was told that the government would increase revenue target for next fiscal year by around Rs 250 billion to provide more resources to the government for development and current expenditures in 2007-08. The president was informed that inflows were enough to support outflows and help the government manage current account deficit. He was told that the government was working out a long-term strategy for the future to enhance exports and reduce trade deficit. The strategy accords priority to a diversified approach in terms of products and markets to give boost international trade in the future.

He was also given a detailed presentation on Public Sector Development Programme (PSDP), covering current year's utilisation and an ambitious plan for 100 percent utilisation in 2007-08. The president was informed that next year's PSDP will be around Rs 505 billion.

http://www.brecorder.com/index.php?id=565517&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Inflation may stay 7-7.5 percent in this fiscal year: Ashfaque *

ISLAMABAD (May 18 2007): Pakistan will not be able to bring down inflation to 6.5 percent target for the current fiscal year. It is expected to remain between 7 and 7.5 percent in 2006-07 against 7.9 percent during the last fiscal year, said Dr Ashfaque Hasan Khan, adviser to the finance ministry.

Speaking at regular weekly press briefing on Thursday, he said that inflation was recorded at 7.9 percent during July-April 2006-07 as against 8 percent in the same period last fiscal year. The inflation was 6.9 percent in April 2006-07 compared to 6.2 percent during the same month the last fiscal year.

Dr Ashfaque said that food inflation stood at 10.2 percent in the first 10 months of the current fiscal year against 7 percent in the same period last year. The non-food inflation, however, came down to 6.2 percent in July to April period of the current fiscal year from 8.8 percent during the same period last year.

The non-food and e non-energy inflation remained at 5.7 percent in the first 10 months of the current fiscal year against 8.8 percent in the same period last year, he added.

"This year, the inflation is actually driven by food inflation," he said. Within food, the inflation in perishable food items is 17.6 percent in the first 10 months of the current fiscal year against 5.1 percent in the same period last year. The inflation in non-perishable food items is 9 percent during July-April this fiscal year compared to 7.2 percent in the corresponding period last year.

RUPEE DEVALUATION: Dr Ashfaque Hasan Khan ruled out the devaluation of the Pakistani rupee. "We are in a comfortable position and there is no need to devalue our currency," he said, while responding to a question.

He said the Pakistani rupee appreciated by two percent against the dollar in last 10 months or so while the Indian currency appreciated by over 13 percent and Chinese by around 10 percent.

With such situation where rupee appreciation is only two percent, it is high time for the exporters to take advantage as they are competing the Indian and Chinese exporters at least in the textile sector, he said, adding the tight Monetary Policy maintained by the State Bank of Pakistan (SBP) was doing well.

In reply to another question, the adviser said that interest rates had been increased globally in the last few years. The mark-up rate at 1.5 percent on bank loans some years back was the 45 years lowest. Gradually, this rate has been increased in developed countries, including the US. He said that US had reportedly controlled the inflation, and now the US authorities were expected to bring down the interest rates.

BASE YEAR: Statistics Division Secretary Asad Elahi, who was present at the briefing, said the government had not taken any decision to change the base year. He said the Statistics Division had undertaken 26 different studies and surveys and they would come in the national accounts first. It will take some time.

Ashfaque Hasan Khan said that if surveys and studies were completed this year, and were brought in the national accounts some time next fiscal year, then the 2006-07 could become the base year.

Asad Elahi gave a detailed account of a recent livestock survey, conducted by the Statistics Division and the Agricultural Census Organisation (ACO). According to the survey, the livestock share in agriculture GDP in 1996 was 25.3 percent, which increased to 49.5 percent in 2006, he said.

http://www.brecorder.com/index.php?id=565546&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*China keen to increase import of Pakistan products *

KARACHI (May 18 2007): China is interested to increase import of several products from Pakistan along with exploring investment opportunities in various sectors. Sources in Federation of Pakistan Chambers of Commerce and Industry (FPCCI) told Business Recorder on Thursday that China was interested in increasing imports from Pakistan in leather shoe and garments to meet rising demand in its country.

In this regard a high level delegation from Wenzhou City, China planned a visit to Pakistan in June. The delegation would also explore the possibilities of investment in leather shoes and garments, low voltage equipment, magnetic pumps and any other product having demand in Pakistani market. The visit was organised by the Consulate General of Pakistan, Shanghai, China in collaboration with the local China Council for the Promotion of International Trade to foster bilateral economic relations between the two countries.

The sources said that Wenzhou City was one of the largest production bases of light industrial products such as spectacle frames, pens, cigarette lighters, badges, valves, magnetic pumps, leather shoes, low voltage electrical items etc.

http://www.brecorder.com/index.php?id=565564&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Chilean company to invest $1bn in copper project *  

ISLAMABAD: Chairman of Board of Directors of Chilean Antofagasta Copper Company, Jean-Paul Luksic F. called on Minister for Petroleum and Natural Resources, Amanullah Khan Jadoon here on Thursday and discussed Companyâs one billion dollar investment programme for development of Rekodiq Copper Project at District Chagai, Balochistan Province.

Welcoming the delegation, the Minister said the government was taking concrete steps for exploring the mineral deposits at a fast pace and looking forward for speedy development of the Rekodiq by Chilean Antofagasta for the mutual advantage.

Jadoon recalled his fruitful and meaningful visit to Chile in December last as a head of delegation comprising of the Chief Minister Balochistan and Mineral experts which helped to abreast with the Chilean technologies and expertise being used for mining and production of copper gold deposits.

Pakistan, he said, has huge proven coal deposits of 175 billion tones at Thar in Sindh province and informed that government was contemplating to produce 20,000 mw electricity from coal energy by 2016.

He said the government would provide all out cooperation to the Chilean Antofagasta for carrying out their development and production activities at Rekodiq copper field.

The Chairman of Chilean Antofagasta who is currently visiting Pakistan as head of 7-member high-powered delegation, expressed gratitude to the Minister for Petroleum for arranging the visit and warm welcome to the delegation.

He said that Antofagasta was keen to implement this mega copper development project as quickly as possible and briefed him about the arrangements being made in this regard.

Minister of State for Petroleum and Natural Resources Mir Muhammad Naseer Mengal, Secretary Petroleum Ahmed Waqar, senior officials of the Ministry and members of Antofagasta delegation were also present during the meeting.

http://www.thenews.com.pk/daily_detail.asp?id=56398


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## Neo

* âSeven monthsâ effort lost in seven daysâ *  

KCCI chief expects a less-than-enthusiastic response to the much-touted My Karachi Exhibition after the May 12 carnage

By Hina Mahgul Rind

KARACHI: All the hard work done over the last seven months to make preparations for an international exhibition in Karachi has gone down the drain in less than seven days, says Majyd Aziz, President of Karachi Chamber of Commerce and Industry (KCCI). 

The chamber has been working strenuously to hold âMy Karachi Exhibition â Oasis of Harmonyâ from June 1 to 3 in the city, but, as its president put it, the May 12 outrage in Karachi has shattered the image of Pakistan as the whole wide world witnessed the macabre incidents of that day.

âOur purpose of holding My Karachi Exhibition was to promote the image of Karachi. We invested time, money and effort to persuade foreign investors to come to Karachi, the financial hub of the country.

âThe image which had painstakingly been built of the city as conducive to commerce in the last few years has been tarnished. It will take a long time to erase the blot,â he said.

Since that fateful day, he said, consuls-general of various countries have been calling me, asking such troubling questions as why all that happened in Karachi in which 46 precious lives were lost and what the law enforcement agencies were doing. 

They have been inquiring about the situation that might develop in the days ahead and are less than sure if they would be able to take part in the planned exhibition.

He said that âI doubt that the exhibition would get the same response as we had thought it wouldâ.

He said how one can reassure them that such incidents will not recur. It was already impossible to convince them that Karachi is a safe and secure place. 

He added that Karachi is the financial capital of Pakistan. It has the lionâs share in GDP and revenue growth. It generates approximately 65 percent of the total national revenue. In large-scale manufacturing, Karachiâs share comes to 42 percent, but the whole city was paralysed last week, he said. The financial losses suffered by the city are estimated to be in the region of Rs.24 billion per day.

In February 2007, the World Bank termed Karachi the most business-friendly city in Pakistan but this positive image has been turned into negative within no time, he added.

Shamoon Bakir Ali, Chairman of My Karachi Organization Committee, said that whatever happened last week has shattered every citizen but we have to do our bit to pull it from the edge of a precipice. He, nevertheless, sounded upbeat and said the exhibition would take place as scheduled. 

He said some foreign delegates have confirmed their visits. He said the event is also part of Visit Pakistan Year 2007. The Ministry of Tourism has signed an agreement with KCCI to make the event a success.

He added that though the May 12 incidents have âshattered are dreamsâ, we are still hopeful and would do our best to make it an event of international standing.

âItÃ­s difficult to get customers as we have already a negative image in the international market,â another businessman observed. âAfter the May 12 bloodbath in Karachi and Peshawarâs bomb blast, people have started cancelling their arrival plans,â he said, and went on to add that the Indian delegation, which was supposed to participate in the exhibition, is among those who have cancelled their trips. He expressed the fear that many more might follow suit.

Zafar Moti, a senior stock broker, said the recent violence has not only hampered our business but also shattered our souls. âOur business depends upon the psyche of investors and such violence badly affects the sentiments,â he said.

âItÃ­s important to motivate the investors but we have been de-motivated so how can we motivate anyone else to invest in a place where security of citizens is not guaranteed.

http://www.thenews.com.pk/daily_detail.asp?id=56397


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## Neo

May 18, 2007 
*Hubco allowed 225MW new plant*

KARACHI, May 17: The Hub Power Company Limited (Hubco) was issued Letter of Support (LoS) by the government on Wednesday for setting up a new power plant with net capacity of 225MW, a senior company official told Dawn on Thursday.

âWe had completed all formalities and forwarded to the Private Power & Infrastructure (PPIB), pre-feasibility documents for a new power plant earlier this year,â said the company official and added that after several sessions of discussions, the company was awarded LoS on Wednesday. He thought that to be a major step forward.

The company official said the new power plant would cost around $230 million.

âTariff structure would be discussed with the National Electric Power Regulatory Authority (Nepra) in due course,â he said.

Hubco already operates the country's biggest independent power plant (IPP) with net capacity of 12,00MW located in Tehsil Hub, District Lasbella, Balochistan.

Chief Executive of Hubco, Mr Javed Mahmood, in answer to a query, responded that world-wide it was the sellers' market for power generation machinery since it was the manufacturer who dictated costs and terms.

He claimed that Hubco would have an edge in acquisition as well as delivery due to the good reputation that the company and its parent enjoy.

The CEO of Hubco would not disclose the location of the new plant but hinted that it would neither be in Karachi, nor in Balochistan. But Mr Javed made it a point to emphasise: âWe are absolutely committed to Pakistan and would like to expand our activities in this country.â

http://www.dawn.com/2007/05/18/ebr9.htm


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## Neo

May 18, 2007 
*Livestock production up 30pc in 10 years*

ISLAMABAD, May 17: Pakistanâs total animal production has grown by 30 per cent in 10 years (1996-2006) compared with 21 per cent in the previous decade of 1986-1996, says Pakistan Livestock Census 2006, results of which have partially been questioned by international experts.

The census conducted by Agricultural Census Organisation over the last 16 months was released here on Thursday by Secretary Statistics Division Asad Elahi. The livestock survey is carried out after 10 years.

Mr Elahi said that field work of the survey took about 11 months in five phases between September 2005 to July 2006 and sampling was carried out in 12 per cent of Pakistan areas and covered 26 per cent housing units of this area including Tharparker and Choolistan where there was large concentration of animal population. The sample survey was based on a total of 1.03 million questionnaires.

He said the cattle production has registered a growth of 45 per cent under the 2006 census compared with 19 per cent of the previous census. Of this, buffalo production grew by 35 per cent, sheep production by 13 per cent and was higher than 29 per cent and four per cent respectively of the previous census.

Goat production also increased by 31 per cent in 2006 census but was significantly lower than 42 per cent growth recorded in the 1996 census. The census revealed that cow insemination had increased from 0.05 million in 1996 to 1.68m, showing an increase of 236 per cent. Likewise, buffalo insemination increased by 106 per cent to 1.11 million in 2006 compared to 0.54 million in 1996.

Milk production increased by 36 per cent to 38.37 billion litres per annum in 2006 from 28.26 billion litres in 1996, says the livestock census. The census revealed that that number of camels in Pakistan has now reached 0.9 million, up by 13 per cent since 1996.

Interestingly, the number of mules and donkeys increased by 18 per cent and 19.9 per cent respectively since 1996 and stood at 0.155 million and 4.268 million but the number of horses increased nominally by three per cent and stood at 344,253 in 2006.

The census results were presented for review to Dr Hans-Siegfried Grunwaldt, an expert of international repute of Germany, who generally appreciated the structure and questionnaire but questioned some of the outcomes.

For example, he said that âfor sheep, the stock of young animals (below one year) has increased by 22.3pc while the stock of the female animals elder than one year has increased by 3.5 per cent only. It would be helpful to have an explanation for that. Could it be change of utilisation of animals resulting in extended raising?â

He also said that the time of data collection was dispersed over time and regions between September 2005 and July 2006, which he said should have been âas far as possible at a common point of timeâ.

He said that âstocks of animals might vary seasonally and thus might have an impact on the regional results of this census. I guess in spring/summer more calves might be born than in autumn/winter. This could explain that in NWFP (between March and June) 72 per cent of the cattle cows had been in-milk where as in Punjab (between September and January) the rate was 62 per cent only. Moreover, it is not indicated whether or not the previous census has been conducted at the same point of time as the present censusâ.

http://www.dawn.com/2007/05/18/ebr13.htm


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## Neo

May 18, 2007 
*39 uplift projects approved: CDWP okays Mirani dam resettlement action plan*

ISLAMABAD, May 17: The Central Development Working Party (CDWP) on Monday cleared 39 development projects estimated to cost Rs11.7 billion, including a resettlement action plan for Mirani Dam in Balochistan. These 39 projects involve a foreign exchange component of Rs1.8 billion.

The meeting was presided over by Deputy Chairman of the Planning Commission Dr Akram Sheikh.

Planning commission spokesman Asif Sheikh told reporters after the meeting that in the infrastructure sector, 26 projects costing Rs8.5 billion, six social sector projects worth Rs1.4 billion and seven projects in science and technology and other sectors costing Rs1.8 billion were either approved or recommended to the Executive Committee of the National Economic Council for approval.

The meeting recommended the Resettlement Action Plan for Mirani Dam worth Rs1.84 billion to the Ecnec for approval. However, the CDWP appointed the National Rural Support Programme (NRSP) as third party which, with the help of the Balochistan government, would re-asses the cost of land, buildings and trees under the compensation package. He said that the height of Mirani dam would be increased by 20 feet that would increase the cost of the resettlement plan.

Mr Sheikh said that in the transport and telecommunication sector, the meeting approved 12 projects costing Rs4.9 billion, five water projects worth Rs5 billion, nine physical planning and housing projects valued at Rs1.5 billion, three higher education projects worth Rs986 million, four industrial and commerce sector projects which would cost Rs995 million and two projects in the science and technology sector worth Rs450 million.Of the approved projects, seven projects valued at Rs1.7 billion would be undertaken in the Punjab province, five projects costing Rs1.8 billion in Sindh, and 10 projects worth Rs1.6 billion in the NWFP. He said for the first time, the government had approved four projects of private sector.

He said that the meeting had also approved the settinh up of a foundry service centre in Lahore on 50:50 per cent basis funding. The project will cost Rs195 million. The centre would share 50 per cent of the cost in the project while the chamber of commerce would share the remaining cost. He said that the chamber would also give Rs500 million for purchasing land for the centre. He said that the center would provide dye-making and moulding facilities besides providing materials testing facilities and training.

He said the meeting also approved a product development centre in Gujranwala at a cost of Rs98.7 million that would also provide common facility for industrial development. âThe meeting also approved product development center for composite based sports goods and business and commerce centre in Sialkot which will also extend facilities for industrial development.â

In the water sector, the meeting approved the construction of Lougher and Karak dams in Karak district and the Darmalak dam in Kohat district.

http://www.dawn.com/2007/05/18/top7.htm


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## Neo

Friday, May 18, 2007 

*Govt to continue providing digital access to people: PM*

ISLAMABAD: Prime Minister Shaukat Aziz on Thursday said the government will continue providing digital access to people so that they could benefit from the opportunities of globalisation.

He was addressing at a function held in connection with the World Telecommunication Day coupled with the launching of broadband service by Pakistan Telecommunication Limited (PTCL) at a local hotel here.

The PM said: âBridging the digital divide is the need of the hourâ¦therefore, there is an urgent need for improving the access of developing countries and disadvantaged groups and leading the way to a truly open, inclusive and prosperous telecommunication age.â

The PM said the country was experiencing a success story in the telecommunication sector as a direct result of the reform dividend.

He said with fully liberalised and deregulated environment, the telecom sector in the country attracted foreign investment on licence and infrastructure of over $9 billion during the last five years, while another $4 billion was expected by 2010.

Prime Minister Shaukat Aziz said this yearâs theme of the World Telecommunication Day - âConnecting the Young: The opportunities of information and communication technology - had a special relevance with Pakistan, as 100 million of its population comprised youth below 25 years of age.

He said the best way to leverage this potential was to focus on human development and particularly on education and skills reflecting national and international job market.

About achievements in the telecom sector, the PM said teledensity had increased from three percent in 2000 to 40 percent in 2007, which was the highest in South Asia. 

http://www.dailytimes.com.pk/default.asp?page=2007\05\18\story_18-5-2007_pg5_2


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## Neo

Friday, May 18, 2007 

*Mutual fund industry size stands at Rs 215b*

LAHORE: Mutual fund industry has witnessed a phenomenal growth in the last few years, as in 2002 the industry size stood at Rs 25.1 billion, and as of March 31 2007 its accounts to 215 billion rupees.

Abbas Sajjad, Head of Business Development at Atlas Capital Markets, said this figure in itself is the proof of trust and credibility people have in this industry. He told Daily Times that an impressive number of foreign investors are investing in Pakistanâs capital markets as they see Pakistan as a developing economy offering exceptional returns.

Regarding Atlas Capital Markets (Private) Limited (ACML), Mr Sajjad told that it is a wholly owned subsidiary of Atlas Bank Limited and one of the 12 financial and engineering entities falling under the banner of the Atlas Group. It has formally launched an advisory and distribution service of open-end funds by the name of âInbestâ from May 14, 2007. Initially, this service will be restricted to four major cities; Karachi, Lahore, Islamabad and Faisalabad. 

He said mutual fund is a pool of assets of scattered investors. It is becoming popular among investors with every passing day. Since mutual funds offer easy redemption option by enabling the investor to enter or exit as per its wish, it is emerging as a buzzword among investorsâ circles. 

Sajjad further added that the competition is set to become fierce Due to the entrance of big commercial banks as they are now tapping the retail market, which was earlier neglected. These banks are able to do so because of their extensive branch networks and customer databases and huge advertising budgets. A healthy contribution has been possible because of the emergence of distribution and advisory services for mutual funds. Indeed the competition is increasing at an alarming rate but this will bring out the best fund. 

http://www.dailytimes.com.pk/default.asp?page=2007\05\18\story_18-5-2007_pg5_11


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## Neo

*Pakistan has 58.39 million mobile users in April*
Thursday 17 May 2007 

Pakistan had a total of 58.39 million mobile subscribers at end-April, up from 55.62 million at end-March, according to the Pakistan Telecommunication Authority (PTA). Mobilink had the highest number of subscribers with 25.21 million subscribers, followed by Ufone with 12.49 million subscribers, Warid with 9.71 million subscribers, Telenor with 9.63 million subscribers, Paktel with 1.02 million subscribers and Instsphone with 0.33 million subscribers. The mobile density was 37.58 in April 2007 compared to 35.79 in March

http://www.telecompaper.com/news/article.aspx?id=168330&nr=&type=&yr=


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## Neo

*PAKISTAN'S LIVESTOCK EARNINGS RISE TO HIGHER SHARE OF GDP*

Thursday May 17, 2007

ISLAMABAD, May 17 Asia Pulse - The share of livestock as a proportion of Pakistan's gross domestic product (GDP) has increased from 25.3 per cent in 1996 to 49.5 per cent of the agricultural value added in 2006, the 4th Livestock Census 2006 has revealed.

Growth during last 10 years in terms of cattle head count was 45 per cent, with buffalo 35 per cent, sheep 13 per cent, goats 31 per cent, camels 13 per cent, horses 3 per cent, mules 18 per cent, asses 20 per cent and domestic poultry, which has witnessed an increase in population of 18 per cent.

Sikandar Hayat Khan Bosan, the Federal Minister for Food Agriculture and Livestock, made the announcement at a press conference.

Secretary Agriculture Ismail Qureshi and officials from Agriculture Census Organisation (ACO) were also present.

The minister said the Livestock Census was undertaken regularly by the ACO every 10 years.

The census exercise was carried out in 1976, '86, '96 and now in 2006.

The census was carried out on a sample basis and 1.003 million households were counted during the census. An entire field operation was spread over five phases from September 2005 to July 2006.

The Livestock Census clearly indicates that headcount of economically important livestock shows an increasing trend, in terms of productivity.

Milk production has also improved in both cattle and buffalo and the comparative growth rate of livestock between 1986 to 2006 had shown an increasing trend, the minister said.

Census results shows that head count of the livestock have increased significantly during 1996 to 2006 and cattle population have increased from 20.42 million to 29.56 million with a 45 per cent increase, buffalo from 20.27 million to 27.3 million, with a 35 per cent increase, sheep 23.54 million to 26.49 million with a 13 per cent increase, goats from 41.17 million to 53.79 million with a 31 per cent increase, camels from 0.82 million to 0.92 million with a 13 per cent increase, horses from 0.33 million to 0.34 million with a 3 per cent increase, mules from 0.13 million to 0.16 million with an 18 per cent increase, asses from 3.56 million to 4.27 million with a 20 per cent increase and domestic poultry have from 62.26 million to 73.65 million with an increase of 18 per cent, the minister added.

In terms of milk production 1996-2006, the minister said that milk production from cows had witnessed an increase of 42 per cent, which stood at 13.33 billion litres in 2006, as compared to 9.39 billion litres in 1996.

Milk production from buffaloes increased from 18.90 billion litres in 1996 to 25.04 billion litres in 2006, projecting an increase of 32 per cent.

Total milk production has increased from 28.26 billion litres in 1996 to 38.37 billion litres in 2006, with an increase of 36 per cent.

http://au.biz.yahoo.com/070517/17/18lra.html


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## Introvert

*
Border trade with Iran up by 100pc in three years
*
QUETTA, May 18: The border trade between Pakistan and Iran witnessed an increase of almost 100 per cent in last three years and both the countries have prepared a list of items to reduce duty and taxes for further enhancement of trade volume.

This was stated by the Governor-General of the Iranian Province of Sistan, Dr Habibullah Dhamardha, and Balochistan Governor Owais Ahmed Ghani while jointly addressing a press conference at the Governor&#8217;s House here on Friday.

The border trade would be brought to $1 billion between Iran and Pakistan and this increase would be 200 per cent more than the present trade volume, they said.

They said in 2004-04 the border trade volume between Pakistan and Iran was Rs7.5 billion, but it increased to Rs16 billion during 2005-06 during the various measures taken.

"We have fixed the target of trade increase to Rs60 billion," they announced and added that both the countries have suggested various steps for achieving the target.

Governor Owais Ahmed Ghani informed that Pakistan had prepared a list of 465 items while Iran included 400 items in the list on which customs duty and taxes would be reduced in near future.

He said both the countries have decided to improve infrastructure for free movement of goods, besides simplification of issuance of visa.

Railway line between Quetta-Zahidan would be improved and air link would be established between both the provinces, he said, adding launching of a ferry service between Gwadar and Chahbar ports was also discussed in the meeting.

He said that Pakistan had established four entry points other than Taftan while some more points would also be opened soon.

He said that dispute on land allotment for construction of Pakistani consulate was also resolved and construction of the new building was launched.

He said that Zahidan and Balochistan would also extend help and cooperation in the field of education and would also provide cold storage and other related facilities to each other.

The Governor General of Sistan Balochistan, Dr. Habibullah Dhamardha, while replying to a question said that Pakistan and Iran have very cordial relations and his country wanted to extend more cooperation in various fields for the development of Pakistan.

He said that Iran wanted to discourage smuggling on its border for increasing legal trade between both the countries and both the countries have decided to take steps in this regard.

Referring to Gwadar port, the Iranian head of delegation said that Iran would review the available opportunities at Gwadar port and would take benefit of it.

He said that Iran was supplying electricity to various towns of Makran and would expand its supply to other areas.

Replying to a question, Dr. Dhamardha said the old Quetta-Zahidan railway track would be improved for increasing rail speed.

He said that Quetta -Zahidan highway would be improved. Joint venture could be launched for providing maximum communication and other required facilities, he said.

He said that as Islamic countries, Pakistan and Iran should come forward and extend help and cooperation to other Islamic countries.
http://www.dawn.com/2007/05/19/ebr1.htm


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## Neo

*Portfolio investment plummets after scaling new heights *

KARACHI (May 19 2007): Portfolio investment in terms of the Special Convertible Rupee Accounts (SCRAs) maintained at the State Bank scaled new heights ever since it touched the record figure of $700.4 million on April 23, 2007.

It stood at $827.5 million a few days ago on May 14, 2007, after posting an increase of $4 million on May 13, and an increase of over $127 million during the intervening 20 days since April 23. Portfolio investment, however, plummeted to $784 million on May 16 after posting decline of $3 million and $40.4 million on May 15 and 16 respectively.

It appears that up to May 14, the day marking the countrywide mourning of the May 12 Karachi killings, foreign investors remained undaunted of the brewing political crisis. They continued to purchase Pakistani equity at depressed prices as the KSE Index first plunged from the record high of 12,512 points on May 4,to the low of 12,080 by May 7. Then after gradual picking in the following days, plunged again from 12,368 on May 11 to 12,259 on May 16, the period when the foreign investors became confused about the future prospects of the stock market in Pakistan.

For the present, we foresee more dis-investments in the coming days until the investors return to the market with recuperated confidence as soon as the dust of political killings settles down.

Between May 14 and May 16, nearly all big investors went on unloading their portfolios with Malaysia alone dis-investing some $33.4 million followed by UK dis-investing $6.7 million, USA $5.7 million and Hong Kong $1 million. Strangely enough, Switzerland, which had been by far the largest dis-investor during FY07, dis-investing some $57.4 million by May 14, brought in fresh funds in the amount of some $1.3 million during May 15 and 16.

Among others, Singapore and UAE made fresh investments of $1.5 million and $0.8 million respectively amid minor inflows observed also in the case of Japan ($0.25 million) and Liberia ($0.03 million). No change was observed in the case of other relatively minor investors/dis-investors, numbering 13 in all, as their positive or negative balances under the SCRAs remained unchanged during the period.

http://www.brecorder.com/index.php?id=565860&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Sindh government demands ban on wheat export *

KARACHI (May 19 2007): Sindh government on Friday contacted the federal government for the imposition of immediate ban on the wheat export because of its rising prices in the domestic market and a probable shortfall of 0.150 million in procurement, sources closed to food ministry told Business Recorder.

Last December, federal government had allowed around 1.3 million tons of wheat for export including 0.550 million from open market. Government took this decision by keeping in the estimated bumper crop of 23 million tons during the current season.

Sources said that wheat exporters are buying huge quantity of wheat from open market for export purpose, which is the basic factor behind its soaring prices in the domestic market.

Wheat prices in the local market have raised by Rs 100 per bag to Rs 1215 per 100-kg bag during last two weeks, which was earlier being tagged at Rs 1115 per 100-kg bag, they added.

On Thursday a delegation of Pakistan flour Mills Association met the secretary food Sindh and demanded for a ban on wheat export. This demand by the millers was endorsed by the Sindh food department on Friday and finally sent an official request through formal channels to the federal government, in which it has demanded imposition of the immediate ban on wheat export.

Government of Sindh has informed the federal government in the letter, stating that, "due to the high price of wheat in domestic market, making it impossible for the Sindh Food Department to achieve the wheat procurement target," sources said.

Some 0.550 million tons wheat has been procured by the Sindh food department against the target of 0.7 million during last one and a half month, while further procurement process has come to a standstill due to high prices of wheat in the market, Sindh government said in letter.

"We were procuring around 20-25 thousand tons per day till last week and now procurement has declined to one thousand tons per day in the wake of high price of wheat," letter added.

Sindh food department said that these days wheat price is higher than the last year one, which is around Rs 12000 per ton against the government's support price of Rs 10625 per ton in the Sindh and it is also expected that procurement target of Sindh food department will not be achieved.

It is requested to the federal government to take immediate steps and suspend the wheat export at least till the target of wheat procurement is achieved, they demanded.

Sources said that due to high price offered by the wheat exporters, farmers prefer to sell their crop to exporters against food department. At least 25 flour mills on Thursday suspended their operations due to increasing wheat-grain price on the back of extra ordinary buying by the export houses, they said and added despite arrival of fresh crop, wheat price is on the constant rise in the open market, they added.

They informed that some flour mills in Sindh province have raised their product price by Rs 0.50 to Re 1 per kg to Rs 16-18 per kg on Thursday and some have closed their operations in the wake of hike wheat price.

They said that some indications show that government estimation of bumper wheat crop is incorrect and the figures of crop will be different than of that announced by the government.

http://www.brecorder.com/index.php?id=565849&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Nepra offers to buy electricity from 'captive power' *

KARACHI (May 19 2007): The National Electric Power Regulatory Authority (Nepra) has offered the industrial sector to generate electricity from their 'captive power' capable to generate 300-400MW in to the national grid.

This was stated by the Chairman of Nepra, Lieutenant General Saeed-uz-Zafar (Retd) while speaking as a chief guest at the first anniversary celebration of Energy Update here on Friday.

He said, "We will give them (captive power) the permission to sell this energy or use it for their industrial needs to reduce burden from national grid and cater electricity shortfall." "Presently the electricity losses loom between 27 to 42 percent, of which the transmission loss is only at 8 percent while rest is power theft," he pointed out.

He hinted that per unit cost of electricity is likely to shoot-up to Rs 15 per unit in future due to high power tariffs. Saeed said, "We are importing oil for consumption and for last few years we are discussing about gas import from various options and now we are planning to import electricity from Iran."

He said why should we enhance oil and gas explorations as our country have huge reserves of fossil fuel to meet the country's growing demand. Earlier, the Chief Executive Officer of Karachi Electric Supply Corporation (KESC) Lieutenant General S. M. Amjad (Retd) said, the outstanding amount of power utility on city's consumers is Rs 20 billion, excluding government departments. Only Rs 3 billion bills were disputed, he maintained This was due to our weak recovery system that would not able to collect pending outstanding, he said, adding that the government should made legislation for dues recoveries.

"There is a communication gap between the KESC and the consumers and we have to tell truth whether someone likes it or not," he added. He said, power demand of the city stand somewhere at 3000MW, of which the corporation and IPPs were generating 1600MW. The shortfall meet through Wapda's supplies, which meet our demands, he added.

The city witnessed before the hot summer a demand of 2350MW and it is likely that the demand would further increase, he observed. Abdul Haseeb Khan said, the private sector is able to invest in power generating plants of 500MW, if the federal government provide guarantee of investment and generation purchase.

The Managing Director of Asia Petroleum Limited, Naved Alam Zubairi said, only 55 percent of population has access to electricity, while 22 percent receiving piped gas. The Pakistan is extremely low energy intensity economy of 14 MMBTU per capita per annum.

He said, the substantial energy injection is required for lifting the general standard of living especially if we do not want to sustain growth rate. The gas distribution system is exhaustive but rising demand and declining fields make expansion of further distribution system infeasible, he added. Demand indigenous supply gap of energy will keep on steadily increasing creating more and more room for imports, he pointed out.

As far as primary energy supply of concerned, the country cater about 80 percent and the long term goal is to create a competitive, efficiently run, financially and largely viable privatised oil and gas sector, he added. Primary energy demand for next 15 years is expected to grow at 6 percent. In 2020 annual energy requirement would be 130 MM TOE from existing 57.85 MM TOE.

http://www.brecorder.com/index.php?id=565824&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pakistan 2nd largest importer of US cotton *

By Mansoor Ahmad

LAHORE: Pakistan after China has emerged as the second largest importer of Puma cotton from the US, overtaking the European Union, Indonesia, Russia, Thailand, India and Taiwan in the last seven years.

The US Agriculture Departmentâs data reveals in the year 2000 Pakistan was placed at second last spot among top 18 importers of US Puma cotton. At that time, Pakistan imported 450,000 bales of 480 pounds compared to 4,770,000 bales imported by the EU, which was the largest importer of US cotton. China imported only 230,000 bales.

Among Asian countries, Indonesia was the largest importer of US cotton in 2000 with imports of 2.65 million bales. India imported four times more cotton from the US than Pakistan in the same year. Its imports stood at 1.56 million bales.

In 2006, when textile quotas were abolished, the markets of US cotton changed dramatically. China emerged as the largest importer with imports of 17.5 million bales, followed by Pakistan, which imported 2.3 million bales. 

India imported only 400,000 bales, which were less than what Pakistan was importing in 2000.

Pakistanâs dependence on US cotton increased steadily from 2000 to reach the present level. Similarly, Chinese imports of US cotton increased rapidly every year till reaching the historic peak of 19.28 million bales in 2005, when there was a short cotton crop in the country. However, cotton imports by China declined by 1.8 million bales to 17.5 million bales last year.

Giving the reason for the demand of US cotton, market analysts pointed out it was long staple used for producing fine-count yarn. They said import of a large quantity of quality cotton showed Pakistan was well poised to produce quality fabrics.

At present, the impact of this large import of long-staple cotton is not being felt in exports as the spinners are mainly exporting yarn made from this cotton.

They said the value added garment sector was not yet geared to use finer fabrics as it was still catering to low-end markets in Europe and the US. They said the sector would gradually acquire skills and know-how to produce high-value garments from fine quality fabrics.

However, they pointed out the decline in Indian import of long-staple cotton was not because of any flaw in marketing fine-count yarn or fabric. 

Indians actually were increasing domestic production of long-staple cotton.

India, in fact, is now competing with the US in the long-staple global cotton market. Pakistan, however, has failed to upgrade cotton cultivation and production to the level achieved by India.

http://www.thenews.com.pk/daily_detail.asp?id=56582


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## Neo

May 19, 2007 
*$1bn bonds assigned B+ rating*

KARACHI, May 18: Standard & Poor's Ratings Services on Friday assigned its 'B+' senior unsecured foreign currency debt rating to Pakistan's proposed global bond issue of up to $1 billion.

The encouraging rating has been assigned with few reservations about some sectors of the economy.

âThe sovereign credit ratings on Pakistan reflect strong economic growth that is supported by a consistent and reform-oriented policy environment, balanced against prevailing high public debt and low fiscal flexibility,â said the rating agency.The proposed issue will consist of a new 10-year bond maturing in 2017, and the reopening of the existing bond maturing in 2036.

The 'B+' rating on the existing bond was also affirmed.

The rating agency found the economic growth of Pakistan sustainable hoping better performance in the future.

"Pakistan's generally prudent economic management and strong policy environment, which over the past several years has consistently focused on structural and institutional reforms, is translating into better growth prospects.â

The rating agency viewed economic growth healthy improving at the rate of seven per cent per year with the help of foreign investment.

Trade liberalisation and extensive privatisation are generating productivity improvements, and attracting a rising amount of foreign direct investment, much of it green field. As a result, the country is poised for a period of sustained high growth of about seven per cent per year, helping to alleviate poverty and make further inroads in debt reduction, said Standard & Poorâs.

The agency expressed disappointment over narrow tax base which has been stagnant for many years though the revenues have improved with the size of economy.

It said the ratings remain constrained by a high level of public and external leverage, and fiscal inflexibility owing to an exceedingly narrow tax base.

"This fiscal constraint limits much-needed public infrastructure investment, and hampers the effectiveness of monetary management, given that the practice of deficit financing by the central bank still prevails.â

Government revenues are estimated at 14.7 per cent of the GDP for fiscal year 2007, while the country's stubbornly low tax-to-GDP ratio of just 10.4 per cent is not expected to improve materially with the modest revenue-raising initiatives of the 2007 budget, said the rating agency.

Gross general government debt to revenues should, therefore, remain at about 380 per cent, well above the median 200 per cent for similarly rated countries.

The government has been under severe criticism by economists regarding accumulation of domestic and foreign debts which curtail availability of liquidity to invest in development projects.

However, the agency did not see any impact of political instability due to coming elections, campaign against President Musharraf and some major violence in the cities, like Karachi and Peshawar.

âThe recent escalation of political tension and uncertainty posed by impending presidential and parliamentary elections are unlikely to have any significant impact on credit fundamentals,â said the rating agency.

"Yet, the longer-term challenge for the government remains, which is to expand and deepen reforms of its tax system to raise government revenues significantly from the current level, and to demonstrate that the current pro-market, pro-growth set of policies will be sustained during successive administrations," it added.

Analysts said that the assigning B+ to the bonds which the government plans to sell in the European Bonds market would encourage her to use the full potential to tap maximum from the market.

The government has adopted policies to borrow more from the markets instead of borrowing from the donor agencies or consortiums of several countries.

http://www.dawn.com/2007/05/19/ebr6.htm


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## Neo

May 19, 2007 
*Pakistan plans dollar bond roadshows*

ISLAMABAD, May 18: Pakistan announced on Friday to hold road-shows in Asia, Europe and USA next week to make another issue of global dollar bonds to raise over $800-1000 million funds for general budgetary support.

The issue of bonds would be subject to market conditions, said a statement issued by the finance ministry.

The government has mandated the Citibank, the Deutsche Bank and the HSBC for this capital market financing.

Pakistan returns to the international financial market with a Rule 144A/Regulations S. bond issue for general budgetary support. The rule makes securities eligible for purchase and trade by institutional US investors.

The securities will not be and have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the US absent registration or an applicable exemption from the registration requirements of the Act.

The government plans to float these bonds in New York before the close of this fiscal year but most probably within this month. The finance ministry has been holding continuous meetings with these fund managers on the subject over the last few months.This will be Pakistanâs fourth international bond in the last five years.

Last year, Pakistan sold $800 million in a dual-tranche sovereign bond, comprising $500 million in a 10-year issue and $300 million in 30-year paper. The proposed new sovereign bond is likely to be for 15 and 20 years maturity period.

In 2004, Pakistan raised $500 million through five-year sovereign Eurobond and in 2005 it issued $600 million five-year Sukuk (an Islamic bond) against which it had to pledge certain sections of the Motorway project.

http://www.dawn.com/2007/05/19/ebr8.htm


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## Neo

*Pakistan on verge of economic take-off: Prime Minister *

DEAD SEA (May 20 2007): Prime Minister Shaukat Aziz said here Saturday the internationally recognised broad-based comprehensive reforms undertaken in Pakistan during the last seven years have repositioned and revitalised the country which is now included among the eleven countries on the verge of economic take off.

Addressing a session of the World Economic Forum on "Success stories in development" he said on their other hand political reforms in Pakistan have ensured good governance through transparency and accountability.

He said there has been devolution of power at grass roots level, with elected representatives running the affairs at the district, provincial and national levels, with representation for women and minorities.

"Pakistan today has an active parliament, an independent judiciary and free media," he said. The Prime Minister said the economic reforms are based on the principles of deregulation, liberalisation and privatisation and they have ensured sustained annual growth at an average of 7 per cent over the past four years.

He said the government has also focused on improvement of the health delivery system, promotion of literacy and improving educational standards, empowerment of women and protection of minorities.

Shaukat Aziz said Pakistan has now embarked upon second-generation reforms including enhancement of infrastructure, development of human capital and building a knowledge-based economy. He said the lessons of Pakistan's experience of implementing the reforms could be useful for other countries facing similar challenges.

"We also believe that it is not the business of the government to be in business; the government should be a facilitator and a regulator while the private sector should be allowed to drive growth." The Prime Minister said the international community, especially the western powers, also need to play a supportive role to help bring peace and stability to the region which is also in their own interest.

Shaukat Aziz said the international community must facilitate efforts to resolve the disputes and conflicts raging in the region. They must help in finding just and durable solutions to these issues, as then it would be possible to remove the root causes of terrorism that threatens the entire international community.

The Prime Minister said the developed countries also must support efforts for socio-economic development in the Middle East region and asked them to provide market access, encourage investment and joint ventures and ensure transfer of technology.

Referring to interfaith harmony, the Prime Minister said it is also necessary for the Muslim and non-Muslim worlds to bridge the increasing gap between them through interfaith dialogue and understanding. Islamophobia and discrimination against Muslim minorities must also end, he added.

Shaukat Aziz said Pakistan would continue its efforts to promote interfaith harmony and dialogue. He said Pakistan has also put forward the concept of enlightened moderation for reform of Muslim societies as well as resolution of issues in the Muslim world with the help of the major powers.

He especially mentioned the efforts being made by Pakistan to address the challenges confronting the broader Middle East region and the Islamic world and the country's key role in the international campaign against terrorism. The Prime Minister said Pakistan has repeatedly advocated resolution of the root causes of terrorism, the disputes and conflicts that are breeding injustice, frustration and anger among Muslims, leading to extremism and violence.

Referring to President General Pervez Musharraf's efforts to resolve the Middle East problem, the Prime Minister said President Musharraf recently visited several Muslim countries to build support for a just and peaceful solution to the issues in the region.

He said Pakistan remains highly concerned over the escalating spiral of violence in Iraq and fully supports the sovereignty and territorial integrity of Iraq and deeply regrets the sectarian violence in the country. The Prime Minister said the international community must make every effort to help the Iraqi people bring this tragedy to an early end.

He said Pakistan supports negotiations to remove tension over the Iranian nuclear program and opposes any use of force. He said Pakistan believes that Iran must honour its international obligations.

Referring to Afghanistan situation, the Prime Minister said peace and security in Afghanistan is in the strategic interest of Pakistan and the region. "We fully support the Bonn process and have provided extensive support to the government of President Karzai and will continue to do so." He said Pakistan and India are engaged in a dialogue process to resolve the Kashmir dispute, emphasising that a just and durable solution of the issue must be based on the wishes of the Kashmiris.

http://www.brecorder.com/index.php?id=566175&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Hi-tech sugar syrup plant designed to arrest invisible losses *

KARACHI (May 20 2007): A hi-tech sugar syrup plant has been designed to arrest the invisible losses in Pakistan's antiquated sugar industry. Javed Malik, Convenor, Sugarcane Grower's Association (SGA) told Business Recorder that the plant would cost Rs 160 million having 70% local and 30% imported components and would be ready on about a year's time.

Besides local, several foreign entrepreneurs from Latin America and Africa have shown interest in setting up this plant. He said that in the backdrop of sugarcane and white sugar crises in Pakistan, a lot of research and development and practical experience have gone in the designing of this project.

The sole is increasing white sugar production and reducing poverty in the rural areas particularly and urban areas generally. It would provide jobs to the rural folks and urban skilled labour (iron foundry workers) to ease unemployment in the country.

Javed Malik said that that the research results show that invisible losses to Pakistan's sugar industry come to about 30-35% according to industrial and grower's estimates. As per sugar chemistry harvested cane should be crushed within 12 to 24 hours while in mega sugar mills it is crushed after 3/4 days provided the system is efficient otherwise it takes about 5/6 days. 

As the hi-tech syrup plant would be small and efficient unit, it has been designed to have a capability to crush grower's sugarcane within 12 hours, thereby arresting the invisible losses to the tune of 30 to 35%. Similar to textile industry, which comprises ginning unit, spinning unit, weaving unit, and stitching unit.

In the United States there are several sugar syrup plants which supply sugar syrup to big sugar mills. The sugar syrup plant designed here, being small and efficient, the focus would be on development of different varieties of sugarcane in gate areas, ie early maturing variety, middle maturing, and late maturing variety, he said.

This, he said, would result in increased quality sugarcane and white sugar production manifold and fresh cut, neat and clean sugarcane would help improve the sugar recovery to new heights.

These small sugar syrup units of 500 TCD capacity would be satellite units of nearby bigger sugar mills ensuring continuous supply of quality sugar syrup to help bigger sugar mills to run its full capacity and producing white sugar very competitively.

The small units would be equipped with the 21st century high-pressure steam technology to produce about more than one mega watt of electricity on 24-hour basis from bogass. This should bring down the cost of running small industry in Pakistan coupled with increased quantity of sugar syrup quality. Further it would bring prosperity to rural and urban Pakistan at grass root level. 

It is a win-win position for all the stakeholders in the sugar industry, Javed Malik said and urged the government to provide 50percent grant and bank financing for this project of growers as India provides 100% grant and gives priority to grower's projects.

http://www.brecorder.com/index.php?id=566212&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Country's nuclear power output capacity only 400 megawatts *

KARACHI (May 20 2007): Country's total nuclear power generation capacity is 400 Mega Watt (MW) that accounts only 0.8 percent of the total power generation of 19,540MW. According to a report published in a monthly, 'Energy Update' in the last 35 years of nuclear research, the country is not yet able to produce nuclear electricity at its own.

As a result, it remains far behind the target of economically viable nuclear power generation that comes only when every plant is capable of producing 1000MW or above.

This is the crucial point where the country feels hurt because of the US-India nuclear deal. With this deal, India would make a quantum jump by setting up nuclear power plants having 1000MW and above capacity. Pakistan's all weather-friend, China, that helped Pakistan in setting up Chashma-1 and now Chashma-II, itself is not capable to put up plant of more than 600MW capacity.

Country's first ever nuclear power plant -Karachi Nuclear Power Plant (Kanupp-I) - installed in 1971 has lost drastically its generating capacity from an original 137 megawatt to only 40 megawatt now and remains closed in major part of the year as the authorities concerned could not maintain it over the years. 

The second plant, Chashma Nuclear Power Plant (Chashnupp-1) started supplying about 300MW to the national grid in September 2000 but it is among the most expensive power plants in Pakistan in terms of its tariff. The third plant, Chashma-II is currently in the construction phase and is expected to be ready by 2011.

The radical drop in the power generation capacity of Kanupp-1 is sufficient to prove the authorities' incompetence in this field. Now, the government is also planning to install Karachi Nuclear Power Plant-2 (Kanupp-2) with a generation capacity of 600 MW with the help of China. 

Negotiations are under way for the purpose. 2019 will retire Kanupp-I and the dismantling of the plant, keeping in view the nuclear emissions factor, will be a test case of the ability and capacity of country's nuclear regulatory authority.

The authorities concerned are trying to increase its generation capacity to the extent possible and within days it could be able to enhance its generation capacity to inject more power in the city's system, which is facing electricity deficit. 

It is strange why the authorities concerned have wasted too much time in enhancing the generation capacity of the nuclear power plant, which has actually been reduced from 137 MW to 40 MW.

However, at long last, the authorities concerned have made a plan to attain the generation capacity up to 70 to 80 MW as it is not possible to retrieve the total generation capacity lost because many of the parts being used in the plant have become outdated. In this connection, the authorities are in talks with the Canadian government for importing some key parts of the plant.

The country plans to increase nuclear power generation capacity to about 8,800MW by 2030. The government has already selected six sites in the first phase to install more nuclear power plants to materialise the plan to increase the country's capacity to generate 8,800MW nuclear power by 2030. The Pakistan Atomic Energy Commission (PAEC) has selected six sites for the purpose in line with the recommendations of the Pakistan Nuclear Regulatory Authority (PNRA) and the International Atomic Energy Agency (IAEA). The government has recently approved funds for the feasibility studies.

The PAEC has selected six sites for installation of more nuclear power plants (NPPs) that include (1) Qadirabad-Bulloki link canal near Qadirabad headworks (2) Dera Ghazi Khan canal near Taunsa Barrage (3) Taunsa-Punjnad canal near Multan (4) Nara canal near Sukkur (5) Pat Feeder canal near Guddu and (6) the Kabul river near Nowshera.

http://www.brecorder.com/index.php?id=566202&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Roadmap for future intra-trade among D-8 group in offing *

KARACHI (May 20 2007): "The Roadmap for future intra-trade between the members of the D-8 organisation is being prepared and it is expected that it would lead to doubling of the trade to over $60-70 billion within ten years. The present global trade of the eight countries is over $750 billion and the combined population is over 900 million.

"Dr Dipo Alam, Secretary General of D-8 organisation disclosed this during a meeting with Majyd Aziz, President and members of Karachi Chamber of Commerce and Industry at KCCI. Dr Alam, who is from Indonesia and was on a short visit to Karachi, moreover added that although this decade old organisation is primarily on a government-to-government level, the new thinking is to involve the private sector and focusing it more as private sector oriented.

He said that the eight Muslim countries, Bangladesh, Egypt, Indonesia, Iran, Malaysia, Nigeria, Pakistan, and Turkey have signed the Preferential Trade Agreement among themselves although it has not yet been ratified by all countries. He said that D8 countries could soon take advantage of trade with Asean countries through Malaysia and Indonesia.

He said visa, custom, and shipping agreements have already been reached within the D-8 membership. Dr Alam who was accompanied by senior Indonesian diplomat, Mr Hikmat Moeljawan, also stated that a process of Sectoral Dialogue is being initiated such as Jewellery development, fruits and fisheries, large-scale manufacturing investment, etc which would be done through 15 working groups.

Earlier, Majyd Aziz in his presentation called for setting up of a designated group of the largest Chambers in each country and that this chambers group could become the focal point in each country and set up a D-8 Cell in each Chamber.

He said that common exhibitions, position papers, and proposals could be done through this Group. Moreover, a continuous flow of information and exchanges of delegations could be undertaken. He offered the services of Karachi Chamber in this regard. He also presented the progress of the My Karachi exhibition which would be held by KCCI on June 01-03.

Dr Alam appreciated the proposal of KCCI and advised that the Chamber should present a formal proposal that would be deliberated in the D-8 headquarters and a decision taken soon. He also suggested that the Pakistani Ministry of Foreign Affairs be kept informed about the proposal too. Mr Hikmat Moeljawan in his remarks assured KCCI that the Indonesian Consulate General in Karachi would continue to provide maximum co-operation and support to KCCI and that is why Indonesian firms have been the first to reserve stalls and participate in the My Karachi exhibition. Later mementos were presented to the Secretary General.

http://www.brecorder.com/index.php?id=566271&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'Industrial sector upgradation budget increased manifold' *

SIALKOT (May 20 2007): Federal Science and Technology Minister Choudhry Nouraz Shakoor Khan has said the budget has been increased to manifold for the modernisation and upgradation of industrial sector in the country. Speaking as chief guest at the earth-breaking ceremony of "Cast Metal Technology Testing and Training Centre" in mini-industrial estate in Daska on Wednesday.

He added that this centre would cater to the needs of advanced foundry, costing, forging and metal testing requirements of industries of Sialkot, Daska, Gujranwala, Wazirabad and Gujrat areas.

The Minister said this centre would be well equipped and it would provide training in various advanced skills to the artisans of these areas. The government was mobilising all available resources and modes for the modernisation of industrial sector of the country aimed at enabling it to cope with modern global challenges and standards more easily, he added.

The "Cast Metal Technology Testing and Training Centre would be accomplished at a cost of Rs 350 million in two years stipulated period. This well-equipped centre would be an international standard and it would provide necessary advanced forging and testing facilities to the industrial sector. Although the construction of this centre would be completed in two years, the provision of metal-testing facilities would be started next month.

http://www.brecorder.com/index.php?id=566258&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*MCCI calls for five-year realistic trade policy to boost economy *

MULTAN (May 20 2007): The Multan Chamber of Commerce and Industry (MCCI) has urged the government to introduce a realistic trade policy for five years, which can boost the economy and should be transparent, comprehensive, viable and free from bureaucratic hurdles, aiming at generating more foreign exchange and additional jobs, and ending the trade deficit to strengthen the economy of the country.

MCCI President Anis Ahmed Sheikh said the incentives of promoting industrialisation with environmental consideration, energy conservation, pollution control and the recycling and use of industrial and city waste by industries as their raw material should be allowed five-year tax exemption.

There is no fruit tin packing industry in southern Punjab, he said, and added that it should be given zero-rated for all taxes as it would enhance exports. He said it was a longstanding demand of southern Punjab that Multan airport should be upgraded for wide-bodied aircraft to operate and for timely exports of perishable agricultural products including fruits and vegetables and other commodities from Multan. The government should take serious steps to control smuggling, promote small industries, which are unable to face competition against bigger industrial units.

The export of value-added engine parts should be allowed 20 percent export incentive to boost exports as there is no duty drawback on these parts, he said, adding that the neighbouring country, China, is providing 22 percent export incentive on these parts. The economic survival of the country depends on its foreign exchange earnings, he said, adding that every country of the world, whether developed or underdeveloped, is making frantic efforts to gain a major share in world trade.

MCCI president said that to boost the country's exports and to achieve national export target the following measures are suggested:

*1) TAX RELIEF FOR ALL EXPORTERS*: However, new entrant in the export trade have to face considerable problems in the early stage. To encourage the newcomers and small exporters it is suggested that liberal tax relief be given to them.

*2) EXPORT RE-FINANCE SCHEME*: The mark-up rate on export be made more attractive. Under part-II of export re-finance scheme the exporters are requested to export goods worth two times of their export finance limit, which should be reduced to 1.5 times.

http://www.brecorder.com/index.php?id=566193&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Textile exports reach $10.11bn *

ISLAMABAD: The National Assembly Standing Committee on Textile was informed here on Saturday that textile exports of the country increased from $8.92 billion in 2004-05 to $10.11 billion in 2006-07.

The committee met here under the chairmanship of Ch Niaz Ahmed Jaat, member National Assembly. The committee was informed that during the nine-month period of 2004-05, total exports were $7.55 billion, which registered an increase of 3.55 per cent during the corresponding period of the current financial year.

It was further informed that the main issues confronted by the textile sector included increase in the cost of doing business involving a rise in utility tariffs, increase in interest rates and cost of finance affecting investment as well as liquidity and lack of value addition to keep pace with the competitors.

The committee was also informed that export refinance rate in the country increased from 3 per cent to 9 per cent, adding to the cost of doing business. A member of Central Board of Revenue (CBR) told the meeting that the CBR is taking every possible step to facilitate the business community and exporters and modern software is being developed to provide fastest refund facilities to its clients.

She said that 2,100 refund cases were cleared, out of a total of 2,700 cases and paid Rs34 billion. Minister of Textile Industry Mushtaq Ali Cheema stressed the financial sector to take serious steps to bring the industry out of crisis and put it on the path of stability and progress.

He said that the textile sector is an important segment of national economy and it can change into a job-creating engine for the workforce of the country, besides being a source of foreign exchange for the country. The minister said that the value of Pakistani currency is stable against the dollar, which is a positive sign for national economy.

Officials of Ministry of Food Agriculture and Livestock (MINFAl) informed the committee that research work on world best and high production cottonseed for production of clean cotton in the country.

The meeting was attended by NNAs Harron Ihsan Piracha, Ahmed Raza Maneka, Sahibzada Muhammad Mahbob Sultan, Ghalib Hussain Domki, Sayed Ayaz Ali Shah Sheerazi, Liaquat Ali Marri, Muhammad Farhan Latif, Iqbal Muhammad Ali Khan, Maulana Rehmat Ullah Khalil, Farid Ahmad Piracha, Asiya Nasir, Nayyer Sultana, Manzoor Ahmed, Yasmeen Rehman, Syed Amir Ali Shah, Muhammad Pervaiz Malik, Mushtaq Ali Cheema and officials of concerned ministries. 

http://www.thenews.com.pk/daily_detail.asp?id=56689


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## Neo

May 20, 2007 
*Foreign investment reaches $6 billion*  
By Shahid Iqbal

KARACHI, May 19: Rising foreign investment in Pakistan is setting new records with each passing day, reflecting attraction and opportunity attached with the growing economy.

Foreign investment reached almost $6 billion during the first 10 months of the current fiscal 2006-07, rejecting speculations that general elections would bar the investors to put their money at risk.

Speculators believe that that risks are attached with instability which may emerge after general elections expected by the end of 2007.

Though foreign investment has been limited to a few sectors, it has increased by over 47 per cent compared to the corresponding 10 months of last year.

Latest official figures showed that foreign investment during July-April 2006-07 reached $5.979 billion against $4.049 billion during the corresponding period of last year.

âIt looks that foreign investment would reach $7.2 to $7.5 billion by the end of the current fiscal which will give immense support to countryâs soaring current account deficit,â said Abid Saleem, an analyst.

The government has been lucky that it received unexpectedly very high flow of workersâ remittances being sent by the overseas Pakistanis.

During the first 10 months of the current fiscal, the country received $4.450 billion which was 22.6 per cent more than the corresponding period of last year.

The fear of unexpectedly low exports growth and high import has been subsided by the record foreign investment and workersâ remittances.

Analysts said the widening trade deficits were of prime concern for the government which could hit up to $12 billion by the end of the fiscal 2006-07.

âThe government has been borrowing heavily to meet the gap, but it will result in more borrowings in future,â he said.

Pakistan has planned to launch Euro Bonds to fetch dollars from the market not relying on donor agencies but despite high commercial prices, the country would have to pay interest on the bonds.

Sources said the government would launch Euro Bonds worth $1 billion and it is now encouraged by the latest rates assigned by the Standard & Poorâs. The rating agency assigned B+ to the bonds in pipeline.

The rating agency also rejected the speculations that the recent political uncertainty would hurt Pakistanâs rating in the international bonds market. This supports the government to carry on its economic policies without making any significant change in the coming budget.

http://www.dawn.com/2007/05/20/ebr1.htm


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## Neo

May 20, 2007 
*NEC to set PSDP at Rs535bn for 2007-08*

By Ihtashamul Haque

ISLAMABAD, May 19: The National Economic Council (NEC) is likely to set the size of the next year's Public Sector Development Programme at Rs535 billion, about 25 per cent above the PSDP of the outgoing financial year.

Dawn has learnt that the NEC, the highest body on taking economic decision, will also review the PSDP 2006-07 and the Medium Term Development Framework (MTDF) 2005-10 when it meets here on May 31. It is also scheduled to monitor the ongoing development projects and approve the working draft of Vision-2030.

Prime Minister Shaukat Aziz will preside over the meeting to be also attended by the planning and finance ministers of all the four provinces, senior officials of the ministries of finance, commerce, industries and the Planning Commission.

The issue of under-utilisation of PSDP funds during the ongoing financial year is also expected to be taken up in the meeting.

"We are proposing about 25-30 per cent increase in the new PSDP and this is how the government plans to offer increased resources for development purposes in the budget for 2007-08", Deputy Chairman Planning Commission Dr Akram Sheikh told Dawn here on Saturday.

He said there will be around Rs95-100 billion additional funding to be provided and approved by the NEC in the new PSDP.

Dr Sheikh said the current PSDP included Rs270 billion share of the federal government, Rs115 billion share of the provinces and over Rs50 billion for the rehabilitation and reconstruction of October 8, 2005 earthquake, totalling Rs435 billion.

The growth momentum, he pointed out, needed to be maintained which required increased funding for new PSDP so as to make available adequate resources for education, health and vocational training.

According to an official summary to be presented in NEC and also obtained by this correspondent, rising inflation, poor exports, slow- down in imports and the widening current account deficit will be thoroughly discussed in the meeting.

The summary projects 7.5 - 8 per cent GDP growth for 2007-08 due to what it claimed strong pick up in domestic and foreign direct investment and strong performance of agriculture, manufacturing and service sector.

"The prospects for sustained high economic growth in 2007-08 would remain excellent," it added.

It further said that GDP growth for 2005-06, provisionally assessed at 6.6 per cent, is likely to go up to about 7 per cent in the revised estimates.

"Strict vigilance needs to be kept on money expansion to contain inflation to the annual target," the summary warned adding that the major taxes collected by CBR showed a comfortable position on government revenues and on the basis it is expected that the full year revenue target would be achieved.

The trade gap though has been widened to higher level but foreign inflows also recorded equally similar growth to bridge the gap.

"The only disturbing aspect of the current year's performance is export growth, which needs to be closely analysed for redressal of its problem, as this is important driving force of the country's economy, having impact on the overall economic performance," the summary added. In this regard, it said that Pakistan's first export plan to increase exports to 15 per cent of GDP from current level of 12-13 per cent by 2013 has been conceived proposing ways and means to accelerate the pace of exports growth.

The summary also conceded that slowdown has been witnessed in import growth, especially those related to production and export process, which are textile machinery and iron and steel.

"Current account deficit is likely to surpass the Annual Plan target of $6.3 billion, as it has already amounted to $4.4 billion during July-December 2006".

GDP growth for the year 2006-07 is estimated to be 7 per cent on the basis of preliminary assessment of agriculture growth and large scale manufacturing (LSM). Taking into account the growth objectives, containing inflation and likely behaviour in the external sector, the Credit Plan for the 2006-07 envisaged 13.46 per cent increase in money supply.

This was based on GDP growth target of 7 per cent and inflation rate target of 6.5 per cent. Net domestic assets were estimated to grow by Rs450.1 billion or 13.2 per cent. Credit Plan target for the private sector was set at Rs390 billion. "The net foreign assets of the banking sector system were envisaged to exert an expansionary effect to the tune of Rs9.8 billion."

The government borrowing for budgetary support at Rs59.4 billion has been 49.5 per cent of the credit plan target. Demand for the private sector credit amounted to Rs227.4 billion as against Rs283.4 billion during the corresponding period of last year. Expansion in credit to private sector is 58.3 per cent of the annual target.

The net assets of the banking system witnessed an expansion to the tune of Rs14 billion as against the contraction of Rs89 billion during the corresponding period last year.

The balance of payment projections for MTDF have been made keeping in view the long-term objectives of reducing the external dependency by increasing those sources of external financing that are stable, sustainable and have positive effects on growth.

The main element of strategy is diversification of exports, stable exchange rate, export competitiveness and trade liberalisation.

http://www.dawn.com/2007/05/20/ebr6.htm


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## Neo

*Australian company may produce cheap power from Thar coal *

KARACHI (May 21 2007): An Australian company is planning to establish power plants with latest technology for utilising huge Thar coal deposits for cheaper power generation. The Couger Energy Company, based in Australia is planning to generate electricity through underground gasification system (UGS), which is the cheapest method for power generation from coal, sources told Business Recorder.

The company, in this regard, headed by L.K. Walker is scheduled to arrive here on May 24, 2007 to discuss the plan with the Sindh Mines and Mineral Department, sources said.

The UGS was being applied in three countries successfully in which no need to make mines for coal excavation. The cost of power generation was lesser than any other method that would be passed on to consumers, they said.

Power purchase issue always discourages potential investors to set up coal-fired power plants, where cost of power exceeds as compared with power purchase by the authorities, sources said.

Recently, a Chinese state-run company, Shenhua Group, had left the project on the basis of lesser tariff offer by the authorities. The Group had completed all formalities producing electricity from coal-fired power plants. But the tariff issue failed the project to materialise, sources said.

In this scenario, uniformed pricing formula for electricity purchase is needed to guarantee foreign and local investors for establishing coal-fired power plants in the country. This was the only way the government could increase share of coal in country's energy mix to at least 19 percent by 2030 and 50 percent by 2050.

Sources said that several foreign and local companies had prepared feasibility reports in the past and confirmed coal deposits but they were reluctant to start power generation due to unfair pricing formula for coal-fired power generation.

The government after realising energy crisis in coming years had opted for developing coal sites for power generation, which was not materialised for about 15 years.

Sources said underground gasification system is cost effective and saves huge amount for making coal-mines. In this system, coal is being burnt underground and the exertion of gases utilised for power generation, sources added.

http://www.brecorder.com/index.php?id=566943&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*ACCOR GROUP TO OPEN MORE HOTELS IN PAKISTAN*

Monday May 21, 2007, 6:06 pm

KARACHI, May 21 Asia Pulse - The Accor Group, after starting Grand Mercure Karachi Airport Hotel, will introduce new hotels in Pakistan i.e. Sofitel, Novotel and Ibis, which will provide the finest quality services to meet the clientele's needs.

This was stated by Grand Mercure Hotel General Manager Thierry Goepfert while briefing the media here on Thursday.

The Grand Mercure Karachi Airport Hotel was inaugurated in March 2007 near Jinnah International Airport with English colonial architecture under the fitness of French style. The hotel is managed by the Accor Group of Hotels. The Accor Group has 4,500 hotels worldwide, of which 750 are Mercure Hotels in 49 countries.

http://au.biz.yahoo.com/070521/17/18s44.html


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## Neo

*Rs 549 billion development outlay worked out *

ISLAMABAD (May 22 2007): The total development outlay for 2007-08 has been worked out at Rs 549 billion that includes Rs 479 billion for the federal and the provincial Public Sector Development Programme (PSDP) and Rs 35 billion each for special programmes and corporations, said working paper prepared for the Annual Plan Coordination Committee (APCC).

The APCC, which met here Monday with Deputy Chairman Planning Commission Dr Akram Sheikh in the chair, will recommend the PSDP size to the National Economic Council (NEC) which will meet on May 31. The sources said that there could be some minor increase or cuts in the proposed size of the PSDP. The APCC will conclude its deliberations on the development outlay for the next fiscal today (Tuesday), said the working paper.

The APCC meeting continued for over ten hours. According to the working paper prepared for the meeting, the APCC rejected the proposal of the priority committees, which recommended that PSDP allocation should be around Rs 420 billion.

However, according to the sources, the PSDP size proposed by the priority committees was actually for ongoing development projects in various sectors. Nothing was proposed by the priority committees for new projects.

Sources privy to the meeting told Business Recorder that Sindh and the NWFP raised serious objections over the allocation of Rs 2.6 billion in the next fiscal year for five big dams.

The representatives of the two governments said that the federating units and the centre had not reached any consensus on the construction of Kalabagh and Akhori dams. They questioned the allocation for both the dams. However, the deputy chairman informed the meeting that allocated amount would be spent on the two projects only after consensus among the federal and the provincial governments.

In an informal chat with a group of journalists after the meeting, Dr Akram Sheikh said that the APCC reviewed the PSDP 2006-07 and the projections for the 2007-08. He said that there would be substantial increase in the PSDP allocation especially for water sector, as the country needed more water resources.

He said that economy would grow by 7.1 or 7.2 percent in the current fiscal. He said the size of economy would remain around $149 billion to 150 billion in 2006-07 and the projections for the next fiscal suggest that the economic growth would remain on track.

The Deputy Chairman Planning Commission refused to give any detail about the exact allocations in the PSDP for next fiscal for federal ministries and provincial governments. The actual size of the PSDP would be determined by the NEC. He said the APCC would remain in session and the final proposed allocations would come today (Tuesday), he said.

The NEC, he said, would review the PSDP spending in the current fiscal and the projections for next fiscal. The NEC will also look at the economic growth in the current fiscal and the projections for the same in the next fiscal, he added. Besides this, the NEC would also take the Vision 2030, which calls for co-ordinated, holistic, integrated approach for knowledge-based economy.

According to the working paper, the allocations for federal ministries has been worked out at Rs 329 billion in the next fiscal, which is 22 percent more than the allocations for the same in the current fiscal.

The allocation for provinces has been proposed at Rs 150 billion, which, according to the working paper, is 30 percent more than the allocation for the same in the current fiscal. Sources said that around 49 percent of the proposed PSDP allocation would go to infrastructure sector around 40 percent to communications and transport and the remaining allocation to other sectors.

The sources said that the total demand of the executing agencies was more than 578 billion. However, the total demand of the ministries, other federal provincial agencies could be approved in toto. The sources said that the priority committees had suggested that PSDP size should be around 420 billion, which was not even accepted by the APCC.

According to the Planning Commission assessment the PSDP size has been proposed at Rs 361 billion. However, the allocations proposed by the Priority Committees and the Planning Commission were not in conformity with the GDP/PSDP ratio. The PSDP size must increase to 4.7 percent of the GDP to meet the MTDF and MDGs targets.

Water and power ministry has sought an amount of Rs 51 billion for water sector and Rs 48.7 billion for power sector. Apart from this the Karachi Electric Supply Corporation has sought an amount of Rs 4.18 billion for the implementation of financial improvement programme. However, according to the sources, the demand is excessively higher and the APCC would discuss the issues in detail today (Tuesday).

http://www.brecorder.com/index.php?id=567165&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*GNP to reach $150 billion, per capita income $950 this year *  

ISLAMABAD (May 22 2007): Despite high international oil prices and devastating earthquake 2005, the economy has grown on an annual average of 7.5 percent during the last four years 2003-06. This year, 2006-07 by achieving growth rate of over 7 percent, the GNP would reach about $150 billion and per capita income around $950.

The growth is broad-based agriculture sector particularly on account of wheat, pulses and sugarcane production and livestock development has achieved a high growth rate of 5 percent in 2006-07, large-scale manufacturing has grown in double digits and growth in services sector has also been robust.

Total investment has increased tremendously in recent years. It reached all-time record level of Rs 1,900 billion in 2006-07 and National Savings at Rs 1,500 billion.

Total foreign investment is rising every year. This year it is expected to reach to $6 billion - highest in South Asia. The workers' remittances an important component of national savings is increasing fast. It will be around $5.5 billion by end June 2007. Tight monetary policy is pursued by the State Bank of Pakistan to control rising inflationary pressures.

The fiscal accounts have considerably improved in recent years. Revenues are buoyant, expenditures are rationalised. Revenue deficit is eliminated and public debt and fiscal deficit has been brought to a sustainable level. It is expected that CBR collection would exceed the target of Rs 835 billion in 2006-07.

Although the trade deficit is on the higher side, rising FDI and workers' remittances over $6 billion and $5.5 billion respectively would keep the external account position comfortable. Foreign exchange reserves currently stand around $14 billion expected to reach around $14.4 billion by end June representing about seven months of imports an improvement of $1.1 billion over the last year level.

The public expenditure on social sectors has increased from Rs 103 billion in 2001-02 to Rs 228 billion in 2005-06 reflecting an increase of 22 percent per annum.

The pro-poor expenditure has also increased sharply by 27 percent annually from Rs 180 billion 2001-2002 to Rs 464 billion in 2005-06. In terms of GDP, the expenditure during this period has increased from 4 percent to 6 percent.

Poverty has declined significantly from 34 percent in 2001 to 24 percent in 2005. Situation should further improve with the good agriculture growth this year. Unemployment rate has declined from historically high level of 8.3 percent in 2001-02 to 6.2 percent in 2005-06.

Knowledge based economy, technology driven development, innovation, value addition, and establishment of quality/accredited laboratories and achievement of MDGs and long-term objectives of the Vision 2030.

For this purpose, Planning Commission is striving hard for just and fair treatment to all and carries everybody along in development of every inch of Pakistan on the basis of equality. Smooth working, growth and equitable development are underlying principles of our development process.

http://www.brecorder.com/index.php?id=567145&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*US firm willing to extend bid date for 500 megawatts power plant *

ISLAMABAD (May 22 2007): A US-based power sector firm, M/s Alstom, has expressed its willingness to extend bid date for further three months for setting up 500 MW combined cycle plant at Chichoki Mallian (Sheikhupura).

The Economic Co-ordination Committee (ECC) of the cabinet in its meeting on May 10 authorised the Ministry of Water and Power to award the project to M/s Alstom and Japanese firm M/s Merubini for 8.842 cents tariff per kWh to be financed by Qatar government subject to the condition that M/s General Electric (GE) would give performance guarantee.

However, the government has also decided to retain the contract of M/s DEC of China using GE turbines with 0.001 cents per kWh higher tariff than that of M/s Alstom and Merubini.

Sources in Private Power Infrastructure Board (PPIB) told Business Recorder that a meeting was arranged between the Alstom and Wapda to discuss the modalities for further extending the bid date, which was agreed by the former. They said that the PPIB, which earlier distanced itself from the Ministry of Water and Power over the inclusion of Qatar in the project, was in the process of finalising the accord to be signed with Doha.

Any material deviation from the approved market tested security documents, particularly in areas of governing laws, dispute resolution, reward/ reward matrix or framework would adversely affect the IPP program, the sources quoted Managing Director PPIB as stating in his letter to Joint Secretary (Water) Zahir Shah on March 31.

Asked how Qatar had become part of the consortium at a later stage, the sources pointed towards the Prime Minister House and Saif-ur-Rehman, former Chairman Accountability Bureau, a close friend of former Prime Minister Nawaz Sharif.

Ministry of Water and Power in its summary had informed the ECC that to meet projected supply deficit on fast track basis Wapda had invited international tenders for three thermal power plants of 200 MW capacity each based on diesel engine combined cycle in September 2006. The bids were evaluated and the resultant levelised tariff was in the range of 11.11 to 11.17 cents per kWh. Wapda had also invited bids for combined cycle plants in the range of 500 MW capacity to be located at Chichoki Mallian through ICB.

It was informed that due to non-availability of gas and high prices of alternate fuel ie diesel, Wapda had stated that the next ranked bid in the bidding process by M/s DEC of China based on G.E turbines could be modified for dual fuel firing on Refined Furnace Oil (RFO) and gas with additional investment of $15 million.

The net capacity after conversion would be 540 MW and the price per kWh would be 8.842 cents.

The ministry further stated that Wapda's proposal was also discussed in a meeting chaired by Prime Minister Shaukat Aziz on February 26 wherein it was decided that the ministry would examine the merits of the proposals for establishing three diesel engine plants at Chichoki Mallian, Nandipur and Faisalabad vis-Ã -vis a 450 MW combined cycle plants based on RFO at Nandipur with a 100 MW unit at Khuzdar and submit its recommendations.

The Planning and Development Division had agreed to the proposal in principle. Finance Division supported it subject to the condition that funds would be arranged by Wapda from its own resources and there would be no burden on federal budget, the sources continued.

http://www.brecorder.com/index.php?id=567194&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*'Foreign investment up to $6 billion in 10 months *

SIALKOT (May 22 2007): Federal Privatisation and Investment Minister Zahid Hamid has said the tempo of foreign investment has gained the momentum as a result of which foreign investment has been increased to six billion dollars in 10 months of the current year and more is expected in a couple of months.

Speaking as the chief guest at the inaugural ceremony of a showroom of Habib Motorcycle on Sunday here, he added that due to strong and effective economic policies of the government, economic activities were picking pace in all sectors of the economy.

Zahid Hamid revealed that poverty rate had been decreased to 25 percent, while the growth rate had been increased considerably as well as per capita income had been doubled. The government had formulated highly friendly-foreign investment polices, aimed at providing even opportunities to the foreign and overseas Pakistanis to invest in Pakistan, he said.

Due to the strong economic polices, Pakistan had been converted into an attractive hub of foreign investment and a large number foreign investors, including overseas Pakistani, were showing their keenness in investing in various trade fields, Zahid Hamid added.

The Investment Minister further stated that to bring a big boom in foreign investment, the government was making strenuous efforts for attracting the foreigners and overseas Pakistanis investors. He said the present government had made concerted efforts on the promotion of maximum industries, aimed at ensuring strong industrial base and converting the country into a strong economic hub. Earlier, the Federal Investment Minister along with Sialkot District Nazim Muhammad Akmal Cheema inaugurated the showroom. Habib Motorcycle Chairman Imran A Habib and others also attended the ceremony.

http://www.brecorder.com/index.php?id=567237&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'Strong economic performance can put Pakistan on growth path' *

FAISALABAD (May 22 2007): Pakistan Resident Mission of Asian Development Bank (ADB) observed that the recent economic development and developments in external debt show that Pakistan is at a crossroad. The strong economic performance, including the improvement of the public debt situation over the past few years, if sustained, can put Pakistan on a growth path.

But there are real challenges and risks that need to be managed carefully. In a brief overview on "Pakistan's Public Debt", which was prepared by Peter Fedon, Country Director, Pakistan Resident Mission, Emma Xiaoqin Fan, Senior Public Resource Management Specialist, Safdar Parvez, Programmes Officer, Farzana Noshab, Economic Policy Officer and Waqas ul Hasan, Project Officer Governance stated that the maintaining political stability, sound macroeconomic management, and structural reforms are key for Pakistan to move forward.

Pakistan's public debt overview reveals a number of important features. First, the public debt situation is closely related to broader economic performance. Accelerating economic growth, improving fiscal conditions, increasing export earnings, and increased foreign direct investment have provided the foundation for improved debt management in Pakistan.

Second, the improved debt situation is also attributable to more favourable external conditions for Pakistan since September 2001. This has led to debt relief and rescheduling, and increased official inflow and workers remittances. While it has helped the country to achieve a significant improvement in debt indictors in the short run, it also exposes Pakistan to risks relating to the sustainability of both economic performance and debt management.

Third, in order to sustain and build on its existing achievements, Pakistan needs to deepen its structural reforms to improve the domestic investment environment, external competitiveness, sustain macroeconomic stability, and maintain political stability. Reforms that improve a country's creditworthiness and investment climate are important for improving domestic savings and investment, attracting FDI, and diversifying the financing sources. FDI is especially important because it not only brings in finance, but also contributes to technology transfer and improved management know-how. Pakistan has had considerable success in attracting FDI in FY06. However, much can be done to improve on this performance in the years ahead.

Fourth, sound public debt management supports macroeconomic stability and economic growth. Debt management should take advantage of favourable economic conditions to strengthen the technical and institutional capacity in managing public debt.

Fifth, multilateral development banks play an important role in lending to the government. This calls for sound project and programme designs and implementation to enhance the effectiveness of development assistance. Introducing innovative and efficient assistance approaches and practices in response to the changing context of economic development is especially important.

The Pakistan economy has experienced a turnaround since 2000. Growth has accelerated, and most macroeconomic indicators have improved. Public debt indicators have also shown significant improvement. Modest growth in public debt, coupled with the strong growth in nominal GDP, led to a significant fall in public debt to GDP ratio. In fact, FY 2005/06 is the fifth successive year that the public debt to GDP ratio has improved. This is also the first time in more than two decades that the ratio has fallen below 60 percent.

The debt servicing capacity of Pakistan has also improved over the past few years. As growth in foreign exchange earnings in Pakistan outpaced the growth in debt servicing payments, external public debt servicing as a share of exports of goods and non-factor services declined.

There has been a particularly noticeable increase in foreign direct investment (FDI) in Pakistan in recent years, reflecting the country's privatisation programmes and increased investor confidence. While Pakistan has significantly improved its economic performance and the debt situation, strong efforts must be made to guard against potential risks.

http://www.brecorder.com/index.php?id=567230&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*All set to achieve economic stability: report *

LONDON (May 22 2007): The economic growth of Pakistan has been described as one of the world's most dramatic turnaround stories, says a report in May's issue of The Banker, a leading magazine in the global financial industry. In his article on Pakistan, writer Jules Stewart says Pakistan looks set to achieve economic stability, a goal many thought impossible.

Pakistan, he wrote, was a verge on default in 1999 when President General Pervez Musharraf came into power. His Finance Minister and now Prime Minister Shaukat Aziz put in place an urgent package of macro-economic reforms aimed at stabilising economy.

At that time, Pakistan was facing an external debt of $37 billion, coupled with huge fiscal and current account deficits. Tax revenue was almost non-existent, exports were stagnated and foreign exchange reserves had shrunk to a dangerously low level.

The stabilisation plan put in place was highlighted by exchange rate liberalisation and the strengthening of foreign reserves, which now stand at over $13 billion compared with $1 billion when the programme was launched. In this period, domestic debt as a percentage of GDP has been managed down to half the 1999 level.

Although, according to Stewart Pakistan has not been able to completely eliminate the imbalances in its economy but a leading banker Farrukh Khan of BMA Capital has spoken about strong foreign direct investment inflows, along with remittances and the ability to borrow in international markets.

However, the writer has noted long term, imports and exports need to come into balance. According to Khan, domestic demand has been the engine of growth. Between 20 million and 30 million people now earn $8000 to $10,000 a year, making the current rate of growth sustainable.

He also says the general election later this year does not pose a threat to the reform process. The present government has been most aggressive in taking the reforms forward. Those living below poverty level account for 25 percent of the population compared with 33 percent a few years ago.

Standard Chartered was the latest of the big ticket acquirers, having recently paid nearly $500 million for Union Bank, one of the most dynamic players in Pakistan's banking sector. More take-overs are in the pipeline.

The article has quoted another leading banker Reza-ur-Rahim of J.P. Morgan as saying that law and order scarce has been blown out of proportion.' We need to portray the softer side of Pakistan because the actual situation is quite different in what people see on their television screens.

A lot is going well in Pakistan. FDI is up, privatisation is moving ahead, the deficit is under control, poverty is reducing and the government is not letting the upcoming elections dictate their policy decisions." The government, says Stewart is now pushing for the second generation of reforms, a task being handled by Ashfaque Khan, Director-General of the government's debt office who is responsible for monitoring the implementation of the new Fiscal Responsibility and Debt Limitation Act, which binds current and future governments to abide by prudent economic policies.

Khan says that once the current high demand for imported capital goods has been satisfied, the current account deficit will decline to normal levels. In his interview with Governor, State Bank of Pakistan, Shamshad Akhtar, she says financial reform needs a progressive mindset, which the present government has provided. Akhtar pointed out that the SBP monetary policy looks at the dual objectives of promoting growth while maintaining price stability.

http://www.brecorder.com/index.php?id=567233&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*US company brings latest construction technology *

LAHORE (May 22 2007): Vermeer, one of the largest US machinery manufacturing companies, has planned to open its office in Lahore to cater to the needs of Pakistan's construction sector and to introduce the latest construction technology for laying underground utility pipes.

This was revealed by Navneet Mathur, Managing Executive of a Sharjah-based marketing company "Rehan International" the exclusive dealer of Vermeer for Sri Lanka, Bangladesh and Pakistan while talking to LCCI President Shahid Hassan Sheikh here at Lahore Chamber of Commerce and Industry on Monday.

Navneet disclosed that Vermeer had invented a number of modern construction machines, which were being used by the developed world for quality construction with a considerable saving of time and cost. Such technologies will help Pakistan to a great extent especially after the quake tragedy, which had destroyed a lot human habitat in northern parts of the country.

http://www.brecorder.com/index.php?id=567266&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*'Strikes cause irreparable loss to economy' *

LAHORE (May 21 2007): The Founders Chairman Dr Khalid Javed Chaudhry has said that strikes, public meetings and protest processions are causing irreparable loss to the economy besides rendering unemployment in the country, therefore, the government should take into consideration this serious matter.

He made these remarks while talking to traders of different markets and members of the Lahore Chamber of Commerce and Industry (LCCI) at a meeting here. Haji Muhammad Asif, Munir Ahmad Khan, Asif Rehan Dar, Muhammad Hashim and Tahir Manzoor Chaudhry also addressed the meeting.

According to an estimate on May 12, the countrywide strike cost country's economy Rs 10 billion loss, he added. Whose loss is it, he questioned.

Haji Muhammad Asif said that the loss sustained by traders community due to loadshedding will have serious repercussion on economy in the time to come. Chaudhry Manzoor Tahir said: "Maintaining law and order in the country is our collective responsibility and we should supplement government's efforts in this regard.

http://www.brecorder.com/index.php?id=567610&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*'Pakistan may import power from Kyrgyzstan': works on new Kyrgz embassy starts *

ISLAMABAD (May 22 2007): Work on new building of embassy of Kyrgz Republic was inaugurated jointly by Federal Minister for Water and Power Liaquat Ali Jatoi and visiting Deputy Foreign Minister of the Kyrgz Republic Kadyrbek Sarbaev on Sunday with cutting the ribbon.

The Federal Minister for Water and Power, Liaquat Ali Jatoi speaking on the occasion extended congratulations to the embassy, on behalf of President General Pervez Musharraf, Prime Minister Shaukat Aziz and people of Pakistan. He said the start of the construction of new embassy building of Kyrgz Republic in Islamabad is a major move to promote trade and transit ties with Kyrgyzstan.

He said, "We need to enhance our trade and commercial ties and it can easily be done through improving the communication linkages between our two countries. The minister said Pakistan is also studying whether it could import electricity from this mountainous republic. He said if it is feasible, there is no doubt that Pakistan would like to import electricity from Kyrgyzstan.

http://www.brecorder.com/index.php?id=567258&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Unemployment on rise, says ADB*

By Sher Baz Khan

ISLAMABAD, May 21: Unemployment in the country has been higher during the last two years than the first eight years of the last decade, reveals a study conducted by the Asian Development Bank.

The unemployment situation has deteriorated for youth in Balochistan since 1999-2000. Young people in Balochistan are twice as likely to be unemployed than their counterparts in Punjab.

The youth employment situation in NWFP is not good either.

âThese provinces need serious policy interventions to reduce the relative disadvantages in employment opportunities for the youth,â states the bankâs latest report on demographic transition, education and youth unemployment in Pakistan between 1990 and 2006.

Unemployment in Sindh and Balochistan increased during 2001-02 and 2003-04 and the number of jobless people in NWFP more than doubled during 1990-91.

The study reveals that overall unemployment rate in the country declined from 8.3 per cent in 2001-02 to 7.7 per cent in 2003-04. Despite this reduction, the overall unemployment rate in the last two years was higher than the unemployment rates observed during 1990-98.

The highest level of unemployment - 12.9 per cent - was found in NWFP in 2003-04, while the lowest level was in Sindh at 6 per cent. In Punjab and Balochistan, 7 and 8 per cent of the labour force respectively was unemployed during this period.

Punjab has not witnessed any major changes in the level of unemployment over the last one and a half decade.

However, the study shows that Balochistan has suffered a lot when unemployment increased to 8 per cent in 2003-04 that is less than two per cent of the 1990-91 level.

In Sindh, the unemployment level remained low â around three per cent â but jumped to five per cent in 2001-02 and six per cent in 2003-04.

A province-wise analysis shows that Balochistan and the NWFP have recently been left behind in providing employment opportunities to jobless people, particularly to urban males in small and medium towns.

âThe benefits of the recent economic growth are, therefore, not evenly distributed in terms of generating employment opportunities,â the report said.

The gender gap of more than 50 per cent in Pakistanâs Labour Force Participation Rate is much higher than the average gap of 35 per cent in South Asia that demonstrates how successful we have been in empowering women economically.

http://www.dawn.com/2007/05/22/top8.htm


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## Neo

*Pakistan to export 1.3 mln tonnes of wheat *

By Reuters
Tuesday May 22, 2007
ISLAMABAD (Reuters) - Pakistan will go ahead with its plans to export 1.3 million tonnes of wheat this season despite a surge in domestic prices, a senior government official said on Tuesday. 

"The amount of wheat allowed for export will be sold abroad. There will be no change," Mohammad Ismail Qureshi, permanent secretary at the Ministry of Food and Agriculture, told Reuters, referring to the 1.3 million tonnes. 

"We have done enough procurement and domestic prices can be controlled with that if required," he said. 

But Qureshi added the government would have to decide about additional wheat exports. 

The government last month allowed exports of 500,000 tonnes of wheat in the hope of making inroads into the lucrative Indian market. 

The decision came after reports that the country's wheat harvest for the current 2006/07 crop year would cross the target of 22.5 million tonnes. 

The government previously also allowed exports of 800,000 tonnes of wheat by private traders and also removed a 15 percent duty on exports. 

Agriculture ministry officials expect more than 23 million tonnes of wheat to be produced in the 2006/07 crop year while the domestic requirement is 21 million tonnes. 

Pakistani traders have already sold about 150,000 tonnes of the amount earmarked for export to Southeast Asian countries for May and June shipments, according to industry officials. 

The deals were finalised at about $230-$240 a tonne, including cost and freight, for shipment in containers. Malaysia, Vietnam and Indonesia have bought the bulk of the cargoes, traders said. 

Traders said Pakistani exporters were also looking for buyers in India and the Middle East. 

Last month, Pakistani exporters finalised deals to sell up to 25,000 tonnes of wheat to India, the first such deal in memory between the neighbours. 

http://in.news.yahoo.com/070522/137/6g3gx.html


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## Neo

*Pakistan's oil imports to hit $8.8b record in 2008 *

MENAFN - 22/05/2007 

(MENAFN) An official at Pakistan's Petroleum Ministry said that the country's oil imports are expected to hit a record of $8.8 billion next year, up 11.7 percent from this year's figure of $7.88 billion, Khaleej Times reported.

The official attributed the increase in the imports bill, which surpassed the country's consumption increase, to soaring oil prices which are expected to further rise by 8.5 percent during next year to an average of $70 per barrel, compared to the current average of $70 per barrel.

In 2008, he added, Pakistan's petroleum sector will be the single largest segment taking major part of foreign exchange reserves. For the current year, the government had estimated around $7.678 billion oil imports in the budget of 2006- 07, which has now been revised upward to $7.877 billion because of higher international oil prices and more than projected fuel oil consumption arising out of electricity crisis. 

On the other hand, the government expects that local crude oil production will remain static at 5.6 million tons next year, accounting for only 3.9 percent of country's total crude requirements

http://www.menafn.com/qn_news_story_s.asp?StoryId=1093153992


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## Neo

*Pakistan's Azgard Nine to issue $260 mln bond*

KARACHI, May 22 (Reuters) - Pakistani denim maker Azgard Nine said on Tuesday to it plans to issue bonds worth up to $260 million in the international capital market. 
"Depending on the market conditions when the bonds are taken to the market, we expect the tenor of the bonds to be between seven and 10 years," the company said in a statement to the Karachi Stock Exchange. 

According to banking sources, Azgard Nine has already awarded the mandate to manage the dollar-denominated bond to Citigroup . 

The company did not say when it plans to issue the bonds, but the sources said it will take place in end-August or early September. 

Last month, United Bank Ltd. said it plans to issue an overseas bond worth up to $250 million to raise Tier II capital over the next two or three months. 

In November, Pakistan Mobile Communications (Pvt) Ltd. (Mobilink) raised $250 million in funds for expansion by selling a seven-year global bond. ADVERTISEMENT

Analysts said the availability of liquidity for emerging markets globally was encouraging Pakistani companies to seek funds overseas. 

http://asia.news.yahoo.com/070522/3/328kv.html


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## Shehz

*Pakistan GDP seen growing at 7.5 per cent*

http://dawn.com/2007/04/13/ebr2.htm

By Shahid Iqbal

KARACHI, April 12: Pakistan economic growth could expand by more than what the government estimates and it could be 7.5 per cent, Merrill Lynch said in a report released on Thursday.

The report did not consider the recent difficult political situation as hinder for the economic growth and expected that the GDP growth to sustain in 2007 and 2008 at 7.0-7.5pc and 6.8pc, respectively.

This will happen owing to robust consumption growth, supported by higher remittances from workers (up 21pc) and foreign investments (up 147pc), it said.

The report said that the investors to remain upbeat in the coming months, backed by withdrawal of expected monetary aggression by State Bank of Pakistan, expected concessions to the corporate sector in the next budget and the government&#8217;s decision to reduce its public sector holding through GDR.

The Merrill Lynch&#8217;s expectation of GDP growth was more than the State Bank estimates which put it in the range of 6.6 to 7.2 per cent while the government expects 7pc growth.

However, the report said that the likelihood of hitting the upper limit depends on the performance of livestock farming, which comprises approximately 50pc of the agriculture sector.

&#8220;Prospects of agriculture growth recovery appear bright on account of the timely rains, sufficient water reservoirs, availability of subsidised agriculture inputs, and higher agriculture commodities support prices,&#8221; said the report adding that countrywide rains are likely to boost the output in livestock farming.

&#8220;Pakistan&#8217;s politics has been in the headlines of international press and we think issues have been exaggerated,&#8221; said the report, adding that President Musharraf will remain firmly at the helm of what is the best privatisation and deregulation story in Asia.

The political turmoil seen in the last few months has been unable to hamper investments in the country, as reflected in foreign flows. Foreign inflows surged 147pc to $4.6bn during July-Feb FY07 and are expected to expand further to $6bn (or 4pc of GDP) by the end of this fiscal.

&#8220;Despite adversities in domestic politics, foreign private investments have risen by 147pc and continue to be a dominant feature over the last three months. This reflects investors&#8217; confidence on Pakistan&#8217;s future economic growth,&#8221; said Merrill Lynch.

The report expects that the fiscal deficit to be contained at 4.5pc and current account deficit at 4.8pc of GDP on account of unexpected slowdown in exports.Rising foreign investments should continue to correct macro imbalances and help sustain economic growth, however, rising foreign inflows will continue to pose a challenge for SBP.

The report said that the rupee was overvalued by two per cent against the US dollar.

&#8220;In trade weighted index rupee is overvalued by 2pc. We maintain our rupee verses US$ exchange rate forecast of Rs62.20 by June 30, 2007&#8221; said the report.

The report said that the robust foreign exchange flows in the past few months have protected exchange rate from downward revision.


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## Neo

*July-April tax receipts cross Rs 656.48 billion *

ISLAMABAD (May 23 2007): The revenue collection crossed Rs 656.48 billion during July-April (2006-2007) against the target of Rs 645.1 billion, beating the target Rs 11.38 billion. According to the updated figures released on Tuesday.

The net revenue collection stood at Rs 656.48 billion during the first ten months of the current fiscal against Rs 547 billion in the corresponding period of the last fiscal, indicating a growth of Rs 109.48 billion. The CBR has to collect Rs 178.52 billion in the remaining two months of the current fiscal to meet the target of Rs 835 billion set for 2006-2007.

The board has to collect Rs 89.26 billion each in the month of May and June to meet the target. Direct taxes collection was Rs 252.88 billion in July-April (2006-2007) against Rs 167.58 billion in the same period last fiscal, reflecting a growth of 50.9 percent.

Sales tax collection was Rs 245.79 billion during the first ten months of the current fiscal against Rs 228.54 billion in the same period, showing an increase of 7.5 percent. GST collection at the import stage was Rs 141.19 billion against Rs 134.86 billion in the corresponding period last year, whereas sales tax collection on domestic consumption was Rs 104.59 billion during the period under review against Rs 93.68 billion in the same period last fiscal, showing an increase of 11.6 percent.

The board has collected Rs 103.07 billion as customs duty during July-April (2006-2007) against Rs 105.50 billion in the corresponding period last fiscal, reflecting a decrease of 2.3 percent.

Federal Excise Duty (FED) collection was Rs 54.73 billion against Rs 45.35 billion during this period. The collection of federal taxes during April 2007 has crossed Rs 59.48 billion. The board has paid an amount of Rs 73 billion as refund/rebate to the exporters during July-April of the current fiscal.

http://www.brecorder.com/index.php?id=567743&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Big allocation for five dams in budget *

ISLAMABAD (May 23 2007): Deputy Chairman Planning Commission Dr Akram Sheikh has said that a significant amount would be allocated in the development budget for next fiscal for the construction of five big dams including Kalabagh Dam announced by President General Pervez Musharraf.

Talking to reporters after the two-day meeting of the Annual Plan Coordination Committee (APCC), he said that a high level committee headed by Advisor to the Prime Minister on Finance Dr Salman Shah had been asked to gear up its efforts to raise funds for this purpose.

Total development budget for the next fiscal 2007-08 would be around Rs 549 billion, confirmed Akram Shiekh. He said that APCC had worked out Rs 549 billion development budget for 2007-08 that includes Rs 329 billion for the federal programmes, Rs 150 billion for the provincial programmes in the Public Sector Development Programme (PSDP), Rs 35 billion for Kushhal Pakistan Programme (KPP-I & II) and Kushhal Pakistan Fund (KPF) and Rs 35 billion for development of earthquake-hit areas.

He said that the final recommendation to National Economic Council (NEC) for development budget would be just less than Rs 549 billion, not more than that.

Dr Sheikh said that the Planning Commission had devised certain principles while working out the total development budget. The principles include giving priority to complete the ongoing projects, starting important approved new projects, initiating crucial unapproved projects, fulfilling the public commitments made by the President and the Prime Minister and ensuring equitable distribution of funds among the four federating units.

Mentioning about the crucial unapproved projects, he said that the government would initiate such projects under which the rivers, which are full of pollution, (industrial effluent and plastic bags), would be made clean on priority basis to save the environment.

He said that the government would keep substantial allocation for acquisition of land for big dams and the Committee on dams, headed by Dr Salman Shah, Advisor to Prime Minister on Finance and Revenue, would arrange the required foreign funding for the dams that include Diamer-Bhahsha, Kalabagh, Akhori, Kuram Tangi and Munda dams.

He said that the government gives paramount importance to the National Trade Corridor (NTC) project and in the development budget for 2007-08, the government would approve the allocation for roads, railways and ports to make the NTC a success story of Pakistan."

He said that the government would give priority to complete the Gawadar Port on long-terms basis under which the Free Trade Zone, oil city and roads would be constructed to ensure connectivity of Gawadar with other parts of the country. Dr Sheikh said that right now the total number of ongoing projects is around 1950 and 50 to 100 new projects would be initiated in the next fiscal.

http://www.brecorder.com/index.php?id=567754&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Karachi carnage scares foreign investors *

ISLAMABAD (May 23 2007): The carnage in Karachi is haunting Pakistan as a number of foreigners who were working on different industrial and oil/gas exploration and production projects in Pakistan, but its worst blow came when Chile's petroleum minister refused to travel to Pakistan after watching firing incidents on TV screen in her country.

Sources said she wrote a letter to her Pakistani counterpart Amanullah Khan Jadoon, who was her invitee that prevailing law and order situation does not allow her to travel to Pakistan.

Chilean petroleum minister's visit to Pakistan was scheduled for May 15 and 16 and she was supposed to lead a delegation of investors of her country who wanted to invest in Pakistan's oil and gas sector. The officials of the ministry confirm that Chilean minister cancelled her scheduled visit, but they are scared to give its reason.

Jadoon had visited Chile some time back and invited his Chilean counterpart to visit Islamabad along with investors of her country and encourage them for investment in Pakistan. Another sad story of the Karachi carnage is that a Japanese engineer, who was in a hotel in Karachi on that particular day, refused to travel from hotel to project site of a $500 million industrial project.

Asadullah, a Pakistani engineer, who is also working on the same project in Karachi told Business Recorder that his boss Japanese engineer, watched incidents of indiscriminate firing in Karachi on May 12, and termed the situation in the city extremely tense and dangerous. Next day, he submitted an application with the management of the project wherein he said in the prevailing situation he can not work Pakistan.

Since the technology of the project is Japanese, the exit of the Japanese engineer is bad sign for the project. The management is worried over the new development that would ultimately delay the project.

It is not the story of Chile's minister or Japanese engineer but of many oil and gas sector companies' foreigner employees who have either left Pakistan after May 12, happenings or they plan to leave this country as early as possible.

The oil and gas sector may suffer more than any other sector since foreigners who were scheduled to visit to discuss different project for oil and gas exploration or services to the exploration and production companies were reluctant to come to Pakistan after May 12 day-long firing cases that claimed more than 45 lives. Local investors who were working to get foreign partners for joint ventures are seriously worried about the future of their projects.

http://www.brecorder.com/index.php?id=567786&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Omantel eyes stake in Pak firm *

MUSCAT: Oman Telecommunications Co. (Omantel) said on Tuesday it was considering buying a Pakistani telecom company to expand outside its home market.

Omantel, the smallest telecom operator in the Gulf Arab region by market value, did not name the telecom firm in a statement, but said it could buy a âbig shareâ.

âThe company is currently studying plans to enter into competition to purchase a share in a Pakistani telecom company,â Omantel said in a statement. âThe deal would give Omantel an opportunity to expand its investments.â Gulf Arab telecom operators have been hunting for foreign assets as competition increases at home, and Asia has been a priority.

Qatar Telecommunications Co. said this week it had completed the purchase of a majority stake in Pakistanâs Burraq Telecom, hoping to tap Asiaâs fourth-most populous country.

Emirates Telecommunications Corp. bought a 26 percent stake in Pakistan Telecommunications Co. Ltd. for $2.6 billion in 2005.

Omantel has faced competition in mobile phone services at home since Nawras, a subsidiary of Qtel, started operations in 2005.

Omantel shares rose 2.71 percent on Monday the biggest gainer among the 10 largest stocks. Its shares have risen more than 11 percent since the companyâs first-quarter profit beat expectations on May 13.

http://www.thenews.com.pk/daily_detail.asp?id=57127


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## Neo

*12,000 villages get benefit from KPP schemes *

ISLAMABAD (May 23 2007): The ministry of Local Government and Rural Development has completed 16,995 schemes under the Khushal Pakistan Programme (KPP) in the country, benefiting around 12,000 villages in areas of provision of electricity, water and other facilities.

The completed schemes account for 73 percent of total schemes planned for implementation in all parts of the country, Federal Minister for Local Government and Rural Development Abdul Razzaq Thahim said. The schemes also included construction of roads, extension of telephone facility, provision of education and health facilities.

Referring to the Federally Administered Tribal Areas, he said that government has issued instructions for providing needed funds to FATA for various projects. The National Assembly Standing Committee for local government and rural development reviewed the development schemes during a meeting here on Monday.

Representatives of the Ministry of Water and Power told the meeting that total 11,4886 villages were electrified 65,191 in Punjab, 20,433 in Sindh, 22,711 in NWFP and 6,551 in Balochistan.

The meeting was informed that under KPP, members of National Assembly were given a total of 19,864 schemes. KPP is focussed on meeting people's basic needs through involvement of elected representatives at all tiers in the planning and execution of projects. Launched in 2003, the programme earlier named as Tameer-e-Pakistan, covers schemes related to gas, electricity, roads, telecommunication, education, health, sanitation and water supply. The federal government has allocated Rs 4.42 billion for the programme for the financial year 2006-2007.

Under this Programme, as of 15 May 2007 Rs 11,905.805 million have been disbursed to executing agencies in the federal, provincial and district governments for executing 23,475 schemes in approved sectors. So far 16,995 schemes have been completed. Schemes are identified by the public representatives keeping in view the needs of the communities while executing agency is also designated.

Proposed schemes have been forwarded to the executing agencies for proper feasibility report, cost estimates and administrative approval. On receipt of administrative approval, financial sanction will be issued by the ministry of local government and rural development after endorsement by finance division.

http://www.brecorder.com/index.php?id=567854&currPageNo=1&query=&search=&term=&supDate=


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## Neo

May 23, 2007 
*Pakistan to spend extra $1.1bn on furnace oil*

By Khaleeq Kiani

ISLAMABAD, May 22: Pakistan will be paying $1.1bn (little over Rs65bn) extra on import of furnace oil in the current fiscal year mainly because of electricity shortage and the burden will grow in coming years.

A senior petroleum ministry official said the government had estimated furnace oil consumption at 650,000 tons for power generation but the electricity shortages had compelled to import an estimated 4.4 million tons, or about six times higher than the estimated.

As such, the government had anticipated furnace oil imports at $235 million for the current fiscal year, which has now expected to go up to $1.335 billion, about five times higher foreign exchange payments.

But this higher burden was partially offset by significant reduction in the diesel, aviation fuel and crude oil imports. The diesel and crude oil imports cost the national exchequer $828 million lower than anticipated by the government.

As result, net loss in oil imports during the current year is expected to be about $270 million. The government had allocated a total of $7.23 billion for total oil imports for the current year, which has now been estimated at $7.5 billion.

The official said the government had projected total crude oil imports at 73.3 million tons for the current year at a cost of $4.545 billion but the overall imports were now updated to remain 17 per cent lower at 62.5 million tons at a cost of $3.87 billion, providing a saving of $674 million.

The official said that the government had forecast import of four million tons of diesel for the current year but the actual consumption was expected at about 3.4 million tons. As a result, the diesel import bill would be just $2.3 billion against budgeted estimates of $2.45 billion, leaving a saving of about $150 million.

Informed sources said the furnace oil imports would cost even higher ($1.36bn) than $1.335 billion this year mainly because of an expected 10 per cent increase in international fuel prices.

Pakistanâs next year oil import bill has now been estimated to cross $8.8 billion mainly because of an expected 8.5 per cent increase in international prices.

http://www.dawn.com/2007/05/23/ebr3.htm


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## Neo

May 23, 2007 
*Eatables import bill hits record $2.36 billion*

ISLAMABAD, May 22: The countryâs food import bill reached to the highest ever level of $2.360 billion during the first 10 months of the current fiscal year, up by 5.31 per cent from $2.24 billion the same period last year.

The eatables import has been on the rise for the last two years as the government has failed to ensure increase in production of some farm products like sugar, pulses etc., which were imported in bulk for meeting domestic demand.

It is expected that the import bill of food items will touch $3 billion mark by June 30, 2007.

The scaling down of tariffs on consumer items also encouraged the inflow of foreign brands which flooded the local market hurting the domestic manufacturers and farmers as a result of ill-conceived policies of the government for liberalising trading regime.

Official figures compiled by the Federal Bureau of Statistics (FBS) showed that the import of milk products increased by 36.86 per cent to $65.464 million during the July-April period as against $47.832 million; an increase of 60.56 per cent in pulsesâ import to $217.854 million as against $135.686 million, 22.61 per cent rise in palm oil to $731.146 million as against $596.302 million during the same period last year.

The import of dry fruits increased by 24.4 per cent to $56.474 million during the period under review as against $45.397 million, 2.11 per cent rise in spices to $44.879 million as against $43.953 million and 11.4 per cent increase in import of all other food items to $730.851 million as against $656.031 million over the corresponding period last year.

The analysis of other commodities showed that the import bill of petroleum products rose by 12.03 per cent to $5.883 billion during the July-April period as against $5.251 billion the same period last year.

It indicated that the import of products manufactured from petroleum increased by 38.64 per cent to $3.008 billion during the period as against $2.170 billion the same period last year.

However, the import bill of

petroleum crude declined by 6.71 per cent to $2.874 billion during the first 10 months of this fiscal year as against $3.081 billion over the same period last year.

The second biggest component of the import bill in value was the machinery group. However, its imports increased by 12.22 per cent in July-April period to $5.443 billion as against $4.850 billion over the corresponding period last year.

The import bill of machinery mainly pushed by an increase of 42.93 per cent in power generating machinery, office machines 8.65 per cent, construction machinery and agriculture machinery 46.89 per cent.

However, the textile machinery declined by more than 34.84 per cent during the period under review over the last year.

In the telecom sector, the import of mobile phones increased by 28.05 per cent and other apparatus by 11.24 per cent during the July-April period.

http://www.dawn.com/2007/05/23/ebr5.htm


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## Neo

May 23, 2007 
*UN plan to help Asian states achieve MDGs*

Karachi, May 22: Government ministers from across the Asia-Pacific region have expressed support to a roadmap, which aims to help the poor countries lagging behind to achieve the Millennium Development Goals (MDGs) by 2015, a UNESCAP press release posted on its website said.

The blueprint, set out by the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP), was discussed at its annual ministerial meeting held in Almaty, Kazakhstan.

Mr Kim Hak-Su, under secretary general of UNESCAP applauded the commitment from the member states. The objective of the plan, he said, was to add value to national level strategies and processes,â targeting those off-track countries and those below the Asian average.âA paper presented by UNESCAP for the session says, âNot all developing countries are making adequate progress towards achieving the goals; and none are presently on track to meet all the goals by 2015.â

The roadmap aims to have all countries marginally off-track to be back on-track towards reaching MDGs by 2009. It also aims for those moderately off-track to be in line by 2011, and those in the severely off-track category to be on target by the end of 2013.

The roadmap proposes a multi-track approach, including enhancing MDG-related legislations and strengthening partnerships, such as that between UNESCAP, UNDP, and the Asian Development Bank on promoting MDGs.

It emphasises the involvement of all the stakeholders â the government, the private sector, non-government organisations, research and academic institutes, and international organisations.

The proposals are intended to be fed into national development strategies, which need to be monitored and evaluated as well as to be fully resourced. The roadmap also calls for regional cooperation to help off-track countries with capacity development, expertise, resources and advocacy.

There was overwhelming support from ministers at the meeting. Deputy Prime Minister of Mongolia Mendsaikhan Enkhasaikhan commended UNESCAP for the initiative.

Minister of Infrastructure and Public Utilities of Vanuatu Edward Natapei said his government was encouraged to see the high level of commitment by the UN agencies.

Mr. Marat Tazhin, minister of foreign affairs of Kazakhstan said the roadmap laid a good foundation and provided a unique opportunity for all nations to coordinate and redouble their efforts aimed at achieving the MDGs by 2015. The roadmap is expected to be endorsed by the commission session when it concludes on Wednesday.

http://www.dawn.com/2007/05/23/ebr11.htm


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## Neo

May 23, 2007 
*Development budget may be raised by 26pc*

ISLAMABAD, May 22: The Annual Plan Coordination Committee (APCC) on Tuesday firmed up a Rs549 billion development budget for next year, which includes Rs35 billion for the rehabilitation of earthquake-hit areas.

The allocations for earthquake rehabilitation are about 30 per cent lower than the current yearâs Rs50 billion, but the overall Public Sector Development Programme (PSDP) 2007-08 proposed by the APCC will be about 26 per cent higher than the current yearâs PSDP of Rs435 billion.Having presided over the APCC, deputy chairman planning commission Dr Akram Sheikh told journalists that next yearâs development budget stood at just under Rs549 billion. He said this included a Rs329 billion federal share, a Rs150 billion provincial share, Rs35 billion for the Khushhal Pakistan Programme, and Rs35 billion for the earthquake-hit areas. However, he said, the APCC recommendations need approval by the National Economic Council (NEC).

According to Dr Sheikh, the development programme was worked out on the basis of five principles: the completion of ongoing projects, the initiation of important new approved projects, the initiation of unapproved but crucial projects, the implementation of public commitments made by the president and prime minister and, finally, the equitable distribution of funds among the provinces.

Asked about âcrucial unapproved projectsâ, Dr Sheikh said that the government would initiate projects such as cleaning up rivers that are polluted with industrial effluent.

In reply to another question, he said the government would make substantial allocations for the acquisition of land for large dams. Furthermore, the committee on dams headed by Dr Salman Shah, adviser to the Prime Minister on Finance and Revenue, will arrange the foreign funding required for the damsâ construction.

Dr Sheikh said that the government was laying greater emphasis on a knowledge-based economy, technical knowledge and vocational training, adding that the Vision 2030 document that is to be tabled before the NEC is a step in that direction. He said the government put great importance on the National Trade Corridor (NTC) project and substantial allocations would be made in next yearâs budget for the construction and improvement of roads, railways and ports. Furthermore, the government would make the completion of Gwadar Port a priority in order to realise facilities such as the Free Trade Zone and Oil City.

http://www.dawn.com/2007/05/23/top8.htm


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## Neo

Wednesday, May 23, 2007 

*Cotton import from India to reach 3.5m bales*

By Razi Syed

KARACHI: The cotton import from India is estimated to be at around 3.5 million bales this season, due to a growing demand of textile and spinning sectors, traders said on Monday. 

They said despite the governmentâs target of 14.14 million cotton bales for the crop season 2007-08, there would be a shortfall of around 3.1 million bales.

A senior trader, Ghulam Rabbani, said according to the International Cotton Advisory Committee (ICAC), among top ten global producers of cotton, China is likely to produce 29.96 million bales (each bale 480 pounds) in 2007-08, the USA will stand second in production with 19.66 million bales, India will produce 21.45 million bales and Pakistan will produce 10.16 million bales. The total world production is likely to reach 115.83 million bales. 

He said the world consumption is estimated around 122.64 million bales, a shortfall of 6.81 million bales. China is the top consumer of global cotton with 50.04 million bales, India with 19.24 million bales, Pakistan with 12.20 million bales and the USA with 4.50 million bales. 

He said the world production would face a shortfall around 6.81 million bales, while Pakistan would face a shortfall of around 3 million bales.

Mr Rabbani said the mills purchased around 11.80 million bales up till May 1, out of the total production of 12.40 million bales in crop season 2006-07. 

The mills also imported 1.75 million bales from the USA, India and other major cotton cultivation countries during this period, he added.

The spinning sector bought the remaining lots of around 600,000 bales besides imports from India and the USA, which stand at around 100,000 bales during this period.

He said in Punjab, cotton would be sown on 6.326 million acres and Sindh cultivate cotton on 1.581 million acres. NWFP and Balochistan will share the remaining 0.14 million area for cotton production in 2007-08.

http://www.dailytimes.com.pk/default.asp?page=2007\05\23\story_23-5-2007_pg5_5


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## Neo

*World Bank Approves $350 Million Credit For Pakistan Reform Program *

ISLAMABAD -(Dow Jones)- The World Bank Tuesday approved credit worth $350 million to support Pakistan's medium-term reform program aimed at sustaining rapid economic growth and reducing poverty.

The credit proceeds will finance reforms meant to maintain macroeconomic stability, improve management of public expenditure and assist power sector reforms, the World Bank said in a statement.

"Economic reforms are now contributing to increased investor interest from Pakistanis and foreign investors alike," said Yusupha Crookes, head of the World Bank in Pakistan.

"The ongoing reform program supported by this project will contribute to sustaining rapid growth."

The World Bank statement said that over the last six years, Pakistan has emerged as one of the fastest-growing economies in Asia on the back of rising per capita income and improving social indicators.

Economic growth has averaged 7% between fiscal years 2003-04 and 2005-06, while the poverty headcount ratio has fallen significantly in recent years, it said. 

http://www.nasdaq.com/aspxcontent/N...CQDJON200705230409DOWJONESDJONLINE000277.htm&


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## Neo

*Pakistan and Germany to set up joint chamber of commerce *

ISLAMABAD (May 24 2007): Pakistan and Germany have agreed on the establishment of a joint chamber of commerce to help further strengthen their commercial co-operation. This was stated by Foreign Minister Khurshid Mahmood Kasuri and his German counterpart Dr Frank Walter Steinmeier while talking to newsmen after their talks at the Foreign Office here Wednesday.

They noted that there was a vast potential to enhance the mutually beneficial bilateral trade and investment. Foreign Minister Kasuri said Germany is Pakistan's second largest trading partner in Europe and one of the largest in the world with bilateral trade approaching two billion-dollar mark.

Dr Frank Walter said the European Union has decided to increase assistance for Pakistan and the country would now receive two hundred million euros during the next three years. Kasuri said they explored the possibility of strengthening relations especially in trade, investment, education, defence, culture, health-care, railways, power generation, engineering and oil and gas sectors.

He said the two countries also have substantial technical co-operation and agreed to build on that co-operation. Pakistan appreciates German co-operation for establishment of a technical university in Lahore and a vocational training institute in Karachi.

A number of postgraduate students are studying in German universities. Pakistan would like to increase this number substantially in coming years. He said Pakistan has conveyed its interest to see the opening of an office of German Academic Exchange Service in Pakistan to further promote relations in the field of education.

The Foreign Minister said the two countries have good co-operation in defence. More than 229 Pakistan armed forces officers have received training in Germany while 26 German officers have attended Staff College Quetta and the National Defence College.

Kasuri said there are also possibilities for co-operation between the two countries in defence procurement. Both countries want bilateral co-operation in defence to deepen to their mutual benefit. Referring to the cultural co-operation he said strengthening of Anna Marie Schimel House in Lahore to the level of an institute would help that process.

Pakistan also appreciates German co-operation in archaeological excavation in the NWFP and Balochistan. German Foreign Minister said his country is keen to enhance economic and commercial relations with Pakistan. He said Pakistan is very important partner of EU in Asia and has special significance in stability and peace in South and Central Asia.

http://www.brecorder.com/index.php?id=568091&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Gas and oil discovered in Hyderabad district *

KARACHI (May 24 2007): The Oil and Gas Development Company Limited (OGDCL) has made a gas and condensate discovery from its Exploratory Well Thora Deep No 1 in Massive Sands of Lower Goru formation in Hyderabad. According to an information sent to the Karachi Stock Exchange here on Wednesday.

It was said that the well was drilled down to the depth of 3,906 meters in Thora and Thora East Mining Lease falling in district Hyderabad of Sindh. On the basis of open hole logs, two dozens of massive sand of Lower Goru formation were selected for testing.

Both the zones were tested, out of which the second zone proved as producing zone. The short duration initial testing results are including, Choke sizes 32/64 inches, WHFP (PSI) 1880, quantity of condensate 100 bpd, quantity of gas 9.90 mmscfd, quantity of water 120 bwpd and API gravity 44.9.

http://www.brecorder.com/index.php?i... rm=&supDate=


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## Neo

*Wapda signs consultancy deal for 5,400 megawatts project *

LAHORE (May 24 2007): Water and Power Development Authority (Wapda) has signed an agreement for providing consultancy services for feasibility study, detailed engineering design and preparation of tender documents of Bunji Hydropower Project with Bunji Consultants here at Wapda House on Wednesday.

Wapda's General Manager Hydro Planning Zia-ul-Hassan and Francis M. Griffin of Bunji Consultants singed the agreement on behalf of their respective organisations. Wapda Chairman Tariq Hamid, Member Water Muhammad Mushtaq Chaudhry and Member Power Fazal Ahamd Khan were also present o the occasion.

The proposed site of Bunji hydropower project, the biggest ever project in the history of Pakistan, with an installed capacity of 5400 MW is located 83 km downstream of Gilgit on the main Indus River. The project, on its completion is expected to contribute 20.75 billion units of electricity annually to the national grid. The PC-II of this 'run of the river' project has already been approved by ECNEC for conducting feasibility study. The study will be completed in three years. M/s Bunji Consultants comprises of five firms in all, including three foreign firms namely Mott McDonald of UK, Sogreah Consultants SAS of France and Nippon Koei of Japan and two Pakistani firms namely MM Pakistan and Development and Management Consultants.

http://www.brecorder.com/index.php?id=568126&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*FDI up 37pc, portfolio investment 80pc *

ISLAMABAD: Foreign Direct Investment (FDI) to Pakistan during the first ten months of the current fiscal soared by 36.93 per cent year-on-year to $4.16 billion and portfolio investment (public and private) by 80 per cent to $1.82 billion the Central Bank reported on Wednesday. 

During July-April 2006-07, FDI in absolute terms increased by 1.122 billion and portfolio investment by $808 million over corresponding period of the last fiscal when these stood at $3.038 billion and $1.01 billion respectively. 

Therefore, on balance, the total net foreign investment (public and private) in ten months increased by 47.67 percent to $5.98 billion from $4.048 billion in corresponding period of the last fiscal.

It is pertinent to note that during 2005-06, total investment inflow had crossed $3.872 billion mark as against $1.676 billion in 2004-05. Moreover, for the current fiscal, there was hope of further improvement in foreign investment, especially with better macro-economic indicators and improvement in infrastructure.

A significant feature of the data was that though FDI inflow followed steep path right from the beginning of the new fiscal and increased enormously, portfolio investment was fluctuating from the beginning of the fiscal. However, during the period under review it showed a sizeable growth.

According to the break-up developed countries made a total investment of $3.485 billion including FDI $2.51 billion and portfolio investment of $979 million. The developing economies invested $1.499 billion (FDI $1.339 billion and $160 million portfolio investment).

Among developed countries, Western Europe made a total investment (FDI and portfolio) of $2.015 billion and European Union, $1.917 billion against $679.4 million and $286.5 million, respectively, in corresponding period of last fiscal. Besides, under unspecified head (investment by IFIs and other n.s.e) was $323.4 million. This includes FDI of $315.4 million and eight million dollars portfolio investment. Among developing economies, Caribbean Islands invested $16.8 million FDI and $1.2 million portfolio investment during the period under review. Africa, including Libya, Egypt, Mauritius, South Africa and other African countries invested $80.1 million. 

Asian countries (West Asia, South, East and South East Asia) made total investment of $1.398 billion including $1.248 billion FDI and $150.9 million portfolio investment. 

The break-up of investment further indicated that United States (US) was the biggest investor in Pakistan by investing $1.346 billion including $676.7 million FDI and $669.4 million portfolio investment. 

United Kingdom (UK) was next with total investment of $1.107 billion, including FDI of $724.4 million and portfolio investment of 382.3 million dollar. Netherlands was third with total investment $759.1 million including direct investment of 753.4 million and $5.7 million portfolio investment. Followed by China with $708.9 million direct investment and zero portfolio investment. 

United Arab Emirates (UAE) also invested $383.8 million as it injected $364.2 million FDI and $19.5 million portfolio investment in the economy. 

http://www.thenews.com.pk/daily_detail.asp?id=57307


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## Neo

Thursday, May 24, 2007 

*Machine imports grew substantially in July-April*

* Textile machinery imports continued to dip

By Tanveer Ahmed 

KARACHI: The import of machinery grew substantially by 43 percent in the first ten months of the current financial year, on back of a major surge in power generating machinery imports.

Although, the overall import of machinery import was up by 12.22 percent, the textile machinery import dipped further by over 34 percent, which reflects the lack of interest of the textile industry to import textile machinery for expansion, because of the intense competition that the textile products confront in the international market.

The total import bill of machinery group stood at $5.44 billion in July-April period of 2006-07, as against $ 4.85 billion in the same period of the previous year.

The cause for the rise in demand for power generating machinery is the acute power shortage across the country.

âWe will see an increase in import of power generating machinery in coming days as there seems to be no let up in power breakdowns and load-shedding in the near future,â an analyst of foreign trade opined.

Commenting on the falling import of textile machinery, a textile exporter said that the import of textile machinery had started declining since the closing days of the previous financial year, when the industry, foreseeing an intense competition and lack of competitiveness of textile products, stopped placing import orders for textile machinery.

âThe investment in the sector has come almost to a halt and the industry lacks interest to go for further expansion in the present scenario,â he said adding that textile machinery import would witness more decline in days to come. 

In the machinery import category, the office machinery depicted a growth of 8.65 percent, construction and mining machinery was down by 1.28 percent, electrical machinery and apparatus import rose by 35 percent, mobile phone import up by 17 percent, agricultural machinery was up by 47 percent and other machinery rose by 13 percent.

In other import categories, the import of metal group was down by 11.52 percent in July-April of current financial year. The import of almost all items gold, iron and steel scrap, iron and steel declined during the period under review.

The import bill of agricultural and other chemical groups was marginally up by 0.61 percent, textile group import was up by 18.45 percent, the miscellaneous group import was also up by 11.74 percent, food group up by 5.31 percent, transport group import up by 11.65 percent, petroleum group import up by 12 percent.

The most significant among various import categories is the rising import of goods in the âother itemsâ group. It has never been disclosed by the government what is being imported under this group, in which imports went up heavily by 35 percent to $1.90 billion in the first ten months as against $ 1.41 billion in the corresponding period of previous year. 

The countryâs total import bill stood at $24.99 billion in July-April of 2006-07 as compared with $22.94 billion in the same period of previous year and the total import bill is expected to be over $28 billion.

http://www.dailytimes.com.pk/default.asp?page=2007\05\24\story_24-5-2007_pg5_1


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## Interceptor

*Planning Commission approves Rs 11.7 b for development
*
ISLAMABAD, May 17 (Online): The Planning Commission has approved thirty nine projects of infrastructure, social sector and other projects worth Rs 11.7 billion. The decision was taken in a meeting of Central Development Working Party (CDWP) chaired by Deputy Chairman of Planning Commission Dr Muhammad Akram Sheikh here on Thursday. Earlier, CDWP had approved Rs 403.9 billion for 352 projects giving priority to construction of new dams, improvement of environment and projects about commerce and industries, as has been notified by a spokesperson of Planning Commission Asif Sheikh in a press conference. Member of Planning Commission were also present on the occasion. &#65533;Two projects of science and technology worth of Rs 450 million, nine projects of transport and communication worth of Rs 4.9 billion, five projects of water worth of Rs 2 billion, nine projects of physical planning and housing worth Rs 1.5 billion, three project of higher education worth of Rs 986 billion, four projects of industries and commerce worth of Rs 995 million, two project of gorsan worth of Rs 213.58 million, one project of worth Rs 358 million and one project of environment worth of Rs 239 million had been spent,&#65533; he held. Twenty six projects of infrastructure, six projects of social sectors, and seven projects of science and technology worth Rs 8.5 billion, Rs 1.4 billion and 1.8 billion have respectively been approved worth Rs 11.7 billion have been approved, he maintained adding that Rs 1 billion foreign aid is also included in the allocated money in which will be spent on social sector .

He said that Rs 1.7 billion had been allocated for Punjab for seven projects, Rs 1.8 billion for five projects of Sindh, Rs 1.6 billion for ten projects of NWFP, Rs 3.3 billion for six projects of Balochistan whereas eleven projects worth of Rs 3.3 billon for entire country. Rs 0.2 billion for Sindh and Rs 0,8 billion loan for entire country has also been included in the development plan .

Two projects out of five of Sindh have been approved for Karachi worth Rs 30 billion as announced by President Pervez Musharraf and which would be provided by federal government, Sindh government and State Bank, he pointed out. He said ten projects of NWFP had been allocated for water reservoirs and Rs 214 million, 138 million and 331 million had been approved for Loar, Karak and Dar Malik dams respectively .

He said that 36 projects out of 39 projects approved in eleventh meeting have been sanctioned whereas three projects worth Rs 500 million each had been sent to ECNEC for approval. Height of Merani Dam would be raised to 264 feet by uprising of 20 feet, he pointed out. While talking to Online, Member of Infrastructure Planning Commission Dr Asad Ali Shah said that feasibility of Basha Dam was in final phases and work on this project would be started in 2009-10 worth of Rs 13.8 billion. 

http://www.paktribune.com/news/index.shtml?178498


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## Neo

*Forex loans and bond issue to keep borrowing within budgetary target: treasury bills stocks hit Rs 705 billion *

KARACHI (May 25 2007): The stock of debt of the federal government from the banking system continues to rise in the current year in the hope that counter rupee generated from inflow of expected dollar loans and forthcoming forex bond issue flotation would retire this debt and also keep the bank borrowing within the budgetary target of Rs 140.01 billion.

Government borrowings, which is on a constant rise, and as of May 12, has spiked to Rs 212 billion against its target of Rs 120 billion. This is countering the SBP's efforts to curb inflation.

Money Supply (M2) has, so far, breached its fiscal target of 13.46 percent hitting 13.99 percent as of May 12 mainly due to external flows. Had the central bank not taken proactive measure of mopping up of commercial flows, the M2 figure would have busted badly.

T-bills outstanding stock, which was Rs 468 billion as of June 2006 has risen to Rs 705 billion. Similarly, against year-to-date (YTD) Pakistan Investment Bonds (PIBs) maturity of Rs 33.4 billion, the SBP has sold PIBs worth Rs 71.2 billion through last four auctions, with another Rs 15 billion PIB auction due in this fiscal year. Hence, against last June stocks, through T-bills and PIB auctions, so far roughly Rs 275 billion in excess has been drained out of the system, with two more T-bills auction due before June-end, the maturing T-bills amount is Rs 41.8 billion and with PIB maturity of Rs 9 billion.

The Asian Development (ADB) has already provided loans amounting to Rs 700 million - already exceeding the budgetary estimate of $500 million - and further $200 million expected before June-end.

The World Bank was envisaged to provide $700 million this year, but thus far has not disbursed this amount due to non-fulfilment of certain conditionalities attached with the loan; like revision of the electricity tariff. After the recent increase in power tariff, Islamabad is confident that this amount will be released within the next seven weeks. According to informed sources the World Bank board has approved a loan of $350 million this week and disbursement is awaited.

Yesterday's successful floatation and acceptance of $750 million in the Eurobond issue is expected to retire government debt by Rs 45 billion along with privatisation proceeds (Rs 15 billion) will reduce government's bank borrowing by Rs 60 billion, which would also help to bring the M2 growth figure within its target level.

The State Bank of Pakistan (SBP) in its fortnightly Treasury Bills auction, held on Wednesday, maintained its target amount by accepting Rs 7.95 billion against its target of Rs 8 billion. The market's offered amount was Rs 16.1 billion and the realised amount is Rs 7.322 billion.

Interest was again seen in 12-month paper due to better yield offered in longer term paper. The gap between three-month and six-month versus 12-month paper is of 42.5 basis points and 21 basis points, respectively. Discount rate is 9.5 percent.

In three-month, previous cut-off yield of 8.6869 percent was maintained and the accepted amount was Rs 500 million, in six-month by maintaining previous cut-off yield of 8.9017 the accepted amount was Rs 50 million and in 12-month, the SBP did not hesitate to inch up yield and against previous cut-off yield of 9.1 percent it accepted Rs 7.4 billion at a cut-off yield of 9.1119 percent.

"The central bank preferred to stay within the target, though it could have lifted additional Rs 6.35 bullion by raising the yield by a mere 2.4 basis points", says a chief dealer of a foreign bank.

SBP hesitancy, he said that is understandable, since liquidity conditions are already tight. On last Wednesday alone, there was discounting of Rs 9 billion by banks from the SBP window to square off their books. For the last four weeks, tight liquidity condition has persisted and frequent use of SBP discount window by banks was observed, he added.

Throughout the current fiscal year, SBP's monetary stance has been very clear. It has kept the market conditions tight for the last four continuous weeks. In the last quarter of this fiscal year, the average overnight borrowing has jumped to 8.75 percent from FY 8.5 percent. In May, average overnight borrowing cost may have risen to 9.25 percent.

While the SBP has announced fifth PIB auction, due on June 5, which is re-opening of old scrip, with target amount of Rs 15 billion. So far, trading activity in PIBs has been very thin. Though there are queries only from the foreign investors, but none has shown any keenness, which is disappointing.

In real sense except for one or two corporates offering tiny amounts, only State Life Insurance Corporation (Slic) has so far shown interest in long-term government paper ie beyond 10 years. Slic is already holding over 90 percent of the long-term PIB stock.

Market gurus believe that Slic still has room to invest in long-term PIBs (due to absence of bond auction in the previous two years) and should be able to gulp additional Rs 50 billion worth of PIBs.

Meanwhile, the Pak rupee has maintained its strength with foreign exchange reserves hitting a new all-time high of Rs 13.8 billion. As the FY forex reserves target for June-end is thought to be Rs 14.5 billion, the rupee is unlikely to ease against the dollar, as another $1 billion could be added to the forex reserves portfolio due to Eurobond and privatisation receipts.

The Pak rupee could follow the regional currencies trend, which has gained substantially in current fiscal year against the dollar. The Philippine peso gained 13.14 percent, Thai bhat was up by 9.25 percent, Indonesian rupiah was stronger by 6.07 percent, Malaysian ringgit gained 7.75 percent and Indian rupee has so far gained Rs 11.56 percent.

Japanese yen was weaker by 6.33 percent, Sri Lankan rupee lost 6.63 percent, erratic moves were witnessed in Bangladesh taka due to political uncertainty, which in last six months has seen high of 70.6 and low of 63.50 per one dollar and is currently trading at 69.05, while Pak rupee which has lost 1.08 percent in the current fiscal year could narrow its losses.

http://www.brecorder.com/index.php?id=568462&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*$750 million accepted for Eurobond at 6.875 percent: Prime Minister *

ISLAMABAD (May 25 2007): Pakistan has decided to accept offering of $750 million received for Eurobond at 6.875 percent interest. It is 40 basis points less than the bond floatation last year. We intend to raise $500 million through Eurobond issue, but it was oversubscribed by $3.538 billion which is 7 times more than the initial offer.

We have decided to accept offering of $750 million and the remaining will be returned to the investors, said Prime Minister Shaukat Aziz at a press conference. The bond was issued two days back and two teams comprising Advisor on Finance Dr Salman Shah, State Bank Governor Dr Shamshad Akhtar; and Advisor to Finance Ministry Dr Ashfaque Hasan Khan and Finance Secretary-General Nawid Ahsan conducted the road shows.

"I am very happy that the issue was oversubscribed as the investors expressed their confidence in Pakistan's policies, its economy and leadership," said Shaukat Aziz. The prime minister said: "The subscription is more than our expectations and this shows Pakistan's credit worthiness in the international capital market."

"The interest of investors was much better than the previous issues, the maturity period would be comparatively longer ie 10 years and the interest rate, too, would be less than previous issues," he added. He said in all about 200 investors subscribed to the issue. All the three regions - Asia, European Union, and United States - have almost equal representation in the subscription.

The prime minister expressed satisfaction over the development, saying the foreign direct investment (FDI) has already crossed $6 billion mark in the first eight months of the year. To a question, Shaukat Aziz said the funds generated through Eurobonds would be utilised for development. Replying to a question, he said the new budget would be pro-development and relief-oriented.

Shaukat Aziz said the budgetary proposals would contain measures to accelerate the pace of development for creating more job opportunities and fulfilling the needs of the common man.

Responding to a question, the prime minister said that the ban on wheat export has been imposed because of vast disparity in the price of the commodity in the domestic and international markets. He said the price of wheat is increasing in the international market and in the absence of ban the local market would have faced shortage of the commodity.

Answering another question, Shaukat Aziz said that PSO's privatisation was scheduled in June, but the Privatisation Commission could provide exact information on this issue.

http://www.brecorder.com/index.php?id=568485&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Proposal for setting up 400 megawatts generating units approved *

KARACHI (May 25 2007): The government has approved the proposal of an Australian company for establishing 400MW power-generating units based on Thar coal. According to a source Sindh Mines and Mineral Department on Thursday allowed the Australian based company, Cougar Energy (Pvt) Limited to go ahead with the project.

A Memorandum of Understanding (MoU) would be signed in a week's time, in this regard. The company will use underground gasification technology in generating the required power. In this system coal is burnt underground and the exertion of synthetic gases utilised for power generation.

The company would produce electricity from coal by applying latest method of underground gasification technology that has been already working successfully in three countries of the world, source said. The advantage of using this technology is that the cost of power generation is reduced and main beneficiary is the end user.

A company official told Business Recorder that in the underground gasification technology coal-mines were not required thus saving huge amount required for setting up power plants. Cougar Energy limited is planning to start the work at Thar Block-III. They had already completed feasibility study on this site some four years back in collaboration with a Dubai based company, the official said.

The company would initially produce 400MW and later the capacity of power generating units would be enhanced to about 1,000MW. Once MoU signed, the company would able to start electricity generation within three to four years.

The official declined to reveal investment layout but said that the spending on this project would be on phases so it was difficult to estimate at the initial stage.

The country is ranked fourth for having the largest coal deposits, which is ideal for power generation declared by several studies but unfortunately for the last 14 years no project could be materialised successfully. But recent efforts taken by both federal and provincial governments have attracted several foreign and local companies, sources in Sindh Coal Authority said.

They said that coal deposits at the Thar desert is 175 billion tonnes followed by Lakhra 1.32 billion tonnes, Sonda-Jherruk 7.112 billion tonnes, Metting-Thatta 0.161 billion tonnes and Badin 0.061 billion tonnes. The Thar coalfield extends over an area of 9,000 sqkm out of which 356 sqkm has been studied in detail by the Geological Survey of Pakistan, proving nine billion tonnes coal in four blocks.

http://www.brecorder.com/index.php?id=568520&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Financial sector attracting heavy foreign investment *

FAISALABAD (May 25 2007): Financial sector is currently attracting heavy foreign investment and is among the top three sectors with respect to foreign inflows, which are Telecommunications - $1.2 billion, Financial Business - $572.8 million, Oil & Gas Explorations - $352.7 million during July-February FY07, said official sources.

According to official sources, existing foreign banks have by and large enhanced their presence and stake in Pakistan along with new foreign banks that have entered the domestic market for the first time. For example, Standard Chartered Bank has acquired Union Bank, ABN-Amro has acquired Prime Bank, Tamasek of Singapore has established NIB Bank. There are other transactions, which are in the pipeline and reflect the robustness and profitability of banking sector in Pakistan.

The increasing investment and build up of foreign stake in financial sector is also a manifestation of the investors' confidence in government of Pakistan's determination to build a sound financial system as an engine of growth for the economy.

Foreign portfolio investment in the local bourses has also shown an upward trend signifying an increasing foreign interest in the country's capital markets. Foreign portfolio investment, as represented by the Special Convertible Rupee Account (SCRA) shows a net inflow of US $104 million in January 2007 alone; an inflow of US $23 million was recorded on just one day ie 31st January 2007. Interest exhibited by foreign companies in buying stakes in local companies has also been very well received by the market through the country's privatisation programme.

The government completed eight privatisation worth Rs 196.2 billion during fiscal year 2005-06. The privatisation programme for the current fiscal year is also on track.

One way of achieving better financial institutions is by means of availing the opportunities offered by globalisation. Liberalisation of the financial sector of Pakistan has enabled the domestic sector to take advantage of global opportunities.

According to official sources, financial globalisation in Pakistan has led to increase liquidity and lowered the cost of capital, thus leading to better allocation of financial resources and more productive investments. It has also spurred competition and led to a new age of financial sector development by improving screening of credit risks, monitoring of borrower activities, diversification of the financial portfolio and substantially increasing the outreach to the customers. Foreign financial institutions have also brought about improvements in the system by bringing in highly diversified financial tools and best practices from the developed economies.

This enhanced financial development as a result of financial globalisation is going to play a key role in meeting the growing demand of a nation blessed with unparalleled demographic dividend. The increase in available funding will realise huge investments in infrastructure, corporate sectors, household financing and SME and micro financing. This, in turn will lead to huge employment generation that is a prerequisite for realising the unparalleled demographic dividend.

Despite these positive results, official sources mentioned that Pakistan can not afford to be complacent. Second generation reforms need to be built on past accomplishments in order to utilise the financial sector's resources to achieve a healthy level of economic growth and alleviate poverty. With an average credit growth of 30 percent over the last three years, and the rapid diversification of banks' loan portfolios, there is need for vigilance in the future.

Official sources mentioned that the government intends to play the role of a regulator and facilitator in the financial sector. It is intended to sustain the momentum of reforms so far achieved through maintenance of the growth-enabling environment.

Keeping in view the importance of financial deepening for economic development, Pakistan's medium term financial sector strategy will focus on the following areas during next five years:

-- Broadening access to middle and lower income groups.

-- Development of new liability products to utilise savings of small savers.

-- Corporate restructuring to support financial sector reforms.

-- Infrastructure financing.

-- E-banking.

-- Private equity, pension and provident funds.

-- Investment banking.

-- Human resource development and capacity building.

-- Promotion of Islamic banking.

-- Further consolidation and restructuring of the banking sector.

-- Focus on development finance to serve the under served markets.

-- Further strengthening of supervisory regime & strengthening risk management.

http://www.brecorder.com/index.php?id=568538&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pakistan and EU moving closer to Third Generation Agreement *

ISLAMABAD (May 25 2007): Pakistan and European Union (EU) have discussed in depth all the aspects of Third Generation Agreement (TGA) and are moving closer despite the fact that it involves multiplicity of issues, said James Moran, European Union Director external relations for Asia.

Addressing a news conference along with Secretary Economic Affairs Division, M Akram Malik here on Thursday after the end of the first meeting of Pakistan-EC Joint Commission (JC) under Pakistan-EC Co-operation Agreement, James said that delegation of both the sides discussed ways and means to further strengthen the relations.

"We held discussion on trade development, electoral process, governance and civil and human rights issues and improved our understanding" said James adding that Pakistan International Airlines (PIA) was given a recovery plan to overcome the difficulties it had with EU.

To a question about Free Trade Agreement (FTA) with Pakistan, he said it would be too early to do anything about it and no one should expect presupposed outcome. M Akram Malik, Secretary, Economic Affairs Division led the Pakistan side whereas James Moran, Director for Asia in the European Commission, led the EC side.

Akram said the aim of the EC-Pakistan third generation agreement on partnership and development is to deepen relations between the two sides so as to promote mutual understanding and to increase co-operation in diverse areas of EU activity, and help promote socio-economic development in Pakistan.

Meanwhile, a handout said the joint commission is the primary forum for discussions between the partners under the third generation agreement, which meets once a year, alternatively between Islamabad and Brussels to review the progress in relations.

Both sides agreed that the JC is an effective instrument to explore opportunities for the mutual interest of both the partners and expressed their sincere hope that the first meeting will become a milestone in the development of co-operation and economic and trade relations between the two sides. Both the sides agreed to the formation of four sub-groups to carry forward the dialogue and report back to the commission.

The parties discussed a wide-range of subjects including education, health, science and technology, environment, alternative energy etc and expressed the desire to increase the level of co-operation in these areas.

Political and civil issues of mutual interests were also discussed. Both sides shared their views on matters relating to good governance, human rights, migration and regional co-operation.

Bilateral trade and the trade related issues are of great significance for both sides. It was agreed to expand trade relations and work towards removal of impediments in bilateral trade. The sub-group on trade, inter-alia, also agreed to monitor the impact of trade policy in the region on Pakistan's preferential access to European Union markets and will identify possible options for improvement in bilateral trade. In this regard, a study would be carried out on the impact of trade policy in consultation with Pakistan. Both sides welcomed the fact that together the 27-EU member states represent Pakistan's biggest trading partner.

The EC announced increase in co-operation grants from Euro 15 million to an average of Euro 50 million per annum for improvement of education and human resources, rural development, trade and trade related matters etc. It may be recalled that European Commission has also provided an amount of 100 million dollar for earthquake relief and reconstruction.

http://www.brecorder.com/index.php?id=568475&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*July-April motor vehicles import declines *

ISLAMABAD (May 25 2007): Import of road motor vehicles, build units CKD/SKD, has declined to 1.154 billion dollar during the first 10 months of current fiscal, down by 13.18 percent from 1.329 billion dollar over the same period last year.

Official figures released by the Federal Bureau of Statistics (FBS) showed that import of almost all vehicles, excluding motorcycles CKD/SKD aircrafts, ships and boats and parts accessories, recorded a declining trend during the first 10 months of current fiscal compared to the corresponding period of last year.

On monthly basis, the import of road vehicles also declined by 2.24 percent to 144.865 million dollar during the month of April as against 148.178 million dollar during the same month last year. The import of vehicles declined to 144.865 million dollar in the month of April of current fiscal, down by 51.53 percent from 298.900 million dollar over the month of March this year.

Import of Completely Built Units (CBU) vehicles declined by 7.77 percent to 376 million dollar this year against 407.678 million dollar over the corresponding period of last fiscal.

The data showed that import of buses, truck and other vehicles in CBU condition registered a decrease of 22.77 percent in the first ten month to 109.045 million dollar during the July-April against 141.186 million dollar over the same period last year.

Statistics showed that the import of motor cars, in CBU condition, declined by 0.09 percent during the period under review, to 264.879 million dollar as against 265.113 million dollar over the same period last year.

The import of Completely Knockdown (CKD) and Semi Knockdown (SKD) vehicles was decreased to 492.879 million dollar during July-April of the current fiscal, down by 22.44 percent from 635.491 million dollar over the same period last year.

Import of buses, trucks and other heavy vehicles in CKD/SKD slightly surged to 135.936 million dollar during the first ten month of current fiscal, up by 2.02 per cent from 133.242 million dollar over the same period last year.

Import of motor cars, in CKD/SKD form, declined by 31.21 per cent during the period under review from 467.160 million dollar over the same period last year to 321.354 million dollar current fiscal.

Import of parts and accessories declined by 0.56 percent apart from 65.96 percent other transport equipment during July-April period. However, import of motor cycles in both CBU and CKD form surged 50.83 and 1.42 percents, respectively. Motor cycles' import, in CBU condition, surged to 2.080 million dollar during the first 10 months of current fiscal compared to 1.379 million dollar of last year.

Likewise, import of motorcycles in CKD and SKD form also grew upto 35.589 million dollar during the first ten months of the current fiscal, up by 1.42 percent from 35.089 million dollar over the same period last year.

http://www.brecorder.com/index.php?id=568506&currPageNo=2&query=&search=&term=&supDate=


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## Introvert

* Pakistan-Sri Lanka trade zooming to $ one billion mark* 
ISLAMABAD, May 25 (APP): Trade between Sri Lanka and Pakistan is growing and would reach the US $ one billion mark in the next five years, High Commissioner for Pakistan in Sri Lanka, Shahzad A. Chaudhry said. Speaking at a programme organized by the National Chamber of Exporters last week in Colombo, he said there is a sharp increase of trade after signing the FTA between the two countries in 2005, says a press release received here Friday. Trade, which was around US $ 35 million before signing the MoU,

passed the US $ 200 million mark after the MoU. "Though this is a sharp increase it is not at all sufficient. Both countries have lot of potential that has been underutilised," he said.


In the first six months of this year trade has passed the US $ 285 million mark with the trade balance being in favour of Pakistan.


Exports to Sri Lanka in the first six months were US $ 285 million. The High Commissioner said most of the countries in the region are trying to do business with Europe and have ignored the potential in regional trade.


Chaudhry said the hospitality industry is an area that has been untapped. "Some of the hotels in Sri Lanka are top of the line and are sometimes better than what they have to offer. The hospitality in Sri Lanka too is better than what is available in Pakistan," he said.


Buddhist tourism too has tremendous potential that is yet to be exploited.


Another area where there are opportunities for Sri Lankan entrepreneurs is the retail trade in Pakistan. "Pakistan has a growing upper class with relatively high per capita incomes.


"We do not have supermarket chains such as Cargills, Keells, Arpico and Laugfs and Sri Lanka could look for opportunities in this area," he said.


While Pakistan produces the best textiles and yarn they cannot match the high quality of Sri Lankan apparels. "Therefore both countries should share knowledge in these areas and joint ventures would be very gainful for both countries," he said.


"Pakistan is now the most investment-friendly nation in South Asia . Business regulations have been profoundly overhauled along liberal lines, especially since 1999.


Foreign investors do not face any restrictions on the inflow of capital, and investment of up to 100% of equity participation is allowed in most sectors (local partners must be brought in within 5 years and contribute up to 40% of the equity in the services and agriculture sectors). Unlimited remittance of profits, dividends, service fees or capital is now the rule.


World Bank report published in late 2006 ranked Pakistan (as 74th) well ahead of neighbours like China (93rd) and India (134th) on ease of doing business. Pakistan's economy is growing at 7 percent and last year they had 6 billion foreign direct investment. The automobile industry too is growing and last year 160,000 units were manufactured.


"We can assist Sri Lanka in engineering, fruit and vegetables dairy sectors and the embassy staff in Colombo would assist any local exporter", he said.


Pakistan's KSE 100 Index was the best-performing stock market index in the world as declared by the international magazine "Business Week". Pakistan exports rice, cotton, fish, fruits, and vegetables and imports vegetable oil, wheat, cotton, pulses and consumer foods.
The country is Asia &#8217;s largest camel market, second-largest apricot and ghee market and third-largest cotton, onion and milk market.
http://www.app.com.pk/en/index.php?option=com_content&task=view&id=9616&Itemid=2


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## Neo

Friday, May 25, 2007 

*Mobile phones import up 28%*

By Romail Kenneth

KARACHI: The import of mobile phones grew substantially by 28.01 percent in the first ten months of the current financial year. In the last three years, the import of mobile phones has increased by almost six times.

Pakistan imported mobile phones worth $728,283 during July 2006âApril 2007 of the current fiscal year as compared with $568,930 during the same period in July 2005âApril 2006.

During July 2006âApril 2007 of the current fiscal year, other telecom machinery worth $1.83 million were imported as against $1.56 million during the same period in July 2005âApril 2006, depicting an increase of 17.35 percent.

Shahid Khan, National Marketing manager in Samsung told Daily Times that a 21 percent increase in mobile import is expected in the next fiscal year. Chinese copies of different expensive international brands are also available in the market at a low price, which is badly affecting the image and business of original brands, he added. 

In recent years, the business of the Pakistani cellular phone industry in the country has risen from 1.2 million in 2002 to 52 million in 2007. After the arrival of Warid and Telenor, an intense competition has been witnessed in the sector.

Apart from this, the manufacturing facility of mobile handsets and other telecom equipments is still lacking in Pakistan, even though the government is attracting foreign companies to invest in this area as there is a continuous demand for telecom related equipment in the country.

According to Pakistan Telecommunication Authority (PTA), the import of other telecom equipment has also witnessed increase due to expansion of telecom network and services. Mobilink has over 25 million clients followed by Ufone with 12 million, Warid with 9.7 million and Telenor with 9.6 million. In the month of April 2007, Warid recorded an 8.5 percent increase and is now in third place.

To compete with each other, mobile phone companies are reducing the rates of sets, boosting the trend of replacing old mobiles with new ones. 

According to an estimate, there are more than 1,75,000 mobile phone shops across Pakistan generating employment for over 6,45,000 people. Mobile phone shops include high-end franchise show rooms to small kiosks in markets and shopping malls. 

A cellular phone retailer at Saddar Electronic market said the sale of used mobile has dropped as the mobile companies are launching cellular phones equipped with latest features at low prices. But still many shopkeepers are selling used mobiles and also guarantee to remove apprehensions from the minds of customers, he added.

http://www.dailytimes.com.pk/default.asp?page=2007\05\25\story_25-5-2007_pg5_3


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## Neo

Friday, May 25, 2007 

*Investors not to worry: Pakistanâs reforms will be continued: Humayun*

ISLAMABAD: Humayun Akhtar Khan, Federal Minister for Commerce, has assured the investors that Pakistanâs reforms would continue with governments of the future and the investors need not worry. 

He was addressing a two-day international symposium on âPakistan in Regional and Global Politicsâ organized by Institute of South Asian Studies (ISAS) at the National University of Singapore, according to an official statement issued here on Thursday. 

The minister gave a wide overview of Pakistan. He said Pakistan is a modern and moderate Islamic state, but faces many challenges. He briefly discussed the history of Afghanistan issue - how while fighting the Soviet Union, the Taliban gained control and how they got involved in the 9/11. 

He said Pakistan since becoming partner in war on terror has taken a number of significant measures, which include deployment of troops at the border with Afghanistan. He said the terrain is very inhospitable and manning it is a brave step. Pakistan has suffered high casualties in the region, which he said shows Pakistanâs commitment to war on terror. 

Explaining Pakistanâs perspective on incidents of terrorism inside Pakistan, the minister said that a few Pakistanis have unfortunately become suicide bombers because of their poverty. He expressed hope that with the economic growth Pakistan is achieving, there will be better employment opportunities and in turn such incidents will cease to happen. 

Humayun Akhtar, deliberating on investment opportunities in Pakistan, said that Pakistan liberalized and de-regulated its economy in the early 1990s, a policy which has been expedited by the Musharraf government. These reforms will continue with governments in the future. On the question of current constitutional crisis, the minister said that Pakistanâs constitution allows a reference to be filed. He said it is for the court to discuss the matter. 

http://www.dailytimes.com.pk/default.asp?page=2007\05\25\story_25-5-2007_pg5_7


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## Neo

May 25, 2007 

*Pakistanâs euro bond fetches record $3.538bn subscriptions *

ISLAMABAD: Pakistanâs Euro Bond launched in the international capital market attracted record $3.538 billion subscriptions from more than 200 investors, which is seven times more than the governmentâs expectations, Prime Minister Shaukat Aziz said on Thursday.Talking to reporters here, Aziz said that Pakistan had initially set a target of minimum 500 million subscriptions, but it received an overwhelming response from the international capital market. Aziz said the marketing team headed by Dr Salman Shah was deciding the price of the bonds and the interest rates to be paid to investors, which would be finalised later on Thursday.He said the government had decided to get $750 million from the market out of the $3.538 billion subscriptions which would be divided equally among Asian, European and US investors. He said the maturity period for these bonds would be 10 years. To a question, Aziz said the governmentâs wheat policy was well coordinated and it had allowed the export of old stocks before the new crop came in the market to protect farmersâ interest and ensure them the support price announced by the government. He said the government had banned wheat export after wheat prices in the domestic market increased. He said the government would look into the individual cases of exporters whose consignments were in the transition phase. Aziz said the price of flour in Pakistan was less than in other countries of the region, adding that the price of flour in India was Rs 22 per kilogramme while it was Rs 13 per kg in Pakistan. 

http://www.dailytimes.com.pk/default.asp?page=2007\05\25\story_25-5-2007_pg7_8


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## Neo

*MoF ditches Planning Commission, CBR on budgetary targets *

ISLAMABAD (May 26 2007): The Ministry of Finance on Friday opposed as big as Rs 549 billion Public Sector Development Programme (PSDP) size for 2007-08, and recommended to cut it down to below Rs 500 billion. However, it suggested that revenue collection target for Central Board of Revenue (CBR) should be increased to Rs 1.5 trillion.

The CBR officials are not ready to accept Finance Ministry's new demand. In their opinion revenue target fixed earlier of Rs 1.15 trillion would be reasonably achievable in next fiscal year. The Finance ministry's senior officials told a high-level meeting, chaired by Prime Minister, Shaukat Aziz, here that a big jump in PSDP size for the next fiscal will aggravate current account deficit problem.

The government is facing huge current account deficit and it's a serious worry for its economic team. Even after unprecedented inflows of foreign direct investment (FDI) and remittances that will be around $12 billion by June 30, and using untraditional ways such as global bond issue, they are yet to plug the current account deficit.

Sources said the Finance ministry officials gave a detailed presentation to the meeting that lasted for over four hours, covering total inflows/ outflows in 2006-07, and current account deficit position. They argued that PSDP size below Rs 500 billion can help the government overcome current account deficit in 2007-08.

Sources said PSDP size and revenue collection targets were complex issues of any budget and they need more meetings to reach their mutually agreed figures. They said the Prime Minister heard the arguments of different ministries/ divisions' officials and left PSDP and revenue collection issue for them to resolve in next two days.

Sources said the prime minister directed the officials working on forthcoming budget to meet on daily basis to reach an understanding on the controversial issues. After sorting out the issues, the officials team will go back to the prime minister for PSDP size and revenue collection figures' endorsement. This process is required to be completed by May 29, to present mutually agreed budgetary estimates to the National Economic Council (NEC) meeting, scheduled here for May 31. NEC approval is a pre-requisite to lay down annual budget before the Parliament.

http://www.brecorder.com/index.php?id=568786&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Completion of mega deals during current fiscal year directed *

ISLAMABAD (May 26 2007): The Privatisation Commission (PC) Board here on Friday directed completion of PSO-HBL IPO-UBL GDRs transactions during the current fiscal year. According to a statement, the meeting of the Board of Privatisation Commission was held under the chairmanship of Zahid Hamid Federal Minister for Privatisation and Investment here.

The meeting reviewed in details the progress achieved in the privatisation of Pakistan State Oil (PSO), launching of Global Depository Receipts (GDRs) of United Bank Limited (UBL), Initial Public Offering of Habib Bank Limited (HBL), Heavy Electrical Complex (HEC), land/assets of Services International Hotel and Republic Motors and Hazara Phosphate and Fertilisers Limited. The Board issued necessary directions for expediting all these transactions within the current fiscal year.

Zahid Hamid Federal Minister for Privatisation and Investment informed the Board that during the past ten months of the current fiscal year the total foreign investment was a record US $6 billion, which was indicative of the confidence of the foreign investors in the economic policies of the government and its leadership.

This very positive and favourable investor sentiment was also evident from Thursday's issue of the $750 million 10-year bond which was oversubscribed 7 times and priced very favourably at 6.875 percent. The PC Board appreciated these highly significant and encouraging developments, which would give further boost to the economy.

These were the fruits of the government's remarkably successful economic reforms based on privatisation, liberalisation, deregulation, transparency, good governance and continuity and consistency of policies, he added.

The Board also took note of the misleading reports regarding the privatisation of National Investment Trust Limited (NITL) and observed that according to the approved transaction structure, which was reopened in November 2005 and was on going since June 2003, 47.75 percent of total NITL units (ie the units not covered by the Letters of Comfort issued by the Ministry of Finance) would be divided into three (3) equal parts and management rights of each part would be sold to three (3) different parties at the highest bid price.

Hence no one party could purchase management rights to more than 16% holding and the apprehensions of manipulation were therefore misplaced. Moreover in view of large number of parties, which had expressed interest in the transaction, the PC expected very competitive bidding. Members of the Board of the Privatisation Commission, senior officials of the respective Ministries and departments attended the meeting.

http://www.brecorder.com/index.php?id=568790&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*CBR may allow 100 percent depreciation allowance on machinery *

ISLAMBAD (May 26 2007): The Central Board of Revenue (CBR) is likely to allow 100 percent depreciation allowance on the plant and machinery in budget 2007-2008 to create a hassle-free environment for the investors as well as local industry.

The CBR has also decided to reduce customs duty on the raw materials/inputs used by certain industries in coming budget to facilitate and reduce cost of doing business in Pakistan.

CBR Chairman M Abdullah Yusuf told Public Accounts Committee (PAC) on Friday that depreciation allowance was the deferment of income tax liability. An investor can claim this allowance at any time, which will ultimately reduce his income tax liability.

However, there is no government revenue involved on claiming capital allowance. The whole issue is that whether the department has correctly given the allowance or not. The government policy is to encourage capital investment for which one of the major tools is to give maximum depreciation in the initial years of investment.

The policy makers are thinking that why not 100 percent depreciation allowance be given once for all. In this regard, the CBR is considering relief pertaining to depreciation allowance in coming budget to end litigation and day to day problems confronted by the taxpayers.

An announcement is expected in federal budget 2007-2008 to facilitate investors, CBR chairman added. Officials of the Auditor General of Pakistan said that if the government was considering incentives for the investors through amendment in rules/regulations in coming budget, it was a positive move. But, presently, new law was not in place in case of under-assessment of income tax due to inadmissible depreciation allowance.

In case of certain sugar mills, excess depreciation allowance was allowed by the income tax department causing shortage of Rs 540.827 million tax. However, PAC members said that if the government wanted to give concession in terms of depreciation allowance, it would be a positive step without causing loss to the national exchequer. It is important to mention that depreciation allowance @ 10 percent is admissible in the case of machinery and plant in addition to initial allowance of 50 percent.

Meanwhile, PAC under the chairmanship of Malik Allah Yar Khan, Chairman of the committee, appreciated overall efforts made by the CBR in effectively dealing with various issues confronting with the board especially maximisation of revenue generation, clearance of huge litigation backlog and settlement of audit objections.

He made this observation after a comprehensive briefing by CBR Chairman on achievements during the last few years. Other members of PAC and senior officials of CBR were also present in the meeting.

"Your (Chairman CBR) efforts are commendable. We are extremely happy and appreciate the measures you have taken to put the things on right track in CBR," remarked Malik Allah Yar Khan and added: "Similar spirit has to be shown by other departments."

He, however, was of the opinion that CBR had to do little more to respond to PAC's directives and implement its decisions. Earlier, CBR chairman, in his briefing to the committee, enumerated the successes made on various fronts including the clearance of huge pendency of tax cases. He said, in the last couple of years, 82,000 tax appeals were disposed of at Collectorate/ commissionerates level and we were now totally current having only 1,200 tax appeals on direct tax side and 2,200 on indirect side, which were all fresh.

Clearance of pendency helped us to reduce the number of Commissioners (Appeal) from 34 to 5 and Collectors (Appeal) from 14 to 6, he added. One more Collector (Appeal) is likely to be withdrawn in a month or so, he said.

At Supreme Court level, CBR Chairman informed the Committee, a total number of 1,950 appeals were pending. Out of this 1,650 cases have been disposed of and current pendency is just 293. He said, some of the disposed of cases were pending for the last over 30 years.

He further informed the PAC that 7,950 appeals had been decided in the last two years at High Courts level. Similarly, out of total 25,000 appeals, pending at tribunal level, 21,414 have already been decided.

Since 2001, Federal Tax Ombudsman (FTO) has handled 9,293 complaints filed by the taxpayers. Only 345 have now left with FTO for decision, he added. The CBR Chairman also apprised the committee that Alternate Dispute Resolution Committees had also played a positive role in reducing the level of litigation. These committees received a total number of 251 applications on direct tax side and 957 on indirect side. Majority of these applications had been disposed of and the current balance pendency is 68 on direct tax side and 223 on indirect tax side.

Later, various pending audit paras and actionable items came under discussion in the meeting and necessary decisions were taken. There was a unanimity of the views in the PAC meeting that time and energy may not be wasted on audit paras in which nominal amounts were involved and committee asked CBR to do the needful to get them written off.

http://www.brecorder.com/index.php?id=568809&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Economic boom behind power crisis: Musharraf *

KARACHI (May 26 2007): President Pervez Musharraf said on Friday that demand for energy was growing annually in double digit due to economic boom and the government was utilising all sources of energy production in a big way. "This challenge of energy shortage has to be met," he said while speaking at the inauguration of $50 million LPG terminal of Progas Pakistan Ltd phase II at Port Qasim.

Port and Shipping Minister Babar Khan Ghauri, State Minister for Petroleum and Natural Resources Naseer Mengal and diplomats were also present on the occasion. "On the one hand we are glad that economy is growing while on the other side we have to work very hard to meet the challenges like rising power demand," he said.

He said the government was focusing on gas and electricity. The country needed gas for the industry as well as for generating electricity. The President said the government needs to generate electricity from all sources, cheapest being the hydro-power. "We are looking at this source and nuclear energy as well in a big way," he added.

President Musharraf said that the government was also working to produce electricity through coal, gas and alternate energy sources. Oil is the only source, which is being left aside due to bad experience in the past as a result of rising oil prices.

He pointed out that the government was importing electricity from Iran to meet demand in the coastal areas. Besides, he said, search for oil and gas was in full swing and OGDL has made 11 successes in drilling for gas, hitting a major gas field in NWFP.

This gas is being extended to the southern districts of Frontier including Peshawar and Islamabad. The President said that the government has devised short-term, mid- term and long-term strategies to enhance energy production in the country. The short-term energy plan is designed to increase energy production up to December 2008. However, he said this plan was not meeting the targets in some areas and needs a push to achieve targets and this is being done.

He said the mid-term strategy from 2009 to 2011 was going all right as it was on track. The long-term strategy up to 2016 was also going alright, he added. He said investment inflow has taken a quantum jump rising from $300 million in 1999-2000 to over $6 billion this year.

When the investors come in, they seek guarantees on energy and to do so the country has to have more gas and electricity, he pointed out. The President said that this challenge has to be converted into an opportunity and the government was determined to do so. He said that the demand for liquified petroleum gas (LPG) was 3000 metric tons while its production was only 1600 metric tons, posing a huge gap.

The President urged LPG producers to put up more terminals to meet the growing demand for this source of energy in the country. "We want to reach out to consumers in mountainous areas to check the on-going deforestation and we need more LPG for this purpose," he noted.

He said that auto sector was also need LPG as more and more vehicles were switching to this cheaper fuel. The government was trying to create investment friendly environment in the country and changing laws and regulations to remove bottlenecks and hurdles, he said.

Referring to the performance of multinational companies operating in Pakistan, he said that the product of Unilever has surged by 50 percent while the sale of Pepsi Cola also went up by 50 percent. The government was also trying to improve law and order in the country with sincerity.

"We are trying to address the issue of terrorism and extremism under a well laid out strategy to ensure the transformation of Pakistani society in due course." Earlier, Chairman Progas Pakistan Ltd Dr Ali Allawi, a cousin of former Iraqi prime minister, in his welcome address, lauded the business friendly policies of the government and the economic revival.

He noted that more foreign investment will flow in, if the government ensures the continuity of its friendly economic policies.

LAW & ORDER SITUATION REVIEWED The obtaining law and order situation in Sindh with particular reference to Karachi was reviewed at a high-level meeting under the chairmanship of President Pervez Musharraf at the Chief Minister House here Friday.

The meeting was attended by Sindh Governor Dr Ishrat-ul-Ebad Khan, Chief Minister Dr Arbab Ghulam Rahim, Federal Minister Information Mohammed Ali Durrani, Advisor Home Waseem Akhtar, Chief Secretary Shakil Durrani, IG Sindh Niaz Ahmed Siddiq, Home Secretary Brigadier Ghulam Mohammed Mohtaram (Retd), CCPO Karachi besides senior civil and army officers.

On the occasion the President was apprised about the prevailing situation in the aftermath of May 12 incident and given a special briefing on law and order. Earlier, at Chief Minister House, the President and Chief Minister Dr Arbab Ghulam Rahim had a one-to-one meeting. The Chief Minister acquainted the President with existing political situation in the province.

He informed that Sindh government is working for the prosperity of people of Sindh. He also apprised the President of law and order situation in the province.

COMPENSATION FOR MAY 12 VICTIMS DOUBLED President Pervez Musharraf announced to increase the amount of compensation by 100 percent to be paid to the families of those killed in May 12 violent incidents in Karachi. Addressing a cross-section of people at the Chief Minister House here, the President said that the provincial government has announced compensation of Rs 300,000 for families of those killed and said it is being doubled with another Rs 300,000 to be paid by the federal government. The President said the compensation to be paid to the injured will also be doubled.

http://www.brecorder.com/index.php?id=568783&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*$500 million bond issue fetches $3.5 billion on world markets: Salman *

NEW YORK (May 26 2007): Pakistan raised 3.5 billion dollars on a 10-year 500 million-dollar bond issue on international markets, said Adviser on Finance Dr Salman Shah on Thursday, an added that this was "unprecedented" in the country's history.

Announcing this at a press conference, he said that the bond was oversubscribed by seven times in sharp contrast with last year when 1.7 billion dollars were raised against a similar offer of 500 million dollars.

He said that the markets included London, Boston, New York, Hong Kong and Los Angeles, and the composition of the subscription was 34 percent from Europe, 34 percent from Asia and 32 percent from the United States. In contrast, last year, the United States had subscribed only nine percent.

"This is a very good news," he said, adding that it represented a vote of confidence in Pakistan economy and the country's potential, despite the political developments at home. "It is a ringing endorsement" of the present government's policies, he said.

He said this year's subscription obtained two percent above the US Treasury rates of 4.8 percent. Before coming here for Pakistan's bond roads how, Salman said there were some reservations whether the bonds should be floated in view of the political situation. But, he said, the government decided to go ahead and continue this annual feature.

Shah said that the continued international confidence in Pakistan would have a positive impact and help bring more foreign investment into the country, even though private investors were usually very cautious.

He said that the government had fully prepared its information portfolio regarding Pakistan's economy, highlighting that the fiscal deficit had been halted, public debt to equity had been reduced and projecting foreign investment at six billion dollars this years, with foreign exchange reserves likely to reach up to 14.4 billion dollars against 13 billion dollars of last year.

About reasons behind the growth, the Adviser said that Pakistan "has a labour force of 100 million" in a population of 100 million, who are under 25. It would reach 200 million in 2050 to become the fourth largest workforce in the world. This was one of the strengths of the economy, he said.

In addition, he said, middle class was expanding, markets were growing, as also there was shift from textiles to engineering and high tech. Besides, the government was now going to make more investments in human resource developments, physical infrastructure, national trade corridor and dams.

He cited Goldman Sachs report, which termed Pakistan among top 20 emerging economies. As regard the increase in foreign exchange reserves, he said that non-debt flows were on the rise and remittances this year were likely to amount to 5.5 billion dollars. Dr Shah called for a consensus in Pakistan on the economic policies, irrespective of political differences, to maintain the present momentum and growth, "which is vital for the country's well-being".

http://www.brecorder.com/index.php?id=568822&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*'Pak-Sri Lanka trade to attain $1 billion mark' *

ISLAMABAD (May 26 2007): The trade between Sri Lanka and Pakistan is growing, and would reach one billion-dollar mark in the next five years, High Commissioner for Pakistan in Sri Lanka Shahzad A Chaudhry said. Speaking at a programme organised by 'National Chamber of Exporters' last week in Colombo, he said there was a sharp increase in trade after signing the FTA between the two countries in 2005.

According to a press release received here on Friday. Trade, which was around 35 million dollars before signing the MoU, passed the 200 million-dollar mark after the MoU. "Though this is a sharp increase it is not at all sufficient. Both countries have lot of potential that has been under-utilised," he said. In the first six months of this year, trade passed the 285 million-dollar mark with the trade balance being in favour of Pakistan.

Exports to Sri Lanka in the first six months rose to 285 million dollars. The High Commissioner said that most of the countries in the region were trying to do business with Europe and had ignored the potential in regional trade.

Shahzad said the hospitality industry was an area that had been untapped. "Some of the hotels in Sri Lanka are top of the line and are sometimes better than what they have to offer. The hospitality in Sri Lanka, too, is better than what is available in Pakistan," he said.

"Buddhist tourism, too, has tremendous potential that is yet to be exploited," he added. Another area where there are opportunities for Sri Lankan entrepreneurs is the retail trade in Pakistan. "Pakistan has a growing upper class with relatively high per capita incomes. We do not have supermarket chains such as Cargills, Keells, Arpico and Laugfs, and Sri Lanka could look for opportunities in this area," he said.

While Pakistan produces the best textiles and yarn, these cannot match the high quality of Sri Lankan apparels. "Therefore, both countries should share knowledge in these areas and joint ventures would be very gainful for both countries," he said. "Pakistan is now the most investment-friendly nation in South Asia. Business regulations have been profoundly overhauled along liberal lines, especially since 1999.

"Foreign investors do not face any restrictions on the inflow of capital, and investment of up to 100 percent of equity participation is allowed in most sectors (local partners must be brought in within five years and contribute up to 40 percent of the equity in the services and agriculture sectors). Unlimited remittance of profits, dividends, service fees or capital is now the rule."

The World Bank report published in late 2006 ranked Pakistan (as 74th) well ahead of neighbours like China (93rd) and India (134th) on ease of doing business. Pakistan's economy is growing at seven percent and last year it had six billion dollars foreign direct investment. The automobile industry, too, is growing and last year 160,000 units were manufactured.

"We can assist Sri Lanka in engineering, fruit and vegetables and dairy sectors and the embassy staff in Colombo would assist any local exporter", he said. Pakistan's KSE-100 Index was the best performing stock market index in the world as declared by the international magazine 'Business Week'. Pakistan exports rice, cotton, fish, fruits, and vegetables and imports vegetable oil, wheat, cotton, pulses and consumer foods. The country is Asia's largest camel market, second largest apricot and ghee market and third largest cotton, onion and milk market.

http://www.brecorder.com/index.php?id=568890&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*NWFP ADP to increase by 33 percent in next budget *

PESHAWAR (May 26 2007): NWFP Chief Minister Akram Khan Durrani has directed for 33 percent increase in the next annual development programme (ADP) for the rapid completion of ongoing and new schemes throughout the province. These schemes were a public welfare and should be completed on priority basis.

The new schemes were public demand driven one and being initiated for the progress and welfare of the people and the province. This he stated in the meeting at Chief Minister's House Peshawar on Thursday. Minister Planning and Development Inayatullah, Ex-Chief Secretary Abdullah, Chief Secretary Riaz Noor, ACS Dastagir Khan, Secretary Finance, P&D and other attended the meeting.

The meeting thoroughly reviewed the ADP funded schemes. The chief minister said that the provincial government has already injected Rs 2 billion additional funds for the expeditious completion of ongoing schemes. He said that funding the ongoing schemes was not the real problem. However, the real problem was the capacity of the departments for the judicious utilisation of resources for the in-time completion of all the projects.

Provincial government would wish to see the cent percent targets were achieved. The access release of Rs 2 billion was justifiable, as it would change the entire developmental outlook of the province. The entire taxation system needs revamping, he told the meeting.

The chief minister directed for a mechanism to keep the prices of essential commodities well under control. The government did not stop developmental work on schemes initiated in the previous areas. These were prioritised and completed with the spirit of public service.

The provincial government managed arranging funding for such schemes, which was an accommodative gesture, never witnessed in the past. "We set a new trend for the development of the province and hopefully it will go on in future for the public interest and development of the province," Durrani maintained. His government returned back expensive loans and the tail-end result would be that the province would get a relief of Rs 30 billion in terms of reduced mark-up on these expensive loans.

The provincial government gets its share in the developmental strategy. That was not enough otherwise still we believe something is better than nothing. There would be small dames irrigational and drinking water facilities and by the end of this fiscal year the people would see for themselves the completions of schemes in the stipulated period. The chief minister wished to make a purchasing committee for medicine in all tertiary and district headquarters hospitals.

The districts would be directed not to utilise the funds for medicines in some other sectors and the use of fund meant for medicines should be transparent. We would also look to the Zakat funding for the hospitals and would rationalise them.

The meeting also debated the ongoing projects and the once to be completed in the current fiscal year. The meeting also debated the spending and receipts and the provincial share in the federal receipts, the expected increase in the salaries of the government servants.

The sanctions of posts in police, education, health departments etc. The meeting was further told about the donors who would inject resources to support the budgetary expenditure and initiation of new schemes for public welfare.

http://www.brecorder.com/index.php?id=568910&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'Green Punjab Programme will be a great success' *

LAHORE (May 26 2007): With a view to making the Green Punjab Programme of the provincial government a great success, Rozgar Auto Industry (Pvt) Limited has manufactured a four-stroke rickshaw, which is available to public at reasonable rates.

Abdul Waheed, CEO Rozgar Auto Industry (Pvt) Limited told Business Recorder, here on Friday that the provincial government had already engaged around a dozen factories to improve the production of new brand rickshaws so as to replace two-stroke rickshaws with CNG-fitted four-stroke. Earlier, the government had engaged three factories to manufacture three-wheelers.

It may be mentioned that the provincial government decided in 2005 to replace two-stroke three-wheelers with CNG-fitted four-stroke rickshaws in Lahore, Multan, Faisalabad, Rawalpindi and Gujranwala by the end of 2007. Three manufacturers were ordered to produce 60,000 four-stroke vehicles, but they reportedly supplied over 6000 to the government, which were now plying on city roads.

According to Abdul Waheed, the government had also relaxed some conditions it had imposed on drivers to obtain loans from banks and corporation to buy a four-stroke rickshaw. This is good initiative on the part of the government.

"When the EPD launched a campaign against two-stroke rickshaws sometimes ago, the price of a two-stroke decreased and most of the drivers looked for four-stroke ones. But they were not available in the market thereby the price of the two-stroke rickshaws again got sustained," Waheed said. He complained that the two-stroke rickshaw was still being manufactured and transported to Sindh, Balochistan and the NWFP, which must be stopped.

He stated that his company was capable to enhance their production of 4-stroke rickshaws to make the Green Punjab Programme of the government a success. The programme has been launched to replace the 2-stroke rickshaws with 4-stroke CNG rickshaws for ensuring clean environment.

Abdul Waheed urged the government to chalk out a comprehensive plan to guide the manufacturing companies regarding the demand of 4-stroke rickshaws. He said that standard as well as production of CNG-rickshaws should be improved so that the desired results of the programme regarding pollution control could be achieved within shortest possible time.

He praised the Chief Minister Punjab, Chaudhry Pervaiz Ellahi for initiating the Green Punjab Programme. He called for simplifying the lengthy procedural formalities for getting loans through Bank of Punjab under the Green Punjab programme for which Punjab government is providing subsidy. He said that other banks should also be included in this programme and the procedure of getting loans should be simplified. He emphasised upon the need of creating maximum awareness among masses about environmental pollution.

http://www.brecorder.com/index.php?id=568917&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*Hydel projects in Punjab: 15 overseas Pakistani investors keen to invest *

LAHORE (May 26 2007): Fifteen overseas Pakistani investors have shown interest to invest in hydel power projects worth Rs 3.8 billion to be constructed in Punjab. They would be provided state-of-the-art facilities at Power Department under one window operation in this regard.

Punjab Power Minister Chaudhry Armaghan Subhani said this in a meeting on Friday to review the investment tendencies of overseas as well as local investors in hydel projects in Punjab and consequently to finalise arrangements for interesting parties, disclosed an official.

The meeting was also attended by Chief Engineer (Power) Muhammad Yaqoob and Director Technical Muhammad Rahat Khan and high ranking officer of attached departments.

Chaudhry Armaghan Subhani said that successful holding of Overseas Pakistanis Investment Conference at Islamabad was a great advancement towards enhancing investment-friendly atmosphere in the country, which would yield fruitful impact on our economy.

He said that Punjab was a land of 23,712 miles long canals and cheap electricity could be produced by installing turbines of two to 50 mega watts on at least 38 selected falls on these canals.

He said that according to the government of Pakistan's Renewable Energy Policy, Wapda was bound to purchase the total quantity of electricity produced privately whereas an investor could also utilise it for its own industry despite selling the produced energy to local vicinity as well. He said that feasibility reports of four falls had been prepared whereas in the light of approved policy, the investors were supposed to produce power according to their own needs.

The minister said that the investors would be granted the Letter of Interest only if they got themselves registered with the Punjab Power Development Board. He said that on the import of machinery required for these projects, the government had waived off the excise duty, sales tax and income tax over energy production.

"The government would only charge investors the water usage price which is 15 paisas per unit." He said the government would offer land on lease for 50 years to the investors along with franchise opportunities for interested parties.

http://www.brecorder.com/index.php?id=568933&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*South Korea likely to import 5500 skilled manpower from Pakistan *

ISLAMABAD: May 26, 2007: South Korea is expected to import 5500 skilled Pakistani labour in this year, said Minster for Labour, Manpower and Overseas Pakistani, Ghulam Sarwar Khan.

He said this after his meeting with South Korean delegation headed by President of Human Resource Development Korea, Kim Yong Dal.

During the meeting, the Minister briefed the delegation about the steps taken by his Ministry regarding the training of manpower in the country.

The delegation lauded the performance of Pakistani labour and said that it (performance) is up to Korean standards and authorities of Korean Labour Ministry face quite less problems of Pakistani labour as compare to labour from other countries like India and Sri Lanka.

The Pakistani labour will be treated equally to Korean Labour in term of employment opportunity. Owing to these advantages, Pakistan is now considered as a source country for Labour to Korea.

The President of Human Resource Development Korea promised that inspectors of Ministry of Labour are bound to protect the legal rights of Pakistani labour that will come through Service Commitment Agreement.

The Minister said that through industrial Training System only private Sector used to send labour to Korea and up till 2006 more than 20000 workers went to Korea under this system.

From now onward, the government of Pakistani will send labour abroad through Overseas Employment Corporation.

Both sides also hoped that this co-operation will open new channels of development for human resource and infrastructural facilities.

Around 7.5 million overseas Pakistanis live in various countries including in United States, Canada, Europe, Middle East and Far East.

The remittances from overseas Pakistani will surge to over US $5.2 billion in the current fiscal year against US $ 4.62 billion during last fiscal year. 

Brecorder


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## Neo

*Poultry policy aims to achieve 20pc growth *

ISLAMABAD: Prime Minister Shaukat Aziz on Friday approved new poultry development policy aimed at increasing the annual growth of poultry sector from the present 12 to 15-20 per cent using modern technologies in production and processing.

The Prime Minister was chairing a meeting here to review progress in the poultry sector and decide steps required for its further development.

He said the government was encouraging development of livestock and poultry sector due to their significant potential in bringing improvement in the living standards of the people.

He said the countryâs enormous potential of livestock remained less utilised and the government along with provinces was taking a number of steps in this regard including re-orientation of public sector institutions, improvement of extension services, better R&D facilities, provision of more resources for the sector and infrastructure improvement.

The Prime Minister said new poultry development policy would facilitate private sector for sustainable poultry products to provide meat, eggs and value-added products to the domestic and international markets at competitive prices.

He said the government would encourage environmentally controlled housing for broilers and layers, and would create integrated production and processing system including value addition in the poultry sector.

Approving the policy, the Prime Minister emphasised the need for effective implementation of the policy and seamless coordination between the federal, provincial and local governments.

Earlier, Secretary Ministry of Food, Agriculture and Livestock (MINFAL) Muhammad Ismail Qureshi in his presentation said the poultry had 1.12 per cent share in national GDP and 1.5 million people were employed in this sector.

He said the poultry provided major source of quality proteins, as its contribution in meat production was 20 per cent.

He said the current 10-12 per cent annual growth of poultry sector was a result of steps taken by the government including reduction in tariff on poultry feed ingredients and medication, duty free import of machinery and equipment not manufactured locally and better credit availability to the poultry farmers.

The meeting was attended among others by Minister for Food, Agriculture and Livestock Sikandar Hayat Khan Bosan, Minister of State for Food, Agriculture and Livestock Muhammad Ali Malkani and senior officials. 

http://www.thenews.com.pk/daily_detail.asp?id=57636


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## Neo

*NIB buys majority stakes in PICIC*

KARACHI, May 25: Singapore-based Temasek Holdings Pte has acquired 56 per cent stakes in Pakistan Industrial Credit and Investment Corporation (PICIC). The NIB Bank, a subsidiary of the Temasek, announced on Friday that it agreed to buy 56 per cent stakes of PICIC for about $300 million.

The PICIC had announced on May 14 through a notification that the NIB Bank would pay Rs78 per share for the stake. The NIB Bank endorsed the share price announcement.

However, the NIB will issue 555 right shares for every 100 shares. This was also announced on Friday.

The announcement said the NIB signed agreements with different shareholders of PICIC to buy 56 per cent stakes for a total amount of $300 million.

The expected announcement was taken as a positive sign for the banking sector and Pakistani bankers expected arrival of more foreign banks in the near future.

The Standard Chartered Bank of Pakistan has already acquired Union Bank at a price of $487 million paving the way for ABN Amro to make the same move.

The ABN Amro is in the process of acquiring Prime Bank. The Standard Chartered Bank became the largest foreign bank in Pakistan.

The acquiring of majority stakes in the PICIC would create more interest for major international banks looking for an opportunity to invest surplus wealth created in Middle East after the Iraq war which flared up oil prices.

Most of the wealth created in the Middle East is being managed by large Western banks and these banks are focusing on developing countries, like Pakistan to earn more with slightly higher inherited risks.

Pakistani bankers believe that attraction in the banking sector was the outcome of prevailing economic growth which on average remained seven per cent for the last three years.

http://www.dawn.com/2007/05/26/ebr1.htm


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## Neo

Saturday, May 26, 2007 

*Pak seeks EC help in wind power projects*

ISLAMABAD: Pakistan has sought the European Commissionâs (EC) collaboration in wind-power generation projects in Pakistan at a Pakistan-EC Joint Commission meeting Thursday, a government official told Daily Times. 

Federal Secretary Economic Affairs Division, Akram Malik, placed the request before the delegation. Wind-power generation projects include manufacturing wind turbines, sub-stations for wind farms and the transfer of available technology. 

The EC delegation was informed that industrial arrangements are available in the Pakistan, leading to a feasible joint venture for manufacturing of the said equipments. It is believed that transfer of technology from European Union (EU) countries, which have state-of-the-art manufacturing technology, to the local industry would be carried out. 

Initiating the equipments manufacturing activities would also give EU countries an opportunity to develop their business in the newly emerged hub of wind energy, the same official stated. 

The official added that Pakistan also sought the European Unionâs help in the development of professional expertise, skill and trained manpower in wind energy. Currently, there are very few professionals in Pakistan available in the field, leading Pakistan to ask the EC delegation to award opportunities to Pakistani professionals to get higher education, training and capacity building in wind energy sector in their countries. 

Initiating the manufacturing of renewable energy equipments in the local industry can facilitate the development of wind technology. Moreover, the sustainability of the projects can be ensured if professionals in the EU collaborate with Pakistan.

Explaining the wind energy potential of the Pakistan, the EC delegation was informed that according to present development programmes, by 2030 wind farms would be installed through the private sector to generate 9,700 megawatts of power. In this regard, the Government of Pakistan has planned to set up wind energy projects through the private sector to generate 700 megawatts by 2010, and 1,700 megawatts by 2015. 

http://www.dailytimes.com.pk/default.asp?page=2007\05\26\story_26-5-2007_pg5_8


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## Neo

Saturday, May 26, 2007 

*Lack of sustainability: Services exports dipped heavily in March*  

By Tanveer Ahmed 

KARACHI: The countryâs services exports remained volatile and lacked sustainability during the current financial year.

The exports, which posted a substantial growth in February 2007, heavily dipped in March by falling 13 percent because of a declining trend in transportation and government services export.

According to latest statistics on the category-wise exports of services, almost all categories showed a sharp decline in March as against the preceding month of February.

The exports of services stood at $224 million in March, depicting a 13 percent slump as against $258 million worth of services exported in February 2007.

Figures indicate that transportation services dipped by 7.20 percent in the month under review to $81 million as against $88 million in the preceding month. The travel services exports were down by 16.39 percent in the month under review. The exports of communication services also dipped by 60 percent.

Insurance services exports were down by 73.16 percent, financial services exports dipped by 44.19 percent, computer and information services declined by 20.68 percent, government services were down by 19 percent and other business services decreased by 21.70 percent.

The only exception was personal, cultural and recreational services exports, which rose by about 72 percent.

The dismal performance of the export in March also affected the overall exports performance of the services sector in the first nine months (July-March) of the current financial year, which resulted in a marginal increase in exports during this period as against the corresponding period of the previous year.

The imports of services also fell during March, however, not as significantly as exports during the month. Imports during this period decreased marginally by 1.19 percent as against the preceding month of February.

If the imports of services had not decreased, the deficit in services trade would have been much larger due to a major fall in exports. The trade deficit in services in the first nine months totalled at $3.38 billion as against $3.32 billion in the corresponding period of the previous year.

âThe exports of services performance was volatile as there was growth during some months, while we witnessed a major fall in the rest,â an analyst noted. 

The dismal performance of the services exports is also a source of concern keeping in view the burgeoning trade deficit in goods, which is growing rapidly and crossed the $11 billion mark in the first ten months of the current financial year. 

The widening trade deficit in goods and services is also having an adverse impact on the current account deficit, which soared to an all time high of $6 billion in the first nine months of the current financial year.

Analysts said that as the services exports mainly depend on the government services including defence, any fall in this category badly hits the overall exports of this sector, in which construction, IT, banking, insurance etc also make a substantial part. âThe export proceeds during the current financial year is not reflective of the potential that the country has in this sector due to a host of issues, analysts believed. The share of country in the world services sector has remained around 0.23 percent over the years. 

The countryâs services exports are confronted with a number of problems including lack of quality, non-acceptance of professional credentials, visa problems, and most importantly, the image problem of the country. 

The export of services fell substantially by 17 percent in March of current financial year as compared to same month of previous year.

It also posted negative growth of 13 percent over the preceding month of February, the latest statistics released by Federal Bureau of Statistics showed on Thursday. 

However, marginal growth in export and import in services in first nine months of current financial year kept the trade in balance with the deficit widening just 1.86 percent.

The export of services stood at $ 2.78 billion in July-March 2006-07, as compared to $ 2.72 billion in the same period of previous year whereas the import of services were $ 6.17 billion over $ 6.05 billion worth of services imported in the period under review.

The trade deficit in March curtailed by 12.63 percent by standing at $ 432 million as against $ 495 million in same month of last financial year.

The export during the month totaled at $ 224 million, depicting a negative growth of 17 percent as compared to $ 271 million in March of 2005-06.

The import during the month under review stood at $ 657 million, reflecting a decrease of 14 percent as against $ 766 million worth of import in the corresponding period of previous year.

Also worrisome is the falling export of services in March compared to preceding month of February when export dipped by 13 percent. Export proceeds were $ 224 million as against $ 258 million in February last.

The import during March also fell marginally by 1.19 percent as against $ 665 million in preceding month of February 2007.

http://www.dailytimes.com.pk/default.asp?page=2007\05\26\story_26-5-2007_pg5_9


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## Neo

Saturday, May 26, 2007 

*âADP increasing from Rs 100bn to Rs 125bnâ*

* More than 50 percent of ADP to be allocated to development programmes in southern Punjab 
* Salaries of govt employees, pensioners to be increased by 15 percent to 20 percent 
* Elahi asked to award road construction contracts to FWO or private companies

By Qamar Jabbar

LAHORE: Shuja Khanzada, Chief Ministerâs Inspection Team (CMIT) minister, said on Friday that the Punjab government had decided to increase the Annual Development Programme (ADP) from Rs 100 billion to Rs 125 billion next fiscal year.

He told Daily Times that more than half the ADP would be allocated to current development programmes in southern Punjab and that allocations to education, health, provision of clean drinking water and agriculture would also be increased.

He said the upcoming Punjab budget would be tax-free and people friendly because tax receipts and other revenue collection went well compared to the previous year. Salaries of government employees and pensioners would also be increased by 15 to 20 percent, he added.

Khanzada said Punjab lead other provinces in foreign investment because of the effective economic policies of Prime Minister Shaukat Aziz and Chief Minister Pervaiz Elahi. âBecause of this the government has enough funds to start large projects in Punjab,â he added.

He said former chief minister Shahbaz Sharif had introduced the ADP of Rs 10 billion by getting foreign loans amounting Rs 7 billion, but Elahiâs government was spending money on projects from its own resources. He said Shaukat Aziz had promised to provide subsidies in wheat and other eatables to Punjab, which would help the government control scarcity.

Khanzada said CMIT had told the chief minister to award contracts of road construction and rehabilitation to either the Frontier Works Organisation (FWO) or private construction companies. He said the Communications and Works (C&W) Department had several development projects on its plate, but because of a lack of heavy machinery and manpower most projects could not be started or completed in time.

He said CMIT had also recommended the government award contracts of constructing government housing colonies to Malaysian and Chinese contractors. He said that during the next fiscal year foreign companies would be asked to start constructing housing colonies in Punjab.

Khanzada said the government was considering not giving development funds for constructing roads, sewerage systems and water pipelines to districts governments.

âCMIT has seen that most district and union council nazims award contracts on the basis of favouritism, which has resulted in contractors using sub-standard material and delaying projects to increase production costs,â he added.

He said the FWO would also be involved in development projects at the district and union council level.

http://www.dailytimes.com.pk/default.asp?page=2007\05\26\story_26-5-2007_pg7_26


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## Neo

*Pakistan Central Bank Expects Faster Economic Growth (Update4) *

By Farhan Sharif

May 26 (Bloomberg) -- Pakistan's economy may expand as much as 7.2 percent this fiscal year because of a record wheat harvest and higher cement and sugar production, the central bank said. 

The $129 billion South Asian economy could surpass the government's 7 percent growth target in the year to June 30, following a 6.6 percent gain in the previous 12-month period, Shamshad Akhtar, governor of the State Bank of Pakistan said at a news conference in Karachi today, restating her previous forecast. 

``The indication that growth could exceed 7 percent is quite positive,'' said Nasim Beg, who oversees the equivalent of $320 million in stocks and bonds as chief executive of Arif Habib Investment Management Ltd., in Karachi. ``The real challenge for the tax collectors is balancing tax relief and higher tax collection in the upcoming budget.'' 

The government needs to increase tax collection and seek to narrow the current account deficit, which is likely to widen to 4.8 percent of gross domestic product this year, Akhtar said. Pakistan's economy is expanding even as the nation experiences its greatest unrest since President Pervez Musharraf seized power in 1999, as protests against him mount. 

``The long-run health of the economy requires a lower sustainable current account deficit and an increase in tax receipts,'' Akhtar said. 

*Military Coup* 

Musharraf, who seized power in a military coup and remains army chief of staff, is facing protests that erupted after he removed Supreme Court Chief Justice Iftikhar Muhammad Chaudhry from his post on March 9 for alleged misuse of authority. Demonstrations have escalated into protests over the president seeking a second five-year term in elections that are scheduled to be held by January 2008. 

The National Economic Council, headed by Prime Minister Shaukat Aziz, will announce on May 31 the government's estimate for growth this fiscal year and its forecast for the next 12 months. The figures will be released 10 days prior to the announcement in parliament of the 2008 national budget on June 9. 

Prime Minister Shaukat Aziz is targeting annual economic growth of 7 percent to 7.5 percent in the next five years and the expansion will be driven by agriculture, manufacturing, services and infrastructure spending, the government told an April 26 meeting of donor nations. 

Pakistan's tax collection rose 18 percent in the 10 months ended April 30 to 646.9 billion rupees ($10.64 billion), the Central Board of Revenue, the federal tax authority said on April 30. 

*Farm Growth *

The farm sector could grow as much as 5 percent this year, exceeding the target of 4.5 percent because of a record wheat harvest, the report said. Pakistan is expected to produce 23 million tons of wheat this year. Agriculture, which accounts for one-fourth of the economy expanded 2.5 percent last year. 

South Asia's second-largest economy may expand 7.2 percent in the fiscal year starting July, quickening from 7 percent this year and 6.6 percent in the previous 12 months, Standard Chartered Plc said in a May 22 report. The $129 billion economy has grown at an average pace of 7.5 percent in the past four years, the report said. 

Consumer prices are likely to rise faster than forecast, the central bank report said. Inflation, as measured by the consumer price index, could rise between 7.5 percent and 7.8 percent in the year to June 30, faster than the 6.5 percent target, the report said. 

*Monetary Policy *

``It is important that appropriate monetary policy be sustained as price stability is important to sustain long-term growth and for poverty reduction,'' the report said. 

Rising prices prompted the State Bank of Pakistan to lift its key interest rate half a percentage point to 9.5 percent in July last year, the first increase in 15 months. 

Consumer prices rose 6.92 percent in April from a year ago, following a gain of 7.67 percent in Marc. Consumer prices in the first 10 months of the year rose an average 7.89 percent from 8.03 percent a year earlier. 

Aziz's government is betting sustained expansion will help to reduce poverty in a nation where the World Bank estimates about 70 percent of the population of 160 million people lives on less than $2 a day. 

The government's fiscal deficit is likely to be on target at 4.2 percent of gross domestic product in the year to June 30, the central bank report said. 

The current account deficit is likely to widen to 4.8 percent of GDP, higher than the 4.3 percent target and last year's 3.9 percent, the central bank report said. 

``The current account deficit is likely to be comfortably financed in the short-run, particularly given strong international liquidity flows toward emerging markets,'' the report said. 

*Overseas Bonds *

Pakistan raised $750 million selling foreign currency bonds to investors in Asia, Europe and the U.S., in the South Asian nation's fourth debt offering in three years, Prime Minister Shaukat Aziz said on May 24. 

``It is positive that international investors are looking at Pakistan in a long-term perspective,'' Akhtar said. More than two-thirds of the investors have never invested in Pakistan before, she said. 

Pakistan got offers of $3.54 billion for the sovereign bonds, or seven times more than the government's initial plan to sell $500 million bonds, he said. 

``This positive response puts recent fears of waning international interest aside and indicates that attention toward Pakistan's growth story remains firmly in place despite ongoing political issues,'' BMA Capital Management Ltd. in Karachi, said in a report yesterday. 

To contact the reporter on this story: Farhan Sharif in Karachi, Pakistan on Fsharif2@bloomberg.net 

Last Updated: May 26, 2007 10:39 EDT 

http://www.bloomberg.com/apps/news?pid=20601087&sid=aFoMB1dYYqA8&refer=home


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## Neo

*Inflation to be higher than target *

KARACHI (May 27 2007): The State Bank of Pakistan has said that inflation, current account deficit, monetary assets and imports will be higher than targets, with export's target falling below target for FY 07. While strongly linking the GDP growth target for FY 07 with a robust and strong performance of large scale manufacturing (LMS) and services sectors.

SBP's third quarterly economy report issued on Saturday said that by July 07 end real GDP growth would be 6.8-7.02 percent against the target of 7 percent, inflation would be 7.5-7.8 percent against the target of 6.5 percent and monetary assets would be 14.5-15.5 percent against the target of 13.5 percent.

The report said that "real GDP growth is now estimated to comfortably reach the annual growth target of 7 percent in FY07, and could potentially exceed it, if LSM growth reaches double digits, livestock growth exceed targets and the services sector growth remains on target".

However, the continued strength in aggregate demand, together with the resilience in food inflation, has meant that despite sustained monetary tightening the downtrend in inflation has been gradual and variable. As a result, domestic inflation is now forecast to remain in a relatively higher range than forecast earlier, and well above its annual target for FY07, the report added.

The central bank's monetary policy is compounded by the unexpectedly strong resurgence in broad money in recent months, with M2 growth forecast to exceed the original 13.5 percent target, to fall in the range of 14.5 - 15.5 percent.

A part of this is a consequence of the concessional re-finance to strategically important sectors of the economy, which significantly raised reserve money growth in FY07, and will consequently have knock-on impacts by raising monetary growth in subsequent periods, the report said.

According to the SBP projection, exports will around $17.6 billion against the target of $19.8 billion, imports will go up to $30.2 billion against $28 billion target and the current account balance would be 4.8 percent of GDP against of 4.3 percent target during FY 07. Workers remittances would surpass the target of $4.5 billion to $5.3-5.5 billion.

The report said that the impact on reserve money growth of this development has been compounded by the heavy reliance on central bank borrowings by the government and the growth in Net Foreign Assets (NFA) of the banking system. The impact of the former may be limited, if the government appropriately ensures that the SBP borrowings are retired as external and domestic non-bank receipts improve.

However, the resurgence in NFA of the banking system poses an additional challenge - the country needs to sustain these flows, but it is simultaneously imperative to sterilise the monetary impact of these flows in order to contain inflationary pressures, the report said.

The need to sustain the external flows is implicit in the growth of the current account deficit during FY07, which is now forecast to rise to 4.8 percent of GDP, up from the initial forecast of 4.5 percent of GDP the report said.

Adding it said that it is a source of comfort that the monthly growth in the current account deficit continues to decelerate, and that the current account deficit is likely to be comfortably financed in the short-run, particularly given strong international liquidity flows towards emerging markets.

However, it should also be kept in mind that international capital flows can be volatile, and are sensitive to a host of domestic and global factors including economic as well as political, the SBP report said.

The long run health of the economy, however, requires a lower sustainable current account deficit, concurrent with a rise in the domestic savings rate and a gradual reduction in the fiscal deficit.

http://www.brecorder.com/index.php?id=569206&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Current account deficit to rise to 4.8 percent *

KARACHI (May 27 2007): The State Bank of Pakistan has forecast the current account deficit to rise to 4.8 percent of the GDP, up from the initial forecast of 4.5 percent, which translates into more than $7 billion. Pakistan's current account deficit continued to widen during July-March FY07, rising to a record $6 billion, up sharply from the corresponding period of FY06.

The third quarterly report 2006-07, issued by the State Bank of Pakistan, says the principal factors responsible for the widening of current account deficit include a widening trade deficit by $1.3 billion and a $730 million rise in income deficit.

Trade deficit has contributed approximately 76 percent in the absolute rise in current account deficit during the period, while the share of income deficit is 41.3 percent.

The deterioration in country's trade account was despite a precipitous decline in import growth, as export growth also fell sharply. The import growth though slowed down to 10 percent during July-March FY07, but the exports grew by only 4 percent as against a healthy growth of 12.4 percent during the corresponding period last year.

The SBP has stressed that the need to sustain the external flows is implicit in the growth of the current account deficit during FY07. It is a source of comfort that the monthly growth in the current account deficit continues to decelerate, and that the current account deficit is likely to be comfortably financed in the short-run, particularly given strong international liquidity flows towards emerging markets, the report says.

http://www.brecorder.com/index.php?id=569210&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*13 percent LSM target may not be achieved *

KARACHI (May 27 2007): A 13.0 percent growth target of Large-Scale Manufacturing (LSM) sector for FY07 is not likely to be achieved, according to State Bank of Pakistan's Third Quarterly Report.

The report said the detailed LSM data of 100 items for quarter one of FY07 and limited information for quarter-two and three of the current fiscal year implied that LSM growth may be higher during July-March FY07 against the same period of FY06 however, the report suggests that the 13 percent growth target of LSM sector for FY07 may not be achieved.

Major industries supporting the recovery in LSM include textiles, sugar, cement and basic metals, the report said and added that automobile industry registered a slowdown in growth during July-March FY07 relative to the corresponding period of FY06.

Similarly, industries such as fertiliser, paper & board and engineering saw a decline in production during this period mainly due to weakness in demand and temporary shut down for maintenance, as well as expansion.

The report said that LSM analysis is based on the limited information regarding production data collected by various associations and committees and due to non-availability of any aggregate manufacturing indicators. This analysis may not be a true picture of overall LSM growth. In addition, it may also not be comparable with trends reported in earlier SBP reports.

The production data provided by the Pakistan Sugar Mills Association (PASMA) shows a 12.5 percent growth during the first nine months of FY07, the second highest in the last six years, the report said.

This is not only a strong reversal from the 2.4 percent decline during the same period of the previous year, but is also significantly higher than the 3.0 percent annual growth target for FY07. This growth is largely due to the 22.9 percent rise in the sugarcane harvest during FY07 on the back of high sugarcane prices in the previous season, the report added.

An acceleration was also observed in the cement production during the first nine months of FY07 with growth rising to 24.5 percent, significantly higher than 18.6 percent in July-March FY06, the report said.

A strong performance is mainly attributed to capacity expansions due to rise in local demand and strong external demand. The total sales of cement recorded a growth of 31.3 percent during the first nine months of FY07, which is significantly higher than 13.9 percent growth in July-March FY06.

The number of local cement dispatches rose by 25 percent in the first nine months of FY07 compared with 13.4 percent growth in the same period of FY06. The growth in exports was even stronger, touching 2.1 million tonnes during July-March FY07 against 1.2 million tonnes during the same period of FY06, the report added.

The automobile sector growth shows a decline during the first nine months of FY07. As per the data provided by the Pakistan Automotive Manufacturers Association (PAMA), the automobile sector displayed 5 percent growth during the first nine months of FY07, much lower than the 28.4 percent growth recorded during the corresponding period of FY06.

The report said that fertiliser industry registered a 0.3 percent fall in output during July-March FY07 as against a growth of 4.8 percent during July-March FY06.

A temporary closure (for maintenance and up-gradation), slowdown in demand due to untimely rain and a considerable rise in prices, mix of the fertilisers and expectation of a subsidy announcement by the government are the major factors for decline in the production of non-urea fertiliser during July-March FY07.

The import of fertiliser also declined by 60.1 percent during the first nine months of the current fiscal year, as against a 69.7 percent rise during the corresponding period of the preceding year, which reflects a slowdown in fertiliser demand during July-March FY07.

The fall in the production of POL products was also declined in the first nine months of the current fiscal year, falling by 5.7 percent as against an increase of 2.3 percent in the corresponding period of the preceding year.

http://www.brecorder.com/index.php?id=569214&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Agriculture sector poised to surpass growth target for fiscal year 2007 *

KARACHI (May 27 2007): Growth of major crops could reach as high as 5.8 percent in FY07, significantly better than the target growth of 4.3 percent for the year. The State Bank of Pakistan's Third Quarterly Report said that a record wheat harvest, and upward revision in the production figures for key Kharif FY07 crops has raised the prospects of a strong recovery by the agriculture sector in FY07.

In particular, the most significant contribution to the improvement in the agri-growth estimates was from the exceptional FY07 wheat harvest. The 23 million tonnes is not only well above the target of 22.5 million tonnes, it is the largest-ever recorded in Pakistan, the report said.

On the expectations of higher irrigation water availability and continued policy support, production targets for Kharif crops for FY08 have been fixed higher as compared with the realised harvests in FY07. However, actual performance will depend critically on market prices and favourable weather conditions.

On the former count, the FY07 increases in price of cotton and rice and persistently high sugarcane prices will be encouraging for the farmers in FY08. The banking system provided a supportive role to agriculture sector by meeting the growing financial needs of the farming sector, as agriculture credit disbursement rose to Rs 111.2 billion during July-March FY07, up by 22 percent relative to the corresponding period of FY06, the report said.

This growth is well above the 16.4 percent annual target, though 1.5 percentage points lower than in July-March FY06, the SBP report said. The pace of agri-credit disbursement suggests that Rs 160 billion annual target for FY07 would be met comfortably.

The report said that rise in the area under cultivation for wheat, higher irrigation water availability, policy support and efficient use of inputs were the main reasons for the exceptional growth of 6.0 percent in FY07 wheat harvest.

A strong contribution also came from favourable weather as good monsoon rains left sufficient moisture in non-canal areas and subsequently timely rains through the growth phases of the crop supported a rise in yields.

The output of gram showed an exceptional growth of 58.2 percent in FY07 against 30 percent decline registered last year. This performance resulted from strong yield growth of 57 percent owing to higher monsoon rains, relatively better sowing practices, and winter rains that especially favoured the non-canal areas.

Further, the crop yield was well supported by the increased fertilisers mix use during FY07 following to the rising price signals from the market. The available data suggested that except for maize, other crops posted strong production growth rates in FY07 than in the pervious year, the report concluded.

http://www.brecorder.com/index.php?id=569198&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Gas demand to be met from import: Musharraf *

By Saad Hasan

KARACHI: President Gen Pervez Musharraf on Saturday said the gap that has emerged between limited supply and substantial demand of gas would have to be met through imports in spite of massive investment to find more domestic reserves.

Speaking at a project launching ceremony of the fast-track floating LNG terminal and extraction plant here at CM House, he said five years ago he did not see an increase in demand for gas.

âWith the economic upsurge, we are short of gas and power,â he said, adding the project that was expected to come online in next 12 months would change the supply scenario.

The LNG (liquefied natural gas) import project of Pakistan Gasport Limited, a subsidiary of Associated Group, is being implemented at a cost of $162 million and envisages supply of 400mmcfd of gas to augment depleting domestic supplies.

President Musharraf said the project would meet 13pc of countryâs gas demand and assured the governmentâs complete support for its timely implementation. Gas import in the form of LNG was vital to fill the energy gap till Iran-Pakistan-India (IPI) pipeline was materialised, he added.

The government was diverting maximum resources for indigenous development of gas resources, he said and added: âBut in spite of all the exploration, we have to bank on (gas) imports.â

Earlier, Iqbal Z Ahmed, Chairman Pakistan Gasport Limited and Associated Group, said electricity produced using LNG as fuel would be three cents per kWh cheaper than that obtained through furnace oil.

He said the project would also help obtain 1,000 tonnes of liquefied petroleum gas (LPG), helping the country to become an exporter of the fuel in coming months.

However, he voiced concern of the LPG industry, insisting that more domestic extraction plants should be set up on competitive bidding to increase its output.

âDecision to link local price (of LPG) with international price is not fair,â he said, arguing that the job to determine the price should be left to the industry.

State Minister for Petroleum Naseer Mengal said though LNG would be costlier than domestic gas, it would be cheaper than furnace oil.

Federal Ports and Shipping Minister Babar Khan Ghauri also spoke at the ceremony, attended by Governor Punjab Lt Gen (Retd) Khalid Maqbool, Sindh Chief Minister Arbab Ghulam Rahim and other dignitaries.

http://www.thenews.com.pk/daily_detail.asp?id=57801


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## Neo

May 27, 2007 
*Bright prospects of increase in trade with India*

ISLAMABAD, May 26: The volume of two-way trade between Pakistan and India may reach $10 to 15 billion per annum in case of trade liberalisation by removing tariffs and non-tariff barriers, said a senior Pakistani diplomat.

With over one billion dollars worth of bilateral trade, the trans-border movement of goods has increased nearly five times during the last five years, but it is obviously a fraction of what it possibly could be, said Pakistan's Ambassador to WTO Dr Manzoor Ahmad while presenting country's paper on Indian trade policy review at Geneva.

The paper said most studies show that the potential bilateral trade volume between the two neighbours is worth about $10-15 billion per annum.

"Our business community feels that due to numerous non-tariff barriers and complications in sanitary and phyto-sanitary (SPS) standards in Indian economy, the balance of trade remains heavily tilted in favour of India,", the envoy added.

India and Pakistan are not only geographical neighbours, but also share a common history.

"We are partners in Saarc free trade area, and are engaged in negotiating bilateral economic cooperation through a composite dialogue," he said.

Mr Ahmad said transparency is another concern faced by Pakistani exporters. It is usually hard to find a single official publication containing all the information on tariffs, fees and para-tariffs on imports, such as countervailing duty, special CVD, national calamity duty, additional excise duty and education cess, etc.

The tax rates keep changing from time to time, and the taxes levied by the state governments on inter-state commerce add further cost to doing business.

"We have raised some of our concerns through questions in writing and are looking forward to receiving their response," he added.

"We are confident that with added level of comfort at political level between the two neighbouring allies, the Indo-Pak cross-border trade is expected to take a quantum jump," he said.

The envoy said Pakistan valued Indian trade policy as a rewarding outcome of robust unilateral tariff reforms.

He added that while trade in industrial goods and services has shown a remarkable progress, the agriculture sector remains protected in India, hence a significant decline in growth of agriculture sector.

Some of the noteworthy achievements of India in the last six years include substantial reduction in overall applied MFN tariffs on industrial goods from 32.3 per cent to 15.8 per cent and reduction of peak tariff from 25 per cent to 10 per cent in the last four years.The growth in industrial sector averaging almost seven per cent per annum has been rapid.

The services sector has performed exceptionally well, growing at the rate of 9.8 per cent each year.

On the other hand, India's agriculture sector has remained protected with the result that compared with services and industrial sectors, this sector has seen decline in growth from three to two per cent.

Dr Manzoor said at multilateral negotiations, both India and Pakistan have common negotiating positions on a number of issues.

"We are working for seeking extensive reforms in agriculture sector, in particular steep reduction in trade distorting subsidies through our common membership of G-20.

http://www.dawn.com/2007/05/27/ebr6.htm


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## Neo

May 27, 2007 
*Qatar offers to make $2 billion investment*

ISLAMABAD, May 26: Qatar has identified five major areas to make over $2 billion new investment that also includes an industrial zone and an important power project in Pakistan, a senior government official told Dawn on Saturday.

Mr Talat Miyan, executive director-general of the Board of Investment (BoI) said that the finance minister of Qatar, Mr Yousaf Hasan Kamal, is arriving here next week to finalise discussions over his country's new investment plan in Pakistan.

Later, he said Amir of Qatar will visit Pakistan next month, most, probably after the announcement of the next budget on June 9, to sign many agreements and Memorandum of Understandings (MoUs) between the two countries.

Giving details, Talat Miyan said Qatar has proposed to set up $500 million power project at Checho Ki Malian, near Sheikupura, Punjab.

Similarly, he said in Khanewal, a livestock farm at 5,000 acres had been planned to be established by Qatar at a cost of around $100 million.

"The Qatari government has informed us that it is interested to build two five-star hotels, each in Karachi and Lahore at a cost of $150 million", the executive director of BoI said.

He said Qatar is also interested to make roughly $1 billion investment in Lahore-Sialkot industrial zone.

Also, Qatari government, he said, was negotiating with the National Logistics Cell (NLC) to enter into a joint venture with it for constructing a multi-storey building in Islamabad for offices and other business activities. The project, he said, would cost about $100 million.

Qatar, he said, has shown keen interest to further set up a cement plant near Thatta at a cost of $100 million.

"The issue of launching a new airline will also be discussed for which Qatar has shown a lot of interest,â Talat Miyan added.

Responding to a question, he said all these new projects by Qatar would be set up during two to three years.

The power project, he said, could be set up within this year as certain homework had already done by the Qatari government.

He said Qatar is also interested in establishing "Qatar Islamic Bank" for which initial negotiations have been held with the central bank and the ministry of finance.

To a question, he said Qatar will be required to arrange 49 per cent equity for establishing an airline while 51 per cent equity is needed to be arranged locally.

"This issue may take time, but other five projects are expected to be finalised soon between the two governments."

Talking about China, Mr Talat Miyan said land had been identified for setting up of China-Pakistan Economic Zone for which the government would be offering five-year tax holiday.

"The Chinese government has informed us that its investors will reach Pakistan in one year once various infrastructure facilities are finalized," he said, adding that there would be zero-rated customs and excise duty in the economic zone for importing plant and machinery.

For the first time, he said, real one-window operation will be facilitated in the economic zone which will have the offices of the BoI, customs office, technical centre and other required government officials.

Responding to a question, he said there will be a 40 per cent necessary Chinese equity in establishing projects in the economic zone while the remaining equity was expected to come from Saudi Arabia and some other countries besides some local participation by Pakistanis.

He said the economic zone would be set up at Kala Shah Kako, near Lahore for which the Punjab government has provided land on market price.

He said electricity, gas and other facilities will be instantly made available to the zone.

To a question, he said foreign investors have completed legal protection to their investments and that all economic sectors were open to foreign direct investment (FDI).

Foreign equity up to 100 per cent had been allowed and no government permission was required for making investment.

To another question, he said there had been a 37 per cent increase in the FDI during July-April 2007, compared to the corresponding period last year.

The first 10 months of 2006-07, he said, have witnessed $4.1 billion FDI against $3 billion of the same period last year.

"We are expecting to have more than $6 billion foreign investment during the current financial year", said the executive director-general of the BoI.

http://www.dawn.com/2007/05/27/ebr8.htm


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## Neo

*Over 100 projects put on back burner as funds withheld *

ISLAMABAD (May 28 2007): Over 100 projects, some of them of very critical nature, have either delayed or simply put on back burner due to unavailability of funds as the finance ministry withheld Rs 62 billion of fourth quarter of Public Sector Development Programme (PSDP) 2006-07.

The finance ministry squeezed release of funds of fourth quarter of the current fiscal year to add to the number of ill-fated projects which now stands at more than hundred.

The situation has worsened to such an alarming level that the Federally-Administrated Tribal Area (Fata) administration and the Azad Jammu Kashmir (AJK) government have to approach President General Pervez Musharraf to tell him that injustice was being done in the release of funds allocated for their development projects in the last PSDP, and he should intervene to make sure they get their share in allocation to complete the on-going development projects without delay.

Sources said the projects, suffered due to slowing down the release of funds included acquiring of land for the new water reservoirs, Higher Education Commission's more than 12 projects, National Highway Authority's (NHA) at least six projects, including M-1 and M-2 Peshawar-Islamabad and Lahore Islamabad sections of motorway, Mother-Child Care Project, at least 20 projects of social uplift and food security of the federal government, National Clean Drinking Water Project and social sector projects in Fata and Azad Kashmir, which included construction of the new schools, repair of roads and basic health units to cater to the need of the people in those remote areas.

The officials conceded that the finance ministry was not releasing funds and different projects were not progressing as per schedule, but they do not either know or intentionally give the reason of withholding funds by the ministry.

In a bid to introduce good governance culture and ensure the availability of developmental funds in time the government decided at the highest level last year that the finance ministry will release funds to all the federating units on quarterly basis. The agreed procedure was followed for the first three quarters and the finance ministry released Rs 172 billion of PSDP by the end of February.

Then comes bad phase as the finance ministry stopped major portion of releases reminding the federal, provincial, and AJK governments, and Fata of the last years days when they have to literally plead for the release of PSDP funds. Mostly they used to get funds in June just few days ahead of the federal budget.

Sources said the finance ministry was following the June days procedure, but it can not help the government maintain its image of spending record funds for social sector development.

http://www.brecorder.com/index.php?id=569700&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Setting up steel mill at Karachi: ministry allowed signing implementation agreement with Al-Tuwairqi *

ISLAMABAD (May 28 2007): The Economic Coordination Committee (ECC) of the Cabinet has allowed the Industries Ministry to sign Implementation Agreement (IA) with Al-Tuwairqi Group of Companies for setting up steel mill at Karachi with production capacity of one million tonnes billets per annum, official sources told Business Recorder.

The agreement, first of its kind in Pakistan except with Independent Power Producers (IPPs), had been submitted to the ECC on receiving verbal orders from the Prime Minister secretariat after a summary for the prime minister had been returned by the Privatisation Commission (PC) with comments, they added.

Sources said the petroleum and water & power ministries had suggested some amendments to the IA regarding tariff for gas and electricity to be consumed by the Tuwairqi Steel Mills Limited (TSML).

Giving the background, the sources said that a memorandum of understanding (MoU) was signed between the Government of Pakistan (GoP) and the Al-Tuwairqi Group of Companies on May 28, 2004 for setting up steel mills at Karachi.

Sources said the TSML has requested that an IA be signed with it, wherein the GoP undertakes upon itself obligations towards the TSML on behalf and of its entities.

The issue was placed before the ECC on September 25, 2006, which considered the case in its meeting on September 27 and directed CBR, Planning Commission and Finance Ministry to give their comments to the Industries secretary to be presented in a meeting with the prime minister. It was also decided that the decision of the meeting would be conveyed by the Prime Minister Secretariat separately.

Pursuant to the directions, a meeting was held in the Industries Ministry in October, attended by representatives of CBR, finance and petroleum ministries, Privatisation Commission, and TSML.

Sources said when the views of the Planning Division were placed before the participants an agreement was reached on certain clauses of the proposed agreement, re-examination of following clauses was decided: It was decided that incentive/facilities listed out in schedule-2 of the proposed IA would be re-examined by CBR.

Proposal for gas subsidy demanded by the TSML would be examined by Petroleum Ministry and competent authority's approval obtained thereon. Sources said that government's viewpoint regarding deletion of privatisation clause was agreed by the TSML with the proviso that as the clause had been proposed by their mudarib, they would discuss government's viewpoint.

The issue was finalised in the light of comments received from CBR and Commerce Ministry and EPZA. Subsequently, the Prime Minister Secretariat convened a meeting on gas supply pricing for the TSML on January 17, 2007, for which a detailed working paper was submitted encompassing all outstanding issues.

During the meeting, only the gas price issue was discussed and it was decided that industrial rates would apply in the case of the TSML.

In the light of a meeting held in the Prime Minister Secretariat on January 17, a summary on the issue was submitted to the prime minister by the Industries Ministry proposing that the matter of executing an IA with the TSML be placed before the ECC.

In view of the verbal orders received from the Prime Minister Secretariat for submission of the case to the ECC, the summary for the prime minister has been returned by the Privatisation Commission with comments, the sources maintained.

Sources said the CBR supported consideration of the IA while the Petroleum Ministry also concurred with clauses 3.7, 3.8 and 3.9 of the draft IA with the modification in clause 3.8 that the words "as notified by Ogra from time to time" may be added before the full stop appearing at the end of this clause.

The Water and Power Ministry has proposed that para 11.2(viii) in the draft IA be deleted and instead, following sentence be added at the end of para 3.11 C:

"For the purpose of billing TSML, provision of Nepra, determination, as per Nepra Act will be followed." The Ports and Shipping Ministry also showed agreement with clause 5.2(a) and (b) of the draft Implementation Agreement. However, the Privatisation Commission cleared the draft IA subject to the condition that there is no clause in the Implementation Agreement relating to warranty by the Government of Pakistan in respect of the privatisation of Pakistan Steel and Sui Southern Gas Company and charges of services to be provided by Pakistan Steel to the TSML shall be reviewed on yearly basis.

The Industries Ministry was of the view that except for IPPs, there was no precedent available where the GoP has signed an IA with a foreign investor, the ministry had previously proposed a facilitation agreement (FA) with the TSML.

However, the Implementation Agreement was subsequently processed in the light of Law Division's views, expressed in the meetings held in that Division on August 16, 2006, ie that the GoP had given specific undertakings in the MoU dated May 28, 2004, signed with the TSML.

THE IMPLICATIONS FOR THE GOP WITH REFERENCE TO THE PROPOSED IA WHICH NEED TO BE KEPT IN MIND ARE AS FOLLOWS: 

(i) There can be no rollback on incentives admissible to the TSML as an EPZ (Schedule-2 of proposed Implementation Agreement) for a period of 30 years from the Mill's commercial operation date.

(ii) Any violation, or dispute as to violation of the Implementation Agreement and various agreements between the TSML and other government entities, already signed or under negotiation, will have legal and financial implications for the Government of Pakistan.

In case of agreements, which are yet to be executed (Services Agreement with Pakistan Steel, Power Implementation Agreement, Power Supply Agreement with Water and Power Ministry and its entities concerned) the Government of Pakistan is taking on the obligation that these will be executed.

(iii) The agreements already executed between the TSML and various entities are valid for different terms. The term of proposed Implementation Agreement would also have to be decided.

Sources said these issues are submitted for deliberation of the ECC wherein it was proposed that the Industries Ministry may be allowed to modify the IA in the light of decisions taken by the ECC, get it vetted from the Law Ministry.

The ECC approved the proposal subject to and condition that it should be vetted by the Law Ministry.

http://www.brecorder.com/index.php?id=569697&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Next budget to be tax-free: minister *

LAHORE (May 28 2007): Punjab Minister Colonel Shuja Khanzada (Retd) has said that budget 2007-08 would be poor friendly and tax-free. In the next financial year, Development Program would be increased from Rs 100 billion to Rs 125 billion so that development scheme could be completed well in time, he added.

He was talking to various delegations of workers of Pakistan Muslim League and citizens at his residence here Sunday. The minister said that relief would be provided to the common man and no tax would be levied in the next budget. He said that salaries of government employees would also be increased by 15 to 20 percent in the forthcoming provincial budget.

Shuja Khanzada said that during the current fiscal year record revenue had been recovered due to which Annual Development Plan was being increased. He said that Punjab was leading in foreign investment due to the comprehensive economic policies of Prime Minister Shaukat Aziz and Chief Minister Punjab Chaudhry Pervaiz Elahi.

http://www.brecorder.com/index.php?id=569728&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Budget to provide maximum relief to masses: ministers *

LAHORE (May 28 2007): Provincial Ministers, Rana Shamshad Ahmad Khan, Dr Anjum Amjad, Chairperson Chief Minister's Task Force on Environment, Fatima Atif Malhi and Parliamentary Secretary for Environment, Saadia Humayun have said that 2007-08 budget would be reflective of the aspirations of masses and maximum relief would be provided to them.

In a joint statement, the provincial ministers said that the economic condition of people, particularly in Punjab, has improved as a result of implementation of the revolutionary developmental agenda for strengthening economy of the country introduced by President General Pervez Musharraf and Punjab Chief Minister, Chaudhry Pervaiz Elahi.

They said that as a result of people-friendly policies of the government not only poverty and unemployment have reduced but per capita income has also increased. They said that due to record development works, Pakistan Muslim League has become a people's party and Istehkam-e-Pakistan rally held on May 12 is the proof of it.

Provincial ministers said that the budget would be people-friendly and exemplary in which maximum relief would be provided to the people relating to all walks of life. They said that more funds would be allocated for the developmental projects.

They said that people of Punjab have unflinching belief in revolutionary and realistic thoughts of Punjab Chief Minister, Chaudhry Pervaiz Elahi which is evident from the fact that under his leadership during the last seven years unprecedented development and progress has been made in all over the province.

http://www.brecorder.com/index.php?id=569773&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'Uplift works in industrial zones to be completed next month' *

KARACHI (May 28 2007): City Nazim Syed Mustafa Kamal has said that first time in Pakistan construction of roads and streets of international standard was made in all four industrial zones of Karachi besides providing water lines to every factory and linking them with sewerage system.

Investors were also provided with best platform with the help of world class infrastructure, which would not only be beneficial for Karachi but whole country would get its fruits. He asked concerned departments of the city government to pay especial attention on uplift works in industrial zones and ensure completion of ongoing works worth Rs 4.5 billion before June 2007.

This he was stated while addressing the officers and engineers of city district government Karachi and KW&SB on Saturday. During the meeting pace of the development works carried out in industrial areas was reviewed while directives were issued to resolve any hurdle in their execution. The city nazim said that work had been carried out speedily in the industrial areas 9 month ago, which would be completed next month.

He said we have imported GR pipes from Dubai, which have life of 100 years because we want to resolve the problems of these areas for 100 years. "After few years problems of all four industrial zones of Karachi will be resolved for 50 years and when the foreign investors would visit these areas they will feel a refreshing and amazing change there," he added.

Regarding Korangi industrial zone, he said this was the biggest industrial zone of Pakistan, which contained nearly 3,500 factories and contributes Rs250 million daily in the national exchequer but the area was deprived of water and sewerage system till 9 month. Now we have provided an international standard infrastructure to this area and these steps would also boost the investment in this area.

Kamal said that due to recent incidents in Karachi not even a dollar investment was affected. The city district government was the only local government, which has brought in a direct investment of 1.2 billion dollars.

He said that a positive change was brought in the city with the works carried out in four years by the provincial government and in two years by the city government.

He said 24-hour work was started in the factories and those, which were closed down in the past were reinstated and there was a rapid increase in the trade and business activities along with more and more opportunities were made available for the city youth. He said we want to boost the investment and taking rapid measures to bring in good change in the life of the common men.

He said that all people were satisfied with the government policies and happy as the government had taken rapid steps to resolve the problems faced by the common men and raising their living standard.

http://www.brecorder.com/index.php?id=569782&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pact signed for offshore exploration *

ISLAMABAD (May 27 2007): The Petroleum Exploration (Pvt) Limited (PEL), a local oil & gas exploration and production company has singed agreement with the Petroleum ministry for offshore exploration in deep waters of Arabian Sea. These licenses/production sharing agreements included Indus-J (2266-4) area 2436.3 sq. km. Indus-P (2365-3) area 897.48 sq. km and Indus-O (2266-7) area 833.78 sq km.

In an announcement PEL on Saturday said it has initiated seismic survey through Sichuan Petroleum Exploration (SPA), a Chinese firm for Kandra Block located in Sindh. PEL is Kandra block's operator and its joint venture partners are Frontier Holdings Limited, a Canadian company, and Government Holdings (Pvt) Limited.

Kandra gas reserves have been estimated at 2.3 TCF. PEL and partners have undertaken to develop the field at $40 million cost for power generation. The joint venture partners will collaborate to set up a 120MW power plant costing over $100 million. Since Kandra is located near Sukkur the project will go a long way towards alleviating the power crunch in the area.

PEL is committed to playing a substantial role in enhancing search for oil and gas for meeting Pakistan's growing energy needs. It is presently producing 35 mmcfd gas from two of its concessions, one percent of Pakistan's total gas production.

Badar area 122 sq km, Hasan area 37.05 sq.km. Sadiq area 40.72 sq. km. Khanpur area 41.78 sq. km. Hamza area 173.12 sq. km. Kandra area 286.08 sq. km. Mirpur Mathelo (2769-9) area 1030.7 sq. km. Salam (2769-13) area 200.22 sq. km. Karsal (3272-12) area 724.42 sq. km New Larkana (2768-10) area 2426 sq. km. Badin IV north (2467-6) area 1246 sq. km Badin IV south (2468-5) area 1265.3 sq.km. Jhangara (2567-5) area 358 sq. km. Kaloi (2468-8) area 2485.14 sq.km. Sanghar east (2669-5) area 2493.13 sq. km. Mirpurkhas west (2568-16) area 199.26 sq. km.

Besides PEL holds working interests in Zamaurdan block and Sukkur block. PEL CEO/ Chairman Zaheeruddin said that his company holds large acreage under exploration (both onshore and offshore) and it committed substantial investment programme. The company has planned to drill 31 exploration / development wells in three years.

He appreciated the role and co-operation of all joint venture partners in exploration & production activities of the company. He also acknowledged the support of ministry of Petroleum.

http://www.brecorder.com/index.php?id=569176&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Energy issue need to be settled quickly: ADB *

FAISALABAD (May 27 2007): Asian countries including Pakistan need to urgently find ways of addressing energy issue, if they are to join the ranks of more developed and prosperous countries, said a study report of Asian Development Bank.

According to various forecasts, the world's energy demand will expand by 52 percent to 71 percent over 2003 levels over the next quarter century, driven by continued economic growth averaging over 3 percent per year.

Furthermore, the demand in developing economies, led by Asia, is likely to begin to exceed the consumption of developed countries by 2011. Fossil fuel use is expected to slightly increase its share of energy supplies over present levels during this period, with oil use rising by as much as 55 percent, natural gas by over 90 percent, and coal by more than 50 percent.

Developing countries are also expected to experience faster growth in electricity consumption than the Organisation for Economic Co-operation and Development (OECD) countries, with world-wide electricity generation more than doubling.

Coal is forecast to be increasingly used for power generation, despite rising environmental concerns, especially in Asia. Nuclear power is not expected to grow significantly enough to increase its share in total generation.

Thus, the current energy picture will largely remain unaffected in terms of the supply mix for the foreseeable future, although production will need to increase significantly in absolute terms.

Almost a third of the world's population, consisting mostly of the 2.4 billion rural poor, therefore seem to have no other option but to continue to rely primarily on traditional biomass fuels-wood, dung, crop residues-to meet their basic needs for cooking and heating.

This is reflected in the high proportion of traditional fuel in total energy consumption in developing countries. The number of those without any access to electricity is forecast to remain largely unchanged, falling slightly to 1.4 billion. In other words, the numbers and condition of the "energy poor" in the world will not be altered at all if present baseline trends continue, even as the more affluent sections of the society continue to increase their consumption and many previously deprived segments also gain access to better energy services.

These projections, however, are subject to many uncertainties, such as the underlying economic and population growth assumptions. At the same time, regardless of whether actual world growth occurs above or below the baseline or reference projections, the corresponding variations in energy supply and demand can be anticipated to be divided in roughly similar proportions, and in either case a huge slice of the global population will continue to be condemned to a dark, destitute existence.

According to study, the variability and uncertainty in fossil fuel prices, as demonstrated recently, adds another layer of complexity to the situation, placing the meager amounts of such supplies consumed by the poor increasingly out of their reach and impoverishing them further. Fossil fuel prices are driven not only by available resources, which appear adequate to provide for current demand trends, and the rate at which they can be farmed, but also many other factors beyond the control of developing countries.

According to rough estimates, some $17 trillion in energy sector investments would be required globally by 2030, half of it in developing countries, for expanding energy production and distribution facilities and infrastructure in order to meet additional baseline demand across all fuel categories-which is projected to be much higher than the corresponding increase witnessed over the previous 3 decades.

The developing world's capacity to meet such enormous financing needs is questionable. Even if such resources can be found, they would remain far below those required to significantly alter the situation in terms of the numbers remaining undeserved or completely deprived of modern energy.

The implications of this scenario on reducing world poverty, and the systematic improvement of human development opportunities in developing countries, are obvious and would require alternative strategies that can help expedite and expand energy service delivery to the poorest within the means available.

According to study, there is a need to examine the linkages between energy access, poverty, and the environment in detail to find possible ways of overcoming the vicious cycle that this interdependence can create among those barely subsisting within such circumstances, ie, those most vulnerable to its grinding effects and with the least means for escaping them.

One way of achieving this is by focusing on populations where modest energy supply improvements can result in the greatest economic and human development gains, ie, those at the bottom rung of the energy ladder. This consists largely of the 2.8 billion rural population in developing countries, 86% of whom are too poor to rely on anything other than solid biomass fuels for their basic energy needs, especially for cooking.

They also constitute the majority of the 1.6 billion people in the world today without access to electricity. The rural poor, given their weak economic and political voice, have traditionally been neglected in national planning and development spending, a bias that can only be expected to grow stronger as countries move toward increasing industrialisation and urbanisation, especially in Asia where such trends are the most aggressive (its urban population will exceed the rural figure by 2030).

Furthermore, the use of traditional fuels has a strong deleterious effect on the well-being of the poor, in terms of damage to health, productivity, local environment, and social well being.

This is particularly true for women and children, who spend a great proportion of their time collecting and using the fuel, and thereby suffering the consequences of its use-especially indoor air pollution-and who have little or no time left for child welfare activities, education, or other gainful, income-earning employment.

Thus, not only is traditional fuel use incompatible with the technological aids that modern society takes for granted-electrical devices and appliances, information and telecommunications technology, rapid transportation systems, production and manufacturing tools, electronic mass media, and so on-but it also effectively excludes half of the population that relies on them, along with their young, from accessing even the few opportunities available to them for self growth, education, and economic betterment.

http://www.brecorder.com/index.php?id=569224&currPageNo=1&query=&search=&term=&supDate=


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## Neo

May 28, 2007 
*Intercropping technology to raise food production*

By Atique-ur-Rehman, Dr Ehsan Ullah & Dr Riaz Ahmad

THE rate of increase in food production is too slow to cope with the rapidly increasing population and with that the rising demand for food. The need of the hour is to increase food production.

The present system of sole cropping has failed to meet domestic needs of small farmers. Monoculture is associated with several problems that intercropping can solve. Intercropping has the potential as an economic and ecological alternative fully compatible with modern agriculture.

Intercropping, the practice of growing more than one crop simultaneously on the same piece of land at a time, may be used extensively in most of the developing world where farmers have limited access to agricultural equipment and products. The modern agriculture, based on monoculture, has increased yield enormously in developed countries, but the improvement has not been without its costs.

The production and operation of machines and synthesis of fertilisers and pesticides involve a huge amount and energy. Other costs can be high as well, ranging from degradation and disruption of environment to human pesticide poisoning. A majority of agricultural scientists are sufficiently aware of environmental and health risks of modern agricultural practices.

Problems: The low cost of synthetic fertiliser may have been a double-edged sword. The inexpensive and seemingly inexhaustible supplies helped to create a false sense of security among farmers, contributing to abandonment of soil conservation practices. Soil lost from erosion is occurring at an alarming rate, exacerbating the need for synthetic fertilisers.

Addressing problems of soil erosion and soil quality is the top priority now. Discontinuation of crop rotation also increases weed problem. Weed species are able to proliferate that can be readopted to the fixed annual planting and harvesting schedules for growing monocultures in continuous sequence. Although mechanical cultivation to remove weeds continues, herbicides rapidly become the primary means of weed control. Pesticides can be extremely useful, but recognition of complications is growing that arise when pesticide especially insecticides are abused. More pests have developed resistance to insecticides than other pesticides but all forms of pesticides have been affected.

Apart from agricultural complications, pesticidesâ use is a health risk. There are direct risks in producing pesticides, a greater number of people including, farmers, fieldsmen and labourers are being poisoned from pesticide use.

Advantages: Better use of growth resources, including light, nutrients and water. Better yield stability. Intercropping offers the possibility of yield advantage relative to sole cropping through yield stability and improved yield. It meets diversified needs of small farmers, stability of yield over different seasons, better control of weeds, insect pest and diseases as well as control of soil erosion.

Companion plant: Perhaps the most obvious advantage of growing two crops simultaneously is the substantially reduced risks of total crop failure. Crops differ in their response to physical and environmental stress and it is not uncommon for one crop species to do poorly while a different crop grown under the same conditions thrives. In fact even varieties of the same species differ enormously in their response to the variable climatic condition that typically occurs.

Planting two crops together through intercropping provides an additional benefit because the resources that become available through the failure of one species can be used by the surviving crop. The remaining companion crop can use resources, such as synthetically produced fertiliser, which would otherwise have been lost due to leaching or run off, thus increasing the efficiency with which these expensive inputs are used.

Differential resources: When the distance between plants reaches some critical point, they begin to compete for at least some of their resources .Given a set of fine conditions (environment, planting pattern etc.) competitive interactions between two intercropped species can have three possible outcomes:

Intra-specific competition can be less than inter-specific competition for both species.

Intra-specific competition can be greater than inter-specific competition for both species.

Intra-specific competition can be less than inter-specific competition for one species,

While reverse is true for other species.

Fertiliser requirements: In many situations the presence of second species may actually enhance nutrient availability for the first, although competition is present between a legume and non-legume in an intercropping system. In an intercrop, inevitably competition occurs for some resources, the legume through a mutual association with nitrogen fixing bacteria (rhizobium) may provide additional nitrogen to the associated non-legume. Legumes also form association with a fungal group, vesicular arbuscular mychorrhizae (VAM). Furthermore rhizobium and VAM can act synergistically for the host legume, greatly increasing nutrient availability. Intercrops can also reduce the need for synthetic fertilisers by alleviating soil erosion. Most soil is lost between harvesting and establishment of next crop. Differences in the phenologies of intercrops allow for continuous plant cover. Furthermore, the diversity of root systems of two crops enables them to use and stabilize a broader soil zone.

Reducing pesticide: Intercrops have been shown to reduce the population of numerous herbivore species under a wide range of conditions. Risch et al 1983 reported that in 150 intercropping studies involving 198 herbivore species, 53 per cent of the herbivore species were less abundant in the intercrop.

An advantage of intercropping has not received much attention is the reduction of weeds, but evaluating this benefit may be complex. If a species used to control weeds, it will probably also compete with its companion crop. Therefore, we might expect that crops yield to be less than it would be if grown in weed free monoculture. However, the economic and ecological cost of maintaining a weed-free monoculture may be excessive.

http://www.dawn.com/2007/05/28/ebr4.htm


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## Neo

May 28, 2007 
*Erratic wheat policy*

In a knee jerk response, the government abruptly suspended wheat export on Wednesday while acknowledging that the open market price of the grain has shot up by seven per cent in spite of a record bumper crop of 23 million tons plus being harvested this season.

Shipment of about 30,000 tons of wheat worth more than $6 million is said to have been stopped at the Karachi and Bin Qasim ports immediately after the government decision. By the time, the Economic Coordination Committee (ECC) of the Cabinet headed by Prime Minister Shaukat Aziz decided to suspend export, about 0.4 million tons worth about $80 million is reported to have already been shipped. Besides, there are letters of credits for export of about one million tons of wheat.

In the initial days of the harvest, the profit margin on wheat export was said to be more than Rs3,000 a ton which has slipped down to Rs1,500 per ton because of the gradual rise in prices in the domestic market and also in transportation cost in Karachi after announcement of May 12 rallies in Karachi About 16--18 well connected exporters from Karachi and Lahore and a few from Islamabad are said to have so far made about Rs1 billion in wheat export, for which the low income consumers are paying a high price.

There is now a gap of 0.6 million tons between the booked orders and the shipment made. The exporters were on a buying spree in Sindh and Punjab till last Tuesday to line up wheat for shipment. Now, the exporters lobby has started working overtime in Islamabad to allow them ship the 0.6 million tons of wheat for which they booked orders. A quick decision to scrap these export orders of remaining 0.6 million tons of wheat, the shopkeepers say can have a good effect on local supplies.

An overwhelming majority of small farmers in Sindh and Punjab has already sold away its wheat to the local grain brokers. Bought by these brokers, the wheat is stocked in ginneries, rice husking factories and even in buildings constructed for schools and dispensaries in villages. As the price of wheat in the domestic market went up by Rs80-100 on a 100 kg bag, the government agencies are encountering difficulties in procuring wheat stocks..

The government's target is to build up a strategic reserve of five millions tons plus. Normally, the government releases wheat to flour mills from its stocks from August or September to cover what is called a ``lean period'' from October to March. It is believed that from April to August, the market gets adequate supply of wheat from the farmers and flour mills get their requirement from the open market.

But this season, there is a visible market distortion or what one can be termed ` manipulationâ, the price of wheat flour for a consumer in Karachi went up from Rs13 for a low quality flour and Rs16 a kg for a relatively better quality flour to Rs14 and Rs17 a kg respectively. Reports coming from NWFP reveal that wheat flour prices in small and big towns have started creeping up. Balochistan also showed the same trend and Punjab has just started showing a rising trend.

Tandoors, hotels and restaurants started shrinking the size of baked breads and there were reports of a possible price hike next month before the budget. Obviously, the low income groups have been hit badly by this unexpected price hike when elections are scheduled to be held. If World Bank is to be believed, 94 per cent population earns less than two dollars (Rs120) a day which comes to less than Rs4,000 a month. A family of five spends more than 55 per cent of its earning on food bill. A 7-10 per cent rise in flour price has upset the family budget. Three more factors-- other than export-driven push--are being mentioned as causes for price rise of wheat flour for consumers in Karachi. The first is freight of the trucks. Transportation from upcountry to Karachi remains disturbed since early May. Finally an announcement was made to put off a local three-day transport strike till next month. ``Freight for a 100 kilogram bag from Lodhran in Punjab increased from Rs65 to Rs90'', a local trader said.

Another reason for the transport freight hike was that fertiliser import has not commenced this season so far. Normally, imported fertiliser is transported to upcountry from Karachi from May onward. The trucks that bring export cargo or wheat from upcountry carry fertiliser on their return journey. The journey of an empty truck escalates freight cost. A ship carrying fertiliser is about to reach Karachi sometimes next month. Till then a majority of the trucks will continue to come loaded with wheat and export cargo and return empty.

A rise in rice prices has also caused a price push in wheat. Traders say that broken rice is now being sold at Rs20 and Rs22 a kg. Broken rice is used in poultry feed. Wheat is being sold as poultry feed because it still costs less.

Officials in Sindh food department said that government godowns in Karachi have less than 1,000 tons of wheat stock. It may take another few days before wheat starts coming to Karachi which is the biggest consuming centre of the country. Karachiâs consumption is more than a lakh tons of wheat in a month. Out of 78 flour mills in Karachi, more than 20 have closed their operations because they ran out of stocks. A few mills reported wheat has started trickling in. But the prices of wheat flour is still high, There are at present no visible flour shortages but wheat transportation uncertainty is causing a price push at the retail level. A âreconciliationâ move by the Sindh Governor to meet opposition leaders have been well received by the market. The wholesale and retail business in Karachi look relatively relaxed.

A shopkeeper in Soldier Bazar sees improvement in wheat flour supply and prices once the government takes a final decision on the 0.6 millions of wheat for which export orders were booked. If these orders are cancelled, wheat will start coming out from private stocks into the market.

Inconsistency in wheat trading policy has been a distinct feature for the last several years but it has become more pronounced in last four years. In late December, the government announced to clear its carryover wheat inventory of about 3.5 million tons by allowing half a million tons export. It found that inventory cost (bank interest, storage charges and transportation cost) has rendered the wheat somewhat uncompetitive in the international market. But the government in its wisdom quietly increased the export quantity from 0,5 million tons to 0.8 million tons. And when the harvest started and there were reports of a bumper crop-23 million tons plus-the government allowed half a million tons export from the new crop also so that it could be marketed without any inventory cost.

Without any regulatory authority and with weak governance, the market abuse is rampant.. No sooner, wheat export was initiated, , hoarders, profiteers and speculators entered the market to mint money. The State Bank of Pakistan's annual report issued on December 2, 2006, about three months before the wheat harvest, had warned of speculators taking over the control of market, if wheat export was allowed before the build up of strategic reserve and assessment of the crop. This is what happened.

Within a month of the commencement of harvest of what was declared to be a record bumper crop, the wheat prices in the open market and prices of wheat flour for consumers started moving up.

Late last week, the market in Karachi was abuzz with rumours that prices of wheat in open market will touch Rs1,300 for a 100 kg bag. The prices of wheat flour will be Rs20 a kg for a consumer. Hotels, restaurants and tandoors are all set to increase the price of baked bread up to Rs6 or Rs7.

Till Tuesday last, the senior bureaucrats in Islamabad Food ministry were defending wheat export policy. None of them was ready to accept that wheat export has pushed up the prices of wheat flour in the local market. They were all convinced that wheat flour price hike is a passing phase and market will behave normally after the effects of May 12 will be over.

âWhy should not there be a permanent Wheat Boardâ? Responding to this question, a senior official in the federal food ministry disclosed that such a board is now being constituted. But the composition of the board and its mandate are yet to be decided.

http://www.dawn.com/2007/05/28/ebr2.htm


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## Neo

May 28, 2007 
*Seed priming: reducing salinity impacts on crop productivity*

By M. Tariq Javed, Dr Shahzad M.A. Basra & Dr Irfan Afzal

THE total geographical area of our country is 80 million hectares or 197 million acres, with a very good canal irrigated system of about 62,400 km long and mainly confined to the Indus plain covering an area of 19.43 million hectares (48 million acres). The salt- affected soil is mainly situated in this plain.

Of the total, about 6.30 million hectares are salt-affected. The magnitude of the problem can be gauged from the fact that the area of productive land was being damaged by salinity at a rate of about 40,000 hectares annually.

It is estimated that out of 1.89 million hectares saline patches, 0.45 million hectares exist in Punjab, 0.94 million hectares in Sindh and 0.5 million hectares in NWFP. Out of 19.3 mha area available for farming, irrigated agriculture is practised on about 16 mha. Irrigation water is mainly supplied through canal system arranged through dams. Intensive and continuous use of surface irrigation has altered the hydrological balance of irrigated areas, especially the Indus basin. The substantial rise in water table has caused salinity and water logging in large areas of Sindh, Punjab, NWFP and Balochistan.

The country is located in arid and semi-arid climatic zones. Generally high evapo-transpiration in semi-arid and arid zones is the basic cause for salt accumulation on soil surface. The average summer temperature is 40Â°C and the minimum winter temperature remains between 2Â°C to 5Â°C. The annual rainfall varies between 100 mm to 700 mm throughout the country. The evaporation rate is generally very high and exceeds that of precipitation. Thus, the insufficient rainfall followed by high evaporative demand and shallow ground water depth, enhances the movement of salts towards soil surface.

Salinity is a serious problem affecting irrigated agriculture. Improper irrigation practices and lack of drainage have generally led to accumulation of salts in soil in concentrations, which are harmful for the crops. There is a major imbalance in the amount of salt entering and leaving the soil. Each year about 120 million tons of salts are added to the land in canal water and brackish underground water. Only about 1/5th of this salt finds its way to the sea. The remaining accumulates in the soil, it continues to reduce the growth and survival of crops.

Salts exert general and specific affects on plants which directly influence crop growth and yield, and also affect certain soil physio-chemical properties which, in turn, affect the suitability of the soil as a medium for plant growth. The major effect of salts on plants is that it reduce plants growth rate. Chloride, sodium and boron may exert specific toxicity effects on susceptible crops, especially woody perennials. Plants vary in their tolerances to salts and many are sufficiently tolerant, especially after seedling establishment, to produce well when irrigated with saline waters, especially typical drainage waters, provided appropriate cultural management practices are followed.

The soils with electrical conductivity less than 4 dSm-1 are considered salts free, where all crops can be grown. As salt concentration increases, the choice becomes limited and one has to go for tolerant plants suited for specific conditions.

There is usually no single way to achieve salinity control in irrigated lands and associated waters. Many different approaches and practices can be combined into satisfactory control systems. The appropriate combination depends upon economic, climatic, social, as well as edaphic and hydro-geologic situations.

The leaching of salts through irrigation however, requires extreme care as this should not add to underground water table. Tube wells are generally sunk to get rid of such shallow water tables without which leaching may not be advisable. The upward movements of saline water from shallow water tables can cause salt build up in the plant root zone. A water table should be at least 41/2 to five feet below the surface during most of the crop growing season.

Green manure through leguminous crops and application of farm yard manure not only provide organic matter and other nutrient, but also make the soil porous for aeration and moisture absorption and enhance soil micro-organisms, thus improving the overall condition of the soil. Similarly replacement of sodium-ions by calcium using gypsum helps in mitigating the adverse conditions.

Modern research has identified more than 1500 plant species that have high levels of tolerance to saline soils, these are called halophytes. Some of these are able to withstand salt concentrations in excess of those found in sea-water. These plants (trees, shrubs and salt tolerant grasses and herbs) are a major resource that can be used in the development of agricultural systems for salt-affected soils. In addition, there are opportunities to increase salt tolerance of existing crops using conventional plant breeding and molecular biological approaches.

Beside several efforts success rate is least due to number of constraints. Output obtained is much less as compared to time and money exhausted. So there is a need to pioneer cost effective and farmer friendly strategies. If the plant survives the shock at seeding/ transplanting stage, the chances of its subsequent survival and growth are likely to be increased. Since less germination rate and reduced plant population is a major setback under saline conditions, so improving seed emergence is the only cure to the problem.

Pre-sowing seed treatment or seed priming is best fit in this scenario. Seed priming is a controlled hydration process followed by re-drying that allows pre-germination metabolic activities, to proceed rapidly. Generally priming improves the rate and uniformity of seedling emergence and growth particularly under saline conditions. The effectiveness of various priming agents differs under different stresses as well as in different crop species.

Seed priming is an easy low cost and low risk technique and an alternative approach recently used to overcome agriculture salinity problems. It can be effectively used for a number of crops like wheat, maize, rice, tomato, sunflower, parsley, pearl millet, cotton, beans, peas, carrot, lettuce and onion.

Interaction between salinity, soil water and climatic conditions change the plantâs ability to tolerate salinity. A basic understanding of the interaction between salinity and environment is necessary for an accurate assessment of salt tolerance in crops. In addition to precipitation, atmospheric humidity and temperature can markedly influence salt tolerating capability of crops.

The rapidly growing demand for increased food, fibre and fuel in the presence of rapidly declining availability of agricultural land use due to increased soil salinity make it imperative that crop production under saline conditions be significantly improved. Now the importance of seed priming techniques goes without saying as well as the application of seed priming techniques to almost all agricultural crops is easy, feasible and cost effective maximising output to the farmer. So there is dire need to boast up research activities involving various crops and priming agents under both laboratory and field conditions. This will help to get rid of such turmoil salinity situation and will reduce our dependence for wheat and cereals on foreign countries.

http://www.dawn.com/2007/05/28/ebr6.htm


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## Neo

May 28, 2007 
*Issues in tax management*

In 10 months of this fiscal year, the Central Board of Revenue (CBR) has collected Rs656.5 billion against the target of Rs645 billion. The CBR officials believe that the full year collection would also exceed the annual target of Rs835 billion. The government is expected to set the next year target at Rs1 trillion.

In Islamabad, economic managers are busy giving final touches to budget proposals for FY2008. The government does not want to introduce any new tax on the eve of elections. But it is looking for ways to broaden the tax base. The CBR has put forward a number of proposals to increase tax collection without levying new taxes.

It has instructed tax collectors to bring all those in the sales tax net who are required to pay the tax but are not registered. The CBR has also advised the collectors to use third party information to see who could be brought into the net and to verify whether those already in are paying the taxes honestly. It has sought a report on the subject by June 15.

The tax collectors have powers to compulsorily register those providing excisable services, including airlines, banks and financial institutions, foreign exchange companies, money changers, cable operators, and service-providers of vehicle tracker and burglar alarm systems.

The CBR and Securities & Exchange Commission of Pakistan (SECP) are also planning to task chartered accountants to issue a separate audit report of companies verifying that they are paying federal and provincial taxes.

The revenue collectors have identified various areas where tax evasion is high and the proposed ways to plug it. âStill we are not sure if political expediency would overrule our professional advice,â remarked a senior CBR official. He said that the third quarterly report of CBR issued last week, contained âprofessional advice on critical issues in tax policy and managementâ.

The 70-page report sheds light on developments in the revenue collection in nine months to March 2007. It reveals that although the CBR met revenue collection target set for July-March FY07, a decline in import-related taxes and additional payments to the power sector squeezed potential tax collection by Rs60 billion.

It says the CBR may have to absorb similar shocks in the last quarter of the fiscal year as well but the full year target of Rs835 billion remains within the reach. It claims that even the overall tax to GDP ratio is expected to improve further. (In the last fiscal year it stood around 9.8 per cent).

Discussing the role of CBR in increasing tax-to-GDP ratio, the report points out that the policy of facilitating various segments of the economy âneeds to have appropriate controlsâ. The rest of the report elaborates this point effectively.

Experts say that one of the reasons for a low tax-to-GDP ratio is a mismatch between the contribution of various sectors of the economy towards GDP and their respective tax contribution. For example, in FY06, agricultural tax revenue totalled Rs874 million or 2.4 per cent of the provincial taxes of which it is a part, whereas the share of agriculture in GDP was 21.6 per cent. And in the first half of this fiscal year, tax collection from agriculture sector stood at Rs268 million or 1.6 per cent of total provincial taxes. The CBR attributes agricultural tax evasion to the fact that it is out of the purview of the federal taxes.

What else encourages tax evasion, according to the CBR report, is a law that allows a person to pay income tax only on non-agriculture income, if his agriculture income exceeds Rs80, 000. âExperience shows that the income from other sources is also reported under agriculture income to avoid taxation.â

The provincial governments of the Punjab, Sindh and the NWFP collect an insignificant amount of agricultural income tax as presumptive tax. And Balochistan has no contribution at all, says the report. The only federal tax paid by agriculture sector is in the form of indirect taxes on agricultural inputs like fertiliser and pesticides.

The report points out that tax contribution of textile sector is also far less than desired. In FY05 the industry paid Rs13.8 billion as indirect taxes whereas CBR paid Rs40.7 billion as refund and rebate. Thus, net tax contribution of the industry was minus Rs26.9 billion.

The report links this situation partly to zero-rating of exports for sales tax and partly to the wide-ranging tax exemptions and concessions âgranted by the taxation system due to pressure by the strong textile lobbyâ. In case of income tax, the industry only pays withholding tax 0.75-1.5 per cent at the export stage. Tax collection through this mode is also unimpressive, the report claims.

It reveals that the levy of three per cent sales tax on domestic sales of textiles fetched an insignificant amount of Rs4.4 million only against the potential of Rs1.9 billion. Similarly, a one per cent income tax on textile retailers fetched only Rs7.7 million. â

At this stage it is pertinent to determine whether the textile sector is paying any amount under sales tax or income tax on its domestic supplies that are not zero-rated,â the report suggests. (CBR estimates that 80 per cent of textile produce is exported and 20 per cent sold in the local market).

An official of the All Pakistan Textile Mills Association said the textile industry is paying all the taxes that it is required to pay. âAs for the tax on domestic sales of textiles, we would certainly support CBRâs efforts to realise the tax potential,â said Mushtaq A. Vohra, member, managing committee.

Market sources say that the CBR can reconcile its data on tax paying retailers with that available with the city governments to plug tax evasion. âIn Saddar Town (Karachi) some 4000 retailers have got licenses from the city government to do business in and around the Empress Market alone. I know for sure that hardly 10 per cent of them are registered with CBR,â said a businessman based in Saddar. âNow, if the CBR reconciles data with the city government it would be easier for them to see who is evading taxes.â

The CBR report has devoted a special section for iron and steel industry. After analysing the tax trends from various angles, the report says that the tax contribution of this industry has been insignificant in relation to its size. The industry as a whole paid Rs24.5 billion tax in the last fiscal year including income tax of only Rs800 million.

The report points out that whereas the tax contribution of Pakistan Steel Mills has remained consistent with its production, this has not been the case with private sectorâs iron and steel producers. The report also accuses those located in Lahore and Gujranwala of not paying âtheir due share of taxesâ.

The representatives of iron and steel industry have reacted strongly to the CBR findings. In a meeting with a senior CBR official immediately after the release of the report, they said they would oppose any change in the tax regime based on the so-called findings of CBR.

âWe are neither involved in under-invoicing nor in tax evasion,â a participant of the meeting was quoted as saying. âThe CBR figures on tax collection indicates that their own system, perhaps, is not functioning properly.â

The report also analyses tax collection from major sectors of the economy i.e. agriculture, mining/quarrying, manufacturing and services. The study shows that the Revenue Productivity (RP) is the lowest and that of the manufacturing is the highest. (Revenue Productivity is an indicator that measures the relation between the extent to which a sector can be taxed under a given tax rate and the potential base and its actual contribution to revenues).

Though the tax contribution of manufacturing sector remains the highest as measured through the RP and that is because of better tax compliance by some selected sub-sectors and is not spread evenly across the components of the manufacturing sector.

The report points out that food and beverages sub-sector has 10 per cent share in manufacturing and contributes two per cent to the GDP. But its revenue productivity is only two per cent in direct taxes and 27 per cent in indirect taxes.

All types of food, agricultural or marine, including fruit juices and cereals are exempt from sales tax and customs duty at domestic and import stages. Only the processed food and beverages are liable to tax.

The rationale behind tax exemption on food industry is to keep food prices in check. But the CBR report indirectly suggests that the government may withdraw tax exemptions on this industry and find ways of providing direct relief to the poor through social safety nets.

http://www.dawn.com/2007/05/28/ebr1.htm


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## Neo

May 28, 2007 
*Are we squandering home remittances?*

ARE we squandering the increasing home remittances of overseas Pakistanis which will exceed $5 billion in the financial year ending June 30.

This issue has arisen as in the first 10 months of this financial year total remittances of $4.450 billion have been received, while large trade deficits and balance of payments deficits plague the economy. The average monthly remittance stands at $445 million.

This issue has also become relevant to the decision to raise foreign exchange reserve of the country to $15 billion. Building that reserve is easy while it is nearly $13.8 billion. In fact this target could have been achieved last June when the reserve stood at $14.59 billion, but it declined due rising trade and current deficits.

Now when a reserve of $15 billion is being sought, the deficit in balance of trade for the first 10 months of the year is $11 billion, while the current account deficit for the first nine months is $4 billion after absorbing home remittances and the foreign investment of $6 billion.

Building larger reserve by converting the rupee reserves of the government is rather easy. In fact the reserve was built up to the current level from billion dollars bought by the State Bank of Pakistan from open market and partially through inter-bank deals. But now it has been decided to raise additional reserve only through inter-bank deals.

So the real solution to the problem with the scary trade deficit is more of exports than of imports and not to delight in the apparent imported affluence. We are now having more of trading and less of manufacturing and expansion of the service sector. Ample proof of this lies in the decline in import of machinery for textiles which will have its impact on the exports later. And if the reserve is to be raised, it should be raised to 20 to 25 billion dollars.

The present reserve is a tiny fraction of the Chinese foreign exchange reserves of over $1,000 billion and very small as compared to Indiaâs reserve of about $190 billion. But the reserve has to be raised in a proper manner and not through artificial mechanisms.

We need to make not only a larger volume of exports but far more of the value-added. We have to export our skills if not our brain power and not far more of our sweat for which we get a paltry price and have to acquire alluring brand names and make them truly popular.

Similarly we have to export more skilled labour to earn far more per head and not the unskilled manpower which vanishes in foreign countries after expiry of work visa.

Even those who are skilled in domestic chores earn a great deal abroad as do the Pilipino and send home large sums.

But we have a dearth of skilled labour for our own industries and particularly new skills. Workers skilled in domestic chores are also getting fewer in Pakistan so the per capita income of our overseas workers is small as compared to those of people from Philippines.

Still our larger earnings of overseas workers come from the US which average $1.2 billion a year followed by earnings of workers from Saudi Arabia and the UAE.

A tragic feature of this operation is that a large number of workers are duped by agents. A number of workers have died of suffocation in the process of trying to be smuggled out through ships or other contraptions. Official efforts to check such abuses have not been successful because of the desperate efforts of Pakistanis to seek employment abroad by any means.

And yet the overseas remittances of $4.450 billion in the first 10 months of this year exceed the amount sent last year in the same period by $820 billion or 22.6 per cent. The remittances from the US have lead again with $1.176 billion. The year may end with total remittance of $5.5 billion. For the first time it has crossed the $5 billion limit.

The remittances had gone under a billion dollars before 9/11. While the hundi system was being used to send money home, but after 9/11 sending money through banking channel began picking up and $2.389 billion was sent in 2001 and 2002. Remittance rose steadily to reach $4.326 billion in the following year.

There has been criticism that large remittances have not been put to the best use in the country. Last year at the Pakistan Development Forum of the donors, there was a charge that a great deal of remittances was used for speculation in share market and in the real estate. But the fact remains that the money does not belong to the country or the government. It belongs to those who earn them and send them home and they are free to use it the way they choose.

Of course some of the tax-evaded money in the country is sent through the hundi system and brought back as clean money and used the way their senders like. The Chairman of the Central Board of Revenue, Mr Abdullah Yusuf, wanted to lay hands on such money but the prime minister did not approve that lest that dries up the remittances which are flowing in plenty through the banking channel.

Getting tax-evaded money sent out through the still operational hundi and getting it back home through banks is a sure way to clean up black money.

As long as the government does not have the means to check the outflow of money from the country, it does not want to interfere with the inflow in such abundance more so when the balance of trade and current account deficits and the balance of trade deficits are too large and the government is underestimating its impact despite the warnings of the World Bank.

Meanwhile, the rupee is largely steady with marginal attrition. The government has left the rupee afloat and sensitive to the market mechanism. The State Bank intervenes in the market to control volatility of theexchange rate.

The government will soon claim that for the first time the foreign exchange reserve has gone up to $15 billion while the economy demands that the reserve is raised to $15 to $25 billion in view of the very large trade and balance of payments deficits.

Meanwhile, a memorandum of understanding has been signed between Pakistan and South Korea to employ Pakistani workers there. An agreement has been signed with Malaysia too to employ Pakistanis, but some hitches remain to be removed. Working in South Korea can provide good training to Pakistani workers and more of them should be sent there.

But if such attempts have to be a success, we have to provide for large training facilities and create a large pool of workers with technical qualifications both to export them as well as meet the needs of the domestic industry.

Our food import is now costing $2.3 billion and the food import is likely to rise further to beat inflation. Milk costs far more now and so does palm oil. The price of crude oil is expected to rise and the oil bill next year will consume $8.8 billion. We have to earn more to meet such diverse demands of the country.

http://www.dawn.com/2007/05/28/ebr13.htm


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## Neo

May 28, 2007 
*KSE 100 index breaches psychological barriers to settle at 12,700*

THE Karachi Stock Exchange 100-share index breached three psychological barriers during the last week as a judicious blend of both local and foreign buying drove bears out of the market at least for the near-term.

The breach of barriers of 12,500, 12,600 and 12,700 in a week is a significant development and reflects that investors are toeing the line of higher corporate earnings, a good national budget and an active presence of foreign fund buying.

The market derived its strength from rumours that a high-powered KSE delegation will meet the prime minister seeking his intervention to resolve the CFS issue, which had already touched its upper ceiling of Rs55 billion.

Speculative buying based on the perception that the CFS limit may be raised to Rs65 to Rs70 billion did not allow investors to lay their guards and they continued to build-up positions on selected counters.

The share market, therefore, staged a broad-based rally as both local and foreign investors made an extensive buying at lower levels almost on all blue chip counters.

The KSE 100-share index, which earlier showed either-way movements surged to new all-time high so far at 12,732.41 points, up by 392 points. Its junior partner KSE 30-share index also rose by 609.86 at 15,897.01. The market capital swelled by over Rs100.00 billion at Rs3,713 billion.

The market was adversely affected by the three-day strike threat by transporters from May 25-27 against the May 12 city violence. The postponement of the strike, however, gave the much-needed push to foreign investors and local bargain-hunters who spent lavishly in the market at current levels.

Market's mid week snap rally boosted by active short-covering in oil shares followed by reports of increase in world oil prices and sympathetic earning-based covering purchases on other counters, notably leading banks showed that it had the will to rise further in normal trading conditions.

&#8220;Essentially, it was an institutionally-based rally which was later joined by foreign investors&#8221;, said a leading stock analyst Faisal Abbas. He said: &#8220;Tired institutions could not sit idle on their heavy liquid cash, and resumed normal business at lower levels&#8221;.

Another analyst Hasnain Ali Asghar hopes that the snap rally could be sustained in coming sessions also, but has doubts as background news from different fronts are not positive.

But Tuesday's snap rally gave a pleasant surprise to most of the leading market players awaiting clearer picture on the corporate thinking in coming sessions, he added.

However, bad news both from political and law and order fronts are following in quick successions which is not allowing investors to plan a long-term portfolio adjustment strategy, says analyst Ashraf Zakaria and adds : &#8220;everybody is awaiting to invest after the political dust settles down.&#8221;

The perception that the index will settle somewhere well above the level of 13,000 points despite developing political situation as investors will think twice to invest even at the falling prices. But some others said it has already survived the shock and is well on the road to set new record.

&#8220;There is more than one reasons, which could have bearish impact on the share market in the coming weeks, the main among them being a perception of political uncertainty&#8221;, analyst Ahsan Mehanti said and added &#8220;all political indicators originating from official and private sources are terribly bearish&#8221;.

FORWARD COUNTER: Leading shares on this counter followed the lead of their counterparts in the ready section and mostly finished with fresh gains, major gainers among them were MCB, National Bank, OGDC and Bank Alfalah.&#8212;Muhammad Aslam

http://www.dawn.com/2007/05/28/ebr17.htm


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## Neo

*Prime Minister confirms export target to be missed marginally *

ISLAMABAD (May 29 2007): Prime Minister Shaukat Aziz on Monday conceded that exports target of $18.6 billion for the current fiscal year would be missed but claimed that dip would be marginal. He announced at a press conference on Monday that GDP grew by 7.02 percent in 2006-07, against 6.1 percent of the last year.

Per capita income rose to $925 from $833 last fiscal. The Prime Minister claimed that per capita income would cross $1,000 mark next year. He said revised GDP growth rate for 2004-05, stood at 9 percent. It was 8.6 percent in the original estimates. The Prime Minister said agriculture grew by 5 percent whereas crops sector growth was registered at 6 percent and livestock by 4.3 percent.

Large scale manufacturing (LSM) registered 8.8 percent growth against revised estimate of 10.7 percent of last year. He quoted the major industries, which performed exceedingly well to take GDP growth slightly over its estimated 7 percent.

He quoted the following sectors that contributed positively: Sugar 19.6 percent, beverages 28.4 percent, cotton yarn 12 percent, footwear 13.2 percent, paint and varnishes 43.8 percent, motor tyres and tubes 1 7.2 percent and 45 percent respectively, Other industries included cement 21.1 percent, iron and steel products 24 percent, air conditioners 36.4 percent, electric transformers products 25 percent, and tractors 11 .4 percent.

The Prime Minister said that wheat production in 2006-07, set a record with 23.52 million tonnes output, sugarcane production was 54.7 million tonnes against 44.7 million tonnes of the last year and cotton production was 13 million bales.

He said that services sector grew by 8 percent and total economy size stood at $146.3 billion. Shaukat Aziz repeatedly claimed that Pakistan's economy was booming and his government was making the best efforts to make sure that its benefits trickle down to all particularly to the poor.

He said that the rural poor were already getting benefit of economic boom and their better living standard was an ample proof. He said the government was fully alive to the situation arising out of growing prices of essential items and taking various measures for improvement. He, in particular, mentioned ban on wheat and cement export, subsidy on fertilisers and hoped that these decision would help the government check price-hike.

He disagreed with a questioner that FBI team was in Pakistan to probe insid- trading scam in US banks. However, shared with the media that he has directed the State Bank of Pakistan (SBP) and Securities Exchange Commission of Pakistan (SECP) to cooperate with regulatory bodies of the US and other countries investigating the matter.

He said Islamabad supports Turkey's efforts for checking human smuggling from Pakistan and it will continue to support it till the end of this menace. The Prime Minister added that the government would take measures to control inflation, which was primary reason of price-hike.

The Prime Minister condemned the use of harsh language against the military at a seminar held at Supreme Court building last week and demanded that apex court should take notice. He said army as an institution was Pakistan's asset and it should be protected by all segments of the society. Earlier, National Account Committee (NAC) met here to finalise GDP and other estimates for 2006-07. Statistic Division secretary was in the chair.

http://www.brecorder.com/index.php?id=569894&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Manufacturers against import of old trucks, buses: waste of investment feared *

KARACHI (May 29 2007): Any change in the current policy that would allow import of more than five years old trucks and buses, even after payment of 30 percent penalty, may jeopardise the Rs 5 billion investment in commercial vehicles manufacturing plants and over Rs 8 billion vendors' investment in the country.

According to truck manufacturers, the policy announced in July 2005-06 for liberal import of used trucks and buses has caused loss of sales revenue to the tune of Rs 16 billion to local manufacturers, and Rs 8 billion to vendors. In addition, 0.3 million new job opportunities with the manufacturers and vendors were lost.

Following the announcement of government policy the import of used trucks swelled to over 11,000 vehicles, while sales of locally produced trucks dropped to only 7,400. This meant that the number of vehicles imported was more than vehicles produced locally. In the same period, over 1,200 used buses were also imported, against local production of 1,500 buses.

According to manufacturers, commercial vehicles industry is one of the oldest industries in Pakistan. Trucks and buses were being produced in the plant of General Motors in 1954. At that time, the government had patronised this nascent industry to the extent of restricting one or more trucks and buses under the gift scheme with the condition that such imported trucks should not be more than two years old.

The importer was required to present documents, such as earning certificate and registration book of imported vehicle, to determine the age of the vehicle. In 1993, minor changes in the import policy were made. In 2000, import conditions were slightly modified, waiving the two-year-old condition under 'Transfer of Residence' (TR) scheme, but requiring vehicle registration in the name of the importer one year before departure for Pakistan.

Much to the disappointment of local manufacturers, the rules for import of vehicles were grossly changed in July 2005 whereby import of used trucks and buses wass allowed and the condition for registration of the vehicle in the name of the applicant for one year before departure for Pakistan was also waived. The condition of registration documents of the vehicles to be attested by Pakistan embassy, too, was also withdrawn.

In July 2006, although import of vehicles even under TR scheme was restricted only to five-year olds, an SRO was issued allowing clearance of illegally imported vehicles on payment of 30 percent additional duty as fine. This opened floodgates for import of even very old trucks and buses, with all types of description and models, with no guarantee of availability of parts and service facilities.

However, the decision to change the rules was eventually withdrawn upon constant protests by vehicle manufacturers and a new SRO was issued on March 17, 2007 disallowing import of vehicles more than five years old. Such vehicles cannot be imported even after payment of 30 percent penalty.

Manufacturers have appealed that the current policy must be continued to save the truck industry from disaster and to encourage it to play its due role in meeting the needs of a growing economy.

Their plea is that the world is heading towards friendly environment and vehicles are produced with euro-compliant engines to reduce pollution. They have described recent introduction of buses in Pakistan operating on natural gas engine as a welcome step in the right direction. Once a large number of such buses ply in the city, pollution intensity would greatly come down and create an environment healthy for those who live in towns.

Import of 10 to 15 years old used vehicles with non-euro-compliant engines would be a step in reverse direction, and operation of such vehicles would create pollution and cause serious health risks, they say.

The manufacturers emphasised that since they were focusing on euro-standard vehicles and multi-axle trucks to meet the demands of new trade corridors requiring expansion in plant facilities, high investment in machinery aand equipment, massive training in skills for technology transfer, it was important that the current policy of stopping smuggling of used trucks and buses should continue uninterrupted.

They say that the government should come up with a long-duration firm policy in this regard to discourage vested quarters active in lobbying for import of about 10,000 used trucks so that the investors' confidence is reinforced and local manufacturers' determination is boosted to build up and support the efforts to modernise the trucking sector.

http://www.brecorder.com/index.php?id=569905&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Two coal-based power plants to be set up near Karachi *

KARACHI (May 29 2007): Discussions are afoot between two foreign companies and the Private Power Infrastructure Board (PPIB) for the establishment of 1,000 mw plants each in the coastal belt near Karachi, based on imported coal. The representatives of United States AES Corporation and Mitsui Japan had recently met PPIB officials to finalise formalities of the projects regarding setting up of these units.

Sources told Business Recorder on Monday that the government had already approved the proposals of both foreign companies and major decision would be taken by the third week of June.

In the key talks, construction of a jetty for coal import would be highlighted, which probably would be built at Keti Bunder. They said that the government had received letters of interest (LoIs) from both companies and had approved them to go ahead with their plans.

For overcoming power shortfall in the country, the government is desperately seeking resources for electricity production, while furnace oil prices have climbed beyond reach, gas reserves are depleting and water resources for power generation are in doldrums.

However, producing electricity from coal-based power units are the best option for the government, sources said. They said the coal could be imported from Australia, South Africa or China for this purpose.

Experts believe that three to four million tonnes imported coal (depending upon high BTU) required for producing over 1000 mw thermal power would mean that the country would import for two proposed projects about eight million tonnes coal.

http://www.brecorder.com/index.php?id=569936&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Punjab ADP to be raised to Rs 125 billion *

LAHORE (May 29 2007): The total volume of annual development plan (ADP) will be raised to Rs 125 billion in the upcoming Punjab budget against previous year's Rs 100 billion. "The Punjab budget for the year 2007-08 will be pro-poor and tax-free" Minister for Chief Minister's Inspection Team, Colonel Shuja Khanzada (retd), said here on Sunday.

He said the economic reforms introduced by the present government had generated more resources for the provinces. He said the federal budget would also have a lot for the low-income groups of the society.

http://www.brecorder.com/index.php?id=569988&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*TDAP initiates 'African Plan' for engineering goods export *

KARACHI (May 29 2007): The Trade Development Authority of Pakistan (TDAP) has initiated a plan targeting 15 African countries to market engineering products in collaboration with the Engineering Development Board (EDB). This 'African Plan' envisages boosting the country's exports to the big African markets.

Under the initiative, taken by TDAP, 15 countries of Africa are to be targeted. In the first phase, the potential of particularly Pakistan's engineering goods in these markets would be explored, which would be followed, in the second phase, by marketing strategy to penetrate this region.

These 15 countries include Morocco, Algeria, Tunisia, Libya, Egypt, South Africa, Mauritius, Mozambique, Angola, Kenya, Tanzania, Sudan, Ethiopia, Nigeria and Senegal.

At present, studies and surveys are being conducted by TDAP with the help of Pakistan embassies in these countries and of Hamid Kidwai, Pakistan's roving ambassador to African countries, who is also engaged in exploring the enormous potential and opportunities for exports to African region.

Pakistan's exports to African markets have remained stagnant over years both in terms of volume and money. Exports figures are also not so impressive keeping in view this populous region of the world.

The latest region-wise export statistics indicate that the country's exports to the African region were almost negligible in first eight months of current financial year, with a growth of only 0.54 percent. For instance, the exports to South Africa were up by 1.4 percent, and to other African countries were either stagnant or depicted negligible growth.

TDAP Executive Director Marketing Riaz Khan said that TDAP's initiatives in increasing the exports has identified African countries as the potential area for export of engineering goods and services in view of having lenient certification procedures, as against EU countries.

In this regard, to get the inputs from engineering sector, TDAP is organising a seminar in Lahore this week to make an effective marketing strategy for boosting engineering goods exports to Africa.

The exports of engineering goods registered 6.71 percent growth in July-April period of this financial year to $185 million against $174 million in the same month of last fiscal year. However, the share of exports of these goods to African region was almost negligible despite having huge potential of these items in the countries of Africa.

Pakistan exports electric fans, transport equipment, other electrical machinery, machinery specialised for particular industries, auto parts & accessories, etc, as engineering goods.

http://www.brecorder.com/index.php?id=569990&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*Engineering Development Board to turn into authority *

ISLAMABAD (May 29 2007): Engineering Development Board (EDB) will shortly be upgraded to Engineering Development Authority of Pakistan (EDAP) and an Ordinance has already been submitted to the government for clearance and promulgation, said Abdul Hafeez Chaudhry, CEO EDB.

The ordinance clearance is expected in early July, he said during a meeting with two-member mission of Dutch Centre for the Promotion of Imports from Developing Countries, which called on him on Monday.

According to an official statement, Mr Chaudhry, however, clarified that the promulgation of EDAP ordinance will not affect the nature of the body and it will continue to play the role of facilitator to the engineering industry rather than a regulatory authority.

The CEO EDB briefed the mission on priorities of the government in development of industry and highlighted the philosophy and background of establishment of various companies for developing these sectors. He said that the basic idea was to encourage the concept of public-private partnership.

CEO, EDB also identified capacity building needs of EDB as a Business Support Organisation. He said that CBI could help in enhancing the export capabilities of engineering industry under their prescribed programmes.

On a query about the role of EDB in policy making, he mentioned the current exercise of tariff rationalisation being carried out by the Board and informed that 17 committees were constituted to interact with various sectors and sub-sectors of the industry.

On the basis of their recommendations a tariff package has been sent to CBR for incorporation in the forthcoming budget. He also said that majority of the recommendations will be accepted by the CBR keeping in view the past experiences.

Chaudhry who is also the Additional Secretary of Ministry of Industries, Production and Special Initiatives briefed the mission about various initiatives taken by the Ministry for industrial development of the country. He said that the government was pursuing the policy of de-regulation, value addition, enhanced efficiency and competitiveness, industrial growth and improvement of exports. To achieve these objectives the Ministry has initiated a number of projects, he added.

Vincent Rouwmaat, head of the mission said that the main objective of their visit is to assess training needs of EDB and the industry on Export Marketing to EU. He added that CBI was also interested to improve their operational relationship with the Board. The Mission member showed keen interest in the sector/sub-sector studies carried out by EDB.

A detailed presentation on EDB with special emphasis on exports strategy for the engineering industry was given to the Mission by Raazia Shakir, Acting Deputy General Manager EDB.

http://www.brecorder.com/index.php?id=569994&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*Malaysian firm to get power plant assets in Pakistan *

KUALA LUMPUR (May 29 2007): Malaysian company Tanjong has said it is going to acquire seven power plant assets located in Pakistan, Egypt, Bangladesh and Sri Lanka from CDC Globeleq Holdings Limited for 493 million dollars.

In a statement here on Monday, the company said its 55 percent-owned unit Pendekar Energy Limited had entered into a conditional share purchase agreement with the CDC Globeleq Holdings Limited for the planned acquisitions. The power plants have a total effective installed capacity of 1,434-megawatt, according to the statement. The plants were governed by power purchase agreements, which would expire between 2012 and 2029, said Tanjong.

http://www.brecorder.com/index.php?id=569925&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Power outages to cripple economic growth: expert *

KARACHI (May 29 2007): The current shortfall of over 1,000 Megawatt (MW) power can slow down country's economic growth in the short-term and cripple it in the long-term. Less availability of energy to country's industrial sector in the past five decades suppressed the economic growth and increased burden on import eventually causing severe damage to the national exchequer.

Experts in energy sector told Business Recorder on Monday that the on-going power shortages could retard the pace of economic growth unless it was dealt with soon under a well thought out energy security plan.

Country's master development plan must include supply of affordable energy to industrial sector and the general consumers. The government should provide energy security, sovereignty and sustainability to achieve its development targets.

"Affordable energy is the lifeline of economic development, the engine of growth and the essential driver of economy to create employment opportunities, they said, adding that "strong economic base enable countries to negotiate their interests with outside world in all segments of co-operation."

The country is the largest user of gas is power sector. Electricity generated from gas is the cheapest economic option and takes the shortest time to set up new generation facilities like combined cycle plants.

"Regular large electricity deficit looming in the country would 'choke' the economic growth as poor planning and lack of futuristic approach has contributed to this situation," an expert pointed out. The expert said, "We should explore new ways and means to bridge the shortfall of gas so that country's economy could continue to grow."

To supplement the dwindling natural gas, liquefied national gas (LNG) supply and re-gasification, provision of energy security and segmental increase options have become a reality, the expert said.

It may be recalled that the country till 2004-05 lacked an integrated national energy data and outlook that establishes a need to develop the first integrated energy plan on fast track basis, the expert added. He said to achieve a GDP growth of over 7.5 percent for the next 25 years as envisioned by the federal government, commensurate growth in primary energy supplies is essential.

An integrated energy plan spread over the next 15 years (2008-2023), based on timeline, economic priorities, has to be developed by 'Planning Commission' with inputs from the industry and needs to supported timely by the federal government in terms of policies and incentives.

The plan to be based on development of optimum energy-mix, maximisation of indigenous coal and hydel resources in medium to long-term and providing sufficient incentives for the development of nuclear and renewable energy and strategic storages.

The plan should be effectively in place to implement oil and gas exploration offshore waters in Sindh and Balochistan coastline. The medium to long-term plans for bulk movements using water courses instead of roads. It also includes development of downstream energy infrastructure including pipelines and refineries, setting up of new port facilities like Single Point Mooring (SPM) to cater to the future economic size ships (save precious foreign exchange on tariff).

In areas of very high demand growth rate between 12 to 25 percent, utilisation of redundant furnace oil (FO) infrastructure needs to be considered for setting up power plants. Direct import of electricity from the Central Asian Republics (CARs) surplus hydel power through Wakhan strip to Terbella and also from Iran to Gwadar.

Establishment of natural gas fired power plant as National Power Regulatory Authority (Nepra) long-term fuel supply guarantee is available for furnace oil, whereas power plant on natural gas, when run on furnace oil, can pass through the additional cost to consumer.

The experts said that as per government announced plans, the coal-based power plants and associated infrastructure offer plenty of opportunities. New sites being offered for Hydel based power may provide additional opportunities to potential investors, they added.

Nuclear options may be limited to the government resources and may be difficult to structure in absence of foreign direct investment (FDI), they said, adding that ambitious target for alternate and renewable energy needs extensive government support should be integrated with base thermal plants. They said, the government should encourage exploration of hydel and coal potential to fill the gap on sustainable basis and the renewable energy can only be a viable option with technological advancement.

http://www.brecorder.com/index.php?id=569955&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*âMarket on course to cross 13000 barrierâ *

KARACHI: The marketâs bullish behaviour is based on fundamentals and the index is set to touch the 13000 level in the coming weeks, said Mohammed Sohail, Director Equity at JS Global Capital.

Talking to The News, he predicted that all the major sectors will remain in the limelight, particularly cement, banking and oil. He said the current rally is driven by positive expectations about the coming the budget, which have boosted the investor confidence.

He said the investors believe that this is going to be the last budget before the election, so the government would try to make it as friendly as possible. These expectations have positively affected the investors' psyche which is helping the index to continue with its record-breaking spree. Another important reason fuelling the bullish sentiments is the State Bank of Pakistan's recently released third quarterly report in which the tone is upbeat about the economyâs performance.

The SBP report stated that the GDP growth rate would surpass the target of 7 per cent in the fiscal year 2007 on the back of three major sectors agriculture, manufacturing and services. Pakistan's fourth Euro bond was 7 times oversubscribed had added to the marketâs positive sentiments, he said. 

Price-Earning Ratio is still in the single digit which is currently at 9.8.Other regional emerging markets like Indonesia and Philippines, whose long-term foreign currency credit ratings are just one notch better than Pakistan's that is BB- are trading at FY08F Price Earning of 14.5 and 15.6, respectively. So in case of any upgrade of Pakistan's credit rating on the back of its rising foreign exchange reserves there lies a substantial upside potential to take Pakistan equity market's leading Price Earning to around 14-15. At the same time, Pakistan market offers 5.4 people dividend yield, not available in other regional markets.

http://www.thenews.com.pk/daily_detail.asp?id=58023


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## Neo

*Pakistan missed Indian wheat tender*  

ISLAMABAD: Pakistan has suffered a massive loss amounting to Rs7 billion as exporters were sluggish in participating in an Indian tender for importing one million tonnes of wheat.

âNone of Pakistani wheat exporters or associates in Dubai or Hong Kong participated in the tender floated by New Delhi for the import of one million tonnes of wheat to meet its requirements,â a senior government official at the Ministry of Food, Agriculture and Livestock (MINFAL) revealed to The News.

âHad Pakistani exporters participated in the Indian tender, they would have fetched $115 million. However, the exporters missed the bus and lost an opportunity to earn Rs7 billion,â the official argued.

The Ministry of Food, Agriculture and Livestock on May 3 allowed the private sector that they could export wheat from their own stocks to regional countries including India via rail link through Wagah border. Besides that, the government had earlier permitted export of 0.8 million tonnes of wheat. 

The May 3 decision allowing export of additional 0.5 million tonnes of wheat was India-specific, but the exporters were not encouraged by the Indian offer, he added. India also extended the bidding date on the request of Pakistani officials, but it is strange that not a single bid was submitted.

It would have not only improved confidence-building measures between the two arch-rivals, but also helped the exporters to capture the huge Indian market, which would be a regular net importer of wheat in coming years, he said.

Besides that, the export to India would have brought handsome foreign exchange, as shipments from Pakistan were much cheaper giving it the whole bid and other offers in coming months. India needs to import more than three million tonnes of wheat to meet local demand.

The Economic Coordination Committee of the Cabinet in its last meeting suspended wheat exports till further orders and hoped the decision would not only help procurement agencies to achieve the target, but also stabilise escalating wheat and flour prices in the country.

http://www.thenews.com.pk/daily_detail.asp?id=58026


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## Neo

May 29, 2007 

*Pakistan wants BIT a part of FTA with US*

ISLAMABAD, May 28: Pakistan has asked the United States to make the Bilateral Investment Treaty (BIT) a part of the proposed Free Trade Agreement (FTA) instead of signing them separately in order to remove persisting differences between the two sides over the issue.

Informed sources told Dawn on Monday that both the governments had failed to remove their differences over the signing of BIT, particularly because of the United States, which kept on seeking unprecedented protection of American investment in Pakistan.

Pakistan has proposed to the US to sign FTA in line with the agreements it earlier signed with a number of countries including Qatar, Oman, Bahrain, Singapore and a couple of South American countries.

"We have proposed that the FTA should have certain portion of investment rather than having a full fledge BIT keeping in view the hardened position taken by both the sides over the issue," a source said.

He said both the governments were expected to shortly hold new round of talks to narrow their differences over the BIT aimed at making it a part of the FTA.

According to informed sources, both sides were not willing to soften their hardened stand over BIT although US had earlier accepted that the "judicial and legislative actions" of Pakistan should not be allowed to be challenged in any international court of law.

The US side, they said, had conceded to differentiate between the "bad faith and the error of judgment" and that the decisions announced by superior courts of Pakistan will not be challenged without any legitimate justification.

In return, Pakistan had accepted that the treaty will be applied with retrospective effect, meaning that any thing pertaining to the existing American investment could also be challenged.

Pakistan, in this regard, had assured the US government that it will be obligatory to Islamabad to give compensation to the US investors in case of their dispute, which has not been settled.

One of the cases in point was the dispute that erupted few years ago over the opening of a US restaurant chain â McDonald - in Lahore.

Sources said that Pakistan had also subdued to American pressure to accept additional forums other than International Centre for Settlement of Disputes (ICSD) to deal with arbitration clauses. The US side maintained that since a number of rules of ICSD were needed to be upgraded, other centres for dispute resolution should also be considered.

The US side was insisting to have more than one international forums to settle investors disputes, while Pakistan wanted only the ICSD. Also, Pakistan wanted the US investors to exhaust the local remedy in Pakistani courts before opting for any international forum in case of any dispute.

Pakistan had also argued that there will be a wastage of time and money to also approach other dispute resolution centres and that let the ICSD alone be approached in case of any dispute.

US Assistant Secretary of State for South Asia and Central Asia Mr Boucher, when visited Pakistan in January this year, had said that there were some "serious technical problems" which were blocking the signing of the treaty.

A source said that Pakistan had been asking the US officials to change their draft law on BIT for signing of the proposed treaty. "In many previous rounds of talks, the US side used to say that since this draft on BIT had been approved by the American Congress, there could be no change in it.

"We have told the Americans that if they are coming with a prepared mind to continue insisting on the acceptance of draft law approved by their Congress, then we are afraid it would not be possible to sign this treaty," he said.

http://www.dawn.com/2007/05/29/ebr3.htm


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## Neo

*Parco exports 60,000 tons of petrol*

KARACHI, May 28: The Pak-Arab Refinery Limited (Parco) has, so far, exported around 60,000 tons of petrol since October 2006 and is likely to meet its current fiscal year target of 80,000 tons by the end of June.

Sources in the refinery said that the company plans to export around 140,000 tons in the next fiscal in case local consumption of petrol continues to decline owing to rapid conversion of vehicles to CNG and LPG.

However, much depends on response from the government which will take a decision in view of demand and supply position. The refinery seeks permission from the government before issuing every international tender in the media.

Parco had issued a global tender last week for 20,000 tons June-end shipments.

The government had given a go-ahead for petrol export last year after smelling that local petrol had become surplus in view of its falling sales caused by the meteoric rise in prices.

Parco had exported 300,000 tons of petrol in 2001-02 and earned $75 million at a price ranging between $235 and $260 per ton at that time, the sources said.

Sources said this yearâs actual earning from the 60,000 tons of petrol export could not be known.

However, the government had decreased the price of petrol to Rs53.70 from Rs57.70 per on Jan 16, 2007, but its sale is yet to pick up significantly.

It is unlikely that petrol consumption will get a big boost as a majority of buyers are more interested in purchasing CNG-fitted vehicles, especially 800-1,000cc cars. Those who have already converted their vehicles would hardly switch over to petrol. The maximum ex-depot sale price of petrol is Rs53.70 per litre while its ex-refinery price comes to Rs33.59 per litre.

The government eats up Rs6.19 per litre in shape of petroleum development levy, Rs 7 as general sales tax and 0.88 paisa as excise duty.

Other levies include Rs2.78 per litre of inland freight equivalent margin recommended by the OCAC and has been tentatively accepted subject to the basis of actual monthly freight computation.

The margin of distributors and dealers comes to Rs1.52 and Rs1.74 per litre, respectively.

According to the chairman of CNG Station Owners Association (CNGSOA), Malik Khuda Bux, over 1.2 million CNG-fitted vehicles are plying roads and around 1,400 fuel stations are in operation all over the country.

An investment of Rs40bn had been made and more than Rs10bn was in the pipeline, he said.

More than 200 cars (new locally assembled, used and new imported cars) start plying roads daily in the country and 60 per cent of them are CNG-fitted vehicles.

Pakistan has emerged as CNG leader in Asia and the third largest user in the world after Argentina and Brazil, he added.

Head of Research at Jehangir Siddiqui, Mohammad Sohail, said in July-March 2006-2007 overall industry petrol sales had dropped by five per cent as compared to the same period of last fiscal despite the fact that petrol rate declined by Rsr4 per litre in mid-January this year.

âI donât think that petrol sales will pick up as CNG is still cheaper by 50pc as compared to petrol even after a cut of Rs4 per litre.

âIf petrol prices come down below Rs50 per litre, its sale can slightly improve. Besides, petrol has been facing another threat from rising consumption of LPG in auto sector.â

http://www.dawn.com/2007/05/29/ebr6.htm


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## Neo

May 29, 2007 

*German firm to set up dairy plant*

LAHORE, May 28: Following the investment by a multinational German store 'Metro' in Pakistan, a Germany based dairy products company will also invest here and a delegation of the firm will soon visit Pakistan in this regard.

Punjab Minister for Industries Ajmal Cheema talking to industrialists at a reception on Monday said that the German company was interested in setting up a dairy plant in the Punjab.

He said that Pakistan had become investors' âparadiseâ and its foreign exchange reserves had risen to over $13 billion.

The minister said that 'Metro' will establish two stores in Lahore, one at Bund Road and the other at Thokar Niaz Baig. Besides, the company will also impart training to Pakistani farmers on modern storage and marketing techniques of fruits and vegetable.

http://www.dawn.com/2007/05/29/ebr7.htm


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## Neo

May 29, 2007 
*Growth rate better than last yearâs 6.6pc, claims Aziz*

ISLAMABAD, May 28: A rather low per capita income and manufacturing output marred an otherwise good 7.02 per cent growth rate in national economy â a fraction above the 7 per cent target â on the back of better results in agriculture and services sectors during the current financial year.

Prime Minister Shaukat Aziz said the growth rate was better than last yearâs 6.6 per cent and described it as âvery robust growthâ. It reflected the governmentâs positive economic policies.

He was speaking to newsmen after the finalisation of the current yearâs economic data by the National Accounts Committee (NAC) headed by statistics divisionâs secretary. It was for the first time that results of the NAC were released before the meeting of the National Economic Council, which would meet on May 31.

He said all the three components -- agriculture, LSM and services -- of the economy performed better than expected and specifically mentioned agriculture sector that grew by 5 per cent, against a target of 4.5 per cent. Within agriculture, crop out put increased by 6 per cent and livestock by 4.3 per cent. He said these figures would further improve by next year.

Services sector was estimated to have grown by 8 per cent, against a target of 7.1 per cent but still lower than last yearâs growth of 8.8 per cent. The impressive growth in services sector was chiefly because of massive profits of the banking industry that offered much lower returns to depositors against higher interest on loans.

The prime minister said the LSM output had grown by 8.8 per cent. This was, however, significantly behind the 13 per cent target for the current year and even lower than last yearâs revised growth of 10.7 per cent. âI am not aware,â said the prime minister when asked as to why LSM data that used to be made public every month in the past was not available this year beyond the first quarter.

Secretary statistics, however, said that the LSM growth data had been finalised for 10 months (July-April) on the basis of information provided by relevant industries, ministry of industries and provincial governments.

The prime minister said that per capita income in 2006-07 had increased to $925, compared with $833 of last year. The government had set a target of $935 in the federal budget 2006-07 for per capita income.

Mr Aziz said the wheat output has been estimated at 23.5 million tons this year and sugarcane production at 54.7 million ton was also 10 million tons higher than last year. Both crops had performed better than expected. Cotton production, however, remained static at last yearâs 13 million bales.

He said total size of the gross domestic product (GDP) had touched $146.3 billion. It was marginally higher than budgeted estimate of $145 billion.

Without releasing the full LSM data of about 100 items, the prime minister said sugar production was up by 19.6 per cent, beverages by 28.4 per cent, cotton yarn by 12 per cent, tyre and tubes by 17 per cent and 45 per cent respectively, cement by 21 per cent and steel by 24 per cent.

The prime minister said agriculture growth had been higher than expected and it would help improve the income of most people living in rural areas.

The prime minister said that all sectors of the economy would get boost in the next year budget and maintain a higher growth rate. He said the government would continue with the current policies so that benefits of higher growth were equitable and widespread.

The prime minister said national accounts of the previous years had also been revised. As a result, the GDP growth rate of 8.6 per cent in 2004-05 had improved to 9 per cent while it remained unchanged at 6.6 per cent in 2005-06.

http://www.dawn.com/2007/05/29/top3.htm


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## Neo

Tuesday, May 29, 2007 

*Textile sector should be split into 3: PRGMEA*

LAHORE: The Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) has demanded that the textile sector be split into three sections, and has urged policymakers to continue with the six percent Research and Development (R&D) Fund in the next fiscal year.

According to Chairman Ijaz A Khokhar, the ginning, spinning and weaving, apparel (woven and hand-knitted), and home textile industries should now be separate groups. 

Making the demands public at a pre-budget press conference, the Association asked for a long term policy, a capping of utility cost for five years at present levels, an increase in the working hours of labourers, announcement of the two percent Travel Support Fund, Export Processing Zone (EPZ) status for garments units exporting over 70 percent of their production, zero rated import of accessories, three per cent R&D on the local sale of fabrics, and a scheme where associations such PRGMEA are entitled to collect 25 percent Export Development Fund (EDF).

Mr Khokhar also lambasted the Commerce Minister for criticising the drop in export in the apparel sector. According to make, the minister had alleged that the textile sector was performing poorly, had low levels of production and obsolete machinery. 

âWe are far ahead of our competitors in all respect and the present fall in exports is due to the negligence of the government towards the sector,â said Mr Khokhar.

Still, he added, the PRGMEA was actively pursuing the policymakers on issues plaguing it. A letter has been sent to all policymakers of the government to no avail, the chairman. âA long term policy can only be the way forward, provided the government divides the textile sector in three major groups and assess their needs individually,â he declared.

He said all units exporting over 70 percent of their production should be declared Export Processing Units. This would enable them to import raw material at zero rating and bypass other social compliance issues. Similarly, he said, government should also allow zero rated import to apparel accessories. According to the chairman, effluent treatment plants should be planned and constructed at all major export oriented industrial clusters. Mr Khokhar also expressed concern over the governmentâs decision to reduce the R&D Fund for the apparel sector down to three per cent, despite the Minister of Textileâs assurances of the continuation of the six percent Fund. He said government should immediately announce an extension of the six percent R&D Fund for the next three years to allow exporters to finalise export strategies. 

http://www.dailytimes.com.pk/default.asp?page=2007\05\29\story_29-5-2007_pg5_1


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## Neo

*7.2 percent GDP growth, 6.7 percent inflation aimed at: NEC to finalise 2007-08 targets on May 31 *

ISLAMABAD (May 30 2007): The government has projected 7.2 percent GDP growth, 6.7 percent inflation, $8.1 billion current account deficit, and $17.7 billion foreign exchange reserves for the next fiscal year (2007-08), according to sources in Finance Ministry here on Tuesday.

All projected targets are to be finalised by the National Economic Council (NEC) in its meeting on May 31. Sources said that since the country had witnessed strong growth momentum during last four years, the prospects for sustained high economic growth in 2007-08 remain excellent.

"With evidence of a strong pick-up in domestic and foreign investments, and better performance in agriculture, manufacturing and services sectors, the real GDP growth for the year 2007-08 is targeted at 7.2 percent," they said.

The Planning Commission is of the opinion that 7.2 percent GDP growth target would be achieved through significant investment, both in public and private sectors and including foreign private investment.

The overall investment has been projected at 23.8 percent of the GDP, with private investment taking the lead, as public sector investment would mainly be on developing physical and scientific and technological infrastructure, sources said.

They said that emphasis in the development strategy for 2007-08 would be on achieving high value-addition in agriculture, including livestock and fisheries, and manufacturing, particularly engineering goods and services.

They said that national savings as ratio of GDP have been projected at 18.8 percent to reach the level of Rs 1,883 billion, and added that maintaining balance at the fiscal, monetary and external levels would be the underpinning factor of sustained macroeconomic stability during 2007-08.

*SAVINGS AND INVESTMENT* The Planning Commission has projected 2,384 billion investment during 2007-08 against Rs 2004 billion in 2006-07, an 18.9 percent increase, to achieve the targeted growth of 7.2 percent.

Fixed investment is expected to reach Rs 2,221 billion, reflecting an increase of 19.2 percent over the investment during current year. To support the higher growth in GDP, PSDP projection, excluding earthquake rehabilitation allocation, has been project to increase from 4.2 percent of GDP (Rs 365 billion) in 2006-07 to 4.8 percent of GDP (Rs 485 billion) for 2007-08, sources said.

As far as financing of the targeted investment is concerned, it has been projected that about 79 percent would be financed through national savings and 21 percent through foreign savings.

*BALANCE OF PAYMENTS *According to sources, during 2007-08, exports (fob) are projected to grow by 10 percent, to $18.9 billion, against $17.2 billion estimated for 2006-07.

Projections of exports would be based on assumptions, such as (i) an increase in exportable surplus through increase in agricultural production and manufacturing output, (ii) improvement in productivity of industrial workforce through technical education and on job training, (iii) greater market access through bilateral arrangements, preferential and free trade agreements with regional and other countries and (iv) improvement in the overall competitiveness of the external sector by enhancing value addition in the manufacturing sector.

Imports during 2007-08 have been projected to increase moderately by 9 percent, to $29.6 billion, from $27.1 billion in 2006-07, due to higher volume of import of food items, POL, edible oil and fertilisers. As a result, the trade account is projected to be in deficit by $10.6 billion in 2007-08, against the deficit of $9.9 billion estimated for in 2006-07.

Sources said that prospects for invisible balance would continue to be governed mainly by the behaviour of remittances during 2007-08, which have been projected at $5.8 billion, against expected level of $5.5 billion for 2006-07. Allowing for other invisible receipts and payments, the surplus on invisible account is anticipated at $2.5 billion, against a surplus of $2.8 billion estimated for 2006-07.

*CURRENT ACCOUNT BALANCE:* With a deficit of $10.6 billion on the trade account and a surplus of $2.5 billion on the invisible account, the current account deficit is estimated close to $8.1 billion in 2007-08, against $7.1 billion in 2006-07.

*CAPITAL ACCOUNT:* Gross disbursements are expected to be $3.2 billion in 2007-08, compared to $3.5 billion in 2006-07, largely due to decline in disbursements of commodity aid. After allowing for other capital movements, surplus of $3.1 billion is expected to occur in the overall balance in 2007-08, as compared to a surplus of $3.0 billion during 2006-07, according to sources.

However, taking into consideration transactions of the banking system and a buildup of $2.8 billion in foreign exchange reserves, the gross reserves are likely to reach the level of $17.7 billion in 2007-08, compared to a level of $14.5 billion in 2006-07.

FISCAL POLICY The main thrust of the fiscal policy during 2007-08 would be on strengthening reforms in the tax system and tax administration to further broaden the tax base at the federal, provincial and district levels, improve tax compliance, and minimise tax evasion.

The main objective of the policy would be to allocate adequate resources for development activities, particularly for pro-poor expenditure, in conformity with the Fiscal Responsibility and Debt Limitation Act, 2005, to achieve the projected economic growth of above 7 percent, and reduce further unemployment and poverty and improve social indicators.

MONETARY POLICY The monetary expansion for the year 2007-08 would be in line with the projected GDP growth of 7.2 percent, and CPI inflation at 6.7 percent. The State Bank of Pakistan would continue to follow the tight monetary policy to curb inflationary pressures.

Sources said that concentrated efforts would be made by the government to bring it down during the fiscal year 2007-08 and beyond, adding that reduction in the rate of inflation would be achieved by tight monetary policy and increased supply of essential items.

http://www.brecorder.com/index.php?id=570470&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Rs 520 billion PSDP, Rs one trillion revenue target finalised*

ISLAMABAD (May 30 2007): After several hours consultations in more than one meetings on budgetary targets, the government on Tuesday finalised Rs 520 billion Public Sector Development Programme (PSDP) and Rs 1 trillion revenue target for 2007-8.

These targets will be presented to the National Economic Committee (NEC) for its approval, scheduled to meet here on May 31. Prime minister, Shaukat Aziz, will chair the meeting. The government is still indecisive on the issue of increase in salaries/pensions of the government employees and relief to low-income group and these issues will now be decided by the NEC.

The Finance ministry has worked out different ratio with their overall impact on the next budget for increase in salaries/pensions of the government employees. It is also believed that the government will revise upward minimum wages for the public and private sector employees, besides announcing special measures for relief to the poor in the next budget. These measures will be presented to NEC for its approval.

An official privy to Tuesday's meeting decision told Business Recorder that next budget would be tax free as the government plans to increase tax base to achieve enhanced target and the same metrology will be presented in NEC meeting.

The Annual Plan Co-ordination Committee (APCC) had approved Rs 549 billion PSDP for the next fiscal year in its meeting early last week. However, its estimates were revised down after Finance ministry's strong opposition. The Finance ministry's officials had told a high level meeting chaired by the prime minister that major increase in PSDP size would widened current account deficit next year.

The government is facing huge current account deficit and it's a serious worry for its economic team. Even after unprecedented inflows of foreign direct investment (FDI) and remittances that will be around $12 billion by June 30, and using untraditional ways such as global bond issue, it is yet to plug the current account deficit.

http://www.brecorder.com/index.php?id=570465&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Iran hopes to finalise IPI gas deal in June *

TEHRAN (May 30 2007): Iran said on Tuesday it hopes to sign a final deal next month for a $7 billion pipeline that transfers natural gas to India through Pakistan, Iranian media reported. The three countries agreed over the price formula for the pipeline in January and a new round of negotiations started in Tehran on Sunday.

"We hope that in this meeting we would be able to prepare the ground to finalise the deal on June 30," senior Iranian energy official Hojatollah Ghanimifard was quoted as saying by the ISNA news agency.

He did not say which issues remained to be settled. The pipeline, known as the "peace pipeline", aims to feed the growing energy needs of the subcontinent but has made slow progress due to political tensions between India and Pakistan and differences between New Delhi and Tehran over the latter's controversial nuclear programme.

Washington accuses Tehran of using its nuclear programme as a cover to build atomic weapons and has repeatedly sought to discourage India from the project. Iran denies the charges. "For carrying out and making this project a reality, India would in no way be influenced by other countries including America," Iranian news agencies quoted India's representative at the talks, S Sunderashan, as saying.

Iran sits atop the world's second-largest gas reserves after Russia. But sanctions, politics and construction delays have slowed its gas development and analysts say it is unlikely to become a major exporter for a decade. Apart from the pipeline, New Delhi is also negotiating with Iran to secure a deal that would see Tehran supply 5 million tonnes of liquefied natural gas a year over a 25-year-period from 2009.

http://www.brecorder.com/index.php?id=570511&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*EU willing to enhance further trade ties: Kasuri *

ISLAMABAD (May 30 2007): Foreign Minister Khurshid M. Kasuri met with EU Commissioner for External Relations Ms Benita Ferrero-Waldner and discussed increased trade co-operation. During the meeting at the sidelines of the Asia and Europe Meeting (ASEM) conference in Hamburg Kasuri said the EU is the biggest export market for Pakistan, and there is a lot of investments from the EU into Pakistan.

A message from Hamburg said. Kasuri said that Pakistan wants to enhance its trade with EU and start negotiations on the Free Trade Agreement. He emphasised the need for a level-playing field in trade for Pakistan.

The EU commissioner said that EU wants to further enhance its relations with Pakistan and increase its financial support for Pakistan. She said the EU intends a serious dialogue with Pakistan regarding trade and as a first step a meeting of the sub-group on trade will be held during the current year between Pakistan and EU. Ms Waldner expressed the hope that it will open more avenues for further co-operation. She said that Pakistan was playing an important role in the fight against terrorism.

She emphasised the need for more co-operation between Pakistan and Afghanistan, and thanked Pakistan for its efforts to host a regional conference on Afghanistan. She said the EU will provide more development aid for NWFP and Balochistan as part of the over all development assistance.

Kasuri briefed the EU commissioner about the progress on composite dialogue between India and Pakistan, saying both the countries are committed to resolving all outstanding issues, including Kashmir.

Ms Waldner hoped that a constructive approach in the dialogue will help achieve peace in the region. She also noted Pakistan's role in inviting the EU as an observer of Saarc during 2006 Summit in India. The foreign minister appreciated the assistance provided by the EU for the rehabilitation of victims of October 2005 earthquake in northern Pakistan.

Apprising the EU commissioner on the progress of rehabilitation of earthquake victims, he said the former UN secretary-general Kofi Annan has appreciated efforts of the government of Pakistan to rehabilitate the earthquake survivors and has termed this as the best possible management of a natural catastrophe in the world.

http://www.brecorder.com/index.php?id=570580&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pakistan needs to harmonise products quality *

KARACHI (May 30 2007): Institutional capacities for certification and inspection need to be strengthened to meet the WTO Technical Barriers to Trade (TBT) and Sanitary and Phystosanitary (SPS) challenges. This is one of the several recommendations made by the two-day '2007 US-Pakistan Standards and Conformity Assessment' workshop held in Lahore on May 24 and 25.

The workshop was organised by Pakistan Standards and Quality Control Authority in collaboration with National Institute of Standards and Technology (NIST), USA. According to recommendations available to Business Recorder here on Tuesday, emphasis was laid on building up strong confidence between industries and government. Sectoral industrial committees, consisting of industrialists, academics and government officials may be set up which should regularly discuss industrial issues and future directions of industrial and export promotion and recommend, to the government, proactive measures to be globally competitive.

Further, the harmonisation, technical equivalence with trading practices including recognition of the private standards (notably in the EU, US & Japan, and China) need to be achieved. Level of flexibility and policy space should be allowed at national level for adjustments to private standards and the specific procedural requirements on private standards like Good Agriculture (GAP) and Hazard Analysis & Critical Control Point (HACCP). Bench-making should be provided to the stake holders through National Enquiry Point (NEP).

The national experience with the development of 'quality systems' for exportable horticultural products needs to be highlighted in all available mass/print and electronic media. Clear understanding that national GAPs are primarily designed for small and medium sized producers/exporters, and their requirements, need to be integrated.

The workshop recommended that national conditions need to be reflected in standardisation process at all levels, and importance of extension services for meeting GAP/HACCP requirements need to be emphasised upon the stakeholders. Government role in national GAPP development and implementation may play a proactive role in this regard.

Workshop participants thought that supportive role of bilateral donors and international institutions through MOUs/MRAs was the need of the day. To meet the requirements of WTO, Pakistan needs to harmonise quality of its products to internationally accepted standards and practices. It was desired to update food laws to bring them in line with Codex Alimentarius Commission guidelines with HACCP integrating private standards in principles with GAP which are widely accepted and are risk-based (preventive) instead of reactive standards.

Standardisation be guided towards supply chain management. Importing countries as well as buyers demanded that exporting countries should carry certification marks in areas of food safety and food hygiene. Therefore, there is need to engage proactively in this area. Quality testing and referral laboratories need to be established and services be integrated through one-window certification. Since the current food legislation and regulations do not meet the present-day requirements, there must be objective review so as to harmonise these Codex Standards and other international standards.

Pakistan being a signatory of WTO has to apply the agreements on TBT and SPS to develop modern food control and safety programmes to assure consumer protection, facilitate international food trade and promote economic growth.

It was, therefore, considered necessary that Pakistan Standards & Quality Control Authority (PSQCA) should establish a dedicated WTO Cell, led by an expert. Mutual coordination with National Institute of Standards and Technology (NIST) US, for human resource development, infrastructure development such as certification, labs upgrade and equipment need to be worked out.

Human Resource Development (HRD) and institutional capacity in risk analysis and risk management need to be developed. Formal and international recognition of the labs, through accreditation and conformity assessment procedures needs to be accelerated and supported, and facilitation of bilateral and multilateral trade, through equivalence arrangements need to be fostered.

Regulatory inspection and certification authorities should have well-defined and transparent operation which will give credibility to the system. Local standards must be harmonised with PSQCA which are mostly based on Codex Alimentarius Standards.

The workshop recommended that a national food safety and veterinary public health authority, as recommended by the World Bank, be established; early warning system based on 'Food Safety Alert' be institutionalised; and Pakistan should participate proactively in standardisation process ie, Codex, IPPC and OIE.

The workshop also made recommendations in the field of electro-technical/electronic product standards & conformity assessment procedures, information technology, and steel and surgical instruments, standards & conformity assessment procedures.

The workshop recommended that efforts are required in creating a database of Manufacturer's Testing Laboratories, especially of those who are engaged in exports and products approved by international testing laboratories and certification bodies, such as UL, KEMA, TUV and VDE, etc. If a national certification body is created, it can affiliate itself with accredited testing laboratories, such as PSB labs of Thailand, TSE of Turkey, SABS of South Africa, or such other willing laboratories.

Encourage and facilitate internationally recognised organisations in Pakistan eg American Association of Textile Chemist & Colorists (AATCC), and American Society for Testing & Materials (ASTM). In the case of steel & surgical instruments, although Pakistan has adopted/developed sizeable number of standards, a lot of work has yet to be done to cover the standards for whole range of plain carbon, low alloy & high alloy steels.

For economic growth of a country it is always per capita consumption of steel which determines its economic development which is too low in case of Pakistan and needs to be enhanced through expansion and modernisation of steel plants in the country to increase domestic share against future growths/demands and bid sharing demands in adjoining overseas markets. For expansion and modernisation of steel plants in the country joint collaboration/assistance programmes needs to be chalked out for implementation between Pakistani steel producers and their counterparts in United States.

http://www.brecorder.com/index.php?id=570582&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Nera selected to link Northern Areas with rest of Pakistan *

RAWALPINDI (May 30 2007): Special Communication Organisation (SCO) has selected M/s Nera to provide Terrestrial Microwave based turnkey solution for linking Northern Areas with rest of Pakistan. The agreement was signed between SCO and M/s. Nera on Tuesday at SCO HQ Rawalpindi.

The project is expected to be completed within 9 months period. The completion of the terrestrial microwave link project will contribute significantly in enhancement of backhaul connectivity of Northern Areas with rest of Pakistan.

http://www.brecorder.com/index.php?id=570563&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*$300 million investment in hotel industry for Karachi offered *

KARACHI (May 30 2007): A noted company has shown interest for making a 300 million dollar investment in hotel Industry in Karachi. A delegation of company led by Chief Executive Hasan Fareed Khan and accompanied by Provincial Advisor Fakir Jadim Mangrio, met City Nazim Syed Mustafa Kamal here on Tuesday.

The delegation informed that the company is working in Britain but has an office in Dubai to facilitate their operation in the region and has decided to construct a 5-Star hotel in Karachi.

The delegation said development of Karachi has greatly pleased them and with improved law and order situation here, there will be no problem in making investment here. Mustafa Kamal informed that for the first time mega projects were launched in Karachi and development activities were progressing at a fast pace.

He pointed out that this city is the regional economic hub where present government with special focus is laying modern infrastructure of international standard with Rs 35 billion schemes being executed at present.

He said special incentives are being provided to businessmen, industrialists and investors while infrastructure development works costing Rs 4 billion were being implemented in industrial areas to facilitate the local industries.

Pointing out that these works will start completing by June end, Mustafa Kamal said these measures have provided vast investment opportunities and world fame companies have entered into private public partnership with City Government. He said so far, investment amounting to 1.2 billion dollars has been made.

He informed that work on elevated expressway is going to start soon and noted Malaysian firm has set up its offices in Karachi while Site offices also established. He said work on IT Tower and Mass Transit system will also commence soon. Mustafa Kamal said besides investment, the revenues of city government, too, will grow.

He told the delegation that city government will provide land for investment and all assistance to investors and protection to their investment. Talking to media along with Fakir Jadim Mangrio, the company's CEO Hasan Fareed said that western media had carried out negative propaganda against Karachi contrary to conditions, which actually exist. He said his company has decided to initially make an investment of 300 million dollars and more investment later.

He described his talks with Nazim Karachi very positive and said the work on partnership with the city government will start after site inspection.

http://www.brecorder.com/index.php?id=570537&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*SBP group to look into mega project financing *

KARACHI: The State Bank of Pakistan has constituted a working group to finance independent power and communication projects. 

The working group comprises senior bankers of the central bank and commercial banks.

At present, the banks are looking at portfolios of these projects for providing financing for local and foreign currency components.

The banking community expects that there would be substantial flow of liquity into this sector.

Sources at the central bank said that Governor Dr. Shamshad Akhtar has suggested to commercial banks to give their recommendations concerning financial market strategy to the SBPâs concerned department.

Sources said bankers have conveyed to the governor that in order to meet the financing requirements of these mega projects, banks need to develop local and foreign currency products for infrastructure which could meet financial requirements of infrastructure development projects over a period of 15-20 years. 

They said that banks need to change traditional focus on providing short-term financing to provision of long-term debt and introduction of more foreign currency hedging products.

Sources said the governor has assured the top bankers that the task of designing policy, regulatory framework, structure of financing, and risk assessment has already been assigned to the working group. Its report will address most of the issues.

She exhorted the banks to ensure credit availability to private sector in long-term financing.

She suggested that banks should also play their role in developing fixed income securities market in the country. 

She indicated that banks could issue instruments for long-term investment to attract public savings as was being done by SBP and the government through PIBs. 

She said that public confidence in banks would facilitate public investment in fixed income avenues.

Sources said that in reply to the governorâs suggestions, the bankers said: âIn the wake of high rates offered by National Savings Scheme, it is difficult to offer products at competitive rates.â

However, the governor urged the bankers to design comparable products and look for avenues to make bank rate of return competitive with National Saving Schemes.

http://www.thenews.com.pk/daily_detail.asp?id=58197


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## Neo

*Rs10,000 minimum pay demanded *

KARACHI: Top trade union activists of Karachi have urged the government to fix the minimum salary of unskilled workforce at Rs10,000 per month in the coming federal budget.

Addressing a pre-budget seminar organised by the National Labour Federation (NLF) at the Karachi Arts Council on Tuesday, Vice President All Pakistan Trade Union Federation, Habibuddin Junaidi, said present minimum salary of an unskilled worker at Rs4,000 could not even meet the expenses of kitchen of a seven-member family.

âWe need to present our recommendations to the government for the coming budget, irrespective of the fact whether these have any impact on the government or not,â Junaidi said.

He said the present regime had transformed the country into a âstate of elite classâ. The government was using its resources for providing benefits to the privileged class, whereas more than 50 per cent of the population lived below the poverty line who could not afford two square meals a day.

âThese rulers are neither progressive nor religious, but their own interests are important for them,â he said.

He said the government had created an executive class in almost all the organisations and that class could get salary raise of any amount. âThey are hired at Rs5 million or even higher than that. âThe president of a bank announced a reward for himself of Rs10m, whereas some workers in the same organisation get small salaries in the range of Rs4,000 to Rs4,500,â Junaidi said. The trade union activist said contractual workers were the most suppressed class in the country and demanded that all the contractual employees should be granted permanent jobs. He also demanded 100pc increase in the salaries of employees of public and semi-public organisations.

Amir of Jamaat-e-Islami Karachi, Dr Mairaj-ul-Huda Siddiqui, in his speech, said the prime minister was claiming seven per cent growth while the middle class was taking its last breath due to wrong policies of the government.

âI donât expect the government to listen to our proposals as wheat could not be grown on a cactus tree,â he commented.

Dr Siddiqui said there was so much poverty in the country that people were selling their kidneys for survival. He said workers were being forced to work for 12 hours a day and they were not allowed any leave in a week. âWorkers are being made slaves through imperialist tactics,â he added.

He said there existed unity amongst military, feudal and industrialist classes and common people needed to create unity among themselves for their own sake.

President NLF Karachi, Rafique Ahmed, said billions of rupees in Workersâ Welfare Fund should be utilised for the welfare of workers. He said the government should provide relief to the labour class so that they could survive in the present high-inflation environment.

Shaikh Majeed said the government had signed agreements with multinational companies on blocking trade union activities in the country. He demanded that IRO 2002 should be withdrawn for the welfare of workers.

http://www.thenews.com.pk/daily_detail.asp?id=58199


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## Neo

May 30, 2007 
*Profit outflows reach $504m: Liberal repatriation policy*

KARACHI, May 29: The negative side of the record foreign investments into the country could start haunting the nation as the outflows in the form of profits and dividends have sharply increased, which may reach $800 million by end of the fiscal.

The governmentâs liberal policy, which allows the investors to take away 100 per cent profits and investments whenever they want, might not be suitable for the country in the longer run.

The new data issued by the State Bank, which reveals more transparency about the economic activity, showed that during the last ten months â July-April 2006-07 â profits and dividend outflows amounted to $655 million. This was much higher than the total outflow $504 million in 2005 06.

It has been a point of satisfaction for the government that huge foreign investments helped it to meet the unexpectedly widening trade gap and current account deficit. During the last ten months of the current year, the country received record $6 billion, while an additional $1 billion is expected till the end of the current fiscal.

Analysts said the foreign investment brought economic growth, while the outflow of foreign exchange was the cost of the economic growth, which every country has to pay.

However, they were not ready to accept that a situation like - Far Eastern economic crisis in 1990s - would happen again that could put Pakistan in trouble.

In 1990s the economic crisis led to massive outflows of foreign investments, which eventually resulted in the collapse of the economies like those of South Korea and Thailand. In those days Pakistan had negligible foreign investments and economists termed the situation a âblessing in disguiseâ for Pakistan.

Analysts believe that foreign investment could not be attracted without giving complete autonomy for investment and disinvestment and the risk involved in it is a âmustâ for doing such business.

Others, who differ with the idea of unchecked foreign investment, said there should be some tools to keep monitoring foreign investment as the threat of disinvestment is always there.

âWe are the nation of a hot region. Any imbalance in politics of the region could imbalance the economy of the country, which should be discussed at the highest level to prepare a strategy as long-term planning,â suggested an analyst.

Highest outflow in terms of profit and dividend during the ten months was recorded in the power sector where the outflows amounted to $118.3 million during the ten months.

The telecommunications sector was another major sector, which witnessed a steep rise in outflow of dollars. The telecommunications sector sent $107 million abroad during the same period. Previous year, the sectorâs outflow was just $17 million.

Other sectors recorded outflow of $92 million from financial business, petroleum refining $48.7 million, pharmaceuticals $48.2 million, chemicals $42.7 million, oil and gas exploration $35.1 million, food $32 million and trade $26.3 million.

http://www.dawn.com/2007/05/30/ebr1.htm


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## Neo

Wednesday, May 30, 2007 
*Agribusiness project for Pakistan: 705 projects to be completed*

* 12,500 farmers skills to be utilised
* 100 business development support companies soon

By Razi Syed

KARACHI: Agribusiness project is expected to lead to the development of 705 agriculture business enterprises in the country by forming 1,250 farmers&#8217; groups involving 12,500 farmers.

Chairman Fruit and Vegetable Processors and Exporters Association (FVPEA) and Sindh director for Agribusiness Support Fund (ASF) Appraisal Committee, Mateen Siddiqui stated this on Tuesday. 

He said the project would also build 100 business development support companies and 30 research and extension service provider companies.

It was also supporting 10,000 agriculture business enterprises backed with a strong human resource component.

An Agribusiness Support Fund (ASF) a non-profit company has been established under which about 2,000 agro-enterprises are expected to benefit over the five years of the project&#8217;s life, he added.

Agriculture sector in Pakistan is still facing many serious challenges and constraints for future growth. These challenges are embedded in the rising demand for agricultural products with the growth of population and incomes and the expanding role of free and competitive markets in agriculture trade at the national and international levels.

The project envisages a comprehensive and systemic approach to remove developmental constraints for agribusiness development in Pakistan, namely poor infrastructure, limited access to appropriate technology packages, lack of financial and capacity services required for agriculture enterprises and absence of proper processing and quality control mechanisms for value added exports of agricultural products, he added.

Through project interventions, Pakistan would be able to tap growth opportunities provided by regional and international markets with the implementation of trade regimes of WTO and SAFTA. 

ASF Appraisal Committee has started supporting fruit and vegetable exporters to comply with the Euro-Retailer Produce Working Group, Good Agricultural Practices (EUREPGAP) and ISO certification requirements besides grant them funds for produce quality promotion, Mr Siddiqui added.

ASF is shouldering 50 percent of the expenses of farmer and exporters to acquire certification in order to enable them to compete in the international market.

He said ASF is an independent body with five directors from private sector, one each from four provinces and a banker, work with four directors appointed from the public sector for the promotion of exports and production of fruits, vegetable and dates. 

According to official sources, Ministry of Food, Agriculture and Livestock (MINFAL) with the support of Asian Development Bank has launched a Programme Agribusiness Project for the improvement of horticulture and livestock related businesses in the country. The cost of the project estimated at Rs 4.1 billion.

Three main donors, ADB, FAO and UN through WFP window, primarily support the agriculture sector in Pakistan. ADB is providing development assistance through two main project portfolios, Agriculture Sector Program Loan-II and Agribusiness Development Project.

ASPL-II program, which is worth $350 million, started operating in early 2004. The program is designed to assist government in addressing key constraints in agriculture sector regarding productivity and profitability with a deliberate emphasis on the development of small agriculture. The five-year umbrella program would accelerate agricultural growth and rural employment, and reduce poverty level. Specific reform measures incorporated in the program include, to promote efficient markets for the major agricultural commodities including wheat, cotton, rice, sugarcane, fertiliser and seed, and to strengthen support services of research and extension especially for small farmers and regulation to improve quality control.

http://www.dailytimes.com.pk/default.asp?page=2007\05\30\story_30-5-2007_pg5_6


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## Neo

*MWH to Provide Construction Management Services for Hydropower Project in Pakistan *

Rapid Economic Growth Drives Demand for New Facility, Part of 25-Year Plan
to Meet Increasing Demand for Energy
Water and Power Development Authority (WAPDA) to
provide construction management and contract administration services on the
Jinnah Hydropower Project (JHPP) through a joint venture with local
engineering companies. The project, which broke ground in December 2006,
and is scheduled to be completed 

CHICAGO, May 30 /PRNewswire/ -- MWH, a global provider of environmental
engineering, construction and strategic consulting services, has been
selected by the Pakistan by the end of 2010, is part of a 25-year
master plan to meet increasing energy demand being driven by rapid economic
growth in Pakistan.

In its role on the project, MWH will complete a detailed review of the
JHPP engineering design and oversee procurement, construction, programming
and quality assurance procedures. This includes quality control testing of
construction materials and the final structures and components. In
addition, MWH will monitor design and construction procedures to ensure
they are completed correctly and comply with project specifications and
local laws.

"MWH has a long history of working in Pakistan and with WAPDA," said
Alan Krause, president of the Natural Resources, Infrastructure and
Industry unit of MWH. "Working in strategic roles by contributing our
technical expertise to hydropower projects, such as the Jinnah project, is
among the things that MWH does best. We're pleased to have been selected
and look forward to working with WAPDA to meet the engineering needs of
this project."

Located in the Punjab province, 234 kilometers southeast of Islamabad,
the main components of the JHPP include a headrace channel; a powerhouse
that houses eight low head pit turbines each producing 12 megawatts of
power for a total of 96 megawatts; a tailrace channel; a 132 kilovolt
double circuit transmission line; and a 132 kilovolt switchyard. The annual
688 million kilowatt-hours of energy the hydropower facility is expected to
produce will be transported along a five kilometer transmission line to
provide power to the national electric grid system.

The project is being implemented under an EPC (engineer, procure,
construct) contract awarded by WAPDA to Dongfang Electric Corporation, a
Chinese contractor, for a total project cost of US $128 million.

*MWH's Work History in Pakistan*

MWH has been a general consultant to Pakistan since 1959 and has
carried out a variety of assignments in the development of water, land and
energy resources during the past 25 years. In 1978, MWH was awarded a
special medal by WAPDA, the first ever awarded to a consulting firm, in
recognition of services to the country.

As general consultants, MWH assisted WAPDA with the engineering review
and construction oversight of the Indus Water Treaty works, one of the
largest water transfer projects ever undertaken. The project was the result
of a settlement between India and Pakistan that required Pakistan's three
western rivers to be brought under control and their flows partially
diverted to supply extensive irrigation systems previously fed by rivers
that flow out of India. Accomplishing this replacement of flows required
the construction of two major dams, five new barrages, a gated siphon, and
eight new inner-river link canals. The total project cost was approximately
US $2.25 billion.

In 2005, MWH served as consultants on the Ghazi Barotha hydroelectric
project in the Northwest Frontier province of Pakistan. The US $2.25
billion project has a maximum capacity of 1450 megawatts and was
successfully commissioned last year.

MWH has an office in Lahore, Pakistan and maintains project offices in
various parts of the country.

* MWH's Dam and Hydropower Services*

MWH has been providing engineering services to the dam and hydropower
sector since 1920 and is currently working on numerous dam and hydropower
projects throughout North and South America, Europe, Asia and Africa. MWH
has played a key role in some of the largest dam and hydropower projects in
the world, including the Three Gorges Dam in China, Ghazi Barotha
Hydroelectric Scheme in Pakistan, Mohale Dam in Lesotho, Tekeze Dam in
Ethiopia, Caruachi Hydroelectric Project in Venezuela and Karahnjukar
Hydroelectric Project in Iceland.

*About MWH*

Headquartered in Broomfield, Colo., MWH is a private, employee-owned
firm with more than 6,000 team members worldwide. The company provides
water, wastewater, energy, natural resource, program management, consulting
and construction services to industrial, municipal and government clients
in the Americas, Europe, Middle East, India, Asia and the Pacific Rim. For
more information about MWH, please visit the company's Web site at
http://www.mwhglobal.com.

http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/05-30-2007/0004598393&EDATE=


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## Neo

*Rs 724 billion development outlay proposed *

ISLAMABAD (May 31 2007): The Planning Commission has proposed total development outlay of Rs 724 billion for the next fiscal year which also would include Rs 35 billion for reconstruction of earthquake affected areas, and Rs 204 billion outside PSDP.

According to an official document available to Business Recorder, the Planning Commission has proposed Rs 335 billion for federal PSDP, including Rs 228 billion for federal ministries, Rs 21 billion for special areas, Rs 37 billion for special programs and Rs 49 billion for corporations, while operational shortfall is expected to be Rs 35 billion. Provinces would get Rs 150 billion from federal PSDP outlay.

The Planning Commission has planned to spend Rs 162.7 billion on infrastructure (48.6 percent from Rs 335 federal PSDP, followed by Rs 159.5 billion (47.6 percent) and others Rs 12.9 billion (3.8 percent).

In addition, public sector corporations are likely to invest about Rs 204 billion, of which Wapda would spend Rs 73 billion on power sector, Rs 73 billion by SSGC, SNGPL and OGDCL, Rs 42 billion by CAA, PIA, PNSC and PQA etc, while Rs 16 billion would be spent on Utility Stores Corporation and Capital Development Authority (CDA).

The Planning Commission is of the view that the water sector continues to receive government attention as highest allocation of Rs 74 billion has been proposed, against Rs 50 billion during 2006-07. The proposed allocation comes to 22 percent of total federal programme, showing 48 percent increase over current year. This would help reduce poverty, accelerate agricultural growth and create construction-related additional jobs.

A major investment of Rs 20 billion is programmed for completion of Mangla dam raising project, which would make available additional 2.88 MAF water to increase agricultural productivity. The National Highway Authority (NHA) may be allocated Rs 29 billion. They have also been advised to raise at least Rs 6 billion through toll receipts and other revenues, to complete the development projects in time.

The total NHA outlay of Rs 35 billion during 2007-08 would facilitate speedy completion of projects. The Islamabad-Peshawar Highway would be completed by September 2007 as federal government has earmarked an additional amount of Rs 5 billion for this purpose.

For mega dams and related infrastructure, a substantial investment of Rs 40 billion is being made during 2007-08. Likewise, to commence work on Neelum- Jhelum Project, Wapda has been advised to arrange resources either through bonds or supplier credit outside PSDP arrangements.

The committee under the chairmanship of Advisor to Prime Minister is working to find innovative financing mechanism outside budget for these projects. Rs 5 billion have been released from the budget during 2006-07 to Neelum -Jhelum Hydero Project.

Allocations for education and training have been increased by 17 percent to ensure availability of qualified human resource to match the highly competitive world market.

The allocation for the health sector has been increased by 33 percent from Rs 12 billion to Rs 16 billion, reflecting continuous emphasis on improving the productivity of human capital and general quality of life. Allocations for special areas (AJK, NA & FATA) have been enhanced by 20 percent with a view to accelerating development in less developed areas.

In order to alleviate poverty, generate employment and undertake quick maturing projects, Rs 34.4 billion would be spent under Khushhal Pakistan Programme with the involvement of provincial and district governments. An investment of at least Rs 6.5 billion will be made during the next financial year to provide safe drinking water down to the union council level.

An amount of Rs 500 million has been allocated for dairy industries during 2007-08. In order to enhance competitiveness and quality of industrial products, a number of projects in the areas of ceramic development, glass production, foundry services, gem & jewellery and marble and granite are being started with involvement of private sector during the next year at a total cost of Rs 3.6 billion.

An amount of Rs 500 million has been proposed during 2007-08 for export promotion plan/measures. For textile sector, three garment cities at Karachi, Lahore and Faisalabad would be set up at a cost of Rs 3.3 billion.

Official sources said that Planning Commission has asked the National Economic Council (NEC) to authorise it to make adjustments, if needed, within the same size of the programme, to accommodate important projects on the basis of quarterly reviews.

They said that NEC would also advise Finance Ministry to place development funds allocated and readjusted as a result of quarterly reviews at the disposal of Planning Commission and expeditiously release funds to the executing agencies to ensure timely completion of projects without delays and cost over-runs.

http://www.brecorder.com/index.php?id=570857&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Growth in 2006-07 GDP: Planning Commission contests Prime Minister's claim *

ISLAMABAD (May 31 2007): The Planning Commission has contradicted Prime Minister Shaukat Aziz's claim of 7.02 percent growth in Gross Domestic Product (GDP) in the current fiscal year (2006-07), saying that the growth would be 7 percent, official sources told Business Recorder.

They said that six sectors ie minor crops, livestock, forestry, large scale manufacturing, transport, storage and communical and wholesale and retail trade had missed their targets. There has also been decline in the output of electric transformers, cotton cloth, paper and paperboard, nitrogenous fertilisers and cigarettes.

For 2007-08, the government has set 4.5 percent growth target for major crops, against 4.3 percent during the outgoing fiscal year, 2.3 percent for minor crops, 5.7 percent for livestock, 4.2 percent for fisheries and 3.5 percent for forestry.

There is no change in targets for minor crops and forestry, as both commodities did not show any noticeable growth in 2006-07. In the industrial sector, growth target for mining and quarrying has been fixed at 4.5 percent, as compared 3.6 per cent in 2006-07. However, this sector is expected to show 5.6 percent growth.

Sources said that the government is projecting 12.5 percent growth in large-scale manufacturing in 2007-08, 0.5 percent less than the target of current fiscal year.

The growth target for small and household industries is projected at 7.5 percent, against 7.4 per cent in 2006-07, while the target for slaughtering would be 5 percent.

The Planning Commission has estimated 8 percent growth for construction industry, against 7 percent in 2006-07, as this sector is expected to touch 17.2 percent growth. Electricity, gas and water supply have also been projected to grow by 3 percent in 2007-08, against 3.5 percent in 2006-07.

In services sector, the growth target for transport and storage has been projected at 5.9 percent, 7.8 percent in wholesale and real estate, 15 percent in finance/insurance, ownership of dwellings 4 percent, public administration and defence 4 percent and social community 5 percent. The Planning Commission expects 21.4 percent increase in total investment, to Rs 2004 billion (23 percent of GDP), and in fixed investment by 21.9 percent to Rs 1864 billion (21.4 percent of GDP).

The confidence of foreign investors has visibly improved as non-debt creating capital flows touched $5.3 billion in ten months of the current fiscal year. Foreign direct investment (FDI) in this period has risen from $485 million in 2001-02 to $4.2 billion in 2006-07, and portfolio investment has reached the $1.8 billion mark.

According to Planning Commission, the economy has also witnessed a sharp rise in the workers' remittances, which increased to $4.5 billion during July-April 2006-07 and, by the end of the current fiscal year, are expected to reach $5.5 billion. The Planning Commission has also claimed that unemployment rate had declined from the high level of 8.3 percent in 2001-02 to 6.2 percent in 2005-06.

Poverty, measured on head count basis, which was 34.4 per cent in 2001, came down to 23.9 percent in 2004-05 as the trend in rural areas is more pronounced than in urban areas.

http://www.brecorder.com/index.php?id=570854&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pakistan graduating to middle and higher income economies: minister *

ISLAMABAD (May 31 2007): The Asian economies, including Pakistan, are steadily growing from low income to middle and higher income economies said Hina Rabbani Khar, Minister of State for Economic Affairs. She stated this while speaking at 32nd annual meeting of IDB Board of Governors (BoGs) started in Dakar Senegal on May 29,says a message received here on Wednesday.

In her capacity as IDB Governor for Pakistan, she is representing Pakistan at the meeting. Hina Rabbani Khar also had the honour to represent the Asian Group of Countries during the inaugural session of the meeting. Speaking on behalf of the member Asian Countries, Hina Rabbani Khar said Asian economies, including Pakistan are steadily graduating from low income to middle and higher income economies.

While emphasising the need of collective action, she said "Asia reflects the challenge that world faces today. She said as President Musharraf reflects - "we collectively bear the responsibility, within countries that have not been able to eliminate the curse of poverty within regions and as comity of nations within the world - especially the Islamic World."

She also highlighted that trade and investment rather than aid can help us achieve the economic development. She appreciated the establishment of the International Islamic Trade Finance Corporation (ITFC) within the IDB Group that will help boost the intra-trade amongst OIC member countries.

Launching ceremony of Poverty Alleviation Fund within the IDB Group also took place after the inaugural session. The fund aims at combating poverty, unemployment, illiteracy and diseases such as tuberculosis and malaria in the OIC member countries.

During the launching session, the member countries were invited to announce their contributions to the fund. The minister announced a contribution of 10 million dollar to the fund on behalf of Government of Pakistan. Earlier, the Minister while addressing the working sessions commended the recent initiatives taken by IDB for human development in the member countries.

"The increase in allocation for health and education to 25 percent of IDB's active portfolio is appreciable, however, more needs to be done, "if the member countries have to come at par with the developed nations of the world."

While stressing the need for focused interventions in the social sector, she said, "Poverty alleviation, greater education, better health and assured social justice can become pillars of our future growth." Hina briefed the session on the different initiatives undertaken by the Government of Pakistan in the field of human development and poverty alleviation.

The minister said, "Sound economic growth of nearly 7 percent over the past four years underpinned by Government's strong and stable economic policies have led to reduce unemployment - falling from 8.3 percent in 2001 to 6.5 percent in 2006.

"High GDP growth, decline in unemployment and higher spending on poverty reduction projects have contributed to 10.6 percent decline in absolute poverty and the poverty head count which was 34.4 percent in 2001 has come down to 23.9 percent," she added.

The Minister felicitated the IDB management for the high ratings achieved by the Bank from Moody's and Standards and Poors. The Minister also congratulated the fellow governors on the observer status accorded very recently to IDB at UN General Assembly.

The annual meeting will last for two days ie May 29 to 30. Annual meetings of other entities of IDB Group ie ICD (Islamic Corporation for Development of Private Sector), ICIEC (Islamic Corporation for Insurance of Investment and Export Credit) and ITFC (International Islamic Trade Finance Corporation) will also take place during the annual meeting.

http://www.brecorder.com/index.php?id=570953&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*FTA with Malaysia likely in two months: Humayun *

ISLAMABAD (May 31 2007): Commerce Minister Humayun Akhtar Khan has said that Pakistan-Malaysia Free Trade Agreement (FTA) was expected to be signed within two months as the two sides had concluded the negotiations on all technical aspects.

Speaking at a news conference here on Wednesday, he said that Pak-EU Sub-Group on Trade will monitor the impact of EU's trade policies in the region on Pakistan's preferential access to EU markets and will identify possible options for improvement in bilateral trade. The minister denied that the EU had linked the market access to Pakistan with the doffing of President General Pervez Musharraf's uniform.

"As far as I am concerned, the EU has never raised this point in trade negotiations," he said. Responding to another question on President's uniform, he said that foreign office would be in a better position to answer this question. The minister said both Pakistan and EU also agreed that Sub-Group on Trade should meet in autumn this year with a view to initiating a study in consultation with Pakistan on the impact of EU trade policies in South Asia especially its trade relations with least developed countries (LDCs) in the region. In reply to a question, he said he was hopeful that major economic blocs of the WTO would shortly sign Doha Development agenda, adding for the first time in the last five years, the momentum is high in different capitals of the developed countries.

Negotiations on the Pak-Malaysia FTA were successfully concluded at Kuala Lumpur on May 24. The initiatives include trade in goods and services. Besides this, the FTA would also focus on investment and economic co-operation, he said.

Under the agreement, Pakistan would reduce special duty on palm oil, which is Rs 9,000 per metric ton, by 15 percent from January 2008, said an official. He said that Pakistan would reduce this duty by around two percent every year.

According to documents distributed to media, for trade in goods, the package with Malaysia was successfully negotiated to achieve objectives of trade liberalisation while giving due protection to the local industry. Pakistan, the minister said, has undertaken to eliminate/reduce tariff mostly to raw materials and Malaysia will provide market access to our textiles, bed linen, other home textiles, kino, and prepared foods, etc.

The manufacturing sectors of Pakistan will now be able to source raw materials and intermediary goods from China as well as Malaysia at preferential or zero duty, Humayun said, adding this will address the issue of trade diversion and help in global competitiveness of Pak exports.

For trade in services, Malaysia has provided market access to various sectors, including Islamic banking and Takaful, said Humayun, adding these concessions have not been extended by Malaysia to any other country. The limit of aggregated foreign equity participation in the Malaysian domestic financial institutions has been increased from 30 percent to 49 percent. This facilitation will also qualify Pakistani financial institutions to conduct full range of Takaful business in international currencies without any limit, he said.

This landmark agreement will be the first between two OIC member countries and will serve as a precedent for reaching many such agreements in future between Muslim countries. Malaysia is an important member country of Asean and this agreement will provide Pakistan a firm foothold in the vibrant and growing economies of East Asia, the minister said.

Humayun said that Asean and China have already concluded the FTA. The Asean member countries are in the process of reducing or eliminating tariff for import from China. The Pakistani exports, which are already facing tariff barriers in Malaysia due to the Asean FTA, would have been even more adversely affected by 2012, when tariffs are to be eliminated on textile imports from China by Malaysia, he said. The Pak-Malaysia FTA is a timely move. With the signing of FTA with Malaysia, the Pakistani exports would not be adversely affected, he remarked.

The minister said that Pakistani exports suffer due to certain policies of the EU with LDCs and Bangladesh, Maldives, Bhutan and Nepal in South Asia. The Sub-Group on Trade will look into this issue in detail, he added.

Responding to a question, the minister said that Pakistan exports in this fiscal year would remain very close to the target of 18.6 billion dollars. He admitted that tight monetary policy had some negative implications on the trade deficit and exports.

http://www.brecorder.com/index.php?id=570943&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*New development projects to be launched in Punjab *

LAHORE (May 31 2007): The present government would launch new development projects throughout the province during new fiscal year, to help eliminate unemployment. Punjab Mines and Minerals Minister Muhammad Sibtain Khan said this while talking to various delegations of Pakistan Muslim League (PML) here on Wednesday.

He said that a strategy has been evolved for bringing far-flung areas at par with the developed ones and for this purpose, vocational training institutions will be set up on priority basis.

"Infrastructure of hospitals and educational institutions would further be improved and for this purpose, the government has allocated a huge amount on emergent basis," he added. The minister said that the present government has formulated people-friendly policies.

He said that the decisions taken by Punjab Chief Minister Chaudhry Pervaiz Elahi of free of cost education up to matriculation level and reduction in the mark-up on agricultural loans had brought betterment in these sectors.

http://www.brecorder.com/index.php?id=570979&currPageNo=2&query=&search=&term=&supDate=


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## Neo

May 31, 2007 

*Pakistan lured $3.5bn FDI in 2006*

WASHINGTON, May 30: The Foreign Direct Investment (FDI) inflows to Pakistan increased from $2.2 billion in 2005 to $3.5 billion in 2006 with much of investment in the oil and gas and financial sectors, says a World Bank report released on Wednesday.

The total FDI inflows also include instalments made on a major telecom privatisation deal in 2005.

The World Bankâs Global Development Finance Report of 2007, however, points out that Pakistanâs GDP increased by 6.6 per cent in 2006 significantly down from the 7.8 per cent growth rate recorded the previous year.

The World Bank said that since 2003 the period for which imports could be covered by foreign reserves has declined by about four months in both India and Pakistan.

While reserves in India remain significantly above the level of three months worth of imports, they are much closer to that level in Pakistan and below in both Bangladesh and Sri Lanka, suggesting that each country would be vulnerable to a significant terms-of-trade shock, such as another hike in oil prices.

The report notes that net capital flows to South Asia reached a record $40.1 billion or 3.6 per cent of GDP in 2006 from $28.3 billion in 2005, which was 2.8 per cent of GDP. Most of the increase went to India.

But the report warns that sustaining recent high growth in South Asia will require continued economic reform, expansion of infrastructure capacity, and further reduction of security threats.

The report predicts that these efforts will also contribute to higher capital inflows, which have been spurred by progress in these areas in recent years.

âIncreased political instability represents another main risk. Heightened security concerns could hurt investor sentiment and undermine foreign capital inflows, which have contributed to the regionâs record four-year expansion,â the World Bank warns.

It notes that continued easing of political tensions between the governments of India and Pakistan bodes well for progress toward improved relations.

Although India attracted a major chunk of the record capital inflows into South Asia in 2006, restrictive policies could stunt investment growth leading to slower economic expansion, says the report.

âIndiaâs restrictive policy conditions are expected to lead to deceleration in investment growth and weaker private consumption and government spending, contributing to a slowdown in GDP growth to 7.8 per cent and 7.5 per cent in 2008 and 2009, respectively.â

Indiaâs GDP grew by 9.2 per cent in 2006-07, although signs of slowing appeared at the end of the fiscal. Total FDI inflows last fiscal (April-March) was $15.7 billion.

Net equity inflows to South Asia, however, increased only slightly as a $3 billion increase in FDI was partly offset by a decline in portfolio equity flows, the report said.

The World Bank points out that high growth rates posted in recent years have helped South Asia make significant progress toward achieving the Millennium Development Goals. The GDP in South Asia expanded a robust 8.6 per cent in 2006.

Most notably, the percentage of people living on less-than-a-dollar a day declined to just over 30 per cent in 2003 from 40 per cent in 1990 and is now projected to be about 13 per cent in 2015, below the initial goal of 20 per cent.

http://www.dawn.com/2007/05/31/ebr4.htm


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## Neo

Thursday, May 31, 2007 

*Import, export of goods and services: IMF predicts trade gap of $13.8 billion*

* Increase of $600m in current account also projected

By Sajid Chaudhry

ISLAMABAD: The International Monetary Fund (IMF) has projected a trade gap of $13.8 billion in the countryâs import and export of goods and services in the year 2007.

The IMF, through its Survey and Regional Economic Outlook of May 2007 of Middle East and Central Asian countries, has predicted that Pakistanâs export of goods and services will grow to $22.7 billion in 2007 as compared with $22.3 billion in the year 2006 indicating a growth of $2.4 billion.

The import of goods and services will be $36.5 billion in 2007 as against $33.1 billion in the year 2006 showing an increase of $3.4 billion.

The gap between export and import of goods and services in year 2006 amounted to $12.8 billion, and now the IMF authorities have projected that in 2007, this gap will widen to $13.8 billion. 

The IMF outlook has also predicted that the current account balance of government of Pakistan will be $5.6 billion in year 2007 as against the current account balance of $5 billion in the year 2006, projecting an increase of $600 million. The current account balance of the country, as compared with the GDP which was 3.9% of the DGP, will reach to four percent in the year 2007, projecting an increase of 0.1%. 

The IMF is of the view that Pakistanâs total debt, which was 56% of the GDP in year 2006, will come down to 53% in year 2007 with a reduction of 3% in total debt as compared to DGP in 2007.

The total gross external debt of the country, which stood at 27.7% of the DGP in year 2006, will reduce to 26% of the GDP in year 2007, projecting a decrease of 2.7%.

The IMF report further predicts that the real GDP of the country, which grew by 6.2% in year 2006, is projected to grow by 6.5% in the year 2007, indicating an increase of 0.8%. The nominal GDP will reach to $141.4 billion in the year 2007, as against $129 billion in 2006, showing a growth of $12.4 billion. 

Pakistanâs central governmentâs fiscal balance, which was 3.6% of the GDP in 2006, will be 3.5% in 2007, indicating a decrease of 0.1%. It also predicts that the central governmentâs revenues excluding grants, which were 14% of the GDP in 2006, will be 14.2% in the year 2007, with an increase of 0.2%. The central governmentâs expenditures and net lending are projected to come down to 18% of the GDP in 2007, as compared with 18.2% in 2006. 

The gross official foreign exchange reserves are projected to increase to $12.1 billion in 2007, as compared with $10.1 billion in 2006 showing an increase of $2 billion. The Consumer Price Index, which registered an increase of 7.9% in 2006, is projected to come down to 6.3% in the 2007, indicating a decrease of 0.2%. 

The report also suggests that in countries, where public sector revenues as a share of GDP are relatively lower such as Pakistan and Lebanon, efforts will be needed to broaden the tax base, reduce exemptions, and improve tax administration. It also says that in low-income and emerging market countries like Georgia, Pakistan, and Uzbekistan, inflation should ease in response to monetary tightening.

http://www.dailytimes.com.pk/default.asp?page=2007\05\31\story_31-5-2007_pg5_11


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## Neo

*Pakistan's Economy Will Probably Maintain Growth Pace Next Year *

By Khalid Qayum and Haris Zamir

May 31 (Bloomberg) -- Pakistan's economy will probably maintain this year's growth pace into the next 12 months, as the government lifts spending ahead of polls and improved crop harvests boost rural incomes and consumption. 

South Asia's second-largest economy will expand 7 percent in the year starting July 1, matching the clip of the previous 12 months, according to the median forecast of 11 analysts in a Bloomberg News survey. The government's National Economic Council is due to release its annual estimate in Islamabad today. 

``Public spending for developing infrastructure ahead of national elections will bolster economic growth,'' said Zaheeruddin Khalid, who helps oversee the equivalent of $173 million as head of research at Al-Meezan Investment Management Ltd. in Karachi. ``To increase rural incomes, the government would also focus on boosting farm production.'' 

President Pervez Musharraf is facing his biggest test since seizing power in a military coup in 1999, with violent opposition to his rule increasing as he seeks re-election before parliamentary polls in January. The government of Shaukat Aziz, a former Citibank NA executive appointed as prime minister by Musharraf in 2004, will release next year's budget in ten days. 

Aziz's government may increase outlays by as much as 16.5 percent to the equivalent of $30.3 billion in the budget, taking advantage of increased tax receipts to boost spending on power generation, roads and other infrastructure, according to analyst Ahsan Javed Chishty. 

*`Election Year' *

``Infrastructure has been neglected over the decades,'' said Chishty, an economist at Standard Chartered in Karachi. ``The 2008 fiscal year is an election year and the government is running an augmented development spending program.'' 

Pakistan needs better infrastructure to achieve the annual economic growth of 7 percent to 7.5 percent that Aziz says is required to reduce poverty in a nation where the World Bank estimates about 70 percent of the population of 160 million people lives on less than $2 a day. 

The $146 billion economy has expanded by an average 7.5 percent in the past four years, more than double the 3.4 percent averaged in the period from 1999 to 2002. Growth in the year ending June 30 is estimated at 7 percent, faster than 6.6 percent in the previous 12 months, Aziz said on May 28. 

``We are heading in the right direction and every section of the economy will get a boost next year to maintain this robust growth,'' Aziz said when releasing this year's gross domestic product figures. Pakistan doesn't produce GDP numbers on a quarterly basis. 

*Record Harvest *

Growth this year was spurred by a record wheat harvest and higher cement and sugar production, the State Bank of Pakistan said in its quarterly review of the economy on May 26. 

Pakistan's farm sector, which accounts for about a quarter of the economy, probably expanded 5 percent in the 12 months ending June, more than double the 2.5 percent pace of the previous year, the central bank said. 

Better-than-expected agricultural growth has lifted rural incomes, increasing sales of cement, cars and mobile phones. Manufacturers, in turn, are investing more to boost capacity to meet rising demand. 

Pakistan's cement sales climbed by a third to 19.71 million metric tons in the July-to-April period, from 14.85 million tons a year earlier, the All-Pakistan Cement Manufacturers Association said. Exports increased to 2.452 million tons from 1.209 million tons a year earlier. 

Cement output is expected to double to more than 40 million tons by the end of 2007 as several companies, including D.G. Khan Cement Ltd., the nation's biggest cement maker, expand capacity to meet higher demand locally and from Afghanistan. 

*Consumer Goods *

``A new phenomena next year would be export of cement as production will beat local demand,'' Al-Meezan Investment's Khalid said. 

Unilever Pakistan Ltd., the nation's biggest maker of consumer goods, expects sales to grow at an annual pace of as much as 20 percent over the next three years. 

Indus Motor Co. Ltd., the local affiliate of Toyota Motor Corp., plans to more than triple its capacity as economic growth lifts demand for vehicles. Car sales have more than tripled in the last five years to 132,000 units in the 10 months ended April 30, from 41,838 in the year ended June 30, 2002, according to the Pakistan Automotive Manufacturers Association. 

``Pakistan is riding the consumer wave,'' said Standard Chartered's Chishty. ``Armed with rising incomes and increased purchasing power, the average Pakistani is fast considering conspicuous consumption as a way of life.'' 

*Foreign Investment* 

Overseas investors are pouring funds into Pakistan to take advantage of the nation's growing appetite for consumer goods. 

Foreign direct investment, which was a record $3.5 billion last fiscal year, reached $6 billion in the first 10 months of this year helped by Standard Chartered in September completing a $487 million purchase of Union Bank Ltd., the biggest acquisition in Pakistan's banking history. 

The Altria Group Inc.'s Philip Morris International said in January it will buy a majority stake in Pakistani cigarette maker Lakson Tobacco Co. for $338.9 million. 

Pakistan raised $750 million selling foreign currency bonds to investors in Asia, Europe and the U.S., in the South Asian nation's fourth debt offering in three years, Aziz said May 24. 

Offers of $3.54 billion for the sovereign bonds were received, or seven times more than the government's initial plan to sell $500 million bonds, he said. 

*`Positive Response' *

``This positive response puts recent fears of waning international interest aside and indicates that attention toward Pakistan's growth story remains firmly in place despite ongoing political issues,'' BMA Capital Management Ltd. in Karachi, said in a report on May 25. 

Pakistan's economy will also benefit from the increased government spending expected in this year's budget, said Nasim Beg, who helps manage the equivalent of $320 million at Arif Habib Investment Management Ltd. in Karachi. 

``The development of farm-to-market roads and building infrastructure and utility facilities will have a positive impact on overall economic growth in the longer term,'' he said. 

The government is boosting public spending ahead of national elections due by January 2008 and nationwide street protests by opposition parties and lawyers. Musharraf is facing protests that erupted after he removed Supreme Court Chief Justice Iftikhar Muhammad Chaudhry from his post on March 9 for alleged misuse of authority. 

``A tense standoff between the government and the judiciary concerning the removal of the Chief Justice has elicited concerns about stability,'' Chishty said. ``The country enters a precarious political passage in the next 12 months with parliamentary and presidential elections around the corner.'' 
 
Musharraf is seeking a second-five year term from the parliament before it tenure ends on Nov. 15, a move rejected by Pakistan's opposition parties. 

FY08

Abamco 7.50
JS Global Capital 7.50
Taurus Securities 7.50
Standard Chartered 7.20
First Capital 7.00
Foundation Securities 7.00
Investcapital 7.00
BMA Capital 7.00
KASB Securities 6.80
Invisor Securities 6.50
Al-Meezan Investment 6.50

http://www.bloomberg.com/apps/news?pid=20601080&sid=akVgnRyW1vzw


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## Neo

*Pakistan cotton crop second largest ever - US attache *

Thursday May 31, 2007
WASHINGTON (Reuters) - Pakistan's upcoming 2007/08 cotton crop forecast is 2.265 million metric tons (MMT, lint basis), the second largest ever, a U.S. attache in Islamabad said in a report released on Wednesday. 

"Progressive textile mills are focusing on producing better-quality products, particularly for the export market. Pakistan is a major cotton importer, especially for U.S. upland and Pima cotton," the attache said. 

Consumption is forecast at 2.736 MMT, marginally less than the previous year. 

"With domestic prices increasing mills are finding the importation of upland cotton increasingly attractive. Recently, the GOP has allowed import of long staple cotton through land routes from India and Central Asia." 

Attache reports are not official USDA data. 

Following are highlights of the report. To see the full report, visit the USDA's Foreign 

"Pakistan's MY 2007/08 cotton crop is off to a good start due in part to near normal weather conditions, accompanied by a sufficient supply of inputs." 

"The crop is planted from the end April through June and is harvested in the fall. Planted area is influenced by the relative prices of competing crops, such as sugarcane and paddy, weather forecasts, and government policy. MY 2007/08 cotton area is forecast at 3.0 million hectares, about 1 percent less than the area planted last year, due to better returns from sugarcane and rice." 

"Due to delays in establishing biosafety regulations and a desire to develop Bt varieties indigenously, sources estimate that Pakistan is ten years behind major cotton-producing countries in the commercial use of Bt cotton. 

"Last year, farmers planted an estimated 500,000 acres or about 5 percent of the crop in illegal Bt varieties, some of which were developed by a local institute; NIBGE where work on transgenic cultivar is under trial and most from pirated varieties from India, China, and Australia. This year, farmers are expected to plant about 30 percent of the crop in illegal Bt varieties." 

http://in.news.yahoo.com/070530/137/6gh05.html


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## Neo

5.31.2007 - 11:00amET

News from: Grameen Foundation USA 

*Grameen Foundation Supports Landmark deal for Kashf Foundation in Pakistan *

*First local currency syndication transaction for Pakistani Microfinance Sector*

(CSRwire) May 31, 2007- Kashf Foundation has signed a US$ 8 million (PKR 484 million) Commercial Loan Facility, with a consortium of local Pakistani commercial banks. This Commercial Loan Facility is a 3-year facility in which Grameen Foundation, through its Growth Guarantee Program, provides partial risk coverage by way of a US$ 2 million Citibank Standby Letter of Credit in favour of the participating banks. Beside the US$8 million Commercial Loan Facility arranged by Habib Bank Ltd (HBL), MCB Bank Ltd (MCB) and Citibank N.A. (Citi), Citibank has also been mandated by Kashf to arrange additional US$ 14 million of long term financing for Kashf whereas HBL and MCB are jointly executing another PKR 720M term financing facility for Kashf through a Privately Placed TFC issue - the first private placement for a micro finance institution in Pakistan.

The Commercial Loan Facility has been jointly arranged by HBL, MCB and Citi while participating-banks include HBL at PKR 152.5 million, MCB at PKR 150 million, and ABN AMRO, at PKR 181.5 million. This is the first local currency loan syndication for an MFI in Pakistan and will provide innovative and diverse funding to support Kashf's significant growth plans. 

The signing ceremony was held in Karachi in the presence of President Kashf Foundation Roshaneh Zafar, President HBL, R. Zakir Mahmood, Country Manager, ABN AMRO Naved A. Khan, Wholesale Banking Head, MCB Aamer H. Zaidi, and Regional Head for Citi's Commercial Banking Group, Farooq Masroor, amongst others.

Speaking at the occasion, Roshaneh Zafar, President Kashf Foundation said, "Microfinance is about giving poor households sustainable opportunities for a better economic future. The current commercial facility is about mainstreaming poor women within the financial sector and will enable Kashf to reach out to hundreds of thousands of such clients." Kashf has been a Grameen Foundation partner since 2002.

"Grameen Foundation is pleased to support the first syndicated loan facility for an MFI in Pakistan," said Alex Counts, Grameen Foundationâs president and CEO. "By supporting innovative financing structures such as this, the Growth Guarantees program is enabling MFIs to access greater financing amounts in a more efficient manner, which in turn allows them to accelerate their expansion to reach tens of thousands of additional poor families."

In February this year, Kashf signed a 5 year PKR 363 million (US$ 6 million) bilateral facility with Citi. Kashf has now secured commercial financing of PKR 847 million. 

*About Kashf Foundation*

The Kashf Foundation was set in 1996 to provide microfinance services to the women in rural/sub-urban localities, initially in Punjab and is now expanding its geographical coverage to Sindh as well. Over the last 10 years, KFâs partners have included well recognized entities in the microfinance sector including the Grameen Foundation, DIFD, Acumen, Pakistan Poverty Alleviation Fund and the Grameen Bank. Additional information may be found at www.kashf.org

*About Grameen Foundation*

Grameen Foundation is a global non-profit organization that combines microfinance, technology, and innovation to empower the world's poorest people to escape poverty. It has established a global network of partners in 23 countries that has impacted an estimated 16 million lives in Asia, Africa, the Americas, and the Middle East. Grameen Foundation was founded by Alex Counts, who began his work in microfinance with Grameen Bank founder, and 2006 Nobel Peace Prize Laureate, Dr. Muhammad Yunus. Dr. Yunus is a founding and current member of Grameen Foundationâs board of directors. For more information on Grameen Foundation, please visit www.grameenfoundation.org. 

*About HBL*

HBL, the largest private sector bank in Pakistan with world-wide presence, is backed by a leading blue-chip sponsor, the Aga Khan Fund for Economic Development. HBL has the ability to provide an entire spectrum of banking solutions, catering to every stage of a companyâs life cycle. The core services that HBL provides to its clients include: Corporate Banking, Investment Banking, Commercial & Retail Banking, Consumer Banking, Treasury Services, Modaraba Management, and International & Overseas Banking. 

*About MCB *

MCB is the 2nd largest private commercial bank by equity with the first Pakistani GDR offering entity in the last 10 years . MCB is also the first Pakistani bank to be declared "Best Bank in Pakistanâ for 2006 by Euromoney- Only bank to receive Euromoney Award for the sixth time in the last seven years. MCBâs growth has been as a result of improved service quality, investment in technology and people, utilizing its extensive branch network, developing a large and stable deposit base and managing its non-performing loans via improved risk management processes. 

*About Citi*

Citi, the leading global financial services company, has some 200 million customer accounts and does business in more than 100 countries, providing consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, and wealth management. Citiâs major brand names include Citibank, CitiFinancial, Primerica, Citi Smith Barney and Banamex. Additional information may be found at www.citigroup.com or www.citi.com. 

Certain statements in this document are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from those included in these statements due to a variety of factors. More information about these factors is contained in Citigroup's filings with the Securities and Exchange Commission.

http://www.csrwire.com/News/8737.html


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## Neo

* Buying spree continues, KSE near 13,000 mark *  

KARACHI: After two subdued performance equity market rebound and came close to psychological level of 13000. The KSE 100 index touched intra day high of 12,994.4 with a 180 points jump only to close at 12,961.26 points up 154.33 points (1.21 percent).

Bulls over ruled the bears, strengthen their position and did not allowed the bears to enter the market.

KSE-30 was up by 315.70 points to close at 16,277.49 levels (1.98 percent) showing that banking sector was major supporter of market.

Institutional and retail investors were very active and buying trend was witnessed in all the counters. Positive sentiments prevailed through out the day and pre budget rally continued and positive news and expectations boosted investorsâ confidence globally.

Investors believed that being last budget in the election year government will make it a maximum corporate friendly budget this expectation is boosting the market confidence.

News of the UBS Investment Bank a Swiss based bank signing a contract with two Karachi based brokerage houses for their investment in Karachi Stock Exchange is another reason for the bullish sentiments in the market.

All the blue chip remained in limelight particularly banking and cement however some profit taking was witnessed in cement sector.

Banking sector ruled the trend of the market on the back of high spreads and foreign interest in the banking scrips.

JP Morganâs recent meeting at Lahore where representatives of foreign equity firms came to meet a select group of companies listed on the Pakistani bourses also fuelled the market sentiments.

Ahsan Mehanti CEO of Shehzad Chamdia Securities said that market is witnessing institutional and retail support and marching ahead amid positive news from all channels boosting the investorsâ confidence.

He said that retail investors and government institutions actively accumulated oil and cement scrips. Portfolio gains of cement, oil, banking stocks were attracting investors and revising fundamentals positively and record high PSDP allocation in this budget. Moreover, record exports have enhanced interest in cement scrips.

Sponsor based buying in PICIC and ABL was also seen in the market and positive expectation of reduced taxes on banking sector interest income, Islamic Banks and CVT reduction expectations in the upcoming budget is leading the market towards its high levels.

He also said that all the major international market closed on their positive side and S&P 500 touch intra day record high level which directly or indirectly have also supported the global sentiments of the investors.

Positive news on Pak Iran India gas pipe line also added in the positive sentiments.

Atif Malik analyst of JS Global Capital said that pre budget driven really was seen in the market and positive expectation in the budget for corporate sector is supported the market. Banking, Telecom and cement sector remained in the lime light and highest foreign investment was seen in BOP which was the volume leader. Market remained positive throughout the day and all the major scrips performed well on the back of the positive news and expectations in each sector. Foreign Brokerage house JP Morganâs positive outlook in the banking sector has helped the index to touch itâs intra day high level.

Trading activity was better as compared to the last trading session as the Ready market volume increased by 32.9percent 409.423million shares as compared to 

volume of 307.859m shares a day earlier and the future market volume increases

71.610m shares as compared to Wednesdayâs volume 41.979m shares

Market Capitalization stand near to Rs.3.738trillion. SCRA balances stand near $730 million. 220 companies advanced, 145 declined and 40 remained unchanged. Portfolio Investment

BOP was the volume leader with 40.883 million shares closed at Rs.118.80 with gain of Rs.5.55 follwed by TRG Pakistan with 34.595 million shares closed at Rs.12.90 and was up by 90 paisa, Askari Bank with 23.366 million shares closed at Rs.99 with a gain of Rs.3.10, DGK Cement with 21.580 million shares closed at Rs.105.70 with a gain of Rs.2.70, OGDC with 20.056 million shares and closed at Rs.122.45 with a gain of 95 paisa, Hub Power with 19.748 million shares closed at Rs.34.70 with a gain of Rs.1.60, Lucky cement with 15.756 million shares closed at Rs.110.15 with a gain of Rs.1.30, Fauji Fert Bin with 14.872 million shares closed at Rs.36.55 was down by 10 paisa, Maple Leaf with 14 million shares, closed at 22.80 was down by 20 pasia, and National Bank with 12 million shares closed at 253.30 with a gain of Rs. 5.30. 

http://www.thenews.com.pk/daily_detail.asp?id=58685


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## Neo

* PIA gets $522m *

KARACHI: Pakistan International Airlines (PIA) has succeeded in arranging a $522 million loan for acquisition of three new Boeing 777-300 ER aircraft, said a handout issued on Thursday. The financing arrangement comprises a 12-year term loan facility of $470 million supported by Export Import Bank of the US and Government of Pakistanâs guarantee and seven-year commercial facilities of $62 million, it added. The national flag carrier recently signed the loan financing agreement with finance facilitator ABN Amro Bank in Amsterdam. PIA Chairman Zaffar A Khan appreciated the efforts of the bank and the airline for finalising a large transaction at commercially-attractive rates. 

http://www.thenews.com.pk/daily_detail.asp?id=58702


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## Neo

*Power supply demand gap may go up *

ISLAMABAD (June 01 2007): The National Economic Council was informed on Thursday that power supply-demand gap was expected to increase to about 2500 MW in 2007-08 against 1000 to 1500 MW shortage experienced in 2006-07.

The meeting was informed that total designed capacity of power generation is 19540 MW of which Tarbela is 3478 MW, Ghazi Barotha 1450 MW, Mangla 1000 MW, Wapda thermal units 4834 MW, IPPs 5743 MW, KESC 2155 MW and others 880 MW.

However, the available capacity is 13900 MW while the demand is around 15200 MW. The demand will increase to substantial extent in 2007-08. The NEC urged that projects under implementation by Wapda and IPPs needed to be expedited.

The NEC also approved the Vision 2030. The Vision envisages developed, industrialised, just and prosperous Pakistan through rapid and sustainable development in a resource constrained economy by deploying knowledge inputs.

http://www.brecorder.com/index.php?id=571215&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*PPIB blocks 500 megawatts thermal power station deal* 

ISLAMABAD (June 01 2007): The Private Power Infrastructure Board (PPIB) has blocked Board of Investment's (BoI) move for signing an Implementation Agreement (IA) with the Qatar government for financing 500 MW thermal power station at Chichoki Mallian.

After the refusal of PPIB to clear the IA, Qatar on Thursday signed a Memorandum of Understanding (MoU) on which implementation was not mandatory, sources close to Managing Director PPIB told Business Recorder.

The sources said that PPIB, in its letter on March 31, raised concern for not properly consulting the board on the proposed financing plan by the Qatar government. They said that PPIB has disputes with some of the clauses of the IA and refused to become a party despite BoI consistent perusal till Wednesday.

"On standard affirmation clause recommended by the Finance Ministry PPIB is of the view that this clause is in terms and conditions of the IA and PPA and there is no need of its inclusion in the project development agreement," the sources added.

The sources said that PPIB also pointed towards terms and conditions of permanent financing and GoPs obligations. Meanwhile, the Prime Minister House has issued a press release that says that Pakistan and Qatar signed two MoUs under which Qatar will invest in the banking insurance and power sector.

Prime Minister Shaukat Aziz and Yousef Hussain Kamal, Minister for Finance, Qatar witnessed the signing ceremony. Under one agreement, Qatar Islamic Bank will set up its branch in Pakistan. Qatar will commission 500 MW power plant in Pakistan under the second agreement signed today.

Earlier, Yousef Hussain Kamal, Minister for Finance Qatar called on Prime Minister Shaukat Aziz at the PM's House. Talking to the Qatari Minister, the Prime Minister said that foreign investment of $6 billion made in Pakistan this year is a testimony of the growing confidence of international community in economic growth, stability, policies and leadership of Pakistan.

Yousef Hussain Kamal said Qatar attaches great importance to its relations with Pakistan, which are characterised by cordiality, warmth and mutual trust. He said that Qatar has plans to invest $2 billion in agriculture, livestock, Banking, Airline and power sector in Pakistan.

http://www.brecorder.com/index.php?id=571212&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Portfolio investment: foreign investors stay away as market heats up *

KARACHI (June 01 2007): The portfolio investment, as witnessed by balances under the Special Convertible Rupee Accounts (SCRAs) with the central bank, has remained stagnant around $730 - $735 million since May 24 when it posted a gain of $8 million to reach $739 million from $731 on May 21.

Earlier, on balances under SCRAs had plummeted to $784 million on May 16 from the record high figure of $827.5 million attained on May 14, 2007. The downslide had continued in the following days and reached $727 million on May 29 from $738 million on May 25. It stood around that level on May 26 before falling to $735 million on May 28.

During all this while the KSE-100 Index exhibited a record breaking bullish sentiment. The Index rose from 12,663 points on May 24 to 12,817 points on May 29 having crossed the 12,800 barrier only a day before on May 28.

Commenting on these positive trends in the Index, we had observed that the changes did show investors renewed interest in the market, but we have yet to see how far the interest of the foreign investors has been restored after the recent political unrest (cf BR May 27).

The trend in portfolio investment revealed that the foreign investors generally stayed away even though the market heated up to touch new historic highs. It was also established that the foreign investor indulges in share trading rather intelligently.

He buys when the market is bearish and sells when it is bullish. This is exactly what he is doing right now. Domestic investors, especially those of small means or who cannot bear losses, must also follow this principle to ward off the gimmicks of the heavyweights.

Such investors are also advised to revisit Aaj TV's two episodes on the subject aired recently under the title 'Aisa Kyun Hai'. Hence the conclusion: the foreign investor will re-enter the market only when he had established beyond doubt that the bulls, whoever were not playing the gimmick but following the rules. Accordingly, the changes in data on portfolio investment revealed that foreign investors withdrew about $11.4 million during these five days.

The largest withdrawal of $6.5 million took place in the case of UK followed by Switzerland, USA, and Hong Kong which withdrew $2.6 million, $1.4 million, and $1 million, respectively. A minor inflow of $0.1 million also occurred in the case of Singapore. UK investors consistently dis-invested amounts of varying magnitudes during all the five days.

http://www.brecorder.com/index.php?id=571241&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*July-April raw cotton import reaches over $503 million *

KARACHI (June 01 2007): Raw cotton's import has been up 57 percent to $503.743 million (Rs 30.57 billion) during the first ten months of the current fiscal year against same period of last fiscal. Importers said that this was due to because the country has missed its cotton production target.

"Monsoon rains in last August severely hit the country's cotton crop of Sanghar, Dhedadpur in the interior Sindh prevented country from achieving raw cotton production by around one million bales against the target of 14 million bales during the current fiscal," importers said.

They said that Pakistan is the fourth largest producer of cotton in the world but its textile industry's requirement could not be met that necessitated raw cotton import raising imports by 57 percent during July-April. The country 's raw cotton import is up $188.771 million during the first ten months of the current fiscal.

"We have imported around 1.832 million raw cotton bales worth $503.743 million (Rs 30.57 billion) during July-April of the current fiscal as compared to 1.527 million bales worth $314.972 million (Rs 18.84 billion) during the same period last fiscal,' they informed.

The government has planned schemes to help raise the output of raw cotton for the next season but currently the country is facing around 2.5-3 million bales shortfall, they added. They said that cotton production growth for the last few years has been of high concern and this year despite all claims the country's production did not show any improvement.

Our local production stood at around 12.4 million bales against the consumption of 15-16 million bales, therefore, textile millers are placing huge orders of raw cotton import to fulfil their export orders, said a leading textile miller.

"We need better quality cotton, which has limited production in the country therefore quality issue also has brought cotton import to 1.8 million bales," he added. He said although imported cotton is costlier than the domestic cotton but due to better quality, millers prefer the imported cotton.

http://www.brecorder.com/index.php?id=571260&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Budget deficit Rs 272.8 billion in nine months *

ISLAMABAD (June 01 2007): Pakistan has suffered a huge budget deficit of Rs 272.8 billion during the first 9 months of the current fiscal that is 3.1 percent of GDP. According to the provisional consolidated federal and provincial budgetary operations of three quarters, released by the Finance Ministry on Thursday.

Total development expenditure during this period stood at Rs 244.22 billion of which Rs 149.8 billion were spent by the federal government and Rs 94.4 billion by the provinces.

Finance ministry's data also disclosed that the provinces received Rs 290.3 billion from the federal divisible pool in the first three quarters of the current fiscal while grants to provinces were Rs 20.87 billion. The country's defence expenditure stood at Rs 172.7 billion in three quarters which is 2 percent of the GDP

The government paid Rs 215.47 billion as domestic debt during July-March FY07 against Rs 139.58 billion in the corresponding period of last year whereas foreign debt servicing was Rs 37 billion. The data further revealed that the State Bank of Pakistan (SBP) earned total profit to Rs 39.2 billion during July-March FY07 whereas dividends were Rs 46.17 billion.

Surcharges on oil and gas and royalty were Rs 71.84 billion during July-March period, collection of agriculture tax stood at Rs 552 million and privatisation proceeds were Rs 52.5 billion. Total external financing during this period was Rs 93.7 billion whereas domestic financing was Rs 179 billion.

http://www.brecorder.com/index.php?id=571269&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Iran seeks joint investment company with Pakistan *

KARACHI (June 01 2007): Iranian government has desired to establish Pak-Iran joint investment company to facilitate the business community of the two countries. According to a press release issued here on Thursday, Masood Mohammad Zamani, Consul General of Iran in Karachi stated this during a meeting with Farooq Dadabhoy, Acting President Federation of Pakistan Chambers of Commerce and Industry (FPCCI).

Zamani said the business community of both the countries should join hands and intensify their interaction to promote bilateral trade and economic relation.

He said that in the recent past the visits of the President and the Prime Minister of Pakistan and federal minister of railways to Iran was indication of the desire to forge close relations. He said that the commercial section of Iran Consulate would organise a seminar on investment opportunities in Iran on June 30, 2007 in Karachi.

http://www.brecorder.com/index.php?id=571280&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Seven percent GDP growth pushes stock market to all-time high: Salman *

LAHORE (June 01 2007): Advisor to the Prime Minister on Finance and Economic Affairs, Dr Salman Shah, has said that over 7 percent GDP growth in the current fiscal year (2006-2007) and high corporate sector profits has pushed the stock market index to all time high.

He was speaking to the group of foreign equity investors at the two-day investors meeting organised by J.P. Morgan here in Lahore, a press release issued here on Thursday said.

He said the government policy of liberalisation, privatisation and deregulation has enhanced potential for foreign investment and added that the recent road show for the Sovereign Bonds received orders of over $3.5 billion resulting in 7 times over subscription. He also stated that "the Pakistan economy is driven by market forces; has the world's 4th largest work force; and a large young population, which means more production and more savings."

Addressing the visiting investors, Governor State Bank of Pakistan Dr Shamshad Akhtar in her address said, "The banking sector in Pakistan has shown remarkable and unprecedented growth. Classified as Pakistan and the Region's best performing sector its assets have risen to over $60 billion, profitability is exceptional and all time high. Non-performing loans are at an all time low, assets are in private hands and almost 47 percent have foreign shareholders."

She also said that Pakistan has huge potential for foreign investment as presently only 3 percent of the population is borrowing from banks and only 30 percent of adults had bank accounts. Earlier, J.P. Morgan's Senior Country Officer in Pakistan Reza Rahim said that "representatives of foreign equity firms have come to Lahore to meet a select group of companies listed on the Pakistan Stock Market. The meetings are being held on one-on-one basis, over a two day period, providing the potential investors an insight into the leading companies traded on the Stock Market."

Reza Rahim also said that the cash equity breaking operations, started earlier this year is a significant development for J.P. Morgan's Pakistan business, which is the only foreign firm with a corporate seat at the Karachi Stock Exchange.

http://www.brecorder.com/index.php?id=571273&currPageNo=1&query=&search=&term=&supDate=


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## Neo

June 01, 2007 
*Trade gap swells on imports from China, India*

KARACHI, May 31: Pakistan has doubled its trade with India and increased exports to China during the 10 months of current year but the volume of trade has put more pressure on the countryâs widening trade deficit.

Both India and China put a cork over imports flow from Pakistan while the country failed to exploit the fastest growing economies of the region in its favour, apparently due to lack of strategy.

The available official trade figures showed that India surpassed even the ambitions trade target of $20 billion with China to reach $24.9 billion last year.

Pakistanâs trade volume with China reached $2.062 billion only during the first ten months of the current year. Out of this total, exports from Pakistan were just $379 million while Chinaâs exports were in the tune of $1.647 billion. Pakistan has been facing a trade deficit of $1.268 billion.

Pakistanâs imports from India have doubled during the first ten months, while exports to the country remained limited to $196 million. Indian exports to Pakistan reached $912m during the ten months of the current year compared to $419 million during the corresponding period of last year.

The statistics showed that the Pakistani policy makers have yet to come out with a strategy to improve their trade relations with the regional countries and exploit the unique long-term friendly relations with China.

On the other side, India mended its territorial disputes with China and sharply increased trade with that country becoming the 10th largest trade partner of China, while China became 2nd biggest trade partner of India within seven years.

The miracles happened just next door to Pakistan but the lack of initiative left the country far behind the pace of economic development in the region resulting in record widening of trade deficits. The situation kept the country under pressure of Western countries begging for export incentives while opening its own market at their own terms.

Pakistanâs trade loss with India reached $716m during the ten months but soon it could reach $1 billion as imports have increased sharply in the recent months.

China and India will finish a joint study on a potential regional trade pact by October this year, which could play a key role in further enhancing of trade.

China said the study would play a key role in the economic integration in Asia if it led to a regional trade pact linking China and India.

The two countries signed an agreement in 2005 pledging to bring bilateral trade volume to $20 billion by 2008. This was achieved ahead of the targeted date and the two governments have now set a new target of $40 billion in bilateral trade by 2010.

In April 2007, Pakistan signed 27 agreements in Beijing, which included setting up a Chinese automobile plant, an engineering university in Pakistan and a joint investment company with a capital of $200 million.

Pakistanâs prime minister recently visited China to explore trade and investment opportunities but the output can only prove the fruitfulness of the visit.

http://www.dawn.com/2007/06/01/ebr4.htm


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## Neo

June 01, 2007 
*Power plant*

KARACHI, May 31: The consul-general of Turkey in Pakistan, Erdem Mutaf, has said that Turkey is keen to make investment in energy sector, and there are many other venues for bilateral trade between the two countries.

Speaking at a meeting arranged by the Korangi Association of Trade and Industryâs chairman Masood Naqi at KATI, the Turkish consul-general said that a Turkish energy company was establishing 50MW power plant at a cost of $400 million in Jhimpir which would be completed by the end of this year, and next year the capapcity of this power plant would be increased up to 300MW, says a press release.

http://www.dawn.com/2007/06/01/ebr19.htm


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## Introvert

*Qatar to invest $2bn in Pakistan*
Published: Saturday, 2 June, 2007, 01:27 AM Doha Time
ISLAMABAD: Qatar plans to invest $2bn in Pakistan&#8217;s agriculture, livestock, banking, airline and power sectors, Qatar&#8217;s finance minister has said.
Qatar is impressed by Pakistan&#8217;s economic turnaround and is keen to strengthen ties between the two countries, HE Yousef Hussain Kamal said while in Pakistan on an official visit.
He didn&#8217;t provide a timeframe for the investment.
On Thursday, Qatar signed two memoranda of understanding with Pakistan.
One paves the way for Qatar Islamic Bank to set up a branch in Pakistan, while the other would allow Qatar to commission a 500-megawatt power plant in the South Asian country.

http://www.gulf-times.com/site/topi...=152792&version=1&template_id=57&parent_id=56


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## Neo

*$2.11bn GCC remittances to Pak.*

Remittances from GGC states contributed $2.11bn to Pakistan's economy from July 2006 to April 2007, Khaleej Times reported. That is 30% more than for the same period in the 2005-06 fiscal year. Expatriate Pakistanis in Saudi Arabia and UAE sent home $828m and $674m respectively. Remittances from all countries are likely to reach $5.5bn by end-June 2007, an official said.

http://www.ameinfo.com/122112.html


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## Neo

*Budget to reinforce macroeconomic stability: Shamshad addresses seminar *

KARACHI (June 02 2007): The coming federal budget would be people-friendly, as no new tax would be imposed, while revenue would be increased by broadening the tax net, and the salaried class and common people would be given more relief in it.

This was stated by Naveed Ahsan, Secretary-General, Finance, at a seminar on 'Budget 2007-08-A milestone in continuation of Economic Reforms', organised by Press Information Department here on Friday. He ruled out devaluation of the currency and said that the country's forex reserves could cross the $15 billion mark by the end of the current friscal year.

He said that Rs 520 billion would be allocated for Public Sector Development Programme and 48 percent of total PSDP would be spent for water reserves and its distribution, while 47 percent of it would be spent on social sector.

The salaried class and common people would be given more relief by increasing salaries and pensions. Low-cost housing schemes would be introduced in the next budget to give another relief to the low-income class of the country, he said, and added that many steps would be taken for poverty alleviation in the country and small loans amount would be increased for this purpose. Many infrastructure development projects would be launched through private-public partnership. He said that the 'Training and Vocational Authority' would be more active to overcome the shortage of skilled manpower in the country.

Naveed said that Wapda had imported a few power generation units which would start production from next month and power generation would increase. About agriculture sector, he said that the government was spending billions of rupees on subsidies. Over Rs 80 billion was being spent for water-courses repairs.

State Bank of Pakistan Governor Dr Shamshad Akhtar said that building incrementally on a strong base and performance is always harder than lifting the economy from distressed straits. This challenge is further compounded by some of other emerging economic and political realities which underscore need for the budget to be well conceptualised and well balanced.

She said that firstly the budget is being formulated in a way that it reinforces the macroeconomic stability, which is critical to maintain economic growth track record. Second, there is a recognition that public expectations are rising from the government both in terms of its leadership to rationalise resources and incentivise allocation mechanism while offering the right transfer of resources and blend of services.

Third, public resources constraints are a reality and will serve as an eventual binding constraint. Ultimately, budget-making process is all about achieving the desired balance between the resources available and resources allocated.

Fourth, there is a continuity, consistency and coherency in economic and financial policies which have to be further broadened and deepened to allow for foreign and domestic private sector to further thrive in Pakistan while playing a yet more distinct role in diversifying Pakistan's industrial base and in delivering public services.

Finally, there is a recognition that public aspirations are rising, partly because the Government has set a strong track record of economic performance in preceding years and partly because gaps in social and economic services continue to exist. Dr Akhtar said that it was important to recognise that private investment in Pakistan has now for some years been very buoyant and robust.

At current market prices, private investment levels for FY08 are assumed to grow to Rs 1651 billion, which translates into $27 billion, and 16.5 percent, as a proportion to GDP (one percent of GDP above FY05 level), 2.8 times of the level of public investment and once again three-fourths the level of total investment.

The monetary policy framework, like in the past years, would be forthcoming as a part of Monetary Policy Statement released by end-July, which is worked out after the budget for FY08 has been finalised. However, there has been intensive consultations between SBP and the government regarding need for more consistency between the budget and monetary policy framework.

In line with SBP Act Section 9(A), the central bank has now institutionalised the process of determination of the level of Government's recourse to bank borrowing and its approval by the Central Board of SBP. This is the first time that as part of the budget making process, SBP worked out different scenarios to assess the monetary implications of budget's financing requirements.

A number of dignitaries, including President of Federation of Pakistan Chambers of Commerce and Industry Tanveer Ahmed Shaikh, President National Bank of Pakistan Syed Ali Raza, President Habib Bank Limited Zakir Mehmood, President First Women Bank Zareen Aziz and many others attended the seminar.

http://www.brecorder.com/index.php?id=571573&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Mealy bug hits cotton crop in Sindh districts *

KARACHI (June 02 2007): 'Mealy Bug', a deadly pest for cotton, has badly hit the standing cotton crop in Sindh, which has put in jeopardy the country's cotton production target of 14.2 million bales, growers told Business Recorder on Friday.

"Mealy Bug has been detected in some 60-kilometer belt of cotton, from Nawabshah to Sanghar, while Jhudo, Shahdadpur, Mirpurkhas are other affected parts, where cotton plants have been growing fast,' they said. Around 7 to 8 percent of Sindh cotton crop has been hit by the pest, which has attacked the fields three days ago, they added.

Cotton sowing had been completed a month ago and now plants are in almost final stage, as cotton flowers are expected to emerge within a few days. This year, for the first time sowing of Bacillus Thuringiensis (BT) cotton has been started, instead of Nayab 73 and other such varieties after government allowed BT cotton cultivation to achieve the cotton production target of around 14.2 million bales, they said.

Despite the rapid outspread of the pest, which initially has attacked about 8 percent cotton fields in the province, the concerned government officials have yet to know of such disastrous development in the agricultural sector taking place, they said. "Government officials are still unaware of it," they added.

"We don't know about the BT cottonseeds resistance against the onslaught of Mealy bug, as it is the farmers' first experiment to grow this variety of cotton in the country," they said.

In spite of non-issuance of guidelines by the government to educate farmer in respect of BT cotton, farmers have sown it in about 98 percent area. Now, with the emergence of this deadly pest, farmers are worried what measures they should take to save their crop, which is in the initial stage.

"If the government does not take immediate steps to control the pest it could hit 5 to 6 percent cotton production target. Mealy Bug is a lethal pest, which produces around 500 eggs a day to destroy the entire crop within a few days," said a leading trader, Ghulam Rabani.

Last year, Mealy Bug had also attacked the cotton crop but the timely monsoon rains perished it, which is also needed this year. If the government failed to play its role to control the Mealy bug, it may hit cotton production target of 14.2 million bales, he said.

It is thought that Mealy Bug could also hit cotton crop in neighbouring Punjab province in the next few days, as there sowing has been done after Sindh, he added.

He said that BT cotton has large resistance against pests and viruses. However, as it is the first experienced here, it could be confirmed in next few weeks. He said that the government should take immediate action to control the Mealy Bug and issue guidelines for farmers.

http://www.brecorder.com/index.php?id=571590&currPageNo=2&query=&search=&term=&supDate=


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## Neo

* Pashaki-Kunnar field to start gas supply to SSGC by 2010* 

KARACHI (June 02 2007): The Pashaki-Kunnar gas field, near Badin, will start supplying gas to Sui Southern Gas Company (SSGC) by 2010. Sources told Business Recorder that the Pashaki-Kunnar gas field would supply about 250 mmcfd to 300 mmcfd to the national grid.

From which the SSGC operational area would be able to take additional advantage as the demand of gas is increasing in power generation sector. In the next few months, the company would add a further 150 million cubic feet daily mmcfd through gas coming in from Zamzama, operated by BHP, and ENI-run Bhit fields.

http://www.brecorder.com/index.php?id=571619&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Sindh to have Rs 40 billion development budget: My Karachi exhibition opens *

KARACHI (June 02 2007): Sindh Governor, Dr Ishrat-ul-Ibad Khan has said that the development budget of the province for the coming fiscal year will exceed Rs 40 billion. Speaking at the inaugural ceremony of 'My Karachi - Oasis of Harmony' exhibition here on Friday, he said that the economic and infrastructure development of Sindh in general and Karachi in particular was quite satisfying.

He said that the development budget of Sindh in the fiscal year 2006-07 was Rs 34 billion, which would exceed Rs 40 billion in the coming budget. Dr Ibad said that three years ago the development budget of the province was only Rs 5 billion and such massive increase proved that the development in the province was in full swing.

He said that Karachi was the political and economic hub of the country, which contributed 60-70 percent to the national exchequer and added that the potential was increasing, as the pace of infrastructure development was so fast under the leadership of city nazim Mustafa Kamal.

With reference to May 12, he said that some incidents occurred in the cosmopolitan city, which happened everywhere in the world, adding that things should not be blown out and situation must not be exaggerated. The governor said that Karachi was a vibrant city and its resilient nature rebound to every situation and the activities got back to normalcy very fast.

He said that the investors still had confidence in the country and the government. In this regard he referred to the MoU signed between the government of Pakistan and Government of Qatar for a $3 billion investment in the country. Out of which Sindh would have three mega-projects pertaining to cement, livestock and a hotel.

Dr Ibad said that Karachi was a cosmopolitan city having multi-ethnic and multi-sectarian population but there was no dispute or conflict in between them as the masses were united on the grassroots level. He said that no conspiracy to trigger sectarian and ethnic violence could do it in Karachi and no elements could hinder the development of the city.

He also congratulated the organisers of the exhibition and appreciated the enthusiasm of the participants. Chairman Trade Development of Pakistan (TDAP), Tariq Ikram said that no body needed to be defensive about the city. Referring to May 12, he said that there was no issue at all and such activities happened all over the world.

He said that a lot of exhibitions were being held in the city, trade and economic activities and development was in full swing in Karachi and added that Karachi was still the city of lights. Sindh Minister, Adil Siddiqui also spoke on the occasion while City Nazim Mustafa Kamal was also present at the ceremony.

KCCI President, Majyd Aziz presented the welcome address. The largely attended 'My Karachi' exhibition is being held for the fourth consecutive time in Karachi with an objective to promote the soft image of the country before the world.

Karachi Chambers of Commerce and Industry (KCCI) is organising this event in collaboration with the Sindh Government, City District Government Karachi (CDGK) and Ministry of Tourism.

The Expo is accommodating around 300 stalls, out of which 65 are by the international exhibitors, including 36 exhibitors from Sri Lanka, four from India, seven from Indonesia, two from Belgium and one stall each from France and Germany.

People from all walks of life evinced great interest in the stalls exhibiting a large range of products including jewellery, rubber, chemicals, tea, cosmetics, sport goods, handicrafts, electrical equipment and engineering products and solutions. The prominent feature of the exhibition is around 100 stalls set-up by the women entrepreneurs. Sindh Governor, Dr Ishrat-ul-Ibad inaugurated the event.

http://www.brecorder.com/index.php?id=571585&currPageNo=1&query=&search=&term=&supDate=


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## Neo

Saturday, June 02, 2007 

*Current account deficit projected at $8.1bn*

* Remittances target set at $5.8 billion for next fiscal year 2007-08

By Sajid Chaudhry

ISLAMABAD: The current account deficit is projected to be around $8.1 billion in the next fiscal year 2007-08, which would be 5 percent of the gross Domestic Product (GDP). 

Current account deficit target was set at 4.3 percent of the GDP or $6.3 billion in outgoing fiscal year 2006-07. This was revealed in a planning commission document on macroeconomic targets including balance of payment target approved by the National Economic Council on Thursday.

The target for the remittances for the next fiscal year 2007-08 has been set at $5.8 billion against the projected estimates of $5.5 billion for the outgoing fiscal year 2006-07 and $4.5 billion target set for the current fiscal year. 

Private transfers are targeted to be at $11.5 billion in the forthcoming fiscal year 2007-08 as compared with the estimates of $11.1 billion in the current fiscal year 2006-07 and $9 billion target set for the current fiscal year. 

Invisible balance is estimated at $2.5 billion in the next fiscal year 2007-08 as against the estimate of $2.8 billion in the outgoing fiscal year as against the target of $1.3 billion target set for the current fiscal year. 

Exports are projected to be 18.9 billion in the next fiscal year as compared with the estimated exports of $17.2 billion in the current fiscal year 2006-07 as against the target of 19.8 billion. The imports are estimated at $29.5 billion in the next fiscal year 2007-08 as against the estimates of imports of $27.1 billion in the current fiscal year against the target of 27.1 billion. Trade deficit is projected to be $10.6 billion in the next fiscal year as compared to estimates of 9.9 billion for the outgoing fiscal year and as against the target of 7.6 set for the current fiscal. 

The targets in the investment side reveal that private investment to be 16.5 percent of the GDP in the next fiscal year as compared to 16.2 percent of the GDP in the current fiscal year against the target of 15.5 percent of the GDP.

Public investment is targeted to be 5.7 percent of the GDP in the next fiscal year as compared to estimated public investment of 5.2 percent in the current fiscal year against the target of 4.7 percent of the GDP. The size of the Public Sector Development Program (PSDP) is targeted at 4.7 percent of the GDP in the next fiscal year as compared to the estimates of 4.1 percent in the current fiscal year and against the target of 3.9 percent of the GDP for current fiscal year.

Services sector is targeted to grow by 7.1 percent in the next fiscal year as compared to the estimated growth of 8 percent in the current fiscal year and as against the 9.6 percent in the year 2005-06. Large-scale manufacturing is projected to grow by 12.5 in the next fiscal year 2007-08 as compared to the estimates of 8.8 percent in the current fiscal year and as against the 10.7 percent in 2005-06. Agriculture sector is targeted to grow by 4.8 percent in the next fiscal year as compared to the estimates of 5 percent in the outgoing fiscal year and 1.6 percent in the 2005-06. The GDP growth target has been set at 7.2 percent for the next fiscal year 2007-08 as compared to the estimated growth of 7.02 percent in the current fiscal year and 6.6 percent in the year 2005-06.

http://www.dailytimes.com.pk/default.asp?page=2007\06\02\story_2-6-2007_pg5_1


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## Neo

Saturday, June 02, 2007 

*Economic policies fuelling inflation*

LAHORE: The economic planners of the country have failed to reign-in the persistent inflation that continues to haunt the poorer segments of the society.

This was stated by renowned economist Dr Qaiser Bengali at a seminar on inflation in Pakistan, here on Friday.

Punjab Minister for Finance Hussnain Bahadur Dreshak, President Bank of Punjab Humaish Khan, Lahore District Nazim Mian Amir Mehmood, MNAs Shah Mehmood Qureshi and Pervaiz Malik were other speakers on the occasion.

The speakers evolved consensus that inflation is due to prevailing economic policies of the government and structural factors that require longer time for correction as they have been neglected for a long time and have gone out of hand.

Dr Qaiser Bengali said inflation is a humane problem that hits the lower segments of society more severely than the rich. According to Dr Bengali the richest segment of society spends 15 percent of its income on food, the middle class utilises 40 percent of its income resources on food while poorer segments utilise 70 percent of their earning on food consumption. Hence, he said high food inflation is a curse for the poor.

Talking about the accelerated economic growth Dr Bengali said it was based on consumption by those who had access to bank credit. He said consumer finance policy of the State Bank of Pakistan facilitated banks to transmit their entire liquidity in the market through different modes of consumer financing. This increased demand and in turn fuelled inflation. Therefore, he said, the quality of life of those that had access to bank credit increased.

However, he continued, the larger segment of society comprising the poor that had no access to bank credit bore the brunt of high rates of inflation due to higher consumption by affluent class. He was of the view that the rankers sitting in Islamabad are insensitive to the plight of the poor and are incapable of reigning in inflation. 

According to Dr Bengali the economic planners had neglected infrastructure development for the last 25 years and no new mega project was initiated during this period. Even maintenance of available infrastructure remained pathetic. As an example he pointed out that Railways bridges have collapsed in recent past.

He expressed concern over shortsighted policies of the economic planners that resort to immediate imports on slightest signs of shortage. He said in case the rates of onions go up, the government suppresses the rates through imports. This import fear, he said, impedes the farmer from enlarging onion cultivation area for the next crop. He said domestic needs were being fulfilled in the past when there were no such interventions.

Cartelization is a major factor that has created short supplies, according to Dr.Bengali. He cited examples of cement, sugar and steel industries. He said these cartels have blessing from government functionaries that also have stakes in them. Concluding his talk he said stable prices are essential for macro-economic stability of the economy.

Dr Akmal Hussain said high inflation rate is a clear manifestation of the fact that present growth in the GDP was not sustainable, as rate of investment was lower than the required rate of 28 percent if the economy is growing at 7 percent.

http://www.dailytimes.com.pk/default.asp?page=2007\06\02\story_2-6-2007_pg5_6


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## Neo

June 02, 2007 
*Macroeconomic targets revised*

ISLAMABAD, June 1: The government has revised some of the major macroeconomic targets for the current financial year mainly because of poor performance in key sectors of the national economy in the first 10 months of the year, official documents suggest.

To start with, the target for growth in industrial production has been reduced by almost half -- to 6.8 per cent from 11 per cent projected in the budget. The target for large-scale manufacturing has also been brought down to 8.8 per cent from 13 per cent envisaged in the budget.

This was mainly because of a dismal show by the industrial sector, particularly by the LSM where the automobile industry, fertilizers, engineering and paper and board besides some others registered a decline in growth.

In agriculture, cotton production target has also been revised to 13 million bales from the original target of 13.82 million bales, showing a reduction of 0.82 million bales. Similarly, rice production did not come up to the target of 5.7 million tons set in the budget and, hence, has been revised to 5.4 million tons. Wheat and sugarcane production, however, remained higher than the budgeted targets.

The target for private sector investment has been increased to 16.20 per cent of the GDP from the 14.30 per cent fixed earlier. However, the total public sector investment has been reduced to 5.20 per cent from the original estimate of 5.60 per cent of the GDP. Similarly, the public sector development programme was originally projected to be around 4.70 per cent but has now been reduced to 4.10 per cent.

On the trade side, the export target has been brought down to $17.20 billion from the original projection of $19.80 billion, showing a reduction of about 13 per cent. Imports have also slowed down and as a result the target has been reduced slightly to $27.10 billion compared with the original estimate of $27.40 billion.

Therefore, the total trade deficit target has been increased to $9.90 billion from the original estimate of $7.60 billion, up by more than 30 per cent. The target for trade deficit in services has also been increased to $8.30 billion from the original projection of $7.70 billion. Private transfers and remittances, however, performed better than expected and helped containing the overall current account deficit, which otherwise might have been quite higher.

The current account deficit target has also been increased for the current year to $7.10 billion compared with the original target of $6.30 billion. The inflation target has also been increased to 7.60 per cent instead of the original target of 6.50 per cent, mainly because of the governmentâs inability to contain food prices.

http://www.dawn.com/2007/06/02/top6.htm


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## Neo

June 02, 2007 
*Iran hopes to finalise IPI deal by 30th*

TEHRAN, June 1: Iran, India and Pakistan have narrowed their differences over a planned $7 billion natural gas pipeline in talks in Tehran this week, a senior Iranian official was quoted as saying on Friday.

The pipeline aims to feed the growing energy needs of the subcontinent but had earlier made slow progress due to political tensions between India and Pakistan, as well as international tension over Iranâs disputed nuclear programme. Officials from the three countries held talks in the Iranian capital this week and Iran hopes to sign a final deal in Islamabad on June 30.

âFinally, there are just four or five items on which we have not reached an agreement yet... the negotiations over them will continue,â the IRNA news agency quoted senior Iranian energy official Hojjatollah Ghanimifard as saying.

He added that previously they could not agree on 16 items, but did not give details on issues that remained outstanding.

âThe final meeting on June 30 will be in Islamabad,â Ghanimifard said. Washington, which accuses Tehran of developing a covert nuclear weapons programme, has repeatedly sought to discourage India from the project. Tehran denies the charge.

Ghanimifard said that in the first stage of the planned contract 60 million cubic metres of gas per day would be exported to Pakistan and India.

If a second stage of exporting 150 million cubic metres of gas is reached another pipeline will be needed, he said.

Iran sits atop the world's second largest gas reserves after Russia. But sanctions, politics and construction delays have slowed its gas development and analysts say it is unlikely to become a major exporter for a decade.

http://www.dawn.com/2007/06/02/top8.htm


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## Neo

*Budget outlay to be Rs two trillion: Salman *

LAHORE (June 03 2007): PM's Advisor on finance Dr Salman Shah, delivering his key-note address at 'Budget 2007-08 - a Milestone in Continuation of Economic Reforms' in a seminar held under the auspices of the Information and Broadcasting Ministry, said here on Saturday that budget outlay would be between Rs 1.92 trillion and Rs 2.00 trillion.

He averred that Rs 724 billion of the budget would be earmarked for development projects of which Rs 520 billion would be spent on PSDP while Rs 204 billion would come from resources other than PSDP, he pointed.

He said the capacity building improvement already in the offing in the country, the education portfolio in the next budget would be to the tune of 4 percent of GDP. Dr Salman Shah said with the increase in minimum wages and salaries as well as in pensions Rs 200 billion subsidies and grants would be given on petrol, electricity and food items to weak economic fiber of the society.

Referring to the increase in health and education portfolios in next budget, he said 20 percent increase was expected there. The present government would also cater to the needs for the improvement in construction industry portfolio in budget 2007-08, he added.

Speaking of the contours of the next financial budget, he said defence budget would be less than 3 percent of the GDP in it. The trade deficit would be restricted to the level of 4 percent in the next budget, he added. Averring on the state of economy in the country, Dr Salman Shah said there had been a balanced growth with GDP remaining at 7 percent and investment to the GDP ratio crossing over 23.5 percent in the current year, he dilated.

He said Pakistan had emerged as Asia's fastest growing economy with 7 percent GDP ratio achieved in the previous five years. The country was head in the radar of investment portfolio in the world and would not lag behind in the race of development, he added.

The advisor said the country achieving the mark of $6 billion in foreign investment in the current fiscal year, achieved a milestone that had never been arrived before in the history of the country.

He said that investments arriving in the country in portfolios such as financial sector, telecom, manufacturing and agriculture were being made on long-term rather than on short-term basis. He said this foreign investment had much more potential here.

Citing example of China, he said there had $70 billion foreign investment in that country during the year and Pakistan also had the potential to multifold its performance here.

Stating that population of Pakistan is better than other countries of the world and under the estimates of Goldman Sache, he said country's labour force would scale to fourth largest place where its economy stood at number 20 in the ranking.

The advisor said that with the ongoing development process remaining unhindered, Pakistan economy had the potential of climbing number six in the world.

Referring to emergence of middle class in the country, he said there had been tremendous growth in food, automobile, AC, clothe portfolios in the country. He dilated that there had been 30-35 percent growth achieved in car portfolio while 200 increase had been witnessed in ACs production.

Speaking about increase in demand, he averred that it had substantially occurred in milk, butter, bread and other related sectors. The advisor said with the demographic picture sound Pakistan was increasingly becoming a part of world markets.

Emphasising the capacity building, the Dr Salman Shah said with 10 new engineering universities coming up in the country, and multi billion investment would occur there in next 10 years. Speaking about development in the energy sector, he said the country had the potential of producing 50,000 megawatt. He warned that if water reservoirs in the country were not made, posterity would not forgive them. He said new projects were coming up in the sector.

Referring to GDP public debt ratio of the country, he said it stood at 51 percent of GDP. He stressed that this level should drop to 20 percent in next 10 years. Speaking about recent success of bonds issued by Pakistan in international market, he averred that with its maturity in 2017, the bond's mark-up rate was 6.875.

The advisor said that for sustained development there was a dire need for reducing hassle factor, adding it was important that special economic zones were made and spread over the country. He said public sector would be involved in these ventures. He said that Pak-China Special Economic Zone was being established in Lahore.

Speaking about rising trend in food prices in the country, the advisor said that measure were being taken to deal with this factor in forthcoming budget. He said they were doing their best to remove the middleman between farmer and consumer so that price of commodities were lower when commodities reached masses.

He said food items inflation was 15 percent at world level where it was less in Pakistan as compared to this level, adding the increase in local production of food items would reduce related inflation here. Speaking about inflation in the country, he said overall inflation had crossed the rate of 7 percent against target version of 6.5 percent, however this figure would be curtailed in future, he pointed. About target given to CBR in year 2006-07, he said that target was of more than Rs 1 trillion.

Dr Salman Shah showed dismay over higher rate of interest in borrowing during 1996 onwards until this government took reign of power. He said the present government was under stress in paying off these huge mark up sums that stood to the tune of 18 percent otherwise they would have spent much more on masses, if that situation had not existed.

http://www.brecorder.com/index.php?id=571962&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*July-May cement exports peak at 2.7 million tons *

KARACHI (June 03 2007): Cement exports reached all time high level of 2.7 million tons recording a jump of 105 percent during July-May period of the current fiscal year against 1.3 million tons during the same period of the last fiscal year due to increasing demand in Dubai and Afghanistan, industry sources said on Saturday.

They said that the reconstruction process in Afghanistan and fast development work in Dubai have given rise to cement demand manifold. "We are expecting that export to India will resume after issuance of quality certificates by Indian Standers Bureau in the next fiscal year," an exporter said.

Pakistani cement price is the lowest in South Asian region, besides being of better quality, he said. Statistics show that during May 2007 country's cement export mounted by 125.46 percent to 348,634 tons as compared to 151,972 tons during the same period of last fiscal year, denoting an increase of 196,662 tons during May 2007.

May 2007 total cement dispatches reached all time high level of 2.283 million tons during one month. Earlier, in May 2006 dispatches during one month amounted to 2.281 million tons. The local and export dispatches have increased due to major stimulus of growth including improved infrastructure and increased construction activities along with reduction in cement prices, industry sources said.

http://www.brecorder.com/index.php?id=571941&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Five percent farm growth has positive impact on rural economy: Prime Minister *

ISLAMABAD (June 03 2007): Prime Minister Shaukat Aziz on Saturday said that 5 percent agricultural growth achieved this year has a positive impact on the rural economy and farm income besides, infusing purchasing power and liquidity in the rural economy. He was talking to Zarai Taraqiati Bank Limited (ZTBL) President Mansoor Khan who called on him here.

The Prime Minister said that agricultural growth this year was better than the targets and it had a very positive impact on the rural economy and farm income. He said the increased production of wheat, sugarcane, pulses and increase in livestock sector has given high levels of income to the farmers and improved their living standard.

Ample availability of water and subsidised provision of fertilisers has improved the farm productivity, he said. Shaukat Aziz expressed his satisfaction over improvement in the operations of the ZTBL that plays a crucial role in meeting the needs of agricultural credit in the country.

He said the ZTBL should be run on professional lines and it should increase its lending to meet the growing needs of the agricultural sector. The Prime Minister said that agriculture is the backbone of Pakistan's economy as two-thirds of its population depends on agriculture and, hence, the ZTBL has an important role in improving the productivity and enhancing lending facilities to farmers across the country.

Shaukat Aziz said the new initiatives undertaken by the government in the field of agriculture, livestock and dairy include better seeds, use of better irrigation techniques and improving the farm productivity by using modern methods. He said in all these areas the ZTBL can play a major role in funding new activities so as to increase and enhance the farm income.

The Prime Minister said as a result of increase in farm income, the sale of other products is also increasing in the rural areas creating business opportunities across the country. Shaukat Aziz said the government is committed to helping the farmers and several steps have been taken to improve market mechanism, so that the farmers get adequate returns for their efforts.

Mansoor Khan explained the various initiatives taken by the ZTBL to improve its performance. He apprised the Prime Minister of the collections of ZTBL, which have increased by 30 percent this year, saying these recovered loans would be used to fund new lending in the agriculture sector across the country.

Mansoor Khan said that one of the major reasons for this increase in collections is the better-than-expected crops, which have improved the capacity of the farmers to pay back loans.

The ZTBL chief also informed the Prime Minister that the Bank is initiating several public-private partnerships with various entities to allow the farmers to get better returns and appropriate technical assistance to conduct farming on modern basis. He thanked the Prime Minister for approval to hire new Mobile Credit Officers (MCOs), which has happened after a gap of 20 years.

The ZTBL president said that 100 new MCOs have been hired and more will be hired to meet the needs of the Bank, strengthen its outreach and assist in the Bank's lending portfolio.

http://www.brecorder.com/index.php?id=571999&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Pakistan given $14.2 billion ADB loan in 20 years *

FAISALABAD (June 03 2007): The Asian Development Bank (ADB) had approved 171 loans for 127 projects with a total value of $14.2 billion during 1985-2006 for Pakistan's Public Sector. ADF accounted for 113 loans totalling $6.3 billion, while OCR provided 58 loans for a total of $8.0 billion.

According to an update ADB report, the average approved loan amount per year was $501.3 million in 1985-1999 (excluding 1998), and $951.4 million in 2000-2006. Pakistan has been one of ADB's largest clients.

Since beginning operations in Pakistan in 1968, ADB approved $16.3 billion in assistance up to 31 December 2006, the third largest amount behind Indonesia and the People's Republic of China. From 2000 through 2006, Pakistan remained ADB's third largest client.

Of total public sector lending in 1985-2006, the agriculture sector received the largest share at 19.7 percent ($2.8 billion), followed by power and energy at 17.6 percent ($2.5 billion), multi-sector (largely urban and rural development and social sector operations, plus some emergency and/or rehabilitation assistance) at 15.4 percent ($2.2 billion), finance at 13.3 percent ($1.9 billion), and transport and communications at 11.9 percent ($1.7 billion).

The highest annual value of approvals was $1.54 billion in 2006. At the end of 2006, ADB's public sector portfolio for Pakistan included 80 ongoing loans (54 projects) with a total value of $6.1 billion.

These included 20 program loans, 36 project or investment loans, 14 technical assistance (TA) loans, 9 sector loans, and 1 mixed development finance institution loan. Of the 20 ongoing program loans, five were under law, economic management, and public policy sector operations, while seven were classified as multi-sector (mostly social sector operations). Of the 80 ongoing loans, 20 were classified as multi-sector.

Pakistan now has the most multi-sector projects of any ADB client-followed by 13 loans in the agriculture sector; 10 loans in the law, economic management, and public policy sector; and 9 loans in the transport and communications sector.

The sector breakdown of lending has changed over time. In 1990-1994, the energy sector received 35 percent of approved loans, followed closely by agriculture with 32 percent, with transport and communications at 13 percent. Priorities shifted significantly in 2001-2006.

The energy sector fell to about 6 percent of approved loans for the period, while agriculture sector loans dropped to 12 percent. The transport and communications sector, meanwhile, rose to 17 percent of approved loans.

Largely in response to a window of opportunity, the law, economic management, and public policy sector became a major recipient of ADB financing, with 20 percent of loans allocated to the sector. Multi-sector operations also rose sharply, from 9 percent of total lending in 1990-1994 to 24 percent in 2001-2006.

ADB Private Sector investments in Pakistan during 1985-2006 totalled $307.3 million. Most of the program comprised 22 private sector loans with a total value of $279.1 million. Of this amount, $190.8 million went to the industry and trade sector, $69.3 million to the energy and power sector, and $19.0 million to ports and shipping (under the transport sector).

In addition to loans, ADB made private sector investments totalling $28.2 million through 13 equity investments for $18.9 million, one line of equity for $5.0 million, and provision of an underwriting facility for $4.3 million. ADB has approved only four private sector facilities in Pakistan since 1996 (in 1996, 2000, 2003, and 2005).

http://www.brecorder.com/index.php?id=571982&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Audi car to be launched in Pakistan *

KARACHI (June 03 2007): With over 85,000 Audi cars sold in Asia last year, the German car maker is proving to be the most desirable brand in the region and now the four-ring badge is gearing itself to take over the Pakistani luxury car segment.

"Pakistani automotive market is one of the fastest growing markets in the region. In 2006, Pakistan has manufactured 160,000 vehicles. The base of our luxury car segment is also widening and a double digit growth in this segment has been recorded," said Zane Dubash, Business Manager-Audi Centre Karachi.

"It is the right time for us to gear up with a growth pool of discerning, increasing affluent consumers, who love sporty, progressive and sophisticated offerings. Initially, we are planning to serve with models ranging from A4, A5, A6, A8, TT and Audi Q7", explained Shadman Siddiqui, Head of Sales-Audi Centre Karachi.

Audi is a manufacturer of exquisite cars - beautiful, sophisticated machines that embody technological perfection. Quality and service are said to be the recipes of Audi's success, which is at the very heart of their DNA.

http://www.brecorder.com/index.php?id=572074&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*ADB to provide $1,400 million for two projects *

FAISALABAD (June 03 2007): Asian Development Bank will provide $1,400 million for two projects National Trade Corridor Highway Investment Program - Project-I and MFF. According ADB sources, $500 million will be provided for the National Trade Corridor Highway Investment Program (NTCHIP).

Which aims to assist the government of Pakistan in the implementation of its flagship initiative approved by the government in 2005. The objective of NTCHIP is to develop and improve road connectivity along the main north-south national highway corridor that will support the national trade corridor (NTC).

Road sector efficiencies will be linked to policy reforms and action as identified and endorsed by the government's reform agenda on NTC. Consulting services for construction supervision of the National Trade Corridor Highway are required to assist the National Highway Authority (NHA) in implementing the proposed improvements and construction.

Under this project, consulting services will be provided by an international consulting firm in association with a domestic consulting firm to be selected by NHA according to ADB's guidelines on the use of consultants. A total of 3,620 person-months of two teams of consultant inputs are estimated for the four packages of Project I.

It will comprise 496 person-months of international and 3,124 person-months of domestic consultant input. Procurement to be financed under NTCHIP - Project-I will be carried out in accordance with ADB's Procurement Guidelines.

International competitive bidding (ICB) will be used for goods and works funded under the Investment Program. ICB will be utilised for supply contracts estimated to cost the equivalent of $1 million or more. ICB will be used for civil works contracts estimated to cost the equivalent of $5 million or more.

ADB will provide $900 million for second programme "MFF - National Trade Corridor Highway Investment Program (NTCHIP)". NTCHIP will contribute to the economic growth by developing connectivity assets.

This will increase the trade competitiveness and regional co-operation. The program will invest in over 800 km of the NTC network. This will reduce the travel time from Karachi to Peshawar by half and provide faster access to the borders with Afghanistan, the People's Republic of China (PRC), and Central Asia.

http://www.brecorder.com/index.php?id=571992&currPageNo=3&query=&search=&term=&supDate=


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## Neo

June 03, 2007 
*Sindh to earmark Rs50bn for development: Rs230bn budget likely on 15th*

KARACHI, June 2: The Sindh government is preparing a budget of about Rs230 billion plus for the next fiscal year, which is likely to include a development outlay of Rs45 to Rs50 billion and a promise of giving employment to 25,000 youths in the provincial government services.

âThe budget size will be approximately 25 per cent more than the current fiscal yearâs budget of Rs193 billion with 30 per cent more development funds than the revised development outlay of Rs35 billion during 2006-07,â a well-placed and authoritative source in the Sindh government disclosed.

The original size of the current yearâs Annual Development Programme was Rs32 billion, which was raised to Rs35 billion.

June 15 is the tentative date for presentation of the Sindh budget.

Next year, being an election year, is of special significance for the ruling coalition in Sindh as it is for the ruling alliance in Islamabad and PML (Q) in Punjab and sources say that strategies are being worked out to pool all available budgetary and non-budget resources to obtain best results.

Sources claim that the Sindh and Punjab governments have huge surplus cash funds â more than Rs100 billion - in their accounts with the State Bank of Pakistan. Professional planners and political brains have been deployed to work out schemes based on these funds to win over the support of the population.

The planners focus on next fiscal yearâs budget is on glittering and attractive schemes and projects to get support rather than on sectors where work is slow and results take time to come. âIt is an entirely election-oriented budget with all known gimmicks,â the source said.

There will be gimmicks for the rural areas and for the urban areas. There is a Mega City plan for Karachi to be launched with fanfare amidst a media blitz. Then there is a White Revolution plan for rural areas by promoting livestock. In fact this plan was launched early this fiscal year with no visible signs of any improvement in dairy farming.

For the next fiscal yearâs budget, the federal government has contemptuously ignored the pleas made by the Central Board of Revenue to allow it collection of agricultural income tax.

The suggestion was that instead of provincial governments, the CBR would collect tax from the agriculturists and then pass it on to the respective provincial governments on purely collection basis.

The CBR officials made a detailed presentation to President Pervez Musharraf with an assurance that it can raise collection to Rs50 to 60 billion instead of less than Rs2 billion at present.

In 1977, when late Bhutto introduced tax on the agricultural income, the same collection mode was adopted in 1977-78. But after taking over on July 5, 1977, one of the first actions of General Zia ul Haq was to repeal agricultural income tax without any announcement and he won over the support of all big landlords in Sindh, Punjab, Balochistan and NWFP.

The big landlords in Pakistan did not take time in abandoning Bhutto. âHow can Pervez Musharraf be unaware of Zia ul Haqâs tactics,â the source said.

Another feature of next fiscal yearâs budget is the distribution of resources on the basis of the decision given by President General Pervez Musharraf. The federal government did not give any hint of forming a new National Finance Commission. The Muttahida Qaumi Movement, the dominant partner of Sindh coalition also did not raise the issue. âElection year is not the appropriate time to raise NFC issue,â the source said.

âAgriculture is getting all attention in resource allocation during next fiscal year,â the well-placed source said and pointed out that livestock farming will get a substantial amount.

-----âLivestock farming was given focus in the current fiscal yearâs budget also,â recalled an observer who pointed out that the milk price had increased to Rs34 a litre from Rs28 a litre last year. âWe can only pray and hope that history does not repeat itself next year and milk price in Karachi goes to Rs40 a litre,â he said.

Revival of closed 7,000 primary schools in Sindh is another issue to get attention. In Sindh there are 15 primary schools for every secondary school. The government wants to bring down this ratio to five primary schools for one secondary school.

Plans are being made to upgrade a large number of primary schools. But how the quality of education will be improved is not elaborated. At present, the constructed structures of schools, hospitals and community centres are being used for livestock pens, parlours and even police stations in the rural areas.

----Sindh Coastal Highway project will also get substantial amount of allocation in next budget. It is a 325 kilometres long highway that will connect Karachi, with Bhambhore, Mirpur Sakrand, Gharo, Keti Bunder, Ali Bunder and Nagar Parkar. Total cost of the project is Rs8 billion and its construction will open up coastal areas of the province.

The next fiscal year also marks the fifth and final year of the present coalition in Sindh. Since 2003-04 till 06-07, the Sindh government invested Rs88 billion development funds. Karachi still remains half-dug and half-excavated city. Even the main business districts are inaccessible.

Hyderabad, Sukkur and other second tier towns of Sindh are in no better positions. The rural Sindh is primitive and poor. In a few rural districts, the poverty ratio is said to be 90 per cent in Sindh.

With an indicated Rs50 billion development investment in the next fiscal year, the total development cost comes to Rs138 billion during the term of this government.

Two chief ministers took turn one after the other. âNone of the two provided leadership and there was no direction of development investment,â an observer said.

http://www.dawn.com/2007/06/03/ebr2.htm


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## ahussains

All the project always is funded by the banks on interst basis and the goverment says we are not taking any more loans ... ? Start the small without loas projects which can give some thing to pakistan and its people..


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## Neo

Sunday, June 03, 2007 

*Export plan for textile and clothing: Textile exports to reach $24 billion by 2013*

* Budget 2007-08 to enhance textile sector exports

By Sajid Chaudhry 

ISLAMABAD: The Budget 2007-08 incorporates measures to enhance textile and garment sectorâs exports by offering fiscal relief to the sector. 

The government is expected to allow sales tax and customs duty exemption on all types of synthetic fibres used in textile exportable products, exemption on income of foreign technicians hired by the textile industry and 15% merger tax credit on merger asset value of textile exporting companies, a government official told Daily Times on Saturday. 

These proposals on âExport Plan for Textile and Clothingâ were discussed at high-level meeting where the Prime Minister Shaukat Aziz directed the Textile Industry to coordinate with the concerned ministries to start implementation of these measures relating to textile and clothing.

The export plan for textile and clothing seeks to enhance textile and garment sectorâs exports from $9.98 billion in the fiscal year 2006 to $24.36 billion by fiscal year 2013. 

The meeting was informed that usage of synthetic filament is nominal in Pakistanâs industry as duties on synthetic materials are discouraging its use in textile export industries. The meeting, taking note of it decided that cotton research facilities may be consolidated and Pakistan Cotton Committee be restructured. It decided to allow zero rating of all synthetic fibres used in the textile exporting industries. The meeting also directed to strengthen synthetic fibre research institutes at Karachi, and establish new institutes at Faisalabad and Lahore. 

The meeting was informed that there is un-necessary competition among textile exporting units, which is resulting in lower unit price of Pakistani textile products. To improve the economies of scale in the textile sector, the meeting has directed to provide incentives to facilitate merger of companies by way of providing â15% merger tax creditâ on merger asset value. The meeting has also directed to initiate study to enforce minimum capital requirements in textile companies within minimum possible timeframe. 

While discussing the non-availability of required human resources, the meeting was informed that against the total requirements of 12750 technical graduates in various fields of textile only 7950 are available and a shortage of 4800 exists in the country. The meeting taking serious note of this situation directed the concerned authorities to immediately hire foreign technicians to fill the skill gap in the textile and clothing sector.

http://www.dailytimes.com.pk/default.asp?page=2007\06\03\story_3-6-2007_pg5_3


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## Neo

Sunday, June 03, 2007 

*Government to offer Rs 200 billion relief measures*

LAHORE: Advisor to Prime Minister on Finance Dr Salman Shah said on Saturday that the government is going to offer Rs 200 billion in terms of subsidies, grants and salary increases in next budget.

Addressing newsmen at a local club, the advisor said that the government intends to increase social sector spending by 20 percent, particularly in health and education sectors.

âWe would take the development work at the doorstep of deserving ones in the next fiscal year,â he said. On construction of dams, Dr Shah said that Basha dam would be completed in next eight to nine years, adding that Kala Bagh dam would also be constructed, as the public understands that the construction of Kala Bagh dam has become inevitable now.

He said government, keeping in mind the rising demand for housing, is going to focus on housing finance next year aggressively. According to him, 10 new Engineering universities, worth Rs1000 billion, would be set up in the next few years and he urged the business community to pay taxes honestly to enable the government to meet the expenditures in this regard.

On the rising prices of essential commodities, Dr Shah admitted that a common consumer is hit hard due to increase in prices but he added in same breath that it was an international phenomenon and surveys show that prices of food items are increasing by 15 percent annually all over the world. 

Dr Shah said government has targeted inflation to remain at 6.5 percent next fiscal year as well. According to him, the latest bumper wheat, pulses and sugarcane crops have played effective role in curtailing the price hike. Similarly, he added, government will focus on improving the supply chain as a measure to control prices.

He said support prices offered to farmers for wheat and sugarcane have also contributed in high prices, though farmers are direct beneficiaries of these measures. He said countryâs reserves would cross $15 billion by June 2007 and government has fixed one trillion rupees as a revenue target for next year.

http://www.dailytimes.com.pk/default.asp?page=2007\06\03\story_3-6-2007_pg5_10


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## Neo

*Budget to add new chapter in history: Shaukat *


ISLAMABAD (June 04 2007): Prime Minister Shaukat Aziz has said that presentation of the new budget next week would add a new chapter in the democratic history of Pakistan since the current Parliament is set to become the first one to present its fifth consecutive budget.

He congratulated the parliamentarians belonging to both treasury and opposition benches for this forthcoming historic occasion.

The prime minister was talking to a group of parliamentarians comprising Federal Minister for Information and Broadcasting Mohammad Ali Durrani, Chief whip in the National Assembly Sardar Nasrullah Khan Dareshak and Minister of State Omar Ayub Khan.

He said that the new budget would be welfare-oriented and would carry forward the reform and development agenda of the government. The meeting also discussed the upcoming budget session. The prime minister appreciated the efforts of Sardar Nasrullah Khan Dareshak and Omar Ayub Khan in interacting with members of the parliament and seeking proposals for the new budget in order to give them representation in the budget making process.

Shaukat Aziz said that during the last five years the government had worked for the welfare of people and was confident of contesting the next general elections on the basis of its performance in office. Omar Ayub Khan said that budget would be presented on June 9 and the general discussions would commence from the 12th.

http://www.brecorder.com/index.php?id=572255&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*ADB to provide KESC $150 mln for power generation *

ISLAMABAD: June 05, 2007: The Asian Development Bank (ADB) and Karachi Electric Supply Corporation (KESC) here on Monday signed an agreement to provide the Corporation with a $150 million loan to help increase power supply and coverage in Pakistan's biggest city, industrial and commercial heartland Karachi.

Agreement to this effect was signed by Chief Executive Officer of KESC, Syed Muhammad Amjad and Robert Bestani Director General of ADB's Private Sector Operation.

Secretary Water and Power Muhammad Ismail Qureshi and Country Director ADB, Peter Fedon also witnessed the ceremony. In his address of welcome, Syed Muhammad Amjad highlighted KESC's power expansion plan adding that present installed capacity is 1756 MW and derated capacity is 1249 MW.

He said after rehabilitation as on June 2007 is 1464 MW. He further said that after completion of rehabilitation the total generation capacity would be augmented to 2244 MW by March 2009.

Syed M. Amjad, said he appreciated ADB's support for the utility's urgent turnaround and for its role in bringing together a big financing package.

The successful turnaround of the utility is viewed as important for future privatisation in Pakistan, he remarked.

"This capital injection is essential and will greatly improve the utility's ability to provide a quality service to Karachi", said Robert Bestani, Director General of ADB's Private Sector Operations Department. Karachi is facing energy crisis and its 16 million residents have to contend with frequent power outages.

ADB's loan will go toward on the corporation's dollars 809 million (Rs. 52 billion) capital investment programme.

The balance of funding will come from shareholders, the international finance corporation and local commercial banks. The move comes less than two years after the utility was privatised.

The investment will increase electricity generation by more than 785 megawatts, from about 1,500 megawatts today, as well as greatly improving the utility's transmission and distribution network and its commercial systems and customer responsiveness.

With the economy rapidly expanding, demand for power in Karachi is increasing well above the national average and this trend is set to continue, putting further pressure on an already strained power sector, not just in Karachi but countrywide.

The Karachi Electric Supply Corporation has an exclusive license to supply electricity to Karachi and surrounding areas, but suffered from years of under investment and poor maintenance before it was privatised. The US $ 150 million loan is being provided from ADB's ordinary capital resources without a government guarantee.

The loan will have a maturity of 10 years and a grace period on repayments of upto three years.

Brecorder


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## Neo

*Oil refining capacity to be jacked up to 13 million tons *

ISLAMABAD (June 04 2007): Pakistan's oil refining capacity is planned to be doubled, from 6 million tons to 13 million tons per annum by setting up new refineries to meet growing energy requirements in the wake of high economic growth rate.

In addition to making efforts to enhance refining capacity of the present five refineries, foreign investment is being tapped for setting up another oil refinery near Port Qasim.

The history of oil refineries in Pakistan started when Attock Refinery began its operations in 1922 with a small capacity of 119,000 tons per annum, and now has reached 1.82 million tons per annum.

Attock Refinery Limited (ARL), situated in Morgah, near Rawalpindi, was incorporated as a private limited company in November 1978 to take over the business of Attock Oil Company Limited relating to refining of crude and supplying of refined products.

ARL was then converted into a public limited company in June 1979 and is currently listed on all three stock exchanges. The company is also registered with the Central Depository Company of Pakistan Limited (CDC).

ARL's configuration enables it to process the lightest to the heaviest indigenous crude and produce a complete range of both energy and non-energy products (non-energy products include lubes and greases, asphalt, solvent oil, mineral turpentine (MTT), benzene toluene xylene (BTX), jute batching oil, processing oil, carbon oil, and wax).

ARL has already obtained ISO 9001 (2001), ISO 14001 (2002), and OHSAS 18001 (2006) certifications.

The second refinery, National Refinery Limited (NRL), was incorporated as a public limited company in Karachi in 1963 and the government took over its management under the Economic Reform Order, 1972.

NRL has now been privatised, and management was handed over to new owner (Attock Oil Group) on July 7, 2005.

The Attock Oil Group succeeded by offering the highest bid of Rs 16.415 billion to acquire 51 percent shares and management control of NRL.

The Group is being represented through shareholding acquired by Pakistan Oilfields Limited (POL), Attock Refinery Limited (ARL) and Attock Petroleum Limited (APL).

In addition to a crude refining capacity of over 2.7 million tons per annum, the NRL has two lube refineries that have a combined capacity of 176,000 tons per annum of lube base oils (LBO) and a BTX unit that has a 25,000 tons per annum capacity.

As the only refinery in Pakistan that produces LBO, the NRL enjoys a competitive edge over other refineries. The NRL has acquired certification under ISO 14001 for compliance with international standards on its environment management system.

Pakistan Refinery Limited (PRL), third in the country, was incorporated as public limited company in May 1960 and is listed at the Karachi and Lahore stock exchanges.

The refinery is situated in Karachi and is engaged in the production and sales of petroleum energy products as well as MTT, its only non-energy product.

Its present design capacity is 2.1 million tons per annum. The majority of PRL shares are held by its associated companies (PSO, Shell, Chevron, Central Insurance and Dawood Corporation), whose combined shareholding amounts to 69.3 percent. Financial institutions (9.4 percent), public sector companies and corporations (2.8 percent), individuals (14.7 percent) and joint stock companies, banks, development financial institutions, Modaraba companies, insurance companies and others (3.8 percent) hold the rest.

PRL has been awarded ISO 14001 certification and Occupational Health Safety Assessment Series (OHSAS) 18001 for maintaining its health, safety and environment (HSE) and quality control standards.

The fourth refinery, Pak-Arab Refinery Limited (Parco), was incorporated in Pakistan on May 9, 1974, as a public limited company. The shares of the company are owned by the Government of Pakistan (GoP) and Abu Dhabi Petroleum Investment Company, LLC (ADPI), based in Emirate of Abu Dhabi, in the ratio of 60 percent and 40 percent, respectively.

The company is engaged in refining, sale and transportation of petroleum products. The company is also undertaking marketing of petroleum products (lubricants) under the brand name of 'Pearl'. The refinery of the company is situated at Mahmood Kot, in District Muzaffargarh.

Parco initially started as a pipeline operator, moving petroleum products from Karachi to Mehmood Kot and later on to Machike via Faisalabad. Parco has commissioned another cross-country pipeline 817 km, 26-inch diameter in November 2005.

White oil pipeline is designed to carry up to 12 million tons per year of refined petroleum products from Karachi to Mahmood Kot, starting with initial throughput of 5 million tons per year.

A joint venture company, called Pak-Arab Pipeline Company Limited, has been formed by Parco having 51 percent share in collaboration with country's major oil marketing companies (OMCs)--Shell, PSO and Caltex--having 49 percent share.

In year 2000, Parco's oil refinery, the largest in the country, was commissioned with a refining capacity of 4.5 million tons per annum. The company has an asset base approaching Rs 100 billion.

Parco has entered into a joint venture agreement with 'Total', of France, for marketing its consumer petroleum products under the co-branding of 'Total-Parco' through a rapidly emerging national network of retail outlets. Parco is also marketing 25 percent of its LPG under the brand name 'Pearl Gas' in collaboration with SHV, of Holland.

In addition, Parco also markets the imported lubes from OMV of Austria under the brand name of 'Pearl Lubes', and its locally blended lubes as 'Pearl Energy' and 'Pearl Zabardast'.

Bosicor Pakistan Limited (BPL) was incorporated in the country as a public limited company in January 1995, and is quoted on the Karachi and Lahore Stock Exchanges.

The principal business of the company is refining and marketing petroleum products. The refinery has a designed capacity of 1.5 million tons per annum. After the completion of its trial run from November 2003 to June 2005, the company started commercial production in July 2005 and can produce a wide range of petroleum products, including LPG and naphtha. It has a long-term sale and purchase agreement with Pakistan State Oil Company (PSO) for marketing of its products.

http://www.brecorder.com/index.php?id=572272&currPageNo=1&query=&search=&term=&supDate=


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## Neo

June 04, 2007 
*NWFPâs ambitious development plan*

By Mohammad Ali Khan

THE North West Frontier Province government is set to announce a Rs32 billon Annual Development Programme (ADP) for the financial year 2007-08.

A major chunk of the fund, of the all-time high ADP, according to Finance Minister Shah Raz Khan, will go to the social sector, including health, education, water supply and communication.

Eying the forthcoming general elections, completion of the projects, which have been initiated by the MMA government, will get top priority in the next budget.

The NWFP government deserves the credit for getting the budgetary allocation for the ADP raised from Rs6 billion in 2001 to Rs27 billion in the current financial year.

But, many believe that even with higher budgetary allocations, no significant improvement could be witnessed towards social indicators of the province mainly because the government lacks a coherent approach to the development sector.

They say that in the NWFP only politically-motivated projects dominate the ADP, which secures the interests of those in power instead of targeting the needy and deserving sections of the population.

Abdul Akbar Khan, parliamentary leader of PPP-Parliamentarians in the Frontier Assembly, says: "Article 119 of the 1973 Constitution confers the provincial assembly with the power to involve parliamentarians in the budget-making process. However, unfortunately even after passage of 30 years, the Frontier Assembly is following the rules framed in 1937, which restrict the involvement of parliamentarians in the exercise.

âBudgets and the ADPs are prepared by bureaucrats on the whims of the ruling parties rather on the basis of need. That is why visible development could not take place in the NWFP even after increasing the spending on public sector uplift programmes," he says.

Apart from limited participation of the public in ADP formulation, there are a number of impediments such as lack of capacity of the implementing agencies and procedural hurdles, which hamper the development process despite higher budgetary allocations.

Background interviews with officials involved in the ADP formulation suggest that government agencies have shortage of technical staff which is creating the biggest hindrance in achieving the required development target.

In the current financial year, out of Rs27 billion worth ADP, the government has earmarked Rs16 billion for those projects which are being financed by provincial resources.

The government had set completion target of 411 projects by the end of current fiscal year. However, by the end of the third quarter hardly 14 projects have been completed. Though, the government anticipates completion of the remaining 397 projects within the specified period of time, the past experiences show that hardly 300 projects could be completed within this period.

According to officials, the Planning and Development Department, being the prime agency for preparing and monitoring uplift activities in the province, doesn't have the capability to achieve the development targets.

Instead of strengthening such department, the government has abolished 180 staff positions during departmental downsizing in 2001.

Currently, there is only one chief of infrastructure, who has to technically scrutinise engineering proposals worth more than Rs5 billion annually.

Similarly the planning capacity of the Works and Services Department is under strain. The department plays pivotal role in the execution of civil works in related projects, but since 1995 no technical person has been inducted to this department, which has badly affected its working.

Earlier, the plan restructuring department had posts of three chief engineers which have been reduced to two along with the staff associated with the office of a chief engineer.

According to officials, the total sanctioned technical staff position of the W&S department is 300, out of which hardly 110 are filled while the rest are vacant.

At the district level, the planning and project appraisal capacity is almost non-existent which is creating procedural hurdles in the preparation of development plans. Such problems are also causing delay in the execution of projects.

A project has to be formally approved prior to its execution by a number of institutions and authorities such as pre-provincial development working party and provincial development working party, concerned department and finally by the chief ministerâs secretariat.

The approval of PC-1 of a project takes seven to eight months and the period some time prolongs even to one year in case of its approval by the federal government. Owing to such impediments, the general public of the province is far away from getting any significant benefit from the huge spending at the government level.

Just increasing the budgetary allocation can not mitigate the rampant poverty in the province unless coherent plans devised with public consultation are adopted.

Accountability with responsibility, job training for the concerned officials, introduction of a system of punishment and reward for the officials, placement of right man at the right place with a fixed tenure, strengthening the institutions by protecting them from political pressures and a strong evaluation and monitoring mechanism could produce positive results to a greater extent.

http://www.dawn.com/2007/06/04/ebr10.htm


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## Neo

June 04, 2007 
*Industry-specific incentives*

Pakistan's manufacturing and industrial sector suffers from various structural problems causing slow growth of output and exports, low level of investment and high concentration of manufacturing industries.

And like in the past, this time too the government is examining a number of proposals submitted by various official agencies and trade bodies for providing some relief to the industry in the budget 2007-08.

The Board of Investment (BoI) and the Federation of Chamber of Commerce and Industry (FPCCI) have separately prepared their recommendations. And the Central Board of Revenue (CBR) is believed to have agreed to offer certain concessions to make the industry competitive in the international market.

"The government is considering some industry specific concessions in the coming budget", said the Secretary General Revenue Division and the Chairman of CBR, Abdullah Yousuf.

He told Dawn that some of the problems faced by the industry have been identified to help improve the sector. Technical inefficiencies have to be overcome and the poor quality of products needed to be improved. Asked to indicate the specific concessions being considered, he said that it would not be appropriate for him to talk about them before the budget.

"We are very much aware of the problems of our industry and we will try to resolve them in the budget", he said adding that the government wanted the industry to grow at a faster rate to become competitive. All possible measures have been proposed by various bodies including the CBR to help our industry", the chairman CBR added.

The government was trying to create a right environment to help the industry. For making exports competitive, various recommendations have been formulated which are being considered by the government. He said 3.3 per cent growth in exports is surely a matter of concern and that the issue needed to be taken very seriously by the government as well as the exporters.

Mr Yousuf said that one of the factors that contributed to the low growth of exports was the competition from the Chinese and Indian products. "The government can offer fresh concessions and other possible fiscal and non-fiscal incentives to help increase our exports.

"Now we are examining what kinds of exemptions or incentives could be offered, especially on raw material, plants and machinery", he said, adding that poor quality of products and absence of proper research and development activities lead to slow growth rate of productivity, making the country's products uncompetitive in the international market. Diversification of products is another important issue which needs to be taken into account by the businessmen and the entrepreneurs, he said.

A senior official of the Planning Commission said that issues concerning the weak performance of industry and low level of exports have been discussed during the last few important meetings. Some of their problems will be addressed in the budget, he said, adding, in a world of aggressive competition it is not enough to keep generating growth exclusively from factors accumulation. Empirically, between 20-25 percent of growth has emanated from productivity gains in various countries.

The entire process for increasing productivity needs to be based upon the realisation that most people who actually do work are hardly educated and lack training. The objective is to promote higher value manufacturing while maintaining traditional edge in low technology and resource based industries. For this to happen, we must not only make policies, but also implement them effectively.

The wide range of activities and skills available, even when they are limited or circumscribed or scattered, lead us to believe that it is possible to achieve these objectives.

It is necessary to move out of the low skills equilibrium which traps both individuals and employers in a low expectations and low productivity environment. A focused policy thrust, supported by adequate resources, will be sought for raising the threshold levels of technology and skills which will lead to better productivity and better quality.

Pakistan has to make important strategic choices to ensure sustainable growth in the manufacturing sector in a rapidly changing, and international competitive environment. This requires massive structural changes rather than marginal change, a shift in production paradigm to technology and knowledge-based industrialisation, with a focus on the quantitative and qualitative growth of an integrated and competitive industry in the private sector.

"The inefficiencies of import substitution must give way to an export led strategy, and to diversification away from traditional industries and services", he said.

http://www.dawn.com/2007/06/04/ebr13.htm


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## Neo

June 04, 2007 
*Too many ministries stifle exports*

PRIME Minister Shaukat Aziz has said that exports in this financial year will marginally miss the target of $18.6 billion, but the economic growth will be above the target at 7.2 per cent, exceeding last yearâs growth of 6.8 per cent.

Exports are able to grow by three to four per cent only, says Chairman of the Trade Development Authority of Pakistan Tariq Ikram while the rate of economic growth exceeds seven per cent.

Commerce Minister Humayun Akhtar, who has recently returned from tour of Europe, says the commerce ministry is not solely responsible for the disappointing exports. The financial managers of the country are focused on higher revenue collection, lower external debt and higher economic growth, and achieving success in that area. He wants lower taxes in the exports sphere and larger concessions to the exporters to make exports cheaper and more competitive. But the authorities find that even when more concessions are given, they have not lead to exportsâ success and the results are far from adequate.

Usually when the growth rate is high and tax resources are larger, the exports are also higher. In fact many countries in recent times have enjoyed export-led growth instead of growth becoming a deterrent to larger exports.

Mr Humayun is right when he says that exports are not any longer the sole domain of the commerce ministry. The commerce ministry can help export only on what is produced at competitive prices. And that is the responsibility of the ministry of textiles and the ministry of industries. Also in the picture is the ministry of investment promotion to accelerate industrial investment and development of the economy and increase in production all round..

The old export promotion bureau is also in focus which has now rechristened as the Trade Development Authority with Tariq Ikram as its chairman with all his energy and drive, but he finds himself cluttered by too many organisations in the export race. Of course the last word in this area is with the finance ministry with the Central Board of Revenue in tow as the prime minister is also the finance minister.Any decision made by the prime minister cannot be reversed easily.

And the prime ministerâs priority is maximising the revenues spent on official activities and on larger development projects. Of course he listens to his ministers when they have a genuine problem.

The expanding textile industry has been agitating for long for a ministry of textile and that has been stoutly resisted by the commerce and industries ministers. They used to argue that if 40 per cent of the industry goes out of the industries ministry, too little authority is left for them and the commerce minister used to argue that if 66 percent of the exports which were textiles were out of his purview, his portfolio will shrink exceedingly. But now for some years, we have not only a textile minister with a cabinet rank but also a minister for state, although there is not enough work for both.

It is to avoid a conflict between the demands of trade and industry that the US has a powerful commerce secretary but no industries secretary. Similarly, Britain has no industries minister but a powerful board of trade headed by a cabinet minister and Japanâs Miti - ministry of trade and industries- is too well known and is very powerful. The ministry looks after the interest of both trade and industry and avoids conflicts between them.

As for the commerce ministerâs charge that the government gives priority to revenue collection which hurts exports is only partly valid. Cheap yarn as a result of tax concessions results in cloth abroad which competes with Pakistani fabrics and the government argues that more concessions given to the textile industry results in larger demand which has no end.

Any way, the cost of production of textiles as of any other product has to be lowered and the sale price made more competitive in a highly competitive textile world.

It is because there is not enough work for him as minister of industries and production that Jehangir Tareen has appended to his designation the title of minister for new initiatives as well, but we have yet to see any spectacular new initiative coming from his ministry. We need such new initiatives in the industrial sphere with its too many ministers doing too little or more of the same over and over again.

Whatever happened to the one village, one industry project copied from Thailand with a great deal of bravado. We have yet to see something coming out of that.

Too many cooks spoil the broth and too many ministers seem to stifle the export trade and produce a mole hill out of a mountain of verbiage.

It is time the prime minister takes a look at the economic portfolios and reassigns them more productively instead of letting the ministers block each other or let the other ministers do their job which he is not doing.

Do we need to clutter the seeds of power with too many ministers and call some of the ministers to be made ministers without portfolio while others are permitted to deliver what they promise.

http://www.dawn.com/2007/06/04/ebr19.htm


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## Neo

June 04, 2007 
*Industry-specific incentives*

Pakistan's manufacturing and industrial sector suffers from various structural problems causing slow growth of output and exports, low level of investment and high concentration of manufacturing industries.

And like in the past, this time too the government is examining a number of proposals submitted by various official agencies and trade bodies for providing some relief to the industry in the budget 2007-08.

The Board of Investment (BoI) and the Federation of Chamber of Commerce and Industry (FPCCI) have separately prepared their recommendations. And the Central Board of Revenue (CBR) is believed to have agreed to offer certain concessions to make the industry competitive in the international market.

"The government is considering some industry specific concessions in the coming budget", said the Secretary General Revenue Division and the Chairman of CBR, Abdullah Yousuf.

He told Dawn that some of the problems faced by the industry have been identified to help improve the sector. Technical inefficiencies have to be overcome and the poor quality of products needed to be improved. Asked to indicate the specific concessions being considered, he said that it would not be appropriate for him to talk about them before the budget.

"We are very much aware of the problems of our industry and we will try to resolve them in the budget", he said adding that the government wanted the industry to grow at a faster rate to become competitive. All possible measures have been proposed by various bodies including the CBR to help our industry", the chairman CBR added.

The government was trying to create a right environment to help the industry. For making exports competitive, various recommendations have been formulated which are being considered by the government. He said 3.3 per cent growth in exports is surely a matter of concern and that the issue needed to be taken very seriously by the government as well as the exporters.

Mr Yousuf said that one of the factors that contributed to the low growth of exports was the competition from the Chinese and Indian products. "The government can offer fresh concessions and other possible fiscal and non-fiscal incentives to help increase our exports.

"Now we are examining what kinds of exemptions or incentives could be offered, especially on raw material, plants and machinery", he said, adding that poor quality of products and absence of proper research and development activities lead to slow growth rate of productivity, making the country's products uncompetitive in the international market. Diversification of products is another important issue which needs to be taken into account by the businessmen and the entrepreneurs, he said.

A senior official of the Planning Commission said that issues concerning the weak performance of industry and low level of exports have been discussed during the last few important meetings. Some of their problems will be addressed in the budget, he said, adding, in a world of aggressive competition it is not enough to keep generating growth exclusively from factors accumulation. Empirically, between 20-25 percent of growth has emanated from productivity gains in various countries.

The entire process for increasing productivity needs to be based upon the realisation that most people who actually do work are hardly educated and lack training. The objective is to promote higher value manufacturing while maintaining traditional edge in low technology and resource based industries. For this to happen, we must not only make policies, but also implement them effectively.

The wide range of activities and skills available, even when they are limited or circumscribed or scattered, lead us to believe that it is possible to achieve these objectives.

It is necessary to move out of the low skills equilibrium which traps both individuals and employers in a low expectations and low productivity environment. A focused policy thrust, supported by adequate resources, will be sought for raising the threshold levels of technology and skills which will lead to better productivity and better quality.

Pakistan has to make important strategic choices to ensure sustainable growth in the manufacturing sector in a rapidly changing, and international competitive environment. This requires massive structural changes rather than marginal change, a shift in production paradigm to technology and knowledge-based industrialisation, with a focus on the quantitative and qualitative growth of an integrated and competitive industry in the private sector.

"The inefficiencies of import substitution must give way to an export led strategy, and to diversification away from traditional industries and services", he said.

http://www.dawn.com/2007/06/04/ebr13.htm


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## Neo

*Growth with equity*

HAVING achieved an average economic growth rate of seven per cent over four successive years, the government is now targeting a 7.2 per cent GDP growth for fiscal year 2007-08. The track record raises hope that Pakistan has not only the potential but also the wherewithal to join the league of Asian countries with decades-long sustained growth â a trend that is becoming more global. But one cannot be sure that the growth strategy now being pursued, resulting in the worsening of major macroeconomic indicators, can really protect the economy from the long-term risks of a possible slowdown. As is evident from a significant gap this year between budgetary targets and the revised provisional estimates, particularly the receding growth of industrial production and exports, the future course of development seems to remain uncertain. Industrial growth is down to 6.8 per cent against the budget estimate of 11 per cent and large-scale manufacturing has recorded a growth of 8.8 per cent, falling significantly short of the 13 per cent target. Similarly, export earnings are now pitched at $17.2 billion this year against the original projection of $19.8 billion. Despite the rise in home remittances and foreign investment â which together account for about $11-12 billion â the record current account deficit is expected to rise to $7.1 billion, mainly because of a very high trade deficit of $9.9 billion.

The current account deficit can be financed in the short run from international capital inflows but, as rightly pointed by the State Bank of Pakistan, global capital âcan be volatile and sensitive to a host of domestic and global factors (both economic [and] political)â. Before the economy suffers a setback, it is imperative to boost exports of merchandise beginning with the next budget, focusing on manufacturing and by taking steps to increase the dismally low rate of domestic savings. The savings rate has been eroded by persistent high inflation, currently estimated at 7.6 per cent as against the budgeted target of 6.5 per cent. With increasing interest rates and decreasing purchasing power, consumer financing by banks has dropped by a huge 42 per cent in nine months during the current fiscal year. The share of consumers, along with exports, in GDP growth is falling. But a positive development this year has been a robust growth in direct taxes, a trend that, if sustained, can ultimately help lessen the heavy burden of indirect taxes on poor consumers.

Going by the official pronouncements, next yearâs budget holds out some promise for the common man. As indicated by the secretary-general of finance, the salaried class and the common people will get relief though increases in their pay and pensions. The long-delayed plans for low-income housing are to be initiated. The size of small loans, which have so far not gone towards the uplift of the poorest of the poor, will be increased. How much these provisions will benefit the common people will be known only after the budget has been announced. Unlike the past two to three years, the economic growth this year is more broad-based coming from all three sectors â industry, agriculture and services. It is a positive trend. But the worsening macroeconomic indicators and structural imbalances pose a daunting challenge to the policymakers. It is time to address issues relating to the fundamentals of the economy to manage sustainable growth with equity.

http://www.dawn.com/2007/06/04/ed.htm#1


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## Neo

*OMV announces new gas discovery in Pakistan *
4-June-2007

VIENNA (Thomson Financial) - OMV AG said its unit OMV (Pakistan) Exploration has discovered gas in its Tajjal 1 exploration well in Pakistan's northern Sindh province. 

Preliminary test results show a flow capacity of 3,400 barrels of oil equivalent per day (boe/d), OMV said. 

Operating in Pakistan since 1991, OMV (Pakistan) Exploration Ltd is a wholly owned unit of Austria's OMV and provides 16 pct of the country's gas needs. 

peter.klopf@thomson.com pkl/vs COPYRIGHT Copyright AFX News Limited 2007. All rights reserved. 

The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News. 

http://www.sharewatch.com/story.php?storynumber=425979


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## Neo

Wow! This is already the fifth discovery in less than six weeks.


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## Neo

*Poverty ratio down by 10 percent in four years: Cheema *

LAHORE (June 05 2007): Provincial Minister for Industries, Muhammad Ajmal Cheema has said that rapid industrialisation is going on in Pakistan and all the spheres of the industrial sectors are contributing to this phenomenal growth.

While addressing a seminar here on Monday, he said that all the industries should take progressive steps in the development of their products because latest technology and new business trends are now part and parcel of a successful industrial revolution. He said that industrialists should ensure the latest technology. He said that during last 4 years poverty ratio has been decreased by 10 percent and more than 1.5 million new job opportunities have been created.

He said that we have to improve our infrastructure, build better facilities, introduce advance technology in machinery and expertise, skilled and semi-skilled work force, and above all, they must be quality conscious to compete with the development world.

Muhammad Ajmal Cheema said that the Government of Punjab and the Ministry of Industries would provide all kind of assistance to all those organisations that have a good business plan for the industrial growth of Pakistan.

http://www.brecorder.com/index.php?id=573272&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Wapda to commission 136 megawatts project *

LAHORE (June 05 2007): Water and Power Development Authority (Wapda) will commission a 136-megawatt (MW) Rental Power Project by the end of this month. This project will contribute 3.2 million units of electricity per day to the national grid to share the electricity consumption load on the power system.

The project is being elected at the premises of Bhikhi Grid Station in Sheikhupura district near the load center so as to minimise the loss of electricity during its transmission to the consumption centres.

It is pertinent to mention that besides devising an energy conservation programme, Wapda planned to inject two-rental thermal power stations of 286MW in this power generation system in order to reduce gap between demand and supply of electricity in the country. One such rental powerhouse of 150MW capacity was earlier commissioned in March this year.

http://www.brecorder.com/index.php?id=573329&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Chinese company working on Sondha power plant *

KARACHI (June 05 2007): China National Machinery Import Export Corporation is working on a 375MW coal-based power plant being setup at Sondha, Jheruk in Thatta district besides coal mining at a cost of 400 million dollars and at present 200 persons are working at the site.

Project Manager Zhu Jianan said this, while leading a delegation of China National Machinery Import Export Corporation, which met Sindh Minister for Mines and Mineral Development, Irfanullah Khan Marwat at his office on Monday.

The delegation told the minister that project feasibility report had been prepared. The minister assured the delegation that the government of Sindh would extend all co-operation to the company in the settlement of power tariff and start of final work. It was decided that the company would give a detailed briefing on June 7 with CMC's Vice-President Qin Ruijuan to lead the delegation.

A meeting will be held on June 11 in Islamabad under the chairmanship of Prime Minister Shaukat Aziz, which will be attended, among others, by members of Thar Coal Task Force, Energy Adviser to Prime Minister's Planning Committee, representatives of Nepra, Wapda, PPIBs and officials of Board of Investment. In the meeting proposals will be put up regarding finalisation of tariff. Marwat said the government's all out effort was that maximum investment is being made by foreign companies in the coal-based power plants.


----------



## Neo

* EU ban on Pak seafood likely to go *

KARACHI: The government has hinted seafood processors, de-listed by the European Union on quality concerns that they could resume exports to the region by July 2007 following a go-ahead by the 27-nation bloc authorities.

Informed sources said a recent meeting between the exporters and senior officials of the Federal Ministry Of Food, Agriculture And Livestock (MINFAL) concluded on assurance from the authorities to resume export by July 2007 following a consultation with the EU authorities.

âActually all the processing factories have declared themselves prepared to face another inspection from experts of the EU bloc after removing deficiencies,â said a source privy to the talks between the two sides.

âAs 11 out of 12 have informed the authorities about their restructuring plan, the government believes it should ask the EU to consider their de-listing,â sources said adding the EU has mandated the MFD (Marine Fisheries Department) to examine the factories and come up with final recommendations.â

He said the federally-administered MFD had a mandate from the EU to check revised quality measures adopted by the processing factories and provincial institutions, which would soon coordinate with the concerned bodies before finally moving to the EU.

âThere is a final meeting expected between the exporters and the MFD in near future,â the source said and added that this meeting would provide MFD with a clear picture to present before EU team.â

The government in March 2007 finally received a verdict from the EU, which informed Pakistani fishery authorities about de-listing of all the processing factories on quality grounds, putting ban on more than $80 million countryâs exports.

The EU decision came after more than a month its team visited Karachi fish harbour and other fisheries installations in January 2007 to check seafood quality being to its member countries. In February 2005 the EU team wrapped up its visit on warnings that Pakistani authorities should maintain seafood quality as per the set standards otherwise they would lose their largest seafood export market.

The exporters appear confident to meet the quality standard desired by the EUâs Food and Veterinary Office (FVO) in its last visit. However, things on part of the provincial government-controlled administration have not changed a lot.

âThere are also commitments from the federal and provincial governments to enhance harbour conditions in a move to satisfy the EU authorities,â said the source citing latest meeting of federal and provincial officials to discuss the situation.

âA meeting in this regard held last week discussed several projects at length. Sources of funding for these projects were also discussed. The federal government offered Rs20 million to upgrade the harbour before the EU visit and funding for new projects is expected too,â source said.

He said the Prime Minister himself visited Karachi last month and asked for serious efforts to improve seafood quality with development of modern facilities at the Karachi fish harbour. The State Bank suggested seafood exports at $160 million by June 2006 up from $138.94 million exported during 2004-05, as the EU countries remained the largest buyers of the Pakistani products with more than 50 per cent share in total shipments. The EU contributes more than 60 per cent of total seafood export fro the country, as the 27-nation block has been the largest single buyer of Pakistani seafood for more than two decades.

http://www.thenews.com.pk/daily_detail.asp?id=59061


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## Neo

June 05, 2007 
*Market capitalisation up Rs1tr in 5 months*

KARACHI, June 4: The paper value of corporate Pakistan has shown an unfathomable increase of rupees one trillion to surpass Rs3.8 trillion on June 6 from Rs2.7 trillion at the close of business on Dec 31, 2006. It could be a moment to rejoice.

But there is a fly in the cocktail. Almost all of the increase has come from staggering rise in the market value of 650-odd stocks of companies already listed at the stock exchanges while new offerings have been negligible.

Doddering at the height of 13,000 points, the KSE-100 index represents rise of close to 3,000 points in less than half the year. Many market strategists admit that most of the shares in some of the sectors, such as banks and cement, are now highly âover-valuedâ. The pre-budget buying now in full swing, the party is likely to last for the time being. The market participants, nonetheless, hold a consensus view that for the bourse to keep up its bull run, there is a dire need for new listings.

The enormous gains that small investors had made from subscriptions in IPOs of state-owned companies, such as the OGDC and Pakistan Petroleum (PPL) a few years ago, had tended to bring them in droves to the Pakistan's capital markets.

Some estimates suggested that from less than 100,000, the number of investors in equities rose to 500,000. But that was until the stock market crash of March 2005. Both the needy and greedy small investors lost all that they had earned and more. The reverberation of those investors' scream still echoes in the corridors of Parliament. But that aside, the government has almost stingily held on to all its holdings in public companies. None of those promises of divestment of shares in many mega stocks have materialised. The private sector listings have also been all but too slow. The result is that too much cash is chasing too few shares. On any given day, volumes are almost always generated in as many shares as can be counted on the finger tips of one hand: NBP; DGKC; MCB; Lucky Cement; MCB and one or two others.

Only nine new companies have entered the equity market to raise capital this year, amounting to Rs5.3 billion, including premium of Rs3.9 billion. Five new companies had sought listing last year, compared with 14 IPOs worth Rs13.6 billion (including green shoe option) recorded in 2005.

One major reason for companies to shun listing, which the Stock Exchanges have been propagating, is the lack of incentives. âIt is the removal of 10 per cent tax benefit to listed companies as compared to unlisted companies which was available until June 2002, that have put off companies from entering the capital market,â said an official at the KSE.

He said that companies had no reason to seek listing and take on themselves all the responsibilities of complying with audit as well as the 'code of corporate governance', when they had no incentives to do so. Matters, he said, were being pursued with the government. Budget proposals for each of the last several years have asked for differentiation in tax rates for listed and unlisted companies. It is the same this year too. But would the ministry budge from its stand is difficult to tell.

If the stock market players are to be believed, equal taxation for both listed and unlisted companies is one of the reasons that only 658 of the 50,000 registered companies have sought listing at the stock exchanges. And even so, out of those 658 listed entities more than 100 are lame ducks sitting on the 'defaulters' counter'.

Another 200 companies are such in which no trading takes place since almost all of the shares are held by sponsors in large frozen blocks. Of what use are they to the small investors, though for the benefit of the exchange, they do add to the total market capitalisation that the bourse is able to display.

Among companies currently coming up for raising capital from equity markets, around 10 companies can be counted that are in one of the following stages of listings: âCompanies in process of formal listingsâ; âprospectus/offer for sale cleared by the Exchange' and those that have 'Applied for listing'.

To satiate the appetite for more stocks and rein in volatility in few actively traded scrips, it is imperative for the government to take the lead in offerings of just a part from its almost wholly-controlled corporate giants.

A private company cannot be expected to enter the market, even if some of the hassles of compliance with complicated code of corporate governance were to be relaxed. And equalising tax rates for listed and unlisted companies is not how everybody visualises as a means to increase the depth of the market.

âTo ask for a lower tax rates for listed companies does not make sense,â says Mr Iqbal Ismail, chairman, ACE Securities.

He argues that those companies sought listing at the bourse and benefited by raising capital through IPOs and right shares. If there was no benefit of remaining listed, there would have been a bee-line for seeking de-listing, but that is not the case. Mr Ismail suggests and several market participants and analysts were found to concur with the view that all new companies who apply for listing should be given the incentive of tax holiday for say three to five years. There is little time left for the budget makers to make a last minute changes and at least for now, it looks like the idea would have to remain just that.

http://www.dawn.com/2007/06/05/ebr2.htm


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## Neo

Tuesday, June 05, 2007 

*Budget 2007-08: Rs 50m penalty for making illegal cartels*

* New Competition Policy and Law

By Sajid Chaudhry

ISLAMABAD: The federal government on Monday has decided to announce New Competition Policy and Law in the forthcoming budget 2007-08.

This policy is aimed at imposing an all time high of Rs 50 million penalty against forming of unauthorised cartels and unjustified process of goods and services transportation in the country.

Upon non-compliance of any order, notice, or requisition of the commission an amount not exceeding Rs 1 million as penalty would be payable. Continuation of violation of any order of the commission would also attract a further penalty of up to Rs 1 million for each day after such violation. 

The official sources at Monopoly Control Authority (MCA) told Daily Times on Monday that in this regard proposed Competition Act, 2007 is being tabled in the National Assembly and will be ready with other budget documents on June 9, 2007. The jurisdiction of the proposed Competition Commission, which would replace existing MCA, upon approval from parliament would also include activities of government or private undertakings. 

The composition of the proposed Competition Commission of Pakistan would include five or seven members, federal government would appoint chairman of the commission, not more than two members of the commission shall be employees of the federal government. Private sector is also expected to get for the first time the member ship of the proposed Commission. The commission would have powers to authorise any officer to enter and search any premises for the purpose of enforcing any provision of this law. 

In this regard, the definition of the âundertakingsâ is being broadened to bring in to the jurisdiction of commission the activities of private as well as government bodies. 

According to the new definition of âundertakingâ, any natural or legal person, government body including regulatory authority, body corporate, partnership, association, trust or other entity in any way engaged, directly or indirectly, in the production, supply, distribution of goods or provision or control of services and shall include an association or undertakings, the official said. 

The proposed law would counter the deceptive marketing practices in the country. These practices shall be deemed to be resorted or be continued in any undertaking resort to; the distribution of false or misleading information that is capable of harming the business interests of any other undertaking. The distribution of false or misleading information to consumers, including the distribution of information lacking a reasonable basis, related to the price, character, method or place of production, properties for use or quality of goods. False or misleading comparison of goods in the process of advertising, fraudulent use of anotherâs trade mark, firm name, or product labeling or packing. 

According to the official, for a contravention of any provision of Chapter II of the Act, an amount not exceeding Rs 50 million or an amount not exceeding 15 percent of the annual turn over of the undertaking would be imposed. 

The penalty would be imposed if any undertaking would limit its production, sale and unreasonable increase in prices or other unfair trading conditions. Price discrimination is set by charging different prices for the same goods or services from different customers in the absence of objective justifications that may justify different prices. Tie-ins are where the sale of goods and services is made conditional on the purchased of other goods or services. 

If the penalty amount mentioned in the decision of the commission is not paid within prescribed time, attachment of immoveable or sale of moveable property, attachment of bank accounts, appointment of receiver, recovery through Land Revenue Act or deduction from receivables of the undertaking would be initiated.

http://www.dailytimes.com.pk/default.asp?page=2007\06\05\story_5-6-2007_pg5_1


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## Neo

Tuesday, June 05, 2007 

*Cattle population increases 44.7% in 10 years*

By Hasan Ali 

LAHORE: The cattle population had increased by 44.7 percent in 10 years from 20.4 million in 1996 to 29.6 million in 2006, said the Federal Secretary, Statistics Division, Asad Elahi.

He said this during an unveiling ceremony of âPakistan Livestock Census 2006â held here on Monday.

He said that the population of bullocks, 3 years and above age had increased by 13 percent from 1996 to 2006 period, whereas the population of cows 3 years and above age increased by 51.2 percent and the population of milk cows increased by 37.8 percent while the young stock by 52.3 percent.

Mr Elahi further said during the time span of 10 years the population of buffaloes stood at 27.3 million at the country level, which was 34.8 percent higher as it was 20.3 million in 2006.

âThe population of sheep according to the livestock census 2006 stood at 26.5 million in Pakistan which was 12.5 percent higher as compared to the that of livestock census 1996,â he said adding that the population of goats in the country reached 53.8 million in 2006 as it was 41.2 million in 1996. The livestock census 2006 shows that the population of camels had gone up by 13 percent from 0.82 million in 1996 to 0.95 million in 2006, while the number of horses had increased by 3.1 percent from 0.33 million in 1996 to 0.34 million in 2006, he said.

Federal secretary further said the population increased by 18.1 percent in 2006 over 1996 from 0.13 million to 0.16 million while the number of asses had increased by 19.9 percent during the inter-census period from 3.56 million in 1996 to 4.27 million in 2006.

Mr Elahi said over the years, the livestock sector has emerged as a leading sub-sector of the agriculture sector in Pakistan, it contributes over 11 percent to the GDP during 2005-06 which is more than the aggregated contribution of entire crop sector of the country.

âThe major objectives behind the livestock census was to provide current estimates of commercially important lives and poultry birds by age, sex and breed,â he said adding that the census also develop basic information on composition of livestock herds. Livestock census also help in ascertaining the number of livestock holders reporting animals and poultry birds, while it also provides estimates of animals vaccinated, fallen sick, treated, purchased, sold and died and it also ascertain the number of work animals by type of work.

http://www.dailytimes.com.pk/default.asp?page=2007\06\05\story_5-6-2007_pg5_8


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## Neo

Tuesday, June 05, 2007 

*Developmental sectors export fails to meet target*

By Tanveer Ahmed 

KARACHI: The export of developmental sectors showed dismal performance as nearly all items in this sector failed to meet their targets in the first ten months of current financial year. 

As a whole, government set a target of $1.18 billion for July-April period of current financial year, however the actual export proceeds of developmental sectors stood at $1.10 billion. 

âKeeping in view the export performance of these items so far, the total target of $1.348 billion would be hard to realise,â exporters opined when Daily Times contacted them for comments on the export performance of developmental sectors. The developmental sectors include engineering goods, cutlery, marble and granite/onyx manufacturing, fish and fish preparations, fruits and vegetables, chemical products, gems and jewellery, meat and meat preparations, cement, furniture, etc.

Country exported $1.213 billion worth of these products during the whole of the last financial year. Based on this performance during the last financial year, government set a target of $1.348 billion for the current financial year. 

The export performance of these items in July-April period also marred the efforts of the government to boost the export of non-traditional sectors especially the much focus was laid on the promotion of export of these items during the trade policy of current financial year. The countryâs main reliance on few sectors especially textile for its export earnings has been causing troubles because of stiff competition, the textile sector is confronting from its regional competitors. According to an analyst of the foreign trade, despite the pledges of the government to switch over from the textile to other sectors for boosting the exports for long-term basis the policies in this regard have not worked out, because no tangible incentives have been offered to these sectors like the textile sector. âWell thought-out strategies are needed to enhance the export of these items and increase their share in overall export, which unfortunately have not been formulated so far,â exporters said. 

The breakup of the export of developmental sectors show that export of fish and fish preparations stood at $157 million compared to its target of $172 million in July-April period of 2006-07. The chemical exports were $315 million against $391 million target, engineering goods were $217 million as against $228 million, and cement export stood at $107 million against the target of $125 million and no export of poultry products was made despite a target of $2 million.

On the other hand, the export of gems and jewellery stood at $32 million as against $29 million, meat and meat preparations at $33 million exceeding the target of $21 million, the fruits and vegetables export were $133 million against the target of $125 million marble and granite/onyx manufacturing were $22 million against the target of $25 million.

http://www.dailytimes.com.pk/default.asp?page=2007\06\05\story_5-6-2007_pg5_9


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## Neo

Tuesday, June 05, 2007 

*400MW: Highest power shortage hits city*

KARACHI: Bin Qasim Power Plant Unit 5 and the Korangi Thermal Power Plant were shut down for repairs from early Monday morning, causing a shortage of 400 MW to the city. Consequently, many areas went without electricity in unannounced load shedding over a minimum of three hours. The same shortage took place Sunday when Bin Qasimâs Unit 3 was being repaired. 

A spokesperson for the Karachi Electric Supply Corporation (KESC) said that Unit 4 of the power plant was already being repaired and would be made operational by next week. Unit 3 was repaired Sunday and Unit 5 was shut down for repairs from Monday morning. âWhen the shortage reaches 400 MW, two groups in the system are affected and have to be intermittently shut down for two hours each, as a result of which major areas in the city take a blow,â said the spokesman.

The Korangi Thermal Power Plant was also reportedly shut down for repairs after an unexpected leakage was detected in one of its boilers. However, the KESC spokesperson said it was a small problem that did not have a major impact on the shortage.

This shortage comes shortly after the KESC CEO announced that he expected load shedding to continue for the next five years. Official figures put the peak load factor at 2,328 MW as a record for April 2007 as against last yearâs breaking peak load level recorded in July 2006. Add the expected yearly increase in demand at nine to ten percent and the problem is magnified. Wapda says that the country generates a total of 11,200MW but that total consumption needed during the summer rises to 12,500MW, causing power failures.

http://www.dailytimes.com.pk/default.asp?page=2007\06\05\story_5-6-2007_pg12_3


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## Neo

*Salman seeks national consensus for continuity of policies *

ISLAMABAD (June 06 2007): Pakistan is among the fastest growing economies in the world as its economy has reached $150 billion from mere $70 billion a few years ago, adviser to prime minister on Finance Dr Salman Shah said on Tuesday.

Talking to PTV, he said national consensus should be evolved for not disturbing vibrant policies of any past government in a bid for country's development. Every political party should pledge that good policies of past governments should not be discontinued.

Pakistan has attracted record $6 billion investment during last year. Volume of economy is increasing. According to labour survey five million new jobs were created last year, while investment to GDP ratio was 23.5 percent. The economy has come out from Selective Default (SD) in 1999 to B-1.The target is to improve the ratings further upto AAA.

Target is to take debt to GDP ratio to 20 percent. It was 100 in 1999 now is at 50 percent. Share of the income of middle class from total income of country has increased upto 56 from 46 percent in recent years, he said.

While the share of bottom 20 percent population has increased from 5 to 12.5 percent indicating that income is flowing towards middle and lower class as compared to upper class. From 1999 to 2007, only agriculture production remained 10 times high. A bumper wheat crop of 23.5 million tonnes was harvested this year.

The leading investment Bank Goldsman has placed Pakistan one of the largest economies of the world in the coming years. Population has fourth largest workforce in the world. Pensions, salaries would be increased in the upcoming budget, more than the ratio of inflation. Subsidy would be offered on food items and oil.

Currently inflation ratio is around 7.5 percent and the salaries would be enhanced more than it. Old pensioners would be provided comparatively more increase. Employment schemes would be announced in the next budget with subsidies on mark up.

Small development schemes would be encouraged in villages aiming to make them self sufficient. 'Aik Hunar Aik Nagar' programme would be initiated in far-flung areas to develop food products, handicrafts, food processing, home made industries, he said.

http://www.brecorder.com/index.php?id=573593&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'Pakistan on way to achieve MDGs'* 

UNITED NATIONS (June 06 2007): Pakistan told the executive board of the United Nations Children's Fund (Unicef) on Tuesday that it was well on the way to achieving the child health and education-related Millennium Development Goals (MDGs)- a set of global anti-poverty targets to be accomplished by 2015.

"Pakistan recognises and acknowledges the access to essential healthcare as a basic human right," Unicef's acting permanent representative Farukh Amil said, while reiterating Islamabad's full commitment to implementing the MDGs. The board, which began its annual four-day meeting, will review the organisation's 2006 Annual Report, discuss country programmes and reviewed the results achieved in education, gender equality, health and other areas.

Noting that Unicef Pakistan worked in co-ordination with the Pakistani government, Amil said the organisation's country programme (2004-2008) reflected Pakistan's poverty reduction strategy and its pursuit of a world fit for child.

Pakistan, he said, has a vast network of healthcare facilities - 946 hospitals, 4,554 dispensaries, 5,290 basic health units and sub-health centres, 907 mother and child health centres, 552 rural health centres and 289 TB centres - to treat the menace of disease.

Amil said the board was meeting at a time when the UN was in the process of inter-governmentally reviewing the recommendations of the Secretary General's High Level Panel Report on System Wide Coherence.

"We do hope that our work here and the outcome of other processes would make the system more responsive to the needs and priorities of the programme countries," he said, noting that Pakistan, as one of the pilots for the "One UN" at country level. Pakistan would do its best to make a modest contribution in ensuring its success.

The Board President, Javier Loayza Barea, in his opening remarks, said, "we will have the opportunity to review the progress done to achieve the Millennium Development Goals."

http://www.brecorder.com/index.php?id=573594&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*AUDI launches Q7 in Pakistan* 



KARACHI (June 06 2007): AUDI has launched the Q7 in Pakistan. To be available in several engine models; 4.2 litres FSI, 3.6 FSI-litre, 3.0 litre TDi engine options, the 2-ton Q7 is priced in the region of Rs 61-80 lakh, rivalling the likes of the BMW X5, Porsche Cayenne, Mercedes M-Class, Volkswagen Touareg and Range Rover.

Launched world-wide in September last year, the right-hand drive version hit markets only in January.

Longer than the cayenne and touareg but based on the same platform, it seats even unlike the other two German SUVs. While the 4.2 FSI produces 355 bhp of peak power and 440 Nm of peak torque, the 3.0 litre TDi-has 500 Nm of max twist to boast of along with a decent 235PS of peak power. Both engines are combined to a six-speed tiptronic as standard while a torque sensing (torsen) differential split torque in a 40:60 ratio.

AUDI believes that with the market growing at 12 percent, the luxury cars segment which is at 2,500 units presently will grow to 30,000 units by 2,015 and hopes that the average young Pakistani with his/her better economic status will shift up to their range of cars and SUVs.

"The Audi Q7 has become extremely popular in Pakistan, since January we have already sold 20 units, and we have a long waiting list already for the other customers," says Zane Dubash of Audi Centre Karachi.

Head of Sales for Audi Shadman Siddiqui adds "with the current growth in the SUV segment, we believe the Q7 is ideally placed due to price and technology that AUDI offers.

http://www.brecorder.com/index.php?id=573682&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*US won't derail India and Pakistan gas deal: Iran *

TEHRAN (June 06 2007): Iran, India and Pakistan are making progress in talks on a planned $7 billion gas pipeline and the United States will not derail the project, Iranian President Mahmoud Ahmadinejad said on Tuesday.

Washington, which accuses Tehran of developing a covert nuclear weapons programme, has repeatedly sought to discourage India from the project. Tehran denies the charge.

The plan has also been hampered by differences over pricing the gas and political tensions between India and Pakistan. "Fortunately the negotiations are making progress. Principles have been agreed and we hope that in the current year we will be able to finalise the deal," Ahmadinejad told a news conference with visiting foreign journalists The Iranian year ends in March. Iranian officials have previously said they hoped to sign a final deal in Islamabad on June 30.

http://www.brecorder.com/index.php?id=573643&currPageNo=1&query=&search=&term=&supDate=


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## Neo

June 06, 2007 
*PSO bidding by end of this month*

KARACHI, June 5: The bidding for sale of 51 per cent shares in Pakistan State Oil (PSO) would be held as scheduled by the end of current fiscal year, Zahid Hamid, Minister for Privatisation and Investment, told Dawn on Tuesday.

He was discussing the issue in the afternoon following the news that the Sindh High Court had upheld decision of Privatisation Commission to disqualify one of the intending bidders, the Attock Group.

The court, while dismissing the groupâs application had lifted the stay order, paving way for the process of privatisation to go ahead.

Minister Hamid stated that seven consortiums of bidders had completed their due diligence and site visit.

âWe are currently in the process of holding discussions with the bidders, following which pre-bid meeting will be held,â Hamid said.

He reiterated governmentâs commitment to sell-off PSO by the end of June this year.

âWe are sticking to the deadline,â the minister said.

Prime Minister Shaukat Aziz had also on several occasions told investors that PSO would be privatised during the current fiscal year.

The Privatisation Minister said that the government would be able to raise a total of Rs2 billion from the privatisation this fiscal year, which include those of PSO, HBL IPO and UBL GDRs.

The government expects to fetch US$500 million or more from the sale of controlling interest in Pakistanâs biggest Oil marketing Company (OMC).

Currently seven parties are in the run to offer bids for PSO. British oil and gas group would join hands with the countryâs Kohinoor Group and Petronas of Malaysia with the MCB Bank. Others in the run include Saudi-based Aljomaih Holding Company with Kuwaitâs Noor Financial Investment Company and Fauji Foundation; Saudi Dabbagh Group Holding with Savola Group and Goldman Sachs (Asia); and Bakri International Energy Systems with Salsal Petroleum. There was the possibility of Vitol SA of Switzerland to rally with Fauji Foundation.

http://www.dawn.com/2007/06/06/ebr2.htm


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## Neo

June 06, 2007 
*Govt to borrow Rs70bn for new budget: Financing gap*

ISLAMABAD, June 5: The government will borrow roughly Rs70 billion foreign funding to meet the gap of financing its 2007-08 budget, a senior official of the ministry of finance told Dawn.

"Since the budget deficit target for next fiscal year is being kept at 4 per cent of the GDP, about Rs60-70 billion funding is needed to be arranged from foreign sources," he said.

The fiscal deficit in 2006-07, he said, was likely to be ended up at 4.2 per cent by June 30 this year. He did not believe that Rs272 billion fiscal deficit recorded in the first nine months of the current financial year could pose any threat to the government.

"The possible negative effects on the economy will be neutralised through improved revenue collection position, regular foreign inflows and more foreign direct investment (FDI), which is likely to be over $6 billion by the end of the current fiscal year," the official said.

Asked about the rising trade deficit, estimated to reach $14 billion during the next financial year against the projected target of $9.4 billion for 2006-07, he agreed that it needed to be brought down. "But this is not a matter of any serious worry for us," he said adding that foreign inflows and increased remittances were helping the government to achieve its objectives.

In reply to a question, the official said that foreign exchange reserves were expected to touch an all time high $15 billion by June 30 this year.

However, he conceded that some of the major targets relating to trade deficit, current account deficit, imports, exports, inflation, industrial production and large scale manufacturing will be missed during the current financial year.

"But we should look at the positive side, which is the better GDP growth, good agriculture growth and the improved performance of the services sector," he said.

He said the highest ever Rs2 trillion consolidated budget has been finalised that sought to improve governance, remove economic inequality and alleviating rural poverty in 2007-08. Responding to a question, he said that energy crisis was a serious challenge and the likely demand supply gap of 2500MW in next year, will be narrowed by helping to have more power projects. In this regard, he referred to the decision of the Qatari government to set up a power project worth $500 million in Sheikupura, Punjab.

He defended the government's decision to have separate Rs204 billion budget for corporations, especially Water and Power Development Authority (Wapda), Oil and Gas Development Company Limited (OGDCL) and National Highway Authority (NHA). "This is how the total development budget would reach to record level of Rs724 billion in 2007-08," he said.

He assured that leakages and element of corruption in the development projects will be minimised in the next budget by shortly having a "strict monitoring systemâ in place.

Another official said that a decision has been taken to substantially increase direct taxes by reducing customs and excise duties in the next budget. He said the CBR had started collecting sizable taxes and would certainly achieve its Rs835 billion revenue collection target set for outgoing financial year.

"The government has no plans to introduce new taxes in the next budget," he said adding that the government has stopped introducing new taxes as the whole emphasis now is on universal assessment scheme through which people were paying taxes on their own. He said that the voluntary tax compliance has increased by 100 per cent, which was helping the CBR to collect the required taxes.

"People are filing their income tax returns by increasing the amount of their taxes and this is good for them and good for us," he said.

There was a time, he pointed out, when the CBR used to collect 70 per cent taxes through withholding tax, which was first lowered to 54 per cent and then to 40 per cent last year.

"We have proved through our conduct that we pay respect to the tax payers and accept their income tax returns without any objection," he said adding that the number of income tax returns has increased from 24,000 in 2003 to over 110,000 last year.

Responding to a question, he said that the CBR was discouraging litigation as it often proved to be a setback for everyone. "Now we sit across the table with the taxpayer and dispose of his case by even reducing 50 per cent of taxes."

He said the number of industrial, commercial and domestic power consumers have increased significantly due to which the number of taxpayers were also increasing throughout Pakistan.

http://www.dawn.com/2007/06/06/ebr3.htm


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## Neo

Wednesday, June 06, 2007 

*Budget 2007-08: Insurance sector to be developed on modern lines*

* Taxable income to be determined after deduction of insurance premium 
* Capital element of annuity receipts to be exempted from tax .

By Sajid Chaudhry 

ISLAMABAD: The Federal government is all set to announce some tax relief measures to remove bottlenecks in the development of insurance sector on modern lines in the budget 2007-08, an official told Daily Times on Tuesday. 

Prime Minister Shaukat Aziz while according approval to new Insurance Policy, in principle, had approved some tax relief measures on April 13, 2007 and these were to be announced in the upcoming budget, the official said. 

According to the official, the new Insurance Policy aims at achieving high life insurance penetration in the country. In this regard, the policy seeks to allow deduction of life insurance premium in determination of taxable income for the individuals. According to the official, this incentive in India, South Korea, Malaysia and Singapore is the reason for relatively high life insurance penetration as compared to Pakistan.

The new insurance policy aims at increasing penetration, removing impediments to insurance industryâs development and outlining a more rational role of the public sector in line with international practices. The percentage of life insurance in the country, which presently is 0.28 percent, is among the lowest in the region and the immediate goal has been set at to enhance it to 1% in a period of three years. Under the new insurance policy insurance cover against terrorism, crop insurance, cover against earthquake and micro insurance facilities would available in the country.

Analysis carried out by the Ministry of Commerce indicates that insurance industry had failed to penetrate rural areas and provide insurance cover to socially deprived people. In order to address this, two initiatives would be taken. Firstly group insurance would be made compulsory, so that all workers would be compulsorily insured under the labor laws. The necessary process to achieve this is being initiated in consultation with the Ministry of Labor and Manpower. Secondly a framework would be developed under which all insurers would be required to write a certain proportion of their business in rural areas as well as amongst those socially deprived. While the framework was being formulated the two state owned direct insurers, i.e. State Life and NICL, would immediately introduce micro-insurance schemes and would also co-ordinate the efforts of the task force to be constituted for this purpose by the ministry.

The policy highlights that annuities taken out are currently taxable beyond a negligible limit, even though the single premium paid to affect the insurance is not deductible. It also pointed that amount to taxation of capital constitutes double taxation. 

The policy proposes that capital element of annuity receipts be exempted from tax or allow deduction of annuity premiums in determining taxable income from individuals especially for annuities taken for defined purposes like pensioners, retirement saving schemes. The policy has pointed out that in health sector general insurance companies are required to levy a federal insurance fee of 1% and central excise duty of 5% on premiums, which are than paid across to the federal government. This does not apply to life insurance companies.

http://www.dailytimes.com.pk/default.asp?page=2007\06\06\story_6-6-2007_pg5_1


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## Neo

Wednesday, June 06, 2007 

*Pakistanâs success rate of projects stands at 58%*

ISLAMABAD: The success rate of Pakistanâs selected 113 important projects implemented during 1985 to 2006 stands at 58 percent, according to the development assistance evaluation report of the Asian Development Bank (ADB).

The success rate of projects in Pakistan has been remarkably static, with no evidence of improving performance, and this should be of concern for the authorities, said the evaluation report.

It said that in 1970s, the total 26 projects were selected for rating and their success rate was calculated at 58 percent. During 1980s total 54 projects were evaluated and their success rate was found at 59 percent. Similarly, in 1990s some 33 projects were evaluated and the success rate was 58 percent. The report is the first whole programme study of operations in Pakistan prepared by the Operations Evaluation Department (OED) of ADB. In preparing this report, OED followed its guidelines for the conduct of country assistance programme evaluations (CAPE). 

Pakistan remains one of ADBâs major clients in terms of public sector borrowing. From 1985 through 2006, ADB approved 171 loans for 127 projects for a total of $14.2 billion. The Asian Development Fund (ADF) accounted for 89 percent of the loans but only 44 percent of the amount. The balance of 11 percent of the loans and 56 percent of the amount came from ordinary capital resources (OCR), the report mentioned. 

The average level of lending has approximately doubled since 2001, as compared with the previous five years. Pakistan now has the most projects in its portfolio classified as multi-sector covering rural development, social services, rehabilitation, and mixed infrastructure. Almost inevitably, these well-intentioned holistic projects suffer from the complexity of the design and implementation arrangements, the report highlighted. 

According to the regional comparison given in the report, Pakistan projects have a similar level of success as those in Bangladesh and Nepal, but lower than those of Bhutan, India, and Maldives. Projects in Pakistan have a higher overall level of success than those in Sri Lanka since the 1970s. 

The report stated that the success rate of projects in Pakistan has been remarkably static, with no evidence of improving performance. The performance of projects in Bangladesh, by contrast, has improved markedly. India is little changed, Sri Lanka is improving, and Nepal has deteriorated. The ADB success ratings have trended up from below 60 percent for the approvals in the mid-1980s to above 80 percent for those approved in 1999. The difficult development context in Pakistan probably contributed to the static performance of its projects over this period.

The analysis of project success, contained in the report, by sector shows major differences in performance for Pakistan projects. Projects in the water supply, sanitation, and waste management sector performed the worst, with only a 20 percent success rate overall (albeit on small numbers) and a 50 percent success rate for projects approved in the 1990s. The next worst performing sectors were education, with a 29 percent success rate (also on small numbers) and 50 percent success rate for projects approved in the 1990s; and finance, with a 30 percent success rate overall, influenced by poorly performing projects with development finance institutions in the 1970s and 1980s, and a 50 percent success rate for later projects.

Health, nutrition, and social protection projects had a 40 percent success rate (also based on small numbers), improving to 50 percent for 1990s. Although many of the balance of projects not rated successful were assessed as partly successful (i.e., desired results were not fully or efficiently achieved, or not sustained), this performance is dismal. Essentially, Pakistan increased its debt in exchange for economic and social benefits that were less than expected, the report disclosed. 

The agriculture sector, the largest group with 33 projects, had an overall success rate of 55 percent with no trend to improvement by decade. Multi-sector projects had a 56 percent success rate overall. However, the multi-sector success rate dove from 75 percent for projects approved in the 1980s to only 25 percent for those approved in the 1990s, influenced by the poor performance of projects supporting the Social Action Programme. ADBâs most successful projects have been in its traditional infrastructure areas. Energy projects had an 81 percent success rate overall, but with a falloff for 1990s approvals to only 50 percent, which was associated with the move to focus more on the policy framework and structural issues.

http://www.dailytimes.com.pk/default.asp?page=2007\06\06\story_6-6-2007_pg5_11


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## Neo

*OMV Discovers Gas with the Tajjal-1 Well in Pakistan * 
Tuesday, June 05, 2007 

OMV announced the discovery and successful testing of gas in its Tajjal 1 exploration well in the Gambat Exploration Block in Northern Sindh province, Pakistan. This is an area where OMV has discovered two major gas fields, Miano and Sawan, which were brought on stream in 2001 and 2003. The new discovery by OMV (Pakistan) Exploration GmbH, a 100% subsidiary of OMV, is the second this year after the announced Latif discovery in March. Both discoveries confirm the potential for further reserves in Related Products this area. The exploration well reached a final depth of 3,845 m and encountered a total of 21 m net gas pay in three layers at depths of 3,600 to 3,800 m. Further appraisal activities for the area like the drilling of additional wells are envisaged. 

Helmut Langanger, OMV Executive Board member responsible for Exploration and Production stated: "I am delighted about this second discovery in our Middle East core region within only a few months. It confirms the significant potential of this block and allows us to integrate the new discovery in our existing infrastructure. This enables us to proceed with our plans for further growth in Pakistan."

Out of the three layers the main was successfully tested in the beginning of May 2007 confirming the potential of the new discovery. Test results show that the well is capable of flowing around 3,400 boe/d (approx. 20 mn scf/d) from the tested zone. However, the actual flow potential and size of the field will be determined after a long term test and appraisal of the field.

The drilling rig has moved off and planning for further evaluations and production testing are ongoing. OMV is the operator of a joint venture with the partners Eni AEP Limited (Eni), Pakistan Petroleum Ltd (PPL) and Government Holdings (Private) Ltd (GHPL). 

The new discovery is located approximately 15 km from the existing infrastructure of the Sawan field, which sits conveniently between the markets of the two Pakistani gas suppliers, Sui Northern Gas Pipelines Ltd. and Sui Southern Gas Company Ltd., enabling OMV to deliver to both networks. In adding new reserves through exploration activities in this area OMV strengthens its position as strategic hub. 

OMV is the biggest international natural gas producer in terms of operated volumes in Pakistan. As the operator of the Sawan and Miano gas fields, as well as the Kadanwari processing facilities, OMV is now responsible for operating more than 100,000 boe/d (600 mn scf/d) covering approximately 16% of Pakistan's demand for natural gas. The total daily net production of OMV in Pakistan amounts to approximately 19,100 boe/d (115 mn scf/d). 

Consortium partners Gambat are OMV (Pakistan) as operator with 35%; Pakistan Petroleum with 30%; Eni with 30% and Government Holdings (Private) Ltd. with 5%. 

OMV (PAKISTAN) Exploration GmbH is a 100% subsidiary of OMV Aktiengesellschaft and has been active in Pakistan since 1991. OMV (Pakistan) employs 539 Pakistanis and 15 expatriates. The activities of OMV are currently concentrated in the central Indus Region, where OMV has established itself in a strong position as an operator, but is also expanding in other areas of the country. To date, OMV has invested approximately US $197 million in exploration, appraisal activities and field development. OMV's first success was the discovery of the Miano gas field in 1993 with Miano 1, which opened a new play type of stratigraphic trapping. In 1998, OMV discovered the large Sawan gas field, for which commerciality was declared in December 1999. 

http://www.rigzone.com/news/article.asp?a_id=46012


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## Neo

* Pakistan Issues License for Kunri Block * 

KARACHI, Jun 05, 2007 (Dow Jones Newswires) 
Pakistan granted a license to a joint venture led by a local firm for oil and gas exploration in the south of the country, the Ministry of Petroleum and Natural Resources said Tuesday. 

The joint venture, Pakistan's New Horizon Exploration and Production Ltd. and Kuwait Energy Co., will invest about $16.05 million to explore the Kunri Block in the southern Sindh province. 

The block covers an area of 2,485.93 square kilometers "The joint venture has committed to drill three exploratory wells during the initial term of first three years," the ministry said in a statement. 

*As Pakistan meets more than 80% of its energy requirements through imports, including about $3 billion worth of crude a year*, the government has been encouraging domestic and foreign firms to increase exploration activities in the country. 

In recent years, Pakistan's liberal policy has attracted a number of foreign firms in the exploration and production of hydrocarbons, making it one of the largest foreign investment areas. 

*The country is still struggling to increase domestic oil production to about 65,000 barrels a day. It hopes to produce 100,000 barrels a day within five years. *

*Pakistan also produces little over 3.5 billion cubic feet of natural gas a day, which meets 50% of its total energy needs. *

The government has set a target of drilling 100 exploratory wells each year, compared with an average of 60 a year previously. 

*According to official estimates, Pakistan has 27 billion barrels of estimated oil reserves, of which only 3% has been explored. 

It also has an estimated 280 trillion cubic feet of natural gas reserves, of which only 42% has been explored so far. *

http://www.rigzone.com/news/article.asp?a_id=46013


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## Neo

*'Iran to hold seminars on investment scope in Pakistan' *  

KARACHI (June 07 2007): The Consul-General of Iran, Masoud Mohammad Zamami, has informed the business community that foreign investment cell of Iran's Economic Ministry has made a plan to hold seminars on investment opportunities in Pakistan.

Addressing members of Korangi Association of Trade and Industry (Kati) on Wednesday, he said that two-way trade target between Iran and Pakistan has remained limited to one billion dollars, and added that there was need to further increase this target.

Zamami termed the current environment in Pakistan as favourable for economic and trade activities. He said that Pakistan and Iran enjoy best cordial relations, and added that Iran was the first country to recognise Pakistan as an independent state. Likewise, Pakistan also acknowledged Iran after Islamic revolution in Iran. Both Iran and Pakistan helped each other in difficult times, he added.

The Iran Consul-General said that anti-Muslim forces were conspiring against Muslim countries and trying to make them economically weaker. In this scenario, the Muslim countries must unite and formulate a joint strategy for better future.

He said that Iran consulate would provide a list of all exhibitions scheduled to be held in Iran, and would invite Pakistan's business community to participate in them.

The Consul-General noted that Pakistan's markets are full of imported dry fruit, tissue papers and other goods from European countries, whereas Iran also produces same products in good quality, quantity and on competitive price.

http://www.brecorder.com/index.php?id=574075&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Government taking steps to slash debt-to-GDP ratio: advisor* 

ISLAMABAD (June 07 2007): Advisor to the Prime Minister on Finance Dr Salman Shah has said the government is taking steps to bring down the debt to GDP ratio from 52 percent to below 20 percent in next 5 to 7 years.

Addressing a pre-budget seminar "A milestone in continuation of economic reforms" organised by Press Information Department (PID) here on Wednesday, he said that policy makers have set the target to reduce the public debt to GDP ratio to 49 percent in next financial year.

He said the government has to follow the Fiscal Responsibility and Debt Limitation Act. We have to operate within the discipline of the law to deal with the volume of domestic and foreign loans and government should avoid excessive borrowing.

Dr Shah said it is necessary to reduce the fiscal deficit to less then 3 percent for achieving the target to reduce the debt to GDP ratio less then 20 percent in next 5 to 7 year. The fiscal deficit stands at 4.2 percent in 2006-2007 and it will remain 4 percent in next three years following impact of the quake-hit areas. In the coming 4-5 years, the fiscal deficit will come to around 3.5 percent.

Commenting on the current judicial crises, he said the judicial crisis would not have any negative implications on the economy of Pakistan. Both the local and foreign investors have shown confident in the present regime. During the road shows, investors understand that the present government and political parties would not disturb the current economic momentum and growth rates. If the imports/exports and other economic activities continued with the same pace during the existing political situation, it would have no negative impact on economy.

He said the economy and politics should not be inter-linked to avoid any negative impact on the economy. In case of total breakdown, the government could face problems on the economic side, which is not possible in the current situation, he said.

During 1996-1998, he said the past governments had issued defence saving certificates at highest rate of 18 percent to borrow Rs 50 billion from the investors for controlling the budget deficit. Now, the present government has to pay Rs 50 billion as principle amount on these certificates along with Rs 200 billion as interest to the investors. This would result in making payment to the tune of Rs 250 billion to the investors during 2007-2009 due to the policies of the past government.

He further said the work is underway on Diamer-Bhasha dam. Similarly, the construction of Neelum-Jhelum will be started after announcement of budget. There is a need to develop consensus on the dams as financing is not an issue for the dams, which could easily be arranged domestically as well as globally.

He said the domestic food inflation is comparatively less than the global food inflation during last year, evident from commodity price index analysed by UK economist. The global prices showed an increase of 11 percent and food commodities showed an increase of 18.1 percent last year. On the other hand, Pakistan has shown less increase in food inflation during the same period.

Referring to the Economist, UK of June 2, he said the commodity price index of leading economies has shown increase during the same period. Countries like Russia, Turkey, India, Indonesia, Argentina and Colombia has shown increase in inflation.

The target for inflation for the next fiscal is 6.5 percent and we hope that the food inflation would remain under control due to many factors. The factors like excellent wheat crop; good production of pulses and bumper sugar crop with its no shortage would result in sustainability of the major food items.

According to him, the government would establish the farmers market in major cities to facilitate the farmers for selling their products directly to the general public. This would help bring down the food inflation in the country.

Dr Salman Shah said the government is considering to convert the weekly Sunday markets into daily Bazars giving an opportunity to the farmers to directly sell their commodity minimising the role of the middlemen. It would ensure availability of food items, vegetables, fruits and consumer products at cheaper rates.

Outlining the major initiatives of budget, he said the major objectives of budget included relief to the common people in the form of increase of pay and pensions; employment opportunities to skilled and unskilled labour workforce. Infrastructure development for both urban and rural development; Human Resource Development and need to improve productively level as well as encouragement of public and private partnership have also been initiated in the budget.

He said that the agriculture sector performed well and registered growth at 5 percent.

Advisor to the PM on Finance said the government has set over rupees one trillion revenue target for the Central Board of Revenue (CBR). For achieving the target, tax should be collected from all potential sectors and burden of taxes should not be on few sectors.

Dispelling impression about the devaluation of rupee, he said exchange rate is stable and the inflation remained at 6.5 percent because of the government steps. Pakistan has competitive edge over the India and China due to its exchange rate stability as compared to currencies of these countries.

He said the government would float dollar-bond for 30 years period in next fiscal taking into account the excellent response of international investors towards the Euro bond. The Euro bonds subscription has gone up to seven times more to 3.5 billion dollar against the demand of 500 million dollar.

On the issue of workforce, he said Pakistan has developed its large labour force, which is the fourth biggest force in the world after India, Chain and USA. Now the government has worked out a policy to make its youth into skilled labour for enhancing the productivity of the country.

He said the government has increased the budget of National and Vocational Training Educational Centres (Navtec) from Rs 500 million to Rs 2.5 billion in 2007-2008. CBR Member Direct Taxes Salman Nabi was also present to represent CBR on the taxation issues.

http://www.brecorder.com/index.php?id=574048&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Privatisation generates $7 billion since 1991 *

ISLAMABAD (June 07 2007): Minister for Privatisation Zahid Hamid said on Wednesday that privatisation process generates $7 billion since 1991 through 164 transactions. The minister stated this in an interview with a private business news channel here on Wednesday.

He said that privatisation and deregulation are the cornerstone of economic policies of the government. Zahid Hamid further said that investment climate in Pakistan is now very conducive for foreign direct investment (FDI) adding most of the reforms have been institutionalised. He said PSO, NIT privatisation, GDRs of UBL and IPO of HBL would be completed before June 30.

Zahid Hamid said that leading international firms are in run for PSO. Zahid Hamid said that GDRs of NBP, HBL, KAPCO would be offered in early Financial Year 2008. He further said that IPOs of Steel Mills, State Life and Parco would be held in FY08. Zahid Hamid said that discussion for sale of PPL is continued.

He said that technical issues have been addressed for sale of SNGPL and SSGCL.

Zahid Hamid said that 51-54 stakes in Faisalabad and Peshawar Area Electricity Companies up for divestment while Heavy Electrical Complex, Pak Machine Tool Factory, salt and coal mines to be privatised.

He further said that government might consider another issue of GDRs of ODGCL adding KESC keen to enhance its production capacity.

Zahid Hamid said 1000 MW Jamshoro power station will also to be privatised.

Zahid said that 20 percent of FDI flows goes to manufacturing sector while FDI composition includes 11 percent oil and gas; 3 percent power; 33 percent telecom; 21 percent financial sector and 10 percent other service. He added that Chinese companies to invest in steel sector adding Etisalat to pay second tranche of PTCL by the end-June after transfer of properties.

http://www.brecorder.com/index.php?id=574049&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Rural income generation: Smeda launches Ahan scheme with ADB's help *

FAISALABAD (June 07 2007): The Small & Medium Enterprise Development Authority (Smeda) has launched 25 projects of "Aik Hunar Aik Nagar (Ahan)" with the financial assistance of Asian Development Bank in the country. Marketing Manger, Ahan, Shaher Yar Tahir, said this while addressing the members of Faisalabad Chamber of Commerce and Industry, here on Wednesday.

He said that the primary objective of Aik Hunar Aik Nagar (Ahan)/Rural Enterprise Modernisation Project is to reduce poverty by supporting employment generation activities economic growth and enhancing competitiveness of the micro and small business in the rural areas.

These projects envisage enabling the rural business to access a range of business development services, including appropriate technologies and financial capital. The direct benefits are expected to flow from increased employment and income earning opportunities in the rural areas, particularly for wage earners, women and poor producer groups with potential to engage in a higher level of commercial activity, he added.

Shaher Yar hoped that through these measures there would be increased value-addition in the products sold improved commercial linkages between rural MSEs and the larger urban business. Increased demand for goods and services will add to overall benefits.

Pakistan has a total population of 156 million people of which around 68 percent still live in the rural areas. Economic growth depends on the overall economic activity in the rural areas. With the continuous drop of the share of agriculture in GDP, it is imperative that non-agriculture/farm based avenues for economic opportunities be explored.

Pakistan, to meet its goal of reducing poverty, needs to expand non-farm economic opportunities in addition to agriculture in the rural areas to create diversified non-farm sources of income. This is how rural poverty rates start to decline. In addition, rural-urban migration rates are placing pressure on the urban infrastructure and environment. Thus, there is a pressing need to provide non-traditional work opportunities in the rural areas, he added.

He explained that the project envisages to study and emulate OTOP (One Tambon, One Product) of Thailand and OVOP (One Village One Product) of Japan and other similar programmes for income generation of rural and per-urban population. This is aimed to identify the best practices and adopt the same for design and implementation of Rural Enterprise Modernisation initiative of the Government of Pakistan (Ahan) programme keeping in perspective the overall policy to use the private sector as the engine for rural enterprise development.

Pakistan has a total population of 156 million people of which around 68% still live in the rural areas. Economic growth depends on the overall economic activity in the rural areas. With the continuous drop of the share of agriculture in GDP, it is imperative that non- agriculture/farm based avenues for economic opportunities be explored.

Pakistan, in order to meet its goal of reducing poverty, needs to expand non-farm economic opportunities in addition to agriculture in rural areas in order to create diversified non-farm sources of income so that rural poverty rates start to decline. In addition, rural-urban migration rates are placing pressure on the urban infrastructure and environment. Thus, there is a pressing need to provide non-traditional work opportunities in the rural areas, he added.

Focusing on project approach of developing strong linkages with all concerned, Shaher Yar said, Ahan activities will be co-ordinated by Ahan cell to be housed within the Smeda.

The Ahan Cell staff will develop the outreach and resources to build the business competencies of small rural enterprises. The cell will undertake preparatory work with the help of international and local experts to design and implement a market driven development programme, identifying areas for further research, initiating collection of required data and designing pilot projects in selected sub sectors.

For this purpose, Cell will have dedicated staff for enterprise/cluster development, product development, quality assurance, technical assistance and marketing and distribution. Ahan Cell will also lead to the design of the organisational and operational framework for Ahan Pakistan Rural Enterprise Modernisation Company (REMC), (outreach strategy, structure, an initial business plan, standard operating procedures, etc). It will also help setting up of REMC under section 42 of Companies Ordinance, he added.

Earlier, Muhammad Ayub Sabir, President Faisalabad Chamber of Commerce and industry presented welcome address and highlighted the proposals of FCCI. Brigadier Ahmad Riza Siddiqui (Retd), Secretary Faisalabad Industrial Estate Development and Management Company (FIEDMC) and Chaudhry Zahid Iqbal also addressed the members.

http://www.brecorder.com/index.php?id=574003&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*'Efforts on to bring industrial revolution' *

LAHORE (June 07 2007): Punjab Minister for Information Technology Abdul Aleem Khan has said the government wants industrial revolution in the country and is making sincere and serious efforts to achieve this goal.

While speaking at annual general meeting of Lahore Township Industries Association (LTIA) on Tuesday, Aleem said that maximum funds were being provided to the Industrial Estates to equip them with all necessary facilities.

He said special attention was being given towards the development of infrastructure to make it of international standards so that the foreign investors could get benefit of available business opportunities. Newly elected LTIA President Fida Hussain promised to continue work for the betterment of industrialists of the area. He said the LTIA was thankful to the Quaid-i-Azam Industrial Board for improving law and order situation in the area.

Speaking on the occasion, Lahore Chamber of Commerce and Industries President Shahid Hassan Sheikh paid rich tributes to Punjab Chief Minister Chaudhry Pervaiz Elahi for expediting public-private partnership in the province.

He said the Quaid-e-Azam Industrial Board had done a marvellous job by spreading a network of roads, adding that industrial community should work in the larger interests of the country. Quaid-e-Azam Industrial Board President Mian Nauman Kabir thanked the Chief Minister for reposing confidence in the private sector and pledged to turn the Industrial Estate exemplary industrial estate of the country.

http://www.brecorder.com/index.php?id=574095&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Energy crisis threatens LSM growth *

ISLAMABAD: The government Wednesday expressed concern over the lingering energy shortage and termed it as a potential threat to the countryâs economic growth, especially of large-scale manufacturing (LSM), which followed 8.8 percent growth this year against the set target of 13 percent. 

Jahangir Khan Tareen, the Federal Minister for Industries, Production and Special Initiatives while talking to reporters blamed the energy shortage (gas and electricity) as the sole reason for decline in large-scale manufacturing. 

According to the government estimates, Pakistanâs industrial sector has recorded a growth of 6.8 percent, falling significantly short of the 11 percent budget estimates. In the backdrop of the current situation and persistently electric break down in the country (especially in the economic hub Karachi) could further aggravate the situation and ultimately economic growth. 

Besides, the Minister also informed that there is also about 6 percent decline in oil refining output, as some of the refineries have stopped work due to the energy shortage. It also reflects in the LSM decline due to short supply of oil and oil products. 

It is also worth mentioning in an Asian Development Bank (ADB) study of the energy crisis in Asia, has urged the Asian countries including Pakistan for finding ways to avert and address the big issue of energy for joining the ranks of developed countries. 

Large population pressure would further add to the issue and the bank estimates that by 2011, continent would consume more than that of the developed counties. 

In the backdrop of energy shortage, the government is staving for striking an agreement with Iran for natural gas import to meet the energy requirements. The Iran-Pakistan-India (IPI) project if materialized would help the country in meeting the energy shortage of the fast growing countries Pakistan and India of the region.

To a query, the minister responded that food inflation was also a also a huge issue which further aggravated the general inflation hovering between 7.5 to 7.9 percent. He termed it as demand and supply issue, which need immediate measures to address. He said that the government was aware of the food inflation and was making all out efforts to bring it down.

http://www.thenews.com.pk/daily_detail.asp?id=59406


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## Neo

June 07, 2007 
*Inflation to reach 8pc: adviser*

ISLAMABAD, June 6: The consumer price inflation will creep up to around eight per cent by the end of June 2007 against the target of 6.5 per cent mainly due to rising prices of food items, says Adviser to Prime Minister Dr Salman Shah.

âThe inflation â measured through the consumer price index â target will be exceeded in the May-June period. It would be around 7.7 to 7.9 per cent,â Mr Shah conceded here at a pre-budget seminar organised by the press information department on Wednesday.

He said the end year inflation depended on the current two months â May and June â calculation. However, he said this year the inflation was driven by food prices, particularly the prices of perishable food items.

The adviser also hinted on relaxation of the monetary policy by start of next fiscal year on the pretext that the inflation would hopefully come down to 6.5 per cent. With this possible reduction in inflation, he said the State Bank of Pakistan would not need to further tighten the monetary policy.

âThis is not our domain to talk about it. However, the SBP would definitely consider rationalising the interest rates,â he added.

He said the core inflationânon food and non energyâwas around five per cent, which he said remained less than the target of six per cent during the period under review.

He said that food prices depended on two main factors âconsumption and international prices. Another factor was interest of farmers, on which the government wanted to give maximum relief.

He said that it was a complex situation to be brought under control as many players were involved in the food supply chain. However, he claimed that food prices remained at around 10 per cent during the current fiscal year as against the 11 per cent in the international market.

The adviser said that food inflation would be under control in the current month as there was a record growth in wheat production followed by sugarcane and rice.

http://www.dawn.com/2007/06/07/top7.htm


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## Neo

June 07, 2007 
*Pakistan to hire banking, financial experts: Reforming economy*

ISLAMABAD, June 6: Pakistan has assured the World Bank and the Asian Development Bank (ADB) to shortly hire international legal and regulatory experts to reform its financial and banking systems.

Informed sources told Dawn that both the international donors have expressed their concern over reports of scandals in the Karachi Stock Exchange and âinsider tradingâ by bankers that marred the image of Pakistanâs financial and banking institutions at home and abroad.

They have asked the government to develop a ânational strategyâ for inclusive financial services that should incorporate all types of institutions including commercial banks, micro-finance banks, rural support programmes and other non-government organisations.

Both the donors told Islamabad that Pakistanis working in the banking and financial sector should work like international sector specialists who must have an extensive working knowledge of banking, micro-finance, international best practices and new technology being used in the financial sector.

Sources said the World Bank and ADB believe that Pakistan needed the services of international legal experts who should provide advisory support to the State Bank of Pakistan and the Ministry of Finance in conjunction with the relevant agencies, stakeholders consultants and forums to ensure adequate inputs and participation of stakeholders groups.

They were of the view that Pakistan required international legal support for providing technical assistance for applications for lower cost funds, transfers and remittances in Pakistan markets, conducting of feasibility study for national mobile money transfer, VSAT applications for other technological changes aimed at improving outreach of sustainable financial services including to the poor and rural areas.

However, the donors said that those international financial and legal experts, whose services were to be acquired, should have comprehensive information and experience about regulations, pertaining to banking and micro-finance in Pakistan. In addition they should also have good understanding about Pakistanâs financial and banking sector.

Similarly, sources said that Pakistan was told to develop expertise for domestic Islamic finance and that the experts in the field must have good working knowledge of Islamic finance and experience in an Islamic financial institution. In addition, the specialists should demonstrate good understanding of the Islamic financial sector in Pakistan and its current regulatory framework.

Sources said that the central bank was expected to conduct professional survey for the development of national instrument on Islamic finance.

There should be certain surveys which should cover the Islamic financial markets in Pakistan to provide important baseline data for monitoring the sector characteristics and demand for growth and development.

http://www.dawn.com/2007/06/07/ebr3.htm


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## Neo

*Pakistan's trade deficit likely to hit $14b in 2007-08* 

MENAFN - 07/06/2007 

(MENAFN) A senior official at the Pakistani Ministry of Finance said that the country's trade deficit is expected to widen to $14 billion in the fiscal year 2007-08 against the projected target of $9.4 billion, set for the current financial year, Khaleej Times reported. 

The official, who said that foreign exchange reserves were expected to touch an all time high of $15 billion by June 30 this year, conceded that some of the major targets relating to trade deficit, current account deficit, imports, exports, inflation, industrial production and large scale manufacturing will be missed during the current financial year. 

Another official said that a decision has been taken to substantially increase direct taxes by reducing customs and excising duties in the next budget. He added that the number of industrial, commercial and domestic power consumers have increased significantly due to which the number of tax payers were also increasing throughout Pakistan.

http://www.menafn.com/qn_news_story_s.asp?StoryId=1093155763


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## Introvert

*Pakistan: economy swells to $160bn*

Pakistan is among the fastest growing economies in the world as its economy has reached the size of $160 billion from a mere $70 billion a few years earlier, Federal Advisor on Finance Dr Salman Shah said on Tuesday.

Talking to PTV, he said a national consensus should be evolved for not disturbing vibrant policies of any past government in a bid to ensure the countryâs development. Every political party should pledge that good policies of past governments will not be discontinued,Ã® he said.

Pakistan attracted a record investment of $6 billion last year. The volume of economy is increasing. According to a labour survey, five million new jobs were created last year, while investment to GDP ratio was 23.5 percent.

The economy, he said, has come out of the Selective Default (SD) in 1999 to B-1. The target is to improve the ratings further up to AAA and take the debt to GDP ratio to 20 per cent.

It was 100 in 1999. Now it is at 50 percent. The share of the income of middle class from total income of the country has increased to 56 percent, up from 46 percent recorded in recent years, he said.

While the share of bottom 20 percent population has increased from 5 to 12.5 percent, indicating that income is flowing towards middle and lower class as compared to upper class. From 1999 to 2007 only agriculture production remained 10 times high. A bumper wheat crop of 23.5 million tonnes was harvested this year.

He said the leading investment bank Goldsman Sach has reckoned Pakistan one of the largest economies of the world in the coming years. The country has the fourth largest workforce in the world. Pensions and salaries would be increased in the coming budget more than the ratio of inflation. Subsidy would be offered on food items and oil.

He said currently inflation ratio is around 7.5 percent and the salaries would be enhanced more than that. Old pensioners would be provided comparatively more increase.

Employment schemes would be announced in the budget with subsidies on mark-up. Small development schemes would be encouraged in villages aiming to make them self-sufficient. âAik Hunar Aik Nagarâ programme would be initiated in far-flung areas to develop handicrafts, food processing, and home-made industries, he said.

The FATA Development Authority has been established to expedite development in backward areas. All basic amenities would be provided to the countryÃ­s far-flung areas. The network of First Women Bank would be expanded aiming to provide adequate opportunities to women entrepreneurs. The concept of a Reconstruction Opportunity Zone (ROZES) is being developed for allowing duty-free export of their products to the USA.

http://www.freshplaza.com/news_detail.asp?id=2424


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## Introvert

* China mobile to invest another $ 500 million next year * 
ISLAMABAD, Jun 7 (APP): World's biggest telecom operator China mobile having 320 million subscribers in China plans to invest another $ 500 million next year as the investment atmosphere is very conducive here. Executive Director China Mobile Pakistan Sikandar Naqvi Thursday told CNBC channel that a sum of $ 1.2 billion has already been invested in Pakistan.

China mobile plans to cover every corner of the country within the next two years. The focus of China mobile would be rural and far flung areas of Pakistan as the unserved areas have immense potential, he said.

Vowing to provide value added services to customers of Pakistan he said every village of the country will be provided mobile services. 

Telecom sector has already attracted a combined investment of around Rs 77 billion during last year.The matching investment is expected during the coming years to ensure services for still unserved areas. 
http://www.app.com.pk/en/index.php?option=com_content&task=view&id=10319&Itemid=2


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## Neo

*Economic zones planned to facilitate investors *

ISLAMABAD (June 08 2007): Various special economic zones have been planned in the country aiming to provide better facilities and incentives to the investors, Investment Advisor, Board of Investment, Marvi Memon said on Thursday. Talking to CNBC channel she said Chinese investors would provide 40 percent equity for establishing industries in special Pak-China economic zone.

Various incentives have already been provided to investors including income tax holiday for five years. Exemption of customs duty will be strictly on imports of capital and not for raw material. Depreciation allowance of 50 percent will too be considered, she added.

An aggressive Foreign Direct Investment (FDI) target has been set for the next financial year. The country has already attracted 5.89 billion dollars FDI during the current FY.

Investment in power generation through wind has been pouring in. A reputed foreign company would invest 250 million dollars while another UK based company will establish wind power generation plant worth 500 million dollars in the country, she said.

http://www.brecorder.com/index.php?id=574792&currPageNo=1&query=&search=&term=&supDate=


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## Neo

Friday, June 08, 2007 

*Development projects: Target to prepare revival plan for KEPZ*

* Better export processing zone on India and Chinaâs pattern n PIDCâs 250 acres of land in Landhi would be functional by next one year

KARACHI: Federal Minister for Industries and Production Jahagir Khan Tareen has given a target to the new management of Export Processing Zone Authority (EPZA) to prepare a revival plan for Karachi Export Processing Zone (KEPZ).

He was talking to reporters after attending a presentation by the chairman of EPZA Kamran Mirza at PIDC House here on Thursday. I have asked them to make KEPZ as a fully functional entity and create a viable and better export processing zone on China and Indiaâs pattern, he added.

He said that EPZA management will give him a briefing by mid of July this year as how to improve the working of KEPZ and how to revive it on modern lines.

âI have asked them to cancel plots of those investors who had yet not started work on the plot after so many years. They are not serious investors but speculators and these plots should be given to genuine investors,â he added.

He said that EPZA would issue notices to all of them and complete a legal procedure before the cancellation of plots. The allottees of these plots will not suffer any losses, as their deposits with KEPZ will be refunded.

He told reporters that Balochistan government has allotted 1,000 acres of land for Gwadar export processing zone. The work on this zone will start soon and this project will be developed along Gwadar Port, he noted.

Mr Tareen said new zones at Sunder, Faisalabad, Risalpure and Karachi are being created in the country to boost industrial activities. 

He pointed out that industrial estate on PIDCâs 250 acres of land in Landhi would be functional by next one year.

Similarly, another industrial estate being developed over 1,000 acres near Steel Mills will be dedicated for small and medium enterprises (SMEs). This will have small plots for small units of down stream steel industry, engineering and auto clusters, he opined.

To a question, he said that industrial sector would get further incentives in the budget in the shape of skill development and tariff rationalisation.

This is the effort of the government to rationalise tariff on industrial raw material and machinery, he added.

To a question regarding price of edible oil, he said that the government was providing ghee and edible oil to consumers at Utility Corporation at Rs 67 a kilo, which is cheaper by Rs 17 compared to the open market.

He said prices of palm oil has increased by 45 percent in the international market rising from $ 450 to $ 850 per tonne in the last six months, whereas prices in Pakistan have increased by only 20 percent during the same period.

http://www.dailytimes.com.pk/default.asp?page=2007\06\08\story_8-6-2007_pg5_2


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## Neo

Friday, June 08, 2007 

*Government all set to start 969MW hydroelectric project*

By Sajid Chaudhry 

ISLAMABAD: The government is all set to start physical work for the construction of much awaited $2.14 billion Neelum Jhelum Hydroelectric Project in the next fiscal year 2007-08, an official told Daily Times on Thursday. 

The construction of Neelum Jhelum Hydroelectric Project would enable Pakistan to get water usage rights over River Neelum. In the event of any further delay in the construction of the said project, Pakistan would have to forfeit its rights over River Neelum and allow India to use these waters for power generation, said the official. 

The official explained that the PC-1 cost of the project was estimated at $1.4 billion and the total cost of the project has been estimated at $2.14 billion. Government of Pakistan has approached Kuwait Fund and French financers M/S BNP Paribas for arrangement of the foreign exchange component of $785 million. 

The project is estimated to have an installed capacity of 969 MW and an annual energy generation capability of 5150 kWh. The project would be connected with the National Grid at Rawat through two separate transmission lines of 500 kV.

Water and Power Development Authority (WAPDA) has already approved award of the contract to the lowest bidder ie CGGC-CMEC on March 9, 2007 at the contract price of Rs 90.885 billion including foreign exchange component of $785 million or Rs 47.089 billion.

The Government had made an allocation of Rs 5 billion for the project in this yearâs Public Sector Development Program (PSDP) and a sizeable amount is expected to be allocated for this project in the PSDP for the next fiscal year, the official added. 

Located in the vicinity of Muzaffarabad, Azad Jammu and Kashmir, the project is scheduled to be completed in 8 years after the start of physical work. 

The official informed that around 2,500 kanals of land would be acquired for the project and in the first phase acquisition of 1123 Kanals of private land is under way. WAPDA has already transferred Rs 336 million to the Azad Jammu and Kashmir government as provisional cost of private land being acquired by it.

http://www.dailytimes.com.pk/default.asp?page=2007\06\08\story_8-6-2007_pg5_6


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## Neo

Friday, June 08, 2007 

*âPSEB plans to increase IT sector size to $10bâ*

ISLAMABAD: The Pakistan Software Export Board (PSEB) has proposed a four-year draft strategic plan, which will increase the IT industryâs size to $10 billion in the year 2010, said Managing Director Yusuf Hussain here Thursday.

Addressing a Microsoft seminar on âWorking Better Togetherâ, Yusuf Hussain highlighted PSEBâs initiatives to promote this vital sector, which registered growth of 57 percent during last year.

Eight strategic areas with missions and annual targets have been identified which include facilitation, human resource development, industry finance, marketing, office space provision, public policy, quality and telecom bandwidth provision, he added.

Yusuf Hussain said many of the activities mentioned were already in full gear and the board had been able to help 125 local companies achieve ISO and CMMI certifications.

He said in addition to tangible benefits like higher revenue and growth, certified companies can also look forward to enjoying intangible benefits including as improved customer confidence, greater employee satisfaction and an increase in shareholder value.

He said the board has also launched apprenticeship and internship programmes for the development of human resource required by the industry and more than 2,500 students have already benefited from the programme.

He said that another area in which the board was aggressively working on was the setting up of IT parks in all major urban centres, including Islamabad, Lahore and Karachi.

He said the PSEB had over 900 member companies and many of them have benefited from various PSEB initiatives, attracting international clients.

The other speakers including Michel Sengakis spoke on software asset management, âfind, use and share informationâ and Microsoft technology vision. 

http://www.dailytimes.com.pk/default.asp?page=2007\06\08\story_8-6-2007_pg5_7


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## Neo

Friday, June 08, 2007 

*Rs 1.874 trillion âno new taxâ budget*

* Rs 15bn earmarked for health, Rs 24bn for education and Rs 275bn for defence 
* Analysts see âelection focusâ in tomorrowâs budget

ISLAMABAD: Omar Ayub Khan, state minister for finance, will present a federal budget of Rs 1.874 trillion for the fiscal year 2007-08 in the National Assembly tomorrow (Saturday) at 5pm, Online reported. 

Official sources said the education and health sectors would get Rs 24 billion and Rs 15 billon respectively, whereas the defence budget would be increased from last yearâs Rs 250 billion to Rs 275 billion.

They said no new tax would be levied in the budget, which would be the first-ever such budget by the Prime Minister Shaukat Aziz-led government.

They said that government employees were likely to get a 15 percent increase in salaries and retried civil servants would get a 15 to 20 percent increase in their pensions. 

Locally manufactured 800cc vehicles will be exempted from tax, while 15 percent tax will be imposed on imported cars. 500 more utility stores would be set up in the country, sources added.

A considerable increase in the provincesâ annual development programmes has also been proposed. Rs 520 billion will be given for the federal annual development programme out of which Rs 150 billion would be given to the provinces and Rs 35 billion for development in the quake-hit areas, the sources said, adding that Rs 500 million had been set aside for the construction of Basha Dam and Rs 40 billion for other large dams.

There will be no tax on import of agricultural, marble, medical, engineering and textile machinery, the sources said. 

Analysts said the budget would be aimed at winning support for the government in elections due late this year or early in 2008, Reuters reported.

âThis budget will largely be an election-focused budget and is expected to include subsidies and measures such as an increase in salaries and pensions,â said independent economist Kaiser Bengali.

Bengali said the government might announce new development programmes to win support, but added that could have a negative impact on inflation. âThe best way to avoid inflationary pressures is to curtail non-development spending, such as on defence and the governmentâs own expenditures, and direct those funds towards development,â he said.

Rising prices are already a challenge. Average inflation is likely to be close to 7.7-7.9 percent for the 2006/07 fiscal year, against a target of 6.5 percent.

The budget allocation for public sector spending in 2007/08 is expected to be Rs 720 billion, including a Public Sector Development Programme of Rs 520 billion â nearly 20 percent higher than this fiscal year, officials said. Out of this, Rs 35 billion would be spent on reconstruction in areas hit by a 2005 earthquake, while the remainder would be spent equally on infrastructure development and the social sector, officials said. The government says the economy is expected to grow by 7.02 percent in 2006/07 and the target for the next fiscal year is 7.20 percent.

Salman Shah, adviser on finance to Prime Minister Shaukat Aziz, said the government would achieve the fiscal deficit target of 4.2 percent of GDP for 2006/07, while the target for the next fiscal year will be about 4.0 percent. Some analysts say that could be tough.

âOne potential area of concern next year would be fiscal discipline,â said Sakib Sherani, chief economist at ABN Amro bank. The government will have to make an extra effort to generate healthy tax revenue if it wants to maintain fiscal discipline, given the huge development spending envisaged for 2007/08, he said.

The government says it will set a revenue target of more than Rs 1.0 trillion for next year. It expects to collect Rs 830 billion this year.

âI think both corporate profitability and imports are currently at their peak, and hence it could be difficult to achieve 20 percent growth in revenue collection next year,â said Sherani.

A likely increase in the minimum wage would also put pressure on the profitability of industries and could thus hamper revenue growth, analysts said. They also see a need to broaden the tax base â only about 1.36 million people are registered as taxpayers out of a population of 160 million. agencies

http://www.dailytimes.com.pk/default.asp?page=2007\06\08\story_8-6-2007_pg7_20


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## Neo

June 08, 2007 Friday 
*Rs398bn deficit likely in new budget*

ISLAMABAD, June 7: The government will present a Rs1.874 trillion federal budget for 2007-8 in the National Assembly on Saturday, envisaging revenue target of Rs1.025 trillion, defence spending of Rs275 billion and fiscal deficit of Rs398 billion, amounting to more than 21 per cent of the outlay.

According to sources, the budgetary outlay is almost 25 per cent higher than the current yearâs estimate of Rs1.5 trillion. The budget deficit is estimated to be about 6.5 per cent higher than the current yearâs estimate of Rs374 billion.

To be presented by Minister of State for Finance Omar Ayub Khan, the budget has been prepared keeping in mind the upcoming election season with populist steps offering subsidies and benefits to the working class.

New pensioner would get an increase of about 15 per cent, while a few pensioners who retired before 1980 would get about 20 per cent raise.

The CBRâs tax revenue target at Rs1.025 trillion will be almost 22 per cent higher that the current yearâs original estimates of Rs841 billion. The defence spending will increase was about 10 per cent against that of the current year.

A critical feature of the budget would be a staggering 54 per cent increase in current expenditure, projected at Rs1.353 trillion, against Rs880 billion of the current year, said the sources.

The centre is projected to transfer about Rs465 billion to the provinces as their share in the federal divisible pool and grants, including subvention, against Rs398 billion during the current year, showing an increase of about 17 per cent.

The Public Sector Development Programme (PSDP) has been estimated at Rs520 billion, compared with Rs415 billion of the current year, showing an increase of about 25 per cent.

The source said a 15 per cent duty on imported and four per cent on locally manufactured cars had been proposed but there would be no new levy on up to 800cc cars. The capital value tax on cars is being removed. Measures in this regard will be approved by the cabinet on Saturday morning.

The Central Board of Revenue is expected to rationalise about 800 tariff lines in the budget, including some zero-rate slab for the industrial sector, including textiles.

A new zero-rate regime will be introduced to promote export of marble, granite and some other precious minerals, medical equipment and engineering goods.

The duties on industrial raw material not manufactured locally will be reduced.

Some of the other populist measures will include, expansion of Utility Stores services; reduction in the prices of pulses, rice, sugar, ghee and some other essential items; 15 per cent increase in government salaries; improvement in the Food Support Programme; increase in Workersâ Welfare Fund payouts by 40 per cent and raise in Employeesâ Old Age Benefit Institution-based pensions.

http://www.dawn.com/2007/06/08/top2.htm


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## Neo

*Export and inflation target unlikely to be achieved: Economic Survey report *

ISLAMABAD: Pakistan's economy has grown at an average rate of almost 7.0 percent per annum during the last five years and real GDP grew strongly at 7.0 percent in 2006-07 as against the revised estimates of 6.6percent for last year and 7.0 percent growth target for the year, the Economic Survey 2006-07 said. 

However, the target of increasing exports and decreasing inflation could not be achieved.

Economic Survey - pre-budget document was released at a press conference jointly addressed by Advisor to the Prime Minister on Finance - Dr Salman Shah and Advisor to the Finance Ministry - Dr Ashfaq Hasan Khan here Friday. 

According to the Economic Survey, growth of value addition in Commodity Producing Sector (CPS) is estimated to increase by 6.0% in 2006-07 as against 3.4% in 2005-06. 

Within the CPS, agriculture and manufacturing grew by 5.0 percent and 8.4 percent, respectively. 

Major crops witnessed an impressive growth of 7.6 percent as against a negative growth of 4.1 percent last year. 

Livestock exhibited signs of moderation from its buoyant growth of 7.5percent last year to 4.3 percent in 2006-07. 

Large-scale manufacturing registered a growth of 8.8% in 2006-07 against the target of 12.5.0% and last year's achievement of 10.7%. 

As a result of structural transformation, the share of agriculture in GDP has declined by 3.2 percentage points in the last 6 years alone and the share of the manufacturing sector has increased by 3.1 percentage points in the same period. 

Construction registered a massive growth of 17.2 percent in 2006-07 as against 5.7 percent last year mainly because of reconstruction work in quake affected areas, higher PSDP and pick-up in private housing market. 

The services sector grew by 8.5% in 2004-05, by 9.6% in 2005-06 and by 8.0% in 2006-07. 

Finance and insurance sector spearheaded the growth in the services sector and registered stellar growth of 18.2 percent during the current fiscal year 2006-07, which is slightly lower than 33.0 percent of last year. 

Value added in the wholesale and retail trade sector increased by 7.1% in 2006-07 compared to 8.6% growth in 2005-06. Value added in the transport, storage and communications sector grew by 5.7% from the previous year compared to 6.9% growth in 2005-06. 

Public administration and defense posted a growth of 7.0 percent while ownership of dwellings grew by 3.5 percent and social services sector improved its growth performance to 8.5 percent from 6.3 percent last year. 

Pakistan's per capita real GDP has risen at a faster pace during the last four years (5.1% per annum on average in rupee terms) leading to a rise in average income of the people. 

Such increases in real per capita income have led to a sharp increase in consumer spending during the last three years. 

The per capita income in dollar term has grown at an average rate of 13.0 percent per annum during the last five years rising from $ 586 in 2002-03 to $ 833 in 2005-06 and further to $ 925 in 2006-07. 

The main factor responsible for the sharp rise in per capita income include acceleration in real GDP growth, stable exchange rate and four fold increase in the inflows of workers remittances. 

As opposed to an average annual increase of 1.4 percent during 2000-2003, real private consumption expenditure grew by 12.1 percent in 2004-05 but declined in the subsequent two years to 3.3 percent in 2005-06 and 4.1 percent in 2006-07. 

The commodity producing sectors (agriculture and industry) has contributed 30.2 percent or 2.9 percentage points to this year's growth while the remaining59.8 percent or 4.2 percentage point's contribution came from services sector.

Within the CPS, agriculture contributed 1.1 percentage points or 15.1 percent to overall growth while industry contributed 1.8 percentage points or 22.7 percent.

The contribution of wholesale and retail trade has increased to 19.4 percent or 1.4 percentage points to GDP growth in 2006-07. 

Finance and insurance has also contributed 13 percent or 0.9 percentage points to this year's growth. 

Consumption accounted for 49.8 percent or 3.2 percentage points to economic growth in 2006-07 while investment accounted for 52.7 percent or 3.4 percentage points to the growth.

The Economic Survey 2006-07 said that the overall developments in the money and credit sector during the fiscal year 2006-07 have been satisfactory and werei n line with the Credit Plan Target. 

During July-May 12, 2006-07, money supply (M2) grew by 14 percent against the annual target of 13.46 percent and last year expansion of 12.1 percent for the same period. 

Net domestic assets have increased to 389.6 billion as compared to increase of Rs.314.4 billion in the same period of last year. 

Net foreign assets have a record increase of Rs.88.2 billion against the increase of Rs.43.8 billion in the same period of last year. 

Government borrowing for budgetary support has also recorded an in crease of Rs.212 billion as compared to Rs.73.4 in the same period of last year 

Credit to private sector amounted to Rs.263.4 billion during July-May12, 2006-07 as compared to Rs.339.9 billion in the same period last year. 

Credit to manufacturing sector recorded to be Rs.119 billion compared withRs.132 billion in the same period of last year. 

There was a substantial decrease in personal loans amounting Rs.38.8 billion as compared to Rs.67.2 billion during Jul -May 12,2005-06 Weighted average lending and deposit rates increased to 10.6 percent and3.9 percent in March 2007 while weighted average yields on 6 months T-bill increased to 8.9 percent in April 2007. 

The Khushali Bank (KB) now serves nearly 550,000 clients in 85 districts across the country. The KB has extended loans amounting to Rs.10 billion. 

During the first eleven months of the current fiscal year, leading indicators of the stock market displayed positive growth. During July-May2006-07, the KSE 100-share index increased by 29.8 percent while SBP general Index of share prices increased by 14.8 percent. 

KSE share index reached to an all time highest figure of 12961 points on May 31, 2007. Market capitalization has increased by a massive of Rs 980 billion, from Rs 2801 billion in June 2006 to Rs 3781 billion in May 2007. 

Nine out of 12 major trading groups in the stock market have recorded growth in their share indices, ranging from 2.0 percent to 44.7 percent. 

Large-scale merger of banks and a telecom company (Paktel) along with continued momentum of privatization programme have promoted growth of Pakistan's stock markets during the current fiscal year. Over the past few years, the Securities & Exchange Commission of Pakistan (SECP) has taken measures to restore confidence of both foreign and domestic investors. 

In the current fiscal year the SECP in consultation with the stock exchanges, has introduced significant capital market reforms in the fields of risk management, governance, transparency and investor protection. 

The fiscal year 2006-07 has witnessed concerted foreign investors interest in Pakistan's stock markets as highest ever inflow of portfolio investment ($1.82billion) was recorded during July-April 2006-07. 

The inflation rate as measured by the changes in Consumer Price Index (CPI) stood at 7.9 percent during the first ten months (July-April) of the current fiscal year, 2006-07, as against 8.0 percent in the comparable period of last year. 

The food inflation is estimated at 10.2 percent and non-food 6.2 percent, against 6.9 percent and 8.8 percent in the corresponding period of last year. 

The Wholesale Price Index (WPI) during July-April, 2006.07 have increased by 6.9 percent, as against 10.3 percent of last year. 

The Sensitive Price Indicator (SPI) has recorded an increase of 11.1percent during July-April, 2006-07, as against 6.7 percent of last year. 

The increase in inflation rate during the current year 2006-07 as against last year is attributable to the increase in food price inflation which has been due to increase in prices of edible oil, pulses, rice, milk, poultry, meat, wheat, wheat flour, fresh vegetables and fruits. 

Exports during the first ten months (July-April) of the current fiscal year are up by 3.4 percent - rising from $ 13457.0 million to $ 13909.0 million in the same period last year. Despite improvements in the international trading environment. 

Pakistan's export growth witnessed abrupt and sharp deceleration to less than 4.0 percent in the first ten months (July-April) of the current fiscal year after growing at an impressive rate of 16.0 percent per annum in recent years. 

What has happened to Pakistan's export in 2006-07? Attempt is made to review the situation and suggests measures to revive its glory of recent years. 

Pakistan's imports grew by 8.9 percent or $ 24993.1 million in the first ten months of the current fiscal year. 

After growing at an average rate of 29percent per annum during 2003-2006 Pakistan's import growth slowed to a moderate level in the current fiscal year. 

As expected, growth in import decelerated to 8.9 percent during the first ten months (July-April) of the current fiscal year as against hefty increase of40.4 percent in the same period last year. 

The deceleration in import growth is caused by several factors which include: the pursuance of tight monetary policy to shave off excess demand, softening of international price of oil, decline in imports of cars as a result of change in policy, decline in the imports of fertilizer because of large carryover stock of last year, and decline in the imports of iron & steel as Pakistan Steel coming back to its normal production level. Exchange rate remained more or less stable during the FY07. 

However, rupee depreciated only marginally (0.7%) from Rs.60.2138 per dollars as at end June 2006 to Rs.60.6684 as of end April 2007. 

In the open market, rupee traded at 60.655 to a dollar, which is at a discount of 0.02 percent as at end-April 2007. 

http://www.thenews.com.pk/updates.asp?id=23995


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## Neo

*IT to transform lives of millions: Awais *

ISLAMABAD: Federal Minister for Information Technology Awais Ahmad Khan Leghari has said that Information Technology (IT) is a tool which can be used to transform the lives of people, especially those belonging to the lower income groups.

Speaking to a group of students from the Department of Mass Communication Studies, Fatima Jinnah Womens University, Rawalpindi on Thursday he said, âWe believe that IT is the only tool, we can use in this age of communication, to transform the lives of people still living in poverty.â 

Briefing them about governmentâs steps in IT sector, the minister said production of top-quality human resources, introduction of a paperless economy and massive proliferation of broadband services are some of the key areas which would be focussed in the coming months. 

He said that reformation of IT and telecom sector was done in light of Presidentâs seven-point agenda within a span of a few years. 

âLast year, we were awarded with the prestigious Country Leadership Award by the GSM Association which is represented by over 700 GSM players of the worldâ, he told students.

Awais said the telecom sector in Pakistan had come a long way, there was a time when the country had merely 2.8 per cent tele-density, today our tele-density is 40 per cent and our mobile phone subscriber base has gone beyond 55 million, he added.

He said it has encouraged the introduction of phone banking, which would further facilitate the subscribers in transferring their money.

http://www.thenews.com.pk/daily_detail.asp?id=59590


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## Neo

*Pakistan records 7.0 percent growth *

ISLAMABAD (AFP) - *Pakistan recorded robust growth of 7.0 percent during its fiscal year ending June 30*, the government said, ahead of a key budget for embattled President Pervez Musharraf. 

The figure for the Islamic republic of *160 million people* was up from the *6.6 growth recorded last year*, according to an official economic survey released a day before the national budget.

The proportion of people living in poverty fell from one-third to less than one quarter while *per capita income rose to 925 dollars from 847 dollars in 2005-6, *the report said.

*"The growth rate this year has been 7.0 percent and this is a strong growth performance," *Salman Shah, finance advisor to Prime Minister Shaukat Aziz, told reporters as he unveiled the report.

The government has said its upcoming *budget with an estimated outlay of 33 billion dollars will focus on welfare and the promotion of economic growth.*
It will be watched closely as Musharraf remains embroiled in the biggest crisis of his eight years in power since suspending the country's independent-minded chief justice on March 9.

The survey said *inflation stood at 7.9 percent for the first 10 *months of the fiscal year, down from last year's figure of 8.0 percent but still *above the target for this year of 6.5 *percent.

"It is essential for us to bring it down to 6.5 percent next year and 5.0 percent in the next few years," Shah said.

The government is wary of the inflation figure because of pressure from the public over rising prices for food and other essentials.

Shah said *exports during the first 10 months of the fiscal year were up 3.4 percent, rising from 13.4 billion dollars to 13.9 billion dollars *against the same period last year.

Pakistan's *imports grew by 8.9 percent to 24.9 billion.*

The country's foreign exchange reserves, which have been high ever since Musharraf joined the US-led "war on terror" after the 9/11 attacks, stood at 13.7 billion, compared with 13.1 billion at the same time last year, it said.

http://news.yahoo.com/s/afp/20070608/wl_sthasia_afp/pakistaneconomygrowth_070608124720


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## Neo

*Improvement in trade deficit to nine percent of GDP expected *

ISLAMABAD (June 09 2007): The government is expecting improvement in trade deficit to 9 percent of the GDP in the current fiscal as against 9.5 percent of last year. However, the government is reviewing the factors that led to sharp deceleration in exports during the first ten months of current fiscal.

According to Economic Survey 2006-07, Pakistan has recorded laudable export performance during the last several years, with exports growing at an average rate of almost 16 percent per annum over the last four years (2002-03 to 2005-06).

Despite improvement in the international trade environment, Pakistan's export growth witnessed abrupt and sharp deceleration to less than 4.0 percent in the first ten months (July-April) of the current fiscal year after growing at an impressive rate of 16 percent per annum in recent years.

Exports were targeted at $18.6 billion or 12.9 percent higher than last year but during the first ten months of the current fiscal they were up by 3.4 percent - rising from $13457.0 million to $13909.0 million in the same period last year.

Exports of food group declined by 3.5 percent of which the share of rice and fruits was 2.6 and 14.3 percent, respectively. Rice export declined due to lesser production caused by adverse weather conditions which kept the domestic price higher and it was more profitable to sell within the country than export. Exports of textile manufacturing grew by 6.2 percent, however, export of raw cotton, cotton cloth and bed wear, on the other hand, registered a decline.

The rise in prima cotton price (genetically modified version) which is imported from the USA and is a critical input for producing high quality bed wear and fabrics, has made these items less competitive in the global market.

Further, the discriminating anti-dumping duty on the bed linen export to the EU also adversely affected Pakistan's competitiveness. Raw cotton declined due to lower production as well as increased domestic prices. Poor quality of cotton on account of contaminated issue is adversely affecting the exports of spinning industry.

After growing at an average rate of 29 percent per annum during 2003-2006 Pakistan's import growth slowed to a moderate level during the current fiscal. Pakistan's imports grew by 8.9 percent or to $2047 million in the first ten months of the current fiscal. Imports were targeted to decline by 2.1 percent in 2006-07 to $28.0 billion from last year's level of $28.6 billion. As expected, growth in import decelerated to 8.9 percent during the first ten months (July-April) of the current fiscal year as against hefty increase of 40.4 percent in the same period last year.

The deceleration in import growth is caused by several factors which include: the pursuance of tight monetary policy to shave off excess demand, softening of international price of oil, decline in imports of cars as a result of change in policy, decline in the imports of fertiliser because of large carryover stock of last year, and decline in the imports of iron and steel as Pakistan Steel's coming back to its normal production level.

Almost 31 percent contribution alone came from petroleum group, mainly on account of the surge in imports of petroleum products both in value and quantity. Imports of machinery contributed almost 30 percent to this year' rise in imports bills.

This is followed by imports of telecom, which accounted for 13 percent to the overall rise in imports. Almost three-fourth contribution came from three categories (machinery, petroleum and telecom) to this year's rise in imports. Interestingly, consumer durables' contribution was negative (-1.8 percent) mainly on account of a decline in the imports of cars. Therefore, contrary to the general perception, the contribution of consumer durables was negative.

http://www.brecorder.com/index.php?id=575063&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pakistan to miss textile export target* 

KARACHI (June 09 2007): Pakistan will miss its annual textile export target of $11.85 billion by $1.2 billion due to stiff competition in the world market with the regional players. High cost of production is said to be one of the major reasons.

Official statistics revealed that the country's textile exports registered 6.2 percent growth in the first ten months of the current fiscal against the growth target of 18 percent. Keeping in view the pace of current textile exports, experts reckon that the country is likely to fall short of the target in the current fiscal.

With 18 percent growth, the government set textile export target of $11.857 billion for the current fiscal against $10.046 billion during the last fiscal However it is expected that at the end of the current fiscal textile exports can not be higher than $10.650 billion, sources said.

"Yes, the country is going to fall short of textile export target and growth in textile exports will not be higher than 6 percent against the target of 18 percent in the current fiscal," confirmed federal minister for textile Mushtaq Ahmed Cheema to Business Recorder.

He said that rising high cost of doing business and poor infrastructure have posted low textile export growth in the current fiscal. However, he is confident that in the next fiscal, textile sector will perform better as the government has recently evolved a special textile package to promote exports.

"I am confident that the textile package will be helpful to make country's export strong and enable it to compete with other regional competitors like India and China," he said.

Official figures show that the country's textile exports stood at $8.866 billion during the ten months of the current fiscal against the target of $11.857 billion for the fiscal year 2006-07.

Exporters believe that the rising costs of production have made the domestic industry incompetitive and textile export orders have been diverted to other regional competitors. "Special incentive to Bangladesh and China's export-oriented textile industry by their governments has explored a number of avenues in the world market, as both are competitive as compared to Pakistan," said an office-bearer of Pakistan Readymade Garments Association.

He said that presently capacity utilisation of textile industry stands at 50 percent. This must be raised close to 100 percent, he said, adding that if the government wished to give a boost to exports and bring it to $23 billion by 2015, it must give level playing field to the investors.

The ministry of commerce has not focused marketing of the textile exports in the international market, which is also a major reason of the declining growth, he added. "The government should make a road map to boost textile exports and should adopt strong marketing policy," recommended a member of the Prime Minister's task force on textile. He said that exports including textile would rise in the next fiscal as Indian and Chinese governments have withdrawn some incentives.

Giving example he said that from July 1, 2007 China would become a complete member of the World Trade Organisation (WTO) after that some incentives would automatically be abolished. It may be mentioned here that textile exports have over 65 percent share in the total export of Pakistan, while the country's textile industry employs 40 percent of the workforce and contributes 11 percent towards the GDP. It is not only paying a number of taxes and hidden costs, but is facing an acute shortage of skilled workers, human resource and infrastructure that further aggravates the situation.

http://www.brecorder.com/index.php?id=575090&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Government upbeat on per capita income rise *

ISLAMABAD (June 09 2007): The government appears upbeat on per capita income set to cross $1,000 mark next fiscal year but plays down the fact that around a quarter of population still lingers beneath poverty line, reflecting unequal distribution of wealth.

At the launch of a survey that revealed key economic data for fiscal year ending on June 30, a financial advisor to the Prime Minister attributed this sharp rise to a robust economic growth.

"Per capita is going up because the economy is growing at an impressive rate," Dr Salman Shah told a news conference here on Friday. He, however, did not agree with a questioner who asked if this growth was favouring only business elites and its impacts were not being transformed to poor segments.

Pakistan economy has been growing at a rate of over 7 percent on the average during past half a decade. Per capita incomes have jumped up from $586 in 2002-03 to $925 this financial year, depicting a 13.5 percent per annum growth.

But poverty is also still a threatening reality. According to official statistics, around 24 percent Pakistanis are poor. Independent think tanks including the World Bank put the figure at 28 percent. With the spending of more than a trillion rupees aid money in last five years, the government has been able to bring the poverty down only by 10 percent, from 33percent in 2002-03.

VIBRANT CORRUPTION Experts say corruption in the government departments, especially at the top level, is one of the reasons for poverty still very high.

According to a 2006 corruption perception index by a Berlin-based watchdog, Transparency International, Pakistan was among the most corrupt countries in the world.

There are many in Pakistan who attribute high incidence of poverty and unequal distribution of wealth to corruption. One can trace several high profile corruption incidents in the country's recent economic history. A Pakistan top court early this year rejected a privatisation deal by the government because it saw a hint of corruption in it.

In March 2005, a stock market crash deprived small investors of more than 100 billion rupees. Reports later suggested some top government officials manipulated the crash. But Dr Shah said the government's efforts were enough to bring poverty down to 16 percent by 2015.

According to Millennium Development Goals by the United Nations, developing nations are bound to halve poverty by 2015 from 1990 level. With the current pace, the achievement looks an uphill task for Pakistan.

http://www.brecorder.com/index.php?id=575106&currPageNo=2&query=&search=&term=&supDate=


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## Introvert

*ICBC to invest in Pakistan
*
ISLAMABAD, Jun 8 (APP): Encouraged by the economic performance of Pakistan, Industrial and Commercial Bank of China (ICBC) is exploring possibilities of establishing its presence in Pakistan to provide financial support to the Chinese Companies investing in Pakistan and other development partners engaged in infrastructure development and financial business. This was disclosed by Jiang Jianqing, Chairman, Industrial and Commercial Bank of China who was leading a 10-member delegation in a meeting with Dr. Salman Shah, Advisor to the Prime Minister's on Finance here this morning.

Jiang further said that if Pakistan maintains the momentum of economic growth, it would become an economic power house in the region attracting substantial foreign investment.


He further said that ICBC was also exploring possibilities of establishing its branches and acquisition of Pakistani banks to provide financial services.


Dr. Salman Shah said that Pakistan under an institutionalized arrangement of Pakistan-China Joint Economic Forum was in the process of identifying infrastructure projects including development of hydro power and large dams.


Similarly, Pakistan has established a Joint Investment Company with China Development Bank to support Chinese firms who were establishing joint ventures with Pakistani companies and in large number of infrastructure projects in Pakistan .


Dr. Shah dilating on a vast investment canvas offered by Pakistan said that ICBC could explore possibilities of investing in Pakistan-China Special Economic Zone where most of the Chinese companies would set up their businesses for contract manufacturing to market their products in West Asia.


He also said that Pakistan would encourage role of ICBC to improve our awareness of the corporate sector of China and mutual funds industry in Pakistan.


He also offered Jiang projects in support of urban transport, logistic chains, mass transit and development of railways.


He said reforms in banking sector have inducted transparency and provided level playing field to both local and foreign investors. As a result, financial sector has significantly contributed in overall growth of economy. Pakistan 's improved international credit rating has inducted financial buoyancy in the policies of the government.


Recently, successful launching of Pakistan Sovereign Bond is a manifestation of investors' confidence in Pakistan 's policies. 


The ICBC with net assets of RMB 311.8 billion is the second largest bank in the world and growing at 30% per annum.


It specializes in infrastructure finance, corporate banking, personal banking, cash management, asset management, internet banking and international banking.


It is also the leader in financial services and products innovation based on advance information technology, corporate governance and risk management.
The meeting among others was attended by the Chinese Ambassador to Pakistan , members of ICBC delegation and senior officers of Ministry of Finance.
http://www.app.com.pk/en/index.php?option=com_content&task=view&id=10437&Itemid=2


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## Neo

*Declining exports blamed for trade deficit *

ISLAMABAD: Sharp deceleration in exports is attributed to the trade deficit of $11.1 billion in the first ten months (July-April) of the current fiscal year; however, economic managers hoped that it would improve after less than satisfactory performance of exports.

The percentage of GDP to trade deficit is likely to remain at 9 per cent in 2006-07 as against 9.5 per cent last year, says an economic survey released here Friday.

Pakistans major exports, which include cotton, leather, rice, synthetic textiles and sports goods, registered a growth of 3.4 per cent but the unit value of its exports declined, as it was deprived of $563 million in export proceeds.

Exports of engineering goods showed an increase of 6.7 per cent whereas petroleum products along with products like carpets, rugs, mats, sports goods, leather products, and surgical equipment, chemical and pharmaceutical products registered a negative growth.

To enhance exports, the survey recommends that Pakistan need to diversify its exports not only in terms of commodities but also in terms of markets, as it can lead to instability. 

Major reasons for the less than satisfactory export performance was that the export manufacturers low value addition, poor quality, obsolete use of machinery and technology, higher wastage of inputs adding to the cost of production low labour productivity, dismal investment on research and development, export houses lacking capacity to meet bulk orders, inability to meet requirements of consumers in terms of fashion and design and non-adherence to contracted quality and delivery schedule and a lack of marketing techniques, were identified by the survey.

As expected, growth in import decelerated to 8.9 per cent during the first ten months of the current fiscal year as against a hefty increase of 40.4 per cent in the same period of last year. Only consumer durables and raw materials showed a negative a growth of -2.2 per cent and 2.4 Percent respectively, whereas all other sector showed an increasing trend with machinery imports at the top, followed by the telecom sector showing 17 per cent growth in imports.

Pakistan also paid an additional bill of $294 million while importing soya bean oil, palm oil, petroleum products, petroleum crude, fertiliser, plastic material, medicinal products, iron and steel, due to an increase in prices of these imports.

http://www.thenews.com.pk/daily_detail.asp?id=59714


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## Neo

*Major crops push agri growth to 7.6pc *

ISLAMABAD: Output of major crops led the agriculture growth from its dismal performance of 1.6 to 7.6 per cent for 2006-07, whereas the performance of other sectors of the agriculture were not at par, says Economic Survey for 2006-07 released on Friday.

Two of the major crops and some minor corps had excellent yields while the rest were sluggish and could not contribute; causing GDP to slip from 21.5 to 20.9 percent.

Only wheat and sugarcane showed a growth of 10.5 per cent and 22.6 percent respectively while other major crops like cotton, rice and maize showed a negative trend.

Likewise minor crops showed a mixed trend, in contrast to major oilseed crops which showed growth in production while some of the minor crops like maize, onion and chillies registered a negative growth.

Agriculture credit disbursement both at the private and public banks showed a growth of 15 per cent but the economic survey did not reveal the number of creditors, who learnt to be shrinking. The survey did reveal that the share of private bank disbursements did increase.

Fertiliser, which is an important input for crops, showed a negative growth of 14 percent, as the total availability of the input, both domestically produced and imported slipped from 3.1 million tonnes to 2.6 million tonness in the first nine months of the current fiscal year, whereas off-take of fertiliser also registered a negative growth of 5.6 per cent when compared with the corresponding period.

The total contribution of livestock and dairy sector in GDP share of the agriculture has not been mentioned in the survey, but the survey emphasised the growth targets for milk, meat and livestock productivity are aligned with MTDF, achieving 6-8 pre cent annually.

Fisheries the most under exploited sector, only contributes 1.3 per cent to agricultural GDP as per capita consumption of fish is said to be a meagre 1.9 kg, which is one of the lowest in the world. 

http://www.thenews.com.pk/daily_detail.asp?id=59715


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## Neo

June 09, 2007 
*Indian market grows faster*

ISLAMABAD, June 8: The pace of growth in Pakistans capital market was just half of the Indian bourses this year despite existence of heavy capital gains tax in the neighbouring country -- a move still unthinkable in Pakistan -- and a higher ratio of capital value tax (CVT).

Though Pakistan was part of the worlds 16 leading stock markets from June 30, 2006, to May 11, 2007, its 23.5 per cent growth rate in terms of US dollars has been dampened by the 45.9 per cent growth in the Indian stock market, shows the Pakistan Economic Survey 2006-07.

The Indian stock market shone and attracted investors while still under the burden of seven per cent capital gains tax and 0.2 per cent CVT.

In Pakistan, the CVT ratio is very minimal, 0.02 per cent. The Pakistans government was unable to slap even the proposed marginal capital gains tax of 0.001 per cent on the market in the last budget after facing stiff resistance from the brokers that led to a market crash of moderate intensity in May last year as the investors had pulled out money from stocks as a threat.

The leading world stock markets which recorded growth of more than 45 per cent during current fiscal year are China (150 per cent), Philippine (75.3 per cent), Indonesia (63.4 per cent), Malaysia (59.8 per cent), Singapore (49.1 per cent) and India (45.9 per cent).

The survey states that aggregate capitalisation of the Pakistani stock market increased by 35 per cent from Rs2.801 trillion in July 2006 to Rs3.781 trillion as of May 2007.

Some big blue chip companies, including OGDC, PTCL, NBP and Hub Power, etc., primarily influenced the Karachi Stock Exchange (KSE).

During the first three quarters of the current fiscal year, the combined turnover of shares of 10 big companies -- OGDC, PTCL, Bank of Punjab, D.G. Khan Cement, Fauji Fertiliser Bin Qasim, Pakistan Petroleum, National Bank of Pakistan, Muslim Commercial Bank, Lucky Cement and Hub Power Company -- was 13.3 billion, which constituted 39.7 per cent of the total turnover at the KSE.

These 10 companies earned a profit after taxation of Rs122.6 billion in the current fiscal year up to March 2007.

Out of Rs122.6 billion profit-after-tax, the share of PTCL and OGDC was Rs66.8 billion, representing 54.5 per cent of the 10 big companies.

In the first nine months of 2006-07, PTCLs after taxation profit was Rs20.8 billion. Earning per share (EPS) of the 10 big companies ranged from 2.39 in the case of Hub Power Company to 20.9 in respect of National Bank of Pakistan. This indicates that the business environment in the current fiscal year has improved appreciably for the blue chip companies.

The performance of Islamabad and Lahore stock exchanges was not satisfactory.

According to the survey, the leading market indicators witnessed mixed trends in Lahore and Islamabad stock exchanges. The turnover of shares on the Lahore Stock Exchange (LSE) during July-March 2006-07 was 5.6 billion compared to 11.9 billion shares in the same period last year. Total paid-up capital with the LSE increased from Rs469.5 billion in June 2006 to Rs491.4 billion in March 2007.

The LSE index, which was 4379.3 points in June 2006, declined to 4249.3 points in March 2007.

However, the LSE market capitalisation has increased from Rs2.693 trillion in June 2006 to Rs2.948 trillion in March 2007. Seven new companies were listed with the LSE during July-March 2006-07, as compared to 15 companies in the fiscal year 2005-06. The Islamabad Stock Exchange also witnessed a mixed trend during the first nine months of fiscal 2006- 07.

The ISE 10 index started at 2,522.6 points and ended at 2,568.8 points depicting an increase of 1.8 per cent only.

The highest level of index was 2,999.87 as on Jan 25, as compared to the lowest level of 2,428.38 as on July 10, 2006.

The average daily trade volume in the ISE during this period was 0.23 million shares, which was substantially lower as compared to the preceding period. The ISE index, however, increased to 2738.3 points on April 30.

http://www.dawn.com/2007/06/09/ebr4.htm


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## Neo

June 09, 2007 
*Rising prices hit the poor most*

ISLAMABAD, June 8: Price hike in Pakistan has hit hardest the poorest section of the population living on less than Rs3,000 per month, says Economic Survey 2006-07.

Data pertaining to inflation rate for various income groups reveal that the increase of 7.9 per cent in Consumer Price Index (CPI) during 2006-07 was largely borne by lower income brackets.

Rising prices reduce the purchasing power of the average consumer, particularly the poor.

Category-wise increase in inflation rate in the case of lowest income group up to Rs3,000 per month was 8.3 per cent and lower income group up to Rs5,000 per month was 8.1 per cent, which is larger than the increase in overall CPI.

Whereas in the case of middle income and upper income brackets, average increase in inflation was at 7.8 per cent and 7.3 per cent, respectively, which indicates that inflationary incidence was highest for lowest income groups and lowest for highest income groups.

The higher incidence of inflation in case of lower income groups is likely due to the fact that lower income groups spend larger shares of their income on food, which has been the driving force in inflation in the current fiscal year.

The survey says that the CPI-based inflation during July-April 2006-07 averaged 7.9 per cent as against 8 per cent in the same period last year. The single largest component of the CPI is the food group, which showed an increase of 10.2 per cent.

On the other hand, the non-food prices grew at a slower pace compared to last year. The non-food inflation averaged 6.2 per cent between July -April 2006-07 while it stood at 8.8 per cent in the corresponding period of last year.

The non-food non-energy inflation (core inflation) decelerated sharply to 6 per cent in first 10 months of the fiscal year as against 7.7 per cent in the same period last year.

A more detailed analysis of the food group shows a considerable variation in inflation rates of the items included in the group. For example, considering the perishable and non-perishable items in the food group separately shows that non-perishable food prices rose by 9 per cent while the perishable items prices grew by 17.6 per cent.

An analysis of individual food items suggests that the major portion of food inflation during the current year stemmed from a limited number of items including rice, edible oil, pulses, meat, milk, tea, eggs, wheat, vegetable and fruit.

These items have experienced relatively larger increase in their prices during the course of 2006-07. However, prices of other important food items like sugar, potatoes, tomatoes, moong pulse and chicken (farm) have shown a decline in their prices owing to improved availability of these items in the market.

http://www.dawn.com/2007/06/09/ebr8.htm


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## Neo

June 09, 2007 
*Tax-to-GDP ratio rises to 9.5pc in 2006-07*

ISLAMABAD, June 8: The tax-to-GDP ratio has increased to 9.5 per cent in 2006-07 from the 9.2 per cent of last year, says the Economic Survey released on Friday.

The survey says that the tax revenue in relation to GDP has remained stagnant at 9 to 9.5 per cent during the last eight years.

The government recently projected to raise the tax-to-GDP ratio to 15 per cent by the year 2014-15. The increase in the ratio was mainly because of the higher growth of revenue, which stood at Rs835 billion to be achieved by end of the current year.

Pakistans GDP was re-based at 1999-2000 from a two decades old base of 1980-81.

According to the report, during the last eight years, tax collection has increased by 141 per cent to Rs835 billion expected to be collected in 2006-07 against Rs346.6 billion in 1999-2000.

The revenue deficit (the difference between total revenue and total current expenditure) was at 0.2 per cent of GDP in 2005-06 compared to a deficit of 2.2 per cent in 2000-01.

It has further progressed towards revenue surplus of 0.6 per cent of GDP in 2006-07. Pakistan has attained revenue surplus first time in 2003-04 since 1984-85, when it recorded 0.8 per cent of GDP surplus.

During the last four years this is second time when revenue surplus is mobilised and in the remaining two years revenue deficit existed, though at an insignificant level, as a result of some unavoidable increase in committed expenditure heads.

Fiscal Responsibility and Debt Limitation Act 2005 envisages a revenue surplus starting from 2007-08.

The primary balance (total revenue minus non-interest total expenditure) was in surplus from 1999-2000 to 2004-05 but turned into deficit of 0.9 per cent of GDP in 2005-06 due to the increased spending on earthquake related activities. Primary deficit is projected in 2006-07 for similar reason.

The positive aspect of reforms is the structural transformation in the structure of taxes, which has undergone considerable changes since the 1990s. Firstly, the share of direct taxes in total taxes (collected by the CBR) has increased from 18 per cent to over 38.5 per cent in July-April 2006-07.

The share of indirect taxes declined from 82 per cent to 61.5 per cent during the same period. Even within the indirect taxes, dramatic changes have taken place.

The collection from custom duty used to account for 45 per cent of total tax collection and 55 per cent of indirect taxes in 1990-91, its share has now been reduced to 18.6 per cent and 32.3 per cent, respectively.

The share of sales tax increased at a tremendous pace from 14.4 per cent to 41 per cent of total taxes and from 17.6 per cent to 60.3 per cent of indirect taxes during the same period. Central excise dutys share in total taxes and indirect taxes were 22.5 per cent and 27.5 per cent, respectively, in 1990-91. These have now been reduced to 8.3 per cent and 12.3 per cent, respectively, during the same period.

http://www.dawn.com/2007/06/09/ebr2.htm


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## Neo

June 09, 2007 
*Agriculture production expands by 5 per cent*

ISLAMABAD, June 8: The agriculture sector has recovered well this year by registering 5pc growth compared to the last years 1.6pc despite marginally less production of rice and cotton and negative growth in maze, barley rapeseed and mustard.

Major crops have bounced back from the last years negative growth of 4.1pc and posted a positive growth of 7.6pc, mainly due to historic production of wheat and vibrant performance by sugarcane crop, shows the Pakistan Economic Survey 2006-07 released by the government here on Friday.

In 2004-05, agriculture sector had grown by 6.7pc, 1.7pc more than this year.

This years historic wheat production of 23.5 million tons is 10.5pc higher than the last years 21.27 million tons and 0.4pc higher than this years target of 22.5 million tons.

Wheat contributes 14.4pc to the value added in agriculture and 3pc to the countrys GDP.

Sugarcane production has reached 54.75 million tons compared to last years 44.6 million tons, showing 22.6pc increase. The crops share in value added of agriculture and GDP are 3.5pc and 0.7pc, respectively.

The 13 million bales cotton production this year has remained mostly unchanged in comparison to 13.02 million bales of last year. Rice production at 5.4 million tons was marginally less than 5.5 million tons produced last year. Despite the lower yield, higher demand abroad for Pakistan Basmati rice and high international prices are expected to surpass the last years export earning from Basmati rice.

The growth in three major crops included maize, barely and rapeseed and mustard have decreased by 4.5pc, 5.7pc and 13.4pc respectively over the last year.

However, gram, another major crop, has exhibited an impressive growth of 75.4pc this year due to the increase in intervention price of the crop and good rains in Thal area.

Minor crops registered a weak growth of 1.1pc while it was 0.4pc last year. However, amongst the minor crops, production of potato increased by 67.2pc, mung and masoor pulses improved by 21.5pc and 17.9pc respectively.

Production of chillies, onion and mash pulse decreased by 49.6pc, 14.3pc and 3.6pc respectively, compared to last year.

Livestock registered a strong growth of 4.30pc over the last years impressive growth of 7.5pc due to increase in the livestock and poultry products.

The countrys performance in the forestry has been dismal this year as well as forestry decreased by 3.8pc. Last year, forestry had decreased by 43.7pc.

In Pakistan, only 5pc of total land area is under forest, ranking it under Low Forest Cover Countries. Of this total forest area, commercial forest is just one-third (32.8pc) and the rest (67.2pc) is under protected forest, performing soil conservation, watershed protection and climatic functions. Existing forest resources are under severe pressure to meet the fuel wood and timber needs of the country and wood-based industries including housing, sport, matches, boat making and furniture industries.

http://www.dawn.com/2007/06/09/ebr6.htm


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## Neo

June 09, 2007 

*External liabilities rise to $38.86bn*

ISLAMABAD, June 8: Pakistans external debt and liabilities (EDL) have increased to $38.86 billion by end of March this year, up by $1.6 billion from $37.24 billion at the end of June 30 last year, says Pakistan Economic Survey 2006-07.

This included a total of $37.36 billion of total external debt while foreign exchange liabilities stood at $1.5 billion. Majority of the EDL were in the form of medium term borrowing from multilateral and bilateral lenders that accounted for nearly 80 per cent of the outstanding debt.

Of the total EDLs, public and publicly guaranteed debt also increased by $1.2 billion in nine months of the current financial year to $31.08 billion as of March 31 compared with $29.875 billion last year. The medium and long term (Paris Club, multilateral, and other bilateral) debts also increased by about $1.6 billion to $31.

Of the total EDL, 33 per cent comes from the Paris Club, 36.3 per cent from multilateral lenders, 4.9 per cent private non-guaranteed and 5.5 per cent foreign currency liabilities.

Pakistans total stock of external debt and foreign exchange liabilities grew at an average rate of 7.4 per cent per annum during 1990-99 - rising from $20.5 billion in 1990 to $38.9 billion by the end of June 1999. Foreign exchange earnings on the other hand either remained stagnant or increased at a snails pace.

Despite the accumulation of almost $18.4 billion debt in the 1990s, foreign exchange earnings rose by only $4 billion. Consequently the debt burden raised from 256.6 per cent in 1990 to 335.4 per cent in 1999.

The external debt and liabilities have, however, declined from 50.9 per cent of the GDP at the end of fiscal year 2002 to 26.3 per cent of the GDP by end of March 2007. Similarly, the EDLs were nearly 5.8 times the foreign exchange reserves at the end of fiscal year 2002 but declined to 2.8 per cent by end of March 2007.

Outstanding external debt and liabilities included all government debt denominated in foreign currency, loans contracted by enterprises with government ownership or more than 50 per cent, as well as the external debt of the private sector.

The EDLs grew by 1.6 per cent in fiscal year 2005, 3.9 per cent in 2006 and 4.4 per cent in 2007. The largest increase in stock was seen in debt by multilateral donors with a change in stock of $1.5 billion or 8.9 per cent.

http://www.dawn.com/2007/06/09/top3.htm


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## Neo

June 09, 2007 
*WB approves $451m package for Pakistan*

WASHINGTON, June 8: The World Bank has approved a $451 million package, including both credits and loans, to help Pakistan improve education, health and other facilities.

The assistance will be used for improving education in Punjab and Sindh, enhancing irrigation in Punjab, implementing education and health reforms in the NWFP and eradicating polio throughout the country.

Islamabad had in recent years made good progress towards improving human development indicators and reducing poverty and vulnerability, said Yusupha Crookes, World Bank Country Director for Pakistan. But there could be no room for complacency.

According to the World Bank, only half of Pakistans adult population is literate, over 40 per cent of five-nine year olds are not in school, and poor health outcomes and high fertility will remain obstacles to economic growth and poverty alleviation.

The $130 million for the second NWFP development policy credit is designed to broaden and deepen human development reforms in key sectors such as education and health.

The $100 million for the fourth Punjab education development policy credit supports the ongoing Punjab education sector reform programme, which has now entered its second phase.

The $100 million for the second Punjab irrigation sector development policy loan will support reforms designed to improve management and maintenance of the irrigation system to ensure its long-term physical and financial sustainability.

The $100 million for the Sindh education sector development policy credit is the first of a series of three operations designed to support the provincial governments medium-term education sector reform programme.

The $21.14 million for the additional financing credit for polio eradication will help supply the oral vaccine for the supplementary immunisation activities during the second half of 2007.

http://www.dawn.com/2007/06/09/top10.htm


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## Neo

June 09, 2007 

*4pc deficit target set*

ISLAMABAD, June 8: The government had achieved the 4.2 per cent GDP fiscal deficit target for the current financial year and set a target of four per cent for the next year, said Adviser to the Prime Minister on Finance Dr Salman Shah.

We have achieved this 4.2 per cent fiscal deficit target by having a 30 per cent increase in revenues, he told a press conference here on Friday where he released the Economic Survey 2006-07.

He said the growth in direct taxes helped the government achieve its fiscal deficit target. The underlying fiscal deficit is targeted at 3.7 per cent of GDP, excluding earthquake spending for the current fiscal year, which is slightly higher than the previous years deficit level of 4.4 per cent, Dr Shah said.

He pointed out that higher deficit was targeted to finance the growing Public Sector Development Programme. Pakistan, he said, needed to strengthen its physical and human infrastructure to sustain the growth momentum.

http://www.dawn.com/2007/06/09/top9.htm


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## Neo

June 09, 2007 

*Country received $1.76bn foreign aid*

KARACHI: Pakistan received $1.761 billion as foreign aid in the first nine months of the current fiscal, according to the Economic Survey of Pakistan for 2006-07 released Friday. 

This shows the governments dependence on foreign economic assistance against claims that Pakistan is now a nation that offers economic assistance to others. 

Besides, the government received $961 million as aid for budgetary support, contradicting claims that foreign inflows were used to finance development projects. Pakistans external debt and liabilities have risen from $35.834 billion at the end of 2004-05 to $38.86 billion by March-end 2007, as the government resorted to financing development projects through borrowing from multilateral organisations, the government admitted in the economic survey. 

The survey further reveals that the country still has to rollover its external debt and liabilities. The government rolled over an amount of $1.1 billion in the first nine months of the current fiscal. 

The survey also said that during the first nine months of the current fiscal year 2006-07 (July-March), the project aid accounted for 41.9 percent stake while non-project aid share stood at 58.1 percent of the overall external assistance inflows. 

However, external debt and liabilities as a percentage of GDP have fallen thanks to the rapid growth of GDP. It declined from 51.7 percent of GDP in 1999-2000 to 27.1 percent of GDP by March-end 2007. Similarly, the external debt and liabilities were 297.2 percent of foreign exchange earnings but declined to 119.7 percent in the same period. The external debt and liabilities were over 19 times of the foreign exchange reserves in 1999-2000 but declined to 2.8 by the end of March 2007. Interest payments on external debt were 11.9 percent of current account receipts but declined to 3.2 percent during the same period. External debt and liabilities at the end of March 2006-7 were $38.86 billion.

http://www.dailytimes.com.pk/default.asp?page=2007\06\09\story_9-6-2007_pg5_6


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## Neo

Saturday, June 09, 2007 

*Agriculture sector grows 5pc: Economic Survey*


* Wheat production at 23.5m tonnes 
* Sugarcane production up by 22.6 percent to 54.8m tonnes

KARACHI: The agricultural sector has registered growth of 5 percent with a sharp recovery in 2006-07 as against the previous years growth of 1.6 percent. 

The performance of agriculture had been weak during 2005-06 because its crops sector particularly major crops could not perform well. 

According to the Economic Survey, released on Friday for the year 2006-07, the agriculture major crops posted strong recovery from negative 4.1 percent last year to positive 7.6 percent, mainly due to higher production of wheat and sugarcane. Wheat production of 23.5 million tonnes is highest ever in the countrys history, registered an increase of 10.5 percent over last year. Sugarcane production improved by 22.6 percent over the last year to 54.8 million tonnes, both being record high productions.

The agriculture growth has experienced mixed trends over the last six years. The country witnessed unprecedented drought during the first two years of the decade ie (2000-01 and 2001-02) which resulted in contraction of agricultural value. Hence agriculture registered negative growth in these two years. In the following years -- 2002-03 to 2004-05 -- relatively better availability of irrigation water had a positive impact on overall agricultural growth and this sector registered strong recovery. 

Despite the lower yield, higher demand abroad for Pakistan Basmati rice and high international prices are expected to surpass the last years export earning from Basmati Rice.

Amongst the other major crops, gram crop, exhibited an impressive growth of 75.4 percent in 2006-07 due to the increase in intervention price of the crop and good rains in Thal area where the gram crop is mainly concentrated. Minor crops registered a weak growth of 1.1 percent while it was 0.4 percent last year. 

However, amongst the minor crops, production of potato increased by 67.2 percent, moong and masoor pulses improved by 21.5 percent and 17.9 percent respectively. Livestock registered a strong growth of 4.30 percent over the last years impressive growth of 7.5 percent due to increase in the livestock and poultry products. 

Fishery performed positively at 4.2 percent though the previous years growth stood at 20.5 percent. Pakistans agricultural output is closely linked to the supply of irrigation water. Against the normal surface water availability at canal heads of 103.5 million-acre feet (MAF), the overall both for Kharif and Rabi water availability has been less in the range of 5.9 percent (2003-04) to 29.4 percent (2001-02). 

However, it remained less by 2.6 percent in 2005-06 against the normal availability. Relatively speaking, Rabi season faced more shortage of water than Kharif during these periods.

During the current fiscal year (2006-07), the availability of water for Kharif 2006 (for the crops such as rice, sugarcane and cotton) has been 6 percent less than the normal supplies and 10.8 percent less than last years Kharif. The water availability during Rabi season (for major crops such as wheat), as on end-March 2007 was estimated at 31.2 MAF, which was 14.3 percent less than the normal availability, and 3.7 percent more than last years Rabi. 

Sufficient water supplies coupled with timely winter rains in Rabi season had a good impact on Rabi crops particularly on gram, masoor and wheat as production of these crops increased by 75.4 percent, 17.9 percent and 10.5 percent, respectively.

http://www.dailytimes.com.pk/default.asp?page=2007\06\09\story_9-6-2007_pg5_4


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## Neo

Saturday, June 09, 2007 

*Growth in GDP, LSM drives energy sector up*

KARACHI: The growth in all components of energy sector during 2006-07 is driven by an 8.8 percent growth in large-scale manufacturing (LSM) sector and 7.0 percent growth in real GDP for the year 2006-07, Economic Survey 2006-07 released on Friday reveals.

The oil and gas sector has attracted huge foreign investment in the country including import of piped natural gas from Iran and Turkmenistan, import of LNG; increase in oil and gas exploration in the country; utilizing 175 billion tonnes of Thar coal reserves; setting up of new nuclear power plants; exploiting the affordable alternate energy resources.

Pakistans production of crude oil has increased to 66,485 barrels per day during July-March 2006-07 from 65,385 barrels per day during the same period last year, showing an increase of 1.7 percent. The overall production of crude oil has increased to 18.2 million barrels during July-March 2006-07 from 17.9 million barrels during the corresponding period last year, showing an increase of 1.7 percent. On an average, the transport sector consumes 50.7 percent of the petroleum products, followed by power sector (32.1 percent), industry (11.4 percent), household (2.2 percent), other government (2.3 percent), and agriculture (1.3 percent) figures for the last 10 years show.

The average production of natural gas per day stood at 3,876 million cubic feet during July-March, 2006-07, as compared to 3,825 million cubic feet over the same period last year, showing an increase of 1.3 percent. The overall production of gas has increased to 1,062,124 million cubic feet during July-March 2006-07 as compared to 1,048,190 million cubic feet daily in the same period last year, showing an increase of 1.3 percent. 

The total installed capacity generation witnesses no change during July-March 2006-07, it was 19,440 MW in first nine months of current financial year. Total installed capacity of WAPDA stood at 11,363 MW during July-March 2006-07 of which, hydel accounts for 56.9 percent or 6,463 MW, thermal accounts for 43.1 percent or 4,900 MW. 

http://www.dailytimes.com.pk/default.asp?page=2007\06\09\story_9-6-2007_pg5_5


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## Neo

Saturday, June 09, 2007 

*Technologycapabilityassessment of firms suggested *

LAHORE: The Federal Minister for Industries, Production and Special Initiatives (MOIP&SI), Mr Jahangir Khan Tareen, during a visit to TUSDEC head office, has suggested forming technical committees for identification of targeted technologies and effective technology capability assessment of companies and firms for the industrial Technology Upgradation Fund (iTUF). 

The Minister advised TUSDEC to establish a Project Management Unit (PMU) for the iTUF on a fast track basis and stated that its setup would be funded by the MOIP&SI. This PMU will be responsible for identification of targeted technologies, marketing strategies, formalizing relationships with stakeholders, outlining policies and procedures, sector identification and other related technical matters. 

The Minister was given a detailed briefing about the urgent need for a technology and skill acquisition fund to stimulate and assist private investment in the industrial sector. The Director Financial Services, Mr Arif Kitchlew, introduced iTUF as a device designed to cater to the overall rapid industrial growth strategy as envisaged by the MOIP&SI. Mr Tareen was informed that in order to address the limitation of acquiring technology by industrialists, a financial scheme is required that not only provides monetary assistance but also facilitates in terms of technical expertise and knowledge. There have been similar technology upgradation funds in countries like Malaysia, Singapore, India etc. and are working successfully for uplifting the status of technology in the targeted industrial sectors of their respective countries. 

The iTUF would be a facility available for existing Pakistani industries to acquire new technologies & skills to upgrade their obsolete machinery, or to make other interventions through which acquisition and assimilation of these technologies could be facilitated to gain a competitive edge within the global value chain.

http://www.dailytimes.com.pk/default.asp?page=2007\06\09\story_9-6-2007_pg5_7


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## Neo

Saturday June 9, 2007
*Pakistan's forex reserves cross $15 bln-cenbank*

KARACHI, June 9 (Reuters) - Pakistan's foreign exchange reserves crossed the $15 billion mark for the first time, thanks to healthy growth in external inflows, including proceeds from a sovereign bond issue, the central bank said on Saturday. 
The State Bank of Pakistan said in a statement that the country's forex reserves stood at $15.03 billion in the week ending on June 9, $1.243 billion higher than a week ago. 

Reserves held by the central bank rose to $12.65 billion from $11.588 billion a week earlier, while those held by commercial banks jumped to $2.38 billion from $2.20 billion, it said in a statement. 

"The achievement of this record level of foreign exchange reserves has been made possible by the healthy growth in external inflows during this fiscal year," Shamshad Akhtar, the central bank governor, said in the statement. 

The external flows include higher foreign direct investment, home remittances, portfolio investment and proceeds from a recently issued sovereign bond, she said. 

"The growth in foreign inflows reflects the confidence of foreign investors in the economy of Pakistan," the central bank governor said. 

Syed Wasimuddin, chief spokesman of the central bank, said Pakistan received inflows worth $750 million this week from the sale of its sovereign eurobond last month. 

The previous all-time high level of the reserves was $13.793 billion, reached in the week ending on May 19. 

http://asia.news.yahoo.com/070609/3/334vk.html


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## Neo

*Development outlay pegged at Rs724bn *

Allocation includes Rs520bn for Public Sector Development Programme

ISLAMABAD: The government on Saturday announced a Rs724 billion development budget for fiscal year 2007-08, including a Rs520bn Public Sector Development Programme (PSDP), with a special allocation of Rs37.6bn for land acquisition to build five major dams, including the controversial Kalabagh dam.

Out of the total PSDP, the federal governments share has been fixed at Rs335bn and that of the provincial governments at Rs150bn. Both of which have been increased by 24 and 30 percent, respectively, from what was allocated for the outgoing fiscal. Besides, the government corporations will spend Rs204bn that is outside of PSDP. 

The PSDP unfolded by Minister of State for Finance and Planning Omar Ayub Khan in the National Assembly on Saturday revealed an increase of 19.54 per cent or Rs85bn against the current years Rs435bn.

An amount of Rs35bn has also been allocated for the earthquake reconstruction and rehabilitation programme in addition to the Rs335bn development programme.

The infrastructure sector, which includes water, power and roads projects, has been given the main share of the total PSDP allocation. The sector will get Rs139.7bn or 41.7 percent of the federal PSDP. The remaining amount has been distributed between social and other sectors.

In infrastructure, a huge chunk of Rs84.15bn will go to the water and power sector to implement the ongoing and new projects. This includes Rs63.55bn for water and Rs20.60bn for the power sector. In the power sector, Rs72.83bn will be outside PSDP and will be generated by the sector itself. On balance, the sector will receive a total of Rs157bn. 

Mega dams for which more than Rs37bn have been earmarked include Kalabagh, Basha, Akhori, Munda and Kurram Tangi. The allocated amount will be spent mainly on acquisition of land for the proposed dams during the next fiscal year. The total cost of new hydel projects, which are given in the power sector under PSDP, has been estimated at Rs16.01bn, and for the Alternative Energy Development Board projects Rs148 million have been allocated.

Among the ongoing power-sector projects, the Neelum Jehlum hydropower project was allocated Rs10bn, Basha Diamer Dam project Rs500m, Golan Gol Hydro power project, Chitral, Rs450m, Khan-kwarhydro power project, NWFP, Rs700m, Allai Khawar hydro power project, NWFP, Rs1bn, and Dubir Khawar hydro power project NWFP Rs1.5bn.

All the eight electric power distribution companies have been allocated Rs5.5bn for their projects. These include 6th secondary transmission and grids project (Rs8.968 bn) for their distribution and system augmentation programme, Rs2.585bn and another Rs2.915bn have been allocated for these distribution companies rehabilitation, distribution, renovation and augmentation projects.

For the ongoing water-sector projects, Rs20bn have been allocated for Mangla raising project, Rs500m for Mirani dam, Rs200m for Sabakzai dam, Rs2.847bn for Kurram Tangi dam, Rs900m Satpara multipurpose dam and Rs600m for Gomal Zam dam. Besides, Rs870m have been allocated for the construction of 20 small dams in the NWFP, and Rs67m for carrying out feasibility studies on small dams in the same province.

Irrigation projects also have been allocated a sizeable amount as Greater Thal Canal (P-I) and Rainee Kanal each has got Rs2.5bn. Kachhi Canal has been allocated Rs8.5bn, lower Indus right bank irrigation and drainage, Sindh, Rs1.9bn and revamping/rehabilitation of irrigation and drainage system of Sindh Rs2bn. 

Special areas programme will get Rs34.42bn in the next fiscal year, including Rs4.42bn for the Khushhal Pakistan Programme (KPP-I), Rs10bn for the Khushhal Pakistan Fund (KPF) and Rs20bn have been allocated for KPP-II that will include 

Rs10bn for new and Rs5 billion for old projects. Five billion rupees will be spent on village electrification through alternative energy sources. 

Allocation for communication sector stands at Rs29.61bn and Rs6bn will come from outside PSDP for various projects. 

For the National Highway Authority (NHA), Rs25.917bn billion have been allocated for the ongoing projects. Of which Rs18.275bn will come from PSDP and the rest from foreign loans. On new NHA projects, Rs3.08bn will be spent which also include Rs0.8bn foreign loans. 

Under NHA allocation, Rs1.8bn are for Makran coastal road Balochistan, Rs1bn each for Islamabad-Peshawar Motorway (M-I), Lyari Expressway, Islamabad-Muzaffarabad Road and Indus Highway project Phase-III. Besides, Rs1.5bn have been allocated for Lowari Tunnel and Access Road, Rs1.8bn for Gwadar-Turbat-Hushab section. For new projects, besides others, Rs1bn have been earmarked for acquisition of land for Faisalabad-Khanewal Expressway (184km). 

Under the development plan, the Pakistan Railways will get Rs11.64bn, including Rs420m for new projects and Rs7.91bn for ongoing projects.

Eighteen billion rupees will be spent on higher education, which includes 397 ongoing and new projects to develop and improve universities in the country. 

For food, agriculture and livestock development, Rs15.79bn have been allocated with special focus on livestock production and development, agribusiness development, improvement of watercourses, land and water resources development, food security and research in the agriculture sector. 

In health sector, Rs14.27bn have been allocated for construction of new hospitals, family planning and primary healthcare centres, TB control, HIV/AIDA control, research and development, training, establishment of laboratories and construction of medical towers. 

An amount of Rs9.5b has been earmarked for industries, production and special initiatives. Under the sector, Rs6.5bn have been allocated for clean drinking water for all, Rs365m for Gujranwala Tools, Dies and Moulds Centre, Rs250m for gem and jewellery development, and Rs500m for marble and granite sector development.

The finance division will get Rs16.96bn, Planning Commission Rs14.43bn, Interior Division Rs9.5bn, Defence Division Rs9.5bn, and Commerce Division Rs1.579bn. 

For the textile sector, the government has allocated only Rs828m, for law and justice Rs3.526bn, ports shipping Rs757m, education 6.51bn IT and telecommunications 3.21bn, science and technology Rs3.6bn, population welfare Rs4.33bn, women development Rs163m, social welfare and special education Rs428m, labour and manpower Rs198m, Overseas Pakistan Division Rs5m, KA & NA Division Rs13.722bn, State and Foreign Region Division Rs7.5bn.

For environment division Rs1.62bn have been allocated, local government and rural development Rs128m, culture Rs378m, sports 522.7m, youth affairs Rs152m, tourism Rs167m, statistics division Rs263m. The Cabinet Division will receive Rs494.8m, housing and works Rs1.21bn, foreign affairs Rs579m, narcotics control Rs277m, information and broadcasting Rs1.54bn, establishment Rs503m, law justice and human rights Rs4.02b, revenue division Rs2.53bn, defence production division Rs526m, National Reconstruction Bureau Rs50m and economic affairs division Rs10m. 

http://www.thenews.com.pk/daily_detail.asp?id=59851


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## Neo

June 10, 2007 
*7.20pc GDP growth and 6.2pc inflation projected*

ISLAMABAD, June 9: The government has projected the Gross Domestic Product (GDP) growth target for the next fiscal year 2007-08 at 7.2pc against the current 7pc while inflation rate at 6.5pc as against the average of 7.9pc recorded in the outgoing year.

The trade deficit is expected to increase to $10.631bn from this years $9.9bn despite an expected 10 per cent growth in export which is projected to increase to $18.921bn against $17.205bn estimated in the outgoing financial year.

The government has planned to achieve the export growth through increase in agricultural production and manufacturing output and improvement in the productivity of industrial workforce.

Imports are expected to increase by 9pc, states the governments Annual Plan 2007-08 released here on Saturday.

The current account deficit is estimated to close at $8.11bn in the new fiscal year against a deficit of $7.12bn in the outgoing year.

The countrys foreign currency reserves are projected to swell up to $17.70bn from the current $14.535bn.

The overall investment is projected to be 23.8pc of GDP, with private investment taking the lead and public sector investment would mainly be made in developing the physical as well scientific and technological infrastructure. The government will try to achieve high value added in agriculture including livestock and fisheries and manufacturing especially engineering goods and services.

The agriculture growth target has been set at 4.8pc, 0.2pc less than the 5pc growth in the outgoing year. The government will try to achieve this target by improving timely water availability and water management besides quality seeds.

The value added of major crops is projected to increase by 4.5 per cent to Rs415.1bn compared to Rs397.2bn during 2006-07.

Cotton production is expected to increase by 8.8pc to 14.14m bales, while the production of sugarcane is targeted at 55.9m tons against 54.7m tons of the outgoing year. Rice and maize production are projected to increase to 5.7m tonnes and 3.2m tons respectively. Wheat target has been projected at all-time high 24m tons, two per cent more than the production in the outgoing year.

The 2006-07 economic growth was also led by wheat and it seems that this sole major crop is the main pillar of the governments economic plan for the new fiscal year despite the fact that crop is highly dependent on weather  a thing beyond human control.

The value added of minor crops is expected to increase by 2.3pc to Rs130.8bn against Rs127.9bn of the outgoing fiscal. Livestock is projected to grow by 5.7pc against 4.3pc increase realised during the outgoing year. The fisheries sector is targeted to grow by 4.2pc, while forestry 3.5pc.

The manufacturing sector is targeted to grow by 10.9pc this year. In the outgoing year the government had targeted industrial growth at 11pc but was unable to achieve it, ending the year with just 6.8pc.

The government plans to achieve the manufacturing target by getting 12.5pc increase in large-scale manufacturing, 7.5pc in small-scale and 5pc in slaughtering.

The services sector, which is projected to grow by 7.1pc, would continue to be the main contributor towards the robust economic growth in this fiscal as well.

In order to achieve the GDP growth target, total investment is projected to increase by 18.9pc to Rs2.381bn from the present R2.003bn. Fixed investment is planned to reach Rs2.221billion reflecting an increase of 19.2pc over the investment level of the outgoing fiscal.

http://www.dawn.com/2007/06/10/ebr11.htm


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## Neo

June 10, 2007 

*250,000 low-cost houses planned*

ISLAMABAD, June 9: The government will construct 250,000 low-cost housing units to provide cheap accommodation facility to the low-income group.

The Minister of State for Finance, Omar Ayub Khan, said in his budget speech on Saturday that low-cost housing scheme would be started in collaboration with the provincial and district governments for which the House Building Finance Corporation would provide soft loans.

He said under the scheme an estimated number of 250,000 units would be constructed in the next five years.

The minister said another scheme for low paid government employees would be launched under which 37,000 housing units would be given to the employees on ownership basis.

The government employees, he said, would have the facility to get loans for the construction work.

Meanwhile, the government has allocated a sum of Rs1.206 billion for the housing ministry against Rs1.194 billion fund provided to the ministry under the Public Sector Development Programme for the last fiscal year.

http://www.dawn.com/2007/06/10/top10.htm


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## Neo

*Economy: revisiting the basics*

WHILE the tempo of economic growth has been sustained this year, it is losing much of its lustre because of a double-digit food inflation, high unemployment and heavy indirect taxes that affect the common people. According to the Economic Survey 2006-2007 released on Friday, the Consumer Price Index at 7.9 per cent exceeded the estimated GDP (national income) growth rate of seven per cent. Food prices surged despite an impressive 7.5 per cent rise in output of major crops, a robust agricultural growth of five per cent and record foodstuff imports worth $2.3 billion during the first nine months. The price spiral can be attributed to fiscal expansion, heavy government borrowings, rising foreign capital and financial inflows and market abuse. On the eve of the budget, prices of such sensitive items as wheat flour, milk, rice, vegetable ghee, etc rose significantly. Convinced that food inflation is less responsive to monetary policy, the State Bank depends on market dynamics and administrative measures by the government to take care of the problem. In the event of market failure, the government has intervened on a case-by-case basis, though belatedly, but has so far failed to update the competitive law or set up the proposed competition commission. The decision to allow export of wheat without building up strategic reserves and the supply chain further fuelled inflation. The worst sufferers are the low-income groups, the poor and the vulnerable who have no means to hedge themselves against the effects of inflation. Combined with high interest rates, inflation is also eroding the savings of the middle-income groups, as is evident from a sharp fall of 42 per cent in consumer loans in the 10 months ending April 2007 compared to the same period last year. Now it is investment at a high level of 23 per cent of the GDP (rather than consumption) that is the leading factor contributing to GDP growth. The rise in the per capita income to $925 billion this year has come more from $4-5 billion remittances per annum than from the GDP growth.

While the government claims that it has brought down the unemployment rate to 6.2 per cent, it is actually higher than at the time General Musharraf took over in 1999. According to the Asian Development Bank, joblessness in the last two years was higher than the unemployment rates during 1990-1998. Over the last six years, the share in GDP of agriculture that employs more than 43.4 per cent of the workforce has declined by 3.2 percentage points. This belies the official claim that it has designated agriculture as the engine of economic growth and poverty reduction. The capital-intensive large-scale manufacturing (LSM) driven by sophisticated technology grew by 8.8 per cent against 10.7 per cent last year while the overall manufacturing growth was lower at 8.4 per cent. It shows that the growth in labour-intensive small and medium industries continues to lag behind LSM. Employment generated from high growth is not evenly distributed, province-wise or household-wise. The governments development spending on physical and social infrastructure offers mainly temporary jobs. In these conditions, the trickle-down theory has lost much of its validity. As lifetime employment managed by changing jobs is the preferred choice of a flexible labour policy, the quality of human skills in all fields of economic activity needs to be improved on a war footing so that abundant and idle manpower can be utilised to realise a transforming economys full potential. Economic growth has to be socially sustainable. That the gender gap in labour participation ratio is 50 per cent against the average of 35 per cent in South Asia shows how much Pakistan lags behind in developing human resources.

Apart from price stability and a high rate of employment, low tax rates are also an inseparable part of any economic success story. With the present narrow base, taxes remain high and concentrated in the manufacturing sector which contributes well over 60 per cent of the total tax revenue and the bulk of the export earnings. The services and agricultural sectors which account for nearly 80 per cent of the GDP are lightly taxed as in the case of large land holdings, the share market and real estate business. The exemptions on capital gains tax and concessions to various sectors and investors are fast approaching the Rs200 billion mark. Besides, the bulk of the tax revenue comes from indirect taxes that puts a disproportionate burden on the low-income groups. However, one positive development this year has been a healthy growth in direct taxes which more than made up for the weak growth in customs duty and sales tax, resulting in the tax revenues rising by 21.9 per cent to Rs597 billion during July-March 2007.

A gradual increase in tax-to-GDP ratio, achievable by widening the tax net, is required to sustain an accelerated pace of governmental development spending. A record of Rs520 billion public sector development programme will help realise a 7.2 per cent GDP growth targeted for the next year. In the first three quarters of this year, the governments domestic borrowings of Rs190.5 billion are four times the debt recorded in the same period last year. According to the Economic Survey, the revenue balance (revenue minus current expenditure) has suffered a deficit of 0.3 per cent as against the stipulated surplus of six per cent of the GDP. The primary balance (total revenue minus non-interest total expenditure) turned negative since last year after remaining in surplus for the previous seven years. The sovereign debt of $750 million, raised on the eve of the budget, is expected to be used to retire a part of the domestic debt and to stick to the budget deficit target of 4.2 per cent of the GDP. While the foreign debt-to-GDP ratio has declined sharply over the years because of a high growth over the last four years and rebasing of the national accounts, it has risen faster by $1.6 billion to $38.86 billion this year. The increased debt is a source of concern when GDP growth is driven by domestic demand and the growth in exports of merchandise has plummeted to 3.4 per cent.

While the external sector, with its huge capital and financial flows, indicates buoyancy, it is actually not robust, carrying as it does long-term risks to the economy. Of nearly 50 per cent of the six billion dollars estimated in foreign investment, $1.8 billion was portfolio investment or hot money and over one billion dollars came from the sale of two enterprises Paktel and Lakson Tobacco. After the Supreme Court judgment in the Pakistan Steel Mills case, the pace of privatisation has slowed down sharply. In the nine months to March, privatisation proceeds have decreased to $133 million as compared to $919 million in the same period last year. Imports estimated at $30 billion for this year continue to outpace exports, resulting in a record trade deficit projected at $13 billion and a current account deficit at seven billion dollars.

According to an independent economist, many worsening macro-economic factors linked to the GDP growth are incongruent to their behavioural relationship with the GDP. Apart from robust agricultural production which has made a seven per cent growth possible, the growth in key sectors is receding, whether large-scale manufacturing, exports or services. Even last years buoyant growth of 7.5 per cent in livestock, which contributes nearly 50 per cent of the agricultural output, is down to 4.3 per cent. With mounting macro-economic imbalances, it is time to revisit the basics.

http://www.dawn.com/2007/06/10/ed.htm#1


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## Neo

*Pakistan aims to kick-start construction*
By Farhan Bokhari in Islamabad

June 10 2007

Pakistan has raised its development spending by 30 per cent for the financial year, which begins next month, setting off plans for a substantial raise in government expenditure to win support from constituents in an approaching election season. 

The country aims to spend Rp520bn ($8.57bn; 6.41bn; £4.35bn) for carrying out development work in the new financial year (July-June) up from Rp394.5bn spent during the financial year (July-June) which ends this month.

Almost half of this expenditure will go towards building infrastructure such as roads and bridges  a step which officials said could give an impetus to construction activity across the country.

Other significant measures announced in the annual budget on Saturday include a bold increase in the target for tax collection of Rp1025bn for the next financial year, up almost 23 per cent on this year. 

But Salman Shah, adviser to the prime minister on finance  a position which makes him the de facto finance minister, on Sunday denied that higher development expenditure was aimed at winning votes ahead of the elections, expected between October and March.

Governments all over the world make policies for the benefit of the people. Why should we be any different, Mr Shah said. This budget is aimed at improving the competitiveness of our country. Our plans are aimed at achieving that target.

Critics said that mounting recent political uncertainty, unleashed after president General Pervez Musharraf suspended Iftikhar Mohammad Chaudhary, chief justice of the supreme court, in March on still unclear charges of misconduct, also promised to raise uncertainty and dent economic outlook. 

Mr Chaudharys decision to contest the charges has made him a public hero. Opposition parties have come out to support him, using his cause to agitate against the government.

Part of the concern over higher expenditure failing ultimately to lead to an overall economic uplift is driven mainly by reports of significant levels of corruption at the grassroots. 

Western economists warned that the budget failed to introduce tough measures for curbing widespread tax evasion. 

http://www.ft.com/cms/s/64d63d5c-1763-11dc-86d1-000b5df10621.html


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## Neo

*Humayun's proposal seeking rupee devaluation rejected *

ISALAMABD (June 12 2007): The National Security Council (NSC) has rejected the Commerce Ministry's proposal for 9 percent devaluation of the rupee on the ground that any such move can meet 1990s' fate when repeated lowering down of the currency value could not add to exports, it was learnt here on Monday.

The Commerce Minister Humayun Akhtar Khan floated the proposal in the recently held NSC meeting. He was of the view that devaluation can help exporters, get more share in the global market to take exports close to targeted mark of $18.6 billion.

Sources said NSC's reaction to the Commerce minister's plan to enhance exports through devaluation, an artificial mean, was spontaneous and extremely harsh.

NSC members raised a number of questions on the proposed devaluation of the currency. They enquired the minister how his idea could grantee the desired result to benefit the economic growth in the given regional scenario when India, China and other countries were appreciating their currencies. They also asked about proposed devaluation's net impact on foreign debt, its cost of financing and open market currency rates.

NSC members opposed the proposal outrightly and asked the commerce minister to go for other options to increase exports and secure maximum share in the international market. They also asked how devaluation would affect the imports and, in particular, industrial activity since in majority of cases, industry was dependent on imported raw material for value addition and other industrial inputs.

Sources said before taking the proposal to NSC, the minister had presented it at other important meetings, including one chaired by Prime Minister Shaukat Aziz, but every time its response was in negative. Finally, he took the idea to NSC.

The government is facing huge trade deficit due to sluggish trend in exports during the current fiscal year. Imports have shrunk vis-à-vis last fiscal year, but this trend is not helping the government to plug rising trade deficit.

http://www.brecorder.com/index.php?id=576325&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*11-month trade deficit soars to $12.62 billion *

ISLAMABAD (June 12 2007): Pakistan's trade deficit for July-May (11 months) climbed to $12.62 billion, with imports dominating and leaving almost no room for the government to achieve the exports target of $18.6 billion it had set for the year 2006-07. The projected trade deficit target, $9.4 billion for 2006-07, has already been surpassed.

According to official figures, the $12.62 billion deficit during 11 months of the year has widened the gap by 15.10 percent against $10.63 billion of same period of last year. Though May deficit was up by 6.28 percent from April, it was 1.74 percent less than May 2006.

Trade deficit in May went up to $1.14 billion against April but decreased to $1.14 billion in May 2007 against $1.16 billion of May 2006 Exports in 11 months (July-May) amounted to $15.48 billion against the target of $18.6 billion for 2006-07.

In May, exports grew by 7.30 percent, to $1.60 billion, against $1.48 billion of May 2006, leaving the government to accomplish $2.58 billion export target shortfall in one month--June.

Imports grew by 8.40 percent to $27.74 billion during 11 months compared to $25.59 billion over the same period of last year. Imports in May were up by 3.85 percent at $2.75 billion against $2.64 billion of May 2006. The imports in May were 6.87 percent higher to $2.75 billion against $2.57 billion of April.

Economic experts believe that the continuing trend of trade deficit in the coming month could have a serious impact on the country's balance of payments, and may have a negative impact on the health of the rupee. However, increase in foreign direct investment and growth in remittances might help the government in controlling the losses caused by this burgeoning trade deficit.

The government had projected import bill at $28 billion for the current financial year, whereas the export target was set at $18.6 billion. Although category-wise data of exports would be released later, figures indicate that the growth in exports did not pick up to achieve the target.

http://www.brecorder.com/index.php?id=576342&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*UAE sees enormous prospects for investment in Pakistan *

ISLAMABAD (June 12 2007): The United Arab Emirates will invest in oil and gas, construction, tourism and several other sectors in Pakistan, UAE Foreign Minister Sheikh Abdullah bin Zayed Al Nahyan said on Monday.

The UAE's foreign minister, who is in Pakistan to sign four agreements and participate in the meeting of Joint Ministerial Committee, said there were "enormous growth prospects" between the two countries.

"Pakistan is very promising and is one of the largest countries where UAE has investments and want to continue making more," he said in an interview with APP at Chaklala Air Base. He said there had been major investment by the UAE both in government and private sectors in Pakistan in various fields.

He said he would discuss with his Pakistani counterpart the conclusion of a free trade agreement between Pakistan and the Gulf Cooperation Council.

"I hope the talks will lead towards a satisfactory conclusion and help promote trade within the region." The MoUs likely to be inked on Tuesday aiming at formulating a joint strategy to fight terrorism and organised crimes, establishment of a political consultation mechanism between the two countries, enhancing cultural cooperation and setting up a joint business council.

He said the UAE viewed Pakistan as its "strategic economic partner" and appreciated its rapid economic growth. About the JMC, he said "we have got a full agenda and will be discussing political relations and security issues."

He said the two countries share common concerns with regard to issues like terrorism and financial crime and would discuss the agreement on criminal and judicial matters.

The foreign minister said the meeting of the Joint Ministerial Commission would provide an impetus to the development of relationship in many fields, including political, economic, cultural and security issues.

Sheikh Abdullah said the balance of trade between the two countries was now 4 billion dollars a year, and was expected to rise to over $5 billion in the current year. He pointed that UAE and Pakistani ministers of labour have recently signed a memorandum of understanding to regulate the way in which people were recruited in Pakistan to come and work in the Emirates.

"This is a major step forward in terms of preventing exploitation of workers by those who recruit them," he added. "We have also announced amnesty for those who are illegally present in the UAE, for whatever reason, to give them a chance either to go home or to regularise their presence in the country."

"Referring to Middle East issue, he said, "the Middle East peace process is faltering and there is a need for concerted international action to get it moving again."

Sheikh Abdullah said: "we look to Pakistan for diplomatic support in the efforts by the UAE and other Arab states to convince the international community that measures to put the peace process back on track is urgently required."

Appreciating the efforts of President Musharraf for re-structuring the Organisation of Islamic Conference, the UAE foreign minister said OIC has an important role to play in promoting interests of the Muslim world in political, economic and social spheres.

CALLS ON PRIME MINISTER Sheikh Abdullah, called on Prime Minister Shaukat Aziz on Monday. The PM said that Pakistan, situated at the confluence of three important regions of Asia, is using its unique geo-strategic location to promote economic cooperation and acting as an anchor of peace and stability in the region.

The prime minister said Pakistan values its relations with UAE and is keen to further expand cooperation in all fields, especially in economic, commercial, investment, manpower, energy and defence sectors. He also emphasised the need to expedite Free Trade Agreement between Pakistan and GCC. He said that the attractive demographics of Pakistan had created growing economic opportunities.

About Iran, the Prime Minister said Pakistan is expanding bilateral trade and finalising plans to buy electricity and gas from Iran. Foreign Minister Khurshid M Kasuri said there was tremendous potential to significantly increase and diversify the two-way trade between Pakistan and United Arab Emirates (UAE).

In his opening statement at the ninth session of the Pakistan-UAE Joint Ministerial Commission, that met here today after a gap of nearly ten years, the Foreign Minister hoped the meeting would help address obstacles hampering optimum realisation of the potential of their economic relations.

http://www.brecorder.com/index.php?id=576397&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*ADB to release $55 million second tranche for Balochistan soon *

ISLAMABAD (June 12 2007): The Asian Development Bank (ADB) announces the progress has been made to achieve targets for releasing $55 million as second part of a $133 million loan to Balochistan government for making official departments more efficient.

"The substantial progress in a difficult political environment has been made in meeting the achievement targets for the release of the second part of the loan," said an ADB senior economist for central and west Asia, in a statement, issued from Manila, Philippines on Monday.

The Manila-based Asian Development Bank approved in November 2004 a $133 million loan to support country's largest but volatile province continue improving its financial position through better management measures.

Within months after ADB approved the Balochistan Resource Management Program (BRMP), around $80 million were released to the provincial government as first part of the loan. The bank set targets to be met ahead of the release of $55 million second part.

"To meet the requirements to release the second part of the loan of $55 million, a set of fiscal and financial management targets had to be established," said Jörn Brömmelhörster, a senior economist in ADB Central and West Asia Department. The statement is believed to be a hint that the remaining amount would be released soon. No date has been fixed.

Balochistan that covers nearly half of Pakistan land area and borders Iran and Afghanistan has been struggling with financial problems and political unrest for years in the recent past. The province is partially being ruled by hard-line religious groups politically gathered under an alliance called Muttahida Majlis-i-Amal (MMA). Despite its size, only 5 percent of country's population lives in the province and only a third of the land area is productive for agriculture.

Balochistan is rich in natural resources, including minerals and hydrocarbons, which remain largely unexplored. The province has limited industrial activity and jobs outside agriculture and mining are rare. The provincial government estimates the poverty level as high as 47 percent.

http://www.brecorder.com/index.php?id=576384&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'Outdated infrastructure can not support seven percent planned growth' *

ISLAMABAD (June 12 2007): The Planning Commission has expressed fears that inefficient and outdated transport and communication infrastructure can not support 7 percent growth the government is hoping to achieve in 2007-08.

It believes that logistic constraints were impeding competitiveness of the country's trade and industrial development, resulting in losses of as much as 4 percent of the GDP.

The Annual Plan 2007-08 reveals that the performance of the transport sector was not up to the mark and a major portion of the public expenditure next fiscal year is being earmarked to revamp the country's infrastructure to cope with the situation.

Besides revitalisation of Railways by transforming it into a commercially viable entity, the government is going to prepare 'master' and 'business' plans of the country's ports, keeping in mind that around 95 percent of imports and exports are handled through ports.

The transport sector currently accounts for 11 percent of GDP, 16 percent of fixed investment, 35 percent of the total annual energy use and about 15 percent of the Public Sector Development Program.

Although Pakistan has a road network of 258,000 km (including 9,500 km national highway and motorways), the road density is low for a population of 156 million people and an area of 796,000 km. The total public expenditure on roads is over Rs 33 billion per year, with 65 percent on national highways.

There are also about 7.0 million vehicles on road, which are projected to increase to 21 million by 2030. Pakistan Railways has about 10,000 km track but it is performing below its commercial potential. The two major ports handle goods over 41 million tons annually apart from container traffic.

The Planning Commission has underlined scores of sectoral shortcomings in the system, as container dwell time at ports is seven days, that is three times higher than in developed countries or in East Asia.

The road freight carries 95 percent of land freight and takes four to six days in reaching north of the country from ports. Trucking rates for high value commodity traders are higher than India and Brazil and same as China where service quality is also higher.

Rail carries less than 5 percent of freight and takes from one to two days on the main Karachi-Lahore line, which is two to three times slower than China and USA. The Annual Plan 2007-08 mentions three-pronged strategy for an efficient transport system to become globally competitive.

Firstly, the Planning Commission says that the existing infrastructure, which is quite unsuitable even by present standards, will have to be updated to international standards in scale, quality and management efficiencies within the next five to six years so that it can be used optimally. Secondly, better co-ordinated use of various modes of transport would be facilitated that would include road, rail, ports and air traffic. This will help reduce the cost of doing business for both domestic and foreign traders.

And, thirdly, it is necessary to prepare for energy efficiencies and other modal changes that will occur in the century. The two existing national ports are handling about 40 million tons cargo annually. Karachi Port handles about 30 million tons while Port Qasim handles about 10 million tons.

There are 44 airports maintained by the Civil Aviation Authority, of which 25 are operational. There is one major public sector airline and a few private airlines.

According to the Annual Plan, a comprehensive and integrated transport policy will be developed during 2007-08. It is planned to revitalise railways by transforming it into a corporate entity. Railways 'Business Plan' is also being prepared and a professional CEO would be appointed to run the railways.

Development of port infrastructure and rationalisation of port charges is envisaged to cater to trans-shipment through the landlord port concept with enhanced private sector participation. Likewise, rationalisation of airport charges and the development of airports through the private sector are also planned.

http://www.brecorder.com/index.php?id=576392&currPageNo=1&query=&search=&term=&supDate=


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## Neo

Tuesday, June 12, 2007 

*UAE to invest in real estate and oil refinery*

KARACHI: A business delegation comprising of senior officials from International Petroleum Investment Company, Abu Dhabi National Oil Company and Emmar visited the Board of Investment (BOI). The visit took place as a part of the 9th session of the Joint Ministerial Commission between United Arab Emirates (UAE) and Pakistan.

The Pakistani delegation was led by the Secretary, BOI, senior officials from the Petroleum Ministry, Capital Development Authority (CDA), Pak Gulf Construction Company, Real estate division of the AWT and members of the business chambers. The UAE delegation was shown joint venture investment opportunities in various projects. The Centaurus project which is a $350 million investment to be completed by 2010 comprising of a 7 star hotel, mall, office towers and a residential area was one such joint venture opportunity presented. 

http://www.dailytimes.com.pk/default.asp?page=2007\06\12\story_12-6-2007_pg5_6


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## Neo

*Election-focused, pro-growth Rs 1.874 trillion budget envisages record Rs 0.52 trillion development spending *

ISLAMABAD (June 10 2007): State Minister for Finance Omar Ayub Khan on Saturday presented an election-focused, pro-growth budget of Rs 1.874 trillion, which envisages, among other things, a record development spending of Rs 502 billion and subsidy-based relief for the poor and the low-income groups through massive expansion of utility stores network.

The Utility Stores Corporation (USC) network will be expanded to union councils level for outreaching maximum number of needy people. Essential items would be provided to low-income groups through expanded USC network, and Rs 111 billion have been allocated for subsidies to protect the poor segment of the society.

Government employees will get 15 percent increase in basic salaries with special incentive for BPS 4 of one grade promotion.

Minimum wages limit has been increased from Rs 4000 to Rs 4,600 per month, and EOBI Old Age benefit will be increased from Rs 1300 to Rs 1500 per month. Pensioners will get 15 to 20 percent increase. Those who retired prior to 1975 would get 5 percent more increase in pensions.

The provinces will get 46 percent of resources from divisible pool, against 45.5 percent of 2006-07, and their share will increase, as per agreed National Finance Commission (NFC) award, to 50 percent by 2011. GDP growth rate has been fixed at 7.2 percent for next fiscal year.

The Public Sector Development Programme (PSDP) will be Rs 520 billion and it will cater the needs of a number of key areas. Several steps would be taken to plug trade and current account deficit.

Mega dams and other water-related projects will be completed on top priority basis to overcome power crisis. Neelam-Jehlum will cost Rs 84.5 billion. PSDP will cover 669 new and 1450 on-going development projects, and Rs 35 billion has been earmarked for earthquake areas rehabilitation.

Design for Bhasha and Diamir dams will be completed in 2008. The Central Board of Revenue's (CBR) has been given target of Rs 1.025 trillion, against Rs 835 billion of the outgoing fiscal year. It would include Rs 622 billion direct and Rs 408 billion indirect taxes.

Tariff regime for cars will remain the same, except conversion of capital value tax (CVT) into customs duty and reduction in period of import from 5 years to 3 years.

One percent special surcharge has been imposed on import of all items, except petroleum products, palm oil and agriculture inputs and machinery. PSF imports have been included in DTRE scheme to give relief to the textile sector.

Real Estate Investment Trust (REIT) has been formed with exemption from tax up to 2010. Assets of stocks exchanges, to be transferred to demutualised exchanges, will be given special tax treatment. In order to speed up private investment in Private Equity Fund (PEF) exempted from tax till 2014 has been proposed.

Four percent of GDP will be spent on education. Defence budget has been increased by 9.12 percent by taking its allocations to Rs 275 billion against Rs 252 billion of 2006-07.

Educated youth will get stipend. Special skill programme will be launched under Navtec to impart skill to the youth. Baitul Maal Fund will cover 0.7 million households, according to new budget. Electricity rates for tube-well have been cut by 25 percent. Subsidy on urea has been increased to Rs 470 per bag. The growers will get fertilisers, new seeds and other agricultural inputs at subsidised rates.

Incentives for livestock in taxes. Khushal Pakistan Programme (KPP) will cover more areas for development. Poverty issue will be addressed through more jobs.

http://www.brecorder.com/index.php?id=575766&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*UAE sees enormous prospects for investment in Pakistan *

ISLAMABAD (June 12 2007): The United Arab Emirates will invest in oil and gas, construction, tourism and several other sectors in Pakistan, UAE Foreign Minister Sheikh Abdullah bin Zayed Al Nahyan said on Monday.

The UAE's foreign minister, who is in Pakistan to sign four agreements and participate in the meeting of Joint Ministerial Committee, said there were "enormous growth prospects" between the two countries.

"Pakistan is very promising and is one of the largest countries where UAE has investments and want to continue making more," he said in an interview with APP at Chaklala Air Base. He said there had been major investment by the UAE both in government and private sectors in Pakistan in various fields.

He said he would discuss with his Pakistani counterpart the conclusion of a free trade agreement between Pakistan and the Gulf Cooperation Council.

"I hope the talks will lead towards a satisfactory conclusion and help promote trade within the region." The MoUs likely to be inked on Tuesday aiming at formulating a joint strategy to fight terrorism and organised crimes, establishment of a political consultation mechanism between the two countries, enhancing cultural cooperation and setting up a joint business council.

He said the UAE viewed Pakistan as its "strategic economic partner" and appreciated its rapid economic growth. About the JMC, he said "we have got a full agenda and will be discussing political relations and security issues."

He said the two countries share common concerns with regard to issues like terrorism and financial crime and would discuss the agreement on criminal and judicial matters.

The foreign minister said the meeting of the Joint Ministerial Commission would provide an impetus to the development of relationship in many fields, including political, economic, cultural and security issues.

Sheikh Abdullah said the balance of trade between the two countries was now 4 billion dollars a year, and was expected to rise to over $5 billion in the current year. He pointed that UAE and Pakistani ministers of labour have recently signed a memorandum of understanding to regulate the way in which people were recruited in Pakistan to come and work in the Emirates.

"This is a major step forward in terms of preventing exploitation of workers by those who recruit them," he added. "We have also announced amnesty for those who are illegally present in the UAE, for whatever reason, to give them a chance either to go home or to regularise their presence in the country."

"Referring to Middle East issue, he said, "the Middle East peace process is faltering and there is a need for concerted international action to get it moving again."

Sheikh Abdullah said: "we look to Pakistan for diplomatic support in the efforts by the UAE and other Arab states to convince the international community that measures to put the peace process back on track is urgently required."

Appreciating the efforts of President Musharraf for re-structuring the Organisation of Islamic Conference, the UAE foreign minister said OIC has an important role to play in promoting interests of the Muslim world in political, economic and social spheres.

CALLS ON PRIME MINISTER Sheikh Abdullah, called on Prime Minister Shaukat Aziz on Monday. The PM said that Pakistan, situated at the confluence of three important regions of Asia, is using its unique geo-strategic location to promote economic cooperation and acting as an anchor of peace and stability in the region.

The prime minister said Pakistan values its relations with UAE and is keen to further expand cooperation in all fields, especially in economic, commercial, investment, manpower, energy and defence sectors. He also emphasised the need to expedite Free Trade Agreement between Pakistan and GCC. He said that the attractive demographics of Pakistan had created growing economic opportunities.

About Iran, the Prime Minister said Pakistan is expanding bilateral trade and finalising plans to buy electricity and gas from Iran. Foreign Minister Khurshid M Kasuri said there was tremendous potential to significantly increase and diversify the two-way trade between Pakistan and United Arab Emirates (UAE).

In his opening statement at the ninth session of the Pakistan-UAE Joint Ministerial Commission, that met here today after a gap of nearly ten years, the Foreign Minister hoped the meeting would help address obstacles hampering optimum realisation of the potential of their economic relations.

http://www.brecorder.com/index.php?id=576397&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*UAE to invest $ 6 billion to set up refinery at Karachi EP Zone *

ISLAMABAD: June 12, 2007: The UAE is all set to invest $ 6 billion to set up refinery at Karachi Export Processing Zone. 

Sheikh Abdullah Bin Zayed Al Nahyan Foreign Minister of UAE informed Zahid Hamid Federal Minister for Privatization and Investment during a meeting here today.

Sheikh Abdullah Bin Zayed Al Nahyan Foreign Minister of UAE assured full support of UAE government to further promote the private sector and UAE government investment in Pakistan in the fields of energy and real estate sectors.

Earlier, while giving an over view of Pakistan's economic picture, Zahid Hamid Federal Minister for Privatization and Investment informed the visiting dignitary that due to the consistency and continuity of economic reforms and policies based on three pillars of deregulation, liberalisation and Privatization, Pakistan has become a safe haven for investors from all over the world.

Investors from China, Middle East, Chile, Germany and other countries were expressing keen interest in various sectors of economy.

Zahid Hamid further stated that Pakistan's economy was performing much better as the GDP per capita and Exports have doubled, the Foreign Investment as compare to US $ 499 million in 2002 has now raised to historic level of US $ 6 billion plus. It was the economic reforms which have further strengthened the confidence of foreign investors resulted in unexpected response from foreign investors in Euro Bond with lower interest of 6.8 % as compare to 7.12 % of last year which was over subscribed with US $ 3.5 billion while our demand was for US $ 500 million, however, we have picked up US $ 700 million, he said.

He added that Pakistan provided tremendous investment opportunities to all investors in every sector of economy with liberal investment policy and unmatchable incentives in the region with a level playing field.

The Secretary Board of Investment (BOI) Mushtaq Malik briefed the delegation regarding the functioning of BOI.

Brecorder


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## Neo

Continued in new thread:

https://defence.pk/forums/showthread.php?t=5806


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## Neo

June 12, 2007 
*Import surcharge to reduce trade gap*

ISLAMABAD, June 11: Central Board of Revenue (CBR) Chairman Abdullah Yousuf on Monday conceded that the tax machinery was encountering enforcement problems in sales tax and customs duty but hoped that the aggressive revenue target of Rs1,025 billion for the fiscal year 2007-08 would be achieved.

We have to improve our efficiency to generate tax from the potential taxpayers. The enforcement issues can not be resolved within days. We are trying to improve upon, he said while replying a question at the post-budget press conference.

Addressing the newsmen the CBR chairman said the aggressive revenue target was achievable due to well-organised reforms, new taxation measures taken in the budget and continuity in the economic growth during the current fiscal year.

To a question he said that the shortfall recorded in the customs duty and sales tax collections, which stood over Rs60 billion during the current fiscal, was bridged by the robust growth of over 50 per cent in the income tax collection.

However, he said that the tax collection target of Rs835 billion set for the outgoing fiscal year would be achieved easily by the end of this month.

He defended the decision of one per cent surcharge on imports on the pretext that it would not only generate revenue for the government but would also help in reducing the flow of imports in the country to reduce the trade deficit.

To a question he said the surcharge will also be applicable on all imports, including those coming under free trade agreements or preferential trade agreements. He clarified that it was not in violation of any provision of the WTO agreement.

Mr Yousuf said that the CNG sector was not contributing the GST according to the actual value-addition, which stood at around 300 per cent. He said that under the new arrangement this gap has been narrowed down. However, he ruled out any increase in retail price due to this arrangement.

He said the budgetary measures taken by the government would help enhance the tax-to-GDP ratio besides broadening the tax base and improving the documentation of the economy. He said the budgetary measures relating to sales tax and federal excise were aimed at providing relief to the taxpayers by rationalising tax rates thereby creating a conducive and business-friendly environment.

http://www.dawn.com/2007/06/12/ebr1.htm


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## Neo

June 12, 2007 
*Cement City at Hub planned*

QUETTA, June 11: Hub would soon have a "Cement City", for which the provincial government would provide 2000 acres of land and all required facilities to industrialists. This was stated at a meeting, presided over by Chief Minister, Jam Mir Mohammad Yousuf, in Hub on Monday.

Chief Secretary K. B Rind, official concerned and leading industrialists attended the meeting in which various decisions were taken.

"Only cement factories would be set up in the proposed cement city," said the Balochistan chief minister. He said a decision was taken after the success of the Marble City established in Gadani.

He said that Lasbela Industrial Estate Authority (LIEDA) had already been asked to take steps for implementing the proposed project and the government would allot 2,000 acres.

"Under one-window operation LIEDA would provide all facilities to the industrials in the proposed Cement City as extended in Hub, Gadani, Winder and Uthal industrial estates," he announced.

The CM assured that provincial government would provide full security to the industrialists who would make investment in the proposed Cement City and all possible steps would be taken.

He urged the industrialists to make maximum investment in all industrial estates, including Gwadar, Gadani, Hub, Winder, Uthal, Marble city and proposed Cement City.

Initially three cement factories would be set up in the proposed Cement City that would provide 50,000 jobs to local people.

Later, talking to newsmen, Jam Yousuf said that the law enforcement agencies have traced out elements involved in bomb blats and they would be soon exposed before the people of Balochistan.

"No one would be allowed to disturb law and order in the province," he said, adding the government would deal with the elements involved in anti-state activities with an iron hand.

Managing Director of LIEDA, Col. (Retd) Bashir Ahmed Nadeem, President Lasbela Chamber of Commerce and Industry (LCCI) Yaqoob M Karim, DIG Kalat Range Ghulam Shabir Shiekh and DCO Lasbela also attended the meeting.

http://www.dawn.com/2007/06/12/ebr6.htm


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## Neo

June 12, 2007 
*Iran completes 50pc work on IPI pipeline*

KUALA LUMPUR, June 11: Iran Oil Minister Kazem Vaziri-Hamaneh said on Monday negotiations for the final stage of the Iran-Pakistan-India gas pipeline is underway and the Iran section is close to 50 per cent complete.

I think negotiations for the final stage is underway. Hopefully, there will be a result soon, he told CNBC in an interview. A copy of the transcript was obtained by Reuters.

As far as the project is concerned, for the Iranian section, work has already started. Maybe close to 50 per cent is complete and it is continuing.Reuters

http://www.dawn.com/2007/06/12/top9.htm


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## Neo

Tuesday, June 12, 2007 

*Minimum wage adjusted at Rs 6,900 per month*

LAHORE: The manufacturing sector has calculated minimum wage at Rs 6,900 per month and not Rs 4,600 per month, as announced by the government in federal budget 2007-08. Though, raise in the minimum wages is only Rs 600 but in actual it is Rs 1,500 comparing with last fiscal year if one calculates net salary, said one manufacturer. The government has raised minimum wages by 50 percent in 2 years against average inflation of below 10 percent, said another industrialist, adding: This increment seems preposterous. The industrial circles believe that average net salary of the mills after adding benefits like EOBI, social security, accident and health insurance, labour colony electric charges, water charges, double overtime, leave encashment etc amounts to Rs 6,900 per month. It is worth mentioning that associations like APTMA have already consulted labour lawyers and sectoral surveys are also done to calculate the real impact of increase in minimum wages. Chairman Pakistan Readymade Garments Manufacturers and Exporters (PRGMEA) Ijaz Khokhar has feared more jobs cuts in result of latest increase in minimum wages. Sugar industry on the other hand believed that it adds burden to the cost of doing business. Some labour leaders are also not happy with the present increase in minimum wages. According to them, the inflation was skyrocketing in the country and government was trying to appease the labour class by offering them peanuts in the budget. Mohammed Akram, one labour leader, proposed that government should provide kitchen items directly to the labourers and withdraw latest increase of Rs 600 in minimum wages. hamid waleed

http://www.dailytimes.com.pk/default.asp?page=2007\06\12\story_12-6-2007_pg5_9


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## Neo

*Portfolio investment surpasses all records *

KARACHI (June 13 2007): Portfolio investment, in terms of SCRAs, broke all previous records as it reached close to $900 million on June 8 from $864.5 million on June 7, which was also a record. It may be recalled that, earlier on, portfolio investment had reached its highest of the year on May 14 when it rose to $827.5 million.

It started slipping thereafter and was $784 million on May 16, $748 million on May 18, $738 million on May 25, $735 million on May 28 and as low as $727 million on May 29.

From then onwards, it started picking up, both at the fag-end of May and through the initial days of June, rising to $750 million on May 31, to $755.4 million on June 1, and to $762 million on June 5, and then surpassing all previous records, first on June 7 and then on June 8.

It is worth recalling that the sensitive stock market indicator (viz KSE-100 Index), during this entire period of downslide and upbeat in portfolio investment, experienced record breaking bullish sentiment, described to be propelled by the pre-budget euphoria witnessed in the stock market.

The Index had risen to 12,817 points on May 29 after crossing the 12,800 barrier on May 28. At that time we saw that foreign investors generally stayed away, even though the market hotted up to touch new historic highs. Later developments, however, showed that sentiment among foreign investors changed somewhat, with Americans particularly making huge purchases.

The result was that net investments during May, which had squeezed to $5 million by May 29 rose to $28.5 million on May 31 though it was still a low recovery, compared with the level of net inflow on May 14 which amounted to $106 million during the first 14 days of May.

On May31, the KSE-100 Index crossed 12,900 points barrier to reach 12,961 before receding to 12,934 the next day on June 1, mainly due to profit taking by extra-careful elements. From then on, it continued rising to cross the 13,000 points barrier on June 5 and stood way higher at 13,237 on June 7.

Buying spree continued on June 8 with the Index closing at a new high of 13,275 points. The Index, however, started the new week by losing 6.59 points to close at 13,268 on June 11 on profit taking in banking sector.

The pace of recovery in portfolio followed suit: recovery amounted to over $5 million on June 1, which rose $11.7 million by June 5 (with $8.8 million flowing on the same date) and further to $114.4 million on June 7 (including $35.4 million on that day and over $67 million on June 6).

By June 8 the recovery had risen to $147.2 million ($32.7 million as on that date alone). At this level, the recovery surpassed the outflow of about $101 million since May 14 by nearly $75 million.

Compared with May 29 (when portfolio investment was at its lowest in May viz, $727 million), the highest recovery by June 8 the record setting date, was in the case of USA amounting to $117.8 million, followed by UK ($36.8 million), Hong Kong ($7.6 million), Switzerland ($5.6 million), Japan ($3.1 million), and France ($2.6 million).

These recoveries were partly offset by further withdrawals of $3 million by Singapore among minor to negligible downward/upward adjustments taking place in the case of Qatar, Luxembourg, Germany and BV Island.

(Report by research.dept@aaj.tv)

http://www.brecorder.com/index.php?id=576651&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*UAE to double investments to $26 billion *

ISLAMABAD (June 13 2007): The United Arab Emirates on Tuesday announced doubling of its investments in Pakistan to $26 billion, construct an oil refinery and infrastructure costing $6 billion, besides renewing soft loan of $265 million for the construction of dams.

The decision came at a meeting of the Pak-UAE 9th Joint Ministerial Commission that also concluded agreements on bilateral political consultations, co-operation in terrorism and organised crime, establishment of Joint Business Council, and protocols on co-operation in culture and media.

The United Arab Emirates is the largest investor in telecom, airlines, financial business and real estate, and its current investments in Pakistan are to the tune of $13 billion. The meeting of the Joint Ministerial Commission was headed by Foreign Minister Khurshid Mahmood Kasuri and his counterpart from UAE Sheikh Abdullah Bin Zayed Al Nahyan.

The meeting reviewed the existing trade between the two countries, and the UAE side pointed out that its investments in the country could easily be doubled, provided the investment-friendly policies of the government of Pakistan continued, a statement released by the Foreign Office said. The current trade between the two countries has surpassed $5 billion, making UAE one the largest trading partners of Pakistan.

Terming the meeting of 9th JMC a "useful institutional mechanism and interaction between public and private sectors", the statement said that the business delegation accompanying the UAE Foreign Minister held separate meetings with their Pakistani counterparts.

The two sides also reviewed the state of bilateral economic relations and agreed to further intensify their ties as there was great potential to further enhance their trade relations. The two foreign ministers also held bilateral consultations of the JMC covering the entire gamut of bilateral relations in political and economic spheres.

They also exchanged views on regional and international issues, including the Middle East, peace process, Palestine issue, Iraq, Iranian nuclear issue, Afghanistan and the global phenomenon of terrorism and religious extremism.

Kasuri provided a comprehensive briefing on the current developments relating to Pakistan-India Composite Dialogue and reiterated the principled position on early resolution of the core dispute of Jammu and Kashmir.

"Both sides condemned the Israeli aggression on the Palestinian territories and stressed the need for an immediate cessation of hostilities by Israeli troops."

The two foreign ministers also agreed to enhance their bilateral relations through collaborative steps and frequent exchange of visits. Kasuri termed the visit of Sheikh Abdullah of immense significance to Pakistan, providing a valuable opportunity to consolidate the existing bonds of friendship and brotherhood to explore new avenues of bilateral co-operation in all fields.

http://www.brecorder.com/index.php?id=576724&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Dawood Hercules gets Rs 8.5 billion Shariah-compliant loan: agreement inked with MBL and HBL *

KARACHI (June 13 2007): Dawood Hercules Chemicals Limited (DHCL) has awarded the mandate for arrangement of Rs 8.5 billion through Shariah-compliant facilities to Meezan Bank Limited (MBL) and Habib Bank Limited (HBL). This represents the largest amount to be arranged by a corporate firm in Pakistan through Islamic products.

The financing will be arranged through multiple structures, each specifically tailored to meet specific objectives of the company and the institutions extending the facilities. DHCL has awarded the mandate with the objective of converting its financing arrangements to conform to Shariah principles.

In this regard a signing ceremony was held between MBL, HBL and DHCL at a hotel here on Tuesday. The agreement was inked by Irfan Siddiqui, President & CEO of MBL, Zakir Mehmood, President of HBL and Hussain Dawood, Chairman of Dawood Group. Justice Taqi Ahmed Usmani was also present on this occasion.

HBL and MBL are the lead arrangers, whereas Meezan Bank will act as Shariah structuring agent for this transaction. The transaction is the first step by the Dawood Group towards the group's stated objective of propagating Islamic baking.

DHCL is the flagship company of the Dawood Group and will be the first company in the group to take this initiative of converting from conventional financing to Shariah-compliant mode of financing. The Dawood Group is a diversified conglomerate involved in fertiliser manufacturing and marketing, textile, information technology, brokerage and insurance sector.

MBL and HBL, by providing DHCL with the innovative financial solution, have demonstrated their commitment to providing comprehensive Islamic banking solutions. Irfan Siddiqui said that this Islamic finance facility of Rs 8.5 billion was the largest mandate awarded to date in the corporate sector of Pakistan.

He said that MBL is now active towards financing the capital needs of industry, and the historic deal with Dawood Group was a sign of bank's commitment to spread the Islamic mode of banking. MBL is pioneer in launching Islamic financing in Pakistan and it would continue to spread Islamic mode of financing for industrial and individual needs.

Zakir said that HBL has started its Islamic banking operation. However, HBL will launch a full-fledged Islamic banking operation through its fully owned subsidiary.

He said that most of the people want Islamic mode of financing, and HBL would provide the people both mode of financing. Hussain Dawood said that they can take finance facility by conventional banks easily but they preferred the Islamic mode of financing. "We want to take Islamic mode of financing for other companies of our group", he added.

http://www.brecorder.com/index.php?id=576679&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*CBR to bring undocumented economy into tax net *

ISLAMABAD (June 13 2007): The Central Board of Revenue (CBR) will bring the undocumented economy into the tax net with the help of a databank containing information collected from various external sources including banks.

CBR Chairman M Abdullah Yusuf told the Senate Standing Committee on Finance on Tuesday that the professional service providers like doctors and engineers were out of the tax net. There are a lot of undocumented sectors, which need to be brought under the tax net.

The CBR is evolving a computerised system to compile a databank for obtaining necessary information from cash withdrawal from banks, utility agencies, foreign travel and other sources. In past, adhoc arrangements failed to bring the potential sectors into the tax net.

He said that the databank would play an important role to control short-filing of sales tax and tax evasion. Particularly, systems would check and take actions instead of individuals using data available with the databank.

He said that the rate of capital value tax (CVT) on stock market transactions were doubled in the previous budget, but the revenue collection from this head did not improve. The doubling of CVT reduced the volumes of buying/selling of shares' transactions in the stock market.

When asked why the Federal Board of Revenue Act 2007 was made part of the Finance Bill, CBR chairman said that it was the government decision and not the CBR's move. The FBR Act has been incorporated in the Finance Bill on the advice of the government.One of the senators said that the government wanted to promote construction sector, but increase in sales tax on iron and steel items has increased the steel prices.

The committee agreed that there is a need of mid-term review of budget to see the financial implications of the taxation/relief measures announced in budget 2007-2008. During the meeting, the CBR chairman also highlighted the contribution of international audit expert from USA in the national audit plan.

Senator Haroon Akhtar Khan appreciated personal efforts of CBR chairman in speedy implementation of reforms and said: "You have done a great job and an extraordinary change has been witnessed in the CBR".

Adviser to the Prime Minister on Finance Dr Salman Shah; Minister for State on Finance Omer Ayub and other senior officials of the Ministry of Finance attended the meeting.

http://www.brecorder.com/index.php?id=576694&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Polish company to start offshore drilling next year *

KARACHI (June 13 2007): A Polish oil and gas company will start offshore drilling for exploration in Pakistan's deep sea early next year. The Ministry of Petroleum and Natural Resources has given 24 concessionary licences to Polish Oil and Gas Corporation (POGC), of which 20 licences are for shore exploration while four are for offshore drilling.

This was stated by President of Polish Oil & Gas Corporation (POGC), Oil & Gas Exploration Company, Krakow Ltd, and Geofizyka Krakow Ltd, Krzysztof Glogowski to Business Recorder on the sidelines after a reception here on Tuesday.

The delegation is visiting the city, led by the POGC, capital group of 56 companies' President. Also accompanying him is Vice President Stanislaw Niedbalec and others.

Krzysztof Glogowski said: "The timeframe for the commencement of offshore drilling could not be finalised, but we are aiming at early next year to start work on it." Earlier, he read out the message of Polish Minister of Economy Piotr Grzegorz Wozniak on the occasion of 10-year presence of Polish oil and gas company.

"The Minister of Economy seeks greater trade and economic relations between the two countries as he feels both nations have a lot to contribute to the world because of their unique geo-strategic location and fast paced development of economies of two countries.

"The Polish government seeks greater trade and economic relations between the two countries as both nations have a lot to contribute to the world because of their unique geo-strategic location and fast paced development of the two economies."

http://www.brecorder.com/index.php?id=576697&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Budget to make Pakistan more equitable: ACCA *

KARACHI (June 13 2007): The Budget and Taxation sub-committee of Association of Chartered Certified Accountants (ACCA) Pakistan has termed the budget as a positive step towards a more equitable Pakistan.

It as commended the increase in salaries of low paid employees, enhancement of the basic pay scales, increase of minimum wages of industrial workers and provision of subsidised essential food items at utility stores.

The increase in expenditure on education to 4 percent of GDP was welcomed but ACCA Pakistan suggested that in view of the paramount importance of education to the development of Pakistan, the expenditure on education may be increased to 7-10% of GDP in the coming years.

The allocation of Rs 520 billion to PSDP was classified by ACCA Pakistan as a positive step as effective and efficient utilisation of the funds will result in economic and social growth.

Mohammad Arshad, Chairman Budget and Taxatoin sub-committee (North) of ACCA appreciated CBR for accepting ACCA's recommendations authorising employers to give credit of tax withheld from employees under different withholding provisions during the tax year as well as tax credit allowable to salaried taxpayers having salaried income only.-PR

http://www.brecorder.com/index.php?id=576732&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Wapda signs deal for designing of hydropower project *

LAHORE (June 13 2007): Wapda has signed an agreement with Golen Gol Consultants for preparation of detailed engineering design and tender documents of Golen Gol Hydropower Project here at the Wapda House on Tuesday. Wapda General Manager (Hydro) Planning Zia-ul-Hasan and consultants' representative Roland Jehle signed the agreement on behalf of their organisations.

Wapda Member (Water) Muhammad Mushtaq Chaudhry was also present on the occasion. It is pertinent to mention that the funding for the project has already been committed by Saudi Arabia, Kuwait and Opec. The project with an installed capacity of 106 megawatt (MW) will be constructed on Golen Gol, a tributary of Mastuj River near Chitral in NWFP. The project, expected to be completed in three and a half-year, will contribute 436 million units (kilowatt hour) of hydel electricity to the national grid annually.

http://www.brecorder.com/index.php?id=576748&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Renewable energy data to be introduced on June 25 *

KARACHI (June 13 2007): The 'Wind and Solar Resources Maps' and 'Geographic Information System' (GIS) data products for Pakistan and Afghanistan will be introduced and distributed at a two-day symposium on 'Renewable Energy Resources: Roll-out of Wind and Solar Resources Maps for Afghanistan and Pakistan' on June 25-26 in Islamabad.

The Government has estimated investment of $6 billion per annum, for the next 25 years, to meet the ever-growing demand for power in the country. Presently, major focus is on generation of power through traditional resources, which eventually has caused shortage of power by 1200 mw against the increasing demand by 10 percent per annum.

This has led the government to adopt non-conventional and renewable resources of energy. The government has issued letters of intent to various private companies to install the IPI projects including alternative and renewable resources of energy, ie, Wind and Solar energy.

Like Pakistan, Afghanistan is also energy-deficient, which will require immense quantity of energy in its rehabilitation process. The symposium, an important step forward in this direction, is being organised by the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) in collaboration with the Saarc Chamber of Commerce and Industry (SCCI) and South Asia Regional Initiative for Energy (Sari/Energy).

The US National Renewal Energy Laboratory has prepared the maps for US Agency for International Development (USAID). They are useful as they provide high-resolution information on Solar and Wind energy sources available and will help the developers in identifying specific high-valued areas for conducting project-specific, on-site assessments and development.

The maps and data products will be instrumental in identifying and developing optimal wind and solar energy sites in the two countries. The symposium will:

-- Familiarise policy makers, project developers, financial institutions and other stakeholders with the maps and their use.

-- Bring together stakeholders from the South Asian region and the US to discuss and share ideas in regional renewable energy development opportunities.

-- Distribute the wind and solar maps with the tool kit to the conference participants, and

-- Discuss possible next steps for installation of maps. Liaquat Ali Jatoi, Federal Minister for Water and Power, and his Afghan counterpart have consented to address the conference, to be followed by speeches by world's renowned authorities on the subject.

The energy requirements have been transformed from traditional and non-renewable resources to renewable resources. Currently, renewable energy accounts for 14 percent of world's energy consumption. At the end of 2006, world-wide capacity of wind-powered generators was 74,223 megawatts. Over the past decade, global installed maximum capacity of wind power increased to 30 percent. Cumulative solar energy production accounts for less than 0.01 percent of total global primary energy demand. Solar energy demand has grown at about 25 percent per annum over the past 15 years.

The world-wide photovoltaic installations increased by 1744 mw in 2005, up from 1,460 mw installed during the previous year. For comparison purposes, total world-wide wind energy installations in 2005 were around 15,000 megawatts, growing at about 35 percent per annum.

The USAID South Asia Regional Initiatives for Energy (Sari/Energy) promotes energy security through increased trades investment and access to clean sources of power and fuel. Sari/Energy countries include Afghanistan, Pakistan, India, Nepal, Bhutan, Bangladesh, Sri Lanka & Maldives.

http://www.brecorder.com/index.php?id=576730&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Sluggish exports blamed for trade deficit *

ISLAMABAD: Pakistan raked up an unprecedented $12.26 billion merchandise trade deficit during first 11 months of the outgoing fiscal 2006-07, breaching the governmentís full year set target ($9.4 billion) by 30.42 per cent or $2.86 billion.

Pakistanís voracious appetite for non essential goods produced abroad and sharp deceleration in exports resulted in a record, politically sensitive trade deficit, which is 15.1 percent more than what it was ($10.65 billion) in the corresponding period of last fiscal 2005-06.

The Federal Bureau of Statistics (FBS) announced Monday and made available on Tuesday that during July-May 2006-07, Pakistanís imports totalled $27.74 billion, which outpaced exports ($15.48 billion) by 44.2 percent in corresponding period (July-May 2005-06), imports were at $25.59 billion and exports $14.94 billion.

The sluggish pace of exports, which is blamed as main reason for towering trade deficit, the government confessed is the inefficiency to exploit favourable international trading environment, low value addition, poor quality fetching low international price, old, power intensive and less productive machinery, wastage of inputs due to low skilled labour which adds to cost of production and make exportable products less competitive.

Countryís export growth witnessed abrupt and sharp deceleration to 3.62 percent in the first 11 months of the current fiscal year after growing at an impressive rate of 16 percent per annum. 

A well placed official in the Finance Ministry told the ëNewsí that the sluggish growth of 3.62 percent in exports was due to decline in the unit values of its exports in international markets which caused a $563 million loss to exports proceeds.

It is feared that with the current pace of deficit growth, by end of this fiscal, the trade deficit would reach more than $13.5 billion, that would further aggravate the current account deficit (CAD) position which has been termed by the international donors as a potential threat to the economy.

Economy pulled in 8.40 percent more imports over the same period last fiscal, while, its exports rose only by 3.62 percent. Each month, the import growth exceeds the exports, widening the trade deficit, the provisional FBS data revealed. 

It is important to note that previously, in its trade policy for the fiscal 2006-07, the government targeted imports at $28 billion and exports $18.6 billion with a trade deficit of $9.4 billion.

In July-May 2006-07, Pakistan achieved 83.2 percent of exports and 99 percent of imports target. 

During the last fiscal 2005-06, the government had missed its exports target of $17 billion by a margin of $531 million.

During May 2007, the local goods worth $1.61 billion have been exported, recording an increase of 8.23 percent against exports of $ 1.48 billion in the same month last year.

Imports have been recorded at $ 2.75 billion during May 2007, which has reflected a growth of 3.85 percent as compared to imports of $ 2.26 billion registered in May 2006. 

Comparing exports of May 2007 with the previous month, the data reveals growth of 7.3 percent as against exports of the previous month, which stood at $ 1.497 billion. The imports also up by 6.87 per cent from $ 2.57 billion recorded in April 2007.

http://www.thenews.com.pk/daily_detail.asp?id=60270


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## Neo

June 13, 2007 
*3 business centres planned to boost exports*

ISLAMABAD, June 12: The Ministry of Industries, Production and Special Initiatives has finalised a plan to set up business centres in major cities aimed at enhancing Pakistan's falling exports by manufacturing international quality products, particularly through value-addition.

Official sources told Dawn on Tuesday that initially three centres  Sialkot Business and Commerce Centre; Product Development Centre for Composites-Based Sports Goods in Sialkot; and Gujranwala Business Centre  will be set up at a cost of about Rs1 billion, besides having a cotton-seed delinting facility at Rahimyar Khan during the next financial year.

The federal government has agreed to provide funding in the new PSDP to the Ministry of Industries to help set up these centres as part of infrastructure projects.

According to details, for Sialkot Business and Commerce Centre, the Small and Medium Enterprise Development Authority (Smeda) will sign an agreement with the Sialkot Chamber of Commerce and Industry for stipulating arrangements for operation of the centre. The centre will help manufacture export quality products.

Sialkot is known internationally as producer of sports goods, surgical instruments, leather garments, gloves and accessories, sportswear, musical instruments, electro-platting industry, sanitary ware, ceramics, domestic electrical appliances, cutlery, stainless utensils and rubber goods industry.

The local craftsmen produce products while export-oriented entrepreneurs ensure that products reach international destinations.

Around 400,000 people are engaged, directly or indirectly, in export activities, and annual earning of the city hovers around $1 billion which is now expected to further increase through value-addition.

The main objective of the centre will be to establish a shared display facility for industries in Sialkot to promote export of various products.

It will comprise consultancy services, international business linkages, entrepreneur training, business support management and technical support financing for marketing and product development, women entrepreneur development; and child labour and social development constraints.

These services will be free of charge and entrepreneurs who do not have exposure to such business development activities would be provided guidance.

The Product Development Centre for Composites-Based Sports Goods Centre will set up by Smeda at a cost of Rs383.43 million to help design and develop dies and moulds, product testing (physical and chemicals), provide skilled workforce to the sector, enhance productivity by providing technical consultancy services to new and existing industrial units, help develop imported machinery locally through reverse-engineering and facilitate in increasing export of composite-based sports goods.

The Ministry of Industries believes that export-oriented SME clusters in Pakistan have a huge potential, and are also crucial for SME sectors growth.

Sports goods sector is the main export sector of the city, with total annual exports of over $350 million.

Gujranwala Business Centre will also provide advisory services to businessmen for improved manufacturing products and value- addition for increasing exports.

Cotton-seed delinting facility at Rahimyar Khan will cost Rs163.63 million, and will provide delinting facilities for various varieties of cotton-seeds.

The centre will be equipped with a latest laboratory to provide testing and analytical facilities, like seed-germination testing and moisture testing to farmers.

It will be the first unit in Rahimyar Khan which will provide service to growers and seed companies interested in processing their seed for commercial sale.

As the farmers will have better seed, de-linted through an advanced technology, it would increase per acre yield which would benefit the farmers.

The project will also instigate private investors to establish more such plants, and it may also end the crude method of de-linting that results in wastages and low productivity.

More than 130 seed corporations are working in Rahimyar Khan and are engaged in the sale of delinited seed.

Currently, there is no delinting facility in the area, and private companies either use conventional methods or send their seed bags to Kabirwala plant for delinting process.

It is estimated that in every season, tons of seed goes from Rahimyar Khan to Kabirwala, which costs millions of rupees to the companies.

http://www.dawn.com/2007/06/13/ebr2.htm


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## Neo

June 13, 2007 
*Services sector exports down*

ISLAMABAD, June 12: The service sectors exports came down by 1.77 per cent in the first 10 months of the current fiscal year between July and April over the same months of last year, Federal Bureau of Statistics (FBS) said on Tuesday.

The services export proceeds totalled $3.068 billion in the 10 months of 2007-08 as against $3.124 billion over the same months of last year.

On monthly basis, the export of services witnessed a decline of 29.57 per cent to $278.963 million in April 2007 as against $396.096 million over the same month of the last year.

According to statistics, imports of services climbed by 2.75 per cent to $6.855 billion during the July-April period of the current fiscal year as against $6.672 billion over the same period of last year.

On monthly basis, the import of services rose by 9.70 per cent to $677.305 million during the month of April 2007 as against $617.397 million over the same month of the last year.

http://www.dawn.com/2007/06/13/ebr5.htm


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## Neo

Wednesday, June 13, 2007 

*27 sectors granted duty exemption, concessions*

* Total number of industries availing this facility reaches 143

ISLAMABAD: The government has granted customs duty exemption or concessions to 27 more industrial sectors and sub-sectors in the federal budget 2007-08 to strengthen the industrial base of the country.

Earlier, some 116 industries and sub-sectors were enjoying customs duty exemption or concessionary regime. With the addition of 27 more industries and sub-sectors, the total number of industries and their sub-sectors has reached to 143, explained a customs official on Tuesday. Different industrial inputs used in industrial sectors and sub-sectors like acetic acid, cosmetic, digital radio system, DOP, ethyl acetate, locomotive, parts, paper bobbins, polyethylene have been added in this exemption regime, where either total or partial exemption would be available. 

The existing exemption regime has also been expanded for manufacturing sectors like air-conditioners, deep freezers, refrigerators, evaporators and condensers, alkyd resins, CNG dispensers, wire and cables, diesel generating sets, disposable syringes, disposable infusion sets, dyes stuff, and chemicals, electric meters, paper and paper board, printing ink, telephone sets, viscose staple fiber and gypsum board. Import duty on seven equipments used in gems and jewellery sector, 30 items used in furniture sector, 21 items used in marble and granite sector, 13 items used in horticulture sector, 19 items and equipments used for manufacturing surgical and medical instruments have either totally or partially been exempted. Duty rates on 67 sectors have been increased which relate to poultry meat, welded stainless steel pipes, and other goods.

Duty rates have been reduced on over 400 items to minimise the cost of doing business in the country and make local industries competitive, the official said. Duty on 10 types of materials and inputs used in manufacturing of CNG compressors, wood pulp and paper waste for paper industry, items and equipments used in sub-sectors like solar, wind and bio energy have been exempted.

Duty on energy saving lamps has been reduced from 15 percent to 10 percent whereas 11 raw materials inputs used for manufacturing of energy saving lamps has been totally exempted. Seven raw materials have been exempted from duty for the gum base manufacturing industry. The poultry industry was allowed duty-free import of 14 items, while duty on import of 12 types of broadcasting equipments have been exempted.

The newspaper industry has also been extended duty reduction facility on import of printing machinery and pre-press machinery. Import of required medical equipment by existing hospitals who are in a process of expansion have been allowed to import on concessionary rate of five percent customs duty.

On the request of Sialkot Sports Goods Association, 14 raw materials used in manufacturing of football bladders have been exempted. Duty on eight raw materials used in footwear manufacturing industry has been reduced. Polyester Staple Fiber (PSF) has been included in DTRE scheme and 25 percent regulatory duty on the export of 46 types of ferrous and non-ferrous waste and scrap has been imposed to ensure such raw materials availability in the country. Import surcharge of one percent on the import of four POL products i.e. kerosene oil, light diesel oil, JP4 and JP4 has been withdrawn.

http://www.dailytimes.com.pk/default.asp?page=2007\06\13\story_13-6-2007_pg5_1


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## Neo

Wednesday, June 13, 2007 

*UBL Privatisation: Govt to offer up to 30 percent shares through GDR*

ISLAMABAD: Minister for Privatisation and Investment Zahid Hamid said on Tuesday that the book building process for the sale of global depositary receipts (GDR) of United Bank Ltd (UBL), the country's third-largest bank, would be completed on June 23 with offering of 25-30 percent shares.

He was briefing newsmen about the decisions of the Cabinet Committee on Privatisation (CCOP) meeting held here under the chairmanship of Prime Minister Shaukat Aziz, which reviewed the overall privatisation transactions to be privatised in the next few months.

Mr Hamid said that privatisation of UBL through GDR is in progress and we have received reports of Financial Advisors appointed for the privatisation of the bank.

He said the share price of the UBL has increased to 77 percent this year and this is high time in terms of getting proper values.

He said that the investors would continue to show strong interest in the UBL GDR and other upcoming investment opportunities in Pakistan. 

United Bank's GDRs would be listed in London Stock Exchange (LSE), he added.

Mr Hamid expressed the hope that government would get the proceeds of the transactions by the end of June 30 this year.

He said that international investors are showing keen interest in the transaction of the UBL, as the United Bank's GDRs would be listed in London Stock Exchange (LSE).

Mr Hamid said that road shows are being launched from Wednesday (today) onwards at the key international financial centres like London, New York and all over the world. He added that the government would finalise the pricing in the CCOP meeting to be held on June 23. Mr Hamid said CCOP also gave approval to the Initial Public Offering (IPO) of the Habib Bank Limited.

"This is going to be the largest IPO in the history of Pakistan and the privatisation of the bank is a success story for the country," he remarked.

He said in the IPO priority will be given to small investors in order to benefit them from this transactions. Mr Hamid said that the final bidding dater will be finalised in the pre bid meeting in consultation with the bidders.

During the CCOP meeting the transaction of various entities were reviewed including Pakistan State Oil (PSO). Privatisation Board decided in its meeting that the pre-bidding of the PSO will be held on June 20. He said that seven parties have pre qualified the bidding. Mr Hamid on the occasion highlighted the transactions, which are in the pipeline.

The privatisation of Hazara Phosphate Fertiliser is in advanced stage and its date of bidding is fixed at June 18 and it is on track.

He said that privatisation of Services International is also in the advanced stage and we wanted to fix it date within the June and efforts are being made in this regard.

In this transaction also the pre qualified bidders are asking for the extension of the date adding said that privatisation of Public Motors and the privatisation has also issued an advertisement in the newspapers this regard and the 42 kanals land at Mall Road and Lawrence roads Lahore its bidding will be completed by the end of July this year.

Mr Hamid said that in the engineering sector the investors have shown keen interest in the participating in the privatisation of Heavy Electrical Complex (HEC) and its privatisation will take place in July this year. Similarly, he said that for the GDRs of National Bank the privatisation commissions have received proposals for the appointment of financial advisors, which are under detailed scrutiny. Appointment of the financial advisor will be made after the proper scrutiny is taken place.

He added that KAPCO GDR has been also initiated proposals and for SME strategic sale the financial advisor has been appointed and the transition is proceeding.

He said that CCOP has also approved IPOs for State Life Insurance Corporation (SLIC) and also Pakistan Steel Mills and take place in next financial year. On power side, he said, that the privatisation of Jamshero power is in an advance stage of privatisation and bidding will take place by the end of July of early August this year.

Mr Hamid said that FESCO is now on the active list of privatisation while the National Power Construction Company the CCOP decided to re-invite the expression of interest (EOI) from both local and foreign investors who are interested in joint ventures. He dispelled the impression regarding the slow down of the privatisation process and said that so far this year without counting the UBL GDR and Hazara Fertiliser Rs 86 billion proceeds during current financial year have been received from the privatisation.

He expressed the hope that after the privatisation of the other transaction the privatisation proceeds will be in the range of $2 billion or Rs 120 billion this fiscal year. app

http://www.dailytimes.com.pk/default.asp?page=2007\06\13\story_13-6-2007_pg5_10


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## Neo

June 13, 2007

*Chinese banking giant eyes Pakistan*
By Syed Fazl-e-Haider 

QUETTA, Pakistan - The Industrial and Commercial Bank of China (ICBC), the world's second-largest bank, is looking to start operations in Pakistan. 

It is exploring the possibility of establishing its presence in Pakistan to provide financial support to Chinese companies investing in the South Asian country and other development partners engaged in infrastructure development and financial business. 

The National Bank of Pakistan (NBP) and the ICBC have agreed to cooperate in the banking and financial sectors in both countries. A declaration calling for exploring the possibilities for mutual cooperation between the two entities was signed last Friday by the chairman of the ICBC board, Jiang Jianqing, who led a seven-member ICBC delegation. 

The ICBC intends to explore the possibility of establishing its branches and acquiring Pakistani banks to provide financial services. 

According to Jiang, Pakistan's sustained economic growth of 7% has prompted the ICBC to establish an economic link by opening branches in the country. He said that if Pakistan maintains its economic growth momentum, it will become an economic powerhouse in the region, attracting substantial foreign investment. He said he appreciated the reforms introduced by the Pakistani government and held separate meetings with the presidents of NBP and Habib Bank Ltd (HBL) and discussed ways to expand cooperation. 

The financial sector has significantly contributed to the overall growth of the Pakistani economy and led to the country's improved international credit rating. The recent successful launching of Pakistan's sovereign bond is seen as a manifestation of investors' confidence in Pakistan's policies. NBP, HBL, Muslim Commercial Bank and Allied Bank of Pakistan have shown high growth in recent years. It is expected that consumer lending will continue to gather momentum as more banks focus their energies on gaining a share of the market, which is largely unpenetrated. 

With 311.8 billion yuan (US$41 billion) in assets, the ICBC is the second-largest bank in the world and growing at 30% per annum. It specializes in infrastructure finance, corporate banking, personal banking, cash management, asset management, Internet banking and international banking. It is also a leader in financial services and product innovation based on advanced information technology, corporate governance and risk management. 

It has a large network of 18,000 branches in China and around the world. It is a leading financial player in China with a large customer base and multi-dimensional business structure. In October 2005, the ICBC was officially transformed from a state-owned commercial bank into a shareholding company and renamed as the Industrial and Commercial Bank of China Ltd. The new entity has a registered capital of 248 billion yuan and 248 billion shares. 

Pakistan and China already enjoy strong economic and trade relations under their free-trade agreement. Pakistan, under an institutionalized arrangement of the Pakistan-China Joint Economic Forum, is in the process of identifying infrastructure projects, including the development of hydropower and large dams. Similarly, Pakistan has established a joint investment company with China Development Bank to support Chinese firms that are establishing joint ventures with Pakistani companies and the large number of infrastructure projects in the country. 

The ICBC can explore the possibility of investing in the Pakistan-China Special Economic Zone, where most Chinese companies would set up their businesses for contract manufacturing to market their products in West Asia. The ICBC's operations in Pakistan will act as a bridge between the two countries as the two countries strive to benefit from the expertise of Chinese and Pakistani banks. 

Pakistan is tipped by foreign investment bankers as a potential hotbed of equity issuance activity because of its high economic growth and the government's aggressive privatization policy. The $129 billion Pakistan economy is expected to expand 8% annually over the next five years. Foreign portfolio investment in the local bourses has also shown an upward trend, signifying an increasing foreign interest in the country's capital markets. Foreign portfolio investment, as represented by the Special Convertible Rupee Account, showed a net inflow of $104 million in January alone; an inflow of $23 million was recorded on just one day - January 31. Interest exhibited by foreign companies in buying stakes in Pakistani companies has also been well received by the market through the country's privatization program. 

China's banking sector is moving toward diversification. The sector has introduced various service delivery models, and a range of product and service offerings are available for retail and corporate customers. For the past five years, economic growth in Asian markets has been driven by strong consumer demographics, political and market reforms and economies of scale in production. The Asian markets are likely to provide the greatest opportunities for global financial-services companies looking for future growth. This trend is likely to continue in the Chinese market after the opening of its banking sector in accordance with World Trade Organization requirements. It presents both domestic and financial institutions with challenges and opportunities. 

As in other Asian markets, financial globalization in Pakistan has led to increased liquidity and lowered the cost of capital, thus leading to better allocation of financial resources and more productive investments. It has also spurred competition and led to a new age of financial-sector development by improving screening of credit risks, monitoring of borrower activities, diversification of financial portfolios and substantially increasing the outreach to customers. Foreign financial institutions have also brought about improvements in the system by bringing in highly diversified financial tools and best practices from more developed economies. Pakistan's banking-sector boom has attracted considerable interest at foreign banks. 

The share of foreign banks has reached 11.4% of total banking-sector assets in Pakistan. Foreign banks' share in profitability is about 11% of total banking-sector profits. According to Jeroen Drost, chief executive officer of ABN Amro Asia, Pakistan is a key growth market for his firm. 

Pakistan has assured that it will provide all possible support and facilities to Chinese banks in the country. Prime Minister Shaukat Aziz on Friday told the ICBC that a big menu of financial services is available in Pakistan. 

He said the government believes in providing a level playing field for all entrants to the market to promote healthy competition and provide consumers with the best and most affordable services. 

Pakistan's financial sector is attracting heavy foreign investment and is among the top three sectors with respect to foreign inflows. They are: telecommunications, $1.2 billion; financial business, $572.8 million; and oil and gas exploration, $352.7 million during July-February in fiscal year 2007. The government intends to play the role of regulator and facilitator in the financial sector, sustaining the momentum of reforms so far achieved through the maintenance of a growth-enabling environment. 

The existing foreign banks have by and large enhanced their presence and stake along with new foreign banks that have entered the Pakistani market for the first time. For example, Standard Chartered Bank has acquired Union Bank, ABN Amro has acquired Prime Bank, and Temasek of Singapore has established NIB Bank. ABN Amro's acquisition of Prime Bank made it the second-largest foreign bank in Pakistan. 

There are other transactions in the pipeline and they reflect the robustness and profitability of Pakistan's banking sector. The government is planning to sell its 45% stake, worth up to $300 million, in United Bank Ltd (UBL) through a global share sale, and it has invited six investment banks to pitch for the deal. Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan and Merrill Lynch are all bidding for the $200 million to $300 million global depository receipt sale. The deal is expected to be completed by the end of this month. 

Foreign banks are rapidly expanding their networks in Pakistan by opening new branches and acquiring small and medium-sized banks, especially ones that are financially weak. 

http://www.atimes.com/atimes/South_Asia/IF13Df03.html


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## Neo

*'CBR plans to improve tax-to-GDP ratio' *

KARACHI: June 13, 2007: The Central Board of Revenue (CBR) is planning to improve the tax-to-GDP ratio Commissioner of Income Tax, Medium Taxpayers Unit (MTU), Asrar Rauf said.

He was expressing his views at a post budget seminar organised by Karachi Branch Council (KBC) of Institute of Cost and Management Accountants of Pakistan (ICMAP) at a hotel here, said a statement on Wednesday.

Chairman KBC, Intisar Usmani, in his welcome address said: 'This is the budget for the poor, for the industrialists, for the investors, for the farmers and last but not the least for the prosperity of our dear homeland'.

Rauf in his address pointed out that the Board is planning to improve tax-to-GDP ratio.

"For the first time we are approaching the taxpayers to create awareness and tax culture at shopping malls," he added.

But revenue collectors strongly feel that with the tax reforms in CBR and its policy base of voluntary compliance there also needs to be a change in taxpayers' mindset.

The MTU will ultimately be merged with Regional Tax Office, which will start functioning from July 1, 2007.

"All domestic taxes like income tax, sales tax and federal excise duty of the non-corporate sector will be brought under one roof," Rauf added.

Former president ICAP, S.M. Shabbar Zaidi, said that our future strategy for economic growth should focus on employment generation, import substitution, human development and devolution of financial resources.

"Now we have reached the stage where companies are being seen as having paid the taxes, real distributional equality will arise when individuals start paying taxes on their income," he said.

He said the tax revenues have been collected without chaos, harassment, and sensationalism.

On the occasion he also discussed the policy framework in the budget for income tax.

Earlier, Member National Council of ICMAP, Mirza Munawar Hussain, apprised the audience of the impact on sales tax.

Vice President Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Zubair F. Tufail, Partner KPMG Taseer Hadi and Co. Chartered Accountants, Saqib Massod, spoke on Direct Taxes.

At the end of deliberations, Convenor Seminar Committee, KBC M. Junaid Aba Ali, presented vote of thanks on behalf of the Karachi Branch Council of ICMAP.

Brecorder


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## Neo

*Rs 163 billion earmarked to pay off DSS cost *

ISLAMABAD (June 14 2007): The government has allocated Rs 163 billion pay off, what the Finance Ministry says, a high cost of Defence Saving Schemes (DSS) issued by previous governments at 18 percent compound tax-free return, official sources told Business Recorder here on Wednesday.

"In the current fiscal year and up till 2009-10 there will be a large increase in domestic debt-servicing. The reason is that from 1996-97 to 1999-2000, the then governments, due to their imprudent fiscal policies, resorted to borrowing through high cost DSS instruments, which are of ten years with a bullet payment," sources said.

"This year, the additional impact on debt servicing was Rs 80 billion, and next year Rs 163 billion will be required just for this particular instrument," they added.

For 2006-07, total current year's expenditure was estimated at Rs 879.8 billion, the main components of which were debt servicing, defence, civil government, grants and subsidies. Revised estimates for 2006-07 were Rs 1033.5 billion, mainly due to domestic debt servicing, subsidies and grants.

For 2007-08, interest on domestic debt is estimated at Rs 318.2 billion, while budget estimates regarding interest on foreign loans have been projected at Rs 56.4 billion against the current budgetary allocation of Rs 48.7 billion.

Repayments of foreign loans have been projected at Rs 62.9 billion for 2007-08 against current year's budget allocation of Rs 56.3 billion. The expenditure on running of civil government for 2006-07, excluding pensions, was budgeted at Rs 127 billion. The revised estimates amount to Rs 111.1 billion.

For the next year, expenditure on this account is estimated at Rs 128.2 billion. Civil and military pensions for 2006-07 were estimated at Rs 43.9 billion, of which Rs 8 billion were for civilian pensioners. For 2007-08, an amount of Rs 46.1 billion is likely to be spent on this account.

http://www.brecorder.com/index.php?id=576990&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*US House panel approves package for Pakistan *

WASHINGTON (June 14 2007): A US House of Representatives Committee has approved a bill to finance foreign aid for next year that also includes a dollars 752 million package for Pakistan. The foreign aid bill for fiscal 2008, beginning October 1, will now advance to approval stage by the two chambers of US Congress.

It will now go to the full House for passage and the Senate will pass its own version and the two are to be eventually reconciled. The approved package for Pakistan totalling $752.1 million includes assistance in economic and military fields. The bill approved by the House Appropriations Committee also includes assistance for other countries.

Pakistan is a major ally in the US-led fight against terrorism, having played a key role in combating terrorists along Pakistan-Afghanistan border. The two countries agreed on a five-year assistance package in the year 2003 during President Pervez Musharraf's visit to the United States when President George Bush pledged wide-ranging relations with the key South Asian ally. The United States also announced recently to extend cooperation for economic development in Pakistan's federally administered tribal areas.

http://www.brecorder.com/index.php?id=577012&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Poverty level drops, GDP up: Punjab chief minister *

LAHORE (June 14 2007): Poverty level has declined while GDP growth rate has gone up in the Punjab. Punjab Chief Minister Chaudhry Pervaiz Elahi said this in his pre-budget policy address here on Wednesday.

Speaking about GDP growth in the province Pervaiz Elahi said that the figure stood at 4.2 percent in 1991 but has now been lifted up to more that 8 percent in the period 2003-2007, a performance unmatched in the history of the province.

The CM said following the federal government steps they would also increase pay by 15 percent and pensions by 15-20 percent. He said Annual Development Fund had been enhanced to Rs 150 billion in the forthcoming provincial budget.

Giving details of per capita income in the province the CM said that it was at Rs 30,281 in 2002 and reached Rs 59,219 in 2007. The CM said that literacy rate in Punjab that was at 42 percent in 2002 has now gone up to 62 percent.

The CM said that prior to his government's take over, Punjab's social indicators were extremely poor. 'The literacy rate was below the national average; the public education sector was marred by poor access. The enrolment rate was low the dropout rate high the student-teacher ratio was poor; school buildings were inadequate; female literacy was lagging; teacher absenteeism was rampant and student participation rates had actually dropped', he said.

The CM said besides improvement of literacy rate to 62 percent in 2007, the net enrolment rate at primary level now stands at 70 percent in Punjab. Talking about gender parity index (GPI) for tertiary education, he said was at 0.78 in 2002. In 2007 the GPI for tertiary education was 0.93.

Speaking about improvement in health care system, he said in 2002 infant mortality rate was 82 per 1000 which was reduced to 72 in 2007, he added. Talking about immunisation, he said as compared to 57 percent of children in age group 12-23 percent fully immunised in 2002, the figure rose to 76 percent in 2007. Talking about maternal mortality rate that stood at 350 per 100,000 births in 2002 it was down to 257 in 2007.

Speaking further about development he said as compared to 6 percent access to piped water in 2002 now in 2007, 19 percent of the rural population had access to piped water. He said in 2002, 31 percent of the rural population had access to flush toilet while in 2007 this figure went up to 50 percent ,he added.

Speaking with reference to poverty alleviation in agriculture zones, he said 12.5 acres were exempted from Agriculture Income Tax. He said provincial government consistently increased the minimum guaranteed price of major crops to generate higher income for the farmers.

He said that with reduced mark up on agricultural loans by 5 percentage points, the provincial government progressively increased agricultural sector loaning through the Bank of Punjab from Rs 159 million in 2001-02 to Rs 7 billion in 2006-07.

He said with over 100,000 land-less people were provided access to land and Rs 6.1 billion disbursed as soft term loans to live stock farmers and introduction of crop insurance. The Punjab government progressively increased agricultural sector loaning through Punjab Provincial Cooperative Bank from Rs 4.8 billion in FY 2001-02 to Rs 8 billion in FY 2006-07.

The CM said that the scheme for subsidised credit for Small and Medium Industrial Enterprises and Cottage Industry in 2005-06 and credit outlay of over Rs 1 billion was achieved in 2006-07. The momentum would continue in 2007-08, he pointed.

The CM said that focus on direct interventions to reduce poverty through micro-credit through Punjab Rural Support Programme amounting to Rs 3.4 billion generating self employment and disbursement of over Rs 17 billion through Zakat funds as direct income support to the poorest of the poor and to facilitate their permanent rehabilitation was the endeavour of provincial government to be remembered.

Speaking about their development efforts in South of Punjab, the CM said while concentrating on poverty alleviation, generally they had not lost focus of those areas that required special attention such as the districts in the South of Punjab and some of the barani areas of Potohar region.

Talking further about interventions of his government in the social sectors over the last four years, he said in 2002-03, the total amount allocated in, Education, Health and Water Supply & Sanitation was Rs 43.6 billion. While these allocations were increased progressively to Rs 57.3 billion in 2003-04, Rs 77.5 billion in 2004-05, Rs 107 billion in 2005-06 and Rs 132.4 billion in 2006-07. He said that in 2007-08, the total investment planned in these sectors was Rs 165.1 billion.

Pervez Elahi talking specifically about education uplift endeavours of his government said his government provided education up to matriculation for all students in government schools. This includes free textbooks up to class 10 in all government schools benefiting over 28 million students, at a cost of Rs 2 billion, till date.

He said Punjab government provided stipends to girl students in 15 low literacy districts benefiting over 1.1 million girl students, at a cost of Rs 1.64 billion, till date including giving of 118,276 Missing facilities to 63,882 government schools in the province, at a cost of Rs 19.5 billion.

Pervaiz Elahi said that besides recruiting over 50,000 new schoolteachers the present government created department of special children. The CM said that in education sub-sector his government was able to check the dropout rate and increase the stagnating enrolment in elementary education by achieving 25 percent increase in enrolment and providing access to 2,209,912.

Adding to the performance of provincial government in health sector, he said that they initiated to provide free emergency treatment to all citizens in tertiary hospitals, fully activated the dormant primary healthcare services in BHU's/ RHC's in the province through provision of doctors, nurses, paramedics (at rationalised salaries) and medicines.

The CM said besides cardiac centres being built in Multan and Faisalabad including coming up of new burn centres in the provinces special emphasis had been given to nurses' training. He said introduction of 1122 service would ultimately be extended to whole of the province.

Talking about the Northern Arc of Lahore Ring Road from Niazi Chowk to Ferozepur road covering 43kms he said it commenced in November 2004 and shall finish in 2007-08.

He averred that Southern Arc of Lahore Ring Road from Ferozepur road to Shahpur Interchange covering over 18kms. shall commence in 2007-08. Speaking about Sialkot Lahore Motorway (SLM), he said that ground breaking ceremony of Sialkot Lahore Motorway took place in 2007 and by this travel time between Sialkot and Lahore shall be reduced to 45 minutes and it would be connected to the Lahore Ring Road, he added.

He said SLM should serve as a new economic corridor having three industrial zones and three foreign universities of science and technology. Talking about Lahore Rapid Mass Transit System (LRMTS) he said that groundbreaking ceremony of LRMTS is scheduled in FY 07-08 and completion of the first phase expected by 2012.

Stating about preparation and execution of irrigation sector reforms, the CM said 37,000 kms of irrigation channels with cultivable command area of 21 million acres were being rehabilitated with an investment of Rs 120 billion in 10 years.

The CM said that hydraulic infrastructure was being rehabilitated and modernised in phases and re-modelling and modernisation of Taunsa Barrage was almost complete. Hydel power stations in Punjab were being developed, he said.

Giving performance highlights in the economic sectors, the CM said that agriculture strategic interventions in extension, research, marketing and water management had been made. He said 6.27% growth rate in agriculture was estimated in 06-07. The CM declared that record wheat production of 17.85 million tonnes including record sugarcane production of 37.542 million tonnes were achieved in 06-07.High level of maize production of 2.044 million tonnes achieved in 06-07, he said.

The CM said that cotton production of 10.35 million bales was achieved in 06-07 including rice production of 3.076 million tonnes achieved in 06-07. About livestock, the CM said that development budget of livestock sector increased from Rs 57 million in 01-02 to 1,137 million in 06-07. With huge increase witnessed in targets for breed improvement and animal health special emphasis on veterinary education and training and up-gradation of infrastructure.

Rs 6.1 billion was disbursed as soft loans to livestock farmers. About establishing industrial estates, the CM said that Sunder Industrial Estate, Lahore, M3 Industrial City and Value Addition City, Faisalabad, Multan Industrial Estate, Rehabilitation of Kot Lakhpat Industrial Estate were the key achievements of the present government.

The CM said that through TEVTA training capacity was targeted to double in two-years. The CM said with a number of construction ventures coming up in Lahore, construction of state of the art 17-storey Software Technology Park Lahore; computerised vehicle registration system in 35 districts and computerisation of land records was taking place.

He said in order to boost housing sector provision of tax and non-tax incentives to realise the potential of this sector including reduction in stamp duty, 5% to 2%; Promulgation of Punjab Site Development (Regulation) Rules 2005 to facilitate bona fide private housing societies and to eliminate the fraudulent ones had been made.

He said that establishment of Punjab Government Servants Housing Foundation, establishment of Punjab Journalists Housing Foundation, tourism and resort development were the key ventures of provincial government.

He said the provincial government was establishing new jails including better facilities for prisoners, especially children and women prisoners. The CM said that with introduction of Gender Reform Action Plan (GRAP) to provide special focus on women development, expansion in the role of Bait-ul-Maal to provide financial assistance to the needy was undertaken.

Pervaiz Elahi speaking of measures for preventing abuse of children said that establishment of Social Security Health Management Company in public-private partnership mode; establishment of three dedicated 100-bed hospitals for labour in Lahore, Sheikhupura and Muzaffargarh; introduction of self declaration system in assessment of social security had been made.

Speaking about the Punjab government's efforts in Southern Punjab, he said Urban Development Project there would result in improving quality of life in 425 low-income areas of 21 towns in 6 six district of Southern Punjab at a cost of Rs 7 billion.

He said that introduction of Tameer-e-Punjab Programme with an annual outlay of Rs 1.86 billion to finance would publicly identify schemes. 'Introduction of Local Development Programme at a cost of over Rs 5 billion was to improve infrastructure in local governments, he added.

The CM said that they had given a broad-based direction for Punjab's economic and social uplift through Vision 2020. Based on the vision, prepared a medium term development strategy for economic and social sectors through the Punjab Economic Report focusing on quantitative and qualitative improvement in the lives of the citizens of the Punjab through, he added. He said that with poverty focused investment strategies in six key sectors, 82% of PSDP goes to pro-poor sectors. He said in order to provide relief to common man, the government of Pakistan had already announced establishment of utility stores in every union council of Pakistan to provide essential commodities at an affordable level to the poorer segments of society. This decision has therefore, supplanted my 'Sasta Store' Programme, which was announced last year and was ready for implementation this year.

The CM said that from the first of July 2007 the minimum wage of the highest category of skilled worker in Punjab would be Rs 5,644 and that of the highest category of semi-skilled worker would be Rs 4833 per month.

The CM speaking of measures to support weaker strata of the society said that they would provide Rs 500 per month support to 646,000 households with a total population of 4.24 million who were the poorest of all in the province. He announced regularisation of 385 katchi abadies all over Punjab by extending the cut-off date of regularisation to 31st December 2006. '

The CM on the further announced a two-kanal land-grant, linked to support for shelter-provision to the land-less, homeless poor of the rural areas of the Province. This grant would be backed by micro-financing facilities and extension services in livestock and agriculture in order to ensure livelihood on a sustainable basis', he added.

The CM told that this programme would commence in Districts of Rajanpur, Muzaffargarh, Bahawalpur and Bahawalnagar in FY 2007-08 and subsequently extended to other poorer areas of all districts of the province.

http://www.brecorder.com/index.php?id=577003&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Apparel industry misses over $1 billion deals *

KARACHI (June 14 2007): The country's export-oriented apparel industry misses over one-billion dollar deals as it does not participate in the internationally floated tenders due to inconsistent government policies regarding revision of utilities' tariffs, industry sources told Business Recorder here on Wednesday.

They said that the apparel sector of the country is deprived of greater chunk export deals, as the system of the international tendering has been upgraded, according to which only one can participate who could ensure that the product supply at the same rate has been quoted in the tender document.

"We annually lose around $1.25 billion worth apparel orders, as we can not give assurance regarding the same price quoted in the tender document, because we don't know whether the tariffs and cost of different utilities will remain the same or go up even in the next three months," said Ijaz Khokhar, Central Chairman, Pakistan Readymade Garment Manufacturers and Exporters Association (Prgmea).

Exporters are always bound to export the consignment at any cost to meet the dateline irrespective of country's law and order situation, increasing cost of products, etc, he said.

The value-added garment sector receives only 3 percent to 5 percent of the total bids every year, while the rest is grabbed by the Indian, Bangladeshi and Chinese exporters in the world market, he added. He pointed out that during last two years Pakistan had missed about $4 billion in such tendering process due to high cost of production, leaving the industry almost prostate in the world market.

"The online tendering system internationally is new in the country according to which the lowest bidder qualifies while the higher and the highest ones respectively are disqualified automatically from the process, of which Pakistani exporters are amongst the prominent ones," Ijaz elaborated. This system was earlier utilised in the home textile sector worldly, however it is now overwhelmingly spreading in the world, he said. Adding that, "Local exporters mostly fail to attract the foreign buyers because of technical errors they commit during the online tendering process due to lack of know-how of this new system," he added.

Urging the government, Chairman Prgmea said that it should come forward to acquaint the local exporters with latest methodologies and techniques to apply in the international contest to grip maximum of the export contracts.

A minor mistake could lead to knock out of the entire process, he added.

"Trade Development Authority of Pakistan (TDAP) can play a vital role in making the exporters of all sectors enable to participate in the online tendering process free of errors," he said.

Ijaz said that advisory boards of the European, Far Eastern and US suggest to their citizens particularly to business communities not to travel Pakistan for various reasons including law and order situation making the local exporters constraint to travel various other region and countries to finalise export deals.

"Value-added garment exporters are continuously travelling to world's neutral venues acceptable for foreign buyers just to strike export deals, causing them million of rupees losses annually," Ijaz said.

High electricity and gas tariffs with uncertain prospects are the major hurdles for this sector in augmenting its exports besides manufacturing products on world class standards, he said and added that government should cap the utility tariffs at exiting levels at least for next three years. He said that the apparel sector with 60 percent employment share is on the verge of complete paralysis and if government did not heed on our genuine demands, it could almost come to a standstill.

Expressing disappointment over the government's policy making process, he pointed out that it had never consulted with the Small Medium Enterprises (SMEs) sector in evolution of policy, which had badly hit the ready-made manufacturing sector in the country.

Government has completely overlooked the value added garment sector in the federal budget 2007-08, as 60 percent of this sector is based on SME badly need its support to grow, he added.

Chairman Prgmea appealed to the government to formulate a long-term policy for the apparel sector so that it could at least sustain in the face high competitiveness in the world market. Government should also support the country's apparel industry to scale down the increasing export deficit by 30 percent, he added.

http://www.brecorder.com/index.php?id=577031&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Capital gain tax relaxation to encourage FDI *

KARACHI (June 14 2007): The Capital Gain Tax (CGT) relaxation to the bourses and real estate sector till 2008 has been given to encourage inflow of foreign direct investment (FDI) in the country. These views were expressed by DG, RTO, Asrar Rauf while addressing a post-budget seminar organised by Institute of Cost and Management Accountants of Pakistan here on Tuesday.

He said there had been a huge influx of FDI in the country and if any such tax was imposed the investors' sentiment would be hurt and their focus would be diverted. He said the Federal Budget 200-08 was an industrialist-friendly budget that had brought incentives for the industry, adding the main objective of the CBR was to facilitate the taxpayers.

Asrar Rauf said it was due to this facilitation that their collection had reached Rs 835 million and the target for the coming fiscal year had been set at Rs 1.025 billion. He said the budget had allocated Rs 520 billion under PSDP, which would generate millions of direct and indirect employment besides, allocations for other social sectors were also satisfactory.

Later, responding to the queries of Business Recorder, he said although there had been demands from the cellular operators to waive the SIM activation tax of Rs 500 on every connection issued, the tax would be continued. "Cellular business is growing apace and the continuation of this tax would have no affect on the sector," he justified.

About the 15 percent GST on the import of computer hardware components, he said there was no plan to withdraw the tax in the current fiscal. However, it may be gradually reduced after that.

It may be mentioned here that the importers and assemblers of computers and PC/servers had been demanding of the government to withdraw the 15 percent GST, as this had been adversely affecting the IT sector. Instead of removing this tax, the government imposed 1 percent import surcharge.

Commenting on this issue, Asrar Rauf said that 1 percent import surcharge had been imposed but the 6 percent income tax had been reduced to 5 percent, therefore, there would be no difference.

FPCCI Vice-President Zubair Tufail regretted that the proposal of gradual reduction of 15 percent sales tax to 10 percent was not considered, as this had been an incentive for the industrial sector.

He said that no incentive was given to the industrial sector, instead 1 percent surcharge on the import of raw material was another blow to the already under-pressure industrial sector. He proposed that this surcharge could be imposed on the import of consumer products, as this would encourage the local manufacturers. It may also be imposed on luxurious items. Other experts also highlighted various features of the federal budget.

http://www.brecorder.com/index.php?id=577082&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Tory party leader praises Pakistan economy's growth *

LONDON (June 14 2007): The British Opposition party leader David Cameron has praised Pakistan's economy growth and described its expansion as only second to China. He was speaking at a gala dinner, hosted by the Conservative Party to mark the 60th independence anniversary of Pakistan and India here on Tuesday evening.

The event attended by about 500 guests invited by the Conservative Party included members of the Pakistani and Indian community in the UK. Among prominent Pakistani or Kashmiri origin Conservatives, who were present was one of the vice-chairs of the party, Sayeeda Warsi, Mahboob Bhatti, Councillor from High Wycombe and Naweed Khan, deputy head of Cities and Diversity. The acting Indian High Commissioner also attended the independence ball.

Cameron said he planned to visit Pakistan soon and also mentioned the South Asian country's focus on the higher education while noting that Pakistan was planning to establish six engineering and three technology universities to equip a new generation with the skills necessary to compete in the globalised world.

The Tory Party leader said that as the world's centre of gravity was moving from Europe and the Atlantic to the south and the east, the time was right for Britain to build a special relationship with the countries of the Asian subcontinent.

Cameron also urged renewed efforts to build more competitive economies to meet the challenge of globalisation. He called for a new special relationship between Britain and Pakistan for the 21st century.

Referring to the Asian community living in Britain, he said British Asians were thriving and making a contribution in all walks of life. In London alone, there are over 14,000 businesses owned by those of Pakistani or Indian origin.

He said Britain's relations with both Pakistan and India were based on historical, economic cultural and family ties. Cameron stressed the need for closer cooperation to confront common challenges, including terrorism, which had to be defeated, not appeased.

But he urged a serious, long-term approach to the challenge of terrorism, not just a security response. The Tory leader made an impassioned plea to build what he called a "positive society" in Britain, which involved building a responsible society.

The British Opposition leader paid rich tributes to Pakistan-UK relationship and also praised the role of High Commissioner Dr Maleeha Lodhi, describing her as among the most talented diplomats in London.

In her message on the occasion, Dr Maleeha Lodhi said that Pakistan valued its growing strategic ties with the UK, which were broad-based and anchored in a shared vision of peace and prosperity for the 21st century. Close to a million British-Pakistanis/Kashmiris living in the UK serve as a living bridge between the two countries.

The leader of the Conservative Party pledged in his address to adopt more ethnic minority candidates to represent his party at all levels. He said he was delighted that the Conservative Party was already doing that, citing as examples Sayeeda Warsi and Syed Kamell.

http://www.brecorder.com/index.php?id=577104&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Dams and gas areas may get big share of profit, royalty: NWFP *

PESHAWAR (June 14 2007): NWFP Finance Minister Shah Raz Khan has said the provincial government is seriously considering allocating a big share received in head of hydel net profit, royalty on gas and oil for the development of the areas where the dams are located or from where gas and oil is being produced.

He said the local government has been allowed to carry out their development projects through project committees. He stated this while addressing a delegation of town/tehsil Naib Nazis of NWFP led by Israrullah, President Town/Tehsil Naib Nazimeen Forum, NWFP in the Conference Room of the Civil Secretariat here on Wednesday.

The meeting was also attended by Secretary Local Council Board Rehmat Ghazi, Special Secretary Finance, Aurangzeb Haq and Director Decentralisation Support Programme Hifzur Rehman.

He said provincial government believed in justice and fair play and we are of the opinion that the areas where dams were located or from where gas, oil, marble etc; were produced would be given a share from the royalty for development of those areas.

He said this decision would go a long way for the uplift and prosperity of the people of the area where dams ie Warsak Dam, Tarbela Dam, Jabban Power House, Dargai Power House, Malakand-III Power House and areas from where gas and oil is produced ie Shakardara, Gurguri, Makori or marble rich areas of Buner district.

Shah Raz Khan also said the provincial government is interested in the uplift of backward areas of the province and a committee has been constituted to identify backward areas and devise formula for special development funds and grant in aid for such areas.

He said the provincial government is very keen to keep quality of the development projects and ensure transparency, therefore, it has been decided to allow local governments to carry out their projects through project committees.

He hoped that the elected local bodies representatives would ensure quality works through project committees and come up to the expectations of the people. He also directed immediate implementation of section 65 sub-clause IV of the NWFP Local Govt: Ordinance, 2001.

Earlier, President Town/Tehsil Naib Nazimeen Forum Israrullah informed the minister of the various problems and difficulties being faced by the town councils and thanked the minister for taking interest in the solution to their problems. He also lauded the efforts of the MMA government for achieving the goal of getting hydel net profit for the province.

http://www.brecorder.com/index.php?id=577043&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pak-German trade agreement mutually beneficial *

ISLAMABAD: Federal Minister for Commerce, Humayun Akhtar Khan met with Dr Bernd Pfaffenbach, State Secretary of German Federal Ministry of Economy and Technology here today. During the meeting they exchanged views on bilateral trade and issues related to free trade agreement.

Minister for Commerce apprised his German counterpart of the existing EUs preferential treatment to most countries in the South Asian region. He said that Pakistan wants to have a level laying field in trade regime and that Pakistan wants to have market access on the same conditions offered by the EU to its other competitors, and that free trade agreement will be mutually beneficial for both, 

says an official release. 

The two sides recalled joint EU-Pakistan ministerial meeting in Pakistan last month and formation of a sub-group on trade. They agreed that this was a step forward for better trade relations.

The German State Secretary said that presently Germany was focused on multilateralism but the government could review the need for bilateral arrangements in view of the competitor, EU has in the international market.

He assured the Minister that Germany will continue to support Pakistan to further improve bilateral cooperation in various domains. 

Both sides agreed that EU Commissions study group will review the situation in South Asia in the light of trade arrangements in the region and evaluate its impact on Pakistan. 

Ambassador of Pakistan to Germany Asif Ezdi, senior officials of the embassy and German Ministry of Economy & Technology were also present during the meeting.

http://www.thenews.com.pk/daily_detail.asp?id=60411


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## Neo

June 14, 2007 
*Improved financial management urged for credibility*

ISLAMABAD, June 13: The World Bank has urged Pakistan to improve public financial management, accountability, transparency, and enhance the capacity of public sector managers to meaningfully use credible financial information for better and informed decision-making.

The World Bank in its latest Country Report, which was made available to Dawn, said that an improved financial system would increase the national and international credibility of the federal and provincial governments financial statements and assurance processes.

"The reform efforts need to include identification of the relevant international standards of accounting and auditing applicable to the public sector and help achieve compliance with those standards," the report  Pakistan Public Sector Accounting and Auditing, a comparison to International Standards - said.

It also called for adoption of International Public Sector Accounting Standards (IPSAS) for accounting and financial reporting in improving the basis for adequate public financial management.

The World Bank also urged Pakistan to build capacity aimed at improving the accuracy, comprehensiveness, reliability, and timeliness of intra-year and year-end government financial reports at federal and provincial levels.

It called for initiating the process at district and sub-district levels for strengthening the financial accountability cycle.

The Bank has expressed its willingness to provide financial and technical support to help undertake the second phase of reforms in improving country's overall financial and auditing system.

The replacement of inefficient manual and outdated accounting processes in the general government sector by faster and updated computerised programmes, the Bank said, is underway with a programme to computerise all district accounting offices by the end of 2007.

According to the World Bank, the assessment of public sector accounting and auditing is generally meant to help implement more effective public financial management (PFM) through better quality accounting and public audit processes in Pakistan and to provide greater stimulus for more cost-effective outcomes of government spending.

More specific objectives are: (a) to provide the country's accounting and audit authorities and other interested stakeholders with a common, strongly-founded knowledge where local practices stand against the internationally developed norms of financial reporting and auditing; (b) to assess the prevailing variances; (c) to chart paths for improving the accordance with international standards; and (d) to provide a continuing basis for measuring improvements.

At the present time, the Bank said, Pakistan does not comply with the IPSAS in preparing its annual accounts. The country's accounts do not provide a statement of cash receipts and payments which (a) recognises all cash receipts, cash payments, and cash balances controlled by the entity; and (b) separately identifies payments made by third parties on behalf of the entity.

"In addition, the country's accounts do not provide accounting policies and explanatory notes." A general programme is underway for the adoption of accounts in a form specified in its New Accounting Model (NAM).

"Under the guidance of the Auditor General of Pakistan (AGP), the Controller General of Accounts (CGA) needs to restructure the present cash basis of financial reporting to conform fully to the cash basis IPSAS," the report added.

While the IPSAS-2 reporting format has been designated by the Auditor General as additional reporting requirements for the government, it would be appropriate to set up a committee to review and steer the process to implement cash basis IPSAS on a continuous basis.

http://www.dawn.com/2007/06/14/ebr12.htm


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## Neo

June 14, 2007 

*Worlds 2nd largest bank seeks entry into Pakistan*

KARACHI, June 13: The world's second-largest bank--The Industrial and Commercial Bank of China (ICBC) -- has entered into an agreement with the National Bank of Pakistan (NBP) for co-operation in establishing its presence in Pakistan, S. Ali Raza, President of NBP told Dawn on Wednesday.

A Memorandum of Understanding (MoU) will, hopefully, be signed this month, said the NBP President in reply to queries regarding reports that ICBC was eyeing Pakistan for extending financial support to Chinese companies investing in the country.He said being a listed company on the Hong Kong Stock Exchange, the Bank had to complete certain formalities before moving forward.

ICBC, with $41 million in assets and 18,000 branches stood out as worlds second largest bank.

A banking sector analyst said chairman of ICBC board, Jiang Jianqing, along with his delegation, had visited the country last week and held meetings, among others, also with Prime Minister, Shaukat Aziz.

The Chinese banking giant is currently looking into two models, NBPs S. Ali Raza says. One choice that ICBC was thinking over was to establish its presence by acquisition of existing banks or opening its own branches and the second option under consideration was to work with the NBP as local currency provider for the banks investment in giant infrastructure and other projects.

The NBP President explained that suppose investment in a refinery was to be made up to $150 million; NBP would arrange finances of $100 million of the equity stake to be taken by ICBC.

Banking sector analysts thought that the ICBC may have taken initiative to gain the first mover advantage to be the largest financier to Chinese companies, who would be setting up projects for production of Chinese goods in the Special Economic Zones to be set up near Lahore. The government had expressed its intention to establish such zones, in the federal budget announced last Saturday.

http://www.dawn.com/2007/06/14/ebr1.htm


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## Neo

Thursday, June 14, 2007 

*Incentives for power producers: Govt decides to amend power policy 2002*

ISLAMABAD: The government has decided to amend the Power Generation Agreements 2002 Policy to resolve the issues of currency exchange rate, return on equity and risk to nationwide fuel storages, an official at Ministry of Water and Power told Daily Times.

The resolution of these issues would help the independent power producers (IPPs) to plan fresh investment on power generation projects and expand their existing generation capacity, the official added. 

A meeting chaired by Adviser to PM on Finance and Revenues Dr Salman Shah with different relevant ministries and divisions has finalised recommendations in this regard for the approval of the government. 

According to the official, a number of IPPs had been raising the issue of inadequate protection against risk of variation in currency exchange rates in the Power Generation Projects 2002 Policy. Besides, they had also been highlighting discrimination in the rate of return on equity to local and foreign investors as well as lack of covering the risk to nationwide fuel storages. 

To settle these issues, the meeting has recommended that to enable maximum competition from suppliers and contractors, the IPPs should not be exposed to impact exchange rate variation between US Dollars, Euros, Pounds Sterling and Japanese Yen up to the Commercial Operation Date (COD).

Consequences of this variation, whether resulting in an increase or decrease in tariff, should be reflected in final tariff to be fixed at COD. Engineering procurement and construction contracts dominated in these four currencies besides rupee should be accepted by the National Electric Power Regulatory Authority, the official said.

The meeting also recommended that at the COD, the IPPs should establish the relevant cost details to NEPRA with actual documents and proofs regarding EPC contract, sourcing of equipment and finances.

To broaden the access for debt financing, debt can be obtained by IPPs in US Dollars, Pounds Sterling, Euro and Japanese Yen. This should receive the same treatment as currently available for US Dollar dominated debt. An Operation and Maintenance (O&M) cost are incurred subsequent to COD, O&M Cost adjustment should continue to be based on exchange rate variation between Pak rupee and US Dollars, the official explained. 

The meeting decided to direct NEPRA to stop the practice of accepting EPC contract cost on the basis of quotation. Instead, they should base their determination on firm (non re-openable) competitive price duly initialed and signed by the IPPs and EPC contractors.

The performance guarantees to the Private Power Infrastructure Board (PPIB) and the government of Pakistan and letter of credit in favor of power purchaser may be accepted in Pounds Sterling, Euro and Japanese Yen in addition to US Dollars. 

On the issue of return on equity, the meeting recommended that the return on equity should be allowed in one currency i.e. US Dollar. All returns on equity for foreign exchange and rupee based equity be converted to equivalent to US Dollars amount at reference exchange rate as noted in NEPRAs determination and adjusted for variation in US Dollar and Pak rupee rates as presently being done for return on foreign component of equity, the official added. 

It was also decided in the meeting that the present policy of not guaranteeing payment obligations of fuel supplier should continue. However, the nationwide storage of fuel needs to be recognised as Pakistan Political Force Majeure and procedure mechanism allowed in the 1994 contracts be adopted to address the issue. The IA is suitably amended in consultation with Law and Justice Division, the meeting observed.

http://www.dailytimes.com.pk/default.asp?page=2007\06\14\story_14-6-2007_pg5_1


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## Owais

*Japan agrees to revise tax treaty with Pakistan to enchance economic ties *


TOKYO (updated on: June 15, 2007, 11:41 PST): Japan has reached basic agreement with Pakistan to revise a nearly 50-year-old tax treaty to promote investment and build closer economic ties, the Ministry of Finance said on Friday.

Under the current treaty, when a Japanese company has a branch in Pakistan Pakistani taxes are levied on all the income made within the country even if it is made through a direct business with its headquarters in Japan. The same applies to companies in Japan.

But the revised treaty will impose taxes only on income made through operations of branches in the other country.

"I hope this will lead to closer economic ties between the two countries," Japanese Finance Minister Koji Omi told a news conference.

Other revisions include rationalising investment income tax levels for dividend, interest income and other fees.

Japan has been stepping up efforts to revise tax treaties in recent years. Revising a treaty with the United States in 2004 was a breakthrough.

Since then, Japan has revised tax treaties with India, Britain and signed similar agreements with the Philippines and France. It is now in talks for similar deals with Australia, Kuwait, the United Arab Emirates (UAE), and the Netherlands.

Japan and Pakistan plan to sign the agreement around the end of this year or early 2008 and on approval by their parliaments, the Japanese finance ministry hopes that the new treaty could take effect by the end of 2008.

brecorder.com


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## Owais

*SBP to extricate itself from export refinance scheme: 'banks will continue to provide loans' *

KARACHI (June 15 2007): The State Bank of Pakistan (SBP) has decided to extricate itself from export refinance scheme but it will be phased out over a period of time and will be a part of the central bank's monitory policy.

In an Exclusive interview to Business Recorder Governor SBP Dr Shamshad Akhtar said that refinancing has contributed excessively to reserve money growth this year it has caused an exceptional increase. Though there are other monetary instruments available with the central bank but top preferences would be to eliminate refinancing. She added that this would not affect the industrial sector at all because industries will continue to get export credit on the same terms and conditions.

Despite elimination of refinance scheme, banks will continue to provide loans on low rate for exports from their own funds and the difference will be paid by the government, she said. Banks will continue to provide export credit at 7.5 percent and the State Bank will decide what differential will be paid to the banks, she added.

Dr Akhtar said that next financial year's budget is a public budget. This is an election year budget but at the same time it has been recognised what is the need of the masses and the same has been taken care of in the budget. She said that it was satisfying that different segments of society have been adequately provided for in the budget.

There is no doubt that food prices are on the higher side, it is partly for this reason that industrial, corporate and industrial employees' salaries have been increased to compensate for the cost of living.

On the other hand, some measures for availability of essential items for common man on lower rates from the utility stores has also been announced in the budget. If we look at the industrial and the agriculture sectors, for each sector there is something critical, she said and added that today's industrial sector's need is diversification.

There is some tariff rationalisation and incentives in the budget, which supposedly may add to industrial growth. For agriculture sector there is subsidy on DAP has which would have a visible impact on the performance of the agricultural sector this year, she added.

"I think there is a lot of real sector measures and there is lot of public response for giving adequate compensation to the people for the high food prices," she said. A prompt reform agenda to strengthen the financial sector is also on the anvil, governor SBP said. On the fiscal side, there is an attempt to contain fiscal deficit at 4.2 percent or even lower, she said.

She said that current expenditure's share in the total expenditure is declining, while the development expenditure has been increased to Rs 520 billion. A number of countries have also been able to tackle the fiscal deficit more than we have and India is also worse off than we are, Dr Akhtar said.

If you have private sector wages, different level is going up not to give your low income employees and adequate compensation, which is consistent with the overall level of the price increases we have, she said.

Public investments have to be accommodated in the fiscal deficit, as we have clarified to the government that we will have to minimise its reliance on central bank browning. There has been very effective communication from the central bank to the federal government and the government has understood our view-point, governor SBP said.

For reduction in the central bank browning, SBP is conducting communication for the last few years but this year serious communication has been exchanged between SBP and the federal government, she said.

The central bank chief said that the government has announced Rs 130.9 billion bank borrowing for the next fiscal. The central bank aims to negotiate with the ministry of finance what would be making the quarterly negotiations of this borrowing.

'We would like to sit down with the ministry of finance and will do a round of technical level consideration,' she added. In our communication with the government, we would like the government to reduce its dependence on the central bank borrowing this year. They should resort more on non bank browning sources including sales of PIBs, the modalities will be discussed soon, she maintained.

The government borrowed Rs 80 billion from the SBP during the last fiscal year against the target of Rs 120 billion, governor SBP pointed out.

Replying to a question, about banks or non banks share in PIB, she said that in the first phase PIBs go to the primary dealers but after that they go to the secondary market, adding that non banks can have recourse in the secondary market to purchase PIBs.

Dr Akhtar said export refinance is not giving any impetus to exports. The decision to allow export of edibles is undoubtedly made by the government but when the wheat export matter came up, the government decided to retrieve on its decision to avoid its impact on local prices.

The fact is that the SBP does not provide refinance on its own accounts but follows government's decision, whether they want to discourage exports of some products or not, she said.

Export refinancing is not a healthy thing but since traditionally we have been giving refinancing we have to give until we decide as a policy to stop it she added. She said that SBP has stopped the LTE-EOP scheme to the value-added textile sector and no such refinancing will be provided under the scheme anymore.

The SBP had issued Rs 87 billion of PIBs during the last fiscal out of which around 60 percent was held by non-banking, the central bank chief said. Talking about exchange rate, she said that it is not clear that the exchange rate will continue depreciating at the current level. It even may come down. I don't think that there is any indication that every year it will depreciate.

She said that foreign direct investment is not coming due to interest rate differential FDI is coming in because of the very high corporate and banking sector profitability.

She said that interest rate differential is not the determining factor in the environment we are adding that the country's corporate and banking sector's profitability is in double-digits. We should not forget that despite political instability foreign investors are investing their capital in Pakistan.

Governor SBP said that foreign investment is not taking place in the manufacturing sectors due to inefficiencies, adding that industrial and manufacturing sectors are not doing enough to attract foreign investment.

She said that foreign investment has been seen in the power sector and infrastructure besides corporate banking sector. Pakistan continues floating sovereign bonds because that keeps Pakistan's name in the international bond market.

It is setting a benchmark, which is helping other corporate issues. Thirdly, it tells the public world-wide that despite all the political crisis, Pakistan is able to raise long term funding in the international market, she said.

"We are not looking at Pakistan today only. We are looking Pakistan over a longer perspective and have in the process achieved an investment grade. Pakistan's image is improving in the international market after the issuance of sovereign bonds abroad," Dr Akhtar added.

The government has brought OGDC in the international financial market to enhance its investment grade and for this purpose the government has geared up its balance sheet according to international standards, she informed. We want to bring Wapda in the international market by issuing its GDRs but it needs hard work.

If Wapda had strong balance sheet, we would definitely bring it in the international market, she said. Adding, that when the PSO will be privatised then we will be able to issue its GDRs in the international market.

When we took OGDC in the international market it became a brand name for international investment. To achieve more, we will issue more than two or three GDRs in the international market, she added. Having achieved this we will see that a large part will be financed outside sources or equity market.

Talking of the overdraft, she said provincial balances are manageable row. The provincial governments are doing pretty well and overdraft of Sindh is in the surplus position while Balochistan is also settled a major amount.

She said that amongst the overdrafts, Railway is alarming one. We have to stop allowing further overdraft, if Railways revenue's picture has to improve.

For the sustainability of the financial sector we need to continue diversifying both at sector level and at regional level and reaching all segment of the population, governor SBP said.

Banks must get out of the urban area and start opening more and more branches in rural and new urban areas. We would have to train our people in the banking industry to enhance the banking sector efficiency and profitability. There are lot of opportunities of innovation in the Islamic-banking sector, she said.

She said we should encourage banks to finance by 100 percent of exports with own funds besides the long term funding. Export refinancing is unnecessary and burdensome. All countries are dependant world-wide. Even our neighbouring country India has abolished export refinance and now they are providing interest rate differential, she said.

The banking sector will not be supported artificially nor artificial support is viable. Banking sector is totally liberated but banking sector has to mobilise funds to finance export flows on annual basis themselves, she said.

Dr Akhtar said that the central bank has instructed to the banks to be transparent both on the lending and deposit sides and banks have started increasing deposit profits but they are still at an unsatisfactory level.

She said we have ended export refinancing to the textile sector. This is much tricky. Therefore, we have proposed for spinning sector that we are not going to provide refinancing but the banks may convert exiting loans into three percent lower than the market rate.

The SBP wants to bring a positive change in the monetary policy to take out every inflationary element from its monetary policy, which is contributing to inflation, she added.

Reserve money growth is under pressure due to refinance. Therefore we need to eliminate it hopefully at some point in time but this will not be an easy decision, she admitted.
http://brecorder.com/index.php?id=577683&currPageNo=1&query=&search=&term=&supDate=


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## Owais

*Forex reserves mount to a historical height at $15.3b *

KARACHI: Foreign exchange reserves ending the week June 9 soaring by $1.2428 billion climbed to the historical highest-ever at $15.3 billion.

State Bank of Pakistan (SBP) figures showed that the secured foreign exchange reserves with the Central Bank surging by $1.621 peaked at $12.6498, while the existing reserves with the commercial banks swelling $180 million pegged at $2.38 billion. 

The aggregate rise in foreign exchange reserves in Pakistan during the current fiscal year was recorded at $1.8932 billion, SBP figures said.

http://geo.tv/geonews/details.asp?id=7547&param=3


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## Owais

*UAE to invest to set up refinery at Karachi *


ISLAMABAD: The UAE is all set to invest US $ six billion to set up refinery at Karachi Export Processing Zone. 

Sheikh Abdullah Bin Zayed Al Nahyan Foreign Minister of UAE informed Zahid Hamid Federal Minister for Privatization and Investment during a meeting here. 

Sheikh Abdullah Bin Zayed Al Nahyan Foreign Minister of UAE assured full support of UAE government to further promote the private sector and UAE government investment in Pakistan in the fields of energy and real estate sectors. 

Earlier, while giving an over view of Pakistan's economic picture,Zahid Hamid Federal Minister for Privatization and Investment informed the visiting dignitary that due to the consistency and continuity of economic reforms and policies based on three pillars of deregulation, liberalization and privatization, Pakistan has become a safe haven for investors from allover the world. 


http://geo.tv/geonews/details.asp?id=7449&param=3


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## Neo

*Prime Minister takes steps to meet unprecedented power demand *

ISLAMABAD (June 15 2007): Prime Minister Shaukat Aziz on Thursday chaired a high-level meeting to review the unprecedented power demand in the country as a result of high economic growth and increased consumption in all sectors of the economy.

He took several decisions to reduce the gap between the demand and supply of power in the country. The prime minister approved Nepra's decision to allow any captive power plant (having surplus power) up to 50MW generation capacity to sell power to buyers at mutually agreed rates.

He also decided that approximately 200-250MW would be added to the National Transmission System. Shaukat Aziz asked for immediate availability of 21MMCFD of gas for the existing power plants of KESC enabling additional generation of 100MW of electricity.

He directed Wapda to lease 100MW power plants on fast track basis and to explore further leasing capacity. The prime minister further directed to strictly implement National Power Conversation Policy to enable availability of additional 600MW.

Shaukat Aziz allowed Wapda to replace its old power plants installed at Guddu with the state-of-the-art power plants, which would increase power generation up to 300MW in future.

Earlier, the Wapda Chairman informed the prime minister that the demand of electricity had increased by 15 to 20 percent as compared to last year and the initial projections for the years were estimated at 7.5 percent to 8 percent. The minister for water and power apprised the prime minister that the demand and supply situation would improve due to increased inflow of water in dams thus resulting in increased hydel power generation by 500MW to 600MW within the next 10 days.

Two new power plants have been added to the Wapda's generation and distribution system of which the first plant with a capacity of 130MW has been made operational while the other plant with capacity of 136MW will be operational by the end of this month.

As regard the situation in Karachi, the Prime Minister was informed that KESC was establishing a power plant with the generation capacity of 220MW in Karachi to augment the power resources. The ground breaking is planned within this week for which the machinery has started arriving in Karachi.

It was also decided in the meeting that the Minister for Water and Power would monitor the demand and supply situation of power on a daily basis and keep the prime minister and other stakeholders informed about it.

The meeting also reviewed the ongoing Independent Power Producers in public and private sectors to meet the growing power demand. The prime minister directed that the plants must meet the target date of commissioning to add power supply to the system. He said any delay was likely to aggravate the situation and would not be tolerated.

http://www.brecorder.com/index.php?id=577686&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Rs 150 billion allocated to ADP *

LAHORE (June 15 2007): The Punjab government has allocated Rs 150 billion to Annual Development Programme (ADP) in the budget 2007-08, which is 50 percent higher as compared to last year's.

The financing of the ADP includes provincial contribution of Rs 142 billion as against budgetary estimates of Rs 91.123 billion and revised estimates of Rs 128.236 billion of 2006-07; and foreign assistance of Rs 7.943 billion against Rs 8.876 billion budget estimates of last year.

It included the core provincial development programme of Rs 93 billion, special programmes of Rs 40 billion, Rs 3 billion for development of Katchi Abadis and the district development programme of Rs 14 billion. The salient features include full funding for projects to be completed; 66 percent funding for ongoing projects, and 34 percent for new projects; 46 percent of 3,290 schemes will be completed.

Special focus has also been laid on development of Southern Punjab ie 12 percent edge in allocations, funding for foreign-aided and mega projects as per plan/requirement with concentration on services and urban sectors.

Emphasis has also been laid on social sectors, that is, education, health, water supply and sanitation (48 percent), rural areas (64 percent), infrastructure investment (35 percent) and allocation to pro-poor sector comes to 8 percent.

The government's primary focus is on provision of quality education in the province and the government will achieve it through education-related millennium development goals (MDGs) by 2015.

http://www.brecorder.com/index.php?id=577721&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*TEC to produce skilled manpower *

SUKKUR: State Minister for Industries, Production and Special Initiatives, Sardar Ali Nawaz Khan Mahar has said that Pakistan should produce one million skilled work force annually.

He said this while talking a delegation of the Technical Education Commission (TEC) here on Thursday.

The Minister asked TEC to submit a comprehensive programme for technical education and vocational training system to produce 1 million skilled workers annually by 2010. The plan would be submitted in six weeks.

He said presently there was a widening gap between industry and training institutes, due to the inability of training institutes to keep up with new technologies.

He said there was no balance between supply and demand of skilled workers and the government has initiated short, medium and long term training programmes to produce high quality skilled manpower in priority areas.

He asked TEC to take immediate steps to identify local and global demands and initiate need-based training programmes to bridge the skills gap for local consumption.

The Minister also asked TEC to maintain gender balance, ensure quality of training programmes, hire experts from both local and foreign markets as trainers, use the facilities of existing public and private sector institutions and strengthen capacity of existing public sector institutions.

http://www.thenews.com.pk/daily_detail.asp?id=60544


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## Neo

* Singapore IT firms vying to invest in Pakistan *

KARACHI: Several Singaporean information technology (IT) companies have shown interest to invest here.

This was stated by adviser to the Sindh Chief Minister for Information Technology, Muhammad Noman Saigal, here on Thursday.

He said the IT projects in Sindh are fast coming on the ground and pointed out that this has generated a great deal of interest among internationally renowned companies as to come up with investments in this sector.

He was of the view that investment in the IT and telecom sectors would be to the tune of billions of dollars.

Saigal informed, that up to 30 Singaporean companies have shown interest to invest.

He said owing to the policies being pursued by the President, Pervez Musharaff and Prime Minister Shaukat Aziz; a great deal of progress has been made in the realms of information technology.

It may be pointed out that Saigal recently attended a seminar in Singapore. The topic of the moot was ICT demand opportunities in Pakistan.

http://www.thenews.com.pk/daily_detail.asp?id=60545


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## Neo

Friday, June 15, 2007 

*Pakistan has better telecom regulatory environment *

ISLAMABAD: The first Telecom Regulatory Environment (TRE) Survey conducted in five Asian countries including Pakistan by a Sri Lanka based independent telecom research organization, LIRNEasia reveals that Pakistan has a better regulatory environment for mobile telecommunication as compared to India, Indonesia, Sri Lanka and Philippines.

These results were presented in a workshop on Assessment of Telecom Regulatory Environments organized by the Pakistan Telecommunication Authority (PTA). The workshop was inaugurated by Chairman PTA Maj. Gen. (Retd) Shahzada Alam Malik. 

In his inaugural address, the Chairman PTA said that independent researchers like GSMA & LIRNEasia are names that motivate the telecom regulators to perform even better every time. PTA has provided a level playing field to all operators during the course of liberalization. Now, there is competition in every telecom service segment in Pakistan, that includes fixed telephony, mobile telephony, payphones, internet and other value-added services, he added. 

He said that the total teledensity of the country reached 43.44 percent in May 2007, which was just 12 percent in June 2005. On an average approximately 2.3 million subscribers are being added on mobile networks each month in Pakistan, which is an exemplary growth in relation to the population of any country in Asian region. He said that mobile penetration has reached 37.6 percent of the population at the end of April 2007. Total mobile subscribers at the end of May 2007 crossed the 60.8 million mark. He said that during the first three quarters of 2006-07, the telecom sector attracted $1.4 billion in investment. Telecom sector of Pakistan is growing at an astounding pace and surpassing all forecasts over the last few years, he added. 

The results of the 2006 TRE survey, carried out in India, Indonesia, Pakistan, Philippines and Sri Lanka as part of a multi-component study, provide a useful diagnostic tool for assessing regulatory efficacy. Overall, Pakistan scored particularly well on market entry and on the management of scarce resources (spectrum) in mobile sector.

Pakistans performance was particularly impressive because it is the country with the lowest per capita gross national income in the set. Pakistan scored higher than India on four out of the six dimensions in the mobile sector, with India being significantly ahead in tariff regulation, the study disclosed. On the fixed sector TRE assessments, the Philippines topped the ratings, and Pakistan came in third, marginally behind India. However, Pakistan scored better than India on four of the six dimensions on fixed sector: management of scarce resources, interconnection, regulation of anticompetitive practices, and universal service.

http://www.dailytimes.com.pk/default.asp?page=2007\06\15\story_15-6-2007_pg5_9


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## Neo

Friday, June 15, 2007 

*Mineral deposits use to boost economy*

ISLAMABAD: Federal Minister for Petroleum and Natural Resources, Amanullah Khan Jadoon has directed the Geological Survey of Pakistan (GSP) to gear up efforts for the speedy exploration of Pakistans mineral resources to help boost national economy.

He expressed these views while presiding over a high level meeting to review the progress and action plan to accelerate the pace of development activities in the mineral sector.

The minister said that the government would encourage and facilitate local and foreign investment in the mining of coal, copper gold, metallic and non-metallic deposits and setting up of a steel mill at Kalabagh in district, Mianwalai.

The government has chalked out an ambitious plan to produce 20,000 MW electricity using coal deposits by 2016 and all-out efforts were being made in this regard. He said that as a result of governments investor-friendly policies, the mineral sector had witnessed a tremendous growth during the last seven years unprecedented in the history of the country, he added. 

He said that utilisation of hi-tech and updated skills were pre-requisite to enhance the rates of success in the exploration of mineral resources.

The minister said that the GSP should be equipped with modern facilities to train the geo-scientists and mineral experts in order to face the emerging challenges in a befitting manner.

http://www.dailytimes.com.pk/default.asp?page=2007\06\15\story_15-6-2007_pg5_11


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## Neo

Friday, June 15, 2007 

*Telecom sector: Pakistan ahead of regional countries​*
ISLAMABAD: Pakistan has a better regulatory environment for mobile telecommunication than India, Indonesia, Sri Lanka and the Philippines, reveals a press release issued on Thursday.

This has been revealed in the results of the first Telecom Regulatory Environment (TRE) Survey conducted in five Asian countries including Pakistan by Sri Lanka based independent telecom research organisation LIRNEasia.

These results were presented in a Workshop on Assessment of Telecom Regulatory Environments organised by Pakistan Telecommunication Authority (PTA) in a local hotel. The workshop was inaugurated by Chairman PTA Major General (retd) Shahzada Alam Malik and was attended by senior executives of telecom sector, PTA officers and academicians. 

Speaking on the occasion, the chairman PTA said that independent researchers like GSMA and LIRNEasia are few names that motivate the regulators to perform even better every time. The survey that has been conducted by LIRNEasia will give us insight on our performance reflected in different areas of tele-use in the country. He said that PTA has provided level playing field to all operators during the course of liberalisation. Now, there is competition in every telecom service segment in Pakistan, including fixed telephony, mobile cellular, payphones, Internet and other value added services. 

He said that the total tele-density reached 43.44 percent in May 2007, which was just 12 percent in June 2005. On average approximately 2.3 million subscribers are being added on cellular mobile networks each month in Pakistan, which is an exemplary growth in relation to the population of any country in Asian region. 

http://www.dailytimes.com.pk/default.asp?page=2007\06\15\story_15-6-2007_pg5_19


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## Neo

Friday, June 15, 2007 

*Lahore needs Rs 13 billion ADP to maintain 90s lifestyle​*
LAHORE: The city requires at least Rs 13 billion for its Annual Development Programme (ADP) to maintain the standard of life enjoyed by Lahoris in 1992-93, said a City District Government Lahore (CDGL) official involved in the city development plans. The official said that the standard of basic facilities in Lahore was rapidly deteriorating. He said the ADP allocations announced by the government fell far below the money required for maintaining the level of standard enjoyed in the early nineties. He said that Lahores share from the Rs 14 billion allocated for local governments in province would be not more than Rs 1 billion. He said that in the previous budget, Lahore had received on Rs 421 million out of the Rs 12 billion provincial development budget. He said that it remain below the Rs 1 billion mark even if it is doubled in this budget. The official said that the provincial government decided the allocation of funds for districts on the basis of 25 multiple collector indicators including population, standard of education, health facilities, civic facilities such as provision of clean drinking water and sanitation etc. He said that after the meagre Rs 421 million allocation for Lahore in the budget of 2006-07, the district nazim had written to the chief minister about the minimum requirement of the city. He said that the CM had then ordered for another Rs 6.5 billion for the city. He said that the district nazim would have to plead his case strongly before the government again to receive a large share for the provincial capital. mansab dogar

http://www.dailytimes.com.pk/default.asp?page=2007\06\15\story_15-6-2007_pg7_37


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## Neo

*Doubling of investment shows strong UAE-Pakistan ties
By M. A. Qudoos​*
15 June 2007 

DUBAI  The UAE decision to double its investments in Pakistan to $26 billion this fiscal year reflect the strong relations enjoyed by the two countries whose foundations were laid down by the late Shaikh Zayed.

This was stated by Pakistan Ambassador to the UAE Ahsanullah Khan at a Press conference in Dubai yesterday attended also by Consul General Abdul Hameed and Press Councellor Dr Zafar Iqbal.

The decision on investments was announced at a meeting of the Pakistan-UAE Joint Ministerial Commission in Islamabad this week. The UAE delegation was led by Foreign Minister Shaikh Abdullah bin Zayed Al Nahyan.

The ambassador elaborated that the sectors selected for investment include petrochemicals, food and agriculture, IT, banking and insurance, real estate and pharmaceuticals.

The UAE decided to construct an oil refinery at Khalifa point in Balochistan with 200,000bpd output for Pakistan's needs and exports to the UAE customers that will create new jobs. In addition, several MoUs and protocols were signed. He said that Abu Dhabi has agreed to renew a soft loan of $265 million to Pakistan for the construction of dams. It was also agreed that the commission will meet on a regular basis and a meeting of the Joint Economic Commission will also take place soon.

Khan said that the highlight of Shaikh Abdullah's visit was his meeting with President Gen. Pervez Musharraf in which he expressed UAE's tremendous confidence in Pakistan and its leadership.

Shaikh Abdullah also conveyed warm greetings from the UAE leadership to Gen. Musharraf, stating that the UAE looks up to and admires the wise leadership of President Musharraf and stressed that stability is vital to Pakistan, specially for foreign investments, to the UAE, the region and to the Muslim Ummah, the ambassador said.

He said that the president was briefed by Shaikh Abdullah on his recent visit to the US with General Shaikh Mohammed bin Zayed Al Nahyan, Abu Dhabi Crown Prince and Deputy Supreme Commander of the UAE Armed Forces, interaction with the US leadership and their support to Pakistan.

*Budget*

Khan said that the new budget was poor-friendly. He said Pakistan was fourth fastest growing economy of Asia and 10.2 million jobs were created in past five years which has led to drop in workers going abroad for work.

He said that remittances by Pakistanis in the UAE increased by 41 per cent in the outgoing fiscal year and the target for new fiscal 2007-08 has been fixed at $800 million.

*Judiciary*

Khan said that the government has filed its affidavits in the chief justice case which provide the other picture of the story. He said that while it was being said that home telephones of the chief justice were cut, the affidavits show that 300 calls were made and received from the phone, including by political leaders residing abroad. "We have unfortunately allowed a judicial matter to be politicised which is damaging the country's interests," he said. Stating that the media was never as free as today with 40 TV channels, he advised the Press to play a responsible role so that the vested interests cannot emotionalise and politicise the issues.

http://www.khaleejtimes.com/Display...ntinent_June577.xml&section=subcontinent&col=


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## Neo

*July-May remittances reach record high *​
KARACHI (June 16 2007): The remittances from overseas Pakistanis' reached a record level of $4.988 billion during eleven months (July-May) of the current fiscal year (2006-07) showing an increase of $851.85 million, or 20.59 percent, over $4.136 billion of the corresponding period of last fiscal year (2005-06).

This amount, of $4,988.10 million, includes $2.57 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

According to data released by the State Bank of Pakistan, during May 2007, Pakistani workers remitted the highest so far amount of $537.98 million in a single month, against $506.57 million remitted in May, 2006, depicting an increase of $31.41 million, or 6.20 percent.

The previous highest amount remitted in a single month was $520.24 million in March 2007. The remittances respectively from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $1,319.47 million, $927.09 million, $771.10 million, $689.17 million, $392.59 million and $136.53 million, as compared to $1,119.34 million, $670.93 million, $635.54 million, $537.39 million, $400.00 million and $109.92 million in the same period of last fiscal year.

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries amounted to $749.58 million as compared to $652.03 million in the corresponding period of last fiscal year, showing an increase of $97.55 million, or 14.96 percent.

The monthly average of remittances for the period July-May 2007 comes to $453.46 million as compared to $376.02 million during the same period of last fiscal year, registering an increase of 20.59 percent. The inflow of remittances from most of the countries increased last month as compared to May, 2006.

According to breakup, remittances in May 2007 from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $143.35 million, $99.49 million, $97.59 million, $79.29 million, $37.99 million and $13.45 million, respectively as compared to the corresponding receipts from the respective countries during May, 2006 ie $124.56 million, $86.29 million, $79.70 million, $60.09 million, $53.60 million and $12.86 million.

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during May, 2007 amounted to $66.49 million as compared to $89.18 million during May, 2006.

http://www.brecorder.com/index.php?id=578053&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*US provides $200 million support to PSDP *​
RAWALPINDI (June 16 2007): The United States would provide another instalment of 200 million dollars (Rs 12.4 billion) as direct budget support to Pakistan's federal Public Sector Development Programme (PSDP) for the 2007-08 financial year.

An agreement was signed here on Friday by Minister of State for Economic Affairs Hina Rabbani Khar, Secretary for Economic Affairs M. Akram Malik and US Charge d'Affaires Peter W. Bodde and United States Agency for International Development (USAID) mission Director Anne Aarnes on behalf of their respective governments.

The budget support was in addition to financial support provided to other social sectors and the agreement was for the third of five annual 200 million-dollar instalments of US economic assistance over five years (2005-09) to support Pakistan's investment in human capital.

Based on Pakistan's current budget, this assistance will provide Rs 3.9 billion for education, rupees four billion for health, Rs 1.3 billion for clean drinking water and Rs 3.1 billion for earthquake affected areas' reconstruction in coming years.

Speaking on the occasion, Hina Rabbani said the amount would be used to fund health, education, water and sanitation programmes. Besides, it would be utilised in the Federal government's budget and for rebuilding efforts of communities devastated by the October 2005 earthquake.

Hina Rabbani appreciated the budgetary assistance, and said the US was the strong partner of Pakistan in bilateral assistance. Commenting on the economy of the country, she said Pakistan's economy had come a long way sustaining economic growth, adding that the budget of the current fiscal year was reflective of this fact.

She said the education funds would be allocated to social sector projects, adding that health funds would be utilised to fight HIV/AIDs and tuberculosis, provide assistance to family planning and reproductive health, maternal and child health, while clean water assistance would benefit people throughout Pakistan.

She said 50 million dollars (Rs 3.1 billion) had been earmarked under the Landless Compensations Policy for October 2005 earthquake affected areas for purchase of land and construction of houses for 24,000 households, adding that one million-dollar (Rs 62.15 million) would be allocated towards a Trust Fund.

Speaking on the occasion, W. Bodde said the US government was proud of working with the government of Pakistan in improving the living standards of its citizens.

"Providing improved health services, creating economic and educational opportunities, supporting better governance and ensuring basic human security for all Pakistanis is fundamental in building a solid, sustainable foundation for Pakistan's continued development," Bodde added.

He said that 2007 financial year's economic support funds would help the government of Pakistan to meet the needs of its people by increasing its investment in education, healthcare, clean drinking water and earthquake reconstruction.

http://www.brecorder.com/index.php?id=578064&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Budget-2007-08: Rs 198.4 million allocated for 14 job generating projects *​
ISLAMABAD (June 16 2007): An amount of Rs 198.4 million has been allocated in the budget 2007-08 for 14 employment generating projects, including new initiatives, a report of Planning Commission revealed.

In 2006-07, an allocation of Rs 1136.8 million was made in PSDP (public sector development programme) for 12 projects, which was reduced in the 3rd Quarter Review of PSDP to Rs 634.8 million, whereas against the release of Rs 103.61 million up to 3rd quarter, Rs 62.76 million were utilised.

Population of the country is estimated at 159.3 million as on June 30, 2007. Labour force survey 2005-06, shows that 81.49 million or 51.2 percent are males and 77.8 million or 48.8 percent are females. Out of the total population, 51.3 million are in labour force out of which males constitute 41 million or 80 percent whereas females are 10.3 million or 20 percent. Almost 48.2 million people are employed while 3.2 million are unemployed. The government has decided to continue some of the ongoing employment sector projects in FY 2007-08 that were started in the last fiscal.

The project of 'Training of Trainers for Skill Development', costing Rs 12.3 million aims at imparting training in computer operation, radio assembling and repair, dress making and electrician.

The other projects are 'labour market requirements and analysis system' that costs Rs 9.1 million, 'policy planning cell' with a cost of Rs 14 million, and the 'computerisation of the data of outgoing emigrants and returning migrants' with a cost of Rs 25.3 million. All these projects are aimed at exploring new job opportunities for the unemployed ones.

As the eradication of unemployment stands high on economic agenda of the government, the current growth of GDP in the coming fiscal years can generate employment opportunities.

In this respect, Medium Term Development Framework (MTDF) 2005-2010 projects would increase 6.97 million jobs from 43.15 million in 2004-05 to 50.12 million in 2009-10. As per the labour force estimates of 2005-06, the employed labour force stands at 46.94 million, thus 3.18 million jobs need to be created in the next four years to achieve the MTDF targets.

http://www.brecorder.com/index.php?id=578140&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pakistani poverty level lower than India *​
ISLAMABAD (June 16 2007): The number of poor is 73.6 percent of the total population in Pakistan, on the basis of two-dollar a day purchasing power parity (PPP), which is less than India's 80 percent, claimed Dr Ashfaque Hasan Khan, advisor to Finance Ministry.

Addressing a post-budget seminar, organised by Press Information Department (PID) at a local hotel on Friday, he said that the 'PPP' formula was prepared by international financial institutions to ascertain the poverty position across the world. Initially, the 'PPP' was based on one-dollar-a-day and, on the basis of initial formula, poverty in Pakistan currently stands at 17 percent of the population.

He said that Pakistan was one of emerging economies in Asia. "Today, Pakistan is clubbed with high-growth countries, like China, India and Vietnam," he said.

Soon after the speeches of other speakers, the participants raised questions on government's failure to ensure electricity supply across the country. Dr Ashfaque defended power load shedding by saying that high economic growth had actually destabilised the demand and supply position.

The power demand was projected to grow by just 3 percent in early 1990s. In late 1990s, the new projections were given and it was stated that power demand would grow by around 6 percent. However, the GDP growth at more than 7 percent for five consecutive years had pushed the power demand by over and above the government projections. This was one of the major factors due to which the country has been facing power shortage for the last year, said the advisor as he was not ready to accept that the government was actually responsible for the present power crisis.

The advisor seemed clueless when a participant of the seminar said that farmers would operate the tube-wells when electricity is available. The power load shedding has actually deprived the farmers of availing government facility of providing electricity to agriculture tube-wells on subsidised rates.

Coming back to 2007-08 budget, he said that certain things, happening during last two years or so, had really surprised the economic managers of the country. The investment has reached 23 percent of the GDP in the current fiscal year, which has been really surprising, he said.

He said that the government had some more money and, therefore, it had increased spending on poor in the 2007-08 budget. Budget is actually the continuation of the economic policies. This year, the government had more money and it decided to give relief to the common man. He said that utility stores outlets would be set up in each tehsil of the country.

Tanveer Ali Agha, Secretary, Finance, said that Pakistan was out of vicious cycle. "Pakistan is the fastest growing economies in Asia. Mere economic growth, however, is insufficient and the government requires formulation of policies so that more and more people take benefit of this growth. The budget 2007-08 is a good step in that direction," he said.

He said that if CBR was able to achieve the revenue target during next fiscal year, the tax-to-GDP ratio would reach 10.3 percent. Dr Abdul Qayyum of Pakistan Institute of Development Economics (Pide) called for proper revival of Monetary & Fiscal Policy Board (MFPB).

"After the revival of the Board, which is inactive, in my view, would give guidelines to the government on containing inflation that is becoming bigger and bigger challenge for the government," he said.

He said that the 2007- 08 budget was inclined to welfare, as additional tax burden in the new budget goes to around Rs 70 billion, while the relief package is of around Rs 100 billion.

http://www.brecorder.com/index.php?id=578117&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Major initiative launched to promote SME sector ​*
LAHORE (June 16 2007): With an indicative amount of Rs 13 billion and implementation plan has been chalked out to support various SME projects which would prove to be a major breakthrough in the development of SMEs in the country. Shahid Rashid, the newly appointed Chief Executive Officer of the Small and Medium Development Authority (Smeda) stated this in a statement issued here on Friday.

He said SMEs were the engine of growth of Pakistan's economy and a number of measures that have been announced in the current federal budget will widely translate into the benefits for the SME sector. These include reduction & elimination of duty on the priority sectors picked by Smeda for fast track development regarding gems & jewellery, furniture, marble and granite, horticulture and surgical equipment/medical devices and footwear industry, he said.

Besides, a number of other steps either to facilitate SMEs directly or to promote documentation and transparency in the sector and remove market distortions have been announced, he added. Referring to the reduction in the rate of taxation and tax slab applicable on retailers, he hoped that it would benefit small enterprises and encourage formalisation of businesses besides widening the tax net.

Reduction in duty on football bladders and glass bangles will benefit SMEs in the two clusters. Even indirect measures like tube-well subsidy of 25 percent payable on electricity charges and subsidy on fertiliser will benefit farmers and will thereby reduce cost of input for the agriculture-based industry, mostly SMEs, he added.

Shahid Rashid observed that efforts has also been made to reduce the regulatory burden on SMEs by simplification of documentary requirements such as CNIC to be used for identification purpose as an alternate where NTN is not obtained. In addition to this, the development programme in the federal budget 2007-08 contains projects worth around 1 billion, as CFCs to be established in different SME clusters to provide design, product development, training, prototype development facilities for SMEs, he added. He disagreed with the general perception about the federal budget that it was not supportive of SME sector.

http://www.brecorder.com/index.php?id=578163&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*$1bn ADB loan sought to develop major cities​*
KARACHI, June 15: Sindh Senior Minister of Health and Coordination Syed Sardar Ahmad announced in his budget speech on Friday that the government was negotiating $1 billion fresh loan from the Asian Development Bank (ADB) to undertake major development activity in Karachi and six other cities of Sindh, namely Sanghar, Badin, Dadu, Mithi/Islamkot, Khairpur and Naushero Feroze.

Ironically, the ministers announcement of negotiating a fresh foreign loan from ADB came after he complained in the budget speech of tremendous increase in external and domestic debt and current liabilities of the government over the years.

Total amount of all liabilities on Sindh now comes to more than Rs122 billion, according to the figures given by Syed Sardar Ahmad, which include Rs71.34 billion foreign debt, while Rs63.79 billion loans were under grace period of repayment.

Then there is a liability of Rs24.64 billion to the federal government on account of cash development loans that carry interest rates of 17 and 18 per cent and mode of repayment is such that very small amount of the principal loan is adjusted.

Moreover, there exist deferred public liabilities worth Rs26.17 billion, accrued since 1970 on account of general provident fund contributions of the public servants. These funds, he said, have been used by the successive governments to finance development expenditure.

But he justified the government negotiations with ADB for $1 billion (Rs60 billion) loan on the ground that infrastructure and social human development in Sindh has lagged behind other provinces.

To facilitate modern management, and to provide needed infrastructure and services in this province, which is backbone of Pakistans economy, the government has sought assistance from ADB for Mega Development Project and Secondary Cities Programme, he stressed.

The senior minister also spoke of the initiatives and prudent measures taken to create new funds for meeting future liabilities and informed the Sindh Assembly that by next year a sum of Rs25 billion would have been successfully set aside from public exchequer and invested appropriately on account of public liability and social responsibility.

Recounting all such initiatives he said that Rs7.79 billion cash development loans were retired prematurely in the current fiscal year, which is saving Rs5.57 billion on interest payment.

A total amount of Rs15.58 billion loans were retired since 2002-03, which saved Rs15.93 billion on interest payment.

The Sindh government has created a general provident investment fund with annual seed money of Rs2 billion and annual supplements of net receipts of GP fund.

The senior minister disclosed that deposits in Sindh Pension Fund and Social Relief Fund will exceed Rs23 billion next year.

This is a remarkable achievement, especially in comparison with the performance of previous governments in 1990s when Sindh was surviving on State Banks overdraft, Syed Sardar Ahmad remarked.

http://www.dawn.com/2007/06/16/ebr2.htm


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## Neo

*Sindhs GDP estimated at Rs240 billion​*
KARACHI, June 15: The Sindhs GDP has been estimated at $40 billion by the Sindh Senior Minister, Syed Sardar Ahmad, in his budget speech who called it the second largest economy of Pakistan.

At this estimate of $40 billion (Rs240 billion), Sindhs economy is roughly a little more than 27 per cent of the national economy and has apparently slipped down from 33 to 34 per cent of the national economy during the decades of the 60s, 70s and even during a part of the 80s. The federal ministers put national economy at $146 billion (Rs8,760 billion) in 2007 and hope to push it up further by seven per cent plus during 2007-08.

But the senior minister in his speech did not elaborate further on Sindhs regional domestic production to inform public of the contribution of various components of the economy indicating that the $40 billion estimate was a mere guesstimate rather than the result of a serious exercise. There is not a word on industrial growth, agricultural production, services sector, mining, fisheries, livestock, schools, hospitals, enrollment of children, particularly of girls in schools.

A day earlier, the Punjab chief minister had informed public that Punjabs GDP was 53 per cent of Pakistans economy and that it showed a growth of eight per cent plus during 2006-07.

By implication, the Punjab chief minister made it known to all that economic growth of his province was well above the national average growth of seven per cent. It means that the three other provinces are far behind in development and Punjab is the growth engine of Pakistans economy.

By this estimation, (Punjabs share of 53 per cent and Sindhs 27 per cent), the share of the other two provinces, Balochistan and NWFP, comes to a mere 20 per cent. There is no study to show how much is the share of each of the two provinces  Balochistan and NWFP  in 20 per cent.

Punjab has developed a mechanism of monitoring GDP indicators with the assistance of World Bank and has found that quite a good size of Sindhs services sector shifted to Lahore. Services sector in Punjab was estimated at 53 per cent of its total economy in 2005. Investment and industrial growth in Punjab has been crawling up in Punjab since the 1977 takeover by General Ziaul Haq. Agricultural growth in Punjab has been steady than in Sindh because of better availability of water.

The World Bank too carried out a study on Sindhs economy after the 2002 elections and formation of a coalition government in Karachi.

The findings of the World Bank team in more than two years exercise was not well taken by the political leadership and bureaucrats of Sindh.

Well-placed sources in Sindh explained that the World Bank and other international donors wanted to offer loans and credits, and the Sindh government showed some reluctance to accept this offer, and in the bargain earned ire of World Bank and international donors.

Way back in the decade of 80s, efforts were made in Sindh to set up a Sindh Regional Plan Organisation. It carried out many studies on districts that found economic disparities increasing between the rural areas and the urban areas of the province. The then President, General Ziaul Haq, did not conceal his anger on all such studies which project the deprivations and sufferings of rural people of Sindh.

A leading economist who taught at Karachi University, served a caretaker government as a minister and now is working with a UN agency told a group of newsmen in Karachi that Ziaul Haqs government officially forbid him to work on monitoring Sindh GDP indicators.

But recent reports suggest that the Sindh government is developing a system to monitor regional GDP of the province with the help of independent economists. Dr Kaiser Bengalis doctorate detestation is on estimation of Sindhs economy. He is said to be giving some help to the Sindh government.

Sources in the Sindh government say that the government may consider issuing a provincial Economic Survey every year with budget documents in the future.

http://www.dawn.com/2007/06/16/ebr3.htm


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## Neo

*Pakistan-Iran bilateral trade potential high: Iranian diplomat​*
The current bilateral trade regime between Pakistan and Iran is in no way near the potential, a senior Iranian diplomat has said, urging Pakistani traders not to limit themselves only to rice. 

Consul General of the Islamic Republic of Iran Mr. Masoud Mohammad Zamani, asked Pakistani exporters to introduce other products, required by the Iranian consumers. 

He made the remarks while talking to Majyd Aziz, President and members of Karachi Chamber of Commerce and Industry (KCCI) during his visit to the Chamber, a press statement of the chambers said. 

"There are ample prospects for the Pakistani exporters and one vital and crucial way is to organize frequent single-country exhibitions not only in Tehran but also in Mashhad and other cities," Azami said. He was accompanied by Mr. Ghulam Raza Tajiki, Commercial Counselor. 

The Iranian diplomat said the Iran-Pakistan-India gas pipeline would soon be a reality as this is the crucial need of all three countries for their development. 

He that the IPI pipeline would bring immediate benefits for the three countries and would boost the economy in many respects. 

He said that there is a major problem in controlling the undocumented travels at the Pak-Iran border since it is over 1000 miles long. He was of the opinion that efforts to control this menace would soon pay dividends. 

Zamani complimented KCCI on the unprecedented success of 'My Karachi Exhibition' held recently and lamented the fact that Iranian companies could not participate in this event. 

He pledged that in the My Karachi 2008 Exhibition, Iran would be in the forefront in participation. 

Earlier, Majyd Aziz while welcoming the Iranian diplomats briefed them on the functions of the Chamber and highlighted its achievements. 

He acknowledged the fact that Pakistani exporters have not been able to take maximum advantage of the Iran market and hoped that the KCCI would undertake one single-country exhibition in November during the tenure of his successor. 

He added that the Iran Consulate General has been very cooperative in facilitating the travel requirements of businessmen as well as religious pilgrims. 

He also welcomed the offer of the consul general to have a strong Iranian participation in the next Karachi Exhibition. 

http://www2.irna.ir/en/news/view/menu-237/0706169217164636.htm


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*Saudi-Kuwaiti Group invests nearly $2.5 billion in Pakistan *​ 
Saudi Press Agency - 16/06/2007 

(MENAFN - Saudi Press Agency) A Saudi-Kuwaiti Group, Midroc Tussonia (Pvt.) Limited, has initiated to invest $1.5 billion to $2.5 billion in Power, Oil and Gas and Real Estate sectors of Pakistan over a period of next five to seven years, according to an official statement.

Sheikh Humoud Al-Sabah, President of the group, gave this information to Minister for Privatization and Investment Zahid Hamid in a meeting with him.

Hamid assured the delegation of full assistance in the completion of their projects, which were at an advanced stage. 

http://www.menafn.com/qn_news_story_s.asp?StoryId=1093156523


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## Neo

*Rs 114.50 billion tax-free NWFP budget unveiled: Rs 5.5 billion deficit to be bridged by World Bank aid *​ 
PESHAWAR (June 17 2007): The government of NWFP on Saturday unveiled Rs 114.507 billion tax-free budget for financial year 2007-08 against total receipts of Rs 109.01 billion, showing a deficit of Rs 5.489 billion. The Minister for Finance, Shah Raz Khan, presented the budget in the provincial assembly. Speaker Bakht Jehan Khan was in the chair.

The minister said that the deficit would be covered by an assistance of Rs 7.8 billion pledged by the World Bank. He said that like last four years the government has once again divided the budget into three categories--of welfare, developmental, and administration. The welfare budget comprises Rs 40.2 billion, developmental budget would have Rs 39.5 billion, and administrative budget would have Rs 14.8 billion.

The province would receive Rs 47.63 billion from divisible pool, Rs 5.8 billion under the head of share in general sales tax (GST), Rs 6.00 billion profit on hydel generation, Rs 3 billion in royalty on gas and oil, and a financial assistance of Rs 6.2 billion from the federal government. The province would have to generate Rs 6.2 billion from its own resources, he said.

Total current expenditure for the year is estimated at Rs 61 billion with provincial expenditure of Rs 32.8 billion, and district expenditures of Rs 28.2 billion.

The volume of the development programme of the province would be Rs 39.4 billion, including Rs 21.9 billion of the annual development programme (ADP), Rs 1.2 billion annual district development programme, Rs 8.3 billion special programme, and Rs 8.00 billion foreign assistance schemes. The estimated welfare budget of Rs 46.2 billion shows an increase by 9 percent from the outgoing financial year. Rs 1.8 billion has been allocated for education, registering 99 percent increase while an amount of Rs 2.7 billion has been allocated for health, which is Rs 0.2 billion more than the current financial year.

The shares of other sectors include agriculture Rs 509 million, irrigation & power Rs 1.5 billion) social security Rs 303 million, and environmental protection Rs 433 million.

The administrative budget has been divided into three heads--police, general administration, and prisons. Police would get Rs 5.14 billion (114 percent more than the current financial year), general administration Rs 650 million, and prisons affairs Rs 321 million.

The estimated annual development programme would get Rs 39.4 billion, showing an increase of Rs 13 billion from the current financial year; Rs 4.84 billion has been sanctioned for education, Rs 3.64 billion for health and Rs 1.24 billion for Tameer-i-Sarhad Programme.

An amount of Rs 71.47 million has been kept for development of social welfare and women development, Rs 3.96 for highways, Rs 1.34 for irrigation, Rs 322 for agriculture, Rs 538 million for industries & mineral development, Rs 3.1 billion for rural development, Rs 255 million for tourism, sports, culture and archaeology, Rs 30 million for minorities affairs, Rs 160 million for urban development, Rs 704 million for construction and houses, Rs 910 million for water supply and sanitation, Rs 392 for establishment of small power stations, Rs 316 million for development of environment and Rs 100 million for development of science and information technology in the province.

The provincial government, the finance minister said, has also decided upon 15 percent increase in the salaries of government employees, while the pensions of government employees would be increased by 15 to 20 percent. On this increase, the provincial government has to bear an extra expense of Rs 2.5 billion. Under the development budget of education sector, the minister said, the provincial government includes female education in its top priority.

The development programme of the sector comprises construction of new girls primary schools, launching of female education in backward districts, granting of Rs 200 per month scholarships for increasing number of girls students, and Rs 1000 monthly special allowance for teachers.

The government has also prepared a model project for provision of buses for girls in the provincial metropolis. The new development schemes include establishment of new primary, middle and high schools, upgradation, repairs of school buildings, providing basic facilities like computer labs, furniture and teaching instruments.

The provincial government would provide free textbooks to both boys and girls from Nursery to Intermediate levels of education. The government would also arrange education of information technology at Intermediate level. This year, the government has sanctioned Rs 4.84 billion for 142 schemes in education sector, the minister said.

In the health sector, Rs 3.64 billion has been earmarked for 134 projects, which include the opening of blood transfusion units in seven district headquarters'' hospitals besides completion of district headquarters hospitals in Bannu, Shangla and Chitral.

In industrial sector, Rs 538 billion has sanctioned for 42 development schemes. The second phase of expansion of the Industrial Estate at Peshawar would be launched during the year, while work on establishment of small industrial estate would be completed in Charsadda.

Similarly, beside the establishment of marble products, training centre in Mardan would start work on opening of handicrafts and sewing centres in Kohat and Charsadda. For promotion of technical education, vocational centers would be established and polytechnic institutes would be upgraded to the level of College of Technology.

In mineral sector, the government would expedite work on standard of mapping and information dissemination projects to help increase revenue in the sector. The government would also give priority to the welfare and protection of labourers, besides extending technical skill and education of 19,600 boys and girls in the province.

The government has also announced 32 percent subsidy on electricity bill of agricultural tube-wells. Of this, the federal government would bear 12 percent and the provincial government would bear 20 percent share.

http://www.brecorder.com/index.php?id=578733&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Mega projects to help develop Balochistan: Prime Minister ​*
ISLAMABAD (June 17 2007): Prime Minister Shaukat Aziz on Saturday said a series of mega and small development projects launched by the government will bring gradual improvement in Balochistan. Talking to a delegation from Balochistan led by Hafiz Hussain Ahmad at the Parliament House.

The Prime Minister said the government is working for equitable growth in the country and it is particularly focussing on the less developed areas of the country to bring them at par with more developed regions.

Chaudhry Shujaat Hussain, President PML, Mushahid Hussain Sayed, Secretary General PML, and Muhammad Ali Durrain Minister for Information and Broadcasting were also present at the meeting. The Prime minister said the government has undertaken unprecedented development work to make up for past neglect of Balochistan by the successive governments.

He said micro-development schemes have also been launched all over the province to transfer the benefits of high economic growth to the masses. People have benefited directly from Rs 100 million allocated to each district in Balochistan, he said.

The Prime Minister said the government is focusing on providing better facilities of gas, electricity, health, drinking water and education to the people of Balochistan. The Prime Minister said the government is focusing on providing employment opportunities to the youth of Balochistan and their quota in federal jobs has been increased from 3.5 to 5 percent.

The government has also initiated training programmes in various technical fields to enable them to take maximum benefit from the jobs created for them, he said. The Prime Minister said the Gwadar deep sea port would serve as a trade corridor for the region and the industrial zones which will be set up around it will provide innumerable opportunities to the people of the province.

The members of the delegation discussed with the Prime Minister development issues of their areas particularly Chagai, Noshki and Aghbarg. The Prime Minister assured them of government's help and said that all requests for development work will be evaluated on merit.

Hafiz Hussain Ahmad and members of the delegation invited the Prime Minister to visit their constituencies, which he accepted. The delegation thanked the government for co-ordinating with Saudi government to establish a hospital in Dalbandin that has started providing treatment to the people. The members of the delegation thanked the Prime Minister for accepting their invitation to visit Balochistan.

The members of the delegation included Senator Dr Ismail Bulidi, Manzoor Ahmed Mengal, Moulvi Aziz ullah, Sardar Rasool Khan Mengal and Moulvi Abdul Hayee.

http://www.brecorder.com/index.php?id=578805&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Poverty reduction: 'Pakistan can benefit from Chinese expertise' ​*
BEIJING (June 17 2007): Pakistan can get benefit from the experience of China for poverty reduction, said one of the Pakistan delegates attended here a seminar on poverty alleviation. The two-week seminar on "Poverty policy and practice" was hosted by International Poverty Reduction Centre in China for the member countries of South Asian Association for Regional Co-operation (Saarc).

Deputy Secretary (Economic Reform Unit), Moinuddin Ahmad Wani along with Assistant Chief of Economic Affairs Division Ghulam Muhammad Mahar; Additional Secretary, Planning and Development Department, Balochistan Sohail Qadeer Siddiqui; Deputy Secretary (Investment), Finance Division, Iqbal Ahmed and Research Analyst Economic Affairs Division Zulfiqar Ali Shaikh represented Pakistan.

The seminar attended by officials from Saarc countries was concluded on Friday. Wani said the participants were briefed on China's social and economic development policies and its experience and achievements in poverty reduction. He said China did a great job by taking various steps to help reduce poverty, this including introduction of reforms especially in agriculture, social development as well as in human resources.

He said that during a field visit to Chongqing Municipality in Southwest China, they were informed that to encourage growers, the State had provided agriculture loans amounting to 70 percent of the total amount, while 30 percent was shared by the farmers.

He said that this step encouraged the growers to bring maximum area under cultivation. Wani said that during the 15-day workshop, seminar, talks and discussions were held on a number of areas of poverty reduction in which strategies Asian countries can adopt to cope with regional economic integration, and methods of managing and supervising poverty reduction funds also reviewed threadbare.

The seminar on Poverty Policy and Practice for South Asian Countries reflected the Chinese governments' commitment to enhance co-operation with south Asian nations on poverty reduction. Deputy Secretary Wani pointed out that Pakistan could benefit a lot from these steps in poverty alleviation.

http://www.brecorder.com/index.php?id=578821&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Middle East potential market for Pak furniture exports ​*
LAHORE: Gulf and Middle East consumers using designs produced in Pakistan are potential buyers of Pakistani furniture and could facilitate the industry to achieve the targeted $1 billion export by 2015.

These remarks were made by Chairman Furniture Pakistan Shahbaz Aslam, while speaking at a press conference held at the Federation of Pakistan Chamber of Commerce and Industry (FPCCI) zonal office Saturday.

He said local furniture industry is growing at an annual rate of 25 percent annually in the absence of modern technology and skilled labour force. 

According to Small and Medium Enterprise Development Authority (SMEDA), in the year 2004, its annual export turnover was $15 million, which clearly showed that if the needed infrastructure and basic facilities were created it could surpass the textile sector.

He appreciated government efforts to promote non-traditional sectors like furniture, gems, jewellery, marble, dairy and livestock. 

He said for sustainable economic growth government would have to shift its focus from textile. He said government has already reduced customs duty from furniture raw material and zero-rated

the import of furniture machinery, which is a positive step.

He told the press conference that the federal government has given a grant of Rs590 million for the development of furniture industry in the country, out of this Rs150 million will be spent on the formation of company development, which will have 75 percent participation of private sector and 25 percent of public sector.

He said Rs50 million has been reserved for the establishment of training centers in Chiniot, Gujrat, Rawalpindi, Peshawar and Lahore. The first training centre will be established in Chiniot and will start working by January next year as it has the largest furniture producing cluster of 20,000 small units.

In addition, a solar kiln will be established in Chiniot with an investment of Rs75 million, while Rs30 million has been allocated for exhibitions and foreign trade shows. He appreciated the role of Ministry of Industry, SMEDA, Engineering Development Board and USAID for supporting the project, and J. E. Austin Associates Inc; the consultant firm. 

Dr Warren Weinstein, Country Director of J. E. Austin Associates Inc, speaking at the press conference said that presently preliminary studies are underway. He also said that academia has a very important role in the program, like Beacon house University, National College of Arts, Lahore School of Fashion Design and Punjab University are helping us in furniture design. 

First furniture testing labs will also be established in the country to meet the export requirements of foreign buyers.

Answering a query, Shahbaz Aslam said that China, Malaysia and Vietnam are our main competitors but we are at a privileged position due to our geographical location. He said that we will try to market our products in the US and Europe afterward as they have reservations like sustainable forestry and no use of child labour.

http://www.thenews.com.pk/daily_detail.asp?id=60807


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## Neo

*Agriculture: the most ignored sector of the economy​*
LAHORE: A complete transformation of the economy has hit hard the agriculture sector, which has suffered badly due to lack of interest by the government in developing the sector in accordance with the modern techniques. 

The latest Economic Survey reveals that the share of agriculture has reduced to 20.9 percent from the earlier 24 percent and experts fear further decline in case no tangible effort is made to develop this sector on modern lines. 

Interestingly, Pakistans economy is growing at a rate of 7 percent annually over the last few years and agriculture, its mainstay, is losing its share as a percentage of GDP resulting in a supply shortage of food items to the public. The federal government had allocated Rs 18 billion for the sector in 2006-07 and it spent Rs 10 billion. The remaining Rs 8 billion, said experts, has again been clubbed with another Rs10 billion to re-allocate Rs 18 billion for the current fiscal year. 

In Punjab, the government allocated over one billion rupees in the fiscal year 2006-07 and increased it to Rs 2.8 billion in fiscal year 2007-08 but if one compares it with the allocation for education of over Rs 21 billion, allocation for agriculture seems a paltry sum. While most of the youngsters leave their education unfinished as soon as they are able to share the burden of cultivation in the rural economy. Therefore, heavy spending on education, according to some agriculture experts, would go unnoticed and the government would not only lose heavily in the education sector but it would also end up with a deteriorating agriculture sector. 

I strongly believe that even an allocation of Rs 2.8 billion for agriculture would not be spent properly, as agriculture is not on the top of governments priority list, said Ibrahim Mughal, Chairman Agri Forum Pakistan. 

He also lambasted the federal policy makers for not extending required attention to the sector. 

They are actually interested in eliminating the sector, as imports suit them, he said. 

According to him, the economic managers of the government are giving all credit to the services sector in the national economy without realising that growth of the financial sector was dependent on the loans extended to industries related to the agriculture sector like textile, sugar and flour mills. 

Dr Salman Shah, in a recent interaction with the media, pointed out that the government has injected billions of rupees in the rural economy by announcing lucrative support prices for crops like wheat and sugarcane. However, he was not able to satisfy reporters when he was asked what the government had done so far to modernise the agriculture sector. 

According to some economists, the policy of announcing support prices has made the agriculture sector inefficient, as farmers have not given attention to enhancing crops per acre yield or improving the quality of crops. Instead, priority was given to those crops where they were getting high premium due to governments intervention. As a matter of fact, the strategy of support prices has not only made agriculture sector inefficient but has also made the related industries sick on one hand and on the other hand, has made the consumers pay high price for food items. 

Though, Dr Salman Shah does not admit that the development of agriculture sector on modern lines has been ignored over the last five years but policymakers in Punjab do admit the fact. According to them, the current fiscal year is the year of agricultural reforms and further capacity to absorb would be created throughout the year.

http://www.dailytimes.com.pk/default.asp?page=2007\06\17\story_17-6-2007_pg5_2


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## Neo

*Stock market capitalisation reaches $70b mark: Shah​*
LAHORE: Advisor to the Prime Minister on Finance, Dr Salman Shah has said capitalisation of the Karachi stock market has reached the level of $70 billion, about 50 percent of country's GDP of $145 billion.

"We are working to get it equal to country's GDP size," he said while talking to a group of local journalists here on Saturday.

He said that big companies should list themselves on the stock exchanges to raise equity instead of depending on banks for loans.

Dr Salman Shah said that Pakistan had the potential to emerge as the hub of manufacturing and Information Technology in the region like China and India. He said that federal government had made 22 percent increase in the allocation for education sector this year, adding that provinces were also making similar raise in the funds for this vital sector.

Similarly, he said, there was no need to increase interest rate or exchange rate adjustment to make products internationally competitive. Enhanced productivity could help achieve this objective significantly, he added.

He said that the size of country's GDP had risen to the $145 billion from $70 billion in the year 1998-99.

"Had we constructed more dams after Tarbela, our economy could have grown 10 times," he added. He said that bumper crops of wheat, cotton and sugarcane had resulted in the injection of Rs 250 billion, Rs 180 billion and Rs 85 billion respectively in the rural economy of the country.

He said that good return for agricultural produce has also contributed to hike in the prices of the food items.

Quoting a report from the latest issue Newsweek, Dr Salman Shah said that the average world inflation of food items at present stood at 23 percent. He said that the use of maize, sugarcane and palm oil for bio-diesel production, had also resulted in the price hike of these commodities.

He hoped that the prices of palm oil that recently touched the level of $815 per tonne had started declining. 

Responding to a question, he said that the steps being taken by the government would help bridge the gap between power generation and consumption in the country.

"We are expecting additional 800-900 Megawatt of power within a month due to authorization of Captive Power Plants (CPPs) to sell electricity, installation of two rental power plants and increased inflows in the rivers due to glacial meltdown," he told

He urged the consumers to adopt power conservation techniques. Dr Salman Shah said that the annual growth of power consumption that stood at 3 percent in 2003-04 has shot up beyond the levels projected by the planners. Most of the power consumption rise was mainly due to increase in the use of consumer durables like air conditioners, TVs and washing machines, he added. app

http://www.dailytimes.com.pk/default.asp?page=2007\06\17\story_17-6-2007_pg5_4


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## Neo

*New plant to make 192MW from March​*
KARACHI: The Karachi Electric Supply Corporation (KESC) is investing in a new 220-megawatt power plant that will help control the power shortages in the city, said 

The KESC Board of Directors Chairman Abdulaziz Aljomaih said at a press conference Saturday that this plant was part of the utilitys plans to increase its power generation capacity.

The plant will start generating 192MW by March and the remaining 28MW will start being distributed by December 2008. Aljomaih said that the company has provided $50 million in financial assistance to support the operational deficit of the company and has been working with agencies such as the International Finance Corporation (IFC), the Asian Development Bank (ADB) and several other local banks. The banks will fund the capital expansion plan over three years with an amount of over $800 million that will bring 780MW of new power generation for the company by 2009.

The capital enhancement programmes will boost KESCs capacity from 70 percent to 90 percent with the cooperation of gas and petroleum companies, he said. Governor of Sindh Dr Ishrat ul Ibad laid the foundation stone for the 220 MW plant at the Korangi Thermal Power Station. 

The governor, who was there as the chief guest, said that the government is focusing on curbing the menace of load shedding in Karachi, particularly in residential areas, and it will extend its full support to the KESC and its management.

Detailing the venture, KESC CEO S. M. Amjad said there is no denial of the fact that the utility is facing challenges in meeting the power demand of the city. Once the initiatives taken by the KESC ... are complete, our network reliability will improve from 70 percent to 90 percent by 2008 and our generation will increase by 1000 MW.

The company is in the process of evaluating the final bid for another 560 MW unit for the Bin Qasim Power Plant, which will be finalized over the next few months, he said. Amjad said that KESC owners are not reluctant to invest in restructuring and development, contrary to what people think.

The KESC chief told the audience that the company will enhance its generation capacity to 4,300 MW by 2010 and then to 6,000 MW by 2017.

http://www.dailytimes.com.pk/default.asp?page=2007\06\17\story_17-6-2007_pg12_1


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## Neo

*Rs2.66 bln allocated for industrial, agri and farming uplift ​* 
PESHAWAR: June 17, 2007: NWFP Finance Minister, Shah Raz Khan Saturday said, the provincial government is giving top priority to industrial, agriculture, farming and irrigation development as massive funds have been allocated for these sectors in the NWFP budget 2007-08.

Unfolding the budget in the NWFP Assembly, the Finance Minister said, to achieve autarky in food, Rs. 2.66 billion has been earmarked in the budget for the completion of 176 projects during next fiscal.

Shah Raz Khan disclosed that 760 kilometers roads have been completed in the outgoing fiscal year including completion of 12 new bridges.

To provide easy access to the people, road net work is being extended as it is a pre-requisite for the industrial progress, he said.

The NWFP government has included 181 new projects in the current fiscal year costing Rs.3.96 billion.

The projects, he said, included 500 kilometers metal led road and 10 new bridges. He said to facilitate the farmers; the NWFP government has constituted Area Water Boards, Anjuman-e-Kissan Board, privatisation's of Tube wells and Chashma Command Area Developmental System.

In the current fiscal year, he said that the NWFP Government has decided to establish new water channel and construction of small dams to feed the farmers with proper irrigation water utilisation.

The provincial government, he said, has planned 65 projects, costing 824 million for construction of water channels. He said 95 kilometers water channels have been completed with installation of 131 Tube Wells.

A total of 15700 acres land would come under cultivation due to increase water facilities.

He said, 507 kilometers watercourses have been improved, 131 tube-wells sink, 12.78 million square feet canals have been metal led while in District Dera Ismail Khan a survey report has been completed for the construction of three small dams.

In the next fiscal year 2007-08, Rs.1.34 billion has been earmarked for the completion of 56 projects in irrigation for sinking of 35 tube wells which will help irrigate 16000 acres of land besides protecting 60,000 acres land from being water logged.

In the farming sector, which is very important tool for overall progress, the provincial government has taken various preventive measures to save waters and to provide irrigation water to the tail end.

To stop the wastage of water, the provincial finance minister, said pavement of water channels and watercourses, establishing farms centers, and interest free loan to the farmers are few steps.

He said Dairy Colonies have been setup in Dera Ismail Khan and Nowshera which will help in milk collection its subsequent cold storage.

In the current fiscal year, he said, 246 million has been earmarked for 35 projects.

He said 4795 exhibition plots have been established. In all 2241 farmers and staff have been provided training. Artificial insemination has been carried of 200,000 animals while 0.8 million new Tea plants has been prepared.

In the 2007-08, Rs. 322 million has been earmarked for the 36 farming projects and with the support of private sector production of milk and meat would boost up. He said 8000 exhibition plots would be established.

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## Introvert

*Pakistan earns $24 mln annually from Mango export*

Pakistan earns about $24 million annually from mango export, an official of Ministry of Food, Agriculture and Livestock told APP on Saturday.Mango is the second major fruit crop grown on an area of over 93,000 hectares with a production of the 915,000 tonnes, every year.

He said around 60-70 percent good quality fruit exported to middle eastern countries, followed by 15-16 percent to european states,

He said the total export varies from year to year but there is huge potential for export of Pakistani mango in world market, he remarked.

He said there was a need to enhance production and quality of the fruit by adopting modern orchard management techniques.

He said the area under mango crop had increased but the productivity ratio was low due to some diseases of mango.

In Punjab, he said Multan, Rahim Yar Khan, Muzaffargarh, Bawalpur, Kabirwala,Vehari and Okara are famous for quality mango production.

In Sindh it is mainly grown in Khairpur Hyderabad and Mirpurkhas and In NWFP mango was grown in Peshawar' suburbs.

He said efforts were increase the export of mango and its growers were being equipped with modern techniques to protect the crop from diseases, especially powdery mildeway, blossom blight and anthroconse.

As part of efforts to enhance mango export, the agriculture linkages programme were being implemented in two main mango growing provinces of Sindh and Punjab with international research organizations.
http://www.freshplaza.com/news_detail.asp?id=3106


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## Neo

*319 industrial units set up in NWFP, says minister​*
PESHAWAR (June 18 2007): The NWFP Minister for Finance and Environment, Shah Raz Khan on Sunday has said that the investment friendly policies, exemption of property taxes on industrial units in industrial estates and other incentives are promoting the industrialisation in the province.

Addressing post-budget press conference Shah Raz Khan disclosed that during the last four years of the government of religio-political alliance of MMA a total of 319 new industries have been set up in the province and around 73,000 labourers had got employment opportunities.

Dispelling the impression of no industrialisation in NWFP during the present provincial government, he said 54 new industries were set up last year only in Gadoon Amazai Industrial Estate. He said although Gadoon Amazai is considered a graveyard of industrial units since the withdrawal of incentives announced by the federal government.

He added an investment of Rs 2.5 billion was also made in the estates adding that 48 acres land has been acquiired for establishment of PVC pipe manufacturing unit in Gadoon Amazai Industrial Estate.

"The total investment made in last one year in NWFP is around Rs 3.96 billion whereas 11,147 persons also got employment opportunities," Shah Raz Khan added.

The provincial government, he said had also constituted an Investment Facilitation Council and Investment Facilitation Committee; the former is chaired by the chief minister while the later is headed by Chief Secretaries.

The bodies having representation from both public and private sectors are holding regular meetings since their formation in 2005.

The Investment Facilitation Council, he said has prepared an agenda after thoroughly taking review of industrial policy. The same agenda will be presented to the Chief Minister for approval in the first week of the next financial year. The minister said that the expansion of Hattar Industrial and Nowshera Industrial Estates were also successfully in progress.

In reply to a question regarding promotion of tourism sector, the minister acknowledged the potential of sector in the province, saying before the formation of the government of MMA roads were in deplorable conditions.

The provincial government, he said had improved roads till Dargai while construction of the remaining portion is being carried by National Highway Authority (NHA). In a recent meeting of Economic Co-ordination Council, the minister said federal government had approved the improvement of roads till scenic valley of Kalam. The completion of work on the roads would help the government to catch the potential of tourism in the province.

The government, he said had also constituted a committee comprising members of Sarhad Chamber of Commerce and Industry (SCCI) and Agricultural Chamber of Commerce of NWFP, secretary finance NWFP and officers of other concerned departments for introduction of tax reforms in the taxation system.

He said the provincial government in the finance bill 2007 has revised tax rates and had exempted widows of the property tax on in urban areas not exceeding tax of Rs 10000 Similarly, stamp duties on different instruments had also been revised to increase the revenue of the province.

The government, the minister said during the last four and half years had retired a federal government debt amounting to Rs 13 billion to save another amount of Rs 3 billion payable in shape of mark up. Next year, he said government would retire another debt of Rs 5 billion to raise the total toll of retirement to Rs 22 billion. Provincial Minister for Information, Asif Iqbal Daudzai and administrative secretaries of provincial departments were also present in the post-budget press conference.

http://www.brecorder.com/index.php?id=579320&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Government needs Rs 230 billion loans, Rs 30 billion grants for uplift programme ​*
KARACHI (June 18 2007): Pakistan will acquire Rs 229.824 billion foreign assistance in the shape of loans from international financial institutions and different countries for the next fiscal year to execute its development programme.

The finance division of the federal government has estimated an overall outlay of Rs 229.685 billion development loans and Rs 29.958 billion development grants, while non-development grants estimates stand at Rs 180 million for the fiscal 2007-08.

The development assistance for the next fiscal year is Rs 20.327 billion higher than current fiscal 2006-07 estimates, current year government's budgetary estimates of foreign assistance stood at Rs 239.316 billion but revised estimates show Rs 281.593 billion.

For the next fiscal year, the government has estimated Rs 66.603 billion loans from foreign institutions for project, including Rs 26.826 billion for federal projects, Rs 15.649 billion for autonomous bodies and Rs 24.127 billion for provinces.

Foreign projects grant stands for 2007-08 estimates Rs 3.471 billion, including Rs 1.506 billion for federal departments and Rs 1.965 billion for provinces.

The finance department has estimated Rs 125.791 billion loans for commodity aid (non-food) and Rs 37.290 billion for other aid, while for food aid no grant has been estimated against the current fiscal year's revised food grant of Rs 730 million.

According to plan, the Asian Development (ADB) would provide Rs 56.6 billion loans and Rs 870.1 million grants, United Arab Emirates Rs 3 billion loans, China Rs 5.301 billion loans and Rs 448.25 million grants, Canada Rs 559.35 million grants, European Union Rs 1.09 billion grants.

Loans from Eurobonds estimated at Rs 31.075 billion, loans from France Rs 1.935 billion, from Germany Rs 800 million and Rs 734.64 million grants and loans from International Fund for Agriculture Development (IFAD) estimated at Rs 800.558 million.

In addition, loans and grants from International Bank for Reconstruction & Development (ABRD) are estimated at Rs 3.434 billion, International Development Association (IDA) Rs 102.139 billion, Islamic Development Bank (IDB) Rs 16.474 billion, Japan Rs 4.118 billion, Korea Rs 1.071 billion, Kuwait Rs 986.5 million, Norway 101.2 million, Saudi Arabia Rs 2.486 billion, and Switzerland Rs 526 million.

Similarly, loans and grants from United Kingdom (UK) are estimated at Rs 7.647 billion, United Nation Development Programme (UNDP) Rs 203.650 million, United Nation International Children Emergency Fund (Unicef) Rs 198.2 million, USA Rs 12.721 billion, World Food Programme (WFP) Rs 186.685 million, Organisation of Petroleum Exporting Countries (Opec) 1.725 billion and from Agency Franchise Development (AFD) Rs 1.295 billion.

Non-plan resources have been estimated at Rs 1.111 billion, including Rs 1.087 billion grants from Oman and Rs 24 million grants from EU, while Rs 180 million has been estimated as non-development grants for the next fiscal year.

http://www.brecorder.com/index.php?id=579269&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Govt advised to cut fiscal deficit in 2007-08​*
KARACHI, June 17: The State Bank of Pakistan Governor Dr Shamshad Akhtar has emphasised upon the government to strictly adhere to the Fiscal Responsibility and Debt Limitation Act, 2005 and reduce its fiscal deficit and debt-GDP ratios during the next fiscal year.

For the central bank, too, she stressed the continuation of strong monetary management in 2007-08 to keep a check on demand pressures stemming from fiscal and external account deficits.

In her keynote presentation at a pre-budget seminar on Friday, where Prime Ministers Adviser on Finance Dr Salman Shah did not turn up as announced by the organisers  the Press Information Department (PID) of the federal information ministry, the SBP governor said the government expects to reduce the debt-GDP ratio to 51.1 per cent by the end of 2007 and use privatisation proceeds for poverty alleviation.

Pakistans current year budget is under the impact of a fiscal deficit. Under the Fiscal Responsibility and Debt Limitation Act, 2005 the revenue deficit will be brought to zero by June 30, 2008. The government is also committed to reduce public debt to 60 per cent of the GDP by 2013.

She said that the SBP was working in house with the government to improve the monetary management and help in achieving the inflation target of 6.5 per cent. But she conceded that the progress in cutting inflation has been slower than original target but it is steady.

The State Banks monetary framework statement, she said, will be released by end July after the budget for 2008 has been finalised. However, there has been intensive consultation between the SBP and the government regarding the need for more consistency in the budget and monetary framework.

In line with the SBP Act 9(A), Dr Akhtar informed the audience - that included bankers, business leaders, agriculturists and media persons, the central bank has now institutionalised the process of determination of the level of government recourse to bank borrowing and its approval by the Central Board of the SBP.She informed the audience of the few understandings reached in the consultation between the government and the SBP. She said the first is the recognition of the need to formally impose a ceiling on governments recourse to SBP borrowings. Secondly, there is a need to better manage the monthly and quarterly borrowings. Thirdly, the government and the SBP will work together towards reducing its stock of borrowings.

Fourthly, the government will continue to change its mix of domestic borrowings by relying on public and commercial bank borrowings rather than SBP borrowings. And finally, there will be a better planning for resource raising from the market to sequence the domestic and foreign borrowings more effectively.

The SBP governor disclosed that the government planned to raise the Public Sector Development Programme next fiscal to Rs724 billion, that includes the budget supported programme of Rs485 billion and Rs204 billion being financed outside the budget by a number of public entities.

Private level investments for the year 2008 are assumed to grow to Rs1,651 billion, which translates into $27 billion and 16.5 per cent to the GDP, she said. The private investments next year are expected to be 2.8 times of the level of public investments and once again three fourths the level of total investment.

Speaking about the financial scene, the governor said that the banks profitability exceeds $1 billion and the banking sector during last few years has attracted two $2 billion with $1 billion raised in 2007. The ratio of non-performing loans to net loans is all time low to 2 per cent and capital adequacy is around 13.5 per cent.

Mr Naveed Ahsan, the secretary general Finance, disclosed that Pakistans budget for 2007-08 will be of the order of Rs2 trillion and it will incorporate Rs500 billion plus public sector development budget. There will be no new tax in the budget but the tax collection will increase to more than Rs1 trillion in the year 2007-08.

http://www.dawn.com/2007/06/02/ebr1.htm


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## Neo

*Rs117bn loans for provinces, public units​*
ISLAMABAD, June 17: The government plans to extend over Rs117 billion loans to the provinces and public sector institutions next fiscal year, up by about 25 per cent over the current years revised estimates of Rs94 billion. These also include Rs19.4 billion equity investments.

Development loans and advances are made to the provinces, AJK, public sector institutions and local bodies to help them carry out development activities. Total development loans for the next fiscal year have been estimated at Rs87.6 billion, showing an increase of 17 per cent over the revised estimates of Rs74.8 billion in the current fiscal year, official documents suggest.

This will include cash development loans of Rs41.6 billion for the next year, about 5.6 per cent higher than the current years revised estimates of Rs39.4 billion. External development loans for the next year have been estimated at Rs46 billion, about 30 per cent higher than Rs35.4 billion for the current year.

The provincial governments and Wapda have been demanding of the federal government for about five years to allow them retire expensive cash development loans (CDLs) and replace them with cheaper loans available in the banking industry and international lenders.

Their demand has partially been accepted and the provinces have started taking development loans from international lenders such as the World Bank and the Asian Development Bank. The CDLs that increased in size over the last decade carry in some cases as much as 20

per cent interest rates.

The four provinces together owed Rs190 billion foreign loans and about Rs145 billion cash development loans until last year. Every year, the provinces have to take fresh CDLs to service the existing CDLs. Sindhs liability for the payment of CDL amounts to Rs28 billion while the foreign loan burden has increased to Rs71 billion. Punjab carries a total debt burden of Rs143 billion that includes Rs73.61 billion CDLs and Rs69.78 billion foreign loans. The NWFP shows Rs22.26 billion CDL liabilities and more than Rs49 billion foreign loans. Balochistan carries more than Rs51 billion loans, but no figures are available for a break-up of foreign and domestic loans.

Besides the cash development loans, the government would be extending current loans of more than Rs10 billion mostly to various institutions to enable them to meet their loans and investment requirements. The estimate for the next year is about nine per cent higher than Rs9.3 billion for the current fiscal year.

Major chunk (Rs4.57 billion) of the current loan would go to the AJK government as ways and means advances while another Rs3.4 billion would go Wapda to finance price differential between high and low sulphur fuel oil. Another Rs2 billion would be provided to the government servants. The government continues to provide one million rupees every year to finance loans payable to Junagarh and Kathiawar chiefs.

Federal governments current investments for the next fiscal year have been estimated at Rs19.4 billion.

http://www.dawn.com/2007/06/18/top1.htm


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## Neo

*Real income rise stymied by low agricultural growth, high food inflation​*
The government frequently points to the increase in the number of mobile phone users as an evidence of progress. But this argument misses some crucial points.

The spread of technology, its tremendous benefits, and its ever-declining cost represent a global phenomenon that has made it possible for people to buy phones  sometimes on even borrowed money-as a long-term investment. Take Kenyas example. In 2000 some 300,000 people used mobile phones; now, in that country of 35 million plus, nearly nine million do.

Statistics from other African countries like Nigeria, Ghana, Swaziland, Egypt, and Senegal reveal a similar trend. The efficiency gains from mobile phone usage, particularly savings in transportation costs, have made this a self-financing investment for hundreds of millions of low-income people around the developing world. It is therefore incorrect to present this as evidence of a significant change in living standards or of success of a governments economic policies.

The only objective measure of a governments performance is the improvement in real (or inflation-adjusted) incomes across all income classes. Now, how do we reconcile two seemingly contradictory facts that Pakistan has one of the lowest growth rates in real per capita (person) income in purchasing power terms despite having recorded one of the highest GDP growth rates among the Asian countries in the last four years? The fundamental reason is higher inflation compared to the rest of Asia. Pakistans current inflation rate is 7.8 compared with five per cent in India and about 1.50-2.4 per cent in Thailand, Malaysia, Korea and the Philippines and 3.40 per cent in China. Hence, it is important to measure progress and growth in real or inflation-adjusted terms.

The government cites the increase in per capita income from $586 in 2002-03 to $925 in 2006-07 as one of its principal achievements and its claim to a significant poverty reduction rests to a great degree on this argument. While it is true that Pakistans GDP growth since 1999-2000 has been higher than it was in the 1990s, real measure of the improvement in the wellbeing of the population compared to other economies is the GDP per capita in purchasing power parity terms.

Pakistans GDP per capita (or per person) increased to $925 by an average of 9.3 per cent per annum during 1999-2007 when measured in nominal dollar terms but since the dollar has depreciated against euro, this growth rate falls to 5.59 per cent when measured in euros and to only 2.5 per cent when measured in real or purchasing power parity terms in 2000 constant dollars as shown in the graph.

In other words, the average real income of a Pakistani has increased by only 2.5 per cent per annum since 1990-2000 and as income inequalities have not improved according to the governments own admission, it is but logical that the incomes of the upper and middle classes have risen more rapidly than the average. It therefore follows that the per capita real income growth for more than 80 per cent of the population has been less than 2.5 per cent. According to a World Bank report released on March 30, 2007, Pakistans agricultural GDP per capita growth rate during 1999-2000 to 2004-05 was only 0.3 per cent annually.

What has made it worse for the lower income groups is the well-established fact that the food inflation has been higher than the overall inflation. The food inflation accounts for about 40 per cent of overall inflation and is therefore critical to improvement or deterioration in the purchasing power. The current food inflation rate is four and half times as high as it was in 1999-2000 as shown in the graph.

The surge in food inflation to 10.24 per cent during July 2006-May 2007 followed a fall of 4.1 per cent in the major crops (wheat, rice, cotton, sugarcane) and a negligible increase of 0.4 per cent in minor crops (potatoes, pulses, other grains, etc.) during 2005-06 despite an overall GDP growth of 6.6 per cent in that year. Both crop groups staged a recovery during 2006-07 and it remains to be seen if the recent gains in their production would translate into lower food price inflation.

The last years GDP growth of seven per cent was helped by a five per cent growth in the agriculture sector, which accounted for 20.9 per cent of the GDP. However, the growth in the crops sub-sector (which accounts for only 47.9 per cent of the agriculture sector, the livestocks share being 49.6 per cent) masks the fact that the (i) 7.5 per cent growth in major crops was from a low base as prior years growth was negative and (ii) the minor crops grew by only 1.1 per cent during 2006-07.

However, going beyond a single years production data, the last seven years record indicates more fundamental and structural problems with the growth trend of the agricultural crops. As shown in the table, the production of cotton, wheat, rice and sugarcane grew by a yearly average of 1.63, 1.23, 0.59 and 1.87 per cent respectively during the seven years from 1999-2000 to 2006-2007 and was below the estimated average population growth of 2.2 per cent or so during this period. An examination of a sample of the production of other agricultural produce reveals similarly low and volatile rates of growth.

The country witnessed unprecedented drought during the first two years of the decade, (that is, 2000-01 and 2001-02), which resulted in contraction of overall agricultural production or negative growth in these two years. However, the 7-year growth rates of agricultural crops compared with even the more normal levels in 1999-2000 are quite low and have failed to keep pace with the population annual growth rate of over 2.2 per cent..

The official statistics on fertiliser, water, and improved seeds distribution indicate some improvement. However, water availability has not materially changed during the past seven years not to mention the worsening power shortages and higher oil prices.

The Economic Survey for 2006-07 claims that this years wheat crop was higher due to a number of reasons including a more seed availability, greater subsidy on fertiliser, introduction of three new higher yielding wheat varieties, etc. This begs the question as to why these measures were not taken in the earlier years because wheat production remained stagnant during 2000-2004 and even in 2005-06, it just managed to recover to its 1999 level.

This underscores the need to undertake major reforms in the crops sector to bring the long-term growth rate to a level that is consistent with the population growth trends. However, improving growth rates in crops production alone will not be enough to bring the 74 per cent poor out of poverty; that is those who earn around or below $2 a day. Rural population accounts for 70 per cent of the total but 80 per cent of Pakistans poor live in the rural years. Agriculture (including both crop and livestock production) accounts for only about 40 per cent of rural household incomes and the poorest 40 per cent of rural households derive only about 30 per cent of their total income from agriculture.

According to the World Bank, a major reason for the large proportion of rural non-agriculture poor in Pakistan, as well as poverty levels among small farmers, is the prevailing highly unequal distribution of land and access to water. According to the 2000 Agricultural Census, only 37 per cent of rural households owned land, and 61 per cent of these land-owning households owned fewer than five acres, or 15 per cent of total land. Access to usable water is also quite unequal, a major cause of lower productivity in the dry lands (barani) relative to irrigated land, land at the tail end of watercourses relative to land at the head end, and areas with saline groundwater as compared with areas that have sweet groundwater.

Because of this skewed distribution of ownership and access to productive assets, much of the direct gains in income from crop production, particularly irrigated agriculture, accrue to higher-income farmers according to the World Bank study. This implies that much of the gains from the recent growth in the crop production in 2005-07 have accrued to the higher-income farmers. It is ironic that the same higher-income farmers pay little or no income taxes while the small farmers and the poor are regressively taxed in the form of higher inflation.

This reinforces the view that despite higher overall GDP growth, higher food inflation and inequitable distribution of resources have prevented the flow of benefits to the vast majority of the people and no amount of the so-called trickle down can have a significant impact on their incomes and living standards in the absence of radical reforms in the agriculture sector as well as about an estimated $17 billion in investments in large and smaller dams to ensure more water and electricity without which 7-8 per cent growth rate is likely to remain a dream in the long-term.

http://www.dawn.com/2007/06/18/ebr1.htm


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## Neo

*Achieving tax targets in an election year​*
It may be difficult but not impossible to mop up Rs1,025 billion tax revenue and attain a GDP growth of 7.2 per cent that translates into a cool Rs600--650 billion jump in the size of economy during the fiscal year 2007-08.

This is how the businessmen responded when asked to give their assessment on the budgetary roadmap for an election year.

Political temperature is already on the rise much before the formal launch of election campaign. No one knows how it is going to affect the economy and business environment. But the Chairman of Central Board of Revenue, Abdullah says that the CBR s collection for this year is well on target. He says he would have mopped up a few billion rupees more had there been no situation that exists now. Without being specific, he was referring to the situation created after March 9.(judicial crisis). These observations cast shadows on the tax collection efforts in the next fiscal year.

Industrial growth, particularly the large-scale manufacturing has not been up to the expectations this year Both the industrial and export growth have receded.. The seven per cent growth is mainly driven by the services and agriculture sectors. This creates doubts whether over seven per cent growth set for next year will be achieved and yield Rs1 trillion tax revenue.

The present assemblies may be asked to elect President General Pervez Musharraf sometimes in September or October. This is the time when three major kharif crops are harvested--cotton, rice and sugarcane. Any disturbance in harvesting of these crops will seriously impact the economy. Interrupted cotton supplies can affected the largest industry-- textiles. Then the general elections for new assemblies may be held in January or February 2008. October onwards is the period for sowing of wheat which is other vital crop. If electioneering affects wheat sowing, the country should be ready to pay for a huge import bill.

Revenue collection and economic growth are two objectives which this government has been achieving almost every year since the last four years and there is no reason why it should not do next year too, says Majyd Aziz President of Karachi Chamber of Commerce and Industry. He agrees that business cannot remain insulated from the heat generated by political process. But the overall growth tempo is such that it will jump over these pitfalls.

The next years target of Rs1,025 billion is up from an expected collection of Rs835 billion plus for this fiscalan increase of about Rs190 billion stipulated from an expected expansion of the economy byf Rs600--Rs650 billion.. A virtual blanket levy of one per cent surcharge on import will generate additional Rs120--125 billion A rough estimate shows that one per cent surcharge will be levied on about $20 billion import out of total $30 billion. At one per cent, $20 billion dollars import should $2 billion or Rs120 billion. Rationalisation and adjustments in rates of taxes and duties on various items are expected to give another Rs44--46 billion. The existing size of the economy at $146 billion (Rs8,760 billion) has the capacity to generate additional Rs3--4 billion. The remaining Rs30 to Rs40 billion will be obtained from the an expanded economy and streamlining of CBR management. This is how the roadmap for recovery of more than one trillion rupees tax is explained by those who are in touch with the CBR.

But dont forget that the government compromised on three big potential areas of tax generation, Asad Saeed, an economist said. The government was dropping hints of improving tax collection from the agriculturists by asking CBR to recover it. There were hints that unlimited exemption from capital gains on stock exchange transactions will come to an end. And finally, the real estate transactions will be documented and taxed.

President Pervez Musharraf was given a detailed briefing by the CBR in March this year. The CBR suggested that tax on agriculture incomes should be made a federal responsibility because less than Rs2 billion was collected and that too by only three of four provinces. It was claimed that after CBR is given responsibility, the collection would be anywhere up to Rs50--Rs60 billion a year and will show progressive rise in future. ``It was instantly made a provincial autonomy issue by politicians, bureaucrats and landlords, an observer said. For obvious reasons, the government dropped the idea.

The stock exchange is getting exemption from capital gains tax since 1974. Real estate business is the other area which remains under-taxed. That real estate transactions are being under-reported which is one of the main sources of black money generation , also recognised at the highest level. The 2007-08 budget announces tax exemption for three years on incomes from transaction with the real estate investment tust (REITS).

In the initial stages , the proposed trust be a facilitator to convert black money into white but eventually stabilise prices of property and give an opportunity to small investors to be part of the big deals, says Mr Akbar Sheikh, a leading representative of the textile industry. based in Lahore.

On taxation measures of 2007-08 budget, he said the spinning sector has been loaded with additional Rs6 billion burden, Rs3 billion burden coming from wage rise of the workers and Rs3 billion from one per cent surcharge levy on imports. Against this burden, the spinning sector has been given a relief of about Rs600 million by way of loan swapping. The spinning sector has now been brought in fold of concessional rate loans given to export-oriented industries. Akbar Sheikh estimates conversion of about Rs20 billion loans at concession rates. This swapping of loans will give a three per cent discount to the spinning mills.

In its own way, the government has responded to textile exporters demand on withholding tax on export proceeds. Since exporters complained harassment at the hands of tax collectors, the government enforced withholding tax at the rate of 0.75 to one per cent. But as export grewalmost $10 billion exporters were uncomfortable on a virtual deduction at tax source. They were given a choice of normal assessment by the tax collectors. Textile exporters were divided. Some wanted filing of returns and assessment with provisions of scrutiny. Some wanted the old method of withholding tax but at reduced rate. The government opted for one per cent withholding tax that gives a minimum recovery of $1 billion.

But the government is also paying back about Rs35--40 billion as research and development rebate being offered at six per cent to readymade garments and knitwear, 3--5 per cent on fabric and other made -ups. More than Rs328 billion loans have been given on discount rate and a huge amount has been advanced as export refinance.

The government has put 398 items in zero rated duty import category which will cost more than Rs9 billion to the government by way of revenue loss. The benefit of this zero rated import will go to industry which however suffers from high utility rates, bad infrastructure and rising cost of doing business. ``This budget makes us pay more than relief given to us, a local industrialist remarked.

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## Neo

*Productivity and decent living​*
People are not destined to live a life devoid of basic needs that define decent living status.

People are hard working and the country is resourceful enough to afford better living standards for the multitude, if systems to improve productivity are put in place. Though the thrust of the current budget is populist, it does attempt to address some basic aspects of the issue.

Handouts and subsidies can at best be short-term stop gap remedies, sometimes entailing unjustifiably high costs in economies such as Pakistan. The long- term solution lies only in employing resources of the country more efficiently and avoidance of wastages that plague all sectors in the economy.

The argument of the government's economic wizard Dr Salman Shah that commodity prices in the country are the lowest looks baffling if the hidden costs and level of wastages in farm products are cited. It is senseless to compare prices in markets of any two countries without keeping in mind the poor consumers affordability. Yes, n Sweden a loaf of bread may cost three times its rate in Pakistan but there is not a single citizen in that country who cannot afford bread.

In the globalised world of inter-dependence, low productivity has hurt the country's exports, forcing the government to consider low productivity related issues more seriously. The lower ranking of Pakistan on the World Competitive Index prepared by the World Economic Forum has also exposed the gravity of the issue.

Majyd Aziz, President Karachi Chamber of Commerce and Industry when contacted by Dawn acknowledged the need but saw the roots of the problem embedded deeper in the economy that beg for consolidated supportive government policies. He saw productivity dependent on 3Ms_material, men and machines.

In Pakistan there are problems in all three aspects of productivity. There are problems in attaining the required quality of raw material. There is a major mismatch in the quality of huge manpower pool available locally and requirement of the same by the industry. As for machines, the private sector is still shy to invest in modern machines that cost more for it feels threatened by its overseas competitors. There is need to ensure improvement in all three Ms to be able to achieve better productive levels.

At the moment, Aziz felt that persistent power outage is the single biggest problem facing the manufacturing sector. The budget has not addressed the issue in a befitting manner. For uninterrupted operations of industry, businessmen found a way out in captive power generation plants but providing electricity in areas where workers reside is not possible for a private business entity.

"Frequent power breakdowns have rendered workers of Karachi not even half as productive as before. If a factory worker returns to work without resting owing to power failures in sizzling June how productive could he possibly be?" He said it would be apt to address the power issue before moving on to some specialised measures to improve productivity.

But some experts were excited over certain budgetary measures and expect these to impact productivity positively. They saw the measures for simplification of tariff regime and abolition of tax exemptions leading to better compliance and improved documentation in the economy. They also felt that certain tax incentives could reverse industrial sector fragmentation.

Pakistan's industrial sector is entering the consolidation phase. The steps such as 'Group relief' in the tax regime will encourage corporate entities to consolidate that, in its turn, would improve scales and induct more professional management", Samir S. Amir, Director Research, Pakistan Business Council told Dawn.

Abolition of exemption clauses and simplification of the regime can reduce transactions costs that has been instrumental in pushing up the supply side inflation. In absence of sales tax invoices by suppliers of imported components, the assemblers end up paying 15 per cent sales tax at the final stage that is passed on to the consumers by increasing the price by the same rate.

The abolition of the clause of compulsory value addition of at least 10 per cent to qualify for sales tax exemption has been withdrawn as it failed to serve any purpose and encouraged people to mis-declare the value of their imports.

Some reservations were expressed on Custom Valuation Law and setting up Valuation Directorate in Customs. The Customs has been vested with discretionary powers that can provide opportunities for corruption. "There is a need for the valuation to be transparent, fair and verifiable so that it leads to more credible assessment of the value of our imports and fair collection of duties", Samir said.

A few businessmen criticised the government for raising the minimum wages that they said will swell the wage bill, a major component in the cost of exportable items. "This is not a wise decision. The government should have provided for the workers from Workers Welfare and Workers Profit Participation Fund which is under-utilised instead of asking the private sector to bear this additional burden" said a textile tycoon who wished not to be identified.

The competitiveness cannot be achieved by rhetoric and economic inefficiencies cannot be wished away. It is a huge challenge that could only be met by synchronised efforts of both public and private sector. The government needs to be more forthright in providing the right environment and removing infrastructural bottlenecks for the industry to improve labour productivity and face the fierce competition internationally.

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## Neo

*Why cotton is a problematic crop?​*
Muhammad Amjad Ali & Dr Iftikhar Ahmad Khan

COTTON, which is also known as white gold, is an important crop in many developing countries. The yield of the crop is dependent upon the environment in which it is grown and the management practices of the cropping system.

Cotton yields are stagnant for the last several years. Factors responsible for the stagnant cotton production include: excessive rain at the time of sowing, high temperature at flowering stage, late wheat harvesting resulting in decline of area under the crop, leaf curl virus incidence, soil system, weather adversaries, pest attack and improper production technology in major cotton growing areas of Punjab and Sindh. There are many social as well as economic problems facing cotton production including, illiterate farming community, high cost of inputs, small landholdings, less adoptability of innovations by the farmers, lack of guidance to farmers, high cost of production and insecurity in the market, the cost of production being the most significant among them.

In recent past two major factors had a significant impact on the economics of cotton production. They are extensive use of agrochemicals and yield stagnation. Among all agrochemicals, fertilisers and insecticides are of utmost importance. There are no efficient alternatives to synthetic fertilisers and cotton production has to bear the use of nutrient supplements in the form of inorganic fertilisers. Among pesticides, insecticides are group of agrochemicals which is extensively used on cotton.

Insects, being living organisms, have adjusted with the injurious chemicals and learned to survive with insecticides. Consequently, insecticide use kept increasing causing a serious impact on the economics of cotton production. Currently, there is a greater need for new developments in production research but more and more researchers are confronted with maintaining the current status of yields in their countries. The cost of production has increased to unacceptable levels in many countries that threaten the economics of cotton production.

Cultural Problems: There are also many aspects which can affect fibre quality and yield. Agronomic practices affecting the yield include sowing time, low quality and adulterated seed, timing of harvest, irrigation, use of plant growth regulators, soil fertility, tillage, and cultivar selection.

Currently cottonseed must be delinted to be used in modern planting equipment. The two most common methods are wet acid delinting using sulphuric acid and gas delinting using hydrogen chloride. There are several possible problems associated with acid delinting including damage to seed quality by improper procedures during the acid delinting process, damage to the seed by ammonia during the neutralisation process, worker safety concerns, and disposal issues.

Seed germination: Seed dormancy is a significant factor involved in germination of cotton crop. Additionally, some forms of cotton may produce hard seeds that, upon drying, become impermeable to water and suffer delayed germination. Priming improved emergence and early growth of maize and cotton in drying soils in the laboratory. On-farm seed priming can partly compensate for the negative effects of low soil water potential and large aggregate sizes on crop establishment. Some studies have shown that conservation-tillage systems can also decrease cotton yields by increasing soil compaction and reducing water availability.

Pests: Cotton is a pest-loving plant and due to this habit it has become a problematic crop for the farmers. More than 1326 species of insects have been reported in commercial cotton fields worldwide but only small proportions are pests. Of the 30 pests of cultivated cotton the most important are the caterpillars of pink, spotted and American bollworms, aphids, whitefly, jassids, mealy bugs and the spider mite.

The bollworm/budworm complex is a primary insect pest problem with larvae attacking squares and bolls causing significant yield losses if left uncontrolled. The cotton whitefly is a pest of primary importance for fibre, horticultural and ornamental crops worldwide. It can cause extensive damage through direct feeding, honeydew production and as a viral vector.

Pink hibiscus mealy bug is an emerging threat to the cotton crop. Its host records extend to 76 families and over 200 genera, with some preference for Fabaceae, Malvaceae and Moraceae. Growing points infested with cotton mealy bug become stunted and swollen. This varies according to the susceptibility of each host species. Plant protection products are of limited effectiveness against the bug because of its habit of hiding in crevices, and the waxy covering of its body.

Poor spraying techniques and over-use of chemicals has led to the pest becoming resistant to most of the available insecticides. Seeing their crops devastated by bollworms, and desperate to salvage something from their losses, farmers have continued to buy more toxic (and expensive) chemicals and to spray more frequently, but with decreasing effectiveness.

Diseases: Never has a single pathogen or insect pest threatened Pakistan's cotton culture, as has the cotton leaf curl virus (CLCuV). In 1993-94, about 0.89 million hectares were badly damaged resulting about two million bales loss in production due to CLCuV. In economic term, the country had suffered a loss of about 7.6 million bales, which costs to the tune of Rs71 billion since 1988 due to the infestation of CLCuV. Yield decreased from1.938 million metric tons in 1991 to 1.445 million metric ton in 1992 and fell further to 1.105 million metric ton in 1993.

Recently, cotton leaf curl virus has again emerged as a key disease in the province of the Punjab in general and Burewala area in particular. The re-emergence of virus commonly called as Burewala Strain of Cotton Virus (BSCV) has dangerous version and could develop into a serious problem.

The continued use of CLCuV-susceptible varieties without any programme of their replacement constitutes a major risk for cotton production in Pakistan. So a premier focus should be given to eliminate the CLCuV disease and a well-planned programme of evolution and introduction of CLCuV-resistant varieties of desired characteristics must be in place to gradually replace the existing CLCuV-susceptible varieties. This is only the sole and the most promising and least expensive method of disease suppression.

Other important diseases are seedling diseases caused by the fungi Pythium and Rhizoctonia, Black root rot, Fusarium wilt and Verticillium wilt, Alternaria Leaf spots and Bacterial blight.

Abiotic stresses: Water deficit, in conjunction with high temperatures and incident radiation, poses the most important constraint to plant survival and crop productivity. Cotton crop was affected by drought and there was yield reduction of 1.1per cent during the year 2003. Drought stress causes severe shedding of small squares, resulting in a decrease in flowering. An understanding of the response of plants to water deficits is important in efforts to model cotton growth, estimate irrigation needs, and breed drought-resistant cultivars.

Although the cotton plant is a sun-loving plant, an excessively higher temperature at reproductive phase (above 36oC) decreases its production significantly. According to an estimate, cotton plant sheds about 6570 per cent of its fruiting points due to heat-induced sterility, spotted bollworm attack and increased humidity during monsoon. High temperature disrupts the movement of water, ion, and inorganic solutes across the plant membrane, which interferes with photosynthesis and respiration. Clearly, an increase in high temperature at the reproductive phase is the major factor of low productivity of cotton varieties grown in the cotton belt of Pakistan.

Soil and fertility: Several soil conditions and farming practices in Pakistan are perceived as being likely to induce micronutrient deficiencies, including high soil pH, calcareousness of soils, low soil organic matter and use of fertilisers poor in micronutrients. Boron contents of soils and plants from light and medium textured soils were less than the critical levels. High soil pH, calcareousness and low organic matter in such soils might be rendering the B less available to the plants.

There may be less availability of phosphorus (P) in a rapidly drying soil due to reduced P diffusion and poor uptake by roots. This may result in inadequate P nutrition for cotton plants.

Nutrient-poor, degraded, and often acidic, soils limit crop production in many tropical regions. Limiting amounts of phosphorous and excessive levels of aluminium are characteristic problems of acidic soils.

Saline soils are found naturally in many locales and have been created in others by poorly managed irrigation. Both the timing and method of application of fertiliser are important, though some evidence suggests that one method may be better than the other under particular circumstances, most of the literature suggests that timing of applications of fertilizer is a much more important determinant of yield response than method of application.

Salinity affects large areas of irrigated land, and is a particular problem in NW India and in Pakistan, where it is often combined with water-logging. The two stresses together have far more severe effects than either alone: root ability to screen out salt is much reduced, and lack of O2 leads to metabolic problems.

In Pakistan, about 6.3 million hectare was affected by salinity, and groundwater in most of these saline areas is brackish and thus unfit for irrigation. So current cropping intensities and groundwater usage in irrigated agriculture are not sustainable due the problem of salinity.

Environmental and health hazards: During July-March, 2005-06, 17,900 and 36,000 tons of agricultural pesticides were imported and locally formulated and most of them were applied on cotton. Chemical pesticides affect human health as well as biological diversity and surface and groundwater quality. Some pesticides leave persistent residues in soil, groundwater, and the food chain, thus exposing human population to slow and cumulative poisoning (WTO).

Pesticides also affect wildlife, domestic animals, and biological diversity. Pesticide poisoning remains a daily reality among agricultural workers in developing countries, where up to 14 per cent of all occupational injuries in the agricultural sector and 10 per cent of all fatal injuries can be attributed to pesticides.

Marketing: Between 196064 and 19992003 real cotton prices fell by 55 per cent, quite similar to the 50 per cent decline in the broad agriculture price index of 22 commodities. The grower-to-market links are usually absent, and the research-extension-grower links essential to the transfer of technology are often weak.

It is found that the incidence of poverty among cotton growers could rise in the short run from 37 per cent to 59 per cent while the average incidence of rural poverty could rise from 40 per cent to 48 per cent. So it appears that cotton growers are heavily taxed both directly, through the lower prices received by the state company which purchases cotton and indirectly through the (likely misaligned) exchange-rate regime. This assessment is shared by a recent report which concluded that only one third of the world price of cotton reaches the producers.

Strategies and prospects: Considering such a high importance of the cotton crop in the national economy, the problems and issues pertaining to this crop should be very carefully evaluated and monitored.

The main objectives of government are overcoming the scarcity of water through augmentation and conservation means i.e. by construction of medium and large dams and by efficient utilisation of irrigation water, restoring the productivity of agricultural land through control of water logging, salinity and floods.

The government should also provide farmers with the credit facilities that they might be able to purchase good quality inputs to raise high yielding stands of the crop. Threshold-based sprays against the main pests, the use of a cotton growth regulator, and earliness of cotton cultivar and seed treatment are accountable for savings in pesticide sprays. Bt cotton varieties should be locally developed and distributed among the farmers to avoid the high incidence of bollworms.

There are various management practices that should be followed to help mitigate some of the environmental risks associated with growing cotton. They include selection of adapted cultivars, planting within the recommended range of favourable planting dates and environmental conditions, use of seed and seedling protectants to avoid stress or early season diseases and insects, use of effective pest management tactics to avoid competition and damage by weeds and insects, management for optimal soil moisture, proper fertility management, and management for maturity and readiness for harvest at optimum times.

One of the tools used in reducing environmental risks and increasing the possibilities of a profitable yield is cultivar development through breeding and genetics. Breeding for heat, salinity and water logging tolerance accompanied with higher percentage of seedlings will emerge to produce even and uniform plant stands. Grower-to-market and the research-extension-grower links are essential to avoid farmer against the clutches of middleman and to the transfer of technology.

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## Neo

*Neelum-Jhelum hydropower project in doldrums​*
By Engr Hussain Ahmad Siddiqui

In his budget speech, the Minister of State for Finance Mr Omar Ayub Khan said: "Today, I hereby announce the construction of Neelum-Jhelum Project, which will cost Rs84.50 billion.

Unfortunately, the ministers statement is not supported by ground realities, as the award for project contract as well as foreign exchange funding have not yet been finalised. The strategically vital Neelum-Jhelum hydropower project is not yet in a take-off position.

The Chinese consortium selected for the award of contract has failed to arrange required foreign exchange cost of the project. The government has not been able to line up financial resources for Wapda to meet the local currency cost.

While allocations for the project under the Public Sector Development Programme (PSDP) were Rs4 billion in 2005-06 and Rs6 billion in 2006-07, only Rs2.50 billion could be made available to Wapda and that too through re-appropriation of other allocations. Wapda spent Rs184 million on preparatory work undertaken as on June 30 2005.

The Neelum-Jhelum project has been allocated Rs10 billion for the next year. There is, however, no likelihood of requisite funds being released in near future, as the PSDP allocation of Rs62 billion of the last quarter 2006-07 has been withheld due to paucity of funds.

The hydropower project with a total maximum capacity of 969 MW - is to be located in Muzaffarabad district, Azad Jammu and Kashmir (AJK). It envisages the diversion of River Neelum waters at Nouseri and outfalling in the Jhelum River near Chattar Kalas-at a distance of 22 km south -- where the underground power station will be built as part of an integrated project. Comprehensive feasibility studies, conducted in the 1980s and revised in the 90s, confirmed the economic and technical viability of the project, whereas detailed engineering design was completed in 1997.

The Executive Committee of the National Economic Council (ECNEC) approved the revised scheme in February 2002, as a high priority project. Bidding process, though initiated in June 2002, had a number of rounds that remained inconclusive until recently, mainly due to bureaucratic snags and lack of planning. In response to the final tender issued in April 2006, the Wapda received only two bids for completing the project on a turnkey basis.

The consortium of China National Machinery & Equipment Import & Export Corporation (CMEC) and China Gezhouba (Group) Co. Ltd (CGGC) emerged as the lowest bidder at $1.30 billion. Instead of offering supplier's credit as per tender conditions, the bidder proposed buyer's credit amounting to $800 million covering foreign exchange cost against government's sovereign guarantee. The other bidder, China International Water & Electric Corporation (CWE), quoted $1.80 billion having offered similar conditions for financing.

Wapda has considered the lowest offer acceptable, and the government agreed to provide sovereign guarantee, as a very special case, for the repayment of the buyer's credit as demanded by the bidder. However, the Chinese consortium is said to have been unsuccessful in providing confirmation letter from China Impex Bank. There is no further development though Wapda is keen to conclude the deal with the lowest Chinese bidder.

Meanwhile, the government is making hectic efforts to arrange for foreign assistance through other sources. Initially there was positive response from Qatar, Kuwait and Saudi Arabia. But, in such a case, the procedural bottlenecks would not allow either of the two Chinese bidders to get the contract since basic parameters of the tender would change, once again. For the reasons of transparency, this may also necessitate another round of bidding, which the government can ill-afford.

PC-1 of the project, as approved in February 2002, estimates total cost of the project at Rs84,503 million with a foreign exchange component of Rs46,668 million ($777.80 million). The civil works account for over 86 per cent of the project cost, whereas the balance 14 per cent share is of electrical and mechanical works. There are already reports about escalation of the project cost since the PC-1 estimates were valid until the year 2002.

Strategically, the project is of great significance. On completion, the project will protect Pakistan's rights as provided by the Indus Waters Treaty. The project is located further downstream on the Neelum River, a tributary of the Jhelum River, which enters from the Indian held Kashmir where it is known as the Kishanganga River. As per provisions of the Indus Waters Treaty, if Pakistan manages to complete the Neelum-Jhelum project first, India would not have the right to divert the river flow, as it plans to do at present. Likewise, if India completes its project on the Kishanganga first, it would have priority rights on the use of Neelum/Kishanganga waters.

India has started construction on the Kishanganga hydropower project of 330 MW capacity, which was approved in June 2004, to be located near Bandipura in Baramula. The project involves a 103-meter dam across the river before it crosses the line of control (LOC) and a channel along with a 27-km long tunnel to divert water from the river to the Wullar Lake. It is reported that 75 per cent of the construction of the tunnel work has been completed. Last week Pakistan reiterated its stand on India's plans.

This development has resulted in conflict of interest between India and Pakistan and the matter may eventually be referred to a neutral expert (as in the case of the Baglihar Dam project), jeopardizing the project. The government is alive to the situation, taking up the matter of violation of the Treaty with the Indian authorities, but without any positive results. In the very real possibility that India completes its Kishanganga project first, Pakistan would not have the required flow at full capacity for its Neelum-Jhelum project - estimated to be reduced by 30 per cent in the Neelum River - that would adversely affect the viability of the project too.

The current power shortage is restricting Pakistan's development and progress as the demand for electricity is increasing exponentially.

There will be a definite shortfall, particularly in hydro power generation, which is expected to add 1,260 MW by 2009-10.There is only one project of 84 MW (New Bong hydropower project) in private sector that may come on stream by then, besides the completion of Wapdas on-going hydroelectric power schemes. Thus, the power deficit in 2009-10 will put more demand on electricity in coming years.

More emphasis needs to be on hydro power generation with the objective of achieving sufficient and low-cost electricity, which has an identified potential of additional 40,000 MW. It is planned to increase present installed hydro generation capacity to 7,570 MW by 2015, in the second phase, and the Neelum-Jhelum hydropower is an important project of the plan period.

The project inherits a number of constraints, impediments and challenges. Given the fact that the project is located on a long stretch of hilly terrain in the AJK and that the site is near the LOC, major international engineering, procurement and construction (EPC) contractors, primarily from the western sources, are not willing to engage in the project construction. This has been demonstrated in poor response to the project tenders issued by the Wapda from time to time.

Second, for same reason, it has been difficult to get support of international lending agencies to finance the project. Lastly, the project is large and of a complex nature, first of its kind in Pakistan considering the underground layout. Almost 98 per cent of the project structure would be underground, including a 32-1/2 km long tunnel and the powerhouse. The tunnel will be constructed about 300 meters below the riverbed.

There are a number of other special features of the project that makes it attractive for investment. Jhelum River and its tributaries are 'early risers' as compared to Indus. The project, on completion, will thus generate power even during March-June period, when other hydropower stations, like Tarbela, operate at minimum capacity due to limited availability of water. The proposed power station will thus help to meet peak demand of electricity during the summer season.

The project is run-of-the-river type demanding relatively short gestation period, instead of a large multi-purpose storage project, like Tarbela and Mangla, which also cater to irrigation, water supply and flood control. The project is vital for the socio-economic uplift of the AJK area. The power station will be connected to the national grid through two 500-KV transmission lines of Wapda system up to Rawat. This scheme was approved by the ECNEC in December 2005 at a total cost of over Rs11 billion that Wapda is implementing currently.

The Neelum-Jhelum hydropower project was scheduled to commence in July 2002 and to be completed in June 2010. It has already been delayed for almost five years, and the government can ill-afford any further delay. There is no other option with the government, at this belated stage, but to salvage the project through total financing at its own.

Minister for Water and Power Liaqat Jatoi promised stated in February 2006 that if foreign funding would not be available the government would construct the project at its own.

Alternatively, it shall be prudent for the government to consider private sector investment in the project.

http://www.dawn.com/2007/06/18/ebr7.htm


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## Neo

*Lowering debt-to-GDP ratio​*
The government wants to reduce the national debt to GDP ratio to 20 per cent from about 50 per cent now over a period of 10 years, says Dr Salman Shah, advisor to the prime minister on finance. It translates into a rate reduction of 2.5 per cent of the debt per annum. This is a very desirable goal that would be helpful to the economy.

The debt reduction will help increase the investment and accelerate the rate of growth as more resources are diverted towards development to provide employment to the over 100 million people under the age of 25.

Lower national debt means less financial resources devoted to debt servicing and more funds diverted to development and social welfare. The total national debt has come down from an untenable over 100 per cent of GDP to 50 per cent.

Privatisation minister Zahid Hamid says that privatisation has so far brought $7 billion which has been used largely for debt reduction. The budgeted privatisation proceed for next year is Rs75 billion, 90 percent of which will go towards debt servicing as committed by the government.

As the major assets of the country like PTCL, Pakistan Steel and the refineries are privatised, the liabilities of the government should also be simultaneously liquidated. To set up such public sector projects, large loans, foreign and domestic were raised. And when these projects are sold off, the proceeds should be used to pay off debts and that should not been done through taxation.

In fact heavy foreign borrowings are a risk because, in case of devaluation of the rupee, they raise the rupee cost of the loans substantially. Already the rupee has come down from 3.33 to a dollar in 1953 to 60.62 for a dollar now. As the rupee gets devalued, the rupee value of the debt goes up and strains the governments resources.

Though rising in absolute numbers, external debt-to-GDP ratio is coming down gradually. But the domestic debt is increasing and along with it the cost of debt servicing The domestic borrowing is too heavy as the governments monetary needs are rising.

The domestic debt servicing cost is rising despite lower interest rate for official borrowing. For example ,the government has borrowed overRs90 billion from the national savings organisation at low interest. In spite of the clamour for higher interest rates on National Savings Schemes, the government has not increased the rates to help the small savers in the face of a surging food and consumer price inflation.

Servicing of foreign debt this year will cost Rs48.417 billion and the foreign loan repayment will be Rs54 billion-Rs2 billion less than the budgeted. Next year it will be Rs62.88 billion. The figure is rising.

The level of foreign debt was reduced after 9/11 when donors wrote off their small loans following 9/11 as Pakistan joined the coalition against terrorism. Some of the loans from Britain and the European countries were converted into contributions for education and social welfare. Some of the donors came up with other forms of relief and reduced the interest rates. In the case of the US, repayment of the small loans were suspended forsix years, where new loans were given. Now is the time to resume such repayments.

The budgeted figure for next year for borrowings from the central bank is Rs130 billion. Such bank borrowing through printing of extra currency has upset the governor of the State bank Dr Shamshad Akhtar as it adds to the money in circulation and aggravates the inflation. But the government finds it a handy process as, while it pays the interest on bank borrowing through one hand, it collects the same as dividend by the other hand as the State Banks sole shareholder. The StatBank wants the government to borrow money from the public including banks and reduce inflation.

The government is resorting to such heavy bank borrowing despite of the large tax receipts it will collect next year to the extent of Rs1.03 trillion. This is an election year and the government prefers to seek votes by making various gestures and offers and relying on bank borrowing to fund that.

The government should stick to the target of bringing down the national debt to 20 per cent of the GDP which will be truly helpful to the government and the country.

http://www.dawn.com/2007/06/18/ebr11.htm


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## Neo

*Computing manufacturing growth​*
IN 10 months of this fiscal year, the overall manufacturing sector grew by 8.45 per cent and the large-scale manufacturing sector (LSM) by 8.75 per cent.

In the entire last fiscal year, overall manufacturing had recorded a growth of 9.9 per cent and the LSM 10.68 per cent. The LSM constitutes roughly 70 per cent of overall manufacturing.

The government released these numbers in the Economic Survey, ahead of the federal budget. Till last fiscal year, the Federal Bureau of Statistics used to post monthly data on the LSM on its website. But the latest data for this fiscal covers the first quarter only.

How, then, the government worked out 8.75 per cent growth in the LSM for July-April FY07? And how it calculated the growth in overall manufacturing? The Economic Survey does not answer this. It only gives production data of 21 industries besides making some remarks on a few other industries not in the list of 21. Traditionally the Federal Bureau of Statistics compiles and makes public the large-scale manufacturing data of 100 items.

Table(below) lists the industries whose production data are given in the survey along with their year-on-year growth rates in July-April FY07. The industries shown in the table represent less than 40 per cent of the LSM. How the remaining 60 per cent fared in FY07 is not known. Some left-outs include the industries producing value-added textiles, steel, leather, agricultural machinery, footwear, food and beverages and pharmaceuticals.

The third quarterly report of the State Bank offers data on the performance of the petroleum industry in July-March FY07. The data shows that aggregate production of 10 items in this industry declined by 5.7 per cent. Since petroleum industry makes up 7.8 per cent of the LSM, this decline also affected the overall LSM growth, and consequently raised the import bill of POL products.

With the LSM growth slowing down to 8.75 per cent in July-April FY07, it is obvious that the growth target of 13 per cent set for this sector for this fiscal year would be missed.

There are many reasons for this slippage. These include shortage of power; higher interest rates; a decline in cotton production; lack of innovative modes of capacity utilisation, dwindling investment in capacity enhancement and a surge in international prices of fuel oil, iron and steel and palm oil etc.

For the next fiscal year, the government has set 12.5 per cent growth target for the LSM. Meeting this target requires a clear identification of the factors impeding growth of the LSM and a practical approach towards addressing them.

Power shortage across Pakistan is the number one reason for a slowdown in industrial production, says Mr S. M. Muneer, an industrialist and ex-president of the Federation of Pakistan Chambers of Commerce & Industry (FPCC&I).

Secondly, many industries are compelled to scale down their production levels due to very high interest rates. And most importantly, industrial activity is suffering in the absence of a one-window facility where all issues related to the utilities can be addressed timely.

Industrialists say that the current power crisis has forced hundreds of industries to lower production volumes. Owner of a pet bottle manufacturing company in Karachi told Dawn that from the start of the summer, he is using generators to maintain a baseline production.

But our generator collapsed one day and it took us three working days to get it repaired because the repairing company had to attend to hundreds of generators. They charged us Rs300,000, almost three times more than normal.

That high interest rates are hurting industrial growth is not a misnomer. However, the reality is that industries across the world sometime live in high interest rates environment. How an industry becomes cost-efficient and remains so is something that many companies in Pakistan need to learn to survive in this competitive era.

But it is also true that depending upon a constant tightening of monetary policy and consequent raise in interest rates should not be considered the only effective tool to curb inflationary pressure. Hoarding, over-charging, cartel making and other bad business practices coupled with food supply shocks and bad governance in state-run institutions have a big hand in boosting inflation. So, if the policy makers continue to tackle inflation more through curbing demand pressures, it would, of course, lower production levels.

Practically, the budget for FY2007-08 is so much inflationary that extra efforts would be required to contain inflation without causing a slowdown in the output. The one per cent surcharge on all imports, minus essential items, is sure to push up prices of imported items, including raw materials for industries. And because of multi-layered supply chain in operation, the actual increase in imported items would be much higher than the rate of surcharge imposed.

Immediately after the announcement of the budget, prices of steel and paper rose sharply due to the five per cent increase in sales tax. Businessmen say that the increase in the minimum wages would also add to the cost of production, but observes point out that in majority of cases, industrial workers are hired on contractual basis and paid much lower wages than the official benchmark. Unskilled labourers working at factories normally get Rs80-Rs100 a day.

However, the fact that the prices of raw materials would rise in FY08 and interest rates would remain high in the fight against inflation poses a big challenge for the industrial sector.

The budget does offer some relief for textile-spinning sector, but it does not envisage a big change in supporting infrastructure for the industries to grow. Manager of a Karachi-based multinational consumer products company told Dawn that he spent three months in vain to get an additional water connection officially. At last, we greased the palms of some officials and instantly got the connection. Now we are paying Rs1,000 per month and the arrangement is working well."

This and other such instancesand the fact that most industries nowadays purchase water from tankers, get power through generators and pay for the carpeting of the roads from their cofferspoints to the governments failure to provide a supportive environment for industrial production.

Similarly, there is a need for both the government and the private sector to work on ways for increasing capacity utilisation of large-scale manufacturing. Overall capacity utilisation was 66.3 per cent in the last fiscal year, which leaves enough scope for a continual increase every year. Automobiles, cement and fertiliser industries were good exceptions whose capacity utilisation rates were about 98 per cent, 88 per cent and 108.5 per cent respectively.

But textiles, the biggest industry, showed capacity utilisation of 59 per cent only. Worse were edible oil/ghee and sugar industries with capacity utilisation of 52 and 46 per cent only.

Clearly, these and other industries need to think of ways for boosting production for their own survival. And the government needs to provide them the required enabling environment and not financial subsidies that make them overly dependent on the state support.

http://www.dawn.com/2007/06/18/ebr15.htm


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## Neo

*Pro-poor measures: a mere trickle​*
Tossing a few coins to get rid of pestering beggars is a pro-poor act but does it help in their poverty alleviation? Does it impact all the beggars there are in the market place? Is this act in proportion to ones ability to help the poor?

Clearly, if the purpose is to address poverty, the act is most inadequate and out of proportion with the wealth possessed by the one who is giving a mere trickle.

For, the giver is merely getting the beggar off the back. The only lesson learnt thus far is not to show outrage at the one stretching out his hand and pestering while the giver is busy in personal wealth maximisation pursuits. It is now understood by many that the beggar should be accommodated and the best way to do that is to throw a coin or two on the begging palms.

It is this attitude that is reflected at the macro level too. Poverty issue is more of a nuisance and a distraction away from GNP growth rate and per capita income maximisation obsession of neo-liberals promoted in the country by the international lending agencies. So, the poor have to be accommodated as neglecting them visibly is not a wise politico-economic move. The more visibly they are accommodated the easier it is for the policy makers to defend their position on the poverty front, not that it might make a tangible dent in poverty in the country. Let us see how federal budget 2007-08 attempts to accommodate the concerns of the poor.

A closer examination reveals hardly anything significantly new. That government employees salaries are to go up by 15 per cent is nothing out of the ordinary. Since the current prime minister was inducted, government employees salaries increase has been a routine phenomenon. What has been the impact though? It is only the salaries of government employees that go up. Private sector organisations or autonomous units may or may not follow suit. In many cases, they do not. Private sector employees and those working for autonomous units are left high and dry as their annual pay increase is not even adjusted for inflation in many cases

As for government employees pay increase of 15 per cent, it may only account for inflation or may not as actual inflation rate is usually higher than the officially stated rate of inflation. So, in both these cases, even the government employees may not be experiencing real gains. Same goes for pensions increase. The policy makers, however, have a claim of 15 per cent salaries increase to make, however inadequate and limited it may be.

For private sector workers, old-age pension, old-age benefits, disability benefits, workers welfare fund have all been revised. Crucial question is the extent to which workers already benefit from these facilities, the numbers that benefit, and the extent to which employers contribute to some of these funds with ease. If there are schemes, they must work promptly for the benefit of all in the target group with active contribution of all the actors.

Up-gradation of government employees in BPS 5, 7, and 11 to BPS 7, 9, and 14 respectively is also limited to not just a few grades but to government employees. Employees of autonomous units do not usually benefit from these decisions even if they are in BPS. Budget announcements usually assume that what is true for a part is also true for the whole. They, therefore, commit fallacy of composition. And their claims need to be discounted.

Minimum wage increase from Rs4000 to Rs4600 per month may make newspaper headlines. The real marginal impact for a poor wage earner needs to be known. Another Rs500 per month may amount to another about 29.4 kg of good quality flour. But flour is not what one can go on consuming. If it was to be combined with other nutritious foods for a family of five or six, another Rs500 will vitiate in thin air in much less than a week leave alone housing, education, transportation, and healthcare, all of which are luxury expenditures for a wage earner of Rs4500 per month. So, while it may be a 12.5 per cent increase in minimum wage, by itself, it is not significant in these inflationary times. Its real impact is even less significant.

However face-saving a 12.5 per cent minimum wage increase may be for the policy makers, no country can boast of a minimum wage that amounts to only about 8-9 days of nutritious food for a family of six. Unless this threshold is breached, poverty will remain unaddressed. All nominal measures will tantamount to tossing a few coins in the hat of an earner who is reduced to a beggar as he is not compensated adequately for his/her toil.

As we lament over this minimum wage, it needs to be noted that even this minimum wage is not paid by many in various sectors. These include factory workers, informal sector, and domestic help. Factories have a tendency to run with contract labour in violation of many labour laws. While the government may increase minimum wage and be about the only one to feel content about it, does it try to ensure that, at least, this bare minimum wage is complied with by all employers who all have a tendency to pay as low as they possibly can?

Prices of pulses, sugar, and tea would be reduced at the Utility Stores whose numbers are planned to increase from 1000 to 5000 in a country of over 152 million. Out of this, at least, 60 per cent that is over 91 million would want to avail the lower prices at the USCs. A total of 5000 utility stores would mean about 18,200 people per utility store if they are accessible. A family size of six would mean over 3000 families per store. Is it a feasible proposition to provide access to all those who need to buy subsidized food and now medicines too from the utility stores?

So, in terms of percentage and if implemented, there would be an increase in utility stores by 400 per cent that is a good defence tool but the real impact would be as in the preceding paragraph. Further, solution to price hike is not in increasing the utility stores and providing more subsidy. Greater subsidy indicates not just a rise in the number of needy or continued unmet needs, it is also a sign of market failure. Market failures require effective government intervention otherwise it is also a sign of government failure.

That market prices of food items do not reflect their true scarcity value but are hiked indicates a market that is not free but that is being manipulated. If this goes on unabated, it shows the weakness of the government that cannot touch the manipulators as these are big power groups. These vested interests if touched can cause political harm to the incumbents. That market players distort but go scot-free and cannot be reined in by the government is its huge all-time political consideration based on expediency. An attempt is then made to compensate for this injustice by showing improvement on crucial scores in the federal budget that may end up in only face-saving percentage increases with little or no real impact on the financial crunch that people experience routinely before and after the budget.

http://www.dawn.com/2007/06/18/ebr16.htm


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## Neo

*Manufactured exports stand still for 25 years ​*
WASHINGTON: Pakistans market share in the worlds manufactured exports in 2005 was only 0.18 percent against Indias 0.95 percent and Bangladeshs 0.10 percent, according to international economic consultant Dr Parvez Hasan. Quoting World Trade Organisation figures, he told the Woodrow Wilson conference on Pakistans economy on Friday that Pakistans share of world manufactured exports had shown little improvement in the last 25 years, being 0.12 percent in 1980. Dr Hasan told the conference that Pakistans total exports in 2005 were $13 billion. Indias total exports, however, were $69.7 billion and Bangladesh had total exports of $7.3 billion.

http://www.dailytimes.com.pk/default.asp?page=2007\06\18\story_18-6-2007_pg1_6


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## Neo

*Pakistans economic reforms ended in 2003​*
WASHINGTON: Pakistans economic reform process came to a halt in 2003, which may be responsible for the countrys slow economic growth, according to Ambassador Manzoor Ahmad, Pakistans permanent representative to the World Trade Organisation.

He told a conference on Pakistans economy organised by the Woodrow Wilson Centre and the Fellowship Fund for Pakistan that if Pakistan desires progress, it would have to resume the reform process. He cited Pakistans 2007 exports at $17 billion, which Pakistan expected to increase to $45 billion in six years, requiring a growth rate that did not at present seem likely. He was of the opinion that if Pakistan entirely eliminated tariffs, its exports could instantly increase by 16 percent. Experience shows, he added, that free economies do better than managed ones, adding that the free market access given to Pakistani exports by the European Commission (EC) has since been curtailed. Consequently, Pakistans exports to Europe have gone down. In addition, the EC has ordered an investigation into dumping allegations against Pakistan. He stressed that Pakistan has a great deal of export potential cotton, milk, rice, wheat and sugarcane that is not being properly utilised. He said Pakistan is also a major exporter of high-quality ethanol, providing 20 percent of European demand.

Mirza Qamar Beg, Pakistans ambassador to Italy, said that Pakistan has no national export strategy. He said market access has become a buzz word for policymakers and may not have all the answers. He said perhaps it is the audacity of hope that makes Pakistan keep trying for the conclusion of Free Trade Agreements with the US and the EC. On the USs continued reluctance to give Pakistani textiles free market access, Beg said, Pakistan does not want concessions, it wants equity. He said Pakistan has several positives including Sindhs export potential and Balochistans largely unexplored mineral wealth. What Pakistan needs is skilled development and an improvement in the quality of its human resources, he added.

http://www.dailytimes.com.pk/default.asp?page=2007\06\18\story_18-6-2007_pg1_5


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## Neo

*Govt doesnt have funds to end power crisis: official​*
KARACHI: The power crisis can not be eliminated by government resources alone, because the costs are huge, amounting to US$16 billion by 2010 and US$40 billion by 2015. Also, the crisis will become worse in 2008 before it becomes better in 2009 and 2010, Advisor to the Prime Minister on Energy Engineer Mukhtar Ahmad has said.

There is, however, a relationship that clearly indicates the link between human development and power consumption, Ahmad said. He was speaking at the inaugural session of an international symposium about the Looming Power Crisis in Pakistan, organized by the Institute of Electrical and Electronics Engineers of Pakistan.

Other speakers said that the technical losses due to theft and other reasons were also one of the reasons for the crisis. If losses can be reduced from 12 percent to six percent in Sui Gas, the power sector could do the same too, they maintained. Speakers also called for a policy of conservation.

Ahmad outlined the future strategy of the government to deal with the present crisis, which he said, started in 2006. He claimed that by 2010 Pakistan would have enough power to meet its demands. Environmental considerations have to be taken into account before we venture into coal-produced power, Ahmad said. He gave the example of China and said environment there has become so polluted that you cannot see from one building to the other in Beijing. A test pit would be built at the Thar coal reserves (at a cost of US$30 million) to undertake studies to be provided to investors.

The gas pipeline from Iran was in its final stages and one part is already being built at a place 200 km from the border in Iran, Ahmad said. Earlier Engineer Munawwar Baseer Ahmad in his keynote address said that addition to power generation in the country has practically been zero in the past ten years. There was also a lack of coordination between Hydel, Thermal, Oil and Gas power production by the planners.

Baseer Ahmad said that Pakistan has the second largest coal reserves in the world after the US, but the country has not bothered to use coal to produce energy.

http://www.dailytimes.com.pk/default.asp?page=2007\06\18\story_18-6-2007_pg7_1


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## Neo

*KESC to get gas to generate additional 105 megawatts power ​*
KARACHI (June 19 2007): The federal government would provide 21-mmcfd gas to Karachi Electric Supply Company (KESC) for generating 105 MW of additional power. Addressing a press conference here at the Governor House on Monday, Sindh governor Dr Ishratul Ibad said that load-shedding coupled with technical faults in the transmission system have made the life of citizens miserable.

In view of such situation the governor met President Musharraf. The President convened a meeting involving all the stakeholders, which lasted for about five hours. During the meeting the President took immediate steps and passed orders on the spot. To give relief to Karachiites, the President agreed for an out-of-the way favour and sanctioned 21 mmcfd additional gas to KESC for generation of 105 MW power.

The governor said that work on faulty generator turbine ie Unit-IV had been completed and the KESC would be producing more power, and thus the masses would get some relief.

He informed that the peak electricity demand of Karachi was around 2400 MW while the shortage hovered around 100MW. He said that increased demand from the industrial, agricultural sector and households widened the demand-supply gap, as the supply did not increase in the matching ratio due to lack of investment in the sector.

Dr Ibad said that they had asked the KESC to avoid load shedding in the residential areas and also asked to defer infrastructure improvement work other than those of immediate nature. He also said that the government was giving subsidy on electricity and added that they have asked the KESC to provide break-up in the bills showing the subsidy given to consumer.

http://www.brecorder.com/index.php?id=579463&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Portfolio investment down $1.202 million ​*
KARACHI (June 19 2007): Portfolio investment in the country's equity market declined by $1.202 million to $859.811 million on June 15, 2007 from $861.013 million recorded on June 13, 2007 due to outflow by USA and Singapore investors.

According to data released by the State Bank of Pakistan (SBP), major inflows were witnessed by Hong Kong investors of $730,383, Japan $956,727, Switzerland $1,094,319, United Kingdom $5,691,524 and USA $1,841,244 on June 15, 2007. On the outflows side, $243,246 were withdrawn by Hong Kong, $730,576 by Singapore, $3,840,423 by UK. and $13,044,495 by USA investors on the said date.

http://www.brecorder.com/index.php?id=579484&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Engro Energy's Qadirpur power plant runs into snag ​*
ISLAMABAD (June 19 2007): Engro Energy's Qadirpur power project has run into snag as its two key players-Sui Northern Gas Pipeline Limited (SNGPL) and Oil and Gas Development Company (OGDC)-have declined to accept LDs (penalties), saying these were unwarranted and needed to be looked into.

Both SNGPL and OGDC want that Engro Energy should come up with such a formula that could equally protect the interest of all the parties to the project.

Business Recorder's investigations revealed that OGDC has referred a contract to SNGPL for signing a gas sale agreement (GSA) with Engro Energy but with a condition that it will only accept the LDs (penalties) clause if it takes- up the same to ensure that in the case of any failure, which is not on the part of the OGDC, will be acceptable to it.

SNGPL has also the same version on LDs. Its officials are not ready to accept any LDs beyond its system. Its officials had clearly mentioned their point of view at different meetings held to formulate an agreement for ensuring continuous supply of gas to the project.

Pakistan is in dire need of power and for plugging the growing gap in demand and supply it's desperately looking for different options. The officials of PPIB and other concerned department accept any proposal without any hesitation wherein investor ensures that he can produce power for increasing supply to WAPDA or KESC.

PPIB sometimes does not hesitate in violating its rules for award of gas to the party if it ensures that it can bring the project at power generation stage in comparatively less time. In Engro's power project's case the ministry took its proposal to Economic Co-ordination Committee (ECC) of the cabinet which accepted it even without any advertisement in the press.

This step itself is questionable. One wonder how Engro Energy's project was allocated 75 MMCFD permeate gas from OGDC's Qadirpur field without any press advertisement or competitive bidding. Another question was there no other party or group interested to invest in Pakistan to produce power at the conditions accepted for Engro's project. If so why SNGPL and OGDC or Wapda were reluctant to accept LDs conditions.

Permeate gas is an off-gas from Gas treatment facility of Qadirpur gas field. SNGPL and OGDC's point of view as to why they should accept huge LDs for which they were not responsible make sense. Their officials say that they will like to be held responsible for their individual act.

Engro's demand that the government should share penalty does, not seem working. The government can hardly have such facility for one when many others were already in queue for looking the same treatment.

One thing which both SNGPL and OGDC made clear is that they will neither accept LDs in their exiting form nor sign gas sale agreement GSA with Engro Energy for power generation.

http://www.brecorder.com/index.php?id=579498&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Temporary blips not to curb record overseas investment: Prime Minister ​*
ISLAMABAD (June 19 2007): Prime Minister Shaukat Aziz said on Monday that the temporary blips are not serious enough to curb record overseas investment strongly needed to sustain national economic growth.

"Despite some blips, which happen in any developing country, we have been vindicated because we have maintained our credit ratings, investment flows and growth momentum," he said in an interview with a foreign TV channel.

The demonstration of 20,000 people in a country of 160 million population is not what we would call a serious concern, he said. Referring to the fast increasing foreign investment, the Prime Minister said investments worth billions of dollars would come into the fields of power generation, hotel industry, stock market, cement and banking sectors in next few years.

Shaukat Aziz said that Pakistan needs overseas funds in power projects because demand is forecast to rise at an annual pace of as much as 12 percent in the next three years. He said demand for electricity rose 20 percent in the year ending June 30, more than twice the projected pace.

"People have the money to buy electricity equipment so, the demand has been much higher than all of us expected and we have to gear up now," the Prime Minister said. About reform process initiated by the present government, he said the reforms have been institutionalised to a large extent and codified in the law.

Outlining the strategy to further reduce price hike, he said agriculture businesses in dairy and livestock and the farming of minor crops like tomatoes, potatoes and onions would be encouraged to help reduce food prices.

The Prime Minister said Pakistan would take advantage of heightened overseas interest to sell $500 million in foreign-currency bonds next year through a Sukuk or conventional bond sale. The nation last month raised $750 million by selling foreign currency bonds in its fourth debt offering in three years, he said.

To a question about holding of next general elections, he said the government is fully committed to holding of upcoming general elections on time in a free and fair manner. He said former Prime Minister Benazir Bhutto, who lives in exile in Dubai and London, will "take her own decision whether to come or not, based on some legal challenges she has to overcome."

http://www.brecorder.com/index.php?id=579502&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Plan to make 24 model villages ​*
ISLAMABAD (June 19 2007): The government has completed a survey to make 24 villages across the country as 'Model villages' and by December 2008 the project would be completed, official sources said here on Monday.

Under the project the Ministry of Local Government and Rural Development would provide proper infrastructure including provision of water supply, electricity, street pavements, proper sewerage system, wastewater collection, household toilets and sanitation.

The sources said that proposed villages were 12 in Punjab, five in Sindh, three in NWFP, two in Balochistan and one each in federal capital and Federally Administered Tribal Areas (Fata). Out of 24 villages, he said, under Rs 142.05 million project, the survey in nine villages had been completed.

Giving details, he said, these proposed model villages included Kirri in distt Jehlum, Padhrar in Khushab, Jhok Bobo in DG Khan, Village Shah Nawaz in Tando Allahyar, village Haji Peerano in Thatta, Toru in Mardan, Paroa in DI Khan, village Lasht in Loralai and one village in Fata. He said one village each from AJK and Northern Areas would also be brought under the project in later phases, for which he added, additional funds had been allocated.

http://www.brecorder.com/index.php?id=579542&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'Major chunk of ADP for completion of on-going schemes' ​*
KARACHI (June 19 2007): Sindh Minister for Planning and Development, Shoaib Bukhari has said that Annual Development Programme (ADP) was the most important segment of the budget and the present government had taken the ADP allocation from Rs 7 billion in 2002-03 to Rs 40 billion in 2007-08.

Addressing a post-budget press conference here on Monday, he said that not only the allocation had increased by leaps and bounds but the releases and utilisation had also been around 90 percent.

He said that this time special emphasis would be on the completion of on-going schemes and a major chunk of the ADP had been set aside for this purpose. While lesser new schemes would be initiated so that the on going schemes could be completed to benefit the masses.

According to the details highest priority is accorded to Transport and Communication Sector, which is to receive Rs 7.66 billion or 19.55 percent of the total ADP which includes Rs 1.6 billion as rupee component for two aided projects.

Funds have also been allocated for "construction of Sindh Coastal Highway, new alignment of Super Highway to Sehwan and new alternate road from Khokharapar/Malir-Memon Goth - Darsano Chano-Haleji-Jhimpir-Jhirk-Mulla Katiyar-Umerkot". Rs 1.478 billion is kept as matching allocation for implementation of federal directives.

Rs 6.378 billion is given to special projects such as water supply schemes in Thar, improvement of infrastructure of city district government, Bhit Shah and Sehwan beautification plans, model villages and provision of Sui Gas for small towns/ villages. Rs 3 billion is allocated to water and power sector schemes, which includes Rs 431 million for 'Village Electrification Programme'.

Agriculture sector is to receive Rs 3.574 billion, in addition, Rs 1.15 billion as Foreign Project Assistance for 'On Farm Water Management Project' and 'Sindh Coastal Community Development Programme' will also be available. Physical planning and housing sector has been allocated Rs 3.105 billion for water supply and drainage schemes.

Education sector receives Rs 2.5 billion as against Rs 1.5 billion provided in ADP 2006-07. New engineering colleges at Jacobabad and Ghotki are to be set up. Health sector is to receive Rs 1.25 billion as compared to Rs 859 million provided in ADP 2006-07. Besides Rs 282 million as a Sindh Government share for three mega projects co-financed by Government of Pakistan and Government of Sindh in the ratio of 50:50 are also available.

Mines and mineral sector is given Rs 1.25 billion whereas Rs 1.1 billion is earmarked for Priority Programme (MPA schemes). Rs 179.182 million is earmarked for Prime Minister 'Thar Package' as Sindh Government share. The 'short term' package costing Rs 1.574 billion (with Federal Assistance of Rs 1100 million) is to be completed by June, 2008.

http://www.brecorder.com/index.php?id=579529&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Promoting SME clusters key to compete with Chinese products ​*
KARACHI (June 19 2007): Promotion of export-oriented SME clusters is the only way for Pakistani SMEs to compete with Chinese products, which have strong advantages in both cost and volume. This has been proposed in the final report (November 2006) on "Toward a vision 2030:direction of industrial development in Pakistan."

The study was conducted both in Japan and Pakistan by the Japan International Co-operation Agency (JICA) and International Development Centre of Japan.

Even if the level of required technology is low, the answer lies in producing highly sophisticated products to beat the Chinese products. The most efficient way to upgrade SMEs in Pakistan is to promote SME clusters, the study said.

With globalisation, the manufacturing industry in the world is going to be reorganised. If Pakistan takes easy way to rely on the principle of the free trade and does nothing to promote the local industry, the country might miss the bus and become an orphan in the middle of global competition. The country might face the following two alternatives in enhancing industrial development:

- To construct the framework of incentives for all groups of industry, and rely on the principle of free market economy or free trade in allocating economic resources of the country.

- To prioritise the importance of the industrial sectors for the country and concentrate on economic resources to promote these sectors in order to effectively utilise the limited resources of the country.

Referring to integral manufacturing, the study said that many segments of Pakistani market are already full of competitive and attractive Chinese products. When the trade with China expands in the process of globalisation, it is unavoidable that Pakistani products should face severe competition with Chinese ones in the domestic market. The Pakistani consumers are attracted to Chinese products due to their low prices. Even though the quality of these Chinese products is not fully satisfactory, it is expected that the demand for these cheap Chinese products might gradually expand in the future.

If the Pakistani manufacturers also produce cheap and low quality products to compete with the Chinese ones, these Pakistani products might not be able to survive in the market.

In fact, some Pakistani producers have already started making cheap and low quality goods by imitating the Chinese strategy or even by getting components from China.

The study did not consider this as an appropriate strategy for the Pakistani manufacturers. It is needed to avoid direct competition with Chinese products. If cheap, low quality and counterfeit products are easily available in the market, it is very difficult to promote high valued, high tech, and internationally competitive manufacturing in the domestic industry.

Pakistani should better introduce the strategy to focus on manufacturing highly valued, high quality products, and making its own brand recognised in the market.

The study has identified that the industrial infrastructure of the country is far less developed than that of the East Asian competitors. Poor infrastructure is the severe bottleneck for the promotion of automobile industry. The supply of electricity in Karachi is particularly unstable. Even inside the industrial estate the manufacturers suffer from frequent blackout.

It is extremely necessary to improve the condition of power supply at the industrial estates immediately. Moreover, in order to attract foreign investors in the automobile industry, the development of fully serviced industrial estates should be taken into consideration.

It identified Sialkot, Karachi, Gujrat, Wazirabad, Faisalabad, and Chiniot where major clusters exist. SMEs with less than 100 employees account for 99 percent of the 3.2 million companies operating in Pakistan. They dominate in major industries in terms of both the numbers of companies and employees. Micro enterprises with less than 10 employees have the biggest shares.

In Sialkot there are 2,500 surgical units employing 60,000 people. The number of sports goods units is around 300,000. In Karachi 170 leather units employ 5,000 people and 8,000 gem and jewellery units employ 250,000. In Gujrat 400 electric fan units employ 50,000 people and in Wazirabad 300 cutlery units employ 25,000 people. The 7,700 textile units in Faisalabad employ 100,000 people and in Chiniot 3000-4000 wooden furniture units employ 25,000 people.

Only 20 percent of Pakistani companies outsource production of parts. The main reason for outsourcing is to save labour costs. It is totally different from the case in advanced countries where the company outsources because of the specialisation and high level of technology of vendor companies, which enhance the competitiveness of products.

One reason behind this low level of vertical linkage is weak contract enforcement. Contracts are regularly breached. There are prevalent delays of delivery and payment. These kinds of practices significantly erode trust among companies.

To reduce the risk of default, companies in Pakistan are inclined to enter into long-term transactions with only selected customers or maintain excessive in-house production. Nevertheless, the study said: assisting clusters can contribute to the enhancement of the competitiveness of SMEs in clusters, as well as clusters as a whole, since clusters in Pakistan do have advantages of agglomeration such as easy availability of raw marterials and labour, and technology/information spill over.

On strengthening SME support channels, the study said that though various institutions exist, both public and private, for offering SME assistance, such as Smeda, EPB (now TDAP), SME bank and provincial small industries corporations, utilisation of their services has not been satisfactory.

http://www.brecorder.com/index.php?id=579528&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*5,000 more utility stores to be set up this year ​*
ISLAMABAD (June 19 2007): As many as 350 franchised utility stores have already been opened at various union councils of the country under President's Rozgar Scheme. Managing Director of Utility Stores Corporation of Pakistan Brigadier Hafeez (Retd) told PTV on Monday that licences have also been issued to 150 more franchised stores.

Around 200 applications were under process and soon they would be issued licenses. Moreover, 300 mobile utility stores are working in the far-flung areas of the country. The Utility Stores Corporation (USC) has chalked out an ambitious plan to establish 500 outlets per month during the current calendar year. He said that 5000 more utility stores would be set up in the country during the current financial year.

However the task would be completed much earlier before the end of the current financial year, he said. There would be 53 distribution centres across the country for ensuring prompt delivery of items. Meat selling has also been initiated in utility stores on trial basis in Islamabad and Lahore. If succeed it would be spread at other stores also, he added.

http://www.brecorder.com/index.php?id=579574&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Essential items on subsidised rates in Northern Areas ​*
GILGIT (June 19 2007): The Utility Stores situated in all districts of Northern Areas began to implement directives and incentives offered in the Federal Budget 2007-08 and public started benefiting from them as edible commodities were sold out on subsidised rates, it was officially stated here on Monday.

The management of utility stores in different points of region was in process of implementation and providing things on rates specified in the Budget and public heaved a sigh of relief and thanked the government for provision of such relief that soothed them in every day life ahead of inflationary pressure.

"I am thankful to the government who took good care of the common citizens and now we are benefiting from the facility of subsidised rates of commodities," a senior citizen Nadir Khan Numberdar told APP. Meanwhile, it was learnt that the government would further open utility stores in left over areas to provide essential items of daily use on affordable prices.

Official sources said the government aims at slashing prices of edible and daily use items so that relief could be provided to each and every citizen particularly dwellers of remote and far-flung areas.

http://www.brecorder.com/index.php?id=579575&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Enshaa expands investor group ​*
SHARJAH (June 19 2007): Enshaa PSC ("Enshaa"), a real estate development company based in the United Arab Emirates, has expanded its investor group following a successful private placement. Major shareholders include Emirates Investments Group, Majid Al Futtaim Group, and Abraaj Capital, says a press release issued on Monday.

Enshaa, chaired by Sheikh Tariq Bin Faisal Al Qassimi, has consolidated a number of companies and projects under its umbrella. Enshaa is constructing sister projects Emirates Financial Towers currently under development in the Dubai International Financial Center, and Karachi Financial Towers in Pakistan.

Enshaa is developing the Palazzo Versace resort and neighbouring Dl residential tower in Dubai Culture Village through its joint venture business Emirates Sunland Group and has previously acquired a 50 per cent interest in the Palazzo Versace resort on the Gold Coast, Australia.

"We are pleased to receive the Ministry's approval, which reflects its trust and confidence in Enshaa, and the value that we can add to the economy," said Sheikh Tariq after receiving news of the Ministry's approval of the capital increase.

http://www.brecorder.com/index.php?id=579460&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Pakistan's sports' goods enjoy unique position in world trade ​* 
SIALKOT (June 19 2007): Pakistan enjoys a unique position in the global trade with reference to sports goods and its main forte is hand-stitched inflatable balls and such masterpieces were being produced and exported for around 100 years now.

The Federal government had introduced a liberal policy for brining big boom in country's export and for the industrial growth and foreign investment. Both Federal and provincial governments had taken drastic steps for tracking the industrial sector on modern and scientific lines aimed at mitigating their problems on top priority basis.

The world trotters have introduced Sialkot as total export-oriented city of Pakistan. Since the place possess century old industrial heritage it has developed a unique export culture over the period and presently contributing 900 million dollars annually and strengthening the national exchequer.

The city has developed an unmatched industrial edge over other cities of the country especially in sports goods, surgical instruments, leather and leather garments, musical instruments and badges etc.

Sialkot the "City of Exports" has ever been playing a significant role in the development of the country by virtue of the yeomen skilled and craftsmen's services. The fame of Sialkot is not sudden and accidental it can be traced in the history and one can easily have a glance at the steady growing popularity of the city.

Exports from Sialkot are recognised all-over the world and there are certain industries in which the city had higher comparative advantage, which distinguishes it from the rest of the world. Sports goods industry especially the soccer balls industry and surgical instruments industry was playing a tremendous role in the exports of Sialkot.

About 85 percent of total production of soccer ball of the world comes from Sialkot, while all international brands are sourcing their supply of footballs from this export-oriented city and nucleus of cottage industry of the country. The sports goods industry is century old and had a special repute in producing hand stitched soccer balls and other sports products.

According to available statistic, the city is producing over 40 million balls annually worth 210 million dollars were producing by highly skilled male and female workforce of Sialkot. These balls were produced by a work force more than 60,000 including women folk and exported to world market by 1,000 plus entrepreneurs while the industry had totally been purged from the menace of child labour.

The soccer ball currently was facing serious threats in shape of "thermo-moulded ball" which uses medium end technology for producing a ball having most of the characteristics of hand-stitched ball. This new ball has been tested and played in a number of international football tournaments including world cup.

Keeping in view the gravity of the situation, Smeda under the directives of federal government had evolved a strategy for setting up a modern "Sports Goods Development Centre" (SIDC) in Sialkot at a cost of Rs 272.61 million for introducing thermo-moulded ball technology in Sialkot industry.

The prime objective of the project is to enable local sports goods sector to adopt new technology of mechanised ball, which is threatening to hand-stitched inflatable ball. The work on this project would be undertaken shortly and it would facilitate in sustaining Pakistan's in international market of hand-stitched inflatable balls in general and soccer balls in particular.

The surgical industry of Pakistan was enjoying globally the monopolistic position because no other country can produce surgical instruments in price ranging and quality. The surgical industry is manufacturing about 100 million instruments annually besides the industry is also manufacturing disposable instruments, which constitutes 60 percent of exports and reusable instruments that is 40 percent of the exports. There are about 1,200 small and medium surgical units functioning in and close to Sialkot with labour force of 60,000 workers.

Surgical industry represents manufacturers and exporters of surgical instruments, dental instruments, veterinary, pedicure and manicure items, tailor scissors, barber scissors and beauty saloon instruments with the total export of $.160 million annually.

To further accelerating the surgical industry, Punjab government had decided to establish surgical training institute and upgrading the existing Metal Industry Development Centre, Sialkot at a costing of more than Rs 300 million. The work on this project would be initiated during next fiscal year.

Similarly, under the directives of federal government Technology Up gradation and Skill Development Company (Tusdec) has also set up CAD/CAM centre at Sialkot equipped with the latest software, which is extensively used in industrial sector.

The step has been taken for making Sialkot self-sustained in designing and innovation and the centre would help the local industries especially Surgical and Sports goods industries.

Undoubtedly, the role of federal and provincial governments is tremendous in the modernisation and up gradation of industrial sector of Sialkot enabling the business community to work in pressure free environment and compete with the global market.

http://www.brecorder.com/index.php?id=579538&currPageNo=2&query=&search=&term=&supDate=


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## ARSENAL6

What about cars, electric stuff , computers Neo ?


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## Neo

*Foreign investment up 50pc ​* 
KARACHI: Foreign investment in Pakistan grew by 50.4 percent in the first 11 months of the 2006/07 fiscal year (July-June) to a record $6.28 billion, data from the State Bank of Pakistan showed on Tuesday. 

Foreign private investment during the July-May period was $5.63 billion, up 59 percent from $3.54 billion in the corresponding period last year, the central bank said. 

Out of the total, foreign direct investment was at $4.52 billion, up 40 percent from $3.23 billion in the year-ago period. 

Foreign portfolio investment, meanwhile, rose to $1.11 billon from only $313.4 million in the year-ago period. Of this amount, $857.1 million were invested in equities and $250 million in debt securities. 

According to the central bank, foreign public investment during the period stood at $654.5 million, up 3.2 percent from $634 million in the same period last year. 

The United States led in the list of foreign investors with total investment of $1.54 billion during the 11 months, followed by Britain with $1.14 billion, the Netherlands with $765.8 million, China with $711.1 million and the United Arab Emirates with $429.7 million. 

The communications sector attracted $1.55 billion, outdoing all other sectors, followed by banking and financial services at $896.7 million. In the 11 months, $479.6 million were invested in oil and gas exploration, and $388.5 million in the tobacco and cigarettes business.

http://www.thenews.com.pk/daily_detail.asp?id=61199


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## Neo

ARSENAL6 said:


> What about cars, electric stuff , computers Neo ?



What about it?


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## Neo

*Runaway deficit, falling exports 
Trade policy makers face an uphill task​*
KARACHI: The Trade Policy for 2007-08 is scheduled to be announced in mid July, soon after the finalization of the figures of internal and external trade. The minister is facing an uphill task to minimize the huge trade deficit the country is facing now-a-days.

The trade deficit has already crossed to well over $12.35 billion in the first eleven months (July-May) of the current fiscal year and it is still bulging and is likely to touch $14 to $15 billion by the end of FY 2006-07.

The previous trade policy not only failed to minimise the trade deficit but also failed to achieve export target last year despite the fact it was revised downward.

This year, country is facing failure in achieving export target once again particularly due to an alarming downfall in textile exports. According to the ministry sources the exports target seems next to impossible in present scenario.

The trade policy is aimed at boosting exports and containing the imports in order to arrest the trade deficit but unfortunately none of the trade policies announced by the present government proved to be successful in achieving the task. 

The most significant reason for the failure of the previous trade policies is not involving the stakeholders or hardly considering their proposals in formulating such policies.

The ministry of commerce has hinted out some significant changes in the basic structure of the trade policy this time as some more potential areas of exports would be focused.

Though some special sectors such as gems and jewellery, furniture, marble, granite, horticulture and surgical equipment were given emphasis in the previous trade policies but this time government is considering some special incentives for boosting their exports. 

The government has once again given the importance to signing more FTAs (free trade agreements) in the region and other parts of the world and to seek thrust of the policy preferential market access for Pakistans exports. 

The free trade agreements signed by Pakistan proved to be ineffective so far and countrys exporters have no success in increasing their exports and establishing any new markets in the countries Pakistan has agreed to do free trade. 

Other features of the policy would include focusing on improving the skills of the workers and improving the supply chains of various commodities and to announce some sectors specific initiatives as well.

The stakeholders have expressed their surprise over the inordinate delay in announcement of the trade policy as the federal budget has already been announced by the government and after the approval from the National Assembly all allocations would be finalized. The exporters especially in textile sector were of the opinion that the forthcoming Trade Policy 2007-08 may not be able to provide any immediate relief to them as ministry is not able to provide financial assistance or subsidies to them. 

Some of the stakeholders have said that the Trade Policy 2007-08 would be announced in less than four weeks time and the government is yet to initiate any dialogue with the export sector.

The government should formulate and implement an effective trade policy with the consultations of the export sector including SMEs in order to achieve the positive results otherwise the fate of the forthcoming trade policy would be no different from the previous ones, the stakeholders said. 

http://www.thenews.com.pk/daily_detail.asp?id=61205


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## Neo

*Quality IT professionals being groomed: Awais ​* 
ISLAMABAD: Federal Minister for Information Technology Awais Ahmed Khan Leghari Tuesday said that all the steps were being taken to groom quality IT professionals to meet the demands of ever craving and absorbing industry.

He was speaking at a two-day Microsoft Pakistan Developer Conference, 2007 here Tuesday.

The minister said Research and Development Fund (R&DF) under the ministry has been allocated to encourage the IT talented lot in the country.

He urged the youth to come forward and translate their innovative ideas in this field into reality.

Government takes every step to facilitate you, R&DF is meant for those persons who have technology access and practical ideas, he added.

Awais informed that certain IT products were in the pipeline, which would be approved by Microsoft, Pakistan, and funded by the ministry.

The Fifth Microsoft Pakistan Developer Conference 2007 is being held simultaneously in Karachi, Islamabad and Lahore with focus on new capabilities for businesses, developers and IT professionals. The proceedings of the inaugural session were relayed live via video conferencing to the venue in Karachi.

Leghari on the occasion said that there exists a great deal of potential in the realms of information technology. He stated that the government is keen regarding capacity building.

The Minister announced the programme is utilising R&D fund for training of IT faculty of the universities in order to help enhance the academic standard in this discipline.

He said that the IT faculty of some 20 universities in the country would be invited to a four-week course at LUMS from next week during summer vacations.

Leghari was of the view that the ICT industry has a great deal of potential for the youth of the country.

As many as 5,000 youngsters would be trained through this programme and thus they would be absorbed in the IT programmes in universities in the country.

The Minister said that he wanted the IT enrolment of students to go up.

He was of the view that a wrong perception is being created in the country that an IT graduate might not be able to get a good job like those offered to telecommunication engineers these days.

http://www.thenews.com.pk/daily_detail.asp?id=61208


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## Neo

*WB grant to develop mining in Balochistan ​*
ISLAMABAD: The World Bank and Pakistan signed an agreement on Tuesday for providing a grant of $750,000 to develop the mining sector in Balochistan.

The agreement was signed by Akram Malik, the Secretary Economic Affairs Division (EAD), on behalf of Pakistan and the World Banks Country Director, Yousapha B. Crookes, here at the EAD. Japans Ambassador to Pakistan Seiji Kojima also witnessed the signing ceremony.

We are supporting Pakistan to develop its mineral sector. We all know that Balochistan possess a lot of potential to attract investment, Crookes said while briefing reporters after the signing ceremony of the agreement. 

The proposed Mining Technical Assistance Project (MTAP) aims at investing in a package of initiatives designed to increase investor interest and to improve the regulatory environment in the mining sector. 

EAD Secretary Akram Malik said the major activities of the project would be in Balochistan and the proposed MTAP would focus on creating a modern administrative system based on access and transferability of rights, security of tenure, operating rights and obligations in particular: (i) the modernizing of mineral law, regulations and fiscal regime; (ii) incorporation of environmental controls and social mitigations; and (iii) mandates and functions of mineral institutions and agencies.

The proposed MTAP would assist the governments of Pakistan and Balochistan in implementing a strategy to accelerate sustainable mineral sector development by strengthening governance, transparency and capacity in the management of mineral resources. 

http://www.thenews.com.pk/daily_detail.asp?id=61209


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## Neo

*Corporate debt market touches Rs50bn mark​*
KARACHI, June 18: The corporate debt market, with an addition of Rs11.6 billion during the current fiscal year, has reached Rs50 billion mark, but is mostly dominated by commercial banks.

Bankers said Rs50 billion corporate debt market, created through the issuance of term finance certificates (TFCs), was much below the size of the corporate sector and far below than the Indian debt market.

Ten new TFCs worth Rs10.65 billion were issued during the current financial year, while last year, nine TFCs worth Rs10.4bn were issued. The total outstanding market of TFCs in Pakistan has reached Rs50 billion.

The rate of return on these TFCs was 1.50 per cent to 2.75 per cent over six- month KIBOR while three TFCs were issued by the commercial banks, said Mohammad Imran, an analyst at the First Capital Equities.

The State Bank has been emphasising on the depth of the secondary debt market which could play a vital role in the growth of the financial sector. Though the financial sectors growth boosted during the last four years, the debt market was still not reflecting the growth of the financial sector, as well as the rate of economic growth of the country.

As per data of June 9, listed TFC market is only 2.2 per cent of total commercial bank advances. Advances grew sharply during the last five years. Scheduled banks total advances, which were just Rs970 billion in June 2002, reached Rs2,127 billion in June 2006, and further moved to touch the figure of Rs2,358 billion till February 2007.

A similar picture emerges when the volume of TFCs is compared with the boost in the Karachi Stock Exchange. The comparison shows that the TFC volume is only 1.3pc of the total market capitalisation of the KSE.

Credit growth in the private sector also took a sharp jump during the last four years.

A lot of potential exists to deepen the debt market and more TFCs are expected to come in the next financial year, said Imran.

Three new companies -- Faysal Bank limited, First National Equities and Shah Murad Sugar Mills -- plan to float their TFCs in FY 2008.

During FY05, seven TFCs were issued by the commercial banks, out of 14. Similarly, in FY06, out of nine, three TFCs were issued by banks. This trend continued in FY07, as of the 10 TFCs, banks issued three, and analysts believe that in the financial year 2008 also, banks will continue to issue TFCs.

As these TFCs count in tier 2 capital of the bank for the purpose of capital adequacy and the banks which are facing problem in maintaining capital adequacy, above eight per cent (prudential requirement) are likely to issue TFCs, said Imran.The Allied Bank was the highest issuer of TFCs which sold TFCs worth Rs2.5 billion in December 2006. United Bank issued TFCs worth Rs2 billion, Bank Al-Habib issued TFCs worth Rs1.5bn, Jehangir Siddiqui and Co worth Rs1.1 billion, while the Orix Leasing issued TFCs worth Rs2.5 billion while the listing is expected before the end of the current fiscal.

http://www.dawn.com/2007/06/19/ebr1.htm


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## ARSENAL6

ARe they developing their own cars and electronic stuff like japan ?

Cus thats where the money is beside Oil Neo ?


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## Neo

*Pakistans Internet sector growing at 40 percent​*
ISLAMABAD: The national Internet communication sector of Pakistan is growing at 40 percent, said speakers during the Cisco Systems Incorporations 10 years celebration of Net Academy in Pakistan on Tuesday.

The celebration had 300 educationists representing Cisco academies from all over Pakistan.

Pakistan telecom boom has created around 300,000 jobs in the ICT sector. However this has also created a huge demand for professional and capable ICT workforce that can expertly meet the new age requirements of these positions. To fill the shortage of skills, creative public private partnerships need to be implemented immediately.

Majority of the participants were women in education comprising of principals, vice principals and teachers, administrators, as well as students of various schools and colleges. 

Muhammad Zaheer, Regional Director NAVTEC said, NAVTEC is very pleased to partner with Cisco, in order to support its mandate of producing ICT trained professionals that would make Pakistan a globally competitive nation. A competent technology workforce is a dire need for our country and NAVTEC through Ciscos Net Academy programme looks forward to training technology leaders of tomorrow  nationally and internationally. 

The Cisco Networking Academy Programme, established in 1997, teaches students networking and other information technology-related skills, preparing them for jobs as well as for higher education in engineering, computer science and related fields. Since its launch, the programme has grown to more than 11,000 academies in more than 150 countries with a curriculum taught in 11 different languages. 

Dr. Qasim Sheikh, CEO of R&D Fund under Ministry of IT said, Cisco commitment to increasing the impact of women on all aspects of technology in Pakistan is highly commendable. R&D fund strongly endorses such gender initiatives and is very pleased with the leadership being demonstrated. He also said that the R&D fund was very keen on soliciting proposals for the development of ICT with the country and promoting this cause within the country. In this regard the fund would encourage universities and colleges as well as other national enterprises to approach the fund with concrete propositions for national development through information communication technologies. The R&D fund under the ministry of IT has been specifically launched to facilitate various country transformational initiatives in information communication technology. 

http://www.dailytimes.com.pk/default.asp?page=2007\06\20\story_20-6-2007_pg5_9


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## Neo

*Swede firm, KWSB to install 40 megawatts power plant in Dhabeji ​* 
KARACHI: June 20, 2007: Water and Sewerage Board (KWSB) under the public private partnership would install a 40 megawatts power plant in Dhabeji that would start production in two years.

A renowned company from Sweden will make an investment of 100 million US$ in this project. Representative of company Ansar Zafar called on Nazim Karachi Syed Mustafa Kamal in his office on Wednesday to brief him in detail about the project.

Managing Director of KWSB Ghulam Arif and other officers of water board were also present on this occasion.

The water board at present receives 21 mega watts of power for Dhabeji pumping station from KESC. After installation of this plant water board would be able to save the amount it spends on power head besides earning million of rupees by selling extra power.

The new plant will also prove economical as it would cost less than the existing KESC rates.

Nazim Syed Mustafa Kamal asked the company to accelerate work so that the plant could be installed in minimum possible time.

He also said that the installation of this plant would not only prove beneficial for water board but would also enhance the production of power by 40 mega watts in the city which at present most needed.

Brecorder


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## Neo

*Sindh to have 400 megawatts power units ​*
KARACHI (June 20 2007): A Memorandum of Understanding (MoU) will be signed between Sindh government and an Australian group for establishing 400 mw power generating units. Sources in CM House told Business Recorder that the agreement would be signed in the first week of July and Sindh Chief Minister Dr Arbab Rahim would be the witness to this agreement.

Sindh Mines and Mineral Department had asked the Australia-based company, Cougar Energy (Pvt) Limited, to go ahead with the project. The process is almost complete and Sindh government has endorsed the project.

After MoU signing, it would take about three to four years for the electricity to be generated. The company will use underground gasification technology in generating power. In this system, coal is burnt underground and the exertion of synthetic gases is utilised for power generation.

The company would produce electricity from Thar coal by applying latest method of underground gasification technology that has been working successfully in three countries of the world, source said.

The advantage of using this technology is that the cost of power generation is reduced and the main beneficiary is the end user. In this technology, coal mines are not required, thus saving huge amounts required for setting up power plants.

Cougar Energy is planning to start the work at Thar Block-III. It completed the feasibility study on this site some four years back, in collaboration with a Dubai-based company.

The company would initially produce 400 mw and later the capacity would be enhanced to about 1,000 mw. The investment layout could not be known. However, the spending on this project would be in phases.

http://www.brecorder.com/index.php?id=579869&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Import of pulses set to shrink this year​*
KARACHI, June 19: The import of pulses is expected to fall to 260,000 tons during this calendar year, from 460,000 tons imported in the last year, due to improved local production of some pulses to meet the consumption demand.

It is estimated that the combine local production of pulses will be 907,000 tons as against the projected consumption demand of 1.16 million tons this year.

The demand for desi chic peas (black gram or kaala channa) is estimated to be 650,000 tons, while the local production stands at 700,000 tons, leaving a surplus of 50,000 tons. Last year, the production was just 300,000-350,000 tons.

An estimated 15,000 tons of green mung beans will be surplus this year as its production is estimated at 125,000 tons as against consumption of 110,000 tons.

Around 95,000 tons of lentils (masoor) are estimated to be imported this year due to low production of 25,000 tons, while demand stands at 120,000 tons.

According to a study carried out by the Karachi Wholesale Grocers Association (KWGA), some 55,000 tons of black matpe (mash) will be imported this year due to low production of 20,000 tons as against consumption of 75,000 tons.

Some 30,000 tons of kabuli chic peas will be brought from various countries to meet the consumption of 60,000 tons as compared with local production of 30,000 tons. Around 43,000 tons of Red kidney beans (lal lobia) will be imported to meet the local demand of 50,000 tons while domestic production is estimated at 7,000 tons.

Consumption of yellow peas/don peas is estimated at 100,000 tons which will be entirely imported due to negligible local production.

Desi chic peas accounts for 77 per cent of aggregate production and 57 per cent of aggregate consumption of pulses in the country, the KWGA study says. Green mung peas makes up for 14pc of production and nine per cent of consumption.

Lentils accounts for three per cent of production and 10 per cent of consumption. Black mapte makes up for two per cent of production and six per cent of consumption. Kabuli channa chic peas accounts for three per cent of production and five per cent of consumption.

This year the country has enough desi chic peas, previously it has been imported from Australia, Canada, Ethiopia and Tanzania. Green mung is imported from Australia, China and Myanmar, while import of kabuli channa is met from Myanmar, Iran, India, Turkey, Australia and Canada. Masoor arrives from Canada, Australia, India, Turkey, Nepal and Ethiopia. Black mapte has been procured mainly from Myanmar with little quantity from Thailand.

China is preferred as main supplier of kidney beans while imports are also managed from Ethiopia and Myanmar in case of short crop in China. Canada mostly supplies yellow peas while some quantities from France and Ukraine are also imported.

The study notes that pulses are marginal crops mainly grown in rain fed areas of Punjab, upper Sindh, Bannu and D.I. Khan with low input use levels.

The government last year had provided a subsidy of Rs8 per kg on import of one million tons of desi chic peas to meet the demand and stabilise the prices in local markets.

This year due to surplus production some 25,000 tons of desi chic peas had been exported to the Middle East and Gulf countries despite 35 per cent export duty on pulses. However, the government had put a ban on export of pulses in order to stabilise prices.

http://www.dawn.com/2007/06/20/ebr1.htm


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## Neo

*Trade and commerce can enhance Pak-US relations: Kasuri *​
WASHINGTON (June 21 2007): Foreign Minister Khurshid Mahmood Kasuri met with US Secretary of Commerce Carlos Gutierrez on Wednesday and discussed the critical role, and urged that the commerce and trade could enhance the US-Pakistan relationship.

Khurshid Kasuri spoke of the tremendous potential that exists for further bolstering of bilateral commerce, and said the greater access for Pakistani products in the robust US market would further increase the volume of Pakistan's exports and help the country achieve and sustain higher economic growth. Pakistan triggered twice of its exports to the world in the last six years. The foreign minister is in Washington in continuation of high-level contacts between the United States and Pakistan to further reinforcement of their wide-ranging relationship.

The Commerce Secretary Gutierrez agreed that the two governments share the objective to strengthen the relationship and added the US attaches great importance to its trade and economic ties with Pakistan. The United States, he said, is appreciative of Pakistan's counter-terrorism efforts along the Afghan border.

They also discussed progress towards establishment of reconstruction opportunity zones, saying these would generate economic opportunities for people in disadvantaged areas. They also discussed progress towards concluding a bilateral investment treaty and free trade agreement between the two countries. The US-Pakistan relationship has expanded significantly in recent years to several areas including trade and economy. Pakistan's exports to the United States totalled $3.6 billion last year while its imports from the US were under $2 billion.

http://www.brecorder.com/index.php?id=580563&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Turkish traders invited to invest in AJK ​*
ISLAMABAD (June 21 2007): Prime Minister of Azad Jammu and Kashmir (AJK) Sardar Attique Ahmed Khan on Wednesday invited Turkish industrialist for joint investment in quake hit areas of AJK.

Addressing at a function organised by MUSIAD (NGO) in Istanbul (Turkey), he said that Pakistan is a country with growing economy and there are huge scope for foreign investors to invest in different sectors.

He invited the top business persons of Turkish international industrialist conglomerate known as (MUSIAD) to visit AJK and explore the areas of investment on partnership basis, says a fax message received here. Sardar Attique said "Even the chronic political disputes get settled all over the world through the agency of big businesses and they are enjoying the strongest political clout globally".

Attique said that MUSIAD has accreditation with all global financial organisation like the World Bank, Asian Development Bank, Islamic Development Bank and other financial institutions. Prime Minister highlighted the vast scope for investment in hydro-power generation, tourism and infrastructure in AJK.

He thanked the MUSIAD for their medical services in the quake-hit areas of AJK and appreciated surprising industrial growth of Turkey. MUSIAD President, Dr Omar Bolog in his welcome address said that his organisation has its own foreign relations commission and training facilities for business men. He informed that MUSIAD has thus so far held over 300 international industrial fairs. Dr Omar Bolog assured MUSIAD's economic activities to expend in Pakistan and Azad Kashmir.

http://www.brecorder.com/index.php?id=580626&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Balochistan advised to find new income sources ​*
KARACHI (June 21 2007): The government of Balochistan must find new and dependable sources of income to get rid of dependence on federal divisible pool for meeting its financial needs.

Balochistan Economic Forum (BEF), a private sector organisation, which has played an important role in attracting foreign investments into the province, gave this advice to the government of Balochistan on Wednesday on the eve of the provincial budget presentation in the Assembly on June 21.

The BEF said: "When the federal government's revenue collection was shrinking, due to the persistent pressure of the private sector for more and more incentives, the provincial government (of Balochistan) would have to find alternative sources to meet the growing needs of the socio-economic development in the province."

In a handy document containing suggestions, it said that with the rapidly changing economic scenario of the country, it would be difficult for the government to collect sufficient revenue through the old methods of revenue collection.

It was, therefore, necessary that Balochistan government widened its revenue base by encouraging direct foreign investments into the province and seeking international economic aid agencies' and multilateral institution's support for the socio-economic development of the province, with the cooperation of the federal government.

It said that the political leadership in Balochistan should strongly support foreign direct investment and, more importantly, also ensure that the message is reflected in the bureaucratic policies and procedures. The foreign investors would happily invest in Balochistan, provided they were reciprocated with the same business-like cooperation based on good bargains and prudent investments.

Foreign investors, who were willing to invest in Balochistan, were giving less importance to the extraordinary incentives offered to them. Instead, they found high returns, due to cheap labour and raw material available in the province, quite attractive.

The BEF said that all incentives and planning for industrialisation in the province was based on incentives and tax relief provided by the federal government for a certain period. In the case of Balochistan, the industrialists rolled off their units when the period of relief in taxation was over. The government should, therefore, mobilise all its energies and resources to gear up the industrialisation process in the province in order to cope with the existing economic problems.

"Active and aggressive private sector development is one opportunity of enormous importance to Balochistan in particular for accomplishment of economic development in the province. Provincial government should take appropriate steps on priority basis for the exploitation of natural resources, as the delay in effective use of resources will keep industrial activities in Balochistan at low profile."

Investment scenario in Balochistan, the BEF said, was bright because of foreign investors' interest in economic exploitation of abundant resources in mineral, fisheries, agriculture & livestock sectors, and the province could develop into a major trading and business centre, as its potential is now widely understood. It received more attention with the establishment of Economic Cooperation Organisation (ECO) as Balochistan provides a gateway to all ECO member countries, the BEF added.

In the opinion of BEF, the political leadership of Balochistan will have to wage an economic war on all possible fronts to bring economic and industrial revolution and improve the quality of life in the province. A political and professional initiative on the part of the provincial government at this stage would make it able to prepare sound economic foundation for the province. The need of the hour is to develop the necessary infrastructure with the help of international development and supporting agencies that could help boost the private sector investments in the region and to attract the foreign investors to explore and utilise the natural resources available in the province.

The economic assistance has become very competitive as more and more under-developed countries are approaching concerned institutions for support, as such a very skilled marketing strategy is required even to win over the required economic assistance during the present time, the BEF said.

http://www.brecorder.com/index.php?id=580564&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*12,500 megawatts plants start trial production by year-end ​* 
KARACHI (June 21 2007): Coal fired 12500 MW power plant near Thatta with Chinese collaboration will start trial production by the end of this year. This was stated by out-going commercial consular of China Zhao Qingmao at a meeting of Karachi Chamber of Commerce and Industry (KCCI) on Wednesday.

He said that the power plant has been established on BOT basis. The plant will start full-fledge power production by 2008. He said beside this, China National Machinery Company is negotiating with City District Government for establishing power units at different places in the city.

He said that the company is also negotiating to establish solar power plants in the country Incoming commercial consular of China Wang Qihui appreciated the fast ongoing development projects in the city and said that this indicates economic development of Pakistan.

Speaking on the occasion, former President KCCI, Siraj Kassim Teli said that Pakistan and China both enjoy best economic and cordial relation and added that people quote Pakistan-China relationship as example in the world.

http://www.brecorder.com/index.php?id=580594&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*India to push pipeline deal with Iran, Pakistan ​* 
NEW DELHI: India will push for an accord on a multi-billion dollar pipeline to transport gas from energy-rich Iran through Pakistan by mid-July, oil minister Murli Deora said Wednesday.

On June 27th there is a bilateral meeting (between India and Pakistan) and on 28th and 29th there are trilateral meetings in New Delhi, Deora told reporters, the Press Trust of India news agency reported. We have to strike the deal by mid-July, he said postponing an earlier date he had set for June. New Delhi and Islamabad will meet to sort out differences on transportation, tariff and transit fees first and then follow it up with discussions with Iran, Deora said.

Oil ministers of the three countries would then meet in July to ink the framework agreement on the 7.4 billion dollar pipeline, he said.

The 2,600-km (1,600-mile) pipeline from Irans giant South Pars gas field will initially carry around 60 million standard cubic metres per day of gas Talks on the proposal started in 1994, but have been stalled because of technical and commercial issues, apart from objections by the United States, which has locked horns with Tehran over its atomic programme. 

http://www.thenews.com.pk/daily_detail.asp?id=61283


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## Neo

*Economy may face mounting pressure: C/A gap, M2 growth​*
KARACHI, June 20: The mounting inflationary pressure, widening current account deficit and very high monetary growth in the outgoing year may create serious problem for the government in the next fiscal year.

While the government is under serious criticism over slow export growth, the State Bank on Wednesday said that the current account deficit rose by 60 per cent during the eleven months of the outgoing fiscal year.

The current account deficit reached to $7.379 billion during the period under review compared to $4.602 billion in the corresponding period last year. The high current account deficit with poor export growth would put more pressure on the economy and the government would have to borrow more and sell state assets through privatization to meet the deficit in the next fiscal year.

The supply of excess money fuels inflation and has resulted in the high growth of monetary assets (M2) till June 9, 2007.

The target for the full year was 13.46 per cent while the M2 grew by over 16 per cent in just 11 months adding Rs89 billion into monetary assets.

The trade deficit reached to $9.124 billion while the balance of goods and services during the July-May 2006-07 stood at minus $13.401 billion.

The State Bank has been showing satisfaction over the monetary growth and putting responsibility on the high foreign inflows in the form of investment and remittances from the overseas Pakistanis.

However, analysts said the new budget 2007-08 carried huge spending plan which would ultimately push inflation further higher. The government has admitted that the main inflation for 2006-07 would remain at 8 per cent.

Analysts said the new budget of Rs1.9 trillion would again not allow the government to curtail the monetary growth and inflation.

The inflation, which is termed an additional tax, could not be brought down to 6.5 per cent in the outgoing fiscal. There is no hope that it will start declining in the next fiscal year, analysts added.

They observed the export sector performance had not been satisfactory in view of massive subsidies and packages announced for various sectors in the outgoing year. Despite the fact, the government in the new budget announced more incentives for export-oriented industries particularly for textile sector. But it did not take any concrete measures to curtail import bill, which is the real reason for high trade deficit.

http://www.dawn.com/2007/06/21/ebr2.htm


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## Neo

*Electricity shortfall declines to 163MW​*
ISLAMABAD, June 20: The electricity shortfall in the country has declined to about 163MW mainly because of increase in hydel generation and fall in temperatures, an official statement said on Wednesday.

The power supply on Wednesday peaked at 13,335MW against a demand of 13,498MW, leaving a shortfall of 163MW, said the statement issued after a meeting presided over by Minister for Water and Power Liaqat Ali Jatoi.

The shortfall had surged to 2,900MW early last week when temperatures touched this years peak amid closure of more than two dozen units of the power stations. The demand was computed at 17,421 MW on Tuesday last against maximum supply of about 14,530MW.

The meeting was informed that the hydel generation has increased from 5,000MW to 5,600MW and thermal from 2,600 to 2,800MW, in addition to maximum generation by the independent power producers (IPPs).

The ministry said there was surplus capability of power generation on Monday and Tuesday as more units started production on the back of higher releases for irrigation and a simultaneous drop in temperatures. It said the load management in some parts of the country under Wapda system was only due to distribution problems.The meeting was also informed that Wapda was providing up to 800MW of electricity to the Karachi Electric Supply Corporation (KESC) in peak hours against its commitment of 600MW. The statement said there was no more load shedding in Karachi as its 180MW Bin Qasim plant was back in production from Tuesday but some areas might be facing some problems because of distribution issues, necessary repairs and overloading of transmission system.

THERMAL POWER PLANT: Meanwhile, Sapphire Electric Company Limited (SECL) on Wednesday announced to have achieved financial close for its 225MW thermal power plant to be situated at Muridke.

http://www.dawn.com/2007/06/21/top7.htm


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## Neo

*Indus Motor raises car prices by Rs 54,000-80,000​*
KARACHI: The Indus Motor Company Limited has raised prices of all its brands of cars by Rs 54,000 to Rs 80,000 throughout the country from Thursday (today) following the decision of the federal government to levy five percent withholding tax on locally manufactured vehicles.

The federal government, through the Finance Bill 2007, imposed a five percent withholding tax and one percent surcharge duty on all local car manufacturers.

An industry source said, Pak Suzuki, Honda Atlas, and Dewan Farooq group are also considering to raise prices of their vehicles from six percent to l2 percent after the budget speech.

Most of the authorised dealers said that they have closed bookings of the vehicles, as the companies are not ready to pay the withholding tax and surcharge from their own pockets.

Indus Motor increased the price of Toyota Corrolla XLi by Rs 54,000 to reach Rs 939,000, Corrolla GLi by Rs 69,000 to make it Rs 1.38 million, Corrolla 2.0D by Rs 63,000 to equate Rs 1.102 million, Corrolla 2.0D SE by Rs 68,000 to make it Rs 1.187 million, Corrolla 2.0D Saloon by Rs 78,000 to Rs 1.357 million, Toyota Altis IM by Rs 75,000 to Rs 1.379 million and Toyota Altis IA (t) by Rs 80,000 to Rs 1.399 million.

Similarly, the price of Daihatsu Cuore has been raised to Rs 4,61,000 from Rs 434,000 and Cuore AC CNG to Rs 503,000 from Rs 474,000. Cuore Automatic prices have gone to Rs 483,000 from Rs 464,000.

Industry sources said the own-money of all the makes of Toyota has gone up by Rs 50,000 to Rs 70,000. The own-money on most of the Toyota vehicles was almost zero before the budget announcement, they added.

H M Shahzad, chairman All Pakistan Motor Dealer Association (APMA) said, the decision of the federal government to restrict auto dealers to import only three-year old cars has paralysed them to compete in the local market.

The automobile industries will now have a free-hand to raise the prices of cars on their will, he added.

He demanded from the government to withdraw its decision of imposing three-year old vehicle condition and allow them to import upto five-year old vehicles. 

We were expecting the government would accept our demand to allow the import of vehicle without any transfer of residents or luggage and gift scheme, but the government has impost this three-year condition to support this raise in prices, he said.

Car sales stood at 146,784 units during the first eleven months of the current fiscal, 4.79 percent above the last years sale of 140,071 units. 

Large slides have been witnessed in the sales of Honda City and Honda Civic during the period mentioned. Sales of Honda City have fallen by 31.91 percent to 10,149 units from 14,907 units last year. Civic managed to attract only 5,936 buyers compared to 11,657 during the same period last year. 

However, the sales of Daihatsu Cuore, Hyundai Santro, Toyota Corolla, Suzuki Cultus and Suzuki Alto have been rising.

http://www.dailytimes.com.pk/default.asp?page=2007\06\21\story_21-6-2007_pg5_1


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## Introvert

* Pak furniture exports to be increased to $ 1 billion mark *

Pakistan plans to increase its furniture exports to $ 1 billion by the year 2015 from the existing level of $ 15 million.

" Government's strategy to maximise the exports of non-traditional items like furniture will definitely help achieve this lofty but doable goal," Chairman of newly formed company, Furniture Pakistan, Shahbaz Aslam told a news conference here Saturday.

He said that the company, formed on the basis of public-private partnership, would spend Rs 590 million for the establishment of furniture training institute to produce skilled manpower.

He said, initially, training institutes would be established in Chiniot and Peshawar which would produce skilled manpower and while collaboration would be sought from Germany and Italy to impart training to the master trainers.

Out of the total funding of Rs 590 million, Rs 150 million were allocated for setting up of company whose board members would mainly be draw from the private sector.

Shahbaz said that Pakistan with only 3 percent area under forests is lagging behind other countries in the world which have 25 to 60 percent area under forest cover.To avoid further de-forestation, Pakistan would have to import wood for which government has reduced duty from 25 percent to 5 percent while machinery import has been made zero rated in the budget 2007-08.

To a question, he said that Middle East would be Pakistan's target market because the European standards are high to be met.

Speaking on the occasion, Dr. Warren Weinstein, Country Director J.E Austin Associates said that first ever timber testing laboratory would be established to test the quality of wooden furniture so that its credibility for the exports could be enhanced.

The company would develope its linkage with Germany, United Kingdom , Italy and other countries. 

He appreciated the role of Pakistan Council of Scientific and Industrial Research (PCSIR) Laboratories in developing the industries in the country.

Zonal Chairman FPCCI, Azhar Saeed Butt and Sh. Muhammad Ali, also spoke on the occasion.

http://www.app.com.pk/en/index.php?option=com_content&task=view&id=11019&Itemid=49


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## Introvert

*July-May textile exports reach $9.816 billion*
ZAHEER ABBASI
ISLAMABAD (June 23 2007): Export of textile products reached 9.816 billion dollars mark in the first 11 months (July-May) of the current fiscal, up 6.04 percent from 9.257 billion dollars over the same period last year while the country's food import bill touched 2.537 billion dollars during the period.

Official figures released by the Federal Bureau of Statistics (FBS) on Friday showed that export of almost all the products, excluding raw cotton, cotton cloth and bedwear recorded growth during the period under review over the last year. On monthly basis the export of textile products witnessed growth of 4.84 percent to 950.821 million dollars during the month of May as against 906.944 million dollars during the same month last year.

Detailed analysis of the commodities showed that export of readymade garments witnessed a growth of 5.35 percent to 1.254 billion dollars during the July-May period against 1.190 billion dollars over the same period last year. A growth of 6.16 percent in export of readymade garments was recorded in the month of May over the same month last year.

Statistics showed that the export of knitwear also recorded a growth of 12.94 percent during July-May to 1.773 billion dollars as against 1.570 billion dollars last year. A growth of 4.12 percent in export knitwear was recorded in the month of May over the same month last year.

Export of raw cotton, cotton cloth and bed wear recorded a negative growth by 21.73 percent, 410 percent and 3.10 percent, respectively, during July-May over the period last year.

Export of cotton yarn was up by 4.21 percent, cotton carded or combed 3.92 percent, yarn other than cotton yarn 82.59 percent, towels 2.43 percent, tents, canvas and tarpaulin 99.06 percent, art, silk and synthetic textile 122.12 percent, made-up articles 13.45 percent and other textile materials 17.42 percent during the period under review over last year. Meanwhile, food import bill jumped 2.537 billion dollars during the 11 month of current fiscal, up by 1.75 percent from 2.494 billion dollars over the same period last year.

Among food items, import of milk cream and milk food for infant witnessed an increase of 31.01 percent, dry fruit and nuts 19.15 percent, spices 3.20 percent, soyabean oil 75.56 percent, palm oil 26.13 percent, pulses 54.83 percent, and all other items 7.33 percent during the period under review.
http://www.brecorder.com/index.php?id=581320&currPageNo=1&query=&search=&term=&supDate=


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## Introvert

*Portfolio investment hits record $906.774 million*
RECORDER REPORT
KARACHI (June 23 2007): Portfolio investment in the country's equity market has for the first time crossed the $900 million mark to reach $906.774 million on June 22, 2007. Analysts say that continuous inflow of portfolio investment in local equity market shows increasing interest of foreign investors to invest here and it is also their trust in this fast growing economy.

According to the figures released by the State Bank of Pakistan, total portfolio investment as represented by Special Convertible Rupee Accounts (SCRAs) reached $906,774,748 on June 22 due to massive inflow from Hong Kong and UK.

Massive inflow of portfolio investment was witnessed during the current month as $151.280 million in this account came from June 01 to June 22, 2007, while $39.737 million increase in SCRAs balances was witnessed in last three days, and $7.083,644 came only on June 21, 2007.

The recent increase from Hong Kong and UK on June 21 was $3,521,099 and $9,089,045 respectively. However, their was a net outflow of $5,305,288 by investors of USA on the same date.

From June 1 to June 21, the investment from USA was at the top at $97,422,695, followed by UK $66,036,721, Japan $6,823,239, Hong Kong $4,553,643, France $2,553,782 and Qatar $34,951. On the other hand, the outflow of $13,909,797 was registered by Switzerland investors, $1,065,136 by UAE, $5,613,792 by Singapore, $135,318 by B V Island, $59,258 by Luxembourg and $14,701 by Germany.

In overall position, from July 1, 2006 till date, US investors were at top as their investment reached $680,822,387, followed by UK $202,282,733. The investment from Netherlands reached $44,124,443, Hong Kong $31,340,071, Kuwait $14,176,417, Singapore $7,245,229, Germany $7,111,896, Japan $7,074,298, France $376,040, Bahrain $127,018, Qatar $14,926 and Oman $2,823.

The outflow of SCRA balances from July 1, 2006 till date (June 21, 2007) was $72,373,368 by Switzerland, $6,916,235 by Australia, $1,852,249 by B V Island, $3,224,050 by UAE, $1,073,665 by Luxembourg, $781,330 by Bahamas, $497,210 by Malaysia, $468,835 by Guernsey, $423,696 by Saudi Arabia, $261,493 Liberia,$51,401 by Denmark.

Muhammad Sohail, a leading analyst and Director Equity Broking, JS Global Capital, said that there was a massive flow of liquidity in the world and the investors from all over the globe were now investing in the emerging markets in the world. Pakistan is one of emerging markets in the region with its GDP growth of 7 percent, which is attracting more foreign investment in equity market. He said that India and Vietnam are the other two emerging markets in this region.
http://www.brecorder.com/index.php?id=581276&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*One-dollar shop programme: export order from US increased ​*
LAHORE (June 22 2007): The response of 'One Dollar Shop Programme' is very positive and the export order from USA has been increased up to Rs 500 million so far. Provincial Minister for Industries, Muhammad Ajmal Cheema said this while talking to a delegation at his office here on Thursday, according to a hand out.

The minister said that a number of industrialists have shown interest in 'One Dollar Shop Programme', therefore, the sphere of the programme will be broadened soon. He said that more seminars are being organised for awareness of this programme, in which investors will be provided necessary information about the utility of this programme and manufacturing of various export items.

He informed that exhibition regarding 'One Dollar Shop Programme' will be arranged at Lahore Chamber of Commerce and Industry where new items will be displayed for the interest of foreign investors.

http://www.brecorder.com/index.php?id=581017&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*Pak-US trade ties expanding: Hunt ​*
LAHORE (June 22 2007): Principal Officer of the US Consulate Lahore, Bryan D Hunt on Thursday said that trade between Pakistan and USA was on the rising trend and had surged by 40 percent.

While addressing the business community at the zonal office of the Federation of Pakistan Chamber of Commence and Industry (FPCCI), he said that exports to USA from special industrial zone being set up in Pakistan would further help increase exports to the USA.

The USA is not only investing in the special zone but also spending billions of dollars in health, education, and earthquake relief. Export of fruit is also being actively considered and hopefully, the mango exports to the USA would commence from the year 2008.

http://www.brecorder.com/index.php?id=581016&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*German firm wins diesel power plants contract ​*
FRANKFURT (June 23 2007): MAN, the German engineering conglomerate, said on Thursday that its subsidiary, MAN Diesel, had signed a deal with Pakistani Atlas Group to build diesel power plants in Pakistan.

The co-operation agreement "covers the development, design, construction and maintenance of four turnkey diesel power plants from 120 to 225 megawatt in size, to be completed by 2012," said MAN Diesel chief Georg Pachta-Reyhofen.

The four power plants were all to be built in the north of Pakistan, near the city of Lahore, with the first plant to come into operation in Sheikhupura in March 2009. MAN Diesel would supply the engines for the plant and the contract also included operation and maintenance of the plant for 10 years. "The order volume for this first stage is about 200 million euros" (268 million dollars), MAN said.

Under the terms of the partnership, MAN Diesel would be responsible for the construction and operation, while the Atlas Group would "configure economic and financial aspects," it said.

http://www.brecorder.com/index.php?id=581386&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*14,455 schemes completed under KPP *​
ISLAMABAD (June 23 2007): Minister for local bodies and rural development former Justice Abdul Razzaq Taheem said 14,455 schemes have been completed across the country from 2002 to 2007 under Khushal Pakistan Programme (KPP) in addition to normal development schemes carried out by various departments.

Talking to PTV, he said a sum of Rs 12,104 million has been released for a total of 23,836 schemes recommended by MNAs under KPP-1. The main focus of schemes under KPP was aimed at providing basic amenities to the countrymen and bringing at par the far-flung areas with country's developed areas. The grants accorded to various senators and MNAs for development schemes for the year 2006-2007 amounted to Rs 10 million per head.

No discrimination was observed between the ruling party and opposition members in the allocation process. The schemes presented by members are carefully scrutinised and are evaluated by relevant departments and organisations, he informed.

The minister denied any delay in the disbursement of funds and said that no case of embezzlement regarding these funds had ever been reported nor any case of corruption been filed against any district nazim. Strict vigilance of the schemes have been ensured aiming to avoid squandering of public money. Monitoring teams have recently been constituted. It has also been ensured that projects are completed on time.

Extra-ordinary development schemes have been completed in the country during the last four years. Various departments were busy in executing the infrastructure development projects including district, provincial, federal governments and MPs funds, he said. District government system was working very effectively. Bureaucracy has been placed under the district government.

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## Neo

*Pakistan's economic growth one of best in world: Musharraf ​*
LAHORE (June 23 2007): Economic growth in the country is rated as one of the best in the world, while the government is spending huge funds on improving infrastructure including railways, roads, airports and seaports. This was stated by President General Pervez Musharraf while addressing the officers of Lahore Garrison at the Corps Headquarters Auditorium here on Friday.

President Musharraf said a strategy has been evolved to improve quality of life of the common man with a focus on health, education, poverty alleviation and employment. He further said the armed forces of Pakistan are symbol of national integration and progress and prosperity of the country depends on integrity, unity and harmony of this vital institution.

He said he was a firm believer in peace through strength. "Irrespective of our country's peace initiatives to encourage stability in the region, we are fully conscious of our security needs and are making all out efforts to maintain impregnable defence of the country", he said, adding, "we do not foster any offensive designs against any country but induction of latest arms and equipment in the armed forces was our right." President Musharraf said Pakistan has a tremendous potential to rise as a progressive and moderate Islamic country among the comity of nations.

He warned that obscurantists and extremist elements are the major impediment in the way of achieving economic progress and development. He urged moderate forces to join hands with him and reiterated his pledge to fight these anti-state forces with an iron hand to lead the country towards a brighter future.

He further said that Islam believes in tolerance and brotherhood, but unfortunately, obscurantists were undermining the basic ingredients of this great religion by interpreting it to serve their nefarious designs. Criticising rumourmongers, Musharraf said they were responsible for despondency among the public to fulfil their self-serving agenda. He advised such elements to act with responsibility, as the country was passing through the most crucial phase of its history. 'Pakistan has come to stay and God willing we shall persevere and succeed to rise in the comity of nations', he said.

Talking about the efforts to curb security threats within the country, the President said efforts were being made to ensure consolidation and reorganisation of the paramilitary forces. He said that more emphasis was being laid to equip them with better weapons and extensive training to control militancy in the tribal areas of NWFP.

President Musharraf said a strategy has been evolved to improve quality of life of the common man with a focus on health, education, poverty alleviation and employment. He also mentioned the Lahore Corps for doing a great national service by establishing a polytechnic institute for imparting technical education to unskilled labour of the country.

The session that lasted for two hours was attended by over 500 officers from Army, Navy and Air Force stationed at Lahore. The President took questions from the officers after his address. Apart from a large number of officers of Lahore Garrison, prominent among those who attended included Corps Commander Lieutenant General Shafaat Ullah Shah, General Officers Commanding, Major General Shaukat Sultan Khan, Major General Raheel Sharif, Director General Pakistan Rangers Punjab Major General Hussain Mehdi and Director General NAB Lahore Major General Qasim Qureshi.

http://www.brecorder.com/index.php?id=581293&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*National Assembly approves amended Finance Bill 2007-08: Rs 1.874 trillion budget passed ​*
ISLAMABAD (June 23 2007): The National Assembly has approved amended Finance Bill (2007-2008) for conversion of Central Board of Revenue (CBR) into Federal Board of Revenue (FBR), levy of one percent special excise duty on import and local manufacturing, tax relief to retailers, further incentives under group relief and extended powers to the CBR to change withholding tax rates without consulting parliament or federal government.

Minister of State for Finance and Revenue Omar Ayub Khan on Friday approved the amendments in the Finance Bill submitted by the Central Board of Revenue (CBR). One of the major powers obtained by the CBR through amended Finance Bill is the rationalisation of withholding tax rates on its own. There is no need to obtain prior approval of the federal government or parliament for this purpose.

The CBR has also amended the Seventh Schedule (banking schedule) for the computation of profits and gains of a banking company. The government has also announced another big relief to the traders operating under section 113-B of the Income Tax Ordinance 2001. Under section 113-B (taxation of income of certain retailers), traders have been allowed to pay reduced rates of turnover tax retrospectively ie from ''tax year 2007'' instead of tax year 2008. Thus, 50 percent reduction in combined sales tax/income tax would be available to traders, whose turnover exceeds Rs five million.

The government has also empowered the commissioner of income tax (CIT) to call income tax statements from the taxpayers for the last five years in cases of ''final discharge of tax liability''. Previously, commissioners could only call income tax returns for the last five years.

Through another amendment cleared by National Assembly, the importer-cum-manufacturers, declaring losses, have to pay 0.5 percent income tax at the import stage. Earlier, the importers-cum-manufactures were given 100 percent exemption certificates.

In cases of losses, exemption certificates would be given at the reduced tax rates and they have to pay 0.5 percent tax at the import stage for obtaining these certificates. The importer-cum-manufacturers are bound to submit the minimum tax at the rate of 0.5 percent of the turnover, which would now be collected at the import stage.

According to another amendment, the option of group taxation shall be available to those group companies which comply with such corporate governance requirements as may be specified by the Securities and Exchange Commission of Pakistan (SECP) form time to time and are designated as companies entitled to avail group taxation.

As per revised section 59B the government has offered more incentives under the concept of group relief. The National Assembly has approved that any company, being a subsidiary or a holding company, may surrender its assessed loss (excluding capital loss) for the tax year (other than brought forward losses and capital losses), in favour of its holding company or its subsidiary or between another subsidiary of the holding company.

Provided that where one of the company in the group is a public company listed on a registered stock exchange in Pakistan, the holding company shall directly hold 55 percent or more of the share capital of the subsidiary company. Where none of the companies in the group is a listed company, the holding company shall hold directly 75 percent or more of the share capital of the subsidiary company.

A company within the group engaged in the business of trading shall not be entitled to avail group relief. All the companies in the group shall comply with such corporate governance requirements as may be specified by the Securities and Exchange Commission of Pakistan from time to time, and are designated as companies entitled to avail group relief, the amended Finance Bill said.

The commissioner may, by notice in writing, require any person who, in his opinion, is required to file a prescribed statement for a tax year but who has failed to do so, to furnish a prescribed statement for that year within 30 days from the date of serving of such notice or such longer period as may be specified in such notice or as he may allow.

Through another amendment, a person may be appointed as an accountant member of the appellate tribunal if the person is an officer of the income tax group equivalent in rank to that of a regional commissioner and the commissioner of income tax or commissioner of income tax (Appeals) having at least five years experience as commissioner shall also be eligible for appointment.

The amended Finance Bill has further specified that the income tax exemption (section 49) would not be available in the case of a corporation, company, a regulatory authority, a development authority or other body or institution established by or under a federal law or a provincial law or an existing law or a corporation, company or other body or institution set up, owned and controlled, either directly or indirectly, by the federal government or a provincial government, regardless of the ultimate destination of such income, as laid down in Article 165A of the Constitution of the Islamic Republic of Pakistan.

In the case of a person whose income is not subject to final taxation, the commissioner is satisfied that such person is not likely to pay any tax (other than tax under section 113), the commissioner shall, upon application in writing made by such person, issue certificate allowing payment of tax collectable under this section at a reduced rate of 0.5 percent.

Through another amendment in the Seventh Schedule (banking schedule) of the Income Tax Ordinance 2001, loss on sale of shares of listed companies, disposed of within one year of the date of acquisition, shall be adjustable against business income of the tax year. Where such loss is not fully set off against business income during the tax year, it shall be carried forward to the following tax year and set off against capital gain only. No loss shall be carried forward for more than six years immediately succeeding the tax year for which the loss was first computed.

On the sales tax side, the National Assembly has approved various amendments in the Sales Tax Act, 1990. The federal government may specify any person or class of persons as withholding agents for deduction and deposit of tax at the specified rate.

Where there is reason to believe that a person has claimed input tax credit or refund, which was not admissible to him, the proceedings against him shall be completed within 60 days. For inquiry or audit or investigation regarding admissibility of the refund claim, the period of 60 days may be extended up to 120 days by an officer not below the rank of an additional collector of sales tax and the board may, for reasons to be recorded in written, extend the period which shall in no case exceed nine months.

BUDGET PASSED: The National Assembly also passed Rs 1.874 trillion budget for next fiscal year, turning down opposition''s request to raise salaries of government employees by 20 percent. The government made nearly eight amendments in the Finance Bill 2007 whereas at least 20 amendments moved by the opposition were turned down.

The government also incorporated 51 out of 90 recommendations in the money bill forwarded by the Upper House of parliament. Opposition members of NA body on finance strongly protested on the passage of the Finance Bill, and, as usual, walked out of the house against what they said was an unconstitutional piece of legislation.

Prime Minister Shaukat Aziz attended most of the daylong proceedings and remained busy in ''brief'' meetings with treasury members. Earlier, taking part in the debate, opposition benches said the bill was drafted merely to appease two classes-bankers and stockbrokers.

The government was accused of bypassing both National Assembly and Senate in the entire budget-making process. Opposition members said money laundering bill had been made part of the Finance Bill unconstitutionally knowing the fact that it was still under consideration by the NA body on finance and revenue.

They termed government''s decision to establish Federal Board of Revenue, changing in the preambles of Securities Exchange Commission of Pakistan (SECP) Act, Customs Act and Banking Companies Ordinance "sheer violation" of the constitution.

They opposition members of NA standing committee on finance and revenue said some controversial changes were made in the money bill through backdoor channels.

They strongly opposed the ''unlimited'' discretionary powers being delegated to Board members of the Federal Board of Revenue. Strong protest was also lodged against the ''unlimited'' extensions in the tenure of National Bank of Pakistan and Khushhali Bank of Pakistan presidents.

PPP-P''s Naveed Qamar and Naheed Khan pointed out that Advisor to Prime Minister on Finance Salman Shah was being made Chairman of Securities and Exchange Commission of Pakistan.

The opposition pressed the government through its amendments that salaries of government employees should be raised by up to 20 percent besides increase in the minimum wage to Rs 6,000. However, the government voted out the opposition''s proposed amendment. The house will now meet on Saturday at 1000 hours to take up supplementary grants for different ministries and departments during the year 2006-07.

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## Neo

*MTDF envisages creation of 50.12 million jobs by 2009-10 *​
ISLAMABAD (June 22 2007): The Medium Term Development Framework (MTDF) 2010 has envisaged the need for the creation of 50.12 million jobs by 2009-10 to meet the set MTDF targets, sources said.

As women constitute 48.8 percent of the population and the rate of female labour has increased from 1.2 percent to 13.3 percent previous years and their unemployment rate has fallen from 12.8 percent to 9.3 percent in the previous fiscal year, which shows substantial decrease of 3.5 points, the government failed to provide education, training and skill development opportunities to women, source said.

The allocation for employment during the previous fiscal year was Rs 1, 136.8 million in PSDP that is higher than the budgetary allocation of the current fiscal, they said. In view of envisaged GDP growth and enhanced PSDP allocations, the target is easily achievable with 4 percent decline in the rate of unemployment. Moreover, reforms and expansions of vocational and technical training will further enhance productivity of the employed labour force, the sources said.

Giving the details of the allocations the sources said that Rs 198.4 million has been allocated in the PSDP 2007-08 for 14 projects including new initiatives and some of the ongoing employment generating projects that would also continue in fiscal 2007-08. Said.

Moreover, Rs 12.3 million for training of Trainers, Rs 9.1 million for Skill Development Labour Market Requirement and Analysis System, Rs 14 million for Policy Planning Cell and Rs 25.3 million for Computerising of the Data of Outgoing Emigrants and Returning Migrants have been allocated in the fiscal 2007-08, they said.

'Labour Market Information and Analysis' project intend to develop an institutional mechanism that will monitor and report labour markets developments at district, provincial and national levels, they said. They also said that one of the initiatives to expand employment specifically among the youth was launched by 'President Rozgar Scheme' in collaboration with National Bank of Pakistan.

This scheme deals with various areas of concerns such as transport, utility stores under Utility Supply Corporation (USC), mobile utility stores, mobile general store, NBP Karobar PCO and NBP tele-centre. During the fiscal Rs 1.3 billion are to be disbursed to around 21,500 beneficiaries, they said.

The government's strategy is to generate employment by imparting technical and vocational training through capacity building of existing and potential skilled and unskilled workers in the field of horticulture and gardening.

Keeping this in view the National Training Bureau has planned to launch three months gardener certificate course under the project titled 'Green Man,' sources said.

http://www.brecorder.com/index.php?id=581004&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Government may fetch $2 billion from privatisation proceeds in fiscal year 2008: National Assembly informed ​*
ISLAMABAD (June 22 2007): The government expects to fetch 2 billion dollar from privatisation proceeds in next fiscal, Privatisation Minister Zahid Hamid told the National Assembly on Thursday amid opposition's serious reservations about transparency in country's privatisation policy.

The opposition staged a token walkout to protest against the lack of transparency in the privatisation proceeds. Defending opposition's seething criticism, Zahid said the government has so far succeeded earning more than 6 billion dollar through 64 transactions out of which 18 were profit-making entities.

He said around 1 billion dollar foreign investment has come in 11 months this year through privatisation proceeds, as it was the most successful year in terms of privatisation. The minister went on saying that the past governments could earn Rs 158 billion only from privatisation of 102 entities between 1991 and 1999.

Meanwhile, the opposition parties moved some 122 cut motions against Privatisation Commission's demands for grants for next fiscal year and expressed serious concerns regarding the government's privatisation policy.

The opposition protested against the proposed privatisation of Pakistan State Oil (PSO), Pakistan International Airlines (PIA), Pakistan Railways and other vital entities.

The opposition lawmakers said that post-KESC privatisation situation should be an eye-opener for the rulers. Similarly, they said the Supreme Court judgement against the privatisation of Pakistan Steel Mills has exposed the transparency in the government's policy.

They took the government to task over privatising the Pakistan Telecommunication Company Limited (PTCL) and Habib Bank Limited (HBL) at throwaway prices.

Questioning the government's credibility, the opposition members said neither the amount coming through privatisation proceeds was being used to retire foreign debts nor a single penny was being spent to control poverty.

PPP-P legislator Manzoor Wassan demanded of the government to form a seven-member committee headed by a senior Supreme Court judge to ensure transparency in the privatisation policy.

The opposition called for re-nationalisation of Karachi Electric Supply Corporation (KESC) and Pakistan Telecommunication Company Limited (PTCL) and pressed the government not to sell profit-making entities.

However, the government voted out 122 cut motions moved by the opposition against Privatisation Commission's demands for grants for next fiscal.

As many as 668 cut motions were moved by the opposition against demands for grants of interior, religious affairs and water and power ministries but all of them were turned down.

The government pushed through the National Assembly demands and grants amounting to more than Rs 90 billion for four ministries-interior, privatisation, religious affairs and water and power.

The demands and grants for water and power ministry were also opposed on the grounds that the government has neither resolved the problem of water shortage nor the lingering power crisis.

May 12 Karachi carnage once again echoed in the House, as the opposition parties voiced for cut in the interior ministry's budget against countrywide worsening law and order situation.

Muhammad Hussain Mehnati of Muttahida Majlis-i-Amal urged the government to withdraw rangers deployed in Karachi, as it miserably failed to protect innocent citizens on May 12.

The opposition also grilled the Religious Affairs Minister Ijazul Haq and demanded his removal over embezzlements in Haj operations.

http://www.brecorder.com/index.php?id=581002&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pakistan placed 100th on political and regulatory environment ​*
ISLAMABAD (June 22 2007): The Global Information Technology Report (GITR) 2006-07 of the World Economic Forum (WEF) shows how Pakistan's economy is performing and becoming stronger with each passing day, or the case is otherwise.

Networked Readiness Index (NRI) shows where Pakistan stands among 122 countries on key economic issues. The detailed performance of the government is given on year to year basis and it gives fairly a true picture of various sectors of economy.

THESE ARE: ENVIRONMENT COMPONENT: 

=============================================================
Market environment 67
Venture capital availability, 2006 61
Financial market sophistication, 2006 53
Technological readiness, 2006 77
State of cluster development, 2006 55
US utility patents, 2005 78
High-tech exports 63
Burden of government regulation, 2006 54
Extent and effect of taxation, 2006 33
Time required to start a business, 2006 38
No of procedures required to start a business, 2006 79
Intensity of local competition, 2006 73
Freedom of the press, 2006 84
Political and regulatory environment 100
Effectiveness of law-making bodies, 2006 59
Laws relating to ICT, 2006 65
Judicial independence, 2006 79
Intellectual property protection, 2006 79
Efficiency of legal framework, 2006 89
Property rights, 2006 93
Quality of competition in the ISP sector, 2006 36
No of procedures to enforce a contract, 2006 113
Time to enforce a contract, 2006 106
Infrastructure environment 102
Telephone lines, 2005 100
Secure Internet servers, 2005 101
Internet hosts, 2004 94
Electricity production, 2003 91
Availability of scientists and engineers, 2006 78
Quality of scientific research institutions, 2006 62
Tertiary enrolment, 2004 104
Readiness component 83
Individual readiness 94
Quality of match and science education, 2006 85
Quality of the educational system, 2006 73
Quality of public schools, 2006 78
Internet access in schools, 2006 51
Buyer sophistication, 2006 67
Residential telephone connection charge, 2005 58
Residential monthly telephone subscription, 2005 89
High-speed monthly broadband subscription, 2006 96
Lowest cost of broadband, 2006 100
Cost of mobile telephone call, 2005 64
Business readiness 64
Extent of staff training, 2006 90
Local availability of research and training, 2006 83
Quality of management schools, 2006 71
Company spending on R&D, 2006 51
University-industry research collaboration, 2006 61
Business telephone connection charge, 2005 51
Business monthly telephone subscription, 2005 73
Local supplier quality, 2006 66
Computer, comm, and other services imports, 2004 43
Government readiness 80
Government prioritisation of ICT, 2006 62
Govt procurement of advanced tech products, 2006 47
Importance of ICT to gov't. vision of the future, 2006 53
E-participation index, 2005 62
E-government readiness index, 2005 103
Usage component 79
Individual usage 102
Mobile telephone subscribers, 2005 105
Broadband Internet subscribers, 2005 86
Internet users, 2005 83
Internet bandwidth, 2004 79
Business usage 73
Prevalence of foreign technology licensing, 2006 81
Firm-level technology absorption, 2006 85
Capacity for innovation, 2006 38
Availability of new telephone lines, 2006 89
Availability of mobile telephones, 2006 102
Extent of business internet use, 2006 50
Government usage 63
Government success in ICT promotion, 2006 46
Availability of online services, 2006 59
ICT use and government efficiency, 2006 63
ICT pervasiveness, 2006 84
=============================================================

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## Neo

*'Skilled workforce needed for rapid industrialisation' ​*
KARACHI (June 22 2007): Any thinking and people pro-active government needs to make optimum use of its workforce and that needs creation of vocational centres in a society like ours. The demand-supply gap of skilled workforce still persists in our country, said some leading economists.

This year, the government has achieved budgetary targets in some fundamental areas but in some important sectors it has missed the targets. This was partly because of lack of proper attention and lack of skilled workforce.

If the government takes the matter seriously, the country may not even need to hire highly paid foreign experts, which eventually becomes an extra burden on the national exchequer. The country is faced with both shortages of manpower and skills, creating gap in the key modern technologies. This reduces optimum operation of plants and machinery, they noted.

Many experts and professors in different institutions were of the view that if the government increases the number of vocational centres the poor children will be able to get better jobs. Many parents suggest that during the summer vacation the provincial government should arrange vocational training programmes, which can help the children utilising time in a healthy way.

It was noted that one of the major constraints in achieving rapid industrialisation in the country is lack of skilled workers. A serious constraint has been low productivity level in the country, economists said. Without the development of a big skilled workforce-base it is not possible to compete or to meet global challenges.

An efficient and quality supply-chain is important for local industry which is missing, partly due to insufficient scale of fund and partly due to inferior raw material and also due to lack of skilled workforce. These are the minimum requirement to come anyway near to global competition, increase exports, they said.

The facilities provided by the government are inadequate. In the Annual Development Plan it was admitted that urban industrial centres could not accommodate the expected rise in the industrial and manufacturing activities.

Meanwhile, the widening trade deficit and increasing inflationary pressure may create more difficulties for the government in the next fiscal year. These are also the main challenges that the government must tackle boldly, they said.

The government is importing costly machinery to accelerate the progress of works, although some progress has been made and many products are manufactured locally, but in some sectors, lack of proper certification on quality and safety are hindering wider acceptance of such products both locally and globally.

Strategic planning of manufacturing industry with local skilled work force at least up to middle management level is necessary to meet the objectives of rapid industrialisation in the country, they said.

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## Neo

*Thar coal project hits snags; consultants identify major risks ​* 
ISLAMABAD: The Thar coal project has hit snags even prior to start of work on it, as the consultant hired by the Asian Development Bank (ADB) have identified major risks and constraints in the extraction of coal, a senior official told The News.

The consultant said that there is a strong indication that there exists a bed of water even at a depth of 300-400 meters and then too there is no certainty about the presence of coal deposits.

Dr Michel C Clarke, hired by the ADB as a consultant recently, identified major risks and constraints in mining for Thar coal and indicated that the information available in the previous studies has not resulted in a bankable feasibility study on the basis of which the private sector could be engaged for full scale commercial development.

In view of the gaps in the technical data, the consultant has recommended hydrological, technical and environmental studies to be followed by digging of a test-pit to identify mining techniques appropriate for the prevailing conditions in Thar, and to collect bulk samples for testing on a commercial scale for power generation and for coal-to-liquids conversion.

The official, quoting the findings of the ADB consultant, said that a bankable feasibility report could be produced within two years at an estimated cost of $20-30 million inclusive of the cost of the test-pit, subject to technical and economic feasibility as determined through test-pit effort.

Answering a question, the official said that a 2000-4000 Mw mine-mouth power generation capacity in the first phase of commercial development could be followed by a 50,000 bbl per day coal to liquids project in the later phases. The government has already set up a $500 million Thar Coal Mining Company (TCMC) to be run by the private sector to develop the countryís largest deposits of coal at Thar.

The plan, approved by the president and the prime minister, envisaged unbundling of Thar Coal project into mining and power generation; to bring down the size of investment in each block from $1.5 billion to $500 million.

We lost seven years in trying to attract large companies to finance up to $1.5 billion in mining and production of electricity from Thar coal reserve but failed to get a breakthrough because such a big investment was not forthcoming, the official said.

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## Neo

*Pakistan's ethanol production likely to decline ​*
KARACHI: Pakistans fuel-grade ethanol production is expected to decline because of lower global prices, according to a latest US Department of Agriculture AttachÈ report.

Pakistans sugar industry operates 21 distillery units, with an annual production capacity of 400,000 tons of ethanol. Most distilleries produce hydrous ethanol. Last year, Pakistan produced and exported 36,500 tons of fuel-grade ethanol, mostly to the United States. During the current year, fuel-grade ethanol production is expected to decline due to lower global prices. 

Pakistan exported 165,406 tons of ethanol during 2006 and is projected to export 234,000 tons during the current year. 

Pakistan is the worlds seventh-largest sugarcane producer. The crop is grown mainly to produce refined sugar. The sugar industry is the second largest industry in Pakistan after textiles, contributes 2 percent to GDP and 13 percent to the manufacturing sector. 

There are 76 sugar mills in the country, with a crushing capacity of 300,000 tons of cane per day. Cane molasses is the main by-product. In order to maximize returns, the sugar industry processes molasses to produce anhydrous and hydrous ethanol. There are 21 distillery units in Pakistan with a capacity to process 2 million tons of molasses to produce 400,000 tons of ethanol. 

Petrol consumption in Pakistan during FY 2005-06 totalled 1.6 million tons. Last year, the government approved a pilot project to initiate the sale of petroleum mixed with 10 percent locally-produced ethanol on an experimental basis at three petrol stations in Karachi, Lahore, and Islamabad through the state-run Pakistan State Oil (PSO).

Oil-marketing companies and refineries looked at the initiative with skepticism because it did not result in any saving or cost reduction and required additional investment in sugar plants and post-refining mixing. This is the first time that the concept of ethanol blending with motor gasoline has been considered in Pakistan. The ratio of blended fuel is 10 percent ethanol and 90 percent gasoline. 

It will take another year to determine fuel specifications, establish quality control standards, and introduce relevant legislation because de-neutering of alcohol specifications also needs to be determined. 

The existing distilleries produce ethanol with 95 percent octane, which needs to be enhanced to 99.7 percent for blending with gasoline. Of the 21 distilleries, only six have the capacity to produce ethanol fit for 10 percent blending and the rest of the units would require an investment of around Rs1.5 million per distillery to upgrade them. 

During 2006, these sugar mills manufactured 36,500 tones of fuel-grade ethanol, which was mostly exported to the United States and a limited quantity was used in the local market. 

The oil industry needs to establish requisite infrastructure for successful marketing of ethanol and gasoline-ethanol blends. Most of the infrastructure requirements are due to the fact that ethanol is not a part of the existing petroleum system. Neither the oil nor the automobile industry in Pakistan has sufficient knowledge and experience to use ethanol blends in gasoline. They will need a learning phase before the country can venture into nationwide mandatory blend. 

The federal government has directed the provinces to allow the sale of blended fuel. Oil-marketing companies are being encouraged to market ethanol as blended fuel because it is cost effective and environmentally friendly. 

The ministry of food, agriculture and livestock (MINFAL) has also been directed to explore other sources of raw material for ethanol production such as maize, wheat, rice, potato and sorghum. 

Now the 21 distilleries operating in the country has total production capacity of more than 400,000 tons. Most of the distilleries are producing hydrous ethanol, which is 96 percent pure with 4 percent water. In order to convert hydrous ethanol into fuel ethanol, or power ethanol dehydration of up to 99.95 percent purity is required by using suitable technologies. The distilleries are introducing molecular sieve technology.

The production ratio of molasses to ethanol is 5:1, meaning that for producing the existing capacity of ethanol (410,400 tons), the industry would require 2.052 million tons of molasses. However, after the expected addition of four units, ethanol production will rise to 632,400 tons, requiring 3.162 million tons molasses. The projected production of 234,000 tons during the current year (January to December 2007) would require around 1.25-1.3 million tons of molasses. The industry is expected to produce around 234,000 tons in 2007 as compared with 165,405 tons produced in 2006, valued at $100.6 million at an average rate of $570-590 per ton. 

Currently, distilleries are operating at 60 percent capacity. Despite the fact that the sugar industrys profitability has improved after entering into ethanol production, the viability of producing more ethanol depends on world oil prices as it is being used as an alternative fuel to supplement regular POL products. The export of molasses is declining and more than 90 percent production is now being used to produce ethanol. There has been consistent increase in ethanol exports for the past eight years, showing that distilleries are converting larger volumes of molasses into value-added ethanol. 

During the past three months, Pakistan has entered into export contracts for around 108,000 tons of ethanol, whereas last year the entire export volume was at 165,406 tons. Exporters are receiving export contract prices in the range of $540-550 per ton of ethanol. Against this, molasses is being quoted at around $61 per ton in the world market. It is expected that higher volumes of ethanol will be produced considering the rising world oil prices. 

Being an inflammable commodity, ethanol needs extra care in transportation and storage stages. There are specially built liners with a loading capacity of 3,500-4,000 tons for carrying ethanol. Similarly, extra care has to be taken for storage and tanks have to be segregated by walls as a safety measure in case of fire. Moreover, storage areas need to be fully equipped with fire-fighting equipment to counter fire hazard.

http://www.thenews.com.pk/daily_detail.asp?id=61535


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## Neo

*Textile exports grow 6.4pc only ​*
KARACHI: The growth of textile exports of the country remained below the expectation of the government as during July-May 2006-07 overall textile exports of the country increased only by 6.04 percent against set target of 15 per cent.

Textile exports during the said period remained $9,816 million against $9257 million recorded in same period of last fiscal year.

The figures issued by Federal Bureau of Statistics (FBS) on Friday revealed that exports of the raw cotton recorded a decline of 21.73 percent to $49 million against $63 million in the same period of fiscal 2005-06. Whereas exports of cotton yarn increased by 4.21 percent to $1,304 millions from $1,251million of last fiscal year, however exports of cotton cloth declined by 4.10 to $1845 million from $1924 millions.

Cotton carded or combed rose by 3.92 percent to $9.7 million against 9.4 millions of last fiscal year. 

The substantial increase of 82.59 percent to $61million recorded in export of yarn other than cotton yarn which stood at $33 in preceding period of last fiscal year.

Moreover knitwear exports surged by 12.94 percent to 1,773 million from $1570 millions.

However bed wear exports dropped by 3.10 to $ 1784 million which was recorded $1841million during the same period of last fiscal year. 

Export of towel augmented by 2.43 percent to $544 million from $531 million while, exports of Tents canvas & Tarpulin rose by 99.06 percent to $66 million from $33 million during this period. 

Exports of readymade garment recorded 5.53 percent increase during first eleven months of outgoing fiscal year. Countrys readymade garments exports were recorded $ 1,254 million, which was $1,190 in the same period of fiscal 2005-06. A commendable122 increase was recorded in the exports of art silk & synthetic textile, which surged to $401 million against $180 million of last fiscal. The exports of made up article excluding towels and bed wear surged by 13 percent to $433 million from $381 million while other textile materials exports rose by 17.42 percent to $287 million from $244 million.

However in the month of May 2007 the textile exports of textile products increased by 4.84 percent only.

During month of May total textile export were recorded to $950 million, which was recorded $906 million in the same month of fiscal 2005-06.

http://www.thenews.com.pk/daily_detail.asp?id=61537


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## Neo

*$6-7bn to be spent on infrastructure​*
ISLAMABAD, June 22: Prime Minister Shaukat Aziz said has said that $6-7 billion will be spent on infrastructure development in Pakistan during the next five years.

Chairing a meeting to review the steps required to improve the logistics chain in the country, the premier said this year the federal government would spend Rs60 billion on infrastructure development and transportation.

The amount spent by the provincial governments in these sectors will be in addition to this, he added.

He said under the National Trade Corridor (NTC) Plan, the government is focusing on improving the end to end logistics chain to improve productivity and competitiveness of industrial sector.

Under NTC, he said improvements are being made in the system of railways, roads and highways.

Processes at the ports, airports and land borders have been simplified to reduce the clearance time. The completion of NTC plan and building of North-South Corridor would remove the road blocks to our industrial development and trade enhancement, he added.

We want to jump the curve and do the right things rightly to improve our productivity and competitiveness, he said.

The meeting decided that the Planning Commission and the Asian Development Bank (ADB) would jointly prepare a strategic framework to improve the business enabling infrastructure in Pakistan.

The Planning Commission will coordinate with all related departments to prepare the framework. The study that will be carried by a world class consulting firm will focus on determining the future growth requirements in Pakistan.

It will be completed within a year and will have five stages; assessing the current situation, setting growth priorities, critical enablers and alignments to NTC, syndication and stakeholders management, implementation, planning and institutionalisation.

Mr Aziz said the initiative is well timed and the first essential step to operationalise the vision 2030 approved by the National Economic Council (NEC) in its meeting held on May 31, 2007.

ADB Country Director, Peter L. Fedon said the strategic framework, to be jointly prepared by the ADB and Pakistan government, will focus on improving the competitive advantage of Pakistan. It will identify steps to bring improvements in terms of competitiveness and optimal utilisation of resources.

http://www.dawn.com/2007/06/23/ebr2.htm


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## Neo

*Karachi  worlds 2nd least expensive city​*
Karachi, June 22: Expanding both vertically and horizontally, home to one of the most heterogeneous mix of population, Karachi, the port city of Pakistan, has maintained its position as the second least expensive city of the world, says a recently released study by global human resources advisory and research firm Mercer HR Consulting.

Comparatively cheaper rental rates, probably discounted for the high property prices in Karachi, enabled it to offer more value for each dollar spent by expatriates in the city.

According to the study available on the website, Karachi is placed at 142nd position in the worldwide ranking of 143 cities.

The study has ranked the cities based on cost of basic necessities, including housing, transport and food among others during the 12-month period ending March 2007.

The list is topped by Moscow, which has retained its position as the costliest city for expats, followed by London, Seoul, Tokyo and Hong Kong among the top five. Asuncion in Paraguay is the least expensive city, while Quito in Ecuador, Montevideo in Uruguay and Argentina's Buenos Aires were the other three least expensive cities.

In India Mumbai is at 52nd, Delhi at 68th, Chennai at 133rd and Bangalore is placed at 134th position in the current survey.

While London moved up to second from fifth rank last year, Seoul, Tokyo and Hong Kong moved down the rankings.

Even Dhaka is costlier than Karachi.

The survey covered 143 cities across six continents and measured the comparative cost of over 200 items in each location, including housing, transport, food, clothing, household goods and entertainment.

http://www.dawn.com/2007/06/23/ebr12.htm


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## Neo

*$900m ADB loan for Punjab​*
RAWALPINDI, June 22: The Asian Development Bank (ADB) will provide a multi-tranche $900 million loan to Punjab for improving water resources and increasing agricultural productivity in the province.

A signing ceremony in this connection was held on Friday at the Economic Affairs Division (EAD) by Secretary EAD Akram Malik, Secretary Irrigation and Power Arif Nadeem and ADBs country director Peter Fedon.

Punjabs irrigated agriculture accounts for over a quarter of its gross domestic product and employs half of its labour force using more than 90 per cent of the water resources.

The programme takes a holistic and integrated approach to improve sector performances supported by infrastructure investment and combined with institutional reform, Thomas Panella, ADBs senior water resources management specialist, said.

The first two loans would finance the Lower Bari Doab Canal Improvement Project (LBDC) that would also improve the Balloki Barrage which supplies irrigation water to 700,000 hectares.

The Punjab Irrigation and Power Department, responsible for the management of surface irrigation system covering 8.4 million hectares in the province, would be the executing agency for the programme.

The ADB would extend the financing through a multi-tranche facility over 10 years that could be converted into separate loans.

http://www.dawn.com/2007/06/23/top11.htm


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## Neo

*Pakistan to raise $650 mln through UBL sale ​*
Saturday June 23, 2007

ISLAMABAD (Reuters) - Pakistan will raise $650.3 million through the sale of a 25 percent stake in United Bank Ltd. (UBL), the country's third largest bank, through an issue of global depositary receipts, a minister said on Saturday. 

The offer was priced at 195 rupees per share and $12.85 per GDR, with each GDR representing four shares, Privatisation Minister Zahid Hamid told a news conference. 

Conditional trading of the GDR on the London Stock Exchange will begin on Monday, while full trading will start on Friday, Hamid said. 

"The transaction attracted gross demand of over $2.5 billion from a mix of top quality global funds," Hamid said, and added that it was the largest-ever book for a Pakistan equity offering. 

The government plans global listing of National Bank of Pakistan, Habib Bank Ltd. and Kot Addu Power Co. 

A consortium of Merrill Lynch and local KASB Securities managed the transaction, which was completed in 11 weeks. 

"The offer price represents a premium of 2.6 percent to the average price of the 30 days price, a premium of 9.2 percent to the 60 days price and a discount of about 5.3 percent to Friday's local closing," Hamid said. 

UBL shares closed at 205.60 rupees on the Karachi Stock Exchange on Friday. 

http://in.news.yahoo.com/070623/137/6hb5f.html


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## Neo

*CCoP endorses $650.3 million UBL GDRs: PSO sell-off date shortly, says Zahid ​* 
ISLAMABAD (June 24 2007): The government has raised $650.3 million from the sale of United Bank Limited (UBL) global depository receipts (GDRs). The Cabinet Committee on Privatisation )CCoP) endorsed the outcome of UBL GDRs.

Later on, Privatisation Minister Zahid Hamid told a press conference that CCoP had approved UBL GDRs and Habib Bank Limited (HBL) initial public offering (IPO).

He said that the Privatisation Commission held roadshows encompassing global financial centers including Hong Kong, Singapore, London, Dubai and New York for UBL GDRs and their outcome was highly encouraging. Zahid Hamid said UBL GDRs would start conditional trading on London Stock Exchange (LSE) from June 25 and this would be followed by full trading from June 29.

He said this launch has marked another landmark transaction of the privatisation program in the international market after the listing of OGDC at LSE in December last year, which attracted $811 million.

Zahid said that international investors from US, UK, continental Europe, Middle East and Asia bought GDRs equivalent to UBE shares priced at Rs 195 a share, amounting to divestment of a 25 percent of the total paid up capital of UBL.

Each GDR represents four underlying shares of UBL. The GDRs price was S 12.8543 each. The transaction attracted gross demand of over $2.5 billion from a mix of to quality global funds, Asian funds and financial sector dedicated specialists, the largest ever book for a Pakistan equity offering.

The GDR was attractively priced at approximately 5.Ox '06 price to book value per share, which is higher than the valuation of similar transactions elsewhere/globally.

He said the offer price represented premium of 2.6 percent to the average price of the 30 days price, 9.2 percent to 60 days price and discount of about 5.3 percent to Friday's local closing price of Rs 206 per share. He said CCoP approved HBL IPO of 5 percent of total shares with a green shoe option of 2.5 percent (51.75m shares) at an offer price Rs 235 per share and the total size would be Rs 12.2 billion.

HBL offer for sale by shares will be the largest offering in Pakistan in terms of both value and number of shares offered. He said for the first time ever shares are being offered in lots of 100 and multiples of 100 up to 500 shares, thereafter multiples of 500 shares.

The marketable lot for trading in the Stock Exchanges will be 100 shares, allowing case of entry and exit to successful applicants of 100 shares. The application size of 100 shares would make the subscription affordable for the common citizens and would allow them an opportunity to become a shareholder of one of the largest banks of Pakistan. This structure will potentially benefit over 517,000 investors, the largest number ever in such transactions.

The Minister said HBL IPO will be made in 2-3 weeks. The minister added that the CCOP was also apprised of the suggestions and proposals came out of the deliberations of the pre-qualified bidders during the pre-bid conference of PSO transaction and said that all stakeholders have been asked to expedite the resolution of all the issues in this regard. He said Privatisation Commission is going to announce PSO bidding shortly.

http://www.brecorder.com/index.php?id=582147&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Portfolio investment hits new high ​*
KARACHI (June 24 2007): The portfolio investment in the country's equity market with fresh increase of around $18 million on June 22 has reached at its high ever level of $924.771 million on the back of massive inflow from Germany, Hong Kong, Switzerland, UK and USA.

The net inflow of portfolio investment of $17,996,846 was registered only on June 22, 2007 out of which $12,301,394 came from UK, $3,232,567 came from Switzerland, $1,567,873 came from Hong Kong, $1,062,173 came from USA and $81,649 came from Germany.

According to figures released by State Bank of Pakistan after recent inflow of portfolio investment, the total figure in this account has reached at its all time high level of $924,771,594 on the said date.

http://www.brecorder.com/index.php?id=582179&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Kasuri encourages US entrepreneurs for investment ​*
CHICAGO (June 24 2007): Foreign Minister Khurshid Kasuri, highlighting Pakistan's tremendous economic potential and its key strategic location to serve as regional hub of trade and economic activity, encouraged American entrepreneurs to take advantage of the vast business opportunities existing in the country on the back of its sustained high growth.

Addressing a gathering of corporate leaders at the World Trade Centre in Chicago, the foreign minister apprised them of an attractive business climate and liberal investment policies that saw the country pull in a record foreign direct investment (FDI) of six billion dollars last year, signalling international investors firm confidence in Pakistan's tremendous growth prospects.

The foreign minister informed the gathering that more than 60 American companies were operating in Pakistan and posting handsome profits. He listed diverse sectors of economy including oil and gas, mining and energy, IT and telecom, tourism and hotel industry, real estate and infrastructure development as presenting enormous opportunities.

Khurshid Kasuri also referred to the fact that Pakistan-US bilateral trade had boosted rapidly in the last few years. Pakistan's exports to the United States have swelled to 3.66 billion dollars in 2005-06 from two billion dollars in 2001 and likewise the country's imports from the US have increased to 1.6 billion dollars in 2005-06 from 565 million dollars 2001.

"Pakistan's economic relations with the US are of central importance to us and the US is Pakistan's largest trading partner." The two countries, he said, signed a trade and investment framework in 2003 and had a mechanism in place to promote economic co-operation.

The EXIM Bank is a major partner in guaranteeing air fleet replenishment from Boeing for Pakistan's national airlines, and is willing to offer similar support in other areas. Overseas Employment National Corporation is increasing its activities in Pakistan. Pakistan has also established an organisation to protect intellectual property rights.

He said Pakistan had proposed to the US government that the two countries should begin negotiations for a free trade agreement. It is believed that the conclusion of such an agreement would bolster Pakistan-US trade substantially and provide a win-win environment for businessmen of both countries including those from textile.

He said accelerated economic growth and the opportunities that had been unleashed had created an enabling environment for expanding investment and trade between the two countries.

Drawing American investors' attention to the country's ranking in the top 10 reforms in 2006 World Bank Report of Doing Business and its inclusion in the club of next level by Goldman and Saches, he said Pakistan had become investors' destination by choice due to very liberal investment policies that allowed repatriation of capital, royalty and dividends and 100 percent equity participation.

Speaking in the context of Pakistan's upbeat economic scenario, he informed the gathering that the national economy had grown at an average growth of seven percent during the last five years, positioning itself as one of the fastest growing economies in Asia. This strong growth momentum is underpinned by broad-based comprehensive structural reforms, dynamism in industry, agriculture and services sectors.

He observed that despite shock of soaring oil prices putting constraints on the country's trade balance as well as the staggering 2005 earthquake, Pakistan's economy continued to demonstrate resilience and was again expected to follow high growth trajectory next year also.

The foreign minister said driven by policy of deregulation, liberalisation and privatisation, Pakistan was moving fast towards market economy. The trade volume has shot up to 41.4 billion in 2005-06 from 17.8 billion dollars in 1999 and is likely to rise further this year.

He said the country's foreign exchange reserves had increased manifold in the last five years, covering seven months of imports and the public debt had also declined significantly in terms of gross domestic product (GDP) percentage.

Referring to decreasing poverty, declining unemployment, rising income level, demographic advantages and a growing middle class, he said the strategically located country of 160 million people had the confidence of four vital sub-regions of Asia - the Gulf, Central Asia, South Asia and West Asia.

Boeing Vice President Kim Malishenjo lauded Pakistan's economic development in the last several years. Earlier, the foreign minister also visited Board of Trade Chicago where its director briefed him.

http://www.brecorder.com/index.php?id=582211&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Petroleum import bill swells to $6.637bn​*
ISLAMABAD, June 23: The countrys import bill of petroleum products rose by 11.15 per cent to $6.637 billion during the July-May period of outgoing fiscal year as against $5.971 billion the same period last year.

The share of oil group in the total import bill also soared to 24 per cent from 23 per cent earlier. This indicates it continues to be the single biggest contributor to import bill despite decline in international oil prices.

Statistics released by the Federal Bureau of Statistics (FBS) here on Saturday showed that the import of petroleum based products increased by 33.76 per cent to $3.430 billion as against $2.564 billion the same period last year.

However, the imports of petroleum crude declined by 5.87 per cent to $3.207 billion during the first 11 months of the outgoing fiscal year as against $3.407 billion in corresponding period of last year.

The second biggest component of the import bill in value terms was the machinery group. Its imports increased by 12.02 per cent to $6.045 billion during the period under review as against $5.39 billion the same period last year.

The break-up showed that the import bill of power generating machinery witnessed an increase of 40.88 per cent, office machines 8.53 per cent, construction machinery 14.21 per cent and agriculture machinery 39.19 per cent. However, the import of textile machinery declined by more than 35.92 per cent during July-May 2006-07 over the corresponding period of last year.

In the telecom sector, the import of mobile phones increased by 27.58 per cent and other apparatus 27.58 per cent during the period under review over the same period last year.

The textile group imports jumped 19.64 per cent to $1.383 billion during the July-May as against $1.156 billion over the same period last year.

Of these imports of raw cotton up by 64.08 per cent, synthetic and artificial yarn 2.46 per cent, worn clothing 16.69 per cent and other textile items 4.36 per cent.

The import of agriculture and other chemical groups rose by 3.70 per cent to $3.914 billion. These include plastic materials up by 13.63 per cent, medicinal products 29.47 per cent and others 10.22 per cent. However, import of fertiliser manufactured declined by 41.57 per cent and 13.83 per cent in insecticides.

http://www.dawn.com/2007/06/24/ebr7.htm


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## Neo

*Textile exports to reach $11bn​*
ISLAMABAD, June 23: The textile export target has been projected at more than $13 billion for the fiscal year 2007-08 up by 20 per cent from the current fiscal year target, says Textile Minister Mushtaq Ali Cheema.

It has been estimated that the textile exports will reach $11 billion during the fiscal 2006-07.

Textile exports reached $9.816 billion during the 11 months of the current fiscal against $9.257 billion over the same period of last year, indicating a growth of 6 per cent.

Talking to Dawn here on Saturday the minister said that the low growth in textile products was mainly because of the high cost of production. The six per cent Research and Development (R&D) subsidy will help the industry to finance the additional cost incurred on account of innovation of products and improving skills of the employees.

I am sure that the growth in textile products will be around 20 per cent in 2007-08 as against the average growth of six per cent in the year 2006-07, the minister claimed.

The share of textile products in total exports reached 63.3 per cent in the 11 months of the current fiscal as against 61.9 per cent during the same period last year.

Official figures compiled by the Federal Bureau of Statistics (FBS) showed that the export of almost all products excluding raw cotton, cotton cloth, and bed wear recorded marginal growth during the first 11 months of the current fiscal over the last year.

Export of readymade garments witnessed a growth of 5.35 per cent to $1.254 billion during the July-May period of the current fiscal as against $1.190 billion over the same period last year.

Statistics showed that export of knitwear also recorded a growth of 12.94 per cent during July-May 2006-07 to $1.773 billion as against $1.570 billion over the same period last year.

Export of raw cotton, cotton cloth, and bed wear recorded a negative growth by 21.73 per cent, 4.10 per cent and 3.10 per cent, respectively, during July-May 2006-07 over the same months of the last year.

Export of cotton yarn, cotton carded and yarn other than cotton yarn, was up by 4.21 per cent, 3.92 per cent, 82.59 per cent, towels 2.43 per cent, tents, canvas 99.06 per cent, art silk and synthetic textile 122.12 per cent, made-up articles 13.45 per cent and other textile materials 17.42 per cent during the period under review over last year.

http://www.dawn.com/2007/06/24/ebr10.htm


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## Neo

*Exports of traditional products plunge​*
ISLAMABAD, June 23: Pakistans export of traditional products  rice, carpets, sports, leather and footwear  recorded double digits decline during the first 11 months (July-May) of the outgoing fiscal year compared to corresponding period of last year.

Latest figures released by the commerce ministry here on Saturday showed that the export of other commodities like cement, gur and gur products, jewellery, gems and engineering goods recorded a marginal growth during the period under review.

Despite the falling exports of these traditional products, the government had failed to announce any special measures in the new budget to arrest the trend.

The figures showed that the export of rice dipped 3.07pc during the period under review over the last year. The foreign sales of basmati rice rose by 19.91pc while other varieties declined by 18.29pc during July-May 2006-07.

The overall export of sport goods declined 16.86pc during the period over last year as footballs saw a major drop of 26.38pc. However, the export of gloves rose by 196.93pc.

The carpets, rugs and mats exports recorded a negative growth of 10.43pc; and leather goods (garments and gloves) by 25.36pc during the first 11 months of the outgoing year. The export of leather garments fell 24.15pc, leather gloves dipped 17.89pc and other leather manufactures plunged by 49.71pc.

Export of footwear declined by 19.69pc during the July-May 2007-06. Leather footwear dipped 14.36pc, canvas footwear 42.32pc and other footwear 40.21pc. The export of surgical instruments and medical equipment, however, jumped by 10.85pc.

The export of engineering goods up by 8.70pc, auto parts by 21.74pc, cement by 32.44pc, gems by 17.04pc, jewellery by 128.19pc, gur and gur products by 23.80pc during period under review over the last year.

http://www.dawn.com/2007/06/24/ebr11.htm


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## Neo

*UK-US investment stands at $2.683 billion ​*
KARACHI (June 25 2007): Investments by USA and UK in Pakistan have gone up by 107 percent and 690 percent, respectively, together touching the high level of $2.683 billion during July-May period of current fiscal year, making 42 percent of overall investment in the country against 21 percent of the same period of last fiscal year.

SBP statistics show that USA and UK investment is gradually increasing here, as Pakistan is a strategic partner of USA and UK in the war against terrorism for about last six years.

Statistics show that after 9/11, during current year Pakistan's economy for the first time has benefited in real manner by USA and United Kingdom through their investments.

Among foreign investor countries USA is on top with $1.544 billion investment, while UK with $1.139 billion, is the second and Netherlands is the third with $765.8 million this year.

UK and USA share in total foreign investment (foreign direct investment and portfolio investment) this year has increased by $1.795 billion to $2.683 billion as compared to $888 million of the same period of last fiscal year.

According to central bank statistics, during the period under review USA investment stood at $1.544 billion against $744.6 million of last year, depicting a raise of $800 million or 107 percent.

USA investors' share was $750.4 million in portfolio investment and $794.4 million as foreign direct investment (FDI). UK foreign investment grew by $995 million, or 690 percent, to $1.139 billion against $144.2 million.

FDI by UK witnessed a growth of 369 percent to $780.9 million during current fiscal.

Economic experts expect more investment from both countries in future but believe that it would depend on the relations of both countries and demand of USA in war against terrorism. Other leading countries in foreign investment were Netherlands, China, United Arab Emirate, Australia, Japan, Saudi Arabia, Singapore and Switzerland.

China invested $711.1 million, United Arab Emirate $429 million, Singapore $139.5 million, Saudi Arabia $105.3 million, and Switzerland $66.6 million.

In addition, India's investment stood at 0.1 million with 77 percent decline' Canada invested $10.8 million, Australia $59.8 million, Japan $57.4 million and Kuwait $83.9 million.

It may be mentioned here that country's total foreign investment witnessed a growth of 50 percent at 6.282 billion dollars 11 months of current fiscal year against $4.177 billion of last year.

http://www.brecorder.com/index.php?id=582992&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*US to provide over $1.5 billion uplift assistance over next 5 years ​*
WASHINGTON (June 25 2007): Underscoring US commitment to an enduring and broad-based relationship with Pakistan, a senior administration official has said the United States would provide more than $1.5 billion in development assistance over next five years to help the key South Asian ally develop in the fields of education, health, governance and economic growth.

Including $750 million for programs in the Federally Administered Tribal Areas Assistant Secretary of State for South Asia Richard Boucher described US ties with Pakistan as "one of America's most vital relationships." He cited examples of multifarious and long-term ties and stated the "US has a continuing commitment to Pakistan's defence needs."

"The sale of F-16s to Pakistan late last year, a regular schedule of bilateral military exercises, and the recent delivery of Cobra helicopters demonstrate the long-term commitment of the United States to its strategic partnership with Pakistan," he stated on the occasion of 15th annual US-Pakistan Friendship Day.

Referring to expanding cooperation in the field of education he noted that in just four years, funding for the bilateral Fulbright program has grown from $1 million per year to over $20 million per year. More than 200 Pakistanis are currently studying for Masters and PhD's in the United States under this program, making it the largest Fulbright program in the world in terms of U.S. government funding.

In the field of basic education, he said over the past five years, the US government has spent over $200 million in support of the government of Pakistan's education reform strategy by working with it to strengthen education policy and planning at the federal, provincial and district levels; improve the skills and performance of teachers and administrators; increase youth and adult literacy; expand public-private partnerships; and provide school improvement grants and involve parents and communities in public schools.

In addition, the United States is also helping Pakistan in its recovery efforts in areas hit by a staggering earthquake in October 2005. He said the US has pledged $206 million for earthquake reconstruction over the next four years. Last winter the US assistance helped Pakistani ensure that those living in earthquake areas had adequate shelter and clothing, he added.

"We say often that Pakistan is a key ally in the war on terror, and that is true. More than that, however, the United States and Pakistan have developed a strong, multi-dimensional, strategic partnership. Our commitment to the Pakistani people is illustrated by our comprehensive development programs in health, education, and economic development," he observed at a gathering organised by Pakistani American Congress. Boucher also cited new facets in US-Pakistan relationship including discussions of education initiatives and a high-level Joint Committee on Science and Technology.

"We are also concluding consultations with Congress on Reconstruction Opportunity Zones and hope that legislation will be voted on in the coming months.

With US support we will be providing $150 million this year in development assistance to Pakistan to support its Sustainable Development Plan for the Federally Administered Tribal Areas, where Pakistan is implementing a strategy to strengthen governance, promote economic development and improve security."

He said Pakistan's strategy has two goals: making Pakistan and the region more stable, open and prosperous; and reducing extremism and thereby eliminating the Taliban and al Qaeda presence in areas bordering Afghanistan.

"The United States shares those goals and is working closely with Pakistan to make them a reality, including working to find additional resources to support efforts to strengthen the Frontier Corps."

The US Assistant Secretary acknowledged President Musharraf's reform efforts in the last several years. "We applaud President Musharraf's efforts to build a modern, democratic, and prosperous nation. The passage of the Women's Protection Bill in November 2006 was an important indicator of President Musharraf's commitment to that goal."

Boucher also noted that Pakistan has made significant progress under the Pakistani leader toward a fully free media and said media organisations have flourished. "We believe it is critical for Pakistan's democratic development, its domestic stability, and its international reputation that this progress continues."

http://www.brecorder.com/index.php?id=583056&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Neelum-Jhelum project contract to be awarded next week: Wapda chief ​*
ISLAMABAD (June 25 2007): Chairman Wapda Tariq Hameed said the contract of 960 MW Neelum-Jhelum hydro power project would be awarded next week to lowest bidder a Chinese company. "The tendering process of seven years project has already been completed," he told PTV.

He said Mangla raising project would start storing 2.9 million extra water from April 2008.Also 190 MW additional power would be generated from Mangla raising project next year. WAPDA has spent a sum of Rs 21 billion on improving its distribution system Grid Station of 500 kv has been established in Sahiwal, direct line has also been laid from Lahore to Rawat, distribution system in Muzaffargarh has been improved greatly.

These measures help decreasing losses to 6.6 from 7.5 percent, he said. As many as 33 power transformers have been set up in Lahore city with the cost of Rs 1.6 billion.

http://www.brecorder.com/index.php?id=583015&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Rs 4.779 billion hotel financing deal signed ​*
KARACHI (June 26 2007): A signing ceremony for the largest hotel financing in the history of Pakistan was held here on Monday for the Avari Islamabad Hotel Project. This has a total project cost of Rs 4.779 billion, which is being financed through Rs 3.750 billion rated privately placed Term Finance Certificates (TFCs).

Byram D Avari, Chairman Avari Group, Badar Kazmi President Standard Chartered Bank Pakistan Limited, Mansoor Ali Khan head of Saudi Pak Bank and Muneer Kamal of KASB Bank sign the agreement.

The Standard Chartered Bank and Saudi Pak Commercial Bank were the mandated lead arrangers for the issue and KASB Bank acted as co-arranger. The 7-year issue has been rated single 'A minus' by JCR-VIS rating agency. These TFCs are being issued on the rate of 3.25 percent over KIBOR. The issue received an overwhelming response from the market and a diverse Investor base including banks, non-banks and funds invested in the TFC.

Speaking on the occasion Byram D. Avari, Chairman, Avari Group said the Avari family has been known in the hospitality business since 1944 when his late father Dinshaw B A vari purchased the Bristol Hotel in Karachi. Today, his sons Dinshaw and Xerxes, the new generation, are spearheading operations with lateral thinking and dynamic ideas.

Islamabad will be the height of "Luxury" being the first 417 all-suite hotel of Pakistan, with each room being 750 sq.ft, with two LCD TV's, separate spas for ladies and gents, a covered swimming pool, state of the art meeting rooms, a 1500 persons ballroom and 400 underground car park.

He said as many as 700 men and 300 women will be employed by the hotel and these 1000 persons will in turn be able to support their families of 10,000 persons.

http://www.brecorder.com/index.php?id=583268&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Manufacturing sector growth targeted at 10.9 percent ​*
FAISALABAD (June 25 2007): In order to achieve the goal to sustain industrialisation, a growth rate of 10.9 percent has been targeted for the manufacturing sector including 12.5 percent for large-scale manufacturing and 7.5 percent for small scale manufacturing for next year 2007-08.

According to planning commission sources, an allocation of Rs 18.75 billions has been earmarked for the industry, textile and commerce sectors which is the highest one ever made in these sectors.

*MAJOR PROJECTS TO BE CARRIED OUT IN INDUSTRY SECTOR DURING 2007-08 INCLUDE: *agro-food processing facilities at Multan (Rs 69.86 million), Aik Hunar Aik Nagar (Ahan) (Rs 60.369 million), Gujranwala Business Centre, Gujranwala, (Rs 13 million), sports industries development centre Sialkot (Rs 168.74 million), technical up-gradation of garment industry all over Pakistan (Rs 100 million), five advanced CAD/CAM training centres (Rs 139.4 million), Gujranwala tools, dies and moulds centre (Rs 295.000 million), 2MGD water desalination project Gawadar, Balochistan (Rs 178.86 million).

Major projects in the textile sector include three garment cities at Lahore, Faisalabad and Karachi, implementation of export plan and establishment of two fibre testing laboratories.

Major projects to be carried out in commerce sector include SA-8000, Pakistan School of Fashion Design, Lahore, Trade and Facilitation Project and Expo Centre, Lahore.

In view of anticipated competition with countries like China and India in the global market, particularly in the backdrop of opening of Chinese export of textile and clothing in European Union and USA in 2008, efforts are being made to make the textile and clothing sector to be more dynamic and competitive. To achieve this objective, a separate textile industry ministry was created and a number of projects including Lahore, Faisalabad, Karachi cities and Karachi textile city projects have been planned in the public sector with an investment of over Rs 3.5 billions, of which two projects Lahore Garment and Faisalabad Garment Cities have been initiated during 2006-07 with an investment of Rs 997 million, said official sources.

In order to accelerate export, planning commission sources mentioned, an investment of around Rs 3 billion was planned in the commerce sector. A number of projects including social accountability SA-8000, Expo Centre Lahore, Pakistan School of Fashion Design, Lahore and Trade and Transport Facilitation projects were initiated during the year under review.

An investment of Rs 1,986 million is estimated for these projects during FY 2006-07. Two major projects of Pakistan School of Fashion Design Lahore and Expo Centre, Lahore are expected to be completed by June 2008.

Commenting over the reforms in the textile sector, ministry of textile industry said that that ministry is currently in the process of implementing and finalising various initiatives in the following areas; contamination-free cotton to cater to the demand of quality raw material for the finished products; technological up-gradation at the ginning, weaving, processing and garment production level; product diversification and value-addition through better materials, accessories and design inputs; up gradation of the weaving sector with air jet and water jet looms along with zero rated duties; encouragement of integrated as well as horizontal garment industries on the basis of R&D and technological support for the garments sector; introduction of cotton hedge trading to promote marketing of cotton; testing facilities for increasing compliance and conformity assessment; and augmenting the institutional capacity in the field of research by setting up of R&D cell within the ministry.

In order to accelerate the growth of textile sector and to resolve issues of supply chain management and value addition, textile ministry has taken a number of proactive measures since its inspection.

*THESE INCLUDE:* Pakistan Textile City Project; The principal objective of the textile city is to develop and manage a state-of-the-art industrial zone on 1,250 acres dedicated to value added textile units in order to avail the opportunities arising out of the decision to remove of quota's applicable in the WTO agreement on textile and clothing from January 2005. For this project 700 acres were acquired in the start of 2006 while remaining 550 acres were made available in January 2007.

The government also announced the setting up of three garment cities at Karachi, Lahore and Faisalabad under the Trade Policy. The purpose of these projects is to provide facilities and necessary infrastructure to the textile sector with a view to promoting value added garments (woven and knitted), home textiles, made ups and accessories to the international markets. The EDF board approved a sum of Rs 1.425 billion for three garment cities.

This project is expected to attract foreign investors who would be willing to rent state-of-the art manufacturing factory space rather than commit their capital in land, utilities and construction. It will also increase the proportion of value added products in textile exports, generate employment and lead to higher per capita productivity and reduced wastage because of in house training and laboratory testing facilities provided by the project.

The Textile Garments Skill Development Board; was set up in October, 2005 and is primarily charged with carrying out skill development of workers for the garments industry within the garment units including the objectives of production of contamination-free cotton, project financing for small and medium entrepreneurs in high value added textile sectors, review of domestic and international prices of cotton to ensure a fair return to growers, maintaining stability in domestic prices and establishing liaison with all stakeholders from cotton growers to textile exporters for removing any bottlenecks in implementation of the recommendations. It is expected to train 10,000-12,000 stitching machine operators in these units in the span of just one year to build a critical mass of skilled workers.

The scope of these training programmes is to be widened to terry towel and bed linen sectors during the current financial year. Presently, the training programme is continuing in 30 units, which are enrolling candidates in consecutive batches.

Textile industry sources mentioned that contamination of cotton is a very serious problem affecting the local spinning industry and the export of textile relatively. In order to tackle this problem, it was decided by the government to launch the Clean Cotton Programme in collaboration with Trading Corporation of Pakistan and provincial agriculture departments, which included payment of premium at Rs 50 per mound to growers directly. The government had sanctioned an amount of Rs 35 million for this purpose.

http://www.brecorder.com/index.php?id=583035&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*'Efforts on to enhance surgical instruments export' ​*
SIALKOT (June 25 2007): The chairman, Task Force on Trade and Industry, Mian Muhammad Riaz, has said the government has adopted a far-reaching approach for bringing out the surgical industry from stagnation. In an interview with Business Recorder here, he said the step was being taken for enhancing the export-volume of surgical industry of the country.

The surgical industry was enjoying the monopolistic position globally and the surgical instruments are most economical and coupled with unconditional guarantee of the finest quality, he added. On the pressing demands of exporters and manufacturers engaged in surgical industry the government was considering imposing ban on the export semi-finished and unfinished products for protecting the surgical industry from decline, he said.

The government had allowed the duty-free import of raw material for facilitating the industrial sector but the rates of raw material were increasing apace as a result of which the cost of production was increasing rapidly, he said.

Riaz said that setting up of a 'Raw Material Bank' was under active under consideration of the government aimed at providing raw material to the surgical manufacturers and exports on fixed rates.

He called upon the investors especially the overseas Pakistanis that they should focus on investing in stainless steel sector for improving the production standard of Pakistani steel, adding that quality stainless steel had become more imperative because the foreign buyers had become more quality conscious. Despite various hurdles and rapid variation in the prices of raw materials the business community of Sialkot was making hectic efforts in maintaining the quality and standard of the surgical instruments, he added.

Mian Riaz also said the government had focused its special attention on bringing revolutionary changes in industrial sector of the country with the concept of ensuring strong export base.

Undoubtedly, Pakistan had become a very attractive hub of foreign investment due to the strong and effective economic policies of the government, he said. To cope with the shortage of trained and skilled workforce, the government has taken numerous steps to produce trained and skilled force in the country, he added.

He said that a full-fledged Institute of Surgical Technology costing Rs 160.459 million is being established and this institute would play a pivotal role in the provision of surgical nursery to the manufacturers of surgical instruments. The work on this project would be carried out shortly and this institute would impart training to 250 students in various fields of surgical manufacturing and it will be equipped with latest machinery, he added. He claimed that the institute will usher in a new era in the development of surgical industry.

The step would not only help reduce unemployment graph but also supportive in increasing the overall production of surgical units as well as help in increasing the export volume, he added.

The surgical industry represents manufacturers and exporters of surgical instruments, dental instruments, veterinary, pedicure and manicure items, tailor scissors, barber scissors and beauty saloon instruments, he added.

Riaz also said on government-to-government level and individual level efforts were being made for acquiring instructors from Germany for imparting latest training to the students in the Institute of Surgical Technology.

On the occasion, he suggested that business community of this export-oriented city and hub of cottage industry should formulate a strategy for setting up power generation plant on self-help basis for catering to the industrial needs and keep the economic wheel in full motion.

http://www.brecorder.com/index.php?id=583033&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*Local group sells Mobilink stake to parent company for $290m ​*
KARACHI: A local group has its shares in Mobilink - a cellular service with highest number of subscriber - to its parent company in a $290 million deal, making the service a complete subsidiary of a foreign telecom giant.

Saif Telecom - a subsidiary of the countrys Saif Group - has entered into an agreement with Egypts Orascom Telecom to sell out its 11.31 per cent stakes in Mobilink at $290 million, industry sources confirmed on Monday.

Actually the two sides had been in talks for a quite sometime to reach such deal and finally reached the contract, said a source privy to the development. Details of the deal have not been disclosed officially but it is estimated that it values around $290 million.

He said with the latest development Orascom Telecom had become the sole owner of the Mobilink, which had the largest subscriber base compared to other five cellular services in the country.

The Orascom Telecom has shown serious interests in Pakistani telecom, as the company already ventured into its $60 million undersea fibre cable project as a first ever private sectors project in the particular area, which brought the submarine telecom into the country.

Mobilink, the Egyptian companys cellular arm in Pakistan, has also been in talks with various local telecoms to acquire their majority stakes, what the experts see an attempt strengthening its presence in the region to capitalise on approaching opportunities. 

The companys deal with the local group is seen in line with the same strategy. Saif Group and Orascom Telecom have been in partnership in Mobilink since 1994, which finally came to an end with the recent deal, said the source. Though the group has ended its commercial ties with Orascom, it has five other telecom ventures, operating in partnership with different local and foreign companies.

He said Orascom Telecom would fund the acquisition with proceeds from the $750 million Senior Notes issuance closed in February this year. Following the transaction, he said, Orascom Telecom would receive 100 per cent of the after tax proceeds from management fees and dividends paid by Mobilink.

This transaction confirms our strategy to consolidate our ownership in our subsidiaries through acquisitions of minority shareholder stakes, when appropriate, in order to increase growth, profitability and shareholder value, the source said quoted the companys official as saying.

Quality conscious cellular companies have already entered into a new kind but stiff competition, which makes the country to win around two billion dollars investment pledges during 2006-07 for their networks expansion.

Mobilink topped in making the investment commitments for the current financial year, as the company planned highest figures for network expansion in 2006, said the source. Its total budget for 2006 stood at $600 million. It ($600 million) was purely for 2006, as the company decide a separate investment plan for the next (2007) year.

Mobilink has become the market leader both in terms of business growth and customer base in the country. The company is the first cellular service provider to operate on a 100 per cent digital GSM technology in Pakistan and enjoys almost 50 per cent market share.

By April 2007 the company (Mobilink) enjoyed 25.21 million out of total 58.39 million subscribers across the country, said the source citing the figures compiled by the Pakistan Telecommunication Authority (PTA).

http://www.thenews.com.pk/daily_detail.asp?id=61903


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## Neo

*US reaffirms pledge to help Pakistan meet energy needs​*
ISLAMABAD: US Charge dAffaires Peter W Bodde on Monday said the US was conscious of Pakistans growing energy needs and would try to address them.

Addressing the inauguration of a two-day renewable energy symposium organised by the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and the SAARC Chamber of Commerce, he reaffirmed the US governments commitment to help Pakistan meet its energy requirements.

The wind and solar maps provide the people and government of Pakistan and Afghanistan a quantified and qualified assessment of wind and solar energy resources of their respective countries, said Bodde. He said the US was the largest bilateral donor to Pakistan. Over the course of the next five years, it is providing Pakistan with $1.5 billion through USAID for education, health, economic growth, democracy and governance, and earthquake reconstruction, he added.

Earlier, Federal Minister for Water and Power Liaquat Ali Jatoi, inaugurating the symposium, said the government would continue supporting renewable sources of energy. He said Pakistan was committed to successfully meeting the challenge of providing energy security to the country. The maps of Pakistan and Afghanistans renewable energy sources were presented at the symposium. The USAID South Asian Initiative for Energy (SARI/E) had funded the launch of these maps, which were produced by the National Renewable Energy Laboratory of the US Department of Energy. The mapping exercise for both Pakistan and Afghanistan was completed in April 2007.

USAID Pakistan Mission Director Anne Aarnes, FPCCI President Tanvir Sheikh, Advisor to the Afghan Minister of Energy Amin Munsif, and USAID SARI/E Regional Coordinator Robyn McGuckin were also present on the occasion.

http://www.dailytimes.com.pk/default.asp?page=2007\06\26\story_26-6-2007_pg7_10


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## Neo

*Drug Expenditure Growing Slowly in Pakistan and Should Reach US$1.82bn in 2010, with Per Capita Spending Expected to Be Only Just over US$10 by 2010​*
Tuesday June 26, 2007

DUBLIN, Ireland--(BUSINESS WIRE)--Research and Markets 
(http://www.researchandmarkets.com/reports/c60765) has announced the addition of Pakistan Pharmaceuticals & Healthcare Report Q4 2006 to their offering.

The Pakistan Pharmaceuticals & Healthcare Report provides independent forecasts and competitive intelligence on Pakistan's pharmaceuticals & healthcare industry.

Drug expenditure is growing slowly in Pakistan and should reach US$1.82bn in 2010, with per capita spending expected to be only just over US$10 by 2010. However, the recently released Pakistan Pharmaceuticals & Healthcare report recognises that the domestic drug sector is still striving to modernise. The country has around 400 licensed pharmaceutical companies including 30 multinationals. Foreign drug-makers account for the majority of the drug market in value terms, with a 53% share, although domestic companies are dominant in volume terms.

Despite having a large population, Pakistan's share of the global pharmaceutical market remains relatively low. Meanwhile, the small-scale nature of the pharmaceutical manufacturing sector and the fact that production consists mainly of basic medicines has meant that Pakistani drug exports are relatively minimal. However, the government is attempting to encourage this sector by offering incentives to local exporters and supporting the improvement of domestic production standards. Entrance to the WTO will also help drug exporters by opening up markets across the globe.

The adjusted Business Environment Rankings for Asia reveal that Pakistan's position is unchanged in 14th place. This is primarily due to the country's poor regulatory system, which we rate as one of the worst in the region. The government does seem to be making some efforts to improve this situation and has recently increased the number of courts dealing with counterfeit drugs from nine to 20. It is hoped that efforts to battle fake and substandard products will boost foreign investor confidence and stimulate local production. The country's long term political risk rating has improved slightly, compared to the previous quarter. Pakistan's alliance with the US is helping to turn sentiment in the international community from hostility to active support. Meanwhile, the US itself is providing billions of dollars in aid and debt forgiveness.

Pakistan is going ahead with plans to implement a new autonomous drug authority. The organisation's main function will be to help streamline the registration process for pharmaceuticals and healthcare ensuring the quality of all medicines. Pakistan has severe problems with counterfeit drugs and the World Health Organisation (WHO) estimates that between 40-50% of drugs in the market are fake or substandard.

Content Outline:

Chapter - Executive Summary

Chapter - Pakistan: Business Environment Ranking

Chapter - Pakistan: Market Summary

Chapter - Regulatory Regime

Chapter - Industry Trends And Developments

Chapter - Industry Forecast Scenario

Chapter - Country Snapshot: Pakistan Demographic Data

Section 1: Population:
Demographic Indicators (2005)
Rural/Urban Breakdown

Section 2: Education And Healthcare
Education
Healthcare: Vital Statistics
Healthcare: Expenditure

Section 3: Labour Market And Spending Power
Employment Indicators
Consumption And Stratification
Wages Per Annum

Chapter - Competitive Landscape

Chapter - BMI Forecast Modelling

Chapter - Appendix: Regional Demographic Data

Companies Mentioned:
- Abbott Laboratories
- Efroze
- Ferozsons Laboratories
- GlaxoSmithKline
- Hilton Pharma
- Merck & Co
- Novartis
- Pfizer
- Sanofi-Aventis
- Wyeth

For more information visit http://www.researchandmarkets.com/reports/c60765

http://biz.yahoo.com/bw/070626/20070626005664.html?.v=1


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## Neo

*Rally Energy Receives Approval for Provisional Gas Price and Production Commencement in Pakistan and West Issaran, Egypt Drilling Update​*Tuesday June 26, 2007

"RAL" - TSX Exchange "RLE" - Frankfurt Stock Exchange www.rallyenergy.com
CALGARY, June 26 /CNW/ -
SALSABIL, PAKISTAN

Rally Energy Corp. (the "Corporation") is pleased to announce that approval has been received from the Government of Pakistan for an interim gas price for the period up to November 30, 2007 and to start production immediately from the Salsabil Field in Pakistan.

The Salsabil gas price will be US$2.81/MMBTU as governed by the provisions of Petroleum Policy 2001. Until the amine plant installation is completed during the third quarter, an 11% quality adjustment discount pertaining to CO2 content will apply.

The operator of the Safed Koh concession expects to commence gas production this week from two wells at an aggregate rate of 15 to 20 MMCF/d or 5 to 6 MMCF/d net to the Corporation.

WEST ISSARAN, EGYPT

The Corporation is also pleased to announce that it has completed the drilling of two additional oil wells, for a total of four wells, in West Issaran. The table below outlines net pay results in feet, by formation, for the West Issaran area. Included in the discovery area is the Issaran - 24 well drilled in 2003.


Upper Middle Lower
Wells Dolomite Dolomite Dolomite
----------------- ------------ ------------ ------------

West Issaran - 1 220 35 75
West Issaran - 2 78 0 0
West Issaran - 4 164 20 0
Issaran - 24 147 0 84

There was no hydrocarbon present in the Nukhul formation in all 4 wells.
The Corporation expects to drill the West Issaran - 3 well next month and several delineation wells in the fourth quarter of 2007 to determine the reserves potential of the West Issaran discovery.

http://biz.yahoo.com/cnw/070626/rally_energy_update.html?.v=1


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## Introvert

*$13 million increase in towel exports *
ISLAMABAD: An increase of $13 million has been recorded in towel exports from the country during the eleven months of current financial year.

According to the federal statistics bureau, with an increase of $13 million the towel exports from the country went up to $ 544.8 million during the 11 months of the current financial year.

As per the statistics, the towel exports are 2.4 per cent more as compared to the same period in the previous year.

The exporters say that due to increase in prices of cotton and yarn in international market,
an increase was seen in the import orders by the foreign buyers.
http://www.geo.tv/geonews/details.asp?id=7980&param=3


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## Neo

*ICI plans Rs 600m power plant​*
KARACHI: ICI Pakistan plans to invest Rs 600 million in ICI Pakistan PowerGen Limited, its wholly owned subsidiary, for a cogeneration plant that will provide cheap energy to the company. 

The company wants to put this item at its Extraordinary General Meeting (EGM) for approval. The approval of Rs 600 investment plan at its EGM, to be held on July 20, 2007 includes Rs 400 million in equity and Rs 200 million in loans, a notice to the Karachi Stock Exchange (KSE) revealed on Tuesday. ICI Pakistan PowerGen Ltd is incurring trading losses because the input cost of furnace oil has increased substantially without a consistent increase in its selling price.

The board of directors of ICI PowerGen after evaluating different options has decided it should install a combined heat waste recovery and power plant normally known as a co-generation or cogen plant, which envisages the installation of two gas turbines, a waste boiler and associated equipment with a capital outlay of up to Rs 600 million.

The proposal by the directors of the ICI PowerGen to install the combined heat and power plant will result in significantly reducing the variable cost of the power plant by substituting the expensive production of both the electric power and steam with the relatively low-cost electric power and steam. The new investment will keep the power plant running in order to ensure continuous and uninterrupted power supply to ICI Pakistans PSF plant.

http://www.dailytimes.com.pk/default.asp?page=2007\06\27\story_27-6-2007_pg5_5


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## Neo

*Bestway and Abu Dhabi group acquire UBL GDR worth $200 million ​*
KARACHI (June 27 2007): Both Bestway and Abu Dhabi group have increased their shareholding to 29.5 percent in UBL by acquiring GDR's worth 200 million dollars, it is reliably learnt. Both groups have jointly acquired 51 percent stake at the time of privatisation - evenly split among them for 201 million dollars.

The cost of acquisition after bonus share is estimated between Rs 30-40 per share. The low caps maximum holding by a group directly or indirectly in a bank at 29.5 percent. As such, the additional four percent has at the rate of Rs 195 per share is 5.5 times the management buy out price.

Later, the government did a public offering of 10 percent shares at Rs 55 per share, but the offer was under-subscribed and only four percent shares could be listed. After the GDR offering government's holding is reduced to 20 percent in the bank.

Business Recorder understands that a probe has been ordered to ascertain the responsibility for the UBL share dropping from Rs 214 to Rs 206 just before the end of day trading which resulted in the GDR offering at Rs 195 instead of Rs 203. This cost the government a net loss of just under two billion rupees.

Perception given that the Bank of Punjab affair may have caused this is said to be unfounded, as other bank shares did not take a dip. And, instead it was trades by overseas investors, which resulted in the share value dropping by rupees eight in less the five minutes. When trading resumed on the next trading day, UBL share value once again touched Rs 216 per share.

http://www.brecorder.com/index.php?id=583570&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*1100 megawatts Kohala hydel project feasibility pact signed ​*
LAHORE (June 27 2007): Wapda signed an agreement with a joint venture Messrs Kohala Hydropower Consultants for preparation of feasibility report, detailed engineering design and tender documents of 1100 MW Kohala Hydropower project here at Wapda House on Tuesday.

Wapda General Manager Manger Hydro planning Zia -ul -Hassan and consultants, representative Robert Goldsmith signed the agreement on behalf of their organisations. Wapda Chairman Tariq Hameed and Member Water Muhammad Mushtaq Chaudhry were also present on the occasion. Kohala Hydropower project, with an installed capacity of 1100 MW will be constructed on Jhelum River in Azad Jammu and Kashmir AJK.

The project on its completion will contribute 4800 million units Kilowatt hour of hydel electricity to the national grid annually. The PC-II of this run of the river project with a 17-km long tunnel for diversion of water has already been approved by the ECNEC tor conducting feasibility study.

The study will be completed in two years with a cost of Rs 312.5 million. Messrs Kohala Hydropower Consultants is a joint venture of three foreign and two national firms led by Messer Snowy Mountains Engineering Corporation of Australia.

The other firms include Messrs Scott Wilson of UK, Messrs Engineering General Consultants of Pakistan Messrs SOGREAH Consultants of France and Messrs Mirza Associates Engineering Services of Pakistan.

http://www.brecorder.com/index.php?id=583608&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*China cuts tariffs on imports from Pakistan, Africa​*
BEIJING: China will lower import taxes on 3,975 categories of goods from Pakistan, by 11 percent to an average tax rate of 8 percent, also effective July 1, the statement said. 

China will also exempt imports from 26 under-developed African countries from tariffs, its Finance Ministry said on Tuesday, in an attempt to promote mutual trade. 

The regulation, approved by the state council, or the cabinet, will exempt 256 items China imported from the 26 countries effective on July 1. The move would further enlarge Chinas imports from African countries, and promote the better development of mutual trade, the ministry said. It did not name the 26 countries or the items. China similarly lowered tariffs on a broad range of imports from 29 African countries effective Jan. 1, 2005. China is broadening trade ties with Africa, an important source of minerals, crude oil, cotton and other natural resources, and has offered its African allies a variety of investments and financial packages.

http://www.dailytimes.com.pk/default.asp?page=2007\06\27\story_27-6-2007_pg5_8


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## Neo

*Record $2.537bn import of eatables​*
ISLAMABAD, June 26: The import bill of eatables has reached record $2.537 billion during the 11 months of the fiscal year 2006-07 as against $2.494 billion over the same period last year.

The low increase in the yield of essential farm produces for the last two consecutive years has encouraged import of food items, like pulses, sugar, etc., which were imported for meeting the domestic consumption.

Moreover, tariff rationalisation and free trade treaties have resulted in the influx of foreign brands in the local market.

Official figures compiled by the Federal Bureau of Statistics (FBS) showed that import of milk products increased by 31.01 per cent to $72.995 million during the July-May period of the current fiscal year as against $55.710 million.

An increase of 54.83 per cent was witnessed in import of pulses to $230.212 million as against $148.691 million, and an increase of 26.13 per cent was witnessed in palm oil $810.933 million as against $642.948 million.

Import of dry fruits increased by 19.15 per cent to $63.108 million during the period under review as against $52.963 million; 3.20 per cent increase was witnessed in spices to $49.986 million as against $48.435 million; and 7.33 per cent increase was seen in import of all other food items to $775.441 million as against $722.473 million.

The analysis of other commodities showed that the import bill of soyabean oil increased by 75.56 per cent to $36.659 million as against $20.881 million.

However, import bill of other food items, like wheat unmilled, declined by 68.38 per cent to $41.538 million during the July-May period of the current fiscal year as against $131.353 million over last year.

Import of tea declined by 1.37 per cent to $198.422 million during the period under review as against $201.173 million over the same period of last year; a decrease of 44.97 per cent was witnessed in import of sugar which stood at $258.338 million as against $469.465 million over the same period last year.

With the current increase in the import bill of food items, the total import bill has reached $27.743 billion during the July-May period of the current fiscal year as against $25.594 billion over the same period last year, an increase of 8.40 per cent.

http://www.dawn.com/2007/06/27/ebr1.htm


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## Introvert

*Chinese high-ups arriving Islamabad on July 11 *
ISLAMABAD: A high level delegation of China will arrive in Islamabad on July 11 for the purchase of Pakistani products.

According to Trade Development Authority, the delegation has expressed interest in the provision of 46 classes of products and services.

These products include cotton, draperies, ready-made garments, chemicals, industrial products, minerals, rubber, agricultural produces and financial services.

TDA officials directed the Pakistani traders to get their products registered for the purchase as the earliest, after which their products will be put on display on July 11. 

http://www.geo.tv/geonews/details.asp?id=8156&param=3


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## Introvert

*Pak, Iran agree to boost trade ties *
LAHORE: Pakistan and Iran would take further measures to enhance trade between the two countries.

Iranian Counsel General in Lahore Saeed Kharazi said this during a meeting with Chief Executive Officer of Small and Medium Enterprise Development Authority (SMEDA) Shahid Rashid.

Iranian Counsel General said that as a first step to boost bilateral trade, an industrial and investment conference would be organized in Lahore to create awareness about the investment options available in both the countries.

http://www.geo.tv/geonews/details.asp?id=8171&param=3


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## Introvert

*Austrian Co. to invest in making oil, gas exploration tools* 
ISLAMABAD: Austrian company will invest in Pakistan for the manufacture of oil and gas exploration equipments.

Voest-Alpine Tubulars&#8217; chief executive Hillkawit told this in a meeting here with the Federal Minister for petroleum and natural resources, Amanullah Jadoon. He said that a study was underway for making investment in Pakistan for the manufacture of oil and gas exploration equipments.

Federal minister MP&NR on this occasion told that with the opening of 17 onshore and offshore blocks in Pakistan, oil and gas exploration activity would get a boost.
http://www.geo.tv/geonews/details.asp?id=8127&param=3


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## Introvert

*PTA talks with Bosnia soon*

ISLAMABAD, June 27: Pakistan will soon initiate talks on Preferential Trade Agreement (PTA) with Bosnia-Herzegovina to increase volume of trade between the two countries. An official source in the commerce ministry told Dawn on Wednesday that the decision of having preferential agreement with Bosnia was taken as part of identifying new markets for exportable products.

The federal cabinet had also approved proposal of the commerce ministry for initiation of talks on PTA leading to Free Trade Agreement (FTA) between Pakistan and Bosnia-Herzegovina.

Through diplomatic channels the date and venue for the first meeting on PTA will be finalised, the official added. The bilateral trade between the two countries stood around $1 million, which is much lower than the potential existed for increasing trade between the two countries, added the official.

Pakistan&#8217;s exports to Bosnia declined by 53.4 per cent to $0.214 million during the eight months (July-Feb) period of the current fiscal year as against $0.460 million over the same period of last year.

This would be Pakistan&#8217;s first initiative of having a preferential agreement with any Eastern European country.

http://www.dawn.com/2007/06/28/ebr12.htm


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## Introvert

*Iran plans investment moot in Lahore*

LAHORE: The Consul-General of Iran in Lahore, Saeid Kharazi, has announced that the Iranian government will organize an exhibition and investment conference in Lahore to create awareness among the business communities of the two countries of the potential of joint ventures and trade.

He was addressing officers of the Small and Medium Enterprise Authority (SMEDA) during his visit to its office on Wednesday.

He said Iran was serious about enhancing trade between the two countries.

He suggested utilizing cooperation of the Joint Economic Commission, Joint Trade Commission and Joint Investment Company formed by the two governments.

He observed that there existed a great potential in Punjab for joint ventures and external trade with Iran. He asked SMEDA to identify areas of joint business interests in the SME sector of Pakistan.

The Iranian diplomat observed that unemployment was a common problem both in Iran and Pakistan.

He praised Pakistan&#8217;s efforts aimed at creating employment opportunities through an effective SME development programme. He said the government of Iran was working on the same line to overcome the problems of unemployment and poverty.

Earlier, SMEDA chief Shahid Rashid welcomed the Iranian consul-general and apprised him about the role of SMEDA in the development of the SME sector in Pakistan.

He emphasized the need to identify new product line for joint ventures in promoting trade and investment between Iran and Pakistan.
http://thenews.jang.com.pk/daily_detail.asp?id=62219


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## Neo

*Pakistan willing to extend 'commercial guarantee': IPI talks in Delhi today ​*
ISLAMABAD (June 28 2007): Pakistan has shown its willingness to offer commercial guarantee as an alternative to sovereign one in Iran-Pakistan-India (IPI) working group meeting, scheduled for June 28-29 in New Delhi.

Sources said that Pakistan's official delegation, which left for New Delhi on Wednesday to attend the working group meeting, would try to convince the Indian side that commercial guarantee would be as workable and solemn as sovereign since the companies or groups which would extend the assurances would be acting on behalf of the respected states.

Sovereign guarantee issue is impeding progress on IPI talks as none of the parties to the project is ready to buy this idea, in the given situation, when it's very difficult to foresee the future developments in the region.

Sources said that Pakistan's delegation, headed by Petroleum Secretary Ahmed Waqar, would float the new concept of commercial guarantee at the working group meeting.

India is demanding sovereign guarantee from Pakistan to make sure that gas supply to the project remains smooth and uninterrupted for specified timeframe. Pakistan is not ready to accept New Delhi's this demand unilaterally. Its argument is that since all parties to the project would enter into a back-to-back agreement it would not accept sovereign guarantee unless it got the same from Iran in case of any interruption in supply to the pipeline occurred on its part.

The working group meeting is also important as it's going to finalise the pricing formula for the project. India and Pakistan are very close to reach an understanding on gas pricing formula for IPI. However, they are yet to go through extensive talks to reach some understanding on other tricky and difficult questions.

Some of such issues are transit fee that Pakistan is demanding from India to provide it a route for gas supply, timely completion of the pipeline in respective areas and bring it to the border of next neighbour to connect it to his distribution system.

There are certain issues on individual basis for each partner as well. Each country will have to raise funds from the donors to guarantee money to timely lay down the part of the pipeline in its respective territory and them workout a mechanism for foolproof security to avoid any damage and at the same time penalty from the next door buyer.

http://www.brecorder.com/index.php?id=583912&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*75 percent textile units cease production: power, water crises worsen ​*
KARACHI (June 27 2007): While about 75 percent textile processing units have ceased production, other industries are running at a slow pace due to frequent power breakdowns and acute water shortage in industrial areas.

Disturbed over the performance of Karachi Electric Supply Corporation (KESC), industrialists said that voltage was one of the biggest problems in operating units on full strength. They pointed out that a number of units, which were running normally, were using their own power generating capability to honour their commitments to foreign buyers.

Industrialists from North Karachi industrial areas complained that KESC and other higher-ups in the government were repeatedly pursued to solve their problems, but no body came forward to solve their problems.

Talking to Business Recorder, pattern -in chief of North Karachi Association of Trade and Industry (NKATI) Captain A Moiz Khan said that there was no electricity in North Karachi industrial area for the last eight days. Around 2,500 units were lying idle, he said, adding only those industries were operating which have their power captive power generating capability.

He feared that if the situation continued and no remedial measures were taken, Chinese textile importers might cancel their import orders worth rupees four to five billion. Korangi Association of Traded Industry (Kati) Chairman Masood Naqi said that around 75 percent textile processing units had gone out of production due to low voltage, irregular power supply and water shortage caused by power failure.

He said that other industries, operating in the industrial area, are working below capacity due to voltage problem and frequent power failures.

Site Association of Industry (Sai) Chairman Imran Shaukat said that with the onset of heavy rains, out of 56 KESC feeders, 22 got out of order. However, the KESC has managed to reactivate 13 feeders, while nine were still out of order. He said that due to unannounced frequent power breakdowns and thin attendance, industrial production was reduced to around 48 percent.

http://www.brecorder.com/index.php?id=583583&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*Tourism price index up 11.3 percent ​*
ISLAMABAD (June 28 2007): The general tourism price index increased by 11.3 percent during 2005-06 over the previous year, giving an impetus to the flow of tourism after 9/11.

The report was released here by the Economic Analysis Wing of the Ministry of Tourism, which shows 0.8 percent increase in food price, 13.4 percent in accommodation and transport cost increased by 7.4 percent. Tourism being a price-sensitive industry and responsive to changes in income, prices and taste, hence price plays a considerable role.

The study being based on printed rate, has not taken into account the group and corporate rates, which are highly competitive and benefit group tourists visiting Pakistan on all-inclusive packages. The tourism accommodation tariff index shows overall increase 17.2 percent for single room and 10.2 percent for double room during 2005-06 over the previous year.

The price index of food items served in restaurants increased by 11.3 percent in 2005-6 over 2004-05, while increase of 8.8 percent was recorded in food served in restaurants located outside hotels during the same period.

Tourism price index in 5-4 star hotels located in Islamabad, Faisalabad, Multan, Murree, Lahore, Rawalpindi, Karachi, Peshawar and Quetta, where accommodation price index increased by 13.4 percent, increased in single room was 21.5 percent and in double room was 14.1 percent.

In the same hotels, food price index increased by 3.3 percent in restaurants located inside hotels, whereas the tourism price index of 1 to 3 star hotels located in Islamabad, Faisalabad, Multan, Murree, Lahore, Rawalpindi, Karachi, Peshawar and Quetta. Accommodation price index in these cities increased by 10.5 percent.

Food price in these hotels increased by 8.3 percent in restaurant located inside hotels and 9.7 percent in restaurants located outside the hotels. Besides, tourism price index in tourist resort areas such as Kaghan, Naran, Balakot, Kalam, Swat, Chitral, Ziarat and Murree, where accommodation price index increased by 20.7 percent, food prices 12.2 percent increased in restaurants inside the hotels and 12.6 in restaurants located in outside the hotels.

Tourist price index in the Northern Areas-Gilgit, Hunza and Skardu, where accommodation price increased by 21.2 percent and food price index increased by 15.7 percent. Tourism price index in Sukkur, Hyderabad, Bahawalpur, Gujranwala, Sialkot, Mardan and D.I Khan, where accommodation price index increased by 4.4 percent and food price increased by 9.1 percent.

Besides, the transport price index increased by 7.4 percent during 2005-06 over the previous year. The domestic air fare index increased 25.8 percent, rail fare index increased by 5.4 percent and the highest increase of 27.3 percent was recorded in the road fair.

During the period, index of currency value in case of US dollar increased by 1 percent and Euro decreased by 5.1 percent during 2005-06 over the previous year.

http://www.brecorder.com/index.php?id=584018&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Landi Renzo to set up CNG kits assembly plant in Karachi ​* 
KARACHI (June 28 2007): Landi Renzo will soon set up a plant to assemble kits of compressed natural gas (CNG) here, said Italian Consul General Domenico Benincasa on Wednesday. Addressing third annual meeting of the Diplomatic Affairs Sub-committee of Karachi Chamber of Commerce and Industry (KCCI), he said that Italian oil and gas giant, ENI, was planning to further expend extraction and exploration activities in Pakistan

Furthermore, SNAM Progetti, another engineering giant, had signed a contract to build a huge urea plant, he said, adding that there was a big potential for Italian investors in Pakistan in sectors like tanning and leather products, textiles, jewellery, marble and granite, woodworking, agribusiness etc.

In all these sectors, he said, Pakistan was endowed with raw material, craftsmanship and a manufacturing tradition that could provide a good base for investment and Italy had world-famous technology and know-how.

Unfortunately, the structure of Italian enterprises, that were mostly small and medium sized, were hesitant to them make investment in such a distant and not well known country as Pakistan.

In other words, the risk involved in investment in Pakistan was too high for average Italian companies, he added. The Italian Consul General said that during the last three years, Pak-Italian trade had increased from 600 million to one billion Euro or by 40 percent. Last year only (2006), Italian exports to Pakistan reached an all-time high of 550 million Euros.

This was an encouraging figure, but since Pakistan was undergoing a process of industrial growth and technological up-gradation that might create an increasing demand for Italian products and ultimately raise that figure much higher, he added. Despite huge potential, Italian exports might be too expensive for this market, as the Euro was much stronger than dollar, he said.

As for Pakistan exports to Italy, he said that Pakistan exports were also at a significant level of 430 million Euros last year, but the trend of growth was much slower due to harsh competition from other Asian countries that had aggressively increased their exports to Italy.

He pointed out that Italy was a rich and quality conscious market and the potential was certainly there for Pakistani exporters to increase their trade volume, provided they concentrated on research and development so as to manufacture medium and high quality products. These would find more eager buyers in Italy and easily beat competitors from countries supplying products of low quality, he added.

Replaying to a question, he said: "We have to admit that Pakistan's security situation is not considered to be good in Europe, and that our investors, being generally very cautious, will tend to stay away from countries that are not regarded as peaceful and stable, however exaggerated this perception may be."

He said that recently he was posted in India and during his stay there, his perception about Pakistan was very bleak. However, after being posted in Pakistan, his perception had changed, he said, and added that ground realties were much different as compared to what was projected abroad.

Speaking on the occasion, KCCI President Majyd Aziz said that in Italy too, there were many industries, which facing problems due to high cost and moving to some other countries, and suggested that Pakistan was the best place to re-locate them.

Welcoming the guests, Chairman of the Diplomatic Affairs Sub-committee Arshad Islam sought Italian companies help in small and medium enterprise (SME) management, training and skill development.

http://www.brecorder.com/index.php?id=584038&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Ministry seeks Rs 3.664 billion for power for Gwadar from Iran: CDWP to consider uplift projects on Saturday ​*
ISLAMABAD (June 28 2007): The Ministry of Water and Power has sought an allocation of Rs 3.664 billion for importing power from Iran for Gwadar and this will be one of the important projects out of around 32 development schemes costing over Rs 55 billion that will be considered by the Central Development Working Party (CDWP), when it meets on Saturday.

The CDWP will consider power import from Iran that also would include foreign exchange component (FEC) of Rs 1.934 billion. The Pakistan Atomic Energy Commission (PAEC) project of setting up Nuclear Fuel Enrichment Plant (NFEP), costing Rs 13.708 billion, is also on the agenda of the meeting, sources told Business Recorder on Wednesday.

The FEC in all projects has been estimated at over Rs 30 billion, according to sources. In the energy sector, the CDWP would also consider development scheme of Pakistan Nuclear Regulatory Authority (PNRA), which is aimed at strengthening regulatory infrastructure by applying innovative radioactive waste management technology. The project will be implemented at a cost of Rs 338 million, that would also include Rs 80 million FEC.

The project of adoption of social accountability (SA-8000) costing Rs 144.3 million, up-gradation and additional works of Expo Center, Lahore amounting to Rs 1.37 billion and Agro-food processing facilities in Multan will come under consideration of the meeting, which will be chaired by the Deputy Chairman of Planning Commission, Dr Akram Sheikh.

The establishment of oceanographic research vessel for coastal waters of Rs 1.3 billion, construction of office building for Ministry of Science and Technology and its organisations of Rs 620 million; upgradation of facilities to produce silicon solar modules upto 80 KW annual capacity of Rs 262 million and establishment of cast metals and foundry technology centre (revised PC-I) of Rs 326 million will also come up for consideration of the CDWP. The Ministry of Science and Technology is the sponsoring agency of these projects.

In transport and communication sector, four projects costing over Rs 14 billion would be taken up. Prominent in these projects are Rs 3.596 billion scheme of land acquisition for Faisalabad-Khanewal Motorway (M4); Rs 1.775 billion project of construction of bridge over River Sutlej connecting Pakpattan with Minchinabad.

In telecommunication, the rural telecommunication and E-Services Development project of $134 million would also come up for consideration of the CDWP. In environment sector, the CDWP would consider three projects, namely establishment of emission testing/motor vehicles examination system, Islamabad of Rs 294.3 million, establishment of combined effluent treatment plant and construction of conveyance system for carrying waste at Hattar industrial estate for phase-IV of Rs 225 million and Rachna Doab afforestation project costing Rs 212.182 million.

In physical planning and housing sector, a total of six projects costing over 2.4 billion would be considered by the CDWP. In higher education, four schemes costing over Rs 13.4 billion are also on the agenda of the meeting. Other important projects include establishment of federal drought recovery assistance program project (DRAPP)/ DERA-II (second revision), costing Rs 215 million and construction of sports stadium at Taxila at a cost of Rs 178.3 million.

http://www.brecorder.com/index.php?id=583980&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Saudi Pak real estate firm being launched​*
ISLAMABAD, June 27: The Saudi Pak Real Estate Development Company is being launched in the first quarter of 2008 aimed at meeting the growing housing requirements of Pakistan by having joint ventures with China, United Arab Emirates (UAE) and Malaysia.

Informed sources told Dawn on Wednesday that the board of directors of the Saudi Pak Agricultural and Investment Company  a 50:50 joint venture of Pakistan and Saudi Arabia - has decided to launch their new real estate company by March next year after having received a formal approval by the State Bank of Pakistan.

The company is being set up at an initial Rs500 million paid-up capital which is expected to be stretched to Rs1 billion during the second quarter of next year.

It will concentrate on low-cost housing besides catering to the requirements of commercial buildings, service apartments and hotels.

Sources said a number of international companies, especially from China, UAE and Malaysia, have expressed their willingness to enter into joint ventures with the Saudi Pak Real Estate Development Company by substantially investing in the real estate sector of the country.The new company will also finance infrastructure projects and housing schemes beside providing funds for development of new tourist resorts, shopping malls, hotels and office blocks.

It will have a complete corporate and management structure for promoting long-term investment horizon for which it will follow draft rules of the Securities and Exchange Commission of Pakistan (SECP) as being the regulator.

The company will be fully operational in March next year for which Mr Javed Kalia has been appointed as its chief executive officer (CEO). The company will be based in Karachi, having offices in Lahore and Islamabad as well.

A long-term regulatory approval has been given by the central bank for the company, but rest of the matters will be regulated by the SECP.

Sources said this would be a first-ever any organised company to cater to the requirements of housing, infrastructure etc. by offering significant loaning to the interested people.

The objective is to fund top quality residential apartments and other office buildings. All the market segments will be adequately covered by the real estate company.

There will be a wide collaboration with foreign companies in the services and technical fields.

Sources said more funding for the real estate company would be raised from the banking sector and the capital market.

A world-wide modern concept will be utilised for building housing and other projects through the real estate company.

Sources said a regional office has been set up in Riyadh after having a formal approval of the Saudi government.

It will be a liaison office the purpose of which will be to study the raising of funds for the Saudi Pak Investment Company and its subsidiaries.

Sources also confirmed that the Saudi Pak Investment Bank would be sold soon due to experiencing financial constraints and particularly to meet Rs6 billion paid-up capital requirement by 2009. It has not earned a profit like other banks last year, a source said, adding that the parent Saudi Pak Investment Company has to increase its paid-up capital to Rs6 billion by 2009 and under these circumstances, it was becoming difficult to retain the investment bank. The Bank has created a good image due to its fine infrastructure, good branch network and IT and Human Resource departments.

It was stated that funds were spent on capacity-building as bank was preparing itself for future and that caused a lot of loss and that was why Saudi Pak company did not celebrate its silver jubilee in 2006.

Sources said a number of investors have approached the company to buy Saudi Pak Investment Bank.

A lot of liquidity is roaming around in our part of the world to purchase banks and other companies which is why the Saudi Pak bank is likely to get a better price, a source said. He added that the bank has a good network of branches and its share is currently being trading at Rs24 per share in the Karachi stock market.

A decision, sources said, has also been taken by the board of directors of Saudi Pak Agricultural and Investment Company to convert it into a public limited company within this year so that it could issue public securities.

The central bank has allowed the company to become a public limited company.

Sources also said that financial approval of the Saudi Pak Investment Company has significantly increased, as by May 2007 total approvals reached Rs3.683 billion as against Rs2.541 billion of last year, registering an increase of 44.9 per cent.

Similarly, disbursements in the first five months of 2007 were amounted to Rs2.116 billion against Rs2.019 billion of last year, having an increase of 4.8 per cent. Also, recoveries stood at Rs2.007 billion in the first five months of this year against Rs1.113 billion of last year registering an increase of 32 per cent.The new sectors which got major financing included steel, fertiliser, cement, power and constructions.

Similarly, the Saudi Pak Insurance Company has achieved a gross income of Rs236 million and is expected to wipe out its accumulated losses in 2007. The company is considered a robust entity having a potential to raise its business in profitability.

The Saudi-Pak Leasing Company is also doing fine as its assets have grown to over Rs6 billion as the year 2006 was good for it.

Overall, group assets of the Saudi Pak Company have reached Rs82 billion and were helping it to further improve its operations across the country.

http://www.dawn.com/2007/06/28/ebr6.htm


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## Neo

*$400m ADB loan to help rebuild homes hit by quake​*
ISLAMABAD, June 27: The Asian Development Bank on Wednesday announced to provide $400 million in soft loans to Pakistan to rebuild homes hit by the 2005 earthquake.

The loan, approved by the ADBs board of directors in Manila, is part of a $1 billion pledge the bank had made after the 7.6 magnitude quake on Oct 8, 2005, which killed at least 80,000 people. The loan would be a new initiative to house some 30,000 people still living in tents and 3.5 million others in non-permanent dwellings, an ADB announcement said.

The loan carries an interest rate of 1 per cent per year and a maturity of 40 years, including a grace period of 10 years.

With the last two winters having been extremely harsh, ADB is fully supportive of the governments push to make the upcoming winter the last one without proper homes for most of those displaced by the quake, said C.C. Yu, the Asian Development Bank Mission Leader. We are moving this forward as fast as possible.

The injection of funds will be a boost for the regions economy. It will create jobs for reconstruction workers and help businesses supplying reconstruction materials.

In addition to the new loan, the Asian Development Bank will provide a $2 million grant to increase the capacity of Pakistani institutions helping to rebuild quake-affected areas. It will provide training in seismic construction, strengthen financial and strategic management and support environmental and social protection.

The loan will be released in two parts. The first tranche of $200 million will provide support on a retroactive basis for significant housing expenditures already incurred by the government. The second tranche, expected to be released within six months of the first, will be used to meet additional financing needs of the housing reconstruction programme.

Home owners will be given money directly to repair or rebuild their own homes in accordance with approved designs to make them more resilient to earthquakes in the future.

People whose homes have been completely destroyed will receive Rs175,000 (about $2,900) in four instalments. For a partially damaged house, the owner will receive Rs75,000 (about $1,230) and for houses with minor damage, Rs25,000 (about $410). The payments will be made on the basis of progress reports from field inspections by appraisal teams with representation from the local government, communities, army and non-government organisations.

An extra Rs75,000 will be provided to about 6,000 households, whose land was destroyed by quake-triggered landslides, to acquire new land to rebuild their homes.

The new loan is the latest in a long list of funding the ADB has provided toward the reconstruction effort. Within three months of the quake striking, the Asian Development Bank had approved $405 million. This was followed by a $5 million grant, $12.5 million increase in financing and $62.5 million reallocation of loan savings from other projects. In addition, the ADB has helped mobilise about $97 million in additional grant funding.

http://www.dawn.com/2007/06/28/top6.htm


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## Neo

*Portfolio investment crosses $1b, or does it?​*
KARACHI: Foreign investment in the countrys equity markets has crossed $1 billion; this was the buzz making rounds at the Karachi Stock Exchange on Wednesday. 

Although the State Banks data showed that the portfolio investment stood at $978 million on June 26, $4 million down from June 25. Rumour had it that it went past $1 billion on Wednesday, June 27. 

The correct situation can only be found Thursday evening when the central bank updates data for investment up to June 27. 

Aqeel Kareem Dhedi, a leading stockbroker of the country, said he expected that the foreign portfolio investment would cross the $1 billion mark within this week, which is the last of the current financial year. 

He said he expected the inflows from abroad into the shares of Pakistani companies to continue during the next year. 

There is a lot of foreign interest in the market and it is expected to continue because prices in our markets are at discount to those of other regional markets, he said.

Apart from the large trade deficit, the economy is doing very well and that is the reason the stocks business is attracting money, he said.

Atiq Ahmad, an analyst at Capital One Equities, said he expected the portfolio investment to cross $1 billion by the end of this week and this fiscal year. The market could take slight correction on Thursday and might again surge on Friday, he said and added that portfolio investment is likely to fly past the $1 billion mark during last trading day of the week.

Data showed that there was a net outflow of $4.245 million on June 26, caused by a total outflow of $9.651 million against inflow of $5.405 million.

The country received $228.050 million during the first 26 days June 2007. Of this amount the largest chunk, $128.993 million, came from the United Kingdom. Investors from the United States invested $100.913 million in stocks during this period. The country attracted $5.935 million, $6.823 million and $2.553 million from Hong Kong, Japan and France, respectively. 

The US investors have put in $684.313 million so far this year. UK investors who invested $265.179 million in the countrys stocks followed them. The investors from Hong Kong, Kuwait, Netherlands and Germany put in $32.722 million, $14.176 million, $44.124 million, and $7.193 million, respectively till June 26. 

Investors of Singapore invested $8.248 million in our stocks.

http://www.dailytimes.com.pk/default.asp?page=2007\06\28\story_28-6-2007_pg5_2


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## Introvert

*Pakistan wants share in $5 billion global flower trade*
29th Jun, 2007 11:45:23 AM

ARTICLE: Pakistan may soon be in a position to claim a share in the global flower trade, which is at present in excess of $5 billion annually, and increasing every year. In recent years, China, India, Kenya, Columbia and Israel have done exceedingly well in this field and are among the leading exporters now.

Since not much emphasis had been given in Pakistan to this lucrative business in the past, the Pakistan Horticulture Development and Export Board has taken the initiative to promote this important area of horticulture with the objective of making "Floriculture exports as one of the sunshine sectors of the country."

With this objective in mind, the Board would establish Floriculture Common Facility Farms (FCFF) in each province to enable the farmers grow export quality flowers on a large scale.

Growing flowers and selling them in the international market is at the moment a huge industry with billions of dollar sales and employing millions of people world-wide. However, to support this international industry, it is necessary to have open trade borders and the bringing down of trade barriers.

Cultivation under controlled environment of greenhouses is recommended to overcome weather conditions and to provide most suitable growing environment for top quality and high yield.

Greenhouse cultivation is an expensive proposition and can be out of reach of individual farmers. Under FCFF, the cost for each farmer would be substantially low, as key facilities would be provided by the zone. The Punjab FCFF would be taken as a model, and later replicated with slight modifications as per the geographical conditions of each province.

It has been proposed that the size of the first FCFF should be 30 hectares (75 acres). Each farm, within the zone, would be of two hectares (1.5 hectare greenhouse + 0.5 hectare open space). Total investment of the FCFF shall be in the range of Rs80 million. This would include development of land, provision of common facilities like drip irrigation, cold storage, packinghouse, etc, on nominal charges. Sale and marketing would also be the responsibility of the FCFF, which, after deduction of expenses and nominal margin, would pass on the balance to the individual farmers.

Profit earned by the FCFF shall be used to develop the zone, provide technical training to farmers through local and foreign consultants, establishing a modern laboratory and marketing. Internal Rate of Return (IRR) of the project is approximately 24 per cent. The FCFF zone would be managed by a private limited company.

The flower trade world-wide is changing very rapidly. Many more flowers are needed round the year for the fast developing impulse sales in the mass-market. These will have to be produced under the most competitive conditions. Many countries are getting into 'cut flower' production both for domestic consumption and for export. Each country has its own limitations in the form of logistics, which could dictate where the flowers are sold.

Looking at the international situation in the flora culture industry, Holland is market leader with about 65 per cent of total sales of flowers and plants. Not only that, Holland is also market leader by supplying all kinds of young plant material, seed, equipment and they have a very high standard and updated with the latest trends and techniques.

Holland is also the middle point of the daily market in selling flowers and plants. The two big auctions 'Aalsmeer' and 'Flora Holland' which are operating five days a week, play a major role in the international selling of flowers and plants. What Wall Street in New York is for the International Financial World, these auction houses have the same importance.

On these auctions, the daily world market prices are settled and in a few minutes people all over the world could follow this by high communication systems and latest techniques. In the last 40 years, Holland has created a big floral culture industry and now more than 100 countries are sending their flowers and plants to this market from where wholesalers send them to customers all over the globe. These wholesalers are able to supply each customer with a wide range of products.

Every day, millions of different flowers and plants in all kind of colours are available for the international buyers and all according to international standards which took about 40 years to develop and at the moment everybody in the world is following these international standards.

These international standards are providing customers all over the world with guaranteed fresh product. By modern cooling systems and logistics systems people all over the world, order in the morning and the same day or early morning next day flowers arrive fresh and healthy.

http://paktribune.com/business/newsdetail.php?nid=3396


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## Neo

*IPI pipeline: Pakistan and India agree on gas transport fee principles ​*
NEW DELHI (June 29 2007): India and Pakistan have agreed on principles to calculate a transportation fee for Iranian gas to be supplied via a pipeline, but were yet to reach an agreement on the transit fee, a top Pakistani official said on Thursday.

"We have agreed on principles under which the transportation tariff will be computed," Mukhtar Ahmad, Energy Adviser to Prime Minister, told reporters.

"All the elements that contributed to the cost of the infrastructure will need to be taken into account, and clearly that cost would need to be recovered through a transportation tariff," he said.

However, the two countries were yet to reach an agreement on a transit fee for the gas moving across Pakistan into India, Ahmad said. "But we do not expect this will be a road block in our way to concluding agreements regarding this project," he said.

India, Pakistan and Iran are negotiating a proposed 7 billion dollars gas pipeline deal for supplies of natural gas from Iran to feed the energy-hungry south Asian economies.

Iran has the world's second-largest gas reserves after Russia. But sanctions, politics and construction delays have slowed its gas development, and analysts say Tehran is unlikely to become a major exporter for a decade.

The proposed pipeline will initially carry 60 million cubic metres (2.2 billion cubic feet) of gas to be exported daily to Pakistan and India, half for each country. The capacity would be raised to 150 million cubic metres at a later date. The delivery point would at the Iran-Pakistan border.

http://www.brecorder.com/index.php?id=584643&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pakistan's Foreign exchange reserves now $15.18 billion ​*
KARACHI (June 29 2007): Country's total liquid foreign reserves reached ever-highest level of 15.18 billion dollar. According to State Bank of Pakistan (SBP), the country's total liquid foreign reserves stood at 15.1822 billion dollars on June 23, out of which 12.7546 billion dollars has been held by the State Bank of Pakistan and 2.4276 billion dollars held by other banks.

http://www.brecorder.com/index.php?id=584676&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Conversion of 1pc surcharge into FED to generate Rs20bn ​*
ISLAMABAD: The governmentís decision to convert the 1 percent special surcharge on imports into a 1 percent federal excise duty (FED) will generate Rs20 billion revenue during the financial 2007-08, as the tax will also be applicable on locally-manufactured goods.

The government has decided to withdraw the one percent special surcharge owing to violation of WTO rules and bilateral trade agreements. The decision will be beneficial for the CBR in terms of generating revenues, and 1 percent special FED will be applicable both on imports and locally-manufactured goods from July 1.

It was the projection of the CBR to generate Rs13 billion through the 1 percent special surcharge on imports, but the decision to convert it into a 1 percent special FED will help to collect Rs20 billion in the next fiscal year. 

Earlier, the 1 percent special surcharge was not meant for locally-manufactured goods, but now it will be levied on it, helping the CBR to generate around Rs20 billion during the next fiscal

The 1% FED will be levied on duly-notified imports and locally-manufactured goods from July 1, as per the decision of the government and amendment made in the Finance Bill, 2007, said a CBR official on Wednesday.

When the official was asked about the reason to impose special 1% FED on locally-manufactured goods as well as imported goods, he said the CBR did not want to create distortions in the economy. He was of the view that the CBR would collect less than Rs20 billion revenue through this tax as the demand would decrease after increase in prices. So the tax authorities should also keep in mind the demand factor, which would help to curtail imports and, resultantly, the countryís trade deficit would also narrow down. 

The CBR has issued instructions to all its field officers to stop collection the of 1 percent surcharge on imports with effect from 21-6-2007. However, special FED is being levied on goods with effect from July 1.

According to WTO rules and bilateral trade agreements in shape of Free Trade Agreement (FTA) and Preferential Trade Agreement (PTA), one percent surcharge on imports was in violation of these agreements. 

Sources said the government had imposed the 1 percent surcharge on imports without consulting the ministry of Commerce, which is the ministry concerned relating to ensuring implementation of FTA and PTA signed by Islamabad with a number of countries.

Pakistan has signed FTA with Sri Lanka, PTA with Iran and Early Harvest Programme with China and Malaysia and these agreements were in jeopardy because of the imposition of a 1 percent surcharge. Earlier, the CBR chairman was of the view that the 1 percent special surcharge was not in violation of the WTO, or bilateral trade agreements. But finally tax gurus changed its mode in such a way that would help them more in achieving an ambitious tax collection target of Rs1.025 trillion by the end of the next fiscal year. 

http://www.thenews.com.pk/daily_detail.asp?id=62471


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## Neo

*Pharma exports to touch $600m by 2010: exporters​*
KARACHI: Pharmaceutical sector of Pakistan is capable to enhance its exports to the tune of more than $600 million by 2010, the manufacturers and exporters said on Friday. 

A senior member of Pakistan Pharmaceutical Manufacturers Association (PPMA), Dr Kaiser Waheed said currently Pakistan was exporting pharmaceutical worth $85 million while the industry was aiming to expand and this would only be possible when government puts a ban on the import of medicine, produced by the country.

India and China are two low-cost drug manufacturers. Pakistan, unfortunately, is located between these two countries. But now, Pakistan is all set for the action. For the past 10 years, the nation has been establishing its drug-manufacturing units, infrastructure and export capabilities. 

He said around 22 international pharmaceutical players and about 380 registered national units are functioning in Pakistan. The total worth of pharmaceutical industry of Pakistan is estimated at $1.9 billion.

He said the country has a low-cost base and the cost of converting generic drugs into their more famous derivatives is among the lowest in the world. 

He pointed out that the ideal location of the country at the worlds centre makes it cost-efficient in terms of freight costs. 

Also, a number of drug courts are working in Pakistan to ensure the quality control of the manufactured drugs and to govern the authentication of exported drugs, he added.

We are exporting medicines to Sri Lanka, Vietnam, African countries and Philippines, he added.

A report on World Pharmaceutical Market (2007) by RNCOS Research Analyst puts forth his views that Pakistan is already trading its pharmaceutical products abroad to highly organised markets. 

Also, the country is a part of TRIPS agreement and since 2000, it has its Intellectual Property Legislation duly placed, its pharmaceutical industry is waiting to fly high. 

He said the manufacturers were importing blister units, tablets and capsules making machinery from Korea, China and Germany due to their quality and cost effectiveness. The government should provide incentives to pharmaceutical exporters in shape of cost sharing for registration of pharmaceutical products in foreign markets.This would result in enhancement of the export of pharmaceutical products in the foreign markets and help government to achieve the set target of the export during the fiscal year 2007-08.

http://www.dailytimes.com.pk/default.asp?page=2007\06\30\story_30-6-2007_pg5_2


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## Neo

*Pak-Russia business cooperation urged​*
KARACHI: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and National Chamber of Commerce and Industry of the Russian Federation signed an agreement to explore the business opportunities between the two countries.

On this occasion, Vladimir V Seliverstov, Consul General of Russian Federation, Karachi and Tanvir Ahmad Sheikh, President FPCCI stressed the need to activate cooperation in business and industry, a statement issued by the FPCCI said on Friday. 

During the meeting they agreed that the Pakistan-Russia Business Council and its counterpart Russia-Pakistan Business Council could play a positive role in the promotion of trade and economic cooperation between the two countries. 

President, FPCCI said that Pakistan was faced with acute shortage of electricity and there were several private sector parties were eager to put up power generation plants but the manufacturers in Europe and other countries were giving delivery dates after three to four years and said that if there were any Russian suppliers who could make immediate deliveries, they should come forward. 

He said that Pakistan was rich in natural gas and Russia could help Pakistan in the expansion of its gas distribution network. It could also help in modernisation and expansion of Pakistan Steel. 

The Consul General said that Pakistan was very dear to Russia and it has offered to help in modernisation and expansion of Pakistan Steel. He said that a Russian company has also offered to construct the Iran-Pakistan-India gas pipeline project. 

He said that the Russian company, which built a power plant in Multan has offered to put up other power plants, ranging from 50 MW to 600 MW. There was also an offer from a Russian company to put up high-tension lines for the transmission of electricity from Central Asia to Pakistan. 

The Russian Consul General in reply to a query said that there was a difference in tariff on goods imported from India and Pakistan because Pakistan did not have free trade agreement with Russia.

It is our ultimate goal to have a free trade agreement with Pakistan as well, he added.

http://www.dailytimes.com.pk/default.asp?page=2007\06\30\story_30-6-2007_pg5_13


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## Contrarian

*Pakistan tops list of 'sex surfers'*

IANS[ FRIDAY, JUNE 29, 2007 04:45:11 PM]

NEW DELHI: Surfers in Pakistan search more for 'sex' on Google than in any other country while those in the Indian capital top the list of those hunting for the three-letter word on the Internet.

Google search trends show Pakistan, Egypt and India as the top three countries in the world where surfers look out for 'sex' on the Internet, and those in New Delhi and Chennai hold the top two rankings among global cities.

Cairo in Egypt takes the third spot, according to its 'Hot Trends' report posted on the site. Google trends also show Turkey, Vietnam, Morocco, Iran, Saudi Arabia, Serbia and Montenegro and Indonesia featuring in the list of top 10 countries.

The city list also includes Istanbul and Ankara in Turkey, Rabat in Morocco, Mumbai and Warsaw.

"Hot Trends reflects what people are searching for on Google today, rather than showing the most popular searches overall, which would always be generic terms like weather," says Google.

"Google Trends uses IP (internet protocol) address information from our server logs to make a best guess about where queries originated."

The search engine, however, makes no claim that its trend may be accurate. "We hope you find this service interesting and entertaining, but you probably don't want to write your PhD dissertation based on this information."
http://infotech.indiatimes.com/Pakistan_tops_list_of_sex_surfers_/articleshow/2161237.cms
---------------------------------------------------

LOL, nice going Pakistan


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## Neo

*SBP says 11.3 percent food inflation 'very high' ​* 
KARACHI (June 30 2007): Food inflation has touched the highest peak of current year at 11.3 percent during May as against 5.6 percent during the same period of last year. This increase has been attributed to reversal of inflation from negative to positive in some key food items, which include vegetables, fruits, eggs, chicken and different varieties of rice.

State Bank of Pakistan (SBP) has issued inflation monitor for May, which shows that food inflation during the current month has increased by 5.7 percent (over 100 percent increase) as against May 2006.

After this upsurge, food inflation has reached the highest level of the current year during May. Earlier in March, it was 10.7 percent while it stood at 10 percent in February. Statistics show that during May, food inflation was also 1.9 percent higher than in April 2007, as it increased from 9.4 percent in April to 11.3 percent in May.

The SBP said that high food inflation was mainly due to reversal of inflation from negative to positive rates in some key food items, including vegetables, fruits, eggs, chicken, different varieties of rice.

On monthly basis, out of 124 items, 49 items showed decline or no change, 50 items showed increase of up to five percent, seven items showed five to 10 percent and four items showed above 10 percent increase, out of which one item, tomato, showed 120 percent increase.

Some 39 commodities, including eggs, fruits, cooking oil, different varieties of rice, chicken and some vegetables exhibited inflation in the range of 10 to 50 percent in May.

In fruits, prices of plum (Aloo Bukhara), kinnow and tomatoes were pushed by 120 percent, 132 percent and 222 percent respectively during May. On the other hand, inflation (YoY) of 16 commodities like potatoes, green chillies, sugar, ginger, onion, pulse moong and peas either declined or remained the same during the month, the SBP said, and added that rest of the items, having a weight of 39 percent in the food group, exhibited subdued or moderate inflation.

There was an increase in the average price of food items like wheat flour, fresh milk, vegetable ghee, beef and onion, whereas prices of sugar, pulse gram and chicken showed decline during May as compared to prices in April.

The SBP said that in food group, the most important raise was observed in the price of tomatoes that showed a steep YoY increase of more than 200 percent in May and among the selected food items, tomatoes were the most volatile item over the last two years.

On the other hand, during May, the CPI inflation was recorded at 7.4 percent, depicting a rise of 0.3 percent points as compared to 7.1 percent in the corresponding month last year.

The main contributing factor for the rise in overall CPI inflation is food inflation, which was 5.7 percent, more than that of the same month of last year. Non-food YoY inflation decelerated for the third consecutive month and recorded 4.7 percent inflation in May.

Monthly CPI inflation also witnessed increase of 0.9 percent, which was more than the five-year average of monthly increase in May. The SBP said that the extent of one-month increase in food inflation was very high at 1.8 percent as compared to zero inflation in May 2006 and the five-year average monthly food inflation, which was also zero.

Core inflation, based on NFNE (non-food non-energy), declined to 4.7 percent in May from 6.6 percent in May 2006 on YoY basis. Similarly, core inflation, based on 20 percent trimmed-mean, also showed a decline from 6.0 percent in May 2006 to 5.6 percent in May this year.

http://www.brecorder.com/index.php?id=584976&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*KSE-100 index grows by 38 percent in fiscal year 2007 ​*
KARACHI (June 30 2007): The Karachi Stock Exchange (KSE), one of the most emerging share markets in the region, witnessed bullish trend during the sixth consecutive year, as the benchmark KSE-100 index grew by 38 percent during FY07, on the back of great foreign investor's interest, strong economic growth of the country and higher earnings expectations of corporate sector.

The KSE-100 index, after breaching through 13,800 points historic level to hit 13,806.38 points intra-day high level, finally closed at its highest ever level of 13,772.46 points during the last trading session of FY07, depicting a net gain of 3,783.05 points on year-on-year basis, as the index stood at 9989.41 points level on July 01, 2006.

The FY07 witnessed a major decline in the trading activity level in both ready and future markets due to doubling of CVT and other taxes on stock market transactions in the Budget FY06 and frequent changes in the future market regulation.

Trading volume at ready counter reduced to 211 million shares (Rs 22 billion or $366 million) during FY07 against average daily volume of 321 million shares (Rs 35 billion or $593 million) in FY06.

Similarly, volumes in futures market also declined to 59 million shares (Rs 9 billion or $261 million) in FY07 as against 103 million shares (Rs 16 billion or $261 million) average daily turnover FY06. Cost of carry (that is ready-future spreads) averaged at 6.4 percent during FY 07 versus 13.7 percent in FY06.

In addition, CFS rates also dropped with FY07 averaged at 13.8 percent as against 16.2 percent previously. Open interest in the futures market remained on the lower side at Rs 9.4 billion FY 07 versus Rs 13.2 billion during FY06 due to stick margin requirements and higher utilisation of traditional CFS/Badla. CFS cap raised to Rs 55 billion, leverage via CFS increased to Rs 38 billion ($624 million) on average in FY07 as compared to Rs 22 billion ($365 million) in FY06.

"The gain of 38 percent, (35 percent in US dollars terms), measured by benchmark KSE-100 index, in the outgoing fiscal year FY07 was lower than previous five-year (FY02-05) average of 50 percent but significantly above last 10-year (FY97-06) average gain of 25 percent," said Faraz Farooq, an analyst at First Capital Equities Limited.

Interestingly, market yielded better return in the second half of FY07 (January-June) versus that of the first half of FY07. Against the gain of only one percent in the first half of FY07, stocks provided 37 percent return in the second half of FY07, he added.

He said that the subdued performance in the first half of FY07 could linked to lower GDR pricing of heavyweight OGDC coupled with the introduction of new rules regarding brokers margins and adequacy.

The performance of Pakistan's equity market during FY07 was not at par with Asian Emerging Markets (as defined by MSCI). The returns posted by Pakistan's key bourse, KSE, in FY07 was below the major Asian Emerging Markets, he said and added in FY07, Pakistan market under-performed both MSCI EM (43 percent return) and MSCI EM Asia (41 percent).

As far as other emerging Asian markets are concerned, China's SHCOMP gained 134 percent in local (146 percent in US$) with MSCI (US$) 76 percent, Philippine (PSEI) 67 percent (92 percent in US$) MSCI returns in US $95 percent, Indonesia (JCI Equity) 61 percent (65 percent in US$) MSCI Return in US $76 percent, India (BSE-30) 37 percent (54 percent in US$) MSCI return in US $56 percent, Malaysia (KLCI) 48 percent (57 percent in US$) MSCI 59 percent, Korea (Kospl 200) 33 percent (38 percent in US$) MSCI 32 percent, Pakistan (KSE-100) 38 percent (35 percent in US$) 37 percent, Taiwan (TWII) 33 percent (31 percent in US$) MSCI 24 percent, Thailand (SETI) 15 percent (27 percent in US$) MSCI 27 percent and Sri Lanka (CSE All Shares) 21 percent (13 percent in US$) MSCI 19 percent in FY07.

The MCSI Return (US$) of EM Asia stood at 43 percent in the FY07 while the MSCI Return (US$) of EM (emerging markets) was 41 percent in this period. The highlight of the year was rising quantum of foreign investment inflows into the local, Pakistan equity market attracted $2.5 billion worth foreign buying during the FY07 against the net inflow of $356 million during FY06.

These inflows are inclusive of the three GDRs (OGDC, MCB and UBL) worth $1.5 billion that were floated into the international market. Resultantly, this has improved the float adjusted market cap of Pakistan market from 20 percent in FY06 to 26 percent by the end of FY07.

On the other hand, foreign ownership in the float adjusted market cap has also increased to 30 percent. In 2006, the delivery ration (settlement value divided by turnover) stood at 37 percent as compared to 25 percent during FY06. Besides rising foreign ownership (offshore funds usually take long positions), higher mutual fund and institutional buying and easy availability of funds were the other factors behind improved delivery base buying.

"KSE-100 index registered an amazing return of 38 percent in FY07, as against 34 percent gain in FY06. This took the average 5-year annual return of the index to 48 percent, an outstanding performance by any standard," said Atif Malik an analyst at JS Global Capital Limited.

In contrast to the past, banks single-handedly drove the market with 42 percent return in FY07. On the other hand, all other important sectors under performed the market, with cement showing 21 percent return, fertiliser 17 percent, telecom 6 percent and O&G distribution just 5 percent, he added.

He said that missing among them is E&P sector that disappointed investors with a negative return of 5 percent. Coupled with relatively unimpressive earnings growth in FY07, the tremendous increase in the free float, as a result of offloading 10 percent stake in OGDC by government through GDR, contributed to this bad show of the sector.

Banks have now taken over as the largest listed sector with 31 percent weight in the market total cap, as against 21 percent in June last year, he said and added on the other hand, weight of E&P sector came down to 19 percent from 29 percent in June last year.

Being the largest sector, banks are now even more capable to steer the index further up, going forward. We are 'Over-weight 'on banks as their earnings are expected to grow by 29 percent in 2007 on the back of stable interest spreads. They are trading at 2007E and 2008F PBV of 2.8x and 2.3x, respectively. Similarly, their 2007E and 2008F PE are 12.0x and 10.2x.

He said that both halves of FY07 presented a contrasting picture in terms of performance. 2HFY07 stood out as the whole of FY07 return is attributed to this part, with 1HFY07 contributed just 1 percent. Issues related to 2005 crash inquiry, reduced profitability of some important sectors and substantial reduction in OGDC share price in the run-up to its GDR issue mainly explained the market dullness in that part of the year.

"Then came foreign funds whose aggressive entry into local markets, especially in banking sector, led the market to record highs," he added. He said that foreign funds now hold 31.2 percent of free float with US markets touching new highs, abundant global liquidity are turning investors to Asia. Despite rise in policy interest rates, the monetary expansion in the US and Europe is continuing unabated.

This ample liquidity is creating a lot of demand for Asian emerging market equities. Since US stocks are doing well, investors are not so concerned about risk of sharp correction in the Asian emerging markets.

"We believe that foreign funds will continue to reallocate the portfolio in favour of Asia, as the better macroeconomic conditions in the region would lead to handsome growth of Asian corporate earnings," he said.

Like other regional markets, Pakistan equity market has attracted a portion of this increased liquidity flow to Asia. This is testified by the fact that foreign funds now hold 7.72 percent of the market cap, as against 3.28 percent in June FY06. This also includes the current foreign holding (adjusted for conversion) of MCB, OGDC, and UBL GDRs.

Atif Malik said that since the current market free float is 24.9 percent, these funds now effectively hold 31.2 percent of total free float in the market. The FY07 proved a better year in terms of new listing and the amount of capital raised by these new entrants. During the last fiscal year 12 new companies got listed on the stock exchange, as compared to nine companies in FY06, he concluded. In this process, Rs 6.258 billion was raised in FY07 vis-à-vis Rs 3.6 billion n in FY06.

http://www.brecorder.com/index.php?id=584960&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*HBLs IPO to be largest in Pakistan​*
KARACHI, June 29: The HBLs IPO (Initial Public Offering), which is expected to raise Rs12.2bn, would be the largest offering in Pakistan and it will enhance market capitalisation by over $3 billion, says a brokerage house report.

HBLs IPO would be the largest offering in Pakistan in terms of value. Previously, OGDCs IPO in November 2003, with an offer size of Rs6.9bn ($120.3m), was the largest local offering, said a JS Research report.

The report said the HBL would enhance market capitalisation by over $3bn.

Since its privatisation in December 2003, HBL, which is Pakistans second largest bank in terms of its total assets (Rs565bn or $9.3bn, as on March 31, 2007), has been reaping benefits of countrys booming economy and developing financial sector, the report added.

Accordingly, in the last three years (2004-06), banks profitability has improved.

On the asset side, major growth was witnessed in the SME (Small and Medium Enterprise), consumer and agricultural sectors.

HBL, under the privatisation programme of Pakistan, was sold to Aga Khan Fund for Economic Development (AKFED) at a price of Rs22.41bn ($389.7m) for 51 per cent stake in December 2003. The Rs36.08 per share at that time after the reduction in the banks capital in 2004 translates into Rs63.68 per share.

After the takeover, the bank managed to triple its profitability on the back of new managements aggressive lending policy, restructuring, and efficient deposit mobilisation strategy.

The government is offloading five per cent of its holding (34.5m shares) through local bourses, with a 2.5 per cent (17.3m shares) green shoe option exercisable in case of over-subscription.

The shares are being offered at Rs235 per share.

The bank had 32,770 employees 1991. However, thanks to a drastic reduction in the number of employees in 1997 and a gradual decline from then onwards, the bank touched a low of 14,572 employees in 2006. In 2006 alone, 2,367 employees were retrenched

Although no major change in HBLs number of branches was witnessed (1,477 branches in 2006 versus 1,470 branches in 2003), administrative expenses of the bank grew by 18 per cent annually in the last three years (2004-06).

http://www.dawn.com/2007/06/30/ebr2.htm


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## Neo

*FDI flow into Pakistan doubles​*  
By Farhan Bokhariin Islamabad 

Published: June 30 2007 

Foreign direct investment into Pakistan has doubled to more than $7bn in the financial year ending today, the privatisation and investment minister said yesterday.

Zahid Hamid said the growth in FDI, which in-cludes portfolio investment, showed that foreign investors were unperturbed by political agitation since March when opposition parties began protesting against the suspension of the country's top judge.

"Despite what people may have called the political noise, foreigners are continuing to come to Pakistan," said Mr Hamid. "These in-vestment numbers show the momentum is continuing."

Mr Hamid said enthusiasm among foreign investors had been raised by the privatisation programme, which had boosted confidence.

The ministry has received $2bn (1.48bn) in the 2006-07 financial year, compared with a target of $1.25bn to $1.5bn. Most FDI has been in sectors such as banking, telecommunications, oil and gas. Economists said foreign investors appeared to be setting aside concerns that the political turmoil might slow the recovering economy - even though national elections, expected before the end of the year, are likely to be turbulent.

"Foreign investors so far appear to be comfortable with Pakistan risk," said Sakib Sherani, chief economist for Pakistan at ABN-Amro.

"As long as General Pervez Musharraf [Pakistan's president and military ruler] stays in power, foreign investors are likely to stay the course."

But Mr Sherani pointed out that while the scale of foreign investment had gone up, it was still concentrated largely in the service sector, which does not necessarily produce the same job opportunities as manufacturing.

"The types of investments coming in are largely those that will eventually repatriate capital from Pakistan. What you need are investments that create exports so that there aren't pressures from outflows and you need to create jobs," he said.

http://www.ft.com/cms/s/8eca149c-26a6-11dc-8e18-000b5df10621.html


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## Neo

*Pakistan sees first floating LNG plant by end-2008​*
By Reuters
Friday June 29, 2007
NEW DELHI (Reuters) - Pakistan plans to build its first floating liquefied natural gas terminal by end-2008, Energy Secretary Ahmad Waqar said on Friday while on a trip to India. 

The 2.5 million-tonnes-a-year floating terminal would be built by local investors, Waqar said, adding they would be also be responsible for sourcing the LNG. 

"We are getting an integrated project in which someone who sets up the terminal will also be managing supplies," Waqar, who is in New Delhi to discuss a gas pipeline from Iran to Pakistan and India, told reporters. 

Pakistan's state-run Sui Southern Gas Co. Ltd. is seeking bids from companies to build a 3.5 million-tonnes-a-year LNG terminal, which it wants to completed by 2011/12, Waqar said. Pakistan's fiscal year runs from July to June. 

"We are now at the bidding stage, and hopefully in next two to three months we should be in a position to finalise the transaction," he said. 

http://in.news.yahoo.com/070629/137/6hj5c.html


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## Neo

*Pakistan's Soft Drinks Industry Is Set to Experience Volume Sales Growth of 30.5&#37; to 2010​*Friday June 29,2007 

Research and Markets (http://www.researchandmarkets.com/reports/c61217) has announced the addition of "Pakistan Food & Drink Report Q4 2006" to their offering. 

The Pakistan Food & Drink Report provides independent forecasts and competitive intelligence on Pakistan's food & drink industry. 

Last quarter, we reported on the state of Pakistan's bottled water industry, which is suffering from high levels of contamination in spite of the disease and health and hygiene scares that already plague the country's domestic water supply. This newly-published Q406 Pakistan Food & Drink Report examines the bottled water market within the broader Asia Pacific region and Pakistan remains a focus, both due to the aforementioned safety issues and due to the general soft drink consumption trends that are currently influencing the market. 

Bottled water consumption levels in Pakistan are actually among the lowest of all the regional markets analysed in our overview. The average person consumes just two litres of bottled water per annum, compared to four in India and 10 in China. This is a consequence of the low levels of per-capita income in the country, even in major urban centres, and the restrictions this imposes on the consumption of non-essential food and beverage items. However, in line with a gradually improving economy and the slow, but steady, spread of organised retail, we believe that per-capita consumption levels are set to climb. Pakistan's soft drinks industry is set to experience volume sales growth of 30.5% to 2010 according to our estimates and we believe that the bottled water sub-sector will be the main driver of this growth. 

Issues of bottled water contamination are unlikely to negatively impact upon sales of the product in a country where a lack of information, or a lack of alternatives, sees the potentially highly dangerous local water supply often preferred to bottled water anyway. In addition, multinational soft drink manufacturers are pouring money into the industry. The likes of US-based Coca-Cola, its compatriot PepsiCo and Switzerland's Nestle have all taken a strong interest in Pakistan at a time when the country's food, drink and retail industries in general are all actually struggling to attract large-scale multinational investments of this nature. Although these companies all have more profitable product categories, which are their primary concerns in more developed markets, in Pakistan a key element of their business strategy at the present time is a strong presence in the increasingly competitive bottled water industry. Should economic growth continue, the introduction of their added-value, more premium products, will simply prove a bonus at a later date. 

Such investment cannot help but drive bottled water sales in Pakistan, while inflows from multinationals also provide much needed jobs and contribute to essential infrastructural developments in the country. However, there is a huge flipside to these advantages - the creation of a population, which can barely afford to spend beyond necessity, reliant on a product that is still considered a luxury item in some of the world's most developed economies. Pakistan's response to this dilemma affects not just its population, but its likelihood of establishing itself as a destination for much sought after food, drink and retail industry investment in the future. 

Areas covered: 

- Business Environment 

- Retail 

- Food & Drink 

- Tobacco 

- Competitive Landscape 

Companies mentioned: 

- Tapal Tea 

- Utility Stores Corporation 

- Coca-Cola Beverages Pakistan Ltd 

- Nestle Milkpak 

- Unilever Pakistan 

For more information visit http://www.researchandmarkets.com/reports/c61217. 

http://au.biz.yahoo.com/070629/43/1amx7.html


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## Owais

*Record $7 billion foreign investment this year *


ISLAMABAD (updated on: June 30, 2007, 20:37 PST): Minister for Privatization and Investment, Zahid Hamid said on Saturday that the country has set a new record of the foreign investment as it achieved $7 billion of investment this year.

"The upward momentum of the foreign investment continued in the current fiscal year and it touched the $ 7 billion mark which is a record," he told audience at a ceremony to mark NIB Bank's acquisition of a majority shareholding in Pakistan Industrial Credit and Investment Corporation Ltd (PICIC) here.

He said that privatisation, de-regulation and liberalisation are the corner stones of highly successful economic reforms introduced by the government under the leadership of President Pervez Musharraf and Prime Minister Shaukat Aziz.

The Minister said due to the prudent reforms and consistency and continuity in the economic policies and good governance, the economy of Pakistan continues to register rapid growth, averaging more than 7 percent during the last four years.

Commenting on NIB Bank's acquisition of a majority shareholding in PICIC, he said it is the policy of the government for providing an enabling environment for private sector investment including physical and technological infrastructure and requisite social service.

Governor State Bank, Dr. Shamshad Akhtar said that Pakistan is leading in banking sector in the region, adding, "Now even some developed countries are viewing our banking sector as role model."

She said the NIB is 10th largest bank and its investment in PICIC will give it a broad-based exposure to our growing economy via financial sector.

The Governor opined that the increasing level of foreign investments is testimony to the growing international confidence in Pakistan.

Speaking on the occasion, Executive Director and CEO Temasek Holdings, Ms. Ho Ching emphasized that Temasek has a positive long term view of Asia.

Over the last 2 years the group has doubled their exposure to Asia from 19&#37; to 39%.

Temasek believes in core principal investment themes, such as transforming economies and Pakistan is certainly one of the most promising countries in this respect.

The Government's courage, wisdom and commitment to free up the economy has given Pakistan a 6 to 8% economic growth over the last several years.

Temasek's earlier investment in NIB Bank and now in PICIC gives us a broad based exposure to this growing economy via the financial sector, she added.

The other theme reflective in Temasek's investment strategy relates to a thriving middle class which is clearly expanding in the economic growth pattern of Pakistan.

She said, through the combined platform of NIB and PICIC, we can benefit from and contribute towards a vibrant economy.

This will be done by providing credit to the families to buy homes, vehicles and household items and also through support to the wave of entrepreneurs, big and small to build their businesses.

Through such innovative services, the new combined bank can help create additional wealth for their clients and build a sustainable franchise.

Pakistan, she said is also blessed with high quality human capital both inside and outside Pakistan.

"We believe that this will be a key comparative advantage that Pakistan will deepen as she invests in education and opens up her market," she added.

With a wealth of talent there's an ample scope for younger generation of Pakistanis to start new businesses, grow new industries and revitalize Pakistan 's traditional industry base.

Madam. Ho Ching said "We see NIB together with PICIC as an emerging champion in the domestic banking space."

The merger of NIB and PICIC will provide a platform to develop many new products and service offerings.


brecorder.com


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## Owais

*9,700 megawatts more through renewable energy by 2030: AEDB *

KARACHI (July 01 2007): National grid would receive additional electricity of 9,700 megawatt (MW) through renewable energy by the year 2030, officials in Alternative Energy Development Board (AEDB) told Business Recorder on telephone from Islamabad.

It is expected that total electricity needs may touch 162,590 MW after 23 years, as its demand is growing between eight to 12 percent annually in the country.

Officials said the country had 19,522 MW total installed capacity contributed by 12,567 MW thermal (64 percent share), 6,493 MW hydel (33 percent share) and 462 MW nuclear (two percent share).

Currently, renewable energy has no share in the total installed capacity but AEDB has projected that national grid would be able to get 700 MW by 2010 and 9,700 MW sharing five percent of the total demand by 2030, they added. To keep the momentum of economic growth, the government has taken various measures to cater energy demands in the future.

They said that AEDB was established in May 2003 to implement government policies, programmes and projects through private sector in the field of renewable energy.

The AEDB was formed to assist and facilitate development and generation of renewable energy to achieve sustainable economic growth besides facilitating transfer of technology and develop indigenous manufacturing base for Renewable Energy Technology, they said.

The AEDB would facilitate installation of 700 MW of wind energy plant near Gharo, Sindh, by 2010 in addition to developing solar products like solar lights, fans, cooker, geyser etc through private sector. In this regard laws and taxes had been designed to encourage self-energy generation by domestic sector, they apprised.

The AEDB has prepared road map for completion of its projects in phases. The short-term or 'lenient phase' would be completed by June 30, 2008, medium-term or 'consolidation phase' by July 2008 to July 2012 and finally long-term or 'maturity phase' by July 2012 onwards, officials said.

They said that unique features of Renewable Energy Policy 2006, including wind risk/hydro risk, guaranteed electricity purchase, setting up of grid station provision is the responsibility of the purchaser, attractive tariff, no import duties on equipment, zero sales tax, net metering, electricity banking, wheeling provisions and grid spill over concept introduced.

The country has the potential of more than 50,000 MW wind energy. Pakistan has 1,045-kilometre long coastline in the south where average wind speed was recorded at 7 m/s only at Gharo Wind Corridor, officials said. They said the government had given incentives to wind farm investors, providing land at reduced rates for wind energy projects.

The federal government has approved the policy guidelines for tariff determination and National Electric Power Regulatory Authority (Nepra) has offered up front tariff of US cents 9.5/kWh to investors. About the present status of wind projects, the officials said the government had issued letters of intent (LoIs) to 84 investors so far for setting up wind farms of 50 MW each on Built, Operate, Own and Transfer basis.

About 23,645 acres of land has been allotted to 15 investors on sub-leased basis in the general wind corridor, officials said, adding that survey and demarcation of another 10,169 acres of land were under way. Power generation licenses have been issued to five companies, including Green Power, New Park, Milergo, Win Power, Tenaga Generasi.

About tariff negotiation with these companies' officials said that Nepra had offered the upfront tariff of 9.5 cents/KWh, 10.23 US cents/kWh to New Park and Green Power's, respectively. While, Win Power and BEL had filed for tariff petition and Tenaga Generasi was willing to accept 9.5 cents, they said.
http://brecorder.com/index.php?id=585396&currPageNo=2&query=&search=&term=&supDate=


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## Owais

*NIT assets&#8217; value mount to a record level *

KARACHI: National Investment Trust (NIT) assets&#8217; value mounted to a record level of Rs98.36 billion in aggregate at the end of June 27.

NIT press release issued here said that the value of the assets previous year in the same period aggregated to Rs64.30 billion, while the per unit price was at Rs43.07. Similarly, the value of the NIT assets during the current fiscal year recorded a surge by 53 percent, while the unit price by 45 percent.

NIT financial results for the current fiscal year were expected next week and it is hoped that the aggregate value of the Fund would continue surging extraordinarily. 

http://geo.tv/geonews/details.asp?id=8275&param=3


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## Neo

*High interest rates stunt LSM growth ​*
KARACHI (July 02 2007): The country has missed its large-scale manufacturing (LSM) growth target of 12.5 percent by 4 percent in the wake of high interest rates and increased cost of doing business in the country, reliable sources said.

The LSM is the second largest sector of the economy accounting for over 20 percent of Growth Domestic Production (GDP) has shown poor performance during fiscal 2006-07.

Experts believe that despite government's best effort, its growth target could not be achieved and final growth figures will be around 9 percent.

Sources said that final figures of LSM growth will be around 8.5-9 percent in last fiscal 2006-07 against the target of 12.5 percent, depicting a decline of 3.5-4 percent during 2006-07.

Official statistics show that 8.5 percent growth was achieved during July-April of fiscal 2006-07, which is around 1.4 percent less than last fiscal year's achievement of 9.9 percent.

Although the government claimed in the Economic Survey that overall manufacturing continued to show a robust growth in 2006-07, it did not concede that the country was failing to achieve its annual growth target, sources said.

Satistics show that the LSM growth has been declining for the last three years due to high interest rates, besides increasing cost of production. Around 97 percent decline witnessed in the LSM growth during the fiscal 2005-06, as it stood at 9.9 percent in 2005-06 as compared to 18.7 percent in the fiscal 2004-05.

"Several factors have contributed to missed growth target of LSM, including difficulties in the textile sector, reduced production of cotton crop. Besides, lower than expected scale of operations of oil refineries are the main reasons behind the decline in the LSM growth," the analyst said

Textile and cooking oil sectors are the major parts of LSM and both have showed poor performance during the last fiscal year, the decline in raw cotton production and high cost of production has badly hit textile industry, he added.

Since high raise in the international palm oil prices put negative impact on the ghee sector, vegetable ghee and cooking oil also showed a lackluster performance.

In addition, high imports of used cars and increase in car-financing rates in the fiscal year also dampened the performance of the domestic auto sector, therefore, the auto sector performance has been far less impressive during 2006-07 as compared to previous five years due to the fall in domestic demand for cars, the statistics said.

The main contributors to the LSM over thr last year are in the textile group: cotton cloth by 7.0 percent, cotton yarn by 11.9 percent, in the food, beverages and tobacco groups cooking oil 6.8 percent, sugar 19.6 percent and cigarettes by 4.14 percent during July-April of last fiscal year. Similarly, the cement sector grew by 21.11 percent and in the automobile group jeeps & cars by 3.0 percent, LCVs 17.04 percent, motorcycles by 12.30 percent and tractors 11.40 percent during July-April 2006-07.

On the other hand, some sectors such as petroleum and fertiliser showed negative growth. In the case of fertilisers, nitrogenous and phosphatic fertilisers growth declined by 0.08 percent and 3.10 percent respectively. Petroleum products declined by 5.59 percent.

Traditionally, the large scale manufacturing (LSM) data of 100 items is compiled and made available for public by the Federal Bureau of Statistics on a monthly basis The SBP in its third quarterly report indicated that LSM target would not be achieved.

http://www.brecorder.com/index.php?id=585806&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*SBP targets 10 million microfinance borrowers by 2013 ​*
KARACHI (July 01 2007): The State bank of Pakistan is targeting 10 million borrowers of micro finance by 2013. This was stated by SBP Director on Microfinance and SMEs Qasim Nawaz while talking to Aaj Markets. He said that by 2010, three million borrowers would be reached and the remaining seven million were targeted during following 2-3 years.

Qasim, while talking on MFB prudential regulations, elaborated that it had been suggested to eliminate MFB from tax regime for at least 5 years, as currently they are being taxed at the rate of commercial banks.

He said that with this incentive more internationally operating NGOs would come to Pakistan, as amendments had been suggested in prudential regulations to enhance the status of NGOs and to acquire licence from SBP to become banks. He added that only licensed banks could raise deposits and re-invest them.

Cash reserve Requirement of these banks, according to MFB regulations, would be decided by the State Bank of Pakistan. He said that by law MFBs would be able to access home remittances directly and could deliver at the doorstep of the customer. He added that the objective was to extend the outreach, and the beneficiaries could benefit at large and borrowers.

SBP is considering enhancing NRSP (National Rural Support Programme) status to National Microfinance Bank. It also plans to provide PPF with credit enhancement tools, where NGOs could borrow from PPF more than 2-3 times for one rupee of a loan. He stressed on improvising governance at Khushhali Bank to make it profitable to the extent where it should become operationally sustainable and its role could be maximised.

The objective is that the top three institutions should facilitate MFBs to raise more and more deposits. He said that with these three top Microfinance institutions and 5 MFBs in private sector, achieving the target of 10 million borrowers was not difficult.

He said that three private sector MFBs are working on national and two on district levels and it is needed to create an environment for MFBs where they can access resources from commercial banks.

Qasim said that at present a microfinance loan ranges between Rs 13-14000 and after three years it is likely to reach up to Rs 20,000. He said that in next few years banking system would need Rs 46 billion additional resources, which are likely to be raised through equity or through commercial bank support.

He said that for maximum outreach it has been proposed to access services of Pakistan Post, where microfinance banks and institutions are not required to open their branches but can access Pakistan Post services. This would help in cost cutting of newly established MFBs.

He said that it is planned to use mobile phone technology to access loan and to repay instalments. A proposed regulatory regime in consultation with Pakistan Microfinance Network (PMN) is placed on SBP website for recommendations.

He said that subsidies should be considered only in areas where acute poverty exists and financing is not possible through cost recovery concept. This is called difficult terrain. In non-difficult terrain financing will be provided on cost recovery concept only.

Talking of the credibility of the system, he said that no leakages had been reported so far. It is estimated that Pakistan is a market of 30 million microfinance borrowers. In 2006, only 0.75 million borrowers were reached, and up to March 2007 the number has crossed 1.13 million borrowers.

He added that the recovery rate of these 1.13 million borrowers was 98 percent. However, efforts were going on to eliminate 2 percent also. He said that misuse was not likely as the size of the loan is small, and added that NGOs were working on community basis and social pressure of the group would eliminate any such incidents.

http://www.brecorder.com/index.php?id=585363&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Pakistans Liquid Foreign Reserves: Forex reserves touch $15.5 billion​*
* Higher inflows support local currency
* $650m of UBL GDR yet to be received

By Arshad Hussain

KARACHI: The countrys reserves have touched $15.5 billion during the outgoing fiscal year (2006-07), rising 23 percent or $3 billion, which is the highest level in the last seven years. Furthermore, the central bank has yet to receive $650 million for UBLs GDR.

On June 30, 2006, total countrys reserves stood at $12.623 billion, central bank data said, but this year the higher inflows of the remittances and direct investment supported countrys reserves at a record level.

Owing to the higher inflows in the inter-bank market, the local currency remained flourishing against the US currency and it stabled against the other currencies also, said a banker of a privatised bank. 

Bankers have been eyeing the level of Rs 60.50 since the last one year. In 2006-07, the rupee gained only 19 paisas or 0.31 percent to Rs 60.38 for buying and Rs 60.39 for selling. The dollar closed at Rs 60.19 in the interbank market on June 30, 2006.

In the mid of last year, bankers said, the greenback was appreciating only because of higher demand of fuel in the international markets. During July-May, the country had paid $6.63 billion as against the import of petroleum products.

Several times in the last fiscal, the local currency attempted to cross the mark of Rs 61 and it did, but with the help of the central bank, it (greenback) moved down again. The market experts said the local currency was stable against all the listed currencies for the last four months only because of the higher inflows of the greenback.

The State Banks data shows that the countrys reserves stood at $15.182 billion on June 23, 2007, but the bankers said the banks received a payment of around $250 million through the sale of PICIC and $100-$150 million of telecom sector in last few days, which were not included in the total reserves of the central bank.

The total reserves had touched $15.5 billion in the outgoing fiscal, a banker said. The reserve would continue its upward trend during 2007-08 following the undergoing privatisation programme of the federal government.

The central bank will have to receive $650 million against the Global Depository Receipt (GDR) of the United Bank Ltd (UBL). 

With the successful completion of UBLs GDR issue, the government should be able to issue GDRs of National Bank of Pakistan (NBP) and KAPCO. The government would issue these GDRs in the current fiscal year.

The country had received $5.627 million in the head of foreign investments including portfolio investment in the local bourses during July-May 2006-07, while it received $4.988 billion remittances from the overseas workers during the same period.

http://www.dailytimes.com.pk/default.asp?page=2007\07\01\story_1-7-2007_pg5_6


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## Neo

IT services export increases 56%​
By Romail Kenneth

KARACHI: The IT and IT-related services export has registered significant increase of 56 percent so far during the financial year. 

Export targets for the year 2006-07 was $108 million as compared to last years target of $72.21 million. 

The country is on track for a year-on-year growth of 50 percent, said Ashraf Kapadia, President of the Pakistan Software Houses Association. He said that we are confident that we will achieve the target of $108 million set by the government for 2006-07. 

With growth comes certain challenges and we need to proactively address these challenges otherwise we may not be able to sustain the explosive growth, he said. 

He felt one of the biggest challenge that we face is the image of Pakistan. Unfortunately, the perception of Pakistan is far beyond from reality. The travel advisory issued by US and other governments is a major problem, which hinders clients to visit Pakistan. Although once the client visits Pakistan, their perception is entirely changed. 

A large number of companies of all shapes and sizes make up the IT sector in Pakistan. IT is now mainstreamed into every aspect of industrial and economic activity in Pakistan. Apart from being used in large-scale organisations, IT is now deployed in many small and medium enterprises. 

All this is making the IT Industry grow at a phenomenal rate of 50 percent year-on- year, making IT the most vibrant, dynamic and exciting sector in Pakistan. There are many major ongoing IT projects in the public as well as private sector.

http://www.dailytimes.com.pk/default.asp?page=2007\07\01\story_1-7-2007_pg5_7


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## Neo

*Over two million severely hit: Balochistan death toll 100 15 districts affected Loss estimated at Rs10bn​*
QUETTA, July 1: Balochistan has suffered a loss of around Rs10 billion because of cyclone and flood which severely affected over two million people in 15 districts and destroyed roads and communication network.

More deaths were reported from different areas of the province on Sunday. The provincial government confirmed over 100 deaths and said that the toll could increase as a large number of people were still missing.

Prime Minister Shaukat Aziz visited the flood-hit areas of Turbat and said the federal government would provide adequate help and cooperation to the Balochistan government for rehabilitating the affected people.

He said the government would also welcome cooperation and help from the international community and non-governmental organisations.

He said that the communication system would be restored immediately in the flood-hit areas to ensure supply of relief goods to the affected people.

Frontier Corps Inspector General Maj-Gen Saleem Nawaz briefed the prime minister on the extent of destruction. Balochistan Chief Minister Jam Yousuf, Chief Secretary, K.B. Rind, federal Minister Zubaida Jalal and provincial Minister Syed Eshan Shah were present.

Provincial Home Secretary Tariq Ayub and provincial Relief Commissioner Khuda Bakhsh Baloch told reporters that 15 out of 29 districts had been affected by the cyclone and flash floods and the situation was quite bad in eight districts where personnel of the army and Frontier Corps were engaged in rescue and relief operation.

Thousands of marooned people were rescued and taken to safe places.

The most affected districts are Turbat, Gwadar, Nasirabad, Jaffarabad, Jhal Magsi, Bolan, Kharan, Khuzdar, Washak and Nushki. More bodies were found in the Nal area of Khuzdar district where 10 villages have been washed away by flash floods caused by a breach in a dam on Friday night.

Officials confirmed that 42 bodies had been recovered. Tahir Bizenjo, a former senator of the National Party, claimed that 50 bodies had been found while hundreds of people were missing.

Nothing is left in the villages. All mud-houses have been washed away, Mohammad Aslam, a resident of Nal, told Dawn by telephone. The officials confirmed a large number of deaths in the area. They said casualties had also been reported in Jhal Magsi, Awaran, Kharan, Bolan, Kalat, Turbat, Sibi districts and other parts of Balochistan.

Heavy rains continued in Jhal Magsi, Nasirabad and Jaffarabad areas, causing flash flood and breaching Dori canal near the Magsi Kot area. Several dozen villages were submerged in water gushing out of the canal.

Floodwater entered nine union councils following the breach in the canal, Relief Commissioner Khuda Bakhsh said, adding that the situation in the Bagh Head area of Jaffarabad district had worsened.

The officials said that rains also lashed Bolan district and the Bolan river was in high flood. Gas supply to Quetta and four other districts have remained suspended for four days.

Many houses collapsed in the Mach area. Four members of a family died when roof of their house collapsed on Sunday morning.

Reports reaching here also said that thousands of mine workers were stranded in coal mines areas of Mach, Degari and Surrang as all roads had been washed away.The situation in Jhal Magsi was the same and several thousand people marooned after floodwater entered the township after washing away of a dyke around the Jhal Magsi town built for flood protection.Provincial Home Secretary Tariq Ayub told reporters that according to initial estimates, Balochistan suffered a loss of around Rs10 billion as all roads, communication system and other infrastructure had been completely destroyed. Losses could be between Rs9 and Rs10 billion, he said, adding that around two million people of 15 flood- and cyclone-affected districts severely affected and tens of thousands rendered homeless.

About the relief operation, he said the provincial government had decided to dispatch 10 medical teams to the affected districts. He said that the teams would be sent by helicopters.

He said that personnel of the armed forces engaged in relief and rescue work had evacuated 300 marooned people from Jhal Magsi and 250 from Jaffarabad. He said that on Sunday an aerial survey of Nal Tehsil, Kharan, Noshki and some other parts was conducted for a massive relief operation.

The home secretary said that a meeting with NGOs was scheduled for Monday to ask them to support the relief operation. He also said that the Dori Shakh river at Kot Magsi in Jaffarabad district had overflown it banks breached and it might affect nine union councils, adding that the authorities had warned more than 40,000 people to leave their homes.

He said the federal government had been asked to provide tents for shelter-less people and the prime minister had assured all possible cooperation in this regard.

Meanwhile, the railway authorities have restored train service between Quetta and the rest of the country on Saturday night after removing boulders that blocked the main track. The Quetta-Chaman railway track was also cleared for traffic.

Meanwhile, President Gen Pervez Musharraf on Sunday said that the federal government would provide help to the Balochistan government for rehabilitating the cyclone- and flood-affected people of the province.

Talking to Chief Minister Jam Mir Mohammad Yousuf, the president said that he would soon visit Balochistan to review the losses.

http://www.dawn.com/2007/07/02/top1.htm


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## Neo

*BMW X5 to hit Pakistani roads soon​*
KARACH: Deliveries of the new BMW X5, a car with powerful eight and six-cylinder engines, permanent all-wheel drive to Pakistan are expected in the current month. According to a press release issued on Monday, President and Chief Operating Officer for Dewan Motors Private Limited, Farooq Mustafa said, The original BMW X5 created a brand-new segment and set the trend for spacious, luxurious, rough terrain vehicles.

http://www.dailytimes.com.pk/default.asp?page=2007\07\03\story_3-7-2007_pg5_13


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## Neo

*SPI-based inflation up 7.65 percent ​*
ISLAMABAD (July 03 2007): The SPI-based inflation was up 7.65 percent at the closing week of financial year 2006-07 against the same period of last year affecting the lower income group. According to statistics released by the Federal Board of Statistic for the week ending June 28.

The Sensitive Price Indicator (SPI) stood at 7.65 percent against same period of last year and with 0.74 surge during the week it mounted to 154.75 from 153.62 of last week.

Increasing prices of essential commodities have been hitting hard the low-income groups, as inflation was 9.45 percent for the group earning Rs 3000 against 5.85 percent for those having income above Rs 12,000.

The inflation was 9.35 percent during the week under review for the income group of between Rs 3000 to 5000 and 8.58 for those having income between Rs 5000 to 12,000. The city-wise prices of 53 essential commodities pertaining to 17 urban centres showed an upsurge in prices of 15 items against decrease in prices of 11 whereas the prices remained unchanged for 27 items.

The statistics showed that the prices of tomatoes, eggs, gram, pulses, onion, chicken, cigarettes, wheat flour, wheat, masoor pulses washed, rice basmati broken, rice irri, red chillies, firewood, mustard oil and cooked dal plate increased.

However, the prices of garlic, LPG, potatoes, moong pulse washed, salt powdered, gur, vegetable ghee loose, mash pulse washed sugar and milk powder Nido declined. The tomatoes price increased by 45.77 percent, eggs 14.74 percent, gram pulse washed 2.20 percent, onion 2.02 percent, and chicken farm 1.45 percent. The prices of 19 items increased to double digits compared to last year.

http://www.brecorder.com/index.php?id=586045&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Export target missed by over $1 billion in fiscal year 2007 ​*
KARACHI (July 03 2007): The country's exports have missed the target of $18.6 billion set for the fiscal 2006-07 by over 6 percent, sources in the commerce ministry told Business Recorder.

According to the unconfirmed figures, the exports stood at $17.5 billion for the 12-month period ie July-June 2006-07 as against $15.48 billion during July-May 2006-07 thus registering a 26.25 percent growth on MoM basis.

The exports in June grew by over 26 percent to $2.02 billion against $1.6 billion in May taking the export figure to $17.5 billion for the year. The trade deficit for the year could not be ascertained, as the trade figures are in the process of compilation that would take another four weeks.

Trade analysts said that under performance of the textile sector coupled with under-target exports of rice, surgical items, footwears, fruits, gems & jewellery and fisheries remained the reasons for the missing of export target, which was quite realistic.They said the Trade Policy 2006-07 had emphasised that due to attention would be accorded to non-traditional export items like gems & jewellery and engineering goods etc, but the idea was not properly worked out and was not properly implemented.

Analysts said that non-traditional export items particularly engineering products had a big international market and had a lot of potential, which should be tapped, adding the Engineering Development Board (EDB) and the Trade Development Authority of Pakistan should explore the markets for these products.

It may be mentioned here that at present, the engineering item exports stands at around $300 million and had due attention given to the sector it would have crossed $1 billion mark.

The government projected import bill at $28 billion for the current financial year whereas the export target was set at $18.6 billion for the whole year, which translates into $9.4 billion trade deficit. Although the import figures, at present, are not available, the signs of a trade deficit around $14 billion are visible, which would have been highest ever in the history of the country.

The all-time high trade deficit is causing adverse impact on the current account deficit and the balance of payments as well as on the health of the rupee, however, the increased foreign direct investment and growth in remittances is helping make up the losses to some extent caused by the widening trade deficit. It may be mentioned here that the services exports for the year ending June 30, 2007 stood at $2.5 billion.

http://www.brecorder.com/index.php?id=586080&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Development of southern Punjab high priority: chief minister ​*
MULTAN (July 03 2007): Punjab Chief Minister, Chaudhry Pervaiz Elahi has said that government is attaching top priority to the development of Southern Punjab and other backward areas and huge funds are being spent for this purpose.

He said that a cardiology institute is being completed with an estimated cost of Rs 1.2 billion while huge funds were allocated for the promotion of education and health sectors, water supply and sanitation schemes, infrastructure development and other projects.

He said that a number of development schemes have been completed in the area while work is in progress speedily on the others. He expressed these views while talking to members of Punjab Assembly and National Assembly of Southern Punjab who met the CM at Chief Minister's Secretariat, here on Sunday.

The CM said that education sector reforms programme is being implemented successfully in Multan as in other districts of the province due to which better academic facilities have become available to students. He said that an amount of Rs 4 billion would be spent on the establishment of University of Engineering and Technology Multan, while a home economic college, a university for women would also be established for the promotion of education in the area and a number of schools have been upgraded while several vocational institutes have also been established.

He said that in order to provide modern health facilities to the masses, an amount of Rs 12 crore is being spent under Health Sector Reforms Programme for the up-gradation of health centers. Similarly, he said, special attention is being paid to the improvement of road network in the area.

The delegation said that a record number of development projects have been executed by the government during the last four and half years. He said that the funds provided by the government for the uplift of Multan division are unprecedented.

They lauded the role of Chief Minister Punjab for the development of the area. They said that due to rapid development process in Multan, popularity of Pakistan Muslim League has grown tremendously in the area and public confidence has increased in the leadership of the party.

http://www.brecorder.com/index.php?id=586105&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Modernising sports goods industry: Smeda plans to set up product development centre ​*
SIALKOT (July 03 2007): The Small and Medium Enterprise Development Authority (Smeda) has evolved a strategy for tracking sports goods industry on modern and scientific lines. The Smeda has adopted this approach in close consultation with all the stakeholders. The concept of this programme is to enable the sports goods sector to deal with emerging technology and produce high value added products.

Official sources told Business Recorder here on Sunday that the step was being taken for ensuring the entry of sports goods industry into largest segment of sports goods exports. Presently 55 percent of the sports goods are composite based.

In this regard Smeda has prepared a well-knitted plan for setting up a product development centre for composite in Sialkot at a cost of Rs 443.4250 million and development work on this project would be undertaken shortly.

Regular functioning of the product development centre would extend services like product testing (physical and chemical), provide skilled workforce to the sector, enhance productivity by providing technical support services to new and existing industrial units, help develop imported machinery locally through reverse engineering and facilitate in increasing exports of composite based sports goods.

The globally Sialkot is identified as a producer of quality products in sports goods, surgical instruments, leather garments, gloves & accessories, sportswear and musical instruments. Around 200,000 plus people are engaged directly or indirectly with export activities and annual export earnings of the city hover around 900 million dollars of which the share of sports goods sector is 350 million dollars per annum.

In sports goods industry where new materials had supplanted the old includes tennis, archery, skiing, boating, golf and fishing. The composites had replaced previous materials and eventually declined in price to widely affordable level. In the production of tennis rackets the wood was only material for frames had totally been changed into new high performance materials.

The trend of tubular steel and aluminium rackets took place in 1970s and these were lighter than wood-made tennis rackets as well as unaffected by the weather.

But within next six years composite rackets became available and wood virtually disappeared and at present 95 percent of all tennis rackets are being produced with composite materials. The other sports goods equipment like field, roller and ice hockey sticks and ice skates, golf clubs, fishing rods and tackles base bats and billiard cues have been converted into composite materials.

The proposed product development centre will prepare the local industry to aggressively enter into the international market of composite based sports items. The sports sector already enjoying strong linkages with international sports goods brands, which would help in marketing of Pakistan made products and help in regaining its position in the global market.

The centre will provide technical know-how, trained labour force, testing facilities, prototype development and mold making services to the sports goods sector as well as it will act as for diversification into composite based products like auto parts, home appliances and surgical instruments etc, the sources added.

It may be mentioned that the sports goods was declared as priority sector in 2004 by the federal Ministry of Industries, Production & Special Initiatives in 2004 and Smeda was given this task of developing a coherent strategy for its development.

http://www.brecorder.com/index.php?id=586139&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*IBRD to provide $79 million to increase Karachi port productivity ​*
FAISALABAD (July 03 2007): International Bank for Reconstruction and Development will provide $79 million to increase productivity of the Karachi port by reducing Karachi Dock Labour Board-related labour costs; and to facilitate the re-entry of former KDLB registered workers and employees into the labour market.

A Project report said the World Bank, with the support of Pakistan Government recently completed a major study titled "Pakistan: Labour Market Study - Regulation, Job Creation, and Skills Formation", which has informed the development of the KDLB.

Labour issues at the Karachi Port Trust reflect similar challenges faced by the country as a whole. The report shows that the rate of job creation observed in Pakistan at the moment is far below what it should be, partly because of the excessive regulatory burden existing labour laws imposed on businesses.

It also offers evidence that, beyond reducing job creation, excessive regulation tends to aggravate the shortage of industrial skills by discouraging firms from sponsoring on-the-job training schemes.

The report mentioned that the transport system in Pakistan generates high economic losses due to a mismatch between supply and demand for transport services and supporting infrastructure. Poor performance of the trade logistics sector significantly reduces the competitiveness of the actual and potential export industries. It is estimated that overall the inadequate and inefficient transport and trade logistics system is imposing a cost to the economy equivalent to 4 to 6 percent of the GDP.

WB experts said the ports in Pakistan recently started to take measures to improve their performance. They were contributing to the overall poor performance and high costs of the transport sector. Port costs were high as compared to other ports in the region.

Container handling charges in the port of Karachi were 1.5 to 3 times more than the charges in Colombo (Sri Lanka) or in the port of Nhava Sheva near Mumbai in India. Ship dues per ship calls were five times more than those ports in Sri Lanka and Hong Kong and 20 percent higher than in Nhava Sheva. Port productivity was also low with an average ratio of 55 containers handled per ship berth per hour as compared to a range between 65 and 100 in the three regional ports.

The report said the KDLB scheme was created in 1973 to protect the rights of dock workers by registering them and providing regular work on a rotational basis. Previously dock workers in the port of Karachi were employed on a casual basis without employment contract and access to social services (health insurance and pension).

When KDLB started its activities, more than twice the requirement of dock workers registered. Since then, increased containerisation and other forms of mechanised handling have greatly reduced the need for manual workers.

The majority of dock workers currently registered by KLDB has low education and do not have the skills for modern cargo handling operations, having been trained for outdated general cargo manual operations. Containers represent now more than two third of Karachi port's dry cargo.

Since most KDLB registered dock workers do not have the necessary skills, stevedoring companies have to employ other workers from the open market for mechanised operations that require skills. Nevertheless, under the KDLB scheme, they are forced to pay for KDLB-provided teams, which are scheduled for work, but not participating to and in fact often not physically present on port operations.

In addition, the number of dock workers in KDLB is also higher than requirement.

Salaries of KDLB registered dock workers are much higher than salaries of other dock workers employed by stevedores from the open market. The gross wage costs, including wages, overtime, special allowances and social services per KDLB registered worker per month is about Rs 31,000, which is five times high than the average wage per skilled worker in the Karachi region, they pointed out.

Currently 3,272 dock workers are registered by KDLB, down from about 9,000 when KDLB was created. KDLB also employs 155 permanent staff and officers. When dock workers registered with KDLB are not actually scheduled for work, they receive a minimum wage allowance and social services financed by a Cess.

The Cess is paid for 52 percent by shipping agents, 30 percent by the Karachi Port Trust (KPT) and 18 percent by stevedores. On average, taking into account the four categories of dock workers' have been employed in the port of Karachi, the KDLB scheme results in employing about twice the number of workers than what is actually required.

Therefore, the cost of using KDLB workers is 8 times high than the normal cost, which is estimated to be around $1.4 million annually. Closing KDLB would then save about $9.6 million per year to the stevedores and to the economy. At project completion, it is hoped that the cost per TEU of using the port is reduced by 7 percent in six months after the project effectiveness.

It said the proposed project is one of the components of the package developed by the World Bank in support of the National Trade Corridor Improvement Programme (NTCIP). To address the key constraints faced by the transport and trade logistics sectors, the government has decided to launch a major initiative, targeted at improving the National Trade Corridor, which links Pakistan's major ports in the South with the country's major cities and trade corridors to the North.

Together, the ports, road and railways along this corridor handle 95 percent of the country's external trade and 65 percent of total land freight.

In support of the proposed project, the Bank brings its extensive experience of similar operations. The government is seeking to benefit from this experience as other retrenchment plans executed in the past either in KDLB or other government agencies had significant social consequences, having not been designed to mitigate these impacts.

http://www.brecorder.com/index.php?id=586104&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Radical reforms needed to achieve $45bn exports​*
ISLAMABAD, July 2: Pakistan will have to undertake aggressive tariff reforms, seek more market access and diversify its export base for reaching the ambitious export target of $45 billion by the year 2013.

Currently, the exports stand at $17 billion and for achieving the target in six years, the country is required to witness 16 per cent growth in its annual exports.

Pakistans Ambassador to WTO Dr Manzoor Ahmad in his study Achieving $45 billion export target by 2013 - The way forward for Pakistan, observed that three key issues - tariff reforms, market access and diversification of export - are of paramount importance to trade policy to reach the ambitious target.

Achieving this target will undoubtedly be a major boost, but looking at it from another perspective, it would still be well below the current figures for countries of comparable size  Brazils $138 billion, Indonesias $102 billion, Turkeys $85 billion and South Africas $59 billion.

Pakistan started to liberalise its tariffs in early 1990s in order to integrate its economy with the rest of the world. The liberalisation was accelerated in 1997, but it was still a stop-and-go approach.

Till 2001, some 86 import substitution programmes were in force. During 2001 and 2002, however, the pace of reforms intensified.

Mr Manzoor stated that further tariff reforms would have to be carried out, if the countrys exports were to grow.

Several studies have shown that reduction in tariff boosts exports since an implicit tax on exports is reduced. If one were to interpolate the results of a 2006 study by IMFs Stephen Tokarick, one can conclude that by removing its import tariffs, Pakistan could achieve a 16 per cent increase in exports, whereas the increase would be only 11 per cent if developed countries removed all their tariffs on imports from Pakistan.

For its internal tariff reforms the best way is to benchmark against a group of successful developing countries like Asean and reach that target. India has been working towards achieving that target for the last five years and is gradually closing the gap, he observed.

Next to tariff reforms, he said the most important factor for boosting exports was access to target markets. Whenever this access became easier, Pakistans exports jumped as a result.

The countrys export of textile and clothing to the EU rose by 23pc in 2003 and 18pc in 2004 due to preferential market access. Later, when the concession was withdrawn in 2005, the decrease of nine per cent in exports was just as remarkable.

Also in 2002, all restrictions on bilateral trade with Afghanistan were removed just when the reconstruction work was starting there. Exports to Afghanistan surged to $1.2 billion by 2006, compared to just $168 million in 2001.

Afghanistan is now Pakistans third largest export market accounting for six per cent of the total exports.

In case of India, with which Pakistan shares 1,800-mile long border, the exports are less than $300 million or less than 1.8 per cent of our total, whereas the potential is huge.

The Indo-Pakistan Business Council estimated in 2005 that the trade level between the two countries could reach $10 billion annually within five years.

Opportunities provided by the Doha Round for improved market access would be substantial and Pakistan will have a better opportunity than many other countries to make use of those opportunities.

However, this will depend upon how well Pakistan is prepared to make use of those opportunities, he remarked.

Currently more than 75 per cent of Pakistans exports originate from cotton, rice, leather and sports goods and more than half of its exports go to seven countries. Therefore, it has to diversify its product range and its export destinations, he suggested.

The ambassador said one of the reasons why Pakistans exports were mostly concentrated in textiles and clothing was that it had never tried to diversify local-grown cotton beyond textiles from the beginning.

Pakistan now has to provide a level-playing field to its other exports. Pakistan now has to look what other comparable countries are selling and try to make a place for itself as an exporter of dynamic products whose exports is growing at the fastest rate he asserted.

As far as diversification of export destinations is concerned, Pakistan should concentrate on major economies. It needs to analyse why share of its exports to Japan, which is the worlds second largest economy, has fallen from 6.8 per cent or $500 million in 1992-93 to less than one per cent of the countrys exports or a mere $200 million.

He said that other major economies which accounted for less than one per cent of our exports included South Korea, Australia, Malaysia, Indonesia, Thailand, and Mexico, whose imports from other countries had been rising rather rapidly.

These are all growing economies where tariff barriers are being reduced and labour costs are going up. Pakistan can make a niche for itself for labour-intensive goods where it has an edge because of abundant labour and lower costs of production, he concluded.

http://www.dawn.com/2007/07/03/ebr4.htm


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## Neo

*Revenue collection jumps to Rs840bn​*
ISLAMABAD, July 2: Revenue collection increased to Rs840.6 billion during the outgoing fiscal year 2006-07, which is up by 17.8 per cent from 2005-06s collection of Rs713.4 billion.

According to provisional figures released on Monday, direct taxes recorded an unprecedented growth of 46 per cent, and came to the rescue of the tax department in achieving the overall tax collection target of Rs835 billion set for the outgoing fiscal year.

Two other leading indirect taxes  customs and sales tax  even remained short of the downward revised target indicating a dismal performance during the year under review.

The officials said it was because of decline in dutiable imports.

It was revealed that revenue collection under the head of direct taxes reached Rs329.7 billion, which is even higher by Rs11.7 billion from the upwardly revised target of Rs318 billion.

The share of direct taxes reached 39 per cent during the outgoing fiscal year 2006-07 as against 30 per cent in the previous year.

This will be the first year in countrys history that income and corporate have become leading tax earners, which is a positive development.

Oil and gas, banking and telecom sectors maintained a vibrant growth which emerged as leading revenue spinners for direct taxes and indirect taxes.

The sales tax collection remained short of the downward revised target by Rs2.205 billion as revenue raised under this head reached Rs308.795 billion during 2006-07 as against the downward revised target of Rs311 billion set for the same period. However, it recorded a growth of 4.7 per cent over last years collection of Rs294.799 billion.

The FBR attributed the decline in growth of sales tax to negative growth in imports.

It was projected that during the outgoing fiscal year, overall imports and dutiable imports will grow by 15pc. However, the growth recorded in imports was only nine per cent in total imports and a decline in dutiable imports by four per cent.The sales tax at the domestic stage was affected by extra payment of refund to power and textile sectors, which were withheld in the previous year.

The customs duty collection also remained short of target by Rs1.884 billion as it reached Rs132.116 billion as against the downward revised target of Rs134 billion during the outgoing fiscal year. However, the customs duty collection also recorded a negative growth of 4.5 per cent during the year under review in comparison with last years collection of Rs156.815 billion.

The same reasons were quoted for the decline under this head, which were made responsible for the low growth in sales tax collection.

The federal excise duty has reached Rs70.021 billion during the outgoing fiscal year as against the upward revised target of Rs72 billion, indicating a shortfall of Rs1.979 billion. However, the excise duty recorded a hefty growth of 26.7 per cent during the year as against Rs55.273 billion collected during the same period last year.

http://www.dawn.com/2007/07/03/ebr8.htm


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## niaz

Let us be realistic;our exports were stagnating around $9 -10 billion for the last 10 years or so. It is only after the turn around starting 2001 that the exports started increasing. Wonder if every one realizes as to how many billions will be required for investment in machinery and manpower resources to increase the exports by 2.5 times within next 6 years??? How are we going to finance it??. As it is, we have a trade deficit in excess of $ 10-billion. Would we have enough funds to generate sufficient surplus production for achieving this target of exports in a competetive world??

Our only salvation lies in the IT sector. This is only sector which requires investment in the improvement of quality of manpower rather than in plant and machinery. Our current exports in the IT sector are a meagre $100-million.


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## Neo

*Pak-UK trade to grow ​*
LAHORE: Bilateral trade between the United Kingdom and Pakistan would touch new heights with a huge investment in the near future in a number of sectors including housing, agriculture, energy generation, hotels, fisheries and minerals.

This was revealed by Kashif Younas Mehar, head of a 15-member Lahore Chamber of Commerce and Industrys delegation that visited the UK.

He said the UK investor trust in Pakistan had been boosted by persistent efforts of the LCCI and continuous liaison for the last three years.

He said the visit had further strengthened the MoUs already signed between the LCCI and Pak-UK Chamber of Commerce.

He said he informed the UK businessmen and expatriate Pakistanis that there was a great scope in the steel sector wherein one could make investment in hot-rolled coils and cold-rolled coils, while same was the case with extraction of iron and copper ores.

Hanzala Malik, Councillor Glasgow City Council, expressed concern over discontinuation of PIA flights to Glasgow, saying it would dampen businesses to a large extent and stressed that measures be undertaken for immediate resumption of PIA flights.

Malik also urged the LCCI delegation to do the needful for one-window operations in Pakistan as bureaucratic hurdles kept discouraging investor activity there.

At a meeting in Greater Manchester Chamber of Commerce and Industry, both sides identified sectors of mutual interest and decided to further cement ties between Pakistan and the UK.

Brian Cleasby, the Lord Mayor of Leeds, while speaking at a reception arranged by the Leeds Chamber of Commerce and Industry in honour of the LCCI delegation, said Pakistan is going through an exciting period. The success of Pakistans reform agenda is a hidden secret which needs to be publicised more.

He assured the participants that the British government would continue to facilitate Pakistani businessmen in the promotion of trade between the two countries.

Mehar said that Pakistan was energy-deficient and could not sustain a 7.8 per cent GDP growth rate without first tackling its energy demands. He urged the British government to provide civilian nuclear technology to Pakistan and also allow its companies to invest in energy projects in designated industrial sectors.

The UK is the third largest investor in Pakistan. British investment in Pakistan stands at $224.5 million, which is six per cent of total foreign investment in Pakistan in 2005-06.

About 70 British multinationals have invested in various sectors such as food, tobacco and cigarettes, textiles, chemicals, petroleum refining, oil and gas, pharmaceuticals, cosmetics, cement, power generation, communications, financial services, etc.

http://www.thenews.com.pk/daily_detail.asp?id=63108


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## Neo

*Poultry farms in Sindh suffer loss of Rs670m: Rains, storms​*
KARACHI, July 3: The Pakistan Poultry Association (PPA) has finally come out with exact financial loss of Rs670 million from the killing of over 3.0 to 3.2 million live birds and chicks owing to scorching heat, rains and storms in Karachi and other parts of Sindh. However, the wholesalers body has expressed reservations on the figures.

Speaking at a press conference at Karachi Press Club, PPA Sindh circle chairman Mohamamd Sohail Chaudhry and convenor press and publication Abdul Maroof Siddiqui said that the mortality of 300,000 layer birds caused a loss of Rs60.36 million, and there was another loss of over Rs330 million due to death of over 3.26 million broiler birds.

The industry people suffered a loss of Rs280 million owing to destruction of poultry sheds.

They demanded of the government to provide a mark-up free loan of Rs1 million to poultry farmers so that they can restart their businesses.

They said the private sector had invested Rs125 billion and the growth in poultry sector had also kept the rate of beef and mutton stable to some extent.

Meanwhile, Maroof Siddiqui told Dawn that the surviving poultry farmers are now releasing their stocks to avert further losses in case rains again hit their farms. As a result, the price at retail stage is stable at Rs62 per kg. Even farmers are not getting poultry feed at their farms in Sindh due to bad road conditions after rains. There are also problems of power failures and lack of water availability.

Currently, Karachi is consuming 450,000 to 500,000 birds daily as compared to normal consumption of 600,000 to 700,000 birds, he said while speaking about daily consumption of birds.

The PPA office-bearers pointed out that land mafia was grabbing land between the boundary walls of poultry farms, and also urged the Sindh government to extend the period of lease for another 30 years.

According to Economic Survey 2006-2007, production of commercial broiler is estimated at 316 million in 2006-2007 as compared to 304 million in 2005-2006, while layer bird production in 2006-2007 is estimated at 23.8 million as compared to 23.2 million birds in 2005-2006.

Poultry meat production in 2006-2007 was 480,000 tons as compared to 463,000 tons in 2005-2006.

An estimated 5.2 billion eggs were produced in 2006-2007 as compared to 5.1 billion in 2005-2006.

Meanwhile, general secretary of Karachi Wholesalers Poultry Association (KWPA), Kamal Akhtar Siddiqui, said that the PPA office-bearers do not know the exact figures.

He said he had already stated that the industry had suffered a loss of Rs1 billion during rains and storm.

He said around 1.5 million live birds and chicks died before and after storm/rains and not over three million. PPAs assessment of slaughtering of 600,000-700,000 birds only in Karachi is also wrong and the correct figure is 450,000 birds daily.

http://www.dawn.com/2007/07/04/ebr1.htm


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## Neo

Wednesday, July 04, 2007 

*Foreign firm to start natural gas production ​*
KARACHI: The government has allowed Rally Energy Corporation of USA to start natural gas production at its Salsabil Field project in the country.

A report issued on Tuesday said that approval has been given for the period up to November 30, 2007. The corporation will feed natural gas production into the Sui northern gas pipeline system.

Initial production from one well was measured at 9.5 million cubic feet per day, the company said and is expected to rise to 20 million cubic feet per day.

Rally expects an eventual 1,000 barrels of oil equivalent net to the company when a second well is connected to the system later this week, it said. 

This is a significant event in Rallys rapid growth where we now have a second source of revenue that is sufficient to fund our ongoing development and exploration activities in Pakistan, Chief Executive Officer of the company, Abby Badwi said. Rally is based in Calgary but mainly runs operations in Egypt, where it has a full interest in the Issaran Oilfield, and also in Pakistan where it holds 30 percent stake in the Safed Koh block.

http://www.dailytimes.com.pk/default.asp?page=2007\07\04\story_4-7-2007_pg5_3


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## Neo

*Cement exports up by 112 percent: local and regional factors behind robust growth ​*
KARACHI (July 05 2007): Country's cement exports have witnessed a strong and healthy growth of 112 percent to an all-time high level of 3.188 million tonnes during the 2006-07 fiscal in the wake of rising international demand and a high increase in local utilisation, industry sources said.

"Regional cement shortages played a key role in achieving the landmark cement export milestone during the last fiscal year, while enhanced production of the local cement factories is another prominent reason behind this huge increase of 112 percent in exports," they added.

They said that during the last fiscal year, strong external demands from the Gulf countries had witnessed pushed the companies to utilise their maximum capacity to meet international demand. Statistics made available from All Pakistan Cement Manufacturers Association (APCMA) shows that cement export registered a robust increase of 1,683,265 tonne during the last fiscal (July-June) and it has touched a new mark of 3,188,424 tonnes against 15,050,159- tonne exports of the same period of the 2005-06 fiscal.

Over all cement dispatches have also been increased by 31.56 percent to all time high level of 2,422,2702 tonnes during the last fiscal year as compared to 18,412,297 tonnes during the 2005-06 fiscal year, depicting a raise of 5,810,405-tonne tons during July-April of current fiscal.

To meet the international and local demand, cement companies' have used maximum capacity utilisation during the 2006-07 fiscal year, which stood at 80 percent, said the sources. Over all cement dispatches also witnessed an increase of 19 percent during June 2007, reaching 2,225,630-tonne mark as compared to 1,867,244 tonnes in June 2006.

During the last month, cement export stood at 392,372 tonnes as compared to 144,544 tonnes during June 2006, denoting an upsurge of 171 percent during June 2007. Local dispatches have gone up by six percent to 1,833,258 tonnes during June 2007 as against 1,722,700 tonnes during the same period of last fiscal.

Cement industry's installed capacity has more than doubled during the last five years, which helped the industry touch all time high dispatches mark during the last fiscal year, industry sources said.

Low prices trend has witnessed in the domestic market, as the cement prices stood at Rs 280-300 per 50-kilogram bag during last July in the domestic market, while presently a 50-kilogram bag is available at Rs 210-225 in the southern region (Sindh and Balochistan) and Rs 180-210 per bag in the northern region.

Huge supply of cement against the low demand has decreased the prices in the local market and due to high competition, cement companies are decreasing their prices to capture the market, they said.

They said that the raise in the export had emerged after the government decisions regarding restoration of the duty drawback on cement exports, in which Central Board of Revenue (CBR) has allowed duty drawback at the rate of Rs 25.08 per tonne on export of cement through a notification. The duty drawback facility is effective since September 27, 2006.

http://www.brecorder.com/index.php?id=587123&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*FBR begins monitoring to achieve Rs 1.025 trillion revenue target ​*
ISLAMABAD (July 05 2007): The Federal Board of Revenue (FBR) has started daily monitoring of customs duty collection on import of goods as part of its strategy to meet the Rs 1.025 trillion revenue collection target in 2007-08.

Sources told Business Recorder on Wednesday that the board-in-council meeting, chaired by FRB Chairman M. Abdullah Yusuf, directed the Member, Customs, to ensure proper monitoring of customs duty collection for improving sales tax and withholding tax amassing at the import stage.

The sales tax and withholding tax collection on imports would automatically improve through 24 hours monitoring of import consignments. Even customs duty collection was below target in 2006-07. Therefore, the department would have to remain vigilant in assessing duties and taxes on imports and exports in 2007-08.

Sources said that the board-in-council discussed threadbare the policy strategy to meet the target. The FBR has been making all-out efforts in the start of the new fiscal year to meet the Rs 1.025 trillion target. The initial estimates of direct taxes, sales tax, customs duty and federal excise duty (FED) have been prepared, but the same would be finalised after consulting relevant members. Some changes in taxation and relief measures for 2007-08 would also be taken into account before finalising quarter-wise break-up for new fiscal year.

The board-in-council also directed FBR Members to learn from the lapses and omissions of 2006-07 for maintaining growth momentum in the current year to surpass quarter-wise revenue targets. The Members were directed to keep in mind that the new fiscal year has started from July 1, 2007. Thus, the plan should be implemented from the start of 2007-08 to meet the target.

Sources said that the FBR Chairman directed the Member Customs to submit forthwith the report on the launching of post-clearance audit (PCA). If electronic PCA system needs some time, the project should be started manually, without delay he said. In the meeting, the idea of conducting audit of information technology (TI) projects launched under the reform process was also discussed.

Tax authorities directed the Member Human Resource Management to chalk out rules and regulations under Federal Board of Revenue Act, 2007 for implementation of the appeals process under Internal Job Posting (IJP).

The board-in-council rejected the new organisational structure of Facilitation and Taxpayer Education Wing (FATE) submitted by the communication consultant, which envisaged 25-30 more personnel to carry out the job effectively. CBR Member Human Resource Management (HRM) expressed some reservations over the implementation of the scheme. The board-in-council did not approve the communication policy submitted by the consultant. Sources said that the FBR Chairman directed the consultant to actively work on the project of Compliant Cell to facilitate taxpayers.

The Chief Executive of Pakistan Revenue Automation Limited (PRAL) gave a presentation on different IT related projects including 'One Customs'; Tax Management System (TMS); Sales Tax Management System (STMS); Nexus; Legal Affairs Management System and Audit Management System. Some FBR members inquired about security checks in these systems. Later, sweets were distributed for surpassing the revenue target for 2006-07.

http://www.brecorder.com/index.php?id=587110&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Indus Motor achieves 50,000 unit sales ​*
KARACHI (July 05 2007): The Indus Motor Company (IMC) has achieved 50,000 unit sales for the year 2006-07. A statement here on Wednesday said that to mark the achievement, a ceremony was organised. The event was attended by senior management of IMC, its 35 dealerships and IMC employees.

Addressing the gathering on the occasion, IMC Chief Executive Officer, Parvez Ghias, congratulated all on achieving this historic milestone which, he added, would not have been possible without the support of stakeholders, particularly the joint venture partners TMC and TTC, IMC dealers, vendors, suppliers, employees and the customers.

The occasion was commemorated by the chairman, CEO and dealer principals jointly pressing the button to print the 50,000th invoice in full view of the participants.

The statement said that this milestone is proof of IMC's commitment to meeting ever-increasing demand for automobiles in Pakistan. IMC also received the "Vehicle Sales Record Award" by Toyota Tsusho Corporation earlier this year. At the time, Junzo Shimizu, President TTC said, 'Indus Motor Company will continue to expand capacity by enhancing investment in current production facilities as well as consider setting up an additional plant.

The automobile industry has a key role to play in increasing employment and transfer in a technology while being a major contributor in the growth of the engineering sector.

http://www.brecorder.com/index.php?id=587103&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*IDA to provide $50 million for poverty alleviation ​*
FAISALABAD (July 04 2007): The International Development Association (IDA) will provide $50 million to support Pakistan Government in the development and implementation of a minimum assistance package targeted to poor households with the objective of increasing the effectiveness of social protection interventions in Pakistan.

In terms of both poverty alleviation and promotion of human capital accumulation. In an update project report, Carolina Sanchez, Senior Social Protection Economist of World Bank, said that the focus would be on improved targeting and strengthened management and monitoring of social protection interventions and, ultimately, on improved quality and impact of public expenditure.

The proposed package would include cash transfers and social care services. International evidence on the impact of CCT programs, together with the fact that demand side factors appear to be a real constraint for school enrolment in Pakistan, suggest that the potential impact of this type of program in Pakistan could be positive if adequately targeted and managed.

As a result, support for cash transfer under the project would build upon and strengthen the FSP and, especially, the CSP. Similarly, international and national experiences suggest that the use of innovative models for financing and provision of social care services can significantly improve their coverage and effectiveness. As a result, support for social care services under the project would assist the GoP in articulation of the existing programs under a common, comprehensive framework, while promoting experimentation regarding delivery models.

Meanwhile, the Ministry of Social Welfare and Special Education and the Planning Commission have drafted a National Social Protection Strategy in which the objectives of poverty reduction and human capital development figure prominently. The strategy is currently under discussion in the Cabinet and is scheduled to be approved late February/early March.

The proposed project would support the GoP in the implementation of key actions within the National Social Protection Strategy. In doing this, the project would contribute to the financing of Pakistan's development priorities while supporting the GoP in increasing the impact and the quality of public social spending. The project is also directly aligned with the social protection priorities identified in the document 'Vision 2030', recently drafted by the Planning Commission, said official sources.

Carolina said that the project would draw on the World Bank's extensive international experience with conditional cash transfer (CCT) programs to extract lessons that are pertinent to Pakistan's needs. In addition, the project would also benefit from recent World Bank's work on social protection issues in Pakistan. This work includes (i) policy dialogue on pensions and safety nets and technical assistance to the Pakistan Bait-ul-Maal in the context of the PRSP discussions; (ii) analytical work on poverty, risk and safety nets (Pakistan Safety Net Report); and (iii) financing of social care service for persons with disabilities (Earthquake Disability Project and two associated JSDF grants).

Important lessons can also be drawn from recent WB experience with cash transfers in the earthquake-affected areas. Finally the project will draw from the World Bank's work on the social sectors, particularly the education sector. This includes (i) financing for co-ordinated supply and demand side interventions in Balochistan, and, (ii) analytical work on the Sindh Education Sector.

These experiences highlight the importance of (i) strong ownership and leadership capacity, (ii) accurate targeting of beneficiaries, (iii) complementary supply side intervention in health and education, and (iv) an effective monitoring and evaluation system.

Commenting over the Bank's comparative advantage, Carolina said that the World Bank was uniquely positioned to support the GoP in the strengthening of existing cash transfer programs and the development of a minimum package of social care services, given (i) its involvement with the MoSWSE and the PBM in recent years, (ii) its overall strategy for social protection in Pakistan and (iii) its experience with the development and implementation of stipend programs to promote school enrolment in Punjab.

She said that the proposed project strongly complements reforms efforts under the PRSC. In particular, the project would build upon the ongoing technical assistance given to the PBM by the WB and the DFID for the design, implementation and evaluation of the CSP pilot, and would support the GoP in the strengthening and expansion of this program.

Commenting over the Bank's strategy for social protection in Pakistan, she said that the project is a key element of the World Bank's strategy for social protection in Pakistan as stated in the CAS (ie, "The Bank's assistance for social protection will include support for safety nets that help the chronic poor cope with and, where possible, escape poverty, and help families and individuals cope with seasonal shocks and natural disasters.").

The proposed project will also build upon the experience and knowledge generated by this program regarding the implementation and potential impact of demand side interventions on education outcomes.

The WB expert stated that the broad objectives of the National Social Protection Strategy are to reduce poverty and inequality and promote human capital investments among poor families through the provision of direct monetary transfers and incentives for investing in human capital. World Bank assistance under the proposed project would aim to contribute to these ultimate objectives of poverty reduction and human capital development among poor families.

Within that broader context, the objective of the proposed APL is to strengthen the ability of the FSP and CSP programs to play an effective role in the country's strategy to reduce poverty and inequality and to foster investments in human capital, as well as to assist the GoP in the development of a minimum package of social care services for the poor structured around these programs.

Specifically, the WB expert mentioned that first phase of the APL would support the effective strengthening and implementation of the FSP and CSP programs and of a minimum package of social care services.

"Effectiveness" would be assessed in terms of: (i) the targeting, coverage, and adequacy of the benefits/services; (ii) efficacy of the CSP conditionalities (co-responsibilities) to foster investment by beneficiary families in human capital; and (iii) the capacities of involved institutions (including ministries, program staff, service providers, and beneficiary groups) to manage these programs efficiently, to monitor results, and to (begin to) evaluate impacts.

Second Phase of the APL would consolidate and deepen the reforms, further perfecting the design of the programs based on experience under phase-1. Such "second generation reforms" might include measures to enable scaling up/down depending on country conditions, further strengthening of M&E, additional administrative efficiency gains, possible development of complementary social protection instruments/services for poor people who are highly vulnerable but do not have children (and thus are not eligible for the co-responsibility requirements of the CSP); and development of mechanisms to enhance prospects for self-sufficiency ("graduation") of poor families.

http://www.brecorder.com/index.php?id=586884&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*ADB extends $400mn special funds to Pakistan​*
ISLAMABAD: Pakistan and Asian Development Bank (ADB) here on Wednesday signed a loan agreement under which the bank would extend $400 million to Pakistan for restoration of facilities for livelihoods in the earthquake-affected areas. 

The agreement was signed on Wednesday by Secretary, Economic Affairs Division (EAD), Muhammad Akram Malik on behalf of Pakistan and Country Director of ADB Peter L. Fedon on behalf of the Bank. 

The loan will carry an interest of 1 percent per year and a maturity of 40 years, including a grace period of 10 years, with repayment of principal at 2 percent per year during the first 10 years after the grace period and 4 percent per year thereafter. 

http://www.dailytimes.com.pk/default.asp?page=2007\07\05\story_5-7-2007_pg5_12


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## Neo

*Trade with India likely to cross $1.5bn mark​*
ISLAMABAD, July 4: Indian High Commissioner to Pakistan Patyabrata Pal said on Wednesday bilateral trade with Pakistan was expected to cross the $1.5 billion mark during the fiscal year 2006-07.

He stated this while speaking at Islamabad Chamber of Commerce and Industry (ICCI) at the chamber house. The meeting was attended by a large number of traders from the federal capital.

The high commissioner said that the Indian economy was growing fast and bilateral trade had increased and was likely to cross $1.5 billion. He said that the Indian exports to Pakistan in previous months stood at $980.33 million, while imports were $247.48 million.

He mentioned that in last year India increased its tea exports to Pakistan from 7.5 million tons to 10.5 million tons. He said that both governments should keep up the level of confidence building measures and hoped that in future Indo-Pak relations will improve further.

The ICCI President Nasir Khan underlined the importance of exchange of trade delegations. He said that trade between the two countries was insufficient as per the existing potential.

He added that with the exchange of cultural, educational, political and economic delegations, the relations between the two countries would be strengthened. He said that India could import cement, marble, sports and surgical equipments, fruit, vegetable and salt from Pakistan. He hoped that with the gas pipeline project, Indo-Pak relations would improve further.

http://www.dawn.com/2007/07/05/ebr10.htm


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## Neo

*China interested in Pakistan auto sector ​* 
ISLAMABAD: July 06, 2007: Minister for Industries, Production and Special Initiatives Jahangir Khan Tareen on Thursday appreciated China for showing interest in Pakistan's auto sector.

He was speaking at a meeting with Chinese delegation that called on him here. The Minister assured full cooperation and support to the Chinese delegation and said that every effort will be made to make this joint venture a success.

The Dong Feng delegation is on a visit to Pakistan to discuss the possibility of a joint venture with Pakistan Automobile Company (PACO).

The meeting was held to discuss the possibility and terms and conditions of the joint venture between PACO and Dong Feng. Dong Feng is one of the biggest automobile manufacturers in China. Trucks, pick-ups and buses are the main products of the company, they informed.

The Dong Feng delegation further said that it want to introduce their products in Pakistan according to the market demand.

It was decided in the meeting that discussions will continue between experts from both the sides to work out possibility of a joint venture between Dong Feng and PACO.

Brecorder


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## Neo

*Pakistans Foreign Exchange Reserves cross $15.6 billion mark. ​* 
KARACHI: July 05, 2007: Pakistans' foreign exchange reserves have reached the historic level of over 15.6 billion US dollars in the last fiscal year (2006-07) that ended on 30th June, 2007.

State Bank of Pakistan stated here Thursday that the achievement of this record level of foreign exchange reserves has been made possible by the healthy growth in external flows during FY07 including foreign direct investment, home remittances, portfolio investment, proceeds of the recent successful launch of Pakistan Euro Bonds and the global depository receipts in the international financial markets.

Proactive management of the foreign exchange reserves by the State Bank has also contributed to the achievement of this landmark. This substantial growth in foreign inflows reflects the confidence of foreign investors in the economy of Pakistan.

According to break up, Pakistans' foreign exchange reserves rose by $2,476.8 million or 18.85 percent to a record level of $15,613.70 million in the last fiscal year (2006-07) compared with $13,136.90 million in the fiscal year 2005-06.

Foreign exchange reserves held by the State Bank of Pakistan increased by $2,568.2 million or 23.86 percent to $13,328.40 million in the last fiscal year compared with $10,760.20 million in the fiscal year 2005-06. Reserves held by commercial banks were recorded at $2,285.3 million in FY07 as against $2,376.7 million in FY06.

The countrys' foreign exchange reserves in the week ending June 30, 2007 were recorded at $15,613.70 million, up from $15,182.20 million as of June 23, 2007. During the week, reserves held by the State Bank increased by $573.80 million to $13,328.40 million, while those held by commercial banks decreased by $142.30million to $2,285.3 million.

Brecorder


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## Neo

*Locusts could soon reach India and Pakistan: FAO​*






ROME (AFP) - Swarms of locusts could cross the Indian Ocean from Ethiopia and Somalia and reach India and Pakistan over the coming days, the Food and Agriculture Organization warned. 

"Desert Locust swarms from Ethiopia and northern Somalia are expected to cross the Indian Ocean and could reach India and Pakistan in the next days," the FAO said in a statement.

"This potentially dangerous situation should be closely monitored in both countries," it said.

Swarms of locusts can have disastrous consequences for local agriculture as they devour crops along the way.

The FAO said several Desert Locust swarms moved east across northern Somalia from eastern Ethiopia last week.

"The swarms are likely to continue to migrate on southwesterly winds that are associated with the southern Asia monsoon. These winds could carry the locusts from northeast Somalia across the Indian Ocean to the coast of Pakistan and northwest India (Bhuj, Gujarat) this week," it said.

The FAO said that two recent tropical cyclones have caused heavy rainfall in Pakistan and western India that will create unusually favourable breeding conditions for locusts until October along both sides of the Indo-Pakistan border and, for the first time in many years, in coastal areas of western Pakistan.

The governments in India and Pakistan have been warned and they are mobilizing field teams, equipment and resources in Rajasthan and Gujarat, India as well as in adjacent areas of Cholistan and Tharparkar deserts in Pakistan, the FAO said.

Crossing the Indian Ocean on monsoon winds is part of the natural migration cycle of Desert Locusts and has already occurred in the past.

Last week, cyclone Yemyin brought heavy rains and flooding to coastal and inland areas extending from Baluchistan in western Pakistan to Sindh in southeast Pakistan, and Gujarat and Rajasthan in India. Consequently, a few swarms could appear in the coming few days in any of these areas.

If so, they are likely to mature quickly and lay eggs that will hatch later this month.

http://news.yahoo.com/s/afp/20070704/sc_afp/pakistanindiafaofarmlocusts_070704154511


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## Neo

*IPI pipeline project: Iran presents revised price formula ​*
ISLAMABAD (July 06 2007): Tehran has presented a revised gas formula for Iran-Pakistan-India (IPI) pipeline project, demanding review of the rates after every three years. Iranian authorities presented the revised gas formula for IPI during its working group's meeting held in New Delhi from June 27-29.

A senior official of the Petroleum ministry confirmed to Business Recorder on Thursday that Iran has placed a new gas prices formula for IPI pipeline and Pakistan and India will respond to its demand at an appropriate time. He said "It's Iranian demand for review of gas prices for IPI after three years and Pakistan and India will assess its implications and may respond at working group's next meeting.

The gas rates have been one of many serious issues relating to IPI and after series of meetings all parties to the project reached to an understanding on the subject.

Iran's demand for three yearly review contradicted the announcement made at the end of Tehran meeting held sometimes back, rather it added to differences among the parties to the project.

Iran may not get desired result from the revised gas formula as India and Pakistan are not willing to accept its demand at this point in time. Islamabad and New Delhi have already reached to an understanding that they will not accept Iran's demand of the new gas prices and want that Tehran should honour its previous commitment.

Sources said Pakistani petroleum secretary, Ahmed Waqar, and his Indian counterpart had held detailed telephonic consultations even before the start of working group's meeting in New Delhi. They agreed that Islamabad and New Delhi will join hands against Iran for any gas pricing formula.

The parties to the projects have also differences on other key issues such as grantees, security and safety mechanism to ensure continuous supply of gas to the project and transit fee that Pakistan is demanding from India for transporting gas from its territory.

The senior official clearly indicated that some serious issues of IPI were yet to be resolved but refrained himself from divulging details of thorny issues. These thorny issues are keeping the parties from a breakthrough to bring IPI on ground.

http://www.brecorder.com/index.php?id=587453&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Texas offers to help Pakistan develop wind power technology ​* 
KARACHI (July 06 2007): Texas is one of the best examples in wind power technology and Pakistan can benefit a lot from the experience and advancement of this technology in Texas. This stated by Emerging Technology Programmes Director and President of Texas Council, USA, Mark Elison here on Thursday.

Speaking at a meeting of Karachi Chamber of Commerce and Industry (KCCI), he offered to help Pakistan develop wind power energy to overcome power crisis. He said that Pakistan had good potential to develop wind power energy by using latest technology.

About Pakistan-Texas trade relations, he said the business community of Texas was interested to further strengthen trade and economic relations with Pakistan. He said that Pakistani products needed no introduction in Texas as a large number of Pakistanis, living in Texas, imported Pakistani products, and pointed out that in Houston alone around 100,000 Pakistan were living there.

Mark Elison said that Texas Governor Rick Perry was also interested in increasing trade with Pakistan. He offered to assist Pakistani College and university students in getting education and training in different fields, besides providing them with internship in American companies.

He said that his organisation was interested to include Pakistan in emerging technology programmes, which would be beneficial to both the countries. Welcoming the guests, KCCI President Majyd Aziz urged the American investors to invest in power development, skill development, oil and gas exploration in Pakistan.

http://www.brecorder.com/index.php?id=587473&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*'Economic boom fails to control disparity' ​*
ISLAMABAD (July 06 2007): Despite having economic growth we have disparities in our system that include gender, regional, rural and urban interpersonal inequalities. As a result, the benefits of economic growth have not been distributed equitably and 20 percent people command half of the income of the country.

Dr Ishrat Hussain, Chairman, National Commission for Government Reforms (NCGR) stated at a Seminar on 'Civil Services Reforms', organised by the Sustainable Development Policy Institute (SDPI), here on Thursday. The other speakers include; Mosharraf Zaidi, Governance Advisor, UK Department For International Development (DFID) and Musharraf Rasool Cyan, Andrew Young School of Policy Studies, Atlanta USA.

He said, having accepted vision of 2030 for Pakistan to become a developed nation we are opting to become a part of global world that compels certain imperatives which demand certain in our system changes.

He said the organisation was working on three principles, which include restructuring of the civil services, reorganising the federal, provincial and district levels and re-engineering of business process. Dr Ishrat Hussain listed essential components in designing a reformed civil service system:

He said, career-based promotions, decent wages and compensation packages would help to eliminate 80 percent corruption from the civil services. He said that, the phenomenon of privatisation has taken long roots across the globe as it reduces the vulnerability of the governments. Several years back we paid Rs 100 billion against the deficits of several departments now with the privatisation of these departments things have changed.

http://www.brecorder.com/index.php?id=587500&currPageNo=1&query=&search=&term=&supDate=


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## Bull

Any plan requires time to show results. You cant expect disparities that existed for centuries to dissappear in less than a decade of reforms.


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## Neo

* Hardware sector slams govt policy ​*
LAHORE: Due to poor policies of the government, the hardware sector, which is one of the largest employment-generating sectors of the economy, has been facing many problems in competing in international markets. 

The hardware sector comprises cottage and small-scale industries spread all over the country and has been providing jobs to millions of people. But due to improper policies of the government to encourage this sector, not a single entrepreneur has entered the medium and large-scale industrial sector so far. 

In an interview to The News, the Chairman, Pakistan Hardware Manufacturers Association (PHMA) disclosed that the federal government did not consult them during the budget, trade and other policy formulation decisions, so the sector was unable to compete with international competitors.

He said at no single time did the government ask them to send in their proposals to uplift this sector during the policy planning meetings, leaving them isolated in international competitiveness. 

He said the PHMA was also a member of the International Hardware Association (IHA) on a self-membership basis, terming IHA membership a feather in its cap, and adding that China and Japan were the other members of IHA from Asia. 

Talking about the efforts of PHMA, the chairman said, the association had been working on a staff exchange programme with the IHA manufacturing members, which was the only source of modern technology and skills transfer method to Pakistani worker. 

He said the government did not support the hardware industry in technology transfer and skill development. He urged policy makers to arrange technology transfer at government levels from industrialised nations. 

The government can also establish training institutes for the hardware sector following the successful examples of the textile and leather sectors, he remarked. 

He was also said that around the globe governments have zero level levy on raw materials to promote their industries, but in Pakistan import duty on raw material was 15 percent which is unfair.

Following the international pattern, Pakistan government should also zero rate raw materials for the hardware sector to stabilise this vital sector of the economy, he urged. 

Presently the hardware sector has split into individual parts manufacturing industry which increases cost of production, he said, adding that the government should also help individual groups in the hardware sector. 

Usman said that research and development has an important role in development of any sector but unfortunately the government has completely ignored the hardware sector in research and development. 

Talking about the productivity of Pakistani workers, he said Pakistani workers efficiency is only 25 percent compared to their Chinese counterparts.

Low productivity is also a major factor in backwardness of Pakistani hardware industry, he remarked. 

Talking about the Indian hardware industry, he said Indian industry was being developed by the European hardware industry and they are the major buyers of Indian products, thus the Indian industry only produces according to market demand.

http://www.thenews.com.pk/daily_detail.asp?id=63281


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## Neo

*US assures Pakistan of continued assistance: Energy security​*
LAHORE, July 5: USAID Regional Coordinator for South Asia Regional Initiative for Energy (SARI/Energy) Ms. Robyn McGuckin has said that the United States would continue supporting Pakistan in its endeavours to ensure energy security. She was speaking at a dinner hosted by Federation of Pakistan Chambers of Commerce and Industry (FPCCI) at a local hotel on Wednesday evening.

FPCCI President Tanvir Ahmad Sheikh, leading businessmen and industrialists attended the dinner.Ms. McGuckin said with the rising prices of petroleum, the energy security had attained significance across the world especially in South Asia where the growth rate was very high.

She said that Pakistan was geo-strategically located between the region with largest energy reserves of the world and the countries with highest energy consumption like China.

She also referred to the factors like efficient energy market and the possibility of cross border trade of energy that could ensure energy security in the region.

Talking about the availability of hydro-carbon resources in Pakistan, she said that this country had huge coal reserves that could be utilised for the generation of power.

Referring to June 27 symposium on Renewable Energy held here, she said that wind and solar maps of Pakistans and Afghanistans renewable energy sources presented there were prepared with the support of USAIDs South Asia Regional Initiative for Energy.

She said that the wind and solar maps provide the people and governments of Pakistan and Afghanistan a quantified and qualified assessment of wind and solar energy resources of their respective countries.

Ms. McGuckin said that the SARI/Energy had also prepared wind and solar energy maps for Sri Lanka and the Maldives.

Earlier, in his address of welcome, FPCCI President Tanvir Ahmad Sheikh said that the US can assist Pakistan to address the economic challenges through shifting its support from conventional aid to market access, investment, technology transfer, education and training, scientific research and infrastructure development.

We realise that time has come for re-appraisal of the existing US strategy to Pakistan to have more widened and meaningful cooperation in trade and investment, he said.

He said that Pakistan would prefer to have greater access to the US market compared to increased aid allocation.

He said that the USAID programme can help Pakistan in the sectors like exploration of minerals and natural resources, construction of dams and electricity generation projects.

http://www.dawn.com/2007/07/06/ebr16.htm


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## Neo

*Three gas projects worth Rs 1.455bn near completion​*
VEHARI: Three Sui gas projects worth Rs 1.455 billion are under construction and nearing completion, said an official of the Sui Northern Gas Pipeline Limited (SNGPL) on Thursday. Chief Engineer South Punjab Abdur Rashid Arshad said a sum of Rs 550 million is being spent on Mailsi project, Rs 455 million on Vehari project and Rs 450 million on Burewala project. 

He said in this way a huge Sui gas project is being executed on the directive of President Pervez Musharraf with an aim to bring backward and remote areas at par with the developed ones. Member of the National Assembly (MNA) and a PML leader, Aftab Ahmed Khan Khichi, and former district nazim Vehari Mumtaz Ahmed Khan Khichi, have termed these projects as unique in the history of the district. They said more than 200,000 people would benefit from these projects which remained to elude in the past, as the past regimes kept promising, but never fulfilled their promises. 

They said the long-cherished dream-cum-demand of the Vehariites became a reality only due to special favour of President Musharraf, PM Shaukat Aziz, Governor Punjab Khalid Maqbool and CM Ch Pervaiz Elahi. The chief engineer said the transmission pipeline has been linked via Pakhi More and Iqbal Nagar from where it will be linked to Hasilpur and Haroonabad. He said the Sui gas supply would generate business activity as well, besides providing a basic necessity to the household for domestic use. He said CNG stations would be set up for vehicular fuel, which will save their resources as well as environment from aerial pollution. 

http://www.dailytimes.com.pk/default.asp?page=2007\07\06\story_6-7-2007_pg5_2


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## Neo

*Private sector investments to meet energy demand: PM​*
ISLAMABAD: The energy demand of the country is increasing rapidly due to high growth and to meet the requirements the government is encouraging private sector investments to bridge the gap between demand and supply, Prime Minister Shaukat Aziz has said. 

The Prime Minister was chairing a meeting Thursday to review progress on Independent Power Projects (IPPs). 

The Prime Minister said the electricity demand is growing by 9.5 percent per annum and the government is taking short and medium term steps to bridge the gap between the demand and supply in the power sector. 

The PM said achieving energy security is among the major global challenges and meeting energy, food and water security is one of the major priorities of the government. He said that as a result of the focus of the government a number of power projects are at various stages of completion in the public and private sector. 

He said economic stability consistency and continuity of policies and investment friendly policies of the government have restored the confidence of investors and a number of companies have showed interest to invest in the power sector. The government is providing a level playing field to local and foreign investors and facilitating investments. 

Other attending the meeting were; principal secretary to the prime minister, Advisor to the PM on Energy Mukhtar Ahmed, secretary water and power, managing director PPIB, secretary petroleum, chief executive officer Uch Power Project and senior officials.

http://www.dailytimes.com.pk/default.asp?page=2007\07\06\story_6-7-2007_pg5_5


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## Neo

*German firm to set up 40 MVA grid station at SIE​*
LAHORE: Punjab Industrial Estate (PIE) and a German Multinational Company have entered into a contract to construct a 40 MVA grid station at Sundar Industrial Estate (SIE) at a cost of Rs 138 million. 

The project will be completed in 11 months. The Contract between Punjab Industrial Estates Development and Management Company PIEDMC and Siemens Pakistan Engineering Company Limited was signed at PIEDMC office in Lahore yesterday. 

Mr Saber Pervaiz Chohan, Chief Executive Officer signed on behalf of PIEDMC whereas Mr Shaukat Ali Hassan signed on behalf of Siemens. According to details M/s Siemens will construct 40 MVA, 132/11.5 kV Grid Station at Sunder Industrial Estate at a total cost of Rs 138 Million within a period of 330 days (11 months). Ground breaking ceremony will take place within one week at the Site of the proposed grid. 

http://www.dailytimes.com.pk/default.asp?page=2007\07\06\story_6-7-2007_pg5_9


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## Neo

*China auto firm eager to introduce vehicles in Pak​*
* Trucks, pick-ups and buses on agenda

ISLAMABAD: The Chinese Automobile Company-Dong Feng wants to introduce trucks, pick-ups and buses in Pakistan according to the market demand. Experts from both sides should work out a possibility of a joint venture between Dong Feng and Pakistan Automobile Company (PACO).

This was stated by a delegation of Dong Feng Automobile Co Ltd, which held a meeting with Minister for Industries, Production and Special Initiatives Jahangir Khan Tareen on Thursday. The minister appreciated the delegation for showing interest in Pakistans auto sector. The Dong Feng delegation is on a visit to Pakistan to discuss the possibility of a joint venture with PACO. The meeting was also attended by Shahab Khawaja, Secretary for Industries, Production and Special Initiatives, Engineering Development Board (EDB), PACO and other senior officials. 

The meeting was held to discuss the possibility and terms and conditions of the joint venture between PACO and Dong Feng. Dong Fengs representatives in their presentation told the meeting that Dong Feng is one of the biggest automobile manufacturers in China. Trucks, pick-ups and buses are the main products of the company, they informed. The Dong Feng delegation further said that they want to introduce their products in Pakistan according to the market demand.

It was decided in the meeting that discussions would continue between experts from both the sides to work out a possibility of a joint venture between Dong Feng and PACO. The minister assured full cooperation and support to the Chinese delegation and said that every effort will be made to make this joint venture a success once all the formalities and modalities are agreed and settled. 

http://www.dailytimes.com.pk/default.asp?page=2007\07\06\story_6-7-2007_pg5_11


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## Neo

*UBL GDR notches up $13.96 per share in London: launch fetches $650.3 million ​*
LONDON (July 07 2007): Privatisation Minister Zahid Hamid on Friday launched United Bank Limited Gross Depository Receipts (GDRs) on the London Stock Exchange marking Pakistan Capital Markets Day at the world famous bourse and said tat the structural economic reforms introduced by the present government were yielding hugely positive results.

The Minister, in presence of Pakistan High Commissioner to United Kingdom, Dr Maleeha Lodhi, senior management of United Bank and leading UK-based businessmen pressed a button that sent 729 balls floating into air and signalled the launch of UBL shares on the LSE.

Each of the 729 balls symbolised the various scrips on the LSE. The UBL share opened at $12.85 and, within half an hour of its opening, it had climbed to $13.96 per share.

The listing and trading of UBL GDR on the LSE was yet another significant milestone in Pakistan government's privatisation program, said the Minister, who added that similar GDRs of National Bank of Pakistan, Habib Bank and Kot Addu Power Company would be offloaded at the London Stock Exchange in the coming months.

The listing of UBL shares on the LSE, following the success of Muslim Commercial Bank and Oil and Gas Development Corporation (OGDC), has raised the number of Pakistan companies trading on the LSE to three in the past eight months.

Zahid said that UBL transaction generated demand of more than $2.5 billion from all over the world. The Government, he said, ultimately decided to raise total proceeds of $650.3 million at $12.85 per GDR. This price valuation, of five times price to book value per share, was highest ever valuation multiple attained for a banking sector GDR, and was at a premium compared to all other GDRs of Asian banks, he said.

He further elaborated that UBL transaction, along with the successful MCB and OGDC GDR offering, and the $750 million ten-year sovereign bond issued last May, which was oversubscribed by more than seven times, reflected foreign investors' appreciation of the continuous improvement in Pakistan's economic fundamentals and their confidence in its future prospects.

He spoke about the economic reforms initiated by the present Government based on the pillars of privatisation, deregulation and liberalisation, accompanied by transparency, good governance and continuity and consistency of policies, "which have created an attractive and conducive investment climate".

The economy continues to perform well with GDP growth averaging more than 7.5 percent per capita income, increasing by an average 13 percent per annum over the last four years, and poverty declining from 34.5 percent in 2000-01 to 23.9 percent in 2004-05, he said.

The Minister noted that the overall investment had increased to 23 percent of GDP in 2007 while the foreign investment had increased from $182 million in 2000-01 to more than $7 billion in 2006-07, the highest level in the country's history.

Speaking about UBL growth, Zahid said it has more than 1000 domestic and 15 overseas branches and more than 14 percent share of the fast growing consumer lending market in Pakistan.

Maleeha said the listing of UBL reflected the fundamental strength of Pakistan's economy and the banking had been the best performing sectors. She appreciated the liberal economic policies of the present Government under the leadership of President General Pervez Musharraf, which led to highest levels of investment in the country.

The High Commissioner also noted the vibrancy in the national economy and said that public-private partnership had been playing a positive role in strengthening the overall economic outlook of the country. She further said Pakistan's bonds were being persistently oversubscribed, "which mirror the confidence of the international investors in Pakistan's economy".

Felicitating UBL on its listing, Baroness Cohen, Director, London Stock Exchange, said the occasion underlined the growing integration of Pakistan into the global economy. She said that solid macroeconomic performance over the recent years, combined with business-friendly reforms and a privatisation program had energised a new generation of Pakistani companies to expand their global operations.

http://www.brecorder.com/index.php?id=587818&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Exports to nine countries down by 30 percent ​*
KARACHI (July 07 2007): Country's exports to nine countries, falling in the index of 40 top countries, including Saudi Arabia, UAE, Iran, Bangladesh and Afghanistan, have slumped by 30 percent in terms of value during the 2007 fiscal year (July-March).

According to statistics, provided by the Trade Development Authority of Pakistan (TDAP), the country's exports to the war-torn neighbouring Afghanistan during July to March was at the lowest.

Pakistan's exports to Afghanistan stood at 528.534 million dollars as compared to 758.589 million dollars during the same period the 2006 fiscal year. This decline is 30.33 percent or 230.055 million dollars. Saudi Arabia is the other major country where the country's exports have plunged by 14 percent in the July-March period of the 2007 fiscal year.

As the country's exports during this period of the 2007 fiscal year to Saudi Arabia were 216.048 million dollars as compared to 251.109 million dollars during the 2006 financial year.

During the 2007 fiscal year, ie July-Mach period, exports showed a decline of 35.061 million dollars in value. Decline in exports to South Korea stands third in a row by 8.49 percent during July-March period of the 2007 financial year, which amounted to 130.368 million dollars as against 142.470 million dollars during the same period of the 2006 fiscal year, denoting a slump of 12.102 million dollars.

Moreover, Iran's imports from Pakistan have dwindled by seven percent or 9.961 million dollars during the 2007 fiscal year (July-Mach period). Its imports from Pakistan stood at 130.818 million dollars during the 2007 fiscal year (March-July period) as against 140.509 million dollars during the same period of the 2006 fiscal year.

Exports to the United Arab Emirates (UAE), the second largest Pakistani goods importer after the US, decreased by 6.01 percent or 59,658 million dollars during July-March period of the 2007 fiscal year.

Pakistan's exports to the UAE remained at 933.763 million dollars during July-March period of the 2007 fiscal year as compared to 993.421 million dollars during this period of 2006 fiscal year.

Exports to Hong Kong shrank by six percent during the 2007 fiscal year (March-July) period, as exports to it stood at 473.364 million dollars against 501.415 million dollars during the same period of the 2006 fiscal year, declining by 28.051 million dollars.

Bangladesh ranks seventh in the context of exports' decline by 5.13 percent. Pakistan made exports of 186.415 million dollars to Bangladesh during the 2007 fiscal year March-July period, whereas exports to it stood at 196.505 million dollars during the same period of the 2006 fiscal year, depicting a decline of 10.090 million dollars. Exports to Japan remained down by 3.35 percent during the 2007 fiscal year (July-March).

Pakistan's exports to Japan were 97.550 million dollars against 100.935 million dollars during the same period of the 2006 fiscal year, going down by 3.385 million dollars. Yemen's imports from Pakistan plunged by 1.105 million dollars or 2.73 percent during July-March period of the 2007 fiscal year. Its imports from Pakistan stood at 39.348 million dollars as against 40.453 million dollars during the same period of the 2006 fiscal year.

http://www.brecorder.com/index.php?id=587876&currPageNo=1&query=&search=&term=&supDate=


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## ahussains

Neo said:


> *China auto firm eager to introduce vehicles in Pak​*
> * Trucks, pick-ups and buses on agenda
> 
> ISLAMABAD: The Chinese Automobile Company-Dong Feng wants to introduce trucks, pick-ups and buses in Pakistan according to the market demand. Experts from both sides should work out a possibility of a joint venture between Dong Feng and Pakistan Automobile Company (PACO).
> 
> This was stated by a delegation of Dong Feng Automobile Co Ltd, which held a meeting with Minister for Industries, Production and Special Initiatives Jahangir Khan Tareen on Thursday. The minister appreciated the delegation for showing interest in Pakistans auto sector. The Dong Feng delegation is on a visit to Pakistan to discuss the possibility of a joint venture with PACO. The meeting was also attended by Shahab Khawaja, Secretary for Industries, Production and Special Initiatives, Engineering Development Board (EDB), PACO and other senior officials.
> 
> The meeting was held to discuss the possibility and terms and conditions of the joint venture between PACO and Dong Feng. Dong Fengs representatives in their presentation told the meeting that Dong Feng is one of the biggest automobile manufacturers in China. Trucks, pick-ups and buses are the main products of the company, they informed. The Dong Feng delegation further said that they want to introduce their products in Pakistan according to the market demand.
> 
> It was decided in the meeting that discussions would continue between experts from both the sides to work out a possibility of a joint venture between Dong Feng and PACO. The minister assured full cooperation and support to the Chinese delegation and said that every effort will be made to make this joint venture a success once all the formalities and modalities are agreed and settled.
> 
> http://www.dailytimes.com.pk/default.asp?page=2007\07\06\story_6-7-2007_pg5_11




We already put too many vechiles on the Road from last 5 years dont you see the traffic jams and polution in the Karachi and lahore the local govt, are unalble to controle the somke come out from the Rakshaws ,Minibuses Trucks and Buses specially and mean while they are cutting the trees in karachi when they are devloping the new roads... 

And the quality of the chinees vechiles are not so good there are alreadys available in market the 10 years old Suzuki Pickup, Hino Trucks and Mazda Mini Trucks and Van are far more stronger and powerfull if compare the chinees like Roma Van , Changan Master Truck... Blah Blah ... They donsent have any quality standard in 5 to 7 years they are going to Trash and our cities are going to be the Junk yards .... Just Think about it ....


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## Neo

*Low-income group hit hard by inflation ​*
ISLAMABAD (July 08 2007): Weekly-based SPI inflation is hitting low-income group the hardest as during the week ending July 5, it stood at 9.66 percent for the low-income group and 5.85 percent for the high-income earners. According to statistics released by the Federal Board of Statistic on Saturday.

The Sensitive Price Indicator (SPI) is up 7.65 percent compared to the same period last year with 0.19 percent surge in a week. The SPI inflation is recorded 155.05 on July 5 against 153.62 on June 28.

Increasing prices of essential commodities have been hitting hard the low-income group, as inflation was 9.66 percent for the group earning Rs 3000 against 5.85 percent for those having income above Rs 12,000. The inflation was 9.53 percent during the week under review for the income group of between Rs 3000 to Rs 5000 and 8.68 for those having income between Rs 5000 to Rs 12,000.

There was an exorbitant increase in prices of onion, fresh milk, vegetable ghee loose, cooking oil, rice, powder milk, firewood, and all varieties of pulses, which hit the low-income group the hardest. The bulletin on SPI, based on data collected for about 53 items from 17 centres, showed that 22 items registered increase, and seven items showed decline, while prices of 24 items remained unchanged. However, further analysis revealed that year on year basis; 18 items are dearer by double digits.

These include; red chillies 67 percent farm egg 65 percent, rice irri-6 38 percent, onions 34 percent, mustard oil 29 percent, vegetable ghee (tin) 27 percent, cooking oil (tin) 27 percent, masoor pulse washed 16percent and wheat flour price increased by 12percent, vegetable ghee loose by 45.68 percent, milk powder by 21.53 percent, fresh milk by 12.27percent, curd by 10.88percent, cooked beef plate by 10.10 percent.

Among these items, in a short span of one week the prices of onions increased by 22.85 percent, farm egg 11.46 percent, potatoes 9.49percent, L.P.G (11-kg cylinder) 1.91 percent, wheat 1.59 percent, gram pulse 1.49 percent and wheat flour by 1.13 percent over the previous week. However, the prices of cement have come down from an average price of Rs 293.25 per bag on June 6 to Rs 234.50 per bag on July 5, showing a decline of 20.03 percent.

http://www.brecorder.com/index.php?id=588719&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*KCCI chief worried over skilled workers demand abroad ​* 
KARACHI (July 08 2007): Pakistan may face serious shortage of skilled manpower due to their increasing demand the world over. This was stated by Karachi Chamber of Commerce and Industry (KCCI) President Majyd Aziz, while speaking as chief guest at ZAKPAK silk beauty soap consumer's lucky draw held at a local hotel.

Stressing the need for human resource development on priority bases to face the world challenge, Majyd Aziz pointed out that in the recent past, developed countries started shifting industrial units to developing countries where the cost of production was much lower.

Besides, they also started to reduce the cost of production, he said, adding now they started hiring skilled manpower from the developing countries. The KCCI President also expressed concern over missing export target by one billion dollars, and attributed this to poor marketing strategy.

Underling the importance of aggressive marketing policy, he pleaded for promoting Pakistani brand names. "We must popularise our brand names in the world market with view to boosting our exports products in the world market," he added. Later, lucky draw was held and KCCI Senior Vice President Abdullah Zaki and Shamoon Zaki announced the result.

http://www.brecorder.com/index.php?id=588780&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Attracting foreign investment: mineral sector devising comprehensive strategy ​*
ISLAMABAD (July 08 2007): Mineral sector is devising a comprehensive strategy to place focus on special generation of basic geological data and dissemination of project profiles to attract international investment particularly in metallic minerals and coal related energy products during the current fiscal year.

According to official sources, the accelerated geological mapping and geochemical exploration of high mineral potential areas of Pakistan would assist in understanding the genesis and geometry of these deposits for their subsequent development. The revised Mineral Policy, to be announced would attract local and foreign investment and accelerate exploration and research activities in the country.

Authorities also confirmed that an allocation of Rs 326 millions has been earmarked for the Minerals (non-fuel) sector. Major projects to be carried out during 2007-08 includes Ground Follow-up Aeromagnetic Anomalies in Chagai District, Balochistan costing Rs 35 million.

The resources said for Up-gradation/Strengthening of Geoscience Advance Research Laboratories, Islamabad, Rs 70.180 million been set aside. Accelerated geological exploration of the out-crop area of Pakistan will receive Rs 40 million, while feasibility study for development and exploration of Iron ore and commissioning of steel Mill at Kalabagh will attract an allocation of Rs 52.867 million.

The resources confirmed that establishment of Project Management Unit (PMU) for PHRD grant gets an amount of Rs 44.900 million, Strengthening and Capacity Building of Mineral Wing Rs 30 million and others relating to exploration of water in Balochistan and Gemstone Training oriented projects rope in Rs 52 million.

The country geologically is gifted with huge natural resources, which includes world class resources of lignite coal deposits at Thar Sindh, porphyry copper gold in Chagai and leaz-zinc deposits in Lasbella, Balochistan, gypsum, rock salt, limestone, dolomite, china clays etc in Indus Basin. There are about 30 different gems and precious stone deposits in northern Pakistan. In addition to this there are still some projects of grass root through exploration.

http://www.brecorder.com/index.php?id=588827&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Chinese firm to set up coal-fired power plant​*
KARACHI, July 7: The Chinese Mechanical Engineering Company, CMC, wants to set up a 375MW coal-fired power plant at Sonda in Thatta district. The company has started the process of getting support from relevant departments to launch the project.

It has submitted a feasibility study to the Sindh ministry of minerals declaring the results of the exploration as positive. The study confirms the availability of sufficient deposits of coal in the area and their suitability for power generation.

A CMC delegation, headed by its Vice President Shen Yen Rigaua, called on director-general of minerals Sohail Akbar Shah this week to discuss the modalities of the power plant.

The delegation also submitted an application for grant of a mining lease to extract coal to be used in power generation.

The two sides will sign a power generation agreement under which the Sindh government will get royalty of Rs60 per ton of the coal mined apart from the dead rent of the land to be provided to the company for setting up power plant and its allied facilities. In addition, there would be a fee for the mining lease, which will be for 30 years.

Under the agreement, the company will be restricted to sell coal in the domestic market and the extracted quantity would be exclusively used for power generation.

The CMC will also hold discussions with the federal ministries of petroleum and electricity, IPPB and Nepra to decide the tariff at which the power produced in Sonda power plant will be provided to Wapda.

Sources in the mineral department hope that if all issues are settled, the power plant will be functional in three years.

Under the agreement, the Chinese firm will also be required to employ local people at the plant and train them to shoulder operation responsibilities after the mining lease expires and the company decides to wind up.

The total coal deposits in Sindh are estimated at 184 billion tons with the biggest reserves of 175.5 billion tons at Thar, 7.1 billion tons at Thatta; 1.3 billion tons at Lakhra; 0.16 billion tons at Jhimpeer and 0.16 billion tons at Badin.

The mineral department has also given mining lease of various blocks in Thar to private companies. These include Hasan Associates, and Associated Group to extract coal for setting up power plants in the area.

A Chinese company has also been given a lease for coal mining for the same purpose.

In Badin district mining lease has been granted to Al Abbas Group and Roadways Company.

A Chinese firm Sinochem Hebei Corporation has been given mining lease to extract a precious mineral celestite found in mountain range near Nooriabad on Superhighway. The mineral is used in manufacturing of TV screen, X-ray films and in defence missile system.

Sohail Akbar told Dawn that the Chinese firm was interested in extracting the mineral for export purposes but the department persuaded it to process the mineral at the site before export.

In Lakhra, mining of coal is in progress since 1960 where Lakhra Coal Development Corporation (LCDC) and Pakistan Mineral Development Corporation have been assisting in mining activities. A Wapda power plant based on coal is generating electricity in the area.

Meanwhile, Fateh Group of Hyderabad has been given lease for a block in Lakhra to set up a power plant.

The director-general of minerals said the Sindh government has provided full security to the Chinese engineers working in the coal-mines in Thatta, Nooriabad and Thar area.

http://www.dawn.com/2007/07/08/ebr4.htm


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## Neo

*Trade Policy 2007-08: Rising imports, declining exports challenge policymakers​*
ISLAMABAD: Trade managers of the country are facing a difficult situation due to the slow pace of export growth and the rising import bill that are leading to an ever-increasing trade deficit, projected to be more than $9.5 billion for the outgoing fiscal year and is a burden on the countrys much earned foreign exchange reserves.

According to sources at the Ministry of Commerce, the trade policy for the current fiscal year 2007-08 is expected to be announced on 19th of July.

The trade managers are at sixes and sevens while proposing an export target for the current fiscal year 2007-08 as they feel that the trade policy alone cannot increase the countrys exports.

They strongly feel that rectification of other economic policies like interest rates, import tariffs, exchange rates and education of the exporters are required for the enhancement of exports. And trade policy alone cannot meet these challenges and a joint effort is required to promote exports through an enabling economic environment. 

Trade policy of the country for the current fiscal year 2007-08 would no more be a wish list of the government, as this policy would not be able achieve the desired results. 

The trade policy for the last fiscal year 2006-07 projected an 18 percent increase in countrys exports however, the actual growth in exports during the first eleven months of the said fiscal year was less that 4 percent. 

The initial proposal for this years trade policy was to set an export growth target of 20 percent, however, now the proposed target is being revised downwards to make it realistic. The downward revised target is going just 10 percent more than the actual exports achieved during the last fiscal year 2006-07.

The government has provided Rs 19 billion as Research and Development (R&D) Support to the textile sector during last two fiscal years. The exporting units were required to spend the amount received as R&D support from the federal government for the product development, skill development and training of the workers, up-gradation of the information technology and for hiring professional consultancy services. 

The situation on the ground is totally different and there is hardly any progress in these important areas, which were the main objectives of the governments R&D support policy. 

Trade officials are of the view that input cost in Pakistan is below than the input cost in our competitor countries like China and India and even Bangladesh. Add to this the fact that Pakistans exporters have a competitive edge in some areas like the availability of 90 percent of the raw material (cotton) within the country even than their performance is not up to the mark and they are unable to compete with those countries that are importing their raw materials like Bangladesh. 

According to the officials, textile sector has performed well due to billions of rupees of government support for export enhancement. Despite this, unit price offered by our products is three times less than our competitors in big markets. This is because of the fact that there is no research on product development in the country. 

When asked about the export of services, the official said that they had done a lot to promote exports of goods despite that the results were not encouraging. The services sector definitely requires governments attention and some measures would be announced in the forthcoming trade policy. 

According to the figures presented before the National Economic Council by the government, exports of the country were projected to be $18.6 billion. Actual exports during the July-May period of the last fiscal year amounted to $15.481 billion as compared to the exports of $14.941 billion in the fiscal year 2005-06 projecting an increase of just 3.6 percent. The imports were projected to be around $27.4 billion and imports stood at $27.743 billion during the July-May period of the last fiscal year as compared to the imports of $25.595 billion in the fiscal year 2005-06, showing an increase of 8.4 percent.

The Planning Commission has set an export target of $19 billion and imports are projected to be $29.6 billion in the next fiscal year 2007-08 with a deficit of $10.6 billion.

http://www.dailytimes.com.pk/default.asp?page=2007\07\08\story_8-7-2007_pg5_1


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## Neo

*Rising foreign stakes in local companies​*
While privatisation of state units is slowing down, much more direct foreign investment is now flowing into take-overs of local private banks and companies.

NIB Bank, a subsidiary of Singapore-based Tamasek Holdings, acquired, last month, 63.36 per cent shares of Pakistan Industrial Credit & Investment Corporation for $339 million.

Through this acquisition, NIB has also gained control of PICIC Commercial Bank, PICIC Asset Management Company, PICIC Insurance Ltd. and PICIC Exchange Company. Thus, it has now become a key player in Pakistans financial market.

In the outgoing fiscal year, Standard Chartered Bank acquired Union Bank for $487 million. Metropolitan Bank merged with Habib Bank AG Zurichs Pakistan Operations to create Habib Metropolitan Bank and ABN Amro bought Prime Bank for about $228 million. Besides, Samba Financial Group of Saudi Arabia took control of 68 per cent of Crescent Commercial Bank Ltd. through the issuance of 600 million new shares valued at $98.75 million.

Standard Chartered and Habib Bank AG Zurich have completed the process of acquisition and merger. But the ABN Amro take-over of Prime Bank would complete by the end of this month or early next month, an official of the bank told Dawn.

We have made the payment and met all requirements. You will see the Prime Bank sign-boards replaced with that of ours within four to five weeks, he said.

After acquiring Prime Bank, ABN Amro has emerged as the second largest foreign bank and its officials say the bank would now extend its services to agriculture and small and medium enterprises.

With 80 plus branches now, we are well positioned to enter into the areas where we had never ventured like agriculture credit and SME financing, said a senior official of the bank.

Banking sources say three more banks may be acquired or merged with some bigger banks in near future. An Egyptian billionaire and a consortium of financial and telecom institutions are in the race for acquiring Saudi-Pak Commercial Bank and a large American bank is trying to take over Soneri Bank. Word is also taking rounds about a possible take-over of Mybank by some investors.

As renowned foreign banks acquire local ones, it reflects their long-term confidence in Pakistan economy thus facilitating faster and larger inflows of foreign investment, says Arif Habib, chairman of Arif Habib Group. The group bought 7.36 per cent of PICIC shares from public on behalf of NIB Bank. (NIB bought 56 per cent shares directly. All direct and indirect buying of took place at Rs78 per piece.)

The most immediate benefit of foreign-sponsored acquisitions is that local share holders are getting attractive prices on their stocks, said Habib with whose group merged Rupali Bank of Bangladesh in fiscal year 2005 creating Arif Habib Rupali Bank.

Moreover, as foreign banks grow in size after acquiring local banks, they would give local banking giants a tough competition. And that would ultimately benefit customers.

Syed Ali Raza who heads extra-large state-run National Bank of Pakistan also thinks so. But he says large local banks including NBP are prepared to meet the challenges thrown by acquisitions and mergers.

Were going to focus on agriculture and on SMEs--the areas where we have the right network and expertise to serve, he said. Foreign banks, I think, wont be able to compete with us in these areas even after they grow in size.

Unlike the central banks of India and Bangladesh, the State Bank of Pakistan does not require foreign banks to offer farm loans. And they dont even do it on their own. At the end of 2006, their combined exposure in the agriculture sector was only Rs18.2 million and in fishing and fish-farming sector Rs25 million!

Against that, foreign banks carried personal and consumer loan portfolio of Rs38.4 billion and manufacturing loan portfolio of Rs52 billion at the end of 2006.

Raza and other top bankers say, however, that large local banks now need to make substantial investment in information technology and human resources to compete with the foreign banks. Foreign banks have latest technologies they have history of customer carenow as they start using networks of local banks their edge in consumer banking would rise further, reckoned Raza.

From customers viewpoint a key question is whether mergers and acquisitions in the banking sector would squeeze the banking spreadthe highest in the region, and bring relief to depositors?

I think, as competition heats up, the spread would shrink and depositors would certainly benefit. If banks go beyond a certain level in charging their customers, they would lose customers but if they give higher returns to depositors there is no threat except that their banking spread would shrink, said Raza.

Bankers say a gradual decline in the banking spreadcurrently at 730 basis pointswould not hit the profitability of banks in a big way. Banks can compensate it by increasing their non-interest income and by reducing the operational cost through enhanced efficiency.

Foreign banks have accelerated acquisitions of local ones, mainly because the State Bank of Pakistan has stopped issuing new banking licences except for Islamic banking.

And sponsors of local banks are selling these banks to foreign ones or merging with them because they cannot meet the SBP requirement to increase the paid-up capitals. However, what primarily attracts foreign banks to Pakistan is banks growing profitability on the back of rather unchecked increase in banking spread.

The combined profits of 26 out of 35 commercial banks during July-March FY07 rose 18.7 percent to about Rs50 billion from Rs42 billion in July-March FY06.

Privatisation of Habib Bank and United Bank that were bought by foreign investors and acquisitions of local banks by foreign ones has increased the foreign stake in the overall paid-up capital of the banking and financial system supervised by the central bank. SBP Governor Dr Shamshad Akhtar had told a conference in Geneva in February this year that foreign stakes stood at 47 per cent. Now it might be over 50 per cent.

Bankers say since 80 per cent of Pakistans total banking assets are in the hands of private sector, the increasing influence of foreign banks should bring in improvement in the system through increased competition. They say that had the system been heavily dependent on state-run banks, this could have an adverse impact.

Acquisitions and mergers are not limited to the banking sector in Pakistan though this sector has certainly seen much more activity than the other sectors. In telecommunication sector, Singapore Telecommunications Ltd. or SingTel is going to acquire 30 per cent shares of Warid Telecom for $758 million and both companies have already signed an agreement to this effect.

In the last fiscal year, China Mobile Ltd., the worlds largest mobile-phone operator bought 100 per cent shares of Paktel Ltd. for $460 million and renamed it as CMPak Limited.

Immediately after this take-over, China Mobile poured in more funds into Pakistan for business expansion. Officials say CMPak plans to invest $400 million in Pakistan in 2007 to expand its network.

With a low mobile phones penetration rate of 39 per cent, and a strong regulatory regime, Pakistani cellular market has emerged as an attractive destination for investment.

That is why not only new companies are exploring this market but those already operating here are reinvesting their earnings.

In the outgoing fiscal year, Telenor Company re-invested $98.4 million earningsand this was in line with the trend seen in other sectors. In July-March FY07, re-invested earnings grew over 50 per cent to $660 million and the State Bank has forecast the full year re-invested earnings to be around $1 billion.

The US-based Philip Morris International (PMI) also taken over Lakson Tobacco by increasing its share holding from 40 to 97.6 per cent in the last fiscal year. The acquisition was worth $382 million.

Acquisitions of local companies by foreign ones and corporate marriages between the two are not only bringing in the much-needed foreign exchange but also technology and expertise in various fields. And generally, a higher inflow FDI is not only helping Pakistan in improving its external account but through their spill over effects it is also contributing towards overall improvement of the economy.

But there are also some concerns about potential costs of FDI such as profit outflows and effects on competition in the domestic market, said the SBP in its second quarterly report for FY07. Specifically, profit outflows that arise from FDI could further deteriorate the current account position by augmenting the investment income payments, it warned.

The latest data show that in eleven months of FY07, profits and dividend outflows totalled $760 million, an increase of 51 per cent over the outflows of $504 million in the entire FY06.

This indicates that the full fiscal year 2007 outflows would easily cross $800 million thus showing an even greater increase over the fiscal year 2006 outflows.

http://www.dawn.com/2007/07/09/ebr1.htm


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## Neo

*Snags in Thar coal power project​*
The approval by the government of a local sponsors proposal to develop a mega coal-fired power project in Tharparkar District could prove to be a landmark decision, if successfully implemented.

On May 8, 2007, the Private Power and Infrastructure Board (PPIB) has allowed Hasan Associates (Pvt) Limited, Karachi, to establish a 1,000 MW capacity integrated mining-cum-power generation project based on the Thar coal,at an estimated total cost of $1.50 billion. The project will be undertaken on build-operate-and-own (BOO) basis, and is scheduled to go on stream within five years from the issuance of the letter of interest (LOI), as claimed by the sponsor.

Hasan Associates have already been granted an exploration licencee to undertake feasibility activities related to coal mining on lease basis. According to the memorandum of understanding (MOU) signed on January 11, 2007 between the sponsor and the government of Sindh, an area measuring 64-sq km at Block-one of the Thar coalfields has been allocated for the purpose. Based on studies to be undertaken by the sponsor that would ensure extraction of required quantity and suitable quality of coal, a feasibility report and environmental study will be prepared.

This may take at least a couple of years, in spite of the fact that the earlier studies conducted by the Chinese and the Germans are already available. Subsequently, the sponsor will sign agreement with the government for the construction of power plant, as well as for the acquisition of allied services and sale/purchase of electricity.

The proposed investment is considered a great feat on the part of a Pakistani sponsor to enter into the area where even a couple of foreign investors have finally shied away. Nonetheless, some sources are not sure about the implementation of the time-bound project, in the wake of past unpleasant experience of efforts for exploiting the Thar coal for power generation. On the other hand, the sponsor is keen to put the project on a fast-track basis, having initiated processing of selection of world-reputed consultants for the project. A 200-ton sample of the Thar coal will shortly be despatched abroad for conducting analysis of its chemical and physical properties and other characteristics. The sponsor intends to seek state-of-the-art environmental-friendly technology for the proposed 1,000 MW integrated project for which he is in contact with plant designers and manufacturers, and plans to establish coal-liquefaction and coal-gasification units in the second-phase of the project.

On its part, the federal government has commenced work on the development of the necessary support infrastructure in the area, under the title of the Thar Coal Infrastructure Development Project, with a total financial outlay of over Rs5 billion. In addition, the provincial government has invested Rs2.20 billion in the construction of roads network, water and power supply systems and town planning, whereas an additional amount of Rs1.30 billion is to be spent on the schemes in the next two years or so.

Likewise, Water and Power Development Authority (Wapda) is in the process of laying a 500-kV transmission line at a cost of Rs5.50 billion for dispersal of electricity from the proposed power station to the national grid.

It was in 1992 that the Geological Survey of Pakistan (GSP) discovered huge sub-surface deposits of coal--- the second largest in the world --in Tharparkar District, Sindh. The appraisal studies established technical and commercial viability of confirmed reserves of 175.50 billion tons of coal. The Thar coal, classified as lignite A-B, contains low ash and sulfur contents and is suitable for power generation, which would not have, relatively, adverse environmental and ecological effects.

Thar coalfields covering an area of 9,000 sq km have been divided into four blocks of demarcation for administrative and logistic purposes. Two new blocks have been added, thus making a total of six blocks for exploration. The different blocks are being offered to the private sector for installing power plants in the range of 50--1,000 MW capacity each.

In April 2002, a state-run Chinese company Shenhua Group Corporation was assigned to develop Block-two of Thar coalfields, accepting its proposal to establish a 600-MW power plant at the mine-mouth with associated captive coalmines. Shenhua Group carried out studies related to coal-geological and hydro-geological investigations in the area, and a project feasibility report was finalised.

Unfortunately, the project ran into various snags. Since then a number of foreign investors have shown interest to develop these resources, but without any breakthrough. In April 2005, AES-Oasis Ltd of the USA showed interest in developing an integrated mining-cum-power project of 1,000 MW capacity, utilising Block-one Thar resources. The sponsor, after a year finally backed out. This block has now been allocated to Hasan Associates.

President Musharraf on May 5, 2007, has reiterated his continued commitment to full utilisation of Thar coal reserves for power generation in an expeditious manner. But, perhaps he has to take stock of present status of the projects personally and resolve various impediments and constraints hindering effective implementation of the projects. Conducting the studies, though essentially needed, appears to have been a never-ending exercise, causing inordinate delay in taking off the vital projects. Rheinbraun Engineering of Germany has prepared a report, in January 2005, only for the mining project of Block-one in two years' time and at a significant cost.

However, the Asian Development Bank (ADB) has identified major risks and bottlenecks in the mining of Thar coal. It has been argued that previous studies have not resulted in a bankable study and therefore private sector might not engage itself for full-scale commercial development of the Thar resources. The available studies, according to the ADB report, also lack full technical information such as appropriate mining techniques to be adopted.

Suggesting mine-mouth mining to obtain large quantities of coal for intended large-scale power generation, the ADB report is said to have proposed to set mining capacity to the largest output from worldwide experience, which lies between 20--30 million tons annually.

Indeed, special efforts and policy measures augmenting domestic coal producing capability need to be undertaken, rather urgently. There are a number of limiting factors to developing mining-cum-power generation project; the major being the risk involved in coal mining and larger size of investment required for each project. The government therefore decided in April 2006 to unbundle the Thar integrated coal project into mining and power generation. Sadly, it is more than a year that the formation of a mining company to exploit Thar coal has been on the cards, but somehow nothing is on ground as yet.

The government will establish the company, in collaboration with Sindh government and, possibly, with the private sector too, which will undertake mining, handling and transportation of the Thar coal and selling it to the Independent Power Producers (IPPs). Prime Minster Shaukat Aziz is reported to have approved the summary for the proposed Coal Mining Company (CMC), with an investment of $500 million, sometime in September last year. There is no progress on this plan.

The ADB has also cautioned that for developing coal sites in Sindh it was necessary to avoid possibility of conflicts between the province and the federal government, as has been observed in the recent past. Realising provincial ownership of the mineral resources and federal control of the market, the PPIB was established as a one-window-operation facility, with necessary provisions in the power policies.

But the Power Policy 2002 is not being implemented in letter and spirit by the provincial governments, causing lack of meaningful coordination among all stakeholders for achieving the objectives. Another major constraint is the uncertainty of fresh water required for the projects. It is reported that the provincial government has recently completed a detailed ground water study and its findings are awaited.

The coal-based power projects, primarily exploiting the large Thar coal reserves, assume greater significance in the projected energy scenario, as it will reduce country's dependence on imported furnace oil, thus resulting in lower import bill and providing cheaper electricity, besides socio-economic development. The Energy Security Plan has thus set a target of generating total 19,910 MW power from coal by the year 2030, aiming to achieve over 12 per cent share in the power mix by then.

In the first phase coal-based power generation of 900 MW is planned to be attained by 2010, which now seems unrealistic. However, the target of generating additional 3,000 MW power (three projects, each of 1,000 MW capacity based on Thar coal) by 2015 may still be realisable, if concerted efforts are made to remove impediments in exploiting the Thar coal potential.

http://www.dawn.com/2007/07/09/ebr7.htm


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## Neo

*Dynamics of high economic growth​*
According to the Pakistan Economic Survey 2006-07, the economy continued its buoyant pace of growth for the fifth year in a row and the growth averaged seven per cent per annum during the last five years.

Economic growth has been widely shared by industry, agriculture and services on the back of a new investment cycle supported by strong growth in domestic demand and credit expansion.

The State Bank of Pakistan (SBP) had responded to the strong growth and rising inflation by increasing nominal interest rates. Successive hikes in policy rates during the last two years have led to higher interest rates across the spectrum, but higher inflation means that real interest rates remain low and their dampening effect on growth remained minimal.

A distinct feature of this years growth is that robust domestic demand underpinned the economic growth, with consumer demand and investment responding to real low interest rates thanks to higher inflation, and rising real incomes as shown by higher real growth in per capita income by 5.5 per cent during the last five years.

Per capita income is a deceptive term in the elite class economy. There is definitely a debate about the nature of this high growth in terms of inclusiveness. There may be different opinions on how the fruits of the growth are distributed but the fact remains that the current years growth is driven by investment.

For the most part of its history, Pakistans economy has been like a plane flying on one engine  domestic consumption. Analysts had fretted that was detrimental to the economy in the long-run, and the contribution of investment  the other big engine would have to be increased. Expanding investment has been a major and increasingly important driver of economys growth for the last three years. Its share in driving growth this year has surpassed consumption for the first time in economic history of Pakistan.

The relative importance of expanding consumption as a source of overall economic growth has lost substance. Investment-driven growth requires the output of machinery and equipment, and the inputs to produce them, to grow much more rapidly than the output of consumer goods. Rapid growth of output of investment goods increases the demand for energy disproportionately but also generates employment and reduces poverty.

The current energy crisis may have negative implications for investment prospects in medium to long- term. One area where growth prospects have not fully exploited is net exports or export-led growth. It is also critical to bridge saving-investment gap.

The savings-investment gap slipped into negative territory in 2004-05; the difference between the two was 1.6 per cent of GDP at that time. The negative savings-investment gap marked the reversal of a three-year trot when national savings were higher than the investment. This is evident from the change in the current account which has slipped into the red at five per cent of GDP in 2006-07 after three years of surplus (2001-02 to 2003-04). Some inherent weaknesses in the structure of our economy have prevented export-led growth. And economy remained more or less investment-led and consumption-led.

Realigning our economy in a manner consistent with ever changing demand patterns takes time and money. Only by foregoing consumption (increased savings), can we provide entrepreneurs with the funds they need to invest in the production of new goods and services.

Besides a faster growth in exports is needed to make total demand less sensitive to rising domestic real interest rates and indebtedness, secure productivity gains as a result of competition on the international market, and relax the foreign exchange constraints for imports. It means firing another engine of export-led growth..

One disappointing aspect of current higher growth is its job creation capacity. The current growth momentum is driven by less labour intensive sectors like financial businesses, telecommunications, production of durables, mergers and acquisitions, privatisation, and last but not the least technological up-gradation.

All these sectors are not creating enough jobs and in some cases resort to retrenchment.. The gulf between haves and have-nots has definitely increased as is reflected in government statistics.

Putting more people in productive and sustainable jobs lies at the heart of inclusive growth. All segments of society should get benefits of higher growth though more active segments get more of it. But inclusiveness, primarily, depend on the success in achieving and maintaining higher growth over a long-term. This requires more discipline and strong political commitment from ruling elite which might not be possible in our social fabric.

The vicious circle of poverty and low growth can be transformed into virtuous circle of demographic dividend by optimising human capital. The formidable challenge is to provide a comprehensive policy framework to harness the dormant talent pool of our work-force and entrepreneurs to position the economy on a sustained high-growth trajectory.

Infrastructural inadequacies continue to constrain the full potential for economic development, pick up in investment and buoyant exports. Last two Public Sector Development Programme (PSDP) have acknowledged the importance of speedy provision of quality infrastructure as a policy stimulus.

Substantial resources are earmarked for this area but still we are not getting proper value of money because of leakages in the system and weak monitoring. Pakistans growth prospects are crucially intertwined with the rapid development of physical infrastructure such as power, roads, ports, and airports, and efficient delivery of services.

The current electricity shortages are manifestation of poor planning on the part of the government and inadequacies of power adversely affecting not only the output of large industries, but also irrigation in agriculture and other economic activities. Such power shortages are also affecting productivity of the labour force. Economic Survey 2006-07 is unable to provide possible GDP losses as a result of these power shortages.

Next years prospects for 7.2 per cent growth target crucially depend upon the responsiveness of production sectors to the electricity shortages and the amount of productivity losses. We need to align our macroeconomic framework with demand for energy and resources and plan for them on long-term basis. The current policy is tilted towards short-run and ad hoc measures for short-term gains.

http://www.dawn.com/2007/07/09/ebr14.htm


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## Neo

*KSE-100 index breaches 1,400-point barrier*​
AFTER having crossed the barrier of 14,000 twice during the last week, the KSE 100-share index finally finished slightly below it as leading punters played on both sides of the fence apparently on some pressing technical reasons.

But on the other hand its junior partner, the free float 30-share index seems to have reached its saturation point, and was quoted modestly higher by 32.74 points at 17,035.49 after two downward adjustments.

The Lal Masjid standoff did take its toll after the operation began, but investors later ignored after some positive developments on the issue, including surrender of one of the chief clerics along with 1,200 students.

However, investors mood reflect that the future war of wits between the bulls and bears will be fought above the index level of 14,000 points as strong presence of foreign buying and higher corporate profits would not allow them to sit on the sidelines.

After having touched its career-best level so far at 14,029, the KSE 100-share index finally ended around 13985.89 points as compared to 13,772.46 points a week earlier, fresh gain of 213.43 points.

The market capital also soared to a new peak level of Rs4,103.727bn, up by Rs85bn as compared to last week's 4,094.795bn as heavily-capitalised shares ended higher.

What is important about the current run-up is that unlike previous bull-run, buying support did not outflow to other sectors but remained very much in the market, although it changed its portfolio investment strategy.

Low-priced shares, particularly in the cement and telecom sectors being traded at an attractively lower levels and having potential of capital gains had now assumed the role of actives.

The Lal Masjid operation, however, briefly intercepted the market's upward drive as investors sold in panic fearing law and order situation in other parts of the country as a result of Islamabad casualties.

But the reaction billed as an overdue technical correction proved short-lived as bulls fought back on the strength of positive corporate background news and higher earnings reports.

A higher dividend at the rate of Rs6.20 per unit by the National Investment Trust (NIT) did provide much needed relief to the shaky investors but the army action on the Lal Masjid again reversed the situation.

Earlier, the KSE 100-share index breached through two consecutive psychological barriers and analysts said there appears to be no near-term end to the existing bull-run after the target of 14,000 points was hit.

At one stage, it was only seven points below its hereto considered an elusive goal of 14,000 at 13,951 but at the last moment bulls gave a breathing space to the massively battered bears postponed it for another session or two.

&#8220;The index level of 14,000 points is expected to be crossed in any session next week but what next is the question being debated in the relevant quarters&#8221;, analyst Ashraf Zakaria said adding &#8220;it may rise further but after having gone through a technical correction being in a highly overbought position&#8221;.

Although index heavy weights, notably OGDC, MCB, National Bank, PTCL, Lucky Cement and some other leading shares were behind the current sustained run-up, incredible role played by the second-tiers stocks for keeping the buying interest intact on an attractive bait of capital gains could well be the chief inspiring force behind the sustained rally.

Pak PTA, TRG Pakistan, Fauji Cement, Dewan Cement and Nimir Chemicals, Telecard, World Call Telecom and Bosicor Pakistan, which are considered undervalued but having potential of capital gains absorbed much of the selling overflowed from the overvalued shares.

&#8220;What seems to have given the credence to the market's current outstanding performance was, among other things, the strong presence of the foreign support&#8221;, analyst Hasnain Asghar Ali said. &#8220;But what make them so sure of the market's viability in the polarised political scenario is not clear,&#8221; he added.

Interim corporate earning reports for the half year ended June 30, are said to be on the higher side of the market perceptions and market talk of bonus shares by some of the undervalued companies did not allow investors and punters to keep to the sidelines for a single session.

However, it goes to the credit of the market that its performance is not influenced by the external factors as investors seem to have decided to go alone and in line with the market fundamentals rather than the fear of political uncertainty.

FORWARD COUNTER: Oil and cement shares led the list of actives on this counter under the lead of OGDC, Pakistan Petroleum, Lucky Cement, D. G. Khan Cement, Fauji and Maple Leaf Cement followed by leading bank, notably National Bank but Bank Alfalah and MCB fell from the recent highs on selling. But other speculative issues generally rose amid slow activity.

&#8212;Muhammad Aslam
http://www.dawn.com/2007/07/09/ebr20.htm


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## Neo

*ADB to fund electricity, gas import projects​*
ISLAMABAD, July 8: The Asian Development Bank (ADB) will support and finance import of about 2,000MW electricity to Pakistan from Kyrgyzstan and Tajikistan. The bank will also provide assistance for the pipeline project for importing gas from Turkmenistan.

Officials told Dawn on Sunday that the bank found Pakistans plans to develop Gwadar port as a transnational hub for Central Asian states, South Asia, China and the Middle East to be economically feasible and decided to fund at least three mega-projects, including the import of electricity from Tajikistan and Kyrgyzstan and the Turkmenistan-Afghanistan-Pakistan gas pipeline project.

The sources said that the commitment for ADBs support and funding for the three projects has come at the highest level during a recent interaction between Prime Minister Shaukat Aziz and the banks president C. Lawrence.

It is not yet clear how much investment would be required for the electricity import projects or the extent of the banks contribution, said these sources, adding that a technical delegation would soon visit Islamabad for more detailed discussions.

The ADB is assisting Kyrgyzstan and Tajikistan to help develop their vast hydropower potential. It wants the two central Asian republics to export 1,000MW each to Pakistan that currently faces more than 2,500MW of power shortfall during peak demand timings.

The annual energy demand growth rate is now estimated at 10 per cent in Pakistan.

Pakistan has held talks with Tajikistan and has held formal talks for electricity import. In one of the formal interactions, major stakeholders like the United States, Afghanistan, Russia and energy giants from the US and Russia also participated.

The ADB has been working very closely with the World Bank to create a regional electricity grid to ensure that surplus energy from one country in a specific country could be transmitted to another nation.

The ADB also completed a feasibility study of the TAP-pipeline project in December last year.

http://www.dawn.com/2007/07/09/top9.htm


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## Neo

*SNGPL to lay IPI gas line in Pakistan: Lone ​*
ISLAMABAD (July 08 2007): The Iran-Pakistan-India (IPI) gas pipeline project agreement is likely to be inked soon and the pipeline within Pakistan would be laid by the SNGPL. Talking to a private TV channel, SNGPL Managing Director Rashid Lone said the IPI gas pipeline project was making headway fast and the talks on gas tariff, taxes and other matters were in the final stage.

While there was strong possibility of an agreement being inked within two or three months in this regard. Rashid Lone said the SNGPL has all the expertise for laying the gas pipeline from the Iranian to the Indian border. He said the load-shedding for the next season would be done in the industrial sector instead of the domestic, adding the possibility of any upward revision of gas tariff in the current fiscal year was remote.

http://www.brecorder.com/index.php?id=588735&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Chinese firms given Neelum-Jhelum Hydroelectric project contract ​*
LAHROE (July 10 2007): Water and Power Development Authority (Wapda) has awarded the contract for the construction of Neelum-Jhelum Hydroelectric project at a cost of Rs 90.9 billion to a consortium comprising China Gezhouba Group Company and China Machinery Export Corporation.

Neelum-Jhelum Hydroelectric project will be implemented over a period of eight years. The project, with capacity of 970 MW will generate 5.15 billion units of electricity on its completion.

It is pertinent to mention that Neelum-Jhelum Hydroelectric project is located near Muzaffarabad in Azad Jammu and Kashmir. The main features of the project include construction of a dam on river Neelum, 47-km long diversion tunnel and installation of four turbines each with a generation capacity of 242 MW.

http://www.brecorder.com/index.php?id=590003&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pakistan may renew efforts to acquire nuclear power plants from China ​*
ISLAMABAD (July 10 2007): Pakistan is likely to renew its efforts to acquire 1000 mw nuclear power plants from China for meeting future energy needs, sources told Business Recorder here on Monday. Beijing had, in principle, agreed to provide two more nuclear power plants, worth about $1.2 billion, to help meet Pakistan's growing electricity demand, and it was about to sign an agreement when the Chinese President visited Islamabad.

However, when the issue was magnified in the media, China shelved the project, arguing that it would not indulge in any controversy, sources said. Though the issue has been almost dead now, Islamabad is again endeavouring to streamline the negotiations to acquire the nuclear power plants as was evident from the visit of Joint Chiefs of Staff Committee (JCSC) Chairman to Beijing a couple of months ago, sources added.

"We must make renewed efforts for acquisition of 1000 mw nuclear power plants and indigenous fabrication of 300 mw nuclear power plants with Chinese assistance," sources quoted JCSC Chairman as recommending in his report on his China visit.

The Central Development Working Party (CDWP), headed by Planning Commission Deputy Chairman Dr Akram Sheikh, has approved setting up of Nuclear Fuel Enrichment Plant (NFEP) at a cost of Rs 13.708 billion, including Rs 8.136 billion foreign exchange component, so that necessary material could be made available easily for its on-going nuclear activities.

Earleir, China had promised to continue cooperation with Pakistan for building "some more nuclear power plants with the courage that it will not succumb to any pressure of West or the 45-member Nuclear Suppliers Group (NSG)". The 45-member NSG consists of nuclear supplier countries who seek to contribute to non-proliferation of nuclear weapons through the implementation of guidelines they set for nuclear and nuclear related exports.

China has provided two nuclear power plants--Chashma I and II--each capable of generating 300 mw electricity. The CDWP has already approved Rs 150 million to prepare feasibility studies of six sites for erecting new power plants.

The PAEC had selected these six sites to set up nuclear power plants (NPPs) to materialise a plan aimed at increasing the country's capacity to generate 8,800 megawatt nuclear power by 2030.

Pakistan Atomic Energy Commission (PAEC) had selected these sites to at Qadirabad-Balloki (QB) link canal near Qadirabad head works, Dera Ghazi Khan canal near Tuansa barrage, Taunsa-Punjnad (TP) canal near Multan, Nara canal near Sukkur, Pat Feeder canal near Guddu, and Kabul River near Nowshera.

http://www.brecorder.com/index.php?id=590020&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'Infrastructure, power and agriculture sectors need heavy investment' ​*
KARACHI (July 10 2007): National Bank of Pakistan (NBP) President Syed Ali Raza has said that three critical sectors, including infrastructure, power and agriculture, badly need heavy investments to attract maximum foreign capital in the country.

Giving a lecture on the "Regional bilateral investment opportunities" at the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Monday, he observed that during the last 10 years, the rapid globalisation had given new shape to capital market in the world.

He said that Pakistan had a major geo-political position in the region, terming this a source for strengthening economy, and stressed on the need to capitalise on the opportunities in the context of trade with neighbouring countries via trade corridors. "Policies are needed to encourage the flow of investment into the capital market of the country," he pointed out.

Broadening and deepening the capital market of the country, the BNP President stressed the need for huge investment in education sector, besides development of human resources on priority basis. He pointed out that galloping trend of globalisation had brought about the rapid growth of the multi-national companies (MNCs) around the world, which dominated the capital market with huge flow of capital.

"Globalisation in last 10 years had changed the businesses, helped them grow with the advent of technology and media's impact on the capital market," said the NBP President.

Syed Ali Raza said that globalisation had freed the capital market from governments' influences and control, giving rise to the new challenges in the face of stiff competitions.

He said: "The era of market control has gone, and we as a country in this very world can compete," he added.

About the deteriorating global environment due to industrialisation, the NBP President hoped that capital market would not get disturbed of such changes, though they were rapid in pace, adding that the US had also backed the earlier opposed Kyoto Protocol on environment protection.

On regional scenario, he said the Middle East, China and South Asian countries were affecting Pakistan in a larger context, he said, adding that the Middle Eastern countries had huge reserves well beyond of their needs in surplus, which needed to be diverted to the country's local capital market.

"China's capital reserves are inflating further as it has presently 1.2 trillion dollars," he maintained.

About the Central Asian countries, the NBP President said that they had huge hydrocarbon resources, which had not yet been scratched out and could be a source for the power generation.

He observed that the post 9/11 era was the vibrant capital market and the need of the day for the country to compete with the emerging capital market challenges.

Regarding NBP's constraints, he pointed out that it also provided services with the three billion pensioners without any charges, which scaled down its commercial businesses. "Other banks charge on service provisions, whereas the NBP is still providing services to the government employees and pensioners free of cost," he pointed out. He demanded of the government to set up service branches for pensioners so that the NBP could concentrate on commercial businesses.

About the President's Rozgar Scheme, Syed Ali Raza said that it was boosting up, and hoped to provide maximum benefits to the poor of the society. Earlier, FPCCI President Tanvir Ahmed Sheikh said that the banks' high mark-up rates were badly hitting the industrial production and growth.

He pointed out that during the last three fiscal years, banks had provided massive credit of Rs 1.04 trillion to private sector.

He said that during the first 10 months of the 2006-07 fiscal year, the volume of bank credit to the same sector had gone down by 22 percent to Rs 266 billion against Rs 340 billion in the corresponding period of the 2005-06. He suggested moratorium to be provided to the textile industry for two years on repayment of the principal amount of loan to the industry.

http://www.brecorder.com/index.php?id=590046&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Italian firm to invest in Pakistan ​*
LAHORE (July 10 2007): A top Italian company has shown its interest to invest in Pakistan by forming a joint venture with Pakistani counterparts. This was revealed by Antonio Bolite and Angelo Zacaroti, representatives of M/s ARKO while talking to President Lahore Chamber of Commerce and Industry (LCCI) Shahid Hassan Sheikh, here on Monday.

This Italian firm deals with furniture and wooden doors business. They said that Pakistan a land of opportunities and has huge potential for foreign investment. However, major bottleneck in the way of economic development is just lack of information about business opportunities available between the two countries, they added.

"We need to undertake frequent activities like exchange of business delegations, organising country exhibitions, participation in fairs & exhibitions, seminars and workshops etc, to ensure a continuous liaison," they maintained.

The LCCI President Shahid Hassan Sheikh informed the delegation that increasing volume of foreign direct investment is enough to make the point that the level of foreign investors' confidence in government economic policies is increasing.

He said that Pakistan is among the fastest growing economies in the region and the economic indicators in terms of gross domestic product, balance of payments.

He said the country had abundant natural resources and skilled cheap manpower but lacks technology. It is an important market of 155 million people apart from a gateway to the Central Asian Republics, South Asia and Gulf countries.

http://www.brecorder.com/index.php?id=590095&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Exploration of salt and iron ore reserves starts ​* 
LAHORE (July 10 2007): New exploration projects aimed at exploring the reserves of salt and iron ore in various areas of Punjab have been started for which funds have been allocated and these projects would be completed in current fiscal year.

Provincial Minister for Mines and Minerals, Muhammad Sibtain Khan stated this while presiding over a meeting of the project managers of Punjab Mineral Development Corporation (PUNJMIN), here on Monday. The Minister said that project to explore the rock salt reserves had been started in Mian Mitha Khushab, while project of iron ore exploration was started in Rajwah, Jhang.

http://www.brecorder.com/index.php?id=590037&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Record rise in cigarette production​*
KARACHI, July 9: Cigarettes consumption is falling in most countries of the world but in Pakistan both production and consumption of this silent killer is increasing at an alarming rate.

It must be surprising to note that while the whole world is fighting against smoking more and more Pakistanis are getting hooked, setting new records by manufacturing additional five billion cigarettes each year.

Despite the fact that each packet carries warning that smoking is dangerous for health, the number of smokers is increasing.

In 2005-06 a total 64.14 billion cigarettes were manufactured in the country. This is an official figure, while a substantial number of cigarettes are manufactured in NWFP by unregistered firms. Moreover, every popular brand is imitated locally in small places without quality supervision.

The latest official figures showed that during 2003-06, additional 14.77 billion cigarettes, with a yearly average of 4.92 billion, were produced in the country.

In 2002-03, total number of cigarettes manufactured was 49.37 billion, it rose to 55.40 billion in 2003-04, again jumped to 60.10 billion in 2004-05 and finally reached 64.14 billion in 2005-06.

During July-September 2006-07, a total of 14,22 billion cigarettes were produced showing the rising trend of production of the popular brands of cigarettes.

The official data showed that the country was not a major exporter of cigarettes, which means that most of the cigarettes being produced are consumed locally.

The data recorded a total export of tobacco and its substitutes worth $7.210 million during July-May 2006-07. It was slightly more than previous year.

The fast rate of expansion in the cigarette market is highly attractive for the manufacturers and a recent huge investment by a foreign company is a clear indication of the trend.

Philip Morris International (PMI) on March 9, 2007 announced completion of the acquisition of a 50.21 per cent stake in Pakistan's Lakson Tobacco Co. Ltd. for about $340 million.

The PMI, which now holds around 97.62 per cent shares in Lakson, agreed in January 2007 to acquire the stake in Pakistani tobacco firm at Rs666.89 a share.

The Lakson Tobacco is Pakistans second largest tobacco company with an estimated 47 per cent cigarette market share in fiscal year 2006.

Further calculation shows that each Pakistani, including women and children smoke 400 cigarettes each year and if women and children are excluded the estimated 40 per cent Pakistanis smoke 1,066 cigarettes each year.

The advertisements for cigarettes have been stopped but the rise in demand is shockingly high. A number of seminars and workshops are organised each year to create awareness about the injurious role of cigarettes for human health but the result is almost negative.

The cigarette industry is adding 5 billion cigarettes each year to the huge total of 64 billion. The addition of 5 billion cigarettes showed that the market has enormous potential to grow while at the same time Pakistanis are willing to welcome more smokes despite deteriorating average health condition in the country.

http://www.dawn.com/2007/07/10/ebr1.htm


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## Neo

*Automobile sales grow by 6.3% to 165,268 units​*
KARACHI: The local auto manufacturers rolled out 18,484 units during June 2007, breaking previous record of 15,994 units set in March 2006. 

The car industry sales grew by 6.3 percent to 165,268 units as against 155,515 units in FY06. This growth can be attributed to the lesser interest of investors in the imported vehicles as the import of completely built-up unit (CBU) cars registered a negative growth of 13.9 percent during the first eleven months of the current fiscal year over the same period of the last year, said Hettish Karmani, head of research at Atlas Capital Markets. 

According to figures released for first eleven months of 2006-07, only 26,802 units were imported in 11M/FY07 of which 18,680 were cars and jeeps of different engine powers. In the previous year over 55,000 units were imported into the country. 

Cumulative production and sales volume of the four listed car assemblers jumped by 4 percent and 9 percent to 196,405 units and 201,421 units, respectively. Pak Suzuki led with a market share of 61 percent and unit sales of 122,426 in FY07 compared to market share of 54 percent and unit sales of 99,105 in FY06. Indus Motors followed with market share of 24 percent and sales volume of 48,590 locally assembled units. The rest was shared by the remaining two assemblers who managed to roll out 30,405 units as against 44,399 units in the last fiscal year. The car assemblers have raised their prices since July 1 following the imposition of one percent special excise duty. They will be raising their prices further when the 2.5 percent withholding tax imposed on locally manufactured vehicles comes into force from September 1, 2007. As per recent notification, the government has reduced withholding tax from 5 percent to 2.5 percent on locally manufactured cars. The levy would be applicable from September 1, 2007. This reduction was done with a view to promote and strengthen local industry. The industry had apprised the CBR of the problems arising from imposition of 5 percent withholding tax that was announced in the budget.

http://www.dailytimes.com.pk/default.asp?page=2007\07\10\story_10-7-2007_pg5_3


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## Neo

*IT exports surpass $108 million target ​*
By Romail Kenneth

KARACHI: Countrys IT and IT-enabled Services exports have witnessed healthy growth during the outgoing fiscal year 2006-07 and have surpassed the target of $108 million, up by almost 50 percent when compared to exports worth $72.21 million for the fiscal year 2005-06.

According to the Pakistan Software Export Board (PSEB), this year Pakistans IT and IT-enabled Services industry has witnessed tremendous growth as it surpassed its target of $108 million and have approximately touched $110 million at the close of the fiscal year. Data reveals that the exports of computer software and information technology services has gone up, said Ashraf Kapadia, President of the Pakistan Software Houses Association.

The country is on track for a year-on-year growth of 50 percent, he added. In recent years Pakistans software exports have gone up as Pakistan offers various competitive advantages over other outsourcing destinations, such as high quality software development, swift and easy establishment of business, lowest cost basis and emerging and state-of-the-art telecommunication and IT infrastructure. Our software houses are providing value added services to their clients, which makes us cater new markets in US and Europe. Ashraf said that apart from the rapid growth of the industry, the IT sector in the country is facing many challenges that are related to infrastructure and human resource. 

Availability of office space in the urban centres of Karachi, Lahore, and Islamabad has become a major issue. Another issue is the availability of human resource as the IT sector relies heavily on trained human resource. With a growth rate of 50 percent year-on-year, trained human resource has started becoming a constraint and we need to address this issue immediately, otherwise it will become a major constraining factor to our growth, said Kapadia.

Talking about the software industry he said that there is a misconception that the value of the software industry stands at $50-100 million. Mr Ashraf added that the figure of $108 million is the amount of remittances received by the State Bank of Pakistan under the head of computer and information services. This represents a small fraction of the total IT industry of the country. He further said that if we look at the total IT and IT-enabled services industry in Pakistan, estimates put the total industry at $2,000 million of which $1,000 million is export related.

http://www.dailytimes.com.pk/default.asp?date=7/10/2007


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## Neo

*KSE crosses 14,000 points​*  

KARACHI: The Karachi stock market on Monday crossed the psychological barrier of 14,000 points due to continuous escalation of oil prices in international market, renewed foreign interest in the fertiliser sector and positive performance by second and third tier scrips, said analysts. Fertiliser and cement sectors were the major market players. The Karachi Stock Exchange (KSE) 100-share index gained 33.16 points or 0.24 percent to close at an all time high of 14,019.05 points as compared with 13,985.89 points of the previous session. The KSE 30-share index closed at 17,103.38 points with a gain of 67.89 points or 0.40 percent. 

http://www.dailytimes.com.pk/default.asp?page=2007\07\10\story_10-7-2007_pg1_6


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## Neo

*Agriculture loan disbursement exceeds target ​*
KARACHI (July 11 2007): Commercial and specialised banks have surpassed the target of credit disbursement to the agriculture sector in the 2006-07 fiscal year, as the total disbursements grew by 22.4 percent to Rs 168.3 billion against the target of Rs 160 billion.

This was revealed in the annual meeting of the Agriculture Credit Consultative Committee (ACCC), held at SBP head office here on Tuesday. The meeting was chaired by State Bank of Pakistan Governor Dr Shamshad Akhtar. The meeting also set a target of Rs 200 billion-credit disbursement to the agriculture sector for the current fiscal.

Dr Shamshad Akhtar informed the committee that the commercial and specialised banks had surpassed the target of credit disbursement to the agriculture sector by issuing Rs 8.3 billion more credit as against the target of Rs 160 billion during the 2006-07 fiscal year.

The meeting was informed that five big commercial banks, including Allied Bank Limited, Habib Bank Limited, MCB Bank, National Bank of Pakistan and United Bank Limited had disbursed a total of Rs 80.2 billion, against the full-year target of Rs 80 billion.

In addition, the Zarai Taraqiati Bank Limited (ZTBL), Punjab Provincial Co-operative Bank Limited (PPCBL) and domestic private banks (DPBs) disbursed Rs 56.3 billion, Rs 7.9 billion and Rs 23.8 billion, respectively against the target of Rs 48 billion, rupees nine billion and Rs 23 billion during the last fiscal.

During the meeting, the committee noted the significant rise in credit and its absorptive capacity in Punjab as its provincial government had created a good environment and developed proper institutional arrangement for promoting the credit delivery.

For the 2007-08 fiscal year, the committee recommended the target of Rs 200 billion for credit disbursement to farmers. This includes combined lending of Rs 132 billion from the commercial banks and Rs 68 billion from specialised institutions, ie ZTBL and PPCBL.

The committee also recommended province-wise allocations of disbursements, based on the cropped area and absorption capacity of each province, Azad Jammu and Kashmir and Federally Administered Tribal Areas (Fata). During the meeting, Dr Akhtar constituted a committee to concentrate on additional groundwork, supportive to the rural development of the country.

These committees would focus on development of agricultural database in conformity with the international standards and development of methodology for proper estimation of the agriculture and rural credit requirements of the country in conformity with the overall agricultural production as set by the respective ministries.

The committee will also prepare a holistic development strategy for enhancing rural financing and to develop guidelines for lending technology and supportive credit enhancement mechanisms. The SBP Governor asked all stakeholders, including banks, relevant Federal ministries, and provincial government departments and farmers' associations to make co-ordinated efforts to increase agricultural credit absorption capacity as otherwise it would be difficult for the banks to meet future targets of agricultural credit.

The committee was informed that the State Bank had developed a multi-pronged approach to double the outreach in terms of the number of borrowers and increase aggregate disbursements by banks of agricultural loans to meet up to 75 percent of the credit requirements of the sector from the existing 45 percent during next three to four years.

Dr Akhtar asked the commercial banks to focus on non-farm credit, which would not only enhance their credit portfolio, but would also help to generate employment in the rural areas. She stressed that banks, in consultation with other stakeholders, should develop new and innovative loaning products to cater to the demand of the sector.

The meeting was attended, among others, by senior officials of the State Bank of Pakistan, presidents and representatives of commercial banks, ZTBL and PPCBL, officials of Federal and provincial governments, chambers of agriculture, farmers' associations and other stakeholders. Meanwhile, the SBP recommended a level playing field for all banks for the agriculture credit by bringing ZTBL and PPCBL on market-based systems.

Recommending some measures for further increasing the pace of growth of agricultural credit disbursement, the SBP Governor recommended periodic surveys and studies by the SBP, the Ministry of Food, Agriculture and Livestocks (Minfal) and the provincial agriculture departments to take stock of the implementation of ongoing initiatives to raise the agri credit.

Each bank, the SBP, Minfal, the provincial agriculture departments, extension services departments, revenue boards, Pakistan Agriculture Research Council (Parc) and other stakeholders should prepare individual activity plans (sub-strategies) along with timelines, duly approved at the highest level, and share the same with the SBP to ensure collaborative efforts, the SBP said.

The SBP stressed on the introduction of mandatory-crop loan insurance scheme and an effective implementation of the ADB agribusiness project for capacity building of banks in agribusiness lending. The SBP and Minfal should develop database-covering information on the basis of districts, farm or non-farm sector, agribusiness', export markets, number of households, the SBP recommended.

http://www.brecorder.com/index.php?id=590375&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Seafood export target may be missed ​*
KARACHI (July 11 2007): The country is likely to miss the seafood fiscal year (2006-07) export target $210 million, falling short by almost $25 million due to decreasing fish availability in the sea besides export ban by the European Union (EU) since April 2007, said seafood exporters on Tuesday.

"This year a very low quantity of tuna fish was caught as compared to last year, which put a negative impact on seafood export," they added. It is expected that at the end of last fiscal year overall seafood export will reach $185 million against the target of $210 million for the fiscal year 2006-07, as the country is likely to fall short the fiscal seafood export target by $25 million.

According to official statistics, seafood export stood at $175.333 million at the end of (July-May) period of the fiscal year 2006-07, against the $176.92 million during the same period of fiscal year 2005-06.

They said that tuna was a migratory fish and it was caught through "long-lining', adding that the most of the fishermen did not have the required technology to exploit such fish in the sea at a great level.

"In order to boost seafood export, government should establish a separate board within the ministry of food, agriculture and livestock (Minfal) so that exporters and fishermen both could get maximum support" said Hanif Khan, chairman seafood industry association.

Fisheries with maximum $200 million export target has mostly failed to invite the attention of government, however its development could augment seafood export manifold in the next few years, he said.

"Lack of basic facilities in this industry has brought about its decline this fiscal year despite establishment of fish processing plants on world standards at the Karachi Fish Harbour," he added.

He said that local fishermen were using traditional tools and apparatus for catching fish in the deep water, whereas global standards did not allow them to do so, which caused severe problems not only for them but also for the seafood exporters.

Now fish consumers, world-wide, are more quality conscious, he said adding that consumption rate of seafood in the world was also increasing rapidly, whereas local seafood production was lower than the international demand.

The plight of the fishermen is the contributing factor in the decline of seafood export because they do not have modern technology to use for catching fish besides increasing fuel prices in the country, Hanif observed.

He demanded at least 5 percent subsidy for the fishermen on diesel, which could relieve their problems to some extent, besides helping increase seafood production.

About 11 million dollars lesser export of the seafood was made during fiscal year 2006-07 against the fiscal year 2005-06, which stood at $196 million, they said. Adding that during fiscal year 2006-07 the fish availability was higher in quantity as compared to fiscal year 2005-06.

"Indian government provides 25 percent subsidy on processing plant machinery to investors, that boosted its seafood export manifold in the world as compared to export made by Pakistan," he added.

Any sector, which lacks availability of clean water, electricity and gas can not grow, he said and added that government should come forward seriously to resolve issues faced by this sector on a priority basis.

Chairman Seafood Industry Association said that government should also organise seminars for the awareness of fishermen about the seafood exploration according to modern day methodologies.

http://www.brecorder.com/index.php?id=590408&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*'China to invest over $800 million in Pakistan': bilateral trade to touch $15 billion ​*
KARACHI (July 11 2007): China will invest over 800 million dollars in different sectors in Pakistan during the current fiscal year. Dr Salman Shah, Advisor to the Prime Minister on Finance and Economic Affairs, said this in his keynote address at the preparatory seminar for the forthcoming Pak-China investment conference, organised by the Board of Investment (BoI) at a local hotel on Tuesday.

The Pak-China investment conference is scheduled to be held in Pakistan in August. Dr Salman Shah pointed out that Pak-China bilateral trade would reach 15 billion dollars under the five-year economic co-operation agreement. "This would be a balanced trade as the imports and exports from both the countries would be of the same worth", he added.

He said that the five-year economic co-operation agreement was a very important development as the relationship between the two brotherly countries would be more strengthened.

Regarding Pak-China free trade agreement (FTA), the advisor said that it was the first FTA signed by China with any country. He said Pakistan had a potential to become a hub for producing quality products globally, however, there was need of modern technology. "We have enough raw material, which can be value-added through modern technology", he said.

"We are the sixth biggest populated country in the world and, on the other hand, we are the sixth biggest economy of the world", he said, and added: "Over 100 million of our people are under 25 and 44 percent of our total population is under 19.

"We have a huge local consumption market as over two million mobile phones are being sold in the country per month and we are third biggest domestic consumer in the world after India and China", he observed.

He said that the country's economy was growing tremendously as the gross domestic product (GDP) growth rate would sustain over seven percent. "There are very good indicators regarding growing economy as the stock market has made new records and now it is at all time highest levels," he added. He said Pakistan had fourth largest labour force in the world after China, India and the US, which should be fully utilised to gain.

He said Pakistan had huge investment potential mainly in financial, telecom, services and manufacturing sectors. "We should initiate more export-oriented projects to minimise trade deficit", he said, and stressed the need for initiating joint ventures with the Chinese investors in the country.

He said that China was the biggest economy in the world. "We must learn from China, which achieved this status because of its consistent policies and making economic zones", he added. He asked the Pakistani business community to think about joint ventures with Chinese investors in Pakistan. "Our Chinese friends can find good trade partners in Pakistan", he said, adding: "We are fortunate to have a neighbour like China and we should take full advantage of this neighbourhood."

He said that many Chinese companies were working on different projects, including Gwadar and other heavy industry projects in Pakistan. China had planned to set up an economic zone in Pakistan. This huge economic zone would be spread over an area of 3500, he said.

Sindh Minister for Culture and Tourism, Rauf Siddiqui said that the government was committed to provide all necessary facilities to the business community so that they could continue their trade activities in peace and safety.

He pointed out that the government had planned two very important projects and Jinnah International Safari was one of them. This mega project was spread at 150 square miles in Sukkur.

He offered the investors from Pakistan as well from abroad to come and invest in this mega project, which was only 65 kilometres away from Moin-jo-Daro. He offered the investors to invest in this project on build, operate and transfer (BoT) basis, and assured them that they could recover their investment in just two years.

He also offered the Chinese investors to invest in this mega project, and said that they would be provided all facilities. Chinese Commercial Consular Wang Qihui said that China had invested 230 million dollars in Pakistan during the last fiscal year and would invest over 500 million dollars only in Sunder economic zone during the current fiscal year.

President of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Tanveer Ahmed Shaikh said that there was much potential for foreign investment mainly in energy, telecom, pharmaceutical and packaging and processing of fruits and vegetables sectors.

He invited the Chinese investors to invest in these sectors in Pakistan. BoI Director General Arif Elahi said that over 150 leading investors would attend the Pak-China investment conference, which would be held in August.

In the second session of the seminar, Dr Junaid Iqbal, Investment Advisor, Ministry of Finance, in his presentation on "Pak-China investors conference - Concepts for spurring Pak-China investment" briefed the participants about the investment opportunities in different sectors in Pakistan.

http://www.brecorder.com/index.php?id=590415&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Plan to set up eight technology centres ​*
LAHORE: Federal Minister for Industries, Production and Special Initiatives, Jahangir Khan Tareen on Tuesday said Rs485 million would be spent on eight technology centres being established all over the country to encourage the manufacturers to benefit from the latest CAD/CAM techniques.

The minister stressed the industrialists to keep themselves abreast with latest technologies in order to survive in the tough global competition.

According to a press note issued here, the minister appreciated the National Institute of Design Analysis (NIDA)s efforts and said its centres would focus on designing rather than teaching commercial software.

He said the manufacturing industry should move towards product designing, rely less on assembling foreign-designed goods and promote self-reliance.

He said the manufacturing organisations should facilitate their employees to benefit from the latest techniques taught at these centres to bridge the digital divide. He assured that the government would provide full support to the industry in order to make it globally competitive.

Out of eight NIDA centres, three at Lahore, Quetta and Sialkot are operational. The remaining five centres at Karachi, Peshawar, Multan, Faisalabad and Hyderabad will start functioning soon.

http://www.thenews.com.pk/daily_detail.asp?id=63926


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## Neo

*Tax-free Pak-China zones soon: Salman Shah ​* 
KARACHI: Advisor to the Prime Minster on Finance Dr Salman Shah, has said that the recent Free Trade Agreement (FTA) and Five-year Economic Relation Agreement (ERA) with China would enable Pakistans economy boom and attain record export targets, adding the present political situation would not harm to the economic activities in the country.

Addressing the Pak-China Investment Seminar, organized by the Board of Investment Pakistan (BOI), here Tuesday, he said that Pak-China Economic Zones would be developed in each province soon where mutual projects, particularly in manufacturing and export-oriented sectors, would be launched.

These Economic Zones would be granted full exemption from customs and excise duty on machinery imported, besides tax holiday for five years, Salman Shah said and added that it would help increasing Chinese investment in the country to a record level.

He said that a high-level trade delegation from China would shortly visit Pakistan to discuss potential projects. He urged that the Pakistani entrepreneurs must follow the suite. He added that local investors and traders must explore Chinese markets for their products, as it was also a huge consumer market.

The Advisor said that Pakistans demographic profile (over 54 per cent population under the age of 19, over 100 million under the age of 25 and being the sixth largest labour force in the world) provided ideal ground for labour-intensive manufacturing ventures and becoming the 4th largest producer after China, India and the USA.

Salman Shah said that no doubt the present economic development was based on domestic consumer market but that was an added feature of the national economy that it did not had to rely on imports only. He added that similar boom like that of telecom and housing sector was forthcoming in the manufacturing sector. GDRs of the United Bank of Pakistan in the international market are very appreciative and reflects solid and concrete economic base of national economy that would always attract large foreign investment in the country, he said. Salman Shah assured local investors that land allocation and registration issues would be addressed, which were raised by many local investors in the seminar.

Dr Junaid Ahmad, Advisor Ministry of Finance presented details of the potential projects in manufacturing, agriculture, real estate, energy, mineral and other sectors for Pak-China investment in the proposed Pak-China Economic Zones at Sindh, Balochistan, the NWFP and Punjab. He mentioned that each province would to provide around one thousand acres of land preferably near to National Highways or Motorways, while the provinces would own 20% share in such zones.

Advisor Ministry of Finance proposed that these economic zones may also include projects of US$450 million Integrated Steel Mill of 2million tonne per year capacity at the Port Qasim, US$800 million Neptha Cracker Unit at Karachi, US$5 billion oil refinery of 6 million tonnes per year production at Gawadar, Bunji Dam and hydro power project, Thar Coal Gasification, Cargo Village at Karachi Port, besides different joint ventures ranging from gem stone lapidary, earth moving machinery, automotive transmission, cement-gypsum-granite plants, cattle and poultry farming, fruit and vegetable processing units and small hand tools, etc.

Earlier, Wang Qihui, Commercial Counsellor of China expressed deep interest in investment in different sectors in Pakistan and lauded the incentives provided by the Board of Investment (BoI) to Chinese investors in this regard.

Sindh Minster for Culture and Tourism Rauf Siddiqui said that Chinese were reliable friends and their assistance in many sectors was badly needed.

Large numbers of local and Chinese businessmen and entrepreneurs attended the seminar. 

Local investors suggested that fisheries and cotton sectors should also be included in the proposed projects. They urged for proper management of industrial units already established in the country. 

http://www.thenews.com.pk/daily_detail.asp?id=63928


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## Neo

*Pakistan urged to get investment grade status: 6-8pc GDP for 10 years​*
ISLAMABAD, July 10: The international financial institutions (IFIs) have asked Pakistan to attain investment grade status by the global rating agencies to qualify for increased foreign investment.

Currently, Pakistan is three notch below the investment grade status and our policy objective for next ten year is to attain that status, said Economic Adviser to the ministry of finance Dr. Ashfaque Hasan Khan.

He told Dawn on Tuesday that the government was targeting to move to investment grade level, which will enhance the overall stature of Pakistan.

The benefit of getting that grade will reduce the cost of borrowing substantially. In other words, market will reward Pakistan handsomely if we attain investment grade status, said Dr Khan, who is also the director general of Debt Coordination Office of the ministry of finance.

Asked how to attain the investment grade status, he said Pakistan would have to maintain an average 6-8 per cent GDP growth rate in next ten years in a stable micro-economic environment.

Further more, he said, the country's debt burden will have to be reduced further to qualify for investment grade status. We have imposed on ourselves to achieve this status and if that is done the World Bank and the Asian Development Bank (ADB) will be very happy and could be more helpful in terms of extending their support in every respect, Mr. Khan added.

He said by attaining that grade, the cost of capital will reduce, economic and political risk would minimise and Pakistan's current B-Plus B-I rating will be enhanced by improving the economic fundamentals.

Responding to a question, he said India had achieved investment grade status by the international rating agencies like many other counties.

Asked why it would take ten years to achieve that status, Dr Khan said that this was the target set by the government. But we may achieve that target in 3-4 years and for that we will have to be very consistent and to continuously perform in terms of better growth rate, lower debt-to-GDP ratio and improving other economic indicators.In reply to a question, the economic adviser to the ministry of finance said that during the last eight years the country's debt burden had declined to one half. Public debt, which was one hundred per cent of the GDP in end July 1999, has come down to 53.4 per cent by end March 2007.

Likewise, external debt as percentage of foreign exchange earnings has declined from 347 per cent on end-June 1999 to 119 per cent by end March 2007.

But he said the debt in absolute terms would continue to rise because the size of GDP was also rising. Debt is not bad but the burden of debt is bad, he said adding that the government was maintaining a stable exchange environment because of getting the country's foreign exchange reserves increased to over $14.5 billion, which were sufficient to provide cover to more than six months of imports.

He said that Pakistan needed to invest in infrastructure development to achieve 6-8 per cent GDP growth rate. At the same time, he said the competitiveness of the industry was also needed to be improved by the private sector in next ten years.

The economic adviser also said that the new micro-economic policy framework was being prepared as various targets set during the last few years have over-performed. We were anticipating that investment rate would reach to 22.2 per cent of the GDP by 2010-11 but we have surpassed this level in 2006-07, he said.

Similarly, the government was expecting 4.5 per cent agriculture growth, which reached to 5 per cent in 2006-07. But we have under-performed in large scale manufacturing. However, we are right on the target as far as real GDP growth is concerned, he said.

Then in terms of revenue collection we have over-performed and

accordingly we have to revise upward revenue projections for the next ten years, he said adding that the Federal Board of Revenue (FBR) was expected to collect Rs980 billion in 2007-08 but it had set an ambitious target of Rs1.025 trillion for the next financial year. It managed more than Rs42 billion against its original target last year.

The new micro-economic framework will be consistent of our growth projection and future policy thrust, which we have set for ourselves, Dr Khan said.

Asked about the criticism being made by the government's opponents that poverty and unemployment had increased, he said that during the first half of the last fiscal employment rate had come dome from 6.2 per cent in 2005-06 to 5.3 per cent in the corresponding period of 2006-07.

He said that during the first half of the last fiscal 730,000 additional jobs were created. As a result of sustained economic recovery, unemployment has gone down substantially, he claimed.

As far poverty is concerned, it has declined by 10 percentage point and this is being recognised by the international donor agencies and other institutions.

The year 2006-07, he said, has been very good in terms of growth, balance of payment, foreign exchange reserves, debt-to-GDP ratio, job creation and investment. The last four years, he said, have brought Pakistan in the limelight in the international world.

http://www.dawn.com/2007/07/11/ebr1.htm


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## Neo

*Boosting exports to US under GSP scheme​*
ISLAMABAD, July 10: Pakistan is eying to increase export of those commodities which enjoy duty concessions to United States under the generalised system of preference (GSP).

An official in the commerce ministry told Dawn that in the recent review of the GSP scheme products of many developing countries particularly of India and Brazil had been graduated out of this scheme, which would give more leverage to Pakistani products in grabbing market access.

The United States has terminated some trade benefits for India, Brazil and other developing countries under the GSP programme that provided duty-free access for $32.6 billion worth of goods from developing countries in 2006.

Pakistan exported $4.391 million worth goods to United Stated in 2006 under the GSP scheme. Of these included dates, fresh or dried, whole, without pits, hides and skins of goat and tanned buffalo leather etc.

In December 2006, the US Congress had approved a bill that provided new guidelines for determining whether a particular product was eligible for duty-free treatment under the GSP programme. It was aimed at eliminating GSP eligibility for products where developing countries had shown they could compete without assistance.

According to the official, the commerce ministry had not conducted any research so far about the implication of the graduation of the commodities of these countries on Pakistani exports. However, he said that certainly Pakistani products of these categories would get preferential access to the US market as compared to other countries.

http://www.dawn.com/2007/07/11/ebr16.htm


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## Neo

*CPI increases to 7.77 percent in last fiscal year ​*
ISLAMABAD (July 12 2007): The Consumer Price Index (CPI) has increased to 7.77 percent for the fiscal year ending 2006-07 over the same period of last year, showing the food inflation jump to 9.68 percent. The CPI based food inflation increased to 9.68 percent in June 2007 over the same period of last years, Federal Bureau of Statistics (FBS) said on Wednesday.

The inflation, based on consumer price index (CPI), Sensitive Price Index (SPI) and Whole Sale Price Index (WPI) increased by 7.77 percent, 10.82 percent and 6.94 percent respectively, in fiscal 2006-07 over the same period of 2005-06, Federal Bureau of Statistics (FBS) said on Wednesday.

Further analyses of the data showed that both the CPI and WPI have recorded 9.68 percent and 11.16 percent food inflation in June 2007 over the same period last year.

However, overall inflation rates based on CPI, SPI and WPI increased by 0.20 percent, 1.48 percent and 1.10 percent in June 2007 over May 2007. The CPI was increased 7 percent in June 2007 over the same period last year and 0.20 percent over May 2007. It showed that the prices of food and beverages increased by 9.68 percent in June 2007 over the same period of last year, apparel, textile and footwear by 7.25 percent, house rent 6.73 percent, fuel and lighting 6.07 percent, household furniture and equipment 5.80 percent, medicare 9.85 percent and education 6.41 percent.

Among the food items, prices of potatoes, eggs, rice, milk powder, vegetable ghee, spices, mustard oil, beverages, milk fresh, milk products, pulses masoor, cooking oil, wheat flour, wheat, pulses moong and ready made food have gone up, revealed CPI indicator.

The WPI data showed that food inflation was 11.16 per cent higher in 2006-07 over the same period last year. The prices of raw material have gone up by 11.68 percent during the last 12 months and building materials 6.66 per cent. The monthly review of price indices by the Bureau showed that there has been a steady increase in the prices of food items an increase in the prices of food items including potatoes, eggs, rice, milk cotton seeds.

The monthly review of price by the FBS showed that there has been a steady increase in the prices of kitchen items in June 2007 over May 2007 with 26.88 percent increase in potatoes, 22.76 percent eggs, 8.76 percent rice, 3.95 percent in milk fresh, mustard and rape seed oil 2.86 percent, and cooking oil 2.02 percent.

The CPI index carries 40.34 per cent weights of food and beverages items, 6.10 percent by apparel, textile and footwear, 23.43 percent house rent, 7.29 percent fuel lightening, 3.29 percent household furniture and equipment, 7.32 percent transport and communication, 0.83 percent recreation and entertainment, 3.45 percent education, 5.88 percent dry cleaning, laundry and 2.07 percent medicare.

http://www.brecorder.com/index.php?id=590706&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Government focusing on modernising industries sector: minister ​*
SIALKOT (July 12 2007): Federal Industries Minister Jahangir Khan Tareen has said that the government has focused its attention on modernising the industries sector to further accelerating its productivity.

Addressing the members of Sports Goods Manufacturers and Exporters Association (PSGMEA) here on Tuesday at Sialkot Chamber of Commerce and Industry (SCCI) he said that the government was committed to bring about radical changes in the industrial sector through provision of certain technologies and know-how in the country.

He said that the government would provide full support for achieving the targets and was ready to provide every assistance for enabling this sector to become internationally competitive and meeting the future challenges that it confronts.

Tareen said he was confident that the business community engaged in sports goods sector would concentrate on enhancing exports to US to one billion dollars in the next three years.

He said that Sialkot is indeed the most important player in the international market of sports goods for the past over 50 years, and has time and again proved as the ultimate and reliable source for all major international sporting goods brands, and its most impressing aspect is that big brand can clearly infer that it must be immaculate product quality and craftsmanship, which forces them to buy from Sialkot.

The Industries Minister said that the sports goods sector is the main export sector of the city with exports of more than $350 million per annum with the product range which includes hand-stitched footballs, rugby balls, basketballs, volleyballs, cricket and hockey balls, baseball balls, hockey, crickets bats, baseball bats, sports gloves, boxing equipment, protective gear, sports wear, etc.

He lauded the services of Sialkot for catering around 70 percent of total world demand which means more than 40 million hand-stitched inflatable balls, of annual worth of $210 million.

He said that the regular functioning of Product Development Centre would help the business community engaged in sports goods for producing the products with composite material more easily that would surely help increasing the exports of sports goods.

Earlier, Chairman of Pakistan Sports Goods Manufacturers and Exporters Association Safdar Sandal presented the address of welcome and highlighted various issues. Chairman, Task Force on Trade and Industry, Muhammad Riaz, Federal Secretary Industries Shahab Khawaja, Chief Executive Smeda Shahid Rashid, and Provincial Chief Smeda Alamgir were also present on the occasion.

http://www.brecorder.com/index.php?id=590850&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Gas-based power plant starts producing 150 megawatts ​*
LAHORE (July 12 2007): In a bid to meet 3000MW power shortfall currently the country was facing, the Water and Power Development Authority (Wapda) in collaboration with General Electric Company of United State of America (GEUSA) has started producing power on 150MW rental power project at Sheikhupura.

The production of 150MW power would help Wapda in reducing power deficit, Wapda was facing at present, said Muhammad Masood Akhtar, Chief Engineer of Wapda Power Privatisation Organisation (WPPO) while talking to a group of journalists, who visited the 150MW Rental Power Project situated at Sheikhupura on Wednesday.

Masood maintained that Wapda and GE Energy Rentals signed a contract for rental services of seven Mobile Tailer Mounted TM 2500 Gas Turbine Generator Sets on September 23, 2006 and Letter of Credit was issued on November 30, 2006. The first four units started its operation on January 28, 2007 while remaining three became functional on February 12, 2007, he added.

He further said that these mobile TM 2500 Gas Turbine Generator Sets were set up purely on experimental basis and after getting fruitful results, Wapda had decided to expand its network and expansion project was started near this site. The reason to select this site for the extension project was that the land was owned by the Wapda and 500 MW Grid Station had already been established at the same place, he pointed out.

The Country Manager of the GE Company, Naeem Shafiq, told this scribe that installation of this project was completed in a record period of three months and commercial operation of entire complex was started on February 22, 2007. Since then, the plant was operating successfully and generating power. He said that Sui Northern Gas Pipeline Limited (SNGPL) made special arrangements for the supply of gas to the GE Company for the accomplishment of this project.

'SNGPL was supplying 40 mmcf gas daily without any interval and these 7 Gas Turbines were producing 3.2 billion power units per day', he said. This plant was providing power to Lahore based grid stations to fulfil the growing electricity requirements of the residents of the provincial metropolis. To a question, he said that electricity being generated from this plant could also be transferred to any part of the country but Lahore being the nearest point was getting the same conveniently.

To a question, Naeem said that GEUSA was selling power to the Wapda @ Rs 4.50 per unit. Highlighting the importance of the project, Masood Akthar said it was first time in the country's history that power was being produced through gas and it was very 'successful experience'. Under the agreement, GEUSA had installed the plant and was bound to carry out its operation and maintenance for the period of three years.

http://www.brecorder.com/index.php?id=590767&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Capital market attracts foreign investment ​* 
ISLAMABAD: The Minister for Privatization and Investment, Zahid Hamid has said Pakistans capital market has become very attractive for foreign investment and fund managers based at London and New York were showing interest in Pakistani markets.

He said the link that was established through listing of some Pakistani companies at LSE will also strengthen through this initiative.

The Minister stated this while inaugurating Pakistan capital market day on July 10, 2007 in New York, co-hosted by Central Depositary Company, Citibank, AKD Securities and Invest cap Securities.

The Minister gave a broad based and multidimensional insight into Pakistans economic and social reforms, privatisation programme, investment policy, capital market reforms and current macroeconomic overview.

He said that in wide ranging tax reforms, for instance, there have been significant reductions in tariffs and universal self assessment tax schemes have been introduced, as a result tax revenues have doubled over the last 7 years and revenue deficit has been eliminated.

Towards financial sector reforms, State Bank of Pakistan has been strengthening as a result of achieving high sectoral growth rates exceeding 25 per cent per annum.

In capital market reforms, the minister explained that sound regulatory policies aimed at developing a modern and efficient corporate sector and a vibrant capital market with increased capitalisation has yielded hugely positive results.

http://www.thenews.com.pk/daily_detail.asp?id=64092


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## Bull

A CPI of 7.7% shows that the economy is contracting in real terms, if i believe GDP is at around 6%.


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## Neo

Bull said:


> A CPI of 7.7% shows that the economy is contracting in real terms, if i believe GDP is at around 6%.



No GDP grew at 7.00 and will prolly be increased to 7.2-7.5% once all data is processed. All due good amount of rainfall and 4.5% growth in major crops and 8.8% growth in LSM.

The report also confirms that your previous claim about inflation being 9.9% is false. I wanted to reply by can't find the post.


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## Neo

*Paktel expands network ​*
KARACHI: Paktel, a China Mobile company, has started a $500 million network expansion with the launch of its first installation site in Wazirabad, said a statement on Wednesday.

This is the first step as part of the companys aggressive expansion plan for which Paktel has signed a $500 million contract with its strategic partners, it said.

The expansion is part of the companys ambitious plans to have the largest network coverage in the country and this is the first milestone of our extensive rollout plan, the statement quoted Babar Bajwa, Commercial Director, Paktel as saying.

He said the addition of the city had given a chance to welcome more customers into the Paktel GSM family. A key focus area for Paktel was the fastest possible network expansion, so that coverage reached every nook and corner of the country and more and more people would stay connected, he added.

Paktel has received an overwhelming response from the customers after its acquisition by China Mobile. The company plans to increase coverage in several thousand cities, locations and roads with the capacity of 20 million subscribers which will be enhanced with the passage of time, the statement added.

http://www.thenews.com.pk/daily_detail.asp?id=64108


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## Neo

*Investment to tap mineral resources sought​*
ISLAMABAD, July 11: Prime Minister Shaukat Aziz has said the proposed project of $700 million by the Tethyan Copper Company (TCC) in Balochistan reflects the confidence of foreign investors to invest in Pakistan.

He was talking to a delegation of Tethyan Copper Company (TCC) led by Gregory Wilkins and Eduardo Flores. The TCC is a joint venture of the Canadian and Chilean mining companies.

Pakistan is endowed with mineral resources and is emerging as a very promising area for exploration of mineral deposits. These natural resources, the prime minister said, need to be tapped by both foreign and local investors by using latest techniques and state-of-the-art technology in this attractive field.

Mr Aziz said Gwadar deep-sea Port would help a great deal to export mining products from Balochistan. He said that the logistic chain through rail and road network was being improved throughout the country to reduce cost of doing business and facilitate investors.

He said currently about 52 mineral exploration projects were underway in Balochistan for exploration of copper, lead, Zinc, oil and gas. He said the increase in the mining activity would contribute substantially to the economic growth and exports in addition to creating job opportunities for the people.

Mr Gregory Wilkins appreciated the economic policies of the government and said that there was a huge potential in Pakistan for foreign investment in different fields. He said as a result of investment friendly policies, Pakistan had become a destination of choice for investors.

http://www.dawn.com/2007/07/12/ebr18.htm


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## Neo

*Wind power plant​*
KARACHI, July 11: Siemens Pakistan Engineering Company and New Park Energy Limited (NPEL) have signed a contract for the supply of electrical part on turnkey basis for NPEL 50MW wind power project near Gharo.

A three-year cooperation agreement was also signed for a number of 50MW wind power projects to be set up in the Gharo-Keti Bandar Corridor using locally assembled/manufactured turbines by New Park Engineering Limited, a sister company of NPEL.

New Park Engineering is setting up a wind turbine assembly/manufacturing plant in Nooriabad for which agreements with European wind turbines manufacturers have been signed.

Most of the wind power plants under the cooperation agreement are expected to be commissioned by 2008-2009, says a press release.

http://www.dawn.com/2007/07/12/ebr21.htm


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## Neo

*Expanding trade with China​*
THE Pakistan-China free trade area agreement has come into force from July 1. The first of its kind for Pakistan to have with a major developing country, it is very comprehensive and seeks to promote bilateral trade with many thousands of goods being on concessional tariff and eventually no tariff.

Initially it provides for increasing trade from under five billion dollars to 15 billion dollars by 2011. How far we can benefit from this trade agreement depends on how shrewd and effective is our government and how adventurous and far-sighted are our exporters. The FTA only opens the gate wide. It is for the participants to make the best of that.

The FTA with China has been negotiated in record time. Once the top leadership of China decided to agree to Pakistans proposal for an FTA everything went smooth and climaxed in its signing. There is already in the region a large FTA in the shape of South Asian Free Trade Area (Safta) which is already a year old, but it has made little headway due to political roadblocks. The Saarc summit has tried to remove the political stumbling blocks but not effectively. So the Safta remains an infant with a great promise if India and Pakistan can close their ranks.

But in the case of Pak-China FTA, there are no political or economic hitches. The leaders of both the countries are keen on promoting much larger trade between the neighbours. Pakistan has been trying to negotiate another FTA with a major power  the United States  but it has made little headway as the initial bilateral investment treaty has not been negotiated. There is a good deal of foot dragging and decisive leadership is needed to clear the decks, although America has little to fear from Pakistans exports.

Meanwhile, the US has at last signed an FTA agreement with South Korea which is the biggest trade agreement signed by it after the Nafta treaty over 15 years ago. The Americans are looking forward to gain by that agreement.

The treaty was opposed strongly by the South Korean labour that feared they may lose jobs following the flood of American goods into the country at concessional rates or on no tariff. But the government stood firm and argued the country would gain from the FTA and prevailed.

Pakistan has issued a notification announcing the first phase of cuts in duty ion import of goods under 4700 tariff lines. China has already lowered import taxes by 11 per cent on 3975 categories of goods from Pakistan to an average tax rate of 8 per cent from July 1. The notification issued by Pakistan has two tables. Table 1 includes fresh items of around 4700 tariff lines for duty reduction from China and table 2 includes 1190 tariff lines which were already availing preferential customs duty under an early harvest programme till January 1, 2008. From that date, these items will be merged into the ambit of the FTA. The service chapter of the agreement is still under negotiation which will end by the end of the year. And that will make this FTA Pakistans first ever comprehensive treaty with any country.

Under the treaty, both sides will reduce customs duty to zero per cent on 5014 products in 3 years, and zero to five per cent on 3942 items within a period of five years after the implementation of the agreement.

Under the agreement Pakistan will further reduce custom duty to zero per cent on 2423 tariff lines and China on 2681 tariff lines in the first three years of the agreement.

Another tariff reduction in the range of zero to five per cent will be completed in five years which would allow reduction on 1338 items by Pakistan and 2604 items by China.

Both the sides agreed that the reduction on margin of preference at 50 per cent would be completed in five years. Pakistan will reduce duty on 157 items and China on 604 items. Pakistan will have to compete in China not only with Chinese goods but also the goods of other countries coming into it through FTA deals. China is to sign an FTA agreement with Australia when President Hu visits that country before the end of the year. China is negotiating such trade deals with many countries.

Meanwhile, the killing of three Chinese nationals near Peshawar this week and the storming of Chinese beauty parlours in Islamabad are bound to anger the people in China. But they know that the Pakistan government and the people as a whole are with China, their traditional friend. It is strange to punish the Chinese if you do not like the Pakistani government.

Meanwhile, following the setback to the Doha round of trade talks, the US is sounding out members of the Asia Pacific Economic Cooperation Organization for FTA agreements. But the power of President Bush for negotiating fast track trade deals has expired. The FTA treaty with South Korea was signed immediately before the fast track authority expired.

Russia has been showing keen interest in not only expanding economic trade and economic cooperation with Pakistan, but also in signing an FTA agreement. When the Russian Consul-General in Karachi visited the federation of chambers of Commerce last week, he stressed the need for an FTA agreement between the two countries. He said since there is an FTA agreement between Russia and India, latters goods are cheap in Russia. While Pakistani goods are expensive, he suggested cooperation between the two countries in the area of oil exploration, gas and steel. He was also interested in bringing gas from Central Asia to Pakistan and India. The Russian interest in Pakistan is also genuine.

Russia is a re-emerging power without the Soviet weightage and it is playing a major role in the oil and gas industry of the world. There is every reason we should have the best of relations with Russia in the manner India has such relations with the US. Signing an FTA agreement is usually a measure taken by countries with surplus production or with surplus reserve capacity. But Pakistan has taken this step and has been approaching almost every country in the world for free trade area deals in the hope of expanding its exports.

But the FTA is a double edged weapon, unless we are prudent and persistent, we may import more than what we export. There is urgency in the country today to increase production, industrial as well as agricultural. The products we produce and exports should be priced competitively and be of better quality. They should be based more on local raw materials and produce value added goods. We should become known as a quality market with splendid products.

That was what Japan did. Following the oil shock of 1973, it decided to export more of its skills and brain power than import millions of tones of cotton in a country with limited land to store it, and produce textiles and compete with all the countries in the world producing textiles. So it moved quickly towards transistors and then to computers while specialising in the automobile industry in a big way. We in Pakistan are exporting the cotton produced in the Punjab and Sindh instead of producing finer varieties of cloth by using our skills. We are to export more of our skills and brain power than the conventional items produced by sweating it out.

Now we are to import three million bales of cotton again from India to meet the demands of the spinning mills which hardly produce any value added items. When we import raw materials from outside, we should be able to put them to good use particularly when oil and gas are imported.

Signing FTA is one part of an economic deal, the other should be to produce enough to feed the FTA partners and benefit by that. Unless the second half of the bargain is effective, signing FTAs will bring small relief.

http://www.dawn.com/2007/07/12/ed.htm#4


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## Neo

*Pak-China trade mission to review bilateral trade imbalance​*
By Sajid Chaudhry

ISLAMABAD: Pakistani and Chinese trade officials will discuss measures to arrest the growing trade imbalance between the two countries at the first round of trade negotiations that are going to be held at Islamabad from July18-20 2007.

A high level Chinese trade mission lead by Vice-Minister for Commerce, Mr Gao Hucheng will be visiting Pakistan to take part in the negotiations, a senior trade official told Daily Times on Wednesday. 

Pakistans exports to China during July-March period of last fiscal year 2006-07 stood at around $411.9 million as compared to Chinese exports to Pakistan in the same period jumped to around $2.478 billion projecting a trade deficit of over $2 billion. 

Pakistan and China have entered into implementation phase of the Pak-China Free Trade Agreement (FTA) with effect from July 1, 2007. However, trade liberalisation between the two neighboring countries under an Early Harvest Program (EHP), operational since January 1, 2006 that has mostly benefited China and while Pakistans exports to China have registered only a marginal growth, the official added. 

Under the Five Year Economic Cooperation Framework, China and Pakistan have agreed to increase the volume of bilateral trade to $15 billion based on equal exports by the fifth year of the five-year program from 2007-2011. 

The official said that the Chinese trade mission would include 10 high level officials from various Ministries and 35 members of various large business groups of China like Sino Chem Corporation, China Tax Group, Sino Steel Corporation, China Meheco Corporation, China Minmetrals Corporation etc.

Prime Minister Shaukat Aziz had visited China in April 2007 and both the countries had agreed to take special initiatives to enhance Pakistans exports to China in order to improve the trade balance that currently is heavily tilted in favour of China. 

The visit of the trade mission is aimed at enhancing interaction between the Pakistani exporters and Chinese importers. 

During the visit, the mission would be attending a mini exhibition of Pakistani export products to place on-the-spot orders for exports to China. The Trade Development Authority of Pakistan has invited applications from potential exporters to enable them to display their products during the aforesaid visit so that the Chinese Trade Mission may be facilitated to increase exports to China. The Trade Mission would also be calling on the Prime Minister, Shaukat Aziz and the Commerce Minister, Humayun Akhtar Khan, apart from the meetings with a number of officials of the various Ministries. It is hoped that the visit of the trade mission would help Pakistani exporters.

http://www.dailytimes.com.pk/default.asp?page=2007\07\12\story_12-7-2007_pg5_2


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## Introvert

*Pakistan to help Tunisia in textile
*

ISLAMABAD, July 12: Minister for Textile Industry Mushtaq Ali Cheema said on Thursday Pakistan would extend technical support to Tunisia in developing its textile industry.

He stated this in a meeting with Ambassador of Republic of Tunisia Zouhaier Dhaouadi to Pakistan. Tunisia seeks Pakistan&#8217;s cooperation in development of its textile industry.

He said Tunisia was also interested in importing textile products from Pakistan due to their better quality and competitive prices. A high- level trade delegation of Tunisia will visit Pakistan in the month of September for negotiations with the textile exporters.

Mr Cheema said Tunisia would also review the possibility of joint-ventures with Pakistani businessmen as Pakistan had good technical know-how and expertise in various fields, especially in the textile sector.

He informed the ambassador that Pakistan has formulated its textile policy, which will be announced by the end of this month. The draft of the policy is being submitted to the prime minister for approval before announcement, he added.

Ambassador Zouhaier Dhaouadi said that the Tunisian business community was keen in joint venture with Pakistani businessmen in various fields including the textile industry.

Meanwhile, Minister for Industries, Production and Special Initiatives Jahangir Khan Tareen in a meeting held to discuss cooperation between the two ministries said that the government was making efforts to upgrade and modernise textile sector so as to make it more competitive and efficient.

The secretary Textile gave a detailed presentation on Pakistan's textile sector and highlighted the areas where synergies could be developed between two ministries.

He informed the participants that the textile sector wanted collaboration with industries in some areas.
http://www.dawn.com/2007/07/13/ebr6.htm


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## Neo

*Punjab to offer incentives to South Korean investors ​*
LAHORE (July 13 2007): Punjab Chief Minister, Chaudhry Pervaiz Elahi has said that in addition to Lahore, Multan and Faisalabad, provincial government has establishing three industrial estates on Sialkot-Lahore Motorway where special incentives will be offered to South Korean investors.

He said that bilateral cooperation between South Korea and Pakistan in textile, transport, infrastructure, industrial and other sectors was rapidly growing and there were vast opportunities for Korean investors in agriculture, industrial, manpower and other sectors in Punjab. He averred that local and foreign investment had substantially increased due to investment-friendly atmosphere in the province.

He was talking to Pakistan's Ambassador-designate to South Korea Murad Ali during a meeting at Chief Minister's Secretariat, here on Thursday. Principal Secretary to Chief Minister, GM Sikandar was also present on the occasion.

Chaudhry Pervaiz Elahi said that exchange of delegations of industrialists and traders between South Korea and Pakistan would further promote economic relations between the two countries. He said that Pakistan had deep-rooted friendly relations with South Korea.

He said that President, Pakistan Muslim League, Chaudhry Shujaat Hussain was Honorary Consular of South Korea and had also been given the highest award by Korean government for his outstanding services.

He said that separate industrial parks were being set up for Chinese entrepreneurs who would make investment of more than 25 million dollars in M-3 Faisalabad Industrial City, comprising 4000 acre of land. Similarly, he said separate zones would also be established in industrial estates on Sialkot-Lahore Motorway for Korean investors.

He said three universities of engineering and science & technology were also being set up besides these industrial estates with the cooperation of Sweden and Germany.

Moreover, he said, housing colonies would also be established in these industrial zones. He said that there were vast opportunities for Korean investors in textile and other sectors in Punjab.

The chief minister appreciated the services of Korean company Daewoo in transport sector and said China, Bangladesh, Korea and other countries were taking keen interest in investment in industrial estates in Punjab.

He said that besides provision of gas, electricity, state-of-the-art infrastructure and other facilities, foolproof security arrangements were also being made in these industrial estates.

He said that Dutch company MACRO and German company METRO were setting up large stores in the province and making investment of more than 700 million dollars. He said that MACRO had its stores in South Korea, which would help in the export of agri-produce and fruits to South Korea. He said that it would not only help in extending guidance to the farmers regarding cultivation of various crops but also in the export of agri-produce.

He said that there were a large number of opportunities for South Korea and other countries for cooperation in agri sector and economic relations were fast growing between the two countries.

He said the government was taking a number of steps for promotion of CNG technology in Punjab, which would leave a positive impact on environment. The chief minister said he had visited South Korea in 1985-86 when he was provincial minister for local government as a member of representative delegation of the four provinces and stayed in the country for a month. He said during his visit he participated in the programmes of rural academy, which provided him opportunity to observe local government system of Korea.

He stressed upon Pakistan's Ambassador-designate to motivate Korean investors to make maximum investment in different sectors in Punjab. All out cooperation and facilities would be extended in this regard, he added.

http://www.brecorder.com/index.php?id=591189&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Government's top priority to boost small industries: minister ​*
KARACHI (July 13 2007): Sindh Minister for Labour, Transport, Industries and Commerce Adil Siddiqui has said that present government had initiated various projects to promote industrial and business activities to provide job opportunities to jobless youths.

The infrastructure of Karachi is also being modernised so as to attract huge foreign investment, the minister said while talking to different delegations who called on him at his office here on Thursday.

He said due to untiring efforts and friendly policies of the present government, the foreign investors had showed keen interest to investment in country. He opined that the main reason of this was good law and order in the metropolis, which had highlighted positive image of the city.

Keeping in view the future needs of the city, Adil Siddiqui said, a master plan was being prepared, adding, thousands of people of Bin Qasim and Baldia towns would be provided jobs after completion of the Textile City and Garments City projects.

Provincial minister said the government in order to improve public transport system, was also paying due attention towards transport infrastructure adding after completion of Lyari Expressway, Northern Bypass and others roads, the entrance of heavy traffic in city would be closed.

http://www.brecorder.com/index.php?id=591221&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Karakoram Highway expansion to raise trade volume manifold ​*
BEIJING (July 13 2007): China's Xinjiang Autonomous region economic activities are growing steadily with its bordering states and Kashghar, as a hub of economic trade contributing significantly.

Pakistan is the third largest trading partner of Xinjiang and both the sides see that on completion of Karakoram Highway (KKH) expansion project the volume of trade through land route would increase manifold.

"The location of Kashghar is just like a bridge, as it connect Pakistan with western regions of China, Central Asian Republics to West Asia, South Asia and Middle East, while Xinjiang lies at the heart of the Silk Road", said a senior official of Pakistan Mission here, who addressed the "China-Pakistan Land Route Trade Convenience Development Forum" at the just concluded Third Kashghar Central and South Asian Commodity Fair.

Although, Pakistan is the third largest bilateral trade partner of Xinjiang, after Kazakhstan and Kyrgystan our contribution is just 4.2 percent of their total bilateral trade, he said in an interview with the APP.

There are many complementarities between Xinjinag and Pakistan we have around 450 million dollars trade, but the prospects to enhance its volume are very bright. "If sustained efforts were made, there is lot of potential to tap this important regional market by introducing our products in large scale," he noted.

To further enhance the trade, he said it had also been decided during a meeting with the Secretary of CPC and Commissioner Kashghar to hold exhibitions in each other countries and also traders belonging to Pakistan and China exchange maximum visits.

In this connection, he said China would hold an exhibition of its commodities in Lahore in the second half of current year and Pakistan would reciprocate by holding an exhibition of its products in Kashghar.

He pointed out that to enhance trade through land with China, a project to expand Karakoram Highway was underway and would be completed by 2010, and said that both sides were desirous to utilise this land route to the maximum.

He said Pakistan had also proposed lying of railway line between Xinjiang and Pakistan and Chinese also supported the idea and were of the view to work on this project as well.

Pakistan, he said had already taken initiatives in this regard as it was working on a pre-feasibility study for lying track so that in future the railway link was also available between Pakistan and China running along KKH. Pakistan, he said was in process of developing a North South Strategic Economic Corridor, which could be extended from Kashghar to Uremqi for goods transport operation.

He said there was a desire from both sides for opening of goods transportation from Kashghar to Pakistani ports at Karachi and Gwadar and a decision in this regard would benefit both the Chinese Businessmen/Transport Operators and their Pakistani counterparts for exporting their goods to each other's markets through this route.

Pakistan also proposed setting up Joint Freight Forwarders Council to promote and encourage trade among member states through effective utilisation of KKH. He pointed out that keeping our trade statistics with China from Xinjiang in perspective, it was important that we pay maximum focus and take advantage of the land route trade.

In this connection, he pointed out that Pakistan had constructed dry-port facilities at Sust, while China provided similar facilitation at Tashkurgan.

He also stressed the need for improving banking and transport facilities on both sides and utilising the existing port facilities in a more efficient manner. Regarding introduction of Kashghar-Islamabad route, he said there was a need for commencing transport operation as soon as possible remaining within the Bilateral Agreement.

http://www.brecorder.com/index.php?id=591158&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*China to help Pakistan tackle trade deficit ​*
ISLAMABAD: Amid security fears in the wake of the Lal Masjid operation, and more attacks on Chinese citizens, Pakistans most trusted friend China is sending a high-level trade delegation, headed by Gao Hucheng, Vice Minister of Commerce, on July 18 to help Islamabad tackle its huge trade deficit with Beijing.

Both countries are in agreement to ensure a balanced trade worth US$15 billion in the next five years and independent economic experts view the upcoming Chinese trade mission as very significant.

The delegation would include 10 high-ranking officials from various ministries and 35 members of various large business groups like Sinochem Corporation, China Tax Group, Sino Steel Corporation, China Meheco Corporation, China Minerals Corporation, etc.

An official said that Pakistans trade gap with China increased to US$2.045 billion during July-March 2006-07, prompting the authorities to come up with an effective plan to reduce the deficit by substantially increasing exports.

Both Islamabad and Beijing are in trade agreement under the Early Harvest Programme, but China has managed to achieve amazing success in increasing its exports up to $2.452 billion to Pakistan.

However, Pakistan managed to increase its exports to China to around $407.8 million, which still shows a huge trade deficit of about $2.045 billion.

The trade deficit with China has increased by 24 per cent if compared with the trade gap Pakistan suffered during the same period of last financial year 2005-06.

However, the trade volume between the two countries during the period under review has increased to $2.859 billion, up by 22 per cent when compared with $2.325 billion trade registered during the same period of the previous fiscal.

Imports from China in the first nine months of 2006-07 increased by 23.5 per cent to $2.452 billion from $1.986 billion in the same period of 2005-06.

It may be recalled that during the visit of Prime Minister Shaukat Aziz to China in April 2007, both countries agreed to take special initiatives to enhance Pakistans exports to China in order to improve the trade balance which is heavily tilted in favour of China.

The visiting trade mission aims to enhance interaction between Pakistani exporters and Chinese importers. During the visit, the trade mission would be attending a mini- exhibition of Pakistani exports to place on-the-spot orders for exports to China.

The Trade Development Authority of Pakistan (TDAP) has invited applications from potential exporters to enable them to display their products during the aforesaid visit so that the Chinese trade mission could be facilitated to increase imports.

The trade mission would also call on Prime Minister Aziz and Commerce Minister Humayun Akhtar Khan, apart from meetings with a number of officials of various ministries.

It is hoped that the visiting trade mission would help Pakistani exporters to promote their products to the larger consumer market in China.

http://www.thenews.com.pk/daily_detail.asp?id=64160


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## Neo

*ADB releases $123m for agri programme ​*
ISLAMABAD: The Asian Development Bank has released the third tranche of $123 million for ASPL-II as the Ministry of Food only partially met its conditions, but assured the lender it would fulfill the terms in the next phase of the project (ASPL-III).

The Ministry of Food, Agriculture and Livestock (MINFAL) received the loan installment from the ADB on June 28 and told the bank it would start the next phase of the programme to meet the conditions, a senior government official told The News on Thursday.

The ASPL-II (Agriculture Sector Programme Loan II) was approved in December 2001 with a total assistance package of $350 million to address key constraints in the agriculture sector regarding productivity and profitability with an emphasis on small farmers.

Earlier, the bank conveyed to the MINFAL that it would not release the third tranche as the ministry along with provincial executing agencies had failed to improve the efficiency of commodity markets and strengthen support services. In reply, the government assured the bank in writing that it would either partially or completely fufill the requirements in the third phase of the programme, which would be launched later.

The bank had already released first two installments of $124 million and $100 million.

Conditions for the release of the third tranche included removal of market restrictions, phasing out commodity price supports and subsidies, restructuring of state-owned enterprises, provision of agricultural support services and strengthening and cooperation in agricultural support services.

The government has failed to eliminate producer and consumer subsidies, close the provincial food departments and eliminate budgetary support and preferential credit for Pakistan Agricultural Storage and Services Corporation.

Under ASPL-II programme, the government has to increase involvement of the private sector in wheat market, increase competition in the private sector in cotton and rice marketing and exports to overcome market imperfections, increase competition in sugar production and marketing with imports, increase competition in the private sector for fertiliser imports, remove the public sectors monopoly in access to breeder seeds and increase participation of private sector, increase autonomy and financial self-reliance of research institutions and increase focus on small farmers for extension services.

http://www.thenews.com.pk/daily_detail.asp?id=64166


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## Neo

*Trade gap jumps to $14bn in 2006-07​*  

KARACHI, July 12: Official international trade statistics for the month of June 2007 and for entire fiscal 2006-07 have been delayed because of the location of Pakistan Revenue Automated Limited (PRAL) in the vicinity of Lal Masjid and curfew area.

Normally, the Federal Bureau of Statistics obtains data from PRAL and release trade aggregate trade figures by 10th of every month. Detailed information on category-wise and item specific import and export figures are then released by second or third week of the next month.

The FBS officials in Karachi and Islamabad indicate the possibility of release of trade figures by Friday or Saturday. These figures are keenly awaited because a year long picture of import and export trade will be available.

The expectations are that the trade imbalance in 2006-07 is about $14 billion with imports at over $30 billion and exports about $17 billion.

The month of June was dominated by many events that apparently hampered production and was feared to have caused a slowdown in export.

Rains lashed Karachi and parts of Balochistan, which devastated vast areas. Many parts of Balochistan are still inundated with flash floods. Sindh and NWFP also came under heavy rains and severe damages.

Along with these natural disasters came the man-made events, the Chief Justice reference and the abduction of Chinese by the Lal Masjid incumbents. All these factors have affected economic performance. In the overall exports, textiles have apparently done better than non- textiles as its growth is expected around 6 per cent against 3 per cent of non textile. In imports, oil, food, mobile phones and autos dominate. More than $2 billion worth of imports are of unspecified items.

Export movement in the current month July also appears to be slow because of the fallout of Lal Masjid episode that gripped the whole country for more than a week. Even now when the episode has come to an end, the after shocks are expected as religious parties plan mass mobilisation.

The protest of the clergy, the continuation of Chief Justice Case and the recent launching of a broad-based political alliance in London are casting their shadows on the countrys economy. It is affecting the working of the federal and provincial governments offices and also the business.

Market reports suggest that people are holding back money and are avoiding big transactions wherever possible. The sowing of kharif crop is complete and plantation of three main crops is in advance stage.

All eyes are now towards skies as too much or little rains can damage the crop, a textile leader said.

http://www.dawn.com/2007/07/13/ebr1.htm


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## Introvert

*Bangladesh place import orders for 5000 cotton bales *

Talking to Geo News, the cotton market sources said that in the wake of the recent rise in cotton demand in Bangladesh, the Bengali importers contacted Pakistan during the current month for the import of cotton bales.

According to the exporters, the average standard cotton from new crop will be sent to Bangladesh in August and September. 
http://www.geo.tv/geonews/details.asp?id=8821&param=3


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## Introvert

*Task force to increase horticulture exports in offing *
ISLAMABAD: Federal government decided to set up a task force to increase the horticultural exports to one billion dollar by 2012.

According to Horticulture Development and Export Board officials, a task force is being formed to take the horticulture exports from $130 million to $1 billion by 2012.

The task force will provide such a platform to all stakeholders that will help increase Pakistani share in horticulture international market worth $80 billion.

According to the officials, five sub-committees will also be established, which include horticulture finance, horticulture infrastructure and markets, Regulations and Health Certification. 
http://www.geo.tv/geonews/details.asp?id=8773&param=3


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## Neo

*Low-income group hit hard: SPI stands at 9.76 percent ​*
ISLAMABAD (July 15 2007): Weekly SPI-based inflation has been hitting the low income group hardest as during the week ending on July 5, it stood at 9.76 percent for low-income group while only 5.06 percent for high income earner. According to statistics released by the Federal Board of Statistic on Saturday.

The Sensitive Price Indicator (SPI) was up 7.39 percent compared to the same period of last year with 0.22 percent surge in a week. The SPI inflation was recorded 155.39 on July 12 against 153.62 on June 28.

Increasing prices of essential commodities have been hitting hard the low-income group, as inflation was 9.76 percent for the group earning Rs 3000 against 5.06 percent for those having income above Rs 12,000.

The inflation was 9.33 percent during the week under review for the income group of between Rs 3000 to Rs 5000 and 8.16 for those having income between Rs 5000 to Rs 12,000.

There has been a steady increase in prices of fresh milk, wheat, pulses, fruit, rice, gur, red chillies and mustard oil. The bulletin on SPI, based on data collected for about 53 items from 17 centres, showed that 19 items registered increase, and seven items showed decline, while prices of 27 items remained unchanged.

Further analysis of the data showed that 22 items were dearer by double digits over last year. These included wheat flour 14.99 percent, masoor pulse washed 19.94 percent, gram pulse washed 11.16 percent, wheat 11.40 percent, rice Irri-38.87 percent, onions 20.12 percent, hen egg farm 52.51 percent, vegetable ghee loose 44.70 percent, milk powder 21.47 percent, vegetable ghee (tin) 27.34 percent, cooking oil (tin) 27.17 percent, and matchbox 21.54 percent.

Among these items, in a short span of one week, the prices of sugar increased by 4.21 percent per kg, masoor pulses 2.98 percent per kg, wheat flour 3.15 percent per kg, gram pulse washed 2.76 percent per kg, milk fresh 1.01 percent per kg, wheat 1.97 percent per kg, and bananas 2.085 percent.

The average price of cement in various cities remained around Rs 233.25 against Rs 292 of last year. Per bag cement price was recorded Rs 233 in Rawalpindi while Rs 237 in Islamabad, Rs 205 in Lahore, Rs 245 in Karachi, Rs 245 in Hyderabad, Rs 221 in Peshawar and Rs 270 in Quetta.

http://www.brecorder.com/index.php?id=592111&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pakistan wishes more trade with Brazil: Wasim ​*
ISLAMABAD (July 15 2007): Pakistan wishes to do more trade with Brazil, Wasim Sajjad, the Leader of House in the Senate told Brazilian Charge'd Affaires Gustavo Siqueira here when the later called on him at the Parliament House on Saturday morning.

Wasim Sajjad was convinced of practical steps that Pakistan needed to take in this direction and spoke of the tremendous scope that awaits the two countries in this sphere. Moreover, the step would strengthen bilateral relations.

In fact, Wasim Sajjad told the diplomat that Pakistan was further actively exploring trade potential with Brazil. In addition, they also discussed a number of issues of mutual concern to their respective countries, especially those relating to commerce and trade.

Wasim Sajjad specially requested Brazil charge'd affaires to convey his message to business houses in Brazil to invest in Pakistan and benefit from friendly investment policy of this country. Within this framework, Siqueira and Wasim explored the possibility of exchanging a number of friendly delegations between the two countries, including students as well as businessmen, in addition to parliament members.

While discussing exchange of parliamentary delegation, Wasim Sajjad explained to the diplomat the working of both the National Assembly as well as the Senate. He said the two Houses have passed a number of beneficial legislation over the years.

Gustavo Siqueira agreed with the points discussed, and assured the Leader of House in the Senate that he would work towards further strengthening the ties between the countries.

He observed that Pakistan is playing an important role in South Asia, and reiterated the view that both the countries shared identical views on a number of international issues.

http://www.brecorder.com/index.php?id=592090&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pharmaceutical exports may cross $100 million mark ​* 
KARACHI (July 15 2007): Country's pharmaceutical export for the 2006-07 fiscal year is believed to have crossed 100 million-dollar mark as the quality standards have been maintained by the local companies, which helped to secure import orders from the international market, industry sources told Business Recorder on Saturday.

Though the official statistics of 2006-07 have not yet been released, the exporters believe that the country's pharmaceutical export, which, according to provisional figure, stands at 85 million dollars, but they are optimistic of a jump of at least 15 million dollars when the final statistics for the 2007-07 fiscal year are released.

"The quality standards of our (pharma) manufacturers have been improved and they are following international standards for manufacturing their products," said former Vice-Chairman of Pakistan Pharmaceutical Manufacturers Association (PPMA) Zahid Saeed.

"Since the government is following two basic international standards, ie the United States pharmaceopia and British pharmacopoeia, our products do not face any difficulty in the international market," he said. Industry sources said that out of 450 billion-dollar world pharmaceutical market, the share of Pakistan is negligible and could be calculated in decimals.

They said that the procedures of initiating the export of pharmaceutical products in any country were quite typical as these took at least three years to understand and get into the country. "For export to any country, we have to register our products there after which a team comes to the importer's country to check the quality standards, besides other procedural matters," Zahid Saeed pointed out.

He was of the view that efforts of the last four years to explore more avenues for export had now been actualised and this was the only reason behind increasing pharma commodity export from the country. He said the United States was the largest pharma commodity exporter in the world, followed by some European countries and Japan.

Elaborating the utilisation aspect, he said the United States was the biggest consumer in the world as some 250 billion dollars worth medicines were consumed annually, while 70 percent population of the world, residing in Asian and African region, hardly consumed medicines worth 30 billion dollars. Sources said that some 25 export-oriented industries were operating in an organised manner across the country.

http://www.brecorder.com/index.php?id=592146&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*2,000 CNG buses to be imported from China ​*
PESHAWAR (July 15 2007): Pakistan has decided to import 2,000 CNG buses from China to ply them in big cities of the country. For the import of the buses Wisdom Alliance Private, a local private sector company had already signed an agreement with Yuma Aircraft & Automobiles Manufacturing Company of China. According to the deal between both parties, Wisdom Alliance would be the sole distributor of the buses in Pakistan.

"In some first instance, we are importing 1,000 buses for different cities of the country, while 1,000 more would be imported shortly," Akbar Ali, a senior official of Wisdom Alliance told Business Recorder when contacted.

He said that Peshawar is required 700 CNG buses. However, in first instance the city would get 100. He said that the City District Government Peshawar has already approved 200 CNG buses for the city in the import of first batch of vehicles.

The arrival of the total 2,000 vehicles is likely to be completed in a period of two months. The decision of the plying of CNG buses in big cities of the country had been made in the wake of the growing environmental pollution, which had climbed to alarming height and many fold high than the international standard.

Furthermore, the plying of CNG buses would also helped revive the old transport vehicles running on the city roads and overcoming the transport problems of the commuters.

However, interestingly, the local transport associations have already been started raising hue and cry over the decision of the government. They are attributing to economic killing of the thousands of people having stakes in the transport sector in the city.

Both the provincial and City District Government Peshawar since last six years had been trying to introduce the plying of CNG buses on the city roads. However, due to unknown reasons, no practical step was taken in this regard.

http://www.brecorder.com/index.php?id=592212&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*'Pakistani handicrafts can fetch good price in western markets' ​*
LAHORE (July 15 2007): Handicrafts made by Pakistani artisans, men and women, have a great market in western countries and an exhibition of Pakistani handicrafts would be held in Europe and the USA where artisans will display their products.

Parliamentary Secretary of Technical Education and Vocational Training Authority (Tevta), Rubina Sulehri Noor, stated this, while addressing a seminar on 'Businesswomen and their role in economy' here on Friday.

Rubina Sulehri maintained that Pakistani handicrafts can fetch a very good price in western markets. Modern marketing techniques had to be adopted for exporting handicrafts and the role of the proverbial 'middleman' should be eliminated in this regard, she added. She called for better finishing of our products and announced that Punjab government would provide soft loans to women entrepreneurs reluctant to work outside their houses, so they could earn their income by working at home.

The maximum limit of loan would be Rs 40,000, with 8 percent mark up to be charged from the artisans in Southern Punjab region and 9 percent mark up from other areas, she added. The government is working on a comprehensive plan for the welfare of women, she said. She urged the women to come forward and work for their personal and national progress.

http://www.brecorder.com/index.php?id=592180&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*Trade policy envisages 12 percent growth in exports: announcement on July 17 ​*
ISLAMABAD (July 14 2007): Prime Minister Shaukat Aziz has approved trade policy for 2007-08, which envisages 10-12 percent growth in exports, official sources told Business Recorder. The trade policy will be announced on July 17, after formal approval by the Cabinet.

However, the Prime Minister did not clear some proposals of Commerce Ministry, and directed it to improve them, keeping interests of local industry in view. Sources said that the Prime Minister was not happy with the performance of Commerce Ministry, especially in not achieving 2006-07exports target of $17.8 billion.

The Prime Minister, who chaired an inter-ministerial meeting in the Prime Minister House on Friday evening, said that the government was also focusing on skills development and on reducing the cost of doing business to achieve the target of $40-45 billion exports by 2013.

He said that the initiatives taken under National Trade Corridor Plan to simplify procedures, reduce clearing time at ports, airports and borders and to reduce end-to-end delivery time for goods had increased the competitiveness of the products thus increasing exports.

"It is important to build brands, work on the existing strengths and create competitive advantage internationally," he said, adding that the trade policy should promote national brands to increase exports of value-added goods. He also directed that Trade Development Authority of Pakistan (TDAP) should pursue an aggressive marketing strategy with a focused approach to diversify and increase exports.

He said that the policy should emphasise both intermediate and long-term plans to develop consistency and achieve the desired exports targets and sustained economic development. The Prime Minister further said that besides improving the quality of products for existing markets the policy needed to cater for the needs and demands of new markets.

"Trade policy should facilitate all areas of manufacturing sector with a view to produce quality goods for both local and international markets to strengthen our economy," he said. Commerce Secretary Asif Shah made a presentation about the proposals received from various Ministries/Divisions to be incorporated in the trade policy.

Extensive discussions were held on each proposal with positive suggestions to further improve upon various proposals, said a press release. The meeting was attended among others by Commerce Minister Humayun Akhtar Khan, Minister for Industries and Production Jehangir Khan Tareen, Minister for Food and Agriculture Sikandar Hayat Khan Bosan, Minister for Health Muhammad Nasir Khan, Advisor to Prime Minister on Finance Dr Salman Shah, Planning Commission Deputy Chairman Dr Akram Sheikh, State Bank Governor Dr Shamshad Akhtar, TDAP Chief Executive and other officials.

http://www.brecorder.com/index.php?id=591456&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*ADB to help create 20-year 'Special Fund' for Pakistan ​*
ISLAMABAD (July 14 2007): The Asian Development Bank (ADB) has decided to help create a 20-year 'Special Fund' for Pakistan aimed at extending a long-term source of funds for capacity building initiatives of various stakeholders including government organisations, regulatory authorities, retailers and potential clients.

The fund would be created in the State Bank of Pakistan (SBP) which would have the possession, management and control of the fund, its undertakings, properties and assets, Khaleej Times reported.

The ADB has agreed to initially extend $20 million for the fund but an equal amount of funds in a local currency would also be made available by the government as part of the counterpart funding. The fund would be established as an endowment fund, whereby the income generated from it would be used for supporting the activities on a grant basis, and the initial $20 million equivalent capital contribution would remain in place for the life of the fund.

The fund would establish its own rules, subject to ADB concurrence, specifying among other things, the selection criteria for the capacity building initiatives and literacy programmes it would support, including general percentage allocations to be applied among the different categories of activities, the investment strategy for the fund, and accounting and auditing procedures.

It is expected that the initial capital of the fund and the unutilised income generated from the fund would be invested by SBP in approved government securities.

The fund would be administered and managed by a 'Governing Body' consisting of five voting members and one observer. The governing body would be comprised of an SBP nominee, CEO of Pakistan Poverty Alleviation Fund (PPAF), CEO of the Pakistan Micro finance Network, Pakistan Banking Association (PBA) nominee, a representative from the education sector to be nominated by the other four voting members and an ADB observer with non-voting status.

The governing body's responsibilities would include, selection of the capacity building initiatives and literacy programmes to be financed by the Fund. The central bank would prepare the fund rules, including provisions on fund management, accounting and auditing procedures, investment policy, grant selection criteria and a minimum percentage of funds available for literacy. The secretariat of the fund would be located at SBP headquarters.

In order to promote transparency and greater accountability, the fund would have a dedicated public website, hosted by SBP, which would list application criteria for accessing grants from the fund for literacy and capacity building programmes, and provide the necessary forms and instructions for application and the contact information for queries and the submission of applications.

The governing body would be responsible for publishing on a quarterly basis on the SBP public website, the listing of recipients of funds and detailed information on the capacity building and training activities that are funded by the fund.

The fund's annual work plan would also be published by the committee on the website and updated quarterly for any changes. The fund account would be audited annually in accordance with internationally acceptable accounting norms and practices.

The objective is to also support national, provincial, and district level micro finance banks (MFBs) in rural and remote areas to support development of product and service innovation, including savings, remittances and Islamic financial services.

Financial service providers adopting and integrating new technologies and applications, including mobile money transfer and VSAT technologies, for improving access to financial services would be assisted. Financial service providers are defined as entities providing financial services to MFBs, non-government organisations (NGOs), rural support programmes (RSPs), Islamic banks, leasing companies, and commercial banks.

Government and regulatory authorities would be supported to develop an inclusive financial sector and implementation of measures under the improving Access to Financial Services Programme (IAFSP) of the ADB.

Literacy programmes are expected to improve access to financial services by the poor and would be conducted for clients and potential clients of financial services providers. These service providers would directly conduct literacy programmes, or could sub-contract provision of the required services to undertake literacy programmes.

This support would enable financial institutions to concentrate on the core business of financial services, while at the same time providing key support for literacy which enables clients and potential clients to better access finance and utilise the finance effectively.

http://www.brecorder.com/index.php?id=591491&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*Poverty reduced by 11 percent, claims minister ​*
LAHORE (July 14 2007): Provincial Minister for Chief Minister's Inspection Team Colonel Shuja Khanzada (Retd) has said that poverty has been reduced by 11 percent due to comprehensive economic policies of the present government and three million jobs have also been created during the last three years.

Reforms have been introduced in all departments to provide basic facilities to the common man and fruitful results have been achieved. He expressed these views talking to various delegations of Nazims and workers of PML at his office, on Friday.

He said that the government is taking steps on priority basis to maintain law & order and to provide daily use items at reasonable rates to all segments of society. He said that special directions have been issued to the members CMIT to keep vigil eye on the prices of goods in their respective areas. "If any shopkeeper is found involved in over charging, take legal action against them and get cases registered against the defaulters", he directed.

He further said that members CMIT would also inspect police stations and listen to the complaints of people. He warned that strict action would be taken against such officials and officers who will fail to redress the complaints of public. He said that crime ratio has been reduced due to set up of patrolling posts throughout the province. About 250 patrolling posts have been established while 250 more posts are being set up, he concluded.

http://www.brecorder.com/index.php?id=591521&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*'6.5 million people benefited from CCBs' ​*
ISLAMABAD (July 14 2007): The underdeveloped people of four provinces have contributed over Rs 1.1 billion for their own development, says a press release. At present over 37,000 citizen community boards (CCBs) are operational across the country.

These voluntary bodies are working in both urban and rural areas and each is comprised of 25 non-elected citizens of Pakistan. Through this mechanism, over 925,000 citizen of Pakistan are directly undertaking activities aimed at mitigating their most pressing problems.

A recent analysis conducted by the Devolution Trust for Community Empowerment (DTCE) reveals that the so far 6.5 million people have directly benefited from CCBs and brought into the mainstream development. The government share of 80% has been Rs 4.71 billion while the community has contributed Rs 1.1 billion.

This is an achievement of enormous proportions. Contrary to the perceptions of the detractors of CCBs, the poor communities of Pakistan have willingly and generously contributed their share of 20% for development projects, which speaks volumes about the ownership level of the communities for these CCBs.-PR

http://www.brecorder.com/index.php?id=591522&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*225 megawatts power generation: Saif Power and PPIB sign agreement ​*
ISLAMABAD (July 14 2007): The implementation agreement for generating 225 MW was signed between Saif Power Ltd and the Private Power and Infrastructure Board (PPIB) on Friday.

Anwar Saifullah, Director of Saif Power signed the agreement on behalf of the company, while on behalf of the government the agreement was signed by Muhammad Yousuf Memon, Managing Director PPIB. Earlier the power purchase agreement and the gas supply agreement had been signed, thereby concluding the package of agreements under the power policy. The power plant will be located at Sahiwal, and capable of operating on dual fuel, will be based on combined cycle technology.

The sponsors of the project are Saif Telecom Ltd, Saif Textile Mills Ltd and Globecomm (Pvt) Ltd, and the power plant will be set up with an estimated cost of 170 million dollars. It is expected that the power complex will start supplying power to the national grid by the year 2010. Saif Power Ltd, is diligently processing its power project and is part of the portfolio of projects being processed by PPIB which are expected to add a total of 6,990 MW into the system by the year 2010.-PR

http://www.brecorder.com/index.php?id=591483&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Thar coal mining company set up​*
KARACHI, July 14: The federal government has set up a new Thar coal mining company to make use of vast reserves for power generation. The federal government will bear 80 per cent of the cost while the rest will be covered by the Sindh government.

Director-General of Sindh Coal Authority Syed Abbas Ali Shah told Dawn that the company would undertake mining projects for power generation.

The step has been taken in view of lukewarm response of foreign companies in mining.

The first meeting of the autonomous company, which is presently headed by additional secretary petroleum, was due to be held in Islamabad at the weekend to discuss ways and means to launch schemes for exploitation of Thar coal deposits lying dormant since 2002.

It will also discuss the issue of initial seed money and a working model for the new entity.

The federal government has decided to undertake the mining and power generation projects by itself to meet the future energy needs of the country after two foreign companies, a US and a Chinese, withdrew from coal mining in Thar. They withdrew reportedly because of problems related to shortage of surface water in the area and tariff dispute with Wapda.

He said of the 175 billion tons of total coal deposits in Thar, 12 to 14 billion tons are proven reserves. These have been divided into six mining blocks and mining lease for two blocks with a view to set up coal-fired plants has been granted to two local firms, Hassan Associates and Associated Group.

The Sindh Coal Authority has decided to carry out a hydrological study to explore underground or surface water resources required in abundance for coal mining.

The study for estimation of coal deposits found in 1994 was completed in 2002 and since then no significant progress had been made for mining of coal to be used for power generation.

Meanwhile, the Asian Development Bank has agreed to provide financing for the development of Thar coal deposits for producing electricity and has asked the Sindh ministry of minerals to submit schemes eligible for banks financing.

The decision was announced at the ADB meeting this week at the Sindh Planning and Development department held to review utilisation of ADBs funding for implementation of various development schemes in the province.

The bank is already providing financial assistance for various projects in roads, agriculture, health, education and irrigation sectors etc. But it is for the first time that financing has been offered for development of Thar coal deposits.

Tufail Jumani, the secretary of minerals, told Dawn that the ADB had realised the importance of coal mining projects and offered the ministry to prepare coal deposits development schemes with its assistance.

The ministry has reserved the entire coal deposits in Thar for power generation and miners are restricted to sell the commodity in the local market.

The ADB has initially indicated a sum of $5 million for carrying out studies in the Thar coal area. However, the amount will be increased when the ministry submits detailed schemes for the development and mining of coal deposits.

The ministry has, so far, signed eight MoUs with the private sector companies, including a Chinese firm for mining coal for setting up power plants in the province.

Jumani, however, said the success of these projects would depend on the tariff offered by Wapda to these companies for the purchase of power.

He complained that a foreign firm interested to set up a power plant in Thar area packed off as Wapda refused to purchase power on a reasonable rate.

The province has total coal deposits of 184 billion tons, including 175.5 billion tons in Thar, 7.1 billion tons in Thatta and 1.3 billion tons at Lakhra.

http://www.dawn.com/2007/07/15/ebr1.htm


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## Neo

*Industrial estate to be set up on PS land​*
ISLAMABAD, July 14: The establishment of a state-of-the-art industrial estate at Pakistan Steel's downstream industrial area will go a long way in economic development of Pakistan and, especially of Karachi whose residents will be its major beneficiaries.

Minister for Industries, Production and Special Initiatives Jahangir Khan Tareen stated this while speaking at the signing ceremony of an agreement between Pakistan Steel and NIPs (National Industrial Parks Development and Management Company).

The agreement was signed by Chairman Pakistan Steel Muhammad Javed and chief executive officer of NIPs.

Giving details of the agreement the minister said that NIPs would develop an industrial estate on 930 acres of Pakistan Steel land while it will continue to remain the latters property.

Master plan of the industrial estate will be completed within three months and the construction will start by December 2007, he said adding that the ECC (Economic Coordination Committee) has already given approval to this joint venture between NIPs and Pakistan Steel.

Jahangir Tareen said this would be the second industrial estate to be set up in Karachi by NIPs and it would greatly contribute towards development of industrial sector in the country. 

http://www.dawn.com/2007/07/15/ebr2.htm


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## Neo

*Pakistan urged to improve investment climate​*
ISLAMABAD, July 14: The World Bank has asked Pakistan to improve the investment climate by removing excessive red-tapism and too much government intervention with the market mechanism.

Informed sources told Dawn on Saturday that World Bank's various surveys on investment climate suggested that Pakistan was behind India, China and even the Philippines in terms of providing an enabling environment to the investors.

The bank said that further progress could be made in Pakistan to attract investment by improving Intellectual Property Rights (IPR), which still remains weak. Similarly, due to poor land record, there was too much government intervention with the market mechanism, especially in the case of some commodities.

The red tape is still in excessive use, particularly at the provincial level and that the labour regulations were hindering the functioning of formal labour markets and employment. Also, corruption remains a problem and the enforcement of contracts, financial obligations, and bankruptcy law as well as the interpretation of tax laws remained difficult.

In addition, educational and more generally human development indicators remain quite weak in Pakistan, resulting in weak labour force often ill-equipped with the skills necessary for higher value-added productions.

Sources said that the bank believed that there was much room for improving the physical infrastructure of the country and the current state, which contributes to the high costs of doing business.

According to the World Bank, there were some impediments to domestic and foreign investment, especially political and security risks which could not be removed or offset without right economic policies and this should be viewed as a challenge.

The bank also argued that with agriculture still representing close to 25 per cent of the GDP, growth in this sector and in related rural activities needed to be picked up for the objective of significantly higher overall GDP growth rates to be sustained in the near term.

The scope for productivity gains appears to be still large, land remains under-utilised and the market infrastructure in the rural areas remains weak. Recent positive developments, if sustained, could boost the prospects for large productivity gains.

They include greater availability of bank financing for agriculture and the decision to increase the Public Sector Development Programme (PSDP) expenditure.

A productivity enhancing land reform, reduction of government interventions in the development and working of competitive markets in agriculture, and strengthening of research and extension services would increase the prospects for accelerated growth in the sector.

The bank also said that the faster growth in export would make total demand less sensitive to rising domestic real interest rates or indebtedness. It will also help secure productivity gains as a result of competition on the international market, and relax the foreign exchange constraints for imports. The re-tooling efforts have apparently taken place in the textile sector.

Pakistan was expected to gain markets as a result of the removal of quotas - that started in the beginning of 2005 - and as a result of this liberalisation. Only limited progress, the bank observed, has been made towards export diversification, which remains a challenge.

The trade policy in recent years has been supportive but more could be done to reduce the implicit export bias.

Given the size of Pakistan's domestic market, it is not surprising that the limited amount of foreign direct investment has taken place so far compared to other countries of the region.

However, the government continues to claim that achieving an all time high $6 billion plus FDI in 2006-07 was a great achievement and that its efforts will bring more investment during the current financial year.

Sources said that the bank was of the view that prospects for FDI could be enhanced by a broad-based improvement in incomes. The direct foreign investment in labour intensive export sectors, particularly agro-based business and information technology should offer great potential for growth and employment.

http://www.dawn.com/2007/07/15/ebr3.htm


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## Neo

*Pakistan economic outlook: Revision in S&Ps rating from positive to stable challenged​*
ISLAMABAD: The Ministry of Finance on Saturday challenged the Standard and Poors (S&P) decision regarding revising the Pakistans economic outlook from positive to stable by arguing that this revision is based on misperception. 

The Ministry of Finance has also agreed that S&P may reconsider their decision. 

Mumtaz Malik, Joint Secretary (External Finance), Ministry of Finance has written a letter to Sani Hamid, S&P, Singapore and has stated that S&Ps analyses as well as conclusions have surprised Pakistan. 

The letter reveals, We feel that S&Ps decision regarding revising the outlook from positive to stable is based on misperception, said the official. The reasons narrated by the S&P for revising the outlook are based on violent social unrest relating to the removal of Chief Justice (CJ), the incident of Red Mosque in Islamabad and the latest assassination attempt on President Musharrafs life. 

Explaining the actual situation, the letter highlighted that as regarding the violent social unrest, it has not at all affected the economic activity as well as market sentiments in the country. S&P may recall that the incident of CJ started in March 2007 till July 09, 2007, the countrys stock market surged 2,811.3 points or 25.1 percent, the market capitalisation increased $17.7 billion or 35.1 percent, exchange rate remained stable throughout this period and the countrys forex reserves continued to rise from $13.4 billion as on March 01, 2007 to $15.6 billion as of July 09, 2007  an increase of $2.2 billion. 

The letter added that during the said period foreign investors also continued to remain upbeat on Pakistans improving credit fundamentals. For example, Tamasek of Singapore acquired PICIC Commercial Bank (a medium sized bank in Pakistan), Singapore Telecom (Singtel) has bought 30 percent shares of Warid Telecom, China Mobile took over Paktel - a local cellular company, SAMBA Financial Group of Saudi Arabia took control of 68 percent shares of Crescent Commercial Bank Ltd, the UBL GDR was oversubscribed by four times and the government raised $650 million through the sale of 25 percent of its shares and most importantly the Sovereign Bond which was floated during the last week of May 2007 was oversubscribed by seven times. All these developments have happened during the so-called violent social unrest relating to the removal of the Chief Justice (March 2007 to July 9, 2007). 

This clearly suggests that these events have not at all affected the confidence of local as well as global investors in current and future prospects of Pakistans economy.

Regarding the siege of Red Mosque in Islamabad, the letter revealed that this has been going on for several months. The government has been trying to address the issue through peaceful means. But now it has used force as a last resort to dislodge and arrest the militants. The operation has achieved all its targets and should be considered a step forward towards improving the overall security environment. This will also have far-reaching impact on the fight against terrorism. You are fully aware that Pakistan is at the forefront of fighting global terrorism and the operation in the Red Mosque clearly demonstrates Pakistans firm commitment in fighting terrorism, the letter mentioned. On behalf of the latest assassination attempt on President Musharrafs life, it appears that S&Ps view is based on press reports. This is factually incorrect and no assassination attempt has been made on the life of the president. Print and electronic media have misreported which have influenced S&Ps thinking as well, it clarified.

http://www.dailytimes.com.pk/default.asp?page=2007\07\15\story_15-7-2007_pg5_4


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## Neo

*Pakistan falls 3% short of rice export target​*
KARACHI: Pakistan fell short to achieve the rice export target for the fiscal year 2006-07 due to the low production and non-availability of surplus quantity for exports. 

The export target for 2006-07 was fixed at $1.27 billion but only $1.2 billion was achieved reflecting a loss of $7 million. While the export target for 2005-06 was $1 billion and $1.5 billion was achieved, resulting in an increase of $5 million.

During the fiscal year 2006-07 the export of rice went down by 4,00,000 tonnes in terms of quantity and 3 percent value wise, Chairman of the Rice Exporters Association of Pakistan (REAP) Aziz Maniya said. Mr Maniya said that the next rice export fiscal year target would be easily achieved if the weather and water supply conditions remain feasible.

In the last fiscal year around 2.3 million tonnes of rice was exported. The short crop is the main reason for not achieving the target, although the exporters have still managed to emerge good results, he added. Mr Mania said it is expected that for this year the government will set a target of $1.35 as compared to $1.27 billion target of 2006-2007. 

According to Chairman REAP, this year the average price of basmati is $1,100 per tonne, rising from $650 per ton last year from November 2006. Similarly, IRRI-6 is exported at $300 per tonne which was $215 per tonne at the start of the season, he added. 

This year a large quantity of Basmati rice was exported in UAE and Iran while IRRI-6 was exported in African countries, as exports this year have increased to Iran, both through formal and informal channels, he added.

This year a six percent shortage has been recorded in rice production globally. Since November 2006, the international prices of Basmati rice have surged by 35 to 40 percent due to crop shortage in leading rice producing countries. As in this season China, Thailand, Vietnam, India and Sri Lanka have reported crop shortage particularly in coarse rice. 

Due to the increase in demand the price is rapidly rising in the international market and Pakistani exporters are exporting those stocks as well that should have been sold locally that is why the local prices are rising.

Previously price of Super Basmati was Rs 40 per kg, Irri-9 from Rs 25 to Rs 30 and Irri-6 from Rs 18 to Rs 20. Currently Super Basmati is being sold at Rs 65-75 per kg, Irri-9 from Rs 35 to Rs 42 and Irri-6 for Rs 24-30.

In East European region Indian has a very strong hold and to compete them Rice Exporters Association of Pakistan (REAP) has to work hard as in the international market every year demand of Basmati rice is rapidly increasing. Some rice traders dealing in domestic grain market complained that unchecked exports of rice had created shortage in the domestic market, and this had pushed up prices. Currently, all rice exports are handled by the private sector, which exported more than three million tonnes because of lower production in India, Pakistans main competitor.

http://www.dailytimes.com.pk/default.asp?page=2007\07\15\story_15-7-2007_pg5_9


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## Contrarian

Neo said:


> *Pakistan economic outlook: Revision in S&Ps rating from positive to stable challenged​*



I didnt know that they had downgraded Pakistan's position in their rating ! When did this happen Neo?


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## Bushroda

*Pakistan hikes farm loans*
The Edmonton Journal, Canada

KARACHI - Pakistan's central bank forecasts farmers will get 19 per cent more loans this year as the government aims to boost agricultural production to accelerate economic expansion.

Farmers will probably get $3.3 billion US in loans in the year that started July 1, the Karachi-based State Bank of Pakistan said Friday in a statement.

Agriculture accounts for about a quarter of Pakistan's economy and employs 45 per cent of the workforce. The farm sector is estimated by the government to have expanded five per cent in the year ended June 30 because of a record wheat harvest.

Pakistan's farm loans exceeded the target for the year ended June 30 as farmers borrowed 22.4 per cent more than the previous 12 months, the central bank said.

Pakistan's economy, which has expanded at an average annual pace of 7.5 per cent over the past four years, is forecast to grow 7.2 per cent in the year that began July 1.


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## Neo

malaymishra123 said:


> I didnt know that they had downgraded Pakistan's position in their rating ! When did this happen Neo?



I'm looking into it Malay. Will come back when I have some answers.


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## Neo

*Pakistan gets highest record $5.493 bln remittances ​*  

KARACHI: July 17, 2007: Pakistan received the highest ever amount of more than $5.493 billion as workers' remittances during the last fiscal year 2006-07.

According to the SBP here on Monday, never before in the history of Pakistan, the country received more than $4.6 billion as workers' remittances.

In the recently concluded fiscal year 2006-07, Pakistan received an amount of $5.494 billion as against over $4.600 billion in the year 2005-06, showing an increase of $893.53 million or 19.42 percent.

The amount of $5,493.65 million includes $2.68 million which received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

During last month (June 2007), Pakistani workers remitted an amount of $505.55 million, up $41.68 million or 9 percent as compared with an amount of $463.87 million sent home in June 2006.

The inflow of remittances in the July 2006 to June 2007 period from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $1,459.64 million, $1,023.56 million, $866.49 million, $757.33 million, $430.04 million and $149 million, respectively as compared to $1,242.49 million, $750.44 million, $716.30 million, $596.46 million, $438.65 million and $119.62 million, respectively in the July 2005 to June 2006 period.

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the fiscal year 2006-07 amounted to $804.91 million as against $724.07 million in the fiscal year 2005-06, showing a rise of 11.16 percent or $80.84 million.

The monthly average remittances for the period July 2006 - June 2007 comes out to $457.80 million as compared to $383.34 million during the same corresponding period of the last fiscal year, registering an increase of 19.42 percent.

The inflow of remittances into Pakistan from most of the countries of the world increased last month as compared to June, 2006. According to the break up, remittances from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $140.17 million, $96.47 million, $95.39 million, $68.16 million, $37.45 million and $12.47 million, respectively as compared to the corresponding receipts from the respective countries during June 2006, i.e. $123.15 million, $79.51 million, $80.76 million, $59.07 million, $38.65 million and $9.70 million.

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during June, 2007 amounted to $55.33 million as compared to $72.04 million during June, 2006.

Brecorder


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## Neo

Link for the article above: http://www.brecorder.com/index.php?id=592810&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Any new IPP unlikely due gas unavailability ​*
ISLAMABAD (July 17 2007): Pakistan is unlikely to have any new independent power producer (IPP) as the Petroleum Ministry has denied gas availability for gas-fired or dual fuel-based thermal projects in future, sources told Business Recorder here on Monday.

"Petroleum Ministry has reviewed gas availability position in the country and, based on overall projections, it is not possible to provide gas for power projects, in addition to the allocation already made for the current projects," said Director General, Gas, Saeed Ullah Shah, in a letter to the Managing Director of Private Power Infrastructure Board (PPIB).

Sources said that PPIB wanted allocation of gas for power projects of Tecna, an IPP, which intends to set up thermal power plants. Keeping in view the commercial operation date (COD) of planned IPPs, block gas allocation at the PPIB's disposal would be 300 mmcfd in 2007-08, followed by 240 mmcfd in 2008-09, and 180 mmcfd in 2009-10 (whereas gas already allocated to IPPs is estimated at 151 mmcfd in 2007-08), 227 mmcfd in 2008-09 and 152 mmcfd in 2009-10.

The remaining balance would be 179 mmcfd in 2007-08, followed by 13 mmcfd in 2008-09 and 28 mmcfd in 2009-10. The Petroleum Ministry, citing the facts, has conveyed to the PPIB that gas availability is limited for the thermal power projects.

According to information provided by PPIB, it has been noted that up to 51 mmcfd gas in 2008-09 could be provided till October, 2008, which could be further extended if any of the placed IPP did not become operational as per expected COD, sources said.

The Petroleum Ministry further said that 40 mmcfd gas from the block allocation already placed at the disposal of PPIB may be considered for allocation to Tecna by PPIB on nine months basis period up to 2009-10 on the understanding that for the period up to October 2008 or till commissioning of planned IPPs, whichever is later, gas allocation would be only to the extent that remained uncommitted from the block gas allocation placed at the disposal of PPIB, sources added.

They said that the Petroleum Ministry has also set conditions for providing gas to Tecna, according to which the project should be implemented on fast track basis and completed within eight months of signing of the Power Purchase Agreement (PPA), as was decided in the case of Savari. The milestones as laid down for Savari power project would also be prescribed for Tecna, the Petroleum Ministry added.

Gas availability, as indicated for Savari previously could not be reconfirmed as other projects, including Wapda's rental power plants, have already got allocation against the said availability, sources quoted DG, Gas as saying.

"Gas availability to Savari was subject to milestones, to which it had committed and was within a time window. Since it did not meet the milestones, gas is no longer available either for it or any other party including associated technologies proposing to step in their shoes," sources said.

They said that PPIB had asked the Petroleum Ministry to ensure uninterrupted gas supply to independent power producers (IPPs) for 25 years, which is life of a power project, as per power policy 2002. "Petroleum Ministry has been asked not to issue comfort letter to the sponsors until gas is arranged for the complete term of IPPs which is possible after 2010-11," sources said.

PPIB worked out allocation of gas availability on 9-month basis from SNGPL system as 94 mmcfd each for 200 mw dual fuel power project at Balloki, Muridkey, Faisalabad, 450 mw project at Faisalabad and 350-400 mw project at Chichoki Malian.

Sources said that due to restricted gas supply either on 9-month basis (in SNGPL) or 11-month (in SSGC), PPIB was constrained to process dual-fired projects. Gas placed at disposal of PPIB is not only for less than a year basis and for shorter than the proposed terms of projects but also too meagre to squeeze anything for the following projects which are either issued LoI or at advanced stage of issuance of LoI, sources added.

They said that due to non-availability of 200 mmcfd gas, PPIB had to shelve 900 MW (600 MW Hawkes Bay and 300 MW (Gadani) projects in KESC area, where power shortages have reached alarming level.

http://www.brecorder.com/index.php?id=592796&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pakistan, Iran and India agree on gas price formula ​*
NEW DELHI (July 17 2007): Iran, Pakistan and India have agreed on a gas 'price formula' on the basis of which Iran will supply gas to Pakistan and India through Iran-Pakistan-India (IPI) gas pipeline project.

The Indian daily, The Asian Age, quoting special representative of the Iranian Minister of Petroleum on IPI and Director of International Affairs in the Petroleum Ministry, Hojatollah Ghanimifard, said that the agreement, on inclusion of a price line in the contract, had been a major achievement in the last round of trilateral negotiations in New Delhi.

The three countries have reached understanding on most of the initially-identified 16 points of difference and only "five to six controversial paragraphs remain to be discussed," the daily quoting the Iranian representative said.

Indian Petroleum Minister Murli Deora is expected to visit Pakistan this month to sort out issues of gas duties between Pakistan and India for finalising the contract, the paper said. The Iranian Representative further said that the agreement on delivery point and the companies who will sign the contract has also been reached.

http://www.brecorder.com/index.php?id=592815&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*KPT to spend $345 million on deepwater container port project ​*
KARACHI (July 17 2007): Karachi Port Trust (KPT) will spend $345 million on its Deep Water Container Port (PDWCP) project at Keamari Groyne, and its construction work would be started in September 2007. Sources in KPT told Business Recorder on Monday that $345 million is the share of KPT in the project which would cost a total of $1087 million.

They said that the remaining amount of $742 million would be invested by other stakeholders from private sector, as the project is based on public-private partnership. KPT, eyeing June 2010 as deadline for completion of the project, would kick start the construction work in September this year, sources said.

"God willing, the construction work would be launched in September this year," KPT sources said. Under PDWCP, KPT would develop ten Deep Draught Berths at Keamari Groyne on long-term basis.

Sources said that the KPT would establish 10 berths with 18 metres depth and 3.75 km of quay wall to handle and cater for the fifth and sixth generations ships. KPT, sources said, had carried out feasibility of the project, which would be completed in different phases.

They said that in the first phase the Trust would build a container terminal, which would have four berths and 1.5 km quay wall. The terminal would be built at a cost of $535 million. The recently acquired state-of-the-art dredger would be used for making new 18 metres deep channel at the new deepwater container port.

http://www.brecorder.com/index.php?id=592843&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Commerce may take over Marble City project ​*
KARACHI (July 17 2007): Federal Commerce Ministry may take over control of 'Marble City' project in Sindh following concerns of marble exporters over slow pace of development work on the project by Pakistan Stone Development Company (PASDEC), Business Recorder has learnt.

The concern of exporters had emerged as a marble city at Risalpur in NWFP and another at Gadani in Balochistan were already functioning while the work on the marble city project in Sindh was going on, sources said. About two years back, the PASDEC had chalked out a strategy to develop marble and granite industry in the country.

The strategy envisaged enhancing exports of marble products from 35 million dollars to 2.44 billion dollars by 2016. According to that strategy, five marbles cities were to be set up--two in NWFP, two in Sindh and one in Balochistan.

The marble city in Sindh, stretched over 300 acres, would house all kinds of facilities for processing of marble, with state-of-the-art machinery to cut and decrate marble. The marble city would also accommodate marble and granite exporters to promote exports by providing modern technology. However, sources said that the marble city here should be set up at a minimum 1,000 acres land to meet the requirement of marble and granite industry.

http://www.brecorder.com/index.php?id=592858&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Malakand-III power project and NWFPs industrialisation​*


By Mohammad Ali Khan

THE Malakand-III hydropower project, having a generating capacity of 81MW electricity, is expected to go into commercial production by the end of this year. But differences have cropped up between the government and the industry as to how the electricity should be distributed.

While the government wants to sell the electricity to Wapda, the industrialists want the province to have its own transmission and distribution company.

The hydropower project (M-III) is the first ever self-financed hydropower station installed by the NWFP government. NWFP possesses immense resources for hydropower generation and out of the 40,000MW potential of the country, 70 per cent is located in the province.

Likewise, the countrys installed capacity of hydropower stations is about 6,595 megawatt, out of which 3,767 megawatt is in the NWFP (more than 50 per cent).

Work on the M-III project was initiated by the previous government with the aim of feeding the local industry with cheaper electricity enabling it to compete with the industries of other provinces.

The government had planned to set up an industrial estate near Daragai (Malakand), a few kilometres downward the main power complex, to create job opportunities and attract investment ..

But, now the government has changed its plan and decided to sell 71MW electricity to Wapda and the remaining 10MW to sick industrial units after a consultant termed the setting up of the industrial estate in hilly areas non-feasible.

About 10MW electricity would be provided to sick industrial units elsewhere in the province through wheeling charges by Peshawar Electric Supply Companys (Pesco) distribution network.

The provincial authorities at present are in contact with the National Electric Power Regulatory Authority (Nepra) for securing a 'good' per-unit price for the 71MW electricity.

According to officials, Wapda, being the purchaser has offered 3.2 cent per unit price for the project in line with the Federal Hydro Policy 1995, whereas the provincial government wants at least five cent per unit price.

The provincial government has recently hired a legal adviser, who will file a petition with Nepra for getting the maximum per unit price.

The MMA government has been attaching high expectations from the forthcoming project, at least Rs1 billion to Rs1.5 billion additional income through electricity sale.

The NWFP industrialists, however, are unhappy over selling power to Wapda instead of giving it to them on subsidised rates as planned earlier. They believe the decision will dash the hopes of building a sound industrial base in the province and set a bad precedent.

President of the Industrialists Association, Peshawar, Numan Wazir, says: "At the International Investment Conference, organised by the NWFP government some two years back, the Sarhad Chamber of Commerce and Industry (SCCI), and Employees Old Age Benefit Institute (EOBI) signed a Memorandum of Understanding (MOU) for financing remaining construction work on M-III. This is sufficient to gauge how much the local business community is interested in the project."

The industrialists, he says, on various forums have advocated transmission of such electricity to local industrial units through wheeling charges by using the Wapda transmission lines because this is the only way to tackle unemployment and poverty.

He explains: "The M-III would generate electricity at the rate of Rs1.92 per unit as compared to Wapda's Rs5.50 per unit, and cheaper electricity would ultimately boost the industrialisation and create employment.

Electricity to be generated from such project could be supplied to industries through wheeling charges by using the distribution network of Wapda. The officials of Irrigation Department, however, have a different view. They say a huge provincial set-up will be needed to look after the distribution mechanism and overall financial and administrative affairs of the project.

"Thus, managing a huge public utility organisation will increase the financial liabilities of the provincial government. Whereas, selling out electricity to Wapda will be an easy way to generate revenue without affecting the already incapacitated government institutions," the officials said.

In response to government worries, Mr Wazir clarified that Pesco or any other distribution company is legally bound through the Nepra Act to distribute electricity in the province generated from any of these hydroelectric projects.

He said that the M-III should be converted into a private limited company registered under Companies Ordinance 1984 with the Security and Exchange Commission of Pakistan for its future operations.

The Company should have a board of directors 50 per cent from the government and 50 per cent from the private sector with a chief executive and other staff on contract with market-based salaries.

The province's relations with Wapda, in his views, in the context of prevailing stand off over net hydro-profit issue is not very good, therefore at this stage the M-III deal would deprive the province of a golden opportunity that it could materialise for boosting its industrial growth.

The M-III is the first-ever attempt to exploit the hydro-power generation potential in province through installation of small stations. The unemployment ratio in NWFP is higher than in all other federating units so we have to encourage labour intensive industrial units for creating new jobs and it cannot be possible unless the government feed the local industry with cheap electricity," Mr Wazir remarks.

http://www.dawn.com/2007/07/16/ebr8.htm


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## Neo

*Surging capital inflows and sliding export growth​*


By Abdus Salam

The surging capital and financial inflows are catching up with export earnings of merchandise and are close to initially reported exports at about $17.5 billion for fiscal year 2007.

A high economic growth is attracting global investors awash with excess money interested primarily in take-over of running local banks and other enterprises and encouraged by the measures taken to integrate the domestic market with the global financial system.

Foreign investment at $7 billion is top contributor to capital and financial inflows, exceeds workers remittances of $5.5 billion and is about three times the much lower levels of committed external assistance at $ 2.5 for July-March fiscal 2007.It follows the worldwide trend of foreign investment and remittances  both individually exceed the global aid flows.

Yet another major trend is that bulk of the foreign investment is in the form of foreign direct investment at $5.2 billion. While the privatisation proceed has dwindled to a mere $133 billion , much of the foreign investment has gone into take-overs of local private firms  banks, cigarette and telecom companies. Helped by reforms ( high capital requirements) foreign stakes are now close to fifty per cent of the paid- up capital of banks.

Despite the emerging political uncertainties, the foreign investors from the USA, the U.K. China South East Asia and the Middle East have invested in a wide range of economic activities during the last fiscal year. This includes hot money that has gone into portfolio investment in the local capital market, now close to$1 billion. Similar is the appetite by international capital market for global depositary receipts (GDRs) which fetched $888 million ( OGDC $738 million and MCB $150 million). The government also accessed the international markets for raising $750 million for Eurobonds which were oversubscribed.

With income tax reduced from 60 to 35 per cent for banks and from 45 to 35 per cent for private companies, foreign investors have been richly rewarded. They remitted profits and dividends of $760 million in eleven months of fiscal 2007 against $504 million of the previous year. Many multinationals and banks re-invested their earnings for buy out of local units or expansion of their local operations.

The capital and financial inflows not only helped to meet the widening trade gap of some $13-14 billion but contributed to an overall external surplus of $373 million and foreign reserves of some $15 billion. And despite the widening trade and current account gap, the inflows help to keep the exchange rate stable.

While the accessing a wide range of sources for money and investment does seem to help to exercise economic sovereignty, one cannot ignore the fact that nation states are required to submit to the discipline of the international financial system which itself suffers from lack of discipline. Much of the direct foreign investment is not going into creating new production capacity but into in acquisition of the existing enterprises. These investments are not meant to realise the export potentials but to meet domestic demands.

The GDRs or the Eurobonds are going into financing of fiscal and current account deficits. The portfolio investment mayl dry up at the first sign of an economic downturn or serious political instability.

The big question is whether the capital and financial inflows would raise production capacity and exports.( international finance is used to making more money from the capital market dominated by speculative activity rather than investment in real economy). The sharp fall in export growth indicates that this is not happening. In the present stage of development, export of manufactures could offer competitive advantage where foreign investment is not coming.

http://www.dawn.com/2007/07/16/ebr12.htm


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## Neo

*Record development spending and weak delivery system​*
By Dr Abdul Karim

In an election year, record budgets have been presented by the federal as well as provincial governments. Special attention has been paid to development expenditure which has been enhanced substantially  both within Public Sector Development Programme and out side of it.

Budget allocation is an essential pre-requisite for undertaking any activity in the government sector.

What provides the sufficient condition is how much and how well the allocation is actually utilised. At present, public sector has not much to show on both counts. Institutional capacity to undertake the task is not enhanced corresponding to the scope of work. As a result, allocations are seldom fully utilised in the given manner. This is officially recognised by the item operational shortfall, in the budget provisions.

According to Federal Budget in Brief, FY 08, development expenditure by federal ministries\divisions\corporations for FY 07 was provided at Rs435 billion against which the utilisation, as per revised estimates was Rs394.5 billion, a shortfall of 9.3 per cent. As a case of achievement in physical terms, 3,000 beds were to be added in Hospitals\RHCs\BHUs during FY 07 but only 2.5 thousand (76 per cent) were added. This situation underlines the urgent need for capacity building in the public sector.

Given the capacity, there are many factors, which militate against proper use of funds. Public functionaries only care for the legal propriety in the sense that the expenditure remains within the budget allocation. Whether the objective is achieved, in terms of the satisfactory quality of work and in the most cost effective manner, is given little importance.

The new prime ministers secretariat has a chandelier worth Rs20 million. Obviously, this expensive lamp has no functional value in an office building except ego satisfaction but its opportunity cost in a poor country like Pakistan is primary schools and dispensaries that could be provided with thus sum in the so far neglected remote villages.

The common perception is that government money is nobodys money. As a result, there is an avoidable tremendous waste in the public sector. The actual genuine expenditure on a project is only a fraction of the cost booked. The end result is sub-standard work, which often needs repair even before completion of the project. An interesting specific case may be cited.

In Karachi, one lane of the Liaquatabad flyover, within a few months of its opening, was closed as the it caved in. The official explanation was that a trailer truck had a flat tyre and it stopped to change it. The road could not stand its weight and caved in. This speaks volumes of the performance of planners, designers, executioner and monitors. The repair cost must have been treated as development expenditure. Such instances are innumerable. The most unfortunate aspect is that no heads roll in such cases even when precious human lives are lost

Ghost institutions and ghost workers at a massive scale are perhaps a unique phenomenon in Pakistan. It was reported that at one time there were as many as 23,000 ghost pensioners in Pakistan Railway. For a World Bank funded education project, army was used to detect ghost teachers in the funded institutions and it came up with no less than 40,000 such teachers.

The Economic Survey FY 07 gives the gist of Education Census 05, which should be an opener for countrys managers. It reveals that of the total institutions covered by the census, five per cent or 12,737 educational institutions were non-functional, of which 11,589 schools and 1,148 other institutions were in the public sector. Out of them, 35 per cent were without a boundary wall, 31 per cent lacked dinking water facility, 54 per cent had no electricity, 38 per cent had no proper latrine and six per cent were without a building. As far as the condition of the school buildings, only 51.6 per cent were in satisfactory condition,, 26 per cent needed minor repairs,17 per cent needed major repairs, and 5.7 per cent were found to be in dangerous condition.

The situation in the health sector is similar. There are hospital buildings without doctors and equipment. If doctors are there, there may be no equipment and medicines. The story is all too familiar to be dilated upon.

The World Bank has, in its latest Country Report, urged Pakistan to improve public financial management, accountability, transparency, and enhance the capacity of public sector managers to meaningfully use credible financial information for better and informed decision making. This says a lot

If development expenditure is to make any meaningful contribution to economic growth and poverty alleviation, the entire existing system from A to Z- project preparation, its execution, continuous monitoring, post project audit and appraisal will have to be revamped, to ensure that the objectives have been achieved in the best possible manner. This is a gigantic task but worth all the effort. Cosmetic changes to placate the donor agencies would not do.

The overarching problem is corruption which, apart from its importance for every aspect of civil society, affects as much government revenue as expenditure. Instead of accepting rampant corruption as a national culture, it should be dealt with, in earnes, as national cancer. Corruption cannot be curbed without honest to God prompt and objective system of punishment and reward. I have advisedly used the word curb and not eliminate, because corruption has been there and will remain, like any other crime, sin and vice. It is thus not just the existence of a phenomena but its magnitude.

In case it is of minor proportion and cannot adversely affect the system, it can be lived with, as the system will keep it in check. However, if it assumes proportions, which overwhelm the system to paralyse it and one can get away with anything through this, it is a matter of grave concern.

http://www.dawn.com/2007/07/16/ebr13.htm


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## Neo

*Foreign exchange inflows​*
Banks remained flushed with foreign exchange throughout the week that ended on July 13 and foreign exchange reserves rose to a new all-time high of $15.63 billion on July 7. The State Bank, taking advantage of growing foreign exchange, amended its November 2004 decision of selling dollars to banks to finance oil import bills.

The central bank asked them to buy part of their requirement including the dollars needed for financing imports of furnace oil from the inter-bank market. But the decision did not have an adverse impact on the health of the rupee for the time being: the rupee closed at 60.37 a dollar on July 13  unchanged at the last weekend closing.

But bankers say since the move has created more demand for dollars it might impact the rupee if the foreign exchange inflows lose steam in coming weeks, for two reasons.

First, the State Bank is now trying to minimise its net selling of foreign exchange to keep the rupee stable as it is inviting criticism from the IMF. And secondly, international oil prices have reached 11-month highs (London North Sea Crude at $77 a barrel and New York Light Sweet Crude at $73 a barrel) threatening to widen the trade deficit.

But bankers say in addition to traditional inflows through exports, foreign investment and remittances from overseas Pakistanis, payment by telecommunication companies in foreign exchange for renewal of their licenses is also keeping the rupee stable. During the week ending on July 13, the inter-bank market received a substantial chunk of foreign exchange from a foreign telecom giant that paid the first installment of its licence renewal fee of a little less than $300 million.

Huge forex inflows into the banking system continues to push up rupee liquidity levels making it quite a challenge for SBP to siphon off additional liquidity from the system to keep monetary expansion in check. (Overnight lending rates remained soft in the inter-bank market throughout the week and oscillated between 3-5 per cent at the end of the week on July 13).

During the outgoing fiscal year, monetary expansion of 17 per cent against the target of 13.5 per cent was partly responsible for a high inflation of 7.8 per cent against the target of 6.5 per cent.

For the current fiscal year the inflation target is 6.5 per cent but the monetary growth target is yet to be fixed.

During the week under review, the SBP closed the doors of three-day repo facility on investment banks and development finance institutions and asked them to borrow from commercial banks when in need of liquidity. The move would help in keeping the liquidity levels from rising too high in the inter-bank market and thus keep interest rates stable. That is a must to continue sending signals about a tight monetary policy stance and keep inflation within tolerable limits.

The central bank is likely to announce its monetary policy for July-December 2007 towards the end of this month and in all likelihood it would not drop its guard against soaring inflation.

As interest rates have reached high levels, SBP may not raise repo rate but it would certainly use other tools to continue a tight monetary policy, said a senior central banker. At the end of May 2007 average lending rate shot up to 11.32 per centmuch to the chagrin of businesses that complain that it is hurting their growth prospects.

High interest rates in FY07 were partly responsible for lower private sector credit off-take. Upto June 31 FY07, private sectors borrowing from banks totalled Rs291 billion indicating that on June 30 it could have touched Rs300 billion against the target of Rs390 billion.

During the week under review, the SBP released latest data on sectoral credit flow, which showed that growth in personal loans including consumer finances substantially fell in eleven months of FY07. In July-May FY07 banks offered Rs52 billion personal loans down 62.7 per cent from Rs84.6 billion in July-May FY06.

And within consumer financing the sharpest decline was seen in car financing. In eleven months of FY07 banks made Rs10 billion car financing whereas in eleven months of FY06 they had offered three times moreRs30.4 billion.

Senior bankers identify high car financing interest rates and low demand for automobiles as two key reasons for this slump.Mohiuddin Aazim

http://www.dawn.com/2007/07/16/ebr23.htm


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## Neo

*Telecom investments to touch Rs393 billion ​* 
PTA to facilitate Wimax operators

By Israr Khan

ISLAMABAD: The Pakistan Telecommunication Authority (PTA), in its quarterly review, has projected that by the year 2010, the telecommunication sector would attract about Rs393 billion local and Foreign Direct Investment (FDI), whereas total revenue of the sector would reach Rs387 billion by the same fiscal.

The authority also says that the sector has the potential to attract huge investments, as many international players are interested to invest in this sector. These players in Wimax Broadband markets would replace small Internet Service Providers (ISPs) and local Wimax operators, the authority therefore plans to further facilitate acquisition and mergers and make more avenues available for wireless operations (Wimax).

PTA quarterly review says, In March 2007, PTA presented its vision 2010 to further develop the sector. According to the vision, the authority made projections for different telecom indicators including potential telecom market investments and demand etc. Total investment according to estimates would grow to Rs393 billion whereas total revenue will reach Rs387 billion by 2010.

Huge price reductions due to large scale competition are also expected in the local telecom market as a consequence of changes in international markets. PTA therefore would be working on IP based Interconnection Mechanism, SLA among operators, and amendments in interconnection regulations to accommodate operators to interconnect at PTCL co-locations.

Wimax along with VOIP (voice over internet provider), will have the potential to bring a revolution in FLL and broadband markets which is an ideal combination to bridge the digital divide. PTA therefore plans to rollout USF to expand fixed network in addition to lowering FWT taxes, which would increase the WLL tele-density, it said.

The cell phone market is expected to grow by 57 per cent by 2010, in this regard activation charges and withholding tax levy on telecom services is required to be further reduced to increase potential markets.

Similarly, there is potential of 3 to 5 million broadband customers; therefore, framework for mobile Wimax is needed to be well defined. Since Wimax and VOIP can create another revolution in Pakistan, legal framework of SIP/VOIP is further required. Accordingly, fixed number portability and symmetric termination rate framework should also be developed to increase the fixed (wire/wireless) density.

http://www.thenews.com.pk/daily_detail.asp?id=64670


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## Neo

*Trade Policy today ​*
ISLAMABAD (July 18 2007): Federal Minister for Commerce Humayun Akhtar Khan will announce Trade Policy 2007-08 on Wednesday after formal approval by the federal cabinet. Informed sources in Prime Minister House told Business Recorder that export target is most likely to be $19 billion minus plus envisaging 8 percent growth in exports during the year.

However, final approval will be given by the federal cabinet to be chaired by the Prime Minister Shaukat Aziz. Target for imports during the current fiscal has not been fixed as was done last year, because the government could not control imports.

"Our imports consist mainly on machinery, raw material, petroleum products and food items whose import cannot be curtailed without impacting economic growth and prices. These imports are essential for sustaining economic activities and stabilisation of prices by augmenting supply position," said an official of Commerce Ministry.

The sources said that the policy has been finalised at a meeting in the Prime Minister House attended by Governor State Bank of Pakistan (SBP), Prime Minister's Advisor on Finance, Dr Salman Shah, Commerce Minister Humayun Akhtar Khan and Chairman Federal Board of Revenue (FBR), Abdullah Yusuf.

Ministry of Commerce, which has miserably failed to achieve the export target of $18.7 billion for the fiscal 2006-07 was focusing on two major proposals in the trade policy, ie incentives for Export Oriented Units (EOUs) and long-term export financing facility for the exporters.

On Tuesday, the ministry officials confirmed that exports hardly crossed $17 billion but did not have any information on imports. However, unconfirmed reports suggest that imports were of $30.7 billion against the target of $ 28 billion.

Humayun Akhtar Khan, who is very vocal against the SBP and Finance Ministry for not taking him into confidence on monetary policies which affect foreign trade, gave a presentation to the meeting and recommended several measures to increase exports and provide incentives to exporters. The sources said that the minister would reveal the steps taken so far to increase exports to the US and European Union (EU) and the reasons of decline in exports.

He would also mention progress on RoZs to be funded by the US in tribal areas and expected fruits of Free Trade Agreement (FTAs) especially with China and Sri Lanka, besides on-going negotiations with other countries.

http://www.brecorder.com/index.php?id=593778&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Extremists trying to divide society on economic lines: President ​*
ISLAMABAD (July 18 2007): President General Pervez Musharraf said that the fringe of the society is afflicted with the unfortunate malaise of extremism and terrorism and this is the only threat from within the country faces today.

Addressing the students of Education City of Heavy Industries, Taxila on Tuesday, the President underlined that extremists are trying to divide the society on economic lines between rich and poor which is a lopsided logic. He said there is no external threat to Pakistan as the armed forces are strong enough and fully capable of repelling any aggression.

President Musharraf said it pains him what we are doing to ourselves. He said people who are not educated enough to understand Islam claim to understand it which is a terrible thing. He said in Islam suicide bombings is haram (illegal) and stressed that our religion does not allow anybody to take his life or life of his fellow human beings.

The President underscored that the extremists ignore that part of the teachings of Islam, which does not suit their purpose. He said the extremists are claiming that they want Islamic system in the country but they forget that the system in Pakistan is Islamic. The constitution of the country does not permit any law repugnant to its teachings. He said Pakistan is an Islamic republic.

The President said Pakistan, like any other society has its ills and we are trying to remove them but that does not mean that it is not an Islamic State. He said the country is following the vision of the Quaid-e-Azam, which espouses an enlightened and forward-looking Islamic State.

He said no nation could prosper and progress if its security is not guaranteed from external and internal threats. He said the peace comes through strength and not through weakness as the weak does survive.

The President was briefed about research and development activities at AARDIC on his visit that AL-KHALID and AL-ZARAR project has helped save seventy-three million dollars of foreign exchange. He was further informed about the production of these state of the art battle tanks. The HIT is manufacturing two hundred and thirteen AL-KHALID and three hundred and five AL-ZARAR tanks and also developing T-80 UD tanks.

The President directed the HIT to go for aggressive marketing and hire more PhDs in Science and Engineering. The AL-KHALID main battle tank has been upgraded with more powerful engine and armour. It has 125mm smooth bore gun and fire control system, which is fully computerised. The tank among the top notches in service has 70kilometer of maximum speed.

http://www.brecorder.com/index.php?id=593782&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Sustaining economic growth pace termed biggest challenge ​*
ISLAMABAD (July 18 2007): The biggest challenge the country is faced with is how to sustain the ongoing economic growth momentum within a stable micro-economic framework. This view was echoed by Dr Salman Shah, Advisor to Prime Minster on Finance, and Umer Ayub, Minister of State for Finance, at a workshop on 'PRSP-2' here on Tuesday.

The workshop focused on three themes: 'Ensuring demographic dividend'; 'financial sector deepening and economic development'; and 'competitiveness, growth and poverty reduction'.

Salman said that, linked with the challenges of sustaining growth in stable macroeconomic framework, there were other challenges of job creation, poverty alleviation, improving social indicators and strengthening the country's physical infrastructure to ensure of 6-8 percent growth in the medium term.

The purpose of the workshop was to discuss in detail the Poverty Reduction Strategy Paper (PRSP-2) that has been going on for the last one and a half year. PRSP-2 is an advanced form of PRSP aimed at taking into account the recent socio-economic developments while addressing the shortcomings of the original PRSP.

The adviser said that rising per capita income and the growing middle class along with higher inflows of workers' remittances would continue to fuel domestic demand that would be helpful in sustaining growth momentum.

"Realising the significance of the phenomena of demographic dividend for an emerging economy like Pakistan, the government has initiated a large number of employment generation programs that include National Internship Program and Establishment of the National Vocational and Technical Education Commission (NAVTEC), besides increasing budgetary allocation for social sectors like education, population and health," he said.

He told the participants that the government believes in an efficient private sector, supporting the public sector, in order to drive the economic growth of the country.

"A strong private sector development strategy would be a key element in enhancing the competitiveness of the private sector. The strategy would focus on lowering the barriers to developing small and medium enterprises, removing irritants to private sector growth and country's physical as well as social infrastructure," he added.

He said that the empirical evidence suggests that financial development would always stress upon the growth of income of the poorest of the population.

Umar Ayub said that strong economic growth on sustained basis in a stable macroeconomic environment was critical for job creation, poverty alleviation and improved social indicators. He emphasised that to convert the ongoing demographic transition into demographic 'dividend' was a major challenge around which the PRSP-2 was structured.

"A decline in dependency ratio would increase savings and, therefore, investment would be a key determinant of strong economic growth", he told the audience. Regarding Financial Deepening and Economic Development, a background paper, presented at the workshop, said the development of financial markets and institutions was a critical and inextricable part of the economic growth process.

Keeping in view the importance of financial deepening for economic development, Pakistan's medium-term financial sector strategy would focus on the following areas:

-- Broadening access to middle and lower income groups.

-- Development of new liability products to utilise savings of small savers.

-- Corporate restructuring to support financial sector reforms.

-- Infrastructure financing.

-- E-banking.

-- Private equity, Pension and Provident funds.

-- Investment banking.

-- Human resource development and capacity building.

-- Promotion of Islamic banking.

-- Further strengthening of supervisory regime & strengthening Risk Management.

-- Prioritising key pro-poor financial instruments like microfinance through increased outreach and entry of new financial institutions.

http://www.brecorder.com/index.php?id=593874&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Software export target fixed at $165 million ​*
KARACHI (July 18 2007): The government has fixed 165 million-dollar target for software export for the 2007-08 fiscal year, which is 52 million dollars higher in value as compared to the last year's target of 108 million dollars, industry sources said on Tuesday.

They said that the country's software export had witnessed a smart growth during the 2006-07 financial year, successfully achieving the target set by the government.

Keeping in view the excellent growth of the local market's share in the global trade, the government has given the fresh task to the software exporters to achieve 165 million-dollar target by the end of current fiscal year.

Exporters believe that the newly assigned export target would not be a difficult task to achieve because the potential foreign investors are diverted to the Asian region to get their projects completed at comparatively much cheaper rates as compared to the developed countries, which were considered information technology (IT) giants.

"The software export target of 165 million dollars would not be difficult for us as a number of international business houses, which have their headquarters in the West, are in negotiations with their Pakistani counterparts," said President of Pakistan Software Houses Association Ashraf Kapadia. "The potential foreign buyers are coming to Asian markets, particularly to Pakistani ones and this fact is also evident from the achieved export target of software and relevant products, which is commendable," he remarked.

"The official statistics have not yet been received for the month of June of the 2006-07 fiscal year, however, we could estimate the software export figures provisionally at 110 million dollars, which will be a new record by the national market", he said when approached to inquire about the software exports.

"The country's software exports have crossed the mark of 70 million dollars during 2005-06, registering first time ever a 50 percent growth of the local IT firms, as the Western firms started turning more and more towards Pakistan for IT-enabled services to cut costs and raise profits", Kapadia remarked. He said some 1,200 software houses were operational across the country, of which Karachi enjoyed the largest share of about 40 percent.

The country's IT industry has emerged as the fastest growing sector this fiscal, mainly supported by phenomenal jump in the operations of call centres during the last two years. More than 140 such centres are currently operational mainly in Lahore, Karachi and Islamabad, offering employment to around 5,000 people. Defined as a unit, the call centres have adequate telecom facilities, trained manpower and access to database providing precise information to customers.

The advancement in telecom technology has made it possible that a person, handling the call operations, could provide the communication and interaction facilities in a proper manner.

Sindh IT Department has also planned to build a 10,000-seat call centres in Karachi, which would provide one-window services to foreign and local investors, on which work is going on at an accelerated pace. The authorities appear to realise importance of the potential opportunities and claim that they have spent billions of rupees for subsidising various activities of immediate relevance to the industry, including managed participation of local exporters in international exhibitions and acquiring quality certifications.

http://www.brecorder.com/index.php?id=593898&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Feasibilities ready: Pak-China moot in August to negotiate billions of dollars joint venture projects ​*
KARACHI (July 18 2007): Pakistan has prepared feasibilities for a large number of potential joint venture projects, worth billions of dollars, for negotiations between Chinese and Pakistani entrepreneurs at the investment conference scheduled for next month.

The Director-General, Board of Investment (BoI), Arif Elahi, said here on Tuesday that Investment Advisor, Ministry of Finance, Dr Junaid Ahmed, has identified potential areas for Pak-China investment in his report. He said that more than 150 top businessmen from China would attend the Pak-China Investment Conference, and added that the Chinese government and entrepreneurs were serious to have joint venture projects in Pakistan.

Similarly, Pakistani entrepreneurs have also shown keenness in joint ventures with Chinese businessmen, he added. He said that Pakistan is seeking Chinese investment in steel production, naphtha cracker project, oil refinery, paper mills, manufacture of construction and earth moving equipment, auto sector, hand and cutting tools, container manufacturing, hydropower project, Thar coal mines, gasification projects, etc through joint ventures.

The BOI D-G said that feasibilities of these projects are ready and land has been identified so that the investors from both sides could assess the potential of the projects and start negotiations right away.

The proposed integrated steel mills, having production capacity of two million tons per annum, would need an investment of $ 450 million. The land is available for this project at Port Qasim.

Based on direct reduction iron (DRI) technology, this plant would produce steel through 'electric arc furnace' (EAF) route to cater to fast growing demand in Pakistan. Another project is naphtha cracker unit with production capacity of 650,000 tons annually. This would cost $ 800 million.

The third major project on the list is an oil refinery, with a capacity of refining 6 million tons crude per annum. The land for this project is available at Gwadar, which is estimated to cost $ 5 billion.

China has the expertise in paper making and Pakistani entrepreneurs can discuss possibilities of setting up paper mills in Pakistan under joint venture, using local raw material. The project will cost Rs 3 billion to produce 100,000 tons high quality paper.

Another important project is the manufacture of construction and earthmoving equipment in Pakistan under joint venture with China at a cost of Rs 500 million. Automotive foundry will need an investment of Rs 1 billion to produce 20,000 tons iron and steel casting.

The hand tool and cutting tool plants will need investment of Rs 300 and Rs 360 million, respectively. Steel container manufacturing plant will cost Rs 1.5 billion, while the cement plant would require an investment of Rs 14 billion, or $ 234 million.

The coal mining and methane gasification project will require investment of $ 250 million, and the land is available in Thar area. Pakistan will also invite Chinese investors to set up a cargo village at Karachi Port at a cost of $ 100 million.

Similarly, Pakistan will ask China to set up China industrial cities in Karachi, Lahore, Hub, Winderr, Gwadar, Attock or Nowshera. Pakistan will also seek Chinese investment and expertise in setting up cattle, dairy and poultry farms and animal and poultry feed manufacturing plants.

http://www.brecorder.com/index.php?id=593938&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pak-German ties in science and technology strengthening: chief minister ​*
LAHORE (July 18 2007): Punjab Chief Minister, Chaudhry Pervaiz Elahi has said that bilateral relations between Germany and Pakistan in engineering, science and technology, agriculture and other sectors are growing rapidly due to which local and foreign investment as well as the pace of economic development is increasing in the province.

He was talking to Ambassador of Federal Republic of Germany to Pakistan, Dr Gunter Mulack at Chief Minister Secretariat, here on Tuesday. Honorary Consular of Germany Anis-ur-Rehman and Principal Secretary to Chief Minister, GM Sikandar were also present on the occasion.

He said that launching of PIA flights from Lahore to Frankfurt would further strengthen mutual contact between the two countries. He said that setting up of Metro and Cash & Carry stores by a German company would help in providing guidance to farmers as well as marketing of agri-production, which would result in prosperity of farming community, stability of prices as well as improvement of the quality of food items.

The chief minister said the government was setting up three industrial parks on Sialkot-Lahore Motorway while universities of engineering and science and technology were also being established with the cooperation of Germany and Sweden.

He said that land had been earmarked for the university to be established with the cooperation of Germany. He said that as a result of industrialisation in the province there was a growing need for the promotion of education of engineering, science and technology so that the process of industrial development could be expedited and youth could benefit from job opportunities.

He said that the three universities to be established on Lahore-Sialkot Motorway would help in developing a skilled workforce. He said that the setting up of stores in the provincial metropolis by Metro Corporation would promote a spirit of competition in agri-marketing sector while the trade activities of the corporation would help in modernising the system of retail markets and export of agri production.

The German ambassador said that there were strong relations between Pakistan and Germany in various sectors and after Metro other German companies were also taking interest in investment in Pakistan. He said that Lufthansa Airline would start its operation in Lahore and other cities of Pakistan in October this year, which would further promote contacts between the two countries.

He said that PIA flights from Lahore to Frankfurt would help in export of fresh fruit, fish and other essential items. He appreciated the steps taken by the chief minister Punjab for the promotion of foreign investment and development of the province.

http://www.brecorder.com/index.php?id=594018&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Industry urged to focus on components manufacturing ​* 
LAHORE (July 18 2007): Pakistan industry should focus on manufacturing components instead of relying on assembling foreign pre-designed goods and this objective could be achieved through introducing concept of teaching design rather than merely teaching commercial software operations.

These observations were made by the speakers in the first meeting of Advisory Committee of National Institute of Design and Analysis, which was also attended by a group of industrialists and directors of various departments of the engineering universities of the country.

The meeting also stressed the need for increasing industry-university linkage in a bid to promote self-reliance in the country. The advisory committee decided that two sub-committees ie one for the infrastructure and the other for curriculum be formed in order to proceed further with the project. The meeting discussed the curriculum and courses, which could promote the concept of teaching 'design' rather than merely teaching commercial software operation.

The participants were of the view that that commercial software should be used as a tool to speed up designing and realisation of the designs into final products or tooling. The committee agreed that Pakistan's industry should move towards product design together with producing the tooling such as dies and moulds, which are used to manufacture the components locally. The participants from the universities assured to provide their full support to NIDA.

http://www.brecorder.com/index.php?id=594036&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*US firm to build power plant at Dhabeji ​* 
KARACHI (July 18 2007): Karachi Water & Sewerage Board (KW&SB) and Energy Saving Solutions (Pvt) Limited, INC, USA on Tuesday signed two agreements for installing a 35 MW power generation plant at Dhabeji.

The implementation and power purchase pacts were signed by Ghulam Arif Khan, Managing Director, KW&SB and Zafar Ansar, Chairman Energy Saving Solutions (ESS) in a ceremony held here at a local hotel.

City Nazim and Chairman, KW&SB Syed Mustafa Kamal attended the ceremony as chief guest. Ghulam Arif Khan, MD, KW&SB in keynote address said that the plant would not only ensure an uninterrupted supply of power but also save around 7 billion rupees of electricity bills in the next 25 years. At present the board's electricity bill stands at Rs 2.5 billion.

He said KW&SB being a sole supplier of water to the city was dependent on Dhabeji pumping station for water supply to the metropolis but due to frequent power cuts the board was unable to do its job. He said the ESS would build the plant at a cost of $40 million within 21 months on BOT basis and provide electricity to the board at Rs 3.98 per unit Rs 1.48 less than the rates of Karachi Electric Supply Corporation for the next 25 years.

He said that as per agreement this rate would neither be increased nor decreased by ESS in the coming 25 years. He said the plant would generate 35 MW of electricity in which 28 MW would be utilised by KW&SB, which consumes 30 million unites per months.

The ESS will deposit five percent of the total cost of project to KW&SB as a performance security and hand the plant to it after 25 years, he said. City Nazim Mustafa Kamal in his address said that all aspects of the agreements would be fruitful for Karachiites. He said the Sui Southern Gas Company had assured KW&SB of providing 8 million cubic gas for one year as a fuel for the plant. Zafar Ansar, Chairman ESS also addressed the ceremony.

http://www.brecorder.com/index.php?id=593998&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Govt plans to set up special zone in Lahore​*
ISLAMABAD, July 17: The government is finalising a proposal to set up a special industrial zone (SIZ) for overseas Pakistanis at Lahore with an incentive of tax holiday. Informed sources told Dawn here on Tuesday said that the Punjab government would offer suitable land in the provincial capital to help establish the new SIZ aimed at attracting sizable investment by the expatriates.

All the hassle-free necessary infrastructure facilities are expected to be provided to the overseas Pakistanis through a one-window operation on the pattern of Dubai.

Sources said that the SIZ at Lahore was being finalised after a number of potential overseas Pakistanis assured to make new investment in Pakistan.

They had also expressed their willingness to separately invest in capital market, telecommunications, information technology, health, education, housing and agriculture sectors.

The issue of establishing SIZ at Lahore was initially discussed during a two-day international conference which was participated in by over 250 overseas Pakistanis on March 5-6 in Islamabad to help mobilise adequate Foreign Direct Investment (FDI) in the country.

At that time the government was also assured to have $3.3 billion new investment which included $300 million by 36 overseas Pakistanis living in Saudi Arabia, $1.1 billion by 55 expatriates living in the US, $84 million by 18 Pakistani investors living in the UAE and $935 million by 38 UK-based overseas Pakistanis.

Beside expatriates, a number of international investors had also attended the conference during which the government proposed new measures for further improving the regulatory environment aimed at increasing foreign investment in Pakistan.

The objective of the conference was to attract investment from middle and high income groups of overseas Pakistanis by highlighting the opportunities and incentives available in Pakistan.

Similarly, the objective was to provide overseas Pakistanis information regarding Pakistan's economic and regulatory environment.

The government, a source said, was providing a platform to overseas Pakistanis to inter-act with private sector and senior decision-makers.

This is how the government plans to further strengthen our economy by attracting Pakistani Diaspora to invest in their country, he said.

When contacted, the managing director of Overseas Pakistanis Foundation (OPF), Syed Nayyar Husnain Haider, confirmed that SIZ was expected to be set up at Lahore for which various formalities would soon be worked out with the Punjab government.

In fact, this is an old proposal which is now being revived for the benefits of overseas Pakistanis, he said.

Responding to a question, he said those overseas Pakistanis who were looking forward to invest in Pakistan, and wanted to do joint ventures with their Pakistani counterparts had good inter-action with Pakistani officials and the private sector during the international conference held in March this year. It was also attended by professionals residing in foreign countries.

The conference with the theme opportunities that belong to you, he said, had provided an opportunity to bring together all relevant stakeholders from public and private sectors and middle and high income overseas Pakistanis.

It also provided the overseas Pakistani entrepreneurs opportunities of investment of interaction with officials of the federal and provincial governments, as well as local businessmen for identifying areas of investment and for forming trade and joint venture partnership.

He said since overseas Pakistanis could play an effective role in further strengthening the country's economy by adequately investing in their country, the government would further consider offering them more incentives and concessions.

According to another senior official of the ministry of privatisation and investment, the government has received an all-time high over $6 billion foreign investment in 2006-07 against $3.9 billion of 2005-06.

He said over $6 billion foreign investment also included $2 billion portfolio investment, of which there were $1.5 billion GDR of OGDCL ($738 million) and UBL's ($565 million).

The private investment in the stock market also exceeded by the end of June 2007.

A 20 per cent foreign investment in the manufacturing sector, 11 per cent in the oil and gas exploration, 33 per cent in telecommunications, 21 per cent in financial business, three per cent in power and 10 per cent in other services was recorded.

He said 41 per cent foreign investment came from Europe which included 18 per cent from the Netherlands, 17 per cent from China, 16 per cent from US, 11 per cent from the Middle East, nine per cent from the UAE.

He dispelled the impression that major foreign investment was attracted from the Middle East.

Answering a question, he said that the biggest portfolio investment came from the US, followed by the UK (33 per cent) and Singapore (15 per cent).

http://www.dawn.com/2007/07/18/ebr2.htm


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## Neo

*Tax-to-GDP ratio to be raised to 15.5pc by 2017​*
ISLAMABAD, July 17: The collection of general sales tax (GST) has declined from electricity, natural gas, cement and motor cars during the year 2006-07 over the same period of last year.

Official figures released here on Tuesday at the first quarterly conference of collectors of sales tax and federal excise, showed that the GST collection declined by 3 per cent from electricity, 6 per cent natural gas, 8 per cent cement, and 29 per cent motor cars during the year under review over the last year.

With this decline, the overall collection of GST remained short of the target during the year under review.The sectors, which have shown positive growth in the sales tax collection in 2006-07 were telecom (35.8 per cent), POL (5.8 per cent), sugar (26.1 per cent), cigarettes (20.5 per cent), services (20 per cent), beverages 19 per cent) etc.

Chairman Federal Board of Revenue (FBR) Abdullah Yousuf told the collectors that reliance on few major sectors like telecom, POL etc were not advisable and likely to weaken revenue position in future and enhance the organisations vulnerability.

We, therefore, have to carefully analyse the tax potential exists in different sectors of the economy and their contribution in revenue. We must ensure that all due taxes are collected, the chairman remarked.

He called upon the tax collectors to make concerted efforts to broaden tax base for which enormous potential exists in various sectors of the country.

Currently, we have a very narrow tax base. Unless we expand this base, we may not be able to enhance our tax-to-GDP ratio, which at present is not at the desired level, he added.

Mr Yousuf reminded the collectors that the present level of tax-to-GDP ratio was certainly not acceptable to the government. We have to raise it from present level of 10.5 per cent to 15.5 per cent by the year 2017, as projected in 10-Year taxation plan.

About disposal of refunds claims, the conference was told that an amount of Rs9.1bn refunds had been withheld in 8,757 refund claims till June 30, 2007.

Major sectors, which have recorded significant growth in federal excise collection were cigarettes (17 per cent), cement (22.6 per cent), POL products (24.7pc) and beverages (24.5 per cent).

The chairman, however, directed the Audit Wing to expedite the settlement of both external and internal audit observations. He said taxpayers audit should be based on automated, un-biased and discretion-free method.

http://www.dawn.com/2007/07/18/ebr4.htm


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## Neo

* MOL to up production in Pakistan, Russia​*
ISLAMABAD: Hungarian oil and gas company MOL expects significant production increases in Russia and Pakistan starting in 2009-2010 as part of its long-term strategy to realise additional growth and cash generation throughout its current operating base and portfolio.

In a statement, the company made the announcement based on its assessment of development options identified since 2005.

The MOL Group said in anticipation of the cash flow benefits of these developments, the company had revised its capital return policy.

The statement said the MOLs upstream and downstream operations were the most efficient in Europe based on recognised independent analysts.

The MOL Group has the highest net cash refining margins among European refineries due to its state-of-the-art refining assets, enviable market position, efficient logistics and unique supply chain management practices.

This excellence in its business operations is reflected in its share price performance which has consistently outperformed its European refining and marketing peers during the last five years, it said.

Earlier, the Board of MOL considered a preliminary and conditional approach made by OMV to acquire MOL. It unanimously rejected this unsolicited and unwelcome proposal.

The Board does not believe that an approach to a corporate combination with OMV represents a compelling proposition for MOL, its shareholders and other key stakeholders.

The Board of MOL believes that the company has significant unrecognised organic upside potential. The company is targeting Group EBITDA, excluding any future M&A activity, to grow at an average of 6.5 per cent per annum between 2006 and 2011 (based on the 2006 macro environment) and reach US$2.9 billion in the year to December 31, 2011.

In the refining and marketing segment, the MOL is targeting a five per cent annual average EBITDA growth until 2011, to exceed US$1,420 million in 2011.

The hydro-cracker refinery project in Duna is expected to improve EBITDA by approximately US$150 million per year starting in 2011, raising diesel yields of MOL from 44 per cent in 2006 to 50 per cent in 2011 on an increased capacity of 15 million tonnes.

This will happen against the backdrop of a market environment that is characterised by seven to eight per cent annual average demand growth in diesel over the next four years.

http://www.thenews.com.pk/daily_detail.asp?id=64812


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## Neo

*Trade Policy: Another failure in achieving export target?​*
KARACHI: After failing to achieve the export targets for two successive financial years, eyes are set on current fiscal years trade policy to see how realistic the export target would be?

This years trade policy, to be announced today (Wednesday) by commerce minister in Islamabad would envisage around 10-12 percent growth in export target for financial year 2007-08. However it has to be seen what measures and incentives would be announced to boost the countrys export sector.

On the other hand, the imports have been surpassing their annual targets on the back of burgeoning petroleum imports and food items, resulting in a whooping trade deficit for the last few years.

The official figures of countrys foreign trade during 2006-07 indicate that export proceeds fell short of their target by 6.9 percent or by $1.284 billion in absolute terms to reach $17.316 billion as against $18.6 billion export target for the whole year. 

In fact the exports grew just at the average of four percent whereas they should have been increased by 18 percent to meet the target. Imports grew at a greater pace and climbed up 8.1 percent to $30.86 billion during the year 2006-07 as against $28 billion for 2006-07. 

The unimpressive export performance could be attributed to struggling export of textile products, which confronted stiff competition in recent months from its competitors. Although a number of incentives have been offered to enhance the textile exports, however exporters term it too short to steer this sector out of crisis.

Last years trade policy emphasised a lot and envisages a number of measures to support the non-traditional sectors especially marble, horticulture and few others, however nothing concrete was taken during the whole year, which is evident from the export performance of these sectors during this year.

Exporters said various incentives announced in last trade policy to boost the export of non-traditional items could not be implemented on one pretext or others. Government incorporates our suggestions in trade policy, but when it comes to implementation of these policies, the red-tapism impedes the process, exporters felt. 

Analysts said failure of government to achieve the export targets in two consecutive years has created embarrassment, as they used to boast of increase in exports over the last few years. 

They said that weaknesses have been identified in the export related policies so that trade balance could be brought under control, which is otherwise, fast eroding the precious foreign exchange of the country, however government instead of devising comprehensive planning to narrow down the gap has been bent upon financing the increasing trade deficit. 

They said that though the category-wise export proceeds detail is yet to come, it is mainly because of slow growth in textile products exports, which made the export target impossible, as well the unimpressive performance of export of traditional and non-traditional items. 

Analysts said that rising costs and energy prices during the last few years have made Pakistani products less attractive for buyers in the international market. This can be one of the reasons for dwindling exports during the first nine months of the current fiscal year, he added.

http://www.dailytimes.com.pk/default.asp?page=2007\07\18\story_18-7-2007_pg5_1


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## Neo

*Oil production up 1.2% in July-May​*
KARACHI: The exploratory and development wells maintained the average 1.2 percent growth in domestic production of oil and gas in Pakistan during the period of July-May, 2006-07.

According to oil and gas production data released by Pakistan Petroleum Information Service (PPIS), oil and gas production during 11-month of FY07 stood at 688 kboepd (thousand barrels of oil equivalent per day) as compared to the production in the corresponding period last year of 585.44 kboepd, posting a rise of 1.2 percent.

Major blocks, including Bobi, Chanda, Kunnar, Mela, Adhi and Tal have contributed significantly this year to the increase in oil production. Local gas production in Jul-May period has increased by 1 percent to 3.9 bcfpd (billion cubic feet per day) as against 3.8 bcfpd produced during the same period last year. This nominal growth in gas production is primarily due to decline in production from mature fields which somewhat offset the impact of production increase from new fields.

On the other hand, oil production stood at 66.9 kbpd (thousand barrels per day), as compared to 65.4 kbpd last year. 

OGDC production of oil and gas reached to 195.9 kboepd during July to May of 2006-07 as compared to 190.5 kboepd in the corresponding period last year. But, the production of oil posted 7 percent growth, as it stood at 40.9 kbpd versus 38.2 kbpd in the same period last year. Gas production on the other hand, stood at 0.96 bcfd.

Pakistan Petroleum Limited production of oil remained flat and combined oil and gas production during 11 months (July-May) of FY07 posted a marginal growth of 0.6 percent to 163.9 kboepd from 163 kboepd produced during the same period last year. Gas production during the period remained flat at 1 bcfd. 

The total oil production of the company registered a growth of 51 percent, raising the oil production to 2.7 kbpd for the period under review against 1.8 kbpd previously. However, oil accounts for just 3 percent of the top line of the company.

http://www.dailytimes.com.pk/default.asp?page=2007\07\18\story_18-7-2007_pg5_4


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## Neo

*Cell phone subscribers swell to 63.15 million, up 45%​*
* Experts see the number rising to 100 million by 2010

KARACHI: The cell phone subscriber base of the country has jumped to 63.15 million as of June 2007, showing a rise of 45.36 percent when compared with the figures for fiscal 2005-06 and experts see the addition of another six million subscribers by the end of the current fiscal year.

According to the latest figures released by the Pakistan Telecommunication Authority (PTA), the number of cellular service users stood at 63.15 million as of June 2007, which was 34.50 million at the end of FY 2005-06. Indicating that more than 28.65 million new connections were sold out last year as tariffs kept on coming down due to rising competition among cellular service providers that attracted more customers.

Mobilink and Ufone have managed to double their subscribers while Telenor and Warid have also achieved good results in terms of subscriber growth up to 50 percent. Surprisingly, in the last moth Paktel instead of gaining has lost around 30 thousand subscribers. Throughout the year Paktel has seen many ups and downs in terms of subscribers.

Sources close to the industry said that the total number of cellular subscribers will reach 80 million by June 2008 and the number of mobile phone subscribers is expected to reach 100 million by 2010. Sources said that the four major companies Mobilink, Ufone, Warid and Telenor have expanded their respective market shares during the last fiscal year. 

These days cellular companies are spending huge amounts on new advertisement campaigns by introducing different packages for their customers with different tariff packages and incentives. 

The cellular phone industry has reached the take-off level and has entered a new phase where investors are keen to invest and subscribers are happy to avail the quality services at reasonably competitive prices. Credit also goes to the regulator who has created a conductive, investor and user-friendly regime in Pakistan. Telecom industry in Pakistan has attracted $9 billion foreign investment in the last three years and another $4 billion are expected during the next 3 to 4 years. Around 1.5 million new subscribers are being added each month. To win this competition the battle of widest coverage, low tariffs and quality services among mobile phone operators is heading towards its fierceness, as all of them are eager to cover maximum cities and towns in the minimum span of time. 

The figures gathered by the telecom watchdog PTA shows that Mobilink leads the market with 26.46 million subscribers followed by Ufone, which was serving 14.01 million people across the country. Telenor grabs the third position with 10.70 million subscribers and puts Warid at the fourth position with 10.62 million subscribers.

http://www.dailytimes.com.pk/default.asp?page=2007\07\18\story_18-7-2007_pg5_13


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## Neo

*Trade policy envisages $19.2 billion exports, $32 billion imports: government moans about growing trade deficit, EPZ-like incentives for export oriented units ​*
ISLAMABAD (July 19 2007): Commerce Minister Humayun Akhtar Khan on Wednesday unveiled the 'Trade Policy 2007-08' with exports projection of $19.2 billion to be backed by several export-driven measures to extend equal incentives to export-oriented units (EOUs), like Export Processing Zones (EPZs) and facilitation measures for domestic trade development.

He did not give imports projections for 2007-08 in his speech on official electronic media, but sources in Commerce Ministry indicated that it would be about $32 billion, which would mean trade deficit of.

The new 'export policy' is based on enhanced competitiveness, productivity and export capacity which also includes 'Long Term Financing for Export Oriented Projects' (LTF-EOP), equity fund, brand acquisition, encouragement of SPS compliance, sectoral investment incentives, export credit risk management, and social, environmental and security compliance and skill development.

Assistance in meeting international standards, support for compliance certifications, assistance for opening exporters' offices abroad, support for marketing of branded products, retail sales outlets, overseas business support units and e-marketing are also among the main features of the policy.

The Minister announced that to facilitate investors changes had also been made in import policy, especially to encourage construction industry, import of heavy duty prime movers, facilitation of exhibitors, facilitation of disabled persons, facilitation for mountaineering expeditions and facilitation for overseas Pakistanis.

According to the new scheme, EOUs will have the same incentives as are available to units in the EPZs, and the existing units exporting at least 80 percent of their production would be eligible for registration with the FBR. However, the new units so registered would be required to export 100 percent of their production.

*EQUITY FUND*: Humayun said that it has been decided to establish equity fund through pooling resources of private and public organisations for brand acquisition, and encourage SPS compliance. This fund would be used to encourage Pakistani companies for acquisition of overseas brands or brands holding companies in the following manner:

-- If the acquirer is a wholly owned Pakistani company or a wholly owned subsidiary of a Pakistani company, up to 50 percent, or equity capital.

-- If the acquirer is a joint venture involving a Pakistani and a foreign company, up to 50 percent of the equity capital of the share of the Pakistani company.

Equity capital participation from the fund will not exceed $5 million per proposal. It has been decided to import silver and platinum for manufacturers and export of jewellery. To arrest decline in exports of carpets it has been decided to allow import of semi-finished carpets on temporary basis for processing for export under Customs SRO 1065.

The Minister said that it has also been decided that inland freight subsidy would be allowed for transportation of goods destined for export, and added that financial assistance would be provided to develop export quality slaughterhouses.

*SECTORAL INVESTMENT INCENTIVES*: To encourage new investments, particularly in hi-tech and core and developmental products, the government has decided to allow First Year Allowance (FYA) on investment in PME (Plant, Machinery and Equipment), to be set off against statutory income in the year of assessment. Unutilised allowance can be carried forward.

*THE FYA WILL HAVE THE FOLLOWING RATES:* 

*EXPORTING UNITS OR VALUE-ADDED OR HI-TECH INDUSTRIES*: @ 90 percent of the cost of the plant, machinery and equipment.

*PRIORITY/DEVELOPMENTAL CATEGORIES AND AGRO BASED INDUSTRY*: @ 75 percent of the cost of the plant, machinery and equipment.

-- Other industries: @ 50 percent of the cost of the plant, machinery and equipment.

-- Re-investment allowance at the same rate as mentioned in para (i) above will be applicable on capital expenditures/investment in case of BMR & expansion.

-- Exporting units, value-added and hi-tech industries will be exempted from payment of customs duty and taxes on import of plant, machinery and equipment.

*EXPORT CREDIT RISK MANAGEMENT*: Twenty percent export transactions of goods and services are on terms of payments, other than secure transaction terms (ie without L/C or advance payment). This practice is growing.

Additionally, large buyers are eliminating middlemen and increasingly demand duty-paid, JIT deliveries. About all competing countries offer facility of Export Credit Agencies while Pakistani exporters face difficulty in obtaining risk covers for exports, especially SMEs.

Pakistan is increasingly losing contracts. In view of this it has been decided to restructure PEFGA to include insurance of the exporters' credit risk and restructure board.

The Commerce Minister said that development of women entrepreneurship in exports, facilitation for pharmaceutical product exports, support for enhanced production of Japonica rice, establishment of cold chain system for fruits, vegetable, floriculture and refrigerated containers would be facilitated.

He also announced regulatory measures regarding imports according to which it has been decided that import and export of goods for transit under the Agreement for traffic in transit among the Governments of People's Republic of China, the Kyrgyz Republic, the Republic of Kazakhstan and Pakistan shall be subject to all prohibitions and restrictions notified and reflected anywhere in the IPO.

*IMPORT OF DRUGS*: In order to prevent misuse of imported narcotic drugs and psychotropic substances, it has been decided that pharmaceutical units having valid drugs manufacturing licences would be allowed to import these substances on the authorisation of Health Ministry. Such imports would also be subject to the meeting of conditions prescribed for import of pharmaceutical raw materials.

*PAKISTAN STILL FACING TRADE DEFICIT CHALLENGE *Commerce Minister Humayun Akhtar Khan admitted that Pakistan is still facing the challenge of trade deficit which grew significantly over the last few years due to slow growth of exports, macro policy, fiscal deficit and debt.

He was of the view that macro policy focus on growth, fiscal deficit and debt which make exports expensive and imports cheaper besides hurting industrial investment and trade competitiveness.

"It is important to have a balance in the macro policy so that exports could be encouraged and the current account deficit be reduced," he suggested. He further said that the government should address the issues of export competitiveness through upgradation of manufacturing, services and agriculture sectors.

He was also annoyed over increasing cost of doing business, saying that it should be brought down to international competitive levels. "Efficient utilities and infrastructure need to be provided and inputs should be available at internationally competitive prices," he concluded.

*SALIENT FEATURES *

-- 6 percent R&D for home textiles.

-- 6 percent R&D for garment and leather footwear to continue.

-- 50 percent financial help for pharma export.

-- 50 percent cost of certification for rice and food export to UK from exchequer.

-- 50 percent subsidy offered for rent and salaries for establishing offices abroad.

-- The LTF-EOP has been enlarged to cover core and developmental sectors, purchase of locally manufactured machinery and compact spinning.

-- 50 percent equity given for brand acquisition.

-- Inland freight subsidy for engineering goods export.

-- Semi-finished carpet import allowed for re-export.

-- Value-addition requirement for gold and jewellery export cut.

-- Import of silver and platinum for jewellery export allowed.

-- Imports of cars, buses in CBU condition decreased by 11.1 percent and 20.6 percent, respectively.

-- Import of mobile phones increased by 27.6 percent.

-- Authority to grant exemption from sales tax registration to be delegated to Collector of Customs to facilitate Overseas Pakistanis.

http://www.brecorder.com/index.php?id=594298&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*New scheme to facilitate SME exporters ​*
ISLAMABAD (July 19 2007): The Federal Board of Revenue (FBR) will announce a new scheme for the temporary importation of raw materials, including fabrics to be used in exports products by the SME exporters. The Trade Policy (2007-2008) revealed on Wednesday that the FBR would issue a new scheme to facilitate SME exporters.

Under the scheme, temporary importation of raw materials, including fabrics would be allowed for consumption as inputs for export products. The FBR will also impose penalty on the imports of stolen and chassis tampered vehicles under the personal baggage, gift and transfer of residence (TR) schemes to check influx of stolen cars.

In addition to confiscation of these vehicles, the importers will also be liable to penalty as may be imposed by any other law for the time being in force. The re-export facility will also not be available for such vehicles. In a bid to facilitate the Overseas Pakistanis, the FBR would empower the Collector of Customs to exempt sales tax registration for release of goods sent by Pakistanis living abroad.

Presently, only FBR can allow release of goods sent by Overseas Pakistanis, to a consignee without sales tax registration. This causes undue delay in the release of goods. Now, it has been decided that the authority to grant exemption from sales tax registration will be delegated to the Collector of Customs concerned.

The government has also decided to allow duty drawback and federal excise duty (FED) refund against goods exported to ISAF and Defence Logistics Agency in Afghanistan.

According to the existing Export Policy Order, exports to Afghanistan in convertible currency is zero rated only on certification of arrival by Afghan authorities.

It has been decided that zero rating of sales tax or duty drawbacks as well as federal excise duty refund against goods exported to ISAF and Defence Logistics Agency will be allowed on production of receipt issued by the aforementioned agencies, endorsed by representatives of these agencies based in Pakistan confirming that they have received the goods.

To encourage export of ghee to Afghanistan, it has been decided that vegetable oils being exported to Afghanistan will have ingredients information printed in 'Dari' and 'Pushto' languages. Consumers desire information about the ingredients used in edible products. In case of Afghanistan it was observed that all foreign brands contained product information in local language except those imported from Pakistan. The government has also allowed the manufacturers in local footwear industry to import duty-free footwear samples.

Presently, exporters of footwear are allowed to import duty-free footwear samples to meet their export commitments. It has been decided that the facility will be extended to manufacturers as well. This will help local manufacturers to improve the quality of their products and keep abreast themselves of fashion and trends in vogue in the world market.

http://www.brecorder.com/index.php?id=594287&currPageNo=1&query=&search=&term=&supDate=


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## solid snake

Pakistan really needs to do something about it's worrying trade deficit.

Great thread, keep it up.


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## Neo

solid snake said:


> Pakistan really needs to do something about it's worrying trade deficit.
> 
> Great thread, keep it up.



I agree, drastic measures are needed to increase exports to friendly countries. Imho best move will be to invest in export oriented SME and and to provide tax examtions for foreign multinationals investing in this sector.


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## Neo

*KSE records biggest fall of year ​*
KARACHI: The Karachi Stock Exchange benchmark KSE-100 Index witnessed the biggest decline of the calendar year on Thursday falling 466.47 points or 3.41 percent to 13193.37 levels amid panic selling triggered by deteriorating law and order in the country and rumours of offloading by foreign investors.

The KSE 100 Index has lost 860.57 points in last two sessions. Index opened in with 19 points positive and at one points it was up by 48 points however the news of blasts in Balochistan and NWFP lead to offloading that pushed the index to intra day low of minus 545 points. KSE 30 index closed at 15768.48 with a loss of 645.90 points down 3.93 percent.

Ahsan Mehanti CEO of Shehzad Chamdia Securities said that uncertain law and order situation in the country and fresh blasts in NWFP and Balochistan were continuously imposing negative impact. Heavy selling pressure was witnessed on all the counters. On the other hand the widow of Daniel Pearl has sued Habib Bank, which was also one of the reason for the banking sector to be the major looser in trading.

Banking scrips remained under selling pressure. KSE 30s loss of 645.90 points indicates that banking stocks have been severely affected by suit filed against HBL and crumbling law and order.

Atif Malik analyst of JS Global Capital said that panic selling was witnessed in all the major scrips and all the blue chips closed on their lower locks. The current geo political situation of the country is the major culprit of the negative market.

The 466.47 points dip of KSE 100 is fourth largest fall in the history of the Karachi stock market and the biggest in the present calendar year. Bearish sentiments prevailed in the market through out the day, Atif said.

He expressed hope that market will bounce back on expectation of positive upcoming corporate results provided the geo-political situation stabilises.

According to Husnain Asghar Ali of Aziz Fidahussien nervous opening pushed the value buyers on the back foot. Although discounts did invite renewed buying, foreign selling never allowed the index to stabilize and the index made an intra-day low of 13134 (-525). 

Technically index failed to honour a major support of 13550-13557, thereby pushing the immediate support around 12977-13983 while overhead resistance stays at 13510-13517. It is however recommended to accumulate main stocks on dips while exit is recommended from the penny stocks on strength in order to reduce the trading portfolio he said. 

The pre announcement season however indicates a healthy post announcement scenario as the main stocks are likely to stay at par or better in the June 30, 07 announcements, improvement in law and order situation and strong conviction by the authorities can however invite the local liquidity in the market, while foreign stance mainly on the strategic investments can re boost the confidence of the locals in the policy makers. 

With CFS capped actual leverage amount is still unknown as those who are unable to get the privilege of using CFS funds have certainly opted for other official and unofficial channels of financing; it is therefore tough to decide as to where the leverage holdings come at manageable levels, stated Hasnain Asghar Ali.

The market performance was dull as compared to last trading session. Trading activity was dull as compared to the last trading session as the ready market volume stands at 321.661 million shares as compared to 461.560 million shares a day earlier, and the future market volume fell to 84.160 million shares as compared to volume 85.622 million shares a day earlier.

Market capitalization stood near Rs.3.885 trillion. Issues of only 34 companies advanced while 344 declined and 16 remained unchanged.

All the major scrips closed on their low locks and steep selling was seen in the all the scrips.

FFBL was the volume leader with 22 million shares down by 90 paisa closed at Rs44.90, followed by Pak PTA Ltd. with 18.939 million shares up by 15 paisa closed at Rs6.65, OGDC with 17.943 million shares down by Rs2.40 closed at Rs117.55, Fauji Cement with 17.894 million shares down by 90 paisa closed at Rs19.90, PTCL with 15.588 million shares down by Rs2.80 closed at Rs56.50, Arif Habib Sec. with 13 million shares fell Rs7 to Rs133.90, BOP with 12 million shares down by Rs.4.95 closed at Rs.94.55, Bank Al-Falah with 11.045million shares down by Rs.2.65 closed at Rs.52.30, Dewan Salman with 11.032million shares down by 80 paisa, National Bank with 10.939million shares down by Rs.12.65 closed at Rs.240.35.

http://www.thenews.com.pk/daily_detail.asp?id=65036


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## Neo

*Govt focusing on narrowing fiscal deficit ​*
ISLAMABAD: Commerce Minister Humayun Akhtar Khan at a post-trade policy press conference here on Thursday said the federal government and its monetary executing agency were focusing more on narrowing fiscal deficit, revenue collection and debt servicing than enhancing exports.

He was optimistic that the non-recurrent flows would replace the recurrent flows (exports and remittances) in the future because of the longer exports policy of the government.

Defending the economic policies of the government, Khan said both fiscal and current account deficits were not only close with each other but under the set target of 4.2 per cent.

Export measures and strategies like export facilitation and marketing support and sectoral initiatives would help to achieve the set target of exports, he added.

About exportable surpluses, the minister said high interest rate for large-scale manufacturing and low yield were major hurdles to the availability of exportable surpluses and the government was focusing on these issues as well.

Answering a question about results of trade diplomacy and FTAs, he said the government pursued both these initiatives vigorously to enhance exports and results would show after some time.

A Chinese delegation, now in Pakistan and comprising a number of importers both from the private and public sectors, was going to place import orders worth one billion US dollars, he added.

The Reconstruction Opportunities Zones would boost exports, Khan said. When asked about the decline in exports to Afghanistan, the minister said the decrease in exports to Afghanistan was noted in POL, adding: A particular country is responsible for it. He did not name the country.

Earlier, the visiting Chinese trade delegation, led by Chinese Assistant Trade Minister Wang Chao, met the commerce minister at his office. The delegation consisted of traders and importers. Secretary Commerce Syed Asif Shah also attended the meeting, says an official statement.

The minister told the delegation that steps had been taken for a roadmap for enhancing trade relationship. One of the important steps was the acquisition of Paktel.

http://www.thenews.com.pk/daily_detail.asp?id=65038


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## Neo

*FDI jumps to $5.12 billion ​*
ISLAMABAD: Foreign direct investment in Pakistan soared by 45.6 per cent year-on-year to $5.124 billion during 2006-07 while portfolio investment climbed by 417.9 per cent to $1.82 billion compared to the previous fiscal year, the State Bank of Pakistan (SBP) reported on Thursday.

During July-June 2006-07, FDI in absolute terms rose by $1.604 billion and portfolio investment by $1.468 billion over the corresponding period of 2005-06, when these stood at $3.521 billion and $351.50 million respectively.

Therefore, on balance, total foreign private investment in the 12-month period shot up by 79.3 per cent to $6.945 billion from $3.872 billion in the same period a year ago.

In 2004-05, total foreign private investment in the country stood at $1.676 billion.

According to break-up of the foreign investment figure, developed countries made a total investment of $4.7 billion - FDI $2.99 billion and portfolio investment $1.71 billion. The developing economies invested $1.805 billion (FDI $1.71 billion and portfolio investment $95.2 million).

Among developed countries, western Europe made a total investment (FDI and portfolio) of $2.78 billion and the European Union invested $2.71 billion compared to investments of $831.3 million and $396.5 million respectively in the previous fiscal. Besides, under unspecified head (investment by international financial institutions and others) $438.9 million was received, which included $423.8 million FDI and $15 million portfolio investment.

Among developing countries, Caribbean Islands made direct investment of $19.1 million and portfolio investment of $1.2 million. Africa, including Libya, Egypt, Mauritius, South Africa and other countries invested $98 million.

Asian countries (West Asia, South, East and South East Asia) made total investment of $1.684 billion, including $1.601 billion FDI and $82.1 million portfolio investment.

The break-up of investment further indicated that United Kingdom was the biggest investor in Pakistan as it invested $1.82 billion - $860.1 million FDI and $960.1 million portfolio investment.

The US was second with an investment of $1.766 billion, including FDI of $913.1 million and portfolio investment of $853.4 million.

The Netherlands was third, whose direct investment was $771.8 million while portfolio investment was $6.2 million. China invested $712 million in FDI.

The United Arab Emirates (UAE) invested $676.3 million comprising $661.5 million FDI and $14.9 million portfolio investment.

http://www.thenews.com.pk/daily_detail.asp?id=65044


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## Neo

*Meat exports to Gulf ​* 
Importers agree to stop snap check of Pak abattoirs

KARACHI: The United Arab Emirates has agreed to avoid surprise visits to check deficiencies at Pakistani slaughter houses exporting meat to the Gulf region, instead the local authorities would be informed to arrange a trip to the approved facilities.

Trade sources said a delegation comprising meat exporters recently visited the UAE and held a series of meetings with the authorities concerned, facilitated by the Pakistani consulate, which ended with consensus that the two sides would sign an understanding to define fresh strategy of quality standard and satisfaction.

The federal ministry of food, agriculture and livestock and the UAEs general secretariat would sign an MoU soon, said a source close to the talks between two sides.

The MoU defines the fresh modalities of quality inspection and control under, which the UAE authorities would now inform the local authorities before planning any visit of the four slaughterhouses, approved for meat exports to the Gulf region.

He said during the visit Dr Amin, a consultant to the UAEs general secretariat made a convincing presentation, which was agreed by the UAE officials and importers to avoid surprise visits of the slaughterhouses.

The Pakistani delegation comprised of Raja Muhammad Dawood, Chief Executive Pakistan Food Products; Asif Ghayas, Chairman Zenith Associates and Muhammad Khalid, Managing Director Catco, added the source.

Pakistan allowed meat export in Trade Policy 1999 first time ever but the shipments of the products were hit snags several times on quality grounds. Saudi Arabia had banned meat imports from Pakistan due to low hygienic standards.

However, the recent meetings between the two sides have lifted hopes of Pakistani traders, who see the meat export figures going higher than previous years on boosted confidence of foreign buyers and increased confidence of local traders.

Actually Pakistani consulate played the vital role in defining new strategy and convincing the UAE officials and importers, Raja Muhammad Dawood of Pakistan Food Products, one of the delegates, who visited the UAE.

He said Bilal Khan Pasha, Commercial Attache for Pakistani Consulate in the UAE arranged the delegation meetings with the UAE municipality and concerned institutions and made a detailed proposal to control quality of the products and increase the Pakistani meat exports.

The UAE consumers and other Middle East countries like the goat meat exported from Pakistan and there is also a demand of our beef and mutton products, said Dawood. We have been making some $2 billion export for the last few years, which is likely to increase significantly with recent initiative agreed between the two sides during our visit.

The government couple of days ago announced the trade policy for 2007-8 eyeing 11 per cent growth in exports to $19.2 billion as against last years export proceeds of $17.3 billion.

The country suffered the highest ever trade deficit of $13.54 billion during 2006-07 up by 12.83 per cent from $12 billion recorded during 2005-06.

The government had projected a trade deficit of $9.4 billion for fiscal 2006-07 as against $12.13 billion deficit recorded during 2005-06.

http://www.thenews.com.pk/daily_detail.asp?id=65046


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## Neo

*Work on land record automation begins ​*
LAHORE: Descon Information Systems has started work for developing Land Record Management Information System (LRMIS). The project has been undertaken by the Punjab government after studying problems faced in the current paper-based land record system.

Descon Information Systems is one of the four companies selected by PITB (Punjab Information Technology Board) for the development of Land Record Management Information System.

The current paper-based land record management is cumbersome and obsolete and due to this local as well as foreign investors have been reluctant to invest in businesses based in rural Punjab.

The electronic system will help automate the management of land record and will provide a central land data repository for monitoring and revenue collection. This automation system will streamline the land record processes and will gain the confidence of investors.

The pilot project of LRMIS will be initiated in district Kasur. All key components of LRMIS and business processes will be tested in Kasur before introduction in the entire Punjab involving 18 districts.

The key components include LRMIS software, hardware, networking, data entry, construction of booths, and business processes associated with land revenue administration.

http://www.thenews.com.pk/daily_detail.asp?id=65047


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## Neo

*Industrialists mostly welcome new trade policy ​*
KARACHI: A majority of industrialists, especially the textile sector, have welcomed the new trade policy 2007-08 announced by the Federal Minister for Commerce, Humayun Akhtar Khan on Wednesday.

However, representatives of some leading trade bodies remained detached and did not pay heed to the commerce ministers speech; who announced new import and export incentives for the current fiscal year.

Pakistan Hosiery Manufacturers Association (PHMA), central chairman Naqi Bari welcomed and appreciated the trade policy, saying that it was one of their long standing demands that benefits being enjoyed by Export Oriented Units in the trade processing zones be given to them as well, which have been heeded.

Pakistan Bed Wear Association, chairman, Shabir Ahmed hailed the policy and maintained that initiatives like establishing of ware houses was an excellent decision. However, he said that the private sector should also be involved in this programme.

He said that the announcement regarding assistance for opening of exporters offices abroad, support for marketing of branded products, besides enhancement of financing period from three years to four for opening of retail outlets were all positive steps which would help in enhancing exports.

Pakistan Readymade Garments Association of Pakistan (PRGMEA), chairman, Ejaz Khokhar expressed his satisfaction over the trade policy and said that the announcement of subsidy for promotion along with support for establishment of overseas business units would help in increasing exports.

He also appreciated dialogue with the US regarding duty free excess for Pakistani garments produced in Reconstruction Zones (ROZs) in border areas.

However he apprehended that if defence exports were not included in total exports of the country in fiscal 2006-07, then shortfall in export target would be further widened.

Ejaz further claimed that in the absence of a comprehensive and focused policy and without involvement of WAPDA and KESC measures announced would be dwarfed in achieving export target of $19.2 billion for fiscal 2007-08.

Former chairman Pakistan Leather Garments Manufacturers and Exporters Association (PLGMEA), Fawad Ejaz said that the leather garment industry has been completely ignored in the trade policy. 

He said exports of the sector had already shrunk by 24 per cent in first eleven months of last fiscal year.

He said out of 17 proposals submitted by PLGMEA not one was approved by the finance ministry.

He said the trade policy should be formulated for a period of at least two or three years and that businessman should not expect much from a trade policy formulated each year.

He said that last year the government had announced R&D (research and development) support for leather footwear; whereas leather garment sector was denied this very same provision.

He also said there was absolutely nothing new in the trade policy for the leather industry as government was already providing the subsidies announced for establishing brands and skill development to various value added sectors.

Similarly, SITE Association of Trade and Industry, chairman, Imran Shaukat avoided committing on the new trade policy, stating that he did not give much weight to the new trade policy.

http://www.thenews.com.pk/daily_detail.asp?id=65048


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## Neo

*New procedures for export of goods​*
ISLAMABAD, July 18: The commerce ministry has issued new procedures for regulating and facilitating export of goods. These procedures were announced through the trade policy here on Wednesday.

Under the new procedures, it has been decided that in case of export of defective goods where replacement has been received, the condition of indemnity bond will be done away with provided there is no revenue implication.

It was also decided that vegetable oils being exported to Afghanistan will have ingredients information printed in Dari and Pushto languages.

Exporters of footwear are allowed to import duty-free footwear samples to meet their export commitments. This facility will be extended to manufacturers as well.

The equity fund for acquisition of overseas brands and/or the brand holding companies will be available in the following manner:

-- If the acquirer is a wholly owned Pakistani company or a wholly owned subsidiary of a Pakistani company, up to 50 per cent of equity capital. If the acquirer is a joint venture involving a Pakistani and a foreign company, up to 50 per cent of the equity capital of the share of Pakistani company.

Equity capital participation from the fund will not exceed US$5 million per proposal.

It has been decided that the equity fund will also be used for participation in investment in such facilities.

The first year allowance (FYA) will have the following rates:

Exporting units or value-added or hi-tech industries at the rate of 90 per cent of the cost of the plant, machinery and equipment.

Priority/developmental categories and agro-based industry at the rate of 75 per cent of the cost of the plant, machinery and equipment. Other industries at the rate of 50 per cent of the cost of the plant, machinery and equipment.

To introduce best practices, it has been decided to hire international consultants for selected companies on cost sharing basis. The consultants would benchmark the firm characteristics, including production technology, skills, accounting procedures, marketing and business practices relative to international levels; identify the deficiencies and assist the firms in removing them.

The scheme will initially include textiles and apparels, surgical instruments, leather products and sports goods.

The companies, which do not follow the advice of the consultants, will be required to refund the money contributed by the government.

For each sector, there will a list of the approved consultants.

Criteria for selection of companies will be prescribed.

The agri-marketing integrated centres (AMIC) will be established.

It will establish close linkages with selected and enlightened farmers to obtain their produce for storage and sales on their behalf, provide common facilities, such as grading, packaging, fumigation, testing, certification, etc.

Export linkages will be established with international and local buyers. TDAP will establish a private limited company to be managed by specialists in this field.

Under the National Trade Corridor Improvement Programme (NTCIP), the ministry of commerce, in consultation with horticulture export board, prepare proposals for enhancing annual export of fruit and vegetables, and floriculture from existing $150 million to $400 million in the next five years.

For this purpose, it was envisaged to establish a cold chain system, including pack houses, cold stores, and refrigerated containers.

The following initiatives will be taken: 39 modern pack houses, completely automated and equipped with advanced electronic devices for packing/grading and storage plants will be set up at 31 fruits and vegetable growing areas throughout the country; 23 facilities for cold storage and controlled atmosphere storage will be established at the fruit production areas, airports and seaports in the country.

Two container yards in Karachi and Lahore with a pool of 200 refrigerated containers and 50 controlled atmosphere refrigerated containers at each location will be established.

Karachi pool will serve the requirements of Sindh and Balochistan while Lahore pool will serve the requirement of Punjab and NWFP.

Trade Competitiveness Institute of Pakistan will be established, initiatives to be taken as part of national trade corridor improvement programme for increasing share in international trade and increasing exports.

http://www.dawn.com/2007/07/19/ebr2.htm


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## Neo

*Large trade deficit made exports expensive​*
ISLAMABAD, July 18: Commerce Minister Humayun Akhtar Khan said on Wednesday large trade deficit recorded in the fiscal year 2006-07 owing to macro-policy focus on growth, fiscal deficit and debt, which made exports expensive and imports cheaper.

The minister in his Trade Policy speech said this policy harmed industrial investment and trade competitiveness. It is important to have a balance in the macro-policy so that exports could be encouraged and the current account deficit is reduced, he added.

He also suggested regaining the export growth momentum and said, We need to address a host of challenges and to put in place proactive policy measures. The minister defended the role of his ministry in seeking preferential market access, facilitating exporters by announcing a large number of export facilitating measures during his last four trade polices excluding the current one.

It is a fact that higher growth levels of the economy can only be sustained by a rapid growth in exports. For example, a 7-8 per cent GDP growth is only maintainable through a 20-25 per cent annual export growth, the minister explained.

For such growth we are dependent, in addition to textile and clothing, on our Large Scale Manufacturing (LSM) sector for generating exportable surplus. However, the declining growth trend in the LSM sector during 2006-07 from 10.7 per cent to 8.8 per cent reduced our exportable surplus, he said.

When there is no surplus what can be exported, he asked.

In the current era of globalisation, free trade and intense competition, there are no short cuts to achieving exports growth and economic development. We need to continue to address the issues of exports competitiveness, the minister emphasized.

The technology used in manufacturing, services and agriculture sectors should continue to be upgraded. Cost of doing business has to be brought down to internationally competitive levels, he added.

Efficient utilities and infrastructure need to be provided. Inputs should be available at internationally competitive prices. Skilled manpower must be developed, he said.

Mr Humayun said successful conclusion of the WTO Doha Round was expected soon and will provide us an excellent opportunity to increase our exports.

In the meantime, rapid progress is being made to gain market access through our trade diplomacy efforts. It is now up to the businessmen and entrepreneurs of Pakistan to take advantage of the incentives. We have come a long way, but we still have long way to go, he added.

The minister dwelt upon a range of challenges the country was facing like low competitiveness, lack of productive capacity as a result of relatively low investment in new machinery and technology leading to lower productivity, and higher costs.

He pointed out that Pakistani exports fetched low prices because of low quality, fragmented export industries and the energy shortage, which are hampering growth in exports.

There have been a host of other factors affecting export growth. These include stiff international competition in textile products from China, India, Vietnam and Bangladesh in major markets of the US and the EU and the regional preferential arrangements.

Among some other factors are, a fall in unit prices in the textile sector, the 5.8 per cent average anti-dumping duties in the European market on bed-linen exports, and negative travel advisories on Pakistan.

Humayun felt this last area was of grave concern as large international importers and chains were reluctant to visit Pakistan citing security concerns. This has led to trade diversion from Pakistan to Bangladesh, China and Vietnam, who are Pakistans product competitors in textiles.

http://www.dawn.com/2007/07/19/ebr3.htm


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## Neo

*47pc growth in IT collection​*
ISLAMABAD, July 18: The income tax collection has recorded a growth of 47 per cent to Rs330 billion during the fiscal year 2006-07 as against Rs224.988 billion over the same period last year.

Chairing the 14th National Tax Conference here on Wednesday, chairman, Federal Board of Revenue (FBR), M Abdullah Yousuf, said the number of taxpayers filing the tax returns up to June 2007 had reached 1.8 million.

He said the FBR had already taken some far-reaching measures to further expand the tax base. Sectoral studies are being conducted for detecting leakages and for tax gap analysis.

Special attention is being paid to those potential areas which are still out of the tax net.

The chairman pointed out that the present number of taxpayers was in no way near to what it should have been.

We still have a huge gap. We have to first evaluate and analyse and then strategise to get the desired results, he emphasised.

We may expect some tangible outcomes, if target groups are correctly and genuinely identified.

He said it was actually direct tax collection through which we managed to make up shortfall faced in other taxes.

He said shortfall in collection of customs duties and sales tax was mainly due to reduction in dutiable imports.

Member, Direct Taxes, Salman Nabi, informed that total advance tax collection during the year was Rs117 billion as compared to Rs63 billion in the year 2005-06, showing a growth of 86 per cent.

On payment of refunds position, Mr. M. Abdullah Yusuf remarked that the balance on this account must be totally negligible.

He directed the commissioners to address this issue through policy changes. He also advised them to send a regular feedback in this regard.

Whereas, tax collection achieved with the tax returns was Rs48 billion, as compared to Rs24 billion in the preceding year, indicating an increase of 100 per cent. However, collection out of demand and refunds issued during 2006-07 were less as compared to those of 2005-06.

Mr Yousuf reminded the tax managers that we can do well, if economy does well.

Directors-general of large taxpayers unit (LTUs) and regional tax offices (RTOs), in their presentations, highlighted the performance of their departments on account of revenue collection achievements in last financial year, strategy for achieving current years targets, liquidation of arrears, broadening of tax base disposal of pending tax /appeals, monitoring of WHT progress on data entry, progress of were on reforms units etc.

On liquidation of litigation pendency, the chairman advised the member (legal) to aggressively pursue the cases pending at Supreme Court, High Court and tribunal level.

http://www.dawn.com/2007/07/19/ebr7.htm


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## Neo

*Pakistan attracts $6.945bn foreign private investment ​*
KARACHI: Pakistan received record amounts in the shape of foreign private investment and foreign public investment in 2006-07, reveals the data released on Thursday by the State Bank of Pakistan (SBP). 

The country managed to attract $6.945 billion as foreign private investment (FPI) during the year. This includes $5.124 received as foreign direct investment of which the government received $266.4 million as privatisation proceeds. 

The FPI also includes $1.82 billion received as portfolio investment of which investment received in equity securities stood at $1.57 billion and $250 million that was received in debt securities. The investment in equity securities included $150 million received in global depository receipts of MCB Bank Limited and $559.7 million in GDRs of United Bank Limited. 

Besides, the country received $1.471 billion as foreign public investment, of which $738 million was received in GDRs of Oil and Gas Development Company and $733 million received in debt securities. 

The country received $913.1 million as FDI and $853.4 million as portfolio investment from the United States. An estimated amount of $1.72 billion as FDI and $986 million as portfolio investment from the European Union was received. 

However, economists said the country might not be able to sustain this trend in the future because of the uncertain political conditions and the deteriorating law and order situation. Dr Asad Saeed, an independent economist, said that the political uncertainty would hamper the foreign investment in the current year. This year is very uncertain, he said. He said the portfolio investment would go down and direct investment would also come down because it has peaked now. 

He said the foreign investment has come in those sectors, which do not earn foreign exchange. It would actually worsen foreign exchange position of the country in the long term when the foreign investors would be repatriating their profits and dividends, he said. 

Dr Afra Sajjad, Head of Policy Development, ACCA Pakistan, said foreign investment has commendably increased in the recent past mainly because of the positive and investor friendly economic policies of the government and improved regulatory framework. 

Foreign investment will continue to flow till such time that the perception of an investor friendly country is maintained which is dependent upon the law and order conditions of the country, continuity of investor friendly economic policies, corporate governance and tax policies of Pakistan, she said.

http://www.dailytimes.com.pk/default.asp?page=2007\07\20\story_20-7-2007_pg5_2


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## Neo

*PIA sets strategy to recover losses of Rs 28.4bn​*
KARACHI: Pakistan International Airline (PIA) has set a foremost strategy to reduce its financial losses worth Rs 28.4 billion. 

This was stated by Chairman PIA Zafar A Khan while addressing the media briefing here on Thursday. 

Enhancing revenue and reducing the wastage cost could recover the losses, he said

It is unachievable to make PIA as a profitable public sector but the new leadership is considering to reduce its financial losses as much as possible, he said this on the 100th day of his job as PIA chief.

Mr Khan believed the national flag carrier is experiencing tough competition in the International aircraft market as its image was tarnished by the EU ban on flights and other airlines of petro-dollar regime that is growing strong.

The EU has restored 11 PIA aircrafts while it continues to restrict nine aircrafts for its territory, causing a decline in PIA business, whereas the soaring oil prices in the international market could aggravate its budget and fares, PIA chief added.

The PIA is considering to hedge finance the 25 percent annual fuel to control its expenditures, Mr Khan said while responding to a query and adding that Sukook bonds would also be issued in the market, which also supports to minimise hemorrhaging.

He said that PIA in its latest strategy abolished all the discount tickets and restricted its routes to those territories, which provide better benefits to national flag carriers.  The sole aim is to surge its revenues and minimise losses.

The government would not provide any subsidy to PIA but would assist for obtaining loans from the banks on the condition of increasing its shares in the organisation, he further added.

Briefing the media about the current strategy, he said the board of directors decided to reduce the aircraft age by 10 years as against 30 years previously as it also reduced companys expenses, he said, adding that all efforts are taken to rebuild PIAs image to strengthen its reliability.

PIA chief said that all the 737 aircrafts would be replaced by Boeing 777 and Airbus 310 by 2009, which have capabilities to consume oil more efficiently than others while they will also reduce the maintenance expenses more effectively.

Regarding PIA privatisation, he said that the Council of Common Interest of Supreme Court has enlisted this public sector organisation for privatisation but authorities did not establish any contact with me in this regard.

http://www.dailytimes.com.pk/default.asp?page=2007\07\20\story_20-7-2007_pg5_3


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## Neo

*Export target challenging, but achievable: Humayun​*
ISLAMABAD: Humayun Akhtar Khan, Federal Minister for Commerce while terming the $19.2 billion export target as challenging has said that it would be achieved and imports will be restricted to $32 billion to contain the trade deficit at $12.8 billion. 

There would be no addition in importable items list from India and only new HS codes will be incorporated in this list. China would import goods worth $1 billion from Pakistan to bridge the growing gap in bilateral trade. 

Explaining the shortfall in exports in the last fiscal year he said that overall policy framework is more focused on revenue generation rather exports. 

Speaking at a post-Trade Policy briefing the minister said that exports and imports are affected by the governments fiscal policies and if the government wants to raise more revenue it just levies a tax and collects Rs 20 billion. 

The government had set the export target at $18.6 billion but remained short of it by $1.6 billion. The minister defended his ministry by saying that though the trade deficit increased to $13.46 billion during FY 2006-07 but the same ministry worked hard and took exports from $7.6 billion in 1999 to $17 billion in 2006-07. 

On a query how would the government achieve next years exports target of $ 19.2 billion when security was deteriorating day by day, giving a negative message to the international business community, the minister acknowledged that the circumstances were challenging in the region but the government was trying to face it and would definitely search out a solution. 

Furthermore, he said that though the exports target was challenging but was still achievable. The scope of long-term financing has been enhanced and tax holiday regime is re-introduced and Rs 20 billion Research and Development subsidy (R&D) was given to boost exports during last two years, he added. 

Replying to a question relating to ban on export of wheat the minister said that there should be continuity in any such policy either to export or not at all, adding that this is not the way to compete in the world market. 

He said that in agriculture sector the country is mainly dependent on rice and to bring value-addition in this sector the government was providing facilities under National Trade Corridor Policy. The success of Doha Round of talks would open international agriculture market for Pakistani products, he added. 

Admitting the impacts of inflation on the trade, Humayun said that inflation has hit the manufacturing sector and its growth has declined to 8.4 per cent from above than 10 per cent due to increase in cost of doing business and similarly, exports and imports are also affected. 

On the question of loosing the Afghanistan market, the commerce minister said that major decline was in POL products that resulted into loss of $300 million this year and this was because of escalating tensions and Afghanistans tilt toward rival state. 

The minister claimed that trade deficit of $13.46 billion in 2006-07 would not impact balance of payment (BOP) as the country enjoys more than $15 billion forex reserves and trade deficit is not affecting governments ability of spending.

http://www.dailytimes.com.pk/default.asp?page=2007\07\20\story_20-7-2007_pg5_4


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## Neo

*Trade policy ignores export potential of surgical sector ​*
KARACHI: The government has not shown any mercy to save the declining surgical instruments export while announcing the trade incentives for priority export sectors, Surgical Instrument Manufacturers Association of Pakistan (SIMA) said on Thursday.

The announcement in the trade policy 2007-08 to allow surgical sector importing machinery, equipment and raw materials on zero-rating duty is merely eyewash, Chairman SIMA, Aamir Riaz Bhinder said while talking to Daily Times.

Mr Bhinder said that the machinery and equipment import allowed in the trade policy were mainly the components and simple grade machinery, which was easily available in the local manufacturing market.

He said that precision and state-of-the-art equipments and machinery was not mentioned in the SRO nor even declared in the trade policy speech. 

He said that import duty on steel has already been enhanced from 15 percent to 17.5 percent for the industry and this reflected the fact that authorities prepared policies without prior consultation with relevant industry and then expect the business community to mould according to the policy. 

We asked the concerned ministry before the policy making that without consulting the sector people, this would be fruitless, he added.

He said that this was due to the lack of proper liaison between the industry and the government that surgical export sector was facing hardships.

He said that according to SRO, it was impossible to any exporter to submit the amount equivalent to the import value and then wait for the refund for long through complicated procedures.

We have submitted these proposals to the Central Board of Revenue before hand but with no avail, he said.

He said that surgical instruments export declined by around $7million during July-May 2007, as exports stood $183 million in July-May 2007 compared to $190 million during same period last year.

Chairman SIMA said that the export of surgical forgings and semi and unfinished products are the most critical components for decline in the surgical instruments exports.

If these products will be exported to other countries, then the local industry will suffer heavily in shape of loss of export orders, he added.

He said that leakage of production technology, rise in production costs and the export of steel scrap are causing havoc for the metal related industries as scrap is the major source of locally produced stainless steel, which fulfils approximately 30 percent of the requirement. 

He asked the Commerce Ministry and Central Board of Revenue to immediately impose ban on export of forgings, semi-finished and unfinished products. 

He said that the surgical industry can start earning at least $300 million annually within three years time, provided, it is given due attention by the government departments. He said that the estimated world market of surgical instrumentation industry is currently around $30 billion and growing, whereas our exports hover between $180 to $200 million for the last one or two decades, despite the fact that there is no reason on the part of surgical manufacturers and exporters for this below par performance. 

The rising utilities cost, increasing prices of raw materials, high banking service charges, high export refinance rates of central bank and uneven taxation system are added barriers to the falling exports, he added.

He said that surgical businessmen in Germany, Japan, UK, and USA have full support of their governments in shape of technology up-gradation, training, export marketing strategies, linkage with academia etc.

http://www.dailytimes.com.pk/default.asp?page=2007\07\20\story_20-7-2007_pg5_12


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## Neo

*Moody brings drastic change in Pakistan's business set up ​* 
LAHORE (July 19 2007): Moody International has been playing a vital role in bringing a revolutionary change in Pakistan's business environment by introducing the management system certification service to our client.

Managing Director Moody Pakistan, a British multinational established in 1911, Rashid Mehr said this while addressing the 10th anniversary of Moody International Pakistan here on Wednesday.

He said that the growing economy of Pakistan during the latter half of the 1990's encouraged Moody International and presently it is operating in 80 different countries across the world to explore new avenues for business and expand its boundaries of markets as well.

He further said that the office began providing with engineering services, which included quality assurance/ quality control services, construction supervision and project management & vendor inspection services to the oil & gas industry.

http://www.brecorder.com/index.php?id=594405&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*KPT to invest $105 million on CVIP project ​*
KARACHI (July 19 2007): The Karachi Port Trust (KPT) would invest 105 million dollars on the construction of proposed Cargo Village and Industrial Park (CVIP) project, which is to commence in September this year.

The KPT sources told Business Recorder on Wednesday that out of this amount the Trust would spend an estimated 55 million dollars on infrastructure development of the satellite facility.

The Cargo Village would stretch over an area of 1,500 acres, which would include areas to cater for containers, general and bulk cargo, processing plants, customs and other related facilities, sources said. They said the designing work of the project was underway by the German firm Inros Lackner.

KPT in 2005, sources said, had awarded the task of conducting a study on CVIP project to the US firm Louis Berger, which had recommended setting up of a Cargo Village.

The KPT had set September 2011 as deadline for the completion of the Village, which would be developed in the vicinity of Karachi Port, sources said. They said the project would be undertaken in different phases. In the first phase, an area of around 330 acres would be developed. They said that the village would also have connectivity with Northern Bypass and Lyari Express Way.

The KPT had devised a comprehensive plan to extend its infrastructure and other facilities including incentives for transshipment of containers to facilitate and boost the trade.

The Trust had also determined to develop a container terminal with a total cost of 1,087 million dollars at Keamari Groyne in which KPT would invest 345 million dollars to handle deep draft vessels. The construction work on the project would also be started in September 2007, while the remaining amount of 742 million dollars would be invested by other stakeholders from the private sector, as the project was based on public-private partnership. KPT eyeing June 2010 as deadline for completion of the project.

http://www.brecorder.com/index.php?id=594351&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*Railways to involve private sector in setting up three dry ports in Punjab ​*
KARACHI (July 19 2007): Pakistan Railways (PR) has planned to set up three new dry ports in collaboration with private sector in Punjab region to felicitate cargo handling operations effectively, railways officials told Business Recorder on Wednesday.

They said that the proposed dry ports would help the department attract potential investors, who would be provided with advanced facilities to handle their cargo operations without any problems.

"Our imports are higher than the exports for which the PR is making efforts to establish new dry ports in different parts of Punjab to attract more investors," said PR Dry Ports Department head Junaid Qureshi.

One of the dry ports would be established at Prem Nagar, near Lahore, in collaboration with three companies, he said, adding the PR would provide land while the private companies would build infrastructure and install other required facilities.

"The Prem Nagar dry port will be constructed over 100 acres of land with an estimated cost of one billion rupees, which will be funded by the private sector", he pointed out. "The second dry port will be built at Jeaya Bhaga near Lahore in collaboration with the National Logistic Cell (NLC).

The basic infrastructure of the railway was already exiting there, while the NLC would bear the cost of construction of a platform for loading and unloading cargo, he said. "The third dry port will be set up at Kot Radha Kishan, which will be established through the financial assistance of the private sector", Qureshi added.

He said that the dry ports in Peshawar, Rawalpindi, Lahore, Karachi, Quetta and Faisalabad were already functional and earning profits for the Pakistan Railways. However, he said, the dry ports at Larkana and Sukkur had failed to generate income for the railways.

"We are managing four freight trains at present for cargo transportation and in case, there is an increase in import or export of cargo, then the PR has the infrastructure to operate eight cargo trains at a time", he said.

http://www.brecorder.com/index.php?id=594375&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*Importable items from India: 'list being re-arranged in descending order' ​* 
ISLAMABAD (July 20 2007): Commerce Minister Humayun Akhtar Khan said on Thursday that list of importable items from India is being re-arranged in descending order without adding any thing to the positive list. "We are not increasing the number of importable items from India, however, list is being re-arranged in descending order based on the new H.S. code to make the list user-friendly," he said while addressing post trade policy press conference.

He also admitted that there were some problems in the implementation of South Asia Free Trade Agreement (SAFTA) and it was not taking off as per expectations. Replying to a question, he said that the Trade Development Authority of Pakistan (TDAP) has been established in accordance with the constitution and government would continue to issue ordinances to keep it intact until it becomes an Act.

Humayun Akhtar was also critical of government's monetary polices which according to him was focusing more on fiscal deficit, revenue collection and debt serving rather on enhancing exports.

Replying to a question, he said that monetary policy and currency issued were being handled by the State Bank of Pakistan (SBP), however, he always expressed his views on such issues in the meeting of monetary and fiscal policy committee.

About the exportable surpluses, he said that high interest rate in large scale manufacturing (LSM) and low yield were the major hurdles in the availability of exportable items and government is focusing more on these issues as well. Humayun further said that despite several challenges and difficulties the Pakistani exports increased from $8 billion to $17 billion in the last couple of years.

http://www.brecorder.com/index.php?id=594655&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Chinese team inks deals with 15 firms ​*
ISLAMABAD (July 20 2007): The visiting Chinese Trade Mission on Thursday signed agreements with 15 Pakistani companies to import cotton, chrome ore, marbles, leather, celestite, gur gum and rapeseed meal. A 50-member Chinese delegation presently visiting Pakistan, headed by Assistant Commerce Minister Wang Chao, held meetings with Pakistani officials and signed MoUs/agreements.

The Chinese business groups placed on-the-spot purchase orders for Pakistani products and the government expects a total deal of one billion dollar. China National Light Industrial Products I/E Corporation signed agreement with Pakistani company Zehri Corporation to import marbles.

Sharmeen Pakistan Limited to import cotton linters and cotton yarn while Sinochem Corporation of China signed agreement with Sinochem Hebei of Pakistan to import Celestite and with Black Diamond mines and minerals to import chrome ore.

Similarly, China National Native Produce and by Products I/E Corporation signed agreement with the S Tahir Iqbal Harman International to import leather, Sinosteel Corporation with Costal Enterprises to import Chrome Ore, China Minmetals Corporation with D-Tek International Limited Pakistan to import Chrome Ore, China National Township Enterprises Corporation with Gaziani Industries Limited to import gur gum.

The other agreements included China National Mineral Co Ltd with Crystal Minerals Corporation, Karachi to import Manganese Ore. China National Light Industrial Production Corporation with Ihsanullah Khan. Pakistan Stone Development Company to import marble and China Grains and Oils Group Corporation with Tayyab Razaq Sea Trade Limited to import rapeseed meal.

The Ministry of Commerce and Trade Development Authority organised a one-day mini exhibition on "Made in Pakistan," to providing an interaction opportunity to the Chinese importers with the Pakistani exporters. The Assistant Minister of China and the Secretary Commerce inaugurated the exhibition.

Addressing the opening ceremony, the Wang Chao said China attaches high importance to Pakistan's trade and commercial relations. He hoped the visit of the Chinese Trade Mission would help increasing Pakistani exports to China.

Addressing on the occasion, the Secretary Commerce Syed Asif Shah called upon the Pakistani business community to explore the plenty of opportunities available under the Pakistan-China Free Trade Agreement (FTA) operational since July 1, 2007. Pakistan has the potential of exporting to China some very important products of Chinese interest on which duty is zero under the FTA, he added.

Major sector covered in the display centres included textiles, marbles, agro products, fresh vegetable and fruits, engineering goods. The business people from both sides hoped that this initiative would let the exporters and importers to continue constant interaction for follow up and future action plans.

An official hand-out said during the Prime Minister's visit to China in April 2007, the Prime Minister met the Chinese Prime Minister and various other leaders including the Vice Premier Madam Wu Yi, who looks after the economic and trade affairs of the country.

In his meetings with the Chinese leadership, Prime Minister raised the issue of trade imbalance between the two countries in responding Chinese side assured that, in order to rectify the trade imbalance with Pakistan, China was ready to dispatch purchase mission to Pakistan.

During the Financial year 2006-07 (July-March), Pakistan's imports from China are recorded at 2.45 billion dollar. The major import products include all sorts of machinery, steel products, industrial chemicals synthetic yarn and fabric, tyres and tubes. The exports from Pakistan to China during the same period are recorded at 407 million dollar showing a trade balance of (-) 2.04 billion dollar.

The major exports include cotton yarn and fabrics, ores and non-ferrous metals, leather, fish and fish preparations, chemicals and cotton waste. Under the FTA both countries have eliminated or substantially reduced customs duty to enhance market access. Ministry of Commerce is planning to participate in the Guangzhou Export-Import Fair to exploit this opportunity and to help Pakistani exporters accessing Chinese market.

A joint study for five years trade development programme is also underway which would provide a road map for future course of action to fortify the trade relations between the two countries. China may consider faster conclusion of quadrilateral Transit Agreement between Pakistan, Kazakhstan and Kyrgistan.

Apart from the purchasing and trade activity of the mission, the Assistant Trade Minister and the official delegation have also witnessed the signing of following MoUs/Agreements/event, Exchange of Letters on Digital Seismic Network with EAD, handing over of Certificate on donation of 400,000 dollar in cash to EAD for repatriation of Afghan refugees, handing over of Certificate on donation of 200,000 dollar in cash to NDMA for flood relief work and signing of agreement on Pak-China Joint Investment Company.

http://www.brecorder.com/index.php?id=594664&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pakistan's foreign exchange reserves up by $166 million ​* 
KARACHI (July 20 2007): Country's liquid foreign exchange reserves have increased by 166 million dollars to 15.6459 billion dollars during the week ending July 14. During the last week, foreign exchange reserves, held by State Bank of Pakistan (SBP), has been risen to 13.3888 billion dollars up from 13.3456 billion dollars as on July 7, depicting an upsurge of 432 million dollars.

The reserves, held by commercial banks, have been decreased by 266 million dollars to 2.2571 billion dollars as compared to 2.2837 billion dollars.

http://www.brecorder.com/index.php?id=594693&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'Roadmap for enhancing trade with China being worked out' ​*
ISLAMABAD (July 20 2007): The trade delegation under Chinese Assistant Trade Minister Wang Chao met with Commerce Minister Humayun Akhtar Khan, a Commerce Ministry statement said on Thursday. The delegation consisted of traders and importers from China. Secretary Commerce, Syed Asif Shah also attended the meeting.

The Federal Minister for Commerce welcomed the delegation and said that it is the desire of our leadership to have good friendly relationship with China. He said that steps have been taken for the roadmap for enhancing trade relationship.

The important step is the acquisition of Paktel. The Chinese minister also thanked the Federal Minister. The recent years have witnessed steady growth of Pakistan's exports to China. According to Chinese statistics its import from Pakistan in the year 2006 was valued at US $462 million an increase of 32 percent over 2005.

http://www.brecorder.com/index.php?id=594685&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'Trade policy to give boost to economic activities in country' ​*
MULTAN (July 20 2007): Different sectors of the economy have welcomed the Trade Policy 2007-08 saying that it would further strengthen economic activities in the country. Multan Chamber of Commerce and Industry (MCCI) President Anis Ahmed Sheikh and vice president Khawaja Muhammad Ali said.

The government should support the manufacturing sector for creating export surplus, which is a pre-requisite for achieving the export target of $19.2 billion. MCCI office-bearers while stressing implementation of Trade Policy 2007-08 said that there is need to take aggressive measures. They said that last year the government announced establishment of carpet cities but the project could not materialised.

MCCI office-bearers said that Trade Competitiveness Institute of Pakistan would plug research gaps. They hoped that this institute would become a premier body for capacity building and human capital development in commerce. This Institute will also provide an important forum for the discussion and dissemination of information on issues of commerce.

They said that the new Trade Organisation Ordinance was a long-standing demand of MCCI. New Trade Organisation Ordinance would not only help to eliminate fake and ghost trade bodies but would also bring true leadership. MCCI office-bearers said that it is the need of the hour that newly announced policy must be implemented in true letter and spirit.

They said the National Trade Corridor Improvement Programme (NTCIP) is a step in the right direction. They hoped that this programme would help decrease the cost of doing business, which is a pre-requisite to ensure trade growth. This programme would be proved by a roadmap for improving transportation logistic chain, on the basis of identified inadequacies and weaknesses.

To increase our share in EU market social compliance certification (quality, environment and social) are considered an important tool. The policy announced a government subsidy from 50 percent to 100 percent, which would definitely increase our market access in EU markets.

All Pakistan Bedsheet and Upholstery Manufacturers Association Chairman Syed Asim Shah has welcomed government steps to continue six percent research for one year. Chairman, APBUMA said this step was direly needed to maintain momentum of garment export in the wake of fierce competition in international markets.

However, he said well sustained and long-term policy was needed to build confidence among garment exporters. He stressed that a concerted government support would keep the industry moving ahead. However, he demanded of the government to adopt recommendations of Tariq Saigol's committee report to make the industry lucrative.

He hoped that the government would take more positive steps to ensure the presence of Pakistani goods in international markets. Iqbal Hassan a leading manufacturer and exporter of engineering goods appreciated the decision of the government on inland freight subsidy for transportation of goods destined for exports.

However, he said that there was a lot to be done for this sector under the Free Trade Agreements (FTA) for international market access. Basmati Growers Association praised the decision of the government to give special attention to the agriculture sector of Pakistan under the new trade policy. "Widening trade gap has compelled the government to focus on the agriculture sector, which is vital for the economic growth of Pakistan," he remarked.

http://www.brecorder.com/index.php?id=594780&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Daimler-Chrysler abandons Mercedes plant project ​*  

ISLAMABAD (July 20 2007): Daimler-Chrysler and its UAE-based Coastal Group has walked out of Pakistan with their $1.1 billion Mercedes Benz manufacturing plant project as the government's last ditch efforts to save the investment plan have failed.

Daimler-Chrysler, a group of two auto sector global giants and manufacturers of Mercedez Benz, had formed a joint venture with Coastal Group of UAE to set-up a Mercedez Benz manufacturing plant in Pakistan. The joint venture was to make initial investment of $1.1 billion for the project.

Obvious loss of winding up of the project is that Pakistan missed a big investor with $1.1 billion sure investment, but the real loss is non-realisation of an opportunity to establish industrial zone for Mercedez Benz from where Pakistan could secure at least $5 billion exports annually.

The government was fully aware of the importance of the project and for the same it opened up the diplomatic channel to bring the joint venture back to Pakistan with its project. It made direct and in direct contacts to the joint venture during the last few weeks, but could not convince its management to rethink of its decision of winding up the project from Pakistan.

In today's open-sky investment world. a group like Mercedez Benz manufacturer can play very significant role in making other groups/ investors feel that the destination it selected for investment was better than the others. This type of project could bring many other companies to invest in Pakistan. Some one year back, the joint venture entered in Pakistan with a big bang and, as was expected it got very encouraging response from the authorities.

Things were moving smooth and in the right direction. The joint venture was making all possible efforts to make sure that its project comes on ground as early as possible and then not only caters to Pakistan's market demand but also export its products from here to the regional countries.

It overcame many obstacles and managed to secure a piece of land stretching over 1200 acres near Shaikhupura in Punjab for the project as well. It was a good development and no one could believe that such a big project will hit snags and one day can finish altogether specially when president general, Pervez Musharraf and, prime minister, Shaukat Aziz, were directly involved and interested to make sure that the joint venture does not face any problem in completing the project.

It happened and subsequent developments forced the joint venture to wind-up its project which, of course, was still on the papers and go back to Germany.

The officials blame media for unceremonial exit of the joint venture from Pakistan and claim that some elements with vested interested played in their own way to create problems for the joint venture. They also claim that the elements damaged the credibility of the joint venture through a malicious campaign in print media.

http://www.brecorder.com/index.php?id=594661&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Pakistan may get new BMW X5 this month ​*
ISLAMABAD (July 20 2007): Perfect combination of driving dynamics, functionality, and exclusivity deliveries of the new BMW X5 to Pakistan are expected in July 2007. BMW not only invented the sports activity vehicle (SAV) sector, it continues to lead the segment through innovation and raises the bar yet again with the launch of the new BMW X5, says a press release.

"Offering enhanced dynamics and even higher standard of all-round supremacy, the new BMW X5 is continuing the victorious success of its predecessor," said Farooq Mustafa, President and Chief Operating Officer for Dewan Motors Private Limited.

"The original BMW X5 created a brand-new segment and set the trend for spacious, luxurious, rough terrain vehicles. We have already recorded high demand for the new BMW X5, which takes the agility, function and exclusivity of the vehicle to a whole new level," he said.

http://www.brecorder.com/index.php?id=594758&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Trade policy focuses on creating export surplus​*
ISLAMABAD, July 19: Commerce Minister Humayun Akhtar Khan said on Thursday measures taken in Trade Policy 2007-08 would help achieve the ambitious export target of $19.2 billion set for the current fiscal year.

The focus of the policy is to encourage value addition and more tax holidays for attracting investment to produce exportable surplus, the minister said while replying to a question at a post-Trade Policy press conference.

While defending the role of his ministry, Mr Khan said the if there were no surpluses in industrial production, what will be exported as the growth in the large scale manufacturing (LSM) declined from 18 per cent to less than 10 per cent during the current fiscal year.

He suggested for a proactive and balanced policy to encourage industrialisation and create exportable surplus in the country. He said that the government introduced equity fund for brand acquisition, encouraging sanitary and phyto-sanitary (SPS) compliance and provided sectoral investment incentives to trade companies.

Answering a question he said despite several challenges and difficulties exports increased from $8 billion to $17 billion in the last five years. However, he said focus of economic policies on revenue generation, reducing debt-to-GDP ratio has resulted in increase in imports but still there was no cause for alarm.

He said that growing economies do need imports as there happens to be a strong correlation between higher imports and GDP growth. However, the highest-ever trade deficit will be bridged through remittances and foreign direct investment.

Mr Khan said Pakistan's trade policy was going on right direction adding that the public as well as the private sector can now go to international market and freely raise debt without affecting foreign reserve position.

---He said that efforts were afoot to replace the non-recurrent with the recurrent adding that this would help enhance export growth.

To a question he said that the current account deficit would not affect the government spending. The government has many ways to generate revenue like one per cent federal excise duty (FED)on imports, which would help generate additional Rs20 billion for the kitty.

The minister defended his trade diplomacy, which, he said, had helped in getting preferential market access for Pakistani goods. He said many preferential trade agreements with many East Asian, Middle East and Far East countries are in the pipeline.

Answering a question the minister said the legislation of the Reconstruction Opportunity Zones (ROZs) will be passed by the US congress soon. He said that these zones will be established in the entire NWFP, tribal areas and border districts of Afghanistan. The products produced in these zones will be exported to US duty free.

He said that the expansion of positive list for trade with India has nothing to do with the trade policy. He said that exports to Afghanistan declined only in the POL products.

Mr Khan defended the FTA with Sri Lanka and claimed that the trade with that country had increased. However, he said, that no auto parts are allowed to be imported under FTA from Sri Lanka.

He said that major portion of the countrys imports was in oil and telecom sectors adding that the government has been working on a comprehensive strategy to increase exports and decrease the trade deficit.

http://www.dawn.com/2007/07/20/ebr3.htm


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## Neo

*Chinese firms sign $300m import contracts​*
ISLAMABAD, July 19: Private firms have signed mutual agreements worth around $300 million for exporting Pakistani products to China. The agreements were signed at a function organised by the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) for the visiting 43-member Chinese business delegation headed by Assistant Minister of Commerce Wang Chao on Thursday.

Wang Chao told APP that the basic aim of the visit was to promote development of balanced trade with Pakistan and to develop economic cooperation in all sectors.

He said that during the visit Chinese enterprises held trade talks with their Pakistani counterparts on expanding import of Pakistan's advantageous products, such as chrome ore, marble, cotton yarn, leather, Celestite and guar beans.

He said that the Chinese government always attached great importance to the bilateral economic relations and trade with Pakistan.

China does not want trade surplus with Pakistan and will approach the bilateral trade imbalance issue in a serious and pragmatic manner, he said.

On this occasion stalls of Pakistani advantageous products were also set up for the Chinese delegation members, who appreciated the fine and exportable quality of products. 

http://www.dawn.com/2007/07/20/ebr9.htm


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## Chrome9

Neo said:


> *Daimler-Chrysler abandons Mercedes plant project ​*
> 
> ISLAMABAD (July 20 2007): Daimler-Chrysler and its UAE-based Coastal Group has walked out of Pakistan with their $1.1 billion Mercedes Benz manufacturing plant project as the government's last ditch efforts to save the investment plan have failed.
> 
> Daimler-Chrysler, a group of two auto sector global giants and manufacturers of Mercedez Benz, had formed a joint venture with Coastal Group of UAE to set-up a Mercedez Benz manufacturing plant in Pakistan. The joint venture was to make initial investment of $1.1 billion for the project.
> 
> Obvious loss of winding up of the project is that Pakistan missed a big investor with $1.1 billion sure investment, but the real loss is non-realisation of an opportunity to establish industrial zone for Mercedez Benz from where Pakistan could secure at least $5 billion exports annually.
> 
> The government was fully aware of the importance of the project and for the same it opened up the diplomatic channel to bring the joint venture back to Pakistan with its project. It made direct and in direct contacts to the joint venture during the last few weeks, but could not convince its management to rethink of its decision of winding up the project from Pakistan.
> 
> In today's open-sky investment world. a group like Mercedez Benz manufacturer can play very significant role in making other groups/ investors feel that the destination it selected for investment was better than the others. This type of project could bring many other companies to invest in Pakistan. Some one year back, the joint venture entered in Pakistan with a big bang and, as was expected it got very encouraging response from the authorities.
> 
> Things were moving smooth and in the right direction. The joint venture was making all possible efforts to make sure that its project comes on ground as early as possible and then not only caters to Pakistan's market demand but also export its products from here to the regional countries.
> 
> It overcame many obstacles and managed to secure a piece of land stretching over 1200 acres near Shaikhupura in Punjab for the project as well. It was a good development and no one could believe that such a big project will hit snags and one day can finish altogether specially when president general, Pervez Musharraf and, prime minister, Shaukat Aziz, were directly involved and interested to make sure that the joint venture does not face any problem in completing the project.
> 
> It happened and subsequent developments forced the joint venture to wind-up its project which, of course, was still on the papers and go back to Germany.
> 
> The officials blame media for unceremonial exit of the joint venture from Pakistan and claim that some elements with vested interested played in their own way to create problems for the joint venture. They also claim that the elements damaged the credibility of the joint venture through a malicious campaign in print media.
> 
> http://www.brecorder.com/index.php?id=594661&currPageNo=2&query=&search=&term=&supDate=



NEO do you have any idea why they walked out in the last minute? I mean was it due to any fault of Pakistan or was it something more econmic-orientated?


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## Neo

*Export Policy Order to be amended for nuclear arms provision ​*
ISLAMABAD (July 21 2007): Pakistan will amend the 'Export Policy Order' for incorporating provisions of nuclear and biological weapons which can only be exported with the permission of 'Strategic Export Control Division (SECDIV), a wing of Ministry of Foreign Affairs.

Sources told Business Recorder here on Friday that proposal had been placed before the Cabinet specially convened to approve 'Trade Policy 2007-08' on July 18. They said that the Cabinet discussed the proposal in detail and allowed Commerce Ministry to amend 'Export Policy Order', incorporating the amendments.

Commerce Ministry in its summary had elaborated that "in pursuance of the export control of goods, technologies, material and equipment related to nuclear and biological weapons and their delivery systems Act, 2004, a Strategic Export Control Division has been created in the Ministry of Foreign Affairs with the authority to implement and enforce provisions of the Act".

The controls on export of nuclear and biological weapons would continue as per procedures and NoC/licence issued by the SECDIV. The ministry had proposed to amend Export Policy Order to incorporate provisions of the "Export control of goods technologies, material and equipment related to nuclear and biological weapons and their delivery systems Act, 2004".

*Pakistan's export control legislation contains the following provisions: *

-- Establishes controls over export, re-export, trans-shipment, transit or diversion of goods, technologies, material and equipment that may be used in the development of nuclear or biological weapons.

-- Affirms broad jurisdiction over Pakistani citizens, nationals abroad, foreign nationals within Pakistani territory, as well as any ground, ship, or air transportation registered in Pakistan, regardless of location.

-- Affirms central government's authority to administer rules and regulations of the export control law and the required licensing of exports, as well as an oversight committee to monitor the implementation aspects of the law. The law also provides plenary power to government officials with regards to inspection and confiscation of suspicious exports.

-- Establishes a comprehensive and wide ranging list of federally controlled goods that may be used in the design, development, production, stockpiling, maintenance, or use of nuclear and biological weapons. The law cannot be construed to restrict or prohibit "basic scientific research in Pakistan or other peaceful applications or relevant technologies." Basic scientific research is defined as "theoretical- or experimental work undertaken principally to acquire new knowledge of the fundamental principles of phenomena or observable facts."

-- Provides for licensing and record-keeping and monitoring provisions. The government maintains authority in framing and notifying licenses, with the power to approve licenses for goods and technologies for peaceful civilian intentions, unless the government determines otherwise. All exporters have a legal obligation to notify relevant authorities of suspicious exports or activities.

-- Provides for punitive provisions ranging from a 5 million-rupee (approx. $80,000) fine to fourteen years in prison, as well as forfeiture of property and assets. Any person who aids in such prohibited activities will be tried as if they actually committed the offence. Any person who diverts controlled goods or technologies to unauthorised users will be denied further export of those technologies or goods, as well as the privilege of exporting products into Pakistan for a specified period of time.

In 2004, National Assembly had passed legislation tightening controls on the export of weapons-making nuclear and biological technology, as well as missile delivery systems.

http://www.brecorder.com/index.php?id=594989&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Trade deficit swells to $13.528 billion ​*
KARACHI (July 21 2007): Country's export target has been missed by 1.6 billion dollars, while its trade deficit has grown by 11.53 percent to all time high level of 13.528 billion dollars during the 2006-07 fiscal year in the wake of rising imports of cars, mobile phones and some other luxury items.

Official statistics revealed on Friday that the country's overall trade deficit jumped to the highest ever level of 13.528 billion dollars during 2007 as against 12.12 billion dollars during 2006, depicting an increase of 1.399 billion dollars.

The last fiscal year's trade deficit was also 4.128 billion dollars, higher than the government's projected trade deficit target of 9.4 billion dollars for the 2007 fiscal year.

According to statistics, the country also fell short of its export target of 18.6 billion dollars by 1.6 billion dollars, as overall exports stood at 17.011 billion dollars during the 2007 fiscal year. However, for the first time in the country's history, exports have crossed 17 billion dollar-mark.

During the last fiscal year, exports witnessed slow growth due to high international competition and overall exports have swelled by 3.40 percent or 556 million dollars to 17.011 billion dollars as compared to 16.451 billion dollars in 2006 fiscal year.

"The country's cost of doing business remained much higher than the other regional countries, including India and Bangladesh, which put a negative impact on the export," exporters said. Political and law and order situation were the other relevant factors, which impeded the country to achieve its export target, they added.

Heavy imports of luxury items have widened imports bill to 30.54 billion dollars during July-June of the last fiscal year as compared to 28.58 billion dollars during the 2006 fiscal year, witnessing an increase of 6.85 percent or 1.96 billion dollars during the 2007 fiscal year. The government had set imports target of 28 billion dollars for the 2007 fiscal year, which missed by 2.54 billion dollars.

Experts believe that imports of luxury items, especially cars, electronic gagets and other items, are the chief reason in giving rise to overall imports. "During the last fiscal year, the government did not take a single supportive step to bring down the increasing imports," they said.

They said the trade deficit in June had gone up by 95 million dollars to 1.23 billion dollars against May 2007, but decreased by 237 million dollars in June 2007 against 1.476 billion dollars of June 2006. In June 2007, exports declined by three percent to 1.557 billion dollars against 1.606 billion dollars in May 2006.

Economists show serious concerns over the rising trade deficit and see it as a serious threat to the country's economy. Criticising the government policies, Dr Shahid Hassan Siddiqui, a prominent economist, said: "The government is encouraging imports of luxury items by providing consumers financing through banks, which is the major reason of failure in the exports and trade deficit targets."

He said that now the various ministries were blaming each other for failing to achieve the export target, rising imports and widening trade deficit during the last two years. "Widening of trade deficit will be harmful in the future for economy and could have a serious impact on the country's balance of payments," he added. He suggested to the government to control the import of luxury items to arrest the raising trade gap.

http://www.brecorder.com/index.php?id=594992&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Thar coal mines development: President and Prime Minister determined to take country forward ​*
RAWALPINDI (July 21 2007): President General Pervez Musharraf and Prime Minister Shaukat Aziz on Friday expressed their firm resolve that Pakistan would continue to move forward on the path of progress and development, undeterred by those who wish to create chaos and fear in the country through wanton and indiscriminate acts of terrorism.

The two leaders made these observations during a meeting in Rawalpindi on 'development and utilisation of Thar coal fields', according to a press release issued by President's Camp Office.

The meeting was attended by Minister for Petroleum and Natural Resources Amanullah Jadoon, Chief Minister of Sindh Arbab Ghulam Rahim, Minister of State for Petroleum and Natural Resources Naseer Mengal, Provincial Minister Sindh for Mines and Minerals Irfanullah Marwat and senior officials.

The President said that by the grace of Allah Almighty Pakistan had progressed at an unprecedented pace during the last seven years and has the will and the capacity to combat and defeat the forces of extremism and terrorism. The President underscored the importance of developing Thar coal for the benefit of the country and the province of Sindh.

He said Thar coal cannot only be a major contributor to power generation, energy security and import substitution for the country, but also would contribute to the economic development of the rural underdeveloped areas of Sindh. Through transfer of technology for large-scale mining it would also lead to skill development and job creation, he added. He said that continuous co-ordination between the Federal and Provincial governments was required and simultaneous efforts for studies and practical implementation needed in order to reduce the gap between planning and implementation. The President stressed the need to fast track the processes and remove all bottlenecks so that the full potential of Thar coal could be realised as soon as possible.

In its presentation the Ministry of Petroleum and Natural Resources informed the participants that at present the current share of coal in the primary energy supply was only 7 percent and it had been planned to double this in the energy mix to 14 percent by year 2020.

http://www.brecorder.com/index.php?id=595006&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*UK-based company working on 5.4 gw Bunji project feasibility ​*
LONDON (July 21 2007): UK-based consultant, Mott MacDonald, is working with an international team to undertake feasibility study on the proposed 5.4 gw Bunji hydro scheme for the Water and Power Development Authority (Wapda).

The company said that the Bunji scheme had a budget of around $3 bn, and current plans foresee construction of a 180 metres high concrete dam on the Indus river. The project design envisages installation of 12 units of 450 mw capacity each. A further key aspect of the construction challenge is the design of headrace tunnels to be excavated through the main tectonic faults between the Indian subcontinent and Asia.

http://www.brecorder.com/index.php?id=595035&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Projects worth Rs 11 billion to be initiated in Northern Areas ​*
ASTORE (July 21 2007): The Northern Areas Planning and Development Department has given approval to 32 development schemes worth Rs 11 billion to bring this backward area at par with rest of the developed areas of the country.

The sources in Planning and Development Department of Northern Areas told APP here Friday that the accelerated pace of development was undertaken at the behest of the federal government, which was taking keen interest in the development of Northern Areas.

Secretary Planning and Development Northern Areas, Attiq-ur-Rehman, gave approval to 32 development projects for Northern Areas at a meeting held here. Giving breakdown of the new development schemes the Northern Areas administration initiated, the meeting was told that power sector was being given priority while according the approval of the projects.

It was decided at the meeting that eight power projects would also be completed in all the districts of Northern Areas to overcome the shortage of electricity. An additional amount of Rs 40 million would be provided to Gilgit for the construction of RRC bridges and Rs 12.5 million would be spent on renovation of roads in the Skardu district.

http://www.brecorder.com/index.php?id=595069&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Engro Chemicals earns Rs 1.103 billion profit in six months ​* 
KARACHI (July 21 2007): Engro Chemical Pakistan Limited has earned Rs 1.103 billion profit after tax in the first half of 2007 (January-June 2007), translating an earning per share of Rs 6.56 as compared to Rs 944.587 million with EPS of Rs 5.85 in the corresponding period last year.

In an information, sent to Karachi Stock Exchange (KSE), it was said that the net sales of the company was Rs 8.119 billion in the period under review as against Rs 6.933 billion recorded in the same period last year. The company's profit before tax reached at Rs 1.574 billion in the first six months of 2007 as against Rs 1.340 billion in the same period in 2006.

http://www.brecorder.com/index.php?id=595085&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*Oil and gas sector attracts over $700 million during fiscal year 2007 ​*
KARACHI (July 21 2007): The oil and gas exploration sector in Pakistan attracted an investment of more than $700 million during the nine months of the last fiscal year 2006-07, up by 23.6 percent over the same period last year.

According to Economic Survey data, 46 wells were drilled during July-March 2006-07, of which 19 wells by the public sector while 27 by the private sector. Out of the total drilled wells, 19 are in appraisal and development phase, 5 of them in public sector and 14 in private sector.

During July-March 2005-06, the public sector had drilled 18 wells while private sector 23, making a total at 41 wells at an investment of $567 million. During July-June 2005-06, the total number of exploratory wells were 64, of which 30 were drilled by public sector and 34 by private sector.

http://www.brecorder.com/index.php?id=595112&currPageNo=1&query=&search=&term=&supDate=


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## Neo

Saturday, July 21, 2007 

*Pakistans merchandise trade up by 5.6% to $47.5 billion​*
By Sajid Chaudhry

ISLAMABAD: Pakistans total international trade in goods has witnessed an increase of 5.59 percent with a volume of $47.551 billion in the last fiscal year 2006-07 as compared to the total trade of $45.031 billion. 

Figures released by the Federal Bureau of Statistics (FBS) on Friday showed Pakistans exports during the last fiscal year 2006-07 to be $17.011 billion as compared to $16.451 billion in the previous fiscal year 2005-06 showing an increase of just 3.6 percent. The export target was set at $18.6 billion for the fiscal year 2006-07; however, this target was missed by $1.59 billion. 

Imports of the country totaled at $30.540 billion in the last fiscal year as against $28.580 billion in the previous fiscal year projecting an increase of 6.85 percent. The country had a trade deficit of $13.528 billion for trade in goods during the last fiscal year when compared to the deficit of $12.129 billion in the fiscal year 2005-06 indicating an increase of 11.53 percent.

Actual set back was witnessed in exports during the month of June 2007 when countrys exports suffered a negative growth of 3.03 percent when exports dropped to $1.557 billion as compared to the exports of May 2007 of $1.606 billion. However, imports grew by 1.69 percent during June 2007 with a volume of $2.796 billion as compared to $2.750 billion in May 2007. Trade deficit increased by 8.30 percent to $1.239 billion in June 2007 as against the deficit of $1.144 billion in May 2007. 

Comparison of trade in goods in June 2007 to June 2006 shows that exports of the country increased by 3.15 percent in June 2007 with total exports of $1.557 billion as compared to the exports of $1.510 billion in June 2006. 

Imports in the month of June 2007 stood at $2.796 billion against the imports of $2.986 billion in June 2006 showing a decrease of 6.35 percent. Trade deficit witnessed a decrease of 16.07 percent in June 2007 with a deficit of 1.239 billion as compared to a deficit of $1.476 billion in June 2006. 

According to an analysis by the Ministry of Commerce there have been a host of other factors affecting Pakistans export growth. These include stiff international competition in Textile products from China, India, Vietnam and Bangladesh in countrys major markets of the US and the EU; regional preferential arrangements such as NAFTA (North American Free Trade Area), CAFTA (Central American Free Trade Area), and the setting up of U.S. sponsored Qualified Industrial Zones (QIZs) in Jordan and Egypt which allow duty free access to their products, have also affected Pakistans competitiveness. 

Among some other factors are: a fall in unit prices of the textile sector, the 5.8 percent average anti-dumping duties in the European market on Pakistans bed-linen exports and negative travel advisories on Pakistan. This last area is of grave concern as large international importers and chains are reluctant to visit Pakistan citing security concerns. This has led to trade diversion from Pakistan to Bangladesh, China and Vietnam who are our product competitors in textiles. In terms of export destinations, the major reduction was of an approximate $300 million in exports to Afghanistan and that too of mostly POL products. In other categories, exports of leather garments decreased by $167 million and exports of rice decreased by $33 million since the crop was not up to the expectations.

http://www.dailytimes.com.pk/default.asp?page=2007\07\21\story_21-7-2007_pg5_1


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## Neo

*Sindh has become an investor friendly destination: CM​*
KARACHI: Sindh has now become an investor friendly destination and the far-sighted policies initiated by the government of Sindh are attracting investment and boosting the process of industrialisation in the province. 

Dr Arbab Ghulam Rahim, Chief Minister of Sindh said this while talking to Daily Times. The CM said that local and foreign investment has increased which was a healthy sign for the local industry.

The policies of the government have restored the confidence of the international trade and investment organisations and massive development schemes bear testimony to this fact. This has also created a lot of jobs for our educated youth, Dr Arbab added.

The Sindh CM also highlighted the initiatives taken by the government to strengthen the infrastructure development in all cities of the province. He said that new industries would be constructed on vast tracts of unused land in Karachi, which is owned by the government so that rapid development could take place. 

We are trying to provide all amenities and basic facilities to all the industrial estates in Sindh. The Sindh government is focusing on a pro-people agenda and a positive change can be seen in the form of massive industrialisation, increase in foreign direct investment and job creation now, Dr Arbab Ghulam Rahim said. pr

http://www.dailytimes.com.pk/default.asp?page=2007\07\21\story_21-7-2007_pg5_19


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## Neo

*Current account deficit crosses $7 billion ​*
KARACHI (July 22 2007): Country's current account deficit widened by two billion dollars to 4.8 percent of the gross domestic product (GDP) and all time high level of seven billion dollars during the 2007 fiscal year as compared to around five billion dollars during the 2006 fiscal, mainly due to slow down in exports.

For the first time in the history of the Pakistan, current account deficit has reached 4.8 percent of the GDP against the target of 4.3 percent for 2007, showing the overall position of the country's inflows and outflows of payments.

Officials statistics revealed on Saturday that during the 2007 fiscal year, the country has faced 2.026 billion dollars worth current account deficit, as it has reached at 7.016 billion dollars at the end of the last fiscal previously stood at 4.99 billion dollars during the 2006 fiscal year.

"Increase in current account deficit has been contributed by trade, services and income deficit, besides huge payments of interest and dividends during the 2007 fiscal year," analysts said.

They said the government had failed to achieve the export target of 18.6 billion dollars, besides increasing imports. As a result, the country during last fiscal year faced a trade deficit of over 9.87 billion dollars (as per the balance of payment).

Statistics indicated that principal factors responsible for the widening of current account deficit included a widening trade deficit by 9.87 billion dollars, services deficit by 4.125 billion dollars and tremendous raise of 3.574 billion dollars in income deficit.

The overall deficit, including trade, services and income stood at 17.569 billion dollars against the current account transfers of 10.638 billion dollars. During the 2007 fiscal, the country's altogether income from abroad stood at 937 million dollars as compared to 4.511 billion-dollar payments of income to the overseas.

In addition, services sector payments reached 8.25 billion dollars against the receipt of 4.125 billion dollars in service account. The statistics show the State Bank of Pakistan (SBP) reserves increased by 2.568 billion dollars to 13.333 billion dollars till June 30 from 10.765 billion dollars.

Current account deficit without official transfers climbed to 7.516 billion dollars during the last fiscal from 5.671 billion dollars at the end of the 2006 fiscal year, depicting an increase of 1.845 billion dollars during the last fiscal.

"The major reason behind the rising current account deficit is failure in achieving export target, as the country has missed export target by over 1.6 billion dollars and as compared to it, the current account deficit also witnessed two billion dollars during 2007," said a leading economist Muzammil Aslam.

Had the export target been achieved, the current account deficit would not have exceeded the previous year's figures, he added. He said that during the 11 months of the last fiscal, current account deficit stood at 7.4 billion dollars, but the inflows of international aid in June had reduced the current account deficit.

Due to high inflows of foreign direct investment (FDI), the county's total foreign reserves had touched all time high level of 15 billion dollar-mark, he added. "Now we are back to the position of 1999 as our fiscal and current account deficit reached 10 percent of the GDP," he said.

It may be mentioned here that the State Bank of Pakistan (SBP) was already aware the situation as it had predicted in its third quarterly report that the current account deficit would be raised to seven billion dollars during the 2007 fiscal.

http://www.brecorder.com/index.php?id=595378&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*50 megawatts Lakhra power plant to be made functional in three months ​*
KARACHI (July 22 2007): Sindh government has decided to take immediate steps to make the second coal-based power generation unit in Lakhra Power Plant, having a generation capacity of 50 megawatt, sources told Business Recorder on Saturday.

The new coal-fired power plant would be the second unit in Lakhra that would be made functional within the next two to three months. The unit will be the second preceded by another power production unit with a capacity of 50MW already functional in the plant and generating electricity from 25 to 30MW, they said.

The decision to make the second power unit functional at the earliest was taken in a meeting of Lakhra Coal Development Company officials, which was chaired by Sindh Mines and Mineral Development Minister Irfanullah Khan Marwat held on Thursday, to cater to the growing demand of the power in the province. It may be pointed out that there are three power units in Lakhra Power Plant each with a capacity of 50MW. But two units are not functional at present.

It is an economical and dependable source of energy and would be another step to achieve the objective of self-reliance in power sector, sources said while commenting on revival of the unit.

The meeting also reviewed the coal mining activities in the Lakhra coalfield and agreed to expand the coal mining and exploration operation in the field. For the expansion of exploration operation, provision of modern facilities has been decided to new areas of the field for development of coal deposits.

Irfan Marwat also granted the permission for acquiring new vehicles for the Lakhra Coal Development Company (LCDC) on the request of its officials keeping the logistics problems being faced by them in view.

Lakhra coalfield is spread over a land of 1309 Sq kilometres and located at a distance of about 93-km from Karachi. According to studies, it has estimated coal deposits of 1.328 billion tonnes. The coal of Lakhra is considered the most suitable for power generation and other application after the coal deposits in the Thar coalfield.

To accelerate the work pace on coal mining and exploration at Lakhra coal field, new equipment and machinery have also been decided to be purchased in the meeting for the fast pace exploration of the coal, sources said.

http://www.brecorder.com/index.php?id=595403&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Pakistan and China sign memorandum to set up investment company ​*
ISLAMABAD (July 22 2007): Memorandum and Articles of Association to set up Pak-China Joint Investment Company were signed here on Saturday. The joint company with a paid-up capital of $200 million will be operational in August.

The paid-up capital of $200 million will be subscribed equally by two parties to promote investment, economic co-operation between the corporate sector of the two countries, including joint ventures, project financing, asset management, housing financing, investment banking and infrastructure projects.

The Memorandum and Articles of Association were signed by Chen Jianbo, managing director/vice chairman, Xia Qiang, Director and Muhammad Akram Malik, secretary, Economic Affairs Division and Iqbal Hussain, senior joint secretary (invest) on behalf of their respective sides.

The signing ceremony was witnessed by PM's Adviser on finance Dr Salman Shah and the finance secretary. The Pak-China Joint Investment Company would perform investment banking business on commercial basis to carry out activities in the financial, infrastructure, services mining, industrial manufacturing and non-manufacturing sectors. It would also increase the existing bilateral economic co-operation between the two countries and attract foreign direct investment from other friendly countries, in addition to improving the investment climate in the country.

According to the agreement, the head office of the company will be located at Islamabad. It may also establish branches, offices or agencies in Pakistan or abroad.

http://www.brecorder.com/index.php?id=595413&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Japan to help set up economic zones ​* 
LAHORE (July 22 2007): Advisor to Prime Minister on Finance Dr Salman Shah has said that the government is negotiating with the Japanese authorities to set up special economic zones in the country. "We have already signed an agreement with China for establishing such special zones and formed an investment company for execution of the project," he told reporters.

At the first investment road show on 'The Future of Online Stock Trading in Pakistan', organised by the ADK Trade and the Mediators Conferences here on Saturday. About target killings of the Chinese in Pakistan, he said: "It is right that focused terrorism continues in the country, but it will not derail economic relations of Pakistan and China.

Moreover, there is also no possibility of change in the economic commitments of the two countries towards each other. We have to change our image of extremism and, by doing so, we can become the global workshop."

About the possibility of involvement of neighbouring countries in the recent wave of terrorism in the country, Salman said it could never be ruled out, and the countries who were unhappy over Pakistan's economic growth could be behind such acts. "But, despite all this, we will continue striving to keep our growth level higher as compared to our neighbouring countries."

Earlier, at the function, he said that Pakistan's stock market had outperformed in recent years and its investment had doubled in two years. "The capitalisation of Karachi Stock Exchange has increased to around $70 billion from $30 billion in the last couple of years," he said, adding, that "what we need to do now is to get more private investment forward in the capital market."

About future of online stock trading, he said: "It looks quite promising in Pakistan since the new generation is at ease with this technology." Dr Salman said that the government's economic liberalisation and privatisation policies had unleashed the real potential of Pakistan's economy.

About the stock market crisis, he said efforts were underway to improve the surveillance of the Securities and Exchange Commission of Pakistan (SECP) to overcome this problem. Citing the 2005 crisis and the consequent ones, he said they were mainly driven by liquidity problems, resulting from the COT. To overcome such problems in the future, the regulator had replaced COT with margin financing, which was subsequently substituted by the CFS arrangement.

Giving an overview of the economic outlook, he said that Pakistan was attracting local and international investors with the government putting the country on the world map through stock market.

He said: "We are living in a global market, which means the world markets are open for us and our market is open for the whole world. When the government started thinking to float bonds in the international market we thought Pakistan should position itself among the countries having their own brands. So, when we started building our brand, we looked into the economic indicators, which were better than other countries of the region.

"We realised at that time Pakistan growth was higher than India while it was also ahead of it in terms of tax-to-GDP ratio. Similarly, Pakistan's macro economic indictors were better than India. Moreover, it was realised at that time that 50 percent of Pakistan population comprised young generation. Pakistan workforce is 4th largest in the world, which is a positive indictor and we converted that growth potential into reality. Our consumer market is also very large and our dairy sector is 5th largest sector in the world."

About the Neelum-Jhelum Valley hydro project, he said its ground-breaking ceremony would take place soon while a company to execute the project had already been formed. "When the project is completed, the company will also be listed on the stock markets of the country," he said. "As far as the law and order situation in Pakistan is concerned, it is a world-wide phenomenon, as explosions take place everywhere in the world - so if a bomb explodes in FATA - it does not affect our investment environment.

"Last year, $8.48 billion foreign investment came into Pakistan and if we concentrates on our growth, we can double this investment in next two years. Likewise, if our brand image is developed we could make a lot of progress since the world knows that our economic fundamentals are very strong. Now because of the policies of the government, Pakistan is going to become the largest manufacturing workshop in the world. However, at this time, we need to invest more on skilled labour workforce. Similarly, Pakistan's energy sector has also lot of potential and the new petroleum policy will encourage investors."

AKD Securities Deputy CEO Muhammad Farid Alam also expressed his views on Pakistan's economic outlook, saying higher industrial and agricultural growth and significant improvement of macro-economic indicators was expected to keep the stock market buoyant. AKD Securities CEO Nadeem Naqvi also spoke on the opportunities in Pakistan's capital markets for potential investors.

Lahore Stock Exchange General Manger Mian Shakeel Aslam talked about the role of stock markets in helping investors and highlighted the new reforms undertaken by the exchanges and the SECP to improve the market efficiency, transparency and governance. Talking about the concept of the Online Trading through AKD Trade, Ali Hemani, General Manager, ADK Trade, discussed the online trading system and educated the investors about the technical aspects of online trading.

http://www.brecorder.com/index.php?id=595373&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*TDAP exhibition helps secure $400 million business from China ​*
KARACHI (July 22 2007): Trade Development Authority of Pakistan (TDAP) has organised an exhibition for Chinese business delegation in Islamabad and successfully secured business worth 400 million dollars. This was stated by TDAP Chief Executive Tariq Ikram while briefing senior officials, executives and consultants of TDAP in light the of 2007-08 trade policy.

The meeting deliberated on various aspects of the textile sector, including its promotion and to achieve the 2007-08 fiscal target. The meeting also took up the issue of exploring new markets for products and holding more exhibitions to augment the trade.

Later, a delegation of rice exporters called on Tariq Ikram and discussed with him various issues on Basmati and non-Basmati rice and matters pertaining to the export of this commodity. Tariq Ikram assured the delegation that TDAP would facilitate the exporters to boost the rice trade.-PR

http://www.brecorder.com/index.php?id=595473&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Trade policy to help government strike balance in world trade: FPCCI ​*
ISLAMABAD (July 22 2007): The Federation of Chambers of Commerce and Industry (FPCCI) has appreciated trade policy 2007-08, as a whole and hoped that it will help the government strike a balance in international trade, besides providing new openings to the exporters to increase share in the international market.

In a statement issued here. FPCCI former presidents, Tariq Sayeed and Iftikhar Ali Malik, said the government took many bold steps in the new trade policy and the private sector should take their full advantage to boost up exports.

He said the exporter have been given incentives to make entry in the new international markets.

They said the new trade policy will be instrumental in promoting new culture of display and exhibition centres in Pakistan. They said it is a global trend to promote the products through exhibition centres and it was materialised in the trade policy. Iftikhar Ali Malik said FPCCI has already taken a big step in the same direction by undertaking the project of Lahore exhibition centre.

He said Lahore exhibition centre will serve as a gateway to the Central Asia. The idea of setting up an exhibition centre in Lahore was conceived in 2001. Punjab government allocated 450 canals of land for the exhibition centre and then practical work started on the project in 2002. FPCCI is working on the project with complete consistency and its leadership believes that the exhibition and display centre will be ready in Lahore in near future. It will not only provide a platform to put industrial products on display but also encourage such activities in other parts of the country.

The government has given importance to the concept of exhibition/display centre in the trade policy and extended financial support to the associations and individual companies.

Iftikhar said the government has provided the associations/individual companies good incentives to set up display centres for promotion of their products. He suggested that the government should set up exhibition centres in other major cities. He said Lahore display centre will be a great facility for the industrial and other sectors.

http://www.brecorder.com/index.php?id=595439&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Work on five hydel power stations to start by year-end ​*
LAHORE (July 22 2007): Construction work on five hydel power stations will commence by the end of this fiscal year, and the project will cost a total of four billion rupees, of which 80 percent funds will be met with the assistance of Asian Development Bank and the remaining to be borne by the Punjab government.

This was stated by Punjab Minister for Power Chaudhry Armghan Subhani, while presiding over a department's meeting at his office here on Saturday, according to a handout. Chief Engineer Power Muhammad Yaqoob, In-charge Reconciliation Cell Iftikhar Ahmad Randhawa, Director Technical Rahat Khan and REDP Project Manager Liaqat Ali Iqbal were also present.

The minister observed that electricity was the backbone of all development efforts, and the government was committed to facilitate the people and all national sectors in this regard. The projects will be constructed at Marala, Chianwali, Deg Outfall, Okara and Pakpattan.

Elaborating on the cost break-up of the hydro power projects, he disclosed that Rs 110.2 million would be spent on preliminary work, Rs 1.07 billion on civil works, Rs 1.37 billion for hydro mechanical equipment, Rs 142.6 million for electrical equipment, Rs 12.6 million on transmission lines, Rs 81.1 million for physical contingencies, Rs 135.2 million for engineering supervision, Rs 40.5 million for administration, audit and accounts, Rs 40.7 million for duties and taxes, Rs 133.2 million for price contingencies, Rs 110 million for feasibility study of five additional sites, Rs 169.8 million for capacity building and Rs 586.4 million for interest during construction.

http://www.brecorder.com/index.php?id=595401&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Air passenger traffic to rise 94pc in five years ​*
KARACHI: Pakistan is expecting a jump of 94 per cent in the number of passengers using its airports from current 17 million to 33 million in next five years, The News has learnt.

It also intends to increase the number of international airlines operating in the country to 40 from 24 between 2008 and 2012, according to Civil Aviation Authority (CAA)s five-year business plan.

The CAA has also planned to make Karachi and Lahore regional hubs for West-bound air traffic, generating from the Asia-Pacific region, by seeking investments in airport-related infrastructure of the two cities.

Asia-Pacific countries will contribute the highest number of air passengers in the targeted period, said a senior CAA official, who was involved in the formulation of the medium-term strategy, but requested not to be named.

We need to convince these Asian airlines to drop their passengers here from where the western carriers could take the traffic to Europe and beyond.

According to Boeing, the American aircraft manufacturer, airlines in the Asia-Pacific region including China, Singapore, Thailand and Malaysia had altogether ordered some 8,000 aircraft, he said.

Just past week, global airports organisation Airports Council International announced that a record number of passengers totaling 4.4 billion traveled in 2006 with Beijing seeing the biggest rise in passenger traffic.

The CAA believes that its airports are ideally placed in South Asia having close proximity to South East Asia, Middle East and Central Asia.

The point is substantiated by one of its comparative studies, which shows a saving of 47 minutes on Hong Kong-Karachi-Brussels route for a flight going from Hong Kong to Brussels via Dubai.

However, an even greater emphasis is on making international hubs by providing a diverse range of facilities including world-class hotels, shopping plazas and other allied infrastructure for transit passengers.

Land is cheaper here and international airlines could use this to their advantage, the CAA official said, explaining that setting up aviation schools and training centres in Pakistan was much more cost-effective.

He also referred to an idea of building an aviation tower in Karachi or Lahore where foreign carriers could relocate their satellite offices.

The worth of land space in and around the airports runs into billions of rupees and it was only after Farooq Rehmatullah took over as Director General CAA a serious thought was given to utilisation of dormant non-aeronautical assets of the aviation regulator.

According to a new assessment, the CAAs non-aeronautical assets are valued at Rs177 billion against a book value of Rs17 billion.

Moreover, the CAA is eyeing increase in its revenues from current level of around Rs12 billion to Rs31 billion by 2012, a rise of 158 per cent.

http://www.thenews.com.pk/daily_detail.asp?id=65274


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## Neo

*Salman calls for faster growth rate ​*
LAHORE: Advisor to Prime Minister on Finance, Revenue, Dr Salman Shah has said it was imperative Pakistan to grow faster from countries in the region for which it will have to improve its image if it wants to emerge as global workshop for manufacturing.

He was talking to journalists after the first investment road show on Future of online stock trading organized by AKD Securities.

He said the demography of Pakistan indicates that the country would have the fourth largest workforce in the world in coming years.

He stressed the need of training and capacity building of the workforce and added that it was a continuous process.

He said that the government was seriously investing in the human resource development, which was evident for the budgetary allocations of health and education.

Dr Shah said that globalisation meant marketing of markets and the government was trying to put Pakistan on the map of markets.

He said that though governments tried to protect their markets from globalisation by putting tariff and non-tariff barriers but there was no protected market in the age of globalisation.

He said, strong macro economic indicators of the country depict tremendous potential of growth and that was better than so many countries in the region, including India, China, Turkey, Indonesia and Thailand.

He pointed out that the economic liberalization and privatisation policies of the government had unleashed the real potential Pakistans economy, which was obvious from the recent foreign investment of $8.4 billion.

He said that the country had a huge consumer market and high rate of return, which made it an attractive investment destination.

Talking about the new initiative of the government, he told participants of the road show that a new trucking company was being established with collaboration of China and Turkey to develop the logistic infrastructure to meet the challenges of the National Trade Corridor program.

He revealed that discussions were underway with Japan to set up special economic companies.

He, however, showed concern about the present vocational training facilities in the country.

He said that capital market in the country had doubled due to investor friendly policies of the government. He said that it was the priority of the government to provide environment conducive for smooth flow of the business activity.

Lahore Stock Exchange General Manager highlighted the role of stock exchanges in facilitating investors.

http://www.thenews.com.pk/daily_detail.asp?id=65275


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## Neo

*Mango export target to exceed by 20,000 tons​*
ISLAMABAD, July 21: Pakistan is likely to cross the mango export target of 115,000 tons set for the current fiscal year by an additional 20,000 tons to be shipped in the next three months.

Official figures compiled by the Horticulture Development Export Board showed that Pakistans annual mango exports amount to around 0.1 million tons, about seven per cent of total 1.5 million tons production.

The country exported 55,000 tons of mangoes worth $16.5 million till June 30, 2007 in just 40 days of the start of the export, which constituted 50 per cent of the total export target set for the period under review.

According to the horticulture board the export target might increase by additional 20,000 tons worth $6 million this year.

The exporters said Dubai remained the top market for Pakistani mangoes by importing 27,000 tons followed by Europe, including the United Kingdom with 10,000 tons.

Pakistan exported 9,000 tons mangoes to Saudi Arabia while 7,500 tons were shipped to other Gulf countries like Oman, and Kuwait, etc. The rest 1,500 tons mangoes went to the Far Eastern countries, like Singapore and Malaysia.

According to the board a mango fair will be held in Czech Republic by end of the current month to introduce Pakistani mango and hopefully the shipment of mango to non-traditional market will start this summer.

The Czech Republic has been a big market and it would provide another destination for Pakistani fruits. Presently, the Czech market is flooded with Brazilian mangoes but it has no match with Pakistani mango in term of quality and taste.

http://www.dawn.com/2007/07/22/ebr2.htm


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## Neo

*Lufthansa announces flights from Pakistan​*
LAHORE: Lufthansa, a German Airline, has announced to start its flights towards Karachi and Lahore from October 2007.

An official press release by the company on Saturday announced that the company would start its service from October 28, 2007 thrice a week flights from Karachi to Lahore and Frankfurt.

Vice President sales and services Southeast Europe, Africa and Middle East, Joachim Steinback has stated Lufthansa Network would strengthen the bilateral economic relation by connecting the commercial and industrial cities of Pakistan, Middle East and Germany.

Joachim Steinback, who is also heading the strategically most important regions of Lufthansa Network, said that passengers of Pakistan and Germany would have access to the extensive route network of Lufthansa connecting through the Lufthansa hub Frankfurt to other European countries as well as to the United States.

Mr Steinbach further said, passengers would benefit from the new Lufthansa flights since the non stop connection from Pakistan to Germany would reduce travel time by up to three hours as compared to current connecting flights from gulf to Europe. He said this step of Lufthansa airline would be a great advantage for the business travellers.

Lufthansa also announced appointments for Pakistan and Mr Ian Patrick would be Lufthansa Country manger for Pakistan and Afghanistan. Mr Patrick has a long and varied airlines experience as he has experience of consulting for numerous fields of marketing, revenue enhancement and route feasibility. 

http://www.dailytimes.com.pk/default.asp?page=2007\07\22\story_22-7-2007_pg5_7


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## Neo

*Pakistan launches 5-yr energy strategy ​* 
(MENAFN) The Pakistani government has announced its five-year energy policy revising upward oil and gas production prices by 6-8 percent on new discoveries, Khaleej Times reported. 

The new plan, dubbed Petroleum Exploration and Production Policy 2007, will pass its impact on domestic consumers within five years, said the Pakistani Minister of Finance, adding that Pakistan has met only 20 percent of its total oil requirements from domestic sources and gas requirements were also rising with growing economy and hence the target was to maximize indigenous production of oil and gas.

He said the country was at twelfth position in 2001 in terms of petroleum activity level but slipped to sixteenth in 2006. However, India was at seventeenth position but improved its environment and secured seventh position during the same period. 

http://www.menafn.com/qn_news_story_s.asp?StoryId=1093160316


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## Neo

*Punjab government urged to set up more industrial estates ​*
LAHORE (July 23 2007): The Chairman of 'The Founders' group, Dr Khalid Javed, has said that Punjab Government decision to set up industrial estates along the Motorway is a very positive development, which will not only reduce the unemployment but will also help in bringing down the rate of crime. Addressing the office-bearers and members of Lahore Chamber of Commerce and Industry (LCCI) here on Sunday.

He said that the decision had been taken by the provincial government on the demand of 'The Founders'. He said that the government should set up industrial estates all across the country. He, however, expressed his deep concern over the law and order situation, and condemned the suicide attacks taking place in the country.

He also condemned the targeted killings of Chinese in the country and said: "China is our friend; therefore, the government must ensure the security of the Chinese workers."

He urged the government to undertake concrete steps for holding transparent elections of LCCI by issuing instructions for correcting voters' lists.

http://www.brecorder.com/index.php?id=595880&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Linking Gwadar port with rail network: Pracs given two-week deadline for feasibility ​*
ISLAMABAD (July 23 2007): The Railway Ministry has given two weeks deadline to a concerned department - Pakistan Railways Advisory and Consultancy Services (Pracs) - for the completion of a feasibility study to link Gwadar deep sea port with country's main rail network.

The Pakistan Railways Advisory and Consultancy Services is undertaking the feasibility study of the project that is already well behind its schedule.

Sources in the Railway Ministry told Business Recorder that Pracs has been asked to 'seriously' accomplish the feasibility study of the Gwadar port within no time.

"The project is already behind its schedule... we have asked the Pakistan Railways Advisory and Consultancy Services to submit the complete feasibility study as soon as they can," a senior official told this correspondent. The government plans to construct a new railway line connecting Gwadar with the main network at Quetta-Kohi-Taftan section.

To this affect, the feasibility study was scheduled to be completed early last year but delayed due to security problems in Balochistan and some other administrative issues.

The government, earlier, had finalised a feasibility report worth Rs 70.63 billion to connect Gwadar port with the main railway network. The Railway Constructions Pakistan Limited (Railcop) - a subsidiary of Pakistan Railways - had prepared the feasibility report of the mega project. Later on, the government decided to conduct a fresh feasibility study of the rail link, as the first one was too inflated.

The task, then, was assigned to Pakistan Railways Advisory and Consultancy Services which is yet to submit the detailed feasibility report. "It (Pracs) has undertaken the feasibility study of most parts of the proposed project but there are some tracks still left," the official added.

"We are trying to put in place a comprehensive railway network that would in future connect Pakistan with neighbouring countries to promote economic activities in the region," he maintained. The government has so far failed to establish communication links to connect multi-billion dollar Gwadar port with country's main network.

http://www.brecorder.com/index.php?id=595842&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*JETRO assures Japan's cooperation for Karachi mega projects ​* 
KARACHI: July 23, 2007. Nazim Karachi Syed Mustafa Kamal has said that Ministry of Railways has completed preparations with regard to Karachi Circular Railway and Japan Government has been asked to start work on the project at the earliest while JETRO has also finalized its preparations.

He said it is an important and inevitable project for Karachi and its completion would help provide modern and comfortable commuting facilities.

He was talking to JETRO's new country director Minoru Uga who had an introductory meeting with him along with outgoing country director Hiro Miakwa and JETRO expert Kokyo Kenny Tamaki here on Monday.

"We are thankful to Government of Japan and Japanese companies for joining us in important projects for Karachi with KCR and Steel bridges being on the top", Mustafa Kamal said.

He assured that Japanese companies would be fully encouraged for their investment in mega projects and all cooperation will be extended to them.

JTRO Country Director appreciated the Nazim's vision for fastest development plans, particularly flyovers, underpasses and other mega projects and said that Karachi would soon become world's modern and beautiful city. He assured of all cooperation of JETRO in this regard.

Brecorder.com


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## Neo

*Will the trade policy achieve export target?​*
It seems that the trade policy 2007-08 is intended to be unveiled in two phases. Apart from the policy announced on Wednesday last, the market believes that the government may come out with an export strategy for textiles in next one to two weeks.

The policy outlines a strategy for only 35 per cent of the $19.2 billion proposed export target for 2007-08,'' said Fawad Ejaz, a representative of the leather industry while offering his comment on the new policy.

Fawad is bitter because the proposal about the six per cent research and development rebate on the export of leather garments has been put off indefinitely by the Economic Coordination Committee of the Cabinet held last month. The same meeting is stated to have adopted an incentive package for the textiles.

The Federal Commerce Minister Humayun Akhtar had moved the proposal about six per cent R and D rebate for leather garments export along with readymade garments at an ECC meeting two years ago. In 2005, the ECC had decided to offer six per cent rebate on readymade garments which was expected to continue till 2009. However, the same incentive was not approved for leather garments. The commerce minister did not attend the ECC meeting last month.

In 2006-07, leather garment exports were down by more than 24 per cent,'' Fawad disclosed saying that the R and D rebate was offered to footwear early this year but it was too late. Hence it failed to show an improvement in export performance.

Unlike the previous years, the chairman of the Export Promotion Bureau did not invite leaders of export associations for discussing problems pertaining to fiscal, banking, logistics etc and working out sector-wise export targets for fiscal 2008. The chairman of the recently formed Trade Development Authority of Pakistan (TDAP) did not talk to exporters. We are not aware as to how much we are expected to export this year'', a leather garment exporter said

There are many irritants which could have been addressed had there been pre-policy consultations. For example, exporters are allowed 100 samples every year for their buyers abroad. They want their ceiling fixed according to the ratio of their business volume. Big exporters have a large buyers' base and need to send more samples.

Carpet manufacturers and exporters are also upset over an import provision about semi-finished carpets for which an SRO has been issued. Yacoob Salehji, a leader of carpet industry has sent a protest note to the government stating that the decision has dealt a crippling blow to domestic labour-intensive carpet-making employing 1.2 million people. More than 60 per cent running cost of the industry goes towards labour charges. He fears that some businessmen might import semi-finished carpets from India, Nepal or China.

Exporters have also reservations about certain aspects of the Export Credit Guarantee Scheme which have made it almost impractical. Exporters say, about 20 per cent of the exports (about $3.5 to $4 billion) are supplied on credit for which they need insurance cover and cash flow to maintain liquidity.

It seems there is a built-in conflict within the government as to how to go about the international trade. The commerce ministry's performance is judged by the improvement in exports and prudence in imports. Imports are expected to serve domestic industry to produce export surplus and meet local market demands. But the finance ministry's sole objective is to generate revenue In 2006-07, the finance minister collected a record Rs841 billion taxes and duties. It has set a target of Rs1,025 billion tax collection in the current fiscal year. Import is one source on which the finance ministry relies heavily to collect as much as 43 per cent of taxes---import duty, sales tax and presumptive income tax. In 2006-07, the government collected more than Rs351 billion from imports. This heavy burden of taxes tend to cripple the industries. While commenting on sluggish export growth last year, the commerce minister in his policy speech on Wednesday pointed out that, ``the declining growth trend in the large scale manufacturing sector during 2006-07 from 10.7 to 8.8 per cent reduced our exportable surpluses''. Even this growth of 8.8 per cent came from imported-oriented auto and electronic industry for which the demand was created by the liberal bank loans. The consumer loaning now constitutes almost 20 per cent of the total bank loans portfolio. The revival of Pakistan Steel driven by price spiral of steel products also contributed to 8.8 per cent growth. But the export-oriented industries failed to come up to the expectations and the exports trailed behind the annual target.

In the current year too, the prime minister was a bit more optimistic while suggesting a $20 billion export target. But the commerce minister was somewhat cautious who wanted it to be less than $19 billion. The government finally settled it at $19.2 billion.

The policy for 2007-08 offers long-term facilitation and vision to the exporters. But the commerce ministry appears to be beset with limitation of funds. It has only two sources for funds at its disposal. One is the Export Development Fund and the other is Export Market Development Fund. The strategy to upgrade skills, production capacities, marketing capabilities, designing , exhibition etc. need a lot of money. Exporters have been given the incentives to obtain certification, open their offices abroad, development of branding.

But all said and done, exports are under the severe impact of high manufacturing cost mainly coming from inflationary trends, high interest rates, high utility tariffs and a miserable infrastructure.

http://www.dawn.com/2007/07/23/ebr1.htm


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## Neo

*Fundamentals for improving cotton crop​*
By Dr Shahzad M.A. Basra, Hassan Munir & M. Tariq Javed

DESPITE being one of the leading cotton producers, Pakistan ranks 13th in the world in the yield per acre. As a result, around 1.5 to 2.00 million bales of cotton are imported annually to meet the demand of the domestic textile industry, contributing 60 per cent of the export earnings. Therefore, it is necessary to increase the per acre yield.

There are a number of strategies to increase the yield and to reduce cost of production. These include efforts to minimise high temperature effects on cotton crop as well as for optimum crop stand to maximise yield. Every cotton grower is making efforts for better yield as it offers a lot of economic benefits.

Useful cotton textile products include terrycloth, used to make highly absorbent bath towels and robes, denim to make blue jeans, chambray used in the manufacture of blue work shirts (from which we get the term blue collar), corduroy, seersucker, and cotton twill. Socks, underwear, and most T-shirts are made from cotton. Bed sheets are usually made of cotton. Cotton yarn is used in crochet and knitting.

Fabric can also be made from recycled or recovered cotton. While many fabrics are made completely of cotton, some are made with materials blended with cotton as well as with other fibres, including rayon and synthetic fibres such as polyester.

In addition to the textile industry, cotton is used in making fishnets, coffee filters, tents and in bookbinding. The first Chinese paper was made of cotton fibre. Fire hoses were once made of cotton. Cotton hulls are used for fertiliser, fuel, and packing. The cottonseed is used to produce cottonseed oil, which after refining is used by human beings. The cottonseed meal is generally fed to livestock.

Successful cultivation of cotton requires a long growing season, plenty of sunshine and water during its period of growth, and dry weather for harvest. In general, these conditions are met within tropical and warm subtropical areas. Production of cotton crop for a given year usually starts soon after harvesting the preceding autumn. Planting time is between April and June ..

A "good stand" refers to the number of healthy, vigorous seedlings that are evenly distributed in the field. This may be two to four plants per foot of row depending on soil type, row width, planting date, and moisture during the growing season. Getting a stand requires proper seedbed preparation, favourable soil temperature, proper planting depth, adequate soil moisture, high quality seed, avoiding chemical injury and protecting the plants from high winds, blowing sand, insects and diseases.

Seed quality should be the top most concern of the cultivator. Poor seed is the primary cause of stand failure. Emerging seedlings are poorly equipped to withstand the challenges of diseases, insects, wind, and weather, including moisture stress and heat stress.

Only such seeds should be sown which have a cool-warm vigour index of 155 or higher. The vigour index is obtained by combining the warm germination test percentage with the cool germination test percentage. Under favourable conditions, emergence of seedlings can occur in four to five days after planting. Emergence will take longer if seed are planted in cool soils. Temperatures below 60°F are detrimental to germination, emergence, and seedling growth. During the first 60 to 100 hours of germination, the radical tip is easily damaged by chilling, lack of oxygen in the soil, or too much moisture. If the tip is killed, a shallow system of secondary roots develop that makes the plant more subject to moisture stress latter in the season.

For better germination and enhanced vigour, better quality seed is the pre-requisite. Under normal soil conditions, simple soaking of seed in water before sowing will serve the purpose. Experiments have shown that primed seeds emerged faster and grew more vigorously. They also flowered earlier (very important in drought-prone areas), matured earlier and gave higher yields.

Deterioration of cotton seed during storage is another problem. During storage various seed-born micro-organisms damage the seed. As a result the seed loses viability and germination capacity. In this scenario seed invigoration techniques offer a new hope.

At present, seed-priming has been commercially used to eliminate or greatly reduce the amount of seed-borne fungi and bacteria. Organisms such as Xanthomonas campestris in canola and cotton seeds and Septoria in celery have been shown to be eliminated within seed lots as a by-product of priming. In the case of Xanthomonas campestris in cotton, zero infection in 50,000 seeds is commonly reported. The mechanisms responsible for eradication may be linked to the water potentials that seeds are exposed to during priming, differential sensitivity to priming salts, and/or differential sensitivity to oxygen concentrations.

Cotton plant is highly sensitive to high temperature. It dries out, becomes hard and brittle and loses all elasticity at temperatures above 35°C. Extended exposure to light causes similar problems. A temperature range of 35°C to 45°C is the optimal range for fungus development. Because of high temperature these problems are frequently observed in cotton growing areas of southern Punjab and parts of Sindh.

The ideal daytime temperature for cotton production is 82 degrees Fahrenheit. In Multan and other cotton-producing areas, daytime temperatures often exceed 100 degrees Fahrenheit. Plant physiologists are of the view that high temperatures can adversely affect the function of plant enzymes, resulting in impaired photosynthesis and reduced yields of cotton as well as other crops.

To overcome high temperature problem in cotton, research activities are in progress at the University of Agriculture, Faisalabad, to address the high temperature as well as poor crop stand problem in cotton crop. However, due to some obstacles, collaboration with other leading national institutes like Pakistan Atomic Energy Commission (PAEC), Islamabad, National Institute for Biotechnology and Genetic Engineering (NIBGE) and Nuclear Institute of Agriculture and Biology (NIAB), Faisalabad, Central Cotton Research Institute (CCRI), Multan, and National Centre of Excellence in Molecular Biology (NCEMB) at Punjab University, Lahore, is need of the time.

Authorities should pay attention for developing this collaboration and should also encourage these research efforts for better outcomes. This is the only way by which we can play our role in improving cotton production and increasing the crop yield in the country.

http://www.dawn.com/2007/07/23/ebr4.htm


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## Neo

*Sustainable agriculture in rain-fed areas​*
THE rain-fed agriculture is an enterprise of high risks and is exposed to many soil and environmental threats. The sustainability of rain-fed agriculture is, in fact, management of risks involved in cultivation and that should be the focal point of policy makers, knowledge imparting institutions and ultimately the farming community.

Taking this sustainability aspect in perspective of Pakistan agriculture, 67 per cent population lives in rural areas (1998, Census of Pakistan), with insufficient food of low quality and natural resources being exploited ruthlessly.

How best the rain-fed areas are used and at the same time sustain productivity is really a big challenge. Out of 79.6 million hectares the total area of Pakistan, 22.1 million hectares is cultivated (Agricultural Statistics of Pakistan, 2006). The three-fourth of the cultivated area is irrigated and one quarter is rain-fed (Barani). The rainfall in Pakistan is highly variable and is recorded as low as 10 mm in hot deserts of Cholistan and Thar to as high as 1500 mm per annum in foothill of Himalayas.

The farming in dry land areas is subjected to soil erosion, degradation of vegetation cover, desertification, low crop productivity, substandard livestock and poor farm management and consequently low economic return to farming community.

Because of these constraints and risks involved in rain-fed agriculture, till recent past the main focus was on irrigated agriculture, and rain-fed agriculture was neglected. However, the barani areas are such a vast and valuable resource that it was not possible to ignore these rain-fed areas any more. Dry land areas sustain 80 per cent of livestock, contribute to 12 per cent wheat, 23 per cent rapeseed and mustard, 53 per cent barley, 65 per cent gram, 69 per cent sorghum and 89 per cent groundnut. As such rain-fed areas offer hope of sustainable agriculture.

Keeping in view the significance of Barani areas, the Barani Commission was constituted to explore the possibility of development of rain-fed areas. The commission in its report in 1976 emphasised the need of trained manpower, problem-orientated research and measures to devise ways and means for uplift of the poor rural masses in rain-fed region.

The soils in rain-fed areas are subjected to water erosion and wind erosion to varying degree. Out of total water erosion area of 11.17 million hectares, 1.9 million, .0059 million, 6.57 million and 2.63 million hectares are affected in Punjab, Sindh, NWFP inclusive of northern areas and Balochistan, respectively. Out of this eroded area only 0.398 million hectares are affected by sheet and slight rill erosion, while remaining area is moderately to severely affected by rill and gully erosion.

In Potohar region during intense rain Kohan, Bhanu, Kansi, Sowan and Harrow rivers take away huge sediments rendering 12,000 to 30,000 acres arable land unsuitable for cultivation every year (Barani Commission report, 1976). In high rainfall areas water erosion predominates, while in low rainfall areas wind erosion is main impediment to sustainable agriculture. The total area affected by wind erosion is 4.7 million hectares. The area affected by wind erosion in Punjab, Sindh, Balochistan and the NWFP is 3.8 million, 0.64 million, 0.28 million and 36,000 hectares, respectively.

This is evident from data of water and wind erosion, that water erosion is most predominant in NWFP, while reverse statement is valid in case of wind erosion. An area of 2.6 million, 0.49 million and 1.6 million hectares are slightly, moderately and severely affected by wind erosion. The rain-fed areas are susceptible to water and wind erosion and need proper management practices. The soil is a natural resource of immense significance and should be utilised in a way that quality of soil is not degraded.

The soil and water resources need to be conserved to ensure sustainability of rain-fed agriculture. The soil eroded by water is conserved by integration of cultural practices, vegetation measures and engineering techniques. The cultural practices include deep ploughing, conservation tillage and furrow cultivation. The crops that fit the rainfall pattern may be cultivated. The pasture may be established on marginal lands. The vegetation cover is the first defence against erosion and run off and must be adopted earnestly.

The soil in rain-fed area is usually uneven, with variable degree of slope. The local word Potohar means, undulating and uneven. The levelling of such lands may not be feasible and costly as well, the soil is to be managed in situ or as it is, hence terracing and contour practices may be adopted. The engineering measure may be temporary or permanent in nature. The water ways, spill ways, drainage ways and diversion channels are constructed to control run off water and conserve the soil. The permanent engineering work involves masonry work, the check dam and retaining walls are constructed to plug the gully. The gully may be plugged by vegetation cover.

The flowing silt is arrested and gully is plugged over time. The principles of wind erosion control are four folds; protect the soil surface with cover preferably vegetation cover, may be grasses, roughen the soil surface to slow down wind velocity and trap drifting soil, produce stable soil aggregates to resist force of wind and install wind barrier, by growing trees, shrubs and tall growing crops. The application of soil stabilisers/soil conditioners may prevent wind erosion, but these chemicals should be cost effective. The top down soil conservation approach need to be replaced with bottom up approach that suit the farmers convictions and resources.

Moisture is most limiting factors in crop husbandry in dry land areas and each and every drop of water is to be conserved for successful crop production. The rain-fed agriculture depends on how to capture rainfall and make efficient use of rain water. During intense rainfall the runoff of water is quite common, and occurs as a rule rather than exception, specifically in soils with low infiltration induced by soil compaction and crust formation. The runoff water takes the top fertile soil away, leaving the soil barren for plant growth.

The conservation of water is important for productive rain-fed agriculture and is accomplished by appropriate tillage, soil mulching, and application of crop residues as cover on soil surface to eliminate evaporation losses, vegetation and crop cover and adoption of cultivation techniques such as terracing, ridges and contour practices. The conservation of water is essential in all rain-fed area, but more so in dry areas. In arid regions with rainfall less than 250mm, the farmers must be conversant with the technology of conservation of all available water.

In order to conserve adequate water, sub-soiling, chiselling and deep tillage is practiced. In this way more water infiltrate into the soil and more root penetration occur that has access to more water over a large area. The success of crop production in rain-fed area is directly related to quantity of water conserved in soil, Hence bunds or check border should be erected around the field, the field may be deep ploughed, so that maximum rain water can infiltrate into the soil and is conserved for the next crop. Water harvesting is essential for rain-fed agriculture. Water harvesting is collection and storage of precipitation, the rain water. The risk involved in rain-fed agriculture is minimised by proper water harvesting, water harvesting in an area may be 20-90 per cent of precipitation received in that area depending on slope, intensity of rainfall and soil characteristics.

The Cholistan desert in Punjab and the Thar desert in Sindh are dependent on rain water. The inhabitant of these deserts had been using water harvesting techniques since distant past. The water harvesting techniques are site specific and most appropriate one must be adopted in a locality under consideration.

In rain-fed areas there is a great scope of runoff agriculture. The rainwater is taken away by runoff to other areas, where it is stored and used for crop production. The runoff takes place in upper part of catchments and is collected at lower part of it. In water harvesting at other places infiltration in reduced at original site and as such runoff is increased for more water harvest on adjacent areas. The runoff is accelerated by vegetation removal and soil compaction. The area is also treated with chemical soil sealant and water repellent materials in order to increase runoff. The farmers in Cholistan in Punjab and Thar in Sindh collect rainwater in depression called Tarries. The shape and size of such rainwater reservoir depend on size of catchments and type of soil in a locality. The farmers also store water in underground tanks locally known as Tonka, that are made by hard clay.

In underground tanks, water loss by evaporation practically does not occur. The shallow well upto the depth of 20m are also dug in depression, where rainwater is collected in sufficient quantity. These dug well are recharged by percolating water in soil. Farm tank or pond is another method of water harvesting. The pond may be excavated in existing depression of the farm and soil so obtained may be used for embankment. The pond may be made impermeable by use of chemical sealants and soil cover such as wax and asphalt that will minimise water loss. The pond may be sealed with local available material to check seepage, covered to control evaporation and designed to prevent silting. With improved practices in catchments it is feasible, to harvest water as low as 10 mm rainfall.

The flood water harvesting, snow harvesting and dew harvesting are other resources of harvesting that deserve attention. In Dera Ghazi Khan District of Punjab, and in Balochistan hill ******** occur. The rainfall is received in short intense storm in form of flood. This flowing water should be spread over adjacent plains for crop production, range and pasture improvement. The water resources are scarce and will be more acute in future, because of the gap between demand and supply. Hence water needs to be conserved/harvested efficiently for optimum crop production.

No plan for uplift of farming community can be useful, unless farmers are actively involved in that activity, so is the case with water harvesting. The participatory approach involving stack holders to take part in water harvesting to conserve / harvest every drop of water is essential. The local people should be provided technical know how and financial assistance for construction and development of rainwater harvesting system in the respective region.

In successful crop production under rain-fed conditions, there are two options, either conserve/harvest enough water for optimum plant growth or grow crops that have minimum water requirements and give more yield with less water. The crops with low water requirements and high water use efficiency are to be propagated in rain-fed areas.

The crop species selected should be such that fit the rainfall pattern. Integrated farming system is appropriate for all levels of technologies from subsistence farming to large, highly technical commercial farming enterprises, The crop plants that can tolerate heat and resist drought / stress environment, yet had acceptable productivity and contribute to economic stability by reducing risks involved in rain-fed agriculture, are to be propagated. The conventional crops are to be supplemented with high value fruits and vegetable crops or agro-forestry, olive, saffron, salicornia and sea buckthorn cultivation may be other alternatives, depending on land capability classes.

The soils in rain-fed areas are usually class III and IV land capability class and had moderate to severe limitation for general crop production and deserve appropriate management practices. Vitiver grass known as Khus Khus is effective in soil and water conservation and may be adopted in suitable localities. The appropriate moisture conservation/water harvesting will ensure water availability to crops sown in rain-fed region.

The water available in dry areas may be utilised by highly efficient and effective irrigation techniques such as drip or sprinkler irrigation for successful crop production in rain-fed areas.

http://www.dawn.com/2007/07/23/ebr3.htm


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## Neo

*Risks to Mirani dams viability​*
The worst affected from the recent rains and flashfloods are the people of Nasirabad in Turbat district. Most people hold technical flaws in the Mirani dams design responsible for the devastation of the area. The Rs5.8 billion Mirani dam project is designed to irrigate about 33,000 acres. However, its commissioning has already destroyed thousands of acres of cultivated land with 18 tube wells, five `karizes and many other irrigation infrastructures.

Many believe the design of the spillway needs to be redesigned as there is no provision for a flood gate and the outlet exists in the form of the sole spillway with a very limited capacity. The original project design had shown the reservoir on 6,000 acres and the fields which were at an elevation of 30 feet were depicted as being under water, while those at a depression of 30 feet as outside the reservoir area.

According to experts and local communities, a population of 50,000 will be affected in the upstream of Dasht River as a result of the storing floodwater in the dam. A majority of the population of Nasirabad, Nodiz and Kalatuk will be inundated once the water is stored in the dam to its full capacity. Official sources say that the project will not have any major adverse environmental effect in the reservoir area. About 1,100 people will need resettlement and about 4,800 acres of flood-irrigated area will be submerged. Based on market value of land and replacement value of facilities, sufficient provision has been made for covering the cost of compensation of the reservoir area.

Mirani dam will have the capacity to store 150,000 acres feet of water with its only spillway at 80 feet. The total height of the dam is planned to be 127 feet. The first feasibility report of the project was completed decades back in 1956. The 1956 survey showed the dam height at 80 feet instead of the 127 feet now planned.

Some political circles have demanded that the height of Mirani Dam be reduced by at least 10 feet in order to mitigate its adverse effects on the people in upstream and downstream areas. Ironically, the government has now planned to increase the height of Mirani Dam by another 20 feet that would also increase the cost of the resettlement plan.

Mirani Dam has been constructed on Dasht River, 43 km south west of Turbat City for irrigation purpose. Turbat is situated on the left bank of Kech stream. The 127 ft-high, 3,350 ft-long, earth-filled dam will create a reservoir, which will extend to about 10 miles upstream of the dam. It will have a designed capacity of 377 cusecs. The local people fear that as a result of the dam, two union councils, Noodaz and Nasirabad, will be inundated. According to the official sources, only some parts of the union councils will be inundated forcing only a few people to migrate.

The construction of Mirani dam has not been without its social and environmental costs. The command area has been affected for the upper riparian, which included resettlement and land acquisition, as well as for the lower riparian, which meant water rights, etc. Besides depleting the productive agricultural land, there will be manifold impacts on the local community, a cross section of income levels, living resources and living standards which would give rise to multi-dimensional socio-economic problems.

The critics say that the study conducted by Nespak remained silent on the resettlement action plan and was more biased towards the lower riparian which forced Wapda to address various aspects relating to the affected population and their resettlement. A Rs1.84 billion resettlement action plan (RAP) was recently approved for Mirani Dam project. National Rural Support Programme (NRSP) was appointed as third party to re-asses the cost of land, buildings and trees under the compensation package. Last month, Water and Power Development Authority (Wapda) abruptly increased the cost of date plants inundated by the dam from originally proposed Rs3000 to Rs20,000 per plant. The initiative is under consideration of NRSP that will send the final report to the Executive Committee of the National Economic Council (Ecnec), which is to approve the Resettlement Action Plan for the dam.

The local people complain that compensation provided so far is not appropriate, as land in Gwadar is costlier than any district in the province due to the construction of deep-sea port. In the case of Sabakzai Dam in Zhob district, the affected people received compensation over Rs43,000 per acre, while the Mirani Dam victims were paid Rs15,000--20,000 per acre. The total area which will be submerged under the reservoir at 244 ft is about 17,982 acres. It also includes resettlement and compensation for houses between the canal command area and the lower riparian area of the river's reach 235 miles downstream up to Jiwani. Out of the total of 17,982 acres of land, the affected people of 7,669 acres have already been paid compensation, whereas the affected people of the remaining area, which is 10,313 acres, are yet to be compensated.

The revised settlement plan by Wapda sought Rs741 million more from the federal government.. Wapda needed funds for the compensation of land, housing, infrastructure and other required facilities to the affected population.

http://www.dawn.com/2007/07/23/ebr7.htm


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## Neo

*Mega projects: gainers and losers​*
Many countries are currently assessing benefits of mega projects so that the advantages and disadvantages of such ventures are made clearly visible. For Pakistan, such a review becomes all the more necessary because billions of dollars have been spent or misspent by successive governments for mega development projects, aimed at alleviating poverty but the outcome have been downright grim.

Barrages, dams and outfall drains have been constructed presumably to benefit people, but they are worse off with more and more people being forced into poverty. Foreign money for mega projects has gone into making some new rich among big bureaucrats, consultants and contractors.

On the other hand, the entire communities in Sindh and Balochistan  a region blessed by nature with rivers, bountiful lakes, large tracks of fertile land, orchids, forests, animal and bird habitats, wetlands, coast and gas and oil reservoirs face a dire situation. These are hard time for peasants, fishermen, craftsmen and herdsmen of the two provinces. Their means of livelihood have been destroyed, degraded and over-exploited in the name of development.With terminal drought, rising poverty and widespread unemployment, more and more people than ever before have been marginalised.

Official economists may or may not have a good grasp of the dimensions of problems ranging from poverty in rural areas to breakdown of social values, but they have altogether ignored the destruction wrought by mega projects on natural livelihood on which people depended for a living for centuries.

Dams, barrages and overexploitation of water resources have taken a toll on people and biodiversity as rivers have dried up, lakes poisoned and fertile lands saline, says Dadu-based writer Aziz Ranjhani. It is not the lack of assets but the destruction and over-exploitation of assets which has caused so much poverty.

According to some figures, out of two people one is extremely poor, who according to the World Bank, cant eat three times a day or even twice a day, drink clean water, wear new clothes, or participate in social get together . In the words of the WHO, he is chronically under-nourished too.

Thus every poverty-stricken person is striving hard to meet basic human needs like shelter, food, clothes, education and medical.

Manchhar, the largest fresh-water levee in Asia, is dying a painful death. The dumping of effluents is threatening its ecosystem, says historian and writer Professor Aziz Kingrani.

The destruction of natural assets has created problems like the breakdown of social values, vanishing culture and profound moral degradation.

How can the government reduce the number of mal-nourished people since two million acres land in Thatta and Badin districts have been swallowed by the sea?

How can you raise per capita income of peasants whose assets have disappeared as a result of government policies-- and fishermen whose natural aquatic resource like the Manchhar lake and the Hamal lake have been made poisonous?

According to Prof Kingrani and Mr Ranjhani dams and outfall drains have permanently rendered two million acres of land barren and millions of people have been dispossessed. The coastal Sindh and Balochistan have been brought to the brink of ecological destruction.

Prof Kingrani and Mr Ranjhani said the dumping of excessive water into the Manchhar lake has brought the entire socio-cultural set up of Mohanas (the fisherman) on the verge of extinction.

Prof Kingrani said the conversion of the sweet-water lake into the saline water has reduced the fish catch from 70 to 80 tonns daily to three maunds (80 to 120 kg) daily.

It is a battle for the survival for the impoverished fishermen, they said.

Writer of many dramas on social problems and articles on cultural heritage, Professor Kingrani told Dawn on telephone that: The entire Manchhar area is sight of malnourished children, men and sick women trying to make a living on dwindling fish stocks. Almost 80 per cent of women and children suffered from one disease or the other. About 50,000 people had migrated from the Manchhar area to settle in other parts of the province.

Larkana-based social activist and chairman of the Earth Lovers Society, Mr Zulfikar Rajper, said the first right of people on their natural resources of livelihood must be rcognised.

A writer of three books in Sindhi, one on the degradation of Hamal Lake, Mr Rajper says if the Sindhs rivers, delta and lakes were not rehabilitated, the communities depending on them for their livelihood would face starvation.

Saline water being dumped into Hamal and Manchhar lakes has not only disturbed the economy but destroyed the cultural heritage, says Prof Mukhtiar Samo of the Larkana Knowledge Centre.

Thousands of people and large herds of wildlife depended on resources of the erstwhile life-sustaining and sweet-water Hamal lake and forest surrounding it, but these are being destroyed, says Mr Rajper.

The Hamal lake has expanded 150 kilometres long and 60 kilometres wide due to discharge of poisonous water inundating several villages and natural habitat of wildlife, he added..

Mr Rajper said that about 30 years ago the Hamal lake used to be a large pond of sweet and potable water from where people of the area not only drank water but irrigated their agricultural lands also.

There was forest-like thick tree plantation along the lake which served as a sanctuary for the wildlife, he said.

The migratory birds from Siberia would flock in thousands to find a cosy living here during winter.

Before being turned into poisonous lake by the saline water and effluent of Balochistan brought by Heeraldin Drain into it, the Hamal Lake was a hub of economic activities.

People of the Kachho (lap of the mountain), as the area is called, converged at the banks of the lake during their leisure time and enjoyed themselves of the fresh air, watery environment and hectic activities of the fishermen in the water, said Prof Samo.

The lake was teeming with the fish and fishermen always were seen sailing in the boats on its surface here and there for catching the fish.

But all these are the stories of bygone times. Now the lake has lost its all past splendour and glory due to the step-motherly treatment of the authorities, says Samo.

He said that the main Nara valley (MNV) drain carries the water of Hamal Lake to the Manchhar as such impure water of Hamal affects the water of Manchhar Lake.

http://www.dawn.com/2007/07/23/ebr8.htm


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## Neo

*Need for an energy conservation policy​*


By Sultan Ahmad

A sharp rise in power demand by 10 to 12 per cent against an average eight per cent decline in electricity generation has resulted in an acute power shortage in the country, particularly in Karachi. Making the situation worse is the frequent breakdowns in supply of power together with abnormal load sheddings.

One making the other worse, and when the power breakdown disrupts the supply of water, the riots occur and the people come out on the streets to destroy the Kesc properties.

The crisis is the outcome of the complacency of the Wapda and the Kesc bosses. They hope that somehow power production will increase or the people will put up with the shortages as before. When they try to tackle the problem, their approach is more dogmatic than pragmatic. Above all, they do not have the large funds needed to invest on new projects.

But now with the oil prices touching nearly $80 a-barrel and Pakistans oil import bill exceeding $8.6 billion, there is no place for complacency or a dogmatic approach to the problem. Those who forecast that oil will rise to $100 a-barrel may soon come true. And that would land the non-oil producing Asian countries into a lot of trouble.

But now realism has begun to dawn on officials and there are significant policy changes. The week began with a strong call by the standing committee of the Senate on water and power for adequate measures to increase power and gas supplies.

A new petroleum policy, approved by the Economic Coordination Committee of the Cabinet (ECC) presided over by Prime Minister Shaukat Aziz, provides various incentives to the earnest explorers and producers of oil and gas. Petroleum Secretary Ahmed Waqar has said that it was more realistic and helpful to the gas and oil producers. He said the country now produced 70,000 barrels of oil a-day which was 20 per cent of its requirement and four billion cubic feet of gas.

He said the fruits of the new policy would be visible after five years but in the mean time price of gas would go up in the country.

Five years is a long time, but then oil exploration has been very slow and the OGRA on its part has said the petroleum policy 2000 is unrealistic and wants that it to be scrapped in favour of the 1994 policy.

Development of the Thar coal is to receive attention of higher degree. President Musharraf is presiding over a high-level conference this week. The federal government has set up a new Thar coal company. A private sector company has also been set up by Hasan Associates. More private sector companies are expected to come up following the presidential initiative and the large area over which the Thar coal is spread, making it one of the largest coal mines in the world. If the Thar coal can substitute imported oil for power production it will be of great help to the country.

The government has come up with additional incentives to an alternate energy development company. Other companies in the field are bound to seek the same favour which cannot be denied. In fact alternative energy demands needs stronger support than it has been given.

Pakistan, Iran and India have eventually agreed on a pricing formula for Iranian gas which was a tough exercise. The formal agreement is expected to be signed soon and the work on the project would follow. The Japanese pattern has been adopted for the pricing formula. It has also been made clear that gas will not be available to new private sector power companies.

But what will happen after the Iranian gas becomes available here by 2011 or earlier? That can surely be used for power production instead of imported oil. The situation in respect of the use of Iranian gas for power production should be made clear by the government.

The government has raised the rates for three private sector power producers. There terms were signed when oil prices were very low, but they are now close to $80 a-barrel. Other private producers of power would want an increase in their rates also. Their legitimate demands should be met so that they invest more on power production. If that is not done they may not use their capacity to produce more power.

Exploration licences are being given more liberally than before, but they will now be scrutinised to separate the genuine from the others. Last year, the OGDC was charged to explore 100 wells in a year but they explored under 50. The target and the performance should be close to each other.

More offshore drilling licences are being issued. Some reputed foreign companies are in the field with local explorers. Their endeavours have not been very rewarding so far. If Bombay High can find oil, Karachi cannot be too far for too long. The General Electric Company of Britain has a joint venture with Wapda at Sheikhupura producing 150 MW of power and that is to be expanded now by 100 MW.

The privatisation of PSO has been delayed because of popular opposition to privatising heavily profitable companies.

The World Bank is dissatisfied with the progress of power sector reforms. In particular it deplores the delay in devolution of authority to the 12 distribution units of Wapda. The government had agreed to it, but Wapda is not willing to transfer a share of the authority to its distribution units. The Asian Development Bank agrees with the World Bank.

The ADB is also coming up with a 20-year special fund to finance the countrys development programme. Let us hope the fund will be large enough to accommodate the power sector needs.

While all this is being said about the production and distribution of power, little is said or done about conservation of energy. The waste of energy is as usual on the occasion of weddings with heavy illuminations. There is a great deal of scope in the reduction of consumption, and waste of power. But the leaders and top officials are in the lead in the exhibitionistic waste of power. Now it is feared that more production could mean larger waste of power.

http://www.dawn.com/2007/07/23/ebr14.htm


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## Neo

*Sale of 68 percent Saudi Pak shares gets the nod from SBP: Shaukat Tarin-led consortium successful bidder ​*
KARACHI (July 24 2007): The State Bank of Pakistan (SBP) on Monday approved the sale of 68 percent shares of Saudi Pak Bank, which is owned by the governments of Pakistan and Saudi Arabia, for $180.5 million to a consortium led by renowned Pakistani banker Shaukat Tarin.

The central bank conveyed its approval to the sellers who had sought its permission upon receipt of four offers last month. The bank did not reportedly approve the bid of Najeeb Saurez of Orascom (Mobilink) for its being a non-regulated financial institution.

The second bid, which was made by Commercial Bank of Kuwait, was not forwarded by the co-advisors to the sale as the buyer was not willing to match the commercial terms.

The third offer came from Tarin-led consortium, which includes Actis (UK), Nomura (Japan) and an Omani banking entity. The consortium expressed its willingness to match the price offer at Rs 32 per share of the highest bidder along with the commercial terms. At Rs 32 per share, the price is four times its book value.

The fourth offer was made by KASB, but it did not find favour for lack of details the advisors to the issue had sought. The share price of Saudi Pak Bank settled at Rs 27.30 on Karachi Stock Exchange by the close of Monday's trading session.

http://www.brecorder.com/index.php?id=596059&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Textile exports surpass $10 billion mark ​*
KARACHI (July 24 2007): Textile exports have surpassed 10 billion-dollar-mark for the first time in the history of the country, despite domestic and international constraints which hit the target badly during 2007 fiscal year due to fall in the export target by 10 percent, central bank's statistics said on Monday.

Statistics shows that the county's textile exports have posted a growth of 10 percent during the last fiscal year against the target of 20 percent growth, while its share in overall exports has also raised by four percent to 59 percent.

"The central bank's statistics are reliable and on their basis that the country has missed its textile export target," said Federal Minister for Textile Mushtaq Ali Cheema.

He said that the Federal Bureau of Statistics would release statistics soon, but "we are sure that the country's textile export target has missed somewhere between 10 percent and 14 percent.

"Although the central bank statistics show that textile exports have increased by 10 percent, but still it is lower than the growth target of 20 percent set by the Federal government for the last fiscal year," he added.

He said that despite the difficulties and hurdles, it was a big achievement and it was expected that during the current fiscal year, the export target would be achieved.

Statistics released by State Bank of Pakistan (SBP) show the country's textile export have touched new peak of 10.012 billion dollars during the 2006-07 fiscal year as compared to 9.141 billion dollars during the 2005-06 fiscal, witnessing an increase of 870 million dollars during 2007 fiscal year.

Another positive sign witnessed during the last fiscal was that the textile export's share in the overall country's exports also surged by five percent to around 59 percent, which earlier stood at 55 percent for the last few years.

Statistics indicate that the country's overall exports claimed to have reached 17 billion dollars during 2007 fiscal, out of which textile exports' share have was 10.012 billion dollars against 9.141 billion dollars, out of 16.387 billion dollars during the 2006 fiscal.

Earlier the exporters were expecting that the textile sector would not perform well and the export of the textile sector could be lower than the 2006 fiscal, as they believed that the textile sector was in a serious crisis due to high cost of doing business and healthy competition in the regional countries, including India, China and Bangladesh.

Therefore, the textile sector continued its demand, and demanded further subsidies and rebates on textile exports. Exporters' point of view was that the country's textile industry was in serious crisis and they needed cut in the cost of production to make the country's textile export competitive in the international market.

However, the government believed that textile sector already had got robust facilities and other benefits in shape of research and development. Statistics show that out of 12, only three textile products, including raw cotton, tents and cotton carded exports have declined during the 2007 fiscal, while exports of other products, including readymade garments, synthetic textile, yarn, knitwear, bedwear, artsilk and synthetic witnessed a raise.

Raw cotton exports have declined by 24.032 million dollars to 75.640 million dollars, cotton-carded exports showed a decline of 8.856 million dollars to 275.972 million dollars and tent and canvas by 0.557 million dollars to 72.764 million dollars during 2007 fiscal.

However, cotton yarn exports have witnesses growth of 181 million dollars to 1.075 billion dollars, cotton cloth exports have raised by 59.545 million dollars to 2.318 billion dollars, yarn other than cotton yarn 30 million dollars to 141.307 million dollars, knitwear 187.58 million dollars to 2.105 billion dollars.

Similarly, exports of bedwear have increased by 80.816 million dollars to 1.394 billion dollars, towels export grew by 45.55 million dollars to 166.268 million dollars, readymade garments by 133 million dollars to 1.096 billion dollars.

In addition, made-up article exports witnessed an increase of 33.106 million dollars to 346.795 million dollars and exports of artsilk and synthetic textile reached 386.292 million dollars with 104 million-dollar upsurge, whereas exports of other textile sectors registered 21 percent growth.

Exporters said major reason behind the failure in achievement of the textile export target was uncompetitiveness in the region and despite the several demands, the government was not providing concessions and facilities in the utilities sector. "We are leaving in the 21st century, but still the industries have failed to get electricity and water as per demand," they added.

Textile industry is one of the major industries of the country, which contributes major share of 65 percent in the country's industry and has a share of 40 percent in the industrial jobs.

http://www.brecorder.com/index.php?id=596036&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pakistan heading towards serious gas crisis: study ​*
ISLAMABAD (July 24 2007): Pakistan is heading fast towards serious gas crisis as its demand and supply ratio is not showing equilibrium beyond 2007, Hagler Bailly, Pakistan, claims in a feasibility study conducted in 2006, for Iran-Pakistan-India (IPI) gas line project.

The study indicates that Pakistan is going to witness gas shortage from 2007 onward and imbalance will increase every year to touch the highest level in 2025, when shortage will be 11092 MMCFD against total 13259 MMCFD production.

The study depicts very bleak picture as far as Pakistan's gas resources, demand and supply are concerned. The study is alarming and a wake up call for those who are at the helm of affairs.

It's yet to be officially ascertained how real and authentic information of the study is. However, majority of independent analysts of oil and gas sector agree that Pakistan could face serious problem in gas supply after few years.

This correspondent contacted some very senior officials of the Ministry of Petroleum to know what exactly the situation of gas demand and supply would be from 2007 onward. They conceded that as a result of high growth gas demand was showing upward trend and indigenous production would not be enough to maintain existing pattern of supply. However, they expected a major breakthrough in gas supply through some foreign source to keep things going.

One senior official of the Ministry said: "Everybody knows that indigenous gas production is shrinking quickly and if any foreign source (pipeline) does not materialise in next few years, things could get worse."

The feasibility study indicates that indigenous gas supply and demand were equal by 2006. However, in 2007, it witnessed quick shortfall and the gap would widen in the coming years.

The report said Pakistan gas shortage would increase alarmingly in the next two decades if it did not manage any alternative sources. Pakistan is making desperate efforts to make IPI see ground in next few years. Will it be so? This is a difficult question. The officials are actively engaged in talks to keep IPI case moving and this is all what they can do at the moment.

IPI is a key project for the entire region and it involves international polities more than anything else. On nuclear stand-off, US is all-out to block the pipeline. Washington can go to any extent to oppose the project as long as stand-off on Iranian nuclear issue continues.

http://www.brecorder.com/index.php?id=596056&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'Traders realising changing business dynamics in world' ​* 
KARACHI (July 24 2007): The economic conditions greatly improved in Pakistan during the last few years due to the very competent leadership of the country. This was stated by the outgoing Director General of Japan External Trade Organisation Karachi Hiroyuki Miyakawa San while speaking at a reception in his honour organised by Pakistan Japan Business Forum (PJBF) here on Monday.

He said that he had passed a very good time in Pakistan saying that he would always remember the co-operation of the members of PJBF. "It is also encouraging to know that the mindset of the business people is gradually broadening", he said and added they are now realising the changing business dynamics in the world, competition and market requirements.

Whether Pakistani businesses are competing with foreign markets or locally with foreign firms the times of today make firms face sharper competition and compel them to think more internationally than they have in the past.

"My successor, Minoru UGA, after taking over the charge will be able to put more endeavours into these works", he added. Regarding his Achievements during his three year tenure, he said that an official visit of the Prime Minister of Japan J. Koizumi and the Minister of METI Nakagawa to Pakistan in January 2005 and April 2005. At that time the yen soft loans were resumed as project development assistance. Previously Japan had imposed sanctions on Pakistan after the nuclear tests.

Recently JETRO completed 5 feasibility studies for infrastructure development projects in Pakistan, including the projects for Revitalisation of Karachi City. These are: The Revival of Karachi Circular Railway, Gharo Area Wind Power Project, Widening & Strengthening of National Highway N-70, Construction of New Khushal Garh Bridge and the construction of Steel Flyovers at various intersections in Karachi. Encouragingly, all of these have been formally requested to the Government of Japan through the Government of Pakistan.

Technical Assistance by inviting JEXSA Experts Ms Noriko Sato, Minoru Ohira, Hiroshi Ito and Kokyo Tamaki for the capacity building of various business institutions. Abdul Kader Jaffer, President PJBF in his massage conveyed his deep appreciation to Miyakawa for his sincere and dedicated services rendered to Pakistan and in particular to PJBF for the development of bilateral economic relations between the two friendly countries.

The Acting President of PJBF, Majyd Aziz said that PJBF is the unique business forum in the country, doing lot of efforts to promote business and balanced the trade between both the countries. Kiroyuki Miyakawa in his speech assured the members of PJBF for his full co-operation to promote Pak Japan bilateral trade.

The Japanese Counsel General in Karachi S. Nakano and Tamaki a JETRO expert was also present on this occasion. The programme was well attend by PJBF members with their spouses including Asif Ali Rasheed, S. Jamil Hussain, Meraj Gul Khan, Sohail P. Ahmed, Younus Dawood and many others.

http://www.brecorder.com/index.php?id=596101&currPageNo=1&query=&search=&term=&supDate=


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## Neo

* TeleCard in talks to sell majority shares ​*
KARACHI: Asias one of the fastest growing telecommunication companies is eying Pakistan as it is in advanced talks with the countrys biggest payphone company to acquire majority shares. Industry sources expect the deal may attract over $90 million.

Sources said the Asian company was likely to strike a deal with TeleCard ñ one of the few payphone companies in Pakistan ñ which had planned to sell its majority shares. The two sides have been in talks for the last several weeks, said a source privy to the development. It may take a month to close the deal but initial talks suggest that more than 55 per cent shares sale was discussed between the two sides.

He said the exact value of the stake sale would be announced once the deal was finalised but estimates suggested that it could be worth more than $90 million. However, he added, the number of shares to be sold would determine the deals value. If an agreement is struck on divestment of 55 per cent shares or a little more than that, the deal is likely to be worth around $90 million or more, added the source.

The country has attracted foreign telecom companies in recent months as three groups acquire majority stakes in local companies. First, Qatar Telecom stretched its wings to Pakistan and is in final talks to acquire Burraq Telecoms nationwide and international telephone networks at $30 million.

Egypts Orascom Telecom ñ parent company of the largest cellular operator Mobilink ñ finalised a deal with DVCOM, the licensed LDI (long distance and international) and limited mobility telecom operator.

Besides these, Oman Telecom reached an agreement to buy a majority stake in local cable and fixed wireless service provider WorldCall at an estimated $171 million. Sources said TeleCard was initially interested in offering its minority stake and launched talks with several foreign groups but finally managed to attract the Asian company.

The company is in talks with that (Asian) firm, a company source confirmed but requested not to name the Asian telecom concern. It is premature to give a timeframe and value of the deal but these are expected to be finalised sometime next month.

Currently, TeleCard provides payphone and WLL (wireless local loop) services and also has an ISP (Internet service provider). The company aims to become the most technologically advanced integrated telecom solution provider of the country, he added.

The company has successfully launched WLL service (GO CDMA) based on CDMA2000 1X technology that provides a unique combination of voice and data/Internet for the first time in Pakistan, he added.

The telecom sector has attracted substantial foreign investment during the last three years with main focus on cellular service. However, industry players believe it is high time that reputed international telecom operators capitalise on the opportunities, particularly in rural areas.

Telecommunications attracted $1.41 billion foreign direct investment during the first nine months (July-March) of 2006-07, a jump of 34 per cent, remaining at the top among all other sectors.

http://www.thenews.com.pk/daily_detail.asp?id=65475


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## Neo

*Pakistan may cut farm tariffs by 36 per cent​*
ISLAMABAD, July 23: Pakistan is likely to accept cuts in its tariff by maximum 36 per cent on agriculture products under the current round of Doha Development Agenda (DDA), says a Pakistani trade diplomat.

This is seemed an immediate reaction of Pakistan Mission to WTO, based in Geneva, negotiating the countrys position on various areas of the DDA. The chair on committee on agriculture has recently issued draft modalities text on agriculture in response to reaction on the draft papers on agriculture.

In any case our bound tariffs are around 100 per cent on average thus leaving a lot of water between final bound and applied rates at present, according to Pakistani Mission official reaction on the draft modalities text.

Besides tariffs, Pakistan would also have recourse to additional flexibilities like Special Products (SPs) and SSM etc., which, in case of any future surge in imports, would provide Islamabad a fair chance to check any potential negative effects on domestic agricultural sector.

On the whole the text is much more positive for developing countries and well defined in terms of issues and number ranges,, said Pakistan Commercial Secretary to WTO Ahmad Mukhtar.

Pakistan has been playing a vital role and putting a lot of importance to modalities in Agriculture since this is the area which will have major impact on the living standards of our farmers. Reforms in this area would help Pakistan to materialise its huge potential through getting fair market access and removal of distortions in the international trade for agricultural products.

The modalities text has given a range of $13 to $16.4 billion for Overall Trade Distorting Domestic Support (OTDS) to the US  which is the leading source of distortion in international market. This range, though tight, would still leave some policy space for US to manoeuvre.

However through various disciplines especially the products specific allocation of support and base periods etc, such maneuverability is likely to be capped in particular those crops, which suffer the maximum distortion such as cotton and rice which are leading agricultural products of Pakistan.

Dairy sector both in EU and US has already started receiving a persistent decline of support thus slowly shifting the comparative advantage towards other potential dairy producers including Pakistan.

With this capping in domestic support and elimination of export subsidies by the year 2013, farmers growing rice, cotton, horticulture, wheat, etc., are likely to be major beneficiaries through higher prices and more market access opportunities, Mr Mukhtar said.

In the market access area, the developed countries would reduce their tariffs by 45-65 per cent on average thus providing enhanced market access on MFN basis where Pakistan could capitalise its potential.

Due to the expected treatment to various products (especially horticulture, rice, beef, dairy etc.,) under the tropical and alternative products and the tariff escalation, Pakistan would have an even better chance to get more market access for the value added products.

It is not yet clear, the commercial secretary said, but if rice is finally accepted as a tropical and alternative product which has to be given fullest liberalisation through tariff cuts of at least 70-80 per cent cut in developed countries markets, it would provide lot of additional market access for our rice exports.

According to a study by the Asian Development Bank, if the DDA mandate delivers fully on cotton both in domestic support and market access (which is quite likely based on the existing text) then around 2 million farmers in Pakistan would get out of poverty immediately due to cotton alone.

http://www.dawn.com/2007/07/24/ebr4.htm


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## Neo

*Plan to bring one million more under tax net: Poor tax-to-GDP ratio​*
KARACHI, July 23: The Regional Tax Office (RTO), Karachi, has chalked out a plan to bring more people in the tax net as it believes that there are 1.597 million potential taxpayers in the city against the present 0.5 million registered taxpayers.

Presently, countrys tax-to-GDP ratio stands at 9 per cent, which is lowest in the region. A two-pronged strategy is being adopted by the RTO to increase taxpayers population. In the first place stress would be laid to broaden the tax net and in the second phase efforts would be made to consolidate the existing tax-base by checking evasions and mis-declarations.

These measures are being taken to achieve the Federal Board of Revenues target of improving the tax-to-GDP ratio to 15 per cent by 2015. Consequently, the RTO Karachi, in order to bridge the gap between anticipated taxpayers and the existing lot of 0.5 million, has worked out the citys population to be around 14.5 million.

According to the RTO study after deducting the non-taxable segments of the population the number of potential taxpayers would come to around 1.430 million but on adding around 0.157 million of working women the total taxpayers population could be 1.597 million in Karachi.

The RTO has based its study and projected figures on 1998 census and also took some support from international study groups such as Wikepedia Encyclopedia, Humanitarian Policy Group of UK, report by UN-Habitat.

Despite the fact that the FBR had been meeting its revenue targets for the last couple of years and also surpassed the target of last fiscal by collecting over Rs850 billion but the country continues to have the lowest tax-to-GDP ratio in South Asia.

In order to identify a greater part of taxpayers population the RTO in coming years would concentrate on enforcement steps, internal control and development and utilisation of data to hunt potential taxpayers, which it believes to be over 1.597 million.

Under the enforcement plan the RTO would cross match the data obtained from the tax returns with the data bank created through the efforts of proposed internal control cell and would also identify non-filers of tax return and will initiate action accordingly.

About 45 days before the last date of filing of tax returns the RTO Karachi will set up kiosks at important commercial centres in all 18 towns of the city. The objective of these centres would be to educate the taxpayers, especially the big ones and the management of federal and provincial government offices.

Workshops will be arranged to highlight changes brought in the tax law.

In line with FBRs policy and intended changes in law the taxpayers would be encouraged to use e-filing of returns and statements and a scheme of certified tax return preparers would also be launched.

The director general of RTO Asrar Raouf told Dawn that these suggestions were also came up for discussion during the recently held field officers conference in Islamabad.

He said most of these recommendations were welcomed by the FBR chairman and were going to be implemented starting from opening around 50 tax kiosks in major commercial centres from August 15.

http://www.dawn.com/2007/07/24/ebr3.htm


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## Neo

*Potato output rises by 57pc in 2006-07​*
ISLAMABAD, July 23: Pakistan is self-sufficient in potatoes production for household consumption and depends 99 per cent on locally produced seeds for production of potatoes.

An official source in the ministry on Monday said an estimated 2.47 million tons potatoes were produced during 2006-07, which showed 57 per cent increase against the last year output of 1.57 million tons.

He said seeds constituted about 35 to 40 per cent of the total cost of production of potato. Formal certified seed production is limited and faces technical, economical and management problems, he said.

Lack of availability of sufficient quantities of good seed and low purchasing power of the farmers force them to rely on seed of low quality or on their own production for which most of them do not have the proper skills, he added.

Poor post-harvest handling including transport and storage facilities causes unnecessary damage and losses and deterioration of quality, he added.APP

http://www.dawn.com/2007/07/24/ebr10.htm


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## Neo

*Country loses 40% of its annual agricultural harvest ​*
KARACHI: The country faces around 40 percent losses per annum in its total harvest that makes up almost five percent of agriculture sectors exports due to a lot of problems that the sector faces, exporters and the officials of Ministry of Food, Agriculture and Livestock (MINFAL) told Daily Times on Monday.

They said that the principal reasons included difficulties in maintaining quality at the destinations, relatively low export price, lack of research and training opportunities besides implementation on the available information, high air transport cost and inadequate penetration in the international market. 

Chairman Fruit and Vegetable Processors and Exporters Association (FVPEA) and Sindh director for Agribusiness Support Fund (ASF) Appraisal Committee, Mateen Siddiqui said that the government has constituted a 12-member task force for improving competitiveness of horticulture sector to boost its export through a focused approach and better financing. He said that the task force members included a senior official each from the MINFAL; ministries of Finance, Commerce, Industries and Production, Health, Science and Technology and the Board of Investment

Mr Siddiqui said that it was decided to add representation from the private sector, commercial banks and exporters in order to make the task force an effective forum in achieving its objectives.

He said that the task force would have a strategic framework for the industry to achieve a horticulture export target of Rs one billion by 2012 besides entering into the new markets with new products.

He said that in their recent and first-ever meeting with Prime Ministers advisor on Finance Dr Salman Shah an action plan was developed to improve competitiveness of horticulture exports and to create financing opportunities for the sector.

He said that the Competitiveness Support Fund (CSF), on the basis of its study of the food industry has developed the action plan.

It included adopting certification standards, ensuring international compliance, and developing world-class infrastructure including cold storages, reefers, CFCs and agro processing zones.

As many as 39 modern packaging houses, completely automated and equipped with advanced electronic devices for packing and grading and storage plants would be set up at 31 fruit and vegetable growing areas throughout the country, Mr Siddiqui added.

Besides this, 23 facilities for cold storage and controlled atmosphere storage would be established at the fruit production areas, airports and seaports in the country. 

Two container yards in Karachi and Lahore with a pool of 200 refrigerated containers and 50 controlled-atmosphere refrigerated containers at each location will be established. Karachi pool will serve the requirements of Sindh and Balochistan while Lahore pool will serve the requirement of Punjab and NWFP.

He said that CSF study pointed out involvement of a number of ministries and divisions and other institutions. The study urged for coordinated efforts for taking full advantage of horticulture sector to increase its exports.

The government is also committed to promote agriculture in the Federally Administered Tribal Areas (FATA).

The study also includes efforts for reclamation of cultivable wasteland, conversion of wild olives into oil-bearing fruits and introduction of beneficial microorganism technology so that the lifestyle of farmers could improve.

The government has so far reclaimed 40,000 acres of land while 100,000 acres of land would be reclaimed under the Sustainable Development Plan for FATA.

Besides, five million wild olive plants would be converted into oil-bearing varieties under two different projects during the current financial year.

http://www.dailytimes.com.pk/default.asp?page=2007\07\24\story_24-7-2007_pg5_1


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## Neo

*Body set up to check rising inflation ​*
ISLAMABAD (July 25 2007): Prime Minister Shaukat Aziz has constituted a committee to analyse the reasons for food inflation, and formulate both short-term and long-term anti-inflation policies, official sources told Business Recorder.

The country's food inflation remained 10.3 percent in 2006-07, against 6.9 percent in 2005-06, which has been serious cause of concern for the policy makers. The committee will be headed by the Prime Minister himself, who is also the Finance Minister. Besides, it will comprise Minister for Industries Jahangir Khan Tareen, Minister for Commerce Humayun Akhtar, Minister for Agriculture Sikandar Khan Bosan, Prime Minister Advisor on Finance Dr Salman Shah, State Bank of Pakistan (SBP) Governor Dr Shamshad Akhtar and Planning Commission Deputy Chairman Dr Akram Sheikh.

The Terms of References (ToRs) of the committee will be finalised by the Prime Minister himself. It would periodically review causes of fluctuation in prices of essential items and take immediate measures to deal with undesirable situation, sources said.

They said that the Economic Coordination Committee (ECC) of the Cabinet, in its meeting on July 19 had expressed serious concerns over the rising prices of wheat and wheat flour. They said that the ECC in its meeting of June 28 had directed SBP to take measures to check wheat hoarding, but no substantial progress has been made.

Sources claimed that authorities had identified a textile mill, owned by an influential politician, whose godown was full with wheat in place of cotton bales, and it was learned that he was earning Rs 4.5 million per day from wheat transactions. According to sources, the government had also received reports that 40 percent of petrol pumps are also stocked with wheat instead of fuel, which means the provincial governments had failed to check illegal movement of wheat.

The SBP has been directed to seek explanation from those traders who took loans for procuring wheat for export purposes but stocked in their godowns to sell in the local market.

The issue of pulse prices was also cause of concern for the government, which was well debated in the ECC meeting, and Minister for Railways Rashid Ahmad had even asked the Prime Minister to arrest only four big fish of Jodia Bazaar and prices of pulses would come down within days.

However, the Prime Minister did not agree with Rashid's idea, but directed that their export should be banned completely. The ECC in its meeting of June 28 had imposed ban on export of gram (chana), gram split and gram powder, but failed to take any consensus decision against export of daal chana. Consequently, profiteers gained time to make procurement for export purposes, which led to increase in its prices.

Minfal, sources said, was of the view that middlemen would continue to fleece the general public until proper market system was adopted. Sources said that the ECC decided to evolve a system for a comprehensive and focused analysis of the situation and directed the provincial governments to do more to control artificial increase in the prices of wheat and flour.

The prices committee, headed by the Prime Minister's Advisor on Finance, which failed in controlling prices of essential items, may be dissolved, sources concluded.

http://www.brecorder.com/index.php?id=596437&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Trade corridor project: CDWP's concept clearance expected today ​*
ISLAMABAD (July 25 2007): The Planning Commission and other line ministries are likely to give concept clearance to National Trade Corridor Improvement Project (NTCIP) that would be undertaken by the Communication Ministry at a cost of over Rs 94 billion, sources told Business Recorder on Tuesday.

The concept clearance of NTCIP will come up for consideration of the Central Development Working Party (CDWP) which is to meet on Thursday, they said. The CDWP, after its concept clearance, may allow the Communication Ministry to go ahead with the preparations of PC-1 of the project to improve the roads infrastructure, which would be the domain of the Ministry under the project that also involves other ministries.

The NTCIP was initiated by the government in August 2005. The priority of this programme can be gauged from the fact that the Prime Minister personally chairs the meetings to review progress of implementation status of the programme. This programme is a roadmap for improving the transportation logistic chain, on the basis of identified inadequacies and weaknesses.

The programme will enhance regional connectivity through trade links, and energy and transport corridors with China, Central Asian Republics, Afghanistan and Iran. The Ministry of Commerce is also an active partner in implementation of NTCIP, and its Trade & Transport Facilitation Project also aims at reducing cost of doing business, sources said.

The project aims at simplifying the procedures of legislation, regulation, administration and documentation. The government under the NTCIP also wants to improve the services in shipping, ports, trucking, customs and insurance, etc. The programme will also include different projects in infrastructure including ports, roads, rail, aviation and air transport and pipelines. The NTCIP envisages foreign assistance of over Rs 66.8 billion, sources said.

Apart from this, the CDWP is also likely to take up concept clearance of the Muzaffarabad City Development Project that would cost around Rs 20.76 billion. The Earthquake Rehabilitation and Reconstruction Authority (Erra) is sponsoring agency of the project. The Erra is not under any obligation to get its projects approved from the Planning Commission. However, its big projects do come for the consideration of different planning bodies in order to take quality inputs from Planning Commission experts.

The CDWP will also take up Pakistan Atomic Energy Commission scheme of establishing Nuclear Fuel Enrichment Plant at a cost of Rs 13.8 billion. The project was deferred at the last CDWP meeting. The Ministry of Water and Power scheme of 100 MW diesel power plant at Khuzdar, worth Rs 7.04 billion, is also on the agenda of the meeting.

The meeting will also consider projects of Balochistan government in which the latter has sought Rs 788 million for electrification of new township at Tali Mat and villages in district Dera Bugti.

Procurement of 300 new design high-speed bogie wagons for Rs 1.6 billion of the Ministry of Railways will also come up for consideration of the CDWP. The Ministry is also seeking Rs 955 million for a pilot project of manufacturing of five 3000-horsepower diesel-electric locomotives.

The construction of new office building of the headquarters of Military Lands and Cantonments at Chak Lala Cantt, costing Rs 130 million, and establishing of Jalozai Campus of NWFP University of Engineering and Technology, Peshawar, costing Rs 6.3 billion are also on the agenda of the CDWP meeting, sources said.

http://www.brecorder.com/index.php?id=596422&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Merkel and UN envoy agree to increase aid to Pakistan ​*
BERLIN (July 25 2007): The international community must increase support to Afghanistan's neighbours, including Pakistan, if peace efforts in the region are to succeed, the top UN envoy to Afghanistan said on Tuesday.

Special UN representative for Afghanistan Tom Koenigs told reporters after meeting German Chancellor Angela Merkel that international efforts aimed at stabilising Afghanistan would have to be expanded to embrace Pakistan.

"We will need additional support to end the threat, additional support for the entire region," Koenigs said after a meeting with Merkel and other top German officials.

"We see in Pakistan that stabilisation efforts have suffered setbacks. This means engagement in the entire region is necessary in order to ensure security, not only for Afghanistan but also in an international context." German Chancellor Angela Merkel agreed it was necessary to increase aid to Pakistan and surrounding countries.

"We need to look at our mission not in a limited way but rather to consider the entire region," Merkel said. However, she spoke only of boosting aid to help the region meet the United Nations' so-called "Millennium Goals" aimed at dramatically reducing poverty by 2015. The porous Pakistani border with Afghanistan snakes 2,500 km (1,500 miles) through rocky mountains and across deserts, and is considered a front line in the US-led war on terrorism.

Washington has accused Islamabad of not doing enough to stop Taliban fighters from crossing the border into Afghanistan. Pakistan rejects this, saying it is doing all it can but needs help from the West to monitor the borders and relocate refugees back inside Afghanistan.

Afghan militants seized two German engineers working on aid projects in Afghanistan last week. One of them died in captivity and the Foreign Ministry believes the other is alive. Merkel provided no new details about hostage situation.

http://www.brecorder.com/index.php?id=596404&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*ADB releases $200 mln for Pakistan quake survivors ​* 
ISLAMABAD: July 25, 2007: The Asian Development Bank (ADB) has released a $200 million loan to Pakistan to help rebuild homes for hundreds of thousands of people affected by the October 2005 earthquake, the bank said on Wednesday.

The amount was the first tranche of a $400 million concessional loan approved by its board of directors in June, the ADB said in a statement.

The second tranche of $200 million would be released in six months on completion of performance targets jointly agreed by the Pakistan government and the bank.

The ADB committed a total $1 billion in loans and grants during an international donor conference held in Islamabad in November 2005 for reconstruction and rehabilitation of quake-hit northern Pakistan.

The statement said the loan was intended to help Pakistan meet a dealine of May 2008 for completing reconstruction of 585,000 rural homes compliant with seismic safety requirements.

"The winter of 2007 will be the last for most displaced people before they move into new houses," said Peter Fedon, ADB's country director.

The October 8, 2005 earthquake killed more than 73,000 and made 3.5 million homeless in occupied Kashmir and North West Frontier Province.

Brecorder.com


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## Neo

*'FDI has created countless job opportunities' ​*
LONDON (July 25 2007): Federal Commerce Minister Humayun Akhtar Khan said on Tuesday that a record $6.4 billion Foreign Direct Investment (FDI) in Pakistan has led to the creation of thousands of jobs in his country and UK companies has important role in this regard through their investments.

Addressing news conference at the Pakistan High Commission after meeting with various UK government functionaries, the minister said jobs had been created in the telecommunication and energy sectors and in other areas where the foreign companies have a heavy investment.

He spoke of his meeting with the UK Secretary for Business Enterprise and Regulatory Reforms John Hutton, Minister for International Trade Digvy Jones and DFID junior Minister Shahid Malik. On Monday the Minister visited Scotland where he met exporters and the members of the Glasgow Chamber of Commerce. On Wednesday, the Commerce Minister to visit Manchester before flying home. He also attended a luncheon meeting organised by the Pakistan-UK Trade and Investment Forum and said he had useful discussion with the concerned officials on matters relating to European Union and Pakistan efforts for market access to the EU countries.

Humayun Akhtar Khan said this was the first Ministerial level contact with Prime Minister Gordon Brown administration which he found useful and forthcoming. He said UK is Pakistan's largest trading partner within EU and within the Commission, Britain has always been very supportive of his country. He also said about Pakistan efforts to eliminate anti- dumping duties and GSP plus scheme and initiate preferential treatment and added UK has always stood by Pakistan in this regard.

Pakistan High Commissioner to United Kingdom, Dr Maleeha Lodhi was also present on the occasion. The Minister said Pakistan has active Free Trade Agreement with China and Sri Lanka, South Asia Free Trade Agreement (SAFTA), has concluded a similar agreement with Malaysia and about to do so with Singapore and also initiating with Thailand.

The Commerce Minister said since UK is a part of EU, under the rules there could be no free trade agreement and this as a whole has to be done with EU. We cannot negotiate independently with UK but Pakistan is trying to initiate FTA with the EU and that pursuit there is a sub-group on trade which has come into activation as a result of Third Generation Agreement.

He said Islamabad has been studying EU preferentials in South Asia and how it could effective Pakistan. This group, he added, would meet again in October this year, to take the matter forward.

Responding to a question on the recently announced Export Policy, Humayun Akhtar Khan said Pakistan was endeavouring to raise its exports to around $1 billion to China and there has been progress in this regard during a recent visit of a Chinese delegation under a vice minister. He said Chinese investment in Pakistan is always on the rise and this could be reflected by the acquisition of Paktel by a Chinese company. He said the increase investment by China in Pakistan would lead to the elimination of duties and cheap availability of raw material.

The Commerce Minister that the two UK Ministers he met this morning has shown interest to visit Pakistan and are likely to do so in near future.

http://www.brecorder.com/index.php?id=596475&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Ukraine keen to enhance trade ties ​*
ISLAMABAD (July 25 2007): Ukraine is desirous of broadening economic co-operation with Pakistan, Ambassador Pasko Ihor told National Assembly Deputy Speaker Sardar Muhammad Yaqub. Ambassador Ihor held a meeting with the Deputy Speaker on Tuesday and informed him on education facilities available in Ukraine.

A large number of Pakistani students was getting education because of high rate of literacy in his country. Sardar Yaqub said Pakistan and Ukraine shared common perception on global issues and spoke of multiple opportunities available to increase bilateral cooperation and work together for achievement of global peace. He also provided information to the ambassador on the rules and procedure of Pakistan parliament.

http://www.brecorder.com/index.php?id=596420&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*LSM sector fails to meet growth target ​*
ISLAMABAD (July 25 2007): Large scale manufacturing (LSM) sector has failed to meet 12.5 percent target of the government for the 2006-07 fiscal year as it grew only by 8.63 percent in 11 months, down by 3.87 percent. This was disclosed by Federal Bureau of Statistic here on Tuesday.

The provisional quantum index numbers (QIN) of large scale manufacturing during July-May 2006-07 were computed on the basis of latest production data of 100 items received from Oil Companies Advisory Committee (OCAC), Ministry of Industries and Provincial Board of Statistics.

The OCAC compiled the data of 11 items, Ministry of Industries and Production provided the data of 35 items, while Provincial Bureau of Statistics (BOS) catered data of 54 items.

The data, provided by the Ministry of Industries and Production showed 9.56 per cent growth in 35 items during July-May 2006-07 over the same period of last year, whereas the Provincial BOS reported 9.10 per cent growth in 54 items.

The QIM clearly shows that the growth in large-scale manufacturing was far below the target set by the government as overall indices of LSM for July-May 2007 were 203.19, showing 8.63 per cent growth in 11 months over last year 187.04. The government had expected the LSM to contribute 12.5 per cent in the total growth for the last fiscal.

The index for May 2007 was 220, 7.10 percent up over May last year's 205.41 percent. The further analysis of data showed that indices of OCAC were 160.63 percent, down by 2.63 percent over the last year's indices of 168.16 per cent.

Giving detailed analysis of the data of various sectors, provided by the Ministry of Industries and Production showed that the sugar sector recorded 19.54 percent growth in the first 11 months of 2006-07 over the same period of last year, cotton yarn 11.88 percent, cotton cloth 6.26 per cent, jute goods 13.01 percent, steel products 11.95 percent, pig iron 30.80 percent, billets ingots 10.14 percent, HRC sheets/strips 6.99 percent, tractors 11.85 percent, motorcycle 12.42 percent, LCVs 17.48 percent, jeeps and cars 1.57 percent, buses 14.13 per cent and cement sector 21.60 per cent.

While the Bureau of Statistics said that vegetable ghee sector showed 2.15 percent growth during July-May 2006-07 against the same period of last year, cooking oil 7.03 percent, wheat and grain milling 7.17 percent, woolen and carpet yarn 6.30 percent, injections 37.94 percent, motor tubes 45.20 percent and air conditioners 25.89 percent.

Almost all the petroleum products, except a few, registered negative growth, thus the production of petroleum products was -2.63 percent during July-May 2006-07 over the same period of last year.

http://www.brecorder.com/index.php?id=596474&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*US envoy assures investment in ports development ​* 
ISLAMABAD (July 25 2007): The United States on Tuesday assured Pakistan of investing in development of country's ports. US Ambassador to Pakistan Anne W. Peterson made the assurance during her meeting with Ports and Shipping Minister Babar Khan Ghauri.

After Karachi port, Port Qasim and Gwadar port, Pakistan now plans to build country's fourth sea port at Sonmaini in Balochistan. According to the statement, Anne W. Peterson said the US would extend maximum co-operation in development of Pak sea ports.

About the security of ports, she assured the minister that the US would actively play its due role for the security of Pak ports. The US envoy also acknowledged Pakistan's role in war on terrorism.

Babar Khan Ghauri, while expressing his views, welcomed the US investment and hoped that the cooperation between the two sides would be strengthened further vis-à-vis ports and the shipping sector. Anne Peterson also accepted the invitation extended by Babar Khan Ghauri to visit Muttahida Qaumi Movement (MQM) central office in Karachi.

http://www.brecorder.com/index.php?id=596454&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*KPT to construct $535 million terminal at PDWCP ​*
KARACHI (July 25 2007): The Karachi Port Trust (KPT) plans to build a high throughput terminal on 229.5 acres backup area at a cost of $535 million as Pakistan's Deep Water Container Port (PDWCP). Sources in KPT told Business Recorder on Tuesday that the terminal, for which tenders have already been issued, would have the capacity to receive and handle super-post Panamax container ships.

It may be recalled that KPT in collaboration with private sector is working to construct the PDWCP at an estimated cost of $1.087 billion to match the country's rapid container growth export targets and to compete with the regional transshipment market.

The construction work on the project, in which KPT would invest US $345 million, is scheduled to start by September 2007 and would be completed by June 2010. The successful bidders would construct the terminal, which would have container yards, storage and transfer areas, operational buildings and other supporting facilities and equipment.

The terminal, sources said, would also be equipped with ship-to-shore (STS) container cranes, rubber-tyred gantries (RTGs), RMGs, Reach Stackers, empty handlers, tractors, trailers, fork lifts etc. KPT would lease the terminal, to be constructed on Build-Operate-Transfer (BOT) basis, for an initial period of 25 years, which would be extendable for another 25 years, on mutually agreed terms and conditions, sources said.

The container terminal will have both road and rail connection to the hinterland including the proposed Cargo Village in the western backwaters of Karachi Port, sources said.

They said the private stakeholders would be required to develop the site into a full-fledged state-of-the-art container terminal. In the proposed PDWCP the Trust would be able to handle much larger vessels. KPT wants the terminal, which would have four deep-draught container berths with a 1500-metre quay wall, to be operational between 2009-10.

For planning the PDWCP, KPT had envisaged a design vessel, (similar to Emme Maersk), of 400-metre LOA, 55.0-metre beam and 15-metre draught with 11,000 'twenty-equivalent units' (TEUs) on board.

The channel and berthing face will be dredged to 16 metres, to start with, but the quay wall is designed for 18-metre depth which would ultimately cater for the design vessel, (450-metre LOA, 60-metre beam and 17-metre draught with 15,000 TEUs on board), the deepest ship being considered for long future planning in the region.

Sources said that a detailed hydraulic study and model testing of the direction and length of protection works was carried out to provide calm wave conditions inside the newly constructed basin. The navigational procedures, including safe arrival and departure of ships, and requirement of tugging assistance and swinging, were examined and all specifications were found to be within safe limits.

The Karachi Port, having an 11 km long, 12.2 metre deep approach channel, 30 dry cargo berths, and 3 liquid cargo handling terminals for POL and non-POL products handles over 65 percent of the country's sea borne traffic.

http://www.brecorder.com/index.php?id=596468&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Energy plan envisages enhanced hydel-thermal ratio ​*
LAHORE (July 25 2007): The recently approved 25 years 'Energy Security Action Plan' aims at increasing Pakistan's reliance on indigenous fuels, and envisages an enhanced hydel-thermal ratio of 39:61 from the existing 28:72.

This was stated by Punjab Minister for Power Chaudhry Armaghan Subhani, while talking to a three-member foreign delegation from the power sector working on Alternate Energy Sources, in his office here on Tuesday. He said the plan aimed to significantly reduce reliance on oil while increasing reliance on coal as an energy source, according to a handout.

"The government will encourage alternate sources of power generation along with conventional ones, and will facilitate the investors to the maximum in this regard," he said, adding that both demand and supply of energy had been on the rise since the last decade and a half.

He said the energy sector in Pakistan mainly consisted of power, gas, oil and coal, whereas according to a survey, the consumption of petroleum products, natural gas, electricity and coal had been increased by an annual average rate of 2.5 percent, 4.9 percent, 5.1 percent and 5.2 percent respectively.

In the last 14 years, the transport sector saw the largest use of petroleum products with a 48.7 percent share, while the power sector, industry, household, other government sectors and agriculture stood at 31 percent, 12.1 percent, 3.8 percent, 2.5 percent and 1.5 percent respectively.

The minister told the delegation that electricity consumption in household sector had always been the largest consumer with a share of 41.4 percent, with industrial, agricultural, government sectors and commercial consumers consuming 31.1 percent, 14.1 percent, seven percent and six percent respectively.

He said that with the growth of industry in Pakistan, the demand for electric power had increased, and was likely to grow at an average yearly rate of 7.9 percent by 2010.

"Renewable energy resources can prove to be vital in the electrification of remote areas in the province, and the government intends to promote a culture of energy efficiency and conservation in the country," he added. Later, members of the delegation discussed various suggestions regarding enhancement of power generation.

http://www.brecorder.com/index.php?id=596515&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Strategy devised to boost seafood exports ​*
ISLAMABAD: The federal government is working on a three-pronged strategy to increase seafood exports from $200 million to $1 billion, Dr Muhammad Hayat, Fisheries Development Commissioner said on Tuesday.

The Ministry of Food, Agriculture and Livestock (MINFAL) with the cooperation of provincial departments is working on a three-pronged strategy to explore the potential of fisheries, the Fisheries Development Commissioner added.

Unveiling the strategy, Dr Hayat said that the government plans to control post-harvest losses, focusing on value addition and development of aquaculture and shrimp farming to enhance the exports.

Adopting techniques that major fish exporters use would control post-harvest losses, which account for 30 to 40 per cent of the total catch, he said.

About the lower level of value addition in fish, Dr Hayat said, we are encouraging local and foreign investors to make value addition in seafood, as all of the fish are exported in raw form.

About the European Commission ban on fish exports, the fisheries development commissioner said that the federal government with the assistance of provincial and foreign agencies is executing a plan to restore the suspended fisheries exports to the European Union after compliance with the procedures.

The ministry along with the provincial agencies and foreign agency UNIDO is pursuing a programme to meet the standard operating procedures (SOPs) of the EC, he added.

The European Commission has de-listed 10 seafood processing units of Karachi for not meeting the quality standards of the commission.

The UNIDO team engaged by the MINFAL to address the problems in seafood exports, is visiting fisheries and harbours and educating the community about the issues at the spot, Dr Hayat said.

The Karachi Fish Harbour (KFH) is also renovating its K2 hall for handling fish and using it for export purposes as well, he said.

The EU countries, which shared 54 per cent of Pakistans $128 million seafood exports during 2003-04, have already imposed 100 per cent checks on the import of frozen fish products from Pakistan following detection of a contaminated consignment of shrimps at Rotterdam in March 2002.

http://www.thenews.com.pk/daily_detail.asp?id=65617


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## Neo

* Cell phone users increase ​*
LAHORE: Cellular subscribers increased by 71.73 per cent during the last fiscal year.

According to figures released by Pakistan Telecommunication Authority, the number of cell phone subscribers was 36,778,462 in July 2006 which increased by 26,381,395 till June 2007.

Two new companies Telenor and Warid remained on top whereas Ufone ranked third place.

Telenor was on top as the growth rate of this company was 175 per cent. The number of subscribers of this company in June 2006 was 3,887,774 which increased by 10,701,332 by the end of fiscal year.

The growth rate of Warid was 102 per cent as the subscribers of this company increased from 5,246,565.

The subscribers of Ufone increased from 7,884,703 to 14,14,044 showing a growth of 77 per cent.

The growth rate of Mobilink was only 44.45 per cent. At the start of last fiscal year, the number of subscribers was 18,321,599 which increased to 26,466,451. 

The subscribers of Paktel decreased by 8.66 per cent while subscribers of Instafone increased by 5.4 per cent.

http://www.thenews.com.pk/daily_detail.asp?id=65629


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## Neo

*Cut in output cost vital to compete globally: Employment policy​*
ISLAMABAD, July 24: Pakistan will have to reduce the cost of production and make it comparable with the competitors in order to penetrate and raise its share in the global export market, says the draft of the National Employment policy.

Lowering of tariffs would bring a change in relative price of products across the chain and there is a need to reallocate resources to greater production, technological innovation and new production structures, the draft obtained by Dawn said.

The new policy seeks to enhance the existing low employment rate by bringing efficiency in the public and private sector organisations. The policy planning cell (PPC) of the Labour and Manpower division has prepared the draft of the national employment policy to be shortly discussed with the stakeholders in all the four provinces after which it will be placed before the government for final approval.

It said that duties imposed on raw materials, considered high, are acting as major constraint for exporting leather shoes and meeting increasing global demand. Duties on tannery machines, spare parts and raw materials needed to be reduced or even made duty free for enabling greater Pakistani exports.

Special incentives, the policy urged, required to be offered for setting up of industries for the manufacturing of international quality trimming, accessories, competent and the inputs required by the leather industry and declaring Kasur and Sialkot as leather cities to promote leather industry.

Pakistan's export of leather goods to European countries is declining due to shifting of tanning industries to China, Korea and other Asian states.

Currently, dominated by the traditional food and textile products, the industrial sector demonstrates significant potential for growth, modernisation and employment expansion. It has to diversify and introduce modern technological processes.

Increasing integration with global market is must and critically linked with higher factor productivity and gradual shift to higher end- products.

The apparel industry needs to improve product quality, move up to value chain, lay technological foundations and strengthen global business operation to generate more employment opportunities as well as becoming global player.

Emphasis should be placed on the promotion of vale-added products, especially in new designs and products. To facilitate transformation of textile sectors into a strong, dynamic and internationally competitive industry, the government should help the industry to attain a dominant position in the made-up garments.

Similarly, the government needs to revitalise the institutional structure to strengthen skills and capabilities of human resources and enable the industry to move into a higher technological orbit, and encourage the active public-private partnership.

The agricultural economy still needs to play an important role in increasing productivity and incomes while maintaining its labour absorptive capacity and these needs to be adequately tapped.

This is indeed contingent upon developing greater and effective linkages between setting targets with regard to GDP growth rates, investment and saving levels, fiscal prudence, taxation and monetary policy as well as inflation with considerations on effectively harnessing development and employment potential, the policy said. Moreover, it also demands an institutional mechanism capable to respond effectively to the challenges, goals and targets.

Currently, dominated by the traditional food and textile products, the industrial sector demonstrates significant potential for growth, modernisation and employment expansion. It has to diversify and introduce modern technological processes.

Increasing integration with global market, a must, is critically linked with higher factor productivity and gradual shift to higher end- products. In the world trade, out of 66 categories of products, 22 have increased their shares and the winning products relate to: i) electric appliances, ii) telecom and recording devices, iii) medicines and medical devices, iv) business and data processing devices, and v) land transportation devices.

Many primary and low value-added products experienced a decline in their share. Among these losing industries, yarn and textile and apparel accounting for 71 per cent of Pakistani exports, recorded the largest decline in their shares.

The way forward for us is to align our industry with the emerging trends and investing in the winning industries with greater participation of multinational corporations. Such an emphasis notwithstanding, we would need to simultaneously focus on the promotion of labour intensive industries, especially the traditional export oriented and those having backward and forward linkages by enhancing productivity and competitiveness.

A clear and convincing roadmap of the policies together with commitment of their continuity is a pre-requisite for the growth of industrial sector, the draft of the policy said.

The most important fundamental right is none else than the availability of a productive work opportunity to the able and willing to work citizen of a country. The policy focus of the government of Pakistan is creating conditions conducive for decent employment generation, poverty reduction and human resource development. Hence, focus is on employment and poverty reduction outcomes of macro and sectoral policies. The centrality of employment in economic and social policy making has also led to a greater focus on raising productivity as well as technical and vocational competence of the workforce. The policies are also matched with budgetary allocations.

However, unemployment and under-employment is quite pervasive; the underutilised labour accounts for a fifth of the workforce. Lesser remunerative and low productive work currently affects a significant proportion of the employed. Poor working conditions in significant workplaces are also not uncommon.

Of the estimated over three million unemployed, a significant proportion is found to be: i) educated having matriculation and higher level of education - a scarce commodity in Pakistan, and youth, ii) chronically unemployed (39.5 per cent) i.e. unemployed for more than a year, and iii) active in the job/work search for over a year (21.3 per cent).

In the absence of any formal social security system, this places enormous pressure on the concerned households and individuals. It is also a drain on the already meagre resources of the country.

Still agricultural sector absorbs largest proportion, while manufacturing sector accounting for 13-14 per cent falls even behind, slightly though; social and personal services and wholesale and retail trade.

Illiteracy, low level of education and poor level as well as poor vocational, technical, and professional competence are currently important facets of the labour market participants.

The problem is compounded further by inadequacy of detailed, reliable and disaggregated information on different labour market indicators. Even disaggregated basic information on labour market changes, education and skill requirements, and nature and extent of unemployment by education, gender, areas and length of unemployment is not available.

Consequently, employment counselling, vocational guidance and employment placement are ineffective and even non-existent.

While, the changes occurring in different labour markets and the consequent demand for educated and skilled is not properly monitored, education and training institutions continue planning and executing their programmes. Mismatch of educated and trained is then the natural outcome. The education and training system also continues with qualitative and quantitative bottlenecks.

The current policy focus on employment, HRD and raising vocational and technical competence is the only way of ensuring a fairly dispersed, beneficial and sustainable development.

The rural areas and surrounding towns indeed demonstrate vast employment and development potential; largely remaining untapped. Main hindrances are none else than those related to marketing, and human and physical infrastructure bottlenecks.

Numerous efforts have been directed but largely un-coordinated.

Handicrafts and rural artesian also suffer through these bottlenecks. The main thrust of this policy naturally aims to removing these lacunas thereby greater synergies are built.

The agricultural sector and allied industry (livestock, poultry and dairy) accounting for the bulk of the employed would continue to keep its importance in determining employment and poverty levels.

A thriving agriculture and allied industry would also be able to reduce pressure on rural to urban migration and corresponding increases in low productivity informal sector employment in urban areas.

The agricultural economy still needs to play an important part in increasing productivity and incomes while maintaining its labour absorptive capacity; this need to be adequately tapped.

The set of policy areas identified and recommended in fact, are a pointer to the potential that can be effectively realised.

http://www.dawn.com/2007/07/25/ebr1.htm


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## Neo

*Foreign investors to acquire Saudi Pak​*
KARACHI, July 24: Another locally incorporated bank, Saudi Pak Commercial Bank, is in the process to be taken over by a consortium of foreign investors. Shaukat Tareen, who is leading the consortium, told Dawn on Tuesday that so far the State Bank had not approved any agreement regarding the sale of Saudi Pak Bank.

He however confirmed that both the consortium and the bank had expressed their intention to finalise a deal after due diligence with the approval of the central bank.

We have agreed to buy the majority shares of the Saudi Pak Bank, Shaukat Tareen said and added that the SBP would be approached for seeking its approval for initiating due diligence of the bank.

When contacted State Bank chief Spokesman Wasimuddin denied that the SBP had approved any agreement for the sale of the Saudi Pak Bank.

Neither we are officially informed nor the SBP has approved any plan for the sale of Saudi Pak, said the SBP spokesman.

A formal deal is expected after assessment of the accounts of the bank and valuation of its assets.

The report about SBP approval of the agreement on Tuesday triggered massive buying in Saudi Pak Bank shares on stock market with a turnover of 11 million shares.

Saudi Pak Industrial and Agriculture Investment Company Pvt Ltd has informed us of their intention to sell their shareholding to a consortium led by Shaukat Tareen, said the KSE notification on Tuesday.

Purchaser will be applying to the State Bank for permission to conduct a due diligence so that they could assess and evaluate the financial and legal position of Saudi Pak Commercial Bank, the KSE notification said.

Saudi Pak has requested Saudi Pak Bank to extend its cooperation to the said purchaser, it added.

It further said; The Saudi Pak Commercial Bank has not been involved in any discussion with the said purchaser.

The sale of the bank will be the fourth major event in the banking sector after sale of Union Bank, PICIC Commercial Bank and Prime Bank.

The balance sheet of the Saudi Bank showed that the bank posted a loss after tax as Rs319 million in 2006. The first quarter of 2007 showed that the loss went higher as it reached Rs104 million in just three months.

The bank has been operating with 50 branches across the country and its assets in 2006 were Rs63.8 billion. Saudi Pak Industrial and Agricultural Company Limited has 59 per cent shares in the bank.

http://www.dawn.com/2007/07/25/ebr3.htm


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## Neo

*Pakistan gaining attention as outsourcing haven  ​*
From Khalid Hasan

WASHINGTON: Pakistan is getting much attention in offshore outsourcing and it is only the threat of terrorism that has kept the sector from achieving its full potential, according to a professional magazine.

Patrick Thibodeau writes in the current issue of Computerworld that despite this handicap, Pakistan has a developing offshore IT services industry and in many areas of the country, its business as usual. In March this year, Chicago-based consulting firm AT Kearney Inc for the first time added Pakistan to a list of 50 countries that it evaluates for their offshore services . AT Kearneys Global Services Location Index weighs more than 40 metrics, such as a countrys labor pool, infrastructure and legal system. Johan Gott, an analyst at AT Kearney, said Pakistan was added to the list of evaluated countries in order to stay ahead of interest from the consulting firms clients. Although its doubtful that large companies will build offshore development centres in Pakistan, Gott said the country does have potential - particularly with smaller companies seeking outsourced IT services. In many respects, its similar to India in terms of education and people skills, he added.

According to the article, AT Kearney is not the only market watcher that thinks offshore development may pick up in Pakistan. In a report last year, New York-based Lehman Brothers Holdings Inc said Pakistans IT industry was growing at a high rate, with more than 330 companies having registered with the countrys software export board. According to Lehman Brothers, Pakistans advantages include relatively low wages - amounting to as little as half the level of salaries in India - as well as reasonable real estate costs, plentiful government incentives and a readily available supply of workers. One of the largest IT services firms with operations in Pakistan is Calabasas, California-based NetSol Technologies Inc NetSol, which is listed on the Nasdaq Stock Market, has offices in the UK, China and Australia. The company was founded in Pakistan in the mid-1990s, and employs about 600 engineers there on projects for global clients in such industries as automotive and financial services.

Najib Ghauri of NetSol says the US is Pakistans largest trading partner, and Pakistans economy is doing well. Anytime anybody goes to Pakistan, they always come back bullish, he said. Todd Furniss, chief operating officer at the , says Pakistan has a reasonably stable economy and a legal system based on English law. That infrastructure should make it a logical destination for services, he added. However, it is not the case, he added, because of a number of issues facing the country, including the lack of an IT industry group similar to Indias National Association of Software and Services Companies. He also questioned whether Pakistans educational system is adequately preparing students for the IT services labour market. The biggest problem holding back Pakistans IT services industry is the geopolitical situation, according to Furniss. That is really is a central issue, he said. There are many other countries that offer similar outsourcing options and dont come with the issues that Pakistan comes with right now, another computer executive observed.

http://www.dailytimes.com.pk/default.asp?page=2007\07\25\story_25-7-2007_pg7_1


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## Neo

*Chinese firms eager to do business with Pakistan​*
* 15 agreements worth $109m signed between Chinese and Pakistani companies

Thursday, July 26, 2007

KARACHI: Despite attacks on Chinese for quite some time in the country, businessmen and investors from China seem determined to opt for business ventures and pacts with their Pakistani counterparts.

This is evident from the fact that a number of Chinese companies have entered into agreements with Pakistani firms at a recently concluded exhibition for Chinese businessmen and investors in Islamabad.

The participation of Chinese companies in the exhibition was encouraging and their interest in having joint ventures with Pakistan firms bodes well for the trade ties between the two countries. 

A total of fifteen business deals worth $109 million were signed between Pakistani and Chinese companies on this occasion besides one Memorandum of Understanding (MoU) was also signed.

Though, the amount involved in these agreements is not that much, however it is significant in the backdrop of some unfortunate incidents, in which Chinese nationals were targeted, as viewed by business community of the country.

They said that they are in contact with their counterparts in China and there are no indications, which discourage them to come to Pakistan and invest and make business deals. 

Our Chinese counterparts seem undeterred in the face of such unfortunate incidents, a businessman said.

The agreements signed at the recently concluded exhibition covers various areas. It ranges from marble, cotton yarn, celestite, leather to chrome ore, guar gum powder and manganese ore.

Businessmen said that apart from these business deals, more investment and business ventures would come as Pak-China Joint Investment Company has been established recently, which would pave for more Chinese investment in the country.

Also, the bilateral trade under Free Trade Agreement (FTA), which got underway from July 01, 2007 is also set to witness growth in the coming days and estimates suggest that exports from Pakistan would peak to over $1 billion in the near term.

Despite FTA, operational from July 01, there has been significant growth in bilateral trade between China and Pakistan. Statistics suggest that Chinas import from Pakistan grew by 32 percent and totaled at $462 million in the last financial year over the year 2005.

In July-March of 2006-07, Pakistans imports from China were recorded at $2.45 billion. The major products included all sorts of machinery, steel products, industrial chemicals, synthetic yarn and fabrics, tyres and tubes. The exports from Pakistan to China during the same period were recorded at $407 million showing a trade deficit of $2.04 billion. The major exports included cotton yarn and fabrics, ores and non-ferrous metals, leather, fish and fish preparation, chemicals, and cotton waste.

According to an exporter, China and Pakistan friendship is time-tested and emerged unscathed over the years despite some negative developments and propaganda, spread by common enemy of both the countries and this deep relationship is reflective from the growing trade between the two countries.

Businessmen said that they are also considering to participate in the Guangzhou Export-Import fair to take advantage of this opportunity so that they could increase their share of export to big Chinese market.

http://www.dailytimes.com.pk/default.asp?page=2007\07\26\story_26-7-2007_pg5_12


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## Neo

*$4.125 billion deficit witnessed in service trade *

KARACHI (July 26 2007): Country faced a deficit of 4.125 billion dollars in service trade, mainly due to high payments of transportation, construction, financial, computer services and royalties during the 2007 fiscal year.

The central bank statistics revealed on Wednesday that Pakistan had earned 4.125 billion dollars against the payments of 8.250 billion dollars on account of services trade, including transportation, travel, royalties, insurance, financial services during the 2007 fiscal year, depicting a 50 percent or 4.125 billion-dollar deficit.

Major contribution in services trade deficit witnessed in transportation, travel and royalties sectors as the share of only transportation sector in the overall deficit was around 50 percent share. Deficit in transportation and travel services sector reached 3.377 billion dollars, ie around 82 percent of overall deficit faced by country during 2007.

According to the statistics, the country faced 2.03 billion-dollar deficit in the transportation services, export of which amounted to 1.095 billion dollars during 2007 against the imports of 3.127 billion dollars during 2007 fiscal year.

Similarly, some 1.345 billion-dollar deficit was recorded in the travel services, as its imports stood at 1.619 billion dollars during 2007 against the export of 274 million dollars. "Rising imports has played a major role in the services sector's deficit, while the raise in the tariff of shipping line is also another leading factor behind it," said economist Muzammil Aslam.

Pakistan did not have a shipping line, except for one flag carrier, Pakistan National Shipping Corporation (PNSC), exporters and importers were, therefore, compelled to hire international shipping lines, he added "During current fiscal year, the country's services deficit might be higher than the last fiscal year as recently shipping lines had further raised their freights," he said.

On the other hand, healthy exports witnessed in the government services, which have contributed around 45 percent of total export. The government sector shows a surplus income of 1.15 billion dollars, as its service exports touched new mark of 1.84 billion dollars against the imports of 325.6 million dollars during the last fiscal.

Statistics further show that services exports grew by 355 million dollars to 4.125 billion dollars during the last fiscal. During 2006 fiscal year, it stood at 3.769 billion dollars, while imports witnessed a growth of by 51 million dollars to 8.250 billion dollars from 8.198 billion dollars in 2006 fiscal.

During June 2007, services trade faced a deficit of 283 million dollars, as its exports stood at 424 million dollars against the imports of 708 million-dollar imports during June 2007.

Construction sector has performed well during the last fiscal, as there was no deficit. Exports in this sector reached 74.154 million dollars as compared to import of 54.838 million dollars, showing a surplus of 19 .316 million dollars during July-June of 2007.

The country's communication services earning recorded 120.751 million-dollar as compared to 97.533 million dollars payments, while insurance sector's exports stood at 30.422 million dollars against the imports of 125 million dollars, financial services exports reached 80.53 million dollars as compared to imports of 135.476 million dollars during the last fiscal.

http://www.brecorder.com/index.php?id=596803&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*OGDC sets 50 wells drilling target for 2007-08 ​*
ISLAMABAD (July 26 2007): The Oil and Gas Development Company (OGDC) has set an ambitious target of drilling 50 wells for 2007-08, (inclusive of 9 projects in Balochistan) and submitted its annual work plan with the Planning Commission for endorsement.

It had achieved target of 41 wells in 2006-07, showing 15 percent increase in oil and reasonable rise in gas production to maintain existing level of 850 mmcfd.

The annual performance report showed that OGDC's oil production in 2006-07 stood at 36,329 against 31,511 bpd in 2005-06, and gas at 850 mmcfd. OGDC Chief Executive Officer (CEO) Arshad Nasar spoke exclusively to Business Recorder on Wednesday on the strategy worked out by him to achieve this year target. He said OGDC had rewritten its history by hitting 41 discoveries' target in 2006-07 and its credit went to his entire team.

He expressed confidence that his team would continue to work with the same zeal to make things even better for 2007-08. Nasar said, "I have contributed to bring evolution in OGDC by making the employees feel that each of them is an important member of the team that helped OGDC achieve ambitious drilling target of 41 wells in 2006-07."

He also listed challenges that his team could face while working at the field. The law and order situation was one of them. OGDC was also looking for expanding its network out of Pakistan through joint ventures with multinational oil and production companies, he said. Its technical teams were already working with some multinationals in China, Yemen, Saudi Arabia and Kuwait for exploring the possibility of joint ventures, he added.

Nasar said that OGDC was working on two-pronged strategy to make the difference in oil and gas production. It planed to follow an aggressive agenda to expand drilling network inside Pakistan to maintain track record of the biggest exploration and production (E&P) company and simultaneously take some joint ventures abroad, he further said.

He said, "We are discussing with many multinationals for joint ventures abroad and China could be the first destination for OGDC for any overseas project." OGDC is very aggressively involved with some big multinational companies for offshore drilling and Petrobras of Brazil is one of them.

It is also a part of Shell Pakistan-led consortium expected to begin offshore drilling in Pakistan's deep waters shortly. Nasar said OGDC was cautious of the importance of offshore drilling and it was part of more than one consortium getting ready for drilling in Pakistan's territorial waters.

He said that a policy of half-deregulation was creating problems for oil and gas sector and LPG prices controversy was one of them. Being one with four decades experience of oil and gas sector Nasar believes that deregulation could be the best tool to protect the interest of all stakeholders of oil and gas sector including the consumers in each case including LPG and the government should follow the same in its real sense.

http://www.brecorder.com/index.php?id=596806&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'Pak-UK economic ties growing' ​*
LONDON (July 26 2007): The British companies are keen for further investments in Pakistan in view of the growing economic, trade and commercial ties between the two countries. This was stated by British Deputy High Commissioner based in Karachi Hamish Daniel, while talking to the journalists at the Pakistan High Commission here on Tuesday.

The diplomat accompanied the Federal Commerce Minister Humayun Akhtar Khan whose three-day visit to UK arranged by the Foreign and Commonwealth Office ends on Wednesday. Daniel, who is also Director of Trade and Investment at the Deputy High Commission in Karachi, said there were over 100 British companies operating in Pakistan in various sectors.

He praised the growing Pakistan's economy and said the foreign investors were happy over the liberal policies of the government. He said those investments had given rise to employment opportunities to the Pakistanis and there had been a steady increase in the emergence of the middle class.

The Deputy High Commissioner said a British Information Technology company called Innovative Group had signed a joint venture with Pakistani counterpart Netsol Technologies for manufacturing of software and other IT related programmes.

He also mentioned the listing of Pakistani companies on the London Stock Exchange and said this showed that those firms had excellent portfolios, which helped to raise them substantial Global Depository Receipts (GDRs).

For Pakistanis, he said UK offered an outstanding education facilities, and a British qualified degree holder could serve his nation in a very admirable way.

He noted that thousands of Pakistanis were studying different subjects in various UK institutions and they served as the driving force in the development and progress of their own country.

Daniel said Pakistan with a population of 160 million represented a huge market, which was very attractive for the British companies. He said although the UK exports to Pakistan had doubled yet the balance of trade, howsoever small, was in favour of Pakistan.

http://www.brecorder.com/index.php?id=596868&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*German traders for improving Pakistan's image abroad ​*
ISLAMABAD (July 26 2007): A three-member private sector German delegation currently visiting Pakistan has asked the government to make more efforts for improving Pakistan's image abroad. "Pakistan's image is improving, but still a lot of efforts are needed for this purpose," the delegation observed at a meeting with officials of Ministry of Industries and Production on Wednesday.

The delegation of the Class Group also called on Industries Minister Jahangir Khan Tareen, and showed interest in investing in Pakistan. The Group is especially interested in agricultural machinery and the purpose of their visit is to look for new venders for casted and forge-machine components.

The delegation had arrived earlier in Lahore on July 21 and visited six industrial units there and Faisalabad for exploring possibilities of business links with them.

The minister pinpointed long-term business opportunities in Pakistan for the German firm, saying that with progress in dairy and farming sectors the market will expand and world class players will find the country more suitable for outsourcing.

He briefed them about the progress made in sugar, agriculture and dairy sectors, saying that some multinational companies were investing in these sectors in a big way and invited the German firm.

The delegation appreciated the vender industry and classified it as world class and assured the minister of bringing technology and partnership in these fields. The delegation also briefed the minister about the possibility of forming a joint venture with a local company. Tareen invited the delegation to visit Pakistan again as his personal guests so that he could show them the progress made in agriculture especially in Rahimyar Khan.

The meeting was also attended by Shahab Khawaja Secretary and Abdul Hafeez Chaudhry Additional Secretary, Ministry of Industries Production and Special Initiatives and CEO EDB.

Earlier, the delegation visited EDB and exchanged views with senior officers. EDB General Manager Zahid J. Yaqoob briefed them about the working of the Board. He said that Pakistan has produced 54,000 tractors in last financial year and was in a position to export to neighbouring countries.

http://www.brecorder.com/index.php?id=596892&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Six percent R&D facility for sports goods industry urged ​*
SIALKOT (July 26 2007): Chairman Pakistan Sports Goods Manufactures and Exporters Association (PSGMEA) Professor Safdar Sandal has demanded the 6 percent research and development facility for sports goods industry and underscored the need of revision its policy for the larger interest of the sports goods sector.

Addressing a press conference here on Wednesday he added the timely action of the government help sports goods industry to bring innovation for improving the quality and standard of the products. Professor Sandal suggested that all export-oriented units, which export 80 percent of their export should be given 6 percent research and development facility on their exports.

The facility of research and development would encourage the sports goods sector of Sialkot to evolve and diversify its production and invest business models that will enable it to compete in the global market and to meet changing trends of the world he said.

Professor Sandal said that mark up on export refinance is another financial crunch on exporter community of Sialkot adding that much coveted 3 percent mark up had been arbitrarily enhanced to 8.5 percent reflecting a straight away increase of almost 300 percent. The step had adversely affected the exports of the country as a result of which large number of exporters were unable to execute their foreign orders because of high rates of mark up he said.

Keeping in view the gravity and magnitude of the problem the mark up rate should be brought to 3 percent and help encourage the SMEs to continue their business easily he added.

The Chairman PSGMEA further stated that business community of Sialkot engaged with sports goods industry was making strenuous efforts for producing high quality and standard products to cope with the international market more easily.

Sialkot, which is a hub of cottage industry and famous for producing quality and standard sports goods and now had entered into manufacturing of "Motorbike" apparel and accessories products and it would be a big ripple in economic activities, which would fetch a handsome foreign exchange for the country he revealed.

Pakistan is next to Italy in producing motorbike apparel and accessories and competing the global market easily and production of martial art products were gaining momentum and according to a rough estimate about 150 units were engaged with the production of martial art uniforms in and around to Sialkot Professor Sandal added.

The PSGMEA Chairman further told that the demand of hand made soccer ball still exist despite the introduction of mechanised soccer ball because the machine made soccer ball had badly failed in producing sustainable results in the Football World Cup. Professor Safdar foresees that hand-stitched ball would stay with man because of its quality and technicalities. The hand-stitched soccer ball during the game keeps the targeted direction whereas the machine made failed in maintaining the directions adding that in previous World Football Cup the ratio of field goals remained at lowest ebb.

The setting up Sports Industries Development Centre (SIDC) project would enable sports goods sector to adopt new technology of mechanised ball, which is threatening to the hand stitched inflatable soccer ball.

It may be added that the sports goods sector of Sialkot is the main export sector of the city with total exports of about 350 million-dollar per annum. The city caters to 85 percent of total world demand of hand stitched inflatable balls, which means around 40 million balls annually worth 210 million-dollars. The Chairman sports goods further told that under the current global scenario and fast growing global industrialisation, it has been observed that the SME sector has not been able to fully realise its potential.

The completion of Product Development Centre for Composite (PDC) project in this export-oriented city would surely help in revival of the manufacturing of tennins, rackets and golf. The PDC will provide technical know how, trained labour and testing facility etc as well as help the sports goods sector in diversification into other composite based products Professor Sandal said. Expressing the confidence the Chairman PSGMEA said that federal Commerce ministry would pay extra-ordinary attention on the provision of six percent for research and development for sports goods industry of Sialkot.

http://www.brecorder.com/index.php?id=596869&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*'Rs 1.21 billion more to be spent on skill development' ​*
LAHORE (July 26 2007): The Technology Upgradation and Skill Development Company (TUSDC) has decided to spend another Rs 1.21 billion for upcoming initiatives in the industrial sector to speed up their function using new technology in 2007-08.

The company has already launched five projects in Karachi, Lahore, Sialkot and Quetta at a cost of Rs 69 million, this was revealed in the company's 10th board meeting. Briefing the board members about the new initiatives, the Managing Director told them that the company has implemented five projects.

He said the purpose of the National Institute of Designing and Arts was to develop skill in the field of design, thus providing the industry with skilled designers in a string of fields.

The meeting was told that the Karachi Tools Dies and Moulds Centre (TDMC) would start operating in August to digital manufacturing, design and provide skills training, consultancy and support for industry, thus producing 550 technicians and operators per year.

About the Skill Development Centre in Batagram, it was said that it began its operation in June 2007 for training in 14 different fields. The purpose was to help people rehabilitate in the earth quake-hit areas and alleviate poverty by providing them with effective skills.

http://www.brecorder.com/index.php?id=596854&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*Development of solar energy top priority: AJK Prime Minister ​*
ISLAMABAD (July 26 2007): Azad Jammu and Kashmir (AJK) Prime Minister Sardar Attique Ahmad Khan on Wednesday said that development of solar energy was the top priority of the AJK government. According to a press release by the Press Information Department of the state, the AJK primer said that technical infrastructure had been installed in the state.

The government had also constituted a special energy coordination committee to hold periodic meetings with world energy experts to review the development work on the project, he added.

http://www.brecorder.com/index.php?id=596906&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Floods cause damage to rice crop in Sindh​*
ISLAMABAD, July 25: There are chances of further increase in prices of all varieties of rice in the coming weeks after it was officially confirmed that monsoon rains had damaged the crop severely in Sindh, sources told Dawn on Wednesday.

The data collected by Sindh government and sent to the federal ministry of food, agriculture and livestock (Minfal) revealed that the damage to the crops caused by floods had brought down production by 200,000 tons in the province.

Sources said the Minfal had expressed its concerns over such huge damages to the crop in Sindh. They said the crop had also been damaged in Balochistan.

This year prices of basmati rice had jumped to Rs45-50 per kg compared to Rs30-32 last year, showing an increase of Rs13-15 per kg.

Similarly, the prices of Irri 6 rice have risen to Rs19-20 from Rs13 last year.

The government was expecting decrease in rice prices after the production target had been achieved.

However, sources said, the Minfal is also thinking revising downward the final production estimates. The rice production target for 2007-08 is 5.7 million tons compared to 5.43 million tons achieved in 2006-07.We will not be able to achieve the 5.7million tons target this year after such huge damages and the prices of rice are likely to go up, an official of Minfal told Dawn. He said the final figures could be lower than expected.

Being a high-value cash crop and a major export item, rice accounts for 5.7 per cent of the total value added farm produce and 1.2 per cent of the countrys GDP.

Last year, the government had initially set a production target of 5.693million tons, which had to be revised downward after the crop was hit by rains in lower part of Sindh and Punjab.

When contacted Minfal Rice Commissioner Inayatullah Khan confirmed the crop losses in Sindh and said there was also some damage to the rice crop in Balochistan.

http://www.dawn.com/2007/07/26/ebr1.htm


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## Neo

*ROZs to get 15-year zero rated access to US markets​*
LAHORE, July 25: US Economic and Commercial Affairs Consular Amy Holman has said that after the passage of the legislation by the end of this autumn Reconstruction Opportunity Zones (ROZs) to be set up in Pakistan will have zero-rated access to the US market for 15 years, the longest such concession ever granted by the US government to any country.

Speaking at the Lahore Chamber of Commerce and Industry on Wednesday, Ms Holman said the US government was aware of the concerns of the local entrepreneurs about limited access to US markets and added that the US market would be opened for October 8 earthquake-effected regions of Pakistan.

She said the US concessions to ROZs would stimulate industrial activity in the quake-hit areas, open up many jobs for the locals and bring them out of poverty.

She said the US helped Pakistan overcome power shortage and a couple of delegations from Pakistan would visit the US in coming days to have one-on-one meetings with American energy experts.

The US diplomat said that the strengthening of Pakistan-US trade relations was one of the priority areas, which were being pursued with full vigour. She said Pakistan planned two investment conferences in Washington and New York that would help boost trade between the two countries as US businessmen were satisfied with the business atmosphere in the country.

She said foreign direct investment from the United States was 44 per cent higher than the previous year.

The US is taking all necessary measures to make Pakistan more competitive in the global market, she said.

LCCI President Shahid Hasan Sheikh said the US had made the largest investment in Pakistan after the United Arab Emirates. The American investment in Pakistan stood at $820.5 million up to the end of 2005-06, which was 6 per cent of the total foreign investment made in Pakistan.

The major sectors where Americans had invested were oil and gas, communications, trade, power, financial business and food.

He said Pakistan was interested in the US investment in infrastructure, energy and human resource development sectors to cope with the needs of a rapidly growing economy.

He praised the services of USAIDs Competitiveness Support Fund to make the milk and dairy, gems and jewellery, marble and granite, surgical and furniture industries as well as horticulture of Pakistan more competitive.

He said USAID could help Pakistan avoid post harvest losses, in value addition of agricultural products, food processing and preservation, development of long staple and high yielding cotton-seed, construction, transport and vocational training.

Chamber vice-president Mubashar Sheikh said Pakistan was the principal gateway to the mineral-rich Central Asian republics and the shortest energy and trade corridor for the CIS, China, and the Pacific Rim and Gulf markets.

http://www.dawn.com/2007/07/26/ebr2.htm


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## Neo

*SSGC to spend Rs9bn on expansion​*
KARACHI, July 25: Sui Southern Gas Company (SSGC) will make a capital expenditure of Rs9billion during the current fiscal year for expansion of its transmission and distribution network.

This was stated by Managing Director SSGC Munawar Baseer Ahmed while talking to a delegation of Oil and Gas Regulatory Authority (OGRA) led by its Chairman Munir Ahmad.

This will be four and a half times the previous 5-year average capital expenditure of Rs5.8 billion before SSGC started its 5-year Rs46 billion strategic development plan, he added.

He asserted that the company achieved several milestones due to better management and enabling of business processes through information and other technology.

The chairman OGRA while showing keen interest in SSGC's initiatives praised the company for its business process re-engineering and its reliance on state-of-the-art technology to serve its customers better. APP

http://www.dawn.com/2007/07/26/ebr12.htm


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## Neo

*High growth and large deficits​*
THE fiscal year 2007 has ended with, as was feared, a current account deficit of over seven billion dollars. It is over two billion dollars or 41 per cent more than the current account deficit of the preceding year which was 4.90 billion dollars.

What is worse is that the current fiscal year threatens to be worse according to many indicators, and may end up with a deficit of over 9 billion dollars destabilising the entire financial structure.

International aid agencies have warned Pakistan against accumulating such huge deficit which is neither sustainable nor helpful for maintaining the economic growth. But the government appears to be helpless as it does not want to revise or reconsider its policies as these are part of a larger structure.

There are four major causes for the expanding current account deficit, while the foreign exchange reserves have now reached $15 billion. But this amount is almost equal to this years trade deficit of $12.8 billion and this is indeed a critical issue which dwarfs the foreign exchange reserves amount which itself is some achievement.

But of the four major causes for the large deficit, the government can barely exercise influence over one-year exports. Oil prices are soaring and reports from Saudi Arabia talk of the impending 90 dollars a barrel oil price before it moves to fulfil the prophecy of 100 dollars a barrel. Foreign loans have to be serviced and the repayable part to be repaid. Remittances of the profits of foreign investment have to be made promptly. And payment on the services account has to be made in full to keep the wheels of the economy moving.

Imports projected at $32 billion can be reduced but that could mean curtailing the industrial activity, reducing employment and emasculating the official revenues beginning with import duties, sales tax and withholding tax and all that can slow down economic growth. So the government is averse to a cut in imports although a number of them are dispensable items.

Now the government will have to concentrate on increasing exports far above the target of $19.2 billion dollars although last years target was missed by 10 per cent. And the focus has to be more on the value added exports instead of physical bulk.

Prime Minister Shaukat Aziz, reportedly wanted a 20 per cent increase in exports but the commerce minister Humayun Akhtar khan was content with 18.7 per cent increase. Ultimately a target of 19.2 billion dollars was agreed and that means a 6.78 per cent rise over the last years figure.

Three major inflows which eventually determine the pattern of balance of payments can be subjected to changes and are not under the control of the government. They are the foreign direct investment, portfolio investment and home remittances. The FDI which hit the peak of $6.95 billion last year is subjected to political and economic changes in Pakistan. The foreign investment can increase substantially even over $ 6.95 billion if some of the large public sector projects could be privatised this year. But there is opposition to privatising profitable companies like PSO, PPL and the refineries and even the loss-making Pakistan Steel which is now making profit.

Portfolio investment depends on the climate in the stock exchange in Pakistan and how well the Karachi stock exchange index fares after 14,000. It is a come and go affair depending on profitability. Portfolio investment comes for profit in Pakistan and not for real investment.

The home remittances which reached the peak of $5.5 billion in the last fiscal year can increase further if the overseas Pakistanis develops a perception that the West particularly America is basically ant-Muslim. So if that perception gains ground then few Pakistanis would want to retain their earnings abroad and may prefer to send them home where they enjoy a higher interest rate.

Last year had been the best year for the FDI, portfolio investment and home remittances. Can that be repeated this year as well despite uncertain conditions and a continuing rise in violence in the country? Besides, this is the election year which may see political convulsions. So can we have more foreign investment in the months ahead? If it does not come, the balance of payments position of Pakistan can become far worse.

Foreign companies as well as Pakistani concerns are now making large profits and that is equally true in case of banks. That the foreign banks are remitting profits home means a heavy demand on the foreign exchange resources of Pakistan and that consumes a large part of the foreign investment.

The real bottleneck in the area of the current account is the services sector. While the expenditure on this account is $ 4.51 billion, the revenue is 937 million dollars resulting in a service sector deficit of over three billion dollars which is indeed a very large gap. Shipping consumes a great deal of the money. The import of goods worth $32 billion would need a great deal of shipping which contributes to the inflated services sector payments.

Despite the handicap and the competition abroad the textile industry has been able to export textiles worth over 10 billion dollars last fiscal year which is 10 per cent more than the exports during the preceding year. Although the exports last year fell below 10 per cent, the textile exports rose by 10 per cent in the preceding year but it was below the 20 per cent target growth. But the textiles have improved their share in the overall trade by four per cent and raised their total to 59 per cent of the total exports.

Evidently the future of Pakistans exports depends largely on the future of the textile exports in an exceedingly competitive area but the textile industry is dissatisfied with the incentives announced by the government in the new trade policy, particularly the spinning mills and they are talking of a shutdown strike to drive home the point that they can throw a lot of workers out of employment.

Even the minister for textiles Mushtaq Ali Cheema does not want to give far more financial concessions to the spinning mills keeping in view their elementary performance but he has promised an overall package for the industry.

It is a matter for debate whether the country is gaining more foreign exchange through the spinning mills or losing more foreign exchange. A proper commission should study this issue and come out with its recommendations. Meanwhile the textile mills want the import of three million more bales of cotton from India over what was imported last year. So the net gain to the country should be clear before the cotton import spree gains greater momentum.

Exports of Pakistan face tough competition because of the conditions at home where the goods are produced. Exporters face a high cost of production. Power supply is as fitful as the prices are high and the water supply presents similar challenges to the industrialists in major cities.

Inflation is high in Pakistan and industrial inflation is higher than consumer inflation of eight per cent. Production dislocations are too many, the holidays are quite many and strikes are frequent for political and other reasons. Transport is too costly and the Karachi Port Trust is an expensive port. Workers are not literate and skilful enough and not quite disciplined. Their productivity is very low compared to the wages. All these enhance the cost of production and transportation.

The new trade policy offers no major incentives, say the businessmen. The leather industry in particular feels shabbily treated. There is nothing new in the trade policy, they say, as positive incentives are needed. This is not the atmosphere in which far higher exports are possible.

Now instead of financial concessions to the industry, or in addition to them, the government makes payment for research and development and now each industry wants that. But the government has to be careful in the WTO as it may be accused of subsidising the exports. We need instead an export economy that depends less on the government and more on its own devices instead of a constant demand on the government for more concessions and their frequent denial.

The fact remains that we plan to have imports of 32 billion dollars and meet the currently planned 19.2 billion dollar exports target which leaves a large gap of 12.8 billion dollars. The World Bank and the Asian Development Bank have been cautioning Pakistan that it wont be able to sustain such heavy deficits and also maintain high growth rates. They want Pakistan to do far more in the area of exports. We have signed a free trade area agreement with China under which bilateral trade is to increase to 15 billion dollars within five years. If we export enough to China from now onward, the trade deficit can be reduced.

We have finally landed in a situation in which a prime minister wants a higher export target and then try hard to achieve that and fail and a commerce minister Humayun Akhtar Khan who wants a modest target and achieve that in full and declare his policy a success. But instead of the 20 billion dollar increase in exports which Shaukat Aziz wanted and 18 billion dollar which Humayun Akhtar preferred, they have struck a compromise on 19.2 billion dollar exports which means an increase of 6.78 per cent which is in consonance with the rate of economic growth.

http://www.dawn.com/2007/07/26/ed.htm#4


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## Neo

*More international airlines to operate from Pakistan​*
KARACHI: *At least three more international airlines are seeking permission from Civil Aviation Authority *(CAA) for initiating their passenger flight service from Pakistan, Director General CAA Farooq Rehmatullah disclosed this to Daily Times.

*Three airlines, namely China International Airline, Virgin Atlantic Airline and Midland Airways are negotiating with CAA for initiating passenger flight service from the country, which is being considered by CAA management.*

The CAA in its currently formulated five-year business plan has decided to increase the number of international airlines operating in the country from 24 to 40 between 2008 and 2012.

It s also planned to make Karachi and Lahore regional hubs for West-bound air traffic from the Asia-Pacific region, by seeking investments in airport-related infrastructure of the two cities.

On the question that Pakistan International Airline (PIA) could suffer from this liberal airspace policy, he replied that CAA had changed its strategy, making it more competitive, compatible and professional. 

He added that previously all the policies had been made to protect PIA and other national airlines but these airlines could not produce the expected results.

Three airlines are also seeking CAAs permission for extending their flights.

*The CAA has allowed the Deutsche Lufthansa AG Airline to resume its passenger service to Pakistan from October 28 this year. Germanys Lufthansa has served its flight service for 39 year in past for Pakistan. Lufthansa will come on stream, with thrice-weekly flights from Frankfurt to Karachi and, for the first time, also to Lahore. However, it would extend its services to five flights a week after six months and one flight per day after one year.*

*Moreover, the CAA has allowed British Airways to extend its passenger flights from thrice weekly to six flights a week by November this year. These flights ply on Islamabad to London and other European destinations.*

*Singapore Airline is seeking CAAs permission for increasing its thrice-weekly flight from five flights in a week. *

Regarding establishment of airport cities, Mr Rehmatullah said that CAA has planed to urbanise surrounding areas of airports with all advance features including hotels, shopping centers, apartments, cafes and other, adding that CAA would make this public at the end of the year. 

Aviation experts commenting on the issue said that the resumption and introduction of airlines would create a competitive environment among international and national airlines that would benefit the passengers and tourism industry. 

The competition will reduce the fare rates of international and local flights gradually, they added. 

They also said that the introduction of new airline companies would bring advance aviation technologies to Pakistan. Other facilities like cargo services will have to be improved as the land is cheaper in Pakistan and international airlines could use this to their advantage.

http://www.dailytimes.com.pk/default.asp?page=2007\07\26\story_26-7-2007_pg5_2


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## Neo

*Telenor Pakistan adds 1.6 million subscribers​*
KARACHI: Telenor Pakistan added a solid 1.6 million subscriptions during the second quarter (April-May-June) 2007, contributing 32 percent of the groups net additions worldwide. 

Telenor Groups President and CEO Jon Fredrik Baksaas have termed Telenor Pakistans quarter-to-quarter successful performance as impressive. The latest financial figures were presented yesterday by Telenor Groups President and CEO Jon Fredrik Baksaas and CFO Trond Westlie at Telenor Groups headquarter at Fornebu.

CEO Telenor Pakistan Tore Johnsen, while talking about the excellent second quarter figures, said, The figures prove that we continue to do things in a way that our customers expect of us. In future, too, we are committed to providing quality products and services that offer the best value and are easy to use. Our other major areas of focus are to keep at building a customer-intimate organization and constantly outperform other networks in terms of reach and reliability.

Earlier, commenting on the Telenor Groups overall impressive growth, Baksaas said, We are delivering another good quarter. The trends from the first quarter have continued, with high underlying revenue growth and stable EBITDA margin.

http://www.dailytimes.com.pk/default.asp?page=2007\07\26\story_26-7-2007_pg5_20


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## Neo

*Three top projects cleared by CDWP ​* 
ISLAMABAD (July 27 2007): The Central Development Working Party (CDWP) on Thursday cleared three important development projects, including National Trade Corridor Improvement Programme (NTCIP), costing Rs 126.955 billion for further action by the ministries concerned.

The CDWP, which met here with Deputy Chairman Planning Commission Engr. Dr Akram Sheikh in the chair, approved 11 schemes worth Rs 2.69 billion and recommended 9 projects costing Rs 30.96 billion that also includes the foreign assistance of more than Rs 13 billion.

The three projects, which were conceptually cleared, included the NTCIP valuing Rs 94.135 billion, Muzaffarabad City Development Programme costing Rs 20.82 billion and Balakot New City Project worth Rs 12 billion. The NTCIP included foreign assistance of Rs 66.814 billion from the Asian Development Bank (ADP) mainly for improvement of road network.

The communication ministry will be the sponsoring agency of these projects, said Dr Asad Ali Shah, member infrastructure Planning Commission. Briefing media persons, he said that under the NTCIP the projects like Peshawar-Torkham Expressway, Hasanabdal-Havelian-Mansehra Expressway, Peshawar Northern Bypass, Faisalabad-Khanewal Expressway, Shikarpur-Rathdhero Expressway and Dadu-Hub-Karachi Expressway would be undertaken. A total of 663-km would be improved under these projects which are likely to be launched by the end of this year, he said.

He said that Earthquake Rehabilitation and Reconstruction Authority (Erra) will give presentation to the Planning Commission on Muzaffarabad Development Programme and Balakot New City projects.

The recommended projects include Pakistan Atomic Energy Commission scheme of establishing the Nuclear Fuel Enrichment Plant at the cost of Rs 13.8 billion, Railway Ministry scheme of Procurement of 300 new design high-speed bogie wagons of Rs 1.6 billion and pilot project of manufacturing of five 3,000 horsepower diesel electric locomotives of Rs 955 million.

The construction of new office building of the headquarters of military lands and cantonments at Chaklala Cantt costing Rs 130 million, and establishing of Jalozai Campus of NWFP University of Engineering and Technology, Peshawar, costing Rs 6.3 billion were also approved.

The CDWP deferred a project of construction of National Accountability Bureau (NAB) building in Lahore, for which the Bureau had sought Rs 949 million. Dr Asad said the new NAB chairman would brief the Planning Commission before the approval of the project.

The CDWP approved 11 projects costing Rs 22.525 billion in infrastructure sector, six projects costing Rs 7.931 billion in social sector and three costing Rs 3.202 billion in other sectors. Seven projects costing Rs 4.977 billion have been approved for the Punjab, five schemes worth Rs 9.704 billion in AJK and NWFP, one project costing Rs 0.396 billion for Balochistan and seven projects valuing 18.578 billion all over the country.

http://www.brecorder.com/index.php?id=597133&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Trade ties will continue to grow with Pakistan: Chinese Consular General ​*
KARACHI (July 27 2007): Despite problems in business and trade dealings with Pakistan, the commercial and trade ties will continue to grow further with the passage of time, Consular General of Republic of China, Chen Shan Min said.

Speaking at a dinner reception hosted by Pakistan Hardware Merchant's Association (PHMA) Sindh Balochistan Chapter in his honour at a local hotel on Thursday, he hoped that both countries' strong efforts would help boost trade ties further. On the occasion, several PHMA members were also present.

Chen observed that Pakistan was on the fast track of economic prosperity, as many commercial, constructional, trading activities had been taking place in Karachi alone, which highlighted the overall aspects of its thriving economy.

"Everything has changed in Karachi, which I witnessed closely on my return to Pakistan, but the friendly sentiments by the Pakistanis are the same as they had been in the past," he observed. "I will surely be successful with your support to enhance the bilateral ties between China and Pakistan," he added.

Acknowledging Pakistan's support to China on diplomatic front in the world, he said that through its support China succeeded to acquire seat in the UN Security Council.

Recalling his past in Pakistan, Chen apprised that Pakistani teachers had taught him English language enabling him to negotiate with English speaking counterparts across the globe.

Chinese Consul General pledged to facilitate the Pakistani business community on their visits to China, which he termed his prime objective. He thanked PHMA's representatives and members for hosting a dinner in his honour and said that it was as if it was hosted for his country.

Chairman PHMA Sindh Balochistan Circle, Aftab Hyder Paliwala acknowledged the Chinese support to Pakistan, saying that it established Gwadar Sea Port in Pakistan, which was the symbol of friendship for both countries.

He highlighted the economic growth and prosperity in China since communist revolution, saying that it was indebted to efforts of the communist leadership of the China.

Military might in the present era will not help any country dominate the world, as it also requires economic growth and stability, which the China has almost acquired, he added.

Earlier, Basit A. Alvi highlighted the PHMA's past and present activities, saying that it had been established in pre-independence era, however after the creation of Pakistan its name was associated with it.

He said that China was the major trading partner of Pakistan, as country was importing over two billion dollars raw material from it, which stood at six percent of overall country's imports.

He said that PHMA's major role was to bridge the gap between the hardware merchants and policy makers in order to evolve better policies. At the end, a PHMA's memento was presented to Chinese Consul General, Chen Shan Min.

http://www.brecorder.com/index.php?id=597168&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Promotion of services exports: economic managers urged to adopt three-pronged strategy ​*
ISLAMABAD (July 27 2007): Pakistan should seek elimination of tariff and non-tariff barriers on its export products like textiles goods, leather goods, rice and fruits in other markets in view of emerging trading system.

This was stated by former Chief Economist and Economic Adviser of the government and Chairman of the IPS Working Group on the World Trade Organisation (WTO) Fasih-ud-din Ahmed, in his new publication on 'Emerging Trading System' released by the Institute of Policy Studies.

As Pakistan is following a policy of liberalisation and deregulation and extending concessions in services sector that should not pose any serious problem for the sector, he said. The basic issue is the opening avenue without restrictions to obtain from the trading partners in particular for export of manpower in which it enjoys a relative advantage.

He also suggested the economic managers to adopt three-pronged strategy for the promotion of services exports including enhancing production, productive capacity and quality of services, negotiating with trading partners to secure expanded market access besides strengthening public-private partnership to realise these objectives.

The author said that the present trading system in the WTO Agreements has evolved through successive rounds of multilateral trade negotiations. Pakistan, with its specific export potentials, liberalisation policy and active participation in trade negotiations, including groups of developing countries with similar interests could gain much from the Doha Round. Being an exporter of agricultural products, Pakistan has an interest in liberalisation of trade in agriculture and reduction or elimination of exports' subsidies and domestic support in major markets.

Since it is not providing with any trade distorting export subsidies its position in the negotiations is comfortable. Pakistan is collaborating with other agriculture exporting countries in various forums, such as the Cairns Group and Group of 33, in seeking greater market access and elimination of export subsidies and domestic support measures in the USA, EU and other highly protected markets.

http://www.brecorder.com/index.php?id=597188&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Plan chalked out to develop small industries on modern lines ​*
SIALKOT (July 27 2007): The Chairman Task Force on Trade and Industry Punjab Mian Muhammad Riaz has disclosed that Punjab Small Industries Corporation (PSIC) had formulated a strategy for developing small and medium industries on modern and scientific lines in the Province.

Talking to Business Recorder here on Thursday he added that government had set aside Rs one billion for extending loan facility for the promotion of small and medium industries in the Punjab. The loan facility amounting to Rs 40 thousand was being extended for the promotion of cottage industries and the return of the loan was 98 percent in the Province Mian Riaz disclosed.

Mian Riaz further revealed that in order to further accelerate trade and commerce activities, cluster development centres and business support centres were also being established in major industrial towns of the Punjab. These business supports centres and cluster developments centres would provide training facility on latest machinery aimed at catering the future needs of the industrial sector he added. The task force revealed that an gro food processing zone costing Rs 35 crore was being developed for mango processing in Multan.

The revamping of Metal Industry Development Centre (MIDC) will cost more than Rs 51.556 million while establishment of Institute of Surgical Technology (IST) was being developed at cost of Rs 160.459 million he disclosed.

Mian Riaz was of the opinion that the role of Surgical institute would be pivotal in the provision of surgical nursery to the manufacturers and exporters of surgical instruments while MIDC will ensure provision of services in various fields and it will serve as a "Common Facility Centre". The work on both the projects would be undertaken shortly he added.

On government-to-government level and at individual level efforts were being made for acquiring highly qualified and trained instructors from Germany for imparting latest training to the students in Institute of Surgical Technology he disclosed.

This institute would impart training to 250 students in various fields of surgical manufacturing and it will be equipped with latest machinery and the institute will be the start of a new era in the development of surgical industry he said. Mian Riaz said that surgical industry was enjoying the monopolistic position globally and the surgical instruments are most economical and coupled with unconditional guarantee of the finest quality.

Mian Riaz disclosed that setting up of a "Raw Material Bank" was under active consideration of the government aimed at providing raw material to the surgical manufacturers and exporters on reasonable rates. It is high time business community Sialkot should made collective efforts for doubling the export-volume of the city he said.

http://www.brecorder.com/index.php?id=597259&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Construction of Sialkot business centre in full swing ​*
SIALKOT (July 27 2007): The development work on Sialkot Business and Commerce Centre costing Rs 341.67 million is in full swing. The centre was being constructed adjacent to Sialkot Chamber of Commerce and Industry (SCCI) building.

The SCCI sources told Business Recorder here on Thursday that the purpose of setting up of Business and Commerce Centre is to display locally manufactured products under single roof and to organise exhibitions in the centre.

The under constructed Sialkot Business and Commerce Centre would be a multi-storied building consisting on 4 display centres, two halls, office box, auditorium, restaurant and living rooms for the foreign visitors. The industrial sector of Sialkot is contributing handsome foreign exchange amounting to 900 million dollars annually that is exceptional feat, considering the small size and population of the city.

http://www.brecorder.com/index.php?id=597198&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Increased power generation to help meet electricity needs: Shaukat ​*
ISLAMABAD (July 27 2007): Prime Minister Shaukat Aziz Thursday said that intended expansion of operations by IPPs demonstrates confidence of overseas investors in the government's policies and hoped that increased power generation would help meet the electricity requirements.

He was talking to Executive Director Asia, International Power Plc Vince Harris, who called on him here. The Prime Minister said the private sector is contributing in the government's efforts to bridge the gap between demand and supply in the power sector. Shaukat Aziz said the government is encouraging investment by the private sector and a level-playing field has been provided to the local and foreign investors.

He said that the demand in power sector is growing by 9.5 per cent annually mainly due to high growth achieved by the country and the government is engaged in tapping all available sources of energy to keep a balance between the demand and supply.

The Prime Minister said that the surge in power demand is mainly due to better living standards, growing middle class, electrification of rural areas and increase in irrigation and industrial demand, all of which necessitates more electricity generation.

Shaukat Aziz said that the government is trying to utilise all sources of energy and maximise output from hydropower and other alternative energy resources including solar, wind, biogas and coal. Under the energy security strategy, the Prime Minister said, the government will exploit all available resources of commercially viable energy both domestically as well as from abroad.

The Prime Minister said the government is focusing both on enhancing the indigenous capacity as well as on importing gas from the neighbouring countries to meet the energy needs. Vince Harris said his group is planning to expand their operations in Pakistan and are exploring several proposals.

He appreciated the investment friendly policies of the government and the enabling environment created by it to facilitate the investors. The rapid pace of growth in Pakistan has impressed him, he added.

http://www.brecorder.com/index.php?id=597165&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Cell phones, telecom apparatus imports cross billion-dollar mark ​*
KARACHI (July 26 2007): The import of mobile phones and other telecom apparatus has crossed the level of a billion-dollar mark during the 2006-07 fiscal. According to official statistics, while the import of telecom accessories has increased by 13 percent, mobile phones import registered a raise up to 18 percent and other apparatus imports increased by eight percent during the last fiscal.

Figure shows that import of telecom in Pakistan during the 2005-06 fiscal year was about 1.197,551 billion dollars, recording a surge of 13 percent in the 2006-07 fiscal year as the import touched 1.347,683 billion-dollar mark.

Same as the import of mobile phones, which amounted to 569.246 million dollars in 2005-06 fiscal year and after an increase of 18 percent in 2006-07 fiscal year, it crossed the figure of 670.163 million dollars.

Statistics show that the import of other apparatus of telecom section remained at 628.305 million dollars in 2005-06 fiscal year and reached 677.519 million dollars in 2006-07 fiscal year, showing an increase of eight percent.

Experts have expressed the hope that the trend of surge in the import of cell-phones and other telecom accessories will continue during the current fiscal year. They said competition among the mobile phone companies had reduced the prices of cell-phones.

The market competition has further boosted the demand of mobile phones as the latest models phones were available at affordable prices, alluring more and more customers, they added. According to a precise estimation, there are over 60 million mobile phones in the country and they are increasing with the passage of time.

President of Karachi Electronic Dealer Association Muhammad Irfan said that 75 percent of mobile phones, being sold in the market, were being imported from China, while only 25 percent being imported from other countries.

Market sources said that sale of Chinese cell-phones were also increasing as Chinese companies were supplying imitated models of cell-phones made by prominent Western companies with minor change in the names of mobiles.

Dealers of electronics market told Business Recorder that the people, who could not afford the latest models of mobile phones of prominent companies, were interested in the Chinese model cell-phones because of their cheaper rates.

Though these models are not durable in use as compared to those made by leading companies, people were still buying them, they said, and added it had also raised the sale of mobile phones in the market.

http://www.brecorder.com/index.php?id=596874&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*40 million SMSs, 10 million calls on Friday! ​* 
KARACHI (July 22 2007): Restoration of the Chief Justice has brought windfall to the mobile phone companies, which earned millions of rupees profit in a single day on Friday, as approximately 40 million short text messages (SMS) and 10 million calls changed hands to celebrate the historic decision of the Supreme Court, sources in cell phone companies revealed on Saturday.

On Friday, after the restoration of Chief Justice, millions of people started messaging and exchanging greetings, interrupting the service of mobile phone operators.

According to estimated figures, provided by the officials of different mobile phone companies, the subscribers of Mobilink made about 13.2 million SMS worth around Rs 5.6 million and four million calls, costing around Rs 16 millions.

Ufone users also enjoyed this day with provisionally estimated 12.4 million SMS, costing nearly Rs 5.8 million and three millions calls worth Rs 6.4 millions.

Besides, the users of Warid and Telenor mobile phone operators sent nearly 13.4 millions SMS, costing Rs 6.3 millions and three million calls of about Rs 7.1 millions.

Sources told that the operators of all leading mobile phone companies faced difficulties in providing service to their customers due to heavy load on all networks, which resulted in frequent suspension of services. They said there was no truth in the rumours that after the Supreme Court judgement, the government had blocked the network of all mobile phone companies in the country.

"I myself made dozens of calls and SMS to members of our community in the country to congratulate them on the restoration of the Chief Justice", said Matwal Afridi, advocate of Sindh High Court. "I think this is the easiest way to express our feelings and I do the same to congratulate my friends", said advocate Shukat Bhund.

Sources said that in such situations, people liked to make SMS and tried to contact their friends and relatives through their cell phones as this was the easiest way to express their quick reaction.

They faced similar situation last year after the Nishtar Park bomb blast incident when the service of the country's mobile phone operators was badly damaged as people started using their cell phones, they said.

http://www.brecorder.com/index.php?id=595474&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Cellular firms show robust growth in 2006-07 ​*
ISLAMABAD (July 19 2007): The cellular companies in Pakistan have shown robust growth of 83 percent in 2006-07, having over 63.18 million subscribers in June 2007 against last year's 34.50 million. According to the statistics, the total mobile users in the country are 63,189,859 as on June 30, 2007 against 34,506,557 last year.

The country's cellular mobile density stands at 40.66 percent against 22.21 percent of the same period last year, said Pakistan Telecommunication Authority on Wednesday.

The statistics uploaded at PTA website on July 18 showed that the mobile sector had shown 3.75 percent growth in June over previous month with cellular density jumping to 40.66 percent and the subscribers base to 63 million.

Mobilink subscribers base was increased from 17,205,555 million in June 2006 to 26,466,451 million in June 2007, Ufone 7487,005 to 14,014,044, Telenor 3,573,660 to 10,731,334 and Warid 4,863,138 million in June 2006 to 10,620,386 million in June 2007. However, both the Instaphone and Paktel lost their subscribers during the period under review.

Monthly analysis showed that the Paktel, taken over by the China mobile, have lost as many as 30,100 subscribers in June over the previous month. The Paktel subscribers have come down from 1,054,663 in May to 1,024563 in June 2007.

Mobilink has added over one million subscribers to its network in the month of June, gaining a subscribers base of 26.46 million in June from 25.79 million in May while Ufone added 6,96,276 users to its network in the month of June and its total subscribers are 14.01 million in June over 13.31 million of last month.

According to the statistics, Instaphone added 6226 subscribers to its network and with this total users of Instaphone services are 333,081 in June against 326,855 in May. Telenor Pakistan and Warid have also made substantial totalling to their networks. Telenor Pakistan added 596,855 users to its network while Warid added 344, 903 subscribers.

The Telenor network users have increased to 10,731,334 million in the month of June from 10,143,479 million in May while Warid have over 10,620,386 million subscribers against last month's 10,275,482 million. The five mobile companies have added over 2,285603 million subscribers to their networks in the month of June and country's cellular users base has gone beyond 63.18 million in June 2007.

http://www.brecorder.com/index.php?id=594393&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Checking inflation ​*
EDITORIAL (July 27 2007): It seems that the government has finally woken up to the situation and decided to do something about the problem of rising prices of food items in the country. According to official sources, the Prime Minister is so concerned about this phenomenon that he has constituted a committee to analyse the reasons for food inflation and formulate both short-term and long-term measures in this regard.

The committee will be headed by the Prime Minister himself, who is also the Finance Minister. Members of the committee will be Ministers of Industries, Commerce, Agriculture, Advisor on Finance Salman Shah, the State Bank Governor and the Planning Commission Deputy Chairman. The terms of reference will be finalised by the committee members but the main focus is expected to be on the behaviour of prices of wheat and pulses.

According to certain sources, the government had received reports that 40 percent of petrol pumps were also stocked with wheat instead of fuel and the provincial governments had failed to check illegal movement of the commodity. Some of the traders, who had taken loans for procuring wheat for export purposes, had also stocked it in their godowns to sell it later in the local market.

The rise in the prices of pulses is also a big issue. Minfal was stated to be of the view that middlemen would continue to fleece the general public until a proper marketing system was adopted while Minister of Railways had opined that the prices of pulses could come down within days if four big fish of the Jodia Bazar were arrested.

The concern of the Prime Minister about the rising food prices is understandable. The Consumer Price Index (CPI) rose by 7.77 percent during 2006-07 as against the target of 6.5 percent and the main factor behind this rise was a hefty increase of about 10 percent in food inflation. The increase in food prices is undoubtedly a very sensitive issue because of its social and political implications.

The present government has all along been propagating about its economic achievements like rapid growth, a healthy rise in per capita income, better investment rate and comfortable foreign exchange reserves, but, honestly speaking, these kinds of aggregates don't matter much to ordinary people of the country.

What they care about most is the year round availability of various food items at reasonable prices for their families. At the prices now prevailing in the country, it is difficult to ensure easy availability of food items and their purchasing power is eroding fast because a large percentage of their incomes is spent on food and if this trend continues, there is every likelihood of a social unrest and mass resentment in the country with the result that the present government may have to bear a heavy political cost in the forthcoming elections.

Seen against this background, the emphasis on containing food inflation by the government appears to be appropriate to the situation, but the policy response discussed casually by the authorities concerned shows a lack of real understanding of the problem.

Administrative measures like punishing the stockists of a commodity or rationing could backfire most of the time and may even be counter-productive. Pure economic logic would suggest that hoarders are performing a vital function of smoothing out price fluctuations, while punishment or rationing would not only create shortages and induce the stockists and also the shopkeepers to sell under the counter at inflated prices to known consumers.

Besides, artificial suppression of prices would force the entrepreneurs to divert their resources for the production of commodities whose prices are unregulated.

Similarly, subsidies are usually a huge drain on the budget and should, at best, be adopted as a temporary measure. In our view, the task of controlling inflation should mainly be handled by the State Bank because prices are essentially determined by the level of aggregate demand and availability in the economy.

While availabilities could be supplemented by import or banning export of a particular commodity by the government, the management of aggregate demand falls exclusively within the domain of the State Bank which has all the necessary instruments at its disposal to manage overall credit and liquidity in the economy.

If there is a need, it could also resort to selective credit control measures, including total ban on advances for certain commodities like wheat and pulses in order to force the stockists to unload them in the market and provide relief to the common man. In a free market economy, measures adopted to check the rising inflation should be in accordance with the letter and spirit of its true principles otherwise economic system will not run smoothly and faultlessly.

http://www.brecorder.com/index.php?id=597250&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Expediting work on coal-based power projects? ​*
EDITORIAL (July 27 2007): The Federal government has decided to expedite work on coal-based power projects in Thar coal field, says a Recorder Report quoting highly placed sources in Sindh Coal Authority. President Musharraf was scheduled to chair a meeting in Islamabad on Friday, to review the pace of work on the projects, besides holding deliberations on security concerns of foreign companies working in Thar, particularly the Chinese firms.

It is expected that the security cover to foreign firms and their personnel will be further bolstered. The Director-General, Sindh Coal Authority, Abbas Ali Shah has meanwhile held a meeting with the Chinese officials in Karachi following the attack on Chinese nationals working on a project in Hub.

A development package for Thar coalfield and other sites in the province, including Sondha, Jherruk, Thatta, Lakhra, Dadu, and Badin, is also said to be on the cards. According to a study conducted by the German firm RWE Power Engineering at Thar coal field, 1,000 megawatt coal-based power plants can be economically operated in this area.

It may also be mentioned here that a Chinese company, Shenhua Corporation, has been working on construction of two 350-megawatt power plants based on Thar coal. (There have been reports also of Shenhua having pulled out of the project over the tariff issue. What is the position now?).

The Sindh government, under a policy decision, is encouraging projects that will use coal as the main input for industrial activities, because this will relieve pressure on more expensive fuels, oil and gas.

After hydropower, coal has a substantial edge over other non-renewable sources as a relatively cheaper mode of electric power generation. And in view of the apprehended shortfall of electricity and other energy resources during the next 10 years, the demand for indigenous coal would considerably grow for purposes of power generation.

Pakistan has, meanwhile, emerged as the seventh among the top 20 countries of the world after the discovery of huge lignite coal deposits in Sindh. Experts have estimated that Pakistan's energy requirements over the next five years are likely to grow at the rate of 7.4 percent per annum, largely because of the ambitious GDP targets set by the government.

This is a big challenge to be faced in the coming years. According to available data, as many as nine companies including Sumitomo of Japan, Siemens and Reinhaul of Germany, AES Corporation of the US, Al-Jumaih Group of Saudi Arabia and Malakoff of Malaysia have so far submitted statements of qualification for setting up a 1000-1200 megawatt power project in Sindh.

But the progress on the ground has been extremely disappointing. Pakistan's current total mine-able coal reserves are estimated at 2 billion tons, which is 60 percent of the measured coal reserves.

Despite the presence of this huge unutilised coal treasure, the share of coal in Pakistan's energy mix stands at only 5.5 percent, with gas, hydropower and nuclear energy accounting for 50 percent, 30 percent, 12.7 percent and 0.8 percent respectively.

However, under a plan, coal's share in Pakistan's energy mix will be gradually increased to 18 percent by the year 2018, which will still be far below that of India's 54.5 percent. (Britain and the US too have historically relied on coal as a major source of energy despite their advanced nuclear energy generation capabilities.)

It is said that Thar coal reserves, estimated at approximately 185 billion tons, can produce energy equivalent to 400 billion barrels of oil or 850 trillion cubic feet of gas! In real terms this is greater than the combined oil reserves of any of the two major oil producing countries. It has also been estimated that by using only two percent of its coal reserves, Pakistan can generate about 20,000 megawatts of electricity for nearly 40 years.

Further, some of the major by-products Pakistan will get include 5.14 million tons of anhydrous ammonia fertiliser, dephenolized creslylic acid pesticides, wire enamel, epoxy resin, krypton/xenon gases, liquid nitrogen etc. But Pakistan needs an investment of about $4 billion for the mining of Thar coal reserves, which has proved elusive so far.

Following its failure to involve any major multinational company in the mining and power generation, the government had decided last year to set up a $500 million Thar Coal Company, which was planned to be operated by the private sector.

The plan envisaged the unbundling of Thar coal project into mining and power generation sectors to bring down the amount of investment required for each of the six identified blocks of Thar coal field, from $1.5 billion to $500 million. We have yet to know what became of the plan.

The government's decision to expedite work on coal-based Thar projects is a move in the right direction. The government should now focus on speedy implementation of the projects. Above all, it should arrange proper security for the foreign personnel working there.

http://www.brecorder.com/index.php?id=597251&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Worsening of current account balance ​*
EDITORIAL (July 25 2007): The current account position of the balance of payments is the best measure to judge the external sector situation of a country. It is unfortunate that current account balance of Pakistan slipped into the red in 2004-05 after posting surpluses for three consecutive years and continues to show a deteriorating trend since then.

According to the latest data released by the State Bank on 21st July, current account deficit of the country reached a record high of $7.016 billion in the fiscal 2006-07 as against $4.99 billion in the preceding year, registering a huge increase of 41 percent.

At this level, it was 4.8 percent of GDP as against the target of 4.3 percent fixed for the year. Increase in current account deficit was contributed by trade, services and income shortages, besides substantial payments of interest and dividends during FY07.

The export target of $18.6 billion was not achieved and the country faced a trade deficit of over $9.87 billion (as per the balance of payments statistics). Services and income deficit also rose to $4.125 billion and $3.574 billion respectively.

Current account deficit without official transfers climbed to $7.516 billion from $5.671 billion during FY06. However, as the inflows of foreign exchange through investments and other capital receipts were also quite high, the country's foreign exchange reserves went up by $2.57 billion to $13.33 billion during the year.

The developments in the external sector, by all indications, are disturbing, to say the least. The fact that Pakistan is facing a growing current account deficit simply means that we are living beyond our means and cannot afford to indulge in this luxury for long, especially since total foreign indebtedness of the country is already quite high.

Multilateral financial institutions as well as the State Bank have been highlighting the developing situation on the external front as a major area of concern, but the authorities do not seem to be too much bothered about the problem.

Complacency of the official quarters is evident from the fact that the huge trade deficit which has been the main factor behind the sharply deteriorating current account balance of the country has again been targeted at a very high level of $10.63 billion in the trade policy for FY08.

There could be two reasons for this apathy. Firstly, home remittances, foreign investment, issuance of GDRs, receipts for services rendered etc, have more than compensated for the soaring deficit with the result that foreign exchange reserves of the country have been going up.

Secondly, the appropriate measures needed to reverse the worsening trend in the current account usually call for harsh measures which the government wants to delay as long as possible due to political imperatives and the forthcoming elections.

We would, however, urge the authorities to attend to the challenge of worsening current account deficit on priority basis and squarely. While high POL prices are likely to persist for some time in the international market for obvious reasons, the country cannot rely on "unpredictable" inflows to meet the gap in the external sector.

Sooner or later, the government has to take remedial measures to achieve a balance in the external accounts of the country otherwise the country could again go back to the days of 1990s, when insolvency, with all its devastating effects, was staring us in the face. A gradual approach towards improvement would of course be less painful than a sudden shock and a major destabilisation of the economy, leading to a huge setback to the industrial activity together with massive unemployment in the country.

To start with, it looks imperative to reduce excess demand in the economy and its spilling over into the foreign sector. Exports of the country have to be made more competitive in the international market and imports dearer in order to reduce the trade gap of the country.

A combination of fiscal, monetary, and exchange rate policies could help achieve this goal to a great extent. Also important are factors like skill development, upgrading of infrastructure, and improvement in law and order situation.

Plans to sell some of the big state-owned companies to fetch foreign exchange may now be difficult to implement in the wake of reinstatement of the Chief Justice and demonstration of strong opposition by the people.

We would urge the government to analyse the situation carefully without losing more time and then go the whole hog to correct the threatening imbalance in the external sector. Protectionary or ad hoc measures only help temporarily and are not an answer to an endemic problem like the one we are faced with.

http://www.brecorder.com/index.php?id=596537&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'IT major contributor in banking growth' ​*
KARACHI (July 27 2007): Information Technology (IT) appears to be the major contributor in the tremendous growth in the banking sector in Pakistan. Innovations in IT have enabled banks to operate faster and more efficiently than before, and are also enabling banks to offer services that previously were not easy to implement.

In the roundtable conference held here recently, Cisco's Vertical Sales Manager (Finance) Saad Syed and Business Development Manager (Advanced Technologies), Cherif Sleiman explained the role of IT and Cisco's networking and server technology in improving Pakistan's banking sector.

According to them, automation, risk management and alternative delivery channels are very critical for the development of Pakistan's banking sector. Saad listed some major alternate delivery channels that can be implemented and capitalised on due to the current trends in Pakistan. The most important, as declared by the State Bank of Pakistan (SBP), are eBanking and mobile banking. Mobile banking is especially attractive as the market penetration for cell phone is extremely high in Pakistan.

When asked to speculate on the implementation of mobile banking, Saad said: "It will take a few years, as implementation of such a system relies on mobile operators, banks and the SBP, as well as the consumers."

Another very interesting development is the deployment of "Banks in Vans". This concept has been pilot tested by Muslim Commercial Bank with its mobile ATMs that operate through a GSM network.

The basic concept behind this alternate delivery system was to test new and far-off areas for their reaction to a bank. These mobile banks would work over a VSAT or GSM network, where VSAT is very expensive but it would be the fastest form of communication, 3G, however, is an alternate system, that is gradually being implemented everywhere.

Cisco has pretty much laid out a plan of action for the banking sector in Pakistan, with which it can expand and grow. Cisco technologies are leaning towards automation and wide-scale systems integration, as well as centralisation of critical resources. Whether this works as a feather in their cap, or as a loose rivet in a wheel, time will tell.

http://www.brecorder.com/index.php?id=597211&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Agriculture loans: outstanding amount shows 2 percent decline ​*
KARACHI (July 27 2007): Despite 24 percent growth in the credit disbursement to the agriculture sector, the outstanding amount shows a slight decline of two percent, as still agri loans outstanding amounts to over Rs 147 billion at the ends of the 2007 fiscal.

Pakistan is an agricultural country, therefore, the State Bank of Pakistan (SBP) is encouraging the agriculture loan disbursement to the farmers, aimed at promoting the agricultural sector.

Commercial and specialised banks have surpassed the target of credit disbursement to the agriculture sector in the 2006-07 fiscal year by showing a growth of 23 percent. As a result, the total disbursements of agri loan reached Rs 168.3 billion in the 2007 fiscal year as against Rs 137.5 billion disbursements during the 2006 fiscal.

Statistics made available to Business Recorder, which was prepared by the Agricultural Credit Department of central bank show that some amount of Rs 147.291 billion credit is due on the farmers as on June 30, 2007 as compared to Rs 150 billion as on June 2006.

"The statistics show that commercial and other agri loan providing banks have improved their recovery side and despite the record disbursement, overall outstanding amount has decline," said a leading banker.

He said that despite the improvement in the recoveries, the outstanding amount was very healthy. As such the banks should adopt some line of action to further reduce the outstanding amount, he added.

Outstanding amount of the five leading commercial banks, including Allied Bank Limited (ABL), Habib Bank Limited (HBL), MCB Bank, National Bank of Pakistan (NBP) and United Bank Limited (UBL), Zarai Taraqiati Bank Limited (ZTBL) and 14 other domestic private banks' outstanding has also increased. The outstanding amount of Punjab Provincial Co-operative Bank Limited (PPCBL) shows decline during the last fiscal.

Five leading commercial banks' agri loans outstanding amount at the end of 2007 fiscal stood at Rs 53.659 billion, out of which ABL has Rs 784 million outstanding agri loan; HBL: Rs 19 billion; MCB Bank: Rs 4.43 billion; NBP: Rs 22.26 billion; and UBL: Rs 7.167 billion as against overall total of Rs 50 billion during 2006.

Unpaid loan of ZBTL stood at Rs 66.775 billion and PPCBL at Rs 8.775 billion, whereas the 14 other commercial banks have outstanding amount of Rs 18 billion at the end of the 2007 fiscal year. It may be mentioned here that for the current fiscal, the central bank has fixed a target of Rs 200 billion-credit disbursement to farmers.

http://www.brecorder.com/index.php?id=597179&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Kalabagh Dam termed 'win-win project' ​*
ISLAMABAD (July 27 2007): Former Chairman Wapda Shamsul Mulk has said that construction of the Kalabagh Dam is a must to overcome the alarming water and power shortage in days to come. Speaking in a PTV programme here on Thursday he said that those who floated the idea of Kalabagh Dam viewed in detail all the associated factors and it was characterised as a win, win project for all.

He said that those who were advocating the construction of small dams in place of Kalabagh dam were actually misguiding the nation. Elaborating the point, he said that there would be a need of constructing 750 small dams instead of Kalabagh only in the areas of water storage adding the small dams were rarely designed for power generation.

He was of the opinion that small dams had their own advantages but they could not be a substitute to mega projects. He said that before the construction of Mangla and Terbela dams, Sindh province was getting 10 million-acre feet during the Rabi season the level, which after the construction of these two reservoirs was raised up to 14.7 maf.

Similarly, he said that with the construction of Kalabagh dam the share of water for that province could further be enhanced. Responding to a question the former WAPDA Chairman said that sustainable pumping capacity of underground water in the country was between 45-50 maf per year adding that limit had already been touched upon.

Further enhancement in the pumping of underground water would be dangerous for the country, he warned. He said in northern parts of the country, the quality of underground water was good but in southern parts that stock was salty.

The ratio of salinity in underground water in Sindh province particularly in Dadu area was double in comparison with seawater, he informed. He said that over pumping of water where its quality was good would attract the saline water to spread underground to fill the gap adding the stock of quality water would thus squeeze.

Responding to another question he said that the world had started to realise the threats of environmental hazards vis-à-vis global warming. He said that that was a big challenge for the entire world hoping the international community would wake up at some stage to save the planet from an imminent destruction.

http://www.brecorder.com/index.php?id=597234&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'Pakistan should target $1 billion horticulture exports by 2012' ​*
ISLAMABAD (July 27 2007): Pakistan should target one billion dollars horticulture exports by 2012 from the current exports of 150 million dollars. A senior advisor to the Competitiveness Support Fund (CSF) said on Thursday in a presentation to the members of the implementation committee on the working of the sub-committees in its first meeting of the Task Force on Finance and Competitiveness of the Horticulture sector.

The meeting was held here under the chairmanship of Ziaur Rehman, Secretary Ministry of Food, Agriculture and Livestock (Minfal). He informed the members that the objective of the implementation committee is to provide the Task Force for Horticulture Finance and Competitiveness with recommendations for a clear management and financial structure for the industry in the context of coherent, well-planned and well-coordinated studies, research activities.

The implementation body consists of the active operational agencies mainly involved with the horticulture industry ie, Pakistan Horticulture Development and Export Board; Trade Development Authority of Pakistan; Minfal/ADB Agribusiness Development and Diversification Project; Agricultural Support Fund; Smeda; Pisdac (Horticulture SWOG) and provincial secretaries of agriculture.

http://www.brecorder.com/index.php?id=597191&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*PM seeks UK help for FTA with EU​*
ISLAMABAD, July 26: Prime Minister Shaukat Aziz hoped on Thursday that Britain would continue to play a supportive role for conclusion of a free trade agreement (FTA) between Pakistan and European Union.

He said this while talking to the British Foreign Secretary David Miliband who called on him at the Prime Minister House.

Mr Aziz underscored the need for continuing cooperation between the two countries at the international level. An important contribution in this regard would be market access for Pakistan in the EU as there was a clear link between security and development, he added.

The British foreign secretary appreciated Pakistan's role and efforts to effectively tackle extremism and militancy and agreed with the need to win hearts and minds.

He extended the assurance that the British government would continue to work for greater market access for Pakistan in the EU.

Appreciating Pakistan's efforts to deal with climate change, he said that as Chair of the G77, Pakistan could play a pivotal role in this regard. He committed to continued cooperation between the two countries in multilateral forums, such as the UN, for achievement of the Millennium Development Goals.

Mr Aziz appreciated the continued interest of private investors from the UK who have taken up opportunities afforded by Pakistan's growing economy and liberal economic policies. He also praised the UK government's economic assistance to Pakistan in earthquake recovery, health and education.

He also emphasised how the Pakistan government's policies are aimed at improving standards of living, social and health sector reforms as well as providing educational opportunities to form a holistic approach in meeting the challenges posed to peace and stability.

http://www.dawn.com/2007/07/27/ebr7.htm


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## Neo

*Reserves​*
KARACHI, July 26: Pakistan's foreign exchange reserves registered an increase of $112 million at $15,757.9 million on July 21, 2007, State Bank of Pakistan (SBP) stated on Thursday.

Of the total reserves the SBP held $13,392 million while $2,365.9 million were held by other banks


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## Neo

*Three infrastructure projects worth Rs 126.95bn approved​*
* Establishment of 22 warehouses and 5,000 utility stores accorded approval

ISLAMABAD: The Central Development Working Party (CDWP) on Thursday accorded concept clearance for three mega infrastructure projects worth Rs 126.955 billion including National Trade Corridor Improvement Project, New Balakot City Development Project and Muzaffarabad City Development Project. The concept clearance of these projects would help the government to raise funds from donor community.

Dr Asad Ali Shah, Member Infrastructure Planning and Development Division briefed the media on decisions taken in the meeting upon conclusion of the CDWP meeting.

He said that concept clearance for National Trade Corridor Improvement Project has been accorded with a total outlay of Rs 94.134 billion and a foreign exchange component (FEC) of Rs 66.814 billion. Concept clearance for two other important projects have been accorded by the CDWP which include Muzaffarabad City Development Project worth Rs 20.820 billion with FEC of Rs 18 billion and New Balakot City Development Project worth 12 billion having a FEC of Rs 7.8 billion. 

He informed the media that the CDWP approved 11 projects worth Rs 2.69 billion and after initial approval recommended for approval 9 projects worth Rs 30.9 billion to the Executive Committee of the National Economic Council (ECNEC) headed by Prime Minister of Pakistan. 

The CDWP also accorded approval to establishment of 22 new warehouses or distribution centers and 5000 new Utility Stores in throughout the country at Union Council level by December 31, 2007. 

In this regard an amount of Rs 1.778 billion has been approved for this project. 

Dr Shah said that Rs 1.23 billion has been approved for the Earthquake Reconstruction Programme in District Swat, which was not included in the reconstruction plan and would help develop damaged infrastructure in Swat. CDWP also approved Rs 1.54 billion for the procurement of heavy machinery and equipment for the earthquake-affected areas of NWFP and AJ&K. 

He said that the CDWP approved procurement of 300 new design high speed bogie wagons for Pakistan Railways with an allocation of Rs 16 billion, and an allocation of Rs 955 million has been approved for pilot project for manufacturing of five 3000 HP diesel electric locomotives in the country. 

The CDWP accorded approval to PC-II worth Rs 59.535 million for technical assistance for Renewable Energy Policy Formulation and Capacity Development of Alternative Energy Development Board.

http://www.dailytimes.com.pk/default.asp?page=2007\07\27\story_27-7-2007_pg5_2


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## Neo

*Confidence of overseas investors enhanced: PM​*
* Increased power generation to meet electricity needs
* Private sectors contribution appreciated

ISLAMABAD: Prime Minister Shaukat Aziz has said that the intended expansion of operations by IPPs demonstrate the confidence of overseas investors in the policies of the present government and has expressed the hope that the increased power generation would help to meet the electricity needs. 

The PM was talking to Vince Harris, Executive Director Asia, International Power Plc who called on him here on Thursday. 

The PM said the private sector is contributing in the governments effort to bridge the gap between demand and supply in the power sector. The government is encouraging investments by the private sector and a level playing field has been provided to the local and foreign investors, he added. 

The PM has said the demand in power sector is growing by 9.5 percent annually mainly due to high growth achieved by the country and the government is engaged in tapping all available sources of energy to keep a balance between the demand and supply.

The PM said the surge in demand of power is mainly due to better living standards, growing middle class, electrification of rural areas and increase in irrigation and industrial demand; all of which necessitates more electricity generation. 

The PM said the government is trying to utilise all sources of energy and maximise output from hydropower and other alternate energy sources including solar, wind, biogas and coal. Under the energy security strategy, the PM said, government will exploit all available resources of commercially viable energy both domestically as well as from abroad. 

The PM said the government is focusing both on enhancing the indigenous capacity as well as on importing gas from the neighbouring countries to meet the energy needs. 

Mr Harris said his group is planning to expand their operations in Pakistan and are exploring several proposals.

He said the rapid pace of growth in Pakistan has impressed him. He appreciated the investment friendly policies of the government and the enabling environment created by it to facilitate the investors.

http://www.dailytimes.com.pk/default.asp?page=2007\07\27\story_27-7-2007_pg5_3


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## Neo

*German firms invitedto Pakistan​*
ISLAMABAD: Federal Minister for Petroleum and Natural Resources Mr Amanullah Khan Jadoon has invited German coal and technology companies to get advantage of Pakistans vibrant energy sector. 

He extended this invitation during his visit to Berlin on the first leg of his tour of Germany at the invitation of the German Government. During his visit to the Hydrogen Fuel project of TOTAL Germany in Berlin, the minister was shown the use of environment friendly hydrogen as an automotive fuel in different applications including direct liquid hydrogen fuel, as hydrogen gas fuel in CNG buses and in fuel cells. This project is run with the help of EU and various European industries. At present 14 hydrogen buses are running as Berlin city buses.

http://www.dailytimes.com.pk/default.asp?page=2007\07\27\story_27-7-2007_pg5_6


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## Neo

*Pakistan's foreign exchange reserves reach record $15.758 billion ​*
ISLAMABAD (July 28 2007): Pakistan's foreign exchange reserves rose to a record 15.758 billion dollars in the week ending on July 21, up 112 million dollars from a week earlier.

According to the State Bank of Pakistan (SBP), reserves held by the SBP rose marginally to 13.392 billion dollars, from 13.389 billion dollars a week earlier, while those held by commercial banks jumped to 2.366 billion dollars from 2.257 billion dollars, private television reported.

Pakistan's foreign exchange reserves have grown steadily over the past few months because of rising foreign investment inflows and higher remittances from Pakistanis abroad.

http://www.brecorder.com/index.php?id=597490&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Education termed key to sustained economic uplift ​*
FAISALABAD (July 28 2007): Education is imperative for the sustained economic development of Pakistan and in this connection US is extending full cooperation to Pakistan, said Ms Amy Holman Consulate for Economic and Commercial Affairs US Embassy.

Addressing the local businessmen at Faisalabad Chamber of Commerce and Industry (FCCI) here on Thursday, she underlined the importance of primary education and vocational training and said that it was imperative to equip 60 percent population of less than 30 years of age with modern skills.

She also stressed the need for linking education with industry and said that US was offering scholarships to Pakistani students. She said that a satellite campus of Howard University would also be established in Islamabad in collaboration with private sector.

She termed Pakistan as reliable economic partner of US and said that US was taking keen interest in the economic development of Pakistan. She also mentioned Reconstruction Opportunity Zones (ROZ) and said that products of these zones would have zero rated access to American markets for 15 years. "It would be the longest concession ever offered to any country," she said and added that in this connection US Congress would approve the bill very soon.

About the prevailing energy crisis in Pakistan, the US Consular said that America was also giving a helping hand to Pakistan. She said that a number of US companies were seriously reviewing proposals to invest in Pakistan in energy sector.

She said that direct US investment has also increased. She said that 44 percent increase was recorded in direct US investment this year as compared to last year.

Brian Hunt Principal Officer US Consulate Lahore said that war against terrorism was in favour of both Pakistan and America. "US was extending economic and technical help to Pakistan to offset the ill impacts of this war," he said and added that US was giving 100 million dollar for reconstruction and military cooperation. He also expressed satisfaction over the development of Faisalabad.

In this connection, he mentioned new industrial estates and said that industries established in these industrial estates would ensure sustained and futuristic growth of this progressing textile city.

He said that US was also co-operating with government college university to develop its education sector and to meet its future needs of manpower. Earlier, Muhammad Ayub Sabir President FCCI in his address of welcome explained some business related problems.

http://www.brecorder.com/index.php?id=597571&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Marble industry ignored in trade policy ​*
KARACHI (July 28 2007): Marble exporters have said that the government had ignored the marble industry in the trade policy 2007-08. Talking to Business Recorder here on Friday, Sanaullah Khan, chairman of All Pakistan Marble Mining Processing Industry & Exporters Association said that the government had announced no relief measures in the trade policy for the marble industry.

Trade policy contains nothing significant for this sector, he added. He said that the industry export stood a $35 million in 2006-07 and achieved more than the government's set target of $30 million, he said, adding that they could exceed the official target but continued electricity failure hampered its growth.

He pointed out that the power outages inflicted $10 million losses on the marble industry. He apprised that inland freight subsidy would not be helpful for marble industry because the proper record of marble and granite transportation from mines to factories and onwards to ports were not made, which would failed this scheme badly.

He observed that majority of miners, industrialists, exporters and transporters were illeterated particularly in Balochistan and Sindh due to which pursuing 25 percent subsidy policy of the government on inland freight would be difficult.

"They do not have any transactional records of any consignment, despite the government's directions to them for written proves of every shipment for subsidy," he said.

He said that the government failed to repair the dilapidated roads in the flooded areas of Balochistan, which had brought about the closure of industrial units for two months. The association has decided to repair roads by their own collective efforts, they are collecting money from their 250 industries of Karachi for this purpose, he added. Sanaullah suggested that Trade Development Authority of Pakistan (TDAP) should provide the marble exporters with export figures on quarterly basis, which would help rectify the correct figures of exports.

He requested for the simplification of the process for acquiring the soft term interest free loans for importing Italian technology machines for marble sector. Export based marble sector should be declared as sale tax free for next three years, he said and added that the Ministry of Commerce should play a positive role in this regard.

He alleged the government had recruited unqualified officers in the Pakistan Stone Development Company, creating problems for marble exporters. He said that despite 90 percent marble export are made from Karachi, the PESDEC arranges its meetings in Islamabad, which was unjustified.

He said that export of marble blocks should be allowed for processing. Marble city project for Karachi has not been finalised despite being approved by the President of Pakistan last year, urging upon the Ministry of Commerce to provide land and basic infrastructure in shape of export processing zone for this sector.

He requested the ministry to include the Karachi based exporters in the list of delegations attending the exhibitions in foreign countries under the umbrella of TDAP and PASDEC. "Karachi exporters are contributing more than any marble sector of country helping country's export grow up annually," he added.

He said that the government should take some measures for providing interest free loans for installing gas generator. He demanded of government to provide gas for this sector.

http://www.brecorder.com/index.php?id=597552&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Cement export to India: PSQCA objects to industry move seeking BIS waiver ​*
KARACHI (July 28 2007): The Pakistan Standards and Quality Control Authority (PSQCA) has taken strong exception to cement industry's move seeking help from authorities in Pakistan to get waiver from the Bureau of Indian Standards (BIS) on import of Pakistani cement in India.

The PSQCA Director General, Dr Abdul Ghaffar Soomro, commenting on the appeal made by All Pakistan Cement Manufacturers Association (ACMA) in this connection, said: "It is very strange that the cement industry of Pakistan is seeking waiver from the procedures required by BIS to issue import authorisation for Pakistani cement."

He said that cement in Pakistan is a mandatory product for certification by PSQCA to meet required standards before sale in the market. "We do not allow sale of even imported cement in Pakistan without certification and testing by PSQCA," he said, and added that imports of cement from China, in the recent past, were also subject to tests which were carried out by PSQCA. The standards are set by PSQCA after due deliberations with the stakeholders and overview by experts from practising profession and academy.

The cement industry of Pakistan, eyeing the Indian market for export of surplus available capacity, finds 'Technical Barriers to Trade' (TBT) coming in the way of their exports. The last consignment of cement exported from Pakistan to India faced difficulty after market sales, the reason being that the landing of goods in India are not allowed without approval of BIS regarding its quality and meeting BIS notified standards.

The cement industry of Pakistan had found Indian market as immediate available market because of demand in India due to its surging development pace racing with other Asian economies. BIS, as the national standards body, represent India on International Organisation of Standards (ISO). Following the framework of TBT agreement of WTO, BIS attempts to base the national standards on international standards as far as possible. The national standardisation body of India, dealing with TBT, has formulated more than 18,000 standards. Of these, about 5,000 are harmonised with international standards. The rest are more or less related to the environment in which the consumer interests are secured.

Qualifying standards equally apply on imports and locally manufactured cement for sale in Indian market. It cannot be sold without certification and continuous monitoring.

Cement industry of Pakistan is well aware of the situation and more sensitive and cognisant of the fact that cement cannot be exported to India without certification by BIS. The sensitiveness and cognisance of the fact became more evident when last exports of cement consignments faced difficulties for both sides.

Sensing that this technical crossover was not possible without qualifying for the standard set by BIS, Pakistan's cement industry has now preferred political course for seeking waiver from BIS tests and certification on imports of cement in India from Pakistan.

The cement manufacturers claim that without political intrusion by President and Prime Minister of Pakistan, Indian government may not allow import of cement bypassing the legislation under which BIS is the national inquiry point in WTO, as well as accountable to standardisation of products in the interest of consumers in India.

The PSQCA Director General said that Pakistan's cement industry has capacity and surplus to enter Indian market through preferential and free trade agreement. In such a situation it needs to strike signing of bilateral or Mutually Recognised Agreements (MRAs) in respect of accepting each other's test results on cement.

Soomro said that Pakistan's cement industry should come forward for compliance of TBT agreement of WTO, a single package deal for country. The contact of cement industry with PSQCA would give reasons to talk with the counterpart, BIS, in India to find some solution in facilitating and in quicker disposal of this technical barrier.

This could be done through either signing of MRA or accepting the test results of each other on extraordinary case basis as it would be cheaper for India to import cement from Pakistan.

He said that the responsibilities of being inquiry point in WTO requires to reply to the queries of the members who are counterpart representative of their countries. Interfacing of PSQCA and BIS could resolve this issue in the way it should be resolved, and not the way the cement industry has devised, he said.

He further said that the best recourse appears to be also available in the TBT, which encourages countries to recognise each other's testing procedures under MRA. WTO also recognises that national circumstances necessitate differences in policies across member countries.

"Fortunately," he said, "we see a lot of ground that BIS will accept our testing procedures as their specifications for portland cement are same vis-à-vis fineness, strength and physical and chemical properties. Both countries seek the same outcome of results based on the specifications of cement notified by PSQCA and BIS. The techniques of measurements may only differ to some extent." He said that PSQCA as enquiry point under WTO has approached BIS on the issue of cement imported in India from Pakistan.

One of the consumer interest group members criticised the approach of cement industry and said that this move was similar to the one which was made by bedlenin exporters in the case of EU. Exporters had preferred political pressure for bailing them out from anti-dumping duty imposed by EU of two digit percentage values.

The arithmetic of accounts did not play its role to solve this problem earlier. Pakistan suffered because the exporters wanted recourse through pressure from the Ministry of Commerce and Government of Pakistan for removal of anti-dumping duty imposed by EU. The anti-dumping duty continued and was reduced only when the cases were investigated.

Another professional conversant with WTO agreements commenting on technical barriers to international trade and role of TBT agreement said that technical specifications for goods represent an increasingly important type of barrier in the global context.

He said that WTO recognises the important contribution of technical measures to the efficient functioning of national economies and encourage their development. Technical regulation, standards and conformity assessment procedures for products, processes and production methods are the present practices in all the countries interested in protecting domestic industry and consumer interest. All products including industrial and agriculture are subject to provisions of TBT agreement, which is again an issue to comply and to prepare.

Another approach to technical harmonisation, he said, has also been suggested in the TBT agreement. Referring to the cement issue, he said that since the portland cement specifications in Pakistan and India are almost similar, except the employed methods of making results, it is the best case for mutual recognition of each other's test results through national inquiry points recognised by WTO. The proper counterpart for PSQCA is BIS.

Pakistan will have another advantage if the BIS accords recognition to Pakistan standards as India serves the other markets in Saarc. In such an event, Pakistani goods from India could reach other markets and that is the way things should work, he said.

Under arrangements Saarc countries have already agreed to have harmonised standard of cement and, for this, Bangladesh's national standard body, Bangladesh Standard & Testing Institute (BSTI),. was assigned the role of convenor.

http://www.brecorder.com/index.php?id=597496&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Pakistan Cables earn Rs 194.276 million profit ​*
KARACHI (July 28 2007): The profit after tax of Pakistan Cables Limited has increased to Rs 194.276 million, translating an earning per share of Rs 13.28 in the year ending June 30 as compared to a PAT of Rs 173.014 million and EPS of Rs 11.82 in the corresponding period of FY06.

The board of directors of the company, in a meeting held here on Friday, recommended a final cash dividend for the year at rupees two per share, ie 20 percent. This is in addition to the interim cash dividend already paid at Rs 1.75 per share ie 17.5 percent.

The board also recommended to issue bonus shares in the proportion of one share for every three shares held ie 33.33 percent. The proposed bonus shares will not be entitled to the final cash dividend. In an information, sent to the Karachi Stock Exchange (KSE), it was stated that the net sales of the company increased to Rs 4,168.938 million in the period under review against Rs 3,028.057 million in the same period previously.

http://www.brecorder.com/index.php?id=597565&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Trade ties will continue to grow with Pakistan: Chinese Consular General ​*
KARACHI (July 27 2007): Despite problems in business and trade dealings with Pakistan, the commercial and trade ties will continue to grow further with the passage of time, Consular General of Republic of China, Chen Shan Min said.

Speaking at a dinner reception hosted by Pakistan Hardware Merchant's Association (PHMA) Sindh Balochistan Chapter in his honour at a local hotel on Thursday, he hoped that both countries' strong efforts would help boost trade ties further. On the occasion, several PHMA members were also present.

Chen observed that Pakistan was on the fast track of economic prosperity, as many commercial, constructional, trading activities had been taking place in Karachi alone, which highlighted the overall aspects of its thriving economy.

"Everything has changed in Karachi, which I witnessed closely on my return to Pakistan, but the friendly sentiments by the Pakistanis are the same as they had been in the past," he observed. "I will surely be successful with your support to enhance the bilateral ties between China and Pakistan," he added.

Acknowledging Pakistan's support to China on diplomatic front in the world, he said that through its support China succeeded to acquire seat in the UN Security Council.

Recalling his past in Pakistan, Chen apprised that Pakistani teachers had taught him English language enabling him to negotiate with English speaking counterparts across the globe.

Chinese Consul General pledged to facilitate the Pakistani business community on their visits to China, which he termed his prime objective. He thanked PHMA's representatives and members for hosting a dinner in his honour and said that it was as if it was hosted for his country.

Chairman PHMA Sindh Balochistan Circle, Aftab Hyder Paliwala acknowledged the Chinese support to Pakistan, saying that it established Gwadar Sea Port in Pakistan, which was the symbol of friendship for both countries.

He highlighted the economic growth and prosperity in China since communist revolution, saying that it was indebted to efforts of the communist leadership of the China.

Military might in the present era will not help any country dominate the world, as it also requires economic growth and stability, which the China has almost acquired, he added.

Earlier, Basit A. Alvi highlighted the PHMA's past and present activities, saying that it had been established in pre-independence era, however after the creation of Pakistan its name was associated with it.

He said that China was the major trading partner of Pakistan, as country was importing over two billion dollars raw material from it, which stood at six percent of overall country's imports.

He said that PHMA's major role was to bridge the gap between the hardware merchants and policy makers in order to evolve better policies. At the end, a PHMA's memento was presented to Chinese Consul General, Chen Shan Min.

http://www.brecorder.com/index.php?id=597168&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Promotion of services exports: economic managers urged to adopt three-pronged strategy​*
ISLAMABAD (July 27 2007): Pakistan should seek elimination of tariff and non-tariff barriers on its export products like textiles goods, leather goods, rice and fruits in other markets in view of emerging trading system.

This was stated by former Chief Economist and Economic Adviser of the government and Chairman of the IPS Working Group on the World Trade Organisation (WTO) Fasih-ud-din Ahmed, in his new publication on 'Emerging Trading System' released by the Institute of Policy Studies.

As Pakistan is following a policy of liberalisation and deregulation and extending concessions in services sector that should not pose any serious problem for the sector, he said. The basic issue is the opening avenue without restrictions to obtain from the trading partners in particular for export of manpower in which it enjoys a relative advantage.

He also suggested the economic managers to adopt three-pronged strategy for the promotion of services exports including enhancing production, productive capacity and quality of services, negotiating with trading partners to secure expanded market access besides strengthening public-private partnership to realise these objectives.

The author said that the present trading system in the WTO Agreements has evolved through successive rounds of multilateral trade negotiations. Pakistan, with its specific export potentials, liberalisation policy and active participation in trade negotiations, including groups of developing countries with similar interests could gain much from the Doha Round. Being an exporter of agricultural products, Pakistan has an interest in liberalisation of trade in agriculture and reduction or elimination of exports' subsidies and domestic support in major markets.

Since it is not providing with any trade distorting export subsidies its position in the negotiations is comfortable. Pakistan is collaborating with other agriculture exporting countries in various forums, such as the Cairns Group and Group of 33, in seeking greater market access and elimination of export subsidies and domestic support measures in the USA, EU and other highly protected markets.

http://www.brecorder.com/index.php?id=597188&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Linking development and poverty reduction ​*
EDITORIAL (July 28 2007): Almost all speakers at a consultancy programme organised by the Sustainable Development Policy Institute (SDPI) in Islamabad the other day on the theme of "Linkages between Trade, Development and Poverty Reduction," stressed the need for creating such linkages.

A prominent economist, Dr A.R. Kemal, argued that trade had the potential to impel human development and reduce poverty, and that this could happen only if trade policies were geared towards achieving the dual objectives. There is no point, he said, in promoting trade for its own sake if it does not result in achieving the ultimate objective of raising the standard of human resource and thereby reducing poverty.

That, in fact, can be said of all areas of business activity. Economic growth and human resource development, of course, are highly desirable goals whether within the context of our domestic economy or foreign trade. Perspectives, though, differ.

Those engaged in trade or some other commercial sector are in it primarily for the sake of profit - the driving force behind all economic activity. But what is equally important is an equitable distribution of the fruits of economic gains.

Trade and human resource potential are closely linked. The quality of human resource was never so important to advancement as it now is with economies becoming more and more knowledge based and innovation driven.

Standards of education, skill training, and health care have always been important to economic as well as social progress. But competitiveness has assumed much greater importance with an increasing demand for innovation.

Sad as it is, in this regard Pakistan lags behind even its regional competitors. A pertinent example relates to the textile industry, which forms the mainstay of our economy and the bulk of exports. When it comes to value addition a country like Bangladesh, whose textile industry heavily depends on cotton imports, is a much better performer in the international market.

Its annual earnings from garment exports of over $9 billion are much more than double of Pakistan's $3.4 billion. It goes without saying that developing human resource is crucial to economic growth. But the big challenge for our policy makers is also to create a linkage with the moral imperative of poverty reduction.

Since the morality involved also demands a price in the form of equitable distribution of resources, those in advantageous positions would rather keep a firm hold on their gains than to exchange some of the gains for moral profits.

Yet no civilised society can let people live in perpetual want and hunger. Also, vast social inequalities breed hate and upheavals. Whether one wants to approach the issue from a moralistic or a utilitarian angle, it is important to create linkages between economic growth, human resource development and poverty reduction.

http://www.brecorder.com/index.php?id=597612&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Aero Asia acquiring aircraft to resume flights *​

KARACHI: The grounded private airliner Aero Asia is near arranging a fresh fleet of aircraft for the resumption of domestic flights in Pakistan, an official of the airline told The News on Friday.

Flight operations of Aero Asia, partly owned by England-based confectionary giant Regal Group, were restricted by the Civil Aviation Authority (CAA) in May this year on concerns that its aircraft were unsafe for passengers.

The Board of Directors will meet in Manchester next week to review and perhaps approve the induction of aircraft that we have cited, said the airline official who asked not to be named. 

First, we will focus on shorter routes and slowly build up the capacity to operate on longer distances.

Initially, three Jetstream-41 turboprop-powered 32 seaters would be operated on secondary routes, which connected the metropolises to smaller cities like Multan, Turbat and Dera Ghazi Khan, he said but did not give an exact date for the start of flights.

The directors, who are expected to meet next Tuesday, will also consider induction of three bigger aircraft, either Airbus 310s or Boeing 737s, for international flights, which will be resumed in the second phase.

However, the draft of a new aviation policy bounds an airline to own four airworthy aircraft to go abroad. Permanent induction of wet-leased aircraft, which are flown by pilots and crew of the lessor, has been disallowed under the policy.

It should be recalled that when CAA slapped restriction on Aero Asia it had three wet-leased aircraft being operated by foreign crew.

Khalil Ahmed, airlines Executive Director, had told a press conference then that problems with the airlines lessors had continued since Regal Group took over the defunct private carrier in June 2006 from the Tabanis.

These problems have reached a stage where we find it difficult to continue operating their (lessors) aircraft till these problems were resolved, he had said.

http://www.thenews.com.pk/daily_detail.asp?id=65981


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## Neo

*Pakistan seeks German help to develop oil shale potential ​* 
ISLAMABAD: Pakistan has sought German assistance in developing its oil shale potential and transfer of clean coal technologies for utilising Thar lignite coal.

Federal Minister for Petroleum and Natural Resources Amanullah Khan Jadoon expressed this desire during his visit to the headquarters of German Institute of Geosciences and Natural Resource (BGR) in Hanover. He led a three-member delegation to Germany to explore avenues of Pak-German cooperation in the energy sector, says a message received here on Friday.

The two sides reviewed the past cooperation between BGR and Pakistani institutions including HDIP, GSP and WAPDA. BGR officials informed Jadoon about their work in earthquake-affected areas of Pakistan for damage prevention and mitigation purposes.

The minister appreciated the contribution of BGR to economic and social development of Pakistan and urged them to continue their good work in the energy sector of Pakistan. 

He said that Pakistan economy is growing at a rate of 7 per cent a year requiring increasing quantities of energy for its socio-economic needs.

In the wake of increasing international oil prices, Pakistan is seriously looking at developing alternatives to hydrocarbons, ie oil and gas. A significant potential of oil shale deposits was identified in Pakistan in Dera Ghazi Khan and adjoining areas by HDIP and BGR in 1990s.

Jadoon invited BGR to work with HDIP to assess the feasibility and potential of utilisation of oil shale resources of Pakistan. The minister also showed keen interest in BGR technology for up-gradation of brown lignite coal into smokeless briquettes which can be used as clean and cheap household fuel in rural and urban areas of Pakistan.

He invited BGR to develop technical cooperation with Pakistani institutions for production of such briquettes. He expressed the hope that this technology would be very useful not only for Pakistan but also for the entire South Asia region.

The Minister toured BGR laboratories in Hanover dealing with petroleum geochemistry and application of satellite remote sensing methods in oil and gas exploration.

The two sides agreed to follow up on the leads identified during the meetings so as to prepare a comprehensive plan for approval of the two governments.

http://www.thenews.com.pk/daily_detail.asp?id=65987


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## Neo

*Food inflation soars to 10.3pc​*
ISLAMABAD, July 27: The food inflation geared to 10.3 per cent during 2006-07 as against 6.9 per cent in the previous year owing to persistent increase in price of essential kitchen items, says an official report of the finance ministry released on Friday.

The food inflation had been fuelled by a combination of global trends in the prices of several commodities and supply and demand driven factors.

It means that the annual inflation had been driven by higher food inflation as opposed to previous year where the major culprit was non-food inflation.

According to the report, globally, higher prices of palm oil and soyabean and dependency on their imports transmitted higher international prices to domestic prices.

It may be pointed out that higher food inflation was now a global phenomenon as many countries around the world for example India, China and Thailand were also experiencing higher food inflation.

In fact, the global food price index surged by 28 per cent during 2006-07 as compared to previous year.

Furthermore, shortfall in domestic production of pulses, rice, chillies, other vegetable items - onion, tomato, etc. and fruits also contributed to the rise in domestic food prices.

The prices of key food items rice, masur and gram pulses, milk powder, vegetable ghee, and cooking oil, red chillies, onions and tomato remained high during the year which contributed to the pick-up in food inflation.

The overall CPI-based inflation declined to 7.0 per cent in June 2007 as against 7.7pc in June 2006. The decline was largely attributed to a sharp reduction in core inflation  non-food non-energy - which dropped from 6.6pc in June 2006 to 5.7pc in June 2007.

Tight monetary policy pursued by the central bank was mainly responsible for this secular decline in core inflation. Non-food inflation also exhibited the same declining trend  it stood at 5.1pc in June 2007 as against 7.5pc in the same month last year.

The average inflation stood at 7.8pc as compared to 7.9pc last year. Non-food inflation declined significantly to 6pc as compared to 8.6pc and most importantly, core inflation averaged 5.9pc in 2006-07 as against an average of 7.5pc in 2005-06.

http://www.dawn.com/2007/07/28/ebr1.htm


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## Neo

*Pakistan eying greater market access for textile​*
ISLAMABAD, July 27: Pakistan is eying greater market access for textile and clothing exports under the proposed modalities of the Non-agriculture Market Access (NAMA), besides providing shelter to the sensitive local industries against the cheap imports, a trade diplomat said on Friday.

It is expected that the proposed modalities would have major beneficial impact on exports, in particular for textiles and clothing. Pakistans export are concentrated in textile and clothing and in two markets US and EU. In US a duty ranging from 8 to 32 per cent is levied whereas in EU the rate of duty is 4 to 12 per cent.

As a result of the proposed reduction in tariffs, in case of EU Pakistani exporters would be paying less than half the current levels or in the range of 3 per cent to 5 per cent or less. In case of the US, reductions would be of much greater magnitude as current tariff levels on clothing are rather high. All tariff levels would be reduced to less than 7 per cent.

According to Pakistans reaction on the draft NAMA modalities, which said the centre-piece of the NAMA paper was that a Swiss formula for cutting industrial tariffs be adopted with coefficients of 8 or 9 for developed countries and a number somewhere in the range of 19 to 23 for developing countries.

Developing countries can use 10 per cent tariff lines (up to 10 per cent of NAMA trade in value terms) for less than formula reduction or 5 per cent tariff lines (with 5 per cent value limit) for keeping tariff lines unbound or out of formula cut.

Pakistan, like many other countries, has two key objectives from these negotiations. These are to seek reduction of tariffs on items of its export markets and to have the flexibility to provide adequate protection for its sensitive industries. Pakistans current applied tariff is 15 per cent as against its bound tariff of 55 per cent.

More than 99 per cent of Pakistans NAMA tariff is bound (majority of lines have a gap of 50 percentage points between applied and bound tariffs). The maximum slab of applied tariff is 25 per cent except for about 250 tariff lines related to auto and allied industry.

Pakistans Counsellor to WTO Dr. Mohammad Saeed said the tariff differential was negatively impacting the biggest sector of Pakistani exports. There are around 5,400 tariff lines in NAMA.

If we opt for 10 per cent flexibilities, we would have around 540 lines to cover our sensitive sectors. The preliminary consultations and calculations have shown that we can cover most of our sensitive sectors in these lines, he said.

Citing an example of car industry, he said, the applied tariff of 100, 120, 150, and 250 in 2001 would need to be bound at 70, 85,120 and 145, respectively, whereas our current applied rates range from 50 to 75. That is also true for most other sensitive sectors.

Second category would be those lines, which are currently at 25 per cent. Almost all such lines are bound at 75 per cent. A representative example would be of home appliances like air conditioners. These would be bound at 15.1 or 17.6 per cent (depending upon the coefficient of 19 or 23).

This means per year reduction of around 6.5 per cent. For first seven years, Pakistan would not be required to reduce any applied tariffs. It would only be reduced in eighth year (around 3.5 per cent) and ninth year (around 6.5 per cent).

Mr Saeed said third category would be those lines, which are bound at the same level as our applied rates are. These are the lines relating only to textile and clothing, which were bound at applied rates to get additional market access from EU in 2001.

The tariff lines bound at 25 per cent would need to be reduced to 10.8 to 12 per cent (using coefficient of 19 and 23, respectively). This would mean a reduction of either less than 1 per cent or max 1.5 per cent per year. Being competitive enough in this sector this is less likely to be of any concern.

The chair of the draft modalities has proposed longer timeframe of seven equal reductions instead of five on some tariff lines to compensate countries, which may be affected because of long-standing preferences. The proposed solution would delay the liberalisation to the extent of 16 tariff lines in US and 23 tariff lines in EU by two years. These include certain tariff lines relating to clothing both in US and EU of export interest to Pakistan.

http://www.dawn.com/2007/07/28/ebr6.htm


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## Neo

*Pakistan likely to achieve cotton production target​*
KARACHI: Pakistan would likely achieve the target of 15 million cotton bales for the crop season 2007-08 as the country has already achieved production of 14.6 million bales a few years back.

The cotton growers said on Friday, the cultivation, which was kicked off from May 1, was getting momentum in cultivation areas of Punjab and Sindh.

A senior trader Ghulam Rabbani said the federal government has fixed the cotton production target at 15 million bales for the new crop. He said the major role in achieving the target is the cultivation of BT type cotton in the country.

BT cotton with having greater resistance value against cotton virus is being cultivated in many parts of cotton sowing areas in Sindh including Sajawal and Tando Adam and in Dera Ghazi Khan, Dunyapur and areas adjoining river belts in Punjab as this variety needs large quantity of water.

He said BT cotton requires far less pesticide application and is more productive than conventional varieties. He said National Institute of Biotechnology and Genetic Engineering (NIBGE), Faisalabad has developed IRFH-901 and Centre of Excellence for Micro Biology (CEMB) has evolved CIM-482 BT seed varieties. 

He said around 45 percent of the total cultivation in the country is BT type cotton. Nearly 90 percent of this type is cultivated in Sindh and about 30 percent is cultivated in Punjab.

He said irrigation water is abundantly available in the canals and the cultivation is continuing at full pace in the cotton belts of Punjab and Sindh. Dry weather conditions are conducive for the cotton plant and the country would be able to harvest a bumper crop next crop season, he added.

He said September is crucial for the cotton crop as it bears fruit these days, therefore it is important for the cotton growers to handle the cotton virus attacks with utmost care and help of agricultural scientists.

He said this variety first introduced in Australia, then it comes to India, where Dupont got rights and allocated around Rs 24 million for research and development in order to make this variety, environmental friendly. He said Indias cotton variety, Shanker 6 is the outcome of the research, a division of Bayer Pharmaceutical, and Germany also got rights for Fibre Max variety of cotton.

He said the federal government has fixed cotton sowing target at 8.031 million acres, 6.326 million acres for Punjab and 1.581 million acres for Sindh. NWFP and Balochistan will share the remaining 0.14 million area for cotton production. He said Punjab is likely to produce over 11 million bales while Sindh will produce three million bales. 

He said in Punjab, cotton would be sown on 6.326 million acres and Sindh cultivate cotton on 1.581 million acres. NWFP and Balochistan will share the remaining 0.14 million area for cotton production in 2007-08.

He said the cotton researchers have recommended several seed varieties, which need less irrigation and their produce, is of better quality. They are MNH-786, NIAB-111, CIM-496, 543, 473 and BH-160. He said two institutes of the Pakistan Atomic Energy Commission (PAEC), NIBGE and CEMB, Lahore are working on the project.

He said the growers also followed the instruction of spraying weeds standing in the fields with effective weedicides in order to fight the mealy bug pest, which attacks the tiny cotton plants.

He said the growers followed the instructions of agriculture scientists as they used one litre of chloropyriphos mixed with 100 litres of water to spray on the crop besides minimise the use of water while fighting spotted and American bollworm.

http://www.dailytimes.com.pk/default.asp?page=2007\07\28\story_28-7-2007_pg5_1


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## Neo

*100% equity participation for foreign insurance firms​*
ISLAMABAD: The Ministry of Commerce has allowed 100 percent equity participation to foreign companies to undertake life and non-life insurance business in Pakistan. 

In this regard, the commerce ministry on Friday issued Order No. 1(43)/2007, stating that in continuation to ministrys Public Notice Nos. 1(38)/89-Ins.I, dated 21st August, 1990 and 1(19)/92-Ins-I dated 24th September, 1993, the federal government has decided to allow 100 percent equity participation to foreign companies to undertake life/non-life insurance business in Pakistan. But the companies will be subject to fulfill some conditions. 

Foreign companies shall be required to bring in a minimum of $ four million in foreign exchange; out of which not less than $ two million should come from abroad. 

There will be no restriction on the number of branches and no restriction of foreign companies as to whom they shall employ. They shall be given national treatment in extending all the facilities to them as enjoyed by local companies.

All other conditions, under Insurance Ordinance 2000 and instructions issued there under from time to time will apply. 

New insurance policy had sought that accident and health business of general insurance companies be exempted from levy of both federal excise duty of five percent and federal insurance fee of one percent. However, the federal government, in the budget 2007-08, has allowed exemption from five percent federal excise duty to the health insurance sector to expand the health insurance sector in the country. 

The participation of foreign insurance companies in the life and non-life insurance sector would help broadening of base of the insurance services to the local as well as foreign investors. 

New insurance policy aims at increasing penetration, removing impediments to insurance industrys development and outlining a more rational role of the public sector in line with international practices. The percentage of life insurance in the country, which presently is 0.28 percent, is among the lowest in the region and the immediate goal has been set at to enhance it to one percent in a period of three years. Under the new insurance policy insurance cover against terrorism, crop insurance, cover against earthquake and micro insurance facilities would available in the country. An analysis carried out by the Ministry of Commerce indicates that insurance industry had failed to penetrate rural areas and provide insurance cover to socially deprived people. In order to address this, two initiatives would be taken. Firstly group insurance would be made compulsory, so that all workers would be compulsorily insured under the labor laws. 

http://www.dailytimes.com.pk/default.asp?page=2007\07\28\story_28-7-2007_pg5_2


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## Neo

*Total foreign investment rises to $8.42 billion*

ISLAMABAD: Total foreign investment reached 5.9 percent of GDP during 2006-07 as against 3.5 percent of GDP in the same period last year 2005-06, said a report released by the Investors Relations Desk, Debt Office, Ministry of Finance on Friday.

Total foreign investment reached at an all time high in the countrys history and amounted to $8.42 billion or 5.9 percent of GDP during this period as against $4.49 billion or 3.5 percent of GDP in the same period last year. When viewed against last years figures for the same period the current performance appears to present a totally different picture. Total investment has registered an astounding growth of 87.6 percent over an already high base of last year. 

Further break down of foreign investment shows that foreign private investment (a major component of overall foreign investment) amounted to $6.94 billion against last years figure of $3.87 billion  an increase of 79.3 percent. Similarly, foreign direct investment amounted to $5.12 billion or 3.6 percent of GDP in the fiscal year 2006-07 as against $3.52 billion or 2.8 percent of GDP in the same period last year, showing an increase of 45.6 percent. Portfolio investment, on the other hand, stood at $1.82 billion or 1.3 percent of GDP (which include GDRs of MCB Bank and UBL Bank amounting to $150 million and $559.7 million, respectively) as against $0.35 billion last year  a staggering increase of 417.9 percent.

http://www.dailytimes.com.pk/default.asp?page=2007\07\28\story_28-7-2007_pg5_7


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## Neo

*EU ban on seafood export costs $20m​*
KARACHI: The suspension of seafood export to European Union (EU) has deprived the country of over $20 million during the current financial year.

If the ban is not lifted, the country will suffer a loss of $80 million in foreign exchange cause closure of many processing plants would create problems for employment and hundreds of thousands of fishermen will be deprived of their livelihood, Pakistan Seafood Industries Association (PSIA) warned.

Speaking at a press conference Chairman PSIA Hanif Khan accompanied by Vice Chairman PSIA Faisal Iftikhar and others said that industry has suffered heavy losses and lost potential buyers due to this ban. They said that real adverse impact of the suspension would appear in peak season like August, September and October when there are bulk landings of brown shrimp and kiddy shrimp, which have no market other than Europe. In absence of approval to export to Europe, the processors and exporters will not be able to buy these items from the market, they added.

They declared that seafood industry has reached on a point of no return due to the negligence and unsuitable approach by the concerned government departments. Marine Fisheries Department (MFD) had suspended the approval of all eleven processing plants for export to EU for small deficiencies, which have since been removed and compliance report have been submitted to the MFD but no sign of revival of export is in sight before the season starts from August.

In fact, most of the deficiencies are related to MFD itself, conditions in harbour and on board the fishing vessels for which the responsibility lies with the MFD, they noted. Mr Khan described the action by MFD only against the processing plants is unfair and unjustified and said that traceability and cold chain are new issues and they have been implemented when auctioning/processing starts.

He rejected the impression by MFD that the ban has been imposed by EU as the final report of EU says non compliant establishments should be suspended from the list of EU approved establishments until such time as deficiencies have been corrected. Mr Iftikhar said that the problem lies with the concerned departments which are unable to discharge their responsibilities as the maintaining hygienic conditions is the job of the provincial departments, however seafood processing plants had to suffer for the faults of other stakeholders. It is on part of Fishermen Cooperative Society (FCS) and Karachi Fish Harbour Authority (KFHA) to maintain cleanliness in the entire harbour and upgrade fishing fleet. Our industry has always to suffer due fault at their end, he said. Association representatives said that is seems that MFD is unable to understand the difficulty of the industry and the importance of the issue as the export of seafood stands fourth after textile, rice and leather, but no government authority is bothered to come to its rescue. 

http://www.dailytimes.com.pk/default.asp?page=2007\07\28\story_28-7-2007_pg5_8


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## Neo

*Rs eight billion Wapda Sukuk bond deal signed: three power projects to be financed ​*
LAHORE (July 29 2007): An agreement between Wapda Second Sukuk Company Limited and lead arrangers National Bank of Pakistan, Standard Chartered Bank and Dubai Islamic Bank Pakistan was signed at Wapda House here on Saturday. The ceremony was witnessed by Wapda Chairman Tariq Hameed and other senior officials.

Member Wapda Abdul Qadeer Chaudhary, National Bank of Pakistan (NBP) Senior Executive Vice President Masood Karim Sheikh, Dubai Islamic Bank (DIB) Country Business Manager Zafar Masood and Standard Chartered Bank Pakistan Head of Client Relations Imran Ahad signed the agreement on behalf of their respective organisations.

Wapda Chairman Tariq Hameed told media men at the agreement signing ceremony: "This is the second issue being launched by Wapda to raise a sum of Rs 8 billion required for three projects. The first Sukuk bond was launched for the Mangla project."

He expressed hope that the Sukuk issue would be beneficial for both Wapda and the banks acting as lead arrangers. Tariq said that total tenure period of the issue was ten years, with a grace period of four years. The projects, to be financed by raising this bond, are Khan Khwar (72 megawatt), Allai Khwar (121 megawatt) and Duber Khwar (130 megawatt). Total cost of these projects is Rs 13.449 billion.

He said that individuals, institutions, trusts, employees' funds, corporate bodies including Islamic banks, modarabas, insurance companies and non-Islamic banking financial institutions can purchase the certificates. Sukuk is the plural of an Arabic word 'Sek', which means 'shariah compliant financial instrument'.

http://www.brecorder.com/index.php?id=597874&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Dispute over estimated gas reserves: Ministry locked horns with Planning Commission ​*
ISLAMABAD (July 29 2007): The Ministry of Petroleum and Natural Resources has denied the allegations of Planning Commission that the former did not obtain independent view on the estimated reserves of Manzalai field, located at Gurjuri area in District Karak (NWFP).

The joint venture comprising MOL Pakistan Oil and Gas (operator 10 percent, OGDCL 30 percent, PPL 30 percent, POL 30 percent and Government Holdings Limited 5 percent, had discovered gas and condensate at Manzalai-I.

The Economic Co-ordination Committee (ECC) of the Cabinet on June 17, 2004 has already allocated 215 mmcfd gas from this field to SNGPL. After undertaking further appraisal through extended well test (EWT), the MOL firmed up gas reserves on the basis of which full field development plan has been planned according to which the field is capable of producing at plateau rate of 340 mmcfd gas.

According to official documents seen by Business Recorder, when the petroleum ministry had sought the comments of the Planning Commission on a summary regarding allocation of additional gas from this field to SNGPL, it doubted gas estimates.

"In the summary, the gas production of Manzalai Gas Field has been estimated by the MOL and no independent view has been solicited," the Planning Commission observed.

According to the Planning Commission, in the 'Energy Security Action Plan' it was decided that Pakistan must develop capability of determining the size of underground reserves and not permit any unscrupulous element to under estimate and inflict the losses to national exchequer.

Therefore, the ministry had been advised to develop reserves estimate capabilities so that production profile could be established. However, the petroleum ministry is of the view that in the light of 'Energy Security Action Plan' it adopted three-pronged strategy for reserve assessment in a prudent manner which is as under:

(i) The OGDCL has been asked to induct reservoir specialist capable of such assessments.

(ii) The petroleum ministry has started taking third party reserve certification from experts of international repute before declaration of commercially of fields.

(iii) The Petroleum Concessions director general is also trying to develop in house skill for reservoir estimation through capacity building program.

The ministry also claimed that development plan of Manzalai field was based on an independent third party reserves certification by the Exploration Consultants of UK besides JV partners in the block, including the OGDCL which were actively involved in the process.

It is pertinent to note that the ECC had approved the proposal of the ministry in which it was suggested that 125-mmcfd additional gas from Manzalai Gas Field be placed at the disposal of SNGPL.

http://www.brecorder.com/index.php?id=597857&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*2006-07 textile products exports up by 5.27 percent ​* 
ISLAMABAD (July 29 2007): Exports of textile products amounted to $10.757 billion in 2006-07, up by 5.27 percent from $10.218 billion of previous year. Official figures released here by Federal Bureau of Statistics (FBS) on Saturday showed that export of raw cotton, cotton cloth and bedwear declined, while a marginal growth was witnessed in other products during the year.

On monthly basis, the exports of textile products witnessed a negative growth of 3.13 percent to $931.140 million in June from $961.221 million over May. The data showed that raw cotton export was down by 53.03 percent in June against May; cotton cloth 21.42 percent, cotton corded or boomed 87.57 percent, bedwear 19 percent, towels 17.62 percent, and tents, canvas and tarpaulin 30.76 percent.

Annual export data for 2006-07 showed that export of cotton yarn witnessed a growth of 3.10 percent, cotton corded or combed 24.33 percent, yarn other than cotton yarn 82.92 percent, knitwear 12.17 percent, towels 1.25 percent, tents, canvas and tarpaulin 77.53 percent, readymade garments 5.32 percent, artificial silk and synthetic textile 114.55 percent, made-up articles excluding towels bed wear 13.40 percent, and other textile material 16.53 percent.

Statistics showed that export of raw cotton declined 25.58 percent last year from 68.151 million in 2006 to 50.720 million in 2007. Export of cotton cloth declined by 4.30 percent from $2.108 million in 2006 to 2.017 million in 2207 while export of bedwear declined from $2.038 million in 2006 to 1.9558 million in 2007.

According to monthly export data, the export of cotton corded or combed declined from $330 million in May 2007 to $115 million in June 2007 and cotton cloth from 155.839 million to $144.427 million.

http://www.brecorder.com/index.php?id=597866&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*SPI up by 7.41 percent year-on-year basis ​*
ISLAMABAD (July 29 2007): The weekly-based SPI inflation was up 7.41 percent over the same period of last year, hitting hard the low income group, as on week ending July 26, it remained 9.85 percent for low income group and 5.03 percent for those earning over Rs 12,000 per month.

Moreover, there was a perpetual rise in the prices of core food items such as wheat, tomatoes, pulses, oil and vegetable ghee. The statistics released by Federal Board of Statistic (FBS) showed Sensitive Price Indicator (SPI) up by 7.40 percent compared to the same period of last year, with 0.23 percent surge in a week. The SPI inflation was recorded 155.79 on July 26 against 154.75 on June 28.

The inflation was 9.41 per cent during the week under review for the income group of Rs 3000 to Rs 5000 and 8.21 for those having income between Rs 5000 to Rs 12,000.

The SPI bulletin, based on data collected for about 53 items from 17 centres showed that 17 items registered increase, 11 declined, while price of 25 items remained unchanged.

Further analysis of data showed that 20 items were dearer by double-digit over last year. These included wheat flour 13.20 percent, masoor pulse washed 26.20 percent, gram pulse washed 10.66 percent, rice Irri-39.37 percent, vegetable ghee loose 42.38 percent, milk powder 21.59 percent, vegetable ghee (tin) 27.34 percent, cooking oil (tin) 27.17 percent, match box 26.15 percent.

Among these items, in a short span of one week, the prices of tomatoes increased by 29.82 percent per kg, masoor pulse washed 1.40 percent, mustard oil 0.69 percent, wheat flour 0.08 percent, gram pulse washed 0.59 percent, and washing soap 0.69 percent.

The average price of cement in various cities remained around Rs 232.25 per bag. Cement price was recorded Rs 238 in Rawalpindi, Rs 240 in Islamabad, Rs 215 in Lahore, Rs 245 in Karachi, Rs 235 in Hyderabad, Rs 213 in Peshawar and Rs 270 per bag in Quetta.

http://www.brecorder.com/index.php?id=597869&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Banks recover Rs 156 billion agriculture loans ​*
KARACHI (July 29 2007): Banks have recovered Rs 156 billion agriculture credit, up by 29 percent during 2007 as compared to Rs 120 billion in the 2006 fiscal year. On the instruction of the State Bank of Pakistan (SBP), the banks stepped up agri loan disbursement, which is up by 24 percent during the 2007 fiscal.

"Bumper production of different crops has contributed a major role in the increase of agri credit recovery, while commercial and specialised banks also took some measures to raise the recovery," said a banker.

The statistics show that despite the record disbursement of Rs 168 billion, overall outstanding amount has declined by two percent, as the commercial and other agri loan provider banks have improved their recovery, they added.

The central bank statistics, made available to Business Recorder, showed that during the 2007 fiscal, overall recovery of agriculture loan had gone up by Rs 35.542 billion to Rs 156.136 billion during the 2007 fiscal, as compared to Rs 120.594 billion during the 2006 fiscal year.

Five leading commercial banks, including Allied Bank Limited (ABL), Habib Bank Limited (HBL), MCB Bank, National Bank of Pakistan (NBP) and United Bank Limited (UBL) have contributed major share in the overall recovery, as they have recovered Rs 76.77 billion during the 2007 fiscal as compared to Rs 56 billion in 2006 fiscal, depicting an increase of Rs 20.73 billion during the last fiscal.

Loan recovery by the country's largest specialised bank for agriculture loans, Zarai Taraqiati Bank Limited (ZTBL) has increased by Rs 7.82 billion to Rs 54.08 billion during 2007 as against the recovery of Rs 46.25 billion during the 2006 fiscal year.

Agriculture loans recovery of Punjab Provincial Co-operative Bank Limited (PPCBL) stood at Rs 6.48 billion up by Rs 493 million from Rs 5.99 billion. In addition, other 14 domestic private banks have recovered Rs 18.797 billion during the last fiscal as compared to 12.307 billion, depicting an increase of Rs 6.94 billion during the 2007 fiscal.

http://www.brecorder.com/index.php?id=597863&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Petroleum, machinery and food dominate $30.540 billion imports ​*
KARACHI (July 29 2007): Petroleum, machinery, food, agriculture and chemical, metals and transport groups are the heavy weights in country's more than $30.540 billion imports during fiscal year 2006-07. According to the data of Pakistan's external trade compiled by the Federal Bureau of Statistics released here on Saturday.

Import recorded a rise of 6.85 percent during July-June 2006-07 over last year's $28.580 billion. Exports also recorded a minimal rise of 3.40 percent to $17.011 billion during July-June 2006-07 compared to last year's $16.451 billion.

The yawning trade gap has touched $13.528 billion due to rising imports during the last fiscal year. Pakistan imported petroleum products worth $7.339 billion during July-June of 2006-07 including $3.733 billion of petroleum items and $3.606 crude oil.

Machinery imports stood second in the list amounting to $6.605 billion, followed by import of fertilisers, pesticides, plastic goods and medicines worth $4.385 billion during the period under review. Palm oil, sugar, pulses and tea were dominant in food group imports which was valued at $2.711 billion during July-June of last fiscal year.

Similarly, iron and steel and its scrap secured lion share in the import of metal group. Transport group imports stood at $2.364 billion during last fiscal. Textile group imports surged by 21.28 percent to $1.556 billion during the period under review.

Exports during June, 2007 amounted to Rs 94.436 billion as against Rs 97.457 billion in May, 2007 and Rs 90.849 billion during June, 2006 showing a decrease of 3.10 percent over May, 2007 but an increase of 3.95 percent over June, 2006. In terms of dollars the exports decreased by 3.03 percent in June, 2007 $1.557 billion when compared with May, 2007 $1.606 billion but increased by 3.15 percent as compared to June, 2006 $1.510 billion.

Exports during July-June, 2006-2007 totalled Rs 1.031 trillion as against Rs 984.841 billion during the corresponding period of last year showing an increase of 4.73 percent. Imports into Pakistan during June, 2007 amounted to Rs 169.551 billion as against Rs 166.867 billion in May, 2007 and Rs 179.659 billion during June, 2006 showing an increase of 1.61 percent over May, 2007 but a decrease of 5.63 percent over June, 2006.

In terms of dollars the imports increased by 1.69 percent in June, 2007 $2.797 billion as compared to May, 2007 $2.750 billion but decrease by 6.35 percent as compared to June, 2006 $2.986 billion. Imports during July-June, 2006-2007 totalled Rs 1.851 trillion as against Rs 1.711 trillion during the corresponding period of last year showing an increase of 8.22 percent.

Based on the provisional figures of imports and exports the balance of trade in June, 2007 was (-) 75,115 million in terms of Rupees and (-)1,239,006000 in US dollars. The balance of trade figures cumulative from July-June, 2006-2007 were (-) 820,388 million in terms of Rupees and (-)13,528,762000 in US dollars.

http://www.brecorder.com/index.php?id=597891&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Grand Hyatt Hotel construction: BNP signs contract with Chinese company ​*
ISLAMABAD (July 29 2007): A leading Pakistani developer, BNP (Pvt), Limited, part of Bismillah Group, has signed a contract worth millions of dollars with the largest Chinese construction company, China State Construction Engineering Company Corporation, for the construction of 380 room Grand Hyatt hotel, service apartments, office complex and a retail village adjacent to Convention Centre.

Explaining the details at the signing ceremony of the contract at a local hotel Jeff Evans, the Project Director said that the main tower would be 45-storey high, the tallest building in Islamabad. This tower would house the world-renowned 5-star Grand Hyatt hotel. Each of the other two towers would be 23 storey high and will have luxury apartments including pent houses and first rate office space. Besides, retail outlet, housing world brands, would also be developed which is primarily meant to serve Islamabad and adjoining areas.

http://www.brecorder.com/index.php?id=597905&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Exploring investment opportunities: German high-level trade team coming in November ​*
LAHORE (July 29 2007): A high-level business delegation of the German Near and Middle East Association, Germany's oldest organisation for bilateral economic relations between Germany and countries of the Near and Middle East region will visit Pakistan in November 2007 to explore business and investment opportunities.

This was stated by German Near and Middle East Association Chief Executive Ms Helene Rang, while addressing eight-member LCCI delegation to Germany. Helene Rang informed the LCCI delegation, being led by LCCI Executive Committee Member Kashif Younas Mehr that besides bilateral trade opportunities, both Pakistan and Germany have huge potential for investment in various sectors and this potential could be tapped with a little sector-specific effort.

The LCCI delegation, comprising Mian Misbah-ur-Rehman, Mian Muzaffar Ali, Mohammad Ayub, Mian Shahid Raza, Hakim Ali Bhatti, Faisal Saud and Bilal Arshad Bajwa, also had meetings with German Association of small and Medium-sized Enterprises and the Foreign Trade Department of Chamber of Commerce, Berlin state.

A large number of businessmen and representatives of various German industries attended the meeting. The presence of German businessmen was enough to make the point that they want to do business with their Pakistani counterparts.

Both sides expressed their satisfaction over the overall outcome of the visit since direct business to business contacts are very essential for exploring new opportunities and establishing long-term contacts with German economy. There was a general agreement that there is a great potential for further growth, especially in imports into Germany.

Earlier, Ms Barbara Bonrath Kaster, Head of Asia, Americas, Western Europe division, gave a detailed briefing to LCCI delegation on German Association of Small and Medium-sized business and stressed the need for chalking out a joint strategy to promote business-to-business interactions.

Speaking on the occasion, Kashif Younas Mehar said that a lot of progress could be made on trade front through identification of new tradable items and this is possible through the active engagement of the chambers of commerce and industry of the two sides and by arranging single country exhibitions.

The participation of Pakistani exporters in the international trade fairs in Germany and vice versa can also expand trade between the two countries. He said Pakistan offers good scope for investors in information technology, telecommunication, infrastructure, textiles (value addition), oil & gas, water & power, food & food processing, SMEs, engineering, tourism & services. We are particularly keen in German investments that could provide transfer of technology to Pakistan.

Mehar said that Pakistan is energy deficient and cannot sustain 7.8 percent GDP growth rate without meeting its energy needs. He urged the German businessmen to invest in energy projects in the designated industrial parks.

He said the Lahore Chamber of Commerce is particularly keen in German investments that could provide transfer of technology to Pakistan and help Pakistan become a knowledge-based economy. The LCCI delegation also visited KaDeWe, a major department store in Berlin and appreciated the way the goods were put on display.

http://www.brecorder.com/index.php?id=597971&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Borrowing only for funding main projects, reforms: Prime Minister ​*
ISLAMABAD (July 29 2007): Prime Minister Shaukat Aziz on Saturday said that ongoing reforms are essential for economic progress and prosperity. He was talking to his financial team members including Advisor to the Prime Minister on Finance Dr Salman Shah, Minister of State for Finance Omar Ayub Khan.

New Secretary Finance Ahmad Waqar and Special Secretary Finance Dr Ashfaq Hassan Khan in a meeting at the Prime Minister's House here on Saturday afternoon. The Prime Minister said that the economic turnaround achieved by Pakistan is largely due to the prudent structural reforms in every facet of economic activity that has created opportunities, jobs and growth.

He said that some examples in this regard are the telecom sector, financial services, agriculture, oil and gas, that have resulted in increased investment, creation of large number of jobs and emergence of a growing middle class, which is fuelling demands.

Shaukat Aziz said "consistency and continuity of policies will ensure that the benefits we have achieved so far will increase even further, both in creating opportunities and enabling equitable growth so that all segments or society see an improvement in their quality of life".

The Prime Minister said that much more needs to be done that will require continued efforts by all ministries and departments including the very crucial role by the Ministry of Finance.

He said that the Finance Ministry has to re-orient and modernise its working so that available resources are utilised in a prudent manner and the processes are made simple.

The Prime Minister also appreciated the fact that Pakistan is no longer under any IMF programme and is becoming a more self-reliant economy. He said "while we are borrowing for funding important projects and reforms, we are doing so prudently and we are improving our overall debt and economic indicators."

Shaukat Aziz also appreciated the working of the Debt Management Unit and its interaction with investors all over the world. He also appreciated the Unit's efforts to update the Bond and Equity investors on latest developments in Pakistan and keeping them abreast of changing developments in the country.

Dr Salman Shah and his team updated the Prime Minister on the latest economic indicators as well as the revenue and expenditure patterns and the various initiatives being undertaken to improve the functioning of the Ministry of Finance.

The Prime Minister appreciated these measures and assured the Ministry of his full support. He congratulated the new Finance Secretary Ahmed Waqar and Special Secretary Finance Dr Ashfaq Hassan Khan on their appointment to their new assignments.

http://www.brecorder.com/index.php?id=597855&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Trade ties with Mauritius to be consolidated: minister ​*
ISLAMABAD (July 29 2007): Commerce Minister Humayun Akhtar Khan has said that the bilateral relations between Pakistan and Mauritius would be further consolidated with the signing of Preferential Trade Agreement (PTA).

He stated this at a reception held to mark the Sixth Round of Joint Working Group (JWG) on Trade and Investment established between two brotherly countries of Pakistan and Mauritius at Port Louis on July 27 and 28.

Humayun Akhtar was received at the SSR International Airport by Minister for Foreign Affairs Madan Dulloo, International Trade and Co-operation, High Commissioner of Pakistan to Mauritius. Syed Hasan Javed and other high officials of International Trade and Cooperation.

The Pakistani side was led by Additional Secretary, Ministry of Commerce Nasim Qureshi whereas the Pakistan delegation was included Jamshed Khan, Joint Secretary, Ministry of Commerce, Khalid Mahmud, Chief (Export) Central Board of Revenue, Mrs Raheela Tajwar, Deputy Secretary, Ministry of Commerce, Tariq Nawaz Janjua, Deputy Secretary, Ministry of Textile, Muhammad Qazafi Rind, Section Officer, Ministry of Commerce and Azhar Saeed Butt, Vice President, Federation of Pakistan Chambers of Commerce and Industry (FPCCI).

The Mauritius Broadcasting Corporation (MBC) and journalists from all leading newspapers were present at the SSR International Airport. All the leading newspaper, have given wide coverage to this highly significant visit of the Federal Commerce Minister. Press clippings along with their unofficial English translations are being sent to all the relevant quarters by this Mission.

Tauritian side was led by Anand P. Neewoor, Secretary for Foreign Affairs who had led the Mauritian delegation for the Fifth Session of the JWG which took place in Islamabad 11-13 January, 2007.

The Mauritian side comprised of Asad Bhuglah, Director Trade Policy, Amedee Darga, Chairman Enterprise Mauritius (EM), K. Dhabee, Solicitor General of the Attorney General's Office, representatives from the Customs Department, Ministry of Finance and other relevant Ministries.

Anand Neewoor in his opening remarks stated that the signing of the PTA signifies of the qualitative upgradation of the bilateral relations between Pakistan and Mauritius. Nasim Qureshi, in his opening remarks said that the early conclusion of the PTA negotiations and the eventual signing of PTA underlines the goodwill that exists between the two countries.

Before start of the formal proceedings of the 6th round, the Pakistani delegation led by Nasim Qureshi called on the Minister of Foreign Affairs International Trade and Co-operation Madan Dulloo.

The minister appreciated the work of technical experts of the PTA from both the sides and expressed the hope that bilateral relations between Pakistan and Mauritius will be further cemented with the signing of the PTA on Monday, July 30, by the two ministers.

The Minister for Commerce is expected to pay courtesy calls on the Prime Minister of Mauritius, Dr Navin Ramgoolam, Deputy Prime Minister, Dr Rasheed Beebeejaun and other high political dignitaries on Monday, July 30.

Commerce minister will also unveil the name plate of the Quaid-e-Azam Mohammad Ali Jinnah street in Plaine Verte, Port Louis in the presence of Asraf Dullul, Minister of Housing and Lands, James Burty David, Minister for Local Government and Hon. Reza Issack, Lord Mayor of Port Louis.

http://www.brecorder.com/index.php?id=597984&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Uplift schemes in Balochistan being implemented ​*
QUETTA (July 29 2007): Provincial General Secretary Pakistan Muslim League, Saifuddin Kibzai on Saturday said the government was implementing development schemes worth billions of rupees in the province. Taking to a delegation here, he said the government was taking effective measures to resolve problems of the people.

The government would take all possible steps to ensure timely rehabilitation of flood victims, he added.

http://www.brecorder.com/index.php?id=598003&currPageNo=1&query=&search=&term=&supDate=


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## Neo

* Rain and flood damage ​* 
Agri sector suffers Rs14 billion losses

ISLAMABAD: Besides numerous causalities, the rains and floods in Balochistan and Sindh have damaged livestock and crops worth Rs14 billion, reveals an official report made available with The News on Saturday.

Out of the total estimated loss of Rs14 billion, Balochistan suffered a loss of Rs13 billion to livestock, crops, orchards, watercourses, embankments and erosion of land, the report said.

In Sindh, the total damages to crops and livestock were estimated at Rs1.18 billion while crop damages in NWFP stood at Rs32 million. Similarly, torrential rains in Punjab completely devastated 15,825 acres of cotton.

According to estimates released in the official report, the Rs13 billion losses suffered in Balochistan include Rs10.68 billion damages to crops and irrigation courses, Rs3.26 billion worth of damage to cultivated area of 1,08,857 hectares, and Rs1.33 billion losses to orchards, Rs2.95 billion to watercourses and erosion of agriculture land was valued at Rs3.13 billion, the report added.

Similarly, livestock damages in Balochistan were estimated at Rs2.32 billion, as 0.9 million livestock were lost in the rains and floods in the province.

The number of heads that lost in the floods includes buffaloes (5,188), cattle (26,997), sheep (1,41,525), goats (1,22,042), horses (20), camel (2,690), donkeys (8,383) and poultry (6,04,589).

The calamity struck districts of Balochistan include Turbat, Gwadar, Panjgur, Lasbela, Khuzdar, Awaran, Kalat, Mastung, Kharan, Washuk, Nushki, Chagai, Bolan, Sibbi, Jhal Magsi, Nasirabad and Jaffarabad.

The people of Balochistan heavily depend on livestock for their livelihood but nearly one million heads were washed away in the heavy rains and floods adding misery to the woes of people already living much below the poverty line.

In Sindh losses to cash crops of cotton and rice were estimated at Rs231 million and Rs384 million respectively whereas loss of livestock stood at Rs563 million. The damages were reported in districts of Badin, Thatta, Dadu and Qambar Shahdad kot.

In NWFP the crop damages was reported at Rs32 million, 50 per cent of Tobacco crop worth Rs24 million was damaged while other crops like maize, vegetables, sugarcane, cotton, mellon, mung and sorghum were also damaged. Losses were reported in districts of Charsadda, Buner, D I Khan, Mansehra and Noshera.

Nearly 15,825 acres of cotton crop was lost due to rain and floods in Punjab while no loss of livestock was reported in Punjab.

http://www.thenews.com.pk/daily_detail.asp?id=66105


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## Neo

* Coal-fired power plants ​* 
SCA suggests lucrative tariff to woo investors

KARACHI: The Sindh Coal Authority (SCA) has asked the federal government to fix an upfront tariff of at least 8 cents per kilowatt hour (kWh) for energy produced by coal-fired power plants, an official told The News on Saturday.

The benchmark price will help woo investors toward utilisation of an estimated 175.5 billion tonnes of Thar coal reserves, located 380km east from here in Tharparkar district.

We have to give them some incentives, something concrete, otherwise, I dont think anyone would find their investments feasible, said the official, recalling that a Chinese company had pulled out of a billion-dollar project after failing to get a reasonable power tariff.

Shenhua Group Corporation of China (SGCC) was disallowed 5.7 cents per kWh when it was just days away from starting work on the power plant that would have marked first time usage of Thar coal reserves since they were discovered in 1992.

That was in January 2005. Now authorities are willing to purchase power from wind turbine farms for as much as 13 cents, said the official requesting not to be named.

A benchmark tariff could also encourage another Chinese firm in its endeavour to generate power by excavating coal from Sonda Jerruk, situated near Thatta district.

China Machinery Import Export Corporation (CMC) late last year signed an agreement with the Sindh government to carry out a detailed geological survey of Sonda-Jherruk coalfield, renewing hopes for a long-awaited breakthrough in coal-based power generation.

Sonda Jerrukh coalfield, located 100km east of Karachi, holds significance compared to all other coalfields in the province because of its close proximity to two major cities and a relatively good chemical composition of its coal.

The area has a limited estimated coal reserve of 7.1 billion tonnes but does not face water-scarcity like Thar.

According to energy experts, Pakistan is faced with a severe energy crisis as continuous depletion of domestic gas reserves necessitates excessive imports of furnace oil at unpredictable prices.

Private Power and Infrastructure Board (PPIB) had already allowed two foreign companies to prepare a feasibility study on power generation from imported coal in lieu of oil.

http://www.thenews.com.pk/daily_detail.asp?id=66107


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## Neo

*Russia hints at lifting ban on Pakistani rice ​*
KARACHI: Russia has hinted at lifting the import ban on Pakistani rice and mangoes as a formal notification is likely to be issued during the visit of a Pakistani delegation to Russia in the second week of August.

The Russian government had invited Pakistani authorities for negotiation with the Russian Federal Veterinary and Phytosanitary Surveillance Services (VPSS)in order to sort out quality problems of Pakistani agri and horticulture products, a source in rice trade said. 

A Pakistani delegation comprising Federal Rice Commissioner Inayatullah Khan, the Commissioner Minor Crops (Fruits), officials of the Pakistan Quarantine Department, Chairman of the Rice Exporters Association of Pakistan (REAP) Aziz Maniya and Chairman of the Fruits & Vegetables Exporters Association Abdul Wahid Memon is to leave for Moscow on Aug 12. Earlier, the delegation was to leave on Aug 8.

Rice exporters are hopeful that Russia may formally announced elimination of the ban in the same manner as it had lifted the ban on Indian rice last week and has been issuing quarantine import certificates from July 20.

Russias phytosanitary watchdog imposed a total ban on rice import from Pakistan for the alleged reason of Khapra Beetle, an insect that was found in a rice shipment sent from Pakistan to Russia and subsequent imposition of ban on the import of Pakistani rice in December 2006.

Before this Russia had imposed ban on the import of rice from India and Vietnam way back in December 2006 and on June 20 it had the extended ban on India after they found pesticides and other impurities in several consignments. Moscow had claimed that last year up to 12 per cent rice imported from India did not meet the Russian phytosanitary norms. 

In the last week of April this year a high-level VPSS delegation had visited Pakistan to discussed phytostanitary issues with Pakistani stakeholders and had held meetings with members of REAP. They had also checked rice storage sites and processing facilities in Pakistan.

REAP members is of the views that the Khapra Beetle was primarily found in wheat stocks and there is a possibility that the rice shipped to Russia was stocked close to a wheat godown.

According to the sources, the Pakistani rice was cleared from the port but later it was lifted from shelves on account of Khapra Beetle infection. 

Russia used to import o.4- 0.5 million tonnes of rice a year until it imposed a tariff of 70 euros ($92.32) a tonne in April 2005 which shrank its rice imports to 0.15 - 0.2 million tonnes after that. Before the end of the last calendar year, Russia had stopped all rice imports on health grounds but had promised to resume imports later under stricter control through a reduced number of ports. India is the main rice supplier to Russia followed by China, Vietnam and Thailand.

If the ban is lifted, then Pakistani exporters would be able to dispatch 20,000 tonnes of rice to Russia. REAP sources said the delegations visit would provide them an opportunity to be in direct contact with Russian buyers as earlier they had to rely on brokers, mainly from India and UAE.

http://www.thenews.com.pk/daily_detail.asp?id=66108


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## Neo

* Thar has great potential to meet Karachis milk, meat requirements ​* 
PM's programme to double the number of goats; the area needs more vets

MITHI: The destiny of the impoverished people of Tharparkar will change drastically if the Prime Ministers Special Initiative for Livestock succeeds, according to Dr Jaimal Dhanani, a former professor of embryology at Tando Jam Agricultural University. 

The desert boasts of the majestic Tharparkar breed of cow that is heat and drought resistant and provides 10kgs of milk daily, he told The News. 

He said the population of Tharparkar breed cows in Tharparkar is about 100,000 but the number is declining because of a small number of breeding bulls. Farmers take cows of the Tharparkar breed to distant places for breeding and this also affects their heat period, said Prof Dhanani, who is also project coordinator of the PMs Special Initiative for Livestock. 

He said the breed is indigenous to Tharparkar from where it went to the Indian state of Gujarat and even Australia where it was named Brahman. 

The Tharparkar cow, a Bos indicus breed used for milk production and as draught animal, came into prominence during World War I when some animals were taken to supply milk for the Near East army camps. Here their capacity for production under rigorous feeding and despite unfavourable environmental conditions at once became apparent. 

Since then, many breeding herds have been assembled in India and Pakistan. When left on arid pasture, the milk production is around 1,135kg per lactation, while those animals maintained in villages average about 1,980kg. 

The average animals of the Tharparkar breed are sturdy, strongly built, medium sized, with straight limbs and good feet, and with an alert and springy carriage. The usual colour of the cattle is white or gray. In males, the gray colour may deepen, particularly on the fore and hind quarters. All along the backbone there is a light gray stripe. The colour of the cattle deepens during the winter months and also when cows are pregnant. 

Prof Dhanani said human, animal ratio in Tharparkar was almost 1:5. The human population, he went on to say, was 1.3 million whereas there were five million animals, including 2.5 million goats and 1.5 million sheep. 

The Prime Ministers Special Initiative for Livestock envisages that the goat population in Tharparkar should be doubled in the next five years to meet the increasing demand for meat and milk. 

Elaborating, he said the importance of livestock in the area can be gauged from the fact that about 50 trucks carrying 2,000 goats are transported from Tharparkar to Karachi every day. 

He said even President General Pervez Musharraf has realised the importance of embryo transfer, but deplored that about one million goats die every year in Tharparkar from disease and shortage of veterinary doctors. But since they breed two kids on an average every year, their population is increasing, he hastened to add. 

For every 20,000 animals there should be one veterinary doctor. India is meeting the target. But there were only 10 veterinary doctors in Thar in 2006, while in the year 2007 their number increased to 10 in the government sector and 26 under the PMs programme, he said. 

He said the PMs initiative envisages fattening of animals and 500 rupees will be given to the owner for every fattened goat. But it seems there is a lack of interest in the fattening programme in Tharparkar, he added. 

The Prime Minister's Special Initiative for Livestock has received only 40 applications in Tharparkar so far as compared with 400,000 applications in Punjab, essentially because there is more awareness in Punjab. 

He said it is high time that entrepreneurs in Karachi made an investment in the livestock sector in Tharparkar. The minimum investment for a small farm with 100 goats is not more than Rs one million, he added. He deplored that livestock is being imported from India but nobody is ready to invest in this area in Pakistan.

http://www.thenews.com.pk/daily_detail.asp?id=66112


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## Neo

*Food exports up 1.24pc ​*
KARACHI: The total exports of food group recorded a marginal rise of 1.24 per cent to $2,036.820 million during last fiscal 2006-07 which was recorded $2,011.805 million during 2005-06.

During July-June 2006-07 the overall exports of rice recorded 3.11 percent decline in tem of value and 15.35 percent in term of quantity.

The figures released by Federal Bureau of Statistics (FBS) on Saturday depicted that exporters dispatched total 3.122 million tonnes of rice to different destinations of fetched $1,121.773 million as export proceeds during fiscal 2006-07 as compared to this they had exported 3.68 million tonnes of rice valued $1,157.614 million during last fiscal.

Exports of prime quality Basmati rice recorded 11.13 percent increase in term of quantity and 16.96 percent in term of value. From July- June 2006-07 exporters dispatched 0.932 million tonnes of Basmati rice worth $560.809 million against this they had shipped 0.839 million tonnes and fetched $479.616 million as foreign exchange during fiscal 2005-06. 

The export of other varieties of rice including Irri-6 recorded sharp decline of 17.31 percent in term of value and 23.14 percent in term of quantity.

From July -June 2006-07 exporters could hardly dispatched 2.190 million tonnes of coarse varieties of rice worth $560.809 million as compared they had exported 2.84 million tonnes of worth $678.198 million in fiscal 2005-06.

Similarly exports of fish and fish preparations recorded 3.01 percent fall to $188.313 million against $194.157 million of last fiscal, whereas exports of the fruits also witnessed 9.94 percent decline to $336.012 percent from $455.33 million of fiscal 2005-06.

The vegetable exports recorded a substantial rise of 80.35 percent to $194.715 million which stood around $125.451 million a year before, while leguminous vegetables recorded sharp decline by 90.02 percent to $16.052 million from $199.080 million. 

Moreover exports of tobacco surged by 46.56 percent to $5.907 million, which was recorded only $0.365 million in fiscal 2005-06, while wheat exports increased by 100 percent to $224.630 million. The exports of spices recorded a marginal increase of 0.36 percent to $23.635 million from $23.550 million, whereas exports oil seeds, nuts increased by 62.31 percent to $24.069 million from $11.105 million.

The significant rise was witnessed in the exports of meat and meat preparation, which put local consumers under pressure.

From July - June 2006-07 exporters sent 15.125 million tonnes of meat and meat preparation and fetched $41.722 million against $18.950 million of last fiscal.

http://www.thenews.com.pk/daily_detail.asp?id=66114


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## Neo

*Commercial exporters grab lions share: Rebate for textile​*
KARACHI, July 28: A Swiss-based internationally known consultancy firm  Gherzi  has proposed to ensure that the 6 per cent research and development rebate on textile exports should be given only to the manufacturing companies so that it could be used only for the purpose it was intended for and that textile industry has little R&D including new product development.

This proposal has apparently been made after it was found that the commercial textile exporters have grabbed the lion share of more than Rs 20 billion R&D rebate given by the government at the rate of 6 per cent, 5 per cent and 3 per cent on export of garments and home textile, respectively, for last two years while the manufacturing companies got a very small share.

Gherzi observes that in all probability the R&D rebate is passed on to the buyers as discounts to get sales. It is unlikely that the subsidy is used for the R&D purpose. Can the rules be changed?, the study raises a pertinent question.

The report observed Pakistans performance in clothing export as disappointing. With so much to offer in terms of local cotton and competitive labour, the export performance is poor.

A sad reflection of Gherzis report is Pakistans textile export performance in the year 2006-07, which has decelerated to hardly 5 per cent plus from 14 per cent annual growth a few years ago. Latest trade figures for the year 2006-07 shows that import of textile machinery is down by more than 38 per cent to about $503 million indicating that the allocation of about Rs50 billion bank loans on concession rate of 7.5 per cent since May 2004 has failed to motivate textile barons to invest for improving their production capacities.

Under this scheme, the textile tycoons swapped Rs34 billion loans they had obtained on 12 to 14 per cent rate to 7.5 per cent. Fresh financing of Rs15 billion to textile industry under long-term financing for export- oriented projects (LTF-EOP) were provided according to the information given by the Federal Commerce Minister Humayun Akhtar Khan in his budget speech on July 18, 2007.

No firm figures are available but a rough estimate shows that conversion of Rs34 billion bank loans from 12 per cent to 7.5 per cent interest bank loans and grant of fresh Rs15 billion loans to the textile industry would cost anywhere from Rs1.5 billion to Rs2 billion to the State Bank of Pakistan. Add to this, the cost on export refinance, which too is being offered on 7.5 per cent interest.

Gherzi was asked by the textile ministry to give an assessment of the situation that has emerged after the quota phase-out in terms of countries that have gained and those who have suffered with special reference to Pakistan. The report was given in March this year.

The textile companies - that export directly - are found to be more attractive and reliable by the foreign buyers as suppliers than those manufacturing companies that depend on commercial exporters.

However, in spite of having a direct involvement in the markets, many Pakistani companies are seem contented to serve the lower, highly price sensitive price segment of the market with basic products, the report notes.

As for those textile manufacturing companies that depend on commercial exporters for market access, the report declares in clear words: These companies are unlikely to be in control of their destinies as they are beholden to the commercial exporters.

They are unlikely to have correct management structures and modern equipment. They are certain to be under persistent price pressures and without product development that enable them to become direct exporters.

Pakistans share in world textile exports is observed to have been increased from 2.58 per cent in 1990 to 3.45 per cent in 2005. On the face of it, this appears to be a positive growth.

However, the report says the growth in Pakistans textile exports have come mainly from increased sales of cotton yarn and woven grey fabrics, which are intermediary products of minimal value addition, that are imported by companies in other countries to convert into products of higher value addition.Similarly, in worlds clothing trade, Pakistans share has increased from 0.94 per cent in 1990 to 1.31 per cent in 2005 by value. Clothing and home textiles are key, labour intensive sectors where Pakistan should have comparative advantages. These advantages have not been exploited to the full potential.

Gherzi suggests setting in place a clearly identified comprehensive strategy for the industry on which all stakeholders should agree to ensure its smooth implementation.

http://www.dawn.com/2007/07/29/ebr1.htm


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## Neo

*Textile machinery imports down by 38 per cent​*
ISLAMABAD, July 28: Export of textile and clothing products rose to $10.757 billion in the year 2006-07 as against $10.218 billion over the last year, indicating a marginal increase of 5.27 per cent.

The slow growth in textile and clothing sector was recorded owing to decline in export of raw cotton, cotton cloth and bed wear during the year under review. However, the government had announced a relief package of subsidies for the sector to make their prices competitive in international market.

It has been observed that Pakistan offered the lowest unit price for its textile and clothing products even lesser than Bangladesh, India, China in international market during the year under review but despite this the growth in exports to these countries remained stagnant.

Another disturbing aspect is the massive decline in import of textile related machinery, which stood at $502.971 million during the year 2006-07 as against $817.240 million over the last year, indicating a negative growth of 38.45 per cent.

It showed that pace of modernisation of textile sector or enhancing the production capacity has been stagnated for the last couple of years. However, the core issue of diversification of products and reducing of the cost of doing business still remain un-resolved to make the manufactured products more competitive.

Detailed analysis of the commodities export released here on Saturday by Federal Bureau of Statistics (FBS) showed that export of readymade garments witnessed a growth of 5.32 per cent to $1.379 billion during the year 2006-07 as against $1.309 billion over the same period of the last year.

Statistics showed that export of knitwear also recorded a growth of 12.17 per cent during the year under review to $1.964 billion as against $1.751 billion over the same period of the last year. The export of cotton yarn reached $1.425 billion in the year 2006-07 as against $1.382 billion over the same year of last year, indicating a growth of 3.10 per cent.

The export of bed wear dipped by 3.90 per cent to $1.958 billion during the year as against $2.038 billion over the last year and cotton cloth by 4.30 per cent to $2.017 billion as against $2.108 billion over the last year.

A marginal growth of 1.25 per cent was recorded in export of towels to $595.012 million during this fiscal as against $587.641 million over the last year and 3.10 per cent in export of cotton yarn to $1.425 million as against $1.382 million during the year under review.

The export of raw cotton declined by 25.58 per cent to $50.720 million during the year as against $68.151 million over the last year. However, export of cotton carded increased by 24.33 per cent to $12.854 million as against $10.339 million; 82.92 per cent in yarn other than cotton yarn to $67.673m as against $36.996 million; 77.53 per cent in tents, canvas to $69.061 million as against $38.902 million; 114.55 per cent in art, silk and synthetic textile to $429.761 million as against $200.308 million; 13.4 per cent in madeup article to $473.893 million as against $417.877 million and other textile materials 16.53 per cent to $312.098 million as against $267.837 million.

http://www.dawn.com/2007/07/29/ebr2.htm


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## Neo

*Outflow of foreign exchange up 60pc: Dividends, profits​*
KARACHI, July 28: Outflow of foreign exchange in the form of profits and dividends has sharply increased by 60 per cent during the fiscal 2006-7 turning the foreign investment into a liability for the country.

Despite high reserves of foreign exchange, the country is struggling to meet the widening trade deficit, which reached $13.54 billion last year making the issue of foreign exchange outflow more crucial for the country.

Pakistan witnessed an outflow of $804 million (Rs48.240 billion) as profits and dividends during the last fiscal ended on June 30.

The outflow is the direct impact of foreign investment as a number of companies are either acquired by the foreign investors or they became majority share holders.

The policy makers have put no restriction on the outflow of profits and dividends from the country even 100 per cent investment can be taken out without any restriction.

The biggest outflow was noted in telecommunications sector and about $151m (Rs9 billion) went abroad as profits and dividends.

The telecom is also the sector, which attracted highest foreign investment of about $1.4bn but the forex outflow was almost same in the form of import of mobile phones and related apparatus.

Power appeared as another important sector, which witnessed an outflow of $136m (Rs8.160 billion) during the same year.

The sector is expected to see heavy investment in the coming years as the country is facing serious shortage and the government is planning to attract more independent power projects to meet the rising demand. This foreign investment would further increase the outflow of foreign exchange from the country.

Along with the power sector the banking also received heavy investment and a number of take-over and mergers were witnessed during the year just ended.

An outflow of $116 million (Rs7 billion) went abroad as profits and dividends from the banking sector. Banks have been making record profits for last four years and the growth in this sector is expected to continue and this will further increase the outflow.

Recently, foreign investors have shown interest to acquire Saudi Pak Commercial Bank and the acquisition could cause more outflows from the country.

Chemicals sector saw an outflow of $53 million, pharmaceuticals $51.8 million, petroleum refining $48.7 million, oil and gas exploration $44.8 million and food $38.8 million.

The privatisation has been a major reason for large share holdings of the foreign investors. The government has a list of some giant organisations to be offered to the foreign investors. These included Pakistan State Oil, Sui Northern Gas, Sui Southern Gas, Pakistan Steel, PIA and stakes in OGDCL and PTCL, etc.

If the foreign investors acquire majority shares in these companies, the country would face a serious problem to arrange foreign exchange for the outflow of profits and dividends.

Analysts said that after privatisation of above units, not only the outflows would acquire a difficult shape but the country would be left without other source to improve its foreign exchange reserves.

http://www.dawn.com/2007/07/29/ebr4.htm


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## Neo

*Petroleum imports up by 9.96pc in 2006-07​*
ISLAMABAD, July 28: Pakistan spent a hefty sum of $7.339 billion on import of petroleum products during 2006-07, showing an expansion of 9.96 per cent over the previous years figure of $6.674 billion.

Official figures released by Federal Bureau of Statistics (FBS) on Saturday showed that the share of petroleum products in total import bill also rose to 24 per cent during the year under review as against 23.3 per cent the previous year.

The statistic showed that the import of products manufactured from petroleum increased by 29.59 per cent to $3.773 billion in 2006-07 as against $2.880 billion a year earlier.

However, the growth in imports of petroleum crude declined by 4.94 per cent to $3.605 billion as against $3.793 billion in 2005-06.

The second biggest component of the import bill in value was the machinery group. However, its imports increased by 8.82 per cent to $6.605 billion in 2006-07 as against $6.07 billion of previous year. The import bill of machinery mainly pushed by an increase of 38.09 per cent in power generating machinery, office machines 5.04pc, construction machinery 16.85pc and agriculture machinery 34.19pc.

In the telecom sector, the import of mobile phones increased by 12.64 per cent and other apparatus 10.80 per cent during the year under review.

http://www.dawn.com/2007/07/29/ebr10.htm


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## Neo

*FPCCI to participate in several trade fairs​*
KARACHI, July 28: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) must explore new markets to boost the country's exports. This was stated by FPCCI President Tanvir Ahmed Sheikh at a meeting of the standing committee of Fairs and Exhibitions held at Federation House on Saturday.

He urged the committee members to explore new markets by participating in exhibitions and fairs worldwide.

He noted that fairs and exhibitions were the modern tools for promoting country's exports and for projecting the export potential in the international market.

He appreciated the efforts of the committee and emphasised that the participants of trade fairs should concentrate on long-term business, which is the real objective. On this occasion Tariq Sayeed, the former president of FPCCl said that the Trade Development Authority of Pakistan should provide subsidy to all trade bodies, including the FPCCI on all allocated fairs and exhibitions.

Earlier, Chairman of the committee Farooq Ahmed Sheikh said that the FPCCI will participate in a large number of fairs and exhibitions during 2007-08 which have been allocated by the TDAP.

He said that the FPCCl was coordinating with the TDAP and will follow its guidelines and ensure transparency in the entire process of fairs and provide all possible assistance to the participants for achieving fruitful results.

He said that special incentives will be given to new exporters, SMEs, women entrepreneurs and manufacturers of remote areas who want to export their goods as a direct exporter.

Tanvir Sheikh also distributed cheques of subsidy amongst the participants of IITF-2005. APP

http://www.dawn.com/2007/07/29/ebr12.htm


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## Neo

*ADB to help reform Pakistan Strategic Energy Plan 2009-29​*
ISLAMABAD: The Asian Development Bank (ADB) would help government of Pakistan to develop within one year and help implementing Pakistan Strategic Energy Plan 2009-2029. The plan would also help establish new Pakistan energy planning unit to meet the future challenges. 

The ADB would finance the hiring of international consultants, which would be completed in August 2007 to help Pakistan review the existing sectoral energy policies and strategies and recommend measures in the shape of final report on Pakistan Strategic Energy Plan. 

According to an ADB document, relating to the project and terms of reference of the international consultants, the project is to assist the government of Pakistan to establish an integrated energy model for analysing the impacts of various strategies for meeting energy requirements. Financial, economic, energy supply, national resources, energy use, environment impacts, technologies, energy efficiencies, and socio political impacts would be among the factors to be addressed.

The services of an international consultant supported by local consultant would review the existing data across Pakistans energy sector. This will include economic, financial and technical data on (i) import and domestic energy supplies of all sources, (ii) energy consumption by sector and by type, and (iii) environmental, efficiency and sociopolitical matters. 

Based on findings of the said review, also to review and evaluate and extract the lesson learned by countries similarly situated as Pakistan who have used energy planning and optimisation model. This would also include review of Pakistans energy sector institutional framework and identify appropriate institutional locations and reporting arrangements of energy planning team. 

The consultant would also identify the leading energy models that are available in the international marketplace for national energy planning. Based on Pakistans needs, identify the advantages of various model types. Also to assist in developing energy model procurement by the developing tender documents to be issued to pre-qualified energy suppliers. The consultant would also coach the counterpart team to ensure a functional energy-planning unit is in existence on the completion of his contract. 

According to the assignments to be given to a team of international consultants, consultant on energy economics would act as team leader and manage the project from inception to completion. Engineer or Economist on Energy Supply Power would give input on technologies and financials of power technologies used in Pakistan and in developed countries. Engineer or Economist on Coal would provide input of reserve assessment, technologies used and financials of coal supply options. Engineer or Economist on Oil and Gas would also provide input on reserve assessment, technologies used and financials of oil and gas technologies being used in Pakistan. An engineer with experience in oil and gas and power demand supply analysis would provide input on technologies and financials of power and oil and gas sectors. An engineer with experience in energy transport analysis would provide input on technologies and financials of energy transport sector in Pakistan. He will also ensure adequacy of input data across and address demand side management and energy efficiency standards. An engineer or economist with experience in environment standards and renewable technologies would provide input to address the issue of carbon intensity in Pakistan. An economist on financial issues would assess the impacts of government of Pakistans financial policies on the energy sector and would ensure their integration into new energy model.

http://www.dailytimes.com.pk/default.asp?page=2007\07\29\story_29-7-2007_pg5_2


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## Neo

*Check bank accounts, pay utility bills through mobiles soon​*
* Citibank and UBL in testing process

KARACHI: Two mobiles operators in Pakistan are planning to launch mobile banking in next few weeks, which may help the customers to check banks accounts and pay their utility bills etc through their hand-set.

In collaboration with banks, the mobile companies are focusing on the advancement of mobile banking, empowering consumers with convenient, flexible and innovative mobile payment options, sources in the banking sector told Daily Times. This service provides facility to the mobile phone subscriber to pay their bills through handset anywhere at any time. Initially Citibank and UBL are in the testing process, sources added. 

The service will enable customers to do away with keeping their credit cards and cash with them and will also ensure secure transfer of funds from one account to the other. The aim is to help customers in doing away with physically going to banks or utility companies for the payment of services.

To avail this service the mobile user must have a mobile phone equipped with General Packet Radio Service (GPRS) technology available to users of Global System for Mobile Communications (GSM). 

The service offers a secure infrastructure for financial transaction over wireless network and physical security of the hand-held device. If the bank is offering smart-card based security, the physical security of the device is more important. Security of the thick-client application running on the device. In case the device is stolen, the hacker should require ID or password to access the application. 

Mobile Commerce Solution would enable mobile users to charge for site content as well as goods and services purchased over the Mobile Internet. The platform includes modules for access, payment and security. It enables network operators and service providers to offer secure payment services for mobile commerce transactions making it easy for content providers and application developers to create valuable services for end-users. These could include banking, trading, ticketing, shopping. 

According to a study by financial consultancy Celent, 35 percent of online banking households will be using mobile banking by 2010, up from less than 1 percent today. Upwards of 70 percent of bank centre call volume is projected to come from mobile phones. Mobile banking will eventually allow users to make payments at the physical point of sale.

http://www.dailytimes.com.pk/default.asp?page=2007\07\29\story_29-7-2007_pg5_3


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## Neo

*3 modern dates processing plants to be ready by 2008​*
KARACHI: Three modern dates processing plants under the trade policy would be ready by year-end, one each in Sindh, Balochistan and North Western Frontier Province (NWFP) with a cost of Rs 78.6 million, the dates exporters said on Saturday.

Pakistan Horticulture Development and Exports Board (PHDEB) is ready to invite tenders for construction of dates processing plant at Khairpur at the cost of Rs 24.113 million by 2008. 

The tenders for two other plants, one each at Dera Ismail Khan and Turbat will be floated within the couple of months, an official in PHDEB said. 

The work on Khairpur plant is underway to hold bidding for up-to-the-mark plant, which would be established on public private partnership (PPP) basis, an exporter, Jawed Khan said.

He said these plants are being built along with cold storage facilities. Pakistan with an estimated 622.1 thousand tonnes annual production ranks fourth in dates production and fifth in its exports around the world.

Under PPP, the Sindh government has provided two acres of land for this purpose. The Sindh government also released Rs 19.946 million from the Export Development Fund (EDF) and would take care of the cost of plant machinery, equipment, vehicles and other civil works.

Mr Khan said day-to-day operations would be entrusted to a team of professionals hired from the private sector, which would also contribute the working capital around Rs 4.167 million while a private limited company had also been formed to accomplish the management work of the plant, which was named as Khairpur Dates Processing Plant (KDPP).

The company, duly registered with the Securities and Exchange Commission of Pakistan (SECP), would have its members from PHDEB, Trade Development Authority of Pakistan, Agriculture Research Institute, DRC, Kot Digi, Khiarpur Chamber of Commerce and Industry and investors and growers from the private sector of Khairpur.

The board had set 2008 as a deadline for completion of the KDPP, which would produce an estimated 2,000 tonnes of processed dates during the 150 working days. 

He said the KDPP, for which funds had been transferred to account of the company, would be built to improve the quality of dates and increase the level of value addition. The proposed plant would be based on multiple products including pitted and stuffed dates and would increase the level of value addition.

http://www.dailytimes.com.pk/default.asp?page=2007\07\29\story_29-7-2007_pg5_5


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## Neo

*2nd generation policy reforms to upgrade 6 sectors​*
ISLAMABAD: Second generation policy reforms introduced in the budget 2007-08 would help six important sectorsgems and jewelry, horticulture, furniture, marble and granite, surgical instrument and medical devices be competitive locally as well as globally.

A senior tax official informed Daily Times that Pakistan Initiative for Strategic Development and Competitiveness (PISDAC) was launched by the government of Pakistan to develop a public private sector dialogue to identify Second Generation Policy Reforms that could encourage the private sector to invest and to upgrade itself to become more competitive both domestically and globally. 

Special Working Groups constituted by PISDAC in the said sectors have identified initiatives to focus on overcoming gaps on workforce development. To bolster these initiatives, each SWG has identified second generation policy reforms which have been supported by ministries of Industries, Commerce, Engineering Development Board and SMEDA. 

Gems and Jewelry: Pakistan lacks adequate testing facilities for gems and jewelry and SWG has developed a strategy that highlights the need for such facilities to be established and equipped with latest world class equipments. In the budget, customs duty on import of seven said equipments and instruments for testing facilities have been exempted. 

Furniture: Furniture Strategy Working Group focused upon availability of quality inputs and lowering the cost of production. In the budget 2007-08, inputs have been identified on which the duty rates have been reduced or eliminated. This policy measure would provide an incentive for greater import of wood and would lessen the pressure on its indigenous supply sources. These measures would enable this sector to increase its production coupled with its comparatively lower labour cost would allow it to increase exports and become competitive internationally. 

Marble and Granite: Quarrying techniques in Pakistani quarries are primitive. Majority of mines basic machinery and equipments like compressors, saws, drill sets, hoists, jacks, lifters and rock excavating or hoisting and transporting vehicles are not available. This not only leads to colossal wastage of 73 percent but also to low production at mines. Upon recommendations of the Strategy Working Group on this sector duty has been exempted on machinery and equipments required to develop this sector in the budget 20070-8. This measure would help this sector to develop and up-grade itself on modern footing and would also help reduce the wastage and increase efficiency. 

Horticulture: Nearly all of the Pakistani fruits and vegetable crop volume is based on old cultivators introduced years ago. There is a noticeable absence of more recently developed modern cultivators. One reason for this is the lack of indigenous research program on horticulture. According to the recommendations of the Strategic Working Group on horticulture duty has been reduced or exempted on import of soluble fertilizer, insecticides, pesticides, plant growth regulators, pruning equipments. This measure would improve production as well as quality, which would be beneficial for both domestic and international markets. 

Surgical and Medical Devices: The Strategy Working Group on surgical instruments and medical devices had pointed out that this sector is facing stiff international competition. Based on SWGs recommendations a list of items and equipments required to develop this sector on modern lines was developed and the government has rationalised the duty rates on their imports. This measure would result in capacity building of this sector to enhance its competitiveness and increase its exports.

http://www.dailytimes.com.pk/default.asp?page=2007\07\29\story_29-7-2007_pg5_12


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## Neo

*Fiscal year 2007 economic targets missed: SBP and FBS unanimous in their figures ​*
KARACHI (July 30 2007): The government once again suffered a setback, as the country missed its major economic targets, including food inflation, large scale manufacturing, current account deficit, trade deficit, exports, and private sector credit during the last fiscal year due mainly to unsustainable policies.

The final report on the country's economy by the State Bank of Pakistan (SBP) is expected next month, in which final figures regarding economy performance and other fundamental reasons will be explained. However, the official figurers released by the SBP and the Federal Bureau of Statistics (FBS) show that major economic targets were not achieved during last fiscal year.

The country has missed its current account deficit target, which usually shows the overall position of the country's inflows and outflows payments. In the last fiscal year, the current account deficit widened by 40 percent to 4.8 percent of the gross domestic production (GDP) and all-time high level of seven billion dollars.

The government had set the current account deficit target at 4.3 percent of the GDP, however, for the first time in the history of the country, the current account deficit reached 4.8 percent of the GDP against the target of 4.3 percent in FY07.

The SBP statistics show during the last fiscal year, the country's current account deficit went up by $ 2.026 billion, as a result it reached new peak of $ 7.016 billion at the end of the last fiscal year while it stood at $ 4.99 billion in FY06. "Failure in achieving export target is the main cause of the widening current account deficit, besides widening trade deficit, services deficit and tremendous raised in income deficit during the last fiscal year", analysts said.

The other major key target missed during last fiscal year is export target, which is also a main factor for widening the current account deficit.

The country fell short of its export target of $ 18.6 billion by $ 1.6 billion, as overall exports stood at $ 17.01 billion during the last fiscal yea. However, for the first time in the country's history, exports crossed $ 17 billion mark.

"The country's cost of doing business remained much higher than the other regional countries, including India and Bangladesh, which have put a negative impact on the export," exporters said.

Due to the rising import of the country also missed its trade deficit target of $ 9.4 billion during last fiscal year. The trade deficit grew by 11.53 percent to highest ever level of $ 13.528 billion in the last fiscal year as against the $ 12.12 billion in FY06, depicting an increase of $ 1.399 billion.

In the last fiscal year, the imports of luxury items raised imports bill to $ 30.54 billion as compared to $ 28.58 billion in FY06, witnessing an increase of 6.85 percent or $ 1.96 billion.

The Large Scale Manufacturing (LSM) is the second largest sector of the economy accounting for over 20 percent of GDP showed the poor performance in last fiscal year. Its growth target of 13 percent missed by 4 percent during the last fiscal year, in the wake of high interest rates and increasing cost of doing business in the country. Statistics shows that LSM growth has been declining for last three years due to high interest rates, besides increasing cost of production.

In last fiscal year, country's foreign debt also increased by two billion dollars to 39.265 billion dollars against 37.265 billion dollars in FY06. While the domestic debt also swelled by Rs 160.754 billion to Rs 2,457.650 billion from Rs 2,296.896 billion in FY06. The budgetary deficit also widened to 4.5 percent of GDP from 4.20 percent, depicting an upsurge of 30 basic points in last fiscal year.

Huge liquidity also depreciated the rupee by 20 pisa against the dollar during last fiscal year. Now it is being traded at Rs 60.40 per dollar as compared to Rs 60.20 per dollar previously.

The rising inflation was a major threat for the economy, therefore, the SBP adopted a tight monetary policy to control the inflation besides, liquidity in the market. Another key challenge for the economy was to reduce the money supply growth, which was also missed by 1-2 percent. The set target of money supply growth for the last fiscal year was 13.5 percent, however, it is estimated that its growth would be 14.5-15.5 percent.

The SBP statistics shows that overall the country earned $ 4.125 billion against the payments of $ 8.250 billion in the account of services trade, including transportation, travel, royalties, insurance, financial during last fiscal year, depicting a 50 percent or $ 4.125 billion deficit.

"Travel advised by different countries for Pakistan, law and order situation, high cost of doing business and electricity shortage are the major reason in the failure of achievement of economic targets," said economist Shahid Hussian.

He said the tight monetary policy e also put negative effect on the economy targets and Commerce Minister Hamayun Khan also identified this matter in the new trade policy.

Regarding achievement of GDP growth target of 7 percent, he said this has happened due to the good performance of services sector specially banking, insurance, besides the agriculture sector. "The export targets were on real basis, however, these were not achieved due to poor performance of textile sector due to higher production cost," he said.

Shahid Hussian said despite the all-time high foreign investment no green filed investment was witnessed in the industry, as the foreign investors invested in the existing business in the Pakistan.

Single largest sector of the national economy "agriculture" made a modest recovery from the dismal performance of last year, as overall agriculture grew by 5 percent in FY07.

The impressive growth in major crops owes partly to the bumper wheat and sugarcane crops and partly to the base effect as it is measured from a low base of last year. Wheat production was up by 10.5 percent to 23.5 million tonnes, the highest ever wheat production recorded in the country's history.

Sugarcane production improved by 22.6 percent last year to 54.8 million tonne- the second highest size of the crop in the country's history. While the third largest crop cotton has missed its production and overall production stood at 12.5 million bales against the target of 13 million bales last fiscal year.

In addition, two other major crops, rice and maize did not perform well. Both rice and maize registered negative growth rates of 2 percent and 4.5 percent, respectively.

In the last fiscal year, some of new records were made including all-time high level of foreign investment, workers remittances and foreign reserves. With 3.39 billion dollars upsurge the overall foreign investment touched all-time high level of 8.416 billion dollars, including 5.125 billion dollars foreign direct investment against the target of $ 6 billion.

Workers remittance also touched new peak, as the country received ever-highest workers' remittances over $ 5.493 billion in the last fiscal year by breaking its previous record of $ 4.6 billion in FY06. The target of tax collection also achieved during the last fiscal year and overall collection crossed the target of Rs 835 billion.

The services sector also performed well but its growth was less than FY06. In last fiscal year, it achieved 8 percent growth against 9.6 percent in FY06. The agriculture loan target also was achieved in the last fiscal year, as the commercial and specialised banks surpassed the target of credit disbursement to the agriculture sector in FY07. The total disbursements reached Rs 168.3 billion representing 22.4 percent growth over the preceding year disbursement of Rs 137.5 billion and exceeding the actual target of Rs160 billion.

http://www.brecorder.com/index.php?id=598392&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Shell offshore project suffers another setback ​*
ISLAMABAD (July 30 2007): Shell Pakistan offshore project for exploration in Pakistan's deep waters suffered another setback as 'Transocean'-the rig-mounted ship-could not clear trial after maintenance. The ship was brought into deep waters in Arabian Sea early this month for trial but failed to work properly. The trial failure led to the ship's return to Singapore for proper maintenance.

The failure is going to delay the project for an indefinite period. The project has not been taking off since 2004, and now technical failure of the ship-mounted rig has made it next to impossible to happen. Sources said the rig-mounted ship, hired by the joint venture, is still not ready due to some technical problem and since the repair work is in progress the partners expect its entry in Pakistan's territorial waters by middle of August.

Will it happen? It's premature to say something with authority, but at least the joint venture partners have no other option but to build up hopes against hopes.

One of the joint venture partners told Business Recorder on Thursday that Shell Pakistan, operator of the project, has conveyed to the partners that due to some technical problem the rig-ship's movement from Singapore, where it was stationed for maintenance, had been delayed.

Earlier, Shell Pakistan had conveyed to partners that rig was arriving in Pakistan's territorial waters in the first week of July for drilling work on the offshore project.

It's forth delay in the start of the offshore project during the last two and half years. Shell Pakistan had entered in a joint venture for offshore exploration work with OGDC, PPL and Government Holdings in 2004 and the cost of the project was estimated at $ 21 million. Shell Pakistan as an operator signed an agreement with Transocean, an American services company, for supply of rig-ship.

The work on the project was to start in 2005. But, despite repeated assurances to the operators, rig availability could not be ensured. Delay costs the joint venture partners heavily as estimated expenditures went up from $ 21 million in 2005, to $ 40 million in May 2007, and still there is no sign of availability of rig-ship.

Inordinate delay is worrying the partners, which are public sector companies and can not afford further delay.

Secondly, further delay may put the project at risk as monsoon weather is around when sea becomes hostile that can make exploration work impossible due to high tide.

http://www.brecorder.com/index.php?id=598373&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Another USC expansion project recommended ​*
ISLAMABAD (July 30 2007): The Planning and Development (P&D) Division recommended yet another project of Utility Stores Corporation (USC) expansion that costs Rs 1.778 billion to Ecnec, despite the fact that ministry of industries and USC, which are the sponsoring and executing agencies, failed to submit completion or progress report of a previous project of almost the similar nature.

Sources told Business Recorder that P&D at a recent meeting of the Central Development Working Party (CDWP) recommended the Rs 1.778 billion project that envisages the establishment of 22 new warehouses and opening of 5,000 stores of the USC at the union council level.

The recommendation has been accorded to the new project despite the fact the ministry of industries and the USC failed to submit any report on their previous Rs 784 million project that envisaged the establishment of 16 warehouses and 44 stores of the USC at the district/tehsil headquarter level.

Sources said the previous project was approved by Ecnec in its meeting held in November 2006. For completion of the project, Rs 388 million was released.

Apart from this amount, a working capital of Rs 396 million was raised through bank loans. But the sponsors did not submit progress report nor completion report.

They said for the new project, in which the government wants to expand the USC up to the union council level across the country, the industries ministry and the USC had been asked to raise working capital of Rs 500 million through bank loans to meet the total financing of Rs 1.778 billion.

Sources said that Rs 200 million has already been released by the Finance Division and Rs 1.078 billion would be arranged through re-adjustment in the current fiscal Public Sector Development Programme (PSDP). The demand of ministry of industries and the USC seeking total capital cost of Rs 1.778 billion has been rejected, they added.

The sponsors of the project had also been asked to provide details of the security plan along with costs finalised in consultation with Frontier Corps for security in Balochistan, the sources said, adding the security cost estimated by the sponsors is Rs 50 million in Balochistan.

According to the sources, there are general complaints regarding the quality of consumer goods being sold at the USC stores. While the USC is required to ensure the quality of goods, a fool-proof quality control mechanism needs to be evolved.

The sources said there are different proposals being discussed to ensure the quality of goods being sold at USC stores. The possibility of constituting consumer societies for effective feedback for the improvement in quality of goods on regular basis is being looked into.

Moreover, affixing date of manufacturing and date of expiry on the packs of consumer goods are also required to be introduced at all the USC stores, the sources added.


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## Neo

*New Trade Policy could help increase country's export: Zia ​*
PESHAWAR (July 30 2007): Executive Member Sarhad Chamber of Commerce and Industry (SCCI) and Chairman. Frontier Custom Clearing Agents, Ziaul Haq Sarhadi has expressed the hope that decisions announced in the new Trade Policy for the fiscal year 2007-08 will help in increasing export of the country.

While expressing comments over new trade policy, Zia said the announcements like formulation of long term export growth strategy, setting up of testing laboratories for increasing export of fresh fruit and vegetables, setting up of equity fund for public-private sector organisations, setting up of export skill development council and others will help a lot in increasing export of the country.

Zia Sarhadi also hailed the decisions like establishing of E-markets for promotion of SME sector, permission for import of those instruments of gem and gemological industry which were earlier banned, permission for export of semi finished carpets in view of decline in export of carpets and extending financial support for construction of quality slaughter house for exporting meat.

http://www.brecorder.com/index.php?id=598397&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Rural electrification programme ​*
ISLAMABAD (July 30 2007): The National Commission for Human Development has planned to launch a project entitled 'Rural Electrification Programme' to provide electricity. Official sources said here on Sunday that it would be implemented in collaboration with alternative energy development board for the sustainable development of 400 villages in Sindh province.

http://www.brecorder.com/index.php?id=598429&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Integrated web-based system being developed ​*
ISLAMABAD (July 29 2007): Ministry of Information Technology (MOIT) is in the process of providing e-services for Ministry of Population Welfare to eliminate the redundant steps of collecting the information from the districts and provincial offices of the Ministry.

Under the project, which is expected to be completed by October this year, an online integrated web-based MIS is being developed, sources at Electronic Government Directorate, MoIT said here on Saturday. The sources said all the offices of the Ministry at district, federal and provincial level would use the MIS to update the relevant set of data.

They said 12 regional training institutes across the country, (02) two population welfare training institutes, (01) one central warehouse and supplies, Karachi and (02) two research institutes will also be automated to share the relevant data with federal offices of the Ministry at Islamabad. Training of online MIS will be provided to concerned officials of districts, provincial and federal offices, they added.

Talking about the other objectives, the sources said it also aims at establishing Local Area Network (LAN) of 340 nodes with provision of 126 computers at provincial welfare departments (Punjab, Sindh, NWFP and Balochistan) and district offices. Some model districts have been chosen for the project, they added.

Giving overview of the project, the sources said there are three reporting tiers of the ministry which are district population welfare offices, provincial welfare departments and Ministry of Population Welfare, Islamabad. They said grassroots level information is collected in districts offices, which gather information from respective Talukas.

Similarly, the provincial offices collect and compile the information from respective districts and submit at federal office, the sources said and added finally the data is analysed at federal ministry of population welfare, Islamabad.

http://www.brecorder.com/index.php?id=597958&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*PTA to start setting up 400 telecentres in August ​*
ISLAMABAD (July 30 2007): Pakistan Telecommunication Authority (PTA) would start setting up 400 telecentres in rural areas from the second week of August. The Authority has undertaken scrutiny of applications, negotiations with operators and cost factors process and is set to provide all necessary equipment next month.

In the first phase, the Authority is establishing 400 telecentres across the country with the support of telecom operators to provide the latest telecommunication and Internet facilities in rural and far-off areas.

The PTA is also in process of imparting training to individuals selected under a scheme for establishment of telecentres, an official at PTA told APP here on July 26.

He said all the necessary equipment worth Rs 50,000 like payphone, fax machine, printer and a computer would be provided free of cost to selected individuals for the establishment of telecentres.

He said those telecentres would be provided to those individuals who were unemployed with at least intermediate qualification. The females of the rural areas fulfilling the criteria would also be eligible to apply for allotment of centres.

He said individuals from only those villages/union councils were considered for the facility where total population was between 4,000 to 10,000 with non-availability of public telephone or net-cafe facility in the radius of five kilometres.

Besides basic necessary training, PTA in collaboration with Allama Iqbal Open University will provide all the relevant information including CDs and a manual to ensure day-to-day running and trouble shooting of various equipments.

Replying to a question, the official said telecom operators were extending their support to PTA for setting up these "telecentres" including PTCL (100), Mobilink (100), Ufone (50), Instaphone (15), Intel (10), Worldcall (Payphones in all Rabta Markaz).

He said PTA would also sponsor 125 such centres that would bring the total number to 400. He said a telecentres' owner could earn approximately Rs 5,000 per month, adding that National Bank had included the plan in its President Employment Scheme whereas negotiations with other financial institutions for issuing soft loans were under process.

The PTA has asked the banks to extend soft loans facility on easy terms to the individuals interested in setting up such Telecentres for the second phase.

"The response of people is satisfactory and a total of 1,105 applications were received from all over Pakistan," he said, adding that out of those, PTA short-listed 465 applications and verified the data based on population of the village, residential address, CNIC, educational certificates of the applicants and location of telecentres PTA has also signed memorandum of understanding with First Women bank to establish telecentres through funds allocated by the bank.

http://www.brecorder.com/index.php?id=598515&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Evolving a viable pension scheme​*


By Nasir Jamal

Can the Punjabs scheme for setting up an independent pension fund and injecting into it Rs100 billion by 2016 through annual budgetary allocations for building up a resource base large enough to earn returns sufficient for pension payouts?. Can the province reduce fiscal squeeze on account of growing pension costs, create room for priority development expenditure and develop financially viable pension system that provides adequate retirement incomes?

Some are doubtful of the sustainability of the scheme  unless the government decides to raise the capital it proposes to inject in the fund to Rs250-300 billion. These doubts were voiced at a workshop organised last week by the Punjab Resource Management Programme (PRMP), which has been overseeing financial and governance reforms since 2003, in the third week of this month.

The workshops objective was to share the ongoing pension system reforms with the stakeholders and to discuss proposals to generate ideas and establish concerns for finalising future interventions.. It was part of a marathon three-day series of workshops organised to facilitate a Fact Finding Mission from the Asian Development Bank (ADB)-- here since mid-July--- to consult stakeholders, and to assess the impact of the financial and governance restructuring in Punjab under its $400 million programme during the last four years and develop second phase of reforms..

The province expects to obtain a low-cost financial assistance in the range of $700-1,000 million from the ADB spread over a period of three to five years to undertake second phase of fiscal and governance reforms. The exact amount of the loan is yet to be firmed up in accordance with the provinces needs for foreign funds, say the officials. .

The four areas that the government proposes to focus on during the next phase of reforms include massive restructuring of the public pension system, reform of provincial and district civil services, removal of irritants in the private sectors growth and development of a medium-term expenditure framework (MTEF).

Restructuring of the public pension system, is just one part of the wide-ranging financial reforms being implemented for the last four years. It, however, is considered the most crucial of the financial reforms because the ever- growing size of the pension payouts has the potential to quickly eat into the fiscal space created for priority development spending through reduction in expensive federal debt and improvements in the provincial fiscal system.

Punjabs existing pension system, like elsewhere in the country, is fraught with issues such as, the absence of reliable documentation and data on the existing and the future pensioners and the total extent of liability, presence of ghost pensioners, and exclusion of genuine pensioners.

Pension obligations are non-contributory and the system covers around 800,000 government employees and an estimated 200,000 pensioners. The pension liabilities are paid from the provinces current revenue account because there is no funding of these payments and there are no investments to pay for them.

According to an initial estimate presented at the workshop, the Punjab governments pension liability stood at around Rs190 billion as of June 30, 2007.

The pension obligations of the government remain a burden on its revenues and continue to squeeze fiscal space for infrastructure and social sector.

Hence the provincial government got the pension fund law passed from the legislature in March this year. The new law paves the way for the government to set up an independent pension fund to generate revenues to meet its pension liabilities outside the provincial budget.

The provincial government plans to capitalise the pension fund to the tune of Rs100 billion by 2016 so that it earns returns sufficient to pay out the pension liabilities. By the end of last fiscal year, the government had set aside Rs12 billion.

Once the fund is fully capitalised and made operational, the provincial finance managers hope that it will be able to make pension an off-budget item..

But Nauman A. Cheema, an actuary by profession, feels that the establishment of an independent pension fund with a resource base of Rs100 billion and making an average 10 per cent returns per annum cannot foot the governments pension bill.

It is being assumed that the Rs100 billion pension fund will generate an average annual return of about 10 per cent or Rs10 billion by 2016, which should be sufficient for the pension payouts after 2016. It is a big assumption, Cheema pointed out in his presentation on the Issues in evaluating and managing the Punjab governments pension liability.

He pointed out that the approximate cash outflows in case of existing pensioners are expected to grow to Rs14.2 billion by 2017. If the increase in the cash outgrows, he maintains, owing to the active employees,( who are also added to those on account of existing pensioners) the total cash flow is projected to grow to Rs30.8 billion by 2017.

His analysis is based on the assumptions that the current strength of active employees in Punjab is about 800,000, the average pensionable salary increase is eight per cent and the rate of pension indexation is four per cent.

This simply means that the pension fund would be making even less than one-third of the amount needed by the provincial government for meeting its pension obligations in 2017 what to talk of the following years.

The returns to be generated from the Rs100 billion pension fund, Cheema said, will not be sufficient to pay out reduced liabilities if the assumptions are changed and the pensionable salary increases by five per cent rather than eight per cent and pension indexation rate is nil instead of four per cent.

Cheema warned that the capital will be eaten up quickly in case the government maintains the current target of Rs100 billion and the funding target is not raised to Rs250-300 billion. Hence, he said, it is difficult to imagine pension expense as an off-budget item owing to continuously increasing cost.

http://www.dawn.com/2007/07/30/ebr1.htm


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## Neo

*Economy & the limping exports​*
Trade policy has never been of much interest to informed analysts. Exporters are mainly concerned with tariff and tax changes. They are also keen to know the amount of public spending earmarked for the development of the export infrastructure. These, respectively, are the domains of the domineering and secretive Federal Board of Revenue and the Finance Division.

Commerce ministry is not necessarily on board, though the actions of the two announced in the budget predetermine the essentials of trade policy. What is left for the ministry is to provide some procedural endnotes and to utilise the Export Development Fund for inconsequential incentives.

Any space left is filled with lectures on social, environmental and other compliances. Planning Commission also has an export plan, but it fails to find a mention in the trade policy, serving as yet another proof of its continuing irrelevance.

This years policy is, however, different: Not for its content but for the explanations advanced for a dismal export performance and a massive trade deficit in 2006-07.

But first the boast, as painting things larger than life is now nearly part of the agenda of good governance. Following the statistical tricks perfected by the finance ministrys jadoogars, the commerce minister happily announced that exports have more than doubled between 1998-99 and 2005-06 from $7.8 billion to $16.5 billion., an increase of 112 per cent.

These numbers do not mean anything unless expressed relatively to some useful aggregate. The usual suspect here is GDP. Now the government also claims a doubling of GDP during this period, which means that exports as percentage of GDP in 2005-06 were the same as in 1998-99, i.e. 12.9 per cent.

I make this comparison between these two years because the minister chose these years. But some economic official in the government might turn around to say that the comparison with 1998-99 is not legitimate because the GDP was rebased from 1999-2000. Comparison with years before 1999-2000 would be possible if the Federal Bureau of Statistics had done its duty to work the series backwards also.

Nevertheless, a comparison of the latest year 2006-07 with the base year 1999-00 does not indicate any significant improvement either. Over a seven year period, exports increased from 11.2 of GDP to 11.8 per cent of GDP, which works out at less than 0.1 percentage point of GDP per annum.

But the commerce minister wants us to feel happy that This is the first time in the history of Pakistan that merchandise exports have crossed the barrier of $17 billion. By the same token, it is also the first time that imports have crossed the barrier of $30 billion, in fact $30.5 billion to be precise.

In a properly contextualised way, these exports finance only 57 per cent of imports. In 1999-2000, when exports had not crossed any mentionable barrier, they financed as much as 83 per cent of the imports.

It should be obvious that the commerce minister has had to resort to special pleadings for the not very handsome trade numbers. But his analysis of how this severest of the trade balance has come about is a devastating critique of the macroeconomic policies followed since October 1999.

It also, not unlike the independent economists and observers, questions the sustainability of the GDP growth that is claimed to have taken place at an unusually high pace in the past 3-4 years.

His observation that the growth of exports has been lagging behind the high growth claimed for the economy is correct. There is a counter-claim that the growth of the economy has not been that high anyway and the claims are the handiwork of creative national accounting. Leaving that aside, the question is: if growth is not coming from exports, what are its sources.

The sources identified in the ministers speech are the same as by many others. The main source is domestic consumption. A lot of it is cheap credit-financed; the inflationary chickens are now coming to roost. There are services, particularly telecommunications. Construction, not in the form of housing for the poor but large capital-intensive contracts resulting from public sector investment, is another source of growth.

This is not the way to sustainable growth. The commerce minister says as much: It is a fact that higher growth levels of the economy can only be sustained by a rapid growth in exports; for example, a 7-8 per cent GDP growth is only maintainable through a 20-25 per cent annual export growth. Such high export growth requires high manufacturing growth. But the recent GDP growth has not been driven by the manufacturing sector. Says the commerce minister: the declining growth trend in the large scale manufacturing sector during 2006-07, from 10.7--8.8 per cent reduced our exportable surpluses.

Finally comes the most damning indictment of the macroeconomic policies. According to the minister, these policies have made imports cheaper and exports expensive. There lies the explanation for the big hole in the balance of trade, which bothers everyone except the `Kashkol breakers.

The minister has now spilled the beans. His candidness must be acknowledged. Independent writers have been talking about the un-sustainability of the present growth process for quite some. There is nothing in it for the poor, the jobless, the sick, the illiterate, the children, women, Balochistan, FATA and rural areas. Like in the Titanic, the rich and the powerful are merrily dancing to the tune of national interest, unaware that the ship is sinking!

Dr Pervez Tahir is a former Chief Economist of Pakistan. He can be reached at perveztahir@yahoo.com.

http://www.dawn.com/2007/07/30/ebr2.htm


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## Neo

*Large subsidies with little relief​*


By M. Haider Hussain

IN the last fiscal year, federal subsidies worth Rs89 billion were budgeted but the government ended up spending Rs108 billion. This increase of Rs19 billion gives a holistic picture but digging deeper, the reality is a bit different.

It is also puzzling that of the Rs100 billion subsidies announced in the budget speech of Mr Omar Ayub Khan, only Rs89 billion can be found listed in the federal budget 2007-2008.

According to the budget-in-brief for fiscal 2008, a Rs8.1 billion subsidy has been earmarked for food. Of this, Rs280 million is for utility stores while Rs7.8 billion is for other food relief measures, including wheat and sugar import and the sale of essential food commodities in FATA and Gilgit. The much-hyped relief through utility stores is a mere 3.4 per cent of food subsidies.

Moreover, subsidy through utility stores, targeted only for sale of `atta (except the Ramazan package of Rs80 million), remained at Rs72 million less than the target of Rs280 million. How much of this subsidy of merely Rs208 million provided relief to the 24 per cent of the population below poverty line through utility stores remains a big question mark.

Table 1 below provides some basic facts on food subsidies. It is based on five years average --- 6.2 per cent of the overall subsidies. During last three years (FY2005-2007), the average share of food subsidies declined to 4.6 per cent.

Table 1 provides a quick snapshot of either less-than or higher-than targeted spending on food subsidies during the last five years. Except for FY2006 when the subsidies were Rs137 million higher, actual subsidies generally remained short of the target. Food inflation remained high and well above six per cent except for the FY2003.

If the difference between the target and the actual subsidy with food inflation is linked, it gives some interesting insights. First, compare the FY2003 and FY2004. When the shortfall in the target increases from Rs41 million to Rs200 million, food inflation rises from 2.8 per cent to six per cent.

In the similar manner, compare FY2005 and FY2006. From a shortfall of Rs23 million in FY2005, when spending on subsidies in the next fiscal overshoots the target by Rs137 million, food inflation declines significantly from 12.5 to 6.9 per cent. And again, when the government spends less than targeted amount in FY2007, food inflation increases again.

This analysis reveals that there can be some correlation between the subsidy target achievement and inflation. Although it is very difficult to establish this point without sophisticated econometric analysis, it provides a possible direction of co-movement. Table 1:

The second significant recipient of the federal government subsidies is the power sector in general, and Wapda and the KESC in particular. Each year, subsidies worth billions of rupees are provided to these two organisations. The power subsidies to these two companies are mainly on account of paying off their arrears, adjusting tariff differentials, absorbing cash shortfalls and GST as well as ad hoc subsidies. Table 2 shows their shares in overall subsidies.

On the average, these two utilities consume around 65 per cent of the overall subsidy each year. In spite of huge subsidies, electricity tariffs are still high as variable power charges average around Rs4.14 per kilowatt hour for residential consumers, around Rs6.56 for commercial consumers, and around Rs5 for industrial and bulk consumers. These variable prices are in addition to the fixed charges.

Wapda receives billions of rupees out of the federal development funds for various development projects related to dams, tube-wells, rural electrification and other relevant activities. These development funds are about 15.5 per cent of overall development budget of Rs543 billion in FY2008; a share higher than any other single ministry or division.

While the importance of these development projects cannot be denied, enjoying highest shares in both the federal subsides as well as development expenditure means that there should be minimal electricity charges as well as no load shedding, which is obviously not the case.

Another critical aspect is the subsidy provided to the KESC. In June 2005, just before its privatisation in November, subsidies were estimated to be around Rs9.6 billion. Privatisation failed to deliver efficient power supply, but subsidies to KESC kept climbing up. At the end of FY2007, KESC enjoyed subsidies worth Rs17.6 billion. A hefty Rs19.6 billion subsidy is earmarked for it in FY2008 as well. Table 2:

The food subsidies in FY2007 were short of their budgetary allocations. The subsidies to Wapda and the KESC have also decreased from 63 per cent of overall budgeted subsidies to 55.9 per cent as per revised estimates. The increase in overall subsidies from Rs89 billion budget estimates to Rs108 billion revised estimates is mainly due to the higher than targeted subsidies to oil refineries and oil marketing companies.

The revenue from petroleum development levy (PDL) is used to subsidise kerosene, diesel and light diesel oil. Refineries and oil marketing companies receive these subsidies as price differential claims due to rise in international oil prices. As a result, subsidies to these oil companies and refineries have increased to Rs25 billion in June 2007 as against the targeted Rs10 billion. Moreover, the government has provided Rs9.6 billion subsidy to textile sector for research and development support during the FY2007.

Food is not the only area that the government is supposed to provide relief to the poor consumers. However providing relief through food subsidies is not the panacea. Price hike, especially of food items, occurs mainly because of administrative or supply loopholes including excess profiting and hoarding which cannot be controlled by fiscal measures. Provision of subsidies without tightening up administrative control gives a wrong signal to hoarders and profiteers.

Continuous heavy subsidies provided to organisations such as Wapda and the KESC make them inefficient. Performance of these bodies is needed to be improved to reduce their subsidies.

The federal subsidies seem to have a very limited role to play in pro-poor welfare. The price fluctuations are purely a market phenomenon. There are some price-affecting endogenous factors for which governments can be blamed including rent-seeking, hoarding and profiteering.

The writer is an economist at the Social Policy and Development Centre.

http://www.dawn.com/2007/07/30/ebr8.htm


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## Neo

*Devastating monsoon and disaster management​*
Recent reports by newspapers and NGOs say that more than 400 people have died in Sindh and Balochistan while 586 are missing in NWFP and Azad Kashmir as a result of floods in these provinces.

Official figures also indicate that the death toll from floods stands at 340, with 180 killed in Balochistan, 120 in Sindh and 60 in NWFP. Thousands of people have been shifted to 20 camps set up in Balochistan and over 90 in Sindh, while the devastation continues.

During the last two weeks, at least 60 more villages in Sindh, most of them located in and around Dadu, have been flooded, after water traveled down waterways from Balochistan. Large-scale flooding was reported on July 16 after fresh rains further upstream.

The National Disaster Management Authority (NDMA) said, 9,000 people in Balochistan and at least 22,000 in Sindh live in camps where food supplies and medicines are reaching them. However, Farooq Baloch living in Dadu but having family links in the neighbouring areas of Balochistan has claimed that, "People in Jaffarabad and Naseerabad districts on the eastern border of Balochistan have in some cases received almost no aid and diseases are spreading there. "

It is stated that floods have affected 1,400 villages in Sindh and 5,000 in Balochistan. There were 73 camps in Shahdadkot and 24 in Dadu accommodating 12,344 and 10,000 people while there are 9,000 people in 20 camps in Balochistan, Almost two million people in Balochistan and 200,000 in Sindh have been affected. 73 relief camps have been established in Shahdadkot--the most affected district of Sindh--, 44 relief camps have been set up in Balochistan.

In the provinces, hundreds of army and paramilitary forces are taking part in the relief operations. Officials say that road and train links have been totally destroyed. Thousands have taken shelter near railway stations as relief teams drop food and emergency medicines from air. Balochistan has been the worst affected with three million people marooned and thousands of others cut off from their villages,

Management failures: It is said that if Karachi was to be hit by an earthquake similar to the one in Kashmir in 2005, it may lead to deaths to 35 million people.

During the official briefing to the president and the prime minister, NDMA officials confessed that one of the major reason for such a large number of casualties in the Kashmir earthquake was the inefficiency in managing the disaster of such a magnitude.

Two years have already passed but the country is still far a way from achieving any such efficient planning or management system.

The Federal Flood Commission (FFC), the Emergency Relief Cell (ERC), the Pakistan Meteorological Department and the Civil Defence-- the main agencies for tackling disasters and relief managementhave no solid performance to boast of in this regard. The country faces monsoon disasters for the last 60 years but only this year the government realised that there should be a plan to meet the collateral disaster of flood and rain.

The Chief Meteorologist, Shaukat Ali Awan announced last week that a comprehensive plan has been finalised to install flood warnings and radar systems in NWFP, Sindh and Balochistan. He said that the basic aim of installing the radar system was to ensure accurate prediction of rainfall duration.

A radar system has already been installed at Mangla Dam. Another radar system upgraded at Lahore and one also has been installed in Sialkot in collaboration with the Federal Flood Commission for forecasting floods in river Chenab.

Relief activism: Dealing with damages of flood and rain havoc covers a package of integrated relief delivery system which includes cluster activities, national/ international relief coordination ensuring provision of shelter cluster, camp management, water and sanitation (WATSAN), education/logistics/gender clusters and sensitive voluntarism, etc

The NDMA reported that shelter is the greatest need for Sindh and Balochistan followed by food, potable water and essential medicines. Spontaneous settlements established primarily along roadsides, however remain a concern.

Three geographical priority regions have been identified according to needs basis:-

Priority 1: Dadu and Kambar districts (Sindh);

Priority 2: Sibi, Bolan, Jhal Magsi, Naseerabad, Jaffarabad (Balochistan) and

Priority 3: Kharan and Turbat (Balochistan)

There is also a strong need to develop a networking of other organisations that are critical components of a disaster planning which includes: fire, police, health, meteorological, agricultural, irrigation, forest, transport and food departments, ambulance services, telephone and utility companies, hospitals, armed forces, coast guards and Rangers, Suparco, the nuclear regulatory body, airport/railways/seaports authorities, environmental/ building-control and water management authorities, besides municipal corporations, public and industry representatives, NGOs and volunteer organisations.

Though the foreign donors have pledged over $6 million for the people hit by recent rains and floods, it is basically a sustainable disaster management that can provide relief to the affected persons.

http://www.dawn.com/2007/07/30/ebr10.htm


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## Neo

*Irritants in exports to Afghanistan​*


TRADE Policy 2007-08 has little to offer to enlarge exports to Afghanistan, which will certainly make the job of countrys economic managers tougher to achieve the ambitious target of $19.2 billion for this fiscal year.

Pakistan emerged as a major trading partner of Afghanistan following major reconstruction work started there because it has geographical, ethnic and cultural advantages over competitors in trade with its neighbour..

More than 3.5 million Afghans lived in rural and urban parts of Pakistan for three decades that has made them familiar with Pakistani consumer goods.

The situation offers opportunity for more exports to the war-ravaged country which lacks enough manufacturing base to cater to its domestic demands. This is evident from export growth after 9/11. The bilateral trade climbed up from $492 million in FY 2003-04 to $1.63 billion in financial year 2005-06 mainly because of exports.

NWFPs businessmen engaged in bilateral trade argue that the countrys exports can be increased manifold from the existing level, if the government removes what they called irritants in exports.

Owing to these impediments they argue that exports have witnessed a decline of almost $400 million in financial year 2006-07 as compared to 2005-06. The local manufacturers are losing huge market mainly to Iranian and Indian competitors.

Liaqat Ahmad Khan, President Sarhad Chamber of Commerce and Industry (SCCI), says the government claims that Pakistan is located at the doorstep of Central Asia, but in reality it has never focused on the benefits of geographical proximity to these emerging markets.

The exports to Afghanistan are on the decline mainly because of the discriminatory policies for the region.

Under the trade policy 2005-06, the federal government made abrupt procedural change to settle claims of rebate on taxes on export to Afghanistan, making it obligatory on exporters to produce imports clearance by Afghan Custom authorities across the border.

This, in Mr Khans view, is the major factor behind the decline in exports.

In the past exporters claiming rebate on taxes were required to produce export documents verified by the embassy/consulate of Pakistan in Afghanistan, a mode still intact for other countries.

Mr Khan says: The new procedure has created a lot of problems for the exporters because most of the Afghan importers are reluctant to provide copies of requisite documents to Afghan Custom authorities across the border. In a number of cases relating to different exporters, where there is one importer in Afghanistan only one certificate of receipt of goods is issued by the Afghan customs, which is difficult for different exporters to claim rebate on their exports. Also, Afghan customs documents are mostly in Persian and are not verifiable, whereas in some cases the Afghan customs documents do not contain even the vehicle number.

We proposed to the federal government to restore the previous system in the new trade policy. But no heed was paid to our demand , says Mr Khan.

At present export is allowed only via land route of Torkham and Chaman border. The growing volume of trade needs better infrastructure. A part of the goods are cleared by Ghullam Khan custom station in North Waziristan.

The Federal Board of Revenue (FBR) on December 30, 2004 notified opening of customs stations at nine different routes to facilitate trade. These include one each at Nawa Pass (Bajur Agency), Khapakh (Mohamand Agency), Terimengal (Kurram Agency), Kharlachi (Kurram Agency), Sheedano Dand (Kurram Agency), Lawara Boya Datta Khel Road (North Waziristan Agency), Angoor Ada (South Waziristan Agency), Khand Naral (South Waziristan Agency) and Arandu Pass at Chitral district.

So far, the custom authorities are unable to formalise trade on such routes because lack of facilities, poor road infrastructure and above all security concerns in the tribal belt, although informal trade is still taking place from such routes.

The commercial exporters are also unhappy over the rebate issue. They say Peshawar-based Regional Tax Office (RTO) is using delaying tactics in disposing of refund claims one way or the other, which is causing liquidity problem for them. They also complain of harassment by the tax officials through unnecessary investigative audits.

Officials in RTO, however, have a different story to tell, saying it was unusual growth in claiming rebate on taxes on export to Afghanistan that prompted them to investigate.

A senior official at RTO informed that a number of commercial exporters with the help of some tax-officials had inflicted loses worth millions of rupees to the national kitty by producing fake documents.

The RTO has recently registered FIRs against two exporters in fraud cases for collectively receiving Rs591 million as refund on bogus invoices.

The official did not agree to the contention that delays in refund claims is hindering export , saying during the first six months of the last financial year 2006-07 the value of pending refund claims was Rs700 million, which stood the same in June this year.

This means there is no increase in the size of pending amount, the official remarked.

In his trade policy speech, Commerce Minister Humyun Akhtar attributed the decrease of almost $400 million in export to Afghanistan to petroleum, leather and rice as flow of other consumer goods is normal. The Commerce Minister has put things under carpet for the time being.

The government has no long-term policy to develop its trade with Afghanistan and Central Asian Republics, says exporters.

Numan Wazir, President Industrialists Association Peshawar, says NWFP trade and industry is mostly focused on the consumer markets in Afghanistan, while opening of huge Central Asian markets will stimulate investment opportunities here.

The federal government should have announced a special package for the NWFP under new trade policy for promoting industrial sector by focusing on trade with Afghanistan and beyond, in various fields including marble, granite, gemstone, match , furniture, cement, pharmaceuticals and food products, Mr Wazir pleads..

In his view, freight subsidy, exemption from import duties on raw materials and machinery and tax holiday can be the lasting remedies for developing local industry and to maintaining a strong hold over Afghanistans markets.

http://www.dawn.com/2007/07/30/ebr12.htm


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## Neo

*Unrealised potential of software exports​*
After earning over a hundred million dollars through exports of information technology and IT-enabled services (ITeS) for the first time in the last fiscal year, the government has set this years target at $165 million.

Pakistans exports of IT& ITeS (including software exports) rose to $107 million in FY07 from $73 million a year before. But this was equal to only 0.6 per cent of the total exports of $17 billion.

Since our traditional exports of textiles are not growing at the desired pace, it has become even more important to increase IT-related exports and exports of other non -traditional items.

Exporters believe that IT& ITeS exports could rise to a billion dollars by 2010 if the government and the private sector launch an effective image- building and marketing campaign

We need to tell the world our success stories and make them believe that we are capable of meeting their requirements, says Mr Ayub Butt, CEO of Karachi-based ZRG International. His company mainly offers the technology to run call centres within and outside Pakistan.

President of Pakistan Software Houses Association Mr Ashraf Kapadia says the country has numerous success stories to sell abroad. How many of us know, for example, that the financial trading software handling the clients transactions on the New York Stock Exchange may be the one provided by MixIT, a Karachi-based company ?

Another Karachi-based company, Etilize, says Mr Kapadia with a pride, is the largest content provider to distributors in the world including Wal-Mart.

He says that Wal-Mart and other companies are using the software developed by Etilize to offer their clients the facility to make on-line cross-company price comparisons.

Officials of Pakistan Software Export Board say exports of IT and ITeS have reached the take-off stage. We need to increase them to at least five per cent of our total exports, says an official adding that in this era of knowledge economy, we cannot continue to count on just traditional sources of exports.

Software exporters and PSEB officials say that one of the impediments to a faster growth in IT-and ITeS is that an unrealistic comparison with India demoralises Pakistani entrepreneurs. Many transactions in IT and ITeS of Pakistan remain under-reported or are even unreported at all, they say.

After taking into account all sorts of forex earnings related to IT& ITeS but not reported as such, the amount goes up to $600 million per year. Critics, however, point out that even at this level it is just 3.5 per cent of our total exports.

In the year ending in March 2007, India earned some $40 billion through exports of IT& ITeS, which was equal to a whopping 32 per cent of its total merchandise exports of $125 billion. Now the country is aiming to increase these non-traditional exports to $60 billion by 2010.

But president of Pakistan Software Houses Association, Mr Ashraf Kapadia says that it is not appropriate to draw a parallel between Pakistans and Indias foreign exchange earnings.

The PSEB has conducted a thorough exercise which shows that if the two countries use the same standards of calculating foreign exchange earnings through IT& ITeS, Pakistans would be not less than $2 billion against Indias $40 billion, he said.

He however reckons that comparisons aside, the country needs to accelerate its exports of IT& IT-enabled services adding that the country has enough potential to do this.

But the number one problem is our countrys image abroad. We need to show the world that despite all the problems that we have, business environment in Pakistan is excellent and foreigners can easily frequent our major cities.

Giving an example he said a US-based client of his own company (Systems Ltd.) was reluctant to visit Pakistan for five long years, citing his concern about various issues here. But finally when he visited Lahore land, saw for himself that there was nothing to scare foreign businessmen, and he made four successive visits ever since.

Officials of PSEB admit this and say that the board is building a true image of Pakistan by holding international events here and participating in the ones held in other parts of the world.

They mention signing of an agreement in Islamabad with the Microsoft in March this year adding that the visit of Microsoft executives would send a positive signal abroad and help others overcome inhibitions about Pakistan.

The agreement is aimed at seeking the Microsoft expertise in making Pakistan more competitive in the international market for software and IT-related services.

Under the agreement Microsoft would also help Pakistan develop and maintain a pool of human resources.

Currently there are 110,000 IT professionals and according to PSEB estimates over 10,000 of them are engaged in exports-oriented activities.

But a large number of professionals are still required to sustain growth, says Mr Ashraf Kapadia citing scarcity of human resources as number two problem facing the IT industry. We need to develop many more institutes of higher learning in IT and encourage the youth to choose IT as a career.

Executives of software houses say that in addition to having larger number of IT professionals they need to groom fresh IT graduates into highly skilled workforce well-versed with the most advanced practical knowledge. Sadly this is not happening on a wide scale.

The lack of adequate number of IT professionals can be gauged from the fact that 94 per cent of the total 1042 IT companies registered with PSEB are located only in three cities namely Karachi, Lahore and Islamabad.

PSEB officials say that export-oriented activities in IT& IteS cannot take place in other cities unless there are enough IT professionals available in those places as well.

That even the available IT professionals need advance training is evident from the fact that the share of software consultancy services is only one fifth of the total IT& ITeS exports. Software consultants are regarded as the most skilled workforce capable of providing real-time solution to complex IT-related jobs.

However, the country is making some progress exclusively in the field of software exports that rose to $73 million in FY07 from $46 million a year before.

Experts say whereas there is little scope for increasing exports of software consultancy, tremendous scope exists for boosting software exports as well as business process outsourcing or BPO. Pakistan has so far not made any big progress in BPO which is regarded as main revenue earner in IT& ITeS. In the last fiscal year India earned $8.4 billion through BPO, which was more than one fifth of its overall $40 billion exports of IT& ITeS.

Executives of software houses say that before 9/11 Pakistan had started claiming a small share of the global BPO business in the form of medical transcription that had gained immediate currency in the country.

But after the September 11, 2001 terror strike on American soil followed by the US-led attack on Afghanistan, medical transcription business slowed down. And the global companies that were eyeing Pakistan as a destination of business process outsourcing moved towards other countries, most notably India. Unlike software development which requires involvement of skilled professionals, the work sought under BPO could be done by semi skilled people. You dont even need people well-versed with English. You need youngsters who can read and write English and can spend time both on computers and on manual entry books, says the head of a software house.

Airlines and shipping companies, large consumer business houses and companies engaged in mortgage, healthcare, engineering and accounting outsource their back-office jobs and call centre operations to offshore companies providing cheaper services. Given the volume of these jobs, award of BPO also creates a lot of jobs in the recipient countries, notably in its sub-urban areas.

IT companies located in major cities can get BPO-related jobs done at the places brimming with young jobless people. In each of these centres they will need to recruit only a handful of fully skilled professionals to guide and groom the raw talent. Experts say that website building is also an area where Pakistan can earn sizable foreign exchange provided it can get huge volumes of business in hand.Mohiuddin Aazim

http://www.dawn.com/2007/07/30/ebr13.htm


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## Neo

*Stubborn food inflation​*
THE government has appointed a four-member ministerial committee to look into the issue of food inflation and bring it down through strict administrative measures and by removing the gap between demand and supply.

"This was the decision of the ECC to have this committee control food inflation by taking some special initiatives", said Prime Minister's Adviser on Finance Dr Salman Shah.

Dr Shah, who is also one of the members of the committee, said that a decision had been taken to lower food inflation by curbing smuggling, especially of wheat, prevent hoarding and banning export of any major item that was causing increase in food inflation. "On top of it, this time there will be a severe administrative action to achieve our objectives", Dr Shah said.

He did not believe that the new committee would be a failure like the previous committees and other provincial bodies in controlling food inflation and was meant only to appease the anger of the common man.

"This time we mean business, and you will find no relaxation in our resolve to check the menace of inflation".

When reminded that some people sitting in the cabinet were allegedly responsible for food inflation particularly of wheat and sugar, Dr Shah said there was need of a "dynamic process" to resolve the issue by taking timely action against anybody who is involved in price hike.

"This committee would constantly monitor the food supply situation and whenever it finds undue export of any commodity, it will recommend a ban or a 15-20 per cent export duty to cut food inflation which, of course, is causing problems and an embarrassment to the government every now and then", he said.

Currently wheat prices were very low here as compared to its prices in other countries, forcing businessmen to start its export. "But now there will be thorough check, and unless there is an adequate quantity of surplus wheat available, its export will not be allowed, he said.

He admitted that smuggling was a serious crime but it could not be controlled overnight. He also conceded that vested interests sitting both inside and outside the government were responsible for smuggling wheat and other commodities.

"We have been failing in taking timely action and this is a real issue which will now be seriously looked into".

The core inflation, he said, was still below the target at 5.3 per cent but it is the food inflation which was above the target and causing problems to price stabilisation. In June food inflation was 0.2 per cent and if it continues to be in the range of 0.2 to 0.3 per cent, it might get stabilised and help the government in ensuring certain check in prices.

The major problem, he believes, is the supply side shocks, and if the oil prices remained at $78 per barrel, it will be a serious issue. The oil prices needed to be stabilised in the international market so that its negative impact could be avoided by the developing countries like Pakistan.

However, some people within the government did not believe that any new initiative or mechanism would work to control both the inflation and the food inflation. They said that there was no real 'will' on the part of the government to address the issue with the result it gets compounded every day adding to peoples problems.

A concerned official said there was need to address the issue of inflation and food inflation on "permanent basis" and not through "ad hoc measures". The policy of allowing import of any item, whose prices are high in the country, is a temporary solution. The real solution lies in increasing its production, he added.

The real issue is the increase in productivity on which the government was not paying any attention, despite having institutions like Parc, which failed to perform its duties in terms of proposing real crop substitutions and changing pattern for various verities of pulses. Why there is still a failure in finding out high-yield varieties of crops, he asked.

Similarly, why there is a failure in seed multiplication and if the public sector cannot do any thing then this is a high time to transfer the job to the private sector, he advised. He regretted that the high officials did not take into account the advice of their subordinates and planned things considering the interests of the sitting ministers and the influential landed gentry.

"The government promised last year to provide adequate funds to increase livestock production but it was not done", the official said.

About inflation, he said, the money supply had not been restricted due to which the government had failed in achieving its target. And now it did not seem that 6.5 per cent inflation target set for 2007-08 could be achieved as the government would once again borrow more than its requirements from the banks. The current target of borrowing Rs130 billion from the banks would not be met, he predicted. "Last year the government borrowed the double of its target - Rs250 billion which created problems in money supply situation", the official said.

Prominent economist and the former director of Pakistan Institute of Development Economics (PIDE), Dr A.R, Kamal, said that the issue of inflation and food inflation cannot be resolved by appointing committees and other bodies.

Unless the government improves the supply side situation, which was a real problem, the food inflation would not be controlled.

Likewise, money supply situation was another matter of concern and it could not be addressed as long the government kept on borrowing without any justification against its own targets. He too was of the view that hoarders, smugglers and profiteers were needed to be checked without caring for the consequences. Only then there could be some respite for the public, he added.

http://www.dawn.com/2007/07/30/ebr17.htm


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## Neo

*External sector: trends and challenges​*
The balance of payments surplus increased to $3.5 billion in the last fiscal year from $1.3 billion a year before. And this happened amidst a record current account deficit of $7 billion.

Apparently, it is quite an achievement. But maintaining this level of BOP surplus might become too difficult during the current fiscal year. The reason is that the huge surplus of over ten billion dollars in the financial account that offset the current account deficit last year may not be obtained easily this year.

In FY07 the financial account surplus expanded to $10.1 billion from $5.8 billion in FY06 as foreign direct investment including privatisation proceeds rose to $5.1 billion from $3.5 billion and foreign portfolio investment shot up to about $3.3 billion from $964 million. (Of this private portfolio investment was $1.82 billion and public portfolio investment $1.47 billion).

The government is preparing to launch GDRs of National Bank and issue Eurobond at an appropriate time. Last year, it had raised $738 million through GDRs of Oil & Gas Development Company besides issuing a $750 million Eurobond.

How the politics in an election year and security situation after Lal-Msjid operation would impact the plans for raising portfolio investment is anybodys guess.

The same can be said about generating enough foreign private portfolio investment this year which, in FY07, rose to $1.8 billion including $650 million GDRs of United Bank Ltd.

Whereas it seems doubtful if large inflows of FDI and portfolio investment would be available in this fiscal year to offset the current account deficit, the deficit itself might expand further.

The government has set the trade deficit target for this fiscal year at $12.8 billion, down from the actual deficit of $13.5 billion in the last year. The targets for imports and exports have been fixed at $32 billion and $19.2 billion respectively. But as international oil prices move up and domestic demand for fuel remains strong, it seems too difficult to contain imports at $32 billion, only five per cent above the actual imports last year.

What else might make it difficult to keep imports bill in check are high international prices of many imported food items including edible oil and milk powder and non-food items like iron and steel.

And achieving the exports target of $19.2 billion, up 13 per cent over FY07 exports is not feasible particularly in view of a sluggish performance of textiles, high inflation and tight monetary policy.

So, the trade deficit this year might exceed the target. The services account deficit, which stood above $4 billion in the last fiscal year might also increase. And remittances from overseas Pakistanis, which are expected to rise 20 per cent or so, would not be of great help to keep current account deficit low.

As Pakistans external sector grows in volume becoming increasingly significant in relation to GDP growth, the country requires having a long-term strategy for dealing with the external sector imbalances. Debts are also mounting. The larger foreign exchange outflows in debt servicing are exerting pressure on the balance of payments. In nine months of the last fiscal year, Pakistan had to dish out $2.2 billion for external debt servicing and it also got $1.1 billion of servicing rescheduled or rolled over.

In case of non-debt creating inflows like FDI, the repatriation of profit and dividend cause a draw down on the foreign exchange resources. In eleven months of the last fiscal year $762 million were remitted abroad on this account. Right now this kind of outflow is not creating much of a problem because foreign investors are also re-investing part of their earning which amounted $668 million dollars in nine months of last fiscal. But that is happening mostly in the sectors, which are witnessing a fast expansion now, like telecommunication.

But a few years down the road, when the expansion euphoria would subside, the volumes of reinvestment would decline and repatriation of profit and dividends would be higher than what they are today.

Reserves: As the balance of payments showed a sizable surplus in the last fiscal year, it led to a build-up in foreign exchange reserves and kept the rupee stabl.

Foreign exchange reserves rose by about $2.5 billion to $15.6 billion in FY07 from $13.1 billion in FY06. And the rupee lost only 0.3 per cent of its value against the dollar in the inter-bank market.

Whereas in FY06 the reserves were enough to finance 46 per cent of total import bill, in FY07 their adequacy to cover the import bill also rose to 51 per cent.

The rupee has so far remained stable during the current fiscal year but bankers fear that it might weaken for two reasons in due course of time.

They reckon that the external sector may not remain as sound and unlike in the past years, the central bank may not strengthen the rupee through net sales of foreign exchange to banks.

Inflation: In the new fiscal year, keeping inflation at 6.5 per cent also seems a real hard challenge, as the post-budget inflationary pressures indicate. Inflationary pressures are particularly visible in prices of food items.

Despite all the government efforts to contain price-hike, food inflation in the last fiscal year advanced at an average rate of 10.3 per cent, against 6.9 per cent a year before.

Advisor to the Ministry of Finance Dr Ashfaque Khan has said publicly that two million tonnes of wheat is lying with the hoarders. He has revealed that the hoarders have the audacity to park their trucks loaded with wheat even at petrol pumps and in the open areas.

http://www.dawn.com/2007/07/30/ebr18.htm


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## Neo

*Investors asked to set up IT venture capital fund ​*
ISLAMABAD (July 31 2007): Prime Minister Shaukat Aziz on Monday urged Pakistani investors to establish a venture capital fund for the Pakistan IT industry to promote an innovative and knowledge based economy in the country. Presiding over a high level meeting on the establishment of the fund at the PM's House.

The Prime Minister said the establishment of the fund would lead to creation of jobs, growth of IT sector and training and awareness among the stakeholders. He said the fund should be managed by professional managers and the government would play the role of an enabler and facilitator for the creation of innovation by the private sector.

He said that Pakistani IT institutions and universities were producing world class IT experts and there was a need to capitalise this potential. He said the large pool of IT professionals with the capacity to provide IT solutions should encourage both the local and foreign companies to benefit from this resource.

Earlier, Managing Director, Pakistan Software Export Board, Yousaf Hussain informed the meeting that the IT industry of Pakistan exceeded $2.2 billion during the financial year 2005-06 with over 1000 world class leading IT companies.

He said currently Pakistan had 50 percent annual export growth and the country was growing as an offshore outsourcing center in South Asia. Asad Jamal, Chairman, E-Planet Ventures said his company was planning to start its operation in Pakistan during the current year.

E-Planet is the pioneer in global venture capital and is considered as a model since 1999, he added. Umair Khan of the Entrepreneurs Fund-III (TEFs) also made a presentation on IT sector in Pakistan and said there was a huge scope in this field and Pakistan could capitalise the opportunity to cater for the requirements of the whole region especially GCC countries.

Adviser to the Prime Minister on Finance, Dr Salman Shah, Minister of State for IT and Telecommunication Ishaq Khan Khakwani, bankers, businessmen and senior officials attended the meeting.

http://www.brecorder.com/index.php?id=598578&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*ADB wants private sector director as Pepco chairman ​*
ISLAMABAD (July 31 2007): The Asian Development Bank (ADB) has asked the government to appoint a private sector director as chairman of Pepco. At present Wapda chairman is also chairman Pepco. Sources said that four 'companies' have submitted their projects to ADB to receive the first tranche of the approved loans amounting to $800 million.

They said that the Bank was also of the view that there was clash of interests between private sector and government members of the Boards of Directors (BoD), which needed to be reviewed. Pepco, in its response to the ADB's aide-memoire, said that in all Boards of Discos, there are invariably three members from private sector.

"All chairmen of the boards are from private sector, but it is true that Wapda and Pepco Chairman is currently the head of the board of NTDC which is not the conflict of interest," was Wapda's response. Sources said that Wapda had also taken up the case with Finance Ministry to review lending rates for power distribution enhancement project of Discos, for which a separate case should be moved for approval of ECC to make this rate compatible with market rates.

They said that Pepco was coordinating with all Discos to develop/frame a comprehensive PC-1 for first tranche of the distribution enhancement project and it is hoped that the document would be submitted in August 2007 for approval of the government.

As discussed in the pre wrap-up and wrap-up meetings, the demand of ADB for acquisition of 'tower bases' (land under the towers) for every tower of the new lines needed to be reviewed as it is impracticable and is bound to jeopardise the whole project, sources quoted Wapda as conveying to the Bank.

Wapda also rejected a proposal of ADB regarding facilitation of independent power producers (IPPs), saying that promotion of IPPs "is not the mandate of Pepco" as this function is carried out by PPIB. On the other hand, as a result of de-regulation and unbundling of power wing of Wapda, the utility has been left with water wing and power wing, which will cater for development and operation of hydel power generation.

According to sources, grid system construction and the T&G stores along with manpower and T&P have been transferred from NTDC to Discos, as these are integral parts of the respective Discos' structures.

http://www.brecorder.com/index.php?id=598617&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'Pakistan wants increased trade ties with Uzbekistan' ​*
LAHORE (July 31 2007): Provincial Minister for Industries Muhammad Ajmal Cheema has stressed that the investors of Pakistan and Uzbekistan would start joint ventures in leather sector that would help enhance the volume of trade between the two countries in leather and other sectors too.

He expressed these views while talking to a 7-member delegation led by Chairman, Leather Association of Uzbekistan Iskandar Attanof, here on Monday. "Pakistan and Uzbekistan have brotherly relations that would further cement in near future," the minister added. He said that investors of Uzbekistan should come forward and avail the opportunities being given by Pakistani government.

http://www.brecorder.com/index.php?id=598663&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'Work on development package in capital in progress' ​*
ISLAMABAD (July 31 2007): The work on development package, worth of Rs 8.3 billion, on various projects, including to improve basic amenities of life like roads and other facilities in the federal capital is under progress, said President Pakistan Muslim League Federal Capital Dr Muhammad Amjad.

Talking to APP here on Monday, he said the Prime Minister Shaukat Aziz have already approved the development projects worth Rs 8.3 billion for rural and urban areas of the federal capital. He said the development package will bringing about improvement in the facilities of health, education, rural development and gas supply in the rural areas.

Dr Amjad said out of this Rs 8.3 billion, a sum of Rs 4 billion will be spent on the expansion of roads, the construction of an underpass and a Zero Point interchange. Islamabad development package also includes the construction of a sewerage treatment plant and the development of a solid waste management system. Dr Amjad said development package for Islamabad would improve the basic needs of life to the people.

He said under this package 19 water filter plants would be installed in different sectors of the federal capital to ensure better supply of clean drinking water. He said a public library, new working women hostel and day care canters for children would also be constructed.

The package, he said, also include, expansion in Daman-e-Koh restaurant at cost of Rs 31 million, construction of Pir Sohawa Tourist Restaurant at cost of Rs 60 million, improvement of F-9 Park at a cost of Rs 3,333 million, improvement of Pir Sohawa Road at cost of Rs 30 million, construction of Arts and Craft Village near Said Pur at a cost of Rs 112 million, construction of Rawal Lake Recreational Spot at cost of Rs 112 million, redesigning and expansion of Zoo at a cost of Rs 100 million.

Said Pur Model Village project at a cost of Rs 400 million, redesigning of Melody Food Street at a cost of Rs 14 million, construction of Food Mall at Blue Area at a cost of Rs 17 million, construction of Weekly Bazars at G-6 and G-9 at cost of Rs 225 million, expansion and redesigning of highways, including 7th and 9th avenue at a cost of Rs 3 billion.

http://www.brecorder.com/index.php?id=598677&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Mega development projects launched in AJK: minister ​*
MIRPUR (July 31 2007): Mega development projects have been launched by the government in various parts of AJK including Mirpur and Bhimbher districts in order to fulfil the local needs of food. This was disclosed by AJK Minister for Food Abdul Qayyum Khan Niazi, while addressing a development review meeting of the AJK Food Department, Mirpur division at the local rest house here on Monday.

The minister continued that the government was bent upon to make AJK self-sufficient in production of various edible items under a broad-based plan. Ongoing food projects have yielded positive results, he said adding in order to ensure the uninterrupted and bulk supply of flour to the masses in far flung areas, the government has established 26 new depots only during new fiscal year.

He said that earlier, only 60 depots could be established in AJK during last six decades. He said that the locally produced flour was available in required quantity at inexpensive and subsidised rates. The government had purchased 17 tons of wheat only from Iftikhar Abad and earned the profit of Rs three million.

The minister said that the government was taking all possible steps to ensure the supply of quality Atta to the consumers. Referring to the need of Atta in far-flung areas in AJK, the minister pointed out that the required stock of wheat and Atta was available for the period of next eight months in the Neelum valley.

Despite this, the food department was fully prepared to meet any shortage of this basic diet in remote and far-flung areas in any emergent situation during monsoon.

http://www.brecorder.com/index.php?id=598723&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Manpower export to Middle East, Malaysia: plumbers, masons, drivers, electricians still in demand ​*
KARACHI (July 31 2007): The Federal government has intensified its efforts to export manpower to labour deficient countries in the Middle East, it was leant here on Monday. Sources said that the slow down in the process of recruitment of semi-skilled and skilled labour by Dubai, Oman, Sharjah, Saudi Arabia and Malaysia was badly affected after 9/11 incident and the recruiters had shifted their attention to India, Bangladesh and Sri Lanka.

The recruiters were reluctant to take initiative on the pretext of "fear of terrorist recruitment". They said that despite assurance from Malaysia that it would send its own teams to Pakistan for recruitment, and despite Pakistan's agreement to this condition, the process did not pick up.

"Malaysian streets are full of cheap labour from Indonesia, India, Philippines, Thailand and Bangladesh. Similar is the situation in the Middle East and elsewhere." Sources said that skilled plumbers, masons, drivers and electricians from Pakistan were still in demand in these countries.

Construction workers, mechanics and operators of heavy machinery and those who could bear scorching heat and dig roads were also needed abroad. "A few years back, it was announced that Malaysia will permit drivers from Pakistan to work in the transport sector, but the proposal did not materialise. We are partly responsible for missing out on this opportunity," they said.

Sindh has "exportable surplus" in these fields and efforts are afoot to encourage people to seek employment abroad. The Federal government has planned to encourage and facilitate people desirous of going abroad for gainful employment.

On Monday, Chairman of Policy Planning Cell of the Ministry of Labour and Manpower Dr Saboor Ghayour called on acting Sindh Governor Syed Muzaffar Hussein Shah and explained to him the prospects of the new plan the Labour Ministry had drawn and recruitment procedures for the intending candidates.

He said that the Federal government was encouraging people to go abroad. He said that the ministry would facilitate in the process of finding placements and process of recruitment. Now the system has changed as the government involves itself from the process of making application to recruitment and joining at the workplace by a candidate. A mechanism has also been evolved to safeguard the agreed remuneration of recruited labours.

Ghayour told the governor that the ministry was keen in encouraging people from Sindh to go abroad and take benefits from the opportunities. In this respect, the ministry would help the intending candidates and provide them complete assistance from the beginning of the process to the end of the process. Remittances through protected channels would also be provided.

He said that a comprehensive plan for overseas employment had been drawn and sent to different government departments in the four provincial governments for feedback on the plan.

Ghayour said that on Tuesday representatives of different departments of the Sindh government would meet and submit their recommendation about the procedure of recruitment that they would like to adopt. Their suggestions to make the entire process simple would be incorporated into the plan.

He said that the purpose of this meeting was to sensitise different department on the kind of manpower they would be able to prepare for overseas employment. The governor, on this occasion, said that the overseas employment opportunities would be helpful in solving unemployment problem in Pakistan. "It would be one step forward in poverty alleviation," he added. According to the Ministry of Labour, Pakistan has skilled and semi-skilled manpower suitable for overseas employment. According to a conservative estimate, the Federal Labour Ministry is capable of arranging 300,000 skilled and semi-skilled manpower by the end of this calendar year.

http://www.brecorder.com/index.php?id=598700&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*FTAs with Asean states to hit exports: industrialists ​*
KARACHI (July 31 2007): Signing of the free trade agreements (FTAs) with member countries of the Association of Southeast Asian Nations (Asean) will reduce the country's exports in the world market due to high cost of production and weak marketing plans by the government, said industry sources on Monday.

"Countries in the Asean block are more competitive in terms of value-addition of readymade textile, producing at lower costs than the same quality of Pakistani products, which will only help them occupy our local market and create stiff competition for us in the world market," they added.

The FTAs will help the other countries as compared to Pakistan because local manufacturers were not able to beat products of these countries in the world market, let alone, occupying their respective domestic markets, they said.

They said the government should enable first its local industries before signing the FTAs, as announced in the 2007-08 trade policy with countries like Thailand, Singapore, Malaysia and Indonesia with a view to competing their products in the world market, but also in the local markets of these countries.

"The government should evolve a policy of protectionism for the local industries against the Asean and other regional countries as products from these countries are expected to glut the local markets soon after the signing of FTAs," they added.

Country's imports were already higher than its exports, of which textile products' share was about 60 percent, whereas textile products of the Asean countries, lower in prices and better in quality, could cause heavy losses to local industries, they feared. Trade with China was already in deficit, they pointed out, and said that the FTAs would further give rise to imports also from the Asean countries, as the country's exporters were already striving to compete with these countries in the world markets.

They said that the next fiscal year's export target would not be achievable in the prevailing circumstances, as the cost of production was increasing, turning away the international buyers toward China, India and Bangladesh.

The continued power outages in the country had put a severe negative impact on the industrial production, which made the commodities costlier and delayed their arrival in the world market, as a result, the exporters faced huge financial losses, they said.

They demanded of the government to chalk out a special plan to sort out electricity problems on priority basis, and added that the government should also support small medium and enterprises (SMEs) to enhance export-oriented production, besides generating employment opportunities in the country.

The biggest challenge to the government was to resolve the electricity crisis, develop basic infrastructure for industries and reduce cost of production before signing any pact with other countries so that the local industries could be protected from oversupply of imports, they suggested.

http://www.brecorder.com/index.php?id=598630&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pakistan keen to export cement to India, trade talks today: foreign office ​*
ISLAMABAD (July 31 2007): Pakistan is keen to export cement to India and it will take up the issue of having more access to the Indian market during the commerce secretary level trade talks being held from Tuesday, July 31 in Delhi.

A Foreign Office spokesperson Tasnim Aslam, speaking at a weekly press briefing on Monday, said the issue of including more items in positive list and host of other issues would be taken up by the two sides during the meeting, which would be followed by the Joint Working Group meeting.

When asked about the bill passed by US Congress linking Pakistan's assistance with its performance to eradicate terrorism, she said the bill, if signed by the US president, would undermine the US interest in the region.

"The bill, which is yet to be signed by President Bush, will not only be harmful for Pakistan, but it will be dangerous for the US interests in the region, as well," she said. However, the spokesperson said that the bill would not affect the Pakistan-US strategic relations.

"Pakistan will continue its efforts to eliminate terrorism in its own national interest," she said. "In the past, the sanctions, which came in the form of Pressler Amendment, did not really work. The new bill though does not spell out any sanction, will meet the same end. We are fighting terrorism in our own national interest, and would continue with our comprehensive counter-terrorism strategy," she added.

At the same time, she said that Pakistan would also continue its position on the bill. "By now, the US Congress would have understood our position," Aslam said. We will continue to interact with the US government on the issue. In reply to another question, she said the bill would have no negative impact on the second round of Pak-US strategic dialogue to be held later this year.

Responding to a question, she said, certainly, Balochistan Liberation Army (BLA) was a terrorist organisation and definitely Pakistan is against it. "The BLA leadership is living in different countries. We have conveyed our message regarding this to the Afghan government." Afghanistan denies that any BLA leader is living there.

Pakistan recognises Taiwan as an integral part of China. The issue of Taiwan is an internal issue of Chinese government. In the past, we opposed UN efforts to separate Taiwan from China and in the future, we would do the same, she said.

"I don't think that Saudi Arabia had any nuclear programme. The media reports suggesting that Pakistan is assisting Saudi Arabia in building nuclear programme are absurd. Such reports don't deserve to be commented," she added.

She said Pakistan was more than ready to speed up dialogue process with India. The composite dialogue process is well on track, though a bit slow. But India is, actually, responsible for this delay. Pakistan wants to shift from conflict management to conflict resolution including the core issue of Kashmir, she added.

On the issue of Siachen, she said it was India, which did not respond positively to Pakistan. In secretary level talks, which would begin today, the two countries would discuss issues like opening bank branches in each other countries, non-tariff barriers, laying of new optic fiber link, relaxation in business visa rules and host of others. Pakistan minister of state for foreign affairs Khusro Bakhtiar will attend Asean Regional Forum (ARF) to be held next month.

http://www.brecorder.com/index.php?id=598689&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Inter-Continental to open in 2010: agreement signed ​* 
LAHORE (July 31 2007): The Inter-Continental Hotels Group will manage a 200-room hotel in Lahore as part of a spectacular mixed-use development by the Centaur Pvt Ltd. The Centaur and the group signed an agreement at the group's Asia Pacific head office in Singapore in July.

Centaur is part of the diversified Rockville Group of Companies, also known for the prestigious Froebel's International School network in Islamabad and Rawalpindi and soon in Lahore. The Inter-Continental Lahore, scheduled to open in late 2010, will offer the luxurious facilities associated with the Inter-Continental brand including meeting rooms, ballrooms, signature restaurants, fitness centre and spa.

http://www.brecorder.com/index.php?id=598665&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Pakistan to become worlds number two: Use of CNG in vehicles​*
KARACHI, July 30: Pakistan is likely to outclass Brazil and Argentina in population of CNG vehicles and may emerge worlds number two in August this year by surpassing Argentina in number of CNG vehicles.

Pakistani roads are now flooded with 1.21m of CNG vehicles while Argentina has 1.243 million vehicles on roads. Brazil has 1.315 million CNG converted vehicles.

We will leave Argentina behind next month in view of the rising demand of CNG-fitted cars and other vehicles. Pakistan has already emerged as the CNG leader in Asia, CNG Station Owners Association (CNGSOA) Malik Khuda Bux told Dawn on Monday.

Currently, over 1,400 stations are in operation in 85 towns and cities of the country and an investment of Rs46 billion has so far been made. More than 60,000 new jobs have been created.

Some 400 new stations will be added in the new fiscal 2007-08 and number of vehicles will touch 1.4 million, he said adding that the 7,000-8,000 vehicles are being converted into CNG every month while some 3,000 new factory fitted CNG cars are finding their way to the roads from the local assembly plants.

Despite phenomenal growth in the CNG sector, consumers continue to face inordinate delays due to long queues at the CNG stations of the drivers to get their cylinder filled.

Less than 10 CNG stations out of over 100 stations in Karachi are getting gas pressure at 15 psi (per square inch) as against low pressure of eight psi. As a result, consumers have to wait for long at the CNG pumps. In the peak hours (after 10:pm) the eight psi reduces to 4-6 psi, thus taking 15-20 minutes to get the gas cylinder of a car filled.

In sharp contract, the Sui Northern Gas Pipeline Limited (SNGPL) offers 15 psi to the CNG stations. Dealers said that more than 90pc of pumps are getting 15 psi pressure. The CNG stations are now handling consumers numbering more than double compared to last year. Because of the low pressure of eight psi, the capacity of the compressor fails and the dispenser takes time to fill CNG especially in peak hours.

Chairman CNG Dealers Association (CNGDA) Abdul Sami Khan along with other members told Dawn in his office that one and a half years back, the SSGCL had agreed to offer 15 psi pressure but their charges were very high. As a result, only few investors have so far afforded to get the 15 psi for their stations.

He said that the SSGCL should follow the policy of SNGPL in offering 15 psi with low charges. But so far the utility company despite repeated attempts and requests is not ready to take the matter seriously.

Because of phenomenal increase in petrol prices, a number of consumers had installed CNG kits and cylinder in their vehicles in a bid to cut the cost of transportation. CNG still costs 40-50 per cent cheaper than petrol in cars.

The CNG dealers had also discussed the draft CNG Policy, 2007, which the petroleum ministry had dispatched to the associations for comments and inputs.

On the governments plan that no new CNG pump will be set up in residential area, Abdul Sami Khan said that the government should exempt those investors, who had already made investment by purchasing land and equipment and also those who had received license.

For example, he said that in Karachi alone, there are 100 pumps situated in residential areas while 35 new stations have also been approved.

http://www.dawn.com/2007/07/31/ebr1.htm


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## Neo

*Economy adds 730,000 new jobs​*
ISLAMABAD, July 30: The government has claimed to have created 730,000 new jobs during the July-December period of 2006-07. The ministry of finance in a report released here on Monday said the number of employed people rose to 48.09 million during the period under review from 47.36 million in July-December 2005-06.

According to Labour Force Survey July-December 2006-07, the overall unemployment rate had declined to 5.3 per cent from 6.5 per cent in July-December 2005-06. In rural areas it declined from 5.7 per cent to 4.6, while for urban areas to 6.8 per cent from 8.4 per cent.

Both male and female unemployment rates have declined both in rural and urban areas. However, the female unemployment is very high, which declined to 14.5 per cent in urban areas from 15.9 per cent, while it stood at 6.8 per cent in rural areas dipped from 8.2 per cent.

The decline in female unemployment in both rural and urban areas can be attributed to two factors. Firstly, it has been observed in many developing countries including Pakistan that females would not enter the job markets due to perceived or otherwise discriminatory factors.

In recent years, in Pakistan, it is now being observed that such impression is being dispelled as female participation rate is on the rise, as female labour force participation rate was 11.1 per cent in 2003-04, which increased to 14.1 per cent during July-December 2005-06 and further to 14.5 per cent in July-December 2006-07.

This trend is due to the increased job opportunities. Secondly, the availability of micro finance facilities focusing on women particularly in rural areas has created new opportunities for women entrepreneurs.

Unemployment is defined as all persons 10 years of age and above who during the reference period were without work i.e., were neither in paid or self-employment nor employed as unpaid family helpers, currently available for work i.e., were available for paid employment or self-employment, and seeking work i.e., had taken specific steps in a specified period to seek paid or self-employment.

Sustaining economic growth is expected to further generate employment opportunities. This is likely to reduce overall unemployment to 4 per cent by 2009-10 under the Medium Term Development Framework (MTDF) 2005-10.

Since approximately 1.0 million people enter the job market each year, creating jobs for them is the key to reducing poverty and thus leading the country towards new heights of economic and social prosperity, added the report.

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## Neo

*Exports of rice, carpet, sports goods drop by 20pc​*
ISLAMABAD, July 30: Exports of traditional products  rice, carpets, sports, surgical, leather, and footwear have recorded more than 20 per cent decline during the year 2006-07 over the last year.

Official figures compiled by the commerce ministry reveals that export of other commodities like cement, gur and gur products, jewellery, gems, and engineering goods have recorded a tangible growth during the year under review over the last year.

The traditional products export once known for its quality in international market like footballs, surgical goods and leather products has been witnessing decline during the last couple of years. As the government policies are only focusing on textile based industries at the cost of others.

The overall export of non-textile products stood at $6.25 billion in the year 2006-07 as against $6.233 billion over the previous year, indicating a nominal growth of 0.33 per cent.

Product-wise details showed export of rice dipped by 3.11 per cent during the year 2006-07 to $1.121 billion as against $1.157 billion over the last year. Of these export of basmati was up 16.96 per cent during the year under review. However, export of other rice declined by 17.31 per cent during the same period. This is the only traditional commodity, which crossed the billion dollar mark otherwise export of other products remained in millions.

The export of sport goods declined by 16.14 per cent during the year 2006-07 as against the same period of last year. Of these export of footballs declined by 27.30 per cent. However, export of gloves rose by 214.93 per cent during the same period.

The carpets, rugs and mats exports recorded a negative growth of 9.38 per cent; and leather goods (garments and gloves) by 24.42 per cent during the fiscal year under review over last year. Of the leather goods export of leather garments declined by 22.72pc, leather gloves 17.07pc and other leather manufacturers 52.79pc.

The export of footwear declined by 21.44 per cent during the months of June-July 2007 over the same months of the last year. Of these export of leather footwear dipped 16.64 per cent canvas footwear 46.76 and other footwear 38.43 per cent. Molasses export declined by 35.57 per cent.

Further analysis showed that export of surgical instruments and medical equipment increased by 13.06 per cent, engineering goods 8.07 per cent auto parts 24.80 per cent, cement 34.74 per cent, gems 19.45 per cent, jewellery 130.69 per cent, gur and gur products 18.42 per cent.

Among the primary commodities, export of fish products declined by 3.01 per cent, fruits 9.94 per cent, leguminous vegetables 90 per cent, and sugar 100 per cent. However, export of vegetables up by 80.35 per cent, tobacco 46.56 per cent, wheat 100 per cent, spices 0.36 per cent, meat products 120.17 per cent and all other food items 21.11 per cent.

http://www.dawn.com/2007/07/31/ebr6.htm


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## Neo

*Drilling of exploratory wells in Khairpur​*
ISLAMABAD, July 30: The Petroleum Exploration Limited (PEL) will drill 16 exploratory wells in Kandra Block in Khairpur district in the next three years. The PEL has completed 350 kms of 2-D seismic survey of Kandra mining lease located in Kharpur District in upper Sindh in collaborating with a renowned Chinese firm, Sichuan Petroleum.

This was stated by chairman of PEL Zaheerudin during a meeting with federal minister for petroleum Amanullah Khan Jadoon here.

An official announcement issued here stated that the PEL chairman told the minister that specialised drilling equipment was imported from China and most modern field units would be utilised in Kandra Block. He informed that newly acquired seismic data had been sent to a renowned US spectrum company for evaluation.

He said that to expedite the spade work for oil and gas search, the PEL had tasked the Sichuan Petroleum to carry out seismic survey in its other blocks.

The joint venture partners in these blocks were Frontier Holdings of Canada and Government Holding.

http://www.dawn.com/2007/07/31/ebr12.htm


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## Neo

*Import bill of eatables shrinks​*
ISLAMABAD, July 30: The import bill of eatables recorded a marginal decline of 3.98 per cent to $2.711 billion in 2006-07 as against $2.824 billion the last year. The decrease in the imports of food items occurred mainly due to decrease in import of wheat, tea and sugar. However, import of milk products, spices, pulses and edible oil increased during the year under review.

Official figures compiled by the Federal Bureau of Statistics (FBS) showed that the import bill of wheat un-milled declined by 68.70pc to $41.550 million as against $132.750 million, tea by 4.03pc to $213.815 million as against $222.782 million and sugar by 58.23pc to $260.364 million as against $623.287 million.

On the other hand, the import of milk products surged by 37.06pc to $84.146 million as against $61.394 million the last year and dry fruits and nuts up 20.67pc to $69.724 million as against $57.779 million.

An increase of 40.29pc was witnessed in import of pulses to $243.838 million as against $173.814 million and an increase of 24.33pc was recorded in palm oil $891.785 million as against $717.273 million.

Import of soyabean increased by 89.33pc to $40.646 million during the period under review as against $21.468 million, 2.10pc increase was witnessed in spices to $53.879 million as against $52.770 million and 6.74pc increase was seen in import of all other food items to $812 million as against $760.754 million.

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## Neo

*Energy security plan may be altered​*
ISLAMABAD, July 30: Pakistans 25-year energy security plan (2005-30) is expected to be substantially altered in about a years time with the help of international consultants as some key targets proposed under the existing plan seem unachievable, it is learnt.

Sources in the government told Dawn that a new 20-year Pakistan Strategic Energy Plan 2009-29 would replace the existing plan. With the funding and technical guidance of the Asian Development Bank (ADB), the government would establish within 45 days a new planning unit comprising five or six international experts.

The government is anticipating the energy crisis to worsen in the next two years due to a 50 per cent increase in demand. The power shortage that had been estimated to remain in the range of 1000-2000MW this year in fact crossed 2,900MW a few months back. The shortfall is likely to reach about 5,300MW by 2010. Overall, Pakistans total energy requirement is expected to be around 80 million tons of oil equivalents (MTOE) in 2010, up by about 50 per cent from the current years 54 MTOE.

Since four out of five major initiatives originally planned for meeting this demand are uncertain at present, the shortage could be anybodys guess, said a senior government official. Hence, the need for a professional review of the energy security plan based on ground realities was felt instead of relying on mere wishlists, he added.

The Energy Planning Unit would develop the strategic energy plan in one year after reviewing all existing policies.

Natural gas, power, and oil shortages were all posing risks to the economic growth in medium to long term period, said an official who would be closely working with the planning unit.

The main focus of the policy review is to examine in detail the long term cost of each effort and source of energy in terms of financial, economic, energy supply and various uses, domestic resources, and long term political costs.

The demand for natural gas, having about 50 per cent share in the countrys energy consumption, would increase by 44 per cent to 39MTOE from 27MTOE currently, an official said. The government had planned to add an overall power generation capacity of about 7,880MW by 2010. Of this, about 4,860MW was to be based on natural gas, accounting for 61 per cent of the capacity expansion. However, the gas-based power expansion of about 4,860MW would remain in doubt since these estimates are based on three gas import options for completion in 2010, 2015 and 2020.

This means that the major part of about 4,860 gas-based plants would not be available and the difference would be met through other costly options. Even if the physical work is started today, it will take at least seven years to complete a pipeline project, said a senior petroleum ministry official. The fifth initiative of the Liquefied Natural Gas (LNG) import is expected to remain on schedule and start delivering about 0.3 billion cubic feet of gas (BCFD) by 2009-10 and another 0.5 BCFD by 2015.

http://www.dawn.com/2007/07/31/top13.htm


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## Neo

*India opens market for Pakistani cement​*
KARACHI, July 31: Bureau of Indian Standards (BIS) has given three Pakistani cement companies  Lucky, Maple Leaf and Pakistan Cement - permission to dispatch consignments to India for five months, newspaper The Hindu stated on Tuesday, quoting senior government officials.

Under the head, Pakistani firms to sell cement in India, the paper also wrote that four other (unnamed) companies were in the process of registering online for provisional permission to enter the Indian market.

Cement sector analysts here thought the move to let the concrete bags roll in, even while complete procedures for the final stamp of approval from quality-control authority was still awaited, was a manifestation of desperation of cement-hungry India.

The Indian demand for cement next year has been projected at 180 million tons against the installed capacity of 132 million tons, reflecting a huge shortfall.

The Hindu quoted officials at the Indian High Commission in Mumbai as saying that earlier this month inspectors of the BIS had visited three companies (in Pakistan) and took back product samples for testing. The testing process was expected to take about four weeks.

Chief Financial Officer (CFO) at one of the three companies who have been given the nod to enter Indian market confirmed the arrival and departure of those officials with the samples in tow.

The cement is tested for compressive strength and the process takes a minimum of 25 days, but the officials said BIS was fast-tracking the process at the intervention of the (Indian) Prime Ministers Office, wrote The Hindu.

The paper also observed that (Pakistans) Foreign Ministry spokesperson Tasnim Aslam had said the problems for Pakistani cement exports to India were likely to be discussed at the two-day meeting of Commerce Secretaries, scheduled to begin in New Delhi on Tuesday, and at an August 2 Joint Working Group meeting that would focus, among other issues, on non-tariff barriers.

The BIS requirements have thrown a spanner in the works since the Pakistani companies first tapped the Indian market, but New Delhi insists that BIS requirements were not Pakistan-specific but applied to all cement imports. Three Chinese cement firms were also reported to be waiting for BIS certification.

Analysts here said that the opening up of huge Indian market would take care of both the falling local prices as well as optimum utilisation of upcoming expansion capacities. But companies were not about to rush to cross the border in order to hunt out buyers on the other side of the fence.

We would wait for the all clear signal from our agent in India so as to protect pricing and more importantly the assurance of no blockage of dispatches, says the CFO of a local cement company.

Meanwhile, on Tuesday the Board of Directors of Lucky Cement, the largest producer of concrete in the country, announced results for the financial year 2006-07, which the market pundits termed as better-than-expected.

The company posted after tax profit at Rs2.55 billion translating into earnings per share (eps) at Rs9.67. Most analysts estimates fell far below that mark. Some of the eps predictions included Rs7.80 by First Capital; Rs7.27 by InvestCap; Rs6.63 by Taurus Securities; Rs7.88 by AKD Securities; Rs7.91 by Khoja Capital Markets; Rs9.47 by Atlas Capital Markets and slightly over Rs9 by JS Global.

But in all fairness it has to be stated that the actual earnings had varied from the estimates not as much by the misjudgement by analysts but because the other income included a one-time, excise duty refund of Rs539m, which was recorded by the company on the back of favourable decision by the Supreme Court regarding the long pending issue of federal duties that the company had contended it need not pay.

If the one-time other income is excluded, the companys eps will be lower by 24pc to Rs7.77, calculates Yasir A. Syed, Investment Analyst at AKD Securities.

Luckys PAT for the year ended June 30, 2007 stood at Rs2.55bn (eps of Rs9.7), which compared with Rs1.94bn (eps of Rs7.4) the year ago, representing a massive growth of 32pc.

In FY07, local cement dispatches of the company grew by 71pc to 3.2m tons compared to 1.9m tons in FY06, whereas exports rose by a staggering 335pc to 1.5m tons. That was attributed mainly to the fact that during the year new expansion capacity of the company had come online, which boosted both local and export sales.

Alone in 4QFY07, the company took full advantage of the favorable export scenario and dispatched a record 540,000 tons cement in 4QFY07 which was up by a massive 611pc versus just 76,000 tons exported in same time last year,c2 says analyst Haris Dagia at JS Global, adding: c2Similarly, local dispatches were recorded at 793,000 tons in 4QFY07  up by 28pcc2.

At the stock market on Tuesday, the share in Lucky gained 70 paisa to close at Rs130.20 with the highest volume of 25.869 million shares traded in any one stock. In the meeting on Tuesday, the Board also recommended cash dividend at Rs1.25 per share, representing improvement over Re1 per share distributed last year.

http://www.dawn.com/2007/08/01/ebr1.htm


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## Neo

*$400 million ADB loan to develop capital markets​*
ISLAMABAD, July 31: The Asian Development Bank (ADB) will lend Pakistan $400 million to help improve functioning of capital markets, particularly in equity and long-term debt.

This will further strengthen economy and make it more resilient to financial shocks, said an ADB statement issued on Tuesday.

Capital market development is a key element of the governments reform agenda due to its importance for resource mobilisation and intermediation, investment finance and employment generation.

The bank said Pakistan has made substantial progress with financial sector reforms since it suffered from a year-long economic and financial crisis in the 1990s. In spite of this, domestic capital markets do not yet play a significant role in resource-mobilisation.

In 2005, for instance Pakistani companies issued about $68 million equivalent in new capital. This compares to $3.7 billion in Thailand, $2 billion in Malaysia and $1 billion in Indonesia.

The programme loan of $400 million will support a second generation of capital market reforms initiated by the government aimed at turning domestic equity and bond markets into a relevant source of long-term finance.

The growth of well-developed capital markets will bring Pakistan significant economic benefits through a more efficient and balanced financial system, the statement said, adding it will facilitate mobilisation of financial resources for productive investment and employment generation.

The programme includes a range of policy and regulatory reforms to increase the supply and demand for securities, such as shares and bonds, and strengthen securities market oversight.

The reforms will significantly increase the number of corporate bond and equity issuances, both primary and secondary, which in turn will increase the amount of funding available for private sector investment.

Deregulation will play the key role in developing corporate bond markets which will have a range of benefits, including helping to finance infrastructure projects that require long-term financing.

Easy procedures and lower costs for issuing corporate bonds will facilitate the funding of urgently needed infrastructure, including for energy generation, and free up government resources to focus more on funding social services besides development of voluntary private pension systems.

The reforms agenda is due to be completed in two years and the loan is due to be released in two tranches  each $200 million.

The loan will have a 15-year term and include a grace period of three years.

http://www.dawn.com/2007/08/01/ebr3.htm


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## Neo

*Plan to net 3m taxpayers by 2015​*
KARACHI, July 31: The Federal Board of Revenue (FBR) has embarked on a plan to broaden the tax net and improve tax-to-GDP ratio from the present low level of 9 per cent to 15 per cent by 2015.

In order to achieve this target the number of taxpayers will be raised from 1.6 million to 4.690 million. Consequently, this will improve the tax-to-GDP ratio to 15 per cent and bring it at par with countries of the region.

The FBR is working on a two-pronged strategy to enhance the number of taxpayers. Firstly, it will concentrate on enforcement measures and secondly, on development and utilisation of data with the help of internal control cells (ICC).

All these measures would be implemented through regional tax offices (RTOs) being set up by the FBR in different cities of the country. In this connection the first RTO has already started functioning at Karachi and more are expected to start operating by the year end. In total around 12 RTOs are expected to be set up.

According to the data compiled by the FBR the countrys total population has been put at 169.270 million (based on US Census Bureau and Pakistan Demographic Survey 2003).

After deducting non-taxable segments like rural population (115.440 million), urban females (30.790 million), urban males under 19 years (17.010 million), urban males above 65 years (1.110 million) and overseas Pakistanis (1 million), the total taxable population comes to around 3.920 million. However, adding up to this 0.770 million working urban females, the actual tax paying population should come to around 4.690 million.

While there is no denying the fact that the tax-to-GDP ratio is a crucial measure of efficacy of a countrys tax system, more realistic approach is required to identify weak areas and then to address the issues.

The RTOs would be given the task to broaden tax net on collecting data of prospective taxpayers from institutions, trade bodies, and professionals.

Some of the bodies identified for this purpose, include Pakistan Medical Association, Pakistan Medical and Dental Council, educational institutions, artists, production houses, beauticians, event managers, tax bar associations, building control authority, major clubs, builders and real estate agents, shipping agents and other professionals.

It would be the duty of regional tax offices to cross match data with the master index and the Nadra data base (CNIC) to identify actionable areas and tax cases. This will also help to identify persons within these sectors liable to file tax returns and yet not discharging their statutory obligation.

Most of these functions would be carried out by internal control cell of each RTO as they would make internal checks to ensure that exemptions and reduced tax rate certificates are being issued in accordance with the provisions of the law.

The ICCs will also make efforts to expand the CVT pilot project and facilitate identification of buyers and sellers not covered by the master index. The data will be scanned through modern techniques. Presently, the data collected along with tax returns is processed by Pakistan Revenue Automation Limited (Pral), which takes a lot of time.

http://www.dawn.com/2007/08/01/ebr4.htm


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## Neo

*PTA with Mauritius​*
ISLAMABAD, July 31: Pakistan and Mauritius have signed the preferential trade agreement (PTA) to increase the level of bilateral trade between the two countries. Commerce Minister Humayun Akhtar Khan and Minister for Foreign Affairs, International Trade and Cooperation of Mauritius Madan Dulloo inked the agreement on behalf of their respective countries.

An official announcement issued here by the commerce ministry said the agreement would open new avenues for trade and commerce between the two countries.

Six MoUs on mutual administrative assistance in customs matters between State Trading Corporation Mauritius and Trading Corporation of Pakistan, sanitary and phytosanitary matters between Small Enterprises and Handicraft Development Authority Mauritius and Smeda Pakistan, between Pakistan Standards and Quality Control Authority and Mauritius Standards Bureau and between TDAP and Enterprise Mauritius were also signed between the two governments.

http://www.dawn.com/2007/08/01/ebr12.htm


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## Neo

*Pakistan ranks 14th in ADBs Asia report​*
ISLAMABAD, July 31: Pakistan ranks 14th among 23 economies of Asia and the Pacific in terms of economic wellbeing and living standards of people, despite an impressive growth in the last few years.

According to the Asian Development Banks (ADB) International Programme (ICP) in Asia and the Pacific: Purchasing Power Parity Preliminary Report, Pakistan at 14th place was ahead of China and India which were at 15th and 17th positions respectively when economies were compared based on per capita actual final consumption of households (AFCH), a measure of economic wellbeing of the population.

The AFCH measures what households actually consume, what they purchase and what they are supplied for individual use by the government (principally education and health). The economic well-being of the population is obtained by comparing household consumption expenditure per capita.

The five economies that top the list are Hong Kong (Hong Kong $125,303 per capita), Taipei (HK$109,108), Singapore (HK$99,706), Brunei Darussalam (HK$81,744), and Macao (HK$67,639). Pakistans per capita is HK$13,230 per year. In comparison, China and India stand at HK$11,502 and HK$9,346 respectively.

The five economies that are at the bottom of the survey are Nepal, Bangladesh, Lao PDR, Cambodia and Vietnam. From another perspective, Pakistan occupies the 15th position among 22 countries when the size of economies is adjusted by population. China and India stand at 10th and 18th place respectively when the full gross domestic product (GDP) is compared, although these two economic powerhouses account for 64 per cent of the total real GDP.

Based on the Price Level Index (PLI), a ratio of the Purchasing Power Parities to the exchange rate, Pakistan figures again at 14th position. The cheapest places in these 23 countries are Lao PDR, Vietnam, Iran, Cambodia and Nepal. Fiji Islands and Hong Kong are the two costliest places to live in. They are followed by Macao, China, Singapore, and Taipei. China ranked eighth, and India ranked 16th in terms of PLIs. Price levels in the Philippines, Thailand, and Indonesia are very similar and are close to the Asian average.

http://www.dawn.com/2007/08/01/top20.htm


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## Neo

*Major changes announced in monetary policy ​* 
Discount rate up 0.5pc, CRR zero rated, Islamic Banks cash in hand to count towards SLR

KARACHI: Governor State Bank Dr. Shamshad Akthar on Tuesday announced major strategic changes in 6-monthly Monetary Statement for first half of the current financial year.

Effective August 1, 2007, SBP will raise policy discount rate from 9.5 percent to 10 percent.

Zero rating of cash reserve requirement would be implemented for all deposits of one-year and above maturity to encourage greater resource mobilization of longer tenor and 7 percent CRR for other demand and time liabilities.

Islamic Banks cash in hands and balances with National Bank of Pakistan are being allowed to count towards SLR.

SBP is introducing a new long-term financing facility (LTFF) to promote export led industrial growth in the country.

This facility will be available through approved participating financial institutions (PFI) including banks and DFIs.

Under this facility exporters can avail financing for fresh procurement of new imported and locally manufactured plant and machinery.

This facility will be available to export oriented projects with at least 50 percent of sales constituting exports or annual exports equivalent to $5 million whichever is lower.

SBP will provide refinance up to 70 percent of the sanctioned facility and the PFIs will finance 30 percent of LTFF from their own resources. LTFF will be guided by an overall yearly limit with which PFI limits will be set based on their financial capacity and strengths.

PFIs will serve exporters on first come first serve basis subject to meeting the prescribed eligibility criteria.

Lending under the facility shall be subject to compliance of relevant prudential regulations and prescribed debt-equity ratio.

Other terms and conditions will be released separately.

She also announced the liberalisation of external commercial borrowings (ECB).

SBP is issuing instructions to banks to further liberalise and rationalize the ECB. Industry and exporter will be able to secure their foreign currency requirements based on different product structures and maturities, if within stipulated pricing range these transactions can be approved by the commercial banks without seeking SBP approval.

In order to liberalise hedging of exchange exposures arising out of foreign currency borrowings, forward cover facility will now be available in all categories of ECBs.

SBP is also in the process of formulating guidelines and procedures to allow banks to provide derivative facility to exporters without seeking SBP approvals.

To encourage the public to open basic banking accounts, BBA, Banks are being advised not to recover any charges from customers for operating BBA or for conversion of regular full service bank accounts to BBA.

Banks are also being advised not to recover service charges of more than Rs50 per month from their regular account holders on maintaining balance below the minimum monthly average balance.

To enhance the financial penetration of banking system, all bank will henceforth be required as minimum to open 20 percent of their new branch network in rural or underserved areas.

http://www.thenews.com.pk/daily_detail.asp?id=66460


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## Neo

*Inflation falls to 7pc ​*
ISLAMABAD: General inflation measured by Consumer Price Index during June 2007 declined to 7 per cent from 7.6 per cent in the corresponding month of the last fiscal whereas, the food inflation went up to 9.7 per cent from 7.8 per cent.

This is giving a crushing blow to the millions of low and fixed income families and snatching their purchasing power, which is a challenge for the economic planners.

According to the State Bank inflation monitor, increase in food inflation was mainly due to the rise in the prices of some key food items including vegetables, fruits, eggs, meat, different types of rice, etc, while for the same period non-food inflation declined to 5.1 per cent from 7.5 per cent in corresponding period of the last fiscal.

Average annual inflation year-on-year showed a marginal decline and stood at 7.8 per cent against 7.9 per cent recorded in FY2006. Food inflation in the same period went up by huge 3.4 percentage points to 10.3 per cent from what it was 6.9 percent in FY2006. 

However, non-food inflation in FY2007 declined to 6 per cent from 8.6 per cent in FY2006.

Core inflation based (non-food non-energy) declined YoY basis to 5.1 per cent in June 2007 from 6.3 per cent in June 2006.

It is worth-mentioning that the contribution of the food group in overall inflation was 57.1 per cent in June 2007 which is significantly higher than the 15 percentage point contribution of food group during the corresponding month last year. The contribution of house rent index (the single largest item of the CPI basket) declined from 24.3 per cent during the corresponding month last year to 22.7 per cent in June 2007 

Food inflation YoY declined from 11.3 per cent in May 2007 to 9.7 per cent in June 2007. This significant decline is due to a decrease in prices of some vegetables, fruits and chicken, etc. 

On monthly basis, 40 items showed decline or no change out of 124 items, 58 items showed increase of 0 to 5pc, 4 items showed 5 to 10pc increase and 8 items showed above 10pc increase.

The food group, which comprise of 124 commodities, 42 commodities including eggs, some fruits, cooking oil, different types of rice, chicken and some vegetables exhibited inflation (YoY) in the range of 10 to 80pc in June 2007.

The combined weight of commodities with double digit inflation was about 40 per cent of the food group. On the other hand, inflation (YoY) of 18 commodities including key staples such as potatoes, green chilies, sugar, ginger, chicken, pulse moong, etc. either declined or remained same during the month.

http://www.thenews.com.pk/daily_detail.asp?id=66464


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## Neo

*Trans-border truck service taken up with Delhi ​*
NEW DELHI (August 01 2007): India and Pakistan began two days of talks on Tuesday to boost trade ties, including a cross-border truck service to ferry goods, a government statement said. The Pakistan team for the talks is headed by Commerce Secretary Asif Shah while the Indian side is led by Gopal K Pillai, Indian government statement said.

"The agenda for the talks includes trade in goods and services, tea exports from India, joint registration of basmati rice, including new items for trade such as cement," the statement said.

The joint registration for basmati will ensure that third parties do not benefit from squabbles between the two nations to register the long-grained aromatic grain as unique to their area of production in India and Pakistan, said Pravin Anand, an expert in patent and copyright laws. Pakistan's exports to India stood at $323 million while Indian exports to Pakistan crossed $1 billion in 2005-06.

The neighbours also discussed the launch of a truck service through the Wagah-Attari border crossing in India's Punjab state. At present, goods are brought up to the land crossing at Wagah and then carried by labourers across the border and loaded onto waiting trucks.

"The arrangement we have now is tedious and we are trying to change that," said an Indian official. Since 2004, India and Pakistan have increased transport links adding several bus routes including one connecting Srinagar, capital of Indian held Kashmir with Muzaffarabad, administrative headquarters of Pakistan controlled Kashmir.

http://www.brecorder.com/index.php?id=598973&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pak-Morocco trade quantum to exceed $140 million ​*
KARACHI (August 01 2007): Trade between Pakistan and Morocco is developing steadily and it is expected that the bilateral trade between the two brotherly countries would exceed 140 million dollars during this year.

These views were expressed by Moroccan ambassador Mohammed Rid El Faso, while speaking at the eighth anniversary of Enthronement Day of King Mohammed VI of Morocco organized by the Moroccan Consulate General here on Tuesday.

The ambassador said that the leadership of both countries was keen to move forward in developing bilateral relations and inter-Islamic cooperation. "The two governments are fully aware of the importance of the task and are working tirelessly to reflect its real value, which is evident from the excellent relations our two countries and people happily enjoy since long," he added.

In fact even before the establishment of diplomatic relations between the two countries in 1958, the Islamic Republic of Pakistan and the Kingdom of Morocco had always enjoyed close, cordial and fraternal relations that stood all times, the ambassador said.

Speaking on the occasion, Honorary Consul General of Morocco in Karachi Ishtiaq Baig said that he was making all efforts to increase bilateral trade between the two brotherly countries. "Now the bilateral trade volume between Pakistan and Morocco has reached 140 million dollars and it is expected to grow further in coming years", he added. He said that a 30-member delegation of Pakistani businessmen had visited Morocco to observe trade opportunities between the two countries, which was a tremendous effort to increase trade volume.

In response of that visit, a delegation of top traders from Morocco was expected to visit Pakistan in near future, which would open new venue of bilateral trade, he added. A large number of dignities, consul generals of different counties, exporters, industrialists and elite of the society attended the event.

http://www.brecorder.com/index.php?id=599054&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*7,000 new jobs through Ahan project envisaged ​*
KARACHI (August 01 2007): The "Aik Hunar Aik Nagar" (Ahan) programme in the pilot phase will generate about 7,000 new jobs across the country, of which 58 percent rural women will be provided with employment. This was stated by Federal Minister for Industries, Production and Special Initiatives Jahangir Khan Tareen.

While talking to newsmen at the Ahan display centre here on Tuesday. During the inspection of handicrafts and other handmade textile, leather, jewellery products etc, displayed by the participants of Ahan programme, he said the government was intending to enable the rural cottage industry to augment its local market share in the first phase.

He was also accompanied by the State Minister for Economic Affairs Hina Rabbani Khar. The stalls of handicraft products at the display centre were from all the four provinces and Azad Kashmir. The products from northern parts of the country were incorporated in the NWFP stall.

Jahangir Tareen said that Ahan was aimed at integrating over 35,000 areas where small and medium sized industries were located in the distant parts of the country and were not able to get easy access to markets of the big cities.

He said the government wanted to steer the flow of capital rotating in the urban cities towards the rural areas, adding that about 30 projects were under way to facilitate the rural people.

"Our efforts on bringing them into the mainstream marketing zones to get maximum benefits on their products across the country," he added. A marketing policy is also being evolved to give easy market access in urban parts of the country to the rural people related to such businesses, he said, and added that under the Ahan pilot project products by rural people were being introduced in the markets of big cities. "Ahan's prime objective to promote the worker and labour of the rural segment of the country," he added.

The Minister said that the government was also making efforts to facilitate the handicraft producers of the rural areas by providing easy loans to them from the micro-finance banks so that their businesses could go smoothly. As many as 100 such pilot projects will be completed by 2008 and expected to generate employment in the rural areas, he said.

He said that on the directives of Prime Minister Shaukat Aziz, his ministry had initiated the Ahan programme, emulating the same sort of project called "one village, one product," first introduced in Thailand and Japan two year ago.

He hoped that this programme would help boost the country's exports, besides providing economic opportunities to rural public. He said that market demands had been changing periodically, whereas the local manufacturers were still producing the age-old traditional products, which were needed to be varied in line with the present day's fashion demands.

Hina Rabbani Khar spoke about the marketing strategy, evolved for the promotion of handicrafts of rural areas, and said that market access to them would be ensured. These products were planned in the later phase to export, she added. Products like traditional leather shoes, embroidery products, carpets, blue pottery, jewellery, Ajraks, mosaics, stone cutting items and apparel were displayed at the centre.

http://www.brecorder.com/index.php?id=599055&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*First KCCI team visit gets warm welcome in New York ​*
KARACHI (August 01 2007): The New York City Commission for United Nations has applauded the visit of the first Karachi Chamber of Commerce and Industry's (KCCI's) visit to USA.

Ms Terry D Jackson, Managing Director, Division for International Business of the Commission, during a meeting with the delegation, in the office of Mayor of New York City, appreciated the initiative of KCCI and said that she would present the contents of the meeting to the five chambers in the five Boroughs that make up New York City. The delegation is led by Majyd Aziz, President of KCCI.

According to a message received here on Tuesday, she informed the delegation that the New York City administration, under Mayor Michael Bloomberg, had adopted a very proactive programme to provide networking opportunities for foreign businesses that want to set up offices or want to invest in the city. The NY Mayor's office has arrangements under which foreign businesses, intending to commence operations in the City, can get free assistance, for a limited time, from designated law firms, accountant firms, and banks, so that they could be provided the best assistance and support.

Moreover, the Mayor's office has set up a business centre near the United Nations Headquarters where foreign businesses can set up their offices at only a few hundred dollars a month and are provided secretarial and other assistance. These offices are open 24 hours daily.

Earlier, Majyd Aziz in his presentation dealt in detail with the objectives of the trip and also highlighted the achievements of the Mayor of Karachi. He said that Karachi is being transformed into a vibrant modern city and made livable for 18 million residents. He called for more cooperation between the two cities so that best practices, adopted by each city, are exchanged and understood. He said that the administrations of the two mega cities needed to be more proactive in attracting businesses to establish offices in respective cities.

At a dinner, hosted for the delegation by Mohsin Razi, Pakistan's Consul-General in New York, Senate Chairman Muhammadmian Soomro, who also attended the dinner, described the KCCI delegation visit as a trend-setter, being first organised businessmen's delegation visiting America to talk about trade and investment in a collective and institutionalised manner rather than the usual individual buying and selling delegations.

He said that though the bilateral trade between Pakistan and USA is in favour of Pakistan, there is need for substantial market presence for Pakistan's products. He emphasised that the private sector must promote ideas, and lobby for more market access and achieving free trade agreement between the two countries.

http://www.brecorder.com/index.php?id=599070&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Pakistan and India aim $10 billion trade by 2010 ​*
NEW DELHI (August 02 2007): Pakistan and India vowed on Wednesday to jack up trade nearly 10-fold by 2010 but clashed over export rights of premium Basmati rice. The two sides wrapped up two days of trade talks - the fourth round since they launched a peace process in 2004 - with an agreement to boost cross-border freight traffic known as "truck diplomacy" to improve ties.

"We are looking at a trade basket as large as possible to achieve 10 billion dollars by 2010 and we believe it will be in the advantage of both the countries," Pakistani Commerce Secretary Syed Asif Shah told reporters. "It's achievable ... We are positive of that," added Shah's Indian counterpart G.K. Pillai.

Pakistan's exports to India stood at 323 million dollars while Indian exports to Pakistan crossed one billion dollars in 2005-2006. Delegates said the two sides failed to agree on Islamabad's contention that New Delhi cannot export the long-grained aromatic Basmati rice under the brand "Super" "Super Basmati" has evolved and being exported from Pakistan from day one and it is our belief Indian exports under this brand hurts our interest," Shah said.

Since 2004, India and Pakistan have increased transport links, opening several buses routes including one connecting Srinagar, capital of Indian Kashmir, with Muzaffarabad, administrative headquarters of Pakistan-controlled Kashmir. But the talks have failed to produce a major breakthrough in ties between the nuclear-armed rivals.

http://www.brecorder.com/index.php?id=599348&currPageNo=1&query=&search=&term=&supDate=


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## Neo

PTA Pakistan June 2007 Customer Numbers

In the first quarter of 2007 Telenor trumped all of its competitors to lead the net additions race in Pakistan's fast-growing mobile market. However, in the second quarter, Telenor slipped into fourth place behind all of its major competitors despite the fact that it had the third best quarter in its nine quarter history. Pakistan Telecom's Ufone emerged as the front runner in Q2 2007 with 2.4m net additions to its base taking the total to 14m. It was followed by market leader Mobilink with 1.8m, new Singtel associate Warid Telecom with 1.7m and then Telenor with 1.6m. In total a record 7.6m new customers were added in Pakistan in the quarter, taking the total count to over 63m and the penetration rate to 37%. In the process both Telenor and Warid exceeded the 10m customer mark, finishing the period with 10.70m and 10.62m customers, respectively. 



Despite the fact that all three of its major competitors recorded more net additions in the second quarter, Telenor still outperformed in this respect relative to its overall size and as a result increased its market share from 16.3% to 16.9%. Warid and Ufone made better progress with gains of 0.7pp and 1.3pp respectively to claim a further 39% of the market between them. As a result, Orascom's Mobilink saw its own position further eroded to leave it with a 41.9% share of the national customer base at the end of June 2007, a year after its market share first dipped below the 50% mark.

China Mobile's Pakistani subsidiary Paktel also gave up 0.3pp as it continued to lie relatively dormant with just over 1m connections, equivalent to 1.6% of the total at the end of the period. Last (and, frankly, least) was AMPS/TDMA operator Pakcom which dropped a further 3bp of market share despite actually adding 22k customers in the quarter.

http://www.cellular-news.com/story/25212.php


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## Neo

*UK-based Pakistani firm listed on PLUS markets ​*
LONDON (August 02 2007): A UK-based Pakistani company which is set to explore coal in Sindh has been successfully approved for a listing on PLUS markets with its shares due for trading from Thursday. Oracle Coalfields plc has raised funds through private and institutional investors, which will be used to develop the 100 square kilometres Indus East coalfield at KhoreWah in Sindh.

A company official said on Wednesday that a 12-month exploration programme has been mapped out to develop the coalfield, for providing fuel to the power sector. The exploration is to commence later this month.

PLUS Markets is a Financial Services Authority recognised Investment Exchange. Over 1,000 small and mid-cap company shares currently trade on the PLUS market, representing a combined market capitalisation of almost 200 billion British pounds.

Around 200 small and mid-cap companies currently trading on PLUS-quoted, which offers an alternative to AIM for high-quality applicants that offer the potential for investment returns.

Speaking about the listing of the company, Director Shahrukh Khan said his company looks forward to developing the Indus East coalfield with local partners Sindh Koela Ltd "Pakistan is blessed with substantial indigenous coal resources, estimated at around 185 billion tonnes. Our aim is to become a mining operation, and provide employment and electricity to the country through the construction of an aggregate 150Mw coal-fired power plant, in conjunction with Sindh Koela.

"Electricity consumption in Pakistan has been growing faster than new sources have come on stream, resulting in load shedding. Pakistan's economy is forecast to grow at between 6-8% per annum over the next two decades and the projected peak demand for grid electricity is expected to increase to 75,636Mw by the year 2025, meaning that new sources of electricity are imperative for the country.

"Currently coal represents only 1% of fuel supply to the electricity sector and is projected to increase to about 17% by 2025. We hope that Oracle Coalfields will become a key player in developing Pakistan's untapped coal resources."

http://www.brecorder.com/index.php?id=599389&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*'Pakistan destination of choice for investors' ​*
ISLAMABAD (August 02 2007): Prime Minister Shaukat Aziz on Wednesday said signing of the Free Trade Agreement, Co-operation Agreement and establishment of Pak-China Joint Investment Company between Pakistan and China will pave way for further strengthening the existing trade between the two countries.

The Prime Minister was talking to Hou BaoXu, President of Metallurgical Construction Corporation (MCC), and the Chinese partner of Pakistani Ruba Group investing in consumer products industry in Pakistan, who called on him at PM Secretariat.

The Prime Minister said as a result of investor-friendly and growth-oriented policies of the present government, Pakistan emerged as a destination of choice for foreign investors.

He said unique demographics of Pakistan with its 100 million population below the age of 25 led to the emergence of middle class that became the backbone of Pakistan's economy. It presented a huge market for investment in all sectors including housing and construction.

The Prime Minister said Pakistan's economy was open for investment in all sectors including construction, exploration, mining, industry, services and other sectors. He also mentioned the benefits of Joint Industrial Zone, which was announced during the recent visit of Chinese President Hu Jintao to Pakistan.

The Prime Minister appreciated the fact that Chinese government owned MCC company with a capital of about 20 billion dollars made its first and biggest overseas investment by joining the Pakistani market.

He expressed satisfaction over the number of major Chinese Companies investing in Pakistan and assured them of every possible support and help in facilitating their operations. Hou BaoXu appreciated the forward-looking economic policies of the government of Pakistan and said the continuity of these policies established the investors' confidence.

He said for this reason, his company embarked upon its first biggest overseas investment in Pakistan. He expressed confidence that this investment would lead to further economic collaborations.

He thanked the Prime Minister for the support in facilitating their operation and said it would help to generate economic activities and employment opportunities for the local people. Federal Minister for Privatisation Zahid Hamid, Ambassador of China in Pakistan Luo Zhao Hui, Haji Kochi of Ruba Group and senior officials attended the meeting.

http://www.brecorder.com/index.php?id=599452&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*PCJIC to help boost economic activities ​*
BEJING (August 02 2007): Pak-China Joint Investment Company (PCJIC), will play the role of a "bridge" between Pakistani and Chinese entrepreneurs and certainly help boost economic activities in Pakistan, this was stated by Chen Jianbo, Managing Director PCJIC.

While talking to APP after returned from Pakistan, he said that the PCJIC would facilitate investors for setting up joint ventures in various fields and to accelerate economic activities. PCJIC plans to open its branches in next phase in Lahore and Karachi, he added.

He will go back to Islamabad in next couple of weeks to further push forward this important project aimed at to promote investment, launch joint ventures, project financing, asset management, house financing, investment in banking and infrastructure, it is learnt.

Referring to the significance of PCJIC, Chen said, "it will play a role of bridge between Chinese and Pakistani entrepreneurs". "My priorities include encouraging Chinese entrepreneurs by inviting them to Pakistan for setting up joint ventures", he noted. The Pak-China Joint Investment Company (PCJIC) was established last month with paid up capital of $200 million that equally shared by both sides.

The establishment of PCJIC would also help enhance the existing bilateral economic co-operation between the two countries, besides improving the investment climate in Pakistan. The setting-up of PCJIC was the part of the five-year economic development co-operation plan with China that would help various sectors of Pakistan to seek Chinese investment.

http://www.brecorder.com/index.php?id=599453&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Punjab announces $3.25 billion reconstruction package ​*
LAHORE (August 02 2007): The Punjab government will spend Rs 3.25 billion to repair and reconstruct 454 schemes of government offices and residences in the current fiscal year. The Punjab Minister for Communication and Works, Chaudhry Zaheer-ud-Din, said on Wednesday.

The government had sanctioned Rs 2.71 billion for 309 development schemes and additional Rs 53.25 billion for new schemes. While chairing a meeting, the minister announced to build 30 police stations and 247 highway patrolling posts in different districts, additional barracks and hostels for 2000 police employees.

He also informed the meeting about the government's plan to set up child protection institutes and 80 housing units for civil servants in Gujranwala and Sialkot as well. He also briefed the meeting regarding the plan to establish police points at the territorial margins of all districts so as to enable them check inter-district crime.

http://www.brecorder.com/index.php?id=599458&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Italy to recruit Pakistani manpower ​*
KARACHI (August 02 2007): Italy is likely to recruit manpower from Pakistan soon for which process is being undertaken, an official of Overseas Employment Corporation (OEC) told Business Recorder on Wednesday. He said that as Italy had chalked out a plan to recruit manpower from the Asian countries, OEC had started negotiations to convince Italy to recruit larger share of manpower from Pakistan instead of other regions.

He said that OEC was established under the administration of Ministry of Labour, Manpower and Overseas Pakistanis, as a state-owned corporation to enhance recruitment of Pakistanis in other countries. Before the establishment of OEC, he said, although foreign employers were satisfied with the Pakistani manpower but still some cases of incompetent recruitment were reported. He maintained that OEC was safeguarding the interests of both the employer and the employee with moral principles and high ethical values.

"OEC has been able to make a remarkable leap in the field of manpower supply by sending over 127,000 workers to 53 different countries of the world", he added.

He apprised that technical manpower from Pakistan was well qualified and trained having diversified experience within the country and abroad in the fields of medicine, engineering, education, science, agriculture, manufacturing and shipping, etc.

He said that the Saudi ministry had recruited 130 doctors and 33 nurses who would leave Pakistan within a month besides that OEC had received requisition of professional and unskilled manpower from Middle East, he added. He further informed that 300 agricultural labours had been recruited by Sharjah ministry, while about 80 doctors and technicians would leave for Oman soon.

About EU and other Western countries he said that they avoid recruiting manpower from the Asian countries because they already have illegal immigrants who provide them cheap labour and are not entitled to legal benefits as well.

http://www.brecorder.com/index.php?id=599429&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*$10 billion industrial estate inaugurated ​*
LAHORE (August 02 2007): Punjab Chief Minister Chaudhry Pervaiz Elahi inaugurating first phase of M-3 Industrial City Faisalabad at a local hotel said that with investment of $10 billion, largest industrial estate in the country was being established. He said the industrial estate was being made on 4500 acres. The CM also on the occasion announced establishing of IMAX theatre in Faisalabad.

The CM said the industrial estate would create job opportunities indirectly or directly for four million people. The CM disclosed that every year 7,00,000 new jobs were being created in the province.

Punjab CM said that with 528 acres were kept exclusive for Chinese investors in the industrial estate. He said separate zones were being established for foreign investors in the new industrial area. Pervaiz Elahi speaking about establishing of industrial units in the estate said that small and big 1,000 new industrial units would be established in M-3 Industrial City Faisalabad.

Punjab Chief Minster speaking about Sundar Industrial Estate on the occasion said it was an exemplary model of establishing of industrial estate in the Province. Punjab CM said that provincial government had allotted 13 kanal land in the heart of Faisalabad city for establishing of Faisalabad Institute of Textile and Fashion Design. He said land had also been provided in the City for construction of EXPO Centre.

http://www.brecorder.com/index.php?id=599386&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*KPT seeks $750 million loan to build bridge over channel ​* 
KARACHI (August 02 2007): The Karachi Port Trust (KPT) is looking for international lending companies as it plans to build a cable-stay bridge (CSB) over the channel at an estimated cost of $750 million. KPT Chairman stated this while talking to news persons at the "soft opening" of the KPT Interchange Flyover at Hino Chowk, Korangi Road here.

"We have a plan to build the largest ever bridge over the channel at the Karachi Port and it would cost us around $750 million for which we are in search of foreign lending companies", said the KPT chairman. He said the designing work for the 70-meter-high bridge was assigned to a German company and likely to be completed by December this year.

"This project (CSB) would be the first of its kind in Pakistan and would be completed within four years", said the KPT chairman. He said the bridge would have two causeways in which the first would connect Manora to Sands Pit Road while the other would extend further to pass over Western Backwaters.

The KPT chairman said the cable stay bridge would connect the Pakistan Deep Water Container Terminal (PDWCT), which it would construct at Keamari Groyne to the proposed Cargo Village to be developed in the vicinity of the Karachi Port.

"The bridge would connect the proposed deep water container terminal to the cargo village and Manora to the Clifton's Defence area and Sands Pit road", he said.

Earlier, the KPT chairman, after inaugurating the third tier of KPT Interchange Flyover told the journalists that this was the soft opening to ease traffic pressure on the road and the "final opening" would be performed after the completion of project which would take another month.

The flyover, he said, would interconnect Korangi Road, Shaheed-e-Millat Expressway, Korangi Industrial Area and Defence Housing Authority Phase VII Extension. He said the three-tiered intersections would facilitate the overgrowing traffic in the area without any interruption, adding that eventually the KPT will also provide decorative lighting, drainage facility, 67 feet monument, traffic sign, landscaping and beautification works for the public/commuters.

Elaborating on the salient features of Interchange, the chairman said, improvement was made in oval-shaped flyover by connecting the two-way flyover structure from Jam Sadique Bridge to Kala Pul, which has two-way traffic movement via two lanes on each direction having width of 19.2 meters, along with aesthetically Overpass design connecting Shaheed-e-Millat Expressway to Kala Pul at one end and on the other with Korangi Town with traffic movement in two lanes of 9.2 meters width respectively.

The total length of the flyover and overpass structures including ramp is 605 meters and 1,072 meters respectively, he told the media persons. The vice admiral, who also holds the chair of Karachi Dock Labour Board, said the Nespak had been appointed as Consultants for planning/designing and supervising the project while the Usmani Associates was awarded the contract to build the Interchange.

About other projects undertaken by the KPT, he said the Trust was planning three projects at the Karachi Port, which include construction of the PDWCT at Keamari Groyne, building a Cargo Village in the vicinity of the port and reconstruction and deepening of berths at the East Wharves.

On ground, he said, a 1947-foot-high Port Tower was under planning at Mai Kolachi Road to give the metropolis a commercial-cum-recreational center, while a Shopping District would also be developed on public-private partnership basis.

The project, which was commenced on December 1, 2004 and had cost the Trust Rs 606 million, was a continuation of the four other projects undertaken by the KPT under the President's Tameer-e-Karachi Program.

http://www.brecorder.com/index.php?id=599457&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*'Pakistan needs quantum jump in power generation' ​*
LAHORE (August 02 2007): Water and Power Development Authority (Wapda) Chairman Tariq Hamid has said Pakistan needs a quantum jump in the power generation and this is possible only through construction of more than one mega dams catering to the increasing needs of the water shortages.

He was briefing the participants at the 87th National Management Course of National School of Public Policy in Lahore on Wednesday about the population growth and sedimentation of water reservoirs reducing the per capita availability of water in Pakistan to an alarming level.

"On the other hand, the consumption of electricity had been surging by about 10 percent per annum because of high economic growth. Only a series of mega projects could improve the situation vis-à-vis availability of water and generation of electricity. If the storage capacity is not enhanced considerably, Pakistan would become, God forbid, a drought-ridden country like Chad and Ethiopia," he said.

He said Wapda had undertaken feasibility studies of 10 new hydropower projects-Bunji, Oasu and Kohala with a generation capacity of more than 11,000 MW. These studies, including preparation of detailed engineering design and tender documents, would be ready by the year 2008-09, thus helping the government have several options to start generating low-cost hydropower electricity, he added.

He said at present, feasibility reports of the projects with generation capacity of 10,000 MW were in hand and the construction work could start when the federal government approved it.

Pakistan, by the kindness of nature, has the potential of generating 50,000 MW of hydropower. However, the existing capacity stands at only 6,463 MW, he added. The Chairman told the delegation that his government had spent Rs 21.23 billion to up-grade the power transmission system in 2004-07 to bring the line losses down by 3.3 percent from 24.8 to 21.5 percent. Various projects to improve and augment the transmission system, costing Rs 36.68 billion, are in progress and expected to be completed by 2009-10, he added.

He said that Rs 176.34 billion were paid to Independent Power Producers (IPPs) for purchase of electricity during the fiscal year 2006-07. He added that providing electricity on affordable rates to the customers was only possible with the induction of more generation of electricity through water resources. Earlier, the Chairman made a detailed deliberation on various development projects being executed by Wapda in the water and power sectors.

The delegation led by NSPP Rector/Dean Javed Hassan, included faculty member and participating officers. Members of Wapda Muhammad Mushtaq Chaudhry (Water), Fazal Ahmad Khan (Power) and Chaudhry Abdul Qadeer (Finance) and other senior Wapda officials were also present on the occasion.

http://www.brecorder.com/index.php?id=599387&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*KESC to install two 780 megawatts power plants, National Assembly body told ​*
ISLAMABAD (August 02 2007): The KESC is planning to install two new power plants of 780MW to control power shortage in the metropolis. This was informed by Chief Executive Officer, KESC to the members of National Assembly's Standing Committee on Water and Power who met here on Wednesday under the chairmanship of Malik Ghulam Murtaza Maitla, MNA.

He said contracts had already been awarded in this regard, which were likely to be commissioned during the next two years to make up for the losses. Briefing the committee about the current acute load-shedding in Karachi, the Chief Executive Officer KESC informed that corporation was facing nearly 1,300 to 1,400 MW shortfall of electricity.

He also briefed the committee about existing power generation and distribution system of KESC. The committee met to consider the current acute load-shedding in Karachi, proposal for enhancing the electricity rates by Wapda and briefing on the destruction of Wapda installations by the recent cyclone in Sindh and Balochistan and the rehabilitation work done in those areas.

While taking up the reported enhancement in the electricity rates by Wapda in the country, the Chairman, Wapda briefed that the authority has been subsidising the tariff approved by Nepra thereby affording financial burden of Rs 48 billion for 2005-06.

He said that Nepra determined 33pc increase (DISCOs-wise) from 23rd February, 2007 but the government allowed only 10pc increase therefore, the tariff subsidy is worked out to be Rs 54 billion during 2006-07.

He informed that due to phenomenal increase in rates of oil and gas, the application for enhancement of tariff will be filed before Nepra after August, 2007.

The committee directed that electricity rate should not be increased. The representative of Hesco and Member Power Wapda also briefed the committee about destruction of Wapda infrastructure by the recent cyclone in Sindh and Balochistan and progress about their rehabilitation.

They briefed that due to recent heavy cyclone, infrastructure in Hesco and Qesco region sustained Rs 43.312 million and Rs 114.952 millions respectively. They also informed the committee that about all damages have been repaired or replaced.

The meeting was attended by MNAs Syed Muhammad Asghar Shah, Muhammad Sanaullah Khan Mastikhel, Chaudhry Mehdi Hassan Bhatti, Dewan Syed Jaffar Hussain Bokhari, Muhammad Pervez Qureshi, Maulana Muhammad Qasim, Mufti Ibrar Sultan and Ghalib Hussain Domki. Additional Secretary Water and Power, Chairman, Wapda other senior officials also attended the meeting.

http://www.brecorder.com/index.php?id=599425&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*IT exports may hit $10bn by 2010 ​*
ISLAMABAD: Pakistan is eyeing $10 billion IT exports by 2010 against present export level of $2.2 billion, said Pakistan Software Export Board Managing Director Yusuf Hussain at a press conference here on Wednesday.

The PSEB managing director said that information technology exports would be doubled from last years figure, but did not disclose the figure, as the State Bank of Pakistan (SBP) had not released the final data for the whole year.

About the improving image of Pakistan in the world, Yusuf Hussain said that AT Kearney, a Chicago-based research and strategic management consulting company, in its latest annual survey report for the first time ranked Pakistan amongst the top 50 countries for its offshore services market potential in the field of information technology.

This speaks volumes for the potential of outsourcing capabilities of local companies and is also a strong manifestation of confidence the world has in the Pakistani IT industry, he remarked.

The PSEB managing director informed the media that the Board was launching the PSEB IT Job Board Portal for the Pakistani industry and said that talent acquisition was the first step in talent management. In that connection, he said, the PSEB and Brightspyre had joined hands to help the IT industry by upgrading their talent acquisition to international standards, besides providing help to foreign investors in acquiring talent pool from Pakistan.

The PSEB would hold an international level CEO Forum in Karachi on August 10, with an aim to showcase the rapid strides made by the Pakistani IT sector over the last few years and also to help increase foreign financing through effective interaction with foreign companies. Title of the forum is Corporate Success in the Knowledge Economy.

About the potential of Pakistan in the IT sector, he remarked that Pakistans IT industry was growing at a high rate. Its advantages included relatively low wages amounting to as little as half the level of salaries in India, as well as reasonable real estate costs, plentiful government incentives, business environment and readily available supply of skilled workers.

He revealed that over 1,000 companies were registered with the PSEB, out of which 100 were ISO certified and there are, at this point, 90,000 IT professionals employed in Pakistan.

More or less 60 foreign IT and telecommunication companies are working in Pakistan that are also further exploring the local market in terms of more investments and outsourcing of IT-based services. 

He said that the PSEB is a government agency mandated to promote the IT industry including software, services, hardware and call-centres locally and globally. Pakistans IT exports crossed one billion dollar mark last year and IT exports growth in has been fifty percent in last four consecutive years. The PSEB has been facilitating the IT industry trhough its programmes in Human Capital, Office Space, Marketing, Company Capability Development, Telecom Bandwidth, Industry Finance, Public Policy, Strategy & Research, and Facilitation. 

http://www.thenews.com.pk/daily_detail.asp?id=66572


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## Neo

*US economic support programme soon ​*
KARACHI: The US Deputy Assistant Secretary of State for Trade Policy and Programmes, Chris Moore said on Tuesday that the US is putting in motion a 15-year long-term initial economic support programme for Pakistan, which is unprecedented and has never been done for any country or region.

There are many opportunities that are available for Pakistan under this programme such as Trade and Investment Facilitation Agreement, Bilateral Investment Treaty and Reconstruction Opportunity Zones, etc. 

The stability of Pakistan is of vital interest to the US, said Chris Moore while meeting a 12-member delegation of the Karachi Chamber of Commerce and Industry (KCCI), led by its president Majyd Aziz. 

The State Department official added that a long-term policy is imperative and that vital components of the programme is what Pakistan is doing to promote stability and economic growth in the region.

He said the ROZs were very important for Pakistan because products made in these zones would be eligible for imports to the US with duty exemption.

He categorically stated that most of the items in the textile sector would be eligible for duty-free import. He added that even cut and sew units would be eligible for duty-free status and other benefits.

He said under the new law, the US president would be authorised to grant duty-free status to many non-textile sectors. He agreed that if there are complicated procedures regarding Rules of Origin, then it would become difficult for retailers and buying agents to import and operate. 

Moore, moreover stated that physical infrastructure could be provided but private sector must undertake the investment initiative. He said that USAID has done studies for places that are suitable for ROZs.

He said that ROZs are the economic ladders leading towards Free Trade Agreement between Pakistan and the United States.

He said that the USAID has done intensive studies to determine where to set up the ROZs. He said that the economic progress made by Pakistan during the last few years is very commendable. He said there is greater possibility of heavy investment in physical infrastructure such as the power sector.

The Deputy Assistant Secretary appreciated the idea floated by president KCCI that there is need for a Track Two initiative between the business communities and said that this idea needs to be further explored.

Regarding the issue of Intellectual Property Rights, he added that this is critical in cementing the bilateral relations. He applauded the efforts of Pakistan in protecting IPR calling it astounding.

Earlier, Majyd in his opening remarks said that KCCI is supportive of the American initiative to establish ROZs in Pakistan and declared that there would be increase in investment in these ROZs not only from domestic investors but also from Foreign Direct Investment (FDI). 

He said that residents of the area would get meaningful employment at their doorsteps and this would also deter smuggling and illegal activities, plus it would also stem the proliferation of negative thoughts and actions that are against human nature.

KCCI president said that the induction of economic prosperity into the areas where these ROZs are to be situated would also discourage inter-provincial migration of people to Karachi and Lahore for better economic prospects.

http://www.thenews.com.pk/daily_detail.asp?id=66573


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## Neo

*Economist stresses political stability in Pakistan ​*
KARACHI: Professor Norbert Walter, the Chief Economist of the Deutsche Bank Group, has said political stability is a pre-condition for Pakistans strong growth to continue.

Speaking to journalists at a local hotel on Wednesday, he said if that remained the case, the growth momentum would be favorable and foreign direct investments would be reasonably strong over the next two years.

He predicted that Pakistan also continued to build foreign exchange reserves and enjoyed robust portfolio inflows and strong remittances, all of which would continue to strengthen the countrys strong external liquidity position.

Replying to a question, he said the solution to Pakistaní economic ills lay in immediate enhancement of exports.

He co-related remittance with exchange reserves and said over the past seven years, remittances had increased more than five-fold from nearly one billion US dollars to almost 5.5 US dollars in 2006-2007, and the foreign exchange reserves had increased more than seven times from 2.1 billion US dollars in 2000-2001 to 15.3 billion US dollars in 2006-2007.

Walter said the global economy continued to grow for the fifth year in succession. This trend would most probably continue into 2008. However, there were numerous risks that pointed towards a difficult 2009.

Both central bankís interest rates and bond yields seemed to have reached a plateau. Stock markets had further growth potential. The US housing recession had not yet affected other economic sectors and had thus dampened US economic growth only slightly, he said.

Euro land and Germany as its main economic growth engine are back on the growth track. Structural problems, however, persist. Since they are not addressed by appropriate reforms, the improvement is only cyclical.

Small Asian economies and especially Japan are benefiting from tremendous growth in India and China. Due to increasing investments, strong regional export demand and a low yen, Japan seems to be back on track as well. Emerging market economies, especially India and china, are experiencing strongly export-led growth, implying a large increase in foreign exchange reserves.

Emerging markets, including Asia, are currently being affected by repercussions of the US subprime mortgage market turmoil.

However, fundamentals in emerging economies remain strong and these countries are much more resilient than in the past to external shocks, he said.

He said asset price bubbles and current account disequilibliria will eventually correct. This will imply foreign exchange gyrations and financial market disruption. According to him, protectionist actions may endanger the global goldilocks conditions.

http://www.thenews.com.pk/daily_detail.asp?id=66578


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## Neo

*Blueprint to develop textile sector: Industrial vision​*
ISLAMABAD, Aug 1: The Cabinet on Wednesday approved the much-delayed Technology-based Industrial Vision and Strategy for socio-economic development, which sought to provide appropriate incentives by the government to transform the textiles sector into a strong, dynamic and internationally competitive industry led by the private sector.

The vision finalised an action plan, the details of which were made available to Dawn, for achieving the major industrial goals, which cannot be realised without an efficient energy sector.

The plan also stressed the need to diversify engineering and electronics industry. The main focus on the engineering sector is on bridging the widening technology gap with the developed countries by providing conducive environment, including the required technology, financial and physical infrastructure and creating a seamless integration with emerging trends of global production systems.

The prime minister will head a special committee to achieve the objectives of industrial vision. Also, a Working Group has also been set under the chairmanship of the deputy chairman Planning Commission to ensure implementation on various recommendations given by the authors of the vision, a source, who was present in the cabinet meeting, told this correspondent.

Chairman of the Higher Education Commission Dr Atta ur Rehman and the economists of Pakistan Institute of Development Economics (PIDE), including Dr. A.R. Kamal were the main authors of the new industrial vision.

The government was advised to address the challenges being faced by the textiles sector, which included lack of trained manpower, low quality standards and low technological base, lack of research and development and too much reliance on cotton.

The key elements of the action plan for the textiles sector, included improving the regulatory and policy framework, human resource development through improving the research institutions and encouraging the private sector to invest in skill enhancement and developing technology up-gradation, rewarding value addition, ensuring quality standards and establishing common facility centres in the areas of garments, knitwear and samples development.

The action plan also sought to establish fully integrated chemical industry in Pakistan to achieve higher economic growth and lessen foreign dependence on imports of vast range of chemical products.

The ministry of petroleum and natural resources in partnership with the private sector has been proposed to undertake an action plan, which would cost Rs72 billion to also help achieve self-sufficiency and the development of the agriculture sector.

There are many proposals currently being looked into to set up a fully integrated chemical industry, a concerned source said.

However, he said that the Centre will have to consult all the stakeholders, including the provinces before finally arriving at any consensus about the setting of fully integrated chemical industry in the country.

The action plan also called for reducing the cost of production of leather products by lowering the prices of utilities with a view to considerably enhance their export. The government was asked to help increase the export of leather products through quality and improved productivity and by rationalising tariffs and import of chemicals.

Pakistan's exports of leather to European countries were declining due to shifting of tanning industries to China, South Korea and other Asian countries. The export to the United States, the main market for leather apparel, has declined by over 9 per cent.

Pakistan being a developing country, its leather products have to face barriers to export i.e. the use of sanitary and phyto-sanitary standards from the developed countries. EU countries are demanding that leather goods should carry the certification marks of international Standard Organisation (ISO) regarding pollution-free environment at the factory premises where the products are manufactured.

According to the vision, in leather and leather garments industries, only 15 per cent are qualified and experienced workers while 85 per cent are employed without proper experience.

Exported leather goods during the storage and transportation develop problems like spew because of the chemical reaction.

The leather industry is facing the problems of non availability of raw materials for their finished goods. At present lot of companies are exporting the leather in the form of wet blue semi-tanned leather to avoid the effluent treatment problems, which is a tremendous waste.

http://www.dawn.com/2007/08/02/ebr4.htm


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## Neo

*Good returns to continue wooing investment​*
KARACHI, Aug 1: Security concerns are real but as long investors continue to get good returns on their investment in Pakistan the strong trend of foreign direct investment will persist.

More than anything else the surroundings with vibrant galloping India on the east and very rich Arab world in the West Pakistan is most likely to maintain the growth pace in future. Pakistan is a natural destination for multi million funds sitting in Middle East waiting to be invested.

Dr Norbert Walter, Chief Economist Deutsche Bank Group and Managing Director Deutsche Bank Research, expressed these views in response to a question while talking to media after his presentation World economic cycle - mature financial markets nervous here on Wednesday.

Referring to security situation for foreigners, Mr Walter said that his presence in the city demonstrated that business opportunities outweigh the risk factor. He was on his annual trip to Pakistan.

He said his bank was not visible as it was not into retail banking in the country. We serve the countrys corporate citizens.

He saw high current account and trade deficit as causes of concern but hailed macro management that led to deceleration of inflation in difficult times. He highlighted the benefits of steady inflow of remittances that, in his view, leads to social stabilisation besides putting in peoples hands the seed money to start a new business.

Earlier in his presentation, he predicted the global economy to grow for the fifth year and expect the trend to continue into 2008. However, there were numerous risks that point towards a difficult 2009.

He said there was possibility of a slowdown in the US economy if the housing recession spilled out to other sectors. The difficulties in Japan may persist for a while. He saw better economic prospects for Europe where business sentiments were at 20 years high.

He said business mood was more positive than the actual companies performance. He saw Indias economic prospects brighter than China that he felt would be caught up in environmental bottlenecks, etc.

Africa will also develop at a faster pace, he said.

He felt both bonds and real estate asset markets were overpriced whereas capital markets on the strength of profit/earning ratios were still cheap.

The speaker was introduced and welcomed by Chief Country Officer Deutsche Bank AG Pakistan Shazad G. Dada.

http://www.dawn.com/2007/08/02/ebr8.htm


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## Neo

*Cement dispatches grow 41 percent on yearly basis​*
KARACHI: The cement dispatches have marked massive growth of 41 percent year-on-year (YoY) in July of current financial year to 2.39 million tonnes as against 1.69 million tonnes in the corresponding of last year.

According to latest data of cement dispatches in the first month of current financial year, the growth includes exports of 441k tonnes, surging by phenomenal 134 percent in the month under review whereas the local sales of the cement registered a growth of 29.6 percent to 1.95 million tonnes during this period.

The company-wise details of cement dispatches revealed that Lucky Cement registered a growth of 44 percent YoY during the month of July with the 23 percent increase in the local sales of the company and phenomenal rise of 105 percent in export dispatches.

DGK Cement recorded a growth of 62 percent in the said period including 65 percent in its local sales whereas company posted a growth of 85 percent in export dispatches during this period. 

Maple Leaf Cements dispatches rose by 64 percent in July this year with the 44 percent growth in its sales in the local market while its export dispatches did not see any growth in the month under review.

Fauji Cements overall dispatches were stagnant, as it witnessed no growth during the month while the local sales of the company were down by seven percent, however exporter dispatches were up by 41 percent in the month of July over the same period of last year.

Pioneer Cement recorded overall growth of 62 percent in its dispatches with 84 percent in the local sales and negative growth of 24 percent was seen on the export side.

On MoM basis, Lucky Cement saw a growth of four percent in July over the preceding month of June with 16 percent growth in its local sales whereas the export dispatches were down by 11 percent in this period.

DGK Cement registered 10 percent growth in overall dispatches with 11 percent in local sales while the export dispatches did not see any growth in the said period.

Maple Leaf Cement recorded growth of 40 percent in total dispatches with the 44 percent in local sales and seven percent on export side. Fauji Cement saw a growth a 12 percent with no growth in local sales and 125 percent in export dispatches.

Pioneer Cements dispatches were up by one percent with three percent rise in local sales and negative growth of 13 percent in the export dispatches.

And Pakistan Cement recorded overall growth of 42 percent including 43 percent in the local sales and 37 percent in the export dispatches.

Analysts identifying various reasons in overall growth in the cement sector believed that still there is a major potential of further export especially after the certification of some Pakistans cement companies by Indian authorities, these companies are gearing up to export cement to neighbouring country, once all the formalities are met.

About the drop in local sales and export dispatches of some companies during the month under review, Khurram Shehzad, analyst at Investcap listed the rainy season in the north of the country and even in its export markets like Afghanistan and African countries, which resulted in drop in the local sales as well as export dispatches.

About any impact of cement export to India on the local prices of commodity, Mr Shehzad did not see any negative fallout of export to India on the local market as after meeting the local requirements, an abundant quantity of cement would be available for export purposes.

http://www.dailytimes.com.pk/default.asp?page=2007\08\02\story_2-8-2007_pg5_1


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## BATMAN

*Pakistan foreign reserves up seven-fold since 2000: Norbert*
http://www.thepost.com.pk/CorpNewsT.aspx?dtlid=110528&catid=8
Zafar Ahmad



> KARACHI: Pakistan's foreign exchange reserves have increased more than seven-fold since 2000-01, said Professor Norbert Walter, Chief Economist, Deutsche Bank Group on Thursday.
> 
> Giving an overall review during a presentation ceremony, Professor Walter said that Pakistan's foreign exchange reserves have increased more than seven times from $ 1.2 billion during 2000-01 to $ 15.3 billion in 2006-07. Pakistan's reserves would continue to grow, he said, adding if the government continues the policy of consistency and the current rate of economic growth is maintained.
> 
> With the present rate of growth, he said, all the indicators point that the foreign reserves would continue to grow at a faster rate.
> 
> Professor Walter said Pakistan's stability, which continued from 2000 was a pre-condition for its economic growth to continue.
> 
> If that remains the case, he said, the economic growth momentum would be favourable and the foreign direct investments (FDIs) would be reasonably strong over the next two years.
> 
> It augurs well for the future, he said, adding with all the indicators, it could be established that Pakistan would continue to build up its foreign exchange reserves and enjoy robust portfolio inflows and strong remittances from the overseas Pakistanis, all of which will continue to strengthen the country's strong external liquidity position. He said over the past seven years since 2000, the remittances from the overseas Pakistanis have increased over five-fold from approximately $ 1 billion to almost $ 5.5 billion during 2006-07, while the foreign exchange reserves have gone up more than seven times.
> 
> "Pakistan's economic growth record since 2000 had been very encouraging and hopefully, it would be further strengthened in the days ahead as the policies being followed by the government are economically sound and positive," he said. The rate of economic growth, he said would hopefully be maintained and the reserves would continue to grow, he added. Talking about global outlook, he said the global economy continues to grow for the fifth year in succession.
> 
> This trend, he said would most probably continue into 2008, he said.
> 
> There were numerous risks that points toward a difficult 2009, he said, adding both the central bank internal rates and bond yields seemed to have reached a "plateau" and stock markets have further upside potential.
> 
> The US housing recession has not yet affected other economic sectors and has thus dampened the US economic growth only slightly, he said.
> 
> The Euro land and Germany as its main economic engine were back on the growth track, he said, adding the structural problems, however, persist.
> 
> The Asian economies, especially Japan were benefiting from the tremendous growth in India and China, he said.
> 
> Due to increasing investments, strong regional export demand and a low Yen, Japan seems to be back on track as well, he added.
> 
> Prof Walter said the emerging market economies, especially India and China, were experiencing strongly export-led growth, implying a large increase in foreign exchange reserves.
> 
> The emerging markets, including Asia, were currently being affected by repercussions of the US sub-prime mortgage-market turmoil.
> 
> However, he said, the fundamentals in the emerging economies remain strong and these countries were much more resilient than in the past to external shocks.


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## Neo

*PPIB signs IA with AGL for 165 megawatts plant ​*
ISLAMABAD (August 03 2007): The Private Power and Infrastructure Board (PPIB) has signed Implementation Agreement (IA) with the Attock Generation Ltd (AGL) for establishing a 165 MW power plant to be situated at Morgah, Rawalpindi. The Attock Generation Ltd has been given the target of August 2008 to start its commercial operation.

The power plant will be set up at a cost of $113 million. This achievement has been made only a few days after the Implementation Agreement was signed between the PPIB and the Saif Power Ltd to set up 225 MW power project at Sahiwal with a cost of $189 million, said Water and Power Minister Liaquat Ali Jatoi on Thursday.

Jatoi was chairing a meeting at the PPIB which was also attended by PPIB Managing Director PPIB Muhammad Yousuf Memon, directors and other senior officials.

The minister said the Sapphire Electric Company Ltd, who had earlier signed IA with the PPIB in March this year, has now achieved financial closure, and is moving ahead to start their commercial operation by May 2009. The lender consortium consists of local banks, including HBL, MCB, UBL, ABL and NBP, providing Rs 9 billion as debt.

Jatoi appreciated the PPIB efforts for working diligently as a team to provide a proactive role in the development of power sector for the utmost interest of the country. He said since the economy of the country is progressing at a fast pace, we are currently experiencing electricity demand growth of 10-12 percent per annum.

The government is looking for all options and also making efforts to utilise local coal at Thar, where the development will take place only when the required infrastructure like water supply, roads and other allied infrastructure is ensured. The government is looking into the matter, as indigenous coal will help in resolving power crisis.

Furthermore, two power plants of 1,000 MW each are being processed on imported coal near Gadani, and the PPIB will also be considering any other serious proposals on imported coal. Due to the rapid power demand growth, more megawatts to be injected into the system, and participation from the private power sector is essential.

Jatoi said the government is willing to join hands with the private entrepreneurs. "Our attitude is positive and responsive to the investors, and we wish to facilitate them and provide them every co-operation for development of power sector in Pakistan," the minister added.

http://www.brecorder.com/index.php?id=599731&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*3G WiMAX coming to Pakistan soon ​*
LAHORE: The Chairman, Pakistan Telecommunication Authority (PTA), Major General (Retd) Shahzada Alam Malik, has said that 3G technology WiMAX would get its way into Pakistan market within a couple of months.

A Gulf-based company is rolling out this technology in the region soon to help introduce eight-digit mobile phone numbers, he said while speaking at the Lahore Chamber of Commerce and Industry (LCCI) on Thursday.

He urged the local businessmen to benefit from the opportunities in mobile phone handset manufacturing by setting up units as Pakistan is presently spending huge foreign exchange on the import of millions of sets every year.

Talking about the rising mobile phone density in the country, he said that the number of mobile phone subscribers had swelled to 65 million as two million new subscribers are added every month.

He said that mobile teledensity in Pakistan had touched the enviable mark of 45 percent in just few years.

About fixed line phone growth in the country, Malik said that the growth in this conventional telecom system was now stagnant. More lines were being laid to provide triple play facilities to the people i.e. internet, telephone and TV in the towns like Lahore and Islamabad. Responding to a question, the PTA chief said that the Authoritys efforts to curb the mobile phone theft in the country had started yielding positive results. The use of IMEI system had led to blocking of 100,000 stolen mobile phones in the country over a very short period of time.

He said that the business friendly policies had attracted foreign direct investment worth $1.9 billion each during the fiscal years 2006 and 2007.

He said that new entrants in the mobile phone sector had led to great competition in this vital segment of the Pakistani economy, development of more physical infrastructure and creation of jobs. The number of cell sites in Pakistan has touched the level of 11,800 in June 2007 from 360 in 2003. Speaking on the occasion, the LCCI President, Shahid Hassan Sheikh, urged the chairman PTA to ensure the provision of DSL (Digital Subscriber Line) service to industrial zones in Pakistan that are suffering because of inadequate DSL services.

The LCCI President said that it was generally observed that whenever there is rainfall, a large number of phone lines go out of order for having connection with underground cable; this is an issue of prime importance for any business firm or industrial concern.

The PTA should give the issue a special consideration as it is pre-requisite for keeping pace with fast growing economy.

Shahid Hassan Sheikh said that line rent being charged by the PTCL was too high so it should be curtailed as in the year 2006, the PTCL earned a profit of Rs20.77 billion.

He urged the PTA Chairman to direct mobile operators to improve quality of their services as the services of some of the mobile operators is not up to the mark.

He also invited the attention of the Chairman towards the repeated disconnection of internet services being provided by ISPs through PTCL.

The LCCI President said that all the banks are charging 15 per cent interest on loans for whole year, the PTCL is charging a surcharge of 10 per cent on late payment.

This is too high surcharge for late payment, this surcharge is totally unjustified and tantamount to exploit the customers, it is suggested that the surcharge is reviewed and brought at par with bank rate.

http://www.thenews.com.pk/daily_detail.asp?id=66719


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## Neo

*Seafood export ban likely to stay ​*
KARACHI: Seafood exports to the European Union are likely to continue suffering for an indefinite period as the federal authorities have refused to give a green signal to the seafood processing factories on grounds that they have not yet removed deficiencies.

A senior official rejected claims made by the seafood exporters last week that 11 seafood processing factories had invested more than Rs50 million to remove deficiencies cited in the final report of the EUs Food and Veterinary Office (FVO) and said only concrete initiatives on the part of processing factories could lift the ban.

We are not satisfied as yet. Out of the 11 seafood processing factories, most have not come up with the desired measures, said Dr Hayat Muhammad Khan, Federal Fisheries Commissioner. We even visited two factories on Wednesday but didnt find them up to the mark. The MFD (Marine Fisheries Department) inspection team is authorised to give quality certification and has marked most of the seafood companies below quality standards.

Hayat said the federal government had also engaged experts from the United Nations Industrial Development Organisation (UNIDO), who had expressed dissatisfaction over conditions at the seafood processing factories, which had further given credence to the authoritys stance.

We are not concerned about the fishing season, said the fisheries commissioner. What we are concerned about is improving quality standards. The seafood companies should remove deficiencies to resume exports to European countries. The fisheries commissioners comments came at a time when more than 100,000 fishermen braced themselves for the fishing season which resumed in August after a two-month gap due to the fish breeding season.

If the ban continues, exporters fear fishermen along with the industry would be the losers, as they would not be able to sell their sea catch at better prices to the processing factories.

The government in March 2007 received an initial finding from the EU, which informed Pakistani authorities about deficiencies in the production chain, which led to delisting of all seafood processing factories on quality control grounds, putting a ban on the countrys $80 million exports.

However, in the final report released recently, the EU has marked the grey areas where MFD failed to ensure implementation on previous quality control recommendations, which led to the suspension of seafood exports to the 27-nation European bloc in the first place early this year.

More than four months have elapsed and still fundamental quality standard concerns remain to be resolved.

The factories have been standardised as per EU requirements and the authorities reservations are baseless, said Akhlaq Hussain of Akhlaq Enterprises, one of the largest Pakistani shrimp exporter to the EU.

Even my factory was inspected a couple of days back by government authorities and the team showed their satisfaction, finding everything upto mark. Then how comes such change in the authoritys stance in a flash?

He said UNIDO was not mandated to check quality standards at the factories and the fisheries department was hiding its own deficiencies and short comings in the guise of objections from the FVO.

Figures compiled by the State Bank suggested seafood export earnings at $160 million by June 2006 up from $138.94 million earnings during 2004-05, as EU countries remained the largest importers of Pakistani seafood products.

The EU imports more than 60 per cent of its total seafood from Pakistan; the 27-nation block has been the largest single buyer of Pakistani seafood for more than two decades.

http://www.thenews.com.pk/daily_detail.asp?id=66721


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## Neo

*Drive to check unauthorised sale of SIM ​*
KARACHI: The Pakistan Telecommunication Authority (PTA) has started checking unauthorised sale of new subscriber identity module (SIM) from August 1 across the country to ensure that new mobile connections are issued after proper documentation.

Various teams of PTA Zonal offices at Lahore, Karachi, Quetta, Peshawar and Multan would carry out surprise checks and inspections in their respective areas, said a statement on Thursday.

The PTA would start sealing those franchises which were not complying with PTA regulations on issuance of new cell phone SIM and concerned company will be asked to cancel its franchise. After these inspections, companies will also be asked to take remedial measures and ensure implementation of PTA directives in this regard.

It said the PTA had taken a number of steps to deal with this issue and has directed cellular mobile companies to ensure that new SIM were sold only through its franchises or authorized dealers.

Similarly, mobile companies are running ads in the press wherein they have advised their users to get their connections transferred in their names if they have not as yet done so. Companies are also sending short messages to subscribers in this regard, added the statement.

It said the PTA had directed the mobile companies to get their data streamlined at their end by August 31, 2007. The companies would provide complete data of their subscribers to NADRA for verification purposes, added the statement.

http://www.thenews.com.pk/daily_detail.asp?id=66723


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## Neo

*High monetary growth causing inflation ​*
KARACHI: The fiscal year 2007 witnessed a monetary growth of 19.3 per cent against the target of 13.46 per cent, which would lead to inflation, said Masood Naqi, Chairman Korangi Association of Trade and Industry.

That high growth was the actual cause of monetary inflation in the country, but the State Bank blamed food prices as the real cause of higher inflation, said Naqi. New target is 13.7 per cent, which is optimistic if achieved by SBP.

Export finance was not properly utilised and export industries were facing tough competition and would not be able to meet the new challenges. Exporters not meeting targets should not be penalised and given another chance, he added.

He said it had been a common concern for the business community that further tightening of monetary policy could prove counter-productive.

To curtail the monetary growth, interest rates had been increased that would raise the cost of borrowing. The high cost of borrowing was inflationary in nature and might keep inflation higher, contrary to the efforts of the State Bank, he added.

On the other side, he said, higher lending rates could lead to low supply of credit to the private sector and it could result in low economic growth, particularly the manufacturing sector could face a difficult situation.

http://www.thenews.com.pk/daily_detail.asp?id=66727


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## Neo

*Greater role for State Bank, SECP sought​*
ISLAMABAD, Aug 2: The newly-approved Industrial Vision urges the government to restructure and strengthen non-banking finance companies to make them an integral part of financial services industries.

The Vision made available to Dawn also calls for further enhancing the institutional capacity of the State Bank of Pakistan and the Securities and Exchange Commission of Pakistan (SECP) in becoming effective regulators and supervisors of the financial system.

It further urges the government to automate the existing manual systems (banking operations) and to develop local and wide area networks, connecting various departments and offices across the country.

Pakistan must continue the reforms process, with particular emphasis on ensuring autonomy and competence of regulators and promoting professional management at all levels of decision-making in the financial institutions.

It also asked the government to implement the privatisation process efficiently and prudently so that 90 per cent of the banking assets are in the private hands.

A well-functioning financial system that efficiently channels funds, that can be invested to most productive uses, is essential for industrial development and growth.

Recognising the importance of financial reforms in the process of industrial development and economic growth, a series of measures have been adopted in recent years with a view to removing various distortions in the financial system, minimising government's interference in the banking system and strengthening the prudential regulations.

The government was also urged to achieve a sustained growth rate of five to six per cent in agriculture which is imperative to ensure a rapid growth in national income, macroeconomic stability, improvement in distributive justice and a reduction in poverty.

This can be realised by exploiting the achieved potential of all the sub-sectors of agriculture, diversifying agricultural production towards high value crops, and conserving land and water resources.

A higher level of investment in agricultural research and development (R&D) activities supported by favourable policy instruments, human resource development, and necessary physical and institutional infrastructure could prove a catalyst towards achieving enhanced productivity and the desired growth rate.

It also believed that the goals of the industrial vision cannot be realised without an effective energy sector. The supply-demand analysis shows that even modest economic growth, the current rate of change in supply will result in power shortages in Pakistan, adversely affecting the growth process.

Therefore, Pakistan needs to concentrate not only on the expansion of energy resources but also on improving efficiency of resource use.

For expansion of power supply it is important to increase the supply of power from traditional resources, like hydel, thermal and nuclear and from other sources, like building micro-mini hydel power units.

For safe and efficient transportation network, a number of measures were also proposed which included modernisation of the maintenance system, introduction of user charges, human resource development through training in transport management and maintenance standards and enhanced participation of the private sector in transport projects.

It recommended revival of Karachi circular railway, and introduction of light rail transit system in Lahore as part of measures to improve urban transportation.

Major issues in the transport sector are: inadequate physical capacity; inadequate maintenance system; poorly targeted investment priorities; operational and financial inefficiencies of the public investment; and lack of private sector participation.The rational allocation of inland freight traffic between rail and road network, privatisation of railway's operation in selected sections and inclusion of private sector in development of roads, airlines, ports and shipping, and inland navigation can help improve efficiency of the sector.

The Vision also carries out an in-depth analysis of major sub-sectors of all the three productive sectors of economy: agriculture, industry, and services and within each sub-sector identifies key issues and challenges, sets out strategic objectives and targets, and spells out a detailed plan to realise the vision.

Information technology (IT), it said, has assumed greater importance in the knowledge-based economy. The government has accorded high priority to the IT sector.

The main initiatives include the addition of facilities for computer education and training at affordable rates while ensuring quality of education, enhancement of internet infrastructure and provision of efficient internet services at reasonable rates, establishment of software technology parks and data networks, incentives for software exports and computer hardware manufacturing, enhance arrangements for marketing of software overseas, and the provision of a legal cover to electronic transactions enabling implementation of e-commerce.

The software industry in Pakistan has enormous potential to grow from its current size.

The worldwide IT services market is growing at the rate of eight per cent in real terms and expected to reach about $910 billion by 2010. Of this, about 54 per cent will consist of hardware maintenance, IT management and other services.

Strategies have been proposed under several focused areas, including IT education, e-governance, and targeted IT human resource development.

The Vision also believed that the role of construction and housing sector in economic growth of a country is quite significant.

In Pakistan, there is a huge gap in the supply and demand for housing: currently there is a shortage of 5.5 million units.

The Vision discusses the role of science and technology and research and development in quantitative and qualitative improvements in the construction and housing sector.

The recommendations include acquisition of technology for improving the quality of building material, opening of a department of architecture at the higher level of education, establishment of a centre for standardisation of construction material, research and development on improvement and commercialisation of high quality construction material, and provision of other facilities and infrastructure.

For increased availability of affordable housing for the poor, development of construction material, like ferro-cement for low-cost and mass housing is recommended. This is a low-cost technology, and commercial production of the material can be useful for achieving the objective of housing for all.

http://www.dawn.com/2007/08/03/ebr2.htm


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## Neo

*Wapda plans $1 billionIslamic bond​*
KARACHI, Aug 2: The Water and Power Development Authority is considering issuance of an international Islamic bond or Sukuk, worth up to $1 billion, a senior official said on Thursday.

We have asked all leading local and international banks to submit their proposals for the planned issue by Aug 31, said Hamad Rasool Bhullar, director finance at Wapda bonds cell.

We are looking at a size of $500 million to $1 billion, and we plan to do it as early as possible... hopefully in the next six months or so, Bhullar told Reuters by telephone from Lahore, where the utility is headquartered.

Wapda last week signed an agreement with Dubai Islamic Bank, National Bank of Pakistan and Standard Chartered Bank (Pakistan) Ltd. for the issuance of a 10-year, 8-billion-rupee domestic Sukuk.

Bhullar did not give names of the banks that have been asked to submit their proposals, but bankers said they include ABN Amro Citigroup, Deutsche Bank and Merrill Lynch.

The tenor of the planned Sukuk is also yet to be decided.

In 2005, the government of Pakistan floated a $600m Islamic bond for a five-year term, no other Pakistani entity has issued a dollar-denominated Islamic bond on international markets.

http://www.dawn.com/2007/08/03/ebr10.htm


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## Neo

*Traders asked to invest in S. Africa​*
ISLAMABAD, Aug 2: Pakistan can increase export of traditional products, like surgical equipment, rice, sports goods to South Africa. Speaking to traders at the Islamabad Chamber of Commerce and Industry (ICCI) here on Thursday, the Acting High Commissioner of South Africa to Pakistan Cassim Peer said South Africa was the main shopping centre of seven neighboring countries.

He said even textile products export to South Africa can increase because of greater demand in South African market.

The envoy said South Africa has great potential for export of gold, diamonds, platinum, other metals and minerals, machinery and raw material of steel products.

He suggested to create a linkage between South African chambers and the ICCI for exchange of trade-related information for stronger business ties.

He added that the current level of bilateral trade was insufficient which needs to be enhanced.

He said that several trade delegation form South Africa would attend exhibitions in Pakistan for enhancement of bilateral trade.

He said the Chinese and Indian companies are capturing South African market and stressed that Pakistani investors should also invest in South Africa.

He informed that there are ample opportunities of investment in information technology, mining, agriculture and other sectors.

ICCI President Nasir Khan said bilateral trade could be increased through exchange of delegations. He said that ICCI will take a delegation to South Africa.

http://www.dawn.com/2007/08/03/ebr16.htm


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## Neo

*Over Rs3bn tax frauds detected​*
ISLAMABAD, Aug 2: Tax frauds of more than Rs3 billion committed in financial years 2005 and 2006 have been detected, Minister of State for Finance Omar Ayub Khan informed the National Assembly on Thursday.

This evasion was reported in 76 companies which either evaded the payment of due taxes on their transactions or committed frauds in the shape of getting undue refund or rebate from the tax department.

In a written reply to a question submitted by PPP MNA Mrs Belum Hasnain, the state minister informed the lower house that in some cases action had already been taken against those tax officials who were found guilty.

He said that FIRs had been lodged against the companies involved. He said it had been observed that majority of tax frauds had been committed by the companies dealing in exports, particularly in textile-related products.

The minister quoted some major cases, including those involving M/s Dancom Pakistan which had allegedly committed a tax fraud of Rs140 million, M/s Early Morning Textile (Rs104m), M/s Bilal Traders (Rs203m), Atlas Honda (Rs118m), M/s Fateh Textile (Rs110m), M/s Pak Arab Fertilisers (Rs116m) and M/s Fateh Yarn (Rs76m).

In the rest of cases the amount of tax evasion was less than Rs50 million but more than Rs5 million during the years under review, the minister added.

He also informed the National Assemble that to check leakages in the tax revenue a number of measures had been taken. He said every prescribed person  withholding agent  was legally bound to furnish statement showing complete particulars of the payee, the nature of transaction, amount paid, tax deducted and deposited thereon.

He said to identify leakages in sales tax and federal excise duty, scrutiny of sales tax returns submitted by the registered persons, the detailed audit was conducted by the field formation and directorate of audit department.

The minister said that Rs8.725 million penalties had been imposed on 1,209 income tax defaulters out of total 13,149.

He said that actions were taken in cases of tax evasion/fraud, which included contravention proceedings; prosecution proceedings in cases of tax frauds and departmental proceedings against the negligent or conniving officials.

He further said to minimise the leakage of revenue a number of measures had been taken which included verification of tax payments, input tax adjustments, minimising interaction between the taxpayers and tax collectors, streamlining and simplification of laws and procedures and specialised audit techniques and focused audits based on a national audits strategy.

http://www.dawn.com/2007/08/03/top4.htm


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## Neo

*Trade with India​*
FEARS that the current imbalance may tilt further to Islamabads disadvantage should not dampen efforts to usher in a new era of bilateral trade between Pakistan and India. The ongoing talks between the two commerce secretaries have raised hopes that the volume of trade between the two countries could increase almost six-fold in three years  from 1.62 to ten billion dollars. Moves are also afoot to open branches of at least two Pakistani and Indian banks on either side of the border  a development that would greatly facilitate the regional business community. Already, trade between the two neighbours has doubled in the last two years, with Indian exports to Pakistan accounting for over 77 per cent of the total volume. Pakistans exports to India stood at $370 million in 2006-07 compared to $1.25 billion worth of goods flowing in the opposite direction  a state of affairs described as disconcerting by the Pakistan commerce secretary.

That said, Pakistan stands to gain from freer and more robust trade with India. Industrial inputs account for between 35 and 40 per cent of Pakistans total imports, and it makes economic sense to do business with the cheapest supplier. India has both experience and expertise in the production of heavy machinery and chemicals, and such imports from across the border would be less costly than those from Europe, Australia or North America. This, in turn, would reduce the cost of production in Pakistan, potentially making exports more competitive. Even if exports do not receive a boost, local consumers reeling under inflationary pressures could benefit from less expensive goods. Pharmaceuticals is another area where imports from India can bring relief to the poor and the middle classes. Basic medicines are significantly more expensive in Pakistan than in India, and the availability of cheaper alternatives may help jolt the local industry out of its rapacious ways. Pakistan also has products to sell, such as cement, and the gradual erosion of Indias non-tariff barriers  if and when that happens  could pave the way for other industries as well. Bringing informal trade within the official ambit will also benefit the exchequers of both countries.

http://www.dawn.com/2007/08/03/ed.htm#2


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## Neo

*Bumper mango crop may lead to 40% enhanced export ​*
KARACHI: Owing to bumper mango crop during the current season, its export target is likely to go up by more than 40 percent as compared to last year as the country has already surpassed last years target two months ahead of closure of the export season. 

Out of 125,000 tonnes of mango export target for the current year, the country has already accomplished 88,000 tonnes goal as compared with previous years 85,000 tonnes, while the export process will continue until the month of October, two months from now. 

This was stated by Chairman Fruit Exporters Association of Pakistan, Abdul Wahid while talking to Daily Times about the substantial growth achieved by the country in the mango export.

He termed the improved ratio of mango export due to its bumper crop during the current year achieved owing to better planning and adoption of modern farming methods. 

Major exporting countries include almost all Gulf countries like Saudi Arabia, Oman, Kuwait, UAE, European countries including Sweden, Denmark, UK France and some parts of far eastern countries, including Singapore and Malysia. Dubai remained the top market for Pakistani mangoes by importing so far 35,000 tonnes followed by Europe, including the United Kingdom with 10,000 tonnes. 

Pakistan exported 12,000 tonnes mangoes to Saudi Arabia, while 9,000 tonnes were shipped to other Gulf countries like Oman and Kuwait. 

Export of mangoes to the far eastern countries including Singapore and Malaysia stand at more than 15,000 tonnes. 

Replying to a question, he said compared to 11 ½ tonnes of mango exported previous year through air route, target for the current year is more than 15,000 tonnes out of which 10 ½ tonnes has already been achieved while rest is expected in next two months. Currently two most popular varieties of Chaunsa, Kala Chaunsa and White Chaunsa, besides Began Pheli and Sunehra, are exported in bulk through air and sea routes fetching substantial foreign revenue to the national exchequer.

http://www.dailytimes.com.pk/default.asp?page=2007\08\04\story_4-8-2007_pg5_4


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## Neo

*GDP growth target for 2007-08: Government stresses value-addition​*
ISLAMABAD: To achieve the GDP growth target of 7.2 percent for the year 2007-08, the government would give more emphasis on high value-addition in agriculture sector including livestock, fisheries, and manufacturing sector particularly in engineering goods and services. 

According to the annual plan for the year 2007-08, issued by the Planning Commission, the future economic targets will be achieved easily when taking into account the strong economic realisations during the last four years. Keeping in view the existing agriculture sector performance particularly in major and minor crops, the agriculture sector is targeted to grow by 4.8 percent in the current fiscal year. 

For the agriculture sector, the annual plan reveals that better water availability, water management, best pest control practices and application of modern techniques of production and more credit facilities to farmers will help in achieving the agricultural targets. The government will provide better environment and infrastructure facilities to agriculture producers. 

For the year 2007-08, the value-addition in major crops is projected to increase by 4.5 percent to Rs 415.1 billion compared to Rs 397.2 billion in the previous year. In major crops, the production of sugarcane is projected at 55.9 million tonnes for the year 2007-08 compared with 54.7 million tonnes achieved during 2006-07; cotton production is projected to increase by 8.8 percent to 14.14 million bales. 

The annual plan also projects maize production at 3.2 million tonnes and that of rice at 5.7 million tonnes. For wheat production, the target has been set at 24 million tonnes higher by two percent against last year. The production of minor crops for the year 2007-08 is projected to increase by 2.3 percent to Rs 130.8 billion against Rs 127.9 billion in the last year. The livestock sector is projected to increase by 5.7 percent against 4.3 percent during the last year. Fishery and forestry sector is targeted to grow by 4.2 percent and 3.5 percent respectively for the year 2007-08.

The mining and quarrying sector is projected to grow by 4.5 percent based on a 15 percent increase in extraction of natural gas, 10 percent in crude oil production and 15 percent increase in coal production. Limestone and rock salt are expected to increase by 8.5 percent and 10 percent respectively. 

The manufacturing sector is targeted to grow by 10.9 percent. Prominent growing industries would be cement, cotton yarn, paints and varnish, LCVs and cars, air conditioners, motor tyres and tractors. The services sector is envisaged to be the main contributor towards the robust economic growth for the year 2007-08 and is projected to grow by 7.1 percent. The main contributors of value addition in this sector are transport, storage and communication (5.9 percent), wholesale and retail trade (7.8 percent), finance and insurance (15 percent), ownership of dwellings (4 percent), public administration and defence (4 percent) and social, community and personal services by 5 percent. 

Savings and investment are targeted to increase by 7.2 percent; total investment is projected to increase by 18.9 percent to Rs 2381.6 billion from the level of Rs 2003.6 billion in the last fiscal year. National saving as a ratio to GDP is projected at 18.8 percent to reach a level of Rs 1882.8 billion. To achieve the annual plan targets, the government is emphasising on macroeconomic stability so as to keep a balance among internal and external accounts. It is also planned that investment targets will be achieved by using national savings and foreign savings in the ratio of 79 percent and 21 percent, respectively.

http://www.dailytimes.com.pk/default.asp?page=2007\08\03\story_3-8-2007_pg5_1


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## Neo

*Textile Industry Development Policy 2007 : Tax incentives to attract FDI in textile sector ​*
ISLAMABAD: The proposed Textile Industry Development Policy 2007 is expected to offer four tax incentives to attract foreign direct investment (FDI) in upcoming textile and garment cities, a senior official at the Ministry of Textile Industry (MINTEX) told Daily Times on Wednesday.

Among its proposals to the tax authorities, MINTEX proposed that all import of textile machinery and raw material should be duty-free to facilitate import of the latest textile machinery, which would prove to be a big incentive for the textile sector to enhance its production capacity. At present, tax authorities are charging a minimum of five percent custom duty on the import of machinery. 

MINTEX has also proposed tax-free procurement of machinery and raw material from the domestic market so that the production capacity is expanded. The proposed incentives include a general sales tax exemption on utilities to those investing in upcoming textile and garment cities.

The government has already allowed general sales tax at zero rating on electricity and gas consumed in the production process of the textile sector. At present, it is establishing garment and textile cities in Karachi, Lahore and Faisalabad to ensure enhanced value-addition and export surplus in the country. 

Exports of textile products amounted to $10.757 billion in 2006-07 increasing by 5.27 percent from $10.218 billion in the previous year.

The government has fixed a growth target of 12 percent for textile exports for the current fiscal year 2007-08.

http://www.dailytimes.com.pk/default.asp?page=2007\08\03\story_3-8-2007_pg5_3


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## Neo

*FBR declares FY 2007-08 as tax recovery year​*
ISLAMABAD: The Federal Board of Revenue (FBR) has declared fiscal year 2007-08 as a year of recovery of tax arrears and decided to recover tax arrears as land revenue arrears through land revenue authorities of the four provincial governments, a senior tax official told Daily Times on Thursday.

Tax revenue to the tune of billions of rupees is stuck due to the half-hearted efforts of the tax authorities and non-availability of taxpayers at their declared addresses and willful default of the taxpayers. Decision to this affect was taken during the first quarterly conference of the director generals, regional commissioners and commissioners of income tax held recently in the chairmanship of the Muhammad Abdullah Yusuf.

It was decided in the conference that four determined priority areas for their revenue generation efforts include recovery of arrears, monitoring of withholding taxes, broadening of tax base and audit. In the areas of tax arrears recovery, the conference was informed that this has been declared as a year of recovery of arrears. The chairman emphasised that 25 percent arrears should be liquidated quarterly. It was further decided that arrears in every case would be forwarded to the revenue authorities for recovery as of land revenue. 

For this purpose close coordination would be ensured with land revenue authorities by the concerned authorities. 

The meeting was informed about the strategy to be adopted by the income tax authorities for increase in the tax base. It was informed that liaison with Securities and Exchange Commission of Pakistan would be ensured to detect corporate sector non-filers of income tax return. Date base of the different activities like sale purchase of transactions of immoveable property, sale purchase of motor vehicles, telephone subscribers, utilisation of withholding taxes as means of documentation and conducting sectoral studies. sajid chaudhry

http://www.dailytimes.com.pk/default.asp?page=2007\08\03\story_3-8-2007_pg5_5


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## Neo

*Morocco invites Pakistan to export textiles under FTA ​*
KARACHI: Pakistani entrepreneurs should take advantage of Moroccos Free Trade Agreement (FTA) with USA and European Union (EU), particularly in the textile and readymade garments, Morocco Ambassador Mohammed Rida El Fassi said here on Thursday.

In a meeting with Vice-President Federation of Pakistan Chambers of Commerce & Industry (FPCCI) Zubair Tufail, the ambassador said that under the FTA, Morocco has free access of readymade garments to USA, which is a huge market for garments.

In addition, Morocco is geographically closer to Europe, giving it an advantage of easy access and reduced freight charges.

Morocco is a big exporter of readymade garments to Europe, and that Pakistan companies can share the Moroccan export to Europe, ambassador said.

The ambassador went on to invite Pakistani companies to set up garment units in Morocco, where even a 30% value addition is acceptable to the European Union.

Consul General of Morocco in Pakistan Mr. Ishtiaq Baig Honorary also gave a briefing on the Morocco market.

Earlier, Vice-President FPCCI welcomed the Ambassador and said that economic relations between Pakistan and Morocco do not reflect their otherwise cordial relations. 

He informed that Pakistans export to Morocco stands at $11.5 million, whereas import from Morocco was $147 million. 

The Vice-President stressed that the private sector of both the countries should come closer to open new possibilities for bilateral trade, and added that the FPCCI would work towards a Pakistan Single Country Exhibition and will send a trade delegation to Morocco.

http://www.dailytimes.com.pk/default.asp?page=2007\08\03\story_3-8-2007_pg5_7


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## Neo

*Coal exploration in Sindh to start this month​*
LONDON: Exploration for coal for use in the production of electricity is set to begin later this month in Sindh by a UK-based Pakistani company. 

Oracle Coalfields plc has raised funds through private and institutional investors, which will be used to develop the 100 square kilometres Indus East coalfield at KhoreWah in Sindh. 

According to a company official, a 12-month exploration programme has been mapped out to develop the coalfield for fuelling the power sector.

Company Director Shahrukh Khan said his organisation will develop the Indus East coalfield with local partners Sindh Koela Limited. He said Pakistan has substantial indigenous coal resources, which are estimated at around 185 billion tonnes. Our aim is to become a mining operation, and provide employment and electricity to the country through the construction of an aggregate 150Mw coal-fired power plant, in conjunction with Sindh Koela. 

Khan said electricity consumption in Pakistan has been growing faster than new sources and this has resulted in load shedding. Noting that Pakistans economy is forecast to grow at between 6-8 percent per annum over the next two decades and the projected peak demand for grid electricity is expected to increase to 75,636Mw by the year 2025, he said new sources of electricity are imperative for the country. 

He further said currently coal represent only 1 percent of fuel supply to the electricity sector and is projected to increase to about 17 per cent by 2025.

http://www.dailytimes.com.pk/default.asp?page=2007\08\03\story_3-8-2007_pg5_9


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## Neo

*Good news on Indo-Pak trade front​*
The news that India and Pakistan have decided in New Delhi to increase their bilateral trade by six times to $10 billion by 2010 should not go unnoticed because it means the pulling down of some of the political barriers that have stymied economic development in both countries. Like all trade negotiations, the two sides should seek mutual advantage and learn to adjust their economies accordingly, all the while keeping focus on what they have agreed under their World Trade Organisation (WTO) commitments.

It is the political barrier in Pakistan that has to be pulled down; and Indias economy has to get rid of the hangover from its Nehruvian days and match the openness it demands from its free-trade neighbours. All said and done, though, getting bilateral trade to touch $10 billion by 2010 will stretch the imagination of both parties which are used to deadlocking each other as a good domestic gimmick. Trade now stands at $1.7 billion and is heavily in Indias favour, which clearly indicates where the logjam has to be broken. Many more items will have to be included in the list of tradable commodities, which today stands at 1,800, having grown painfully slowly from only 40 under the regime of General Zia-ul-Haq in the 1980s.

Economic wisdom is not a plant that grows wild in South Asia. The Indo-Pak economic thaw has been forced by external leverage as Pakistan has got used once again to American assistance and India has quenched its thirst for nuclear technology from the United States. Pakistan has been linking a breakthrough in trade with India to progress in peace talks with special reference to the Kashmir dispute. The idea in Islamabad is to punish (sic!) India in order to get its way on Kashmir. It says it has great geopolitical advantage because it sits astride a clutch of trade routes joining South Asia with Central Asia. But the operationalisation of this vision is obstructive rather than constructive. The purpose is to deprive someone else of advantage, not to seek advantage for oneself.

The one item in President General Pervez Musharrafs political agenda that has found favour among the masses in Pakistan is normalisation with India. While not detracting from his efforts to ease the tensions that peaked in 2001, one has to fault his men for not grasping the urgency to get Pakistans equation straightened out with India as the status quo power in the region. India had granted Pakistan the most favoured nation (MFN) status in 1996 but Pakistan has not reciprocated because of Kashmir, a decision accepted by Pakistans ruling politicians because of internal pressures.

What militates against this policy is the multilateral treaty of a free trade area (SAFTA) signed by it at South Asian Association for Regional Cooperation (SAARC). The treaty required the signing of bilateral free trade treaties among SAARC members. Pakistan signed the free trade treaty with India but refused to ratify it because of Kashmir. That leaves Pakistan isolated in the region where all other states have signed and ratified their free-trade treaties with India.

There are reasons for holding Pakistan more responsible than India for the delay in economic normalisation. It is not useful for Pakistan to view its geopolitical advantage in military terms. And if it takes another look at itself as a trading nation rather a warrior state, then it has to actively sell its trade routes to the two regions it has actually tried to separate for the past 60 years. Its efforts to extract a price for being the impenetrable barrier to movement of commodities have given a strangely anachronistic definition to the Indo-Pak border. There are few frontiers left in the world today that are as off-limits as this boundary line. The examples that spring to mind  North and South Korea, Israel and some of its neighbours (Syria and Lebanon)  explain how threatening the policy is to the region.

The two economies are communicating all right, but through third countries and through smuggling. Analysts rightly add a couple of billion dollars to this regular trade by computing a huge chunk that Pakistani importers consume on the side. But now that the two sides have pledged to facilitate Pakistans exports to India  cement is on the line  things may start looking different. It is only after agreeing to do normal trade that one can get into the nitty-gritty of getting the other partner to pull down its non-tariff barriers. There are no trading partners in the world who dont occasionally lock horns, at times quite aggressively, over trade imbalances.

Pakistan is threatened on its western border in a most glaring contradiction of its traditional security perception in the region. But it is taking too long  even after loss of territory  to even recognise this threat. Normalisation with India is on the cards, the people of Pakistan want it, the changing threat perceptions demand it, and one can, and should, choose to do the right thing without being dragged to it kicking and screaming. *

http://www.dailytimes.com.pk/default.asp?page=2007\08\03\story_3-8-2007_pg3_1


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## Neo

*Daimler Chrysler importing components from Pakistan ​*
KARACHI (August 03 2007): Daimler Chrysler has placed orders for components worth over a million dollars with Transmission Motor Company (TMC), marking a beginning of a long term partnership with a Pakistani company that would end up in spare parts and complete unit building of electric motorcars in Pakistan, it was learnt on Thursday.

Sources said that the components of first wave were in advanced development stages with supplies to commence shortly. The second wave of components is under consideration for development from leading automotive suppliers. Sources said, "In the wake of combating environmental pollution electric vehicles are gaining global popularity and this US-Pakistan cooperation will be a boon for this fast developing auto sector".

Transmission Motor Company (Pvt) Ltd has been appointed by Global Electric Motorcars (GMC), LLC (A Daimler Chrysler USA company) as their primary sourcing partner for developing and procuring components from Pakistan.

TMC is a fully owned subsidiary of Transmission Engineering Industries Limited (TEIL), quoted on KSE, is developing and producing low-cost automobiles for Pakistani and export markets. GEM cars are producing electric vehicles for the global market.

http://www.brecorder.com/index.php?id=599725&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Sindh floods: 4.418 million tons cotton, rice and sugar crops damaged ​*
KARACHI (August 03 2007): The floodwaters have inundated around 4.418 million tons of cotton, rice and sugarcane crops and destroyed the office infrastructure of a worth Rs 62.8 million in Sindh. According to a report from District Officer, Agriculture Extension Dadu, which was made available to Business Recorder here on Thursday.

The floodwaters damaged almost 71806 acres crop area of the province. The flood, the report said, had left 3 Taluka offices, 8 agriculture offices and some 113 F.A Houses in a complete destruction costing the provincial government around Rs 12 million, Rs 5.6 million and Rs 45.2 million respectively.

The report said water had flooded the three Kharif crops in fields and stores of Dadu and Qambar Shahdadkot districts after breaches in the MNV Drain (RBOD-I). Out of a total 0.140 million acres sown area in 2007 the floodwaters have inundated 71806 acres of land in which the sown and damaged area for rice crop stands at 0.108 million acres and 58860 acres respectively, the report said.

It further said that total cultivated area for the cotton crop (in 2007) was 27000 acres out of which 10800 acres of land was damaged while the sugarcane crop faced inundation on 2146.5 acres out of a total 5400 acres of cultivated area.

The report said rice or paddy crop was hard hit by the floodwaters and estimated damages to the crop at 3.052 million tons in which 2.092 million was ruined in fields while 0.96 in the stores.

The floodwaters, which was flowing between MNV Drain left side and the Supro Bund creating a heavy pressure on Supro Bund, has also destroyed 0.25 million tons of wheat in the storages, the report added. The second most affected crop, the report said, was the sugarcane losses for which had been estimated at 0.922 million tons followed by a 0.192 million tons damage to the cotton fields.

The report said that the total agriculture land in Mehar, K.N Shah, Johi and Dadu tehsils was spread over 0.128 million acres but the floodwaters, which were flowing towards Nara Distry and the Indus Highway near K N Shah, had inundated 0.732 million acres of the cultivable land. Meanwhile, an official from the Sindh Sugarcane Growers Association (SSGA), in his talks with Business Recorder condemned "apathetic" attitude of the federal government towards the poor farmers of Sindh, which he said was a major contributor to the national exchequer.

"The agriculture sector has faced a loss of billions of rupees due to the government's apathetic attitude towards the lining of canals in Sindh", said the SSGA official.

He claimed that the floodwaters had not only played havoc to the agriculture sector in the upper Sindh, but also washed away hundreds of houses of the poor farmers. "There has been no announcement from the government of compensation to the flood victims who are living in miserable condition", he lamented.

"The federal government is more interested in the issues like Lal Masjid and suspension of the chief justice (Justice Iftikhar Mohammad Chaudhry) rather than give hand to the farmers of Sindh in crisis time" claimed the official.

He said lining of canals in Punjab province were well done but no heed was paid to the same in Sindh which he claimed was a clear manifestation of the uneven treatment from Islamabad. "Though Pakistan has an agrarian economy but the condition of farmers in Sindh is so miserable that they are compelled to mortgage their houses" he said.

He further said this is deplorable to know that there is no representative from Sindh province in the Planning and Development Commission. "Sindh which is a major revenue earner for the country has no representative in the Planning and Development Commission, this is shocking", he added. He claimed that the government was giving more incentives to the industrialists as compared to farmers as the latter had got only Rs 400 million of their loans written off by the Public Accounts Committee (PAC) against Rs 28 billion for the industrialists.

It may be mentioned that the breach in left side bank of the MNV Drain (RBOD-I) upstream of the Johi Branch had been closed as the water was flowing towards Nara Distry and the Indus Highway while efforts were underway to close the breach. Water from the breaches on the right side of the MNV Drain is flooding the area between the MNV Drain and outer side of the FP Bund.

http://www.brecorder.com/index.php?id=599728&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*US to provide resources to set up ROZs in border areas ​* 
KARACHI (August 03 2007): John A. Gastright, Deputy Assistant Secretary of State has said that the United States is committed to working with Pakistan on a long-term basis which is deep and broad and not just limited to the traditional military-to-military relationship but also business-to-business relationship.

According to a message received here on Thursday, this was stated by him during his meeting in the State Department with a 12-member Karachi Chamber of Commerce and Industry (KCCI) delegation now visiting United States. The United States has planned a strategy to provide resources to establish Reconstruction Opportunities Zones (ROZs) in the northern border areas of Pakistan.

These ROZs would provide economic benefits to the people residing in those areas and would acquire a duty free status if goods manufactured there are exported to US. The US government is, therefore, moving forward with this initiative package since it is in the larger interest of the region.

Ms Kay Anske, the new US Consul General in Karachi, Ms Mary Beth Goodman, the new Commerce and Economic Consul at the US Embassy in Islamabad, Moazzam A Khan, Commercial Counsellor, Pakistan Embassy, Mossadaq Chughtai, Regional Director, Pakistan American Leadership Centre (PAL-C), Ali Chaudhry, Executive Director, PAL-C, and other senior State Department officials were also present.

Gastright said that the people of United States have expressed solidarity with Pakistan and there is a very sympathetic attitude in US regarding Pakistan. It is imperative that the Pakistani citizens continue to do what they have to do to make their lives better.

Regarding travel advisories, he said that these are pragmatically projected since these are based on intensive information and intelligence reports received from various sources. He also said that Pakistan is in the throes of extremism and this must be strongly checked.

He categorically declared that Iran-Pakistan-India gas pipeline violates US laws and this could trigger a negative reaction because there is uniformity of views among Democrats and Republicans in Congress regarding Iran.

Gastright appreciated the efforts of KCCI in bringing a delegation to the United States at this critical juncture and advised them to highlight the achievements of the governments, especially the successes of the period between 1999 and 2007. He said they must develop initiatives so as to assist the foreign investors.

He applauded the Track Two Initiatives proposed by Majyd Aziz, President, KCCI and described it as an excellent concept and one which is doable and workable. He also advised that KCCI must develop programmes to enhance the image and perception of Pakistan in foreign countries.

Majyd Aziz in his opening remarks proposed that the time has come where the business communities of United States and Pakistan must establish a Track Two mechanism to deliberate and lobby for a stronger and more formidable bilateral relation scenario.

He also brought up the issue of negative travel advisories and difficulties faced by Karachi based businessmen in obtaining US visas. He expressed the hope that the legislation to provide resources for the establishment of ROZs would be approved soon and assured that Karachi businessmen would support the idea and there would be substantial investment in these zones in the future.

http://www.brecorder.com/index.php?id=599764&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Russian delegation visits Rawalpindi Chamber ​*
ISLAMABAD (August 03 2007): A two-member Russian delegation visited Rawalpindi Chamber of Commerce and Industry (RCCI) here on Thursday to explore the ways for enhancing trade relations between Pakistan and Russia in the better interests of both the countries.

The delegation included business representative of Russian Federation for Pakistan Alexander Keryoken and Councillor Russian Embassy for Islamabad Dzhioev. Speaking on the occasion Alexander underlined the need for devising a comprehensive strategy to enhance imports and exports between the two countries.

He said that private sector trade companies could play an important role in enhancing the trade relations between the two countries. Dzhioev, speaking on the occasion, said that both the countries must exchange trade delegations to enhance trade volume which he said was very nominal at present.

Speaking on the occasion, President RCCI, Dr Hassan Saroosh Akran lauded the economic policies adopted by the Pakistan government which resulted in flourishing the business all across the country. He said that the government had devised comprehensive policies to provide an equal opportunity to investors both from Pakistan as well as abroad.

He said that business communities of the two countries must join hands with each other to strengthen economic co-operation, which he said was very weak at present. Describing public-private partnership as very successful experience, the RCCI president said that this resulted in economic uplift in the country.

He was of the view that in this era of globalisation, no country of the world could achieve the goals of development and prosperity alone adding that this fact highlights the importance that regional countries should enhance co-operation for better development future. He also stressed the need for taking forward steps to enhance Russia-Pakistan business relations and described Russian delegation's visit to RCCI as a welcome step towards this direction adding that this would also enable peoples of both the countries to interact with each other.

http://www.brecorder.com/index.php?id=599805&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Cement sector shows 41.25 percent growth in July ​* 
KARACHI (August 03 2007): Country's cement sector has continued it healthy growth during first month of current fiscal, as its exports witnessed a raise of 134 percent to 0.4 million tonne during July 2007 in the wake of rising international demand, industry sources said.

"Cement manufacturers have done huge investment under their expansion plans during last three year, which have put positive impact on the cement sector performance," they added.

Statistics made available from All Pakistan Cement Manufacturers Association (APCMA) that country's cement export reached at 441,097 tonnes during July 2007 as compared to 188,162 tonne during same period of last year 2008, depicting an increase of 2592,935 tonne during July 2007.

The cement sector overall performance is also shows 41.25 percent of growth during July 2007 against July 2006, as total dispatches stood at 2.388 million tonne during last month as compared to 1.690 million tonne during last July, 2006.

Local dispatches have increased by 29.58 percent to 1.947 million tonne during last month as against 1.502 million tonne dispatches during same period of last year, showing a raise of 444,513 tonne during July 2007. "Strong external demands from gulf countries is continue, besides rising local demand, which have pushed that dispatches on the new peak during a month," said Khurram Schehzad a analyst at InvestCap.

He said that companies are using maximum capacity utilisation to meet local and international cement demand, therefore despite the huge dispatches no price increase has witnessed in the local market.

"Regional cement shortages is also playing a key role in rising dispatches, as India, UAE, Iraq, Abu Dehbi and other regional countries required cement in tremendous quantity for their new real state projects," Schehzad said. He said that it is expected that during the next months cement dispatches would further grow and at the end of the current fiscal it would touch new peak.

It may be mentioned here that during the last fiscal cement sector has also performed well as over all cement dispatches gone up by 31.56 percent to all time high level of 2,422,2702 tonne during fiscal year 2007.

http://www.brecorder.com/index.php?id=599760&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Improved communication system to minimise transportation time: Prime Minister ​*
ISLAMABAD (August 03 2007): Prime Minister Shaukat Aziz on Thursday reaffirmed government's resolve to improve communication system under the National Trade Corridor (NTC) project. Speaking at a special awards ceremony of National Highways and Motorway Police (NH&MP) here at PM Secretariat, Aziz said the government was actively engaged in improving highways, ports and railway network under the NTC project.

Communications Minister Shamim Siddiqui, Secretary Tariq Mahmood and Inspector General NH&MP Raffat Pasha were also present on the occasion besides a large number of parliamentarians and senior police officials. The Prime Minister said an improved communication system would help minimising the duration of goods transportation between Karachi and Khyber.

Praising the services of Motorway Police, he said the government believes to make all the police departments as corruption-free institutions. "It's an island and icon of excellence," he said while acknowledging the performance of National Highways and Motorway Police. He maintained that the government has introduced reforms to further improve performance of the police.

Unlike the past, Shaukat Aziz said that nobody would be allowed to use police for political motives. He was of the view that a culture of favouritism has ruined the country's departments but warned that the practice would be stopped once for all. "We have to put an end to favouritism policy. Motorway is a merit-driven institution and I urge you to maintain your reputation," he added.

Speaking on the occasion, Communications Minister Shamim Siddiqui informed the gathering that the government would spend Rs 520 billion till 2012 to improve nearly 11,000 kilometres roads network with regard to Asian Highway project. He said Motorway Police would soon be deployed on M-I (Islamabad-Peshawar) project once it opens for traffic this October.

Following the directives of Prime Minister Shaukat Aziz, the minister said only Baloch people were being recruited to be deployed on highways in country's biggest province. Siddiqui also acknowledged that the performance of Motorway Police was the best as compared to other government departments.

Inspector General Raffat Pasha told participants that the rate of accidents have dropped by more than 70 percent whereas the crime rate on the highways has been reduced by more than 85 percent.

He suggested setting up of National Traffic Management Commission to co-ordinate all related activities with a dedicated cell for research and analysis. Later, Prime Minister Shaukat Aziz distributed certificates among 25 male and female police officers for their remarkable performance throughout the year.

http://www.brecorder.com/index.php?id=599802&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*KWSB to set up 35 megawatts power plant at Dhabeji ​*
KARACHI (August 03 2007): Karachi Water and Sewerage Board (KWSB) has chalked out a plan to establish 35 megawatt (MW) power plant at Dhabeji, KWSB official informed Business Recorder on Thursday. Thirty-five MW more electricity would be available after plant completion at lower cost as compared to Karachi Electric and Supply Corporation (KESC).

The project cost is Rs 40 million and American Company (AC) has given green signal to invest the same amount for the project, he added. He said that KWSB had to buy a unit of electricity at the rate of Rs 5.95 from KESC while AC would provide power at Rs 3.98 per unit through which the board would save million of rupees.

He observed that KWSB will have to purchase the power at a very expensive rate for the next 25 years period, if it would continue purchasing electricity from KESC.

The KESC tariff will not remain the same during next 25 years, as evident from the present trend of KESC tariff that is going upward at an exorbitant rate, he elaborated.

The KWSB requires 23 MW electricity to run its water pumping stations, he said, adding, "The power plant would fulfil the power supply demand of Dhabeji while additional 12 MW would be sold to KESC or industrial units at Dhabeji." He said that power plant would be constructed on Built, Operate and Transfer (BOT) basis, adding that on the expiry of BOT, AC will provide every possible assistance to KWSB to run this project smoothly.

City District Government Karachi (CDGK) and KWSB are facilitating AC to establish power plant while they would also arrange supply of natural gas from Sui Southern Gas Company (SSGC) for the plant, he said. "A Letter of Endorsement will also be provided to AC from State Bank to ensure the payment of tariff to the company on time besides endorsement for fuel supply agreements," he added.

This project will be completed within 21 months after the commencement and it would fulfil the power demands of next 25 years, he said, adding that government has approved BOT contract for 25 years and it will be extendable, although AC will bound to transfer control to KWSB.

The power plant will consist of natural gas, high-speed diesel and light diesel oil-fired combustion turbine power generating units and three steam turbine power generating units, he apprised. The KWSB has also planned to install another power plant at East Filter Plant with the financial assistance of private sectors, he said.

http://www.brecorder.com/index.php?id=599814&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Another 400 megawatts coal-based power plant to be set up at Thar ​*
KARACHI (August 03 2007): A 400-Megawatt coal-based power plant will be set up at Thar coal field by an Australian company at an estimated cost of $400 to 500 million, Business Recorder learnt on Thursday. This will be the first power plant of its kind in which Australian company would generate the power through gasification of coal deposits of Thar field.

Sources in Sindh Mines & Mineral Development department said. A Memorandum of Understanding (MoU) is likely to be signed in this respect within couple of days between the Sindh Mines & Mineral Development Department and the Australian firm, they said and added the volume of investment could vary in case of any change in capacity of the power plant.

The sources said that Australian firm has vast experience of establishing power plants through the gasification of coal deposits allover the world including US, European Union members and other countries. The power plant would be set up on the Block-III of Thar coal field and raw coal deposits would be converted into gas to generate the electricity.

According to sources, the work on the proposed power plant is likely to commence soon after the signing of MoU and completion of plant is expected between one to two years period. Mines and Mineral Development Department is focussing on establishing more electricity generation plant and to complete the projects that are being undertaken at present on immediate basis, they said.

Sindh Minister for Mines & Mineral Development Irfanullah Khan Marwat will hopefully sign the MoU on behalf of the department while head of Australian firm will sign on behalf of the company.

The power project has been initiated on directive of higher provincial authorities to accelerate the work on coal-based power projects to meet the growing demand of electricity in Sindh and in Karachi in particular, the sources said. It was a part of vision of department to utilise the coal resources for sustainable energy supply at lower price to all sectors of economy. Sindh Coal Authority is also undertaking a project to construct three 375MW power plant based on feasibility study of Thar Coal Mining on selected part of Block-I.

http://www.brecorder.com/index.php?id=599811&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Teradata keen to increase investment ​*
KARACHI (August 03 2007): "Teradata is keen to increase its volume of investment in Pakistan owing to the tremendous potential growth in the IT sector", said the Vice President-of Teradata for Europe, Middle East and Africa, Hermann Wimmer during a recent visit to Pakistan

Teradata is the global leader in enterprise data warehousing and a division of NCR Corporation (NYSE: NCR). According to a press release issued on Thursday "the company will provide employment opportunity to more IT specialists in Pakistan and groom them as consultants to represent Pakistan in the international market"

Mr Wimmer who manages more than 70 countries in the region also added that he could oversee immense investment opportunities in Pakistan. "Teradata Pakistan has more than 250 IT specialists working in its consulting to be increased up to 300 by the month of December", said Khuram Rahat, the Country Manager, Teradata Pakistan, Bangladesh and Afghanistan.-

http://www.brecorder.com/index.php?id=599816&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Working of micro finance institutions ​*
Micro finance sector in Pakistan has recorded substantial growth over the last few years as a result of a conducive policy environment and active support by the government. However, latest balance sheets of most of the financial institutions engaged in this business suggest that this sector is not as profitable as normal banking business which has been yielding high dividends for the equity holders in the recent years.

In fact, some of the micro finance banks are reported to have incurred losses due to high administrative costs. According to a State Bank review on "Financial Position of Micro Finance Banks - 2006" issued on 25th July, 2007, most of these banks posted losses during 2006 as their interest and non-interest income was lower than their administrative costs.

The Network Micro Finance Bank incurred a loss of Rs 7.3 million as its administrative expenses stood at Rs 25 million, while its interest and non-interest income amounted to Rs 17 million and Rs 5 million respectively. The Pak-Oman Micro Finance Bank, Rozgar Micro Finance Bank and Tameer Micro Finance Bank also posted losses of Rs 11.2 million, Rs 7.9 million and Rs 50.1 million respectively for similar reasons.

On the other hand, Khushali Bank and The First Micro Finance Bank earned profits of Rs 23 million and Rs 19.4 million respectively, though their administrative costs were also quite high in relation to their overall financial activities and coverage.

The losses or low profitability of the existing micro finance banks in Pakistan suggests that their equity holders could have second thoughts and the potential new entrants would be less enthusiastic to enter the field. Such a behaviour could, therefore, be a blow for the government plans to use this kind of financing for poverty reduction and employment creation in the country.

It may be recalled that micro finance had emerged as a great social innovation in the 1970s to offer financial services to the working poor, especially those who were previously considered unbankable because of absence of collateral.

The beauty of the concept was that, once given the opportunity, not only clients of MFIs would expand their businesses and incomes but their high repayment rates would demonstrate the success of this model and strengthen the belief that the poor were also capable of transforming their own lives, if they had a chance.

Grameen Bank of Bangladesh established by Professor Yunus was regarded as such a huge success story that authorities of almost all developing countries, including Pakistan, wanted to follow his footsteps.

However, as the experience of Pakistan indicates, it is hard to replicate the characteristics of an institution in two different countries in its entirety. It is highly difficult, if not impossible, to find the level of commitment to a worthy cause as shown by Yunus and his team.

It was not the incentives or persuasion by the central bank or the government of Bangladesh which induced Professor Yunus to move in a certain direction, but it was the pain and hunger writ large on the faces of the very poor which swung him into action.

Moreover, the cultural norms in the rural areas of Bangladesh are quite different from Pakistan's. Whereas in rural Bangladesh, default in payment is almost considered a sin, in Pakistan repayment on time is seen as an indicator that the borrower is weak and uninfluential. In the kind of environment prevailing in Pakistan, high default rates also undermined the viability of micro finance institutions.

The experience of past schemes like yellow cabs, green tractors and other small loans are not very heart a warming. We don't want to discourage the establishment of micro finance institutions in the country, but would only like to say that businessmen venturing into the field need to be fully dedicated to the cause and be prepared for a lower return on their equity.

The very viability of micro finance institutions may be a question mark if administrative costs are not reduced to the minimum. Professor Yunus on his recent visit to Pakistan had advised Pakistani banks not to run micro finance banks like corporate banks and not to treat them as another money making avenue.

We can only wish that some entities in Pakistan would follow his vision and take up the challenge to expand the network of micro finance institutions earnestly and improve the lives of millions of people living below the poverty line through his novel scheme.

http://www.brecorder.com/index.php?id=598713&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Contamination diverts $15 million export orders to India ​*
KARACHI (August 04 2007): Some 15 million dollars worth raw cotton export orders have been diverted to India due to contamination issue during last fiscal year 2006-07, traders said on Friday.

"Despite the fact, Pakistan is the fourth-largest cotton producer in the world, the quality of cotton is not as per international standards. As a result its raw cotton export is declining, which is benefiting the neighbouring India," they added.

They said that during the last fiscal year some 26 percent decline has occurred in country's raw cotton export, adding that "due to high ratio of cotton contamination, over 20 percent of leading foreign buyers of Pakistani raw cotton have turned to India and some five percent to USA".

Official Statistics show that Pakistan's raw cotton exports stood at $50.720 million during the last fiscal year as compared to $68.151 million during fiscal year 2005-06, showing a decrease of $17.431 million during fiscal year 2007.

In terms of quantity, raw cotton export to the different countries has decreased by 25 percent during 2007 fiscal year. During this period Pakistan has exported 45,069 metric tonne of raw cotton as compared to 62,658 metric tonne during fiscal year 2006, depicting a decline of 17,589 metric tonne.

"Indians have the best quality and long staple cotton, besides the bumper crop of the commodity, therefore, Pakistani textile millers are also importing Indian cotton," said Ghulam Rabbani a leading trader.

He said that during the last fiscal year, Pakistani textile mills have imported 0.4-0.5 million bales of Indian cotton to meet the international buyers requirements.

"We are confident that over 20 percent out of 26 percent worth 15 million export orders have been diverted to India on the cotton quality grounds," Rabbani said. He said that leading raw cotton importers Indonesia, Vietnam, Taiwan and Bangladesh are now placing their orders with India.

Contamination ratio in the Pakistan's raw cotton is higher than the other competing countries, as a result, Pakistani exporters are loosing international orders, he added.

Raw cotton exports statistics also depict a decrease of 53 percent during June 2007 as compared to the same period of the last year, as country has exported worth $2.309 million raw cotton during June 2007 as against $4.916 million exports during 2006.

In the terms of quality during the June 2007 overall exports stood at 2,029 metric tonnes raw cotton as compared to 4,574 metric tonnes during the same period last year, depicting a decrease of 2,545 metric tonnes.

Rabbani said that during the last fiscal year India exported over 4.5 million cotton bales and has become the third largest producer of cotton with 27 million bales.

"Current year country's cotton production is expected to be 15 million bales, however, despite the record crop country's export may not do well to retrieve the diverted international export orders," he added.

http://www.brecorder.com/index.php?id=600479&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*All energy targets missed ​*
ISLAMABAD (August 04 2007): The government has missed all energy sector targets, reflecting badly on everyone involved. An official document, made available to Business Recorder, indicated that President General Pervez Musharraf had fixed targets for the government in 2005 and given clear direction to achieve them through a better strategy.

But none of the targets have been met even after two years. The failure in achieving any target for energy sector is enough to narrate the whole story of the government performance. According to the document, the President had chaired a meeting at camp office Rawalpindi on February 15 to review energy security action plan and this concluded at fixing of key targets for the government.

As on August 3, not a single target had been achieved. Even a series of follow-up meetings at the highest level could not make things happen. One wonders who would make the decision makers feel that indifference on their part is costing Pakistan dearly, if the President can not do it.

The government was asked that import of gas should be expedited to ensure its supply to the industrial sector at competitive rates for lowering down production cost. Other targets were;

-- The policy of gas allocation and its management during shortage period be reviewed and done on modern lines so that the industrial sector does not face the squeeze.

-- The prospective investors be assured supply of gas as additional supply of gas would be made available through the import of pipeline gas and/or LNG.

-- Sui Southern Gas Company (SSGC) should import LNG on fast track through private sector on BOT/BOTO basis.

-- BOI and PPIB should appropriately inform prospective investors that Pakistan is a multi-use country so that investors install plants capable of running on at least one other fuel, besides natural gas.

-- The Ministry of Petroleum and Natural Resources must ensure development of Taj Block (INWFP) on priority to meet the growing demand for energy.

-- OGDC to increase its drilling ratio to 10 holes per rig.

-- Feasibility of importing hydel power from Kyrgyzstan and Tajikistan be undertaken on priority.

-- Alternative Energy Development Board (AEDB) should ensure completion of the first pilot wind power plant of 100 MW by December 2005. For this, the government of Sindh must provide land at Keti Bandar and Gharo, latest by end March 2005.

-- On hundred industrialists should be tasked to establish ethanol production plants.

-- Foreign investors should be encouraged to set up naptha cracker plant. In case of lack of response from them, local investors should be invited to discuss the project.

-- OGDC to explore the possibility of getting/running a developed oil field in Iraq.

-- PAEC should be inducted in the mining of uranium at Thar.

-- There is need to establish more power plants based on nuclear energy.

-- Participation of other countries like Canada, Germany, France and USA in this regard be explored.

-- Adequate facilities be made available at Gwadar Port to serve as an alternative port in case of blockade of straits of Hormuz.

-- PSO should be tasked to undertake study for utilising Gwadar as hub for oil storages and refineries, particularly keeping in view the current geopolitical scenario.

http://www.brecorder.com/index.php?id=600463&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*KSE one of best performing markets in region: Salman ​* 
KARACHI (August 04 2007): The Karachi Stock Exchange (KSE) is one of the best performing share markets in the region as the benchmark KSE-100 index has grown by 51 percent in FY07 with a net gain of 770 points.

This was stated by the Advisor to the Prime Minister on Finance, Revenue and Economic Affairs, Dr Salman Shah while addressing the members of Karachi Stock Exchange here on Friday. He said that the country's economic growth continued during the last five years with an average growth rate of seven percent per annum.

"Pakistan attracted foreign investors during the last few years and got record foreign direct investment, which has now reached at $8 billion during the last fiscal year", he said and added that highest foreign exchange reserves, record remittances and record portfolio investment at the country's equity market were some very positive signs for the continuous growth of country's economy.

He said that increase in interest rates would not affect country's economy negatively as the interest rates are much higher in many countries. The State Bank of Pakistan has adopted this policy to control inflation and to control the forex reserves of the country.

He said that the world appreciates that Pakistan government has taken many measures to keep peace in the country, which boosted the foreign investor's confidence in this country.

"Record inflow of foreign investment which has reached at $8 billion last year, showed the foreign investor's trust over the government efforts regarding keeping in the country", added.

"We held successful road shows in different countries in Asia, Europe and the US to showcase the country's equity market globally, which tremendously attracted the foreign investors to invest here", he said.

The country's equity market is witnessing fresh foreign investment with new IPOs as new companies are being listed at the country's stock exchanges. He said Pakistan is 6th largest populated country in the world and the young generation is 60 percent of its total population as 100 million people of the country are under 25 years of age. "We have fourth largest labour force after India, China and the US", he said and added, "we have to utilise this labour force for the development of the country".

He mentioned that Pakistan could not grow during the last thirty years due to lack of planning. He pointed out that the Korean economy was only 50 percent of the Pakistan economy in 60s which is now 700 percent higher than Pakistan's economy. "It is only because of the economic systems which the two countries followed", he said.

Shukat Tarin, Chairman, KSE in his welcome address said that the KSE had become one of the most emerging markets in the region and its capitalisation has reached to $4 trillion in 2007.

The ready volume grew by 51 percent while the futures volume increased by 15 percent, he said. He said that the demutualisation process of the KSE is under way and hopefully the share market will witnessed some strategic investors by the end of this year.

The chairman of Securities and Exchange Commission of Pakistan Razi-ur-Rehman, Acting Managing Director KSE Yaqoob Memon, Chief Manager Operations Haroon Askari, directors and a large number of KSE members were present on this occasion.

http://www.brecorder.com/index.php?id=600541&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*No talks on trade across LoC with India: Asif ​*
NEW DELHI (August 04 2007): Pakistan's Commerce Secretary Asif Shah on Friday denied any talks with India on allowing trade through Line of Control (LoC), even as he announced that cement from Pakistan would reach Indian shores by the end of August.

"There were hurdles in cement exports from Pakistan to India, but we have moved forward, and the first tranche of cement will reach India by August-end," Asif, currently visiting India of trade delegation, said in a meeting organised by the Federation of Indian Chambers of Commerce & Industry (FICCI).

"We did not have any talks (with India authorities) on having trade through the LoC. Trade through Wagah route by trains is already happening. Whether it would take place through roads or not has not yet been decided," he told reporters when asked if he had any talks with Indian authorities on allowing trade through LoC.

India's Minister of State for Commerce Jairam Ramesh was on Thursday quoted by Indian media as saying that Pakistan was in favour of duty-free movement of a limited number of goods through the LoC. Asif stressed need to facilitate increased export of tea from India to Pakistan.

On talks with Indian authorities, he said that India and Pakistan had also signed a shipping protocol according to which cargo ships from both countries would now be able to lift cargo from each other's dockyards. "We have made meaningful progress in shipping protocol. It's now in place, which means ships can move from one port to another if there are no legal glitches."

On trade deficit between the two countries, he said: "We addressed the issue of widening trade gap in our bilateral trade meeting during our current visit here."

http://www.brecorder.com/index.php?id=600473&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Government urged to acquire renewable energy technology from China ​*
KARACHI (August 04 2007): The Karachi Chamber of Commerce and Industry (KCCI) has urged the government to seek assistance from Chines government to provide technical support for producing photovoltaic solar energy cells. This was stated in a report on power sector in Pakistan.

The report noted that China is producing photovoltsaic solar energy cells quite economically and government of Pakistan can seek the help of the Chinese government in this regard. Out of many innovations in the field of renewable energy technology, development of solar energy technology has acclaimed to be effective.

As per the new technology, the sun produces enough power supply the earth for an entire year only in 15 minutes. An interesting computation carries out by the global energy technology strategy projects shows that if solar power could be developed such that its cost would drop to global average of 3 cents per kWh, as against the current 9 cents, and the global costs of stabilising atmospheric carbon dioxide levels at 550 parts per million (PPM) would be reduced by about 1.5 trillion dollars.

http://www.brecorder.com/index.php?id=600550&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Use of hydro, thermal sources urged to meet power needs ​*
LAHORE (August 04 2007): Punjab Power Minister Chaudhry Armaghan Subhani has said the Punjab Power Development Board should use both hydro and thermal power sources to meet power demands in the province. He made the comments while chairing a meeting to review the progress of the Punjab Power Development Board here on Friday.

He also said PPDB should process and ensure implementation of power generation projects in liaison with the Private Power and Infrastructure Board, Power Distribution Companies and National Transmission and Dispatch Company to achieve its objectives. "PPDB should also liaise with other power generation agencies to ensure the inter-transfer of information and data related to load growth and of the respective plans to meet it." He said.

According to the latest load forecast, the expected projected load growth by 2025 will be 36,358 mw, which is about 330 percent of the loads in the year 2002-03 while the load forecast up to year 2010 of Punjab province is about 11,500 mw. The load growth requires a proper expanded generation plan to be managed. He said. "Punjab has sufficient resources to generate about 480 mw from 315 hydel locations. This potential is in addition to other options available for thermal generation based on indigenous fuel such as oil, coal and gas."

The meeting informed the minister that out of the total generation capacity of 17,975 mw in the country, the Water and Power Development Authority and General Companies owned 9,750 mw, the Karachi Electric Supply Corporation owned 1,756 mw and rest is owned by independent power producers.

http://www.brecorder.com/index.php?id=600574&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Uganda to buy agricultural machinery from Pakistan ​*
ISLAMABAD (August 04 2007): Uganda expressed the desire to purchase latest agricultural equipment's and livestock processing units from Pakistan to boost its agriculture sector. A-3 member high level Ugandan delegation led by its Minister of State for Animal Industry, Rawamirama K. Bright met Federal Minister for Food, Agriculture and Livestock, Sikandar Hayat Khan Bosan on Friday.

They discussed matters relating to promotion of agriculture and trade between both of the countries. They informed the Minister about his visit to Agriculture related equipment industries in Daska, Lahore and Faisalabad.

Bosan told the Ugandan Minister that the Government was focusing on developing the Agriculture sector for eradication of poverty from the country. He ensured the delegation that Pakistan would extend all possible help to Uganda for the purchase of agriculture and meat processing machinery from Pakistan to promote the agriculture sector in Uganda. Later the delegation visited National Agriculture Research Centre (NARC).

The meeting was also attended by Zia ul Rehman, Secretary (MINFAL), M. A. Tasnaeem, Chairman PARC, Muhammad Saleem Jhagra, Additional Secretary MINFAL and other senior officials of the Ministry.

http://www.brecorder.com/index.php?id=600512&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Kachhi canal project to be completed by December 2008 ​*
LAHORE (August 04 2007): The phase-I of Kachhi Canal Project comprising 400-km long main canal and head regulator will be completed by December 2008. Chairman Wapda Tariq Hamid said the completion of phase-I would facilitate irrigating 1,02,000 acres of land in District Dera Bugti of Balochistan.

While speaking at a Rs 3.274 billion contract signing ceremony for the construction of the head regulator of Kachhi canal, held here at Wapda House today, Tariq said Kachhi Canal project is of immense importance, particularly for the province of Balochistan. This project will enable the province to draw its allocated share of water as per water apportionment accord 1991.

General Manager (Central) Water, Waseem Ahmed and Ateeq Zaman Khan signed the agreement on behalf of Wapda and Descon respectively. The agreement includes construction of Kachhi Canal head regulator and other structures at Taunsa Barrage along with canal section by December 2008.

The chairman said the overall completion of the project is expected by the year 2010 with an estimated cost of Rs 31.2 billion. Kachhi canal is one of the priority projects being executed by Wapda under 'Vision 2025' programme and aims at irrigating about 7,13,000 acres of land in Kachhi Plain of Balochistan, he concluded. Member (Water) Wapda, Muhammad Mushtaq Chaudhry was also present on the occasion.

http://www.brecorder.com/index.php?id=600554&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pakistan keen to enhance ties with Asean ​*
ISLAMABAD (August 04 2007): Pakistan is keen to further develop political, security and economic relationship with Association of Southeast Asian Nations (Asean) in line with its vision East Asia Policy. State Minister for Foreign Affairs Makhdum Khusro Bakhtyar stated this at the ministerial meeting of fourteenth Asean Regional Forum (ARF) held in Manila, says a Foreign Office press release issued here.

*ADDRESSING THE FORUM, THE MINISTER OF STATE UNDERLINED:* 

Pakistan's perspective on major regional and international security challenges. He spoke about the significance of composite dialogue process with India for resolving all outstanding issues including the occupied Kashmir dispute. Bakhtyar also underscored Pakistan's contribution towards international campaign against terrorism and extremism. He urged the need to adopt a holistic approach to deal with the scourge through inter-civilisation dialogue and understanding among followers of different faiths.

The Minister of State stated that Pakistan was making its utmost contribution towards achieving peace and security in Afghanistan. He said Pakistan was committed to support all efforts aimed at resolving the issues faced by the Middle East including Palestine, Iraq and Lebanon.

On the sidelines of the meeting, the Minister of State held meetings with the Foreign Ministers of China, Sri Lanka, Republic of Korea, Lao PDR and the Philippines and the Deputy Foreign Minister of Canada. During the meetings, issues of mutual interests and Pakistan's bilateral relations with respective countries were discussed.

http://www.brecorder.com/index.php?id=600520&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Runaway deficits threaten economy ​*
ISLAMABAD: Pakistan economys runaway twin deficits, if unchecked, could cause irreparable damage to the macroeconomic stability of the country and are likely to pose a serious threat to the smooth functioning of financial markets, valuation of rupee, monetary policy and economic growth in particular.

The State Bank of Pakistan (SBP) in its monetary policy statement for July-December 2007 has covertly blamed fiscal extravaganza for monetary indiscipline in the economy during 2006-07.

During fiscal year 2006-07, fuelled by a huge $13.53 billion trade gap, the countrys current account deficit (CAD) widened to a staggering $7.016 billion (4.9 percent of GDP) from $4.99 billion or 4.3 per cent of GDP in FY 2005-06.

Likewise, the widening revenue-expenditure gap due to expansionary fiscal policy also stood at about Rs366.13 billion ($6 billion) against Rs325.18 billion recorded in FY 2005-06.

This was the reason that the governments borrowing from the banking system ie scheduled banks and the central bank, was on the rise for budgetary support. The SBP, however, is committed to putting a check on monetisation of the fiscal deficit.

Pakistans current account and budget deficits are reflecting a greater degree of deficit tolerance on the part of the government. The government has added Rs260 billion to the domestic debt stock and $1.6 billion to the external debt stock by end-March 2007, which is amazing for a government claiming to be breaking the begging bowl.

The twin deficits collectively put a question mark over the tall claims of fiscal prudence and external sector comforts. The governments economic planners keep on saying that Pakistan is enjoying an economic boom and the current account was manageable because at the moment greater chunks of it are being financed through non-debt creating inflows like remittances and foreign investment. However, a hefty increase of $1.6 billion to the external debt stock in nine months is self-explanatory of prudent debt management.

One dismaying aspect is that the government could have easily controlled this over-spending, but none bothered about it. For instance, issuance of Eurobond and GDR at high interest rates in the range of 7 to 10 per cent has only added to the low-yielding (0.5-1.5 per cent) reserves.

To the government, all inflows like remittances, FDI, portfolio investment, foreign economic assistance and foreign exchange reserves are very encouraging. But the million-dollar question is for how long can the current account deficit of this magnitude be financed through these inflows? And how long can Pakistan continue to spend more than its earnings for the sake of higher growth when the sustainability of these inflows is questionable?

The inflow of foreign investment should be taken with caution because most of the inflows are in sectors like financial business, telecoms and food and beverages where returns are high and have implications for remittance of profits and dividends which have already witnessed a tremendous rise in 2006-07. It is likely to have serious implications for the balance of payments.

On the other hand, it is very pleasing for Pakistan to receive large foreign direct investment (FDI), but the painful aspect of this growth is rising outflows of profits/dividends in foreign exchange.

During FY 2006-07, such outflows on account of remittance of profits and dividends to foreign investor countries amounted to $804.2 million against $504.4 million in FY 2005-06.

At present, these outflows are overshadowed by huge quantum of inflows, but in the long run the outflows could exacerbate the balance of payments.

Can the government be able to sustain inflows in the shape of privatisation proceeds about which the government is overly confident, and how long they would keep on privatising state-run entities?

There would come a point when all these inflows would dry up; then what would be the alternative source to finance the current account deficit.

It is important to note that in FY 2006-07, the communication sectors foreign investors remitted $152.5 million, power sector $136.2 million, financial businesses $116.1 million, chemicals $53.2 million, pharmaceuticals and OTC products $51.2 million, petroleum refining $48.7 million, oil and gas explorations $44.8 million, food $38.8 million and tobacco and cigarettes investors remitted back to their countries $33.4 million.

Well-placed sources in the Finance Ministry told The News that though, it was largely driven by a burgeoning trade deficit (which during FY2006-07 stood at $13.53 billion), yet, governments lavish expenditure on foreign trips and huge import of luxury cars have also been major factors augmenting the current account deficit to worrisome level.

Sources said that during the period under review, the national exchequer spent nearly $1.6 billion on import of luxury vehicles, more than $831.7 million on cellular phone sets, $1.32 billion on telecom apparatus and about $1.35 billion were paid through exchange companies to foreign countries. Besides, more than quarter of a billion dollars was spent on foreign tours by the President, Prime Minister and cabinet members.

The most depressing thing was that foreign trips remained almost fruitless as no improvement was seen or mentioned about enhancement of exports. 

Pakistan during FY 2006-07 missed the export target of $18.6 billion by a wide margin of $1.6 billion by end June 2007.

According to economic experts external disequilibria in the shape of twin deficits may have a significant impact on the value of the rupee, a matter attracting keen attention around the country.

Besides, it would translate into a large increase in Pakistans net foreign debt position. A large and growing public debt could also eventually put upward pressure on interest rates and crowd out private investment.

http://www.thenews.com.pk/daily_detail.asp?id=66856


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## Neo

*Sindhs share in GDP rises to 29pc​*
KARACHI, Aug 3: The Sindhs contribution in the national economy is estimated to have increased from 28.2 per cent in 1999-2000 to 28.6 per cent in 2004-05 and is expected to be around 29 per cent in the 2006-07, revealed a recent study of the provincial government.

In all these years from 1999-2000 to 2004-05, the study says the contribution of industry in Sindh has increased substantially. The share of Sindh agriculture in the national economy has declined. The share of services sector too has come down. The document is yet to come for detailed scrutiny and analysis before the economists and analysts.

For the first time in 60 years history, the Sindh government has taken a major initiative of constructing a Gross Provincial Product (GPP) for an analysis of provincial economy and to measure contribution of various sectors in the national economy.

This was done in face of the hurdles created by Islamabad, a senior official said. He disclosed that the Sindh government took up this task sometimes in 1990s but was abruptly stopped by the federal government. But the World Bank took up a study of Punjab economy and gave an estimate of its share in the national economy.

This report proved to be a green signal for us and we prepared this report, he said.

According to this study, the contribution of the Sindh-based industry in national industry is 37 per cent while that of services sector is 27 per cent. Agricultural sectors contribution has been estimated at 22.1 per cent.

In the industrial sector, the large scale industry contributed 49.1 per cent, small scale 31.5 per cent. In agriculture, major crops contributed 16.9 per cent while minor crops 30 per cent. Livestocks share is 25 per cent but that of forestry is only 0.2 per cent. Fisheries contributed 19.4 per cent.

In the services sector, the finance and insurance contributed 36.9 per cent, wholesale and retail trade 31.1 per cent, transport, storage and communications 27 per cent, ownership of dwellings 23.2 per cent, public administration and defence 15.2 per cent, social services 23.8 per cent.

Carried out by the Sindh Bureau of Statistics under the guidance of provincial Chief Economist Mr Mohammad Ali Khaskheli, the study noted a structural change within the provincial economy since 1999-2000 till 2004-05. The agriculture sector contributed 21.6 per cent in the GDP of Sindh in 1999-2000, it declined to 17.4 per cent in 2004-05. The share of industry grew from 23.6 per cent in 1999-2000 to 29.4 per cent. The share of services sector decreased to 48 per cent from 50.5 per cent in 1999-2000.

The Sindh study estimates are supported to a large extent by the World Bank report on Punjab economy, which noted a major shift of services sector from Karachi to Lahore. Services sector in Punjab is 52 per cent of the total national services sector. A decline in agriculture in Sindh is being attributed to four years drought and its after effects which reduced the water supply.

But the increasing share of industry in Sindh warrants a further careful study and analysis, a member of Site Association of Industry said. He agreed that there had been some revival of industry in the province and the landscape on way to Pakistan Steel, Nooriabad, Kotri and a few other places have changed.

But how far this industrial expansion has provided employment opportunities is a question for which no answer has been provided, an active trade unionist said.

The construction of Gross Provincial Product (GPP) series is a large and complex assignment, as disaggregate data are needed for a vary large number of provincial specific variables, the authors of the study observes at the very outset and then goes on to explain the methodology used for estimating Sindhs share in the national value added to various economic sectors.

While the authenticity and credibility of the Sindhs study is yet to go through scrutiny of the economists and businessmen, the initiative seems to have been appreciated by the scholars and analysts at large.

The regional account of a province aims at giving quantitative picture of the main economic activities in which the province has been involved during a certain period of time, normally a year, a banker quoted the study itself to justify the document and periodical updates.

Analysts recall that Islamabad had always looked with suspicion any attempt in Karachi, Quetta and Peshawar to quantify the outflow of their resources. A Regional Planning Organisation set up in Sindh during the decade of seventies was rendered dysfunctional on instructions from Islamabad.

Mr Pasha, a noted economist who was associated with a caretaker government and is now a senior official in a United Nations agency was a teacher at the Karachi University. He told journalists that late General Zia ul Haq instructed in early eighties to stop any exercise that aims at monitoring economic indicators at the provincial level.

http://www.dawn.com/2007/08/04/ebr1.htm


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## Neo

*India, Pakistan agree to combat trade barriers​*
NEW DELHI, Aug 3: The commerce secretaries of India and Pakistan prescribed transparent measures on Friday to combat artificial trade barriers between the two countries and they set up empowered committees to help implement the resolve.

Indias G. Pillai and Pakistans Syed Asif Shah led talks at the joint study group (JSG), which met here for the third time since it was formed recently, and both expressed support for a time-bound implementation of their recommendations.

Mr Pillai stressed that the JSG should aim at developing a policy framework to maximise benefits of geographical proximity, identify opportunities for enhancing economic cooperation and create a framework to boost trade in goods including elements such as customs cooperation, standards, and certification system.

Mr Shah agreed and said that in the spirit of the article XXIV of GATT, India should consider creating special provision for giving more market access to Pakistan. The article deals with the special privileges that neighbouring countries could be accorded in bilateral trade. India noted the request.

Mr Shah proposed and the Indian side agreed that sub-groups on Customs cooperation and trade facilitation measures, sanitary and phytosanitary measures, agreement on technical barriers to trade, and standards & conformance should meet every six months to ensure speedy implementation of the recommendations of the joint study group.

Pakistan also wants to set up a sub-group to address the issue of market access rising linked to the agriculture sector in India. Mr Pillai noted the proposal.

The sub-group on customs cooperation and trade facilitation measures agreed: a) To work towards a bilateral agreement on customs cooperation on specific bilateral issues; b) To constitute a Customs Border Liaison Committee at Attari-Wagah border to meet once in two months to resolve the operational issues at the field level; c) To work towards electronic exchange of information, including verification of adherence to the Rules of Origin; d) To meet at a six-monthly interval alternatively in India and Pakistan.

It was also agreed to exchange a list of 20 products of export interest to both sides by 31 August 2007 and prepare a compendium of procedures for their trade facilitation. Though this would be a continuous process, efforts would be made to complete the exercise and place it on their respective websites by 31 December 2007.

The Non-Tariff issues associated with the identified commodities or any other product would be exchanged by 30 September 2007 and the issue would be resolved in the working group scheduled to meet in November 2007.

To facilitate export of cement from Pakistan to India, it was agreed to finalise the process of certification of the three Pakistani cement factories, from which samples have already been taken, by September 15, 2007.

For the purpose of harmonisation of standards it was mutually agreed that initially standards for cement would be taken as a pilot project, to be extended to other products up for trade.

http://www.dawn.com/2007/08/04/ebr3.htm


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## Neo

*Sindh govt plans sale of assets worth billions​*
KARACHI, Aug 3: The Sindh Privatisation Commission (SPC) will soon invite Expressions of Interest (EoIs) for the sale of billions of rupees assets of the defunct Sindh Road Transport Corporation (SRTC) and grain silos constructed but left incomplete by the NLC on Superhighway near Karachi.

The marketing activities of the Sindh Privatisation Commission (SPC) had slowed down during last year owing to resignation of its private sector chairman Tariq Amin in June 2006. The SPC board now has recommended name of the new chairman which awaits approval by the chief minister.

The SPC chairman resigned about a year ago on reasons of preoccupation, but notification about acceptance of his resignation by the chief minister took about one year paving the way for a new entrant.

However, a heavy agenda of privatisation awaits the new chairman which include sale of assets of the defunct SRTC; sale of wheat silos, prime farm land belonging to the Sindh Board of Revenue and a printing press in Hyderabad.

The assets of SRTC include 50 shops at a bus terminal in Jacobabad, a shopping plaza at SRTC terminal in Hyderabad, a residential house in Lateefabad, Hyderabad and a bus terminal at Sukkur.

Earlier, bids were invited for sale of SRTC assets and silos were far below the benchmark price fixed by the SPC and hence the sell-off was postponed.

However, the PC board recently decided that the SRTC assets should first be offered to the city district governments in respective towns on market rates so that their land-use plan is not disturbed. If the district governments refuse the offer, the assets would be offered to the private sector.

The SPC owes Rs662 million to the ministry of finance for payment made to the employees of the SRTC which closed operations in December 1993 on account of golden handshake scheme. The amount will be paid to the ministry after the assets are sold.

All decisions made by the SPC are subject to approval by the Sindh Cabinet Committee on Privatisation.

Giving details of the efforts for privatisation of the government assets, sources at the commission told Dawn that the SPC also initiated the process of privatisation of Lakhra Power Generation Company and Lakhra Coal Development Company.

The sell-off process could not progress as central government decided that assets of Lakhra Power Generation Company should be handed to Wapda since it has majority shareholding in two coal mining power companies.

Privatisation of Silos: The construction of 16 grain silos was undertaken by NLC at a cost of Rs50 million on a land provided by the Sindh government. On completion of 47 per cent work at a cost of over Rs47.2 million, the construction was abandoned by the NLC. The concrete structure of 11 silos was completed while foundation of five silos dug up. The machinery of the project is lying on the site.

The ECC of the cabinet in Islamabad decided to hand over silos along with machinery of the project packed in containers to the Sindh government. The valuation of the property on the prevalent market price is being carried out following which the property would be placed for auction.

The commission will invite expressions of interests from prospective investors for submitting an integrated development plan for using the property as whole i.e. land, structure, machinery and equipment.

The other assets due for sell-off by the commission include 75 acres of the Board of Revenue land in Deh Shah Mureed. The commission decided to divide the land into small plots of 15 acres each for sell-off.

Meanwhile, Mirza Ikhtiar Baig, a prominent businessman and member of the board of Sindh Privatisation Commission, told Dawn that the commission had been non-functional for quite some time due to resignation of the chairman and preoccupation of the Sindh finance minister who chairs the meetings of the commission.

He said the SPC had assets worth billions of rupees, including properties of the defunct SRTC, and incomplete grain silos with unpacked machinery.

He suggested that the silos should be handed to the ministry of agriculture for storage of grain if the assets do not get a good sale offer.

http://www.dawn.com/2007/08/04/ebr4.htm


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## Neo

*Business policy moot on Microfinance: SBP encourages developing alliances, says Dr Shamshad​*
KARACHI: Governor State Bank of Pakistan (SBP) Dr Shamshad Akhtar has said SBP encourages delivery of microfinance to the borrowers by moving away from the traditional means and encourages developing alliances among the active players in this sector.

Leading the roundtable on Microfinance - Improving Outreach and Possible Solutions to Enterprise Financing she appreciated this important initiative taken by Centre for International Private Enterprise (CIPE) and assured SBPs full support. The roundtable was organised Thursday by the CIPE, an affiliate of US Chamber of Commerce. 

A large number of eminent personalities from financial and professional circles attended, including women entrepreneurs, representatives from business associations and donor agencies. 

Dr Akhtar was of the view that venture capital funds for microfinance industry should be set up and money pools should be developed for specialised microfinance institutions. She supported the idea of developing instruments against which microfinance banks and institutions can borrow funds at market rates.

In his welcome address Country Director, CIPE, Moin Fudda, said microfinance is relatively a new sector with high growth potential and effective collaborative efforts in the microfinance sector would have a larger economic impact. There is a strong need to build a platform to develop a dialogue among stakeholders for effective policy making in this sector. 

It was agreed that microfinance programmes in Pakistan have reached a point that warrants consolidation, if outreach has to be increased within a short period of time to meet the stiff challenge of multiplying it to three-folds. Simultaneously, issues such as deepening the microfinance system into the MSE sector, creating an enabling environment both for the enterprises and microfinance banks and institutions; developing home grown models for MFIs to suite Pakistans norms for microfinance banks and institutions framework, processes, and products to achieve higher organisational and financial stability; and strengthening coordination (value chains) between various stakeholders for higher synergy for all are ought to be addressed to ensure the wider impact of microfinance in the country, and the success of this sector is based on financial viability and commercial sustainability of microfinance institutions. 

Other speakers who shared their expertise on this topic were GM Pakistan Microfinance Network (PMN), Syed Mohsin Ahmed, Chairman Modarba Association of Pakistan, Basheer A Chowdhry, Member CIPE Project Advisory Committee, Shamim Ahmed Khan, Director Operation and Policy Reforms CIPE, Steve Rogers and Senior Programme Officer for South Asia, CIPE Andrew Wilson.

In his address, Wilson said collaborative efforts are required to facilitate the informal sector so that it may directly contribute in the economy and gradually become part of the formal economy. 

Endorsing the recommendations received from the stakeholder, Governor SBP agreed to form a consultative group comprising the microfinance banks and the Pakistan Microfinance Network, led by SBP to take these recommendations to a more concrete conclusion.

http://www.dailytimes.com.pk/default.asp?page=2007\08\04\story_4-8-2007_pg5_1


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## Neo

*Credit rating at all time high, says Dr Shah​*
KARACHI: Advisor to Prime Minister on Finance Dr Salman Shah has said that credit rating of the country is at an all time high level because of prudent and vibrant economic policies.

Speaking to members of Karachi Stock Exchange (KSE) here on Friday Dr Shah spoke at length on the economy of the country, which according to him has been outperforming for quite some time because of better economic management system.

Listing various indicators of the growing economy, he pointed out that the best performing Karachi Stock Market is among the various indicators of the fast developing economy of the country. Dr Shah said though there was market crash in March 2005, $35 billion more were added in the market capitalisation since then which reflects the investors confidence in the countrys capital market.

He pointed out that the total capitalisation of the market is about 40 percent of GDP of the country, which needed to be increased to over 100 percent like the some other markets in the world. This could be done through more IPOs and listing of more companies in the stock market, he added.

Dr Shah said overseas road shows to project the countrys economy have received overwhelming response and asked KSE to hold such shows in the country so that participation of the people from all over the country could be encouraged.

He underlined the need for further development of countrys capital market so that it could be ranked among the leading global markets. Earlier Chairman KSE Shaukat Tarin in his address said that like the fast improving economy, KSE also outperformed and became fast emerging market of Asia.

He said that in the last five years, annual average growth was 51 percent while market capitalisation also registered 47 percent growth during this period as well as volumes also surged. About the future plans, Tarin said that stock market is going to have its new managing director by end of this month and embarked upon capacity building measures.

http://www.dailytimes.com.pk/default.asp?page=2007\08\04\story_4-8-2007_pg5_3


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## Neo

*Imports of computer equipment fall by15.8%​*
KARACHI: The total import value of computer equipment in the country has declined by 15.8 percent due to the 15 percent general sales tax (GST) imposed on the imports of these items in the last budget.

This is concluded by a report compiled by Pakistan Computer Association (PCA). It further revealed that the imports for the period July-June 2006-07 stood at Rs 1.26 billion.

By assuming that actual 2007 figures will be closed to the projected data we can say that IT industry was growing till 2006 since market consumption was reflected by imports. But the expected figures for 2007 are lower than 2006 and even lower than 2005. The projected figures for fiscal year 2007 are Rs 1.26 billion as against Rs 1.46 billion in 2006 and Rs 1.42 billion in 2005. In 2007, figures are 13 percent lower than 2006, however they were expected to be higher. The imposition of 15 percent GST on imports of these components results in declining orders on the part of importers, which created a gap between demand and supply. 

Taking advantage of this opportunity, the smugglers became active to fill this gap incurring loss to the governments revenues. 

As allowed by CBR, passengers travelling from abroad, can travel with two laptops in their personal baggage. Passengers are travelling with Rs 1.5 million worth of computer parts, said President PCA Munawar Iqbal.

Pakistan is completely dependent on imports to fulfil its computer equipment requirements, as not a single component is manufactured in the country.

Due to the CBR policies in the recent budget, corruption is increased in the IT industry in Pakistan. The IT equipments are beyond the reach of common user. During the last one year of discussions the governments representatives stressed on the PCA to produce data, which would support the stance of the IT community that increases levies on import and has affected the growth of the industry. According to the Global Competitiveness Report 2006-07 published by the World Economic Forum (WEF), Pakistan ranks 91 in the global competitiveness index rankings in comparisons with 125 countries. 

According to WEF report, personal computer density stands at 0.4 per 100 persons, while Information and Communication Technology (ICT) remains at 64 amongst the list of 125 government priorities. Governments progress is ranked 47 in the list of 125 countries.

http://www.dailytimes.com.pk/default.asp?page=2007\08\04\story_4-8-2007_pg5_5


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## Neo

*UK firm to establish 400mw power plant ​*
KARACHI (August 05 2007): Sindh Coal Authority (SCA) signed a Memorandum of Understanding (MoU) with Couger Energy, of UK, to develop a 400 mw power station at an estimated cost of $400 to $500 million by introducing 'Underground Coal Gasificaiton' (UCG) technology in Thar coal field.

Abbas Ali Shah, Director-General, SCA, and Ashraf Khan, Country General Manager, Couger Energy, signed the MoU here on Saturday at Sindh Secretariat building. Under the MoU, Sindh government will allocate an area of 50 sq km in Block III of Thar coal field for development of coal deposits within two weeks after signing the MoU.

A joint survey team comprising technical personnel of the company and Sindh government will demarcate the area. According to the MoU, Cougar Energy will arrange investment and introduce UCG technology for development of coal deposits and establish 400 mw powerhouse besides organising application for gasification of coal on 'Built-Own-and-Operate' (BOO) basis in accordance with policies and procedures of federal and provincial governments, particularly the Power Policy of 2002.

Couger along with other private and public sector sponsors may incorporate a company as 'Operator in Pakistan' for implementation of proposed power plant. It will apply for 'Letter of Intent' to the Private Power and Infrastructure Board (PPIB), Ministry of Water and Power and Ministry of Petroleum and Natural Resources, according to policies with request to allow utilisation of UCG technology, establishment of coal-based power stations and piping of gas produced.

Sindh Coal Authority will support and assist in this regard. This is one of the latest clean coal technologies being used in the whole region.

MoU will be valid for 18 months from the date of its signing and will be completed in phase-wise programme. SCA will approach Sindh Directorate of Mines and Minerals Development for grant of licence and subsequent mining lease.

The ceremony was attended by Sindh Mines & Mineral Development Minister Irfanullah Khan Marwat, Secretary Mines & Mineral Development Abdul Hamid Akhund, Khalid Mirza Chief Inspector Mines and Managing Director Cougar Energy Alan Walker.

http://www.brecorder.com/index.php?id=601120&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Leather sector out of billion-dollar export club ​* 
KARACHI (August 05 2007): Leather trade has gone out of the $1 billion exports club due to government indifference, inefficient marketing strategy and rising cost of doing business, exporters said on Saturday. "Leather is one of the major industries of the country, which has also been a member of billion-dollar export club for past some years.

However, the internal and external problems have kicked this important sector out of the billion dollars exports club," they said. They said that the country's leather garment exports, including tanned leather and leather manufactures declined by $166 million to $848.860 million during last fiscal year against $1.014 billion of 2005-06.

They said that the major reason behind this setback was the rising cost of doing business, besides government's inattention towards it. "Government's focus is on providing textile and other sectors with maximum facilities, whereas demands from leather sector always go unheard in the corridors of government, as ministry of textile and commerce have been indifferent to it," they said.

Despite several requests, the federal government did not take a single step to resolve the issues faced by this sector, bringing the sector on the verge serious crisis, and the growth ratio is declining rapidly.

"If the government continues its present policy of negligence towards this sector, export ratio of leather products will consequently fall to zero," exporters said.

They said that during June 2007 leather exports slumped by $17.670 million to $72.643 million as compared to $90.313 million during June 2006. The country is also losing its leather exports' share rapidly in the world market owing to rigorous competition, which has emerged as a huge threat for survival of local leather industry, they said, adding that "leather industry is unable to yield positive growth in the absence of government support".

They demanded that the government should take immediate action and provide some facilities to the leather sector to meet international requirements and once again achieve the one billion-dollar mark.

It may be mentioned here that the country has some limited exports items, which do over one billion-dollar exports every year. Till last fiscal year leather products, readymade garments, bed-wear, knitwear, cotton cloth, cotton yarn and rice were the members of one billion-dollar export club.

http://www.brecorder.com/index.php?id=601111&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Cement export to India to start next month ​*
NEW DELHI (August 05 2007): The first consignment of Pakistan cement would reach India by September after completion of certification formalities, said visiting Commerce Secretary Syed Asif Shah.

He told newsmen on Saturday before leaving for Islamabad after attending talks with his Indian counterpart on economic, commercial cooperation, he said currently, Pakistan has surplus cement of about 14 million ton for export. Pakistan would be able to produce 9 million tons more cement by year 2009 which will enhance country's export capacity, he added.

On imports from India, Asif Shah said most of commodities are in raw form including chemicals, which help us produce finished products to earn foreign exchange. He hoped following purposeful talks with Indian officials, the trade gap of about $800 million between the two countries would be minimised.

http://www.brecorder.com/index.php?id=601157&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Three sites for establishment of ROZs identified ​*
PESHAWAR (August 05 2007): NWFP Governor Ali Mohammad Jan Aurakzai has said that the government is planning to establish three 'Reconstruction Opportunities Zones' (ROZs) at Shah Kas (in Khyber Agency), Hangu and Bannu to generate economic activities and employment opportunities for the people.

Addressing the Fourth Gold Medals and Export Trophy Awards ceremony held here under the auspices of Sarhad Chamber of Commerce & Industry (SCCI) at a hotel on Friday night, he said that the products of such zones would be exported to the United States.

He said that the provincial government has decided to upgrade all existing industrial estates by way of providing modern infrastructure and allied facilities, and added that Hattar Industrial Estate in Haripur had been declared as a Model Industrial Estate where improved infrastructure would greatly benefit the industrialists.

The Governor said that the events which followed the 9/11 had greatly affected the congenial atmosphere of NWFP and FATA. However, the government was fully cognisant of the situation and was taking concrete steps to restore normalcy so that business and industrial activities cold flourish without any hindrance, he added.

The increase in police force of the province and retrieval of Frontier Constabulary personnel from other provinces and their deployment in NWFP are some of the steps that have been taken in this regard. He said that the government firmly believes in providing investment-friendly environment to both local and foreign investors and, as a result, Pakistan has now become the hub of over 600 foreign companies primarily due to the liberal investment policies.

Aurakzai said that revival of economy of Pakistan is indeed a success story which is closely linked to the volume of increase in exports over the years. In the process, he said, the Federal Government has taken many bold and futuristic decisions and, by doing so, it has ensured a bright future for the countrymen. Indeed, he remarked, as a result of consistent and steadfast policies of the government, the country is now witnessing positive results.

Referring to the export sector, he said that previous successive governments had been laying emphasis on certain traditional exports, like textiles, rice, leather goods, etc, and now the country is facing stiff competition in these products. Therefore, he remarked, "we have to explore new avenues and expand the list of our exports".

The development of non-traditional sectors, like minerals on scientific lines could help earn foreign exchange beyond expectations. In this connection, he particularly mentioned the mineral deposits, and added that the wealth hidden in NWFP and FATA can change the very destiny of the people.

On this occasion, seven gold medals and winners and runners up trophies in 25 different categories were given to best exporters, entrepreneurs, tax payers and manufacturers of 2005-06 in the province. Taba family; owners of Gadoon Textile Mills and Lucky Cement Factory; followed by Khyber Trading Company and Muslim Commercial Bank and Bank Al-Falah maintained their honours of the past year in this mega event, too. The Governor handed over the awards to the winners on behalf of the Sarhad Chamber of Commerce and Industry.

Earlier, Liaquat Ahmad Khan, President of Sarhad Chamber, Ilyas Ahmad Bilour, and Muhammad Asif, Chairman of Awards Distribution Committee addressed the function and highlighted the role of the SCCI in promotion of trade and business activities in the province. They particularly talked of the role of the Export Trophy and Businessman of Year Gold Medal Award and said that the event has been widely recognised at every level not only towards the encouragement of entrepreneurs but also promotion of economic activities in the province and generating precious foreign exchange for the country. Large number of businessmen, industrialists, bankers and exporters attended the ceremony.

http://www.brecorder.com/index.php?id=601147&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Govt plans to develop stranded gas fields ​* 
Talks being held with private sector

By Saad Hasan

KARACHI: Government is in discussions with the private sector on formulation of an exclusive policy that would give way for utilisation of stranded gas fields, people close to the development told The News on Saturday. 

According to another released policy document recently the government has decided to encourage development of stranded fields in a bid to augment gas supplies from depleting conventional reserves like Sui. 

Stranded gas fields are left undeveloped by the big exploration and production companies because they hold small quantity of gas reserves which do not meet their large economy of scale. 

While there are no government-accredited figures available, private sources say such reserves hold 3 trillion cubic feet (TCF) of gas. Fourteen stranded fields have been identified in Pakistan. 

The Draft CNG Policy 2007 that mainly deals with fueling stations has made a slight reference to utilization of stranded gas fields through employment of compressed natural gas (CNG) technology. 

However, it says nothing about the price of gas obtained from such fields. Industry people argue that the government must fix a higher-than-conventional-gas price for stranded gas to incentivize its production. 

The government has also proposed allowing duty-free import of CNG into the country as part of its efforts to offset expected gas shortfall, the daft policy says. Though a relatively new mode of hydrocarbon trade, a foreign company already operating in Pakistan has embarked upon a joint venture with other firms to import CNG. 

Pakistan is an expanding market and it is located in close proximity to countries which have exportable gas surplus (from stranded fields), an official who is close to the project said. 

People involved in the project insist that the import of CNG will cost less than liquefied natural gas (LNG) - a preferred means of gas trade that is high on government agenda - because of cost eliminations in its delivery chain. 

But while the import of CNG is still far-off reality, a Pakistani company is months away from starting imports of LNG that would prove to be much more economical vis-a-vis furnace oil for power generation. 

http://www.thenews.com.pk/daily_detail.asp?id=67006


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## Neo

*Businesswomen to get representation in all trade teams: Cheema ​*
LAHORE (August 05 2007): The Punjab government will approach the federal government and make a formal request for allocating quota for women entrepreneurs in all the trade delegations being sent to various countries around the globe in a bid to explore export opportunities.

This was stated by the Punjab Minister for Commerce, Suhail Zafar Cheema, while talking to Business Recorder, after inaugurating the 5th Lifestyle Exhibition organised by the Women Chambers of Commerce and Industry at a local hotel on Saturday.

Suhail Zafar Cheema said the provincial government would give due representation to women entrepreneurs in all the trade delegations to be sent by it. He was of the view that women entrepreneurs had great potential to fetch precious foreign exchange provided they were given proper training, marketing techniques and resources.

He further said the provincial government has provided conducive atmosphere to both the local and foreign investors and during the year 2006-07, huge foreign investment was made in the Punjab. Chief Minister Chaudhry Pervaiz Elahi was keen to bring maximum foreign investment in the province. "Qatar Group was making huge investment in the Livestock sector while UAE Group had already made huge investment in different projects. Sialkot Motorway project will go a long way in bringing huge foreign investment in the country," Suhail said.

Talking about women entrepreneurs, he lauded the services being rendered by the Women Chambers of Commerce and Industry for promoting business trend among the women.

http://www.brecorder.com/index.php?id=601149&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Real estate development to drive local economy ​* 
UAE investment here for the long run

KARACHI: Investment from companies of the United Arab Emirates (UAE) in Pakistan has risen significantly and one of the reasons is the good experiences many UAE-based companies have had here. Saad Zaman, who works as the Honorary Investment Consul for Pakistan in the UAE, told The News that UAE-based companies have done well in the past couple of years and this experience is opening up Pakistan to UAE investors.

Zaman, who also heads the Dubai Islamic Bank in Pakistan, says that the experience of his bank is proof enough of how lucrative the Pakistani market is. He said that the growth of the bank since it started working here has been very impressive and this has not gone unnoticed in the UAE.

Companies are now asking us for advice on how and where to invest in Pakistan, he commented. 

Zaman said that areas of focus for the UAE companies remain telecom, the retail sector, real estate, finance and tourism. The honorary consul says that these are the areas where the companies have expertise and this is where they will come.

We have been active in the real estate sector and we believe that this activity will start an economic cycle which will result in more opportunities. At the same time, Zaman clarified that the real estate projects that many UAE-based firms are bringing into the country are not elitist as believed but will bring housing relief to all sections of society.

He said it is a misconception that the housing projects being launched by UAE-based companies like Emaar and Limitless are only for the rich. Zaman argued that these mega projects will not only expand the housing sector considerably but will also help in creating opportunities for the middle class to invest as well.

Look at Pakistan, says Zaman, who did his schooling in Karachis Habib Public School, adding there is a shortage in the housing sector. You either have upper end products or those that are very down market.

Zaman said that UAE companies entering the Pakistan real estate sector will have a positive impact. First, there is shortage of housing and this will be met. Then, the middle class will be able to go for purchasable real estate. Also, this business will create lots of job opportunities.

He also said that it is wrong to assume that UAE companies are coming to Pakistan because opportunities in the West have been restricted following the events of September 11. He pointed out that it is the state of Pakistans economy which is drawing investors otherwise lots of opportunities exist in different parts of the world like China and India.

Zaman also talked about a UAE-based organisation Limitless, a subsidiary of UAE firm Nakheel, which is investing in a mega real estate project in Karachi. 

He said that the companies that were coming into the real estate sector from the UAE were credible and in many instances Dubai government-owned.

Its not a case of a commitment of some years. We are looking at long-term commitments in Pakistan, he said, adding that the real estate sector in Pakistan needed to have big and credible players for it to boom.

He said that the projects being initiated by companies owned by the Dubai government meant that all international standards including addressing environmental concerns and issues related to residents of an area that was being developed would be addressed.

Zaman clarified that the Sugarland City Project initiated at the Hawkesbay/Sandspit area was in fact still in very early stages. 

First of all, its not called Sugarland but Waterfront Development Project, said Zaman, adding that the Sindh government was at present doing its due exercise after which the area could be offered to their company for development.

The DIB chief said that the entry of international players in Pakistan would also help raise the quality of products and services offered in Pakistan. He said that the Pakistani market needed this kind of investment and expertise to grow.

http://www.thenews.com.pk/daily_detail.asp?id=67007


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## Neo

*AJK collects Rs1.3bn excise duty, sales tax ​*
MIRPUR (AJK): The Azad Jammu and Kashmir Excise and Sales Tax Department has achieved the revenue target as it collected Rs1,311.31 million against the target of Rs810 million during financial year 2006-07.

The realisation of the target is a record achieved by the department, Muhammad Asif Abbasi, Collector Excise and Sales Tax Azad Jammu and Kashmir told newsmen in his office here on Saturday.

Unveiling the tax target for the new fiscal year, Abbasi said the AJK government had set excise and sales tax collection target at Rs1,200 million and the department had launched an extensive drive to achieve the goal.

The taxes collected in 2006-07 were higher by Rs501.31 million (61.89 per cent) from the target of Rs810 million, he underlined.

Comparing the tax recovery of Rs1,311m in 2006-07 with the previous year, the AJK collector said in 2005-06 Rs791.48 million were netted as excise and sales tax. That showed a rise of Rs520.16 million (65.75 per cent), he added.

He pointed out that despite the historys worst earthquake in AJK in 2005, the department achieved the tax collection target easily. The quake disrupted the supply of timber by the Forest Department and Azad Kashmir Logging and Sawmills Corporation, which was a major source of revenue. The supply of timber has not yet been totally restored, he added.

The collector further said the textile industry was another major source of revenue for the department, but that also did not contribute because of being zero-rated.

http://www.thenews.com.pk/daily_detail.asp?id=67009


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## Neo

*Punjab to set up cement plant and ceramic institute ​*
SIALKOT (August 05 2007): Punjab government has prepared an action plan for setting up a new cement plant, Glass and Ceramic Institute in Attock, revealed Chairman Task Force on Trade and Industry Punjab Mian Muhammad Riaz.

Talking to Business Recorder here on Saturday, he said the aim for establishing a new cement plant was to enhance the cement production to cope with the growing domestic needs, while ceramic institute would produce graduate and postgraduates as well as research and development activities would also be ensured in the institute.

The facility would be supportive in the promotion of new glass and ceramic projects with advanced technology, he added. He said the establishment of a modern Furniture City was also in the cards that would be developed in Gujrat, where all facilities would be made available for the manufacturers engaged with furniture manufacturing under the one roof and work on those projects would be undertaken shortly.

Mian Riaz further stated that Small Industries Corporation (PSIC) had formulated an action plan for setting up tracking small and medium industries on modern and scientific production lines in the province.

The government had set aside rupees one billion for extending loan for the promotion of small and medium industries in the Punjab. The loan facility amounting to Rs 40,000 was being extended for the promotion of cottage industries and the recovery of the loan was 98 percent in the province, Mian Riaz added.

To further accelerate trade and commerce activities, Cluster Development Centres and Business Support Centres were also being established in major industrial towns of the Punjab, which would provide technical and training facility for utilisation of latest machinery aimed at catering the future needs, he added.

Mian Riaz disclosed that setting up of a "Raw Material Bank" was under active consideration aimed at providing raw material to the surgical manufacturers and exporters on reasonable rates.

It was high time that business community of Sialkot should make collective efforts for doubling the export-volume of the city, he said. Most modern industrial estates would be developed though private-public partnership in the province and government had set aside rupees three billion for the purpose.

The development work on this programme would be carried out soon, revealed Chairman Task Force on Trade and Industry Mian Muhammad Riaz.

He said that special attention had been accorded on resolving the problems being confronted by the small and medium enterprises (SMEs) on top priority basis, adding that SMEs were playing an instrumental role not only in strengthening the economy but also providing employment opportunities to the skilled and semi-skilled industrial force in the Punjab.

http://www.brecorder.com/index.php?id=601189&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*NTC to reduce travel time, cost of business ​*
ISLAMABAD (August 05 2007): "The government is committed to develop a transport system with an integrated approach to reduce travelling time and cost of business to make Pakistan's exports more competitive in the international market," the Ministry of Communications sources said on Saturday.

APP quotes government sources that, the completion of the National Trade Corridor (NTC) by 2012, will reduce the travel time from Peshawar to Karachi from 72 hours to 36 hours. The project will also lesser the accident ratio by 70 per cent and road losses will come down about $1 billion per annum.

The NTC will link the country in the North with ports in the South to reduce travel time and fuel cost by improving existing road network as roads are being constructed and Upgraded by the year 2012.

http://www.brecorder.com/index.php?id=601142&currPageNo=1&query=&search=&term=&supDate=


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## Neo

* $750m plan for IT parks ​* 
ISLAMABAD: A three-phase plan is being pursued to set up Information Technology Parks at a cost of 750 million dollars across the country; this was stated by Pakistan Software Export Board (PSEB) Managing Director, Yusuf Hussain on Saturday.

In an interview with APP he said Most of the required funding will be made available by foreign companies, to help implement the plan.

The PSEB MD said at the time the plan was conceived funding was a major problem. But as we approached foreign companies for investment they gave us an encouraging response.

We are now trying to finalise negotiations with various foreign companies on solutions to implement the plan in a befitting manner, Yusuf Hussain said.

In the first phase of the plan, the existing IT Park in Islamabad will be transformed into an Internet City costing 10 million dollars to meet the requirements of IT companies currently operating in the federal capital, he said.

Yusuf Hussain said various companies of repute had submitted their letters of interest for setting up Internet City in Islamabad and tenders submitted by them will be opened on August 10.

The selected company will invest capital and construction work on the Internet City will commence by November 15 this year, he said.

http://www.thenews.com.pk/daily_detail.asp?id=67014


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## Neo

*Moot on Wind Energy Development on the cards ​*
ISLAMABAD (August 05 2007): The government is organising conference on Wind Energy Development following a week-long training for intending investors to generate power through wind, sources said. They said that as many as 30 investors who are at the advance stage to set up wind power plants would attend the conference besides those planning to make investment.

Officials in the Alternative Energy Development Board (AEDB) said that the objective of the conference is to promote sustainable development of commercial scale wind power projects in Pakistan by targeting the barriers like insufficient human and institutional infrastructure and limited capacity to support projects and markets.

The Renewable Energy Policy envisages promotion of renewable energy sources by encouraging the private sector investment in wind and micro-hydel projects to meet the widening demand-supply gap.

The policy framework recognises the need for a long-term review of its development by evolving immediate, medium-term, and long-term strategies. They said that the conference followed by a week-long workshop is part of the first phase that include creating awareness among the stakeholders about the need to develop renewable energy, identify barriers and study support mechanisms which suits environment.

The UNDP/GEF Wind Energy Project (WEP) in collaboration with EU-Asia invest program has organised the training workshop to provide exposure to stakeholders about knowledge and experience of proven European wind project developer.

Capacity building, they said including education and training is crucial for increased contributions from renewable energy technologies and in the conference both the foreign and local experts have been invited to make presentations on relevant subject.

Whereas, in the training all the aspects of wind project including feasibility studies, land management, grid connection, wind measurements, details engineering plan would be covered. They said that the UNDP has initiated a project "Sustainable Development of Commercial Scale Wind Power Generation Project" which is being funded by Global Environment Facility and implemented by AED.

The project has been designed to create enabling environment for the development of the commercial scale wind power projects by removing institutional, regulatory and financial barriers The discriminatory barriers, they said would be removed to attract more and more investors in wind energy to meet the day-to-day increasing energy needs.

http://www.brecorder.com/index.php?id=601172&currPageNo=1&query=&search=&term=&supDate=


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## Neo

Prospects have never looked brighter for a move towards democracy in Pakistan. The intense power struggle (as reflected in the events of the last few months) signals a realignment of forces as long held alliances give way to a repositioning of power centres for a new equilibrium. Worldwide, the private sector champions free market and tends to support democracy for the development of institutions that provide a level-playing field for business to compete, grow and prosper.
In Pakistan, however, the elite looks scared of a shift in that direction. The question is:

*Why does corporate Pakistan detest democracy?​*
By By Afshan Subohi

In this special report the team of Business reporters of Dawn tries to glance through the mind of this supposedly most dynamic class to identify causes of its apprehensions. An attempt has also been made to identify who they are betting on in the coming elections.

KARACHI: The pampered, risk-averse private entrepreneurs of Pakistan do not share the people enthusiasm for democracy. They find popularly elected governments unstable, unpredictable and less business friendly. Yet, they say, they will extend financial backing to the leading political parties in case there is a general election in the country.

Their support has little to do with the political programme or ideological moorings of a party. It is dictated more by the prospects of a partys position in the next government. Sudden twists and turns in the countrys politics has taught them to keep base of their support as broad as possible to mitigate the risk of falling on the wrong side of the next government.

An informal survey by Dawn over the political positioning of the business class in Pakistan uncovered some interesting facts. The responses confirmed that the businesses, irrespective of size, are either hostile or indifferent to democracy. As a general pattern hostility matches the scale of business.

The elite of the elite, some 30 leading family business houses, felt no compulsion to share their opinion over the issue with the public. With the exception of a few most did not care to respond to our queries.

Medium and micro business owners were also reserved. Whatever their personal political leanings, they said, they prefer to keep out of the politics they termed dirty. They said they were too preoccupied with work-related challenges to spare time for politicking. They did complain of the governments insensitivity to their needs irrespective of its composition over the last two decades.

Many big entrepreneurs talking to Dawn, however, confessed to acting patrons during elections. They, generally, back all parties at the same time. They declined to substantiate their statement but said that there were cases when even opposing candidates in the same constituency fought with support of the same fancier.

Elections in Pakistan are an expensive exercise for political parties. Mohammad Mian Soomro, a veteran politician from Sindh, said the other day at a seminar, that one polling station for a national assembly candidate cost at least 25 to 30,000 rupees and there are more than 200 such stations in a national assembly constituency. This comes to about Rs60,00,000 spent on the polling day on one head alone: polling stations. Expenses on securing a ticket from the party of choice and pre election campaigning (flags, banners, leaflets, etc) are over and above this. According to a rough estimate a national assembly candidate spends nothing less than Rs30 million in one constituency.

In course of the survey Karachiites were more vocal in their support for the military-led governments. It is a fact that both leading political parties PPP and PML(N) do not view Karachi as their constituency. It could have been for this reason that even top notch Memon and Khoja business families find themselves sidelined during their rule. They said that during the PPP and PML(N) governments in 1990s their access to power corridors was restricted. They said for them it had been more comfortable during the past eight years.

There is no neat bifurcation between traders and manufacturers in Pakistan as they overlap. Still groups who have dominant interests in trading were found to be more inclined towards the military-led government than others.

Another interesting observation is the fact that businessmen in Pakistan prefer to make the funding process as personalized as possible. This is done, they said, so that they know whom to approach for a favour in the next government. Those with the right connections channel their support through their links in dependable quarters.

The big boys of the business community are arrogant, for beside huge fortunes that they attribute their success to their superior professional acumen. Many have branched out in services including finance and insurance. They produce their own energy, purify their own water, provide for their security and claim that they work independent of the state. Some own vertically integrated units. Some of them have even constructed roads and related infrastructure required for their business.

They feel they pay taxes over and above the huge hidden costs (bribes, bhatta and commissions) to countless government and non government actors but get nothing in return. The government in their view hardly walks the talk of being a facilitator. They were particularly critical of the rising credit rate. They are also uncomfortable with the governments handling of external trade affairs. Many a times trade partners shy away over issues of governance (fractured democracy or low scoring on international indices) beyond the control of a businessman, some said.

A woman publisher in Karachi mentioned problems that medium and micro businesses face because of weak institutional frameworks. She mentioned issues related to standardization, diversification, training etc., hindering the growth of the sector. She felt that by their behaviour businessmen and their associations promoted nepotism and resisted institutions that could provide a level playing field and reward merit over connections. Mrs. Rashid hailed the Musharraf government for encouraging women entrepreneurs. She, however, felt that an elected government was better equipped to respond to the needs of all segments of society.

When discussing trust deficit in a democratic set-up many businessmen mentioned the nationalization programme of the seventees and freezing of foreign currency accounts after the 1998 nuclear tests. They felt such accesses by democratic governments hurt the country and dealt a blow to investors confidence.

Thirty years of post-1977 business-friendly policies  privatization, liberalization and deregulation  seem to have helped them overcome their fears but not enough to revive their trust in elected governments.

Experts claim that the private sector in Pakistan prefers a military-led government over a democratic one because they enjoy preferential treatment in return for their support for an unpopular disposition. Who benefited most from economic expansion during Musharrafs eight years in power? Beside military bureaucracy, real estate operators, stock brokers, commercial traders and business tycoon made most of this period. They made much above their share by manipulating markets while the government chose to look the other way, an analyst said, adding, They committed day light robbery in the countrys capital markets, retail market and the real estate sector and robbed people of their hard earned money. It came out in the press but the government ignored their excesses. Sugar, cement, wheat flour, stock market, real estate scams can be recalled here.

Experts contacted for their comments endorsed the findings of Dawn survey with some reservations.

Dr A R Kemal, a senior economist rejected the view that defends military rule for being pro development citing high growth rates achieved during General Ayub, Zia and Musharrafs periods. This is a superfluous analysis. How can anyone forget Seato, Cento (US-Pakistan military alliances) in 1960s, Afghan War in 80s and September 2001 attacks on the twin towers in the US when discussing the economy of Pakistan during these periods, he said. He defended democratic periods that in his view undertook all major infrastructural projects such as Terbella Dam and PSM of 1970s and IPPs of 1990s that provided basis for growth later. He felt that military governments in Pakistan actually floundered the opportunities that came our way.

Another social scientist who wished not to be named considered Pakistani business class short-sighted and ready to forego a promising future for petty immediate gains. Unlike the Indians, who are eying a share in many sectors globally, Pakistani businessmen have yet to realise their true potential to strategise accordingly. Political positioning to an extent depends on the vision and the level of understanding of a segment. As long the business class of Pakistan hinges their future on governments patronage they will continue to prefer government set ups that are willing to accommodate them even at the cost of public interest.

Dr. Faisal Bari, an independent economist, felt that there were segments within the class who might not be visible but would support democracy from a purely business standpoint. He emphasised the need for a detailed study for an insight on how the class itself perceived business related problems and solutions. He cited the example of smaller cities of Punjab that he said seem to have entered the election phase with political parties flags fluttering all around. He felt that like other segments medium and small businesses have a stake in fairer business environment in the country.

Dr Asad Saeed, who has done a number of studies on industrialization in Pakistan and is currently working on the ethnic dimension of the business class in Pakistan observed: The bigger the business greater the hostility towards democracy. He felt that compared to businessmen from Punjab, the tycoons of Karachi had a stronger bias against democracy.

Kaiser H. Naseem, Manager, Pakistan Corporate Governance Project, IFC, saw hostility on the business class towards democracy rooted in its overall character that needs more time to mature. He said the third generation of foreign qualified entrepreneurs were keen to transform inherited businesses into modern establishments to make them compatible internationally. Hopefully it would help them mature politically as well.

Sakib Sheerani, Chief Economist, ABN Amro Bank agreed that the business class does not share the popular sentiments and business of Karachi is spiritually more alienated from the democratic current.

Dr Nasir Afghan of LUMS felt that the business class of Pakistan is showing some signs of transformation. The third generation educated entrepreneurs are more enlightened. They know that the current business patterns will have to be changed to compete and win globally. They are more inclined towards democratic order than their fathers and grandfather.

Samir Amir, a researcher with Pakistan Business Council emphasised the need of broadening the domain of public debate on business issues. This he said could be better managed in a democratic environment. He also mentioned downgrading of the countrys rating by international rating companies for not being misgoverned.

The fact is that with success stories of countries such as Singapore, Malaysia and China under autocratic authoritarian rule there seems to be no proven correlation between democracy and market economy. Democracies are perceived to be more predictable by investors (the level of investors interest in India as compared to China is often quoted as a proof).

Many development economists believe that transparency, accountability and public participation in political decision-making will have a direct effect on the level of market fairness.

In Pakistan transparency and participatory decision making would certainly help in improving the countrys image abroad and could contribute to an improvement in the investment climate.

http://www.dawn.com/2007/08/05/ebr1.htm


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## Neo

*Economy booms under military leaders​*
ISLAMABAD: The 60 years of Pakistan's history has proved that financial decision-making was more easy and remained fruitful during a dictatorial rule, says Prime Ministers Advisor on Finance Dr Salman Shah.

"Our GDP in the 60s was very good and it remained good for another period in between and then today you find the difference under the leadership of President Gen Pervez Musharraf and Prime Minister Shaukat Aziz," he maintained.

In an interview with Dawn, Dr Salman Shah said it was not Pakistan, but many other countries, including Singapore, Malaysia, China, Taiwan and the UAE who flourished economically during a period when they were ruled by a group of men or by one person. "This is how their financial system became so strong and is now providing huge benefits to their people," he added.

He said there was no doubt that economic conditions improved in the western democracies over the years, but many other countries, having autocratic rules, also succeeded in significantly improving their financial and economic systems.

He said financial allocation and their viability along with market-driven investment and financial system is ensured in an authoritarian rule of any country.

"There requires good rules of business to strengthen any economy and this job was done in a much batter manner in Pakistan during President Musharraf's rule," he said, adding that he was not against democracy or any political system but was talking keeping in view the ground realities.

These realities, he said, have made many countries to become economically and financially independent, strong and assured improvement in the life of a common man.

"Look at Pakistan's middle class and lower middle class and even the poor classes who have flourished, particularly during the last eight years," the prime minister's advisor on finance claimed.

He said real conducive business environment was provided to the private sector during 60s and then specially during President Musharraf period.

"Pakistan's economy today is more stable than any previous period," he said.

Dr Shah was asked whether this government's period of boom, disparity has risen and whether he believes that elite supports the present government because its policies favoured this elite disproportionately.

"This disparity exists in India and many other countries. But I can tell you without the fear of any contradiction that all segments of the society were benefited by the fruits of the improved economy in our part of the world," the prime minister's advisor on finance replied.

He said Pakistan's print and electronic media were projecting the good image of the country's economy and the overall economic performance of the government.

"There are an all time high over $16 billion foreign exchange reserves today and $8.4 billion investment. Then the unemployment rate came down from 8.3 per cent to 5.3 per cent during the last five year period and Pakistan's credit rating improved by the international credit rating agencies by 3/4 times during this period.

Also there was an average seven per cent plus GDP growth rate and all this happened during President Musharraf and Prime Minister Shaukat Aziz's government," Dr Salman shah asserted.

Responding to a question, he said the ruling Pakistan Muslim League's performance was far better than previous two governments of PML (N) and Ms Benazir Bhutto's PPP.

He said PML (Q) government provided a level-playing field to all investors under the worthy leadership of the president and the prime minister. Good corporate governance, he said, was shown by the private sector for the first time under Musharraf's rule during which confidence of both the local and foreign investors increased manifold.

"That is why they are investing in this country despite having many other problems."

To another question, he said political parties have been getting financial support from the private sector, especially at the time of election. The issue, he said, was important and needed to be brought under any legal framework so that those parties which get such assistance could be monitored. However, he said this was an issue which is to be decided by the Election Commission of Pakistan.

When asked who in his view enjoyed the greatest trust of the corporate Pakistan amongst major political parties, he said, obviously this was the ruling PML (Q) who was enjoying such a support.

"You go and ask the corporate sector people and they would tell you that the kind of independence and good business opportunities they are getting today, this is just because of the right policies being pursued by the PML (Q) government.

http://www.dawn.com/2007/08/05/ebr3.htm


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## Neo

*Livestock sector uplift key to poverty alleviation: Maqbool ​*
LAHORE (August 05 2007): Governor Punjab Lieutenant-General Khlaid Maqbool (Retd) launched an HEC-funded project "Dairy Training and Development Centre" worth Rs 109.8 million of the University of Veterinary and Animal Sciences (UVAS) Lahore on Saturday.

Higher Education Commission Executive Director Professor Dr Sohail H Naqvi, UVAS Vice-chancellor Professor Muhammad Nawaz, Virtual University Rector Professor Dr Naveed A Malik, US Consulate Principal Officer Bryan Hunt, officials from the Punjab government and the university teachers attended the launching ceremony.

Speaking at the ceremony, Governor Khalid Maqbool said that the development of livestock sector was key to poverty alleviation while Pakistan had great potential in livestock, poultry, fisheries and related fields for development.

He called the Pakistani buffalo as black gold and a great asset. He said the government is funding chillers and there is need for more milk processors. He, however, said the big challenge is how to check the quality of milk available to the people.

The governor asserted that the government would bring about "white revolution" through development of dairy sector and "blue revolution" by developing fisheries sector. He assured that the government would continue supporting the university in its development.

The HEC Executive Director Professor Dr Sohail H Naqvi said that the Higher Education Commission was investing heavily in higher education because "we do not want to remain as a developing country anymore."

Earlier, Vice-chancellor Professor Dr Muhammad Nawaz said that launching of "Dairy Training and Development Centre (DTDC)" was an initiative of the university to improve milk production and processing. He said that the main objectives of the project were to establish a modern milk processing plant for research and training purposes, to conduct training programmes for dairy technology students and industry in cooperation with PTC Netherlands and to produce qualified manpower at certificate, diploma, graduate and postgraduate levels in dairy technology.

He said the focus of education programmes of the UVAS is on poverty alleviation of rural masses. He was of the view that poor productivity of animals, shortage of feed resources and their optimal use, inadequate housing and management, emerging and re-emerging diseases, poor milk handling and marketing were the constraints of milk production. He added that the UVAS had taken short and long-term measure to overcome these constraints.

US Consulate Principal Officer Bryan Hunt said that establishment of the "Dairy Training and Development Centre" would prove to be a landmark in the development of the dairy sector of Pakistan. "The United States is proud to be a catalyst and a partner in the growth of Pakistan's dairy sector," he said. "We hope that the center will produce educated and trained future leaders for this industry", he added.

Pakistan's dairy sector has received significant public and private sector investment since the formation of the Dairy Strategic Working Group (SWOG) by the Pisdac project. It has also been supported by the ministry of industries and Smeda. Pisdac is also working closely with the ministry of industries, production and special initiatives and Smeda in the gems and jewellery, marble and granite, furniture, surgical instruments and horticulture sectors.

http://www.brecorder.com/index.php?id=601192&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Fear of state takeover haunts industry​*
LAHORE: What matters most to the business community? Democracy or autocracy? Most businessmen are least bothered about the political setup in vogue in the country as long as they are making decent money on their investments, background interviews with a number of manufacturers, exporters and traders indicate.

A businessman is there to make money. He invests his money and takes known and unknown risks only because he wants to multiply his wealth. It doesnt matter to him who rules the country, an exporter says.

It is a common observation that most businessmen recalling Ayub Khans so-called development era with nostalgia as golden period in the history of Pakistans economy.

Those were the perfect, business-friendly days. The economy grew by leaps and bounds in those golden days. Manufacturing and other sectors of the economy boomed at that time, a second-generation exporter reminisces.

No doubt he (Ayub Khan) was a dictator, but he did for the country that no other ruler has been able to accomplish ever since. All the gains achieved during the Ayub period were wiped out by nationalisation of the economy by the so-called democratic government of Z.A. Bhutto, he says.

His views are echoed by a number of people from the business community with equal force. What the business needs to flourish is political and financial stability, consistency of policies and early resolution of problems and issues hindering its growth. All these elements are more or less in place only when what you call as a dictator is ruling the country. No sooner a political, democratic government takes over, the situation begins to deteriorate. Political turmoil, strikes, whimsical changes in economic policies, delays in decisions on issues retarding business growth and problems of law and order overtake everything. The government gets busy in other things, which it finds more important for its survival, says an office-bearer of the All Pakistan Hosiery Manufacturers Association (APHA).

Comparing Gen (Pervez) Musharrafs early years in power with the present situation, he says, the business flourished and the economy progressed before the general elections 2002 because the government was more receptive to the issues that had stunted the economic and business growth in the 1990s.

There was a consistency in the economic and business policies and stability was put in place to remove the hurdles constraining growth. An enabling and facilitative environment was provided, which resulted in investments to the tune of billions of dollars, quick growth of exports and a general economic wellbeing of the people. Once the political government took over the reins of the country, the entire scenario changed radically. The attitudes of bureaucrats and ministers, including those who were part of Gen Musharrafs cabinet before the induction of the so-called democratic setup, changed. The governments view about the business changed. And what do we have now? The manufacturers, exporters, traders and others crying for help to stay afloat, he says.

But there are also businessmen who prefer a political, elected government as more responsive to the needs of business.

Dictatorships always favour the selected few at the expense of the rest of the community. For example, we had 22 families controlling the whole economy during the so-called golden period of Ayub Khan. Besides, corruption was rampant and any one who wanted to start a new business or expand the existing one had to grease the bureaucratic machinery to get a license or permit. The commission economy flourished as we had numerous middlemen helping entrepreneurs buy a license or permit, says former Lahore Chamber of Commerce & Industry (LCCI) president Pervaiz Hanif.

He says only those who had made money at the cost of their community as well as common man can praise that era. Barring Z.A. Bhuttos government, when the economy was nationalised and mark you he did so because he had got the public mandate for that, the industry and business has flourished most during the civilian rules because democratic setups are always more responsive to the needs of businessmen as well as consumers. Besides, there is less corruption because democratic governments are under pressure to settle the business and consumer issues if they want re-election. Unlike dictators, the civilian rulers have to and they must strike a balance between the demands of the business and the needs of the common man. That is something which many businessmen do not like and favour authoritarian rule, Pervaiz says.

What matters most for the growth of business is good governance and a policy of checks and balances, which allows the businessmen to make a fair return on their investments without compromising the larger public and labour interests. And good governance can be ensured only when the country is ruled by a democratically elected government that is accountable to the people, he says.

http://www.dawn.com/2007/08/05/ebr5.htm


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## Neo

*Too long stretched a warning ​*
(August 05 2007): The National Standards Committee for Civil Engineering of the Pakistan Standards and Quality Control Authority (PSQCA) is reported to have decided at its meeting in Islamabad on July 5, to allow three years to some 300 re-rolling mills, producing cold twisted (TOR) steel bars, to upgrade quality and to start production of 'thermo-mechanically treated' (TMT) steel bars, or to face a ban on their production.

According to a Recorder Report, this was deemed necessary because TOR manufactured under Pakistan Standard (PS) 1612-1992 was found vulnerable to seismic changes. It was simultaneously decided to endorse British Standard (BS)-4449-based Pakistan Standard PS:1612-2007 to supersede the existing PS:1612-1992 for its lack in compatibility requirements of the territorial seismic zones of Pakistan.

It is, however, distressing to learn that it has taken two years to issue a stern warning to the TOR producing rolling mills, as it is based on the federal cabinet's decision dating back to October 2005, that is, in the aftermath of vast devastation caused by the mountain shaking earthquakes that also resulted in the collapse of apparently strong enough buildings in Islamabad. As for the belated urge for implementation of the cabinet's well-conceived decision, among other things, it has been attributed to the political clout of some of the influential ones among the owners of the re-rolling mills.

As the news report stated, also the affected re-rolling mills have been conveniently avoiding to obtain the PSQCA mark. It will be noted that, as now revealed, manufacturing of TOR comes under the compulsory certification regime of PSQCA, but random sampling is stated to have revealed that the TOR products manufactured by re-rolling mills do not qualify even up to the outdated standard, which now stands superseded in favour of manufacturing TMT and micro-alloyed steels.

It will be noted that while compulsory licensing is obligatory the re-rolling mills avoid compliance with it which has to be overseen by PSQCA in view of its obligation as mandated by law. Viewed in this perspective, three years given to the re-rolling mills to complete the formalities is too long a period. For, from all indications, switching over to TMT steel would have been a much better, if not the ideal choice for use by the construction industry.

Besides, non-availability of TMT in the country has been denied by, at least, one of its manufacturers in Peshawar, saying it had made its advent in Pakistan only last April. It claims to figure as the second largest steel re-rolling mill in the country, with a rated capacity of 330 tons per day.

Now that it has been followed by another steel mill in Karachi, some idea may be had of this industry's growth potential. Yet another steel mill is reported to be vigorously trying to optimise its TMT process and hoping to commence production soon. There is also enough evidence to show that subsequent to the October 8 tremors in 2005, many in the construction industry had come to realise that construction standards should not be taken lightly. One is apt to wonder as to why the use of TOR should not be brought to an immediate end.

For as PSQCA is reported to have observed, cold twisted deformed (CTD), commonly known as cold twisted (TOR) steel bars, do not meet the required quality standards and are unsafe for use in the construction industry, pointing out that the item has been banned internationally in seismic areas.

There is absolutely no reason why despite their vulnerability to earthquakes and natural disasters, they are still being massively used all over the country. Learning the right lesson from the calamitous 2005 earthquakes, it will be in the fitness of things to ban their manufacture and to replace them with TMT or other reliable alternatives of which there should be no dearth in the world. More to this, in the event of the alternative proving to be of desired worth it should obviously attract investors too.

http://www.brecorder.com/index.php?id=601197&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Engineering sector lacks unified stand​*
KARACHI: People managing medium engineering units in Karachi favour authoritarian rule for they argue that business activities in Pakistan grew at an astonishing rate during Musharrafs period. Chinese motorcycle makers do not agree and see the autocratic rule favouring only the big companies.

Former chairman Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM), Mohammad Ashraf Shaikh said the history of Pakistan over the last 60 years holds testimony to the fact that businesses flourished during an authoritarian rule.

He said he did not see any link between democracy and market economy at least in Pakistan. To a question what suits business better, Mr Ashraf said for Pakistan he believes there is a need for a Turkish-type system of government that is both democratic and autocratic.

When asked as to which party he would support in the next election, he said this would depend on the manifesto of the political parties. However, he would prefer a moderate and forward-looking party.

Another active member of PAAPAM, on the condition of remaining anonymous, said in Pakistan market economic reforms were initiated by a democratic government with limited success. There was major thrust towards a free market during the current government. Currently Pakistans economy is not regulated. The last of the regulation of automobile deletion policy was done away with a year ago and replaced by a tariff regime. I, for one, do not see a link between democracy and market economy in Pakistan.

Life has become much easier under the current regime. You may call it authoritarian but look at the reforms they have done like the e-filing of tax returns and no audit and self-assessment at all stages, including customs level. These reforms should have been introduced long ago. The government deserves credit for the growth in the economy.

He said for a country to prosper a strong leadership with a vision is indispensable. If you look around in Asia most of the countries that have prospered had a very strong leader at the helm of affairs.

In Malaysia, a combination of king and democracy was a success. Thailand is a combination of king and democracy. In the UAE, authoritarian rulers are making rapid progress. India is pure democracy but if you go there the myth of it being far ahead of Pakistan evaporates into thin air. India does not have a local government concept despite having a well-established democracy at the state and federation level. What we need is a political system that suits us. The current system that is in place minus the uniform may be what we need, the PAAPAM member said.

He said he would support any party that can ensure stability and consistency in its policy. We require consistency the most. Businesses are adaptable as they can not afford to cease working.

The Vice Chairman (South), Association of Pakistan Motorcycle and Rickshaw Assemblers, Mohammad Sabir Shaikh, said there is a link between democracy and market economy. One can see the current situation of stock exchanges and abnormal rates of property because of autocratic rule. The military rule actually suits the multinational companies, while SMEs resolve their problems in a better way at a lower level under democratic rules.

Mr Sabir did not agree that businesses in Pakistan are more comfortable under an authoritarian ruler. He said he would support an honest person in the new election rather than supporting any single party because one can not trust anyone under the prevailing unsatisfactory situation.

http://www.dawn.com/2007/08/05/ebr9.htm


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## Neo

*Stock brokers spin invisible wealth​*
KARACHI: About a dozen leading brokerage houses operating on the Karachi Stock Exchange may have more asset wealth than the legendary top 25 but no one among them managed to join the elite club since the industrial boom of the 60s.

This question is now being debated with a big why? Why the industrial and financial giants only qualify for the title, but not the brokers?

There could be more than one explanation for this phenomenon. The most appropriate one among them could be that the Pakistani bourse at that time was in its formative stage and has not attained the title of best performing markets in the world when the late Dr Mahbubul Haq coined the title of top 20s.

How could brokers, with terribly low financial standing join the elite club at that time when the number of listed companies was about 300 and daily volume figures seldom top a million shares, a leading stock analyst Faisal A. Abass said. The general investor interest at that time was also low and not that encouraging.

However, the financial reforms initiated by the Nawaz Sharif government in 1993, gave the needed push to stock trading after the entry of foreign investors.

The years that followed the 1995 boom during the second Benazir Bhutto regime was the real breakthrough and was confidentially sustained since then, another leading analyst Zia Javaid said. In between the KSE index has set a new all-time high record both in terms of daily volume over one billion shares, market capital at Rs4 trillion and KSE index at 14,202.00 points (base 1,000 points). The number of listed companies rose to 963, which has now reduced to 657 owing to delisting and mergers.

He said the market crashes of March 2005 and June 2006 proved a windfall for some and total financial losses for the others but they certainly opened the other modes of investment as safe havens for the moneyed brokers to opt for industry and financial instruments.

Among the owners of leading brokerage houses, Arif Habib was perhaps the one who tried to decentralise his investment portfolio from stock trading to industrial and banking sectors, including cement, engineering and fertilizer, analyst Ahsan Mehanti said.

Some others may follow as the cash-heavy brokers are out to keep their wealth within the country and are not following others who believe in outflow for safe havens elsewhere.

An overview of the corporate sector since late 80s shows that leading brokers are terribly more prosperous than in the martial regimes and are now progressively opting for productive activities to share the benefits of national growth of economy rather than stock trading.

They may not be in a position to play the pioneering role as did the top 25s, but some of them will certainly join the elite club to make top 30 or above when the fresh survey is conducted, another analyst Ashraf Zakaria predicts.

The houses of Adamjees, Dawoods, Valikas, Bawanys, and Habibs had since independence, notably in the 60s certainly played the role of pioneers both in the industrial and financial sectors and in a way made Pakistan self-sufficient in more than one sectors of economy. It was the house of Valikas, Dawoods and the Adamjees who set up textile and jute mills, while Habibs opted for banking.

But the nationalisation of private sector enterprises by the Z. A. Bhutto regime in early 70s halted the process of industrialisation and gave a severe blow to the financial sector.

Late 80s, however, witnessed the revival of industrial and financial activity during the Benazir Bhutto regime owing to financial reforms and incentives given by the government to boost trade and industry.

A record 125 companies were listed on the Karachi Stock Exchange in the maiden year of Benazir Bhutto and other several dozens followed in the subsequent years.

http://www.dawn.com/2007/08/05/ebr10.htm


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## Neo

*Do elected govts breathe life into SMEs?​*
KARACHI: Small and medium enterprises worked as an engine of growth for all the developed nations which today have around 96 per cent of SMEs and only four per cent large-scale manufacturing.

Unlike the large-scale manufacturing sector which largely depends upon foreign technologies and know-how and bank funding, SMEs all over the world developed and grew on indigenous skills and methods.

Consequently it is of paramount importance that for the growth of SMEs enabling environments should be provided at the grassroots level and all hurdles and bottlenecks should be removed. Simple and transparent systems should be evolved which should suit local conditions and skills.

This means that without robust growth in SMEs, the country could not achieve sustainable economic and industrial growth. There could be stray achievement here and there with high growth periods but they could not be of a permanent and sustainable nature.

On an average, SMEs all over the world provide 80 per cent jobs and contribute up to 38 per cent to the GDP. However, in Pakistan SMEs had never been on the priority list of successive governments which did not only result in haphazard and slow growth but also deprived the country of real and sustainable growth.

The low literacy rate had been the main factor for slow growth in SMEs, because this deprived the sector of much-needed skilled manpower and necessary knowledge to run a business or industrial establishment. The Information Technology (IT) sector could not flourish in Pakistan because its basic need is knowledge of the English language. Labourers in Pakistan mostly speak the Urdu language or their respective mother tongues.

The low literacy rate also inhibits SMEs from understanding laws and huge manuals meant for setting up and running any business or industrial establishment.

It is unfortunate that many of our laws still belong to the colonial era and they had never been translated into the national or local languages, which could allow SMEs to benefit and grow at a faster pace.

All federal and provincial departments directly linked with the setting up and running of industrial and business establishments still have cumbersome laws and procedures which even an educated person could not understand what to talk of being fulfilled by SMEs who have extremely scarce resources and knowledge.

For example, take the Employees Old-age Benefits Institution (EOBI), the Sindh Employees Social Security Institution (SESSI) and the Labour Department which are still being run on such methods which could easily retard the growth of any industrial or business establishment. The field inspectors have the powers of land revenue and could put any businessman behind bars over a small fault or violation of law.

Zafar Iqbal, president of the Small and Medium Enterprises Alliance (SMEA), said if the government was serious about the growth of the economy and industrialisation in the country it would have to simplify rules and regulations and also remove unjust laws which cause a lot of unnecessary hardships to SMEs who could not afford to enter into cumbersome procedures and could not hire consultants.

Citing an example, he said if any enterprise had ten workers it would have to be registered with the EOBI. Similarly, if an establishment has five workers or more it, it will have to be socially complaint with SESSI. But on many occasions it has been experienced when a worker leaves his job and the total number of a setup declines below ten or five, these institutions do not accept and keep asking for deposits for the total number of workers declared at the time of registration.

Mr Iqbal said that the most cruel and funny thing is that many such levies are supposed to be paid by the business or industrial establishment even if it suffers losses. Consequently, there is a great need to look into basic irritants which are hindering SMEs growth.

There are innumerable expenditures SMEs have to face in the process of doing business. Despite the fact small setups do not have huge funds but they have to pay illegal gratification sometimes, which further add to their financial problems. At times they also have to pay consultants to seek their guidance and at others pay speed money to ensure the work is done.

Zulfikar Thaver, president, Union of Small and Medium Enterprises (Unisame), said, while explaining why only two per cent out of the Public Sector Development Programme (PSDP) fund is spent on SMEs, promotion and development of SMEs is no charity, it is their right.

He said there is vast scope for SMEs in each and every sector, including agriculture and agro-based industries. But these could not be fully tapped until and unless the system is simplified and unnecessary involvement of government departments are curtailed.

Both the leaders were of the firm opinion that such far-reaching changes could not be made by a totalitarian government or even so-called elected governments. However, only a popularly-elected government truly representing the downtrodden masses knowing their problems could only bring about changes at the grassroots level badly needed to give indigenous prescription for all ills presently engulfing the SMEs.Even after 60 years, most of our laws and systems still belong to the colonial era and we have not tailored them to suit our interests and according to the needs of our level of skills to ensure fast industrial development which could only be made by promoting SMEs all over the country.

http://www.dawn.com/2007/08/05/ebr11.htm


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## Neo

*Developing sector products export fails to hit the jackpot​*
KARACHI: Like the traditional exportable items, the export of developmental products was not so impressive during the financial year 2006-07 as a number of items in this category fell short of their whole years targets. 

For the whole year, government set a target of $1.348 billion for financial year 2006-07, however the actual export proceeds of developmental sectors stood at $1.267 billion. Though there was some growth in the export of some products in this category, overall export could not be termed impressive to enhance the products of these shares in the overall export of the country, exporters of these items said.

The developmental sectors include engineering goods, including cutlery, marble and granite/onyx manufacturing, fish and fish preparations, fruits and vegetables, chemical products, gems and jewellery, meat and meat preparations, cement, furniture, etc.

The export performance of these items in fiscal year 2006-07 also marred the efforts of the government to boost the export of non-traditional sectors especially much focus was on the promotion of export of these items in the last trade policy. 

The countrys main reliance on few sectors, especially textile for its export earnings has been causing troubles because of stiff competition, the textile sector is confronting from its regional competitors.

According to an analyst of the foreign trade, despite the efforts of the government to switch over from the textile to other sectors for boosting the exports for long-term basis the policies in this regard have not worked out, because no tangible incentives have been offered to these sectors like the textile sector. 

Well thought-out strategies are needed to enhance the export of these items and increase their share in overall export, which unfortunately have not been formulated so far, exporters said. 

The breakup of the export of developmental categories show that export of fish and fish preparations stood at $188 million as compared to its target of $210 million in July-June period of 2006-07. The chemical exports were $387 million as against $470 million target, engineering goods were $236 million as against $235 million, cement export stood at $139 million as against the target of $150 million and no export of poultry products was made despite a target of $2 million.

On the other hand, the export of gems and jewellery stood at $44 million as against $35 million target, meat and meat preparations at $41 million exceeding the target of $25 million, the fruits and vegetables export were $113 million as against the target of $150 million, marble and granite/onyx manufacturing were $12 million as against the target of $25 million. 

Exporters said that government is least bothered to consult them before setting the targets as bureaucratic style is only concerned with setting the ambitious targets without taking care how these are unrealistic.

They said that there is vast potential in these sectors in the country and also have major market in the world, however the ill-conceived policies and concentration on only few sectors is a big cause in this regard.

About this years trade policy, they said that although there were pledges to increase the export of these items, but what remains to be seen is how these are implemented during this year.

http://www.dailytimes.com.pk/default.asp?page=2007\08\05\story_5-8-2007_pg5_1


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## Neo

*Silicon to showcase product range at ITCN Asia 2007​*
KARACHI: Silicon Technologies will showcase its product range in the upcoming mega event of ITCN Asia 2007.

Mobeen-ul-Haq, Director Sales and Marketing of Silicon Technologies said, Information Technology has transformed the world from a traditional society to a global village and no country can sustain without streamlining its IT policies at par with the international standards.

This exhibition does not only serve as a good platform to showcase our expertise but it also portrays a soft image of Pakistan across the world. 

Silicon Technologies is providing high quality services to its clients and has official strategic partnership with some of the worlds leading IT concerns like 3Com, Adaptec, AMP, D-Link, Kingston, Moxa, Sony, Tandberg Data, Telenetics and US Robotics.

http://www.dailytimes.com.pk/default.asp?page=2007\08\05\story_5-8-2007_pg5_7


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## Neo

*Decline in unemployment rate ​*
The latest Labour Force Survey depicts a highly encouraging picture of the employment situation in the country. According to the data released by the Ministry of Finance on 30th July, the number of employed people rose to 48.09 million during July-December period of 2006-07 from 47.36 million in July-December, 2005-06.

In other words, 730,000 new jobs were created during this period. Overall unemployment rate declined to 5.3 percent from 6.5 percent during July-December, 2005-06. In rural areas, it fell from 5.7 percent to 4.6 percent, while for urban areas, it came down to 6.8 percent from 8.4 percent.

The female unemployment rate, though still high, is also declining. It came down to 14.5 percent in urban areas from 15.9 percent and in rural areas, it dipped from 8.2 to 6.8 percent.

The Economic Survey, released by the government in June 2007, had also claimed a sizeable reduction in the unemployment rate in the country over the years. It boasted that "the rising trend of unemployment has not only been arrested but it has also started declining since 2001-02".

The unemployment rate which stood at 8.3 percent in 2001-02 came down to 7.7 percent in 2003-04 and fell further to 6.2 percent in 2005-06. In rural areas, the unemployment rate declined from 7.55 percent in 2001-02 to 5.35 percent in 2005-06 while for urban areas it came down from 9.8 percent to 8.0 percent during this period.

Two factors were specially mentioned in the decline in female unemployment rate in the country. Firstly, increased job opportunities and conducive environment had dispelled the impression of discriminatory environment, and secondly, "the availability of micro finance facilities focusing on women particularly in rural areas has given rise to a new wave of rural women entrepreneurs".

The government further claimed that sustained economic growth was likely to reduce overall unemployment rate to 4.0 percent by 2009-10, a target aimed at in the Medium Term Development Framework (MTDF) 2005-10.

The latest statistics released by the government about the level of employment/unemployment are highly impressive. These clearly show that unemployment in the country is not only declining but its rate is almost equivalent to the level of unemployment in the developed countries.

It would also look as if Pakistan has reached nearly the level of full employment because unemployment rate of about 3-4 percent is considered a normal phenomenon in market economies due to shifting of jobs and other transitory factors.

The only problem is that official statistics on unemployment in Pakistan, unlike other countries, are not regarded as trust-worthy. In fact, most of the people would not even care to read and know about this information.

The reason for this total lack of interest is simple. Government statistics do not reflect the ground realities in the country. Contrary to the government statistics, unemployment in the country is so rampant that thousands of unemployed could be seen roaming the streets of every town.

Any ministry could advertise a vacancy for a clerk or other low paid job to have a feeling for the increasing unemployment level in the country and the hopelessness associated with this.

Increasing robberies, other street crimes and deteriorating law and order situation are partly the result of growing unemployment in the country. The claim of the government that micro finance has given rise to a new wave of rural women entrepreneurs simply appears to be no more than wishful thinking.

In our view, the government must revisit the definition of unemployment as soon as possible, to obtain an accurate picture of the true dimension of the problem.

According to government documents, "unemployment is defined as all persons ten years of age and above who during the reference period were: a) without work, ie were neither in paid or self employment nor employed as unpaid family helpers, b) currently available for work, ie were available for paid employment or self employment, and c) seeking work, ie, had taken specific steps in a specified period to seek paid or self employment."

Obviously, such a broad definition of employment would hardly leave any body unemployed. It is, however, another matter that people other than those compiling such statistics will not believe it nor will they be amused by this.

The biggest problem of such exaggerated statistics would, of course, be the possibility of complacency and lack of interest in tackling the important issue of unemployment if this is not fully and openly recognised by the government as such. It needs to be pointed out, however, that in this editorial note we are only talking about the statistics on unemployment and not other aspects of the issue.

http://www.brecorder.com/index.php?id=600602&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pakistani buffaloes are black gold​*
* Khalid Maqbool and Bryan Hunt open Dairy Training and Development Centre at UVAS

LAHORE: Pakistani buffaloes are black gold and a great asset to the country, Governor Khalid Maqbool said while speaking at the opening ceremony of the Dairy Training and Development Centre at the University of Veterinary and Animal Sciences (UVAS), according to a press release on Saturday.

US Consulate Principal Officer Bryan Hunt presided over the occasion. He said the US was proud to be a partner in the growth of Pakistans dairy sector.

He said the centre would prove to be a landmark in the development of dairy sector of Pakistan. He said, We hope that the centre will produce educated and skilled people for the dairy industry. The governor said the development of livestock sector was key to poverty alleviation. He said Pakistan had great potential in livestock, poultry and fisheries. 

UVAS vice chancellor Prof Dr Muhammad Nawaz said livestock was an important sub-sector of the agricultural economy of Pakistan. He said, The centre will not only develop the dairy sector, but will also add value to it. He said the centre would help in training as well as developing formal partnerships across the dairy sector.

Higher Education Commission executive director Prof Dr Sohail H Naqvi, UVAS dean Prof Dr Talat Naseer Pasha, officials from the UVAS and the Small and Medium Enterprise Development Authority (SMEDA) were also present on the occasion.

The governor said the centre would set up a modern dairy processing plant for research and training purposes for students, doctors of veterinary medicine, personnel of dairy technology and industry, farmers and other stakeholders. 

He said, It will develop a formal partnership between academia and the dairy sector to ensure that the centre is supported and meets the needs of the dairy sector. He said Pakistans dairy sector had received investment from both public and private sector since the formation of the Dairy Strategic Working Group by the Pakistan Initiative for Strategy Development and Competitiveness project. He said the project has also been supported by the Industries Ministry and the SMEDA.

http://www.dailytimes.com.pk/default.asp?page=2007\08\05\story_5-8-2007_pg7_24


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## Neo

*Pakistan economy burdened as oil imports hit record​*By M. Aftab (Analysis)

5 August 2007 

ISLAMABAD  Oil and petroleum products are hitting a record, on the back of spiralling oil prices in the global market and rapidly rising demand, straining the economy.

The petroleum imports are the biggest spender, that is widening the trade deficit with implications for balance of payments. But, Pakistan will continue to be a big market for oil imports in the foreseeable future, as the growth in demand is more than 10 per cent a year. The governments efforts to sustain a 7 per cent plus annual growth in GDP, an expanding domestic market for consumer goods and services, and higher export targets require creating larger exportable surpluses, are pushing oil imports.The domestic efforts to produce more energy  oil, gas, electricity, and coal, are likely to take four to five years more to help meet the energy demand. 

Pressed by this growing demand, and to ease pressures on the balance of payments, the government has annnounced incentives and tax breaks for foreign and domestic producers of oil and gas in the form of the just-unveiled Petroleum Exploration and Production Policy (PEPP)-2007.

The State Bank of Pakistan (SBP), the central bank, for which it was officially issuing foreign exchange, has now shifted a part of the growing oil import bill to the inter-bank forex market, in order to conserve the official reserves.

A 10 per cent rise is indicated in petroleum group imports for the just ended fiscal 2007. The amount spend on imports reached a record $ 7.34 billion, or 24.3 per cent of the overall imports. Oil imports, at $7.34 billion in fiscal 2007 were 9.96 perc ent higher compared to $ 6.675 billion in 2006, Federal Bureau of Statistics (FBS) reported this week. The increase was more pronounced because of 'the surge in quantity' of imported oil and petroleum products, besides the rising oil prices, the FBS said. Saudi Arabia, UAE, kuwait and the Gulf are the key sources of crude oil and petroleum products imported by Pakistan.

Fiscal 2007 saw overall imports surpassing all targets and rising to $ 30.5 billion. The value may rise close to $ 35 billion during the current 2008 fiscal. Overall exports in 2007 were $ 17.01 billion, falling short of the target of $ 18.7 billion. The export target for 2008 is $ 19.2 billion. The trade deficit widened to a record $ 13.49 billion in 2007. Among the oil group, imports of petroleum products alone were $ 3.733 billion in 2007, up from $ 2.88 billion in 2006  an increase of 29.59 per cent. But, the crude oil import showed a decline of 4.94 per cent to $ 3.61 billion in 2007, compared to 2006.

While the government is worried about the rising energy cost, oil imports and the domestic production is a key source of its revenue collection. The collection from the oil and gas sector was a record Rs72 billion in the first nine months of 2007. The amount surpassed the governments own target of Rs42 billion for 2007. The amount in 2006 was Rs46 billion. According to the Ministry of Finance, the above collection is besides the indirect taxes, the government receives from petroleum products and gas as 15 per cent General Sales Tax (GST), Excise Duty, surcharges and other levies. The oil and gas surcharges rose to Rs51 billion in the first nine months of 2007, up from Rs 31.6 billion in 2006.

The Ministry says, it collected Rs23 billion in the form of surcharge on oil in the first sixth months of 2007 on the back of higher international prices. Although the Ministry made this collection, the Oil Marketing Companies (OMCs), importing and marketing petroleum and oil products in Pakistan, complain that the government has not paid them their Price Differential Claims (PDCs) which they insist totaled Rs18 billion as of May 31. The Ministry had also decided to grant a Rs10 billion subsidy on oil prices in the National Budget-2007 covering PDC of diesel. 

The PDC, OMCs claims rose to Rs18.4 billion as of July 15.Trouble now is brewing on the oil front. It may add to the list of several domestic problems, ranging from judicial crisis to militancy, if OMCs are not paid their claimed amount of PDC. The OMCs, this week, threatened to "disrupt the oil supply chain in Pakistan in case the government does not pay them the Petroleum Differential Claim." In case the OMCs carry out the threat, the country and its economy may experience a jolt. The country already is facing bad news from the global market as the oil price is moving around $ 75 a barrel.

Again, Pakistani consumers, already hard hit by a 16 per cent food inflation, in an election year, will encounter a bad news from the oil front. Dr. Salman Shah, Adviser to Prime Minister Shaukat Aziz on Finance and Economic affairs, says the government may increase domestic oil prices in future, in case its prices continue moving around $ 75-78 a barrel in the international market. If the government does not increase the domestic prices, the PDC of OMCs will rise further to Rs 22 to 23 billion by August 10, from the July 15 amount of Rs18.4 billion.

OMCs point out that motor gasoline in the international market has recently declined, while diesel has risen by Rs6.38 a litre. The OMCs say, they will not be in a position to continue supplying diesel at the present domestic rate as its international price has gone up.

Indications are that the government is not raising the domestic oil prices for political considerations in this year of national elections, in which the ruling party and the President of the country are facing considerable opposition. In view of this, the government is absorbing a Rs5 billion hit a month in order not to raise prices. But after a few months it may have to raise prices and stop absorbing this loss, as Dr Shah has indicated.

http://www.khaleejtimes.com/Display...t/business_August74.xml&section=business&col=


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## Neo

*New industrial vision seeks to enhance institutional capacity of SBP and SECP​*
ISLAMABAD  Pakistan government is likely to soon restructure and strengthen non-banking finance companies to make them an integral part of financial services industries.

The 'Industrial Vision' approved by the federal cabinet yesterday also called for further enhancing the institutional capacity of the State Bank of Pakistan and the Securities and Exchange Commission of Pakistan (SECP) to make them "effective regulators and supervisors of the financial system".

It further asked the government to automate the existing manual systems (banking operations) and developing local and wide area networks, connecting various departments and offices across the country.

"Pakistan must continue the reform process with particular emphasis on ensuring autonomy and competence of the regulators and promoting professional management at all levels of decision making in the financial institutions".

It also asked the government to implement the privatisation process efficiently and prudently so that 90 per cent of the banking assets would be in the private hands.

A well-functioning financial system that efficiently channels funds and that can be invested for most productive uses, is essential for industrial development and growth. 

Recognising the importance of financial reforms in the process of industrial development and economic growth a series of measures have been adopted in recent years with a view to removing various distortions in the financial system, minimising government's interference in the banking system and strengthening the prudential regulations.

"While these measures have led to an improvement in the financial system, much more needs to be done to transform the financial sector into an efficient and market-driven financial system".

*Boosting agriculture *

The government was also urged to achieve a sustained growth rate of 5-6 per cent in agriculture which is imperative to ensure a rapid growth in national income, macroeconomic stability, improvement in distributive justice and reduction in poverty.

"This can be realised by exploiting the achieved potential of all the sub-sectors of agriculture, diversifying agricultural production towards high value crops, and conserving land and water resources.

A higher level of investment in agricultural research and development (R&D) activities supported by favourable policy instruments, human resource development, and necessary physical and institutional infrastructure could prove a catalyst towards achieving enhanced productivity and the desired growth rate.

*Energy sector * 

It also believed that the goals of the industrial vision cannot be realised without an effective energy sector. The supply-demand analysis shows that the current rate of change in supply will result in power shortages in Pakistan, adversely affecting the growth process. Therefore, Pakistan needs to concentrate not only on the expansion of energy resources but also on improving efficiency of resource use. For expansion of power supply it is important to increase the supply of power from traditional resources like hydel, thermal and nuclear and from other sources.

*Transport system * 

For safe and efficient transportation network a number of measures were also are proposed which included: modernisation of the maintenance system, introduction of user charges, human resource development through training in transport management and maintenance standards and enhanced participation of the private sector in transport projects. It recommended the revival of Karachi circular railway and introduction of light rail transit system in Lahore as part of measures to improve urban transportation.

An efficient and good quality transport system contributes to economic growth by lowering domestic production cost through timely delivery of raw materials, facilitating market integration, and helping to strengthen competition. Major issues in the transport sector are: inadequate physical capacity, inadequate maintenance system, poorly targeted investment priorities, operational and financial inefficiencies of the public investment and lack of private sector participation. The rational allocation of inland freight traffic between rail and road network, privatisation of railway's operation in selected sections and inclusion of private sector in development o roads, airlines, ports and shipping, and inland navigation can help in improvement of the efficiency of the sector.

The vision also carried out an in-depth study of the major sub-sectors of all the three productive sectors of the economy  agriculture, industry, and services  and within each sub-sector identified key issues and challenges, sets outs strategic objectives and targets, and spelld out a detailed plan to realise the vision.

http://www.khaleejtimes.com/Display...t/business_August69.xml&section=business&col=


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## Neo

*Pakistan cabinet clears action plan to revamp textile industry​*
ISLAMABAD  Pakistan government has approved an action plan that seeks to transform the weakening textiles sector into a strong, dynamic and internationally competitive industry led by the private sector.

The federal cabinet on Wednesday approved the much delayed 'Technology-Based Industrial Vision and Strategy for Pakistan's Socio Economic Development' which seeks to provide appropriate incentives particularly to the textiles sector.

The plan also stressess the need to diversify engineering and electronics industry. The main focus on the engineering sector is on bridging the widening technology gap with the developed countries by providing a conducive environment including the required technology, financial and physical infrastructure and creating a seamless integration with emerging trends of global production systems.

The prime minister will head a special committee to achieve the objectives of the industrial vision. Also, a working group has also been set under the chairmanship of the deputy chairman of planning commission to ensure implementation of various recommendations given by the authors of the vision, a source who was present in the cabinet meeting said.

The Chairman of Higher Education Commission Dr Atta ur Rehman and the economists at Pakistan Institute of Development Economic

(PIDE) including Dr AR Kamal are the main authors of the new industrial vision.

The government was advised to address the challenges being faced by the textiles sector which included lack of trained manpower, low quality standards and low technological base, lack of research and development and too much reliance on cotton.

The key elements of the action plan for the textiles sector include improving the regulatory and policy framework, human resource development through improving the research institutions and encouraging the private sector to invest in skill enhancement and developing technology upgrdation, rewarding value addition, ensuring quality standards and establishing common facility centres in the areas of garments, knitwear and sample development.

The action plan also seeks to establish a "fully integrated chemical industry in Pakistan" to achieve higher economic growth and lessen foreign dependence on the imports of chemical products.

The ministry of petroleum and natural resources in partnership with the private sector has been proposed to undertake an action plan which would cost Rs72 billion to help achieve self-sufficiency and the development of the agriculture sector.

"There are many proposals currently being looked into to set up a fully integrated chemical industry", a source said.

However, he said that the centre will have to consult all the stakeholders including the provinces before finally arriving at any consensus about the setting of a fully integrated chemical industry in the country.

The action plan also called for reducing the cost of production of leather products by lowering the prices of utilities with a view to considerably enhance their exports. The government was asked to help increase the export of leather products through improved productivity and by rationalising tariffs and import of chemicals.

Pakistan's exports of leather to European countries were declining due to shifting of tanning industries to China, South Korea and other Asian countries, The exports to the United States, the main market for leather apparel have declined by over 9 per cent.

The cost of production is very high in Pakistan compared to its competitors like China and India. The high cost of various inputs especially utilities and taxes make the country's productive uncompetitive in the international market.

According to the vision, in leather and leather garments industries, only 15 per cent of the workers are qualified and experienced. Finishing recipes are prepared by uneducated technicians. Exported leather goods during the storage and transportation develop problems like spew because of the chemical reaction. 
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## Neo

*Indian investment in Pakistan increases ​*
ISLAMABAD, Aug 3 (APP): The country has received $0.6 million in private investment from India during the last two financial years. In 2005-06, Pakistan had received $0.5 million investment from India, while it received $0.1 million in 2006-07, The Malaysia Sun reported. 

The inflow of foreign private investment in the country in last fiscal year 2006-07 was the highest ever in the last five years. 

The inflow of foreign private investment of the Asia region has posted decline in FY 2006-07 and stood at $216.3 million as compared to the FY 2005-06. 

The decline in investment is depicting less interest of investors from Gulf countries. 

However, Pakistan has received $6.945 million in FY 2006-07 from the western European countries, which have increased to $1.947 million as compared to FY 2005-06. 

The foreign inflow in the country from the North American countries has increased in FY 2006-07 to $951.9 million as compared to the FY of 2005-06. 

According to the official documents, the inflow of foreign private investment came from US and China was highest with total amount of US investment being $946 million and Chinese investment at $712 million. 

http://www.app.com.pk/en/index.php?option=com_content&task=view&id=14098&Itemid=49


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## Neo

*Task force on Horticulture competitiveness established to increase exports to US $ 1 billion by 2012 ​* 
ISLAMABAD, Aug 3 (APP): The government has established a Task Force for Horticulture to increase its exports to US $ one billion by 2012 in the Global horticulture market US $ 80 billions. 

The Task Force headed by the Advisor to the Finance and Economic Affairs Dr.Salman Shah would provide a common platform for the all stake holders to discuss and develop a common strategy for the horticulture sector in Pakistan, Competitiveness Support Fund (CSF) sources said. 

It was also decided to set up five sub committees of the Task Force to identify long term and short term implementation plan to leverage the existing export base and improve upon it. 

The sub committees include Horticulture Finance, Horticulture Infrastructure and Markets, Regulation and health certification, Processing and Canning and Production Management. 

These Sub Committees, in consultation with Steering Committee under the Ministry of Food and Agriculture would formulate their recommendations within two weeks to remove hurdles and devise a strategy for improving export and domestic performance of horticulture industry of Pakistan. 

It was further decided that the Board of Investment in consultation with the stakeholders would recommend to the Government for giving horticulture the status of an industry. 

The Competitiveness Support Fund, through its recently completed study on the Policy Analysis on the Competitive Advantage of the Food Processing Sector in Pakistan , proposed an Action Plan for the Government to improve the competitiveness of the horticulture industry and to boost its exports for the countrys benefit. 

http://www.app.com.pk/en/index.php?option=com_content&task=view&id=14106&Itemid=49


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## Neo

*OMCs decline to increase oil storage capacity ​* 
ISLAMABAD (August 06 2007): The private sector oil marketing companies (OMCs) have declined to become part of government plan for building up storage capacity to increase the country's strategic oil reserves, saying that their low profit/margin does not allow them to go for any such big investment-demanding initiative.

Sources told Business Recorder on Sunday that the government had received the proposal of building up its strategic oil reserves from the World Bank to increase storage capacity from 22 days' to 40 days' reserve.

The idea was discussed at different levels and finally, at a meeting chaired by President General Pervez Musharraf, it was agreed in principle that since Pakistan needs to increase strategic oil reserves to some reasonable level, the World Bank's proposal was worth implementing.

The meeting tasked the Ministry of Petroleum and Natural Resources to push up Pakistan State Oil (PSO) and the multinational OMCs to invest in building up more oil storage facilities to increase Pakistan's strategic reserves. Being a public sector company, PSO had no other option but to say yes to any government call, and it undertook construction of oil storage house at Gwadar port, but none of the private sector OMCs, including Shell, Shavron and Attock Petroleum, came up with a positive stance.

On behalf of the private sector OMCs, the Oil Companies Advisory Committee (OCAC) informed Prime Minister Shaukat Aziz, in writing, that Pakistan's market demand and rate of return on investment were inadequate for huge immovable investment required for construction of new oil storages.

The World Bank has taken up the issue of oil storage capacity with the government time and again and has demanded to increase it to a reasonable level. Its officials believe that Pakistan needs to have 45 days' oil reserves. Pakistan's existing storage capacity is only 20 to 22 days' reserve.

OMCs are not comfortable with the government on oil pricing policy of not passing on the market rates to the end-consumers. They are of the view that the policy of capping the prices was resulting in creating financing problem for oil import operation. They claim that the government owes over Rs 23 billion as differential on oil buying and selling prices.

http://www.brecorder.com/index.php?id=601586&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Need stressed to realise importance of mining sector ​*
QUETTA (August 06 2007): Mining sector in Pakistan needs serious attention of policymakers to make Pakistan more prosperous and self-reliant, said sources close to mining industry.

They say that although Pakistan is a resource-rich mineral country where more than fifty metallic, non-metallic and industrial minerals are abundantly available, yet its mining and quarrying sector is slow to grow up to its potential.

Over a period of sixty years of independence, this vital sector of Pakistan has no sign of any substantial engine of growth for the national economy. In almost six decades, this sector has grown by little over 9.5 percent only. As such, its meagre share of just 0.5 percent in the GDP does not fully reflect the actual potential of the sector.

There are several fundamental factors for the mining sector retarded growth. These factors include deplorable lack of infrastructure, lawlessness, resource constraints, non-availability of hi-tech and risk capital, vulnerability to outlaws feudal tribal chiefs, bureaucracy's tricks and pressure on the mining settlements.

Now the present government seems to have come out with a well conceived strategy for metallic, non-metallic and industrial minerals development on most modern lines under a plan to grow up to their potential. The plan provides for Pakistan Stone Development Company with the collaboration of the private sector. The public-private Sector Company has taken steps for economic exploitation and correct utilisation of minerals with easy access to national and international markets for better returns to the investors.

Under National Mineral Policy, the Federal and Provincial Government have ensured investments and incentives. These governments jointly taken steps to provide basic infrastructure like water, power, gas, better means of transport, truckers and trains, safety measures for the investors, mining manpower, machinery and materials in the mineral rich areas of the country. Under the plan, investments have been ensured and encouraged on 5-point broad-based grounds. Investment in small-scale mining involving less than Rs 300 million is confined to Pakistani nationals.

Corporate merger of small-scale mine operators is encouraged. Pakistan Geo-Data Center has come up as an autonomous body to collect, store, update and manage entire countries geo-data. The Federal and Provincial governments have been geared up to provide grants for the respective corporations and companies to promote task on priority minerals and priority areas. To attract more investments in the mining sector, mining concession rules have been provided for four types of mineral titles: reconnaissance license, exploration license, mineral deposit retention license and mining lease.

http://www.brecorder.com/index.php?id=601685&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'Road infrastructure plays key role in economic progress' ​*
ISLAMABAD (August 06 2007): Road infrastructure has a profound and enduring impact on the economic fabric with pivotal role in propelling country's economic growth on swift velocity. The most effective and sustainable way to address the scourge of poverty is to link backward and far-flung areas with the developed areas.

Construction of new roads opens new vistas and avenues of opportunities to those areas and their lives are changed forever. A network of quality roads can spur economic growth and help the country realise its geo economic potential.

Early completion of a road networks connecting agricultural centres and industrial zones of the country with main road arteries of the country and onward linkage to trading centres of the countries of the region is top priority of the present government.

"On completion of the National Trade Corridor by 2012", says Minister for Communications Shamim Siddiqui, "the cargo travel time from Karachi to Peshawar would be reduced from 72 hours to 36 hours, and road losses would be reduced to the tune of over $1 billion per annum which will reduce annual transportation cost by 10 per cent.

"We are revamping the existing infrastructure and are focusing to develop a new one that would carry good promise to achieve our ends. Rupees 520 billion will be spent on rehabilitation and upgradation of highways and motorways in the country during next five years," adds the Minister.

"Under the vision of President General Pervez Musharraf, roads network of the country is being revamped as a strong communication system was essential for the progress and prosperity of the country", says Shamim Siddiqui.

Chairman National Highway Authority Major General Imtiaz Ahmed says roads not only provide impetus to the economic development but also promote inter-regional harmony and integration among people from different areas of a country. He said, we in NHA also believe in the fact that "the road to progress and prosperity leads through development of network of quality highways".

Apart from harmony and establishment of co-ordinated transport system, he said, NTC would also facilitate international and bilateral trade, tourism and traffic in transit for landlocked countries, which hopefully will culminate into tangible benefits and economic prosperity of the people of Asia Pacific region.

Pakistan's primary artery and the main North-South corridor linking Karachi with Torkham on Pakistan - Afghanistan border via Lahore, Rawalpindi and Peshawar the National Highway N-5 is the mainstay of the country's road network and its economic lifeline.

http://www.brecorder.com/index.php?id=601684&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Taming inflation with monetary policy​*
THE State Bank of Pakistan has further tightened its monetary policy in an effort to achieve the inflation target of 6.5 per cent set for this fiscal year. But the government still needs to do a lot to control food prices to make this happen.

In the last fiscal year, CPI inflation rose 7.8 per cent against the target of 6.5 per cent but food inflation soared to 10.3 per cent.

Government borrowing: The State Bank has advised the government to contain its inflationary borrowings from the central bank by observing quarterly ceilings and by retiring Rs62.3 billion during this fiscal year...

Besides, the SBP has asked the government to finance its budgetary requirements more through long-term financing sources including Pakistan Investment Bonds and less from short- term borrowing from commercial banks. This would raise the cost of domestic borrowing for the government particularly after increase in the discount rate. But it would certainly help fighting inflation as a major chunk of long-term borrowing can be made through non-bank sources which is least inflationary.

It would deepen the secondary market for long-term bonds and provide corporates particularly insurance companies and provident-fund and pension fund managers to park their long-term funds profitably.

Interest rates: In its monetary policy for July-December 2007, the SBP has also raised its discount rate from 9.5 to 10 per centthe second 50 basis points increase in the rate after July 2006.

The move had an immediate impact on the benchmark six-month KIBOR, which rose 30 basis, points on the first day after the announcement of the policy. It went up from 9.96 per cent to 10.26 per cent. Treasurers of local and foreign banks say it may now remain well above 10 per cent.

The SBP increased the yield on treasury bills as well. It raised the cut-off yield on the benchmark six-month T-bills the very next day after the policy announcement by 20 basis pointsfrom 8.9 per cent to about 9.1 per cent.

Bank treasurers expect the yields on T-bills would rise further as the government would be borrowing more from the commercial banks and less from the SBP.

Business concern: Businessmen are concerned that banks would soon increase their lending rates as a result of the latest tightening of the monetary policy. This would dampen the demand for private sector credit and have an adverse impact on industrial activity.

This would ruin the industry, remarked Mr. Tanvir Sheikh, president of the Federation of Pakistan Chambers Of Commerce & Industry.

It seems that the central bank keeps tightening the monetary policy to let banks make huge profits at the cost of the industry, he blamed.

Mian Muhammad Latif, chairman of Chenab Group, said that the latest monetary policy would destroy textiles industry beyond repairs.

The central bank should have realized that textiles and other large-scale industries provide jobs to millions of people and even if some of them are forced to close down it would render thousands jobless.

He warned that the outcome of frequent tightening of monetary policy would be that, textiles, the largest foreign exchange earner, would loose its competitive edge.

Industrial growth: In the last fiscal year, Pakistans industrial sector grew at 6.8 per cent against the target of 9.1 per cent. And within this, the large-scale manufacturing sector grew 8.8 per centfar below the target of 13 per cent.

A major reason attributed by industry for this slowdown in industrial activity was an increase in the interest rates.. The weighted average lending rate of banks rose from 10.40 per cent in June 2006 to 11.33 per cent in June 2007a rise of 93 basis points over one year.

A slowdown in the industrial activity took its toll on exportsand exports grew only 3.4 per cent to $17 billion against the target of $18.6 billion. Textile exports grew 5.3 per cent to $10.7 billion. (Bangladesh, a close competitor of Pakistan in exports, posted 16 per cent growth both in its overall exports as well as in textile exports during the same period. Its overall exports rose to $12.2 billion and textile exports totalled $9.2 billion).

Bnakers: President of National Bank of Pakistan Syed Ali Raza dismissed as baseless the perception that interest rates would automatically increase after a 50 basis points increase in the SBPs discount rate. We are mature enough to realise that if the interest rates are increased beyond a limit, cash flow of our clients would be hit and that would be detrimental for our business too, he remarked.

If industries are burdened with very high interest rates, they would naturally stop servicing bank debts, and banks would have make provisioning against these bad debts. Of course, a banker would not like this situation.

Besides, Mr. Raza added, banking system is wallowing in excess liquidity; the demand for bank credit is already low and borrowers can now shop around as banks compete fiercely with each other. All this means that the latest tightening of monetary policy would not necessarily make bank borrowing expensive for a vast majority of our clients, he said.

But I assume that 10-20 per cent borrowers may have to borrow at a higher rate now than before but it would be because of their lower credit worthiness.

Reserve ratio: The central bank has also made some changes in reserve ratios. In January, it had hiked cash reserve requirement from five to seven per cent on demand liabilities of banks but reduced it from five to three per cent on their time liabilities.

Now it has applied a uniform CRR of seven per cent on time-and demand liabilities of less than one-year and exempted all deposits of one- year and longer maturity to help banks raise long-term deposits.

One of the reasons for a very large banking spread is that fixed term deposits account for less than one third of overall deposits. So, an incentive to banks for mobilising long -term deposits would also narrow the gap between lending and deposit rates, which stood at a whopping 735 basis points at the end of the last fiscal year.

Islamic banks: Recognising the shortage of Shariah-compatible papers used by Islamic banks to meet statutory liquidity requirements, the central bank has allowed them to count their cash in hand and balances with the National Bank towards SLR.

No change has been made in SLR of other commercial banks, which remains at 18 per cent of the time and demand liabilities.

This would help the growing Islamic banking industry expand further.

Export Refinance: The SBP has also decided to phase out its subsidised financing to exporters through refinancing scheme. . And as a first step, it would provide export refinance against 70 per cent of the total export financing requirementand banks would bear the cost of the remaining 30 per cent on their own.

But the move would not impact exporters as such because they would continue to get export finance from banks at a concessional rate of 7.5 per cent. It would, however, helping curbing inflation because the amount that the SBP reimburses to banks under export refinancing, adds to reserve money and fuels inflation.

Stock market: Stock brokers say the hike in SBPs discount rates and the incentive given to banks to raise long- term deposits would have a negative impact on the stock market. (The Karachi Stock Exchange 100-share index lost 50 points on the first day after the announcement of the new monetary policy).

I believe the impact of the discount rate hike would be negative on the equity market. The market is rather disappointed with the SBP decision, commented Mr. Arif Habib, a former chairman of KSE.

But he said that as supply of new bond issues continues to grow, their yields would remain more or less intact. As KIBOR increases, the issuer would add fewer percentage points over it than before, making no real change in the yield.

http://www.dawn.com/2007/08/06/ebr1.htm


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## Neo

*The neglect of energy conservation​*
THE National Energy Conservation Policy (NECP), approved by the Cabinet in November last year, sets guidelines for energy conservation in all sectors to achieve energy security. Based on the limited experience and expertise available in the country, the policy prioritises sectors in this order: transport, industry, buildings and households, agriculture and power.

The policy also identifies key initiatives and instruments in the following areas: legislation and regulatory framework; public awareness, training, education; making energy conservation an integral part of the energy policies; institutional strengthening and capacity building; public-private-civil society partnerships; energy service companies. The policy also suggests an implementation mechanism and its monitoring.

What happened since November 2006? The National Energy Conservation Centre, the so-called ENERCON, put together an action plan and sent it to the ministry of environment. Among the many problems of ENERCON to be discussed later, a critical one is that from an autonomous body it has been downgraded to an attached department of Ministry of Environment, whose own capacity leaves much to be desired.

The ministry is managed by globe-trotting generalist- bureaucrats, who sit as heads of a large number of small donor-funded projects in almost every field of environment. Their initial ineptitude allowed these projects to be donor-driven.

Now the donors, led by UNDP as the manager of Global Environment Facility, are so used to leading that any semblance of local ownership by experts is subverted in league with the generalist bureaucrats. They like to sit on all committees and enjoy veto power in all decisions.

By chance the ministry got the mega project of Clean Water for All. The issues of capacity apart, the issues of integrity are so crucial that a former secretary of the ministry himself requested the top man in authority to shift the project to another ministry, which turned out to be the ministry of industries.

In a ministry like this, one cannot expect much for an attached department like ENERCON. The action plan sent by it for the approval of the minister did the rounds of all manner of desks for months and was returned by a section officer with a one -line remark that it should be on the pattern of the National Environment Action Plan (NEAP). No comment on what was wrong with it and no reason why NEAP is such a superior document!

If the leisurely implemented pleasure-trip driven NEAP prepared by the UNDP is their ideal, then God help environment. For it will apply to National Sanitation Policy, National Forestry Policy and a couple of others. As one can see, the ministry has too many policies for its size and an inclination to jet-setting. Small wonder, when you read an official piece on environment, such as a chapter in the Medium Term Development Framework or the Economic Survey, it is long on words and short on actionable projects and programmes and their funding. The reason is that these are cut-and-paste jobs from the innumerable consultants reports commissioned almost every other day.

In the last mid-year review, the little amount in the PSDP projects, the ministry was allocated was slashed by one-half by the Planning Commission for poor implementation. After the ministry was gutted in a fire blamed on the Lal Masjid zealots, the statement issued by the ministry did not hide its glee in announcing that the records of all PSDP projects had been completely burnt.

End of the story? Nothing to do! Not quite. Now they have all moved to the ENERCON building and have pushed its officers and staff to its remotest corners. The only library on energy conservation is now the office of an additional secretary. The librarian has resigned and the books are disappearing. The committee room is occupied by a minister.

One might feel they would now think more seriously about the implementation of Energy Conservation Policy. Well, till the writing of this article, nobody from the ministry has yet contradicted impressions from newspaper reports and articles that the need for an energy conservation policy has already been recognised officially.

What it proves is the ministrys lack of awareness that the world over, awareness is half of the energy conservation business. Next week I will dwell on what is happening in the world and what is Pakistan missing by leaving energy conservation to environment ministry alone. There are many players in the field who have failed to get their act together in this vital investment in a sustainable future.

Dr Pervez Tahir, is a former chief economist, Planning Commission and Professor of Economics at the GC University, Lahore. E-mail: perveztahir@yahoo.com.

http://www.dawn.com/2007/08/06/ebr3.htm


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## Neo

*Illegal biotech cotton cultivation​*
THE government has embarked upon on an ambitious plan of Cotton Vision 2015. It has devised a three-pronged strategy with focus on biotech (Bt) cotton, developing the Cotton Leaf Curl Virus (CLCV) resistant varieties, and the development of hybrids. The aim is to have 25 per cent area under Bt cotton by 2009. On paper this is a foolproof strategy, but its enforcement will determine its success or failure.

On the other hand, influx of unapproved varieties of BT cotton continues in blatant violation of countrys laws. The government agencies responsible for checking this illegal practice, seem to be doing nothing despite the fact the Minister for Food, Agriculture and Livestock, Sikandar Bosan has said that these varieties are illegal and highly susceptible to cotton leaf Curl Virus.

People involved in this illegal business are making windfall profits without any remorse, and poor farmers are being swindled in the name of Bt. The farmers have no way to confirm whether the seeds they are getting have the Bt gene or are merely spurious.

In a recent national conference on cotton production, conducted at the Nuclear Institute of Agriculture and Biology (NIAB), Faisalabad, Dr Qadir Bux Baloch, Agriculture Development Commissioner, while highlighting the importance of GM cotton , advised farmers not to grow unapproved Bt cotton seeds. According to him, in random sampling of Bt cotton varieties available in the market out of 10 only one sample was found positive for Bt gene.

Last year, according to unofficial estimates, one to 1.5 million acres (15 per cent of total cotton area) were under un approved Bt cotton, whereas, during the current season 2007-08, the area can easily cross 30 per cent mark (2.7 million acres) of the total cotton growing area.

It is the responsibility of the government to check availability of unapproved Bt cotton in the market and educate farmers about the ill- effects of using spurious seeds. According to the Agriculture Minister Sikandar Bosan, the government had banned cultivation of unapproved Bt cotton varieties, but farmers cultivated them and got good yield. This has resulted in increase in the area under Bt cotton this year. If the government has reconciled with the position to control spurious seed plantings then the battle is half lost .

If uncontrolled use of technology is allowed to go on, there may be early build up of pest resistance. The lack of expertise with local seed companies, who claim to have developed these varieties, is bound to result in poor gene expression. Knowledgeable farmers are already expressing their apprehensions about the deteriorating lint quality from the unapproved varieties.

The country has done well in adopting the Bio-safety guidelines. It has taken another key step forward by formulating the Plant Breeders Rights Act and drafted amendments to the Seed Act 2007. Patents are already available for the technology. So there is an appropriate environment in place, also because of a. large number of dedicated and highly qualified biotechnologist, genetics, virologists and plant breeders at well-known institutes like the National Institute for Biotechnology and Genetic Engineering (NIBGE) and the Nuclear Institute of Agriculture and Biology (NIAB) in Faisalabad, and the National Centre of Excellence in Molecular Biology (NCEMB) at the Punjab University, Lahore, Centre of Agriculture, Biochemistry and Biotechnology (CABB), University of Agriculture, Faisalabad, and Central Cotton Research Institute (CCRI), Multan.

These institutes have the capacity of developing new crops and isolate and transform the desired genes. The government has promised large financial assistance to the institutes to help develop genetically modified (GM) local cotton varieties.

From merely 1.1 million bales of cotton produced when it came into existence, the country today is producing over 12 million bales per year. However, under the prevailing conditions the present yield per acre is very low  needless to say the country needs new and improved varieties or possibly hybrids that are high yielding and resistant or at least tolerant to diseases like CLCV and Mealy bug. In addition, there is need to move quickly to adopt new cotton technologies, such as, Bt cotton to face the severe infestation and losses incurred by insect pests.

There is a significant growth in the textile industry of the country. Prior to 2003 the demand of the industry was met by local production. However, now only 70 per cent is provided by local farmers and the rest 30 per cent is imported to meet its requirement. This is creating a great deal of concern among the industry, which is pursuing the government to ensure uninterrupted supply of raw cotton.

The country has undoubtedly lagged behind in the adoption of this important technology since the ministry of environment forbade to commercialise and cultivate Bt cotton variety developed by the National Institute for Biotechnology and Genetic Engineering (Nibge) after a controversy over the Bt gene ownership. The frustration is evident from the fact that we have failed to produce even a single variety of Bt cotton when compared to India where there are currently 111 (39 approved just this season) varieties available to farmers.

The area under cultivation of Bt Cotton variety in India has almost tripled to 8.6 million acres this year from 3.1 million acres in 2005. Four double Bt genes (cry1Ac & cry2Ab) cotton varieties have received approval for commercialisation from the Indian authority while about 121 Bt cotton hybrids are under various stages of field trials. India had a bumper yield of 26 million bales this year, and had produced a record 24.2 million bales of cotton last year. Experts believe the high yield was because of adoption of transgenic cotton seeds and timely rainfall.

In India more than one million small and medium farmers enjoyed the benefits of Bt cotton technology with increased yields, reduced pesticide applications and other health and environmental benefits. Pakistan can adopt similar strategy to catch up the fast pace of development in this field.

The atmosphere in the country has never been conducive to research and development (R&D), and no opportunity has been provided to private sector to work in the field of agricultural research together with the public sector.

Research to produce genetically modified crops is a painstaking job. Millions of dollars and years of concerted efforts are needed to develop these technologies. By allowing the unapproved varieties to thrive in the market, is almost like discouraging the institutions busy in research and development studies to evolve the required high-yielding varieties of the crop.

All that is needed here is to put the house in order. There is no denying the fact that Pakistan is in need of Bt cotton, and that to urgently. But the most important part of this equation is that it needs to employ legal and ethical means for acquiring this technology.

Enormous benefits of this technology can be reaped, provided correct, legal and ethical steps, with strict compliance to the regulatory systems of the country, are taken. For that there is need for immediate and effective measures to curb the thriving illegal business and uncontrolled use of technology, and create an appropriate environment for public and private sectors to ensure incentives for R&D and commercial release of these varieties.

http://www.dawn.com/2007/08/06/ebr6.htm


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## Neo

*Diversified imports and industrialisation​*
WITH the changing pattern of the economy and its impact on various sectors, the import pattern has greatly changed and become rather unpredictable because of global factors as well.

But what is striking about the hefty import bill of $30.5 billion in the fiscal 2006-07, is not only its bulk and the staggering large deficit, but the diversity of its contents.

If petroleum adds to the import bill of $7.33 billion, the telecom sector also contributes to a large part of the imports. On the other side, the computer sector is making headway and Prime Minister Shaukat Aziz wants its sponsors to set up the venture capital to develop the industry. Pakistans import of machinery in the last fiscal year touched $6.6 billion -- about one-fifth of the total imports.

Pakistan is still in the primary stage of industrialisation as it is manufacturing mainly consumer goods not machines. Even in the automobile sector, Pakistan is still just an assembler.

Attempts to manufacture machines through the Machine Tool Factory, the Heavy Mechanical Complex and the Heavy Electrical Complex were not a success and had to be abandoned for want of adequate investment as well as advanced technology. Even with 300 textile mills, most of the textile machinery is imported. Hence we are relying on imported machinery which in the last fiscal cost $6.6 billion and $6 billion the year preceding that.

In a year in which Pakistans manufacturing sector faired poorly in exports, except the textile sector, the import of machinery has been very heavy and is marked for its diversity of their contents.

Even in the area of textiles, in which we exported goods worth $10 billion last year, we have not done too well compared to Bangladesh which exported textiles worth $9.2 billion out of its total exports of $12.12 billion last year despite political turmoil and violence there and the fact that Bangladesh does not produce any cotton; its jeans, shirts and other garments, which are well tailored, did the trick.

Industrial sector in Pakistan, particularly leather, which once was a major sector, has fared poorly in export performance. Its leaders complain of lack of incentives and support. Additional investment in this industry has also been poor compared to the challenges it faces and the opportunities for larger sale abroad.

Now frequent power failures and breakdowns in supply have necessitated the import of power production machinery for $706 million mostly by the private sector. The machinery is needed to set up new power plants which are to be given higher rates to encourage more private sector investment. As a result more and more private sector power plants are coming up with early maturity dates.

Added to that is the import of electrical equipment for $642 million which is a distinct increase over the previous imports.

The textile sector has imported machinery for $503 million which is lower than the previous years imports. Some of the machines are expected to produce sophisticated products with higher value added goods.

The I.T and office equipment sector imported equipment for $306 million. Far more will have to be invested and imported if the industry is to achieve the $10 billion target by 2010 -- three years from now.

But more has been said about large investment in the I.T sector than what has been achieved in reality. The prime minister should follow up his call for venture capital in this area with practical measures which are productive and bring about concrete results. The IT software exports fetch merely $100 million.

The Telecom sector has consumed $2,158 million of imports of which the mobile telephone equipment claimed $831.6 million.

With more and more luxury buildings coming up in the form of office towers and super plazas, more advanced construction equipment has to be imported. So $222 million were used for the import of such advanced equipment.

With food grain prices going up along with the prices of vegetables, more farming equipment is being imported. Such imports in the last fiscal year caused $220 million.

The Punjab cost of production committee has suggested Rs518 for 40 kilograms of wheat after the next crop. Higher support prices and heavier procurement prices will increase the profit from farming and make the affluent farmers import more agricultural machinery.

Earlier there was a move to sell off the Heavy Mechanical Complex and the Heavy Electrical Complex and the Machine Tool Factory along with the Steel Mills, but that has been suspended for the time being so that the government could look for better options. We have to make proper use of the equipment on which a great deal has been invested. We have to move from simple manufacturing to machine making where our skills will be used.

And in the area of textiles we have to focus on the value-added instead of importing cotton from India or the central Asia to make low count yarn or cheap cloth which others convert and sell at far higher prices. We have to try to sell our skills instead of largely our sweat.

Of course, the textile industry has to be encouraged to diversify so that it can provide labour to the millions of workers in the country and millions more to come year after year.

What is imperative is that we move from the primary industrial stage to making machinery and certainly the textile machinery which as hundreds of mills need and we import now at a very heavy cost.

http://www.dawn.com/2007/08/06/ebr15.htm


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## Bushroda

Neo said:


> *Pakistani buffaloes are black gold​*
> LAHORE: Pakistani buffaloes are black gold and a great asset to the country, Governor Khalid Maqbool said while speaking at the opening ceremony of the Dairy Training and Development Centre at the University of Veterinary and Animal Sciences (UVAS), according to a press release on Saturday.
> 
> 
> http://www.dailytimes.com.pk/default.asp?page=2007\08\05\story_5-8-2007_pg7_24



lol!!!!!! Seems like we Indians arn't the only one with a unique Laloo Yadav & his love for his buffalos.


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## niaz

Bushroda said:


> lol!!!!!! Seems like we Indians arn't the only one with a unique Laloo Yadav & his love for his buffalos.



Jokes aside, there is some merit in this. Buffalo or water buffalo ( as distinct from Bison of American Buffalo) is native to Pakistan and India. Buffalo has been providing milk, meat and labour to the South Asian population since the dawn of history. People keeping buffalo herds were known as Gujjars ( we dont have too many cows in Punjab). Just looking at the names of towns such as Gujrat, Gujjar Khan, Gujranwalla, Gojra etc provides a good indication of buffalo's importance to the natives. 

I am no Lalu Parshad, but I am also from a village ( known as 'Paindoo' by the unrbanites of Lahore, a derogatory term, but nevertheless factual). I grew up drinkng buffalo milk, eating ghee, dahi (youghurt) and lassi all made from baffalo milk. We had a couple of buffalos of our own. Thus I dont mind being called a lover of buffalos lol.


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## Neo

*US bill shocks businessmen​*
KARACHI, Aug 6: The business community in Pakistan believes that foreign investment will receive a jolt, if the United States links its aid with Pakistans performance against terrorism.

It may lead to a steep decline in the foreign exchange inflows the business community said while expressing shock over the signing of a legislation by President Bush on Friday last. The bill requires the president to certify Pakistans satisfactory performance against Al Qaeda and Taliban before the US provides aid to the country.

Foreign investors, especially European and American investors, take a lead from Washingtons viewpoint, and how it sees Pakistan and what plans they have for the country, said Abdullah Zaki, acting president of Karachi Chamber of Commerce and Industry.

The decision has shocked us and would certainly shake the confidence of foreign investors, besides distorting countrys image abroad, he said. Pakistan received record over $8.4 billion foreign investment for the fiscal 2006-07.

A few businessmen in Karachi said most of the foreign investment was coming from the Gulf countries and there would be no response to recent US move which creates a negative image about the country.

However, analysts said American decision would not hit the flow of foreign investment as Pakistan has grabbed a significant role in global economy.

American corporate sector is more interested in Pakistan than the Washingtons view about the country, said Muzzamil Aslam, an economist at the KASB Securities who also looks after Merrill Lynch in Pakistan.

Americans are in election fever and they are not taking Pakistan issue seriously, said Aslam who recently returned from United States after a successful road show for his products.

Analysts said American investment could hurt not more than 25 per cent of the total foreign investment. The joint investment of European and American companies was about 30 per cent of the total inflows recorded last year. Foreign investment in Pakistan grew by 87.6 per cent in the fiscal year 2006-07 to a record $8.42 billion.

They said even if US stops aid to Pakistan, the reserves of the country have reached close to $15 billion which is enough to absorb annual gap of $950 million US aid.

Aslam said a Global Depository Receipts (GDR) of UBL was recently launched for $650 million but investors offered $2.5 billion showing keen interest of foreign investors in Pakistan.

It is difficult to say because they (Americans) have not quantified the performance target of Pakistan, said Mohammad Suhail, Director Equity and Brokerage at JS Research.

With $15 billion in reserves, no major impact is likely, he said.

However, business community feels that bad days may cripple trade with foreign countries, especially US and Euro zone.

The US bill requires screening of all cargo on passenger planes within three years and sets a five-year goal of scanning all container ships for nuclear devices before they leave foreign ports.

We can assume with our past experiences that the scanning of container ships will badly hit our exports to other countries, said a textile exporter.

He said the best way is to put harsh restrictions on imports from the US and European countries and trade should be strengthened with China and other regional countries.

http://www.dawn.com/2007/08/07/ebr3.htm


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## Neo

*PM okays draft textile policy ​* 
Proposed policy targets 40pc increase in textile exports

By Aftab Maken

ISLAMABAD: Approving the new draft of the textile policy, Prime Minister Shaukat Aziz has said the proposed textile policy will help increase the export of textile products, improve competitiveness and generate employment in the industry. 

He was presiding over a meeting, which approved, in principle, the draft textile policy here at the Prime Ministerís House on Monday, says an official release. The prime minister said textile is the backbone of our industrial sector and the government will continue to support the private sector in its efforts to modernise itself, increase the productivity and competitiveness of textile products. We need to produce value-added products, particularly garments, so as to create jobs and higher exports, he added. 

The prime minister said the proposed policy envisaged to build a new culture which would expedite the process of improvement in all the segments of textile sector. He, however, emphasised that the skills gap in all the entities of the textile sector as well as the relevant government organisations had to be filled by professionals to cope with the challenges and the changing environments of international marketing. 

Aziz said textile was contributing 66% to the countryís export, 40% to employment and 8.5% of GDP and in this regard the government would take all possible steps required to help the industry to boost its global trade and the proposed textile policy would be a milestone to achieve even higher objectives. 

Earlier, the secretary textile industry made a detailed presentation outlining the main features of the proposed textile policy. He apprised the meeting of the findings after interaction with all the stakeholders.

He mentioned that the proposed policy would cater for short, medium and long term measures to increase production of cotton, improve value-added products, productivity and competitiveness of the textile sector. He said the proposed textile policy targeted a 40% increase in the export of textile products and job creation for over 3.5 million people. 

He further mentioned that in the new textile policy there was a detailed plan which would help create five model garment factories, introduction of a new scheme whereby a textile park would be declared special economic zones, setting up of a weaving city, formation of Pakistan textile research and compliance organisation, audit of processing industry for efficient and economic use of precious chemicals, setting up of a state-of the art textile laboratory at NTU Faislabad, horizontal and vertical integration to balance textile value chain, a specialised garment training institute for females, one-window facility for provision of required infrastructure and standardisation of machinery and equipment. 

Later, State Bank of Pakistan Governor Dr Shamshad Akhtar briefed the meeting on various categories of financing facilities to promote industrial development in the country, including external commercial borrowings and local long-term financing for plants and machinery.

The meeting was attended by Minister for Textile Industry Mushtaq Ali Cheema, Federal Minister for Food and Agriculture Sikandar Hayat Bosan, Federal Minister for Science and Technology Noraiz Shakoor Khan, Adviser to the Prime Minister on Finance Dr Salman Shah, Deputy Chairman of the Planning Commission Dr Akram Sheikh, CEO of the Trade Development Authority of Pakistan Tariq Ikram and other senior Officials.

http://www.thenews.com.pk/daily_detail.asp?id=67240


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## Neo

*Textile policy aims 40pc increase in exports​*
ISLAMABAD, Aug 6: Prime Minister Shaukat Aziz has approved in principal the much-awaited draft textile policy seeking increase in export of textile products, improve competitiveness and generate more employment.

The policy aims to boost export of textile products to $17 billion from current $10.757 billion in the next five years. It targets 40 per cent increase in the export of textile products and generate over 3.5 million jobs.

The draft policy was approved at a high-level meeting on Monday, headed by prime minister and attended by ministers for textile, food, science, advisor to prime minister on finance, deputy chairman of planning commission and governor State Bank of Pakistan.

Under the new policy, there is a plan to help create five model garment factories, introduction of a new scheme whereby a textile park would be declared special economic zone, setting up of a weaving city and formation of a textile research and compliance organisation.

It also includes audit of processing industry for efficient and economic use of precious chemicals, setting up of state-of-the-art textile laboratory at NTU Faisalabad, horizontal and vertical integration to balance textile value chain, specialized garment training institute for women, one-window facility for provision of required infrastructure and standardisation of machinery and equipment.

A source privy to the meeting told Dawn on Monday that the draft policy was seeking another package of subsidies for the sector, which was not approved by the prime minister.

The Economic Coordination Committee (ECC) had already asked all ministries to avoid submission of summaries seeking subsidies in the shape of research and development (R&D).

Discuss the issue of subsidies with the relevant ministries before the submission of another report on the textile policy to the cabinet, the prime minister advised the textile industry.

An official announcement issued after the meeting said the meeting was informed that the proposed policy would cater to short, medium and long-term measures to increase production of cotton, improve value-added products, productivity and competitiveness of the textile sector.

The prime minister said that textile was the backbone of our industrial sector and the government would continue to support private sector in its efforts to modernise itself, increase productivity and competitiveness of textile products.

We need to produce value-added products, particularly garments so as to create jobs and higher exports, prime minister said.

He said the proposed policy envisages to build a new culture which would expedite the process of improvement in all the segments of textile sector.

He, however, emphasised that skills gap in all the entities of the textile sector, as well as the concerned government organizations, have to be filled by professionals to cope with the challenges and the changing environments of international marketing.

Later, the SBP governor briefed the meeting on various categories of financing facilities to promote industrial development in the country, including external commercial borrowings and local long-term financing for plants and machinery.

http://www.dawn.com/2007/08/07/ebr6.htm


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## Neo

*Capital market reforms to continue: SECP ​*
ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) will continue its reforms process to improve the existing risk mitigation standards, introduce specialised market monitoring techniques and ensure transparency and fair trade practices in the market.

SECP Chairman, Razi-ur-Rahman Khan stated this while inaugurating a seminar on Role of Derivatives in the Growth of Emerging Capital Markets organised by the commission in collaboration with the London Metropolitan University, in Karachi, says a press statement issued on Monday.

He explained the SECPís policy of taking initiatives to learn from the international experiences and to introduce internationally acclaimed products and standards in the local capital markets. He viewed that better and efficient products will attract more market participation.

During the seminar, a presentation was given by Clive Farr and, a senior lecturer at the London Metropolitan University with an extensive experience in investment banking in the UK, Europe and the Middle East. He introduced the various derivatives products presently traded in international markets through exchanges as well as on Otis. 

He explained how such products brought diversification and investment options in international markets for various types of investors. He advised participant institutions to make small investments in such products in the international markets, to develop better understanding of the benefits.

The Chairman, Karachi Stock Exchange Shaukat Tarin, in his concluding remarks highlighted the significant growth in the Pakistani capital markets in the last two years, where foreign direct investment has grown tremendously. He observed that in international markets derivates have emerged as pillars of financial system and the same are now inevitable for emerging markets, including Pakistan. He apprised the participants on the progress of institutional capacity building of KSE and NCEL with special emphasis on marketing these investment avenues across the nation to increase the investors base. Tarin appreciated the recent reforms, including improvements in the governance standards, deregulation and liberalisation of investments policies and fast-track privatization.

http://www.thenews.com.pk/daily_detail.asp?id=67244


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## Neo

*MoU with USAID to improve investment​*
ISLAMABAD, Aug 6: The United States Agency for International Development (USAID) has agreed to help achieve a structured economic reform process aimed at improving investment climate in Pakistan and enhancing competitiveness of the economy.

The Board of Investment (BoI) and the Competitiveness Support Fund (CSF) of USAID will sign a memorandum of understanding here on Aug 16 to help improve investment climate and enhance competitiveness of the economy.

The MoU will be signed by Federal Minister for Privatisation and Investment Zahid Hamid and Minister of State for Finance Omar Ayub Khan and chairman of the Competitiveness Support Fund (CFS). The MoU will be witnessed by a high-level US government representative.

President Gen Pervez Musharraf said in Karachi on Sunday that the country had started facing economic problems and that foreign investment was decreasing. According to some analysts, the signing of the MoU with the CSF could be a new move for considerably enhancing foreign investment in Pakistan.

The Competitiveness Support Fund (CSF) is a joint initiative of the Ministry of Finance, Government of Pakistan and the USAID which started with operations in May last year.

The financial support of USAID to the CSF is a part of $1.5 billion of US government assistance to Pakistan over five years in the five major areas of education, health, economic growth, democracy and governance, etc.

The MoU between the BOI and CSF is expected to pave way for both the organisations to undertake joint initiatives to support the creation of a foreign investors council (FIC), unifying policies towards effective establishment of special economic zones by benchmarking Pakistan with India, China, Thailand, Malaysia and Vietnam, working together to promote investment in infrastructure of the horticulture sector in Pakistan.

The MoU also envisages cooperation between the two parties to jointly prepare an investment guide demonstrating the potential and investment opportunities as well as organise a conference on cross-border co-operation through trade and investment in the Federally Administered Tribal Area (Fata).

Furthermore, following the MOU, the CSF will undertake a benchmarking exercise on BOI for its effective operations in Pakistan.

The Competitiveness Support Fund (CSF) established to support Pakistan's goal to have a competitive economy by providing input into policy decisions, working to improve regulatory and administrative frameworks and enhancing public-private partnerships within the country.

It also provides technical assistance and co-financing for initiatives related to entrepreneurship, business incubators and private-sector-led initiatives with research institutes and universities that contribute to creating a knowledge-driven economy.The CSF has undertaken policy analyses and studies on a number of sectors to identify the potential and competitive advantage to grow.

http://www.dawn.com/2007/08/07/ebr11.htm


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## Neo

*BD invites Pakistani traders​*
ISLAMABAD, Aug 6: Bangladesh has formally invited Pakistani businessmen to invest in various sectors, particularly in the textile sector. Bangladeshi industries are not facing problems, like energy shortage, electricity tariff and labour cost. These are cheaper in Bangladesh than Pakistan, said Acting High Commissioner of Bangladesh to Pakistan Allama Siddiki while speaking to traders at the Islamabad Chamber of Commerce and Industry (ICCI) here on Monday.

He stressed that Pakistani businessman should invest in Bangladesh in information technology and informed that seven Pakistani companies have already invested in export processing zones (EPZs).

Bangladesh is not a cotton growing country, but a lot of looms are working in Bangladesh, he added.

He said Bangladesh offers a lot of incentives to foreign investors and there was no quota system.

He further stated that business visa could be issued on the recommendations of chambers on a priority basis.

The envoy suggested creation of a linkage between Bangladesh Chambers and ICCI for exchange of trade-related information for stronger business ties.

He invited the ICCI delegation to visit Bangladesh in November.

The current trade volume is insufficient, which needs to be enhanced, he said, and informed that there were ample opportunities of investment in information technology, textile, pharmaceuticals, agriculture and other sectors.

The envoy informed that Bangladesh has still not signed free trade agreement with any country. He said that historical bounds need much better business relations and this was the ideal time for Pakistani businessmen to visit Bangladesh.

The Acting ICCI President Jamal Abdul Nasir agreed that bilateral trade between the two countries can be improved through exchange of delegations.

He said that the chamber would take a delegation to Bangladesh in November.

http://www.dawn.com/2007/08/07/ebr12.htm


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## Neo

*US-Pakistan investment conference: Opportunity to attract US assets in energy sector​*
ISLAMABAD: US-Pakistan investment conference in the United States is scheduled to be held in October-November 2007 to provide an opportunity to attract US investment in Pakistans energy sector.

This was informed by the US Ambassador Anne W Patterson who paid a courtesy call on the Federal Minister for Petroleum and Natural Resources Amanullah Khan Jadoon here Monday and discussed with him matters pertaining to promoting energy cooperation between the two countries. 

Welcoming the new US envoy, the minister said both countries enjoy very cordial and friendly relations. He informed that both countries have set up an energy dialogue pursuant to the visit of President Bush to Pakistan last year. He said that the government was taking concrete steps to exploit the untapped hydrocarbon resources in onshore and offshore areas to meet the growing energy needs of the country.

The minister said that the government has introduced a new petroleum policy that envisages an attractive package of incentives to the investors in the oil and gas exploration and production. He invited the US petroleum companies to take advantage of these investment potentials for the mutual benefit.

The minister highlighted the potential of unconventional hydrocarbon resources in Pakistan like oil shale and gas hydrates which needed transfer of US technology for their exploitation in the medium to long-term so as to meet future needs of Pakistan while reducing dependence on imports.

Mr Jadoon informed the envoy about the steps being taken by the government for the utilisation of 185 billion tonnes coal deposits of the country and sought US cooperation for conducting bankable feasibility of the attracting US private investment so that huge coal deposits could be utilised for gasification and power generation. He also invited the US companies to invest in the development of LNG and CNG sectors of Pakistan.

During the meeting, the US Ambassador told the minister that it is being planned to host US-Pakistan investment conference in the US during October-November this year, which would provide an opportunity to attract US investment in Pakistans energy sector.

The meeting was attended by Farrakh Qayyum, Secretary Petroleum and Natural Resources, Hilal A Raza, Director General Hydrocarbon Development Institute of Pakistan and Jahangir Khan, Senior Joint Secretary, Ministry of Petroleum and Natural Resources, Amy Holman, Consoler for Economic and Commercial and Affairs US Embassy.

http://www.dailytimes.com.pk/default.asp?page=2007\08\07\story_7-8-2007_pg5_10


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## Neo

*Musharraf for speeding up industrialisation ​* 
KARACHI: President General Pervez Musharraf has emphasised the need for acceleration of industrialisation process as it contributes to poverty alleviation and reduction in unemployment.

He expressed these views during a briefing by Federal Minister for Industries and Production, Jehangir Khan Tarin, on Sindh Initiatives held at the Sindh Chief Minister House on Monday. Sindh Governor, Dr Ishrat-ul- Ebad Khan and Chief Minister, Dr Arbab Ghulam Rahim, were also present on the occasion. The President called for rapid industrialisation to create more jobs and urged facilitation in setting up of industries. He pointed out that for industrialisation the acquisition of land remained a problem which should be resolved in an effective manner.

Musharraf said establishment of industries in Pakistan is being focused upon with the basic aim of poverty alleviation. He informed that this is the sector which creates most of employment opportunities.

The President emphasised that in the process of industrialisation, the private sector should be involved for provision of required infrastructure. He said that local as well as foreign investors should be encouraged.

Gen. Musharraf highlighted the significance of the industrial areas such as Karachi, Lahore and Faisalabad with which prosperity is linked. He also referred to his meeting with the then Premier of Malaysia, Dr Mahathir Muhammad, who had informed him that in Malaysia free land is given to those who want to establish industries.

The President pointed out that in the country there is a gap between policy formulation and implementation and said that what is planned should also be implemented and that there should be an effective monitoring system too.

He said the basic purpose for devising local government system was to help bridge the gap between policy formulation and implementation. Gen. Musharraf said he is encouraged by development work being undertaken and added that we have to work harder.

He also spoke of the federal governments plan of setting up urban clinics which would be set up on union council level. The President said doctors would be deployed at these clinics and basic medicines would be available stating that this would be real service to the poor. He stated that fishermen be provided with money for modification of their fishing boats and for having proper preservation facilities so that their fish catch would not go to waste.

Gen. Musharraf said the people in rural areas be provided with necessary information to help improve the yield of their crops. He stated that there is a need to convince people to improve the quality of their livestock. 

Briefing the President, Federal Minister for Industries and Production, Jehangir Khan Tarin, spoke of the Karachi Tools, Dies and Mould (TDM) Centre, project at Korangi Creek Industrial Park (KCIP), Bin Qasim Industrial Park (BQIP), Marble City on Northern Bypass and Rehabilitation of five industrial estates. He pointed out that the objective of TDM Centre was to provide local TDM industry with the state-of-the-art design, development, training and consultancy services as well as to enhance the TDM skill pool and develop digital manufacturing environment besides upgrading local engineering industry to wards world design and manufacturing standards.

The Minister said that PIDC has come up with a funding of Rs515 million and that the project is ready for inauguration. The second TDM Centre would be established at Gujaranwala at a cost of Rs980 million. 

http://www.thenews.com.pk/daily_detail.asp?id=67247


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## Neo

*Pre-paid electric meters soon in AJK ​*
MIRPUR (AJK): The AJK government has decided to introduce the pre-paid electricity meter system in Azad Jammu Kashmir to ensure correct billing for consumers, official sources said.

The sources told this scribe here Monday that the plan for installing pre-paid meters also involved the introduction of meter reading card. The government is taking these steps in the light of frequent complaints of wrong billing. Moreover the AJK government is also contemplating to computerize power billing. Currently, bills for all sorts of consumers are compiled manually by the revenue wing of the state electricity department.

Complaints of incorrect electricity bills by AJK electricity department against the actually consumed power has become a routine. The sources said that the government has also decided to keep the posting of a line man or a meter reader in an area only for three-month period. No any line man or meter reader could consume more than the stipulated three-month period in any area and their transfers would be made in rotation under the proposed new policy, the sources said. 

The government has also, meanwhile, directed the state electricity department to gradually change the old meters and power supply lines past their age. Chief Engineer of the AJK Electricity Department has also been directed to advertise the actual cost structure of electricity meter and the drop wire in the media for the information of the existing as well as upcoming consumers seeking new connections so that no official of the department could charge extra for electricity connection.

http://www.thenews.com.pk/daily_detail.asp?id=67252


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## Neo

*Banks to give Rs 40.2 billion loans to exporters: EFS ratio fixed at 70:30 ​*
KARACHI (August 07 2007): Banks will provide Rs 40.2 billion loans from their own resources to exporters under the export finance scheme (EFS) during the 2008 fiscal year, as the central bank has redefined composition of EFS by setting the 70:30 ratio. The central bank has decided to extricate itself gradually from export refinance scheme and transfer it to the banks.

The State Bank of Pakistan (SBP) has, therefore, introduced some modifications, which have recently been announced in the monetary policy by amending the EFS rules and regulations.

In the monetary policy, the central bank has announced some changes in refinancing limit and resource sharing arrangements for the EFS to reduce its consequences for reserve money growth and promote efficient utilisation.

The central bank said that during the current fiscal year, it would provide 70 percent funds for the EFS against the total limit fixed for the banks, while the remaining 30 percent funds for EFS would be provided by banks from their own resources to fulfil the exporters' requirements.

The banks have been advised by the central bank to ensure their total outstanding under the EFS, funded by the central bank as of June 30, should be reduced constantly by 30 percent latest by June 30, 2008. Therefore, the banks are bound to pay Rs 40.2 billion to the central bank till June 30, 2008, as overall outstanding amount under the EFS stood at Rs 134 billion on June 30 2007.

To make this reduction gradual, the aggregate outstanding refinance of Rs 134 billion must be reduced by at least 15 percent or Rs 20.1 billion, latest by the end January 2008.

In addition, for gradual reduction, the banks will pay Rs 20.1 billion, out of 40.2 billion, to the central bank till January 30, 2007 as the SBP has given directives that the banks should reduce 15 percent EFS outstanding by the end of January, 2008.

After the payment of Rs 40.2 billion, a 30 percent of overall EFS outstanding of Rs 134 billion as on June 30, 2007, the banks will arrange this amount from their own resources. "The payment of Rs 40.2 billion by banks during the current year to the central bank cloud not hit their deposits or liquidity," said economist Muzammil Aslam.

He said that during the last fiscal, the banks deposit was raised by 19 percent to Rs 3,300 billion and during the current fiscal year, a further 15 percent growth was expected. Therefore, an investment of Rs 40.2 billion under the EFS by the banks was not a huge amount against the growth of 15 percent, which counted around Rs 500 billion to Rs 3,800 at the end of June 2008, he added.

http://www.brecorder.com/index.php?id=602442&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Advancing Pak-US trade ties with Bush officials discussed ​*
WASHINGTON (August 07 2007): Commerce Minister Humayun Akhtar Khan discussed advancing Pakistan-US trade and economic relations with senior Bush Administration officials on Monday.

Khan met with US Trade Representative Susan Schwab and US Deputy Secretary of State John Negroponte as the two countries discussed forging closer trade and economic links to further consolidate their wide-ranging relationship.

In his meeting with Susan Schwab, the Commerce Minister discussed ways move forward in areas of bilateral investment treaty negotiations, reconstruction opportunity zones, intellectual property and World Trade Organisation matters.

"We worked on the strategy how to move forward in these areas," he told APP at the start of his two-day visit to Washington.

With Negronponte, he deliberated on the importance of an economic linkage with the United States with respect to better market access for Pakistani products in the robust American market.

"I emphasised on the need that it is trade that Pakistan needs to move out of poverty much more than economic aid and that has been the cornerstone of President Musharraf and Prime Minister Aziz's policy internationally."

Khan stated the senior State Department official understood the point well and added the two countries are working closely on the upcoming reconstruction opportunity zones legislation, which is expected to be presented in the American Congress next month.He expressed the hope that with the implementation of ROZs initiative, the trade will expand further between the two countries.

The United States is one of the largest trading partners of Pakistan and the two-way trade volume has increased in recent years to about six billion dollars with the South Asian country's exports totalling around $3.9 billion last year.

http://www.brecorder.com/index.php?id=602505&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Rs 64 billion spent on Punjab uplift projects: Elahi ​* 
LAHORE (August 07 2007): Chief Minister Chaudhry Pervaiz Elahi has said a strong Pakistan Muslim League is the guarantee of the country's solidarity and people will bring about a historic victory for the PML in the forthcoming general elections for the continuity of on-going development process in the country.

He was addressing the Punjab Assembly members, Nazims and PML office-bearers hailing from Vehari District here on Monday, disclosed an official. He said consultations had been completed in most of the districts of the province regarding the upcoming elections.

He also said the party leadership was dealing with all matters efficiently, yielding excellent results. "Alliance with other political parties will be considered after elections," he added. "The government has spent Rs 64 billion on development projects to remove poverty, backwardness and ignorance from Southern Punjab and more funds will be provided to the region.

Allocation of resources for backward areas on the instructions of President General Pervez Musharraf had resulted in raising the standard of living of the people, he asserted.

Up to Rs 4.5 billion had so far been spent on the development and uplift of district Vehari whereas development schemes worth Rs 1.5 billion were being implemented, he said. The Chief Minister said the PML would contest the elections on the basis of these development programmes and would win with a thumping majority.

"Rescue 1122 service is also being initiated in Southern Punjab for the relief of victims of accidents and calamities. An amount of Rs 55 million is being spent on the construction of a gymnasium in Vehari while Rs 85 million are being utilised on sewerage and sanitation schemes.

A sum of Rs 1 billion has been spent on the repair and construction of roads, which include 29km long Vehari-Multan road, 28km long Tibba Sultanpur-Makhdoom Rasheed road, 40km portion from Vehari to Tibba Sultanpur and repair and reconstruction of Vehari to Katcha Kho Road.

Girls colleges in Tibba Sultanpur, Gagu, Shaikh Fazal and Machhiwal while boys degree colleges in Tibba Sultanpur and Luddon at a cost of Rs 240 million were being established, he told the delegation.

Provision of additional resources for the uplift of remote areas is an important feature of the development strategy of the government," he added. He also said the Pakistan Muslim League would fight the People's Party hard from its own platform in the elections and meet a glorious success.

He said assembly members, Nazims and PML office-bearers should set aside their mutual difference and forge unity in their ranks in the interest of public service and development of the country as well as strengthening of the party. "Unity in the PML is necessary to defeat political opponents in the elections," he added.

Those who also attended were Minister of State for Information Technology Ishaq Khan Khaqwani, Punjab Ministers Haroon Sultan and Mohayyuddin Chishti, Vehari District Nazims Syed Shahid Naseem Mehdi, PML leaders Saeed Ahmed Khan Manais, Mumtaz Ahmed Khichi and President Muslim League Vehari, Chaudhry Nazir Ahmed Arain.

http://www.brecorder.com/index.php?id=602551&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Musharraf underscores need for private sector's involvement ​*
KARACHI (August 07 2007): President General Pervez Musharraf has emphasised the need for acceleration of the process of industrialisation as it contributes towards poverty alleviation and reduction in unemployment. He expressed these views during briefing by Industries and Production Minister Jehangir Khan Tarin on 'Sindh Initiatives' at Chief Minister House here on Monday.

Sindh Governor Dr Ishrat-ul-Ibad Khan and Chief Minister Dr Arbab Ghulam Rahim were also present on the occasion. The President called for industrialisation to create more jobs, and urged that the setting up of industries must be facilitated.

He pointed out that for industrialisation the acquisition of land has remained a problem which should be resolved in an effective manner. Musharraf said that concentration on establishment of industry in Pakistan has been focused with the basic aim of poverty alleviation.

He said that this is the sector which creates most of the employment opportunities. The President emphasised that in the process of industrialisation, the private sector should be involved for provision of the required infrastructure.

He said that local as well as foreign investors should be fully encouraged.he highlighted the significance of the industrial areas such as Karachi, Lahore and Faisalabad with which "our future is linked". He referred to his meeting with Mahathir Muhammad, who informed him that in Malaysia free land was given to those who want to establish industry there.

The President pointed out that in the country there is a gap between policy formulation and implementation and said that what is discussed should also come on the ground and that there should be an effective monitoring. He said that the very purpose of devising the local government system was also to help bridge the gap between policy formulation and implementation.

Musharraf said he was encouraged regarding the development work that has been undertaken, and added that "we have to work hard". He spoke of federal government's plan of setting up urban clinics, which would be on union council level.

The President said that doctors would be deployed there and selected medicines would be available, and remarked that this would be a real service to the poor. He said that fishermen should be provided with money for modification of their boats for having proper preservation facilities so that the fish that go waste after catch could be saved.

He said that the people in the rural areas should be provided with necessary information to help improve the yield of their crops, and there was need to convince the people to improve the quality of livestock.

The Minister for Industries in his briefing spoke of Karachi projects of Tools, Dies and Mould (TDM) Centre, Korangi Creek Industrial Park (KCIP), Bin Qasim Industrial Park (BQIP), Marble City on Northern Bypass and Rehabilitation of five industrial estates. He said that the objective of TDM Centre was to provide local TDM industry with the state-of-the-art design, development, training and consultancy services and to enhance the TDM skill pool and develop digital manufacturing environment besides upgrading local engineering industry towards world class design and manufacturing.

He said that PIDC has come up with a funding of Rs 515 million and that the project is ready for inauguration. The second TDM Centre would be established at Gujaranwala at a cost of Rs 980 million, he added. Tarin informed the President that KCIP is the first project of National Industrial Park on a plot of land of 250 acres. It is strategically located next to Pakistan Refinery and Korangi Industrial Zone. The project's commercial launch would be by the end of next month and the project would be completed by December next year.

He said that BQIP is being established on 930 acres land, adjacent to Pakistan Steel Mills, and the federal government would finance the project with a commercial loan of Rs 2 billion. The Minister said that the BQIP would create some 20,000 direct and 80,000 to 90,000 indirect jobs.

He said that Pakistan Stone Development Company would set up 'marble city' on 300 acres on Northern Bypass, Karachi, which includes industrial plots for the processing industry and marble and granite sector. There will be latest machinery for value-addition and upgradation of the skills of the workers. Tarin said that for the rehabilitation of five industrial estates of Karachi the federal government is to provide a grant of Rs 1 billion, to be matched by Sindh government.

He also spoke of his Ministry and Sindh government cooperation towards the white revolution and under this the provincial government would set up 23 milk colonies, and Pakistan Dairy Development Company (PDDC) would provide technical assistance to modern management practices. The Minister said that the PDDC plans to establish a total of four breeding and training farms in the country. There will be establishment of 'Salvage Farm' at Karachi for 'dry' cows and calves at Karachi cattle colonies.

The Minister also spoke about the Sindh component of President's Primary Healthcare Initiative (PPHI) and said that the Federal Government would provide funding for the provincial and district support units and would also provide Rs 0.1 million per BHU for urgent rehabilitation. The Provincial Support Unit of Sindh was established in November last year.

About the progress achieved, Jahangir said that all illegally occupied facilities had been retrieved, reopened, rehabilitated, and furnished and doctors have been employed. He said that all facilities without doctors have been converted into clusters of two or three facilities.

http://www.brecorder.com/index.php?id=602583&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Rs 50 billion to be invested in housing and construction sector ​*
KARACHI (August 07 2007): More than Rs 50 billion will be invested in housing and construction sector, thus creating direct and indirect employment opportunities. This was stated by Chairman of Housing and Construction Sub-Committee of Karachi Chamber of Commerce and Industry (KCCI) Munir Sultan, while talking to newsmen here on Monday.

He further said that more than six foreign companies were making huge investments in construction projects in the metropolis. He appreciated the recently introduced government scheme, which provided incentives to small investors to invest in real estate and earn profit.

Before introducing this new scheme, only big investors could invest and make profit in real estate sector, he added. About Katchi Abadies, he said that due to negligence of governments in past and influx of around 0.7 million people, seeking jobs, per year around 1,475 Katchi Abides developed in the city.

He quoted the World Bank report, indicating that Pakistan faced 7.1 million houses shortage. Commenting on the government scheme of constructing 50,000 houses annually, he said that this target was too short to cater to the need for housing requirement in the country. At least 100,000 houses should be constructed annually, he suggested.

http://www.brecorder.com/index.php?id=602538&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Karachi Port may have three-shift working system shortly ​* 
KARACHI (August 07 2007): The Karachi Port is soon likely to have the three-shift working system as a joint committee of the Karachi Dock Labour Board (KDLB) and the Stevedore Conference (SC) has been established to discuss the modalities.

The committee would submit its final report to KDLB Chairman Vice Admiral Ahmad Hayat by October-end this year, well-placed sources in the Board told Business Recorder on Monday.

Sources said the three-shift system would not only create more employment opportunities for the dockers, but also give a remarkable boost to cargo handling at the port. They said the committee would have four members, including Sabir Hasan and Mohammad Ali Rajpar representing the Conference and Mohammad Halal and S.M. Ejaz Bacha from the Karachi Harbour & Dock Worker's Union, Collective Bargaining Agents (KHDWU-CBA). Sabir Hasan would be acting as a convenor of the committee, sources added.

The system, which is already working at the Port Qasim, was first proposed by the stevedore companies, but later they kept mum on the topic due to unknown reasons, said the sources.

They said the new development surfaced after KHDWU-CBA demanded introduction of the three-shift system for loading and unloading at the port in the charter of demands which was finally ratified by the KDLB chairman, who is also the chairman of the Karachi Port Trust (KPT).

The KHDWU-CBA was favouring the new system because it has a surplus labours strength, which would get the job at port after the two-shift working system is upgraded to a three-shift system, sources said.

They, however, claimed that some stevedoring companies, which mainly use 'automated grippers' to handle the bulk cargo like cement, fertiliser, chemicals, etc are less interested in the new system.

In addition to this, sources said, the Pakistan International Container Terminal (PICT) and the Karachi International Container Terminal (KICT) are reluctant to introduce the new system in their jurisdictions due to the fact that they are less dependent on the manual work.

At present, the dockers at the Karachi Port work from 7:30 am to 4:30 pm and till 7:00 am in case of overtime in the first shift while the second shift working time stretches from 7:00 pm to 3:30 am which continues till 7:30 am if the overtime is needed.

Under the proposed three-shift system, sources said, the 24 hours would be divided into three working shifts with almost equal timing, which would certainly accelerate the process of cargo handling at the port.

http://www.brecorder.com/index.php?id=602535&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*President inaugurates Northern Bypass ​*
KARACHI (August 07 2007): President Pervez Musharraf on Monday inaugurated the 56-km long mega Northern Bypass project, completed at a cost of Rs 3.5 billion, and said that it would not only help ease the traffic problem in Karachi but would also provide a boost to the already growing economy.

Addressing the ceremony on this occasion, he pointed out that the economy was growing satisfactorily, and this fact was reflective in public sector development projects costing Rs 520 billion against Rs 80 billion which used to be spent in the past on this count. "If this amount is utilised prudently, I see no reason why Pakistan should not progress and move forward", the President said.

He pointed out that if there would be destabilisation in the country, it could be because of extremism and terrorism, which should not take place while destabilisation on the political scene can create difficulties and economic surge can take a downward turn which, he said, he would not allow to occur. He announced in unequivocal terms that he would not allow destabilisation in the country.

"Democracy will continue to move forward, and elections are to take place; but there should not be destabilisation, and I would not allow it", he declared.

General Musharraf reiterated that the forthcoming elections would be fair and transparent, but whoever would attempt to create destability he would have to come across him first.

Congratulating NHA and NLC engineers and technicians on the successful accomplishment of the mega project, the President said that construction of Northern Bypass would ease traffic pressure within Karachi city.

He pointed out that Karachi has a unique position for its being the gateway of Pakistan and a link of Pakistan with the rest of the world and, therefore, it is most essential that the city should have an effective communication network within to facilitate South to North traffic movement.

"Whatever is done for Karachi will not be too much, particularly peace and harmony here is essential for economic growth of Pakistan and South to North traffic management".

http://www.brecorder.com/index.php?id=602466&currPageNo=3&query=&search=&term=&supDate=


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## Neo

*Pakistan for more market access to US​*
WASHINTONG, Aug 7: Access to US market is a key tool in Pakistans drive against extremism, said the federal commerce minister on Tuesday following talks with US officials on trade initiatives.

Mr Humayun Akhtar Khan said US authorities should take a strategic view of its economic ties with Pakistan to attain shared anti-terrorism goals.

Economically, as well as strategically, to effectively address in a long-term manner, the problem of extremism in that region, it is important to enhance trade, he told Reuters.

Foremost in Khan's talks with US Trade Representative Susan Schwab and other officials in Washington was promoting reconstruction opportunity zones under a plan agreed by Pakistan President Pervez Musharraf and US President George W. Bush in Islamabad in March 2006.

The plan would allow duty-free access to goods made in areas along the Pakistan-Afghanistan border, including tribal areas of Pakistan.

Even trade should be strategically viewed because it addresses the main problem we are trying to face, which is curbing extremism, Khan said.

Khan said the Musharraf government hopes to finish nearly three-year-old talks on a bilateral investment treaty with the US. This would add to foreign investment in the country, which drew $8.4 billion last year on the back of deregulation and fast growth.

Stimulating investment and trade would also help Islamabad and Kabul tackle the problem of increasing opium poppy production in Afghanistan.

When you have young people out of jobs and economically deprived, certainly, whether they go towards terrorism or they go towards poppy growing, such economic measures are a big help, Khan said.

While Pakistan awaits what it hopes will be swift moves by the US Congress to take up legislation to implement the reconstruction opportunity zones, Khan said he was actively pursuing multilateral and bilateral trade diplomacy.

Pakistan has signed free trade agreements with China and Sri Lanka and is negotiating such a pact with Bangladesh.

It is also seeking to expand trade with India, Khan said, adding we are very conscious of the fact that our regional trade is much lower than other regions of the world.

Pakistan is also looking to break deadlocks in the World Trade Organization's Doha round of trade talks, he said.

The WTO is where we'll get relief and liberalisation in the agricultural trade and in the textile trade.Reuters

http://www.dawn.com/2007/08/08/ebr6.htm


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## Neo

*Economy stabilises, says prime minister​*
ISLAMABAD, Aug 7: Prime Minister Shaukat Aziz said on Tuesday that the consistent and transparent policies had established the economy on solid foundation, which attracted substantial investment.

He stated this while talking to the delegation headed by Chairman of Merrill Lynch International Inc. Kevin Watts.

An official announcement said the record investment of $8.4 billion clearly indicated the trust of the investors in policies initiated by the present government.

He said that now Pakistan stood on a solid footing and had strong fundamentals as well as substantive structural reforms to attract more investment in days to come. He, however, emphasised the need for continuity and consistency of policies to further boost the economic activities in the country. Several sectors represent attractive investment opportunities, including telecom, IT, financial services, engineering, agribusiness and real estate, he added.

Mr. Kevin Watts appreciated the government's policies regarding the protection of investment in different sectors. Merrill Lynch has worked with the government on promoting investments, privatisation and share issues for Pakistan in global markets.  Our Reporter

http://www.dawn.com/2007/08/08/ebr16.htm


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## Neo

*IT export figures under-reported *​ 
Out of 140 software firms, only 17 share data with authorities

KARACHI: Out of the total 140 software companies exporting different products to various parts of the world, only 17 share their annual export figures with the relevant authorities, which is considered the major reason for lower than official export figures.

Figures compiled by the Pakistan Software Export Board (PSEB show the country has 380 registered companies, including 140 software houses, which are serving foreign clients with services in different categories.

We have been trying to net each and every company while compiling export figures in coordination with the State Bank, said Yusuf Hussain, PSEB Managing Director. Unfortunately, now only 17 companies report their export figures to the institutions concerned, which is seen as total software and IT exports from the country.

He said the mechanism to register export data also mattered when the total cost of services was calculated by the end of a fiscal in June every year. The State Bank of Pakistan, however, he added, was making efforts to make the figures authentic with a true picture of the industrys capability.

The countrys exports of software and information technology and IT-enabled services rose to $116 million in 2006-07 from $72 million a year before, against the target of $108 million set by PSEB. The IT industry emerged the fastest growing sector a few years ago mainly supported by a phenomenal jump in call centre operations during the past two years.

Both the authorities and software companies fly high eyeing $10 billion by 2010 on higher demand from the outer world of Pakistani skills and effective image-building campaign. However, the PSEB chief says the country still owes a larger size of IT industry, which is much more skilled and in demand compared with other competing countries.

In fact we follow the 1992 Economic Act, which suggests a way whereby we can count the size of our industry and of export figures, he said. In fact we have an industry of the size of $2 billion, which is not small in any sense and is growing at a staggering pace.

He said the State Bank registered the export figures under the BPM 5 Reporting system, which restricted the number to $116 million by the end of 2006-07. However, he added, such practice was not followed in India, which was considered the largest exporters of software and IT products.

The Reserve Bank of India actually registers the figures under the BPM 6 Reporting System, which jacks up its exports to billions of dollars, added the PSEB MD. He said under such system, India reported $1.4 billion software exports by March 2006-07 and if the same formula was applied for exports, the countrys exports could reach $1.4 billion by the fiscal end.

Among other facilities call centre operations have played a vital role in our export figures. Defined as a unit, the call centres have adequate telecom facilities, trained manpower and access to database providing information to customers.

The progress in telecom technology has made it possible that the person handling a call could be anywhere provided that communication and interaction is properly handled. Growth in business from Western companies has inspired local investors to explore new opportunities.

http://www.thenews.com.pk/daily_detail.asp?id=67369


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## Neo

*$8.4bn investment shows investor trust: PM* ​ 
ISLAMABAD: Prime Minister Shaukat Aziz Tuesday said consistent and transparent policies of the government have established the economy on solid foundation which attracted substantial investment in the country.

Record investment of $8.4 billion in Pakistan clearly indicates the trust of investors in its policies, he said while talking to a delegation headed by Kevin Watts, Chairman Merrill Lynch International, which called on him here at Prime Ministers House.

The Prime Minister said Pakistan has strong fundamentals to attract investments in days to come. Several sectors represent attractive investment opportunities including telecom, IT, financial services, engineering, agribusiness and real estate, he added.

Kevin Watts apprised the Prime Minister about Merrill Lynch activities in Pakistan and expressed confidence in countrys economy which, he said, is based on strong fundamentals and would attract more foreign investment. 

http://www.thenews.com.pk/daily_detail.asp?id=67377


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## Neo

*Mineral sector ​*
LAHORE: Provincial Minister for Mines and Minerals, Muhammad Sibtain Khan on Tuesday said there were vast opportunities of collaboration between Pakistan and China in the mineral sector.

Talking to a delegation of mine-owners belonging to various parts of the province, the minister said open trade between the two countries would increase after the implementation of the trade agreement.

Bilateral cooperation will be further cemented in the mineral sector, especially in areas like rock salt, coal, iron, cooper and gypsum, he added. The minister said the government was launching a comprehensive programme for the progress of the mineral sector in the province, which would help in accommodating thousands of jobless people.

He said vast reserves of iron had been discovered in Punjab and negotiations with multinational companies were in final stages for their exploration. During the meeting, the delegation members apprised the minister of their problems.

http://www.thenews.com.pk/daily_detail.asp?id=67382


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## Neo

*Investment target set at 23.8% of GDP*​
By Ijaz Kakakhel

ISLAMABAD: Keeping in view strong economic performance over the last few years, the government has projected investment target of Rs 2381.6 billion for the year 2007-08 up from the level of Rs 2003.6 billion reflecting an increase of 19.2 percent over the investment level of last year. 

Overall, projected target of investment is set to be 23.8 percent as a ratio of GDP for the current fiscal year.

Fixed investment foe the current year is planned to reach Rs 2221.5 billion reflecting an increase of 19.2 percent over the investment level of last year. 

According to the annual plan of planning commission, the prospects for sustained high economic growth in 2007-08 remain excellent with the heavy increase in domestic and foreign investment and strong performance by agriculture, manufacturing and services sector. 

The government is trying its level best to facilitate both local and foreigner investors with initiatives, like tax exemption, tariff reduction and loan facility to investors.

The private investment sector is however taking the lead and public sector investment would mainly be on developing the physical as well as scientific and technological infrastructure. 

The investment climate in the country improved significantly during the year 2006-07 with all time increase of Rs 2 trillion (23.0 percent of GDP) in 2006-07. 

Impressive growth of the Pakistans economy is attributed to the continuity and consistency of policies, which are initiated by the present regime within the overall framework of deregulation, privatization and liberalization. 

The national savings as a ratio to GDP (Gross Domestic product) are projected at 19.8 percent to reach a level of Rs 1882.8 billion for the year 2007-08.

In the current year the emphasis will be on macroeconomic stability so as to keep a balance among internal and external accounts.

As far as financing of the targeted investment is concerned, it projected that about 79 percent will be financed through national savings and 21 percent through foreign savings. 

The foreign private investment without privatization during July-April 2006-07 has increased by 179 percent to $5.2 billion (FDI $4.0 billion). The countries contributing to FDI are: 

USA ($ 676.7 million), UK ($ 724.4 million), UAE ($ 364.2 million), Switzerland ($ 157.8 million) , Netherlands ($ 753.4 million). 

The major sectors which are attracting FDI in the country are telecommunications with $1360 million, financial business with $871 million, oil & gas explorations with $449 million, trade sector with $134 million, thermal power with $134 million, petroleum refining with $115 million and construction with $117 million.

http://www.dailytimes.com.pk/default.asp?page=2007\08\08\story_8-8-2007_pg5_1


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## Neo

*Pakistani Kinoo exports to Russia: Annual export of $20.68 million could be saved​*
KARACHI: In order to save annual export of $20.68 million worth of Kinno to Russia, an eight member high-powered delegation from Pakistan, comprising representatives of public and private sectors, is proceeding to the country to remove apprehensions and fears in this regard.

The ban on import of Pakistani fruits and rice was placed by the Russian government on March 19, after discovery of a copper bug from a Pakistani rice shipment which also prompted them to place immediate ban on import of all kinds of fruits besides rice.

Talking to Daily Times, Chairman All Pakistan Fruit Exporters Association (APFEA) Abdul Wahid said since placement of the import ban from Pakistan, exporters have suffered colossal financial losses in terms of foreign currency, which also proved disastrous for the national exchequer. 

The decision was unjustified as the ban should have been limited to rice only, but without any valid rationale, they also included Kinoo in the prohibited import item list. 

Replying to a question, he claimed that Kinoo exports to Russia started in 2003-04 season and initially export volume stood at 25 containers but in the next three years, it made an enormous jump to 1,400 containers during the peak season worth $20.68 million. 

He attributed the popularity of the Pakistani fruit in Russia in short period of time due to its high nutrition and sweetness besides export of quality products, which are unmatchable across the world. 

We had planned to boost up the exports of Kinoo to Russia in next three years, up to 2,000 containers, however imposition of import ban, has shattered all future planning and the countrys export is currently facing consternation as far as this particular fruit is concerned. 

Abdul Wahid further told that the eight-member delegation would be headed by Salim Jhangra, Commissioner Minor Crop and Chairman REAP, Quarantine Officer and representatives of growers association. 

Members of the delegation during the two-day visit to Russia, would strive to allay apprehension of the Russian government relating quality of Pakistani fruits, rice and quarantine system in Pakistan. 

They would also ensure that standard of Pakistani products conforms to the standard of Geneva convention regarding exports besides in compliance of WTO standards and pursuing Sanitary Phytosanitary Certificates which lays special emphasis on maintenance of quality of the exported material.

http://www.dailytimes.com.pk/default.asp?page=2007\08\08\story_8-8-2007_pg5_10


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## Neo

*KESC to buy power plants from Russia ​*
KARACHI (August 09 2007): Karachi Electric Supply Corporation (KESC) has decided to purchase ten 100-MW power plants worth billions of rupees from Russia to generate an additional 1000-MW supply to overcome a serious loadshedding crisis in the city, sources told Business Recorder on Wednesday.

"KESC would be able to overcome power shortage after the installation of these power plants in different areas," sources said. The Board of Directors of KESC in its last meeting recommended to the corporation to make a deal with a Russian-based company to acquire the plants.

Sources said that KESC administration was under severe criticism while the Supreme Court had also given clear-cut directives to the utility agency to improve its performance. "It was decided in the meeting that immediate steps would be taken in this regard to seek an end to power crisis," they said. A proposal, which was approved and highly appreciated in the board's meeting that 10 power plants, each plant of 100-MW capacity, would be obtained from Russia.

Karachi will get a total of 1000-MW power supply from these power plants and it is hoped that with the installation of these plants the power crisis would end. KESC is evaluating and collecting data required for the installation of power plants from different parts of city in which Bin Qasim, Malir and Gadap are included.

Sources said an agreement would be signed soon to make payment of these power plants. "Since KESC cannot pay the full amount, there are different options under consideration. These options include profit sharing with the concerned firm and purchase of plants on instalments," they added.

Sources said a highly questionable performance of Siemens, the Management and Operation partner of KESC, had prompted KESC Corporate Management to explore other options.

It may be noted that power requirement of the city is over 2400-MW. At present, KESC has failed to fulfil the demand despite the fact that Wapda and Kanupp are providing to it 750-MW and 75-MW, respectively.

There are only two power plants in the city of which Bin Qasim power plant, consisting of six units, is providing about 900-MW to the city while Korangi Thermal power plant, consisting of four units, is supplying only 60-MW which is 190-MW less than its original capacity of 250-MW.

Of the four units of power plant in Korangi, two units were declared retired while third is not working due to technical faults and only one unit of 60-MW is supplying power to the metropolis.

According to an agreement, installation of two power plants of 488-MW should have been completed in August 2007. Board of Directors of KESC scraped this agreement in December 2006, due to allegations of corruption and bribe.

http://www.brecorder.com/index.php?id=603189&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Wapda sees worst power shortfall in next summer *

ISLAMABAD (August 09 2007): The Water and Power Development Authority (Wapda) has projected worst ever power shortfall in next summer which is expected to cross 3000MW, official sources told Business Recorder.

These figures were presented by Wapda Chairman Tariq Hamid at a meeting of the Private Power Infrastructure Board (PPIB) chaired by Minister for Water and Power Liaquat Ali Jatoi here on Wednesday.

Sources said that Wapda also placed the recovery figures before the meeting, according to which the government owes Rs 98 billion, including Rs 64 billion of Federally Administrated Tribal Areas (FATA). The industrial, commercial, agriculture and domestic consumers were also defaulters of Rs 48 billion, which is far less than government departments.

They said that representatives of some IPPs, who were invited to attend the meeting, complained of non-cooperation by the concerned ministries and departments. However, the Minister instructed PPIB, Nepra, Wapda and asked the Ministry of Petroleum to facilitate them and resolve their issues within one week.

Sources said that some new IPPs said that Nepra for not giving them tariff expeditiously which is one of the reasons of delay in signing Implementation Agreements, while others complained against Petroleum Ministry.

"Power demand is increasing tremendously in the coming years, and we should be geared up to face the challenges. The government will provide maximum facilities to investors to put their investment in the energy sector," Jatoi said.

The IPPs also assured the meeting that the projects were being developed as per schedule and would be completed within the prescribed timeframe, a press release said.

According to the press release, Wapda Chairman informed the meeting that during the past five years of the present government since 2003-04, Wapda had electrified 43,670 villages while before 2003-04, since the creation of Pakistan, 73,829 villages had electricity. Wapda had added four new 500KV transformers valuing Rs 5960 million and 220 KV transformers valuing Rs 3292 million on the national transmission system, he added.

He said that during last five years, distribution losses of Wapda have been reduced from 24.4 percent to 21.5 percent, thereby reducing 2.9 percent. One percent losses reduction on Wapda system means Rs 1 billion in financial terms. In 2006-07, Wapda recovered revenues amounting to Rs 274.5 billion against Rs 193.9 billion in 2002-03, thereby an increase of 41.5 percent in the revenue had been achieved, he added.

The Minister directed that Wapda should immediately resolve the issues pertaining to transmission lines for import of power from Iran and gear up the projects, especially those relating to reduction in energy loss, Discos transmission lines and grid station projects.

He further directed that immediate measures should be taken for meeting the power shortage in the next summer season. In this regard fast track projects should be closely monitored, he added. He also directed to monitor the measure to mitigate the shortage of power.

Besides the officials, the meeting was attended by CEOs/representatives of Attock General Ltd (165 MW), Engro Power Project (150 MW), Nishat Chunian Power Project (200 MW), Eastern (EPCO) Power Project (150 MW), Sheikhupura (Atlas) Power Project (225 MW) and Japan Power Project (expansion project) (156 MW).

http://www.brecorder.com/index.php?id=603192&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Assets at Rs 4.2828 trillion cross two-year high level: Banks profits exceed Rs 100 million mark ​*
KARACHI (August 09 2007): The financial performance of the country's banking sector remained outstanding and continued to grow for yet another year, as its balance-sheet size crossed the highest ever level of rupees four trillion and profit has crossed Rs 100 billion-mark during the 2006 calendar year.

These tremendous achievements in the profit and assets growth has placed Pakistan among the top half in a group of 44 emerging economies in terms of capital adequacy and asset quality, while in terms of profits, Pakistani banking system ranked among the top 10.

The central bank said that during 2006, overall banking sector assets grew by 17 percent or Rs 622 billion to all time high level of Rs 4.2828, previously stood at Rs 3.66 trillion in 2005. The pace of growth of total assets was 17 percent, mainly funded by continued inflows of deposits, borrowings and equity of the banking system.

Deposits, being the main funding source, contributed around 60 percent of the growth in total assets whereas equity and borrowings jointly accounted for 32 percent, said the central bank. Besides strong growth, the share of local private banks (LPBs) in total assets has further increased due to shift of couple of foreign banks (FBs), as a result of merger and acquisition of the LPBs.

The central bank has issued Banking System Review (BSR) for the 2006 calendar year, in which it has presented overall performance of banking sector. Accordingly, their share in total assets of the banking system surged to 72.4 percent in 2006 from 67.8 percent in 2005.

On the other hand, all the remaining groups witnessed further squeeze in their shares, as share of public sector commercial banks (PSCBs), specialised banks (SBs) and foreign banks (FBs) stood at 19.5 percent, 2.8 percent and 5.2 percent respectively.

The central banks said that the pre-tax profit of banking sector had set another milestone by crossing Rs 100 billion marks during 2006. During the year under review, pre-tax and after-tax profit of the banking system was raised to Rs 123.6 billion from 93.8 billion and Rs 84.1 billion from Rs 63.3 billion in 2005 respectively.

During 2006 as well, deposits of the banking system grew strongly. However, the pace of growth remained a bit slower at 13.1 percent against 18.3 percent in 2005. Banking sector deposits reached Rs 3.202 trillion in 2006 from Rs 2.832 trillion during 2005, depicting an increase of Rs 370 billion during 2006.

The factors contributed towards sustained deposits' growth also included the higher foreign inflow in the form of workers' remittances and FDI, expanding branch network, product innovation and enhanced marketing efforts, the central bank added.

The robust profitability, strong solvency profile, managed asset quality, better risk management practices and ongoing consolidation of banking system have witnessed further improvement in almost all the key financial performance and soundness indicators, the central bank said in the BSR.

The banking system continued to invite the foreign investors' interest in Pakistan and attract significant share of direct foreign investment on the back of excellent results.

Return on assets (RoA) of the banking system has further improved to 2.1 percent. Return on equity (RoE), however, slightly dropped to 24.2 percent from 25.6 percent over the year due to proportionately greater increase in the banks' equity base as a result of high retention of profits and fresh capital injections.

The recent upward movement in cost of deposits put some pressure on growing net interest income (NII) as the interest rate variance on deposits of the commercial banks has increased to Rs 39.3 billion as against Rs 26.3 billion in 2005.

On the income side, the contribution of interest rate variance on loans decreased to Rs 36.2 billion as compared to Rs 50.2 billion in 2005. Total NPLs of the banking system declined to Rs 175 billion from Rs 177 billion in 2006. However, the commercial banks (CBs) witnessed an increase in their NPLs by around rupees two billion to Rs 138 billion during 2006.

NPLs to loans and net NPLs to net loans ratio of all banks remained in the vicinity of seven percent and two percent respectively. As compared to the last year, the loan portfolio of the banking system grew at a relatively lower rate of 18.8 percent against the 24 percent growth in 2005.

The share of fixed investment loans decreased to 21 percent from 23.2 percent in 2005, whereas share of working capital loans increased to 35.3 percent from 33.2 percent in 2005.

The interest rate spread determined on the basis of weighted average rates on outstanding loans, and the deposits had been hovering around 7.3 to 7.5 percent during 2006. However, the spread on gross disbursements and fresh deposits remained lower in the range of 5.1 to 6.5 percent.

Besides conventional banking, growth in Islamic banking also remained encouraging. Growing at the higher pace, the number of branches increased to 150 from 70 in 2005.

With the entry of three more conventional banks, the total number of conventional banks' offering Islamic banking increased to 13, whereas the full-fledged Islamic banks have increased to six from two in 2005. Besides expansion, key performance indicators also witnessed healthy trends during the year, auguring well for the future growth prospects.

Total assets of this segment grew by almost 67 percent to Rs 119 billion, thus increasing its share in the overall banking system to 2.9 percent from two percent in 2005.

Microfinance also witnessed growth in its market share and added to the access to finance as both the depositors and borrowers of this sector recorded healthy growth during 2006. The total number of microfinance institutions increased to six from five, whereas the number of branches increased to 145 from 91 in 2005. The share of advances also increased to 33 percent from 27 percent in 2006, whereas the infection ratio of the loans stayed below two percent.

However, these banks need to enhance their focus on scaling up their core business activities, improving operational efficiencies and building professional expertise. The rural areas, despite having two-third share in population, have only one-third of the bank branches, catering to their needs. Realising the importance of access to financial services, the SBP is making it the cornerstone of its future strategy.

http://www.brecorder.com/index.php?id=603163&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*BIT negotiations: Pak-US officials to achieve consensus on unresolved issues ​*
WASHINGTON (August 09 2007): Pakistan and the United States have resolved to make efforts for progress in bilateral investment treaty (BIT) negotiations, Commerce Minister Humayun Akhtar Khan, who met with senior US Administration officials, stated at a press briefing.

We have resolved to focus and try to make progress in the bilateral investment treaty negotiations, which had been static in the last several months, he said. Minister Humayun Akhtar Khan was hopeful that the two countries would be able to achieve a consensus on a few unresolved issues in BIT negotiations but added no timeframe has been fixed as yet.

The minister, who also interacted with the American entrepreneurs, expressed satisfaction with the American investors growing confidence in the Pakistani economic potential and its consistent policies and in this context cited continued increase in US investment in various sectors in recent years. However, he added, the conclusion of a bilateral investment treaty would give additional comfort to the new investors.

The fact that Pakistan received a record 8.4 billion dollars investment last year signifies the tremendous trust and confidence of the international businesses in the strength of the economy. Pakistan, he said, expects greater inflows of American investment into potential areas of oil and gas, service sector and power generation. At the same time, the Commerce Minister noted Pakistan has also bolstered its exports from a mere 7 billion dollars a few years back to over 17 billion dollars last year.

Khan, who discussed progress towards creation of Reconstruction Opportunity Zones (ROZs) in Pakistan with senior American officials, sounded confident that these would help spur further growth in the Pakistani exports to the United States. A draft legislation on materialising ROZs initiative is expected to be tabled before the American Congress next month.

We are in touch with the House and Senate Finance Committees, which would handle the issue of ROZs, said Khan while also reporting US administrations full support for the initiative. The products from these special zones would enter the United States duty-free and are expected to boost Pakistan's efforts to reduce poverty as well as curb the problem of extremism through economic development.

http://www.brecorder.com/index.php?id=603211&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Government committed to facilitate investors: President ​*
RAWALPINDI (August 09 2007): President General Pervez Musharraf on Wednesday said that the government was committed to facilitating all investors and would ensure the provision of every possible assistance and incentives to them.

The President was talking to a delegation of Merrill Lynch International led by its Chairman Kevan V Watts, who called on him at the camp office here on Wednesday. The President welcomed the delegation and appreciated their move for investment in Pakistan.

Kevan V Watts lauded the far-reaching economic reforms introduced by the Pakistani government, which not only helped stabilise the economy but also served as tremendous incentive to attract valuable foreign investment.

He said there was an excellent investment-friendly environment in Pakistan and thanked the Government of Pakistan for facilitating his group. Federal Minister for Privatisation and Investment Zahid Hamid was also present on the occasion.

http://www.brecorder.com/index.php?id=603257&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*German Consul General for boosting trade with Pakistan ​*
SUKKUR (August 09 2007): German Consul General (CG) Hans Goachin Kandrelan has stressed the need to boost existing two billion dollars trade between Pakistan and Germany. In a meeting with District Nazim Syed Nasir Hussain Shah at the DCO Office here on Wednesday, he noted that textile machinery, chemicals, instruments and a lot of other goods could be imported to Pakistan from Germany.

Similarly, he said, rice, dates, leather goods and many other things could be exported from Pakistan to Germany. Hans Goachin mentioned several projects were initiated in Pakistan as joint venture, and there was great potential for more joint investment projects.

Syed Nasir Shah, on the occasion, apprised German CG that there was a scope for establishing agriculture-based industries in Sukkur. He assured investment environment for foreigners was suitable in the country. He said complete safety would be provided to investors besides required infrastructure facilities for setting up industrial units.

http://www.brecorder.com/index.php?id=603258&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Surveys on family budget, small home industries planned ​*
ISLAMABAD (August 09 2007): The government has planned to conduct surveys on family budget, small and household manufacturing industries, water supply and sanitation and on wholesale and retails trade, hotel and restaurants to provide government the accurate statistics for planning, it is learnt.

Sources said that the Federal Bureau of Statistics (FBS) would conduct these surveys besides studies on forest products, input-output structure of crops including horticulture and floriculture, stockbrokers, money changers, exchange companies and inland water transport. The purpose of these studies and surveys is to have the exact statistics about these sectors. No government could have the concrete planning if it does not have the exact figures about different sectors, they added.

It is further learnt that the FBS has to conduct census in 2008-09 on construction and rent, rebasing of producer price index (PPI) and enhancing its coverage, social, recreational, community and personal services, mining & quarrying, electricity & gas distribution (including CNG, LPG) non-governmental organisations (NGOs), warehousing and storage besides study on use of agriculture machinery.

The National Education Census, that covers over 0.245 million educational institutions of all categories from primary to university level run by public, private, NGOs, autonomous bodies, armed forces & community & deeni madrassas etc from all over the country including FATA, Northern Areas and AJK, was conducted in 2005-06. The survey was completed in 7 months at a cost of Rs 100 million against provision of Rs 185 million.

A project on Rebasing of National Accounts at a cost of Rs 283.104 million has been approved by the CDWP, involving 25 surveys and studies to be carried out during the period 2006-07 to 2008-09 in areas not henceforth covered as well as updating of data which had not been updated since many years. List of surveys and studies include Pakistan Social and Living Standard Measurement (PSLM) survey.

The PSLM 2007-08 has been planned and field operation is in progress from July 2007 whereas time use survey 2006-07 is being conducted in collaboration with Finance Division in the country with a sample size of 20,000 households.

The overall aim of this survey is to find out the macroeconomic implications of unpaid care work (such as caring for children and sick people and general housework). Field operation and data processing of the survey is in progress. Preparations for National Population and Housing and Mauza Census are in progress. Mauza census will provide frame for the Agriculture Census 2010 along with information about social conditions and facilities available in Mauzas/Dehs.

The coverage of data on trade has been improved to cover all custom entry and exit points at the national level. Arrangements have been made with the SBP for releasing data on import & export of services and a business register is proposed to be set up to keep up-to-date data on industrial sector.

http://www.brecorder.com/index.php?id=603239&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*5,500 workers being trained for South Korean market ​*
ISLAMABAD (August 09 2007): Overseas Employment Corporation (OEC), Ministry of Labour, Manpower and Overseas Pakistani is imparting training to 5,500 workers in line with market requirements to send them South Korea. Official told APP here on Wednesday that Korea is expected to import 5, 500 skilled Pakistani labour in this year.

He said OEC has so far trained over 3,800 Pakistani workers about Korean language and culture, adding, the remaining workers would be trained soon. After the training, official said Korean delegation will visit Pakistan to hold the test of applicants for recruitment.

He said the Korean Labour Ministry has already lauded the performance of Pakistani labour as they are facing quite less problems of Pakistani working force as compare to labour from other countries like India and Sri Lanka. He advised the people to avoid unauthorised technical trade test centres and private agents who are misleading the people for employment in Korea.

He added some private test centres and agents are charging huge amounts for conducting Korean language training test on pretext of sending them to Korea for employment.

Under a Memorandum of Understanding (MoU) inked between the governments of Pakistan and Republic of Korea, he said only Overseas Employment Corporation (OEC), a public sector organisation, has been authorised to recruit, train and send Pakistani workers to Korea on work visa. Around 7.5 million overseas Pakistanis live in various countries including United States, Canada, Europe, Middle East and Far East.

http://www.brecorder.com/index.php?id=603296&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Reforms create enormous growth in telecom sector: Prime Minister ​*
ISLAMABAD (August 08 2007): Prime Minister Shaukat Aziz on Tuesday said deregulation and reforms in the telecom sector accompanied by high disposable income has created enormous growth in this field.

The Prime Minister was talking to the Chief Executive Officer of PTCL, Walid Irshaid who called on him at PM House. The Prime Minister said as a result of reforms, the foreign investment had rapidly increased, with a total number of mobile phones crossing 60 million, teledensity increasing by 40 percent and tariffs reduced dramatically for local and foreign calls thus benefiting the people.

The Prime Minister said thousands of new jobs had been created in the telecom sector and more would be created in future as this sector expands and grows. Walid Irshaid updated the PM on growth plans for PTCL on fixed lines and cellular business. He said the company would continue to expand and serve the market with new services and products. He said Pakistan telecom sector was attractive, growing and the de-regulatory and policy framework was world-class.

http://www.brecorder.com/index.php?id=602871&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*94,000 tons mango exports fetch $31.33 million ​*
KARACHI (August 09 2007): Pakistan has earned $31.33 million till July 31, 2007 by exporting 94,000 tons mangoes to United Arab Emirates (UAE), Saudi Arabia and other Gulf and Far Eastern countries and Europe.

Sources in Pakistan Horticulture Development & Export Board (PHDEB) told Business Recorder on Wednesday that the country had achieved almost 75 percent of its 120,000 tons mango exports target.

They said that this year mango exports were started on May 20, 2007 and may end by September 15. About production of the mango crop, sources said that it might come to around 1.6 million tons this season, out of which 0.12 million tons, worth $39.99 million, may be exported, which would be a mere 7 percent of total output.

Sources said that UAE has been top importer of Pakistani mangoes with 45, 000 tons, worth $14.99 million, followed by Saudi Arabia with 16,000 tons, worth $5.33 million.

According to sources, 15,500 tons mangoes, worth $5.16 million were exported to the Gulf countries like Iran, Oman, Muscat, Kuwait, etc, while 11,500 tons, worth $3.83 million, went to the United Kingdom.

They said mango exports to European countries like France, Germany, Norway, etc, amounted to 4,000 tons, which fetched $1.33 million worth, and the rest 2,000 tons mangoes, worth $0.66 million, had gone to the Far Eastern states like Singapore, Malaysia, etc.

Sources said the country had two months viz August and September ahead to achieve the export target, which was increased by 20,000 tons with an additional worth of 6 million dollars this year.

Referring to the monthly 'Friday Meetings' of PHDEB with mango exporters, which was held on August 3 last, sources said that participants of the meeting expressed their satisfaction over mango exports to Europe as per new "weight standardisation" rules and urged Islamabad to extend the application of new laws to other countries, too.

They said that the exporters were appreciative of the new rules and asked the government to ensure the implementation of new laws more strictly, adding that in the wake of tough competition world-wide Pakistan should focus on infrastructure development, which covers plucking, pre-cooling, treatment, packing and logistics.

The meeting also urged the growers and exporters of the 'king of fruits' to use latest technology, coupled with proper technical know-how, to make the perishable produce more qualitative, sources said.

Future of mango export is bright, as the newly promulgated rules on the weight standards and fixation of exporting date by Islamabad were decisive to avoid irregularities in the export process, the meeting observed.

Meanwhile, Mohammad Iqbal, Chief Operating Officer (COO), PHDEB, said that efforts were underway to create better marketing conditions for Pakistani mango in the world in general and in Europe in particular.

"We have kicked off promotion of mango exports in Germany by displaying it in the superstores, and the same would be done in other European countries soon", he said.

About reasons behind low quantity mango exports to Europe, he said: "Reasons are not concerned with the issues like quality standards set by the World Trade Organisation (WTO) or EurepGap (European retailers protocol for good agricultural practices) but they are related to the logistics problems". He said: "Besides higher airfreight for mango export to Europe the cargo aircraft has low capacity as compared to that of the ships, which are used for exports to the Middle Eastern countries.

"Less capacity in the aircraft and higher freight rates minimise the quantity of mango exports to Europe", he added. "What they (Europeans) want us to ensure is the application of EurepGap from growing to exporting stage and certified farms and orchards", Iqbal said.

"We are going to audit certification of EurepGap in Punjab by the end of August and would soon make it possible in Sindh", he added. It may be recalled that the ministry of commerce had introduced new amendments {S.R.O 397 (1)/2007} in the Export Policy Order, 2006 to ensure a better value of the Pakistani produce in European markets and clear the image of country across the globe.

Being encouraged by the new set of rules about packaging and weight variations the mango exporters had demanded of the ministry of commerce to also introduce legislation on the standardisation of the quality of commodities.

http://www.brecorder.com/index.php?id=603212&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*All set to start second phase of constructing 20 dams in NWFP ​*
ISLAMABAD (August 08 2007): The NWFP government is all set to start second phase of constructing 20 small dams in the province, which will be funded by the federal government from the Public Sector Development Programme (PSDP), sources told Business Recorder on Tuesday.

The sources said that the Frontier government will inaugurate the construction work of Loughar Dam Project in District Karak on Wednesday. The sources said in the first phase the NWFP government had inaugurated the Dur Malik Dam in Lachi, Kohat district. The Rs 336 million project will irrigate 2,500 acres of land and would provide drinking water to a population of 11,200 of the area, the sources said.

The total cost of constructing 20 small dams is over Rs 3.6 billion. However, the individual cost of each project is not more than Rs 500 million. The total area to be irrigated by the dams has been estimated at 9, 250 acres of land in various districts of the province. The sources said 20 small dams projects have already been approved in principle by the Planning Commission.

Ministry of water and power is the sponsoring agency of Loughar Dam Project that would cost Rs 227 million. The NWFP irrigation and power department is the executing agency of the project, the sources said.

The proposed reservoir, with a storage capacity of 3860-acre feet will provide assured supplies to a command area of 1,274 acres throughout the year. The project envisages the construction of 650 feet long and 100 feet high embankment dam, the sources added.

According to the sources, the NWFP government is of the view that an amount of Rs 276 billion has been allocated to the water sector projects in the Medium Term Development Framework (MTDF) 2005-10 including an amount of Rs 218 billion for federal development programmes and all the 20 small dams should be funded from this allocation. This demand has been accepted by the Deputy Chairman Planning Commission Engineer Dr Akram Sheikh in principle. However, the Planning Commission would look into the dams individually after the compilation of PC-I of the each project.

The sources said the NWFP irrigation system comprises 83 flow irrigation schemes, 45 lift irrigation, 7 water storages and 762 tube wells. The total length of canals is about 4335 kms covering 2.277 million acres of agriculture land. About 0.284 million acres area will also come under the cultivation by completion of Gomal Zam Dam, Pehur High Level Canal, Gandialli dam and some other small dams.

The sources said small dams could attract funding from international donors like World Bank (WB) and the Asian Development Bank (ADB). However, the sources gave no detail that how much amount has been pledged by the ADB or WB for the 20 small dams' project. However, the sources said Loughar Dam Project has no foreign funding either from the ADB or the WB.

http://www.brecorder.com/index.php?id=602883&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Wapda forms company to raise Rs50 billion: 969MW project​*
ISLAMABAD, Aug 8: The Water and Power Development Authority (Wapda) has set up the Neelum-Jhelum Hydroelectric Project Company (NJHPC) as a special purpose vehicle (SPV) to raise about Rs50 billion for the 969MW project in Azad Kashmir for protecting Pakistans priority rights over the Neelum River.

A senior Wapda official told Dawn that the estimated cost of the project on its completion was expected to increase by 41 per cent to $2.14 billion, although its contract had been awarded to a Chinese consortium, comprising China Gezhouba and the CMEC China, at Rs90.90 billion ($1.5 billion).

He said a meeting presided over by Minister for Water and Power Liaqat Ali Jatoi was informed on Tuesday that the NJHPC had been registered with the Securities and Exchange Commission of Pakistan as an SPV to raise about half of the project cost in foreign exchange through bonds and loans.

The company will be run by a seven-member board of directors led by Wapda Chairman Tariq Hamid.

The remaining amount  half of the project cost  will be provided by the federal government. The official said a lot of efforts made by Wapda and the federal government could not succeed in arranging foreign exchange component of the project cost and hence the new project company was established for the purpose.

Based on the bid price of $1.5 billion (Rs90.90 billion), the actual project cost phasing over a period of eight years would in effect reach Rs128.4 billion ($2.14 billion) on completion. This also included interest payments of more than Rs29 billion, he said.

The plan also suggests that the final cost of the project will be more than 105 per cent higher than Wapdas contract estimate of Rs62.25 billion ($1.04 billion).

The government has released Rs5 billion as mobilisation advance to the executing agency to start the project without further delay. Pakistan will need to spend $87 million for the start-up operations in the first year of the projects implementation.

On completion, the project will generate electricity at a cost of Rs1.91 per kilowatt hour (unit), which is much higher than the engineers estimate of Rs1.42 per unit, but significantly lower than the tariff currently being offered by the government for thermal power projects.

According to Wapdas cash plans, the project will require $125 million (Rs7.5 billion) in the second year of implementation, followed by another $235 million (Rs14 billion) in the third year.

In the fourth year, Wapda will spend $271 million (Rs16.3 billion) and $382 million (Rs23 billion) in the fifth year. In the sixth year, $444 million (Rs26.6 billion) will be spent on the project and then about $348 million (Rs21 billion) in the seventh year.

In the final year of implementation, the project will eat up another $248 million (Rs14.8 billion), leading the total cost of the project to $2.14 billion (Rs128.37 billion), although the bid quoted by the lowest contractor is Rs90.9 billion.

The fate of the 969MW Wapda project has been hanging in balance for eight years although it is considered crucial to secure Pakistans priority rights over Neelum waters  a tributary of the Jhelum River  threatened by the Indian move to use its waters for power generation and diversion.

Bidding for the project was held about a year ago. Wapda received three bids for the project. The lowest $1.3 billion bid given by the Chinese consortium was recommended by Wapda to the federal government for approval.

The project has already been delayed by more than eight years because of lack of public sector allocations for the project. Several rounds of bidding were held and cancelled for one reason or the other. The project should have been started in 1999 as originally planned. It is estimated to take at least eight years for completion.

Pakistan had stopped India more than a year ago from completing a 22km tunnel that sought to construct a storage-cum-power project and divert Kishanganga (Neelum) waters to Wullar Lake in violation of the Indus Waters Treaty 1960.

Later, India offered to alter its project design but Pakistan rejected that plan as well. Like the Chenab, the Jhelum River of which Neelum is an integral part, belongs to Pakistan under the 1960 treaty.

Under the treaty, India could not change the flow of the Jhelum River even for power generation that may affect any Pakistani power project. But if Islamabad fails to construct the project and there is no power project in Pakistan for that particular river, India could divert the river for run-of-the river project but without any storage.

Under the treaty, Pakistan has exclusive rights to use water of western rivers  Indus, Jhelum and Chenab  and eastern rivers  Ravi, Sutlej and Beas  have been assigned to India.

http://www.dawn.com/2007/08/09/ebr1.htm


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## Neo

*ADB links $400m loan to SECP restructuring: Market reforms​*
ISLAMABAD, Aug 8: The Asian Development Bank (ADB) has linked the release of $400 million loan for the Pakistans second generation market reforms to institutional independence and capacity-building of the Securities and Exchange Commission of Pakistan (SECP), changes in some of its laws and the commissions conversion into the Financial Services Commission of Pakistan (FSCP).

The bank has asked the government to draft and submit to the parliament a law codifying the FSCP. This law would establish FSCP based on SECP and strengthen its enforcement powers by enhancing its independence, governance and accountability.

The law should be a framework law that incorporates by reference to sector-specific laws such as those governing securities markets and intermediaries, insurance, private pension funds, and non-banking financial companies. The FSCP will have the powers to administer these laws.

Under the ADB conditions, the government will have to continue with the exemption from capital gains tax on income earned from individual investment in shares to facilitate long-term capital formation. However, a turnover tax on such investment will be introduced to reduce the high volume of speculative short-term investment by individuals.

The second generation reforms also seek the FSCP to be in charge of regulation and supervision of non-banking financial institutions (NBFIs) by clearly codifying its powers, functions, governance and accountability in line with international best practices.

In recent years, financial sector regulatory bodies have been granted greater independence in many countries to ensure that they can professionally perform their statutory functions in the public interest and be largely free from political interference. An agency responsible for regulation and supervision of NBFIs and markets should, in general, have authority and capacity comparable to that of the agency in charge of banking and for similar reasons, the board of directors of ADB said in its recommendations for the release of the loan.

The SECP has to introduce competitive remuneration for senior officers to fill all existing vacant positions. The commission has been asked to designate specific positions for commissioners responsible for law, accounting and auditing given the importance of these areas for effective financial sector regulation and supervision.

Another commissioner should be charged with assessing the economic impact of regulatory initiatives.

By June 2009, FSCP will undertake a self-assessment of compliance with international best practices in the regulation and supervision of securities markets and private pension funds.

This assessment could provide the basis for formulating another round of policy reforms to address remaining weaknesses, if any, the bank said.

The government will have to address tax policies that impede the formation of holding companies. This is likely to encourage the establishment of holding companies, including financial institutions to facilitate sound risk management practices and supervision.

The FSCP will adopt regulations on the reporting requirements of holding companies that own or control NBFIs. The reporting should comprise ownership structure and relationship of companies within the holding company group, disclosure of inter-company and related party transactions and public disclosure of audited financial reports in accordance with international accounting standards.

To facilitate investor protection and capital formation, ADB seeks replacement of the Securities Ordinance of 1969 with a new substantive law that provides a legal framework for modern securities markets. The FSCP has to be mandated with adequate legal powers and responsibilities for the regulation and supervision of the securities markets and intermediaries, private placements, public offers of listed and unlisted securities, corporate governance practices and related matters in line with international best practices.

For this, the government will have to grant FSCP the power to approve or disapprove audit firms authorised to audit NBFCs, listed companies and publicly tradable companies. This will strengthen SECPs (FSCP) capability to ensure quality and consistency in the financial information available to investors and the regulator.

The FSCP is to enhance market transparency and best execution of customer orders by requiring the stock exchanges to establish an inter-market surveillance committee. The committee would meet regularly to coordinate stock market surveillance and oversight of securities that are traded on more than one stock exchange.

The ADB also seeks the stock exchanges to prepare plans for self-regulation for SECP (FSCP) approval. These plans would identify the functions to be performed by the exchanges in their capacity as self-regulatory organisations under the Securities Law and clearly define sub-plans for areas such as listed companies, market surveillance and on-and-off-site inspections of professional market participants.

These sub-plans should lead to the adherence to sound business practices and applicable laws and regulations including financial responsibility requirements and quality of execution of trade on behalf of customers.

The government is to clarify SECPs legal mandate for its powers, functions and responsibilities over NBFCs and services.

As an intermediate solution, amendments will be made in the Company Ordinance to empower SECP to regulate mutual funds and strengthen SECPs powers to establish prudential requirements for NBFCs, the ADB demands.

http://www.dawn.com/2007/08/09/ebr3.htm


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## Neo

*Europe offers huge market to boost exports ​*
LAHORE: Europe is the most lucrative business destination with a huge market for Pakistani exports. The market is so enormous that Pakistans exports could be doubled within a short period and with modest efforts.

This was stated by Kashif Younas Mehar, head of a 10-member delegation of the Lahore Chamber of Commerce and Industry on return from a nine-day successful business tour of Germany and France.

Kashif Younas said that the IT sector of Pakistan alone could boost exports, but a lack of proper information was a major impediment.

Not only would Pakistan gain from a huge European market but vice versa Europe too would gain access to Afghanistan and the land locked Central Asian States through Pakistan once both the sides develop bilateral trade relations at the desired levels.

It would be a win-win situation for both sides, he added. Kashif said that the biggest trouble, now-a-days being faced by Pakistan is the Western medias negative and biased news coverage which is tarnishing the image of Pakistan.

The government would have to work on a war-footing to counter this situation otherwise Pakistan would lose business in the European Markets.

The head of the LCCI delegation said that the Europeans have no doubts about Pakistans potential but only due to the tarnished image of Pakistan thanks to the western media they hesitate to undertake any joint venture or invest in this country.

The Europeans, particularly the Germans are much impressed with the GDP growth witnessed by Pakistan and its economic reforms. 

They know well that Pakistans economic growth is the fastest in the region but the media avoids highlighting this achievement.

Kashif said that the LCCI delegation had visited a number of business organisations besides having a number of one-to-one meetings and in all these meetings the core issue was Pakistans falsely tarnished image.

The head of the LCCI delegation lauded the role of commercial attaches appointed in Pakistan embassies in Germany and France saying that these people are putting in their best efforts but all their endeavours are defeated by negative portrayal of Pakistan in the west.

Viqar Khilji, Commercial Consular at the Pakistan Embassy in Berlin, Feroze Junejo, Head of Commercial Division at the Pakistan Consulate in Frankfurt, Tariq Puri Economic Minister in Brussels and Jehanzeb Khan, Commercial Consular in Paris deserve much appreciation for their commendable job. These people are serving the country wholeheartedly he said.

Marble, steel, mining, heavy machinery meant for construction and port handling, copper extraction, energy, textiles and fruits; particularly mangos, are a few strong areas through which Pakistan could earn billions of dollars in foreign exchange. He said that Brussels, the capital of the European Union, has a huge demand in IT sector, and with a little focus on the IT sector our exports could reach unprecedented levels. Pakistan could be a befitting market after China and India, he reiterated.

The head of the LCCI delegation said that the visit was so successful that a high-level business delegation of German Near and Middle East Association, Germanys oldest organisation for bilateral economic relations between Germany and countries of the Near and Middle East region, will visit Pakistan in November 2007 to explore business and investment opportunities.

The LCCI delegation also had meetings with German Association of Small and Medium-sized Enterprises and the Foreign Trade Department of the Chamber of Commerce, Berlin State.

A large number of businessmen and representatives of various German Industries attended the meeting. The German business communities presence was enough to prove that they want to do business with their Pakistani counterparts.

Ms Barbara Bonrath Kaster, Head of Asia, Americas, Western Europe division, gave a detailed briefing to the LCCI delegation. stressing the need for chalking out a joint strategy to promote business-to-business interactions.

http://www.thenews.com.pk/daily_detail.asp?id=67498


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## Neo

*Mega projects discussed ​*
LAHORE: Punjab Chief Minister Chaudhry Pervaiz Elahi and State Bank of Pakistan Governor Shamshad Akhtar in a meeting on Wednesday discussed the ongoing development process, mega projects and financial discipline.

The SBP chief called on Punjab chief minister at the chief ministers secretariat and discussed the financial matters of the province. 

The chief minister said available resources are being utilised in a transparent manner through an effective system of monitoring for consolidating the process of social development in the province. He said Punjab has become a focus of attention of international financial institutions due to which a record increase has been registered in local and foreign investment.

He said the development budget for education, health, agriculture, infrastructure and other sectors had been increased substantially. He said all-out efforts had been made for eliminating poverty and unemployment and to make Punjab prosperous in the light of Vision 2020.

He said reforms introduced in education, health, industries and other sectors of development have resulted in relief to the masses. He said the government has taken practical measures for the development of the agriculture sector and socio-economic uplift of farming community.

He said subsidy on the power tariff for tube well, fixation of flat rate of Abiana, due returns to the farmers for their produce and soft-term loans to the cultivators at union council level have left a positive impact on agri-economy of the province. 

The chief minister further said in order to provide better health facilities to the people, emergency service has been modernized while all health centres in the province have been upgraded and availability of doctors, paramedical staff and medicines have been ensured. He said the Rescue-1122 has been very successful in providing relief to the victims of accidents and calamities and now its scope is being extended to all major cities of the province. 

He said the monetary policy will be helpful in maintaining financial discipline. 

The governor appreciated the reforms process introduced in education, health, agriculture, industries and other sectors in the province. She said Punjab is playing an important role in socio-economic development of the country due to which jobs are being generated and poverty rate has been reduced.

http://www.thenews.com.pk/daily_detail.asp?id=67506


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## Neo

*Incentives for manufacture of telecom equipment in Pakistan ​*
ISLAMABAD: The government will soon offer a 10-point incentive package to foreign investors for manufacturing telecom equipment in Pakistan to save foreign exchange, a senior official said Wednesday.

The official from the Telecommunication Ministry said consultations have been held with foreign investors and a special committee is finalising a package in the light of their suggestions.

The incentive package will be announced soon after its approval at the highest level, he said, pointing out that if the plan was implemented it would be first time telecom equipment including mobile sets would be manufactured locally.

The incentives will include duty free import of machinery, smooth availability of raw material, reduction in corporate taxes, concession in power supply rates, human resource development, consistency in policies and other measures, said the official. 

According to statistics, telecom equipment worth around $1 billion was imported by Pakistan during fiscal 2006-07, 26.7 percent more than the imports during the year before that. 

Imports of mobile phones alone amounted to $506 million during July to March in the last fiscal year, showing an increase of 26 percent over imports in the corresponding period during 2005-06.

The official said a Centre would be established in Islamabad at a cost of $4.5 million to develop human resource to cater to the needs of manufacturing of equipment in the telecom sector.

He said Nokia has already established a testing facility and similarly facilities would be set up at other places across the country.

The official said the ministry has also evolved a strategy to set up centers of excellence in universities to impart training in the field of telecom industry.

He said over 400 scholarships have so far been awarded to students in the top-level universities such as Ghulam Ishaq Institute and National University of Science and Technology.

The students of far-flung areas would be provided with opportunities to bring them into the mainstream and enable them to utilize their potential to optimum level in the industry. 

As a result of promotion of manufacturing sector thousands of jobs would be available for trained people in the competitive sector, he said.

According to business circles, there are more than 1,75,000 mobile phone shops running their business across Pakistan, generating employment for over 6,45,000 people.

Telecom sector is becoming a major employer of skilled jobs as its exponential growth has resulted in creation of 80,000 jobs directly and 500,000 jobs indirectly in the recent years. At present, telecom sector accounts for two per cent of Pakistans GDP.

http://www.dailytimes.com.pk/default.asp?page=2007\08\09\story_9-8-2007_pg5_9


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## Neo

*Pakistan to import 1,100MW electricity from Iran in 2009, NA told​*
* Some members walk out from session over power outages

ISLAMABAD: The Water and Power Development Authority (WAPDA) will import 1,100 megawatts of electricity from Iran in 2009 for supply to Gwadar and other coastal areas of Balochistan, Water and Power Minister Liaqat Jatoi told the National Assembly on Wednesday.

Jatoi said the contract for import of electricity had been given to Irans Tavanir Company. The minister was responding to questions by opposition members on what steps the government was taking to check the frequent power outages in the country. 

Jatoi told the house that the country was expected to produce 8,728MW a year by 2010. He said that the public and private sectors were carrying out several hydroelectric and thermal projects to meet Pakistans electricity demand. He said that his ministry planned to increase power generation in the current year by installing two rental gas turbine power stations. He said one power station of 150MW capacity would be installed in Lahore and another of 136MW capacity at Bhikki. He said the Lahore power station had been commissioned, while the Bhikki power station would be commissioned in October.

Jatoi said that Larkana Division-II had reported 44.4 percent line losses in 2005-06 and 43.5 percent in May 2006-07. He said that WAPDA had fined power thieves Rs 1120.212 million in 2005-06, Rs 725.728 million in 2004-05 and Rs 683.831 million in 2003-04. He said that 28,652 electricity theft cases and arrest of 1,289 power pilferers were recorded in the last three years.

He said the Lahore Electric Supply Company had reported Rs 170,66.67 million line losses and the Gujranwala Electric Power Company Rs 6,132.22 million in line losses in the last two years.

To a question, Jatoi said the Multan Electric Power Company (MEPCO) had received 3,390 applications for agricultural tube well connections between June 1 and December 2006. He said that MEPCO had issued 742 tube well connections so far and planned to issue another 4,400 connections in the current financial year. He said the ministry had no plans to fix uniform rates of electricity up to 500 units.

Some members from the Muttahida Quami Movement, the MMA and the PML-N staged a token walkout from the session to protest against the lingering power shortage in Karachi.

http://www.dailytimes.com.pk/default.asp?page=2007\08\09\story_9-8-2007_pg7_15


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## Neo

*Growth momentum may hold: Banks warned of Basel II challenge ​*
KARACHI (August 10 2007): Future growth projections of the economy suggest that the current growth momentum in the banking system may prevail in the near future, while the implementation of Basel II would be a great challenge, both for the regulator and the banks.

The central bank, in its Banking System Review (BSR) for the 2006 calendar year, said: "The banks are expected to maintain their previous growth trend during the 2007 calendar year on the back of steady flow of workers' remittances and substantial foreign exchange inflows in the form of foreign direct investment (FDI)".

The higher loan growth during the last couple of years, which also resulted in outstanding performance of the banking system, might have become a concern as well as a challenging target, the central bank said. "The expected slow down in loans' demand in near future may put some pressure on net interest margins of the banks," said the central bank.

Besides weeding out the smaller banks, they helped in increasing the healthy competition, improving the governance standards, and promoting efficiency and productivity, the BSR said.

Going forward, the implementation of Basel II would be a great challenge both for the regulator and the banks. Basel II is not only aimed at strengthening the risk management standards, but is also helping the banks to align their risk with the capital, it said. The BSR further said: "In line with the roadmap, the parallel run has started in July 2006."

The central bank said the demand from the small and medium enterprises (SMEs) and agriculture segments of the economy, which had great potential, would also pave the way for loan growth. However, the promising growth in deposits and the increasing capital base might encourage banks to increase their business volumes in their core business activity to maintain the trends in their profits and return on assets (RoE).

On capital front, the central bank said since the banks would further need to increase the capital base to meet the rupees four billion requirements by the end of 2007, the strengthening of solvency profile of the banking system was expected to continue for this year too.

The maintenance of the growth trends would become a challenge for the banks in their quest of maintaining the RoE, especially when the capital base was also increasing, it said.

The central bank said that capital position of the banks was expected to further fortify the enhanced minimum capital requirement (MCR) for the next couple of years and sustained earnings support. Growing mergers and consolidation, which had greatly shaped our banking system during the last few years, were expected to further consolidate and contribute towards the stability of the banking system, said the central bank.

http://www.brecorder.com/index.php?id=603542&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Thar power plants: Chinese group willing to re-start work ​*
KARACHI (August 10 2007): Shenhua Group of China, which had abandoned the coal-based power project in due to disagreement on power tariff, has again shown interest in setting up two power plants of 350 MW each in Thar.

Sources in Sindh Mines and Mineral Department told Business Recorder here on Thursday that Shenhua Group had sent a green signal that in case of finalisation of agreed tariff rates, it could re-start work on the project. They said ministry, too, wanted the Chinese group to resume the work on the two power plants at the earliest.

This would not only provide much needed 700 MW power to the electricity-deficient areas, but would also save a huge amount of money already spent on feasibility and other works, they said. The other option, which is under consideration, was to resume work on the two power plants by handing them over to newly established Coal Mining Company, which was under the administration of the Federal government, said the sources.

The most viable option, available to the government - Shenhua Group and Coal Mining Company - would be chosen after consultation with the Federal and provincial authorities. It may be pointed out that Shenhua Group started work on Thar coalfield in 2002. It spent over 100 million dollars to conduct two investigation studies about the viability of the project, the sources said.

"After concluding its investigation and preparation of a feasibility report, the group was all set to construct the proposed power plants, but the crucial issue of tariff rate on power generation halted the project," said the sources.

The Mines and Mineral Department sources revealed that the group had stopped work in 2004 prior to the official announcement, which was made in the 2007. The group officials had left the project, but negotiations on tariff rates continued and finally Shenhua announced to abandon the project.

Earlier, Sindh Mines and Mineral Development Minister Irfanullah Khan Marwat held Water and Power Development Authority (Wapda) responsible for withdrawal of Shenhua from coal-based power projects in Thar.

He said the tariff rate was already decided with Shenhua at 5.67 cents per kilowatt hour (KWH), but Wapda disagreed with the rate and revised it unilaterally at 5.39 cents per KWH, compelling the group to leave the project.

It is hoped that Shenhua might re-start work on the project when the committee, set up by President Pervez Musharraf, comprising Irfanullah Marwat and Mukhtar Ahmed of National Electricity Power Authority (Nepra), would finalise the recommendations of tariff rate on coal-based power projects.

Had the Wapda accepted 5.67 cents per KWH rates and not insisted on its revised rate of 5.39 cents per KWH, then it would have been cheaper, sources said. The said that at present the most reasonable tariff rate would be between eight and 10 cents per KWH, which was far higher than the previously decided rates.

http://www.brecorder.com/index.php?id=603571&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*'Public-private partnership can accelerate economic development' ​*
ISLAMABAD (August 10 2007): The pace of economic development in Pakistan can be accelerated by developing a strong partnership between the public and private sectors, as was done by the developed states of the world to accelerate the tempo of progress in their countries.

These views were expressed by the Chief Executive Officer, Infrastructure Project Development Facility (IPDF), Aijaz Ahmad, while addressing a seminar on "Draft Public Private Partnership Standardised Contractual Provisions" here on Thursday.

The seminar was organised by the IPDF to initiate a consultative process between the representatives of public and private sector organisations for finalising a framework for Public-Private Partnership (PPP).

The IPDF has been established by the government of Pakistan, under the aegis of the ministry of finance and economic affairs, to facilitate PPP projects by providing expertise and hands-on support to public sector implementing agencies. In addition, the government has also constituted a PPP policy task force under the chairmanship of Advisor to the Prime Minister on Finance, Dr Salman Shah to provide a forum for the stakeholders to formulate recommendations on the various components of the PPP framework, ie legislation, risk management framework, standardisation of contractual provisions and viability gap funding.

Besides IPDF CEO Aijaz Ahmed, other speakers included Dr Asad Mi Shah, Member (Infrastructure) Planning Commission Ejaz Ishaq Khan, Legal Consultant IPDF; Ikram ul Haque, Manager Legal Affairs IPDF; and Adil Anwar, Head IPDF's Legal Affairs. A number of leading bankers, investors, chartered accountants, lawyers, insurance executives and other stakeholders attended the seminar and also actively participated in discussions and presented their opinion over the draft PPP framework.

In his welcome address, Dr Asad Ali Shah, Member (Infrastructure) Planning Commission, said that the world progress lies in the strong interaction between the public and private sectors. In Pakistan, the government alone cannot undertake infrastructure projects due to financial constraints and thus there was a need for active participation of the private sector in the national development effort. Infrastructure services can have a direct and immediate effect on living standards and poverty alleviation efforts. Potable water and sanitation can dramatically reduce debilitating and life-threatening diseases, while electricity can transform the quality of life for urban and rural citizens, better roads can connect isolated communities to markets and modem modes of telecommunication can empower poor people by putting them in touch with markets, services and the society at large, he added. Government is also working on the establishment of PPP cells at all terms.

The IPDF Legal Consultant, Ejaz Ishaq Khan, stated that with a view to facilitating the public and private parties to expeditiously achieve financial close and efficiently implements the PPP agreement, IPDF has prepared draft standardised PPP contractual provisions in the light of international best practices.

"A public-private partnership is a medium to long-term relationship between the public and private sectors, involving the sharing of risks and rewards of multi-sector skills, expertise and finance to deliver desired policy outcomes," he explained.

M. Ikram Ul Haque, Manager Legal Affairs IPDF, was of the view that the tight fiscal constraints require innovative approaches, away from the traditional role of the government as the service provider, to ensure that the massive investment needs are financed with the assistance of the private sector.

http://www.brecorder.com/index.php?id=603634&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'Furniture Pakistan' firm to promote furniture clusters ​* 
KARACHI (August 10 2007): Furniture Pakistan, a company based on the concept of "Private-Public-Partnership" has been established to promote furniture clusters in the country. It is part of the Ministry of Industries, Production and Special Initiatives' (MOIP&SI) initiative to support different industrial sectors of Pakistan.

An initial amount of Rs 590 million has also been approved by the Ministry to start the implementation of proposed development projects in the Furniture Sector Development Strategy (FSDS).

Small and Medium Enterprises Development Authority (Smeda), which was assigned the task to prepare a comprehensive strategy for the development of furniture sector of Pakistan, is leading the project. The process was initiated in June 2006.

As part of this effort, a private sector led Strategy Working Group (SWOG), consisting of all major stakeholders of furniture sector from all major furniture clusters of Pakistan was formed. SWOG consists of 20-25 members from the cities/clusters of Gujrat, Chiniot, Lahore, Karachi, Peshawar, Rawalpindi and Gujranwala. Value chain participation in SWOG was also assured including manufacturers, exporters, retailers, designers, academia, craftsman, associations and forestry, etc.

After a comprehensive consultation process during the last one-year (including visits of some foreign experts and benchmarking with international market leaders), a detailed strategy was formulated and approved by MOIP&SI in May 2007.

In the first phase of the project, one Common Facility, Training and Manufacturing Centre (CFTMC) will be established at Chiniot and one at Peshawar. Groundwork has been initiated and it is expected that these centres will be established in a time period of 1-2 years.

Approval for building 75 solar kilning units for wood seasoning has been given under the same initiative. These units will be installed in all major furniture clusters of the country. The government will also provide financial support to furniture manufacturers/exporters to participate in different international trade fairs and exhibitions so that exports base of the sector could be strengthened through penetration in the international export markets.

Japan International Cooperation Agency (Jica) and International Development Centre of Japan (IDCJ) in their report: "Toward a Vision 2030: Direction of Industrial Development in Pakistan" had observed that promoting clusters can serve to strengthen SME competitiveness and thus promote economic prosperity in the area.

The Japanese study had proposed the promotion of export-oriented SME clusters since they are the most efficient way to upgrade SMEs in Pakistan. Cluster has been defined as a geographic concentration of interconnected companies and institutions in a particular field, encompassing linked industries and other entities important for competition.

Clusters have advantages of forward linkages, backward linkages, technological/information spillover and collective actions. Study reviews the current status as well as issues related to clusters in Pakistan, and examines what sort of support is necessary to strengthen the competitiveness of clusters.

In Pakistan, there are a number of cities where similar kinds of industries are geographically agglomerated. Major clusters in Pakistan exist in: Sialkot - surgical goods, sports goods, Karachi - leather, jems and jewellery, Gujrat - electric fan, Wazirabad - cutlery, Faisalabad - textile, and Chiniot - wooden furniture.

However, according to the study, clusters have several stages of development. If the cluster does not reach the stage where it can enjoy the agglomeration effects, it is just an assembly of individual enterprises, and thus it is not very meaningful to support it as a cluster.

Three categories called export-oriented clusters (surgical goods and sports goods in Sialkot), domestic-centered clusters (electric fans in Gujrat) and under-developed clusters have been identified.

Assisting clusters can contribute to the enhancement of the competitiveness of SMEs in clusters, as well as clusters as a whole, since clusters in Pakistan do have advantages of agglomeration such as easy availability of raw materials and labour, and technology/information spill over, the study said.

http://www.brecorder.com/index.php?id=603651&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'Rs 150 million to be spent on coastal highway repair by March' ​*
ISLAMABAD (August 10 2007): Cyclone, flood and rains during June 2007 have severely damaged the Coastal Highway and the repair work would be completed by March 2008 at a cost of Rs 150 million. This was stated by Communication Minister Muhammad Shamim Siddiqui at a press briefing on 'flood damages in Balochistan' here on Thursday.

The Coastal Highway links Lyari with Gwadar and stretches over 639-km. It has 1,794 culvert, three major, and 78 minor bridges. The project was completed three years ago at a cost of Rs 15 billion.

The minister said it was second time that the road had been damaged by floods and rains. In February 2005, just within a year of its completion rains damaged it and Rs 109 million was spent on its repairs. He said an inquiry committee has been set up to investigate and identify the damage.

In order to prevent such damage in future, a specialist team is conducting survey to improve its quality. The National Highway Authority (NHA) will adopt the measures in accordance with report provided by the specialists so that Coastal Highway could resist such calamities, he added. NHA Chairman Major General Imtiaz Ahmad gave details about the damaged Highway.

He told the media that 35 feet high waves hit the highway severely damaging nearly 1.5 percent area whereas the rest of 98.5 percent is intact and in working position. The NHA chief said that 11 culverts out of 1,794 and the approaches of five bridges have been washed away by the cyclone, though not a single bridge was damaged, he added.

http://www.brecorder.com/index.php?id=603604&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Businessmen nervous over political instability​*
KARACHI, Aug 9: Industrialists and traders appear to be nervous over looming political crisis after rumours of emergency or martial law. They have urged the government to immediately remove uncertainty so that businesses could flourish.

Although the government has ruled out imposition of emergency, they said political confusion is still not over and has taken a new turn after rumors of emergency.

Many industrialists paint a bleak picture of future foreign trade and investment in case of imposition of emergency.

President, Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Tanvir Ahmed Shaikh, said: No comments on current political situation when the government has clearly stated that no emergency will be imposed.

Chairman, Korangi Association of Trade and Industry (KATI), Masood Naqi, said industrialists feel insecure under current political scenario, and perhaps it was the worst situation during the last three to four months.

Businessmen feel satisfied working under political stability and improved law and order situation. Currently political situation is alarming for last the few months.

He was of the view that business flourishes in a democratic setup instead of martial law.

He said foreign buyers had already stopped coming to Pakistan for the last four months, and they prefer sending their representatives, based in the Far-East, Middle East, Sri Lanka, Dubai, New Delhi, etc, instead of coming on their own to Pakistan for a quality check of local products destined for exports.

He ruled out any immediate impact on exports in case of imposition of an emergency.

He said its impact would be visible after three to four months and it might result in a decline in exports by 20 per cent.

Chairman, SITE Association of Industry Imran Shaukat, said political situation was definitely not satisfactory, and had resulted in business instability.

So far, regular foreign buyers are tight-lipped on political instability. But foreign investors will shy away from Pakistan if there was no improvement, he said, adding the government should take steps to clear political confusion.

He, however, said military regime was not an appreciated form of government in the world today.

Chairman, North Karachi Association of Trade and Industry (NKATI), Faraz Mirza, said imposition of emergency or martial would hit trade and business.

Foreign trade and local business activities had been going on satisfactorily, but again political crisis and hovering clouds of martial law or emergency have created a sense of uncertainty among businessmen.

He said business activities record growth in democratic setups instead of martial law regimes.

The government should resolve issues through mutual understanding; martial law was not the solution of present political uncertainty.

Chairman, F B Area Association of Trade and Industry, Masroor Ahmed Alvi, said it doesnt matter whether there was a martial law or a democratic government. So far, business has been as usual. Actually smooth business environment depends on good law and order situation.

He said there was no panic among foreign buyers in the wake of worsening political crisis.

Chairman, Karachi Wholesale Grocers Association (KWGA), Anis Majeed, said reports of emergency have created a stir among trading community whose moral had come down.

Even these kinds of situations are creating doubts among traders for making any future commitment.

Emergency or martial law is not good for the country. The government should resolve political chaos and restore democratic atmosphere, he said.

General Secretary, Karachi Retail Grocers Group (KRGG), Farid Qureishi, said people would not invest if there was an authoritarian regime. Usually business runs quietly in autocratic rule, he added.

He said under a pure military rule, traders remain conscious of making huge profit because of fear of arrests.

He added that trading activities pick up pace in democratic regimes and people make investment.

http://www.dawn.com/2007/08/10/ebr1.htm


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## Neo

*Power outages eating away export deals​*
KARACHI, Aug 7: Acute power crisis combined with water shortage have crippled production activity in five industrial estates of the city resulting in loss of export contracts worth millions of dollars daily, industry sources claimed.

There are power outages in industrial areas ranging from six to eight hours. This means that the industry loses around 180 production hours per month and is presently running at 60 per cent of its capacity.

Industry sources further said that when there was load-shedding or power breakdown it took hours to restart plants and bring the entire production-line back to normal. Consequently, loss in industrial production in real terms comes much higher.

The industry is suffering on two accounts, firstly because of load- shedding and secondly due to less productivity given by workers, who come to work after sleepless nights owing to unscheduled load-shedding in residential areas of the city.

North Karachi Industrial Area Chairman Faraz Mirza told Dawn that industrial activity was smooth up to June as there was no load-shedding of power in industrial areas. However, since July, besides load-shedding there had been massive power breakdowns causing production loss.

He further said that since most of the units in North Karachi were SMEs, they could not afford to have their own power generating facility and have to totally depend on KESCs power supply.

There are around 2,000 to 2,500 units engaged in production of home textiles, towels, garments, marble and pharmaceuticals and were mostly export-oriented.

Federal B Industrial Area Chairman Masroor Ahmed Alvi said since last 45 days the industry was facing massive load-shedding and power breakdowns. Despite repeated assurances from the KESCs high-ups for providing one window service for lodging complains no progress had been made so far.

As a result of this, Mr Alvi continued, even today our members have to approach different centres for different problems and this adds to our miseries.

He said there were around 2,000 units of small and medium size with 80 per cent of these export-oriented and 20 per cent vendor industry. Besides losing export contracts the industrys cost of production has increased by 30 per cent as some units opt for self generation of power.

All these factors add to the cost of production and the industry fails to compete in the world market where cost-effectiveness, quality and timely delivery are the only way to succeed.

Site Association of Industry Chairman Imran Shaukat said that three major problems were being faced by the industry, including power and water shortage and poor quality service of telecommunication companies.

Besides, load-shedding by the power utility, he said, on an average there were breakdowns on regular basis, which completely crippled industrial production and caused lots of hardship.

The industry does not only lose production hours but also has to compromise on quality, which is, in a free market, of paramount importance. The power breakdowns and voltage fluctuations cause severe damage to costly plants and machinery and bring production to a grinding halt at times.

The Site industry needs 25 million gallons of water per day but was being supplied with only 5 million gallons. Most of the industry is export-oriented and engaged in textile processing, which needs a lot of water, he added.

Korangi Association of Trade and Industry (Kati) Chairman Masood Naqi said that owing to load-shedding many industrial units stopped booking export contracts from foreign buyers as they could not meet the delivery deadline.

He said many a times the industry had to send export consignments by air in order to meet the deadline but this added to their cost and resulted in huge losses.

http://www.dawn.com/2007/08/10/ebr2.htm


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## Neo

*Agriculture sector gets Rs169bn in five years​*
ISLAMABAD, Aug 9: The banking sector has provided a total of Rs169 billion in the last five years to help develop agriculture sector and increase export of its various products.

A meeting, chaired by a senior official of the ministry of finance, was told here on Thursday that the sub-committee on finance (SC-F) was developing a set of guidelines for banking and insurance sectors to further support the agriculture sector.

The new guidelines will include size and types of financing, working capital, term-financing, eligibility, repayment terms, channels, documentation, conditions / covenants, monitoring and recovery.

The SC-F will assist the agricultural support fund of the government, with matters relating to horticulture grants.

It was the first meeting of the finance sub-committee on task force on finance and competitiveness of the horticulture sector held under the chairmanship of Mr Javed Malik, additional secretary, ministry of finance.

The meeting was attended by representatives of relevant ministries, provincial departments concerned and banking as well as non-banking financial institutions.

The aim of the sub-committee on horti-business finance (SC-F) is to help the task force on horticulture finance and competitiveness (TFHFC) achieve its goal by ensuring that all relevant actions are taken in the banking and financial sector to facilitate those wishing to invest in the horticulture sector.

In addition, the sub-committee will pay special attention to exporting and export finance and insurance issues of the sector.

The Competitiveness Support Fund (CSF) was earlier tasked by the Ministry of Finance to undertake a comprehensive study entitled the competitive advantage of the food processing industry: focus on quality, safety and standards.

The CSF is a joint initiative of the ministry of finance, and the US Agency for International Development (USAID).

Support for CSF is part of the $1.5 billion aid that the US government is providing to Pakistan over five years to improve economic growth, education, health, and governance.

The sub-committee on finance will work with stakeholders in horticulture and financial sector to coordinate and facilitate initiatives currently being taken to provide finance to the industry.

Where necessary, the sub-committee will identify areas that require further intervention and liaise with the relevant line ministries, agencies and institutions to bring them about.

In order to achieve the aims and goals of the task force, the sub-committee on finance (SC-F) will establish a profile of financing in the agricultural sector, with particular reference to horticulture.

The SC-F will also identify major participants in the financing of horticulture.

The SC-F will establish a relationship between market pricing of horticultural products and provision of credit.

The committee will also put special emphasis on the fact that horticulture is often undertaken by the poorest of the rural population and will, therefore, establish operations and concerns and issues of micro-credit institutions and the overall provision of micro-credit for horticulture developments.

http://www.dawn.com/2007/08/10/ebr3.htm


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## Neo

*Emergency rumours wipe out Rs115bn from stock market​*
KARACHI, Aug 9: The KSE 100-share index on Thursday plunged by 385 points as investors indulged in panic-selling on media reports of imposition of emergency. However, the market capital suffered a loss of Rs115bn as official denial came a bit late.

The market, however, could have run into a deeper recession in case the emergency was declared by the president as it would signal the exit of leading foreign investors, but the official denial could put the market back on the rails even on Friday as investors would cover positions at the lower levels, said a leading analyst.

But more optimistic among the investors termed the market fall to psychological factors based on speculation rather than real news and market could bounce back if emergency was not imposed.

All may not be well in corridors of power in Islamabad, said a leading analyst, adding the message has aptly been picked up by all and sundry.

After having fallen at one stage to sessions low at 12,947.18, off 617 points, it managed to finish partially recovered on active short-covering to stay well above the 13,000-level at 13,179.41.

The market capital plummeted to Rs3,854bn.

All the leading base shares, notably OGDC, MCB, National Bank, Askari Bank and Hub-Power encountered near-panic selling and fell sharply.

The free-float KSE 30-share index shed 432.60 points at 15,848.71 as compared to overnights 16,281.31.

Trading resumed amid a terrible panic as investors could not precisely decide how to react to the media reports and held on to their positions but their weaker links hastened to liquidate long positions to avoid fresh financial risks.

Among the leading gainers, Fazal Textiles and HinoPak Motors were leading up by Rs15 and Rs15.50 followed by Premium Textiles, JS Global, Javedan Cement, Pakistan Engineering and KSB Pumps, which rose by Rs2 to Rs7.85.

JS & Co and Siemens were prominent losers, off Rs46 and Rs81 respectively. Other major losers were led by Javed Omer, Arif Habib Ltd, Adamjee Insurance, EFU General, IGI Insurance, Pakistan Resource Company, Sapphire Fibres, National Refinery, Attock Petroleum, Indus Motors, Dawood Hercules, Sanofi-Aventis, Packages and Nestle Pakistan, which suffered fall ranging from Rs10.50 to Rs40.

Trading volume rose to 263m shares from the previous 177m shares as losers forced a strong lead over the gainers at 297 to 47, with 17 shares holding on to the last levels.

Askari Bank led the list of actives, off Rs1.65 at Rs97.15 on 15m shares followed by OGDC, lower by Rs2.55 at Rs118 on 15m shares, Arif Habib Securities, off Rs4.40 at Rs127 on 14m shares and National Bank, easy by Rs6.80 at Rs246.10 on 13m shares.

Hub-Power, lower Rs1.45 at Rs31.80 on 10m shares, Fauji Fertiliser Bin Qasim, off Rs1.80 at Rs44.15 also on 10m shares and Bank Alfalah, off Rs1.75 at Rs53 on 9m shares.

Other actives were led by TRG Pakistan, off 85 paisa on 13m shares, Bosicor Pakistan, lower 80 paisa on 12m shares and Pak PTA, easy by 45 paisa on 8m shares.

FORWARD COUNTER: Habib Bank led the list of actives on this counter, off Rs5.75 at Rs313.30 on 7m shares followed by National Bank, easy by Rs6.15 at Rs2.48 on 7m shares and MCB, off Rs3.60 at Rs311.40 also on 7m shares.

Lucky Cement followed them, off Rs5.55 at Rs119.65 on 5m shares and Fauji Fertiliser Bin Qasim, lower Rs1.65 at Rs44.45 on 4m shares.

DEAFAULTER COS: Nimir Chemical led the list of actives, off 25 paisa at Rs4.15 on 2.758m shares followed by Japan Power, higher by 60 paisa at Rs9.50 on 1.257m shares and Zeal Pak Cement, lower 50 paisa at Rs5.90 on 1.107m shares.S.S. Oil also came in for active support and rose by Rs1.15 at Rs24.25 on 0.724m shares followed by Unity Modaraba, unchanged at 55 paisa on 0.224m shares and Norrie Textiles, easy by 10 paisa at Rs2.25 on 0.175m shares.

http://www.dawn.com/2007/08/10/ebr5.htm


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## Neo

*Proposals to attract more industrial investment​*
ISLAMABAD, Aug 9: Official planners have proposed to the government to create a market-friendly business environment to enhance industrial investment and the overall economic growth in the country.

Investment plays a crucial role in growth process by not only adding to productive capacity but also by improving the technological base. Therefore, creation of a market-friendly business environment is absolutely essential, the planners said in their recommendations contained in the new Industrial Vision also made available to Dawn.

To develop a viable industrial sector, there is a need to put in place a regulatory and legal environment that is conducive for private business.

The vision was approved by the federal cabinet earlier this month. It said that the investment rates in Pakistan had been low though in 2003-04 it had increased from 16.4 to 18.1 per cent of GDP. Whereas in the past the resources for investment have been the major problem, at present it is the relatively low levels of demand for investment.

The investment rates can rise rapidly provided the investors are convinced of long run profitability, it said.

It added that the business-friendly environment revolved around consistent economic policies, strong macroeconomic fundamentals, deregulation, privatisation, better law and order with credible police, law and judicial system, better regulatory environments, an efficient tax and customs administration and a labour policy that motivates the workers, financial reforms and improvement in infrastructures.

Investment levels exceeded 20 per cent of GDP only in the periods when the investors perceived continuity of policies.

Strong Macroeconomic fundamentals: Lower fiscal deficit, good balance of payment situation, stability of exchange rates, higher foreign exchange reserves, availability of funds at competitive rates, openness of trade etc help a great deal in attracting investment.

At present Pakistan has strong financial macro-fundamentals and can attract investment.

De-regulation and privatisation policies: Pakistan has divested most of public sector manufacturing enterprises and has privatised four out of five public sector banks. It intends to privatise various public utilities. Similar, over the last two decades there has been considerable de-regulation.

Nevertheless, investors feel that second generation reforms and further de-regulation is absolutely necessary for reducing the cost of business, the Vision said.

It also pointed out that the law and order situation had deteriorated since the early 1980s and after 9/11 events had deteriorated further. While efforts are being made to improve the situation, more efforts in this direction are absolutely important. The government may accord priority to police and judicial reforms.

It also said that the regulatory uncertainty needed to be reduced and that all rules were made transparent by removing discretion from the administration. Regulations relating to labour, health and environment, besides FBR regulations, should be made transparent.

Businesses have to comply with a host of regulations relating to work environment, including health and sanitation, product standards, and taxation etc. Excessive discretionary powers in the hands of the enforcing agencies often lead to harassment of enterprises and opens up avenues for corruption resulting in loss of business confidence.

http://www.dawn.com/2007/08/10/ebr13.htm


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## Neo

*Three date processing plants to be set up​*
SUKKUR, Aug 9: Three modern date processing plants will be established under the trade policy by the end of 2008, one each in Sindh, Balochistan and NWFP, at a cost of Rs78.6 million.

President of the Dates Exporters Association (DEA) Khairpur, Bashir Ahmed Arain told APP on Thursday that Pakistan Horticulture Development and Exports Board (PHDEB) is ready to invite tenders for construction of date processing plant at Khairpur at a cost of Rs 24.113 million by 2008.

In this regard, he said tenders for two other plants, one each at Dera Ismail Khan and Turbat will be floated within a couple of months.

He said work on Khairpur plant is under way to hold bidding for up-to-the-mark plant, which would be established on Public-Private Partnership (PPP) basis. These plants are being built along with cold storage facilities, he added.

Chairman DEA Arain further said Pakistan ranks fourth in dates production and fifth in its exports around the world.

He said under PPP, the Sindh government has provided two acres of land for this purpose.

The Sindh government also released Rs19.946 million from the Export Development Fund (EDF) and would take care of the cost of plant machinery, equipment, vehicles and other civil works, he said.

Presiedent DEA said that day-to-day operations would be entrusted to a team of professionals hired from the private sector, which would also contribute the working capital of around Rs4.167 million while a private limited company had also been formed to accomplish the management work of the plant, which was named as Khairpur Dates Processing Plant (KDPP).

He said the company, duly registered with the Securities and Exchange Commission of Pakistan (SECP), would have its members from PHDEB, Trade Development Authority of Pakistan, Agriculture Research Institute, DRC, Kot Diji Taluka, Khiarpur Chamber of Commerce and Industry (KCCI), investors and growers from the private sector of Khairpur district.

He further said the Board has set 2008 as a deadline for completion of the KDPP, which is estimated to produce more than 2,000 tons of processed dates during the 150 working days.

He said the KDPP for which funds had been transferred to the account of the company would be built to improve the quality of dates and increase the level of value-addition and added that the proposed plant would be based on multiple products, including pitted and stuffed dates and would increase the level of value- addition.

http://www.dawn.com/2007/08/10/ebr18.htm


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## Neo

*Emergency not to affect corporate sector ​* 
KARACHI: While the country remains under apprehension and speculation regarding the threat of emergency laws, leaders of the business sector believe it will not affect investments or the corporate sector. Speaking to The News at the ITCN Asia 2007, SECP Deputy Registrar of Companies Muhammad Naeem Khan said that the emergency laws would have no direct effect on the corporate sector.

He said that the situation would affect the basic human rights and therefore it had nothing to do with businesses. He, however, feared for the stock market as slightest of instability in the economy affects the stock markets badly.

Executive Vice President of PTCL , Tariq J Qureshi opined that the emergency laws were not relevant to corporate sector where it would be business as usual.

Faisal Amin, President of Texas Trade Council said that political situation was not likely to affect investments.

Geoffrey S. Connor, Principal of Texas Global was not ready to comment on the situation though he voiced that he didnt think that emergency laws had anything to do with external relations of Pakistan with other countries. These are internal matters of Pakistan and therefore I dont think they would affect the country or its image. We just want to trade and bring technology into Pakistan and thats what we are doing even now, he said. 

http://www.thenews.com.pk/daily_detail.asp?id=67648


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## Neo

* IT industry size to reach $10bn by 2010 ​*
KARACHI: The size of IT industry in Pakistan will reach 10 billion dollars in 2010. To develop IT industry in the country agreements are being undertaken with the international companies, said Yusuf Hussain, Managing Director, Pakistan Software Exports Board (PSEB) at a media workshop at ITCN Asia EXPO centre Karachi.

We are in Pakistan as we see great potential and opportunities in the software industry of this country, said Tony Murphy author of Succeeding in Knowledge Economy.

PSEB has done much in software development and such workshops and seminars improve the confidence of companies which in turn bring more IT companies and investment in the country, he said.

Jutta Schwengsbier of DW Group Germany said Pakistan has a huge network of villages where IT can turn things upside down as it had done in changing the very face of journalism.

Pakistan has to develop and carve its own way to success with the assistance of IT, Schwengsbier said. Speakers of the Workshop highlighted the importance of IT and its role in the development of modern technological world and the revolution that IT has brought in the field of media.

Geoffrey Connor, Principal, Texas Global, Santosh Sinha, Interactive Editor, BBC World Service also addressed the workshop.

http://www.thenews.com.pk/daily_detail.asp?id=67650


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## Neo

*LSM misses growth target of 12.5%​*
* Achieves 9.46% growth, which is lower than the growth of 10.68% in 2005-06

ISLAMABAD: The growth target of 12.5 percent in large scale manufacturing (LSM) for the fiscal year 2006-07 has been missed and final figures show that growth in LSM was 9.46 percent for the July-June period, according to a production data of selected LSM items finalised by the Ministry of Industry and Production. 

The Economic Survey 2006-07 had earlier projected a LSM growth of 8.8 percent in the last fiscal year, however, this projection improved to 9.46 percent for the year. LSM growth of 9.46 percent in the last fiscal was less than the growth of 10.68 percent in the fiscal year 2005-06.

Final figures of the LSM items shows that production of sugar registered a growth of 19.13 percent with total production of 3,525.949 metric tonnes in the last fiscal year as compared to the production of 2,959.782 metric tonnes in the previous fiscal year. 

The production of fertilisers witnessed a decline of 3.05 percent in the fiscal year 2006-07 with total production of 6,042,180 metric tonnes as compared to 6,232,070 metric tonnes in the previous fiscal year 2005-06. Production of nitrogenous fertilisers declined by 2.03 percent and production of phosphatic fertilisers declined by 10.06 percent in the last fiscal year 2006-07. Decline in the fertiliser sector was broad based and production of urea declined by 1.54 percent, nitro phosphate by 8.63 percent, super phosphate by 7.41 percent, Di-ammonium phosphate 8.79 percent and NPK by 2.03 percent. 

Production of bicycles declined by 21.59 percent with a total production of 462,297 as compared to the production of 589,605 in the previous fiscal year. The production of motorcycles registered a growth of 11.65 percent with overall production of 839,224 in the last fiscal year as compared to 751,667 in the previous fiscal year. Production of jeeps went up by 33.41 percent with total production of 3,298 in the last fiscal year against the production of 2,472 in the previous fiscal year. LCVs production increased by 18.74 percent with a production of 35,124 in the last fiscal year as compared to 29,581 in the previous fiscal year. Trucks production showed a decline of 2.39 percent with total production of 4,410 in the last fiscal year as against the production of 4,518 in the previous fiscal year. Production of buses increased by 20.36 percent with total production of 993 in the last fiscal as compared to 625 in the previous fiscal year. Production of tractors also registered a growth of 10.46 percent with a total production of 54,610 in the last fiscal year as against the production of 49,439 in the previous fiscal year. 

The production of cars declined by 0.09 percent with total production of 160,496 in the last fiscal year as compared to the production of 160,642 in the previous fiscal year. 

Production of cement witnessed a growth of 22.49 percent with total production of 22,739 thousand tonnes in the last fiscal year as compared to a production of 18,564 thousand tonnes in the previous fiscal year. 

Pakistan Steels production showed a mixed trend in the fiscal year 2006-07. Production of coke increased by 79.01 percent, pig iron h metal 31.36 percent, cast rolled billets 48.22 percent, hr coils plates 35.78 percent, and however, the production of cr coils declined by 3.27 percent galvanised products 14 percent.

Production of inguts and billets produced by steel melters increased by 8.79 percent and production of steel re-rolled items increased by 2.64 percent in the last fiscal year.

Cotton yarn production showed a growth of 11.75 percent with total production of 2,845,762 thousand kilogrammes in last fiscal year as compared to the production of 2,545,520 thousand kilogrammes in previous fiscal year. 

Jute goods also registered a growth of 12.97 percent with total production of 118,059 metric tonnes in the last fiscal year against the production of 104,504 metric tonnes in the previous fiscal year. 

Paper and paper boards overall production registered a negative growth of 2.21 percent in the last fiscal and it production amounted to 466,115 metric tonnes as against 476,653 metric tonnes in the previous fiscal year. Production of paper declined by 3.54 percent, printing paper production was down by 4.46 percent, writing paper by 2.88 percent and packing 4.25 percent, paper board 1.54 percent and chip board by 0.86 percent. 

Production of cigarettes registered a growth of 2.87 percent with an overall production of 65.980 million in the last fiscal year as compared to the production of 64.137 million in the previous fiscal year. Production of soda ash showed a growth of 3.74 percent and caustic soda by 10.45 percent in the last fiscal 2006-07. 

Production of sheets and float glass showed a growth of 98.89 percent in the last fiscal year 2006-07. sajid chaudhry

http://www.dailytimes.com.pk/default.asp?page=2007\08\10\story_10-8-2007_pg5_12


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## Neo

*PLHCL receives over $6.665 million as FDI ​*
KARACHI (August 11 2007): Pak Libya Holding Company Limited (PLHCL) has received 6.665 million dollars (Rs 401.958 million) as foreign direct investment (FDI) from Libyan Foreign Investment Company (LFICO) to enhance its paid-up capital for compliance of minimum capital requirement (MCR) of State Bank of Pakistan (SBP).

An equivalent amount has also been contributed by the SBP (on behalf of government of Pakistan), which will resultantly raise the paid-up capital from Rs 3,442 million to Rs 4,242 million. At present, the equity of the company has grown to Rs 5,283 million.

The capital injection from the foreign counterpart is a clear indication of their trust and confidence on the economy and government's current policies as well as on the future prospects of the company.

The capital injection will enable the company to expedite the momentum of its operational and business growth together with strengthening its contribution to the economic growth of the country. The performance of Pak Libya Holding Company improved significantly by depicting growth in all operational areas during the half year ended on June 30.

Total assets at the end of the half year registered 87 percent growth to Rs 17,261 million at the end of June 30 this year as compared to Rs 9,220 million at the end of the corresponding period last year, while the net profit went up to Rs 238 million during the half year period this year against Rs 112 million in the same period last year.

The management of Pak-Libya Holding Company is confident that the growth pattern in the key financial indicators would continue, keeping up with their vision to achieve and maintain greater strength within the financial sector.

Pak Libya Holding Company, a joint stock company, commenced its operations in 1980. Equally owned by the governments of Pakistan and Libya, the company operates within the framework of banking laws of Pakistan and its operations are supervised by the State Bank of Pakistan.

Pak Libya Holding Company has a successful track record of over 25 years of consistent growth and performance and is one of the leading non-banking financial institutions of the country, having a distinction of being the first Pakistani financial institution with rating of ISO 9001:2000.

As a result of the operational strengths, Pakistan Credit Rating Agency Limited has maintained the long-term and short-term rating of the company at "AA-/A-1+," a "positive" outlook. These ratings denote strong risk absorption capacity of the institution.

http://www.brecorder.com/index.php?id=604365&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Rs 10.94 billion approved for FATA development schemes ​*
PESHAWAR (August 11 2007): The NWFP government is taking special measures to accelerate the pace of developmental projects in the far-flung tribal areas and Rs 10943.453 million have been approved for the sector of regional development.

According to a handout of FATA Media Cell, Rs 466.439 million would be spent during 2007-08. The development of backward and far-flung parts of different tribal areas would be the focus of the government under the package for Regional Development.

Special attention has been given to developmental packages in North and South Waziristan Agencies, and Rs 838.93 million have been sanctioned for development packages in the two remote agencies.

A sum of 678.94 million has been approved for five different Regional Development schemes in South Waziristan Agency. These include allocation of Rs 144.155 million for Shawal inaccessible area, Rs 93.318 million for Shaktoi and Shobi Khel areas of Tehsil Ladha, Rs 65.645 million for Shakai area, Rs 180.774 million for Tehsil Toi Khullah and Rs 195.048 million for Mantoi and Santoi areas.

A sum of Rs 159.980 million has been approved for two schemes in North Waziristan Agency. These include Rs 99.980 million for Madakhel area and Rs 60 million >for Shawal area.

Besides the two Waziristan Agencies, special attention has been given to developmental projects in the remotest Tirah Valley and Bara in Khyber Agency for which a package costing Rs 118.059 million has been approved. Moreover four schemes in Mohmand Agency, four schemes in Kurram agency, three in Orakzai and 27 other schemes in all FATA have been approved to accelerate the pace of developmental work in backward and deprived parts of the FATA.-PR

http://www.brecorder.com/index.php?id=604388&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Pakistan to benefit from Indian expertise in IT​*
KARACHI, Aug 10: Federal Minister for Information Technology Awais Ahmed Khan Leghari has said that Pakistan wants to benefit from the advanced expertise of international giants including India in the field of information technology (IT).

He also said the future of Pakistan lay in rapid progress in IT sector as in the next 60 years the strength of a state would be gauged from the growth of its IT industry.

The minister expressed these remarks while addressing the international level CEO forum arranged by Pakistan Software Export Board (PSEB) in conjunction with ITCN- Asia on Friday.

The purpose of the forum titled Corporate success in the knowledge economy was to showcase the rapid strides made by the Pakistani IT sector over the last few years and also to attract more foreign financing through effective interaction with foreign companies.

Various high-profile delegates representing international as well as national IT companies attended the forum while renowned IT personalities including Dr. Tony Murphy, author of the book Succeeding in the Knowledge Economy; Geoffrey S. Conner, former Texas secretary of state and principal, Texas Global; Raymond King, CEO About Us and others addressed the audience.

Mr Leghari stated that India also wanted to get benefit of Pakistan's human resource in IT sector. We acknowledge that India is at an advanced stage in terms of IT industry and we should benefit from this expertise, he said, adding that there were some bottlenecks on the part of the neighbouring state that need to be resolved in this regard.

Evaluating the contribution of PSEB in the IT sector's advancement the minister said that due to its vigorous initiatives Pakistan had rapidly secured an important place in the world IT market.

These initiatives would continue on regular basis as it would also enhance the international financing for the promotion of IT industry and help in marketing the local IT outsourcing services abroad.

About the human resource potential, the minister said that it was a point of satisfaction that more or less 80 million youths under the age of 18 in Pakistan were associated with the IT sector and would further strengthen the IT industry in near future.

He pointed out that presently the local IT industry was facing shortage of IT professionals and said that there was a wide capacity for accommodating hundred of thousands of workers in addition to experts in the IT industry.

He pointed out that the government was actively working on introducing various more initiatives for the promotion as well as expansion of the IT sector in addition to provision of more employment opportunities for the local IT graduates

Managing Director of PSEB Yousuf Hussain said the CEO forum was an effective initiative where prominent international executives and local IT companies could increase interaction by exchanging their expertise.

He informed the audience that about 60 foreign IT and telecommunication companies were working in Pakistan and they were further exploring the local market in terms of more investments and outsourcing of IT-based services.APP

http://www.dawn.com/2007/08/11/ebr12.htm


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## Neo

*Rains, power outages hit industrial output ​*
KARACHI (August 11 2007): Industrial production has badly suffered due to thin attendance, non availability of transport, power failure as well as continuous rains on Friday. Industrialist said a very large number of industrial workers faced hardship in getting to their residences on Thursday due to rains, which started earlier in the day and continued with small intervals on Friday.

Korangi Association of Trade and Industry (KATI) Chairman Masood Naqi said that industrial production declined to around 20 to 25 percent due to shortage of workers in Korangi industrial area.

He said many workers, who faced difficulties in reaching home on Thursday, did not report for duty on Friday. Besides, there was thin transport on the road, which played a big role in keeping the workers away from their jobs.

In some areas like Sector 23, prolonged power failure was also the major cause of short production, causing revenue losses not only to the government, but also the government, he said, and pointed out the area contributed around Rs 250 million in taxes per day. Chairman of Federal "B" Area Association of Trade and Industry (FBAATI) Masroor Alvi said that industrial production in the area was cut to half as workers failed to report for duty.

Referring to thin attendance of workers, he said majority of workers, living in low-lying areas, had to save their belongings from the rainwater, which entered their houses. Non-availability of transport was another factor and the workers could not reach their factories, he added.

He said heavy rains also disrupted delivery of export goods to the port for shipment. In Site industrial area, a very large number of industrial units remained closed due to power failure. Around 18 feeders of Karachi Electric Supply Corporation (KESC) were tripped, rendering almost the entire area without power.

http://www.brecorder.com/index.php?id=604363&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*ICCI for pharmaceutical laboratories of international standards ​*
ISLAMABAD (August 11 2007): Acting President Islamabad Chamber of Commerce and Industry (ICCI) Jamal Abdul Nasir on Friday called for establishing pharmaceutical laboratories of international standards to boost quality of exports.

"Local pharmaceutical industries should be encouraged to export its products to Central Asian States, African region and other countries of the world", said while addressing the participants of meeting on pharma industry here on Friday.

The President ICCI lauded the initiatives of the government for bringing tariff to zero percent on import of pharmaceutical machinery, which will encourage the sector.

He also emphasised to greatly focus on research and development of pharmaceutical products as Pakistan has great potential in this sector. He added that for progress in this area it is important that government should continue to provide support to the pharmaceutical industry so as the help in reducing the cost of pharmaceutical products and also to export it for earning foreign exchange.

Nasir said that it is essential to establish pharmaceutical testing labs of international standards in the country, which will facilitate the pharmaceuticals industries. He said that 50 percent subsidy given by the government on testing of pharmaceutical goods from recognised international laboratories would assist the local pharmaceutical industry in cost sharing and reducing prices.

http://www.brecorder.com/index.php?id=604389&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Final word on IPI in two months ​*
KARACHI: Secretary Petroleum Farrakh Qayyum on Friday said a final outcome of negotiations on Iran-Pakistan-India (IPI) gas pipeline was expected in next two months. 

Denying that talks on the seven billion dollar project were moving at a snails pace, he said that Pakistan was in advance negotiations with the two other participating countries and only few issued remained to be settled. 

Ill personally take up the matter at the highest level to ensure that it (IPI pipeline) is implemented, he vowed while talking to newsmen here at going-live ceremony of SSGCs IT enabled Customer Information Service (CIS).

He lauded the role of SSGC in introducing new innovations to facilitate its customers. By and large the perception of public utilities is very poor, he said and emphasised that such services will help change that. 

CIS has streamlined all the internal and external process of the utility that included pre-sales, sales, field services, customer care, gas-theft control and other customer support functions. 

http://www.thenews.com.pk/daily_detail.asp?id=67832


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## Neo

*PIA to replace B737 with new A320-200 aircraft ​*
KARACHI: Pakistan International Airlines (PIA) on Friday said it will induct seven new Airbus 320-200 aircraft in year 2009 to replace the aging fleet of Boeing 737-300. 

It said a letter of intent has been signed for lease of the aircraft with Aviation Lease and Finance Company (ALAFCO) of Kuwait. B-737-300 served PIA for more than 20 years. 

A PIA press release referred to Chairman PIA Zafar A Khan as saying that a comprehensive study was carried out and based on technical and operational evaluation of the available options, A320-200 was selected as the most suitable choice for the airline. 

The new A320 aircraft will provide maximum operational flexibility on short and medium haul routes with lower operating costs, optimised cabin layouts and better baggage/cargo, he added. 

PIA will fly these 146-seater A320s on domestic routes with limited operation on regional routes. This induction will take down average age of PIA fleet to 10 year from 13. 

http://www.thenews.com.pk/daily_detail.asp?id=67837


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## Neo

*In-depth analysis of policies needed ​* 
New programmes are launched without assessing outcome of previous ones

Mehtab Haider

ISLAMABAD: The government has launched more than 50 policies at the national level pertaining to various sectors and is starting more without analysing what went wrong in the previous ones.

A huge number of policy-level documents had been issued for various sectors during the last eight years uninterrupted Musharraf-Aziz rule, but analysis was never done to evaluate the implementation process in order to adopt an outcome-based approach, The News has learnt.

This government has been enjoying power with full authority for eight years, which was not the case in the democratically-elected regimes during the 90s. So the incumbent regime must answer 160 million people about the outcome of its envisaged policies, a high-level official said.

Many policies announced by the regime in the last eight years were even in conflict with each other, the official involved in the decision-making process confided to this scribe.

A list of policies announced by the incumbent regime, which is available with The News, reveals the government launched National Education Policy, National IT Policy, National Conservation Strategy, National Sanitation Policy 2006 and Pakistan National Operational Strategy for CDM, but it never bothered to even think about their outcomes.

A retired civil servant, who was actively involved in devising Poverty Reduction Strategy Paper (PRSP-1) in 2001, said the government had set an ambitious strategy in the paper, but in-depth analysis was never done to overcome failures in achieving the envisaged targets.

The agriculture sectors contribution to overall GDP growth has been on the decline, but the government did not consider reviewing its announced policy-level documents namely Agriculture Prospective and Policy and Wheat Policy.

The government launched National Housing Policy and Allotment Policy for Government Houses, but it never attracted the policy-makers attention to consider the outcome. The government, the list shows, announced National Forest Policy 2002, National Environment Policy, National Drinking Water Policy for 2005, Export Policy Order and Import Policy Order without analysing their outcomes.

There are certain policies usually announced by every government, but in the last 60 years the governments never bothered to apprise the masses and other stakeholders of their results. For instance, Trade Policy is announced every year without mentioning results of last years promises.

The government also announced Monetary Policy Statement, Fiscal Policy Statement and many other policies on the economic front. It, sources said, also formulated Fertiliser Policy 2001, Privatisation Policy, Labour Policy 2002, National Social Welfare Policy, National Policy to Combat Child Labour, Liquefied Natural Gas (LNG) Policy 2006 and Natural Gas Allocation and Management Policy 2005, but analysis was not done to find out their outcomes.

The government has recently announced Petroleum Exploration and Production Policy 2007 without analysing the last policy of 2001. It also launched Labour Protection Policy 2006, deregulation policy for telecommunications sector, Textile Policy, wind power tariff guidelines and National Policy for Development and Empowerment of Women. No one knows what have been achieved through these policies as it is out of fashion to analyse net results, a source added.

Some policy documents, the high-level official said, were not in line with Medium Term Development Framework (MTDF) designed by the government for the next two decades to move with the pace of the 21st century. Now the government is again busy in devising more policy-level documents such as Poverty Reduction Strategy Paper (PRSP-II), Labour Policy, etc without ensuring its synchronisation with other documents. For devising policies, inputs also come from bilateral and multilateral donors for various sectors.

A few of them can be cited as example like a World Bank report on Role of Economic Policies in Protecting the Environment: The Experience of Pakistan, WB report on Higher Education Policy Note: An Assessment of the MTDF, UNIDOs Industrial Policy and Environment in Pakistan, Policy Making in Pakistan Population Programme and Boston Group publication on higher education in Pakistan.

The donors including the IMF, WB, ADB and others launched a number of policy-level reports on various sectors of Pakistan, but there was a lack of accountability on their part. Citing an example, sources said, the WB officials were equally responsible for devising a faulty Social Action Programme (SAP) during the 90s, which resulted in wastage of billions of dollars in loans obtained by Islamabad, but no accountability was done against the WB high-ups.

http://www.thenews.com.pk/daily_detail.asp?id=67839


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## Neo

*Heavy downpour: Production, export sectors suffer badly​*
KARACHI: The industrial production and export-oriented sector suffered badly on Friday from the current spell of rain in the city, which caused major power outage and accumulation of rainy water in the factories located in the low lying areas in various industrial estates of the city.

Also, the thin public transport on the roads of the city kept the workers away from the work places, which resulted in slowing down the industrialist activities in the city.

Although, industrialists were unable to give exact figures of the losses they suffered from the two days of heavy downpour in metropolis, they put the production losses around fifty percent and failure to honour export commitments as well.

Industrialists said that though, they did not experience the long-hours power breakdowns this time because of rain, however it impacted the business to some extent. The main factor, as they pointed out, flood like situation in the industrial areas and inability of workers to reach the factories because of thin public transport and bad weather conditions. 

Exporters also complained of facing difficulties in transportation of export shipments because of condition of roads, which turned worse because of accumulation of rainy water, making it difficult for the heavy vehicles to move to and from the industrial areas.

Putting the industrial losses in millions of rupees, they lashed at civic agencies for their inefficiency to act to provide relief to citizens in such a situation and make possible the drainage of rainy water properly particularly in the industrial areas so that wheel of industry could be kept moving uninterrupted. 

Site Association of Industry Chairman Imran Shaukat put the production losses around 50 percent due to rain related problems and said that movement of export shipments also suffered during the day.

Mr Shaukat pointed out that power outage caused around 30 percent losses in the production while around 25 percent losses were incurred due to accumulation of rainy water in the factories located in the low lying areas. SITE industrial area has over 3,000 units, which has around 550,000-600,000 employees.

Korangi Association of Trade and Industry Chairman Masood Naqi put production losses in millions and said around 20 percent losses were estimated in the production because of rain related problems. Whereas the export sector suffered badly as most of the exporters were unable to transport their shipments to port because of difficulties in movement of vehicles from industrialist area due to flooding of roads in the areas. 

FB Area of Association of Trade and Industry Chairman Masrood Ahmed Alvi told Daily Times that industrial activities in the area also suffered badly with the major losses recorded by the industry. He also complained about the turning up of workers in low number, accumulation of rainy water and bad condition of roads, which caused hindrances in movement of traffic. The FB industrial area has 2,500 units in which 90 percent are export-oriented units. The export shipments also suffered because of this low production and low attendance of the staff, he added.

An industrialist from North Karachi Association of Trade and Industry said that industrial activities were also at low ebb because of rain related problems. The area comprises mostly of 2,500 small and medium units employing 125,000 people.

http://www.dailytimes.com.pk/default.asp?page=2007\08\11\story_11-8-2007_pg5_1


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## Neo

*IRSs of financial sector grow to Rs 162b: SBP​*
KARACHI: The volume of Interest Rate Swaps (IRSs) in the Pakistani financial sector grew significantly to Rs 162 billion in March 2007 from around Rs 98 billion in March 2006, according to State Bank of Pakistans Banking System Review released recently. 

It says that in relative terms, IRS transactions are nearly half of the total derivatives volume. FX options stand second under derivative products, and it holds around 22 percent share of the total derivatives market. Its volume grew from Rs 18 billion to Rs 74 billion during the same period. 

Cross currency swaps (CCS), which currently are allowed against the one-off approval of SBP, also holds a major share of the Over The Counter market. With its 30 percent overall share, its volume as of March 2007 was at Rs 101 billion. This indicates that corporate are opting to manage their PKR interest rate swaps through CCS. 

The State Bank says: Although the derivatives market is growing in Pakistan, however, it is facing some teething problems, of which the major are; a less developed market for the derivatives business, less number of authorised derivatives dealers and absence of non-market maker financial institution, unavailability of the market data and the absence of benchmarks for vanilla products. 

The central bank says that once these problems are addressed, the derivatives market is expected to grow at a higher pace and would largely serve to provide risk management solutions. 

Although derivatives are a relatively new concept in Pakistan, actually started in year 2003, its volume grew many folds in the last couple of years. The number of authorised derivatives dealers (ADD) has increased to five from the three during the last year. However, till now, no institution has obtained the status of non market maker financial institution (NMI). Nevertheless, the institutions, which are not ADD, can also undertake derivative business transaction with prior approval from SBP. 

As for the development of over the counter (OTC) financial derivatives market, Financial Derivatives Business Regulations (FDBR) issued by SBP in November 2004 allows three types of transactions; IRSs, FX options and Forward Rate Agreements (FRAs). 

Of these three, products allowed under FDBR, the first two appear to hold the major share of OTC market since FRAs are very few. The FRAs going extinct, may be attributed to the perceptions of interest rates as well as the absence of a developed market, which is imperative to create demand for such products.

http://www.dailytimes.com.pk/default.asp?page=2007\08\11\story_11-8-2007_pg5_3


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## Neo

*National Transport Policy 2007-08: Rs 60b allocated stet transport and communication​*
ISLAMABAD: The government has set an amount of Rs 60 billion for the development of transport and communication sector. This amount includes Rs 29.4 billion for the budgetary programme and Rs 29.6 billion for the budgetary corporations programme. 

The transport development programme for the year 2007-08 is based on a broad strategy that includes establishment of a multi-modal transport system with emphasis on asset management with consolidation, upgrading, rehabilitation and maintenance of the existing system and enhanced private sector participation in sector development and institutional capacity building, with the use of modern technology, procedures and processes to increase sector efficiency. 

The strategy also takes into account the regional and domestic dimensions, particularly in relation to rail, road and ports and shipping sub-sectors, enhancing regional connectivity to improve links to the Central Asian States, Iran, Afghanistan and India. According to the annual plan for the year 2007-08, Pakistan Railways would be transformed into a corporate entity making profitable business through its core activities. Seven fast freight trains have already been introduced from Karachi to Lahore / Faisalabad and back. An allocation of Rs 11.6 billion has been made for 2007-08. 

Works on track rehabilitation of Pakistan Railway network, procurement of 69 DE locos, procurement / manufacture of 625 passenger coaches, procurement of 2300 bogie high capacity wagons, rehabilitation of 450 passenger coaches, re-commissioning of 55 stabled DE locos, doubling of track on Lodhran - Raiwind sections, and other on-going projects would continue. 

For the ports and shipping sector the annual plan for the current year 2007-08 reveals that a ports master plan study, defining the roles of Karachi Port, Port Qasim and the Gwadar Port would be prepared. The business plans of the three ports would be completed.

http://www.dailytimes.com.pk/default.asp?page=2007\08\11\story_11-8-2007_pg5_5


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## Neo

*2nd Generation of Market Reform Programme: Need to convert SECP intoFSCP stressed​*
ISLAMABAD: The Second Generation of Capital Market Reform Programme seeks to convert Securities and Exchange Commission of Pakistan (SECP) into the Financial Services Commission of Pakistan (FSCP). 

FSCP would be in charge of regulation and supervision of Non-Banking Financial Institutions (NBFIs) by clearly codifying its powers, functions, governance, and accountability in line with international best practices. 

According to the report and recommendation of the Additional Development Bank (ADB), President to the Board of Directors on Programme Loan and Technical Assistance Grant on Second Generation of Capital Market Reform Programme. Based on these recommendations, ADB had approved $400 million for the three-year second phase of the capital market reforms. 

The government is asked to draft and submit to parliament a law codifying the FSCP.

This law would establish FSCP, based on SECP, and strengthen its enforcement powers by enhancing its independence, governance, and accountability. 

The law should be a framework law that incorporates by reference to sector-specific laws (such as the laws governing securities markets and intermediaries, insurance, private pension funds, and non-bank financial companies) FSCPs powers to administer those laws. The establishment of FSCP does not preclude further integration of responsibility for regulation and supervision of banking and non-banking financial services at a later date (for which the framework law would have to be amended). However, given the substantive capacity building needs to establish a fully consolidated financial sector agency and the considerable transaction cost typically involved in merging regulatory agencies with different cultures and capacity, this would be beyond the scope of the programme.

In recent years, financial sector regulatory bodies have been granted greater independence in many countries to ensure that they can professionally perform their statutory functions in the public interest and be largely free from political interference. An agency responsible for regulation and supervision of NBFIs and markets should, in general, have authority and capacity comparable to that of the agency in charge of banking. 

Toward the end of the programme, FSCP is recommended to undertake a self-assessment of compliance with international best practices in the regulation and supervision of securities markets and private pension funds. This assessment could provide the basis for formulating another round of policy reforms to address remaining weaknesses, if any.

Further under the programme, SECP (FSCP) is to issue guidelines on obtaining information about unlisted publicly tradable companies. Stock exchanges will continue to provide on their websites disclosed information of listed companies. Therefore, investors will have a better access to annual reports and other disclosed information of both listed and unlisted publicly tradable companies, which will enhance transparency and efficiency of the capital market. The government is to grant SECP (FSCP) the power to approve or disapprove audit firms authorised to audit non-bank financial companies licensed by SECP (FSCP), listed companies, and publicly tradable companies. This will strengthen SECPs (FSCPs) capability to ensure quality and consistency in the financial information available to investors and the regulator.

http://www.dailytimes.com.pk/default.asp?page=2007\08\11\story_11-8-2007_pg5_7


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## Neo

*Project management : French experts to train Pak officials​*
ISLAMABAD: To enhance the capacity building of officials, the government has arranged a training course on Project Management for increasing project management capability with the collaboration of Lille School of Management France and Pakistan Planning Management Institute. 

Renowned world-class French experts will provide training to the participants (total 30 officials, of which five will be from Planning Commission). During the training, which is first of its kind for officials BPS 19 and above, new techniques of project management would be provided. Those officials will get training who are working on assignment relating to project planning appraisal and implementation. 

http://www.dailytimes.com.pk/default.asp?page=2007\08\11\story_11-8-2007_pg5_21


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## Neo

*Telenor Pakistan introduces world recharge​*
ISLAMABAD: Telenor Pakistan has engaged ezetop Ltd, an Irish based international mobile phone services company, to provide yet another, first of its kind service in the country: International Recharge. 

Through this service Telenor Pakistan customers will become the only privileged subscribers to receive credit from their families living abroad. Chief Marketing Officer Telenor Pakistan Sigvart Voss Eriksen, excited about the milestone achievement said: We are delighted to have ezetop on board in introducing another industry first service in Pakistan. International Recharge will allow thousands of people living in Middle East, UK and USA to send instant and practical support home. 

Ezetops Head of Business Development David Shackleton said this was a significant development for Pakistani communities around the world who could now empower their relatives at home in Pakistan to stay in touch whenever they want. With international recharge facility, family and friends living abroad will soon be able to purchase Telenor Pakistan vouchers available in different denominations from any ezetop distribution partner abroad and send the voucher details to their loved ones in Pakistan who use Telenor Pakistan prepaid connection.

http://www.dailytimes.com.pk/default.asp?page=2007\08\11\story_11-8-2007_pg5_23


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## Neo

*Musharraf concerned at slow economic progress ​*
ISLAMABAD (August 12 2007): President General Pervez Musharraf said here on Saturday that the government, nation and judiciary should be in conciliatory mode for Pakistan's stability and smooth run-up to the upcoming general elections.

Talking to All Pakistan Newspapers Society (APNS) executive committee members at the Presidency before his departure for Kabul to attend Afghan jirga, he termed the next three months as critical, and stressed the need for an effective strategy to meet political and economic challenges upfront.

The president said he was concerned over slow economic progress, and wanted the government to seize downslide to maintain existing pace of growth for the benefit of the people.

He said that for the first time since his take-over the international rating agencies had reported downturn in Pakistan's economy, which was a cause of concern for him. He said that stability and transformation of the economy was a prerequisite for transmitting its benefits to the people of Pakistan.

He deplored that Pakistan's two key allies in war on terrorism had issued travelling advisories, suggesting to their citizens to stay away from Pakistan. He said that such negative statements made adverse effect on Pakistan to slow down its pace of economic growth.

He said Pakistan had fetched $6.7 billion foreign direct investment (FDI) in 2006-07, and it targets $10 billion FDI in 2007-08. He said FDI has a snowballing effect on the economy as it encourages many more parties/companies to bring investment to a number of new areas to quicken the pace of progress of any country.

President Musharraf said that the Sharifs, Benazir Bhutto (BB) and Altaf Hussain should not come to Pakistan prior to presidential and general elections. His argument in support of the demand was that return of the exiled and self-exiled political leadership before the presidential and general elections could create political and social turmoil that could result in Pakistan's instability.

He added that post-election environment would be conducive for their comeback. The President ruled out the possibility of martial law, and said that he does not believe in any such step, in the given situation. However, on the question of emergency, he said that the option was talked about on August 8, but it was not exercised for various reasons. He dispelled the impression that the option of emergency was put off on the intervention of US Secretary of State Condoleezza Rice. He said that Rice had phoned him twice during daytime on August 8, but her calls could not be made through, and since in the afternoon consultations had started on emergency, she could reach him on telephone at midnight.

He said that the US State Secretary discussed with him the issue of Afghan jirga and his presence. The President said Rice wanted him to attend the Afghan jirga to make it a success to address several bilateral issues between Kabul and Islamabad, besides creating a better understanding between the two governments on anti-terror campaign.

He said that the voters' list and condition of national identity card for voting were something between the government and Election Commission of Pakistan (ECP) and they should sort it out in such a manner that all parties to the issue accept it with an open mind and heart.

He said that present assemblies will elect him as President for the 2nd term. However, he will seek endorsement of his election from the next assemblies. APNS team greeted President General Pervez Musharraf on his 64th birthday.

http://www.brecorder.com/index.php?id=604629&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Information technology products: Shaukat tells MoC to find new markets ​*
ISLAMABAD (August 12 2007): Prime Minister Shaukat Aziz has directed Commerce Ministry to start aggressive efforts for identification of new markets and to introduce information technology (IT) products, granite stones and other value-added items, sources in the Ministry told Business Recorder here on Saturday.

The PM gave these directions while chairing a special Cabinet meeting on July 18, convened to approve the Trade Policy 2007-08 wherein export target was fixed at $19.2 billion.

The Prime Minister was also of the view that trade with China must be reviewed and immediate steps be taken to enhance trade relationship with special reference to Free Trade Agreement (FTA). Sources said that an inter-ministerial delegation is leaving for Beijing shortly to discuss trade and investment-related issues, and added that Chinese investors would be offered more incentives.

"Exports is the domain of the private sector. The government is to carry out trade diplomacy for the identification of export markets," sources quoted the Prime Minister as saying.

Aziz also advised that special attention be given to bring down cost of doing business, and enhance managerial capacity and labour productivity through skill development so that the country is able to compete in the international market, sources said.

A number of suggestions were made during the meeting which included emphasis on value-added products, focus on SMEs, ambitious plan for fruits and vegetables in their area of growth as well as cold areas to reduce storage cost on account of power consumption, allowing import of construction machinery by the overseas Pakistanis, focus on marketing outlets abroad, public private partnership in the different manufacturing areas, provision of protection to football and surgical instruments industry of Sialkot and diversification of export portfolios to new markets.

Sources said that the Cabinet rejected two proposals of Commerce Ministry regarding duty-free import of sports motorbikes and vintage and classic cars being used for sports rallies.

"Import of vintage and classic cars and sports motorbikes would not be viewed favourably by the common man and its import may not be allowed," sources quoted Prime Minister as arguing against the proposal. They said that the Commerce Ministry would issue SRO for incorporating amendments in export and import policy order after the Law Ministry clears the wording. The Cabinet directed the Industries Ministry to take measurers for the development of small and medium enterprises (SMEs).

The Cabinet also directed that clean cotton program, already approved by the government, should continue, Revenue Division should rationalise duty on shuttlecocks and Navtec should be provided more funds for skill development.

http://www.brecorder.com/index.php?id=604679&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*SPI-based inflation up 7.56 percent ​*
ISLAMABAD (August 12 2007): The SPI-based inflation is 7.56 percent up on week ending August 9 over the same period last year with wheat flour dearer by 11.82 percent and rice basmati 53.51 percent. The inflation has been 9.48 percent for the low-income group as compared to 5.38 percent earning over Rs 12,000 per month.

The date released by the Federal Bureau of Statistics (FBS) on Saturday showed no sign of relief for the poor as the prices of core kitchen items have been increasing regularly. The perpetual rise in the prices of essential kitchen items have been eroding the budget of those who are earning between Rs 3,000 and Rs 5,000.

The cooking oil was 27.60 percent dearer over last year, wheat 9.25 percent and vegetable ghee 27.84 percent. The regular increase in the prices of core food items such as wheat, cooking oil, pulses and milk have been disturbing the budget of the poor.

Moreover, there has been no check on prices varying from market to marker resulting in disputes among vendors and buyers. The section in the local government system that provides a mechanism to regulate the market prices was flatly ignored.

The SPI inflation has been recorded 157.61 percent on August 9, 0.63 percent up against 156.62 over last week. The low-income group was more affected by the price-hike, as inflation was recorded 9.48 percent for Rs 3,000 earner against 5.38 percent for those earning above Rs 12000.

The week under review shows that price-hike was 9.48 percent for people earning between Rs 3,000 and Rs 5000 and 8.20 percent for those earning between Rs 5,001 and Rs 12,000. The SPI bulletin, based on data collected for about 53 items from 17 centres showed that 21 items registered increase, 10 items declined, while 22 remained unchanged.

Further analysis of the data showed that 19 items were dearer by double digits over last year. These included masoor pulse washed 32.19 percent, red chillies 75.73 percent, milk powdered 30.06 percent, mustard oil 32.83 percent, veg ghee tin 27.84 percent, cooking oil tin 27.60 percent, cooked dal plate 11.06 percent, veg ghee loose 37.94 percent, milk fresh 13.77 percent.

The prices of egg is 22.23 percent dearer over the last year, wheat flour 11.82 percent, rice basmati 53.51 percent and curd 12.80 percent, rice Irri 39.37 percent, cooked-beef plate 10.88 percent and sandal gents Bata 25.06 percent. Among these items, in a short span of one week, the prices of tomatoes went up 16.78 percent up, onions 12.42 percent, chickens 5.22 percent, breads plan mid-size 2.95 percent and potatoes 3.60 percent.

http://www.brecorder.com/index.php?id=604655&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'Investment climate conducive in Punjab' ​* 
LAHORE (August 12 2007): Provincial Minister for Trade and Investment, Dr Sohail Zafar Cheema has said due to sagacious and far-reaching policies of Punjab Chief Minister Chaudhry Pervaiz Elahi, industries are being set up in the province as a result of which large scale job opportunities are being made available.

He said Sundar Industrial Estate has been established in Lahore under private-public partnership where enormous foreign and local investment opportunities are being generated.

The Minister said that industrial estate is being set up in Faisalabad over an area of 4,000 acres while Multan Industrial Estate has been rehabilitated which will provide thousands of job opportunities to the unemployed people. He said that technical training is being imparted to 100,000 people annually at union council level throughout the province under Tevta and they are being provided job opportunities in these industrial units. The minister said capacity of this training programme would be doubled.

He said Shaikh Zayed Centre and Sports City are being established in Lahore at a cost of 700 million dollar each. He said stores are being established by the international organisations like MAKRO and METRO which will result in investment of hundreds of million dollars.

http://www.brecorder.com/index.php?id=604698&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'Sundar Industrial Estate to provide thousands of jobs' ​*
LAHORE (August 12 2007): Provincial Minister for Industries, Muhammad Ajmal Cheema has said the government measures and projects for industrial and social development in accordance with the vision of President Pervez Musharraf and Chief Minister Punjab Chaudhry Pervaiz Elahi had started yielding results.

The Sundar Industrial Estate was the best industrial estate of the country, which would result in provision of 60,000 direct and 6,00,000 indirect job opportunities to the people. Industrial estates were being established throughout the province to expedite the pace of industrial development as well as generation of employment opportunities and their management had been given to the private sector.

He said promotion of industrial development and provision of employment was part of vision 2020. He expressed these views while talking to a delegation of industrialists at his residence, here on Saturday.

The Minister said on the special directions of the Chief Minister Punjab, Chaudhry Pervaiz Elahi, Sundar Industrial Estate project was started three years ago at a cost of Rs one billion under public private Partnership and its management was given to the private sector. He said the Sundar Industrial Estate consisting of 1,500 acres of land had been provided state-of-the-art infrastructure.

He said all plots in this industrial estate had been sold and it has its own power generation system. He said, medicines, chemical, pesticides, plastic, food beverage and other industries were being set up in Sundar Industrial Estate.

He said water treatment plant was also being installed here for provision of potable water. He said a labour colony was being constructed here to provide residential facilities to the labourers and steps have been taken to provide education and health facilities to the workers. He said due to effective monitoring system of the Sundar Industrial Estate, outstanding results had been achieved.

http://www.brecorder.com/index.php?id=604724&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Mineral sector allocated Rs 326 million ​*
ISLAMABAD (August 12 2007): The government has earmarked Rs 326 million during the financial year 2007-08 for the development of mineral sector in the country, Planning Commission sources said.

The focus of the mineral sector during the year would be on generation of basic geological data and its dissemination through print and electronic media, for attracting international investment particularly in metallic minerals and coal related energy projects by publishing project profiles of world class mineral resources in well-reputed mining magazines.

Accelerated geological mapping and geo-chemical exploration of high mineral potential areas of Pakistan would assist understanding the genesis and geometry of these deposits for the subsequent development.

The revised mineral policy would attract local and foreign investment and accelerate exploration and research activities in the country. The minerals with good chances for export, substitute imports and meet the local consumption were being given priority, the sources informed.

An amount of Rs 326 million has been earmarked for the minerals (non-fuel) sector. Major projects to be carried out during the year 2007-08 include: Ground follow-up Aero-magnetic anomalies in Chagai district at Balochistan at a cost Rs 35 million, upgradation/strengthening of Geo-science Advance Research Laboratories GSP Islamabad at a cost of Rs 70.180 million.

Accelerated Geological Mapping and Geological exploration of the out-crop area of the country at a cost of Rs 40 million, feasibility study for development and exploration of Chicchalai iron ore and commissioning of Steel Mill at Kalabagh at a cost of Rs 52.867 million, strengthening and capacity building of Mineral Wing at a cost of Rs 30 million and other relating to exploration of water in Balochistan and Gemstones Training-oriented projects at a cost of Rs 52 million.

http://www.brecorder.com/index.php?id=604750&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Prime Minister inaugurates new hotel near Karachi Airport ​*
KARACHI (August 12 2007): Prime Minister Shaukat Aziz here on Saturday performed the inauguration of the Grand Mercure Hotel here. The 118-room hotel, with five star facilities, is located close to Jinnah International Airport.

Sindh Governor Dr Ishrat ul Ebad Khan, Federal Ministers Ameer Muqam, Awais Ahmed Khan Leghari, and Ministers of State Tariq Azeem Khan and Ali Asjad Malhi were also present on the occasion.

The Prime Minister said that opening of new hotels in the country, especially in Karachi, is the need of the hour because in a country which is growing and the economy which is moving ahead, the movement of people is linked to the growth of the economy. He said there is also need for tourist facilities, and that 2007 is the 'Visit Pakistan Year'.

He said that Pakistan with its historical past and Mughal and Gandhara periods as well as Indus Civilisation attracts a fair number of people who want to explore these areas. He said that aircraft and air travel are bringing about a major Transformation, "and we are trying to improve our national carrier, Pakistan International Airlines (PIA) and encouraging competition".

Shaukat said that many more airlines are coming to Pakistan as they see growth in business. He said that Pakistan also has about seven million people working overseas--in Europe, North America, Middle East and Far East. He said that airport management has also become a specialised field.

He pointed out that two major airports are being constructed in the country. The construction of Islamabad Airport has started and will be completed in three years' time. Another airport would be built at Gwadar.

The Premier said that airports really are the first impression a visitor gets when he visits a country. He said that as far as tourism is concerned the government will do whatever it can to bring more passenger traffic into the country.

Shaukat said that with the increased activity in the economy, the need for hotels is growing across the country. New hotel projects are coming up in Karachi, Lahore and Islamabad.

He said that the PIA and the private carriers are expanding and the job of the government is to create enabling environment. He said: "We are looking at six to eight percent growth in the economy per year. We are one of the fastest growing economies in Asia. This growth rate is moving ahead in the right direction."

He pointed out that the per capita income this year would cross 1,000 dollars. Civil Aviation Authority (CAA) Director-General Farooq Rehmatullah presented the address of welcome. The General manager of Grand Mercure Hotel, Thierry Goepfrort, also spoke on the occasion. Earlier, the Prime minister unveiled the plaque and performed the inauguration of the hotel.

http://www.brecorder.com/index.php?id=604715&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*LNG terminal at Port Qasim to be completed in November 2008 ​*
LAHORE (August 11 2007): The liquefied natural gas (LNG) import terminal, being set up by the Associated Group and Pakistan Gasport Limited at the Port Muhammad Bin Qasim on 'Built, Operate and Transfer' (BOT) basis, will be completed in November 2008 when the LPG production and first cargo will start.

The Associated Group Chairman and Chief Executive, Iqbal Z Ahmed, told Business Recorder that this terminal is located at twin pier, just north of Qutub point, near the confluence of Kadiro and Phitti creeks.

China Harbour Engineering and Adayard Dubai are EPC contractors while Techno-Consult International and Mustang Engineering are local and foreign consultants. He said that agreement was signed on April 28 this year while project completion date is set for November 2008 when the LPG production would start.

About the project's current status, he said that feasibility report was submitted to Port Qasim Authority (PQA) on January 12 and now engineering design of the jetty and submerged pipeline laying is in progress.

Apart from this, re-gas and LPG extraction facility detail design is in progress in Houston by Mustang Engineering. "Storage vessel lease arrangements are also in progress while the LNG supply source and supply vessel arrangements are underway," he added.

He said the re-gas platform fabrication contract was being finalised while banking consortium for project financing had already been completed. The Associated Group wants to buy LNG from spot market, he said, adding that the long-term sourcing of LNG and understanding of contracts for LNG purchase, RLNG supply to utilities, RLNG transportation agreements and direct sales to large customers were the project's challenges.

Of the Associated Group, he said the group started as a small family concern. After five decades of hard work and dedication, it is today one of Pakistan's pre-eminent corporate leaders with a wide range of interest. "We believe in corporate social responsibility, in giving back to the community and working on projects that benefit Pakistan's economy. We believe in profit, but profit from work that benefits humanity and helps economy," he added.

He said the group is one of the leading players in the energy sector of Pakistan and its flagship company Jamshoro Joint Venture Ltd is the single largest producer of LPG in Pakistan. The group also holds Lub Gas and Mehran LPG which market LPG across Pakistan through a wide network of distributors. The group is also involved in the production of NGL/Naphtha, fabrication of LPG cylinders, construction of LPG filling plants, real estate development.

He said that the Group is in advanced stages of augmenting production at the Jamshoro Plant by tapping oil and gas fields that have been declared uneconomic by the Government of Pakistan. "The Hanover Company, Walters Power International and our American and Chinese partners are pursuing these business opportunities with us," he said.

He said: "We strive for unequivocal excellence in all aspects of business so that we are able to satisfy and, indeed, exceed the expectations of our shareholders, employees and consumers. We believe in our vision and courage to lead the industry to higher standards."

He praised the government's economic policies, saying that the government's policies were conducive for investment both local and foreign. He said energy business was a difficult business but a good one, too. "However, only those having competitive edge will be able to survive in this business," he added.

He said that the business of imported LNG is viable in Pakistan because it is cheaper than furnace oil. Supporting the Iran-Pakistan-India gas pipeline project, he said this project is vital for all the three countries. "Our commitment is to meet energy requirements. In a record period of five months, the group has set up a 136MW power plant," he added.

Ahmed, who is also World Punjabi Organisation President, Pakistan Chapter, said peace was vital for both India and Pakistan. Both countries should make efforts for ensuring lasting peace in the region. He also supported exhibition of Indian films in Pakistan.

http://www.brecorder.com/index.php?id=604381&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Horticulture export issues discussed​*
ISLAMABAD, Aug 11: Pakistans horticulture export share remained stagnant at $150 million during the last few years as against the total world horticulture market of $80 billion.

This negligible horticulture share in the world market is due to poor infrastructure, lack of proper packing and grading and low compliance to world standards.

Only 16 per cent of fruits are being processed, although this activity offers great opportunities to augment volume of value-added products using modern technology.

The fruits and vegetables exported in fresh form attract discount prices because exporters are unable to provide adequate grading and packing.

The potential markets for Pakistani exporters have been identified in Europe and the Middle East.

These issues were discussed at length in the first meeting of the sub-committee on infrastructure of the task force on horticulture finance and competitiveness.

The meeting was headed by Secretary Board of Investment Mushtaq Malik. It was attended by representatives of various ministries.

The sub-committee was established to help the task force achieve its goal by ensuring that all relevant actions are taken in developing needed infrastructure to facilitate production, post-harvest handling, storage, transport, processing and export by sea, land and air of the products of horticulture.

An official announcement issued here said the committee identified core areas and issues impacting competitiveness of the horticulture sector in Pakistan.

The meeting confirmed that the horticulture industry required major support in the area of infrastructure.

It was also noted that there were disparities between the infrastructure in Punjab where facilities were generally good and the other provinces.

The committee recognised the need for a national approach that can link production in remote areas with main markets.

The sub-committee will also be including its recommendations on financing requirements for infrastructure projects, where more private sector and public-private partnerships will be encouraged.

http://www.dawn.com/2007/08/12/ebr7.htm


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## Neo

*Pakistan-Afghan highway opened​*
KHYBER AGENCY, Aug 11: Transporters, traders and people from different walks of life breathed a sigh of relief after the Pakistan-Afghan highway was opened on Friday night for all types of vehicular traffic after three days of closure.

The highway was closed after the people of Naiki-Khel, a sub-tribe of Zakhakhel, blocked the road over a land dispute three days ago.

Officials said that the tribesmen who blocked the road had been handed over to the political administration in Landi Kotal.The administration after the dispute had closed the road for two days, demanding the handing over of the perpetrators.

The tribesmen of Zakhakhel assured the administration that after the return of their leaders from the Pakistan-Afghan grand jirga, problems of the road closure would be solved forever.

The closure of the highway had caused traffic jams and created a number of problems for commuters.

http://www.dawn.com/2007/08/12/top11.htm


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## Neo

*Pak growth seen at 6.1pc during 2007-11 ​*
LAHORE: A leading US economic magazine has forecast Pakistans GDP to grow at an average of 6.1 per cent during 2007-11 peaking with inflation declining to 5.5 per cent and interest rates to 7.3 per cent by 2011.

The magazines intelligence unit prepared a research report on Pakistan stating that besides political situation, military and militancy also provided a deep insight into Pakistans economy.

The entire economic structure of the country has been outlined including its main exports and export destination and import items and major avenues of imports.

The study of the intelligence unit of the magazine is not in line with the vision of present economic team that aims for GDP growth of eight per cent or higher for the next decade and expects inflation to reach 5.5 per cent in 2008-09.

The report of the magazine states that it expects the Pakistani currency to average Rs61:$1 in 2007 and Rs62:$1 in 2008, based on support from high levels of foreign investment.

Macroeconomic policies will focus on maintaining economic growth while fighting inflation. Efforts to widen the tax net and improve revenue collection will achieve some success.

Real GDP growth will average 6.1 per cent a year during 2007-11, driven by private consumption and investment.

The economy will remain dependent on textiles, other manufacturing and services.

Inflation, high oil prices and a possible asset-price correction are the biggest macroeconomic threats.

The current-account deficit will remain large, but will start to decline in 2007-08 as higher interest rates dampen domestic demand, leading to a slowdown in import growth.

Giving year wise predictions about different economic indicators the report predicts that the real GDP growth would be 6.9 per cent in 2007, 6.0 per cent in 2008, 6.2 per cent in 2009, and 5.8 per cent in 2010 and 2011.

On consumer price inflation the study by the intelligence unit of the magazine expects that it would be 6.3 per cent in 2007, 6.0 per cent in 2008, 5.6 per cent in 2009 and 2010 and 5.5 per cent in 2011.

It states that the budget deficit would be 3.8 per cent of GDP in 2007, 3.9 per cent in 2008, 3.8 per cent in 2009, 3.6 per cent in 2010 and 3.3 per cent in 2011. The current account balance would be 5.6 per cent of GDP in 2007, 5.0 per cent in 2008, 4.0 in 2009, 3.9 per cent in 2010 and 3.7 per cent in 2011.

The short term interest rates (discount rate) would be 10.1 per cent 2008, 10.1 per cent in 2008, 9.6 per cent in 2009, 8.3 per cent in 2010 and 7.3 per cent in 2011.

The study expects value of US dollar against Pakistani currency to reach Rs61 in 2007, Rs62 in 2008, Rs64 in 2009, Rs65 in 2010 and Rs66 in 2011.

http://www.thenews.com.pk/daily_detail.asp?id=67921


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## Neo

*Low-income people worst hit by inflation ​*
ISLAMABAD: The weekly Sensitive Price Indicator (SPI) shows that inflation is hitting low income families the hardest as during the week ended August 9, the index stood at 9.48 per cent for the low-income group and only 5.38 per cent for high-income earners.

The combined SPI of 53 daily-use items for the week under review showed a 7.56 per cent increase compared to the corresponding week of the last fiscal, the Federal Bureau of Statistics (FBS) said on Saturday.

The bureaus statistics further revealed that most of the kitchen items recorded an increase in prices. For the income group earning less than Rs3,000, SPI inflation was 9.48 per cent; for Rs3,001 to Rs5,000, it was 9.15 per cent; and for the income bracket from Rs5,001 to Rs12,000, the inflation stood at 8.20 per cent.

The significant feature of the weekly bulletin of FBS was that year-on-year rise in prices of some necessities and kitchen items was exorbitant. 

These items are tomatoes, onions, chicken, potatoes, LPG, fresh milk, vegetable ghee (loose), cooking oil, milk powder and all kinds of pulses, which have hurt the low-income group the most.

The bulletin on SPI, based on data collected for about 53 items from 17 centres, showed that 21 items registered an increase and 10 items showed decrease, while prices of 22 items remained unchanged.

However, further analysis of data on yearly basis reveals that nine items are dearer by double digits. 

These include vegetable ghee 38 per cent, mustard oil 33 per cent, masoor pulse 32 per cent, milk powder 30 per cent, vegetable ghee (tin) 28 per cent, cooking oil (tin) 28 per cent and fresh milk prices increased by 14 per cent. 

Among these items, in a short span of just one week the prices of tomatoes shot up by 16.78 per cent, onions 12.42 per cent, chicken (farm) 5.22 per cent, potatoes 3.6 per cent, LPG (11 kg cylinder) 2.69 per cent, masoor pulse 2.25 per cent, powder milk 1.92 per cent and mustard oil by 1.79 per cent percent. 

These figures further showed that though prices of 22 items posted no change during the week, yet compared to the corresponding week of last year, several items are now dear. 

For example rice Irri-6 is dearer by 39 per cent, match box 26 per cent and cooked beef by 11 per cent. 

The bulletin further indicates that the prices of 10 items declined, but compared to prices of corresponding weeks of last year, items, which showed an increase in prices, were; rice basmati (broken) was dearer by 54 per cent, egg (farm) 22 per cent, curd 13 per cent and wheat flour price up by 12 per cent.

http://www.thenews.com.pk/daily_detail.asp?id=67922


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## Neo

* PM asks workers to learn new technologies ​* 
KARACHI: Prime Minister Shaukat Aziz has said workers should learn new technologies to enhance capability and productivity. Being the back bone of economy workers are carrying forward Pakistan.

You should leave obsolete working skills and learn modern technologies to enhance productivity, he told a delegation of leaders of workers unions of the Karachi Port Trust and the Port Qasim Authority here at the Governors House on Saturday. Federal Political Affairs Minister Amir Muqam, Minister of State for Information Tariq Azim and Sindh Chief Secretary Ejaz Qureshi were also present 

The prime minister said technology was future of the world and every country was striving to acquire new technologies for faster growth, improve efficiency and competitiveness. He said China, a close friend of Pakistan, had grown rapidly and excelled due to hard work and adoption of new technology 

We are taking every possible step to protect the interest of workers, raised salaries of govt employees manifold in the last eight years and enhanced minimum wage twice in two years. We will take more pro-worker measures, he assured He said he would consult managements of the KPT and the PQA and take a decision to benefit both parties. We will examine your demands and take a decision with the consent of both parties.

http://www.thenews.com.pk/daily_detail.asp?id=67923


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## Neo

*Infrastructure problems block horticulture growth ​*
ISLAMABAD: Lack of infrastructure in the shape of dedicated refrigerated trucks, rail cars and containers, space on aircraft and improved connectivity with the international markets is a major impediment blocking the growth of the horticulture sector of Pakistan.

The issue was raised by the Sub-Committee on Infrastructure (SC-I) of the Task Force on Horticulture Finance and Competitiveness, which met on Saturday under the chairmanship of Mushtaq Malik, Secretary Board of Investment.

The committee noted that there were disparities between the infrastructure in Punjab, where facilities were generally good, and other provinces. It recognised the need for a national approach that could link production in remote areas with the main markets.

The aim of the committee is to help the task force achieve its goal by ensuring that all relevant actions are taken in developing needed infrastructure to facilitate production, post-harvest handling, storage, transport, processing and exports by sea, land and air of horticulture products.

The committee identified core areas and issues impacting the competitiveness of the horticulture sector. The meeting noted that the horticulture industry required major support in the area of infrastructure. This particularly included transport (eg dedicated refrigerated trucks, rail cars and containers), space on aircraft and improved connectivity with the international markets.

The committee will also be including its recommendations on financing requirements for the infrastructure projects, where more private sector and public-private partnerships will be encouraged.

Soft infrastructure in the form of improved technology transfer, increasing knowledge at the farm level and developing access to market information were also identified as priority areas to be included in the National Horticulture Policy and governments plans for the sector. The committee will submit the findings of the meeting to the Implementation Committee for a final review of the task force.

Dr Salman Shah, Adviser to the Prime Minister on Finance, Economic Affairs, Revenue and Statistics will make a presentation to the prime minister on improving the financing for the horticulture sector to improve its competitiveness.

The task forces recommendations would also complement the governments strategy for the National Trade Corridor initiative, which is envisioned to create growth-facilitating infrastructure. This will revamp the whole transport sector including ports, roads, railways, aviation, etc.

The framework takes a holistic and integrated approach to reduce the cost of doing business by improving the trade and transport logistics chain and improving Pakistans overall competitiveness.

To improve the competitiveness of the economy, Prime Minister Shaukat Aziz has earlier announced that roads are a major part of the National Trade Corridor (NTC) and all 115 ongoing projects pertaining to roads and highways costing Rs415 billion will be completed by 2014.

All these efforts are expected to help increase Pakistans exports from US$17 billion in 2006-07 to around $250 billion by 2030. The infrastructure development initiatives will ultimately facilitate in decreasing the cost of doing business through improvements in trade logistics for the horticulture sector as well.

Speaking on the occasion, Senior Adviser to the Competitiveness Support Fund Geoff Quartermaine Bastin briefed the members that the Special Economic Zones might have a role to play in the development of the horticulture industry and the committee would work with CSFs consultants in this area to identify SEZs that offered particular benefits to the industry.

The world horticulture market is valued at $80 billion to which Pakistan contributes an annual $150 million worth of products. Only about 16 per cent of fruits are being processed, although this activity offers great opportunities to augment the volume of value added products using modern technology.

The fruits and vegetables exported in fresh form attract discounted prices because the exporters are unable to provide adequate grading and packing. Pakistans horticulture export industry share in the world market rose steadily from about 5 per cent in 1991 to 12 per cent in 2004. The potential markets for the Pakistani exporters have been identified in Europe and the Middle East.

http://www.thenews.com.pk/daily_detail.asp?id=67926


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## Neo

*AJK revenue collection soars by 41 per cent ​*
MIRPUR (AJK): The Azad Jammu and Kashmirs Tax Department has collected revenues of Rs4.74 billion during financial year 2006-07 against last years collection of Rs3.35 billion. This shows a surge of Rs1.39 billion or 41 per cent in revenue collection despite the adverse effects of the destructive earthquake of 2005 on the economy of AJK.

Unveiling the facts, a spokesman for the AJK Tax Department told The News the department had broken all records of revenue collection, achieved as a result of broad-based reforms introduced by the Regional Commissioner Taxes AJK Sardar Irshad Shaheen. 

The reforms were primarily aimed at improving the performance of the tax department, besides promoting and encouraging a tax culture in Azad Jammu and Kashmir.

The spokesman revealed that the Indirect Tax Wing (E&ST) achieved an unprecedented increase in the collection of indirect taxes, despite a drastic reduction in the rate of sales tax as well as closure of some manufacturing factories.

He disclosed that arrangements for training and frequent workshops for the officers, expansion of the department on professional lines as well as introduction of incentives for efficient and honest workers gave a tremendous boost to the efficiency of the department. In the process, disciplinary action against more than 80 employees was also taken, which resulted in a substantial fall in mismanagement and corruption, he added.

Simultaneously, he said, efficient and honest officers were promoted on merit, some new offices were opened and cash rewards were introduced as an incentive for enhancing the collection of revenue.

In recognition of the officers contribution to surpassing the revenue target, the AJK Council had approved the purchase of three new vehicles for them, he said, adding 23 new motorcycles had also been distributed among the officers for efficient and speedy recovery of taxes.

About new appointments, the spokesman said more than 6,500 applications had been received for around 113 vacant posts and a transparent system of conducting tests had been introduced by outsourcing the job to an expert organisation.

All these measures contributed to an unparallel surge in overall revenues including income tax, sales tax, federal excise and other taxes, he added.

Giving the break-up of revenue collection, he said income tax collection for the year ended June 30, 2007 stood at Rs3.45 billion against last years Rs2.56 billion and target of Rs2.8 billion.

Similarly, collection of sales tax, federal excise and other taxes came to Rs1.28 billion compared to last years collection of Rs790 million and target of Rs810 million.

The members of the AJK Council as well as the president and the prime minister of the state hoped that enhanced collection of taxes would enable the AJK government to rely more on its own resources, the spokesman added.

http://www.thenews.com.pk/daily_detail.asp?id=67931


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## Neo

*Govt regards IT a key driver of economic growth: PM​*
KARACHI: Prime Minister Shaukat Aziz said on Friday that the government considers Information Technology (IT) a key driver of economic growth and has created an enabling environment over the last few years. 

This, Mr Aziz said, has resulted in tremendous expansion, value addition and employment generation. He was talking to a delegation comprising corporate leaders, authors, researchers and venture capitalists from various countries who are currently in Pakistan to attend a conference in Karachi arranged by Pakistan Software Export Board (PSEB), said a statement. The meeting was held here at the Governor House on Friday night.

The PM said Pakistani companies are well positioned to become active contributors to the global knowledge economy where globalisation, continuous change and information flows are re-inventing the rules of the game. This, he said, is a unique opportunity for corporate leaders in Pakistan to interact with global leaders of the knowledge economy.

Highlighting the achievements of the government for the growth of information and communication technology, he said the reforms in information technology and telecom sector were underpinned by liberalisation, privatisation, deregulation and transparency.

Referring to the demographic division of Pakistan, the PM said out of 160 million population, 100 million people are below the age of 25 and this fact presents both a challenge and an opportunity. The best way to leverage this potential is to focus on human development and in particular on education and skills, reflecting national and international market requirements, he added.

The PM further said young people are among the most prolific and knowledgeable users of information and communication technology. Mr Aziz called upon the policy-makers and industry leaders to put their minds together to produce suitable technologies, applications and services to facilitate access to children and youth. The young people everywhere must have equal opportunities to rise out of poverty and illiteracy and to realise their full potential, he added.

Elaborating the rapid growth in telecom sector, he said that tele-density has increased from three percent in 2000 to 40 percent in 2007. The total number of fixed and mobile subscribers, he said has reached 67 million, with major contribution coming from the mobile sector. Pakistan has already crossed the Asian connectivity average, surpassing India and Sri Lanka, and is close to China, he added.

Mr Aziz said the telecom sector attracted foreign investment on license and infrastructure to the tune of $9 billion during the last five years and another $4 billion is expected on roll-out by 2010. Today, he added, over 110,000 graduates are employed in the economy and the projected demand by 2010 would be for around 230,000 graduates. To meet this demand the Ministry of Information Technology, Higher Education Commission and Pakistan Software Export Board are undertaking a number of programmes to help ensure that supply matches the projected demand, he said. Talking about the significance of capacity building in the IT sector, the Prime Minister said a comprehensive programme of Technical and Vocational Education aimed at maximum utilisation of existing facilities as well as creating new ones has been established under the title of National Vocational and Technical Education Commission. 

At present 350,000 students per annum are being imparted various skills across the country and it is targeted to reach the level of one million students per year by 2010, the PM said. Explaining incentives given to foreign investor in Pakistan the Prime Minister said up to 100 percent equity ownership, 100 percent repatriation of profit and corporate tax exemption on IT exports till 2016 are the salient features of the governments policy. Owing to incentives and programmes as well as availability of a large pool of English-speaking technical manpower, the PM said Pakistan offers a tremendous competitive advantage for the corporate sector. app

http://www.dailytimes.com.pk/default.asp?page=2007\08\12\story_12-8-2007_pg5_9


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## Neo

*Pakistan must improve global performance in exports ​*
ISLAMABAD (August 13 2007): Pakistan has to improve its global competitiveness in exports, which means that it will have to improve its index from the present 91 among 125 countries in 2006. It was 94 in 2005.

According to a working paper of Pakistan Institute of Development Economics (PIDE), which examines the potential for export growth for improving global competitiveness, it is a multi-faceted problem calling for improvement in governance, technological progress, improved value-addition and sophistication of technology.

The working paper 'International Competitiveness-where Pakistan Stands?', prepared by Staff Economist Uzma Zia, has stressed the need for technology-intensive activities. It says that high technology exports will come by strengthening research and development through investment in human capital. To achieve this, there should be combined effort of the main three actors ie government, individuals and business initiatives by firms and private sector.

The working paper observes that being at 91st position among 125 countries, Pakistan is counted among the worse performers because of the absence of good governance. Moreover, the government has shown quite low ranking in all nine pillars of the competitiveness index, especially health, primary education, macro economy, higher education and training and technological readiness.

It is pertinent to mention that the government so far has been working on a draft of technology-based development or knowledge-based economy for the last three years, without much tangible progress. The draft has not been finalised yet.

It may be further pointed out that the global competitiveness report on Pakistan with regard to various pillars for competitiveness index endorses Pakistan's performance in human development and some sectors of social indicators.

Referring to experts' analysis and review of the country's exports, the paper notes that Pakistan's share in total world exports has declined between 1990 and 2002. Its share of global manufacturing exports has remained stagnant at 0.18 percent, whereas several countries like China, Malaysia, Thailand and India have shown rapid expansion in exports by 2004.

Pakistan invested heavily to prepare for post-MFA regime and showed satisfactory progress in the first six months of 2005 in export of cotton manufactures. Despite structural and economic reforms, Pakistan's economy remains dependent on in producing and processing which contribute 12 to 15 percent of national products.

According to experts, Pakistan scores relatively low on export sophistication because of low technology. The country's capacity in high technology and scientific research is limited. Thus, its share in technology-intensive products has been low. Further, skill development and social/human capital have suffered neglect and there was decline in education spending. This resulted in low productivity. A comparison with productivity measure with a few regional economies indicates that Pakistan's estimated value-added per capita manufacturing is lower.

As noted by some economists, Pakistan's unit wage costs are higher than most regional economies. The reasons for less encouraging business climate include inadequate provision of infrastructure, high business costs and high level of government regulations, bureaucracy and political situation, the paper adds.

The paper said that World Bank review of the value chain analysis of 2006, useful in assessing export competitiveness, examined the export of five specific items like textiles, fisheries and shrimps and new products like marble, powdered milk and agri-businesses and automobile items.

Findings on the basis of production costs of all segments of value chain, productivity and export competitiveness spoke of relevant policies/constraints to cost and quality issues, food quality and safety standards. Major constraints identified were infrastructure, burdensome regulations, weak legal and enforcement framework, low coordination among government agencies, and inadequate access to finance.

An earlier survey/analysis of value-added manufacturing by ADB brought out similar weaknesses like low technology, and inadequate adoption of high technology, and had very little share of medium and high technology.

The paper stresses the need not only for specialisation in textiles but also for improvement and innovation.

http://www.brecorder.com/index.php?id=605137&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*ADB to provide $500 million for infrastructure uplift project ​*
FAISALABAD (August 13 2007): Asian Development Bank (ADB) will provide $500 million for Private Participation in Infrastructure Development Project - MFF. In a project study, Julie Rogers, Principal Financial Sector Specialist of ADB mentioned that the Private Participation in Infrastructure and Utilities Sector Development Programme (PPI SDP) aims to enhance growth through improved infrastructure and utilities.

It will promote private sector participation in infrastructure and utility investment and maintenance, thereby reducing the government's fiscal burden and enhance the population's access to quality infrastructure services. To achieve these objectives, the PPI SDP will (i) strengthen the enabling environment for PPI by addressing remaining policy, legal, regulatory and institutional constraints to PPI and (ii) provide technical and financial support for PPI subprojects, ADB expert added.

Project study revealed that infrastructure development is a key pillar of the Pakistan government's Medium-Term Development Framework (MTDF) for 2005-2010 in recognition of its importance in sustaining economic growth to alleviate poverty. Addressing the serious bottlenecks in infrastructure and utilities will require the investment of substantive resources over the MTDF period and beyond. Given the government's fiscal situation, these investments cannot be financed by the public sector alone.

Hence, alternative approaches are needed, including private participation in infrastructure and utilities. It is proposed that the investment programme will be supported by a multitranche financing facility (MFF) amounting to $500 million.

http://www.brecorder.com/index.php?id=605145&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Punjab government spends record amount on uplift projects ​*
LAHORE (August 13 2007): Punjab Food Minister Hussain Jahanian Gardezi has said the provincial government has spent record funds on the development of education, health, agriculture, infrastructure, sewerage, sanitation and other sectors of social development.

Talking to a delegation of Pakistan Muslim League (PML) workers he said billions of rupees have been utilised in various sectors for the uplift of entire districts of the province, which has accelerated the pace of social development. He said educational budget has been increased manifold and a sum of Rs103 billion has been spent for the promotion of education.

The minister further said that as the dream of progress cannot be realised without education, therefore, the government is strengthening education sector on priority basis. He said that missing facilities in educational institutions have been ensured and 60 thousand new teachers have been recruited.

Hussain Jahanian Gardezi said that due to distribution of free textbooks, provision of educational stipend to girl students and free education up to matric level, 2.2 million new students have been enrolled in schools. He said that 15 percent increase has been registered in the literacy rate due to the measures taken by the government. He said that special attention is being paid to the education of special children so as to make them useful citizens of the society.

http://www.brecorder.com/index.php?id=605182&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*'Tianjin investors to contribute in economic development of Pakistan' ​*
BEIJING (August 13 2007): The Mayor of Tianjin Dai Xianglong has expressed the hope that the Tianjin entrepreneurs would work together with their Pakistani counterparts to help make contribution for the prosperity of the people and for the economic development of the South Asian country by making investment in various projects.

He was talking to a group of foreign journalists during a visit to Tianjin conducted jointly by the Information Department of Ministry of Foreign Affairs and Municipal Government of Tianjin.

"China and Pakistan maintain very good relations", he said and added that "we really want to see the stability and development in Pakistan". The Mayor told APP special correspondent during Q&A session after a briefing on various development projects being carried out in the port city of Tianjin that he maintains old friendship and has very good relations with Pakistani Prime Minister Shaukat Aziz.

He observed that when China makes investment in foreign countries we give priority to those having good relations with us and of course Pakistan is one of them.

Mayor Dai Xianglong said China maintains huge foreign exchange reserves and there is no bar on Chinese companies as well as individuals to make investments in foreign countries by using foreign exchange.

The central government, in this regard has devised a policy to encourage and support the Chinese enterprises and individuals for investments in foreign countries, he said.

China, he said has already invested in countries in Central Asia as well as in Egypt and most of these investments have been done in the industrial zones.

The Mayor said that he is very much supportive of economic globalisation and firmly believe in free flow of capital, investment and the labour technology.

He expressed the hope that the Tianjin entrepreneurs would make investment in Pakistan and work together to contribute for the building of Pakistan and to help achieve prosperity in the South Asian country.

http://www.brecorder.com/index.php?id=605211&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Strategy for SME industrial estates in Punjab evolved ​*
SIALKOT (August 13 2007): Punjab government has evolved a strategy for the establishment of SME industrial estates in the Punjab. Official sources told Business Recorder here on Sunday that under the plan SME industrial estates would be set up in major industrial towns including Sialkot and work on the plan would be executed in near future.

The step was being taken for redressal of the problems being confronting by the SME sector, which is the backbone of the national economy of the country. All basic facilities would be ensured to the SMEs in these proposed SME estates, sources added.

Special attention was also being accorded on the development of industrial sector on modern and scientific lines aimed at enhancing export volume and to bring industrial revolution through setting up large-scale industries including agro-based industries in the province.

Under the programme, the government has introduced certain schemes for the development of small and medium industries besides loan facilities was being extended to the small and medium businessmen enabling them to upgrade their industrial units and for setting up new industrial projects in the Punjab.

More than Rs one billion had been set aside to diminish the financial problems being faced by the businessmen engaged with small and medium industries as well as for removing the hitches which were hindering the process of setting up of new industrial projects.

Apart from this, government was also providing loan facilities for the advancement and expansion of agro-based industries and dairy development, engineering and Information Technology in the Punjab.

The prime aim of setting up of large-scale industries was to ensure strong industrial base and to keep the economic wheel in to gear in the Punjab. The maximum establishment of industries will not only help in doubling the export volume but also create wide job opportunities for the jobless educated, skilled and unskilled labour, sources added.

http://www.brecorder.com/index.php?id=605185&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Inflation surges by 6.37pc​*
ISLAMABAD, Aug 13: Consumer price inflation rose modestly by 6.37 per cent in July over the same month last year owing to tight monetary policy. This would be the lowest increase in inflation, so far, recorded in any month of the last fiscal year because of falling prices, particularly freezing of oil prices which helped control non-food inflation.

The government has projected 6.5pc annual inflation to be achieved during the year 2007-08.

The annual inflation in 2006-07 was 7.77 per cent as against the projected target of 7 per cent.

Official figures released by the Federal Bureau of Statistics here on Saturday showed that inflation measured through consumer price index (CPI) declined by 1.01pc in July 2007 over the previous month (June 2007).

This showed that the tight monetary policy had resulted into bringing down the core inflation  non-food, non-energy  which pushed down overall inflation during the first month of the current fiscal year.

However, the challenging issue of food supply and overcoming shortage of food items still remains the same as the food inflation is still on the higher side, which recorded a growth of 8.47pc during July 2007 over the last years figures in July.This means that the scaling down of overall inflation will not bear any fruits as food prices, which were mostly consumed by the poor people, are still on the higher side.

Similarly, the government had frozen oil prices in the domestic market that also resulted in lowering of the transportation cost and fares.

With this, the non-food inflation also witnessed a steep decline during the month under review.

The slowdown in inflation during the month under review was mainly due to decrease in non-food inflation and core inflation. Though the government recently constituted a ministerial committee on core food inflation for working out short-and long-term policy measures, it is yet to come up with some solution for arresting prices of some essential commodities.

Analysts said food inflation would further rise as supply of essential commodities, like potatoes, onions etc., in the market might decrease, coupled by increase in the price of sugar, wheat, meat and some vegetables.

Apart from the increase in food items, the medicare charges and education went up by 13.99pc and 6.22pc, respectively, in July 2007 over the same months of last year.

This indicates that charges of basic facilities, like life-saving drugs and education fee, sky-rocketed, thus affecting the monthly budget of the poor people.

The house rent recorded a growth of 6.91pc in July 2007, textile products 7.41pc, household furniture 6.15pc, fuel and light 2.56pc and laundry 4.96pc over the same month of last year.

The only area where some decrease was witnessed was transport and communications which recorded a negative growth of 3.07pc and recreation charges 0.01pc during the month under review over last year.

WPI: The wholesale prices of commodities increased by 7.60pc in the month of July 2007 over the same month last year.

Official figures released by the Federal Bureau of Statistics (FBS) showed that on a monthly basis, the wholesale price of commodities witnessed an upward trend, indicating that prices of products would increase at retail stage.

The WPI measures changes in average ex-factory and wholesale prices of 425 items grouped into five broad categories.

The categories include food items, raw material, fuel, lighting and lubricants, manufacturing and building material.

The main commodities, which showed an increase in their prices during July 2007 over June 2007, are as under:

Food: Vegetables (15.22pc), eggs (12.69pc), basEn (10.98pc), onions (9.89pc), gram split (8.57pc), potatoes (8.50pc), wheat flour (6.09pc), maida (6.04pc), masoor (6.01pc), bajra (5.86pc), wheat (5.46pc), cotton-seed oil (5.43pc), chicken (5.27pc), sugar refined (4.02pc), mustard and rapeseed oil (3.25pc), powdered milk (3.21pc), rice (2.54pc) and salt (1.50pc).

Cotton (6.84pc), mustard/rapeseeds (5.21pc), tobacco (1.28pc), coke (13.64pc), furnace oil (7.38pc), chemicals (3.81pc), fertilisers (2.23pc), soaps (1.69pc), iron bars and sheets (3.25pc) and bricks (1.63pc).

The main commodities which showed a decrease in their prices in July 2007 over June 2007 are in food: tomatoes (39.86pc), moong (4.03pc), maize (2.75pc), jowar (2.48pc), gram whole (2.44pc), fresh fruits (1.79pc), gur (1.67pc), fish (1.63pc), pig iron (5.89pc), skins (3.30pc) and paper (1.12pc).

http://www.dawn.com/2007/08/14/ebr1.htm


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## Neo

*Engineering sector without regulatory check​*
ISLAMABAD, Aug 13: The government plans to provide regulatory mechanism to the engineering industry to stop large-scale smuggling of electrical goods, including air-conditioners, fans, household appliances, automotive parts and steel products.

Informed sources told Dawn on Monday that the regulatory mechanism was currently missing and was hitting the engineering industry badly.

The government has been proposed by its planners to accelerate the growth of the engineering sector by also rectifying the existing irrational tariff structure.

One of the many reasons for slow growth of engineering sector was said to be the absence of long-term vision for development.

There was hardly any integrated and consistent approach towards the engineering sector. The productive sectors have been marred with irrational tariff structure.

Now that the government has approved a broader vision for industrial development, our recommendations, especially to have some regulatory mechanism for the engineering industry, will help improve the performance of the sector, said one senior planner of the government.

The progress of the engineering sector has been described as less than satisfactory.

The contribution of engineering industry to the GDP is currently only $2 billion and it provides employment to a mere 600,000 people. Pakistan saves $3.75 billion per annum through import substitution. The rising trade deficit has been attributed mainly to import of engineering sector which is more than $2 billion (Rs132 billion).

The present share of the engineering industry in meeting the total demand is merely 25 per cent while the remaining is met through imports which have almost doubled over the last eight years.

Its share in total imports has varied from 33 to 42 per cent. The share of engineering goods in Pakistan's exports is only three per cent.

Pakistan exports $0.27 billion worth of engineering goods which is negligible share of the world trade. Major areas of imports include equipment for the textile industry, energy sector, cement plants, agricultural machine, electrical machinery and automobiles etc.

The local consumption of steel which is one of the major indicators of industrial development did not rise due to high prices of steel. Moreover, for most of the engineering industries, effective protection was negative.

The main reason for the negative protection was due to high duties on inputs whereas outputs were generally imported duty-free, under various concessionary tariff regimes or outright smuggled. Therefore, local engineering industry has been deprived of a major business opportunity.

The main causes of poor performance of engineering sector was the absence of integrated approach for balanced growth of all economic sectors; lack of consistent policies and political will in developing the local industry manifested in widespread smuggling of engineering goods; ad hoc approach in policy formulation and preferences for turn-key imports of plant and machinery; irrational and discriminatory tariff structure with relatively high import tariff on inputs and low zero rates on output/finished goods along with cumbersome procedures for customs clearance of imported inputs; priority to less value-addition areas for investment and tariff support and lack of incentives to attract investment in high value-added sectors; lack of institutional support and incentives for acquisition and absorption of foreign technologies.

Unfavourable cost structure was due to factors, such as lack of economy of scale in production, high financing cost, high inventory carrying costs, low labour productivity, high utility costs, and high cost of local inputs, particularly steel products.Lack of R&D and design, quality standards and engineering support have resulted in the inadequate vending sub-contracting facilities and lack of entrepreneurship and management skills.

http://www.dawn.com/2007/08/14/ebr4.htm


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## Neo

*World Bank to be asked to redefine IT projects scope of funding ​* 
ISLAMABAD (August 14 2007): The Federal Board of Revenue (FBR) will ask the World Bank (WB) to redefine the scope of funding for information technology (IT) projects being completed under the Tax Administration Reforms Project (TARP). Sources told Business Recorder on Monday that WB has allocated around $80-90 million for IT projects under the TARP.

However, most of the IT-related functions have been completed without utilisation of WB loan. Despite the fact that the WB wanted utilisation of funds, the priority is to complete projects with minimum donor's funding through domestic resources.

Sources admitted that out of the allocated amount, a meagre amount has been spent on IT projects. They said that the major projects like One Customs,; Customs Administrative Reforms Project; e-filing; Tax Management System (TMS); banking automation system etc are being finalised utilising board's own resources.

So far an amount of US $8-10 million has been spend out of WB funding for the procurement of computers and other IT related equipment during the last few years. In the next phase, more procurement would be done for the reformed units like Regional Tax Offices (RTOs).

An amount of $40 million has been allocated for the integrated tax management System (ITMS). Many important features of ITMS like e-filing etc have already been implemented by the board. If the board achieves all objectives of ITMS with domestic resources, the FBR may utilise much less amount against the actual allocation for this project. Taking into account huge amount of US $40 million for ITMS, it is important to analyse all aspects. Sources said that the customs projects like Pakistan Customs Computerised System (PACCS) are no more part of the TARP.

During the upcoming midterm review by World Bank, the board will request the WB to redefine the scope of funding. It could be seen that the IT project in terms of deliverables are ahead against what is conceived in the actual plan. As the board has indigenously enhanced its IT systems, the board may request the WB to readjust the amount for some other project etc.

http://www.brecorder.com/index.php?id=605369&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*Foreign investment increases manifold, says Zahid ​*
SIALKOT (August 14 2007): Federal Privatisation & Investment Minister Zahid Hamid has said that with increased economic growth in the country, the pace of foreign investment has increased manifold in the last few years.

In an interview with APP here on Monday, he said that the government has formulated investment-friendly policies aimed at providing even business opportunities to foreign and overseas Pakistanis to invest in Pakistan.

"Due to positive economic policies, foreign investment here today is touching over $8.4 billion, with direct foreign investment (***) accounting for $5.1 billion, a record in the country's history," he said.

He said more foreign investment is expected in the next couple of months as a result of which the foreign investment index will rise further. The minister further stated that the process of privatisation is being carried out in a transparent manner and in accordance with the rules and regulations, adding that the government has earned $2 billion through the privatization process.

The privatization of Habib Bank Limited, National Bank, Jamshoro power project, Kot Addu power station, Heavy Electrical Complex, coalmines and hotels is also in the pipeline, Zahid Hamid revealed.

"Our privatisation policy is crystal clear, keeping in view national interests," he said, adding that efforts are on to attract more overseas Pakistanis, as well as foreign firms, to invest here. Due to effective polices, the national economy has attained a position of strength, which will be further strengthened with the passage of time, he observed.

Responding to a question, the minister said that the coming general elections will be held on schedule, in a free and fair environment, adding that PML-Q has worked, and continues to work, with sincerity for the progress of the country and the people.

"The masses have been provided with all basic facilities like education, health, telecommunication, gas and electricity, road networks, even in remote rural areas that were totally neglected by past regimes," he said, adding that PML-Q is the first government to have worked practically for the welfare of the common man.

http://www.brecorder.com/index.php?id=605460&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Chinese Group keen to produce petrochemicals from Thar coal ​* 
KARACHI (August 14 2007): A Chinese Group has shown keenness in producing a range of petrochemical products from Thar coal, Business Recorder learnt here on Monday. According to sources in Sindh Mines & Mineral Development Department, the Chinese company has indicated that it is willing to invest $400 million to $500 million on the project.

They said that China National Chemical Engineering Company (CNCEC) has asked the Ministry of Petroleum to facilitate the company to produce petrochemical products from Thar coal.

They said that the company has carried out a comprehensive research and survey of the Thar coal field and has claimed in its report that the coal of Thar is not suitable for power generation. This is the reason that it not expressed interest in coal-based power projects.

Sources said that CNCEC has offered that in case Shenhua Group Corporation of China did not resume work on the construction of two 350 MW coal-fired power plants in Thar then it could start work on producing chemical products from Thar coal.

The project would be first of its kind as Mines & Mineral Development Department has shown interest only in coal-based power projects, instead of other projects. According to sources, a delegation of the company had met with senior officials of Ministry of Petroleum in November 2005 to finalise the project of producing coal related chemicals. However, the project remained in doldrums because of lack of interest of Sindh Mines & Mineral Department.

Ministry of Mines & Mineal Development, however, is now persuading CNCEC to start the project as soon as possible, and Minister Irfanullah Khan Marwat wants CNCEC to start work. On his directive, an official of the department has contacted the Chinese Consulate in Karachi for contact number of any focal person of CNCEC group to initiate the work on the project.

http://www.brecorder.com/index.php?id=605363&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Nespak to prepare 'Nai Gaj' dam design ​* 
LAHORE (August 14 2007): The Water and Power Development Authority (Wapda) has signed an agreement with Nespak to map out a detailed engineering design and tender of the 'Nai Gaj' dam project documents.

Wapda Planning and Design General Manager Dr Muhammad Siddique and Nespak Geo-technical and Geo-environmental Engineering Design Vice President Muhammad Ilyas signed the agreement on behalf of their organisations.

The engineering design and the tender documents will be completed in 18 months at a cost of Rs 88.37 million. The 'Nai Gaj' dam will be built on the Gaj River in Sindh's Dadu district, helping to irrigate more than 44,000 acres land and generate 2.3 mega watts hydropower.

http://www.brecorder.com/index.php?id=605442&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Two million tons kinnow output expected this year ​*
KARACHI (August 14 2007): Pakistan expects around 2 million tons kinnow production during 2007-08 in the wake of a 'good crop' at kinnow orchards, sources told Business Recorder on Monday. "This year, kinnow production is likely to touch 2 million tons mark as so far a good kinnow crop is being reported from the orchards," sources in Pakistan Horticulture Development and Export Board (PHDEB) said.

In this season, which tentatively starts from mid-October and ends by mid-April, growers expect kinnow production to be almost equal to the country's output in 2005-06, which was near about 2 million tons. "Though expectations are high for producing the same output of kinnow as in 2005-06, it depends on favourable weather", sources in the Board added.

Last year, in 2006-07, they said, due to bad crop around 1.6 million tons kinnow were produced, and quality also was not very good. It is worth mentioning that the prospects of the country's kinnow exports have become somewhat uncertain this year in the wake of Russian ban on imports of agricultural products from Pakistan, on quality ground.

Russia used to import Pakistani kinnows worth around $36.80 million annually, but this year exporters fear that kinnow exports to Moscow is likely to face a setback after the cancellation of a $0.4 million mango exports order in June 2007. The only ray of hope in this regard is the visit of a Pakistan delegation, which is due to leave for Moscow some time in September.

http://www.brecorder.com/index.php?id=605359&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Unemployment to remain at 6.2% in 2007-08​*
ISLAMABAD: For the current fiscal year 2007-08, the number of unemployed people is forecast to increase to 3.23 million from 3.18 million. However, the unemployment rate is expected to remain at 6.2 percent, same as it was in the last fiscal year. 

According to the annual plan for the year 2007-08, the population of the country is expected to reach 162 million in the current fiscal year, from 159.26 million last year. It is also forecast that the labour force will constitute 52.16 million people in the current fiscal year from 51.33 million in last fiscal year. 

To reduce unemployment, the government has allocated an amount of Rs 198.4 million in the public sector development programme for the year 2007-08. 

This amount will be spent on 14 projects including some new initiatives. The government has also decided to continue some of the ongoing employment generation projects in the fiscal year 2007-08. These projects include, Training of Trainers for Skill Development (Rs 12.3 million), Labour Market Requirements and Analysis System (Rs 9.1 million), Policy Planning Cell, (Rs 14.0 million) and Computerisation of the Data of Outgoing Emigrants and Returning Migrants (Rs 25.3 million). These allocations will further the objective of the ongoing projects in the employment and labour sector. 

Officials in the planning commission told this scribe that creating employment opportunities is the top priority of the government. The officials said that sustaining and accelerating the current momentum of GDP growth in the current fiscal year 2007-08 would undoubtedly generate more employment opportunities. 

The Medium Term Development Framework (MTDF) 2005-2010 has projected an increase of 6.97 million jobs from 43.15 million in 2004-05 to 50.12 million in 2009-10. As per the labour force in 2005-06, the employed labour force stands at 46.94 million. Thus 3.18 million jobs need to be created in the next four years to achieve the targets of MTDF. The ongoing economic reforms and expansion of vocational and technical training will further enhance the productivity of the employed labour force. 

Employment generation is the main focus of the MTDF that will help in raising productivity and technical competence of the labour force. In this regard, information and analysis is needed on key labour market indicators for important insight and development of appropriate policies. Realising the fact, a project named Establishment of Labour Market Information and Analysis has been launched by ministry of labour. 

This project cross-cuts the three pillars of the MTDF employment strategy and will contribute to understanding of the labor market dynamics and its various characteristics in order to improve policy formation for employment generation, employee protection and employee enhancement. 

Main objective of the project is to develop and consolidate the collection and usage of labour market information in the country. It is a pre-requisite for effective program for employment promotion, and manpower planning and development. 

The government has already initiated the Presidents Rozgar Scheme with the partnership of National Bank of Pakistan (NBP) in March 2007. The scheme covers the areas of transport, utility stores under Utility Stores Corporation (USC), mobile utility stores, mobile general store, NBP Karobar PCO and NBP tele-centre. 

To generate employment opportunities, the government has also kicked off National Internship Program for the benefit of fresh graduates. The objective of this scheme is to enhance their capacity and employability in the country.

http://www.dailytimes.com.pk/default.asp?page=2007\08\14\story_14-8-2007_pg5_13


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## Neo

*Sindh seeking $1.944 billion loans from donors ​* 
KARACHI (August 15 2007): Sindh Government is negotiating a $1.944 billion loan with foreign donors for six different development projects for which concept papers have been cleared, it is learnt. Advisor on Finance to Sindh Chief Minister M A Jalil told Business Recorder that these loans would improve the lives of the coastal people, water supply schemes, education, civic infrastructure in cities.

To assist in Karachi Mega City Development Project (investment programme), and help in Sindh Rural Road Construction Phase-II Project. He said that ADB will provide three loans ($36 million) for Sindh Coastal and Inland Community Development Project, Sindh Cities Improvement Programme ($500 million to $800 million), and Karachi Mega City Development Project (investment programme) ($800 million).

Two credits would be available from IDA: one for Sindh Water Sector improvement Phase-I ($150.20 million), and for First Sindh Education Sector Development Policy Credit. The sixth loan, for which negotiations are expected soon, will be for Sindh Rural Road Construction Phase-II Project from JBIC (ODA Loan).

Despite efforts by the provincial government to accelerate completion of development projects the executing departments do not comply with accounting practices prescribed by the donors. The delays in working and inadequate accounting often cause delay in release of funds, on the one hand, and affect completion schedule, on the other. Planning and Development Department sources said that auditing of foreign fund expenditure was underway.

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## Neo

*Hyderabad airport soon to be operational ​*
HYDERABAD (August 15 2007): Hyderabad Zila Nazim Naveed Jamil said on Tuesday that the Hyderabad airport would soon become an operational airport of the country. He said that struggle continues for making Hyderabad airport operational. He stated this at a gathering of people organised by Hyderabad Chamber of Commerce and Industry. He said that the industrial development is the need of the time.

The Nazim said that the enthusiasm of industrialisation would control the unemployment. He said that there are three big barriers in the development of industry and trade--lack of airport, lack of large industrial area and lack of good infrastructure.

He said that as some members of the Chamber had pointed out in seminars, the district government has kept this as first priority. He said: "We are trying to solve the problems of the people according to our resources. When I met the Prime Minister and President I asked them to make Hyderabad airport operational."

He said that 300 acres land would be handed over to Sindh Industrial Trading Estate for widening the area of industrial zone. He added the plots would be allotted to genuine industrialists.

On this occasion, the President of Hyderabad Chamber of Commerce and Industry, Yousuf Sulaiman, said that air flights was the main demand of industrialists, businessmen, and other people. PIA will start service by flight ART-40 from Hyderabad. He said that it is believed that PIA would start both passengers and cargo services.

A former president of HCCI, Muhammad Yaqoob, said that the Smeda had announced to allot land for establishing Hyderabad Chamber of business development centre. He said one draft agreement has been prepared between Smeda and Taluka municipal administration of Latifabad that the project work would be started in near future. Vice President Muhammad Ammin said that PIA would no loss from the air service to Hyderabad.

On the occasion, DCO Hyderabad Afitab Ahmed Khateri, DIG Police Shouket Shah, DPO Investigation Khalid Mustafa Korai, SP Headquarters Zulifqar Ali and other officials, members of HCCI and people from other walk of life were also present.

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## Neo

*Sindh to train 6,500 in modern trades​*
KARACHI, Aug 14: A total of 6,500 workers will be trained in modern trades in Sindh under the Prime Minister Programme for Special Initiative to be launched in December this year.

The programme is aimed at training youths in fields where employment opportunities exist. These fields include building electricians, painters, steel fixers, mobile repair technicians, telecom technicians, computer programming, and farming skills, tractor driver-cum-mechanic to the people of the rural areas.

The training being launched by National Vocational Training and Education (Navtech) will be undertaken at 10 centres of the directorate of training and manpower as evening programmes apart from other institutions, like Sindh Directorate of Technical Education and Pakistan Institute of Training in Hotel Management (Pithom) organising training for jobs in hotel and tourist industry.

The training will be imparted to people in Karachi and other major interior towns, like Hyderabad, Thatta, Mirpurkhas, Sukkur, Larkana and Dadu.

The trainees will get a monthly stipend of 1,000 during the six months training along with a free of cost tool kit. The curriculum for training in 51 trades and vocations has been developed with the help of ILO.

The programme, which will continue for three years, is part of the government efforts to provide employment to the people. This is in line with the earlier programmes of National Internship Programme and Presidents Rozgar Scheme.

The directorate of training and manpower has also designed a course for training of prisoners in Karachi, Hyderabad and Sukkur jails to help them earn a respectable living after their release.

The curriculum of training has been designed keeping in view the special mental frame of the prisoners, who mostly commit crimes on reasons based on socio economic factors.

In the first phase about 4,000 prisoners will be trained and they would be handled by an NGO after their release to help them get suitable jobs. The project has been designed on a concept taken from Irish rehabilitation centres and it has been sent to the Planning and Development (P&D) for funding.

Presently, prisoners getting rigorous imprisonment are trained on outdated looms (khuddy) for weaving cloth. Hence most of them fail to get any job in trades prevailing in the market after their release. When they fail to get a job and suffer from starvation they again tend towards committing a crime.

Under the rehabilitation project designed by the directorate of training and manpower the prisoners would be trained as electricians, painters, mobile phone repairing, computer programmers, surveyors, farmers and shuttering fixers, etc.

The directorate is also running three centres for training women in various trades. A new training centre for women will be opened at Yaqoubabad in Orangi. Women are mostly trained in computer programming and apparel designing but for housewives there are courses in cooking, repair of domestic appliances and art of applying mehandi for special occasions.

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## Neo

*15 Pakistan firms eyeing India cement market​*
NEW DELHI, Aug 14: Fifteen Pakistani firms have sought approvals to sell cement to India, which is facing a shortage to feed hectic construction activity in the rapidly growing economy, a minister said in parliament on Tuesday.

Junior Commerce Minister Jairam Ramesh did not disclose the name of the firms or the quantity that will be imported in his written reply to law-makers questions.

The Pakistani firms have sought clearance certificates from the Bureau of Indian Standards to sell the cement in India, he said.

Earlier this month, Pakistani Commerce Secretary Syed Asif Shah said in New Delhi the first consignment of cement from his country would arrive in India by the end of August. Pakistan has an annual production capacity of 37-38 million tons, while it consumes only 22-25 million tons. ndia's cement supplies grew 7 per cent to 41.60 million tons during April-June from a year earlier, data from the Cement Manufacturers' Association showed, but demand expanded by 10 per cent in the same period.

This had pushed up prices by about 10 per cent from a year earlier.

Indias top cement producers such as Grasim Industries Ltd and UltraTech Cement and ACC Ltd and Ambuja Cements Ltd, both partly owned by Switzerland's Holcim are running almost at full capacity.Reuters

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## Neo

*ADB points to poor governance: Pakistans social indicators among worst in Asia​*
ISLAMABAD, Aug 14: The Asian Development Bank (ADB) in a special evaluation on Pakistans 60th independence anniversary describes it as a country with poor governance, endemic corruption and social indicators that are among the worst in Asia.

In the first evaluation report in 22 years Learning Curves: What role for ADB in Pakistan?, the bank says that Pakistan has provided a challenging context in which to implement a programme of development assistance, although it was a major client of the bank.

Wars and cross-border conflicts with its neighbours, strong ethnic and cultural divisions, continued existence of feudal social relations in some parts and a complex structure of government comprising federal, provincial, district, tehsil or taluka and union levels, each with an elected body since 2002 have marked Pakistans modern history.

The bank plans to reduce the number of sectors and sub-sectors in which it is involved on the basis of a detailed Country Assistance Programme Evaluation (CAPE). This restructuring, however, is not because the country did not fare well but for the reason that ADBs public sector loan portfolio was unfocused and its staff overburdened.

The Asian Bank says that three periods of military rules, 10 changes in the leadership of civilian governments during 1988-1999, erratic economic growth, with periods of faster growth neither sustained nor translated into better social outcomes, rising poverty rates throughout the 1990s were important developments in Pakistan over the years.

The report said the ADBs performance in none of the ten sectors was rated highly successful while the programmes in health, nutrition and social protection, water supply, sanitation and waste management were rated unsuccessful.

Only two sectors -- energy and transport -- were rated as successful and in agriculture and natural resources, education, finance, law, economic management and public policy the performance was ranked partly successful.

The evaluation concluded that the ADB has too many loans in too many sectors and sub-sectors, given staff and technical resources and the requirement of its business processes.

The study recommended that in the absence of a major increase in the number assigned to support operation in Pakistan, the bank should reduce the number of sectors and sub-sectors it is involved in. An appropriate scenario would be four core lending and two core non-lending sectors with a more focused approach and hence the number of active public sector projects in the portfolio should be reduced.

The bank would consider a new approach towards preparation of a new country partnership strategy with key elements of sector prioritisation, pro-poor approaches, private sector operations, capacity building, delegation of authority, project processing and client perceptions.

The ADB said the balance would need to be adjusted between lending and economic, thematic work and policy dialogue.

The second element would be to ensure that operations are underpinned by more rigorous analysis and that it becomes recognised as a leading source of ideas in its sectors of core focus.

The study recommended that in addition to higher staff resources and analyst level support, greater authority should be devolved to Pakistan Resident Mission, with the country director empowered to act on most matters.

The report also says that to complement the within-project focus on corruption, the ADB should ensure that it understands the nature, extent and drivers of corruption in each sector in which it engages to ensure that project design and separate initiatives incorporate effective anti-corruption measures at the sector or country level.

The report also recommends that if the Asian Bank increases resident missions staff resources significantly, greater efforts are needed to ensure compliance with the policy for their full staff involvement in project processing.

Similarly, the delegation of project administration should be accelerated and projects should be delegated as soon as possible after approval before they run into implementation problems.

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## Neo

*WB likely to offer $500m for poverty alleviation​*
ISLAMABAD, Aug 14: The World Bank is likely to offer $500 million funding to Pakistan for infrastructure development and poverty alleviation but has expressed its dissatisfaction over the governments performance to reduce the poverty during the last five years, Dawn has learnt.

Sources said a World Bank mission that visited Pakistan in November last year had proposed the funding for poverty alleviation.

They say that the bank wants Pakistan government to work out comprehensive programme to improve the infrastructure through the new funding, especially for attracting sizable local and foreign investment. The bank has stressed the need for reducing poverty level, they added.The sources claim that bank authorities do not agree with the governments claim of remarkable reduction in poverty and believe that fruits of improved economy, especially during last seven years, have not reached to people.

They say the bank authorities have expressed concern over the reports of misuse of funds.

The bank is expected to offer $250 million each for infrastructure development and poverty reduction during the next five year period.

Meanwhile, the Rome based UN International Fund for Agricultural Development has approved $30 million funding each for livestock support and assets building of the rural population of Pakistan, the sources said.

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## Neo

*Power breakdown and production losses​*
A MAJOR power breakdown, following heavy rains last week, plunged many areas of Karachi into darkness for long periods, ranging from 10 to 24 hours or more. The critical power shortage and disruption of electric supplies and civic facilities resulted in huge production losses and halted much of the foreign shipment of export goods. Trade associations estimate that production fell on Thursday and Friday last by 50 per cent, reaching 70 per cent in some units, for which power failures were mainly responsible. They complain that they did not get steady power supplies to meet delivery deadlines for export goods  something they can ill-afford in a fiercely competitive international market.

The KESCs fragile power generation, transmission and distribution system has long been vulnerable to the slightest external shock or internal mishandling. Whether it be service to the consumers or transmission and distribution losses, the utilitys performance since its privatisation has worsened. This deterioration over the years forced industry to set up its own power-generating capacity. Representatives of industrial associations estimate that 50-60 per cent of the citys 2,500 units have installed standby diesel generators, which has increased their cost of electricity by 30 per cent more than the KESC tariff. Less than one per cent of the enterprises (big business houses) generate cheaper electricity from their own power plants. The medium- and small-size industries find it tougher to produce goods for exports at globally competitive prices.

Concerned over the energy crisis facing the countrys premier financial centre, a major manufacturing hub and a port city with a large urban population, the prime minister asked the KESC on Friday to honour its contractual obligations for power generation and supplies. Similar directives have also been issued from time to time by President Musharraf, the federal minister for power and the governor of Sindh. But nothing significant has happened to alter the situation. Perhaps, the fault lies with the way the KESC was privatised  a deviation from the successful mode adopted in the case of major commercial banks. The state-owned banks were made eligible for privatisation by downsizing, induction of professional managers and financial restructuring for a turnaround. Private investors do not risk big investments unless they are sure of good returns. The state-subsidised KESC was sold when it was facing daunting long- and short-term challenges in all spheres of its operations, the principal one being an archaic management and work culture.

The utility has been run for a very long time by the civil and military bureaucracy and must undergo a culture change to become a modern and efficient outfit. Given the failure of the KESCs privatisation, the government also needs to review its policy on privatisation of strategic and sensitive assets like utility services. After having taken some short-term measures like installing 1,000 PMTs and 80 feeders to improve the supply position, the KESC now promises to add 80 MW by October and another 180 MW to its power-generating capacity by March next year. The existing capacity is planned to be enhanced by 1,500 MW by 2011 to overcome the power crisis. Until then, the industrial community and domestic consumers will suffer a great deal, unless the KESC recognises that consumers need to be served first before any effort to maximise its revenues.

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## Neo

*Public-private partnership aimed at: first SME Policy launched ​*
ISLAMABAD (August 16 2007): The Minister for Industries Production and Special Initiatives, Jahangir Khan Tareen, formally launched here on Wednesday the first Small and Medium Enterprises (SME) Policy 2007 for development of the sector through public-private partnership by creating maximum job opportunities for poverty reduction and propelling the country''s exports.

Highlighting the salient features of the policy after the meeting of the National Committee on Small and Medium Enterprises (NCSME) here, the Minister said that the policy was approved, in principle, by Prime Minister Shaukat Aziz in May 2006 and was also approved by the Cabinet in January this year, and was notified in June.

"We are formally launching the SME Policy 2007 from today", the Minister told a press conference while flanked by Governor State Bank of Pakistan Dr Shamshad Akhtar, Secretary Industry Shahab Khawaja and Chief Executive Officer (CEO) Shahid Rashid.

Jahangir said that the policy aims at creating globally competitive SMEs by creating a hassle-free business environment, ensuring provision of modern infrastructure support and institutional support structure for access to resources and services.

He added that the government would take measures for promoting women entrepreneurship, clusters development, and would also focus on neglected/untapped sectors of the economy. The Minister said that strengthening the industry academia linkages would also be a key feature of the policy.

He said that SMEs'' access to finance would be ensured and the government would extend every possible support to the sector for its growth. He added that the SME sector employs 80 percent of the country''s workforce and is a source of income for a large population.

He said that under the policy credit information centres are being established across the country for development of the SME sector and is also establishing a data development bank to facilitate the sector.

He said that workshops in every city of the country would be organised to inform the people about the importance of SME sector for their own benefit and for the betterment of the country.

He said that costs of the utilities for the industry are lowest as compared to other countries. State Bank Governor Dr Shamshad Akhtar said there is no limit on private sector credit as opposed to the target-oriented credits to the sector in the 1970s.

She said that banks are following prudential regulations for provision of loans to the SME sector. She said that in the SBP, SME consultative committee has been established to facilitate the SME sector which is represented by the Presidents of the banks. She added that credit enhancement to SME sector would help reduce lending rates to the sector.

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## Neo

*Exports fetch $1.4 billion in July: imports down by 2.59 percent ​*
ISLAMABAD (August 16 2007): The country's exports have shown 10.73 percent growth in July as compared to the same month of last year. According to the provisional foreign trade figures released by the Federal Bureau of Statistics (FBS) on Wednesday, that exports in July attracted $1.486 billion against $1.342 billion in the same month of previous year.

Imports took away $2.575 billion against $2.46 billion last fiscal showing an increase of 4.64 percent. In July, trade deficit remained $1.089 billion against $1.118 billion in the same month of last year, showing an increase of 2.59 percent.

However, exports showed 4.6 percent negative growth when we compare foreign trade figures of July and June 2006, as exports in June were $1.5577 billion. Imports also showed 7.93 percent negative growth when figures of June and July are compared.

It may be mentioned here that the government had fixed $19.2 billion exports target for the fiscal 2007-08 after failing to achieve the target of $18.6 billion last year.

According to Commerce Ministry main reasons for decline in the growth rate of exports during 2006-07 were tough competition in the international market for textile products, greater competition from China and India, low crop of Basmati rice, capacity constraints in other manufacturing sectors due to obsolete technology and lower productivity of manpower.

Official documents made available to Business Recorder suggest that Prime Minister Shaukat Aziz has stressed for making aggressive efforts in identification of new markets and introduce products such as Information Technology (IT) products, granite stones and other value added items.

Prime Minister was also of the view that trade with China must be reviewed and immediate steps be taken to enhance trade relationship with special reference to Free Trade Agreement (FTA). "Exports, the domain of the private sector, the government is to carry out trade diplomacy for the identification of markets exporters," the sources quoted the Prime Minister as saying.

Aziz also advised that special attention be given to bring down cost of doing business, enhance managerial capacity and labour productivity through skill development so that the country is able to compete with other stakeholders in the international market, the sources conclude.

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## Neo

*Government striving to alleviate poverty: Jadoon ​*
ISLAMABAD (August 16 2007): Federal Minister for Petroleum and Natural Resources Ammanullaha Khan Jadoon on Wednesday said that government was striving to alleviate poverty from far flung areas of the country and Pakistan Poverty Alleviation Fund (PPAF) programme was playing a significant role in this regard.

He stated this in a function organised by PPAF in Hazara division. The Minister said that the government was according high priority to develop the remote areas by involving the large number of masses in the race of development.

He said that government in PPAF had allocated an amount of Rs 250 billion in the current fiscal year for completion of public sector development projects to revolutionise the rural life style. Chief operation Officer PPAF Kamran Akbar, speaking on the occasion said that PPAF had provided small loans to 1.3 million people in 110 districts of the country, adding that the loans ranged from Rs 12,000 to 30,000.

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## Neo

*'Industries from urban areas being shifted' ​*
LAHORE (August 16 2007): Provincial Minister for Industries, Muhammad Ajmal Cheema has said that industries spreading pollution are being gradually shifted from urban areas and such industries will be forced to implement the laws regarding environment pollution.

While talking to a delegation of industrialists at his residence here on Wednesday, the minister said that industrial units would have to adopt environment friendly atmosphere keeping in view the new challenges of WTO. He said that all industries should have to eliminate the anti-environment procedures otherwise their products could not compete in the world market. Ajmal Cheema said that many multinational companies are interested to establish their projects in Pakistan, which had increased the foreign investment.

The minister said that separate zones being set up in every city for new industrial units and a comprehensive policy being formulated to shift the industries from urban areas. He said that separate land being allocated to industries outside the urban areas.-PR

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## Neo

*Trade deficit shrinks in July​*
ISLAMABAD, Aug 15: Pakistans trade deficit witnessed a modest decline of 2.59 per cent to $1.088 billion during the first month of the current fiscal year as against $1.117 billion over the same month of last year.

This showed that with a stronger base of monthly import bill last year, the starting month of July 2007 has recorded a very nominal increase in imports and exports grew at slightly higher rate during the month under review.

This trend, which is believed to be a sign of relief for economic managers, has resulted into bringing down the unexpected increase in trade deficit recorded during the last two years. Normally, the trade deficit remained within the range of $2 billion to $4 billion for the last three decades.

Under the trade policy 2007-08, the government for the first time had not projected any estimates for import bill for the year 2007-08 with an assumption that imports could not be estimated. The trade deficit recorded in the year 2006-07 was more than Rs13 billion as against the projected trade deficit of $9.4 billion for the same year.

Official figures released here by Federal Bureau of Statistics (FBS) here on Wednesday showed that the export proceeds stood at $1.485 billion in July as against $1.342 billion over the same month of the last year, indicating a growth of 10.73 per cent.

This is an unexpected growth in exports as the average growth in export was around 3 per

cent during the whole year of 2006-07. The government has projected a target of $19.2

billion for the year 2007-08.

Analysts said that the government had already missed two consecutive years exports targets mainly because of dismal performance of the textile sector and decline in export of traditional products.

Another major setback is the steady decline in the production of large scale manufacturing sector and heavy reliance on few industries.

This year target would again depend on performance of textile sector as government has again announced a hefty package of subsidies and financial assistance for the sector with a hope to record a double digit growth as against the six per cent growth last year.

Imports climbed by 4.67 per cent to $2.574 billion in July 2007 as against $2.459 billion over the corresponding month of last year. The import bill was dominated by high oil prices that hit the economies of developing countries like Pakistan.

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## Neo

*Sponsors offer bank guarantee for project: Coal power plant​*
KARACHI, Aug 15: The sponsors of $2 billion coal-based power project  Hasan Associates  offered on Wednesday a bank guarantee to signal the commencement of the implementation of what is being described the so far the biggest and innovative private sector industrial project.

It is a small step towards implementation of a giant project, Farooq Hasan said while talking to Dawn on Wednesday by telephone. He now expects to receive a letter of intent from the government, which would be the first such official letter to any investor.

This would pave the way for preparation of a bankable feasibility report by internationally reputed financial and technical consultants.

If everything goes well and on schedule, he expressed the hope that the project may be commissioned in next four years or else it may take five to seven years. The sponsors were given a go ahead signal for the project by the Private Power and Infra structure Board (PPIB) on May 8 last.

This project is being taken up on built, own and operate (BOO) basis and will need approximately 6m tons of coal every year.

Both the president and the prime minister were given a detailed presentation on Thar coal and on the project by federal secretary of petroleum and natural resources and the Sindh minister of mineral development in third week of July.

The president is understood to have been dismayed by lack of coordination between the federal and provincial governments on the issue of Thar coal exploitation. Officials quote the president as having advised both the governments to keep each other on board on all major initiatives.

A Thar Coal Company has already been set up for mining of the coal in the area. Almost 80 per cent of the cost is to be borne by the federal government, an official said. The top-level meeting between the president and the prime minister in third week of July decided in principle to appoint someone from the private sector as chairman of the coal company. The Energy adviser has been asked to review composition of a technical committee of the Task Force on Thar Coal and recommend its reconstitution and empowerment to make its decisions binding.

Officials said that the Sindh government proposed in the high-level meeting that the tariff of lignite-based power projects be decided upfront in consultation with National Electric Power Regulatory Authority (Nepra).

The Energy adviser is expected to prepare a schedule of tariffs for Thar based coal power projects of different sizes in consultation with the Nepra.

Tariff has proved to be the main stumbling block in investment and officials in the Sindh government are bitter on the treatment given to the state-run Chinese company Shenhua group, which was keen to set up a 600MW power project based on Thar coal at the mouth of a mine.

Since then a few others also showed interest in setting coal based power projects. However, none of them were encouraged by the federal government agencies approach towards fixing tariff structure.

Hasan Associates have been given this project and they claim with confidence of implanting the project in next four years, if everything goes well and according to schedule, and in next five to seven years, provided not so unusual and unexpected hurdles - that come in the way - are eventually removed.

On its part, the federal government has commenced work on development of necessary infrastructure in the area under the Thar Coal Infrastructure Development with a total outlay of Rs5 billion. The provincial government, too, is supplementing these efforts of the federal government with an investment of Rs2.20bn on construction of road network.

An additional amount of Rs1.30bn is being invested for developing many other facilities.

The Water and Power Development Authority (Wapda) has been assigned to a 500KV transmission line in the area at a cost of Rs5.50 billion.

With a proven reserve of 175 billion tons, experts estimate the value of raw coal at $7 trillion.

You generate electricity from this coal and the value addition makes it worth $27 trillion, an official said. He said that Thar has a potential to generate 100,000MW electricity for next 150 years from existing reserves.

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## Neo

*Pakistan to attend World Expo China 2010​*
ISLAMABAD, Aug 15: Prime Minister Shaukat Aziz on Wednesday approved a proposal for Pakistans participation in the forthcoming World Expo China 2010.

Chairing a meeting, the prime minister said the participation in expo would not only reflect Pakistans close relations with China, but it would also promote the Pakistani brand and increase exports and possible investments.

An official announcement issued after the meeting said Pakistans active participation would further strengthen the economic ties between the two countries.

China is one of few countries with which Pakistan has an FTA and our business community needs to leverage and take advantage of this facility, he added.

Mr Aziz emphasised that the Trade Development Authority of Pakistan (TDAP) as a focal institution should ensure sizable and meaningful presence of Pakistan at the World Expo China 2010.

He stressed that the objective, theme and game plan of our participation should be focused and market-oriented. He further said that the Pakistan pavilion at the expo should help build the image of the country.

Earlier, TDAP Chief Executive Tariq Ikram made presentation on the proposed pavilion and said that services of professional firms would be hired to ensure proper presentation of our cultural and economic activities.

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## Neo

*Gwadar port may be fully operational next month​*
ISLAMABAD, Aug 15: The Singapore Port Authority (SPA) which is to run the Gwadar Port has overcome its teething problems and the port is likely to be made fully operational from next month with three berths handling the arriving ships.

However, according to authorities, the port requires more berths to handle big ships.

Director-General of the Gwadar Development Authority (GDA) Ahmad Bakhash Lehri told Dawn that businessmen need more warehouses and other equipment to enhance the countrys foreign trade. He said that due to destruction of the coastal highway and floods, it had become difficult to make the port fully operational. But this job is expected to be done by next month, he said, adding that ships had started to arrive at the Gwadar port.

An Iranian ship carrying relief goods for flood victims in Balochistan had reached the port recently, he said. He expressed the hope that the SPA would be in a position to run Gwadar port by next month. Sources said the Singapore-based operators were told to expedite their work, especially after having received a 40-year tax holiday, despite concerns expressed by other investors and the World Bank and the Asian Development Bank (ADB).

The government is already extending tax exemptions and tax holidays at various industrial zones and duty-free economic zones and that is why such a facility had been offered to Singapore port which is investing $550 million there, a senior government official said. He said that export processing zones were also enjoying certain tax holidays and exemptions and there was nothing exceptional in the case of the SPA.

Gwadar port located at Balochistan is being considered as a future trading hub in the region due to its proximity with the Gulf region.

Initially, the port is expected to face competition from Port Salalah of Iran. But after completion of the Phase-II by 2010 at a cost of $840 million, it is likely to become one of the busiest ports in the region, providing warehousing, trans-shipment and industrial facilities for trade with over 20 countries, including Gulf countries, Iran, Central Asian States, India, China and East Africa. Phase-I of Gwadar port has cost $298 million.

The government also planned some other concessions at the proposed Export Processing Zone (EPZ) near Gwadar port for local and foreign investors. There will be tax exemption on customs, sales tax and excise duty in the EPZ with a view to promote substantial investment in Gwadar.

A number of foreign investors have shown interest to establish mega refineries, building storage capacity and undertaking other businesses in Gwadar to help expedite the process of industrialisation in Balochistan. With the completion of both phases of the Gwadar port, a Special Industrial Development Zone (SIDZ) with an area of 4,000 hectares will also be set up for various industries.

The SIDZ is located on the north of Gwadar town at a distance of about 30kms from the port. The federal government is also providing special Rs700 million funding to Balochistan to help meet 15 years water demand of the Gwadar Industrial Estate (GIE) through installation of a foreign assembled desalination plant.

The future demand of water supply will be met partly by recycling of waste water (irrigation and industrial cooling) and partly by addition to the desalination plant. At present, there is no water resource available in the area.

The Balochistan government has provided 3,000 acres through two separate allotment letters, out of which 20 acres will be made available free of cost through the GIE to set up water desalination plant, intake work, storage tanks and other facilities.

The total cost of water supply from the plant (including depreciation) will be Rs0.25 per gallon against the cost of water supplied by tankers at Rs0.76 per gallon.

There will be approximately 2,000 industrial units in the GIE providing employment to 30,000 workers. Most of the production will be export-oriented and will bring foreign exchange to the country.

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## Neo

*ADB plans $12-15bn package​*
ISLAMABAD, Aug 15: The Asian Development Bank (ADB) has decided to provide $12-15 billion assistance to Pakistan over the next three years to improve infrastructure and utilities, deepen governance reforms and create better investment conditions.

The assistance package will be a combination of direct funding under which the bank will almost double its three-year country assistance programme to $6 billion and arrange another $7-9 billion co-financing from the private sector, Juan Miranda, the director general of ADBs Central and West Asia Department told Dawn on Wednesday.

This is largest ever funding in Pakistan by any development bank. This does not include allocation for mega water projects like Kalabagh dam or Bhasha dam, for which separate funding would be provided whenever the government takes a decision to construct them. Under the current three-year programme (2005-08), the ADB has provided less than $3.6 billion, including $1.4 billion planned for the current year.

Mr Miranda who is currently in Islamabad as part of preparation of the three year (2008-10) country assistance programme said the bank would provide about $6 billion to Pakistan at the rate of $2 billion per annum. About $1 billion will come through soft-term ADBs Development Fund (ADB) and remaining $5 billion commercial loans out of Ordinary Capital Resources (OCR).

He said the financing under ADF carried a maximum of one per cent interest and matures in 40 years. He said: Its size has increased because Pakistan is doing one of the best in Asia in terms of performance based approach of 18 indicators that among other things includes governance. The OCR was a normal commercial lending for 25 years that carried about six per cent interest, he said, adding that Pakistan was the most open country in Asia and this trend would continue in future.

Mr Miranda said Pakistans economic policy and direction at this stage were absolutely right to get Pakistan into the league of fast growing Asian economies and now it required higher level of investments for job creation through second generation reforms for further depth.

He said the development banks including the ADB did not see any risk to Pakistans economy even after elections.

Mr Miranda said the ADB would also arrange $7-9 billion through co-financing with commercial banks, private equity groups, capital markets and sponsor groups.

http://www.dawn.com/2007/08/16/top16.htm


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## Neo

*National Trade Corridor programme ​* 
Cohesiveness in public sector key to success

LAHORE: The success of Prime Ministers National Trade Corridor is not only linked to the upgradation of infrastructure, but also to cohesive efficiency of related public institutions that still operate independently with varied degree of incompetence.

Among various factors that increase the cost of production in Pakistan, the delay in clearance and speedy transport of goods to and from upcountry to national ports has been identified as a major contributing factor. High inland freight charges on import and export goods are another cost increasing factor as freight charges on containers from Lahore to Karachi are higher than freight charges of containers from Karachi to Beijing.

The Prime Minister announced an ambitious plan to upgrade the sea ports, dry ports, and road and rail links in the country through the National Trade Corridor project. At the same time the government has planned to make institutions linked with facilitating trade more efficient.

The Customs CARE clearance was introduced with this single aim in mind. The number of goods trains from Karachi port to upcountry has also been increased for this very purpose.

In fact the government desires to increase the efficiency of institutions like Customs, Railways and public sector transporters to global standards before any high expenditure infrastructure is built.

The performance and efficiency of all these institutions greatly impact the cost of doing business in the country. 

A recent example of Railways delay in dispatch of goods to upcountry illustrates this fact. A Lahore based steel re-rolling mill imported 54 containers of steel, got them released from the customs on August 2, 2007 and booked them with the Railways on August 4, 2007 for onward delivery to Lahore. 

The Railways failed to dispatch these containers to their intended destination upto the 13th of August - while four carriages remained stranded for repairs.

It is pertinent to mention here that it was mandatory on the importer to return the containers to the shipping company by the 13 of August after which the importer was liable to pay a penalty of Rs1000 per day on each container. When the delay in dispatch of these containers seemed imminent the importer and custom clearing agent requested the Railways to off-load the containers so that these could be sent through a licensed road transport.

The procedure for off-loading these containers too was cumbersome and lengthy and the authorities informed the importer that it would take another 6-7 days by which time the goods would eventually reach their destination by rail.

This story does not end here. One of the goods train carrying 38 containers was stopped at the Kotri Railway Station and is still stranded there while these lines are being penned, for reasons best known to the Railway authorities.

Four containers are still stuck in Karachi while the remaining have fortunately reached Lahore.

The importer is liable to pay a penalty on fifty four containers at the rate of Rs1000 per container for two days amounting to Rs108000. For the other thirty eight containers detained at Kotri and four stranded at Karachi the importer is liable to pay another Rs1000 per container till these reach Lahore and are then finally handed over to the shipping company.

The cost of business is thus increased due to inefficiency and inept state controlled institutions.

The Railways should have been responsible for arranging alternative road transport for these stranded containers or it should have at least off-loaded them promptly at the request of the importer to save the importer from being further penalised, but State institutions so far have never been penalised for their follies while the private sector industry and businessmen suffer and are forced to bear the brunt of mismanagement, ineptness and callousness on the part of staff.

http://www.thenews.com.pk/daily_detail.asp?id=68433


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## Neo

*Countrys exports register growth of 10.73 percent​*
* Trade deficit during July 2007 stood at $1.088 billion

By Sajid Chaudhry

ISLAMABAD: Exports of the country registered a double-digit growth of 10.73 percent in the first month of July of fiscal year 2007-08 against an overall growth of 3.4 percent in the last fiscal year 2006-07.

According to the trade figures released by Federal Bureau of Statistics (FBS) the exports of the country amounted to $1.486 billion in the month of July 2007 as compared with exports of $1.342 billion during the same period last year, projecting a growth of 10.73 percent.

However, the imports of the country witnessed an increase of 4.6 percent in July 2007 with total imports of $2.574 billion as against the imports of $2.459 billion in July 2006. The trade deficit during July 2007 stood at $1.088 billion as compared with the trade deficit of $1.117 billion in July 2006 showing a decrease in trade deficit of 2.59 percent.

The export performance of the country in July 2007 as compared to June 2007 was not satisfactory. The exports in July registered a decline of 4.61 percent in the month of July 2007 with total exports of $1.486 billion as compared to the exports of $1.557 billion in June 2007. Similarly, imports of the country also witnessed a decline of 7.93 percent in July 2007 with total imports of $2.574 billion as compared to the imports of $2.796 billion in June 2007. Trade deficit also declined by 12.11 percent in July 2007 with total deficit of $1.088 billion as compared to trade deficit of $1.239 billion in June 2007.

Trade Policy 2007-08 approved by the government sets an export target of $19.2 billion and containing imports of the country at $32 billion with a projected trade deficit of $12.5 billion. The export target of 19.2 billion is 12.86 percent higher than the actual realised exports in last fiscal year 2006-07 of $17.01 billion. 

To meet the projected export target set for the current fiscal year 2007-08 the country requires per month exports of $1.6 billion. However, the exports of July 2007 with a growth of 10.73 are seen as a good start towards the goal, an official at the commerce ministry said.

The measures announced for promotion of exports from country in the Trade Policy 2007-08 would definitely enhance the competitiveness of the exports of the country, and momentum of current export growth would be ensured with the help of private sector, he added. 

According to the experts the higher growth levels of the economy can only be sustained by a rapid growth in exports, a 7percent to 8 percent GDP growth is only maintainable through a 20 percent to 25 percent annual export growth. For such growth, the country is dependent, in addition to textile and clothing, on Large Scale Manufacturing sector for generating exportable surpluses. However, the declining growth trend in the Large Scale Manufacturing sector during 2006-07, from 10.7 percent to 8.8 percent reduced our exportable surpluses. 

The other challenges that the country would continue to face in the current fiscal year 2007-08 are low competitiveness, low labour force productivity, lack of productive capacity as a result of relatively low investment in new machinery, low quality products, export industries are still fragmented and informally organised, energy gap.

http://www.dailytimes.com.pk/default.asp?page=2007\08\16\story_16-8-2007_pg5_1


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## Neo

*Services trade deficit narrows by 6.87 percent ​*
* Export of services grows by 9.44% to $4.12 billion

By Tanveer Ahmed 

KARACHI: The deficit in trade of services narrowed down by 6.87 percent during the financial year 2006-07 on the back of unprecedented growth in the month of June.

It came down to $4.12 billion in July-June 2006-07 from $4.42 billion in the previous year, updated statistics released by Federal Bureau of Statistics (FBS) showed on Wednesday.

The export of services registered 9.44 percent growth to $4.12 billion during the whole year as compared with $3.76 billion in the previous year. 

On the other hand, the services import was static with just marginal growth of 0.63 percent to $8.25 billion in the year over $8.19 billion during last year.

The balance of services trade in June 2007 was in surplus with the marked rise in the export as the it stood at $102 million as compared to $338 million in last June, thus reducing by 130 percent during this period.

Whereas over the preceding month of May, it was further reduced by 124 percent when the deficit was $416 million.

Month-wise breakup of trade figures indicate that performance of export in the month of June was impressive as there was 91 percent growth in it to $811 million as against $424 million in the same month of last year as well as posting unprecedented growth of 224 percent over the preceding month of May 2007.

While imports fell during the month under review by posting 7.15 percent negative growth to $708 million as against $763 million in the corresponding month of last year, however it grew by 6.21 percent over the preceding month of May.

The impressive export performance has helped to curtail burgeoning deficit in services trade. The export of services remained volatile during the whole year with registering gains in few months and falling drastically in other months. 

The countrys service export mainly relies on defence services, which make a bigger part of the overall exports, apart from construction, IT, banking, insurance and many others services.

The export proceeds during the current financial year is not reflective of the potential country has in this sector due to a host of issues, confronting the sector, an analyst noted. Share of the country in world services sector has remained around 0.23 percent over the years. 

The countrys services export are confronted with a number of issues, which obstructed to tape the vast potential of the export in this sector like quality, acceptance of professional credentials, visa problems and the most importantly the image problem, which the country has been confronting since long.

http://www.dailytimes.com.pk/default.asp?page=2007\08\16\story_16-8-2007_pg5_2


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## bhangra12345

&#65279;Ranking Economy international dollars) 
1 United States 13,201,819 
2 China 10,043,780 a 
3 India 4,247,361 b 
4 Japan 4,202,524 
5 Germany 2,570,810 
6 United Kingdom 2,118,130 
7 France 1,941,904 
8 Italy 1,753,663 
9 Brazil 1,707,712 
10 Russian Federation 1,704,036 
11 Spain 1,260,949 
12 Mexico 1,193,382 
13 Korea, Rep. 1,152,301 
14 Canada 1,140,628 
15 Indonesia 920,852 
16 Australia 681,235 
17 Turkey 661,651 
18 Argentina 617,649 
19 Thailand 603,682 
20 Iran, Islamic Rep. 592,203 
21 Poland 576,375 
22 South Africa 566,805 b 
23 Netherlands 564,945 
24 Philippines 462,765 
*25 Pakistan 405,689 * 
26 Saudi Arabia 383,789 b 
27 Colombia 362,953 b 
28 Belgium 357,504 
29 Ukraine 355,739 
30 Egypt, Arab Rep. 351,478 


link - http://siteresources.worldbank.org/DATASTATISTICS/Resources/GDP_PPP.pdf


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## solid snake

I can see Pakistan getting into the top ten within my lifetime. India will probably remain at 3rd for a while.


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## Neo

*Structured economic reform processes: USAID and BoI sign MoU ​* 
ISLAMABAD (August 17 2007): The USAID-funded Competitiveness Support Fund (CSF) and the Board of Investment signed a memorandum of understanding (MoU) to support structured economic reform processes for improving Pakistan's investment climate and enhancing its economic competitiveness here on Thursday.

Privatisation and Investment Minister Zahid Hamid and Minister of State for Finance and CSF CEO, Omar Ayub Khan signed the MoU. Mushtaq A. Malik, Secretary BOI, also signed the MoU as a witness. Economic and Commercial Councillor US Embassy, Amy Holman witnessed MoU signing.

The MoU provides BOI and CSF would undertake joint initiatives to support the creation of a Foreign Investors Council of Pakistan (FIC) as a forum for policy dialogue between the government of Pakistan and the foreign Investors, with a view to strengthening Pakistan in competing for international investment, promoting it as a preferred investment location and enhancing its industrial competitiveness.

Speaking on the occasion Zahid Hamid, said that MoU is a landmark in terms of the international community confidence in Pakistan's economic policies. He said Pakistan has incorporated competitiveness as the cornerstone of Pakistan's growth strategy, He said, "I am confident that the Competitiveness Support Fund will support the Board of Investment to generate more foreign direct investment in the country."

Omar Ayub Khan, highlighted the importance of investment promotion for economic growth in competitiveness. "The country needs more foreign direct investment to enhance the productivity of its manufacturing industry, managerial professionalism and skill development, so that the Pakistani industry can compete with high value-added productivity in the international markets," he said.

Amy Holman said competitiveness is the key to long-term economic growth. She added that Pakistan's policies of deregulation, liberalisation and privatisation were working and providing concrete results.

She added that USAID funding for economic growth initiatives will exceed $73 million, and Thursday's agreement reaffirmed commitment for $12 million to continue generating economic success and reducing poverty in Pakistan.

CSF is a joint initiative of the Ministry of Finance and the US Agency for International Development (USAID). It supports Pakistan's goal to have a competitive economy by providing input into policy decisions, working to improve regulatory and administrative frameworks, and enhancing public-private partnerships within the country.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Mega projects: master plans made mandatory to get development funds ​*
KARACHI (August 17 2007): The Sindh government has decided to make it mandatory for all district administrations to submit master plans of the mega development projects for the release funds. Sources in the Sindh Local Government and Spatial Development Department told Business here on Thursday.

They said the district governments and taluka administrations had been advised to submit their master plans of their respective areas as soon as possible. There are 23 districts in the province and the provincial government has allocated Rs 52,364.933 million as District Support Grant for 2007-08 fiscal year as against Rs 45,478.536 million allocated for 2006-07. A meeting, held under the chairmanship of Sindh Local Government and Spatial Development Minister Muhammad Hussain, discussed the matter in details.

Backing the idea to accelerate the development work, the minister expressed concerns over improper utilisation of funds, said the sources. Muhammad Hussain said that the basic reason for inapt funds' utilisation was the absence of any master plan in all districts and talukas of the province. He directed the district governments and taluka administrations to finalise comprehensive master plan for their areas so that the uplift projects could be accelerated.

No district or taluka of the province has yet announced the master plan that encompasses all details about the mega projects being carried out in its jurisdiction. The City District Government Karachi (CDGK), is likely to announce Karachi Master Plan, 2020, setting out a strategic framework to develop the city as per the international standards, during the current month.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Government completed record number of developmental projects ​*
LAHORE (August 17 2007): Provincial Minister for Excise and Taxation Rana Shamshad Ahmed Khan has talked up his government's achievements, saying it has completed a record number of development projects in the country. He met a Pakistan Muslim League (PML) delegation of workers and office-bearers of the youth wing at his office here on Thursday.

Where he said the party under the leadership of President Pervez Musharraf, had made its public service its mission helping the country progress. He said his government was spending billions of rupees on development projects aimed at the public welfare and had allocated more funds for more projects to provide maximum relief to the masses.

He said people would support his party's candidates in the next general elections, urging party workers and office-bearers to play their role in developing the country.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistans exports to Afghanistan fall 40pc ​*
KARACHI: Exports to Afghanistan have dropped by more than 40 per cent during 2006-07, reflecting a discouraging trend among exporters due to higher duty structure levied by the neighbouring country and new regulatory procedures introduced by the Pakistani government, traders say.

Latest figures compiled by the institutions and traders suggest exports to Afghanistan dropped to $600 million during last fiscal 2006-07 compared to $1.2 billion registered during 2005-06.

Exports to Afghanistan are on the decline mainly because of discriminatory policies, said a Peshawar-based exporter asking not to be named.

The trade policy 2005-06 made abrupt procedural changes to settle claims of rebate on taxes on export to Afghanistan, making it obligatory on the exporters to produce imports clearance by Afghan Customs authorities across the border.

He said the new procedure had created a lot of problems for the exporters because most of the Afghan importers were reluctant to provide copies of requisite documents to Afghan Custom authorities across the border.

The current financial year began on a positive note as the countrys exports rose 10.73 per cent on year in July to total $1.485 billion, less than the $1.529 billion exported in June. Figures released by Federal Bureau of Statistics showed imports grew 4.67 per cent on year to $2.574 billion in July.

The trade deficit narrowed to $1.088 billion from $1.117 billion in July 2006. The government raised the export target for the current fiscal year to $19.2 billion. The exports during last financial year totalled $17.01 billion, below the $17.87 billion government target.

Imports for the current fiscal year are forecast to reach $32.6 billion, after totalling $30.54 billion in the last fiscal year. The government predicts a trade deficit of $13.4 billion in the current fiscal, slightly lower than the $13.49 billion recorded in the last fiscal. However, the exporters regret the way country is losing its export share to Afghanistan, one of the nearest and potential market of Pakistani products.

There are several reasons, which need to be addressed for a boost in exports to Afghanistan, said Senator Ilyas Ahmed Bilour, Chairman Pak-Afghan Chamber of Commerce and Industry. We have forwarded some proposals to both Pakistan and Afghan governments, which are expected to get serious consideration from both sides.

He said the proposals were discussed during a recently concluded Pak-Afghan Peace Jirga, during which boost in bilateral trade was also incorporated in the final declaration with the consent of traders from the two sides.

The Afghan government has evolved a discriminatory duty structure, which facilitates the transit trade but doesnt allow the regular exports under the same structure, said Bilour. The situation is not disturbing for the Pakistani exporters but it is also supported by the Afghan importers, who endorsed our proposals.

The countrys exports to Afghanistan started jacking up in 2002, following higher demand of Pakistani products in the war-ravaged country, which lacks enough manufacturing base to cater to its domestic demands.

The bilateral trade climbed up from $492 million in 2003-04 to $1.63 billion in financial year 2005-06 mainly because of exports.

Pakistans exports to Afghanistan fall 40pc


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## Neo

* FBR sets monthly, quarterly tax targets ​*
ISLAMABAD: The Federal Board of Revenue has finalised monthly and quarterly revenue targets in order to achieve its envisaged target of Rs1.025 trillion for fiscal year 2007-08, The News has learnt.

At the announcement of the budget in June, the government fixed the tax target for the whole year, but it did not set monthly and quarterly targets at that time. However, the FBR has recently finalised the monthly and quarterly targets in order to meet the challenging task of collecting Rs1.025 trillion in 2007-08.

According to revenue figures finalised by FBR authorities and exclusively made available to The News, the first quarter (July-September) target has been set at Rs218 billion compared to Rs183.9 billion for the same period of the previous fiscal, envisaging an increase of 21.3 per cent.

For the first month (July) of the current fiscal, the revenue target was Rs47.8 billion compared to Rs46.2 billion in the same month of the previous fiscal. In August 2007, the FBR expects to collect Rs58.6 billion against Rs46.3 billion in August 2006. In September 2007, the FBR sees collecting Rs111.8 billion against Rs91.4 billion in the same month of the previous fiscal.

In the second quarter (October-December), the FBR envisages tax collection of Rs280.3 billion against Rs226.6 billion in the same period of 2006-07, an increase of 23.7 per cent.

For October 2007, the tax target would be Rs66.4 billion against Rs53.3 billion in the previous year. In November, the FBR expects to net Rs69.5 billion against Rs59 billion in the previous year. In December, the FBR would collect Rs144.4 billion in taxes compared to Rs114.2 billion in the same month of the previous fiscal.

The FBR has set tax collection target of Rs230 billion for the third quarter (January-March) period of the current fiscal year against Rs186.5 billion for the same quarter of the previous fiscal.

For January 2007, the tax collection target is Rs61.9 billion against Rs52.2 billion, for February Rs65.7 billion against Rs52.4 billion and for March Rs102.4 billion against Rs81.9 billion.

For the fourth and last quarter (April-June), the FBR has set an ambitious target of Rs297.1 billion against Rs244.4 billion in the same quarter of the previous fiscal, anticipating an increase of 21.6 per cent.

For the month of April, the tax collection target is Rs73.1 billion against Rs59.5 billion, for May Rs81.2 billion against Rs65.8 billion and for June Rs142.8 billion against Rs119.2 billion.

By achieving the four quarterly targets, the FBR expects to net Rs1.025 trillion in 2007-08 against revenue collection of Rs841.4 billion in 2006-07.

FBR sets monthly, quarterly tax targets


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## Neo

*KPT to spend Rs5.5bn on berths reconstruction ​*
KARACHI: The Karachi Port Trust (KPT) has decided to award the tender for reconstruction of five berths to a Korean firm at a cost of Rs5.5 billion, a senior KPT official told The News on Thursday.

Depth of berths 10 to 14 would also be increased from current 10.5 metres to 16 metres to enable handling of larger ships and bring down shipping freight cost, said Brig (Retd) Syed Jamshed Zaidi, General Manager Planning and Development Department of KPT.

The tender will be awarded in next few days for the first phase of reconstruction, he said, explaining the renovation of remaining non-operational berths 15 to 17 would be carried out in the second phase.

Since berths 10 and 14 collapsed during the recent downpour, the dilapidated status of a great part of the wharf has come under media spotlight. The KPT has a total of 30 berths.

Zaidi said cargo loading and unloading activity had been stopped through berths 10 to 17. These (eight) berths are over 40 years old and reconstruction will add another 40 to 50 years to their life.

The reconstruction of the berths would be completed in two years, which would increase the capacity of the port to handle expected rise in cargo traffic, he said.

While Zaidi insisted that berth occupancy was 50 to 55 per cent and closure of some of the berths would not slow down trade activity through the port, shipping agents say otherwise.

That must be the average figure for the whole year, said Rasheed Abro, Vice Chairman Pakistan Ships Agents Association (PSAA). On any given day, there will be six ships waiting for their turn to be moored at a berth. You can imagine the congestion.

Painting a drastic picture, he said the closure of the berths would leave a lasting impact on trade and economy of the country. 

In a few days, import of fertiliser has to be started. Congestion at the port may delay its timely delivery to the farmers.

He insisted that the poor condition of the berths had been brought to the knowledge of the KPT administration time and again, but no step was taken to reinforce the weak foundations supporting the wharf structures.

KPT to spend Rs5.5bn on berths reconstruction


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## Neo

*Airblue to buy planes, mulls listing ​* 
KARACHI: Airblue, Pakistans biggest private airline, plans to spend up to $700 million over the next five years on new aircraft as it replaces its existing fleet of leased planes. 

Chief Operating Officer Shahid Khaqan Abbasi also said Airblue, which competes with state-run Pakistan International Airlines on several domestic routes, was considering a stock market listing. 

We are discussing the option, and it will depend on market conditions as well as appetite. We may well choose to go for listing abroad, as it seems more viable, he said. 

Abbasi said the airline was in talks with both Airbus and Boeing for the purchase of up to 14 short-to-medium haul aircraft. 

We plan to buy somewhere between eight and 14 aircraft either from the Boeing 737 NG (New Generation) family or the A320 family of Airbus, Abbasi told reporters on Thursday, noting a deal, which could be announced in time for the Dubai Air Show in October, could be worth $400-$700 million. 

He said delivery would start in 2009 and Airblue would take one plane around every three months. Another senior Airblue official, who asked not to be named, said the airline would most likely choose the Airbus A320. 

We already operate these aircraft and have a comfort level with them. So it suits us to have more of the same family.

Airblue to buy planes, mulls listing


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## Neo

*ADB package shows world institutions confidence: PM ​* 
ISLAMABAD: Prime Minister Shaukat Aziz on Thursday appreciated the Asian Development Banks (ADB) $6 billion package to Pakistan for development of various sectors and said that this reflects confidence reposed by major international financing institutions in the country.

He was talking to the Director General ADB, Juan Miranda, who called on him at the Prime Ministers House.

Giving an overview of Pakistans economy, the Prime Minister said the country maintained a solid economic pace in 2006-07 and achieved 7 per cent growth.

The magnitude of growth that Pakistan has achieved during the previous five years has positioned Pakistan as one of the fastest growing economies in Asia, he said.

The Prime Minister said, Pakistans economy grew in the initial 53 years by a mere US$63 billion, whereas, it achieved a record growth in the last seven years of US$87 billion, touching US$144 billion.

This reflects the sound economic policies and reform of the government, he said.

The Prime Minister said that Pakistan has emerged as a preferred destination for foreign investors.

The per capita which was US$ 438 seven years ago has increased to US$850 and is likely to touch US$1000 by next year, he added.

Juan Miranda said that ADB Country Assistance Strategy is in the process of finalisation and is aimed at providing US$6 billion over a period of three years to Pakistan.

Its utilisation, he said, would include energy sector, national trade corridor, urban development, resource management, transportation, communication and poverty alleviation. 

Advisor to PM on Finance, Dr Salman Shah, Secretary Economic Affairs Division and senior officials attended the meeting.

ADB package shows world institutions confidence: PM


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## Neo

*Pakistan Country Assistance Strategy: ADB to provide $6 billion over three years​*
ISLAMABAD: The Asian Development Bank (ADB) is finalising Pakistan Country Assistance Strategy aimed at providing $6 billion to Pakistan over a period of three years. 

The strategy includes financing energy sector, national trade corridor, urban development, resource management, transportation, communication and poverty alleviation. 

Prime Minister Shaukat Aziz was informed by the Director General of ADB Juan Miranda, who called on Mr Aziz at the PM House on Thursday.

Mr Aziz appreciated the ADBs package to Pakistan of $6 billion for the development of various sectors and said that it is a reflection of the confidence reposed by major international financing institutions on the economic credentials of the country. 

Giving an overview of Pakistans economy, he said the country maintained a solid economic pace in 2006-07 and achieved 7 percent growth. The magnitude of growth that Pakistan has achieved during the previous five years has positioned Pakistan as one of the fast growing economies in Asia. 

The PM said Pakistans economy grew in the initial 53 years by only $63 billion, whereas, it achieved a record growth in the last seven years of $87 billion reaching a total size of $144 billion. This reflects the sound economic policies and reform agenda of the government, he said. 

Mr Aziz said that Pakistan has emerged as a preferred destination for investments. The total foreign investments, he added, has touched record level of $8.5 billion, which shows the confidence of the foreign investors in governments policies.

The PM further said that Pakistan is blessed with a unique demographic dividend. Out of 160 million people, 100 million are below the age of 25, which will contribute to the economic growth and would further increase the middle class. The per capita, which was $438 seven years ago has increased to $850 and is likely to touch $1,000 by next year. 

Mr Miranda said the ADB Country Assistance Strategy is in the process of finalisation and is aimed at providing $6 billion over a period of three years to Pakistan. 

Advisor to the PM on Finance, Dr Salman Shah, Secretary Economic Affairs Division and senior officials also attended the meeting.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan to get $35m for microfinance programme​*
RAWALPINDI, Aug 16: The International Fund for Agricultural Development (IFAD) has agreed to provide $35 million to Pakistan to help finance a programme for increasing sustainable microfinance.

The loan will formally be approved by the 91st session of IFAD Executive Board meeting in Rome from September 11-12. The loan to be directly supervised by Rome-based IFAD is within the 2007-2009 allocation cycle, according to the loan document made available to Dawn.

The development goal of the programme is to reduce poverty, promote economic growth and improve the livelihoods of rural households under the overall objective of facilitating sustainable growth in microfinance in order to give the rural poor greater access to financial services.

The programme for increasing sustainable finance is concordant with the governments Second Poverty Reduction Strategy Paper, which sees microfinance as an important instrument for poverty reduction.

It recommends that microfinance move away from subsidisation of microfinance services to commercialisation, and concludes that the key to reducing costs is to introduce market competition, innovation and efficiency.

In particular, the programme will support the Governments stated target of reaching three million microfinance borrowers by 2010, it says.

The programme is consistent with the objective of the IFAD Strategic Framework 2007-2010 of increasing access to financial services, and with the objective set out in IFADs country strategic opportunities paper of expanding rural enterprises and financial systems in Pakistan.

It is also in line with the IFAD Rural Finance Policy, in particular the partnership with an autonomous microfinance apex institution; the focus on commercialisation of the sector; and the use of instruments such as equity participation in rural financial institutions and the provision of credit guarantees.

The programme was developed to respond to one of the key gaps in the microfinance sector identified in the April 2007 Country-Level Effectiveness and Accountability Review issued by the Consultative Group to Assist the Poor, and to be complementary to ongoing donor-funded projects.

Pakistan to get $35m for microfinance programme -DAWN - Business; August 17, 2007


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## Neo

*Wapda to collect Rs 52 billion for 969 megawatts project: 10 paisa per unit raise approved ​*
ISLAMABAD (August 18 2007): The Economic Coordination Committee (ECC) of the Cabinet has approved, in principle, 10 paisa per unit increase in electricity tariff for the consumers of Wapda to arrange local component of resources for the much-delayed 969 MW Neelam-Jehlum hydropower project, official sources told Business Recorder.

However, Prime Minister Shaukat Aziz, who chaired the meeting, directed Finance Ministry to table the issue in the next Cabinet meeting, on August 22, for discussing its political implications.

Ten paisa per unit increase in power tariff would appear in the bills as development surcharge and Wapda is expected to collect Rs 6.5 billion annually from the consumers excluding those who use 50 units per month. With the implementation of this decision, Wapda would collect Rs 52 billion for the Rs 84.5 billion project to be completed in eight years, sources said, adding that foreign exchange component would be arranged from other sources.

"The main purpose to refer the project to the Cabinet is to avoid political implications, especially when the general elections are nearing," sources added. They said that the ministers would be asked to convince the public about the importance of this project with the argument that if Pakistan does not go for this project, it would lose the right on Indian waters.

Sources further said that the ECC also cleared the proposal to cease the powers of Oil and Gas Regulatory Authority (Ogra) for notifying Liquefied Petroleum Gas (LPG) producers' prices and impose restrictions on its export. They said that it was agreed that producers should be allowed to revise prices of LPG according to their own formula and Ogra would monitor it and if the latter feels something wrong then recommend action against them.

Sources said that the Prime Minister said he did not allocate LPG quota to anyone, but producers especially Parco, are crying for change in the mechanism. After the meeting, Dr Ashfaque Hasan Khan, Economic Advisor to the Finance Ministry, said that the language used in the proposed decision has been termed uncomfortable and ECC directed that it should be changed.

He said that the ECC has approved increase in Produce Index Unit (PIU) from Rs 400 to Rs 1200. The government had fixed Rs 400 PIU price in 1989 in accordance with Loan for Agriculture Purposes Act 1973.

"Now farmers can get three times more loan from banks on their land," he added. He said that the ECC also approved Rs 500 million as GoP equity to be provided for the Textile City Karachi. The proposal had been submitted by the Ministry of Textile Industry.

The ECC also approved three percent reduction in interest on outstanding loans obtained by the spinning textile industry from July 2003 to 30 June 2007, he said, adding that the impact of this relief on national exchequer would be of Rs one billion.

Dr Ashfaque said that the ECC spent most of its time to discuss prices situation and claimed that CPI was increased by 6.37 percent in July, which was lowest in last four years. In July 2004-05 CPI registered 9.3 percent growth, followed by 9 percent in 2005-06 and 7.6 percent in 2006-07, he said and hoped that the target of 6.5 percent set for the current fiscal year would be achieved.

With regard to stock position, he said that wheat stock was 4.723 million tons as of August 15, of which Punjab held 2.65 million tons, Sindh 0.61 million tons, NWFP 0.85 million tons, Balochistan 0. 34 million tons and Passco 1.342 million tons while hoarders were keeping 1.2 million tons. He said that anti-inflation committee headed by the Minister for Industries and Production Jahangir Khan Tareen would submit its recommendations next week to the Prime Minister.

The committee would recommend wheat release prices for the provinces and Passco, ban on export of flour or imposition of Regulatory Duty and strategy regarding pulses price. He said that the number of utility stores in the country has increased to 3500 as per the plan approved by the government.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Micro finance bank to be expanded: Prime Minister ​*
ISLAMABAD (August 18 2007): Prime Minister Shaukat Aziz has said that the government has envisaged extending the coverage and outreach of micro-finance facilities from the present one million to three million borrowers till 2010 as part of government poverty reduction strategy.

This was stated by the Prime Minister while chairing a meeting which approved in principle the action plan on expanding the micro-credit facility to poor households, here at Prime Minister house on Friday. The Prime Minister said that the grass-roots lending to the poor through bank credit would help them increase their income.

Micro-financing, he added, is the best way of reaching out the marginalised and the forgotten which can change their destinies, as experienced in a number of developing countries. This model, he said, is based on the strategy that poverty decreases by increasing the income.

The Prime Minister said the government is focusing on improving the standard of living of common man. Lack of resources, he added, is a major impediment in their efforts to have a better standard of living. Micro credit facility, he said, is an effective enabler to generate economic activities, reduce poverty and improve living standards. He expressed confidence that this facility will provide them with opportunities to augment their income and move up the social ladder.

The Prime Minister said that the government is promoting public-private partnership and encouraging them to come forward and involve themselves in organising micro-finance credits to the less privileged sections of society.

The meeting approved in principle the action plan to create a micro finance bank under the National Rural Support Programme (NRSP). It was emphasised that NRSP's lending operations as a bank should be sustained through raising funds by attracting deposits for which the rural community in particular has to be mobilised. The delivery cost could be reduced through efficiency while the staff to be recruited has to be committed with a mission to serve the poor.

Earlier, in his presentation, Dr Rashid Bajwa, CEO, NRSP, explained the salient features of the action plan to increase the number of active borrowers from one million to 3 million by 2010 as well as opening up the lending operations by establishing a micro-finance bank.

He elaborated that out of the existing number of borrowers 60 percent are in rural areas and 40 percent in urban areas, which has helped increase the income of the poor people through availability of credit for establishing new sources of income.

He said that the utilisation of micro-finance in the rural areas would help develop the agriculture, livestock and allied sectors. Dr Bajwa informed the meeting that the micro-financing efforts of the government have been a success, particularly the NRSP growth which was recorded at 105 percent for the year 2006-07 over 2005-06. While explaining the financing and growth strategy, he said that the NRSP is working all over the country reaching union council level and its operation would be further expanded in future.

The meeting was attended by Advisor to the Prime Minister on Finance Dr Salman Shah, Governor State Bank Dr Shamshad Akhtar, Shoab Sultan Khan, Chairman Rural Support Programmes Network, Shandana Khan, CEO, Rural Support Programmes Network and other senior officials.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Remittances up 31.48 percent in July ​*
KARACHI (August 18 2007): Expatriates remittances witnessed tremendous growth of 31.48 percent during the first month of the current fiscal (July 2007). Remittances, sent home by overseas Pakistanis, continued to show a rising trend during July around 495.69 million dollars have been received, while the remittances were 377.01 million dollars in the same month of 2006-07 fiscal, depicting an increase of 118.68 million dollars.

The amount of 495.69 million dollars includes 0.29 million dollars received through encashment and profit earned on foreign exchange bearer certificates (FEBCs) and foreign currency bearer certificates (FCBCs).

The inflow of remittances into Pakistan from almost all countries of the world increased last month as compared to July 2006. Remittances in July this year from the US, Saudi Arabia, United Arab Emirates (UAE), Gulf Cooperation Council (GCC) countries, including Bahrain, Kuwait, Qatar and Oman, UK and European Union (EU) countries amounted to 127.99 million dollars, 106.55 million dollars, 77.35 million dollars, 70.30 million dollars, 39.50 million dollars and 14.81 million dollars, respectively as compared to 90.73 million dollars, 80.92 million dollars, 59.62 million dollars, 57.48 million dollars, 31.70 million dollars and 10.53 million dollars, respectively in July 2006. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during July amounted to 58.90 million dollars as against 45.35 million dollars in July 2006, showing a rise of 29.87 percent or 13.55 million dollars.

It may be mentioned here that in the 2006-07 fiscal year, the country received the highest-ever amount of 5.49365 billion dollars as workers' remittances as compared to 4.60012 billion dollars in the 2005-06 fiscal year, showing an increase of 893.53 million dollars or 19.42 percent.

The monthly average of remittances during the last fiscal year stood at 457.80 million dollars, up 19.42 percent as compared to 383.34 million dollars during the 2005-06 fiscal year.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Coal exploration: UK-based Pakistani firm to invest in Badin project joint venture ​*
KARACHI (August 18 2007): A UK-based Pakistani firm, Oracle Coalfields, will make a substantial investment in coal exploration work with a local partner, Sindh Koela Limited, and start work from October. The company also planned to set up a 150 megawatt power plant after the coal is explored in Badin coalfield.

This was revealed by sources in Sindh Mines and Mineral Development Ministry to Business Recorder here on Friday. According to the sources, senior officials of Oracle Coalfields Plc, including its Director Anthony Scutt held a meeting with the ministry officials on Thursday to finalise the details of the project.

Sources quoted Anthony Scutt as saying: "This is the first ever project of his firm in Pakistan." The joint venture with Sindh Koela had been named as the Sindh Carbon Energy (SCE) to execute the project without any difficulty, said the sources.

Although, the company had not submitted its final financial model, which was expected to be submitted by mid of September, it had chalked out one-year exploration programme to develop the Indus east coalfields in Badin to provide coal fuel to coal-based power projects, they said.

Assessment of the commercial viability would be finalised after the completion of the drilling work, which was being undertaken by deep drilling in rocky land, Anthony was further quoted as saying.

He hoped that the work on the project would be initiated by mid of October, which would create hundreds of new jobs for local people. Meanwhile, the provincial Mines and Mineral Development Department sources said that the delegation of Oracle Coalfields, which had left for London, was expected to return by next month for final discussion with the department on the project.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Kyrgyzstan asked to expedite power export to Pakistan ​*
BISHKEK (August 18 2007): Foreign Minister Khurshid M Kasuri has asked Kyrgyzstan to expedite electricity export to Pakistan, which is in grip of acute power shortage. He said this during his meeting in Bishkek on Friday with his Kyrgyz counterpart Ednana Karabaev.

In the meting, the two Foreign Ministers took stock of bilateral relations. They noted with satisfaction the excellent political understanding that characterises ties between the two countries. However, they stressed the need for giving greater economic and commercial substance to relations.

The Foreign Minister of Kyrgyzstan conveyed keen interest of his country to acquire a terminal for Kyrgyz imports at Gwadar. A detailed proposal outlining the Kyrgyz request would be conveyed to Pakistan shortly.

The Foreign Minster of Pakistan agreed, in principle, to the request of the Kyrgyz side and underscored that one of the major purposes of building Gwadar Port was to provide trade and transportation corridors to the land-locked Central Asian states.

On Pakistan's part, the Foreign Minister probed the possibility of import of hydro-electricity from Kyrgyzstan, since it has the potential to export hydropower.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Exports to EU move up by 8.77 percent ​*
KARACHI (August 18 2007): Overall exports to the European Union (EU) have gone up by 8.77 percent or 295.39 million dollars during the 2006-07 fiscal year as compared to the 2005-06 fiscal year due to rising demand of textile finished products in many EU countries, industry sources said on Friday.

However, the exports to the EU and other countries had dwindled manifold as compared to the regional countries' exports, including Bangladesh and Sri Lanka.

Official statistics, issued by the Trade Development Authority of Pakistan (TDAP), revealed that the country's exports to the EU countries stood at 3,664.10 million during the 2006-7 fiscal year against 3,368.71 million dollars during the 2005-06 fiscal year. This shows a growth of 295.39 million dollars.

It is pertinent to mention that exports to Irish Republic had declined by six percent or 2.271 million as they stood at 33.094 million dollars during the 2006-07 fiscal year against 35.365 million dollars during the 2005-06 fiscal year.

Moreover, exports to Austria surged by 25.55 percent, as they stood at 29.869 million dollars during the 2006-07 fiscal year as compared to 23.791 million dollars during the 2005-6 fiscal year, showing an increase of 6.078 million dollars.

Export to Belgium during the 2006-07 fiscal year was 11.39 percent or 295.286 million dollars against 265.093 million dollars during the 2005-06 fiscal year with 30.193 million dollars increase.

Exports to Denmark grew by 21.58 percent or 9.525 million dollars during the 2006-07 fiscal year. They stood at 53.664 million dollars during this period against 44.139 million dollars during the 2005-06 fiscal year.

During the 2006-7 fiscal year, Finland's imports from Pakistan stood at 39.334 million dollars with boost of 6.56 million dollars or 20 percent against 32.774 million dollars during the 2005-06 fiscal year.

In addition, exports to France witnessed a growth of 2.95 percent or 8.178 million dollars during the 2006-07 fiscal year. The country made exports of 285.111 million dollars during this period against 276.933 million dollars during the 2005-06 fiscal year.

Rise in exports to Germany was 1.23 percent or 7.013 million dollars during the 2006-07 fiscal year, which were 579.406 million dollars against 572.393 million dollars during the 2005-06 fiscal year.

Greece imported goods worth 79.459 million dollars during the 2006-07 fiscal year against 68.158 million dollars during the 2005-06 fiscal year, which depicted a growth of 16.58 percent or 11.301 million dollars.

During the 2006-07 financial year, the country exported goods worth 518.808 million dollars to Italy against 472.182 million dollars during the 2005-06 fiscal year, showing an increase of about 10 percent.

The lowest exports were made to Luxembourg during the 2006-07 fiscal year, which stood at 1.140 million dollars against 730 million dollars. However the exports grew by 56.16 percent or 410 million dollars.

Exports to Netherlands grew up by 11 percent or 35.927 million during the 2006-07 fiscal year, which stood at 365.893 million dollars against 329.966 million dollars during the 2005-06 fiscal year.

Exports to Portugal surged by 41.96 percent or 38.831 million dollars during the 2006-07 fiscal year, which were 131.376 million dollars as compared to 92.545 million dollars during the 2005-06 fiscal year.

Spain's imports from Pakistan stood at 382.366 million dollars during the 2006-07 fiscal year as compared to 330.685 million dollars, witnessing a boost of 16 percent or 51.681 million dollars.

Exports to Sweden registered a growth of 2.65 percent or 2.034 million dollars during the 2006-07 fiscal year, which stood at 78.853 million dollars as compared to 76.819 million dollars during 2005-06.

Lastly, exports to United Kingdom have augmented by 5.76 percent or 43.046 million dollars during 2006-07, which rose to 790.183 million dollars from 747.137 million dollars during 2005-06.

Meanwhile, Central Chairman of Pakistan Hosiery Manufacturers Association (PHMA) Naqi Bari termed this growth of 8.77 percent unsatisfactory, saying that the textile exports of the regional countries like India, Bangladesh and Sri Lanka to the EU were much higher than Pakistan.

He said that export growth should have been at least 20 percent during 2006-07, and urged the government to evolve a compact plan to reduce high cost of business to accelerate this lower rate of exports.

President of Karachi Chamber of Commerce and Industry (KCCI) Majyd Aziz, has said that this increase was significant, and added that anti-dumping duty on bed-wear products had hit the country's exports to the EU, which could be 20 percent during 2006-07.

Strong marketing, country's image building and government and private sector co-ordination would help augment the country's exports manifold, he added.

He said increasing demand of the country's textile finished products in the EU had given rise to the country's exports.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*ADB to release second tranche of $100 million ​*
FAISALABAD (August 18 2007): Asian Development Bank has agreed to release the second tranche of $100 million, keeping in view the progress made in implementing the Punjab Resource Management Programme, considering earlier compliance reports.

According to official sources the Asian Development Bank (ADB) approved a cluster of loans of $500 million to the Government of Pakistan for the Punjab Resource Management Program (PRMP). The purpose of the PRMP is to support the Punjab government to implement the development agenda outlined in the Government's poverty reduction strategy (PRS).

At the provincial level, the PRMP is integrated with other governance-related initiatives. The immediate objectives of the PRMP are to assist the Punjab government through reforms in systems, processes, and governance. Further the aim is to (i) strengthen its finances, (ii) realign provincial institutions for providing service to poor and (iii) create opportunities for growth and income generation in the private sector.

The PRMP cluster of loans is supported by a technical assistance (TA) loan in the amount of $4 million equivalent of which shall be completed by 30 June 2008.

The PRMP cluster is structured within three programmes (SP) and covers the period from 2003 to 2008. Sub-programme-1 of the PRMP, for $200 million, has successfully been completed with the release of the second tranche on 27 June 2005.

PRMP Sub-programme-2 consists of: (i) loan of $200 million from ADB's ordinary capital resources (OCR) for public resource management reforms; and (ii) a TA grant of $150,000 to support the preparation of Sub-programme-3 of the PRMP. Sub-programme-2 relates to effectiveness conditions and tranche release conditions, and made it a requirement for the Government to comply fully with the four conditions of Sub-.program-1.

Sub-programme-2 was approved on 14 December 2005 and became effective on 5 April 2006. Full compliance with first-tranche requirements was achieved on 30 June 2006, and the first tranche for $100 million was released on 3 July 2006.

The goal of Sub-programme-2 is to improve fiscal and financial governance and public service delivery, leading to poverty reduction in the Punjab. The purpose and policy objectives of sub-programme 2 are to assist the Punjab government through reforms in governance structures, systems, and procedures and.provide "fiscal space" for sustainable development and improve monitoring mechanisms to ensure that the allocation and utilisation of funds is effective and transparent,and conducive for private sector development, growth, and income generation.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Solid waste management: ADB may release $50 million by month-end ​*
KARACHI (August 18 2007): The Asian Development Bank (ADB) has completed feasibility work on solid waste management (SWM) project of the Karachi City District Government (CDGK) and is likely to release around $50 million in the first tranche by end of this month.

Sources in CDGK told Business Recorder on Friday that after green signal from the Bank about release of the tranche the city government would hire a consultant with sufficient expertise in solid waste disposal work.

"The CDGK has worked out feasibility of the project with an okay report and ADB is likely to give a response by month-end", they said. "We would then make an international call for hiring a consultant, local or foreigner, to go ahead with the project", they added.

After hiring a consultant, the CDGK would issue tenders for completion of the project. The bidding process is likely to start some time in the beginning of 2008, they said. "We have received expressions of interest (EoIs) from many local and international firms, but we will be able to issue tenders towards the start of 2008."

Sources said that so far companies from the United States, France, Norway, China, Iran, Malaysia and some from Pakistan have expressed interest to undertake the project.

They said that the city government would expect the successful bidder to complete the project within two years of its startup date. "If work on the project starts in the first quarter of 2008, we would expect it to go not beyond the beginning of 2010", sources said.

In the first tranche of the ADB credit the CDGK would build five garbage transfer stations (GTSs) so that the garbage packed on modern methods could be transferred to landfill sites, they said.

"Each garbage transfer station would be established at a cost of around $9 million", they said. Sources said that the five stations would be built at Mewa Shah, Orangi Town, Korangi Town, Mehmood Abad and Gulshan-e-Iqbal. In Gulshan-e-Iqbal, decision was yet to be finalised on the two proposed sites.

Of the second tranche of ADB loan, sources said the money would be invested to upgrade the two landfill facilities at Surjani Town and Hub River Road with a new landfill site to be constructed at National Highway in Razzaq Abad.

"CDGK would establish a new landfill site at National Highway besides upgrading the existing two which are located in Surjani Town and Hub River Road", they added. They, however, expressed concern that the people were selling out to scavengers from the informal sector their "combustible" garbage, like rubber, paper, tires, clothes, plastic, wood etc which are a prerequisite for the energy generation.

"For generating energy we must have garbage with an extensive calorific value or in other words combustible material but people are prone to sell this type of wastes to the informal sector", sources said, adding that "what they leave for us is the inert material which can not be used for the energy generation purpose".

It must be recalled that the CDGK is working on the SWM project under a comprehensive strategy to keep the city clean and build a power plant, which would generate 30 to 60 megawatt electricity using 1000 tons of garbage per day.

Karachi produces 10,000 tons of garbage daily therefore the CDGK has planned to sign agreements with different firms which could arrange for lifting of garbage from each home with modern machinery and then make it to transfer to the landfill sites after packing it by modern methods. The city government has also procured machinery of a worth Rs 700 million to re-organise SWM on modem scientific methods.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan's future lies with emerging economies of region ​*
ISLAMABAD (August 18 2007): Speakers at a one-day seminar here on Friday said that Pakistan's future lies with emerging economies of the region and stressed to avail the current opportunities for prosperous future of the country.

The seminar titled, "An Analysis of Stock Market and Monetary Policy in Pakistan from a Global Financial Market's Perspective," was organised by the Pakistan Institute of Development Economics to overview the progress of financial markets in the country.

Professor Mangla of Haworth College of Business, Western Michigan University presented the subject and focused on various aspects to make Pakistan's monetary policy more effective. He said, Pakistan must get involved in regional economies and strengthen economic co-operation and trade relations with regional countries for better prospects.

"As compared to the world trade there are more benefits in regional trade, Pakistan will have to strengthen economic co-operation with China and India for long term economic benefits," Professor Mangla said adding, "China, the 3rd largest economy of the world at present, has very promising future."

He also said that India, too, has potential to play pivotal role in the regional economy and a healthy regional co-operation would ultimately produce fruitful results for all the countries. Mangla termed, "Chindia" (China and India) has almost witnessed double digital real growth, adding that this would effect us even if we do not join them.

However, he observed "We cannot ignore these economies so we have to join them for our own interests. He further explained in his paper, "Initially it may seem that Pakistan's imports excel regional exports and some companies may also face difficulties, but in the long run, it would benefit Pakistan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Integrated plan to electrify far flung areas of AJK ​*
MIRPUR (August 18 2007): An integrated plan has been chalked out for the electrification of far flung and remote areas of Azad Jammu and Kashmir (AJK) including various parts of Mirpur division, official sources said.

The sources told APP here on Friday that plan is being executed under the phased programme and all the ten percent remaining areas of Mirpur, Bhimbher and Kotli districts of this division will be electrified by the end of next year.

The sources continued that under the plan two 132KV-grid stations at the cost of about Rs 130 million each have so far been installed in Dadayal sub-division of Mirpur District and Khuiratta in Kotli district. Both of the grid stations would not only help in to electrify more and remaining rural and far flung areas of Dadayal sub-division and Khuiratta but would also help in to ensure the smooth and stable power supply to the existing and upcoming power consumers.

Over 90 percent of the areas of Mirpur and Bhimbher districts have so far been electrified. The sources said that priorities have been fixed to improve the power supply system in this division side by side other parts of Azad Kashmir in view of the mounting load on the lines. About 450 transformers of different strength have been added in the plan to replace the old ones who have or going to complete their age. Special attention is being given to overcome the problem of low voltage to ensure the smooth and uninterrupted supply of electricity to the consumers.

Under an integrated plan for electrification of the remote areas, the department has electrified the far flung villages of Kadiala, Rahel and Haripur, close to the Line of Control in Samani sub-division of Bhimbher district. Five more 132-KV grid stations are proposed to be installed in various parts of Mirpur districts under the gigantic Mangla Dam raising project.

They said that a liaison would be managed with Wapda to ensure the modern network for supply of electricity to the consumers in the proposed New Mirpur city. The sources revealed that the electricity billing system is also being computerised in entire Azad Jammu Kashmir in the near future. This would help in to ensure the correct billing of the consumed power besides removing the problems in the manual system.

The electricity department is providing electricity to the consumers in Azad Jammu Kashmir at the same tariff as being enforced in Pakistan. The sources said that the number of power consumers in Mirpur city has reached to over 55,000 at present. The department has fixed the priorities to resolve the problems of the consumers.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*External liabilities rise to $40bn ​*
ISLAMABAD: Pakistans external liabilities, external debt plus foreign exchange liabilities, soared to $40.17 billion at the end of June 2007 from $37.24 billion at end-June 2006, depicting an increase of $2.931 billion in one year.

Interestingly, in the same time, official liquid reserves with the central bank also increased to $13.33 billion by end-June 2007, compared to $2.568 billion in the last fiscal.

Of the total liabilities, the external debt has surged by $3.04 billion to $38.7 billion at the end of June 2006-07, against $35.65 billion recorded at the end of June 2006. While the foreign exchange liabilities declined to $1.473 billion as compared to $1.586 billion recorded at the end June 2006.

The State Bank of Pakistan (SBP) data says that the government during the fiscal also retired foreign debt of $2.98 billion.

Accumulating the figures i.e. increase in total debt of more than three billion dollars and payment of $2.98 billion as debt servicing indicates that in the fiscal year 2006-07, Pakistan has borrowed about $6 billion from external sources if they are multilateral or bilateral donors. 

In absolute terms, external debt is increasing, but according to the government economic planners the debt to GDP ratio was on the decline. They say that increase in absolute term was not worrisome phenomenon as its burden on the economy was not increasing.

On the other hand, independent economists say that floating of euro and dollar bonds were a source of building up countrys reserves. 

They say that floating of bonds on one hand is increasing government liabilities while on the other adding to the countrys reserves. 

According to the banks data during the last five years, the countrys public and publicly guaranteed debt has been on the rise.

On June 30, 2003, it was $29.23 billion, June 2004 ($29.87 billion), June 2005 ($31.08 billion) and at the end of the same month of 2006 it increased to $32.58 billion. And now, at end fiscal 2006-07, the publicly guaranteed debt further inched up with big margin to $35.29 billion.

In public and publicly guaranteed debt, the medium and long-term debt (more than one year) during the period under review augmented by $2.85 billion to $35.26 billion as it was $32.41 billion at the end of June 2006.

According to the break-up of the medium and long-term debt, the multilateral debt by end-June 2007 grew by $2.157 billion to $18.687 billion and bilateral debt up by $155 million to $1.002 billion compared to June 2006 when these stood at $16.53 billion and $847 million respectively.

While during the period under review, the volume of military debt declined by $47 million to $83 million, Paris club debt by $137 million to $12.694 billion as compared to $130 million and $12.83 billion respectively in June 2006. Euro bonds/Saindak bonds up by $747 million to $2.655 billion as compared to $1.908 billion recorded in June 2006.

The significant feature of SBP data was that the short-term external debt (less than one-year) from Islamic Development Bank (IDB) declined to $25 million at end June 2007, as at the end of last fiscal, it was $169 million. 

The Private non-guaranteed debts (more than one-year) during the period also inched up to $2.002 billion from $1.585 billion at the end of FY-2005-06. 

The State Banks data also depict a decline of about $84 million in the International Monetary Fund (IMF) debt. 

At the end of June 2007, it declined to $1.407 billion as compared to $1.491 billion recorded at the end of June 2006.

The foreign exchange liabilities excluding foreign exchange bearer certificates, foreign currency bearer certificates and Dollar bearer certificates (which stand at $5 million) declined by $113 million during the period under study to $1.473 billion from $1.586 billion at the end June 2006.

Of this, during the period under review the special US dollar bonds declined by $91 million to $156 million, as it was $247 million at the end of the fiscal 2006. 

Besides, foreign currency bonds (NHA/NC) declined by $21 million to 88 million from $109 million end June 2006. 

While the central bank deposits, NBP/BOC deposits and other liabilities (SWAP) remained unchanged for the last five years at $700 million, $500 million and $30 million respectively.

External liabilities rise to $40bn


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## Neo

*Remittances reach $495.69m ​*
KARACHI: Remittances sent home by overseas Pakistanis continued to show a rising trend as $495.69 million were received in the first month (July) of the current fiscal year 2007-08, showing an increase of $118.68 million, or 31.48 per cent, over the same month of last fiscal year.

The amount of $495.69 million includes $0.29 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs), the State Bank said on Friday.

The inflow of remittances into Pakistan from almost all countries of the world increased last month as compared to July 2006. 

Remittances in July 2007 from the US, Saudi Arabia, the UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), the United Kingdom and EU countries amounted to $127.99 million, $106.55 million, $77.35 million, $70.30 million, $39.50 million and $14.81 million, respectively.

In July 2006, these were $90.73 million, $80.92 million, $59.62 million, $57.48 million, $31.70 million and $10.53 million, respectively.

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during July 2007 amounted to $58.90 million as against $45.35 million in July 2006, showing a rise of 29.87 per cent or $13.55 million.

It may be mentioned here that in the fiscal year 2006-07, the country received the highest-ever amount of $5,493.65 million as workers remittances compared to $4,600.12 million in the preceding fiscal year 2005-06, showing an increase of $893.53 million or 19.42 per cent. 

The monthly average of remittances during the last fiscal year remained at $457.80 million, up 19.42 per cent when compared to $383.34 million during fiscal year 2005-06.

Remittances reach $495.69m


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## Neo

*IT sector may create 30,000 jobs ​*
ISLAMABAD: Pakistan can generate 30,000 jobs for the unemployed youth in the Information Technology (IT) sector after reducing 10 per cent piracy rate from the current 86 to 76 per cent, said Microsoft-Pakistan Licence Compliance Manager Farhan Junejo on Friday at a training programme.

He said this while addressing a week-long IPR Law Enforcement and Cyber Investigation Training, organised by the American embassy.

The law enforcement personnel from FIA, police and judiciary are being trained to help them investigate and prosecute Intellectual Property Rights (IPRs) related crimes in the country. 

He said nearly every sort of software piracy is present in Pakistan including commercial piracy, corporate end user piracy, internet piracy, casual copying and CDs compilation, which needs to be addressed. 

He said Pakistan is also a signatory to the World Intellectual Property Organisation (WIPO) conventions for protecting the copyright works of the software developers. 

Quoting the International Data Corporation (IDC) report Farhan said a 10 per cent reduction in the global software piracy rate could in fact add 1.5 million jobs, increase economic growth by $400 billion and generate $64 billion in new taxes to help governments fund public programmes like education, health care and law enforcement. 

In 2006, he said the IT industry provided almost a trillion dollars revenues to the global economies. The hardware sector contributed $330 billion, the packaged software $180 billion and the services generated $420 billion in revenues. 

IT sector may create 30,000 jobs


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## Neo

*Three million to have micro-credit facility by 2010, says PM​*
ISLAMABAD: Prime Minister Shaukat Aziz on Friday said the government has envisaged extending the coverage and outreach of micro-finance facilities from the present one million to three million borrowers by 2010 as part of its poverty reduction strategy. 

He was chairing a high level meeting which approved in principle the action plan on expanding the micro-credit facility to poor households here at PMs House. 

Mr Aziz said the grassroots lending to the poor through bank credit would help them increase their income. Micro-financing, he said is the best way of reaching out the marginalised and the forgotten which can change their destinies as experienced in a number of developing countries. This model is based on the strategy that poverty decreases by increasing the income. 

He said the government is focusing on improving the standard of living of common man and added lack of resources is a major impediment in their efforts to have a better standard of living. Micro credit facility is an effective enabler to generate economic activities, reduce poverty and improve living standards. 

He expressed confidence that this facility would provide them with opportunities to augment their income and move up the social ladder. The government is promoting public-private partnership and encouraging them to come forward and involve themselves in organising micro-finance credits to the less-privileged sections of society. 

The meeting approved in principle the action plan to create a micro-finance bank under the National Rural Support Programme (NRSP). It was emphasised that NRSPs lending operations as a bank should be sustained through raising funds by attracting deposits for which the rural community in particular has to be mobilised. 

The delivery cost could be reduced through efficiency while the staff, to be recruited, has to be committed with a mission to serve the poor. 

Earlier in his presentation, Dr Rashid Bajwa, CEO NRSP, explained the salient features of the action plan to increase the number of active borrowers from one million to three million by 2010 as well as opening up the lending operations by establishing a micro-finance bank. He elaborated that out of the existing number of borrowers 60 percent are in rural areas and 40 percent in urban areas, which has helped increase the income of the poor people through availability of credit for establishing new sources of income. 

He further said the utilisation of micro-finance in the rural areas would help develop the agriculture, livestock and allied sectors. 

Dr Bajwa informed the meeting that the micro-financing efforts of the government have been a success, particularly the NRSP growth which was recorded at 105 percent for the year 2006-07 over 2005-06. Explaining the financing and growth strategy, he said the NRSP is working all over the country reaching union council level and its operation would be further expanded in future. app

Daily Times - Leading News Resource of Pakistan


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*Telecom sector creates 80,000 jobs​*
LAHORE: About 80,000 jobs have been created by the telecom sector while people have also benefited from the sector in many ways, a recently launched research study revealed on Friday.

The study said more than 500,000 indirect jobs have been created through the telecom sector. The study is entitled, Telecom Liberalisation in Pakistan: Implications for a Common Man and the author is Ali Salman of a Lahore-based consultancy firm called Development Pool with support from a German foundation.

The study further reveals that telecom sector is presently providing more than 10 percent of total employment while the share of telecom in GDP for 2005-06 was 2 percent. 

The study maintains that liberalisation agenda is considered as a welcome change. According to findings of the survey done under the study, 46 percent users of the telecom services believe that Internet charges are low and affordable while 40 percent users are indifferent to Mobile Number Portability and 80 percent users now benefit from value added services as compared with 34 percent four years ago.

Around 60 percent users benefit from tele-banking nowadays as compared to 36 percent in 2003, 73 percent believe that mobile phones have helped them significantly in cutting the time required to arrange a meeting by at least 50 percent. Around 80 percent users believe that their social contacts and networking has enhanced by 100 percent through regular use of mobile phones and 75 percent business customers believe that their profitability has been enhanced with the use of mobile phones. 

The study has also identified best practices for possible liberalisation in various economic and business sectors providing directions for vital policy making and planning. 

The study recommends that policy makers would do well by carefully considering the citizens - or end users - and consulting them before launching any reform agenda ostensibly in the name of citizens. The success of telecom liberalisation offers an illuminating example.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Troubled Pakistan aims for a larger share of outsourcing ​*By John Ribeiro

San Francisco (IDGNS) - Pakistan, which has been affected by Islamic extremist violence and civil unrest against the current government, is trying hard to compete for a share of the offshore outsourcing business. 

The country's highly skilled, English-speaking people provide a key advantage, said Yusuf Hussain, managing director of the Pakistan Software Export Board (PSEB), a government agency set up to promote the IT, BPO (business process outsourcing), and call center industries in Pakistan. Some multinational companies have centers in Pakistan, while others are outsourcing work to IT and services companies in the region, he added.

Salaries in Pakistan are lower by 30 percent than in neighboring India, said Ashraf Kapadia, president of the Pakistan Software Houses Association (PASHA), an association of software, call center, and BPO companies in Pakistan.

On the downside, the country has an image problem, according to Kapadia. "There is this perception abroad that Pakistan is politically unstable," he said.

However, these problems have not scared away customers, Kapadia said. His software and BPO company, Systems Limited, has a number of large multinational customers, including Bank of America and Citigroup, which continue to do business with his company, despite the country's unrest, he said.

A customer that has never done business in Pakistan may hesitate to outsource to a company in the country, Kapadia said. But regular customers understand that Pakistan is large, and trouble in a corner of the country will not affect their operations in another part of the country, he said. Software, BPO, and call center companies have in place disaster recovery strategies, and centers in many locations, to ensure that work does not get disrupted, he added.

Pakistan's exports of IT and services have grown by 50 percent year-on-year for the last three years, Hussain said.

The PSEB now has an ambitious target: to boost exports of software, IT services, call center, and BPO from $1.4 billion in the fiscal year ended June to about $4.5 billion by 2010. By then, the overall IT and services industry in the country is also expected to grow to $10 billion from the current $2.4 billion a year.

In computing its IT and services export figure, Pakistan includes exports by Pakistani companies, salaries of its people with work permits working on IT jobs abroad, as well as sales of services to operations in Pakistan of foreign companies and foreign government agencies.

Several challenges abound. Pakistan has similar characteristics that have made India successful as an outsourcing hub, such as its low-cost, skilled, English-speaking staff, said Siddharth Pai, a partner at sourcing consultancy firm, Technology Partners International in Houston. But the IT industry in Pakistan is still in its early stages, and companies have very little experience in the business and lack the ability to scale their operations, he added.

To boost the country's outsourcing industry, PSEB and other Pakistan government agencies have launched a multipronged strategy covering infrastructure, cheaper communications, investment in education, quality certifications, and a data confidentiality law.

The PSEB is also investing in promoting Pakistan as an offshore location to European and U.S. companies. Most of the media coverage of the country so far has focused on law-and-order problems, rather than on its thriving economy, Hussain said.

Not many people outside Pakistan know, for example, that the country has over 63 million mobile phone subscribers for a population of about 164 million people, Hussain said. The percentage of Pakistan's population using mobile phones is more than that of India, which is seen as a key Asian market for mobile-phone vendors.

Besides helping to earn foreign exchange and provide large-scale employment in Pakistan, the country expects a booming IT industry to change the nation's business culture from "industrial age" to a more modern, "knowledge age" industry, Hussain said. Growth of the IT sector will also help increase productivity in local agriculture and industrial sectors, he added.

The PSEB has introduced a package of incentives including tax breaks for the IT sector until 2016, and low-rent facilities for IT companies. The PSEB already operates 750,000 square feet of software technology parks in eleven building across Pakistan, with large IT parks planned in Islamabad, Karachi, and Lahore. For the Islamabad park, the PSEB has invited global developers to bid to set up and operate the park under a "build, operate, transfer" model.

Other government agencies are also pitching in. The country is investing in education with an eye to avoid the shortages of staff that have affected India's outsourcing industry. The annual budget of the Higher Education Commission has gone up to about 30 billion Pakistan rupees ($497 million) from 600 million rupees seven years ago, Hussain said. Nine engineering universities are being set up with foreign collaboration, and will have foreign faculty, curriculum, and certification, he added.

"We don't have staff shortages now, but that could change in the next three years, as the industry is growing very fast," Kapadia said.

The PSEB is also setting up a venture capital fund, which will be run by international venture capital, Hussain said. The fund will invest in both IT services and products companies, he added.

Troubled Pakistan aims for a larger share of outsourcing - Yahoo! News


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*Rs 725 million allocated for Balochistan district governments ​*
QUETTA (August 19 2007): Share for the district governments in the current Balochistan financial budget has been increased from Rs 82.9 million to Rs 725.5 million with the objective to make the system a success in the province and virtually devolve power to grass roots level, sources in the provincial Finance department told APP here on Saturday.

They said the share of the district governments has been increased manifold in the budget, as present government is keen to resolve the long-standing problems of the people. The local government will spend funds mainly on health, education and water sector schemes, which on one hand ensure these facilities to the people deprived of these facilities while on the other improve their financial condition.

Business Recorder [Pakistan's First Financial Daily]


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*'Latest technologies can help double exports' ​*
MULTAN (August 19 2007): Pakistan can double its exports as it has the potential to do so, but the manufacturers and exporters would have to modernise their machinery, adopt modern technology and fresh designs, improve quality, and curtail prices to compete with India, Thailand, Bangladesh and other countries, said Muhammad Younas, Muhammad Tayyab, Tariq Nawaz Deputy Secretary ministry of Textiles.

Muhammad Mohsin, Registrar of Trade Mark Registry, Muhammad Iqbal Secretary Garments City, Mehmood Shamsul Haq, Assistant Director SBP, Ikramullah Director Trade Development Authority (TDAP) and Taj Din Manshah at a seminar on 'Export of Home Textile Items and Incentive Extended by the Government', jointly organised by All Pakistan Bedsheet & Upholstry Manufacturers Association (APBUMA) and TDAP.

They said ,"We should pay special attention to the research and development, exploring new markets, capturing maximum number of buyers, taking part in international fairs, exhibitions, and festivals to introduce the products."

They said that exporters should investigate the markets thoroughly and must acquaint themselves with the laws, rate of taxes, demands of buyers, colours, designs, etc.

Tariq Nawaz spoke at length on 'Incentives extended by the Government for export of Home textile items', and said that Government would give three percent incentive on the export of white yarn and five percent on dyed yarn and this incentive would help in adopting modern technology.

Muhammad Mohsin, Registrar of Trade Mark, threw light on the significance of export of textile items with brand name after textile quota regime in international markets.

Muhammad Iqbal spoke on export marketing for home textile items and demand in international markets, while Mehmood Shamsul Haq of SBP gave lecture on claim of R & D supports amount, while Ikram-ullah explained the role and importance of Trade Development Authority of Pakistan and said that it was a gift of the present regime for the exporters as well as manufacturers who wanted to bring revolution in their products and exportables.

Business Recorder [Pakistan's First Financial Daily]


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*Raise in uplift spending widens deficit to 0.9 percent of GDP: ADB ​*
FAISALABAD (August 19 2007): Rapid rise in development spending in Punjab has widened the FY2006 deficit to 0.4 percent of provincial GDP, while more increases in development spending are expected in FY2007, disclosed study report of West Asia Department (CWRD) of Asian Development Bank.

From FY2001 to FY2006, ADB study mentioned, Punjab government has increased development spending by 31 percent per year, addressing gaps in social services and infrastructure development that had accumulated during a period of low expenditure in the 1990s.

This rapid rise in development spending widened the FY2006 deficit to 0.4 percent of provincial GDP. More increases in development spending are expected in FY2007, including the capitalisation of the pension and the general provident fund (GPF) and financing for the special infrastructure programme recently launched by the government. This will further widen the fiscal deficit to 0.9 percent of provincial GDP in FY2007.

According to report, the special infrastructure programme will continue to receive large allocations until FY2009, when increases will taper off. As the federal government pushes to sustain economic growth, the Punjab government has also positioned itself to boost economic development.

The Punjab's performance is essential to national economic growth, since the province accounts for about 57 percent of Pakistan's GDP. World Bank estimates show that between FY2002 and FY2006, the annual GDP growth of the Punjab ranged from 4.7 percent to 10 percent.

Underlying this have been the sound economic policies and fiscal management of the Punjab government, which have enabled it to increase development spending. Government revenues have increased by 15 percent annually, while the annual growth rate of recurring expenditures has been maintained at 10 percent.

Fiscal reforms have reduced untargeted subsidies by 28 percent annually. Replacing federal government debt with foreign debt has lowered interest payments to 4.2 percent a year in FY 2007 from 11.3 percent in FY 2003, enabling the Punjab government to implement wide-ranging reforms.

With the deficit kept below 1 percent of GDP, ADB report observed that the increases in development spending do not pose an immediate risk to fiscal stability. Nonetheless, the Punjab government is fully aware that projected expenditures cannot be funded solely by the provincial budget.

It is therefore exploring public-private partnerships for project financing and implementation. If its fiscal stability is threatened, the Punjab government is ready to implement measures to reallocate expenditures toward priority sectors and to cap the development budget at the FY2007 level.

While there has been an increase in the public debt in the Punjab, as a percentage of provincial GDP the debt burden eased from 7.7 percent in FY2001 to 5.9 percent in FY2006. Further declines are anticipated in the future, reducing the public debt to 3.7 percent of provincial GDP by FY2010.

The Punjab government has also made headway in structural reforms supported by the PRMP. It has successfully introduced a medium-term budgeting framework and preparations are fairly advanced for rolling 3-year projections for fiscal resources and broad sectoral ceilings that will start in FY2008. The Punjab government is also moving ahead with pension reforms.

On March 7, 2007 the provincial assembly passed the Pension Fund Act 2007 and earmarked funds totalling Rs 12 billion ($198 million) for both pension and GPF reforms. These positive developments, coupled with the government's strong fiscal position, have prepared the Punjab for the next generation of reforms.

The province of the Punjab is poised to move forward with the introduction of a medium-term expenditure framework to link expenditures closely with results, implementation of further pension reforms, civil service reforms to enhance government responsiveness to the public and to improve the delivery of public services, and the creation of an enabling environment conducive to private sector growth, ADB report added.

The ADB experts observed that the Punjab government has demonstrated strong commitment to the PRMP reforms and has also strongly supported the capacity building initiatives under the TA loan and other TA grants. The government has made considerable progress in implementing the reforms agreed under the PRMP, despite the technical complexities inherent in public sector adjustment programmes.

Of the 39 second-tranche policy achievement targets, 26 have been fully complied with, six have been substantially complied with, six have been partially complied with, and one requested to be waived. All other reform directions have been broadly on track.

Business Recorder [Pakistan's First Financial Daily]


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*Sindh Vision 2030 Cell established ​* 
KARACHI (August 19 2007): Sindh government has decided to establish a Sindh Vision 2030 Cell at an estimated cost of Rs 12 million to finalise the draft of Sindh Vision-2030. Sources in Sindh Planning and Development Department told Business Recorder here on Saturday that department had already prepared draft of Sindh Vision 2030.

It encompasses all sectors of the life including agriculture, forest, wildlife, industries, mines and mineral development, water and power, physical planning and housing, transport and communication, rural development.

The other sectors for which next 20-year planning has almost been completed keeping every aspect of the respective sectors are education, health, culture and tourism, statistical and economic research, IT, poverty alleviation, women development, population welfare, law and order and others.

The main focus of the vision would be on growing environmental pollution including air, noise and marine in the province. The measures are suggested in the draft to combat the degradation of environment in the province in general and in Karachi in particular after evaluating local and international research reports.

Additional Chief Secretary (Planning and Development) Ghulam Sarwar Khero also confirmed that provincial government was working to chalk out a full fledge future planning for the province. No sector would be left in Sindh Vision 2030 and viable solutions would be suggested to resolve the problems of every sector, he added.

Sources said that after the finalisation of recommendations presented in draft of Sindh Vision it would be sent to Sindh Chief Secretary and then to Sindh Chief Minister for final approval for its implementation.

Business Recorder [Pakistan's First Financial Daily]


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*'Unemployment rate declines to 6.2 percent' ​*
KASUR (August 19 2007): Unemployment rate in the country has declined to 6.2 percent from staggering 8.3 percent after employment of one million people during the last four years. Chairman National Assembly's Standing Committee for Railways and Pakistan Muslim League, Kasur district President Tufail Ahmed Khan observed while addressing a meeting largely attended by PML workers, nazims and local press in Kot Radha Kishen.

PML president said a grant of Rs 50 million had been approved by Chief Minister Chaudhry Pervez Elahi for the construction of a Tehsil complex in Kot Radha Kishen with a total area of 25 acres, adding that construction would start soon.

Paying rich tributes to President General Pervez Musharraf, he said PML and its allied parties would undertake all out efforts to ensure re-election of President Musharraf for a five-year term and hinted that some opposition members would also vote for the president.

Business Recorder [Pakistan's First Financial Daily]


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*Foreign firm ready to invest in desalination project *

KARACHI (August 19 2007): G.E Water and Process Technologies, a prominent Saudi and UAE-based company has showed interest to make investment in water desalination project.

A company's delegation led by its Sales Manager Ali Bin Haj Hamida, met City Nazim Syed Mustafa Kamal here on Saturday and informed that the company is already working in Saudi Arabia and UAE on similar projects and is prepared to make huge investment here as well.

Speaking on the occasion Nazim Mustafa Kamal said that Haq Parast leadership has carried a positive image about Karachi to the world through its vision of fast development activity and implementing policy of concrete development projects and as a result investors world-over have started focussing on Karachi.

He pointed out that Karachi's population is fast growing and as a result demands for water and power was also rising.

The City government, he informed, is exploring new water resources and planning to establish a power plant and such projects would be completed under public-private partnership for which direct agreements are being made with reputed international companies.

He said the city government is encouraging all such companies, which are ready to invest under public-private partnership. He assured that the company planning to setup desalination plant here would be provided all necessary facilities as per law.

He said with fast increase in the demand for water in Karachi, water board should focus on exploring alternate water resources, particularly projects of water desalination.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Under-served areas to get telecom facility ​*
KARACHI: Minister for IT and Telecom Awais Ahmad Khan Leghari on Saturday unveiled a plan to provide telecommunication services to six under-served areas of the country, said a ministry statement.

The six geographical areas marked out in the divisions of Malakand, Sukkur, Sibi, Chaghai, DG Khan and Attock due to a large part of the population in these areas still in want of telecommunication services, will be covered under a project to be launched within the next few weeks, the statement quoted the minister as saying.

The minister also chaired the fifth meeting of the Universal Service Funds Board of Directors. The meeting was attended by IT Secretary Farrakh Qayyum, Member Telecom Nooruddin Baqai, Telenor Pakistans CEO Tore Johnson, WOL CEO Azfar Manzoor and USF CEO Parvez Iftikhar.

The funds for the project will be provided by the multi-billion Universal Service Fund instituted within the Ministry of IT through annual contributions received from telecom operators, said the statement.

The auction of the funds to be provided to the existing telecom operators, which will implement the project, is already under way.

The minister said the designated under-served areas to be covered under the first phase of the project constituted approximately three per cent of the total population and 23 per cent area of the country.

He said the USF had prepared a plan to achieve 85 per cent population coverage and increase rural teledensity to five per cent by the year 2010.

He said another goal the USF had set to achieve was nationwide broadband penetration, by adding 1.5 million new users by the year 2010.

Today, our teledensity is 42 per cent and our mobile phone subscribers base has gone beyond 60 million, prompting the government to introduce mobile phone banking which will further facilitate the subscribers in transferring their money from one place to another with a click of their handsets, Leghari said.

He said the benefits of growth in the telecom sector were myriad and the whole economy had benefited with over 200,000 jobs created directly or indirectly during the last few years.

He stressed the exponential growth in the telecom sector owed a lot to consistent backing from the president and the prime minister to the ministry in its efforts to liberalise and deregulate the sector to ensure open competition.

Under-served areas to get telecom facility


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*Foreign funds pull out $138.5m amid global sell off ​*
KARACHI: Foreign divestment from the local equity markets was witnessed throughout the week. Foreign investors are withdrawing their capital from Pakistani stock markets along with other global bourses amid persisting financial crisis in the US economy. 

There was an out flow of $138.5 million from the Pakistani stock markets according to State Bank of Pakistan SCRA balances as updated on August 16th 2007.

Analysts told that if the US sub-prime mortgage muddle were not brought under control, the foreign investors would further offload their position in Pakistani and other stock markets across the world.

However US Federal Reserve has discounted its interest rates and it is expected that the global markets will settle down with this so the local market is also expected to bounce back once the situation is clear.

The Karachi bourse benchmark KSE-100 index fell 750 points or 5.5 percent last week. Market capitalization stood at Rs3.721 trillion. On week-on-week basis KSE-100 plunged 2.42 percent (315 points) to close at 12,698 points. The KSE 30 index closed at 15,148.22 with a loss of 459.79 points.

Average daily volumes on ready counter were on the lower side and it stood at 182.844 million shares as compared to the last week 285.027 million shares.

Average future volume market increased and stands at million 47.328 shares as compared to the 45.913 million shares last week.

Sell off in global markets had its clear impact on the local equity market as well.

This week was marked by massive sell-off in global stock markets due to concerns on weakening US housing market and default of some funds exposed to this market. However, major central banks pumped massive liquidity into the system, giving some relief to the investors. During the week Dow Jones, Straits Times, Hang Seng, Nikkei and BSE-India Indices declined sharply by 3.0 percent, 6.2 percent, 5.1 percent, 3.7 percent & 3.4 percent, respectively. 

Despite the clarification from the government last week that emergency would not be imposed in the country Pakistan equity market did not look comfortable with deepening political uncertainty amid the upcoming presidential election and possible return of exiled political leaders.

Another concern for the local market was over cash margins on the CFS counter which was not appreciated by the market. As a result, investors stayed sidelined and confused as market direction was not clear pushing the average daily volume this week to its 19-week low of 183 million shares worth Rs16 billion versus 213 million worth Rs18 billion last week. 

During the week sector wise decline in Telecom, Banks, Fertilizer, Insurance, Cement, sectors were down by 5.2 percent, 3.7 percent, 3.5 percent, 3.0 percent, 2.8 percent respectively. 

CFS rate closed at 10.8 percent this week and CFS value increased by 0.74 percent. CFS value stood at Rs54 billion versus Rs52 billion last week. Similarly, the spread between ready and futures ended this week at 4.21 percent versus 3.01 percent on previous Friday, a jump of 120 bps. The highest CFS scrips were OGDC, PPL, NBP and POL.

Foreign funds pull out $138.5m amid global sell off


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## Neo

*Government borrows $15 billion in 4 years: $40bn debt, liability​*
KARACHI, Aug 18: The government has borrowed a staggering amount of over $15 billion in the last four years as countrys total debt and liabilities reached $40 billion mark, reveals the latest data issued by the State Bank.

Pakistan paid $9.706 billion as principal during 2003-07 and still the total external debt of the country increased by over $5 billion to push the total debt to $38.699 billion.

In 2003-04, the total external debt was $33.352 billion.

Had the government stopped borrowing, the countrys total debt would have declined to $23.646 billion after payment of principal as debt-servicing at the end of June 2007.

The data showed that the countrys total debt and liabilities rose to $40.172 billion at the end of June 2007 while it was $35.474 billion in 2003-04.

Pakistan borrowed over $3 billion during 2006-07 alone which was a sharp jump and was in contrast with other three years when it made moderate borrowing.

The figures reveal that the huge borrowing was made to make payment of debt-servicing and continuous current account deficits.

The massive borrowing raised the debt-servicing which had started rising after a substantial decrease in 2004-05 to $2.715 billion from $4.969 billion in 2003-04.

State Banks latest figures showed that Pakistan paid $13.258 billion as debt-servicing, including $3.553 billion as interest during the last four years.

The paid amount is close to the borrowing the country made during the same period.

Though the government has been claming of breaking the debt bowl, the figures showed the borrowing had been made regularly and aggressively during the period.

The cost of borrowing could be a threat to economy as average annual payment of debt-servicing reached $3.314 billion.

The government claims that the debt-to-GDP-ratio has declined as size of the GDP has substantially increased, but the ratio is not considerable while making payments for debt-servicing.

The State Bank has been purchasing billions of dollars from local market by flooding the local currency and creating inflation in the country.

Also, the current account deficit has taken a difficult shape to deal with. The current account deficit for the year ended on June 30, 2007, increased by 41 per cent to $7.016 billion.

In the wake of rising debt and liabilities, the current account deficit has become more tricky, posing a risk to the growth of economy.

Pakistan has been relying on sources of foreign exchange which are not dependable, like foreign direct investment, remittances by overseas Pakistanis and privatisation proceeds.

Despite record inflow of FDI (87 per cent -$8.42 billion) and remittance of about $6.5 billion in 2006-07 the government borrowed $3.044 billion.

Pakistans dependence on multilateral donors has significantly increased as the country borrowed $2.157 billion last year.

The borrowing rose also because the government failed to raise dollars through privatisation and now its dependence on Global Depository Receipts (GDRs) has increased.

It has a plan to launch GDRs of National Bank, Habib Bank and KAPCO during the current fiscal.

It may help raise foreign exchange needed to meet the widening current account deficit. At the same time, reverse remittances from the country are also taking a solid shape, in result of foreign investment in Pakistan.

The outflow of foreign exchange in the form of profits and dividends has sharply increased by 60 per cent reaching close to $1 billion during the last fiscal.

If the government fails to materialise its plan for GDRs, it would have to borrow more from abroad and it would add more burden to the economy yet not able to feed its 33 per cent poor of the country.

Government borrows $15 billion in 4 years: $40bn debt, liability -DAWN - Business; August 19, 2007


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*Foreign firm to invest in mining​*
ISLAMABAD, Aug 18: Tethyan Copper Company is willing to invest in mining sector in Balochistan and has sought official permission for opening up its liaison offices there to execute business activities.

This interest was shown by CEO of the company Mr Eduardo Flores in a meeting with Secretary Board of Investment (BoI) Mushtaq Malik here on Saturday.

An official announcement said that Mr Flores said that the province had quite large deposits of copper offering massive business opportunities.

The secretary BoI informed him that there were numerous opportunities in mining sector and assured all possible support and assistance to the company.

Foreign firm to invest in mining -DAWN - Business; August 19, 2007


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*Service sector exports up 9.4 per cent​*
ISLAMABAD, Aug 18: The services sector exports went up by 9.44 per cent in 2006-07 over last year, Federal Bureau of Statistics (FBS) said on Saturday. The services export proceeds totalled to $4.125 billion as against $3.769 billion last year. It witnessed a robust growth of 90.93 per cent to $811.400 million in June 2007 as against $424.982 million over the same month last year.

Export of goods recorded a negligible growth of around four per cent during 2006-07.

Imports of services climbed by 0.63 per cent to $8.250 billion during 2006-07 as against $8.198 billion over the same period last year.

On a monthly basis, the import of services declined by 7.15 per cent to $708.885 million during June 2007 as against $763.445 million last year.

The deficit in the trade of services reached $4.125 billion during 2006-07 as against $4.429 billion over the same period last year, indicating a growth of 6.87 per cent.

The deficit in services declined by 130.29 per cent to $102.515 million in June 2007 as against $338.463 million over the same month last year.

Service sector exports up 9.4 per cent -DAWN - Business; August 19, 2007


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*Pakistan working hard to improve image: US report​*
WASHINGTON, Aug 18: Pakistan has launched a major effort to combat its image problem and promote the advantages of its highly skilled, English-speaking people to get a larger share of the outsourcing business, says a report.

The report by the International Data Group notes that some multinational companies have centres in Pakistan while others are outsourcing work to IT and services companies in the region.

The IDG is the worlds largest technology media, research and event management company based in Boston.

The report notes that salaries in Pakistan are lower by 30 per cent than in India. On the downside, the country has an image problem which scares away potential customers, but there are major multinationals that overcame their initial fear and are doing business with Pakistan. These include two major US firms -- Bank of America and Citigroup.

Software, BPO (business process outsourcing) and call-centre companies have in place disaster recovery strategies and centres in many locations to ensure that work does not get disrupted, the report notes.

Pakistans IT and services exports have grown by 50 per cent year-on-year for three years.

The Pakistan Software Export Board (PSEB), a government agency set up to encourage multinationals to do business with Pakistan, has an ambitious target: to boost exports of software, IT services, call centre and BPO from $1.4 billion in the fiscal year 2006-07 to about $4.5 billion by 2010. By then, the overall IT and services industry in the country is also expected to grow to $10 billion from the current $2.4 billion a year.

In computing its IT and services export figure, Pakistan includes exports by Pakistani companies, salaries of its people with work permits working on IT jobs abroad, as well as sales of services to operations in Pakistan of foreign companies and foreign government agencies.

The report, however, points out that Pakistan faces several challenges in achieving these targets. The country has similar characteristics that have made India successful as an outsourcing hub, such as its low-cost, skilled, English-speaking staff, but the IT industry in Pakistan is still in its early stages and companies have very little experience in the business and lack the ability to scale their operations.

To boost the countrys outsourcing industry, PSEB and other agencies have launched a strategy covering infrastructure, cheaper communications, investment in education, quality certifications and a data confidentiality law, the report adds.The board is also investing in promoting Pakistan as an offshore location to European and US companies. Most of the media coverage of the country so far has focused on law and order problems rather than on its thriving economy.

Pakistan working hard to improve image: US report -DAWN - Top Stories; August 19, 2007


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*Kinow export likely to double in 2007-08​*
KARACHI: Pakistan is likely to export 200,000 tonnes kinow in 2007-08, which is almost double as compared to 100,000 tonnes exported during the previous season.

For the upcoming season, there are encouraging reports of good crop of kinow and there are strong prospects that the countrys exports would touch 0.2 million tones, said Chairman Fruit Exporters Association of Pakistan, Abdul Wahid on Saturday while talking to Daily Times about anticipation for the export target of kinow.

He said we are expecting a good crop of citrus fruit as the growers used modern techniques and methods under the directives of technical and farm fruit experts. 

He said in 2006-07, torrential rains have hit hard the kinow crop leaving the juicy citrus with blemishes on its skin. 

Mr Wahid said, due to these blemishes we could not get a good price and kinows exports remained confined to 100,000 tonnes. Mr Wahid said kinow crop, despite heavy rains remained unaffected, which has evoked hope for realisation of double export goals for current season. 

Kinow season starts in mid-October and lasts till mid-April, while exports would start some time by mid-December.

Replying to a question, he said Pakistan Horticulture Development and Export Board (PHDEB) was also working on the proposals of the stakeholders to improve and maintain the quality of the fruit. 

He said these proposals include enforcement of quality and grading standards, pre-shipment inspection and some incentives like subsidies on airfreights etc for those exporters who would voluntarily present their goods for inspection. According to him, training programmes would also be organised for the growers, processors and exporters by holding various seminars and workshops and creating awareness among the stakeholders on the EurapGap and HACCP (hazardous analysis for critical control point) and motivating them to implement these standards. He said major markets for kinows are Middle Eastern countries, Iran, Eastern Europe, Russia and Ukraine. He said the importers from Indonesia and Malaysia also entertain great demand for Pakistani kinows. 

In order to fetch more orders for our citrus fruit, an eight-member Pakistani delegation has gone to Russia in mid August to allay the concerns of importers in Moscow on Pakistans agricultural commodities. He hoped that the visit of Pakistani delegation will help do away with the ban placed by the Russian government on fruit import from Pakistan and the export to the country would soon be resumed.

Daily Times - Leading News Resource of Pakistan


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## Neo

*LSM growth: who to believe? Govt agencies differ on manufacturing data​*
KARACHI: Two different government organisations have differences over the growth recorded by the Large Scale Manufacturing (LSM) sector during the financial year 2006-07.

According to the consolidated figures released by Federal Bureau of Statistics (FBS) on Saturday, data provided by Ministry of Industries, Production & Special Initiatives shows that LSM growth during the last financial year was 9.14 percent. While the figures released by ministry itself about one week ago indicated that LSM growth was 9.46 percent during the financial year 2006-07.

The difference in the data of both departments is not so wide, however it puts a question mark on the abilities of our government agencies to compile and provide accurate and authentic data about the various sectors of our economy. 

According to an official of FBS, whatever details provided by the ministry were incorporated in the consolidated growth in LSM, so the ministry concerned should be asked about the difference between the two figures.

Final figures of LSM growth by FBS show that overall growth in LSM stood at 8.41 percent during the last financial year, falling short of whole-year target of 12.5 percent. The figures released by the FBS include the data received from Ministry of Industries, Production & Special Initiatives, Oil Companies Advisory Committee (OCAC) and Provincial Bureau of Statistics (BOS).

LSM in the OCAC category posted a negative growth of 1.76 percent during 2006-07, Ministry of Industries category registered 9.14 percent growth and industries falling in the ambit of provincial BOS recorded a growth of 8.98 percent in the year under review.

In month of June alone, the OCAC category grew by 7.41 percent, provincial BOS registered 9.05 percent growth and ministry of industries category registered growth of 3.45 percent whereas the overall growth during month of June remained 6.01 percent.

In the OCAC category, jet fuel production dipped by 6.83 percent in July-June 2006-07. Kerosene oil production was down by 5.41 percent; motor spirit production was up by 2.72 percent, high-speed diesel production was down by 1.97 percent, furnace oil down by 4.72 percent, lubricants up by 1.20 percent and LPG production up by 3.70 percent. 

In Ministry of Production & Industries Index, sugar production was up by 19.13 percent, cigarette up by 2.87, cotton yarn was rose by 11.75, cotton cloth was higher by 6.75 percent, jute goods were up by 12.97, paper and board fell by 2.21 percent, soda ash up by 3.74 percent, caustic soda increased by 10.45 percent, cement production was up by 22.49 percent, steel products up by 10.69, tractors up by 10.46 percent, trucks down by 2.39 percent, buses up by 20.36 percent, jeeps and cars up by 0.42 percent and motorcycle manufacturing grew by 11.65 percent.

In the index of provincial bureau of statistics, in 2006-07, cooking oil production was up by 7.04 percent, starch and its products by up by 7.48 percent, beverages up by 33.95 percent, cycle tyres up by 0.37 percent, cycle tubes by 2.12 percent, motor tyres by 18.27 percent, air conditioners by 23.24 percent, diesel engines by 37.12 percent.

Daily Times - Leading News Resource of Pakistan


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## Neo

*10% software piracy reduction can generate 30,000 jobs'​*
ISLAMABAD: Intellectual Property Rights (IPRs) protection drives the growth of Pakistans advanced manufacturing as well as its local software, biotechnology and cultural industries. 

This was stated by the US Charge d Affairs Peter Bodde on Saturday. US envoy spoke at the concluding session of a week-long IPR Law Enforcement and Cyber Investigation Training, organised by American Embassy here at a hotel. Protection of IPR is not just important for Pakistans economic growth and development, but it is also essential for its singers, writers and movie producers to thrive, he added. Tariq Parvaiz, Director General, Federal Investigation Agency (FIA) noted that this is a new dimension of cooperation between FIA and the United States. He said that IPR crimes deprive the owners of legitimate profits, defraud the government of its rightful revenues and causes serious and irreparable damage to public health and safety. 

Earlier, speaking on the occasion Farhan Junejo, License Compliance Manager, Microsoft-Pakistan said Pakistan could create 30,000 jobs in the IT sector by reducing its software piracy rate by only 10 percent. 

Pakistan can easily cut its piracy rate from the current 86 percent to 76 percent, to generate 30,000 jobs for the unemployed youth in the Information Technology (IT) sector. 

The law enforcement personnel from FIA, police and judiciary are being trained to help them investigate and prosecute IPRs related crimes in the country.

Quoting an International Data Corporation (IDC) report, Mr Junejo said a 10 percent reduction in the global software piracy rate could in fact add 1.5 million jobs, increase economic growth by $400 billion and generate $64 billion in new taxes to help governments fund public programmes like education, health care and law enforcement. He said that in 2006 the IT industry provided almost a trillion dollars in the shapes of revenues to the global economies. The hardware sector contributed $330 billion, packaged software $180 billion and the services generated $420 billion in revenues.

However, Mr Junejo said in 2006, about four out of 10 software programmes or 35 percent software, were also pirated globally incurring a loss of $39.58 billion to the software industry.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Foreign investment reaches to $8,416.6 in 2006-07 ​*
ISLAMABAD (August 20 2007): During the financial year 2006-07, the aggregate value of foreign investment in the country has reached up to $8,416.6 which is 88 per cent more as compared to the financial year 2005-06.

According to a private channel, statistics of the State Bank reported that the foreign investment of $4,485.5 million was made during the financial year 2005-06 whereas the new foreign investment of $1,820 million with an increase of 418 per cent as compared to the previous financial year has been made in Pakistani stocks market during the financial year 2006-07.

During the financial year of 2005-06, the external investors had made an investment of $351.5 million in Pakistan stocks market.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Sustained economic growth must for progress: Shaukat ​*
LAHORE (August 21 2007): Prime Minister Shaukat Aziz has said that Pakistan is one of the fastest growing economies in Asia and its growth has to be sustained for future progress. The PM said this while chairing a meeting here at Governor House on Monday.

He said that the continuity and transparency in the economic policies is well recognised by all the major international financial institutions and hoped that it would usher in a new era of progress and prosperity in the country.

The PM said that the armed forces of Pakistan are fully capable of defending the sovereignty and territorial integrity of the country and would not allow any country to violate its geographical boundaries. He added that Pakistan's nuclear assets are fully secured and the command and control structure is fully alive to protect these assets.

He further said that Pakistan Muslim League (PML) and its allied parties would contest the forthcoming elections on one platform and expressed confidence to win these polls based on their performance.

The meeting was attended by Punjab Governor Lieutenant General (Retd) Khalid Maqbool, Chief Minister Chaudhry Pervaiz Elahi, Federal Minister for Information and Broadcasting Muhammad Ali Durrani, Federal Minister for Defence Production, Habibullah Warriach, Minister of State for Health Shehnaz Sheikh, Advisor to Prime Minister on Finance Dr Salman Shah and Advisor to Prime Minister on Political Affairs Commander Khalil-ur-Rehman.

The meeting reviewed the ongoing projects initiated by the Punjab government and expressed hope that the completion of these projects would open new vistas of job opportunities and help improve the living standards of the people.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Exports up by 11 percent in July: Humayun ​*
LAHORE (August 21 2007): Commerce Minister Humayun Akhtar Khan on Monday said the country's exports increased by 11 percent during the first month of the current financial year ie July 2007 against the corresponding period last year. Talking to journalists at the regional office of the Trade Development Authority of Pakistan (TDAP) here on Monday, he said.

Pakistan has registered growth in its exports which increased from $7.8 billion to $17 billion during the last three years. About the increasing trade deficit, the minister said it was not due to the trade policy rather it could be the outcomes of entire policies being persuaded by the country. The trade policy was compiled after taking all the stakeholders, including chambers of commerce and industry, into confidence, he added.

Talking about the School of Fashion and Designing, the minister said it has been decided to upgrade the school to university level and its campus would soon be constructed in Johar Town, Lahore, which would be helpful for the textile and apparel.

To a question about the reported deal between President Musharraf and Benazir Bhutto, he said the deal would not cause any harm to PML-Q and his party would be further strengthened in future. President Musharraf has already taken the MNAs and MPAs during his Friday's visit of Lahore into confidence on the deal issue.

Humayun Akhtar also said that he has no differences with Chaudhry brothers and he has congenial relations with them. About the party ticket and his participation in the elections, he said it would be decided after the presidential election and the announcement of the general elections' schedule.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*PGBF for growth in Pak-German trade volume ​*
KARACHI (August 21 2007): Bilateral trade between Pakistan and Germany has crossed the mark of one billion Euro expected to grow further with the passage of time. This was revealed by Pakistan's new Ambassador to the Republic of Germany Shahid Kamal while speaking at a luncheon, hosted by Pakistan-German Business Forum (PGBF) on Monday.

Kamal said that although the trade volume between the two states was in favour of Germany, it was hoped that Pakistan's export to Germany would increase. The stable economic growth rate, which was over seven percent over the last four years, had enabled the country to extract its maximum share from the global trade and indicators of every sector of the country were had positive signs, he said. He also stated that Germany was assuming its status as a great political, economic and cultural centre of Europe as well as of the world.

The strong economic position of European Union (EU) member could be judged with the fact that it was the largest exporter of manufacturing goods in the world, he added.

Kamal viewed that his major task as a new envoy to Germany would be to change the mindset of people of Germany about Pakistan and its people as a good image of any country was imperative for doing good business anywhere in the world.

He said that a high level delegation of German lawmakers was expected to visit Pakistan next week to discuss and enhance bilateral ties between the two countries. According to a rough estimate, there were around 60,000 to 70,000 Pakistanis settled in Germany. These expatriates could help build the image of the country to improve relationship between Pakistan and Germany, he said.

Speaking on the occasion, PGBF President Qazi Sajid Ali said that the Pakistan-German Business Forum was playing a key role in enhancing trade ties between the two countries.

All business between Pakistan and Germany was being undertaken through the PGBF and it was serving as a platform to potential investors of Germany, willing to invest in Pakistan, he added.

Talking about the trade ties between Pakistan and Germany, he said that it was growing as compared to the earlier growth rate, which was not at satisfactory level. "German Embassy in Islamabad and its Consulate in Karachi should make their best efforts to improve the bilateral relations," he said.

Sajid observed that work on viable solution for issues and problems like anti-dumping duty and other several pending issues might further enhance the trade volume.

He suggested the new ambassador should uplift the image of Pakistan and promote cultural norms, including arts, literature, and film. Citing example of India's influence on Germany, he stressed penetration in every area of German society to build the positive image of the country in Europe. He also stressed the need for expanding bilateral links to share knowledge, information, technological changing and research.

Pakistan-German Business Forum is the largest forum of the country with 188 members onboard. The members include top players of corporate sector of the country and potential German companies, having investment in Pakistan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Productivity, competitiveness essential for development: Prime Minister ​*
LAHORE (August 21 2007): Prime Minister Shaukat Aziz, emphasising the need for encouraging small and medium manufacturers to add value to their products for better marketing, both within the domestic market and for possible exports said that productivity and competitiveness are two driving forces essential for the development of small and medium industries.

He stated this while presiding over a meeting to review the progress of Small and Medium Enterprises Development Authority (Smeda) at the Governor's House here on Monday.

The PM asked Smeda to expand its scope into new sectors within recently announced SME policy to increase the opportunities for development of small and medium enterprises. He directed Smeda to contribute in extending guidance for skill development, which would improve the quality of products. He said that Smeda needs to launch public relations exercise to create awareness particularly in cities and regions, which are home to the small and medium enterprises.

He appreciated the Smeda project Ahan (Aik Hunar, Aik Nagar) and said the initiative has supported the rural economy by providing product development and marketing services for traditional crafts.

The Chief Executive Officer of Smeda, Shahid Rashid informed the PM that the authority has expanded its work with SMEs and launched several projects for infrastructural support in various sectors like furniture, surgical instruments, leather products and sports goods. He also highlighted the prospects to expand Smeda activities in various sectors like fans manufacturing, plastic goods and pharmaceutical products.

The meeting was attended by Punjab Governor, Lieutenant General (Retd) Khalid Maqbool, Federal Minister for Industries, Production and Special Initiatives, Jahangir Khan Tareen, State Minister for Economic Affairs, Hina Rabbani Khar, Advisor to Prime Minister on Finance, Dr Salman Shah and other senior officials.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Metro to build stores in big cities ​*
LAHORE (August 21 2007): Provincial Minister for Industries, Muhammad Ajmal Cheema has said multi-national company of Germany Metro would set up 10-storied stores, initially in big cities of Pakistan, while the first store of Metro is being constructed at Tokkar Niaz Beg, which would be completed this year.

He expressed these views while talking to a delegation of industrialists at his residence here on Monay. The Minister said Metro would set-up stores in Lahore, Karachi, Rawalpindi, and Islamabad while the most of the stores would be located in Punjab. He said after the investment of "Metro" other multi-national companies of the world are also coming to Pakistan and these companies are taking keen interest to invest in this country.

He said the Metro would also impart training of modern techniques regarding protection of vegetables and fruits. He said business-friendly policies of the present regime have attracted the foreign investors and they are ready to invest in Pakistan. He said Punjab has become the hub of industrial actions, which have increased the industrial growth of Punjab.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*CSF and PBC sign MoU to promote investment ​* 
KARACHI (August 21 2007): The United States will continue to help the government of Pakistan in its efforts to raise income, jobs opportunities and well being of its citizens.

"We understand that providing economic opportunities for all Pakistanis is fundamental in building a solid, sustainable foundation for continued economic growth and peace", said US Consul General in Karachi Kay L. Anske, while speaking at the memorandum of understanding (MoU) signing ceremony between the USAID-funded Competitiveness Support Fund (CSF) and Pakistan Business Council (PBC) here on Monday.

The CSF and PCB signed the MoU to identify public policy initiatives to improve competitiveness of Pakistani businesses. The MoU was signed by Chief Executive Officer of CSF Arthur Bayhan and PBC Chairman Abdul Razzak Dawood.

According to MoU, the CSF and PCB will undertake joint initiatives in engaging the government, research institutions, academia and the private sector in developing evidence-based advice on changes in legislation relating to public policy initiatives.

The PBC will help the CSF in achieving its objective of supporting Pakistan's goal of a more competitive economy by providing input into policy decisions, working to improve regulatory and administrative frameworks and enhancing public-private partnerships within the country.

The US Consul General said that the USAID's support to this agreement amounted to 12 million dollars and since 2003, the USAID had provided over 73 million dollars for economic growth initiatives.

"Competitiveness is the key of long-term economic growth and we are pleased to see that the government of Pakistan's policies of de-regulation, liberalisation and privatisation are working and providing concrete results", she said, and added that the benefits to Pakistan were evident as its companies strengthened their competitive position, the country's economy would grow and improve the economic condition of its citizens.

As a driver of global economic growth, the US also benefited from competitiveness as a competitive and prosperous Pakistan would create more trading opportunities for the US, as well as other countries in the region.

She said that this new collaboration between the PCB and the CSF would ensure that Pakistan was better poised to not only understanding the needs of the global market, but also meeting their demand of a highly skilled and well-trained workforce.

The CSF would continue to build on the momentum generated from the conference it held here in May last year on competitiveness and economic growth in the Asia-Pacific region, she said, adding the conference provided Pakistan an excellent opportunity to showcase its competitiveness initiatives and efforts under way to improve its standing in the global value chain.

The US Consul General said that the CSF had identify industry sectors - such as motorcycles and fisheries - with potential and competitive advantage. The motorcycle industry, for instance, would increase the motorcycle market from existing 750,000 units per annum to 1.7 million units by 2010-11. This would create additional 500,000 jobs by 2010-11 due to increase in the market size and approximately an additional Rs 40 billion would be generated as government revenue, she added.

She said that the CSF had also carried out a study, which was assisting the government of Pakistan in establishing special economic zones (SEZs), which would result in the formation of a task force on SEZs. This task force would identify the investors' demand and assess the economic impact of the SEZs and it would also define the incentives and the standards for the SEZs, which would generate investment and create jobs.

"In a short span of time, the CSF has managed to establish public-private partnership to promote innovation and competitiveness by working closely with the Higher Education Commission (HEC), Pakistan Agriculture Research Council, the provincial governments, the Board of Investment (BoI) and now with the PBC", she added.

She said that the MoU between PBC and CSF was a noteworthy step towards their objectives, and expressed the hope that this partnership would help the private sector in Pakistan to generate more economic activities in the country.

Speaking on the occasion, CSF CEO Arthur Bayhan said: "It is important to look into the three main economic pillars to measure the competitiveness of any country and these pillars are:

-- An appropriate legal and institutional framework that includes, among others, the intellectual property rights, company and insolvency laws, antitrust legislation or competition policies etc.

-- An investment regime which aims at creation of a business-friendly environment and attracts foreign and domestic investment. However, more important is the greenfiled investment, which generates new technology, know-how, skills development, professionalism in management.

-- Innovation systems. Federal, provincial and local innovation systems to promote knowledge-based enterprise development that includes the strengthening industry academia linkages, commercialisation of research and building capacity for adaptation of new technologies.

He said that the competitiveness was the key to a sustained economic growth and economic growth was the key to generate employment and reduce poverty. PBC Chairman Abdual Razzak Dawood and CEO Salim Raza also spoke on this occasion and briefed about the agreement.

The CSF is a joint initiative of the Ministry of Finance and the US Agency for International Development (USAID). It supports Pakistan goal to have a competitive economy by providing input into policy decisions, working to improve regulatory and administrative frameworks and enhancing public-private partnerships within the country.

Support for the CSF is part of the 1.5 billion dollars in aid that the US is providing to Pakistan, through the USAID, over five years to improve economic growth, education, health and governance and for earthquake reconstruction.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan to provide access to Uzbek cargo via Gwadar ​*
ISLAMABAD (August 21 2007): Pakistan will provide access to Uzbekistan for transshipment of its cargo to and from Gwadar port, sources in Communication Ministry told Business Recorder on Monday. The Cabinet, which is scheduled to meet on Wednesday, will accord ex post facto approval of the proposal.

The agreement, already signed between the two countries, envisaged free traffic in transit to the carriers of contracting parties through multi-modal transport system (land, rail and sea) in accordance with their existing national laws and regulations.

The main objective was to provide Uzbekistan access for the transshipment of their its cargo to/from Gwadar port. However, details of exit/entry points, land routes for traffic in transit as well as other operational details have to be worked out by the two countries in the form of a protocol to the agreement to be signed between the contracting parties.

Sources said that the Prime Minister, during his visit to Uzbekistan in March this year, had signed a number of agreements, Memorandums of Understanding (MoUs) including cooperation in transport and transit of goods without the consent of the Cabinet. They said that now the Ministry of Foreign Affairs has requested that the ex post facto approval of the Cabinet may be solicited for the signing of the agreement between Pakistan and Uzbekistan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Road sector:'high quality infrastructure being developed' ​*
LAHORE (August 21 2007): The government is paying special attention to development of high quality infrastructure in road sector with focus on construction of new roads and widening of existing roads.

Punjab Communication and Works (C&W) Minister Chaudhry Zaheer-ud-Din Khan said this while presiding over a high level meeting here on Monday, disclosed an official. Punjab C&W Secretary Muhammad Ahsan, Additional Secretary (Technical) Javed Akhtar Lodhi, chief engineers highways (North and South), superintending engineers and other concerned officers also attended the meeting.

The C&W secretary informed the minister that the provincial road assets have increased from 40,000 km to over 77,232 km during the last five years and estimated value of road assets exceeded Rs 200 billion. In the recent years, the overall demand for road transport has grown at seven to eight percent per annum, he added.

He apprised that the ever-increasing demand for additional road links in the province has intensified the need to augment existing road densities.

The minister was informed that Rs 14.3 billion has been allocated during the current fiscal year and a target for the construction of 700 km new roads and widening 7,600 km existing roads has been fixed. Additional funds for the mega projects like Lahore Ring Road and Lahore-Sialkot Motorway have been earmarked.

Chaudhry Zaheer-ud-Din urged the officers of C&W department to ensure timely completion of schemes and utilisation of quality material. He warned that strict action would be taken against the supervisory officers who failed to complete the projects within stipulated period.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Economic progress under civilian and military set-ups​*
By S. M. Shafi Azam & Vishnu Parmar

Pakistans economic history shows mixed performance over the past six decades with GDP growth rates varying between civilian rule and military regimes and also during different periods of the non-democratic set-up.

The economy grew by 6.8 per cent under the first military regime of Field Marshal Ayub Khan, slowed to 6.5 per cent over General Zia-ul-Haqs period and dropped to an average of 5.5 per cent during President Musharrafs tenure so far.

However, a study of the key economic and social indicators of two different periods-- the democratic rule (DR)(1989-1999) and the military regime (MR)(1999-2005)  shows that of 6 out of 28 variables, there is no significant difference in their group means. The remaining variables show some difference, with most of them worsening instead of improving during the current military rule.

The main conclusion of this study is that the current military regime has not performed significantly better as compared to the preceding civilian rule. Comparatively, the overall quality of life in terms of education, health, and poverty has also not improved significantly. In fact, it has remained stagnant or even worsened.

GDP: The average growth rate of GDP during the 17 years 1989-2005 was 4.6 per cent. Incidentally, during FY89-FY99, the GDP growth rate averaged 4.6 per cent while during FY00-05 it increased slightly to 4.8 per cent. Though there is no significant statistical difference between the two periods, there is a large variation in growth rates during the FY00-FY05. In the first three fiscal years,1999-2002 the average GDP growth was only 2.9 per cent, and it more than doubled during the next three years to 6.3 per cent- a jump of 3.4 per cent.

The acceleration in the growth rate is explained by events following 9/11, economic reforms and the re-basing on national accounts. The base year of measurement was changed from 1980-81 to 1999-2000. As a result of re-basing, the GDP estimates for 1999-2000 have improved from Rs2,952 billion to Rs3,529 billion--an increase of 19.5 per cent over the old base estimate. Thus, estimated agriculture sector performance improved by 18.5 per cent, industrial sector 18 per cent and the services sector by 21.9 per cent.

Per capita income has been estimated at $526 for the re-based year 1999-2000 as compared to $441 on the basis of 1980-61 base. Similarly, estimates of fixed investment have surged by 34.3 per cent to Rs607 billion over 1980-81 base estimates of Rs452 billion mainly due to improved coverage.

One can safely deduce that the 6.4 per cent GDP growth rate in FY04 and 8.4 per cent in FY05 are significantly over-stated. Unfortunately, the Economic Survey does not provide the data for these two years based on the common base year 1980-81 which would be the right basis of comparison for all the relevant data being analysed in this study.( See table 1)

Investment and savings: The total investment as percentage of GDP during the democratic era was 17.93 per cent, while under military rule it dropped to 17.07 per cent. The T-test and ANOVA test results show that there is no statistical difference between the two periods. The share of industry in GDP was relatively constant at 24.85 per cent of GDP for both periods. It was slightly higher at 25.59 per cent under civilian rule and dropped to 23.5 per cent under the military regime as the share of the services sector went up to 52 per cent. Over all, there was little variation during the two regimes

Savings as a percentage of GDP averaged 15.16 per cent for 17 years (1989-2005). It averaged higher during the military regime at 17.67 per cent and averaged lower at 13.79 per cent during the democratic era. It was 20.80 per cent in 2002-03 mainly after 9/11 because of increased remittances.

Defence spending: Though the volume of defence spending has been increasing every year, it, as a percentage of current expenditure and GDP, has been declining. The average defence spending ratio of current expenditure during (1989-2005) was 22.25 per cent. It was highest at 26.5 per cent in FY90 and lowest at 18.5 per cent in FY05.

The main reason for the reduction in defence spending as a proportion of current expenditure is due to creative accounting. Several items which are part of defence spending such as the salary and pensions of active and retired personnel of armed forces are included in the civilian budget.

Unemployment and inflation: There is significant statistical difference in the unemployment rate and Consumer Price Index in the two compared periods. The average unemployment rate during 1989-2005 was close to six per cent. During the civilian rule it averaged 5.19 per cent and increased to 7.52 per cent during the current military regime. Despite high growth rate like 8.4 per cent in 2004-05, and 6.40 per cent in 2003-04, the unemployment rate has increased which shows that the benefit of high growth rate is not benefiting the people. Unemployment touched the highest ever at 8.70 per cent in FY05. (see table 2)

The average inflation rate when measured by the consumer price index was 8.14 per cent during the last 17 years and 8.60 per cent when measured using the GDP deflator. It averaged close to 10 per cent during the democratic era and 4.75 per cent during the military regime.

Budget deficit: Budget deficit averaged 5.89 per cent of GDP during the last 17 years. It averaged close to seven per cent in the democratic era which is much larger than 3.95 per cent under the military regime. It was better contained within three to 4.3 per cent of GDP .

Trade: Exports as a part of the GDP was 12.92 per cent during 1989-2005. It was almost the same during the military regime at 12.95 per cent and the democratic era at 12.91 per cent. Export growth averaged 11.38 per cent during the military era and 5.45 per cent during democratic era.

Remittances: The average worker remittances as a ratio of GDP was 3.15 per cent during the last 17 yearscivilians 3.13 per cent and militarys 3.21 per cent. So essentially, there is no difference in the workers remittances as a proportion of GDP during the two periods.

Foreign exchange reserves: Robust foreign exchange reserves position reduced vulnerability of the exchange rate and provided some stability to countrys currency value.

Education: Investment in education grew by 2.18 per cent of the GDP during the entire study period--- 2.28 per cent during civilian rule and two per cent during military regime. This important area was equally neglected by both civilian and military governments.

Health: The average growth rate of investment in health sector during the 17 years of study (1989-2005) was 0.7118 per cent. It was 0.74 per cent under civilian rule and 0.67 per cent under military regime. ( see table 3)

Poverty: During 1989-2005, the growth rate of poverty was 30.13 per cent. The average growth was 31.7 per cent under military regime and 29 per cent during the democratic rule. The definition of poverty differs from country to country. The level of poverty is defined by the government by the benchmark of rupee value of Rs25 a day or Rs748 a month-- enough to afford 2,350 calories a day. Anyone earning less than this is considered as absolute poor. (Table 4)

Economic progress under civilian and military set-ups -DAWN - Business; August 20, 2007


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## Moin91

*Vision 2030 launched *



ISLAMABAD, Aug 21 (APP) - Pakistan Tuesday launched Vision 2030 programme, a roadmap for the development of the key areas of national importance. Vision 2030 is focused on developed, industrialized, just and prosperous Pakistan through rapid and sustainable development in a resource constrained economy by deploying knowledge inputs, Deputy Chairman Planning Commission Dr Akram Sheikh told participants at its launching at Aiwan-e-Sadr. He said the programme is aimed at making Pakistan a major regional hub for industry, trade and education. On achieving the economic goals, Dr Sheikh said the objective was to enhance country's GDP around US$ 1,000 billion with per capita income expected to quadruple from US$ 925 in 2007 to about US$ 4,000 in 2030. Reducing population growth from 1.9 to one percentand increasing literacy rate upto hundred percent by 2015 were the other targets.


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## BATMAN

*Economic Survey for 2005-06 *
Arab News 
Economic Survey for 2005-06



> Fiscal year 2005-06 proved to be a solid economic growth for Pakistan, according to its survey. This was consistent with the previous three years, despite the surging oil prices and devastating earthquake of Oct. 8, 2005, which caused extensive damages.
> 
> Pakistans economic growth, according to the survey, reflected a strong consumer spending and buoyant corporate sector, with per capita income rising to $847.
> 
> With a growth of 6.6 percent during the year, Pakistans economy grew at the rate of seven percent on aggregate during the previous four years, thus emerging as one of the fastest growing economies in the region.
> 
> The annual economic survey presents a comprehensive and balanced analysis of the countrys economy each year by covering all sectors of the economy. It analytically assesses the impact of government policies and reforms on the growth and development of the economy as well as focuses on microeconomic management and sectoral development.
> 
> *Agriculture*
> Agriculture is the mainstay of Pakistans economy. Nearly 22 percent of total output (GDP) and 44.8 percent of total employment is generated in agriculture and further 45.9 percent of the countrys rural populace is directly or indirectly linked with it for their livelihood. It contributes substantially to the countrys exports. It contributes as a supplier of raw materials to industry as well as markets for industrial products.
> 
> Performance of the agriculture sector during the fiscal year has been relatively weak. Against the target of 4.2 percent and last years achievement of 6.7 percent, overall agriculture grew by 2.5 percent in 2005-06 due to a relatively weak performance of major crops and forestry.
> 
> Production of the two of the four major crops, cotton and sugarcane was less than the previous year due to many reasons including excessive rains at the time of sowing, high temperature at the flowering stage and inadequate availability of water. The wheat production remained more or less at the previous years level of 21.7 million tons with a 0.4 percent growth, failing to turn the negative growth in the major crop to a positive one. Minor crops accounting for 12.3 percent of the agriculture value added registered a growth of 1.5 percent in 2005-06.
> 
> Livestock sharing on one half of the agriculture value added registered an impressive growth of 8.8 percent on the back of a substantial increase in the population of species, milk etc. Though the production of cotton and sugarcane was estimated less, rice production registered an increase of 10.4 percent during the year.
> 
> Agriculture credit disbursement of 91.16 billion Pakistani rupees during July-March 2005 was higher by 23.5 percent. The fertilizer off-take was 6.1 percent higher as compared to the previous year.
> 
> *Construction Sector *
> The construction sector continued a strong showing. Partly helped by activity in private housing market, spending on physical infrastructure and reconstruction activities in earthquake affected areas, it grew by 9.2 percent.
> 
> *Services Sector*
> The service sector grew by 8.8 percent in 2005-06, which was attributable to a strong growth in finance and insurance sector, better performance of wholesale and retail trade as well as trade and communication sector. In fact services sector emerged as a new growth powerhouse. In real GDP terms, contribution of the services sector was two-third whereas one-third contribution came from agriculture and industry.
> 
> *Manufacturing, Mining and Quarrying*
> Manufacturing sector continued to maintain its growth momentum with more vigor by recording an impressive and broad-based growth of 8.6 percent. Large scale manufacturing grew by nine percent, which included automobiles, engineering goods, leather, pharmaceuticals, electrical appliances and nonmetallic mineral products.
> 
> *Investments*
> Domestic fixed investment grew by 30.7 percent. Private sector investment grew by 31.6 percent. Major growth private investments was in agriculture (15.3 percent), manufacturing (14.4 percent), mining and quarrying 45.5 percent, construction 9.5 percent, transport and communication 20.2 percent, wholesale and trade 424.5 percent. Public sector investment registered a massive growth of 46.7 percent. The growth in domestic sector investment was largely a public sector phenomenon in the previous year but in 2005-06 it was a public-private drive. Total investment increased to 20.2 percent of GDP, up by 1.9 percent as compared to the previous year.
> 
> Foreign direct investment (FDI) witnessed an increase of 238.7 percent in the first 10 months of the year surveyed, whereas net foreign investment stood at $3.376 billion.
> 
> *Privatization*
> The privatization program maintained its pace during 2005-06 and succeeded in privatizing some high ticket items despite an inhospitable global environment. By the end of April 2006, Pakistan completed or approved privatization of public sector entities worth 985 billion rupees.
> 
> *Poverty and Income Distribution*
> A poverty reduction strategy was launched by the government in 2001 in response to the rising trend of poverty in the country. Preliminary findings of the Pakistan Social and Living Standard Measurement Survey indicated that the poverty level in the country came down. As per the survey, the poverty level stood at 25.6 percent during the year as compared to 32.1 percent during the year as compared to 32.1 percent in 2001. More importantly, rural poverty declined more than its urban counterpart. The social sector and poverty related expenditure grew at an average rate of more than 20 percent per annum during 2001-05. There is nearly a threefold increase in the projected PRSP expenditure for 2006-07 when compared with actual expenditure of the base year 2001.
> 
> *Fiscal Development*
> Pakistan gained further strength on fiscal side. Revenues were buoyant and expenditure was rationalized. Fiscal deficit remained at a sustainable level and revenue deficit had almost been eliminated. The central Board of Revenue (CBR) was targeted to collect 690 billion rupees but it was most likely to collect 710 billion rupees. Total expenditure remained more or less stable in a narrow band of 17 to 18.3 percent of GDP over the previous six years. Share of development expenditure doubled from 11 percent to 22 percent in the same period.
> 
> Total consolidated revenues were targeted at 1,095.6 billion rupees in 2005-06 compared to 900 billion rupees in 2004-05. This was primarily due to a rise in tax revenues. Size of fiscal deficit was estimated to be 4.2 percent of the GDP including the expenditure related to earthquake effects. The revenue expenditure gap was financed through external and domestic sources. Out of a gap of 327.3 billion rupees, financing from external sources was expected at 118.4 billion rupees. The remaining gap was likely to be financed from domestic sources. The public debt to GDP ratio declined to 54.7 percent of the projected GDP for the year, which stood at 61.4 percent by the end of June 2005. The ratio of domestic debt to GDP decreased during 2005-06. Interest payments as a percentage of total revenue had been reduced to 20 percent from 41 percent over the last six years, thereby releasing resources for development and social sector programs.
> 
> More importantly as percentage of GDP, interest payments declined from six percent to 2.6 percent over the previous six years. Money and the credit tight monetary policy stance by State Bank of Pakistan (SBP) was the hallmark of the year surveyed despite a drop in core and overall inflation.
> 
> Notwithstanding the tight monetary policy stance, the SBP continued to strike a balance between promoting growth and controlling inflation as well as maintaining a stable exchange rate. In order to revamp the financial sector in line with the global financial system, the SBP set out a road map for the implementation of a new regulatory capital adequacy regime, which offers a series of approaches for capital allocations against credit and operational risks.
> 
> The money supply during July-April 2006 remained well within the credit plan target for the year. Net credit to the government for budgetary purposes was 43.3 billion rupees compared to the annual target of 98 billion rupees. However, credit to the private sector exceeded the plan target and stood at 345.1 billion rupees as against 330 billion rupees envisaged for the year in the credit plan, reflecting the confidence of the private sector on the continuously improving macro economic fundamentals of the country.
> 
> Expansion in banking business can be gauged from the fact that scheduled banks opened 34 offices from April 1, 2005, to March 31, 2006. As a lead micro finance bank in the microfinance sector development program (MSDP), Khushali Bank is serving 250,000 clients with a cumulative disbursement of over 6 billion rupees in 75 districts of Pakistan.
> 
> *Trade and Payments *
> Exports during the first nine months were up by 18.6 percent to $12.073 billion. Pakistan doubled its exports in seven years and increased its trade-GDP ratio to an estimated 34 percent in 2005-06. Our imports have risen by 43.2 percent in the first nine months to $20.693 billion primarily due to higher oil prices, rise in food imports and buoyant domestic demands of the industrial sector.
> 
> *Education*
> Literacy rate was 53 percent, which was lower than the target set. However an encouraging aspect of the increase was in net enrollment by 10 percent during the year, which needed to be harnessed to achieve the Millennium Development Goals.
> 
> *Health*
> Pakistan is fully committed of its commitment to achieve Millennium Development Goals, and initiatives have been taken to address health issues in PRSP. New health facilities added to overall health services during the year included construction of 56 new health facilities, upgradation of 59 existing facilities, and addition of 3,500 new doctors, 1,900 nurses and 15,000 female health workers. The total expenditure on health sector for the year was 40 billion rupees, up by 5.39 percent as compared to the previous year. In order to improve the health status of the people various programs remained operative during the year.


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## Neo

*Pakistan urged to comply with WTO standards​*
ISLAMABAD, Aug 20: The government has decided to comply with the standards demanded by the World Trade Organisation (WTO) to survive in the export market. Official sources told Dawn on Monday that the WTO had been insisting that Pakistans manufacturers, exporters and entrepreneurs should meet the internationally acceptable standards, measurements and calibration in its foreign trade, commerce and industrial dealings.

There is a long list of standards demanded by different agencies in various sectors. The WTO wants Islamabad to comply with the requirements like Technical Barrier to Trade (TBT), including metrology, standards, testing and quality (MSTQ), sanitary and phyto sanitary (SPS), scientific metrology and legal metrology (weights & measures) to achieve the highest level of accuracy in measurement and calibration as obligatory requirements of the International Standard Organisation (ISO).

It has also asked Pakistan to enter into agreements on mutual recognition (MR) with other countries as recommended by the Bureau of International Weights and Measures (BIPR), Organisation of Legal Metrology (OIML), International Laboratory Accreditation Cooperation (ILAC), Asia Pacific Laboratories Accreditation Cooperation (APLAC) and International Accreditation Federation (IAF).

For achieving various international standards, the government has decided to go for the balancing, modernisation and revamping (BMR) of National Physical and Standards Laboratory (NPSL), Islamabad, for which Rs2 billion has been allocated for upgradation and strengthening of metrology base in Pakistan.

As a first step, the NPSL needs primary standards to essentially take part in international key comparison arranged by BIPM, which are set by the WTO for which the state-of-the-art equipment will be procured. This equipment will help establish primary standards of measures in chemical, physical, industrial and legal metrology.

After attaining the BMR, the NPSL will meet the demands of the potential customers from industrial trade, research development organisations for calibration, measurements, test and analysis.

The NPSL is the only organisation in the country responsible for maintenance and dissemination of national primary standards. Practically, limited facilities are available within the country. Some of the defence organisations are carrying out calibration work without going for establishing traceability expression and they have to refer NPSL for their reference/traceability hierarchy due to their classified nature.

At present there is no mechanism of coordination among the newly emerging private sector laboratories. However, some sort of coordination could be visualised in near future as far as accreditation of laboratories and management of inter-laboratory comparison is concerned.

The government approved the establishments of NPSL in 1974 through an act of parliament, which started functioning in 1983 at its present premises in Islamabad. The laboratory was supposed to extend and refine its capabilities with time in accordance with requirements of the country. But unfortunately, sources said, it was very slow and NPSL could not prove its worth even after years. It was not in a position to provide the needful services to industry and other users in Pakistan.

With the allocation of new funding, the NPSL is expected to enhance about 10 to 15 per cent of existing test and calibration facilities and improvement of environment conditions in the laboratory to some extent.

The additional services by virtue of new facilities were being rendered to the industries and exporters. However, ranges and accuracy of most of the existing physical parameters and testing areas still needed to be increased and improved further.

Pakistan urged to comply with WTO standards -DAWN - Business; August 21, 2007


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## Neo

*Security problem may delay oil output in NWFP​*
ISLAMABAD, Aug 20: The Hungarian-based MOL Pakistan, prospecting for oil and gas in Gurguri area of the Karak district, on Monday confirmed that a foreign sub-contractor had pulled out of petroleum exploration due to security reasons but had been replaced to avoid stoppage of the operation.

A press release quoting MOL Managing Director Janos Feher  the Tal Block operator in the NWFP (Karak) -- said the security issue in the area was well known to the government and that the company had always worked with both the federal and provincial authorities.

What we have communicated to the government is that the security and land acquisition related issues can delay the development and the targeted oil and gas production from the field that are crucial for the energy security and economy of the country, the province and the local community, Mr Feher added. He said that the MOL was working in the area for exploring petroleum and had no intention to stop its operation in the near future.

The MOL has been working in Pakistan through its subsidiary MOL Pakistan Oil and Gas Company, B.V. since April 1999.

The petroleum concession and exploration licence was granted to MOL (TAL Block No. 3370-3) in NWFP with the joint venture partners, Oil and Gas Development Company Limited (OGDCL), Pakistan Petroleum Limited (PPL), Government Holdings (Pvt) Limited (GHPL) and Pakistan Oilfields Limited (POL) for exploration of oil and gas.

Shah Abdul Aziz, a local MNA, told Dawn that the companies had actually received threatening letters from some unknown persons.

Security problem may delay oil output in NWFP -DAWN - Business; August 21, 2007


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## Neo

*Millers warn against looming sugar crisis​*
LAHORE, Aug 20: Pakistan Sugar Mills Association (PSMA) drew the attention of the government on Monday towards the worst emerging sugar and cane crises. In a letter to Dr Salman Shah, adviser to Prime Minister on Finance, PSMA Punjab chapter chairman Ch. Zaka Ashraf said that the country was going to have a bumper cane crop next season, and the industry was likely to produce 4.3 to 4.5 million tons of sugar.

He said that the current minimum support price of sugarcane cannot be paid unless sugar was sold at an ex-mill rate of Rs32 per kg, inclusive of 15 per cent sales tax and one per cent special excise duty. The industry, he said, is likely to have surplus stocks, ranging between 300,000 tons and 500,000 tons out of next years crop.

If industry starts crushing from the first week of November, it would have a carry forward surplus of 200,000 tons from last year, which would take the surplus stocks to 500,000-700,000 tons next year.

Unfortunately, in spite of domestic glut, the government is allowing unhindered flow of Indian sugar. If Indian sugar keeps on arriving through Wagha border, it will trigger a price crash in the domestic market because it costs $285 per ton, which is only Rs26.50 per kg.

In order to ensure start of crushing season by the first week of November, it is necessary that entire sugarcane crop is lifted on time and minimum support price of cane is ensured, and mills be allowed to sell their sugar by the first week of November.

The Trading Corporation of Pakistan (TCP) should only sell 100,000 tons between Oct 15 and Nov 15. No sugar should be sold by the TCP until Oct 15. This will enable the sugar mills to start crushing in the first week of November.

He further proposed that import of sugar from India must either be banned or import duty be raised from the 15 to 30 per cent.

Moreover, to enable the mills to pay minimum support price to sugarcane growers, the ex-mill sale price of Rs31-32 per kg must be maintained, the letter said.

If this price is not maintained, mills would neither be able to pay minimum support price to growers, nor they would be able to crush bumper sugarcane crop next year, the letter said.

He said that the industry is timely informing the government about the alarming situation and it is hoped that immediate corrective measures would be taken to bail the sugarcane growers out of the impending crisis.

Millers warn against looming sugar crisis -DAWN - Business; August 21, 2007


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## Neo

*APL to invest in associated companies​*
KARACHI, Aug 20: Attock Petroleum Limited (APL) announced on Monday that it proposed to invest in shares of associated companies: National Refinery, Attock Refinery, Pakistan Oilfields and Attock Cement Pakistan.

A meeting of the board of directors held on Monday resolved that the chief executive be authorised to invest from time to time as may be considered appropriate, through the Stock Exchange(s), for purchase of shares in the (above four) companies, collectively called the investee companies.

The announcement made at the KSE stated that the shares were proposed to be purchased through the stock exchange from the general public including shares held by any large shareholder(s) to the extent of a maximum of 2.5 per cent of the paid-up capital of each investee company (in addition to the existing investment of 1pc in NRL) with overall amount not to exceed Rs2,500 million at the price(s) ruling on the date of such purchase(s).

The material information was conveyed by the company to the KSE in accordance with the Listing Regulation No.28 and Clause (xxiii) of the Listing Regulation No.37 under Code of Corporate Governance.

Earlier, the board approved financial results and appropriations for the year ended June 30, 2007. The payouts proposed included: cash dividend at Rs14 (140 per cent). No interim was earlier announced.

The company posted profit after tax in the sum of Rs1,728 million, translating into earnings per share (eps) at Rs43.22 for the year ended June 30, 2007. This compared with PAT at Rs1,393 million and eps of Rs34.82 the previous year. Sales amounted to Rs49.9 billion for the year under review and Rs46.2 billion the earlier year.

The results appeared to be in line with most analysts expectations, but the boards decision to issue bonus shares and invest sum to the extent of Rs2.5 billion in associated companies were elements of surprise for most investors.

APL to invest in associated companies -DAWN - Business; August 21, 2007


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## Neo

*Philippines may import rice from Pakistan​*
MANILA, Aug 20: The Philippines announced on Monday it would hold a tender on Sept 7 for import of 260,000 tons of rice. The governments National Food Authority said the 25 per cent broken variety rice could be sourced from Thailand, Vietnam, China, Pakistan, India, Australia or US.

However, the maximum quantity of Indian rice to be imported would be 25,000 tons and the limit for Pakistani, Australian and US rice would be 50,000 tons. The rice is for arrival in September and October.

The import was announced after a prolonged dry spell in the main rice-growing areas of Luzon island that ended only two weeks ago. Officials have said the rains earlier in August came too late to save the full harvest.

Officials said the Philippines rice output this year would rise between 3.5 and four per cent, below a target of around five per cent.Reuters

Philippines may import rice from Pakistan -DAWN - Business; August 21, 2007


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## Neo

*Strategy to be evolved to check inflation, price hike: Prime Minister ​*
LAHORE (August 21 2007): Infrastructure development, especially the construction of roads, provision of potable water, electricity and gas supply, have brought about a positive change in the lifestyle of the people of rural areas. Prime Minister Shaukat Aziz said this while talking to Punjab Chief Minister Pervaiz Elahi who called on him here at Governor's House on Monday.

Development strategy in the province, reforms process, political affairs as well as organisational matters of Pakistan Muslim League came under discussion during the meeting. The Chief Minister also apprised the Prime Minister about the pace of implementation of ongoing mega projects in the province.

He said that President Pervez Musharraf would contest the presidential election between September 15 and October 15 in accordance with the constitutional provisions and his re-election would ensure political stability and economic prosperity in the country.

"Continuity in government policies would bring about economic development apart from further strengthening democratic institutions. Pakistan needs consistent progress in all the fields as it is the only guarantee for the sovereignty of the country," he added.

Terming the increased political activity in the country as a healthy sign, he said that democracy was being strengthened and people were taking interest in the political affairs. He said the ongoing developmental projects in Punjab were leaving a positive impact not only in the province but also on the overall economic situation of the country.

He said that projects of development and uplift of the people have started yielding encouraging results and the standard of living of the masses has improved. He said that national internship programme is being promoted in an effective manner in Punjab which will result in improving professional skills of youth for availing job opportunities.

The Prime Minister also appreciated the development strategy and reforms process in the province and expressed satisfaction over the pace of implementation of development projects. He said that local governments have undertaken commendable development activities, which is a proof of the fact that the devolution of powers has proved very useful.

The Chief Minister said that collective efforts of provincial and federal governments were resulting in relief to the masses due to which PML would achieve a thumping victory in the forthcoming general elections. He said that a burn centre was being set up at Jinnah Hospital at a cost of Rs 860 million. He thanked the Prime Minister for bearing 50 percent cost by the federal government on the setting up of the burn centre.

He said that reforms programme in education, health and other sectors of development and execution of development projects have resulted in considerable decrease in poverty. He added that infrastructure is being improved in the province under a comprehensive programme and substantial resources are being utilised on the improvement of means of communication.

He said that Punjab government has initiated a programme for rehabilitation of the families living below poverty line and an amount of Rs 500 per month would be given to such families. He said that 4.3 million members of 600,000 destitute families would benefit from this programme.

Talking to Punjab Governor Khalid Maqbool during a meeting, Prime Minister Shaukat Aziz said that the government has devised a comprehensive strategy to check inflation and price hike. The government, he said, was taking appropriate measures to ensure that prices should remain stable during the holy month of Ramazan.

The rising demand and improved buying power of the people was one of the factors for inflation, which would be checked through adequate supply of items of daily use at reasonable rates, the PM added.

"The people of Pakistan are generally religious, peaceful and hardworking. However, certain elements profess such tendencies which are inconsistent with socio-cultural and religious beliefs of people. As such, they occasionally attempt to create law and order situation which causes embarrassment not only to the country but to the people also. The government was fully capable of handling such elements and protecting lives of the citizens," he said.

Khalid appreciated the policies of the government and hoped that this would bring a positive change in the lives of the people. He also apprised the Prime Minister of various development projects initiated by the Punjab government.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*President stresses need for political stability: 'Vision 2030' launched ​*
ISLAMABAD (August 22 2007): President General Pervez Musharraf on Tuesday urged the political power holders in the country to maintain a stable political environment for continuity and sustainability of development policies, and to make the 'Vision 2030' a reality.

"We have to have a stable political environment," he said at the launching ceremony of 'Vision 2030' programme, held at Aiwan-e-Sadr. The 'Vision' envisages a roadmap for future development in key areas of national importance.

The gathering being addressed by the President comprised National Assembly Speaker Amir Hussain, Governors and Chief Ministers of NWFP and Balochistan, federal ministers, parliamentarians, federal secretaries, diplomats and senior government officials.

The President spoke of the 'Vision' that looks for a "developed, industrialised, just and prosperous Pakistan through rapid and sustainable development in a resource-constrained economy by deploying knowledge inputs."

He called for a "balanced political approach" to allow the government, coming through a fair and transparent election, to continue for five years so that it can focus on the plans and achieve the objectives.

He said that in the run-up to the election, it was extremely important that "we develop national consensus on issues, challenges and threats. We have to generate political reconciliation to meet those [threats] and finally ensure good governance." The President said: "If we can meet these, Insha Allah, Pakistan has a very bright future ahead." He said that it was also vital that "we maintain harmony externally, peace within and peace without."

In this connection he referred to the efforts being made for peace with India and the approach to ensure that things stabilise in Afghanistan and on the borders within the Federally Administered Tribal Areas (FATA). "We have to achieve these targets so that our 'Vision 2030' continues moving unimpeded by these centrifugal forces that may harm it and may create obstacles."

The President said that it was the duty of every government to ensure security, progress and development of a nation and wellbeing of its people. He said that security of Pakistan was paramount, and stressed that it never could come from weakness, but from strength.

"Our potential to deal with external threat must remain always," the President said, and added that "at the same time, the government must be able to maintain security from internal threats".

He mentioned a series of challenges, like population growth, shortage of water resources, food and energy security, environmental issues, and globalisation, and said: "We have to surmount all these boldly, and cannot brush these under the carpet."

Otherwise, the President said, the challenges like power generation, scarcity of water, issue of construction of major water reservoirs, population growth and "the forces that are in conflict to our national harmony and integrity" would create obstructions at a later stage.

"They erupt as challenges ... we cannot do this anymore ... we must face these challenges boldly, confront them and defeat them and carry on going on the path of our future vision," the President said.

Musharraf said there was need to develop infrastructure and communication, and termed it vital for the country's development. He said that it was important to convert the railways tracks to standard gauge and to have faster trains to create linkages with Central Asian Republics and country's sea ports.

He talked about the need for larger water reservoirs to preserve the precious water resources, besides brick lined water courses and canals to irrigate larger areas.

The President referred to the country's large coal reserves and said that China was meeting 70 percent of its energy requirements by using coal. He said that Pakistan has huge untapped potential, including alternative sources for energy, which also needed to be exploited.

President Musharraf called for achieving greater food security through yield and area intensification. He said there was wide scope for growth in the livestock and dairy sectors where, with even little investment, good results could be achieved rapidly.

"The 'white revolution' must be pursued vigorously, bringing the rural areas at par with the developed areas," he said. He called for managing the population growth, besides protection of environment, countering deforestation and building road, rail, energy and pipeline links with the Central Asian Republics.

The President said that industrialisation was very vital for the country's progress and development, and added hat the government was offering numerous incentives to foreign and local investors.

He said that welfare of the people was at the centre of all developmental activities, and added that poverty had been reduced from 33 percent to 24.3 percent due to government efforts and pointed that still one person out of four was very poor, but vowed that "we cannot allow this to continue".

He pointed to the need for human resource development and improving the quality of the population. He said there was also need to concentrate on primary and secondary healthcare, besides having holistic approach towards education.

He stressed neesd for skill development as part of growing industrialisation and said that greater synchronisation between the universities, industry and vocational training was required.

He talked of the ambitious programme of establishing nine foreign universities in the country to impart quality education to the ypuths. Earlier, Prime Minister Shaukat Aziz presented the 'Vision 2030' documents to the President.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Little risk to Pakistan's economy ​*
KARACHI (August 22 2007): On August 7, 2007, US central bank policy makers came up with a declaration that inflation remained their primary target. In other words, it also meant that Federal Reserve's monetary stance would remain tight until they succeed in containing inflation.

Surprisingly, the announcement was made despite strong signs emerging from the US market of Subprime mortgage market collapse. Estimates suggest that total asset investment in Subprime, the 10th largest loan provider in the US,debt this year could be $300 billion.

The size of the US market for mortgage is said to be a little over $2 trillion industry. In July, disclosure made by Bear Sterns head fund of its Subprime debt holdings rocked the financial market. But announcement by BNP Paribas on August 9 that the bank had decided to freeze withdrawal on three investment funds with assets of euros two billion ($2.7 billion) added fuel to fire, leading to the current turmoil.

Soon after 9/11, the Fed decided to ease its credit stance and funds started rolling into the economy, finding way into equity, bonds, housing and commercial paper. US money market fund is said to be a $2.6 trillion industry, while estimates suggest hedge fund is under $2 trillion market.

Banks regularly hedge their exposure by means of derivatives. The size of derivative market is believed to be around $20 trillion. But funds such as short-term commercial paper, which has a $1.1 trillion market, CD's and US treasury bills, which are $2 trillion industries, are not hedged.

How quickly things change. Fed, which never stops thinking about inflation, has suddenly stopped talking about inflation. In a short span of 10 days, ie on August 17, the turmoil in the global financial market forced Fed to lower its discount rate by 1/2 percentage to 5.75 percent in an effort to provide liquidity after failing to lift the market, despite injection of $350 billion (approximately) by the global Central Bank.

Fed's discount window will provide 30 days loan facility to all home mortgages and its related assets. Generally, banks avoid using this facility as the market perception is that if a financial institution approaches the Fed discount window, it is seen in trouble.

During the Gulf war in the early 1990s, overnight Fed fund rates soared to 90 percent, yet couple of banks were said to have preferred borrowing from the market rather than approaching the Fed window.

Is it not very strange that frequent interventions by Central Bank are quite contrary to the general perception of a free market economy? When a Central Bank steps in to intervene in an underdeveloped country, such market is called an unregulated market.

Hence, it is not considered a free economy and the so-called experts make a lot of hue and cry. But in the present circumstances, the so-called financial gurus must be full of praise for the Central Bank's act. If the turmoil further aggravates, they will be looking for more such support in future.

Apparently, it looks as if the market is moving towards stability. This could be temporary, but it may not be very encouraging until the market is aware of the US financial market fiasco. It is likely to witness more volatility before getting back to normal.

Big names such as Citibank, J.P. Morgan, BOA, BNP Paribas, UBS, Credit Suisse and a large number of other good banks and financial institutions have been badly hit and the damage is intensive, which has spilled over to big parts of Europe, Canada, Australia, Japan and South Asian economies.

It is a worrisome news to know that French President Sarkozy in an urgent letter addressed to German Chancellor Merkel has shown his concern about the financial market turmoil and has questioned the rating agencies failure to issue warning against a state of great anxiety and confusion in the market.

Creditworthiness of the two rating agencies Standard and Poor's and Moody's Investors Service has been badly damaged for giving credit derivatives Triple-A ratings, which indicated that they were as safe as US Treasuries.

So far it has lost 30 percent of its value. This year, the share prices of two rating agencies, Moody's and S&P, too, have declined by 28 percent and 24 percent respectively.

*SUBPRIME'S IMPACT ON PAKISTAN'S ECONOMY* Subprime mortgage may have a global impact, but direct risk to the Pakistan's financial market is minimal.

Except for the 1st Sukook bond worth $600 million issued by the Government of Pakistan on January 27 2005, which was agreed on a six-month floating rate basis, which has to bear the price volatility due to rising US interest rate, and now due to global liquidity crunch, the LIBOR rates have been pushed higher. But discount rate cut of 50 basis points suggests that Fed could ease its Fed fund rate either before or by September 18 when FOMC meets. Any slash in US interest rates usually favours borrowing cost.

While, the remaining of the euro bonds floated by Pakistan are fixed and therefore will have no negative financial impact, the holders of bonds are nevertheless the risk takers. The turmoil pushed bond yields substantially. As of August 15, Pakistan's Euro bond with coupon rate of 6.75 percent that matures on February 19, 2009, rose by 1.806 percent to 8.556 percent.

Euro bond with coupon rate of 7.125 percent, maturing on March 31, 2016, was up by 2.769 percent to 9.894 percent. Bond maturing on June 1, 2017, with coupon rate 6.875 percent jumped up by 2.27 percent to 9.145 percent and 30-year Euro bond maturing on March 31, 2036, was up by 1.663 percent to 9.538 percent.

The spike in short term yield is in line of demand in the international market arising from short dated funds. In real terms, Pakistan is currently better placed by floating $800 million Euro bond in March 2007 and presently is a net gainer by over 100 basis points (approximately).

Pakistan may not enjoy the same type of spread if it decides to float Euro bond, since the rating agency S&P has shifted Pakistan's outlook from positive to stable, (positive means possibility of upward revision to high whereas stable stands for neutral outlook).

Some risk could be seen in Pakistan's equity market, which out of $1.2 billion SCRA funds could have 25 percent to 30 percent hot money. With Pakistan's forex reserves comfortably hovering around $12 billion, it should not be a matter concern.

Banks could be sitting with small risk, as available funds in F.E. 25 is Rs 2.3 billion, which is a residual quantity of liquidity for overseas investments, but these funds are invested with the financial institutions, so risk could be minimal.

*GLOBAL CONCERNS AND REMEDY* Since the ongoing global financial turmoil is not over, nervousness still prevails in the market. The US short term Treasury bills yield tumbled on Monday. This is a much sharper fall than stock market crash in October 1987.

The Fed would be watching the market carefully until its next FOMC policy meeting due on September 18. Stability would be the key factor for easing of Fed rate. In 1997, when the issue of Long Term Capital Management rose, Fed cut its rate by 25 basis points on three occasions.

European Central Bank's President Jean-Claude Trichet is said to be reconsidering ECB's rate policy. European rate is currently 4 percent. While ECB is alert to take further steps to avert credit squeeze and to stem the turmoil, it would be interesting to note if the European Central Bank follows in Fed's footsteps to ensure stability.

Another tool available with the Central Bank is that Fed could do a currency swap with Europe to provide liquidity to the market. Euro could still be the currency of choice due to healthy interest rate spread and wide corporate profit in Europe. This could push euro to 1.4350 against the dollar.

Meanwhile, Japanese yen, which gained sharply on unwinding of carry trade, is taking a breather. There is a huge risk of unwinding of carry trade positions that could further strengthen yen to 107 per dollar by year-end.

However, the big question that remains to be answered is that how the world would know that the global financial crisis is over, as the turmoil in the credit market still looks far from over? The true consequences of global financial turmoil will only be known several months or years hence.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan to sustain growth in foreign investment​*
ISLAMABAD: Pakistan will sustain the growing momentum of foreign investment and privatisation proceeds, which performed tremendously well and attracted record amounts of $8.4 billion and $2 billion, respectively during the year 2006-07. 

Mr Zahid Hamid, federal minister for privatisation and investment stated this during a meeting with Mr Asif Ahmed, Director Asia Pacific for UK Trade & Investment who called on him along with UKs Deputy High Commissioner here on Monday. 

He informed that two GDR transactions of Oil & Gas Development Company Limited (OGDCL) and United Bank Limited (UBL), attracted $811 million and $650 million respectively on their listing at the London Stock Exchange. 

The investment conferences and road shows held within Pakistan and abroad have contributed significantly in the amazing increase in portfolio investment, he added. 

Mr Hamid stated that the economic reforms introduced by the government would go a long way in the days to come. 

GDRs of National Bank of Pakistan (NBP), Kot Aadu Power Company (KAPCO), Habib Bank Limited (HBL) and others were proceeding according to their tentative time frame. 

The Minister lauded the interest of UK and US investors in the economic activity of Pakistan while terming it encouraging and assured the visiting guests that Pakistan was in the process of further improving its competitiveness and facilitation arrangements for the foreign investors.

Mr Asif Ahmed appreciated the support being extended by the Pakistan High Commission in Britain to British investors and hoped the exchange of investors delegations of both the countries would help a lot to improve the existing trade and investment relations.

Daily Times - Leading News Resource of Pakistan


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## Neo

*150 villages selected to supply water through solar electrification ​*
ISLAMABAD (August 22 2007): Pakistan Alternative Energy Development Board (AEDB) has selected 150 villages in Tharparkar district of Sindh province to supply water under the framework of solar electrification of remote villages.

The project titled 'Sustainable Development of Utility Scale Wind Power Production' is being initiated in collaboration with United Nations Development Programme.

The villages selected in first phase for the feasibility study in Sindh are located in talukas of Chachro, Diplo, Nangarparkar and Mithi. "The feasibility study of the project would be launched within next few weeks and work on the project is expected to get underway in the first quarter of 2008," an official of the AEDB told APP on Tuesday.

He said that after completion of feasibility report the local communities would be involved to identify their water needs. "Each water supply point will be set up at maximum distance of half kilometer from the target houses," he elaborated.

It has been proposed that minimum quantity of 25 liters water per person will be provided in a day. "The quality of water would be maintained as per standards set by World Health Organisation (WHO)," he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pak-German trade rises to $2bn per annum​*
KARACHI: Bilateral trade between Pakistan and Germany has now risen to about $2 billion per annum and is likely to grow further.

Pakistans economic indicators are healthy and we will encourage more trade and investment with Germany. At present German exports to Pakistan were valued at $1.2 billion and Pakistans exports to Germany $700 million annually, said Ambassador of Pakistan designate to Germany Shahid Kamal. 

Speaking at a lunch hosted on Monday by the President Pakistan-German Business Forum Qazi Sajid Ali that was attended by leading industrialists and businessmen of both countries including KCCI President Majyd Aziz.

Shahid Kamal said that a high level German parliamentary delegation would visit Pakistan next week.

The intensity of ties between the two countries is quite strong and growing. I will make efforts to change mindset of Germans towards Pakistan., he added. 

Qazi Sajid said that Germans interest in making more investment in Pakistan is growing due to the efforts of the German Embassy, Consulate and their companies. He called for more interaction at governmental, parliamentary, educational, and cultural and NGO level between the two countries in order to create a soft image of Pakistan. ppi

Daily Times - Leading News Resource of Pakistan


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## Neo

*Saudi group wants to invest in mega projects ​*
KARACHI (August 22 2007): A delegation from Saudi Arabia, led by Sheikh Abdul Razzak, Chairman Bindawood Group, called on Sindh Chief Minister Dr Arbab Ghulam Rahim at Chief Minister House here on Tuesday and showed their interest for making investment in mega projects.

Senior member board of revenue, IG Sindh, Secretary (LU), Secretary to C.M, Chairman CM Inspection Team, prominent businessmen and other senior government officials were also present on the occasion. Later at simple ceremony, a MoU related to proposed projects was signed. The ceremony was attended by provincial secretaries and other guests.

Addressing the ceremony, the Chief Minister said that both Pakistan and Saudi Arabia are brotherly Muslim countries bound together with fraternal ties and these will continue to grow in all fields including business and trade. The Chief Minister appreciated the objectives of MoU. Bindawood Group, he observed, is a prestigious group with a very vast network carrying out score of projects in the entire Kingdom.

Some of these included the largest Mall, chain of "A" class Hotels, top of the line residential and office plazas, full range of Super Markets etc. He pointed out that Bindawood Group has shown keen interest in investing in similar kind of projects in Sindh in the first phase.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Rs 167.8 million schemes in Jhelum near completion ​*
JHELUM (August 22 2007): Federal Minister for Population, Chaudhry Shahbaz Hussain had approved several development schemes of Rs 167.8 million for his constituency NA-62 Jhelum-I last year, which have been completed, while rest of the project would be completed in the upcoming few weeks.

These development schemes include power supply to the far-flung areas, road infrastructure, supply of Sui gas, installation of new telephone exchange, upgradation of filters and provision of clean drinking water.

Chaudhry Shahbaz Hussain, in a press release here, said that he had obtained funds of Rs 40 million under the Khushhaal Pakistan Programme-II, while amount of Rs 127.8 million under the Khushhaal Pakistan Programme.

While describing the details of development schemes, he said that 82 villages of Constituency NA-62 Jhelum-I had so far been provided electricity from February to August 2007, while the work on the 15 other schemes being underway.

More than 30 links roads have been constructed while several villages have been provided Sui gas. The capacities of telephone connection have also been increased in 28 telephone exchanges. Similarly, he said that the process of installation of water supply plant is in initial stages and it would be completed by the end of current year, he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Singapore and Brunei may recruit Pakistani workers ​* 
KARACHI (August 22 2007): Singapore and Brunei are willing to recruit workers, both skilled and unskilled, from Pakistan, said an official of Overseas Employment Corporation (OEC) on Tuesday. The official also revealed that Federal Minister for Labour Ghulam Sarwar Khan and OEC Managing Director S M Junaid were presently visiting these countries.

During their visits, they held talks with the concerned people and apprised them about the quality of Pakistani manpower, which could help enhance image of Pakistani labour abroad, he said. He further said that the OEC was safeguarding the interest of both the employers and the employees by adhering to moral principles and high ethical values.

Legal support was provided to every registered Pakistani workers and the OEC helped the employees understand the working conditions before going abroad. He said that the government would start training programmes for unskilled manpower, which sought foreign jobs.

Majority of technical institutes were teaching outdated courses and using old equipment to enhance technical know how, he added. He said that Pakistan's technical manpower was well-trained and diversified, having experience of working abroad in fields of medicine, engineering, education, science, agriculture, manufacturing, shipping, etc. He said the government would formulate a policy to utilise the experience of returning Pakistanis as was done in Japan and Korea.

These countries used to send their manpower abroad only to polish their skills in advanced working conditions and thereafter utilised their professional experience for the growth of the country's economy.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan, South Africa agree to boost economic ties​*
ISLAMABAD, Aug 21: South Africa and Pakistan have agreed to increase economic cooperation in all fields particularly in mining, steel, auto, chemical and plastics, engineering and technology.

This understanding was reached during a meeting held here on Tuesday between officials of Engineering Development Board (EDB) and the visiting six-member South African delegation led by Willem van der Spuy, Director Department of Trade and Industry, Bilateral Trade Relations  Asia.

An official announcement said the delegation underlined the importance of specific work programme in these sectors so that the relationship could be built on sustainable basis.

The delegation assured that South Africa was keen to build partnership with Pakistan on the basis of South-South cooperation policy of the country and would like to increase interactions between the two governments and business communities.

The South African delegation was visiting Pakistan after eight years gap.

EDB General Manger Zahid J. Yaqub gave a detailed presentation covering macroeconomic indicators, investment environment, efficiency improvement initiatives, production trend in automotive products, export processing zones and potential sectors for enhancing cooperation.

He informed the delegation that a steel policy was under preparation covering incentives to investors for steel-making at different parts of the country and requested for South African help in steel production.

He added that Pakistan had learnt a lot from South Africa in auto sector and formulated its new auto development programme based on pre-announced tariff policy, successfully implemented by South Africa along with other incentives.

The meeting was informed that Pakistan had prepared an aggressive African initiative policy for increasing its export to the region. As a first step, Pakistan will attend Nairobi Fair scheduled in October 2007 so that its products could be promoted in African countries.

Pakistan, South Africa agree to boost economic ties -DAWN - Business; August 22, 2007


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*200 megawatts power plant: Sindh decides to annul MoU ​*
KARACHI (August 23 2007): The Sindh government has decided to terminate the Memorandum of Understanding (MoU) signed with Dadabhoy Group for setting up a coal-based power plant in Sonda-Jherruk, following the Group's failure in executing works on time.

Sources in Sindh Mines & Mineral Department told Business Recorder here on Wednesday that earlier a show-cause notice had been issued to the group but it failed to accelerate the work as per conditions of the MoU. Provincial government had served a notice on the Dadabhoy group for the delay in undertaking the 200 MW power project.

After serving the notice, a delegation of senior officials and technical experts of Mines & Mineral Department had visited the site. After detailed survey of the project site, they came to know that the reply submitted by the Group claiming that it had drilled over 250 holes was totally baseless. Not more than a dozen holes had been drilled for coal exploration at the project site contrary to the claims of company officials.

Following the visit and on the spot inspection of the site, officials of the department decided to terminate the MoU, sources said. About the chances of handing over the project to any other company, sources said that it was too early to say anything in this matter.

The Memorandum of Understanding (MoU) was signed on June 27, 2005. Sindh Minister for Mines and Mineral Development Irfanullah Khan Marwat had signed on behalf of Sindh Coal Authority and Amin Dadabhoy on behalf of Dadabhoy Hydrocarbon Limited.

According to project details, Dadabhoy group had planned to set up a 200 MW coal-based power plant at an estimated cost of $400 million in association with North China Power Energy Company Ltd.

Business Recorder [Pakistan's First Financial Daily]


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*Bumper sugarcane crop expected this year ​*
ISLAMABAD (August 23 2007): Pakistan is poised to get a bumper sugarcane crop this year, and if the mills agreed to start crushing in November, the government need not import sugar, sources told Business Recorder on Wednesday.

Sources said that the government has been pressing the sugar mills for starting the crushing in October in Sindh and in November in Punjab and NWFP. The government demand has not been accepted by the sugar industry. The government also acknowledges that the import of sugar could deprive the farmers from good return as the industry could use this option in a tit for tat response to the government decision of importing sugar, the sources said.

According to initial estimates, there are indications that the sugarcane production target of around 55 million tonnes from an area of 1.015 million hectares for this year will surpass, they added.

Some recent press reports suggest that the government was ready to use the option of sugar import for ensuring supply beyond November this year. According to these reports, the government was planning to import between 0.4 and 0.5 million tonnes of sugar for carryover stocks. However, this proposal was set aside due to the fear that farmers would not get good return, the sources said.

At the start of this month, the mills had 1.2 million tonnes of sugar and the Trading Corporation of Pakistan (TCP) had 0.3 million tonnes of sugar stocks, which at the rate of 0.350 million tonnes per month consumption can meet local demand till November.

The government and the sugar industry are at odds over the start of next crushing season. Both are poles apart on stocks lifting, availability, and the prices. The sugar industry blames the government for not honouring its commitment to keeping sugar prices at reasonable level to help them dispose of stocks and make the payments to the growers.

The sugar mills, according to the sources, are not satisfied with the government's mechanism of fixing the indicative price of sugarcane. The provincial governments fix the prices under their political compulsions.

Business Recorder [Pakistan's First Financial Daily]


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*July foreign investment down 14.7 percent ​*
KARACHI (August 23 2007): Country's net foreign investment witnessed a decline of 14.7 percent during the first month of current fiscal 2007-08 due to major dipped in the portfolio investment.

Central bank statistics shows that during July 2007 net foreign investment including portfolio and foreign direct investment (FDI) stood at $156.3 million as compared to $176.3 million during the same period of the last fiscal, depicting a decline of $26 million during July 2007.

Decline of 426 percent in the portfolio investment is the major reason behind the overall decline in the foreign investment, as portfolio investment in the last July 2006 stood at $11.5 million as compared to $-37.7 million during July this year.

FDI has increased by $23.2 million to $188 million as compared to $164.8 million during same period of the last fiscal. While, the portfolio investment witnessed a dipped of $500 million to $-37.7 million during July 2007 as compared to $11.5 million in the July 2006, as during July 2007 $12.3 million portfolio investment has witnessed against the outflows of $500 million.

It may be mentioned here that during last fiscal 87 percent upsurge witnessed in the net foreign investment and the net foreign investment for the first time reached at $8.42 billion as against $4.48 billion in the fiscal 2005-06.

Business Recorder [Pakistan's First Financial Daily]


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*US firm wants to expand operations ​*
LAHORE (August 23 2007): US-based Company 'AboutUs' has planned to bring in foreign investment in Pakistan, finding a country that has a significant potential of growth and talented human resource to compete in international market, Company Founder Raymond King told Business Recorder during his visit in Lahore.

"The AboutUs wiki was launched in August of 2006 and now, one year later, the site has seen very rapid growth of over 4 million unique visitors per month and thousands of user generated edits per day, he explained. To keep up with its growth, developers, content creators and community experts are needed quickly, he added.

When asked about his interest in opening operation in Pakistan, Raymond King said he was inspired by another US based company, Mentor Graphics, which was already functioning in Lahore for almost eight years with impressive achievements and decided to open a branch office in Lahore.

Talking about Mentor Graphics he said that Mentor Graphics Corporation's President, Greg Hinckley was a good friend of him, adding that he said that Mentor Graphics was able to find great talent in Pakistan, along with a culture of innovation and dedication.

He said 'AboutUs' started its operation in Lahore in April 2007 with only eight employees and now their figure has touched to 20, which is more than double within three months. He said Mohsen Gilani; a Pakistani expatriate who was instrumental in opening and establishing Mentor's office eight years ago now using his experience to help develop 'AboutUs.'

While small at present, AboutUs plans to grow the Lahore office to 120 people over the course of the next year, he revealed. To a question, he said that Pakistan is an emerging market with a blend of unique talent, good infrastructure and high level of tolerance.

"I believe our company will create a market in Pakistan with the support of Pakistani talent, who are fully capable to compete in the international market," he added. He also praised the Pakistan over its efforts to pave suitable ways for bringing in foreign investment. To another query, AboutUs founder said that his company already had invested a huge sum of amount and more investment is in the pipeline.

Mohsen Gilani, country manager of AboutUs said he was quite happy and satisfied with the offices' performance and his ultimate goal is to establish a sustainable operation in Pakistan and through this technology Pakistan would definitely gain a tremendous visibility among other developed nations. Gilani said Pakistan has the required talent, potential and effective educational system to become an offshore technology epicentre in the region.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Import of power from Iran: authorities directed to remove bottlenecks ​*
ISLAMABAD (August 23 2007): Federal Minister for Water and Power, Liaquat Ali Jatoi has said that import of cheap electricity from Iran to Balochistan would benefit both the countries and the consumers of the region. He directed the authorities concerned to remove bottlenecks in commissioning the project as early as possible.

The minister said that the import of 1,000 MW power from Central Asian states was also being actively pursued and presently a team was discussing the modalities for import at Montreal where Tajikistan, Kyrgystan and Afghanistan were also participating.

The minister said this while chairing a high level meeting to review the technical and financial aspects of import of power from Iran. The meeting was informed that presently 39 MW was being imported from Iran to meet demand of south-west Balochistan comprising Turbat, Gawadar and Panjgoor districts and the border towns of Mashkhail and Taftan.

Considering rapid development in and around Gawadar, another contract with M/s. TAVANIR for import of 100 MW had also been signed, it was told. During Pak-Iran joint economic commission in Islamabad, Wapda and TAVANIR agreed on a tariff of 6.25 cents/kwh for supply of additional 100 MW power to Gawadar by TAVANIR, which was approved by the ECC.

The meeting also discussed the proposal of laying 55 kilometer 220 KV transmission line inside Pakistan for which financial assistance was being given by the Iranian government. The Iranian company would bear the cost of 65km line in Iran to provide power to Pakistan at its border.

The meeting also discussed financing and other aspects of the project and decided to send a larger technical group including Finance Ministry's Representative to Iran to further clarify the terms and conditions and other modalities for quick implementation of the project. The minister stressed the need for expediting the efforts for early completion of the project for importing cheap electricity from Iran for Balochistan.

The meeting also discussed import of 1,000 MW power from Iran for which an MoU has already been signed by the two countries in April, 2007. The team will also finalise various aspects of the project with their counterparts in Iran shortly.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Prime Minister studying incentive package for computer industry ​* 
ISLAMABAD (August 23 2007): Prime Minister Shaukat Aziz is examining an incentive package for computer industry to abolish duties/taxes on the import of call center equipment; withdraw GST on computers and levy 10 percent customs duty on the import of computer value of $600 or less.

Official sources told Business Recorder on Wednesday that the IT ministry has submitted the proposal to the prime minister for approval. The incentives included total waiver of sales tax on computer and reduction in duties and taxes to zero percent on the import of the call center equipment, including power supply. Such apparatus included IP phones, video conferencing equipment, and miscellaneous computer-related equipment, including switches and cables etc.

Moreover, 10 percent duty be imposed on the import of computer of the value of $600 or less to boost local assembly of computers by multinational companies. Officials said the viewpoint of the finance ministry would also be incorporated before taking any final decision on the proposed package.

Sources said a meeting on the incentives to the IT industry was held under the chairmanship of the prime minister on June 30, 2007. The prime minister issued directives to relevant ministries for promotion of the IT industry.

The prime minister had directed that the Pakistan should have an IT industry incentive regime which should be as good as any offered by comparable countries. Secondly, the IT ministry should develop a comparison of IT industry incentives offered by comparable countries. Thirdly, local assembly/manufacture of computers by MNCs like Lenovo should be comparatively incentivised pertaining to imports.

The IT ministry conducted an exercise to make a comparison of tax regimes applicable to regional countries with the local industry. Under the study, tax regimes for the IT industry in other countries are far more favourable than the tax incentives offered by Pakistan. The exemption from sales tax, corporate income tax, and import duty are available to the IT industry of Turkey; Vietnam; Thailand, and Malaysia.

Officials said the Pak IT industry has shown tremendous growth in the past four years with annual growth in exports averaging 50 percent. The companies listed on Nasdaq and the Karachi Stock Exchange (KSE) have acquired venture capital from overseas, and have gone through merger, and acquisitions with international companies.

Out of over 1,000 active IT companies, several are world leaders in their product niches and other provide services to leading corporations of the world. Seven leading multinational companies have located their development centers in Pakistan. Now this growth and expansion is threatened by the imposition of the GST on computers and other taxes and levies on call center equipment.

Keeping in view the circumstances, the IT ministry has proposed withdrawal of GST on computers; exemption of duties/taxes on import of call center equipment and other incentives, officials added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan to train other countries in MNP ​* 
Thursday, August 23, 2007

KARACHI: Pakistan Telecommunication Authority Chairman Maj-Gen (Retd) Shahzada Alam Malik has said that it is an honour for Pakistan to be selected by the International Telecommunication Union (ITU) to provide training to other countries who wish to implement Mobile Number Portability (MNP).

Pakistan would provide support to those countries. He said this while addressing the opening session of a three-day workshop on Implementing MNP organised by PTA under the aegis of ITU Centre of Excellence Network on Wednesday, a PTA statement said.

He said that the workshop has provided the Pakistani Regulator an excellent opportunity to share its experiences and expertise in the implementation of MNP. It would be willing to send its experts to regional countries to help them implement MNP, he said.

The PTA chairman further said that more than 100,000 cellular mobile subscribers have availed the service of MNP in the country since the service started five months ago. He said that Pakistan is one of the first countries in the region to have provided the services of MNP to its 64 million mobile subscribers.

The service is aimed at strengthening further healthy competition in the market and to improve the quality of service of the countrys rapidly growing cellular mobile sector. Appreciating the cooperation extended by the countrys mobile companies towards the implementation of MNP in the country, he added.

On the occasion, the statement said that Member Telecom, Ministry of IT and Telecom, Nooruddin Baqai, observed establishment of ITUs Centre of Excellence Node in Pakistan was recognition of the countrys sound economic liberalisation policies and the unprecedented growth that has been witnessed in the countrys telecom sector.

The MNP has empowered the mobile subscribers and they enjoy their right to choose any mobile service provider while retaining their numbers, he said.

Pakistan to train other countries in MNP


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*Motorola to help Pak adopt new communication technology ​* 
Thursday, August 23, 2007

KARACHI: Motorolas country manager Nadeem Safdar in his keynote presentation at the 7th ITCN Asia 2007, held in Karachi recently, underlined Pakistans advances in the telecommunications sector, while discussing, with regulators, telecom operators and enterprise customers present, the benefits and uptake potential for technologies that will support Pakistans telecommunication goals.

With a robust regulatory framework, Pakistan is embracing new technologies like WiMAX which are expected to revolutionise communications in the country.

Motorola also showcased its GSM solutions, as the technology remains a cost-effective upgradeable option.

Along with China, India, and Bangladesh, Pakistan enjoys one of the fastest growing telecommunications industries.

We remain committed to enabling Pakistan to retain a competitive regional edge by providing the latest telecommunications solutions and services targeted to operators, government, public safety organisations, enterprises and consumers, that will boost the overall economic development of Pakistan said Nadeem Safdar.

Motorola to help Pak adopt new communication technology


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## Neo

*Rains cut industrial production by 50pc​*
KARACHI, Aug 22: Except for normal production activities at the SITE Industrial Estate, four other industrial areas of the city suffered 50 to 80 per cent production losses, especially in morning shifts on Wednesday, as workers could not reach factories due to thin public transport and bad condition of roads.

Industries had experienced production losses to the extent of 30 to 70pc on Aug 9 and 10 as a sizable number of workers failed to turn up owing incessant rains.

On Wednesday, around 90pc leading retail and wholesale markets either remained closed or observed a half day. Industries could not send their local shipments to the domestic market for fear of damage to their products from rains.

Apart from low productivity, exporters are already facing problems in meeting deadlines for timely shipments due to thin presence of container goods carriers after a ban on their movement.

Chairman, Karachi Wholesale Grocers Association, Anis Majeed, said trading in wholesale food items remained suspended at markets as many people could not reach their shops due to accumulated water on roads.

Some traders, who somehow opened their shops, closed them early.

There was only 10 to 15pc trading activity at the Subzimandi on Superhighway despite satisfactory arrival of trucks from the upcountry on Tuesday night.

Chairman, Falahi Anjuman Wholesale Vegetable Market Haji Shahjehan, said some 400 to 500 trucks arrived on Tuesday night despite rains in the city.

However, only 100-150 trucks offloaded their consignments on Wednesday.

There were only fewer buyers from the city as many failed to enter the market owing to poor road passage inside the wholesale market that had submerged with rainwater.

Many traders either cashed in on the situation by charging higher prices, while others sold items below normal rates.

Chairman, SITE Association of Industry, Imran Shaukat, said production remained normal as 80 per cent workers marked their attendance, while arrival of administration people remained 50 per cent less.

He said situation about power failures and labour attendance remained satisfactory as compared with previous rains. However, export shipments and local supplies from industries almost remained at the bottom due to absence of heavy vehicles.

Chairman, North Karachi Association of Trade and Industry (NKATI), Faraz Mirza, said 80 per cent industries in the areas remained shut, out of a total 2,500 units, while the remaining 20 per cent units recorded only 30 to 40 per cent attendance.

Chairman, Korangi Association of Trade and Industry (KATI), Masood Naqi, said production suffered as 20-25 per cent workers failed to reach factories. He said of the 2,500 units around 50 per cent units failed to operate.

Senior Vice Chairman of Landhi Association of Trade and Industry (LATI), Dawood Usman, said as a result of only 50 per cent attendance of workers, production also remained low.

However, other activities, like supplies to local markets, remained very idle.

Chairman, FB Area Association of Trade and Industry (FBATI), Masroor Ahmed Alvi, said production fell by 50 per cent as only 50pc workers turned up.

Rains cut industrial production by 50pc -DAWN - Business; August 23, 2007


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*Market capitalisation seen rising to 60pc of GDP​*
ISLAMABAD, Aug 22: Despite the present scary plunge in the local stock market caused by an air of political uncertainty, a multilateral lender sees market capitalisation swelling to 60 per cent of the countrys Gross Domestic Product (GDP) in the next year and a half.

If there is a political will behind the implementation of the Second Generation Capital Market Reforms, which are around the corner, the Asian Development Bank (ADB) expects increase in market capitalisation from 41.8 per cent of GDP in 2005 to 60 per cent in 2009, an official document reveals.

Pakistans GDP had touched the $140 billion-mark last year.

The Karachi Stock Exchange (KSE), which withstood the fierce winds of judicial crisis, threats of suicide bombings and even the May 12 massive killings, had to dip by four per cent on Tuesday following rumours of imposition of martial law or emergency.

This has given further authenticity to a belief almost commonly being held by the managers of international financial institutions that what matter a lot for the Pakistani equity markets are not simply the law and order situation or any violation of human rights or constitution, but continuity of economic reforms and political commitment to ensure their implementation or simply a strong government with a central authority.

The ADB, which is providing $400m for the capital market reforms, also projects increase in the volume of outstanding capital bonds from 0.5 per cent of GDP in 2005 to three per cent in 2009 while taking into account the new political set up and its economic policies.

And, during the same period, the bank expects increase in the number of companies listed on the equity market to 700 from 526, issuance of equity capital from 12 issues to 50 and corporate bonds from 10 to 50.

For a more efficient and balanced financial sector, the ABD expects increase in the longest available bond maturity from seven years to 12 years, a sign of lenders trust in the governments policies.

Under the reform process, for which the government has made its commitment with the ADB before making an official request for funds, the Karachi, Lahore and Islamabad stock exchanges would also disclose plans for self-regulation within the next 10 months. This may provide a safeguard to small investors.

The bank is of the view that liquidity in the KSE could be attained by a few possible measures including more listing of companies on the stock market and introduction of new products by the SECP like the Voluntary Pension Scheme (VPS) and Real Estate Investment Trusts (REITs).

Through an improved financial sector intermediation, the ADB forecasts an increase in money supply to 65 per cent of GDP by 2012 from 44 per cent of GDP as recorded in 2005.

In this period, the countrys savings rate is expected to increase to 19 per cent of GDP from the present 16 per cent.

Similarly, savings mobilised by non-bank financial institutions (NBFIs) is expected to go up to four per cent of GDP in the next six years from the level of 0.5 per cent.

Such progress would be recorded in the governments economic statistics and country reports of the International Monitory Fund (IMF), the ADB has stated.

The reform processs hallmark is the restructuring of the SECP and its conversion into the Financial Services Commission of Pakistan (FSCP).

The ADB also sees development of domestic and institutional investment with a hefty increase in assets managed by private mutual funds from Rs17bn level in 2005 to Rs55bn in the next fiscal year. An increase is also expected in the paid-up capital of the NBFCs.

Funds accumulated under the voluntary private pension schemes are also expected to hover around one per cent of GDP by 2009.

Market capitalisation seen rising to 60pc of GDP -DAWN - Business; August 23, 2007


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## Neo

*Core inflation drops to 5.2pc​*
ISLAMABAD, Aug 22: Core inflation (non-food, non-energy) exhibited declining trend as it stood at 5.2 per cent in the first month of current fiscal year (July 2007) as against 7 per cent in the corresponding month of last year.

Tight monetary policy pursued by the central bank is mainly responsible for this decline in core inflation, said an official report of the finance ministry released on Wednesday.

The annual core inflation during the year 2006-07 was 5.6 per cent as against 8.6 per cent in the previous year mainly because of the central bank tight monetary policy.

The first month of the current fiscal year has started with a positive note as the overall CPI-based inflation declined to 6.4 per cent in July, 2007 as against 7.6 per cent in the corresponding month of last year (July 2006).When viewed in the long term perspective; this months inflation is the lowest in the last four years.

The decline in overall inflation in July, 2007 is largely attributed to a sharp reduction in non-food inflation, which declined from 7.8 per cent in July, 2006 to 4.9 per cent in July, 2007.

Food inflation, on the other hand, has shown a marked increase as it was 7.4 per cent in July, 2006, which has increased to 8.5 per cent in July, 2007. However, as compared with previous month (June 2007) food inflation has declined considerably to 8.5 per cent as against 9.7 per cent in the previous month.

During 2006-07, average inflation stood at 7.8 per cent as compared to 7.9 per cent last year. Core inflation declined significantly to 5.6 per cent as compared to 8.6 per cent and non-food inflation averaged 6 per cent during 2006-07 as against an average of 8.6 per cent in the same period last year.

Food inflation on the other hand witnessed increase during the said period. It was 10.3 per cent in 2006-07 as against 6.9 per cent in the same period last year. It is clear that last years inflation was driven by higher food inflation as opposed to previous year where the major culprit was non-food inflation.

Last years (2006-07) food inflation has been fuelled by a combination of global trends in the prices of several commodities and the local supply demand driven factors.

Globally, higher prices of edible oil (palm oil and soybean) and dependency on their imports transmitted higher international prices to domestic market price.

Shortfall in domestic production of pulses, rice, chillies, other vegetable items (onion, tomato, etc.) and fruits also contributed to the rise in domestic food prices.

There are a few key food items, which are widely consumed and whose prices remained high during the year and, therefore, contributed to the pick-up in food inflation. These items include: rice, masur and gram pulses, milk powder, vegetable ghee, and cooking oil, red chillies, onions and tomato.

On the other hand, the prices of some essential food items were lower in 2006-07 as compared with last year.

These items include moong pulse, sugar, chicken, potato etc. The next year (2007-08) inflation target has been set at 6.5 per cent and the current inflation figures suggest that this target will most probably be met, added the report.

Core inflation drops to 5.2pc -DAWN - Business; August 23, 2007


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## Neo

*Large-scale manufacturing slows down​*
ISLAMABAD, Aug 22: Pakistans large-scale manufacturing sector grew by 8.41 per cent in the fiscal year 2006-07 as against the target of 13 per cent set for the same period, said Federal Bureau of Statistics (FBS) on Wednesday.

The capacity constraints and slower demands have badly affected the industrial production during the last couple of years and resultantly the exports proceeds also remained much behind the targets during the period.

The ministry of industries and production directly collects information on 35 items, oil companies advisory committee (OCAC) 11 items and provincial bureau of statistics provide data for 54 items.

The product wise production showed that sugar production increased by more than 19.13 per cent to 3.525 million tons compared with 2.959 million tons last year. The production of cigarettes has increased by 2.87 per cent, while cotton yarn and cloth production grew by 11.75 per cent and 6.75 per cent, respectively.

In the food sector, the vegetable ghee production increased by 2.26 per cent, cooking oil 7.04 per cent, wheat 6.96 per cent, starch and its products 7.48 per cent, beverages 33.95 per cent during the period under review over the last year.

In the automobile sector, the LCVs production has increased by 18.74 per cent, jeeps and cars 0.42 per cent, buses 20.36 per cent, motor cycles 11.65 per cent during the year 2006-07 as against the same period of last year. However, the production of trucks dropped by 2.39 per cent.

Similarly, tractor production has increased by 10.46 per cent, diesel engines 37.12 per cent during the period under review. The production of cycle tyres up 0.37 per cent, cycle tubes 2.12 per cent, motor tyres 18.27 per cent and motor tubes 43.46 per cent.

The production of paper & board has dropped by 2.21 per cent, petroleum products 1.76 per cent.

The cement production during the year 2006-07 has increased by 22.49 per cent and the production of glass sheets, up by 98.89 per cent during the period under review over the last year.

The iron and steel production during the period under review up by 10.69 per cent, coke 79.01 per cent, pig iron 31.36 per cent, billets 8.79 per cent and HR sheets 5.46 per cent during the period under review over the last year.

Among the electrical production, refrigerators recorded a growth of 7.25 per cent, deep freezer 4.34 per cent, air-conditioners 23.24 per cent; electric tubes 8.51 per cent, electric fans 5.11 per cent, electric motors 4.97 per cent. However, TV sets production declined by 35.85 per cent, electric meters 17.51 per cent during the period under review over the last year.

Large-scale manufacturing slows down -DAWN - Business; August 23, 2007


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## Neo

*Defence exports rise to $40m: POF chief​*
ISLAMABAD, Aug 23: Pakistans defence exports increased to more than $40 million in 2006-07 and France, Germany, South Korea, Turkey and other countries have offered joint ventures to manufacture and market small arms and ammunition.

The industry is also meeting domestic requirements of sophisticated arms and ammunition, the chairman of the Pakistan Ordnance Factories, Wah, Lt-Gen Syed Sabahat Husain said.

He said the POFs aggressive marketing efforts had helped it to enhance defence exports in 2006-07 and now it aimed to get more orders.

He said some other countries, including Malaysia and Argentina, had also decided to offer joint ventures.

He said the POF signed a cooperation agreement with Poongsan of South Korea for co-production and co-marketing of complete rounds of 155mm base-burn dual-purpose improved conventional munition (BB-DPICM) by the POF. According to the agreement, the first lot would be delivered to the GHQ in 2007-08.

The POFs share of work would gradually increase to 50 per cent, starting from 10 per cent. On our request, the procurement of complete rounds planned by the Pakistan Army was diverted to the POF. The POF renegotiated the price of the ammunition with M/s Poongsan on C&F basis, which resulted in a saving of $2.726 million, Gen Husain said.Pakistan, he said, would be getting technology transferred through the joint venture. The joint venture, he said, would provide new market access to Pakistan.

He said the POF and MKEK of Turkey had agreed to share expertise in joint R&D projects to meet requirements of both Pakistani and Turkish armies. Pakistan Army, he said, was interested in extending the range of its existing stock of 122mm multiple-barrel rocket launchers from 20kms to 40kms. POF has short listed Edepro of Serbia in this regard. Modalities of the joint venture will be finalised subject to successful trials and acceptance by Pakistan Army.

Also, Nexter of France has agreed to join hands for co-production and co-marketing of 155mm hollow base/base bleed LU211 artillery, he said adding that trials were expected in September 2007.

He said the POF was planning to build CNG cylinders in cooperation with an Argentine company.

He also said that POF was planning to outsource some of its work to the private sector to concentrate on its core businesses. The outsourcing to the private sector, he pointed out, would be in the downstream industry.

He said that POF had been tasked by the Ministry of Defence Production to prepare feasibility for manufacturing third generation ammunition.

POF has developed an indigenous version of 9mm pistols and is negotiating with international firms, including FN Herstal of Belgium for co-production and co-marketing.

POF was also exploring the possibility of joint venture with Hiehl of Germany for smart and advanced ammunition.

Nitrocheme, one of the top manufacturers of the modular charge system for artillery ammunition, has also agreed to cooperate with POF.

POF is engaged with Rocketsan of Turkey to produce 122mm extended range rockets subject to successful trials and acceptance by Pakistan Army.

Lanx of US has offered to co-produce protective suits for the army by utilising POF facilities.

Defence exports rise to $40m: POF chief -DAWN - Top Stories; August 24, 2007


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## Neo

* Domestic debt rises to $42.6 billion ​* 
Friday, August 24, 2007

ISLAMABAD: Pakistans total outstanding domestic debt rose to Rs2.599 trillion ($42.6 billion) by May-end 2007, from Rs2.299 trillion ($37.68 billion) at the end of fiscal year 2005-06.

During 11 months (July-May 2006-07), the government borrowed about Rs302.34 billion or $5 billion (13.1 per cent) more at the end of June 2006, the State Bank of Pakistan (SBP) said.

The interesting feature of the provisional data released by the bank was that the increase in domestic debt during July-May 2006-07 was mostly due to rise in the stocks of floating debt. The un-funded and permanent debt also jacked up the total debt to a sizeable amount.

During the 11 months, the floating debt increased by Rs208.90 billion, un-funded debt by Rs51.63 billion and permanent debt by Rs41.80 billion.

The permanent domestic debt comprising medium and long-term market loans, federal government loans, special government loans, federal instruments and prize bonds, stands at Rs539.43 billion, which totalled Rs499.77 billion at the end of fiscal 2005-06.

The floating domestic debt, mainly comprising short-term debt instruments and market treasury bills, maintaining a rising trend, was recorded at Rs940.23 billion at the end of June 2006. And, during the following 11 months, it went up to Rs1.15 trillion. Un-funded domestic debt comprising National Saving Schemes (NSS) stand at Rs910.8 billion. It grew by Rs51.64 billion from Rs859.16 billion at the end June 2006.

However, it reveals that the net mobilisation under all instruments of the NSS were once again negative during the period but not as high as was recorded in the corresponding period of last fiscal.

The saving instruments i.e. Bahbood Saving Certificates, Pension Benefit Accounts and Mahana Amdani accounts increased while deposits in Postal Life Insurance stood unchanged.

It is worth mentioning that the government in June 2005-06 on account of rising cost of living raised the rate of profit on Special Saving Certificates/Accounts, Regular Income Certificates, Defence Saving Certificates, Pensioners Benefit Accounts, Bahbood Savings Certificates, Savings Account and Prize Bonds from 8.6 per cent, 8.88 per cent, 9.46 per cent, 11.04 per cent, 5.00 per cent and 5.00 per cent to 9.17 per cent, 9.24 per cent, 10.0 per cent, 11.52 per cent, 6.00 per cent and 6.50 per cent, respectively, however its effect would be felt in the coming months.

As a result of prudent government decision, net investment in NSS is gradually increasing. Of these three most popular instruments of the NSS i.e. 10-year Defence Saving Certificates (DSCs), five-year Regular Income Certificates (RICs) and three-year Special Saving Certificates (SSCs) net withdrawals were only Rs21.8 billion in 11 months of FY 2006-07. 

It reveals that erstwhile popular instruments; DSCs, SSCs, and RICsówere comparatively attractive for investors during the period under review.

There were also fresh inflows in savings accounts; special savings accounts and general provident (GP) fund during the period under study these were Rs5.2 billion, Rs5.66 billion and Rs554.9 million respectively.

Besides, Bahbood Saving Certificates and Pensioners Benefit Accounts attracted net fresh investment of Rs44.9 billion and Rs10.86 billion respectively while no investment was witnessed in Postal Life Insurance.

Domestic debt rises to $42.6 billion


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## Neo

*IT industry earnings touch $116m: SBP ​* 
Friday, August 24, 2007

ISLAMABAD: The IT industrys export revenue as reported by the State Bank of Pakistan (SBP) reached $116 million in financial year 2006-07, crossing the target of $108 million set for the year.

This indicates an increase of 61.18 per cent in IT exports when compared to the previous years export revenues of $72 million, says an official announcement on Thursday.

The SBP, in its statement for the year 2006-07, has estimated the countrys IT services export revenue at US$116 million, which indicates a consistent annual growth, a spokesman of Pakistan Software Export Board (PSEB) said.

BPO and call centers have made a significant contribution increasing exports due to adequate telecom facilities and trained manpower available in the country. Considering that the 15 per cent GST imposed on computer hardware in the federal budget 2006-07 has not yet been removed, this rise in IT exports is commendable.

The current IT exports annual growth rate is still understated as only 5 per cent of the countrys registered companies file their export data with SBP.

PSEB is making vigorous efforts to ensure that the export figures of all IT companies are reported to SBP.

The State Bank of Pakistan utilised the BPM-5 Reporting System to account IT exports revenue, which also restricted the export revenue figure to $116 million in 2006-07. The Reserve Bank of India, on the other hand, follows the BPM-6 Reporting System, which raises its exports to billions of US dollars.

BPM-6 includes sales to multinationals, earnings of overseas officials and salaries of non-immigrant overseas workers to export revenue.

Utilising the BPM-6 Reporting System, Pakistan IT Industrys exports are estimated at $1.4 billion while the total industry size is estimated at US$2.8 billion. 

With over 1042 IT companies registered with PSEB, the countrys IT exports grew by an average of 50 per cent in each of the last four years. PSEB has been facilitating the countrys IT industry through its programmes in Human Capital, Office Space, Marketing, Company Capability Development, Telecom Bandwidth, Industry Finance, Public Policy, Strategy and Research, and Facilitation.

The Government of Pakistan has also introduced an incentives package for the IT sector including tax exemptions until 2016, 100 per cent foreign equity and earnings repatriation, and low-rent facilities for IT companies.

IT industry earnings touch $116m: SBP


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## haviZsultan

*Pakistan's growth is 'second fastest' *

By Our Correspondent Dawn, 8 June 2005

WASHINGTON, June 7: The world&#8217;s second fastest growing economy after China is no longer India. It&#8217;s Pakistan, says a commentary on Pakistan&#8217;s budget by US financial wire service Bloomberg. Another financial news service, Forbes, commented that Pakistan had seen a swift economic turnaround after the Sept 11, 2001, attacks in the United States when it threw its support behind Washington in the war on terror, and in return America and many other countries gave it financial assistance or rescheduled and wrote off its loans.

Forbes said Prime Minister Shaukat Aziz played a key role in &#8220;reviving a near-bankrupt economy&#8221;.

In a commentary titled &#8216;Pakistan&#8217;s economy posts historic gains,&#8217; the Voice of America said it was quite a turnaround for a country that five years ago nearly defaulted on a series of international loans and now was one of Asia&#8217;s five fastest growing economies.

The country&#8217;s agriculture and service sectors grew by over seven per cent in the past year and its large-scale manufacturing sector was up 15.4 per cent, it pointed out.

Other commentators noted that the budget had been widely welcomed as pro-business, helping the Karachi Stock Exchange enjoy a three per cent rise in Tuesday trading.

The budget cut a number of business taxes, in addition to dedicating more money for defence and social and development spending, they said. The cuts included a one per cent rebate on the tax firms must pay when listing on the stock exchange and exemptions from capital gains tax for investment in agriculture-related sectors. The government also announced an increase in the tax-free allowance on profits from stock investment to Rs150,000 from Rs100,000. There was also no mention of any increase in capital value tax on share transactions, which some investors had feared.

Pakistan&#8217;s economy was strong, growing at 8.4 per cent this fiscal year, they said.

Some development analysts, however, criticized the budget saying it did not do enough for ordinary people.

Referring to figures released over the weekend, commentators noted that the $110 billion economy was estimated to have grown by 8.4 per cent in the current fiscal year, compared with 9.5 per cent expansion in China&#8217;s gross domestic product last year while India recorded 6.9 per cent GDP growth in the 12 months with ended on March 31.

The growth target for the next fiscal year, as set out in the budget, was eight per cent, the same as Beijing&#8217;s goal.

&#8220;That may be a trifle over optimistic. Pakistan isn&#8217;t yet ready to sustain eight per cent growth year after year &#8212; not until it can push up its savings rate, which is languishing at 14 per cent of the GDP,&#8221; observed Bloomberg.

It noted that inflation was at an eight-year high of 11 per cent, a clear indication of an economy overheating from too much consumption.

&#8220;Still, another year of strong growth is eminently achievable in Pakistan, provided the central bank can manoeuvre deftly to suppress inflationary expectations, even as the government goes ahead and steps up investments in public works,&#8221; it said.


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## haviZsultan

When we were the second fastest we got no attention. When india is the second fastest they have a hell of a lot of attention! All we ever get is negative media... however this is old but some people still say we are the 2nd fastest growing economy... There is no arguing that we are the 3rd fastest growing economy although we get no attention (exept when someone blows himself apart!)


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## Contrarian

Sorry mate, this report is absolute crap. India IS the second fastest with our growth rates crossing 9&#37; while Pakistan's are going to drop to around 7% this year. 

And FYI, If there is a competition between the second and third places, its between India and Vietnam, not Pakistan.


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## Bushroda

First of all, China isn't the fastest growing economy. China is the fastest growing *major* economy. I don't think at $128 billion Pakistan can be considered as a major economy in the world. But still, median growth rates arn't picked up by just one or two year performance. It is calculated over a long period of time. India's median growth rate has averaged at 7&#37; for the past decade. Since 1991, the average growth rate has been 6.5%. Since 1980 it has been 6%. This makes India the second fastest growing economy along with Vietnam.

BTW, check the date of the article
8th June 2005


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## haviZsultan

malaymishra123 said:


> Sorry mate, this report is absolute crap. India IS the second fastest with our growth rates crossing 9&#37; while Pakistan's are going to drop to around 7% this year.
> 
> And FYI, If there is a competition between the second and third places, its between India and Vietnam, not Pakistan.



Read! Read before you start crying! Its for 2005! My point is just that how you guys get so much attention when you have the second-fastest GDP growth rate while we are ignored! The report proves that we once were the second fastest not that we are the second fastest!


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## Contrarian

You were never the second fastest alone mate, when you averaged 8.4&#37; if i remember correctly, India managed that as well. And Pakistan's base is so small, its not a major economy, as Happyfeet said. Do you expect the world to celebrate when Pakistan gets an 8.4 once?


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## Contrarian

Incidentally, happy feet, why have you stopped posting in the Indian economy section? Please continue your old method, Neo only asked you to mellow down the posting rate, and you stopped completely!


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## Moin91

*Current account deficit at $917m in July*

Sunday, August 26, 2007
By Israr Khan

ISLAMABAD: Pakistans economy kicked off the new fiscal 2007-08 with a hefty $0.917 billion in current account deficit (CAD), which has already been termed by multinational donors a grey area.

Despite a strong build-up in current transfers, the burgeoning trade deficit pushed CAD (excluding official transfers) to $917 million during the first month (July) of the new fiscal year. However, it is about 14.85 per cent less than what was recorded in July 2006-07.

During the month under review, current transfers were $905 million, but the $1.538 billion trade gap in goods and services turned the current account into deficit, the central banks data revealed on Saturday.

Net current transfers rose to $905 million during July 2007, from $765 million in the corresponding month of the last fiscal.

Current transfers went up as Pakistan received $495 million in remittances from overseas Pakistanis, up from $377 million a year ago.

Likewise, during the month under review, the resident deposit holders deposited more in foreign currency accounts (FCA). In July 2007, there were about $33 million in these accounts against only $19 million deposited during the corresponding month of the last fiscal.

During 2005-06, the deficit rose to $5.7 billion against $1.784 billion in 2004-05. As per GDP percentage, it rose from 1.6 to 4.4, the highest level in last nine years. In fiscal year 2006-07, it further inched up to a record high $7.016 billion surpassing the annual target of $6.3 billion by $716 million.

The SBP data revealed that Pakistan witnessed this imbalance due to trade deficit (in goods and services sector).

Trade deficit (in goods) during July stood at $1.002 billion with imports $2.45 billion and exports of $1.448 billion. Trade deficit figures are estimated using the freight-on-board value of imports and exports.

The services account also witnessed a large imbalance of $536 million, as inflows under this account stood at $219 million whereas outflows totalled $755 million. Thus on balance total trade deficit (goods and services) stood at $1.538 billion.

The data reveals that factors responsible for this huge deficit include a higher outflow on account of transportation, travel, insurance, royalties and licence fees.

Pakistan had to spend $283 million on transportation account whereas its earning under this head was only $96 million. Thus, the net deficit in the service account due to chartering of vessels for imports and exports was $187 million.

Another factor responsible for services account deficit was the net outflow of about 100 million dollars on account of overseas travelling.

Pakistan had to spend $113 million to finance personal and business-related travel abroad of individuals and groups whereas it earned only $13 million under this head.

The same applies for expenses on insurance, royalties and licence fees paid to international organisations and their employees operating in Pakistan


Current account deficit at $917m in July


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## Neo

*Low-income group hard hit by price hike ​*
ISLAMABAD (August 25 2007): The SPI-based inflation was 7.21 percent up on week ending August 23 over the same period of last year, with wheat flour dearer by 11.55 percent and cooking oil by 30.84 percent. The inflation of the majority of salaried class was recorded 8.68 percent as compared to 5.21 percent for the working class earning over and above Rs 12,000 per month.

The data released by the Federal Bureau of Statistics on Friday showed that there had been regular increase in prices of essential kitchen items from last couple of months. As a result there was no sign of relief for the poor as perpetual escalation in the prices of food items was eating up the whole budget of those having monthly income between Rs 3000 to Rs 5000.

Cooking oil was 30.84 percent dearer over last year; wheat 9.20 percent, vegetable ghee 30.51 percent, and wheat flour was all-time high by 11.55 percent. The regular increase in the prices of core food items, such as wheat, cooking oil, pulses and milk, has been disturbing the budget of the poor.

What was more painful and unfortunate was that there had been no check on prices varying from market to market in some places.

The SPI inflation was recorded 159.22 percent on August 23 with 0.29 percent increase over 156.62 percent of past week. The low-income group was hit hard by the price hike, as inflation was recorded at 8.68 percent for monthly income of Rs 3000, against 5.21 of above Rs 12000 earning bracket.

The week under review showed that price hike was 8.68 percent for people earning Rs 3000 to Rs 5000 and 7.66 for those earning between Rs 5001 and Rs 12000. The SPI bulletin, based on data collected for about 53 items from 17 centres, showed that 22 items registered increase, 7 declined, while the tag on 24 remained unchanged.

Further analysis of the data showed that 18 items were dearer by double digits over last year. These included masoor pulse washed 31.70 percent, red chillies 81.72 percent, milk powdered 30.06 percent, mustard oil 32.45 percent, veg ghee tin 30.51 percent, cooking oil tin 30.84 percent, onion 20.18 percent, chicken farm 21.03 percent, veg ghee loose 36.52 percent, and milk fresh 13.29 percent.

The eggs were 21.03 percent dearer over last year, wheat flour 11.55 percent, rice basmati 55.40 percent, curd 12.91 percent, rice Irri 41.70 percent and sandal gents Bata 25.06 percent.

Among these items, in a short span of one week, the prices of onion went up by 7.53 percent, egg farm 4.56 percent, chicken 4.20 percent, bread plain medium size and potatoes 2.48 percent and cooking oil and ghee 1.31 and 1.26 percent respectively.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Loans to poor have created positive impact on income: World Bank ​*
ISLAMABAD (August 27 2007): A dramatic increase in the number of loans issued to poor people in Pakistan has had a positive impact on personal income, key food item consumption, productive asset acquisition, household repair and utilities expenditure, and social status, World Bank said.

According to the Bank's statement, community infrastructure projects have reached roughly 1.5 million households with efforts ranging from safe water to irrigation, roads, flood protection and micro hydroelectricity projects.

The Bank said that prior to PPAF, the market had provided about 100,000 loans to the poor. Between April 2000 and June 2007, PPAF provided over 1.3 million loans--55 percent of these to women.

It said that 13,000 community infrastructure projects had been completed, over half of which to provide safe drinking water or access to safe sanitation, touching the lives of over 2.5 million persons in about 5,000 villages.

Besides improving the rural environment and other social benefits, these projects saved $7.5 million a year in health related expenses.

The World Bank said that the PPAF model is designed to ensure a sense of ownership and projects are implemented on cost sharing basis with over $9 million so far from the communities. The PPAF-supported projects are also labour-intensive, generating $12 million in wages.

A PPAF Water Management Centre focuses on drought mitigation and flood relief projects and efficient water use. Around 2,600 households in pilot projects are seeing increased availability of irrigation water, reduced use of fertiliser and pesticides and increased crop yields.

The pilot health and education projects are experimenting with model school and health facilities established, staffed and managed by communities.

So far, 69 schools and 22 health facilities are benefiting, mostly women (70 percent of the health facility beneficiaries are women and 80 percent of the students are girls). The PPAF's mandate--and the trust it has established--has enabled it to respond to crises like the October 2005 earthquake.

Its network allowed PPAF to reach the most vulnerable people in remote areas of the country with relief and later reconstruction support. The PPAF is involved in about 20 percent of the 600,000 houses being reconstructed. The IDA provided $90 million out of $107 million for the first phase of PPAF.

Total project cost for PPAF-II is $368 million: $238 million from IDA; $13 million from communities; $10 million from the government of Pakistan; and $107 million sub-borrowers.

Additional funding of $100 million has also been provided to PPAF by IDA for its earthquake reconstruction program. The PPAF has also leveraged funding from USAID of $6 million; US Department of Agriculture of $25 million; IFAD of $52 million; Germany $17 million; and from the Committee to Encourage Corporate Philanthropy, USA of $12 million.

The IDA's assistance to PPAF has contributed significantly to the strength of other development actors--in particular civil ociety--who had been previously ignored, or received limited support, in Pakistan.

When the impacts of the first project became evident through early assessments, IDA responded with even greater support, allowing PPAF to increase its scale in a short period of time. It now operates in 27,281 villages where 65,000 community organisations have been formed. The World Bank statement added that IDA's support to PPAF had created institutionalised retail capacity and reformed the way the micro-finance sector operates.

The PPAF is working with 70 partner organisations in 111 out of 120 districts in Pakistan.

PPAF has entered into collaborative arrangements with UNDP, WWF, WFP, ILO, UN Habitat, and CGAP as well as local and international corporate firms in Pakistan. PPAF is a strategic partner of the Prince of Wales International Business Leaders Forum, and the Citigroup Foundation (NY) is partnering with PPAF for sponsoring the Global Micro-entrepreneurship Awards 2006. PPAF is in research collaboration with Pakistan Institute of Development Economics, Gallup (Pakistan) and DECRG (World Bank).

PPAF's long term strategy for the next 10 to 15 years is to cover all villages and hamlets of Pakistan through a comprehensive range of activities. There will be a major effort to provide occupational skills training, leading to exponential growth of micro-enterprises.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Govt focus on infrastructure development​*
KARACHI, Aug 24: The government has embarked on a programme of structural public private partnership to accelerate the pace of infrastructure development for achieving sustained economic growth.

This was stated by CEO of Infrastructure Project Development Facility (IPDF), Ministry of Finance, Aijaz Ahmad at a seminar on Draft Public Private Partnership Standardised Contractual Provisions here on Friday.

The seminar was organised by the IPFD under the consultative process initiated by the government between the public and private sector stakeholders for finalising a framework for Public-Private Partnership (PPP).

He said that work on several PPP initiatives were already underway, including Lahore Mass Transit project, Islamabad-Rawalpindi Mass Transit project, Environment Friendly Public Transport (CNG buses) Service, Islamabad IT Park, Multipurpose Water Reservoirs, CBR Automation Project, Kalinger Water Supply and Charsadda Solid Waste Management.

Some other projects proposed to be implemented under the PPP modality, include: Karachi Circular Rail, Bus Rapid Transit System Karachi, Intra-City Bus Terminal Facilities Karachi, Hyderabad-Mirpurkhas Road (Dualisation & Tolling), Sindh Coastal Highway (Expansion & Rehabilitation), Karachi Desalination Plant, Rawalpindi Solid Waste Management, Lahore Solid Waste Management, Low Cost Housing Hyderabad, Car Park Garages Karachi etc.

Dr Asad Ali Shah, Member (Infrastructure) Planning Commission, said the government was looking to the private sectors active participation in the national development effort.

Govt focus on infrastructure development -DAWN - Business; August 25, 2007


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## Neo

*'Record uplift work underway in Karachi' ​*
KARACHI (August 27 2007): A record development work is being carried out in Karachi, which is unprecedented in the history of the metropolis. This was stated by the Sindh Minister for Local Government, Muhammad Hussain. He was performing the inauguration of Afza Altaf Park in Gulshan-i-Iqbal Town's UC 9 here, says a statement on Sunday.

The minister pointed out that the construction of parks and playgrounds are aimed at fostering a healthy atmosphere and promoting healthy activities. He informed that development projects worth Rs 55 billion are being carried out in the metropolis.

Muhammad Hussain said that roads, bridges and expressways are being constructed in the city with a view to improve the infrastructure. Speaking on the occasion, Town Nazim Muhammad Wasay Jalil informed that the park spreading over an area of 4,000 square yards has been constructed at a cost of Rs 3.3 million. It has been equipped with swings for children, jogging tracks as well as wash rooms for men and women.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*China swaps lists for services trade​*
ISLAMABAD, Aug 25: Pakistan and China have exchanged list of areas to be offered for services providers under the aegis of the already operational free trade agreement (FTA).

A senior official told Dawn on Saturday that these lists were exchanged during the second round of negotiations on the services chapter of the FTA held recently in Beijing at a technical level.

Under the trade on services, both countries would have to identify areas for trade in the positive list. However, both sides also requested for market access in the services sector and also agreed on revised list to be exchanged within a month.

The official said Pakistan had requested for market access for local banks in China and had also asked for technology transfer and on job training of locally-hired human resources as well as training of labour.

It is expected that the next round on the services sector will be held by end of the current calendar year and negotiations will be wrapped up in the next couple of meetings.

The official said Pakistan would seek more commitments in maximum sectors to gain more market access for Pakistani services suppliers. We would also be seeking foreign investment from China under the services sector negotiations, the official added.

The potential areas for services liberalisation include finance, telecom, tourism, health, education, transportation, road, energy distribution services. However, Pakistani services providers could get maximum benefits only in case China train local Pakistani employees.

China swaps lists for services trade -DAWN - Business; August 26, 2007


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## Neo

*Arbab lays foundation stone of coastal highway ​*
THATTA (August 27 2007): Sindh Chief Minister, Dr Arbab Ghulam Rahim Sunday laid the foundation stone for construction of Coastal Highway at Dhabeji near Thatta. Speaking on the occasion, he said on completion the project would bring about revolutionary changes in the socio-economic standard of the people of lower Sindh.

The Chief Minister said the Coastal Highway would be 278.6 kilometres long and completed at a cost of Rs 7500 million. He said construction work on a portion of the highway measuring 90 kilometres has been started in the first phase at a cost of Rs 2407 million. The project would be completed in three years, he added.

He said a road has been constructed from Umerkot to Zero Point while the Coastal Highway would be built from Dhabeji to Ali Bunder. Construction of another road will be undertaken from Karachi to Tando Muhammad Khan besides a road from Super Highway to Gorakh Hill, Johi which will also help promote tourism.

A livestock and a dairy farm are being established on an area of 8000 acres at Ghaghar Phatak while dairy farms will be set up in 23 districts of the province, he informed.

Meanwhile, addressing a public gathering at Police Lines DR Arbab said that the continuity of the present system and government under the leadership of President General Pervez Musharraf was essential for Pakistan because remarkable development had taken place during his tenure. He said President General Pervez Musharraf would l be re-elected as president for the next term.

He said that he had initiated the election campaign from Thatta, which has become a fort of Pakistan Muslim League (PML) during his tenure. He said a proposal has been initiated to construct a dam at Ran Pathiani where train track was damaged during the last heavy rains.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*PIA asked to adopt modern techniques ​*
ISLAMABAD: Prime Minister Shaukat Aziz on Friday underscored the need to adopt latest techniques in management, marketing and fleet management to establish PIA as a brand name and to make it a profitable organisation. 

He was chairing a high level meeting regarding PIA affairs here at the Prime Minister House. The prime minister said that PIA is a national asset and has to play its role as Pakistans premier flag carrier. He said that the airline must adopt best practices prevalent in other international airlines and also benchmark its performance with comparable competing airlines in order to improve both its service and profitability. 

He underlined the need to hire qualified people and improve skills of the existing staff so that they could be better equipped to meet the challenges. 

He said PIA must focus on generating more revenue by improving its service and attracting more customers in order to overcome its financial problems. He said PIA must do route-to-route analysis and operate flights to those destinations having acceptable profitability. The government would provide all necessary assistance in this regard, he added. 

Earlier, PIA Chairman Zafar Ahmad Khan highlighted short and long term measures to deal with the challenges being faced by PIA and updated the meeting about the financial situation of the organisation. 

He said PIA has planned to phase out its ageing fleet replacing it with the new ones, strengthening its infrastructure, changing the working culture, improving governance structure, engaging and empowering employees and stepping up training facilities to increase organisations effectiveness. 

The chairman also apprised the meeting of the steps needed to reduce losses through route rationalisation, better revenue management, financial restructuring and planning to address restrictions imposed by the European Union. 

He expressed the hope that through these measures PIA would improve its financial position and become a profitable organization despite high fuel prices. 

The meeting was attended by the Senior Minister for Defence, Rao Sikandar Iqbal, Minister of State for Defence, Ali Asjad Malhi, Parliamentary Secretary for Defence, Tanveer Hussain Syed, Secretary Defence and senior officials.

http://www.thenews.com.pk/arc_news.asp?id=3


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## Neo

*220KV transformer manufacturing facility soon ​*
KARACHI (August 27 2007): The 220 KV power transformer manufacturing facility will be inaugurated at the premises of Siemens Pakistan here on September 3. Sindh Governor, Dr Ishrat-ul-Ebad Khan will be the chief guest on the occasion. Managing Director and Chief Executive Officer of Siemens Pakistan Engineering Company, Sohail Wajahat H Siddiqui, will present the welcome address.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Overseas Pakistanis remit over $5.5bn ​*
ISLAMABAD: Prime Minister Shaukat Aziz said Overseas Pakistanis are excellent ambassadors of the country and help Pakistan by remitting over US$5.5 billion per year.

The Prime minister said this while talking to Minister for Labour, Manpower and Overseas Pakistanis, Ghulam Sarwar Khan who called on him at the Prime Ministers House on Friday afternoon.

The Prime Minister said that over seven million Pakistanis are living in different parts of the world including North America, Europe, Middle East and the Far East.

He said that these people are performing important tasks in their host countries and improving Pakistans image as well as improving their standard of living and that of their families by remitting money to the homeland.

The Prime Minister said that the government will encourage more Pakistanis to seek skilled jobs overseas and has launched several initiatives in this connection for vocational and technical training in several disciplines including construction, hotel management, manufacturing, engineering, teaching, agriculture, deep-sea fishing etc.

The Minister for Labour, Manpower and Overseas Pakistanis apprised the Prime Minister of various initiatives undertaken by his ministry to increase the flow of Pakistani skilled workers overseas and numerous labour reforms undertaken by the ministry to provide better facilities to workers in Pakistan. He told the PM that last year 184,000 Pakistanis went to work aboard and this year too, due to government efforts 250,000 workers would be facilitated in overseas jobs thus earning a better living for their families and in turn contributing to the nation in the form of remittances.

http://www.thenews.com.pk/arc_news.asp?id=3


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## Neo

*Auto Industry: things go from bad to worse ​*
ISLAMABAD (August 26 2007): There was hardly any increase in the production of cars during 2006-07 against the same period of previous year despite the fact that the government had accepted all demands of auto assemblers, including ban on import of five-year-old vehicles, in the long-term auto policy, designed to increase production.

Total production of cars was only 160,496 in 2006-07, 438 vehicles more than previous year's 160,058, which showed almost no growth. The government had given clear roadmap to the industry by unveiling five years' pre-announced tariff in its new auto policy so that the assemblers could raise their investment and enhance production capacities to meet the demand-supply gap.

But the production figures for 2006-07 paint an altogether different picture. The local assemblers have not only increased the prices of vehicles after the government, conceding the longstanding demand of assemblers, imposed ban on import of five-year-old cars in the budget 2006-07 which resulted in an increase in the premium known as 'own money', charged for delivery, which had almost finished after import of used cars was allowed.

The data showed that production and sale of Honda Atlas and Dewan Farooque declined during 2006-07 while those of Pak Suzuki and Indus Motors increased. The production and sale of Honda Civic and Honda City amounted to 5,610 and 6,513 vehicles, respectively, during 2006-07 over past year's 12,274 and 11,998 cars. The sale, production figures of Toyota Corolla for the period under review were, 35,762 and 35,036 respectively against previous year's 31,094 and 30,527 cars.

There has been substantial growth in the sale and production of almost all vehicles assembled by Pak Suzuki Motors. Among 1000cc the production of Suzuki Khyber/Cultus was around 29,880 vehicles against previous year's 21,342; Suzuki Alto 21,546 vehicles against 21,390, and 800cc Suzuki Mehran was 12,776 vehicles against 77883. An official in Engineering Development Board (EDB) said that production of vehicles during 2006-07 was not up to government expectations, but about increase in premium he referred to other sectors citing land and food as example. "Is food, the most essential commodity for human survival, free from black marketing?" he posed the question when asked why measures were not taken to discourage the heinous practice of premium on cars. He, however, admitted that the premium, known as 'own money' had gone up since the ban on import of five-year old cars, but said that the local industry could not be jeopardised to benefit the Japanese companies, expressing hope that local assemblers would realise and take measures to eliminate this abhorrent practice.

The 'own' on Cuore has gone up from Rs 5000 to Rs 8000; on Toyota Corolla to Rs 45,000 from Rs 8000-10,000; and on Corolla GLI from Rs 10,000 to Rs 50,000. Amongst Suzuki brands, the most used vehicles are Mehran, Cultus, Alto, Liana, Bolan Van and Ravi Pickup.

Suzuki Cultus VXR 'own money' is Rs 25000, Cultus VXR CNG is around Rs 25,000. Suzuki Ravi pickup 'own money' is Rs 60,000 which is quite a high amount to be paid as own money. Similarly, Suzuki Bolan van own money is Rs 60,000. Previously there was no own money on Honda vehicles but now it is around Rs 10,000 to Rs 12,000.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Strategy to develop cottage, small industries in Punjab planned ​* 
SIALKOT (August 26 2007): Punjab government has worked out a comprehensive strategy for development of maximum cottage and small industries including agro-based industries in the province.

Official sources told Business Recorder here on Saturday that the government had set aside huge funds for the development of cottage and small-scale industries aimed at generating large number of employment opportunities for the jobless skilled and semi-skilled people in the Punjab.

The government has planned to establish agro-based industries in remote and neglected areas by giving incentives and concession to the interested persons for setting up such industries in their respective areas, they said.

The sources pointed that purpose of the programme was to generate employment opportunities for the skilled and semi-skilled persons, besides to discourage the rapid rural migration towards the cities of the Punjab. The proposed programme will also serve its dual role in broadening strong industrial base and ensure the development process in far-flung and neglected areas of the province.

"The concept of setting up maximum small-scale and cottage industries was to tackling the threats of unemployment as well as to further accelerate the pace of export activities," they said and added that the government was constantly stressing upon the business community to produce non-traditional products besides traditional products as well as to concentrate on bringing innovation in their products. The Punjab Small Industries Corporation (PSIC) would extend full guidance, assistance and loan facilities to the interested businessmen and newcomers for setting up and upgrading their industrial units in the Punjab.

Under the programme special focus was being accorded on the promotion of agro-based industries and interested persons would not only provide loan facility but also assisted for setting agro-based industries in the Punjab, the sources added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Trade deficit climbs to $17.653b in 2006-07​*
ISLAMABAD: Pakistans overall trade deficit in goods and services increased to $17.653 billion in the fiscal year 2006-07 as compared to the deficit of $16.558 billion in fiscal year 2005-06, projecting an increase of 6.6 percent. 

Total exports of goods and services in 2006-07 stood at $21.225 billion, showing an increase of 5 percent when compared to the exports of $20.22 billion in the fiscal year 2005-06.

Similarly, total imports of goods and services stood at $38.790 billion in the fiscal year 2006-07 as compared to imports worth $36.778 in 2005-06, showing an increase of 5.47 percent. 

The overall trade of goods and services in 2006-07, amounted to $60.015 billion as compared to $56.998 billion in the fiscal year 2005-06, showing an increase of 5.31 percent. 

The surging gap between exports and imports during the recent past is a major area of concern for the economic managers of the country. To sustain a GDP growth rate of 7 to 8 percent in the next five years, the country requires 20 to 25 percent growth in its exports in the coming years. 

Pakistans goods exports during the last fiscal year 2006-07 amounted to $17.011 billion as compared to $16.451 billion in the previous fiscal year 2005-06 showing an increase of just 3.6 percent. 

The export target for fiscal year 2006-07 was set at $18.6 billion; however, this target was missed by $1.59 billion. 

Imports of the country totalled $30.540 billion in the last fiscal year as against the imports of $28.580 billion in fiscal year 2005-06, projecting an increase of 6.85 percent. 

The country suffered a trade deficit of $13.528 billion in trade of goods during the last fiscal year as compared to the deficit of $12.129 billion in the fiscal year 2005-06, indicating an increase of 11.53 percent.

In services sector the country exported services worth of $4.125 billion in the fiscal year 2006-07 as compared to the exports of services of $3.769 billion in the fiscal year 2005-06, projecting an increase of 9.44 percent. However, the imports of services were $8.250 billion in the fiscal year 2006-07 as against the imports of services of $8.198 billion in the fiscal year 2005-06 showing an increase of 0.63 percent.

Trade Deficit of services sector in fiscal year 2006-07 decreased by 6.87 percent with the value of $4.125 billion, as against the deficit of 4.429 billion in the fiscal year 2005-06.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Commercial production from Thar Coal mines by 2012 *

ISLAMABAD (August 26 2007): The Petroleum Ministry is all set to start commercial production of Thar Coal mines by 2012 under a roadmap approved by President Pervez Musharraf, a senior official of the ministry said.

"Commercial production from Thar Coal mines will be started in 2012 that would greatly help enhance the coal share in overall energy mix in the country," Director General, Mineral, Irshad Ali Khokhar said on Saturday.

Under the roadmap advanced hydrological studies would be undertaken before test-pit digging to make foreign investors realise that besides 120 meters deep sand bed the commercial production of coal was possible in Thar.

He said that generation of power from furnace oil would be too expensive for industry and domestic use, so the government had planned to develop indigenous coal resources for energy security of country. The Energy Security Action Plan elucidated the target of 20,000 MW electricity from coal by 2019.

The Sindh government being major shareholder of coal resources is endeavouring to attract international investment for development of Thar Coal resources in consultation with PPIB. The Director General said Pakistan imports its primary energy requirements incurring an expenditure of about dollar Rs 4 billion dollar annually.

He said the natural gas contributing 50.3 per cent and oil 29.4 per cent in overall energy mix, at present has some how mitigated high import bill, whereas coal contribution is 7.6 per cent only.

Furthermore, with present growth rate of 7 per cent the country would require additional power of 10,000 MW by 2010, due to long gestation period coupled with high financial costs, he said.

Total estimated coal resources of Pakistan are about 185 billion tonnes, which mainly include resources of 175 billion tonnes at Thar in Sindh. Owing to large coal potential, Thar Coal could be developed as large source of energy. The Thar Coal reserves are the fifth largest in the world and would reach maximum production capacity by the end of 2020.

Based on available infrastructure and favourable geological parameters, the Geological Survey of Pakistan (GSP) evaluated the resources over an area of 352 sq km.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

Saturday, August 25, 2007 

*CDWP likely to approve 44 projects worth Rs 86.024b​*
ISLAMABAD: The Central Development Working Party (CWDP) is likely to recommend and take up 44 developmental projects worth Rs 86.024 billion in 11 sectors at its meeting scheduled to be held on Monday (Aug 27). 

The 44 projects expected to be recommended have a foreign exchange component of Rs 25.4846 billion. Five projects in the transport and communication sector are: Rehabilitation, improvement and widening of existing road of N-55 Chashma Right Bank Canal crossing to Sara Gambilla worth Rs1.5845 billion; Fourth Highway Project (Revised) Construction of 507.53 km of additional carriageway and provision of 153 km of overlay on the National Highway N-5 worth Rs 7.979 billion; construction of Malakand Tunnel worth Rs 8.0883 billion. The sponsoring agency of all the above three projects is the Communication Division. 

Construction of an underpass in Bahawalpur City near railways station to link two parts of the City is valued at Rs 34.035 million. The last and fifth project is Sheikh Rasheed Expressway and Flood Channel Project worth Rs 17.769 billion. The government of Punjab is the sponsoring agency for the last two projects. Federal Government Data Center and Internet worth Rs450.848 million is the only project in the information technology division and IT and Telecom division is the sponsoring agency for the project. 

Six projects of the energy sector are: Electrification of new township at Tali Mat District Dera Bugti worth Rs 71.660 million, Electrification of villages in District Dera Bugti worth Rs 717.710 million. The sponsoring agency for the above two projects is the government of Balochistan. Third project is the addition of four 500 and 220 KV sub-stations and Associated Transmission Lines in NTDC Integrated System worth Rs 12.894 billion. Fourth project is 220 KV Rohri substations and associated transmission line for dispersal of power from IPPs of Fauji Foundation and Engro near Daharki worth Rs 4.765 billion. The fifth project is 220 KV D/C T/L from Chashma to Luderwala for interconnection of Chashnupp-2 worth Rs 2.025 billion. The last project of energy sector is Engineering Design Organisation of the Pakistan Atomic Energy Commission worth Rs 424.3 million. 

The Water sector consist of three projects, which are, Assuring water supply for Karachi by upgrading Kinjhar lake system worth Rs 3.422 billion, re-settlement action plan for Mirani Dam project worth Rs 1.243 billion and the third project is construction of Aujo Escape worth Rs 94.770 million. 

The education sector has three projects that include establishment of govt polytechnic institute for boys at Muslim Bagh District Qilla Saifullah worth Rs 208.66 million, establishment of govt polytechnic institute for boys at Khanozai District Pishin worth Rs 221.594 million and the third one is the establishment of National Education Assessment System worth Rs 340.385 million. 

The CDWP will take up four developmental projects of the physical planning and housing sector, which are; Uplift of Ziarat Town, Balochistan worth Rs 300 million, Augmentation of Pasni Town water supply system procurement Rs 593.517 million, Project for the retrieval of sewerage and drainage system in Lahore City (Phase-II) worth Rs 588.73 million. The last project of this sector is the extension of ENERCON Building, Sector G-5/2 Islamabad worth Rs 147.510 million. 

Two projects of the culture, sports and tourism sectors that are expected to be given approval are; Establishment of Pak-China Friendship Center at Islamabad worth Rs 3.128 billion, and the Construction of Boxing Gymnasium at Islamabad worth Rs 62.019 million. 

Agriculture and Food sector has the following five projects; The white revolution worth Rs 2.654 billion, Promotion of Cotton Cultivation in Balochistan (Phase-II) worth Rs 202.787 million, Oil Palm Cultivation in Coastal Areas of Balochistan worth Rs 466.251 million, Development of Olive Production and Processing in Balochistan worth Rs 185.843 million, and the Development of Fisheries Training Center at Gwadar worth Rs 361.154 million. 

Health sector has the following five developmental projects; Construction of 50-bed Hospital at Pasni in Gwader District worth Rs 151.208 million, Establishment of Swat Institute of Nuclear Medicine and Radiotherapy worth Rs 795.51 million, Bannu Institute of Nuclear Medicine and Radiotherapy worth Rs 796.53 million, Establishment of DI Khan Institute of Nuclear Medicine worth Rs 692.69 million and Nawabshah Institute of Nuclear Medicine and Radiotherapy worth Rs 862.69 million.

Daily Times - Leading News Resource of Pakistan


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## Neo

*165 megawatts plant agreement signed ​*
ISLAMABAD (August 25 2007): The Implementation Agreement for 165 MW Attock General Limited (AGL) power project was signed on Friday here at Private Power and Infrastructure Board (PPIB). Adil Khattak, CEO of AGL, signed the agreement on behalf of the company, while on behalf of the Government the agreement was signed by PPIB Managing Director Muhammad Yousuf Memon.

The power plant will be located at Morgah, near Rawalpindi, and will use indigenous low sulphur fuel oil (LSFO). The plant will apply combined cycle technology, according to a press release.

The sponsors of the project are Attock Refinery Ltd and Attock Oil Company, UK, and the plant will be set up at a cost of $113 million. It is expected that the plant will start supplying power to the national grid by August 2008.-PR

Business Recorder [Pakistan's First Financial Daily]


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## Contrarian

Neo, why was the Indian economy section closed?


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## Neo

malaymishra123 said:


> Neo, why was the Indian economy section closed?



I have no clue mate, I've reopened the thread.


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## Neo

*38 projects worth Rs 72.1 billion approved ​*
ISLAMABAD (August 28 2007): The Central Development Working Party (CDWP) on Monday approved 38 projects worth Rs 72.1 billion with foreign exchange component of Rs 17.1 billion. Briefing the newsmen, Planning Commission spokesman Asif Sheikh said that the cost of 21 projects each was over Rs 500 million.

Hence these projects were referred to the Executive Committee of National Economic Council (Ecnec), which is expected to meet and take these up before the month of Ramazan. These 21 projects, costing 55 percent of total development schemes are worth Rs 68.2 billion.

About foreign exchange component, he said it had been conscious policy of the government that this aid should only be taken for infrastructure development projects, and 70 percent cost from Rs 12 billion power projects would be utilised from foreign exchange component.

He said that till September only those projects would be approved for which the allocation has been made in the Public Sector Development Plan (PSDP). He said that 24 projects, approved or recommended by the second meeting of the current fiscal year, had the PSDP allocation. The CDWP revised as many as 28 projects and their cost has gone up from Rs 13 billion to Rs 23 billion.

Giving break-up, he said that 15 projects, of Rs 50.8 billion, are for infrastructure, 19 projects of Rs 18 billion for social sector, and 4 projects of Rs 3.9 billion for other sectors including agriculture.

Transport and communications projects include Rehabilitation, improvement and widening of existing road of N-55 Chashma Right Bank Canal crossing to Sara Gambilla worth Rs 1.5845 billion, 4th Highway Project (Revised) construction of 507.53 km of additional carriageway and provision of 153-km of overlay on the National Highway N-5 worth Rs 7.979 billion and Sheikh Rashid Expressway and Flood Channel project (Leh Nullah Expressway) Rawalpindi of Rs 17.76 billion

Energy sector projects include electrification of new township at Tali Mat District Dera Bugti worth Rs 71.660 million, electrification of villages in District Dera Bugti worth Rs 717.710 million, addition of four 500 kv and 220 KV substations and Associated Transmission Lines in NTDC Integrated System worth Rs 12.894 billion, 220 KV Rohri substations and associated foundation and Engro near Daharki worth Rs 4.765 billion and another 220 KV D/C T/L from Chashma to Luderwala for interconnection of Chashnupp-2 worth Rs 2.025 billion.

The developmental projects of the physical planning and housing sector include uplift of Ziarat Town, Balochistan worth Rs 300 million, augmentation of Pasni Town water supply system procurement Rs 593.517 million, project for the retrieval of sewerage and drainage system in Lahore City (Phase-II) worth Rs 588.73 million and extension of ENERCON Building, Sector G-5/2 Islamabad with Rs 147.510 million.

Health sector projects are: construction of 50-bed hospital at Pasni in Gwader District worth Rs 151.208 million, establishment of Swat Institute of Nuclear Medicine and Radiotherapy worth Rs 795.51 million, Bannu Institute of Nuclear Medicine and Radiotherapy worth Rs 796.53 million, establishment of DI Khan Institute of Nuclear Medicine worth Rs 692.69 million and Nawab Shah Institute of Nuclear Medicine and Radiotherapy worth Rs 862.69 million.

Water resources projects include Resettlement Action Plan (RAP) for Mirani Dam project of Rs 1.24 billion and construction of lower Nara Canal Nip side modified PC-1 of Rs 94.770 million. The CDWP also approve establishment of National Education Assessment System (NEAS) revised 2002-08 with a cost of Rs 340.385 million.

Two projects of the culture, sports and tourism sectors that were taken up by the CDWP are establishment of Pak-China Friendship Centre at Islamabad worth Rs 3.128 billion, and the construction of Boxing Gymnasium at Islamabad worth Rs 62.019 million.

Agriculture sector projects include white revolution worth Rs 2.654 billion, promotion of Cotton Cultivation in Balochistan (Phase-II) worth Rs 202.787 million, development of Olive Production and Processing in Balochistan worth Rs 185.843 million, and the development of Fisheries Training Centre at Gwadar worth Rs 361.154 million.

A project of Information Technology namely Data Centre and Internet worth Rs 493.810 million and two projects of Science and Technology, Establishment of National institute of Laser and Optronics (NILOP) at Islamabad and Funding for ICT-Pakistan collaboration, was approved by the meeting.

Higher Education Commission projects approved by the CDWP are, a sub campus of Agriculture University at Depalpur, Okara, with Rs 475.395 million, Rs 1.375 billion for land acquisition for Engineering, Science & Technology University at Islamabad, Rs 47.550 million for G.C. University at Faisalabad on cost sharing basis with Punjab government, Rs 981 million scholarships for Students of Balochistan and FATA, Rs 2.270 million for NUST headquarters and H9-Tech Postgraduate Science and Technology Institutes at Islamabad-Phase-1 (Revised), Rs 3.722 billion for Information Technology & Management Science and Telecommunication Institutes at Islamabad-Phase-1 (Revised) and Rs 465 million for development on farm Students Research Facilities, Gujar Khan, University Arid Agriculture, Rawalpindi.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Major entities' sell-off may be left to next government ​*
ISLAMABAD (August 27 2007): The government is likely to leave the privatisation of major public sector entities for the next government and would only proceed for Global Depository Receipts (GDRs) and Initial Public Offerings (IPOs), official sources told Business Recorder.

The Privatisation Commission (PC) realised Rs 86 billion in 2006-07 against the budgeted target of Rs 75 billion, and similar target had been fixed for the current fiscal year, which appears to be unachievable.

Sources said: "The next government will take decisions on all major transactions, and we will proceed only for GDRs and IPOs already planned by the present administration."

Analysts are also of the view that it is not the right time to go for privatisation of more entities, as investors have adopted the policy of 'wait and see'.

They said that the privatisation process had already been dead after the annulment of Pakistan Steel Mills (PSM) deal by the Supreme Court, and the privatisation process of Pakistan State Oil (PSO) has also been halted as the Attock Group has challenged its disqualification from the list of bidders.

With sudden change of Privatisation Minister and post of Secretary Privatisation being vacant, chances of IPOs and GDRs were also looking bleak, said another official.

He was of the view that after the demise of two federal secretaries--one in the Prime Minister House, and the other in an accident in Saudi Arabia--no Secretary is ready to join the Privatisation Ministry.

According to official sources, the planned privatisation of SME Bank, National Investment Trust, State Life Insurance Corporation (IPO), Pakistan Petroleum Limited (PPL), National Power Construction Company (NPCC), Hazara Phosphate Fertilisers Limited, Services International Hotel, Roosevelt Hotel New York, Jamshoro Power Company Limited (JPC), Republic Motors Limited Lahore, Pakistan Tourism Development Corporation (PTDC) Motels and Hotels, Heavy Electrical Complex, Pakistan Steel Mills IPO, Lakhra Coal Miners, Faisalabad Electric Supply Company(Fesco) and Pakistan Mineral Development Corporation salt and coal mines would be left for the next government.

They said that privatisation of Heavy Mechanical Complex (HMC) was shelved only to appease one of the Federal Ministers who hails from Taxila.

According to the PC's earlier presentation to the Cabinet Committee on Privatisation (CCoP), GDR for the Habib Bank Limited (HBL) had been planned for September 2007, while invitation of SoIs, pre-qualification, bidders due diligence, pre-bid conference and bidding of SME Bank had to be held during the first quarter of 2007-08, which would be missed.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Country needs shipyards with bigger docks' ​*
ISLAMABAD (August 28 2007): President General Pervez Musharraf on Monday said ship building industry can become the country's great asset due to its potential and would contribute to the uplift of national economy. The President was chairing a meeting of the Karachi Shipyard and Engineering Works (KS&EW) to review the ship building industry, which was also attended by Prime Minister Shaukat Aziz.

KS&EW Managing Director Vice Admiral Iftikhar Rao, in his presentation, informed the President Musharraf that ship building is an attractive industry for developing nations, because shipyards are labour-intensive and employ a large number of workers, including a wide range of ancillary industry.

The participants of the meeting were briefed that since 2003, the number of orders had been doubled, ie from 115.5 dwt to 300 dwt and the total anticipated receipts were Rs 965 million. The next 50 years will see a growing demand for new ships which would increase from 30 million dwt a year now to around 90 million dwt a year in 2055. It was also pointed out that the commercially strategic location of Pakistan was a takeoff point for such projects.

President Musharraf remarked that Pakistan should concentrate not only on ship repair but also ship building and needed shipyards with bigger docks to accommodate larger vessels.

He approved the concept and formation of a steering committee for implementation of the project. Among others, Balochistan Governor Owais Ahmed Ghani, Defence Minister Major Habibullah Warraich (Retd), Planning Commission Deputy Chairman Muhammad Akram Sheikh, and PM's Adviser on finance Dr Salman Shah attended the meeting.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Services sector deficit widens to $536 million in July ​* 
KARACHI (August 28 2007): The country's services trade deficit widened to $536 million during July 2007, up by $6.463 million, mainly due to high payments on account of transportation, travel, financial, computers services and royalties.

SBP statistics on Monday showed that Pakistan earned $218.822 million, against payments of $755.390 million, on the account of services trade during first month of current fiscal year. This deficit was $6.163 million higher than $530.105 million of July 2006.

During the period under review, transportation exports amounted to $95.928 million, against the imports of $283.045 million, depicting a deficit of $187.117. Travel exports stood at 12.89 million against imports of $113 million. Insurance service exports amounted to $2.655 million against imports of $21.788 million, while financial services payments stood at $6.046 million against the receipts of $3.418 million.

The country earned $2.010 million on the account of royalties and licence fees against payments of $115.058 million and in other business services, exports stood at $45.695 million against imports of $258.526 million during July 2007.

Some sectors including communication and construction performed well, as these sectors' exports are the higher than imports. Communication sector exports stood at $6.785 million against imports of $5.439 million, construction sectors earned $6.785 million against expenses of $1.082 million.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Cotton crop and the textile industry​*
Pakistan may miss the cotton production target of 14.20 million bales for this year because of the pest attack, which is reported by growers to have affected the crop on at least 25 per cent of the total area of eight million acres under cultivation, ahead of the start of full-blown harvest.

The crop is under attack of Cotton Leaf Curl Virus (CLCV) and mealy bug at various places in Punjab, the AgriForum Pakistan says.

The agriculture department officials from nine districts in the province have corroborated the reports of mealy bug attack on the crop, AgriForum chairman Ibrahim Mughal tells Dawn. But, he says, it is too early to predict the extent of damage to cotton crop, the mainstay of Pakistans economy.

The extent of damage being caused by the pest to the pick varies from one place to another, he says. The key point to note is that the government, especially its plant protection department and ministry of food, agriculture & livestock, has done little to ensure provision of insecticides needed to kill mealy bug despite repeated warnings from the growers about the appearance of the pest since the beginning of this month, he says.

The insecticide required to combat mealy bug, the farmers claim, is available in some areas for Rs1,300 per litre against its actual rate of Rs600 a litre because of its acute shortage in the market.

The current situation reminds one of similar mealy bug attack last year, which largely contributed to the country missing the cotton output target by a hefty 800,000 bales, says Mughal. Government failed to act on time even last year and the growers either paid a very high price to purchase insecticides to eliminate the pest or could not get it at all and suffered huge losses.

Mealy bug was spotted on the cotton crop for the first time in 2005, but it did not cause much damage to the crop that year. None of the research institutes in Pakistan could identify the pest or suggest measures for its elimination. The insect was sent to England for identification.

The growers say even B.T. cotton is not resistant to mealy bug, which is considered by the farmers to be a major threat to cotton crop because it comes in 3-4 layers. The insect lays eggs and hatches them in a natural basket attached to its body. It multiplies rapidly as eggs are hatched in 6-10 hours. Its occurrence not only curtails the crop size, but also increases the production cost as the farmers are required to apply 3-4 sprays of insecticides to kill it and control the damage.

While the growers are trying to underline the threat of mealy bug to the cotton output, the textile industry is making efforts to downplay the farmers claims. The reason is pretty obvious: The reports of reduced crop size can trigger panic buying by the mills and shoot the commoditys rate to new levels as was witnessed on August 10 when the lint prices surged to the historical level of Rs3,500 a maund (37.32kg) on fears of its tight supply owing to heavy rains in Sindh.

Mealy bug or other pests should not have affected more than 1- 2 per cent of the total area under cotton cultivation, says a spinner, who refused to give his name. He like many other spinners, is pretty confident that the country will be able to reap a good crop and attain the output target for this year. But he also warns the government to take effective measures to control the damage to the crop by the pest attack.

Unnerved by the unexpected surge in the cotton prices, the All Pakistan Textile Mills Association (Aptma) advised spinners struggling under increasing costs of production to take advantage of the provision in the labour laws to temporarily lay off labour for 14 days for reducing their cotton consumption to narrow the gap between demand and supply of the commodity.

At the same time, the yarn spinners also arranged for the import of around 2,000 tonnes of Uzbek cotton warehoused at the port of Bandar Abbas, Iran, at about Rs3,000 a maund. Some 8,000 bales are already said to have reached Pakistan during the last few days.

Nevertheless, the reports of imported cotton landing Pakistan have failed to contain the fluctuations in the cotton market. Although the lint rates eased to Rs2,900 per maund early last week, the price again jumped to Rs3,350 per maund in the second half of the week before sliding to Rs3,125 (Punjab) and 3,025 (Sindh).

Rains in Sindh and tight supply from early pick are causing the cotton prices to fluctuate in the domestic market. If we examine the cotton price outlook for the next harvest on the basis of the global scenario, we are hoping to see its rates to come down sharply, says a senior Aptma office-bearer.

He pointed out that New York Cotton Futures for Dec have dropped to $0.64 a pound from $0.68. Commodities are crashing the world over on fears of impending recession in the global economy owing to the crisis spawned in the world markets by the recent crisis in the United States sub-prime mortgage market. The big investors and hedge funds are liquidating their assets in the commodity markets to make up for their losses in the stock markets. A bearish trend is visible all around the globe, he says. We are looking at New York Cotton Futures for Dec sliding to $0.54-55 a pound sooner than later. How can Pakistan remain unaffected by the global developments? The cotton market in Pakistan too has to cool down.

Pakistan Cotton Ginning Association (PCGA) chairman Sohail Haral says the supply of the commodity in the domestic market is expected to remain tight till at least Sept 20. The price fluctuations are caused by rains in Sindh as well as tight supply of the commodity ahead of full-fledged commencement of its harvest in October. He says on 78 ginning factories out of a total of 1,200 in the country are operating at present due to slow supply of 7,000 to 8,000 bales a day.

He says only early pick of B.T. Cotton, which according to the AgriForum has been sown on 2.4 million acres in non- core cotton areas, is reaching the market at the moment. He also warns the government that if the growers are not provided pesticides needed to control the damage caused by mealy bug, CLCV and other pests, the crop output could be affected adversely.

As the spinners are making hectic efforts to somehow keep down the price of their main raw material, the growers are crying for a better price for their product. The farmers are getting only Rs1,250 per maund for their crop at this time against their input cost of Rs1,500, claims Mughal. He says the mealy bug attack has increased the farmers costs on account of their huge spending on pesticides, which are short in the market and are available only at more than double the actual price.

The growers also blame the textile industry of manipulating the price, a charge that is denied by Aptma officials. We have nothing to do with price manipulation. We are the largest consumer of local crop. If the farmers are worried about import of cotton, they should stop fretting on this account because they are also free to export their product. The textile industry needs cheaper raw material to survive. If the domestic cotton market is going up for one reason or the other despite falling commodity prices in the global markets, we shall import as much fibre to meet our needs as possible. We want the farmers to get a good rate for their product. But it should not be done at the expense of the industry, says a former Punjab Aptma office-bearer.

He also demands that government must allow import of all varieties of Indian cotton via Wagha in order to ease the domestic prices. We need to create a balance to safeguard the interests of both the industry and the farmers. That is in the best interest of the country and its efforts to increase exports as well as its people. Anything contrary to this will take us nowhere, he warns.

Cotton crop and the textile industry -DAWN - Business; August 27, 2007


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## Neo

*Declining manufacturing growth​*
By Mohiuddin Aazim

In the last fiscal year, the production of large-scale manufacturing grew 8.4 against 10.7 per cent a year agoand far below the target of 13 per cent. This year, the growth target is 12.5 per cent but industrialists say it is too ambitious.

The growth in LSM peaked at 15.6 per cent in FY05 before it fell to 10.7 in FY06 and to 8.4 per cent in FY07. So, whereas a lower growth in FY06 can be attributed, at least partially, to a high-base effect, a further slump in it in FY07 was a real slippage.

Businessmen cite rising interest rates, declining demand, increased labour cost, erratic supply of electricity, high utility prices and poor infrastructure as key factors that might depress LSM growth in FY08. They fear that an anticipated fall in cotton output after the floods, worsening law and order situation and political uncertainty ahead of elections may also dampen LSM production.

There seems to be little or no basis for being so much optimistic about LSM growth, says Mr Mushtaq A. Vohra, ex-chairman of All Pakistan Textile Mills Association. He sees growth in textiles stagnating for many reasons including those listed above.

Mr Vohra laments that the government has ignored the textile sector while India, China and Bangladesh are providing many incentives. This, he fears, coupled with the lack of large-scale investment financing would dampen LSM growth. In the last fiscal year, the production of cotton yarn grew about 12 per cent but the production of cotton cloth rose just seven per cent.

Textile mill owners say this year production of cotton yarn too might not grow as fast because of inadequate supply of high-grade cotton. And production of cotton cloth and other value-added textile products might show only a nominal growth.

Mr Majyd Aziz, president of Karachi Chamber of Commerce & Industry also believes that meeting the LSM growth target of 12.5 per cent would be too difficult. Infrastructure bottlenecks, power shortages and a slowdown in demand are key constraints, he says.

Mr Aziz points out that the large-scale manufacturing is faced with the challenges of low productivity, lack of skilled labour, unreliable power supply and saturation of capacity in most of industries.

He fears that textiles production which accounts for about one fourth of LSMs output may post a low growth in FY08 due to rising cost of production and an anticipated decline in cotton output after the floods. Farmers Association of Pakistan reckons that mealy bug and leaf curl virus have so far ravaged 25 per cent of cotton crop.

As for automobiles businessmen opine that high imports of used cars and increase in car-financing rates may lower domestic production of cars and jeeps.

In the last fiscal year the production of cars and jeeps grew at a negligible rate of 0.42 per centthe lowest in the last five years. The number of cars/jeeps that rolled out in FY07 stood at 163,794 marginally up from 163,114 in FY06. This was due to capacity constraints, lower demand growth, and increased imports of used vehicles, said a senior executive at a car manufacturing plant.

Other major industries like sugar, cement, fertilizer, petroleum, cooking oil, paper and board, chemicals and basic metals showed a mixed trend.

In the last fiscal year, sugar production rose more than 19 per cent to 3.52 million tonnes on the back of increased sugar cane production. Its production grew about 23 per cent. Sugar millers say that sugar production is expected to show a decent growth also in this fiscal year as sugar cane production is likely to remain strong. But this growth in sugar industry is very temporary, warns Mr Zaka Ashraf, Chairman Punjab Zone, Pakistan Sugar Mills Association.

Sugar mill owners have long stopped any investment in their plant and machinery and subsidised imports of sugar have forced them to sell sugar at very low prices thus incurring huge loss.

After a year or two, you wont see any decent growth in local sugar production, he predicts.

In the last fiscal year, paper and board, fertiliser and petroleum industries showed a fall in production mainly due to weakness in demand and temporary shut down for maintenance or expansion.

Cement industry grew 22.5 percent mainly due to enhancement in the installed capacity during the last five years on increased local and international demand. Cement exports increased by 35 per cent to over 2.6 million tonnes.

On the other hand, petroleum production declined by 1.8 per cent. The slowdown was caused mainly by a mismatch in production mix and the demand growth pattern. That was why production of some petroleum products like jet fuel oil, kerosene oil and furnace oil declined but the production of other items like motor spirit and liquefied petroleum gas or LPG went up.

Iron and steel sector showed a very strong growth and the production of all items like steel, pig iron, billets and iron sheets recorded an increase ranging between 5.5-79 per cent.

Higher capacity utilisation and a robust demand for these products on the back of increased construction activity made the steel industry grow in FY07.

Steel dealers say that the production of almost all items of this sector would show a modest growth in this fiscal year mainly because of high base effect. Besides, after an impressive increase in capacity utilisation by Pakistan Steel in FY07, one should not expect equally promising performance this year, said a steel dealer who sells Pakistan Steel products. Pakistan Steel is currently utilising 85-90 per cent of its installed capacity. Since large-scale manufacturing accounts for roughly 13 per cent gross domestic product, the LSM growth target is very vital to ensure achievement of the GDP growth target.

This summer all industrial estates in Karachi including SITE and Korangi complained of up to 33 per cent production loss due to frequent and prolonged power outages. In Lahore, Faisalabad and other industrial hubs, the situation was not very different though the percentage of production loss was not as high as in Karachi.

Given the fact that no major improvement has taken place in regard to power supply, this would continue to have a dampening impact on LSM growth during this fiscal year.

As for the rising interest rates, these are the by-product of a tight monetary policy which the SBP is pursuing to contain inflation. In the first month of this fiscal year, CPI inflation stood at 6.4 per cent- against the annual target of 6.5 per cent- chiefly because of a high base effect.The SBP has further tightened its monetary policy stance from August 1.

But in this process , interest rates are sure to rise further. At the end of June, the average lending rate of banks stood at 11.33 per cent, which top bankers say might rise by 0.5-1.0 percentage points during the course of this fiscal year. Executives of large business groups say that instead of complaining of rising interest rates, businesses need to increase their credit worthiness with the banks.

We still get bank finances at nine per cent, said head of a large business group. He said that high level of liquidity and growing competition in the banking system would help businesses get loans at cheaper ratesprovided they follow best business practices.

Items Growth in

FY07

Kerosene Oil (-5.41%)

High Speed Diesel (-1.97%)

Furnace Oil (-4.72)

LPG 3.70%

Cotton yarn, 11.75%

Cotton cloth 6.75%

Sugar 19.13%

Nitrogenous Fertilizer (-2.03%)

Phosphatic Fertilizer (-10.06%)

Soap and detergents 2.2%

Vegetable ghee 2.26%

Cooking oil 7.04%

Cement 22.49%

Cigarettes 2.87%

Jeeps and cars 0.42%

Tractors 10.46%

Bicycles (-17.51%)

Paper &paper board (-2.21%)

TV Sets (-35.85%)

Motor tyres 18.27%

Steel Products 10.69%

Refrigerators 7.25%

Deep Freezers 4.34

Caustic soda 10.45%

Source: Federal Bureau of Statistics

Declining manufacturing growth -DAWN - Business; August 27, 2007


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## Neo

*Mushroom growth of CNG stations​*
MUSHROOM growth of compressed natural gas (CNG) stations in Peshawar in violation of safety standards and government bye-laws is posing serious threat to precious lives and billions worth investment.

Interviews with operators and officials agencies, which regulate this thriving sector, suggest that frequent increase in oil prices is pushing owners of petrol vehicles to shift to natural gas.

The number of gas stations is increasing fast and ,according to a conservative estimate, the sector has attracted more than Rs62 billion investment country-wise during last nine years in which the share of NWFP is Rs25 billion.

The Oil and Gas Regulatory Authority (OGRA) has issued more than 5,000 provisional licences for setting up CNG stations across the country, of which around 2,000 are operational, while the rest are in the pipeline.

In Peshawar, which has a population of two million people, 68 gas stations provide fuel to more than 15,000 vehicles, whereas more than a dozen stations are under-construction.

The CNG station operators in the province, who are beneficiaries of the boom, are worried about their future in the backdrop of unabated increase in the number of operators.

The fate of CNG sector, they say, would not be different from flour mills industry, if the prevailing pace of setting up of new stations without caring for safety standards and bye-laws continue.

Their worries also led to a protest and strike in Peshawar last week that compelled the owners of 15,000 vehicles to opt for petrol, which increased their financial burden owing to closure of 68 gas-stations.

However, the strike was later called off following the intervention of NWFP Chief Minister Akram Khan Durrani. Mr Ghiyas Paracha, an office-bearer of the association, said that the district Nazim Haji Ghulam Ali had assured the association that a committee would look into the issue and prepare its report within 15 days.

Ikhtiar Wali Khan, president of the All Pakistan CNG Association, NWFP chapter, says that being a cheaper alternative to oil, consumption of CNG is increasing in the city rapidly, but the demand can be catered with the existing number of gas-stations.

He argues: "The OGRA, provincial and district governments have formulated certain guidelines to ensure safety of consumers and operators besides the business interests, which needs to be implemented in letter and in spirit.

But, unfortunately the City District Government, Peshawar, has violated its own bye-laws time and again just for the vested interests."

The existing bye-laws for the district governments for regulating CNG stations were formulated by the provincial government and were first implemented in Peshawar and later adopted in other parts of the province.

According to the original guidelines, the minimum distance between two gas-stations was determined at 300-meters inside and 1000-meters outside the city. This condition was put in place to ensure safety of the public and also discourage mushroom growth of gas stations.

However, the district government, which issues final No Objection Certificate (NOC) for setting up a station, has deliberately been violating such guidelines particularly those relating to the distance just to oblige some elements, remarks Mr Khan.

The distance for outside the city has now been reduced up to 200-meters which led to appearance of new stations within short distance contrary to safety standards.

Under the guidelines no gas station can be set up near bridges, schools, hospitals, parks or any other public place to avoid any damage to public.

But in a number of cases, the district administration has allowed the setting up of gas stations close to sensitive locations in violation of bye-laws, he says.

These locally-manufactured sub-standard gas cylinders, being installed comparatively at cheaper rates than its certified versions, are a serious threat to consumers lives and property of gas-stations, it was stated.

Operators say that at least four explosions have occurred in Peshawar, Mardan and Nowshera during last one year because of sub-standard gas kits. The matter was taken up with the district administration some one-and-half-year back, but to no avail.

However, Nazim of Peshawar, after the protest of the operators, assured the association office-bearers that action would be taken against workshops installing sub-standard CNG kits, Mr Paracha said.

He, however, explained that the bye-laws are made to protect public interest and they could be amended by the district council.

About the distance issue and operations of un-authorised workshops, the Nazim says: "The district administration did not want to create any unrest in the city. However, if the gas station operators have any grievances they can come to me and a strategy can be evolved to deal with it."

The Sui Northern Gas Pipeline Limited (SNGPL) has recently devised a strategy to counter the mushroom growth of CNG stations in urban areas, which according to the operators of Peshawar, will greatly help in obstructing the prevailing trend.

Under the new plan, the SNGPL will restrict provision of new connections to CNG filling stations to six inches and above diameter pipelines. In addition to this, the SNGPL has also set a new distance-limit for installation of stations from random to two kilometres.

Ghiyas Paracha, former president of the association, believes that the new strategy will stop the mushroom growth of gas stations in congested areas in Peshawar, where mostly four-inch diameter pipeline is used for gas supply.

This small diameter pipe suits pipe network in relatively smaller localities linked through branch roads. Whereas, the large diameter pipelines are laid on major roads within the city and on the inter-city highways.

According to SNGPL estimates, connections will be provided to CNG stations from six, eight, 10, 12, to 16 inches diameter pipelines that have approximate length of more than 5000km across Punjab and the NWFP.

"If implemented in letter and in spirit, public utility will give connections to gas stations to be installed on major roads rather than narrow streets," Mr Paracha maintains.

Mushroom growth of CNG stations -DAWN - Business; August 27, 2007


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## Neo

*An emerging trade conduit​*

By Sabihuddin Ghausi

For long, Sri Lanka has remained a micro dot on the radar screen of Pakistani business. But with the fast changing global and regional environment, an increasing number of businessmen have started eying Sri Lanka as a purchase centre and also as a marketing destination.

They are seen in Colombo with a shopping list and exploring avenues for selling their products.

Trade figures are still not very impressive but what is noteworthy is the pace of improvement. The two-way volume has increased from $110.65 million in 2000-01 to $230 million in 2005-06 and has been estimated at around $149 million in first seven months of the last fiscal year. The two-way trade in 2003-04 swelled to $146.25 million from $114.36 million in 02-03, motivated by the signing of a Free Trade Agreement (FTA). The FTA came into effect in June 2005, and no wonder the two-way trade volume touched the peak of $230 million in 2005-06.

Encouraged by the pace of trade growth in about last two years, the inter-governmental FTA Review Committee of Sri Lanka and Pakistan proposed in March this year, to raise the volume of two-way trade to $1 billion annually in the next few years. ``Next few years mean by 2011 or 2012'', explained Sidhant Kumar, the Sri Lankan Trade Commissioner in Karachi.

The Sri Lankan business community generally views the FTA with Pakistan more advantageous to them than their FTA with India'', Muhemmed Aejaz, Pakistan's Trade Counsellor in Colombo told this correspondent. As he sees it, the Sri Lankan businessmen are now beginning to consider Pakistan as an attractive market.

Sri Lanka signed an FTA with India in 2000 and with Pakistan in 2002 and many do not rule out of the island becoming a ``trade junction'' or ``trade conduit'' for exchange of goods among the regional countries -- India and Pakistan, Nepal, Bangladesh, Bhutan and Maldives.

Given the geographical location, (a high literacy rate, (more than 92 per cent with highest ratio of English-knowing population in South Asia), a strong adherence to democratic values and a secular outlook and endowed with a modern corporate culture, Sri Lanka is being considered as the destination of businessmen of South Asia.

After the FTA, Sri Lankan trade with India has reached $2 billion. The balance of trade is heavily in favour of India. But in a much modest two-way trade at $230 million, the share of Sri Lankan exports to Pakistan has shown a big jump-- from $44.86 million in 2004-05 to more than $71million in 2005-06

The volume of the two-way trade between Pakistan and Sri Lanka would have considerably increased this year had there been no shipping crisis as is being witnessed now in Far East and East Asia'', says Raees Ashraf Tar Mohammad, leader of the Pakistan's Commodity Importers' Association. According to him, China announced termination of subsidy on chemicals and dyes by July 2007 under the growing world pressure. Almost the bulk of world shipping fleet diverted to Chinese ports to avail the subsidy for more than a month now, the shipping availability for other ports is still a problem. Explaining the gravity of problem, he said average freight between Sri Lankan and Pakistan was $80 a ton which peaked to $200 in recent times.

Raees led a five--member delegation to Colombo in the third week of August for concluding a deal with a Sri Lankan firm on supplies of spices and variety of kitchen items to meet growing demands during Ramzan and Eid and also for Christmas. The FTA has removed duty on import of black pepper and reduced considerably the rate of duties on many other items. ``We have placed orders for double the quantity of items this time than in the past'', he said. A rough estimate put the entire import orders between $35-- 40 million.

Sri Lankans are buying from Pakistan yarn and fabric in bigger quantities to which they add value for onward export to the USA and Europe. Like Pakistan, Sri Lankan depends a lot on USA and Europe for export of textiles. Reports also suggest that a few Pakistanis have made modest investment in Sri Lanka's garment industry.

The foreign secretaries of the two countries at a meeting in Islamabad reviewed the bilateral relationship in February with reference to military hardware sale to Sri Lanka. Pakistan is helping Sri Lanka in its endeavour to counter terrorism.

The first inter-governmental committee also explored the possibilities of including services sector in the FTA. The meeting noted Pakistan's achievements in banking, financial services, insurance, engineering, construction, road development and communications. Addition of these services will provide new opportunities to our companies'', said Pakistan's Trade Counsellor in Colombo.

Business opportunities beyond the FTA are being explored. Pakistan mission in Colombo considers good opportunities for the export of surgical instruments, engineering goods, motorcycles and bicycles, cement, quality furniture, textiles, raw gemstones and livestock . The Indian FTA provides enough room for export of pharmaceuticals, chemicals, agro-based industry products, the FTA with Pakistan sets low ceilings for expansion of export base in Sri Lanka.

This is one of the basic reason for lack of interest of many Pakistani businessmen in Pakistan-Sri Lanka FTA'', Mehemmed Aejaz observed. His advice was to keep pursuing the Sri Lankans to give an even playing field to Pakistan in export market.

Rice is one item for which we seek better access in the Sri Lankan market'' Raees said pointing out that India enjoys a better access for rice than Pakistan. Pakistan normally harvests good rice crop every year and maintains good stocks. There is also a good demand for rice but sometimes the ``import duty is very high'', he said. Traders also confide that on a few occasions Pakistan and Indian traders join hands to service a tender of food grain won by either side.

An emerging trade conduit -DAWN - Business; August 27, 2007


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## Neo

*Reforms to what end?​*
According to the Director General (DG) of ADBs Central and West Asia Department, Pakistans economic policy is headed in the right direction as it would get Pakistan into the league of fast growing Asian economies.

He further said that Pakistan now required higher level of investments for job creation through second generation reforms. In other words, the ADB official is saying that the first generation reforms gave jobless growth. If that be the case, is Pakistan, ala the DG, set to get into the league of fast growing Asian economies without all its people?

Whatever league Pakistan is set to enter would not be of much interest to the people if they are left behind in the race for a few to catch up to the exclusion of the many deprived? And, how might the result be called development if the target of all development, that is, the people at large are not targeted directly in the scramble for registering high rates of economic growth? Such growth is not just called jobless but is also called. ruthless, voiceless, rootless, and futureless (and) is not conducive to human development (UNDPs Arab Human Development Report 2002. 16). Recently, the World Bank also expressed its dissatisfaction with the governments performance on poverty reduction.

So, while the lending agencies used to take one view of economic growth and the UN system another, one of the two key lenders is attempting to see the reality. Having said that, the emphasis of all key lenders is on pushing in the same direction in the hope to include the bystanders at some point in time in the future about which they themselves are unclear. Emphasis, therefore, is on second generation reforms regardless of how various lenders may view progress on the first generation reforms.

A key mind-boggling issue, therefore, is whether even the reforms to come will lead to growth with equity. Both the World Bank and the ADB are emphasising infrastructure development. The ADB has further decided to provide $1215 billion assistance to Pakistan over the next three years for infrastructure, utilities, governance reforms, and for the creation of better investment conditions.

While infrastructure and utilities are certainly needed to attract investment, a whole lot of other variables are required to improve the investment climate. Still more is required to ensure that the gains from higher investment are distributed equitably. It might be said that governance reforms are being undertaken for better service delivery. But governance reforms are not just about changing the organisational structures and compensation packages if organisational software of attitudes, style, and skills remains pretty much the same.

It is a fantasy to believe that improved infrastructure will by itself be powerful enough a magnet to attract investors. For, an infrastructure under growing threats of terror attacks will hardly be an inducement. There are serious issues in governance and structures of power in the northern areas that are now fast exporting traditional forms of life to settled areas per force. Currently, there are two opposing forces at work up north. One that wants to join the league of rapidly growing Asian countries through foreign investment and the other that wants to pull the society back in time that will require no investment, no growth, and no integration with the world. The integrative and isolationist forces are engaged in a tug of war with looming threat now that the latter might prevail or influence somewhat. This is a huge deterrent to foreign investment. Even if the integrative forces come to prevail, the concern is that this integration with the rest of the world may not necessarily mean integration within the country. And, lack of integration within marginalises people and provides impetus to the isolationist tendencies brewing fast.

So, an outcome of mal-distribution, inter alia, leads to the rise of forces that deter the variable of investment so strongly desired by the integrationists in the country. If investment climate is to improve, a frontal attack is required on the issue of mal-distribution of assets and income which, amongst other factors, fuel the isolationist tendencies that end up deterring investment.

At the same time, the issue of terror needs to be dealt with head-on so that Pakistan becomes a safe country for foreigners to bring their investment in for the long haul. Otherwise, infrastructure and utilities availability will by themselves not make a case strong enough to induce the investors when the issue of security is writ large on the national canvas and is gaining increasing visibility in the world.

As said earlier, the issue of governance is not just an issue of organisational structure and compensation when the attitudes are hardened in favour of status-quo. By and large, all eyes set on making a fast buck by fair or foul means. In the Islamic republic, there is little appreciation of Islamic teachings and this is the second contradiction mentioned in this piece that leaves us agitated.

On the one hand is the rising influence of the clergy and on the other hand is a growing deviation from Islamic teachings about which the clergy have nothing to say except to focus on the form and effect. This attitudinal outlook of making the most out of a situation in the short-term with little regard for the reason of being of the organisation in question will turn most investment projects into failures and will provide all the more reason for less investment and not more.

Unless the attitudes are made to turn around by inculcating a sense of mission in people, investment will not turn over into better outcomes and will, therefore, not beget more investment. A key challenge in governance is to turn anti-developmental attitudes into development-oriented attitudes by deploying the state-of-the-art in management technology.

Modern management, however, requires a mindset that is based on sharing of power, ideas, profits, honesty, sincerity, sense of purpose, and pursuit of lofty goals in life to realise ones potential for collective societal gain. The above values are anathema to the mindset prevailing that is driven by a lust for power, money and in ways strictly prohibited in all religions. A major attitudinal turnaround effort is required to make the governance reforms succeed, without which, these will be yet another exercise in making the existing minds sit in new boxes that will make no difference unless the minds have undergone a sea change.

It is the anti-development attitudes that further prevent distribution from growth. For, to stay in the office, alliances are built by the resourceful whose power and pelf must maximise before all and in consideration of which they give political support to the rulers who must arrange to distribute first to their political supporters or maintain status-quo in their interest and in their own.

As mentioned previously, it is the state-of-the-art in management in all spheres that will facilitate turnaround in governance and will bring us closer to being what is Islamic in substance. Once Islamic in action, the country will be better equipped to break the monopoly of the clergy on religion. Negative spillovers from clergys monopoly will be better dealt with collectively.

Possibility of higher investment and distribution from growth will then arise which is currently smirked at by the sections of society deeply steeped in a tradition that should not be ours. This crucial aspect of reform can be contemplated by no lending bank but must grow indigenously. Otherwise, generation after generation of reforms will not show the results that people call development.

Reforms to what end? -DAWN - Business; August 27, 2007


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## Neo

*Low inflation for economic stability​*
President Musharraf has come up with Vision 2030. It is the longest distance vision in public life  23 years. Other visions were for far shorter periods and with specific objectives and targets.

This vision is much broader and marked for its generalities. In fact, it is platitudinous. It is the vision of technocrats, not a party manifesto. It is not approved by the cabinet or endorsed by the national assembly. Nor is there any move for that. It is his election manifesto.

Earlier, the people were familiar with Perspective Plans for 20 years and then for 15 years, arguing 20 years was too long a period. Now there is vision for 23 years but it says the obvious and unexceptionable. What matters is what is done in practice.

The Vision contains no specific commitments that it seeks to fulfil and no specific targets, not even in the crucial energy sector. It is obvious that five-year plans are needed for a poor country to make the best use of its limited resources and for the largest number of poor and low income groups to benefit by the economic growth-- including drinking water for all and electricity in every home without frequent power failures.

The president wants political stability and sustained economic development. To achieve economic stability, sustained low inflation is needed, more like the two per cent in USA.. India has an inflation rate of 4.4 per cent and China is taking firm measures to lower the inflation rate to 5.2 per cent, caused by the overheating of its economy.

Inflation may be inevitable when an economy grows very fast and measures have to be taken to keep it low but the economic growth of Pakistan is not at the rate of China`s and yet we have an inflation of seven per cent along with the food inflation of over 10 per cent because of the free- for- all market practices.

Low inflation is the centre piece of economic stability. High inflation has many negative fall outs.

It is claimed that the core inflation has come to 5.2 from 5.6 per cent last year but what use is an inflation index that does not take into account the far higher food inflation and high energy prices in a country in which each family has a large number of dependents and one- third of its people live below the income of a dollar a day.

High inflation is one of the major causes of the under-nourishment of the people , particularly the children who are exposed to various diseases and that inflates the medical bill. It spurs corruption among the lower ranks of government employees and once an employee embarks on the road of corruption, he tries to make more and more money. High food prices are also behind the factors which make young men turn to crime and move from small crimes to big time crimes.

Violence against housewives is often caused by the high food prices as the mother cannot feed too many children on a low family budget. With low inflation we have few industrial strikes and less waste of the productive hours. Sustained inflation makes exports more costly and our products less competitive abroad. As a result we tend to lose our export markets. High inflation makes industrial investment more costly and delays the development of the country.

Sustained inflation makes the rupee weak and eventually it gets devalued or slides down in relation to the dollar. That is how our rupee has come to 61 to a dollar from Rs335 in the 1950s. While the Indian rupee after revaluation hovers around Rs40 to a dollar. In spite of the obvious adverse results of high inflation, the government has been averse to taking firm measures to check soaring prices. Policies announced are not enforced and the profiteers and hoarders have a field day and cartels thrive fixing the prices higher and higher.

The government instead comes up with palliatives like the Ramazan package with a subsidy of Rs1.49 billon but there are barely 1000 utility stores through which the subsidised goods will be sold. So, the people have less access to such goods. Another 4000 more utility stores are to be opened all over the country eventually on the basis of one in each union council. But that is taking a long time. Even 5000 utility stores cannot meet the needs of the entire country and the cost of transportation to the utility stores and back home may negate the relief provided by these stores.

Meanwhile, flour mills have raised the price of atta as they do at every available opportunity. The city administration has reached an agreement with the traders on Ramazan prices but usually the prices are maintained as agreed for a few days and then the whole system collapses. There is a free for all and the market thereafter. The city administration should make sure that does not happen this time. The situation demands long-term sustained solutions instead of snap measures which fail after initial success and the people should also cooperate by not over consuming in Ramazan as is usually done and make Ramazan a season for feasting instead of fasting. If the president wants economic stability, he should strive for price stability along with low inflation and that can save the country from many ills, political, economic and social. A restrained monetary policy as practiced by the State Bank of Pakistan which has raised the discount rate to 10 per cent is not enough. The Governor of the State Bank, Ms Shamshad Akhtar has urged the government to take adequate administrative measures to ensure fair prices to supplement her efforts. But such efforts have not been forthcoming.

The president wants general elections every five years and five year plans. The right thing to do would be for every major party to have its own five-year plans. The party successful in the elections should enforce its five- year plans.

It is easy for the rulers to promise many things to the people but difficult to deliver them. Sometimes, the failure is due to indiscreet practices and outright violation of commitments.

In Pakistan, the people are not given a chance to reject such governments, instead the army removes them and seizes power. Then after a while the people want the army out of power. This vicious cycle has to come to an end and the people allowed to punish the betraying leaders though periodical elections and choose the new leaders while the army stays away from the political arena.

Low inflation for economic stability -DAWN - Business; August 27, 2007


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## Contrarian

Neo said:


> I have no clue mate, I've reopened the thread.



Who closed it then and removed it as a sticky?


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## BATMAN

*Pakistan IT Exports Revenue crossed USD 116 Million*
Pakistan News Service - PakTribune


> ISLAMABAD: Pakistan IT industry`s export revenue as reported by State Bank of Pakistan (SBP) has hit US$ 116 million mark in the financial year 2006-07, crossing the target of US$ 108 million set for the year. *This indicates a quantum increase of 61.18 percent in IT exports when compared to the previous year`s export revenue figure of US$ 72 million.*
> 
> SBP, in its statement for the year 2006-07, has estimated the country`s IT services export revenue at US$ 116 million, which indicates a consistent annual growth, a spokesman of Pakistan Software Export Board (PSEB) said. BPO and call centers have made a significant contribution in the increased exports due to adequate telecom facilities and trained manpower available in the country. Considering that the 15 percent GST imposed on computer hardware in the federal budget 2006-07 has not yet been removed, this rise in IT exports is remarkable.
> 
> The current IT exports annual growth rate is still understated as only 5 percent of the country`s registered companies file their exports data with SBP. PSEB is making vigorous efforts to ensure that the export figures of all IT companies are reported to SBP.
> 
> The State Bank of Pakistan utilized the BPM 5 Reporting System to report the IT exports revenue, which also restricted the export revenue figure to US$ 116 million in 2006-07. The Reserve Bank of India, on the other hand, follows the BPM 6 Reporting System, which raises its exports to billions of US dollars. BPM6 includes sales to multinationals, earnings of overseas officials & salaries of non-immigrant overseas workers to export revenue. Utilizing the BPM 6 Reporting System, Pakistan IT Industry`s exports are estimated at US$ 1.4 billion while the total industry size is estimated at US$ 2.8 billion.
> 
> With over 1042 IT companies registered with PSEB, the country`s IT exports grew by an average of 50 percent in each of the last four years. PSEB has been facilitating the country`s IT industry through its programs in Human Capital, Office Space, Marketing, Company Capability Development, Telecom Bandwidth, Industry Finance, Public Policy, Strategy & Research, and Facilitation. The Government of Pakistan has also introduced a package of incentives for the IT sector including tax exemptions until 2016, 100% foreign equity and earnings repatriation and low-rent facilities for IT companies.


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## Neo

malaymishra123 said:


> Who closed it then and removed it as a sticky?



Probably closed by mistake as we were reorganising the section. Sorry for inconvenience.


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## Neo

*TDAP meeting : Expo Pakistan 2008 to be held on March 13-16​*
KARACHI: A meeting to plan organisation of Expo Pakistan 2008, to be held from March 13- 16, 2008 at Karachi Expo Centre, was held here at Trade Development Authority of Pakistan (TDAP) with Minister of State and Chief Executive TDAP, Tariq Ikram in the chair.

Mr Ikram, reviewed the marketing plan presented by the event managers and discussed at length the plans to approach all top retail chain stores and leading buyers across the globe to extend invitation for participation in Expo Pakistan 2008. It was decided that network of Pakistani foreign missions will also be engaged to contact and follow-up with importers and buyers in their respective countries to ensure bringing in quality buyers at Expo Pakistan 2008. Simultaneous focus will be paid on local marketing to have a broad product based display at the event to represent true potential of Pakistan to the international community.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Body set up to develop shipbuilding industry​*
ISLAMABAD, Aug 27: President Gen Pervez Musharraf on Monday said shipbuilding industry could become the countrys great asset due to its potential and would contribute to the uplift of national economy.

The president was chairing a meeting of Karachi Shipyard and Engineering Works (KSEW) to review the shipbuilding industry, which was also attended by Prime Minister Shaukat Aziz. Vice Admiral Iftikhar Rao, managing director KSEW, in his presentation informed the president that shipbuilding was an attractive industry for developing nations, because shipyards were labour intensive units and facilitate a wide range of ancillary industries.

The participants of the meeting were told that since 2003, the number of orders had been doubled from 115.5 deadweight tons (dwt) to 300 dwt and the total anticipated receipts were Rs965 million.

The next fifty years will see a growing demand for new ships, which would increase from 30 million dwt a year now to around 90 million dwt.

It was further pointed out that the commercially strategic location of Pakistan was a take-off point for such projects.

President Musharraf remarked that Pakistan should concentrate not only on ship repair but also shipbuilding and needed shipyards with bigger docks to accommodate larger vessels.

The president approved the concept and formation of a steering committee for implementation of the project.

The meeting was also attended by Governor Balochistan Owais Ahmed Ghani, Minister for Defence Production Habibullah Warraich, Deputy Chairman Planning Commission Muhammad Akram Sheikh and Adviser to Prime Minister on Finance Dr Salman Shah.APP

Body set up to develop shipbuilding industry -DAWN - Business; August 28, 2007


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## Neo

*Shipbuilding industry to boost economy: Musharraf ​* 
Tuesday, August 28, 2007
ISLAMABAD: President General Pervez Musharraf on Monday said shipbuilding industry can become the countrys great asset due to its potential and would contribute to the uplift of national economy. 

The President was chairing a meeting of the Karachi Shipyard and Engineering Works (KSEW) to review the shipbuilding industry, which was also attended by Prime Minister Shaukat Aziz.

Vice Admiral Iftikhar Rao, Managing Director Karachi Shipyard and Engineering Works in his presentation informed President Musharraf that shipbuilding is an attractive industry for developing nations, because shipyards are labour-intensive and employ a large number of workers including a wide range of ancillary industry. 

The participants of the meeting were briefed that since 2003, the number of orders had been doubled, ie, from 115.5 dwt to 300 dwt and the total anticipated receipts were Rs965 million. The next fifty years will see a growing demand for new ships which would increase from 30 million dwt a year now to around 90 million dwt a year in 2055. 

It was further pointed out that the commercially strategic location of Pakistan was a take-off point for such projects. President Musharraf remarked that Pakistan should concentrate not only on ship repair but also shipbuilding and needed shipyards with bigger docks to accommodate larger vessels. 

The President approved the concept and formation of a steering committee for implementation of the project. The meeting was also attended by Governor Balochistan Owais Ahmed Ghani, Minister for Defence and production Major (Retd) Habibullah Warraich, Deputy Chairman Planning Commission Muhammad Akram Sheikh and Adviser to Prime Minister on Finance Dr Salman Shah. 

Shipbuilding industry to boost economy: Musharraf


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## Neo

*Control over Hawala network giving results ​* 
Tuesday, August 28, 2007
By Israr Khan

ISLAMABAD: Pakistans tight control over the informal (Hawala) network of moneychangers since September 11, 2001, has shown positive results. The foreign currency reserves with the government that stood at $15.61 billion at the end of June 2007, have inched up to $15.80 billion by the week ended August 17.

Before the September 2001 incidents in the US, Pakistani expatriates used to remit their money, through informal means, which had no positive impact on the countrys reserves. But now they are remitting through banks and formal means for fear they may be caught in US-led investigations into terrorist financing. That switch-over to legal means has contributed to the countrys reserves.

The State Bank of Pakistan (SBP)s data shows that it has net reserves of $13.486 billion while other banks hold $2.314 billion. Since the start of the new fiscal in July, the countrys reserves have been heading north. In the first week, they rose to $15.629 billion, on July 13 they went up to $15.645 billion, July 20 ($15.757 billion), July 27 ($15.791 billion), August 3 ($15.779 billion), August 10 ($15.800 billion) and August 17 ($15.801 billion).

In the first month (July) of the current fiscal, $495.69 million in remittances were received, showing an increase of $118.68 million, or 31.48 per cent, over the same month of the last fiscal year.

The central banks reserves rose to $13.486 billion from $13.445 billion last week while foreign currency deposits held by commercial banks declined to $2.314 billion from $2.355 billion the previous week.

Control over Hawala network giving results


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## Neo

*Trade Corridor Highway project to affect 9,272 households ​*
FAISALABAD (August 29 2007): The National Trade Corridor Highway Investment Program (NTCHIP) Project will affect 9,272 households that were identified through a detailed measurement survey of the impacts caused by the two core-subprojects on land including loss of titled plots, loss of leases, and loss of untitled space.

According to the 'Summary of Poverty Reduction and Social Strategy of Project', released by Asian Development Bank, impacts include demolition of houses and loss of business, crops, and trees. Land acquisition will be conducted under the Land Acquisition Act 1894, which provides for compensation to be paid in a fair and transparent manner according to market value. Other losses will be compensated according to the entitlement matrix developed for the project in keeping with Pakistan laws and ADB safeguard policies where the absence of a formal legal title is not a bar to compensation.

For all additional projects that entail resettlement, ADB report said that the executing agency will prepare resettlement plans on the basis of the resettlement framework prepared for the project.

Considering the possible presence of labourers from outside the immediate project area and for long-distance truck drivers, NHA will employ qualified national consultants under construction supervision to conduct information and education campaigns on the risks of HIV/AIDS and human trafficking, targeting construction workers at campsites, truck drivers at truck stops, and local communities along project highways, particularly rural women. The consultants will work closely with the relevant district agencies and other existing networks dedicated to the prevention of HIV/AIDS and human trafficking.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*EU planning to extend trade-related technical assistance ​*
ISLAMABAD (August 29 2007): After remarkable success of the first phase, the European Union (EU) is planning to extend the ongoing Trade-Related Technical Assistance (TRTA) program in Pakistan.

This was stated by European Union Ambassador in Pakistan Jan De Kok while addressing a two-day seminar on 'Developing Pakistan Trade Capacity', jointly organised by the European Commission (EC), United Nations Industrial Development Organisation (Unido) and World Intellectual Property Organisation here on Tuesday.

The European Commission's technical assistance program, which had been launched in 2004, had helped Pakistan reduce cost of export related goods and enhance its trade capacity. The amount provided by EU is  5 million (roughly Rs 410 million) with government contribution of  1.1 million in kind (roughly Rs 90 million), and  0.2 million (roughly Rs 10 million) from each of the program implementing agencies ie Unido and International Trade Centre (ITC).

"Pakistan's exporters will now be able to send their products for testing to local laboratories that are in the process of accreditation", he said, adding that at the same time, authorities in the EU would now have more confidence in the results of tests in local laboratories.

He said that TRTA program would allow Pakistan to better defend its interests in the World Trade Organisation (WTO) because its officials have now been trained to better understand the rules and functions of the WTO.

The implementation phase of the TRTA would be terminated by September 30, 2007 but in view of the successes achieved under the ongoing program, the EC is now looking forward to funding another TRTA to build on the interventions initiated in the current program, he added. The TRTA program was aimed at assisting Pakistan in its integration with the world economy, facilitating its engagement with the multilateral trading system, and ultimately contributing to poverty alleviation.

The program also helped in enhancing awareness among government officials, the business sector and civil society about the implications of the WTO agreements on the economy. The program had assisted Pakistan in capacity building to address technical barriers to trade and sanitary and phytosanitary compliance requirements.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Government to build residential colonies for the poor' ​* 
KARACHI (August 29 2007): Sindh Government has decided to develop residential colonies for the residents of the poor scattered across the metropolis. This was stated by Abdur Rauf Chaudhry, Secretary, Federal Ministry for Housing and Works while addressing "3rd Bulid ASIA 2007: International exhibition and Conference" which was organised by E-commerce Gateway Pakistan (Pvt) Ltd here at Expo Centre on Tuesday.

Muhammad Al Falasi, Managing Director, EMAAR Properties Pakistan and Nasreen Jalil, Naib Nazim Karachi also addressed the event. Abdur Rauf Chaudhry said that the government had formulated housing policy to promote construction industry in the country. The construction industry is a vital sector for economic growth and effects more than 40 other industries, he added.

He further said that government had promoted construction industry with collaboration of private investors to provide better housing scheme to public besides enhancing better job opportunity for locals. He emphasised organisers to arrange such more events, which would help launching joint ventures between all stakeholders. Such international events also prove helpful in bringing foreign investments in the construction sector, he added.

Private and public sector investment will help to make construction industry stronger, he added. Meanwhile Syed Mustafa Kamal, City Nazim Karachi formally inaugurated the exhibition.

Speaking on occasion, he said that government was focussed on improvement of law and order situation in the city to attract the investors from around the globe. After completion of ongoing mega projects the cosmopolitan would achieve a significant position in the ranks of the world's developed cities in the next couple of years, he added.

Muhammad Al Falasi said that the directives of federal government to facilitate foreign investors in construction sector would play ample role in the development of the country. He said that EMAAR was ready to share all expertise with Pakistan, adding that it never compromised on the quality.

"We are life style provider in hospitality, finance and education", he said and added that we should accept the innovation in construction world, stressing construction industry to go beyond their boundaries to enhance its expertise and urged to adopt latest trends and equipment for best practices.

EMAAR is considering a plan to provide more job opportunities to locals, he said, adding that event would pose to be an optimum platform for the construction and building giants of world-wide to gather under one roof.

Nasreen Jalil said that 60 percent of total production of cement was being used in Karachi proving that mega projects of Karachi were being carried out at an accelerated pace.

She said that CDGK had started several housing schemes for middle and lower income classes. Some of the schemes have been completed like Shah Latif Town housing scheme, Taiser Town Housing Scheme, Malir Housing scheme and Hawksbay housing scheme while others are in pipeline, she added.

More than 100 international and domestic companies have displayed their products related to construction industry and 90 Furniture manufacturers were displayed furniture in the exhibition.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*ADB to provide $187 million for NTCHIP development ​*
FAISALABAD (August 29 2007): Asian Development Bank (ADB) will provide 187 million dollars from its Ordinary Capital Resources for National Highway Development Sector Investment Programme-Project II, which will assist the government in developing national trade corridor highway network (NTCHIP).

According to official sources, NTCHIP will contribute to the economic growth by developing connectivity assets. This will increase the trade competitiveness and regional cooperation. The programme will invest in over 800 km of the NTC network. This will reduce the travel time from Karachi to Peshawar by half and provide faster access to the borders with Afghanistan, the People's Republic of China (PRC), and Central Asia.

The NTCHIP will also contribute to the economic growth by developing connectivity assets. This will increase the trade competitiveness and regional cooperation. Sustainable development of the network will also be enhanced through continued policy reform and private sector participation. The investments will lead to better road safety and application of safeguards. NTCHIP will further develop capacity at National Highway Authority (NHA).

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Plan to generate 8,800 megawatts nuclear power ​*
FAISALABAD (August 29 2007): Federal government has planned to generate 8,800MW nuclear power during the next two decades. At 85 percent capacity factor, the requirement for natural uranium will be 1,600 tonnes per year in 2030, said planning commission sources.

According to official sources, exploration and mining of uranium in Pakistan will be intensified to meet projected requirements as far as possible. A matter of concern is that the current known international resources of uranium are believed to be sufficient to fuel the world wide nuclear capacity requirements only up to 2050. However, the life of uranium resources can be extended through reprocessing of spent fuel which may happen by 2030, in the form of fourth generation fast breeder reactors, sources added.

Official sources mentioned that Pakistan has built up a critical base of manpower, technology and expertise in this sector over the last thirty years, with ability to design and build small reactors. It will be necessary to expand upon this by initiating research in fast breeder reactors. Nuclear power plants are attractive in the context of the future world energy scenario.

The new designs are safer, but worries about waste management or proliferation still persist. Pakistan has proposed a new regime whereby such plants are treated as any other power plant being set up by the private sector, which can build, operate and own these plants under full IAEA safeguards, while selling the electricity generated at mutually negotiated tariffs. The supplier would be fully responsible for fuel and waste management.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*ADB to provide $350 million for renewable energy development ​* 
FAISALABAD (August 28 2007): Asian Development Bank (ADB) will provide $350 million for Renewable Energy Development - Project II and III to develop indigenous, non-polluting, and renewable sources of energy to help meet Pakistan's power shortage and diversify the power sources. It will also improve the quality of the power system, especially in rural areas.

According to ADB sources, total investments (first phase) requirement for Renewable Energy (RE) development to reach 3.5 percent target by 2015 is estimated as $2.2 billion. The proposed facility will cover up to $510 million. The rest will have to be found from various sources such as private sector, multi-lateral and bi-lateral agencies, or through public-private partnership.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan sees $10bn trade with India ​* 
Wednesday, August 29, 2007

KARACHI: Federal Minister for Foreign Affairs Khurshid M Kasuri has said that Pakistan will be establishing stronger trade ties with India which will be worth US$10 billion in the next four years.

Addressing a meeting of the Karachi Chamber of Commerce and Industry on Tuesday, he said based on the current geo-political scenario between the two countries, Pakistan would like to trade with India on a mass scale and take further steps towards friendship.

He said Pakistan expected to enhance trade and investment with China to $40 billion in the next three years and hoped the Free Trade Agreement (FTA), signed with Beijing, would bring in more foreign direct investment (FDI).

He informed the businessmen that foreign investments touched the highest-ever level of $8.4 billion in 2006-07, of which FDI alone was $5.1 billion. Remittances also surged to $5.5 billion in the year, the highest-ever figure in the countrys history.

Kasuri added Pakistan was not a blind ally of America and considered its national interests as a top priority. Conflict management is an important aspect and based on it we need to see where our higher interest lies. By fighting the war against terror, we can use it to our economic advantage that eventually benefits our common public, he added.

Pakistan sees $10bn trade with India


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## Neo

*Singapores investment in Pakistan reaches $2bn ​* 
Wednesday, August 29, 2007

SINGAPORE: Sajjad Ashraf, Pakistan High Commissioner in Singapore, has said Singaporean firms have invested almost $2 billion in Pakistan and the figure could go up to $3 billion as a result of sustained efforts in the future.

Talking to The News at the sidelines of an international seminar titled, India-Pakistan: A Peace Process, organized by the German foundation, Friedrich Ebert Stiftung (FES), he said a delegation of Singpower, an energy producing and distribution company from Singapore, led by its chief executive officer was reaching Pakistan today (Wednesday) to discuss prospects of investment.

He said the delegation was interested in investing in the electricity distribution system in Pakistan at this stage and would be visiting Karachi, Islamabad and Lahore for talks with KESC, Wapda and NEPRA authorities. The delegation would fly back to Singapore on September 1.

The three-day seminar in Singapore was organized by the German FES has brought together 16 Indian and Pakistani together for a dialogue as part of the Track-II peace diplomacy. Among the participants are retired generals and diplomats, academics and journalists.

Sajjad Ashraf said firms from Singapore until now have invested in a number of sectors including telecommunication, banking and Gawadar seaport. He said Singtel had already invested $ 785 million in telecommunication and could invest more in future. He pointed out that Singtel was a big telecommunication firm having investments in India, Mauritius, and some other countries. 

High Commissioner Sajjad Ashraf, who is due for retirement from service in November, was very optimistic about the future prospects of investment by Singaporean companies in Pakistan. He said such investment was ideal because Singapore doesnt have any political agenda in Pakistan and its firms were going there and exploring further investment because the opportunities being offered by Pakistans government were unprecedented. When asked whether the political instability and insecurity in Pakistan were being mentioned by the investors from Singapore as roadblocks in investing in the country, Sajjad Ashraf said increasingly the Singaporean firms were detaching the extraordinary investment opportunities that Pakistan was offering from the political situation and law and order problems there.

He said the Singaporeans were pragmatic people and their investors were willing to invest in Pakistan because the situation there was investment-friendly.

Singapores investment in Pakistan reaches $2bn


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## Neo

*PPIB, APL ink power plant deal ​* 
Wednesday, August 29, 2007

ISLAMABAD: The Private Power and Infrastructure Board (PPIB) has signed an Implementation Agreement (IA) with Atlas Power Limited (APL) for establishing a 225 MW power plant to be situated on the Lahore-Sheikhupura Road.

Earlier, the company had signed a Power Purchase Agreement with NTDC, and Engineering, Procurement and Construction (EPC) along with Operation and Maintenance (O&M) contracts with MAN Diesel SE Germany and MAN Diesel North America, respectively.

Maqsood Basra, CEO of APL inked the agreement on behalf of the company, while PPIB, Managing Director, Muhammad Yousuf Memon signed on behalf of the Government of Pakistan. Saquib Shirazi, Group Director Shirazi Investments and CEO of Atlas Honda Pakistan and Directors of PPIB were also present during the signing ceremony.

The power plant will use Residual Fuel Oil (RFO) with reciprocal engine technology. Targeted to start commercial operations by March

2009, the power plant is estimated to be set up at a cost of US$228 million.

This is yet another achievement, enhancing Megawatt capacity of the system for the coming years, and one of the many productive steps being taken by the Musharaff government for the economic prosperity and development of the country.

PPIB, APL ink power plant deal


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## Neo

*Govt to seek $16bn from foreign banks: Dam, power projects​*
ISLAMABAD, Aug 28: The government plans to borrow $16 billion from international banks to build Bhasha and Kalabagh dams and the Neelum-Jhelum hydroelectric power project.

Informed sources told Dawn on Monday that the decision to go to the international capital market had been taken after the World Bank and the Asian Development Bank linked the financing of the protects to consensus among the provinces. The lenders also asked the government to clarify whether there existed the fiscal space for undertaking projects of this magnitude.

The sources said the World Bank and the ADB wanted the government to first finalise feasibility studies on five mega hydropower projects  Munda, Kurrum Tangi, Akhori, Kalabagh and Bhasha dams. So far, the feasibility study on Kalabagh dam has been prepared.

A senior official at the ministry of finance told Dawn that the government had changed its strategy to arrange funding for bigger dams. Now for each dam, a separate company will be set up to raise finance. Initially, the government has decided to arrange funds worth $16 billion for the Neelum-Jhelum project and Kalabagh and Diamir-Bhasha dams, he said.

The official said the government needed $2 billion, $8 billion and $6 billion for the Neelum-Jhelum hydro project, Kalabagh and Bhasha dams, respectively.

The official said that public-private partnership would be encouraged in the proposed companies for raising funds from international banks. The government will make its equity investment in these companies, but most of the finances will be arranged by them.

Local banks and financial institutions will also be approached by the proposed companies to provide funds for building bigger dams.

The sources said that international banks would charge higher interest on the loans to be offered to the proposed companies. Moreover, the government will have to provide sovereign guarantee to the foreign banks against the loans.

The government should try to remove differences among the provinces for building mega dams and seek direct foreign loans on low mark-up from the World Bank and the ADB, analysts said.

The government could maximum think of initiating Diamir-Bhasha dam in near future because its feasibility report is likely to be completed in 2008, they added.

Diamer-Bhasha dam has been planned in the Northern Areas on the Indus river. It is located about 314km upstream of Tarbela dam and about 165km downstream of Gilgit. The dam is expected to generate 3,360MW of power.

Govt to seek $16bn from foreign banks: Dam, power projects -DAWN - Top Stories; August 29, 2007


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## Neo

Wednesday, August 29, 2007 

*Emaar to invest $2.4 billion in new project​*
KARACHI: Emaar Pakistan will invest $2.4 billion in their new real estate project Crescent Bay, located within Karachis DHA Phase VIII and in close proximity to the DHA golf course. The project will be completed in seven years, said Mohammed Al Falasi, Managing Director of Emaar Pakistan today at the inaugural ceremony of 3rd Property Asia 2007. Mr Falasi said that their goal is to create a series of exciting developments that set new standards for commercial and residential property. 

Crescent Bay will set new standards and we have planned for other cities in Pakistan also, which we will be developing over the next few years, he said.

The master planners have brought inspiration from the worlds best-designed residential communities to Pakistan, offering another Emaar signature landmark to the region, he added.

Daily Times - Leading News Resource of Pakistan


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## Introvert

*Pakistan, Bangladesh open talks on expanding ties*​
Aug 29, 2007, 14:54 GMT 

Dhaka - Senior Pakistan and Bangladeshi officials opened talks Wednesday to map a common strategy to expand trade, investment and shipping ties, diplomatic sources said. 

The talks were between visiting Pakistan's Foreign Secretary Reaz Mohammad Khan and his Bangladeshi counterpart Towhid Hossain. 

The two also discussed the possibilities of finalizing a free trade area, and focused on a direct shipping link to increase trade. The last such route stopped operating in 1987. 

Pakistan exported to Bangladesh goods worth 150 million dollars and imported from Bangladesh goods of about 57 million in 2005-06. 

The two countries held their last bilateral meeting at the foreign secretary level two years ago.

Pakistan, Bangladesh open talks on expanding ties - South Asia


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## Bushroda

*Rivalry with India cause of poor Pak economy: US expert* 
Thursday, August 30, 2007
By Javed Afridi

PESHAWAR: Walter Russell Mead, a US foreign policy expert, has linked Pakistans poor economic condition to its rivalry with India ever since its independence in 1947 and successive military regimes in the country.

The rivalry that dogged Pakistan after partition led to misallocation of funds to the army on the pretext of keeping itself at par with India, militarily and caused political and economic disturbances, Mead, a senior fellow at the council on Foreign Relations at USA said while speaking at the Institute of Management Sciences and later at the Peshawar Press Club Wednesday.

Advocating against what he termed as militarisation of economic policies, Mead opined that Pakistans military bureaucracy needed to understand that its current approach was unsustain-able.

He was of the view that India had access to the very best of weapons available in the world, for which it did not have to suffer much owning to the volume of its economy, while on the other hand, Pakistan had to use the fund for the purpose that were direly needed for its development. 

Pakistan needs to get out of this vicious circle, he said.

The expert refused to accept any US role in strengthening military regimes in Pakistan and that he was surprised to see the apprehension deep rooted in Pakistani nation. 

He said that it was something they did not hear about in the United States, saying people there did not believe US interests lay in supporting dictatorial rules in any other country. 

I do accept that the periods of US interaction with this country happened to coincide with military governments here, but perhaps, it is because of the prolonged and repeated military rules in Pakistan, he said.

He believed that in instances such as 9/11, the US government had to negotiate with the incumbent government in Pakistan to seek its support for the war of terror. 

The Americans did not have any choice. The military government in Pakistan was the only option available to them, Mead advocated amid repeated assertions that he was not an employee of the US government and that he did not want to speak for the US government; but a government servant would not have done it any better.

Mead held that availability of cheap labour was not something to cheer about, saying the world had enormous number of cheap labour and instead stressed the need for skilled labour for countries like Pakistan.

He said that Pakistan needed to regulate its financial system where institutions such as banks were not blocked by political entities. 

He lauded the role of IMS, saying the country needed more such institutions that tell the students to walk through the open door of opportunities available to the present day world.

Mead writes for the Los Angeles Times on international affairs, where he is a contributing editor and contributes articles and books reviews to leading newspapers and magazines including the New York Times, Wall Street Journal, International Herald Tribute, Washington Post and Financial Times.

He has authored a number of books including Special Providence, which won the Lionel Gelber Award in 2002 and Power, Terror, Peace and War.


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## Neo

What a huge load of crap Mr Mead, what century are you in? 

First of all comparing India with Pakistan is like apples and oranges, India inherrited lionstake of the industrial infrastructure whereas Pakistan had to start from scratch and yes arming our forces has always been a major priority to us since we have to deal with atleast two hostile neighbors, one of which even introduced nuclear weapons into the region.

I'll agree with the fact that during first five decades of our existance we could have done better in terms of economic development but we're well on course since the turn of the century. Lot of funds are being pumped into the economy and we've sustained high growth for the last 6 consecutive years.
It took India 15 years to build in infrastructure for sustained growth of arround 8% (last 3 years), we're not far behind...
So my guess is that Mr. Mead has been in hybernation for the last 6-7 years to come up with this bias report.  

As far Mr. Meads military views are concerned, he can't be more naive! US has had a history of supporting military regimes in Pakistan and all arround the world.

Coincidence is a fools definition of destiny!


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## Neo

*Services import bill touches $8.25bn in 07​*
KARACHI, Aug 29: Pakistans imbalance in import-export of services during the outgoing fiscal 2006-07 showed a slight improvement to $4.13 billion from $4.43 billion in 2005-06.

An inflow of $1.2 billion on account of logistic support being offered to foreign countries in fight against international terrorism is one of the main contributing factors.

Official statistics show that total import bill of services went up to $8.25 billion in 2006-07 from $8.19 billion. As against this, export of services generated an inflow of $4.12 billion last fiscal compared to $3.76bn in 2005-06.

Sources in insurance, IT and banks are confident of pushing up export of services to $5 billion a year in a next few years provided the government gives some support to local business and services in expanding their network in the foreign countries.Shipping remains an untapped area, argued a market watcher who said development of a national fleet will curtail expenditure of more than $3 billion of freight being given to foreign shipping lines for our international trade. Shipping has a potential to earn a big freight revenue, he said.

In 2006-07, the government services generated the highest amount of foreign exchange that amounted to $1.84bn as against $1.66 billion a year earlier.

The logistic support being given to foreign countries contributed $1.24 billion in the last fiscal as against a little over $1 billion in 2005-06.

Transportation services netted over $1 billion, followed by $459 billion obtained from business services in foreign countries.

Visitors to Pakistan  tourists and businessmen  contributed $274 million, followed by $121 million from communications services abroad.

Pakistans construction services abroad showed an impressive growth to $74 million in 2006-07 from $16 million a year ago showing more than four times rise.

Insurance services yield was $30 million, financial services $81 million, and computer and IT $107 million. On the import side, transportation claimed $3.12 billion in 2006-07, up from $2.81 billion in 2005-06.

Foreign travel cost Pakistan $1.62 billion while communications services claimed $98b, construction services $55 million, insurance services $125 million, financial services $135 million, computer and IT $90 million.

Pakistan has to pay $115 million royalties and licence fee and $326 million for government services. The business services took away $2.55 billion while government services cost $326 million.

In overall import-export of goods and services, Pakistan suffered a total imbalance of $13.99 billion in 2006-07, up from $12.87 billion in 2005-06.

The import bill for goods and services amounted to $35.22 billion last fiscal as against export earnings of $21.22 billion from goods and services.

A year earlier in 2005-06, total import bill of goods and services was worth $33.19 billion as against export worth of $20.33 billion.

The current account foreign exchange deficit during 2006-07 was financed to a large extent by remittances, GDRs, FDIs and privatisation proceeds.

Market watchers predict hard days for plugging current account deficit in the current fiscal year because privatisation has come to an almost abrupt halt, and probably environment is not that favourable for GDRs as it was in last fiscal. Expansion in trade imbalance of goods and services is bound to bring Pakistani currency under pressure in the current fiscal year.

Services import bill touches $8.25bn in 07 -DAWN - Business; August 30, 2007


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## Neo

*Export of textile products up​*
ISLAMABAD, Aug 29: Export of textile products went up by 8.47 per cent during the first month of the current fiscal year to $951.937 million as against $877.635 million over the same month of last year.

This unprecedented growth in textile and clothing exports has pushed up overall export proceeds to $1.485 billion in July 2007 as against $1.342m over the same month last year, indicating a growth of 10.73 per cent.

The average per month growth in textile products was around five per cent during the whole year of 2006-07. However, total export growth remained less than four per cent during the same year.

Analysts said in case the same momentum of growth in textile and clothing is maintained during upcoming months, export target of $19.2 billion could be easily achieved.

However, it depends on exporters capabilities to market their products in a better way rather than selling their products at cheaper rate even from those coming from Bangladesh, India and China in the international market.

The product-wise details showed that export of almost all products, excluding cotton cloth, bedwear, towels and tents recorded a substantial growth during the first month of the current fiscal year over last year.

Official figures released here by the Federal Bureau of Statistics (FBS) showed that export of readymade garments witnessed a growth of 5.10pc to $125.816m in July of the current fiscal year as against $119.714 million over the same month last year.

Statistics showed that export of knitwear also recorded a growth of 17.07 per cent during the month under review to $203.137 million as against $173.518m over the same month last year.

Export of raw cotton, cotton yarn, cotton carded and yarn other than cotton yarn recorded a growth by 165.68 per cent, 8.58 per cent, 0.74 per cent and 42.18 per cent, respectively, during the month of July over the same month last year.

Export of cotton cloth and tents dipped by 8.01pc, bedwear 17.75pc, towels 14.31pc, tents, canvas 21.78pc during the month under review over last year.

The statistics showed that export of art, silk and synthetic textile up by 324.92 per cent, made up articles 58.18 per cent and other textile material 112.34 per cent during the month of July over the same month last year.

Export of textile products up -DAWN - Business; August 30, 2007


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## Neo

*175MW unit to be set up in Dharki​*
ISLAMABAD, Aug 29: The Private Power and Infrastructure Board (PPIB) has signed an implementation agreement (IA) with Foundation Power Company Dharki Ltd for establishing a 175MW power plant.

The power plant to be built in Dharki, district Ghotki, will commence its commercial operations by September 2009. The plant is estimated to be set up at a cost of $132 million.

The Foundation Power, a special purpose company formed by the Fauji Foundation, had initialled the power purchase agreement with Wapda, NTDC, and a gas supply agreement with Mari Gas Company.

Brig (retd.) Rahat Khan, director P&D Fauji Foundation signed the agreement on behalf of the company, while Muhammad Yousuf Memon, managing director PPIB signed on behalf of the government of Pakistan.

The power plant will use 560BTU raw gas from Mari Deep gas field as fuel and will apply a combined cycle technology.

Demand for energy is growing rapidly with the growth in economy and the liberal policies of the government have greatly encouraged private sector participation in the power sector, market sources said.

175MW unit to be set up in Dharki -DAWN - Business; August 30, 2007


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## Neo

*Small farmers get Rs6.7bn ​* 
Thursday, August 30, 2007

LAHORE: In order to achieve the objectives of Green Punjab, the provincial government has distributed Rs6.73 billion among small farmers for the purchase of agriculture inputs in the last three months through one-window operation.

This was disclosed by the Punjab Minister for Revenue and Relief Gul Hameed Khan Rokhari while talking to a delegation of progressive farmers in his office on Wednesday.

He said the provincial government was focusing on resolving the issues of the small farmers in order to generate a green revolution through increase in agriculture production.

He said a network of farm-to-market roads had been laid in Punjab and even small villages were connected with the markets. This, he added, would enable the farmers to transport their produce to the market and get real prices of their products.

He said for the first time in the history of Punjab a separate department of agriculture marketing had been established to facilitate the farmers.

He said the government had taken various steps to save the farmers community from Patwaris, adding flat water rates had been introduced, besides giving 50 per cent concession in water rates to tail-end farmers. 

Small farmers get Rs6.7bn


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## Neo

*2020 being drafted for industry development ​* 
Thursday, August 30, 2007

LAHORE: The Engineering Development Board (EDB) is drafting Chemical Vision 2020 for the development and progress of the chemical industry which will also contain an action plan for implementation and will be prepared by mid-January 2008. 

Chairing a meeting of stakeholders of the chemical industry here on Wednesday, EDB General Manager (Policy) Zahid J Yaqub said the board wants guidance and inputs of the industry as the vision will be made and owned by the industry. 

In order to achieve this goal, the EDB has started consultations with the industry and organised a series of meetings with stakeholders at Lahore and Karachi. Later, a day-long workshop will be organised at Islamabad in October, he said. 

He said a roadmap with data such as energy consumption, tax paid, export figures etc was necessary to make progress in preparations of the Vision 2020. 

The EDB is commencing a survey and will send teams to manufacturing units soon for collection of data. He appealed to the industry to extend necessary cooperation as it will be beneficial for them. 

He assured the data will not be shared with any other agency. The package of suggestions made by the representatives of the chemical industry includes tariff protection, availability of skilled manpower, infrastructure development, improved industry, university linkages, reduction in cost of doing businesses in Pakistan, curbs on smuggling, check on under-invoicing and awareness of the problems of the industry. 

Majority of participants supported the idea of R&D development fund for the chemical industry on the pattern of textile industry. The meeting decided to appoint Ch M Sadiq, Director, Descon Chemical Ltd, as focal person of industry for preparation of the Vision 2020. It also decided to form Chemical Manufacturing Association in order to provide a platform to the industry for taking up issues with the government. 

A three-member committee headed by Mian Mohammad Adrees of Sitara Chemical was formed to complete formalities in this regard. Later, a three-member team of EDB, headed by Yaqub, visited the factory of Pakistan Cycle Industrial Co-operative Society Ltd (PCICS) situated 28 kilometer away from Lahore. 

The team went around various shops of the factory in four hours visit and discussed the future of the cycle industry in the country with the management. 

PCICS Chairman Mohammad Akram Sheikh said the Pakistani cycle industry has been given new lease of life with zero-rated sales tax in the current budget. 

He said reduction in duty has also scaled up the import of cycles in the country but the local industry is competing. 

However, he said the menace of under-invoicing was badly affecting them. He said various parts of cycle were being imported at much below the cost of its single component. 

He paid tributes to the EDB for its efforts to get the required relief from the government. He said the sale of products was increasing since then and currently, it has reached 2,000 units as against 500 units in June 2007. 

He highlighted the responsible corporate nature of the organisation and said 20 blind workers were provided jobs in the factory and a full-fledged hospital was serving people of the area without any fee.

2020 being drafted for industry development


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## Neo

*Economic zones being created to facilitate investors ​* 
Thursday, August 30, 2007

ISLAMABAD: The Federal Minister for Privatisation, Muhammad Wasi Zafar on Wednesday termed privatisation a cornerstone of economic reforms and stated the government was in the process of creating special economic zones, industrial estates and value-added cities in the country to facilitate investors.

Addressing a group of 71 participants of the 87th National Management Course of National School of Public Policy on the privatisation and investment policies he said that in a bid to facilitate and encourage investors, two value-added cities are being planned in Faisalabad and one at Multan-Lahore Road, said a news statement issued here. 

Elucidating the salient features of the Privatisation Policy, the minister stated that it sought to reduce the governments role in doing business and to confine its role to policy making, providing good governance, effective regulatory framework and enabling environment including physical and technical infrastructure.

Simultaneously it sought to encourage and promote private sector as engine of growth, he said. 

He informed that after the promulgation of the Privatisation Commission Ordinance 2000 by the present government, the privatisation proceeds were being utilised 90 per cent for debt retirement and 10 per cent for poverty alleviation.

Economic zones being created to facilitate investors


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## Neo

*Uncertainty may derail economic growth: experts ​*
KARACHI (August 30 2007): Political uncertainty in the country may derail the pace of economic growth, which has been brought back to the track after a hectic exercise of at least five years, economists and a top economic manager of the country believe.

The economic decision-makers of the country are watching the day to day changes in the political scenario, and believe that if this episode does not end in the next few weeks, efforts to bring back the country's economic growth rate to the positive track may be hampered.

Referring to the country political instability for the last two months and rumours of imposition of emergency, martial law, dissolution of the National Assembly, have panicked local businessmen and foreign investors.

"Definitely, stock markets and economy of any country linked with political circumstances, said Advisor to the Prime Minister on Finance Dr Salman Shah over phone from Islamabad. He was of the view that current political situation would hurt the country's economy growth, and feared that exports might shrink.

He said that during the last few weeks, the country's stock markets had bearish trend by over 2000 paints, but now the markets were moving upward after dialogues between the government and various political parties.

The government had started dialogue with the political parties with a view to stabilising the economy, besides strengthening democracy, he said. Dr Salman Shah said: "The re-election of President General Pervez Musharraf will also determine the country's political and economic fate".

The continued political crisis could force the international buyers to place their export orders in other countries for on time delivery, he added. He said that any deadlock in the current political dialogues would undermine the country's economy, and added the government was striving to make things clear before the foreign investors.

"If the political fight continues in line with the code of conduct of Election Commission of Pakistan and demonstration of street power are avoided, then it is still believed that the economy will continue to thrive, the Advisor added.

"The current political battle is still under control and political fight among the government and opposition parties has not yet come on the streets," said Muzamil Aslam, an economist.

He said that the foreign investors were now taking back their capital and external flows of investment had also witnessed a decline of some 200 million dollars during July-August.

"Presently, we have seen political fight, which remained limited only to media and the assemblies, which could spill over to roads soon after the arrival of exiled political leaders in the country," he pointed out. Further decline was also expected in the foreign inflows, which could also affect the current account deficit, he added.

"The present political situation and crisis is damaging the country's image abroad and our importers are now reluctant to place orders," said Zubair Motiwala, a leading exporter. Referring to special travel advisories, issued by different countries advising their citizens to avoid travelling to Pakistan, he said some potential importers had cancelled their routine visits to Pakistan.

"Now we are facing the same situation which the Bangladeshi exporters faced last year, when general election campaigns started, creating political turmoil and violence.

As a result, export orders of Bangladesh were diverted to Pakistan, which spurred the country's exports significantly up, he said. He said that the letters of credit opened for 90 days, but now it was difficult to predict about the future of export orders, he added.

"Importer don't want to disturb their supply line, keeping in view the coming Christmas season, " Motiwala said, adding that the importers might turn to the neighbouring country to keep the supply chain intact till the Christmas.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Banking on profits, the sector keeps growing​*
KARACHI: The countrys banking sector continues to post strong growth in its profitability by pocketing huge sum of profits during the first half of current year registering substantial increase in their interest and non-interest incomes.

Reports on the profitability of the banking sector prepared by two brokerage houses show growth in the profits of the sector but the two reports differ on the magnitude of the profit. 

According to the report prepared by First Capital Research, 25 banks are listed at Karachi Stock Exchange (KSE), which represent 91 percent and 94 percent of total banking sectors assets and deposits, respectively.

Out of these, 23 banks posted 42 percent growth in first half of 2007 in their profits and in absolute terms the profitability of these banks totalled Rs 49.7 billion during this period. Net interest income of listed banks was recorded at Rs 88 billion during the period under review, which is 20 percent higher and analysts attribute this relatively low growth to a higher base effect.

Moreover, dull growth of three percent in advances was also a reason behind this, besides margins of the sector remained stable in the period under review, analyst Muhammad Imran noted. 

Banking sector average spread during first five months of current year increased by only 8 bps over the corresponding period of last year. Whereas the non-interest income of the banks witnessed an impressive growth of 74 percent, huge capital gains due to bullish market during this period also supported in this regard. 

Habib Bank Ltd (HBL)s one-time fair value adjustments of associates and joint venture of Rs 10.5 billion augmented gain on investments head sharply and this income segment recorded a growth of 589 percent, Imran said.

Fee, commission and brokerage income also depicted a healthy growth of 27 percent to Rs 16.8 billion.

On the other hand, Jahangir Siddiqui Global Capitals report puts the profitability of the banking sector at Rs 42.7 billion depicting 22 percent growth in the first half of 2007, however JS report excluded HBL from their calculation of banking sector profitability which is in the process of listing at the stock market. 

Growth in earnings was mainly driven by non-interest income, which went up by 32 percent to Rs 31.5 billion while bottom-line growth was supported by banks net interest income as it depicted 20 percent growth to Rs 88.4bn (or $1.5billion) from Rs 73.4 billion (or $1.2billion) in same period of last year.

A break-up of the sector shows that National Bank posted 12 percent growth in its net profit during the period under review, MCB Bank 33 percent, Habib Bank 50 percent, United Bank 20 percent, Allied bank 22 percent, Standard Chartered four percent, Bank of Punjab 49 percent etc.

The share of banks in stock market capitalisation is Rs 1027 billion ($16,886 million) having weightage of 27.07 percent in the KSE-100 index.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Vision 2020 for development of chemical industry​*
ISLAMABAD: The Engineering Development Board (EDB) is in the process of drafting Chemical Vision 2020 for the development and progress of chemical industry. 

The document will also contain an action plan for its implementation. The vision will be ready by mid January 2008. 

This was revealed by Zahid J. Yaqub, General Manager (Policy) EDB in a meeting here on Wednesday with the stakeholders of the chemical industry. He said that the EDB wants guidance and inputs of the industry as the vision will be made and owned by the industry. In order to achieve this goal, the EDB has started consultations with the industry and has organised a series of meetings with stakeholders at Islamabad and Karachi. 

Mr Yaqub said that a road map with data such as energy consumption, tax paid, export figures etc. were necessary to make progress in preparations of the vision 2020. The EDB is starting a survey and will send teams to manufacturing units soon for the collection of data. He appealed to the industry to extend necessary cooperation, as it will be beneficial for them. He assured that the data would not be shared with any other agency. The package of suggestions made by the representatives of chemical industry includes tariff protection, availability of skilled man-power, infrastructure development, improved industry  university linkages, reduction in cost of doing businesses in Pakistan, curbs on smuggling, check on under invoicing and awareness of the problems of the industry. 

Majority of the participants supported the idea of R&D fund for the chemical industry on the pattern of textile industry. However, Zahid Yaqub out- rightly rejected the idea in the light of recent cabinet instructions that no such proposal should be made in future. The meeting decided to appoint Ch. M. Sadiq, Director, Descon Chemical Ltd, as focal person of industry for preparation of Vision 2020. It also decided to form Chemical Manufacturing Association in order to provide a platform to the industry for taking up issues with the government. A three-member committee headed by Mian Mohammad Adrees of Sitara Chemical was formed to complete formalities in this regard. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*More reservoirs needed to meet power demand: Wapda ​*
LAHORE (August 30 2007): Pakistan needs construction of more than one mega water reservoirs to meet rapidly increasing demand of electricity and have sufficient water available for its agriculture sector. This was stated by Wapda Member (water) Muhammad Mushtaq Chaudhry while briefing a delegation of the second senior management course of the National Management College in Lahore here at Wapda House on Wednesday.

Wapda Member (finance) Chaudhry Abdul Qadeer and other Authority senior officers were also present. Addressing the delegation, Mushtaq said that increasing population and depleting storage capacity of the water reservoirs in Pakistan call for constructing more than one mega dams. He said that another 22.5 million acres of virgin land could be brought under plough in the country if new mega dams are constructed.

He said Pakistan had already lost water storage capacity by 28 percent, which has now come down to 13.17 million acres feet (MAF) from 18.37 MAF. He said that an average of 32.81 MAF of water escapes downstream Kotri Barrage annually since 1976.

Mushtaq informed the audience that Pakistan is heading towards a situation of being water-strapped country, as per capita water availability has already reduced to an alarming figure of 1100 cubic meters in 2006.

Referring to the development projects being executed by Wapda in the water sector, Mushtaq said water filling in the raised Mangla Dam would start from April 2008. On completion of raising, additional 2.9 MAF of water would be made available to the country.

He hoped that Phase-I of Greater Thal Canal and Kachhi Canal projects would be completed by December 2008. Responding to a question, he said that Wapda is vigorously carrying out studies of as many as 11 mega hydropower projects with a total capacity of more than 10,000 MW of electricity.

He said that contract for construction of 969-MW Neelum-Jhelum Hydropower Project has been awarded while Kohala and Golen Gol Hydropower projects with the generation capacity of 1100 MW and 106 MW respectively will soon be available for implementation.

Business Recorder [Pakistan's First Financial Daily]


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## Introvert

*118,000 tons of mangoes exported*​
By Our Staff Reporter

LAHORE, Aug 30: Pakistan has so far exported 118,000 tons of mangoes, 18,000 tons more than its original target of 100,000 tons and only 2,000 tons less than enhanced target of 120,000 tons.

According to sources in the Customs, the export is still in full swing and, if present pace is something to go by, it may cross 140,000 tons. The exports have mainly gone to the UAE, Saudi Arabia and other Gulf and Far Eastern countries and the European markets.

The mango export formally started on May 20 this year and may extend to mid-September. That means there are still over two weeks to go, and may cross 140,000 tons.

Commenting on the situation, officials of Pakistan Horticulture Development and Export Board (PHDEB) say that 118,000 tons could have fetched around $38 million. The total export of 120,000 tons is expected to bring around $40 million. If figures crosses 140,000 tons, another $7 to $8 million could be added to the tally.

118,000 tons of mangoes exported -DAWN - Business; August 31, 2007


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## Moin91

*Work on new steel mill starts*


Friday, August 31, 2007
By our correspondent

KARACHI: Steel production is vital for the development of Pakistan, said Governor Sindh, Dr Ishrat-ul-Ibad at the ground breaking ceremony of Aisha Steel Mills on Thursday.

The project will provide 1500 direct and indirect jobs and will help reduce steel imports of the country, said Hasib Rehman, CEO Aisha Steel Mills Limited.

Aisha Steel Mills was incorporated in May 2005 at Bin Qasim at a cost of US $100m to manufacture cold rolled coils for automobiles, engineering and domestic appliances industries. The initial capacity of the project is 220,000 tonnes which will be expanded to 350,000 tonnes in the second phase.

The sponsors of the projects are a mix of foreign and local financial group namely Universal Metal Corp (UMC), Japan, Metal One Corp, Japan (a subsidiary of Mitsubishi Corp & Sojitz Corp, Japan) and Arif Habib Securities Limited (AHS).

UMC, MOC, AHS will invest 49 per cent, 26 per cent and 25 per cent equity in the equity of the company. 

Japanese Ambassador, Seiji Kojima speaking on the occasion said the corporate sector in Pakistan must come up with the latest technology; we are ready to do more joint ventures with Pakistan.

Earlier Japanese investment was restricted to automobiles and financial sectors but now new investment in the steel sector are being explored, there is much to gain by bilateral trade ventures between Japan and Pakistan, he added.


Work on new steel mill starts


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## Neo

*Government reluctant to release household integrated economic survey ​* 
ISLAMABAD (August 31 2007): The government is reluctant to release Household Integrated Economic Survey (HIES), an indicator showing impact of on-going government polices on the masses particularly the poor, sources told Business Recorder on Thursday.

It was learnt that the Federal Bureau of Statistics has stopped printing of the survey, which had to be released along with Pakistan Social and Living Standards Measurement survey (PSLM) in July 2007. At the time of releasing PSLM it was said that HIES would be released shortly but is yet to be released after elapsing one and half month.

When asked, a Director in the FBS did not deny rather said Khalid Mehmood, Deputy Director General is the right person to be asked such questions. This scribe failed to get in touch with the DDG despite many attempts. The delay in releasing survey was creating doubts, as it would provide important data on household income, consumption expenditure and consumption pattern at national and provincial level with urban/rural breakdown.

Sources said that the survey would reveal consumption patterns among different income classes and would have given details that how the lowest income group was grappling to meet both the ends at a time of double digit inflation.

It would have also given details that whether poor are left with some amount to pay for their children education after spending on food items, they added. It would have showed that how much the poor spend on their income on food expenditure vis-à-vis to the rich.

The FBS had released the PSLM excluding income and expenditure report showing poverty trend with the objectives to provide detailed outcome indicators of the government programs on social sector as well as income and expenditure for future policies.

The data of the PSLM has been released on education, health, immunisation, pre and post-natal care and population welfare in 2005-06, which is the second round of a series of surveys planned to be conducted up to 2009.

The PSLM as well as HIES are the main tools used for monitoring the implementation of the PRSP and MDGs. These provide population-based estimates of social indicators and their progress under Poverty Reduction Strategy Paper (PRSP).

Business Recorder [Pakistan's First Financial Daily]


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## Neo

* China - specific economic zones to attract FDI: PM​* 
Saturday, September 01, 2007

ISLAMABAD: Prime Minister Shaukat Aziz Friday said the establishment of China-specific Special Economic Zones (SEZs) would attract substantial Foreign Direct Investment (FDI) in the manufacturing sector and help enhance exports from Pakistan.

He was chairing a high level meeting which approved in principle the exemption of duties on the import of machinery for SEZs here at Prime Minister House.

The Prime Minister said the setting up of China Specific SEZs would usher in a new era of economic activities in the country and help generate thousands of new jobs and improve living standards of people.

The Prime Minister said both Pakistan and China are working actively to expand their trade and economic ties for which all the required ingredients to achieve this objective are in place.

He said China Specific Economic Zone is an important initiative of the leadership of the two countries.

Prime Minister said Pakistan and China are strategic partners and enjoy a multifaceted relationship, which covers a broad spectrum of areas including trade, investment, security defence, health and education.

There are yet numerous opportunities to further enhance the economic and trade relations between the two countries.

Earlier, Secretary Commerce in his presentation highlighted the salient features of SEZs and briefed the meeting that these economic zones are being established under the Free Trade Agreement (FTA) between Pakistan and China and all goods manufactured in these zones will have tariff free entry into Chinese market.

He also mentioned that the business ventures would be based on partnerships with the Pakistani businessmen.

The meeting was attended by the Minister for Commerce Humayun Akhtar Khan, Deputy Chairman Planning Commission, Dr. Akram Sheikh, Chairman CBR, Abdullah Yousaf, concerned Federal Secretaries and senior officials.

China - specific economic zones to attract FDI: PM


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## Neo

*Pakistan-Bangladesh trade to be raised to $1 billion ​*
DHAKA (August 31 2007): Pakistan has agreed to sell rice to Bangladesh as part of efforts to raise annual bilateral trade to $1.0 billion, officials of the two countries said on Thursday, after a two-day meeting in Dhaka. But the meeting made no headway on the repatriation of around 300,000 Urdu-speaking Pakistanis stranded in Bangladesh for 36 years.

"We export 1.5 million tonnes of rice annually," said Pakistan foreign secretary Riaz Mohammad Khan. "We can sell coarse rice to Bangladesh to meet its immediate import requirements and also to boost trade between us," he told reporters. Current annual trade between the two countries totals around $350 million, officials said.

Bangladesh will import 450,000 tonnes of rice and 350,000 tonnes of wheat the 2007-08 fiscal year (July-June) to meet domestic demands, partly pushed up by recent floods that damaged rice and other crops with $500 million, officials said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*PIA losses up 20pc in first half ​* 
Saturday, September 01, 2007

KARACHI: Pakistan International Airlines (PIA) on Friday reported an after-tax loss of Rs7.7 billion in first half of 2007 up 20 per cent from Rs6.7 billion incurred in same period of last year.

Total sales revenue increase by 4 per cent supported by passenger revenue growth of 7.1 per cent, which was partially offset by a 12.6 per cent drop in cargo revenue, the airline said.

An operating loss of Rs4.3 billion up 3 per cent than last year was incurred as operating costs excluding fuel increased by 17 per cent primarily reflecting the impact of 2006 salary hike, the increase in depreciation and lease rentals of new aircraft, it added. 

While the share of PIA in the domestic market remained unchanged at 69 per cent, share in the international market declined 3 per cent to 46 per cent due to intense competition from regional airlines and some capacity limitations on account of EU action. 

Total fuel cost showed a 13 per cent decline due to lower quantities consumed in part due to utilization of newer fuel-efficient aircraft. 

The airline said fuel-hedging arrangements have been finalized with two international banks, which would be undertaken as soon as a sensible price opportunity arises. 

PIA is already engaged in cost-cutting steps including the closure of lost-making routes. It said the restructuring plan envisaging rescheduling of debt is progressing on schedule and completion is expected before yearend. 

PIA losses up 20pc in first half


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## Neo

*Advantage of globalisation: Pakistan needs to act towards good governance ​*
ISLAMABAD (August 31 2007): Inaamul Haq, a former Federal Secretary, has said that poverty could not be attacked without eliminating injustices and inequalities. "Poverty is intimately connected with tyranny; once you give people the exercise of freedom and equal opportunities, poverty would gradually go down the hill," he stressed.

We can attack poverty only when we learn to prioritise the principles of development economics, he added. Inaamul Haque, who has been associated with development policy formulation for 40 years, held that in the past the government had given priority to growth economics, which is necessary but not sufficient. There were rapid inequalities during period of rapid growth."

Speaking on the international implications of globalisation, which is irreversible, Inaamul Haq opined that "to take advantage of globalisation, Pakistan needs to act towards good governance instead of making speeches."

Inaamul Haque referred to the message implicit in a recent study said that Pakistan must do more for 80 percent or more of our working women who lived below the poverty line.

Inaamul Haq who was a former chairman of Export Promotion Board and also did a stint at the World Bank, was speaking in a seminar on 'Globalisation and International Dimensions of Development' held at the Pakistan Institute for Development Economics on Thursday. Dr Rehana Siddiqui, Director of PIDE, chaired the seminar held in the series 'Nurturing Our Minds.' Globalisation, which he said had become irreversible, has made underdeveloped countries conscious of dichotomies in the world.

An example of this could be sought in goods that were not manufactured at one place now. Instead, a number of components of the same goods were fabricated in several different countries.

The country has some responsibility to proceed with globalisation. 'You could not any thing substantial in the process without adopting good governance, or without fighting corruption. The state has to become a regulatory body. Inaamul Haque also gave tips for making substantial gain in the globalisation process, such as increase private capital inflows, take measures toward achieving national and international financial stability and improve investment climate to attract substantial international foreign investment.

As an illustration he referred to the case of IPPs. They were charging high cost for electricity because of faulty mechanism and also because investment climate was bad at that time.

In this regard he questioned foreign investment of the type of MacDonalds' and KFC,' which he pointed out was not the ideal type of investment. In this regard he cited the case of import of computers when the late Ghulam Ishaque Khan was the finance minister because the country was short of foreign exchange at that time and we had to import main frame of computers. Besides, GIK thought computers would increase unemployment.

Inaamul Haque thought trade was a key factor in poverty reduction and therefore, he put a lot of emphasis on Pakistan increasing trade, rather than depending on foreign aid.

However, Pakistan must fight high tariff barriers. Helpful laws were available to combat selective trade indulged in by the developed countries which charge a lot of tariff while exporting but give less to developing countries.

However, the Doha development agenda has at least given developing countries a sense of the lack of balance perpetrated in international trade imports by the developed countries. In conclusion, Inamul Haque suggested that the country needed autonomy in shaping a strong monetary policy and giving independent status to the State Bank.

'Things are changing now for the better, but there was a time when the State Bank Governor would be tied up with attending government meetings. He was also of the view that the financial position of the country had improved in the last ten years.

His concluding message to economists who were in the audience: Pakistan must step up its trade and do its best in removing trade barriers, and must adopt a vision, improve implementation gap to take advantage of the age of globalisation. 'To take advantage of globalisation Pakistan needs to act towards good governance instead of making speeches'.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pak farm produce among best in world ​* 
Saturday, September 01, 2007

LAHORE: Agriculture is a very strong area for collaboration between Pakistan and France as Pakistans agricultural products are among the best in the world and it deserves to be one of the top exporting countries of agriculture, horticulture, dairy, livestock and food products.

This was stated by the French Commercial Consular Madam Brigitte Bouvet while speaking at the Lahore Chamber of Commerce and Industry on Friday. LCCI President Shahid Hassan Sheikh, former presidents Ilyas M Chaudhry, Mian Misbah-ur-Rehman and head of the LCCI delegation to France Kashif Younas Mehar also spoke on the occasion.

The French commercial consular said that there were a number of other sectors where both sides could initiate joint ventures to take the existing volume of bilateral trade to new heights.

She said that French technology and equipment would help exploit Pakistans full potential in agriculture, dairy and food processing sectors. The diplomat also appreciated the Lahore Chamber of Commerce and Industry for its efforts aimed at increasing collaboration between the business communities of the two countries. Speaking on the occasion, LCCI President Shahid Hassan Sheikh urged the French diplomat to consider increasing imports from Pakistan as Pakistan has a traditional edge in textiles, sports goods, leather products, carpets, cereals (rice), fruits and vegetables over a number of other countries. He said French multinationals have maintained a visible presence in Pakistan in various sectors like pharmaceuticals and chemicals, telecommunication equipment, oil marketing textiles and food processing.

The LCCI President said that the Lahore Chamber of Commerce and Industry was ready to ink a Memorandum of Understanding with the Chamber of Commerce in France to increase the level of information exchange between the two countries. He also informed the French diplomat that Pakistan presently is running short of electricity and French companies could benefit by availing opportunities in this sector.

He said that major areas where France and Pakistan can work together include telecommunication, automobiles, shipbuilding and automotive parts, defence equipment, oil and gas exploration, infrastructure, textiles, garments, leather products, electrical and electronics appliances, fruits and vegetables, livestock and dairy, fisheries, horticulture, storage facilities for agro-products and cool chains.

Any investment made in Pakistan will find ready markets not only in Pakistan but Central Asian States, China and other regional countries too. Pakistan Railways also intends to lease out facilities to the private sector. France may be interested in this offer also.

He said that although Pakistan is the 5th largest producer of milk in the world, the current industry is inadequate to meet the growing demand for milk and other dairy related products.

ADEPTA (French Association for the Development of International Exchanges of Food, Agricultural products and Technologies) can play a crucial role in this regard.

The LCCI President informed the diplomat that Investment cycle is gaining momentum. Foreign investment has almost tripled. Pakistans stock market is one of the best performing markets of the world. It has outperformed the markets of Malaysia, India, Indonesia, Egypt and Turkey. The openness of Governments policies and transparency in transactions is attracting higher investments and Pakistan is geared to become a regional hub for trade and manufacturing. Pakistan is also destined to serve as an energy and trade corridor for Central Asian States and China.

Pak farm produce among best in world


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## Neo

*Fundamentals of economy strong: report ​* 
Saturday, September 01, 2007

KARACHI: The fundamentals of the Pakistan economy are now strong enough to be backtracked by any changes in future political set-up in the country, stated Ovais Siddiqui, head of Research at JS Global Capital, in his report.

Pakistan is in the midst of a political crisis. Restoration of the Chief Justice of Pakistan last month caught General Musharraf off guard and now he is in a tight corner against the backdrop of upcoming presidential elections. We feel that the next few weeks are very crucial and would set the stage for some major changes in the post-election political set-up in the country.

Economic benefits of several years of structural reforms and successful privatisation program are not likely to fade away in the face of this crisis.

In fact, the hallmarks of economic policies under Musharraf rule more or less mirror the broad economic objectives of previous governments led by Benazir Bhutto and Nawaz Sharif. So, if these leaders come into power, there is a strong likelihood that there would be no major change in the current economic policies.

Currently, Musharraf does not enjoy the luxury of having many options to get himself out of this problem. 

The most likely future scenario (70 per cent probability) is an agreement of Musharraf with Bhutto, leading to re-elect Musharraf as civilian President. He would be sharing power with Bhutto who would likely be the next Prime Minister.

In the second scenario (probability 15 per cent), he could go for imposing emergency on the country. This may lead to martial law, if the Supreme Court annuls emergency for its no solid justification.

In the third scenario (probability 15 per cent), there would be no deal and Musharraf would proceed with his original plan to get himself re-elected with uniform. 

However, this would be challenged in the Supreme Court, which would give decision against him, forcing him to resign from the post of President and Army Chief positions. 

Later on, general elections would be held and either Bhuttos PPP or Sharifs PML-N would win elections.

In the most likely scenario where an agreement is struck between Musharraf and Bhutto, investors would be very excited, leading to even re-rating of the Pakistan market on the back of possible reduction of Pakistans political risk premium. In the second scenario, the market is likely to initially react negatively to the imposition of emergency and martial law. 

However, considering the economic out-performance under previous military rules, it is expected that the market may start rallying once the dust settles down. 

In the third scenario, the stock market is likely to initially react negatively to any indication of Musharrafs leaving and would remain shaky as long as the structure of future government remains unclear. Since either Bhutto or Sharif is likely to win the elections, and the market is expected to welcome the change.

He added that Pakistan is now at deeper discount. Pakistan is currently trading at FY08F PE of 9.2x, which is 13 per cent and 41 per cent discount to its historical average of 10.6x and to average 2008F PE of 15.6x of Asian emerging markets, respectively. We expect JS Universe companies earnings to grow by 17 per cent in FY08 on the back of good recovery in energy and cement sectors.

Fundamentals of economy strong: report


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## Neo

*Cathay increases flight services ​*
KARACHI (August 31 2007): The Cathay Pacific Airways today announced that it will further increase its services to Pakistan by adding frequencies on its routes from Karachi to Bangkok and Hong Kong. The airline took this step in lieu to the importance of Cathay Pacific places in Pakistani market.

The service from Karachi to these two cities will be increased from three flights a week to four flights a week effect from October 7, 2007. New flight would depart on every Sunday at 0025 of the morning. The flight will not only meet the domestic demand by the businessmen but will also cater to the requirement of leisure market.

Airline's Country Manager in Pakistan, Feroze Jamall said, "Karachi is an important market for Cathay Pacific and we are pleased to be able to further strengthen our presence in the region through this additional flight. The Cathay Pacific enjoys good reputation in Pakistan and we believe the enhanced services to Hong Kong and Mainland of China will help us to meet the demands in great extent ". "Together with our sister airline Dragonair, we operate a fleet of 144 aircrafts serving over 120 destinations world-wide, " said Jamall.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*500 megawatts power project: Wapda being forced to accept QIA proposal ​*
ISLAMABAD (August 31 2007): The Board of Investment (BoI) is being accused of forcing Wapda to accept Qatar Investment Authority's (QIA) proposal for setting up 500 MW thermal power project at Chichoki Mallian with 33 per cent inflated cost, well informed sources told Business Recorder.

Both the GoP and QIA signed an MoU during the visit of Qatari Minister for Finance to Islamabad on May 31, at the Prime Minister House, but it expired on July 31, as the sponsors did not finalise negotiations with the EPC contractors ie Alstom Marubeni.

The company which is being assisted by Saif-ur-Rehman, former Chairman Ehtsab Bureau, had quoted $350 million project cost a couple of months ago but BoI claimed that it has been enhanced to $525 million without giving any justification.

Rehman, who was very close to former Prime Minister Mian Nawaz Sharif, was seen in the Prime Minister House at the time of MoU signing ceremony between the GoP and QIA. The sources said that a two-member team of QIA is in the capital for holding negotiations with the officials of Ministry of Water and Power on Friday (today) to finalise the proposal.

" It is premature to predict if the project will materialise or not as the revised project cost as mentioned by the BoI is unacceptable," said an official on the request not to be quoted. The official was of the view that with the increase in project cost, tariff would increase automatically, which Nepra may not allow.

The official said that Private Power Infrastructure Board (PPIB) had blocked the signing agreement between the QIA and GoP, saying that some of its clauses were not acceptable. PPIB was also of the view that it was not being properly consulted on the QIA proposed financing. The sources further said that Wapda's Advisor (thermal) visited London from July 19-24 to discuss technical issues with the QIA and HSBC.

During the meeting, all technical issues were amicably resolved and stood settled, claimed Fazal Ahmad Khan, Member Power, Wapda. Regarding updated progress on the project, he was of the view that QIA was negotiating the price with EPC contractor on its own and the utility was unaware of any progress.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Govt decides not to allow import of sugar: Record cane crop likely​*
ISLAMABAD, Aug 30: With a record 58 million tons of estimated sugarcane crop, the government has decided not to allow import of sugar this season, it is learnt.Informed sources told Dawn on Thursday that the government and the sugar industry had reached an understanding about the start of crushing season and ensuring sufficient buffer sugar stocks for carryover into the next season.

Dr Ashfaque Hassan Khan, Special Secretary, Ministry of Finance, said the government had decided to ensure about 400,000 tons of sugar stocks in reserve for market stabilisation. In addition, if sugar industry starts crushing on Nov 1 in Sindh and on 15 in Punjab and NWFP, there would be no need for sugar import.

However, the government will hold consultations with the industry and examine stock position and the crushing situation to ensure these objectives. If a gap was found between demand and supply, the government would allow sugar imports to meet the deficit, he told Dawn.

A meeting of the sugar industry and a secretaries committee - that was convened on Thursday to finalise minute details of the agreement and formally announce the decision - was postponed until Sept 11 because of engagements of Dr Salman Shah, adviser to the prime minister on finance.

Secretary General, Pakistan Sugar Mills Association, K. Ali Qazilbash, said the government and the industry had already agreed on the basic objectives.

He said the millers had already decided to start crushing in the first week of November in Sindh and second/third week of November in Punjab and NWFP, respectively, and hence they would have no problem to accept official demands.

He said the countrys current sugar stocks of 1,175,000 tons were sufficient for until end of November because monthly consumption ranged between 350,000-375,000 tons.

With the start of crushing in early part of November, the new production would also be available in November that would reach about two million tons by March.

Mr Qazilbash said a record production of 4.2 million tons of sugar was expected next season because of a historic 58 million tons of estimated sugarcane crop.

Pakistan produced about 55 million tons of sugarcane in 1998-99 that too was a record. Last year, the country had a 50.6 million tons of sugarcane crop.

Under a long-term understanding between the PSMA and a committee on core inflation, led by Minister for Industries Jahangir Khan Tarin, the sugar mills would start crushing on Oct 15 in Sindh and Nov 1 in Punjab and NWFP from next year but provincial governments would be flexible in start of crushing in case of later maturity due to weather.

The federal and provincial governments would formulate sugarcane/sugar policy in consultation with stakeholders by Sept 15 every year.

The policy will envisage that sugar should not be imported until the size of sugar season is determined by the end of March except in case of very abnormally high sugar prices.

The government would build up a buffer stock of 400,000 tons for price intervention through import or local purchases in staggered intervals during December to April.

The Trading Corporation of Pakistan should buy sugar through open tenders.

In has also been decided that millers would pay the cost of storage and replace it with new stocks every year in case buffer stock remains unsold and is purchased from them.

The committee suggested that sugarcane support prices should not be raised from existing levels in 2007-08.

Govt decides not to allow import of sugar: Record cane crop likely -DAWN - Business; August 31, 2007


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## Neo

*Tarbela hydropower project expansion approved ​* 
ISLAMABAD (August 31 2007): The Private Power Infrastructure Board (PPIB) has approved expansion of Tarbela dam power project that would generate 960 MW costing $500 million. This will be fourth extension of Tarbela hydropower project, which will be completed within shortest possible time.

The Board also approved that feasibility study of the 960 MW expansion project to be carried out by the Tarbela Hydro Limited and the Associates, said an official statement.

The decision has been taken at the 72nd meeting of the PPIB board held here on Thursday under the chairmanship of Water and Power Minister Liaquat Ali Jatoi. PM's Adviser on energy Mukhtar Ahmad also attended the meeting.

The PPIB board also approved setting up of hydropower project of 139 MW of Chakotti Hattian Hydropower project located in Azad Jammu and Kashmir (AJK) expected to start commercial operation by 2015. The meeting was informed that the PPIB has recently signed/initialled Implementation Agreements (IAs) with five companies totalling 992 MW, while four IAs totalling 715 MW are ready for initialling.

The IAs initialled include 165 MW Attock General by Attock Group of companies, 225 MW Atlas Power of Shirazi Group, 202 MW Foundation Power a company of Fauji Foundation, and 200 MW Nishat Chunian and 200 MW Nishat Power by Nishat Group.

The PPIB's major role is to facilitate power sector investors for establishing IPPs in the country, and enter into Implementation Agreements (IAs) with them, it was further informed. Currently, the portfolio of projects being processed by the PPIB includes 59 power projects totalling 15,000 MW with an investment outlay of $13.8 billion. Of the 15,000 MW, 5,138 MW will be hydel, 4603 MW will use oil/bagasse, 1600 MW will be based on pipeline gas/oil/LNG, 1174 MW will be generated from dedicated gas while 2,550 MW will be generated from coal. As per estimated schedules, 831 MW will be available to the national grid by 2008, while another 2,627 MW and 3734 MW by 2009 and 2010, respectively.

The system will be having a total capacity of 7192 MW by 2010. All milestones to achieve the targeted Commercial Operation Dates (COD) of the projects are being achieved in timely manner, while the PPIB has issued letters of interest (LoIs) to 32 projects totalling 8,276 MW and letters of support (LoSs) to 14 projects with a cumulative capacity of 2,590 MW, the Implementation Agreements of nine projects for 1700 MW are either signed/initialled or ready for signature, the meeting noted.

Jatoi advised that all fast track projects should be dealt with diligently and project sponsors should be given maximum facilitation. Power is a prime mover of the economy, and we should put in all our sincere efforts to develop the power sector of the country. He appreciated the efforts of the PPIB, which played a pivotal role in concluding the agreements with the sponsors in an efficient and speedy manner.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Plan to set up textile machinery base: Policy being finalised​*
KARACHI, Aug 30: The long-term textile policy proposes to set up a textile machinery manufacturing base in Pakistan to support and sustain textile industry that should attract investment from home and abroad and push up export of all products to $24 billion plus by the next five years.

For this purpose, all rebate incentives being offered to the textile sector in the name of research and development at the rate of three, five and six per cent are being integrated in the long-term textile policy.

The policy is being given final touches by the textile ministry, in consultation with the finance ministry and is expected to be handed to the federal cabinet sometime next week for approval.

A well-placed source said that textile machinery manufacturers in many parts of the world are on the lookout for relocation of their facilities.

Pakistan is one such place with cotton production, a mature textile industry and an attractive place for investment, an official said.

He disclosed that the some segment of spinning that could not be accommodated in concession rate lending will be given a three per cent relief in the interest rate.

This will cost anywhere up to one billion rupees plus a year to the State Bank, he said.

The focus is on developing infrastructure facilities and emphasis is on setting up self-contained textile cities and garment cities to attract investment, the source pointed out while informing that work on construction of textile and garment cities in Karachi, Lahore and Faisalabad is in full swing.

The problem of missing and weak links in the textile chain has also been addressed in

the new policy, the source said, and expressed the hope that in the next few years processing, dyeing and finishing segments of textile industry will be developed to its full potential.

We want to have a fully self-sustained and self-serving textile industry where all segments are inter-linked and end products secure good prices.

The Planning Commission has proposed an investment of more than Rs500 million for textile projects in the current fiscal year, the official disclosed who revealed that a sum of Rs22 billion will be invested in the next five years to upgrade textile industry.

At present, the Federal Board of Revenue and the finance ministry are giving a close look to the policy to ensure cost-effectiveness of money to be invested and proper utilisation of rebates being offered to exporters.

A textile machinery complex was set up in the public sector about 30 years ago in Pakistan which failed to attract customers simply because sponsors of textile projects were interested in import of plant and machinery rather than buying from local company.

Market sources said sponsors obtained bank loans on the basis of highly inflated cost of project designed on imported machinery.

Import helped sponsors to siphon off a big chunk of money and the project went in loss before its completion. In the decade of 80s, textile barons were the biggest beneficiary of loan write-offs.

Developing facilities of textile machinery and equipment manufacturing in Pakistan will be another attempt in Pakistan.

But this time attempt is being made by offering investment opportunities to private sector and integrating this project with all segments of the industry.

Plan to set up textile machinery base: Policy being finalised -DAWN - Business; August 31, 2007


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## Neo

*New systems for SMEs being developed​*
KARACHI, Aug 30: The Small and Medium Enterprises Development Authority (Smeda) will shortly develop systems for SMEs in areas of accounting, technology, production enhancement, packing, storage and logistics.

With regard to SMEs specific banking products, Smeda chief Shahid Rashid said in a meeting with members of Small and Medium Enterprises Union (Unisame) on Thursday that the authority would work on this matter with the ministry of finance.

He further stated that the Smeda would work with the national committee on SMEs for implementation of an SME policy recently announced by the government.

The authority, he said, had been taking up one industry after the other for upgradation and modernisation, such as jewellery and marble, and it was now working on furniture industry.

He also assured the participants that the authority would jointly work with trade and industry for growth of SMEs in all sectors.

Shahid Rashid informed the Unisame members to visit Smeda offices and its website and apply for the feasibility and other services available for SMEs.

Zulfikar Thaver, president of the Unisame, asked the Smeda chief to take up the basic issue of finance and technical education, raw material, marketing and logistics on a fast track to provide an enabling environment for SMEs.

He said SMEs need finance on single digit mark-up without collateral, and they also need land at concessional rates.

Other matters raised in the meeting were about product improvement, machinery up-gradation and modernisation facilities.

The Unisame members also sought uninterrupted supplies or raw material and marketing projection in international market of their products.

It was also pointed out that so far no scheduled bank had made any product for SMEs for finance at special rates. However, some of the participants drew the attention of the meeting towards the SME policy and said that there were certain grey areas which need to be corrected.

They said that definition and labour laws should be made easy for SMEs.

Mr Thaver pointed out that legislation of the SME Act during the present National Assembly session should be made.

He added that the SMEs were anxiously waiting for an SME export house, SME promotion council, SME insurance, SME institute, SME ombudsman and other supporting organisations promised in the policy.

New systems for SMEs being developed -DAWN - Business; August 31, 2007


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## Neo

*Tax collection grows by 15.6pc​*
ISLAMABAD: The Federal Board of Revenue (FBR) has surpassed its revenue collection target of Rs 106.4 billion assigned for the months of July-August 2007-08. 

Figures obtained from the FBR show that the provisional tax collection indicated a cumulative growth of 15.6 percent. The net collection during the period has been Rs 107 billion against Rs 92.5 billion in the same period last year.

The revenue on account of direct taxes has maintained its buoyant posture, as Rs 28.2 billion have been collected during July-August 2007 against Rs 21.2 billion last year, showing a remarkable increase of 33 percent. 

Sales tax collection has reached Rs 53.4 billion against Rs 44.9 billion, indicating a growth of 18.9 percent, whereas the growth in sales tax (import stage) was quite modest. Domestic sales tax collection has increased by 55.4 percent going up from Rs 15 billion to Rs 23.3 billion. Tax receipts on account of excise duties have recorded a decrease of 8.6 percent due to change in reporting procedure. The collection has declined form Rs 8.6 billion last year to Rs 7.9 billion this year. Finally, notwithstanding the widespread disruption of business activities due to heavy rains, the collection of Rs 17.5 billion form customs duties has been fairly close to last years figure. The net collection of Rs 56.6 billion during August 2007 is expected to increase further when provisional figures are finalised. According to the tax-wise collection during August 2007, FBR managed to collect income tax of Rs 14.3 billion, sales tax of Rs 27.2 billion, federal excise duty Rs 7.9 billion; and customs duties Rs 8.8 billion.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan yet to take advantage of export opportunities​*
ISLAMABAD: Despite growing international demand and a range of highly attractive economic benefits, many developing economies including Pakistan are yet to take full advantage of the opportunities that exist in exporting services. 

Currently, Pakistan has a very low share of the international services market. Economic significance of the service sector in Pakistan's economy is that it contributes to 53.3 percent to the Gross Domestic Product (GDP). The government has set the growth target for the service sector as 7.1 percent for the year 2007-08, while last year it was recorded at 8 percent. 

Almost six percent is the target for 2007-08 for transport, storage and communication, 7.8 percent for wholesale and retail trade, 15 percent for finance and insurance, four percent for public administration and defence, and five percent for social community and personal services. 

In recognition of Pakistan's potential in the export of services, the International Trade Center (ICT) has developed a "Pakistan National Services Roadmap", the purpose of which is to provide recommendations that will facilitate growth in Pakistan's services exports. Key strategic areas identified in the roadmap are strengthening institutional support for service providers, streamlining the regulatory environment by the government, strengthening the infrastructure and providing better information and support to stakeholders. 

The roadmap recommends that services trade associations need to be strengthened through export-oriented policies of the government, training and financing and encouragement to form services coalition and enterprise networks. 

Other organisations such as the Overseas Employment Corporation (OEC), the Small and Medium Enterprises Development Authority (SMEDA), the Industrial Information Network (IIN) and the Pakistani mission abroad can also play stronger roles in enhancing services exports by addressing the trade issues within their domains. 

It is also recommended that regulation may be reviewed and where possible, simplified to facilitate services exports. Different service sectors in the country, including construction, legal and accountancy, require regulations that support the export plans of firms. No regulatory environment can be effectively streamlined until it addresses the concerns of the stakeholders, and this needs to be pursued through consultation. The roadmap, through its recommendations, invites stakeholders to participate actively in such a process. 

The recommendations to strengthen services infrastructure include human resource development based on national needs, an improved financial lending environment, a stronger telecommunications infrastructure, and better utilities and transport. A skilled human resource base, matching international market need, is the key to the export of many services. The roadmap recommends education and training in priority fields and places special emphasis on improving English language skills. 

Access to finance is a problem for the service exporters of Pakistan. The roadmap provides a number of options and recommendations to the State Bank of Pakistan and other local banks to improve service export lending facilities. Service exports are critically important to the Pakistan economy as it can increase foreign exchange earning, the competitiveness and innovation of service firms, can strengthen domestic capacity and decrease reliance on imports, as well as more jobs for skilled and semi-skilled people.

Increasing institutional support provided by trade promotion bodies, streamlining the regulatory environment, strengthening the service input infrastructure, and focusing on service sectors with high export growth potential will bring momentum in enhancing the capacity of the sector for exports.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Export refinance: 7.5 percent mark-up rate to continue ​*
KARACHI (September 01 2007): The central bank on Friday announced that it would continue 7.5 percent mark-up on export refinance scheme. The central bank, in a circular to all heads of the banks, said that the existing rate of mark-up on export refinance would continue for September.

It reiterated that the aggregate financing facilities, provided by banks under the export finance scheme (central bank and bank funded) would continue to carry a maximum mark-up of 7.5 percent irrespective of the fact that the State Bank of Pakistan (SBP) had revised mechanism for grant of refinance, provided the request for financing by the exporters to fulfil the lending conditions of the financing bank and conditions/criterion prescribed under the scheme, central bank added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*PM urges German bank to invest in more projects​*
ISLAMABAD, Aug 31: Prime Minister Shaukat Aziz on Friday said that economic indicators in Pakistan were showing positive trend and the country offered attractive business opportunities to both local and foreign investors in all sectors.

He was talking to a delegation led by Chairman DEG, Winfried Polte at the Prime Minister House.

DEG, a German investment bank, is a member of KfW Bankengruppe, one of the largest European development finance institutions, which has contributed to the financing of 28 projects in Pakistan with an overall invested amount totalling 120 million euro, while its worldwide investment stands at euro 45 billion.

The prime minister said Pakistan offered a level-playing field to all investors and imposed no restriction on percentage ownership.

He said foreigners were encouraged to invest in all sectors and the country offered attractive investment opportunities in several sectors, including telecom, IT, oil and gas, financial services, engineering, insurance, agribusiness and real estate.

Mr. Aziz said that during the last five years the per capita income and size of the economy had doubled, remittances had increased, exchange rate was stable while debt burden and poverty had reduced and reserves had crossed $16 billion, an all time record level.

He said that because of high economic growth during the last five years and expansion in various fields the middle class was rapidly growing and demand for consumer goods was increasing.

The prime minister said that because of consistency in policies and a structural reform agenda based on de-regulation, liberalisation and privatisation Pakistan has attracted over $8 billion worth foreign investment last year, which is highest in the countrys history.

Talking about the demographic advantage, which Pakistan has over other countries in the region, he said that Pakistan had 100 million of its population below the age of 25. The government was focussing on educating and training this vital human resource.

The prime minister noted with satisfaction that economic cooperation between Pakistan and Germany was increasing, particularly in trade and investment.APP

PM urges German bank to invest in more projects -DAWN - Business; September 01, 2007


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## Neo

*Jetro concerned about economic situation ​*
KARACHI (September 01 2007): Although Pakistan has become a manufacturing partner of Japan, from just being a trading partner, as Japanese companies are now willing to shift their production base to Pakistan, many private inquirers from Japan are hesitant till the election time is over.

According to Japan External Trade Organisation (Jetro) analysis of economic partnership between Pakistan and Japan, it (Jetro) is quite concerned about the economic situation in Pakistan because of the events of May, the recent political uncertainties and as the nearing of election time. It is not very clear as to what the future will unfold, it said.

Japan has been supporting Pakistan in developing its infrastructure so that the technology gap and quality of human resources between the two countries can be filled up. The dynamics of trade between Pakistan and Japan have totally changed with the passage of time.

Initially, a major exporter to Japan, Pakistan is now a major importer from Japan. According to trade statistics of Japan Ministry of Finance, Pakistan's exports to Japan increased by 44.8 percent to $0.281 billion in 2006. In the same period, imports from Japan into Pakistan stood at $1.76 billion, showing a 15.9 percent increase as compared to the previous year. Associated transport equipment and machinery and mechanical appliances hold 70 percent share in total imports from Japan.

Transport equipment showed an increase of 21.6 percent from 2005 mainly due to the surge in market demand for cars and the subsequent imports from Japan. Machinery and mechanical appliances mainly include textile machinery and have shown a small increase of only 4.8 percent as compared to last year.

The Japanese trading houses in Pakistan and the textile associations are of the view that the textile industry is currently not thinking of heaving investments and expansions as the exports have not been increasing up to the mark.

Textiles constitute 37.6 percent of Pakistan's total exports to Japan. In 2006, textile exports to Japan were $78.2 million which showed a 7.6 percent decrease as compared to the previous year. Direct investment recently has shown a very encouraging trend in the last couple of years, increasing by 41.1 percent in 2006-07 to $68.3 million. The foremost area of investment is the automobile sector.

According to Pakistan Automobile Manufacturers Association (Pama) statistics, production of cars stood at 0.126 million units in 2004-05 and in 2005-06 it increased to 0.16 million units. The share of Japanese carmakers in Pakistan market is an overwhelming 96 percent. Each Japanese company has expanded its production capacity.

Pak-Suzuki, the leading market holder in Pakistan, increased its production capacity from 70,000 units per annum in 2005 to 150,000 units per annum by 2007. Indus Motors and Honda cars both increased their production capacity from 43,000 and 25,000 units respectively to 50,000 units by 2006.

Japanese motorcycle manufacturers have also increased their production capacity. Recently, Atlas Honda, the leading market shareholder in motorcycles, built a new factory with increased production capacity from 0.4 to 0.5 million units per year.

Apart from automotive, huge Japanese investment is coming in the textile sector as well. YKK Zippers has started constructing its factory at Karachi Export Processing Zone (KEPZ). The lease contract for the factory is for a premise 50,000 sq metres.

The first phase of development is being done on 8,600 sq metres facility, at a cost of $15 million investment since January 2007 including the cost of the contract. Recently, NYK Group South Asia Pte Ltd, a Singapore-based wholly owned subsidiary of Nippon Yusen Kabushiki Kaisha, Japan, has established NYK Line Pakistan (Private) Ltd.

The new company began operations on August 20. The annual container handling volumes at the Port of Karachi has reached one million TEUs, and growth is expected to continue. The purpose of the establishment of this company is to respond to increasing demand in this region.

Pakistan is also known as the gate port to countries in Central Asia, and this local company will allow better response to customer needs in this region. NYK Line Pakistan (Private) Ltd is NYK's 13th regional shipping agent in Asia.

Additionally, Mitsui O.S.K Lines Ltd (MOL) opened a new subsidiary in Pakistan, effective April 2007. Mitsui O.S.K. Lines Pakistan (Pvt) Ltd will handle all MOL's liner and non-liner business and Ocean Consolidation Business (OCB).

The new company will assume the duties currently handled by Asiatic Shipping Agencies (Pvt) as MOL's sole agent in Pakistan. MOL had been expanding various ocean shipping businesses with Asiatic Shipping Agencies (Pvt) as its sole agent in Pakistan, but now deems it necessary to establish an agency with its own paid-in capital of $0.2 million to continue its expansion strategy in Pakistan, which is experiencing tremendous economic growth.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Palm oil imports in July soar to $114 million ​*
KARACHI (September 02 2007): The import of palm oil has gone up by 90 percent to 114 million dollars during July as compared to 60.204 million dollars in the same period of the last fiscal due to increasing demand ahead of the holy month Ramazan, importers said on Saturday.

They said: "Consumption of the commodity increases every year during this period ahead of the holy month due to increasing demand of ghee and edible oil, which are used for preparing different food items.

"We have imported some 114.011 million dollars worth of palm oil during the first month of the current fiscal as compared to 60.204 million dollars during the same period of the last fiscal year, showing an increase of around 90 percent or 53.8 million dollars upsurge during July," said a leading importer.

In terms of quantity, it depicts an increase of 20,730 tonnes during July, as overall 156,251 tonnes of palm oil has been imported during July against the import of 135,521 tonnes during July 2006.

On monthly basis, the commodity's import during July as compared to June 2007 also depicts a raise of 47 percent to 114 million dollars against 77.805 million dollar during June 2007. The importers said that consumption of edible oil is also rapidly going up which is another reason of rising import of the commodity during the first month of the last fiscal.

The commodity import during last fiscal has also gone up by 24 percent to 891.785 million dollars, however they believed that during current fiscal year the import of palm oil would reach at the peak level of 900-950 million dollar with over 30 percent overall upsurge.

"August-October period is arrival season of the commodity in the Malaysian and Indonesian markets, therefore we have imported huge commodity to meet the local demand," they added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Hydropower deal ​* 
Sunday, September 02, 2007

ISLAMABAD: The Implementation Agreement (IA) for 84 MW New Bong Escape Hydropower Project by Laraib Energy Limited was signed at the Private Power and Infrastructure Board (PPIB). 

CEO of New Bong Escape Hydropower Project Khalid Faizi signed the agreement on behalf of the company, while on behalf of the Government of Pakistan the agreement was signed by Managing Director PPIB, Mohammad Yousuf Memon.

The power plant will be located 7 kilometres downstream of Mangla Dam, in the Azad Jammu and Kashmir and will sell power to WAPDA/NTDC.

The sponsors of the project include local Pakistani investors, as well as investors from Malaysia and Mauritius, while the Asian Development Bank (ADB), Islamic Development Bank (IDB) Habib Bank Limited (HBL) and National Bank of Pakistan (NBP) are lenders to the project; the total estimated cost of the project is US$ 160 million.

It is expected that the power complex will start supplying power to the national grid by the year 2011.

This is the first hydropower plant in the private sector to have completed the major milestone of finalizing the IA, and will supply clean, reliable and cheap energy to power consumers of Pakistan.

Hydropower deal


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## Neo

*Americans are accepting Pakistan as an investment hub: Majyd Aziz​* 
Sunday, September 02, 2007

KARACHI: The President of the Karachi Chamber of Commerce and Industry (KCCI), Majyd Aziz, in an interview with The News talks about his recent trip to the USA and how he thinks the political situation is likely to affect the countrys economy. Here is what he has to say.

Q: How was your journey and what was the aim of it?

A: This trip to the US was the first ever by any KCCI delegation. We didnt go for any individual gains, and the main objective was to promote Pakistan. We discussed bilateral trade, intellectual property rights, market access, the image of Pakistan as an investment hub, prospects of SMEs, etc.

We went to convince that America needs to invest here, especially Americans of Pakistani origin as their roots are in Pakistan. An interesting fact that we noticed was that Americans are finally accepting Pakistan as an investment hub with good opportunities other than India with whom theyve always had strong ties.

Q: How successful was your trip?

A: It was the first time we had one-to-one discussion. People think America is trying to destroy the Muslim world, which is untrue.

America itself wants to move away from political talks and in fact they want to have a 15-year long-term economic commitment with our country which is now more reformed and intensive than ever before. 

Other than this, we had four roundtable conferences to discuss the Kashmir issue at the economic level. You see we went as businessmen but became diplomats and politicians! Apart from this we also met about eight Congressmen individually and spoke on political issues which seemed to be a success.

Q: Would such meetings be held again with the US or any other country?

A: Some European diplomats have invited me to their country so that we can have similar meetings with them, too. But nothing has been confirmed so far.

Q: Did Americans promise to visit Pakistan?

A: A delegation from Texas has confirmed with the KCCI to visit Pakistan in spring 2008.

Q: What has America got to say about the technology standards of Pakistan? How far are they willing to aid our manufacturing sector?

A: We are far behind America in technology! It is easy to talk about technology transfer, but it has many aspects that need to be looked into. For example, there are intellectual property rights, company policies, etc. that cause obstacles. 

These things need to be discussed at the Ministry of Commerce or by the nazims of the cities concerned.

My advice is that a body should be constituted to discuss trade and investments and local talent can go there for training at their companies. That is how technology cab be brought into the country.

Q: What would you like to say about the current political situation? How much does it affect our economy?

A: In spite of the so-called political instability I say this is the creation of political jonnies. It doesnt affect the rest of the country and neither does it affect the businesses. Musharraf has done a good job in stabilising the economy. Fact is fact. Look at where we were in 1998 and compare it with the present. Im sure even the opposition parties are well aware of what the president has done for Pakistan.

One thing that I want you to mention here is that none of the political parties have come up with any economic agenda, or manifesto. 

What are they waiting for? They should come up with economic policies with the same passion as they show when they talk about ruling the masses. All these parties are power hungry.

Americans are accepting Pakistan as an investment hub: Majyd Aziz


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## Neo

*Informal sector grows by 20pc​*
ISLAMABAD, Sept 1: Pakistans informal sector has grown at an unprecedented pace over the years and today 72.9 per cent of the non agriculture workforce is employed by this sector.

Informed sources told Dawn on Saturday that there has been 20 per cent plus growth in the informal sector and the issue has become a matter of great concern, with government considering a proposal to bring the informal sector in the mainstream through its decent work country programme.

According to a conservative estimate, out of $160 billion size of countrys economy, $32 billion plus is in the informal sector, providing a huge opportunity to its businessmen to evade taxes every year.

According to the latest details 32 per cent workforce is in the wholesale and retail business, 21 per cent in the manufacturing sector, 17.5 per cent in community and social and personnel sector, 13.8 per cent in construction and 11.1 per cent in the transport sector. This included both in urban and rural areas.

The informal sector consists of small units producing goods or services with the primary objective of generating employment and incomes to the families engaged in these activities. Informal activities have often been characterised by low levels of capital, skills, access to organised markets and technologies; low and unstable incomes and poor and unpredictable working conditions. Such activities are often outside the scope and purview of the official statistical enumeration and government regulations as well as are beyond formal system of social protection.

The units operating in the informal sector are highly labour intensive but employment is mostly casual; based on kinship, personal relations rather than contractual arrangements ensuring protection. The informal sector activities depend, to a large extent, on the local and regional demand.

The focus should be on productive and decent employment creation rather than low productivity and marginalised jobs that largely create a pool of working poor.

The informal sector, the official said, plays a significant role in employment and income generation in Pakistan but is marked with extreme inadequacy of detailed and reliable data.

According to latest official data, more than three fourths of the employees monthly income is even less than Rs1,500. More than quarter of males and two thirds of females have monthly income of less than Rs2,500.

The regional analysis shows that a higher proportion of females earn less than minimum wage in both urban and rural areas as compared to males.

Pakistan, he said, needs skilled labour which should be accounted for in the formal sector properly. The access to high quality goods at lower prices due to globalisation has brought changes in the structures of production.

The easier growth options are no more available and penetration in the global market is critically linked with the skills and

capabilities of the workforce. Meeting the challenges require retaining technical and vocational competence as well as productivity of the workforce through better education, training and retaining.In the past the focus was largely on the demand augmentation rather than addressing this supply side issues.

Resultantly, the vast treasure of the nation is mostly untrained and not ready to take the high value added production. And this unskilled labour is mostly employed by the informal sector whose employers also offer fewer wages to their employees.

A large proportion of the current labour force does not possess skills measurable in higher education terms. Literacy level is as low as 52 per cent. The educational distribution of literates shows that 35 per cent are below matric, 10 per cent are matriculates and 4.1 per cent have higher secondary certificates. The degree holders account for only a small (3.8 per cent) proportion.

Informal sector grows by 20pc -DAWN - Business; September 02, 2007


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## Neo

*Indus Motor cars sale up by 19pc​*
Karachi, Sept 1: Sales of Indus Motor Company (IMC), makers of Toyota and Daihatsu vehicles, have increased to 50,557 units for the year ended June 30, 2007 as compared with 42,406 units in the corresponding period of last fiscal, up by 19 per cent, says a press release.

Production went up by 15 per cent to 47,821 units from 41,552 units last year. The companys sales revenue increased by 11 per cent to Rs39 billion from Rs35 billion last year with the after-tax profit of Rs2.7 billion, as compared to Rs2.6 billion achieved during the year ended June 30, 2006.

Earnings per share went up to Rs34.93 as compared with Rs.33.70 in the previous year.

The board of directors of IMC, which met on August 31 to review the companys financial and operating performance for the year ended June 30, 2007, declared a final cash dividend of Rs8 per share, making a total of Rs13 per share during the year.

The total dividend paid for the same period last year was Rs12 per share.Giving an overview of the entire local industry, IMC said that total sales for locally assembled passenger cars and light commercial vehicles during 2006-07 grew by nine per cent to 204,212 units compared with 187,436 units in 2005-06.

Production was recorded at 196,405 units for the period ended June 30, 2007, showing an increase of four per cent over 189,138 units last year.

Although there has been a decrease in the import of used cars from 46,425 units in 2005-06 to 28,493 units in 2006-07, these imports are still 14 per cent of the domestic passenger car and LCV production and continue to impede growth of the local auto industry.

Indus Motor cars sale up by 19pc -DAWN - Business; September 02, 2007


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## Neo

*EC-funded tech aid puts Pakistan's trade on right direction ​*
ISLAMABAD (September 02 2007): The 'Trade Related Technical Assistance' (TRTA), funded by European Commission (EC), has achieved a great success in making positive contribution towards developing Pakistan's trade capacity.

"The TRTA, initiated in 2004, is scheduled to be terminated by September-end," official sources said, adding that, witnessing the success of the programme, the government has requested the EU to support another TRTA for trade capacity building.

The programme was launched to help Pakistani firms develop dynamic exporting capabilities, reduce export challenges, and raise their trading capacity through planned investment in technologies to meet export market requirements and strengthening institutional infrastructure services for conformity assessment.

The TRTA project has laid solid foundation in enhancing Pakistan's capacity to trade and access to international markets, sources said, adding that "the programme has provided significant interventions in strengthening the capacities and capabilities of the mainline ministries and institutions concerned with commerce and trade.

There is need to continue this effort into the future so as to consolidate the gains made, and complete the trade capacity building process initiated under the programme, they added. "The government has already made a formal request to the EC in this regard," sources said, and expressed the hope that the EC would favourably consider the request, "and continue funding for the purpose."

The TRTA programme had made a positive contribution in developing Pakistan's trade capacity and it would help Pakistan's exporters to reduce cost of the local products. "The exporters will now be able to send their products for testing to local laboratories that are in the process of accreditation," sources said, and added that "at the same time, authorities in European Union will now have more confidence in the results of tests made in Pakistani laboratories."

The TRTA programme would allow Pakistan to properly defend its interests in the World Trade Organisation (WTO) because its government officials have now been trained to better understand the rules and functions of the WTO.

"The programme helped enhance awareness among government officials, the business sector, and civil society about the implications of WTO Agreements on the economy of the country," they said.

Besides, the programme assisted Pakistan in building capacity to address technical barriers to trade and sanitary and phytosanitary compliance requirements, sources added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan looking to carve out tech role ​*
WASHINGTON (September 02 2007): Seeking to carve out a share in the bulging market for offshore outsourcing services, Pakistan offers many advantages in terms of labour costs, widespread use of English and increasingly open and well-regulated business environments, according to two recent reports.

Pakistan's information technology sector has witnessed consistent growth in the last few years despite geo-strategic challenges and the country has set upon achieving ambitious targets through a series of steps.

The South Asian country is listed among countries holding out a vast potential and financially more attractive than some major current destinations, according to Global Services Location Index 2007.

"Pakistan is trying to enter the off-shoring marketplace largely through contact centers and back-office services. Companies have set up approximately 100 contact centers in the country in the past three years. In addition to telemarketing, Pakistani workers provide payroll, accounting and human resources work," A.T. Kearney, a global strategic management consulting firm says while discussing off-shoring for long-term advantage.

The global market for shared services and outsourcing is expected to grow to 1.43 trillion dollars by the end of 2009, from 930 billion dollars in 2006, according to a report. Meanwhile, a report in PC World Communications, citing entrepreneurs and officials, has highlighted advantages the South Asian country offers in terms of its skilled yet inexpensive human resource, some of the factors considered vital to bolstering the IT business.

"The country's highly skilled, English speaking people provide a key advantage," said Yusuf Hussain, Managing Director of the Pakistan Software Export Board (PSEB). Ashraf Kapadia, President of the Pakistan Software Houses Association (PASHA), an association of software, call centre and BPO companies in the country, underlines investors' continued confidence in Pakistan's potential.

Pakistan's exports of IT and services have grown by 50 percent year-on-year for the last three years. The PSEB now has an ambitious target to boost exports of software, IT services, call centre and BPO from 1.4 billion dollars in the fiscal year ended June to about 4.5 billion dollars by 2010. By then, the overall IT and services industry in the country is also expected to grow to 10 billion dollars from the current 2.4 billion dollars a year.

"To spur the country's outsourcing industry, PSEB and other Pakistan government agencies have launched a multi-pronged strategy covering infrastructure, cheaper communications, investment in education, quality certifications and a data confidentiality law."

The PSEB is also investing in promoting Pakistan as an offshore location to European and US companies. Not many people outside Pakistan knew, for example, that the country had over 63 million mobile phone subscribers for a population of about 164 million people, he said. The percentage of Pakistan's population using mobile phones is more than that of India, which is seen as a key Asian market for mobile-phone vendors.

In addition, the country is investing in education with an eye to avoid the shortages of staff that have affected India's outsourcing industry. The annual budget of the Higher Education Commission had gone up to about Rs 30 billion Pakistan (497 million dollars) from Rs 600 million seven years ago, according to Hussain.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Work on uplift works of Corridor-II starts ​*
KARACHI (September 02 2007): The construction work of signal-free Corridor-II has started at a cost of Rs 1.38 billion and four flyovers as part of the Corridor would be completed in four months. Nazim Karachi Syed Mustafa Kamal said on Saturday that work on any development scheme of the corridor will not be started without construction of alternate road and taking the traffic police into confidence.

He said that initiation of work on four flyovers will cause no traffic problem and rather smooth traffic flow will be greatly felicitated so that citizen may not face any problem. He stated this during a 4-hour visit to development works of the project and inspection of alternate road for traffic from Nagan Chowrangi to Sharea Faisal at 2 am Saturday.

He was accompanied by DCO Javed Hanif, MD Water Board Ghulam Arif Khan, EDO Works and Services and representatives of contractor consultant firms. City Nazim Karachi said that the system with regard to development projects has been changed and the agreement now incorporates that the contractor firm will be responsible for any defect or error in the quality of project, because the firm is paid huge amount for this.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Rs 520 billion to be spent on NTC and road network uplift ​*
ISLAMABAD (September 03 2007): The government has chalked out a plan to develop National Trade Corridor (NTC) in order to boost trade activities and exports. A source in ministry of communications told APP on Sunday that the NTC will link upper parts of the country in the North with ports in the South to reduce travel time and fuel cost by improving existing road network and introducing new highways and motorways by 2012.

The government would spend Rs 520 billion on NTC and road network development to complete all the projects. It will cause multifaceted benefits, reduce the losses and significantly contribute to the national exchequer, he added.

On completion of the national trade corridor by 2012 the cargo travel time from Karachi to Peshawar would be reduced from 72 hours to 36 hours, and road losses would be reduced to the tune of over one billion dollars per annum which will reduce annual transportation cost by 10 percent, the source added.

Talking about steps being taken for development of road network, he said, China had agreed to widen and re-habituate 600 kilometres of KKH with the cost of 350 million dollars.

He said that the main artery and the main North-South corridor linking Karachi with Torkham on Pakistan-Afghanistan border via Lahore, Rawalpindi and Peshawar the National Highway N-5 is the mainstay of the country's road network and its economic lifeline. The Grand Trunk Road N-5 is being converted into a dual carriageway.

Similarly Indus Highway, (N-55) which is on the left bank of the Indus River, is also being constructed according to the specifications of the Asian Highways recommended by the Asian Development Bank. After construction of the Kohat Tunnel, N-55 is set to play a vital role not only for Pakistan but for inter-regional connectivity also, he added.

The transport cost of trade goods would be reduced through restructuring and modernisation of railway, under the NTC programme, which will contribute in terms of saving of $2 to 2.5 billion per year. The administrative measures, reducing documentation would result in saving of $1.2 billion per annum, he said.

He said that the modernisation of existing trucking fleet was also planned, which would reduce fuel import bill by 25 percent and road maintenance cost by one billion dollars. The ministry of communications had also moved a proposal to reduce tariff on multi-axle vehicles for five years to implement the plan, he informed.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*AJK to have new airline soon ​*
MIRPUR (September 03 2007): The Azad Jammu and Kashmir would be air-linked soon with rest of the world through launching new airline service. The air link with rest of the world would not only boost business activity in the area but also provide facilities to the passengers living abroad.

AJK Premier said this while addressing a big gathering at formal inauguration of new commissionerate at Poonch (Rawalakot) late Saturday. Rawalakot - the district headquarter of Poonch, was elevated to the status of divisional headquarter after the Prime Minister formally inaugurated the commissionerate of the newly-carved Poonch division -third one in AJK next to existing Muzaffarabad and Mirpur divisions.

The opening ceremony was presided over by the Premiers Special Assistant and President Poonch district Muslim Conference Dr Muhammad Haleem Khan.

Besides others, Ministers Dr Najib Nuqqi, Qayyum Niazi, Colonel (R) Nasim, Deputy Speaker Sardar Farooq Tahir, MLAs Sardar Yaqub, Chaudhry M. Aziz, Dr Mahmood Riaz, Advisor to Pakistan Premier Raja Iftikhar Ayyub, ex-Speaker Sardar Siab Khalid, ex-Minister Sardar Khan Bahadur, Presidential Advisor Syed Naseebullah Gardezi and others also addressed the ceremony. This would be the first airline of Azad Kashmir having lucrative prospects as 1.5 million Azad Kashmiris are working abroad, the AJK PM said.

The matter of launching new air service with the name of Air Kashmir would be taken into the next cabinet meeting for its formal approval, he said.

The AJK PM also announced construction of two highways with double lanes, expansion of Rawalakot airport to accommodate at least 50 aeroplane at a time. He also gave details of overall development projects, which would be completed in the liberated territory.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Power projects: additional $500 million loan from ADB sought ​*
FAISALABAD (September 03 2007): The government of Pakistan is negotiating with the Asian Development Bank (ADB) for an additional $500 million loan for Power Transmission Enhancement Project II and III to promote the Investment Program, which will improve the energy efficiency and provide institutional capacity including implementation and monitoring support programme, said ADB sources.

The Medium-Term Development Framework envisages additional power generation, transmission, and distribution capacities in order to ensure sufficient electricity supply to meet the projected 8% per annum growth in demand over the planning period. The growth in demand was about 12% in FY2006.

According to an ADB report, Power Generation is expected to grow from about 19,540 megawatts (MW) in 2005 to 162,590 MW in 2030. The bulk of the additional supply is expected to meet through an expansion of domestic and imported thermal and hydropower generation. The Government is currently pursuing a combination of public and private options to ensure new generation to be added as required. The ADB is working with the Government and private power generation developers to finance public- and private-owned generation stations to meet the current and future demand for electricity.

This Investment Program focuses on power transmission. In order to facilitate efficient and effective evacuation of power from existing power stations, the National Transmission and Despatch Company (NTDC), in co-ordination with the Ministry of Water and Power (MOWP), has prepared a Transmission Sector Road Map, 2007-2017. The road map addresses the current shortcomings of the power transmission system by recommending rehabilitation, augmentation, and expansion of projects and power evacuation from the planned power stations in the least-cost power generation plan.

The total cost of the NTDC investment plan is estimated at $3.9 billion. It is envisaged that ADB will finance $800 million (20%) of the total investment plan, ADB report disclosed. As per the report, the 13,051 MW peak demand recorded in 2006 was constrained by the transmission system and there was an estimated 800 MW of unfurnished demand. As a result, some transmission sections operated at or above rating limits, increased the risk of its failure and costly service restoration. The inability to transmit power already available is similar to generate it to overcome the shortage that results in load shedding.

The 500 kilovolt (kV) system provides the main power flow route between the North and South of Pakistan. The bulk of the power is generated in the North (hydropower) and the South (thermal power) with the major load centres being in the middle of the country around Lahore, Faisalabad, and Islamabad. As a result there are always significant power flow from North and South to the centre, depending on the season and the availability of hydropower.

At the end of FY2006, 77% of the 500 kV and 69% of the 220 kV power transformers were overloaded. This means that security of supply standards is insufficient and the NTDC cannot meet its transmission license obligations. The expertise of NTDC operating staff has prevented the situation from becoming worse, but they are constrained to deal with the system under current stress.

Additionally, the key load centres are functioning at a very low power factor combined with long transmission lines, places a very high reactive power requirement on the power transmission system. The reactive power results in a high current flow, which does not contribute to efficient power transmission, reduces the effective transfer capacity of the system causing the transmission system voltages to fall below acceptable limits.

There are plans to increase power generation, but development of the transmission system has not received sufficient attention so far. The increase in power generation will strain the transmission system still further, and the full benefits of the extra power generation will not be achieved without urgent investments in the transmission system.

The ADB also observed that, planning and project development capacity is essential for transmission investments since the system reinforcement lags behind and has a longer lead time than new generation (gas-fired generation plants can be operational within two years of initiation). This further emphasises the importance of advance planning and accelerating the transmission system reinforcement process.

A support component is an integral part of the proposed Investment Program. This component will strengthen the NTDC's project (i) planning, (ii) design, (iii) implementation, (iv) operations, and (v) monitoring capabilities. The total cost of the Investment Program support component is estimated at $10 million for the duration of the Investment Program.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Neelum and Jhelum power project: contract given to Chinese firm: AJK Prime Minister ​*
RAWALPINDI (September 03 2007): Prime Minister of Azad Jammu & Kashmir (AJK), Sardar Ateeq Ahmed Khan has reiterated his government's firm resolve to promote hydro power generation in AJK, saying that every drop of water would be converted into energy.

"Contract for construction of 969 MW Neelum and Jhelum Hydro Power Project has been given to a Chinese company and work on this multi billion project will be executed soon", the prime minister said in an exclusive interview with Business Recorder.

Ateeq Khan said that the potential of more than 7,000 MW Hydro power generation was identified on different rivers of AJK and government would exploit these resources to produce hydro power. "We will be in a position to export electricity to India and other neighbouring countries and strengthen the economy of AJK", he maintained.

"Work is under progress on a 84MW power project costing $120 million in private sector being funded by Islamic Development Bank (IDB) and Asian Development Bank (ADB)", he told adding that an MoU was signed with a Canadian Company for construction of 36MW power project.

Terming the Mangla Upraising Project, as a project to strengthen Pakistan's economy, the AJK Premier said that the capacity of Mangla Dam would be doubled with completion of Rs 60 billion upraising project.

Rs 30 billion have been spent so far on the project and steps are being taken for rehabilitation the affected people, he said.

The AJK Prime Minister reiterated the strong resolve of his government to fulfil the dream of "Green and Skilled Kashmir" to address the poverty, unemployment, illiteracy and environmental issues of the state. "This is a project of economic stability and improving the living standard of people," he observed.

Under this campaign, he said that students from class 8 to 10 would be given technical training in schools, while these schools would be used to impart technical training to non-school going youths. Chinar and other local species of trees would be planted in every school and government building, he said.

"We will be in a position to arrest unemployment by catering a skilled work force," he said. Sardar Ateeq said that AJK Government was encouraging the private sector in hydropower, tourism, agriculture and communication sectors and Private Public Partnership would be preferred. He said that AJK was better place for tea and a tea-growing project of Rs 3.5 billion was launched in partnership with Qarshi Group, Khwaja Foods and Janu Group.

He said that the government had increased the budget of tourism by 1900 percent while 1300 per cent in Environment. The budgets of these two sectors were nominal in past and it was imperative to increase the budget.

Business Recorder [Pakistan's First Financial Daily]


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## solid snake

Good to read about an increase in tax collection. It's shocking how many people in Pakistan don't pay their taxes. Also good to read that economy is stable. Great thread, keep it up Neo


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## Neo

*Pakistan: Graft 'rampant' in building of transport network​*
Karachi, 3 Sept. (AKI) - (by Syed Saleem Shahzad) - The plan to build a transport network from Almaty in Kazakhstan to Karachi in Pakistan in order to develop trade routes between the Central Asian and the Indian subcontinent, could be threatened by corrupt building practices. 

A former chief engineer with the Karachi Metropolitan Corporation, which handles public building projects in the southern port city, told Adnkronos International (AKI) that there is rampant corruption in the way in which construction contracts have been awarded to companies to building the flyovers that are part of the transport network. 

Ironically, this practice [corruption] is rampant in this whole project to build the trade communication infrastructure which will link Central Asia to the warm waters of Gwadar and Karachi," Nadeem Ansari, the ex-chief engineer of Karachi Metropolitan Corporation, told AKI. 

"Within Karachi, the two main communication corridors have been developed. One corridor, comprising three flyovers and three underpasses was finished last year at a cost of 23.33 million US dollars and another corridor comprising five flyovers costing around 24 million US dollars is underway," he said.

"The contracts have been awarded without pre-qualifications and to those contractors who never built flyovers in the past," said Ansari. 

One of the most important flyovers in this project was the Northern By-Pass flyover, in Pakistans southern port city of Karachi which connects the trade traffic from northern Pakistan to the south and is part of the trade corridor to link to Afghanistan and the Central Asian republics. 

The Northern By-Pass Flyover collapsed on Saturday killing at least six people. The incident reportedly occurred because of a design fault in the project. Initial official inquires revealed that project was awarded without a tender.

It is believed that other transportation networks are under also serious threat as corruption is the major factor behind the poor construction of the flyovers. 

The project's contracts should have been tendered at a larger scale and foreign consultants s should have been encouraged to participate in the contracts," he said. 

"But ironically the demands for kickbacks is as much as 40 percent which no professional firm with an international reputation can afford to pay that amount and thats why such a high profile consultancy contract was awarded in contravention of all tender rules and in some cases to little known companies, Nadeem said. 

Pakistan began to work on improving road and trade links in 2001. 

The then Pakistani finance minister and current prime minister Shaukat Aziz had announced that a rail link would be built in Baluchistan province from Dalbandin via Panjgur to the Gwadar deep-sea port with Chinese cooperation and pledged to renew the prospects for an alternate land-sea trade outlet for Central Asia through Pakistan via the Indus Basin corridor.

The project would initially cost approximately 142 million dollars, relying partly on traffic through Pakistan's existing road rail facilities. 

The entire project would be completed in two phases at an estimated cost of 1.42 billion dollars. 

There was the plan of a Almaty-Karachi road/railway networks to be extended and linked through other Afghanistan-Pakistan routes surrounding Bolan, Gomal, the Khyber Pass and Pakistans northern areas. 

This would allow Turkmenistan, Uzbekistan and Tajikistan to trade through the Arabian Sea on the doors of South and Southwest Asia and the Middle East with distances reduced by approximately 1200-1400 kilometers. 

Diplomatic circles and government officials in the participating countries value the importance of Almaty-Karachi and related link roads as economically cost-effective, and relatively safe and uncontested when compared to other turbulent routes.

AKI - Adnkronos international Pakistan: Graft 'rampant' in building of transport network


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## Neo

*Pakistan determined to develop nuclear energy: Aziz ​*
By IANS 
Monday September 3, 2007

Islamabad, Sep 3 (IANS) Pakistan 'with its high growth trajectory' is determined to develop and utilise nuclear energy, among other resources, to meet its growing requirement, Prime Minister Shaukat Aziz said, according to Online news agency. 

Every country has the right to develop and use nuclear energy for peaceful purposes under the appropriate international safeguards and guidelines, the prime minister said in address to a conference on 'Energy: Sources of Regional Cooperation' at the Institute of Strategic Studies here.

'We believe there needs to be a level playing field for all countries to have access to civilian nuclear technology without prejudice or discrimination', Aziz said.

To meet future energy challenges the international community faced, he said there was no option but to cooperate with one another. 

'Competition between us will not only be counter-productive but would be immensely destructive,' he said, adding that the 'fragile international political system, which is already faced with serious challenges, may well collapse as a result of conflicts over energy resources'. 

'We must act now to save the world and especially our region from such a disastrous fate', Aziz maintained.

About Iran's nuclear programme, he said: 'It is also desirable to reduce tensions between Iran and the Western countries, as these threats will not only undermine regional peace and security but would also derail efforts to ensure energy security for the entire world.'

Commenting on the Iran-Pakistan-India gas pipeline, the premier said: 'The project is now at an advanced stage of negotiations and we are confident that it will be launched in the near future.'

'Similarly, we are exploring the possibilities of a pipeline from Turkmenistan to Pakistan through Afghanistan, which could be extended onward to India. Import of LNG from the Gulf countries is also a growing option for Pakistan as well as for countries in our region,' he said. 

Pakistan determined to develop nuclear energy: Aziz - Yahoo! India News


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## Neo

*Japan firm to invest in new steel mill​*
KARACHI, Sept 3: Japans Metal One Corp., a subsidiary of Mitsubishi Corp, will have a 26 per cent stake in Aisha Steel Mills (ASM), a joint venture firm being set up in Pakistan to meet growing demand, a venture official said.

Pakistani firms  Universal Metal Corp and Arif Habib Ltd - will have a 49 per cent and 25 per cent stake, respectively, in the venture, being established in Karachi at a cost of $100 million, said Hasib Rehman, chief executive of ASM.

The plant is expected to be completed in two years and it will have an initial capacity of 220,000 tons per annum, Rehman told Reuters.

The steel mills will cater to the growing demand of cold-rolled coils (CRCs) in the country and cater to the automotive and engineering industries, as well as value-added products for the home appliances sector, he said.

The capacity of the mills will be later increased to 350,000 tons, said Rehman.

Annual demand for CRCs in Pakistan is about 450,000 tons, most of which is met through imports, analysts said.

ASM would be the second Pakistani firm to manufacture CRCs after the state-run Pakistan Steel Mills.-Reuters.

Japan firm to invest in new steel mill -DAWN - Business; September 04, 2007


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## Neo

*NADRA among top 50 IT companies of world ​* 
Wednesday, September 05, 2007

LAHORE: The National Database and Registration Authority (NADRA) has for the third consecutive year been acclaimed as among top 50 IT companies of the world.

The NADRA has been placed amongst the Top 50 e-Passport Technology Suppliers for the third consecutive year by one of the leading IT magazines entitled ID World that highlights the players of the auto ID industry. The NADRA is in its list of top 50 e-Passport technology suppliers that includes mostly the companies from the US and Europe.

It is interesting to note that NADRA has not been associated with the issuance of driving licence but it won the Bangladesh Drivers License Project in February last year. Similarly the Database Authority won the contract for Kenya Passport issuing system this year after eliminating six renowned firms from United Kingdom, USA, Canada, Germany and Israel.

Keesing the Journal of Documents & Identity, a world renowned bi-monthly magazine for developments in the security document industry also commended NADRAs multi-biometric passport, an achievement that placed the organisation among the top 50 IT companies of the world.

NADRA was established in 2000 to provide integrated homeland security solutions for Pakistan. NADRA has successfully issued 62 million Multi-Biometric National ID Cards in the last five and a half years and over 4.3 million Multi-Biometric Electronic Passports, containing an RFID chip, facial and fingerprint images of the bearer, PKI and other security features compliant with ICAO standards, since October, 2004. 

NADRA among top 50 IT companies of world


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## Neo

*ABN to lend Rs500m to microfinance institutions​*
LAHORE, Sept 3: ABN Amro plans to lend Rs500 million market rates to micro-finance institutions to support the micro-finance market in Pakistan.

The amount will be increased to Rs2 billion later on, banks chief executive officer Naveed Khan told reporters at a news conference on Monday.

The call for the conference was given to announce formal re-branding of branches of the Prime Commercial Bank, which ABN Amro has acquired for $230 million.

In terms of rupee, the bank paid Rs54 per share to acquire 96.4 per cent shareholding in the Prime Commercial Bank, which is its first acquisition in Asia. With the acquisition, ABN Amro becomes the second largest foreign bank operating in Pakistan. Mr Khan said his bank was committed to Pakistan and its economy, which he described to be very lucrative for the banking sector.

ABN to lend Rs500m to microfinance institutions -DAWN - Business; September 04, 2007


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## Neo

*Japanese investments, exports to Pakistan rise ​* 
Wednesday, September 05, 2007

KARACHI: According to trade statistics of Japanese Ministry of Finance imports from Japan into Pakistan stand at $1.76 billion showing a 15.9 per cent increase as compared to the previous year.

In the same period, Pakistans exports to Japan increased 44.8 per cent to $0.281 billion. Initially a major exporter to Japan, Pakistan is now a major importer from the country.

Associated transport equipment and machinery and mechanical appliances hold 70 per cent share in total imports from Japan. Transport equipment showed an increase of 21.6 per cent from 2005 mainly due to the surge in market demand for cars and the subsequent import.

Machinery and mechanical appliances mainly include textile machinery and have shown a small increase of only 4.8 per cent as compared to last year. The Japanese trading houses in Pakistan and the textile associations are of the view that the textile industry is currently not thinking of heaving investments and expansions as the exports have not been increasing up to the mark. 

Textiles constitute 37.6 per cent of the total Pakistans exports to Japan. In 2006 textile exports to Japan were $ 78.2 per cent million, which showed a 7.6 per cent decrease as compared to the previous year.

Direct investment recently has shown a very encouraging trend in the last couple of years increasing by 41.4 per cent in 2006-07 to 68.3 million. The foremost area of investment is the automobile sector. 

According to PAMA statistics, production of cars stood at 0.160 million units per year 2005-06. Share of Japanese carmakers in the domestic market is an overwhelming 96 per cent. Pak Suzuki, the leading market holder in Pakistan increased its production from 70,000 units per annum in 2005 to 150,000 units per annum by 2007. 

Indus Motors and Honda Cars both increased their production capacity from 43,000 and 25,000 units respectively to 50,000 units by 2006. 

Japanese motorcycle manufacturers have also increased their production capacity. Recently Atlas Honda, the leading market share holder in motorcycles built a new factory with increased production capacity from 0.4 to 0.5 million units per year.

Apart from Automotives, huge Japanese investment is coming in the textile sector as well. YKK Zippers have started constructing their factory at the Karachi Export processing Zone (KEPZ). The Release Contract for the factory is for a premise 50,000 sq meters. The first phase of development is being done on 8,600 sq meter facility at a cost of $15 million investment since January 2007 including the cost of the contract.

Recently, NYK Group South Asia Pte. Ltd., a Singapore based wholly owned subsidiary of Nippon Yusen Kabushiki Kaisha, Japan has established NYK Line Pakistan Pvt. Ltd. The new company began operations on 20th August. 

The annual container handling volume at the port of Karachi has reached one million TEUs and growth is expected to continue. The purpose of the establishment of this local company is to respond to increasing demand in this region. 

However, Japan External Trade Organization is concerned about the economic situation in Pakistan. It is very unclear as to what the future will unfold and many private inquirers from Japan are being hesitant till the election time is over.

Japanese investments, exports to Pakistan rise


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## Neo

*Airblue takes record passengers ​* 
Wednesday, September 05, 2007

KARACHI: Airblue has announced the record monthly travel of over 100,000 passengers and the highest revenue ever on its network in August.

Managing Director Syed Nasir Ali stated that the airline had been able to achieve this performance due to continuous growth in its network and induction of the latest in industry systems. He cited the addition of Islamabad to Manchester flights, the first-ever long-haul flights by a private sector Pakistani airline, as a major contributor to these record revenues and number of passengers flown.

Airblue has unveiled extensive growth plans with the purchase of 14 new-generation aircraft, with deliveries starting in 20 months, and route network growth with additional frequencies on existing destinations and opening of new routes in Europe and the Middle East in addition to the domestic market. The airline plans to increase its flights from Islamabad to Manchester to daily frequency and start flights on the Islamabad to Lahore sector in the near future.

Airblue takes record passengers


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## Neo

*EU investing in social sector uplift programmes: envoy ​*
KARACHI (September 05 2007): Ambassador European Union (EU), Jan De Kok on Tuesday said that EU has been investing in a number of social sector development programmes in the four provinces of Pakistan. Addressing the newsmen at 'Meet the Press' arranged by Karachi Press Club (KPC) here on Tuesday at the KPC, he said the concentration of resources remains on the social sector.

"We are mainly focusing on education and in this regard about 40 to 45 million euros are being spent on educational projects in Sindh," Jan De Kok informed. He said rural development is another area of focus in Pakistan and projects are being executed in NWFP, which according to him has the largest number of poor people of the country.

The ambassador said EU has finalised a funding programme for co-operation with Pakistan in the next seven years and under this programme 50 million euros will be invested here. He also mentioned the formation of a joint commission of EU under which assistance will be extended in trade, science and technology and co-operation to Pakistan.

Replying a question, he said EU looks after the money it spends in different projects extremely carefully and ensures payment directly to the contractors involved. Giving historical account of the EU, he said the community started with six countries in the fifties and now comprises 27 member countries. Croatia and Turkey have aspirations to become members of EU, he added. "The EU will be celebrating its 50th anniversary this year," he announced.

He said during the last 50 years, the EU has made huge success in terms of improving the socio-economic and political environment across the world, particularly in the European countries.

Business Recorder [Pakistan's First Financial Daily]


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## AgNoStiC MuSliM

Neo said:


> *Airblue takes record passengers ​*
> Wednesday, September 05, 2007
> 
> KARACHI: Airblue has announced the record monthly travel of over 100,000 passengers and the highest revenue ever on its network in August.
> 
> Managing Director Syed Nasir Ali stated that the airline had been able to achieve this performance due to continuous growth in its network and induction of the latest in industry systems. He cited the addition of Islamabad to Manchester flights, the first-ever long-haul flights by a private sector Pakistani airline, as a major contributor to these record revenues and number of passengers flown.
> 
> Airblue has unveiled extensive growth plans with the purchase of 14 new-generation aircraft, with deliveries starting in 20 months, and route network growth with additional frequencies on existing destinations and opening of new routes in Europe and the Middle East in addition to the domestic market. The airline plans to increase its flights from Islamabad to Manchester to daily frequency and start flights on the Islamabad to Lahore sector in the near future.
> 
> Airblue takes record passengers



Can we please privatize PIA now? Sell a management stake to these guys and take a large part public after a couple of years.


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## Neo

I agree AM, only pravatisation can save PIA from the current crisis. Atleast the management stake should come under foreign leadership to end corruption and nepotism in the enterprise.


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## Neo

*Cement exports register record growth of 144 percent ​*
KARACHI (September 05 2007): Cement exports registered a record growth of 144 percent during August 2007 due to huge exports orders, over production and better quality, industry sources told Business Recorder on Tuesday.

They said that the cement industry in the country was growing rapidly for the last two years and its production capacity had raised by around 40 percent to 30 million tonnes from 21 million tonnes. Statistics, made available from All Pakistan Cement Manufacturers Association (APCMA), show that during August the country's cement export reached 575,987 tonnes as compared to 236,098 tonnes during the same period of 2006, depicting an increase of 339,889 tonnes or 144 percent during the last month.

Local cement shipments reached 1,963,123 tonnes during the last month from 1,561,979 tonnes in August 2006. Last month, overall cement dispatches totalled 2,539,110 tonnes, or 41.21 percent as compared to 1,798,077 tonnes during the same period last year.

In addition, the cement exports have crossed one million tonne-mark in just first two months (July-August) of the current fiscal. During July-August, the cement exports depicted an upsurge of 139 percent to 1,015,084 tonne against 424,260 tonne during same period of last fiscal.

The local dispatches during the first two months of 2008 fiscal year have reached 3,912,254 tonnes from 3,064,957 tonnes during July-August, depicting an increase of 28 percent. Overall dispatches have gone up by 41.23 percent to 4,927,338 tonnes during July-August from 3,488,857 tonnes during the same period of last year.

"Cement export would further increase in the future, as the export to India would resume within the next few days," said APCMA Secretary Shahzad Ahmed. He said that the Bureau of Indian Standard (BIS) had issued quality and export certificate to the two leading Pakistani cement manufacturers, Lucky Cement and Maple Leaf Cement.

"The issuance of BIS certificate was the major hurdle in the export to India," he said. He said the cement manufacturers had made massive investment under their expansion plans during the last three years, boosting the performance of the cement sector.

He said that the reconstruction process in Afghanistan and fast development work in Dubai had given rise to cement demand. Besides, the demand from Iraq had also pushed the country's cement export to the all time high level during July-August of the current fiscal year.

Business Recorder [Pakistan's First Financial Daily]


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## Introvert

*Pak-Tunis trade ties in different sectors to be bolstered *
ISLAMABAD: Pakistan and Tunis will boost their trade ties in textile, auto industry, financial and hotel sectors.

Prime minister&#8217;s Finance Advisor, Dr. Salman Shah and Tunis Minister for Industry and Energy, Afeef Shalbi in a meeting held here decided this. Afeef Shalbi told the meeting that the Tunis industrial exports valued at $10 billion and Pakistan could export raw materials worth $2 billion to this market. 

Dr. Salman Shah on this occasion offered training facility for Tunis industrial workers in textile and financial sectors, while Tunis to Pakistan in hotel industry. The meeting also discussed the possibility of the setting up of Islamic Economic Union under OIC.

Pak-Tunisia sign MoUs to boost economic cooperation


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## Neo

*PTDC, IPDF sign deal to develop infrastructure ​* 
Wednesday, September 05, 2007

ISLAMABAD: In a bid to promote and develop the tourism industry, the government is all set to construct a corporate complex in Islamabad under its Public Private Partnership (PPP) mechanism.

To this effect, an agreement was signed here on Tuesday between the Infrastructure Project Development Facility (IPDF) and the Pakistan Tourism Development Corporation (PTDC). CEO IPDF Aijaz Ahmad and Managing Director PTDC Salman Javed signed the agreement.

It is worth mentioning that IPDF has been recently established under the aegis of the Ministry of Finance and Economic Affairs to facilitate development of infrastructure projects under the PPP modality.

The lack of infrastructure is of the major bottle-necks in promotion and development of countrys tourism industry. Therefore, the government is now making hectic efforts to overcome these deficiencies as experts believe in alleviating these barriers, enabling the government to earn billions of dollars in foreign exchange.

Under the agreement, IPDF would provide technical assistance to the PTDC including provision of qualified advisory firms for constructing a Corporate Complex on an area measuring 7544.44 square yards in sector F-5/1, Islamabad. The advisory team, comprising financial, legal and technical experts, will help it in structuring the best options to implement the Project.

In addition to housing PTDCs head office, the complex will also house other corporate offices, auditoriums, audio/visual centers, tourism facilitation centers, and additional office floor space.

After signing the agreement, MD, Pakistan Tourism Development Corporation Salman Javed said that the construction of PTDCs Corporate Complex is part of the business plan drawn to make PTDC self-sufficient within the next two years.

He further said that very soon other similar projects would also be coming up as part of the strategic developmental plan wherein other PTDC assets are also planned to be incorporated into Tourism Complexes such as Motels, Beach Resorts, Spas, etc. under the PPP modality.

Aijaz Ahmad commenting after the signing ceremony that the PPP mechanism would ensure a professional and fast track approach to PTDCíS developmental strategy. PTDC is marking the ongoing year under the banner of Visit Pakistan and todays agreement would help in promoting tourism activities in the country through structuring the best options, remarked MD PTDC.

PTDC, IPDF sign deal to develop infrastructure


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## Neo

*EU keen to enhance trade with Pakistan​*
KARACHI, Sept 4: The EU wishes to increase the quantum of trade and aspire for closer cooperation in fields of mutual interest such as social sector, governance, science and technology. It, however, can not allow Pakistani seafood to enter its markets as it does not meet European food standards.

This was stated by the EU Ambassador to Pakistan Jan De Kok while responding to a question after his brief speech at the Karachi Press Club on Tuesday. He was the first ever EU diplomat to visit the KPC.

He further said that the policy of temporary restriction on the Pakistan International Airlines aircraft would also continue till the time qualifying standard requirements to visit European destinations were achieved.

We are committed to our consumers, who are aware and very sensitive over the quality of supplies in the market, particularly of food and food products. We are not satisfied with the sanitary conditions at preparatory and processing stages of seafood, he said.

About PIA Mr Kok maintained that it was a similar issue of safety that led to a temporary ban.

We have no wish to ban either the seafood or your flights to EU but we also can not compromise on our standards. So we hope that standards are obtained for the benefit of both Pakistan and the EU, he said. He however admitted that there was great potential to enhance two way trade.

Kok made no comment on possibility of a free trade agreement between the EU and Pakistan. He also avoided speaking on the issue of five per cent anti-dumping duty on Pakistani bed linen and exclusion of the country from special preferential treatment that our other South Asian neighbours, except India, enjoy.

He, however, claimed that the EU kept a close vigilance on all its programmes in Pakistan that have expanded since September 2004  three fold after the third generation cooperation agreement was enforced.

He said that projects were monitored and evaluated and pilferage was not tolerated and those found involved in wrongdoings were actually proceeded against.

I have zero tolerance for two things that are strictly prohibited in my office  corruption and harassment, he said.

Explaining rationale of projects and programmes that the EU have launched in the country he said, We do not involve ourselves in bankable projects but are more interested in crucial areas that might not be very lucrative such as literacy, healthcare for dispossessed etc.

EU keen to enhance trade with Pakistan -DAWN - Business; September 05, 2007


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## Neo

*Economy in the driving seat?​*
HAVING given a boost to the national economy that has more than doubled the GDP over the past eight years, Pakistans policymakers are now keen to ensure that the current momentum of economic growth does not slow down because of political turmoil. Addressing a seminar last week, the prime ministers advisor on finance, Dr Salman Shah, voiced this sentiment when he observed that economics should be in the driving seat instead of politics. While it is economics that has dominated President Pervez Musharrafs national agenda, politics has emerged as the driving force since the judicial crisis erupted on the national scene in March this year. Subsequent political developments have undermined the concept of economy first as practised by military or quasi-military regimes in this country to depoliticise society.

Technocrats look at the world through what social scientists in the West describe as an economic prism. They believe that sustained and high economic growth can reduce poverty and usher in democracy. Until strong democratic institutions emerge, they pin their hopes on powerful individuals to provide stability and ensure economic progress. But which of the two  economics or politics  will be in the driving seat at different times is determined by the dynamics of the political economy. While technocrats can dominate politics for a while, this situation cannot continue indefinitely. Thus President Ayubs development decade could not save the state structure he had instituted. Today, the economic success of the last eight years  thanks to deregulation, privatisation and liberalisation  have not paved the way for a stable democracy. The economy is being driven by the market forces that have somewhat lowered the political risk. With no single leader dominating the political landscape, pluralism runs deep. This can lead to the maturing of constitutional democracy in which power is widely dispersed and shared. But can the economy flourish in such conditions?

Fortunately, there is consensus among the major political parties on economic reforms, though they may differ on the details. But this consensus needs the endorsement of the electorate. Economic policies that result in social exclusion and political polarisation are not sustainable. Without constitutional democracy, an independent judiciary and a sovereign parliament, there can be no stability without which economic development suffers. Political reforms have been late in coming and until the current constitutional-political crisis is resolved a congenial environment will not be created for putting the economy back in the driving seat.


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## Neo

*'Build Asia 2007' to improve country's economy' ​*
KARACHI (September 05 2007): Italian and Turkish private firms are likely to invest over 100 million dollars in the field of granite and marble mining jointly with the country's leading local firms in a span of one year.

In an interview, Dr Khursheed Nazim, President, E-commerce Gateway Pakistan (Pvt) Ltd, told Business Recorder here on Tuesday that Italian and Turkish private firms had signed Memorandum of Understanding (MoU) with the City District Government of Karachi, local marble industry and with other construction sectors.

They also signed MoUs with the local furniture manufacturers, steel and its related products manufacturers during the Build Asia-2007 Exhibition. He said that 247 foreign delegates from 21 countries had participated in the exhibition besides numerous local private firms exhibited their products.

An Italian firm has signed MoU with a local marble industry to provide them latest equipment for granite and marble mining besides assisting them with their professionals to furnish raw marble blocks in line with the international standards, he said. Moreover, these agreements will also scale down the increasing graph of joblessness and poverty in the country and augment Gross Domestic Product (GDP) rate besides helping this sector to evolve sustainable development.

Syed Mustafa Kamal, City Nazim has taken interest in Turkish plastic pipe manufacturing industry and is likely to award a tender to the manufacturing firm for replacing the old sewerage and water supply pipelines with Turkish ones in the metropolis, he said. In addition, to marble and plastic in steel sector Itehad Steel has signed an agreement with EMAAR a Dubai based construction company to provide steel bars for its construction projects in Pakistan, he said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Vision-2007 trade fair to help improve quality of local products': opening on September 6 ​*
RAWALPINDI (September 06 2007): The two-day 'Vision-2007' international trade fair, which will open here on September 7 (Friday), will help in creating competition in the local market and improve the quality of products in international markets, said Dr Hasan Sarosh Akram, President of Rawalpindi Chamber of Commerce and Industry (RCCI), here on Wednesday.

While talking to reporters here in his office, he said: "This trade fair will not only enhance the economic stability of the country but will also introduce the local industrial products among the people of this country." He said that public and private sector engineering, automobile, cement, textiles and marble firms would take part in the fair.

All arrangements for the exhibition have been completed which is being held to enhance the trade relations with the Central Asian States, China and Afghanistan, the RCCI president said. He said that Science Foundation has agreed to arrange school children's visits to increase their knowledge about industries and production.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan needs to focus on achieving more inclusive growth: Pasha ​*
LAHORE (September 06 2007): The Asia-Pacific region is well on track as a region to achieving the Millennium Development Goal of halving poverty by 2015, however, South Asia remains somewhat off-track and will have to perform better to achieve the target.

This was stated by Dr Hafiz A. Pasha, Assistant Secretary General United Nations while delivering a lecture on the theme of 'Inclusive Growth: The Asian Experience and Implications for Pakistan' organised by the Planning and Development Board as a part of P&D lecture series, here on Wednesday.

Dr Hafiz Pasha, who is also assistant administrator of UNDP, maintained that Pakistan also has the opportunity for bringing down poverty sharply, however, for achieving the Millennium Development Goal (MDG) of halving poverty by 2015, Pakistan will have to focus on achieving more inclusive growth. 'Countries like Bangladesh and Pakistan also have large pockets of poverty and prospects have improved in both the countries of achieving a faster breakthrough in reducing the incidence of poverty', he added.

He said the Asia-Pacific has been the fastest growing region in the world over the last few decades, and has at the forefront of the process of globalisation. In the recent years, the euphoria about Asian economic performance has been enhanced even further by the high growth rates achieved simultaneously by the two largest economies of the region, China and India.

India growth rate has crossed 9 percent while China continues at almost 10 percent. Both the countries also had the largest numbers of the poor and the critical question is how the high rates of economic growth have impacted on the incidence of poverty in these two countries, he said, adding, all countries of south Asia including Pakistan have also seen a significant upsurge in their growth rates by anywhere between half and one and ha1f percentage points. The manufacturing sector, in particular, in these countries is beginning to take off on the back of rapid growth in exports.

Talking about trends in inequality in Asia Pacific, Dr Pasha said there have been concerns about inequality in Pakistan. However, he said the recent ADB study has shown Pakistan not only has had a relatively low level of inequality but has also experienced a very small increase in inequality from 1990 to 2004. 'Rising inequality is demonstrated by the fact that in most countries the top 20 percent have experienced bigger increases than their counterparts in the bottom 20 percent', he pointed out.

He added that the countries where inequality has increased, regional disparities have also widened at the sub-national level. Another important source of rising inequality is the growing gap between rural and urban incomes. Quoting ADB, Dr Pasha said the growing urban-rural gap has contributed more to the overall level of inequality in China than disparities among household within urban or rural areas. In India also, estimates are that the gap is increasing and rural incomes are now only about half the level of urban incomes on a per capita basis, he added.

Citing neglect of agriculture and rural development, failure in employment generation, under investment in human development and consequences of globalisation and liberalisation as drivers of inequality and poverty, Dr Hafiz A. Pasha apprised the select audience about its impact on the growth.

About the Pakistan experience, he said growth in Pakistan has picked up appreciably in the last four years while levels of expenditure of the poorest segments have fallen slightly primarily because of low growth. He added that Pakistan has also a higher rate of economic growth probably being accompanied by rising inequality. The visible consumption boom, especially with the explosion in asset values in the stock market and the urban real estate market have fuelled these concerns about the growing concentration of wealth in the country, he added.

Dr Pasha said that taking lessons from the Asian experience, there is need that growth should take place in sectors in which the poor work. Therefore, an inclusive growth strategy has to focus on sectors, areas, factors of production and items of consumption, which can play a special role in alleviating poverty.

About the policy for resource mobilisation, he said one of the singular failures of many Asian governments has been the inability to use fiscal policy as a strong redistributive mechanism, especially in terms of developing a progressive taxation system. 'Provincial governments in Pakistan have, in fact, been endowed with taxes, which are inherently progressive in character. These include taxes on assets like land, buildings and motor vehicles, which are owned largely by the richer segments of the population.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Industrial clusters: setting up of production centers recommended ​*
LAHORE (September 06 2007): The speakers at a two-day workshop on "Clean Production and Pollution Prevention" have recommended setting up of production centers in the industrial clusters of leather, cutlery, surgical instrument and garment sectors.

Small and Medium Enterprise Development Authority (Smeda) has organised the workshop in collaboration with ministry of industries, production and special initiatives and the World Bank.

The concluding ceremony of the workshop held this evening, which was addressed by Shahab Khawaja, Federal Secretary, Industries, Production and Special Initiatives, Shahid Rashid, CEO, Smeda, Paul Martin, Senior Consultant, World Bank, Walter E Weaver, Ms Ana Oestreich, Ms Kalusm Ahmed and Hammad Naqi Khan of WWF-Pakistan.

The speakers recommended that the World Bank and Smeda should initiate a clean production awareness programme as a public-private partnership project. A series of workshops has also been suggested for capacity building of the human resources involved in clean production. Smeda and World Bank have also been requested to subsidise the consultation regarding clean production and pollution prevention for providing SMEs with methodologies of the clean production systems.

The speakers urged that government should share at least 50 percent cost of the environmental compliance certification to attract SMEs towards this emergent need of the hour. The speakers urged the government to provide incentives for promoting use of environment friendly technology and raw materials along with the technical assistance to encourage pollution prevention in the industry.

Shahid Rashid while speaking on the occasion, said the awareness move on clean production and pollution prevention would be continued with the same zeal and assured further measures in partnership with private, public sector to introduce the technology, raw materials and the modern methods for this purpose. He urged the private sector to play a positive role to help government of Pakistan comply with the regulations and procedures set for clean production and pollution prevention in the country.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pak cotton output may rise ​* 
Thursday, September 06, 2007

LAHORE: The World Cotton Advisory Committee has projected increase in cotton yields in India and Pakistan in 2007-08.

However, production in the rest of the world is expected to decline for the third consecutive season to 10.5 million tonnes. As a result, world cotton production is forecast to fall slightly to 25.4 million tonnes in 2007-08.

Mill-use of cotton in Asia is expected to continue to increase to a record 20.3 million tonnes, showing 75 per cent of world cotton use by mills. Most of the projected three per cent increase in global mill use will be once again driven by China (mainland).

World cotton trade is expected to rise by eight per cent to 8.9 million tonnes in 2007-08 due to larger Chinese imports forecast at 3.4 million tonnes.

Exports by the US, India and Brazil are projected to increase in the year under review. However, exports by Uzbekistan, the African Franc Zone and Australia are expected to decline.

Using the ICAC Price Model 2007, it forecast a season-average Cotlook A Index of 68 cents per pound in 2007-08, nine cents higher than in 2006-07. This projected price increase is the result of an expected significant decrease in stocks-to-mill use ratio in the world less China (mainland).

Pak cotton output may rise


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## Neo

*Should the economy be in the driving seat? ​*
The prime ministers adviser on finance, Dr Salman Shah, said at a seminar in Karachi that the national economy should be in the driving seat instead of politics. The subject has been editorialised upon subsequently and the conclusion drawn is that unless the political landscape in the country is made suitable for economic development, economic growth cannot be sustained. Reference was made to representation in the democratic process in order to make the people feel that they own the economy and dont regard it as an enemy.

Some reporting took stock of the business communitys reaction to the upsurge in favour of democratic rule earlier this year, especially in the wake of the judicial crisis caused by a faulty reference against the Chief Justice of Pakistan. It was noted that the pampered, risk-averse private entrepreneurs of Pakistan do not share the peoples enthusiasm for democracy. It was also discovered that businesses, irrespective of size, are either hostile or indifferent to democracy.

Dr Salman Shah, in an earlier statement, had been more direct in his argument in favour of the primacy of the economic function. He claimed that the national economy functioned better under dictatorship. He pointed to Singapore, Malaysia, China, Taiwan and the UAE, which flourished economically during a period when they were ruled by a group of men or by one person. He thus set up an unintentional comparison that doesnt suit the current mood in Pakistan and could actually be incongruous on many counts.

But it is unfair to say that the business community of Pakistan is hostile or indifferent to democracy. By their very nature, the productive sector of the economy is focused on the creation of products and their export. All ancillary sectors also adhere to the view that their function should remain unthreatened by political events in the country. However, there are some service sectors such as the professional classes  doctors and lawyers, etc  who are unaffected by the risk-prone economic function of investment and production.

Democracy is the domain of politics and politics is not only a representation of the people, but also the domain where politicians vie with one another for power. In underdeveloped societies, politicians are less sensitive to the functioning of the economy. In some cases their approach to the question of power compels them to put politics above the economy. They believe that an economic roadmap which consolidates their dominance is better suited for growth. Sometimes they bring in changes that may not be growth-friendly and may in fact be damaging to many businesses in the private sector.

In Pakistan, the business sector did react politically to the policies of state sector dominance involving nationalisation in the 1970s. This was a reactive behaviour and it dominated the politics of the country for many years. Unfortunately, it looked as if the business community was not in favour of democracy; but the truth was that it simply wanted to secure stable conditions for its functioning. In the 1990s, however, an across-the-board political consensus on denationalisation and private sector primacy took the business community back to its normal conduct.

No economy likes transformational political programmes. Ideological politics is the stuff of high ideals and inflexible principles; but the economy is based on opportunism and linkages with an increasingly globalised world. Honour-based societies vote for political parties promising honour through a defiant foreign policy. But the business community wants a non-isolationist foreign policy completely based on material opportunism. This is where the conflict between business and politics emerges. Because it is in a minority the business community keeps quiet while secretly favouring a non-isolationist government facilitating their functioning.

The current cautionary attitude of the business community has been moulded by the bad and inconsistent economic policies adopted by the democratically elected political parties in opposition to each other. The ambience of uncertainty created by the tendency of changing the economic goalposts is certainly hostile to the economy. No matter who rules Pakistan the business community would like him to help create a predictable environment for investment and production. That is why it is unfortunate that Pakistani politicians, despite the over-all consensus on the primacy of the private sector, have been myopic in this regard.

Today, the business community is on tenterhooks. It doesnt look as heroically decisive as the lawyers agitating for democracy in the street and getting roughed up by the police. Sensing that the state is plagued by problems of law and order and terrorism, they privately judge the politicians on the scale of their ability to counter these two problems. But such is the nature of politics that the politician finds it strategically more important to downplay terrorism and violence by linking it to the Musharraf government. But the businessman can also see with some trepidation that the old PML-PPP polarity is on its way back.

In the developed world the politician gives priority to the economy. It is only after this priority is granted that the business community becomes directly involved in the politics of democratic governance. But the paradox in Pakistan is that the politicians have not been able to place themselves in subservience to the national goal of economic growth. On the other hand, it is the military dictator  there is lot of grey area here  who shows signs of getting worried over the economy and begins to pay attention to the demands of the business community.

The reluctant Saudi reprimand

The Saudi government, while consulting its legal experts, must have wrung its hands over how to handle the return of Mr Nawaz Sharif and his family to Pakistan. It has issued a moral reminder to him that his return is improper. Is any punitive measure implied? No, only that if he came to Saudi Arabia some indeterminate action could be taken.

So what if Mr Sharif had at times said that he had made no commitment about not returning? Equally, as Saudi Arabia is careful about going against the Supreme Court of Pakistan, Mr Sharif is emboldened by it. Has he ruined his relations with the Saudi authorities? No. In the long run, nothing that cant be set right with intensive diplomacy. Will he still stick to his plan to return to Pakistan on the 10th of September? Has the Musharraf government suffered another reversal by misunderstanding the nature of the papers signed by the Sharifs before their exile? We shall know the answers very soon. *

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan and Tunisia sign four bilateral agreements ​* 
06 September 2007
ISLAMABAD -- Pakistan and Tunisia here yesterday signed four bilateral agreements aimed at increasing volume of bilateral trade to $300 million from $25 million during next four years. 

The agreements were signed in the areas of enhancing cooperation in industrial, science and technology fields besides cooperating in cultural as well as tourism sectors. The agreements were signed at the conclusion of two-day Joint Ministerial Commission (JMC) session.

Federal Minister for Textile Mushtaq Ali Cheema, and Nauraiz Shakoor, Federal Minister for Science and Technology signed the agreements on behalf of Pakistan while Afif Chelbi, Minister for Industry, Energy, Small and Medium Size Enterprises, Tunisia signed the agreement on behalf of his government.

The two sides also approved the minutes of the 6th session of Pak-Tunisia JMC. According to the minutes of the meeting, it was decided that constitution of Joint Business Council, in furtherance of MoU signed between FPCCI and UTICA in 2002, would be completed within a period of one month.

Both the countries agreed to exchange list of tradable goods within 90 days.

Constitution of a Joint Working Group (JWG) on Industrial Cooperation was also agreed. The JWG to be notified by December 31, 2007, would provide impetus to cooperation in establishment of joint ventures in the field of industry including SMEs. Constitution of a study group was also proposed to specifically examine and address all issues relating to textile, apparel industry and trade. 

Pakistan and Tunisia sign four bilateral agreements - Middle East News


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## Introvert

*Pakistan, Sri Lanka pledges raising trade to $one billion * 
COLOMBO, Sept 6 (APP): Traders in both Pakistan and Sri Lanka are looking forward to adopt aggressive approach in achieving the potentional bilateral trade capacity that is over $one billion. While assessments and thorough research show that the existing Pakistan-Sri Lanka bilateral trade capacity is highly encouraging, present trading bring about $250 million only 25 percent of the capacity, said Muhemmed Aejaz, Commercial Counselor of the High Commission for Pakistan in Colombo. 

He was addressing the gathering at the opening ceremony of a mini-exhibition of Pakistani products, held here at local hotel. 

The exhibition coincides with the visit of a 15 member Pakistani trade delegation, to Sri Lanka, who is currently in Colombo. In the past one year trade between the two countries included some extraordinary activities, said the Commercial Counselor. Since January 2007, two trade delegations from Sri Lanka have visited Pakistan. 63 Sri Lankan businessmen had attended Expo Pakistan 2007 in March and 30 companies had exhibited Sri Lankan products at the My Karachi held in June. 

The visit is important since it is the first major return visit by the Pakistani business community, he said. 

The exhibition was organized to introduce the products of the delegation to interested counterparts in the Sri Lankan market. The delegation represents 15 novel fields of trade, breaking traditional approach of trading a limited number of commodities such as rice, potato and textiles from Pakistan and tea, rubber and beetle leaves from Sri Lanka. 

The delegation is lead by Arshad Alam former vice president of the Federation of Pakistan Chamber of Commerce and Industry (FPCCI) representing the leather industry in Pakistan.The market has high potential. 

It is time that we convert the good political relations between the two countries to good economic relations, Alam told APP special correspondent Vimukthi Femando. 

Increased per-capita income, expanding middle class population, increasing consumption and consumer base in Sri Lanka are some favourable conditions in the Lankan market which appeal to the businessmen in Pakistan, he said. Previously, trade had been between the two port cities, Karachi and Colombo. 

However, the present delegation, representing diversified products as well 

as diversified locations in Pakistan, could be considered a milestone, the first 

step in a million mile journey, he noted. Alam expects that with the 

introductions by the delegation, trade between the two countries will meet up the 

one billion USD target within five years. 

Shakeel Azam representing Pak Cutlery Consortium from Wazirabad said, he was happy with the response he received in Sri Lanka. I have already received nine major inquiries and have decided to tie up with a major chain store in Sri Lanka, he said. 

Shahid Ahmed, from Karachis FD&C Equipment (Pvt) Ltd, presenting machinery used in pharmaceutical industry was hopeful about the potential market in the country. Sri Lanka at present imports most of the pharmaceuticals to meet the countrys need. So, why not take the opportunity to manufacture own drugs/medication. It can also become a major manufacturing country, he said. 

The delegation that includes prominent Pakistani traders had discussions with Manel De Silva, Director General of Commerce and a team of officials from the Department of Commerce on Monday. They are also scheduled to meet with the members of the Ceylon Chamber of Commerce, National Chamber of Commerce, National Chamber of Industries and Chamber of Exporters. 

It is also scheduled to visit Kandy, capital city of the central province situated 112 kilometers Northeast of Colombo on Thursday to hold discussions with the Central Province Chamber of Commerce and provincial trading associations. 

Since the Sri Lanka Pakistan Free Trade Agreement in June 2005, interest has grown in bilateral trade and business cooperation. The business community had started exploring trading of new commodities, non-traditional items of trade as well as trading over 100 tax free items, which enables them earn higher profits

Associated Press of Pakistan - Pakistan, Sri Lanka pledges raising trade to $one billion


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## Moin91

*Pakistans forex reserves exceed $16 billion​*

KARACHI: Foreign exchange reserves of Pakistan have exceeded from $16 billion during the week ended on September 1. During this period, an increase was seen in the reserves of the central bank whereas decrease was seen in the reserves of the commercial banks.

According to the chief spokesman of the State Bank of Pakistan, Syed Waseemuddin, reserves of foreign exchange, after an increase of $260 million during the week ending September 1, reached $16.0789 billion which is the highest level in the history of the country.

During the same period, reserves available with the central bank after an increase of $289.9 billion reached $13.804 billion whereas reserves with commercial banks after a fall of $29.2 million came down at the level of $2.2749 billion.


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## Moin91

*Infrastructure main obstacle to attracting FDI: OICCI survey​*
Friday, September 07, 2007

KARACHI: Pakistans role in the global war against terror has heightened domestic security risks.

In a presentation on Thursday, the Overseas Investors Chamber of Commerce and Industry (OICCI) highlighted that 69 per cent of its members found the internal political situation to be poor while 71 per cent of them were concerned about the law and order situation.

A growing domestic economy and consistent and business-friendly policies have contributed to an overall favourable outlook for Pakistan as an investment destination. However, infrastructure is the key constraint in attracting FDI, said Zubyr Soomro, the OICCI President.

Announcing the results of the first-ever OICCIs annual survey on the perception of its members doing business in Pakistan, he said with FDI of over $5 billion last year, Pakistans economy had achieved critical mass yet to sustain and increase this level of investment required continuity of the economic reforms process and current government policies.

Nevertheless, 75 per cent of those questioned said the business climate was attractive and had a positive outlook towards their trading partners. Most OICCI members are satisfied with the performance of the Ministry of Commerce, Ministry of Finance and Ministry of Industry and Production; however, the Ministry of Interior needs improvement according to 41 per cent of them.

Among the autonomous bodies the State Bank of Pakistan and the Federal Board of Revenue received the highest percentage of praise from the foreign members.

A major concern is the state of infrastructure facilities available in the country with 89 per cent being highly dissatisfied with the availability electricity and 51 per cent being dissatisfied with water availability in Pakistan. Telecommunications ranked as the most promising sector with over 70 per cent considering it satisfactory.

The foreign business community considers the law and order situation, infrastructure and political uncertainty to be the most significant deterrents to business as these factors received very high ratings of 6.5, 5.3 and 5.7, respectively, out of eight points.

OICCI has 168 members representing all major sectors of the economy. The annual survey conducted by KPMG shows that the OICCI members contribute more than 14 per cent of GNP of Pakistan and nearly 32 per cent of GDP of the manufacturing sector. Between them they contribute 33 per cent of the total tax revenue of the government of Pakistan and directly employ around 100,000 people.

Infrastructure main obstacle to attracting FDI: OICCI survey


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## Moin91

*EDB consultative meeting today*

Friday, September 07, 2007
By Israr Khan

ISLAMABAD: Frequently-interrupted power supply, short-range tariff policies and lack of university-based research are major bottlenecks in the countrys industrial growth, especially the chemical industry which remains consistently neglected.

Sensing the importance of the chemical sector, the government has now decided to formulate and finalise a long-term Chemical Vision 2020 along with an action plan by mid-January 2008, which aims to boost the sector and its exports.

The Engineering Development Board (EDB) in this effect has initiated a process of consultations with industrialists and other stakeholders to overcome hurdles in the development of this sector.

It is worth mentioning that on 28 August, 2007, the EDB held a meeting in Lahore, which highlighted various issues regarding the sector, which needed special government attention. 

Now, it has been decided to hold another meeting in Karachi on Friday (today) with the stakeholders.

Industrialists believe that the chemical industry has the potential to raise economic growth, if these major stumbling blocks highlighted were resolved with the assistance of the government. 

It would reduce cost of production and make the sector more competitive.

Industrialists complain that the government is always focussing on the textile sector while neglecting the chemical industry, an official told The News on Thursday.

Frequent power outages were another impediment in industrial growth, which also increased the cost of production, he added. Industrialists working in fertiliser sector say that in Pakistan, gas supply in winter season perennially remains cut off which results in low production and higher cost.

There is also a weak linkage between university based research and the industrial sector. To make a strong and worthwhile interaction, industrialists have offered technical and financial assistance to universities carrying out valuable research, which could cater to the requirements of the chemical sector.

Industrialists suggest that there should be tariff protection and it should be long term not of short term because; frequently changes in tariff shake investorsí confidence and their plans of investment.

EDB consultative meeting today


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## Moin91

*Emirates aims to provide quality products​*
Friday, September 07, 2007

KARACHI: President Emirates Global Islamic Bank Ltd Syed Tariq Husain said on Thursday with the implementation of CRM system, Emirates has become the first bank in Pakistan to deploy Oracle-Siebel solutions.

The objective is to provide quality and Shariah-compliant financial products and services.

CEO Integrated Technology Partners Anwar Matin, on the occasion, said with the successful installation of CRM solutions, the banking industry of Pakistan had an option to source Pakistan-based expertise to provide world-class services to the consumers.

He said the ITP was the first Pakistani IT company to carry out end-to-end implementation of Oracle-Siebel solutions in the financial services sector, using a combination of local and internationally-trained and accredited resources.

CIO EGIBL Ahmed Saaqib Asad said the system is now up and running with all the call centre supervisors, having access to EGIBL Oracle-Siebel CRM.

Emirates aims to provide quality products


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## Introvert

*Pakistan to export bed sheets to China; Chinese Textile delegation to visit Pakistan next year : PTE *

BEIJING, Sept 7 (APP) - A delegation of Textile manufacturers from Shanghai is scheduled to visit Pakistan next year to explore the avenues to import Textile products from Pakistan. 

This was stated by Chairman Pakistan Textile Exporters Association (PTEA) Zahid Aslam while talking to APP from Shanghai where he along with an eight-member delegation held successful negotiations with their Chinese counterparts in Shanghai, Ningbo and Changzhou to find out markets to enhance export of Pakistani Textile products. 

He said that during meetings in these cities, he invited the Chinese textile manufacturers to Pakistan to see themselves the conducive business environment available there. 

The Chairman PTEA said that he was delighted that they have accepted his invitation and agreed to visit next year. 

Zahid Aslam said that we were successful in obtaining export orders for supply of five containers of bed sheets which is the beginning and expressed the hope that more orders would be forthcoming in future. 

He pointed out that we would start exports of bed sheets to China from next month. 

The Chinese side, he said expressed willingness to import from Pakistan Yarn, Fabrics and Bed sheets as they were of the opinion that these products of South Asian country are competitive in price as labour cost and other associated expenditures are on the lower side. 

Zahid Aslam said that negotiations for import of Yarn and Fabric are under progress and expressed the determination of their successful conclusion. 

He said that the PTEA delegation would again visit soon to Shanghai to further push these negotiations with the Chinese side. 

He said that during their visit to Changzhou, the delegation was informed that the thirty percent of the total textile production was being exported to various parts of the world. 

The negotiations with regard to purchase of power-looms for textile were also to continue in future, he said and expressed the hope of positive out come in this regard. 

Zahid Aslam said that what he transpired from these meetings was that Chinese were willing to do business in close liaison with Pakistani businessmen. 

Associated Press of Pakistan - Pakistan to export bed sheets to China; Chinese Textile delegation to visit Pakistan next year : PTE


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## Introvert

*NBP, ICBC ink MoU to boost cooperation in Banking sector * 
BEIJING, Sept 7 (APP)- National Bank of Pakistan (NBP) and Industrial & Commercial Bank of China (ICBC) signed a MoU on bilateral cooperation in Dalian, on the sidelines of World Economic Forum Friday. 

&#8220;Areas of mutual cooperation will focus on trade, finance, cash management and international payment, corporate lending and project financing, infrastructure financing, investment banking including cross border mergers and acquisition&#8221;, said a spokesman of NBP. 

The two banks have also agreed to expand their business cooperation in third countries. 

The MoU was signed by Mohammad Rafiq Bengali, SEVP, NBP and Mr. Wei Guoxiong, CRO, ICBC in the presence of Prime Miniter&#8217;s Adviser on Finance Dr. Salman Shah and Chairman, ICBC Jiang Jian. Pakistan&#8217;s ambassador to China Salman Bashir was also present at the occasion. 

The spokesman of NBP commenting on the signing of MoU told APP from Dalian that it would be mutually beneficial for both the countries. 

He said that it would also boost the Sino-Pak economic ties and added that especially it would be help boost Pakistan&#8217;s economy. 

ICBC is China&#8217;s largest bank with total assets of more than USD 1.11 trillion. NBP is Pakistan&#8217;s largest and most profitable financial institution with 1,232 branches in the country and presence in 23 countries across the world. 

Earlier, the ICBC&#8217;s Chairman in June 2007 visited Pakistan and held discussion with NBP&#8217;s President Ali Raza on mutual cooperation in the areas of banking and finance. 

Associated Press of Pakistan - NBP, ICBC ink MoU to boost cooperation in Banking sector


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## Introvert

*China Mobile to mix profit, responsibility in Pakistan*
By Liu Baijia (China Daily)
Updated: 2007-09-07 09:06

China Mobile Communications Corp, the largest mobile operator in the world, aims to export its experience of balancing social responsibility with business growth to Pakistan, where it has just taken full control of Paktel.

Wang Jianzhou, chief executive officer (CEO) of China Mobile and chairman and CEO of its Hong Kong-listed arm China Mobile Ltd, said social responsibility should be a top priority for companies that aspire to become global giants.

In the past seven years, Beijing-headquartered China Mobile has more than tripled the number of its subscribers since its incorporation in 2000 and has become the largest telecom company in terms of subscribers and market capitalization.

"Global growth companies face better opportunities and more challenges, but they also have more social responsibilities," said Wang at the Inaugural Annual Meeting of the New Champions organized by the World Economic Forum in Dalian.

"They should take social responsibility into account when they start their businesses," added Wang, a mentor to the new champion companies, together with Intel Chairman Craig Barrett and Citibank NA Chairman, President and CEO William R Rhodes.

China Mobile has seen its subscribers from the rural regions of the country rise by almost 40 percent in the first half.

Driven by a strong increase in customer numbers and good momentum in its value-added services, China Mobile reported 26 percent year-on-year growth in the first half to 37.91 billion yuan (US$5 billion).

At the end of July, it had 338 million subscribers, two-thirds of the total mobile users in the world's most populous country.

The Chinese giant, which took over the fifth-largest Pakistani mobile operator Paktel in March and renamed it CMPak, will follow the same principle to strike a balance between profit and social responsibility in Pakistan.

"We always see ourselves as a local Pakistani company and are highly committed to the market there," said Wang.

His company has committed to invest US$800 million in two years to upgrade and expand the networks in Pakistan.

At the end of June, there were 63.15 million mobile subscribers in Pakistan, rising by 45 percent.

On September 2, CMPak won approval from the Pakistani government to secure a 15,000-sq-m plot to build a campus with integrated functions of research and development, training, and commercial use.

China Mobile to mix profit, responsibility in Pakistan


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## Introvert

*Bahraini investor to set up Islamic bank*

KARACHI: Commenting on the current development of the Islamic banking sector in Pakistan, Mr Ashar Nazim Managing Director, Islamic Capital, said that the introduction of new banks and financial investment in Pakistan is a very positive sign in the development of an Islamic financial market. These comments came in view of the news that a Bahraini investor, Al Salam Bank, is keen to establish operations in Pakistan. 

Yousif Taqi, CEO - Al Salam Bank, has expressed his interest in making investments in Pakistan&#8217;s infrastructure, energy, power and real estate sectors. He further said that the current market share of Islamic banking in Pakistan is nearly 3 percent within five years, which is remarkable by any international standards. Comparing Pakistan to markets of Malaysia and Bahrain, it took them nearly ten years to reach the milestone. Currently there are 6 Islamic commercial banks and 13 Islamic banking windows of conventional banks operating in Pakistan, with more than 170 branches. staff report

Daily Times - Leading News Resource of Pakistan


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## Introvert

*&#8216;FTA can increase volume of Sino-Pak trade&#8217;*

ISLAMABAD: The Free Trade Agreement (FTA) between Pakistan and China will help in increasing trade volume to the optimum level between the two countries.

Zhang Ye, Party Chairman and Vice Director General, Department of Foreign Trade and Economic Cooperation of Xinjiang province expressed these views while welcoming the business delegation of Islamabad Chamber of Commerce & Industry (ICCI) on Thursday, said a press release issued here. 

He said that the Pakistani business delegation could explore enormous opportunities of trade in Xinxiang and appreciated their interest for visiting the Urumqi trade fair, which provided an excellent window of trade in many areas with Chinese entrepreneurs. China had a great interest for trade and investment in Pakistan and highlighted the importance of various projects, which were underway with collaboration of China in Pakistan. The chairman said that Pakistan and China friendship was deeper than oceans. 

Zhang Ye said that both the countries should closely collaborate in many areas, which would further deepen their historic friendship. Discussing the development in Xinjiang province, he said that it had a great potential and Pakistan could further trade in the areas of common interest. 

Nasir Khan, President of ICCI thanked Mr Zhang Ye for meeting the business delegation. He said that delegation had a great experience visiting the Urumqi fair, and their meetings with several Chinese entrepreneurs. staff report

Daily Times - Leading News Resource of Pakistan


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## Neo

*BIT and ROZs in tribal areas: US lobbying firm's contract terminated ​*
ISLAMABAD (September 07 2007): Pakistan has terminated a contract with a Washington-based lobbying firm Quinn Gillespie and Associate LLC for failing to secure enough support in the US administration for Bilateral Investment Treaty (BIT) and Reconstruction Opportunity Zones (RoZs) in troubled tribal areas, official sources told Business Recorder.

Sources said the government paid millions of dollars to the firm for obtaining reasonable support in the US administration against two tasks ie BIT and RoZs but the firm failed to meet the target. "Quinn and Gillespie obtained four or five letters from senators which Pakistani diplomats can do easily," the sources added.

Now, Pakistan has hired a Texas-based firm, Hunton and Williams LLP, to speedily complete the task, which is already too late. The firm practices in the areas of general civil trial practice in all state and federal courts, securities, probate, real estate, intellectual property, environmental, labour, employee benefits, antitrust and oil and gas law.

Asked how much the government is expected to pay to the new firm, the sources said it would also be in millions of dollars. Sources said that a team of Hunton and Williams met with the officials of ministries concerned, including the commerce ministry to devise a comprehensive strategy to secure enough support for BIT and RoZs.

"Our meeting with the team members was very encouraging as we discussed all the hurdles in details and new strategy," the sources maintained. They said some of the demands of US administration are difficult for Pakistan to accept and remove these hurdles, Pakistan decided to hire new lobbying firm in consultation with the Pakistan embassy in Washington.

They said the US is of the view that the investment made by the American companies in 90s should also be covered in the BIT whereas Pakistan argues that it should be treated separately as it was made before agreement.

Another demand made by the US was that any dispute between Pakistani and American companies would be dealt by the US courts, but Pakistan was of the view that the issues should be settled in accordance with international laws, the sources added.

However, Pakistan has agreed to pay compensation to the American companies in case of intellectual property rights piracy which was a longstanding demand of the US, besides tightening rules in the country, the sources maintained. According to sources, the US was also insisting on including a clause in the treaty that Pakistan's National Assembly, Senate, Executive and Judiciary would not take expropriate action against any American company.

Though, Pakistan has informed the Americans that these are sovereign institutions and they have no such track record, the issue is yet alive and may be discussed in Thursday's video conference, the sources added. Sources said that both parties have narrowed down differences on a few points while several other issues were yet to be resolved before reaching a formal agreement.

They said President Bush had announced that US establishment of RoZs during his last visit to Pakistan, but this had not been materialised yet due to one or the other reasons.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan's foreign exchange reserves cross $16 billion mark ​*
KARACHI (September 07 2007): Liquid foreign reserves have crossed 16 billion-dollar mark, reaching historic level of 16.0789 billion dollars despite the outflow of some 133 million dollars in portfolio investment.

The central bank on Thursday issued the latest figures of liquid foreign reserves, which depicted an increase of 260.7 million dollars in overall reserves from 15.8182 billion dollars to 16.0789 billion dollars during the last week.

During the last week, foreign reserves, held by the central bank, have gone up by 289.9 million dollars to 13.804 billion dollars from 13.5141 billion dollars. The reserves, held by banks, show a decline of 29.2 million dollars during the last week, as it has reached 2.2749 billion dollars previously stood at 2.3041 billion dollars last week.

The historical achievement of this record level of foreign exchange reserves has been made possible by the healthy growth in external flows, including foreign direct investment (FDI), home remittances, said the central bank.

"It is a positive indicator. Despite a decline of 133 million dollars in portfolio investment during the 2008 fiscal 2008, the overall foreign reserves show an upsurge," economics experts said.

They said that foreign reserves, after reaching 16 billion dollars peak level, the country was able to make imports of six months without any assistance, as the country's overall imports would reach 32 billion dollars during the current fiscal.

"This increase in liquid foreign reserves may be due to a big inflow of foreign loan or remittances by Pakistanis abroad, but the reason of rise would be confirmed later in the current account," they added.

It may be mentioned here that at the end of the last fiscal, the country's foreign exchange reserve showed tremendous growth of 2.4768 billion dollars to historic level of over 15.6137 billion-dollar benchmark as compared to 13.1369 billion dollars during the 2005-06 fiscal year.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan and Sri Lanka eye $1 billion trade ​*
COLOMBO (September 07 2007): Traders in both Pakistan and Sri Lanka are looking forward to adopt aggressive approach in achieving the potential bilateral trade capacity that is over one billion dollar. While assessments and thorough research show that the existing Pakistan-Sri Lanka bilateral trade capacity is highly encouraging.

While present trading brings about 250 million dollars only 25 percent of the capacity. Muhemmed Aejaz, Commercial Counsellor of the High Commission for Pakistan, said in Colombo, whileaddressing the gathering at the opening ceremony of a mini-exhibition of Pakistani products, held here at a hotel.

The exhibition coincides with the visit of a 15-member Pakistani trade delegation to Sri Lanka, who is currently in Colombo. In the past one year trade between the two countries included some "extraordinary activities," said the Commercial Counselor.

Since January 2007, the two trade delegations from Sri Lanka have visited Pakistan. Sixty-three Sri Lankan businessmen had attended 'Expo Pakistan 2007' in March and 30 companies had exhibited Sri Lankan products at the 'My Karachi' held in June.

The visit was important since it was the first major return visit by the Pakistani business community, he said. The exhibition was organised to introduce the products of the delegation to interested counterparts in the Sri Lankan market.

The delegation represents 15 novel fields of trade, breaking traditional approach of trading a limited number of commodities such as rice, potato and textiles from Pakistan and tea, rubber and beetle leaves from Sri Lanka.

The delegation is led by Arshad Alam former, vice president of the Federation of Pakistan Chamber of Commerce and Industry (FPCCI), representing the leather industry in Pakistan. "The market has high potential. It is time that we convert the good political relations between the two countries to good economic relations," Alam told APP special correspondent Vimukthi Femando.

Increased per-capita income, expanding middle class population, increasing consumption and consumer base in Sri Lanka were some favourable conditions in the Lankan market, which appealed to the businessmen in Pakistan, he said. Previously, trade had been between the two port cities, Karachi and Colombo.

However, the present delegation, representing diversified products as well as diversified locations in Pakistan, could be considered a "milestone, the first step in a million mile journey," he noted.

Alam expects that with the introductions by the delegation, trade between the two countries will meet up the one billion-dollar target within five years. Shakeel Azam, representing Pak Cutlery Consortium from Wazirabad, said that he was happy with the response he received in Sri Lanka. "I have already received nine major inquiries and have decided to tie up with a major chain store in Sri Lanka," he said.

Shahid Ahmed from Karachi's FD&C Equipment (Pvt) Ltd, presenting machinery used in pharmaceutical industry, was hopeful about the potential market in the country. "Sri Lanka at present imports most of the pharmaceuticals to meet the country's need. So, why not take the opportunity to manufacture own drugs/medication. It can also become a major manufacturing country," he said.

The delegation that includes prominent Pakistani traders had discussions with Manel De Silva, Director General of Commerce, and a team of officials from the Department of Commerce on Monday.

They are also scheduled to meet with the members of the Ceylon Chamber of Commerce, National Chamber of Commerce, National Chamber of Industries, and Chamber of Exporters. It is also scheduled to visit Kandy, Capital City of the central province situated 112 kilometers Northeast of Colombo on Thursday to hold discussions with the Central Province Chamber of Commerce and provincial trading associations.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Reforms plan enables Pakistan to bring down poverty: Shaukat ​* 
ISLAMABAD (September 07 2007): Prime Minister, Shaukat Aziz, on Thursday said reforms programme has enabled Pakistan become economically strong to improve the living standard of people, besides bringing down poverty.

Shaukat Aziz expressed these views at a function held at the Prime Minister Secretariat for laying the foundation stone of National Press Club, Islamabad.

He said the government fought well on many fronts to make Pakistan viable and strong politically and economically. He added that the government took all possible measures to make Pakistan an attraction for trade and investment which to him were key to economic progress and prosperity.

However, Pakistan was yet to overcome many difficulties and challenges on different fronts.

Shaukat Aziz dispelled the impression that the government and media fall apart after March 9 events and said it was a wrong perception. He said the government believes in a free media culture and award of licenses for TV channels in a large number during the last few years was its practical proof. He said media men should focus on quality journalism to become professionals of international repute. He announced Rs 40 million grant for National Press Club Islamabad. The Prime minister also announced free of cost medical facility for journalists and their families.

Information minister, Muhammad Ali Durrani said the government was taking all possible steps to strengthen media and improve working conditions of the journalists. He said the government was working on a plan to bring the owners of the newspapers and working journalists at an understanding on 7th wage board award.

He added that setting up of a media university in Islamabad was under consideration to provide better opportunities to the working journalists for quality journalism.

Earlier, Islamabad - Rawalpindi Press Club president Mushtaq Minhas welcomed the Prime Minister for the event and termed laying of foundation stone for National Press Club Islamabad as a milestone for providing better facilities to the working journalists. He appreciated the government for fulfilling its promise to establish the National Press Club in Islamabad of international standard. He demanded implementation of 7th wage board award as well as constitution of 8th wage board award which was due for the last two years. He said better economic conditions could help the journalists improve their working skills to play their role more effectively.

Islamabad - Rawalpindi Press Club Secretary General Afzal Butt thanked the Prime Minister and Information minister's team for taking special interest in completing homework for National Press Club Islamabad.

Business Recorder [Pakistan's First Financial Daily]


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*World Bank group extends $6.9 billion support to South Asia in fiscal year 2007 ​*
LAHORE (September 07 2007): The World Bank Group extended loans, credits, grants, equity investments, and guarantees totalling nearly $6.9 billion to South Asia in fiscal 2007. The World Bank said here on Thursday that this was an increase of $2.3 billion over the previous year, demonstrating the institution's continuing role in fighting poverty.

South Asian countries look for ways to tackle their social challenges even while most of their economies grew aggressively. The eight countries of South Asia are using World Bank Group support in more than 78 projects designed to overcome poverty and enhance growth; for example, by improving education and health services, promoting private sector development, building infrastructure, and strengthening governance and institutions.

Contributing to this increase was: $1.6 billion from the International Bank for Reconstruction and Development (IBRD), which provides financing, risk management products, and other financial services; $4.03 billion from the International Development Association (IDA), which provides interest-free loans and grants; $1.18 billion from the International Finance Corporation (IFC), which makes equity investments, and provides loans, guarantees and advisory services to private sector business in developing countries; and $76 million from the Multilateral Investment Guarantee Investment Agency (Miga), the Group's political risk insurance agency.

Globally, the World Bank Group committed $34.3 billion in fiscal 2007, up $2.7 billion (7.8 percent) from fiscal 2006. India was by far the largest borrower from IBRD and IDA, accounting for $3.75 billion, or 15 percent of total lending from these two institutions. The World Bank's programme in India focuses on providing basic services such as access to clean water and education, improving infrastructure for rural areas, and employment. The increase also reflects $700 million in lending to the health sector to India, which was carried over from the previous year. Pakistan was the World Bank's seventh largest borrower with $985 million in loans and credits.

Nearly, 60 percent of the World Bank Group's commitments to South Asia came from the IDA and more than two-thirds of the lending financed projects in the areas of rural development and human development such as health, education, nutrition and HIV/AIDS.

Many of the Bank's projects in the last fiscal year supported existing programmes that are delivering results. For instance, in Afghanistan the Bank approved a $120 million IDA grant for the Second National Solidarity Programme, a community-led reconstruction and rural infrastructure initiative that has reached about 14 million rural people - 74 percent of Afghanistan's rural population - since its inception in 2002.

Looking ahead, the Bank would focus on cross-cutting reforms such as governance and fiscal management, and continue addressing deficiencies in the region's investment climate, such as weak infrastructure, red tape, and corruption. It would also deepen its engagement in states where poverty is increasingly concentrated, such as Orisa and Bihar in India and Sindh in Pakistan.

IBRD lending in the past year focused on helping South Asia close its infrastructure gap with road and irrigation projects. Looking ahead, the Bank would broaden its commitment to infrastructure with the first hydro project in a generation up for consideration early in the fiscal year just started.

IFC's investment commitments in the South Asia region reached $1.07 billion for 30 projects in FY07, and it mobilised an additional $102 million through syndications. Its portfolio spreads across eight sectors in Bangladesh, Bhutan, India, Maldives, Nepal, and Sri Lanka. The financial and manufacturing sectors are the largest with infrastructure displaying the most rapid growth.

Three quarters of $2.6 billion of the disbursed and outstanding regional portfolio is in India, with Bangladesh at $147 million, the second largest. Private sector projects worth $3 billion were supported as a result of IFC's assistance to the Indian corporate sector.

IFC doubled its committed portfolio in India in the infrastructure sector to $600 million. Investments ranged from natural gas to wind power and from port services to a fund for developing public-private projects in infrastructure sector.

Also active in the region is Miga, which provided $76.4 million in insurance guarantees in support of three investments and undertook two technical assistance projects in the region, including support for the new Bangladesh Investment Climate Facility. To date, Miga has issued $640 million in insurance guarantees for foreign direct investments in South Asia.

In the past year, Afghanistan received a major cash injection with a Miga-backed investment in a state-of-the-art telecommunication network. The $85 million project represents roughly a third of total flows of foreign direct investment into the country from March 2006-07 (the Afghan calendar year). This is the fourth investment guaranteed by Miga in Afghanistan.

Equally important is the World Bank's knowledge assistance to South Asia. The Bank delivered over 90 analytical and advisory activities, ranging from a detailed exposé of Afghanistan's drug economy to an analysis of Sri Lanka's plantation sector to the economic impact of HIV/AIDS in India.

This year also saw earlier Bank analytical work having policy impact. Estimates of teacher absenteeism in India, for example, have contributed to a shift in the focus of India's major primary education program towards improved education quality.

In response to the Bank's Doing Business report, the Indian government set up a Committee of Secretaries in November 2006. This Committee has directed that action is taken to reduce the time and cost of doing business in the country.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Infrastructure main obstacle to attracting FDI: OICCI survey ​* 
Friday, September 07, 2007

KARACHI: Pakistans role in the global war against terror has heightened domestic security risks.

In a presentation on Thursday, the Overseas Investors Chamber of Commerce and Industry (OICCI) highlighted that 69 per cent of its members found the internal political situation to be poor while 71 per cent of them were concerned about the law and order situation.

A growing domestic economy and consistent and business-friendly policies have contributed to an overall favourable outlook for Pakistan as an investment destination. However, infrastructure is the key constraint in attracting FDI, said Zubyr Soomro, the OICCI President.

Announcing the results of the first-ever OICCIs annual survey on the perception of its members doing business in Pakistan, he said with FDI of over $5 billion last year, Pakistans economy had achieved critical mass yet to sustain and increase this level of investment required continuity of the economic reforms process and current government policies.

Nevertheless, 75 per cent of those questioned said the business climate was attractive and had a positive outlook towards their trading partners. Most OICCI members are satisfied with the performance of the Ministry of Commerce, Ministry of Finance and Ministry of Industry and Production; however, the Ministry of Interior needs improvement according to 41 per cent of them.

Among the autonomous bodies the State Bank of Pakistan and the Federal Board of Revenue received the highest percentage of praise from the foreign members.

A major concern is the state of infrastructure facilities available in the country with 89 per cent being highly dissatisfied with the availability electricity and 51 per cent being dissatisfied with water availability in Pakistan. Telecommunications ranked as the most promising sector with over 70 per cent considering it satisfactory.

The foreign business community considers the law and order situation, infrastructure and political uncertainty to be the most significant deterrents to business as these factors received very high ratings of 6.5, 5.3 and 5.7, respectively, out of eight points.

OICCI has 168 members representing all major sectors of the economy. The annual survey conducted by KPMG shows that the OICCI members contribute more than 14 per cent of GNP of Pakistan and nearly 32 per cent of GDP of the manufacturing sector. Between them they contribute 33 per cent of the total tax revenue of the government of Pakistan and directly employ around 100,000 people.

Infrastructure main obstacle to attracting FDI: OICCI survey


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## Neo

*IMF team due next week to discuss Pak economic health ​* 
Friday, September 07, 2007

ISLAMABAD: The International Monetary Fund (IMF) is all set to initiate technical and policy level talks on Pakistan economy with government of Pakistan under Article IV consultations from 10 to 20 September, a senior government official at Ministry of Finance told The News.

A four-member delegation headed by Di Tata, a senior official of the Fund will arrive n Pakistan to hold meeting under Article IV consultations. IMF has the mandate to look into economic and financial health of its member countries once in a year.

The official said that IMF delegation will be holding the technical talks from Sept 10 to 15 with top officials of Federal Board of Revenue, Budget Wing in Finance Ministry, Economic Affairs Division, State Bank, Privatisation Commission, Textile Ministry, Ministry of Food, Agriculture and Livestock and Ministry of Commerce.

However, IMF and the government of Pakistan will hold policy level talks on September 16-17 and have wrap up meeting on September 18-19. Pakistan has already said good-bye to the IMF after completion of the Poverty Reduction and Growth Facility (PRGF) program three years ago.

Now our economic indicators are very strong even amid the uncertainty the country is facing in the wake of forthcoming election for President of Pakistan and then general elections, he said.

It is pertinent to mention that the Fund expressed concern over hike in inflation, growing trade deficit and current account deficit Pakistan facing in the last couple of years. On return to the headquarters, the mission prepares a report, which forms the basis for discussions by the Executive Board. At the conclusion of the discussions, the managing director, as chairman of the board, summarises the views of executive directors, and this summary is sent to the countrys authorities.

IMF team due next week to discuss Pak economic health


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## Neo

*Pakistan borrows $985m from WB in FY07​* 
Friday, September 07, 2007

ISLAMABAD: Pakistan is the World Banks seventh largest borrower with US$985 million in loans and credits, out of loans, credits, grants, equity investments and guarantees amounting to US$6.9 billion the Bank extended to South Asia in fiscal 2007.

The World Bank will also deepen its engagement in states where poverty is increasingly concentrated, such as Sindh in Pakistan. This is an increase of US$2.3 billion over the previous year, demonstrating the institution continuing role in fighting poverty as South Asian countries look for ways to tackle their social challenges even while most of their economies grew aggressively, says a press release issued from Washington, DC.

The World Bank will also increase its activities in Orissa and Bihar in India to fight against poverty menace.

The eight countries of South Asia are using World Bank Group support in more than 78 projects designed to overcome poverty and enhance growth for example, by improving education and health services, promoting private sector development, building infrastructure, and strengthening governance and institutions.

Contributing to this increase was: US$1.6 billion from the International Bank for Reconstruction and Development (IBRD), which provides financing, risk management products, and other financial services; US$4.03 billion from the International Development Association (IDA), which provides interest-free loan and grants; US$1.18 billion from the International Finance Corporation (IFC), which makes equity investments, and provides loans, guarantees and advisory services to private-sector business in developing countries; and US$76 million from the Multilateral Investment Guarantee Investment Agency (MIGA), the groups political risk insurance agency.

South Asia is home to the largest number of people in the world living below one dollar a day, so the agenda for poverty alleviation in the region remains very large, said Praful Patel, World Bank Vice President for South Asia.

The lending numbers from the IDA and IBRD in Fiscal Year 2007 are in line with the scaling up strategy we developed for the region three years ago Globally, the World Bank Group committed US US$34.3 billion in fiscal year 2007, up US$2.7 billion (7.8 percent) from fiscal year 2006.

India was by far the largest borrower from IBRD and IDA, accounting for US$3.75 billion, or 15 percent of total lending from these two institutions.

The World Banks program in India focuses on providing basic services such as access to clean water and education, improving infrastructure for rural areas, and employment.

The increase also reflects US$700 million in lending to the health sector to India, which was carried over from the previous year.

Pakistan was the Banks seventh largest borrower with US$985 million in loans and credits.

Nearly 60 percent of the World Bank Groups commitments to South Asia came from IDA, and more than two-thirds of this lending financed projects in the areas of rural development and human development such as health, education, nutrition, and HIV/AIDS.

There is a huge demand for IDA resources in South Asia and there is a huge prospect for making a real impact on the ground to reduce poverty, said Patel.

These types of programs would not be possible without IDA funding.

IDA leverages government programs, enabling them to innovate and scale up.

Many of the Banks projects in the last fiscal year supported existing programs that are delivering results. For instance, in Afghanistan the Bank approved a US$120 million IDA grant for the Second National Solidarity Program, a community-led reconstruction and rural infrastructure initiative that has reached about 14 million rural people 74 percent of Afghanistans rural population since its inception in 2002.

Looking ahead, the Bank will focus on cross-cutting reforms such as governance and fiscal management, and continue addressing deficiencies in the regions investment climate, such as weak infrastructure, red tape, and corruption.

IBRD lending in the past year focused on helping South Asia close its infrastructure gap with road and irrigation projects.

Looking ahead, the Bank will broaden its commitment to infrastructure with the first hydro project in a generation up for consideration early in the fiscal year just started.

IFCs investment commitments in the South Asia region reached US$1.07 billion for 30 projects in FY07, and it mobilized an additional US$102 million through syndications.

Its portfolio spreads across eight sectors in Bangladesh, Bhutan, India, Maldives, Nepal, and Sri Lanka.

The financial and manufacturing sectors are the largest with infrastructure displaying the most rapid growth.

Three quarters of the $2.6 billion of the disbursed and outstanding regional portfolio is in India, with Bangladesh at $147 million, the second largest.

Private sector projects worth US$3 billion were supported as a result of IFCs assistance to the Indian corporate sector.

IFC doubled its committed portfolio in India in the infrastructure sector, to US$600 million.

Investments ranged from natural gas to wind power and from port services to a fund for developing public-private projects in infrastructure sector.

IFCs strategic priorities in South Asia include addressing constraints in infrastructure, health, and education, said Paolo M Martelli, IFC Regional Director.

IFC supports local mid-tier manufacturing companies in agribusiness, engineering, automotive components and other sectors and helps them become globally competitive. 

We work towards local financial market development through institution-building and promoting innovative financial products, Martelli said.

Investment climate improvement programs and small and medium enterprise development are the primary areas of focus for our Advisory Services in the region,  he said.

Also active in the region is MIGA, which provided US$76.4 million in insurance guarantees in support of three investments and undertook two technical assistance projects in the region, including support for the new Bangladesh Investment Climate Facility.

To date, MIGA has issued US$640 million in insurance guarantees for foreign direct investments in South Asia.

In the past year, Afghanistan received a major cash injection with a MIGA-backed investment in a state-of-the-art telecommunications network.

The US$85 million project represents roughly a third of total flows of foreign direct investment into the country from March 2006-2007 (the Afghan calendar year).

This is the fourth investment guaranteed by MIGA in Afghanistan.

Foreign direct investment can have a strong, positive impact on rebuilding conflict-affected countries, bringing much-needed private capital and jobs, developing local skills, and stimulating spin-off industries, said MIGAs Executive Vice President, Yukiko Omura.

The South Asia Region has been acknowledged as a leader in impact evaluations to better understand what works and what doesnt work, so governments and the Bank can decide what should be scaled up and what should be scaled down, a said Shanta Devarajan, World Bank Chief Economist for South Asia.

This year also saw earlier Bank analytical work having policy impact.

Estimates of teacher absenteeism in India, for example, have contributed to a shift in the focus of Indias major primary education program towards improved education quality.

In response to the Banks Doing Business report, the Indian government set up a Committee of Secretaries in November 2006.

This Committee has directed that action is taken to reduce the time and cost of doing business in the country.

Pakistan borrows $985m from WB in FY07


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*Textile ministry plans to regain share in world market​*
ISLAMABAD: The ministry of textile industry has decided to develop perspective textile and clothing industry plan 2007-2015, to regain the sectors lost share in the world market. 

The perspective plan would consist of two phases, Phase-I would cover period of 2007-2011 to meet the challenges of short and medium term and phase-II would be 2011 to 2015 for realising the medium and long term objectives, a senior government official told Daily Times on Friday. 

Perspective plan would be based on recommendations, which would be available through a study to be conducted by M/s Gherzi Textile Organisation, Switzerland. Terms of reference (TOR) of the study include, drawing up of a perspective plan for Pakistan textile and clothing industry up to the year 2015 in two phases, phase-I (2007 to 2010) and phase-II (2011 to 2015). It also includes proposing measures for skill development in the different sectors of the textile and clothing industry, especially in textile processing, garments and home textile. 

To achieve these objectives the consultant firm has to identify the market issues that Pakistani exporters need to address and make a SWOT analysis of the industry. Address the need to increase the competitiveness of Pakistans textile and clothing industry keeping in view in mind the strategies of China, India, Bangladesh, Sri Lanka and other countries, to increase their shares of global market. Update and revise Textile Vision 2005 to strengthen the value chain in textile and clothing. Recovery of labor related and other federal, provincial and local government levies from textile units as One Window operations. Review the taxation policies and the rationalisation of existing taxes and duties. 

This phase-I of the study would cost $60,000 and phase-II of the study will follow immediately after phase-I with a separate budget. The objectives of the Phase-II of the consultancy study would include: to identify the export industry targets for the period 2011 to 2015 for medium to long term and the required strategic action plan to realise these targets. In this regard issues, which would be examined in detail, would include, Review the textile value chain to identify the needed Balancing, modernising, Restructuring and Expansion (BMRE) investments. Defining the role of banks financial institutions in financing BMRE investments together with the levels of interest rates that may preclude investment in the critical sector. The need for fashion and design inputs to assist the industry moves to higher value added consumer products. Review the numbers needed in the industry of skilled management and production operatives at all levels for the developing industry and types of skills required. Review the higher education (universities, technological institutes) and vocational skill training schools to identify their capacities, to determine the challenges needed to serve the developing industry with the requisite skills. Other issues would also be added in these TORs to meet the needs of a more challenging industry to meet the global markets highly competitive demands. 

The textile ministry has been allocated the responsibility for formulating Textile Industry Policy. In this regard the ministry has already undertaken various steps including studies through foreign consultants to finalise the said policy. M/s Gherzi Textile Organisation, Switzerland has already completed two important studies on benchmarking the production costs of certain textile products in Pakistan, China, India, Indonesia, Bangladesh, Egypt and Vietnam. A comprehensive study of incentives for promotion of textile industry of Pakistan, India, China, Sri Lanka, and Bangladesh. 

In addition, M/s Warner International has undertaken to do the study Productivity Benchmarking in Textile and Garment Industry. All Pakistan Textile Mills Association (APTMA) is coordinating this study. Ten textile sectors including spinning, weaving, processing, woven garments, towels, ginning, bed wear, knitting, denim, and hosiery would be covered under this study, so far study on spinning and weaving sector have been completed.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan climbs ladder of economic freedom: report​*
ISLAMABAD, Sept 7: Pakistan still remains behind India in South Asia in terms of economic freedom, according to a report released on Friday on economic freedom of the world for the year 2007.

Though Pakistan performed better than India as Islamabad score leapt to six points, out of 10 this year as against 5.7 points last year whereas Indias score slightly improved to 6.6 points out of 10 as against 6.5.

The areas that improved Pakistans overall performance are: size of government; legal structure and security of property rights; and, freedom to trade internationally. However, Pakistan lost a lot in areas of access to sound money and regulation of credit, labour, and business.

The report, a copy of which was made available to Dawn, said Pakistan climbs the ladder of economic freedom scoring six points ranking 101 out of 141 countries; leaps big in legal structure and security of property rights area by improving from 2.5 to 4.4; loses big in access in sound money by sliding down from 6.4 to 6.0.

Hong Kong and Singapore rated best for economic freedom, Zimbabwe and Myanmar rank worst, according to the report released by Pakistans first free market think-tank, Alternate Solutions Institute.

The annual report uses 42 different measures to create an index ranking countries around the world based on policies that encourage economic freedom.

The cornerstones of economic freedom are personal choice, voluntary exchange, freedom to compete, and security of private property.

Research shows that individuals living in countries with high levels of economic freedom enjoy higher levels of prosperity, greater individual freedoms, and longer life spans.

These measures are part of a fundamental base needed to build a free and prosperous nation.

A quick glance at the names of countries scoring lowest on the index shows that without protection of property rights and judicial independence, there was little individual freedom and little in the way of prosperity.

Pakistan scores in key components of economic freedom (from 1 to 10 where a higher value indicates a higher level of economic freedom): size of government changed to 7.3 scores from 7.2 in the last years report; legal structures and security of property rights changed to 4.4 from 2.5; access to sound money changed to 6.0 from 6.4; freedom to trade internationally changed to 5.8 from 5.7; regulation of credit, labour and business changed to 6.3 from 6.5.

In this years main index, Hong Kong retains the highest rating for economic freedom, 8.9 out of 10.

Pakistan climbs ladder of economic freedom: report -DAWN - Business; September 08, 2007


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## Neo

*Provinces received Rs400bn last year​*
ISLAMABAD, Sept 7: The centre transferred Rs400 billion to the provinces during the last financial year (2006-07) as share from the federal revenue under the National Finance Commission Award, which was 33 per cent higher than the fiscal year 2005-06.

The government had allocated a total of Rs381 billion in the revised estimates for the budget but the final share to the provinces increased to Rs400 billion as a result of higher revenue collection. As such, the provincial share in the federal divisible pool increased by about Rs19 billion or almost five per cent when compared with revised budget estimates.

The government has estimated the current years provincial share in the divisible pool at about Rs492 billion, which is likely to go up at the time of finalisation of federal accounts. The fiscal transfers to the provinces include grants and loans from the federal government.

According to the full provisional data of consolidated federal and provincial budgetary operations released by the ministry of finance, the province of Punjab received Rs191.50 billion during financial year 2006-07 compared with Rs148.55 billion of 2005-06, showing an increase of about 29 per cent. The province is estimated to get Rs236 billion this fiscal year.

The data suggests that the centre transferred about Rs131.30 billion during the financial year ending on June 30, 2007, which was 36 per cent higher than Rs96.30 billion of 2005-06. Sindh is expected to get Rs144 billion under net transfers of the federal divisible pool this year.

The NWFP province was paid about Rs46 billion last financial year, which was 29.6 per cent higher than Rs35.50 billion it got a year earlier. The province is anticipated to be paid Rs56 billion during the current financial year.

The data suggests that Balochistan province received Rs31 billion share of the federal divisible pool last year, which was 54 per cent higher than the Rs20.30 billion it got in 2005-06. As such, Balochistan emerged as the biggest beneficiary in terms of percentage increase in share, followed by Sindh, at 36 per cent.

The share of the NWFP and Punjab in percentage terms stood at 29.60 per cent and 29 per cent. Balochistans share, however, is expected to come down to Rs29.60 billion during the current financial year.

The provinces are entitled to get one-sixth of sales tax revenue, which is subsequently transferred by the provinces to district governments and cantonment boards in full.

Under this head, Punjabs share is 50 per cent, followed by Sindh at 34.85 per cent, the NWFP at 9.93 per cent and Balochistan at 5.22 per cent.

The remainder of the divisible pool is distributed among provinces on the basis of their population. Under this head, Punjab gets the highest share at 57.36 per cent, followed by Sindh at 23.71 per cent, the NWFP at 13.82 per cent and Balochistan at 5.11 per cent.

Moreover, Punjab, Sindh, the NWFP and Balochistan are entitled to get 11 per cent, 21 per cent, 35 per cent and 33 per cent, respectively, out of the Rs31 billion in collections from the provinces.

Provinces received Rs400bn last year -DAWN - Top Stories; September 08, 2007


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## Neo

*PIA bailout may require massive staff cuts​*
KARACHI, Sept 7: Some 25 per cent of the staff of the national flag carrier may have to be axed to pull the airline out of its current financial crisis, the new head of the Pakistan International Airlines (PIA), Zaffar A. Khan, hinted during an interview with Dawn at the PIA headquarters.

The move is part of a rightsizing programme and the managements long-term measures to reduce operational costs and improve performance. We have to decide whether we want to run this airline on a commercial basis or as a social welfare service, said Mr Khan.

In an effort to justify the imminent sacking of employees, he said: We have 430 to 440 employees per aircraft as compared to other good airlines, which have 200 employees for one aircraft. Currently, we have a workforce of over 18,000 and if we go by the international standard, almost one-fourth of the total employees, or around 5,000, should be counted under rightsizing. Ultimately, we have to address this (rightsizing) issue some time next year in a sensible and humane way, he explained.

Armed with the experience of several senior posts such as the chairman of the Pakistan Telecommunication Company Limited (PTCL), chairman of the Karachi Stock Exchange and president of Engro Chemicals, Mr Khan took control of the airline in April this year. With the airline beset with myriad problems, Mr Khan chose to speak on issues such as the overall financial condition, overstaffing, short- and long-term measures to turn the loss-making airline into a profitable entity, the European Unions ban on 20 PIA planes, need for capital injection and a fleet modernisation plan.

Who would purchase PIA?

While not ruling out the option of privatisation, he asked: Who would purchase the airline with Rs32 billion of accumulated losses and over-employment? he asked. But at some point the government will have to address the issue of PIAs privatisation, which is on the approved list of the Council of Common Interests (CCI).

He admitted that the airline was in dire need of capital to facilitate infrastructural development and cut borrowing costs, yet had limited channels of generating funds.

A rough estimate suggests that we have an immediate need of approximately half a billion dollars to bail the airline out, said Mr Khan. We have to improve our infrastructure, replace old aircraft with fuel-efficient ones, construct new hangars and fix electricity problems since our generators are too old. All these require capital and it is difficult to generate revenue.

Mr Khan presented two options to generate capital: the controversial sale of the PIA-owned Roosevelt Hotel in New Yorks upscale Manhattan, and Scribe Hotel in Paris.

On the basis of its national strategic consideration, the government injects capital into the airline, which seems difficult. The second option is that PIA sell valuable properties in New York and Paris to ease the financial burden, he pointed out.

He regretted that the latter option had become highly politicised, giving rise to the debate that the asset was up for sale at a throwaway price. Consequently, it will not be sold but PIA is going bankrupt, he remarked.

The bottom line is clear. We need capital to keep our head above water. The sale of PIAs property is the only way to generate the capital badly needed to run the airline, he said, adding that he would never have agreed to the sale of Roosevelt Hotel if it were not going to give PIA good value.

Referring to various short-term measures introduced by the management for the July to December period, Mr Khan stated that PIA was currently incurring a loss of Rs1.2 billion per month and required urgent measures to manage its financial crunch.

EU ban

Regarding the highly-publicised European Union (EU) ban on 20 PIA aircraft, the airline chief said a partial lifting of the ban on 11 aeroplanes resulted from a Recovery Action Plan submitted to the EU. However, they said the implementation of the plan would be a challenge for the airline, he added, disclosing that the EU had imposed a condition on lifting the ban on 11 aircraft, which required all such aircraft to obtain clearance from Pakistans Civil Aviation Authority (CAA). The CAA has already cleared one, he said. We are in no hurry and are working in sequence with the CAA.

According to Mr Khan, an EU team may visit Pakistan in October to judge the situation on ground before reviewing the ban on the remaining nine aircraft.

While refusing to divulge the exact monetary loss resulting from the ban, Mr Khan only said that PIA had suffered immense brand damage. Maintaining that safety and reliability remained the airlines priority, he said, There were deficiencies in some areas, mainly issues of system and procedure.

He added that the national carrier intended to replace its ageing fleet of Boeing 737-300 with seven new Airbus A320-200 aircraft.

PIA bailout may require massive staff cuts -DAWN - Top Stories; September 08, 2007


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*Coal reserves: US firm starts $5 billion methane gas project ​*
KARACHI (September 08 2007): A US-Canadian company, 'Soneri', has started work on $5 billion project for discovery of coal-bed methane gas under the layers of coal reserves in Sindh, Business Recorder learnt here on Friday.

Sindh cabinet on December 24, 2006 gave approval, in principle, to an agreement for exploration of methane gas in coal reserves in the province, according to Sindh Mines & Mineral Development Department. An MoU in this regard was signed with Soneri on November 27, 2006 during the US visit of President Pervez Musharraf.

The company started survey of coal reserves for which special aircraft of Marine Corps of United States were used as traditional aircraft could not determine the availability of methane gas. The company would drill 400 to 600 holes at every coal reserve which would then be connected through modern system.

In the first phase, the company has planned to make investment of $5 billion. At present, there exists no law with regard to gas discovery. Therefore, Sindh government has made some rules. However, before their enforcement, the provincial cabinet would carry out scrutiny so that no legal hitch remains in the project.

In this regard a committee has been formed comprising Secretaries of Law, Mines and Mineral Development, Finance and Industries, which has been directed to carry out vetting of the rules and submit its report. According to an estimate, there are 25 trillion cubic feet methane gas reserves in the province.

This gas can be used as piped, and also be converted into petrol or diesel and used in the production of chemicals. Sources said that the company is responsible to bring in entire equipment for gas exploration, and Sindh government could levy excise and other taxes, which previously was the subject of federal government.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Work on poverty alleviation fund-III begins ​*
LAHORE (September 08 2007): Pakistan Poverty Alleviation Fund (PPAF) has started work for the development of PPAF-III to build on the successes of the first two phases of the programme sponsored by the federal government and World Bank to bring reduce poverty in the country.

"PPAF-II has entered its last year. In third phase, we may explore the new options like credit guarantee company or equity fund," PPAF Chief Operating Officer Kamran Akbar said, while addressing a workshop jointly organised by PPAF and Small and Medium Development Authority (Smeda)'s project, Aik Hunar, Aik Nagar (AHAN) here on Friday.

AHAN Project Director Suhail Aamir and senior officials were also present on the occasion. Kamran Akbar hoped that PPAF-III would take some concrete shape by June 2008. He said that PPAF and AHAN had joined hands to expand the outreach of government's rural enterprise modernisation project to replicate the 'One Village One Product' concept in the country.

He said the partnership of AHAN with PPAF would enable the former to have exclusive access to the partner organisations (POs) of the latter to ensure easy access to services in the far-flung areas. PPAF, through its POs, would provide substantial support to AHAN in terms of identifying products, forming communities/clusters, providing microcredit, enterprise development facility (EDF), community physical infrastructure, health and education services as per community requirement, he added.

He said PPAF would help in identifying potential products in their respective location and would also assist in conducting baseline and impact studies on the projects initiated.

Since the year 2000, the fund had disbursed Rs 32 billion for various interventions through 70 partner organisations working in 27,500 villages and more than 66,000 communities in 111 districts across the country, he explained.

Speaking on the occasion, AHAN Project Director Suhail Aamir said the project's role would be to identify the areas of intervention in terms of product design, quality and marketing.

It would provide assistance in the identified area through designers/consultants and would build capacity of the craftsmen on product development, he added. Besides providing market linkages and sharing its finances with PPAF, AHAN would also provide marketing exposure through display outlets and exhibition at national and international level, Suhail Aamir said. AHAN's Manager Marketing and Networking Shehrayar Tahir highlighted the importance and potential of the project.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan fails to find a place among chemical-producing states ​* 
KARACHI (September 08 2007): Pakistan has failed to find a place among chemical-producing countries due to high cost of manufacturing and raw materials, low investment and lack of coordination between the academia and industries for research and development.

These views were expressed by various stakeholders at a meeting, organised by the Engineering Development Board (EDB) at PIDC House here on Friday. Chaired by General Manager (Policy), EDB, Zahid J. Yaqub, the meeting discussed ways and means to evolve an action plan-2020 for the development of local chemical industry.

The stakeholders observed that the country's tiny chemical-producing sector was insufficient to cater to the need of the local industries, which were compelled to depend on huge imports on high tariffs.

On the other hand, neighbouring India was producing 90 percent chemicals and thriving rapidly in this field with the least reliance on import, they said. To increase investment by making this sector profitable, they stressed upon the government to provide the local manufacturers with incentives, minimise tariffs on imports and simplify the process for acquisition of documents for import of chemicals and tax relief.

"Import of chemicals is a tedious process, as the bureaucratic inefficiency causes long delays, compelling the industrialists to ultimately to avoid investments in the chemical producing sector," they said. Import of chemicals was cheaper in rates as compared to its production, which cost huge capital and consumed time, they added.

Role of academia was also considered significant in giving boost to chemical sector, they said, adding its relationship with industries was very limited due to various reasons, particularly lack of trust on local experts. Some of them observed that though academia's role was, undoubtedly, important, but so far it had failed to assist the chemical industries and remained irresponsive.

About the chemical use in herbal medicines and their export, they said that the country, being an agrarian, the cultivation of herbs should be done on a large scale, and pointed out that the herbal medicine were being extracted from wild plants.

Giving China's example, they said that it had earned huge capital by exporting herbal medicines, manufactured on world standards, whereas Pakistan's local industry could not streamline its production, which needed to follow China's example at least in this case. Keeping in view the rising demand chemicals demand in the world, they stressed the need for boosing its production indigenously to cope with the challenges ahead.

The stakeholders were of the view that emerging challenges in post-World Trade Organisation (WTO) agreement, the country would face severe difficulties to sustain its chemical industry due to no-action plan. They also stressed the need for implementing the intellectual property rights (IPR) to protect the productions of the multinational companies from being copied by illegally established small industries.

According to officials statistics, the country's export of chemicals last year stood at 200 million dollars, which was only 1.3 percent of its total exports. They said during the last year the global markets witnessed chemical trading at 1.8 trillion dollars, mainly dominated by the US, Japan and Europe. Pakistan made its import by 3.6 billion dollars or by over 12 percent of its total imports, they said.

The meeting was addressed by Hassan Ahmed from Pakistan Petrochemical (Pvt) Limited, K. R. Siddiqui from Crescent Chemical, Pervez Tufail from Tufail Chamicals, Dr Ibrahim Mustafa from the Department of Chemical Engineering, NED University; Asif Saad, Idrees, Asif M. Khan and Saleem Khan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Work on five hydropower stations to start by year-end ​*
LAHORE (September 08 2007): Punjab Power Minister Chaudhry Armghan Subhani has said the construction work on five hydro power stations will start by the year-end. He made the comment when he chaired a department meeting here on Friday. Chaudhry Armghan Subhani said the project would cost Rs 4 billion in total, out of which 80 percent would be met by the financial assistance of Asian Development Bank (ADB) whereas the rest of 20 percent would be borne by the Punjab government.

"Electricity is the back bone of all developments and the government is committed to facilitate the masses in all respects in this regard," he added. While elaborating the head wise break up cost of these hydel power projects to be constructed at Marala, Chianwali, Deg Outfall, Okara and Pakpattan, the minister disclosed that Rs 110.2 million would be spent on preliminary work, Rs 1.07 billion for civil works, Rs 1.37 billion for hydro mechanical equipment, Rs 142.6 million for electrical equipment, Rs 12.6 million for transmission lines, Rs 81.1 million for physical contingencies, Rs 135.2 million of engineering supervision, Rs 40.5 million for administration, audit and accounts, Rs 40.7 million for duties and taxes, Rs 133.2 million for price contingencies, Rs 110 million for feasibility study of five additional sites, Rs 169.8 million for capacity building and Rs 586.4 million for interest during construction.

Power Chief Engineer Power Muhammad Yaqoob, Reconciliation Cell In-charge Iftikhar Ahmad Randhawa, Technical Director Rahat Khan and REDP Project Manager Liaqat Ali Iqbal also attended the meeting.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Countrys reserves touch $16.07bn​*
By Mushfiq Ahmad 

KARACHI: Pakistans foreign exchange reserves crossed the $16 billion mark for the first time during the last week, State Bank of Pakistan said on Thursday. Total liquid foreign reserves held by the country surged to $16.0789 billion on September 1, registering an increase of $260.7 million or 1.648 percent from $15.8182 billion on August 25. An increase of $290 million was seen in the reserves held by the central bank during this week while the reserves held by banks other than SBP registered a decline of $30 million. 

Foreign reserves held by the State Bank of Pakistan rose to $13.804 billion from $13.514 billion on August 25. Net foreign reserves held by banks other than SBP declined to $2.2749 billion from $2.3041 billion on August 25. State Banks officials preferred not to disclose anything about the rise in foreign exchange. However, the bankers said the central bank was buying dollars from the market in order to arrest the declining trend of the greenback. The central bank has purchased above $300 million from the market during recent days, the official said. Besides, investment into the stocks market, which had seen outflows early this financial year, is now recovering and money is coming in, they said. A senior official at a foreign bank said there might have been an inflow from the parent organization of a foreign bank operating in the country for its recent acquisition of a local bank. 

He further said some local companies had recently finalized foreign currency loan arrangements, which could have added to the foreign exchange reserves of the country. Also, he said, some foreign investors have acquired stakes in local companies in the financial sector. These investments may also have been the reason for build up in foreign exchange reserves, he added. Other sources said receipt of privatization proceeds of Pakistan Telecommunications Company Limited could also have been the reason for the surge in foreign exchange reserves.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan now has highest number of CNG-run vehicles​*
KARACHI: Pakistan has become the country with the highest number of CNG-run vehicles in the world leaving Brazil and Argentine behind in the race as largest user of natural gas vehicles.

According to statistics compiled by CNG Owners Association of Pakistan, the number of CNG-run cars have exceeded to 1.6 million throughout the country. The number of CNG filling stations has also grown largely in the country. The number of operational CNG pumps has increased to 17, 000, while around 200 CNG pumps are being established and 4,000 investors have shown interest to set up fuel stations of this gas.

Brazil, the second largest user of natural gas, has 1.42 million CNG-run vehicles. The third largest user, Argentine, has 1.35 million consumers. Private owners run around 70 percent of CNG filling stations while 30 percent are run by Oil Marketing Companies (OMCs).

Malik Khuda Baksh, President CNG Owners Association said these figures will be informed to International CNG rating organisation (Natural Gas Vehicle International), which would rank Pakistan as number one country using CNG in vehicles after its own calculation. He said that country has shown an extra-ordinary growth of 5.5 million vehicles in the last seven months of the current year as the number of CNG-run vehicles stood at 10.5 million at the beginning of the year. 

He claimed that gas fuel had saved about $2.2 million of countrys foreign exchange and this savings would be exceeded to $3 million at the end of current fiscal year. Gas fuel helps protect the environment from pollution as well.

Now, there is a need to provide CNG to public buses or heavy vehicles and private sector is seeking government cooperation in this regard, he added. 

Mr Khuda Buksh said that the CNG station owners body has initiated to convert a diesel-run bus into CNG-run bus at the cost of almost 0.2 million. He urged government to form an exclusive loan facility to attract big investors in this sector and allow import of CNG-run vehicles and kits in the country, so that diesel consumption could decline and the countrys oil import bill could be minimised. Experts believed that gas reserves would not be sufficient to meet the countrys gas requirements. Pakistans gas demand and supply projections indicate a widening gap of approximately 500 MMCFD by the year 2010.

Daily Times - Leading News Resource of Pakistan


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## Neo

*EU seafood export ban to cost $47 million a year​*
ISLAMABAD: Despite the hectic efforts to remove the bottlenecks and meet the requirements, the government is unable to restart exports of seafood to European Union (EU) and is suffering a loss of about $47 million a year. 

Pakistan exported seafood worth $188 million during the financial year 2006-07, which was down by almost 4 percent against $196 million in the year 2005-06. According to an estimate, the EU is a big market for Pakistani seafood and seafood worth $45-50 million was exported from Pakistan, Daily Times learnt on Thursday. 

The EU has banned seafood exports from Pakistan since April 2007. The action was taken after its inspectors, during their visit to the country in January this year, found the industrys food processing to be below their standards. The ban has rendered jobless a large number of poor fisheries workers. 

The provincial government of Sindh has so for spent Rs 50 million to meet the export standards set by the EU. The EU had also raised complaints against fishing vessels, auction halls and processing units, which still have not been addressed by the fishermen community.

An official of the ministry of food, agriculture and livestock (MINFAL) told this scribe that United Nations Industrial Development Organization (UNIDO) and EU had provided technical assistance to improve and meet the quality standards set by EU for exporting seafood to these countries. The EU experts had provided technical training to harbour and Marine Fisheries Department (MFD) officials.

The national assembly standing committee on food, agriculture and livestock in its meeting held on August 22 and Sept 3 this year also stressed on the stakeholders to upgrade their facilities and meet the EU requirements as early as possible. 

The official said MINFAL had a role as regulator while the objections raised by the EU related to the provincial government of Sindh and private stakeholders. The processing units and harbours were the responsibility of Sindh government and boats were privately owned. In the light of standing committee meeting regarding EU ban on seafood exports from Pakistan and other steps taken by the federal and provincial governments to meet the EU standards, the officials expressed the hoped that the issue would be resolve soon. 

He further said the MFD was the regulatory authority and the EU had expressed satisfaction with the laboratory and other things, but there were some issues in the supply and cold chains and hoped that it would be resolved soon.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan is the 7th largest borrower: WB​*
ISLAMABAD: Pakistan is the banks seventh largest borrower with $985 million in loans and credits, said a report released by World Bank.

Globally, the World Bank Group committed USA $34.3 billion in fiscal year 2007, up $2.7 billion (7.8 percent) from fiscal year 2006. India was by far the largest borrower from IBRD and IDA, accounting for $3.75 billion, or 15 percent of total lending from these two institutions. The World Banks program in India focuses on providing basic services such as access to clean water and education, improving infrastructure for rural areas, and employment. 

The increase also reflects $700 million in lending to the health sector to India which was carried over from the previous year, the report said. Looking ahead, World Bank would focus on cross-cutting reforms such as governance and fiscal management, and continue addressing deficiencies in the regions investment climate, such as weak infrastructure, red tape, and corruption. It will also deepen its engagement in states where poverty is increasingly concentrated, such as Orissa and Bihar in India and Sindh in Pakistan, it added. 

Daily Times - Leading News Resource of Pakistan


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## Introvert

*Chinese company to invest in IT sector of Sindh *
KARACHI: Sun Technology, a Chinese company, has expressed its interest in investing in IT sector of Sindh.

The delegation of the Chinese company told during a meeting with Nauman Saigal, adviser to chief minister Sindh for information technology, in Karachi that it is reviewing the investment opportunities in IT sector of Sindh, particularly Karachi.

On this occasion, Nauman Saigal explained to the delegation about the development made so far in the IT sector of the country.

He told the delegation that there is a huge scope of investment in the IT sector of Sindh and the Chinese company can utilize the talents of the skilled persons available here. 
Chinese company to invest in IT sector of Sindh


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## Neo

*FATA uplift projects: Dutch minister assures financing *​
PESHAWAR (September 09 2007): A three member Dutch delegation led by the Development Minister, Albert Gerad Koender met the Governor, NWFP Lieutenant General Ali Mohammad Jan Aurakzai (R) at the Frontier House Islamabad on Saturday. The discussion focused on co-operation between the two friendly countries, regarding regional peace and development.

The Governor briefed the delegation especially about the socio-economic conditions of the people of FATA and the development measures undertaken by the present government in far-flung areas.

Aurakzai said that for the first time, development projects are operative in otherwise totally neglected and underdeveloped areas like FATA added that education, health, agriculture and livestock projects need international co-operation particularly from Netherlands. The Dutch minister assured Aurakzai that the people and the government of Netherlands would continue their support in the ongoing projects undertaken to benefit the people of FATA.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Two new shipyards planned ​* 
Sunday, September 09, 2007

ISLAMABAD: Prime Minister Shaukat Aziz on Saturday said the government is committed to making Pakistan a leading shipbuilding country of the region.

The prime minister was chairing the first Policy Board meeting on development of the shipbuilding industry in Pakistan at the PM House. The board approved a work plan for the establishment of two large shipyards on joint venture basis with leading foreign shipyards of the world.

He said the government is concentrating on the development of shipbuilding industry in the country and establishment of two new shipyards with bigger docks which would ensure accommodation of much larger vessels.

He said this would also usher in a new era of economic activities, creating new jobs and improving living standards of the people.

The Prime Minister said shipbuilding industry can become a great asset due to its potential and would contribute to the uplift of national the economy. He said that the commercially strategic location of Pakistan is a take-off point for such projects.

The next 50 years, he added, will see a growing demand for new ships around the world which is expected to increase manifold in the near future. The Prime Minister approved the establishment of an Executive Committee which will ensure implementation of the decisions taken by the Policy Board.

He also approved the setting up a separate cell of professionals under MD, KS&EW to undertake approved tasks and handle the work of development of shipbuilding industry in Pakistan.

The Prime Minister emphasised the need for the development of human resource in this sector and asked the Karachi Shipyard to prepare a highly skilled workforce. He said the government is simultaneously taking steps to facilitate and promote the marine equipment manufacturing industries and other support industries in the country.

The Prime Minister was informed that shipbuilding is an attractive industry for developing nations, because shipyards are labour intensive and employ a large number of workers including a wide range of ancillary industry.

In his presentation, MD Karachi Shipyard and Engineer Works briefed the meeting about the salient features of the proposed shipyards. 

He said that the two shipyards to be built at Gwadar and Port Qasim cover approximately an area of 500 acres and each would also include two dry docks of approximately 600,000 dwt (dead weight tonnes) thus catering to building and repairs of heavy ships. 

Highlighting the proposed work plan 2007-08, he said the plan envisages the physical demarcation of sites, process of land transfer, feasibility study of sites for shipyards, selection of business houses and financial advisors, short-listing of potential leading shipyards for joint ventures, training plan for workforce and ancillary support industry. The Prime Minister of Pakistan is the chairman of the Policy Board.

Two new shipyards planned


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## Neo

*Govt providing Rs21bn subsidy to agriculture ​* 
Sunday, September 09, 2007
By Adeel Pathan

HYDERABAD: The Government of Pakistan is giving Rs21 billion in subsidy to farmers for increasing per acre yield as well as reduce the cost of production of agriculture commodities, said the federal minister for food and agriculture Sikandar Hayat Bosan on Saturday.

He was addressing the inaugural ceremony of a two-day national agriculture conference organised by the Federation of Chambers of Agriculture Pakistan (FCAP) at Sindhi Language Authority Hall.

Responding to queries of newsmen the minister said that government is aware of the problems of growers and formulating policies to address them. He said that RS 170 billion have been provided to farmers in form of agriculture credit last year and this year this amount has been increased up to 200 billion rupees.

About imports and exports of agriculture commodities, the minister said that government have to think about consumers being the stakeholder besides keeping in view the benefit of farmers but said that commodities are importedin case of shortage.

Sikander Bosan further said that there is no ban on cotton import as well as export and added that farmers are getting reasonable prices for the cotton almost of international level prices. He said that the cotton is being imported of the variety that we dont produce and added that difference on cotton prices is because of different varieties.

He said that present government restarted the subsidy for the growers and Rs21 billion in subsidy was given on fertilizers and duty of agriculture machinery has also been withdrawn.

The federal minister for agriculture and food and livestock further said that flour prices in Pakistan is lesser than India as flour is being sold in India at Rs24 per kilogram and in Pakistan it is Rs15 to Rs16 per kg.

About sugarcane crushing season, he said that provinces as well as sugar millers have been consulted in this regard and have been directed in Sindh to begin crushing from 15-20 October to produce sugar from 1st of November and in Punjab 1st of November has been fixed as crushing date.

The minister said that when he talks about growers this means small farmers comprising of 92 per cent agriculture sector and said that because of government positive policies the crops production is increasing. He said that production of various crops is increasing but marketing is still a problem.

He said that Rs1.8 billion have been allocated for the development of livestock sector alone and gave credit to President Musharraf for better agricultural policies.

Bosan said that earlier the total outlay of agriculture stood at Rs340 million that has now been enhanced to 16 billion rupees and added that there is nothing to worry about WTO (World Trade Organization).

Delivering his welcome speech president of FCAP Syed Qamar-uz-Zaman Shah presented the problems of growers of the country and added that this conference has been convened to discuss the problems of growers on country level. He was of the view that cost of production of agriculture commodities should be reduced and more subsidy should be provided to the growers of the country and termed wheat bumper crop was result of better policies of government.

He asked the government to extend subsidy for electricity, inputs and tube wells to reduce the cost of production so that growers would be in a position to produce better crops. He said that with the reduction of cost of production more production would come in market and consumers would also become beneficiary of the subsidy and demanded that agriculture products should not be imported at any cost.

He appreciated the crop insurance policy and called upon the State Bank of Pakistan (SBP) Governor to direct the private and public sectors banks to insure the loan of growers in view of natural calamities. He also demanded withdrawal of General Sales Tax (GST) on food products. The heads of delegation of four provinces as well as AJK also spoke at the occasion and provincial secretary agriculture and federal agriculture commissioners also attended the conference.

Govt providing Rs21bn subsidy to agriculture


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## Neo

* Pakistan has potential to take off ​* 
Sunday, September 09, 2007

LAHORE: Pakistan with a good human resource base has all the potential to become a developed nation, said visiting Singaporean scholar, Dr. Kishore Mahbubani here Saturday.

By adopting the worlds best practices, Pakistan can takeoff, he said while delivering a lecture on The New Asian Hemisphere: The Irresistible Shift of Global Power to the East at a local hotel.

Chairman Punjab Planning and Development Board, Suleman Ghani, Former Finance Minister Sartaj Aziz, Rector FC College University, Lahore, Peter Armacost and senior civil officials were present on the occasion.

Dr. Kishore Mahbubani, the Dean of Lee Kuwan Yew School of Public Policy, National University of Singapore said, like overseas Chinese, the Pakistanis Diasporas living in various countries, could contribute to rapid economic development of their homeland.

It is unnatural for an Asian society not to do well, he remarked.

He said that the Asian countries by embracing seven pillars of the western wisdom including concept of free market economy, science and technology, meritocracy, pragmatism, culture of peace, rule of law and education, were rapidly catching up with the Western world in terms of economic development.

Pakistan has potential to take off


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## Neo

*More power generation to meet energy demands​*
ISLAMABAD, Sept 8: Prime Minister Shaukat Aziz said on Saturday that additional power generation capacity was being commissioned to meet growing electricity demand in rural and urban areas.

He stated this while talking to Chairman Wapda Shakil Durrani and CEO of Pakistan Electric Power Company (Pepco) Munawar B. Ahmad, who called on him at the PMs House.

An official announcement issued here said that in order to improve the transmission, distribution and generation of electricity Wapda and Pepco have been separated and hoped that this restructuring will improve the efficiency, create a focused approach and help consumers to get reliable and continuous supply of electricity.

The prime minister said that Wapda was mainly responsible for hydel power generation and water reservoirs while Pepco will look after the transmission, distribution and generation of electricity through other sources.

He emphasised the need to build large dams in the country and said several projects are under consideration in this regard.

Preliminary work on Bhasha Dam, he said, is already underway and Neelum-Jhelum project is also at the advance stage of planning. He said all dams will be built by developing consensus and will help in achieving the increased demand for electricity besides building water reservoirs to meet the need for irrigation.

More power generation to meet energy demands -DAWN - Business; September 09, 2007


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## Neo

*Malaysian firm to invest in coal power ​*
ISLAMABAD, Sept 8: Malaysian Roxwelol Investment Group has shown interest to invest in coal generation and oil shale projects.

Managing Director of the group Dato Dr. Abdullah Hasbi Bin Haji Hassan stated this in a meeting with Minister for Petroleum and Natural Resources Amanullah Khan Jadoon here on Saturday.

During the meeting, the minister told the Malaysian group official that the government was taking concrete steps to exploit the untapped hydrocarbon and coal deposits at a faster pace in order to meet the growing energy needs of the country.

He said that the government has made an ambitious plan to utilise the coal deposit of 175 billion tons in Thar area of Sindh province and generate 20,000MW coal electricity by the year 2016.

He also highlighted the salient features of upcoming oil and gas projects and coal development activities.

The MD of the group expressed the desire to invest in coal generation and oil shale projects.

Malaysian firm to invest in coal power -DAWN - Business; September 09, 2007


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## Neo

*Technological Favouritism: Foreign software firms elbowing local ones​*
KARACHI: Foreign software companies are taking a strong hold of the banking and insurance sectors leaving Pakistani software houses out of competition in specific sectors, industry sources told Daily Times on Saturday. 

Giving an example a source said that, even the State Bank of Pakistan has ignored local software companies and has acquired software from a Korean company. Even though the local companies are well capable of making most kinds of financial software. 

Sources said that all the existing banks and insurance companies are prefering high priced foreign software companies to develop software for them and not considering the local software companies. Although the banks and insurance companies, who have purchased software that has been developed in other countries, are facing a number of problems in implementing them. 

To keep local software companies out of the race, banks and insurance companies put in such requirements in their Requests For Proposals, that local companies just cannot qualify (for instance 100 successful sites where the software is already running) and eliminate them in the fist phase, sources added. 

For the survival of the local software companies, government officials have been asked to look into this matter. However, the officials informed them that they are unable to control this situation, as according to WTO rules they cannot put in any protectionist measures. 

Pakistan Software Houses Association (P@SHA) says that two things should be kept in mind when companies in Pakistan purchase software: (a) if locally produced software exists that is not only being used by companies in Pakistan but is also being implemented out side the country, then the local software should be preferred; (b) if local software does not meet the requirements, then large national companies, banks, government departments, etc. should ensure that the foreign company uses a local software company for the implementation of the software with 30 percent of the project cost being paid to the local company and transfer of knowledge taking place so that support and maintenance can be carried out by the local company. 

There are many companies in Pakistan that have developed cutting edge products for different sectors. Recently PixSense, a local software firm, has developed a cutting edge solution for the telecom sector. This is being used by Telenor, China Mobile, etc. and two US venture capital firms have also invested in this company because they have faith in the product and their business model.

Daily Times - Leading News Resource of Pakistan


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## Neo

*$20 million confectionary export orders lost in a year​*
ISLAMABAD: Pakistan has lost biscuits and confectionary export orders worth $20 million in last one year.

Maqsud Ismail, Chairman Pakistan Biscuit (PBCMEA) and Confectionary Manufacturers and Exporters Association said on Saturday.

He said all of these orders have moved to China and Turkey due to reduced the export rebate given to confectionary industry by Federal Board of Revenue (FBR).

According to Chairman PBCMEA, export rebate has reduced from seven per cent to 0.5 per cent.

Besides, he said the prices of ingredients used in confectionary items like sugar, glucose, flavors and peper have increased.

Moreover, our confectionary products are facing extreme competition in international market, he added. app

Daily Times - Leading News Resource of Pakistan


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## Moin91

*5,000 attend admission tests for MBBS and BDS*

Monday, September 10, 2007

Karachi

The Dow University of Health Sciences (DUHS) conducted tests at the Karachi Expo Centre on Sunday for Bachelor of Medicine and Bachelor of Surgery (MBBS) and Bachelors of Dental Surgery (BDS) admissions in the citys colleges.

The colleges for which admission is being sought are Dow Medical College (DMC), Sindh Medical College (SMC), Dow International Medical College and Dr Ishratul Ebad Khan Institute of Oral Health Sciences.

According to a university press release, about 5,000 candidates participated in the tests for the 650 seats available for MBBS and BDS degrees. 

A help desk was available at the site for the guidance of candidates, where their admit cards were also checked through computers. Students entered using electronic gates for security reasons.

Vice Chancellor Dow University Prof Masood Hameed Khan, Principal DMC Prof. Salahuddin Afsar and Principal SMC Prof. Tariq Sharafatullah also monitored the admission tests.

The answers key for the test will be displayed at the Dow University website - DUHS Portal - from Sunday while the official result will be announced within a few days.


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## AgNoStiC MuSliM

*Asian Bank to fund mass transit second line*​
By Intikhab Hanif

LAHORE, Sept 9: The Asian Development Bank has reportedly agreed to also fund the estimated $2 billion second line of the Lahore Rapid Mass Transit System Network covering 26.6km from Thoker Niaz Beg to Mehmood Booti via Multan Road.

&#8220;The bank has conveyed to also fund the second line of the rail service which we are planning on the pattern of a similar facility in New Delhi. It (ADB) has already committed to fund the main line form Shahdara to Ferozepur Road&#8217;s Hamza Town costing an estimated $2.5 billion,&#8221; official sources informed Dawn here on Sunday.

They said the loan would be advanced on easy terms in view of the viability and importance of the project.

They also said spadework for the first main line was near completion and the process of acquisition of land for it would be started in a week or two. As a result, the work on the construction of the depot (main station) would be started by the end of this month or early next month, they added.

They said the geo-technical investigations had also been started on this main line and tests were being conducted at four places near Shahdara and other parts of the city to be covered by the route.

The first line will cover 27km area from Shahdara to Hamza Chowk via Ravi Road, Bhatti Chowk, Lower Mall, The Mall, Queen&#8217;s Road, Mozang Chungi and Ferozepur Road. It will have 15.4km elevated and 11.6km underground railway line. There will be 10 elevated and 12 underground stations.

The second line will cover 26.6km area from Thoker Niaz Beg to Mehmood Booti near Pakistan Mint via Multan Road, Chauburji, Lake Road, Lakshmi Chowk, Railway Station, GT Road and Shalamar Gardens. It will have 21.5km elevated and 5.1 underground railway line. There will be 20 elevated and six underground stations.

Asian Bank to fund mass transit second line -DAWN - National; September 10, 2007


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## Introvert

*Chinese firm to set up 300,000 tons steel mill*
ISLAMABAD, Sept 10: Baosteel, a Chinese company, has shown interest in setting up 300, 000 tons cold rolled steel plant in Pakistan.

The plant will be established in joint venture with Sapphire Group, this was stated by Director Strategy and Planning of Baosteel Dr. Lin Li in a meeting with chief executive officer of Engineering Development Board Abdul Hafeez Chaudhry on Monday.

The CEO briefed the six member Chinese delegation about increased demand in steel sector on account of economic growth in the country. He added that the gap between supply and demand was increasing and the government was desperate to fill it by encouraging foreign investment in this sector.

He especially mentioned the new projects such as Al-Tuwairqi and Aaysia steel mills. He said that the privatisation of Pakistan Steel Mill steel was expected next year and invited Baosteel to take part in its bidding.

It may be recalled that Baosteel had earlier made a bid for privatisation of PSM but later withdrew their bid due to shortage of time. Mr Chaudhry invited the Chinese company to invest in setting up a mini steel mill at Kalabagh. &#8212; Our reporter

Chinese firm to set up 300,000 tons steel mill -DAWN - Business; September 11, 2007


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## Introvert

*Pakistan to export 10m-ton cement to India in 2008 *
KARACHI: Seventeen companies of Pakistan will export 10 million tons of cement to India in 2008.

According to Indian state trading company MMTC, it is expected that the production by the cement companies in Pakistan will grow by 50 percent to synchronize with the 50 per cent increase in coal imports into the country.

The local consumption of cement in Pakistan ranges from 22 to 24 million tons annually. However, the total production of cement in Pakistan is expected to surge to 35 million tons thanks to the bulging volume of exports.

According to MMTC, the cement prices in India rose by 45 percent since December 2005.

According to Indian Cement Manufacturers Association, the demand of cement has gone up by ten per cent in India during 2007. 
Pakistan to export 10m-ton cement to India in 2008


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## Introvert

*Countrywide petrol consumption rises steadily *
KARACHI: The consumption of petrol in the country is rising continuously since last two months, as the sale of petrol in the month of July shot up by 11 percent, while in August, it further went up by 9 percent.

Oil industry sources attributed country&#8217;s rising petrol sale to the enforcement of Iranian petrol rationing system in June, as petrol consumption in June stood at 110,000 metric tons, which rising by 11 percent went up to 122,000 metric tons, while it further rose in August by 9 percent reaching 132,000 metric tons.

Sources told that the diesel consumption in the country last year in August amounted to 528,000 tons, which in the current year August increasing by 18 percent ascended to 623,000 tons.

Analysts told that the power shortage in the country and the large-scale use of diesel for enhancing industrial production triggered persistent surge in diesel sale in the country.

Countrywide petrol consumption rises steadily


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## Neo

*FBR asked to declare Gwadar as EFZ ​*
ISLAMABAD (September 10 2007): The Planning Commission has approached the Federal Board of Revenue (FBR) for declaring Gwadar City as Economic Free Zone (EFZ) to attract foreign tourists and investors in Balochistan.

Sources told Business Recorder on Sunday that Balochistan Governor has fully supported the proposal of Gwadar Development Authority (GDA) for declaring Gwadar city as EFZ to attract investment in transport, hotel business, tourism, entertainment, power generation, water and other projects.

The Planning Commission has requested the tax authorities to consider the proposal on top priority basis. According to GDA, there is an impression, from the beginning, that the whole of Gwadar City would be declared as free zone. A large number of investors who had expressed willingness to participate in activities like transport, tourism, water and power projects, water desalination, general manufacturing, assembling plants and packing etc were waiting for the announcement of the government's package.

Recently, the government exempted only 3 port companies from income tax. In the absence of a sustainable city, which may attract tourists as well as investors, traders, cheap labour, technicians etc, desired results may not be achieved.

The GDA, therefore, requested that the Balochistan government should approach Federal Board of Revenue (FBR) for incentives to all sectors where people may invest in Gwadar, rather than exempting only three companies from income tax.

The exemption from taxes should be given on machinery imported for industrialisation, construction and raw material imported for processing export goods, it said. However, anything moved outside Gwadar may be subject to all normal taxes, sources added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Chinese firms to be engaged in mega development projects ​*
ISLAMABAD (September 10 2007): Pakistan is likely to engage more Chinese firms in undertaking a number of mega development projects in infrastructure sector in a bid to lessen country's dependency on other international lending organisations.

Sources told Business Recorder that as Pakistan was keen to invest more in the development of infrastructure to ensure maintaining the present GDP growth, since it was not in a position to finance all these schemes from the national exchequer, it would go for foreign financial assistance to launch projects in water, power, and roads infrastructure.

In this context, Pakistan is searching for some lenders other than international financial institutions (IFIs), they added. The sources said that in this regard a number of senior most government officials have recently floated the idea of engaging more Chinese companies for executing mega projects.

However, various stakeholders including Planning Commission, ministries of finance, water and power, and other in the public sector not yet to reach on consensus on the issue, they added.

A number of senior most officials are strongly supporting the Chinese public and private sector involvement in Pakistan's infrastructure development, the sources said.

The sources, however, gave no detail whether the Chinese firms would be engaged in water reservoirs of which construction has already been announced by the government.

According to initial estimates, the construction of Kalabagh, Diamer-Basha and Akhori dams will cost more than Rs 1.0 trillion. The government estimates also suggest that more than $7.2 billion only for these three mega projects. The total cost of the Diamer Basha project has been estimated at around Rs 390.7 billion, Kalabagh Dam at Rs 370.5 billion and Akhori Dam at Rs 267 billion.

The estimated foreign exchange component (FEC) is $2.96 billion for Diamer Basha, $2.8 billion for Kalabagh Dam and $1.4 billion for Akhori Dam.

However, these costs are subject to change if the government failed to start work on these projects soon, the sources said. The sources added that Pakistan was happy with the Chinese assistance in the construction of deep-sea Gwadar Port. Similarly, the government was even happy with the work done by a Chinese company in Gomal Zam Dam being built in South Waziristan Agency. The Chinese company was forced to withdraw from the contract after the kidnapping of two Chinese engineers and subsequently killing of one of them.

Some Chinese companies are even engaged with cement industry that is also quite helpful. The only bad experience with such Chinese involvement was in the development of Thar coal reserves. However, that was an exceptionally difficult case, the sources said.

According to the sources, there is difficulty for the government to take up the issue of funding for big dams, as there is no national consensus on these issues.

The strong reservations of Sindh and the NWFP on the construction of Kalabagh dam are also the main obstacle in taking this issue to the IFIs. Sources said it would be difficult for government to get funding from China for the construction of Kalabagh if there is no consensus. However, other projects in infrastructure sector could be taken with the Chinese authorities.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Punjab plans to set-up 50 cluster centres ​*
LAHORE (September 10 2007): Provincial Minister for Industries, Muhammad Ajmal Cheema has said that Punjab government will set up 50 Cluster Development Centres for technology up-gradation within 5 years in a phased programme of which 3 centres would be completed during current year.

Presiding over a high level departmental meeting here at Punjab Small Industries Corporation head office, the Minister said that with the setting up of Cluster Development Centres modern technology would be used in industrial sector besides availability of skilled workforce. He said that locations had been selected to establish Cluster Development Centres in various cities while construction of 3 centres is in progress.

He further said that Product Development Centre for composite based material for sports goods in Sialkot, Wooden furniture common facility services centre in Chiniot and Business Support Centre of electrical fitting (Bake light and plastic) industries in Sargodha are being set up while centre for development of auto parts, design tools, dies and provision of testing facilities have been completed in Lahore. On the occasion, the Minister directed the concerned authorities to complete the projects within specified period and also install modern machinery in these centres.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Shipbuilding: 10 orders missed due to capacity constraints ​*
ISLAMABAD (September 11 2007): According to a presentation about Karachi Shipyard and Engineering Works (KS&EW), given to President General Pervez Musharraf and Prime Minister Shaukat Aziz, Pakistan missed at least 10 orders of billions of dollars for shipbuilding due to capacity restraints.

The KS&EW management presentation claimed that Singapore, Indonesia, Canada, UAE, Korea and Pakistan National Shipping Corporation (PNSC) had contacted Pakistan for building big tankers, DWT general cargo, DWT barge and Aframax, but could not be booked due to limited shipbuilding capacity.

KS&EW said shipbuilding is an attractive industry for developing nations as it employs a large number of workers and involves wide range of ancillary industry. It added that shipbuilding industry can help Pakistan reduce poverty, besides expediting the process of economic development.

It referred to countries which took advantage of shipbuilding industry and were earning considerable foreign exchange from it. These were Japan, Korea, China and Vietnam.

The KS&EW said it has already 10 years' orders to enhance its profit reasonably. It would also build submarines (S/M R&S) and corvettes and FACs, survey vessels for Pakistan Navy besides negotiating with Karachi Port Trust (KPT) for building of tugs, tender ferry OPVs (MSA). It is also negotiating contract for building 9600 t /7000 t commercial tankers.

The presentation was indicative of below capacity docking. It mentioned that KS&EW has 88 months' scheduled docking and 17 months' unscheduled docking against requirement of 105 months. It showed a big shortfall in capacity and requirement.

It also demanded big ship lift system at some alternative place as it was not possible at the present location. A comparison showed that Pakistan was at disadvantage in the region since its docks capacity is very small in comparison to competitors. Pakistan has only 26000 (?) docks size against Singapore 500,000, Dubai 600.000, Bahrain 500,000, and Oman 600,000.

The presentation also underlined the need of better ship repair facilities to meet local demand and get business from foreign clients. KS&EW claimed that Pakistan needs shipyards with bigger docks to take advantage of the opportunities, and Gwadar could be the best option for it.

It maintained that the global capacity for shipbuilding has exhausted and it was the right time for Pakistan to enter this industry with additional capacity to earn sizeable foreign exchange from it.

Both President and Prime Minister agreed with the basic concept of the presentation and approved a number of its recommendations to make Pakistan's shipbuilding industry vibrant and profit-making, in real terms.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Locally manufactured cars sale up by 5.75 percent ​*
KARACHI (September 11 2007): The locally manufactured cars sale increased by 5.75 percent to 28,225 units in July-August as compared to 26,690 units sold in the corresponding period of 2006.

According to the statistics, released by Pakistan Automobile Manufacturers Association (PAMA), the production of cars in the country increased by 2.4 percent to 27,700 units in two months of 2008 financial year from 27,100 units in the same period last year.

The company-wise sales volume indicates that the sales of Honda Atlas cars increased by 2.39 percent to 3,165 units in this period against 3,091 units sold during the same period last year.

The sale of Pak Suzuki Motors surged by 2.14 percent to 14,911 units against 14,598 units, Indus Motor by 12.40 percent to 9,456 units against 8,413 units, while the sale volume of Dewan Motor increased by 17.86 percent to 693 units against 588 units.

The 1300cc and above car segment is still leading overall car sales, with the market share of 38.8 percent during July-August, Abdul Azeem at Invest Capital & Securities Limited said.

In addition, 1000cc to 1299cc and 1300cc and above segment held 29.8 percent and 30.4 percent market share respectively, he added. According to the company-wise market share, Honda Atlas cars' market share stood at 11.21 percent in July-August period against 11.58 percent during the same period last year, Pak Suzuki Motors's share was 52.83 percent against 54.69 percent, Indus Motor: 33.50 percent against 31.52 percent, while the market share of Dewan Motor increased to 2.46 percent in this period against 2.20 percent previously.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Oil and gas production up by eight percent ​* 
KARACHI (September 11 2007): The oil and gas production of the country showed a healthy growth of 8 percent on year-on-year basis to reach 7,34,000 bpd (barrel oil equivalent per day) during July 2007 as compared to 6,79,000 boepd in July 2006 and by 4.2 percent over June 2007.

The three major listed companies gained market share and contributed 54 percent to the total production in this period compared to 51 percent during the same period last year. As many as 12 percent growth was witnessed in oil to 73,476 bpd in July 2007 against 65,510 bpd in the same period last year, while gas production surged by 8 percent to 3,892 mmcfd against 3,614 mmcfd and the production of LPG increased by 9 percent to 1,593tpd in this period against 1,461tpd in the same period last year.

The oil production increased on the back of rise in production from fields namely Bobi, Chanda, Dhakni, Makori and Kunnar; as well as inclusion of production from the fields not producing last July namely Mela and Pasakhi North, Ambereen Jiwani of Invest Capital & Securities Limited said.

She said that the increase in gas production could be attributed to increase in production from Qadirpur, Mela and Dakhni. However, a low-base effect is also apparent as production from Uch was stopped due to a maintenance shutdown during July 06. The total oil and gas production of OGDC grew by 29 percent to 215,347 bpd in July 2007 against 167,391 boepd in the same month in 2006. The company's oil production grew by 15 percent to 45,643 bpd in this month against 39,590 bpd in the same month last year, gas production grew by 33 percent to 1,000 mmcfd against 752 mmcfd while LPG production grew by 23pc.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Project planned to produce electricity and fertiliser from solid waste ​*
FAISALABAD (September 09 2007): Ministry of Environment has planned a multi-million project for conversion of solid wastes into fertiliser and energy generation for Faisalabad. The project would be undertaken as joint venture with private sector and the equity of public sector would, however, be 60 percent.

Under this project, a solid waste disposal station will be installed to utilise municipal solid waste for electricity generation and production of fertiliser with capacity of utilising 1000 tons solid waste per day.

Faisalabad is currently producing more than 1000 tons of solid waste daily. A spokesman of the ministry said that environment friendly and clean development mechanism would be used for this project.

The components of this technology would be weigh bridge, trammel screen, shredder for organic material, sorting station consisting of 6 work places, conveyor system to the aqua separator, aqua separator, homogenisation tank, bioreactor, de-sulphurisation tank, sludge holding tank, liquid fertiliser tank, high rate composting machine, co-generation of heat and power unit. The spokesman said that efforts have already been made to start work on this project without any unnecessary delay.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*NWFP seeks World Bank's help for Peshawar Master Plan ​* 
PESHAWAR (September 11 2007): NWFP Chief Secretary Sahibzada Riaz Noor has stressed the need for a master plan for the provincial capital of NWFP to streamline the fast unplanned growth in the city. Presiding over a meeting with of the World Bank at the Civil Secretariat here on Monday, he appreciated the WB assistance in education, health and other sectors of the province.

The World Bank mission members included Harsha Aturupane, Naveed Hassan Naqvi, Sayem Ali, Ralph Rawlinson, and others. Board of Revenue Senior Member Ihsanullah Khan, the Local Government secretary, Establishment secretary, P&D secretary, Industries secretary, Finance secretary, and other high-ranking officers of the provincial government were also present on this occasion.

Addressing the meeting the NWFP chief secretary apprehended that the day-to-day life would come to a standstill after 15 or 20 years if we could not make a master plan for Peshawar and other big cities of the province.

He proposed to the World Bank mission to consider establishment of a change management department on the pattern of Punjab to oversee all the reforms and developmental activities all over the province to avoid overlapping.

Riaz Noor said that a medium-term plan was needed for development of the Frontier province, adding that establishment of a special unit in the office of the Chief Secretary would enable monitoring of the reforms agenda in the province.

He told members of the WB mission that literacy and non-formal education, including the Madaris, which had not been the priority of the government also played a very important role in our education system. He said we could no longer ignore it as a large number of our children were pursuing education through the non-formal system.

Appreciating the performance of the NWFP government, the WB mission members said the Frontier province had excelled in education, health, governance, and financial management in all over the country. They said that such an outstanding performance did not even have any parallel in most of the South East Asian countries as well. They particularly lauded the NWFP chief secretary, saying that his keen interest in implementation of the reforms was a great help in removing many chief secretary that the World Bank would favourably consider all the proposals given by him for development of the Frontier province.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Growth now, equitable distribution later​*
Can economics be separated from politics? This is an age-old desire of economists yet to be realised. Politics is not just about contesting elections. Healthy politics is competition for scarce resources at not just the macro level but also at the micro-organisational levels. Scarce resources cannot be deployed for productive purposes without a competition for them that is perfectly legitimate.

Unless there is a healthy competition for scarce resources, there cannot be a vibrant thriving economy and society. Healthy competitive spirit is a sign of collective vitality without which inanimate financial and economic resources cannot be turned over into benefit for humankind. Economics per se does not exist for its own sake.

It is about allocation, production, and distribution of scarce resources for the benefit of the society. If all of these functions are being carried out and the end of these functions is not being achieved for all but for only a few, then competition for scarce resources will intensify, giving rise to a demand for representation in decision-making at the highest levels.

You may call it politics that it actually is and should be. But, you cannot call it undesirable as without a true representation of the people, they will not get their just share from Gods bounties that are actually abundant but made scarce because of mal-distributive human intervention.

That is, there already is competition for resources but the more powerful prevail to get a disproportionately high share. So, what appears like neat economics is actually dominated by big political interests. If power is already influencing the functions of economics, economics is not in the driving seat ala the PMs advisor on finance. There already is an interplay of economics and politics which is why growth rates remain on the high side but not distributive justice.

It is this political economy that needs to be seen, addressed, and redressed. The process of redressal may be temporarily sobering somewhat but what good is a surface calm beneath which discontent simmers and may continue to do so eventually to destabilising levels. Or, have we not reached that level already as is evident from the surging numbers of the discontented seeking refuge in isolation from, inter alia, domestic and global systems that have not distributed in their favour at all? For them, this is an alternative away from a world dominated by economics that could never take charge even by remaining in the driving seat.

Alternate radical drivers are, therefore, emerging to hijack all to their worldview. One solution is in equitable distribution. But, who will distribute? Will they be the ones who do not have the true mandate of the people and may include those from the worlds top class universities who, in turn, owe their positions to the countrys social and political glitterati? Or, the ones who are voted into office by the people and who owe their re-election to the same downtrodden ignored lot.

The reality on the ground is that as the growth rates soared, people of all shades felt poorer. The price levels have risen to unprecedented levels of nearly all goods and services that have adversely affected the consumption patterns of even the middle classes. One can well imagine how much more poor the poor must have become if the prices of staples such as flour, pulses, and even basic vegetables increased manifold.

One really needs to determine if this growth has given more food to the poor or less. If the poor now have less on their plate, must we not shed the hang-up of growth now, distribution later? This obsession will not be shed because this is what the evaluation criterion is for the policy makers from without and, therefore, from within. As they keep getting more and more pats on their backs, the poor have to cut back on their food intake.

So, people in general and the poor in particular long for the times when their popularly elected PM would hold weekly meetings to keep the prices of kitchen items contained and they were effective in doing so. Prices were a major item on their agenda or else the electorate would not return them to office. So, if the PM comes via the general publics choice route, the PM will be concerned about their aspirations not otherwise.

This is the significance of electoral politics on the economics without which economy may take-off but the people are left scrounging for food. It is a meaningless take-off for a plane that can fly with its crew but cannot fly with passengers on board. It is through elected political representatives that at least some aspirations are factored into economic decision-making. Economy first is a debunked economic view as none of the late developers developed minus the people at any stage. Development is not development of the physical landscape, mountains, and buildings unless people develop first and foremost and not the last.

It is naïve to think that the entire emphasis thus far has been on economy first. This emphasis requires a second reading. Economy first meant what and why? It meant economic growth rates that were achieved through ways known to most country nationals. Why? Because, this was a quick, sure, fine way of gaining legitimacy and showing performance on the economic front to the world that does not look beneath the surface nor is interested in doing so as they only want support on the front of terror. If support gets eroded because people generally are worse off, the society can be only more politicised and not less.

There is no harm in being politicised if it is in the sense already discussed in this article. However, if politics is to get an unjust share of the resources through power play, it is certainly undesirable. Was the economy first emphasis effective in getting rid of undesirable influence peddling which is what is generally meant by politics in the country and, therefore, considered bad?

It did not as is evident from the sugar pricing issues faced not too long ago. Were the policy makers able to place economy first then? They did not. Did they say that undue increase in sugar prices might feed into a wage spiral and thereby into cost of production and exports and growth and so on? They did not. They have been unable to depoliticise when depoliticisation was badly needed.

The point is that politics and economics are inextricably interlinked. Adam Smith tried to isolate economics from the then political influences but warned of the tendencies to monopolise and hoard. A visible hand of the government was soon needed. Since then visible hands of governments in varying proportions have been essential features in countries economics all over the world.

To ensure that this visible hand guards the interest of all and not of a few, it is imperative that governments come somewhere near to being of the people and for the people. Only then can headway be made in societies, still grappling with the meaning of socio-economic justice, towards the eventually desired end of development for all now and not for a few now and for the multitude later.

Growth now, equitable distribution later -DAWN - Business; September 10, 2007


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## Neo

*Selecting technology for Thar coal​*
The Sindh Coal Authority (SCA), Mines and Mineral Development Department, has invited an open discussion by geologists, technocrats, geoscientists and companies for throwing light on the recent advances in lignite coal mining, coal gasification, power generation and other industrial purposes and suggestions to overcome the problem of water shortage, overlay, etc.

Exploitation of Thar coal is very important, especially for enhancing energy security.

Clean coal technologies are being developed and incorporated in power generation plants in the developed countries. SCA and the government may look for relevant details and approach friendly countries; particularly their special funds established for promoting use of clean coal technologies and for building a data bank on coal mining and coal-based power plants indicating capital costs of projects, technology used and the financing methods.

One such source of valuable information is COAL21 which is an initiative of the Australian Coal Association aimed at reducing greenhouse gas emissions arising from the use of coal in electricity generation. It is a collaborative, consensus-building programme involving participants from federal and state governments, the coal and electricity industries, and research organisations.

The career officers employed in the provincial or federal government can perform diversified activities . However, for specialised activities, often the governments engage experts in different ministries and departments. SCA may be strengthened by engaging experts with high exposure in coal / lignite mining as well as in use of high sulphur lignite in power generation.

At the government level there should be technical tie-up with specialised funds / foreign governments supporting development and use of clean coal technologies. Regular officials as well as experts may be provided extensive training and exposure including participation in conferences with a view to enhance their capabilities in these areas.

These officers would initially be facilitating the interested parties / investors who have signed MOUs with the government on developing coal mines for setting up coal-based power plants. They will eventually be overseeing mining and power generation operations and collecting royalty, excise duty or other dues from the investors. Their role particularly with positive attitude is very important for the success of the Thar coal initiative.

SCA will have to go out of its way by taking a number of actions and measures, some of which may include: (i) special invitations to officers / experts who have been interacting with the government on development of Thar coal for power generation; (ii) posting on the website of the government of Sindh of different policies, reports, progress reports, information documents, standardized text of MOUs, procedures specific to coal mining for power generation, various forms used in the mining concessions, income tax rules regarding profit/losses by coal mining companies, etc; (iii) and printing of important document such as National Mining Policy-1995, PPIB report on use of coal for power generation; selected extract of reports prepared on mining of Thar coal and its use for power generation; synopsis or summary of findings and recommendations of the technical reports.

There are lot of activities and construction going on in and near Thar coal fields. Thar lodge is under construction and different roads are being developed. On the one hand job opportunities are opening up for a large number of people and at the same time there are fears on the part of local people of being displaced from coal-bearing and adjoining areas due to mining of coal, acquiring of land for setting up of power plants and development of infrastructure including new townships for the people working in the mines and power plants, etc.

The displacement of people and the minimization of environmental degradation are the two most important areas needing careful attention of the government. The people to be displaced must be generously compensated including free provision of residential accommodation and should be trained at government expense to enable them to adjust to the new environment of coal mining and power generation activities.

There are three groups of stakeholders who need particular attention of SCA/ government. These are: (i) consultants who worked on Thar coal for developing different studies on coal, coal-based gas or underground water in the Thar coal field areas; (ii) investors who are working in the coal field to determine extent of available coal and water suitability for ultimately setting up coal-based power plants; (iii) and the technical experts who would be working in the coal mines or the power plants or the construction of these facilities or would be the suppliers of appropriate technologies.

SCA has to be ready for suitably handling complaints, if any, regarding matters such as unfair and discriminatory treatment, abnormal delays in sorting out routine matters, absence or insufficiency of promised infrastructure facilities, etc.

SCA has also an important role in facilitating the mining of coal and setting up of the power generation plants. However, all power so generated will be sold to different entities in the public sector, carved out of power wing of Wapda , at rates to be determined by Nepra and agreements made with PPIB on the one hand and the financiers of the mining-cum-power generation projects on the other. The provincial government/SCA have to be working in close cooperation and coordination with different federal ministries and institutions. Things would not move without such close working relationships among different stakeholders.

The ministry of petroleum and natural resources (MP&NR), has meanwhile requested for expression of interest for consultancy services. The major activities within scope of services of the selected firm include: (i) development of policies, plans, programme, projects and their implementation mechanism; (ii) suggesting of methodology to enhance coal production from the existing proven coal reserves, setting up of down stream coal mining industry by adoption / utilization of latest technology; (iii) making Pakistan competitively attractive for investment in coal mining, suggest viable fiscal package of income tax, royalty, custom duty rates etc; and (iv) designing a viable layout for coordination between federal and provincial governments / institutions.

Selecting technology for Thar coal -DAWN - Business; September 10, 2007


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## Neo

*Pakistan is costlier in food prices than India, BD​*
ISLAMABAD, Sept 10: Pakistan is the costliest among three major south Asian countries, including India and Bangladesh, in terms of essential food items, despite being primarily an agriculture economy, according to official statistics.

This is despite the fact that Pakistan had bumper crops, including those of wheat, sugarcane and gram, over the two consecutive years. Food inflation has been a major challenge in Pakistan over the last three years, in some cases, beyond 15 per cent.

Sri Lanka, which is more import-dependant than self-reliant is, however, costlier when compared with India and Pakistan.

Informed sources told Dawn that a meeting of the Economic Coordination Committee (ECC) of the cabinet, presided over by Prime Minister Shaukat Aziz, was briefed about the situation through an analysis of regional prices of critical consumer items.

Dr Ashfaq H. Khan, economic adviser to the finance ministry, had announced that Pakistan was cheapest in the region when seen in the context of food inflation.

Minutes of the ECC meeting held on August 29, available with Dawn, however, reveal a totally different picture. Of 31 essential items, the prices of 16 items are higher by 32.7 per cent in Pakistan than India. Prices of the remaining 15 items were higher in India, but with an average margin of 26.2 per cent.

The comparison with prices in Bangladesh was even more deplorable. According to the minutes, the prices of 16 basic food items out of 27 recorded were higher in Pakistan as compared to Bangladesh, with an average margin of 45 per cent.

Prices of the remaining 11 items were lower in Pakistan by a small margin of 21 per cent when compared with basic food items in Bangladesh.The documents suggest that the prices of 20 items out of 25 were lower in Pakistan when compared with Sri Lanka, with an average margin of 30.7 per cent.

Prices of the remaining five items were higher by an average margin of 21.6 per cent.

The only decision the ECC took on this analysis was that the prices of loose edible oil and Irri rice should be compared in future, instead of branded oil and basmati rice.

The Planning Commission was advised to focus on atta, ghee, sugar, dal chana, tea and rice, according to the minutes of the meeting.Reviewing the trend of change in prices, the ECC noted that average consumer prices of 22 items had increased (during the week ending Aug 23). The prices of seven items have decreased, while those of 24 items have remained unchanged.

And despite an increase in prices of many items, the sensitive price index in the case of combined income group for 53 essential items covering 17 urban centres, increased by 0.29 per cent over the previous week.The ECC was also briefed about the recommendations of the inter-ministerial committee on core food inflation, but the prime minister had directed that the matter be placed before the next ECC meeting. The meeting was informed that timing of a policy measure was crucial to address core food inflation problems, the sources said.

Pakistan is costlier in food prices than India, BD -DAWN - Business; September 11, 2007


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## Neo

*Chinese firm to set up 300,000 tons steel mill​*
ISLAMABAD, Sept 10: Baosteel, a Chinese company, has shown interest in setting up 300, 000 tons cold rolled steel plant in Pakistan.

The plant will be established in joint venture with Sapphire Group, this was stated by Director Strategy and Planning of Baosteel Dr. Lin Li in a meeting with chief executive officer of Engineering Development Board Abdul Hafeez Chaudhry on Monday.

The CEO briefed the six member Chinese delegation about increased demand in steel sector on account of economic growth in the country. He added that the gap between supply and demand was increasing and the government was desperate to fill it by encouraging foreign investment in this sector.

He especially mentioned the new projects such as Al-Tuwairqi and Aaysia steel mills. He said that the privatisation of Pakistan Steel Mill steel was expected next year and invited Baosteel to take part in its bidding.

It may be recalled that Baosteel had earlier made a bid for privatisation of PSM but later withdrew their bid due to shortage of time. Mr Chaudhry invited the Chinese company to invest in setting up a mini steel mill at Kalabagh.  Our reporter

Chinese firm to set up 300,000 tons steel mill -DAWN - Business; September 11, 2007


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## Neo

*Trade deficit widens by 23.9pc*​
ISLAMABAD, Sept 11: Pakistans trade deficit witnessed a robust growth of 23.97 per cent to $1.270 billion in August 2007 as against $1.025 billion over the same month of the last year.

This unexpected increase in the trade deficit occurred due to surge in imports of commodities and decline in exports proceeds during the month under review over the last year.

However, the first month (July) of the current fiscal year had witnessed a modest decline of 2.59 per cent in the trade deficit as a result of very nominal increase in imports and exports grew at slightly higher rate.

Official figures released on Tuesday showed that due to decline in exports in August the overall trade turned into deficit from surplus in the first two months of the current fiscal over the last year.

The trade deficit increased by 10.12 per cent to $2.359 billion during July-August of the fiscal 2007-08 as against $2.143 billion over the same months last year.

The government for the first time has not projected any estimates for import bill this year. The trade deficit recorded in the year 2006-07 was more than $13 billion as against the projected trade deficit of $9.4 billion for the same year.

The export proceeds declined by 1.43 per cent in Aug 2007 as it stood at $1.477 billion as against $1.498 billion over the same month of the last year. A double digits growth was recorded in July 2007, which was unexpected as against the average growth of three per cent in the whole year of 2006-07.

In the first two months (July-Aug) export proceeds stood at $2.963 billion as against $2.840 billion over the same months of the last year, indicating a growth of 4.31 per cent.

The government has projected a target of $19.2 billion for the year 2007-08.

Imports climbed by 8.89 per cent to $2.747 billion in August 2007 as against $2.523 billion over the corresponding month of the last year.

According to the statistics, the current two months import bill reached $5.322 billion up by 6.81 per cent from $4.983 billion over the same months of the last year.

Trade deficit widens by 23.9pc -DAWN - Business; September 12, 2007


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## Neo

*CPI inflation down to 6.45pc in Aug ​* 
Wednesday, September 12, 2007
By Israr Khan

ISLAMABAD: Inflation measured by Consumer Price Index (CPI) in August came down to 6.45 per cent from 8.93 per cent in corresponding month of the past year. 

Inflation in the two-month period (July-August, 2006-07) also declined to 6.41 per cent from the corresponding period of the previous fiscal (8.28 percent), the Federal Bureau of Statistics (FBS) said on Tuesday. 

Though the general inflation is coming down, the rising prices of food, house rent, education and medicare expenses are still eroding the purchasing power of the low-income group, which is a challenge for the economic planners of the country.

The most worrisome is the rising food prices. House rent and medical expenses which are expensive by 8.62 per cent, 7.17 per cent and 9.77 per cent, respectively, over August 2006 hit low income families hardest by further shrinking their purchasing power.

Besides, the other groups of CPI basket were also exorbitant. During August 2007, apparel, textile and footwear were costlier by 7.51 per cent, household furniture and equipment 6.59 per cent and education was costlier by 6.17 per cent over the same month of the previous fiscal. 

Despite their adverse impact on the low-income group, the government is not taking effective steps to reverse the trend. The government seems to be indifferent to the plight of the poor and the lower middle class who are finding it increasingly difficult to make ends meet with soaring prices of foodstuffs and medical care. 

Detailed analysis of the CPI data showed that under food and beverages, the items which became dearer in August 2007 were tomatoes 44 per cent, chicken farm 29 per cent and onion price increased by 18 per cent over July 2007. 

In one month, general inflation increased by 1.32 per cent. During the same period, the prices of food and beverages increased by 2.38 per cent, house rent o.80 per cent, apparel textile and footwear 0.33 per cent and education was costlier by 0.30 per cent in August 2007 from the previous month.

However, the FBS bulletin says the Wholesale Price Index during the period under review also came down to 7.8 per cent from 8.3 per cent in the corresponding period of the previous fiscal, which signifies further decline of general prices in the coming months. 

However, still the main concern is that raw materials, food and building materials in August were costlier by 16.53 per cent, 11.48 per cent and 9.03 per cent, respectively, over the corresponding month of the previous fiscal. In one month, raw materials prices increased by 3.68 per cent, food 1.97 per cent and building materials prices up by 0.9 per cent over July 2007. 

In August 2007, tomato prices increased by 35 per cent, chicken 27 per cent, onion 23 per cent, vegetables nine per cent, masoor seven per cent, powder milk six per cent and potato price was up by five per cent over July 2007. In the category of raw materials, in a span of one month, the prices of pig iron went up by 9.59 per cent, cotton 7.29 per cent, skins 3.2 per cent and cotton seeds by 1.77 per cent.

CPI inflation down to 6.45pc in Aug


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## Neo

Wednesday September 12, 2007
*UTStarcom Gets Contract for Voice and Data Service in Pakistan​*
NEW YORK (AP) -- Telecommunications systems maker UTStarcom Inc. said Wednesday it received a multimillion dollar contract to provide voice and data services in Pakistan.
The company said it will provide the services to Bell & Tell Pvt. Ltd., a Pakistani affiliate of Worldcall Telecommunication Ltd., using passive optical network and voice over Internet protocol technologies.

The company didn't provide specific financial terms.

The Nasdaq Stock Market has warned Alameda, Calif.-based UTStarcom that it faces delisting over delinquent financial reports. The company is working to restate earnings after finding bookkeeping problems stemming from historical stock options practices.

UTStarcom Gets Pakistan Service Contract: Financial News - Yahoo! Finance


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## Introvert

*Local cement company enters Indian market*

By Our Equities Correspondent

KARACHI, Sept 12: Lucky Cement has started exporting 3,000 tons per day of cement to India at an attractive price of $70 per ton (fob), making the company first to make a successful entry into the Indian market.

A senior company official said that the shipment had begun early this month and contract for 125,000 tons had been signed with the Indian importers.

He said that payment for sale of 30,000 tons had been received. That was until early last week. Director Abid Ganatra could not be reached on Wednesday for latest update.

Following the issuance of BIS certificate, Pakistani cement producers have a clear way ahead to tap the potential of the Indian market.

Due to substantial price premium in India, compared to export price of $48 to $50 per ton (fob) in GCC countries, local cement producers have been eyeing the Indian market since March this year when Luckys consignment of 5,000 tons was first despatched. That was withheld for want of BIS certification, but subsequently cleared.

BIS certificates have been issued to several Pakistani companies, which are preparing to dispatch the commodity. Shortage of trucks is a major road block in exports to India via the Wagah border. But cement sector analyst Khurram Schehzad at InvestCap believes the problem will be resolved by the beginning of next month.

Lucky has nonetheless snatched the first mover advantage, he said since the company exports product from its Southern region plant via the Karachi sea port. Other companies such as Maple Leaf are following suit.

But in the business of cement neither country is doing the other any favours. India has been keen to import due to the price differential benefit with the Indian cement costing $109 per ton in the Indian markets compared to Pakistani cement cost of $90 per ton (all expenses included).

And for Pakistani producers, the retention price for exports amounts to Rs200 per bag compared to Rs170 in the local markets.

Pakistani cement producers have been looking for greener pastures abroad. Afghanistan, Dubai, South Africa and Iraq are major destinations. And with no production capacity utilisation quota system among producers (generally referred to as cartel formation) in vogue, every producer finds himself free to despatch as much as possible to markets that he may find most lucrative.

The opportunities look endless, at least for the time being. Qatar is fast running out of its limestone deposits, which constitutes 80 per cent of raw material used in production of clinker, says Mr Badruddin Fakhri, Managing Director Galadari Cement (Gulf Limited). That could give further push to clinker exports to Qatar in the near future.

All Pakistan Cement Manufacturers Association (APCMA) figures released last week revealed 144 per cent increase in exports during August 2007 at 575,987 tons compared to 236,098 tons in the same month in 2006. For the first two months of the current year, cement exports rose by 139 per cent to 1,015,084 tons against 424,260 tons during same period of last fiscal.

So would unbridled exports hurt the local market? Cement producing exporters naturally do not think so. They argue that the annual local demand is 21 million tons, while production capacity has increased to 32 million tons, representing surplus of around 11 to 12 million tons.

Local users of the commodity vehemently disagree. According to market sources, the price of 50-kg cement bag in the country ranges between Rs215 in the North to Rs260 per bag in Karachi, which would give an average price of Rs235 per bag.

A major local producer was asked about the status of investigations by the Monopoly Control Authority (MCA) relating to issues, including pricing in the local market and possibility of presence of a cartel. He responded that the MCA had not levelled any allegations of wrong doing, but conducted an enquiry.

Its findings were based on just one months benchmark  prices in February 2007, he said and contended that those could not be construed to be representative of the market realities.

Local cement company enters Indian market -DAWN - Business; September 13, 2007


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## Introvert

*Italian firm to invest in hydrocarbon sector 
*
Thursday, September 13, 2007

ISLAMABAD: Prime Minister Shaukat Aziz on Wednesday said that Pakistan is an ideal place for investment in hydrocarbons as energy demands continue to rise here due to high economic growth. 

The Prime Minister was talking to Managing Director, Eni Pakistan, Lugi Ciarrocchi who called on him at the PM House.

Prime Minister Aziz said energy exploration was one of the most under-explored sectors in the country and the government was continuously monitoring the demand and supply situation.

He said under the petroleum policy, the global companies were being encouraged to invest more in this sector.

He invited Eni Pakistan to explore possibilities to invest in relevant sectors like power generation and petrochemicals; besides, exploration in the field of oil and gas.

The Prime Minister said Pakistan and Italy enjoy good trade relations and called upon the need to further improve the current level of trade between the two countries.

He said successful implementation of wide-ranging structural reforms and good macroeconomic policies had transformed Pakistan&#8217;s economy into a stable and resurgent one thus making it attractive for foreign investors.

Lugi Ciarrocchi said the government&#8217;s policies for investment particularly in the field of hydrocarbon explorations were very attractive and Eni Pakistan has planned to invest $300-400 million in the next four years.

Eni S.p.A is an Italian based oil and gas exploration company, doing business in 70 countries.

The company primarily focuses in areas of exploration and production, gas and power, refining and marketing, construction and petrochemicals. The meeting was also attended by the Federal Minister for Petroleum and Natural resources.

Italian firm to invest in hydrocarbon sector


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## Neo

*Government warned against political uncertainty: IMF team on annual review visit ​*
ISLAMABAD (September 13 2007): The International Monitory Fund (IMF) has cautioned Pakistan that the on-going political uncertainty and crisis can aversely hit its economic growth more than inflation and current account deficit and it should take corrective measures to make sure that it does not miss targets set for 2007-08.

The warning has come from a visiting IMF delegation during its meetings with the economic managers of the government during the last couple of days. A four-member IMF delegation is currently in Pakistan for annual review of its economy.

Pakistan had come out of IMF programme few years back and its opinion or suggestions are not binding on the government for economic policy decisions. However, IMF under article IV of the memorandum reviews its economy annually. It can also suggest various measures to the government for corrections if necessary to maintain current level of economic growth.

Pakistan is eyeing over 7 percent economic growth for the current fiscal year and initial inflows and other economic indicators are pretty good to achieve the target. However, IMF apprehended serious implications for Pakistan if the political situation remained volatile and Pakistan's trade and investment keep on suffering for some more time.

Sources said IMF team had held meeting with Prime Minister's advisor on Finance Dr Salman Shah and many other important members of the government economic team and conveyed its concern to them over Pakistan' aggravating political situation.

The Fund suggested the government authorities that they should take all possible steps to make sure that the on-going political uncertainty comes to an end as early as possible.

Pakistan is also facing Herculean task of high inflation and widening current account deficit and IMF and other institutions had been suggesting the authorities to tackle these two economic issues on the long-term basis to improve their performance in these areas and protect low income and salaried groups. But this time their priority has changed from inflation and current account deficit to political situation.

Pakistan is facing political polarisation for the last six months and there seems no immediate end to this situation. It is hurting Pakistan very seriously. Other international donors such as the World Bank and ADB have also conveyed their concern on the issue and asked the government authorities to come with some immediate solution to the problem.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Sales Tax wing given Rs 382 billion target ​*
ISLAMABAD (September 13 2007): The Federal Board of Revenue (FBR) has directed its Sales Tax Wing to collect Rs 382 billion sales tax on domestic consumption and import stage to meet the ambitious target of Rs 1.025 trillion in 2007-08.

Sources told Business Recorder on Wednesday that all FBR Wings have been assigned monthly/quarterly targets of sales tax, customs, excise and direct taxes taking into account slight changes in taxation/relief measures.

The estimated sales tax collection at the import stage is Rs 201 billion, whereas target for sales tax on domestic consumption has been fixed at Rs 181 billion in 2007-08 budget. The board has communicated the figures to the collectors of sales tax and federal excise for meeting collectorate-wise monthly targets. Sources said that the board has to collect Rs 98 billion as federal excise duty (FED) during the period under review.

On the customs side, the collectorates have to make efforts to generate Rs 140 billion despite massive tariff rationalisation in the budget. The board would have to generate Rs 405 billion to meet the target of Rs 1.025 trillion in 2007-08.

It is important to mention that share of sales tax in CBR tax collection has declined from 41.3 percent in 2005-06 to 36.5 percent in 2006-07. The gross and net collection of sales tax during 2006-07 stood at Rs 346.9 billion and Rs 309.3 billion, entailing growth of 5.8 percent and 4.9 percent respectively over the last year.

Although the revised target of sales tax has been achieved to the extent of 99.6 percent, the overall collection has remained below the expected level--for both components of sales tax ie, sales tax domestic and sales tax imports.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*PPL discovers oil and gas at Hala ​*
KARACHI (September 13 2007): After a span of nearly three years, Pakistan Petroleum Limited (PPL) has announced a small discovery of oil and gas at Hala in Sindh. The last discovery by PPL was in Block 22, in Sindh. However, the operatorship of the field was sold by PPL to Pakistan Exploration Limited.

Drilling of one well at Hala has met success and initial estimates indicate 1,310 barrels per day condensate and 27.4 mmcfd of natural gas. Hala field is approximately four to five kilometres from the main gas pipeline.

According to informed sources, further drilling of extended well and piping connection to the main line will take at least six months. PPL will have to drill more wells before a proper assessment of the reservoir size can be ascertained. But initial indications show that to begin with 1,310 bbl/day condensate and about 15 to 11 mmcfd of gas could be obtained from this single well.

PPL hold about 24/25 licensed concession in the country, of which six are located in Balochistan. The geological survey of these concessions has been undertaken by PPL staff. Seismic or drilling activity is yet to start because the security clearance is still withheld by the provincial government.

PPL had outsourced some exploration activity to Chinese companies. Due to recent specific targeting of Chinese nationals - a "force majeure" position persists in the province with no new activity. With over Rs 30 billion in reserves and Rs 24 billion in cash, PPL needs to seek overseas exploration to tap fresh opportunities and make the right investment decision for it to grow further.

Due to poor conditions for oil prospecting and exploration, the new technology inflow is said to be drying up in the country. According to Pakistan Petroleum Information Services (PPIS), PPL has made a gas condensate discovery in Hala Block at Adam X-1 well in Sindh province.

The well was spud on April 7 and drilled to the depth of 3,566 meters. A successful Drill Stem Test was carried out which flowed at a rate of 1,310bpd (barrel per day) of condensate and 27.4mmcfd (million cubic feet per day) of gas.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Abu Dhabi Group helps strengthen economy' ​*
RAWALPINDI (September 13 2007): The Abu Dhabi Group has invested billions of rupees in telecommunication, financial services and banking, and has played vital role in national economic growth, said Mian M.A. Shahid, president, United Insurance Company (UIC) here on Wednesday.

"The group owns mainstream organisations in these sectors, including Wateen Telecommunication, Warid Telecom, and Bank Alfalah", said Shahid, while talking to, Abu Dhabi Group CEO Tahir Bashir during a meeting.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan to export 10 million tons cement to India in 2008 ​*
ISLAMABAD (September 13 2007): Seventeen companies of Pakistan would export 10 million tons of cement to India in 2008. According to Indian state trading company MMTC, it is expected that the production by the cement companies in Pakistan will grow by 50 percent to synchronise with the 50 percent increase in coal imports into the country, privet TV reported.

The local consumption of cement in Pakistan ranges from 22 to 24 million tons annually. However, the total production of cement in Pakistan is expected to surge to 35 million tons thanks to the bulging volume of exports. According to MMTC, the cement prices in India rose by 45 percent since December 2005.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*$54.52 million loss likely in kinnow exports ​*
KARACHI (September 13 2007): The country's kinnow exports are likely to face a loss of around $54.52 million due to almost a lost Indonesian market with Russian ban on Pakistani agricultural imports still intact, exporters said. Pakistan had exported around 2,000 containers, or 52,000 tons kinnows to Indonesia in 2003.

Which last year dipped to a meagre 250 to 300 containers, or 7800 tons worth $4.68 million marking a decrease of around $26.52 million, a leading exporter told Business Recorder on Wednesday. "Despite losing such a big kinnow market--Indonesia--which cost millions of dollars to the national exchequer, nobody even took notice of it", he lamented.

He expressed fear that similar situation was likely to take place in the Russian case, which has put an embargo on agricultural imports from Pakistan as an insect, known as 'khapra beetle', was found in rice consignments during inspection at Russian ports. "If the government of Pakistan does not go for reforms in the horticulture sector from grass-roots level we will soon face an unaffordable setback in fruit exports", he warned.

Pakistan used to earn around $28 million annually by exporting around 1400 containers, or 36,400 tons kinnows to Russia, which he feared would be lost if the Russian ban persisted. "The country would have to face a loss of around 28 million dollars if grass-roots level measures are not taken by Islamabad to allay their (Russians) concerns", he said.

Of reforms needed to make improvement in the horticulture sector he said: "Good agricultural practices (GAP) should be introduced at growers' level. Instead of spending billions of rupees on holding exhibitions and sending trade delegations abroad the government should regulate the use of urea, pesticides, and irrigation water. It should also ensure implementation of sanitary and phytosanitary (SPS) rules in the country". Appealing to President Pervez Musharraf for taking personal interest in the matter he urged the government to raise the standard of agriculture produces to the level of quarantines set by the importing countries as per Geneva Convention.

The exporter said that Pakistan should make reforms as per demands of the 'sensitive markets', namely Europe, Eastern Europe and Russia, who stress implementation of GAP. "To make our exports sustainable and to avoid situations like Russian ban we need to regulate the use of pesticides and residual level on the growers level as the exporters have already made remarkable progress in it", he suggested.

Another area of improvement, he said, was use of 'cool treatment', which is an affective tool to disinfect the fruit-flies, which can not survive in temperature below 3 degree centigrade.

He claimed that the benefits of 'Cool Chain Policy, 2003' could not trickle down to all exporters, as only 7-8 parties have the cool storage facilities with more than 100 others still without them. "Every year, a great part of the country's fruits goes in wastage due to the non-availability of cool storages for majority of the exporters", he said.

He said that only 7 or 8 Pakistani factories are recognised in the international markets like China, Iran, Philippines etc for kinnow exports, while the rest have no proper equipment to standardise their products as per demand of the importers.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan accepts US terms on BIT​*
ISLAMABAD, Sept 12: Pakistan has accepted all those conditionalities of the US on Bilateral Investment Treaty (BIT) that it had been resisting for over a year for being against its national interests, Dawn has learnt.

The all of a sudden acceptance came from Islamabad following mounting pressure from Washington asking for finalisation of the much-awaited treaty. This softness in position would now likely lead to early signing of the BIT.

Informed sources told Dawn on Wednesday that a final meeting will be held with the attorney general of Pakistan shortly for a legal input.

Already the relevant ministries held the first meeting on the clauses with the Attorney General.

The two sides held several rounds of meetings since 2004 for reaching a conclusion to ink the agreement, which was termed a first step for initiation of talks on FTA between the two countries.

Sources said Pakistan has no other option but to accept the US demands under the treaty. The issue will be discussed during the second round of Pakistan-US strategic negotiations.

The two sides seemed nowhere closer on the five clauses of the agreement  scope and coverage, transparency, claims on behalf of an enterprise, investment agreements and arbitration rules.

The sources said under the five clauses, the US side had agreed only on two clauses with the proposals of Pakistan.

The US has been showing flexibility on claims on behalf of enterprise. Pakistan needs to draft specific language to take care of its concerns, like beneficiary ownership etc.

The sources said that the US side has noted concerns of Pakistan and required to provide language, but it has not been received as yet.

The second clause, where some flexibility has been shown by US was the issue of arbitration procedures in addition to international centre for settlement of investment dispute (ICSID).

Pakistan has also communicated its position on additional procedural rules and coverage of dual nationality under the United Nations Commission on International Trade Law (UNCITRAL) for the response of US side but no response received from the US side.The sources said that the US side had not shown any flexibility in three clauses of the proposed treaty. On transparency issue, Pakistan explained its position for issuance of ordinance without its advance publication. The SROs can be placed on website a week prior to their enforcement where such notifications, in the subjective opinion of Pakistan, will not have any adverse effects or implications for Pakistan.

Another controversial clause related to investment agreement. Pakistan proposed that it could not be made responsible for an act committed under investment agreement.

Contract as per agreement has its own mechanism to settle dispute which arose as the forum provided in the contract.

Pakistan accepts US terms on BIT -DAWN - Business; September 13, 2007


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## Neo

*Help for engineering sector assured​*
ISLAMABAD, Sept 12: The Ambassador of the Netherlands to Pakistan, Willen Andreae, has urged Pakistani manufacturers to improve competitiveness of their products for increasing exports to European countries.

The envoy was talking to representatives of Pakistan Foundry Association (PFA) here on Wednesday.

Mr Andreae referred to the Free Dutch scheme under which retired and experienced persons are sent to other countries. Many Pakistani business organisations have utilised these services, but there was an ample room for expansion.

The envoy assured full support of the European countries for development of engineering sector, especially foundry in Pakistan.

Pakistan PFA chairman said that European companies were shifting their production units to other countries due to high cost of production and environmental problems. He said Pakistan was interested to get her share in this shifting.

Meanwhile, the delegation also met the Chief Executive of Engineering Development Board.

Help for engineering sector assured -DAWN - Business; September 13, 2007


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## Neo

*Mobile phone market to grow​*
KARACHI, Sept 12: Pakistan, the third largest growing mobile phone market in the world, is poised to grow manifold by the year 2010.

This was stated by Saleem Mobhani, CEO, Hungama Mobile, India. He is also CEO of FM India and currently on a visit to Pakistan on an invitation from Converge Technologies (Pvt.) Ltd., their strategic partners in Pakistan.

Addressing a press conference along with Qazi Fakhir Jamil, CEO, Converge Technologies (Pvt.) Ltd. and Imran Ahmed- Emu of Fuzon (prominent musical group), he said collaboration between Pakistani and Indian company was to form a common platform to provide security to artistes of both the countries to get theirs due share of profit out of what they had produced in the music and other form of entertainment.

Qazi Fakhir Jamil, CEO, Converge Technologies (Pvt.) Ltd, expressed his common resolve with the Indian company to uproot piracy in the country by providing quality content to the people at an affordable price.

Mobile phone market to grow -DAWN - Business; September 13, 2007


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## Neo

*Pakistan, US enhance cooperation: Teams formed to finalise trade, economic issues​*
ISLAMABAD: Pakistan and United States (US) on Wednesday constituted sub-groups of high officials from both the countries to pave the way for early finalisation of issues regarding trade and economic cooperation, a government official told Daily Times on Wednesday. 

The strategic dialogues between the government of Pakistan and US were held here on Wednesday at the foreign office between the US Deputy Secretary of State John Negroponte and local officials. 

The official informed that during the meeting sub-groups have been constituted to discuss matters with the concerned ministries. The US delegation discussed in detail issues relating to different ministries including money laundering, intellectual property rights, bilateral investment treaties, Reconstruction Opportunity Zones in FATA and data exclusivity on pharma products. 

The meeting also finalised the arrangement for the Economic Forum meeting to be held in October 2007 at Washington DC. The roadmap has been developed to resolve the bilateral issues, which will be expanded after the Economic Forum. 

The official informed that the US government has placed Pakistan in its priority watch list due to IPR violations in Pakistan. It was decided by the US authorities that mid-term review would be held in Pakistan during September to review the updated situations to rate the countrys standing in the countries protecting Intellectual Property Right (IPR). 

The current visit of the US authorities would help them reach a conclusion that whether Pakistan should remain in priority watch list or anywhere else. 

Explaining the pending issues relating to the Bilateral Investment Treaty (BIT), the official informed that the US is urging Pakistan to accept a harsh provision in BIT that all economic decisions are vetted at Washington well before formal issuance of the notification by Pakistans concerned ministry. 

This has been demanded as a metre of transparency to be ensured in BIT implementation period, which is still being negotiated between the two countries. Pakistan has not accepted this harsh provision due to its negative effects on Pakistan and its decision making process in bilateral issues. The US wants arbitration under proposed Pak-US BIT at US under Pakistani law. 

The BIT negotiations between Pakistan and US have shown no positive results and more rounds of consultations at top levels between the two countries would be held to narrow the differences, said an official.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan A Major Source Of Trained Manpower Export ​*
ISLAMABAD, Sept 13 (Bernama) -- Pakistan will become a major source of export of trained manpower to global market by exploiting potential of country's budding youth, said President General Pervez Musharraf.

He said youths below 19 years age form about 55 to 60 percent of country's 160 million people.

"This burgeoning young population is a challenge and opportunity as well," PPI reported Wednesday quoting Musharraf as saying here.

He said government's main policy thrust is aimed at job creation and poverty alleviation through harnessing potential of its human resource, skilled young workforce is declining in industrialized states which projects Pakistan as a foremost source of skilled workers with far lesser wages as compared to advanced countries.

The President said it would be a challenge for the government to provide skill training to about 90 million youngsters who would be looking for jobs in local market in next few years.

This challenge has to be met through concerted policy of providing technical education and vocational training in sync with demands of industry.

General Musharraf said focus to hire skilled labour is now shifting towards East which offer services on much less wages as compared to Western industrialized states and Pakistan stands to benefit from this opportunity.

Pakistan A Major Source Of Trained Manpower Export :: Bernama.com


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## Neo

*'Over 10,000 Pakistanis visit Hong Kong annually' ​*
ISLAMABAD (September 14 2007): Hong Kong has very liberal visa policy for genuine visitors, especially for the business community and over 10,000 people visit Hong Kong annually from Pakistan taking advantage of this policy.

This was stated by Assistant Director Enforcement and Litigation, Immigration Department of the Hong Kong Special Administrative Region, Eric K.K Chan while talking to newsmen here at Chinese embassy on Thursday.

Giving details of liberal visa policy for all genuine visitors including business community, he said, Chinese embassy in Islamabad was fully co-operating to grant Hong Kong visa without any delay.

He said visa of Hong Kong, which was initiated in 2003 for Pakistani nationals was processed without any delay however 14 days were required to complete the process. Regarding introduction of the visa policy for Pakistanis, Eric K.K Chan said the decision had to be taken in 2003 after increase in number of "asylum seekers" from Pakistan.

He explained that there were two kinds of asylum seekers coming to Hong Kong, one related to political cases and the others related to torture. These two categories were under 1951 UN Convention on Refugees and UN Convention against torture, he added.

Eric Chan said Hong Kong was not signatory to UN Convention on Refugees while it was signatory to UN Convention against torture, therefore, it had to take up the cases in these both categories.

He said there were 2,500 cases under refugees convention and 1,500 under Torture Convention under process and 700 and 300 respectively are Pakistanis and their number is increasing every month.

Eric said the Hong Kong government had to spend a huge amount to fight the cases of these asylum seekers, on legal fee and providing shelter and other facilities to the applicants, although not a single case under Torture Convention had been justified so far.

He explained that visa policy had been introduced only to check such abuses and assured that if these abuses would be controlled, Hong Kong could again offer Pakistan a visa free travel because both the countries had very warm, cordial and friendly relations.

Over 15,000 Pakistani expatriates were also living in Hong Kong and contributing positively to the economic conditions and they were living there as a law abiding citizens of Hong Kong, he added. Replying to a question, he said, most of the asylum seekers were from Pakistan, other Asian and Africa countries.

He said during his recent visit to six countries including Pakistan, Bangladesh, India, Nepal, Sri Lanka and Vietnam, he had been explaining the same problem of asylum seekers.

Many Pakistanis coming from main land China as they first visit China on visa and then slipped to Hong Kong through different means for getting asylum, he added. He said in 2006 illegal entry from China was 213 while in 2007 so far 363 persons have reached to Hong Kong for asylum and the number is increasing every day.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Cotton output target to be achieved: Bosan ​* 
Friday, September 14, 2007

KARACHI: Federal Minister for Food Agriculture & Livestock Sikander Hayat Bosan has said the country will achieve the cotton production target of 14 million bales despite mealy bug and cotton leaf curl virus (CLCV) attack. 

He was talking to media persons after chairing a meeting of the Pakistan Central Cotton Committee (PCCC) here on Thursday. 

Though 0.1 million acres area of cotton crop has been affected by mealy bug and CLCV, blooming hopes and strong anticipation are still there that the country will achieve the production target, the minister said. However, he noted that the current month was very important because chances of pest attacks on cotton crop were there till the end of September. 

Mealy bug attack on cotton crop in Pakistan had been taking place in recent years, so there was no pesticide which could effectively eradicate this deadly pest, Bosan said and added scientist were working hard to develop effective pesticides to control mealy bug, whereas foreign experts were also being hired to evolve an efficient mechanism to eliminate this menace. Similarly, no preventive method could be developed so far in order to treat CLCV, however, scientist were developing disease resistant seed varieties in order to curb these threats. 

Earlier, addressing PCCC members he said that cotton was the main stay of national economy, so the government was putting special focus on research & development for betterment of cotton quality and its production. 

In order to enhance production agriculture credit had been increased manifold, whereas Rs470 per bag subsidy was being provided on phosphate and potash fertilisers to encourage balance use of fertilizers. However, he said that per hectare yield in the country was still much lower than other major cotton growing countries such as Australia, China, Greece, Turkey and Syria. Our national average yield is almost stagnant due to vagaries of nature, absence of virus resistance varieties, and limited scientific cultivation methods. 

He advised PCCC to collaborate with the federal and provincial agriculture departments in order to establish develop high yield seed varieties in the country. 

He said that government was in favour of introducing BT cotton cultivation in the country, but through formal means and in this regard MINFAL had finalised a strategy to regulate genetically modified (GM) plant varieties, including BT cotton. He said the Ministry of Environment had notified bio safety rules and guidelines 2005, and all GM plant varieties were to be required to get environment clearance. He said that the BT cotton varieties developed by National Institute of Biology& Genetic Engineering and Centre of Excellence for Molecular Biology (CEMB) would be released soon after fulfilment of necessary obligations, whereas multinational companies were also been approached to bring the technology to Pakistan. 

He highlighted that Organic cotton production was another important area where the country needed to progress, particularly in Balochistan.

Cotton output target to be achieved: Bosan


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## Neo

*ABC concerned about law, order in Pakistan ​* 
Survey reveals 92pc ABC members positive about business climate, 76pc consider law, order poor

Friday, September 14, 2007
By Muhammad Farhan Zaheer

KARACHI: The American Business Council (ABC) has described law and order as well as external and internal political conditions in Pakistan as negative for foreign investment in its annual survey on members perception of economic and investment climate of the country.

Economic fundamentals in Pakistan are very attractive as this country offers 100 per cent equity, and very few countries offer this opportunity, said Iqbal Bengali, the ABC president, here on Thursday. 

We cannot expect a 100 per cent business-friendly atmosphere, so one should look at opportunities as well as the downsides such as economic conditions and taxes in Pakistan, he added.

ABC released the results of its annual survey on members perception of business, economic and investment climate in the country as well as the performance assessment of relevant government ministries and departments, including the provincial and city governments. 

Ninety-two per cent of the ABC members are positive about the overall business climate in the country, and 76 per cent of the members considered law and order to be poor, said Bengali.

This years survey results revealed a positive outlook on the overall business and economic climate, and 75 per cent pf the members said they were planning to invest over the next 12 months, he said.

Overall members were satisfied with the performance of the Sindh and Punjab governments and the city governments of Karachi and Lahore. However, the Punjab provincial and Lahore city governments have received better ratings than the Sindh provincial and Karachi city governments.

The survey results provide the ABC members with current assessment and are based on responses from 85 per cent of its members. Members gave high ratings to SBP, CBR, SECP, income tax and customs departments. They have very favourably rated the ministries of industries and production and commerce. The Ministry of Labour and Manpower received a satisfactory rating. However, the Intellectual Property Organisation of Pakistan got an unfavourable rating. In addition, 38 per cent of the respondents expressed concern about the international perception of the country.

ABC has been releasing its annual reports on the economy of Pakistan for the past 15 to 16 years. The Overseas Investors Chamber of Commerce and Industry (OICCI) issued its economic report the first-time ever this year. There could be some similarities in our results as our members are also present in OICCI, said Bengali.

ABC is the ambassador which tries its best to bring investment in Pakistan and United States investment is the highest in Pakistan, he said.

ABC members contribute a sizeable amount to the national exchequer every year in direct and indirect taxes with last years contribution exceeding Rs43 billion. Memeber companies provide direct and indirect employment opportunities to nearly a million people. 

ABC is affiliated with the Federation of Pakistan Chambers and Commerce and Industry and is a member also of the US Chamber of Commerce (USCC), Washington DC, and the Asia Pacific Council of the American Chambers of Commerce. 

ABC has also close working relationship with the USñPakistan Business Council, Washington, which is a component of the USCC. ABC members have cumulative revenues of about $3.3 billion and an investment of over one billion US dollars in Pakistan.

ABC concerned about law, order in Pakistan


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## Neo

*Gems, jewellery exports may rise to $500m ​* 
Friday, September 14, 2007

KARACHI: Pakistan Gems and Jewellery Development Company (PGJDC) Chief Executive Officer Fawad H Khan has said the companys target is to increase the exports of gems and jewellery to $500 million by 2011 and up to $1.5 billion by 2017.

In a statement, the CEO said Pakistans current gems and jewellery exports stood at $40 million, which could be increased through concerted efforts for skill development, technology upgradation, marketing and branding.

The PGJDC will participate in the 40th Bangkok Gems and Jewellery Fair 2007 to be held in Thailand from September 18 to 22.

The PGJDC will have a pavilion called Gems & Jewellery Pakistan which will have 18 stalls. The exhibitors, including two women entrepreneurs, have been given the stalls on subsidised rates by the company.

Pakistan participated in this fair in 2005 and 2006, attracting a large number of people from across the world and managed to get orders worth US$6 million and $12 million respectively.

Gems, jewellery exports may rise to $500m


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## Neo

*CNG sector attracts Rs70bn investment​*
ISLAMABAD, Sept 13: Federal Minister for Petroleum and Natural Resources Amanullah Khan Jadoon said on Thursday that the CNG sector attracted over Rs70 billion investments during the last few years owing to liberal and encouraging policies of the government.

Chairing the sixth meeting of the board of governors of Hydrocarbon Development Institute of Pakistan (HDIP) the minister said the government would encourage private sector to set up CNG equipment manufacturing plant in the country.

As a result of introducing investor friendly policies and deregulation of the petroleum sector the oil and gas exploration in the onshore and offshore areas attracted an unprecedented direct and indirect investment in the country.

The minister said that Rekodiq Copper project being undertaken by the Chilean Antofagasta company with an investment of $6 billion in Chagai district of Balochistan province would place Pakistan on the world copper map shortly.

He said that the country was endowed with enormous energy potential and underlined the need to promote the research and development activities on modern line to tap the explored oil, gas and mineral deposits to meet the growing energy needs of the country.

He said that HDIP would introduce latest technologies to boost the oil, gas and mineral exploration activities in the country. He said that the government would provide better incentives package to the professionals engaged in the hydrocarbon research and development activities aimed to raise their living standard in a competitive environment.

CNG sector attracts Rs70bn investment -DAWN - Business; September 14, 2007


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## Neo

*Pakistan on world copper map shortly​*
ISLAMABAD: Rekodiq Copper Project, being undertaken by the Chilean Antofagasta Company with investment of $6 billion in Chaghi District, would place Pakistan on the world copper map shortly.

This was informed in the 6th meeting of Board of Governors of the Hydrocarbon Development Institute of Pakistan (HDIP), presided by the Federal Minister for Petroleum and Natural Resources Mr Amanullah Khan Jadoon here on Thursday.

The minister said that the CNG sector has attracted over Rs 70 billion in investment during the last few years as a result of liberal and encouraging policies of the government. He said that Pakistan now stands as the second largest CNG users country in the world. 

He said that the government would encourage the private sector to set-up CNG equipment manufacturing plants in the country in order to save heavy foreign exchange on the import of CNG equipment. The minister said that as a result of introducing investor friendly policies and deregulation of the petroleum sector, the oil and gas exploration in the onshore and offshore areas has attracted unprecedented direct and indirect investment in the country. 

He said that the country is endowed with enormous energy potential and underlined the need to promote the research and development activities on modern line to tap the unexplored oil, gas and mineral deposits to meet the growing energy needs of the country. He said that HDIP, which is the prime research and development organisation in the petroleum sector, should introduce latest technologies to boost oil, gas and mineral exploration activities in the country.

Mr Jadoon said that government would provide better incentives to the professionals engaged in the hydrocarbon research and development activities that are aimed to raise their living standards in a competitive environment. staff report

Daily Times - Leading News Resource of Pakistan


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## solid snake

Good to see a lot of Pakistani companies exporting cement to India. Overall, the economy looks strong and hopefully will maintain it's 6&#37;+ growth in the coming years.


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## EagleEyes

solid snake said:


> Good to see a lot of Pakistani companies exporting cement to India. Overall, the economy looks strong and hopefully will maintain it's 6%+ growth in the coming years.



Presidents says it will likely to grow because of the policies of the current government, it will continue to grow AS LONG AS corrupt leaders dont come in power.


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## solid snake

WebMaster said:


> Presidents says it will likely to grow because of the policies of the current government, it will continue to grow AS LONG AS corrupt leaders dont come in power.



The corrupt and *incompetent* you mean 

I don't understand the Pakistani habit of backtracking on almost every policy of the previous government by those that are newly elected. Things are going great the way they are, Shaukat and Pervez have done a great job in finally putting Pakistan on the tracks towards prosperity. Let us hope self-proclaimed champions of democracy don't get to derail our train


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## Contrarian

solid snake said:


> Good to see a lot of Pakistani companies exporting cement to India. Overall, the economy looks strong and hopefully will maintain it's 6%+ growth in the coming years.



Mate, India needed to import cement because Indian cement industry has not gone for capacity expansion for like the last 5 years at the very least. And the growth was calling for more and more cement. Now for the first time, because of the rise of cost of cement and the need for import, Indian companies have gone for capacity expansion, and some estimates put that there would be surplus cement within 2-3 years time because of that. The supply would exceed the demand around that time.


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## Introvert

*Strategy unveiled to boost Pak-Italy trade *

Saturday, September 15, 2007
By our correspondent

LAHORE: Realising the low volume of trade between Pakistan and Italy, the Lahore Chamber of Commerce and Industry (LCCI) on Friday unveiled a strategy to boost bilateral trade between the two countries.

The strategy includes active engagement of the business community and diplomatic missions of the two countries, frequent exchange of economic and trade delegations to identify areas of mutual interest and arranging of single country exhibitions and socio-cultural programmes in each other&#8217;s country.

Participation of Pakistani exporters in international trade fairs in Italy and vice versa could also expand trade between the two countries.

The LCCI president Shahid Hassan Sheikh to briefed Tasneem Aslam, Ambassador-designate to Italy during a meeting at the LCCI.

The LCCI president informed the ambassador-designate that non-availability of required trade-related data is the biggest hurdle in the way of expansion of trade between the two countries and Pakistan embassy through its commerce section needs to play a proactive role.

The Embassy should also try to arrange sector-specific delegations of Italian businessmen to visit Pakistan to gain first hand knowledge about the opportunities of trade and investment in Pakistan.

He said that keeping in view the market potential of the two countries a lot of progress could be made on the trade front through boosting up the existing trade and identification of new tradable items between the two countries.

To cater to the requirements of Pakistani market, chemicals, dairy products, electronic equipments, machinery, automobiles can be exported from Italy, whereas Pakistan has a competitive advantage in textiles, surgical instruments, leather products, sports goods, fruits & vegetables and rice etc., which can be exported to Italy on a larger scale.

The LCCI president suggested that Italy could make direct investment in the marble sector, electrical & industrial machinery, IT, pharmaceuticals, engineering, automobiles & agro-based industries, oil & gas exploration and financial sector.

Italian industrialists can also enter into joint ventures with Pakistani counterparts. Pakistan occupies a strategic position in the region. It is a key market populated with 150 million people and its manpower is highly capable. Labour is comparatively cheap. 

Investment operations based in Pakistan would not be restricted to the Pakistani market alone but would find their way to India and Central Asian States.

The Ambassador-designate to Italy promised to take all possible measures to take the graph of two-way trade between Pakistan and Turkey to the desired levels.

Strategy unveiled to boost Pak-Italy trade


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## Neo

*ISP projects: three Gulf companies want to invest $60 million ​*
KARACHI (September 15 2007): Three international companies from Gulf countries are currently engaged in negotiations with at least 10 Pakistani internet service providers (ISPs) for acquiring their stakes and management control with an approximate investment of around 60 million dollars.

According to sources in the information technology (IT) industry here on Friday, three potential United Arab Emirates (UAE) and Qatar-based parties are in the negotiation phase with the local ISPs for last few weeks, They said these parties intended to invest 20 million dollars each in three separate project.

With the 60 million-dollar investment in the IT sector by these parties, the total investment in the IT sector would be increased up to 150 million dollars during next five years, said the sources.

Of the 10 ISPs, three would be shortlisted, they said, adding two of them would start work by the end of current year, while third would be active in the beginning of the next year.

They said that one company would use fibre-to-the-home (FTTH) technology, while the other company would use metro WiFi technology, and added that these companies would provide 512 KVPS as the current speed of ISPs in Pakistan was 128 KVPS to 256 KVPS. The sources said that beside the GSM and LDI sectors, the broadband internet had a vast potential to growth in the country.

They said that the internet penetration growth rate target had been set up at 20 percent from the existing 1.2 percent, which would attract heavy foreign investment. Pakistan Telecommunication Company Limited (PTCL) had also reduced its internet broadband tariff, which was a good sign to create a trend of competition among various companies they said, and added that the use of internet would be increased as banking sector in Pakistan was gradually switching over to e-banking.

They said that banking sector would install 5,000 more ATMs all over the country, which would increase the use of internet and would facilitate the public in withdrawing cash.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistans cotton outclasses other countries produce: First lint shipment of 2007-08 to Far East next week​*
By Razi Syed 

KARACHI: The international cotton buyers seem interested in making deals for Pakistans cotton, as the local produce is available at the lowest price in the global market, dealers said on Friday. 

First shipment of the cotton season 2007-08 would be ready in the next week to the Far East as Pakistani cotton has become the most favourite in the international market these days, a senior trader Ghulam Rabbani said. 

In the international market, Pakistani lint was getting more attraction from the several traditional and non-traditional cotton importing countries.

Mr Rabbani said with a small inching up in the cotton rates, the Indian cotton quotes are very common to be in the table of every one in the globe. The international buyers could wait until the rates become lower.

He said still the rates in domestic market are cheaper than the worlds cotton rates for the same specification as Indian type J-34 offered at 64 cents per pound which accumulated to Rs 3,200 per maund. 

Pakistans millers agreed to buy cotton on a little bit higher price paying small premiums, as they feel better not going for imported cotton on higher rates than the domestic available stuff. Besides millers, the private sector commercial exporters were also in the market and they were purchasing lint in reasonable quantities.

He said, A sizeable export will not affect the domestic markets requirements as the countrys import of PIMA grade and other qualities cotton are still a regular feature, as we are facing a shortfall of around 3 million bales.

He said worlds mill consumption of cotton is forecast at a record of 25.7 million tonnes in 2006-07, which is up around three percent from the previous season, according to a report released by the International Cotton Advisory Committee (ICAC). 

He said Mainland Chinas textile industry, according to the ICAC, would continue to drive world cotton use in 2006-07. Chinese cotton use is projected at a record 10.5 million tonnes, up 600,000 tonnes from 2005-06.

He said world cotton production is expected to remain stable at 24.7 million tonnes in 2006-07 and the production is forecast up in Mainland China, India and Pakistan, but significantly down in the US. 

He said with the world cotton consumption is expected to exceed production by 1.1 million tones and the world cotton stocks are expected to decline to 9.8 million tonnes by the end of 2006-07, according to the ICAC. 

He said rising imports by Mainland China are expected to boost world cotton trade to a record 9.7 million tonnes in 2006-07. 

The world cotton production in year 2005-06 was around 24.75 million tonnes, (113.7 million bales), 24.7 million tonnes (113 million bales) in 2006-07 and 26.4 million tonnes (121 million bales) expected in 2007-08. 

Similarly the consumption remained at 24.88 million tonnes (114.4 million bales) in 2005-06, 25.7 million tonnes (118 million bales) in 2006.07 and 26.2 million tonnes (121 million bales) expected in 2007-08.

During the same period, the export remained at 9.63 million tonnes (44.2 million bales), 9.7 million tonnes (45 million bales) and 9.6 million tonnes (44 million bales) respectively.

The ending stocks remained at 10.84 million tonnes (49.8 million bales), 9.8 million tonnes (45 million bales) and 9.9 million bales (46 million bales).

Daily Times - Leading News Resource of Pakistan


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## Ababeel

If the environment becomes more and more peaceful as against the ongoing voilence, there are very bright chances that the economy will surge ahead with fast pace.


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## AgNoStiC MuSliM

> *China agrees to import Pak products at zero duty​*Pakistan to set up China-specific economic zones in various cities
> 
> By Khalid Mustafa
> 
> ISLAMABAD: In a major development, *Beijing has agreed to import Pakistani products at zero duty, which are to be manufactured in China-specific Special Economic Zones (SEZs) in Pakistan, *a senior government official told The News.
> 
> China-specific Special Economic Zones will be established in various parts of the country and the Economic Coordination Committee has already approved the establishment of SEZs for China in Kalashah Kaku near Lahore. The Punjab government has acquired land for this ambitious project.
> 
> *About 250 companies are ready to invest in the China-specific Economic Zones for trade with China. "The Pakistan government would, in return, permit Chinese companies which would make 40 per cent investment in the China-specific Special Economic Zone to import the machinery at zero duty to be installed at the said zone."
> *
> Pakistan will be able to have the biggest market of one billion people of China by exporting the products to be manufactured in the SEZs at zero duty. Beijing has also extended a special incentive under which Islamabad can initiate banking services in China just with the deposit of $250 million with sovereign guarantee. "In China there is a rule which is strictly adhered to, according to which it is mandatory for the party (country) to deposit first $ 10 billion prior to opening any bank, but the authorities concerned have allowed Pakistan to open bank in China with deposit of only $ 250 million.
> 
> "This is a landmark achievement in services sector between both the countries. China has extended this huge incentive to bank in Pakistan in a recent meeting held in Beijing on August 14-16. In the meeting both the countries have also made remarkable progress on talks about services sector," the official siad.
> 
> According to the official, Pakistan and China have also agreed to initiate trade under an FTA on services from January 1, 2008, and to this effect both sides have made reasonable progress to materialise the agreement on the services sector. Both the friendly countries decided to initiate trade in the services sector from January 1, 2008, in a meeting held in Beijing from August 14 to 16.
> 
> "Both the sides are currently in trade with each other under Free Trade Agreement (FTA) on goods and investment and are not in trade in services sector." The official said Pakistan and China have started negotiations on trade in the services sector under Article 83 of the FTA.
> 
> Under the services agreement, if successfully concluded, both countries would enter into a recognition agreement about doctors, engineers, banks and professors of each country. Under the agreement, Pakistan doctors, engineers, professors would be able to offer their services in China and in the same way Chinese would offer their services in Pakistan.


China agrees to import Pak products at zero duty

If this is true, this will be a huge development. I'm interested in the identity of those 250 companies - all Pakistani or some multinationals as well? Some major investment could be coming in if it is the latter.


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## AgNoStiC MuSliM

> *Centre releases Rs 3.87bn to acquire land for Gwadar oil city
> $40 billion investment to be made in biggest oil storage in region​*
> Sunday, September 16, 2007
> By Khalid Mustafa
> 
> ISLAMABAD: The government has released Rs 3.87 billion to acquire 12,500 acres of land in Gwadar to establish an oil city, the biggest oil storage base in the region.
> 
> "About $40 billion investment will be made in the oil city that will make the port different from other ports," a senior official told The News. The Ministry of Petroleum and Natural Resources has been asked to prepare the PC-1 of the project.
> 
> After acquiring the land, construction work would kick off. In the days to come, the Central Development Working Party (CDWP) and the Executive Committee of the National Economic Council (ECNEC) will accord formal approval to the project.
> 
> The land that is to be acquired will be made available on lease at nominal rates to interested parties for setting up refineries or making investment in oil logistics and storage facilities. The official said the project would be completed in two phases. In phase-1, a 'petrochemical city' will be set up with an initial investment of $12.5 billion. In this city, a big refinery, along with petrochemical, oil logistics and storage complexes, will be set up.
> 
> In the first three years, the refinery will be able to refine 10.5 million tonnes of oil annually. The capacity of this refinery will be increased up to 21 million tonnes in seven to nine years. The official said the Chinese Petroleum Chamber would come up with $12.5 billion investment plan for the project.
> 
> In addition, some companies from the Middle East have also shown interest to set up refineries at Gwadar Port. Under the second phase of the plan, the capacity of refineries in the Oil City will be enhanced to 63 million tonnes in 15 years, the official said. "We have allowed a Chinese company to initiate the project for power generation and water desalination prior to initiating the construction of the Oil City," he added.


Centre releases Rs 87bn to acquire land for Gwadar oil city


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## Neo

*'Pakistan in top 10 in trade dynamism, market flexibility' ​*
ISLAMABAD (September 16 2007): Pakistan has been listed among top 10 countries in the world business dynamism and market flexibility, according to a 'Competitiveness Support Fund' (CSF) report, issued here on Saturday. The report says that Pakistan has shown serious efforts in improving competitiveness ranking which the World Economic Forum measures on performance basis of any country.

It said that Pakistan's private sector played a pivotal role in making Pakistan competitive in the world market. The report said that CSF undertook a number of initiatives during the last over one year to help Pakistan get fit in global market. It engaged public and private sector leaders to address the economic issues jointly.

CSF is an independent body established in 2006 to reposition Pakistan's economy on a more competitive global footing. It is a joint initiative of Ministry of Finance and the United States Agency for International Development (USAID)1.

The precursor work identified several gaps in important sectors of the economy. CSF proposed a series of interventions to accelerate the adoption of practical competitiveness-building initiatives in Pakistan. The gaps lack innovative approaches, linkages between academic community and industry, poor dialogue on policy and reform issues, slow commercialisation of innovation and weakness in the legal framework for a viable economic environment.

CSF is meant to help Pakistan achieve the goal of a competitive economy by providing input into policy decisions, improve regulatory and administrative frameworks and enhancing public-private partnerships. It will also provide technical assistance and co-financing for initiatives related to entrepreneurship, business incubators and private-sector led initiatives with research institutes and universities that contribute to creating a knowledge-driven economy.

CSF activities will help the producers to ultimate product quality. By obtaining better value and better prices for quality products, and improving co-operation throughout the Pakistani economy, CSF will contribute to poverty alleviation by providing more income for producers and better employment prospects for employees.

The government has included, for the first time, competitiveness into poverty reduction strategy. Its salient features were private sector development, intensifying deregulation, privatisation and liberalisation, enhancing competitiveness and productivity, special economic zones, value-addition in agriculture and riding the globalisation wave in export markets.

CSF also carried out a study on special economic zones (SEZs) by benchmarking Pakistan against China, India, Malaysia, Vietnam and Thailand. Globalised economies require policies based on de-regulation, privatisation and liberalisation. This theme requires reduction in tariff barriers and custom duties for imports, the prices and increase in quality of the products for the consumers.

CSF has developed an action plan on unifying the policies and promoting the effective creation of special economic zones in Pakistan. This action plan includes developing an Act on Special Economic Zones which is based mostly on the Indian model and includes the legal and institutional framework for establishing and effectively operating the SEZs, incentives for developers and investors, standards for SEZ approval and the role of private sector and provincial and federal governments.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Saarc foreign ministers discuss process to use $300 million development fund ​*
NEW DELHI (September 16 2007): Finance Ministers from eight member states of the South Asian Association for Regional Co-operation (Saarc) on Saturday in New Delhi started discussion on mechanism to operationalise the $300 million Saarc Development Fund for socio-economic uplift of the people of the region.

Saarc Development Fund envisages to identify and implement development projects aimed at poverty alleviation, institutional and human resource development, social and infrastructure development in member countries under an agreed mechanism.

Advisor to Prime Minister on Finance & Economic Affairs Dr Salman Shah, who is leading Pakistan delegation at the second meeting of the Saarc Finance Ministers, said that Pakistan desires to have progress in these areas to make Saarc a more vibrant organisation.

He said that he would hold meetings with his counterparts from Saarc states to exchange experiences in socio-economic sectors for betterment of the people. Saarc Finance Ministers at the first meeting in Islamabad in July 2006 had agreed on a roadmap for creating the Saarc Development Fund, and had approved the framework to make the organisation reflective of people's aspiration.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*AJK to have highway-cum motorway network soon ​*
MIRPUR (September 16 2007): AJK will soon have a grand highway-cum-motorway network to provide comfortable travelling facilities to the commuters as AJK government has decided in principal to implement the plan under phased programme, official sources said.

The sources told APP here Saturday that the AJK government has planned a grand road network across AJK under a phased programme. Kashmir Highway Authority has recently been set up to implement the plan.

The proposed highways from Keil to Bhimbher would be of international standard and the project would be completed by reputed and much experienced construction companies including contractors involved in the construction of silk route. After completion of the highways and motorway network across AJK toll tax system will be introduced in the area to collect the tax to meet expenditure of similar public welfare projects.

The sources revealed that 'Slide management system' has been introduced in AJK in order to make all highways usable round-the-clock. Elaborating the system, the sources indicated that it was aimed at ensuring interruption-free travelling facilities to the masses in the mountainous areas where travellers have to suffer long delays because of landslides.

The sources further said that experts including engineers involved in various development projects of public welfare including roads and highways shall have to declare life of projects.

The AJK government has decided that there would be no compromise on quality of development projects in the liberated area. The AJK administration has already launched the broad-based plan for the speedy development and uplift of AJK in line with the means of modern construction with special focus to convert the area into a true model and welfare state.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Power demand needs $2 billion annual investment: ADB ​*
FAISALABAD (September 15 2007): The country's power demand is currently growing at around 2,000 megawatts (MW) per year, and investment needs for this may exceed $2 billion per year over the next decade, according to Asian Development Bank.

The bank's project completion report on 'Energy Sector Restructuring Programme' (ESRP) said that substantial ADB involvement in Energy Sector Restructuring Programmes can help sustain the progress made under the ESRP.

However, the investment needs to be linked to further reform efforts in six areas: (i) Commitment by the Government to announce tariff decisions approved by Nepra in a timely manner and enable cost recovery across the power sector; (ii) Clear policies on and payment arrangements for any subsidies for power supplies; (iii) Stronger commitments to conclude the restructuring of Wapda and the privatisation of some of its successor companies; (iv) Progress toward open access in the power sector, at least for larger power consumers; (v) Swift establishment of an independent CPPA; and (vi) Strengthening of Nepra as the independent power sector regulator.

The report says that ADB has continued to be engaged in the power sector of Pakistan since 2000. It has provided technical assistance to restructure the gas sector and build the institutional capacity of the National Transmission and Despatch Company Limited and the Alternative Energy Development Board. A major new loan for the transmission sector was approved in December 2006. A technical assistance project for the CPPA is currently going through tendering. ADB's private sector operations have an investment in KESC. A new loan for the distribution sector is being considered, the report said.

In general, the report says that the model for future lending should be multi-tranche facilities, so that the lending program can be linked to progress on ongoing conditions and to further reform efforts. ADB should also aim to lend money in areas where it can take the lead in policy dialogue and reform to ensure best value for money in its overall support.

According to ADB's project completion report, the ESRP was implemented broadly as conceived, and attained most of its planned objectives. Some aspects of the program were delayed, and the achievement in some areas, for example, privatisation, was incomplete. The Government is of the view that initial impediments have been removed, and further progress on implementation of program is expected as planned. However, in general, the reform program was adhered to and the most important objectives were met. Sustained and regular policy dialogue between the Government and ADB, in formal missions and other discussions, ensured effective monitoring of the program.

Overall, from the point of view of relevance, efficacy, efficiency, and sustainability, the program is considered successful. The growing skills of the power sector regulator, the privatisation of KESC, the improvement in the environment for inward investment in the power sector, and the unbundling of Wapda all involved difficult decisions for the Government and those decisions were taken and implemented.

The ESRP loans began processing in April 1998 with a fact-finding mission but were not approved until December 2000. There were several reasons for this relatively long approval period, some of them extraneous to the energy sector (for example, Pakistan 's nuclear tests in May 1998). However, the key factor was the policy dialogue, which led to the policy matrix and the loan covenants. The extended negotiating period gave the Government enough time to meet key conditions for the approval of the loans. This demonstrates the importance of investing time in loan processing and setting tough conditions for loan approval.

Conditions associated with the incentive tranche of Loan (1807) were all met within 4 months of loan approval. Although there was a slight delay compared with the timetable, this was still good performance. The second and third tranches had fewer conditions but were not disbursed because privatisation was not achieved and the Government decided to repay the loan. The other conditions for the second and third tranches were relatively straightforward.

Setting conditions 2 years in advance of a program as wide-ranging as the ESRP is difficult. On the one hand, conditions may be affected by adverse external events such as the difficult environment for power sector investment in 2002 and 2003. On the other hand, the progress of the program may show up other areas where conditions may be needed. The program could have included a mechanism of formal review after about 18 months to consider revising the content and timing of loan covenants. The objective would be to make the covenants more relevant to prevailing conditions, strengthen or bring forward some conditions, and waive or defer others.

The role of the Ministry of Finance, as the Executing Agency for the loans, was also a source of strength for the program. The MoF was well placed to see the link between Pakistan 's macroeconomic crisis and the need for reforms in the energy sector. A well-thought-out structure for monitoring and implementing the ESRP was established. Responsibility for coordinating and monitoring the implementation of the ESRP was given to the MoF, which was supported by (i) the Ministry of Water and Power in the implementation of sector reforms, (ii) Nepra in sector regulation, and (iii) the Privatisation Commission in the privatisation of KESC and other corporatised Wapda entities. A federal steering committee and a KESC privatisation cell ensured timely implementation.

According to report, the loans for the ESRP were closely co-ordinated with those of the IMF and other development partners, particularly the World Bank. This close coordination was a key strength of the ESRP, as it recognised the clear links between Pakistan 's power crisis and macroeconomic instability and offered remedies for both problems.

Loan (1809), the technical assistance loan designed to support the evaluation of the social impact and labour retrenchment and redeployment program for KESC's privatisation, was cancelled in its entirety. Interest in using the loan proceeds seems to have been limited from the outset, with substantial delays in establishing the project management unit for the loan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

* CAA seeks more flights to Heathrow, Gatwick airports ​* 
Sunday, September 16, 2007
By Saad Hasan

KARACHI: Pakistan is seeking an increase in the number of flights to Londons two busiest airports for its private airlines, an aviation official told The News on Saturday. 

Only state-owned Pakistan International Airlines (PIA) has 10 weekly flights to Heathrow Airport, one of the busiest and lucrative airports in the world. We want to win flights for Air Blue and Shaheen to Heathrow and Gatwick airports, said a senior Civil Aviation Authority (CAA) official directly involved in negotiations with British aviation authorities. 

Four British carriers can use Heathrow to fly to Pakistan, but only British Airways operates currently. The other three are British Midland Airways, European Air Charter and Astraeus Airlines.

Air Blue, the first Pakistani private airline to extend operations to Manchester, would be in the most favourable position to exploit the opportunity with its surplus pilots and cabin crew, industry people said. 

The airline is also in search of a long-haul aircraft. Finding an aircraft is an issue these days, but we are in a continuous search for an A330-200 on dry lease, an airline official said. A CAA delegation will visit Europe from Sept 19 to 20 to negotiate 10 articles of an air services agreement with the European Commission. This is a pre-requisite for a new regulation of EC, which allows airlines from its member states to utilise each others routes. 

However, the CAA official said, the number of passengers, frequency of flights and other details would have to be negotiated at bilateral level with the 20 member states. This (new regulation) will greatly benefit the European low-cost carriers. All they have to do is open an office in the country where there are dormant routes available and utilise them, he added. 

PIA Case: About PIA rolling back its routes as part of a restructuring move, the official feared that Gulf based airlines could easily exploit this vacuum to their advantage. While the national flag carrier claims that only unprofitable routes are being rolled back, travel agents say flights to Chicago has a huge market, so there is no question of their being unprofitable.

CAA seeks more flights to Heathrow, Gatwick airports


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## Neo

*Plan to make Korangi harbour export corridor ​* 
Sunday, September 16, 2007
By Shahzad Anwar

KARACHI: Seafood exporters blamed that Ministry of Food Agriculture & Livestock was planning to declare Korangi Fish Harbour as export corridor to EU and other countries.

Marine Fisheries Department the operational arm of the MINFAL was not allowing exports from Karachi Fish Harbour to EU on basis of so called quality standard grounds, the sources said and added that Planning Commission had submitted in its proposals that KoFH was a strategic asset and its operation was supposed to be leased out to an international operator through bidding after upgrading of harbour facilities.

Sources said that registration of new boats at Karachi Fish Harbour had already been banned and fishermen were forced to register & operate from Korangi Fish Harbour after clearance from Marine Fisheries Department (MFD). 

The Karachi Fish Harbour is being controlled by Sindh Government, while Korangi Fish Harbour was constructed under ordinance No. XVI of 1982 aimed to increase fish production by providing basic infrastructure facilities to increase the foreign exchange earnings of country through increased export of marine fish products.

Exporters said that reason behind exports ban to EU was a clash of interest between provincial government and MINFAL, as former earns huge amount from Karachi Fish Habour, while later wants to control these resources by making Karachi Fish Harbour failure and shifting boats to Korangi Fish Habour which is the property of Federal Government. 

National Standing Committee on Food, Agriculture & Livestock had directed Marine Fisheries Department to resolve the seafood export ban to EU. But eight months have passed and MFD is yet to lift ban on exports.

Couple of days back Federal Minister for Food Agriculture and Livestock Sikander Hayat Bosan said that seafood exports would not be allowed to EU till seafood processing factories de-listed by European Union meet quality standards set by EU.

Though processing factories made good progress regarding improvement in deficiencies in respect of quality standards pointed out by EU, but they are yet to do bit more in this regard, he said and noted that fisheries was provincial subject but federal government just plays role of a regulator.

However, he said before inviting EU for final inspection processors must have to satisfy Marine Fisheries Department (MFD) the sole representative of federal government, which regulates seafood trade in the country.

The EU had slapped ban on import of Pakistan seafood from April 12, 2007 by de-listing all processing factories on the basis of quality standards, which barred annual seafood exports from Pakistan to EU worth $80 million. 

Plan to make Korangi harbour export corridor


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## Neo

*Surgical instruments development strategy to fetch $1bn ​* 
Sunday, September 16, 2007

LAHORE: The Federal Minister for Industries Jahangir Khan Tareen has expressed confidence that by implementing the proposed development strategy for surgical instruments industry would touch US$1 billion by 2015.

He stated this at a meeting held at the Small and Medium Enterprise Development Authority (SMEDA) head office on Saturday while granting approval to the Comprehensive Strategy for Sustainable Development of Surgical Instrument Sector.

The strategy has been developed by SMEDA through a Strategy Working Group comprising representatives from the Surgical Industry Association, SMEDA and J E Austin, USA. The meeting was attended by Ajmal Cheemah, provincial minister for Industries, CEO, SMEDA Shahid Rashid, amid a large number of stakeholders from the surgical Instruments sector.

Tareen, while addressing the participants, disclosed that the government had invested over Rs4 billion on developments of the four sectors whose development strategies were compiled by SMEDA through the concerned Strategy Working Groups. The sectors include dairy, gems and jewellery, marble & granite and furniture he said and expressed pleasure to know that a similar comprehensive strategy was ready for development of surgical instrument and medical devices industry.

He advised SMEDA to initiate the paper work for establishment of a company on Private-Public Partnership basis to start the implementation process. Meanwhile, he summoned a meeting of the SWOG at Pakistan Industrial Development Corporation (PIDC) on October 2, 2007 to manage provision of the required funds for implementation of the Strategy.

Talking to newsman on the occasion, he said that the surgical instruments industry was part of the priority sectors to be worked out by SMEDA on his advice. The surgical instruments sector, he said, had a potential to grow through export, but is currently witnessing a decline from US$150 million in exports because it is loosing its competitive edge. He said that exports of this sector have shrunk to US$105 million this year. 

Surgical instruments development strategy to fetch $1bn


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## solid snake

*Technologies to improve rice yield*​By Hafeez ur Rehman, Dr M. Farooq & Dr S.M.A. Basra



RICE is the countrys second staple, high-valued and major export crop. But there has been a decrease in area and size of the crop in recent years. Lower production especially of Basmati varieties is due to heavy rains in lower Sindh and in Punjab at the time of maturity of the crop. The better prices offered by millers for sugar cane crop last year is also the reason for shifting of the area to sugar cane crop.

Despite high-yielding varieties and resource conservation technologies in use, there has been decrease in the crop area and yield. This necessitates research through constant involvement of farmers and sharing of findings among them.

Weed control, rainfall pattern, sufficiency of water supply, field elevation and hydrology are the major determinants of farmers choice for rice production method. In addition, wage rates, availability of family labour, and power for land preparation were found to be the major economic factors influencing the choice of cultivating methods.

Transplantation is the most common method in rice cultivation. Rice plants raised in a nursery bed are transplanted into puddled and leveled fields 15 to 30 days after seeding. Rice seedlings can either be transplanted manually or through machine.

Land preparation activities in the main field begin with pre-saturation irrigation to saturate the topsoil layer and to create a pounded water layer (about 5cm in depth) for land soaking, followed by ploughing and puddling (harrowing under saturated soil conditions). Puddling is done not only to control weed, but also to increase water retention, reduce soil permeability, and ease field leveling and transplanting. After land preparation, the crop growth period in the main field goes from transplanting to harvest. This traditional transplantation requires high continuous water inputs and labour at a critical time, which often results in shortage and increase labour costs.

Traditional method of raising rice nursery is by using pre-germinated seeds usually after soaking them into water for 48 hours which makes them ready for transplanting within 40-45 days of sowing.

Better quality seeds produce vigorous seedlings with increased growth rate and high percentages for germination. The seedlings become ready within 30 to 35 days. Improved method of raising nursery is by using primed seeds treated with CaCl2 and KCl for both coarse and fine varieties of rice. This treatment helps improve growth, yield and quality of the transplanted rice.

Excessive use of nitrogen (N) leads to crop lodging, invites insect pests and diseases, pollution of water sources and ultimately loss of yield and grain quality. Simple tool to optimise nitrogen application in rice is use of leaf colour chart (LCC).

An attractive technology to increase production after harvesting the crop is to take a ratoon crop as in the case of sugar cane can also be practiced in rice as an alternate to double cropping in areas where water is available after the main crop season.

Better yield from a ratoon crop greatly depends on agronomic and management practices of land preparation, sowing date, adequate plant density and spacing, use of appropriate cultivars, water management, application of adequate rate of fertilisers, appropriate height of cutting, and control of diseases, insects and weeds. These interactions are needed to be studied properly for manipulating ratooning ability agronomically.

Area under Chinese hybrid rice has increased. Producers of hybrid rice predict that it will reach 8,57,143 acres by 2012, admitting that the entire production would be for export. For growing high quality paddy from hybrid rice needs the following steps: seed from previous crop should be discouraged, healthy nursery seedlings should be transplanted, seedbed should be properly prepared, optimum dose of fertilisers at right time should be applied and right amount of water at a depth of 2-3cm should be maintained. Proper plant protection measures and timely harvesting of crop at maturity make hybrid rice production different from farmers usual practices. Production of hybrid rice seed from China would usher Pakistan in a new era in rice production.

Under the changing socio-economic environment, there is need of a method that results in high yield and involves use of fewer inputs than in the traditional methods i.e. water, chemical fertilisers or agro-chemicals.

In this regard, system of rice intensification (SRI) is a new method to be introduced in the country. It involves use of certain management practices, which provide better growing conditions for rice plants, particularly in the root zone, than those for plants grown under traditional practices. Cultivation of any variety of rice under the rice intensification system (SRI) has resulted in at least double yield. No external inputs are needed for a farmer to benefit from SRI. The methods should work with any seed that is being used now. However, what is needed is to have an open mind about new methods and a willingness to practice them.

Key success in SRI involves early transplantation of nursery seedlings with first two leaves between 8 t0 15 day raised on moist soil instead of constant flooding. Seedlings should be transplanted singly rather than in clumps of two or three or more in a square pattern usually at 25x25cm space to reduce competition among plants. The square pattern also facilitates weeding.

One thing that should be taken care is that the soil must be kept moist but not saturated during the vegetative growth period. Later, after flowering, 1-3 centimeter of water is kept standing on the field. However the field is drained completely 25 days before harvesting.

In addition to these principal practices, weeding and organic inputs practices are extremely beneficial when using SRI. Many experimental trials have been carried out at the University of Agriculture, Faisalabad, on this system. However, there is need of more on-farm research experiment to verify this new method of increasing rice yield.

Direct-seeded rice (DSR), an alternative to transplanting, is grown like any other upland crop with seed placed in the soil by seed cum fertiliser drill with or without ploughing. Direct-seeded crop grows faster, reduces labour, crop matures early by 7-10 days, water use is more efficient with less methane emission and often-higher profit in areas with an assured water supply.

Many seed priming techniques such as osmo-hardening, hardening and on-farm priming have been employed to enhance the performance of direct-seeded rice under field condition.

Agricultural scientists through direct-seeded crop employing seed priming techniques in many on-farm research trials at various fields and the research area of crop physiology department of Faisalabad Agricultural University have obtained improved emergence, better growth, yield and quality of rice.

Osmo-hardening with calcium chloride and potassium chloride have been found the most promising and effective seed priming techniques to improve performance of direct-seeded rice.

Other management and agronomic requirements for DSR is same as in case of puddle-transplanted rice. For optimum nitrogen application an LCC value of three and four is used for scented and other rice cultivars. One or two light irrigations are required to facilitate emergence and afterwards irrigation can be applied at an interval of 7-10 days depending upon the soil type and weather conditions.

Weed is a major issue in direct-seeded rice and scientists are making efforts to eliminate this menace. Weed management early in rice season hold key for a successful DSR crop. If it rains before seeding, or it takes time to seed after pre-sowing irrigation, most weeds would germinate early. Pre-germinated weeds can be eliminated with chemical treatment or by 1-2 very shallow ploughings. Experiments have shown that weed problem can be tackled efficiently by integrated weed management practices. Growing of rice varieties (Basmati type) have greater ability to compete with weeds.

Technologies to improve rice yield -DAWN - Business; September 17, 2007


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## solid snake

*USTDA Invests $1.4Mln under US-Pakistan Strategic Partnership Projects* 
Pakistan Times Business & Commerce Desk​
WASHINGTON (US): US Trade and Development Agency has awarded an $ 810,000 grant to Habibullah Energy Limited (HEL) to address critical power shortages and promote energy security in Pakistan under the US-Pakistan Strategic Dialogue, affirmed by President George W Bush and President Pervez Musharraf in March last year. 

The grant will partially fund the early investment analysis on a proposed 150 megawatt (MW) power plant, as well as develop a detailed plan to ensure the reliable supply of coal for the plant from the Lakhra coalfields in Pakistan. 

In addition to the USTDA grant, HEL will contribute significant additional resources towards the completion of the study. 

The grant was conferred in a signing ceremony at USTDA headquarters in Arlington, Virginia. USTDA Acting Director Leocadia I. Zak and Managing Director of HEL Saeed Khan Peracha signed the grant agreement. 

Abdul Wajid Rana, Economic Minister of the Embassy of Pakistan; Tom Cutler, Foreign Affairs Officer of the US Department of Energy; and Ms. Esperanza Gomez Jelalian, Executive Director of the US-Pakistan Business Council also participated in the signing ceremony. 

Bilateral cooperation in the energy sector was identified as a priority area under the US-Pakistan Strategic Dialogue with coal and renewable energy development specifically recognized as key areas for cooperative efforts. 

The proposed 150 MW integrated coal mining and power project is a major private sector initiative that will help alleviate Pakistans present and growing power generation shortfall, and will be a major advance in the development of the countrys enormous, but virtually untapped coal resources. 

The USTDA recently awarded two grants in support of Pakistans renewable energy sector. One grant, in the amount of $ 325,000, will fund a feasibility study for Pakistans Alternative Energy Development Board for the establishment of a proposed 5-10 MW waste-to-energy power plant near Karachi. 

The other grant, valued at $263,000, will fund technical assistance to Pakistans National Electric Power Regulatory Authority to assist with renewable energy tariff-setting procedures, recommendations for changes to the legal framework affecting the renewable energy sector, and organizational improvements to NEPRA. 

The opportunity to conduct the USTDA-supported study for HEL will be competed on the Federal Business 

Opportunities Website at Federal Business Opportunity. Interested US firms should submit proposals according to the 

instructions contained in the Federal Business Opportunities announcement. HEL will select the US firm that will provide the assistance.&#9679;

Pakistan Times | Business: USTDA Invests $1.4Mln under US-Pakistan Strategic Partnership Projects


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## Neo

*ADB seeks justification for $5.2 billion power loan ​* 
ISLAMABAD (September 17 2007): The Asian Development Bank (ADB) has raised the question with the government whether the power distribution companies (Discos) would be in a position to absorb the investment of $5.2 billion for the period of 2008-17 and would be able to pay back within the stipulated timeframe, sources in Finance Ministry told Business Recorder.

They said that the ADB Country Director and World Bank mission met Advisor to Prime Minister on Finance on August 30 and September 3, respectively, and discussed the forthcoming multi-tranche loan facility for the power sector.

The ADB Country Director said that overall investment in the power distribution sector would be $5.2 billion for 2008-17, and raised a few queries before finalising the pact.

The issues which the bank said needed further clarification from all the concerned Discos were: details of investment; whether approval of the CDWP/Ecnec had been obtained, what would be the impact of proposed investment, and what benefits would be obtained in terms of savings and system efficiencies; whether the Discos have the capacity to absorb the investment and pay back; what would be debt equity ratio; what were assets and liabilities of Discos; what would be impact on tariff; how would this investment change the balance sheets of Discos; would it be sustainable or not; had the financial and technical analysis of such investment been carried out; and what would be the key financial and operational indicators. These were the main concerns of the donors.

"The answers to all these questions have been sought from the companies on the instructions of Prime Minister's Advisor on Finance," sources said.

They said ADB mission had also indicated that the current overhanging debt of Discos was Rs 130 billion, which would increase to Rs 220 billion by the end of current financial year.

Finance Ministry is of the view that these figurers need to be re-checked, very carefully, and all concerned are required to carry out necessary accounting adjustments, if not already done.

"The Finance Ministry has asked the Discos to investigate the matter thoroughly and submit a report within one month," sources said. In addition to this loan, the ADB also offered investment of $3 billion in water and power sectors in Pakistan during the next three to five years, but questioned transparency in utilisation of the funds.

The federal government had also sought $6.46 billion investment from the bank for the construction of Diamer-Basha dam for which a working group comprising concerned federal ministries and development partners would be established to work out financing modalities.

The ADB has assured technical and financial support for major water and power sector projects including upgradation of distribution systems and transmission lines in order to improve system efficiency for supply of electricity to the consumers besides major rehabilitation and infrastructure projects in water sector.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*New digital innovations-driven economic landscape in the offing ​*
FAISALABAD (September 17 2007): A new economic landscape is being created globally that highlights a shift from geographical industrial clusters to virtual clusters, driven by digital innovations. According to Planning Commission sources the clusters were emerging in the new competitive space offered by a web-based business world, where "how you do business" is more relevant than "where you do business".

For Pakistan it is a challenge to operate the next generation communication networks, which combine convergence with speed, stability, security, and flexibility.

Official sources mentioned that the ongoing massive economic globalisation and dispersion of information and technology was changing the scale and nature of human enterprise.

They said that an important likely consequence of the techno-economic-knowledge revolution was the erosion of equity, in the world at the same time as the tools for banishing inequity and poverty would become available to mankind and this is likely to be an important challenge for Pakistan.

Commenting over the "Globally Integrated Economy", official sources said, by 2030 economies were likely to diffuse across national boundaries into truly global supply chains, whether in industry, services or ownership. This dispersal of work and strategic linkages across national boundaries, coupled with information integration, and a shift in the technological content of world trade towards high technology, would be the most conspicuous features of the globalised economy of the future. There would be continuing relocation of manufacturing and an increasing share of design and services from the developed countries. Benefiting from relocation activities and investments, and developing into regional or global hubs, would be major challenge for Pakistan, sources mentioned.

According to official sources, there would be fierce competition in both domestic and external markets. The role of the multinationals and regional supply chains would also have expanded, not only in industry but also in agriculture and services. Pakistan would face a challenge of putting in place the infrastructure, and matching of skills with demand, within the country as well as those of trans-national agents.

Commenting over the "Nature of Work and Workplace Plan", sources stated that the several factors were influencing work and employment in the emerging global 24 hour/ 7 day societies and economies of the 21st century, but nearly all of them were technology related.

Some key features were short product lifecycles, global competition and supplies chains, and processes with focus on the entire value chain and not just on internal processes. In addition, countries playing catch-up are also more open to trade (ie have a high ratio of exports to GDP).

All these factors have resulted in a continuously changing economy, with technology and globalisation influencing what we produce and serve, and how it is done. Pakistan will need to address the challenges of a changing workplace, changing demand for skills, and a flexible gender inclusive workforce.

According to sources, the most abrupt transformation is occurring in Asia, which is expected to be the engine of global growth and consumption in the foreseeable future. If some emerging economies in Asia can sustain their growth for several decades, then three of the four largest global economies would probably be Asian in 2030.

The first goal is the attainment of a just society without which prosperity and growth are not sustainable. It will discuss the various deficits and propose means to overcome them.

The second fundamental tenet of Vision 2030 is the establishment of a society which is innovative and productive, and which makes excellence its guiding star. This is the only route to be competitive in the 21st Century.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Smeda prepares plan for modernising sports goods industry ​*
SIALKOT (September 17 2007): Small and Medium Enterprise Development Authority (SMEDA) has prepared a multi-dimensional strategy for the modernisation of Sports goods industry especially the soccer ball manufacturing sector enabling it to cope with the new challenges of global market.

Official sources told Business Recorder here on Sunday that under the programme Sports Industries Development Centre (SIDC) costing Rs 273.11 million would be established on 40 kanal of land on Sialkot-Daska road. The construction work on the project would be started by the end of the current month.

The main concept of the project is to enable Sports Goods sector to adopt new technology of mechanised ball, which is threatening the current hand stitched inflatable soccer ball.

The main benefits to mass from the project are facilitate in sustainable Pakistan's position in international market of hand stitched inflatable balls in general and soccer ball in particular, provide skilled workforce to the sector, help develop imported machinery locally through reverse engineering, develop an indigenous patent for mechanised soccer ball and get it registered internationally, provide assistance in setting up mechanised ball production lines in individual industrial units, developing prototype balls for the industry and developing quality vulcanisation and past molds.

Sialkot is known internationally as a producer of quality products in sports goods, surgical instruments, leather garments, gloves and accessories, sportswear and musical instruments.

The Sports Goods sector of Sialkot is the main export sector of the city with total exports of about US 350 million dollar per annum. The city caters to 85 percent of total world demand of hand stitched inflatable balls, which means around 40 million balls annually worth US 210 million dollars.

The soccer ball manufacturers are facing serious threats in the form of "Thermo-Molded Ball" that uses medium end technology to produce a ball having most of the characteristics of hand stitched ball.

Under the plan Sports Industries Development Centre (SIDC) will introduce thermo-bonded ball technology in Sialkot and it would provide technical know how, trained labour force, reverse engineering prototype development and mold making services besides, the centre will also manufacture and sell thermo-molded balls to the exporters on order. The capacity of the centre on single shift basis would be 5000 balls per day.

The city is dotted with thousands of small and medium enterprises, which are engaged in honouring their global commitments for export of value-added quality goods such as sports goods, Surgical Instruments, Leather Goods, Gloves, Badges and Musical Instruments etc.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Government allocates Rs 40 billion to develop communications sector ​*
FAISALABAD (September 17 2007): Federal Government has allocated an amount of Rs 40 billion in the current fiscal year 2007-08 for the development of Communications sector.

According to Ministry of Communication sources, the development of infrastructure with special focus on the road network is the government's top priority. Sources mentioned that the construction work on different mega projects costing 250 billion rupees is in progress across the country.

Official sources mentioned that the vision for the Transport and Communications (T&C) sector is the establishment of an efficient and well integrated system that will facilitate the development of a competitive economy and poverty reduction, while ensuring safety in mobility, accessibility and effective connectivity.

The strategic thrust is on optimal utilisation of the existing capacity, improved management for maintenance and operation and co-ordinated use of various modes of transport. Private sector participation in the sector would be enhanced and institutional capacity building and research and development activities undertaken to enhance the efficiency of T&C sector.

The transport sector currently accounts for 11 percent of GDP, 16 percent of fixed investment, 35 percent of the total annual energy use, and about 15 percent of the Public Sector Development Programme. The T&C sector covers roads, road transport, railways, ports and shipping, aviation and telecommunications. The sector has direct and indirect linkage with all important sectors of the economy, which influence economic and social development.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Pakistan in top 10 in trade dynamism, market flexibility' ​* 
ISLAMABAD (September 16 2007): Pakistan has been listed among top 10 countries in the world business dynamism and market flexibility, according to a 'Competitiveness Support Fund' (CSF) report, issued here on Saturday. The report says that Pakistan has shown serious efforts in improving competitiveness ranking which the World Economic Forum measures on performance basis of any country.

It said that Pakistan's private sector played a pivotal role in making Pakistan competitive in the world market. The report said that CSF undertook a number of initiatives during the last over one year to help Pakistan get fit in global market. It engaged public and private sector leaders to address the economic issues jointly.

CSF is an independent body established in 2006 to reposition Pakistan's economy on a more competitive global footing. It is a joint initiative of Ministry of Finance and the United States Agency for International Development (USAID)1.

The precursor work identified several gaps in important sectors of the economy. CSF proposed a series of interventions to accelerate the adoption of practical competitiveness-building initiatives in Pakistan. The gaps lack innovative approaches, linkages between academic community and industry, poor dialogue on policy and reform issues, slow commercialisation of innovation and weakness in the legal framework for a viable economic environment.

CSF is meant to help Pakistan achieve the goal of a competitive economy by providing input into policy decisions, improve regulatory and administrative frameworks and enhancing public-private partnerships. It will also provide technical assistance and co-financing for initiatives related to entrepreneurship, business incubators and private-sector led initiatives with research institutes and universities that contribute to creating a knowledge-driven economy.

CSF activities will help the producers to ultimate product quality. By obtaining better value and better prices for quality products, and improving co-operation throughout the Pakistani economy, CSF will contribute to poverty alleviation by providing more income for producers and better employment prospects for employees.

The government has included, for the first time, competitiveness into poverty reduction strategy. Its salient features were private sector development, intensifying deregulation, privatisation and liberalisation, enhancing competitiveness and productivity, special economic zones, value-addition in agriculture and riding the globalisation wave in export markets.

CSF also carried out a study on special economic zones (SEZs) by benchmarking Pakistan against China, India, Malaysia, Vietnam and Thailand. Globalised economies require policies based on de-regulation, privatisation and liberalisation. This theme requires reduction in tariff barriers and custom duties for imports, the prices and increase in quality of the products for the consumers.

CSF has developed an action plan on unifying the policies and promoting the effective creation of special economic zones in Pakistan. This action plan includes developing an Act on Special Economic Zones which is based mostly on the Indian model and includes the legal and institutional framework for establishing and effectively operating the SEZs, incentives for developers and investors, standards for SEZ approval and the role of private sector and provincial and federal governments.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan's CDNS distributes Rs178b profit in 2006-07​*
17 September 2007 

ISLAMABAD  Pakistan's Central Directorate of National Savings (CDNS) has distributed Rs178 billion profit in 2006-07 and this is a great achievement, says its senior official. "Let me also inform you that our total stocks have risen to an all time high Rs1.067 trillion," Ahmad Owais Pirzada told a news conference here yesterday.

"We also received gross new investment of Rs483.549 billion and we repaid Rs415.898 billion during the last financial year", He said that the central bank has allowed the CDNS to sell its products in Saudi Arabia and other Middle Eastern countries for which negotiations were being finalised with foreign banks who would work on behalf of the directorate.

The plan, he said, was to sell government securities in Saudi Arabia, Kuwait and Qatar. The CDNS is already selling its products in the United Arab Emirates (UAE), Oman and Behrain through Habib Bank Limited (HBL) and the United Bank Limited (UBL).

"We would offer some good products to our Overseas Pakistanis and as soon as things are finalised we would start our business outside Pakistan", he said. In addition to that, Pirzada said that a number of other new Islamic products were being prepared to be offered to the general public once the CDNS achieved autonomy soon.

Responding to a question, he said that the ban on institutional investors have been lifted by the CDNS about six months ago. "But their investment has declined from 25 per cent to about 15 per cent," he added.

He told a reporter that another review of offering increased rate of interest on various national saving schemes was shortly due. Earlier, it offered little over 0.5 per cent more profit to its investors.

However, he said that benchmark of the CDNS profit was Pakistan Investment Bonds (PIBs) which were set by the central bank. But he agreed that interest rate on various saving products was less than India and Bangladesh.

In reply to a question, he said that there required legislation to convert the CDNS into Pakistan Savings to make it an fully autonomous organization. The federal cabinet, he said, has already approved the proposal of having new independent organization which will have its own rules and pay scales.

He said it took time to get the approval of the central bank, Securities and Exchange Commission of Pakistan (SECP), Law and Justice division and Establishment Division for creating a new organization. "It was delayed because it required the vetting by seven organizations".

Pirzada said that the president could promulgate the ordinance for having Pakistan Savings. But he said it would be good if the matter was legislated by the parliament and the issue was resolved once for all.

The corportisation of the CDNS, he said, was being pursued to ensure further investors' confidence. In this behalf, he referred to automation of the directorate by handing over software to all its outlets. Local networking is complete and in next six months time, the process will be finished satisfactorily, he said. It cost about Rs306 million to have this automation in the organisation. He said since it involved financial transactions, the CDNS wanted to offer an improved system to its investors. 

Khaleej Times Online - Pakistan's CDNS distributes Rs178b profit in 2006-07


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## Neo

*'Economy suffers Rs 74 billion losses due to reduced yields, salinity' ​*
FAISALABAD (September 18 2007): The estimated economic losses from reduced yields, salinity and rangeland degradation estimates of the combined losses exceeds Rs 74 billion annually, equivalent to more than one percent of GDP, while offsite cost such as the siltation of dams and changes in hydrology are not included due to data limitations.

According to a World Bank study, land degradation is a serious concern for Pakistan. Erosion is accelerating due to anthropogenic factors such as the destruction of natural vegetation and over-grazing. Degradation on arable land caused by wind and water erosion increased by almost 3.5 million hectares from 1993 to 2003 and comprised about 18 million hectares in total in 2003.

The regions most affected by soil erosion during this period are Sindh (about 1.5 million hectare increase in eroded land of which an estimated 360 thousand hectares is an increase in eroded crop lands) and Balochistan (about 2 million hectares increase in eroded land of which as estimated 500 thousand hectares is an increased in eroded crop lands), said WB study.

WB study mentioned that salinity is one of Pakistan 's most serious problems, while common to other arid regions, Pakistan has naturally saline soils, but the problem has been compounded by consistent mismanagement of irrigation and human induced soil erosion.

Official statistics indicate that over 25 percent of irrigated land suffers from various levels of salinity, with over 1.4 million hectares being rendered uncultivable due to excessive salinity levels. Salinity imposes direct economic losses, through reduced yields and less visible indirect losses through changes in farming practices or the cropping mix.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Sporting arms being exported to US and UK' ​*
PESHAWAR (September 18 2007): Pakistan has started the export of sporting and hunting arms to United States and Britain while the country has also received orders from a number of other countries.

"The manufacturers of Dara Adam Khel had recently sent a sporting arms consignment orders were in the pipeline," Pakistan Hunting & Sporting Arms Development Company (PHSADC) Chief Operating Officer Brigadier Naveed Rahman (Retd) told Business Recorder.

Similarly, he said that another consignment worth $8,500 has been exported to United Kingdom while other order of demands were also in progress and near maturity. Hunting and sporting arms and equipment constitute a giant industry world-wide and the consumer market of these arms and equipment collectively in world is estimated more than $37 billion.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Condensate and gas discovered in Sindh​*
KARACHI, Sept 17: Pakistan Petroleum Limited (PPL), the operator of Block 2568-13 (Hala), and its joint venture partner Mari Gas Company Limited (MGCL) have announced the discovery and successful testing of condensate and gas in the Adam X-1 exploration well located in district Sanghar, Sindh province.

According to a PPP press release on Monday Adam X-1 well was drilled on April 7 this year and reached the final depth of 3,566 meters on June 27.

Cased hole drill tests were conducted in three zones during July and August, out of which two zones yielded condensate and gas.

The lower zone flowed 12.5 million cubic feet per day of gas and 41 barrels per day condensate, whereas the upper zone flowed 14.9 million cubic feet of gas and 1,269 barrels of condensate per day.

A long-term test will be conducted for appraisal and determining a more representative flow potential and size of the field.

The prospects of the remaining part of the block are being evaluated for future exploration.

The joint venture of Hala exploration license consists of PPL (65%) and MGCL (35%).APP

Condensate and gas discovered in Sindh -DAWN - Business; September 18, 2007

*Condensate, gas discovered ​*
KARACHI (September 18 2007): Pakistan Petroleum Limited (PPL), the operator of the Block 2568-13 (Hala), and its joint venture partner, Mari Gas Company Limited (MGCL), have announced the discovery and successful testing of condensate and gas in the Adam X-1 exploration well located in District Sanghar.

According to a PPL press release here Monday, Adam X-1 well was spudded on April 07, 2007 and reached the final depth of 3,566 meters on June 27, 2007. Cased hole drill stem tests were conducted in three zones of lower goru formation during July and August 2007, out of which two zones flowed condensate and gas.

The lower zone flowed 12.5 million cubic feet per day gas and 41 barrels per day condensate, whereas, upper zone flowed 14.9 million cubic feet per day gas and 1,269 barrels per day condensate. A long-term test will be conducted for appraisal and determining a more representative flow potential and size of the field. The prospects of the remaining part of the block is being evaluated for future exploration.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Rs157bn revenue collected from oil, gas​*
ISLAMABAD, Sept 17: The government has collected highest-ever revenue on oil and gas, amounting to about Rs157 billion during the 2006-07 financial year.The amount included general sales tax (GST) collection of Rs64 billion on petroleum products.

According to the oil price revision announced by the Oil and Gas Regulatory Authority (Ogra) on Saturday, the government has slightly increased oil companies margin, dealers commission and inland freight equalisation margin on motor spirit and high octane blending component and reduced the petroleum development surcharge.

However, the overall price regime has been kept unchanged to keep GST collection at the same level. The government collects a GST of Rs7 and Rs8.46 a litre on motor spirit and HOBC,

respectively, in addition to about Rs9 and Rs16, respectively, as petroleum development levy on the two products.

At the same time, the government has doubled inland freight equalisation margin on motor spirit from Re1 to 1.98 per litre and from Rs2.05 to Rs3.85 per litre on HOBC.

The margin is the transportation cost the government collects on petroleum products to maintain uniform prices at 29 depots across the country. No explanation was given about the increase in transportation cost.

According to official statistics, the government collected tax revenue of Rs889.7 billion during the financial year ending on June 30, 2007.

Total tax revenue increased from 9.8 per cent of gross domestic product (GDP) in 2005-06 to 10.2 per cent of GDP in 2006-07, showing an improvement in tax-to-GDP ratio.

Likewise, the total revenue in 2006-07 amounted to Rs1.298 trillion or 14.9 per cent of GDP, showing an increase of 14 per cent of the GDP in 2005-06.

The statistics indicated that direct taxes in 2006-07 stood at Rs334.2 billion, against Rs214 billion during the previous year.

The government said the total expenditure on debt-servicing amounted to Rs369 billion in 2006-07 that included Rs319 billion as servicing cost of domestic debt and Rs50 billion spent on foreign debt servicing.

The consolidated accounts for 2006-07 showed that total development expenditure stood at Rs434 billion. This included Rs251 billion spent by the federal government on development and Rs182 billion spent by provincial governments.

The accounts also suggested that the government expenditure on retirement and pensions reached about Rs42.2 billion in 2006-07 as against Rs40 billion in 2005-06, showing an increase of about 5.5 per cent.

Rs157bn revenue collected from oil, gas -DAWN - Business; September 18, 2007


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## Neo

*BT cotton seeds to yield over 5m bales this season​*
KARACHI, Sept 17: More than five million bales of cotton this season -about 30 to 40 per cent of expected 14 to 15 million bales cotton output this autumn - is being obtained from the sowing of genetically modified seeds, which are either being smuggled from India or trans-shipped from Australia via Dubai or Hong Kong as a mis-declared item.

Officially, the government has not so far adopted bio-technological cotton seed (B.T cotton seeds) and it is banned. The government issues warnings to the farmers every year at the time of cotton sowing in June against plantation of B.T. seeds. But because of its pest resistant quality and a much better yield, the B.T. cotton has become popular among the farmers. Last season, the farmers, more particularly in Sindh, disregarded with contempt all official warnings and sowed B.T. seeds smuggled from India on big tracts of agricultural land and reaped as much as one million bales of cotton. In Sindh B.T. seeds are called Bhittai cotton.

This season, the farmers in Punjab too have sowed B.T. seeds in a big way and a rough estimate expects at least 30 to 40 per cent of cotton being obtained this season from the genetically modified seeds. Involved in local development of such B.T. seeds are two national science and research organisations under the government control, which are the National Institute of Bio-Genetic Engineering and Centre for Excellence for Molecular Biology.

Realising the popularity of B.T. cotton seed and improvement in yield, the government is understood to be seriously considering adoption of these seeds officially and associate a well-known American multinational with two national science research organisations for production of genetically modified seeds in the country.

Well connected sources say that the issue of official adoption of B.T. seeds came up for discussion last week at the annual meeting of Pakistan Central Cotton Committee held at Karachi last week with Food and Agricultural Minister Hayat Mohammad Bosan in chair.

The official in textile ministry, leaders of faming community and cotton traders had openly alleged that the seed mafia and pesticides mafia were against the official adoption of B.T. seeds in Pakistan. Normal cotton seeds obtained from market give an average yield of 15 to 20 maunds per acre but B.T. seeds give up to 100 maunds an acre if meticulously managed and normally the yield is not lower than 60 to 70 maunds in any case.

The genetically modified seeds were introduced in Pakistan about six years ago by an American multinational firm Monsanto that has its office in Lahore. This company has registered its patent internationally and expect the government to observe international patent rules.

Any agreement with Monsanto will bind us with unbearable terms and conditions, an official of agricultural ministry offered explanation last year in October. Under these terms, the Pakistan government will have to import B.T. cotton seeds every year from the US company because the seeds lose their pest resistant quality after one crop and a repeat sowing may in fact cause a disaster by spreading virus in the neighbourhood also.

The government is trying to blend foreign genetically modified seeds with local input by the scientists of two national institutions of Pakistan to make B.T. seeds more economical with a better yield and effective pest resistant. Both India and China have adopted these modified seeds but are entirely dependent on the foreign multinational company. Both these countries have tremendously improved on cotton output.

In Pakistan we want to improve our output and with relative less dependence on foreign companies, a well-placed source explained who was confident that if experiment on cotton seeds was successful, efforts will be made to extend this research on all other crops - grains, vegetables and fruits. He said that research was also being made to take care of environmental hazards, if any from sowing of these seeds, its harmful effects and all other aspects.

BT cotton seeds to yield over 5m bales this season -DAWN - Business; September 18, 2007


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## Neo

*Chinese help sought for new shipyards​*
BEIJING, Sept 17: Adviser to prime minister on Finance Dr Salman Shah held important meetings with key Chinese bankers, financial institution and shipbuilding companies for cooperation in setting up two giant shipyards in Pakistan during his visit to China.

The basic purpose of these meetings was to hold discussions with Chinese for setting up two giant shipyards with a capacity of 600,000 dwt to be built at Gwadar and Port Qasim, said a senior official at Pakistan Mission here while briefing APP about the PM advisers Adviser meetings in Dalian.

Mr Shah was in Dalian, a coastal city in northeast Chinas Liaoning province to represent Pakistan in the New Champions seminar organised by World Economic Forum (WEF) from Sept 6-8.

The adviser, he said, besides participating in various forums, also held very important bilateral meetings with presidents of EXIM Bank and ICBC, chairman of China Banking Regulatory Commission, chairman of China International Capital Corporation, China Development Bank, the MMC, a reputed financial institution and prominent entrepreneurs dealing with ship building with basic purpose of cooperation in ship-building project.

The shipyards to cover an area of about 500 acres each and that include two dry docks of about 600,000 dwt thus catering for manufacturing heavy ships.

He said that Pakistan was desirous to build these shipyards in cooperation between Pakistani private sector and Chinese corporate and participation by the government.

He said the government was concentrating on the development of shipbuilding industry in the country and establishment of two new shipyards with bigger docks would ensure accommodation of giant vessels.

He said this would also usher in a new era of economic activities, creating new jobs thus improving the standard of living of the people.

The commercially strategic location of Pakistan is a take-off point for

such projects.

The next 50 years, he added, will see a growing demand for new ships around the world, which is expected to increase manifold in future.

In these meetings, the official said, Dr Shah also briefed them about the vast prospects available in Pakistan in diverse fields of economy for investment.

He also informed the Chinese officials about the salient features of the joint Sino-Pak 5-Year economic development programme, free trade agreement and China specific special economic zones being developed in Pakistan and the opportunities available for Chinese investors there.

He said that Dr Shah also informed them that as per study conducted by a reputed international consulting company by the year 2050, Pakistan would emerge as the 4th largest workforce in the world and therefore, it has the capability to become the sound base of manufacturing industry in the world.

As per demography of Pakistan its 54 per cent population comprises 19 years of age bracket and soon they would be part of the economic growth.

By this, the adviser said that Pakistans growth prospects had brightened to new height, though at present too the country is sailing with excellent economic growth.

He said that due to such an excellent economic growth, the WEF had recognised Pakistan as Champion Economy.APP

Chinese help sought for new shipyards -DAWN - Business; September 18, 2007


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## Neo

*90 investors interested in Pakistans wind energy sector ​* 
Two groups begin manufacturing wind turbines at Nooriabad; wind turbines for Pakistan also being made in Turkey

Tuesday, September 18, 2007
By Asadullah

KARACHI: The Alternative Energy Development Board (AEDB) has awarded a letter of intent (LoI) to the 90th investor, intending to invest 100 million dollars each in Pakistans wind energy sector, which is fast developing in the Gharo wind corridor identified for wind farming, sources in the energy sector said. 

So far, AEDB has accommodated 25 investors in Sindh where the provincial government has already sanctioned 50,000 acres of land for their projects. Each investor, given LoI, is investing 100 million dollars each, Dr Nasim A Khan, secretary of AEDB, informed. We have been promised a total of 100,000 acres in coastal areas of Sindh.

Alternative and renewable energy sector of Pakistan is brimming with investments. The country will, however, take time to produce wind or even waste- based power generation. AEDB has already issued six LoIs for 22 megawatt power generation using waste, whereas an American investor of Muslim origin has secured an LoI for 50 megawatt power generation by tidal wave.

The National Electric and Power Regulatory Authority has issued five power generation licences and three have been issued power tariff, which is two cent lower than that of thermal power. Wind power is cheaper than thermal power, explained an engineer. After a decade, thermal power tariff goes up by 20 cents and that of wind by four.

UNDP, in collaboration with Pakistan and funding from the Global Environment Facility, is implementing the Sustainable Development of Utility Scale Wind Power ProductionñPhase I. It falls under the GEFs Operational Programme-6 called Promoting the Adoption of Renewable Energy by Removing Barriers and Reducing Implementation Costs.

AEDB, under the Ministry of Water and Power, is the executing agency. The overall objective of the full project is to avoid carbon dioxide emissions by removing barriers to utility-scale wind energy production in Pakistan, says the UNDP report. The Phase-I has been designed to remove policy and regulatory barriers and create an enabling investment environment for the private sector in wind energy production. 

All the investors, given land in Sindhs coastal areas, will rely on coastal and dry land areas lumped together as the Gharo wind corridor, which has yet to pass Environment Impact Assessment (EIA) from the Sindh Environment Protection Agency. This wind corridor, where each wind farm likely to generate 50 megawatt, will help investors generate about 4,500 megawatts of power by 2012-2015.

A wind turbine manufacturing consortium has been formed for indigenous production of various components of wind turbines. Two groups have started manufacturing wind turbines at Nooriabad. Another group has started working on turbines in Turkey for Pakistan. Another project envisages the installation of 140 small wind turbines at various sites in Maluk Khaskheli area in Sindh.

UNDP is undertaking an EIA study broadly covering the Gharo wind corridor, where most of the potential wind farms will be set up. The area is roughly 180 by 60 km, consisting of two main wind farm areas in Gharo and Jhimpir. Global geographical coordinates of both the areas for potential wind farms have been marked on maps, the UNDP documents revealed.

The Global Environment Facility (GEF) is also intending to conduct a study of the integration of grids with the proposed wind farms in the Gharo wind corridor, inviting interested consulting firms to send their qualifications for the purpose of short-listing a group of selected consultants to whom WEP will send a Request for Proposal, which would be issued in September. 

According to the UNDP documents, with the introduction of wind energy into Pakistans national grid, senior grid managers and independent power producers are requesting assistance to improve their understanding of the impacts of utility-scale wind farms on grid stability. That need prompted such an undertaking, said another engineer.

With such a rosy backdrop, Pakistan has embarked on a long-term wind energy development plan under its 2006 Renewable Energy Policy. This includes development of 100-200 megawatts of wind power by the year 2010, another 700 megawatts by 2015, and 9,700 megawatts by 2030. Such an ambitious power generation project but where is the outcome? 

We have yet to deliver. It is true but that is simply because we were supposed to bring in private investors in wind energy production, Nasim Khan clarified the ARDBs position. With private investment, we have to be careful regarding security issues. This takes time but weve definitely moved ahead in real, concrete terms. 

90 investors interested in Pakistans wind energy sector


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## Neo

*ADB lowers growth forecast to 6.5pc​*
ISLAMABAD, Sept 17: The Asian Development Bank has revised its growth forecast for Pakistans economy, reducing it to 6.5 per cent from the targeted 7.2 per cent for the current fiscal year and said the country could also miss some other economic targets.

In its Asian Development Outlook 2007 Update released on Monday, the ADB said some key political questions along with economic constraints, including power shortages, needed to be resolved for sustainable GDP growth.

The lack of industrial and export diversification has to be rectified, to bring down persistent growth in the current account deficits to levels consistent with sustainable financing, it said.

The fundamental issue is a resolution of the current political uncertainties, said the ADO 2007 Update.

It insisted the forthcoming presidential and parliamentary elections should be seen by the population as fair, and need to ensure continuity and coherence of economic policy, to sustain economic and governance reforms.

The bank praised Pakistans growth that averaged an impressive 7.5 per cent over the four-year period (fiscal 2003-2007), and said the rate could be sustained in the medium term if macroeconomic fundamentals remained strong and policy commitment to governance and economic reforms continued.

Also, despite recent improvements, the still-low investment and saving rates represent a constraint to achieving and maintaining high growth, and that has to be addressed.

The bank said slow growth in Pakistan exports was projected because of continuing weakness in textiles, while import growth is expected to be elevated, reflecting a larger oil bill and continued robust expansion in investment. Accordingly, the trade deficit was likely to remain heavy at $11.4 billion or 7.1 per cent of GDP.

While the net services and income deficits would continue to widen, workers remittances, targeted to reach $6.2 billion, should hold the current account deficit to $8.8 billion or 5.5 per cent of GDP in fiscal 2008. The forecast was far more than the ADBs March deficit forecast of 3.9 per cent of GDP.

The ADB said the servicing of domestic debt would remain at high levels.

The central board of revenue (CBR), however, expects receipts to remain robust and the government has set a 21 per cent improvement target in revenue collection.

Taking these factors into account, the ADB forecast the fiscal deficit to be 4.2 per cent of GDP in fiscal year 2008, slightly above the government budget plan of 4.0 per cent.

The bank said the inflation was expected to subside to targeted 6.5 per cent during the year but if the government borrowing increased for financing higher budget deficits or if external inflows were unexpectedly strong, the SBP would find it difficult to offset the impact on the money supply and ultimately inflation. The bank said the continuity of foreign inflows, including remittances, was not ensured and thus raises questions about the deficits sustainability.

The bank noted with concern over the concentration of higher foreign direct investment into four years  telecom, financial, oil and gas and tobacco  and called for diluting this focus for reduced volatility attached to these flows. Unlike some other countries in the region, Pakistan attracts little FDI into manufacturing, which needed to be remedied to stimulate economic and employment growth, by bringing in improved technologies, business practices and innovation to raise the level of manufacturing competitiveness and to accelerate structural change.

The bank said the export growth decelerated to a disappointing 3.3 per cent in 2007 from 14.9 per cent in 2006 mainly because of slower growth in textile accounting for 60 per cent of total exports, which apparently stemmed from greater international competition in the post-quota era. The ultimate causes of poor exports are grounded in long term and deep structural issues relating to the lack of diversification of export industries, poor compliance with quality standards, and concentration of exports in a small number of markets.

ADB lowers growth forecast to 6.5pc -DAWN - Top Stories; September 18, 2007


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## Neo

*Asian Development Outlook 2007 update released: ADB predicts 6.5% GDP growth in 2007-08​*
By Sajid Chaudhry 

ISLAMABAD: The Asian Development Bank (ADB) has highlighted in a report that fiscal deficit is expected to be 4.2 percent of GDP in FY2008, slightly above the governments budget plan of 4.0 percent. 

While the net services and income deficits will continue to widen, workers remittances, is targeted to reach $6.2 billion, which should hold the current account deficit at $8.8 billion, or 5.5 percent of GDP, in FY2008. The trade deficit is likely to remain heavy at $11.4 billion or 7.1 percent of GDP. 

ADB, in its Asian Development Outlook (ADO) 2007 update released on Monday titled Prospects of Pakistans Economy said that robust and broad-based growth is marked in FY2007 (ended June 2007). Vigorous domestic demand was the catalyst, but it also induced inflation pressures. Monetary policy was tightened but fiscal policy remained expansionary, and a key challenge will be to align the two policies more closely. 

Encouraging revenue performance helped keep the fiscal deficit unchanged relative to GDP, although the trade and current account deficits widened, financed by strong external inflows. A concern is that these inflows could slow or reverse. The present momentum is expected to continue in FY2008, moderated by the impact of tight monetary policy conditions, high international oil prices and slow export growth.

On the basis of strong demand, bolstered by increa-sed private and public investment, the economy is seen keeping most of its momentum and achieving 6.5 percent growth in FY2008. The slight deceleration reflects several factors; tightening of the monetary policy stance to contain consumer demand, impact of high international oil prices, continued slow growth in exports, mainly due to greater international competition in the textile sector; and expected slow growth in the US economy (Pakistans largest trading partner) in JulyDecember 2007.

On August 1, 2007, SBP raised its discount rate from 9.5 percent to 10.0 percent and has recommended that the government adopt quarterly ceilings for budgetary borrowings from itself. The central bank also took measures to limit refinancing from its special credit facilities. The tighter monetary policy is expected to continue to hold down nonfood inflation.

The agricultural pickup in FY2007 should help ease the supply-side constraints that triggered food inflation, and good harvests in wheat, pulses, and sugar are likely to help stabilise their prices.

Overall, inflation in FY2008 is expected to subside to 6.5 percent. However, if the government borrows more from the banking system to finance higher than budgeted expenditures, it would result in a wider than planned deficit. The government is to continue its expansionary fiscal policy in FY2008 as announced in the June budget, with an increase in salaries and pensions of government employees, larger subsidies, and a 20 percent hike in development spending.

Expenditure on earthquake areas will continue, and relief and rehabilitation of districts in Sindh and Balochistan, badly affected by the recent rains and floods, will add to public spending. Servicing the domestic debt will also remain at high levels. The Central Board of Revenue expects receipts to stay robust, and the government has set a 21 percent improvement target in revenue collection for FY2008. Taking these factors into account, the update forecast the fiscal deficit to be 4.2 percent of GDP in FY2008, slightly above the government budget plan of 4.0 percent.

On the external side, relatively slow growth in exports is projected because of continuing weakness in textiles, while import growth is expected to be elevated, reflecting a larger oil bill and continued robust expansion in investment. Accordingly, the trade deficit is likely to remain heavy at $11.4 billion or 7.1 percent of GDP. While the net services and income deficits will continue to widen, workers remittances is targeted to reach $6.2 billion, which should hold the current account deficit at $8.8 billion, or 5.5 percent of GDP, in FY2008. This level is well beyond the ADO 2007estimate of 3.9 percent of GDP.

Overall, Pakistans growth over the 4-year period FY 20032007 has averaged an impressive 7.5 percent and this rate could be sustained in the medium term if two conditions are met: macroeconomic fundamentals remain strong, and policy commitment to governance and economic reform continues.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Chemical Vision 2020: Govt to make action plan by January 2008​*
ISLAMABAD: The federal government has decided to make an action plan titled Chemical Vision 2020 by mid of January 2008.

The chemical sector is one of the five highest growth and globally traded sectors. During the last fiscal year 2006-07, the world market for chemical sector remained at $1.8 trillion and is mainly dominated by USA, Europe and Japanese companies. Pakistan during 2006-07 imported chemicals worth nearly billion of rupees that is 12 percent of the total imports while exports were only $200 million that is 1.3 percent of the total Pakistan exports. The import was mainly concentrated in the plastics, organic, inorganic chemicals and special chemicals etc. 

For the last few years the demand for chemical products was high, mainly the fertiliser inputs, Chlor-Alkali, pesticides and plastic inputs for use in packing, auto, electronics, house hold items, cables, pipes and fittings etc, besides the high use of chemicals in the processing of textile, leather, carpets etc. The high consumption of chemicals in various sub sectors of the economy now speaks of the high potential in the local manufacturing, value addition and formulation etc. 

At present, the existing manufacturing capacity is small, both in level and scale; the productively levels are relatively low, research and development to improve chemical reactions, process, molecular formation and beneficiation of locally available minerals remain low. 

For establishment of Chemical Vision, the ministry of industry, production and special initiatives and engineering development board held first meeting on August 28, 2007. Participants of the meeting were of the view that manufacturers had an inward approach by concentrating on the local market and ignoring a huge international market.

Due to absence of clear policy framework on the development of chemical sector with any road map and benchmarks has resulted into growth, which has been haphazard and on short-term need basis, officials in the concerned ministry told Daily Times. The chemical sector has no benchmarks at this moment in terms of its total productive capacity, sales turnover, contribution to GDP and taxes, manpower employed, value addition benchmarks in comparison to global trends and other indicators of the sector. 

The Engineering Development Board and the chemical industry had started consultation with the stakeholders for the development of Chemical Vision 2020. Main feature of the process is the consultative and participatory process so that the chemical industry could own the vision and play its due role in the implementation process. During the meeting held last month, a chemical industry development committee having the private, public partnership would continue overseeing the implementation, removing the bottlenecks and irritants in the development process of the industry and review of the plan etc.

Daily Times - Leading News Resource of Pakistan


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## solid snake

I guess it shows how much we've been progressing if we're being 'downgraded' to 6.5&#37; growth. I guess the current turmoil because of the political and terrorist situation is causing this. And what are we doing to address our power shortage? Even a few years ago the power situation was very bad and now I'm hearing it's the worst ever.


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## solid snake

*Remittances increase by 21.3pc in 2 months​*
KARACHI, Sept 18: The inflow of remittances further increased and overseas Pakistanis sent just below $1billion during the first two months of the current fiscal.

Figures issued by the State Bank showed that the two-month remittances grew by 21.35 per cent, reflecting confidence of Pakistani workers on economy despite prevailing political instability and deteriorating law and order situation in the country.

Remittances reached $985.20 million in the first two months (July-August 2007) of the current fiscal year 2007-08, showing an increase of $173.35 million or 21.35 per cent over the same period of last fiscal.

The monthly average remittances for July-August come to $492.60 million as compared to $405.93 million during the corresponding period of last fiscal, registering an increase of 21.35 per cent.

During the last month (August 2007), Pakistani workers remitted an amount of $489.51 million, up $54.67 million or 12.57pc when compared with an amount of $434.84 million sent home in August 2006.

The amount of $985.20 million includes $0.42 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

US, Saudi Arabia and UAE remained on top of the list from where highest remittances were sent to Pakistan. A total of $265 million were sent from US, $202 million from Saudi Arabia and $156 million from UAE.

The inflow of remittances into Pakistan from most of the countries of the world increased last month as compared to August, 2006.

High growth in remittances is one of the most important and powerful factor of the countrys economy which has to face a trade deficit of over $13 million and current account deficit of about $7 billion.

Remittances increase by 21.3pc in 2 months -DAWN - Business; September 19, 2007


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## solid snake

*Power firms urged to improve efficiency​*
By Our Reporter

ISLAMABAD, Sept 18: Minister for Water and Power Liaquat Ali Jatoi has directed all the power distribution companies (Discos) to improve efficiency, reduce line losses and bring financial discipline in their companies.

The directives came from the minister in the first meeting of the Discos after the appointment of the new chairman of Wapda Shakil Durrani and chairman Pepco Munawar Baseer Ahmad on Tuesday.

He directed that the Discos should accelerate their recovery campaign and initiate action against power theft and avoid overloading in the system.

The minister also directed that the Discos should further reduce line losses and should take all possible measures to improve efficiency. He desired that professional auditors should be hired by the companies to bring financial discipline in their utilities.

All the companies should prepare their own mission statements to provide better facilities and customer-friendly environment to the people. Transmission and distribution infrastructure should be in good condition and there is no unusual breakdown or overloading, he further directed.

The minister stressed the need to make the utilities as customers-friendly, commercially viable and more responsive to meet the governments objective of Power for All. He observed that due to the restructuring and reforms introduced in the power sector, greater independence and financial autonomy was being given to the companies with the objective to enable them to work under the corporate culture and ensure better delivery of service to the customers.

A restructuring plan approved by the prime minister recently is being implemented in Wapda to improve the efficiency of the power sector and to meet customers energy requirements on a sustainable basis.

Mr Jatoi said that the Discos now were fully empowered to make developmental projects in their respective jurisdiction.

The Pepco chairman in a detailed presentation informed the meeting about the new face of Pakistans power sector with crisis management objectives to stop load-shedding, construct new grid stations, reduce losses, minimise tripping, theft control, revamping of generation units and to improve customer services.

He further informed that on short-term basis, an integrated automated power planning system would be set up for generation, transmission and distribution to ensure systems stability.

Power firms urged to improve efficiency -DAWN - Business; September 19, 2007


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## solid snake

*Inclusion of Balochistan in ROZs sought​*
By Our Reporter

ISLAMABAD, Sept 18: Pakistan has proposed a range of amendments to the United States for consideration of the legislation for establishment of Reconstruction Opportunity Zones (ROZs) in the terrorist-prone areas of Pak-Afghan border.

An official source told Dawn on Tuesday that the amendments were related to coverage of areas, inclusion of more items for manufacturing in these zones for duty free export to the United States market and issues of rules of origin.

According to the official Pakistan has proposed to include the whole of Balochistan for establishment of ROZs on the pretext that it would help in providing more employment opportunities to the people of the province.

Currently, only the border districts of Balochistan with Afghanistan have been included in the ROZs list of eligible areas.

It has also been demanded that the category 338 (men and boys knit shirts) and 339 (women and girls shirts) should be included in the list of items for manufacturing in these zones.

The official said that Pakistan was also pushing for more relaxation in the rules of origin, which would actually determine the status of the products to be exported to the US market.

The United States plans to impose ceiling on certain textile products from the proposed ROZs to protect its own domestic industry. This restriction will be on the pattern of China to allow partial import from Pakistan of cotton- based products.

The official said that the legislation would be presented in the US Congress in the next few weeks. It was expected that the law would be ready for implementation in a period of around three months.

USA is Pakistans single largest trading partner with volume of trade nearly at $5.8 billion in year 2005-06.

USA is generally a low tariff market with average duty on manufactured goods at 3.9 per cent.

Inclusion of Balochistan in ROZs sought -DAWN - Business; September 19, 2007


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## solid snake

*Credit card business growing slowly: SBP​*
By Shahid Iqbal

KARACHI, Sept 18: Despite massive investment to promote the business of credit cards, the growth in this sector was not attractive as reflected in a report issued by the State Bank on Tuesday.

All major banks have issued credit cards and millions were spent to promote the most profitable business but the growth in the last quarter of 2006-07 was just 2.1 per cent.

Credit cards recorded a growth of 2.1 per cent to reach 1.69 million. However, debit cards grew with much bigger speed. Total number of active cards grew by 4.8pc reaching the level of 5.8 million while debit cards recorded a growth of 5.1pc and stood at 3.98 million.

Credit card users have to pay up to 40 per cent as interest. The card users also have serious complaints against the attitude of banks towards customers who claim that late payment is charged despite timely payment.

The SBP report showed that e-banking has substantially increased and the graph is moving up.

The volume and value of e-banking transactions during last quarter of 2006-07 reached 28 million and Rs3.1 trillion respectively, recording a growth of 9.7pc in numbers and 14.2pc in amount, said the SBP report.

The total number of ATM machines reached 2,294 with a growth of 5.5 per cent.

The report said 99 per cent ATMs users made cash withdrawals and only one per cent use was made for payment of bills and other purposes.

The total number of ATM transactions increased by 9.3pc in the fourth quarter of financial year 2006-07 and stood at 14.4 million, whereas the amount of such transactions was Rs88.2 billion; showing a growth of 10.4pc over previous quarter.

The use of electronic channels is consistently growing as contribution of electronic transactions increased to 24.9pc in number terms and in value terms constitute 8.8pc of total retail transactions, as compared to 24.2pc and 9.1pc, respectively, in the previous quarter, said the report.

However, value of electronic transactions declined, compared with the previous quarter due to heavy tax payments through paper-based instruments.

The report disclosed that the share of online branches in the total branch network increased from 53pc in the previous quarter to 54pc in the current quarter

During this quarter, banks converted 45 manual/computerised branches into online branches and added 44 new online branches, raising the total number of online branches from 4,090 to 4,179.

The total number of online branches recorded for this year is 4,179 out of total 7,719.

Credit card business growing slowly: SBP -DAWN - Business; September 19, 2007


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## solid snake

*Good prospects for textile exports to Russia​*
Wednesday, September 19, 2007

KARACHI: Russia is a potential market for Pakistani products particularly textiles and related products, said the Trade Development Authority of Pakistan (TDAP) in a statement.

Bilateral trade between the two countries is about US$500 million and currently the trade balance is in favour of Russia. In 2005-06, Pakistani exports were worth $50 million, mostly comprising textiles and related products.

Last week, the TDAP facilitated the participation of 16 Pakistani exporters in Heimtextile Fair in Moscow, which focused on home textile products like floor coverings, wall coverings, window decorations, curtains, furniture fabrics, leather, bedroom fittings, bedlinen, pillows, bathroom and kitchen interior furnishings.

Good prospects for textile exports to Russia

This is the third year that Pakistani exporters and TDAP officials have taken part in the fair, indicating huge textile export prospects in Russia through regular participation with an increasing number of exporters.

Russia, with a population of 143.5 million, is an attractive market for home textiles and its economy is growing at an annual rate of 6.4 per cent.

Russian imports account for 80 per cent of its textile trade and the volume of the textile market has significantly increased from $35 billion in 2005 to $55 billion in 2007.

Good prospects for textile exports to Russia


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## solid snake

*Political stability a major issue for foreign investors*​
Wednesday, September 19, 2007
By Salman Siddiqui

KARACHI: It is an established fact that the prevailing law and order situation in Pakistan is a result of drastic ideological changes being made in the internal political system under external influence. On the contrary, foreign portfolio investors have drawn a line between the political system and law & order to deal with them separately.

Overseas investors seem slightly comfortable to run their businesses amid prevailing law and order situation, but they are strongly demanding an end to political uncertainty.

Members of Overseas Investors Chamber of Commerce Industry (OICCI) and American Business Council (ABC) at recently held press conferences to unveil their separately conducted business perception surveys in Pakistan not only demanded an end to political uncertainty but they also proved it by their actions at the local bourses.

OICCI survey said that foreign equity share in Pakistan was increasing every year, it was 49 per cent in 2004, 61 per cent in 2005 and up to 62 per cent in 2006.

One should notice that the law and orders situation is not a new phenomenon. Pakistan has always faced this problem and it has heightened since it became an active ally of US in war on terror.

As a matter of fact, the Karachi stock market breached the 14,000 points threshold at a time when Lal Masjid (Red Mosque) operation was going on in the Islamabad. However, it eased down later on account of profit-booking amid political uncertainty in the country, equity analysts said.

Moreover, the foreign investment at the local bourse and in various government schemes, which was withdrawn (i.e. US$212 million) in the currently fiscal year 2008 owing to one or the other reasons was coming back to Pakistan, as withdrawals shrank to US$53.506 million on Tuesday, according to SBP website.

Majority of ABC members (76 per cent) said that the law and order is poor in the county, though, they (75 per cent) would continue to invest in Pakistan during the next 12 months as they found the overall business and economic climate positive in the country.

A number of analysts endorsed that foreign investors were not bothered by law and order situation that recently emerged in the country following Lal Masjid episode in Islamabad, but they were more worried about the political stability that is in the transforming phase since President Gen. Pervez Musharraf had filed reference against Chief Justice of Pakistan on April 09, 2007.

Political analysts are of the view that irrespective of Supreme Court verdict regarding Gen. Musharraf to hold dual (president and chief of army staff) portfolios, Musharraf would be there in power in one office or the other.

As far as the reports regarding the failure of dialogue between Gen. Musharraf and Benazir Bhutto has hit some snags, analysts believe that there was still a kind of broad understanding between these two leaders not to pit themselves against each other in the run-up to the upcoming elections, a JS Global Research report states.

Keeping Musharraf in power is the dire need for US, as Congress had blasted that it has no Pakistan-centric policy but Musharrf-centric, said political analysts and added that power-sharing deal between Gen. Musharraf and Benazir Bhutto was also the brainchild of American politicians.

However, dramatic change in the current political set up could change the entire investment atmosphere in the country, the other equity experts warned.

Political stability a major issue for foreign investors


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## AgNoStiC MuSliM

Good thing Credit Card business is growing slowly - do we really need high interest credit card debt afflicting our already problem laden society?


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## Neo

*ADB economic outlook 2007: Pakistan economy seen keeping growth momentum ​*
FAISALABAD (September 19 2007): On the basis of strong demand, bolstered by increased private and public investment, the Pakistan economy is seen keeping most of its momentum and achieving 6.5 percent growth in FY2008, said Asian Development Outlook 2007 Update, released by Asian Development Bank, here Monday.

According to ADO Update-2007, the slight deceleration reflects several factors including the tightening of the monetary policy stance to contain consumer demand; the impact of high international oil prices; continued slow growth in exports, due mainly to greater international competition in the textile sector; and expected slow growth in the US economy (Pakistan's largest trading partner) in July-December 2007.

On 1 August 2007, ADO Update-2007 mentioned that State Bank of Pakistan (SBP) raised its discount rate from 9.5 percent to 10.0 percent and has recommended that the government adopt quarterly ceilings for budgetary borrowings from itself. The central bank also took measures to limit refinancing from its special credit facilities. The tighter monetary policy is expected to continue to hold down non-food inflation.

The agricultural pickup in FY2007 should help ease the supply-side constraints that triggered food inflation, and good harvests in wheat, pulses, and sugar are likely to help stabilise their prices.

Overall, inflation in FY2008 is expected to subside to 6.5 percent. However, if the government borrows more from the banking system to finance higher than budgeted expenditures resulting in a wider than planned deficit, or if external inflows are unexpectedly strong, SBP will likely find it difficult to offset the impact on the money supply and ultimately inflation.

According to ADO Update-2007, the government is to continue its expansionary fiscal policy in FY2008 as announced in the June budget, with an increase in salaries and pensions of government employees, larger subsidies, and a 20percent hike in development spending.

Expenditure on earthquake areas will continue, and relief and rehabilitation of districts in Sindh and Balochistan, badly affected by the recent rains and floods, will add to public spending. Servicing the domestic debt will also remain at high levels. The Central Board of Revenue expects receipts to stay robust, and the Government has set a 21 percent improvement target in revenue collection for FY2008.

Taking these factors into account, the update forecasts the fiscal deficit to be 4.2percent of GDP in FY2008, slightly above the government budget plan of 4.0 percent. On the external side, relatively slow growth in exports is projected because of continuing weakness in textiles, while import growth is expected to be elevated, reflecting a larger oil bill and continued robust expansion in investment.

Accordingly, the trade deficit is likely to remain heavy at $11.4 billion or 7.1 percent of GDP. While the net services and income deficits will continue to widen, workers' remittances, targeted to reach $6.2 billion, should hold the current account deficit to $8.8 billion, or 5.5percent of GDP, in FY2008. This level is well beyond the ADO 2007 estimate of 3.9 percent of GDP, observed ADB experts.

Overall, Pakistan's growth over the 4-year period FY2003-2007 has averaged an impressive 7.5 percent, and this rate could be sustained in the medium term if two conditions are met: macroeconomic fundamentals remain strong, and policy commitment to governance and economic reform continues. Also, despite recent improvements, the still-low investment and savings rates represent a constraint to achieving and maintaining high growth, and that has to be addressed.

The lack of industrial and export diversification has to be rectified, to bring down persistent growth in the current account deficits to levels consistent with sustainable financing. As a matter of some urgency, ongoing power shortages, which could become a bottleneck to growth, need to be resolved. Yet the fundamental issue is a resolution of the current political uncertainties. The forthcoming presidential and parliamentary elections must be seen by the population as fair, and need to ensure the continuity and coherence of economic policy, so as to sustain economic and governance reforms, mentioned ADO Update-2007.

According to ADO Update-2007, Robust and broad-based growth marked FY2007 (ended June 2007). Vigorous domestic demand was the catalyst, but it also induced inflation pressures. Monetary policy was tightened but fiscal policy remained expansionary, and a key challenge will be to align the two policies more closely. Encouraging revenue performance helped keep the fiscal deficit unchanged relative to GDP, although the trade and current account deficits widened, financed by strong external inflows. A concern is that these inflows could slow or reverse. The present momentum is expected to continue in FY2008, moderated by the impact of tight monetary policy conditions, high international oil prices, and slow export growth.

Underpinned by continued healthy domestic demand, the economy maintained its robust performance in FY2007, to achieve 7percent growth. This outcome was broad based and supported by a solid recovery in agriculture (better availability of irrigation water), continued momentum in large-scale manufacturing, and sustained expansion of services. In recent years, growth from the demand side has been led by increased private consumption on rising per capita incomes, higher workers' remittances from abroad, and easier consumer credit (which, however, slowed sharply in FY2007 due to tighter monetary conditions).

In FY2007, private and government consumption contributed 45.4percent of total output growth. For the first time in 4 years, total investment overtook private consumption as the largest contributor. This was the result of a strong expansion in real fixed investment of 20.6percent, up from 17.6percent in FY2006. As a share of GDP, total investment (including stocks) edged up from 21.8percent to 23.0percent. Several sectors, including manufacturing, construction, transport and communications, finance, and trade, witnessed high double-digit growth rates in private investment during the year.

On the production side, agriculture picked up in FY2007 (from stagnation in the previous year), posting 5.0percent expansion. Large-scale manufacturing continued to grow briskly at 8.8percent. However, as a result of unchanged raw cotton production and weakening export demand, the textile sector's performance was lacklustre. Growth decelerated in the automobile sector too, as demand faltered, in part on the higher cost of consumer credit following a tightening of monetary policy.

Rebuilding work in the regions that had been devastated by the October 2005 earthquake continued to boost a notable expansion in construction, just as greater private and foreign direct investment (FDI) did in the property sector.

Services, a major contributor to growth over the past 5 years, rose by 8.0percent. Its momentum was spearheaded by the financial and telecommunications sub-sectors, both recipients of substantial amounts of FDI. Investment inflows resulting from the issuance of global depository receipts (securities listed and traded in a foreign stock exchange), as well as a series of mergers and acquisitions further supported financial sector momentum.

Inflation, after averaging 8.6percent in the previous 2 years, declined only marginally in FY2007 to 7.8percent from 7.9percent. Despite heightened global oil prices toward the end of the fiscal year, the Government did not raise domestic oil prices in response (having made some downward price adjustments in gasoline and diesel, in March 2007).

A tighter monetary policy brought down non-food inflation markedly to 6.0percent (from 8.6percent in FY2006), which led to a moderation in overall core inflation (non-food, non-energy) to 5.5percent, from 7.1percent. But food prices, which make up 40percent of the consumer price index, rose sharply by 10.3percent, reflecting a combination of global trends and domestic factors: dependency on imports of edible oil, whose price increased; and a shortfall in local production of chilies, pulses, and fresh vegetables.

The State Bank of Pakistan (SBP), the central bank, tightened monetary policy for FY2007 to manage aggregate demand and so contain inflation pressures. In August 2006, it raised its discount rate (the main policy rate) from 9.0percent to 9.5percent; increased the statutory liquidity ratio from 15percent to 18percent; and raised the cash-reserve ratio for demand liabilities from 5percent to 7percent.

However, the effectiveness of a tighter policy was confounded by unexpectedly large net capital account inflows, which, despite a wider current account deficit, produced a very large overall balance-of-payments surplus.

Reflecting this higher surplus, net foreign assets of the banking system registered a sharp increase to Rs 286 billion in FY2007. This boosted broad money supply (M2) growth to 19.3percent, which overshot its 13.5percent growth target. The sharp rise in SBP net foreign assets, plus much larger use of its special refinance facilities (for industry and exports) resulted in exceptionally high growth of 20.9percent in reserve money, keeping liquidity conditions easy at banks.

With the high levels of net foreign exchange inflows, the central bank stepped up its purchases in the interbank market to maintain the currency steady against the US dollar at slightly above Rs 60/$1 during the year. While it succeeded in avoiding nominal appreciation against the dollar, it incurred the cost of an increase in M2 and reserve money, which, in turn, will most likely have a continuing inflation impact.

(The decline in the US dollar against other currencies largely offset inflation differentials and the real effective exchange rate appreciated by marginally less than 1percent in FY2007.) Open-market operations by SBP were sufficient to avoid a drop in bank lending rates, which changed little over the year.

Private sector credit growth slowed to 16.9percent, its lowest level in 3 years. Fiscal policy remained expansionary. Actual total public expenditure in FY2007 at Rs 1, 675 billion was higher than planned and 19.5percent greater than the previous year, while actual development spending rose to Rs 433.7 billion.

Borrowing from SBP was high for most of FY2007. An offshore $750 million bond issue in May 2007, however, helped the Government make a large repayment of its outstanding credit from the central bank at the end of the fiscal year.

This masked SBP's intra-year problems in controlling reserve money to achieve its policy targets, and highlights the need for closer alignment between monetary and fiscal policies to manage aggregate demand more effectively. Non-bank borrowings through the national savings schemes and long-term Pakistan investment bonds picked up sharply in FY2007.

Greater reliance on these sources rather than domestic bank borrowing or the issue of foreign bonds would limit the adverse macroeconomic consequences of an expansionary budget policy that seeks to rapidly advance development spending.

Tax receipts remained buoyant, exceeding the target. On the back of improved revenue collection and administration reforms, direct taxes in particular registered impressive growth of 48percent. Accordingly, the share of direct taxes in total tax collected by the Central Board of Revenue rose to 39.4percent from 31.6percent a year earlier. This performance kept the budget deficit to 4.3percent of GDP.

Export growth decelerated to a disappointing 3.3percent, from 14.9percent in FY2006. One reason was slower growth in textile exports (which account for around 60percent of total exports), which appears to stem from greater international competition in the post-quota era. Another important factor was marked weakness in the performance of the other exports category.

The ultimate causes of poor exports are grounded in long-term and deep structural issues relating to the lack of diversification of export industries, poor compliance with quality standards, and concentration of exports in a small number of markets.

The growth of imports, too, in FY2007 saw a sharp deceleration, to 7.9percent, from an average of 30percent in the 3 previous fiscal years, reflecting the notable slowing in domestic consumption during the year: consumer and intermediate goods were virtually stagnant, (with large reductions in important items such as automobiles); oil imports moderated; but capital goods remained buoyant. Growth in oil imports also moderated.

The trade deficit widened significantly in absolute levels but as a share of GDP was essentially static at 6.9percent. With deterioration in the income account, the current account deficit (excluding official transfers) slumped to $7.5 billion.

This represented a significant widening in dollar terms for the third year in a row, reaching 5.2 percent of GDP. Yet the deficit would have been even greater if workers' remittances had not increased by almost 20percent, to $5.5 billion.

The financing of the current account deficit was again managed without difficulty, given that the financial account surplus amounted to an estimated $10.2 billion-a very large $4.3 billion advance relative to the previous year.

However, the continuity of these flows is not ensured and thus raises questions about the deficit's sustainability. Nearly all the rise in the surplus came from non-debt-creating inflows that have financed the bulk of the large increases in the current account deficit of the past 3 years.

Total foreign private investment inflows nearly doubled to a record $8.4 billion from $4.5 billion a year earlier, including $5.1 billion in FDI and the balance of $3.3 billion in portfolio investment (up from $1.0 billion), mainly in equities. With a large $3.5 billion overall surplus, SBP foreign exchange reserves in FY2007 climbed steeply to $13.3 billion. External debt as a share of GDP continued declining, to 26.9percent.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan recognised as champion economy in WEF *​
BEIJING (September 19 2007): Pakistan has been recognised as "champion economy" in the just concluded annual meeting of the "new champions" organised by World Economic Forum (WEF) in Dalian, a coastal city in Northeast China's Liaoning Province.

"Like champion companies, having excellent growth and best prospects, Pakistan has been recognised as among the countries having robust economy and buoyant future growth prospects", a senior official at Pakistan Embassy here said while talking to newsmen.

He said that Adviser to Prime Minister on Finance Dr Salman Shah represented Pakistan in the august forum held from September 6 to 8. He said the WEF provided best platform for interaction between the delegations of various countries, particularly of those achieved excellent economic growth in the region.

The official said that in future, such kind of forum would continue to be held in China and there would be maximum number of participation both from private and public sectors from Pakistan. A dozen of enterprises from Pakistan participated in the WEF that included National Bank of Pakistan, Habib Bank Limited and Abdul Razzak Dawood of DESCON.

The WEF, while making announcement to host the Summer Davos in China every year after the inaugural event in Dalian, said next year the event would be held in Tianjin, a city on the Bohai Bay from September 25 to 27. The event provide a platform to identify and engage the "new champions" - the world's next generation of global leaders, fast-growing regions, up-and-coming cities and technology pioneers.

He said that as the world economy had now entered a phase of development, more and more new companies were emerging and reshaping the landscape of the business world. They typically have an annual turnover between two billion dollars and four billion dollars, and no less than 15 percent year-on-year growth. He pointed out that the WEF provided an opportunity to exchange opinions on the latest issues of the world, such as energy, education, environment and technology.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Ecnec likely to okay project to import power from Iran today ​* 
Wednesday, September 19, 2007

ISLAMABAD: The Executive Committee of the National Economic Council (Ecnec) that meets on Wednesday with Prime Minister Shaukat Aziz in the chair is set to approve a Rs3.664 billion transmission line project to import 100 megawatts of electricity from Iran for Gwadar. 

Under the project, Pakistan will import 100 megawatts of electricity at the rate of 6.25 cents per unit. Under the project, a 100 km-long 220kV double circuit transmission line from Pakistan-Iran border to Gwadar with optical power ground wire (OPGW) and 220/132kv GIS substation with 2x160MVA transformers and allied facilities will be constructed. 

Answering a question, an official said Iran Export Development Bank would arrange 85 per cent financing while National Transmission and Dispatch Company (NTDC) on behalf of Pakistan would provide a 15 per cent financing. 

The project will be implemented in 36 months. 

The official said since the coastal area of Mekran was not connected with the national grid and power requirements were met through isolated power generation and transmission systems. 

However, with the development of a deep-sea port at Gwadar, power needs of the area had increased. 

In order to meet the increasing power demand, the government of Pakistan has decided to import electricity from Iran and an agreement between M/s TAVANIR of Iran and NTDC of the government of Pakistan was signed in February this year. 

The proposed project, after its completion, will play a pivotal role in the supply of electricity to Gwadar Port, which will have a positive impact on the socio-economic development of the country, besides, electrification of far-flung areas of Balochistan. 

According to the agreement, the transmission line will be constructed by NTDC. 

Replying to a question, the official said the environmental impact assessment would be carried out before starting implementation of the project. 

Now Pakistan is importing 39MW of electricity from Iran for border areas of Balochistan. Pakistan is also planning to import 1,000MW of electricity. 

The two countries are also engaged in talks for the import of 1,000MW of electricity, which will be injected into the Wapdas system. 

Ecnec likely to okay project to import power from Iran today


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## Neo

*Remittances at $985.2m ​* 
Wednesday, September 19, 2007

KARACHI: Remittances sent home by overseas Pakistanis continued to show a rising trend as $985.20 million was received in the first two months (July-August 2007) of the current fiscal year 2007-08, showing an increase of $173.35 million or 21.35 per cent over the same period of the last fiscal year. 

The amount of $985.20 million includes $0.42 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs), the State Bank announced on Tuesday. 

The monthly average of remittances for the period July-August 2007 comes out to $492.60 million as compared to $405.93 million during the same period of the last fiscal year, registering an increase of 21.35 per cent. 

The inflow of remittances in the July-August 2007 period from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $265.33 million, $202.40 million, $156.88 million, $142.88 million, $82.81 million and $28.88 million, respectively as compared to $203.59 million, $165.34 million, $124.97 million, $115.42 million, $69.38 million and $24.60 million, respectively in the July-August, 2006 period. 

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the first two months of the current fiscal year 2007-08 amounted to $105.60 million as against $107.75 million in the same period last year. 

During the last month (August 2007), Pakistani workers remitted an amount of $489.51 million, up $54.67 million or 12.57 per cent when compared with an amount of $434.84 million sent home in August 2006. 

Remittances at $985.2m


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## Neo

*Bull-run continues, index poised to cross 13,000 barrier ​* 
Wednesday, September 19, 2007

KARACHI: Bulls dominated the local equity market. Positive sentiments prevailed in the market and the KSE 100 index registered a gain of 160.75 points to close at 12,952.60 levels after touching an intra-day high at 12,989.56 with 197.71 points up.

KSE 30 index closed at 15674.19 with a gain of 213.18 points.

Gainers outnumbered the losers by 198 to 89 with 40 unchanged. Market Capitalization increased by Rs50 billion to Rs3.796 trilion as compare to Rs3.746 trillion a day earlier.

Atif Malik analyst of JS Global Capital said that record high price of oil triggered accumulation in the oil sector and PSO and Attock Petroleum closed on their upper lock.

News of Musharraf doffing uniform after re-election further fuelled the market sentiments and bulls set the rule of the day.

Ahsan Mehanti CEO of Shehzad Chamdia Securities said that oil based scrips were in the limelight on news of condensate and gas discovery in Sanghar by PPL, Mari Gas and increase in the price of furnace oil by five percent benefiting oil marketing companies.

Kashif Mustafa Head of the Research ECL stated that relatively aggressive stance was seen from investors who preclude the negative factions intending for buy option. With considerable volumes market seems to be consolidated at 13000 level which is right according to technical will. 

Considering all negative factors it seems that market will continue to carry bullish tone due to which it can be inferred that index will cross the 13,000 levels in coming session. Further on at the political front, many doubts and ambiguities remained the resisting force and as presidential elections are approaching, volatility cant be ignored.

Trading activity was better compared to the last trading session as the Ready market volume stands at 213.825 million shares as compared to previous volume of 136.28 million shares and the future market volume increased to 34.686 million shares as compared to 23.648 million shares a day earlier.

On account of heavy buying in telecom and banking sector volumes remained relatively high totalling to 213.8 million scrips. Banking sector showed a positive movement as some first tier participants gained pace closing with moderate gains. Walking on the path of fundamentals, BOP and BAFL were in limelights. Heavy buying was also witnessed in cement sector as almost all scrips closed on the positive side. LUCK and DGKC were the major volume holders both closed with significant gains along with FCCL.

Backed by strong fundamentals E&P and refinery sectors played due roles in bullish rally.

Leaqdfing the volume giants TRG closed at Rs.15.35 up by 85 paisa on turnover of 36.66 million shares, followed by Arif Habib Securities with 20.22 million shares closed at Rs.142.90 up by Rs.4.55, Bosicor Pakistan with 17.7 million shares closed at Rs.19.35 up by 85 paisa, Pak Petroleum with 9.43 million shares closed at Rs.257.74 up by Rs.4.15, Pakistan Cement with 8.16 million shares closed at Rs.12.25 up by 10 paisa, Pak Oilfields with 7.91 million shares closed at Rs.311.50 up by 5.50, Attock Refinery with 7.68 million shares closed at Rs.210.55 up by Rs.10, LUCK with 7 million shares closed at 124.25 up by 25 paisa, Fauji Fertilizer Bin with 6.3 million shares closed at Rs.42.50 with no gain or loss and BOP with 6.28 million shares closed at Rs.96.45 up by 90 paisa.

Bull-run continues, index poised to cross 13,000 barrier


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## Neo

*ZRG gets telecom software export order ​* 
Thursday, September 20, 2007

KARACHI: ZRG International, the nation's market leader in contact center solutions has been selected by Smart Link Inc., Saudi Arabia to deliver flexible open standards based Intel CTI technology.

Smart Link is a rapidly growing contact center outsourcing service provider established as a joint venture by two prestigious business groups in the Kingdom of Saudi Arabia, namely: Al Khaleej and Al-Alamiah.

Smart Link selected Intel CTI based platform with OneView Unified desktop software by ZRG, because it is a proven and flexible communication environment that provides a revolutionary approach of handling multiple channels of communication including Voice, Fax, SMS, Email and Web chat.

The use of the open standards based approach enables the customer to incorporate any type of technology, data source and applications. 

OneView boosts the productivity of the agents by integrating and presenting all the available business applications and communication channels in a simple-to-use GUI. 

In this case, the agent spends less time in interacting with the system and more time in customer care and revenue-generation. 

By offering full integration, maximum flexibility and readily available customisation capabilities, ZRG has become the preferred solution provider for mission-critical centers. 

ZRG holds the market leadership position in the contact center market with advanced solutions deployed at majority of the centers in the country.

ZRG gets telecom software export order


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## Neo

*WB okays $150.2m credit for Sindh irrigation sector​*
ISLAMABAD: The World Bank (WB) on Wednesday approved a $150.2 million credit to Pakistan for irrigation sector of Sindh to improve the efficiency and effectiveness of this sector. 

A WB announcement made here said that the Sindh Water Sector Improvement Project is designed to improve irrigation water distribution in three Area Water Boards (AWBs), namely Ghotki, Nara and Left Bank, focusing on measures of reliability, equity, and user satisfaction. It is expected to help increase agricultural production, employment, and incomes in more than 30 percent of the irrigated area in the province. 

Pakistan relies on the largest contiguous irrigation system in the world to provide basic food security. The Indus Basin Irrigation System has converted deserts into arable lands suitable for agriculture. However, this infrastructure is deteriorating and needs rehabilitation along with reforms to improve the allocation of water as well as the efficiency of its use. 

Sindh is one of the primary beneficiaries of this system with three major barrages that divert some 48 million acre feet of water annually to the 14 main canal commands in the province. Sindh is one of the poorest regions of the country, and 56 percent of household income comes from agriculture, directly or indirectly. 

Irrigation is absolutely critical to Pakistans agriculture sector, which is the single most important source of employment and exports said Yusupha Crookes, World Banks Country Director for Pakistan. This project will help increase agriculture production in Sindh through increased yield and cropping intensity. This will stimulate rural growth that raises agricultural and nonagricultural wages which are fundamental for reducing poverty. 

The project aims to deepen the institutional reforms that are already underway in Sindh, and will improve the irrigation system in a systematic way covering key hydraulic infrastructure. It will also enhance long-term sustainability of the irrigation system through participatory irrigation management and developing institutions for improving operation and maintenance of the system. These reforms will also improve equity of water distribution by increasing water availability for poorer farmers at the tail end of the distribution system.

The Project will support Farmer Organisations to improve irrigation canals and their enhanced role in management thus improving overall sustainability of the irrigation and drainage system in the province by providing a model, said Masood Ahmad, WB Lead Water Resources Specialist and project team leader. These vulnerable groups will also be encouraged to play greater role in decision making in water management and in the planning and implementation of projects. 

Daily Times - Leading News Resource of Pakistan


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## amunhotep

.
the rising crude may hurt pakistan.

it'stime to focus on reneweable energy like wind & solar energy.

whatever u do don't go the ethanol way. it will only increase inflation.


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## Neo

*45 projects worth Rs 154 billion approved ​*
ISLAMABAD (September 20 2007): The Executive Committee of National Economic Council (Ecnec) on Wednesday approved 45 development projects worth Rs 154.1 billion, with major allocation of over Rs 100 billion to infrastructure sector, said Engr Dr M Akram Sheikh, Deputy Chairman, Planning Commission.

Briefing media persons after Ecnec meeting, chaired by Prime Minister Shaukat Aziz, he said that the approved projects pertained to social welfare, energy, water, education, industries, commerce, agriculture and health.

Total foreign exchange component (FEC) has been estimated at Rs 36.8 billion. Of the approved projects, 39 are new with a cost of Rs 140.7 billion. The top planning body, Planning Commission, revised the cost of six projects upward--from Rs 7.5 billion to Rs 13.4 billion--reflecting a net addition of Rs 5.9 billion in the cost of the ongoing projects.

In the infrastructure sector, 29 development projects, costing Rs 100.8 billion, were approved. The Ecnec approved 7 projects, worth Rs 37.5 billion in social sector, and 9 schemes costing 15.8 billion were approved in other sectors, like agriculture, industries, commerce, etc.

The highest number of projects were approved for Punjab where the number of projects is 15 with a cost of Rs 45.5 billion, including an amount of Rs 4.4 billion as FEC.

In Sindh, the number projects is three, with a cost of Rs 21.6 billion, with FEC of Rs 11.2 billion. For the NWFP, the number of approved projects is five, costing Rs 15.1 billion, with FEC of Rs 5.1 billion. Similarly, five projects, worth Rs 7.2 billion, with FEC of Rs 2.3 billion, have been approved for Balochistan.

Fifteen projects, worth Rs 62.4 billion, with FEC of Rs 12.6 billion, have been approved for all over the country while two projects worth Rs 2.3 billion with FEC of Rs 1.2 billion are for Erra. Akram said that 30 projects, costing Rs 94 billion, would be financed by the Federal government, while 11 projects would be financed by the provincial governments at cost of Rs 52.5 billion.

Of the 15 projects located in Punjab, 4 projects have been approved on 50:50 cost sharing basis and the federal government will provide Rs 11.3 billion for the four projects. Of the three projects located in Sindh, one project will be financed by costing sharing basis for which the federal government will provide about Rs 4 billion.

The projects approved in the energy sector are Development of Renewable Energy in the NWFP costing Rs 4.7 billion, Renewable Energy Development Sector Investment Programme (Construction of Marala Hydel Power Station) costing over Rs 4 billion, Fuel Fabrication Plant, Pakistan Nuclear Power Fuel Complex (PNPFC) worth Rs 2.8 billion, Seamless Tube Plant-1, PNPFC, worth Rs 2.7 billion, Nuclear Power Fuel Testing Project, PNPFC costing Rs 1.129, Up-gradation of CHASCENT (CHASNUPP Center of Nuclear Training costing Rs 536 million, Import of Power from Iran for Gwadar costing Rs 3.66 billion and Rehabilitation of Jabban Hydroelectric Power Station of Rs 1.037 billion.

Planning Commission Deputy Chairman said that projects pertaining to nuclear energy would help the government to generate 8800 MW electricity targeted in the Energy Security Plan. These projects would provide the improved infrastructure for the development of nuclear energy in the future.

Ecnec approved 12 projects, worth Rs 36.74 billion, in transport and communication; three projects, worth Rs 30.36 billion, in water resources; one project of 7.66 billion in education; four projects worth Rs 24.36 billion in higher education; three projects costing Rs 5.83 billion in food and agriculture; 6 projects valuing Rs 9.83 billion in industries, commerce etc.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Three Chinese companies refuse to ink new contracts ​*
ISLAMABAD (September 20 2007): Pakistan has suffered a serious setback as three major Chinese oil and gas service companies have refused to sign new contracts with multinational, national and private sector oil and gas sector companies for conducting seismic survey and supply of rigs for drilling.

Sources said that Chinese companies SPA, Great Wall, and BGP, were reluctant to sign new contracts in Pakistan. Pakistan's oil and gas sector is dependent on these Chinese companies for big crews for survey and variety of rigs.

Sources said the killings of Chinese workers in Pakistan in the recent past, and worsening law and order situation were major reasons for the Chinese companies for staying away from more business in Pakistan.

In different unfortunate developments, some Chinese workers were targeted, and killed, in Pakistan recently. Beijing had strongly protested over the killing of its citizens and had asked Islamabad to make foolproof arrangements for protecting Chinese workers in Pakistan.

The Chinese companies, in particular Great Wall, SPA and BGP, are considered as Pakistan's important partners for exploration and production of oil and gas. They have the largest-ever history to stay and work in Pakistan and help it get more production of oil and gas to increase local share in consumption. Their crews have conducted largest seismic survey in Pakistan during last few years. The Chinese companies are comparatively cheaper than other countries and willing workers for Pakistan to boost up its oil and gas sector.

The refusal of the major Chinese companies to sign more contracts could very badly affect seismic survey and supply of rigs and other material to the local oil and gas sector companies.

Since the killings of the Chinese is a very serious issue for Pakistan, the government is taking all possible steps to make sure that no such incidents occur in the future. It has made special security arrangements to preempt any risk to Chinese workers. It has already offered Beijing a plan for joint working group for providing flawless security and safety to Chinese workers in Pakistan. The idea of setting up housing facilities within the working place for Chinese workers is also being considered by the government. But still final decision and plan is yet to mature and work to really make sure that te Chinese, who are known for friendly attitude and behaviour, do not face threat to their lives while working in Pakistan.

Pakistani people take Chinese as brethren and they can not even think of attacking them. They have strong feelings that Chinese should have preferential treatment from Pakistan government in business and contractual jobs. The government, on its front, is all out to address security issue to Chinese. It would like to make sure that Chinese live and work in Pakistan in stress-free environment.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*China assures of cooperation in enhancing trade ​* 
Thursday, September 20, 2007

ISLAMABAD: The Chinese government on Wednesday assured Pakistan unconditional cooperation for enhancing trade and economic cooperation and expressed great satisfaction over Islamabads economic situation.

Ambassador of China to Pakistan Luo Zhaohui along with a 10-member delegation visited the Islamabad Chamber of Commerce and Industry (ICCI) and held a meeting with the business community. He stated that Pakistan-China cooperation stands on four pillars ie trade and economic coordination, people to people contact, defence and strategic cooperation and political relations.

We should do more in this regard to cement bilateral ties, he added.

Luo Zhaohui also said that in next five years bilateral trade will be enhanced to $15 billion from the existing $5.2 billion. Under the Free Trade Agreement, which has already been operational from July 2007, the ambassador assured that bilateral trade would be on equal bases.

Ambassador of Peoples Republic of China to Pakistan H.E. Luo Zhaohui pointed out that Pakistan offers very lucrative and business friendly policies besides a conducive environment for foreign investment and there are no restrictions imposed on the repatriation of capital and profit in the business venture undertaken by foreign investors.

Luo said that both countries should closely collaborate in many areas, which will further deepen the historic friendship between our two brotherly countries. He expressed satisfaction over increased trade between the two countries and said that investment environment in Pakistan is very good and Chinese can take part in everywhere without any fear. 

Chinese want to investment in Pakistan in various sector especially auto, information technology, agriculture sector, up gradation of industries, rail links and power generation projects. Excellency stressed for the trade and economic relations because this world is globalization. Excellency, stressed people to people connectively. Chinese enjoyed every movement in Pakistan because Pakistani people are rest kind to the business visa is free and granted immediately. 

On the question of the business community regarding visa issuance, the Chinese visa counselor said that due to some of illegal immigrants have been found in criminal activities in china that made the scrutiny difficult to issue a visa for guanine business community.

The councilor further added that some of the people use fake documents for getting visa however he assured that the government of china would relax the visa policy for the genuine business community of Pakistan.

During meeting Nasir Khan referred to the excellent cooperation in economic development between Pakistan and China collaboration such important projects of nation interest as Gawadar deep sea port, Sandak Cooper, Indus Highway, Pakistan Cycle and Industrial Cooperative, Pakistan Aeronautical Complex, Power Generation projects, both nuclear and non nuclear, up-gradation of Karakoram Highway.

He mentioned Chinese support for Pakistan in economic sphere has always been considered as integral to Pakistan s development and trends in economic cooperation between both countries are increasing gradually.

President invited Chinese companies to investment in Pakistan in various projects and also discussed about the recently visit of ICCI delegation to China. 

China assures of cooperation in enhancing trade


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## Neo

*Trade with China to reach $15bn in 5 years​*
ISLAMABAD, Sept 19: The volume of bilateral trade between Pakistan and China will reach $15 billion mark in the next five years from the existing $5.2 billion under the free trade agreement (FTA) effective from July 1.

The comprehensive FTA, which covers trade in goods and investment would benefit traders from both the countries equally, said Ambassador of China to Pakistan Luo Zhaohui while speaking to traders at the Islamabad Chamber of Commerce and Industry here on Wednesday.

The envoy assured Pakistan of all possible and unconditional cooperation of his country for enhancing trade and economic cooperation and expressed satisfaction over Islamabads economic situation.

Mr Zhaohui stated that Pakistan and Chinas cooperation stands on four pillars  trade and economic coordination, people-to-people contact, defence and strategic cooperation and political relations.

We should do more to cement bilateral ties, he added.

He pointed out that Pakistan offers lucrative and business-friendly policies, besides there was a conducive environment for foreign investment and there was no restriction on repatriation of capital and profit in the business ventures undertaken by foreign investors.

He said both the countries should closely collaborate in many areas, which would further deepen the historic friendship between our two brotherly countries.

He expressed satisfaction over increased trade between the two countries and said investment environment in Pakistan was very good and Chinese could take part without any fear.

Chinese want to invest in Pakistan in various sectors, especially auto, information technology, agriculture sector, upgradation of industries, rail links and power generation projects, he said.

On a question from the business community regarding visa issuance, the Chinese visa counselor said that the Chinese government would relax visa policy for genuine business community of Pakistan.

During the meeting, Nasir Khan referred to excellent cooperation in economic development between Pakistan and China.

He added that FTA would also increase bilateral trade and Chinese can invest particularly in the areas of infrastructure development, such as railroads, communications, highways, farm to market roads, water security, and human capital development.

Trade with China to reach $15bn in 5 years -DAWN - Business; September 20, 2007


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## Neo

*Ecnec approves Rs154bn projects​*
ISLAMABAD, Sept 19: The Executive Committee of the National Economic Council (Ecnec) on Wednesday approved 45 development projects of the value of Rs154 billion, including four schemes with Rs7.2 billion for production of nuclear fuel to meet the nuclear power generation target of 8,800MW by 2030.

Prime Minister Shaukat Aziz presided over the meeting. Dr Akram Sheikh, Deputy Chairman of the Planning Commission, told newsmen after the meeting that five projects in the nuclear energy sector had been approved at an estimated cost of Rs8.8 billion.

These include Rs1.6 billion acquisition and development of land and construction of office buildings for the second phase of Karachi Nuclear Power Plant (Kanupp-2). Four different schemes were being launched by the Pakistan Atomic Energy Commission (PAEC), as part of Pakistan Nuclear Power Fuel Complex, at a cost of Rs7.2 billion to set up fuel fabrication plant, seamless tube plant, nuclear power fuel testing project and upgradation of Chashnupp centre for nuclear training.

Dr Sheikh sidestepped questions relating to the monitoring role of the Planning Commission, particularly in the implementation of large projects and award of contracts to military organisations for construction of mega-projects like Karachi Northern Bypass and the Coastal Highway through negotiations and without inviting tenders. But, he said, the Planning Commission did not monitor Northern Bypass construction while damage to a small patch of the coastal highway was not reflective of the entire project.

He said that investigation report about the Northern Bypass incident would be made public when Prime Ministers Inspection Commission completed its work.

The deputy chairman said that Ecnec had approved five projects in the education and higher education sector at a cost of Rs24.4 billion including Rs7.7 billion project for providing basic facilities like drinking water and toilets in 16,000 schools.

The project, he said, would be completed by different formations of the Pakistan Army. He said about 57,000 schools in the country lacked basic amenities and the provinces would provide these facilities in the remaining 41,000 schools.

Of the 45 projects, Dr Sheikh said that the meeting had approved 39 new projects costing Rs140.7 billion. Another six ongoing projects were revised and their cost increased from Rs7.5 billion to Rs13.4 billion. Among the projects 29 are in the infrastructure sector which will cost Rs101 billion.

Ecnec approves Rs154bn projects -DAWN - Top Stories; September 20, 2007


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## Neo

*Pak-Afghan trade ties​*
Wahdat

PAKISTAN has been unable to play a proactive role in safeguarding its interests in Afghanistan since the inauguration of the government led by President Hamid Karzai, with the result that India is getting closer to the landlocked country and stepping up its activities there, despite the absence of a common border between them.

During Karzais recent visit to India, the signing of an accord on expanding trade links and Delhis assurance of continued assistance to Kabul were essentially aimed at undermining the position of Pakistan and strengthening Indias foothold in the war-torn country.

It is about time Islamabad stopped watching the growing Kabul-Delhi partnership as a silent spectator and jerked into action to promote its core interests in the neighbouring country.

Pakistan should adopt a realistic approach towards the rebuilding of Afghanistan by reviewing the bilateral trade regime so as to tap irresistible opportunities emerging next door. Determined efforts by both sides to exploit the situation for boosting free trade will give Afghanistans rebuilding a much-needed shot in the arm on the one hand and guarantee the economic prosperity of both on the other. In the prevailing circumstances, Pakistan has bright prospects of capturing the mammoth export market in Afghanistan, where basic civic amenities are non-existent due to three decades of strife.

For Afghanistans reconstruction drive to gain momentum, Pakistan is ideally placed to export a wide range of items like cement, steel, paints, marbles, tiles, medicines, electronics and other commodities at competitive prices. With the export duty on these items already abolished, Islamabad should have a shot at shipping more goods to Kabul and thus pave the ground for the liberal import of Afghan products demanded by Pakistanis. One way of achieving this goal is to organise trade fairs in major cities on both sides of the border.  (Sept 18)

DAWN - Editorial; September 20, 2007


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## Bushroda

*Pakistan poised for key role in the innovation economy*
By Faruq Ahmad
San Jose Mercury News, USA
Article Launched: 09/21/2007 01:36:48 AM PDT

The aisles were crammed, and the booths were jammed. Earnest and intense men (and some women) listened attentively as exhibitors pitched gadgets, software solutions and services, with all the exuberance of Silicon Valley. Monitors flickered, there was garish advertising everywhere, and an occasional TV crew wandered by, interviewing and taping. The energy level was high, a mix of excitement, adrenaline and confidence. This could be Las Vegas or San Francisco. But Karachi, Pakistan?

I was at the Karachi Convention Center, where the 7th annual Information Technology Commerce Network trade show was in full swing last month, with a reported 60,000 in attendance. I had been invited to speak at a daylong CEO forum program organized by the Pakistan Software Export Board that ran concurrently with the trade show. My fellow speakers included Greg Hinkley, CEO of Mentor Graphics, who announced that his development team from Lahore, Pakistan, would be filing its first patent.

Some of those attending paid an extra $250 to hear venture capitalists from the United States talk about entrepreneurship, and how they could make it big in the innovation economy. The room was full.

But Pakistan, you say with unease - isn't travel there especially risky? Well, not for almost a dozen invited Americans who mingled freely with the locals, in what is just another bustling South Asian city. While I would not attempt to underplay travel risks for visitors, it was equally clear that here in the United States, our anxieties are far too easily stoked, and there is a lot to be said for replacing fear with facts.

Pakistan is an ethnically similar, smaller neighbor to India. Could its recent rapid 7 percent-plus growth rate turn it into the next innovation-economy player in the region? Its economic vitality in recent years is consistent with the 800 percent increase in its stock market. A key step is to build a bridge to Silicon Valley, and the country is rapidly stepping up its links. The South Asian networking group the Indus Entrepreneurs (Global) already has offices in Karachi and Lahore, and OPEN (OPEN Silicon Valley) is following suit.

India and Pakistan are better viewed as companions, rather than competitors. India is bursting at the seams, and for some types of projects, Pakistan could be the better choice, to everyone's benefit. Hinkley, for example, said his company picked Pakistan for its development team because of workforce quality, lower costs and lower turnover.

As opportunities grow, experienced Pakistanis from abroad are returning to positions of responsibility. I was pleasantly surprised to find bureaucrats with backgrounds that were anything but bureaucratic. Yusuf Hussain, director of the software export board, is a graduate of Rice, Cornell and the University of Texas, and has been an executive at Time Warner and MCI. His team includes Aon Rana, who cut his teeth in senior marketing roles at Orange business services in the United Kingdom.

In my field of expertise, venture capital, Pakistan's success is particularly hard to predict. My investment experience includes India and China, and I saw how long it took these countries to get to critical mass as attractive investment destinations for U.S. institutional investors. Pakistan is assembling a $50 million fund to help kick-start venture capital support for local companies. How the government structures and selects managers for this fund will determine whether future funds attract institutional investors and sponsorship support from top Silicon Valley firms, assuming attractive deal flow.

Done right, this first fund could help lay out a road map for venture capital that moves Pakistan forward in the global innovation economy. Pakistan may be late to the party, but it seems to have finally found the directions.

What of all the political turmoil that appears to taint Pakistan? As one seasoned Indian-American veteran of Silicon Valley pointed out to me, it is an entrepreneur's job to turn handicap into opportunity. Start-ups never have enough capital, or the right people, or the revenue momentum or brand presence. In Pakistan, add political stability to the list. So long as it does not turn into a show-stopper, it is just another challenge to work around. Judging from my visit, Pakistanis certainly seem to be gearing up to the task.
--------------------------------------------------------------------------------
*FARUQ AHMAD, founding partner of Palo Alto Capital Advisors, was born in Pakistan. He received engineering degrees from MIT and Stanford, and an MBA from Stanford. He wrote this article for the Mercury News.*


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## Neo

Nice article mate, thanks for sharing!


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## Neo

* Inflation target to be missed on staples' price spiral ​* 
Friday, September 21, 2007

KARACHI: Inflation is likely to stay higher in FY08 as well. The growing shortage of staple foods have recently triggered tremendous inflationary pressure on the food side, as testified by latest SPI numbers, its leading to believe that CPI target would again be missed in FY08 by a wide margin.

Accordingly, it is expected full year FY08 CPI to end up at around 7.55 per cent, against the target of 6.5 per cent.

However the benchmark CPI inflation measure witnessed a slight decline to 6.45 per cent yearly basis last month, stated Ovais Siddiqui, Head of Research at JS Global Capital.

He said that spiralling inflation has been a black spot on the overall better economic performance for the last few years. In the last fiscal year FY07, CPI turned out to be 7.8 per cent, far above the government target of 6.5 per cent. 

However, in the first two months of FY08 (Jul-Aug) food inflation showed a declining trend, bringing down average CPI in this period to 6.41 per cent year-on-year (YoY).

This is the 16-month lowest YoY figure since April 2006 and accordingly must be a big relief for the government in the backdrop of upcoming elections.

Food prices are creeping up again and meeting FY08 inflation target does not appear smooth sailing for the government as food inflation now looks creeping up again, as suggested by latest SPI numbers for the second week of this month. There are reports that the country could face severe shortage of wheat unless the local supply shortfall is plugged by imports.

This is quite surprising as the government was claiming a bumper wheat crop this year. However, the reported smuggling of wheat to neighbouring countries is believed to have created this wheat crisis in the country, causing significant jump in wheat and flour prices (having around 5.6 per cent weight in CPI basket). Similarly, other food staples, like rice and milk (8 per cent CPI weight), have also witnessed a substantial price increase, he added.

Wheat price touched all-time high of Rs13,000 per ton on the back of growing shortage. It is not sure whether the governments miscalculation of crop size or alleged wheat smuggling to neighbouring countries caused this price jump. However, substantial discrepancy between international and local wheat prices is giving credence to the second factor. 

International wheat prices have surged to a record high on the news of damage to wheat crop in major wheat-exporting countries, like Canada and Australia. This sent countries that rely on imported wheat, such as Japan, Egypt, India and Brazil, scampering to the market to secure supplies. 

He said that according to calculations, despite a substantial jump in the price, the local wheat is still available at a whopping 146 per cent discount to comparable international price of Rs37 per kg, giving ample economic incentive for hoarding and smuggling. 

In short, local wheat prices are likely to maintain upward momentum, despite that the government has now decided to import one million tons of wheat. This, together with price increase of other food items, could once again take FY08 CPI well off the target as foodstuff has around 40 per cent weight in CPI basket.

Owing to freezing of retail prices of petroleum products (POL), the non-food component of CPI has been more or less tame since January this year.

However, its flip side is the substantial revenue hit to the government as it did not pass on significant rise in international oil prices to local consumers and instead reduced its taxes and gave subsidy to keep POL prices unchanged.

This subsidy policy of the government is not sustainable as it owes around Rs25 billion to oil marketing companies (OMCs) and these dues are mounting by around Rs3 billion a month at the current oil prices, putting a lot of strain on budget deficit.

Ironically, the government is targeting to bring down this deficit to 4 per cent of GDP in FY08 from 4.2 per cent last year.

Further aggravating the situation, international oil prices are currently hovering at all-time high of $82.5 per barrel and, as per Reuters Consensus Oil Forecast Poll, these prices are likely to stay over $60 per barrel over the next two years.

This makes it near impossible for the government to keep local retail POL prices unchanged at the cost of worsening budget deficit. However, elections are likely to be held in the next four months, ruling out any increase in POL prices in that period. 

We believe that these prices could be raised substantially post-elections in the second half of FY08, potentially culminating in substantial jump in non-food prices.

On the basis of this scenario, it is expected full year FY08 CPI to end up at around 7.55 percent, against the target of 6.5 percent. This is slight lower compared to last year figure of 7.8 percent. An evitable corollary of this is the continued monetary tightening by SBP in FY08.

Inflation target to be missed on staples' price spiral


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## Neo

*Squandering taxpayer money to cover up economic mismanagement ​*  

Friday, September 21, 2007

KARACHI: Is another crisis looming? Once again state-owned Trading Corporation of Pakistan (TCP) has been given the task to import wheat when price of staple is at acme in the international market. 

Though the government is never tired of claiming and recalling its economic achievements and introduction of good governance in her tenure during last seven years, but series of engineered crisis paint a different picture. 

Current wheat crisis is also a reminiscent of previous predicaments one after the other including crisis of stock exchange, sugar, cement and pulses. The masses are left licking the wounds of untimely and wrong decisions.

The majority of ministers in current cabinet are feudal lords that have now become business tycoons. These ministers and advisors largely protect interest of their class or community rather than of masses.

The feudal and business barons running the country seem least bothered about problems faced by masses neither do they care about billions of rupees losses caused to national exchequer.

The involvement of top government dignitaries was unearthed in March 2005 stock market crash but they are still enjoying their status safe and sound. Similarly, ministers and other dignitaries were found involved in sugar crisis and for this reason the NAB was hushed up and further inquiries were stopped.

After creating crisis these influential drag public sector organisations like TCP into arena apparently in a bid to control crisis and assuage the situation, using taxpayer money to clean their hands. During past few years, whenever TCP was directed to intervene in the market, it left unpleasant affects instead of managing the crisis. 

Now these influential persons are again dragging TCP on to the pitch, which has earlier caused Rs12 billion losses to national exchequer by importing sugar at high cost.

When sugar was being priced at $250-300 tonne at international market, the government remained idled by adopting wait and see policy. But when prices of sugar started to inclined it invited tenders through TCP, which awarded last tender for 50,000 tonnes at $518 tonnes.

It may be noted that TCP had imported more than 0.8 million tonnes till August 2006, since than the corporation is still holding around 0.3 million tonnes, which gives and idea that sugar imported at higher cost in order to bridge gap between demand and supply in local market did not bring about any change in prices, which indirectly benefited influential sugar millers.

When TCP was importing sugar at $518 per tonne importers from private sector were importing sugar at $390 per tonnes.

However, after successfully completing sugar import at higher cost TCP had issued tenders for import of 50,000 tonnes of black gram and mash pulse at cost of $600 tonne from India, though these pulses could not reach Pakistan at the time of crisis, but it fuelled international market where private importers making import contracts at lower rates easily. 

In this backdrop the TCP has been directed to import wheat despite production of 23.5 million tonnes. The TCP also issued wheat stock statistic of the country around 22.5 million tonnes which directly challenges MINFAL claims of 23.5 million tonnes.

Before issuance of tender by TCP the prices of wheat was hovering around $400 per tonne at international market, whereas the prices of wheat and wheat flour have started to come down amid low domestic demand.

Would this declining trend continue? or would TCP again intervene in the market to push up prices in organised manners which will indirectly benefit millers, hoarders.

Squandering taxpayer money to cover up economic mismanagement


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## Neo

*Pakistan dropped from FT global stock index​*
KARACHI, Sept 20: Pakistan would find it difficult to get strong response for its planned GDRs after the country was dropped out from developed status of the Financial Times Stock Exchange Indexes on Thursday, said experts.

Pakistan was dropped from FTSEs global indexes on the grounds that it no longer meets the entry requirements.

This is shocking for both the stock market and the planners, who are preparing to launch GDRs of some prominent companies of Pakistan.

However, bankers and analysts did not find the situation critical for launching of GDRs mainly because of high global liquidity created after unexpectedly high oil prices. The oil boom continues to create wealth, of which 50 per cent goes to United States and ultimately reaches global market for investment in the financial instruments.

Analysts found it difficult to assess the immediate impact but said that the decision would bring some impact on launching of GDRs.

Pakistan has planned to launch GDRs of National Bank of Pakistan, Habib Bank and Kapco during the current fiscal.

I dont expect big impact but the new GDRs from Pakistan may not get the enthusiastic response as it got in the case of MCB Bank and the United Bank, said Mohammad Imran, research head at First Capital Research.

Most of the analysts said FTSE Indexes was not the benchmark. They prefer to consider Morgan Stanly (MSCI) as benchmark to calculate any impact or move in the financial market. An estimated $2 trillion to $2.5 trillion of funds track FTSE Indexes

Analysts consider excess global liquidity as one of the strongest factor in selling of GDRs. The global liquidity glut needs opening to penetrate in the economies, which could offer some return. It was a general consideration among the analysts that high global liquidity will not disappoint Pakistani GDRs.

The FTSE group reviews the status of countries each year and last year the group considered to drop Pakistan out from the developed status but was kept under watch. However, this consideration would not have any impact on Pakistans image abroad, which is obvious from the record foreign investment.

Analysts said the drop out of developed status would hurt Pakistans image but the global liquidity would mitigate the possible negative impact.

I have two reasons which will defend any possible impact of FTSE groups decision to oust Pakistan. First, FTSE is not the benchmark and second the surplus global liquidity seeks opportunity to invest, said Atif Malik, senior analyst at JS Research.

He also pointed out that the decision to drop Pakistan out would be effective in June 2008, which provides sufficient time for launching of GDRs.

China was dropped from the FTSC last year but the result was reverse and the country received huge investment.

Pakistan dropped from FT global stock index -DAWN - Business; September 21, 2007


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## Neo

*Rs280.3bn revenue target for next quarter​*
ISLAMABAD, Sept 20: The tax authorities have set a target of Rs280.3 billion revenue collection for the second quarter (October-December) to achieve Rs1,025 billion target projected for the current fiscal year.

An official source told Dawn on Thursday that a growth of 23.7 per cent had been projected in the revenue collection during the next quarter. The break up showed that the tax authorities would have to collect Rs66.4 billion in October, Rs69.5 billion in November and Rs144.4 billion in December. Tax wise break up showed that Rs130.6 billion would be collected under the head of direct taxes, Rs91.8 billion under sales tax, Rs34.4 billion under customs and Rs23.5 billion under federal excise duty.

The official was of the view that the target would be achieved easily if the economic growth momentum was maintained during the next quarter. However, due to decline in imports, the customs duty collection had recorded a negative growth in the first quarter.

Rs280.3bn revenue target for next quarter -DAWN - Business; September 21, 2007


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## Neo

*Textile exports fall by five percent in August ​*
KARACHI (September 21 2007): Political uncertainty and law and order situation, besides high cost of doing business have once again pulled down the country's textile exports by five percent during August, exporters said on Thursday.

They said that political crisis since March had badly damaged the country's image making foreign buyers reluctant to place their orders, as they believed that their orders, mostly for Christmas season in the West, would not be fulfilled on time.

In addition, the high cost of production and increasing competitiveness in the international market was another factor to hit the country's textile exports, they added.

"We were hoping that after the revaluation of the Indian and Chinese currency, Pakistani textile export would go up. However, the decline in this sector is not less than a serious shock for us," Federal Minister for Textile Mushtaq Ali Cheema said.

He said that tight international competition and high cost of doing business were the chief reasons behind the recent (five percent) decline. However, the ongoing political uncertainty may also be another reason, he added.

During the first month of the current fiscal (July 2007), the country's textile export registered an upsurge of 8.47 percent to 951.937 million dollar. However, in August, the textile sector once again witnessed a regressive trend, resulting in a decline of 52.176 million dollars.

Official statistics show that during August 2007, the textile export declined by 5.27 percent to 938.436 million dollars as compared to 990.612 million dollars during August 2006.

The textile exports also show a slump of 38.675 million dollars during August against the figure of July. The exporters said that the government was not paying due attention to textile exports, which contributed the largest share of 66 percent of the country's exports.

Statistics indicate that out of 13 textile products, export of nine textile products, including raw cotton, cotton yarn, towels, cotton cloth, bed wear, readymade garments and cotton carded exports have recorded a decline in export during last month.

On the other hand, textile exports during the first two months - July-August - of the current fiscal year witnessed a growth of 1.18 percent to 1.89 billion dollars as compared to 1.86 billion dollars during the same period of the last fiscal year.

"We have already informed the government officials that the present political battle was damaging the country image abroad, which could also hurt the economy, said leading industrialist Zubair Motiwala.

He said that the importers were reluctant to visit Pakistan to put their orders amid political uncertainty going on since March till todate. Letters of credit (L/Cs) for export opened for 90 days and the present export results reflected that the future textile export would further go down, he added.

Exporters pointed out that the "high cost of production" had brought the country's textile industry into severe crisis to put a negative impact on the growth of textile exports.

They said that despite the government's repeated current pledges, no serious action had so far been taken to restore the foreign buyers' confidence, while the textile policy was still in pending for the last few months. In such a situation, they said the exporters were relaying only on six percent research and development (R&D) to boost the exports.

Referring to the major competitors like China, India and Bangladesh, where textile products were available at lower prices, they said that faulty and weak marketing strategies on the part of the exporters in the world markets had also created problems for them.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Petroleum products: Countrys import bill falls 6.53% to $1.344bn​*
KARACHI: The countrys import bill of petroleum products declined by 6.53 percent to $1.344 billion in July-August of current fiscal as against $1.438 billion over the same period last year. According to official figures released on Thursday, the import bill of petroleum crude was up by 6.53 percent to $ 689.090 million in July-August 2007 as against $ 646.835 million over the same period last year. However, the import of products manufactured from petroleum declined by 17.20 percent to $655.467 million during the period under review as compared with $791.588 million over the corresponding last year. Figures showed that the decline in import bill of oil was due to decrease in import of petroleum products over the last year. The average per month growth in import bill during 2006-07 was around nine percent. The decline in import bill of petroleum started since the beginning of current financial year and analysts said if the trend continues for the next few months, it is expected that current years trade deficit will remain under control.

The second major component of the import bill in value was the machinery group and its imports increased by 10.33 percent in first two months of current financial year to $1.139 billion as compared to $1.032 billion over the same period last year.

The increase in import bill of machinery was mainly driven by an increase of 15.95 percent in power generating machinery to $135.671 million in the period under review over $117.011 million in the corresponding period of last year, construction machinery was up by 28.74 percent to $37.655 million over $29.249 million, electrical machinery and apparatus were up 28.95 percent to $122.336 million as against $94.869 million, agriculture machinery jumped 85.46 percent to $26.235 million as compared with $14.146. 

In the telecom sector, imports were up 16.65 percent to $398.596 million over $341.699 million. The import of mobile phones decreased 7.61 percent. However, import of other apparatuses increased 33.39 percent during the first two months of the current fiscal over the same months of last year.

The textile machinery declined 33.51 percent and office machinery 28.52 percent during the months under review as against the same months of last year. Import bill of food group registered negative growth of 5.48 percent to $472.134 million in July-August of this year as compared with $499.515 million in the corresponding period of last year.

Transport groups import bill was also down 12.59 percent to $251.857 million in the months under review over $288.120 million in the same months of last year. Textile groups import bill was up by 35.40 percent in the said period.

The imports of agriculture and other chemical group were up 25.80 percent during the period and metal groups import was up 16.46 percent in the said period of current financial year over the same period of last year.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Swelling trade deficit, still FDI inflows threaten forex reserves build-up​*
KARACHI: Foreign exchange reserves of the country continue to swell thanks to the massive inflows of dollars from abroad in remittances and foreign direct investment (FDI). 

According to the figures released by the State Bank of Pakistan (SBP) total liquid foreign reserves held by the country rose by $69 million from September 8 to September 15. The countrys reserves surged to $16,090.7 million on September 15 from $16,021.3 million on September 8. 

Net foreign reserves held by banks other than SBP rose from $2,248.4 million to $2,292.6 million. Foreign reserves held by the SBP rose from $13,772.9 million to $13,798.1 million. 

However, this trend might not continue for long now because the country has suffered a trade deficit of $2.359 billion in the first two months of the current fiscal only and in the absence of any major foreign investment it would become difficult for the central bank to keep the reserves from declining in the coming months. 

Although remittances sent home by overseas Pakistanis surged by 21 percent to over $900 million in these two months, the inflow of FDI has not been substantial. The country received $150 million as FDI in July, which was down by 14.8 percent from $176 million received last year. This level of investment would be far from sufficient for the country. 

The central bank has been depending upon remittances and FDI to bridge the countrys trade deficit. Economists say that it is unwise on the part of the central bank to rely on remittances and FDI to cover trade deficits. Both remittances and FDI are something that the government cannot control. Due to their volatility, if their inflow stops or declines due to one reason or the other, the government would be helpless. Citing political and security concerns, economists have already predicted that the inflow of foreign investment is going decline this year. Credit rating of the country has been lowered of late, which is going to affect the investment plans of the foreign companies. Many foreign companies have put on hold their investment plans due to highly uncertain political situation of the country. 

If the country continues to suffer large trade deficits every month and there are little inflows of dollars in the form of foreign investment  both very likely  the central bank would have to release dollars in the market from its reserves to keep the rupee from declining. If the government decides to keep the reserves at the present level, it would have to let the rupee slide against the dollar. In any case the job of the central bank is going to be tougher than it has been.

Daily Times - Leading News Resource of Pakistan


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## Neo

*NFLs vision of Rs 50bn company by 2020​*
KARACHI: The National Foods Limited (NFL) are on course of fulfilling the vision of being a Rs 50 billion food company by the year 2020 due to efforts to unearth customers insights and develop products, Chief Executive of NFL, Abrar Hasan said in a statement on Thursday.

Speaking at the 22nd annual sales conference, he said NFL believes in its workforce, as the catalyst for growth and sales growth is the result of great teamwork.

He said NFL is consistently improving its performance due to the research and development, both for new products and for improved packaging that ensures freshness. The company has highly qualified scientists and food technologists on board, which are an integral part of the teamwork that has ensured the companys success. 

The theme of the conference was broadly built around NFLs Vision 2020 and specifically its four components: re-imagine, strategize, evaluate and lead. 

The conference also highlighted issues such as the future direction that sales of the companys products will take in Pakistan and new sales targets to be achieved in the coming year.

NFL has a portfolio of products spanning over 11 categories, 110 variants and 165 pack sizes for national and international markets.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan's forex reserves reach record $16.091 bln​*
KARACHI, Sept 21 - Pakistan's foreign exchange reserves rose by $70 million to a record $16.091 billion in the week ended on Sept 8, the central bank said on Friday.

Reserves held by the State Bank of Pakistan rose to $13.798 billion from $13.773 billion a week earlier, while those held by commercial banks jumped to $2.293 billion from $2.248 billion, a central bank spokesman said.

Pakistan's foreign exchange reserves have grown steadily over the past few months because of rising foreign investment inflows and higher remittances from Pakistanis abroad.

Pakistan's forex reserves reach record &#36;16.091 bln - Yahoo! Malaysia News


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## Neo

*Risk of Pakistan default may double, analyst says​*
By Patricia Kuo Bloomberg NewsPublished: September 20, 2007

HONG KONG: Growing opposition to President Pervez Musharraf of Pakistan may double the risk of the country defaulting on its bonds, according to Lehman Brothers.

Credit-default swaps on Pakistan debt may rise to 850 basis points, said Yang-Myung Hong, a credit analyst in Hong Kong with Lehman. The contracts closed Tuesday at 425 basis points, up from a record low of 146 basis points on Feb. 22, according to CMA DataVision in London.

Hong recommends buying protection against a default on the country's $2.7 billion of dollar-denominated bonds as Musharraf seeks re-election next month. Two former prime ministers, Nawaz Sharif and Benazir Bhutto, are rallying opposition to Musharraf, whose policies have helped the $146 billion economy of Pakistan expand at an average of 7.5 percent annual rate over the past four years.

"There is high probability the road to a peaceful resolution would be bumpy," Hong said.

Pakistan bonds may become as risky as those of Ecuador under the most "pessimistic scenario," Hong said. The cost to protect Ecuador debt from default reached 850 basis points on Sept. 12, the highest of any government, CMA prices show. President Rafael Correa said during his campaign last year that Ecuador might not make interest payments on its debt.

Today in Marketplace by Bloomberg

Nestlé appoints insider as chief executive

Sainsbury eases opposition to Qatar takeover bid

Metro chief to step down early

Credit-default swaps are financial instruments based on bonds or loans that are used to speculate on a borrower's ability to repay debt. Higher prices suggest that investor confidence is deteriorating. Each basis point on a contract protecting $10 million of debt from default for five years adds $1,000 to the annual cost. A basis point is one-hundredth of a percentage point.

Credit-default swaps on Pakistan's bonds may fall to 280 to 300 basis points if all parties reach a resolution, Hong said.

The cost of contracts linked to Pakistan's bonds has risen since Musharraf ordered an army raid on the Red Mosque in Islamabad on July 10, ending a challenge by militants who wanted to impose Islamic rule in the capital.

Standard & Poor's cut its outlook for Pakistan's credit rating to "stable" from "positive" on the same day on concern that security was deteriorating. S&P has a B+ foreign-currency rating on the debt, four levels below investment grade. Ecuador is at CCC, or four steps lower. Debt rated below BBB- by S&P is considered high-yield, high-risk, or junk.

"Pakistan's economic fundamentals are still strong enough to deal with this kind of political uncertainty for a while," said Agost Benard, a credit analyst at S&P in Singapore. "But if it doesn't get resolved soon, it will affect investor confidence. It could reach a stage where it could affect the economic fundamentals and the rating."

S&P is unlikely to change the rating for now, he said.

Demonstrations by Islamic parties against the president have escalated since the raid. Sharif returned to the country on Sept. 10 after seven years in exile in Saudi Arabia. Musharraf, who ousted Sharif in 1999 in a military coup, had him deported again.

Bhutto said last week that she intended to return on Oct. 18 to lead her party in elections, after living in self-imposed exile in Dubai and London since 1998. Bhutto heads the Pakistan Peoples Party, the country's largest opposition group, which rejected Musharraf's attempt at a power-sharing agreement.

Musharraf pledged to resign as army chief if he won a new term as president, one of his lawyers said Tuesday. Bhutto's party rejected the move and said it would be unconstitutional for Musharraf to run in the presidential election while he was still army chief.

The Pakistani leader is opposed by both pro-democracy advocates who want him to end control of the army and govern more freely, and Islamic groups sympathetic to Al Qaeda who resist his cooperation with the United States in battling terrorism.

Pakistan needs overseas investments to sustain its economy, which the government forecast could accelerate to 7.2 percent in the year that started July 1 from 7 percent in the previous year. Foreign direct investment increased to $5.12 billion in the past fiscal year from $3.5 billion the previous year, according to government data.

Risk of Pakistan default may double, analyst says - International Herald Tribune


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## Bushroda

Neo said:


> Nice article mate, thanks for sharing!



Thnx, anytime bro


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## Neo

*July-August foreign investment down 16 percent ​*
KARACHI (September 22 2007): Foreign investment, after a long gap, have declined by 16 percent during the first two months of the current fiscal mainly due to portfolio inflows and uncertain political situation in the country for the last few months.

The State Bank of Pakistan on Friday issued latest statistics of foreign investment, including foreign direct investment (FDI) and portfolio investment, showing overall decline of some 60.4 million dollars during the first two months of the current fiscal year.

Overall foreign investment stood at 313.9 million dollars during July-August of the current fiscal as compared to 374.3 million dollars during the first two months of the last fiscal years.

"Major reasons behind this dip is decline in the portfolio inflows, as the foreign investors were reluctant to invest in the equity market due to political uncertainty and negative reports regarding the country's stock markets," economic experts said.

They believed that after the presidential elections, foreign investors might again invest in Pakistan. "Despite the political crisis, the overall inflows of some 313.6 million dollars are a positive sign and it means that still foreigners are interested to invest in Pakistan," they added.

They made it clear that during the current fiscal, overall investment would be lower than the investment of last fiscal year when the country received some extraordinary funding by the foreign investors, besides some government level investments.

Statistics show that FDI during July-August has increased by 22 percent, but the declining portfolio investment has decreased the overall investment by 16.10 percent. During the first two months, the FDI has gone up by 22.6 percent to 460.3 million dollars as compared to 375.5 million dollars during the same period of the last fiscal, while portfolio investment is already in negative position of 146.3 million dollars.

Besides, privatisation proceeds show a decline of 7.7 percent to 375.9 million dollars during July-August of 2008 fiscal year as previously it stood at 407.3 million dollars, depicting a dip of 31.4 million dollars during the first two months of current fiscal year.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Airblue carries 10,000 passengers on Manchester route ​*
KARACHI (September 22 2007): Pakistan's fastest growing airline, Airblue on Thursday recognised the 10,000th passenger on its Islamabad-Manchester route with a simple ceremony at Islamabad Airport.

Airblue started the first long-haul operation ever by a private Pakistani airline to Europe with four weekly flights from Islamabad to Manchester on June 1 this year and an additional flight was added in late June to increase capacity on the route to five weekly flights. The convenient scheduled timings from both Islamabad and Manchester, and personalised service has enabled Airblue to capture substantial market share on the route; and in a short span of 14 weeks it has carried more than 10,000 passengers on Islamabad to Manchester sector.

The 10,000th passenger was Sara Latif, a resident of Sialkot, who was leaving to pursue higher studies in Finance at Birmingham University. The surprised lady was presented with two Return Business Class Manchester-Islamabad tickets and a model of the Airblue Airbus A321 aircraft by Airblue Islamabad District Manager Saeed Hassan.

Airblue officials said here on Friday that the airline planned extensive growth in its operations with the purchase of 14 new-generation aircraft providing additional frequencies to existing destinations and opening of new routes in the Domestic, Middle Eastern, and European markets.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*6.53 per cent fall in oil import bill​*
ISLAMABAD, Sept 21: The countrys import bill of oil declined by 6.53 per cent to $1.344 billion during July-August period of fiscal year 2007-08 as against $1.438 billion over the same months last year.

The negative growth in import of oil bill has been recorded for the last couple of months in the wake of substantial decrease in the import bill of products manufactured from oil during the period under review over the last year.

However, the import bill of crude was up by 6.53 per cent to $689.09 million in July-Aug 2007 as against $646.835 million in the same months last year. The recent surge in oil prices in the international market increased the oil import bill which would further escalate during the upcoming months.

The oil prices surged to $84 per barrel recently, which is anticipated to increase further as there was disruption in supply of oil in international market.

Official figures released here on Friday by the Federal Bureau of Statistics (FBS) indicated that import of products manufactured from oil declined by 17.20 per cent to $655.467 million during the first two months of the current fiscal year as against $791.588 million over the same period last year.

It indicates that the share of oil is still on the higher side, which like last year, would be the prime mover of trade deficit this year because of greater consumption.

The second biggest component of the import bill in value was machinery group.

However, its import increased by 10.33 per cent in July-Aug 2007-08 to $1.139 million as against $1.032 billion over the same months last year.

The import bill of machinery was mainly pushed by an increase of 15.95 per cent in power generating machinery, construction machinery 28.74 pc, electrical machinery 28.95pc and agriculture machinery 85.46 pc.

Statistics showed that more depressing aspect of the current trend in economy was the steady decline in import of textile machinery which declined by more than 33.51 per cent during the July-August period of the current fiscal year over last year. It means textile tycoons have stopped importing machinery.

Food items import dipped by 5.48 per cent to $472.134 million as against $499.515 million in the corresponding months of the last year.

The import of milk products decreased by 1.36 per cent, wheat unmilled 40.84pc, tea 23.22pc, sugar 97.92pc and pulses 44.17pc during the period under review.

The import of palm oil increased by 90.06pc, soyabean oil 1,011pc, spices 2.1pc, dry fruits 330.13pc during the July-August period of the current fiscal year over last year.

6.53 per cent fall in oil import bill -DAWN - Business; September 22, 2007


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## Neo

*Reconstruction cost in quake-hit areas up by $500m: ERRA​*
* Authority deputy chief says 210,000 houses built so far

By Ijaz Kakakhel

ISLA MABAD: The reconstruction cost of the earthquake-affected areas has jumped from $4.483 billion to around $5 billion showing a net increase of about $500 million, Earthquake Reconstruction and Rehabilitation Authority Deputy Chairman Lt Gen Nadeem Ahmed said on Friday.

Addressing a press conference at the Asian Development Bank here on Friday, Nadeem linked this increase in the reconstruction cost to the surge in prices of construction materials, and some other factors. About $2.3 billion has been spent so far on reconstruction works, he added.

Construction of 210,000 houses: Gen Nadeem said that more than 210,000 houses had been constructed in line with international standards. These houses can sustain any disaster in the future, he added. The enrolment of students, particularly female students, has increased substantially at educational institutions, he said. He said more than 788 healthcare schemes had been completed. He said 98 percent of the affected people had received Rs 78,000 for reconstruction purposes. The whole construction process will be completed in five years, he said.

ADB Country Director Peter L Fedon said there was a construction boom going on in the quake-hit areas. The ADB has been assisting the ERRA in its reconstruction process and extended $400 million for the purpose, Fedon said, and desired to complete this process as early as possible. Fedon said the ADB had established its sub-office in Muzaffarabad to assist the ERRA in carrying out rehabilitation works.

European Union Ambassador Jan De Kok said the EU had pledged a 100 million Euro aid for the quake-hit areas. Belgium Ambassador Michel Goffin said Pakistan had introduced a new thing: that is to do better than before the October 8, 2005, earthquake. The structure of new schools is better than what it was before the 2005 earthquake, Goffin said, and added that enrollment of students at some schools has increased from 30 to 350 due to better facilities there.

Daily Times - Leading News Resource of Pakistan


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## Neo

*SPI inflation hits double digitBy Israr Khan ​* 
Sunday, September 23, 2007

ISLAMABAD: The weekly SPI-based inflation hit double digit at 10.74 per cent for the week ending September 20, 2007 over the corresponding week of the last fiscal, the Federal Bureau of Statistics (FBS) reported Saturday.

The mother of all economic and social evils (inflation) is not only eating away the purchasing power of the fixed income (salaried class), but also adding to the miseries of millions of people living below the poverty line.

Compared with the previous weeks Sensitive Price Indicator (SPI) of 53 daily-use items it showed a sizeable increase. It is worth mentioning that as the holy month of Ramazan came closer and closer the prices of kitchen items went higher and higher. 

The prices started increasing on August 23 when hoarders started stocking up ahead of Ramazan and created artificial supply constraints in the market that resulted in high prices that are still increasing. 

On the other hand, the government seemed helpless in prosecuting these hoarders responsible for skyrocketing prices of essential kitchen items.

After August 23, SPI turned its beak up and each week it jumped up sizably. On August 30 it stood at 8.13 per cent on September 6 it was 8.38 per cent and just two days before the holy month of Ramazan on September 13 SPI jumped to 10.02 per cent and now during the week under review SPI stood at 10.74 per cent.

The FBS weekly SPI-based inflation bulletin says that year-on-year rise in the prices of some necessities and kitchen items were exorbitant. These commodities were onion, wheat and wheat flour, liquefied petroleum gas, rice, ghee, cooking oil and milk.

The bulletin on SPI, based on data collected from amongst 53 items from 17 centres, showed that 14 items registered increase, and 13 items showed decline, while prices of 26 items remained unchanged.

However, further analysis of the data revealed that on a year-on-year basis nine items are dearer by double digits. These include; rice basmati 56 per cent, rice irri-6 46 per cent, vegetable ghee loose 38 per cent, mustard oil 37 per cent, egg farm 31 per cent, wheat flour 26 per cent, wheat 25 per cent, curd 13 per cent and plain bread prices increased by 12 per cent.

Among these items, in a short span of just one week the prices of wheat flour increased by 5.83 per cent, wheat 5.3 per cent, egg farm 5.27 per cent, L.P.G (11 kg cylinder) 4.68 per cent, bananas 2.87 per cent, mustard oil 1.69 per cent, plain bread 1.6 per cent, vegetable ghee loose 1.21 per cent and rice basmati prices up by 0.84 per cent over previous week. 

The figures further showed that though prices of 26 items posted no change during the week, yet compared to the corresponding week of last year, several items are dearer i.e. powder milk, vegetable ghee (tin) and cooking oil (tin) prices increased by 30 per cent over corresponding week of the last fiscal.

SPI inflation hits double digitBy Israr Khan


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## Neo

*Grinding of wheat much higher than consumption​*
KARACHI, Sept 22: Has anyone in the government or the business ever thought why are there about 1,000 flour mills in Pakistan with a total grinding capacity that is about five times the requirement of the country?

Who are these people who invested in flour mills even when they knew that the sector is over-saturated as far as Pakistan market for wheat flour is concerned?

It is an issue that begs for an explanation from the military president, a banker prime minister and from the oversized federal cabinet with 70 members, mostly drawn from business, landed gentry and second generation of families with proven loyalty to military governments in Pakistan.

Needless to say that many owners of the flour mills enjoy close links with businessmen-politicians in the federal and provincial cabinets and in the federal and provincial legislatures.

There are many retired military servicemen having stakes in flour mills.

Obviously, all these gentlemen with stakes in flour mills and wheat trade would not like their investment to go waste.

Efforts were made by this correspondent to seek explanation from the federal ministers of food and agriculture and industries and production.

Repeated calls were made to Mr Hayat Bosan and Mr Jehangir Tareen that failed to evoke any response from them in last three or four days.

Chairman, All-Pakistan Flour Mills Association Sheikh Mohammad Shabbir responded from Islamabad to inform that there were 950 flour mills in Pakistan with a total grinding capacity that is four times the wheat flour requirement of the country.

He ruled out cartelisation of flour mills in the country for creating shortages and pushing up prices.

Absolutely impossible, he made it clear while responding to an observation that quite a few flour mills have joined to form a cartel to regulate supply and push up prices of wheat and wheat flour in the market.

The production capacity is much in excess of demand and almost all flour mills operate under their capacities out of compulsion, he said.

But there was no plausible explanation as to how all these flour mills make their business operations viable by operating only on 33 to 50 per cent of the utilisation capacity.

Quite a many of these about 1,000 or 950 flour mills are closed and almost everyone of these flour mills operates on one to one and half shift basis. It means that every flour mill is operating on 33 to 50 per cent capacity utilisation basis and is yet in the business. How?

An average size flour mill can be set up at an investment of Rs15 to Rs20 million, Murtaza Jatoi, the adviser on Food and Agriculture to Sindh chief minister explained the proliferation phenomenon of flour mills in the country and stressed that there was hardly need of any bank credit as there were many people with such amount of cash with them.

But still the question is why should people put even this small amount in a business that is already over-saturated in terms of investment.

My family does not have any flour mills, therefore, I cannot offer any explanation why people invest in setting up a flour mill.

There are 80 flour mills in Karachi with a total grinding capacity that is three times of the actual wheat flour requirement. In Mumbai, the Indian mega city, with population almost equal to Karachi if not more, has only 22 flour mills. As compared to Karachi, Mumbai is closer to wheat growing areas of Maharashtra.

Like Karachi, Pakistans capital Islamabad is also located far away from wheat growing areas and its population is much less. Yet there are about 20 flour mills.

One explanation offered by a market analyst is that flour millers and wheat traders do not operate for Pakistan market only.

For years together, Afghanistan gets wheat and wheat flour from Pakistan. Pakistani wheat is said to be reaching Moscow and many countries of Central Asia.

In the current season, when there is a global wheat shortage and flour price is said to have touched Rs22 to Rs25 a kg in some parts of India, as much as two million tons of wheat and wheat flour is said to have been transported across the border.

Only the other day, Punjab Chief Minister Chaudhry Pervez Elahi said in a talk show that Pakistani wheat and wheat flour bags were being seen in Afghanistan and parts of Central Asia.

Way back in 1997, the Punjab food minister after returning home from Russia had disclosed that he saw for himself wheat flour bags of Pakistani mills in Moscow stores.

Millers jokingly call Afghanistan the fifth province of Pakistan for which not only wheat and wheat flour but cooking oil, ghee and importable items are indented.

A premature decision to export wheat by the government and a bumper wheat crop set the ideal conditions for speculators and more enterprising millers to go for quick money spinning.

Even a suspension of export in May could not stop outflow of wheat and wheat flour.

An outflow of wheat and wheat flour pushed up prices within domestic market.

It has all been milk and honey for speculators and millers this season so far, the market analyst said.

What keeps the millers in business despite partial capacity utilisation is the subsidy element that gives good margin in trade.

The Punjab government is giving Rs16 billion subsidy while Sindh is likely to offer anywhere up to Rs6 to Rs7 billion on wheat trading.

The NWFP and Balochistan governments also offer good amount of subsidy on wheat trade.

The Sindh chief minister announced on Friday Rs250 million additional subsidy on wheat and wheat flour trade during Ramazan.

Murtaza Jatoi said this subsidy would be given to millers at the rate of Rs125 on 100 kg bag. The millers will be asked to fix ex-mill price at Rs13.50 during Ramazan.

Millers have been asked to open at least one fair price shop outside their mills. In Karachi, there will be more than 70 such fair price shops.

But these remain cosmetic measures for Ramazan. For round the year, as a market watcher said, the consumers are at the mercy of traders, millers and food bureaucracy.

The flour mills remain a thriving business for many political families and retired armed forces personnel because the government provides a good cushion for exploring market far and wide.

Business circles now openly say that there is a strong caucus of about a dozen persons. This caucus has a few stock brokers, a few brokers and grain merchants who exploit the situation to their advantage and make quick money at the cost of 160 million helpless consumers.

Grinding of wheat much higher than consumption -DAWN - Business; September 23, 2007


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## Neo

*Industry in a fix over fall in textile exports​*
KARACHI, Sept 22: The leaders of textile industry seem to be in a fix after noticing a sharp drop in export of textile products and a fall in import of textile machinery during July and August this year and to quote a prominent textile tycoon we are now thinking of an exit strategy rather than revival of industry.

While the overall export of textiles is down by 5.27 per cent in first two months of the current fiscal year, the yarn export is short by 6.75pc than last year.

The export of cotton cloth has fallen by 36.33 per cent in quantity terms and 17.93 per vent value-wise. Bedwear export too is down by 13.39 per cent.

Textile machinery import in August was worth $32.32 million. Import of textile machinery slided down to $471.62 million last fiscal year as against $910.81 million a year earlier, indicating that the honey mooning for textile investors is over.

It is coming at a time when Indians are making huge investments in textile.

Out of about a million bales arrival at ginneries, more than 6,000 bales have been exported.

The All-Pakistan Textiles Association wants suspension of export till a final assessment of cotton crop is made. Would cotton be imported later at higher prices after exporting it at lower price as was the case in wheat, the APTA asked a question.

It fears that government policies will further expand trade deficit.

Industry in a fix over fall in textile exports -DAWN - Business; September 23, 2007


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## Neo

*Gwadar Free Zone: Government to provide land for export oriented units​*
ISLAMABAD: As a measure to promote export-led industrialisation the government will provide investors with land on 99-year lease for setting up of export oriented industries in Gwadar Free Zone, a government official informed Daily times on Saturday. 

The free zone area will be measuring 923 hectares and shall be acquired by Gwadar Port Authority (GPA) with a clear title and with full authority to lease the same to the Free Zone Company for establishment of free zone, the official added. 

Availability of prime land on lease would help local as well as foreign investors to set up their export oriented units and would also help them reduce their cost of business. The government has already agreed in principle to allow import of plant, machinery and equipments duty-free for the units to be set up in the export processing zones or special economic zones, the official said. 

The free zone area would be customs free and protected by a security fence, however, all imports taken out of the free zone are shall be subjected to all applicable duties and charges. The free zone area would be used exclusively for port related business and will supplement the port related business. A 20-year tax holiday has been announced for the businesses to the established in the free zone area. 

The concession holder has already constituted a free zone company to manage free zone business. Currently the concession holder, Port of Singapore Authority, holds 9 percent of the paid up capital in the Free Zone Company but would have the right to increase its shareholding in this company or disinvest its entire shareholding. The Free Zone Company would be controlled by the AKD Group with 91 percent shares. 

The Free Zone Company shall be given leasehold rights in respect of the free zone area for a period of 40 years. The investors in the free zone area shall be given sub-leases for a period of 99 years from the free zone effective date. All sub-leases would be signed by the Free Zone Company, GPA and the sub-lessee. 

The government has fixed targets for the GPA to make land available for free zone and hand it over to the company within specified deadlines. GPA has been directed to make available approximately 261 hectares of the land presently in the ownership of the Pakistan Navy and Coast Guards on the date of commercial operation. 

The remaining 662 hectares are to be made available by December 31, 2007 with a grace period until 30th June 2008. If the GPA fails to acquire sufficient land under the said two options, it would be required to acquire remaining land within the port area to the reasonable satisfaction of the Free Zone Company. 

The Free Zone Company would not be required to pay land lease fees to GPA but will be allowed to charge sub-lease fee from free zone users at fair market value. Limited residential development, housing in the free zone area would be allowed for use by the staff employed in the port related business. 

The Free Zone Company would be entitled to earn income from leases, rental charges, development charges, maintenance charges and utility charges. However, the Free Zone Company would be required to pay 15 percent of its gross revenue from the free zone area.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Stress on R&D for development of chemical sector*​
By Ijaz Kakakhel 

ISLAMABAD: In continuation of the process of development of Chemical Vision 2020, the stakeholders in a meeting emphasised on more research and development (R&D) and pointed the need for Higher Education Commissions collaboration in this regard. 

Officials in the ministry of industry, production and special initiatives told Daily Times here on Saturday that second meeting about the Chemical Vision 2020 was held in Karachi a few days ago and the participants raised the issue of innovation, supply chain management and incorporation of information technology in the development of chemical sector. 

During the meeting, universities and educational institutions offered their full and continuous support to establish linkages and collaboration with the chemical industry for which a need of a focused group was highlighted which could bridge the gaps between the industry and universities. The officials said the participants were unanimous in their views on the low yield, less efficient and lack of any big-ticket items in the existing portfolio of chemical sector. The efficiency constraints are due to old, under-scale and inefficient plants and processes coupled with low level of human resources available in the industry. Officials said that the meeting was informed that growing challenges confronting the chemical sector are health, safety, environment and intellectual property rights. Alongside this, lack of any standards and homologation with internationally benchmarked quality and standards, there was a need to work in this area without which the future of chemical sector will remain doubtful.

Participants were of the view that despite abundant local reserves of phosphate rock and other salt and minerals, sufficient beneficiation could not take place. One reason of relatively low purity level of such reserves particularly rock phosphate was cited, otherwise there was general agreement that a larger potential however, remains untapped so far.

Daily Times - Leading News Resource of Pakistan


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## Neo

*CNG sector attracts investment of Rs 70bn *​
ISLAMABAD: The Compressed Natural Gas (CNG) sector of Pakistan has attracted over Rs 70 billion investments during the last few years as a result of liberal and encouraging policies of the government. 

According to official sources in the Ministry of Petroleum and Natural Resources, Pakistan now stands the second largest CNG user country in the world.

The government would encourage private sector to set up CNG equipment manufacturing plants in the country in order to save heavy foreign exchange on the import of CNG equipment.

Presently, some 1,414 CNG stations are operating in the country in 85 cities and towns. 

By March 2007, about one 1.35 million vehicles were converted to CNG as compared to on million vehicles during the same period last year, showing an increase of 35 percent. On average 29,167 vehicles are being converted to CNG every month. 

Meanwhile, as a result of introducing investor friendly policies and deregulation of the petroleum sector by the government, the oil and gas exploration in the onshore and offshore areas attracted an unprecedented direct and indirect investment in the country. 

The Rekodiq Copper Project being undertaken by the Chilean Antofagasta Company with investment of US $ 6 billion in Chagai District of Balochistan Province would place Pakistan on the World Copper map shortly. app

Daily Times - Leading News Resource of Pakistan


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## Neo

*Rs 8b sewerage plan to be in place by 2011​*
* Project to take four years 
* All sewage to be treated before entering the sea 
* Treated water to be used for greenery



KARACHI: City Nazim Mustafa Kamal has said that the Greater Karachi Sewerage Plan (S-III) that has been approved by the Executive Committee of the National Economic Council (ECNEC) will cost Rs 7.982 billion, which will be shared by the federal and provincial governments.

Kamal said that the project including its planning, design and construction, was scheduled to be complete within the next four years and tenders for appointment of a consultant will be finalized on October 5. Local and international firms have been asked to participate in the process. 

He was addressing a press conference held Saturday at the Karachi Water and Sewerage Boards (KWSB) head office on Shahrah-e-Faisal. The conference was attended by MD KWSB Ghulam Arif, Additional Vice Chairman Imamuddin Shahzad and KWSB officials.

The S-III will protect and improve the citys environmental condition because after it is complete, the ecological balance of marine life and the cleaning of beaches and the sea front of Karachi will be maintained as every single drop of sewerage water will be treated before it goes into the sea, he said. Through this project, a new treatment plant (TP-4) will be constructed in Korangi near the sea to treat 200 million gallons daily (mgd) by Malir Naddi and 350 acres of land have been allocated for this. Also, the capacity of the three existing treatment plants (TP1, TP2 and TP3) at Mehmoodabad, Jameela Street in Saddar and Lyari will be increased to 400 mgd rather than the present 150 mgd, where only 90 mgd water is being treated of the 435 mgd of sewerage that is generated in Karachi. This means that the rest of 345 mgd was polluting the sea at different sites through seven major drains, Malir Naddi, Lyari Naddi, Pitcher Nullah, Kalri Nullah, Railway Colony Nullah, Frere Nullah and Nehr-e-Khayyam.

The nazim said that the project will install a comprehensive network of sewerage to construct trunk sewer, interceptors and interconnections on these seven major drains and link them all into four treatment plants. The treated water will be utilized for greenery and save the tremendous amount of potable water being used for parks, footpaths and other greenery, he said.

Daily Times - Leading News Resource of Pakistan


----------



## Neo

*Pakistan to pursue tight fiscal, monetary policy approach​*
22 September 2007 

ISLAMABAD  The International Monetary Fund (IMF) and the government have agreed to pursue a tight fiscal and monetary policy approach for Pakistan to avoid contagion effect of the volatility in the international bond and equity markets.

Dr Ashfaque Hasan Khan, spokesman for the finance ministry, said yesterday that the government side agreed that current account deficit that stood at 4.9 per cent in 2006-07 due to slow export growth would be reduced and pointed out that new avenues of exports were emerging.

For example, he said the IMF mission was told that cement exports this year were expected to be about 3.2 million tonnes particularly to India, South Africa and Libya, yielding an additional $360 million. Pakistan's cement industry's capacity has reached 37 million tonnes against domestic demand of 24 million tonne, leaving a surplus capacity of 10 million tonnes.

The IMF has asked Pakistan to adopt prudent macroeconomic policies during the current financial year to lower external current account deficit and associated vulnerabilities.

The IMF staff mission that stayed here for over a week advised the government to introduce an appropriate policy mix between monetary and fiscal policies to bring down the external current deficit.

The staff mission would submit its concluding report to the IMF board of directors next month for consideration by the annual board meetings of the IMF and the World Bank in Washington on October 20-21.

The mission said the prospects for sustained high growth in 2007/08 and over the medium term remain favourable, as macroeconomic stability and market-oriented reforms further take hold. The mission welcomed monetary policy measures announced by State Bank of Pakistan, including the central bank's intentions to reduce its role in financing the government and providing export finance.

The fund asked authorities to have a flexible approach in determining interest rates to help achieve the inflation control objective and reduce import growth. The mission called for reducing the budget deficit to four per cent of GDP in 2007-08.

The fund called for further fiscal consolidation, starting in 2007-08 to significantly reducing external current deficit while lessening pressure on real interest rates.

The fund said the authorities agreed that a substantial revenue mobilisation effort was necessary over the medium term to reduce fiscal deficit while allowing for additional spending on infrastructure development and poverty alleviation.

The mission noted that despite lower import growth, the external current account deficit had increased to 4.9 per cent of GDP in 2006-07, owing to slower export growth. It said the Pakistan economy continued to perform well in 2006-07 with real GDP growth increasing to seven per cent. Average inflation remained near eight per cent, but the 12-month rate has declined in the recent months.

Khaleej Times Online - Pakistan to pursue tight fiscal, monetary policy approach


----------



## bhangra12345

seems to have been a poor quarter for Pakistan,
inflation high , sensitive price index at over 10&#37;, thats a whopping high- so high infact can threaten governments in some countries.
textile exports falling (major export item for Pakistan right?), reduction in growth rate is another thing, but falling?
oil bill decreases implies buoyancy in economy less. 
Increase of risk rating for Pakistan implies Pakistani companies will have difficulty raising foreign loans at cheap rates, infact it seems even govt bonds have taken a hit.
FDI increases by 22% but FII decreases by huge factor and is infact negative, i.e. foreign funds are exiting from Pakistan, shows that international business confidence is too low.
Have to see the overall growth rate to get the complete picture.


----------



## bhangra12345

Mysterious wheat surplus -DAWN - Business; September 24, 2007


> One day the dream economic team had to face the consequences of its own actions. The current wheat crisis is a case of &#8220;as you sow, so shall you reap.&#8221; *It used to be said before the base was revised that a million ton of additional wheat contributes half a percentage point to GDP growth.*
> 
> Of course a loss of wheat output of equal quantity would knock off the same percentage point of growth. *After the change of base, the weight of wheat is less than before, but is still significant* for a regime whose religion is growth. Any come down in terms of growth weakens its only legitimising argument.
> 
> So growth must not only happen, it has to be high enough. *In October last year, the data of large scale manufacturing for the first quarter of FY 2006-07 made it very clear that the high-pitched target of 13 per cent for the whole year would be impossible to achieve.*
> 
> The manufacturing of last year missed its target.
> 
> *No data was issued for the following two quarters, neither monthly nor quarterly, as is the practice. It had to be fixed by creative national accountants. *
> time when the repeated missing of targets was not publicized
> If large scale manufacturing fails, a respectable overall growth is still possible if agriculture performs exceptionally well.
> because manufacturing failed, agriculture has been artificially propped up
> Data for kharif crops &#8211; rice, sugar cane and cotton &#8211; becomes available in good time for the fiscal year. By March-April, the state of the news was not very good for cotton and rice. Sugar cane was the only crop worth talking about.
> 
> All these data are presented by their source agencies at the annual meeting of the National Accounts Committee headed by Secretary, Statistics. In the light of information presented, this committee is competent to decide the growth rate that is published in the Economic Survey. The importance of the chair of this committee for a growth-crazy regime cannot be underestimated. It should come as no surprise that in the past seven years, all secretaries of statistics were either those nearing retirement and hoping to get extension or additional secretaries in-charge looking for promotion. Some have had the rare distinction of double extension even as additional secretary in-charge.
> The above paragraph simply says nepotism/"bureacrat licking politician" was rampant
> 
> This committee used to meet in the end of April or latest by early May. The practice was to have provisional estimates based for the year based on nine months data. All this has changed and this meeting is pushed as late in May as is expedient.
> again an indication of something is wrong
> The effort is to include a good estimate of wheat, a big ticket item. Being a rabi crop, its output can only be judged about this time. The PR advice is that a bumper crop not announced with the budget is like it never happened.
> 
> This time the pressure to perform was much greater. In an election year, a bumper wheat crop and the achievement of the trade-mark growth rate of GDP of seven per cent would be the best argument for policy (read political) continuity. *There was no way to achieve this GDP target without a bumper wheat crop.* The target fixed for wheat was not based on an expectation of bumper crop. It was 22.5 million tons and was ambitious any way when compared with the actual production of 21.3 million tons and 21.6 million tons in the previous two years.
> *
> The provinces, whose job it is to provide crop estimates, are stated to have reported a total of 22 million tons, which was higher than the previous two years but less than the target by half a million ton. *This would have undermined the targeted GDP growth of seven per cent and, therefore, utterly unacceptable. *Some midnight oil was burnt and, lo and behold, the target of 22.5 million tons was not only achieved but surpassed by as much as a million ton.*
> abraca-dabra anyone?
> With 23.5 million tons of wheat, the GDP growth rate of seven per cent was credibly achieved. The announcement of the outcome of the deliberations of the lowly National Accounts Committee came, for the first time in the history of its 86 meetings, directly from the Prime Minister&#8217;s Secretariat.
> 
> Even 22 million tons is a comfortable level of output and does not signal a difficult situation to the market despite the extra demand of Ramazan. Prices came under pressure when attempt was made to export a non-existent surplus.
> 
> With an eye on the elections which cost money, the lords of the land asked their ministry, the ministry of agriculture and food, to seek permission for exporting wheat. *With a bumper crop and rising world prices, how could the permission have been refused?*
> Paper crops were shown as surplus and real crop was exported, simple economics says, prices will raise and if they raise to a very high level, the crop has to be imported, often at higher prices- which is what happened in a nut shell.
> The bad experience of exporting wheat at the time of an earlier bumper crop, a real one, was forgotten. The venerable Mr Shafi Niaz, who then was Advisor on Agriculture and a passionate advocate of support prices, was accused by the dream economic team of an economic mentality of shortages in an era of surpluses.
> 
> So the ministry of agriculture lost no time and exported half a million tons. This brought down the actual supply of 22 million tons to 21.5 million tons. With orders for more, prices in domestic market started to rise, not only due to reduced supply but also in sympathy with the rapidly rising world prices. The panic ban on export of wheat and wheat-related products confirmed what the market had already discovered, that there never was a surplus. But the damage had already been done. The decision to import one million ton at prices way above received for the half a million ton exported, only shows how costly it was to jack up GDP growth on the basis of a spurious surplus.
> 
> It is not even amusing to see those having claimed success of first generation reform and want to go on and on to do their second generation reform, speak the language of run-off-the-mill politicians. To warn smugglers and hoarders of actions for which either no machinery exists or it has been weakened in the name of good governance, to talk of price magistrates and subsidies to utility stores, and to rely on bans rather than duties is a retreat that reformers are failing to admit. What to speak of action against private hoarders, the official hoarders &#8211; the provinces holding on to over four million tons &#8211; have ignored the dream team.
> 
> The provinces have the last laugh because the economic team had gone out of the way to encourage credit to private sector to build stocks in competition with the corrupt and inefficient food departments. As for the smuggling, the market has always catered for it, whatever the level of production. To say that two million tons have been smuggled and hoarded is an attempt to cover up the lack of integrity in the estimation of wheat crop.
> 
> Perhaps the dream economic team needs to learn some old generation lessons from a populist politician. Once atta prices go out of hand, there is no end to this atta-push inflation. Everyone who can raise the price of goods or services s(h)e sells, will do so and those who cannot, will protest. With a high incidence of poverty and no social protection worth the name, atta continues to weigh higher in ordinary budgets than the price indices assume.



Pakistan statisticians seem to be learning from the chinese!!! 
The great leap forward of china built on the fake statistics shows how fooling statistics can have horrendous results of having millions dead.
Not good for Pakistan, not at all good.  

When will the politicians(mushy and co in this case) learn that statistics have a way of biting back too hard?


----------



## Neo

bhangra12345 said:


> seems to have been a poor quarter for Pakistan,
> inflation high , sensitive price index at over 10%, thats a whopping high- so high infact can threaten governments in some countries.
> textile exports falling (major export item for Pakistan right?), reduction in growth rate is another thing, but falling?
> oil bill decreases implies buoyancy in economy less.
> Increase of risk rating for Pakistan implies Pakistani companies will have difficulty raising foreign loans at cheap rates, infact it seems even govt bonds have taken a hit.
> FDI increases by 22% but FII decreases by huge factor and is infact negative, i.e. foreign funds are exiting from Pakistan, shows that international business confidence is too low.
> Have to see the overall growth rate to get the complete picture.



You're correct, most parameters are down and didn't meet the target in Q1 and indeed you'll have to look at the overall picture, i.e. full economic report at the end of fiscal year 2007/08.
Q1 is tradionally week in pakistan with 3rd and 4th being the strongest due harvest and high export.

Inflation is high but the 10% referred to in the report is the highest sofar in one week, average inflation fluctuates between 7 and 8 percent.

Growth is realised in FDI and Foreign Remittance and both are expected to go on record breaking high this year.


----------



## Neo

*World Bank set to finance third PPAF programme ​*
ISLAMABAD (September 24 2007): The World Bank has been looking positively towards funding the third programme of Pakistan Poverty Alleviation Fund to help reduce poverty and ensure a positive impact on the lives of the poor and their families.

"Following the successful experience of PPAF-I and the ongoing PPAF-2, the World Bank is interested in doing the third project also," Chief Executive and Managing Director of PPAF, Kamal Hyat told APP.

He said, "A team from the WB will be visiting Pakistan in November this year for the final appraisal of PPAF programmes which would be followed by the launching of third project."

He expressed the hope that funding for the third PPAF programme would be doubled, adding that WB had provided $90 million for first PPAF and $238 million for the second one.

"We expect the WB to provide $576 million for the next project," the PPAF Chief Executive remarked, adding that it was the only institution in South Asia which has been rated AAA.

He said that the next programme would be launched by the end of year 2008 following the completion of second programme, he added. To a question, he said that the cumulative disbursement of the PPAF stands at $533 million adding of which $260 million were disbursed through micro-credit facility.

He said, being the lead apex institution, PPAF has disbursed $1.5 million micro-credit loans with 100 percent recovery adding that it has a borrowers' base of 1.3 million with 55 percent women.

He said that as many as 9 million people have been impacted by credit and 6 million by infrastructure, health and education sectors.

He said PPAF has 91 education and health facilities and 14,000 community physical infrastructure projects all over the country, adding that 205,000 individuals have been trained through 6,300 training and skill development events so far.

He said that the Alleviation Fund would cover 90 percent of the villages in next 5-6 years to develop infrastructure and provide micro-credit facilities to the people.

He said that over the last seven years, PPAF has increased its outreach to 111 districts and 27,500 villages besides forming 66,000 communities in the nook and corner of the country.

Quoting the Gallup Pakistan Survey, he said, the PPAF helped enhance 21 percent in the personal income of the borrowers, 13 percent in the household incomes, 19 percent in average expenses on household consumption, 14 percent increase in food item consumption and 16-26 percent in assets.

Business Recorder [Pakistan's First Financial Daily]


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## AgNoStiC MuSliM

Neo said:


> You're correct, most parameters are down and didn't meet the target in Q1 and indeed you'll have to look at the overall picture, i.e. full economic report at the end of fiscal year 2007/08.
> Q1 is tradionally week in pakistan with 3rd and 4th being the strongest due harvest and high export.
> 
> Inflation is high but the 10% referred to in the report is the highest sofar in one week, average inflation fluctuates between 7 and 8 percent.
> 
> Growth is realised in FDI and Foreign Remittance and both are expected to go on record breaking high this year.



I would imagine that the current political uncertainty also has a large part in investors holding back. So the economy may not have any more major inherent weaknesses than it usually does.


----------



## Neo

*Two more industrial estates for Balochistan planned ​*
QUETTA (September 24 2007): Balochistan government has worked out to set up two more Industrial Estates one each in Loralai and Bostan aimed at attracting investors to construct factories in the areas, besides providing employment to youths, official sources told APP here on Sunday.

Industrial Estate Loralai will be established on 50 acre of land while Industrial Estate Bostan on 200 acre of land. The government will also set up Industrial Estates in Khuzdar, Turbat and Pasni aimed at providing job opportunities to local people. Six industrial units have been established in Nasirabad district and investors have shown their interest to invest and construct factories.

A total of 34 industrial units are functioning in the provincial capital and 45 more industrial units will also be set up in the city.

Business Recorder [Pakistan's First Financial Daily]


----------



## Neo

*Comprehensive industrial uplift plan for AJK evolved ​*
MIRPUR (September 24 2007): An integrated plan for the uplift of industrial sector in AJK has been evolved to boost business activity in the area. Official sources told APP here on Sunday that AJK government had already chalked out a plan for early revival of sick industrial units located in Mirpur and Bhimbher districts to promote business culture in both the districts and other parts of the liberated territory.

The sources said that in the light of various proposals moved during recent foreign investment conference abroad in which AJK high officials have decided to encourage the foreign investment in the liberated territory.

The sources pointed out that bright potential was available for launching investments in hydel power generation, mineral and tourism sector in AJK.

The sources revealed that an international investment conference is being held in Mirpur in near future to materialise the foreign investment-oriented industrial development plan in the liberated territory.

The sources said that a high level committee comprising officials of Commerce and Industry, electricity, finance, taxation was being formed soon to inquire about the problems of the industrialists.

The committee would also be responsible to ink and forward proposals to the government for early redressal of the grievances of the business fraternity including industrialists, the sources added.

Meanwhile a recently-held high level meeting chaired by AJK Industries Minister Chaudhry Muhammad Yousaf reviewed and discussed with the owners of the Mirpur and Bhimber districts for quick revival of the sick units.

Business Recorder [Pakistan's First Financial Daily]


----------



## Neo

*Machinery import crosses billion dollars mark in two months ​*
KARACHI (September 23 2007): Machinery sector's imports crossed one billion dollars mark during the first two months of the current fiscal due to huge demand of agriculture, telecom and power generation machinery, importers told Business Recorder on Saturday.

They said that huge imports of agricultural machinery had played prominent role in the growth of machinery import, as new agriculture reforms and loan availability for the agriculture had raised the demand of agriculture and its allied machinery.

While there is tremendous increase in the import of power generation machinery due to frequent load shedding in the different parts of the country, the import of office and mining machinery has declined.

Importer said that during the first two months of the current fiscal year, machinery import, including power generation equipment, data processor, construction, mining, telecom sector and agriculture machinery had increased by 10.33 percent or 107 million dollars

After this upsurge, the overall machinery import has reached 1.139 billion dollars during July-August of the current fiscal as compared to 1.03 billion dollars during the some period of last fiscal.

In addition, machinery worth about 605.887 million dollars has been imported during August as against the 522.357 million dollars worth of imports during August 2006, depicting an upsurge of 83.530 million dollars in August 2007. Machinery imports during August as compared to July depicted an increase of 14 percent, as it stood at 533.357 million dollar during July 2007.

"We are expecting further increase in the machinery import during the next few months, especially in power generation sector, as the country is still facing shortage of electricity," the importers said.

They said that import of construction and mining machinery, which showed a decline of seven percent in the August, would also go up in the future as some new international construction companies would be starting their projects during this fiscal.

Business Recorder [Pakistan's First Financial Daily]


----------



## Neo

*Chichoki Mallian power plant: Wapda hesitant to accept Qatar proposal ​*
ISLAMABAD (September 24 2007): The Water and Power Development Authority (Wapda) is still hesitant to accept the proposal of Qatar Investment Authority (QIA) for setting up 500 mw thermal power plant at Chichoki Mallian, despite the fact that Prime Minister Secretariat is strictly monitoring the progress, sources told Business Recorder.

They said that the QIA team was not happy with the attitude of some top officials at a meeting on August 31 at the Board of Investment (BoI) and threatened to scrap the project.

Basically, the QIA team, which is being guided by Saif-ur-Rehman, a former Chairman of Ehtesab Bureau, was not expecting harsh questions from Pakistan bureaucracy especially when the project was being pushed by Prime Minister Secretariat.

They said that the project cost, which the QIA has increased from $350 million to $525 million, is being considered as one of the major hurdles in smooth progress.

They said that the justification given by QIA on cost over-run and changes in technical specifications were not being accepted by the concerned stakeholders, including Wapda, as the projected tariff would be too high.

Kenneth Shen, head of Strategic & Private Equity, QIA, also briefed the participants on the status of the project and future line of action. Sources said that QIA was of the view that the strong world economic growth had given immense negotiating power to EPC, Alstom-Marubeni.

It is also being argued that the change in planning approach and modification in technical specifications were warranted for arranging non-recourse financing from ECA's, which added to the cost of the project and forced QIA to extend time lines of the project.

Sources said that Finance Ministry representative, who was present in the meeting on August 31 at the BoI, reminded the Qatari delegation that non-recourse financing was a deviation from the original consensus developed between the two counties.

The technical teams of QIA and Wapda are now negotiating the technical specifications of the project so that the project could be finalised as per aspirations of the PM Secretariat.

Sources said that the QIA was also in interaction with Nepra to initiate negotiations for tariff. QIA has also been told that the MoU validity date had expired; rather another month had passed, and the milestones mentioned therein were still to be accomplished.

BoI Secretary Mushtaq Malik asked QIA to submit milestones achieved, and the timeframe for the ones that could not be achieved. "The Ministry of Water and Power will pursue timely development of the Chichoki Mallian power project through QIA and define timelines," sources in PPIB quoted the Prime Minister as directing the Ministry at a meeting on August 28.

Business Recorder [Pakistan's First Financial Daily]


----------



## Neo

*Mysterious wheat surplus​*
One day the dream economic team had to face the consequences of its own actions. The current wheat crisis is a case of as you sow, so shall you reap. It used to be said before the base was revised that a million ton of additional wheat contributes half a percentage point to GDP growth.

Of course a loss of wheat output of equal quantity would knock off the same percentage point of growth. After the change of base, the weight of wheat is less than before, but is still significant for a regime whose religion is growth. Any come down in terms of growth weakens its only legitimising argument.

So growth must not only happen, it has to be high enough. In October last year, the data of large scale manufacturing for the first quarter of FY 2006-07 made it very clear that the high-pitched target of 13 per cent for the whole year would be impossible to achieve.

No data was issued for the following two quarters, neither monthly nor quarterly, as is the practice. It had to be fixed by creative national accountants. If large scale manufacturing fails, a respectable overall growth is still possible if agriculture performs exceptionally well. Data for kharif crops  rice, sugar cane and cotton  becomes available in good time for the fiscal year. By March-April, the state of the news was not very good for cotton and rice. Sugar cane was the only crop worth talking about.

All these data are presented by their source agencies at the annual meeting of the National Accounts Committee headed by Secretary, Statistics. In the light of information presented, this committee is competent to decide the growth rate that is published in the Economic Survey. The importance of the chair of this committee for a growth-crazy regime cannot be underestimated. It should come as no surprise that in the past seven years, all secretaries of statistics were either those nearing retirement and hoping to get extension or additional secretaries in-charge looking for promotion. Some have had the rare distinction of double extension even as additional secretary in-charge.

This committee used to meet in the end of April or latest by early May. The practice was to have provisional estimates based for the year based on nine months data. All this has changed and this meeting is pushed as late in May as is expedient. The effort is to include a good estimate of wheat, a big ticket item. Being a rabi crop, its output can only be judged about this time. The PR advice is that a bumper crop not announced with the budget is like it never happened.

This time the pressure to perform was much greater. In an election year, a bumper wheat crop and the achievement of the trade-mark growth rate of GDP of seven per cent would be the best argument for policy (read political) continuity. There was no way to achieve this GDP target without a bumper wheat crop. The target fixed for wheat was not based on an expectation of bumper crop. It was 22.5 million tons and was ambitious any way when compared with the actual production of 21.3 million tons and 21.6 million tons in the previous two years.

The provinces, whose job it is to provide crop estimates, are stated to have reported a total of 22 million tons, which was higher than the previous two years but less than the target by half a million ton. This would have undermined the targeted GDP growth of seven per cent and, therefore, utterly unacceptable. Some midnight oil was burnt and, lo and behold, the target of 22.5 million tons was not only achieved but surpassed by as much as a million ton. With 23.5 million tons of wheat, the GDP growth rate of seven per cent was credibly achieved. The announcement of the outcome of the deliberations of the lowly National Accounts Committee came, for the first time in the history of its 86 meetings, directly from the Prime Ministers Secretariat.

Even 22 million tons is a comfortable level of output and does not signal a difficult situation to the market despite the extra demand of Ramazan. Prices came under pressure when attempt was made to export a non-existent surplus.

With an eye on the elections which cost money, the lords of the land asked their ministry, the ministry of agriculture and food, to seek permission for exporting wheat. With a bumper crop and rising world prices, how could the permission have been refused? The bad experience of exporting wheat at the time of an earlier bumper crop, a real one, was forgotten. The venerable Mr Shafi Niaz, who then was Advisor on Agriculture and a passionate advocate of support prices, was accused by the dream economic team of an economic mentality of shortages in an era of surpluses.

So the ministry of agriculture lost no time and exported half a million tons. This brought down the actual supply of 22 million tons to 21.5 million tons. With orders for more, prices in domestic market started to rise, not only due to reduced supply but also in sympathy with the rapidly rising world prices. The panic ban on export of wheat and wheat-related products confirmed what the market had already discovered, that there never was a surplus. But the damage had already been done. The decision to import one million ton at prices way above received for the half a million ton exported, only shows how costly it was to jack up GDP growth on the basis of a spurious surplus.

It is not even amusing to see those having claimed success of first generation reform and want to go on and on to do their second generation reform, speak the language of run-off-the-mill politicians. To warn smugglers and hoarders of actions for which either no machinery exists or it has been weakened in the name of good governance, to talk of price magistrates and subsidies to utility stores, and to rely on bans rather than duties is a retreat that reformers are failing to admit. What to speak of action against private hoarders, the official hoarders  the provinces holding on to over four million tons  have ignored the dream team.

The provinces have the last laugh because the economic team had gone out of the way to encourage credit to private sector to build stocks in competition with the corrupt and inefficient food departments. As for the smuggling, the market has always catered for it, whatever the level of production. To say that two million tons have been smuggled and hoarded is an attempt to cover up the lack of integrity in the estimation of wheat crop.

Perhaps the dream economic team needs to learn some old generation lessons from a populist politician. Once atta prices go out of hand, there is no end to this atta-push inflation. Everyone who can raise the price of goods or services s(h)e sells, will do so and those who cannot, will protest. With a high incidence of poverty and no social protection worth the name, atta continues to weigh higher in ordinary budgets than the price indices assume.

Mysterious wheat surplus -DAWN - Business; September 24, 2007


----------



## Neo

*Rising debt defaults​*
Non-performing loans of both commercial and specialised banks rose to Rs184 billion at end-March 2007 from Rs173 billion at end-December 2006- a rise of Rs11 billion in just three months. The stock of non-performing loans net of provisioning also increased to Rs47 billion from Rs36.5 billion. And as a result, the ratio of net NPLs to net loans climbed to two per cent from 1.5 per cent.

Over this period, the gross NPLs of commercial banks rose to Rs142.8 billion from Rs134.5 billion, and that of specialised banks increased to Rs41.3 billion from about Rs38.7 billion.

The increase in NPLs indicates that the private sector is finding it difficult to service bank debt on time. And in their race for earning profits ,banks err while evaluating credit quality.

The volume of NPLs has shown an increasing trend after some years while banks profits have grown rapidlythanks to low tax rates and high banking spread. The after-tax profit of the banking system zoomed to Rs84.1 billion in calendar year 2006 from just Rs2.9 billion in 2002. And in Q1 2007 it reached at Rs21.6 billion.

On the other hand, the cost of production and trading has risen sharply due to high inflation and high cost of water, gas and electricity plus a substantial increase in the bank interest rates. Bankers say that this has forced even their prime borrowers to defer debt repayments.

Besides, banks have developed a sort of herd mentality in credit making which too is responsible for increasing NPLs, says head of credit division of a large commercial bank.

Most banks are too focused on consumer lending without ensuring whether, it is their cup of tea. Resultantly, many are accumulating bad loans as they lack the expertise needed to manage such assets.

Although the loan infection ratio of consumer loans remained low at 3.2 per cent at end-March 2007, it saw a full percentage point increase during the quarter. From borrowers point of view, a big jump in mark-up was responsible for this situation.

Within the consumer loans portfolio, the highest rate of default was seen in credit cards. Bankers say they received a lot of cases of credit card payment problems during January-March 2007. After close scrutiny we found that an increase in the mark up rate had created these problems, said the head of a consumer finance at a local bank. Besides, our staff who verified credentials of credit card seekers had not done their homework well, he admitted.

At end-December 2006, credit cards had a loan infection ratio of 1.4 per cent which jumped to 3.7 per cent at end-March 2007.

In January-March 2007, corporate loans also came under NPLs as some seasonal loans issued earlier and due for repayment in July-September 2006 remained unpaid for next six months. Top bankers say corporate loans became infected partly because of the private sectors financial woes and partly due to the banks inability to supervise these loans prudently.

This fits well into the much talked-about theory that part of the Rs402 billion private sector loans disbursed in FY06 was used for investment in stocks and in the real estate. And as the real estate prices slumped by the end of 2006, the borrowers began to defer debt payments.

The rise in corporate NPLs also suggests a co-relation between credit growth/NPLs and between NPLs and corporate leverage.

It has been observed that when the private sector credit grows strongly in a particular year, the stock NPLs shows a build up in the following year.

For example, when in FY05 private sector credit grew to an all time high of Rs438 billion, the gross NPLs of commercial banks also increased by Rs4 billion.

Since the private sector credit of Rs402 billion in FY06 was in excess of the target of Rs330 billion, an increase in NPLs of commercial banks in FY07 may be explained by the quality of credit.

Similarly, studies suggest that the banking sector asset quality is dependent on the financial health of the corporate sector. As the corporate sectors profitability in calendar year 2006 was weaker than in 2005, it also increased NPLs till the end of March 2007.

Bankers involved in credit disbursement say that NPLs for April June 2007 might also show further increase. They say that the agriculture sector would see repayment problems as the monsoon rains and floods have stripped farmers of cash. Textile spinning sector is also facing liquidity problems and is unlikely to repay bank loans on time. And higher interest rates on consumer loans would continue to create payment problems.

Agricultural loans show the highest loan infection ratio because loan recovery in rural areas dominated by powerful feudal lords is not a simple task. At end-March, 23.7 per cent of all agricultural loans were non-performing.

Bankers say non-performing loans are likely to increase further in April-June 2007 due to not-very-tight credit policies of banks during calendar year 2006. But as banks became more prudent in lending with the start of 2007, youd see its impact on NPLs after six months and Im sure from July 2007 onwards there will be some regression in NPLs, predicted a senior official of state-run National Bank of Pakistan.

An SBP official said, the SBP views the growing trend in NPLs with concern but we are certainly not alarmed. The reason is that the bulk of NPLs upto March 2007 are concentrated mostly in initial categories i.e. where the principal or interest or both remained unpaid for three months or six months. A State Bank report, however, showed that a portion of total NPLs was also liable to be treated as Loss.

Going forward, banks will have to further tighten their credit appraisal and monitoring standards to stem increase in their NPLs portfolio and re-assess their exposures in relatively high risk areas, says the report.

Bankers involved in credit disbursement and recovery say that a fast-paced mergers and acquisitions in the banking industry had also contributed to growth in NPLs. While mergers and acquisitions go on, many bankers switch over jobs and newcomers take time in having a grip on their new assignments. As a result banking operations suffer including in the areas of credit quality assessment and recovery.

(During January-March 2007 banks cash recovery fell slightly to Rs7.15 billion from Rs7.25 billion during October-December 2006).

Generally speaking, banking industry is facing human resource scarcity, particularly at the middle and low levels, says Raza Fatimi, himself a mid-level official in credit department of a local bank. We hire new boys on contract and train them in different disciplines but it is just too difficult to get the best out of them, he said and admitted that banks often do not pay them enough.

Earlier this month, the SBP sent a draft circular to all banks proposing that they make 100 per cent provisioning against all NPLs instead of following different slabs currently in practice.

It also proposed that the time period of one year should be reduced to six months for classifying non-performing personal and consumer loans as Loss. After having input from banks the central bank is likely to implement new standards from next year to stimulate loan recoveries. But banks fear a big decline in profits in case of implementing these measures.

An executive member of Pakistan Banks Association said making 100 per cent provisioning against all categories of NPLs could be very difficult. The proposal about reducing the time period for treatment of non-performing personal and consumer loans as loss, merits consideration.

Rising debt defaults -DAWN - Business; September 24, 2007


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## Neo

*Need for an export-driven wheat production strategy​*
THE State Corporation of India recently invited a tender for import of 511,000 tons of wheat for Oct-Dec 2007 at a price as high as $380 per ton. But, Pakistan failed to grab the opportunity of earning precious foreign exchange--- despite Minfals claim of having harvested a bumper crop of 23.5 million tons amidst global shortages--- as compared with 21.2 million tons produced last year.

Paradoxically, the government had to ban the export as prices of wheat and flour rose sharply in the domestic market. There could either be large-scale hoarding, or the governments claim of bumper crop of 23.5 million tons was wrong.

Press reports also suggest sizeable wheat smuggling to neighbouring countries. Recently, the government also had to ban export of wheat products. It is a pity that in an age of advanced statistical and computational techniques, Minfal can not accurately assess measure the wheat production even four months after the harvest.

According to USDA, global wheat production was 594 millions tons during 2006-07 as against 616 millions tons in 2005-06. Wheat prices escalated in the international market from $160/metric ton to present $300-325/metric ton.

India is importing 3-4 million tons of wheat to beef up its strategic reserves. In this scenario, export of two million tons would have fetched a precious foreign exchange of $600 million and an amount of more than Rs36 billion would have been pumped into the rural economy of Pakistan. Increased crop would have also kept the wheat and flour prices low thereby saving poor consumers from spiraling food inflation. But, due to un-imaginative policy of the Minfal, Pakistan and its farmers were deprived of earning good prices and precious foreign exchange.

Had the Minfal and the farming community been more innovative and taken the international wheat production shortage into account, the country would have been able to harvest a much bigger crop last year as it was a proven fact that price signals are the most decisive factors in enhancing production.

Given that wheat is the staple food of the people, its importance demands a sizeable crop without fail, to meet the needs of ever-increasing population. Consistent good crops are also needed to control high food inflation which is making the life of ordinary people miserable. Based upon its natural resource base, farmers enjoy comparative advantage in wheat production but still it is not a cash crop due to its low support price. Surprisingly, crop area under wheat is stagnant at about 8.4 million hectares and production has not increased much since 21 million tons was harvested in 99-2000, though a better crop was claimed this year.

Wheat policy is inward looking and ignores the international conditions altogether. Farmers with subsistence land holding do not have any knowledge of international scenario and just adopt the traditional cropping pattern which is not in sync with the market force of the world. Big farmers never take farming on economic factors as to them land is a means to attain political power and prestige which is then used to amass economic power as well.

The provincial agriculture departments are engaged in issues dealing with the production and supply of agriculture inputs. The policy making in case of wheat is the domain of the federal government. The Minfal should, therefore, adopt the wheat policy well before the growing season keeping in view the international production scenario.

An innovative wheat policy--- Grow for ourselves and exports is needed. Instead of fixing the wheat production target arbitrarily, at 10-15 per cent above the previous years production, Minfal should fix the target in September on the basis of crops harvested in Europe and especially, on expected crop size of Australia and Argentina as they are major wheat-exporting nations.

Another factor would be carryover wheat stocks available with major wheat producers every such as USA, Russia, Ukraine, Australia and Canada etc. If the production in Australia and Argentina and the global wheat stocks are less, Minfal can just increase wheat target, predict expected price in next year and start educating farmers to increase the crop area and gear up production effort so that a larger size of crop is harvested which, can not only ensure food autarky, but also generate sufficient surplus for exports.

Wheat prices in the international market are expected to be in the higher range due to fears of on-going drought in Australia. Another factor is the increasing use of corn by bio-fuel industry. This may lead to increased demand for wheat in international market.

It is time that policy-makers in Minfal and farming community forums, such as the Kisan Board should start looking outwards for developing production patterns of different crops.

Need for an export-driven wheat production strategy -DAWN - Business; September 24, 2007


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## Neo

*When the number of automobiles doubles!​*
FROM once the largest ship-breaker in the world, Pakistan is now wanting to be a significant ship builder, and we are seeking to do that not through one shipyard but two large ones.

Simultaneously the automobile industry in Pakistan has set the target of manufacturing half a million cars and one million motorcycles by 2010. That is three years from now and that would amount to more than doubling the existing capacity.

Can we really do that when our basic steel production capacity is one million tones? In addition we will be producing a number of buses and trucks to carry our goods.

Automobile imports within first nine months of the last financial year exceeded one billion dollars and if the new target is to be achieved, the automobiles imported in parts will exceed two billion dollars and we are planning that at a moment with a large trade deficit and an external account deficit of over $7 billion.

The capacity of Pakistan Steel would have been increased eventually to three million tones if the Supreme Court of Pakistan had not called off the privatisation of Pakistan Steel saying it was done in indecent haste. While the Pakistan Steels eventual output is to be three million tones, the current steel consumption of the country is 3-4 million tones.

World steel prices have been rising very high in recent months and the government has been adding to the taxes on it so the domestic price of steel has gone very high.

Do we have enough of technologies and well-trained technicians to achieve such large targets in such a short time. A manager of a Japanese automobile company in Karachi asks what do I do with a worker on the assembly line if he can not read the manual? Evidently we need far more educated and trained technical workers who can adapt to new technologies quick.

We are not talking here of imported or foreign-assembled cars in large numbers, particularly the luxury models but of locally assembled cars---in fact the local manufacture of the entire car along with engines.

Because of defects in locally manufactured cars, which get corrected subsequently, there is a large preference for foreign-assembled cars and even old foreign-assembled cars. The locally assembled cars have yet to become perfect to the satisfaction of the Pakistani customer who pays a heavy price inclusive of hefty duties.

When we get half a million cars and one million motorcycles on the road, where the roads for them? The roads are already congested and clogged by existing automobiles. Where is the parking space in major cities?

Setting large targets is easy and very alluring, but to realise that is tough and demands a great deal of exertion.

So not every developing country has opted for manufacturing automobiles. India is different and has a long history of automobile making. Malaysia under Mahathir Mohammed tried to make its own car but had to go through too many exertions and sacrifices.

When we double the number of cars we produce, we would need far more petrol, engine oil and gas. Do we have enough of that when our own oil meets only 20 per cent of our needs? World oil prices have hit $84 a barrel and the external account deficit of the country cannot go on rising.

When it comes to motorcycle production, the imported vehicles have resulted in the shutting down of many local factories. The Chinese motorcycles have a dominant share of the market and when within five years the trade between China and Pakistan touches $15 billion, most of the motorcycles will be of Chinese origin. Meanwhile, their prices would have come down and their quality improved because of the growing Chinese technology.

We have tried to attract more western car manufacturers along with those from East Asia or Japan and Korea. We tried to get the Daimlers Mercedes to manufacture in Pakistan beginning with trucks but the Mercedes eventually dropped the project.

Following the rise in the price of cars, and preference of foreign-assembled cars, we allowed five-year-old cars. Many cars came in and so the age of the car was reduced to three years. Over 13,000 five-year-old cars are lying in Japan, as only three-year-old cars can be imported to Pakistan after the current budget. The disadvantage of importing foreign assembled old cars is that we need to import spare parts soon to repair them and the process can become too costly.

While the high-income groups prefer to import luxury cars and the low-income group old foreign assembled ones, public transport is receiving little attention. Consequently the roads are clogged by luxury cars and high-priced vehicles, the workers find it difficult to reach the place of their work and return home. And the transport costs a great deal.

It has become easy for the middle-income group to buy new cars using bank loans which are offered in plenty. Almost every foreign and local bank is offering car loans which are secure as far as the banks are concerned and quite often no cash down payment is essential.

Too much petrol gets wasted by cars and public transport owing to traffic jams and this waste will become higher as the number of cars increases day by day.

A developing country with 160 million people, of whom one-third lives below the poverty line, are to adopt a policy primarily aimed at helping the low-income group instead of catering to the needs of the rich and the very rich who can easily avail a car.

We should have a proper public transport policy in which the waste is cut to the low and the transport is really helpful to the people. The index of success of the economic policy is not the number of vehicles that the country produces, but how helpful is the policy to the low income groups who are to move from homes to the factory and back to their place of residence.

When the number of automobiles doubles! -DAWN - Business; September 24, 2007


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## Neo

*Moves towards trade corridor​*
The federal government has approved setting up of a trade, energy and transport corridor between Pakistan and China. For this purpose, a 16-member Policy and Supervisory Board has been constituted under the chairmanship of the President of Pakistan. Plans will be finalised by a Pakistan-China bilateral working group.

A 50-sq km piece of land will be allocated to Chinese developers at nominal rates for establishing special economic zones (SEZs). Incentives similar to the Chinese SEZs may be provided.

A site for China-Saudi oil refinery will be identified and its terms and conditions decided on a priority basis. The energy advisor has been directed to recommend within 60 days the oil concessions for Chinese companies which are expected to bring in at least 200 rigs.

The dry port at Sost near the Pakistan-China border, the seaport, airport and oil refinery at Gwadar, the proposed rail sector projects and the expansion of the Karakoram Highway are moves toward setting up the energy corridor.

Islamabad has already decided to award the contract for construction of an international airport at Gwadar at a cost of $70 million to a Chinese company  the China Harbour Engineering Company (CHEC).

By virtue of its geo-strategic location, Pakistan can serve as an energy corridor between the Gulf and China and the Gwadar port can become a major outlet for trade between the China, Central Asia and the Gulf region. The proposed $6 billion National Trade Corridor (NTC) envisages improving all sectors of communications, including ports, shipping, aviation.

The Asian Development Bank has agreed to provide $1 billion for the NTC project that would link Karachi to Gwadar and Khunjrab in Northern Areas.

The World Bank and other lenders have already agreed to provide $1.8 billion for the Karachi-Gwadar-Khunjrab section, which is estimated to cost $2.8 billion. The World Bank will provide $300 million within a year.

Chinas stakes have witnessed a steady growth in Pakistan over past many years. It has made investments in a wide range of infrastructure projects in different parts of the country, particularly in strategically located Balochistan and the Northern Areas.

It has been focusing on building the strategic transport links between Pakistans Northern areas and its remote western regions including Xinjiang. The number of road links between Pakistan and China has risen to eight.

Plans are also afoot for a rail link between Pakistan and China.

The Chinese have already built the railroad up to Tibet and its extension to Pakistan will ensure a faster movement of cargo between the two countries.

The linking of the KKH with Gwadar will need building of new highways and rail tracks passing through Balochistans vast expanse.

China and Pakistan are also considering to link the Karakoram Highway to the southern Pakistani port of Gwadar through the Chinese-aided Gwadar-Dalbandin railway, which extends up to Rawalpindi.

Islamabad and Kabul recently signed an understanding for laying railway track between Chaman (Pakistan) and Spinbudlak (Afghanistan). The project will take around one year to complete. Around 10.5 km of track would be laid at a cost of Rs700 million.

Under the accord, Pakistan, in the first phase, will provide the infrastructure to introduce railway system up to Spinbudlak. In the second phase, the track will be extended up to Kandhar and there from up to Khushka through Herat.

Pakistan Railway will complete feasibility study for laying of track between Spinbudlak and Kandhar. It would be a pioneering rail project that will introduce railway system in Afghanistan.

Moves towards trade corridor -DAWN - Business; September 24, 2007


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## Neo

*Is the economy slowing down?​*
Pakistans import bill of petroleum products slipped 17 per cent in July-August FY07. This happened not due to a fall in prices but in import volumes. It indicates that the refining capacity of local petroleum companies has increased as is clear from a growth in the import of petroleum crude. But it also points to a slowdown in the economic activity.

The Asian Development Bank recently estimated 6.5 per cent growth in Pakistans GDP for FY08 against the official target of 7.2 per cent.

This low growth forecast takes into account the tightening of the monetary policy; the impact of high international oil prices; declining growth in exports and expected slower growth in the US economy, Pakistans largest trading partner, in JulyDecember 2007.

That the monetary tightening would impede industrial growth is fast becoming evident. Industrialists including those in textiles sector say higher input cost including higher interest rate has robbed them of their competitive edge in international market.

Textile exports fell 5.2 per cent in August 2007 and showed a negligible growth of 1.2 per cent in July-August combined. Overall exports, however, grew 4.3 per cent to $2.96 billion. This suggests that Pakistan may miss the export target of $19.2 billion for this fiscal year.

However, remittances from overseas Pakistanis continue to rise.

In July-August remittances grew over 21 per cent to $985 million. The ADB says the remittances might reach $6.2 billion at the end of the fiscal year in June next.

But as exports are unlikely to reach the targeted level, a jump in remittances would contribute much towards balancing the current account. The ADBP projects that the current account deficit would rise to 5.5 per cent of GDP in FY08 from 3.9 per cent in FY07.

For the time being, strong inflows of remittances have kept the foreign exchange reserves intact at $16 billion and firmed up the rupee.

Forex inflows through remittances, exports or other channels have also raised the rupee liquidity levels in the inter-bank market.

But as individuals and corporates make large withdrawals from bank deposits for spending in Ramazan, banks are experiencing a liquidity crunch. So strong has been the liquidity shortage that banks resorted to heavy discounting from the State Bank several times during the week ending on September 21. This kept overnight lending rate tied to 9.9 per cent, slightly below the discount rate of 10 per cent, most of the time during the week.

Bankers anticipate that the liquidity shortage would continue throughout Ramazan and ease off in the middle of October.

They say it is not only Ramazan spending spree that has taken so much cash out of the banking system. The presidential elections next month and general elections due afterwards also explain large withdrawals from deposits recently, said treasurer of a local bank.

A leading moneychanger said that branches of foreign exchange companies in the Punjab and NWFP have also reported large selling of dollars, sterling and euro in the last few weeks. Part of this selling could be linked to political activity ahead of elections.

In July-August CPI inflation rose 6.4 per cent year-on-year but food inflation increased 8.5 per cent.

Growing incidence of hoarding and smuggling of food items like wheat and wheat flour makes it difficult to rein in food inflation. The price of wheat has soared to the highest level last week despite the fact that the country has 1.5 million surplus grains. In the past few weeks, the government repeatedly promised to launch a crack down against hoarders and smugglers but that is not in sight. On the contrary, it shot down a proposal from the directorate of customs intelligence to employ helicopters to check smuggling on Pakistan-Afghanistan borders.

For those who think that overall inflation would continue to fall even if food inflation remains higher, some reality checks might be in store. Already, the Ramazan-related price hike is yet to show in CPI inflation of September.

Besides, prices of a variety of items from fertilisers to furnace oil to liquefied petroleum gas to steel products have been on the rise. The international oil prices have touched $84 per barrel with prospects of rising further. Besides, the fiscal deficit is set to rise beyond the targeted level due to an increase in pay and pensions, larger subsidies announced ahead of elections and a 20 per cent increase in budgeted development spending. The ADB says it might touch 4.2 per cent of GDP against the target of four per cent. All this point to the possibility of inflation exceeding the target of 6.5 per cent.Mohiuddin Aazim

Is the economy slowing down? -DAWN - Business; September 24, 2007


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## IceCold

*Pakistan plans to import 100 MWs electricity from Iran *

ISLAMABAD: Pakistan has planned to import 100 megawatts of electricity from Iran at the price of 6.25 Cents per unit.

National Economic Councils executive committee a few days ago had given approval to this plan of importing 100 MWs of electricity from Iran. This project costing a total of Rs3.60 billion for laying 100 kilometers long transmission lines on completion would provide electricity to Pakistan via Gawadar at 6.25 Cents per unit 

According to one Iranian news agency, Export Development Bank of Iran would provide 85 percent of the cost of the project finalized between the power generation companies of the two countries and this project would be completed in three years. Pakistan is already currently importing 39 MWs of electricity from Iran.


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## Bushroda

Neo said:


> *Is the economy slowing down?​*
> 
> Is the economy slowing down? -DAWN - Business; September 24, 2007



Is it that the US subprime effect beginning to be felt in Asia?


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## Neo

*Pakistan become destination of choice for all investors: Prime Minister ​*
ISLAMABAD (September 25 2007): Prime Minister Shaukat Aziz on Monday said that a level-playing field to both local and foreign investors and government's macro-economic policies and structural reforms, had greatly encouraged foreign investment in Pakistan.

He was talking to a delegation of Capital Investment Overseas, Abu Dhabi, headed by Chairman, Abdulhamid Saeed, who called on him here at the Prime Minister House here on Monday.

The Prime Minister said that with a growth rate consistently ranging between 6-8 percent, the expansion in middle class and significant rise in per capita income, Pakistan had become a destination of choice for all foreign investors.

He said that Pakistan greatly values its brotherly relations with UAE which were based on common faith, values and a shared perception on international issues and were growing with the passage of time.

Abdulhamid Saeed informed the Prime Minister that as a result of stable economic policies and good governance coupled with consistent growth in the economy, UAE looked at Pakistan as a destination for its investment.

He said that close links between the two countries would lead to UAE's increased investment in Pakistan. He apprised the Prime Minister of the details of his Company's proposed project to build a state of the art five-star hotel in Lahore comprising 602 rooms with an estimated investment of Rs 20 billion which would be completed by the year 2011.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan to get $0.170 billion ​*
ISLAMABAD (September 25 2007): Pakistan and United States here on Monday signed five amendments for additional funding of $169,938,713 to the ongoing five-year $1.5 billion bilateral agreement of development assistance to Pakistan.

The agreement was signed by US Agency for International Development (USAID) Pakistan Mission Director Anne Aarnes and Secretary for Economic Affairs Division M Akram Malik. Akram Malik thanked the US government for providing additional funding, which would help further strengthen the economic co-operation between the two countries.

Anne Aarnes said, "The United States government is proud to continue working with the government of Pakistan in improving the living standards of its citizens." The funding would be utilised for education, health, good governance, economic growth and reconstruction of earthquake-hit areas of northern Pakistan and Azad Jammu and Kashmir, she said.

She said that continued economic growth, greater political stability and better educated and healthier Pakistan society also benefits the United States, and added that "it creates the conditions for our continued joint success in fight against terrorism".She said that the agreement was manifestation of longstanding bilateral relations between the two countries.

The bilateral agreements are the instrument using which the United States, through the USAID, is providing $1.5 billion to Pakistan over five years in the areas of education, health, democracy and governance, economic growth and earthquake reconstruction.

Both governments revise the agreements annually to add additional funds, and Monday's signing marked the fifth cycle of amendments to the original agreements that the US had signed with Pakistan in 2002 with the aim to help Pakistan address its development needs as a strong US ally in the war against terror. This year's amendments will add approximately $200 million.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Laboratories in major industrial zones proposed ​*
ISLAMABAD (September 25 2007): Minister for Health Nasir Khan has proposed setting up of quality labs in major industrial zones to conduct stability studies and other tests relating to medicines.

The labs, to be accredited by Pakistan National Accreditation Council have been proposed to ensure quality of medicines in the country, Nasir Khan said while talking to a delegation of pharmaceutical manufacturers of Islamabad and Rawalpindi Zone.

Talking to a group of journalists here on Monday, senior representatives of the zone, Muhammad Asad and Shaukat Sindhu said the minister was apprised about the major problems confronting the pharmaceutical manufacturers.

The minister agreed that all sort of business activities should continue in parallel to the policy making and directed the concerned officials to issue all pending registration letters to the companies under Heat, Ventilation and Air Conditioning (HVAC) policy. The minister also approved one year extension in the installation of HVAC system by the companies which is ending on December 31 this year.

Muhammad Asad, a CEO of Global Pharmaceuticals informed that the minister said that the manufacturers would keep on doing stabilities but condition to submit data for new registrations will be applicable for the applications submitted after June 30, 2008. He said it was also decided that a committee comprising secretary health, director general health and drugs controller will meet with representatives of pharmaceutical manufacturers soon to formulate and finalise the agreed decisions.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Over Rs 14 billion allocated for construction of roads ​*
SIALKOT (September 25 2007): Punjab government has set aside more than Rs 14 billion during current fiscal period for the construction of new roads and widening of existing roads in the province. Official sources told Business Recorder here on Monday that under the programme 600-km long new roads would be constructed while existing 700-km roads would be widened in various parts of the Punjab.

Under the programme about 10 feet roads would be widened to 20 feet while 12 feet roads would be widened to 24 feet. The step was being taken for further improving the means of communication system and to ensure safe and hassle-free travelling facility to the masses in the Punjab, sources added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Balochistan to get 20pc shareholding in PPL: Deal clears way for GDRs​*
ISLAMABAD, Sept 24: Having agreed to provide reasonable shareholding to Balochistan in the Pakistan Petroleum Limited (PPL), the government has decided to sell minority stakes of the countrys oldest gas producer in the international market.

Informed sources told Dawn on Monday that an agreement in principle has been reached between the federal and provincial governments to allow 15-20 per cent shareholding to Balochistan along with proportionate representation on its board of directors to end a long-standing provincial claim over the company.

PPL is the countrys oldest and largest exploration and production company with annual sales revenue touching Rs20 billion. It produces more than 300,000 million cubic feet of gas and more than 240,000 barrels of oil per year, besides substantial annual production of condensate, liquefied petroleum gas and other minerals.

It has been on the privatisation list, of course, with continued postponements since 1998 under a covenant with the World Banks International Finance Corporation (IFC), which has about seven per cent shareholding in the company.

According to an official statement, a meeting of the Privatisation Commission board held by the newly-appointed minister Wasi Zafar on Monday included PPL among three other major public sector entities in the priority privatisation programme for listing on the international market through Global Depository Receipts (GDRs).

Other companies, for which GDRs are planned to be issued, include National Bank of Pakistan (NBP), Habib Bank Limited (HBL) and Kot Addu Power Company (Kapco), the statement said. All these entities are already listed on the domestic stock exchanges.

Informed sources said the decision to issue PPLs GDRs was taken because of some technical and legal aspects that were delaying the strategic sale of PPLs majority shareholding, including formal transfer of PPL shares to the Balochistan government.

More importantly, the decision about the GDR issue would give a political boost to the government because of a resultant appreciation of share value in the stock market. This will also be in line with the governments claim about continuity and consistency of the economic policies.

Had that not been a consideration, there was no logic to announce such a decision in the midst of election season and that too without a privatisation schedule, a participant of the PC board meeting told Dawn.Balochistan has been demanding of the federal government to transfer entire ownership of the PPL to the province on the ground that the provincial energy resource had kept on feeding the countrys energy requirements since independence and hence it was time to compensate the province.

The provincial assembly had also adopted a unanimous resolution to this effect.

However, the current provincial set up changed its stance to the extent that the major shareholding might go the private sector as the centre planned to sell but since it was a provincial resource, a minority shareholding to the province would be a source of revenue to the cash-starved province.

After a lengthy negotiation process the centre agreed in principle to this modified demand. A lot of legal paper work, however, would now be needed to implement this decision, but politically this is a settled issue, a senior government official said.

PPL is the operator of Pakistans oldest Sui gas field. The federal

government had taken over more than 63 per cent shares of the PPL from Barmah Oil Company in 1997 to raise its ownership to about 94 per cent.

Later, it decided to privatise the company but the Balochistan Assembly adopted a resolution asking the federal government to give its ownership to the province. The centre did not oblige the request then.

About two years ago, the federal government reduced its share in the company by 15 per cent through initial public offering (IPO) and planned to sell 51 per cent shares along with management control of the PPL. The plan was later put on the back burner because of structural lacunae in the gas pricing mechanism that also delayed the sale of Sui Southern and Sui Northern Gas companies.

Balochistan is currently in a classic debt trap  taking new loans to service old  and mostly relying on central banks overdraft to meet its running expenditures and interest repayments.

The official statement said the meeting also reviewed progress on the privatisation of National Power Construction Company (NPCC), Pakistan Tourism Development Corporation (PTDC) motels and restaurants, SME Bank, Heavy Electrical Complex (HEC), Faisalabad Electric Supply Company (FESCO) and Jamshoro Power Company (JPC).

The financial adviser for NBP GDR, the consortium of Deutsche Bank, Morgan Stanley and AKD Securities made a presentation before the PC board regarding the offering structure of the transaction, the statement concluded.

Balochistan to get 20pc shareholding in PPL: Deal clears way for GDRs -DAWN - Business; September 25, 2007


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## Neo

*Pakistan, US to devise new economic framework​*
ISLAMABAD, Sept 24: Pakistan and the United States have decided to develop a new economic framework to broaden cooperation in bilateral trade, investment and infrastructure development.

After having developed a political framework, time is for developing a new economic framework between the two countries aimed at providing substantial financial support to Pakistan, Prime Ministers Adviser on Finance Dr Salman Shah told Dawn on Monday.

He said a five-member high-level delegation, to be led by him, will leave for Washington on October 17 to hold strategic dialogue on economic issues with senior US officials. The prime objective is to effectively promote trade and economic

relations between the two countries.

One of the important efforts, Dr Shah said, is to double US investment in Pakistan from $1.7 billion to $3.4 billion within next two years for which Bush administration has assured to greatly facilitate the American investors in Pakistan.

Pakistan has successfully attracted an all time high $1.7 billion US investment in 2006-07, which needed to be further enhanced, he added.

We hope to have substantial US investment in infrastructure projects and increased assistance for the development of Balochistan and Federally Administered Tribal Areas (FATA), Dr Shah said adding that Pakistan currently required massive investment to improve its old and fragile infrastructure.

Without improving this infrastructure we cannot sustain our economic development, he said hoping to have an enhanced cooperation during 2007-08 between the two sides in the infrastructure field.

The adviser did not believe that in the absence of the much-delayed Bilateral Investment Treaty (BIT), there would be any problem to attract sizable US investment in Pakistan. This investment from the American side is already taking place and only needs to be enhanced significantly, he said.

Responding to a question, Dr Shah said that unfortunately trade and economic relations between Pakistan and the US did not greatly improve over the years as were the political relations. But now this is the decision of both the governments to substantially enhance economic cooperation and this will be very good for Pakistan.

To a question he said that the US government had expressed its willingness to provide considerable assistance for the development of Balochistan and FATA, particularly to promote education and health activities there.

During the visit, he said, Pakistani delegation will also have annual consultation meetings with the World Bank and the International Monetary Fund (IMF) in Washington.

Pakistan, US to devise new economic framework -DAWN - Business; September 25, 2007


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## Neo

*Abu Dhabi firm to build Rs20bn hotel in Lahore​*
ISLAMABAD, Sept 24: Capital Investment Overseas  an Abu Dhabi based company, will build a five-star hotel in Lahore, comprising 602 rooms with an estimated investment of Rs20 billion.

The construction of the hotel will be completed by the year 2011, said chairman of the company Abdulhamid Saeed in a meeting with Prime Minister Shaukat Aziz here on Monday.

This will be the second big venture of a UAE-based private company to make huge investment in the hotel industry during the last two years.

Mr Saeed informed the premier that as a result of stable economic policies and good governance, coupled with consistent growth in the economy, UAE looks at Pakistan as a destination for its investment.

He said that close links between the two countries would lead to UAEs increased investment in Pakistan.

Prime Minister Shaukat Aziz said that a level-playing field to both local and foreign investors and governments macro-economic policies and structural reforms has greatly encouraged foreign investment in Pakistan.

He appreciated the Capital Investment Overseas investment in the real estate sector in Pakistan and said that the government of Pakistan would continue to provide every possible facility to foreign investors.

Mr Aziz said this would add to the tourism and corporate interest in the historical city of Lahore, in addition to relieving pressure on existing hotels and creating job opportunities

He said that with a growth rate consistently ranging between 6-8 per cent, the expansion in middle class and significant rise in per capita income Pakistan has become a destination of choice for all foreign investors.

Abu Dhabi firm to build Rs20bn hotel in Lahore -DAWN - Business; September 25, 2007


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## Neo

*99pc mango export targetachieved​*
ISLAMABAD, Sept 24: Pakistan exported 118,000 tons of mangoes till Aug 25 as against a target of 120,000 tons.

The country achieved almost 99 per cent of the total target set for the current fiscal year, and mainly exported the commodity to the UAE, Saudi Arabia and other Gulf and Far Eastern countries and Europe.

An official report of the Horticulture Development Export Board said this year mango exports were started on May 20 and it continued till mid-September. It is expected that the target will be achieved when the figures for the remaining period are compiled by the ministry of commerce.

The mango production stood at 1.6 million tons this season, out of which 0.12 million tons, worth $39.99 million might be exported, which would be a mere seven per cent of the total output.

The UAE was the leading market for Pakistani mangoes followed by Saudi Arabia. The new weight standardisation brought credibility to export process in the European Union member countries.

According to the report, efforts were under way to create better marketing conditions for Pakistani mango in the world, in general, and in Europe, in particular.

Pakistan has succeeded in getting due market share for export of mango in Germany by displaying it in the superstores and the same would be done in other European countries.

The reasons behind low quality mango export to UAE include issues like quality standards set by the World Trade Organisation or Eurep Gap but they related to logistics problems.

Besides, higher air freight for mango export to Europe, the cargo aircraft has low capacity as compared to that of the ships, which were used for exports to the Middle Eastern Countries.

It was pointed out that less capacity in the aircraft and higher freight rates minimise quantity of mango exports to Europe.

99pc mango export targetachieved -DAWN - Business; September 25, 2007


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## Neo

*TDAP for strategic plan to develop trade sector, enhance exports​*
KARACHI: As part of its export development strategy, the Trade Development Authority of Pakistan (TDAP) wants a strategic plan to develop trade sector and enhance exports.

There is a need of a long-term strategic plan of the authority for export development, the authority mentioned in the draft of financial regulations finalised by the authority on Tuesday. The draft of the regulations will be put up before board of the authority for approval.

Among the other key components of these regulations, development of Annual Financial Plan of the authority in the context of the strategic plan of the authority has also been envisaged. 

According to draft of financial regulations, this strategic plan should not be taken as a numbering exercise, but as a planning and qualitative exercise, supported by the top down estimates and numbers.

This plan will both serve as an input to the National Planning Commission and also to various members and stakeholders as well as for national socioeconomic plans and requirements.

Apart from the strategic plan, the draft of the financial regulations also envisages resource allocation and utilisation policy of the authority. 

It should resource generation, allocation, utilisation and results to have a strong strategic policy, the draft mentioned.

According to officials, the approval of the financial regulations from the board has become important for the smooth sailing of related affairs in TDAP, which replaced Export Promotion Bureau (EPB) last year. 

Meanwhile, the 2nd meeting of the board has been scheduled on September 27 and will take up a heavy agenda regarding policies for administrative and financial affairs of the authority. 

It is pertinent to mention that the first board meeting was held in February this year, however it did not accord approval of financial matters, HR Policy, administrative and financial delegation of authority and pay and perquisite of the authority, which are now agenda of the second board meeting.

TDAP board is comprised of 27 members from government and private sectors. Federal minister for commerce heads the board. The high-powered TDAP board includes the chief executive of TDAP, secretaries of ministries of commerce, finance, industries production and special initiatives, textile industry, food and agriculture and livestock, chairman Central Board of Revenue, secretary Board of Investment (BOI), Deputy Governor State Bank of Pakistan (SBP), chief secretaries of Punjab, Sindh, NWFP, and Balochistan and AJK, presidents of the Federation of Pakistan Chambers of Commerce and Industry and the Overseas Chamber of Commerce and Industry, and 10 members from the private sector.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Portfolio investment down by $84m​*
ISLAMABAD: The total portfolio investment in the country registered an outflow of $84.3 million during July-August period of current fiscal 2007-08 as against an inflow of $31.9 million in the same period last year, the Ministry of Finance said on Monday. 

According to a report released here, the Investor Relations Desk of the finance ministry said that during the first two months (July-August) of the new fiscal year 2007-08, foreign direct investment (FDI) amounted to $460.3 million during this period against $375.5 million in the same period last year, showing an increase of 22.6 percent. staff report

Daily Times - Leading News Resource of Pakistan


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## haviZsultan

Thanx Neo... we rarely hear any good news about Pakistan in this forsaken place! Thanx for the information! Hate it here in Canada... just don't belong here and don't even wanna study...  

I wanna be back in Pakistan where I can hang around with the sweet pakistani pariyan, attend all the underground music events and can borrow my my freinz mustang and drive it at 220 km without a stupid Canadian policeman stopping me on the way. I miss Pakistan... and then you admins don't even take mercy on me and get girls on the site...


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## Neo

*Non-tariff barriers hampering Indo-Pak bilateral trade​*
* Indian commerce ministry issues pro-forma to cement exporters

LAHORE: Lahore Chamber of Commerce and Industry (LCCI) has said that non-tariff barriers imposed by the Indian government are hampering bilateral trade between India and Pakistan as is evident from a 200-page pro-forma given to Pakistani cement exporters. 

In a joint statement issued on Tuesday, LCCI President, Shahid Hassan Sheikh, Senior Vice President, Yaqoob Tahir Izhar and Vice President, Mubasher Sheikh said that contrary to its claims, the Indian government was increasing non-tariff barriers with every passing day. 

Recently, they said, the Indian Ministry of Commerce has issued a 200-page pro-forma for Pakistani cement exporters and considering the contents of that pro-forma it is very difficult for any Pakistani cement exporter to export the commodity to India. 

The LCCI office-bearers while stressing the need for removal of non-tariff barriers said that in the presence of such non-tariff barriers, even the MFN status would not work. 

India and Pakistan together have a population of 1.295 billion (Indian 1.13 billion and Pakistani 165 million). Their total international trade amounts to $347.55 billion, out of which the trade between the two countries amounts to only $1.095 billion, which is only 0.315 percent of their total international trade.

They said that while Pakistans imports from India through proper channels had increased from $382.2 million to $802 million during the last three years, Pakistans exports to India had increased from $93.8 million to $293.3 million. Pakistan has always experienced a deficit balance of trade with India, which had increased from $288.4 million in 2003-04 to $508.7 million in 2005-06. The deficit would increase manifold if the trade through third countries such as Dubai and Singapore were taken into account.

LCCI Senior Vice President, Yaqoob Tahir Izhar and Vice President, Mubasher Sheikh said that while the businessmen of the two countries are interested in gains from trade, an unfriendly visa policy of the two countries is hampering the businessmen of the two countries to visit each others market and negotiate trade deals. 

They said that the talks between the Commerce Secretaries of the two countries in July-August, 2007 in which all trade barriers between the two countries were discussed have raised hopes that trade between our two countries can increase to $10 billion in the next three years. 

They hoped that Joint Study Group of the two countries would help develop a policy framework to maximise benefits of geographical proximity, identify opportunities for enhancing economic cooperation and create a framework to boost trade in goods including such as custom cooperation, standards and certification system. 

They said that Indian companies can come forward by entering into joint ventures in the fields of software development, telecommunication, information technology, computer engineering, bio-technology, light engineering, foundry machinery items, metallurgy, precious and semi precious gemstones and petrochemicals. Joint ventures will increase interest in each others countries and provide opportunity to utilise potential available in India and Pakistan.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Private sectors borrowing declines 9.86%​*
KARACHI: The borrowing of private sector from the banking sector declined by 9.86 percent during the last financial year, indicating a slowdown in the economy. 

Banks credit to the private sector declined to Rs 365.718 billion from Rs 401.797 billion after rising continuously for many years. 

This fall reflects a slowdown in industrial and trading activities. This may be attributed to a sharp surge in interest rates for the private sector during the last two years. The central bank of Pakistan had started raising interest rates about two years ago in order to check inflationary trends in the economy. Although the decision has so far failed to have any major impact on the prices of commodities and consumer items, it has slowed down the credit off-take of the private sector. 

Economic observers say sectors like textile and auto consumed less than what was expected from them. Both these sectors have been the largest consumers of credits. Export-led textile sector has reduced consumption of credit which is reflected by its below target exports. Also, the booming auto sector has started moving downward, resulting in the lower consumption of credit.

This lower credit off-take is also significant because the credit disbursements to agriculture sector were above the central banks target last year. This may imply that the condition for doing business has become worse in the country while the untaxed agriculture sector continues to produce bumper crops. 

During the year net domestic assets of the banking sector rose by Rs 383.699 billion while net foreign assets surged by Rs 274.551 billion. 

Reserve money grew by 20.88 percent during 2006-07 owing to robust inflows from abroad. Broad money grew by 19.32 percent during the same period. 

Federal governments budgetary borrowing rose to Rs 138.4 billion in 2006-07 from Rs 107.9 billion in 2005-06. 

The government borrowed Rs 195.3 billion from scheduled banks, but repaid Rs 56.9 billion to the State Bank of Pakistan. 

Currency in circulation rose by Rs 99.79 billion in 2006-07. It had increased by Rs 74.48 billion in 2005-06. 

Demand deposits increased by Rs 1.558 trillion, but time deposits declined by Rs 1.013 trillion. 

Bank deposits with SBP increased by Rs 97.59 billion to Rs 305.16 billion.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Private sectors borrowing declines 9.86%​*
KARACHI: The borrowing of private sector from the banking sector declined by 9.86 percent during the last financial year, indicating a slowdown in the economy. 

Banks credit to the private sector declined to Rs 365.718 billion from Rs 401.797 billion after rising continuously for many years. 

This fall reflects a slowdown in industrial and trading activities. This may be attributed to a sharp surge in interest rates for the private sector during the last two years. The central bank of Pakistan had started raising interest rates about two years ago in order to check inflationary trends in the economy. Although the decision has so far failed to have any major impact on the prices of commodities and consumer items, it has slowed down the credit off-take of the private sector. 

Economic observers say sectors like textile and auto consumed less than what was expected from them. Both these sectors have been the largest consumers of credits. Export-led textile sector has reduced consumption of credit which is reflected by its below target exports. Also, the booming auto sector has started moving downward, resulting in the lower consumption of credit.

This lower credit off-take is also significant because the credit disbursements to agriculture sector were above the central banks target last year. This may imply that the condition for doing business has become worse in the country while the untaxed agriculture sector continues to produce bumper crops. 

During the year net domestic assets of the banking sector rose by Rs 383.699 billion while net foreign assets surged by Rs 274.551 billion. 

Reserve money grew by 20.88 percent during 2006-07 owing to robust inflows from abroad. Broad money grew by 19.32 percent during the same period. 

Federal governments budgetary borrowing rose to Rs 138.4 billion in 2006-07 from Rs 107.9 billion in 2005-06. 

The government borrowed Rs 195.3 billion from scheduled banks, but repaid Rs 56.9 billion to the State Bank of Pakistan. 

Currency in circulation rose by Rs 99.79 billion in 2006-07. It had increased by Rs 74.48 billion in 2005-06. 

Demand deposits increased by Rs 1.558 trillion, but time deposits declined by Rs 1.013 trillion. 

Bank deposits with SBP increased by Rs 97.59 billion to Rs 305.16 billion.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pak-German trade to touch $2 billion mark ​*
KARACHI (September 27 2007): The Germany's trade with Pakistan will touch two billion dollars by the end of this year, said Consul General of Germany in Karachi, Hans Joachim Kiderlen, while talking to reporters at an Iftar dinner hosted by him here on Wednesday.

The Consul General said that of the total trade volume, Pakistan's exports to Germany were to the tune of about 800 million dollars and the imports from Germany were 1.2 billion dollars.

He spoke of the good economic ties between the two countries and was of the view that these should be enhanced further. Kiderlen said that Pakistan should diversify its exports to Germany.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Promotion of tourism to project country's true image: President ​*
ISLAMABAD (September 27 2007): President General Pervez Musharraf has said Pakistan is promoting tourism which provides an opportunity to project the country's true image in the international community.

In a message on World Tourism Day falling tomorrow (September 27), President Musharraf said Pakistan joins the international community in celebrating the day, with its theme 'Tourism opens doors for women' that highlights the issue of prime importance - promoting gender equality and women empowerment. The President said tourism is a sector of economy that not only employs significant number of women, but provides enormous opportunities for their advancement.

"Pakistan is proud of having an unparalleled combination of history, culture and adventure. As a nation we may be young, but as a land we are custodians of the legacies of ancient civilisations of Indus Valley, Gandhara and treasures of the marvellous Moghul heritage," he said.

President Musharraf said Ministry of Tourism's campaign 'Destination Pakistan 2007' was able to create awareness among fellow citizens as well as foreign tourists about the immense tourism potential of Pakistan.

He said as a result of the government's consistent pursuit of the UN's third millennium development goal of promoting gender equality and women empowerment, women are actively playing role in country's political, social and economic spectrum.

"More and more women are joining Pakistan's tourism industry in professions like travel agents, tour operators, guests relations officers, housekeepers etc. There are a number of tour and travel companies in Pakistan which are being successfully run by women chief executives," he added.

Prime Minister Shaukat Aziz in his separate message said by actively participating in every social and economic activity, Pakistani women have already proved that they are even better than their fellow male citizens.

"Whether it is the field of education, engineering, medicine, computer sciences, social sciences, arts and crafts, business administration or financial management, Pakistani women have excelled in every field of national economy."

Prime Minister Aziz said Pakistan is blessed with matchless natural beauty and it is the cradle of many ancient civilisations and religions. He said the country's cultural diversity and architectural heritage are unique and its mountains present opportunities for all types of adventure sports.

He mentioned 'Destination Pakistan 2007' campaign and the several events organised in this regard including Lahore Marathon, First Women Rock Climbing Expedition, National Ski Championship, Cholistan Jeep Rally, in which Pakistani women showed dedication and courage.

The Prime Minister said during last three years, the government brought many positive changes in the country's social and economic set up. He said many discriminatory laws are now history and many new avenues of national development had been opened as a result of gender reforms.

He said with more and more women opting for higher education in social, management and computer sciences, the socio-economic fiber of the society is taking a modern and progressive look.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Abu Dhabi investor to set up hotel in Lahore ​*
ISLAMABAD (September 27 2007): The Chairman of Abu Dhabi based Capital Investment Overseas has said that the company is planning to build a five-star hotel in Lahore, with an estimated investment of $341 million.

He said that the construction of 602-room hotel would be the second big venture by the company during the last two years investing huge amount in Pakistan's hotel industry, Khaleej Times reported. He added that UAE investors are looking for more opportunities in Pakistan as a major destination for their investments as it has stable economic policies in addition to consistent growth.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Rs 120 billion SDP for Fata approved ​*
ISLAMABAD (September 26 2007): President General, Pervez Musharraf and Prime Minister, Shaukat Aziz, on Tuesday approved a priorities' list for Rs 120 billion Sustainable Development Programme (SDP) for Federally Administrated Tribal Area (Fata). SDP spans over 9 years and will be completed by 2015.

The two leaders deliberated over SDP with the officials of the federal government and Fata Secretariat at Presidency for more than three hours. Under the programme, construction of small dams in Fata will be the government's top priority. The president and Prime Minister were informed that over 100 sites have already been identified in Fata, which suit for construction of small dams. These dams will generate power to meet demand in Fata, besides providing water to a vast acreage for irrigation. The next comes infrastructure in the priorities' list.

The meeting was informed that the federal government will provide funds from Public Sector Development Programme (PSDP) for the construction of quality infrastructure to facilitate the people in that area. In order to attract public and private sector investment for setting up industries to supplement government efforts to provide job opportunities to the people and eradicate unemployment.

SDP's other priorities will be development of road network, setting up of health units, schools for quality education, small and medium enterprises (SMEs), training centres to impart training to unskilled people to meet the requirement of the industries and other businesses. SDP is also meant to develop Fata and bring it at par with the developed areas of Pakistan and improve living standard of the people there.

The administrator of Fata secretariat gave a detailed presentation to the meeting on potentials of Fata in different sectors. He said Fata was enriched in different natural precious stones and the government should encourage private sector for their exploitation. According to the administrator, Fata has confirm resources of copper, gold silver and other previous stones.

The meeting also reviewed the progress of the on-going development projects in Fata and expressed satisfaction that utilisation of PSDP allocated for it was 99.7 percent. The meeting was informed that Fata will get Rs 7.5 billion from PSDP this year. In addition to it, Fata will be given special grant for ensuring adequate funds to ensure that its development projects complete well in time.

SDP will also supplement the US sponsored programme of ROZs from where exports to US and Europe will be free of duty and taxes.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Balochistan development: Netherlands, IUCN to sign MoU ​*
ISLAMABAD (September 26 2007): Kingdom of Netherlands and International Union for Conservation of Nature (IUCN) would sign Rs 450 million agreement for "Balochistan Partnerships for Sustainable Development." A ceremony for signing this contribution agreement would be held at Embassy of Netherlands on Wednesday morning.

The agreement would be signed by Ms Aban Marker, the regional director for Asia, on behalf of IUCN and Willem Andreae will represent the Embassy of Netherlands. The amount to be provided under this agreement would be spent on the execution of second phase of the Balochistan water programme, through the IUCN.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Thermal power plants: portion of ADB funds to be used for feasibility study ​*
FAISALABAD (September 27 2007): A portion of the funds $51 million under Power Sector Component of Infrastructure Development Project assisted by the Asian Development Bank (ADB) will be used for the feasibility study for thermal power plant based on gas from small gas fields of Pakistan.

This was disclosed by the sources of Private Power and Infrastructure Board, here on Wednesday. Additional funding, over and above the ADB's allocation for this project, will be provided by Pakistan Government. The Private Power Infrastructure Board (PPIB), a one-window facility of Pakistan Government on matters related to private power projects development is the implementing agency (IA) of the subproject.

PPIB is now seeking expressions of interests (EOIs) from suitable engineering consulting firms/joint ventures to carry out the Feasibility Study for Thermal Power Plant(s) based on Gas from Small Gas Fields of Pakistan.

There are gas fields in Pakistan which are offering limited gas supply and as such are not feasible to be connected to the main gas pipeline due to economic reasons. These reserves are either not being utilised optimally (gas being flared) or in some cases, the gas-fields are dormant.

The feasibility study is aimed at identification of such gas-fields offering limited gas supply for limited periods, authentication of gas availability and development of thermal power plant(s) based on gas from these gas-fields. One of the alternatives is to pool gas at some central point from nearby gas-fields, which otherwise is uneconomical to produce and/or transport.

This gathered gas could be used to feed a medium to large-scale power plant of about 150-200 MW. The other alternative is to set-up small-scale portable power generation plants operating on gas from such small fields, so that these can be relocated to another such site upon diminishing of the gas reserves at a particular site.

The cumulative capacity would be in the range of 150-200 MW. According to official sources, the Feasibility Study is proposed to be carried out by a joint team of Local and Foreign Consultants to be appointed by Private Power and Infrastructure Board (PPIB) in consultation with Asian Development Bank (ADB) and Infrastructure Management Unit (IMU). PPIB will be the main agency for execution of the study.

PPIB will oversee the study implementation, envisaged over a period of 15 months, with the advice and assistance from the Panel of Experts (POE). PPIB and/or POE, as the case may be, will review the drafts of various reports/technical memoranda of the Consultants before final approval. Regular formal meetings will be held so that there is no ambiguity on the layout of the scheme, design and work progress.

Pakistan has received financing from the Asian Development Bank to assist the Government to create an enabling environment for infrastructure investments for domestic public and private participation as well as bilateral and multilateral agencies and to increase infrastructure services in Pakistan, by implementing an infrastructure investment programme in the power, transport, and water resource sectors. The Loan is being administrated by Infrastructure Management Unit (IMU) established within the Planning and Development Division (PDD).

According to official sources, the feasibility study must explore for optimum power project, keeping in view the fuel availability, interconnectivity with transmission grid, system reliability, efficiency, availability, flexibility for power purchaser to opt for different combinations.

In case a single power project is to be implemented by pooling gas at some central point, the envisaged capacity would be 150-200 MW. However, in case, the other option of setting up small-scale portable power generation plants operating on gas from such small fields, so that these can be relocated to another such site upon, the cumulative capacity would be 150-200 MW.

The works covered under this study will include, but not limited to, data collection, technical and economical analysis and detailed feasibility level design of equipment, power optimisation, transmission, economic, financial, social and environmental investigations, cost estimates with detailed bill of quantities (BOQ).

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*165 megawatts Morgah plant: Attock General achieves financial close ​*
ISLAMABAD (September 26 2007): Attock General Limited (AGL) on Tuesday of its 165 MW thermal power plant to be set up at Morgah, near Rawalpindi. Liaquat Ali Jatoi, Minister for Water and Power, witnessed the signing of the financial close documents executed between AGL and the Private Power Infrastructure Board (PPIB) Managing Director.

Jatoi, in his remarks, appreciated the financial close of AGL which, according to him, was the fifth project which had achieved financial close under the 2002 power policy. "This," he said, "shows confidence of the investors in the policies of the government, committed to team up with the private investors for developing the power sector of the country, for a prosperous Pakistan."

The estimated cost of the project is $148.60 million, wherein 20 percent equity will be invested by the sponsors--Attock Refinery Limited and Attock Oil Company Ltd (UK)--and 80 percent debt will be financed through lenders (Faysal Bank Limited, Allied Bank Limited and Meezan Bank Limited). The power plant is expected to start its commercial operation by August, 2008.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

IT industry grows manifold: Netsol chief executive officer ​
LAHORE (September 27 2007): The size of the IT industry in Pakistan has grown manifold, and besides Karachi, a good number of IT companies are operating in Lahore, Islamabad and some other major cities of the country. NetSol Technologies Chief Executive Officer Salim Ghauri said in a statement here on Wednesday.

"Out of 1,056 IT companies, over 100 companies are ISO-certified and the industry's total size, in terms of volume, has crossed the mark of two billion dollars and its exports are close to touching 100 million dollars". He said 2007, like last year, registered robust growth in IT sector of Pakistan. Starting with a comparatively slow pace, it gained momentum gradually to compete internationally, he added.

Salim Ghauri said the workforce involved in this sector had crossed the 100,000 mark and an impressive number of foreign qualified youngsters were aggressively returning Pakistan to tap the potential of the sector.

He said that every growing industry, anywhere in the world, came across with issues like resource management, adding that pace of growth in Pakistan's IT industry was much higher than the number of IT professionals being produced by the universities and colleges.

"We can be facing a critical situation in case academic institutions are unable to provide sufficient number of IT professionals," Salim Ghauri warned. He said that both Pakistan Software Export Board (PSEB) and Ministry of Information Technology had chalked out an Internship Programme to meet the industry's demand of human resource.

PSEB is also investing to assist IT companies in certifications, including CMM and CMMI levels. It has allocated sufficient budgets for this purpose and its efforts would start showing results in the next three years.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*75 percent households to have Internet facility by 2015 ​*
ISLAMABAD (September 24 2007): Over 75 percent of households will have access to high speed Internet facility by 2015, an official of the Pakistan Telecommunication Authority (PTA) said on Thursday. "A target of 1.6 million broadband connections has been set for the next three years as against the present level of less than 100,000 connections," he said.

The official said the government is pursuing a plan to develop an infrastructure to cover maximum population with Internet facilities. He said the plan would help bridge digital divide by improving the access of information and communication technology to low-income groups in the country.

In the liberalised and deregulated environment of Pakistan, telecom and information technology companies are expanding their networks, business and customer base, he said.

The Universal Service Fund Company (USFC) has been operationalised to provide basic telecom services especially in remote areas of the country, he added.

This year's theme-"Connecting the Young"-has a special relevance to Pakistan as more than 50 per cent of population is below the age of 19.

The total number of fixed and mobile subscribers has reached 62 million, with major contribution coming from the mobile sector.

About 22 million youngsters are already connected on mobile networks as Pakistan has already crossed the Asian connectivity average, surpassing India and Sri Lanka and getting close to China.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Doing Business 2008 report WB lowers Pakistan ranking ​* 
Thursday, September 27, 2007
By Mansoor Ahmad

LAHORE: Though still the best place for business among major countries of South Asia, World Bank report Doing Business 2008 has ranked Pakistan three places down than last year and India 12 places above. 

In the report released on September 26, Pakistan is ranked 76 in the ease of doing business among 178 global economies. Last year, it was ranked 73 indicating that Pakistan has not kept pace with the reforms being instituted by other economies in this regard.

India on the other hand has improved its ranking from 132 to 120 showing that it has continued with necessary reforms. 

The World Bank based its finding after measuring regulations affecting 10 stages of a businesss life. These include starting a business, dealing with licenses, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business.

Data in Doing Business 2008 are current as of June 1, 2007. An analysis of the report reveals that Pakistan has to go a long way in improving its overall business climate. The needed reforms have to be instituted at a rapid pace backed by strong institutions to give real impetus to its economy. 

Pakistans ranking in ease of doing business is derived from the average ranking the country attained in above ten parameters.

Pakistan is ranked 59 in the ease of starting business, 93 in dealing with licenses, 132 in employing workers, 88 in registering property, 19 in protecting investors, 68 in registering property, 146 in ease of paying taxes, 154 in enforcing contracts, 94 in trading across border and 51 in closing business.

The report gives insight in the deficiencies needed to be covered to reduce the cost of doing business in the country. While giving due protection to the investors the government has failed to reform its cumbersome tax regime, enforcement of contract and employment of workers that impedes investment.

The reforms have to be pursued in tandem one closely following the other. 

An entrepreneur has to follow 11 procedures in Pakistan to start a business against only two procedures in Australia ranked first in this regard. Time required to start the business in Pakistan is 24 days, cost to start business is 14 per cent of its per capita income against zero per cent in Denmark that is the best.

Procedures to deal with licenses in Pakistan are 12 that is double the six procedures required in global best (Denmark). Time to deal with licenses in South Korea is 34 days against 223 days in Pakistan. Least cost to deal with licenses is in UAE that is 1.5 per cent of its per capita income against 849 per cent of per capita income in Pakistan.

Pakistan scored 43 out of 100 points in rigidity of employment index compared with zero achieved by Hong Kong and Maldives that are the best.

Bangladesh is on top with zero non-wage labor cost while it is 10 per cent of workers salary in Pakistan. The cost of firing a worker in Denmark is zero while it is equivalent to 90 weeks of salary in Pakistan. Norway has one procedure only to register a property against six in Pakistan. Cost of registering a property in New Zealand is 2 per cent of its value while it is 50 per cent of the property value in Pakistan.

Pakistan scored four points out of ten in strength of legal rights index compared with full 10 points scored by Hong Kong. New Zealand with score of 9.7 was declared the best protector of investor.

In South Asia Bangladesh scored 6.7 points, Pakistan 6.3 points and India 6.0 points.

In Maldives the entrepreneur has to pay only one tax while there are 47 federal, provincial and local taxes in Pakistan. Tax payment for the whole year consumes less than one hour in Maldives and 580 hours in Pakistan. Tax rate is 8.4 per cent in Vanuatu, 40.7 per cent in Pakistan and 70.6 per cent in India.

Average cost of import per container is $1336 in Pakistan and $367 in Singapore. Average cost of export in Pakistan is $390 per container same as China that is the lowest in the world. Procedures to enforce contract are 20 in Ireland and 47 in Pakistan. Time to enforce a contract is 120 days in Singapore and 880 days in Pakistan. Time to go through insolvency is 0.4 years in Ireland and 2.8 years in Pakistan. Recovery rate from insolvency is 92.6 per cent in Japan and 39.1 per cent in Pakistan.

Doing Business 2008 report WB lowers Pakistan ranking


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## Neo

*Elections not to mar future of Pakistans economy ​* 
Thursday, September 27, 2007

KARACHI: Leaders of the business community are worried about the current political crisis and are hoping for peaceful elections. They, however, see a bright future for Pakistans economy regardless of who gets elected.

Zubair Tufail, vice-president of FPCCI, says the business community was sensitive to the political situation, so there was likely to be some effect on trade and industrial activity. Nevertheless, he added, the effect would be short term as the local market was huge in size with a lot of potential that the investors wouldnt want to miss.

The uncertainty that everyone is talking about isnt likely to lead to any market crash. People are still making reasonable profits and business is progressing. Low-income people do suffer but businessmen are established people and so whatever impact there will be would be short term.

He said: Some people are trying to portray a negative look, but I am very optimistic as the GCC countries have reached their saturation point and there are no investment opportunities there. These countries are now turning towards India, Pakistan, China, Malaysia and Indonesia, and we should therefore review long-term effects which are of higher importance.

Arif Habib, a former chairman of the Karachi Stock Exchange, says these elections have come as a bad news for the businessmen as it means that they become paralysed when it comes to upcoming investments. 

Political uncertainty hinders investment plans and focus, so I think every stakeholders wish that these elections would be conducted soon, he added. However, if nothing out of the ordinary happens during the elections, then I predict that the future holds prosperous investments. 

Mohammad Nasir Khan, the president of the Islamabad Chamber of Commerce and Industry, says that they try and avoid politics. Whenever something like this happens, then the business community is the most affected one. Our businesses have been at a standstill for four to five months now, since the day the Chief Justice landed.

He says that the business community wants the elections to be held and decided soon so that they get a relief from the uncertain future and progress with their trade normally.

The ICCI president added a delegation of the Chamber had visited India and China last month. They are far ahead of us in terms of trade and technology. We need to have continuity of economy and policies to progress at the same pace. Pakistan has a huge amount of talent but no leadership to steer them towards the right path.

Abdul Kadar Jaffar, the president of the Pakistan Japan Business Forum, said since Japan was a democratic country, it would like to see Pakistan have the same status. As far as investors are concerned, they want Pakistan to have a stable economy and sustainability in policies.

He said: Politicians should shun their personal benefits and think about Pakistan first. Foreigners and not just Japanese feel very strongly in these respects. Yes, tradesmen are uncomfortable as the outcome of the elections is unpredictable.

If President Musharraf returns, then the existing policies are likely to continue and so there wont be any significant change. However, if one of the opposition parties gets elected, then no one can be sure. In fact we also need to look at what the judiciary is doing as they seem to be gaining strength too, he added.

Shahid Hasan Sheikh, the president of the Lahore Chamber of Commerce and Industry, says foreign investment has been the most deeply affected sector in Lahore which is almost at a standstill. 

Elections arent the only reason for this, but the law and order is disrupted too. We used to try and invite new potential businessmen into Lahore to come and analyse their trade prospects, but now even the regular visitors are hesitant.

He said the investment momentum had gained, but then this transitional phase caused hindrance that could not seem to be progressing further than its existing stage. We have the human resources, the raw materials, even the finance to move further, but we need to organise ourselves. Pakistan has an ideal geographical location that cant be ignored by any country so we need to cash in our our treasures and benefit from it.

Zubair Tufail summed up the situation in these words All we want is the campaigns and the elections both to go peacefully without the ordinary citizens facing the brunt of political activities.

Elections not to mar future of Pakistans economy


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* Rs22bn AJK capital project to start soon ​*
MIRPUR: The AJK police has been reinforced to ensure fool-proof security to the foreigners including Chinese engineers, experts and workers to be engaged in the upcoming mega project of reconstruction and rehabilitation in the quake-stricken zone including the construction work on China-sponsored gigantic Rs22 billion City Development Project to be launched soon in the quake-hit capital city of Muzaffarabad for the reconstruction and rehabilitation of the state metropolis.

This was disclosed by Acting Inspector General Police of Azad Kashmir Sardar Muhammad Faheem Abbasi while addressing a news conference at the Mirpur range DIG office here on Monday.

DIG Mirpur range Shahid Iqbal, AIG Traffic AJK Ibrar Haider, SSP Mirpur Raja Muhammad Razaq Khan, SPs of Kotli and Bhimbher including Sardar Gulfraz Khan and Chaudhry Muhammad Rafiq, DSP Headquarter Raja Irfran Salim, DSPs Nassar Ullah and Chaudhry Zulqarnain and other officers of AJK police were also present on this occasion.

The acting IGP of AJK said over seven to eight hundred Chinese engineers and experts were scheduled to land in Muzaffarabad to execute the Rs22 billion City Development Project being launched under the broad-based reconstruction and rehabilitation programme.

He said that the Earthquake Reconstruction and Rehabilitation Authority has extended financial assistance of Rs160 million for ensuring the fool-proof security arrangements for the protection of the foreign engineers and experts during the mega development process.

He continued that a Turkish company was already engaged in reconstruction and rehabilitation project in AJK capital. He said that under an integrated plan, Foreign Security Cell has been set up at Central Police Office in Muzaffarabad to supervise and monitor the security arrangements for the safety of the foreign engineers engaged in the development project.

He pointed out that various effective steps were initiated with the collaboration and cooperation of federal home ministry, after an MOU was formally signed between the minister of internal affairs and the concerned Chinese authorities.

Faheem Abbasi said that the upcoming City Development project will also help to rehabilitate the damaged infrastructure of AJK police in Muzaffarabad which was totally ruined in the killer earthquake of 2005. 

He pointed out that although police lines and all offices of AJK police in Muzaffarabad had turned into rubble, the police maintained its performance to maintain peace and order in entire AJK.

http://www.thenews.com.pk/arc_news.asp?id=3


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*Japan to assist in software development ​*
KARACHI: The economic conditions greatly improved in Pakistan during the last few years due to the competent leadership of the country, said Minister and Deputy Chief of Mission Embassy of Japan Akira Mizutani.

He was speaking during a recent meeting with the President of Pakistan Japan Business Forum (PJBF) Abdul Kader Jaffer.

However, Mizutani expressed concern over trade imbalance between the two countries and said there was a huge market of Pakistani Basmati rice and mangoes as well as other consumer products in Japan.

Mizutani said Japan was ready to support Pakistan in software and human resource development.

PJBF President Abdul Kader Jaffer said there was a lot of trade potential between Pakistan and Japan and emphasised the need of Japanese investment in Pakistan.

Jaffer said the PJBF was a unique business forum in the country, desiring to promote business and balance trade between the two countries.

He said Pakistan is now moving on a right track and most of the foreign investors are looking to invest here.

Pakistans foreign reserves have risen above $16 billion compared to 1999 when they were only $200 million.

http://www.thenews.com.pk/arc_news.asp?id=3


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*Overseas Pakistanis: Industrial area to increase foreign investment ​*
ISLAMABAD: The establishment of industrial area for overseas Pakistanis at Chakri would increase foreign investment in the country, member of Overseas Pakistanis Foundation (OPF) Board of Governors Chaudhry Zafar Iqbal said on Wednesday.

He said OPF welcomes government decision as it will create employment opportunities and boost economic activities.

The Foundation also hails the governments decision to allocate 500 persons Haj quota for overseas Pakistanis, he said in a statement here. Mr Iqbal thanked Prime Minister Shaukat Aziz, Minister for Labour, Manpower and Overseas Pakistanis Ghulam Sarwar Khan on taking initiatives for welfare of overseas Pakistanis. 

Daily Times - Leading News Resource of Pakistan


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*Marble, granite projects to generate 0.5m jobs by 2011​*
By Ijaz kakakhel

ISLAMABAD: Realising the potential of marble and granite sector, the government has approved in principle a project relating to the establishment of 10 model quarries, two machinery pools and four common facility training centers. 

The project also includes the establishment of two warehouses and up-gradation of 20 existing quarries all over the country. The project of marble and granite sector was approved in the executive committee of the National Economic Council meeting held on 19th of this month. Total cost of the project is Rs 1.98 billion and ministry of industries, production and special initiatives is the sponsoring agency. 

Officials in the ministry of industry, production and special initiatives told Daily Times here on Wednesday that the project would create employment opportunities for about 120,000 people and in future it was anticipated that the sector would be providing employment opportunities to half a million people by 2011 adding that all the above projects will incur losses in the first and second years of operation. The profits from model quarries will be utilised for the development of another model quarry and machinery handed over to the mine owner. 

At present, the officials said the project would create employment opportunities for about 120,000 people and in future it was anticipated that the sector would be providing employment opportunities to half a million people by 2011. 

Main objectives of the project was to remove the primitive, deficient and wasteful mining practices, poor processing technology and practices, inconsistency of quality of products, lack of progressive marketing strategy and improvement in the existing infrastructure facilities. 

The project will help the government in industrial diversification, technological up-graduation, and investment in infrastructure and human resource development. 

Officials in the concerned ministry said major obstacle to the growth of this sector was the lack of modern technology in mining. Existing quarries and processing units need to be up-graded and modernised to enhance quality, production, value-addition and to increase local sales and exports etc. Therefore, with the implementation of the said project, they said the mining sector would be in a position to play its due role in economic growth and may become not only source of employment but also a source of innovation and productivity. 

Duration of the project is three years, i.e. 2007-08 to 2009-10 and Pakistan Stone Development Company (PASDEC) is the executing agency. Other major on-going and potential projects in the marble and granite sector are: construction of Pakistan school of fashion design, adoption of social accountability (SA-8000), trade and facilitation project, Expo centre Lahore, creation of trade competitiveness institute of Pakistan, Lahore garment city, Faisalabad garment city and development project of Pakistan gems and jewellery development company. 

Officials in the ministry told this scribe that Pakistan had been gifted with abundant resources of several precious and semi-precious gemstones.

The vast natural reserves have founding in the country of precious and semi precious gemstones include ruby, emerald, tourmaline, garnet (pyrope, almandine rhodolite, demantoid, spessartite and hessonite), topaz, periodot, aquamarine, spinel, pargasite, diopside, moonstone, serpentine jade, epidote, pink beryl (morganite), purple beryl, sphene, zoisite, lapis lazuli, turquoise, kunzite, and almost all known varieties of quartz. Pakistan is home to many varieties of minerals, some of which make it prominent in the mineral world, such as peridot, aquamarine, topaz (various colours: violet and pink, golden and champagne), ruby, emerald, rare earth minerals

bastnaesite and xenotime, sphene, tourmaline, and many varieties and types of quartz. Pakistan shares a long and porous border with Afghanistan. 

This has effectively resulted in a full influx of all types of Afghan minerals into Pakistan, from which they are traded. Peshawar serves as the first, direct and only market for all minerals found in both these countries since 1979, after the Soviet Union invaded Afghanistan. Before the invasion, Pakistans only port city of Karachi held the bigger market of gem minerals, the officials added. Gemstones Corporation of Pakistan was established in 1979 to effectively explore Pakistans own share of wealth in minerals and to facilitate gemstone mining and business in Pakistan. It had some valuable influence but ultimately was liquidated in 1997 and hence abandoned. 

Three world-famous mountain ranges namely, Hindukush, Himalaya and Karakorum shroud the northern and northwestern parts of Pakistan. In these mountains nearly all minerals Pakistan currently offers to the world market have been found, including aquamarine, topaz, peridot, ruby, emerald, amethyst, morganite, zoisite, spinal, sphene, and tourmaline. It is important to stress here that the non-professional residents of mining areas are actually the ones who mine these jewels of earth in their hazardous, traditional way of mining.

Daily Times - Leading News Resource of Pakistan


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*Pakistan at No 138 on TIs transparency list​*
* Watchdog says corruption draining resources 
* Iraq, Somalia top list of corrupt states

LONDON: Corruption is rampant in Pakistan and it has rated at No 138 out of the 180 countries analysed by a respected anti-graft watchdog in a report released on Wednesday. 

Berlin-based Transparency International (TI) said in its annual Corruption Perceptions Index covering 180 countries that some of the worlds poorest nations were seen as having the most dishonest political and business elites.

The report showed that Pakistan, which is tied at No 138 with Ethiopia, Paraguay, Cameroon and Syria with a corruption rating of 2.4, has rampant corruption.

The index score relates to perceptions of the degree of corruption as seen by business people and country analysts. It ranges between zero, which is highly corrupt, and 10, which is very clean.

However, the group said that even countries believed to be the least corrupt  named this year as Denmark, Finland and New Zealand  needed to do more to combat corporate graft.t.

Corruption drain: Despite some gains, corruption remains an enormous drain on resources sorely needed for education, health and infrastructure, said TI Chairwoman Huguette Labelle, in a statement. It noted significant improvement among African countries such as Namibia, South Africa and Swaziland, which the organisation said highlighted that political will and reform can root out sleaze.

Iraq, Somalia top list: According to the report, the corruption in war-ravaged countries such as Iraq and Somalia is hobbling their recovery efforts. Countries torn apart by conflict pay a huge toll in their capacity to govern, Labelle said.

Low-scoring countries need to take these results seriously and act now to strengthen accountability in public institutions. But action from top-scoring countries is just as important, particularly in cracking down on corrupt activity in the private sector, she added.

TI also continued to find a strong link between poverty and graft with 40 percent of the countries scoring below three this year  indicating that corruption is considered to be rampant  classified by the World Bank as low-income states. afp

Daily Times - Leading News Resource of Pakistan


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*Kuwaiti firm to build 225MW power plant​*
ISLAMABAD, Sept 26: Am Power Company, a Kuwait-based company, intends to build 225MW combined cycle power project located at the Sundar Industrial Estate at an estimated cost of $200 million.

This was stated by representative of the company Ross Connelly in a meeting with Prime Minister Shaukat Aziz here on Wednesday.

Mr Ross apprised the premier about details of the investment to be made in the power project in Punjab. He also appreciated Pakistans economic policies and incentives being offered to foreign investors.

Due to high demand in energy and power sector, the premier proposed that Am Power Company could also explore possibilities of setting up additional power generation projects as well as investments in other related fields, like agribusiness, mining and oil and gas exploration.

The prime minister said successful implementation of a wide-ranging structural reforms and supportive macroeconomic policies have transformed Pakistans economy into a stable and resurgent one.

He said economic and political stability gained through consistency, continuity and transparency of policies and restored confidence of investors and Foreign Direct Investments (FDI) resulting in jobs creation and poverty alleviation.

He said structural reforms in many sectors, including banking, capital markets, energy, power and telecom, have attracted investment, created jobs and provided better quality services. Alongside the demographic dividends with 60 per cent young population is a very attractive feature for the long-term investors, he added.

Kuwaiti firm to build 225MW power plant -DAWN - Business; September 27, 2007


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*Pakistan's forex reserves at record $16.104 bln​*
KARACHI, Sept 27 - Pakistan's foreign exchange reserves rose by $13 million to a record $16.104 billion in the week ended on Sept 22, the central bank said on Thursday.

Reserves held by the State Bank of Pakistan rose to $13.835 billion from $13.798 billion a week earlier. However, those held by commercial banks fell to $2.269 billion from $2.293 billion, the central bank said in a statement.

Pakistan's foreign exchange reserves have grown steadily over the past few months because of rising foreign investment inflows and higher remittances from Pakistanis abroad.

Pakistan's forex reserves at record &#36;16.104 bln - Yahoo! Singapore News


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*'Environmental degradation costs Rs 365 billion a year' ​*
KARACHI (September 28 2007): The estimated annual cost of environmental and natural resource damage is about Rs 365 billion per year or six percent of gross domestic product (GDP). A World Bank study report, received here on Thursday, asked Pakistan to gear up its efforts to draw an effective environmental control policy and implement it or be ready to face its consequences.

"Delays in intervention have costly consequences for economic growth and the well-being of the poorest." The report said that the highest cost was from inadequate water supply, sanitation and hygiene: Rs 112 billion; agricultural and soil degradation: Rs 70 billion; and air pollution: Rs 67 billion. The urban air pollution added Rs 65 billion, lead exposure Rs 45 billion and rangeland degradation and deforestation rupees seven billion.

The report said that these were low estimates and somewhat misleading and reflected the lack of data that had led to partial estimation of values and the already low productivity of these resources. It said: "To guard against overstatement, the estimates are based on conservative assumptions and, therefore, represent the lower bounds of the damage."

The report omitted, among other factors, important categories of loss - most notably fisheries and coastal zone degradation, and recorded its regret for this, a many other omission, saying, "for which there is no adequate data".

The bank asked for interpretation of data and calculations of the relative share of damage with extreme care. "As a consequence, calculations of the relative share of damage must be interpreted with utmost caution since the magnitude of total damages is unknown since the impact of natural resource degradation have been underestimated."

The study could not calculate the impact of environmental degradation of coastal areas flora and fauna, but it recorded results of a satellite imagery, which showed a steady decline in the mangrove forests. Its acreage since 1990 had shrank from 160,000 ha to 106,000 ha.

Quoting from a IUCN findings, the report said: "Surveys conducted by IUCN in two districts, Badin and Thatta, suggest that the human toll has been substantial. Sea water intrusion may have affected over 135,000 people and led to loss in excess of 125 million dollars."

The report took into consideration the issues such as economic impacts of illness and premature deaths, urban air pollution, airborne lead pollution, indoor air pollution, salinity impact, groundwater changes, soil erosion, rangeland degradation, forests, and carried out comparative study with countries having poor environmental records to show the relationship between economic progress and cost of neglect of environmental issues.

The report said that a clear conclusion that emerged from the review was that environmental degradation eventually translated into socio-economic problems, which retarded development and growth.

The report emphasised upon the need to address environmental issues through policies and institutional reforms that created the right incentives for administrators to effectively enforce policies, and for polluters to comply with regulations.

Business Recorder [Pakistan's First Financial Daily]


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*Site phase-II to meet all modern needs of industry ​*
KARACHI (September 28 2007): At a time when infrastructure of major industrial areas of Sindh are in a dilapidated condition, Sindh government is developing basic Infrastructure in Site phase-II on Super Highway on international lines with an amount of around Rs one billion, Business Recorder learnt here on Thursday.

Sources in Sindh Industrial Trading Estates Limited said that Site phase-II would soon emerge as most modern and developed industrial zone as compared to other industrial areas of this province. They said that the newly developed industrial area would be a model industrial area in the province. Billions of rupee investment would be made in the Site phase-II as it would be free of all such infrastructural problems, which are prevalent in the other industrial areas, they hoped.

They said that a huge amount of Rs 940 million has already been spent on the project, which was going through completion phases, to provide all modern and international standard facilities to industrialists. It is now up to the investors and industrialists to invest in the newly developed area besides promoting it as model industrial site and contribute towards development of the province and the country.

According to sources, state of the art facilities have been provided in the Site phase-II. For the first time in the country, underground electricity system has been installed in this industrial area besides other facilities. They said that plots had already been allotted to around 1,150 allottees at Super Highway Site phase-II and the plots would be handed over to the owners soon after completion of development works.

Business Recorder [Pakistan's First Financial Daily]


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*'Punjab government spending Rs 62 million on tourism' ​*
LAHORE (September 28 2007): Punjab Tourism Minister Mian Aslam Iqbal has said the Punjab government was spending Rs 62 million on promoting tourism in the province and a special attention would be given to southern Punjab's tourist spots. He told a function in connection with the World Tourism Day here on Thursday that the government had prepared a comprehensive strategy in Punjab.

"Areas like DG Khan, Rajanpur and Bahawalpur have been targeted to develop tourist spots," he added. Tourism MD Irfan Ali and Punjab Parliamentary Secretary for Tourism Lubna Tariq also addressed the function.

Business Recorder [Pakistan's First Financial Daily]


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*Accord for 134MW power project​*
ISLAMABAD, Sept 27: The Private Power and Infrastructure Board (PPIB) on Thursday signed an Implementation Agreement (IA) with a subsidiary of UAEs Al-Ghurair Group for setting up of a 134 MW Star Power Project in Dharki, district Ghotki in Sindh, according to a press release.

Acting managing director of PPIB Mohammad Yousuf Memon signed the agreement on behalf of the government while Musarrat Zuberi, CEO of Star Power Project signed the agreement on behalf of the company.

The power plant will use Low BTU gas from Mari Deep reserves and run on combined cycle technology.

The sponsors of the project are ETA-ASCON (Al-Ghurair Group, UAE) and the power plant will be set up with an estimated cost of more than $100 million. It is expected that the power complex will start supplying power to the national grid by July 2010.

Accord for 134MW power project -DAWN - Business; September 28, 2007


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*Improved CPI sends positive message to investors world-wide: BoI ​*
ISLAMABAD (September 29 2007): Pakistan's improving 'Corruption Perception Index' (CPI) sends positive message to investors worldwide, Board of Investment (BoI) sources said.

An official of the BOI told APP here on Friday that the 'Corruption Perceptions Index' was based on 14 expert opinion surveys carried out by World Bank, United Nations, Asian Development Bank, etc, and gives an overall overview of public sector corruption in 180 countries.

Its ranking of countries is based on scores ranging from 0 to 10, where 'zero' indicates highest levels of perceived corruption, and 'ten' indicates lowest levels of perceived corruption in a particular country. The BoI official said that Pakistan has shown improvement in its CPI score from 1.0 (2nd country most corrupt country out of 54) in 1996 to an improved score of 2.4 in 2007 (42nd country above the most corrupt country out of 180).

The Economic Reforms introduced by the government in 1999 soon after President General Pervez Musharraf took office, through the then Finance Minister, now Prime Minister, Shaukat Aziz have proved to be remarkably successful. He added that based on the three pillars of 'deregulation', 'liberalisation' and 'privatisation', these reforms have resulted in very impressive economic growth over the last several years, with dramatic improvement in all major economic indicators, which have completely transformed the economy and placed it on the path of rapid growth.

He said that investors in Pakistan must feel well protected and secure now, because Pakistan has recently ratified the United Nations Convention against Corruption (Uncac) and the Government of Pakistan intends to carry on the momentum of its economic reforms so that all investors, whether local or foreign, could be provided level playing field. The Government, he said, is committed to providing national treatment and full legal protection to foreign investment.

With a view to increasing investor confidence and to protect their investments, a number of initiatives have been taken to improve the legal framework in the country.

Arbitration Acts of 1937 and 1940 were revised and updated to make them compatible with the needs of modern times. Pakistan signed the New York Convention in 1966, he added. In 2005, this Convention was ratified, and the enabling legislation has also been made into domestic law.

Business Recorder [Pakistan's First Financial Daily]


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*7.2 percent GDP likely in fiscal year 2008 ​*
FAISALABAD (September 29 2007): Economic Adviser's Wing of Finance Division has observed that the day is not far when Pakistan will be on the top rung of the ladder of prosperity and will become an economic power to reckon with.

In an Update Economic Performance Report, released here on Friday, Economic Adviser's Wing stated that "Economic Outlook/Forecast" for the current financial year 2007-08 on the basis of healthy macro-economic indicators remains extremely favourable.

Building on the same positive trajectory as last year, real GDP growth is expected to increase to 7.2 percent in 2007-08 ably supported by agriculture (4.8 percent) and large scale manufacturing (10.5 percent). Last year over all CPI based inflation averaged 7.8 percent, however inflation for this year has been targeted at 6.5 percent.

Investment has also been forecasted to increase to 23.5 percent of GDP as compared to last fiscal year's figure of 23.0 percent of GDP. On the external side of the accounts, current account was enumerated at 4.9 percent of GDP in 2006-07, this year it has been projected to decline to 4.7 percent of GDP.

Fiscal deficit on the other hand has been targeted to decline to 4.0 percent of GDP in the ongoing financial year as against 4.3 percent in 2006-07. As regards financing of budget deficit is concerned, the Government is expecting Rs 29 billion as grants.

Therefore, total financing requirements will be Rs 370 billion, of which Rs 220 billion will come from external sources. Within external financing Rs 113 billion is expected as privatisation proceeds. However, remaining Rs 147 billion will come from domestic sources, mentioned Economic Adviser's Wing Report.

According to EAW report, Pakistan's economy continues to gain traction as it experiences the longest spell of its strongest growth in years. The outcomes of the recently concluded fiscal year indicate that Pakistan's upbeat economic momentum remains on track. Economic growth accelerates to 7.0 percent in 2006-07 at the back of robust growth in agriculture, manufacturing and services. Economic growth has been notably stable and resilient.

With economic growth at 7.0 percent in 2006-07, Pakistan's real GDP has grown at an average rate of 7.0 percent per annum during the last five years (2003-07) and over 7.5 percent in the last four years (2004-07) in running. Compared with other emerging economies in Asia, this puts Pakistan as one of the fastest growing economies in the region along with China, India, and Vietnam.

The good performance has resulted from a combination of generally sound economic policies, on-going structural reforms and a benign international economic environment.

Based on the performance of half-a-decade of strong, stable, resilient and broad-based economic growth it appears that Pakistan's economy will continue to be a high mean, low variance economy over the medium-term. Pakistan is in the midst of its strongest economic expansion phase and its growth momentum is broad based. EAW report mentioned that all the three major sectors, namely, agriculture, industry and services have provided support to strong economic growth.

The commodity-producing sectors (agriculture and industry) contributed 2/5th and services sectors contributed remaining 3/5th to the real GDP growth of 7.0 percent in 2006-07. Within the commodity-producing sectors, the contribution of agriculture alone has been 15 percent (or 1.1 percentage point) while 25 percent (or 1.8 percentage point) contribution to 2006-07 growth came from industry.

Services sectors as a whole contributed almost 60 percent (or 4.2 percentage points) to FY07's strong economic growth. Current economic growth is mainly driven by strong domestic demand with investment taking lead over consumption for the first time in the last three years.

Net exports appear to have been a drag on overall growth in 2006-07. Almost 53 percent contribution to 2006-07's growth came from investment while consumption contributed 50 percent. Net exports contributed negatively to the extent of 3.0 percent. The last fiscal year's economic growth has benefited from higher consumption and investment demand owing to a growing middle class and favourable demographics.

Increased contribution of investment to growth is a healthy development as it will engender employment growth, which will support consumption demand and together they will play an important role in sustaining strong growth momentum in the medium-term.

Needless to say Pakistan's economy continues to maintain a solid pace of expansion since the fiscal year 2002-03. This recovery has been strong, rapid and sustained. During the fiscal year 2006-07, Pakistan's economy continues to perform impressively and its economic fundamentals have gained further strength.

Business Recorder [Pakistan's First Financial Daily]


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*SME industrial estates to be set up in Punjab ​*
SIALKOT (September 28 2007): Punjab government has evolved a strategy for the establishment of SME industrial estates in the Punjab. Official sources told Business Recorder here on Thursday that under the plan SME industrial estates would be set up in major industrial towns including Sialkot. The work on the plan would be executed in near future.

The step was being taken to redress problems being faced by the SME sector, which is the backbone of the national economy of the country. All basic facilities would be ensured to the SMEs in these proposed SME estates, sources added.

Special attention was also being accorded on the development of industrial sector on modern and scientific lines aimed at enhancing export volume and to bring industrial revolution through setting up large-scale industries including agro-based industries in the province.

Under the programme government has introduced certain schemes for the development of small and medium industries besides loan facilities was being extended to the small and medium businessmen enabling them to upgrade their industrial units and for setting up new industrial projects in the Punjab.

More than Rs one billion had been set aside for overcoming the financial problems being faced by the businessmen engaged with small and medium industries as well as for removing the hitches which were hindering the process of setting up of new industrial projects.

Apart from this, government was also providing loan facilities for the advancement and expansion of agro-based industries and dairy development, engineering and information technology in the Punjab.

The prime aim of setting up of large-scale industries was to ensure strong industrial base and to keep the economic wheel into gear in the Punjab. The maximum establishment of industries will not only help in doubling the export volume but also create wide job opportunities for the jobless educated, skilled and unskilled labour sources added.

Business Recorder [Pakistan's First Financial Daily]


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*Siemens to construct 220kv sub-station for KESC: contract signed ​*
KARACHI (September 29 2007): The Karachi Electric Supply Corporation (KESC) and Siemens signed a contract for equivalent of Rs 885 million for the construction of a 220kV GIS substation at Korangi.

This substation will connect the under-construction 220MW gas turbine power station to KESC network, and is required to be completed on a fast track to ease the current power supply situation in Karachi. Siemens will supply, 220 kV state-of-the-art gas insulated switchgear (GIS) with digital control system which will ensure reliable transmission of power to the network.

The contract was signed on Friday in Islamabad by Mohammed Amjad, Managing Director, and Mohammed Asghar, Chief Financial Officer from KESC and Suhail Anwer and Samiullah Siddiqui Divisional Directors from Siemens.

Business Recorder [Pakistan's First Financial Daily]


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*Malakand-III hydropower project to be functional from 2008 ​*
PESHAWAR (September 29 2007): Malakand-III hydropower project is near completion and would be functional by January 2008, SHYDO sources said here Friday. The mega hydel power project is being completed at a cost of six billion rupees, he said, adding, 97 percent works on the project has been completed.

It would generate 81 megawatt electricity of which 10 percent of which would be used for the local industries in the area. Apart from generating employment opportunities, it would also generate an income of Rs 15 million annually for the province. The agriculture sector would benefit from it as well and the problems of load shedding and low voltage would be addressed to a great extent.

It would also give boost to the industries in the area, the source added. The SHYDO sources said that Pakistan has capacity to generate 40,000 megawatt hydel power and NWFP alone can produce 25,000 megawatt electricity.

Business Recorder [Pakistan's First Financial Daily]


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*SPP signs 134 megawatts project agreement with PPIB ​*
ISLAMABAD (September 28 2007): The Implementation Agreement for 134 MW Star Power Project (SPP) was signed Thursday at the Private Power and Infrastructure Board (PPIB). Muhammad Yousuf Memon, Managing Director PPIB and Musarrat Zuberi, CEO Star Power Project signed the agreement, says a press release.

The power plant costing US $100 million will be located at Dharki, District Ghotki, Sindh, and will use low BTU gas from Mari Deep reserves. The power plant will apply combined cycle technology. The sponsors of the project are ETA-ASCON (Al-Ghurair Group, UAE). It is expected that the power complex will start supplying power to the national grid by July 2010.

Business Recorder [Pakistan's First Financial Daily]


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*World Bank to provide $200 million for power uplift projects ​*
KARACHI (September 28 2007): The World Bank (WB) will provide 200 million dollars to Pakistan for the electricity distribution and transmission improvement project mainly in rural areas of the country. The World Bank, in a recent development, agreed to extend financing facility in line with its lending programme to Pakistan for 2007-08, official sources told Business Recorder on Thursday.

"The government itself has asked the World Bank to include the project in its lending programme for 2007-08," said an official in the ministry of water and power. "The Discos (distribution companies) have requested and obtained approvals from their respective board of directors to pursue the World Bank financing in their investment programmes", he added.

He said the distribution firms had prepared a number of investment projects, which had been approved by the government and from which the components for the project would be selected.

The designed lending programme of the World Bank for the project suggests 130 million dollars for electricity distribution, 55 million dollars for transmission and 15 million dollars would be provided for technical assistance.

It says the project will be financed by the World Bank loan and by the companies themselves but insists that the indicated size and the allocation of the bank loan are preliminary and could change.

"The distribution, which is the key segment of the power industry for restoring its financial performance, is responsible for the largest technical and commercial losses in the electricity supply chain in Pakistan," said an official of the project. Similarly, he said the fast growing demand required continuos strengthening and expansion of the already stressed transmission network.

World Bank high officials visited Pakistan in the start of current year and announced that the bank's overall lending to Pakistan would be increased to 1.5 billion dollars a year over the next three years. During their visit to Pakistan as members of the global development institution, they met the country's leadership, and briefed them about the World Bank's planned projects in the region.

The official said that under technical assistance for electricity transmission and distribution project, the World Bank would provide support in various areas. "It would focus project implementation, capacity building for the various corporate functions in the project companies and investment planning and financing strategies, including attracting private investment," he added.

He said the objective of the project was to help increase the efficiency, reliability, and quality of electricity supply by supporting reductions in overall technical and commercial losses, increased availability of electricity and improved voltage profile. "The project also aims to support power sector reform and investment planning and financing through technical assistance," added the official.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

* Pakistan should trim current account deficit ​*
WASHINGTON: Pakistan should be able to maintain high growth this year and next but it ought to reduce the current account deficit by targeting spending, the International Monetary Fund said on Wednesday.

Further fiscal consolidation, starting in 2007/08, would contribute significantly to reducing the external current deficit while lessening pressures on real interest rates, the IMF said in a statement after a mission to Pakistan.

Pakistans current account deficit mounted to 4.9 per cent of GDP (gross domestic product) in 2006/2007, the IMF said, blaming slower export growth. The economy grew 7 per cent in 2007/2008 and the IMF expected this pace to be kept up.

Inflation has slowed on a year-on-year basis to 6-1/2 per cent in recent months and the IMF said that steps to reduce the role of the State Bank of Pakistan in financing the government and providing export finance would help. (The IMF mission) recommended a flexible approach to the determination of interest rates to help achieve the inflation objective and reduce import growth, it said. 

http://www.thenews.com.pk/arc_news.asp?id=3


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## Neo

*PM approves BoI restructuring plan: Investment division to work to bring FDI in Pakistan

* Foreign direct investment worth $10 billion to $15 billion per year targeted​*
By Sajid Chaudhry

ISLAMABAD: Prime Minister Shaukat Aziz on Thursday approved in principle the creation of investment division by restructuring the Board of Investment (BoI) to achieve $10 billion to $15 billion in foreign direct investment (FDI) per year by 2010, a senior government official told Daily Times. 

The prime minister was chairing a meeting on the restructuring of BoI here at the PM House on Thursday afternoon. 

According to the official, the restructuring of BoI would enable it to get its investment related proposals, plans and other issues approved directly from the prime minister, federal cabinet or its economic coordination committee (ECC), without approaching the ministry of privatisation. The restructured BoI is expected to be headed by a federal minister for investment instead of minister of state for investment. 

The restructuring would transform BoI into a more vibrant organisation providing one window operation for expeditious finalisation of local and foreign investment projects. 

Federal secretary investment division would be exercising full powers to facilitate the investment related proposals or projects. This would result in early finalisation and implementation of the much-needed investment projects that would result in job creation and strengthen the countrys economy, the official added. 

The meeting was told that an efficient and effective BoI is critical for increased foreign investment because it links macroeconomic stability to GDP growth, foreign reserves, balance of payments, current account deficit management and competitiveness indicators. BoI performance is critical meeting FY 2007-10 FDI targets of $10 - $15 billion and BoI is not geared for meeting these targets unless restructured 

Whilst economic affairs division is a government-to-government debt generating division ($2-$3 billion), therefore BoI also needs to be an administrative division to generate more than $10 billion (non-debt) private investment under the medium term development framework (MTDF). 

The meeting was also informed about the new organisational structure according to which BoI to be a division on the pattern of FBR/PC board to be chaired by the federal minister and a summary in this regard has been sent to the prime minister through the finance and cabinet divisions for approval, the official informed. 

During the meeting the prime minister said that an effective and efficient BoI is critical for macroeconomic stability and growth of FDI. He stressed the need for international benchmarking of BoI to make it a viable organisation to attract more investment for Pakistan.

The PM said that continuous flow of FDI to Pakistan indicates the strength of the economy as well as the confidence of investors in the economic future of the country. This is due to strong macroeconomic growth, attractive demographics and continuous structural reforms based on liberalisation, deregulation and privatisation, he added. 

The prime minister said that BoI should develop a marketing plan, which should be dovetailed with the overall investment and reform strategy of the government. The marketing plan should clearly identify the potential areas of investment and the incentives provided by the government, he said. 

The prime minister said that the marketing plan should also include a clear and comprehensive strategy to achieve the targets, create awareness at local and foreign level about the investment potential of Pakistan and to sell the investment potential of the country more effectively. 

Noting that different parts of the world have different requirements, the prime minister asked the BoI to develop geographical expertise. They should conduct research about the interests of investors in Pakistan and prepare country-specific plans and policies to guide different categories of investors more effectively, he said. 

The prime minister asked BoI to consistently guide the foreign missions, federal and provincial government departments about investment policies and potential areas of investment. 

While identifying major potential areas for investment including IT & Telecom, real estate and construction, engineering, agri-business and manufacturing, the Prime Minister asked BoI to focus more on preparation of promotional and marketing material for the guidance and facilitation of potential investors. 

Earlier, the meeting was told that restructuring of BoI would help boost local and foreign investment as well as improving the working environment of BoI. 

BoI, after restructuring will be working under the name of Investment Division and will thus help further simplify the procedure for investment.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Finance ministrys economic outlook: GDP to grow by targeted 7.2%​*
ISLAMABAD: The GDP of the country is expected to grow as per its target of 7.2 percent in 2007-08 ably supported by agriculture growth at 4.8 percent and large scale manufacturing growth of 10.5 percent, according to the economic outlook released by the ministry of finance on Friday for the current fiscal year 2007-08. 

As regards financing the budget deficit for the current fiscal year 2007-08 is concerned, the government is expecting Rs 29 billion in grants. Therefore, total financing requirement would be Rs 370 billion, of which Rs 220 billion will come from external sources. Within external financing Rs 113 billion is expected as privatisation proceeds. However, remaining Rs 147 billion will come from domestic sources as borrowing. 

This economic forecast has not taken into account the political scenario especially the controversy over presidential election, resignation by opposition parties, and worsening law and order situation in the country right from the start of this fiscal year. 

In its Asian Development Outlook 2007 Update released last week, the Asian Develo-pment Bank has pointed out that the fundamental issue confronting the economy is the resolution of the current political uncertainty in Pakistan. The bank suggests that the forthcoming presidential and parliamentary elections must be seen by the population as fair, and the continuity and coherence of economic policy should be ensured, so as to sustain economic and governance reforms. 

The ADB has projected that GDP growth of the country to be around 6.5 percent against the target of 7.2 percent for the current fiscal year. 

On the basis of strong demand, bolstered by increased private and public investment, the economy is seen keeping most of its momentum and will achieve 6.5 percent growth in FY08.

The slight deceleration reflects several factors: the tightening of the monetary policy stance to contain consumer demand; the impact of high international oil prices; continued slow growth in exports, due mainly to greater international competition in the textile sector; and expected slow growth in the US economy (Pakistans largest trading partner) in JulyDecember 2007, the ADB points out.

The ministry has said that economic outlook for the current financial year 2007-08 has been prepared on the basis of healthy macroeconomic indicators, which remain extremely favorable. Building on the same positive trajectory as last year, real GDP growth is expected to increase to 7.2 percent in 2007-08 ably supported by agriculture (4.8 percent) and large scale manufacturing (10.5 percent). Last year overall CPI based inflation averaged 7.8 percent, however inflation for this year has been targeted at 6.5 percent. Investment has also been forecasted to increase to 23.5 percent of GDP as compared to last fiscal years figure of 23.0 percent of GDP. On the external side, current account was enumerated at 4.9 percent of GDP in 2006-07, this year it has been projected to decline to 4.7 percent of GDP. Fiscal deficit on the other hand has been targeted to decline to 4.0 percent of GDP in the ongoing financial year as against 4.3 percent in 2006-07. 

The International Monetary Fund (IMF) mission, who concluded its Pakistans annual Article IV Consultations on September 20, 2007, has projected that the prospects for sustained high growth in 2007-08 and over the medium term remain favorable, as macroeconomic stability and market-oriented reforms further take hold.

In light of current uncertainties in global financial markets, the IMF mission stressed the need for very prudent macroeconomic policies in 2007-08.

Daily Times - Leading News Resource of Pakistan


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## Neo

*SPI up by 10.09 percent ​*
ISLAMABAD (September 30 2007): The SPI-based inflation was 10.09 percent up during the week ending on September 27 against the same period of last year, with 12 percent dearness for the low income group. The data released by Federal Bureau of Statistics on Saturday showed no respite for the poor as prices of kitchen items kept going up regularly without an iota of relief.

Persistent increase in essential kitchen items' prices has been eroding the budget of those who are earning between Rs 3000 and Rs 5000. The SPI inflation was recorded at 161.68 percent on September 27 with a 0.69 percent decline from 162.81 percent of previous week.

The low-income group was more affected by the price hike, as inflation was recorded 12 percent for earners of Rs 3000 pm as against 7.58 percent for those earning above Rs 12000 pm. The week under review showed that price hike was 11.89 percent for people earning Rs 3000 to Rs 5000 and 10.91 percent for those earning between Rs 5001 and Rs 12000.

The SPI bulletin, based on data collected for about 53 items from 17 centres showed increase in 17 items, decline in 13 whereas 23 remained unchanged. However, the prices of tomatoes, onion, wheat flour, bananas, garlic, potatoes, moong pulse washed, gram pulse washed, mash pulse washed, lawn red chilli and sugar declined during the week but were still much higher when compared to the same period of last year.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'80 percent Fata uplift budget misappropriated' ​*
PESHAWAR (September 30 2007): The speakers here in a dialogue on development and law & order situation in Fata rejected the tall claims of federal government regarding progress and development of the tribal region as farce, saying 80 percent of the development budget has been misappropriated.

The speakers in the Dialogue, organised under the auspices of Journalists Helpline, Pakistan, were: former MNA Sahibzada Haroon Rasheed, Jamaat-i-Islami (JI) Deputy General Secretary Zar Noor Afridi, Shahid-ur-Rehman of the Tribal Area Chamber of Commerce & Industry (TACCI) and Khyber Union of Journalists (KhUJ) General Secretary Nasir Hussain.

They said the people would react to working on the completion of the US agenda and imposition of Western culture, adding that campaign against CDs shops and music centers is being run with the support of the tribesmen.

They acknowledged that lawlessness and terrorism had badly affected the business activities in the tribal belt. They called for the utilisation of the vast mineral reserves of the tribal area for the development of the people.

The speakers were of the view that institutions have become weakened in the impoverished tribal region, saying that tribesmen are being deprived of their basic rights in the garb of the black law of the Frontier Crimes Regulations (FCR) even in the present modern era.

They expressed concern over the prevailing situation in Fata, saying the violation of Pakistani frontiers and killing of innocent tribesmen are very serious matters. Such kind of incidents prove that the tribesmen have been even deprived of the right to call themselves Pakistani citizens, they added.

They said for lack of health and education facilities have kept tribal belt backward and far away from the progress and development of the modern era. The lack of employment is also pushing them towards backwardness with each passing day.

Replying the question of journalists' panel, they said that tribesmen would not tolerate to sacrifice their autonomy just for seeking economic and employment benefits from the United States. They said that peace in tribal belt of Pakistan was linked with situation in Afghanistan.

"Till the withdrawal of foreign forces from Afghanistan and their interference in the tribal areas of Pakistan, the restoration of peace to Fata are looking impossible. The withdrawal of foreign forces from Afghanistan is inevitable for restoration of peace to tribal areas of Pakistan," the speakers stressed.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Ship breaking industry imported 26 vessels for $67.7 million during January-September ​*
KARACHI (September 30 2007): The country's ship breaking industry imported 26 scrap vessels during nine months from January to September 26, 2007, costing $67.7425 million. This comprised around 135,485 light displacement tonnage (LDT) at a cost of $500, or about Rs 37,000, per LDT.

This was stated by Azam Malik, Chairman, Pakistan Ship Breakers' Association (PSBA) on Saturday. He said that during this period the industry created employment opportunities for nearly 15,000 people. He said that the ship were purchased from international ship sellers in Japan, France, Germany, United States, Italy, United Kingdom, Belgium, Canada, Poland, and others.

Imports of scrap ships declined to $16.028 million marking a decrease of 65.17 percent during July-August 2007 as compared to $46.021 million in the corresponding period of last year, official statistics showed. Imports dipped due to higher demand for steel in Bangladesh where the importers were offering attractive prices to the sellers for the scrap ships, Azam said.

He said the ever-increasing international demand for steel was also an attributing factor as the international market forces attract most of the sellers of scrap ships. In addition to this, he said, the dollar factor was also prominent in this regard as a US dollar accounts for around 39 Indian rupees while it accounts for around 60 to 61 Pakistani rupees.

"Ship sellers get more attractive dividends from the Indian market due to a remarkable difference in the value of money", he added. He said that the climate was now favourable for local ship breakers to enable Pakistan regain the status of world's top ship breaking industry.

"As ship industries of India and Bangladesh are experiencing some internal problems we have a fascinating opportunity to make extensive buyings and we are very much doing it", he said. He said that ship sellers would certainly turn to Pakistan once they face a quota system in BD and India, which are the major competitors of Pakistan in this industry.

On the matter of price, Azam said that rates for breakable vessels range from $324 to $500 (Rs 33000 to 35000) per LDT. He said that the industry feared a setback when taxes on the ship breakers were increased to Rs 5600 per ton in the 2007-08 budget. This amounted to 107 percent increase from the pre-budget Rs 2700 per ton. But, after repeated appeals to the President and Prime Minister this has been revised to Rs 3,660 per ton general sales tax (GST), and one percent income tax.

About pricing of ship Azam said that oil tanker is the most expensive vessel which costs around $525 per LDT, while passenger ships normally cost $425 per LDT.

He said that prices were fixed after evaluation of various factors like 'made-in' (country of manufacture) of the vessel, taxes structure, local and international rates, wastage etc. "We keep our profit margin from 4 to 5 percent in the purchase of a scrap vessel", he added.

He appealed to the government for developing the basic infrastructure like roads, electricity, gas etc in Gadani, which is teh hub of the country's ship breaking industry.

However, he added that "Balochistan Chief Secretary after a meeting with us had issued directives to develop the road infrastructure in Gadani." "We are set to hold another meeting with him (chief secretary) which would be crucial in terms of government's compliance with our demands and bring fruitful results", he hoped.

It is interesting to note that the industry, which was once the world's top ship breaking industry and is a major source of quality raw material to the country's steel sector, has been working without proper arrangements for water, electricity and fuel ever since it was established almost 40 years ago.

Business Recorder [Pakistan's First Financial Daily]


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*First passenger flight lands at Sialkot International Airport ​*
SIALKOT (September 30 2007): The first passenger flight landed at Sialkot International Airport on Saturday with 32 passengers including Chief Executive Airblue Shahid Khaqan Abbasi and Khawaja Muhammad Asif Member National Assembly.

Chairman Sialkot International Airport Baber Iqbal, Chief Executive of Sialkot International Airport Khawar Anwar Khawaja, Provincial Industries Minister Muhammad Ajmal Cheema, Chairman Task Force on Trade and Industry, District Co-ordination Officer and District Police Officer Sialkot received the passengers in a simple but impressive ceremony.

Speaking on this historic occasion Chief Executive Sialkot International Airport Khawar Anwar Khawaja said that President Pervez Musharraf would perform formal inauguration of the Sialkot airport in near future. It was President Pervez Musharraf who approved the project of Sialkot international airport and help fulfilling dream of the business community of this export-oriented city and hub of cottage industry of the country, Khawar Khawaja said.

He said that business community of Sialkot had played a dominated role in undertaking the mega project elegantly on self-reliance basis for fulfilling their dream.

The mega project of Sialkot international airport costing more than Rs two billion, had a great significance because it was totally financed by the private sector and so far the private sector had not built a project of this magnitude and size in the country, and not even in South Asia Khawar Khawaja said.

Speaking on the occasion Chief Executive Airblue Shahid Khaqan Abbasi said that Airblue would extend full support and co-operation to the management of Sialkot airport for making the project a complete success. He said that it was heartening that Sialkoties had set a role model by constructing most modern airport with longest international runway.

It may be mentioned that most modern Apron having the parking capacity for six wide-bodies aircraft or three airbus plus F-27 aircraft had been constructed at the airport. Besides 3,600 meter long, 45-meter wide taxiway had been constructed.

The longest international runway of the country measuring 3.6 Km had been constructed and it will cater the requirements of all aircraft used for international and domestic cargo and passenger traffic. The work on main passenger terminal was in full swing however temporary arrangements had been made accommodating the passengers at the airport.

The project had been undertaken on Build, Own and Operate (BOO) basis and this modern and professionally designed international airport has been developed over 1,004 acres of land and fully equipped for handling B-747-400, A300 and 737 aircraft.

The airport will not only cater the needs of golden industrial triangle of Sialkot, Gujranwala and Gujrat but also generate thousands employment opportunities besides bring a revolutionary change in the socio-economic development of the region.

With the merging of Dry Port, Export Processing Zone and Airport at Sialkot, the importance of the area will further enhance which will ultimately help substantial increase in the exports from the area in future. Besides, the construction of mega project of Sialkot-Lahore motorway and setting up of an engineering university and industrial zone in the area has further increased the importance of the airport.

In the absence of airport, the exporters of Sialkot were confronting with multifarious problems because the air cargo from the area was sent via Lahore and Islamabad airports. But due the support and co-operation of the government the construction of airport has been given practical shape, which would ultimately help reduce the logistic problems of exporters of Sialkot, Gujranwala and Gujrat areas.

The potential traffic forecast for Sialkot international airport is scaled down at the time of opening to 530,339 passengers a year while estimated cargo tonnage at the time of opening is expected to be 28,515 tons. This means that by the end of year 2012 about 53,000 tones of cargo will be lifted from Sialkot International Airport. Due to the provision of passenger facilities at Sialkot International Airport, it was estimated that the general public would benefit to the tune of over Rs two billion in terms of time and money savings.

Business Recorder [Pakistan's First Financial Daily]


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*Pakistan and Iran agree over gas sales sans India ​*
TEHRAN (September 30 2007): Pakistan has agreed to details of a deal for buying gas from Iran, officials from both sides said on Friday, adding that the proposed tri-nation pipeline would be viable even if India, the third party, walked out.

India stayed away from this week's talks in Tehran on the proposed $7 billion pipeline, saying it wanted to agree transit costs through Pakistan on a bilateral basis first, an Iranian official said. But he said India had not said it was quitting.

"The economics of the project will improve with Indian participation but ... the project is economically viable as a bilateral project also," PM's Adviser on energy Mukhtar Ahmed told reporters in Tehran.

National Iranian Oil Company (NIOC) International Affairs Director Hojjatollah Ghanimifard said the three sides had previously planned for gas sales and purchase agreements (GSPAs) to be negotiated separately by India and Pakistan. "So far, the information formally we have from the authorities of India is that they are willing to join us. They have just their internal problems, including that they need to finalise the transit fee with our good Pakistani friends," said Ghanimifard after talks late on Friday.

The Iran's oil minister said on Wednesday his country would still sign a deal with Pakistan if India decided not to join. Mukhtar said Pakistan and India had agreed in principle how to tackle issues like transportation tariffs and transit fees.

"We don't see transit through Pakistan as a problem. We've had bilateral discussions with India on this subject," he said, although he said more talks were needed.

Speaking of Pakistan's talks with Iran, Mukhtar said: "We have agreed upon everything that we needed to agree on with regard to the gas sales and purchase agreement and the inter-governmental framework agreement." He said the details would be drawn up in final documents to be examined at bilateral talks in Islamabad on October 15-19.

Mukhtar did not give details for the price of the gas agreed, but said it would be linked to the price of oil. He as well as they agreed on a price review clause - an issue that had been pending - but he did not elaborate. In July, Ghanimifard said India and Pakistan had accepted Iran's demand for gas price reviews based on market changes. He denied reports by some Indian newspapers that the pipeline talks had failed after Iran demanded a review every three years.

The pipeline would initially carry 60 million cubic metres of gas daily to Pakistan and India, half for each country. The pipeline's capacity would later rise to 150 million cubic metres. Pakistan says it could want 60 million cubic metres for itself in the future.

Iran says it has completed 18 percent of the work for the pipeline to bring gas from its South Parts field up to Iran-Pakistan border. Pakistan has yet to begin work on a 1,000-km stretch of the pipeline to link Iran with India.

Iran has the world's second-largest gas reserves after Russia. But sanctions, politics and construction delays have slowed its gas development, and analysts say Iran is unlikely to become a major exporter for a decade.

Business Recorder [Pakistan's First Financial Daily]


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*$400 million coal-based power plants planned ​*
KARACHI (September 30 2007): Two coal-fired power plants of total capacity of 250 mega watts would be established in Sindh by Descon Engineering and Descon Minex (Pvt) Limited with an estimated investment of around $400 million.

Sindh Coal Authority, Sindh Mines and Mineral Development Department in this regard signed two memorandum of understandings (MoUs) on Saturday for conducting feasibility study separately for the establishment of two 250 MW capacity coal-based power plants and integrated coal mining at South-east of Naukot, District Tharparkar and Golarchi, District Badin.

The MoUs were signed by Syed Abbas Ali Shah, Director General, Sindh Coal Authority (SCA) and the representatives of Descon Limited. As per MoUs details, SCA will allocate an area of 100 Square Kilometers to the firm to carry out feasibility study, undertake development of identified coal mines and commissioning and operation of mine mouth coal-fired power plants with capacity of 125 MW each at Golarchi and South-east of Naukot ie integrated fired power station.

The Descon Engineering and Descon Minex (Pvt) Limited will apply for letter of intent to Private Power and Infrastructure Board (PPIB), Water & Power Development Authority (WAPDA), for establishment of mine-mouth indigenous coal-fired power stations with total capacity of 125 MW each. If the power project is found feasible, SCA would support and assist in obtaining the same.

Sindh Coal Authority will allocate coal field area for a period of 18 months from the date of demarcation of the area for exploration license which would take place within 15 days after signing of MoUs. Descon Engineering will carry out survey and exploration and investigation at its own cost and risk for completion of a bankable feasibility study report.

The demarcation of the coal field area would be done by a joint survey team comprising the technical personnel of Descon Engineering, DG SCA, DG Mines and Mineral Development Department and Sindh Revenue department.

The purpose of investigation is to determine suitable quality and quantity of coal which could be economically and safely mined, handled and transported to the power plant in order to provide at least one million tonnes of coal or more annually for 30 years period.

The signing ceremony was attended by Sindh Mines and Mineral Development Minister Irfanullah Khan Marwat, Tufail Ahmed Jumani, Additional Secretary Mines and Mineral, Muhammad Khalid Mirza, DG Mines, Mineral Development, Abdul Razak Dawood, Chairman Descon Engineering and representatives of the firm.

Speaking on the occasion, Irfan Marwat termed fixation of upfront tariff rate on coal-based power project crucial for completion of the ongoing projects. He hoped that the upfront tariff would be finalised on electricity generated through coal of Sindh as President Pervez Musharraf was personally taking interest in the matter.

Business Recorder [Pakistan's First Financial Daily]


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*Inflationary pressures to stay due to monetary overhang: report ​* 
Sunday, September 30, 2007

KARACH: Further inflationary pressures may be seen in near future owing to monetary overhang research analysts said Saturday.

Monetary overhang of 4.6 per cent would further fuel inflation, Samiullah Tariq researcher with InvestCapital Securities said in his report. He pointed out that GDP growth remained 14.7 per cent (real growth plus deflator) last year, while the money supply growth remained much higher due to a variety of factors.

Consequently, a monetary overhang has been created which would be inflationary for the economy, Samiullah stated. Presently, we are observing inflationary pressures in the economy (MoM inflation for Aug-07 is at a 12-month high of 1.3 per cent). We believe it would be difficult for the government to contain inflation below 7 per cent against its target inflation of 6.5 per cent if the current situation persists, he opined. 

The SBP has released the money supply numbers for FY07. Actual money supply growth of 19.32 per cent has outstripped the FY07 target of 13.5 per cent amid rising net foreign assets (NFAs) on the back of higher foreign investment (+88 per cent inclusive of direct and portfolio investment) and remittances (+19 per cent). 

Samiullah Tariq said government sell-offs restricted borrowings but fuelled NFAs The government borrowing has remained restricted during the year despite higher-than-expected fiscal deficit of 4.3 per cent of GDP against the target of 4 per cent for FY07.

The government offloaded significant amount of its holdings in UBL ($650mn/Rs39.2bn) HBL (Rs12.1bn/$200mn) and OGDC ($811mn/Rs49bn) to mitigate the impact of rising development expenditures (+16 per cent YoY), he reminded.

In addition, the government also floated Eurobonds in the international market worth around $750 million (Rs45 billion) in order to take advantage of the excess liquidity present in the global market. 

These government transactions coupled with FDI of $5.1 billion (+46 per cent) and portfolio investment (inclusive of governments sell-offs) of $3.3 billion (up 241 per cent) contributed to 274 per cent rise in NFAs from Rs73 billion to Rs275 billion.

This rise in NFAs is also evident in the rising foreign exchange reserves of Pakistan, which have increased by $2.5 billion from $13.1 billion at Jun-06 to $15.6 billion on Jun-07. Private sector credit flow down by 9 per cent during FY07. An in-depth analysis of the credit borrowers shows that 45 per cent of the total loans extended were received by the manufacturing sector.

Among the manufacturing industries, food products and beverages (11 per cent), textile weaving (5 per cent) and paper & board industries (3 per cent) have made major contributions to the total private sector credit.

Major expansions are being witnessed in the agricultural credit as the growth of agriculture has risen by 5 per cent in FY07. Higher food prices (+10 per cent for FY07) and higher production volumes boosted farmers confidence, hence, credit extension has increased. 

Credit for Mining & Quarrying has increased by 9 per cent as a consequence of rising commodity prices around the world. Oil prices are presently up by 32 per cent YoY. In addition, the Petroleum Policy 2007 is expected to provide clear incentives to investors in order to achieve self-sufficiency for the countrys energy needs. Investment into fixed assets in the Mining sector - measured by gross fixed capital formation - has increased by 94 per cent during FY07. 

Credit for the Manufacturing sector grew on the back of higher investment into FMCGs, Paper & Board industries. Pakistans consumption expenditure (inclusive of government and private) has increased at a 5-yr CAGR of 15 per cent, which has increased demand for packaged food and products. 

Among the Textiles, the total sector witnessed zero percent growth, while among the sub sectors Weaving was the best performer. Spinning and finishing sectors have witnessed significant credit retirement, as supply glut situation has been faced by these two sectors. This credit retirement has been compensated by expansion in Weaving, Knitwear and Apparel. 

We believe that credit growth would improve after the political uncertainty would come to an end till first quarter of calendar year 2008. As the confidence of the investor would improve, investment would increase pushing the GDP growth higher in the coming years.

Inflationary pressures to stay due to monetary overhang: report


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## Neo

*Current account gap shrinks in July-Aug​*
ISLAMABAD, Sept 29: The current account deficit shrank by $562 million to $1.434 billion in the first two months (July-August) of the current fiscal year as against $1.996 billion during the same period last year, says a fact sheet of the ministry of finance issued on Saturday.

As percentage of GDP the current account deficit in the first two months stood at 0.9pc of the projected GDP for the year as against 1.4pc in the corresponding period of last year.

According to the details, exports (on fob basis) have grown at an average rate of 6.7pc during the period under review amounting to $2.910bn. Imports on the other hand recorded a modest fall of 0.6pc totalling $4.624bn during the period.

The narrowing of trade deficit is the direct result of improvement in exports on the one hand and a marginal decline in imports on the other. The improvement in the trade balance during the period under consideration was an encouraging development and would have salutary impact on the countrys overall balance of payment.

Invisible balance maintained a surplus of $269 million as opposed to a deficit of $82 million in the same period last year. Private transfers also registered an improvement of 41pc or $588 million over the corresponding period last year.

Workers remittances also grew by over 21pc to $984m in the first two month of this fiscal year.

Current account gap shrinks in July-Aug -DAWN - Business; September 30, 2007


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## Neo

*Pakistans rice exports to Turkey may go up​*
ISLAMABAD, Sept 29: Pakistan will increase export of rice to Turkey in the wake of dispute settlement body of WTO decision asking Ankara to remove burdensome procedures and implicit barrier to market access.

This decision would really have a positive impact on Pakistans exports because it would remove burdensome procedures and barrier to market access in the Turkish market, an official in the commerce ministry told Dawn on Saturday.

The US government has taken action against Turkey at the World Trade Organisation in a row over Turkish restrictions on rice imports.

This complaint was supported by Argentina, Australia, China, Egypt, European Communities, Korea, Pakistan and Thailand as third parties.

He said the decision would alert other importers as well who have similar implicit barriers.

Currently, Pakistan has very negligible export of rice to Turkey due to the quantitative restrictions and high tariff walls on the agriculture produce, including all varieties of rice to protect their local farmers.

According to the DSB decision, Turkish decision, from September 2003 and for different periods of time, to deny, or fail to grant, certificates of control to import rice outside of the tariff rate quota, constitute a quantitative import restriction, as well as a practice of discretionary import licensing.

Accordingly, it is a measure of the kind, which has been required to be converted into ordinary customs duties and is therefore inconsistent with Article 4.2 of the Agreement on Agriculture.

It was recommended that the Turkey should bring the inconsistent measures as listed above in conformity with its obligations under the WTO agreements.

This means that in compliance of this decision, Turkey will have to open up its market for import of rice from all rice producing countries.

Pakistans rice exports to Turkey may go up -DAWN - Business; September 30, 2007


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## Neo

*Gas deal with Pakistan to be signed in October: Iran​*
TEHRAN, Sept 29: Iran will sign a multi-billion dollar gas pipeline deal with Pakistan in the absence of India by the end of October, a top Iranian oil official said on Saturday.

The peace pipeline contract... will be ready to sign by the end of October, Hojatollah Ghanimi-Fard, Irans representative to the talks, told the oil ministrys news service Shana.

Indian officials have been absent from the talks over the peace pipeline between Iranian and Pakistani officials to finalise the long-delayed deal, which would see Iranian gas sent to Pakistan and to India via Pakistan.

It was agreed that the price be calculated according to the current gas market standards, Ghanimi-Fard was quoted as saying by the Irna news agency.

Pakistan asked for 60 million cubic metres per day, 30 million of which was approved, he said.

All issues of disagreement were studied again and all points have been finalised, he said, adding that the final meeting would be held in Pakistan in mid-October to study the text of the contract to see if it does not contradict agreements. Ghanimi-Fard said India was welcome to join the contract whenever this countrys problems are resolved and it will be a tripartite deal.

Gas deal with Pakistan to be signed in October: Iran -DAWN - Top Stories; September 30, 2007


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## Neo

*Coolies go home, here come the trucks: Pakistan and India allow trucks inside borders from Oct 1​*
ISLAMABAD: Pakistan and India are set to discontinue six decades old coolie system and would allow cross-border movement of trucks up to the designated points at Wagah and Attari borders from Monday, October 1, 2007. 

According to the agreed arrangement between the two countries, Pakistan would allow Indian trucks to cross 200 meters inside the Wagah customs area and India would allow Pakistani trucks to come 400 meters inside at Attari, Member Customs Federal Board of Revenue, Shahid Rahim Sheikh, informed Daily Times on Saturday. 

A standing committee comprising Pakistani and Indian Customs officials would also be established to resolve the issues, which need attention of both sides. This committee would meet after two-month intervals at Wagah and Attari borders for mutual consultation, he said. 

This initiative of the both governments would not only reduce the cost of bilateral trade between the countries but would also help save time in transportation of goods between the two countries, he said. 

Both sides would establish a telephonic link to consult each other in maters that require immediate resolution for smooth flow of trade on a day-to-day basis between the two countries, he added. 

The decision had been taken at the technical level meeting held between the customs authorities of the two countries at Wagah. Senior customs officials of the Federal Board of Revenue were also present in the meeting. In that meeting the two sides had agreed that trucks from one side would be allowed to go to designated points on the other side at the Wagah/Attari border for unloading of cargo, he added. 

In the first stage, trucks up to ten-wheelers would be allowed to cross over to the other side. Both the sides have also agreed to obviate the need for passports, visas and international driving licence; a system of computerised single entry permits would be introduced. These permits, which would be issued in triplicate by the respective customs authorities, would contain a picture ID of the driver, his name, address, licence number and details of the vehicle.

The drivers of these trucks would wear bright yellow jackets/vests with Driver-Pakistan inscribed on the back of the Pakistani drivers and Driver-India inscribed on the back of the Indian drivers. As per statement, the operation of trucks shall take place between 0700-1400 hours PST and 0730-1430 hours IST, he said. 

In case of force majeure, the customs authorities of the two sides at Wagah/Attari border shall establish hotline contact to workout the modalities for further action. He further informed that officials from both the countries also agreed that the customs authorities of the two sides would also consult each other to resolve local issues as and when required. 

Pakistan and Indian customs authorities agreed that the two sides shall open a dedicated cargo gate towards South-East of the existing Pakistan customs house and South-West of the existing Indian customs house at the Wagah/Attari border. 

A fenced path shall connect the two customs houses through this gate and upon completion of this dedicated cargo gate, all cargo traffic shall pass through it, he said.

Daily Times - Leading News Resource of Pakistan


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## Neo

*OGDCL to undertake offshore exploration in Arabian Sea soon*​
ISLAMABAD: After successful onshore oil and gas exploration, the Oil and Gas Development Company Limited (OGDCL) will soon undertake offshore oil and gas exploration in the Arabian Sea, Managing Director of the Company, Arshad Nasar said on Saturday.

For this purpose, an exploration license with government holdings and petroleum production sharing agreement with OGDCL has been signed by the government over a block covering an area of 1,492 square kilometres located in the Arabian Sea.

In an interview, the MD said the company will invest an amount of $1.1352 million during the first two years of the initial term of the license.

Responding to a question he said the company has all set to become a multi-national company and in this regard all the preparations have been completed.

Mr Nasar said the company has succeeded to spud 50 wells last year, which speaks volume of its success.

Terming the company as the largest public limited company engaged in exploration and production activities in the country for the last four decades, he said presently, OGDCL is 100 percent owner in 28 exploration blocks. 

In addition, it is the operator as well as working interest owner in other 13 exploration blocks and partner in another six exploration blocks operated by other exploration and production companies, he added.

He further informed that OGDCL is operating 39 Mining and Development and Production Leases and is partner in 33 non-operated Mining and Development and Production Leases.

The MD said companys annual sales are more than 39,130 barrels of oil per day, 919 million cubic feet per day of gas, 334 metric tonnes per day of LPG and 71 metric tonnes per day of sulphur.

He said its major oil and gas fields are located at Kunnar, Pasakhi, Bobi, Tanbdo Alam, Thora, Lashari, Sono, Fimkassar, Kal, Sadqal, Rajian, Missakeswal, Dhodhak, Dhakhni, Chanda, Chak, Naurang, Qadirpur, Uch, Pirkoh, Loti, Nandpur/Panjpir and Hundi/Sari.

OGDCL has so far completed major development projects like Dhodak Development Project, Dhaki Development Project, Pirkoh Development Project, Nandpur/Panjpir Development Project, Sadqal Gas Compression Project, Uch Development Project and Bobi Development Project, he added. 

He said companys equipment base includes seven drilling rigs, two work over rigs, a geological field party, four seismic parties, four engineering field parties, a gas gathering and pipeline construction party, seismic data processing centre, geological analysis laboratory, wireline logging unit, cementing units and data logging unit.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan and US sign Fata development accord ​*
ISLAMABAD (October 01 2007): Pakistan and the United States of America on Sunday signed a new $750 million agreement for the development of social sectors in Federally Administered Tribal Areas (FATA).

Representatives of the two countries signed the multi-year agreement for American people's assistance for FATA development amounting to $750 million, which will be spent on different development programmes over the next five years.

The US is providing $105 million this year for the FATA programme, said a US embassy statement here on Sunday. "The United States Government on behalf of the American people understands the importance of delivering resources quickly and effectively to bring essential services to the people of the FATA," US Agency for International Development (USAID) Pakistan Mission Director, Anne Aarnes, said after signing the bilateral agreement with the Secretary, Economic Affairs Division (EAD), M Akram Malik.

The USAID Director said that it was part of a long-term commitment by the United States to assist the Government of Pakistan in addressing the acute development needs of the people of this important region of Pakistan. "We commend the Government of Pakistan in establishing the Sustainable Development Plan for the FATA," Aarnes said.

"We have crafted our assistance activities to directly support this plan, and we look forward to working together closely with FATA officials in its implementation."

The new agreement will be used to support programs in capacity building, livelihoods, agriculture, micro and small and medium enterprises, health, education and infrastructure development in the FATA. The US Ambassador Anne W. Patterson said that the US was dedicating substantial resources to meet the need of Pakistani people, and to build service and institutions over the long run. The government programme will improve health, education, infrastructure, agriculture, governance, and economic dynamism in the tribal areas, he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan's economy fast growing: Shaukat ​*
ISLAMABAD (October 01 2007): Prime Minister Shaukat Aziz said the successful implementation of wide ranging structural reforms and supportive macroeconomic policies have transformed Pakistan's economy into a stable and resurgent one. It was because of the policies and reforms, he said, Pakistan's economy has become one of the fast growing economies in Asia.

The Prime Minister was talking to a delegation of British Telecom and Saigol Group, who called on him and signed a memorandum of understanding (MoU) on Sunday.

While referring to economic growth in Pakistan, the Prime Minister said that because of a reform agenda based on deregulation, liberalisation and privatisation, Pakistan has attracted record amount of foreign investment of US $8.4 billion in 2006-07. He said the economy of the country is growing at an impressive rate of 6-8 percent per year, the middle class is expanding and poverty as well as unemployment is reducing.

The Prime Minister said structural reforms in many sectors including banking, capital markets, energy, power and telecom have attracted investment, created jobs and provided better quality services. Pakistan's attractive demographics with 60 percent young population is a very attractive feature for the long term investors, he added. Out of the total population of 160 million, he said, 100 million people are below the age of 25 thus creating future economic activity and opportunity.

Shaukat Aziz said that after having gained economic strength the government is now in a position to transfer the benefits of economic growth to the people and as a result there has been a visible improvement in the living standards of the people. He said per capita income has been doubled and all human development indicators are positive.

While referring to the progress made in telecommunication sector, the Prime Minister said Pakistan has become a hub of activity for international and local telecom companies and unprecedented amount of foreign investment flowed into the sector due the well thought out telecom policy, which was prepared after intensive discussions and debates involving all stakeholders.

He said telecom is one of the fastest growing sectors of the country where combined teledensity has increased from 4 percent to about 44 percent of the population. The number of subscribers has increased form 8 million in 2003 to over 62 million in 2007 and the market has the potential to reach 80 million in the next couple of years, he added.

He further said that the telecom sector has become a major employer of skilled jobs as its exponential growth has resulted in creation of 80,000 jobs directly and 500,000 jobs indirectly.

Shaukat Aziz while appreciating the signing of MoU between British Telecom and Siagols (Pvt) Ltd, said that this will bring international expertise to the country and capitalise on various opportunities in the field of media comprising television, radio and internet/satellite services in Pakistan.

The Prime Minister also appreciated the contribution made by the British Telecom during October 2005 earthquake for restoration of telecom services by rendering help to SCO for telecom services besides providing satellite PCOs services.

While briefing about the credentials of British Telecom (BT), Paul Falkner, Director General BT Global Services said that BT is a London based telecom service provider company doing business in retail and wholesale local, national and international telecommunications products and services.

He said that BT is highly encouraged by Pakistan 's structural reforms and investment friendly policies and are planning to invest more in Pakistan. He said memorandum of understanding (MoU) signed between BT and Saigol (Pvt) Ltd marks a new era in networked IT services, telecommunication services and higher-value broadband/internet product and services and it will benefit the people of Pakistan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*SMEDA's Rs 1743.16 million plan to promote surgical industry ​*
SIALKOT (October 01 2007): Small and Medium Enterprise Development Authority (SMEDA) has prepared a three-year plan to promote surgical industry of Sialkot with more than Rs 1,743.16 million.

Official sources told APP here Sunday that in the first phase of the plan, special attention would be given to setting up a company under the name of Surgical and Medical Devices Pakistan at a cost of Rs 77.90 million.

Medical Devices Training and Research Centre (MDTRC) would be established with Rs 542.90 million in Sialkot, while Rs four million would also be spent on marketing and branding, sources added.

The objectives of setting up of MDTRC are to provide common facilities in high-tech electro-medical devices, training for labour in advanced instruments manufacturing, dissemination of knowledge about latest technology, information resource centre and new instruments development.

The step has been taken keeping in view the potential of surgical industry to enhance its exports to US one billion dollars by 2015.

The Punjab government for the establishment of Medical Devices Training and Research Centre would provide the facility of building while the work on this mega project would be undertaken in near future.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*$5.2 billion power sector reforms: Wapda to submit roll-out plan to Prime Minister ​*
ISLAMABAD (October 01 2007): The Water and Power Development Authority (Wapda) is to submit roll-out plan to the Prime Minister Shaukat Aziz, envisaging specific timelines and targets to achieve the goals, official sources told Business Recorder.

The plan is being drafted on the instructions of Munawar Basir Ahmad, the new Managing Director of Pakistan Electric Power Company (Pepco) who, to satisfy the consumers, intends to introduce some measures similar to those he introduced in SSGC, sources said.

"The Prime Minister has mandated me fast track implementation of the power sector reforms, including restructuring and corporatisation," sources in Iesco quoted him as saying in his first letter to power distribution, generation companies and National Transmission and Dispatch Company (NTDC).

One of the key objectives given by the Minister for Water and Power, Liaquat Ali Jatoi, and Secretary Ismail Qureshi is to stop load shedding, minimise tripping and, consequently, improve the customer services on fast track basis.

"Admittedly, the current supply and demand scenario is in itself a Herculean task", he said, adding that "Wapda must put in full efforts to overcome the crisis-like situation and the spectre of load shedding, facing the nation in the months to come."

Sources said that Wapda would provide details to World Bank (WB) and Asian Development Bank (ADB) investment plans, according to which both donors have offered billions of dollars to the Discos, Gencos and NTDC for system improvement.

They said that ADB had raised the question with the federal government whether the power distribution companies (Discos) would be in a position to absorb the investment of $5.2 billion for 2008-2017 and pay it back within the stipulated timeframe.

Sources said that ADB Country Director and World Bank officials met Prime Minister's advisor on finance on August 30 and September 3, respectively, and discussed the forthcoming multi-tranche loan facility for the power sector. During the discussions, ADB Country Director pointed out that overall investment in the power distribution sector would be $5.2 billion for 2008-17, and raised a few queries before finalising the pact.

The issues which the bank says need further clarifications from all concerned Discos are: details of investment, whether approval of the CDWP/ Ecnec had been obtained and what would be the impact of proposed investment and what benefits would be obtained in terms of savings and system efficiencies; whether the Discos have the capacity to absorb the investment and pay back, what would be debt equity ratio, and what were assets and liabilities of Discos? What would be its impact on tariff? How would this investment change the balance sheets of Discos? Would it be sustainable or not? Had the financial and technical analysis of such investment been carried out? And what would be the key financial and operational indicators, were main concerns of the donors.

According to sources, heads of both Wapda and Pepco would also ask the Prime Minister to allow 23 per cent increase in tariff, as was promised by the government in February when 10 percent raise was notified.

The National Electric Power Regulatory Authority (Nepra) had allowed 33 percent increase in the tariff in February last but the government notified only 10 percent with the arguments that such a huge raise would have a negative impact on the government's performance especially when elections were near. Wapda is of the view that Finance Ministry did not pay Rs 50 billion due last fiscal as subsidy, which forced the utility to arrange funds from the commercial banks.

This issue would also come under discussion and Wapda would ask for notification of remaining 23 percent, as the same is being demanded by the Secretary Finance, Ahmad Waqar.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Indigenous coal-fired power plants: MoU signed for conducting feasibility study ​*
KARACHI (October 01 2007): The Sindh Coal Authority, Mines and Mineral Development Department, Government of Sindh and Descon Engineering and Descon Mines (Pvt) Limited here on Sunday signed a Memorandum of Understanding (MoU) for conducting feasibility study for the establishment of 125MW (each) integrated mining and power generation units at Golarchi in District Badin and at Southeast of Naukot, in District Tharparkar.

The MoU was signed by Syed Abbas Ali Shah Director General, Sindh Coal Authority and the representatives of M/s Descon Engineering and Descon Mines (Pvt) Limited.

The Sindh Coal Authority will allocate an area of 100 square kilometres to them to carry out feasibility study to undertake development of identified coal mines and construction, commissioning and operation of minemouth Coal-fired power plants.

The Descon Engineering and Descon Mines (Pvt) Limited shall apply for letter of intent to Private Power and Infrastructure Board (PPIB) Water and Power Development Authority (Wapda), Government of Pakistan for establishment of minemouth indigenous coal-fired power stations with total capacity of 125 mw each. If the power project is found feasible the Sindh Coal Authority will support and assist in obtaining of the same.

The Sindh Coal Authority will allocate the coalfield area for a period of 18 months from the date of demarcation of the area for exploration license, within 15 days after signing of MoUs. While M/s Descon Engineering and Descon Mines (Pvt) Limited will carry out survey and exploration/investigation at its own cost and risk for completion of a Bankable Feasibility Study Report.

The demarcation of the coalfield area will be done by a joint survey team comprising the technical personnel of Descon Engineering and Descon Mines (Pvt) Limited, Director General Sindh Coal Authority, Director General Mines and Mineral Development Department and by the concerned Revenue Department of Government of Sindh.

The purpose of investigation is to determine suitable quality and quantity of coal which can be economically and safely mined, handled and transported to the power plant in order to provide at least one million tonnes of coal or more annually for 30 years.

The signing ceremony was attended by Irfanullah Khan Marwat, Minister for Mines and Mineral Development Department, Syed Abbas Ali Shah, Director General, Sindh Coal Authority, Muhammad Khalid Mirza, Director General Mines and Mineral Development, Abdul Razak Dawood, Chairman Descon Engineering and representatives of Descon Engineering.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Transforming the economy​*By Dr Aqdas Ali Kazmi

The growth experience of countries at different stages of economic development teaches us an important lesson. The sustained growth in a country over a long period of time must result in fundamental changes in the structure and composition of its GDP.

These changes generally synchronise with a steep decline in the share of the agricultural sector and rising shares of industry and services sectors in the GDP. This transformation becomes more viable and visible as economies rise in the scale of development from take-off to drive-to-maturity and finally to the stage of mass consumption.

The global GDP for 2005 has been estimated at $45 trillion. The four industrial countries namely the US with GDP of $13.0 trillion, Japan ($5 trillion), Germany ($2.8 trillion) and UK ($2.2 trillion) have a combined GDP of $23.0 trillion which is more than 50 per cent of the global GDP. The common and distinguishing feature of these economies is the share of agricultural sector equivalent to one per cent with industry and services sector contributing roughly 99 per cent to GDP. However, the relative shares of industry and services sector in the GDP of these countries show significant variation.
The agriculture sector in countries like Australia, Austria, Denmark, Hungry, Ireland, Canada, France, Italy, Korea, Norway, Sweden, Netherlands, Spain etc. with large GDPs has a maximum share of 3-4 per cent.

Now let us look at economic growth of Pakistan in juxtaposition to the structural changes it has registered over time. First, we have to look at the overall growth rate. The average annual growth rate for the period 1950-51 to 2006-07 comes to around 5.5 per cent with population growth rate being 2.2 per cent during the period, the annual growth rate in the real per capita income comes to be 3.3 per cent. When compared to the growth rates of counties like China, Singapore, South Korea, Malaysia, Thailand etc, Pakistans economic growth does not appear impressive.

The growth performance plan-wise depicts wide fluctuations. The high growth rate of 6.8 and 6.7 per cent achieved during the second plan (1960-65) and the third plan (1965-70) could not be sustained during the non-plan period of 1970-78 as it fell to 4.4 per cent. It was revived in the fifth Plan (1978-83) and sixth Plan (1983-88) to the level of 6.6 and 6.2 per cent respectively but from 1988-89 onward, the growth rate followed a downward trajectory with the result that for the seventh (1988-93) and the eighth plan (1993-98) it declined to 5.1 and 4.5 per cent respectively. During the period 1998-03, it was further reduced to 3.7 per cent per annum even through it recovered significantly in the four year period of 2003-07 with the average rate reaching seven per cent per annum.

As the Table indicates, growth rate of agricultural sector and the manufacturing sector from the 1950s onward have fluctuated substantially. In case of agriculture, the growth rate has been extremely low in case of the first plan, non-plan period (1970-78) and the five years of 1999-03 spanning the otherwise abortive ninth Plan. The growth rate of agriculture during the third, fifth and eighth plan was reasonable. However, the overall average growth rate for the agriculture sector for the 55 years starting with the first Plan comes to only 3.7 per cent, which is quite inadequate considering the rising demand for food for the burgeoning population as well as the growing demand for raw materials to sustain the growth of the industrial sector. The services sector registered an annual average growth rate of 6.5 per cent in this period.

As regards the manufacturing sector, it could register double digit growth only during the two distinct spans of the economic development i.e. the second plan and the non-plan period of 2003-07. For the rest of the plan periods, the growth rates have been quite low with the result that on the average, this critical sector grew by only 7.3 per cent per annum during the last 55 years or so. This indeed reflects a poor performance of this vital sector which is supposed to spearhead the structural transformation of the economy.

The historical transformation of the economy has not resulted in the large scale industrialisation of the economy which keeps its agrarian structure and form. The share of agriculture has declined from 45.8 per cent in the early 1955s to 20.9 per cent in the year 2006-07 while the share of services sector has gone up from 30 to 53 per cent. The fact that agriculture still contributes one-fifth to its GDP is a clear indicator of the countrys continuing backwardness and underdevelopment.

The manufacturing sector contributes only 19 per cent to GDP against a share of 12 per cent during the first plan (1955-60), an increase of seven per cent in the 50-years period. Paradoxically, the share of large-scale manufacturing sector which is the principal sub-sector of the manufacturing sector remained at 10.6 per cent of GDP from 1962-63 to 2002-03 a long period of 40 years and only in recent years it has shown some upward movement. The manufacturing sector which is concentrated within a few industries such as textiles, food, beverages, tobacco, fertilisers and pharmaceuticals, is highly under-developed and narrow-based with the result that the whole economy remains entrapped in an abysmally low level of productivity.

There is an aura of mystique about Pakistans historical growth experience. At the time of independence, it did not inherit any viable industrial and technological base and it seriously lacked in social, financial and physical infrastructure. The initial conditions were highly unfavourable and the industrial-cum technological gap was unusually large. However, this does not make a complete story. There have been many countries in the world which had faced initial conditions worse than those of Pakistan. Still these countries have registered unprecedented growth in the recent past and have moved up the highest stage of economic development. The question therefore remains unanswered: Why the take-off stage has been elusive for Pakistan for such a long period of time?

The writer is consultant/economist working in the Planning Commission.

Transforming the economy -DAWN - Business; October 1, 2007


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## Neo

*Emerging economic trends​*
The performance of the economy in two months of this fiscal year has raised questions about the pace of the growth. A key issue is: how would the external sector fare?

Exports are not growing at the desired pace. Foreign portfolio investment has remained negative so far and is unlikely to reach the last years level more so because the prospects of generating foreign exchange through euro bonds are not so promising. 

The privatisation process has come to a halt. Foreign direct investment and workers remittances continue to show a strong growth but the investment may falter because of the political uncertainties. The real sector of the economy has so far shown mixed trends. In agriculture, cotton production is likely to reach 14 million bales despite the attack of mealy bug and curl leaf virus. The production of wheat, rice and sugarcane are also likely to remain strong though rice production might see a nominal decline due to heavy monsoon rains and flooding. Water availability is at its peak and there are no chances of major or minor crops suffering because of its shortage.

In the industrial sector, there are signs that production would decline because of high cost of finance, labour and utilities. In the last fiscal year, large scale manufacturing sector had risen 8.4 against 10.7 per cent a year ago. No data about LSM production for the first two months of this year is available but industrialists say and exports volumes suggest that full capacity utilisation is not there.

Statistics on the performance of the services sector are also not available. But banks and financial institutions might continue to show strong results. Despite all moral suasion by the State Bank, the banking spread is still at 730 basis points, far higher than in India and other regional countries. This gives the banks a lot of opportunity to make huge profits. Some banks are likely to earn handsome profits as those which have completed the process of mergers and acquisitions are now geared to enter into new businesses. Two of these areas are agricultural and SME financing. 

In July-August FY08 banks lending to agricultural sector rose 18 per cent to Rs25.8 billion. Bankers say their farm lending would rise further in coming months but they also realise that recovery of farm loans would be a problem this year. Farmers have suffered cash equivalent losses of billions of rupees because of rains and floods.

Disbursement of bank credit to the entire private sector has slowed down. Bankers and business indicate that the appetite for private sector credit is low due to a slower growth in industrial activity. The banks have also tightened credit appraisals to prevent borrowers from using part of the bank credit in making speculative investment in stocks and real estate.

No data about private sector credit off-take in this fiscal year is available. But the recently released SBP statistics show that in the last fiscal year the private sector borrowed Rs366 billion from banks, down from Rs402 billion a year earlier and below the target of Rs390 billion.

On the other hand, the government borrowing from banks for budgetary support totalled Rs102 billion in FY07 up from Rs67 billion in FY06 but lower than the target of Rs120 billion set for FY07. Fortunately, the government managed a much better borrowing mix in the last fiscal year. It borrowed Rs160 billion from commercial banks and retired Rs58 billion worth of SBP loans, thus mitigating the impact on inflation. A year earlier the situation was in total contrast: the government had borrowed Rs135 billion from SBP and retired Rs68 billion loans of commercial banks thus fuelling the flames of inflation.
From this fiscal year onwards, the government is bound to keep its inflationary borrowing from the central bank within limits determined jointly by the SBP and the ministry of finance. This coupled with the overall tightening of the monetary policy has so far kept inflation below the targeted level of 6.5 per cent for this fiscal year.

But the problem is that food inflation is still much higher than overall CPI inflation, which means that inflation is hitting the poor harder. The mishandling of wheat crisis and the resultant price hike shows that handling of inflation through administrative means remains a far cry.

In the first two months of this fiscal year the rupee remained somewhat firmthanks to sufficient inflows of foreign exchange through various channels. But in the third month it started to fall more rapidly as the outflows outdid the inflows.

Between July 1-September 28 the rupee shed 23 paisa or 0.4 per cent of its value against the dollar. On September 28 the rupee closed at 60.70 a dollar down from 60.47 on June 30.

Emerging economic trends -DAWN - Business; October 1, 2007


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## Neo

*MONEY WEEK: fiscal year 2007 monetary expansion exceeds credit plan target by Rs 200 billion ​*
KARACHI (October 01 2007): Although as per policy documents the State Bank of Pakistan pursued a tight monetary policy throughout FY07, money supply during the year expanded by Rs 658.3 billion, or 19.3 percent, compared with the targeted growth of Rs 459.9 billion, or 13.5 percent. Thus, monetary expansion exceeded the credit plan target by about Rs 200 billion.

This was shown in the final data released by the State Bank on September 24, for the week ending the financial year 2006-07 (FY07). It may be recalled that in the beginning of FY07, annual report of the State Bank for FY06 had stated that to achieve the inflation target, money supply had been envisaged to grow at 13.5 percent, significantly lower than the realised money supply growth of 15.2 percent during FY06. So, how the State Bank would explain the failure on this front in the forthcoming annual report, is to be seen.

Maybe the unbridled expansion would be explained by a reference to the election year. This happens the world around, but the question is why we failed to provide for that at the beginning of the year.

What figures show is that government borrowing remained well within the target (viz Rs 92.4 billion against the targeted Rs 130.1 billion, with budgetary borrowing and borrowing for commodity operations behaving admirably well and within the respective targets) and so was non-government borrowing (viz Rs 385.7 billion against the targeted Rs 395 billion with private sector ending up at Rs 365.7 billion against the target of Rs 390 billion though PSEs borrowed Rs 19.7 billion exceeding the target of Rs 5 billion by a very wide margin).

The huge amount of excess borrowing by PSEs was not only in violation of the Credit Plan target, it also spoke of the continuing inefficiency of some larger PSEs. Hence, the proposition to privatise the PSEs. While the proposition is well founded, difference must be made between good PSEs and bad PSEs. What the Privatisation Commission should be doing is to go ahead privatising these lazy and hardly able to walk 'white elephants', instead of selling the 'running horses'.

Another significant factor which contributed to the much higher than targeted monetary expansion was the behaviour of foreign sector. The planners at the State Bank visualised an expansion of only Rs 9.8 billion on this account. It appears that the State Bank did not properly consult the Finance and Economic Affairs Divisions who normally have good estimates about the foreign sector behaviour, or maybe they did not convey the true estimates to the State Bank, which is an important ingredient in the formulation of the Credit Plan.

We cannot, however, absolve the State Bank of doing its duty in containing monetary expansion, and hence inflation, on the basis of the foregoing assumption. By mid-year, it was amply clear that foreign sector had started exerting pressure on money supply.

Why the State Bank failed to neutralise the massive contribution of Rs 260 billion, which was over and above the targeted annual growth of foreign sector? Perhaps, the State Bank could have neutralised the huge impact of foreign sector by absorbing liquidity through the sale of its own paper. But, why State Bank did not work on introducing its own paper despite the proposal lying pending since long? (For comments and suggestions research.dept@aaj.tv)

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*New trade route opens with India ​*
LAHORE (October 02 2007): Trucks carrying tomatoes crossed the border between India and Pakistan on Monday, the first goods vehicles to do so in past 60 years, officials said. The neighbours agreed in August to allow each others' trucks over their only land border as part of a slow-moving peace process launched in 2004.

Porters on foot previously took fruit, vegetables and other items across the heavily militarised Wagah border, a decades-long tradition that now appears threatened. "Indian trucks entered our side of the border for the first time and brought around 1,200 crates of tomatoes which we unloaded here," a Pakistan Customs official told AFP.

The new procedure, adopted after demands by Indian and Pakistan traders, has "opened a new chapter of trade," said Nasir Butt, an importer from Lahore. But the porters have previously complained that they will lose their traditional livelihood.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Efforts being to revolutionise industrial sector: Cheema ​*
SIALKOT (October 02 2007): Punjab Minister of Commerce, Industries and Investment Muhammad Ajmal Cheema has said that strenuous efforts were being made for bringing industrial revolution and tracking the industrial sector on scientific lines.

Talking to reporters here on Saturday evening he said that the government had adopted a liberal and business-friendly policy enabling the newcomers and foreign investors to set up new industrial units in the Punjab.

The minister said that 100 KM long Sialkot-Lahore motorway would be completed at a cost of Rs 23 billion and this motorway would play an instrumental role in further accelerating the pace of trade and commerce activities in the area. Cheema said that initial development work on this mega project had been initiated.

He said that industrial estates would be developed on Sambrial, Gujranwala and Muridke interchanges along with motorway besides the new economic corridor, which would surely augment industrial production.

The motorway would also be supportive in enhancing farm and agriculture industry besides helping to reduce the poverty graph in long neglected town and districts spreading from Narang Mandi, Narowal tehsil Pasrur of Sialkot district, he added.

Ajmal Cheema said that strategy has also been evolved for setting up SME industrial estates in major industrial towns of the Punjab. The step was being taken for minimising the problems being confronted by the SME sector of the Punjab, he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Sindhs tourism potential​*
ONE could not agree more with the Sindh tourism and culture minister when he said the other day that the province had a lot of potential for tourism. The trade is the mainstay of revenue generation for many developing countries with much less potential. As for Sindh, it is not going to be a hundred new parks, say, in Karachi or Sukkur that will bring more tourism to the province, as flouted by the city and provincial government officials crediting themselves with belated provision of recreational venues to the public. Development of a hill station at Gorakh, which could be termed as an accomplishment if and when achieved, has remained a pipedream all these years. Sindhs little explored and badly neglected treasure trove remains the prehistoric world heritage site of Moenjodaro. Which other country in the region can boast of having such an impressive tourist destination? The National Museum in Karachi is arguably the biggest repository of the Indus valley civilisation relics, but what has the city or the provincial government done to showcase it to the world in any meaningful way?

Sindh is also the land marked with glorious mediaeval-time architectural jewels: the ancient city of Bhambore and the Chowkandi tombs lie at a few miles distance from Karachi; so do the necropolis and the unique Shahjehan mosque at Thatta. The Thar desert, the Indus delta, the coastal belt with its marine-related potential in the south, the sufi shrines across the province and the remains of old rulers of Sindhs palaces in upper Sindh are waiting to be explored, but for the want of vision on the part of the inept departments concerned. The immense potential for tourism remains untapped, and the blame for this must rest with the rulers who milk Sindh dry but will give nothing back to it.

DAWN - Editorial; October 02, 2007


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## Neo

*Gems and Jewellery sector : PGJDC formed to enhance export to $1.5bn ​*
ISLAMABAD: The government has formed Pakistan Gems and Jewellery Development Company (PGJDC) with a cost of Rs 1.4 billion, to increase the export of gem and jewellery from $25 million to $1.5 billion by 2017. 

The above umbrella project comprising of six projects, which envisages upgrading the Gem and Jewellery industry to a competitive level internationally in terms of technology, skill development and country branding. The project will help in promoting the development of this sector and will play a vital role for encouraging investment and growth. Officials of the Ministry of Industry, Production and Special Initiatives told Daily Times here on Saturday that exports from this sector are expected to increase from $25 million to $1.5 billion in year 2017.

The project, which was approved by executive committee of National Economic Council, (ECNEC) on 19th of this month, is a part of comprehensive plan and strategy for upgrading Gems and Jewellery industry in Pakistan. The umbrella project will focus on upgrading the entire value chain thorough undertaking different initiatives including raising value chain productivity, setting up common facility training and manufacturing gems processing centres and Jewellery manufacturing.

Despite of having abundance resources of precious stones, Pakistan so far has not succeeded in getting its due share of the total global trade of $84.4 billion in this sector. In addition to these natural reserves the country process near about 170 tonnes gold annually that makes it one of the ten largest consumers of the metal in the world. 

The initiatives also include establish gem identification and certification laboratories to ensure better understanding of gemstones and their properties, to set up and promote gem exchange centres to facilitate linkages between buyers and sellers, get geological surveys to identify new stone deposits and quantify the existing ones. The company will also work to improve industry marketing and for this purpose it will introduce hallmarking to ensure quality of gold Jewellery for the local as well as the international market. 

For the development of industry and marketing, the company will conduct market survey to ascertain the size of the local market and to identify customer trends and preferences, the officials further added. The project will also work for establishing Pakistan as a world gold Jewellery supplier through a country campaign and to position the industry in international market and establish recognition at trade shows. The company will take initiatives for the human resource development and innovation capacity and in this regard the company will set up a centre to upgrade the industrys skill level.

Daily Times - Leading News Resource of Pakistan


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## Bushroda

*Pakistani role in economy to be discussed*
By GAYLE PEREZ
THE PUEBLO CHIEFTAIN

An internationally recognized author and expert on race, culture and diversity will kick off the Hasan School of Business Distinguished speakers series on Wednesday.

Dominic Pulera will speak at 5:30 p.m. in the Hasan School of Business auditorium. His talk is titled "Making it Happen: The Overseas Pakistanis, Pakistan's Next Generation, Success in a Global Economy." It's about te role of expatriate Pakistanis in the development of Pakistan's economy.

With nearly 1 million Pakistanis living in the U.S. and Canada, they have the capacity to significantly enhance the development of Pakistan's economy and to improve the country's standing in the global economy, Pulera said.

Pulera will be discussing the success of Pakistani-Americans; Americans' views of international trade; Americans' views of the world in the post 9/11 era; the linkages of overseas Pakistanis with Pakistan; and reflections on Pakistan's image abroad and how it affects efforts to attract tourism and foreign direct investment to Pakistan.

Pulera is a member of the Academy of Political Science, the Southern Political Science Association, the Western Political Science Association and the American Academy of Political and Social Science.

He has published two books, "Visible Differences" and "Sharing the Dream."

A third book titled Green, White and Red is forthcoming. Pulera, who did some research for the book in Pueblo, focuses on the broad treatment of the experiences of people of Italian origin, particularly Italian Americans, living throughout the world.

Pulera also owns Pulera International, an independent consulting firm that helps businesses improve their work-force productivity, increase sales and enhance their public image.


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## Neo

*Industry to import one million tons scrap ships in two months ​*
KARACHI (October 03 2007): The ship breaking industry will import about one million tons-light displacement tonnage (LDT)-scrap vessels in October-November 2007, industry sources told Business Recorder on Tuesday.

"We will import scrap ships of around one million tons during next two months," they said, and added that import process was already continuing at an accelerated pace. Due to some internal problems in India and Bangladesh, Pakistan's ship breakers have better chances to attract the sellers of scrap ships, sources said.

"Indian and Bangladeshi ship breakers are busy in efforts to form cartels, which would restrict their imports, or introduce some quota system. This would certainly go in favour of Pakistan", they added. They said that national exchequer would also get billions of rupees in taxes from the ship breaking industry.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Iran invited to set up refinery in coastal areas: IPI gas line progress reviewed *​
ISLAMABAD (October 03 2007): The Minister for Petroleum and Natural Resources, Amanullah Khan Jadoon, and Iranian Ambassador Masha Allah Shakeri on Tuesday discussed progress on Iran-Pak-India (IPI) gas pipeline project and supply of electricity from Iran to Pakistan.

During a meeting held here, they also deliberated upon co-operation in coal, lead, and zinc exploration and production of iron ore and establishment of oil refinery. Petroleum Ministry Secretary Farrukh Qayyum, Director-General, Oil, G A Sabri, and Director-General, Minerals, Irshad Ali Khokhar, were also present.

Both sides agreed to take benefit of the vast opportunities in the oil, gas and minerals sectors between the two countries. The Iranian Ambassador said that his country has technical expertise in mining and production of coal, lead, zinc and iron ore, and Pakistan could take benefit from it.

He also offered to set up an oil refinery in Pakistan and supply of furnace oil. Jadoon said that Pakistan was taking possible steps to utilise the deposits of coal, lead, zinc, copper and iron ore to strengthen its economy and meet its energy requirements.

He said there were 175 billion tons coal deposits in Sindh and added that foreign and local investors could invest in these sectors. He said that the government would welcome Iranian co-operation in setting up a coastal refinery, which would also enhance development and progress in the regional areas.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Gas demand in Pakistan outstrips supply by 800mmcfd ​* 
Wednesday, October 03, 2007

KARACHI: Queues of cars outside gas filling stations are becoming longer and longer. What is being called artificially exorbitant cost of petrol has pushed an ever-increasing number of people towards compressed natural gas (CNG). 

But with demand for gas already outstripping supply, the government has started to tighten the noose around gas-for-all policy. 

While new CNG stations are being discouraged, cement manufacturers have been asked to run their furnaces on coal, textile industry is being persuaded to use fuel-efficient boilers and media campaigns are instructing public to shut off geysers when not needed. 

In the last few decades, natural gas has taken more than 50 per cent share in the basket of total energy consumption. Its low cost is one reason and myopic policies of successive governments another. 

The average production cost of gas in Pakistan is Rs176 per million British thermal units (MMBTU), highly subsidised considering that even a conservative price estimate of imported gas comes to around Rs360. 

Munawar Baseer Ahmed, former managing director of Sui Southern Gas Company (SSGC), says gas demand is increasing by 10-11 per cent annually whereas production is flat at around 4,000 million cubic feet per day (mmcfd).

This increase is the suppressed demand and does not include what is required by upcoming private power producers, said Baeer, who is now the MD of Pakistan Electric Power Company (Pepco), which is tasked with improving the power infrastructure of the country. 

According to one estimate, gas demand has outstripped supply by 800mmcfd, which has prompted the government to step up efforts to secure external sources of supply, the most vital being the transnational Iran-Pakistan-India (IPI) gas pipeline. 

For now Iranian gas is the cheapest solution to meeting the looming energy crisis but still that cost much more than what Pakistanis pay for it now. 

Consumer prices would have to be increased in a phased manner, said an industry official close to liquefied natural gas (LNG) import project. People will not let any government survive a day if price is increased all of a sudden.

Pakistan will receive a little over 1000mmcfd from the IPI gas pipeline when the 2,600km peace pipeline is completed in the next six-seven years. By then LNG imports would have started at even a higher price. 

As against the prevailing gas cost of $2.9 per MMBTU, a conservative estimate puts IPI cost at $6 per MMBTU and that of LNG at $8-9 per MMBTU. 

Affordability of imported gas will heavily depend on the extent to which it is benchmarked with fluctuations in international oil prices. 

In any case during fiscal 2006-07 industries Sindh and Balochistan paid Rs7 billion to cross subsidise domestic and fertiliser manufacturing gas consumers. 

The government has failed to pass the burden on to domestic (residential) consumers. On average, they pay Rs125 per MMBTU against their cost of Rs185, said an SSGC official, requesting not to be named.

When increase in cost of imported fuel is passed on to power consumers, it will be a double whammy for the government. 

The government is having a hard time in maintaining the existing subsidies. How can it be further increased? wondered a National Electric Power Regulatory Authority (Nepra) official. As per the agreements with power producers fuel cost has to be passed on to consumers, he added. 

Successive governments have clinched on to the policy of picking up part of power tariff cost. But as production from local reserves remains sluggish and import of is gas becoming necessary, an increase in energy prices seem inevitable. 

Gas demand in Pakistan outstrips supply by 800mmcfd


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## Neo

*Govt to restructure investment strategy ​* 
Wednesday, October 03, 2007

ISLAMABAD: The government is all set to restructure its investment strategy to attract more foreign investment and make the country a safe-haven for all investors.

Pakistan is an investor-friendly destination where the investors can expand their operations, start new ventures and make profits in a competitive environment as more than 600 multinational companies are successfully operating in Pakistan, Muhammad Wasi Zafar Federal Minister for Privatisation and Investment stated this during an Iftar dinner hosted by him in the honour of the representatives of the national print and electronic media. 

Pakistan has so far privatised 166 public sector units raising $7 billion since 1991 while 87 per cent of the privatisation was completed during the last seven years realizing around $6.1 billion through the privatisation of 61 transactions, the minister informed the media men. 

Wasi Zafar said, Our Privatisation Program provides a number of opportunities in Oil & Gas, Power, Engineering, Financial Institutions, Minerals, Tourism and Restaurants sectors.

The privatisation minister said that the highest ever-foreign investment of $8.4 billion was witnessed during 2006-07 would be further increased after the implementation of restructuring the strategy. 

The continuity and consistency of the policies have yielded remarkable results. 

Pakistan is a safe haven for all investors where they enjoy no restriction for availing opportunities in any sector of economy. 

Investors can invest 100 per cent equity and repatriate desirable amount of equity and profit without any permission. 

The Board of Investment is providing all assistance to the local and foreign investors without any discrimination in a level-playing atmosphere. 

Based on the three pillars of deregulation, liberalization and privatisation, the economic reforms have resulted in very impressive economic growth over the last several years, with dramatic improvement in all major economic indicators, which have completely transformed the economy and placed it on the path of rapid growth, he said. 

Wasi Zafar further stated that the governments broad based and comprehensive privatisation program, its attractive, liberal investment policy and the exciting investment opportunities in Pakistan today have yielded record results. 

Pakistan has comprehensive and broad based Privatisation Program, which provided attractive opportunities and PC Ordinance 2000 has given statuary cover to the whole process, he added.

Mushtaq Malik Secretary Board of Investment (BOI), Ahmed Jawad, Federal Secretary Ministry of Privatisation & Investment and senior officials of Privatisation commission and BOI were also present on this occasion.

Govt to restructure investment strategy


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## Neo

*KSE near 14,000 barrier as stocks attract fresh funds *​ 
Wednesday, October 03, 2007

KARACHI: Stocks remained buoyant and attracted fresh funds on Tuesday, as market participants lived with high assumptions of re-electing President Musharraf despite change of rules in political game.

Hectic buying across the board added 184.61 points or 1.34 per cent in KSE 100-share Index that swelled to 13,922.08 points. The 30-Index surpassed the mark of 17,000 points, as it posted an increase of 271.69 points to 17,048.38 points.

Investors continued to show their appetite for accumulation and enlarged their portfolios with buying in almost all the leading base shares and fundamentally strong stocks, analysts commented.

Now market stands just 77.92 points away from 14,000 points the next psychological barrier. This target seems achievable while keeping in view the present buying euphoria at Karachi bourse, but profit-sellers might change their loyalty to the bearish forces in short and medium term, said S. Kashif Mustafa, Head of ECL Research.

Therefore, investors should remain highly cautious and conscious this week, as presidential elections are due on October 06 (Saturday), he advised and added: In the long-term the 100-Index is poised to cross 15,000 points, he opined.

The news of appointing the next chief of army staff by Gen. Musharraf was also there in the market, which confirmed that the next political government would be formed as assumed by investors and Musharraf would be a civilian president.

This reshuffling in army personnel ranks was also in line with the market expectations that tempted and intimated investors to hunt fundamentally strong scrips, he added.

Kashif Mustafa discounted affects of political situation in Islamabad and NWFP and replied it was just a disturbing phase.

Ahsan Mehanti of Shahzad Chamdia Securities, however, gave a little importance to the situation in Islamabad and NWFP and said that unrest on domestic political front kept bulls curbed otherwise more 300 or so points could have been.

He added that increase of five per cent in furnace oil prices by PSO and Shell; increasing inflow of foreign portfolio investment and persistent rise in CFS investment were all encouraging and investment-friendly news.

Banks remained relatively high in demand as they clutched bulk volumes; NBP was the major volume holder among its sector mates. Low tier scrips also joined the run and closed with handsome gains. BAFL was the second major performer closed with high volumes of almost 16.9 million shares. Moderate buying was seen in specifically strong scrips, analyst said.

Cement sector also joined the bullish pace and closed with moderate gains. Almost all the major scrips showed positive movement and closed in green zone. Telecom and fertilizer sector also showed positive movement and closed with moderate gains, he said.

E&P sector was the major puller in this sector; OGDC was the major volume gainer of about 27 million scrips closed with the appreciation of 2.38%. POL and PPL also followed its sector mates and closed with high gains as well as volumes, he added.

Trading activity improved furthermore, as volumes in the ready market surged to 355.194 million shares from 316.471 million recorded a day earlier. 

The future market volume, however, decreased slightly to 49.240 million shares as compared with previous session 50.742 million shares.

The overall market capitalisation surged by Rs59 billion to Rs4.270 trillion.

The CFS investment ceiled to Rs55 billion cap, as it enhanced to Rs54.8 billion from Rs52.2 billion a day earlier, registering an increase of Rs2.7 billion or 5.1 per cent.

It was somehow a balance market with 180 companies stocks closed in positive column against 147 stocks closed in red. Therefore, the value of 33 scrips remained unchanged with total 360 active counters on board.

Highest volumes were witnessed in Oil and Gas Development Company at 27.377 million closing at Rs121.25 with a gain of Rs2.55, followed by DG Khan Cement at 19.960 million closing at Rs113.65 with a gain of 35 paisa, Arif Habib at 18.198 million closing at Rs142.35 with a gain of Rs1.85, Pak Oilfields at 17.402 million closing at Rs336.50 with a gain of Rs13.55 and Bank Al-Falah at 17.049 million closing at Rs52.80 with a gain of Rs1.65.

KSE near 14,000 barrier as stocks attract fresh funds


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## Neo

*Pakistan loses edge in global citrus market​*
ISLAMABAD, Oct 2: A host of managerial issues have severely damaged the prospects of Pakistan to enjoy comparative edge over other countries in the global citrus market.

Sources in the federal food ministry and Pakistan Horticulture Development and Export Board (PHDEB) believe that besides an uncertain growth history, mushrooming administrative problems have been haunting the growth prospects of the countrys kinno export.

Even some of the most optimists amongst a group of policymakers, who once believed that Pakistan would reap many benefits under the WTO to increase the volume and quality of its kinno exports, have now started thinking differently.

In the last few years, Pakistani kinno has claimed a share in some of the prominent citrus markets worldwide including Russia, Dubai, Saudi Arabia, the Philippines, Iran, Singapore, Sri Lanka, Ukraine and Mauritania.

However, certain managerial problems are keeping the Pakistani citrus fruit blessed with many special traits, from taking off as for as consumers demands and international best practices are concerned.

Sources in the federal ministry of food, agriculture and livestock (Minfal) told Dawn that Pakistan was facing difficulties in keeping a grip on its existing kinno markets due to the lack of proper plant protection measures to avoid pests and diseases and poor plant protection coverage that create favourable conditions for pests and diseases.

According to the PHDEB sources excessive carbohydrates and mineral elements depletion due to retention of fruit on tree beyond its maturity is on the top of a list of problems Pakistani kinno export is facing at present.

According to the Horticulture Research Station, Sahiwal, in Pakistan fertilisers are inadequately applied to exhausted plants, particularly the weaker plants after heavy fruit crop during preceding year.

Weather calamity hit Pakistani kinno frequently mostly in the form of severe frost persisting at the critical stage of flower-bud differentiation.

Excessive low temperature also causes death to stigma (the terminal part of the ovary) at the end of the style, where deposited pollen enters gynoecium.

Although natural and genetic factors are difficult to control, however, management factor, if handled carefully, could minimise their impact and ensure better crop during the lean cycle.

Pakistan loses edge in global citrus market -DAWN - Business; October 03, 2007


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## Neo

*Trade with India and its problems​*
Pakistan and India have abandoned the pantomime of propagating hate while opening up trading facilities via the land route on the Wagah border post in Lahore. Now trucks carrying goods will be able to cross the dividing line and unload on the other side. If this is difficult to understand, let us go over the practice of bilateral trade between the two old rivals. Until now each others trucks were not allowed across the line. The Indian trucks unloaded on the Indian side and Indian porters carried the goods up to the line where Pakistani porters took them and loaded them unto Pakistani trucks as if in a relay race. The same kind of comic routine was observed on the Pakistani side with customs officials and border guards looking on in pretence of intense scrutiny.

The same kind of thing happens with the train link. Thousands of Pakistanis cross over to India to meet their relatives by train. The train stops at the last station on the Pakistani side, after which they are forced to walk across the border and board an Indian train. This practice has gone on for the past 60 years during which the two countries have fought many wars. Keeping the bilateral trade down was actually a way of facilitating the prosecution of war.

Pakistan is also responsible for the transit trade of Afghanistan as a land-locked state. Afghan trucks are allowed to come up to the border at Wagah and unload as per the routine established between India and Pakistan. After that, the Indian side is not allowed to use the same Afghan trucks to send goods to Kabul. This goes on even after the entry of Afghanistan into the regional economic grouping called SAARC which is wedded to a free trade area in South Asia.

The Wagah border continues to be the venue of a fascistic drill by goose-stepping Pakistani troops, showing battle readiness to their equally hostile Indian counterparts, while mutually jeering crowds sit and watch on both sides of the border. So what will the facilitation of the trucks do to this warmongering?

Officials expect 150 trucks crossing every day as the two sides import foodstuff from each other on short notice to balance their local supply-demand imbalances. In August this year India and Pakistan decided to increase their two-way trade by ten times, to $10 billion. Tradeable items have increased, from 40 under General Zia-ul-Haq after his cricket diplomacy, to 1,800 under General Musharrafs out of the box India policy. The pledge to allow more trade may have been forced by the fact that Indian goods kept coming into the Pakistani market through smuggling and also via Dubai . Despite the goose-step drill on the border, this years bumper crop in Pakistan is said to have been smuggled to India too. Thus Wagah will have to be expanded many times over if the planned trade is to go ahead. In fact the trade of perishables  the trucks that crossed the line on Monday were carrying Indian tomatoes  crowding on both sides has to be avoided. But there is many a slip yet. Pakistan has recently shown umbrage at Indias plan to allow tourism on the Siachen glacier that it has illegally occupied. Pakistan also renewed its complaint about Indias interference on Monday when the Foreign Office spokesperson said that Pakistan had evidence of Indias links with anti-state elements in the country.

The peace dialogue with India is going on while the irritants become more irritating and feed into the national politics of Pakistan. There is an increasing lack of cohesion in Pakistan because of protest in the provinces and a growing quarrel between civil society and the state on the fundamental assumptions of state behaviour. Pakistan is continuing to link the peace dialogue to the resolution of the Kashmir issue and is resisting all moves to ratify a free trade agreement with India following the example of the other members of SAARC.

Clearly the peace first argument is still important to Islamabad. But in the rest of the world, peace has come after all aspects of state relations leading to normalisation have been sorted out. Yet, the gesture at Wagah should be welcomed as a step towards this normalisation. *

Daily Times - Leading News Resource of Pakistan


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## Neo

*Cement sales post 34% rise in Q1​*
* Expanding local demand, higher exports responsible

KARACHI: Cement sales rose by 34 percent during to the first quarter (July-September) of current financial year over the corresponding period of last year on the back of expanding local demand as well as higher exports.

According to sales figures released by the industry, cement dispatches totalled around 7.3 million tonnes in the period under review as compared to 5.4 million tonnes in the same period of previous year.

Of the total dispatches, local cement sales depicted 21 percent growth at 5.7 million tonnes as against 4.8 million tonnes previously. Export performance of the industry also continued to shine with total cement exports of 1.5 million tonnes during the first three months of current fiscal year, a phenomenal upsurge of 133 percent over the same period last year.

Local dispatches during this month stood at 1.8 million tonnes while exports were at 523,000 tonnes, representing eight and 120 percent growth respectively on a year-on-year (YoY) basis. 

However, on a month-on-month (MoM) basis, total cement sales declined by 6.7 percent in month of September 2007 against the preceding month of August due to the month of Ramazan falling in the said month, which generally witnesses a slight slowdown in economic activity.

Analysts attributed the surge in cement sales to lower cement prices coupled with improved housing and construction activities during this period. 

Substantial export growth was the consequence of increasing construction activities in Afghanistan, Iraq, Middle East and African countries, said Muhammad Rehan Khan, analyst at First Capital Equities Limited (FCEL), adding that this upward trend is likely to continue in future with likely penetration in the Indian market as well.

The future outlook, he added on cement demand growth is also positive on the back of higher PSDP allocations and new avenues for exports.

Bilal Hameed, analyst at Jahangir Siddiqui Global Markets also forecasted pick up in cement sales particularly after Ramazan, when the sales slow down during the holy month due to sluggish construction activities.

On the export front, analysts see bright prospects for the cement sector as Russia is reportedly eyeing to import cement from Pakistan as well as the government is in final stages to allow cement export through the land route to India, whose appetite for cement could well be grabbed by Pakistani cement industry due to its close vicinity. 

During the first quarther of current fiscal year, capacity utilisation of the industry improved slightly, despite the increase in industrys installed capacity, as it improved to 81 percent as against 80 percent in last financial year.

Company-wise breakup shows that Pioneer Cement posted the highest growth of 85.7 pecent as its sales stood at 425,000 tonnes during the said period versus 229,000 tonnes last year. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Construction of fishing jetty at Gwadar to enhance seafood export​*
ISLAMABAD: The federal government has decided that the existing fish harbour at Gwadar would be used as mini port for cargo handling purpose annexed with the Gwadar deep sea port and to replace the existing fish harbour, the government plans to construct a fish landing jetty and allied harbour facilities at Pishukan, Gwadar. 

Official sources told Daily Times here on Tuesday that the project will cost Rs 628.575 million and the provincial government of Balochistan and the federal government will share the cost on a 20:80 basis. 

Pishukan village consists of fishing community, which requires basic facilities to enhance the fish catch handing, preservation and trading. At present there is no fish landing jetty or allied structures in these villages for necessary all-weather fish catching. A feasibility study for the new landing jetty and allied harbour facilities has been carried out by the GDA consultants on which the projects PC-I was based the sources added. 

The project was to be implemented in two phases. Phase-I that comprises fish jetty, road works, auction hall, break water and groyne wall was proposed to be completed within two years through the federal PSDP, where as second phase will be completed in 36 months through private sector under BOT (build operate transfer)/BOO (build-operate-own) basis consisting of construction of additional jetty, break water, reclamation works, for fighting facility, repair yard, cold storage, ice plant and packing and processing plant. 

Sources further said that the proposed project would give boost to various industrial activities such as boat building, repairs workshops, packing processing and canning of fish, etc. and generate job opportunities. With the construction of landing jetty, there will be an appreciable increase in registration of motorised boat traffic.

After construction of the fish-landing jetty, the fish catch at Pishukan will increases from 9,310 metric tonnes in 2007 to 12,040 metric tonnes per year by the year 2015. 

The Pishukan share in fish catch will further increase to 15,560 metric tonnes per year by 2,020 and it will touch the figure of 20,310 metric tonnes per year by 2025. 

The sources further said that with increase fish catch activities; road traffic was expected to grow. It has been proposed to provide access roads from the proposed jetties to the coastal highway. 

The officials further said that work on the provision of facilities like cold storage and ice plant through private sector should be started simultaneously to optimise the benefits of the project. The GDA should ensure supply of clean water at the two jetties as per their annual requirement.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Only 3.3% of countrys population has Internet access​*
* Dial-up connections remain favourite, despite the availability of broadband and DSL

By Romail Kenneth 

KARACHI: The Internet user base in Pakistan has reached 5.3 million people (3.3 percent of the total population estimated at 160 million), among whom there are 51,870 broadband Internet users leaving a vast majority of population without Internet access, a disappointing figure even compared to the standards in least developed countries.

This is because of total absence of customer support, lack of accountability and transparency in the Internet service providers financial statements. 

According to the Internet Service Providers Association of Pakistan (ISPAK) there are over 13,500 users registered under the .pk domain and approximately 60 Internet service providers are operating in Pakistan.

Slow-speed dial-up connections are still leading as they control the predominant size of the market share while broadband users ratio is still very low. The main reason behind low broadband ratio is that the middle and lower middle class Internet users are unable to afford this service, as it is relatively expensive. These subscribers have to rely on dial-up connections using Internet cards ranging from Rs 10 to Rs 250 and more.

The cost of a broadband connection is around Rs 1,000 to 2,000 per month for a volume limited connection but this budget is too much for a middle-class internet user, said Mir Wajahat Ali, IT Manager in a local company. 

He said that in his office we have a DSL connection but recently PTCL has cut down its DSL rates due to which other DSL providers have also reduced their rates but their service standards have also come down. Currently there are six to eight companies providing DSL service but their customer support service is very deprived as there is support staff is totally non-cooperative. 

An IT graduate, Azeem Alfred said that most of the users are still relying on dial-up connections but now Metropolitan Area Network (MAN) is getting popular in Karachiites. Farias is the pioneer in the MAN as they are currently covering almost 60 to 70 percent of the metropolis and are offering unlimited speedy Internet connections for Rs 500 to 800. 

In the current scenario, it can be easily seen that the government is not taking the IT industry seriously despite the IT ministers claims that Pakistani IT industry is flourishing every year.

Internet, with its massive repository of knowledge and potential benefits is a must for educational institutions. Unfortunately in Pakistan, many universities are without Internet access. To provide immediate relief, while larger plans were under consideration of the National IT Task Force, ISPAK, under a commitment with the Ministry of Science and Technology, provided free dedicated Internet connections to universities and educational institutions selected in consultation with the Higher Education Commission.

At present there are three under-sea cables connecting Pakistan to the rest of the world of which two cables belong to the Pakistan Telecommunication Limited (PTCL) and one cable is owned by Trans World Associates (Pvt) Ltd (Transworld), Pakistans first private submarine fibre optic cable operator. Transworld has setup the largest submarine cable system in Pakistan with a total capacity of 1.28 Tbps. 

In collaboration with other landing partners, Etisalat and Omantel, high quality submarine cable network sf over 1274 km in length connects Pakistan to UAE and Oman and onwards to the rest of the world. 

While there are two domestic fibre optic backbones owned by PTCL and Wateen Telecom and two more are under construction.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Environmental degradation threat to Pakistans growth: WB report*​
ISLAMABAD: Environmental degradation is threatening Pakistans growth prospects, says a World Banks (WB) assessment report. According to the study, degradation of Pakistans resource base and high burden of diseases are costing the country at least 6 percent of its GDP (about Rs 365 billion annually). Due to indoor air pollution, about 30,000 children die every year, says the report. Deaths and diseases resulting from waterborne diseases caused by inadequate water supply, sanitation and hygiene cost 1.8 percent of GDP. In addition, reduced agriculture productivity, due to salinity and soil erosion, accounts for about 20 percent of the cost. Environmental damage has severe impact in both rural and urban areas, as nearly 40 percent of countrys irrigated land is water logged, and 14 percent is saline. Forest and rangeland is also at risk. 

The estimated cost of deforestation is between Rs 206 to 334 million ($ 3.4 to 5.5 million) per annum, where as up to 80 percent of the rangeland is degraded, says the report. All major cities of the country experience air pollution, airborne particulate matter, which exceed safe levels and cause 22,700 deaths annually, the report said. The report also says that the main binding constraint to improving environmental performance included gaps in incentives and accountability, institutional design, regulatory framework and capacity limitations. The country lacks standards of quality ambient air and water, suggests the report. It also suggested an important need for investment by public and private sector to improve the quality of air and water. The report stresses the importance of the improvement of regulatory framework to set health based air quality, drinking water, vehicle emission and fuel quality standards on an urgent basis. 

To improve the environment of the country, WB Senior Environmental Specialist Paul Jonathan Martin recommends that partnership must be build between federal, provincial and municipal authorities for clean air and to define responsibilities of water quality protection and educate common people on it. When Daily Times contacted Environment Director General Javed Ali Khan said the environment was being given a low priority. He said the environment should be given priority, as the WB report figures were alarming. We do not have any centralised database system to record the environment change which took place during the last couple of years, however we are now working to have a national environment information management system to record and store environmental data, said Khan.

Daily Times - Leading News Resource of Pakistan


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## solid snake

wow only 3.3&#37; internet penetration? That is lower than I would ever have guessed.


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## Neo

*70 percent projects rated slow moving in first quarter ​* 
ISLAMABAD (October 04 2007): Around 40 percent of development projects in water sector and 20 to 30 percent schemes in social sector are rated slow moving in the first quarter of the current fiscal year. The Planning Commission has said that it would continue the policy of shifting funds to fast track from slow-moving projects, sources told Business Recorder on Wednesday.

The government has been giving top priority to the water sector and in the current fiscal year, there are 73 development projects, which are being executed in this sector with an allocation of Rs 63.5 billion.

According to Public Sector Development Programme (PSDP)- 2007-08, the number of new projects is 19 with allocation of Rs 1.23 billion. Even the Ministry of Food, Agriculture scheme of National Programme for Improvement in Watercourses, which is regarded as one of the fast moving projects was not progressing as planned for almost two years, the sources said.

Sources said the ongoing projects were not on track for the last two years, whereas the Planning and Development (P&D) Division comes up with figures of more than 95 percent utilisation of the PSDP allocation over the last two years. The total number of development projects is 2,111 in the current fiscal year against 1,444 last year.

There are some problems with implementation of communication sector projects especially the construction of motorways and highways. The NHA failed in meeting the extended deadlines regarding the completion of M-I (Islamabad-Peshawar Section of Motorway) and Noshera-Malakand road, according to the sources. Mangla dam raising is also a slow moving scheme and this will take six more months.

When contacted, Member Implementation and Monitoring, Planning Commission Lieutenant General Muhammad Zubair (retd) confirmed that around 40 percent of schemes in water sector are slow moving, saying that 20 to 30 percent of social sector projects are also delayed. However, he clarified the position is changing with the passage of each month.

He said the first quarter review of the current fiscal year will begin from October 4, and the progress made on the projects would be re-assessed. The review exercise will continue for over 10 days and projects execution will be scrutinised in detail.

Zubair admitted that by and large the specific projects in Balochistan are very slow moving. There is a serious problem of security in the province, which is causing delay in the implementation of various development schemes. Actually, the projects in Balochistan are the top priority of the government, but the security problems are hindering the development process, including establishment of cadet colleges and turning the B areas into A areas, he added.

Zubair said there are some positive aspects like awakening among the concerned people that this is government money and it should be spent judiciously and speedily so that the projects cost should not increase due to delay in execution.

He said the improvement in water courses programme is going well on the ground, adding the quality of work being done is outstanding, but due to the time lost at the outset, the scheme will be delayed for less than two years. "We have strengthened the monitoring system. Around 500 schemes were properly monitored during the last fiscal year. In this fiscal year, the number of projects to be monitored could be doubled," said Zubair.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Proactive US role to be sought for investment ​*
ISLAMABAD (October 04 2007): Pakistan is going to seek US more proactive role in public and private sector investment in Pak-US dialogue, commencing from October 21-22 in Washington.

Finance Special Secretary Dr Ashfaque Hasan Khan told Business Recorder that Pakistan's official delegation headed by PM's Adviser on finance Dr Salman Shah will hold dialogue with US authorities to find ways and means to strengthen Pak-US economic co-operation. Dr Ashfaque Hasan Khan will also be the part of the delegation.

He said: "We are going to Washington on October 17 to attend the World Bank and the IMF annual meeting scheduled for October 19 and 20. The donors meeting will be followed by Pak-US dialogue for economic co-operation. Other members of the delegation will be Finance Secretary Ahmed Waqar and State Bank of Pakistan (SBP) Governor Dr Shamshad Akhtar.

The Pak team will have bilateral meetings with the WB and the IMF to give them more specific views of Pak economy. Pakistan is working actively on a plan to build new water reservoirs to enhance electricity production and improve irrigation water supply in a judicious manner. The government had allocated few billion rupees in the budget for initial work such as land acquisition and technical survey. However, it depends heavily on international donors for financing construction of big dams.

Pakistan has identified at least seven big dams and set a specific target for completion. Each identified dam requires $6 billion to $7 billion. The World Bank being a consistent source for funding of the development projects Pakistan accords it the first priority for seeking funds for mega dams.

The economic team will present Pakistan's achievements on economic front during the last five years besides, giving an outlook for the future. It will include steps taken for poverty reduction and reforms implementation.

The team will also apprise the World Bank about Pakistan's economic growth and its need to maintain the current pace. Pakistan has achieved over 7 percent growth rates. It faces a challenge of maintaining the current pace to achieve the future target.

The team will also apprise the World Bank authorities about its financing need as well as growing energy demand. It will also apprise the World Bank about rehabilitation and construction work done so far in October 8, 2005 deadly earthquake and seek support for early maturity of the donors and other countries pledges. It will be the first face-to-face meeting of Pak high-level economic manager with the new World Bank chief Robert Zoellick.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Transit trade with China, Kyrgyzstan and Kazakhstan proposed ​*
ISLAMABAD (October 04 2007): Pakistan has proposed to launch an awareness campaign for the promotion of transit trade among the quadrilateral agreement signing countries which include Pakistan, China, Kyrgyzstan and Kazakhstan, Business Recorder learnt here on Wednesday.

Sources stated a 25-member delegation comprising all the singing countries will soon launch a road trip from Kazakhstan to Pakistan via China and Kyrgyzstan aiming at publicising the agreement in a bid to inculcate awareness among business community of these states.

Director Co-ordination, National Highway Authority, Chaudhry Khalid Naseem will reach Kazakhstan, the starting point, to join the campaign. Media men will also accompany the delegation.

Federal Minister for Communications Shamim Siddiqui, diplomats of the concerned countries based in Pakistan will receive the delegation at Sust Post, which will travel to Islamabad directly through Karakoram Highway. The delegation will also hold meetings with Federal Minister for Commerce and Prime Minister Shaukat Aziz, they added.

The delegation will also visit Gwadar Port, the nearest port to the Asian countries, to see the development work on the port. A proper security plan has been chalked out for the safety of the delegation, they said.

They observed the slow processing agreement for traffic in transit which took more than eight years to come into force was signed by Pakistan, China, Kyrgyzstan and Kazakhstan on March 9, 1995 and protocol on custom procedure for goods in transit and passport visa regime for the implementation of the agreement was signed on November 24, 1998, while the agreement finally came into force in May 2004.

As per contract, Pakistan and Kazakhstan agreed to grant one year multiple visas to the driver and crew (2 members) of the vehicles in transit for six trips, China agreed to provide six months multiple entry visa and Kyrgyzstan to grant one month single entry and up to one year multiple entry visas.

Transit time allowed for movements of goods from entry to the exit point is 30 days each in Pakistan and Kyrgyzstan, 180 days in China while 7 days in Kazakhstan, they informed.

They said foreign exchange rules and regulations of the contracting party will be applicable to the drivers and crew travelling with the vehicle engaged in traffic in transit. The traffic expenses (maintenance of road and toll tax etc) will be accepted in US dollars while Kazakhstan will get expenses in its local currency.

Only vehicles registered in the contracting parties are allowed to undertake the transit. The carriers holding valid international road transit permit can operate traffic in transit amongst the contracting parties. At present 200 permits are allocated to each contracting party for one calendar year, they added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Surgical goods, medical equipment exports up 11 percent ​*
KARACHI (October 04 2007): Export of surgical goods and medical equipment has gone up by 11 percent during the first two months of the 2007 fiscal year, officials figures revealed.

In the first two months of the current fiscal year, ie July-August, the export of surgical items and medical equipment stood at 27.176 million dollars as against 24.545 million dollars during the same period of the last fiscal year, depicting an increase of 2.631 million dollars or 11 percent.

In August 2007, the country exported surgical and medical equipment worth 13.798 million dollars against 12.386 million dollars during August 2006 with an increase of 11.40 percent or 1.412 million dollars. Month on month basis, in August 2007, exports surged by 3.14 percent or 42 million dollars against 13.378 million dollars during July 2007.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Economic zones ​* 
Incentives may hamper local investment

Friday, October 05, 2007

LAHORE: Special facilities being provided for establishing economic zones including China-Pakistan Economic Zone (CPEZ) are feared to disturb ongoing investments by local private sector investors and encourage them to withdraw their money already invested in different projects.

Withdrawal of investments would lead to further unemployment and hamper the growth of the economy, which has already been disturbed by the political uncertainty.

These concerns were aired by both the government officials and private sector people in a meeting held at the Punjab Civil Secretariat to discuss a policy package prepared by the Board of Investment (BoI) for setting up economic zones including China-Pakistan Economic Zone (CPEZ).

Sources privy to the meeting told The News that all the stakeholders strongly criticised the BoI package during the talks. They said the package created worries and encouraged private sector investors to take out their money.

According to the policy package, the government will give full exemption from customs duties and taxes strictly on the import of capital equipment (plant, machinery, equipment and accessories) for the development of economic zones and for projects and not for raw material.

Chinese and other foreign investors would also enjoy corporate income tax holiday for a period of five years for projects in the zone from the date of starting commercial operations. This facility would also be available for the developers of the zone. Moreover, existing initial deprecation allowance of 50 per cent would be considered to be enhanced to 100 per cent.

Normal incentives for exports available to projects established elsewhere in the country shall be applicable to exports from the projects in the zone.

Under the policy package, the federal government/agencies will provide gas, electricity and other utilities at zero point of the zones while captive power generation would also be allowed to the developers of the zones.

The provincial government will construct approach roads up to the zero point of the zones. The BoI would provide one window facility within the zones for foreign investors. It would also provide services to complete required processing/procedures within the zones at the doorstep of investors.

The BoI would also provide free facilitation services and guidance to investors. Workers Training Centres would also be established in the zones for the upgradation of technical skills of labourers.

In the case of joint venture in the CPEZ, only such projects would be allowed to be set up which has at least 40 per cent equity from well-known Chinese companies.

Dry port facility would also be provided in the zones to facilitate imports and exports. It was also mentioned that the Punjab government would facilitate Haier-Ruba Group to acquire land for special economic zones.

According to the sources, all the stakeholders in the meeting said discrimination in the policy package between the local and foreign investors would ultimately hit the domestic industry. They argued that the local industry, which was already striving hard to fight the Chinese factor, would ultimately be wiped out after the Chinese manufacturers established their industry in Pakistan which would further cut their input cost.

The participants of the meeting cited the example of Hattar Trade Zone, which gave a deserted look since after the period of special facilities ended as the investors withdrew their investment.

The sources said the stakeholders also argued that the government had been encouraging joint ventures, which would not be possible as it was not easy to bring in well-known Chinese companies for joint projects. However, some companies were ready to come to Pakistan than only limited companies which would be able to make joint ventures, leading to closure of a large number of industries, they remarked.

An official of the Punjab government said on condition of anonymity a new zone took a minimum of 18 to 24 months for infrastructure development and a further similar time spent for the establishment of the industry. So a minimum of four years are required for the development of a new zone if the land was already acquired, he said.

But for the establishment of these zones, acquisition of land would also take a minimum of 12 to 18 months, the official remarked.

Economic zones


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## Neo

*Pakistan, EU sign 200m euros accord *​ 
Friday, October 05, 2007

ISLAMABAD: Pakistan and European Union here on Thursday signed a Memorandum of Understanding on Multi-Annual Indicative Programme (MIP) of 200 million euros.

M Akram Malik, Secretary Economic Affairs Division led the Pakistan side whereas Jan De Kok, head of delegation led the EC side.

The financing instrument EC is providing is meant for poverty alleviation in the context of sustainable development, including the pursuit of the Millennium Development Goals.

Cooperation under the instrument shall also encourage integration into the world economy, promotion of good governance and human rights and strengthening of relationship between the European Commission and Pakistan.

The EC strategy and the Multi-annual Indicative Programme 2007-2010 for Pakistan have been designed on the basis of such principles, the European Consensus on Development, and also the declaration on Aid Effectiveness adopted in Paris in 2005.

The memorandum reflects the indicative assistance priorities for the period 2007-2010 as outlined n the multi annual indicative programme 2007-2010.

The overall objective of the Multi-Annual Indicative Programme (MIP) 2007-2010 is to fight poverty and help Pakistan follow a sustainable growth path, in line with Pakistans policy priorities outlined in the Medium-Term Development Framework and its Poverty Reduction Strategy Paper.

The programme concentrates on rural development and natural resources management in North West Frontier Province and Balochistan with a view to reducing regional disparities and promoting stability in provinces bordering Afghanistan.

Moreover, governance, education and human resources development are accorded priority for developing a well-trained work force and creating a moderate and stable Pakistan.

The program also underscores the trade development, democratisation and human rights and anti-money laundering.

Pakistan, EU sign 200m euros accord


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## Neo

*Telecom revolution to be broadened to remote areas: Awais ​* 
Friday, October 05, 2007

ISLAMABAD: Minister for Information Technology Awais Ahmad Khan Leghari on Thursday said the telecom revolution will now be broadened to far-flung areas of the country. 

He was addressing the signing ceremony of Universal Service Contract awarded to Telenor Pakistan for provision of telecom facilities in Malakand division. 

The contract was signed by CEO of Universal Service Fund (USF) Parvez Iftikhar and CEO Telenor Pakistan Tore Johnsen onbehalf of their respective institutions. 

The minister said even with market liberalization and under strictly commercial considerations, there would always exist certain populations and geographic areas that remain un-served. 

Leghari said the government had established USF in 2005 to ensure that these designated populations and geographic areas gradually receive defined adequate services in a sustainable manner. He said the success of telecom sector in Pakistanis now globally recognized and it has emerged as a role model for other emerging telecom markets. 

Combined teledensity figure has already reached up to 40 per cent in 2007 from just 4 per cent in 2003, with major contribution coming from mobile sector, he said. 

The minister said the primary goal of USF is to make available and affordable voice telephony to progressively greater proportions of population at their home locations. 

Minister for Political Affairs Engr Amir Muqam said that the Malakand division has over 25 per cent of population with one-thirds of total area in the province. The minister said initiation of USF pilot project will go along way in enabling the people living in the area to seek benefits from the telecom revolution. USF CEO Parvez Iftikhar said access to abundant telecommunication services has led to economic progress during the last five years. 

He said USF aims at bringing the focus of telecom operators towards rural population, improving broadband penetration and making significant advances both in rural and urban areas of the country.

Telecom revolution to be broadened to remote areas: Awais


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## Neo

*Cement output increased by 22.5 per cent: LSM pattern unchanged*​
KARACHI, Oct 3: The latest official data issued on Wednesday does not show any significant change in the pattern of economic growth recorded last year as well as the one prevailing for last five years.

The dominant textile sector still has the largest share in the economic growth while all other traditional sectors of the economy remained the part of the growth with slight changes in their growth pattern.

No new sector emerged during the year 2006-07 to become a key player in the growth of economy neither any traditional sector appeared with its extra ordinary performance.

However, the construction industry looked a major sector, which improved its performance comparatively better than previous year. The cement sector, which has a weight of 4.14 per cent in the economy, grew at the rate of 22.5 per cent.

The pig Iron grew at the rate of 31.4 per cent while the overall metal industry grew at a rate of 10.7 per cent.

The textile sector, which has a weight of 24.49 per cent in the economy, showed a production growth of 8.5 per cent. This was not an attractive growth to give a big push to the economy as expected by the government. It also showed dismal growth on the export front despite the recipient of the largest incentives provided by the government.

What is important for the country is the petroleum production, which instead of going up to bear the rising burden of the petroleum imports, showed a negative growth of 1.8 per cent. The countrys import bill carries the largest amount of petroleum products reaching almost $8 billion.

The most talked about automobile sector was another one, which showed a disappointing growth during the last fiscal. The government expects that the automobile sector would prove to be one of the pillars of the economy. The sector growth was just 3.8 per cent.

Cars and jeeps having largest share in the automobile sector could hardly retain their growth in positive number as this sub-sector grew by just 0.4 per cent. Motorcycles growth was 11.6pc but this sub-sector has just 0.137 per cent weigh in the economy.

Food, beverage and tobacco were the second biggest sector in terms of its weight in the economy, which was 14 per cent, showed a growth of 8 per cent. This traditional sector could only maintain its traditionally normal growth.

The only significant growth in this sector was of beverages, which shot up by 34 per cent.

Pharmaceutical products, which has a weight of over 5 per cent in the economy, moved up with a significant growth of 12.2 per cent and this growth was led by 47 per cent growth in the injections.

Chemicals having a weight of 4.8 per cent, showed a growth of 11.7 per cent. Electronics sector grew by 9.4 per cent led by 20.4 per cent growth of electric transformers.

However, the sub-sector television, registered a sharp decline with a negative production of 35.9 per cent.

Engineering items having a weight of 0.44 per cent showed a growth of 28.8 per cent led by sewing machines and diesel engines with a growth of 33.7 per cent and 37.1 per cent, respectively.

Cement output increased by 22.5 per cent: LSM pattern unchanged -DAWN - Business; October 04, 2007


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## Neo

*ADB to give $510m for renewable energy project*​
ISLAMABAD, Oct 3: The Asian Development Bank (ADB) will provide $510 million to Pakistan to fund its $2.2 billion renewable energy development sector investment programme, envisaging development of low-head hydropower projects in Punjab and NWFP provinces.

A formal agreement to this effect will be signed here on Friday by the representatives of ADB and the government.

The total investment requirement for renewable energy development to reach 3.5 per cent target by 2015 is estimated as $2.2 billion. The ADB loan facility will cover up to $510 million. The rest will have to be found from various sources such as private sector, multi-lateral and bi-lateral agencies, or through public-private partnership.

The programme is part of an initiative to help meet power shortages and diversify electricity sources. Under the first set of sub-projects, the NWFP will develop a cluster of small hydropower from perennial high-head rivers that are abundant in the province.

Punjab province will also develop a cluster of low-head, high-volume small hydropower stations that can be installed in the existing irrigation canal system with perennial water flows.

Pakistan is a water rich country, offering a total hydropower potential of more than 45,000MW. Hydropower resources are located mainly in the northern and central parts of the country. The total installed capacity of the hydropower stations in the country is 6,595MW.

The ADB financing will be used to develop feasibility studies of new sites for future renewable energy investments by the public sector, bi-lateral and multi-lateral financial institutions, and the private sector and for promoting enhanced social and environmental safeguards.

It is estimated that about $900 million investment will be made by the private sector, $400 million by other lending agencies and about $390 million by the federal government. A number of incentives and concession would be made available for development of projects under the public-private partnership scheme.

Under the agreement, the ADB will have the discretion to deny any financing request made by Pakistan, cancel the uncommitted portion of the facility, and withdraw Pakistans right to request any financing tranche under the facility.

The ADB financing will be in two parts. The $500 million assistance will be under the Ordinary Capital Resources and $10 million from ADBs Special Funds Resources for Capacity Development of related agreements. The ADB programme would be completed by December 2017.

ADB to give $510m for renewable energy project -DAWN - Business; October 04, 2007


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## Neo

*KSE index crosses 14,000-point barrier*​
KARACHI, Oct 3: The KSE 100-share index on Wednesday breached through the psychological barrier of 14,000 points at 14,046.01 for the second time in the stock trading history as investors continued to build-up long positions on selected counters aided by some positive developments, including top military appointments.

It had already broke this barrier some time in March this year at 14,236 points and indications are that it may surpass its previous all-time record during the current run-up, analysts said.

The net rise over the day was 123.93 points adding Rs32 billion to the market capital at Rs4,303 billion. The KSE 30-share index rose by 210.48 points at 17,258.86 to close at its new career-best level.

Fresh massive covering purchases in the leading bank and oil shares, OGDC, Pakistan Petroleum, National Bank, Attock Refinery and some others was said to be the chief inspiring factor behind the indexs meteoric rise.

The share market, therefore, maintained its winning streak for the fifth session in a row as investors were not inclined to take even technical breather despite two opinions about the presidential election on Oct 6.

The appointments of Joint chief of staff and Vice Chief of Army Staff, who eventually would take charge of the top army posts after Gen. Musharraf retires after being re-elected president has, analysts said, reinforced the investors perception that political wind is blowing toward sanity ending the protracted state of uncertainty.

There are, however, still two opinions about the possible apex court ruling on the review petitions seeking that President Musharraf is not eligible as candidate for the presidential election on Oct 6 in uniform, they

added.

The hearing on the issue, which resumed yesterday, may not end before the deadline of Oct 6, and there are doubts in investors minds whether the apex court orders stay pending the decision or allow the election on the fixed date, some others said.Buying support was largely selective as investors were not inclined to take risks until the apex court ruling on the presidential election. As a result, there was a lot of profit-selling on some other counters.

Leading gainers were led by Siemens Pakistan and Unilever Pak Foods,

were quoted further higher by Rs34 and 30, followed by Pakistan Resource Co, Fazal Textiles, Pakistan Petroleum, Engro Chemicals, Shezan International, Hino Pak Motors, Attock Refinery, and Nestle Pakistan, which posted gains ranging from Rs9 to 29. There were several others, which rose by Rs5 to 8.50.

Colgate Pakistan and National Foods were leading among the losers, off Rs19.95 and 16. Other prominent losers were JS Global, JS & Co, EFU Life, Central Insurance, Dawood Hercules, New Jubilee Insurance and Lakson Tobacco, off by Rs4 to 10.50.

Trading volume rose further to 379m shares from the previous 355m shares as gainers held a slight edge over the losers at 159 to 157, with 52 shares holding on to the last levels.

OGDC again topped the list of actives, up by Rs4.25 at Rs125.50 on 57m shares, followed by Pakistan Petroleum, higher by Rs10 at Rs285 on 28m shares, Bank AlFalah, higher by Rs2.60 at Rs55.40 on 24m shares, D.G.Khan Cement, off 70 paisa at Rs113.40 on 19m shares, Engro Chemical, up Rs13.45 at Rs282.95 on 18m shares, National Bank, higher by Rs2.40 at Rs263.35 on 16m shares and Attock Refinery, higher by Rs12.35 at Rs259.85 on 12m shares.

Other actives were led by TRG Pakistan, steady by five paisa on 14m shares followed by Fauji Fertiliser Bin Qasim, up 45 paisa on 17m shares, and Lucky Cement, higher by 95 paisa on 13m shares.

FORWARD COUNTER: OGDC also led the list of actives on the cleared list and was quoted higher by Rs4.25 at Rs136 on 8m shares followed by D.G.Khan Cement, lower by Rs1.20 at Rs112.30 on 6m shares and Lucky Cement, firm by 80 paisa at Rs135.55 on 5m shares.Pakistan Petroleum after being ex-dividend and ex-bonus was quoted higher by Rs9.30 at Rs255.90 on 5m shares and National Bank rose by Rs2.50 at Rs264.50 on 4m shares.

DEFAULTER COS: Barring a large turnover of 3.485m shares in Zeal Pak Cement on selling, lower by 10 paisa at 4.55, trading activity on this counter was relatively slow. Nimir Chemical followed it, easy 10 paisa at Rs3.90 on 0.504m shares and Japan Power, off 25 paisa at Rs9.10 on 0.221m shares. Others were modestly traded.

DIVIDEND: Pak Elektron, bonus shares at the rate of 25 per cent, Sazgar Engineering, cash 10 per cent plus bonus shares of the same amount, Saudi Pak Leasing co, cash 10 per cent, bonus shares five per cent, KASB Bank, right shares 26 per cent.

KSE index crosses 14,000-point barrier -DAWN - Business; October 04, 2007


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## Neo

*Mining and quarrying sector registers 5.6% growth​*
ISLAMABAD: The government is fully committed to making the mineral sector in Pakistan one of the most profitable for the country as during the current fiscal year the mining and quarrying sector has registered a growth rate of 5.6 percent as against 4.58 percent last year. 

According to the official sources the increased growth was propelled by strong growths recorded in magnetite (30 percent), dolomite (26.1 percent), Limestone (25.2 percent) and chromites. 

To make this sector thrive further, the government has already started various initiatives, which is evident from the discovery and development of world-class copper-gold deposits in Chagai, Balochsitan by Australian Firms that would fetch $500 million to $600 million per year during the lives of these mines. 

The sources said that successful up gradation studies being carried out by German Consultants on Dilband iron ores Balochsitan would, to large extent, minimise importation of Iron Ores 1.7 million tonnes iron ores costing about Rs 3.2 billion per year.

Development of Thar coalfield, one of the largest good quality lignite deposits in the world, on completion, would provide additional source of energy. 

Moreover development of abundantly available high quality industrial minerals and natural stones has bright prospects for exports, import substitution and local consumption, the sources added. 

The confidence of foreign investors, developers and consultants repose in Pakistan, clearly demonstrate the successful implementation of investment-oriented policies initiated by the present regime, the sources maintained.

The minerals described below are under various phases of exploration, development and utilisation in Pakistan, which includes energy minerals (coal), agriculture minerals (rock phosphate, gypsum), metallic minerals (iron ores, copper, gold, zinc-lead, chromite, antimony), refractory minerals (refractory clays, magnesite, chromite, silica sand, dolomite) and glass and ceramic minerals (kaolinchina clay, nephyeline syenite, silica sand).

The sources said that Pakistan has a widely varied geological framework, ranging from pre-Cambrian to the Present that includes a number of zones hosting several metallic minerals, industrial minerals, precious and semi-precious stones. 

Although many efforts have been made in developing geological products, institutional, academic and research and development (R&D) infrastructure, much remains to be done to enable this sector to take full advantage of its endowment, they added. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*More tax exemptions needed to save Gwadar port deal​*
ISLAMABAD: The fulfillment of additional three tax exemptions would help save the agreement signed with the Port of Singapore Authority International (PSAI) for operations of the Gwadar Port, a senior government official told Daily Times on Wednesday. 

PSAI has demanded from the government of Pakistan to also allow tax holiday for concession holder and operating companies from corporate income taxes for a period of 25 years, exemption of the lenders from income tax on interest and stamp duties in the respect of financing agreement and exemption of the operating companies from sales tax. 

The ministry of ports and shipping has informed the finance ministry that in pursuance of approval by the cabinets economic coordination committee (ECC) accorded in its meeting held on February 1, 2007, certain tax exemptions were notified under SRO 327 (i) 2007 and SRO 755 (i) 2007 issued by the revenue division. 

The ECC had accorded approval to concession agreement for 40 years for operation of Gwadar Port Authority (GPA) with PSAI/AKD. Subsequent to the ECC approval, the concession holder had demanded additional exemptions, which were included in the concession agreement signed by GPA with the port operator. 

The GPA has now initiated a case for allowing the additional exemptions for the approval of the ECC. Tax holiday for the concession holder and operating companies from corporate income taxes for a period of 25 years, exemption of the lenders from income tax on interest and stamp duties in respect of financing agreement, and exemption of the operating companies from sales tax. 

The ministry of ports and shipping reviewed the matter in consultation with the GPA and found that subsequent to the draft concession agreement submitted by the PSAI in December, 2006, the new draft agreement was tabled by them demanding additional exemptions and was contested by the negotiating team to the extent that PSAI walked out of the negotiations, the official added. 

With the agreement signing date approaching near and with a view to salvaging the agreement, there was no alternative for GPA but to accept the demands of PSAI regarding additional exemptions from sales tax. 

In view of the position explained, the ministry of ports and shipping has said that there is no alternative but to accept to fulfill the contractual obligations. In the event of default, PSAI may invoke articles 1.3.8.1 and 7.5.2 of the concession agreement, which may adversely affect the operation of the port. 

The article 1.3.8.1 of the concession agreement signed with PSAI states that parties acknowledge and confirm that the conditions precedent are fundamental to the fulfillment of the obligations under and exercise of rights vested by this agreement. Consequently, the party who is to fulfil the condition undertakes that it shall make best effort to fulfil or cause to be fulfilled these conditions precedent (except for the conditions precedent that relates to the free zone business and which shall be fulfilled as and when GPA acquire the required land for this purpose in terms of this agreement) no later than the long-stop-date. 

Article 7.5.2 of the concession agreement signed with PSAI relates to the termination of the agreement by concession holder. This article states that concession holder may give notice of the intent to terminate this agreement in accordance with article 7.6 upon the occurrence on any of the events (each a GPA event of default) unless an event has occurred as consequence of a concession holder event of default or a force majeure event: (a) GPAs failure to perform or discharge any of its obligations in accordance with the provisions of this agreement which failure shall have material adverse effect on the rights of the concession holder under this agreement and which failure is not remedied within 180 days of the concession holders written request to do; or (b) any representation or warranty made or given by GPA under this agreement found to be false, misleading or incorrect, provided that this causes a material adverse effect on the rights of the concession holder under this agreement and that the reasons rendering the representation or warranty false, misleading or incorrect are not rectified or caused to rectified by GPA within a reasonable time.

Daily Times - Leading News Resource of Pakistan


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*Multi-Annual Indicative Programme: Pakistan and EC sign MoU worth euros 200 million ​*
ISLAMABAD (October 05 2007): Pakistan and European Commission here on Thursday signed a Memorandum of Understanding on Multi-Annual Indicative Programme (MIP) 2007-2010 worth Euros 200 million to help sustainable development and effectively pursue the Millennium Development Goals.

The MoU was formally signed by Secretary, Economic Affairs Division, M Akram Malik and Jan De Kok, Head of Delegation, European Commission. The European Commission's strategy and the MIP 2007-2010 is focused on to fight poverty and help Pakistan follow a sustainable growth path, in line with its policy priorities outlined in the Medium-Term Development Framework and its Poverty Reduction Strategy Paper.

Speaking on the occasion, M Akram Malik said that the MoU would further strengthen relations between Pakistan and European Union. He said that the MIP would concentrate on rural development and natural resources management in North-West Frontier Province (NWFP and Balochistan with a view to reduce regional disparities and promote stability in Pakistan's sensitive provinces bordering Afghanistan.

Moreover, he added, governance, education and human resources development are the second focal objectives for developing a well-trained work force and creating a moderate and stable Pakistan. The Programme also underscores the need for taking concrete measures for trade development, democratisation, human rights and anti-money laundering, he added.

Speaking on the occasion, Jan De Kok, Head of Delegation, European Commission said that Pakistan and EU were committed to strengthening their relationship under this new MIP.

He said that since the beginning of its co-operation with Pakistan in 1976, the EU has committed more than Euros 500 million in grants to projects and programmes in Pakistan. It may be recalled that the financing instrument for development co-operation under which EC development assistance to Pakistan is provided for poverty alleviation in the context of sustainable development, including pursuit of MDGs.

Business Recorder [Pakistan's First Financial Daily]


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*WB provides $150.2m to improve irrigation system in Sindh ​* 
ISLAMABAD (updated on: October 05, 2007, 19:47 PST): Pakistan and World Bank here on Friday signed an agreement of $ 150.2 million under Sindh Water Sector Improvement Project to improve effectiveness and operational efficiency of irrigation system by ensuring safety of canal network in various areas of Sindh province.

The project would be executed by the government of Sindh's Irrigation and Power department, Sindh Irrigation and Drainage Authority, Area Water Boards of Ghotki, NARA and Left Bank, and farmer organizations.

The agreement was signed by M. Akram Malik Secretary Economic Affairs Division, Yahya Waliullah, Secretary P&D Department, Government of Sindh and Youspha B. Crooks, Country Director World Bank on behalf of Federal government, government of Sindh and WB respectively.

The objective of the project is to improve the effectiveness and operational efficiency of irrigation system by ensuring safety of canal network in Ghotki, Nara and Left bank areas. It would help ensure deliver due share of water to the farmers at the tail end with adequate drainage.

Speaking on the occasion, Secretary Economic Affairs, M. Akram Malik said that the objective would be achieved by deepening and broadening the already initiated institutional reforms, improving the irrigation system and by enhancing sustainability of the systems through maintenance and cost recoveries.

Speaking on the occasion, World Bank Country Director, Youspha B. Crooks described the agreement as very crucial in terms of rehabilitating the existing canal system to enhance its effectiveness.

He said, this would help irrigate more areas in the province by ensuring proper distribution of water and thereby increase incomes of the people.

The terms and conditions of the US$ 150.2 million credit are standard. It would have maturity period of 35 years having a grace period of 10 years with service charges on the withdrawn balance _ of 1 per cent per annum and the maximum commitment charge rate on the withdrawn financing balance shall be of 1 per cent.

WB provides $150.2m to improve irrigation system in Sindh


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*Four 920 megawatts projects approved ​*
ISLAMABAD (October 05 2007): Private Power Infrastructure Board (PPIB) which met on Thursday with Minister for Water and Power Liaquat Ali Jatoi in the chair approved four power projects in the private sector. According to information, the board cleared a 100 MW power project to be set up in Khuzdar in Balochistan by NLC.

The project would be based on diesel cycle engines using furnace oil as fuel. This is a very important project for Balochistan, which will cater for the another gas-based project of 120 MW power project at Sukkur. The project would use a mixture of low BTU gas from Kandra gas field and some pipeline quality gas, the main sponsors of the project are M/s PEL who would now carry out a feasibility study.

In addition, 200 MW project of PIE-AmPower to be located at Sundar Industrial Estate and 500 MW Chichoki Mallian Power Project by Qatar Investment Authority (QIA) were also approved. A comprehensive progress report of upcoming private power projects was submitted to the Board.

Under Power Policy 2002 PPIB has initialled/signed with the private sponsors Implementation Agreements (IAs) totalling 2066 MW during the year 2007 whereas negotiations on 3 more IAs are at advance stage of conclusion. The projects having IAs signed include 225 MW Saif Power, 165 MW Attock General, 202 MW Fauji Mari, 84 MW New Bong, 200 MW Nishat Chunian, 200 MW Nishat Power, 225 MW Atlas Power, and 134 MW Star Power.

Moreover, IA of 227 MW Engro Power has also been inked. Furthermore, Financial close has been achieved by 5 projects totalling 1015 MW which include 225 MW Orient Power, 225 MW Muridke (Sapphire) Power, 175 MW Fauji Mari Power Project, 165 MW Attock General Limited and 225 MW Sahiwal (Saif) Power Project.

Jatoi appreciated the efforts of Managing Director PPIB Mohammad Yousuf Memon and his team for working diligently for the development of power sector of the country. He said that due to rapid demand growth, more power needs to be injected into the system, and participation of the private power sector is essential. Jatoi reiterated Government's firm stance to provide all assistance to the investors to develop the power sector.

Business Recorder [Pakistan's First Financial Daily]


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*Oil reserves increased by six percent ​*
KARACHI (October 04 2007): The country's oil reserves have increased by six percent to 937 million barrels (mbbls) during 2007 financial year against 883 mbbls of 2006 financial year, while the gas reserves witnessed an increase of two percent to 54 trillion cubic feet (tcf) in this period as against 52.75tcf in the same period previous year.

According to figures, released by Pakistan Petroleum Information Service (PPIS), Pakistan's balance recoverable oil and gas reserves stood at 353 million barrels and 32.4 tcf respectively. During the 2007 financial year, the E&P activity in the country yielded net addition of 53.4 million barrels of oil and 1.26tcf of gas.

Faraz Farooq, an analyst at First Capital Equities Limited, said that the new additions in the list of oilfields include Chak-66 NE, Dars Deep, Mela, Nim, Nim West, Unar. Interestingly, all these fields belong to Oil and Gas Development Company (OGDC), which is the most aggressive E&P giant in the country. Additions in gas reserves were mainly due to the inclusion of Bahu, Chak-66 NE, Chandio, Dars Deep, Nim, Nim West and Unar. Again the OGDC is the operator in all these fields.

Amongst the already discovered fields, major addition was witnessed in the reserves of the OGDC with the inclusion of Chanda, Kunnar, Qadirpur, Pasahki oil reserves.

In case of gas, the upward revisions in the reserves were seen in Bobi, Dahkni, Qadirpur and Nandpur. OGDCL made 10 new oil and gas discoveries during the year.

"One measure of E&P performance is the "reserves replacement ratio" (RRR) that is the ratio of new reserves to oil produced.

"In the 2007 financial year, the reserve replacement ratio for hydrocarbons was worked at 218 percent versus the last five years average of 117 percent", Faraz said, and added": "This ratio is calculated by dividing the sum of changes to estimated crude oil reserves from revisions, improved recovery and discoveries during the 2007 financial year by production of 24.5mn barrel oil equivalent (BOE).

"In case of gas, the RRR for 2007 financial year is at 86 percent as compared to the average of 252 percent in the previous five years," he said. Amongst the listed E&Ps, the OGDC was solely responsible for the reserve addition during the 2007 financial year. In this regard, the most significant discovery was Mela-1. The original recoverable reserves of this field were quoted at 15.87mn barrels oil and 46.5bcf.

He said the reserve replacement ratio of the OGDC in the 2007 financial year was significantly higher than other E&Ps. As per the 2007 financial year's annual report, the OGDC's balance recoverable reserves as of Jun 30, stood at 159.17mn barrels of oil and 10.87tcf of gas. This is due to the aggressive exploration strategy of the company, which is bearing fruits for it.

No major change was observed in the reserves of the Pakistan Oilfields Limited (POL) as Tal Block and Pindori fields reserve estimates were unchanged during the 2007 financial year.

In case of PPL, the recent discoveries by JV, OMV at Latif, Tajjal and Hala were not assessed and, therefore, are included at the end-June reserves.

The E&P sector stocks attracted healthy buying at the stock market on Wednesday due to its good performance during the last fiscal year and new regarding increase of its reserves. Most of the relevant stocks closed with handsome gains as the OGDC gained Rs 4.25 to close at Rs 125.50, PPL surged by Rs 10 to close at Rs 285, while POL increased by Rs 1.20 to close at Rs 337.70.

Business Recorder [Pakistan's First Financial Daily]


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*UAE firm may invest in IPI project ​*
ABU DHABI (October 04 2007): A UAE enterprise has announced its plans for future investment in a tripartite project to transfer Iran's gas to Indo-Pak sub-continent. Abu Dhabi National Energy Company (Taqa) Official Peter Barker Homek said the 2,500-km-long Iran, Pakistan, India gas pipeline project is interesting and could boost his company's active role in downstream industries.

Business Recorder [Pakistan's First Financial Daily]


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*Gas production increases by 103 percent ​*
KARACHI (October 04 2007): The production of natural gas in the country has increased by 103 percent to 3.873 million cubic feet per day in fiscal year 2006-2007 against 1,999 cubic feet daily in 1996-1997.

A report in the latest publication of Pakistan Petroleum Limited referred to available official data reflecting steady growth in the production of natural gas - enjoying a share of 54 percent in the country's primary energy supplies as compared to 38.6 percent in 2007.

Pakistan was mentioned to meet over 75 percent of its energy requirements from domestic resources, which are led by natural gas. The country has a well-developed and integrated infrastructure for the distribution and transportation of gas. Covering the area of 60,000 kilometres, the sprawling gas pipeline network of the country is considered to be one of the best.

Business Recorder [Pakistan's First Financial Daily]


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*Infrastructure development: Pakistan signs Seoul declaration ​*
ISLAMABAD (October 06 2007): Pakistan signed the Seoul Declaration on Public Private Partnership (PPP) for infrastructure development in Asia and Pacific to re-affirm its commitment to continue support and promote PPPs as an effective means to complement the government's efforts in the development and provision of infrastructure facilities and services to the citizens.

The declaration was signed by Dr Salman Shah, Adviser to the Prime Minister on Finance, Revenue, Economic Affairs and Statistics, who was heading the Pakistani delegation attending the Asia Pacific Ministerial Conference on Public Private Partnerships for Infrastructure Development.

The conference, held on October 5, was hosted by the Government of Korea and supported by the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP). Earlier, a high-level expert group meeting convened by the ESCAP secretariat and hosted by the Government of the Republic of Korea, provided an opportunity for agencies involved in PPPs development to discuss issues in infrastructure development.

The Seoul Declaration is yet another step in a series of initiatives, such as the United Nations Millennium Declaration; General Assembly Resolution on World Summit, the Johannesburg Declaration on Sustainable Development and the Monterrey Consensus of the International Conference on Financing for Development etc which provides global recognition of the need for the support and promotion of the concept of PPPs in the development process.

The conference underscored the need to enhance and create an environment that is conducive to private sector participation in the provision of infrastructure facilities and services including (i) Formulation of PPP policy framework, (ii) Reform of legislative and regulatory regimes, (iii) Establishment of administrative mechanisms to promote good governance in PPPs and (iv) Enhancement of the capacity of the public sector to implement PPPs.

Commenting on the occasion, Dr Salman Shah stated that the signing of the declaration re-affirmed Pakistan and signatory countries' resolve to give infrastructure development high priority in our national development agendas and the agreement to support and promote PPPs as an effective means to complement the efforts of governments in the development and provision of infrastructure facilities and services.

Business Recorder [Pakistan's First Financial Daily]


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*Investors asked to invest in quake-hit areas ​*
ISLAMABAD (October 06 2007): Chief Technical Advisor and Programme Co-ordinator of United Nations Industrial Development Organisation (Unido) Aysha Khan in a meeting with President Islamabad Chamber of Commerce and Industry (ICCI) here on Friday asked the investors to invest in the earthquake affected areas of Pakistan.

She said European Union (EU) desires to increase Pakistan export and specially provide consultancy for upgrading those sectors, which are in great demand in European countries specially steel, marble, mining, flower, fish, textile and stone, a press release said here on Friday.

President ICCI Nasir Khan informed her that a delegation of ICCI will visit Italy next month. He asked Unido to help arrange meetings with right persons specially those belonging to Marble, Mining, Steel, and Flower sectors.

He further said that with the allocation of consolidated amount industries in Pakistan would enhance and workers would be trained and arrangements in exchange of trade delegation, mutual training would be increased.

Programme Co-ordinator of Unido Aysha Khan also discussed the Community Based Livelihood Recovery Programme (CBLRP) and informed that European Union funded Programme, which aims to restore Socio economic fabric in the earthquake affected areas of NWFP and AJK through the sustainable livelihood approach.

She added those (CBLRP) key areas of interventions and identified investment opportunities, enterprise development, improving agricultural production, rehabilitating critical minor infrastructure, vocational skill training and preventing environmental degradation. Aysha Khan invited the investors to invest in affected areas of earthquake through chambers.

She further said that the main aim of the project "Community Based Livelihood Recovery Programme for Earthquake Affected Areas of Azad Jammu and Kashmir and NWFP" is to assist to immediate and mid-term livelihood recovery of the vulnerable populations affected by the earthquake in order to improve the living conditions of the affected populations and to allow them to return their places of origin. She informed that European Commission provided 639 million rupees in this connection.

Business Recorder [Pakistan's First Financial Daily]


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*Specialised Saudi Zone ​*
KARACHI (October 06 2007): Ministry of Finance and Board of investment BoI would seek 2500-acre land allocation from the government of Sindh for Specialised Saudi Zone with similar incentives to the Saudi investors like that to the Chinese in Higher Arroha Pak China zone.

Investment Advisor, Ministry of Finance, Dr Junaid Ahmed informed that Sindh Chief Minister and Chief Secretary would be approached soon for their approval of land allocation before the "Pakistan Week at Jeddah scheduled in November 2007 so that Saudi investors would feel confident to invest in Pakistan.

Business Recorder [Pakistan's First Financial Daily]


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*Bus service starts: Adil asks Daewoo to invest more in Sindh ​*
KARACHI (October 06 2007): Sindh Minister for Transport and Industry, Muhammad Adil Siddiqi on Thursday said that Sindh was an ideal place for the investment, as present government was providing all possible facilities to the foreign investors on 100 percent equity basis.

The minister was talking to a four-member delegation of Sammi Daewoo Pakistan Bus Service, led by its Chief Executive Chang Kim. Adil Siddiqi said that launching of the operations by Daewoo Bus Service from Karachi was the beginning of the availability of modern travelling facilities in Sindh.

The visiting delegation also expressed gratitude to Sindh minister for extending active support to the Daewoo for launching their services from Karachi. Leader of the delegation Chang Kim thanked the minister on facilitating the Daewoo in launching services from metropolis, and said the launching the operations from Karachi was impossible without the personal interest and full cooperation of Transport Minister.

Chang Kim informed the minister that at present Daewoo had successfully introduced its operations between Karachi-Hyderabad-Karachi. In the next phase, Daewoo services would be launched between Karachi to Sukkur, Moro and Sadiqabad, consequently, it would be linked-up with the service of the Daewoo, operating across Pakistan, he maintained.

Chang Kim said that Daewoo had poured the investment amounting to Rs 1.5 billion in the bus service, through which employment opportunities were being created for large number of people.

The delegation also informed that the Daewoo had started its service from Karachi with 18 departures, daily, and now comfortable, save and luxurious travelling facility was available for the passengers. Delegation further apprised that the Daewoo had obtained two acres of land near Rajputana Hospital in Hyderabad, where a modern bus terminal would be built.

Leader of the delegation Chang Kim also presented a souvenir shield to the Sindh Minister M. Adil Siddiqi. Besides, Sindh Secretary, Transport, Rasool Bukhsh Phulpoto and PTA Secretary Khalid Khan, other members of the delegation were included, Manager Daewoo Operations, Suhail Ahmed and Muhammad Mazhar.

Business Recorder [Pakistan's First Financial Daily]


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*Renewable energy development: $510 million ADB loan agreement signed *​
FAISALABAD (October 06 2007): Pakistan on Friday signed an agreement with Asian Development Bank for a $510 million multi-tranche loan for the development of renewable energy. The program is the first of its kind in Pakistan, and is one of the first to be developed under ADB's evolving clean energy and efficiency initiative.

Pakistan's energy supplies are highly dependent on oil imports, the cost of which accounts for a large share of the country's total import bill. In addition, demand for power is outstripping supply. Electricity needs are projected to reach 162,590 megawatts (MW) by 2030, from 15,000 MW in 2005.

While thermal power (coal, oil, and gas) is expected to meet much of the future demand, there is enormous scope for more environment-friendly options. Renewable energy accounts for only 180 MW of Pakistan's present power output. The first project under the loan will finance a set of small to medium hydropower plants in Northwest Frontier Province and Punjab.

The governments of Northwest Frontier Province and Punjab expect to borrow up to $180 million and $150 million, respectively, to fund renewable energy projects. Other provinces can request funding for renewable energy projects totalling $170 million.

The program will expand Pakistan's power supply, especially in rural areas, to serve about 600,000 new domestic connections for 4.8 million people. It will also improve reliability and quality of supply.

"Small to medium-sized hydropower plants offer the greatest renewable energy potential for Pakistan, while possibilities also exist in promoting greater use of wind, solar, and biomass power," said Peter Fedon, ADB's Country Director for Pakistan.

"Investment in such renewable energy options would not only be beneficial to Pakistan's energy security, but would also boost social equity, lead to a cleaner environment, and make good economic sense."

The loan and project agreements for the Renewable Energy Development Sector Investment Program were signed on Friday by Akram Malik, Secretary, Economic Affairs Division, Peter Fedon, ADB's Country Director for Pakistan, Arif Nadeem, Punjab Secretary Irrigation and Power, Khalid Gilani, Irrigation and Power Secretary for North West Frontier Province, and Ishtiaq Shah, Chief Executive of Sarhad Hydel Development Organisation (Shydo).

The loan will have a life of 10 years--to 2017. The Alternative Energy Development Board is the executing agency for the Renewable Energy Development Sector Investment Program at the federal level. At the provincial level, the program will be executed via special purpose implementing agencies such as Irrigation and Power Departments.

Power and energy, together with transport connectivity and water, are major constraints in Pakistan to achieving the kind of high economic growth that can benefit the poor. Under its clean energy and efficiency initiative, ADB is planning to expand energy efficiency operations in its developing member countries to $1 billion per year.

Business Recorder [Pakistan's First Financial Daily]


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*Islamic banking investment exceeds Rs20bn ​* 
Saturday, October 06, 2007

LAHORE: Direct investment in Pakistans Islamic banking industry is in excess of Rs20 billion till September 2007.

Arab investors from the Middle East have lined up an additional Rs35 billion to be invested in Pakistans banking and industrial sector through Sharia compliant financing over the next 6-8 months.

Ashar M Nazim CEO Islamic Capital Partners said in a statement issued here on Friday. He said that there is more keenness from foreign investors to invest in Pakistans banking sector, as well as its industrial sector through Sharia compliant financing.

The prominent Sharia compliant investors that have expressed interest include: Dubai Bank, Qatar Islamic Bank, Qatar International Islamic Bank, Saudi Economic and Development Company, National Bank of Dubai, Rayyan Bank, Ithmar and Al-Noor amongst others.

Ashar Nazim said that several other institutions are in the process of finalising their investment plans for Pakistan. Investors are much eager to invest in the corporate sector in Pakistan, and who have plans to set up regional operations. 

Many major investors will be visiting Pakistan in November to assess ground realities in Pakistan, he added. They will be attending a key Investors Forum in Karachi during the 3rd World-Asia Islamic Banking Conference.

The 3rd World-Asia Islamic Capital conference seeks to bring together policymakers, bankers, corporate sector, Sharia scholars and other professionals from the local and regional markets to discuss the current positioning of the Islamic capital industry and challenges to future growth.

He said that there is some uncertainty amongst investors and they are waiting for the political scene to clear. Islamic Capital Partners is also actively engaged in promoting knowledge exchange, awareness and training programs in the Islamic financing industry.

Islamic banking investment exceeds Rs20bn


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*EU allocates $639m for technical assistance: UNIDO *​
ISLAMABAD: Chief Technical Advisor and Programme Coordinator of United Nations Industrial Development Organisation (UNIDO) Ayesha Khan in a meeting with President, Islamabad Chamber of Commerce and Industry Nasir Khan on Friday said that the European Union has allocated a consolidated amount for technical assistance in Pakistan.

The European Union desires to increase Pakistani Export and to especially provide consultancy for upgrading of those sectors that are in great demand in European countries especially steel, marble, mining, flower, fish, textiles and stone.

President, ICCI Nasir Khan informed her that a delegation of ICCI will visit Italy next month. He asked UNIDO to help arrange the meetings with concerned persons, especially persons belonging to the marble, mining, steel and flower sectors.

He further said that with the allocation of the consolidated amount, industries in Pakistan would boom and workers would be trained and arrangements for exchange of trade delegations and mutual training would increased.

Programme Coordinator of UNIDO also discussed the Community Based Livelihood Recovery Programme (CBLRP) and informed that the European Union funded programmes which aims to restore the socio-economic fabric in earthquake affected areas of NWFP and AJK through a sustainable livelihood approach.

She added that the CBLRPs key area of intervention are identifying investment opportunities, enterprise development, improving agricultural production, rehabilitating critical minor infrastructure, vocational skills training and preventing environmental degradation.

Aysha invited investors to invest in affected earthquake areas through the chambers. 

She further said that the main aim of the project Community Based Livelihood Recovery Programme for Earthquake Affected Areas of AJK and NWFP is to assist to immediate and mid-term livelihood recovery of the vulnerable population affected by the earthquake in order to improve living conditions of the affected populations and to allow them to lead a normal life. She said European Commission will provide Rs639 million in this connection.

EU allocates $639m for technical assistance: UNIDO


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*Rs400m plan to develop glass industry​*
KARACHI, Oct 5: With a view to improve the lot of 500,000 women workers of the bangle industry, a modern glass designing and development centre is being set up in Hyderabad at the cost of Rs400 million.

The centre, a joint venture of Sindh Small Industries Corporation (SSIC) and Small and Medium Enterprise Development Authority (Smeda), will train workers of bangle factories located in Hyderabad in designing of glass products such as chandeliers, flask, vase, car headlights and other decorative items.

Bangle-making is very old industry of Hyderabad and its bangles are not only sold across the country but also exported to Bangladesh, Sri Lanka, the Middle East, Africa, Europe and the USA.

However, no serious efforts were made in the past to develop of this industry on modern lines and diversification of its products. Bangle factories engage male workers while a large number of women work at homes to make beautiful designs on simple bangles.

The SSIC will provide land and develop infrastructure for the centre while Smeda will construct building, install machinery and design training curricula.

Muslim Raza, Sindh chief of Smeda told Dawn that in India the glass industry was well developed and was manufacturing not only bangles but a wide variety of fine glass products including car headlights etc., while in Pakistan the glass industry had been confined to only bangle-making.

He said that the project was aimed at diversifying glass products so that income of the women working in this industry could be increased besides boosting exports of fine glass products to earn foreign exchange.

The Smeda official said that the centre would train women in manufacturing various glass products which would include car headlights, an important part of automobiles, to meet the rising local demand besides enhancing their export.

The SSIC, which develops and runs a network of small industrial estates all over the province, has reserved special quota of plots in this project for small and cottage industries and women are being encouraged to set up units there.

Rs400m plan to develop glass industry -DAWN - Business; October 06, 2007


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*Industrial output may rise to 25pc of GDP by 2015: minister*​
ISLAMABAD, Oct 5: Pakistan expects its industrial production to increase to 25 per cent of the gross domestic product (GDP) by 2015 from the current 19 per cent, to be supported by increased output from five priority sectors like automobiles, construction, engineering, chemicals and fertilizers.

This will require that we improve our skills, modernize the industries technologically, ensure availability of raw material at competitive rates and undertake an aggressive marketing initiative to get a better market share internationally, Jahangir Khan Tarin, federal minister for industries, production and special initiatives told Dawn.

This means the share of the industry would rise to one-fourth after seven years from the current one-fifth. The government has estimated that industrial production would increase by 10.90 per cent this fiscal year from 8.45 per cent last year, which was less than the target of 13.90 per cent.

Last month, the Asian Development Bank (ADB) lowered its forecast for Pakistans growth rate to 6.50 per cent for the current year against the 7.20 per cent target set by the government for the year.

The bank said unlike some other countries in the region, Pakistan attracts little FDI into manufacturing. This feature needs to be remedied to stimulate economic and employment growth, by bringing in improved technologies, business practices and innovation so as to raise the level of manufacturing competitiveness and to accelerate structural change.

The ADB said that the ultimate causes of poor exports are grounded in long-term and deep structural issues relating to the lack of diversification of export industries, poor compliance with quality standards, and concentration of exports in a small number of markets, it added.

Mr Tarin conceded that the industrial base in Pakistan is very low, highly lopsided and mostly dependent on textiles. The industrial base is low because of basic structural weaknesses developed over the years. It has not developed like other developing countries. The manufacturing sector contributes 25 to 35 per cent to the GDP in developing countries but we have not developed like others. We are now making efforts to follow that route and broad-base our industrial sector, said the minister.

He said excessive protectionism in the past has been the root cause for a lacklustre performance of the industrial sector in general. My biggest concern is that we had strength in textiles, but we are in danger of losing our edge because of over-protection to the textile industry and if we do not prepare for the international marketing competition.

He said the share of manufacturing in GDP was 12 per cent when General Musharraf took over and has increased to 19 per cent in 2006-07.

He said the industrial sector has played a key role in developing countries but this area has not developed in Pakistan like other developing countries. The manufacturing sector contributes 25 to 35 per cent to the GDP in developing countries but we have not developed like others. We are now making efforts to follow that route and broad-base our industrial sector.

To change this structural base is a long-term job and basic challenges we are going to face are lack of skills, modernisation of technology and provision of raw material. So, we are now focussing on skill development, including managerial skills and labour skills, particularly in the engineering sector.

Mr Tarin said our engineering sector, particularly iron and steel, has been hostage to protectionism. The Pakistan Steel Mills that should have been a source of strength for iron and steel has, in fact, been hampering growth. So we have reduced import duties to make raw material available at lower costs.

Secondly, Pakistan has been lacking marketing initiatives. Hence, the Engineering Development Board is being revitalised while efforts are being made to urbanise the SME sector.

The minister did not agree that utility costs were extremely high in Pakistan. That is a myth.

He said the textile ministry has recently got a study done by an international firm WERNERs which after comparing a number of countries has come up with the conclusion that utility costs are not high. However, efficient use is the key and this is an area where we could improve things by developing managerial and labour skills and technology upgradation.

So the National Vocational and Technical Education Centre (NAVTEC) is a big initiative to improve skills in addition to Technology Upgradation and Skill Development (TUSDEC) which will develop skills in tools, dyes and mould sectors. On the marketing front, we have chosen about 65 companies as champions of relevant sectors who have been showcased in Hanover for the last five years and have started getting big orders.

Five sectors have been identified as priority sectors, including automobiles, construction, chemicals and fertilizers, textile and engineering. A total of Rs3-Rs4 billion is being spent on skill development in specific sectors like gem and jewellery, surgical products, marble and granite.

Another big impediment in industrial growth is energy shortage. Electricity shortage and its dependability is a real problem now in addition to textile sector problems. But despite all these problems, the manufacturing sector has grown almost in double digits, although we missed targets.

He said but the ADB in its latest update on Pakistans economy said last week that a resolution of current political uncertainties was the fundamental issue facing the economy. The Oct 6 presidential election as well as parliamentary polls taking place in January must be seen by the population as fair and need to ensure the continuity and coherence of economic policy.

The bank said as a result of unchanged raw cotton production and weakening export demand, the textile sectors performance was lacklustre. Growth decelerated in the automobile sector too as demand faltered in part on the higher cost of consumer credit following a tightening of monetary policy.

The bank said rebuilding work in the regions that had been devastated by the October 2005 earthquake continued to boost a notable expansion in construction just as greater private and foreign direct investment did in the property sector. FDI flows have been highly concentrated in four sectors; telecom, financial services, oil and gas, and tobacco and cigarettes. Together these sectors accounted for three-fourth of total FDI.

Industrial output may rise to 25pc of GDP by 2015: minister -DAWN - Top Stories; October 06, 2007


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*Unrealistic export targets: Exports miss target by 7 percent in July-August​*
* Falls $200 million short of $3.163 billion target

KARACHI: The unrealistic export targets set by government were again exposed during the first two months (July-August) of current financial year as the total export fell by over seven percent from their set target during the said period.

In absolute term, export fell short of $200 million during July-August of the current fiscal to $2.963 billion as against the target of $3.163 billion set for the period under review.

The comparative analysis of two months indicates that August was worst for meeting the target, as during this month export were around ten percent down from their target for the month. During this month export fell by $163 million to $1.477 billion as against the target of $1.640 billion.

Also, during the first month of July the export failed to meet the target, however the fall was not as big as in August. During this month, export suffered just $37 million shortfall against the whole months target of $1.523 billion by coming to $1.486 billion.

Failing to meet the target has remained a major issue for the countrys export sector as it happened during the last two financial years when exports were unable to achieve the whole years targets.

For the current financial year, government set a target of $19.2 billion, which is 12.86 percent higher than the actual realised exports in last fiscal year 2006-07 of $17.01 billion. 

To meet the projected export target set for the current fiscal year 2007-08 the country requires per month exports of $1.6 billion, however exporters said export of projected amount each month does not seem realistic at the moment due to a number of issues, countrys export sector is confronting in international market.

The export performance of first two months is a clear evidence to inability of export sector to post required growth, an exporter of textile products felt and said in the coming months, we fear the export to slide down from the past years export figures.

The sluggish export performance is across the board because all the export categories either posted very nominal growth or registered negative growth during these months.

The analysis shows that the inability of export to meet the targets was caused by the poor performance of textile sector, which contributes over sixty percent in overall export volume followed by non-traditional items like leather, rice, sports goods and developmental categories also remained on the downward side vis-à-vis their export targets.

Exporters said there was a decline of over five percent in the textile exports during the first two months and they apprehend that this decline could exceed the ten percent mark during the next month.

According to exporters, the export targets are unrealistic and this we are saying right from the first day, but the economic managers, just to show internationally and domestically that the economy is progressing well, set ambitious targets, which often, to their embracement could not be achieved. However nothing has been learnt from the past experiences and these people again went for high targets, which seem, though ambitious, but unrealistic in the present circumstances.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Airblue to soon start daily flights to Manchester​*
KARACHI: A private Pakistani airline, Airblue, has plans to increase the frequency of its flights from Islamabad to Manchester from five a week to daily, and start flights on the Islamabad-to-Lahore sector in the near future, said a recent statement.

As the newest airline in Pakistan, Airblue is working with a vision of the future by setting new trends and bringing in technology with a new generation of aircraft, thus making a making serious effort to make air travel affordable and comfortable, said the airlines MD Syed Nasir Ali in a statement issued on Friday. 

Airblue started its first long-haul operation to Europe with four weekly flights from Islamabad to Manchester from June this year, and an additional flight was added in late June to increase capacity to five weekly flights. 

It has recently unveiled growth plans with the purchase of 14 new-generation aircraft, with deliveries starting in 20 months, and a route network growth with new routes in Europe and the Middle East. When Airblue was launched in June 2004 with 12 daily flights from Karachi to Lahore and Islamabad, industry observers understood that the airline would be the first in the private sector to have Pakistani pilots and engineering staff trained according to international standards. Airblue envisaged an initial investment of over Rs 500 million and boasts a great team of veteran aviation professionals today. 

It now operates 26 daily flights to seven domestic destinations in addition to Dubai and Manchester. 

The new generation airline launched frequent-flyer cards in March 2007 for its regular passengers. Registered passengers who have traveled more than 2,000 miles but less than 20,000 miles get a blue card and those who have traveled more than 20,000 miles get the platinum card. Airblue offers 100 percent more redemption of miles to its frequent-flyer passengers than the competition. In addition to giving free tickets, it also offers business-class check-ins and access to the Blue Lounge to its platinum-card holders. These card holders have priority tags on checked-in baggage, preferred boarding, priority check-ins, personal assistance at the self-check kiosks and preferred seating. 

Airblue also plans more value-added services such as purchase upgrades to business class, purchase excess baggage, extra miles for online purchases, purchase merchandise for miles, exclusive customer support and discounts at different retail outlets. 

In June 2007, the environment-friendly airline took the initiative and started a green revolution by pledging to plant more than one million trees in the coming year, marking its third anniversary. The airlines three years of growth turned its focus to corporate social responsibility by making Pakistan a cleaner and greener place. It became the first airline to adopt a park - The Sarwar Hassan triangle - in Karachi. 

Although todays aircraft are 70 percent more fuel-efficient than they were 40 years ago, they still contribute two percent to global warming. Airlines in the next 50 years are expected to contribute up to three percent of emissions containing CO2, H2O and NO. Aircraft manufacturers at present devote up to 15 percent of turnover to research into better and more environment-friendly aircraft.

Airblue pledged to plant 200,000 trees in selected schools in Pakistan to help cultivate a culture of care and environmental concern among young people. Air transport the world over generates 6.7 million direct jobs to alleviate poverty and boost economic conditions.

The airline announced a record travel of over 100,000 passengers and the highest monthly revenue ever on its network in August this year. 

Daily Times - Leading News Resource of Pakistan


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## Moin91

*Senior engineers leave PIA: report*

224 engineers have left and only 43 new appointments;PIA inducts expert with no experience in civil operation

Sunday, October 07, 2007
By Saad Hasan

KARACHI: The recovery of national flag carrier Pakistan International Airlines (PIA) from financial haemorrhage can be bogged down by the departure of experienced engineers.

More senior engineers have left the Engineering Department of PIA than new entrants at a time when PIA is considering increasing its fleet, European officials noted in a quality assurance report available with The News.

In addition, an expert in aeronautical field has been recruited, mainly in airworthiness section, but without experience in civil operation, said the report that was prepared following the visit of a European Union inspection team earlier this year. It said the expert had a military background.

Both actions seemed not to be valid in a short time, and a significant promotion of engineering managers occurring at the same time could create more problems than benefits, the report added.

PIA aircraft allowed into the 27-nation bloc are subject to EU clearance. Nine aircraft, including B-747s and A-310s, are still under scrutiny, since 11 aircraft from the two series were cleared three months ago.

After a large part of PIA fleet, which comprised 42 aircraft, was barred from entering the EU airspace on safety concerns, the airline management has embarked upon rationalisation of unprofitable routes.

But the problem of excess employees: 440 employees to one aircraft, and financial losses creeping up 20 per cent to Rs7.7 billion in six months to June 2007 coupled with an engineering expertise drain could hamper the managements restructuring plan. 

Most seniors have joined Emirates, Etihad, Qatar and other airlines, an engineer from PIAs Engineering Department said. Those airlines are offering good money.

Around 224 engineers have left the company and only 43 have joined despite the fact that basic pay of the employees was increased by 35 per cent late last year, the European Union report notes. 

While the official spokesman for the airline denied if there was any crisis due to shortage of engineers, he acknowledged some had left for better pay. In the coming month the remaining (EU-barred nine) aircraft would be cleared.

The spokesman also referred to timely arrival and departure of flights, something recently achieved by the airline, as a step towards improvement.

However, boiling tempers among re-deployed contractual workers could mar that progress. 

Hired by the airline through a contractor, these employees of basic pay group of 1-4 say their meagre salaries at Rs8,500 are forcing them to think of taking dire action.

We will go on strike during the Haj operations, which starts in the middle of November, one of the employees said, claiming they were 3,326 in number.

Asked if it was a sensible move at a time when the management was already looking at the option of downsizing, he said: They cannot do this. Contractual employees are responsible for very important jobs in departments ranging from engineering to technical ground services.


Senior engineers leave PIA: report


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## Neo

*$132 million sent abroad by foreign investors in two months ​*
KARACHI (October 07 2007): Repatriation of profit by the foreign investors is rapidly increasing, as during the first two months of the current fiscal year, 132 million dollars have been sent abroad, showing an upsurge of some 49.2 percent.

According to reports, foreign investors are taking full advantage of the government policy, allowing them to repatriate 100 percent of the profit earned in Pakistan to their home country.

After this massive upsurge, the overall repatriation of profit has reached 132.20 million dollars during July-August of the current fiscal, as previously it stood at 88.60 million dollars during the same period of the last fiscal, showing an increase of 43.60 million dollars.

The major share of repatriation witnessed in the financial sector, in which foreign investors have invested million of dollars during the last few years due to rising profit in this sector.

Investors have taken back some 40.8 million-dollar profit from the financial sector, which has gone up by 750 percent or 36 million dollars during July-August from 4.8 million dollars during the same period of the last fiscal. While the communication sector is the second leading sector, wherefrom some 32.3 million dollars' profit has been sent aboard. However, it is lower than 51 million dollars repatriated by foreign investors during the first two months of the last fiscal year.

Latest statistics, released by he State Bank Of Pakistan (SBP) show that foreign investors have sent 10.7 million dollars from food sector; 5.4 million dollars from tobacco and cigarettes; 3.4 million dollars from chemical sector; 7.7 million dollars from oil and gas exploration; 1.2 million dollars from pharmaceutical; and 12 million dollar from power sector during the first two months of the current fiscal year.

Besides, some 1.4 million dollars have been sent by trade sector; 9.1 million dollars from transport; 3.1 million dollars from storage facilities; 32.3 million dollars from communication sector; 2.2 million dollars from personal services and some two million dollars from other sectors have been repatriated during July-August.

It may be mentioned here that during the last fiscal, the repatriation of profit showed an increased of 299.8 million dollars or 59 percent to 804.2 million dollars as compared to 504 million dollar was sent during the 2006 fiscal year 2006.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Inflation up 10.73 percent year on year ​* 

ISLAMABAD (October 07 2007): The SPI-based inflation was 10.73 percent up on week ending October 4 as compared to the same period of last year, with 12.61 percent dearness for the low income group. The Federal Bureau of Statistics data released on Saturday showed that the prices of kitchen items were going up regularly, without an iota of relief.

The SPI inflation was recorded 162.45 percent on October 4 with a 0.48 percent increase against 161.68 percent of previous week. The low-income group was more affected by the price hike, as inflation was recorded at 12.61 percent for Rs 3000 earners against 8.14 percent for those having monthly income above Rs 12000.

The week under review showed that price hike was 12.55 percent for people earning Rs 3000 to Rs 5000 and 11.58 percent for those earning between Rs 5001 and Rs 12000.

The SPI bulletin, based on data collected for about 53 items from 17 centres showed increase in 18 items, decline in 9 items, and 26 items remained unchanged. Persistent increase in essential kitchen items' prices has been eroding the budget of those who earn between Rs 3000 and Rs 5000.

The prices of tomatoes, onion, wheat flour, potatoes, moong pulse washed, gram pulse washed, masoor pulse washed, gur, firewood, eggs, bread plain, and red chilli increased during the week with a maximum increase of 46.85 percent in the prices of tomatoes. The price of per kilogram tomatoes went up from Rs 26.66 on September 27 to Rs 39.15 on October 4.

Though the prices of 26 items remained unchanged during the week under review, these were more expensive as compare to last year. The prices of 20 items increased in double digits over the same period of last year.

These included tomatoes 44.41 percent, onions 22.46 percent, wheat average quality 21.24 percent, mustard oil 39.50 percent, red chillies 44.44 percent, bread plain medium size 11.88 percent, egg hen (farm) 37.50 percent, firewood 11.95 percent, wheat flour average quality 22.77 percent, rice Irri-6 46.34 percent, rice Basmati broken 59.13 percent, sugar 10.04 percent, milk fresh 12.70 percent, milk powered Nido 31.01 percent, curd 12.61 percent, veg ghee (tin) 29.51 percent, cooking oil (tin) 29.29 percent, sandal gents Bata 25.06 percent, chappal sponge Bata 11.24 percent, matchbox 26.87 percent, and bath soap Lifebuoy 17.72.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Doing business in South Asia: reforms drop number of days needed to import ​* 
KARACHI (October 07 2007): Recent reforms undertaken by the government in respect of doing business in Pakistan has resulted in drop in the number of days required to import in the country from 39 to 19 days. The protection given to investors has transformed Pakistan into one of the most reliable country for investment.

These remarks were made by Federation of Pakistan Chambers of Commerce and Industry (FPCCI) former President Tariq Sayeed, while addressing the symposium on "Doing business in South Asia, prospects and constraints held in New Delhi on October 4.

According to details available here on Saturday, the symposium was organised by Saarc Chamber of Commerce and Industry (Saarc-CCI). Tariq Sayeed, who is the life member of SAARC-CCI, said that as a result of the adoption of liberalised investment regime, global standards and practices, Foreign Direct Investment (FDI) of over eight billion dollars came to Pakistan last year.

Speaking on trade between Pakistan and India, he said the volume of un-official trade indicated that tremendous potential existed between the two countries. If the illegal trade is converted into official business, the current volume of trade may touch three billion-dollar mark coupled with huge revenue gains for both the countries.

Tariq Sayeed identified 21 potential sectors for promotion of trade between Pakistan and India and explained benefits of increasing trade within South Asia region. Besides identifying potential areas, he also pinpointed some barriers causing hindrance in the growth of trade within this region.

He emphasised that there was a strong need that the governments of Pakistan and India create a congenial business and investment environment. For instance Safta, which has not materialised due to some discrepancies, could play an effective role in increasing the trade share of the two countries in the world, he said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*National Foods endorses excellent financial results ​*
ISLAMABAD (October 07 2007): The 36th annual general meeting (AGM) held on Friday, of one of the most diversified food companies in the country, National Foods Ltd, endorsed the excellent financial results achieved for the financial year ending June 30. A final cash dividend of Rs two per share and three bonus shares for every 10 ordinary shares held were approved.

The AGM was informed that the company achieved sales of Rs 2.39 billion during the year, compared to sales of Rs 1.84 billion in the previous year. Similarly profit after tax registered a sizeable increase at Rs 129 million compared to a little over Rs 70 million in the previous year. The corresponding earnings per share stood at Rs 30.41 compared to Rs 16.55 in the previous year.

"National Foods Limited's strong growth is directly attributable to our adherence to our vision and our core values in all our operations and credit goes to the company's management and its employees who worked as a close knit team to convert the vision into reality," said Company Managing Director and Chief Executive Abrar Hasan. National Foods Limited is manufacturing over 110 food products in 12 major categories, ranging from plain spices, ingredients and basic recipes to pickles, ketchup, snacks, desserts and jams and jellies.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*UAF scholar develops value-added food items *​
FAISALABAD (October 07 2007): Food scientists of National Institute of Food Science & Technology (NIFST), University of Agriculture Faisalabad (UAF), have made significant breakthrough in producing a variety of value-added foods from cereals, meat, milk, fruits and vegetables.

This was stated by Dr Umar Farooq, who completed his PhD research under the supervision of founder NIFST Director Professor Dr Faqir Muhammad Anjum. Giving the details of his research, Dr Umar Farooq said that keeping in view the importance of food industrial waste management and utilisation of organic acids in food products as acidulates or preservatives, the research project was planned to produce value-added food products (citric and lactic acids) from corn steep liquor and sugarcane molasses through fermentation technology.

The main objectives of the study were to develop a culture and isolates of Lactobacillus species and Aspergillus niger from indigenous sources, etc. Dr Umar said that value-added products (lactic and citric acids) were produced from sugarcane molasses and corn steep liquor and the fermentation conditions were optimised with special reference to fermentation time, temperature and substrate levels.

"The lactic acid was used as acidulant for preparation of soft cottage cheese and citric acid was used for the preparation of apple jam and apple soft drink", he added. He said the production of lactic acid and citric acid by sugarcane molasses and corn step liquor at commercial level depending upon the composition of these food industrial wastes.

He also recommended the scientists and researchers to make further attempts for producing the organic acids with different combinations of these wastes so that a medium could be suggested for commercialisation of the technology depending upon cost of production and its end use quality.

UAF vice-chancellor Professor Dr Bashir Ahmad while congratulating the PhD scholar, directed Controller of Examinations to sanction his name to the degree of philosophy. He is the 554th PhD scholar produced by the university since its inception.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Dubai-based company to invest 500 million Dirhams in power project​* 
DUBAI (October 07 2007): The Dubai based ETA Star Group part of Abdullah Al Ghurair Group has signed an implementation agreement worth 500 million Dirhams with Pakistan's Ministry of Water and Power, to set up a power project in Pakistan. TransAsia Gas International LLC, a subsidiary of Al Ghurair Investment LLC is a co-investor in the project.

ETA's subsidiary Star Power Generation Limited will spearhead this gas-fired combined cycle 134-MW Independent Power Project (IPP). It will be based at Dharki, district Ghotki in Sindh, Pakistan. The plant will be allocated low BTU gas by Pakistan government from their Mari Deep reserves for 25 years.

It is likely to be completed and functional by 2010 and will supply 134-MW electricity to national grid. Commenting on deal, Hameed Salahuddin, Director of ETA Star Group said this power generation project and other infrastructure projects initiated by "us in Pakistan are a testament of our commitment to the country's development. We are proud to be instrumental in contributing to and supporting overall infrastructural development of Pakistan."

ETA Star Group is simultaneously developing an Dhs825m hydel power station in northern Pakistan. It is one of pre-qualified bidders for the privatisation of Pakistan State Oil Company Ltd and also developing a 100,000 barrels/day capacity petroleum refinery at Port Qasim, Pakistan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*25 more desalination plants for Thar coalfields by year-end ​*
KARACHI (October 07 2007): Sindh government will install another 25 units of reverse osmosis (desalination) plants in the Thar coalfields. Sources in Sindh Mines and Mineral Development Department told Business Recorder here on Saturday that technical report on installation of the 25 units were submitted to the government last Monday.

According to sources, it is hoped that the units would be functional and provide usable water by the end of current fiscal year. The units will be installed in Lakhra coalfield near district Dadu, Sonda-Jheruk coalfield near district Thatta and Badin coalfield.

Each unit of the reverse osmosis plant has a capacity to treat 0.1 million gallons of saline water daily. The total capacity of 25 units, therefore, is to treat 2.5 million gallons of saline water per day.

The government had allocated Rs 550 million for installation of these plants in Badin and Dadu districts, the sources, and hoped that work on the project would be completed by the end of 2007-08 fiscal year. It may be recalled that 29 such units have already been installed in the Thar coalfiled.

The desalination units, on completion, besides removing salinity problem and for cooling the power plant, would also be used for domestic purpose in Lakhra coalfield, Dadu district and Badin, the officials said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Businessmen delighted over Musharrafs re-election ​* 
Sunday, October 07, 2007

KARACHI: The business community of Pakistan has welcomed the unofficial results of President Musharrafs re-election with delight.

The business community leaders are breathing a sigh of relief as they hope that with the President continuing his term for another five years, the economic policies will remain stable, which would eventually help them in their trades.

Zubair Tufail, Vice President of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) said that while Saturdays results are unofficial and everything is subject to the Supreme Courts final decision, he sees General Musharrafs re-election for the next five years as a good sign for the country.

Pakistan has good investment opportunities and if any cautious investor was holding back due to the political situation, he would not do so any more and therefore the foreign investment into the country is likely to improve immensely.

Masood Naqi, Chairman, Korangi Association of Trade and Industry said that though this news is welcome by all the businessmen, the opposition is going to be creating a big hype. 

He says, Our concern is not in politics but in the economy. We want stability and therefore now our country should concentrate on general elections.

Siraj Kasim Teli, Patron in Chief of SITE Association voiced that the elections do not affect the businessmen; their direct concern is economy and economic policies.

He said There would be better FDI in Pakistan as policies are expected to remain stable now. However, real peace would come after the general elections when the final governing body settles down to assume its place.

Kaiser Bengali, an economist, however sees the situation on the micro side rather than the larger view. He predicts that the political situation is not likely to improve as the opposition parties wont sit quiet.

He says: The personal rifts of the politicians are going to increase rather than decrease as General Musharraf is not accepted in many circles. There would be more strikes and riots which would mean the common man getting affected. The labourers earning daily wages are the most affected as strikes mean these small businessmen have no jobs for the day. These people do not have savings or sources of extra income, he continues.

Everyone is more concerned about the big businesses and foreign investments but they are not so affected by political uncertainty as these small businessmen are. The big businesses have options of recovering losses that is not possible for labourers, he says.

Sources in Islamabad and Lahore also informed that the businessmen hailed the news of Musharrafs re-election and hoped there would be no further ado. Some said that they hoped the general elections would be held peacefully now.

A political analyst from Islamabad said that the recent events had led to severe impact on the citys business which is hoped would recover now that situations seem to have taken a turn for the better.

Businessmen delighted over Musharrafs re-election


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## Neo

*Reverse remittances increase by 49pc​*
KARACHI, Oct 6: First two months of the new fiscal witnessed the much accelerated pace of reverse remittances in the form of profits and dividends which the companies in Pakistan are paying to their investors or shareholders living abroad.

The trend has started taking a solid shape for the last three years and is the direct outcome of privatisation of local entities bought by foreigners or new companies operating in Pakistan owned by the foreigners.

Official figures issued on Saturday showed that in the two months July-August 2007-08, reverse remittances reached $132.2 million compared to $88.6 million in the corresponding period last year.

The concern for policy-makers and the economic managers is the pattern of rising remittances abroad which has kept increasing. Only last year the total outflow of profits and dividends reached around $850 million.

During the last two months, the rising trend showed a growth of 49 per cent in the reverse remittances which could be alarming if the trend persists.

Analysts said the rising trend of reverse remittances would continue since more and more companies owned or having shares in the companies by the foreigners, have started paying dividends or profits.

Rising reverse remittances are threatening the balance of foreign accounts of the government already facing damaging uncontrolled rising trade and current account deficits.

If the total repatriation of remittances reaches higher than $1 billion by the end of this fiscal, it would be of serious problem for the country.

It would be an additional burden on the economy while the borrowing to meet the deficit would increase further.

The highest payment was made by the financial business (banks) to its foreign shareholders as a total 40.8 million were repatriated during the first two months of the current fiscal.

However, remittances by the telecommunications sector dropped to 32.3 million against $51 million repatriated during the corresponding period of last year.

A telecommunications expert said the reverse remittance from this sector would further rise in the next couple of months.

Power sector repatriated $12 million against $5.6 million, transport sector $9.1 million against nil payment and oil and gas exploration $7.7 million against $2.1 million during the first two months against the corresponding period of last year.

The country received foreign investment of over $7 billion last year which was widely welcomed by the government and the money was invested in several sectors.

However, the output of these investments would take time to show their results and finally it would add more to the reveres remittances and create serious threat for the governments ability to make payment.

The government meets its current account deficits through this foreign investment, remittances being sent by the overseas Pakistani workers, privatisation proceeds and borrowings from the international market and donors.

Reverse remittances increase by 49pc -DAWN - Business; October 07, 2007


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## Neo

*IT returns under universal self assessment scheme:*​
CBR faces shortfall of Rs 9 billion in IT receipts

* Number of IT returns grew from 1.32 million to 1.47 million but tax payments decreased from Rs 12.350 billion to Rs 3.264 billion 

ISLAMABAD: The Central Board of Revenue (CBR) has suffered a major set back in income tax receipts along with income tax returns under the Universal Self Assessment Scheme (USAS), a senior tax official told Daily Times on Saturday. 

The authorities are faced with a shortfall of Rs 9.086 billion in income tax along with income tax returns, as some 1,477,893 income tax returns were filed and income tax payments of Rs 3.264 billion were received by October 5, 2007. Some 1,326,246 income tax returns were received along with income tax payments of Rs 12.350 billion during the same period of last fiscal year, the official added. 

Although the income tax returns this fiscal year have risen by 151,647 as compared to the last fiscal year 2006-07 but the income tax payments have gone down from Rs 12.350 billion in 2006-07 to Rs 3.264 billion in 2007-08, the official disclosed. 

Corporate sector during last fiscal year filed some 1208 income tax returns and paid Rs 10.395 billion in income tax as compared to 536 income tax returns and income tax payments of Rs 2.277 billion for the fiscal year 2007-08, the official explained. 

Non-compliance by the corporate sector led to major shortfall of Rs 8.118 billion in the income tax receipts this fiscal year 2007-08 when total receipts of Rs 2.277 billion for this year are compared to the total receipts of Rs 10.395 billion in the fiscal 2006-07, the official disclosed. The corporate sectors income tax returns shortfall also stood at 672 income tax returns by October 5, 2007 with total returns of 536 in the fiscal year 2007-08 as compared to 1208 income tax returns filed by the same date last year. 

Association of Persons (AOPs) filed 13,887 income tax returns with income tax payments of Rs 47.638 million this fiscal year as compared to the 19,429 returns and Rs 70.698 million in income tax payments. 

Salaried class filed 74,926 income tax returns and paid Rs 48.917 million as income taxes in the current fiscal year as compared to 56,652 income tax returns and paid Rs 148.751 million as income tax in last fiscal year, showing a big difference in tax paid. 

Non- Salary class filed 427258 income tax returns and paid Rs.754.573 million as income tax by October 5, 2007 as compared to 492915 returns filed and Rs.1.599 billion paid as income tax during the same period last fiscal year, the official informed. 

By October 5, 2007, the corporate sector, Association of Persons (AOPs), salaried class and non-salaried taxpayers had filed 516,607 income tax returns and paid Rs 3.128 billion as income tax along with their income tax returns. Till October 5, 2006 some 570,204 income tax returns were received and Rs 12.213 billion was paid as income tax by the said four categories of taxpayers. 

Statements in the shape of salary certificates in this fiscal year were 36,091 and tax paid along with these returns stood at Rs 9.966 million as compared to the 105,795 certificates filed and Rs 28.966 million income tax paid in the last fiscal year. Some 9,704 Importers filed income tax statements and paid an income tax of Rs 0.378 million during this fiscal year as against 12,612 income certificates and Rs 0.22 million in income tax paid in the last fiscal year. 

Exporters filed 6,658 income certificates and paid Rs 1.23 million in this fiscal year as compared to 7,457 income certificates filed and paid Rs 1.397 million in income tax in the last fiscal year. 

Retailers having turnover of up to Rs 5 million filed around 10,868 certificates and paid Rs 57.647 million as income tax by October 5, 2007 against 26,847 retailers who filed certificates and paid Rs 85.008 million in income tax in the last fiscal year. 

Retailers having a turnover of more than 5 million filed 662 income statements and paid Rs 6.07 million as income tax in the current fiscal year as compared to 2,142 income certificates filed and income tax of Rs.10.003 million paid in same period of last fiscal year 2006-07. 

Contractors and Suppliers filed 18,411 income statements and paid Rs 5.476 million as income tax up to October 5, 2007 as compared to 27,623 income statements filed and Rs 8.897 million by such in the same period of last fiscal year 2006-07. 

Taxpayers in the category of others filed 18,207 income statements and paid Rs 56.046 million as income tax by October 5, 2007 as against 756,042 income statements filed and Rs 1.891 million as income tax paid during the last fiscal year, the official added. 

The CBR is left with no option to extend the last date for filing of income tax returns and the CBR bosses has issued instructions to the Director Generals of Regional Income Tax Offices and Commissioners of income tax to explain the reasons that why this situation has arisen in this fiscal year, the official concluded.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Govt seek export growth by infrastructure development​*
By Ijaz Kakakhel

ISLAMABAD: The government plans to undertake major projects for infrastructure development that are mandatory for facilitating exporters to maintain the annual growth and double exports from Pakistan over the next five years. Arranging exhibitions are one of the most effective tools for foreign exchange earnings. For this purpose the government has approved an Expo Centre Lahore with a revised cost of Rs 2.970 billion. 

The project was originally approved at a cost of Rs 1.970 billion but later on the cost was revised to Rs 2.970 billion due to raising of the ground level by 7-8 feet, induction of international standard cat walks, up gradation in the furnishing of convention center, two 11 KV independent electricity feeders for 4500 KW load, modern multi-story parking plaza and strategic alliance with the reputed joint ventures for consultancy, officials in the ministry of commerce told Daily Times here on Saturday. 

The project aims to provide a state-of-the-art modern facility for the promotion of country&#8217;s exports and other related economic activities. The proposed Expo Centre will provide over 30 thousand sq. metre space to local and foreign manufacturers/traders to exhibit their products to promote their business. The ministry of commerce (TDAP) and the government of Punjab through its industrial department are the sponsoring agencies of the project. 

The officials in the ministry of commerce claimed that exports of the country confront several challenges including low productivity and poor quality, poor processing technology and practices, lack of trained and skilled workforce, limited testing facilities, poor infrastructure facilities and lack of product development and diversification. However, the officials said that the government has adopted several initiatives for enhancing exports through industrial diversification, technology up gradation, investment in infrastructure, standardisation, quality control and productivity enhancement, improvement in business climate and reducing the cost of business and acceleration of exports by establishing expo centres in big cities (including Expo Centre Lahore). 

The cost of the project has jumped up by Rs one billion, including, increase in infrastructure development from Rs 120 million to Rs 290 million, the cost of convention centre rose by Rs 100 million, the internet protocol (IP) technology rose by Rs 160 million, furniture and furnishing cost grew by Rs 100 million, utility connection costs surged by Rs 75 million, construction of parking plaza cost went up by Rs180 million, foreign consultancy/alliance charges increased by Rs 35 million and overhead expenditures rose by Rs20 million, the official added. The revised cost of the project has been approved in the Executive Committee of the National Economic Council (ECNEC) held last month in which 45 different developmental projects worth Rs 154.1 billion were approved.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Sialkot district government spending Rs 400 million on new roads ​* 
SIALKOT (October 08 2007): Sialkot District Government is spending more than Rs 400 million during the current fiscal year on construction of 200 km long new roads in Sialkot, Pasrur, Daska and Sambrial tehsils of the district. The work on the project would be started soon in all tehsil headquarters.

Official sources told Business Recorder here on Sunday that the construction of 93 roads had already been completed at a cost of more than Rs 356 million while repair and rehabilitation of 85 roads at a cost of Rs 230 million had also been completed.

The district government will Rs spend 16.4 million on purchase of new hospital machinery for improvement of Allama Iqbal Hospital and extending modern treatment facilities to the patients. More than Rs 58.8 million will be spent on purchase of medicines for government hospitals of Sialkot district, and Rs 25 million will be spent on repair and construction of government hospitals and dispensaries.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Development disparities and the MDG targets*​
The Millennium Development Goals (MDG) report 2006 on annual update produced this year, provides information on the state of human development indicators up to year 2005.

It reveals development gaps within different parts of the country. A total of 98 districts have been ranked on various development indicators. The report confirms that politically skewed development paradigm has left the underprivileged areas less developed. Disparities in the level of development among the provinces are also evident.

Sindh and Balochistan suffer from relatively poor state of human development whereas Punjab emerges as the leading province in almost all areas of human development.

Primary enrolment ratio: According to the report, net primary enrolment ratio has increased from 33 per cent in 1998 to 48 percent in 2005. Likewise, literacy rate has increased from 45 per cent in 2001 to 53 per cent in 2005. This shows significant improvement.

But the provincial distribution reflects grim disparities. The top 10 districts comprise nine from Punjab and the remaining one from NWFP. These districts are Sialkot, Narowal, Jehlum, Chakwal, Gujrat, Rawalpindi, Abbotabad, Attock, Lahore and Gujranwala.

The first district from Sindh is Karachi which stands at No 11. The first district from rural Sindh is Sukkur which stood at No30. The first district from Balochistan is Kech which secured 18 position. Among the bottom 10 districts, seven belong to Balochistan and three to NWFP.

Literacy rate: Top 10 districts under this indicator also show similar trend. Seven districts belong to Punjab and the remaining provinces share one district each. These districts are: Karachi, Rawalpindi, Lahore, Chakwal, Gujranwala, Jehlum, Gujrat, Quetta, Abbotabad and Sialkot. The first district from the rural Sindh is Sukkur which stands at No 11 and the first district from Balochistan is Pishin at No 16. The bottom 10 districts comprise eight from Balochistan and two from NWFP.

Gender equality: Gender disparities are visibly prevalent throughout the country as measured by several indicators. However, the MDG report focuses on net primary enrolment. In terms of better gender equality top 10 districts are eight from Punjab and two from NWFP.

The districts are: Toba Tek Singh, Narowal, Lahore, Gujranwala, Jehlum, Sialkot, Abbotabad, Mansehra, Sarodha and Mandi Bahaudin. The first district from Sindh is Karachi which stood at No 13 and the first district from rural Sindh is Sukkur which stood at No 31. The first district from Balochistan is Sibi which stood at No 27. The bottom 10 districts comprise six from Balochistan, three from NWFP and one from Sindh.

Youth literacy: Ranking show nine districts from Punjab among the top 10 districts and the remaining one is from Sindh. Sialkot, Lahore, Gujranwala, Gujrat, Karachi, Jehlum, Rawalpindi, Faisalabad, Toba Tek Singh and Chakwal are among the top rankers.

The first district from rural Sindh is Sukkur which is ranked at No 18 and that from Balochistan is Quetta ranking at No 29. Balochistan and NWFP share seven and three districts respectively among the bottom 10 districts.

Child mortality: Pakistan is among the poorest performers on this important indicator. Countrywide, the trend of disparities is not too different. Punjab shares eight out of 10 top districts, whereas Balochistan and NWFP share one each. The top 10 are Chitral, Jehlum, Sialkot, Gwadar, Khushab, Attock, Chakwal, Gujrat, Minawali and Bahawalnagar.

The first district from Sindh, Hyderabad is ranked at 23. Zhob is the first district from Balochistan ranked at No 21. The bottom 10 districts include seven from Balochistan, two from Sindh and one from NWFP.

Clean drinking water is believed to be a fundamental human and a citizen right, which is unfortunately a rare commodity in the remote rural areas as well as in some mainstream urban areas. According to the ranking of the 98 districts, Punjab and Sindh share eight and two districts respectively among the top 10 districts. These districts are: Shaikhupura, Narowal, Layah, Gujranwala, Bakhar, Lahore, Kasur, Shikarpur, Ghotki and Sialkot. The first district from Balochistan is Quetta which is ranked poorly at No 47. Among the bottom 10 districts, Balochistan has six districts, one from Sindh and three from NWPF.

Sanitation: The trend is somewhat different in this indicator. Sindh, NWFP and Balochistan share three districts each among the top ten districts and Punjab shares only one.. The top ten districts placed in sequence are Quetta, Charsada, Kohat, Noshehro Feroz, Mardan, Pishin, Larkano, Nawabshah, Chaghi and Lahore. Balochistan has six districts among the bottom ten districts. Sindh and Punjab have one each and NWFP has two districts among the bottom 10 districts.

Conclusion: A scrutiny of the data indicates that Balochistan and Sindh receive lesser attention in the key areas of human development. Even within Punjab, which ranks highest among all the indicators except sanitation, almost all the districts belong to Central Punjab indicating poor state of human development in south Punjab. The following table of ten top districts clearly shows the disproportional trend of human development among the provinces.

Likewise, if the bottom 10 districts are analysed, the trend gets reversed. Balochistan shares the highest number i.e. 47 out of the 70 bottom districts whereas Punjab has only one among the bottom 70.

This trend shows that equal opportunities for development are not being provided to all citizens and the politically marginalised provinces of Sindh and Balochistan (specially their rural areas) are receiving less than the desirable share in development. Ironically, these are the richest districts in terms of natural resources. This is contrary to the Declaration of the United Nations on the MDGs which says: No individual and no nation must be denied the opportunity to benefit from development.

If the government is serious in providing equal development opportunities to all citizens, it should create special MDG funds for the provinces/districts to improve their human development indicators.

Development disparities and the MDG targets -DAWN - Business; October 08, 2007


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## Neo

*Technology package to promote oil palm​*
Dr Ali Muhammad Khushk & Bhugro Mal

OIL palm is an important plant for obtaining edible oil. It is a tropical plant which grows in warm climates at altitudes of less than 1,600 feet above sea level.

It is a perennial plant with a year-round canopy intercepting solar radiation. The tree grows up to 50 feet in height with large primate leaves. Oil palm is normally monoecious i.e., it has both male and female flowers on the same tree. It produces thousands of fruits in bunches weighing between 10 and 40 kilogrammes. The oil is derived from the fruit. A hundred kilogramme of fruit produce around 20kg oil.

Each fruit is almost spherical, oval or elongated in shape. Generally the fruit is dark purple, black before it ripens and orange-red when ripe. After soybean, palm oil is the second major oil produced in the world. From its home in West Africa, the oil palm has spread throughout the tropics and is now grown in over 16 countries. However, the major centre of production is in Southeast Asia with Malaysia and Indonesia together accounting for around 83 per cent of the world palm oil production.

A single hectare of oil palm may yield 5,000kg of crude oil, or nearly 6,000 liters of crude, making the crop remarkably profitable. An average yield of oil palm in major producing countries is about 3-4 tones of oil/ha/year. By contrast, the yields of most competing oil crops are typically less than one tone/ha/year. This means that productivity of oil palm is at least 3-8 times more than most oilseed crops. Thus, only seven million hectares of oil palm are required to supply 20 per cent of the world demand for oil and fats (1.09 billion tones), compared to the 80 million hectares of oilseeds needed to supply another 24 per cent of this demand.

Of the total produce of the world, only 10 per cent accounts for industrial uses. Palm oil is rich in carotene responsible for its red colour, and a rich source of vitamin A and E In addition palm oil is an excellent source of toco-trienol, a powerful anti-carcenogenic substance which is helpful against thrombosis.

Recently, it has been found that oil palm is a rich source of phenolic anti-oxidants which is good for health. Palm oil intake raises levels of the high-density lipoprotein (HDL, good cholesterol) at the expense of the low-density lipoprotein (LDL, bad cholesterol).

Palm oil (and its products) has good resistance to oxidation and heat at prolonged elevated temperatures; hence, making it an ideal ingredient in frying oil blends. Other parts of the tree may be used for industrial purposes such as leaf fibres and empty fruit bunches are used in making chipboard and plywood and the trunks of old palm trees can be used in making furniture. Palm oil is used in soaps, candles, detergents, lubricants, fuel, caked residue, cosmetics, and other personal-care products.

The plant is cultivated on various types of soils, with growth supported by better drainage and water content of the soil. The plant needs a well-drained sandy or clayey soil for better yield. The propagation is done by its seeds after providing proper treatment. The tree bears fruits within two-and a half years after plantation. Various tools are used to harvest the plant such as chisel or hooked knives attached to long poles and some times, by climbing on tree directly. The fruits are obtained from the tree till it gets around 30 feet high.

Pakistan is one of the largest consumers of palm oil besides China, India, Japan, Europe and the Middle East. An estimate of the per capita consumption of palm oil in the world is nine pounds per year with the total consumption figure of around 33 million tons. China is the maximum palm oil consuming country.

Pakistans edible oil requirements have increased from 0.3 million tones to 1.95 million tones. The per capita consumption of edible oil is around 14-15kg as against an average of 8-9 kgs for developing countries. But yet production of edible oils has remained inadequate and fluctuating. So the requirements are met by supplementing local production with imports. Of the total requirements, 29.15 per cent is met from local production and the remaining 70.85 per cent through imports. Edible oil imports are a drain on national exchequer which has increased from Rs7228.6 million in 1987-88 to Rs 44975 million in 2004-05.

Cultivation of palm in the country can beautify the coastal areas and minimise environmental pollution reducing considerably the imports of edible oil bill.

Oil palm possesses great potential for plantation in coastal areas of Sindh and Balochistan where irrigation facilities are available. In Sindh areas of Karachi Thatta, Badin, Hyderabad (Tando Muhammad Khan), Mirpurkhas, and Sanghar (Tando Adam) are suitable for cultivation of oil palm whereas Vinder and OMara in Balochistan are also potential areas.

Income of farmers in the above areas of Sindh ranges from Rs10,000 to Rs32,000 per acre per year through cultivation of sugarcane, rice, cotton, banana, onion etc. Whereas these areas of Balochistan are the poorest. Farmers grow maize, millet, moong, mash and fodder. Income level of farmers in these areas is very low. From one acre oil palm plantation, the growers can earn an income of about Rs40,000 to Rs50,000 per year. Additional income can be generated by intercropping various crops in the oil palm fields.

Introduction of palm oil crop in both the regions will result in bringing a positive change in the socio-economic status of the population and provide employment opportunities besides triggering development in the area. The Oil Palm Development Pilot Project (ODPP) was approved at a cost of Rs61.655 million for implementation in the province of Sindh in the areas of Thatta, Badin, Hyderabad, Mirpurkhas and Tando Adam of Sanghar districts and in Balochistan areas of Uthal, Hub, Pasni, Gawadar, Jewani and Ormara.

The actual oil palm acreage which has successfully been achieved under this project is 1,009 acres. Around 48,000 seedlings were imported from Malaysia in October 2002. Oil palm plantation on 30 acres at Vinder farm in Balochistan is being looked after with satisfactory results with banana inter-cropping. Farmers are getting appropriate income by intercropping sugarcane, wheat, sunflower within the oil palm plantation.

Although, sugarcane and banana are exhaustive crops but they help in the growth of oil palm by creating micro-environment and increasing humidity. The Parc has also successfully introduced oil palm at the Coastal Agricultural Research Station, Karachi. Both, the plant growth and nut yield was obtained from 70 plants. At Hub and Pasni about 2,500 plants of hybrid oil palm were planted by Agriculture Department, Balochistan, and are being maintained with promising results.

A complete package of production technology is essential for the promotion of oil palm in the country. Research work is therefore, needed for the purpose. There is a need for training of the manpower involved in oil palm cultivation and development. Private sector should also be involved in the oil palm promotion and installation oil extraction mill. Highly saline areas need to be avoided to grow oil palm. Proper plant, water and soil management is also needed for the success of the plantation.

Technology package to promote oil palm -DAWN - Business; October 08, 2007


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## BATMAN

Musharraf vote lifts Pakistani stocks to life high
Musharraf vote lifts Pakistani stocks to life high | Business | Reuters


> KARACHI (Reuters) - Pakistani stocks ended at a life high on Monday after President Pervez Musharraf swept a vote for re-election on Saturday *even though it is unsure whether the Supreme Court will let the result stand.*
> 
> The Karachi Stock Exchange (KSE) benchmark 100-share index gained 1.91 percent, or 268.70 points, to 14,368 on turnover of 249.7 million shares.
> 
> The KSE-100's previous intra-day life high was at 14,290.43 points on July 13.
> 
> The free-float KSE-30 share index meanwhile ended up 2.23 percent at 17,718.51 points.
> 
> *"The sentiment was positive the whole day today, and the market reacted positively to Musharraf's success in the vote," *said Shuja Rizvi, Director of Broking Operations at Capital One equities.
> 
> But Rizvi warned of caution ahead.
> 
> "The market still has room to grow more, but caution has to be exercised. We would not suggest any new entries at these high levels." he said.
> 
> Musharraf must wait at least 10 days for the court to decide whether he was eligible to run while still army chief, but most analysts reckoned it would be hard for the court to annul his sweeping victory.
> 
> Investors want to see a continuation of the policies that have produced growth and a strong stock market.
> 
> Among the most active companies, TRG Pakistan ended 0.60 rupee at 14.95, Oil and Gas Development Co Ltd gained 1.85 rupees to 125.40, and National Bank of Pakistan ended 3.95 rupees up at 278.85.


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## Neo

*Pakistanis overwhelmingly favour international trade: survey ​*
WASHINGTON (October 09 2007): An overwhelming majority of Pakistanis are supportive of international trade as they see it good for economic advancement of the country, according to a latest world-wide public opinion survey. The survey by 'Pew Global Attitudes Projects' found that 82 percent Pakistanis favour international trade, 60 percent of the respondents saw people better off in free market economies.

A substantial part of the population also feels that foreign companies operating in the country are having a positive impact. Pakistan has sustained a robust economic growth rate, of around 7 percent in the last few years, with its exports more than doubling in the last eight years.

Last financial year, the South Asian country attracted a record $8 billion investment, signifying a strong investor confidence in the country's economic potential.

The survey finds that publics of the world broadly embrace key tenets of economic globalisation, but fear the disruptions and downsides of participating in the global economy. In rich countries, as well as in poor ones, most people endorse free trade, multinational corporations and free markets.

However, the latest 'Pew' survey of more than 45,000 people finds that they are concerned about inequality, threats to their culture, threats to the environment and threats posed by immigration.

There are signs that enthusiasm for economic globalisation is waning in the West: Americans and Western Europeans are less supportive of international trade and multinational companies than they were five years ago. In contrast, there is near-universal approval of global trade among the publics of rising Asian economic powers.

Nonetheless, since 2002 enthusiasm for trade has declined significantly in the United States, Italy, France and Britain, and views of multinationals are less positive in Western countries where economic growth has been relatively modest in recent years.

There are widely shared concerns about the free flow of people, ideas and resources that globalisation entails. In nearly every country surveyed, people worry about losing their traditional culture and national identities, and they feel their way of life needs protection against foreign influences.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*FDI on the rise in Pakistan: BoI secretary*​
KARACHI: Volume of foreign direct investment is rapidly increasing because of attractive returns on investing in Pakistan despite the political and law and order issues, Mushtaq Malik, Secretary Board of Investment (BoI) stated on Monday.

In a meeting with President of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Tanveer Ahmed Sheikh, pointed out that there has been a positive change in the magnitude of the inflow of foreign investment  portfolio and FDI in the country and said that it was notable that the inflow of foreign investment had increased manifold after 9/11. 

Secretary BoI extended his cooperation to provide his best support to solve the business sectors problems in all the areas where his cooperation is required. The meeting also discussed the role and possible benefits of the ROZs (Reconstruction Opportunity Zones) for investment promoting activities. 

Mr Sheikh highlighted the issues being faced by the private sector to invest in the country. He highlighted that private sector has fulfilled its commitments to invest in Pakistan but the government, in certain areas, was not successful to fulfill its commitments. 

He exemplified the Textile Vision 2005 programme where industrialists invested their funds in the textile sector according to the targets determined by the planning authorities. The sector imported and installed the machinery and enhanced investment through equity based financing. As a consequence the textile sector increased its production capacity and modernised the facilities. However, MINFAL failed to provide the targeted production of textile raw material cotton. As a result, the textile sector is facing unutilised capacity, which is hampering its profitability. 

The permission for the import of cotton from India through Wagah border is the only immediate solution to fill the gap between the demand and supply of cotton, he emphasised. Mr Sheikh also highlighted the efforts of the FPCCI in promoting the investment activities in Pakistan. He stressed that integrated efforts are required for the cause of national economy. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*India and Pakistan top FDI recipients in 2006 *​
ISLAMABAD (October 09 2007): India and Pakistan were top recipients of foreign direct investment (FDI) inflows to South Asia, with India getting major share of $17 billion from total $22 billion and Pakistan $4.3 billion FDI in 2006.

"India received more FDI than ever before, and inflow was 153 percent more than in 2005," said 2007 World Investment Report (WIR) of United Nations Conference on Trade and Development (Unctad).

Other important recipients of FDI in the sub-region included Pakistan, Bangladesh, and Sri Lanka. According to the report, the performance of Pakistan in attracting FDI in 2006 had been promising. Strong economic growth and aggressive privatisation programme had led to booming FDI inflows during 2004 and 2006.

After playing a leading role in a number of large merger and acquisition (M&A) deals in Pakistan's privatisation process, West Asian companies announced a series of large green-field projects, the report said.

Inflows to Sri Lanka rose significantly, reaching a record high of $480 million. However, Bangladesh did not realise as an underperformer according to Unctad's Inward FDI Potential and Performance Indices. Bangladesh received $625 million in 2006, which was 10 percent less than in 2005.

Elaborating the Indian position, the report said that rapid economic growth had led to improved investor confidence in the country. According to Indian government, the country's economy was expected to grow by 9.2 percent in 2006-07 fiscal. The sustained growth in income had made the country increasingly attractive to market seeking FDI. Indeed, foreign retailers such as Wal-Mart had started to enter the Indian market.

At the same time, a number of US transnational companies (TNCs) such as General Motors and IBM were rapidly expanding their presence in India. Large Japanese TNCs such as Toyota and Nissan are also doing the same. Private equity firms are also playing a role, said the report.

Global FDI inflows soared in 2006 to reach $1,306 billion--a growth of 38 percent. This marked the third consecutive year of growth, and approached the record level of $1,411 billion reached in 2001.

The rise in global FDI flows was partly driven by increasing corporate profits world-wide and resulting higher stock prices that raised the value of cross-border M&As. The United States regained its position as the leading host country, followed by UK and France. The largest inflows among developing economies went to China, Hong Kong (China) and Singapore, and among the transition economies to the Russian Federation.

The developed-country TNCs remained the leading sources of FDI, accounting for 84 percent of global outflows, while there was a rebound of FDI from the US, almost half of the world outflows originated from European Union (EU) countries. Increased cross-border M&As activity supported the current rise in global FDI in 2006.

According to the report, China and India were beginning to challenge the dominance of the Asia's newly industrialising economies like Hong Kong (China), the Republic of Korea, Singapore, and Taiwan province of China as the main sources of FDI in developing countries.

China's outflows increased by 32 percent to $16 billion in 2006, and its outward FDI stock reached $73 billion, the sixth largest in the developing world. China is establishing the first group of eight overseas economic and trade co-operation zones in Pakistan comprising Mongolia, Thailand, Nigeria, Mauritius, Zambia, Russia, and the Commonwealth of Independent States (CIS).

India's outflows were almost four times higher than those of 2005. Compared to China, where FDI outflows were driven by the international expansion of state-owned enterprises encouraged by proactive government policies, booming outflows from India have been dominated by privately owned conglomerates.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Japan to provide Rs 6.5 billion loan for Sindh uplift schemes ​*
KARACHI (October 09 2007): The Japanese government will provide Rs 6.5 billion soft loans to the Sindh government to undertake different uplift schemes, including road and water projects, in the province.

Sources in the Sindh Finance Department told Business Recorder here on Monday that under the Japanese-assisted rural roads construction project, phase-II, the Sindh government would be provided with Rs 3,736.890 million to upgrade road network in the rural areas.

"During the 2007-08 fiscal year, Rs 100 million has been allocated to initiate the construction of roads in remote areas of the province," sources said. Elaborating, the sources said that under the roads construction project a total of 452 kilometres of roads would be constructed in different areas of the province, aimed at improving the communication between the districts.

It may be pointed out that the Sindh government would also carry out a rural road construction project for which the Asian Development Bank would provide loan of Rs 2.16 billion to the provincial government. Moreover, Japan will provide Rs 2.77 billion as a soft loan for Karachi water supply project so as to improve the water supply in the metropolis, besides reducing water scarcity.

The project would further enhance the water supply to meet the water demand of sprawling population of Karachi and to ensure filtration of the water. Japan has shown grave concerns over the reports about the rapid surge in water-borne diseases in the metropolis apparently owing to unavailability of the filter facility for water being supplied to Karachi, sources said.

It further added that installation of large water filters would ensure to supply clean water to Karachiites under this project. "The paper work and planning of both of the projects have almost been completed and work on these new projects will be initiated soon," sources said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Delays in start-up of uplift projects mar achievement goals: ADB *​
FAISALABAD (October 09 2007): Asian Development Bank has observed that the rating of the technical assistance for "Streamlining procedures to reduce delays in the start-up of development projects" is unsuccessful because of its discontinuity and the TA's main outputs were not achieved.

According to ADB's Project Completion report, the dissemination and training workshops were not conducted nor was there any appetite by the EA to implement the initial proposals.

The TA provided useful inputs to EAD and P&DDs in identifying weaknesses and recommending a basic framework for streamlining post-approval procedures and reducing start-up delays for all development projects, including ADB funded projects. ADB assessment report noted that the issues identified were not new and the government had already cognised of the respective deficiencies and issues.

However, key investment in terms of systematic and sustainable capacity development of officials, training, and the provision of necessary office equipment are vital to affect any change of the prevailing situation.

According to report, project processing and implementation capacity continues to remain weak in Pakistan leading to implementation delays and sub-optimal utilisation of aid resources. Significant start-up delays of development projects adversely affect achievement of project goals, contribute to cost overruns, increase cost of borrowing, and result in poor development results. Asian Development Bank (ADB) financed projects have suffered perpetual start-up delays, in some cases averaging to over 2 years, mainly due to delayed loan effectiveness and the late setting-up/staffing of project management units (PMUs).

Such protracted delays adversely affect project implementation schedules, often resulting in extension requests of the loan closing date. Repeated transfers of the project directors, lack of qualified technical staff, poor accountability, and a complex decision-making process has also seriously affected project implementation.

Due to unfamiliarity with ADB's procurement procedures and lengthy approval formalities within the executing agencies (ESA), contract awards have been inordinately delayed resulting ultimately in delayed project benefits.

Pakistan government had requested ADB in 2004 to provide an advisory technical assistance for streamlining procedures to minimise delays at the start-up stage of development projects from the approval to the award of the first substantive contracts.

It was recognised that measures introduced to address start-up delays in ADB projects under the TA would have broader relevance in terms of addressing similar delays in all other development projects. Total cost of the TA was $570,000, financed on a grant basis by ADB's TASF ($450,000) and the government ($120,000). The TA was well formulated and was relevant to government needs, including well-drafted terms of reference adequately reflecting the assignment.

Commenting over the "Expected Impact, Outcome and Outputs", ADB report mentioned that the TA aimed to reduce excessive delays during the start-up phase of development projects by analysing processes and stakeholders' involvement, proposing recommendations, and initiating measures to minimise such hold-ups with the objective to increase efficiency and effectiveness of development assistance.

The TA also envisaged a critical evaluation of ADB's procedures, including a possible alignment with Government's protocols. The expected outcome of the TA was to strengthen the pre-approval project preparation capacity of the Government by developing a streamlined and monitoring system of internal clearances with all relevant stakeholders thereby saving time and money.

Expected outputs were (i) recommendations and an implementation plan for reducing start-up delays in projects through a comprehensive diagnostic study on the reasons for such delays, (ii) recommendations regarding systemic improvements in the Economic Affairs Division (EAD) and the foreign aid sections of the provincial planning and development departments (P&DDs) to increase their effectiveness in addressing start-up delays in projects, and (iii) capacity building for EAD and P&DDs to enable them to effectively monitor, facilitate, and follow-up with EAs and PMUs.

Commenting over the "Delivery of Inputs and Conduct of Activities", ADB report stated that initial inputs envisaged under this TA were to be provided during 18 months and included 54 person-months of consulting services (3 international and 51 domestic), 6 workshops at federal and provincial levels, formulation and operationalisation of a Management Information System (MIS) to track and monitor the status of development projects at the start-up stage, hands-on-training for selected key staff of EAD and P&DDs, and provision of equipment for EAD and P&DDs. To monitor the progress, a high level overseeing body was set up in EA, with Secretary EAD as the chair.

ADB report disclosed that the overall performance of the consultants was poor. Due to frequent changes of staff in charge, both in ADB and in EAD, there was a lack of continuity in the management and implementation of the TA. This situation was further aggravated when the selected Team Leader, who performed reasonably well, resigned shortly after submitting the diagnostic report. The selection process of the new Team Leader was stalled due to an insufficient response of interested parties and a lack of consensus between ADB and EAD on the selection of the best candidate.

The two institutional and capacity development specialists who were contracted after the team leader's departure continued their work and maintained some degree of continuity and momentum in absence of any team leader.

The EA appreciated the initial findings of the consultants as documented in inception and diagnostic reports, which highlighted major reasons for delays both caused by ADB and by the Government. The TA identified and documented the current Government systems and procedures used in ADB assisted projects - from project concept approval to loan effectiveness and contract awards - and compared its possible synergy and relevance with ADB's internal procedures. The TA suggested measures to curtail the processing times and streamlining institutional bottlenecks and made recommendations regarding a modification in protocols, increased capacity building, and systems' automation.

The key outputs of the TA were not achieved due to lack of ownership by the EA and a subsequent request for a major change in scope to avoid overlaps with other TAs of ADB and other donors, particularly in the wake of generous assistance to the Government following the October 2005 earthquake.

According to report, the timing and sequencing of the TA impeded its efficacy as there was an overlap with several other concurrent initiatives though it must be recognised that a one-time effort through a TA cannot achieve sustainable capacity development and a change in the mindset. There has to be a sustained, long-term programme by the Government that carries forward the work identified under the TA. The development of the proposed MIS needs specific expertise, and extra time, budget and, most importantly, training of relevant staff. The Government's commitment and regular monitoring of such efforts is essential for achievement of development impact and outcomes.

The key reasons for start-up delays are systemic and a TA may only highlight causal or contributing factors, that cannot per se be addressed through capacity building of a single agency or EA. Systemic re-engineering of Government functions would require a different incentive system for project staff and massive revisions in procedures and rules of business. On the same vein, changes to ADB's own procedures are beyond the scope of any TA. In conclusion, TAs cannot be a panacea for deep-rooted inefficiencies afflicting the public sector.

ADB pointed out that instead of addressing the project start-up delays through one-off TA(s) interventions, the critical systemic issues related to such hold-ups should be dealt with by (i) monthly portfolio reviews with EAD as practised by PRM since more than a year, (ii) harmonised project processing and implementation procedures of ADB and the Government, (iii) pragmatic project readiness filters including advanced procurement actions and setting-up of project implementation units at project fact-finding stage, and (iv) realistic project design and implementation arrangements with minimal loan effectiveness conditions. These efforts should be complemented through targeted and sustainable capacity development initiatives.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Rs 1.5 billion drugs smuggled into Pakistan annually ​* 

KARACHI (October 09 2007): With the menace of smuggled drugs touching the alarming Rs 1.5 billion figure, the federal government has failed to curb selling and smuggling of the medicines, market sources told Business Recorder on Monday.

"Medicines are being smuggled from India, China, Iran, Turkey, Malaysia and Singapore, which is putting a negative impact on the businesses of local pharmaceutical companies," they said. Despite several requests by local companies for brisk action against the people involved in the sale of smuggled medicines the government has not done anything to cleanse the markets of such medicines and stop their smuggling into the country.

A Sindh government official said that lengthy legal procedures were the major reason which discourage the government to work against the heinous mafia involve in its peddling. "We acknowledge that medicines are being smuggled from different countries. But it is the prime responsibility of the federal government to stop such activities," said Dr Abdul Majid, Sindh Public Health Secretary.

He said that legal procedure is so lengthy and time-consuming which helps the culprits escape punishment and, in exceptional cases, they get punishment from courts for their severe crimes. "That is why there is a great need of change in drugs law," he added.

He said that Sindh government was playing its due role in eliminating the trend of drugs smuggling, and added that the government was deliberating to evolve a policy to end this menace as soon as possible. Sources said that sale of smuggled and substandard medicines are on the rise, as they are easily available at cheaper rates throughout the country.

"About Rs 600 million transactions of smuggled and substandard medicines are done at Karachi pharmaceutical market annually, while Rs 400 million transaction done in the other parts of the country including Rawalpindi, Lahore, Quetta and Peshawar," they said.

People prefer to purchase smuggled medicines because they are low priced as compared to the locally manufactured medicines, whereas their quality is always substandard, which could be lethal for patience, said a chemist.

He said that a large quantity of such medicines was being smuggled from China, and added that "the prices of such medicines are lower as compared to local made medicines."

The World Health Organisation (WHO) has set a list of essential drugs, while the Federal Health Department has also made a list of 'National Essential Drugs' in which 478 basic medicines are included.

Such medicines are also beyond the reach of common man due to their high prices, while the government has failed to provide such live-saving drugs to public on affordable rates. According to market sources, the officially banned medicines, such as Viagra capsule, are now easily available in the market with alternative brand and medicine names and containing the same manufacturing formula.

The government strictly imposed a ban on the use of anti-biotic injection Meylon on December 11, 2006, while an injection Apicilline was also banned by authorities on March 2006, but both medicines are available in the market.

Timejack injection, which has been banned by the government in the wake of its increasing use by the drug addicts, is now also available in market at higher price--Rs 680--than its original Rs 180. Sources alleged that chemists were behind the artificial shortage of life-saving medicines in the market, which are used in emergency cases.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Shell starts offshore drilling ​* 
KARACHI (October 09 2007): Shell has started much awaited offshore drilling in Indus Block this week. "With pre-drill resource potential of 300mmbbl oil, Shell drilling in Anne-1 well in Pakistan's ultra-deep offshore region commenced this week", an analyst at KASB Securities said in its recent report.

Oil and Gas Development Company (OGDC) and Pakistan Petroleum Limited (PPL) carry 30 percent and 20 percent stake respectively. The exploration potential in Pakistan's offshore is believed to be high, but the reserve potential is yet to be established, as the offshore region is relatively under-explored.

A total of 15 offshore wells have been completed with no commercial discoveries to date. High exploration potential has attracted many big names, eg ENI, BP, Petrobras, Shell.

Under the production sharing agreement (PSA) of offshore package in Petroleum Policy 2001, the government's share in profit and royalty payments are back-loaded (increases in later years), allowing a rapid recovery of investment. Furthermore, the cost recovery has a maximum allowable limit of 85 percent, including royalty payment.

"We estimate potential impact of Rs 6.4 to Rs 8.9 per share on OGDC upside by five percent to seven percent and Rs 27 to Rs 37 per share on PPL upside by eight percent to 13 percent in the success case", Mohammad Fawad Khan a research analyst at KASB Securities said, and added: "However, we note that this is the theoretical value of any discovery. We would not be surprised to see the market factor in greater value in anticipation of further discoveries in what would be a new petroleum province".

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*KSE index hits highest ever 14,367-level *​
KARACHI (October 09 2007): The KSE-100 index on Monday hit the highest ever level of 14,366.99 points with net gain of 267.69 points on the back of strong foreign investors' interest coupled with local institutions' support due to easing of political situation after presidential elections in the country.

On the other hand, the KSE-30 index surged by 386.91 points to close at 17,718.51 points' level. The market started on a strong positive note with 238 points positive and the bulls gradually strengthened their position till the end of the session where the index closed at its intra-day high level.

The analysts and market participants were expecting a bull run after the completion of presidential elections process and smooth re-election of General Pervez Musharraf as President of Pakistan. They were of the view that the present economic reform policies, privatisation process and the inflow of foreign investment in the country would continue after re-election of Pervez Musharraf.

The market witnessed healthy trading activity as the ready market volume increased to 343.530 million shares as compared to 290.047 million shares traded on Friday. The futures market turnover surged to 71.795 million shares against 67.605 million shares previously. The overall market capitalisation significantly increased by Rs 79 billion to close at Rs 4.397 trillion.

Trading took place in 360 scrips, out of which 228 scrips closed in positive column and 99 in negative, while the value of 33 scrips remained unchanged. TRG Pakistan was the star performer of the day with 43.481 million shares and the scrip surged by Rs 0.60 to close at Rs 14.95 followed by Oil and Gas Development Company (OGDC), which increased by Rs 1.85 to close at Rs 125.40 with a total volume of 27.735 million shares.

Healthy buying was also witnessed in Pakistan Petroleum Limited (PPL), which gained Rs 8.35 to close at Rs 285.60 with 25.330 million shares. The banking sector remained active as National Bank of Pakistan (NBP), Askari Bank, Bank Al Falah, NIB Bank and Bank of Pakistan (BoP) surged by Rs 3.95, rupees five, Rs 2.95, Rs 1.05 and Rs 3.70 to close at Rs 278.85, Rs 105.25, Rs 62.10, Rs 22.45 and Rs 108.70 respectively.

Fauji Fertiliser Bin Qasim increased by Rs 0.30 to close at Rs 46.20, while Arif Habib Sec gained Rs 7.20 to close at Rs 152.10. Colgate Palmolive and Pak Reinsurance were the highest gainers, with Rs 22 and Rs 20.10 gains to close at Rs 477 and Rs 422.35 respectively, while Nestle Pakistan and Lakson Tobacco were the highest losers. They lost Rs 45 and Rs 20.10 to close at Rs 14.80 and Rs 556 respectively.

Ahsan Mehanti at Shehzad Chamdia Securities said that the market celebrated Pervez Musharraf's success in the presidential elections. The great interest of foreign investors was witnessed at the share market as the SCRA balances reached record high level for this fiscal year at 101.16m dollars. The strong institutional support and foreign buying were witnessed on easing political situation in the country.

Kamran Naqvi at Atlas Capital Markets said that it was a historic day for the KSE as it closed at highest ever level. As expected, the market welcomed Pervez Musharraf's re-election with a grand opening of 238 points positive, he said, adding the much-needed clarity on political front was the main reason behind the bullish sentiment.

The investors' confidence was evident from across the board buying in oil, cement, fertiliser and banking sector. Rumours of foreign buying in oil and banking sector generated healthy volumes in these sectors and MCB Bank and AKBL closed at their upper circuits.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Govt owes over Rs995bn to banks ​* 
Tuesday, October 09, 2007

KARACHI: Government borrowing from banks touched Rs995.225 billion during August 2007 as compared to Rs861.066 billion in the same period of last fiscal year. 

The latest figures of the State Bank of Pakistan showed that the government borrowed around Rs364.575 billion from the central bank in August 2007 including Rs464.532 billion investment by the SBP in government securities, Rs8.827 billion direct loans to the government and Rs7.971 billion under the head of others. 

The government deposits with the central bank amounted to Rs116.75 billion. The government acquired around Rs630.650 billion from scheduled banks during the aforesaid month as compared to borrowing of around Rs418.197 billion from scheduled banks in the same month of year 2006.

The break-up showed that scheduled banks invested around Rs917.264 billion in government securities, while they lent Rs99.290 billion directly to the government in August 2007 as compared to this the banks had provided direct loans of Rs114.284 billion to the government in August 2006. 

Banks credit to the private sector also recorded a substantial increase to Rs2,575.236 billion in August 2007 as compared to the same month of last year, when it stood at Rs2,227.550 billion. 

However, in June 2007 banks had disbursed around Rs2,619.351 billion credit to the private sector, which was Rs44.115 billion higher than loans disbursed by banks to the private sector in August 2007.

The State Bank provided Rs16.048 billion loans to the non-government sector, which was slightly below than Rs16.089 billion in August 2006. In addition, scheduled banks lent Rs25,559.188 billion to Public Sector Enterprises (PSEs), Non-bank Finance Companies (NBFCs), investment in securities and shares of private sector, besides loans to the private sector including agriculture, fishing and fish farming, manufacturing, chemicals, ship-breaking, commerce and trade and personal loans.

Govt owes over Rs995bn to banks


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## Neo

*Govt fails to boost industrial investment*​
KARACHI, Oct 8: Federation of Pakistan Chambers of Commerce and Industry President Tanvir Ahmad Sheikh has blamed government for failing to play its part to supplement the efforts of private sector in boosting industrial investment.

Industrialists invested their funds in textile sector according to the targets determined in the Textile Vision 2005, he bluntly told Mr Mushtaq Malik, the Secretary of Board of Investment (BoI) during a meeting and reminded that it was the government that failed to provide textile industry with required quantity of cotton.

A press release issued by the FPCCI on Monday quoted the FPCCI president as saying that the governments inability to grow targeted quantity of cotton had kept textile industry starved and under utilisation of production capacities had seriously impaired its profitability.

Tanvirs prescription was to allow import of Indian cotton via Wagah to meet the growing demand of cotton of domestic textile industry.

He informed the BoI Secretary that a FPCCI delegation would attend the forthcoming ECO meeting at Istanbul and would make a presentation on investment opportunities in Pakistan.

The BoI Secretary informed that inflow of foreign investment swelled to $1.9 billion from $350 million five years ago in face of serious political issues and challenges of law and order in the country. It was because of the sound economic policies and stability.

Govt fails to boost industrial investment -DAWN - Business; October 09, 2007


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## Neo

*Oil and gas production up by 6.3 percent​*
KARACHI: The exploration and production companies have paced up their engines to meet the countrys rising energy demand as oil and gas production during the first two months of the current fiscal year stood at 688 kbpeod (thousand barrels of oil equivalent per day), depicting a year-on-year growth of 6.3 percent. 

Oil production, alone with a growth of 11.1 percent, stood at 72.3 kbpd (thousand barrels per day). Similarly, gas production with a growth of 5.6 percent rose to 3.8 bcfd (billion cubic feet per day) versus 3.6 bcfd in the same period last year.

Oil and gas production by the Oil and Gas Development Company (OGDC) increased to 193.1 kbpeod in July-Aug 2007 with a growth of 21.2 percent against the corresponding period of last year. Oil production rose by 19.1 percent to 47.0 kbpd (thousand barrel per day) mainly on the back of increased production from Mela, Chanda, Bobi and Tando Alam oil fields. Production from Mela in the month of Aug 2007 stood at 4,797 bpd, which slightly declined to 4,655 bpd in the last week of September 2007.

In the first two month of FY08, oil and gas production by Pakistan Petroleum Limited (PPL) stood at 159.4 kbpd registering a growth of 3.8 percent. 

The combined oil and gas production by Pakistan Oil Fields (POL) Jul-Aug 2007 stood at 13.2 kbpeod versus 13.6 kbpeod in Jul 2006 posting a decline of 3.1 percent. Oil production of the company declined by 10.0 percent to 5.8 kbpd compared to 6.4 kbpd in the corresponding period last year. This decline is mainly due to lower oil production from Pindori field.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan lacks effective implementation capacity: ADB​*
ISLAMABAD: Project processing and implementation capacity continues to remain weak in Pakistan leading to implementation delays and sub-optimal utilisation of aid resources, according to a technical assistance completion report on streamlining procedures to reduce delays in the Start-up of development projects released by Asian development Bank (ADB). 

According to the report, significant start-up delays of development projects adversely affect achievement of project goals, contribute to cost overruns, increase cost of borrowing and result in poor development results in Pakistan. 

ADB financed projects have suffered perpetual start-up delays, in some cases averaging to over 2 years, mainly due to delayed loan effectiveness and the late setting-up of project management units (PMUs). Such protracted delays adversely affect project implementation schedules, often resulting in extension requests of the loan closing date. Repeated transfers of project directors, lack of qualified technical staff, poor accountability, and a complex decision-making process have also seriously affected project implementation. 

Due to unfamiliarity with ADBs procurement procedures and lengthy approval formalities within the executing agencies (EAs), contract awards have been inordinately delayed resulting ultimately in delayed project benefits. 

The Government of Pakistan requested ADB in 2004 to provide an advisory technical assistance for streamlining procedures to minimise delays at the start-up stage of development projects from approval to the award of the first substantive contracts. 

The TA aimed to reduce excessive delays during the start-up phase of development projects by analysing processes and stakeholders involvement, proposing recommendations, and initiating measures to minimise such hold-ups, with the objective to increase efficiency and effectiveness of development assistance. The expected outcome of the TA was to strengthen the pre-approval project preparation capacity of the government by developing a streamlined and monitorable system of internal clearances with all relevant stakeholders thereby saving time and money. 

Expected outputs were (i) recommendations and an implementation plan for reducing start-up delays in projects through a comprehensive diagnostic study on the reasons for such delays (ii) recommendations regarding systemic improvements in the Economic Affairs Division (EAD) and the foreign aid sections of the provincial planning and development departments (P&DDs) to increase their effectiveness in addressing start-up delays in projects and (iii) capacity building for EAD and P&DDs to enable them to effectively monitor, facilitate, and follow-up with EAs and PMUs. 

The EA appreciated the initial findings of the consultants as documented in inception and diagnostic reports, which highlighted major reasons for delays both caused by ADB and by the Government. The TA identified and documented the current Government systems and procedures used in ADB assisted projects - from project concept approval to loan effectiveness and contract awards - and compared its possible synergy and relevance with ADBs internal procedures. The TA suggested measures to curtail the processing times and streamlining institutional bottlenecks and made recommendations regarding a modification in protocols, increased capacity building, and systems automation. 

The TA provided useful inputs to EAD and P&DDs in identifying weaknesses and recommending a basic framework for streamlining post-approval procedures and reducing start-up delays for all development projects, including for ADB funded projects. It may be noted that the issues identified were not new and the Government already was in cognisance of the respective deficiencies and issues. However, key investments in terms of systematic and sustainable capacity development of officials, training, and the provision of necessary office equipment are vital to affect any change of the prevailing situation. 

The development of the proposed MIS needs specific expertise, and extra time, budget and, most importantly, training of relevant staff. The Governments commitment and regular monitoring of such efforts is essential for achievement of development impact and outcomes. 

The key reasons for start-up delays are systemic and a TA may only highlight causal or contributing factors, which cannot per se be addressed through capacity building of a single agency or EA. Systemic re-engineering of Government functions would require a different incentive system for project staff and massive revisions in procedures and rules of business. On the same vein, changes to ADBs own procedures are beyond the scope of any TA. In conclusion, TAs cannot be a panacea for deep-rooted inefficiencies afflicting the public sector. 

In its recommendations ADB report said that it is important to note that instead of addressing the project start-up delays through one-off TA(s) interventions, the critical systemic issues related to such hold-ups should be dealt with by (i) monthly portfolio reviews with EAD as practiced by PRM since more than a year, (ii) harmonised project processing and implementation procedures of ADB and the Government, (iii) pragmatic project readiness filters including advanced procurement actions and setting-up of project implementation units at project fact-finding stage, and (iv) realistic project design and implementation arrangements with minimal loan effectiveness conditions. These efforts should be complemented through targeted and sustainable capacity development initiatives.

Daily Times - Leading News Resource of Pakistan


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## Neo

Thread closed down due exceeding format, please continue the updates here:

http://www.defence.pk/forums/economy-development/7671-pakistan-economy-news-updates.html

Thanks,
Neo


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## Neo

*July-September trade deficit at $3.6 billion ​* 
ISLAMABAD (October 10 2007): The trade deficit has amounted to $3.6 billion during the first quarter (July-September) of the current fiscal year, 13.53 percent higher than $3.17 billion of last fiscal year.

According to foreign trade provisional data released by Federal Bureau of Statistics (FBS) on Tuesday, during the first quarter of this fiscal year, the country's exports fetched $4.456 billion, while imports cost $8.06 billion, against $4.25 billion exports and $7.42 billion imports of same period of last year.

The data shows that during the period under review, Pakistan economy pulled in 8.51 percent more imports than last year, while exports rose only by 4.77 percent.

It has been observed that each month imports growth exceeds exports, which results in widening of the trade gap. However, the country's imports declined by 0.46 percent, to $2.73 billion, in September 2007 from $2.75 billion of August 2007, comparing to the same month's imports with the corresponding September 2006 ($2.44 billion), up by 12 percent.

During September, goods worth $1.49 billion were exported, recording an increase of 5.69 percent against exports of $1.41 billion in September 2006. However, comparing exports of September 2007 with the previous month, the bulletin shows an increase of only 1.09 percent as against exports of the previous month, which stood at $1.47 billion.

Independent economists say that though trade deficit is considered as a good omen for a growing economy (as our economic managers think), in Pakistan's case it is very large and requires immediate attention.

It is pertinent to note that during 2006-07, the government had targeted imports at $28 billion and exports $18.6 billion with trade deficit of $9.4 billion, but at the end of the year, it surpassed the deficit target to reach $13.53 billion. During 2006-07, Pakistan also missed its export target by a wide margin of $1.59 billion, and breached the import target by $2.54 billion.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Sindh government, CDGK at odds over Rs 1.263 billion World Bank loan *​ 
KARACHI (October 10 2007): The Sindh Government and Karachi City District Government (CDGK) have locked horns on the issue of repayment of the Rs 1.263 billion World Bank (WB) loan, Business Recorder learnt on Tuesday.

The bone of contention is the longstanding issue of handing over of the 10 depots of the now defunct Karachi Transport Corporation (KTC) to CDGK by Sindh government, official sources in Transport & Communication Department of the City Government said.

They said that in a meeting on August 22, 2005 at Sindh Governor House, it was decided that vacant possession of all 10 KTC depots would be handed over to CDGK, which would, in return, ensure re-payment of all liabilities of KTC, particularly a WB loan amounting to Rs 1.263 billion (without interest) in 36 equal monthly instalments.

The KTC, which ceased operation in 1997, had borrowed Rs 1.263 billion from the World Bank under Sindh Social Development Program (SSDP) to give Golden HandShake to its employees, sources recalled.

But, as the CDGK has not been able to fulfil its commitment under the agreement, the Section Officer (Vigilance), Labour, Transport, Industries & Commerce (LTI&C) Department of Sindh government, has issued a notice to City Nazim Mustafa Kamal and District Coordination Officer (DCO) Karachi demanding their special attention to the lingering issue.

Sindh government is now constantly pressing the CDGK to repay the first instalment of Rs 283 million to the former, with a warning that in case of non-compliance it may invoke provision of 'at source deduction', sources said. The Sindh government is also asking CDGK for signing an agreement with its Transport Department for completing the formality to hand over/take over the defunct KTC properties, they added.

On the other hand, the city government contends that it would pay the WB or any other loan after bringing in use the depots, majority of which are occupied by various government agencies like Pakistan Rangers (Sindh), Sindh Police, Town Municipal Administration etc, sources said.

The CDGK has plans to establish inter and intra city bus terminals, CNG stations for urban buses and develop parking facilities etc on the said properties, and then the revenue so generated would be used for repayment of former KTC liabilities, sources said. "Of course, the CDGK has no money reserves. It would be able to pay after generating revenue from the KTC depots, which are still not vacant", they added.

According to sources, in October 2004 a summary was initiated by the Labour, Transport, Industries & Commerce Department of Sindh government with the proposal that the CDGK could be handed over all the depots of the KTC, if it agrees to pay WB loan and all liabilities of KTC. On December 20, 2004, the summary was approved by Sindh Chief Minister, and the CDGK was asked to take further action as per approval. But the matter remained inactive, they said.

After getting approval from the Advisor to the Chief Minister Sindh for Finance in a meeting held on December 27, 2005 it was decided that ex-KTC depots be handed over to CDGK, while the mode of payment would be decided later on.

The DCO Karachi on July 31, 2006 informed the LTI&C Department of Sindh government that a meeting was held on July 21, 2006 at Sindh Governor House wherein it was decided that CDGK may take over ex-KTC depots immediately after completion of the formalities, sources said.

The CDGK is now demanding of Sindh government to ensure transfer of the ex-KTC depots with no occupation by whatsoever agency with the latter asking for an immediate repayment of the first tranche of the WB loan, sources said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan and Iran to revise gas prices periodically ​*
TEHRAN (October 10 2007): Iran and Pakistan have agreed to periodic revision of gas prices as part of the pipeline deal to carry Iranian gas, via Pakistan, to India, the Isna news agency said on Tuesday, quoting local export company.

"The two parties have agreed that each side submit its demands for gas price revision to the other side every three years, taking into account the situation on the international market," said a statement from the National Society for Gas Exports from Iran.

The two countries have also agreed on other terms, particularly dealing with "situations of force majeure and the law governing the agreement." According to the statement quoted by Isna, the Indian side--opposed to a price review system--may take part in future talks.

Late in September, Ganimifard, Iran's deputy minister in charge of the project, said that Iran and Pakistan had reached an agreement, in the absence of India, on the pipeline. He added that the two countries should meet in Pakistan in mid-October to approve a final version of the agreement, with a probable signing of the accord at the end of the month. Talks on the $7.4 billion project to supply gas to India through a 2,600 km (1,615 miles) pipeline began in 1994 but suffered from tensions between India and Pakistan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Terrorism poses threat to foreign investment in Pakistan' ​*
ISLAMABAD (October 10 2007): Minister for Communications, Muhammad Shamim Siddqui said on Tuesday that terrorism and suicide attacks were threat to foreign investment in the country. Speaking on a resolution moved by MNA Yasmeen Rehman about the eradication of poverty in the country, the minister said that the economic policies of the present government aimed to eradicate poverty from the country.

He said that increase in agricultural support prices directly benefited the farmers. He further said that investment in agriculture, infrastructure, banking, energy sectors has directly and indirectly benefitted the lower class of the society.

Shamim Siddiqui said that PSDP in the present fiscal year has reached record figure of Rs 520 billion as compared to Rs 100 billion in 1999. About flour availability situation he said that it was available at Utility Stores Corporation (USC) at Rs 13.80 per kilogram while in open market it was now available at Rs 16.

He said that masses have trust in the economic policies of the government and poverty has been reduced. Earlier, opening the debate on the resolution, Yasmeen Rehman said that poverty is main issue of our country. She claimed that ground reality was far from the figures of poverty reduction given by Federal Bureau of Statistics (FBS).

She said that during last couple of years inflation has risen rapidly, which has eroded the purchasing power of the middle and lower class of the society. Syed Zafar Ali Shah blamed weak institutions for what he called unjust distribution of resources in the country. He alleged that local government system was a source of corruption in the country.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Continuity of economic policies promised ​* 
KARACHI (October 10 2007): Sindh Governor Dr Ishrat-ul-Ibad Khan has assured the business community of the continuation of the economic policies being pursued by the present government. He was Speaking at a ceremony held to rename Road 8000 as "S.M.Farooq Road" in Korangi industrial area on Monday evening.

He said that as a result of pursuing the present economic policies, investment climate had improved a lot which attracted foreign direct investment (FDI).

He said the federal Board of Revenue (FBR), which was once known as thieves, had now become businesses-friendly. The governor informed the business community that the government had approved a project of re-building Rs 800 million Jam Saddiq Bridge, which had completed its age. He also said that beside the bridge, a causeway would be constructed at a cost of Rs 200 million.

The Governor announced that the government had decided to change the names of some of the roads, bridges and parks in the city and rename them against the names of those who had done some important work in past.

Taking about recent presidential election, the Governor has criticised the media in general and electronic media in particular, and said that they had created hyper, giving impression that something very big was going to be happened. He said that it was most important that a government completed its tenure and new election process had been initiated.

Dr Ishrat-ul-Ibad advised the business community to get united for the betterment of the country. City Nazim Syed Mustafa Kamal, speaking next, announced establishment of Korangi industrial zone (KIZ), which will be manned by the Chief Engineer of Karachi Water and Sewerage Board (KWSB), officials of land, tax and other department to provide better services and resolve complaints on the site.

He also announced imposition of municipal tax, which would be peanut for the business community, but it was necessary for the maintenance of infrastructure in the area.

He said that the city government had incurred an expenditure of Rs 4.5 billion on infrastructure development in the area and now needed finance to maintain it.

Sindh Minister for Culture and Tourism Rauf Siddiqi suggested that a university would be established in the name of late S.M.Farooq Former President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) S.M.Munir, speaking on the occasion, stressed the need for unity in business community for the betterment of the country. Welcoming the guests, Masood Naqi praised the services of late S.M.Farooq for the people of the country, and said that the road had been named to recognise his services for the people in the country.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Over one million vehicles converted to CNG mode *​
ISLAMABAD (October 10 2007): As many as 1,080,000 vehicles were converted to the Compressed Natural Gas (CNG) mode by June this year as compared to 500,000 in June 2004, thus marking an increase of 116 percent. Encouraging the use of CNG as an alternate fuel for automotives is the government's policy to control environment degradation and save foreign exchange in import of liquid fuels.

Also, the number of operational CNG stations by June 2007 has risen to 1,488 against 546 in June 2004, hence increasing by 172 percent, according to a three-year performance report of the government. In last three years, the government has taken various policy initiatives to enhance the overall availability of gas for domestic, industrial and other economically important uses such as power generation.

During the same period, supply of gas was increased from 1,197 to 2,466 towns and villages, thus marking an increase by 106 percent. Under Khushhal Pakistan Programme, 1,190 projects were launched under the government's directives at a cost of Rs 35 billion, with 19 billion funded by the government. About 715 projects have been completed while 475 are being implemented.

Production of gas in last three years has increased by 188 MMCFD, which is equivalent to about 1.64 million metric ton of furnace oil per year worth 0.59 billion dollars at an average price of 360 dollars per metric ton. In the power sector, 16 works of 500 KV costing to Rs 21.228 million have been completed during last three years to improve the capability of transmission system.

As many as 18 works costing Rs 34.869 billion for improvement of Transmission System, are under progress and are expected to be completed by June 2008. The Water and Power Regulatory Authority has given a record of 28,82,671 new connections during last three years. The connections include 25,67,744 domestic, 2,41,068 commercial, 28,866 industrial, 44,253 tube-wells and 740 other connections.

The Alternate Energy Development Board (AEDB) has launched a policy for development of new-able energy for power generation, which has been approved by the Economic Coordination Committee.

The AEDB is pursuing the target of implementing 700 MW of wind power projects through private sector by 2010. Letters of Intents have been issued to 90 national and international investors for 50 MW wind power projects.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Power companies to provide one million new connections ​* 
LAHORE (October 10 2007): Power Distribution Companies (Discos) will provide one million new connections during the current fiscal year. In addition, 7,500 villages will also be electrified during July-December 2007.

According to details, Discos have been assigned the target to provide one million new connections including 900,000 domestic, 80,000 commercial, 9,750 industrial, 10,000 tube-well and 250 other connections during the fiscal year 2007-08.

In pursuance of the target, as many as 183,975 connections have already been made during first two months of the current fiscal. The connections, provided in July-August 2007, included 166,167 domestic, 14,522 commercial, 1,636 industrial, 1,630 tube-well and 20 other connections.

Maximum number of connections, ie. 54,104 has been provided by Multan Electric Power Company (Mepco) followed by Fesco with 33,413, Lesco with 29,356, Iesco with 19,827, Pesco with 18,380, GEPCO with 18,012, Hesco with 7,958, Qesco with 2,904 and Tesco with 21 connections.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*HP unveils dynamic range of computing products *​ 
LAHORE (October 09 2007): HP unveiled an innovative line-up of personal mobile and desktop computing products that have been designed to reflect consumers' personal and professional lives through meaningful innovations and the next-generation designs.

HP's broad range of new personal computing products includes two special edition consumer notebook PCs; a Designed-in-Asia-for-Asia notebook PC; as well as the HP Pavilion Elite m9000 Series Desktop PC and the latest high definition widescreen monitors, a spokesman of the company said here on Monday.

According to him, Chin Hon Cheng, vice president, Consumer Products and Mobile Business Group, Personal Systems Group, Asia Pacific & Japan, HP said: "A new energy at HP is creating an ever more personal experience in computing.

HP is innovating and designing PCs and delivering experiences that are reflections of consumers' personal and professional lives." Chin added, "The concept of 'personal' takes many forms. It can be a more natural user interface using touch, or the beautiful high gloss finish that personifies elegance and has become an HP trademark."

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Creating job opportunities: Minfal planning to invest in rural areas ​* 
ISLAMABAD (October 10 2007): The Ministry of Food, Agriculture and Livestock (Minfal) is planning to invest in rural areas to create job opportunities for young generation as the rural poverty is continuously increasing joblessness through migration of unskilled youth to the urban areas, Business Recorder learnt here on Tuesday.

Sources said that a huge investment in agriculture sector can cause reduction in poverty as 70 percent population of the country is living in the rural areas, of which mostly depends on agriculture while rest of 30 percent directly or indirectly dependent of agriculture.

They said growth in agriculture helps in reducing poverty and hunger more than industrial development. Looking back at the investment data during the last three decades, it could be seen that countries that have invested or continued to invest most in agriculture, both public and private, now experience the lowest levels of under-nourishment.

Sources said Minfal is already working on introducing its first ever agri-business policy funded by the Asian Development Bank and for the purpose, a survey has been carried out through agri-business development and diversification project all over the country, including Fata, Fana and AJK to identify the problems the private sector is facing and to find out their solution aimed at alleviating poverty especially in the rural areas.

All the relevant stakeholders, including farmers, traders, small and medium entrepreneurs, researchers, extension workers, policy-makers and experts of agriculture sector are being involved in the project as the agricultural sector has the potential to be a source of economic growth and income generation, they maintained.

They said the agriculture sector would be revolutionised through enhancing investment in agriculture, technology interventions and policy support. High value crops and value addition processes are mainly under focus to make the agriculture a profitable profession and business in addition to making investment in rehabilitating other production factors such as water, agriculture credit, fertiliser and pesticides for improving crop productivity. Livestock sub-sector is also being strengthened and facilitated especially by involving the private sector.

Sources said that steps are also being taken to reduce poverty through macroeconomic adjustments to foster economic growth, improve governance and initiate reforms in key sectors, including human resource and rural development for accelerating the pace of development of the agriculture sector and betterment of the poor living in the rural areas.

The government has funded various projects this year for adoption of efficient agricultural technologies in all the four provinces to increase agricultural productivity, water management, livestock promotion, horticulture development, quality assessment, and agri-business interventions in a bid to overcome the nuisance of poverty, they added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*LSM registered growth of 6.26pc during July *​ 
Wednesday, October 10, 2007

ISLAMABAD: Large Scale Manufacturing (LSM) industries grew by 6.26 per cent during the first month July of the fiscal year 2007-08 over the corresponding month of the last fiscal 2006-07.

The Federal Bureau of Statistics (FBS) provisional Quantum Index Numbers (QIM) of LSM Industries released here for the period of July, revealed that the eleven Petroleum products witnessed a growth of 11.15 per cent and the data compiled by Ministry of Industries for 35 manufacturing goods showed a growth of 5.4 per cent. 

54 LSM industries data compiled by FBS also witnessed growth of 6.73 per cent, thus, the overall growth of 100 recorded LSM industries remained at 6.26 per cent during the month under review.

Production of the petroleum products increased by 11.1 per cent in July 2007 as against the same month of the 2006. The manufacturing of steel products and cement grew by 32.2 per cent and 21.6 per cent during the period under review. 

On the other hand tractors, trucks and jeeps cars, television sets and bicycles manufacturing declined by 13.5 per cent, 15.3 per cent and 4.6 per cent, 9.84 per cent and 8.69 per cent respectively during the first month of the current financial year over the corresponding period of the last fiscal year. 

During July 2007, cotton yarn production witnesses growth of 3.71 per cent, cigarette 0.77 per cent, phosphorus fertilizers 24.6 per cent, nitrate fertilizers 7.27 per cent, caustic soda 20 per cent, soda ash 16.86 per cent while the production of cotton cloth and paper and board production declined by 3.68 per cent and 6.83 per cent respectively.

Besides, vegetable ghee production declined by 3.35 per cent, tea blended 2.36 per cent, sole leather 10 per cent, diesel engines 8.19 per cent, electric bulbs 13.6 per cent and electric tubes 25 per cent and electric meters manufacturing declined by 26.5 per cent over the same month of the last fiscal. Beverages production goes up by 89.4 per cent, tablets 24.4 per cent, capsules 27 per cent, injections 72 per cent, cycle tubes 8.37 per cent, motor tyres 8.67 per cent, motor tubes 31.75 per cent, wheat thresher 530 per cent, power looms 54 per cent, sewing machines 9.9 per cent, refrigerators 11.2 per cent, deep freezers 27.3 per cent, electric fans 23.5 per cent and electric transformers production up 11 per cent during July 2007 over July 2006.

LSM registered growth of 6.26pc during July


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## Neo

*Govt collects Rs350bn through privatisation ​* 
Gas production increased by 188mmfcd in three years

Wednesday, October 10, 2007

ISLAMABAD: Around Rs 350 billion have been collected through 20 privatization transactions during the last three years. 

This was 72 per cent of the total amount (Rs475 billion) realized from privatization since the Privatization Commission was set up around 16 years ago.

In December 2006, 9.5 shares of OGDCL were divested through an international offering of global depository shares.

According to data available with APP, as the economic fundamentals have been set right, Pakistan has become one of the most attractive investment destination. There are 48 bilateral investment treaties which are now becoming part of Free Trade Agreements (FTAs). 

The objective of the present government is to promote domestic and foreign investment and has also created an enabling environment, which is conducive to the participation of the private sector in sharing efforts for catering to the energy needs of the country.

Currently out of 20 million households, 5 million are connected with natural gas network and approximately 1.8 million are using LPG. 

Production of gas during the last three years has increased by 188 MMCFD, which is equivalent to about 1.64 million metric tons of furnace oil per year worth $0.59 billion on an average price of $360/metric ton.

A number of reforms in the oil sector have been initiated during the last three years and criteria for setting up of new oil marketing companies have been approved. 

In order to implement the National Sanitation Policy, strategy and action plans are under preparation in consultation with all stakeholders including the provincial governments, district governments and the private sector.

The National Energy Conservation Policy enumerates broad guidelines to enhance end-use efficiency in various energy consuming sectors of the economy.

Furthermore, in communication sector a lot has also been achieved during the last years. The strategic framework for the National Trade Corridor Implementation Programme (NTCIP) has been developed based on a holistic and integrated approach. 

Due to effective vigilance National Highway & Motorway Police have been able to recover a number of stolen or hijacked vehicles, illegal sophisticated or lethal weapons, narcotics and drugs. Their presence and timely action foiled 54 decoities and 467 culprits were arrested. 

The National Highway Authority completed projects having a total length of 1,462 km at a cost of Rs35.291 billion during the last three years. 

Work on railway track rehabilitation, doubling to track from Lodhran to Khanewal and onwards to Raiwind, procurement of 144 locos, 775 passenger coaches and 2300 high capacity wagons continued with further acceleration during the period.

Gwadar Port was inaugurated on March 20 this year and the Port of Singapore Authority has been entrusted with its operations. 

The total fixed and mobile phone tele-density has crossed 45 per cent in the country with further increase in this sector is envisioned.

Govt collects Rs350bn through privatisation


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## Neo

*Shift in investment policy sought ​* 
Economists call for focus on export-oriented industries

Wednesday, October 10, 2007

LAHORE: Economists have urged the government to make a paradigm shift in its investment policy in order to attract investment into export-oriented industries instead of encouraging investors who produce goods for domestic consumption only.

They pointed out that the policy of allowing investment and then protecting the production through protective duties had proved counter-productive. They said local industries were unable to compete globally in all those items for which foreign investors had installed small units in Pakistan, which were sufficient to cater to domestic demand.

The production cost of these units, they added, was high due to lower production capacities and the products could not compete globally. However, they have found domestic markets as the government has slapped 15 to 50 per cent protective duties on their production. This impacts the competitiveness of those local industries which buy their products for use in manufacturing. The protection also hurts consumers who pay higher than global prices.

Another adverse impact of this policy, according to the economic experts, is that foreign investors make huge profits on their production which are repatriated to their headquarters abroad.

They said the local textile industry was suffering due to the protection given to PTA produced by ICI. Though global use of blended textiles has reached 50 per cent cotton and 50 per cent manmade fibre (polyester), the ratio in Pakistan is 25 per cent fibre and 75 per cent cotton. It is extremely difficult for the local manufacturers to export blended fabric or yarn due to higher cost.

The car manufacturers have kept vehicle prices much above the global levels due to this protection. They are making huge profits which are being transferred to their home countries.

Soda ash and plastic polymer manufacturers, enjoying similar duty protection, have kept glass and plastic manufacturers from the world market.

Ironically, none of the protected investors are exporting their products as they either make more profits by selling them locally or are not competitive in the global market due to low production capacity which increases the production cost.

They warned that if the present investment trend continued Pakistan would face a huge outflow of foreign exchange in the form of profits.

Leading industrialist Tariq Saigol in fact questioned the wisdom of allowing fast-food outlets, which neither create much jobs or investments but take away foreign reserves when profits are sent abroad.

This year, the outflow of foreign exchange is expected to cross $1 billion compared to only around $200 million four years ago.

All economists advised the government to make the country a manufacturing hub for exports to Central Asia and the Middle East. They said the government might give unlimited tax concessions to the investors provided they exported 60 per cent of their produce.

Indians do not allow investment until a phased plan of exports is presented to the government which the country ensures will be fully implemented.

Auto-vendor Almas Hyder said anything which could be exported would be globally competitive, adding the manufacturers would need no protection and the local consumers would not be unduly taxed.

Small foreign investors are currently investing in Pakistan just to benefit from the high domestic consumption-based economy. If the present trend continued, outflows would match home remittances, Hyder added.

Shift in investment policy sought


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## Neo

*Cotton export surges by 47% in July-Sept​*
KARACHI: Cotton export from Pakistan has surged by 47 percent in July-September 2007 as compared to the same period last year, the exporters said on Tuesday.

In the international market, Pakistani cotton is getting more attraction due to higher quality from the traditional and non-traditional cotton importing countries, a senior trader Ghulam Rabbani said.

During July-September 2007, Pakistan registered an export figure of 4,788 metric tonnes against 2,936 metric tonnes in July-September 2006.

Mr Rabbani said another shipment of lint from fresh crop is ready after Eid-al-Fitar to Far East, as we have already completed two shipments of the cotton season 2007-08 some week ago.

He said the international lint buyers consider Pakistan cotton number one in quality as well as on competitive rates in the international market besides it is the only new harvest in the international market available.

He said our nearest competitor, the Indian cotton merchants are offering a bit higher price while their quality does not confirm to the demand of international buyers. He said still the rates in domestic market are cheaper as compared to the prices in other international markets in the world as Indian type J-34 offered at 65-66 cents per pound which accumulated to around Rs 3,225 per maund. 

He said, a sizeable export will not affect the domestic markets requirements as the countrys import of PIMA grade (US) and other qualities cotton are still a regular feature, as we are already facing a shortfall of around 3 million bales.

Indian cotton exports are expected to continue to expand to over one million tonnes, making India the second largest cotton exporting country, the ICAC said. 

The ICAC forecast a season-average Cotlook A index of 71.00 cents per pound in 2007-08, 12 cents higher than in 2006-07, because of an expected significant decrease in the 2007-08 stocks-to-mill use ratio.

The ICAC issued the world supply and demand estimate for October 1 for 06-07-world production. It rose to 119 million bales from 118 million bales in September. World consumption was also lowered to 120 million bales down one million bales from a month earlier.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Exploration and production sector : Higher oil prices to boost Q1 FY08 profits​*
KARACHI: Higher international oil prices since the beginning of current fiscal year have revived investors confidence in the exploration and production (E&P) stocks after its lacklustre performance in last fiscal year 2007, analysts said.

During the first three months (July-September) of the current fiscal year, the average Arab Light crude price stood at $70.6 per barrel against $67.0 per barrel in the first quarter of last fiscal year, depicting a year-on-year growth of 5.4 percent. 

These higher oil prices could significantly contribute towards the top line of the E&P companies, especially Pakistan Oilfield Limited (POL) and Oil and Gas Development Companies Limited (OGDCL), which have significantly higher percentage of oil in their production portfolio compared to Pakistan Petroleum Limited (PPL), which receives 8-10 percent of its revenues from oil production.

Coupled with higher oil prices, significant increased oil and gas production of OGDCL during the first quarter of FY08 would lead to approximately 12 percent growth in the top line of the company against the same period last year. This growth in oil and gas production is mainly led by increased production from Mela, Tando Alam and Chanda fields. However, it is expected that exploration expenses of the company will remain higher on the back of its aggressive exploration activities, said analyst Umer bin Ayaz of JS Capital Research. 

At present, the company is in process of drilling approximately 9 exploratory and 10 development wells. Nevertheless, most of these wells are part of previous years drilling program, he added. Moreover, it is also expected the amortisation charges of the company to stay on a higher side due to relatively higher number of successful wells last year. This would weigh down the growth in the bottom line of the company, despite a healthy growth in the revenues. 

The company drilled the highest number of wells (41 wells) last year, out of which it came up with 10 discoveries. PPL is the least affected among E&P companies when it comes to oil price variation, due to companys higher concentration on gas rather than oil. During the first three month of the current fiscal, PPL is expected to post combined oil and gas production growth of 3.8 percent compared to the corresponding period last year. For Q1 FY08, we expect the company to post net revenues of Rs10.6 billion versus Rs8.8 billion versus 1QFY07. The rise in the top line of PPL is mainly due to increased oil and gas production and also due to reduction in discounts of Sui and Kandhkot fields pricing. POLs EPS could stand at Rs 9.5 per share. POL is expected to post net revenues of Rs 4.1 billion in Q1 FY08 against Rs 4.6 billion in the corresponding period last year, depicting a decline of 10.8 percent. 
Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan's Rural IT Centers Connected Via EDGE Networks​*
Telenor Pakistan says that it has launched Telenor Rabta Centers as part of a pilot project involving local communities. These community information centers offer all modern communication facilities under one roof, and use Telenor Pakistan's EDGE network for connectivity. Each center is equipped with two PCs with EDGE data card to connect to the Internet, a printer, scanner, webcam, and a handset with Telenor Pakistan connection.

Commenting on the aims of the project, CMO Telenor Pakistan Sigvart Voss Eriksen said, "We want to establish an easy-to-access point for these communities in order for them to benefit from e-mail, scanning, faxing and printing facilities in their everyday lives. With Information & Communications Technologies (ICTs) becoming an ever-increasing part of our living, there is need for such facilities to be made available in Pakistan's rural and semi-rural areas too. It is well known that efficiency and productivity of a population increases with easy access to ICTs, thus contributing to their well-being and prosperity. Telenor Pakistan with its largest EDGE network will make it possible for these rural communities to connect to the internet, download content, and send and receive data, including digital images, web pages and photos up to four times faster than GPRS. "

The GSMA Development Fund is providing support in project management and facilitation activities for the pilot implementation. This includes working with Telenor Pakistan to develop the business model, secure funding and ongoing project management.

Telenor Rabta Center customers will be able to use the following services: E-mailing, Internet searching, Video Conferencing, Printing, Document Composing, Scanning, CD burning, Faxing, Photocopying, Downloading different forms, EasyLoad, make mobile phone calls, and use a number of other Telenor Pakistan value-added services.

Telenor Pakistan will monitor the performance of the Rabta centers and will decide on expanding the project after a comprehensive evaluation.

Pakistan's Rural IT Centers Connected Via EDGE Networks


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## Neo

*Special zones to help promote industries​*
ISLAMABAD, Oct 9: Prime Minister Shaukat Aziz said on Tuesday that the establishment of Special Economic Zones (SEZs) would help promote industrialisation, enhance Pakistans competitiveness, generate employment and reduce poverty in the country. Chairing a meeting on the establishment of SEZs here, the premier said there was a need to develop quality SEZs in the country, and asked the officials to prepare proposals to help create competitiveness, uniqueness and give the country a comparative advantage over the other countries in the region.

He said: Our strategic location, well-equipped ports and skilled manpower can be exploited to our advantage.

He said: We have to develop a hassle-free environment which should be conducive to attract both local and foreign investment.

Mr Aziz said: We have to look into pros and cons of the already existing schemes and share experiences, like Export Promotion Zones (EPZ), and accordingly incorporate recommendations for formulation of a policy for establishing SEZs.

Besides policy, there is a need to encourage private sector to come forward and invest in these zones. The participation and involvement of the provincial government, specifically in sharing the incentives for investors, would give a boost to SEZs, he added.

We have to develop a model by looking into the success drivers of other countries, which are also compatible to our needs and supported by credible ideas incorporated in the policy, he added.

The meeting reviewed the institutional framework of SEZs, international benchmarking of similar ventures, the regulatory aspect and the proposed action plan for the development of SEZs in Pakistan.

He said it is incumbent upon the government to ensure that all basic facilities to investors are available in order to attract private sector whose participation is essential for success of SEZs.

He said establishment of quality SEZs is critical to attract investment and the government must ensure that investors get all possible assistance through one window facility.

The meeting was informed that in order to create an institutional framework, there is a need to increase coordination, consolidate authority and ensure that zones are efficiently planned for SEZs development.

The meeting was further apprised that in order to increase the investors confidence, there is need to incorporate additional incentives within the policy.

Special zones to help promote industries -DAWN - Business; October 10, 2007


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## Neo

*FDI On The Rise In Pakistan Because Of Attractive Returns: Boi*​
KARACHI, Oct 10 Asia Pulse - Volume of foreign direct investment is rapidly increasing because of attractive returns on investing in Pakistan despite the political and law and order issues, Mushtaq Malik, Secretary Board of Investment (BoI) stated on Monday.

In a meeting with President of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Tanveer Ahmed Sheikh, pointed out that there has been a positive change in the magnitude of the inflow of foreign investment - portfolio and FDI in the country and said that it was notable that the inflow of foreign investment had increased manifold after 9/11. ADVERTISEMENT



The Secretary of BoI extended his cooperation to provide his best support to solve the business sector's problems in all the areas where his cooperation is required.

The meeting also discussed the role and possible benefits of the ROZs (Reconstruction Opportunity Zones) for investment promoting activities.

Mr Sheikh highlighted the issues being faced by the private sector to invest in the country.

He highlighted that private sector has fulfilled its commitments to invest in Pakistan but the government, in certain areas, was not successful to fulfil its commitments.

He exemplified the 'Textile Vision 2005' programme where industrialists invested their funds in the textile sector according to the targets determined by the planning authorities.

The sector imported and installed the machinery and enhanced investment through equity based financing.

As a consequence the textile sector increased its production capacity and modernised the facilities.

However, MINFAL failed to provide the targeted production of textile raw material cotton.

As a result, the textile sector is facing unutilised capacity, which is hampering its profitability.

"The permission for the import of cotton from India through Wagah border is the only immediate solution to fill the gap between the demand and supply of cotton," he said.

Mr Sheikh also highlighted the efforts of the FPCCI in promoting investment activities in Pakistan.

FDI On The Rise In Pakistan Because Of Attractive Returns: Boi - Yahoo!7 News


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## Neo

*Rice, cotton targets likely to be missed ​* 
Thursday, October 11, 2007

ISLAMABAD: Two major cash crops of the Kharif season will slightly miss the targets set by the Federal Committee of Agriculture while the other two will likely witness a record production, official sources revealed to The News on Wednesday.

The estimates of Kharif crops would be submitted before the Federal Committee on Agriculture (FCA), which is scheduled to meet on Oct 17 with Federal Minister for Food and Agriculture Sikandar Hayat Khan Bosan in the chair.

Paddy, a foreign exchange earner, would miss the set target of 5.72 million tonnes by nearly 10 per cent because of floods, rain damage, and pest attack. The crop is now estimated to be around 5.1 million tonnes, the sources said.

Last year, rice production was recorded at 5.42 million tonnes and for 2007-08, the target was fixed at 5.72 million tonnes from a cultivated area of 2.6 million hectares.

Irri-6 the coarse rice cultivated in riverine areas of River Indus and irrigated areas of Balochistan was damaged in floods and monsoon rains and also pest attack, they added.

Similarly basmati rice cultivated in Punjab also came under pest attack of bacteria blight. This whole situation leads to miss the target by 10 per cent and the production is estimated to be above and over 5.1 million tonnes, the official said.

Pakistan exported more than 3.6 million tons of rice during the current year earning around $1.2 billion from the export of the commodity.

Cotton, second major cash Kharif crop, would also miss the set target of 14.1 million bales for this season because of mealy bug and viral attacks and the crop size would remain 12.5 million bales, they said.

Last year, Pakistan achieved 13 million bales against the set target of 14.6 million bales.

Sugarcane production is expected remain much above the target of 58 million tonnes against the set targets for 2007-08 of 54 million tonnes form an area of 1.015 million hectares while last year, its production was 52.9 million tonnes, the sources said.

The sugar availability at the end of this month would be 0.9 million tonnes and millers will starts the crushing from Nov 1st both in Sindh and Punjab, they added.

Maize production fixed at 3.2 million tonnes for 2007-08 from an area of one million hectares would also cross the target because of high prices both at the international and domestic markets.

Rice, cotton targets likely to be missed


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## Neo

*New industrial vision stressed ​* 
Thursday, October 11, 2007

KARACHI: Sindh Minister for Labour and Industries Adil Siddiqi has directed SITE Ltd and Sindh Small Industries Department to work on a new vision for establishing more industrial areas equipped with modern infrastructure and facilities so as to meet the requirements of the future. 

He called for chalking out such a strategy for big and cottage industries which may serve as a role model for the whole country. In a statement on Wednesday, the minister pointed out that a new era of fast industrial development has started due to modern technology and it wants to carry out future planning to meet the challenges ahead. 

He said the government will do marketing in other countries for attracting investment in Sindh and for speedy economic and industrial development. 

He pointed out that SITE Phase I and II is the countrys only industrial area where under-ground electric system has been laid as per international standards. 

Referring to residential areas situated near these industrial zones, the minister said steps have been taken to control pollution in view of establishment of industries in the future. 

The industries to be established here will have to be certified by ISO and each of them has its own effluent treatment plant so that human lives remained safe from harmful effects of industrial environment.

New industrial vision stressed


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## Neo

*American labour supports economic opportunity zones in FATA*​
Washington: American labour federation, AFL-CIO, says it supports the establishment of economic opportunity zones in NWFP and Balochistan tribal areas, and appreciates the price Pakistan is paying for being an American ally in confronting terrorism and extremism. 

Majyd Aziz, former president of the Karachi Chamber of Commerce and Industry, was assured of this by AFL-CIOs Thea Lea when he called on her in Washington recently. She told him that the federation appreciates the building of a Pakistani middle class and understands the need for development of the far-flung areas. The reconstruction opportunity zones (ROZ) are backed by the administration and have bipartisan political support, to which, Lea said AFL-CIO will now add its own. 

She said industries in the ROZ must adopt all labour standards so there is no child labour, workers get proper wages, enjoy freedom of association and are not abused or exploited. Aziz said the ROZ are part of the counter-terrorism strategy since they will provide economic opportunities, employment to village women, and help in building schools, vocational training centres and hospitals. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Inflation surges by 8.4pc in September​*
ISLAMABAD, Oct 10: Led by a double digit increase in food inflation, the overall consumer prices jumped again by 8.4 per cent in September over the same month last year, the Federal Bureau of Statistics (FBS) said on Wednesday. This would be the highest increase in inflation so far recorded in any month of the current fiscal year because of the soaring food prices particularly wheat flour, vegetables and fruits which touched new heights.

In the first two months  July-August  the overall inflation remained between six to seven per cent. However, the food inflation during the same period remained less than the double digit growth.

The government has projected 6.5 per cent annual inflation to be achieved during 2007-08. The annual inflation in 2006-07 was 7.77 per cent as against the projected target of 7 per cent.

When contacted Economic Advisor to Prime Minister Dr Ashfaq Hassan Khan told Dawn that the Consumer Price Indicator (CPI) based inflation was registered a growth of 8.4 per cent in September as against 8.7 per cent in the same month last year.

He said that inflation during the first quarter of the current fiscal year (July-September) was estimated at 7.1 per cent as against 8.4 per cent during the same period last year.

He said that the CPI based inflation in September 2007 was largely driven by food inflation, adding that SPI based inflation during the week ended on October 4 stood at 10.7 per cent against the corresponding week of last year.

Mr Khan said that prices of essential commodities during Ramazan remained stable adding that the SPI based inflation remained at around 10 per cent during the holy month.

He said that 6,000 utility stores would be set up by December end which would impact the market prices providing relief to the consumers.

Among the food group, the products which registered growth in prices include tomatoes, onion, besan, wheat, wheat flour, gramwhole, eggs, pulse gram, betel leaves, gur, cooking oil, mustard oil, dry fruit , tea, readymade food, vegetable ghee, vegetables, rice, jam and pickle and vinegar.

Similarly, the continuous increase in the house rent, doctor and education fees have also pushed up inflation in September 2007 over the corresponding month last year thus hitting the low income group.

Analysts said that the tight monetary policy had resulted into bringing down the core inflation  non-food, non-energy  which curtailed the overall inflation during September 2007.

However, the challenging issue of food supply and overcoming of shortage of food items still persisted as the food inflation is on the higher side, which recorded a growth of more than 10 per cent during September 2007 over the same month last year.

Similarly, the government had frozen oil prices in the domestic market that had also resulted into lowering the transportation cost and fares. With this the non-food inflation also witnessed steep decline during the month under review.

Inflation surges by 8.4pc in September -DAWN - Business; October 11, 2007


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## Neo

*$5bn refinery approved for Hub​*
ISLAMABAD, Oct 10: The government approved on Wednesday construction of the Coastal Refinery Project costing $5 billion at Khalifa Point in Hub area of Balochistan.

It also decided to advise the Oil and Gas Development Corporation to allocate and dedicate at least 80 per cent of the Liquefied Petroleum Gas (LPG) produced from Chanda filed for distribution in the Federally Administered Tribal Areas (Fata).

These decisions were taken at a meeting of the Economic Coordination Committee (ECC) of the Cabinet held here on Wednesday with Prime Minister Shaukat Aziz in the chair.

Briefing newsmen, Adviser to the Finance Ministry Dr. Ashfaq Hassan Khan said the refinery would be established as a joint venture by the Abu Dhabi-based International Petroleum Investment Company (IPIC) and Pak-Arab Refinery Company (Parco) with equity participation of 74 and 26 per cent, respectively. The project would be completed and commissioned by the first quarter of 2011.The Ministry of Petroleum and Natural Resources had been allowed to sign the implementation agreement with IPIC within a month, he added.

Mr Khan said that the project with a refining capacity of 200,000 to 300,000 barrels per day would cost $4-5 billion and the preliminary work had already been started.

He said that various concessions, including a 20-year tax holiday, exemption from five per cent workers profit participation and exemption from 0.5 per cent services charges under the export processing zones rules, had been announced for the project.

These initiatives would be applicable for all the refineries and petrochemical projects to be installed along the coastal belt of Balochistan, particularly Gwadar, he added.

Answering a question, the adviser said that the products manufactured by the refinery would be exported as well as sold in the local market.

The ECC also approved reduction of duty on the import of bitumen from 15 per cent to 5 per cent, he said.

Mr Khan said that a summary for the provision of LPG to Fata had also been approved. He said that the Oil and Gas Regulatory Authority would ensure that the LPG dedicated from Chanda field was marketed in these areas.

The finance ministry adviser said that the meeting reviewed flour prices and expressed satisfaction over its availability in the market. He ruled out any increase in flour prices the days ahead. He said as of October 7 the wheat stock stood at 3.79 million tonnes.

He said that the foreign exchange reserves reached the highest ever $16.34 billion.

Mr Khan said that the sales of utility stores recorded a three-time increase during Ramazan as compared to the previous month. He said that the number of utility stores outlets would reach 6,000 by the end of 2007.

$5bn refinery approved for Hub -DAWN - Top Stories; October 11, 2007


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## Neo

*ECC approves incentives for refineries: 0.1 million tons wheat to be imported from Russia ​* 
ISLAMABAD (October 11 2007): The Economic Coordination Committee (ECC) of the Cabinet on Wednesday approved incentives for oil refineries and petrochemical projects to be established along the coast of Balochistan, particularly in the vicinity of Gwadar.

Presided over by Prime Minister Shaukat Aziz, the ECC meeting also slashed customs duty on import of bitumen from 15 percent to 5 percent, to be imported by Pakistan State Oil (PSO) from Saudi Arabia.

Announcing the decisions of ECC, Dr Ashfaque Hasan Khan, Special Secretary, Finance, said that the incentives for refineries and petrochemical projects include 20 years tax holiday, waiver of 5 percent workers' profit participation fund under the Companies Profits (Workers Participation) Act, 1968, and waiver of 0.5 percent service surcharge under the EPZA Rules 1981.

"These incentives will be applicable to all refineries and petrochemical projects to be set up in the coastal belt of Balochistan, particularly Gwadar," he added. He said that the ECC has also allowed the Ministry of Petroleum and Natural Resources to sign 'Implementation Agreement' with International Petroleum Investment Company (IPIC).

However, there would be no guaranteed rate of return for this refinery as the project is purely based on commercial consideration. It is expected to be completed and commissioned by the first quarter of 2011.

An oil refinery at Khalifa Point, near Hub, in Balochistan, with an estimated cost of $4-5 billion with 200,000 to 300,000 barrel per day refining capacity, is going to be established for which preliminary work has already started. This project is a joint venture of IPIC of Abu Dhabi and Parco with equity participation of 74 percent and 26 percent, respectively.

Dr Ashfaque said that incentives for the refineries had been recommended by the Energy Task Force headed by Dr Akram Sheikh, Deputy Chairman Planning Commission. He said that total wheat stock was 3.971 million tons as of October 7; of which, Punjab had 7772.275 million tons, Sindh, 0.498 million tons, Balochistan, 0.027 million tons, NWFP 0.062 million tons, and Passco 1.107 million tons.

He said that Trading Corporation of Pakistan (TCP) had floated two tenders to import 100,000 (50,000+ 50,000) tons wheat, and the parties had quoted price of $523 and $445 per ton. "TCP has accepted tender of $445 to import 50,000 tons Russian wheat," he said, adding that the other tender of equal quantity may also be awarded to the same party.

He said that inflation (CPI-based) in September 2007 was 8.4 percent, against 8.7 percent in September 2006, and 8.5 percent in September 2005, admitting that CPI was high in September as against August due to Ramazan.

"CPI based inflation in the month of September was largely driven by food items price hike," he said. SPI-based inflation during the week ended on October 4, 2007 stood at 10.7 percent against the corresponding week of last year. During the entire month of Ramazan (beginning from September 13, 2007), SPI-based inflation remained at around 10 percent.

The prices of 18 items increased in the week ending October 4, 2007 while the prices of 9 items registered a decline. The prices of 26 items remained unchanged during the week. This week's increase in SPI was largely driven by tomato prices, which had increased by 47 percent.

The recent increase in prices of essential items was relatively less in Pakistan compared to South Asian Region. Out of 16 food items, prices of three items, namely eggs, sugar and tomato, were higher in Pakistan while the prices of remaining 13 items were less in Pakistan. Most important among them were wheat flour, all kinds of pulses, chicken, potatoes, onion etc.

There are 3500 utility stores operating in Pakistan. By December 2007, the number will increase to 6000, he said, adding that sale in utility stores is up three times. The ECC also approved the summary of the provision of LPG to FATA.

It was proposed that OGDC will be advised to allocate LPG through competitive and transparent process and at least 80 percent of the LPG produced from Chanda filed be distribution in FATA. The OGRA will ensure that the LPG dedicated from Chanda field is marketed in the FATA area. The ECC has approved the proposal.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'OICCI contributes 32 percent of GDP' ​* 
ISLAMABAD (October 11 2007): The Overseas Investors Chamber of Commerce and Industry (OICCI) contributes over 14 percent of GNP of Pakistan and approximately 32 percent of the GDP of the manufacturing sector. President OICCI Zubyr Soomro told Business Recorder on Thursday that OICCI has 168 members, representing all major sectors of the economy.

He said a recent survey indicated that the OICCI membership contributes 33 percent of the total tax revenue of the government of Pakistan, and directly employs approximately 100,000 people. He said that the Chambers' primary function is to promote the commercial, industrial and finance interests of foreign investors engaged in Pakistan.

He said that OICCI recently conducted its first annual perception survey of its members in which they were asked to summarise the quality of their interaction with various ministries and autonomous bodies over the past 12 months.

He said it was a matter of satisfaction that the results of this survey indicated that Pakistan was an attractive investment destination because of a growing domestic economy, consistent and business friendly policies and sound macro-economic management. He said OICCI works closely with the Board of Investment to promote FDI and is looking forward to its on-going dialogue with respect to the formation of Foreign Investors Council.

Business Recorder [Pakistan's First Financial Daily]


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*$1.5 billion 'unofficial' trade conversion to benefit India and Pakistan alike ​* 
KARACHI (October 11 2007): The volume of trade between India and Pakistan through third country and other illegal means has been estimated at around $1 to 1.5 billion annually. The goods include chemicals, industrial machinery, spices, tyres, tea, medicines, videotapes, cosmetics and viscose fibre.

Which find their way either through third countries, like Dubai and Singapore, or through smuggling. According to a paper contributed to the symposium on doing business in South Asia held in New Delhi early this month under the aegis of Saarc Chamber of Commerce and Industry (S-CCI), the volume of 'unofficial' trade indicates tremendous potential between the two countries.

If the illegal trade is converted into official business, the current volume of trade may touch $3 billion mark, besides huge revenue gains for both countries. As a result of 'Confidence Building Measures' (CBMs) between Pakistan and India, trade had crossed $1.5 billion in 2006-07, showing five times growth since 2000-01. Pakistan's exports to India in 2006-07 were to the tune of $315 million against imports worth $1.18 billion, showing $866 million trade balance in favour of India.

At least eight trade and investment sectors have the potential for joint ventures in which both countries can complement each other's needs and produce cost-effective quality goods.

These relate to engineering industry, automobile sector, pharmaceuticals, textile industry, chemicals, plastics & melamine, textile and food & agribusiness. By importing iron and steel from India, Pakistan will have significant advantage of bring down the prices of steel products by over 50 percent and those of finished engineering goods by 10 to 20 percent.

Pakistan imports iron ore at a high cost from Brazil and Australia although it is available in India at lower rates. In order to avoid the possibility of Indian auto manufacturers capturing Pakistani market, as they are 25 percent cheaper as compared to Pakistan manufactured vehicles, establishment of joint ventures is the best way out.

A similar situation exists in pharmaceutical industry where Indian products are 30 percent cheaper than Pakistani products. To avoid conflict, establishment of joint ventures could be more effective.

At present, Pakistan imports machinery, including textiles and pharma worth over $2 billion per annum. It is expected that opening of trade with India would help Pakistan to acquire this machinery directly at much lower prices, instead of importing at higher rates from Germany.

Pakistan imports about 4.5 million tons diesel annually, mostly from Kuwait, but forbids imports from India, which exports over five million tons diesel annually. The import of diesel from India could lower the cost due to lower transportation cost.

In order to attract export-oriented foreign direct investment (FDI), establishment and strengthening of export processing zones (EPZs) need to be given priority. The EPZ concept encompasses different types of zones (eg free trade zones, duty-free zones, and special economic zones) reflecting the variety of activities performed by them. Pakistan and India may not be able to reap the true trade and economic advantages until the Kashmir problem is resolved, trade and industry circles believe.

Business Recorder [Pakistan's First Financial Daily]


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*'Conducive environment for business women in Pakistan' ​* 
KARACHI (October 11 2007): The working conditions for woman entrepreneurs are more suitable and secure in Pakistan, rather, in United State of America (USA). This was stated by Ann. E. W. Stone, Entrepreneur and activist, USA at a meeting held here to encourage women to contribute and make a helpful hand for the growth of Pakistani economy.

The meeting was organised by Women Chamber of Commerce and Industry (WCCI) at Islamic Chamber of Commerce and Industry (ICCI) here on Wednesday. Salma Ahmed, Chairperson, BSA Inc, Attiya Nawazish Ali, Assistant Secretary General Coordination, ICCI, Yasmeen Hasnain and other WCCI members were also present on the occasion.

"USA is a developed country and countrymen are provided with all amenities but businesswomen are not being facilitated to establish business or to enhance their running businesses yet", Ann said. She noted that USA was a male dominated country, where businesswomen were being suppressed and not being facilitated as per women rights laws. Ann said that women in US were still not had given due role in taking financial decisions.

She noted that working condition in Pakistan has improved a lot and women were contributing in every sector besides. She hoped that Pakistan would came at par with the developed countries of the world shortly. Salma said that WCCI was facilitating all its members' entrepreneurs besides welcoming every businesswoman to be a part of WCCI family. She emphasised on the women to learn accountancy and computer education.

Business Recorder [Pakistan's First Financial Daily]


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*'Record development schemes completed in Punjab' ​* 
LAHORE (October 11 2007): It is an unprecedented example that the present government has completed record developmental projects and distributed 100,000 acres of state land and 1,14,000 plots of five marlas among the landless farmers and shelter-less people in Punjab during the last five years.

Punjab Colonies Minister, Mian Manazar Ali Ranjha expressed this while talking to different delegations here on Wednesday, disclosed an official. He said the government has taken concrete steps for providing maximum relief to the people in every field.

Ranjaha said that the state land provided to the farmers at the ratio of 12.5 acres to each family is more than Rs 15 billion in total. "Roofs have been provided to the thousand of families by allotment of 5-marla plots. Second phase of these schemes would be announced soon during which 150,000 five marla plots and 100,000 of land would be distributed. Distribution of 250,000 plots would help housing sector to overcome its needs," he added.

The minister also said that the government is implementing a policy to retrieve the land from "qabza mafia" and allot it to the landless formers. This policy would bring huge area of land under cultivation, which would increase production help reduce unemployment in the rural areas of Punjab, he added.

Business Recorder [Pakistan's First Financial Daily]


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*'India six times behind Pakistan in gas pipeline' ​*
ISLAMABAD (October 11 2007): Pakistan has connected 1050 towns and villages through gas connectivity while in case of India, the connectivity is only restricted to 20 cities.

Pakistan is nearly six times ahead of India in terms of gas pipeline network as its pipeline network stands around 56,400 km as against 10,500 km that of India with its current pipeline density measuring at 1044KM/MMSCMD per day compared to 116KM/MMSCMD (million metric standard cubic meter per day) of India. According to the Associated Chambers of Commerce and Industry of India (ASSOCHAM), IINS reported.

In a paper brought out by the ASSOCHAM on gas sector - a comparison between India and Pakistan - has highlighted that as a result of intensive pipeline network, Pakistan has connected its 1050 towns and villages through gas connectivity.

In case of India, its connectivity is only restricted to 20 cities. Pakistan has created a 31,000 kilometers of distribution network to serve its domestic and commercial consumers in large locations as against 11,000 kilometers of distribution network that have so far been created in India to serve the requirement of its consumers in limited pockets.

Interestingly, while Pakistan has its possession nearly 1600 CNG (compressed natural gas) stations, in India their number is just at 380 and the gas throughput Pakistan is 38MMSCMD per day as against 8.5MMSCMD gas throughput in India.

The number of gas customers in Pakistan is estimated at 19 lac, which in case of India is just 5.50 lac and Pakistan runs vehicles on CNG whose number is estimated at 15.60 lac while in India, their number is just 4.60 lac.

Business Recorder [Pakistan's First Financial Daily]


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*CPI-based inflation up by 7.07 percent ​* 
ISLAMABAD (October 12 2007): The Consumer Price Index (CPI) based inflation is up by 7.07 percent in 2007-08 over the same period last year with double digit, 12.97 percent, food inflation, said Federal Bureau of Statistic data released on Thursday.

Summary inflation rates based on CPI, Sensitive Price Indicator, (SPI) and Wholesale Price Index (WPI) were up by 7.07 percent, 10.22 percent, and 8.30 percent respectively over the corresponding period last year.

Further analysis of the data showed that inflation based on CPI, SPI and WPI increased by 8.37 percent, 11.65 percent, and 9.28 percent respectively in September 2007 with an increase of 2.13 percent, 2.63 percent, and 1.62 percent over August 2007.

The double digit food inflation poses a great challenge for the government as it has been recorded 12.97 percent, followed by Medicare 7.77 percent, house rent 7.46 percent, apparel, textile and footwear 7.62 percent, fuel lighting 2.70 percent, cleaning, laundry and personal appearance 6.47 percent.

The only area where some decrease in inflation was witnessed is transport and communications which recorded a negative growth of 3.06 percent and recreation charges 0.02 percent during the period under review when compared with the same period last year.

In wholesale Price Index (WPI), the food inflation grew by 14.25 percent, in 2007-08 followed by raw materials 6.92 percent, general 9.28 percent, fuel lightening and lubricants 6.38 percent, manufactures 3.72 percent and building materials increased by 9.81 percent over the same period last year

The main commodities, which showed an increase in their prices under CPI during September 2007 over August 2007, are onions (53.15 percent), vegetables (22.96 percent), tomatoes (17.72 percent), potatoes (10.54 percent), wheat (9.90 percent), wheat flour (8.50 percent), maida (7.66 percent), eggs (7.16 percent), cereals (3.12 percent), mustard oil (2.92 percent), fresh fruits (2.67 percent), chicken farm (2.56 percent), sweetmeat & nimco (1.82 percent), dry fruit (1.79 percent), besan and rice (1.65 percent each), pulse masoor (1.63 percent), vegetable ghee (1.53 percent), gur (1.51 percent), cooking oil (1.41 percent), milk products (1.23 percent), milk-powdered (1.04 percent) and jam, tomato ketchup, pickles and vinegar (1.01 percent).

Business Recorder [Pakistan's First Financial Daily]


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*Small industries facing crisis due to budget policies ​* 
FAISALABAD (October 12 2007): Muhammad Hamid Sultan, Coordinator Micro Industries Development Resource Centre has said that small scale industries including sewing machine manufacturing units are facing severe crisis due to budget policies, while Engineering Development Board has taken no serious initiative to bring this labour intensive sector on the road of progress.

Talking to newsmen, he urged that while working for the stability of big industries, due attention be diverted to micro engineering development sector which badly need the patronage of EDB because in the last seven years nothing has been done for the promotion of this sector, commenting upon the adverse position of this sector.

He said that during the past years our exports of handicrafts and small engineering products declined to 78 percent whereas in the same period Indian exports in this sector reached to 3 billion dollars from 90 million dollars.

Ten years before Pakistan was exporting domestic sewing machines and now he is the largest importer in Asia for the import of domestic sewing machines having burden on foreign exchange exchequer in spite of having full human resources to compete globally.

India exporting 1.1 billion dollars sewing machine parts and he got stable establishment of micro industry. On the one side there is ministry of micro industries development which through strategic planning playing vital role for technology awareness, upgradation of this sector with financial support to meet with the global competitiveness challenges, whereas for regulatory mechanism Micro Small Medium Enterprise Development Act, Bill for the Development of Micro Industries playing remarkable role in the self sustainability of their economy, he added.

Hamid Sultan said that the role of micro industries in developing countries in this labour intensive sector is playing prominent part in poverty alleviation whereas our planners neglected this sector at large.

Rapid technical changes, shrinking economic distance, new forms of industrial organisation, tighter links between national value chains and widespread policy liberalisation creating hurdles with great intensity for small industries, the experience of the tigers of Asia indicate that coherent and carefully crafted policies can accelerate shifts in competition and promote entry into very complex and high technology, he added.

Business Recorder [Pakistan's First Financial Daily]


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*Government to provide jobs to 70,000 people: minister ​* 
LAHORE (October 12 2007): The Provincial Minister for Trade and Investment Dr Sohail Zafar Cheema said that the government has developed a plan to provide jobs to 70,000 capable people. He said this while talking to a delegation of investors and industrialists on Thursday.

According to him, seven thousand small industrial units are being established in all districts of Punjab so that poverty and unemployment can be eradicated completely from the province. The minister said the government had evolved a plan to solve problems being faced by the industrialists and investors in Wapda, telephone, Sui gas, excise and income tax departments. Through TEVTA and other technical institutions, the government wants to make Punjab a skilled and self-reliant province.

"An exhibition for local products will also be arranged by the government in foreign countries and the government is encouraging investors and industrialists at every level," he added.

Business Recorder [Pakistan's First Financial Daily]


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*Agro-based industries in remote areas to be promoted ​* 
SIALKOT (October 12 2007): Punjab government has prepared a plan for the promotion of cottage and agro-based industries in remote and neglected areas of Punjab. Official sources told Business Recorder here on Thursday that under the plan loan-facility would be extended to the SMEs, businesswomen and other interested persons for setting up new industrial units as well as up-gradation of existing industrial units in Punjab.

Sources said that people would be encouraged to establish agro-based industries in their respective areas by offering them incentives and concessions. The concept of this programme was to generate employment opportunities for the skilled and semi-skilled persons besides discouraging the rapid rural migration towards cities, sources added This proposed programme would also be helpful in broadening strong industrial base and ensuring the development process in far-off and neglected areas of Punjab.

Business Recorder [Pakistan's First Financial Daily]


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*Auto sector sales surge by 23 percent ​* 
KARACHI (October 12 2007): The cumulative sales of auto sector surged by 23 percent however, the sales of cars, trucks and tractors declined by 2 percent, 3 percent and 12 percent respectively during the first quarter of FY08. On the other hand, on month-on-month basis, the cumulative sales of auto industry fell by 5 percent, with a biggest decline registered by the car segment.

Car sales declined by 37 percent to 11,000 units in September 2007 against 17,700 units in the month of August 2007. Major reasons assumed behind the lower sales volume during the month of September were imposition of one percent special excise duty and 2.5 percent withholding tax and a subsequent increase in prices, Hettish Karmani, an analyst at Atlas Capital Markets said.

With capacity constraints, sales of the assemblers during the first quarter of FY08 surged by 2 percent only. Pak Suzuki Motor Company sales increased by a mere 2 percent to 28,400 units and Indus Motor sales surged by 4 percent to 12,800 units.

A surprise growth was witnessed in the sales volume of Dewan Farooq Motor Limited which posted a sharp rise of 25 percent to 2,900 units and managed to increase its market share during the quarter to 6 percent from 5 percent during the same period last year. The market share of Pak Suzuki Motor Limited and Indus Motor stood at 59 percent and 27 percent respectively.

Business Recorder [Pakistan's First Financial Daily]


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*Seven new coal blocks to be developed in Sindh ​* 
KARACHI (October 12 2007): The Sindh government has decided, in principle, to develop another seven coal mining blocks in Thar and other provincial coal fields to expand the operation for exploration of coal, Business Recorder learnt here on Thursday.

The development of seven new coal blocks would take the total number of coal blocks to 11 in the province where exploration activities would be undertaken. It may be pointed out that the exploration work in four coal blocks of Thar coal field have already been carried out by various international and local mining firms.

Official sources in Sindh mines and mineral development department said the authority was considering developing additional mining blocks in Thar so as to expand the exploration operation to cater the growing demand for coal being used in thermal power plants.

Comprehensive studies have been conducted to finalise the development of additional blocks and ensure the viability of coal exploration in these blocks, they added. Sources said that international tender had had been floated for expression of interest (EoI) from international as well national firms to develop two blocks in Thar. Other five coal mining blocks, which have been planned, would be developed in districts of Sanghar, Khairpur, and Tando Jam.

At present, the coal production in Sindh is about five million tonnes per year and the department has envisaged increasing the coal production to over 20 million tonnes by 2015. Thar coal-field is the largest in the country spread over an area of 9,100 sq. km located at a distance of 380-km from Karachi. It has estimated coal deposits of about 175.506 billion tonnes and considered the best for power generation.

Sources said that though preference would be given to local firms, but ironically most of the firm did not have adequate equipment required for exploration and mining of coal on larger scale under the conditions at Thar coal field. Tenders would purely be awarded on the merit and expertise of the firm, they added.

Sindh mines and mineral development department has also plans to develop soon more coal mining blocks in Lakhra coal field near Dadu and Sonda-Jheruk coal field near Thatta after carrying out studies in the said fields.

Business Recorder [Pakistan's First Financial Daily]


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*Deep-sea well drilling starts in Indus Delta ​* 
Friday, October 12, 2007

KARACHI: After missing one deadline after another for the past 16 months, Shell Development and Offshore Pakistan BV finally started drilling a deep-sea exploration well earlier this month in the Indus Delta, government officials said on Thursday. 

The location of the exploration well, Anne-X in block 2345-1, offshore Indus-E, is 200 kilometers southwest of Karachi in the water depth of more than 1,300 metres, a senior official of the Ministry of Petroleum told The News on condition of anonymity by telephone from Islamabad. 

Shell, with a 25 per cent stake, is the operator of the Joint Venture in which the state-run Oil and Gas Development Company (OGDC), Pakistan Petroleum Ltd (PPL), Premier Offshore BV and KUFPEC Pakistan BV are the other partners. 

OGDC holds 30 per cent stake in the venture followed by PPLs 20 per cent, while both Premier and KUFPEC each have 12.5 per cent share, the official said. 

Shell started the drilling of the deep-sea well in quite a hush-hush manner because of the security concerns, the official said. The entire drilling operation is spearheaded by expatriate crew including many Americans. A drill-ship of Transocean Inc, one of the worlds largest offshore drilling contactor, has been deployed at Indus Delta for the drilling. 

Earlier, Shell planned to start the drilling in August, but it missed the deadline again as it did several times in the past, he said. Industry officials said that the delay led to serious protest by the ministry and the Joint Venture partners. 

Sources said that the drilling was delayed because of the unavailability of the drill-ship which was carrying out exploration in the Indian Ocean. Later it had to be sent for maintenance, they added. The ministry official said that Anne-X is being drilled as a vertical hole down to the planned depth of 3,000 meters. This deep-sea drilling is a big challenge. State-of-the-art technology is being employed on this project. Indus Delta has many similarities with other oil and gas producing deltas like Mahakam (Indonesia), Niger (Nigeria) and Nile (Egypt) in terms of their age, sediment thickness, tectonic style and rock properties, industry officials said. 

It is considered to be prospective for oil and gas exploration considering its location. The block is spread over 7,300 square kilometers and has a water depth ranging from 200 to 1,700 meters. Indus is the last unexplored offshore places in the world where in the past 11 wells were drilled. Three of these wells had gas shows including one with oil but none with commercial gas flow, the official said. 

Indus is the second largest delta in the world after Amazon, formed by continuous flow of water from Himalayas, Hindukash and Karakoram mountain ranges, said Dr M M Rabbani, Director General National Institute of Oceanography (NIO). Indus River discharged 400 to 500 million tonnes of sediments in the basin annually. 

Thickness of delta sediment exceeding 7km is thermally mature, which suggests presence of organic content, he said, adding: Indus Delta has a sediment thickness of up to 12km. The petroleum ministry official said Anne-X is only the second deep-sea drilling endeavor in this basin. The first one, PAKG2-1, was carried out by a Joint Venture led by Total in 2003. To date, 17 offshore wells have been drilled but none proved commercially viable. 

PPL remains the only Pakistani company, which drilled an offshore well Pasni X-2 in 2005 as an operator. Saad Bin Ahmed, analyst for Capital One Equities, was skeptical about the prospects of hydrocarbons in this basin. 

PPL was also optimistic about Pasni, but nothing came out, he said. To believe (Indus) delta contains substantial oil and gas reserves is over optimism considering the past results. 

But Fawad Khan, analyst for KASB Securities, said that interest of multinationals like British Petroleum and ENI show that the region has a strong potential for the discovery of hydrocarbons. Pakistan has coastline that spreads over 1,990km. Its offshore is subdivided into Indus and Makhran deltas. 

Deep-sea well drilling starts in Indus Delta


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*Services trade: Growing imports increase deficit by 23.73 percent​*
KARACHI: Fast growing imports of services further increased the deficit in services trade by 23.73 percent during the July-August period of current financial year to $1.141 billion as compared with $922 million in the corresponding period of last year.

According to latest statistics of services trade released by Federal Bureau of Statistics (FBS) on Thursday, exports of services also grew by 12.25 percent during the first two months of this fiscal, however it was much behind 20.09 percent growth witnessed during this period of last year. Exports of services totaled to $481 million in the period under review over $428 million in the corresponding period of last year and imports stood at $1.623 billion in the said period as against $1.351 billion in the same period of last year.

In month of August 2007, the trade deficit in services widened by 51.47 percent to $593 million as compared to $392 million in the same month of last year.

Exports during the month recorded 14.82 percent growth to $260 million over $226 million in the corresponding period of previous year and were up by 17.57 percent as against $221 million in the preceding month of July this year.

Imports grew by 38.04 percent in the month under review to $854 million over $618 million in the August of last year and depicted an increase of 11.01 percent over $769 million worth of services imported in July this year. The deficit in services will continue to increase as the exports of services are unlikely to match the fast growing trend of the imports due to weak exports of services base, analysts said.

As the economy is expanding fast, the requirement of services is increasing which is to be met through import as country lacks the capability in this regard, Samiullah Tariq, Analyst at Investcap believed.

Whether it is IT, financial, shipping and construction sector, country has to rely on the imported services as well as the number of tourists visiting the country has drastically gone down in the recent years while more and more Pakistanis are visiting abroad, which is resultantly adding into the imports bill of services. On the other hand, export sector mainly relies on government services, mainly comprising the defence services, which over the years the dominated export sector. 

The countrys exports of services are confronted with a number of issues, which obstructed to tape the vast potential of the export in this sector like quality, acceptance of professional credentials, visa problems and the most importantly the image problem, which the country has been confronting since long.

Daily Times - Leading News Resource of Pakistan


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*US to provide $145m under FATA uplift plan this year​*
ISLAMABAD: The US will provide $145 million this year as the first installment of a total of $750 million it has pledged to provide Pakistan over five years for the development of the Federally Administered Tribal Areas (FATA).

The support is aimed at helping the government establish its writ in the Tribal Areas, according to a document made available to Daily Times. The funding is being provided to Pakistan for being a front line ally of the US in the war against terror. An agreement to this effect was signed a fortnight ago between Pakistans Economic Affairs division secretary and the USAID mission director here. US Deputy Secretary of State John Negroponte announced the FATA development plan and the allocation of funds needed during his visit to Pakistan in June 2007.

Daily Times - Leading News Resource of Pakistan


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*Boosting IT exports to Gulf states​*
ISLAMABAD, Oct 11: The Gulf Cooperation Council (GCC), the worlds third fastest growing IT sector, offers huge potential for Pakistan Information Technology industry, observes an official of Pakistan Software Export Board.

There would be major drives to step up IT exports to the GCC countries, the official said, adding the Pakistans IT exports to the Gulf had been increasing over the years, but there is still considerable potential to boost software exports to this region.

He said several IT companies of Pakistan had succeeded in making inroads in the fast growing IT market of the Middle East.

According to the official the Middle East and North Africa (MENA) IT market was set to grow from $6.9 billion in 2003 to $13.4 billion in 2008.

The UAE and Saudi Arabia are alone accounted for 77 per cent of the Gulf regions current annual IT related spending of $4.94 billion, which is projected to increase to $5 billion this year, the official said.

According to a statement issued here on Thursday several Pakistani IT companies had developed successful business relations and had established their offices in Middle East.

Boosting IT exports to Gulf states -DAWN - Business; October 12, 2007


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*Sindh to pay Rs 67 billion interest on foreign loans by 2050 ​* 
KARACHI (October 13 2007): Sindh government will pay around Rs 67.75 billion as interest to international financial institutions by 2050 on amounts received from these financial bodies, Business Recorder learnt here on Friday.

Sources in Sindh Finance Department said that according to an estimation the provincial government has to pay around Rs 1.5 billion every year to balance the interest rate on international loans, apart from the payment of real debt amount.

Foreign debt burden on Sindh government has exceeded Rs 123 billion during the last four to five year, which had been borrowed for execution of mega development projects in the province.

The debts have mainly been received from two organisations--Asian Development Bank (ADB) and World Bank (WB)--, of which half have been borrowed on highly inflated rates, which means that the rate of interest can be changed with variation of dollar prices in the international market.

The Sindh government has also signed several agreements with ADB and WB under which it will receive Rs 116 billion during coming years, which will take total foreign debts on the province to Rs 240 billion, sources said.

It is interesting to note that paper work and planning of some mega projects are still not complete, while the loan has already been sanctioned. "The paper work and planning of the most of projects have almost been completed and work on rest of the projects will be finalised soon," they added. However, they did not give details how the government would pay back these loans.

Business Recorder [Pakistan's First Financial Daily]


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*World Bank approves additional financing of $75 million for PPAF ​* 
ISLAMABAD (October 13 2007): The World Bank has approved additional financing of $75 million for Pakistan Poverty Alleviation Fund (PPAF). This additional financing will support new social mobilisation component and aims at mobilising community organisations and local support organisations in 25 districts, says a press release.

The PPAF has changed the lives of more than 10 million people since it began operations in 2000. Under the program, 10,000 community infrastructure projects have been completed and more than half of these provide safe drinking water or access to safe sanitation and 1.2 million micro-credit loans have been provided with 99.8 percent repayment rates and over 200,000 people have been trained in various skills.

PPAF is an apex organisation and is currently working with 70 partners organisations, who have formed over 66,000 community groups in more than 27,000 villages in 111 districts across the country.

It aims at reducing poverty in communities by providing micro credit, small-scale infrastructure, training programs and capacity building through civil society organisations.

PPAF is also helping communities in rebuilding their lives after the devastating earthquake by supporting for reconstruction of 10,000 houses and launching 350 schemes in different sectors including water supply, link roads, health and educational facilities in the earthquake affected areas.

This will lay foundation for the scaling up of PPAF poverty reduction programs under the planned Third Alleviation Fund Project and other activities; including linking with local government and development schemes of provincial and federal government.

The project will also finance a leadership cadre of 250,000 women and men who would be trained to manage the Community Organisations and Federations and to manage the linkages with outside organisations for long-term sustainability.

Business Recorder [Pakistan's First Financial Daily]


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*780 percent rise in foreign investment in cement sector ​* 
KARACHI (October 13 2007): Cement sector attracted $41.4 million foreign investment during July-August this year, depicting a surge of 780 percent against $4 4.7 million of same period of 2006-07, industry sources told business recorder on Friday.

Cement industry is rapidly growing due to huge local and international orders, as presently South East Asia region, Gulf counties and India are facing huge shortage of cement due to tremendous development work.

On the other hand Pakistani cement sector is main beneficiary of the regional cement shortage, which is filling the shortage gap by exporting cement to these countries, industry sources said.

They said that improved infrastructure, cheap labour and easy availability of raw material for cement making are some chief reasons behind this increasing foreign investment.

According to SBP statistics, foreign investment in cement sector got a raise of $36.7 million during July-August this year, as compared to same period of last year. External demands for cement from Gulf countries is growing. This has attracted foreign investors in the cement sector.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*50,000 homes to be electrified with Rs 50 million 'Solar Homes' plan ​* 
FAISALABAD (October 13 2007): The Alternative Energy Development Board (AEDB) has prepared a 'Solar Homes' programme, which will be implemented at a total cost of Rs 50.35 million, while research on development of one kw fuel cell vehicle in the country will be implemented at a cost of Rs 4.03 million.

Under this plan, more than 54,000 homes will be electrified through wind and solar sources by 2010. According to official sources, Pakistan has not so far used its solar potential to save on conventional energy, although its central and southern parts can be used for solar thermal power plants in addition to water/home heating in the north where gas is currently used for heating purposes.

The solar potential can be gauged from Jacobabad in southern parts, which is an excellent location for solar energy, as it receives 2,142 kWh solar irradiation/square metre/year, which works out at 230 KWh /m2/year.

Despite the high generation cost of solar power at present, the mid-term prospects are promising due to the expected technological improvements and economics of mass production of PVs. Recent developments point to nearly 41 percent efficiency of sunlight conversion, which could reduce the cost of generation to the order of 8 - 10 cents per unit, (as in oil-based plants).

Furthermore, the AEDB has also prepared a plan to establish a demonstration unit for solar thermal power plants technologies at an estimated cost of Rs 39.8 million. Solar Water Pumping and Desalination Unit will be established at an estimated cost of Rs 33.040 million.

For several years, official sources said, climate change has been attributed to human activity and the resulting emission of greenhouse gases (IPCC, 2007). Consequently, there has been growing focus on alternative forms of energy.

The contribution of alternative energy in the overall energy mix in Pakistan is negligible at present. However, the first wind farms are in the implementation stage. These projects will be eligible for carbon credits to reduce the tariff.

The Alternative Energy Development Board (AEDB) has been established to facilitate development of renewable energy projects. At least 5 percent of the total electricity generating capacity of the country (ie 9,700 MW) is targeted to be based on these sources by the year 2030. AEDB would also develop and implement off-grid electrification programme for rural areas. In addition, under the remote village electrification programme, the first 400 villages (54,000 homes) will be electrified through wind and solar sources by2010.

Since 2001, global wind capacity has nearly doubled to 47,760 megawatts and is cheaper than natural gas even without subsidies. On good sites, wind is even closing in on coal. The world's global sales of wind power equipment are projected to reach $49 billion a year by 2012. The global wind industry now employs well over 100,000 people, and Germany alone expects to have more than 100,000 wind energy related jobs by 2010.

Pakistan has some excellent sites to exploit wind energy. A section of the coastal area of Sindh has been identified as having wind power potential of 50,000 MW. The annual average wind speed, at 50 metre height, at Gharo, Mirpursakro and Talhar sites in Sindh is 6.5 metre/second and the capacity factors for wind turbines at these sites are estimated to be in the range of 23 to 28 percent.

With improved site studies, wider wind mapping, better project planning, R&D and learning cost of wind energy projects can be reduced to acceptable levels of around 6 cents/kWh, and even below.

Wind energy has the disadvantage of being intermittent, but it is ideal for 'pump storage' whereby it can be used for pumping water back into a reservoir of, say a hydropower plant, during periods of lean use.

Official sources said that many new technologies and sources of energy are currently being investigated. As part of Vision 2030, the development of such systems will need to be completed as a matter of priority in order to meet the looming oil crunch. In all cases, the true costs will need to be worked out for all competing forms of present and future energy--coal and its derivatives (health costs), hydroelectric plants in the Northern Areas (contribution to and danger from seismic activity), nuclear (waste handling, de-commissioning, and availability of fissionable material), solar cells (monopolies, and toxic wastes from production), fuel cells (secondary source costs), wind energy (low availability and storage issues which it shares with solar), fusion (time factor), ethanol (more sugarcane/biomass).

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Foreign engineering firms may capture Pak market ​*
Sunday, October 14, 2007

LAHORE: With a contribution of less than three per cent to exports, the local engineering sector mainly comprising small and medium enterprises is likely to surrender the domestic market to foreign companies as the economy further opens up. 

Engineering experts have urged entrepreneurs and government planners to coordinate in facilitating the local engineering industry by lowering the cost of doing business, providing increased access to funds, capacity-building to connect globally and improving global marketing. 

They pointed out that the exports of engineering goods had not increased in line with the increase in total exports during the past one decade. The share of engineering goods exports, they added, was still less than three per cent of the total exports. The engineering sector has been the real growth promoter and accounted for over 60 per cent of the total global trade. 

They said exports from the engineering sector in Pakistan were limited to the electrical and mechanical industry only and pointed out that engineering and construction services, engineering design services, energy and telecom were also part of the engineering sector, besides light engineering (for example fans), home appliances and auto part sub-sectors, which should lead growth in exports. 

Engineering experts considered high interest rates as a small component in the cost of doing business in Pakistan and said that the cost of engineering goods increased due to wastages that occurred owing to unscheduled and frequent electricity breakdowns.

Also, closure of industries for long periods due to official holidays pushed up the cost and they cited the example of four straight holidays announced on the occasion of Eid this year.

They said no local construction company had the capability to build a 70-storey building, encouraging construction companies from Bosnia, Turkey, Dubai and Malaysia to start mega residential and commercial projects. They said these companies were likely to stay on after the completion of projects and grab a share from local construction companies for smaller projects as well.

They said the construction industry in Pakistan would have to gear up to thwart the challenges posed by the foreign construction companies in the future.

They said the situation in the automobile industry was not as bright as was being propagated by the planners. Pakistan is saving just 30-40 per cent of foreign exchange on locally-produced cars as indigenisation has not been carried out on a rational basis.

They pointed out that although the government claimed that the local car industry had indigenised 53 to 73 per cent of auto-parts, their value was too small even for cars with 73 per cent deleted parts when compared to the cost of 27 per cent parts that had to be imported.

In other words, even for the highest deleted car models the country has to pay over 50 per cent in foreign exchange. 

Engineering experts also blamed entrepreneurs for their failure to raise funds through secondary markets. No engineering concern in Pakistan has the capacity to meet even 25 per cent requirement of any component required by any leading global car-maker. They said the inability to reach global markets also increased the cost of production. 

The engineering experts, however, appreciated the governments policy of entrusting the responsibility of engineering sector development to the private sector. They said the former chief executive officer of the Engineering Development Board, who belonged to the private sector, took bold steps to encourage local entrepreneurs to participate in international engineering fairs and broaden their horizon.

However, the EDB has been working without a head for eight months as the private sector CEO was forced to resign due to a non-cooperative bureaucracy. The government has once again appointed a private sector entrepreneur as the EDB head who would again need compliance from the bureaucracy which should be ensured.

Foreign engineering firms may capture Pak market


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## Neo

*KSE-100 jumps 1,600 points in Ramazan *​
Sunday, October 14, 2007

KARACHI: Ramazan remained a blessing for equity investors at the Karachi bourse that saw benchmark KSE-100 index gaining 1,600 points (i.e. 12.5 per cent) in with a surge of Rs662.5 billion in market capitalisation.

Ramazan is the ninth month of the lunar year and the month of fasting for the Muslim faithful. It started on September 14 with the sighting of moon in Pakistan and ended on October 13 this calendar year 2007.

During this month, the chief benchmark KSE 100-share Index augmented by 1,599.90 points or 12.437 per cent to close at 14,463.78 points at the last working session ahead of Eid-ul-Fitr, held on Thursday (Oct 11).

The 100-Index breached through three major psychological barriers successfully during Ramazan i.e. 13,000 points, 13,500 points and 14,000 points. It also crossed the mark of 14,500 points threshold, but never succeeded to sustain with the sessions concluded.

The lunar month resumed as many as 19 day-long trading sessions at KSE, out of which 14 closed in green territory, while remaining five sessions finished up their day businesses in red. Therefore, the 100-Index registered a sum of 1,813.07 points with 14 sessions closing in positive while remaining sessions closing in opposite column minimized the month high gains by 213.17 points.

The free-float market capitalisation based 30-Index surged by 2,138.69 points or 13.676 per cent to 17,775.94 points during the same corresponding month.

Despite of the short-span trading sessions held during the outgoing month, KSE managed to record comparatively good turnover. The average daily turnover stood at 244.402 million shares with a total trade of shares of the entire month at 4.643 billion shares.

Heavy tactical buying poured in more Rs662.496 billion or 17.597 per cent in the overall market capitalization to stand at Rs4.427 trillion to date.

The gradual elimination of the dubious politics in the country invoked investors from all walks of life came in active for accumulation of stocks. Foreign portfolio investors were prominent among them with high inflow of fresh funds.

Balances in the Special Convertible Rupee Account (SCRA) turned positive for the first time during Ramazan from standing negative this fiscal year 2008. At present, the inflow of foreign portfolio investment stood over US$151 million to date (according to SBP website) from US$60 million in negative a couple of days before the Ramazan started. 

SCRA is foreign funds account maintained by SBP. Funds in this account are invested or disinvested at the countrys stock exchanges and various government schemes, it is learnt.

The market participants calculation of witnessing a definite possible power-sharing deal between Gen Musharraf and Benazir Bhuttoo triggered massive buying on across the board.

Investors continued to advance their positions on across the board following everyday changing political scenario favoured the government amid market participants.

It was all in line with the market expectations that happened on political front. For example (1) Supreme Court (SC) rejected all petitions against Gen. Musharraf and allowed him to contest presidential election in army uniform; (2) the appointment of Gen. Pervez Ashfaq Kiyani as Vice Chief of Army Staff and then Chief of Army Staff when Musharraf doff his army uniform in near future; (3) the general amnesty to all politicians for the period from 1986 to 1999 vide National Reconciliation Ordinance (NRO) and last but not the least presidential election held on due date on October 06 after SC permission

Now President Musharraf had been re-elected for the next tenure with majority votes, according to the media reports. And the power-sharing deal between Benazir Bhuttoo and President Musharraf had already been announced done. This newly developed situation turned uncertainty on the political front into the investment-friendly atmosphere at KSE.

Almost all the favourite stocks in the limelight in financial, energy, fertilizer and telecom sectors were accumulated extensively. Therefore, OGDCL, PPL, POL, Engro Chemical, FFBQ, Lucky Cement, DG Khan Cement, NBP, MCB Bank and many more in front line and second tier stocks closed with inflated share price.

As far as the outgoing week (Oct 08 to 12) performance is concerned than KSE-100 index remained bullish for the seventh consecutive week and touched its all-time high at 14,486 level on Oct 09, 2007. During the outgoing week, market gained three per cent or 364 points to close at 14,463. Amid average daily volume reached its 12-week high and stood at 334 million shares.

KSE-100 jumps 1,600 points in Ramazan


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## Neo

*Afghan trade team to visit Lahore ​*
LAHORE (October 14 2007): A high level private sector trade delegation from Afghanistan will visit Lahore after Eid-ul-Fitr to import Pakistan made diesel engines for agricultural purpose. Chief executive officer KAM Engineering, Engg Khalid Saeed Khan told APP here on Saturday that the Pakistan made KAM diesel engines have become very popular in Afghanistan, compared to all brands of those made in India, and are being successfully used for agricultural purposes.

He said the Afghan team will visit the state of the art plant and see the engine assembly process, using indigenous technical know-how and expertise, which has helped to control the price of the product with minimum overhead expenses.

In their war torn country, the Afghans are now inclined to bring maximum area under cultivation to meet the ever increasing need for food grains. For this purpose, they need quality agri inputs and implements, and Pakistan made products offer the guarantee to compete in terms of quality and price, said the firm's director marketing, Sh Amin Akhtar.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Greek Company awarded contract for 220 megawatts power plant Phase-I ​* 
KARACHI (October 14 2007): The Karachi Electric Supply Corporation (KESC) has awarded the contract for Phase-I of the 220 MW power plant to METKA, EPC contractor, a Greek Company of international repute, whereas Phase-II for 565 MW is under process, it is reliably learnt.

The General Electric (GE) are the manufacturer of the 220 MW power plant consisting of four GTs of 50 MW each and one steam turbine would add approximately 20 MW. The EPC cost of the project is around 186 million dollars including approximately 11 million dollars for chiller equipment.

According to a source in KESC, the bids for new power plant Phase-II of approximately 565 MW are in the process of evaluation and the contract is likely to be finalised shortly. The new power plant project Phase-I and Phase-II would be financed through medium and long-term financing facilities from local and international financial institutions, in addition to equity injection, as under:

International Finance Corporation (IFC) 125 million dollars, Asian Development Bank (ADB) 150 million dollars, syndicate of local banks Rs 12,500 million, and equity financing by KES Power and Government of Pakistan through Redeemable Preference Shares (RPS) Rs 6,000 million.

These financing arrangements would be utilised in a phased manner according to the requirement of funds for Phase-I and Phase-II of the new power plant. The cost estimate and efficiency level of the new power plant favourably match rather excel the benchmarks set by National Electric Power Regulatory Authority (Nepra) and would as such be approved by Nepra.

The evaluation of bids had been carried out in a highly professional manner by the consultants of international repute. The contract with METKA has been legally examined through in-house lawyers as well as external experts on contract laws aiming at safeguarding interest of the Company.

The setting up of a new power plant had been one of the top priority areas of the new management from day one and various proposals had been under consideration. Siemens power plant of 830 MW was also evaluated but could not be finalised because of unfavourable delivery schedule. Advance payment of Euro 25 million to Siemens has been refunded except retention money of Euro four million, which would be received back shortly.

At the last extraordinary general meeting of KESC Ltd, the Chairman had informed that 75 percent of equity injection through RPS, viz Rs 4.5 billion would be contributed by the new owner. This is in addition to initial investment of 265 million dollars at the time of privatisation of the Company in November 2005.

The medium and long-term financing facilities of upto Rs 37 billion being availed from local and international financial institutions were successfully managed with the sponsors' support and guarantee. Insofar as retention of KESC shares by the new owner is concerned it is mandatory for them to hold majority shares in the capital of the Company, following the agreement with Government of Pakistan.

The extraordinary general meeting had resolved and approved issuance of additional share capital to IFC and ADB without making a right share. The turn around strategy devised and actively pursued by KESC management with the complete support of major shareholders, is likely to produce improved operational and financial results which would benefit all the stakeholders, especially the minority shareholders during the future years.

The subscription of shares by IFC and ADB, the Chairman believed, would send a positive signal to all stakeholders. Some of the benefits that will accrue to KESC would be that the equity investment from multilateral institutions would greatly enhance KESC's image and profile.

KESC could draw upon the resources, expertise and best practices from these financial institutions, as they have considerable utility experience in other countries. The services offered by IFC include a tariff rationalisation seminar based on experiences from financing of electric utilities eg in Brazil and India. Besides this a grant of seven to eight million dollars is being provided for financing low-income connection regularisation schemes.

Improvement in corporate governance, as these financial institutions will independently assess the KESC operations and will provide feedback for corrective actions, thereby improving the monitoring, financial reporting and evaluation system.

The rate offered on the long-term facility has been reduced during the construction phase and for the remaining period this saving in interest cost is considered as a premium paid by IFC/ADB for obtaining the loan to equity conversion option.

The estimated saving from reduction in interest rate would be 14.50 million dollars, and estimated saving due to reduction in outstanding balance, assuming option is exercised in 2010 would be 14.00 million dollars. The total savings would thus be 28.50 million dollars.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Exports miss another target, fall short by $320m​*
* First quarter of the current fiscal year saw exports worth $4.456 billion against a target of $4.776 billion

By Sajid Chaudhry 

ISLAMABAD: Countrys exports have missed their target for the first quarter (July-September) of current fiscal year 2007-08 by $320 million, a senior official told Daily Times on Saturday. 

Trade managers of the country had fixed a target of $4.776 billion for exports and total exports during the first quarter amounted only to $$4.456 billion, the official explained. 

Export target fixed by the Trade Development Authority of Pakistan (TDAP) that is headed by federal minister for commerce, serves as the bench mark for accessing the export performance of the country, so that actual export target is realised after ensuring that is meets the projections made on month by month basis. 

The trade managers of the country have not been able to meet individual monthly targets from the start of this fiscal year. Total exports during the first month of July stood at $1.486 billion as against the monthly target of $$1.523 billion leaving a shortfall of $37 million in that month. 

A shortfall of $163 million was witnessed in exports during the month of August when the total exports of the country managed to reach at $1.477 billion as against the fixed monthly target of $1.640 billion. 

Exports fell short of another $120 million during the month of September when actual exports managed to reach $1.493 billion against the fixed monthly target of $1.609 billion. 

On the external side, the Asian Development Bank in its Asian Development Outlook Update 2007 has projected relatively slow growth in exports because of continuing weakness in textiles. Whereas it projects elevated import growth that will reflected in a larger oil bill and continued expansion in investment. The bank projects the trade deficit to remain heavy at $11.4 billion or 7.1 percent of GDP. 

While the net services and income deficits will continue to widen, workers remittances, targeted to reach $6.2 billion, should hold the current account deficit to $8.8 billion, or 5.5 percent of GDP, in fiscal year 2007-08, it said. 

International experts say that there would be a slight deceleration in Pakistans economy which would have negative impact on countrys exports due to the factors like, tightening stance of the monetary policy to contain consumer demand; high international oil prices; continued slow growth in exports, due mainly to greater international competition in the textile sector; and expected slow growth in the US economy (Pakistans largest trading partner) in JulyDecember 2007.

An International Monetary Fund mission which held discussions with the Pakistani authorities on recent economic developments, prospects, and policies under the annual Article-IV Consultations welcomed the measures announced in the recent monetary policy statement of the State Bank of Pakistan, including the stated intention to reduce the role of the central bank in financing the government and providing export refinance. It recommended a flexible approach to the determination of interest rates to help achieve the inflation objective and reduce import growth. 

The mission underscored the need for an appropriate policy mix between monetary and fiscal policies in bringing down the external current deficit. In particular, it stressed that further fiscal consolidation, starting in 2007-08, would contribute significantly to reducing the external current deficit while lessening pressures on real interest rates.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistani cement set to rock Indian market​*
NEW DELHI: Pakistani cements arrival in India is set to prove a boon for the construction industry. Pakistani cement, which is scheduled to hit Indian market by the end of October, is expected to lower the cement prices here considerably with Pakistani cement bags being priced at Rs 165 per 50 kg. Indian cement is currently priced at Rs 230 to Rs 265 per 50 kg bag.

Because of the rapid rise of the Indian rupee against the dollar, Pakistani companies have large room to price aggressively to gain a market share. A representative of Pakistans Bestway Cement Company told reporters here that a 100-tonne sample consignment was arriving through rail at Amritsar in a few days. We already have orders for about 15,000 tonnes from some real estate players, he said. The company recently received the certification of the Bureau of Indian Standards (BIS). 

Bestway Cement along with another Pakistani company DG Khan Cement is flooding the Indian market with 35,000 tonnes of cement by the end of this month. Experts here believe though the quantities are small given the 155 million-tonnes a year requirement in the Indian market, their lower prices could force Indian cement producers to drop their prices. India has granted licences to 18 cement companies in Pakistan, Bangladesh, Dubai and Bhutan after cement import regulations were relaxed earlier this year. 

Over the last year, the Indian government has announced several incentives including lowering of excise duty to lower cement prices, but they have little effect. Indian industry hopes that Pakistani cement wil succeed where Indian government incentives failed in lowering the prices of cement.

Daily Times - Leading News Resource of Pakistan


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## solid snake

*Industrial units in ROZs to follow labour laws*​
By Sabihuddin Ghausi

KARACHI, October 13: The leaders of American trade unions who have an influential role in US legislation that include granting market access to key allies, like Pakistan, want enforcement of international labour standards and compliance of Decent Work in the industrial and business houses to be set up in the proposed Reconstruction Opportunity Zones (ROZs).

The zones are being planned to be set up with American assistance all along on Pakistan-Afghanistan border in the NWFP and Balochistan.

President Bush has promised a duty-free market access of products from such ROZs in his country as Americans have done similarly in West Bank of Jordan and a few African and South American countries to generate employment and contribute to economic prosperity of the friendly companies and faithful allies.

These industries must adopt international labour standards, workers be paid proper wages, full freedom of association be guaranteed to workers and that there should be no exploitation of workers, said Ms Thea Lee, the Policy Director of the Legislation Department of AFI-CIO, told a delegation of NWFP investors and tribal leaders that visited US on an ROZ advocacy mission. The President of Karachi Chamber of Commerce and Industry, Mr Majyd Aziz, was with this delegation as its consultant advisor and involved in the negotiations.

Full support of American workers for ROZs in Pakistan is imperative, Majyd Aziz said.

He said that Pakistan wants a level-playing field with other competitor countries in the US market.

Since our regional competitors are having an edge on us in US market, we have advocated for same advantages, he said.

The American leadership also explained in detail the concept of ROZ to the NWFP investors during the meetings.

The idea is to provide employment opportunities to women living in villages, the KCCI president said.

He explained that setting up of ROZs also intend to attract student registration in vocational institutions and schools.

Quite a few businessmen in Karachi have visited the ROZs set up at the West Bank in Jordan and Palestine where a large number of Arab women, mostly Palestine Christians, have found employment opportunities and immensely improved on their economic prosperity.

Businessmen also quote Liberian trade zones as another success story where women are playing a key role in changing and bringing sense in a violence-ridden society.

But businessmen doubt on success of ROZs in the Federally Administered Tribal Areas (FATA) in the NWFP and Balochistan on Pakistan-Afghanistan border as women will never be allowed to become economically productive members of the family.

Even now in the 21st century, the women in the FATA are stopped from casting their votes in general elections, a businessman pointed out who said it is not only in far-flung areas of FATA but right here in the economic power house Karachi.

In Pashtun settlements of Banaras Colony and other areas, the area elders decide on elections eve that their women will not go to polling stations to cast votes.

How can you imagine these people will allow their women and girls to work in a garments factory even when there is a pick and drop facility.

Many South Asian and Far East Asian countries are on path of progress because their women played a key role in South Korea, Singapore, Malaysia, Thailand and now in Bangladesh and India.

Industrial units in ROZs to follow labour laws -DAWN - Business; October 14, 2007


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## Neo

*SCRAs hit new high of $151.035 million ​* 
KARACHI (October 14 2007): After witnessing a fresh inflow of 65.820 million dollars on October 11, the special convertible rupee accounts (SCRAs) balances reached the new high level of 151.035 million dollars during the current fiscal year.

The fresh inflow was witnessed mainly from the UK, US and Switzerland as the investors from these countries were keen to invest more in the Pakistan's equity market, analysts said. Out of the total fresh inflow of 65.820 million dollars, while 32.668 million dollars came from the UK, 27.217 million dollars from the US and 7.513 million dollars from Switzerland only on October 11.

On the other hand, an outflow of 1,013,441 dollars and 5,65,727 dollars was witnessed by Hong Kong and Singapore on the said date. According to the State Bank of Pakistan figures, a total of 287.258 million dollars came during the first 11 days of the current month, while the foreign investors withdrew 130.556 million dollars during this period and cumulative net inflow stood at 156.702 million dollars by October 11.

During the current fiscal year, a total of 230.722 million dollars came from the US followed by 26.480 million dollars from Kuwait, 14.823 million dollars from Hong Kong, 6.095 million dollars from Camyan Island, 5.363 million dollars from Luxembourg and 1.990 million dollars from Chile. The investors from Bahrain invested 331,470 dollars, Qatar 89,834 dollars and Japan 84,671 dollars.

On the other hand, the UK investors withdrew 75.085 million dollars from the country's equity market during the current fiscal year till October 11 followed by 27.507 million dollars by Australia, 23.497 million dollars by Singapore, 3.609 million dollars by the UAE, 2.193 million dollars by Switzerland, 1.990 million dollars by Chile, 1.757 million dollars by Germany, 1.200 million dollars by France and 93,657 dollars were withdrawn by B. V. Island.

"The foreign investors' confident has began to flourish again after re-election of Pervez Musharraf as President of Pakistan", Chief Operating Officer (COO) of JOV & Co Ahmed Nabeel said, adding that the ongoing economic reforms and privatisation process would continue after the re-election of Pervez Musharraf. He said that the foreign investors were well aware that there was a huge potential in the Pakistan's equity market.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

solid snake said:


> *Japan to invest $1.7bn in copper mines*​
> TOKYO, Oct 13: Two Japanese mining firms will invest up to $1.7 billion in jointly developing copper production bases in Peru and Chile to secure supplies amid growing demand worldwide, a report said on Saturday.
> 
> Nippon Mining and Metals Co. and Mitsui Mining and Smelting Co. plan to build the facilities by 2011 to produce up to 250,000 tons of copper ore a year, the leading business newspaper Nikkei reported.
> 
> The project will be undertaken by Pan Pacific Copper Co., a joint copper smelting venture set up by the two firms last year.
> 
> It will be the biggest nonferrous metal mining endeavour by Japanese companies, the report said.
> 
> Copper is a main raw material for electrical wires, cellular phones, personal computers and automotive electronics.
> 
> Pan Pacific Copper will develop mines wholly owned by the two firms -- one in Quechua in the Peruvian province of Cusco and the other in Caserones in northern Chile.
> 
> In Quechua, production facilities will be built as early as 2010 to produce 70,000 to 100,000 tons a year. The entire output will be shipped to Japan to be smelted into copper bullion, which will be mostly supplied to domestic users, the report said.It added that copper ore production at the Caserones mine would begin in 2011.
> 
> The annual ore output of 110,000 to 150,000 tons will be processed into bullion at a smelting plant to be set up there for sales worldwide.
> 
> Pan Pacific Copper, which also produces copper ore at other mines, would boost its annual procurement to 350,000 tons when the new mines go into full swing, the daily said.
> 
> Japans copper bullion consumption stands at roughly 1.25 million tons a year, Nikkei said.
> 
> Worldwide consumption of copper amounted to about 17 million tons in 2006, up two percent from 2005, it added.
> 
> Pan Pacific Copper shares 40 per cent of the domestic market worth one trillion yen.AFP
> 
> Japan to invest $1.7bn in copper mines -DAWN - Business; October 14, 2007



Solid,

How is this news related to Pakistan???


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## Neo

*Pakistan approves Khalifa Point refinery near Hub​*
By an OGJ correspondent

KARACHI, Oct. 15 -- Pakistan has approved construction of the $4-5 billion coastal refinery project at Khalifa Point near the Hub area of Balochistan province. 

Ashfaq Hassan Khan, briefing adviser to the finance ministry, said preliminary work has begun on the refinery, which will have a capacity of 200,000-300,000 b/d. 

The facility would be established as a 74:26 joint venture of Abu Dhabi-based International Petroleum Investment Co. (IPIC) and Pak-Arab Refinery Co. The project is expected to be completed and commissioned by first quarter 2011. 

The Ministry of Petroleum and Natural Resources was authorized to sign the implementation agreement with IPIC within a month. 

Various concessions had been announced for the project, including a 20-year tax holiday, exemption from 5% workers' profit participation, and exemption from 0.5% services charges under the export processing zones rules. 

Pakistan also advises Oil & Gas Development Corp. to dedicate at least 80% of the liquefied petroleum gas produced from Chanda field for distribution in the Federally Administered Tribal Areas of northern Pakistan. 

Pakistan approves Khalifa Point refinery near Hub - Oil & Gas Journal


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## solid snake

Neo, my bad. I thought they were going to invest it in Pakistan, but apparently they're doing it in Chile. Please delete that post.


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## Neo

*Pakistan eyes the $13.4bn Middle East IT market​*
Pakistan has launched a major drive to step up IT exports to the Gulf countries.

United Arab Emirates: Sunday, October 14 - 2007 

The six Gulf Cooperation Council (GCC) countries offer huge potential for Pakistan IT industry, official of Pakistan Software Export Board said in a statement. 

Pakistan's IT exports to the Gulf had been increasing over the years, but there is still considerable potential to expand IT exports to GCC countries. Several IT companies of Pakistan have succeeded in making inroads in the fast growing IT market of the Middle East. 

Currently, it is the third fastest growing IT market in the world, after India and China. 

Market Information Estimates show that the Middle East and North Africa (MENA) IT market is set to grow from $6.9bn in 2003 to $13.4bn in 2008. Between the GCC countries, UAE and Saudi Arabia alone account for 77% of the Gulf region's current annual IT spend of $4.94bn, which is projected to increase to $5bn this year. 

Official stated that several Pakistani IT companies have developed successful business relations and have established their offices in Middle East. 

Amongst those Pakistani IT companies, which have made inroads in the Saudi Arabian IT market, ZRG International is the prime example due to its selection by Smart Link Inc. (Saudi Arabia) to deliver flexible open standards based Intel CTI technology. Smart Link is a rapidly growing contact center outsourcing service provider, established as a joint venture by Saudi Arabia's two prestigious business groups, namely Al-Khaleej and Al-Alamia. 

By winning the first phase of this multi-million dollar contact center expansion project, ZRG has clearly demonstrated its capability to successfully deliver the quality expected by the international IT customers. 

Another credible name in the global IT market, TPS is serving 25 countries across the Middle East, Asia and Europe. The TPS technology solutions are helping banks in Bahrain, Qatar and Oman to develop EMV-compliant ATMs, thus assisting them in avoiding any likely penalties, which could be levied for non-compliance by end of the year. In the years to come, UAE is likely to be the next country to mandate EMV. 

Software export activities by Pakistanis companies are not only enhancing Pakistan's image abroad, but are also having a positive impact on the IT export related earnings of the country. 

PSEB official stated that Pakistan IT industry has experienced a tremendous growth of 60 percent in the last fiscal year, while the industry size is estimated to be at US$ 2.8 billion, according to BPM 6. At current rates of growth, it is expected that industry size will surpass eleven billion dollars by 2011.

Pakistan eyes the $13.4bn Middle East IT market | Pakistan Software Export Board


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## Neo

*Next KSE target could be 15,000 if all goes well*​
15 October 2007 

KARACHI  The KSE 100-share index last week soared to an all-time high of 14,400 points and analysts predict its new target could be 15,000 if all goes well with the background news both on the political and legal fronts.

The post-Musharraf unofficial election rally and the buying euphoria associated with it on the perception of continuation of the existing economic and financial policies could push the index to new peak level. The market talk of 15,000 plus level may not be irrelevant but it is linked to the apex court ruling on Musharraf's eligibility as a presidential candidate, some leading brokers believe.

But some others said the entire affair appeared to be "inspired" by some quarters who have a stake in it but ground realities are silent on the issue and the current market run-up.

"But when the money comes in in tonnes, most of the basic fundamentals take a back seat ignoring the irritants and this is what is happening in the market," said analyst Ahsan Mehanti.

After having hit an all-time high of 14,536.49, the KSE 100-share index at 14,300 with a market capital at Rs4.4 trillion indicates that a strong foundation has been laid for another boom within the current year, floor brokers said. The market's bullish reaction was also well reflected in the KSE100-share index, which posted a fresh sharp rise at 14,366.99 points, surpassing its previous all-time high record set in March this year at 14,236 points.The total market capital at Rs4.4 trillion or $74 billion and an average daily volume figure of well over 300 million shares reflect investors' confidence and the market's future outlook.

Much of the rise in the index was contributed by half a dozen leading base shares, notably National Bank, Pakistan Petroleum, Bank AlFalah, Askari Bank, Bank of Punjab and OGDC. The KSE 30-share index rose by 386.91 points at 17,718.51 points.

"The progressive rise in the single session volume to well over 300 million shares reflects the future viability of the share market," analysts said. 

Khaleej Times Online - Next KSE target could be 15,000 if all goes well


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## Neo

*Only 27 greenfield projects set up from $4.27bn FDI in Pak ​* 
In India, 981 such projects established from $16.88bn FDI; greenfield projects pertain to development of undeveloped areas

Wednesday, October 17, 2007

LAHORE: Pakistan has managed to establish only 27 greenfield projects from total foreign direct investment (FDI) of $4.273 billion it received in calendar year 2006. In comparison, 981 greenfield projects were established in neighbouring India from FDI of $16.881 billion during the said period.

The World Investment Report, released on Tuesday by the United Nations Conference on Trade and Development (UNCTAD), revealed these figures.

The report said global FDI soared to $1,306 billion in 2006, recording an increase of 38 per cent over previous year. South Asia received $22.274 billion in FDI in 2006, which was more than double the investment of $9.866 billion it received in 2005.

The FDI inflows to Pakistan increased by less than 100 per cent from $2.201 billion in 2005 to $4.273 billion in 2006. The FDI inflows to India, on the other hand, rose by 250 per cent from $6.676 billion in 2005 to $16.881 billion in 2006.

The report gave details of greenfield projects established from 2002 to 2006 in all the regions. These projects generate additional employment which is not the case in the acquisition of already established projects by foreign investors.

The number of greenfield projects established in Pakistan was 13 in 2002, 23 in 2003, 20 in 2004, 67 in 2005 and 27 in 2006. That meant the total number of greenfield projects during the last five years in Pakistan was 152.

In neighbouring India, 246 greenfield projects were set up in 2002, 453 in 2003, 696 in 2004, 590 in 2005 and 981 in 2006. Thus, India managed to develop 2,966 such projects during the five-year period from 2002 to 2006.

It is worth noting that the total number of greenfield projects established in Pakistan was much less than the projects attracted by India even in 2002 when it set up the lowest number of such projects.

Another point that needs attention is that the FDI for greenfield projects in Pakistan remained inconsistent during the last five years while India managed to attract higher number of foreign investors for these projects every year, though there was a slight decline in 2005 which was more than compensated in 2006.

There were five cross-border mergers and acquisitions in Pakistan in 2004 which increased to six in 2005 with another six Pakistani companies acquired by foreign investors in 2006. Foreigners acquired 80 Indian companies in 2004, 126 in 2005 and 163 in 2006.

Again there is a progressive increase in cross-border mergers and acquisitions by foreigners in India while the process remained stagnant in Pakistan.

Pakistani investors purchased/acquired three foreign companies in 2004 and none in 2005 and 2006. Indian investors, on the other side, acquired 64 foreign companies in 2004, 91 in 2005 and 133 in 2006, showing a consistent increase. These included some of the biggest acquisitions worth $32 billion by Mittal of a European steel company and $9 billion takeover of another steel company by Tata.

The report revealed that developed economies were the main recipients of FDI inflows which increased by 45 per cent in 2006 to $857 billion The US regained its position as the main destination for FDI inflows replacing Britain which was the leader in 2005.

The FDI inflows to developing economies reached a record $379 billion, registering an increase of 68 per cent over previous year. The largest investments in this category went to China, Hong Kong and Singapore.

Only 27 greenfield projects set up from $4.27bn FDI in Pak


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## Neo

*Pak external debt at $36.9bn, up from $33.6bn in 99 ​* 
This gives a lie to govts claim country has come out of WBs, IMFs clutches; country borrowing more and more from WB, ADB

Wednesday, October 17, 2007

KARACHI: The economic managers of the present government have continuously been making claims that the country has come out of the clutches of the foreign lending agencies, especially the World Bank (WB) and the International Monetary Fund (IMF). The present government has also made claims that inflation has declined and the country would no more require further assistance from the WB and the IMF.

The factual position, however, is entirely different.

According to prominent economists, Pakistans official external debt has not gone down since 1999 although it has received record aid, investments and remittances. It has gone up to $36.9 billion from $33.6 billion in 1999 despite receiving at least $10 billion in economic, military and development aid from the United States, over $6 billion from privatisation proceeds and a relief of $1.6 billion in loan write-offs by foreign governments during the last seven years.

The rescheduling of Paris Club debt provided an additional relief of $1.2 to $1.5 billion annually in terms of debt service payments. Is the governments debt management policy is sound and successful as it claims or a historic opportunity to restructure the countrys high debt levels has fallen victim to political expediency or a false sense of achievement, questioned an economist. 

Even after having received such generous assistance, Pakistans external debt to GDP ratio is 28 per cent, slightly worse than Africas 26.2 per cent, which also happens to be the average for all the developing countries. The average external debt to GDP ratio of all emerging markets declined from 42.1 per cent in 1999 to 26.2 per cent in 2006, underpinned by strong growth in the global economy and record investment flows into developing countries.

The economists argue that former prime minister Nawaz Sharif left a heavy external debt burden at 53 per cent of GDP and the current levels represent a substantial improvement. The net debt flows (disbursements minus repayments) into Pakistan during 1990-1999 aggregated $5.4 billion compared with $1.1 billion during 2000-2006.

Hence the growth in the debt slowed down during the last seven years. However, post-9/11, Pakistan received generous foreign aid as well as much higher levels of foreign direct investment. Remittances averaged around $4 billion a year during 2003-2006 compared with an average of $1.5 billion in the 1990s.

Nevertheless, Pakistans liquid foreign exchange reserves, after jumping to $10 billion-level in 2002-03, have more or less stayed around that level on average. The foreign exchange reserves of even Sub-Saharan countries (excluding South Africa and Nigeria) doubled to $50 billion during the same period. Brazil and Argentina repaid all of their $25 billion debt, by utilising their foreign exchange reserves, to the IMF in early 2006 to rid their countries of its influence.

In contrast, Pakistan has not been able to reduce the external debt burden in absolute terms or build up its foreign exchange reserves. In fact, it has become the fourth-largest borrower of the World Bank and the fifth-largest recipient of American aid. This shows its continued reliance on foreign governments and multilateral institutions, despite declarations of economic sovereignty, and a failure to mobilise domestic resources to pay for the development expenditure. Leaving aside all the technicalities and vague statements, there has been no convincing explanation for not having used the privatisation proceeds to reduce the external debt in a completely transparent manner.

Some policy-makers argue that it is acceptable to borrow if the borrowing is for productive purposes. That is theoretically correct. However, if the borrowing record is littered with corruption and wasteful spending, and major sectors of the economy (large agriculturists, stock brokers, property barons, etc) do not pay any tax at all, the proposition becomes quite debatable and the motives questionable.

The government claims that it no longer borrows from the IMF and does not carry around a begging bowl. This is quite misleading because it has been borrowing more and more from other multilateral institutions like the World Bank and the Asian Development Bank (ADB). The borrowing from multilaterals has outpaced the borrowing from the Paris Club since 1999-2000. Its share in total public and publicly-guaranteed debt has increased from 37.5 to 50.2 per cent in 2006.

While negating the claims of breaking the begging bowl by the present government the World Bank has recently unveiled a lending programme of up to 6.5 billion dollars for Pakistan under a new four-year aid strategy showing a significant increase in funding aimed largely at beefing up the countrys infrastructure. 

According to a Washington-based institution, the 2006-2009 strategys blueprint, discussed by the Bank envisaged a lending programme of up to 6.5 billion dollars for Pakistan during the period. 

The new lending shows a substantial increase over the previous period, the WB claimed. 

According to WBs sources, Pakistan received about 2.73 billion dollars from the Bank over the last four years.

As the government is constantly telling lies to the people of Pakistan, the economists believe that it is just like pulling wool over the eyes of the people of Pakistan.

But the biggest question is: where all the money has gone? 

Pak external debt at $36.9bn, up from $33.6bn in 99


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## Neo

*The economy under Pervez Musharraf​*
This may be a good time to take stock of the economys recent performance. When on October 12, 2007, General Pervez Musharraf completed the eighth year of being in total power, the military had governed the country for a total of 32 years.

During this time the economy grew at an average rate of 6.3 per cent a year. For the remaining 28 years, the economys performance was less impressive, the GDP increased at the annual rate of 4.7 per cent.

Does this mean that the military is a better manager of the economy? This question does not have an easy answer but it can begin to be addressed by looking closely at the performance of the economy under General Musharraf.

This article is an attempt to take a look at how the economy was governed in 1999-2007 period. The conclusion that I will reach after asking a number of questions and then providing brief answers to a few of them is that while the economy performed well under the general, it was not due to any deep structural change brought about by the regime in power. Luck and a change in the external environment were important determinants of growth.

What are the important questions we need to raise at this time as we begin to assess the performance of the economy under the military? I will begin with six of them. Are the people better off after eight years of military rule compared to their situation when the military returned to power?

Has the economy, as a result of the policies adopted during this eight year period, now proceeding on a trajectory of reasonably high level of growth on which it can remain, no matter what happens to the flow of foreign assistance?

What kind of structural changes have been introduced and will these strengthen the economy over the long run? Is Pakistan now in a position to take advantage of the enormous change that is occurring in the global economy?

Was the decision making in place during the Musharraf period such that it could factor in the wishes and aspirations of the population at large? Have the governments at the sub-national level been given the autonomy to operate without too much interference from the central authority?

Full answer to these questions will need a much longer article than possible for the pages of a newspaper. That said, my main purpose today is to provide a quick overview of the performance of the economy over the last eight years and then address the issue of its vulnerability to possible changes in the perception of the world to the evolving situation in Pakistan.

I will begin with a simple accounting of the performance of the economy in terms of the growth in GDP and income per capita of the population. These are shown in the table placed below. The table shows three things. One, the economy took time to pick up under General Musharraf. It was only after three years that it began to expand and income per capita started to increase. The economy was deliberately kept in check by the decision to follow the IMFs model of stabilisation.

Nonetheless, in the eight year period since the latest take over by the military, the size of the economy increased by almost 50 per cent and that of income per head of the population by nearly 25 per cent.

Two, once the economy shrugged off the constraints placed on it, it went on to a higher trajectory of growth on which it has remained for the last five years.

Three, over the entire period, GDP per capita has increased at nearly twice the rate of growth of population. This should have had a profound impact on the incidence of poverty. But that did not happen.

There is a reason why the poor did not benefit as much from the pick up in the rate of the economy during the period of Pervez Musharraf. This was due to the fact that growth came from the sectors which did not provide much employment to lower income groups. Much of the increase in GDP came from the sectors which returned high rewards to the investors but in which the share of wages was relatively low. Real estate development was one of the important sectors of the economy as was the modern service sector. Neither, at least in the context of Pakistan, generated employment and income for the poorer segments of the population.

The government maintains that public policy has put the economy on a trajectory of growth that would produce seven to eight per cent increase in GDP over the next several years. That claim is hard to endorse since the economy remains sensitive to the quantum of external flows. As was the case in the past, the economy would suffer a serious set back if the flow of resources from abroad is reduced significantly. The only difference between the present situation and the past is that a sudden cut off in aid will not hurt the economy as much as it did in the nineties. Then, the sanctions imposed on the country following its decision to test nuclear weapons resulted in a severe economic set back. Now, if aid were to suddenly stop, Pakistan could continue with economic expansion provided capital continues to flow in from the large and rich Pakistani diasporas in three continents and provided also the Middle Eastern investors retain their interest in the country.

One of the positive features of the way the Musharraf government managed the economy is to have made it attractive for some foreign investors. But Pakistan has not become an important destination for investors as India has over the last decade. India offers the promise of political stability, a legal system that can protect investors, a highly trained workforce, and a fairly large rate of domestic savings. It also has a large domestic market which is of interest to foreign companies.

Pakistan, on the other hand, is seen as a country which has high levels of illiteracy, in which political instability continues to threaten the pursuit of economic policies that would be sustained over a reasonably long time, and in which the rise of Islamic extremism threatens economic and social modernisation. If foreign investors have been attracted to the country it is only those who either are tapping the large market for some basic goods of consumption and for some basic services. When the government claims that it has made possible large foreign direct investment into the country, it does not mention that FDI has come in the form of purchase of domestic cigarette manufacturing by Americas Altria group, or by an expansion in the presence of such food and beverage companies as Pepsi Cola and MacDonald. There has also been significant investment in mobile telephony by operators from the Middle East and China.

But investment in consumer product and domestic services cannot be the basis of long-term sustainable growth.

The vulnerability of the economy to external flows is revealed by the data on investments and the sources for financing it. During the Musharraf period, the rate of investment has increased by a third, from 17.2 per cent of GDP in 2001-02 to 23.0 per cent in 2006-07. However domestic savings have declined from 17.8 to 16.1 per cent of GDP in the same period. This means that the economy is even more dependent on foreign flows than was the case in the 1990s. This dependence may not mean that the continuing political support of western governments and development institutions such as the World Bank is absolutely critical for economic progress. But there is now reliance on other sources of external finance. In other words, some changes in the structure of the economy notwithstanding, the claim of Islamabad that the economy is now moving on a sustainable course and that it will not derailed by political storms is hard to accept. The economy remains vulnerable to external shocks but of a different kind.

The economy under Pervez Musharraf -DAWN - Business; October 17, 2007


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## Neo

*Slower credit off-take and falling industrial growth​*
DURING the first quarter of this fiscal year, the private sector made a net retirement of Rs4 billion bank loans. This comes in a sharp contrast to its net borrowing of Rs37 billion in the same period of the last year.

At its meeting held in Karachi on October 9, the central board of directors of the State Bank examined this and other recent economic developments. Sources said that the private sectors representatives on the board pointed out that the monetary tightening was resulting in a slower off-take of the private sector credit.

State Bank Governor Dr Shamshad Akhtar, however, insisted that the tightening of the policy had slowed the rate of inflation and added that the inflation target of 6.5 per cent set for FY08 would be achieved.

Business leaders are concerned about a big fall in banks lending to the private sector. They are also unhappy with the State Bank for not holding the meeting of the Private Sector Credit Advisory Committee. Sources close to SBP believe that the committee would meet early November. Dr Shamshad Akhtar is leaving for Washington to attend the IMF-World Bank annual meetings and would be back towards the end of this month.

The advisory committee is expected to draw the credit plan for this fiscal year and set a tentative target for the private sector borrowing from banks. There is little point in holding the meeting after four months of the new fiscal year have passed, remarked a member of the committee.

Business leaders fear that a low bank borrowing of the private sector would lead to a lesser than expected growth in industry during this fiscal year. That is very much obvious, says Mr. Iqbal Ibrahim, vice chairman of the All-Pakistan Textile Mills Association. And once the industrial sector growth falls short of target it means we wont achieve the economic growth target as well. The government has set the GDP growth target at 7.2 per cent for this fiscal year.

In the last fiscal year, growth in the large-scale manufacturing had declined to 8.5 per cent against the targeted 12.7 per cent partly because higher interest rates had lowered private sectors borrowing from banks. In FY07 the private sectors borrowing fell to Rs366 billion against the target of Rs390 billion and far below the FY06 borrowing of Rs402 billion.

That the slowdown in the private sector credit flow is likely to impact on industrial growth is evident from the fact that in the first month of FY08, large-scale manufacturing has grown at a low rate of 6.2 per cent. The full year growth target is 10.5 against 8.5 per cent in the last year.

Business leaders say the appetite for private sector credit is low primarily because the textile sectors borrowing from banks has fallen sharply. They claim that many yarn processing mills have closed down and even those operating are working below capacity as this sector fights for survival amidst growing international competition and rising input cost.

The sector-wise credit disbursement data for Q1 FY08 are not available. But older statistics show that the manufacturing sector rather made a net retirement of Rs21 billion during the first two months of this fiscal year.

Senior bankers say this happened as banks tightened credit disbursement after bad loans ballooned during January-June 2007.

Non-performing loans of all commercial and specialised banks rose to Rs187.3 billion at end-June 2007 from Rs173 billion at end-December 2006, showing an increase of Rs14.3 billion.

Financial observers point out that in the first quarter of FY08 banks did not bother much about lending to the private sector because the government borrowing from banks was at its peak. In Q1 FY08 the government borrowed Rs88 billion from banks to fill in the gap between budgetary income and expenses. It, however, retired Rs9 billion of central bank credit.(In Q1 FY07 the government had retired Rs21 billion bank loans and borrowed Rs60 billion from SBP.

On the one hand, heavy government borrowing from banks has led to a situation where banks are not much concerned about a negative growth in private sector credit. But on the other hand, the government policy to borrow from banks and not from the central bank has helped keeping core inflation in check. Small wonder than that in July-August 2007 CPI inflation accelerated 6.4 per cent against 8.3 per cent in July-August 2007.The government has agreed to keep its borrowing from the central bank at bare minimum from this fiscal year to help the State Bank in its fight against inflation..

The manufacturing sector, particularly textiles, looks certain to borrow less in this fiscal year because of high interest rates combined with rising input cost including increased wages. But the farming community believes that agricultural borrowing would rise.

The government has increased the produce index valuea tool that determines the borrowing requirement of farmersfrom Rs400 to Rs1200, says Syed Qamaruzzaman Shah, president of Sindh Chamber of Agriculture. This means a farmer can now borrow up to three times his previous borrowing limit. This would boost banks agricultural lending.

In the first two months of this fiscal year, agricultural lending increased 18 per cent to Rs25.8 billion and bankers say it would increase faster once the notification about calamity-affected areas is issued.

After heavy monsoon rains and flooding earlier this year, the government had eased the terms for farm loans recoveryand even waived parts of outstanding loans in certain parts of the countryside. But bankers say they have not received notification of this and insist on recovering previous loans before making new ones, complained Syed Qamaruzzaman Shah.

The FY08 growth target for agricultural sector is 4.8 per cent. But lower-than-expected cotton production, concern about rice output and increase in the prices of agricultural inputs including fertiliser might let the target slip by. Agriculturists, however, believe that agricultural lending this fiscal year would reach the targeted level of Rs200 billionnot only because of an increase in PIU but also because over the past two years Zarai Taraqiati Bank has improved its financials and commercial banks have learnt the art of farm lending. In the last fiscal year banks lending to agricultural sector rose to Rs168 billion against the target of Rs160 billion.

More importantly, as National Insurance Corporation has just facilitated crop and crop loans insurance by banks, agriculturists think this would go a long way in boosting agricultural credit. But they point out that there is very little awareness about this among farmers.

The overall private sector credit growth has remained negative in Q1 FY08 also due to slower distribution of consumer loans. Data covering the first two months of FY08 show that consumer loans rose just 2.6 per cent. Bankers say though auto loans might continue to show a nominal growth because of a rise in car prices, housing finance might grow faster.

The reason is that the real estate prices have seen a nominal fall in the recent months and have become attractive again, said a head of credit division of a large local bank. If the sub-prime credit squeeze in the US worsens, youll see lot of investment in the real estate here and that would be followed by a growth in bank loans for housing and construction.

In FY06 when the private sector credit had hit an all- time high of Rs402 billion ,it was widely believed that part of the bank credit was used in speculative investment in the real estate and stocks thus fueling inflation. This phenomenon weakened in the last fiscal year when private sector credit totaled Rs366 billion against the target of Rs390 billion. And since the SBP has made it difficult now to use bank loans taken for other purposes in investing in the real estate and stocks, this too has dampened the private sector credit appetite this year.

Slower credit off-take and falling industrial growth -DAWN - Business; October 17, 2007


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## Neo

*Qatar to invest $2.5 billion ​*
ISLAMABAD (October 17 2007): A number of companies from Qatar have shown interest to invest $2.5 billion in Pakistan in various sectors like finance, hotel industry, cement plant and power generation. The Chief Executive of Pak-Qatar General Takaful Limited, Waqar-ud-Din, told Radio Pakistan on Tuesday.

The Islamic Bank, with an investment of $100 million, would be established in Pakistan. Companies included in the Takaful would also introduce their products and services in property and automobile and engineering sectors, he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Gwadar highlighted as global investors' future port ​* 
KARACHI (October 17 2007): Gwadar was highlighted as the future port of global investors at an international conference on 'Free zones, science and technology parks, enterprise zones', jointly organised by World Free Zone Convention (WFZC) and World Customs Organisation (WCO).

The conference was held at the WCO headquarters in Brussels, Belgium, on June 5 and 6. According to a report prepared by Sheikh Javaid, Chairman, Federation of Pakistan Chambers of Commerce and Industry (FPCCI) standing committee on export processing and free zones, who attended the conference, Gwadar was also introduced as commercial hub of the region.

The report, available here on Tuesday, said that the conference was told that Gwadar, when fully operational, would be capable of catering the requirements of international trade between CAS countries, Middle East & Near East and Far East. As a result of the wide coverage by media, considerable interest by investors of the world had been recorded for investment in projects in Gwadar.

WFZC is UK-based international organisation engaged in providing knowledge and information to free zone stakeholders, ie, managers, operators, customs and port authorities, transporters, investors, financial institutions, etc. It thus provides a fora for guiding concerned institutions and personnel not only for establishment of new free zones but also to suggest ways and means to improve the working of existing zones for achieving the targets set for each unit.

The report says that Mike Schmitz, Director, World Customs Organisation, Brussels, mentioned about a policy of understanding and cooperation and said that certain countries were executing examination of goods and documents on behalf of each other to avoid duplication of work at the points of origin and destination.

A similar system has been introduced at Port Qasim for Pakistan's exports to the United States whereby scrutiny of goods is carried out through scanning the containers by a joint team of Pakistan and US customs to avoid re-examining of goods at destination in US. It was also emphasised that simplification of documents and customs procedures should be ensured to achieve faster movement of goods in the supply chain.

Adel Abdel Maged Masoud, First Under-secretary and head of Free Zones sector, GAFI, from Cairo, spoke on setting up and monitoring zone customs bases in public and private zones and compliance issues. His main points for discussions included role of Free Zones relationship between Free Zones and customs bases. Egypt has developed Free Zones with dedication and has provided a distinguished investment regime to the investors.

There are two types of Free Zones in Egypt, namely, the Public Free Zones, and Private Free Zones. There are 1000 units working in Free Zones regime in Egypt. Simplification of procedures and freedom to export and import was also ensured in Free Zones in Egypt.

The report said that this issue is hitting the investors hard in Pakistan these days and it is reported that survival of EPZ units is becoming difficult day by day. Investors are agitating over the regulation of 80-20 and it is said that a considerable number of units in KEPZ have closed down.

Mao Xintang, Vice-Chairman and Secretary General of China Free Trade Zone and Export Processing Zone, said that ShenZhen Special Economic Zone (SZSEZ), established in 1980, was launched as the first Special Economic Zone in People's Republic of China. It is said that ShenZhen's economic growth is among the world's most robust and fastest growing Free Zones and, by 2010, the annual GDP of ShenZhen City would rise to $12000 per capita.

The report mentions that Pakistan's importers have been in contact with ShenZhen Free Zone and have been importing merchandise of a sizeable volume from the zone.

China claims to have following free zones in the country: Export processing zones 59; free trade zones 15; bonded ports 4; bonded logistics parks 8; and cross-border industrial park 1. Special zones of China are seen as roadmap and many countries of the world have followed the special economic zone strategy to give a boost to their economy. These countries include India, Iran, Jordan, Poland, Kazakhstan, the Philippines, Russia, Ukraine and Pakistan.

China is helping Pakistan develop the 'Haier-Ruba' economic zone near Lahore, and another zone is likely to be set up in Gwadar. The conference noted with great interest the Chinese efforts in the area of establishing free zones to support its economy. The Chinese government also encourages outward foreign direct investment (FDI). The outflows amount to $16.1 billion, placing China at 13th position in the world, with stocks rising to $73 billion mark.

The report summarises that free zone concept is claimed to be an ideal situation for the betterment of economy of a country. The world is attracted by free zone ideology, and most of the countries of the world, including China, Pakistan, Bangladesh, UAE and others, introduced and amended their policies so as to induct and follow the ideology.

The world has recognised free zone as an ideal solution. These zones are established under different titles eg export processing zones, special economic zones, and science and technology free zones, etc.

There are about 3000 free zones in the world, and thousands of industries, service units and offshore trading and warehouses are operating under the free zones flag. Special economic zones of China, Panama, UAE and Shannon free zone, Ireland are considered successful zones of the world.

The report concludes by pointing out that departure from public sector control to private sector was suggested by leading advisers, especially in cases where zones are not giving desired results for betterment of country's economy in the form of increased exports and investment.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*World Bank to give $238 million for power sector ​* 
FAISALABAD (October 17 2007): World Bank will provide 238 million dollars for "Electricity Distribution and Transmission Improvement Project" to help increase the efficiency, reliability, and quality of electricity supply by supporting reductions in overall technical and commercial losses, increased availability of electricity, and improved voltage profile in Pakistan.

According to official sources, the project also aims to support power sector reform and investment planning and financing through technical assistance.

The update Environmental Assessment (EA) document evaluated impacts and suggests mitigation measures in the following areas, respectively: soil erosion and degradation, caused by grid stations and transmission lines construction activities; surface and ground water contamination; loss or damage to wildlife; damage to natural vegetation; inappropriate liquid or solid waste disposal; leakage from oils and chemicals; crop compensation; construction crews will be provided with LPG for cooking; use of firewood will not be allowed; post-construction monitoring of tower foundations will be carried out to detect early signs of soil erosion or land sliding; and finally, applicability of Pakistan's legal and environmental policy legislation and the bank's operational safeguard policy on environmental and social matters, such as forestry, natural habitats; indigenous peoples; cultural property; projects in disputed areas. Negotiations scheduled for mid-November 2007, sources added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Gwadar Oil City: Pakistan, China to sign agreements in early 2008​*
ISLAMABAD: During the forthcoming visit of Chinese president in early 2008, Pakistan and China are set to sign agreements on Chinese investments in Gwadar Oil City, incentives for setting-up of Special Economic Zones (SEZs), Gwadar seaport development programme for expansion of bilateral trade and strengthening of investment relations. 

All these initiatives are considered to be essential for the success of Trade Energy, Transport and Industrial Corridor between Pakistan and China, a senior government official told Daily Times on Tuesday. 

A steering committee headed by deputy chairman Planning Commission and comprising minister of State for investment, secretary general revenue division, prime ministers advisor on energy and members from all four provinces, and concerned federal ministries have been directed to prepare well before the visit of Chinese president and within 90 days incentive packages for realising the targets of the corridor. 

Energy advisor has been directed to recommend within 60 days the oil concessions for Chinese companies with the objective of attracting Chinese companies to bring in at least 200 rigs to Pakistan. This policy will be open to other interested exploration companies as well. 

President of Pakistan has approved establishment of Trade Energy, Transport and Industrial Corridor between Pakistan and China. 

To implement the initiatives for realising the objectives of the corridor, president has also approved constitution of a 16-member policy, supervisory board and constitution of over 10 members steering committee. 

The corridor would require a set of 14 important measures to make this initiative a success. It has been decided that Pak-China bilateral working group would be constituted to prepare and finalise the action plan for building the Multi-Model Corridor. General attractive concessions would be given for the development of SEZs.

Site for China-Saudi Oil refinery in proposed Oil City at Gwadar would be identified and terms and conditions for investment would be decided on priority basis. Government of Balochistan has been asked to identify state land for development of projects at Gwadar out of which 50 square kilometres land will be allocated to Chinese developers at nominal rates for establishment of SEZs. 

The Gwadar Sea Port development programme (Arthur D Little and Chinese Plans), which has been approved would be negotiated with Chinese investors to attract investment in this area. Financial incentives equal or better than Chinese SEZs would be provided to the investors in the said area.

Under the corridor plan, a high speed and capacity link of Gwadar with international optical fibre cables would be established. As an essential first step, coal mining would be commenced by setting up a joint venture company comprising of Pakistani stakeholders and foreign companies. 

Federal government has already showed its willingness to resolve the issue of land for economic zones in different parts of the country, in addition to special lease of land at Karachi, Lahore, Islamabad and Peshawar for international entrepreneurs including Chinese companies to build 15-20 story offices and business support centres residency blocks for the perspective investors. 

The policy and supervisory board would be constituted for providing strategic vision by laying down policy guidelines, ensuring timely decisions and regular monitoring of the progress. It has been decided that the President of Pakistan will head the board and other members would be prime minister, federal ministers of Ports and Shipping, Communication, Railways, Petroleum and Natural Resources, Industries and Production, Commerce, Water and Power, governor and chief minister Balochistan, minister of State for investment, deputy chairman Planning Commission, secretary general finance, secretary general revenue division and secretary Foreign Affairs.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Total assets of banking sector up by Rs 499 billion​*
KARACHI: Total assets of the banking system grew exceptionally by Rs 499 billion or 11 percent to Rs 4.952 trillion during the April-June quarter, equal to almost 80 percent of the full-year increase of CY06, reveals the Banking System Review released by the State Bank of Pakistan. 

The assets of banking system witnessed this exceptional growth, which was mainly supported by the huge increase in deposits and healthy addition in capital. Overall, performance of the banking system remained healthy, on the back of strong profits and strengthening capital position, the review says. 

Though the aggressive loan growth in the past few years has resulted in marginal rise in the level of infected portfolio, the healthy profits lent hand to keep the key asset quality indicators in check. 

The recent trend of the slowdown in the growth of loan portfolio continued in June quarter too, as loans took only one-fourth or Rs 132 billion of the increased asset base. 

Profits of the banking system continued to grow  signifying an extension to the previous years trend. Before tax profit of the banking system reached Rs 68.5 billion, which constitutes around 55 percent of the full-year profit of CY06. After tax profit increased to Rs 45.4 billion, which accounts for about 54 percent of the full-year after tax profit of CY06. 

As a result, key profitability indicators remained strong. Both the before and after tax returns on assets (ROA) of the banking system maintained the last quarters level of 3.0 percent and 2.0 percent in June 2007. Despite a significant increase in the equity base, the banking system was able to maintain return on equity (ROE) at previous quarters level of 20.6 percent. 

Investments increased by a handsome amount of Rs 202 billion, as compared to full years increase of Rs 47 billion in CY06. Resultantly, the share of investments in total assets has increased to 23.8 percent from 19.3 percent in CY06. As a result, the share of loans in total assets fell to 50.5 percent from 55.8 percent in CY06. 

On the back of extraordinary deposits inflows and slowdown in advances, liquidity indicators suggested further softening during the quarter under review. 

Analysis of income and expenses shows that increase in interest expense was on higher side as compared to the increase in the interest income. This may be referred to relatively higher increase in deposits rates as well as some compositional shift of the assets away from loans to the investments, which offer comparatively lower returns. 

Liquidity of the banking system further eased during the quarter. A shift of the assets away from loans to investments added to the liquidity of the banking system. 

Loans to deposits ratio of the banking system softened to 63.9 percent from 66.0 percent in March 2007. Liquid assets to total asset ratio also increased to 35.8 percent from 34.0 percent in March 2007. 

Noticeable shift has been seen in the composition of banking systems assets, away from loans toward investments, says the review.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Loans of banking system reach Rs 2.496 trillion​*
KARACHI: Loans of the banking system increased by Rs 132 billion to Rs 2.496 trillion during April-June 2007, says Banking System Review for the quarter released by the State Bank of Pakistan. 

It is substantial when compared with the previous years trend - almost equal to the one third of the total increase in CY06, it says. 

Segment wise increase in loans portfolio reveals that it was corporate sector, commodity finance and the consumer finance activities, which attracted significant portion of the increased loans. Loans of corporate sector increased by Rs 38 billion to Rs 1.343 trillion. Commodity finance, with almost an equal increase stayed at Rs169 billion. Growth in consumer finance, which has been attracting much attention of the stakeholders, remained at 6 percent during the quarter and it reached Rs 354 billion. Resultantly, its share in total loans increased slightly to 14.3 percent from 14.1 percent in March 2007. 

Following the aggressive credit growth during the past few years, the credit quality of the banking system has started showing some concerns. However, the key asset quality ratios experienced improvement during June 2007 quarter as compared to March 2007 quarter. In absolute terms NPLs of banking system, which had been decreasing till CY06, experienced an increase of Rs 3 billion to Rs 187.6 billion during the June 2007 quarter. 

Net NPLs of the banking system improved to Rs 45 billion from Rs 47 billion in June 2007. Group wise, it were only LPBs, which experienced an increase in NPLs, and net NPLs by Rs 9 billion and Rs 6 billion respectively, whereas PSCBs and FBs were able to keep their levels in check. 

Specialised banks have significantly improved their levels of NPLs and net NPLs, which dropped by Rs 6 billion and Rs 7 billion respectively during the quarter. 

Significant increase in the loans of the banking system lent a hand in keeping the key asset quality ratios in check. Both the NPLs to loans ratio and net NPLs to net loans ratio of the banking system improved to 7.1 percent and 1.8 percent from 7.4 percent and 2.0 percent in March 2007. 

Segment wise, the NPLs to loans ratios of corporate, SME and consumer segments have increased by 0.2 percent, 0.6 percent and 0.4 percent to 6.9 percent, 9.7 percent and 3.6 percent respectively in June 2007 quarter. On the other hand, infection ratio of agriculture sector witnessed a decline of 4.4 percent to 19.3 percent during the quarter. 

Increase in warrants of NPLs drew attention of the risk managers of the banks since it can affect the future profitability of the banking system, the review says and adds that future trends in NPLs would largely shape the profitability of the banking system.

Daily Times - Leading News Resource of Pakistan


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## JK!

Neo,

Could you tell me about any Renewable Energy prospects or industry in Pakistan as it would be helpful to my studies at University.

I am currently studying for a BSc Renewable Energy and I hope to find work in Pakistan once I complete my studies.

Regards JK!


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## Neo

JK! said:


> Neo,
> 
> Could you tell me about any Renewable Energy prospects or industry in Pakistan as it would be helpful to my studies at University.
> 
> I am currently studying for a BSc Renewable Energy and I hope to find work in Pakistan once I complete my studies.
> 
> Regards JK!



Sure, I'lll check whatever news I have and pss it to you.

Neo


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## Neo

*ADB stresses economic, social benefits for all ​* 
Thursday, October 18, 2007

ISLAMABAD: Asian Development Bank vice-president Ursula Schaefer-Preuss has stressed the need for ensuring access to economic and social benefits in Asia to many people and not just to the few.

Asia is the fastest growing region in the world, and yet if specific actions are not taken, there will be many people falling behind, not being able to benefit from growth, said the vice-president in a speech at the opening session of the Taking Action for the Worlds Poor and Hungry People conference in Beijing.

According to an ADB press release received here on Wednesday, she said income poverty in Asia, as measured by the $1 per day benchmark, is declining, much due to the Peoples Republic of Chinas (PRCs) rapid growth.

However, the region still has more than 600 million living on less than $1 per day; and about 1.8 billion people living on less than $2 per day, she added.

Young girls in the region still lack access to primary education. Infant mortality in Asia is around 60 per thousand live births and maternal mortality is about 30 per cent higher than that of Latin America and the Caribbean.

Schaefer-Preuss said Asia faces the twin challenge of ensuring energy security and preventing environmental degradation.

Protecting the environment is a critical challenge on poverty alleviation since it will lead to increased distress on agriculture and food security, foods and other natural disasters, while significant concerns on human habitat and safety remain.

The poorest people in the region suffer the first and most, she said.

The Vice President also emphasised that societys most vulnerable groups; children, women, and those living in rural areas are suffering the most, and that the rural-urban disparity is rising.

Alleviating poverty and hunger means we have to address the needs in various economic and social policies; ranging from health, environment, labour, rural and urban, social protection, infrastructure at regional, national and local levels, she said.

Schaefer-Preuss added that in many parts of Asia, governments are becoming much more proactive in understanding the complexities of poverty. To support governments, ADB will target its efforts on enhancing peoples access to infrastructure, education and employment, health and basic social services, clean environment and energy, as well as gender and other reforms.

ADB stresses economic, social benefits for all


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## Neo

*Food inflation at 7-year high​*
KARACHI, Oct 17: Rampant price escalation placed the food inflation at seven-year high in September 2007.

The unchecked food price escalation which is mostly an outcome of hoarding and black-marketing, increased prices of almost all essential goods needed by a common person.

The latest report of price trend shows that in September 2007, the food inflation reached 13 per cent on year-on-year basis which is the highest figure since 2001.

It has been argued by the government that one of the major reasons for food inflation was distribution problem which creates supply and demand gap, resulting in a price-hike.

However, no action has been taken against the organised wheat price hike, 100 per cent increase in rice prices and sugar hoarding. These are the essential items used on a daily basis.

Earlier, the food inflation reached second high as 12.7 per cent in December 2006 and this was the highest in last 12 months.

At the same time, the CPI of annual average showed that the food inflation never reached 13 per cent since 2001. Food inflation was 12.5 per cent in 2005.

The 13 per cent inflation in September 2007 carried the Ramazan factor which is usually known for sudden price jump. However, the wheat factor with its massive weight in the price index had started much earlier to influence the market and food inflation.

Analysts identified three reasons for the recent food price hike; the international food price increase, high oil prices and low production of food items in the country.

The wheat prices have come down for last couple of weeks and this will impact the food inflation in the October, said an analyst, adding that the October food inflation could be around 12 per cent.

However, he feared that the food inflation could jump again if the government passes on the oil price impact to the local market. The oil prices have gone up to $88 per barrel on Monday and the oil experts have been predicting for further increase as the winter season is approaching closer to Europe and America.

The food inflation which reached seven year high in September, was untouched by the oil price hike as the government has kept the oil prices frozen for at least one year. The real impact of recent oil prices would come in next three months. Analysts believe if the oil prices are increased, the food inflation could hit all time high.

In the name of free market economy the government has allowed black-marketing, hoarding and forced price increase by eliminating the public factor from this entire price affair, said Ehtesham Arif, a retired bureaucrat.

He said the government did not have any policy to stop these forces behaving against the market practices making the life more painful for a common person.

The recent wave of price increase touched a wide range of food items, ranging from essential items like wheat, sugar, rice to vegetables, meat, edible oil, etc.

Food inflation at 7-year high -DAWN - Business; October 18, 2007


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## Neo

*Pakistan to raise Rs15bn in bond auction​*
KARACHI, Oct 17: Pakistans central bank said on Wednesday it planned to raise Rs15 billion ($247.44 million) through an auction of long-term government bonds this month.

The State Bank of Pakistan said in a statement it planned to reopen the Aug 22, 2007, issues of the 3-, 5- and 10-year Pakistan Investment Bonds (PIBs) on Oct 30.

It would also re-open Oct 31, 2006, issues of 15- and 20-year PIBs, in addition to reopening the Dec 22, 2006, issue of the 30-year bond, it said.

Settlement will be on Oct. 31.

The 3-, 5-, 10-, 15- and 20-year PIBs carry annual coupons of 9.1, 9.3, 9.6, 10 and 10.5 per cent, respectively, while the 30-year paper carries a coupon of 11 per cent.

This will be the third PIB auction to be conducted by the government in the 2007-08 fiscal year, which began on July 1, and the second this month.

The last PIB auction was on Oct 9, when the central bank sold Rs15.29 billion worth of long-term bonds.

The central bank then set a cut-off yield of 10.1897 per cent on the benchmark 10-year paper, 9.8024 on the five-year and 9.6211 per cent on the three-year PIBs.

It also set a cut-off yield of 11.1494 per cent for the 15-year PIB, 11.4103 per cent for the 20-year and 11.6142 per cent for the 30-year securities.

Pakistan launched its first long-term PIBs in December 2000 to tap institutional investment and set a benchmark for corporate bond yields. It issued a 30-year bond for the first time in December last year.Reuters

Pakistan to raise Rs15bn in bond auction -DAWN - Business; October 18, 2007


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## Neo

*Pharmaceutical exports to Gulf begin this month​*
KARACHI: Pakistan will start its pharmaceutical export to Gulf countries thorough Jordan soon in the ongoing month.

The first export consignment has worth around $50, 000 based on single product water for injection. The product will export to Jordans ministry of health department direct, which is also the main supplier of Gulf countries. 

Initially, only one national pharmaceutical manufacturer company Indus Pharma was granted export license by Jordans ministry in Pakistan subsequently after completion of prolongs inspection processes during the last three-year period. However, a Pakistan based multinational company was also registered for inspection but it failed to fulfill all the required compliances asked by the buyer country. It is prudent to mention here that Jordans ministry registered these two national and multinational companies in 2004 and it took one year extra for monitoring of quality standards drugs of Pakistani companies.

Managing Director, Indus Pharam, Zahid Saeed said that the designated medical watchdogs conducted the inspection of drugs processing very strictly. On the other hand, he added the cost of input has been surged by 25 percent in order to acquire all the demanded standards of buyer country. Particularly, Jordans ministry of health was cautious for high quality packaging and safe transportation of medicine, he added.

Mr Saeed added that the company was also imported highly modern machineries of drugs production for meeting this export target during last two years. 

Indus Pharma is ranked in top five exporter of the Pakistan out of total 25 pharmaceutical exporter companies. Its contribution of countrys export crossed $2 million per annum. Indus Pharma also exports its pharmaceutical product to Bahrain, which is small but lucrative market in terms of prices.

Pharmaceutical exporters told the Gulf market is very lucrative for Pakistan export as it offers high prices of the pharmaceutical products. Some believe that the export values are seven to eight times higher than offered by African and Central Asian countries. They are optimistic that countrys pharmaceutical brands will reach in the Gulf countries particularly in Saudi Arabia, UAE, Qatar and Kuwait.

Pakistan has achieved its pharmaceutical export target of $100 million in the last fiscal year and it has set worth $125 million export target for the current fiscal year 2007-08.

Daily Times - Leading News Resource of Pakistan


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## Neo

*1,765 CNG stations set up, 1,000 more in pipeline ​*
KARACHI: More than 1,765 Compressed Natural Gas (CNG) stations have been established in the country and 1,000 more would be set up in three years due to governments liberal policies and participation of private sector.

This was stated by Director General of Hydrocarbon Development Institute of Pakistan (HDIP) Hilal A Raza on Wednesday.

According to him an investment of Rs 70 billion has been made in the CNG industry, which is providing employment to 30,000 people in the country. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*KSE index reaches new high ​* 
KARACHI (October 18 2007): Karachi share market on Wednesday continued its upward trend with making new records as the KSE-100 index crossed 14,600 historic level to hit 14,614.34 points intra-day high level on the back of increasing oil prices in the international market.

Finally, the KSE-100 index closed at its highest ever level of 14,590.17 points with a net gain of 126.39 points. While the KSE-30 index gained 87.84 points and also closed at its new record level of 17,863.78 points.

The market started on a positive note, but a major decline in Indian market affected the momentum, while selling in the banking sector stocks, forced the index to enter the negative zone to reach 14,255.37 points intra-day low level.

Later, the market witnessed buying mainly in oil sector stocks due to increasing oil prices in the international market and the index once again entered the positive zone. The index hit its historic 14,614.34 points intra-day highest ever level, but the selling in banking sector stocks pushed the index to close slightly lower at its closing level.

The market witnessed healthy trading activity as the ready market volume increased to 438.542 million shares as compared to 302.696 million shares traded on Thursday. The futures market turnover surged to 95.453 million shares against 54.297 million shares previously.

The overall market capitalisation increased by Rs 28 billion to settle at its record level of Rs 4.455 trillion. Trading took place in 379 scrips, out of which 207 scrips closed in positive and 128 in negative, while the value of 44 scrips remained unchanged.

The E&P giant, Oil and Gas Development Company (OGDC) was the star performer of the day with 66.430 million shares and the scrip surged by rupees three to close at Rs 132.80 followed by TRG Pakistan, which increased by Rs 0.50 to close at Rs 15.80 with a total volume of 46.864 million shares.

Fauji Fertiliser Bin Qasim also remained active and gained Rs 0.70 to close at Rs 47.55 with a total turnover of 35.637 million shares. Fresh buying was seen in Arif Habib Sec and the scrip surged by Rs 3.95 to close at Rs 165.25.

In the banking sector, Bank of Punjab (BoP) and NIB Bank gained Rs 0.35 and Rs 0.60 to close at Rs 105.15 and Rs 22.50 respectively, while National Bank of Pakistan (NBP) declined by Rs 4.70 to close at Rs 266.55.

Buying was witnessed in cement sector stocks as DG Khan Cement and Zeal Pak Cement gained Rs 2.75 and Rs 0.65 to close at Rs 114.25 and Rs 5.45 respectively, while Lucky Cement closed at the same level of Rs 137 without any change.

Unilever and Siemens were the highest gainers, with Rs 90 and Rs 29 gains to close at Rs 2,590 and Rs 1,786 respectively, while Pak Reinsurance and Pak Engineering were the highest losers. They lost Rs 13.70 and Rs 12.25 to close at Rs 381.05 and Rs 232.75 respectively.

Ahsan Mehanti at Shehzad Chamdia Securities said that major decline in Indian market affected the momentum at the local share market in initial hours, forcing the index to enter the negative zone, but rising oil prices in the international market supported the index to recover its intra-day losses and to close at its new record level of 14,590.17 points.

Major buying was witnessed in oil sector stocks and most of the relevant stocks closed in positive with gains. Selling was witnessed in some banking sector stocks, which closed in negative. Buying was witnessed in MCB Bank and BoP, which closed in positive.

The investors took positive the recent developments on the political front and took fresh positions on the back of their good expectations. Increasing special convertible rupee accounts (SCRAs) balances and good volume indicate the investors' interest to invest at the share market.

Hasnain Asghar Ali at Aziz Fidahusein Securities said that the impact of changes in treatment of non-performing loans (NPL) by the State Bank of Pakistan (SBP) was certainly exaggerated, nevertheless the suspense linked to the Supreme Court's decision regarding presidential elections added to the banking sector and the positive opening invited fresh inflow mainly in the banking stocks.

Index did witness an extended onslaught and the index made an intra-day low of 14,253.29, down by 210 points. Surge in oil prices in the international market and temptation linked to futuristic growth invited accumulation in almost all sectors, leading the way were certainly oil and gas exploration stocks.

Aggressive buying accompanied by short covering in low priced banking, fertiliser and cement sectors certainly allowed the index to continue the record-breaking spree both on intra-day and closing basis. Technically, the index still faces major resistance around 14,800-14,810, while intra-day resistance stayed at 14,670-14,677 and intra-day support stayed at 14,327-14,333.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Developing Thar coal blocks​*
EDITORIAL (October 18 2007): The Sindh government has decided in principle to develop another seven coal-mining blocks in Thar to expand coal exploration operations in the province, says a Recorder Report. Various local and international mining firms have already carried out exploration work in four coal blocks.

According to sources in Sindh Mines and Mineral Development Department, the expansion in exploration work is meant to meet the growing demand for coal being used in thermal power generation.

At present coal production in Sindh stands at about five million tonnes per annum, and the department envisages increasing it to over 20 million tonnes by 2015. Sources in the department maintain that international tenders have been floated for securing expressions of interest (EoI) from national and international firms for developing two blocks in Thar.

Five coal-mining blocks will be developed in Sanghar, Khairpur and Tando Jam districts. Thar coal-field, spread over an area of 9,100 square kilometers, is the largest coal-field in the country. It is estimated to have coal reserves of about 175.506 billion tonnes.

Further, Thar coal is said to be the best for power generation. Although preference will be given to local firms, according to official sources, most of these firms lack the specialised equipment and technical know-how required for undertaking exploration and mining of coal on such a vast scale.

Tenders will, therefore, he awarded purely on merit. Meanwhile, the Sindh Mines and Mineral Development Department is planning to develop more coal-mining blocks in Lakhra coal-field near Dadu and Sonda-Jheruk coal-field near Thatta after carrying out feasibility studies.

According to a study conducted by a German firm, RWE Power Engineering at Thar coal-field, 1,000-megawatt coal-based power plants can be economically operated in this area. (A Chinese company, Shenhua Corporation, has in fact been working on the construction of two 350-megawatt power plants based on Thar coal).

The Sindh government, under a policy decision, has lately started encouraging projects that will use coal as the main input for industrial activities because this will relieve pressure on the more expensive fuels, such as oil and gas. Experts believe that after hydropower, coal has a substantial edge over other non-renewable sources as a relatively cheaper mode of electric power generation.

In view of the apprehended shortfall of electricity and other energy resources over the next 10 years, the demand for indigenous coal for power generation is expected to grow considerably.

Meanwhile, Pakistan has emerged as the seventh among the top 20 coal producing countries of the world after the discovery of huge lignite coal deposits in Sindh. Experts have estimated that Pakistan's energy requirements over the next five years are likely to grow at the rate of 7.4 percent per annum, because of the ambitious GDP targets set by the government.

This is a big challenge for the country's energy sector. According to available data, as many as nine companies including Sumitomo of Japan, Siemens and Reinhaul of Germany, AES Corporation of the US, Al-Jumaih Group of Saudi Arabia and Malakoff of Malaysia have so far submitted statements of qualification for setting up a 1000-1200 megawatt power project in Sindh. Realisation of the project is, however, nowhere in sight.

Their mindset has been mainly responsible for our failure to benefit from our huge coal reserves, which could have allowed us to get out of the tightening energy squeeze. Pakistan's current total mine-able coal reserves are estimated at two billion tons, which is 6 percent of the measured coal reserves.

Despite the presence of this huge unutilised coal treasure, the share of coal in Pakistan's total energy mix stands at only 5.5 percent. However, under a plan, coal's share in the country's energy mix will be gradually increased to 18 percent by the year 2018, which will still be far below that of India's 54.5 percent.

Further, our energy requirements will have been quadrupled by then. It is said that Thar coal reserves, estimated at approximately 185 billion tonnes, can produce energy equivalent to 400 billion barrels of oil or 850 trillion cubic feet of gas. In real terms this is greater than the combined oil reserves of any of the two major oil-producing countries of the world.

Experts believe that with the end of the oil era being not far off, coal-fired thermal power plants, with improved design, will find favour in the next 30 to 40 years.

In Pakistan, the Jamshoro thermal station, with 469 million coal reserves from Lakhra coal-field, best illustrates this point. The Sindh government's decision to develop seven new coal-mining blocks in Thar is indeed a move in the right direction, provided this otherwise commendable initiative does not fall a prey to dithering and self-serving expediency, yet again.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*NetSol revenue crosses Rs 1 billion mark ​* 
LAHORE (October 17 2007): NetSol Technologies Limited Chairman Salim Ghauri told Business Recorder that information on the growth of Pakistan's IT sector was now travelling rapidly that not only made customers realise our potential but also international companies started watching Pakistan as a serious destination for their mission critical projects.

He said the year of 2007, like the preceding one, again registered a robust growth in the IT sector in Pakistan gaining momentum gradually to compete internationally. He said Pakistan's IT sector was highly competitive but problems could emerge if we failed to manage our resources efficiently. "We need constant supply of good quality resources and a gradual growth in it, as if we failed to do so Pakistan's IT sector would lose its edge over competitors that would be counterproductive both for the industry and Pakistan', he added. The sector's exponential growth has turned Pakistan into a decisive destination for many mission critical projects.

Majority of the local IT companies have reached to the requisite maturity level and the buyers' confidence is strengthening fast with every passing day," he said.

He also said, "Pakistan, today, is one of the few countries in the world where good number of IT companies are certified as Capability Maturity Model (CMM) and Capability Maturity Model Integration (CMMI) Level companies. There are five levels of CMMI maturity. A "5" rating is the highest. The rating is the key because higher maturity levels signify lower risks to successful programme execution.

He said that NetSol Technologies Limited has become first IT company that achieved CMMI level 5 in August 2006. Since then, NetSol has grown by leaps and bound and it is taken as a serious contender for mission critical projects worldwide. Its revenue has crossed Rs 1 billion mark in financial year 2007."

Ghauri said the Pakistan Software Export Board (PSEB) was investing wisely to assist IT companies in certifications, including CMM and CMMI levels. "It has allocated sufficient budgets for this purpose and its efforts would start showing results in next three years. The IT sector has also responded positively to the Ministry of Information Technology and PSEB's efforts. A substantial number of small and medium level IT companies have emerged on the IT scene of Pakistan during the last few years," he added. With the improvement of entrepreneurial skills and entry of fresh workforce was being translated in software exports of Pakistan exponentially every fiscal year.

He said recent "bearing point study" places Pakistan's global IT export revenue in the Financial Year 2004-2005 at $400 million. The basis of the figure was the State Bank of Pakistan's IT export revenue figures of just under $50 million. Bearing point multiplied this figure by two to account for the IT export revenue brought into the country, but not registered as such with the State Bank.

The global IT revenue of Pakistani IT companies therefore added up last year to $400 million. Therefore, for official IT export figures of just under $75 million reported by the SBP for FY 2005, the actual global receipts of Pakistani IT firms should be around US $600 million, he said.

About the size of IT industry in Pakistan, he said it had increased manifold and besides Karachi, the commercial and IT hub of Pakistan, a good number of IT companies are operating now in Lahore, Islamabad and a few in other major cities of the country. Out of 1056 IT companies, over 100 companies are ISO-certified and the industry's total size, in terms of volume, has crossed the mark of US $2 billion and its exports are near to touch US $100 million.

The workforce involved in this sector has crossed the 100,000 mark and an impressive number of foreign qualified youngsters are aggressively returning Pakistan to tap the potential of the sector, he added.

Appreciating government cooperation, he said it was a source of great satisfaction that Pakistan government has become very aggressive on technology front and many of the public sector departments have strongly realised the benefits of automation of their procedures. Thus, the IT companies have become very busy on a number of local projects besides catering for the demands of their foreign customers.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Drive to step up IT exports to Gulf nations launched ​*
ISLAMABAD: Pakistan has launched a major drive to step up IT exports to the Gulf countries. The six Gulf Cooperation Council (GCC) countries is the huge potential market for Pakistan IT industry, official of Pakistan Software Export Board (PSEB) told Business Recorder.

Pakistan's IT exports to the Gulf had been increasing over the years but there is still considerable potential to expand IT exports to GCC countries and several IT companies of Pakistan were making inroads in the fast growing IT market of the Middle East, official said.

Markets estimates show that the Middle East and North Africa (MENA) IT market is set to grow from $6.9 billion in 2003 to $13.4 billion in 2008, official said. Between the GCC countries, UAE and Saudi Arabia alone account for 77 percent of the Gulf regions' current annual IT spending of $4.94 billion, which is projected to increase to $5 billion this year, he said.

Official stated that several Pakistani IT companies have developed successful business relations and have established their offices in Middle East amongst those Pakistani IT companies which have made inroads in the Saudi Arabian IT market.

The ZRG International is the prime example due to its selection by Smart Link Inc (Saudi Arabia) to deliver flexible open standards based Intel CTI technology and it is a rapidly growing contact centre outsourcing service provider.

By winning the first phase of this multimillion dollar contact centre expansion project, ZRG has clearly demonstrated its capacity to successfully deliver the quality expected by the international IT customers, he said.

Another credible name in the global IT market, TPS is serving 25 countries across the Middle East, Asia and Europe. The TPS technology solutions are helping banks in Bahrain, Qatar and Oman to develop EMV-compliant ATMs, he said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Poland seeking joint ventures in Gwadar ​* 
Friday, October 19, 2007

QUETTA: Consul-General of Poland in Karachi, Ireneusz Makles has said that his country was interested to cooperate with Pakistan in oil and gas, energy, infrastructure, maritime, engineering and food processing sectors as well as in developing industries in Gwadar.

Speaking at a roundtable conference on Poland-Pakistan economic relations with reference to Balochistan, organised by the Balochistan Economic Forum on Thursday, he said that his country could supply electric equipment including diesel generators, railway equipment, agriculture machinery and spare parts, heavy vehicles and marine and diesel engines. He said Poland was also interested to cooperate with Pakistan in coal mining.

The experts of biggest Polish Mining Corporation Kopex had visited Quetta in April last to acquaint themselves with the current requirements and plans of Balochistan to invest, establishment of joint ventures with Pakistani companies as well as delivering mining machinery.

Referring to Gwadar port, the Polish diplomat termed it gateway to Asia, very modern, soon the biggest port in the region that would make Pakistan the maritime hub for the region linking Europe, the West with Central Asian states. The port would also serve as an energy corridor for Central Asia, Middle East, South Asia and western parts of Asia. Makles said that it was his desire to work closely with Balochistan Economic Forum and Pakistani business communities to boost bilateral trade and economic co-operation.

Earlier, Sardar Shaukat Aziz of Balochistan Economic Forum, welcoming the distinguished guest, highlighted various investment opportunities in Balochistan with special reference to Poland. 

A former president Quetta Chamber of Commerce and Industry Fazal Qadir Shirani also spoke on the occasion and asked the Polish CG to help in setting up fruit processing plants and supply construction machinery.

Poland seeking joint ventures in Gwadar


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## Neo

*Industrial production hampered ​* 
Friday, October 19, 2007

KARACHI: Industrial production was hampered and businesses were cut short on Thursday due to non-availability of transport and blockade of roads on the arrival of Pakistan Peoples Party Chairperson Benazir Bhutto.

Industrial production came to a complete halt on Thursday, said Masood Naqi, Chairman Korangi Association of Trade and Industry. Our workers come from Malir, Shah Faisal and Landhi and all of these areas were completely blocked on Thursday which caused absence from work. We would work on coming Sunday to overcome Thursdays loss while most of the multinational companies would work on Saturday, he said.

There are over 4,000 industrial units in Korangi Industrial Area while daily wagers are the most affected people due the industrial halt in the city. Most of the labours and staff confirmed Wednesday night that their presence is doubtful on Thursday.

Almost 90 per cent staff confirmed their absence on Thursday. There was approximately a loss of 1 billion rupees due to the production halt on Thursday, said Masood. Most of the labours, which are on Eid leaves and are in northern areas, were unable to reach Karachi due to traffic jams inside and outside Karachi. 

"There was a very short production on Thursday," said Chairman Towel Manufacturing Association Karachi, Muzamil Hussain adding there was only 25 per cent production in our factories as labour was unable to reach; transport was also thin.

One can not do business with most of staff absent, Senior Manager of KFC restaurant on the busy road of Shahrah-e-Faisal.

Almost 40 per cent of the business was affected on Thursday, as there was less transport along with fewer vehicles for Karachi port. Its seems that tomorrow would also be the same day like today, M Zubair Motiwala, Renowned businessman and Managing Director of Diamond Textiles Pvt Ltd The whole week would pass unproductive as workers who were on Eid holidays were not able to reach factories, Motiwala added. 

Industrial production hampered


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## Neo

*Investors push KSE to new high amid positive political outlook ​* 
Friday, October 19, 2007

KARACHI: The Karachi stock market managed to achieve another landmark as the 100-index hit an all-time high of 14,755 points amid peaceful return of Benazir Bhutto to Pakistan on Thursday.

The KSE 100-share index recorded another significant surge of 164.75 points and closed at the historical level of 14,754.92 points after briefly touching 14,802.61 points intra-day high in the middle of the session.

The free float market capitalisation based 30-Index crossed 18,000 points threshold for the first time in history. It augmented by 219.37 points to 18,083.15 points. The equity experts declared Thursday October 18 a historical day in the Pakistan domestic politics vis-a-vis local bourse.

The mammoth welcome to Benazir Bhutto in the city in a government friendly and peaceful environment gave go-ahead signal to the mighty bulls at the Karachi bourse, analysts commented.

Ms. Bhutto former prime minister of Pakistan and chairperson of Pakistan Peoples Party (PPP) came back to the homeland after more than eight year in self-imposed exile. She left Pakistan on April 06, 1999 facing corruption charges in second term of Nawaz Sharif government. 

Market participants showed their complete confidence in the recently developing political scenario in the country. They, however, must not ignore the proceedings in Supreme Court in the case of Gen. Pervez Musharrafs candidature in the already held presidential election, they reiterated.

If political happenings stay in line with the market expectations the benchmark 100-Index may surpass 15,000 points mark in short and medium term, Ahsan Mehanti of Shahzad Chamdia Securities said adding, in the long run it would be standing beyond the imaginations.

He said that if political parties succeed in forming the next government the market would continue to perform in upward direction. He opined that the next political government would continue the current political and economic policies as per demand of investors. The cement sector attracted the most investment followed by fertilizer, banking, insurance and telecom stocks.

Investors remained highly optimistic, overwhelming and confident, as it is evident with the six-month high turnover at 485.308 million shares generated during this session.

Across the board buying poured in more than Rs46 billion in the overall market capitalization, which stood at highest level of Rs4.501 trillion when the session closed. M. Imran, Head of First Capital Equities Research said that although market was in overbought zone and it might witness profit selling in the short term, the oil sector was undervalued and is yet to show performance at the Karachi bourse. In the fantastic journey of the leading 100-Index to the north (from 12,000 points to 14,000 points level), the energy scrips did not perform and nor contributed their due share in the index owing to one or the other reasons. Now the energy stocks fundamentals have turned to positive enough strongly, as oil prices in the international markets had surged over US$89 per barrel. 

Oil and Gas Development Company, however, settled in the red region owing to profit booking at the available price.

Mehanti added that the share of oil stocks in the free float capitalization was around sixty per cent and surge in the oil stocks value mean surge in the indices.

Issues of 243 companies closed in the positive column against 102 stocks in the red column with 37 scrips unchanged among 382 active counters on board.

Highest volumes were witnessed in DG Khan Cement at 48.360 million closing at Rs117.10 with a gain of Rs2.85, followed by Lucky Cement at 43.192 million closing at Rs143.25 with a gain of Rs6.25, Fauji Fertilizer Bin Qasim at 32.250 million closing at Rs48.05 with a gain of 50 paisa, Arif Habib Securities at 30.513 million closing at Rs172.80 with a gain of Rs7.55 and Oil and Gas Development Company at 26.481 million closing at Rs131.80 with a loss of Re1.
Investors push KSE to new high amid positive political outlook


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## Neo

*Pak cotton production cost lower than global average ​* 
Friday, October 19, 2007

LAHORE: The cost of production of a kilogram of cotton lint in Pakistan is higher than India, its closest competitor in textile trade, though the cost is still much lower than global average.

The International Cotton Advisory Committee (ICAC) disclosed this in a survey, which evaluated the cost of producing raw cotton and lint in 31 of the 54 countries that cultivate cotton. These 31 countries included all major producers, constituting 88 per cent of global cotton production.

The data from 12 major cotton-producing countries representing various regions and production systems indicated that Turkey was the most expensive country producing raw cotton at 57 cents per kg, followed by Syria at 53 cents per kg. The cost in China (mainland), India (north) and Pakistan (Punjab) was 36 cents, 25 cents and 29 cents respectively for producing one kg of raw cotton.

The net cost per kg of lint in the US came to US$1.15/kg, in China (mainland) $1.52/kg and in Turkey (GAP) $1.63. In Pakistan, the net cost/kg was only $0.67.

Assuming the ginning cost in India equivalent to the cost in Pakistan, the net cost in the northern region of India came to $0.50/kg of lint. Net cost per kg of lint is lower in India due to recent increases in yields as well as higher value of cotton seed after ginning.

The survey of 31 countries showed that the farmers spent $730 to produce cotton over one hectare. 

That excluded land rent, but included all inputs and operations up to the harvest of raw cotton. The value of seed sold after ginning may be significantly lower or higher than the cost of ginning. Thus, net cost has been calculated excluding land rent and seed value from the total cost.

The net cost of producing lint per hectare came to $763 while the net cost of producing a kilogram of lint averaged $1.

These countries are located in North America, South America, Asia, Africa and Australia. Highest money is spent in Australia to produce and harvest cotton over an area of one hectare. Three west African countries participated in the survey and on average farmers spent $391 to produce cotton on one hectare.

The expenses on producing raw cotton are close to double west African costs in Asia, almost three times in Australia and 12 per cent higher in other African countries.

However, the average cost of producing raw cotton among the regions is in a small range, except for Australia, from 31 to 36 cents/kg. However, the cost of producing lint varies greatly among the regions.

It is most expensive to produce a kg of lint in west Africa, followed by Australia and North America. It is least expensive to produce lint in other African states, costing $0.80/kg.

The four major inputs, excluding field operations, are seeds, irrigation water (if cotton is irrigated), insecticides and fertilisers. On average, the farmers spend $70 per hectare to purchase seeds.

The cost of planting seeds includes seed de-linting and treatment with fungicides, if any. The average cost of planting seeds comes to nine US cents per kg of lint. Almost half of the world cotton area is sown with assured irrigation water.

The cost of irrigation is $110 per hectare, or 11 cents per kg of lint. Insecticides are used in almost every country and the only exception seems to be Syria. Average cost of insect control is $100.51/hectare or 13 cents per kg of lint.

The cost of fertilisers is on the increase and averaged 22 cents per kg of lint in 2006-07. The cost of weed control operations, comprising hoeing, inter-culturing and herbicides, comes to 12 cents/kg of lint. The cost of harvesting averages 15 cents per kg of lint.

Pak cotton production cost lower than global average


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## Neo

*Pakistan extends $10m loan to Lao ​* 
Friday, October 19, 2007

ISLAMABAD: Pakistan would provide US$10 million buyers credit facility to Lao Peoples Democratic Republic (LPDR).

An agreement to this affect was signed by Additional Secretary Economic Affairs Division, Junaid Iqbal Chaudhry on behalf of the Government of Pakistan while Phongsavath Boupha, First vice Foreign Minister, Ministry of Foreign Affairs LPDR signed the agreement on behalf of his country. According to the agreement, the credit of US$10 million has been offered to LPDR on one per cent interest rate with 30 years repayment period including five-year grace period.

The credit will be utilised by the LPDR to purchase goods and services from the source country as mutually agreed between the two sides. Entering in this stage of bilateral cooperation with LPDR is a manifestation of the Pakistans vision of East Asian Strategy to expand our relations beyond the immediate neighbourhood through organisations like ASEAN and ASEM, Chaudhry observed and added that Pakistan accords high priority to its relations with LPDR and plans to develop a soft visa regime with them in near future.

He stressed that Pakistan and LPDR can enhance their relations in agriculture, science and technology, education and industrial development.

Pakistan extends $10m loan to Lao


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## Neo

*Kinno exports to improve this year​*
ISLAMABAD, Oct 18: Pakistan may be able to export 200,000 tons of kinno this season starting mid-November because of the expected bumper crop which is likely to yield 1.6 million tons.

According to the Pakistan Horticulture Development and Export Board (PHDEB) kinno is gaining popularity in new markets such as Czech Republic, China and Germany due to the promotional exhibitions arranged by the government of Pakistan last year.

A recent crop analysis by the PHDEB which found the kinno crop in very good condition has generated optimism about an increased export this year.

The board, in collaboration with the Agribusiness Development and Diversification Project (ADDP) and the Agribusiness Support Fund (ASF), has initiated the system of Good Agricultural Practices (GAP) through EurepGAP certification.

For the first time a Pakistani orchard has received EurepGAP certification awarded by Bureau Vertias this year. Pakistans maiden EurepGAP certification has been awarded to Jamal Din Wali (JDW) orchards in Rahim Yar Kan district.

This certification is likely to help in starting the export of Pakistani citrus to the so-far unexplored US and UK markets. Sanitary and Pythosanitary (SPS) related issues have been haunting Pakistans efforts to start export to these valued markets.

The EurepGAP represents a set of standards and procedures which has been developed by the Euro Retailer Produce Working Group (EUREP) and farmers representatives for the certification of GAP worldwide.

The standards focus is directed on risk analysis and risk prevention for the purpose of food safety, traceability, workers health and welfare, environmental pollution and conservation management. It covers exclusively the on-farm production and handling facilities.

Russia has also emerged a sizeable market for Pakistani kinno. But, the issue of the Pakistani rices infestation with Khapra beetle has invited a ban on the export of rice last year. A Russian delegation is also visiting Pakistan by the mid of next month.

The delegation comprising experts would inspect farms, orchards and processing plants. Officials at the federal ministry of Food, Agriculture and Livestock (Minfal) are hopeful that they would satisfy the Russians queries regarding the domestic standards.

Pakistans earning from kinno export has been increasing for the last few years. According to the federal Bureau of Statistics (FBS), the country earned $21.7m during 2001-02, which jumped to $38.96m in 2005-06.

Kinno exports to improve this year -DAWN - Business; October 19, 2007


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## Neo

*Reserves​*
KARACHI, Oct 18: Pakistans total liquid foreign exchange reserves surged by $151 million to a record high at $16.335 billion mark this week.

According to the weekly report of State Bank of Pakistan the foreign exchange reserves held by the central bank were at $14.104 billion on October 13, 2007, while those held by the banks stood at $2.231 billion.

Reserves -DAWN - Business; October 19, 2007


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## Neo

*Pakistan, Iran may sign GSP for gas pipeline project today​*
* India will sign separate GSP with Iran for gas pipeline project 
* India contacts Pakistan to resolve the issue of transit fee

ISLAMABAD: Pakistan and Iran have finalised the much awaited technical level talks on Gas Sale Purchase (GSP) agreement for the gas pipeline project worth $7.4 billion and the agreement is expected to be signed on Friday (today) after secretary level round of talks between two countries, it was learnt on Thursday.

Sources in the Petroleum Ministry told Daily Times that all technical obstacles in the GSP agreement between Iran and Pakistan regarding the gas pipeline project have been removed in technical level talks on Thursday and there is a strong possibility that the agreement will be signed after the secretary level talks to be held on Friday (today). The press briefing in this regard will be held on Saturday (tomorrow). Sources said the last unresolved subject of price review proposed by Iran after three years remains under discussion in technical talks. 

The official said three-day technical level talks between Iran and Pakistan were concluded on Thursday with better results, adding that if the dialogue between the two sides went in the right direction then the GSP agreement may be signed for the gas pipeline project after secretary level talks here in Islamabad.

These talks are the follow up of the Tehran round of talks on the gas pipeline project and the head of the National Gas Exports Company Nasrullah Saifi led the Iranian side at the technical level talks while Pakistani delegation was led by Managing Director in Petroleum Ministry Hassan Nawab.

Official said that Iranian representative to the secretary level talks Dr Hojatollah Ghanimi-Fard, reached Islamabad Thursday to take part in the talks. The seven-point $4 billion gas pipeline deal is to bring sixty million cubic metres natural gas per day from the Iranian South pars gas field through land route to Pakistan. In the technical talks agenda the draft of GSP contract was studied by legal and technical experts to see if it does not contradict agreements.

Though India has announced to stay away from the talks being held in Islamabad between Iran and Pakistan, official expressed hope that the gas pipeline project is still Iran- Pakistan-India (IPI) project and Pakistan also supports involvement of these three parties in the project. India and Iran would also hold talks to make an agreement of the GSP kind, he added. Another official in the ministry of petroleum and natural resources said that India might go for a separate agreement with Iran regarding the gas pipeline project. Official confirmed that India had contacted Pakistan to resolve the issue of transit and transportation fee regarding the gas pipeline project that India will have to pay to Pakistan to bring natural gas from Iran via Pakistan. There is also a strong possibility that Pakistan and India can hold a meeting to resolve the issue of transit fee any time soon. Both countries are in contact to resolve the issue of transit fee and finalising the schedule of meeting in this regard, official said.

Daily Times - Leading News Resource of Pakistan


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## Neo

Friday, October 19, 2007 

*Russian team to visit Pakistan next month​*
ISLAMABAD: A Russian delegation will visit Pakistan in mid-November to sort out phytosanitary problems with their Pakistani counterparts for the possible removal of ban on Pakistans agricultural imports, officials in the ministry of food, agriculture and livestock (MINFAL) told Daily Times here on Thursday. 

In this regard a high level meeting was held on Thursday at the MINFAL that was attended by Russian ambassador to Pakistan, Sergey N Pesvok, Additional Secretary MINFAL, Saleem Khan Jeghra and other high level officials. 

The Russian Federal Veterinary and Phytosanitary Surveillance Service (VPSS) delegation will visit Pakistan in order to check the quality of agricultural produce. The Russians had raised the issue of quality problems of Pakistani agricultural and horticulture products, which had provoked Russia to slap ban on import of Pakistani agriculture products.

It was expected that the Russian experts would visit farms, orchards and inspect processing plants and fields, the officials said.

Another official in MINFAL said that last year the country had exported 1400 containers of kinno to Russia and brought back $2.8 million in exports proceeds. He said that this year a bumper kinno crop was being expected and exporters were willing to dispatch more than 2000 containers of kinno worth $4 million to Russia. 

Saleem Khan Jeghra, Additional Secretary of MINFAL told Daily Times that exporters should meet the international quality standards for removing the Russian ban on Pakistani agricultural produce, particularly that of kinno and rice. He said last year the government earned Rs 30 million from export of kinno to Russia.

The secretary said that Russian imposed ban on Pakistani rice when some of the product that landed in Russia via several countries was affected by trogoderma granzrium. He said that Russia was huge market for Pakistani agricultural produce and proper steps will taken to remove the problems. 

He Thursdays meeting as a positive development and expressed the hope that the coming delegation in mid-November would help in removing the ban on Pakistani agricultural products.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Oil consumption surges by 9.3%​*
KARACHI: The oil consumption growth has surged by 9.3 percent in the country on year-on-year basis during the first quarter of the fiscal year 2007-08, reveals the recent Oil Companies Advisory Committee (OCAC) figures for 1QFY08 issued on Thursday. 

The total volumes excluding non-energy settled at 4.58 million tonnes during the period as against 4.19 million tonnes in the same period last year. Only PSOs market share has improved to 70.7 percent during 1QFY08 as against 68.4 percent last year. Shell and APL stood with 13 percent and 5.2 percent of market shares in 1QFY08, down from 14.3 percent and 7.3 percent respectively during 1QFY07. Slight decline in Shells market share came on the back of low volumes and the declining exposure to regulated products. Whereas, reduced market share of APL was due to 23 percent decline in volumes of the POL products of the company (ex- non-energy). 

An energy analyst Khurram Schehzad said the overall supply might be affected due to local refineries shutdown. However, in the months ahead, upcoming winter would freeze water, which would increase FOs demand as hydro power plants would slowdown. Wheat sowing season (from Oct) is likely to increase LDOs demand whereas Mogas and HSD consumption is already picking up pace. JP1 demand may increase as the Hajj season comes closer. Therefore, OCAC expects full-year demand growth to range between 10-12 percent on Y-o-Y basis, he added.

Daily Times - Leading News Resource of Pakistan


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## Neo

*ADB to provide $75 million for Barani sector project ​*
FAISALABAD (October 19 2007): Asian Development Bank will provide $75 million for Barani Integrated Water Resource Sector Project, while Punjab government will provide $26 million and beneficiaries' share of the project will be $2.30 million.

In a project update report, Arnaud M Cauchois Rural Development Specialist from ADB said that the aim of the proposed project is to improve household income and health care in the districts of Attock, Rawalpindi, Jehlum and Chakwal in the barani areas of the Punjab province.

These four districts were selected due to their high percentage of rain-fed agriculture as compared to other districts in the barani areas, he added. Arnaud M Cauchois said that the project's objective is to help increase crops and livestock productivity and households' access to domestic water supply.

This will be obtained from the conversion of 11,500 hectares (ha) of rain-fed agricultural land into irrigated land and the improvement of irrigation system on 10,000 hectares. Two representatives' subprojects ("core sub-projects") were selected to assess the Project's feasibility with regards to technical, social, financial and economic aspects as well as to social and environmental safeguards.

The selection of core sub-projects was based on size of investment, type of proposed dam, representative geographic and social conditions, he added. Arnaud M. Cauchois said, less than 10 percent of the total crop output is produced from the barani cultivated land of Punjab and North West Frontier provinces. This low productivity that affects 18.6 percent and 49 percent of the Punjab and NWFP total cultivated area respectively is further constraining an already low national agricultural growth and is forcing Barani residents to migrate or live in poverty. Yet significant gains in agriculture and livestock productivity and related economic growth can be obtained through water resources development for which little investment support has been made available to date. With suitable topography and rainfall, the best potential option appears to be the development of water storage through the construction of small to medium dams, he added.

He mentioned that previous experiences show that small to medium dam development in Barani areas needs to be developed through an integrated approach to ensure the full development of the potential economic benefits.

Guidelines on the Use of Consultants by Asian Development Bank and its borrowers (2007, as amended from time to time). The project will provide 569 p/m of national project implementation consultants (8 long term consultants) for the PMU.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Trade and economic relationship: Salman to hold talks with senior US officials ​*
WASHINGTON (October 19 2007): Adviser to Prime Minister Dr Salman Shah, who represents Pakistan at next week's strategic economic dialogue with the United States, has voiced the confidence the two countries would avail existing vast opportunities for further bolstering bilateral trade and economic relationship.

Dr Shah will hold extensive talks with senior US officials and explore possibilities for enhanced trade, economic and investment ties as part of the broader strategic partnership between the two countries.

"The US-Pakistan economic dialogue aims at invigorating the economic co-operation, Pakistan can impart further momentum to its development through greater access into the robust US market -- and Pakistan being an emerging economy and the US being the world's largest economy, I see a lot of scope for further expansion in our relationship," he told APP in an interview.

The United States is one the largest trading partners of Pakistan, which has chalked up remarkable growth in recent years with investment inflows spiralling consistently, a factor which, Shah said, reflected the strength of the South Asian nation's economic potential. The US is destination for about 29 per cent of Pakistan's annual exports.

The top economic manager is due to meet senior officials at the US departments of state and treasury and also to interact with American business leaders and investors. Ahead of economic dialogue, Dr Shah is leading Pakistan's delegation at the annual World Bank-IMF meetings and is due to meet the new WB president Robert Zoellick.

Stressing on US-Pakistan relations, the adviser on economic and financial affairs said, "America is also one of the largest capital markets of the world and a huge market for the country's products.

"Pakistan has a large population, with over 100 million people under the age of 25, so it is very important for a country like Pakistan to be able to participate in global markets like the United States - it is in line with our policy to integrate with the large markets like the US, EU, China and Japan - we should be able to have access to these markets, and tap the capital markets and also be able to sell our services and goods to products markets."

Shah identified technical training for Pakistanis, higher education, manufacturing and investment possibilities as areas of prospective co-operation. Besides, he said, Pakistan has a great opportunity for outsourcing business in the information technology sector.

On proposed creation of Reconstruction Opportunity Zones in tribal areas, NWFP, Balochistan, and earthquake-hit areas of Azad Kashmir, Shah said the launch of initiative will be important in terms of Pakistan gaining greater access to the US market and added this will be one of the subjects on dialogue agenda.

Pakistan, he said, has a very large competitive workforce and is looking for utilisation of this labour force in value-added activities like engineering, ship building, automobiles, consumer durable, services sector, financial services etc.

"Pakistan has common legal system with the West, we also have the English language advantage, our accounting systems are up to the mark, so the country is very well-placed to provide manpower for the world in these services areas."

Questioned about the impact of politician transition on Pakistan's economic growth prospects, Dr Shah said since the presidential election, the country has "already received close to $300 million in portfolio investment in a couple of weeks, which shows that there is so much interest in investing in Pakistan."

"And as our political transition happens successfully and there is this semblance of continuity with the president being there for the next five years, and if the general elections return a parliament which continues economic policies, there will be immense pouring in of investment and investment is what Pakistan needs."

The adviser, who will also interact with members of the influential US Congress, said the battle against extremism affecting the country's areas along Afghan border, requires a major socio-economic initiative, where the country can grow rapidly and create the jobs for the youth.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

* SIE to provide 60,000 direct, 600,000 indirect job opportunities ​* 
LAHORE (October 19 2007): Provincial Minister for Industries, Muhammad Ajmal Cheema has said the government measures and projects for industrial and social development have started yielding results. The Sunder Industrial Estate (SIE) being the best industrial estate of the country will provide 60,000 direct and 600,000 indirect job opportunities to people.

Industrial estates are being established throughout the province to expedite the pace of industrial development and generation of employment opportunities and their management has been given to the private sector. Cheema said promotion of industrial development and provision of employment was part of vision 2020.

He told a delegation of industrialists in Eid at his home here that the Sundar Industrial Estate project started in 2004 at a cost of Rs 1 billion under the Public Private Partnership and its management was given to the private sector. He said the estate made up of 1,500 acre of land had been provided state-of-the-art infrastructure.

The minister said plots in this industrial estate had been sold and it had its own power generation system. He said pharmaceutical, medicines, chemical, pesticides, plastic, food beverage and other industries were being set up in the estate. He said water treatment plant was also being installed here to provide water. He said there was a labour colony being constructed to provide residential facilities to labourers plus facilities to educate them. 

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Interpreters having language skill vital to cope with rising demand ​* 
ISLAMABAD (October 19 2007): Pakistan should have a cadre of interpreters with efficient language skill to cope with rising demand for interpreters as country's increased participation in international forums, like WTO. Interpreter's job offers excellent opportunities of high remuneration and social stature.

It may be pointed out that many trade institutions in the country and abroad need the services of qualified interpreters for developing contacts with overseas agents. However, there are few takers because of the shortage of competent and qualified persons with foreign language skills.

Syed Mukhtar Haidar Shah, Joint Secretary (Administration) of National Assembly told Business Recorder that the NA secretariat recently advertised the job of interpreter to do simultaneous rendering in English and Urdu of Members' speeches but only a few candidates with relevant diploma or degrees responded to the advertisement. He pointed out that even the Foreign Office does not possess cadres of qualified interpreters in foreign languages.

Senate and National Assembly need skilled hands not only for interpreting speeches made on the floor, and in the standing committees, but also to deal with visiting parliamentary delegations.

Heads of foreign delegations usually like to speak in their own mother tongue. To meet this need Parliament hires interpreters from the National University of Modern Languages (NUML).

Considering the very close relationship with Chinese Parliament, the NA Secretariat has sent its research director Razia Sultana to learn the Chinese language.

It might be mentioned that the Chinese Radio in Beijing almost invariably hires a Pakistani for external Urdu language service. So do BBC, Deutsche. Wales, Danish Radio and Voice of America, to name a few, for Urdu broadcasts beamed to this region. When contacted, Brigadier Aziz, Rector of NUML, said his university offered a two years' course of interpretership, in 22 foreign languages.

The NUML courses were tailored to suit the need to get ahead fast in intensive instructive course designed for a personalised programme, that integrates professional and personal skill to speak in native languages such as Arabic, Chinese, French, English, German, Italian, Persian, Japanese, Spanish, Dutch, Portuguese, Polish, as well as prepare documents, presentations and write details for real professional situations with a good control of the language.

The Rector added that after passing out, NUML diploma holders are quickly absorbed in foreign embassies. Besides NUML, institutions such as Alliance Francais, British Council, Khana-e-Farhang Iran, Goethe Institute, etc teach the language spoken in their own country.

Interpreters are also needed by commercial and trade bodies to establish contacts, which need to follow WTO standards, as well as for meeting international objections often raised about the quality of goods, as well as in participation in international conferences and seminars, which are being organised in Pakistan at a fair pace.

However, English is used as the principal language in international meetings held in Pakistan, although many interpreters would be needed for day to day contacts with foreign delegates and guests who visit Pakistan on official invitations.

Amjad Farooq of the Federation of Chambers of Commerce in Karachi informed this scribe they maintain a directory of persons with foreign language skills and hire their services for extending hospitality to foreign guests and delegates, who have only rudimentary knowledge of English. He also said now a days, much of the interpreting is done by computers. You feed the data in, and the computer will translate you in the knowledge you want it to be done.

A public relations official of the Industries Minister related the story of recent gems and jewel exhibition organised by his Ministry in Bangkok. They hired a Thai girl to meet the needs of local language transmission and ended up with orders of 800 million dollar. From these two examples, quoted above, one could come to conclusion that local commercial and business houses need to be synthesised to hire more interpreters.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Government committed to develop NWFP and Fata: Musharraf ​*
ISLAMABAD (October 18 2007): President General Pervez Musharraf on Wednesday said that government was firmly committed to bringing about fast track socio-economic uplift for the people of NWFP and Fata.

Chairing a high level meeting, also attended by Prime Minister Shaukat Aziz, here at the Aiwan-e-Sadr on the prevailing situation in NWFP and Fata, the President said the vast majority of the people are moderate and want peace and progress in their areas.

President General Pervez Musharraf said the government was pursuing a comprehensive strategy for the uplift of Fata and the underdeveloped areas of NWFP on a fast pace basis as it would help defeat extremism and terrorism and usher in a new era of progress and prosperity for the people.

The meeting was also attended by Governor NWFP Lieutenant General (Retd) Ali Muhammad Jan Aurakzai, Caretaker Chief Minister Shams ul Mulk, Interior Minister Aftab Sherpao and senior officials.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Shell starts offshore drilling ​* 
ISLAMABAD (October 19 2007): Pakistan is on its way to make new history by hitting untapped potential for oil and gas production as the Shell-led consortium has started drilling in deep waters for offshore exploration project.

Sources said that Shell Pakistan, being operator of the project, has managed to bring 'Transocean', a ship-mounted rig, for exploration in Pakistan's deep waters.

Drilling started on October 1, and so far half of the drilling process has been completed. The concerned authorities are of the view that drilling process may take another 15 to 20 days. The project will cost roughly $ 46 million. The parties to the joint venture--OGDC, PPL and Government Holding (Pvt) Limited (GHPL)--are party to the project.

Experts hope for a positive outcome of the exploration since offshore block, being drilled, is believed to have very bright prospects. They believe that a discovery in deep waters will help Pakistan increase domestic oil and gas production share. The positive outcome can also help Pakistan secure more investment in its oil and gas sector.

Shell was granted a block in Pakistan's deep waters in 2005. Since then, it made several attempts to secure a rig for exploration. However, its initial efforts did not succeed. At one stage, it appeared that the project may not take off.

In response to the partners' queries, seeking reasons of delay in securing the rig and spudding the well, Shell informed them early this month that drill ship 'D534' was on its way, and ETA was September 15. It said that a helicopter to facilitate the operation has already arrived in Karachi and standby vessel Ocean Flower had arrived in Karachi on September 10.

Shell said: "We have been informed that the Sea Trout, our main supply vessel, that was to transport the casing, drill bits, offshore containers and other supplies from Dubai to Karachi, has suffered damage to a main engine and requires replacement of the crank shaft. These ongoing repairs in Dubai are anticipated to take until September 19 to complete. This would delay the arrival of the vessel in Pakistan until September 24 for customs clearance which could lead to a delay in spud date of around 10 days."

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Govt to take one more year to finalise transport policy ​* 
Saturday, October 20, 2007

ISLAMABAD: The government has failed to finalise the first-ever national transport policy within the stipulated time and will take one more year to complete the task.

Sources in the communication ministry told The News that the much-awaited transport policy was most likely to be finalised next year, an assignment which had to be completed in 2006. The transport sector currently accounts for 11 per cent of GDP, 16 per cent of fixed investment, 35 per cent of total annual energy use and about 15 per cent of the Public Sector Development Programme.

Although Pakistan retains a road network of 258,000km (including 9,500km national highway and motorways), the road density is low for a population of 156 million people and an area of 796,000km. The total public expenditure on roads is over Rs33 billion a year, with 65 per cent on national highways. There are also about seven million vehicles on road, which are projected to increase to 21 million by 2030. Pakistan Railways has about 10,000km of track network but it is performing below its commercial potential.

The two major ports handle over 41 million tonnes of cargo annually apart from container traffic. The Asian Development Bank (ADB) has been offering technical assistance for the formulation of a comprehensive and integrated transport policy to develop an efficient mode of communications by improving and developing existing rail and road infrastructure.

Sources said the draft of the national transport policy was still incomplete and scores of issues were yet to be resolved with the stakeholders. When contacted, Communications Minister Shamim Siddiqi conceded that there was a delay in finalization of the transport policy. He said the ADB wanted to take all the stakeholders on board which resulted in further delay.

Siddiqi said some stakeholders were earlier not part of the process but now the government has decided to take all of them on board. When asked, he hoped the policy would most probably be ready in next June after almost one year. Under the policy, he maintained better coordinated use of various modes of transport would be facilitated that includes road, rail, ports and air traffic.

On the other hand, the Planning Commission (PC) in Annual Plan 2007-08 feared that inefficient and outdated transport and communication infrastructure could not support 7 per cent growth the government is hoping to achieve.

The PC said the existing infrastructure, which is quite unsuitable even by present standards, will have to be updated to international standards in scale, quality and management efficiencies within the next five to six years so that it could be deployed optimally.

Govt to take one more year to finalise transport policy


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## Neo

*Agri growth precursor to industrial revolution ​* 
Saturday, October 20, 2007

LAHORE: Agricultural growth was the precursor to the industrial revolution that spread from England in the mid-18th century to Japan in the late 19th century. More recently, rapid agricultural growth in China, India and Vietnam was the precursor to the rise of the industry.

This was observed in a World Bank development report for 2008 titled Agriculture for Development. According to the report, Pakistan has 22.11 million hectares of arable and permanent cropland. Average annual growth in its irrigated land during 1980-2004 was 09 per cent. Average use of fertiliser per hectare is limited to 167 kg while pesticide use is 6.1 kg per hectare.

Its annual renewal water resources per capita are 336 cubic meters, the lowest in the region. Agriculture consumes 96 per cent of this water resource. The rate of deforestation in the country is 1.6 per cent. Agriculture is based worldwide in rural areas. Sixty one per cent of Pakistans rural population has access to all seasons roads and 67 per cent enjoy the facility of electricity.

Cereal production in Pakistan is 203 kg per capita and has grown at a rate of 2.8 per cent during last decade. The yield of cereal per hectare is 2456 kg per hectare and has grown at rate of 0.9 per cent in last two decades.

Meat production is 13 kg per capita, fruits and vegetable production is 68 kg per capita. Import of agricultural commodities average $2,703 million during 2003-05 while exports averaged 41,666 million during same period. The share of agricultural exports in total exports of Pakistan stands at 12.1 per cent.

Access to water and irrigation is a major determinant of land productivity and the stability of yields. Irrigated land productivity is more than double that of rain-fed land. In Sub-Saharan Africa, only 4 percent of the area in production is under irrigation, compared with 39 percent in South Asia and 29 percent in East Asia.

The large and persistent gap between agricultures shares in GDP and employment suggests that poverty is concentrated in agriculture and rural areas and that as non-agricultural growth accelerates, many of the rural poor remain poor. 

Pakistan is classified among countries where smaller farm size means more inequality. The Gini of land Distribution in Pakistan has increased from 53.5 per cent in 1990 to 4 per cent in 2000.

Average farm size in Pakistan has reduced from 3.8 hectares in 1990 to 3.1 hectares in 2000. The process has impacted 31 per cent of the farms during this period. Population pressures, unequal landholdings, and inheritance norms favouring fragmentation are leading to rapid declines in farm sizes in many parts of Asia and Africa, states the report. Increasing the productivity of small farms-through high-value crops or higher-yielding technologies for food crops- can increase the incomes from small farms, the report adds.

Pakistan reduced taxation of agriculture during the two decades ending in 2004 while India increased taxation on agriculture during this period. The report states that following complete trade liberalization the global rates of cotton would increase by 20.8 per cent, oilseeds by 15.1 per cent, dairy products by 11.9 per cent, wheat by 5 per cent and livestock by 2.5 per cent.

Trade liberalization would increase the global share of trade of developing countries for cotton by 27 per cent, oilseeds by 34 per cent, dairy products by 7 per cent, wheat by 21 per cent and livestock by 2 per cent. 

With 55-60 percent of Indias irrigated land supplied by groundwater, electricity for tube well pumps is an important input. Most state governments provide electricity to farmers at a subsidized flat rate-often for free. But the quality of service is poor because of erratic and limited supply and voltage fluctuations, which can result in crop losses from forgone irrigation and damaged pumping equipment.

The electricity subsidies to agriculture are also fiscally draining and environmentally damaging. In Punjab electricity subsidies to agriculture in 2002/03 were 7 percent of state expenditures. 

Fertilizer subsidies would have to be the most cost-effective option for achieving the desired, social objective, compared with such alternatives as food aid, food for work, and cash transfers. 

Agri growth precursor to industrial revolution


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## Neo

*Pak-German trade rises to $2bn per annum​*
ISLAMABAD: Bilateral trade between Pakistan and Germany has the potential to grow further, which at the moment reaches to about $2 billion per annum.

President Islamabad Chamber of Commerce and Industry (ICCI), Nasir Khan, said on Friday that Pakistan economic indicators were healthy and the business community would encourage more trade and investment with Germany. At present Germany exports to Pakistan were $1.2 billion and Pakistan export to Germany was $800 million annually, the ICCI president said during a meeting with Counselor of Media and Public Diplomacy Mr Patric Hiens and Third Secretary of Commercial & Development Section Mr Andreas Dautch in ICCI office. 

The German Counselor Patric Hiens said that presently Germany was focused on multilateralism but the government could review need for bilateral arrangements in view of the competitor. The EU assured the business community that Germany would continue to support Pakistan to further improve bilateral cooperation. 

Germany also offered technical assistant with latest equipment for the growth of production.

Daily Times - Leading News Resource of Pakistan


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## Neo

Saturday, October 20, 2007 

*Strong growth, aggressive privatisation boost FDI inflows​*
* World Investment Report 2007 points large merger and acquisition deals as successes in Pakistans privatisation process

ISLAMABAD: Pakistans performance in attracting foreign direct investment (FDI) worth $4.3 billion has been promising and it has been made possible due to strong economic growth and an aggressive privatisation programme, according to the World Investment Report 2007 released here on Friday.

The report titled Transnational Corporations, Extractive Industries and Development has been prepared by the United Nation Conference on Trade and Development (UNCTAD).

The report highlights that after playing a leading role in a number of large merger and acquisition deals in Pakistans privatisation process, West Asian companies have announced a series of large Greenfield projects in the country.

The report further highlighted that FDI in Pakistan is increasing constantly, during the decade of 1990-2000 inflows of FDI in Pakistan averaged $463 million and outflows were recorded at $5 million. 

Inflows of FDI rose to $534 million in the year 2003 with outflows of $19 million. However, FDI inflows crossed the $1 billion mark in 2004 and FDI inflows slowed to $1.18 million. Inflows of FDI in the year 2005 further increased to $2.201 billion in Pakistan with a FDI outflow of $44 million in the same year. FDI inflows during the year 2006 amounted to record $4.273 billion in Pakistan with FDI outflows of $107 from Pakistan in the year. 

The report 2007 further reveals that inflows of FDI in Pakistan during the decade 1990-2000 were 3.8 percent of the gross fixed capital formation (GFCF). FDI inflows rose to 7.5 percent of GFCF in the year 2004, 13.1 percent in year 2005 and further rose to 24.1 percent in the year 2006. 

In terms of source of FDI, there has been a shift from developed countries to West Asian countries, particularly the United Arab Emirates and Saudi Arabia. UNCTADs annual survey of global investment trends reported that FDI jumped sharply by 38 percent in 2006 to Rs 1,306 billion, nearly equaling the record set in year 2000. All three categories of countries developed, developing and transition showed significant gains. 

The report states that the FDI inflow to South Asia surged by 126 percent amounting to $22 billion in 2006, mainly due to investment in India. The country received more FDI than ever before ($17 billion, 153 percent more than in 2005), equivalent to the total inflows to the country during the period 2003-2005. Rapid economic growth has led to improved investor confidence in the country. 

According to the government of India, the countrys economy is expected to grow by 9.2 percent in the 2006-07 fiscal year. The sustained growth in income has made the country increasingly attractive to market-seeking FDI. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Poland offers to develop Gwadar Port city​*
QUETTA Oct 19: Poland has offered to set up industry in the port city of Gwadar besides developing infrastructure there. It has also extended cooperation in oil and gas, energy, maritime, engineering and food processing sectors in Pakistan.

The offer was made by Ireneusz Makles, Polands Consul-General in Karachi while addressing a conference on Poland-Pakistan economic relations with reference to Balochistan organised by the Balochistan Economic Forum here on Thursday.

The conference was attended by business leaders, industrialists and senior officials of the Balochistan government.

Poland is interested in helping Pakistan in different sectors. It can supply electrical and railway equipment, agricultural machinery and spare parts, heavy vehicles and marine and diesel engines, he added.The diplomat said that his country was also interested in cooperating with Pakistan in coal and mining industry. It has great experience in this field. He said that a delegation of Polands biggest mining corporation visited Quetta in April to acquaint itself about Balochistans requirements and plans for investment as well as scope of joint ventures.

Praising the rapid development taking place in Gwadar and the setting up of an economic free zone there, he said Gwadar would serve as an energy corridor for Central Asia, Middle East, South Asia and western Asia. The free zone would attract investment in many sectors, including power generation, manufacturing, hotel industry and tourism and water desalination.

Mr. Makles said that the Polish companies were awaiting the announcement of investment packages and incentives by the government. He would encourage Polish companies to take part in the development projects of Balochistan, including the Kachhi Canal, Gwadar Port, the coastal highway, and the railway line from Gwadar to Central Asian states.

The Polish diplomat said that there was also a possibility for Pakistani businessmen to export Polish products to Afghanistan, Central Asian states and also to Eastern regions of Iran.

He said that Poland was also interested in cooperating in mining, engineering, fisheries, food processing, gas, pharmaceuticals and textiles industry.

Inviting Pakistani investors, he said Poland was a paradise for foreign investors due to its political stability and its location in the centre of Europe. It can serve as a launching pad for businessmen to market their goods to the whole of Europe.

He said that a Polish trade delegation would soon visit Pakistan to discuss ways to boost two-way trade and investment opportunities.

He further said that his country would supply 300 bulldozers to Pakistan, of which 200 would be provided to Balochistan.

Earlier Sardar Shaukat Aziz of Balochistan Economic Forum said that Poland had agreed to set up a warehouse in Warsaw for precious stones exported from Balochistan.

Poland offers to develop Gwadar Port city -DAWN - Business; October 20, 2007


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## Neo

*India virtually out: IPI gas line rendered two-nation project ​*
ISLAMABAD (October 20 2007): Iran-Pakistan-India (IPI) gas pipeline has literally turned into Iran-Pakistan (IP) gas pipeline as Tehran and Islamabad entered into bilateral technical discussions without waiting any more for India to make the project a reality.

A visiting Iran delegation, headed by Dr Ghamini, Chief of Iranian Natural Resources Ministry, held discussions with Pakistan officials on the project. The discussions covered wide-ranging issues, including gas pricing formula, size and route of the pipeline, taxation and other facilities to be accorded by the two governments to make the project a reality.

The two sides will have another round of talks on October 20. This is expected to be followed by a joint announcement here on the outcome of discussions. Sources said that during the first round of talks the two sides were unanimous that the preparatory work for the gas line should be completed on top priority to bring it on ground as early as possible.

They also discussed the nature of the back-up facility to ensure continuous supply of gas for the project. A senior Petroleum Ministry official told Business Recorder on Friday that keeping in mind unresponsive attitude of the Indian side, Islamabad and Tehran decided to go for the project without New Delhi. He said that discussions for gas line were primarily on bilateral basis. The official said: "We are not considering Indian participation in the project any more."

However, the official did not rule out the possibility of India's coming in as third party to the project at any later stage. He said: "One can not rule out Indian participation in the project at any later stage, but at present our (Iran and Pakistan) priority is to make sure that the project does not face inordinate delay in execution."

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Kabul angry over not facilitating its exports ​* 
ISLAMABAD (October 20 2007): Kabul is angry with Islamabad for not facilitating export of its goods to Pakistan under the Afghan Transit Trade Agreement (ATTA) which the former feels necessary to improve the balance of trade, sources told Business Recorder here on Friday.

These concerns were expressed in the Pak-Afghan Joint Economic Commission (JEC) meeting and joint Jirga held a couple of months ago. Pakistan's formal exports to Afghanistan have crossed $2 billion mark per annum but the share of Afghan exports to Pakistan is far less.

Both sides had agreed that Pak-Afghan Joint Business Council should be made more effective and active to identify areas of co-operation between the private sectors of the two countries, sources said, adding that the council would report its activities to the JEC for making it more effective.

Sources said that both sides had also agreed to take steps for increasing Afghan exports to Pakistan, and the former was given responsibility to identify exportable items for launching potential joint ventures so that the private sectors of both countries could be encouraged to invest in export-oriented industries.

"Though both sides were in agreement that export of goods from Afghanistan to Pakistan will be encouraged, nothing has been done so far, which has irritated Kabul," sources added.

They said that the JEC was scheduled to meet in October but its meeting was cancelled for reasons unknown. They said that Afghan authorities were also concerned over Pakistan's consistent resistance to facilitate transit trade and when the issue was raised in the Joint Pak-Afghan Jirga a couple of months ago, Pakistan assured Afghanistan that it would fully cooperate in this regard.

Sources said that Pakistan has already approached the Afghan customs authorities to encourage import/export of containerised cargo under the ATTA to ensure proper documentation and to curb smuggling. The Federal Board of Revenue (FBR) has also asked Commerce Ministry and Afghanistan government to facilitate the containerised cargo movement for encouraging documentation and discouraging smuggling.

Pakistan Customs would demand only those documents from the Afghan businessmen, which are specified under the ATTA Protocol. Pakistan customs authorities would only verify the seals of the containers carrying ATT cargo at the entry and exit points. Checking of the seals at specific points would put in place an effective transit regime for the benefit of both Pakistan and Afghanistan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Rs 3.83 billion projects for Rahim Yar Khan to be inaugurated' ​*
RAHIM YAR KHAN (October 20 2007): Mega projects estimated to cost some Rs 3.83 billion will be inaugurated here in the city soon, said Minister of State for Foreign Affairs Makhdoom Khusro Bakhtiar.

Addressing a gathering here on Thursday evening, the minister said a bridge over Indus River, which would substantially reduce the travelling time between Rajanpur and Rahim Yar Khan districts, would be constructed with Rs 2.5 billion. Another mega project of a modern stadium-cum-sports complex in RYK would also be built at the estimated cost of Rs 200 million.

Third major project that will be inaugurated here is a sewerage scheme and water treatment plant planned to meet the needs of next 100 years. "All these initiatives would improve living standard and bring development in these areas", Khusro Bakhtiar said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

* Institutional, foreign buying place KSE on record high ​* 
Sunday, October 21, 2007

KARACHI: Politically motivated bulls won the show at the Karachi bourse this week despite the law and order situation declining to worst. Significant institutional and foreign buying helped benchmark KSE 100-Index breach through 14,500 points for this first time this week to close at 14,787 points all time high record.

KSE 100-share Index managed to post another smart rise of 323.77 points (i.e. 2.2 per cent) on week-on-week basis and closed at 14,787.55 points the ever-highest historical level. It was the eighth consecutive week that continued to perform under the authoritative control of might bulls.

The week placed ready market turnover to nine-month high at 431.5 million shares; overall market capitalisation at Rs4.512 trillion and foreign portfolio investment at US$157.6 million this fiscal. These all records were on their historical high, analysts said.

They added: Market started swelling on the strong assumption of power-sharing deal done between Benazir Bhutto and President Gen. Musharraf almost two-month ago. This trend kept market continued to perform unprecedented this week following good, better and the best business deals done respectively at KSE earlier.

Friday twin-trading session might have shed some points due to tense situation in the city following Thursday night bloodbath. But all day-long sessions of the week closed with extended gains.

Market resumed business activity only for three days, as it remained closed on Monday and Tuesday on account of Eid-ul-Fitr. Experts see the attack on Benazirs procession separate from the political scene and give more importance to the ongoing political reconciliation in the country and National Reconciliation Ordinance (NRO) in place.

Until and unless the county fails to formulate the highly assumed political set up, following general elections in the country sometime in January 2008, the market would continue to perform on its course, they added.

Experts see the BB-Musharraf political patch up as good for Pakistans economy. Formation of a political government means consistency in the current economic policies that was growing on reusable pace, they added.

We measure the trickledown affect of good economic growth at the Karachi bourse, they further said. In the coming week, several companies are to announce their quarterly financial result for the period ending on september 30, 2007. We expect most of them to show handsome earning growth in this season that would have positive impact on the market next week, Sana Faisal of JS Research commented.

Investors are much confident of receiving smart payouts this quarter. It is evident with rising foreign portfolio investment in the bourses and government securities everyday. The SCRA balance further surged to US$157.6 million for this fiscal year (2008) to date from US$151 a day earlier, according to SBP website.

This week rally was broad-based and was mainly driven by refinery, auto, cement, OMCs and insurance sectors. Refinery outperformed market by 7.6 per cent, whereas automobile & insurance outperformed the market by 3.8 per cent and 2.4 per cent, respectively, Sana added.

Faraz Farooq of First Capital Equity said, Global oil prices are identified as one of the strong factor that has an effect on the market sentiments since the three listed E&P companies (OGDCL, PPL, & POL) accounts for 22 per cent of KSE Index. As per his brokerage house analysis, a US$1/barrel rise/decline in international oil price caused the earnings of PPL, OGDCL & POL to increase/decrease by Rs0.1, Rs0.2 and Rs0.6 respectively on per share basis that is around 0.3 per cent to 2.0 per cent. 

Average daily volume in the week reached its nine-month high and stood at 432 million shares versus 334 million shares last week. Therefore the overall market capitalisation further surged Rs85 billion to Rs4.512 trillion.

On week-on-week basis, majority of the blue chips managed to stay in the green territory including Oil and Gas Development Company, Pakistan State Oil Company, Pakistan Oilfields, Pakistan Petroleum Limited, Lucky Cement, DG Khan Cement, Pakistan Telecommunication Company, Bank of Punjab and MCB Bank.

However, three major banks i.e. National Bank, United Bank and Habib Bank closed in negative column. During the week, CFS investment maintained its position and stood at Rs54.6 billion, close to its upper limit. In the previous week, CFS investment stood at Rs54.5 billion. CFS rate in the current week stood at 11.45%, versus 11.06% last week, JS Research reported. 

Institutional, foreign buying place KSE on record high


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## Neo

*Govt to promote coal as alternate energy source​*
* Coal policy aims to attract FDI in the sector to rid the economy of expensive oil burden 

ISLAMABAD: A National Coal Policy of Pakistan is under-preparation by the Ministry of Petroleum and Natural Resources that aims to attract much needed foreign direct investment in transfer of technology and alternate energy source through coal reserves in Sindh.

An official of the ministry told Daily Times on Saturday, the step is being taken to shield the economy from the adverse effects of surging oil prices (currently at $90 per barrel) in the future.

The government has allocated Rs 23 million for policy preparation and consultation with stakeholders, in the Public Sector Development Programme for this fiscal year. 

The ministry has also decided to establish Thar Coal Mining Company and has allocated Rs 241 million for this purpose. 

The Central Development Working Party (CDWP) has already approved initial feasibility study on gasification of Thar coal with an allocation of Rs 126.649 million and work on this study is being finalised. 

According to a study initiated by the Sindh Coal Authority, the Thar coal deposits are sufficient to meet fuel requirements of the country for centuries and would generate about 100,000 mega watt (MW) of electricity. Only 200 million tonnes Thar coal (lignite) can produce 1000 MW electricity power up to 40 years in the country. 

In Pakistan, share of coal in energy mix during decades has declined from 68 percent to 35 percent and specifically 5 percent in 2002 due to the increase share of natural gas and cheaper oil in the power generation of the country. 

Presently the scenario has changed, gas reserves of the country are depleting and continue to deplete as it has other important uses, such as fertiliser and other. Oil reserves of the country are limited with high cost of production, which is increasing day by day and would continue to increase in foreign exchange with uncertain conditions.

Renewable energy such as wind and solar produce high cost energy. Nuclear energy requires public acceptance with safety issues and disposal of waste cycle. Hydel power generation is seasonal with environmental problems and displacement of population and rehabilitation. New power plants on coal are to be installed on affordable cost. 

The government is emphasising on development thermal power generation on indigenous resources, including coal (lignite) for power generation and other industrial use keeping in view some important factors. 

Elaborating these factors, the study reveals that, share of coal in countrys energy mix is to be increased at least 19 percent by 2030 and 50 percent by year 2050. Sindh lignite reserves are huge and suitable for power generation as compared to lignite being sued in the world for electricity generation. It is a cheap dependable energy source and would meet countries energy requirements for centuries. 

Thar coalfield is spread over an area of 9000 sq kilometer, which consists over 175 billion tonnes with proved coal reserves over 12 billion tonnes of six delineated blocks over an area of 500-kilo metres. 

Indigenous resources are free from uncertainties of fuel supply and associated danger of dictation of oil prices by oil suppliers. Coal drive much of current global economic development and providing 23 percent of global primary energy needs and generates about 39 percent of the world energy. Global primary coal consumption would rise at an average annual rate of 1.4 percent up to 2030. In all regions, coal use would become increasingly concentrated in power generation, which would account for almost 90 percent of the increase in demand during 2000 to 2030, according to World Energy Outlook 2002.

Coal is to play integral role in the economic development of many countries and it can play a major role in addressing sustainable development in the filed of economic, social and environment. Pakistan coals are mostly lignite and Thar coal (lignite) with proved reserves of 12 billion tonnes has over burden ratio 5 to 7, which can be economically mined. Clean coal technology is available, which has made possible to use lignite with zero emission. 

Thar Coalfield: Geological Survey of Pakistan (GSP), discovered huge deposits of coals in 1992 at Thar during the research program, assisted by United States Geological Survey (USGS). Spread over an area of more than 9000 square kilometres with dimensions of 140 kilometres north south and 65 kilometres in the east-west possess 175.506 billion tonnes of coal. 

Coal mining cost suggested by coal feasibility studies conducted in 1994 at Thar by John T. Boyd of United States, revealed that in case of annual production comes to 2.5 million tonnes, the estimated realisation cost would be $88 per tonne. Incase of the annual production comes to 3.5 million tonnes the estimated realisation cost to be $68.50 per tonne and if the production level comes to 7 million tonnes annually the estimated cost would come down to $40.60 per tonne. Another study done by RWE of Germany in the year 2003 highlighted that 6 million tonnes of annual production with shovel trucks, the estimated realisation cost to be $36.50 per tonne and electricity generation value to be 6.9 cents per KW/h. Same production level is achieved with bucket wheal excavator the estimated realisation cost to be $42.50 per ton with specific value US Cents 7.18 KW/h.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Cargo handling rises by 3.52% to 281,241 containers​*
KARACHI: Cargo handling at the Karachi Port Trust rose by 3.52 percent to 281,241 containers during the first quarter of this fiscal, higher from 271,656 containers handled in the same period of last year. 

It shows that cargo handling of the port has not been hurt by the collapse of berths. KPTs berths no 10 and 14 had collapsed in early August this year, which created fears that KPT would be unable to keep its cargo handling business from declining. However, the port managed to accommodate 483 ships, higher by 8.05 percent from 447 ships berthed last year. 

The port handled a total of 5.763 million tonnes dry cargo, higher by 13.66 percent from 5.070 million tonnes handled last year. It also handled 2.705 million tonnes liquid bulk cargo, up by 14.13 percent from 2.370 million tonnes liquid bulk cargo handled in the same period of last year. 

The port handled 4.029 million tonnes dry import cargo and 2.269 million tonnes liquid bulk import cargo in the first three months. Last year it had handled 4.022 million tonnes dry import cargo and 2.041 million tonnes liquid bulk import cargo in the same period. 

The port also handled 1.734 million tonnes dry export cargo and 0.435 million liquid bulk export cargo from July to September this year. It had handled 1.048 million tonnes dry export cargo and 0.329 million tonnes liquid bulk export cargo.

Daily Times - Leading News Resource of Pakistan


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## Neo

*New rice target to be at 5.5m tonnes for 2007-08​*
KARACHI: The government has set rice production target for the year 2007-08 at 5.7 million tonnes as against 5.4 million tonnes last year, while sources in the ministry told Daily Times on condition of anonymity Saturday that on October 23 (Monday) the target will be revised to 5.5 million tonnes.

On Monday Federal Committee on Agriculture (FCA) will meet with the Federal Minister for Food, Agriculture and Livestock (MINFAL) Sikandar Hayat Khan Bosan to fix the rice production target.

Although the government has set a rice production target of 5.7 million tonnes but it is expected that in the next meeting the officials will revise their decision and set a new target of 5.5 million tonnes. The reason to revise the decision is due to the recent floods and damaged crop in Sindh and Punjab belts, which are under pest attack and it is already expected that this years production will not increase, sources said.

When Daily Times approached Chairman of the Rice Exporters Association of Pakistan (REAP) Aziz Maniya on this issue, he said a decrease in rice production is expected this year and looking at the current circumstances Ministry of Food Agriculture and Life Stock (MINFAL) should fix the current target with the previous years target of 5.4 million tonnes as half of the production is exported while the rest of the half is used for local consumption, he added.

Mr Maniya said from last two to three years rice shortage has been recorded worldwide. Last year a six percent shortage has been recorded in rice production globally. Since November 2006, the international prices of basmati rice have surged by 35 to 40 percent due to crop shortage in leading rice-producing countries and in this season China, Thailand, Vietnam, India and Sri Lanka have reported crop shortages. 

Giving the reason of this shortage he said every year population is increasing while the production is not flourishing as it is used to be every year. Therefore there is a need to increase the production of rice and government should take constructive steps to deal with this issue to meet the demand of local market and the export target, he added. 

On the other hand few exporters told Daily Times that due to the global shortage the price of rice is rapidly increasing in the international market and to earn more local exporters are exporting those stocks as well that should have been sold locally, which is why the local prices are rising.

According to a leading rice exporter, the countrys rice production was badly effected due to some reasons, which include poor shelling and milling, defective harvesting, deteriorating quality of seed and cultivation of different un-approved varieties of seeds.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Week-long closure incurs Rs120bn loss​*
KARACHI, Oct 20: Businessmen and economists conservatively estimate a total loss of over $2 billion (Rs120 billion) because of a virtual business closure in Karachi for more than a week that came to a close on Saturday.

The businesses were closed early this week because of the Eid and then a bloodbath in the early hours of Friday which claimed 140 lives and left as many as many 500 injured, many of them maimed for life, and plunged the city in a state of mourning and also brought the entire business life to a standstill.

During this week, banks remained closed on Monday and Tuesday, and when bank branches opened on Wednesday, they did a small amount of business because trade and industry did not open. On Thursday, the government closed the educational institutions.

The city, except for Sharea Faisal, was functional, but economic activity remained suspended.

People of the city unilaterally decided to treat Oct 18 as a public holiday on their own; otherwise there was no tension or disruption of any sort anywhere during the day, a lady who travelled through the city on the day told Dawn.

Most of shopping centres pulled down shutters and hardly any public transport was seen on the roads.

Friday dawn saw a trail of blood on the road which connects airport with the metropolis, and most of the people preferred staying indoors.

The city was in a state of shock; and a pall of gloom eclipsed areas where bodies of victims came for burial.

Most of the public transport was off the roads; offices and business centres were closed and even vegetables and fruits were not available on streets.

Then came the last day of the week, Saturday, when the city started limping back to normalcy. Public transport made some appearance, shopkeepers were seen opening their shops and the city started receiving some vegetable supplies from the Punjab and Balochistan, but not from Sindh according to leaders of the wholesale market on Superhighway.

Quantification of the spill-over effect of Karachis business closure to other parts of the country is difficult, but a rough estimate puts it anywhere from four to five billion dollars.

The overall economic loss from a full week business closure in Karachi comes to six to seven billion dollars (Rs360 to Rs420 billion).

The most hard hit are the poorer sections of the city, a market analyst said. Those who suffer are farmers and small traders who supply vegetables and fruits regularly from all the three provinces to this huge market of almost 20 million.

The week-long suspension in supplies means building up of a huge inventory of perishables in the fields for which small farmers do not have storage facilities. Then port operations also suffered and many traders and industrialists were not able to get their export orders served in time. They also failed to get their imported consignments in time which disturbed their production and delivery schedule.

About 250 to 300 trucks of vegetables have come from Punjab and Balochistan, said Haji Shahjehan who pointed out that daily arrival on a normal day is 800 to 1,000 trucks.

He warned that tomatoes will continue to be costly at Rs75 to Rs80 a kg for consumers as these are being imported from India via the Punjab. Tomato harvest in Sindh is still two weeks away.

Leaders of the main vegetable and fruit market on Superhighway are worried over reports of continued disturbances in Sindh hinterland where reports of Friday bloodbath reminded many people, particularly the political activists of the 1983 army crackdown in rural areas.

Traders in Karachi and other parts of the country look with fear and suspicion the coming days and weeks.

They are more worried after former Prime Minister Benazir Bhutto expressed apprehensions in a press conference on Friday of more attacks on her life in the coming days.

Business leadership took prompt notice of the Friday blasts that turned a carnival of hundreds and thousands of political supporters of a reception rally into a mob of angry mourners.

The leaders of the Federation of Pakistan Chambers of Commerce and Industry deplored the worst terrorist attack in the history of the country.

Such acts of brutal terrorism in Karachi are bound to create a sense of insecurity and uncertainty, which will adversely affect business and investment climate, not only in the city, but all over the country as a whole, said Tanvir Ahmad Sheikh, President of the FPCCI with his seven vice presidents in a joint statement.

The FPCCI presidents advice is that police personnel and security system needed urgent modernisation and re-organisation.

Also to take notice of the ugly incident are Karachi business leaders Siraj Kassim Teli, Tahir Khaliq, Haroon Farooki, M. Zubair Motiwala, Anjum Nisar, Shamim Shamsi, Iftikhar Sheikh and Haroon Agar who called attack on Benazir Bhutto a conspiracy against democracy.

Karachi Stock Exchange is the only business house that remained unaffected by the early Friday morning bomb blast and killing of 140 persons.

Stock brokers showed more than 32 per cent growth in business on Friday when the entire business of the country was either closed or was in a state of shock. No plausible explanation was given by any businessman on this odd behaviour of the stock brokers.

A market analyst, however, said that stock market operations are manipulated by hardly a dozen persons. There are stock brokers who have interests in banking, financial services, real estate and commodity business. Their job is to keep the government and international bankers in a good mood by showing positive results even on a day when 160 million people were in a state of shock and mourning.

Week-long closure incurs Rs120bn loss -DAWN - Business; October 21, 2007


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## Neo

*Services sector exports up by 12.25pc​*
ISLAMABAD, Oct 20: The services sector exports increased by 12.25 per cent in the first two months (July-August) of the fiscal year 2007-08 over the same months last year, the Federal Bureau of Statistics (FBS) said on Saturday.

The services export proceeds reached $481.496m as against $428.946 million last year.

In August, services exports witnessed a robust growth of 14.82 per cent to $260.188 million as against the $226.613 million recorded last year.

The statistics showed that the services sector exports were steadily on the rise for the last two years following having preferential market access.

On the other hand, import of services rose by 20.09 per cent to $1.623 billion in July-August period of the current fiscal year as against $1.351 billion over the same period last year.

Imports of services rose by 38.04 per cent to $854.019 million in August 2007 as against $618.658 million over the same month last year.

The deficit in trade in services widened by 23.73 per cent to $1.141 billion during the first two months of the current fiscal year as against $922.841 million over the same period last year.

Services sector exports up by 12.25pc -DAWN - Business; October 21, 2007


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## Neo

*Northern Areas to have elected local govts: President okays devolution package​*
ISLAMABAD, Oct 20: President Gen Pervez Musharraf on Saturday approved a draft empowerment package for the Northern Areas, giving enhanced political, administrative and financial powers to a region now administered by the federal government.

The president said he was confident that the package would fulfil a long-standing demand of the people of these areas.

He said the government was committed to developing neglected and under-developed areas to bring them on a par with the rest of the country.

The decision was taken at a meeting, presided over by Gen Pervez Musharraf. It was attended, among others, by the Federal Minister for Kashmir Affairs and Northern Areas, and Maj (retd) Tahir Iqbal, the deputy chief executive of the Northern Areas, Ghazanfar Ali.

The package envisages law-making powers for the Northern Areas Legislative Council.

There had been considerable disenchantment among the people of these areas as they had to come down to Islamabad for sorting out petty matters in the ministry of Kashmir affairs and Northern Areas (Kana).

At present the areas are governed by the chief secretary who, as a representative of the federal government, enjoys unbridled powers and the deputy chief executive, as head of the NA Legislative Council, works under the directives of the Kana.

The Legal Framework Order, the sources said, had been on the table of the president for quite some time, but it could not be approved because of some unexplained reasons.

The sources said the step had been taken in the light of a surge in political activity in these areas after the return of the PPP chairperson Benazir Bhutto. Her party has a vast following in these areas and a large number of workers had travelled to Karachi to welcome her.

The task of the preparation of the political empowerment package, the sources claimed, was assigned to the ministry of law. It took six years in drafting it in consultation with the Ministry of Kashmir Affairs and Northern Areas.

Under the LFO, the federal government would devolve its powers to district governments to be set up through elections in the six districts of the Northern Areas  Gilgit, Ghanche, Gizer, Skardu, Astore and Diamer.

The president has directed authorities concerned to improve the package to accommodate viewpoints of elected representatives of the Northern Areas Legislative Council.

The NALC, the sources said, had proposed a change in the nomenclature of the council as assembly and suggested some other changes in the basic draft.

The president approved additional funding for Gilgit and Skardu airports and directed the PIA to increase the number of flights to both areas.

He pledged more funds for development projects in these areas with the support of the Asian Development Bank.

Northern Areas to have elected local govts: President okays devolution package -DAWN - Top Stories; October 21, 2007


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## Neo

*Banks reluctant to give loans to Sindh and Balochistan farmers ​* 
ISLAMABAD (October 21 2007): Banks are reluctant to give agricultural credit to the farmers of Sindh, Balochistan and NWFP as lending environment in these areas has not improved, Sources in the Ministry of Food, Agriculture and Livestock (Minfal) told Business Recorder here on Saturday.

They said that the major bottlenecks in disbursing agricultural loan to farmers in these provinces are non-co-operation by the revenue departments in issuance of passbooks, issuance of bogus passbooks, lack of one-window operation by banks, law and order situation, default of farmers in Balochistan, and limited availability of passbooks especially in Sindh where about 250,000 farmers do not have the passbooks.

They said that commercial banks, like Habib Bank (HBL) and United Bank (UBL) have failed to achieve their loan disbursement targets while the big player, National Bank of Pakistan (NBP), could hardly meet the target of Rs 28 billion during last fiscal year.

Domestic private banks like Mybank, Habib Metropolitan Bank, KASB Bank, Prime Commercial Bank, Saudi Pak Bank, Bank of Khyber and Standard Chartered (Pakistan) Bank met the same fate due to absence of conducive atmosphere, in addition to limited branch network in the rural areas.

Sources said agricultural credit has not been equally distributed among the provinces, rather disparity among the provinces has increased. The share of Punjab during last six years increased from 73 percent to 84 percent, whereas the shares of Sindh and Balochistan declined from 19.59 percent to 10.25 percent and 1.51 percent to 0.25 percent, respectively.

Over last year share of Punjab has increased from 83.03 percent to 84.34 percent and share of Sindh decreased from 10.96 percent to 10.25 percent, whereas the share of Balochistan further declined by about 50 percent from 0.42 percent to 0.25 percent.

Sources said that there was some improvement in achieving credit disbursement targets in Sindh, Balochistan and NWFP after following the initiatives taken by the State Bank of Pakistan (SBP), which include issuance of guidelines for livestock and fisheries financing, development of strategy paper to increase outreach of agriculture credit, arranging banking facilities for Pakistan's largest Cattle Colony, Karachi, issuance of handbook on agri finance products of banks and publication of various documents/material in English and Urdu languages for the awareness of the farming community.

The SBP also took measures to constitute a task force on Islamic products for agri financing, develop framework on crop loan insurance in consultation with major banks and insurance companies, conduct awareness building seminar at Lahore under Asian Development Bank (ADB) project, liaise with Sindh Board of Revenue for information of district committees on Passbook issues, conduct successful 10 outreach and awareness training programmes, arrange 5 half days training programmes on agriculture finance of the officials of SBP and Minfal and revise and rationalise database for agricultural credit, they added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

​Ecnec likely to approve first nuclear fuel enrichment plant 

ISLAMABAD (October 21 2007): The government is expected to give final approval to a landmark project for establishing first 'Nuclear Fuel Enrichment Plant' (NFEP), aimed at indigenously enriching nuclear fuel to reduce the country's dependency on imports, sources told Business Recorder on Saturday.

The project, costing Rs 13.7 billion along with other 26 other schemes, will come up for consideration of the Executive Committee of National Economic Council (Ecnec) in its meeting on Monday, October 22. The overall cost of 26 other development projects, which are on the agenda of the meeting, has been estimated at over Rs 132 billion.

The meeting will be presided over by Prime Minister Shaukat Aziz. The Central Development Working Party (CDWP) in its meeting in July had approved the NFEP project, which is believed to be Pakistan's first bid to reduce dependence of its nuclear power programme on imported fuel.

The price of nuclear fuel is increasing in the international market. The project is of national importance, and it is of utmost importance to help Pakistan attain the nuclear power generation target of over 8800 MW by 2030.

The cost of the project includes foreign exchange component of Rs 8.136 billion. The project will be funded through budgeted Public Sector Development Programme (PSDP). The plant will be located near Chak Jhumra, Faisalabad, in Punjab. The Pakistan Atomic Energy Commission is the sponsoring agency of the scheme.

The objective of the project is to install nuclear enrichment plant with capacity of 150 tons per annum, which would fuel the nuclear power generation reactors. The project would be completed in three phases. Each phase will be completed in five to six years in which one module will be set up having capacity to enrich about 150 tons per year feed natural (FN) gas, apart from Separative Power of 100 tons Separative Work Unit (SWU-kg/year).

Hence, at this pace, four modules will be set up by 2030. The government's energy security action plan has envisaged increasing the share of nuclear power from 1 to 4.2 by installing 8880 MW nuclear power plants by 2030.

Apart from this, Ecnec will also consider the development scheme of oil and gas exploration in Balochistan-opening of activities in Tribal Areas (Revised). This is also one of the important projects to be considered. Pakistan is largely dependent on imported oil. Now, the government is finalising an agreement with Iran for gas import. The country is becoming more and more energy-deficient, which has necessitated to intensity oil and gas exploration activities.

Other projects in the energy sector include Chemical Processing Plant (CPP)-Phase-I Pakistan Nuclear Power Fuel Complex (PNPFC), Chashma Hydropower Power Project (184 MW) (2nd revision).

Addition of four 500 and 220 KV sub-station and associated T/L NTDC integrated system, 220 KV D/L from Chasma to Ludewala for interconnection of CHASHNUPP-2, 220 KV Rohri sub-station and associated T/L for dispersal of power from IPPs of Fuji foundation and Engro near Dahrki and Electrification of villages in district Dera Bugti in Balochistan province are other projects in the energy sector.

Projects in food and agriculture sector include Restructuring and Strengthening of National Agriculture Research System (Balochistan) and National Biosaline Agriculture Programme (NABSAP).

In water resources, the projects of Balochistan Small Scale Irrigation Project, Toiwar/Batozai Storage Dam Project, and Rehabilitation/ reconstruction of Bolan dam Project (Revised PC-I) will be considered by Ecnec.

In transport and communications sector, the projects are Construction of New Carriageway; National Highway N-65 Nuttal-Sibi section including Sibi Baypass (5km), Construction of a 41 km long link / service road between the Turbat - Hoshab stretch of the proposed Gwadar - Ratodero Motorway (M8) and adjoining villages, Rehabilitation and Improvement of 124 km DI Khan - Mughalkot Road (N-50), revised, Construction of Surab- Basima-Nag-Pangjur-Hoshab road N-85 (Total length 454 km), (revised), Fourth Highway Project; Construction of 507.53 km of Additional Carriageway and Provision of 153 km of overlay on the national highway N-5 (Revised), Paksat project (Phase-I) extension.

In devolution and area development the Linking of Nara Amazai and Bait Gali union councils of district Haripur with Kala Dhaka area district Mansehra including provision of Higher Education Opportunities for the Students of Balochistan and FATA (President directive) is also on the agenda of the meeting.

The schemes of 'Clean Drinking Water for All' (CDWA) project (revised PC-I), Acquisition of land for establishment of engineering university at Islamabad in collaboration with foreign universities (HEC) (revised), Oceanographic Research Vessel for Coastal Waters and Establishment of Pak-China friendship Center and some other schemes will also be considered in the meeting.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*AEDB to set up 18 megawatts wind farm in Gharo ​* 
KARACHI (October 21 2007): Alternate Energy Development Board (AEDB), Sindh will set up an 18 Mega Watt wind farm for power generation through wind in Gharo at an estimated cost of 14.18 million dollar, Business Recorder learnt here on Saturday.

The feasibility report for the installation of 18 MW wind power project in Gharo, has already been prepared by Pakistan Meteorological Department, sources in Alternative Energy Development Board (AEDB) said. They said that the payback period timing of the total investment made on the project was estimated at around 7-8 years.

"The power generated through wind turbines would cost Rs 2.5 to 3 per Kilowatt Hour which is very cheap," they said and added that the project would be first step towards generating electricity through alternative ways.

Pakistan Meteorological Department (PMD) has recently conducted a detailed Wind Power Potential Survey along the coastal areas of the country and Ministry of Science and Technology provided the funding for it. The study has enabled us to identify the potential areas where economically feasible wind farms could be established to generate power, they added.

One interesting aspect of the survey is that contrary to general impression, Sindh coastal areas have more potential than Balochistan coastal areas, they said. "In Sindh potential areas spread over 9,700 Kilometres where wind farms could be established for power generation."

In Gharo, where 18 MW wind farm would be set up, PMD collected wind data and recorded air measurements during the last 24 months. The annual wind speed is estimated to be 6.8 m/s at 50 meters above the ground level while aerial density is 608.6 W/m, which means that the area is in category of good power potential and economically feasible wind farm could be set up there.

Using the measured wind data, the 18 MW wind farm comprising thirty 600-k turbines will have net power generation capacity of 31 million kWh per year corresponding to capacity factor of 28 percent. After the payback period, the financial benefits would be extended to the government besides saving its huge amount on purchasing electricity generated through oil, sources said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Garment sector can provide millions of jobs to women' ​* 
ISLAMABAD (October 21 2007): Pakistan's under utilised garment sector has the potential to provide millions of jobs to women and bring about a socio-economic change in the country, Secretary Textiles Zafar Mahmood told Business Recorder here on Saturday.

In an exclusive interview Zafar said "it is a pity that only 5 percent of our cotton production is utilised by the garment sector which provides the highest value addition in textile sector."

This industry is distributed in small, medium and large-scale units most of them having 50 machines and below. Large units are now coming up in the organised sector of the industry. The industry enjoys the facilities of duty free import of machinery and income tax exemptions.

Zafar said this sector has tremendous export performance for the future, as it has three distinctive advantages ie (a) highest capital output ratio (b) highest capital employment ratio and (c) highest export generation.

He said globally garment industry employs over 90 percent women workers as machine operators, cutter of cloth, stitching, pattern designer, design maker, packager, quality controller, value chain processor, manager etc.

He said the disciplined and peaceful women work force in garment industry of China, Bangladesh and Vietnam had not only cut down the cost of production by 50 percent, it had also empowered women and brought about a healthy change in social fabric of these countries.

These countries trained and efficient women workforce has made their textile products cheaper in the international market and adversely affected textile exports of Pakistan and India. Zafar pointed out that because of feudal customs and social constraints, and lack of training facilities in the past, Pakistani women could not work in large numbers in the made-ups, garment, knitwear and other concerned units. They could easily contribute Rs 5000 to 6000 to the monthly family income. He said there are 750,000 stitching machines, 450,000 in organised and 300,000 in non-organised sectors, which were mainly operated by male operators.

He said under the Export Development Plan prepared by the Planning Commission, a well co-ordinated programme has been launched for training of women for employment in the textile industry.

The Textile Garment Skill Development Board has been charged with carrying out skills development of workers for the industry within the 30 garment units. Besides production of contamination free cotton, project financing for small and medium units.

Secretary Textiles expected to train 10,000 to 12,000 stitching machine operators in Karachi, Lahore and Faisalabad garment units every year. The purpose of this training is to build a critical mass of skilled workers.

The other provincial and federal government vocational training institutes have their separate certification programmes to meet industries' ever-growing needs of skilled workers.

He said the scope of these training programmes is to be widened to terry towel and bed lenin sectors during the current financial year. He said of the total ginned cotton, 30.69 percent is used by made ups (17.48 percent), Knitwear (7.67 percent) and garments (5.52 percent) which fetch about $6 billion of $10.5 billion Textile exports.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Risks to growth momentum​*
Pakistans economy is under mounting pressures which could upset the growth projection for the current fiscal year. There are alarming reports of pest damage to the two main autumn crops  rice and cotton  and the international oil prices now at $88 are rising.

Shopkeepers in Karachi reported a staggering 30 per cent drop in Eid sales this year. It shows a huge erosion of the consumers purchasing capacity because of the inflation and more particularly high food prices. Food inflation is in double digits for the last several months. The drop in Eid sales is a manifestation of shrinking market for consumer goods.

Construction picked up in the city in last few years but the number of unoccupied apartments is on the increase as many of those who booked flats and houses are finding it difficult to meet rising costs. Construction companies offer one price for booking flats and then demand an increase on one pretext or the other. In many cases, the increase in their demand ranges between 30-40 per cent of the original offer.

Banks thrived most in last five to six years. Their profits touched almost Rs100 billion in the year 2006. But they now fear a 22 per cent drop in their profits during 2007.

Exports are moving at a much slower pace than imports and the trade deficit is widening Inflation and current account deficits are seen by many as two major threats to the economy.

All these negative trends have appeared after an impressive average growth rate of over seven per cent over the last five years. But then there is a consensus that the average growth was mainly driven by domestic consumption without corresponding increase in the domestic industrial and agricultural production and hence the doubts about its sustainability.

Purchase of import-oriented-electronic appliances and cars was driven by bank loans, a young researcher in a private bank said and pointed out that banks are now reporting growing loan defaults and a sharp drop in demand of consumer credit. The crunch has to come, if not today than tomorrow, he said. Customers prefer to curtail their demand because of high interest rates and rising service charges.

However, there is another view also. A top garment exporter who has strong links in USA and EU is of the view that emerging political scenario for early 2008 will matter a lot. Pakistan can expect a bail out by the international financial institutions and a relatively better market access for its products in western countries.

For the year 2007-08, the government projected a 10 per cent growth in export targeted at $19.2 billion. Imports growth in the current fiscal year was expected to be moderate at nine per cent to claim $29.6 billion. In the first quarter, the export grew at less than five per cent to $4.25 billion. The imports grew by 8.5 per cent to over $8 billion.

 Trade deficit during current fiscal year is bound to be close to $15 billion or 50 per cent more than projected by the government. a well-known garment manufacturer and exporter anticipated who does not want to be identified for portraying a bleak economic picture. Export growth is sluggish for last three years and is showing no signs of recovery even though the exchange value of currencies of Pakistans two main competitors in textiles--India and China-has appreciated.

 But India and China continue to provide visible and invisible cash subsidy to their exporters in a number of ways, argued the garment exporter. Adil Mahmood, the Chairman of the newly-formed All Pakistan Textiles Association (APTA) informed from Lahore by telephone that about one million spindles of textiles are inoperative because of closure of about 160 textile mills. Two top knitwear companies in Lahore are said to have been closed down while a few in Karachi, Faisalabad and Multan are considering to pull shutters down.

Cotton prices are crawling upwards and banks are not ready to oblige millers with fresh credit lines as they have been unable to pay off their previous loans. The President of the Federation of Pakistan Chambers of Commerce and Industry, Sheikh Tanvir Ahmad, has pleaded on a number of occasions for a two-year moratorium on repayment of loans. The APTA has indicated about Rs200 billion outstanding loans against textiles.

Textile is expected to net in about $12 billion export earnings during the current fiscal year. It could hardly fetch $10 billion export in 2006-07. Even to maintain last years export level has now become a daunting task, a local textile manufacturer said.

Industry leaders now fear a further hike in production cost from the impact of rising international oil prices. The 2007-08 budget was drawn up on assumption of $56-58 a barrel cost a business analyst said. But within less than four months, the oil prices have gone up by more than 45 per cent with no signs of respite. Thanks to the Presidential elections and expected general elections early next year, the government has spared the consumers from the impact of rising oil prices and is apparently taking hit on its budget. But how long will government absorb the rising cost of oil import and provide a cushion to consumers?

The special secretary, ministry of finance, Dr Ashfaq Ahmad Khan avoided a direct answer when asked by a private television channel recently as to when will the petroleum prices be reviewed. He feared media will come down rather harshly on the government whenever a price review was made. But industry leaders apprehend an increase in energy cost very soon which is bound to push up the production cost with an adverse impact on exports.

The government does not have any contingency plan to meet the challenging situation,  economist Asad Saeed said. Pakistan has managed to weather these difficult times because of the depreciation of dollar. But Asad and many businessmen are of the view that the government should now give a hard look at the foreign exchange reserves. Foreign currencies of our reserves should have something to do without exports and imports a businessmen said.

With little hopes of export growth showing some recovery, the government is expected to pay more for imports in 2007-08 as oil price is on the increase. The government has already started importing wheat after having claimed to have harvested a record bumper crop of more than 23 million tons. Wheat flour availability is still a problem for the consumers who are paying Rs18--20 for a kilogram. The government has been forced to import tomatoes. International import prices of edible oil, milk powder and pulses are also on the rise. Import of all these food items are being made after the State Finance Minister Omar Ayub Khan claimed of having achieved complete food autarky in his budget speech in June. In all probability, the import bill this fiscal year will go beyond $32 billion.

The State Bank of Pakistan in its monetary policy statement early this year conceded rising inflation. Tight monetary policy made credits expensive for private sector but failed to control inflation. The situation is bound to aggravate with impact of rising international oil prices. The National Economic Council has set 6.5 per cent inflation target. The Consumer Price Index is being driven by food prices. Inflation hurts fixed income group and it has deep implications for export-oriented production.

Risks to growth momentum -DAWN - Business; October 22, 2007


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## Neo

*Perceptions of the rich-poor gap​*


Now that there are indications to suggest that the policy regime which is already in its eighth year has secured its continuity for the next five years at least, it is important to reiterate that its most disturbing fall-out has been the widening rich-poor gap. To be fair, the gap was not created by the regime. But its strategy of growth above all has widened it and there is nothing in the pronouncements of its main protagonists that it is likely to do any more than continue attempting to alleviate poverty  which amounts to first inflicting a wound and then dressing it.

In a recent interview with the networks, General Musharraf observed that slogans like roti, kapra aur makan are raised to hoodwink the people. He does not believe in sloganeering and has always talked about changing the condition of the people. Unfotunately, the perceptions are very different. As much as 56 per cent of respondents reported worsening of their economic condition in the survey conducted by the International Republican Institute.

If one is skeptical about an externally sponsored survey reaching this particular result, then we may look at one of our own. Data released by the government in the latest Economic Survey, despite some creative accounting, provide corroborative evidence. Between 2001 and 2005, the period for which substantial poverty reduction is claimed, 60 per cent of the population experienced a reduction in its share of the pie, with the economic condition of the bottom 20 per cent worsening the most. A staggering 93 per cent of the gains concentrated in the top 20 per cent bracket.

Ever since the market struck back after the collapse of the statist development models in the eighties, issues of income distribution took a back seat in policy making as well as academic teaching. The focus shifted to absolute poverty as some sort of a doable public good, compared to the difficult issues of relative positions involving endless debates on fairness and equity. However, as poverty has not been falling as fast as was predicted, there is a renewed interest in distributional issues.

With a view to exploring these issues, Nadia Saleem, a lecturer, and myself are jointly giving an MPhil course entitled Economics of Poverty and Income Distribution. at the G.C. University, Lahore. MPhil is a higher teaching-cum-research degree after the Masters level and the admission requires a reasonably good level of academic attainment and the satisfactory passing of a test conducted by the HEC.

Before starting the actual teaching so as to avoid influencing their opinions, the students were asked to return a questionnaire stating the major economic problem of Pakistan. The choice was limited to unemployment, inflation, poverty, income inequality and energy crisis. The results of the analysis, carried out by Ms Saleeem, are given in the pie chart. To our surprise, 50 per cent of the students chose income inequality as the major economic problem. Inflation was next, chosen by 28.6 per cent. Unemployment occupied the third place, being the choice of 14.3 per cent. Poverty came at the end with 7.1 per cent indicating it as their choice. There were no takers for energy crisis.

The economics curriculum at the universities being what it has been in recent years, we had not expected income inequality to be the choice of an overwhelming majority. Our expectation was that the students would either choose what affects them most personally, i.e., unemployment. Or it would be inflation, which they experience at level of household and are also taught in classes with a fair degree of detail. With a view to understanding a bit more about the majority choice, another questionnaire was circulated to find out more about the backgrounds of the students. This was even more revealing.

First of all, 71.5 per cent of those choosing income inequality were women and 28.5 per cent were men. We cannot read too much in this result as 78.6 per cent of the entire student body consists of women. In terms of the age composition, those choosing income inequality were a mature group of students: 57.1 per cent belonged to age group 22-28 years and 14.4 per cent to 30 years and above. Looking at the employment status, 57.1 per cent are employed, 28.5 per cent were unemployed and only 14.4 per cent had never been employed.

It seems that that the mature students, who are or have been in employment, have a better idea of the inequalities and injustices prevailing in the society. None of them had yet seen the data on increasing inequality in the country. They had neither done any formal reading nor received any formal instruction in the field income distribution. Their identification of income inequality as the major economic problem facing the country was based purely on the basis of a keen observation of the reality on the ground and the ability to interpret it on the basis of their overall knowledge of economics.

The results of this obviously limited survey are presented here not as representing some overall tendency or trend. Finding that will require a much larger and more systematic sample. Our purpose was only to illustrate the point that perceptions of a rising rich-poor gap exist and may well be expanding into a world of us and them. This does not augur well for the long term sustainability of the growth process in particular and the stability of the social fabric in general.

Inclusive growth, participatory processes, and programmes to improve access to physical, financial and social assets need to move well beyond rhetoric. What is worrying is the fact that inequality, which had begun to decline between 1999 and 2001, should start rising again in 2005. Worse, the sectors which have shown the highest growth, such as the financial sector, also register the highest Gini coefficients, i.e. the technical measure of inequality.

Perceptions of the rich-poor gap -DAWN - Business; October 22, 2007


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## Neo

*Losing one billion a day​*
REGARDLESS of the reasons of geopolitics behind the phenomenon and equally regardless of the doubts over its long-term sustainability, the fact remains that the economy today is enjoying a sort of purple patch that is unprecedented in ways more than one.

Basking in the glory  reflected or otherwise  the economic managers may afford to ignore it for the time being, but in the long run they, and the nation, may regret wasting a huge chunk of this bonanza due to shortsightedness in broad policy terms. The drain on the national economy, mind you, is to the tune of as much as six per cent of the GDP, and, worse still, it is a loss that is avoidable with a little bit of policy adjustment and fine-tuning.

The Strategic Country Environmental Assessment report that has been recently released by the World Bank is a timely reminder for our policymakers that, one, economic progress is not necessarily synonymous with development; and, two, that lack of development is a direct drain on economic progress.

Pakistan is the most urbanised country in South Asia, according to the report, with a booming economy. Economic reforms have paid their dividend and the country has achieved record growth rates, buoyant levels of investment and sustainable fiscal balances. Long term growth rates too have been reasonable, averaging 2.6 per cent since 1960, exceeding most other countries in the region.

Even in recent time, Pakistan has achieved impressive macroeconomic results, with ambitious reforms resulting in an acceleration of growth from 3.3 per cent in 1997-2002 to over 6.5 per cent during 2002-2005. However, despite these historical and recent achievements, social and natural resource indicators continue to demonstrate the daunting development challenges facing the country, and in particular the importance of strengthening environmental management to reduce risks to health and natural resource productivity, and to sustain economic progress. The burden, says the report, is threatening to undermine growth prospects.

Using conservative estimates in the absence of reliable official data, the World Bank report has put the mean annual cost of environmental degradation as approximately six per cent of the GDP, or Rs366 billion per year. In simple terms, it is a loss of a little over a billion per day! The figure incidentally is of a magnitude similar to the recent growth performance recorded by the official economy. As such, the two all but negate each other, with the result that despite record GDP growth rates, a number of development indicators continue to show limited improvement at best, and negative growth at worst.

The report has identified seven key areas that are contributing to the economic drain. The highest cost is from inadequate water supply, sanitation and hygiene, followed by agricultural soil degradation, indoor air pollution, urban air pollution, lead exposure, rangeland degradation and deforestation.

The most significant causes of environmental damage identified and estimated are: illness and premature mortality caused by air pollution (indoor and outdoor)  almost 50 per cent of the total damage; diarrhoeal diseases and typhoid due to inadequate water supply, sanitation and hygiene  about 30 per cent of the total; and reduced agricultural productivity due to soil degradation  about 20 per cent of the total.

That is not all though. The litany of woes is much lengthier. For instance, with more than one-third of the Pakistani population living in towns and cities, exposure of the workforce to urban and industrial pollution is a rapidly growing concern. Overall, environmental health risks are estimated to contribute more than 20 per cent of the total burden of disease. At about 25 per cent, the contribution of agriculture to the national GDP is close to the regional average, but the sustainability of this production is subject to greater environmental threats than in other South Asian countries. The irrigated share of crop land  80 per cent  is almost twice the regional average, but nearly 40 per cent of this area is waterlogged, and 14 per cent is saline. Forest and rangeland production is also at risk, with rates of deforestation about ten times the regional average, and rangeland productivity estimated to be only one-third of its potential, with up to 80 per cent of rangeland degraded.

While reminding that the estimates represent the lower bounds of damage, the report stresses that there could have been several other areas doing similar or more damage  most notably fisheries and coastal zone degradation  but they have not been included because there is no adequate data on such sectors.

The magnitude of these costs certainly indicates that environmental decay has become a serious development concern. Furthermore, accelerated growth and urbanisation present additional environmental challenges. Capturing the development dividend of growth calls for complementary policies that address environmental issues while facilitating development, says the report.

The consequences of not adjusting the policy focus, says the report, may seriously threaten the countrys poverty reduction efforts and long-term economic growth. The limits of resource-intensive development suggest that when the costs of natural resource depletion, pollution and consumption of fixed capital are factored in, gross national savings are cut by half.

It is interesting that while the linkages between environment and poverty through the impact of environmental degradation on livelihoods, health and vulnerability are explicitly recognised in the Poverty Reduction Strategy Paper (PRSP), which was presented in December 2003, not much has been done in this regard in practical terms. The legislative framework for environmental management is largely in place, and many aspects of the reform agenda can have positive environmental outcomes, but action on the ground, as happens often, leaves a lot to be desired.

Taking a historical view of the issues involved, the report concedes that since economic growth is the main vehicle for promoting development and reducing poverty in a sustainable way, it could, therefore, be argued that environmental degradation is the inevitable price to pay for economic success. This is typically justified in terms of an empirical regularity termed the Environmental Kuznets Curve that shows that as countries develop, pollution intensity increases at first and then declines. This may well be the case with Pakistan, but the concession made by the World Bank report does come with a warning: It would be misleading to assume that this empirical finding implies that environmental neglect is an economically prudent development strategy. In many cases prevention or mitigation of damage may be more cost effective than neglect. In the short run environmental interventions may lower profits or utilise scarce public funds, but these costs need to be compared to the associated benefits.

In terms of suggesting a possible remedy to the relative inactivity on the part of the executing agencies despite the presence of relevant legislation, the report favours the institution of performance-based grants under the National Finance Commission instead of direct intervention by the federal government to ensure the implementation of national policies. The carrot of incentives and the stick of accountability may do the trick.

Losing one billion a day -DAWN - Business; October 22, 2007


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## Neo

*Fears about discarded technology​*
By Engr Hussain Ahmad Siddiqui

A number of power projects based on indigenous coal are coming up in the private sector sponsored by local investors. Private Power and Infrastructure Board (PPIB) has sanctioned four independent power producer (IPP) projects of aggregate capacity of 1,550 MW, as integrated coal mining-cum-power generation projects, to be located at mine-mouths of Thar, Lakhra and Sonda-Jherruk coalfields.

The feasibility studies for all these projects, which are scheduled to commence commercial operations by June 2012, are currently at various stages of preparation, though pace of work is slow. These studies are required to be credible bankable documents of an internationally acceptable standard, in accordance with the Power Policy 2002, ensuring advanced technology to be employed.

But the fear is that obsolete technology may be employed in the coal-based power projects resulting in environmental degradation. In a bid to avoid procedural formalities and financial commitments, the sponsors are obtaining approval from the government, routing their projects through other agencies, like the Board of Investment, that have no jurisdiction whatsoever on processing such projects. In fact the government mandates the PPIB as a single-window facility for implementation of power projects of above 50 MW capacity in the private sector, which has the requisite capacity, capability and specialised expertise.

The major issue is that sponsors of such projects have not established their financial and technical credentials and are not willing to prepare independent feasibility report for the project, in accordance with the Power Policy 2002. This way they also save arranging a bank guarantee for an amount at the rate of $1,000 per MW to the government, a pre-requisite for issuance of the Letter of Interest (LOI) as per Power Policy, besides avoiding a project fee.

In fact, the prescribed feasibility study is essentially required to be undertaken before launching the project of this nature, which would conform to the requirements of the government, the power-regulator, the power-purchaser, the lender, the environmental control authority as well as the investor himself.

Such sponsors, in violation of the applicable rules and regulations, are not conducting any feasibility studies that would principally allow them to negotiate a tariff with the power purchaser and the National Electric Power Regulatory Authority (Nepta).

These sponsors are currently lobbying for hypothetical determination and announcement by the Nepra of an up-front tariff for the proposed power plants based on indigenous coal.

This however is being resisted by Nepra, on its merit, as in the absence of any feasibility study on the respective project, or for that matter of any such project, the proposed tariff will be unrealistic and consumers will have to pay higher price for the electricity.

On the other hand, such a hasty decision on the part of regulatory body may hamper further investment, particularly foreign, in the power sector. The feasibility study has to define the parameters of technology, machinery, cost of project and other economics that obviously vary from project to project and form the basis for determination of the power tariff in each case. For tariff determination, it is also of prime importance to take into consideration various provisions, particularly related to the incentives, benefits and concessions, of the National Coal Policy, which is not yet in place.

Of late, the domestic investors have shown interest in developing integrated coal mine-cum-power generation projects. Habibullah Energy plans to establish a 150-MW capacity mine-mouth plant, whereas Fateh Textile will develop a 200-MW plant, both based on Lakhra coalfields. Lakhra coalmines, with total mine-able reserves of 305 million tons, are well developed and mining is in progress since 1960, though under-capacity. It is a major potential area for establishing an associated power plant by the private sector.

Various studies undertaken by the USAID, JICA and the Chinese and the Polish firms during different periods from 1986 to 1996 have confirmed techno-economic viability of a series of 250-300 MW capacity power plants based on Lakhra coal. Yet such a project remains a pipedream so far, in spite of existing infrastructure. Wapdas plan to set up additional three units of 50 MW each was dropped many years ago so as to encourage private sector.

Likewise, Dadabhoy Hydrocarbon is setting up a 200-MW power plant based on Sonda-Jherruk coalfields, which are the second largest coalfields in Sindh with reserves of over seven billion tons, and a 1,000-MW project by Hasan Associates on Thar coal, the countrys largest coal resources.

In addition, Idrees Steel Co propose to develop a 300 MW capacity plant based on Thar coal. Descon Group has plans to develop 125 MW mine-mouth project at Naukot, Distt Tharparkar and another 125 MW project at Golarchi, Badin. Also, Olympia Chemical Co plans to establish an integrated project to generate 76 MW electricity. It is yet to be seen as to how many investors are really serious to develop the respective integrated projects.

Here, one may recall a project sponsored by Associated Group/Smith Co-generation Management Inc. for which mine-lease area of Lakhra coalfields was allotted by the provincial government in 1996. In spite of obtaining repeated extensions of the LOI until 2003, the sponsors could not even prepare a feasibility report for the project. Instead of imposing a penalty for the opportunity that the nation lost for almost a decade, the sponsors were recently favoured to takeover Wapdas Lakhra power station on lease, without any bidding.

One of the projects not being routed through the PPIB, and thus not following the Power Policy, is reported to be sponsored by TASAQ International (Pvt) Ltd, in association with China National Machinery Import and Export Corporation (CMC) of China. They are going ahead with the implementation of an integrated mining-cum-power generation project of 2x300 MW capacity based on Sonda-Jherruk coalmines. The project is to be constructed on BOO (build, operate and own) basis, and has not yet obtained the LOI from the PPIB, as required. The initial agreement (MOU) was signed in August 2002 and the CMC has concluded an agreement with the government of Sindh on November 12, 2006 for conducting coal geological investigations.

Pakistan is emerging as an important market for coal-mining equipment and coal-based power generation equipment. Not surprisingly though, such sponsors plan to develop coalmines and install a power plant with the assistance of the Chinese, ignoring the latest technological developments.

This may precisely be the reason why they would be reluctant to seek approval of the project through proper channel, where technology, plant efficiency, plant availability, energy consumption, capital cost, competitiveness, environmental control and other parameters of the project are duly verified and monitored.

The development of an integrated mining-cum-power generation project is a complex and arduous process posing a number of issues, problems and challenges, which should be dealt with professionally in the feasibility study. First and foremost, comprehensive survey, exploration and investigations are to be conducted in the leased area to identify and verify suitable quality and quantity of coal resources on a long-term basis, say 30--40 years.

This is crucial for project implementation but unfortunately not taken seriously by the sponsors. Also, the geo-technical investigations and hydrological studies have not been carried out satisfactorily by the sponsors of these projects. The government of Sindh, which is responsible to allow exploration license or mining lease to the sponsors, has repeatedly shown its concern over the unsatisfactory situation, even sometimes threatening to cancel their lease, but to no avail.

Though China has the largest coal mining industry in the world, the technology employed is conventional and obsolete, and the mining management remains outdated. This results in low productivity, higher power consumption, poor mining conditions and higher pollutant emissions. A large number of accidents occur in coalmines in China, causing more than 6,000 deaths each year. These represent almost 80 per cent of total number of deaths in mine-accidents worldwide. For these reasons, China is currently closing down as many as some 7,000 coalmines, whereas coal-fired power stations with capacity up to 200 MW were closed down in January 2007 as these were heavily polluting the atmosphere.

The Chinese government has banned, on March 6, 2007, the construction of coal-based power plants in future with capacity below 300 MW. Realising that larger capacity would result in higher efficiency with less energy consumption and less pollution, the newly adopted policy allows installation of 600 MW to 1,000 MW coal-based power plants.

Simultaneously, China is seeking collaboration with the West to acquire latest coal-mining methods and technology .China has imported large-scale coal-mining equipment from the USA, UK, Germany and Japan worth $4.5 billion during the last seven years.

The only experience Pakistan has is that of 150 MW capacity (three units of 50 MW each) power station at Khanot, District Dadu in public sector using Lakhra coal. The Chinese have supplied the machinery, said to be of advanced technology of fluidized bed combustion but it is in fact first generation technology, which was already outdated when the power station was installed.

These units are not giving satisfactory performance in terms of economy, efficiency, pollution control and operational reliability, due to a number of factors including that of the obsolete technology. Currently, only one unit, at de-rated capacity of 30 MW, is operational, whereas the other two units are not functional for quite sometime. We need to learn from our experience, rather than repeating the same, time and again.

The government needs to review its strategy, curbing back-door investment in power sector, as it shall be disastrous, unfair and discriminatory to allow setting up of coal-fired power plants, without conducting a detailed project feasibility study as per PPIB rules. As regards technology, the Chinese companies should be asked to seek strong collaboration with the consultancy companies in the Western countries specialising in the latest technology for implementation of identified projects in Pakistan.

The government should ensure that, for future projects, modern technology for mining as well as power generation is acquired. Couger Energy UK have shown interest to develop a 400-MW power plant based on Thar coal, introducing latest underground coal-gasification technology. One hopes the proposal of the British company is considered seriously on its merits.

Fears about discarded technology -DAWN - Business; October 22, 2007


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## Neo

*Time to review tourism policy​*
Tourism has always been a weak, palsy-stricken, churchyard-like thing that has strutted around the potent spell of official inefficiency. Its lack of performance warrants serious analysis because despite its diverse and large base, the sector has failed to harness its full potential.

Although, unlike other natural resource-based economic development initiatives such as mining and timber production, tourism needs fewer financial resources to develop.

But tourism has never been viewed as a major engine of economic growth. In fact, we have failed to regard tourism equal to other industries capable of creating jobs, earning foreign exchange, improving terms of trade, and regional development, overcoming economic disparities and for conservation purposes.

The available literature on tourism suggests its first master plan was conceived in 1967. Although it recognised environmental considerations in general terms, it laid no emphasis on environmental conservation. Resultantly, hotels and tourists resorts emerged close to natural attractions and archaeological monuments.

The rapid urbanisation brought encroachments around monuments of historical and cultural importance, for example, around Shalimar Garden, Lahore that have impacted negatively on the prospects of cultural tourism.

Similarly, no attention was paid to preserve potential landscapes for recreation purposes. The Nala Dek in Sialkot, Lower Bari Doab Canal in Lahore and the Bara River Peshawar were major sources of enjoyment and recreation. These potential landscapes are now being polluted by adding sewerage water into them. Similarly, the landscapes of riverfronts in Lahore, Sukkur and many other historic towns have not been exploited at all. From 1967 to the time when National Tourism Policy of 1990 went public, no policy level attempts were made to develop tourism on national level. While some isolated projects, rules, regulations and activities such as UNESCO Master Plan for the Preservation of Mohenjo Daro, 1972, compilation of tourists statistics in 1971 etc were seen, convergence of resources and expertise through integrated planning and cooperation among public and private sectors at federal, provincial and local levels were never sought on policy level.

Some measures were taken to control pollution in mountainous areas in 1983 and in 1988 by making expeditions responsible for leaving camping sites clean of garbage, supply of kerosene oil to the porter and contribution of clean up operation fee of $200 etc.

Then came the National Tourism Policy of 1990 with the following core objectives: it stressed on the government to ensure preservation of environment and ecology. It argued that market forces cannot be expected to ensure environmental degradation. It proposed launching of educational programmes for creating awareness and conservation efforts

The objectives of National Tourism Policy of 1990 do not appear to be enough to take care of tourism development as such. Hinged largely around preservation and conservation of environment, the policy had failed to recognise tourism as major engine of economic growth capable of generating mass employment opportunities, alleviating poverty, and positing Pakistan as a global brand capable of capitalising on the increasing international travel, trade, and investment opportunities.

It failed also to link tourism development with environment policy as a strategic national development goal. Even the stated objectives of Tourism Policy 1990 were never achieved. Degradation of natural resources continued unabated around the republic and the proposed educational programmes were never incorporated in educational curriculum.

After a gap of 11 years, the government had announced tourism policy 2001 with major highlight: tourism shall continue to be treated as industry. Year-round tourism will be promoted. Efforts will be made for qualitative improvement, development in environment, human resources, tourist services, and the tourist product. Federal and provincial governments will be asked to bring all legislation in consonance with demand of the tourist industry. It will stimulate private sector involvement in tourism through provision of industry support constructs.

It seems the government has drafted this policy in an extreme haste. The entire policy, whatever it is, is not available on website of Ministry of Tourism that has been developed or has been in the process of being developed at the cost of Rs5 million for promotion of tourism industry and dissemination of information to tourists, researchers, and general public.

Other than the policies and organisations, the country has a Tourism Master Plan 2002. Prepared jointly by United Nations Development Programme, the WTO, and the government of Pakistan, the master plan had enumerated among the others, several constraints, which must be overcome to ensure the sustainable development of tourism services: (1) Lack of awareness amongst the general public about the structure, impact and benefits of tourism. (2) Limitations on adequately trained personnel in all sectors (3) Outdated regulations and over-regulation of tourist services and facilities in certain areas and a lack of regulation in other areas (4) Lack of investment in tourist facilities and services by both national and provincial authorities and few incentives for private investors (5) Limited and outdated infrastructure all over the country

For Pakistan to make progress in this sector, it may be recommended that the government should explore the links that exist between sustainable tourism development and natural and cultural resource management. Efforts must be directed to develop community-based tourism and recreational opportunities for a very large domestic tourist market. Ministry of tourism needs to develop a comprehensive domestic tourism policy. Similarly, the Tourism Policy 2001 must no longer look vague. The government needs to develop it properly for country to make substantial gains from global tourism market growing at seven to 12 per cent annually since 2002.

For foreign tourists Pakistan has immense potential particularly in eco-tourism, due to the availability of vast tracts of pristine natural settings. This we say without entangling our horns in the complex business of defining exactly the term ecotourism, but agreeing to its main feature: (1) All forms of tourism aimed at the appreciation of both natural and traditional cultural recourse in natural areas. (2) Deliberate efforts to minimise the harmful human impacts on the natural and socio-cultural environment. (3) Support for the protection of natural, cultural assets, and the well-being of host communities.

Actually, the ministry of tourism needs to understand that the developed countries lack pristine natural settings but have affluence, time, and desire to visit exotic places for camping and nature study etc. The forecasts by WTO in Tourism 2020 Vision and others state tourism volume, employment and export earning is expected to move away from developed countries towards less developed countries. Therefore, what is the point in missing yet another opportunity to harness the potential that tourism offers?

Time to review tourism policy -DAWN - Business; October 22, 2007


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## Neo

*Surviving $100 a barrel​*
Pakistan may feel the bitter fallout of $100 a barrel as world price of oil sooner than feared earlier. The reality of such a giddy price for oil is staring us in the face today. Earlier the $100 a barrel was expected by the middle of next year but now this may become a reality by the end of two months from now.

The oil price took a leap of $9 a barrel from 79 dollars last weekend in the US where a shortage in the US oil reserve was reported. It jumped by $9 to $88 a barrel and then went up by a dollar a barrel. The immediate reason was said to be the fear of an American attack on Iran to stop its nuclear programme. That has been confirmed by President Bush that Iranian nuclear arms would mean World War III.

The US is determined to prevent Iran from acquiring nuclear weapons and even risk a war with Iran. President Bush is determined to prevent Iran from acquiring nuclear weapons and if that means yet another war in the Middle East after Iraq. He couldnt care less, he is desperate. In addition, the oil producers want more dollars because of the falling exchange rate of the dollar in relation to stronger currencies, particularly the euro. They want to be compensated with more dollars.

Normally, when the world economic situation is not bright and oil consumption is reduced, oil prices dont go up but not this time when the western world is facing a credit crunch following a crisis in the US property market. The International Monetary Funds new forecast says that economic growth in the world will be 4.8 per cent in 2008 while it will be 5.2 percent in 2007. So a combination of a threat of another war in the Middle East, shortage of the US oil reserve and the eagerness of the oil producers to get more bucks for their oil are pushing up the oil price.

Russia and the Caspian countries have together warned the US against attacking Iran but whether that will restrain the US remains to be seen. The Asian Development Bank says that Asia is the fastest developing region. That means Asia will consume far more oil but will be handicapped by the far higher price of oil. However, one part of Asia-the Middle East- will gain by the higher prices of oil  surplus money which is sought to be invested but the oil poor countries like Pakistan and India will suffer.

Pakistan which produces only 20 per cent of the oil it uses will truly suffer. Last year, the OGDC was expected to drill 100 oil and gas wells but succeeded in drilling only 50. It had no success with its offshore ventures either. Although more and offshore wells are being drilled more local companies are joining the foreign explorers. Higher price of oil touching $100 a barrel will hit domestic economy hard. But the government which earned over Rs176 billion from oil and gas may earn more while the country will suffer. Power production will become far more costly as furnace oil prices shoot up. Industrial production will cost far more.

Transportation costs will rise. Railway fares will go up and airlines will raise their fares substantially. As transportation costs rise, bus fares will shoot up and bitter disputes between passengers and the bus conductors will become common. In the farm sector, the power rate for tube wells will go up making farm output far more costly. Higher power rates will affect the service sector including hotels, restaurants and shops. Power for schools , colleges and universities will cost far more.

The government sells the oil it drills within the country at international prices. S the cost of production will go all round . Overall the cost of living will rise substantially, particularly if the POL prices are raised substantially .

Normally when the prices of imported items rise sharply, the government reduces the import duties but seldom in Pakistan. Hence it was able to make over Rs176 billion from oil and gas last year.

Now that inflation is high and food inflation is even higher, the government should do nothing to raise prices abnormally. Instead it should step up its effort for a peaceful settlement between Iran and the US. That will be helpful to Pakistan and the Middle East in many ways. Although it can be an arduous exercise. We are living in a very uncertain world facing political threats and economic challenges. So we have to behave very prudently instead of running a large trade deficit as well as an external payments deficit.

Simultaneously, political convulsions are interfering with production and export schedules. The politicians have to think of the economy which affect the poor people instead of relegating the economy to a lower order of things.

Their public demonstrations should be more orderly and disciplined, particularly when terrorists are out to wreck the political system.

Surviving $100 a barrel -DAWN - Business; October 22, 2007


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## Neo

*Adding value to export products​*
Over the years, the country has expanded its simple manufacturing base and raised exports. But it needs to add more value to industrial products for a rapid and sustainable growth in exports.

Exports grew just 3.4 per cent in the last fiscal year against the target of 13 per cent whereas its imports increased 6.8 per cent against the target of minus two per cent.

If we dont introduce value-addition at all levels our exports wont grow fast enough and our dream of import substitution would be shattered, says Mr Iqbal Ibrahim, Vice Chairman, All Pakistan Textile Mills Association.

The country cannot afford to miss its export growth targets year after year or continue to delay import substitution because that would weaken its external sector and make it more dependent on external debt.

In FY07, the country posted a balance of payments surplus of $3.5 billion but its stock of foreign debt and liabilities also increased by $3 billion to $40 billion.

Policy makers do agree that it is time to focus on industry-led growth strategy and value-added exports, transfer of hi-tech technology and import substitution. But not much is being done in practical terms.

The creation of the ministry of textiles is a good omen to start the process of strategic industry-led growth. But the ministry has not delivered much in terms of facilitating the textile sector to develop on sustainable grounds and to increase value-added textile exports, says textile industrialists.

According to a report of Pakistan Institute of Development Economics, Pakistans exports of textiles are concentrated in low value- added products despite a rising share of higher value added textile products in global trade. To move with the global trends, the textile industry must move up the value chain and increase the share of high value added garments and made-ups in its export portfolio.

The textiles sector remains largely cotton-based, despite an increasing trend towards synthetic and blended fabrics. Current spindle utilisation for man-made fibres is very low compared with its competitors. A major reason for this is the protected man-made fibres industry.

The overwhelming reliance of the textile sector on cotton makes it vulnerable to adverse shocks in the cotton market, says the PIDE report authored by Musleh ud Din and Ejaz Ghani. In order to decrease the reliance on cotton, there is a need to encourage a shift towards man-made fibres.

There is also a need to move up the value chain both within and across all the sub-processes of the textile sector. And to reward value addition, incentives provided to the textiles sector should be linked with value addition. Similarly, other incentives such as export refinance should be cascaded across the value chain within a sub-process e.g. lower refinance rate for the finer counts and other value-added yarns and higher rate for the lower counts.

After textiles, leather sector is the biggest foreign exchange earner . Lately, this sectors exports have grown because of higher value-addition. But still there is much scope for making our products more-value added, says a leading exporter of leather and leather products.

Exports of tanned leather and such value-added items like footwear and leather garments have risen over the past few years. But there is a vast array of leather products whose exports need to be boosted. These items include leather under garments, gloves, handbags, purses, key chains, wallets etc.

In FY07, exports of tanned leather rose 3.5 per cent to $303 million. But the exports of leather manufactures fell 24 per cent to $546 million. Some exporters say that the exports of leather manufactures were over-stated in FY06 and that the decline seen in FY07 was a consequence of it.

But like many others, they too admit that not much is being done to make leather exports more value-added. One basic reason for not-so-fast value addition in leather products is that the industry lacks the modern technology used in this business, says Qaisar Hassan, a leather technologist.

Hardly half a dozen tanneries out of more than two dozens I have so far worked with have the latest technology necessary for making finished value-added leather products, he says.

Textiles and leather industries use local raw materials and can easily go for value-added production. But the scope for value addition exists even in case of other industries.

The plastic industry is one good example. Polypropylene granules are imported to meet industrial requirements. But whereas we use it for making low value-added products like woven sacks India, China and Turkey manufacture and export an array of industrial and household goods made from polypropylene, says Sardar Ashraf, a member of the managing committee of FPCCI.

The Indian Reliance Company is the biggest plastic granule importer but at the same time it is also the biggest exporter of plastic bags. This is real value-addition. A leading rice exporter pointed out that whereas Thailand has long been producing and exporting rice-based food products we only export rice. And flour millers say a big scope also exists for export of value-added wheat and wheat flour-based food products. We have started exporting vermicelli to the UAE and the response is encouraging. We can explore possibilities for exporting other traditional food items made of wheat flour to the Gulf countries where a large number of non-resident Pakistanis live.

Apart from textiles, leather, plastic and food industries there is a vast scope for value-addition in almost every industry including those with export potential. Value-addition in construction and engineering industry can earn a huge amount of foreign exchange. The light engineering sector has started investing in technology needed for value-addition in manufacture of household electronic goods. Till recently, local fans were doing a roaring business in global markets but with the emergence of cheaper Chinese fans, the situation has changed.

Businessmen point out that the issue of value-addition in exports needs to be handled through a public-private partnership programme. Let the ministry of industries, ministry of commerce, Trade Development Authority of Pakistan and the FPCCI join hands to come up with a vision for value-addition, suggests Sardar Ashraf.

Many frankly admit that the private sector has so far not played its due role in introducing value-addition to various industries. But they say that the country cannot afford to delay this requirement any more.

Moving up the chain of value addition in every industry is not only needed to boost exports but also to cater to the growing domestic demand for sophisticated goods.

If local companies fail to make value-added products to suit to the tastes of an emerging class of domestic buyers, influx of imported goods would continue unabated. And that would adversely impact the efforts being made to boost industrial production and employment and take its toll on the external sector.

Adding value to export products -DAWN - Business; October 22, 2007


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## Neo

*WB gives mixed report on economic growth​*
WASHINGTON, Oct 21: As many as 37 per cent of the working-age population in Pakistan is 24 years old or younger, says a World Bank report released on Saturday.

The World Bank development report for 2008 also shows a total of $308 million of foreign direct investment in the country in 2000, which increased to $2.2 billion in 2005.

Long-term debt was $29.7 billion in 2000, which increased to $31 billion in 2005.

Total debt service as percentage of exports of goods, services and income was 25.2 in 2000 and 10.2 in 2005.

Official development assistance and official aid was $692.4 million in 2000, which increased to $1.7 billion in 2005.

Workers remittances and compensation of employees totalled $1.1 billion in 2000, $4.3 billion in 2005 and $5.4 billion in 2006.

According to World development indicators database of April 2007, Pakistans GDP in US dollars was $73.3 billion in 2000, which increased to $128.8 billion in 2006.

The annual GDP growth rate is shown as 4.3 per cent in 2000, 7.3 per cent in 2005 and 6.2 per cent in 2006.

The annual inflation, GDP deflator, is shown as 23.8 per cent in 2000, 8.7 per cent in 2005 and 10.3 per cent in 2006.

Agriculture is shown as 26.2 per cent of the GDP in 2000, 22.2 per cent in 2005 and 20.5 per cent in 2006.

Industry is shown as 22.6 per cent of the GDP in 2000, 26.5 per cent in 2005 and 26.7 per cent in 2006.

Services and miscellaneous are shown as 51.2 per cent of the GDP in 2002, 51.3 per cent in 2005 and 52.9 per cent in 2006.

Exports of goods and services are shown as 13.6 per cent of the GDP in 2000, 15.5 per cent in 2005 and 15.5 per cent in 2006.

Imports of goods and services are shown as 14.8 per cent of the GDP in 2000, 19.3 per cent in 2005 and 24.4 per cent in 2006.

Gross capital formation is shown as 17.4 per cent of the GDP in 2000, 18.1 per cent in 2005 and 20 per cent in 2006.

Revenue, excluding grants, is shown as 14 per cent of the GDP in 2000, 12.8 per cent in 2005 and minus 13.3 per cent in 2006.

Cash and surplus deficit is shown as minus 4.1 per cent of the GDP in 2000, minus 3.2 per cent in 2005 and minus 3.8 per cent in 2006.

It takes 24 working days to start a business in Pakistan.

Market capitalisation of listed companies is shown as 9.0 per cent of the GDP in 2000, 41.3 per cent in 2005 and 35.3 per cent in 2006.

Military expenditure is shown as 4.1 per cent of the GDP in 2000 and 3.3 per cent in 2005.

Only 24.3 per thousand people had mobile phones in 2000, which increased to 115.9 per thousand in 2005.

Only 2.2 per thousand people had access to the internet in 2000, which increased to 67.4 in 2004.The World Bank also notes that the population growth rate in Pakistan reduced from 2.4 per cent in 2000 and 2005 to 2.1 in 2006.

Infant mortality rate also reduced from 85 per thousand live births in 2000 to 79 in 2005.

Prevalence of HIV for population aged between 15 and 49 remains at 0.1 per cent.

Primary school completion rate is 63.2 per cent. Enrolment in primary schools is 87.3 per cent of the relevant age group. For secondary schools it is only 26.9 per cent and reduces to a depressing low of 4.6 per cent for high school and colleges.

Ratio of girls to boys in primary and secondary education is 75.4 per cent. Adult literary rate for people aged between 15 and above is shown as 49.9 per cent.

Of a total surface area of 796.1 thousand square kilometres, only 21,160 square kilometres were shown as forest areas in 2000, which further reduced 19,020 square kilometres in 2005.

Agriculture land increased from 35 per cent of the total surface area in 2000 to 35.1 per cent in 2005.

As many as 89 per cent people have access to improved water sources.

In urban areas, 89 per cent of the population has access to improved sanitation facilities.

Energy use as kilogram of oil equivalent per capita remains 463.2 and electric power consumption kilowatts per capita is shown as 373.5.

Energy imports cover 26.3 per cent of total energy use.

WB gives mixed report on economic growth -DAWN - Top Stories; October 22, 2007


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## Neo

*Industrial nations, IFIs support FATA development plan​*
WASHINGTON: The major economic powers and the international financial institutions (IFIs) have expressed their support for the Federally Administered Tribal Areas (FATA) economic development plan.

Representatives of the industrialised nations and the global financial institutions met on the margins of the World Bank-IMF annual moot and discussed ways to complement efforts for socio-economic uplift of the mountainous tribal region of Pakistan as well as the border areas of Afghanistan. The representatives acknowledged the key importance of economic development in the region.

The Prime Ministers Adviser on Finance and Economic Affairs Dr Salman Shah made a presentation to the representatives from the United States, European Union, Canada, Japan and Asia Pacific countries about Islamabads development plan with an outlay of Rs 2.06 billion, aimed at the socio-economic development in FATA.

Dr Shah said, They were very impressed by what Pakistan has done and the institutional arrangement that we have put in place, and I think this should be a very successful plan for FATA. Under the plan, Pakistan will spend $ 1 billion over a period of nine years (2006-15). The United States has committed to provide $ 750 million over five years, which leaves a gap of $ 250 million.

In his presentation, Dr Shah said the government was committed to economic well being of the people in the rugged region and it was setting up infrastructure and providing economic opportunities that would help the local people integrate into the mainstream of the country.

The prime ministers adviser also discussed the governments approach of addressing problems like poverty, limited access to public services and extremism affecting the border region through a combination of administrative, political and security measures. However, he stressed that economic development was the most important component of government policy in the long run. Talking about the implementation mechanism for the development strategy, Dr Shah informed participants about the establishment of the FATA Civil Secretariat that would carry out projects in human development sectors - education, health, water supply, sanitation and rural development.

The FATA Development Authority, established on a public-private partnership model, will be responsible for the execution of economic development sectors - industry, mining, commerce, trade, tourism and reconstruction opportunity zones, he added. Dr Shah said that rural support programme, which would be undertaken through civil society organisations, would focus on poverty alleviation with a livelihood-cantered approach to rural progress. He appreciated the important role played by the US in mobilising resources for development of the region. 

The G-8 countries are also planning to further increase their support for Pakistans development plan, he added.

On the occasion, US Economic and Business Affairs Assistant Secretary Dan Sullivan and Afghan Finance Minister Anwar Ahady spoke of their commitment to development of the region. app

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan may lose advantage on ROZs ​* 
Tuesday, October 23, 2007

LAHORE: Economic experts cautioned on Monday that availability of duty free access in US market to textile products of Bangladesh and Cambodia would neutralize any advantage that Pakistan was expecting from production in ROZs. 

While Pakistan is still waiting for a bill to be presented in the US Congress for duty-free access to the US markets for products made in the Reconstruction Opportunity Zones (ROZs) and in earthquake-affected areas, a bill for duty free access to Bangladesh and Cambodia has been placed in the US Congress.

A bill was introduced last Thursday in the US House of Representatives for granting duty-free access to poorest countries on the planet, including Bangladesh and Cambodia. The text only requires 35 per cent of the total value to be originated in one or more eligible countries, falling to 25 per cent for African countries. Limits would be imposed on duty-free imports from Bangladesh and Cambodia but would be raised if core labour rights were enforced in both countries. 

For Pakistan a US partner in its fight against terrorism the proposed bill for ROZs offers duty free access to only two textile value added categories produced in Pakistan while for poorer countries it is for all textiles.

Bangladesh already has an edge over Pakistan in the European market where it has market access at zero rate under GSP while Pakistani textiles are subjected to 13-19 per cent duties.

Pakistan may lose advantage on ROZs


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## Neo

* Remittances surge to $1.5bn ​* 
Tuesday, October 23, 2007

KARACHI: Remittances sent home by overseas Pakistanis continued to rise in the first quarter (July-September 2007) of the current fiscal year as the country received $1,501.25 million during the period.

That figure showed an increase of 21.7 per cent or $267.66 million over the same period of the last fiscal year.

The total figure of $1,501.25 million included $0.63 million got through encashment and profit earned on Foreign Exchange Bearer Certificates and Foreign Currency Bearer Certificates.

The monthly average of remittances for the period July-September 2007 came to $500.42 million compared to $411.20 million during the same period of the last fiscal year, registering an increase of 21.7 per cent.

The inflow of remittances during the period under review from the US, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), the UK and the EU countries amounted to $420.90 million, $294.99 million, $237.39 million, $217.14 million, $119.91 million and $44.78 million respectively.

That compared with $311.87 million, $242.79 million, $190.82 million, $173.47 million, $102.23 million and $36.43 million respectively in July-September 2006.

The remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries combined during the first three months of the current fiscal year 2007-08 came to $165.51 million against $175 million in the same period last year.

During last month (September 2007), Pakistani workers remitted $516.05 million, up $94.31 million or 22.36 per cent compared to $421.74 million in September 2006.

In September 2007, the inflow of remittances from most of the countries recorded an increase as the break-up showed that remittances from the US, Saudi Arabia, UAE, GCC countries, the UK and the EU countries amounted to $155.57 million, $92.59 million, $80.51 million, $74.26 million, $37.10 million and $15.90 million respectively.

In comparison, receipts from those countries during September 2006 were recorded at $108.28 million, $77.45 million, $65.85 million, $58.05 million, $32.85 million and $11.83 million respectively.

During September 2007, remittances from Norway, Switzerland, Australia, Canada, Japan and other countries amounted to $59.91 million compared to $67.25 million in the same month of the last fiscal year.

Remittances surge to $1.5bn


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## Neo

* Trade corridor to benefit Pakistan, CARs ​* 
Tuesday, October 23, 2007

ISLAMABAD: Prime Minister Shaukat Aziz while acknowledging Pakistans close friendly and brotherly relations with China, Kyrgyzstan and Kazakistan said that the people of Pakistan have an immense reservoir of mutual goodwill, which is a source of strength to relations between Pakistan and these neighbouring countries. 

He was talking to a group of touring delegates from the Central Asian States, who called on him here at the Prime Ministers House on Monday. 

Aziz said that a comprehensive programme has been launched under the National Trade Corridor initiative to overhaul the entire logistics chain, physical connectivity and infrastructure network such as motorways, expressways, railways, shipping, sea ports and airports so as to bring them at par with international standards. 

He said that the new activity from Gwadar to upcountry and beyond into China and Central Asia through energy and trade corridor would be a major catalyst. 

With the completion of this corridor, he said Pakistan would serve as a transit hub in the region. The prime minister said that the work on up-gradation of Karakurram Highway (KKH) has already been planned with Chinese assistance which includes widening and strengthening of the road to improve its capacity to cater for heavy loads and making it a reliable link for all seasons.

Trade corridor to benefit Pakistan, CARs


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## Neo

*Karachi bourse grew by 38pc in last fiscal​*
KARACHI, Oct 22: The Karachi Stock Exchange (KSE) recorded growth of 38 per cent during the year ended June 30, 2007, with the index closing the year at all-time high at 13,772 points.

KSE Annual Report 2007 released by the bourse on Monday stated that the major thrust came in the fourth quarter when the index registered a jump of 22 per cent. During the year, the market capitalisation also rose by a remarkable 43 per cent to reach its peak at Rs4 trillion ($66bn).

The two halves of financial year 2007 portrayed distinctly different trends, whereby the first half remained almost flat and registered only 0.51 per cent increase, the report stated and added that in the second half, the market witnessed rise of 37 per cent in the KSE 100-share index.For all the healthy run-up in the stock market during the year, which was the sixth consecutive year of rally, the Ready Market turnover averaged 221 million shares during FY07, which was stated to be the lowest since FY02. As a result, the average daily value also shrank to a three-year low of Rs22 billion ($362bn).

During the year under review, the KSE saw a total of 16 new listings and 12 companies offering equity, which set out to raise Rs6.3bn including premium. It included OGDCs second issue, which accounted for 38 per cent of the total issue size. That was against the earlier years total 14 new listings including 12 public offerings to the tune of Rs6.5bn. The directors stated in their report: The subdued interest was observed by the private sector, mainly due to lack of tax incentives for listed companies and the stringent requirements of corporate governance. At the end of financial year, 658 companies remained listed on the exchange. Like equity markets, corporate debt market also witnessed three new listings of Term Finance Certificates (TFCs) valued at Rs6bn.

The annual report stated that there were many contributing factors leading to booming conditions at the market. Those, inter alia, included improvement in the countrys economic fundamentals and regional political environment, governments commitment to capital market reform agenda and pro-market policies, stability in exchange rate, regionally cheap valuations of the scrips, large scale mergers and acquisitions, improving relationships with neighbouring countries, successful GDR offerings and increase in Pakistans coverage by large international brokerage firms and investment banks. The biggest push to the market was caused by the interest shown by foreign investors with huge liquidity at their command, looking for investment opportunities throughout the world, the KSE directors stated.. They added that it was substantiated by the fact that (the share of) foreign funds reflected a sharp jump from 3.2 per cent of market capitalisation in June 2006 to 6.3 per cent by the end of March 2007.

Karachi bourse grew by 38pc in last fiscal -DAWN - Business; October 23, 2007


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## Neo

*More FDI likely from Arab states, China​*
ISLAMABAD, Oct 22: Pakistan is likely to attract more foreign direct investment (FDI) in the coming years mainly from Arab states and China due to its aggressive privatisation policy and economic growth.

The country is so far at the bottom in the list of the top ten South, East and South East Asia FDI recipients.

However, a United Nations report on World Investment-2007 states that the West Asian companies spearheaded by Saudi Arabia and United Arab Emirates are likely to bring FDI in Pakistan to new heights.

The report says that the performance of Pakistan in attracting FDI ($4.3billion in 2006) has been promising. And, now there is a shift from developed countries to West Asian countries in terms of sources of FDI. But, the report has not pointed towards the 9/11 incident, which made the West Asian countries divert their investment to Pakistan from the developed countries fearing freezing of their assets on charges of any connection with the extremist elements.FDI inflows to South Asia surged by 126 per cent amounting to $22 billion in 2006, mainly due to investment in India. The country received more FDI than ever before ($17 billion, or 153 per cent more than in 2005).

Foreign retailers, such as Wal-Mart, have started to enter the Indian market. At the same time, a number of US trans-national corporations (TNCs), such as General Motors and IBM, are rapidly expanding their presence in India, as are several large Japanese TNCs, such a Toyota and Nissan.Chinas FDI outflow increased 32 per cent to $16 billion last year, and its outward FDI stock reached $73 billion, the sixth largest in the developing world. Part of this overseas expansion involves considerable investment in other developing and transition economies.

For example, China is establishing the first group of eight overseas economic and trade cooperation zones in Nigeria, Mauritius and Zambia in Africa, in Mongolia, Pakistan and Thailand in Asia and in Kazakhstan and Russian Federation in South East Europe.

China will remain a magnet for FDI, but is becoming more selective with respect to the quality of FDI. India has shown huge potential for market seeking FDI, but faces a number of disadvantages that could impede progress in attaining its goals of raising annual FDI to $150 billion by 2010.

Meanwhile, investors from West Asia may continue to drive FDI to South Asian countries such as Pakistan to new heights, the report states.The FDI inflow to Sri Lanka rose significantly to $480 million. However, Bangladesh has not yet realised its potential, the UN report says.

More FDI likely from Arab states, China -DAWN - Business; October 23, 2007


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## Neo

*Govt may set 24m tons wheat target for 2007-08​*
ISLAMABAD, Oct 22: The Federal Committee on Agriculture (FCA) is likely to set the wheat production target at 24 million tons for 2007-08, which would be 1.5 million tons more than the last years achieved target, when it meets here on Tuesday.A copy of the Rabi crops targets proposed by the Federal Ministry of Food, Agriculture and Livestock (Minfal) to FCA, which was made available to Dawn, reveals that the government is under immense pressure following the recent wheat flour crisis which saw the prices touching new heights.

Sources told Dawn that the target seemed too much optimistic to be practical. The FCA meeting, they said, can also make changes into the proposed targets. However, the committee is expected to fix the major crops target at a level which could not give the impression of another wheat flour crisis next season.

Last season, the country produced 22.5 million tons of wheat. The meeting will also revise the sugarcane and rice targets.Ironically, there is no mention of any tomato target in the Minfals document. A source told Dawn that tomato seemed to be the least priority of the FCA despite the fact that tomatos price reached at Rs140 per kg last week. The target for gram has been proposed at 760,000 tons which will be achieved by sowing on an area of 1.1 million hectares. Last season, the country produced 706,000 over a million hectares.

This Rabis potato production is expected to be 600,000 tons less than that of last years. Minfal has proposed 2.1 million tons of potato production in 2007-08 compared to 1.7 million tons last year.About 100,000 tons reduction is also expected in the onion production target. In last Rabi, the country achieved 2.1 million tons of onion.

Govt may set 24m tons wheat target for 2007-08 -DAWN - Business; October 23, 2007


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## Neo

*Ecnec approves 23 projects of Rs116.5 billion​*
ISLAMABAD, Oct 22: The Executive Committee of the National Economic Council (Ecnec) has approved 23 projects to cost a total of Rs116.5 billion in various sectors, including agriculture, energy, science and technology, water, transport, communication, environment, higher education and culture.

Of them 14 are new projects costing Rs69 billion and nine revised projects of Rs47.5 billion.

Chairing the meeting here on Monday, Prime Minister Shaukat Aziz said frequent meetings of Ecnec held over the past three years were aimed at reducing delays in the approval process and ensuring speedy development activities.

The prime minister said that special attention had been paid to future energy requirements. He lauded the efforts of the Pakistan Atomic Energy Commission chairman for developing indigenous technology to launch classified and non-classified nuclear energy projects.

Briefing newsmen after the meeting, Dr. Akram Shaikh, Deputy Chairman of the Planning Commission, said that Ecnec in its last meeting had approved 45 projects, adding that 68 projects were approved in September and October.

He said that the government had planned to enhance nuclear power production to 8,800 Megawatts, adding that the chemical processing plant and nuclear fuel enrichment plant had also been approved.

Dr Shaikh, however, said that feasibility studies for establishing the nuclear plant was in progress and its venue was yet to be finalised. The other projects are oil and gas exploration in Balochistan and Chashma hydropower project.

Ecnec also approved a social sector development project for higher education in Balochistan and Federally Administered Tribal Areas, he said.

Through the Higher Education Commission, he said, 2,000 scholarships would be provided at primary, college and university levels with 60 per cent quota for Balochistan and 40 per cent for Fata.

Dr Shaikh said the government would establish 10 engineering universities. One of them would be established in Islamabad with the help of China. Ecnec approved a proposal for acquiring land for the university.

Other projects relate to clean drinking water for all, Balochistan small-scale irrigation project and Toiwar-Batozai storage dam project, rehabilitation and reconstruction of Bolan dam project.APP

Ecnec approves 23 projects of Rs116.5 billion -DAWN - Top Stories; October 23, 2007


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## JK!

Thanks Neo for that post on the Gharo wind farm.

I also checked out the AEDB website to see what sort of things Pakistan is looking at in the renewables energy sector.


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## Neo

JK! said:


> Thanks Neo for that post on the Gharo wind farm.
> 
> I also checked out the AEDB website to see what sort of things Pakistan is looking at in the renewables energy sector.



You're welcome JK! 
I've found few other links that might help you get data you're looking for.

I'll post them here later tonite.

Neo


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## Neo

*Pakistan's economy has grown at seven percent: Salman ​* 
WASHINGTON (October 23 2007): Advisor to the Prime Minister on Finance and Economic Affairs Dr Salman Shah has said that Pakistan's economy has grown at an average rate of almost seven percent per annum over the last four years and positioned as one of the fastest growing economies in the Asian region.

Speaking at the annual meeting of the boards of governors of the World Bank (WB) and International Monetary Fund (IMF), he said that the size of Pakistan's economy had more than doubled (from 58 billion dollars to 132 billion dollars) and per capita income almost doubled (from 438 dollars to 847 dollars) during the last seven years.

"Prudent macroeconomic policies and wide-ranging structural reforms underpinned Pakistan's economic turnaround and six/seven years of consistent and transparent economic policies along with economic reforms have transformed Pakistan into a stable and resurgent economy", he said.

"How to sustain the ongoing growth momentum within a stable macroeconomic environment is the biggest challenge going forward. Linked with this are the challenges of job creation, further reducing poverty and meeting the MDGs targets, strengthening the country's physical infrastructure to support seven to eight percent growth in the medium-term and, most importantly, how to reap the benefits of demographic transition that is currently taking place in Pakistan", he added.

Dr Salman Shah pointed out that Pakistan's economy continued to gain traction as it experienced the longest spell of its strongest growth in years, and added the outcomes of the recently concluded fiscal year indicated that Pakistan's upbeat economic momentum remained on track.

He said that economic growth accelerated to seven percent in the fiscal year, which concluded on June 30 at the back of robust growth in agriculture, manufacturing and services, and added Pakistan's economic growth had been notably stable and resilient.

The advisor to the Prime minister mentioned that Pakistan's real gross domestic product (GDP) had grown at an average rate of seven percent per annum during the last five years and over 7.5 percent in the last four years in running.

Compared with the other emerging economies in Asia, he said this had put Pakistan as one of the fastest growing economies in the region along with China, India and Vietnam. The good performance had resulted from a combination of generally sound macroeconomic policies, on-going structural reforms and maintaining consistency and continuity in policies, he added.

"Based on the performance of half-a decade of strong, stable, resilient and broad-based economic growth, we are confident that Pakistan will continue to be a high mean low variance economy over the medium term", he said, and referred to the following other important developments of the fiscal year, which ended on June 30:

-- A sharp pick up in overall investment, reaching at a new height of 23 percent of the GDP.

-- Overall budget deficit remained at the target of 4.3 percent of the GDP.

-- Across of all measures vulnerability to external shocks, Pakistan's debt profile had improved significantly - public debt declined from 56.9 percent to 53.4 percent of the GDP and the external debt and liabilities declined from 29.4 percent to 27.1 percent of the GDP.

-- Highest ever-foreign investment flows at 8.4 billion dollars, emerging as a single largest source of external finance after exports.

-- The expatriate Pakistanis remitted 5.5 billion dollars, the highest ever in the country's history.

-- Exchange rate continues to remain stable despite widening of trade and current account deficit.

-- Foreign exchange reserves continue to rise and are sufficient to provide import cover of almost six months; and most importantly we successfully launched a new 750 million-dollar 10-year 144 A Sovereign Bond in international debt capital market with seven times over-subscription.

These and other measures reflected a strong vote of confidence of global investors on Pakistan' current economic prospect and future economic outlook, he said.

He observed that the rapid and broad-based economic growth was essential for poverty reduction and improving income distribution. Strong economic growth, large inflows of workers' remittances and massive spending on social sector and poverty-related programmes in Pakistan in recent years resulted in sharp reduction in poverty, he said.

At the national level, headcount decreased from 34.46 percent in 2000-01 to 23.9 percent in 2004-05, depicting a substantial reduction of 10.5 percent over this period. Most importantly, rural poverty declined more that the urban poverty. The other indicators of living standards also exhibited significant improvement, he added.

"While Pakistan's economy continues to perform impressively and its economic fundamentals have gained further strength, there is no room for complacency", he said, and added that a relatively higher inflation, largely attributable to higher food prices and widening of current account deficit, owing mainly to slower growth in exports were key macroeconomic challenges confronting Pakistan today.

"The government has already taken various measures to address these two challenges and we believe that going forward, inflationary pressures is likely to ease further and the gap in external account is likely to narrow.

"Going by the trend of the last half a decade, Pakistan's economic outlook for the current fiscal year remains favourable even in the midst of global liquidity crunch and sub-prime mortgage issues. We have targeted a real GDP growth of 7.2 percent of the current year, ably supported by robust growth in agriculture, industry and services sector", he said.

"The current inflationary trend, largely attributable to higher food prices is likely to ease further during the current year. The process of fiscal consolidation along with improvement in quality of expenditure will continue as well as gap on external account will be narrowed further in the current fiscal year. Although the country's debt burden has declined substantially in recent years, effort to reduce it further is the key policy objective of the current fiscal year. Despite this growth performance, we are not complacent", he added.

Salman Shah said that Pakistan greatly valued its partnership and engagement with the Fund and WBG. "We look forward to continuing to work together to achieve our shared goal of reducing global poverty and promoting inclusive and sustainable development", he added.

"Global challenges are our shared responsibility and require global solutions, global resources and leadership and to meet the major challenges of our times, our international institutions have also to reform, improve their internal governance, adjust their business model and strategies to remain relevant and deliver effective results", he said, and added: "We fully support the strategic directions set out for the WBG by President Zoellick in his vision for an inclusive and sustainable globalisation".

The underlining principles and the framework clearly articulated the value proposition the WBG could offer to its diverse client segments through a more differentiated menu of products, services and support.

"We also welcome the reaffirmation to integrate group-wide services to bring synergy within all the institutions of WBG, improve internal governance, address issues of voice and under representation of the developing countries, and develop closer cooperation with other multilaterals to foster regional and global public goods in pursuance of its poverty reduction and development mandate.

"However, to be operationally successful and responsive to the differentiated and evolving demands across its membership, the strategy must retain flexibility and promote use of country ownership and the country systems, reduce non-financial costs of doing business with the Bank and, strengthen countries institutional capacities," he said.

He welcomed the initial progress made by the WBG in implementing its Clean Energy Investment Framework. While implementing this agenda, he urged the bank to strive for the right balance between access to modern energy services for the poor and the promotion of low carbon emission economy without in any way compromising its developmental and poverty reduction mission.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

JK! said:


> Thanks Neo for that post on the Gharo wind farm.
> 
> I also checked out the AEDB website to see what sort of things Pakistan is looking at in the renewables energy sector.



Here are the links I promised earlier, good luck on your project!:

Alternative Energy Development Board

Pakistan Council of Renewable Energy Technology

Renewable Energy Businesses in Pakistan

environment / Renewable Energy/Clean Fuels

Pakistan : New policy on renewable energy launched - Wikinews, the free news source

$510 Million to Promote Renewable Energy in Pakistan

http://www.environment.gov.pk/pub-pdf/StateER2005/Part3-Chp 8.pdf


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## Neo

*RTO Karachi receives 45pc more returns ​* 
Wednesday, October 24, 2007

KARACHI: The Regional Tax Office (RTO) Karachi received 45 per cent more returns till October 20, 2007 as compared to the same period of last year.

In view of the growing number of taxpayers, the tax office has announced another extension till October 30 for filing returns, as earlier the last date was October 20.

According to a Director General Asrar Rauf the RTO Karachi received total 0.64 million returns as compared to 0.46 million in the same period of last year. He expected that the number of returns might further increase due to extension in last date for return filing and reforms steps taken by tax authorities.

The break up showed an increase of 66 percent in number of retail taxpayers, which expanded to 23,711 persons till October 20, as against this some 14,279 retail taxpayers had filed their returns during the same period of last year. Whereas, according to statements filed by employers number of salaried taxpayers increased by 57 percent to 5,12,976 as compared to 3,26,295 million of last year.

In addition, around 47,255 taxpayers including importers, exporters, retailers up to and above Rs5 million turnover filed their returns. 

Asrar Rauf Director General RTO said that in order to facilitate taxpayers 50 Tax Help Kiosks were established in 18 towns of Karachi, which remained operative during month of Ramazan also. It may be noted that the campaign was launched by Chairman Secretary General Revenue Division Central Board of Revenue (CBR) Abdullah Yusuf in the beginning of September.

RTO officials hoped that further returns could also be received due to intense withholding tax monitoring efforts besides of extension in deadline to October 30, for filing of return. Asrar Rauf DG RTO Karachi was optimistic that target of bringing 5 million additional taxpayers in tax net during next two years was well in reach.

He said that due to reforms in CBR and introduction of Universal Self Assessment Scheme tax revenue was doubled while share of direct taxes in over all revenue pool also increased during last few years. He maintained that the achievement of budgetary targets during last two years showed that the reforms played important role in revenue generation. However, he said tax to GDP ratio was in Pakistan was still low as only 1.7 million taxpayers filed returns out 160 million population. 

The breakup of showed that till October 20, RTO Karachi received around 241 returns from corporate sector as against of 211 in same period of the last year. 

Association of Persons filed 1,910 returns as compared to 1,866 of last year, return filed by salary class increased to 11,078 from 10,892 in same period of last year. Non-salary classed filed 90,158 returns as compared to 86,377 of last year.

RTO Karachi receives 45pc more returns


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## Neo

*Pakistan to sustain high growth momentum, says Salman 
​* 
Wednesday, October 24, 2007

WASHINGTON: Adviser to Prime Minister Dr Salman Shah said the country has a clear roadmap to sustain high economic growth with particular thrust on human resource development and job creation to turn its huge young workforce into harbinger of economic boom.

He informed a gathering of diplomats and financial experts at the Pakistani embassy that Pakistan, having positioned itself as one of the fast-emerging economies in Asia, is committed to utilizing its large pool of workforce to maintain economic growth momentum at over 7 per cent.

We are also investing heavily on people - on education, health, skill development and training and re-training of our workforce, he stated.

Pakistan, he said, is the sixth largest country with a population of 160 million of which, 100 million is less than 25 years old and the country is determined to convert its demographic transition into demographic dividend.

The top economic manager listed challenges including managing domestic demand and expansion of domestic markets; improving competitiveness for exports growth; increasing savings and investment to support growth momentum to create job opportunities for the young generation and was confident that with consistency of policies and reforms the country would be able to meet these targets.

The challenges are enormous but we have a clear roadmap to meet these, he said while speaking on Pakistans Economic Outlook and Investment Opportunities.

The gathering included senior US officials from the departments of state and commerce, Washington-based foreign diplomats, bankers and Pakistans economic managers, Governor State Bank Dr Shamshad Akhtar, Special Secretary Dr Ashfaq Hasan Khan, Finance Secretary Ahmed Waqar and Secretary Economic Affairs Malik Akram, who are attending annual World Bank-IMF meetings in the US capital.

He spoke of initiatives like special economic zones with China, saying these would further step up growth in manufacturing sector. He said development in the country has been broad-based in recent years.

Karachi Stock Exchange has emerged as one of the best performer in Asia reflecting investors confidence in the market, he said.

The NWFP is a gateway to Central Asia and the launch of preferential trade initiatives like US-assisted reconstruction opportunity zones (ROZs) in the province will spur economic activity in the province while Balochistan is shaping up with construction of roads and Gwadar port to see a massive trade and tourist activity on its coastline.

On sustaining agricultural growth, he said the country is building water reservoirs to ensure continuous supply of the resource for growth.

In his opening remarks, Pakistans ambassador to the United States Mahmud Ali Durrani said the team of economic managers has helped provide an unprecedented impetus to the economy while pursuing development policies under the top leadership. 

Pakistan to sustain high growth momentum, says Salman


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## Neo

*Bush seeks $60m for Fata uplift zones​*
WASHINGTON, Oct 23: US President George W. Bush has asked Congress for $60 million for the development of tribal areas in Pakistan.

During a visit to Islamabad in March last year, President Bush had announced an initiative to establish reconstruction opportunity zones (ROZs) as part of a plan to bring economic progress to the tribal region bordering Pakistan an Afghanistan.

The initiative aims at promoting economic growth by providing tariff-free access to the US market for goods produced in these specially-designated areas. ROZs will also be established in the areas destroyed in a major earthquake two years ago.

A US team travelled to Pakistan in August last year to study the probability of setting up industries in the tribal zone and later submitted a report to the US Congress and officials.

Earlier this month, a team of traders and investors from Pakistan visited Washington for talks with US lawmakers and officials on the issue.

The US Congress is expected to take up shortly a piece of legislation necessary to allow a duty-free access to US markets for products from these specially-designated areas in Pakistan and Afghanistan.

Bush seeks $60m for Fata uplift zones -DAWN - Top Stories; October 24, 2007


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## Neo

*Pakistan gets top place in new S&P index​*
KARACHI, Oct 23: Standard and Poors (S&P) has launched new Select Frontier Index that includes companies from emerging economies and has placed Pakistan at the top of the index in terms of weight of the companies.

S&P, the worlds leading index provider, on Tuesday announced the launch of the new index, the first investable index covering a broad range of frontier equity markets across emerging Europe, Asia, South America and the Middle East.

The index is comprised of 30 of the largest and most liquid companies from countries with smaller economies or less developed capital markets than traditional emerging markets, and as a result, have previously been excluded from most emerging market benchmarks and investment funds.The universe from which index candidates are drawn includes publicly listed companies from 11 markets in the S&P Emerging Market Data Base (EMDB) that are generally accessible to foreign investors but are excluded from the S&P/IFCI Emerging Markets Index.

The Select Frontier Index includes companies from Bulgaria, Cambodia, Colombia, Jordan, Kazakhstan, Pakistan, Panama, United Arab Emirates and Vietnam.

The biggest country weightings include Pakistan (28.97pc), UAE (23.12pc), Jordan (13.23pc), Vietnam (11.54pc) and Panama (7.74pc), while the top three constituents are MCB Bank (Pakistan), Emaar Properties (UAE) and Copa Holdings (Panama), stated S&P.

A company must have a minimum float-adjusted market capitalisation of $100 million, a minimum average daily value traded of $2 million and a minimum of 15 days traded over the previous six months to be eligible for inclusion in the Select Frontier index. Constituent weights are driven by liquidity and size.

The index has been designed to meet the needs of increasingly sophisticated investors seeking to create index-linked products for frontier markets, which have the potential for similar or greater returns than other better known developed and emerging markets.

Pakistan gets top place in new S&P index -DAWN - Business; October 24, 2007


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## Neo

*225MW power plant signed​*
ISLAMABAD, Oct 23: The implementation agreement for 225MW Bhikki power project by Halmore Power Generation Company was signed on Tuesday at Private Power Infrastructure Board (PPIB).

Muhammad Yousuf Memon, the managning director PPIB signed the agreement on behalf of the government, while Shahid Hafeez Ahmed, chief executive officer of Halmore Power signed the agreement on behalf of the company.

The power project, to be located at Bhikki, district Sheikhupura, Punjab, using pipeline quality gas will apply combined cycle technology. The plant will be set up at an estimated cost of $169 million and is totally financed from the international markets with Dr Main M Sharif , a well known businessman of UK as the leading sponsor.

Debt will be provided by leading banks making it the first independent power project (IPP) to be signed under the 2002 power policy, which involves foreign lenders.

225MW power plant signed -DAWN - Business; October 24, 2007


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## Neo

*Gas production likely to soar in Tal Block ​*
KARACHI: Gas reserves and productions from two fields in the Tal Block are expected to increase around 300 mmcfd and 5 tcf by the end of 2008, sources in the energy sector told Daily Times here on Tuesday.

Geologists believe that gas production of these two fields would rise by 300 mmcfd (million metric cubic feet per day), separately with the ratio of 250 mmcfd and 50 mmcfd. The reserves of Tal Block have reached 2.5 tcf (trillion cubic feet) as per official statement issued by Pakistan Oilfields Limited (POL), while geologists believed it will enhance to 5 tcf by the end of 2008.

Enhancing gas reserves and production of the country, the drilling project titled Manzilai Field Development Plan was conducted in Manzilai and Makori fields during the first quarter of the current fiscal year. Situating in NWFP near Kohat, Tal Block is currently producing 65 to 80 mmcfd gas. 

Energy analyst, Saad bin Ahmed said that the gas production of the Tal Block would be ranked as one of the largest gas producing fields of the country and it is one of its own types as a matter of fact that it will enhance its gas production substantially in short time period.

Pakistan has only six gas fields generating up to 300 mmcfd and it would be the seven major gas field that would also enhance overall gas production of the country for long time period, he added.

He further said that the gas production at Tal Block is likely to take the total gas reserves sufficient for over 30 years. Before this discovery, the country had gas reserves for 20-25 years. 

In Taj Block gas reseves, Oil and Gas Development Company Limited (OGDCL) has 30 percent share, Pakistan Petroleum Limited posses 28 percent share and Pakistan Oilfield holds 25 percent stakes, while the remaining shares were divided among the operators MOL and government owner company GHPL. MOL is also the operator of the Tals field.

Pakistan has 103 various gas field reserves in different parts. The total gas reserved is estimated around 51 tcf gas on which 33 tcf is consumed. Sui, Boluchistan is the biggest gas-producing field having total estimated reserves of 12.6 tcf. It has consumed around 9.1 tcf since gas reserves discovered while 3.5 tcf reserves are remaining. This field generates 641 mmcfd as per first quarters figure. Mair and Qadirpur gas fields are the others biggest gas producing fields of the country with the production of 461 mmcfd 518 mmcfd.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan and Iran agree to sign GSP​*
* Iran to build pipeline at the entry point on Pakistani border 
* Pakistan will build pipeline in its territory
* India gives cold response to Pakistans invitation to hold talks on transit fee

ISLAMAMAD: After agreeing on gas price formula, Pakistan and Iran have agreed in principle during secretary level talks to sign Gas Sale Purchase (GSP) agreement for IPI project worth $7.4 billion during the next two months.

Secretary Petroleum, Farrakh Qayyum, led the Pakistani side and Dr Hojatollah Ghanimi-Fard special representative to Gas Pipeline project led the Iranian side in secretary level talks.

According to high level official in petroleum ministry who participated the talks, 80 percent language correction of the draft document of GSP agreement has been completed during the talks and the 20 percent language correction would be made through e-mail between the two sides.

Gas Sale Purchase agreement has been finalised during the talks and no big bottlenecks remain, official said adding the agreement would be signed by the heads of the two countries hopefully within next two months.

The document of the agreement has been finalized by 80 percent regarding the language and technical corrections and the heads of the two countries would sign the agreement hopefully during the current year. However, the schedule of the signing of the agreement between two countries would be finalised later.

He said the gas price would be tied to the Japanese Crude Cocktail and Japan Liquefied Natural Gas (JLNG) and also added that the two countries have also agreed on the gas price formula that contains price revision arrangement also. However, he said in the price revision agreement it is not agreed that gas price would be revised periodically just as after three, five, seven or ten years.

According to agreed gas price formula, gas prices would be reviewed automatically but there is not time frame work in it, official said adding gas prices would be reviewed under a formula just as imported oil prices are reviewed.

We have also noted during the talks that the agreed price formula is not capturing the whole thing and the general price arrangements would also be made, he said clarifying that however the agreed formula would not be changed. 

According the price formula Pakistan, he said, would get the gas from Iran on much lower price than the international price of gas. He further said according the agreed price formula, there would not need to review the gas price during the next ten years.

Official informed that Iran would start supplying gas to Pakistan by the year 2013 and it has also been agreed that Pakistan and Iran would build the pipeline in its respective territory. Iran will build pipeline to the entry point on Pakistani border and from the entry point Pakistan would build pipeline in its territory. The proposed 2,670-km IPI pipeline project has about 1,115-km length in Iran, 705 km in Pakistan and 850 km in India.

Iran has already completed the one-third work on the project in its portion. He also informed this scribe that Pakistan had invited India many times to hold talks to resolve the issue of transit and transportation fee to materialize the billion dollars gas pipeline project but India has not responded the Pakistani invitation in this regard. India says that it is engaged in internal meetings regarding the issue of transit fee with Pakistan and hold meeting later in this regard, official added.

Daily Times - Leading News Resource of Pakistan


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## Neo

*FBS provisional figures: LSM grows by 7.01 percent in two months ​* 
KARACHI (October 24 2007): Large scale manufacturing industries (LSM) have registered a growth of 7.01 percent during the first two months of the current fiscal year due to the raise in oil, heavy industries production.

Official provisional statistics of quantum index numbers of large scale manufacturing industries (QIM) has been issued by the Federal Bureau of Statistics, which showed the production of major industries in the country had been growing.

LSM is one of the major indicators of the economy, which showed the industrial productivity of 100 items received from different sources, ie Oil Companies Advisory Committee (OCAC), Ministry of Industries and Production and Provincial Bureaus of Statistics.

The OCAC supplied the data of 11 items, while the Ministry of Industries and Production gave the data of 35 items and the Provincial Bureaus of Statistics provided the data of 54 items.

With 7.01 percent growth, the overall QIM July-August has reached 204.42 points from 191.03 points during the same period of 2007 fiscal year. Major share in this growth was of the oil production, as during the first two-month of the current fiscal oil production (OCAC index) has gone up by 16.48 percent from 152.84 points to 178.02 points. LSM indices witnessed a growth of 9.37 percent during August 2007, to 205.90 points as against 187.72 points during the same period of the last fiscal.

Growth in the production of major industries, including sugar, cigarettes, cotton yarn, cotton cloth etc, has registered by 7.06 percent during July-August of the current fiscal and some 9.17 percent during August 2007.

The production of furnace oil, motor sprit and LP has risen by 26.03 percent, 26.90 percent and 6.54 percent respectively, while the jet fuel, kerosene oil and lubricants oil has declined by four percent, 5.20 percent and four percent respectively during July-August of the current fiscal.

In addition, production of sugar, cigarettes, soda ash, pig iron, motorcycle and buses registered a growth of 5.54 percent, 4.63 percent, 21.59 percent, 22 percent, 27.51 percent and 41 percent during the first two months of 2008 fiscal year, while the trucks, tractors and paper board production dipped by 15.32 percent, 5.43 percent and 13.87 percent.

Similarly, vegetable ghee production has declined by 3.84 percent, sole leather by 14.29 percent, bicycle by 12.48 percent, electric transformer by 17.70 percent, soap by 2.38 percent and production of tea blending has declined by 2.50 percent in July-August 2007.

It may be mentioned here that during the last fiscal country has missed its LSM growth target by 4.50 percent, as the overall LSM growth stood at 8.50 percent as against the growth target of 13 percent.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Cotton output estimated at 12.8 million bales ​*
ISLAMABAD (October 24 2007): Pakistan expects its cotton output in the 2007-08 crop year will be 12.80 million bales, 1.33 million bales less than targeted because of pests and more rain than expected, Food and Agriculture Minister Sikandar Hayat Khan Bosan said on Tuesday.

Pakistan, the world's fourth-largest cotton producer, last year produced 13 million bales. "According to our first assessment, cotton production in 2007-08 will be 12.807 million bales," Bosan told reporters after a meeting of the Federal Committee on Agriculture, which meets twice a year to set and review crops targets. In June, the government set a cotton production target of 14.14 million bales.

Bosan said a final estimate of the crop would be made in February. The cotton crop year runs from April to March. Heavy rain in Sindh and Balochistan provinces and mealy bug and cotton leaf curl virus attacks in the main cotton growing province of Punjab were the reasons for missing the target, Bosan said.

Another reason was a reduction in the sowing area as many farmers switched to sugarcane. But an industry official said he still expected the target of 14 million bales would be met, citing increasing trends in cotton arrivals at ginning factories.

"Cotton arrivals up to October 15 this year were 2.71 million bales compared with 2.46 million in the same period last year," said Akbar Ali Hashwani, chairman Karachi Cotton Association.

"This indicates that the crop size will be close to the estimates," Hashwani said. Cotton bales start to arrive in the market after August, according to the industry officials. Pakistan achieved record cotton production of 14.6 million in 2004-05. Cotton and textiles account for about 60 percent of Pakistan's exports.

Pakistan's domestic consumption fluctuates between 14 million and 16 million bales a year, meaning the country has to import cotton every year to meet growing demand of its textile mills. Pakistan imported nearly 3 million bales in 2006-07 (June-July). Imports in August and September amounted to about 0.55 million bales, an industry official said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Pakistan keen to deepen reforms': Salman stresses more privatisation ​*
WASHINGTON (October 24 2007): Pakistan is eager to deepen economic reforms that have delivered historic growth in the country despite political turmoil, Advisor to Prime Minister on Finance and Economic Affairs, Salman Shah said on Monday.

Salman Shah said Islamabad was eyeing "second-generation reforms" to follow a bank privatisation program that helped power five years of 7 percent growth and doubled Pakistan's GDP during the seven-year tenure of President Pervez Musharraf.

"These second-generation reforms would mean a leaner government and a much more active and aggressive private sector," he said in Washington, where he attended the semi-annual meetings of the International Monetary Fund and World Bank.

Shah said his government intended to move forward with privatization of the power and energy sectors as well as railways and airlines. Islamabad also planned tax reforms to broaden the tax base and steps to enlist the private sector in infrastructure development.

"In spite of all the politics, the economy keeps doing well because the reforms have made sure that the economy is now more driven by the private sector than by the politicians," he told reporters.

Pakistan is headed into elections and a tentative transition to civilian rule, under the cloud of political violence, underscored by last week's killing of 139 people in a suicide attack on opposition leader Benazir Bhutto during her homecoming parade in Karachi.

Shah appealed to foreign investors and governments to maintain interest in his country, which borders turbulent Afghanistan and is fighting a mix of home-grown Islamic militants, the Afghan Taliban and al Qaeda operatives.

"In the war on extremism, it's very important that we succeed in Pakistan and that's for the entire world," he said. "On our own, we are not going to be able to sustain it."

The 100 million people in Pakistan under 25, out of a total population of 160 million, represent "an age group that will determine the future of Pakistan and its growth and its economy and its politics," Shah said, underscoring the need to create jobs for young people.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Heavy Electrical Complex: five pre-qualified bidders being scrutinised ​* 
ISLAMABAD (October 24 2007): Five pre-qualified parties for Heavy Electrical Complex (HEC) are in the process for due diligence of the transaction in the data room. Three parties have already completed due diligence while two parties are in the process.

These included ABB (Pvt) Limited, Switzerland; Areva T&D, France; Pak Elektron Limited (PEL), Siemens (Pak) Engineering Company Limited, Karachi; and Iljin Heavy Industries Company Limited, Korea.

A pre-qualification committee evaluated these parties for pre-qualification on the statement of qualification (SoQ) basis. Bid documents and time-frame for the pre-bid conference and bidding date will be provided to these pre-qualified parties only.

The Privatisation Commission had invited expression of interests (EoIs) from prospective investors to own, efficiently manage and operate the Company for the acquisition of minimum 90 percent shares of HEC with the management control on an 'as is, where is' basis.

The Heavy Electrical Complex is one of the industrial units of the State Engineering Corporation (SEC) engaged in the manufacturing of power transformers of different types (total annual capacity 3000 MVA) with primary voltage rating of 66 and 132 KV. In addition, the HEC undertakes repair and refurbishment of old and damaged power transformers up to 500 KV. The HEC was incorporated as a private limited company in 1991, and commenced its full-scale commercial operation in 1997.

The Heavy Electrical Complex is located in Hattar Industrial Estate about 65-km from Islamabad. It is spread over an area of 81.379 acres. A total of 63 acres of land is included in the transaction out of which 20 acres is non-core land for expansion. Major clients of its products include Wapda, its corporatized entities and KESC.

The Complex has six main manufacturing shops namely Machine shop, Winding shop, Insulation shop, Core shop, Fabrication shop and Assembly shop. In addition, it has an oil purification shop, high voltage test laboratory equipped with 250-tonne overhead travelling crane. It can diversify its manufacturing range by including other products such as instrument transformers, high voltage circuit breakers and other grid stations equipped for meeting demand of the products in domestic and foreign markets.

The purchaser shall continue to operate company's manufacturing facility and shall not in any way abandon, cease to operate or otherwise shut down the existing company manufacturing facility.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Pakistan attractive place for Saudi investors' ​*
ISLAMABAD (October 24 2007): Pakistan has become a business hub as the country pursues a policy of 'trade diplomacy' to provide maximum possible opportunities to entrepreneurs for better market access, Pakistan's Ambassador to Saudi Arabia Shahid Karimullah said.

Giving details to media persons about the 'Second Pakistan-Specific Week (Catalogue Show)', which is going to be held from November 3 to 7 at Jeddah Chamber of Commerce and Industry, he said that Pakistan and Saudi Arabia enjoy strong economic relations.

He said that the aim of this show is to convince Saudi Arabian businessmen to invest in Pakistan and, at the same time, market Pakistan's products in that country, Arab News reported. "I urge Saudi businessmen to visit Pakistan and explore the investment opportunities," Karim said. The 'catalogue show' will provide an opportunity for interaction between Saudi and Pakistani entrepreneurs, government representatives and members of the chambers of commerce and industry.

"This (Pakistan) mission is striving to promote trade between the two countries and create business opportunities for companies on both sides. The show will project Pakistan's trade potential and provide an opportunity to Pakistani firms to introduce their products in the Saudi market," he said. He pointed out that Islamabad is pursuing an investor-friendly policy, and added that it has introduced a number of reforms removing all hurdles in investment and providing maximum facilities to the business community.

However, trade between the two countries is still below full potential, the ambassador said, noting that time has come to strengthen business activities between the two countries.

Saudi Arabia is a member of World Trade Organisation, and Pakistan should benefit from its booming business sector, he said. Top Saudi entrepreneurs have shown interest, as some 225 leading Pakistani companies have agreed to take part in the show. Catalogues, brochures, and samples totalling 11,000 will be on display. Representatives of the participating firms will be available to give further information.

High ranking officials from Pakistan, including Tariq Ikram, chief executive of Trade Development Authority, Junaid Ahmad, Adviser to Prime Minister on economic affairs, and Asif Ali, Secretary of Commerce, and representatives of leading manufacturers will attend the show, Karim said. Pakistan's Ministry of Commerce, Trade Development Corporation, Board of Investment, Islamic Development Bank and Jeddah Chamber of Commerce and Industry are sponsoring the event.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Musharraf unveils package for Northern Areas ​*
GILGIT (October 24 2007): President Pervez Musharraf on Tuesday announced a package, giving maximum financial and administrative autonomy to the Northern Areas and elevating status of its Legislative Council to the Assembly. Under the package the Northern Areas Legislative Assembly (Nala) will now have the powers to prepare, debate and pass its annual budget and development plan.

"Most of the powers presently being exercised by the Ministry of Kashmir and Northern Areas would be transferred to the new chief executive and the legislative assembly under the package, the President said, amidst a thunderous applause by the people here at the FCNA Auditorium.

Also the post of the current deputy chief executive of Northern Areas has now been upgraded to chief executive, empowered to exercise full administrative and financial authority. The Minister for Kashmir and Northern Areas, who currently holds the charge of chief executive will become chairman of Northern Areas, said the President, who flew into the scenic valley earlier in the day.

Addressing the notables of the area, he said that most of the 52 proposals prepared by the Northern Areas Legislative Council have been approved by the government, adding, the new measures would promote greater democracy in the area.

He said this will usher in a new era of maximum autonomy for the people of the NAs, fulfilling their longstanding demand. The chief executive, speaker and deputy speaker of Nala can now also resign or face a no-confidence motion, which is a step forward towards greater democracy, the President said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Budgetary support ​* 
Pakistan likely to borrow $1.5bn

Thursday, October 25, 2007

ISLAMABAD: Pakistan is expected to obtain a budgetary support of $1.509 billion from three major multilateral creditors, the World Bank, Asian Development Bank and the Islamic Development Bank during the current fiscal year.

At a time, when Islamabads external front is facing pressure owing to the growing current account deficit in the current fiscal year, multilateral creditors are seen coming to rescue the country from the financial crunch on the balance of payments (BoP) position.

The prevailing political uncertainty on Pakistans economic front is a cause for concern for economic managers in the wake of upcoming elections and the smooth process of privatisation could be a victim to the deteriorating law and order situation.

The privatisation proceeds that have remained a major source of improving inflows in recent years are set to face a severe blow during the current financial year, sources disclosed.

The country is passing through a phase of political uncertainty, which will remain till the installation of the next elected regime and it can also negatively affect inflows estimated by the government in the form of privatisation proceeds and investments.

Finance ministry sources confirmed to The News that three major multilateral institutions like the WB, ADB and IDB would provide credit lines worth $1.509 billion in the current fiscal year.

During the last financial year in July-March period, multilateral creditors had provided $1.406 billion to Pakistan, the Economic Survey 2006-07 stated.

The sources also pointed out that the WB would be the leading institution among multilateral creditors providing more than $1 billion in budgetary support to Islamabad during the current fiscal.

The second major creditor would be the Asian Development Bank (ADB), it plans to give a credit line worth $329 million in order to improve the balance of payment situation in the country.

The ADBs support is mainly pouring into project financing and budgetary support will be a lesser part of it. The ADB has recently brought changes to its strategy wherein it has reduced its programme loans from 81 to almost 60. 

The ADB as well as the Government of Pakistan reviews various foreign funded programmes regularly and this reduction is a routine exercise, said an official.

The third major institution providing budgetary support to Islamabad is the Islamic Development Bank (IDB). According to Finance Ministry estimates, the IDB will provide $100 million budgetary support to Pakistan during FY 2007-08. Although Pakistans Balance of Payment (BoP) position is still in a surplus mode, its current account deficit (CAD) is widening sharply.

The CAD had reached the $7 billion mark (4.9pc of GDP) in the last financial year, which is quite worrisome to economic managers. Islamabad is expecting the current account deficit hovering in the same range of 4.9 per cent of the GDP during the current fiscal year.

Policy makers are of the opinion that Islamabad has so far been able to bridge the deficit gap owing to improved inflows in the shape of foreign direct investment and privatisation.

But with an increasingly volatile environment on the political front, it is uncertain whether Islamabad will be able to attract investments or even successfully privatise its state owned entities in the current fiscal. 

Budgetary support


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## Neo

*Curbs on investment in venture capitals be reconsidered ​* 
Thursday, October 25, 2007

KARACHI: Stakeholders in the Private Equity and Venture Capital Fund (PE&VC Fund) have urged the regulator, the Securities and Exchange Commission of Pakistan (SECP), to provide a level-playing field to foreign investors.

They were speaking at the Business Policy Roundtable to give suggestions and recommendations on the draft regulations for private equity and venture capital funds here on Wednesday.

The roundtable conference was organised by the Centre for International Private Enterprise (CIPE), an affiliate of the US Chamber of Commerce, in collaboration with The Indus Entrepreneurs (TiE), a global network of entrepreneurs and professionals.

The conference was organised in the backdrop of objection or suggestion invited by the Commission (SECP) from persons in respect of the said draft within 30 days since the document was made public on August 31, 2007. SECP had introduced venture capital rules in 2001.

The conference participants welcomed extension in the tax holiday for the venture capital companies till 2014. Till this extension is expired the PE&VC Funds sector would have reached a mature stage, Shabber Zadi, a leading economist said at the conference. Government on the recommendation made by CIPE earlier last year extended the tax holiday, Moin M. Fudda, Country Director-CIPE Pakistan said in his welcome address.

The eleven points draft recommendation adopted at the end of one-day conference says: Restriction on foreign PE&VC funds on seeking funds locally should be eliminated. Moreover, local investors should not be deprived of outing money in foreign PE&VC funds.

The draft added: Minimum numbers of investors to form a PE&VC fund should be reconsidered. Internationally, there is no minimum or maximum number of investors generally specified, and the proposed limits of 10 and 50 respectively should be reconsidered, to perhaps zero and 100.

In accordance with the international trends, restrictions on pension funds and insurance companies on investing in the PE&VC sector should be reconsiders, the stakeholders stressed upon.

Salman A. Shaikh, Commissioner-SECP, welcomed the valuable suggestions and arguments from the stakeholders and promised to remove unnecessary barriers in developing the private equity and venture capital funds market here in the country.

Another participant identified that raising capital was not a big issue for the industry, but finding skilled human resource was becoming a dying art in Pakistan. Seeking a qualified chief executive officer or the director to run a business here had become too difficult, most of the participants developed consensus.

Three companies have been licensed here in Pakistan over the last six years under the 2001 VC rules. While the first ever venture capital fund was formed in 2002 in the country.

A number of private equity initiatives have been announced by various local players in the last two years while some international and regional private equity funds have also started to look at possible entry into Pakistan, stated in the concept paper of the roundtable conference.

Venture capital and private equity are globally established asset classes with an industry size of over US$200 billion.

Christopher Lane Davis, Special Counsel, McCarter & Entlish, LLP, USA said that the US private equity and venture capital industry was substantially free from regulation. 

His argument coincided with a stakeholder at the conference who invested in India under the PE&VC regulations. He said that India had no regulation for this sector. SECP-Commissioner, however, believed that firm regulation for any of the sectors made investment low risky.

Curbs on investment in venture capitals be reconsidered


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## Neo

*Import of 3m cotton bales likely​*
KARACHI, Oct 24: The country will have to spend huge foreign exchange on importing around 2.5 to 3 million cotton bales to meet the expected shortfall even after harvesting around 12.8 million bales as estimated by the government.

The installed capacity of over 10 million spindles consume more than 15 million bales, but cotton production continues to lag behind owing to poor yield and lack of proper management and research work.

Due to short supply cotton prices keep on rising in the domestic market, which makes the entire textile industry unviable.

The cotton crop has been a victim of some pest attack for years but this year a new pest  mealybug  has caused a huge damage to the crop to the tune of 1.5 million bales.

However, Federal Minister for Food and Agriculture Sikandar Hayat Khan Bosan still believes that the country will produce around 12.8 million bales, down from earlier estimates of 14.1 million bales.

Even if we take optimistic production figures of cotton as hinted by the minister, the country will still be importing huge cotton to meet the spinning industrys demand.

Rising world cotton prices, owing to lesser crop, are yet another factor, which keeps cotton prices highly volatile, and presently are being quoted above Rs3,000 per 40 kg in the domestic market.

Being inflicted by rapidly rising oil prices many countries are striving for alternate energy sources. Consequently, crops such as sugarcane and corn, having potential of being converted into fuel grades, are being sown on a large scale.

As a result of this phenomenon these crops are fetching much higher prices in the world market and growers are fast shifting from cotton to these crops.

The global shortage of cotton against an estimated consumption has soared prices up to $0.66 per lb in New York cotton market, and there is a growing fear that as demand emerges from countries facing short crop, prices would further increase.

Independent estimates place crop size at 12 million bales and also argue that since there are no opening stocks with the mills, the actual available cotton for current season (2007-08) would be at around 11 million bales.

There is panic in the textile industry, which is faced with two- pronged problems. On the one side, they are deeply concerned with rapidly rising raw cotton prices and on the other, they confront with yarn prices which presently do not fetch their cost. Though domestic cotton market prices are still lower than the world market, the industry is of the view that it was still sustaining loss owing to lower yarn prices.

My unit, which produces around 120,000 pounds of yarn per day is on average has to bear Rs0.3 to 0.5 million loss per day due to price differential, claimed former chairman of Aptma Waqar Mannoo.

He said up to December 2007, domestic prices would stay lower than world cotton prices, but as local stocks start depleting and actual crop size emerges, the import parity would go higher.

However, Mr Mannoo was of the view that the price differential between yarn and cotton would force many spinning units to close down, and advertisements for sale of textile units have started appearing in the newspapers.

There is a greater need to increase cotton production to keep the textile industry viable, he suggested. In India cotton production has gone very high and this was mainly because of proper handling of BT cotton by the government under the guidance of experts and technologists.

In Pakistan, he said, BT cotton was cultivated by growers by using uncertified seeds, which resulted in a disaster as the mealybug damaged a very large quantity of standing cotton crop in upper Sindh and lower Punjab.

It is also being said that if a large number of mills go out of operation, only then the gap between cotton demand and supply would narrow down.

Pakistan needs an altogether fresh look at cotton crop and a lot of research has to be made to boost per acre yield so that the output could be raised to 20 million bales within next couple of years.

Import of 3m cotton bales likely -DAWN - Business; October 25, 2007


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## Neo

*Firm US assurance to support Pakistan: Trade growth​*


KARACHI, Oct 24: A number of senior US diplomats met business hierarchy at a series of meetings in Karachi.

The diplomats assured the Pakistani businessmen of their countrys commitment to support Pakistan all through the process of transition and beyond.

The jittery business community was assured that the US has strong indications that the political change would be smooth and would not derail the on-going process of transformation towards a market-based economy that yielded dividends in the form of a robust above six per cent growth rates since 2004.

Over the last two days, US Ambassador to Pakistan Anne W. Patterson and US consul-general Kay L. Anske met members of American Business Council, visited the Karachi Chamber of Commerce and Industry and attended a private dinner in their honour by a senior businessman where a select group of Pakistans corporate big-wigs were also present.

The business community of the country is understood to be nervous over the unfolding political situation.

Factors such as: the lose ends in what is perceived to be a West- sponsored stitch-up between the Pakistan Peoples Party chairperson Benazir Bhutto and President General Pervez Musharraf, public discomfort of Presidents allies in PML(Q), fears of more violence and terror strikes, the lingering case of legality of President Musharrafs candidature in the controversial Presidential election and the defiant mood of the judiciary, have all added up to create a lingering situation of uncertainty.

The business can endure a difficult phase if there is some measure of predictability in the so-called transition process. However, when in a society as fragmented as Pakistan, where there are so many variables heading on a collision course, anxiety of investors is perfectly justified, a leader privately told Dawn.

We met US diplomats in a cordial atmosphere and the conversation with them was free and frank. Many issues of common interest cropped up, such as businessmens reservations regarding proposed ROZs, issues related to adverse travel advisories, problems faced by students wishing to study in the US, discriminatory treatment meted out to textile exports from Pakistan, slow pace of progress over bilateral investment treaty (BIT) and free trade agreement (FTA) also came up. The focus, however, was on the evolving political situation and terror threats that the country is faced with, a leader who attended the meeting told Dawn.

Majyd Aziz, an active leader who commands respect for his leadership qualities amongst local business community and diplomatic circles hosted the dinner on Tuesday.

We are often mentioned as a third biggest recipient of US support in the world. We, however, wish to attain that position in trading, Aziz said who was optimistic and saw a bright future for his community in the country. He saw the level of US engagement as a stabilising factor.

The interaction of high profile US diplomats, within a week of Oct 18 ghastly incident, with such a wide range of people reflects their resolve to stand by us. It shows the depth of their commitment. Their movement in Karachi also demonstrates that the US does perceive ordinary Pakistanis as tolerant and peace- loving who are bearing the brunt of activities of terrorist elements who work in isolation divorced from general public.

Explaining the reasons of scepticism of the business community with political leadership in and out of the country, a spokesperson of multinationals said: We fear that reins of the country will again be in the hands of those self-centred individuals who thrived on loot and plunder, destroyed institutions and promoted the culture of cronyism. It will be a death-knell for serious business if a system of check and balance is not put in place.

Those who met US diplomats included American Business Councils Iqbal Bengali, Karachi Chamber of Commerce and Industry office-bearers and President Shamim Ahmed Shamsi and others, including S M Munir, Saifuddin Zumkawala, Tariq Saeed, Amina Syed, Fareeha Haroon, Zubair Motiwala and Salma Ahmed.

Firm US assurance to support Pakistan: Trade growth -DAWN - Business; October 25, 2007


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## Neo

*Pakistan-Russia trade meeting: Exporters refund claims issue to be raised with Russian authorities​*
ISLAMABAD: Pakistan will take up the issue of outstanding claims of Pakistani exporters with the Russian authorities who will be holding meeting with Pakistani officials here in Islamabad on November 15, said an official here on Wednesday. 

Official in commerce ministry told Russia has not still paid the money in term of refund claims of Pakistani exporters even after entering into an agreement entitling Agreement on exporters refund claims between two sides.

According to official, Russia has to pay over $80 million to Pakistani exporters in term of refund claims that it denied to give after the disintegration of Russia. These refund claims are pending since the war between Afghanistan and Russia. When the Russia was disintegrated after the war in Afghanistan, it denied paying exporters refund claims saying now it will not pay after the disintegration.

Sources said that Pakistan had also taken up the issue with Russian delegation on September 7, 2006 in a meeting held with Pakistani officials to resolve the issue and informed the Pakistani officials that Russian government had not still given approval.

The delegation had opined that the issue of claims of Pakistani exporters would be settled down, however, the problem of one group would be resolved separately.

But since that time, no step has been taken in this regard and during the talks being held in the mid of next month, the matter would be taken up, official said. Russia in March 2006 approached Pakistan that it wanted to increase the volume of trade between two sides and pledged to enter into Free Trade Agreement with Pakistan, official said adding that since that time Pakistan again took up the matter of refund claims saying that the resolution of this issue could lead to Free Trade Agreement between two sides.

Official further said that a delegation visited to Russia to resolve the issue and then two sides entered into an agreement enabling Pakistani exporters to have $75 million in terms of refund claims that were pending for over many decades.

During that agreement Pakistani government would also get $18 million in terms of shipping rights, he said adding even after the agreement Pakistani exporters and government is still failing to have money due to Russian authorities reluctance.

He said only this move can lead two countries to enter into FTA that Pakistani cabinet has approved initiating negotiations to conclude Free Trade Agreement with Russia but Russian authorities have not succeeded to understand the different articles of the agreement. Therefore, FTA has not been still materialized between two sides.

The current trade volume between two sides is $270 million and Pakistan would improve further in the coming years after the resolution exporters refund claims and entering into Free Trade Agreement, official added.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan has 72.89m mobile phone users​*
* Telenor now is the runner-up in the battle of cellular operators

KARACHI: Telenor Pakistan has elbowed Ufone to become the second biggest cellular network provider in terms of subscribers, Daily Times has learnt. 

Since the year 2005 Ufone had retained its second position and was considered to be the second biggest mobile phone operator in Pakistan. And this was so until last month when Telenor, with 15.46 million users, overthrew it to claim the second position for itself. Ufone with 15.42 million subscribers now holds the third position. 

Sources in the Pakistan Telecommunication Authority told this scribe that the way competition is proceeding, some more interesting happenings may be expected in the coming years as all the companies are putting all their efforts to be the number one mobile phone operator of Pakistan.

Pakistans mobile phone market has passed 70-million user mark. Latest figures compiled by the PTA suggest cellular phone connections reached 72.89-million mark by September 2007. Within a period of one month, September 2007, Pakistans fast growing telecom industry managed to add 4.89 million subscribers. 

According to a PTA official, since January 2007 more than 22.21 million new connections have been sold on the back of comparatively cheaper tariff offers due to the rising competition among the cellular service providers.

Mobilink continues to remain the leading operator in the sector with maximum market share both in terms of subscribers and revenues.

The figures gathered by the telecom watchdog show that by September 2007 Mobilink led the market with 28.57 million subscribers followed by Telenor, which was serving 15.46 million people across the country. Ufone now holds the third position 15.42 million subscribers and Warid is at the fourth position with 11.86 million subscribers. Meanwhile, the aggressively marketed Paktel has managed to grab 1.23 million subscribers.

Among all the new entrants, Telenor has shown its strength by capturing a good market and has left behind its closest competitor Warid within one months time to claim the second position. While Paktel, now owned by CMPak, has still been unable to add fuel to the current mobile operators battle.

Telecom industry in Pakistan attracted $9 billion foreign investment in the last three years, and another $ 4 billion are expected during the next 3 to 4 years. Around 1.5 million new subscribers are being added each month.

According to some analysts, the mobile phone industry has reached its take-off level and has entered a new phase where investors are keen to invest and subscribers are happy to avail quality services at reasonably competitive prices. Much of this credit goes to the telecom regulator that has created a conductive, and investor and user friendly regime in Pakistan.

The four major companies Mobilink, Telenor, Ufone and Warid have earned better market share during the last fiscal year. These days, the cellular operators are spending huge amounts on advertisement campaigns to introduce different packages for their customers with different tariff packages and incentives.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Attracting Spanish investment: Pak exports to Spain could touch $6.2bn: LCCI​*
LAHORE: Pakistans exports to Spain could touch the figure of $6.2 billion as there are a number of potential sectors including textiles, minerals and fuels, leather products, plastics and plastic products, optical, photo, technical and medical apparatus, raw hides and skins, fish, and fish products where a huge potential exists.

Lahore Chamber of Commerce and Industry (LCCI) Acting President Yaqoob Tahir Izhar stated this while talking to Ambassador-designate to Spain Ms Humaira Hassan during her visit to LCCI on Wednesday. LCCI Vice President Mubasher Sheikh, former President Mian Misbah-ur-Rehaman and former Senior Vice President Sohail Lashari also spoke on the occasion.

Mr Izhar said onus lies with Pakistan Embassy in Spain to ensure dissemination of all business-related information to the chambers in Pakistan so that Pakistans business community could be able to do business in the areas where the scope exists.

He informed the visiting diplomat that Pakistani merchandise having superior quality always gets a good response all over the world and a little effort could help Pakistan earn much-needed foreign exchange from Spanish markets.

Mr Izhar said total trade between Pakistan and Spain during 2005-06 was only $512 million with major exports including articles of apparel, cloth accessories, leather and leather products, sports goods, fish and fish products, cane molasses and surgical instruments etc. On the other hand, Pakistans imports include organic chemicals, iron and steel, pharmaceutical products, dying and tanning material, transport vehicles and equipments, machinery and parts, tiles, paper and paper board.

He said the best possible way for both the countries to initiate and take the first step is to identify the areas where they can cooperate. Non-availability of required trade-related data is the biggest hurdle in the way of expansion of trade between the two countries. For this commercial section of Pakistans Embassy needs to play a proactive role, keep itself abreast of the demand of Spanish markets for imported goods and to engage with Spanish business circles. He urged the Ambassador-designate to arrange sector-specific delegations of Spanish businessmen to visit Pakistan to have first-hand knowledge about the opportunities of trade and investment in Pakistan. Active engagement of the business community and diplomatic missions of the two countries, exchange of trade delegations, exhibitions of products and socio-cultural programmes in each others country can be very helpful.

Mr Sheikh urged the ambassador-designate to consider opportunities where joint ventures could be made. He stressed the need for highlighting the strengths of Pakistans economy, its strategic location and investment opportunities. He said Pakistan is a land of opportunities for foreign investors. Pakistan is one of the fastest growing economies of Asia along with China and India. Its GDP has averaged 7 percent over the last 4 years. There is increased flow of foreign investment in Pakistan. It was $8.4 billion during 2006-07 as against $0.56 billion in 2002-03. Pakistan is becoming a trade and energy corridor for Central Asian Republics, China and Afghanistan. It has developed Gwadar Deep Seaport and is linking it through a network of roads and rails with these countries. Any investment made in Pakistan by foreign investors as such will find its market in these countries. Doing business in Pakistan is easier than the other regional countries. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Sindh seeks 3,500 acres for new industrial zones​*
KARACHI: The provincial government has demanded that the federal government allocate 3,500 acres more land to set up new industrial zones in the province Sindh, said Minister for Labour, Transport, Industries and Commerce Adil Siddiqui Wednesday. In a statement, Siddiqui said that due to huge investments and growing industrial work, Sindh was facing a shortage of industrial land. He added that local and foreign investors and traders had invested billions of rupees in different projects in province, especially in Karachi due to the current governments trade-friendly policies. 

Asias largest industrial zone at Nooriabad is thriving, he said, thanks to improvements in law and order in the area and the development of infrastructure in industrial areas. Siddiqui also said that water would be available at 34 paisas per gallon in SITE area after the installment of a new desalination plant, adding that a new multinational chain of stores is expected to open operations in Sindh soon. He also said the construction of new hotels, offices and residential projects are expected in the province.

Daily Times - Leading News Resource of Pakistan


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## Neo

*US and Pakistan drawing framework to expand trade ties ​*
WASHINGTON (October 25 2007): United States and Pakistan are drawing a framework to consolidate ties through enhanced private sector interaction and investment, as both view economic links as critical to sustaining wide-ranging ties over long-term.

Visiting adviser to prime minister Dr Salman Shah, who had strategic economic dialogue with senior US officials from Departments of State, Commerce, Treasury & Trade, spoke of "very good progress, which expanded to focus beyond government-to-government cooperation on greater involvement of private sectors.

"There is realisation our strategic relationship be underpinned by economic cooperation with focus on bolstering private sector cooperation and achieving higher level of American business investment into Pakistan."

Both countries entered strategic partnership in March 2006 after talks between President Pervez Musharraf and President George W Bush in Islamabad. Economic cooperation is important component of overall strategic relationship.

In addition to five-year $3 billion US assistance package for Pakistan, two allies have also seen upsurge in investment, trade ties. US was largest investor in fiscal 2006-07. US is one of largest trading partners of Pakistan, which in wake of a spectacular growth momentum, rated by global financial institutions to move forward as emerging economy having large talented workforce.

For next many decades, 100 million population of Pakistan aged under-25, will be entering market and if they are gainfully employed, it will be huge boost for economy to grow at 8-10 percent. It is important Pakistan is developed as manufacturing, outsourcing hub and must be viewed as fast-emerging economy with unique demographic profile."

Citing a Goldman and Sachs study, Dr Shah said Pakistan will be fourth or fifth biggest labour force in the world and in words of an American investor South Asian country would also be second biggest English speaking workforce outside the US.

The two sides also discussed progress toward materialising a preferential trade programme under which products manufactured at designated zones will be brought duty-free to US market.

The goods will be produced in exclusive areas Reconstruction Opportunity Zones, to be set up NWFP province, Balochistan border regions, Federally Administered Tribal Areas & quake-hit areas of Azad Jammu & Kashmir.

It will spur economic fundamentals, bring employment to local people, industrial parks will attract lot of investment. US Congress is expected to take up legislation on the initiative soon. US committed $750 million over five years to Fata sustainable development plan. Pakistan will spend $100 million each year for 10 years under $2 billion programme, to bring socio-economic development to people along Afghan border.

http://www.brecorder.com/index.php?id=643780&currPageNo=2&query=&search=&term=&supDate=


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## Neo

*US wants Pakistan economically sound, strong country: envoy ​* 
KARACHI (October 25 2007): United State's Ambassador to Pakistan, Anne W. Petterson, terming Pakistan as an important ally of US has said that it wanted Pakistan to be economically strong and sound country. Speaking at a meeting of Karachi Chamber of Commerce and Industry (KCCI) she reiterated US resolve to develop strong and long-term economic relations with Pakistan.

She said that US was supporting Pakistan in development of Economic Zones (ROZS). "This project will boost economic activities, free trading of goods produced in the zones and create more jobs", she added. US envoy assured that US would continue to provide assistance for improvement of education sector in Pakistan

N.W. Peterson said that US and Pakistan had best cordial and economic relations, adding US was the biggest trading and economic partner of Pakistan. She said that Americans had made huge investment in oil and gas sectors, telecommunication and power development in Pakistan.

Regarding improving living standards of people in Northern Areas, she said that the US had increased its finical assistance from $30 million to $90 million. She said that US government was making efforts to improve Pakistan image in America.

Regarding the law and order situation in Pakistan, she opined that the law and order situation in Pakistan was not so bad as projected by media. Giving example of Colombia and Guatemala and other countries, she said that law and order in many countries were worst than Pakistan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Current account deficit falls to $2.2bn in Q1 ​* 
Monthly average still higher than first quarter of 2006-07

Friday, October 26, 2007
By Israr Khan

ISLAMABAD: Pakistans current account deficit (CAD), excluding official transfers, during first quarter (July-September 2007-08) has reached $2.257 billion lower than $2.8 billion during the same period last fiscal, State Bank of Pakistan (SBP) reported Thursday. 

Though less than comparable period, the CAD monthly average of $752.3 million during the first quarter is far higher than monthly average of $633.2 million during Q1 of 2006-07.

The rise in monthly average is further exacerbated by around 11 percent fall in inflow of foreign investment which is an important component of non-debt creating inflows to finance the burgeoning CAD.

Some respite is provided by 21 percent rise in inflow of remittances during the quarter otherwise, the CAD would have been far higher. The trade imbalance at $3.98 billion in the quarter is also lower than $4.16 billion in the comparable quarter last year. However, slower pace of imports growth is an indication of slowdown in economic activity and this is supported by negligible growth in exports as well. 

The indifferent attitude of policy makers to review the gloomy situation at external front is adding to the economic woes of Pakistan on external front. Rising foreign exchange reserves provide some satisfaction to the policy makers; however, wisdom of adding reserves through external borrowing has given rise to many questions. 

The disbursement of external loans amounted to $785 million in the quarter against $451 million in the comparable quarter of last year, thereby reflecting an increase of 74 percent. Last year Pakistan has added almost $3 billion to the external debt stock. This has serious implications for debt servicing. The objectivity and prudence is badly missing in debt management strategy of the country.

It is also pertinent to note that during July-September 2007-08; the foreign investors have remitted to their countries $183 million as profits and dividends. This outflow is higher by 31.7 percent over $139 million remitted in the same period of the last fiscal.

Likewise in the first two months (July-August) the outflow was $132 million, with biggest share of financial businesses from which the investors remitted to their countries about $40.8 million followed by communication sector with more than $32 million. 

Economic analysts believe that burgeoning CAD would be aggravated by massive outflow of profits and remittances in the near future. There are instances in developing countries where FDI inflows are indiscriminately welcome. The outcome of these inflows is normally outflow of remittances and profits in future after a time lag. Recently, IMF has warned Pakistan about quality of inflows and advised Pakistan to be cautious about these inflows.

It is worth mentioning that for a country like Pakistan , the huge drain looks very disturbing as it already faces a potential threat of burgeoning CAD for the last couple of years. 

Interestingly, foreign investors find Pakistan an attractive destination, as they are allowed to invest in any sector and bid for any privatised enterprise, can own 100 per cent of the capital or have foreign and local partners. Besides, there is no embargo on repatriation of profits and dividends. They can repatriate 100 percent of the capital anytime and remit their total profits to their countries of origin.

However, independent economists questions about job creation ability and augmentation of existing technological know-how of current flow of FDI inflows. Pakistans portfolio of FDI needs diversification, especially in favour of investment in production sectors. 

In the current situation around three-fourth of FDI inflows are concentrated into four major sectors; namely, communication, financial businesses, power and oil & gas exploration. All these sectors have serious implications for future outflow stream of profits and dividends. 

If an investment is coming for a manufacturing unit, it will create jobs, increase production and augment exports, and if FDI inflows are directed towards a service unit; it has limited options like mobile telephones, which have to be imported in large numbers along with the supportive equipment. 

The current inflow of FDI inflows is unable to provide support for export promotion or serve the cause of import substitution. Pakistan needs more emphasis on export promotion and some help from import substitution so that our import bill can be reduced. 

Financial businesses, a magnet for foreign investors, but unfortunately it also just like communication sector that creates not sizeable jobs or help in increasing countrys exports. But, repatriation of profits from the sector is on the top of the list with 40 million dollars in two months. The sector sent only $4.8 million abroad during the same period last year.

Outflow in terms of profit and dividend during the July-August, 2007-08 from power sector were recorded at $12 million. Other sectors i.e. Food sector ($10.7 million), transport sector ($9.1 million), oil and gas exploration $7.7 million, tobacco and cigarette $5.4 million, storage facilities $3.1 million and pharmaceuticals $1.2 million contributed to this outflow.

Current account deficit falls to $2.2bn in Q1


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## Neo

* Foreign investment declines 10.8pc ​* 
Friday, October 26, 2007

KARACHI: The net inflow of foreign investment in Pakistan declined by 10.8 percent to $990.1 million during first three months of current financial year as compared to $1.109 billion in the same period of last fiscal year.

The latest figures of SBP showed that during July -September 2007 Foreign Private Investment declined by 11 percent to $1.020 billion, which was recorded $1.146 billion in the corresponding period of last year. 

Whereas, Foreign Direct Investment fell by 6.2 percent to $962.5 million as compared to $1.026 billion of last year. Out of total FDI the privatisation proceeds were $133.2 million. 

During aforesaid period the Portfolio Investment fell by 52.2 percent to $57.6 million, which stood $120.6 million during the same period of last fiscal.

The investment in equity securities was 120.6 million while in GDRs of UBL Bank was $90.5 million.

In addition, the Foreign Public Investment (FPI) also declined by 18.9 percent to $30 million as compared to $37 million which was comprised over Debt Securities including net sale/ purchase of special US$ bonds FEBC, DBC, T-bills and PIBs.

During July- September Foreign Direct Investment (FDI) from developed countries recorded $570.4 million against $796.1 million of last year.

The break-up showed that investment from Western Europe recorded $175m, from European Union $135.2m as against $499.5m of last year, investment from Luxembourg stood $1.9m, Denmark $6.2m, investment from France fell to $0.8m from $2.5m, Germany $8.4 from $8.9, Netherland $23.5m from $30.3m and investment from UK dropped to $97.8m which was recorded $433.6m in the same period of last year. However, investment from USA increased to $377.5m from $262.3m. Moreover investment from developing countries stood $187.3million as against $$265. 5m of last year. Investment from Saudi Arabia increased to $8.1m as compared to $5m. Investment from Oman recorded $24.8m as against $0.6m of last year and from Kuwait it stood to $13.6m as compared to 2.6m of last year. Though investment from UAE declined but it remained top among Gulf States with $70.1m as compared to $187.6m.

Foreign investment declines 10.8pc


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## Neo

*Trans-LoC trade from next year ​* 
Friday, October 26, 2007

MIRPUR: Stating that entire ground work was done by the governments of India and Pakistan for starting trade between Srinagar and Muzaffarabad, Indian union minister of state for commerce Jairam Ramesh has disclosed that trans-LoC trade would become a reality in the first half of the next year, says a report reaching here from across the Line of Control.

He also announced that a special institute would be set up in occupied Srinagar to impart training to artisans in gems and jewelry, the report added.

Answering a question at a press conference in occupied Srinagar the other day, the minister said India and Pakistan have exchanged the lists of items, the trade of which would be allowed across the LoC, the report said.

Three separate lists were prepared by the Pakistan government, the occupied J & K government and the Indian government, which were later exchanged by the governments of India and Pakistan, based on these three lists, the final selection has been made by the parties concerned, the minister said.

He added that 14 items were offered from which the government of Pakistan accepted trade in nine items and it rejected trade the in rest of the five items. But the nine items which the Pakistan government has accepted are what the J & K traders wanted. So I believe it is a good beginning and we are pretty hopeful that trade would start between the two parts in the first half of the next year, Jairam said. 

The Indian minister said the external affairs ministry has sent the final list back to the Pakistan government. We are now waiting for the response of the Pakistan government, he said.

The items which the government on the other side has agreed to include are carpets, wall hangings, shawls, embroidery, furniture and wooden items, silk and silk products, spices and flowers, saffron, Kashmiri Wazwan, aromatic and fruit plants, etc.

He also announced that an institute would be set up in J&K to promote training in gems and jewellery. He said 20 youth of the state had already been trained in the job. He said a team of the Leather Export Promotion Council would visit Srinagar to promote leather industry and its export potential. 

The minister said the skin available in Kashmir, especially of sheep, was rated high in the world, the report added.

Trans-LoC trade from next year


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## Neo

*Marble industry facing problems ​* 
Friday, October 26, 2007

ISLAMABAD: Marble industry in tribal areas of the North West Frontier Province (NWFP) is facing numerous problems including lack of roads and unreliable electricity supply.

A delegation from Mohmand Agency held a meeting with the Federal Minister for Industries, Production and Special Initiatives Jahangir Khan Tareen and apprised him of the problems of marble industry. Secretary Industries, Production and Special Initiatives Shahab Khawaja and Ihsan Ullah Khan CEO Pakistan Stone Development Company (PSDC) were also present on the occasion. The delegation included Malik Hanif, Malik Noor Hashim and other stakeholders from the agency.

White, green, and red & white marble of the agency is very popular all over the world and is exported to Afghanistan and Karachi and from there to other countries. There are huge deposits of marble in these agencies and so far only 10 per cent of it has been explored. Hence extensive exploration is needed to fully utilise the potential. It is worth mentioning that the government is already planning to setup a Marble City in the agency at some 300 acres with modern infrastructure.

The delegation told the minister that there were 65 marble units in the area but no facilities were provided to them. Tareen assured the delegation that government would help in setting up another Marble City under public-private partnership arrangement.

Marble industry facing problems


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## Neo

*Govt keen to develop agriculture sector ​* 
Friday, October 26, 2007

ISLAMABAD: Government is striving to improve and develop the agriculture sector through enhancing investment, ensuring technology interventions and policy support, which will enhance production and farm income by providing a congenial environment in rural areas.

Federal Minister for Food, Agriculture and Livestock, Sikandar Hayat Khan Bosan stated this while chairing a World Food Day programme organised jointly by the Ministry of Food, Agriculture and Livestock (MINFAL), National Agriculture Research Centre (NARC) and Food & Agriculture Organisation of United Nations (FAO) on Thursday.

He said the government was spending a huge amount on allied activities in the agriculture sector such as watercourses, agri-credit, fertilisers and pesticides for improving crop productivity to alleviate poverty and to ensure food security through macroeconomic adjustments.

The minister said the government was making concrete efforts to improve investment climate, reduce vulnerability and internal and external shocks to the economy in order to ensure prosperity and welfare of the people.

Bosan stressed the need of adopting modern technologies to enhance crop productivity, water management and livestock promotion and horticulture development. He added that the government has funded a number of such projects in all the four provinces.

He informed the audience that the ministry has increased investment in agri-sector during the last six years from Rs290 million to Rs15,800 million in 2007-08.

The minister appreciated the role of WFO in spreading awareness of food safety and security across the world.

On this occasion, Secretary MINFAL Zia-ul-Rehman said that the agriculture sector was the largest segment of the world economy and a source of livelihood for more than half of the world population.

Pakistan has been a major beneficiary of FAOs support and technical assistance. We see FAO as a partner in agriculture in Pakistan and value this organisation as the apex organisation in the field of agriculture, the secretary added.

Later, the minister distributed awards and cash prizes among scientists and students who won essay writing competition organised on the occasion.

Dr Ahsan-ul-Haq, a scientist, was awarded Norman Borlaug award for his research and development of hybrid cotton and pulses seeds.

Govt keen to develop agriculture sector


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## Neo

*Concern over growing trade gap ​* 
Friday, October 26, 2007

KARACHI: FPCCI Acting President Qamar Zaman Gill has expressed concern over the growing trade deficit during the first quarter (JulyñSept) of the current fiscal year, which amounted to $3.6 billion, 13.53 per cent higher than $3.17 billion last year. He said that the figures released by the Federal Bureau of Statistics (FBS) were alarming as during the first quarter of this fiscal year, the exports fetched $4.456 billion while imports cost $8.06 billion against $4.25 billion exports and $7.42 billion imports in the same period of last year. The data shows that during the period under review, Pakistans economy made 8.51 per cent more imports than last year, while exports rose only by 4.77 per cent. Gill said that each month import growth exceeded export, resulting in a widening trade gap. He said that the government had targeted imports at $28 billion and exports at $18.6 billion with trade deficit of $9.4 billion, but at the end of the year the gap rose above the target to reach $13.53 billion.

He added Pakistan had also missed its export target by a wide margin of $1.59 billion and breached the import target by $2.54 billion, which would continue to grow if remedial measures were not taken.

Concern over growing trade gap


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## Neo

*1,135 new companies enrolled in third quarter​*
ISLAMABAD, Oct 25: The Securities and Exchange Commission of Pakistan (SECP) registered 1,135 companies during the third quarter of the current calendar year.

With the new registrations, the total number of registered companies with the SECP as on September 30, 2007 reached to 50,1250, official figures released here on Thursday showed.

The total new registrations included 1,106 companies limited by shares comprising of 23 public unlisted companies, 1,053 private companies and 30 single member companies. The other entities were 15 foreign companies, 13 associations not for profit and one company limited by guarantee.

Total authorised capital and paid-up capital of the companies limited by shares amounted to Rs7.06bn and Rs1.23bn, respectively.

The Company Registration Office (CRO) Lahore enrolled 370 companies, CRO Karachi 335 companies and CRO Islamabad registered 220 companies. The CRO Peshawar, Multan, Faisalabad, Quetta and Sukkur registered 72, 61, 43, 32 and two companies, respectively.

The 193 companies, the highest number, were registered in the tourism sector followed by 138 in services, 135 in trading, 70 in Information Technology, 54 in real estate development sector, 50 each in construction and communication and 48 in textile sector.

1,135 new companies enrolled in third quarter -DAWN - Business; October 26, 2007


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## Neo

*Work on second phase of Gwadar port to begin by year-end​*
ISLAMABAD, Oct 25: The second phase of Gwadar deep seaport construction is expected to be started before the year-end by the Singapore Port Authority (SPA) for which it is lining up new investment in the country.

The government has taken a decision to allow the SPA to undertake the mighty second phase of the Gwadar Port preferably within this year, Director General of Gwadar Development Authority (GDA) Ahmad Buksh Lehri told Dawn on Thursday.

He said that Phase-1 had cost $298 million and the SPA, the operator of the port which had been given a lease for a long period of time to run it efficiently, was currently working out its investment plan for the second phase.

The government, Mr Lehri said, had given to the SPA 16 acres of land which included a tax-free zone.

Answering a question, the GDA chief said that the SPA had successfully overcome initial problems and that the port was likely to be fully operational in December with three berths handling the ships. However, to handle big ships more berths would be required, he added.

He said that the SPA was being provided all the necessary equipment including cranes and buildings.

New equipment, provided by the government, is also being installed by the SPA, Mr Lehri said.

In reply to a question, he said that there was no law and order problem in Gwadar. However, he said that the Coastal Highway, which was damaged by the recent floods, should be repaired on a priority basis.

More warehouses and other equipment were also needed to enhance countrys foreign trade, he added.

Earlier, the Singapore-based operators were told to expedite the work especially after having received a 40-year tax holiday despite the concern expressed by other investors and the World Bank and Asian Development Bank (ADB).

The GDA director general said since the government had already been extending tax exemptions and tax holidays in various industrial and duty-free economic zones, the SPA was also offered a tax holiday.

He said export processing zones were also enjoying certain tax holidays and exemptions and there was nothing exceptional in the case of SPA, which was investing $550 million.

The Gwadar port located in Balochistan is being considered a future trading hub in the region because of being so close to the Gulf region.

Initially, it is expected to face competition from the Iranian port of Salalah, but after the completion of Phase-2 by 2010 at a cost of $840 million, it is likely to become one of the busiest ports in the region. It will provide warehousing, transhipment and industrial facilities for trade with over 20 countries including the Gulf countries, Iran, Central Asian states, India, China and East Africa.

The government has also planned some other concessions for the proposed Export Processing Zone (EPZ) to be located near the Gwadar port for local and foreign investors. There will be customs, sales tax and excise duty exemptions in the EPZ to promote substantial investment in Gwadar.

A number of foreign investors have shown interest in establishing mega refineries, building storage capacity and undertaking other businesses in Gwadar to help expedite the process of industrialisation in Balochistan.

Land for the new international airport has been acquired after giving due payments to the landowners. The government is said to have released about Rs4 billion for acquiring land for the proposed oil city. Prices of land in Gwadar have gone up.

With the completion of Gwadar port, a special industrial development zone, about 30km off the port, will also be set up on 4,000 hectares.

The federal government has also provided Rs700 million to Balochistan to meet water demand of the Gwadar Industrial Estate (GIE) for 15 years by installing a foreign-assembled desalination plant.

The water demand will be met partly by recycling the waste water (irrigation and industrial cooling) and partly by the desalination plant as there is no water resource available in the area.

The Balochistan government has provided 3,000 acres of land, of which 20 acres will be made available for free through the GIE to set up water desalination plant, intake work, storage tanks and other facilities.

There will be approximately 2,000 industrial units in the GIE creating 30,000 jobs. Most of the production will be export-oriented.

Work on second phase of Gwadar port to begin by year-end -DAWN - Top Stories; October 26, 2007


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## Neo

*Ufone still the 2nd largest operator in Pakistan​*
KARACHI: Ufone, with 15.421 million subscribers, still holds the second position among all the cellular operators in Pakistan. The Pakistan Telecommunication Authority (PTA) has updated the new subscriber data on its official website quoting that the total subscribers of Ufone are higher than that of Telenor. Therefore Telenor still occupies the third position with 12.578 million subscribers. Earlier, a PTA official had mistakenly released wrong figures, which the Daily Times carried in its October 25 issue. Taking cognisance of the issue, a PTA official informed Daily Times of the error in compiling the figures and corrected the data on its website on Thursday. According to the data being displayed on the telecom watchdogs website, Mobilink is still holds the number one position and Ufone enjoys the second place.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Cement export to India below 6%​*
* Most Indian importers want Hindi scripts on packaging

LAHORE: The cement export to India is very low as compared with other countries and stands at only six percent of the total cement export of the country, industry sources told Daily Times said on Thursday.

The industry is facing different types of problems in exporting this commodity, including packaging problems and different objections from the Indian importers, they said.

The cement export to India would remain low till December and at the start of next year the exports might improve gradually, they added.

The cement industry in the month of September exported around 550,000 tonnes of cement to different countries including Afghanistan, African and Gulf countries and India. While the cement export of India remained at only 11,500 tonnes or two percent in September, sources said, adding that the situation improved a bit in October but is still lower than expectations. Pakistan exported 340,000 tonnes of cement to different countries in October and managed to export only 20,000 tonnes or less than six percent to India in the same month, said Muhammad Shahzad spokesman of All Pakistan Cement Manufacturers Association (APCMA). 

He said the production of cement is very much high but the transportation and packaging problems are hindering the exports. 

Exports could only be enhanced if transportation is done through road instead of rail or other means. The road transportation is cheaper and carry more stocks, thus increasing the export and decreasing the cost, he said, adding that the Indian importers are also making different kinds of demands including writing of Hindi manuscripts on the packaging bags.

Some of the Indian importers say that they want bags with Hindi written on it while some importers are not asking for it, which is also causing problems for the cement manufacturers, he said, adding that the export to India would improve in January, as the problem of packaging would also be overcome by the industry during that time. 

Every industry faces such problems in early time but such troubles are settled with the passage of time.

Around two companies are supplying plastic bags to the cement industry for packing the commodity while their capacity is around 16 million bags, each of 50-kilogramme. However, the industry requires more than 28 million bags, which means still 12 million bags are short. Earlier, the manufacturers were facing shortage of bags but now they are asked to pack the commodity in Hindi written bags, which is affecting the exports. Currently, cement companies are packing cement in a 50-kilogramme bag consisting of paper or plastic. Most of the companies prefer paper bag to supply cement in local market, as it is cheaper and easily available while the plastic bags are costly as well as short in supply. A paper bag costs around Rs 6 to Rs 8 while the cost of plastic bag is Rs 12 to Rs 13, said a local cement trader.

APCMA said the packaging bag companies have shown keen interest in increasing the production and would meet the industrys demands in a couple of months.

Local cement manufacturers are exporting cement to Middle East and African countries and a couple of months back, around a dozen companies have applied for Board of Indian Standards (BIS) certification and more than five cement manufacturers have started exporting cement to India. The number of exporting companies is expected to increase, the APCMA said.

Daily Times - Leading News Resource of Pakistan


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## Neo

*German firm eager to start operations in Pakistan​*
KARACHI: The Trade Development Authority of Pakistan (TDAP) and a German company have discussed ways for the latters entry into the Pakistani market with an array of export finance products to facilitate the countrys exporters under rapid growth strategy.

A two-member delegation of the DF Deutsche Forfaiting AG met the senior officers of export finance services of TDAP here on Thursday.

Mr Ulrich Wipperman, the regional director for Asia of the Cologne-based company told the meeting that their market representative office would be set up and start operations in Lahore by early next year. Through this office the company would be able to test market tailor-made and customised products for Pakistan.

He said that he had received tremendous encouragement during the current visit and he saw great potential for business in Pakistan with its robust and sustained economic growth over the last six years coupled with continued national efforts of a quantum increase in merchandise and services exports to reach $100 billion by 2015.

Sajjad Malik, Executive Director, Export Finance Services, TDAP said that DF Deutsche has been encouraged to consider Pakistan as a new high potential market for development. 

DF Deutsche will be facilitated by TDAP in introduction of their services to the stakeholders from small traders to large-scale industries and the organisation will assist the German company in maximising its first mover advantages in this emerging and untapped market, he said.

He said that even at a modest percentage of the business by 2015 could mean a forfeiting turnover of over $2 billion from Pakistan. With this base one could expect, over the long term, as much as five percent of all exports from the country being facilitated through forfeiting, factoring, export credit agency and other such export financing facilities currently under active planning and implementation of TDAP, he added.

Daily Times - Leading News Resource of Pakistan


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## Neo

*IPI gas line project: Islamabad offers new arrangement to Delhi ​* 
ISLAMABAD (October 26 2007): In a bid to again bring on board, Pakistan has offered India a new arrangement for benefiting from the pipeline to be used for importing gas from Iran. If India comes up with positive response, Pakistan will sign a separate bilateral agreement with it to transport Iranian gas at its desired point at the border.

The new arrangement provides that in the case of bilateral agreement India will have nothing to do with Pak-Iran segment of the project. First, Iran and Pakistan will sign the agreement on their mutually accepted terms and conditions and then it will be followed by an independent arrangement between India and Pakistan for gas transportation.

Petroleum Secretary Furrukh Qayyum had written a letter to his Indian counterpart early this week, inviting New Delhi to enter into bilateral arrangement with Islamabad to get Iranian gas at its border. A senior official of the petroleum ministry on Thursday told Business Recorder that Pakistan wants to take India on board for gas pipeline project and the new offer based on a segmental approach was the part of the same strategy.

Iran and Pakistan have already begun work on the new strategy. The two sides had held talks in Islamabad last week under bilateral arrangement and sorted out a number of technical and legal issues.

The official said: "Under the bilateral arrangement, Iran and Pakistan had made development in the recent round of talks held here and this will be followed by another round soon to sign a formal agreement for turning multi-billion dollar pipeline into reality."

After actively participating for tripartite gas line project for years, India suddenly walked out of it recently. It was no doubt a disturbing development for Iran and Pakistan. However, the two sides did not give up and they decided to take the project on bilateral basis. The new strategy help them reach to a conclusion on almost all-key legal and technical issues.

The official said Iran and Pakistan have reached an understanding on all-key issues of the project, including the gas pricing mechanism, security, and their formal announcement will be made in next meeting.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*OGDCL earns Rs 12.336 billion in three months ​* 
KARACHI (October 26 2007): The Oil and Gas Development Company Limited (OGDCL) has earned Rs 12.336 billion in the three month period ended on September 30 as compared to Rs 12.327 billion in the corresponding period last year. The board of directors of the company, in its meeting held on Thursday, recommended an interim cash dividend for the quarter at Rs 1.75 per shares, ie 17.50 percent.

The Karachi Stock Exchange (KSE) was informed that the net sales of the company increased to Rs 27.768 billion in the period under review against Rs 25.295 billion in the same period last year. On the other hand, the company's expenses in account of royalty increased to Rs 4.066 billion in this period against Rs 2.839 billion in the same period last year.

The company's operating expenses surged to Rs 3.757 billion against Rs 3.300 billion and transportation charges increased to Rs 302.362 million against Rs 261.164 million.

The other income of the company declined to Rs 638.945 million in the three-month period this year against Rs 1,362.769 million in the same period last year. The company's profit before tax stood at Rs 17.195 billion in the third quarter of 2007 against Rs 17.461 billion in the same period in 2006.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Port Qasim handles record seven million tons cargo in first quarter ​* 
KARACHI (October 26 2007): Backed by port tariffs 'more competitive than Karachi Port' extensive trade took cargo handling at the Port Qasim to around 7 million tonnes during first quarter of the current fiscal year.

Overall cargo handling at the multi-purpose port registered an increase of 2 percent against the 6.65 million tonnes of the last corresponding period, sources in the Port Qasim Authority (PQA) told Business Recorder on Wednesday.

"We have far more better cargo handling facilities and tariff rates than the Karachi Port specially at the Qasim International Container Terminal (QICT) due to which our containerised cargo handling has increased by 14 percent", claimed the sources in PQA.

During July-September 2007-08, the port handled a record 0.185 million twenty equivalent units (TEUs) containerised cargo as compared to 0.162 million TEUs in the corresponding period last year, depicting an increase of 14 percent, they said. "Containers carrying commodities like sports goods, rice, carpets, etc were imported and exported extensively via Port Qasim which ensured 14 percent growth in handling of the containerised cargo", sources said.

They said dry cargo handling also depicted an upsurge of 4 percent over the last year's corresponding figures. Raw material imports for the Pakistan Steel Mills have also increased by 21 percent during the said period.

"Growing demand and use of raw material like coal, iron, etc at the Pakistan Steel Mills have largely attributed to rise in dry cargo handling at the port", they said.

To increase the port parameters, the Authority had increased length of the port to 295-meter length basis (mlb) from the previous 269 mlb, which had enabled the PQA to berth bigger vessels at the country's "first industrial" port, sources claimed. "Deam" of the port had also been increased to 42-meter which previously stood at 40-meter, they added.

Sources said that with cargo volume surpassing the planned targets by more than 3 percent, handling of the chemical goods also showed an increase of 11 percent during first three months of the current financial year. Though undeclared, an incipient competition between the Karachi Port Trust (KPT) and the PQA is fast turning to be a hot conflict as the two port operators have been engaged with each other particularly after the "berth collapse" incident at Karachi Port.

On October 8, both the PQA and the KPT had locked horns over the issue of berth occupancy with the former claiming that it was entertaining 100 percent berth occupancy due to shortage of berths at the port operated by the latter.

The KPT had, however, outright differed claims of the PQA, saying that talks of any berth shortage or berth occupancy problem was even not an issue at the Karachi Port.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*13 power projects worth $2bn to be operational by 2010 ​* 
Saturday, October 27, 2007

ISLAMABAD: Thirteen private power projects having total capacity of 2,456MW will be commissioned by the year 2010, out of which 554MW will be added to the national grid by next year. 

In 2009 and 2010, 1,343MW and 559MW respectively will be injected into the power system, translating into overall investment of US$2 billion through the private sector. 

This was announced in the 74th meeting of the Private Power and Infrastructure Board (PPIB) held here on Friday, under the chairmanship of Liaquat Ali Jatoi, Federal Minister for Water and Power. 

The minister added that this is a massive achievement as due to the liberal policies of the government both the local and foreign investors have shown a keen interest in the power sector of Pakistan. 

He appreciated the sincere efforts of Managing Director PPIB Yousuf Memon and his team, and the quick decision-making process of all the board members of PPIB for working closely for facilitating the investors. 

It was informed that PPIB is currently processing sixty two (62) multiple fuel (Oil, Coal, gas & Hydel) power projects having a cumulative capacity of 16,790MW which are expected to be commissioned from year 2008 to 2016. Out of these, Letters of Interest (LoIs) have been issued to 33 projects with a cumulative capacity of 9,276MW, Letters of Support (LoSs) have been issued to 14 projects totaling 2,590MW, while Implementation Agreements (IAs) have been signed with 10 projects of 2,026 MW. 

The projects with whom PPIB has signed IAs include 225MW Orient Power, 225MW Sapphire Power, 225MW Saif Power, 165MW Attock Gen, 202MW Fauji Mari, 200MW Nishat Chunian, 200MW Nishat Power, 225MW Atlas Power, 134MW Star Power and 225MW Halmore Power. 

Moreover, IAs of 227MW Engro Power and 179MW Gulf Power are ready for signatures. A number of companies have also concluded the Direct Implementation Agreements with their lenders, while five IPPs namely Orient Power Project, sapphire Power Project, Fauji Mari project, Attock Gen and Saif Power have achieved financial closure, other project sponsors are aggressively working to achieve financial close. 

It was also informed that the IA has also been signed with the 84MW New Bong hydel power project which is the first private hydropower project in the country to make such breakthrough, and will make way to other 21 hydropower projects in the pipeline which are being processed by PPIB. 

The board recommended that the tariff of hydropower projects be rationalized to attract further investment in this sector. Jatoi said that there is a rapid growth in economy, and an expansion in the industrial sector is being witnessed because of the radical development reforms of the present government. 

This has to be augmented with an uninterrupted supply of electricity, and the progress in the power sector is a proof to commitment towards the development of the country and economic betterment of people. 

13 power projects worth $2bn to be operational by 2010


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* Iran keen to make investment ​* 
Saturday, October 27, 2007

LAHORE: Consul General of Islamic Republic of Iran Saeed Kharazi has said that Iranian companies are keen to make investment and initiate joint ventures with their Pakistani counterparts for common good of the people of the two countries.

He stated this during a visit to the office of Punjab Industrial Estates Management Company where he held talks with Chief Executive Officer of Punjab Industrial Estates Sabir P Chohan.

Kharazi said the Sundar Industrial Estate, a project of PIE, had become a role model in Pakistan which would not only help local industrialists, but the whole Islamic Ummah by accelerating industrial and business activities.

He appreciated the world-class infrastructure at SIE and informed that a trade delegation from Iran would soon visit Pakistan for promotion of business and trade relationship.

Iran keen to make investment


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*Report on pro-poor expenditures this year ​* 
Saturday, October 27, 2007

ISLAMABAD: The Finance Ministry plans to resume releasing details of pro-poor expenditures from current financial year 2007-08 after an interval of 15 months, as the exercise has been stopped since fiscal year 2005-06.

The last report of the Finance Ministry on pro-poor spending was released for fiscal year 2005-06 which means that there has been no progress report on Poverty Reduction Strategy Paper (PRSP) or pro-poor expenditures available with the authorities concerned for the last five quarters (15 months).

In the whole fiscal year of 2006-07, the Finance Ministry did not make public any details about pro-poor expenditures. Now the ministry has directed the four federating units to furnish details of accounts related to pro-poor expenditures, enabling the authorities concerned to come up with facts for the first quarter (July-September) of the current fiscal year, an official told The News on Friday.

The effectiveness of pro-poor expenditures is highly questionable in our existing circumstances as the economic managers concede this fact that they remained unable to achieve the results compared to the total spending done on pro-poor accounts in the last five year. There was no monitoring mechanism placed under the PRSP to track down effectiveness of pro-poor expenditures.

The main reasons for ministrys failure in releasing pro-poor expenditure report was non-cooperative attitude of the four federal units as they did not provide details to the federal government despite several reminders, sources disclosed. Now relevant officers have been asked to pursue the four provinces in order to obtain the desired details about accounts of pro-poor expenditures. The relevant officers would visit the four provincial headquarters in coming few weeks to obtain data as official communication alone would not work, the source added.

According to official estimates 23.9 per cent of the population lived below the poverty line in 2004-05 as compared to 34 per cent in 2000-2001. The government has already conducted Pakistan Social and Living Standard Measurement survey for 2005-06 but its data has not yet been provided to the federal government for the finalisation of analysis on poverty estimates.

Pakistan has already assured donors that it will increase the pro-poor expenditure by 0.2 per cent of the GDP in each fiscal year. The PRSP-II has not yet been finalised on the basis of which the donors were to provide financial assistance to Islamabad for the next three years. The government has decided to finalise the much-delayed PRSP-II document after the installation of next elected regime and the implementation on this document will start from the next fiscal year.

The sources also mentioned that the government with the assistance of the UNDP has finalised Millennium Development Goals (MDGs) costing and handed it over to the authorities in Islamabad. The MDGs costing will also be part of the final version of PRSP-II, said the official. 

Report on pro-poor expenditures this year


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*Comparison with China, India and Turkey ​* 
Textile input cost lower in Pakistan

Saturday, October 27, 2007

LAHORE: The All Pakistan Textile Mills Association has finally admitted at an international forum that textile input costs in Pakistan are lower than those in China, India and Turkey.

APTMA Chairman Shafqat Elahi revealed this while reading his paper titled Strategies for national competitiveness in textile and garments at the 66th plenary session of International Cotton Advisory Committee at Azmir, Turkey.

Quoting various international research reports, the APTMA chairman said average cost of a textile worker per hour in Pakistan was 43 US cents compared with 48 cents in China, 67 cents in India and $2.88 in Turkey. He said electricity cost in Pakistan was $0.06 per kilowatt hour and the same in India. However, the power cost in China was $0.07 per kilowatt hour and in Turkey was $0.09 per kilowatt hour.

He said Pakistans textile industry paid 11 US cents per cubic metre of water used compared with 15 US cents per cubic metre in China, 16 US cents in India and $1.50 in Turkey.

The paper disclosed that the government of Pakistan was already providing six per cent research and development support for garments, five per cent for dyed and printed home textiles and three per cent for dyed and finished fabric. 

In addition to these, long-term project finance is available to the industry at 7.5 per cent while working capital is also offered at the same rate.

Shafqat Elahi said Pakistans textile exports amounted to US$10.6 billion in fiscal year 2007, adding the government had set a target of $23 billion worth of textile exports for 2014. In comparison, the private sector has set a target of $29 billion for textile exports in 2014.

He said Pakistan enjoyed inherent advantage in basic textiles and such advantage was being utilised by the industry as a springboard to benefit the textile value chain.

He asserted the textile sector is the backbone of Pakistans industry today, and informed that there were 12 million installed spindles in Pakistan (half of which were less than five years old), 24,000 shuttleless looms, 6,000 air jet looms, 300,000 auto/power looms, 18,000 knitting machines and 4.6 billion square metres of fabric processing capacity.

He said Pakistans production was estimated at 2.4 million tonnes and there was a potential to increase cotton production with the introduction of biotech cotton, which was under study.

He further said Pakistans cotton consumption was increasing at an average annual rate of eight per cent, adding cotton consumption was estimated at 2.7 million tonnes while man-made fibre usage was seen at 0.5 million tonnes.

He mentioned that Pakistan enjoyed special market access for textile and clothing in China (mainland) under a free trade agreement that eliminated all tariffs for Chinese imports of cotton yarn, un-dyed fabric, processed fabric and bedlinen from Pakistan for domestic use starting in 2008. Later, tariff on readymade garments will be reduced from 16 per cent in 2007 to 8.04 per cent in 2010.

On the occasion, Chief of Market Development Sector at the International Trade Centre Matthias Knappe made a presentation on competitiveness requirements of the textile industry. He indicated that competitiveness was market and buyer-driven and had three levels (macro, meso and micro), and that cotton, textile and clothing were not three different value chains but one value system combined at the national, regional and global levels.

He said the most important factor in placing import orders was consistent quality, followed by speed in the second place, and low cost and product development capabilities in the third place.

Finally, he underlined the importance of recognising the potential for value addition through linking chains of value to a value system, and controlling the links. China (mainland), India, Turkey, Brazil and to some extent South Africa are considered to have a complete value system.

Comparison with China, India and Turkey


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*$60bn income likely from mega projects​*
ISLAMABAD, Oct 26: Pakistan expects to earn $60 billion a year from transit trade after completion of the national trade corridor, a couple of shipyards and improvement of the North-South road network.

The estimate has been prepared by the Planning Commission that is seeking advisory services from international firms for establishment of two large shipyards at Port Qasim and Gwadar Port on a fast track basis. The appointment of an adviser for preparation of project structure would lead to international competitive bidding to develop the shipyards and related infrastructure at an estimated cost of $500 million, to be raised through an emerging public-private partnership facility.

Official sources said the government had already asked the Karachi Shipyard & Engineering Works Limited to coordinate with reputable international financial institutions, investment banks having direct or partnership with technical, legal and other consultants to assist in planning, development and implementation of the project. The private sector will be responsible for designing, financing, building, operating and maintaining the Shipyard.

The national trade corridor of which Gwadar port is an integral part  is a major communication link for Central Asian states, China and the Gulf as 60 per cent trade of oil and gas is done through this route. The government expects it to play a major role in the region by reducing the transport time from and to China, the Middle East, Central Asian states, Europe and Africa.

The first project, Gwadar Shipyard will be set up at Gwadar East Bay (Shamba Ismail area), over approximately 500 acres. Starting with ship repairing, the facility will be converted into building Very Large Crude Carriers (VLCCs) and Ultra large Crude Carriers (ULCCs) and will have at least two dry docks of approximately 600,000 DWT.

The second project, Port Qasim Shipyard is planned to be developed adjacent to Korangi Fish Harbour (Port Qasim Area), covering an area of approximately 500 acres with at least two dry docks of 600,000 DWT. The main function of this shipyard will be to build large ships up to VLCC/ULCC size and offshore and onshore oil rigs. It will also have ship repair facilities.

A recent meeting presided over by President General Pervez Musharraf decided to accord high priority to the shipbuilding industry to make Pakistan a leading shipbuilding player by taking advantage of its location and emerging opportunities in shipbuilding, including engine and equipment manufacturing.

The meeting also constituted a high-level policy board headed by the prime minister to provide policy initiatives for development of shipbuilding and marine industries in the country. The board was asked to facilitate the development of large shipyards at Port Qasim and Gwadar Port and to ensure acquisition of land and provision of related infrastructure. The board comprises governors of Sindh and Balochistan, ministers for ports & shipping, defence production and privatisation, adviser to the PM on finance, deputy chairman of the planning commission, chief of Naval Staff and secretaries of defence production and ports and shipping.

Currently, more than 80 per cent of Pakistani trade is carried by foreign ships as the state-run Pakistan National Shipping Corporation (PNSC) manages a fleet of only 14 ships. Last year 3,000 ships visited the Karachi Port and Port Qasim but none of these ships could be provided repair services as the two small docks currently available fall much short of even domestic requirement.

According to official data, the international order book for shipbuilding jumped from 115.5 million DWT to 300 million DWT between 2002 and 2006 and the demand for new ships will increase from around 30 million DWT a year at present to around 90 million DWT a year in 2055.

$60bn income likely from mega projects -DAWN - Top Stories; October 27, 2007


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## Neo

*Dera Ghazi Khan rural development project completed: ADB ​* 
FAISALABAD (October 27 2007): The Dera Ghazi (DG) Khan rural development project was completed at 93 percent of the estimated cost and was able to achieve more than the appraised targets for all components (except the surface irrigation subcomponent), said Asian Development Bank (ADB) project completion report.

ADB project report observed that the delay of more than 23 months in implementation did not reduce the overall economic internal rate of return (EIRR), which was estimated at 33.5 percent, compared with 23.6 percent estimated at appraisal.

This project was effective in achieving its outcomes. At completion, the total value of production (net of production cost) from the additional hectares brought under cultivation in Kaha was estimated at $183,200, for an increase of $37.7 per ha in the yearly gross margin.

According to report, the low gross margin was due mainly to seasonal variations in flow in the Kaha hill torrent and the related low cropping intensity in the area. The total annual value of production (net of production cost) from the 137 DTWs of about $5.1 million meant a yearly gross margin of $932 per ha in the irrigated plains, compared with the $300 per ha envisaged at appraisal.

This significant increase in the estimated gross margin was due to the higher-than-expected cropping intensities achieved by farmers; and the cultivation of high-value crops such as onions. The availability of loans through the lines of credit supported by the project; and the government's deregulation policy, which gave farmers higher compatible values for their outputs, and thus an incentive to grow high-value crops.

During the Project Completion Review (PCR) Mission, road users indicated that passenger fares had gone down by almost 50 percent, as envisaged at appraisal. The average passenger fare is equal to that charged to transport a 40-kilogram (kg) load. The PCR mission estimated that, on the average, each household now saves $20 in passenger fares and $40 in cartage yearly (Appendix 9, para. 15), for a total of $60-almost three times the appraised estimate. The increase in savings is attributed to various factors including the transfer of a larger share of the vehicle operating cost to consumers, competition in the transport sector made possible by liberal bank leasing facilities, a surge in economic activity from greater-than-expected development, and widespread demand for CD infrastructure.

The average increase in household income for all CD schemes was $21 per household, with the highest increase reported from soil conservation structures, which contributed an annual increase of $327 per household, against $25 estimated at appraisal for soil conservation measures alone.

In addition, ADB report mentioned that the project's investment in nonfarm community schemes and social services such as drinking water, street paving, sanitation, and community facilities has helped improve living standards. The provision of doorstep credit facilities has made it economically possible for farmers to grow high-value crops, buy better-quality inputs, and sell outputs on their own terms.

The project proved efficient in achieving its planned outcomes and outputs. It was completed at 93 percent of the estimated cost and was able to achieve more than the appraised targets for all components (except the surface irrigation subcomponent). The delay of more than 23 months in implementation did not reduce the overall economic internal rate of return (EIRR), which was estimated at 33.5 percent, compared with 23.6 percent estimated at appraisal. The methodology adopted during appraisal was also used in evaluating the project interventions at completion. At appraisal, EIRRs were estimated for the irrigation improvement and rural roads components but not for the community development, FS, and institutional support components.

The EIRR for the surface irrigation subcomponent was evaluated at 23.0 percent against an appraisal estimate of 43.2 percent, despite the reduction in scope and the decision not to rehabilitate the head reach, where the additional area allocated for high-value crops (the main contributor to the high EIRR at appraisal) was located. The EIRR for the installation of DTWs was estimated at 39.0 percent at the design stage, and 57.8 percent at the end of the project, when higher yields were assumed.

The EIRR for the rural roads component was evaluated at 36.9%-3 percentage points higher than estimated at appraisal. The estimated combined EIRR for the above components, together with the cost of institutional strengthening, was estimated at 23.6 percent at appraisal, and a significantly higher 33.5 percent at completion. This suggests that the expenditure on institutional strengthening was cost-effective.

At the appraisal stage, ADB report mentioned, no financial analysis, indicative or otherwise, was done for the interventions that were to be identified and managed by communities, such as income-generating physical infrastructure (cattle and poultry sheds, warehouses, small irrigation schemes, small wheat-flour mills and sawmills, and soil conservation structures).

These were to be funded after their viability was assessed, during implementation. Similarly, the project also supported the development of community-managed social infrastructure such as community halls, dispensaries, non-formal school buildings, small drinking water supply structures and ponds, link roads and street soling, and culverts and bridges.

Most of these interventions have proved beneficial. However, some interventions for which there was inconspicuous demand might take a longer time than anticipated to yield the desired returns. Cattle sheds, for instance, will require support services, including a network for milk collection and financial support for building herds, before they are fully used.

Similarly, warehouses are currently underused because of the lack of marketable surpluses of grain, and of holding capacity for cash crops. Moreover, community organisations need to be strengthened further to manage collective inputs and market outputs.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Services sector trade deficit up by 10 percent ​* 
KARACHI (October 27 2007): Services sector trade deficit rose to 1.5 billion dollars during the first quarter of the current fiscal year against 1.391 billion dollars of corresponding period of last year, showing an increase of 144 million dollars, or 10 percent, mainly due to high payments on account of transportation, travel, construction and computers services.

Overall, services sector exports stood at 657 million dollars against imports of 2.192 billion dollars during this period, depicting a deficit of 1.535 billion dollars. Major contribution in services trade deficit was witnessed in transportation services, travel services, travel, insurance, royalties and government sector services.

Only transportation sector share of deficit was around 510 million dollars as, in this sector, exports stood at 271 million dollars against imports of 781 million dollars, analysts said. They said that transportation and travel services accounted for 785 million dollars deficit, or around 52 percent.

As Pakistan has no shipping company other than Pakistan National Shipping Corporation (PNSC), the exporters and importers are compelled to hire and pay high charges to international shipping lines, they said.

An analyst point out that during current fiscal country's services deficit might be higher than last fiscal as recently shipping lines has further raised their freights. Some 275 million dollars deficit was recorded in travel services, as its imports stood at 340 million dollars against exports of 65 million dollars.

According to State Bank statistics, services exports grew by 11 million dollars, to 657 million dollars, while imports increased by 155 million dollars to 2.192 billion dollars during this period.

Financial sector performed well, with 40 million dollars exports against 23 million dollars imports, depicting a surplus of 17 million dollar during first quarter of current fiscal year.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*103 percent surge in natural gas production ​*
KARACHI (October 27 2007): The production of natural gas in Pakistan has increased by 103 percent to 3,873 million cubic feet per day (MMSCFD) in fiscal year 2006-2007 against 1,911 a decade ago.

A Pakistan Petroleum Limited (PPL) report that appeared in its recent publication referring to official data said there had been a steady growth in the production of natural gas which now enjoys a share of 54 per cent in the country's primary energy supplies compared with 38.6 percent in 1997.

During the review period, the daily production of oil increased by almost 16 percent to more than 67,000 barrels. However, its share in the overall energy supply mix fell to 28.4 percent against 42.5 per cent in 1996-97.

Pakistan was said to meet over 75per cent of its energy requirement from domestic resources, which are led by the natural gas. The country has a well developed and integrated infrastructure for the distribution and transportation of gas. Covering the area of 60,000 kilometers, the sprawling gas pipeline network of Pakistan is considered to be the best in the world.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Industry on revival path ​* 
Knitwear exporters swamped with orders

Sunday, October 28, 2007

LAHORE: The knitwear industry has finally embarked on a revival path and many manufacturers, who had laid off workers a few months ago, are now regretting their decision as they are flooded with export orders diverted mainly from India.

The News found that the revival of the knitwear industry was on cards after a painful two years for the manufacturers who faced stiff competition from China and India.

Many leading exporters said earlier they continued to execute export orders for 12 to 18 months even for products on which they suffered a little loss or those which were exported at break-even prices.

They said the industry experts hoped that this phase would be temporary and prices would bounce back. However, when this did not happen most of the exporters decided six months ago to fulfill only those export orders on which they could make fair profit.

Subsequently, production was slashed and the companies started making profits. But workers were also proportionately reduced.

In 2006-07, when knitwear exporters accepted all orders irrespective of profitability, their exports totalled $1.945 billion, which was the highest figure among different textile sectors that contributed $10.638 billion to Pakistans total exports in that year.

The knitwear exports started edging down in the first quarter of the current fiscal year after which the exporters only accepted those orders which earned them profits.

In the meantime, the currency factor assumed greater importance in the global textile trade, particularly during the last two months when the dollar went on a regular downward path. The Indian rupee started appreciating against the greenback while Pakistani rupee remained stable.

The Indian currency has appreciated 13 per cent year-on-year against the US dollar while Pak rupee lost 1.5 per cent value. This huge difference between the two currencies has started marginalising Indian knitwear exports and provided advantage to Pakistani knitwear industry as global buyers are diverting their orders to countries like Pakistan, Bangladesh, Cambodia or Bangladesh.

However, the knitwear exporters are in a quandary as a large numbers of orders are being placed at reasonable prices. They have the production capacity to meet those orders, but do not have the manpower which they reduced a few months ago due to scarcity of importers.

One exporter said he laid off 300 workers six months ago and another 350 workers in July and August. Now I need not only that workforce back but some more. The HR department is on the hunt for workers but its task has become difficult as other exporters need more workers.

Pakistan Hosiery Manufacturers Association (Punjab Zone) Chairman Adil Butt said the dilemma of the knitwear industry was that only those factories that were still operative would benefit from the sudden increase in export orders.

He said almost all smaller and a number of medium-sized units had closed down during the past two years, adding operating factories would not be able to meet all the additional orders as they had during the past two years taken the load of smaller factories that closed in recent past.

He said revival of closed industries would take some time and availability of skilled workers would also pose a serious problem in that regard. 

He said the operative industry could increase production at a rate of 12 to 15 per cent which would in fact be the growth rate of knitwear exports in the short term.

The capacity is not a problem for the industry, which currently has almost half a million sewing machines. This value added textile sector enjoyed the highest research and development grant, which was being wasted in fulfulling export orders which were not commercially viable, he said.

Industry on revival path


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*PM inaugurates edible oil extraction plant ​* 
Sunday, October 28, 2007

KARACHI: Prime Minister Shaukat Aziz said here Saturday that Pakistan would turn into the manufacturing base of the region during the next 5-10 years.

It will serve as manufacturing base for Africa, Central Asia and Middle East, he said while performing the groundbreaking of Oil Extraction Plant Project at Port Qasim of IFFCO Group at a ceremony held at Governor House.

Prime Minister said that Pakistan would achieve the position of being manufacturing base because of cheaper labour and compatible cost of doing business.

He informed that government conducted a study, which revealed that cost of doing business in Pakistan was lesser as compared to many nearer and far off countries.

He said that it is for this reason that IFFCO has estimated to have 100 million dollar export of its products in the very first year.

He said that MAZA is another company of UAE, which has decided to set up two plants here where it would manufacture its products and export the same.

Prime Minister pointed out that availability of raw material here is a big facility for the manufacturers while improving logistic means would help cut down the cost of doing business. He said when there would be lower cost of doing business, more factories will come up.

He asked Port Qasim Authority to keep their tariff structure lesser than good ports because already it will have to face competition in the presence of Karachi and Gwadar and other ports in the region.

Shaukat Aziz declared that future of Pakistan is bright although it is faced with many challenges. He said those who know that countrys future is bright, should work with dedication and honesty and expand their business.

He said that Pakistans economy has witnessed a great transformation and not a single day passes when one step forward is not taken towards economic progress and investment because of the potential now available.

In this regard he particularly referred to dollar 150 million investments being made by IFFCO.

He recalled that when present government came into power, there were only 56 industrial units in Port Qasim area and today there were 225 units which are either functional or on which work is being done.

Congratulating Port Qasim Authority for this achievement, Prime Minister pointed out that establishment of unit open doors for jobs and leads to increased productions which results in prosperity.

He referred to Pakistans foreign reserves which surpassed over 16 billion dollars mark, the rise in growth rate, Rs8 billion dollar investment in a year, increase in per capita income and GDP growth rate and described the same as good omen.

Shhaukat Aziz said all this was not achieved just through mere thinking but it involved hard work and efforts with contribution having been made by all the sectors.

He told the gathering that case studies are being written in the world on Pakistans economic turn-around.

Prime Minister Shaukat Aziz while recalling the achievements of the last four years of the present government, said that it chalked out national policies, implemented them honestly, transparently and with sincerity of purpose and attained the desired results.

He stated that reforms were made under planning and today image of Pakistan figures on the world map.

Our policies were based on the philosophy of liberalization, privatisation and deregulation, which are a worldwide trend as today and adapted so that people may come and invest their capital here. Shaukat Aziz underlined the imperative need for continuity and consistency of these policies.

He described Port Qasim the symbol of progress and said that if continues to progress in this way, it would lead to creation of more opportunities which would raise jobs and bring prosperity.

Earlier Mashkoor Alam, CEO of IFFCO Pakistan said that his group recognises the potential and is excited about opportunities in Pakistan. We see over 155 million population of Pakistan growing at nearly2 percent annually as a huge potential customer base that we could delight with our products presently being manufactured world-wide.

We see an economy which is going through a positive structural change that has expanded in terms of GDP growth and per capita income, Mr Alam said.

The Sharjah based IFFCO group is operating in 80 countries and allotted 15 acres land under Direct Foreign Investment Program to set up an Oil Extraction Plant at PQ.

The base of project is approximately 100 million tons import and 60m tons export. The project will create direct employment opportunities for 120 skilled and unskilled workers while over 1500Pakistanis will gain from the indirect employment opportunities.

PM inaugurates edible oil extraction plant


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*CBR says Rs1.025 trillion revenue target achievable ​* 
Sunday, October 28, 2007

ISLAMABAD: Chairman, Central Board of Revenue (CBR), M Abdullah Yusuf has said that the revenue collection target of Rs1.025 trillion, fixed for the current financial year was although ambitious and challenging but achievable.

He was giving his concluding remarks at the 15th National Tax Conference on Friday evening. The conference was attended by the relevant members of CBR, Regional Commissioners of Income Tax, Directors General of Large Taxpayers Units & Regional Tax Offices, Commissioners of Income Tax and Commissioners (Appeals).

All of us have to make sincere efforts to come up to the expectations of the government to achieve this huge target, said the chairman. He advised the tax managers to concentrate more on those areas where a huge gap existed between the potential and actual revenue paid. The chairman was of the view that a lot more was needed to be done to meet the challenges of the future.

We need to update and equip ourselves with the latest techniques besides keep moving in the right direction to achieve the desired results, Yusuf remarked.

CBR says Rs1.025 trillion revenue target achievable


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## Neo

*Oil import bill up by 5.34pc in July-Sept​*
ISLAMABAD, Oct 27: The countrys import bill of petroleum crude increased by 5.34 per cent during the first quarter (July-September) period of the fiscal year 2007-08 to $1.018 billion as against $966.994 million over the same months last year.

Share of oil in total import bill will increase to the highest ever, as oil price crossed $90 per barrel in the international market.

If this trend continues in the next few months, the import bill of crude oil will increase to around $6 billion by the end of June 2008.

Official figures released here by Federal Bureau of Statistics showed that petroleum products import dipped by 10.55 per cent to $987.060 million in the first quarter of the current fiscal year as against $1,103.487 million over the same months last year.

In absolute term, the total bill of oil  crude and petroleum products  stood at $2.005 billion in July-September of the current fiscal year as against $2.070 billion over the same period last year, indicating a negative growth of 3.13 per cent.

Like last year, import bill of oil had been the prime mover of trade deficit because of greater consumption. This year too, with upsurge in oil prices in international market, the import of crude oil would further witness increase in the months ahead.The second biggest component of the import bill in value was the machinery group. However, its imports increased by 5.63 per cent in July-Sept to $1.636 billion as against $1.549 billion over the same months last year.

The import bill of machinery was mainly pushed by an increase of 16.50 per cent in construction and mining, electrical machinery and apparatus 31.05 per cent, agriculture machinery 60.99 per cent and other machinery 11.05 per cent.

However, the power-generating machinery declined by more than 12.31 per cent and office machinery 16.38 per cent during the July-Sept period of the current fiscal over last year.

In the telecom sector, the import of mobile phones imports decreased by 19.75 per cent during the period under review over last year. However, the import of other apparatus of mobile phones increased by 39.80 per cent during the first three months of the current fiscal year over the same months of the last year.

Food items import declined by 3.08 per cent to $754.384 million during July-September of 2007-08 as against $778.323 million in the corresponding months of last year.

The import of milk products increased by 1.40pc, dry fruits 33.11pc, spices 0.80pc, soyabean oil 280.46pc, palm oil 73.18pc, and all other food items 34.59pc.

However, import of wheat declined by 40.84pc followed by sugar 97.31pc, tea 15.66pc and pulses 35.33pc during the period under review over last year.

Oil import bill up by 5.34pc in July-Sept -DAWN - Business; October 28, 2007


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## Neo

*Roadmap suggested for enhancing Pak-US trade​*
* Traders brief US counterparts about investment opportunities in Pakistan

ISLAMABAD: The United States President George W. Bush administration has asked Pakistan to develop a roadmap based on workable proposals for enhancing the bilateral economic relations according to the potential exists. 

This was stated by Dr. Ashfaque Hassan Khan, Special Secretary of Finance on return from United States after participating in Pak-USA Economic Forum and World Bank-IMF meeting held at Washington. 

In an exclusive interview with Daily Times here on Saturday, Dr. Ashfaque Khan said the United States would help Pakistan how to make these initiatives operational for enhancing trade and economic relations for the benefit of the peoples of both the countries. 

In this regard Pakistan has been suggested to ensure frequent visits of the business leaders so that the concerns of the local investors are addressed and foreign direct investment from US is enhanced, he added. 

Pakistan s delegation to Washington has successfully addressed the concerns of the International Financial Institutions (IFIs) and United States investors on Pakistan s political and other developments. There is no capital flight from Pakistan, foreign direct investment, remittances, revenues, foreign exchange reserves, stock market capitalisation are increasing and the country is enjoying full confidence of the IFIs and foreign investors. 

Current political and other events in Pakistan have not impacted Pakistans economy as the major economic indicators have witnessed positive growth, the economic fundamentals are strong as the countrys economy is progressing well to achieve sustained growth in the years to come. 

Pakistan has also requested the US authorities to review its decision on Travel Advisory on Pakistan and it was informed that this has been the major obstacle in enhancing trade and investment relation between the two countries. 

He further informed that the US authorities have renewed their commitment regarding establishment of ROZs and they were of the view that they are perusing the related legislations with the US Congressmen and US Senators and the process would be completed in due course of time. 

We have proposed Gadoon Mazai Industrial Estate and Risalpur Industrial Estate to be named as Reconstruction Opportunity Zones (ROZs) for zero percent duty market access in the US. We are going to suggest more places for establishment of ROZs so that maximum number of people is benefited through this initiative, he added

Pakistan s businessmen from Karachi who were the part of the official delegation have successfully satisfied the US local industry representatives and related officials about the concerns they had about the ROZs and market access on zero percent duty for products produced in ROZs. Mushtaq Malik, Federal Secretary for Investment also updated the US authorities about the progress so far made on Bilateral Investment Treaty (BIT) in the relevant bilateral forum. 

He said that during the bilateral and multilateral talks in Washington, the United States and G-8 countries have agreed, in principle, to finance Federally Administered Tribal Area development on long term basis to bring it at par with rest of the country with job opportunities. He further informed that the United States is already financially assisting Pakistan for development of FATA but the fresh in principle willingness of USA and G-8 which include United States, Japan, Britain, Russia, Germany, France, Italy, Spain would supplement the Pakistans efforts for development of FATA in the long run to provide all basic facilities like roads, education, health and employment. 

Dr. Khan informed that the U.S investors and leading officials from IFIs have been informed that political events in Pakistan are taking place with intervals and the economic activity is going on as usual. The proof of the governments claim was based on economic indicators, which have been positive during the period from February 28, 2007 to October 16, 2007, when the country witnessed judicial crisis, political confrontation by the opposition parties and Lal Masjid event. 

During mid 90s 25 strikes in Karachi caused the country Rs 50 billion loss to the country as well as the economy but now the country is not faced with the same situation and strike calls of the opposition parties have received discouraging response from the public as well as the business community, the IFIs and US investors have been informed. 

The top officials from IFIs and US investors were informed that during the said period workers remittances increased from average $427 million per month till February 2007 to $482 per month by October 10. 

Foreign Direct Investment in Pakistan increased from $577 million per month till February 2007 to $687 million per month by October 10, 2007. Countrys foreign exchange reserves rose to all time high $18.334 by October 10, 2007 as against $13.362 billion by February 28, 2007. 

Indices at stock markets jumped from 10,474 points to 14, 466 after February 28, 2007. Stock market capitalization increased from $42 billion to $72 billion with stable exchange rate Rs 60.71 against $1 by October 10 as against Rs 60.657 by February 2007. Pakistans bond offer during the judicial crisis was over subscribed by 7 times against the offer of $500 million. Pakistan received offers of $3.5 billion that was the real test for Pakistans economy. Foreign investors showed complete confidence in the economy and also offered their funds for up to 30 years, he added. Now the top officials from IFIs and the US investors are able to understand the political and economic situation and would be keeping in view the facts about the economy and political scenario of Pakistan, this has improved the image of the country.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Skyrocketing oil prices may derail economy​*
* Oil is the lubricant of economic expansion. A high oil price makes it more expensive for companies to operate and consumers to buy

KARACHI: Skyrocketing crude oil prices in the global market that touched an all-time high of $92 per barrel in the New York market on Friday due to rising US-Iran tension, pose a great concern to the economy of oil-dependent countries like Pakistan in near future. 

Economists, while expressing their opinion to Daily Times, were in unison to say that the direction of a countrys economy depends on the movement of oil prices whether they go up or down. If oil prices move up persistently, then it will have a negative on the countrys progress as it has been forecast that the oil prices may jump above $100 a barrel if the market continues its jittery over the US move. And, all governments efforts to stabilise the economy would result in naught.

Oil is the lubricant of economic expansion. A high oil price just makes it more expensive for companies to operate, said an economist requesting anonymity.

A high price for oil makes it more expensive for companies to transport goods from one place to another, and makes it more expensive for consumers to fill up their cars, and therefore theyve got less money in terms of disposable income, he added. This importance makes the commodity one of the key aspects that economists look towards when judging consumer behaviour that in turn shapes business plans.

Crude oil has always been one of Pakistans major imports. During the first two months of the current fiscal year, the import bill for crude oil by 6.53 percent to reach $1.344 billion on a year-on-year basis but analysts believe that it will increase by 20-22 percent further if the current high oil price scenario continues. Economists predict that if the government had to increase prices of petroleum products i.e. high-speed diesel and motor sprit (MS) or gasoline/petrol in the retail market, it would also result in high inflationary pressures. Inflation, which is currently stands at 8.4 percent, is expected to reach eight percent by the end of the year against governments target of 6.5 percent, said economist Samiullah Tariq.

Although petrol has a higher weightage of 0.98 percent than diesels 0.2 percent in general CPI, the actual impact on the economy would come from increasing the prices of diesel, as majority of the transportation (public and cargo both) depends on diesel. This is also evident from the consumption of 1.15 million tons of gasoline /petrol against 7.3 million tons of diesel.

Although, the government had subsidised diesel prices since March 2005 to control retail prices, its subsidy amount has increased from Rs 7.33 per liter to Rs 11.53 per liter with the oil prices hovering around $90 per barrel in global market during the last two months.

The governments payables to the Oil Marketing Companies (OMCs) as price differential claims, an oil subsidy, will further rise to Rs 25 billion by the end of October.

This is not just it; high oil prices will show their harmful impact in a number of ways. Power production will become far more costly as furnace oil prices may shoot up. Industrial production will cost more. The prices of furnace oil stood at Rs 29,799 per tonne following a sharp surge of more than Rs 2,000 during the current month. 

There are many industries, which still utilise furnace oil to run their machinery and are facing the burden of high cost of production due to increased prices in the international market. It is prudent to mention here that gas companies stop providing gas during four months during the winters to industries therefore they have to run their boilers on furnace oil

Definitely, costs of running all means of transportation will high substantially. Railway fares will go up and airlines will raise their fares substantially. Agriculture sector will also hurt owing to the power rate for tube wells will go up making farm output far more costly. Higher power rates will affect the service sector including hotels, restaurants and shops. Power for schools, colleges and universities will cost far more. 

All in all cost of living will be higher as the all the food items and essential necessities will become dearer due to the hike in oil prices. 

The governments policy of not passing this hike to the consumers is pressurising its fiscal abilities. This might derail all macroeconomic indicators. If the government does not pass on inflationary pressures to the consumer, then the current deficit account will widen further, interest rates will jump up and the government will face budget deficit at the end of the year finally, said renowned economist Asad Saeed.

As a consequence of being an election year, foreign inflows and privatisation receipts are also expected to slow down, he added. Pakistan has to explore its own oil reserve and promote alternate source of energy like natural gas and natural coal.

Daily Times - Leading News Resource of Pakistan


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*Horticulture exports may fetch $1bn by 2012​*
LAHORE: Linking finance to horticulture competitiveness will achieve $1 billion export by 2012, said Javed Malik, Additional Secretary Ministry of Finance on Saturday.

Chairing the 3rd meeting of the Sub-Committee for Horti-business Finance, Malik said that finance is considered as an essential but underemphasized issue in the horticulture. There is a need to develop effective policy tools to link finance to innovation and competitiveness and identify innovative projects in the horticulture sector, he added

He said at a meeting last month, the task force was informed that a few crucial steps needed to improve the financial situation of the sector. 

The Task Force has been established under the auspices of the Ministry of Finance headed by Dr. Salman Shah, Advisor to the Prime Minister on Finance, Economic Affairs, Revenue and Statistics. The world horticulture market is valued at $80 billion to which Pakistan contributes $170 million annually. In Pakistan only 16% of fruits are being processed, although, this activity offers great opportunities to augment volume of value added products using modern technology. 

Pakistans horticulture export industry share in the world market has risen steadily from about 5% in 1991 to 12% in 2004. The potential markets for Pakistans exports have been identified in Europe and the Middle East.

The Competitiveness Support Fund (CSF) was tasked by the Ministry of Finance to undertake a comprehensive study entitled The Competitive Advantage of the Food Processing Industry: Focus on Quality, Safety and Standards. Following this study, CSF undertook more specific work on horticulture, a sub-sector of agriculture accorded national priority by the Government of Pakistan. Support for CSF is part of the $1.5 billion in aid that the US government is providing to Pakistan over five years to improve economic growth, education, health, and governance. Stakeholders including representatives of horticulture exports, senior officers of the commercial banks and the State Bank of Pakistan also attended the meeting.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Privatisation of Sindh unutilised assets can fetch over $37 billion: Prime Minister​* 
KARACHI (October 28 2007): Prime Minister Shaukat Aziz has said that Sindh has the potential to generate through privatisation of unutilised assets more than 37 billion dollars, enough to pay off entire foreign debt.

Aziz was speaking at the distribution ceremony of "Achievement awards to leading industrialists and renowned personalities, 2007" held at the Sindh Governor House on Saturday evening.

Referring to a comment from Sindh Minister for Labour, Transport, Industries, Commerce and Co-operation Adil Siddiqui, the Prime Minister said that there were enough idle assets in Sindh that might be privatised and the sale proceeds utilised for retirement of debts.

He said that the national economy was in good hands. It was growing. "If looking back 1999, we had inherited problems of complex nature and to find out solutions was not easy." He added. He said "we were living tranche to tranche," and hastened to add that they believed in finding out solution of their problems as no one would come to them to find out a solution.

He said that the series of reforms in all the departments were carried out paid dividends. There were liberalisation, privatisation and corporatisation in all the sectors with a view to systematising management practices and business principles.

He said things were changed with a little bit of vision, and sense of direction. "Banking sector was suffering from bad debts, politicised administration and banking practices, poor customer services, inaccessibility to services and several other factors that contributed to services had brought financial institutions at the verge of disasters," he said, adding Rs 20 billion to Rs 25 billion were pumped in, and revolutionary measures were taken to make the sector healthy. It had now improved. He said that Pakistan had a robust banking sector today.

He said still there was room for improvement in the consumer lending services, agricultural finances and housing finances. "These areas are weak and in need of concerted efforts to make them effective."

He said that telephone industry and telecommunication sectors were progressing. "Teledensity has reached 60 percent, tariff rates have come down, employment opportunities in the sector have increased manifold, investment - domestic and foreign - has increased and there is overall an atmosphere of investment friendliness."

He said: "Investment comes when the investor sees and finds a stable government, continuation of its policies and continuation of reforms, good governance and support to good business practices. All these ingredients of a prudent investment and business-friendly policy are there and investors can take advantage of this situation."

He said that inflation was a challenge and food prices were going up, but this was a natural phenomenon. "When many people chase few things this phenomenon takes place. It is good sign and shows that our people have money and their purchasing power has improved. This is a sign of improved economic health."

He said: "We do not appreciate people who contribute toward making quality of life better. We do not recognise their work and fail to appreciate people who need encouragement."

He said that recognition of good work and words of appreciation gave energy to work better and improve upon previous performances. "People need encouragement." He said Pakistan was an exciting country with potential to grow and prosper. "This is an exciting country to be in."

He said that today's programme was to acknowledge good work done by the members of the business community toward the growth of economic activity in Pakistan. The Prime Minister also unveiled the plaque to inaugurate construction of a labour complex of 3,008 flats in the low-income area of Karachi.

He gave away awards and letters of appreciation to 34 industrialists, including two stockbrokers Arif Habib and Abdul Karim Dhedi and two builders - Rufi builders and Saima builders. Sindh Governor Dr Ishrat-ul-Ibad Khan, Sindh Chief Minister Dr Arbab Ghulam Rahim, Federal Minister Babur Ghauri, Sindh Industries Minister Adil Siddiqui and Pakistan Muslim League (Q) chief Chaudhry Shujaat Hussain were also present.

Business Recorder [Pakistan's First Financial Daily]


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*20.36 percent rise in first quarter agriculture loans disbursement ​* 
KARACHI (October 28 2007): Agriculture-related loans disbursement by commercial and specialised banks surged to Rs 36.369 billion during July-September period of 2007-08 fiscal year against Rs 30.217 billion of FY2006-07, marking an increase of Rs 6.151 billion, or 20.36 percent, according to State Bank of Pakistan's statistics.

With 28.97 percent increase, five leading commercial banks, Allied Bank Limited (ABL), Habib Bank Limited (HBL), MCB Bank Limited, National Bank of Pakistan (NBP) and United Bank Limited (UBL), disbursed Rs 19.494 billion during the said period against Rs 15.115 billion of July-September 2006-07 and the full-year target of Rs 96.5 billion.

The performance of Zarai Taraqiati Bank Limited (ZTBL), the largest specialised bank, was rather poor as its disbursement declined to Rs 7.222 billion, or by 21.29 percent, against Rs 9.175 billion of July-September 2006-07.

Punjab Provincial Co-operative Bank (PPCBL) disbursement also showed a decline of 10.58 percent, at Rs 1.265 billion, as compared to Rs 1.415 billion of last year. The SBP statistics makes no mention of agri loan disbursed by domestic private banks (DPBs).

NBP was on top by loaning Rs 6.234 billion. ABL disbursed Rs 3.005 billion; HBL Rs 5.532 billion; MCB Bank Rs 2.792 billion; and UBL 1.909 billion. The SPB has set a target of Rs 200 billion for the current fiscal year against last year's Rs 166 billion, showing an increase of Rs 34 billion.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*No rupee devaluation: Shamshad turns down proposals ​* 
ISLAMABAD (October 27 2007): State Bank of Pakistan Governor Dr Shamshad Akhtar has turned down the much-talked about proposals for devaluation of rupee, saying it was unjustifiable, official sources told Business Recorder here on Friday.

"The demand from certain quarters for devaluation was not favoured because the currency rate was market-driven and fluctuated in manageable limits," sources quoted SBP Governor as briefing the Economic Coordination Committee (ECC) of the Cabinet on October 10.

Sources said that Commerce Ministry was one of the stakeholders, which had proposed devaluation of the rupee on the demand of exporters who are suffering for long high value of the rupee. She also briefed the ECC about inflationary trend in the country, expressing hope that non-food items and non-energy inflation was likely to reduce following the monetary policy in vogue.

In response to an observation about neglecting the textile industry in provision of export refinance, it was explained that some individuals, with genuine problems, had already been accommodated by SBP.

The SBP Governor did not like the comments of Minister for Textile Industry, Mushtaq Ali Cheema, saying that the textile sector had so far received cumulative support totalling Rs 1 trillion.

At the same time, she said, it was noted that the reasons for stress on the textile sector needed to be analysed more closely and a balanced policy be put in place to tackle the issues hurting the textile sector.

While reviewing the performance of stocks, it was reported that every day had been a record day at stock exchanges during the recent weeks. The buoyancy called for placement of discreet, yet robust, techniques and the tools of risk management, sources added.

The ECC also observed that sub-prime market, posing a serious threat to world economies, makes it imperative for Pakistan to remain vigilant. However, it was noted that the conservative approach of macro management, adopted by the government, had served the country well.

It was also pointed out that oil prices had impacted importing economies negatively, but Pakistan had successfully managed to tackle the crisis, sources said.

The ECC was also apprised that Pakistan's rating among investors had improved during the last three years, as reflected in credible transparency and business surveys published recently. It was observed that policies and political stability had contributed to investors' confidence.

"The Government has successfully managed the challenges of uncertainty and image-building, especially in the backdrop of developments in the tribal areas. Besides, Presidential elections had transpired to be a vote of confidence for the national economy," sources quoted the Prime Minister as saying in the meeting.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*TDAP and Deutsche officials meet to boost exports ​*
KARACHI (October 28 2007): A two member delegation of Deutsche Forfeiting (DF) AG from Cologne, Germany met with Sajjad Malick, Executive Director, Export Finance Services of the Trade Development Authority of Pakistan (TDAP), says a press release.

DF as a financing company is looking to being facilitated in their entry into the Pakistani market with an array of export finance products to facilitate the country's exports under the rapid growth strategy.

DF offers benefits where risks are eliminated, liquidity is improved through disposal of accounts receivables of exporters, at a small discount and the net amount is placed at the disposal of the vendor immediately. The vendors of these receivables, in the form of promissory notes, bills of exchange, accounts receivables, L/C's, lease of receivables could be of exporters themselves or commercial banks who would like to manage their risk and exposure.

Forfeiting service immediately enables exporters to free up working capital and eliminates the need for additional lines of credit for their operations, consequent to improved cash flows while their exports are still in transit to their destination.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Nespak to build nine Tevta centres in Punjab ​* 
RAWALPINDI (October 28 2007): The National Engineering Service of Pakistan (Nespak) has been tasked to construct nine technical training centers for the Technical Education and Vocational Training Authority (Tevta) Punjab.

The institutions to be built in different parts of the province, including four polytechnic institutes, two polytechnic institutes for women, two surgical instrument institutes, and one textile institute, would help produce skilled manpower for the industrial sector of Pakistan, sources said while talking to Business Recorder.

Sources said that Tevta has signed an agreement with Nespak for the completion of 33 development schemes for Rs 1,713 million. The government has assigned the task of imparting technical and vocational training in the province to Tevta, which aimed at producing technically-sound workforce for public and private sector industries in the province, they said. Sources said the government efforts would help eliminate unemployment and poverty.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Growth setback due to unfavourable policies declares Springboard ​*
KARACHI (October 28 2007): The Springboard Research, a leading innovator in the IT Market Research industry, today announced that the Pakistan PC/Server market witnessed a growth of 5.7% with 319,838 units shipped during 1H 2007 (January-June) as compared to the same period of the preceding year.

The lower than expected growth rate was mainly due to the government's unfavourable IT policies and continuation of the 15% GST, as well as from increased terrorist attacks and unstable political conditions. In addition to the GST, the government has shown little support for the IT sector, as it has not announced any new policy or allocations for the sector.

However the government has continued with its IT industry development plan, although its actions and policies do not seem to be in sync with desired growth for the sector. "Pakistan's IT market is in between a "growth" and "decline" stage, where the country's political stability will play a major role in overall market performance, commented Rehan Ghazi, Springboard Research Analyst.

"Also, before the imposition of the 15% GST in June 2006, Pakistan's PC/Server market was a "diamond in the rough", but since then, a downward trend has been noticed. The government's recent decision not to withdraw or reduce the GST has weakened the growing IT market in the country, as well as decreased the confidence of MNC's" Ghazi added.

Among MNC's, HP continued to lead the market with 6.3% share of total PC shipments in 1H 2007, followed by Dell and Acer. The x 86 server segments dominated the market during this period and experienced a growth of 7.7% year-on-year, followed by the desktop and notebook segments. However, for the rest of 2007 and 2008, the portable segment is expected to lead overall PC market growth. This expectation is fuelled by the introduction of the Intel PC Classmate Program in 1H 2007, which will drive procurement of notebooks from the education sector in upcoming quarters. Apart from this, the adoption of notebooks from the home segment is also on the rise in the country.

In the application segments, the large enterprises, especially in the telecom, banking and finance sectors continued to be the largest procurers of IT solutions in the market, registering an annual growth of 21% in 1H 2007, followed by the government and medium enterprises.

As noticed after the imposition of GST in 2006, the grey and refurbished markets have continued to flourish substantially affecting branded machine sales in Pakistan. According to channel partners, around 15-20% increase was seen in the grey market business in the past few quarters and this trend is expected to continue/gain momentum in the future.

The negative spiralling effect created by unfriendly government policies, is expected to continue in the upcoming few quarters. Springboard Research also expects the second half of 2007 and beginning of 2008 to be politically turbulent. Considering the current market scenario and political climate, Springboard forecasts a marginal growth for 2007. Nevertheless, from the fourth quarter of 2007 onwards (October-November), the market is expected to start picking up, as the Intel PC Classmate program will perk up the portable market in the country. Pakistan's government and large enterprises also expected to continue with their automation and IT up-gradation programs.

Business Recorder [Pakistan's First Financial Daily]


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## PakForce Unlimited

*Pak cement reaches India​*
NEW DELHI: For the first time in history, two wagons laden with Maple Leaf and Lucky Pakistan cement have reached India.

General Secretary of Cement Dealers Association Shaikh Asif Saeed stated this here. He said that Prime Minister Shaukat Aziz would inaugurate the custom and warehouse at Wahga border after which export of cement would be started through land route. 

Initially, two bogies of Samjhota Express have been allotted which would be increase later, he added.

Link: Pak cement reaches India


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## Neo

*Pakistan may hit 7.2 pct 07/08 growth target: SBP ​* 
KARACHI: October 29, 2007: Pakistan may achieve its economic growth target of 7.2 percent in fiscal year ending June 2008, the State Bank of Pakistan (SBP) governor said on Monday.

"The economy will probably grow in kind with real GDP (gross domestic product) projection of 7.2 percent," Shamshad Akhtar said at a news conference to unveil the SBP's annual report for fiscal year 2006/07.

Akhtar said the current account, which balloned to $7.2 billion or 4.9 percent of GDP in 2006/07, was manageable but remained a challenge due to a slowdown in exports.

"The external current account, though sustainable in the short-term, remains the single-largest challenge," she said.

Weak exports pushed the country's trade deficit in the fiscal year 2006/08 to $13.49 billion, an increase of 11.4 percent over the previous year. 

Brecorder.com


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## Neo

*Traders eying six million tons cement export to India ​*
NEW DELHI (October 29 2007): After acquiring provisional certification from the Bureau of Indian Standards to sell their product in cement-hungry India by seven Pakistani companies, Pakistani traders are eying export of six million tones of cement per annum. "Times of India" reported India would replace Afghanistan as the largest export market for Pakistani cement by the end of 2007.

Cheaper than Indian cement, Pakistani cement which sells in India in the price band of Rs 235-250 per bag, will make it much more attractive with the Indian construction and real estate boom.

During the last Pak-India trade talks in New Delhi, some decisions were made to remove barriers by India for Pakistani exports. Pakistan is surplus in cement and India can become heaven for the Pakistani cement exporters as cost of transportation will be low as compared to other countries.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*The long wait for market access​*
Pakistan, it seems, will have to patiently wait for another six months before its economic diplomacy bears fruits and a breakthrough in terms of greater market access for its exportable merchandise in the western markets is achieved.

This was the subtle message that our able trade managers got when they put up the case of Pakistan, the umpteenth time, in Brussels to be treated at par, if not preferentially, with its competitors in the region. Of the seven South Asian nations four (Bangladesh, Maldives, Nepal and Bhutan) have a freer access in the huge European market for being categorised as LDCs (least developed nations) that the union wants to support as its responsibility towards poor of the world.

Sri Lanka for reasons not very clear enjoys GSP+ (general system of preference plus) status. Nations covered under the scheme enjoy 15 per cent subsidy in tariffs on their exports. With India that like Pakistan does not get covered by these schemes, the European Union has initiated negotiations for a free trade agreement (FTA). That leaves Pakistan high and dry, all by itself in the sub-continent.

Trade experts consider the trade discrimination by the West against Pakistan a policy gesture of western governments to express their displeasure over the countrys political system. It will require more than skills of persuasion and marketing to get increased market access in US and Europe. They want to have closer trade relations with stable democracies. Our brand of democracy with a military general at helm affairs does not sell there. We will have to learn to behave like a civilised nation to be able to develop closer, cordial commercial relations with the advanced nations of the world, an old time trade negotiator told Dawn.

This has nothing to do with politics, Humayun Akhtar Federal Commerce Minister told Dawn over telephone from Islamabad. Yes, we have not been given any commitment so far that the European Union will initiate negotiations for a free trade agreement with Pakistan as a result of the study that has been initiated by the most powerful regional grouping to analyse the discriminatory impact of its trade policy in South Asia on Pakistans economy, the minister accepted.

Over the years, we lobbied hard to qualify for GSP+ status to secure better terms of trade for Pakistan in EU but did not succeed. We, however, cannot afford to give up. Now we are engaged in bilateral trade talks with EU and succeeded in persuading them to form a sub- group to look into Pakistans trade related demands. In May this year the sub-group met in Islamabad and on October 16 the second round was held in Brussels. We try to sell Pakistan as a high growth country with a promising economic future, the minister worried for dwindling textile export growth disclosed.

He was sounding disappointed with the stubbornness of the West that refused to oblige to, what he calls, just and logical demands of Pakistan, despite its role in West sponsored war on terror.

Pakistans tariff regime is liberal. Those are actually non-tariff barriers that are coming in way of achieving better terms of trade for Pakistan, Tanvir Ahmed Sheikh, President Federation of Chamber of Commerce and Industry said responding from abroad to a call by this scribe.

He viewed the political system in place in the country to be the cause that earned Pakistan ire of leaders of powerful western countries with attractive markets. The private sector is suffering from the discrimination meted out to them in developed markets. The government should do all it takes to get us terms that offer the manufacturers even playing field in the preferred markets with our competitors, he said articulating his concern for the difficulties that the textile exporters are facing in Europe.

The trading partners are demanding restoration of democracy that local business class and other privileged segments did not find so comfortable to work with in the past. It is their dilemma, they are not enthusiastic about democracy but need markets abroad to sustain their business that is denied to them because of the lack of democracy, an expert said.

How the private sector reconciles its two positions is hard to understand? It is, for the time being, leaving no stone unturned and is reaching out to all relevant quarters to get assurance that rules of the game that are tilted to suit its interests, will not be changed with possible political changes in Islamabad.

The economic diplomacy has become a key element of a countrys foreign policy targeting to protect and promote her commercial interests in an era of globalisation and to face the challenges and exploit opportunities thrown up by a fast integrating world. The question is how far is it succeeding?

The long wait for market access -DAWN - Business; October 29, 2007


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## Neo

*Creating edible oil zone in Potohar plateau​*
ABOUT two-thirds of the domestic requirements of edible oil are met through imports. Its import increased from 1.197 million tones in 2001-02 to 1.695 million tones during 2005-06.

A huge amount in foreign exchange is spent every year on imports, which can be cut significantly by enhancing domestic production of edible oil seeds. And the Potohar area has great potential for growing edible oil crops.

Agriculture in Potohar area is totally dependent on rainwater. The insufficient and uneven distribution of rainfall increases the risk involved in crop production. Water scarcity coupled with land fragmentation has lowered farmers income from wheat to such an extent that they consider it a part time business only.

However, there is a large contingent of oilseed crops that have proven to be promising in the area, which include rapeseed, mustard, groundnut, sunflower, sesame and olive.

It is desirable to look at the Potohar agriculture from entirely a new perspective, just like rice zone and cotton zone, an edible oil zone can be created in this area. The only need is to install oil expellers and processing units for brassica, groundnut, sesame, sunflower, and olive in Potohar.

Such a move would help boost oilseed production and help farmers make more money out of their lands, and reduce the import bill.

While some of the oilseed crops are grown in the area, these cannot compete with common cereal and cash crops for lack of market. All efforts to proliferate oilseed crops will go waste until farmers find better market of their produce, which can be provided by installation of oil expeller. The success stories can be seen in case of sugar mills. Where there is a sugar mill, farmers prefer to grow sugarcane, where corn-processing units have been set up, farmers have started growing more corn.

Factories themselves ensure production of the required crop by providing incentives to the growers so that they may not fall short of raw material.

Rapeseed and mustard have been grown for oil production in Potohar for years. However, the oil was not fit for human consumption because of its pungent smell and bitter taste due to presence of toxic compound called erucic acid.

Recently, cultivars named canola have been evolved whose oil is fit for cooking and human consumption. Rapeseed and mustard have direct competition with wheat, as both are grown in the same season.

Farmers prefer to grow wheat, as it is the staple food and subsistence crop. Rapeseed monoculture on large blocks of five to 10 acres is rare. It is now diverging mostly into intercrop with winter fodders and wheat and cash crop in Zaid Kharif season.

Peanut is an important oilseed crop of the dry farming system. Its oil is edible and serves as excellent cooking oil. The nuts (un-shelled) have 33 per cent oil. It is free of toxic compounds and contains no linolenic acid, which causes oxidative rancidity (off-flavour) in other vegetable oils.

Groundnut requires light soils, which is necessary for the penetration of the flower pegs into the soil for pod formation. Light soils also offer easy digging and minimum harvest losses. Due to this specific requirement, its cultivation remained confined to sandy and light soils, which are abundant in Rawalpindi division.

Sunflower seed contains 25-32 per cent oil. It was introduced in early sixties as an oil crop. Its expansion remained restricted due to the absence of systematic follow up and adequate market mechanism.

Sunflower was grown on maximum area of 144,190 hectares, during 1998-99, with 194,540 tons production. During 2002-03, it was grown on an area of 107,720 hectares producing 128,530 tons seed.

Sunflower oil is comparable to olive oil. It is rich in linoleic acid, the essential fatty acid. Hence it is valuable cooking oil. It can be successfully grown in summer on fallow lands.

Safflower is a low moisture-loving crop and therefore, can do better in rain-fed areas and on residual moisture. It has deep roots and can meet its water requirements from zones as deep as two to three meters.

Because of the same reason, it can help reclaim soils with high water table. However, the spiny nature and long maturing period of the crop, subdue its promotion and acceptance even in the presence of such strong advantages. Mechanisation in the harvest or production of new spineless varieties can help to overcome this constraint.

Sesame is one of the most ancient oilseed crop grown in the sub-continent. It requires more heat and light but is sensitive to low temperature.

Its seed contain 45 to 55 per cent oil. The oil is of good quality, odourless and not liable to become rancid due to the presence of sesamolin in the oil, which on hydrolysis yields a powerful antioxidant sesamol.

The most attractive trait in sesame is its very short duration, besides its tolerance to marginal lands. Therefore, it has large scope for expansion in rain-fed areas.

Last but not the least, olive, a popular oil crop of the world, is well known for its cooking oil. The domesticated varieties of olive can be planted successfully in the Potohar area.

Creating edible oil zone in Potohar plateau -DAWN - Business; October 29, 2007


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## Neo

*Rural dairy farming and alleviation of poverty​*
THERE are about 125 million livestock in the country, of which 50 per cent are large ruminants (cattle and buffaloes) and 50 per cent small ruminants (sheep and goats) which is growing at a rate of 35 per cent annually.

Punjab and Sindh are the major holders of the livestock i.e. 52 per cent and 26 per cent respectively with the best milch breeds of cattle and buffaloes. The area is suitable for dairy farming with a lot of potential for its growth. The sector is important both from food security point of view and job opportunities for around 10 million people of Sindh. The country is earning about Rs60 billion from dairy export every year.

About 75 per cent of the rural population is engaged in livestock rearing and its livelihood depends on this important sector.

Livestock contributes about 9.4 per cent to the GDP, and 40 per cent value addition to agriculture sector. More than 90 per cent farmers are small holders and possess about 1-4 animals. Hardly five per cent have more than 100 animals and are busy in their farming business at commercial level.

Production of livestock products per year is as under:

The per capita per annum availability of milk in the country is 80.5 litres, and meat 16.5 kg which is far below the minimum required level of 27.5 grams of protein daily. Because of the acute shortage of animal protein in diet, people are prone to various diseases particularly in the less developed areas where the poor live.

The rural areas of the country are suitable for livestock rearing and the people, both male and female, have the knowledge of rearing livestock. It is, therefore, necessary that they are provided with facilities to own livestock and rear them properly with the following objectives:

To increase milk and meat production; provide jobs to unemployed rural people, specially rural women; increase income of rural people; alleviate poverty in rural and less developed areas; help develop rural areas and eradicate social evils; provide food security; increase efficiency of agriculture sector; provide security against crop failure; reactivate closed milk plants; improve milk collection system and increase export earning.

Each farmers family should be provided with a credit facility from agriculture bank/or any other commercial bank on easy terms and condition like takawi loan for purchase of 10 milking animals i.e. six buffaloes and four cows as mixed dairy farming is more profitable. These dairy farms should be provided with required high protein diet so that the milk contains more than six per cent fat. The recovery of credit may be started after one month from the date of purchase of animals on weekly basis through a planned and well-established system.

In the first phase, in each district about 5,000 farmers should be provided with such credit for purchase of 10 milking animals (newly calved) i.e. about Rs0.5 million including money for the purchase of cans, ropes, chains, buckets and other relevant accessories with 15 days ration / fodder etc.

Each farmer would thus manage to produce about 40 to 50 litres of milk a time and 100 litres a day. This way each district will produce an extra 0.5 million litres of milk a day. Due to improved management and availability of feed in the area production of milk would increase by 30 to 40 per cent.

Districts for dairy farming and animal breeding should be carefully selected for the purpose i.e. Malir in Karachi, Hyderabad, Badin, T.M. Khan, Tando Allah Yar, Matiari, half of Sukkur and half of Mirpurkhas, half of Jamshoro, Dadu, Naushehro Feroze, Shikarpur, Larkana, Sukkur and Ghotki in Sindh. This way about 7.5 million litres of milk would be produced daily and about 350,000 male and 350,000 female cow and buffalo calves would be produced yearly with more manure for agricultural land.

To purchase milk from farmers and provide them technical facilities, a concept may be adopted based on the pattern exercised in India, where milk collection all required services are provided through one-window operation at a centre called dairy development and extension centre.

Every village with a population of about 500 farmers should be provided with a dairy development and extension centre. The centre should register the farmers of the area and provide them with facilities of milk collection; supply of processed feed; artificial insemination service; health services; parasite control; natural breeding services through high pedigreed bulls; supply of multi-cutting, fodder seeds; credit facilities; and arranging cattle shows to create a sense of competition among the farmers. The centre should also arrange training of farmers both male and female on modern farming system.

Animal health, parasite control, breeding and training services should be provided free of charge, where as other services should be provided on no-loss and no-profit basis.

These dairy development and extension centres should be linked with milk plants (at least 30 centers with one milk plant). These milk plants should arrange credit facilities through banks on easy terms and conditions and collect milk / from these centers, through tankers and arrange training of milk collectors and technical persons working at the centres. Modem techniques of livestock management and production, competitions should be arranged among these centres and awards ceremonies held for best workers, milk collectors, farmers and fodder growers.

The recovery of credit, feed and other service charges should be made from the income of milk on weekly basis with 1-2 per cent additional charge for development of the area like, roads, school buildings, furniture, medical and maternity facilities etc. in consultation with the farmers / members of the centre.

New systems of milk marketing on pattern of India may be introduced i.e. sale through milk booths, both in localities of the rich and the poor, with high and low fat contents along with other products like, yoghurt, ice cream, ghee, lassi etc.

The programme, if introduced, would upgrade the livestock of the country by introducing high yielding animals and specially breeding bulls in the farming system, and modernise the technology of keeping animals healthy and productive.

Through this project in addition to other benefits, about 75,000 unskilled and about 25,000 skilled workers may be engaged in dairy jobs.

Rural dairy farming and alleviation of poverty -DAWN - Business; October 29, 2007


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## Spring Onion

*Pakistan cbank says may hit 7.2 pct 07/08 growth target*

KARACHI, Oct 29 (Reuters) - Pakistan may achieve its economic growth target of 7.2 percent in fiscal year ending June 2008, the central bank governor said on Monday.

"The economy will probably grow in kind with real GDP (gross domestic product) projection of 7.2 percent," Shamshad Akhtar said at a news conference to unveil the central bank's annual report for fiscal year 2006/07.

Akhtar said the current account, which balloned to $7.2 billion or 4.9 percent of GDP in 2006/07, was manageable but remained a challenge due to a slowdown in exports.

"The external current account, though sustainable in the short-term, remains the single-largest challenge," she said.

Weak exports pushed the country's trade deficit in the fiscal year 2006/08 to $13.49 billion, an increase of 11.4 percent over the previous year.


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## Spring Onion

*Pakistan cbank sees 07/08 c/a deficit near 5 pct of GDP*

KARACHI, Oct 29 (Reuters) - Pakistan aims to keep its current account deficit close to 5.0 percent of gross domestic product for the fiscal year ending June 2008, compared to 4.9 percent the previous fiscal year, the central bank said on Monday.

"For this year (2007/08) the target for the current account is close to 5 percent of GDP," Governor Shamshad Akhtar said at a news conference to unveil the central bank's annual report for fiscal year 2006/07.

Akhtar said the current account deficit, which ballooned to $7.2 billion or 4.9 percent of GDP in 2006/07, though manageable in the short-term, remained the single-biggest challenge due to a slowdown in exports.

Weak exports pushed the country's trade deficit in the fiscal year 2006/07 to $13.49 billion, an increase of 11.4 percent over the previous year.

*Net foreign investment inflows to Pakistan have also eased in recent months, falling 10.8 percent to $990.1 million in the three months from July to September, after a record $8.4 billion in the whole of 2006/07. *


Pakistan Business


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## AgNoStiC MuSliM

^^^
The drop in foreign investment inflow is most probably a short term phenomenon linked to the political instability - the situation will probably start improving once the SC rules on Musharraf's constitutionality, and especially after the Elections.


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## Spring Onion

AgNoStIc MuSliM said:


> ^^^
> The drop in foreign investment inflow is most probably a short term phenomenon linked to the political instability - the situation will probably start improving once the SC rules on Musharraf's constitutionality, and especially after the Elections.




Agreed Agno But 
Though i am not good at Economy things but i guess these FDI may be good for short spane of time adding to our economy and providing employments in relative sectors but in the long run its the foreign companies that get the maximum benefit out of Pakistan to their native nations.
In the start they invest and after getting strong footing the flow of money truns outside Pakistan.

Isnt it ??

Or if my perception is wrong than do correct me.

Jana


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## Neo

Not necessarily Jana Jee, only the profit will return to the investor not the infrastructure. In emerging countries like Pakistan usually the gained profit is reinvested into the country as long as the returns remain high.

The presence of multinationals is good for any country making her entrance into globalisation since it will only enhance networking throughout the globe.
We've seen it happen in Korea, Singapore, China and Malaysia and its happening in India and Pakistan now.

We have more to gain from FDI than to lose.


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## Spring Onion

OK got to some extent Neo.

Tell me many brands of international products manufactured in a second country instead of the origion of the product, how much benfits the manufacturing country and the origional company.

One more question the Economic growth is nice but what about Cost push Inflation ??? Isnt it that with high growth we also face cost push inflation ?


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## Neo

Jana said:


> OK got to some extent Neo.
> 
> Tell me many brands of international products manufactured in a second country instead of the origion of the product, how much benfits the manufacturing country and the origional company.


You will be surprised to learn how many American, British, German or Japanese brands you buy are actually manufactured in countries like China, Korea, Brasil or even Pakistan!
From garments, cosmetics and healthcare products to high tech manufactured electronic goods, you'll find those multinationals doubling the size of their production and multipying their profits by shifting production to cheaper and developped markets.



> One more question the Economic growth is nice but what about Cost push Inflation ??? Isnt it that with high growth we also face cost push inflation ?


Relatively high inflation is comon to emerging economies like Pakistan since the demand for consumers goods doesn't always meet the supplyline from home and results into higher import hence higher prices.

To curb inflation we need to enhance production and effeciency of locally manufactured goods, provide better infrastrucure for these goods to reach the mass and to replace many imported items by local brands which can be produced way cheaper by our own industry. Also keeping strategic deposits or reserves in food items is a good way to secure supply at all times.

Just for the record, Pakistan imports 67% of its edible oils from abroad but we have the suiteable climate and know how to reach selfsufficiency.
Government should interfere in this and promote industrial growth in area's where we have the potential to become self reliant.

There's much more we can do and believe me current governemt is poised to fight inflation and bring it back to 5% within next five years.


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## Spring Onion

Neo said:


> You will be surprised to learn how many American, British, German or Japanese brands you buy are actually manufactured in countries like China, Korea, Brasil or even Pakistan!
> From garments, cosmetics and healthcare products to high tech manufactured electronic goods, you'll find those multinationals doubling the size of their production and multipying their profits by shifting production to cheaper and developped markets.



Yes i know and that is why i had asked you the question beacuse it doubles their production as well as benfits beacuse it involves cheap labour and saves the cost of transporting the products.
But i have a question despite this we get the products at relatively high price as compare to other countries.


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## AgNoStiC MuSliM

Jana said:


> Yes i know and that is why i had asked you the question beacuse it doubles their production as well as benfits beacuse it involves cheap labour and saves the cost of transporting the products.
> But i have a question despite this we get the products at relatively high price as compare to other countries.



That is complex question to answer, because the situation is different in different sectors of the economy. But take the automobile sector for example - the primary reason behind the higher cost of cars is the "deposit" or whatever the dealers charge on top of the MSRP. This is a consequence of both greed and higher demand than supply.

My personal opinion is that a lot of industrialists in Pakistan are still stuck in the old mentality of making money in the short term the quickest way possible, rather than investing in capacity increase, modernization, efficiency in systems etc. Of course this isn't completely their own fault, a stagnant, relatively small Pakistani economy never really provided them with the incentive to do any of the above.


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## Neo

*Widening current account deficit, high inflation serious challenges: SBP ​* 
KARACHI (October 30 2007): Pakistan''s economy recorded one of the fastest growth rates in Asia during the 2007 fiscal year by achieving seven percent of real gross domestic product (GDP) growth This was stated by State Bank of Pakistan Governor Dr Shamshad Akhtar at a press conference on the occasion of the issuance of the State Bank''s annual report 2006 here on Monday.

GDP growth accelerated to 7percent in FY07.

Investment to GDP ratio at record 23 percent was complemented by a surge in domestic private investment and record FDI flows.

In proportion to GDP, national savings rose, external debt burden declined, total revenue increased, budget deficit stayed at FY06''s level of 4.3 percent of GDP.

-- Central bank chief expresses concern over present tax to GDP ratio.

-- Believes present expansionary fiscal policy poses a dilemma.

-- Underscores the need for developing long-term debt markets.

-- Declares that subsidies are unsustainable given the shrinking space available to government.

Akhtar said that investment to GDP ratio rose to a record 23 percent in FY07 from 21 percent in FY06, which have contributed by a surge in domestic private investment and record foreign direct investment (FDI) flows. As a result, the economy looks well poised to continue on a high growth trajectory in coming years.

However, despite the improvement, the investment to GDP ratio remains low in Pakistan. Governor SBP showed concern over the tax revenue ratio in the GDP, which still stands at 10.2 percent as against the 9.9 percent during FY06.

The present expansionary fiscal policy poses a dilemma. On one hand, the high fiscal deficit in recent years is driven primarily by development spending, particularly on infrastructure, which is quite necessary if the growth in the economy is to be sustained, she said.

Central bank believes that present expansionary fiscal policy poses a dilemma and it is believed that it would further grow the economy, while it underscores the need for developing long-term debt markets.

More specifically, and in proportion to GDP, national savings rose, the external debt burden declined and total revenue increased while the budget deficit stayed at last year''s level of 4.3 percent of GDP, she said.

However, key macroeconomic challenges remain to be fully addressed yet. The current account deficit widened further in FY07, the tax to GDP ratio is still very low, and inflation remained stubbornly high, showing only a sluggish decline in FY07, she added.

She said the economy would continue to grow strongly during the 2008 fiscal year 2008, but warned that external current account deficit and inflation would be the key challenges to the economy.

The SBP Governor said that domestic prices of key food staples had already been affected by rising international prices, and if 2008 financial year harvest of food crops remained below expectations, the situation could be aggravated.

Akhtar said that the first quarter data suggested that inflationary pressures were, however, strong, as efforts for reverting the food prices to double digits in September 2007 had not been made.

Key risks to the inflation outlook appeared to be the energy and food staple prices in the wake of rising international prices, enhancing production in 2008 financial year would be critical for easing sonic of the supply constraints, both to ease inflationary pressures as well as to provide for export growth.

"This is expected to keep domestic inflation close to the annual target in 2008 financial year, however, the domestic economy was partially insulated from the rise in international energy prices during 2007 financial year due to the government''s decision not to pass on to customers the increase in the prices of key fuels.

"This policy may not be sustainable if energy prices increased further," she added. The SBP Governor said private sector credit off-take had been low in the first quarter, partly reflecting the seasonal trends and partly because the companies are positioning themselves to gear up as the emerging environment unfolds.

"Foreign inflows remained in line with 2007 financial year trends in the first quarter and are likely to gain momentum in the second half of the year," she added.

Given that domestic sugar stocks could be exhausted by November 2007, any such delay in the sugar-crushing season could lead to a price hike. However, administrative measures such as extension in the network of utility stores and pro-active imports would help alleviate any short-term shortages, she said. Pakistan''s current account deficit, though sustainable in the short-term, would remain a key challenge for the economy.

Further deceleration in imports growth, together with a small improvement in export growth, and a robust rise in remittances underpinned the projected improvement in the current account deficit for 2008 financial year, while the deficit was expected to be larger than the 2007 financial year figure in absolute terms.

She said that aggressive monetary tightening should help contain demand pressure in the economy, with monetary growth forecast to remain within the indicative targets.

Uncertainly in the global oil prices and increasing commodity prices, which had been on the rise in the last few weeks, an anticipated increase in the import of telecom following China''s investment in Pakistan''s telecom sector, and the likely rise in power generating machinery imports might put upward pressure on the import bill, she added.

She said that it was likely that the GDP, inflation, imports, fiscal deficit and current account deficit targets would be achieved, while the targets of export, monetary assets would not chase.

Current SBP projections, based on the limited data availability to date, suggested that the growth was anticipated to be broad-based, with the strong contributions expected from agriculture and the services sector, she said.

"It has projected that the GDP growth target would be 7-7.4 percent, inflation 6-7 percent, monetary assets (M2) 13.2-14.2 percent, fiscal deficit around four percent and current account deficit growth would be 4.8 percent during the current fiscal year," she said.

During 2008 fiscal year, export would be 18.3 billion dollars as compared to target of 18.9 billion dollars as per balance of payment, while imports would be 28.9 billion dollars as against the target of 29.6 billion dollars.

"The slowdown in monetary growth is expected to be reflecting mainly through growth in private sector credit, lower government borrowings from the SBP, and slower net growth in net foreign assets (NFA) of the banking system, consequent to changes in the monetary policy framework in 2008 financial year," she said.

Regarding the changes in the financial act by providing some financial regulation responsibilities to the SECP, she made clear that SBP was solely responsible and regulator of the financial sector and would continue to regulate the sector in the future.

Akhtar also said that it was worth mentioning that in the coming years, the country was likely to face higher burden of debt-servicing as repayments of the rescheduled non-ODA Paris club debt stock would resume from 2008 financial year, and the maturities of the Eurobond, issued in 2004 financial year and Sukuk issued in 2005 financial year would become due in 2009 financial year and 2010 financial year respectively.

In addition, interest payments on various Eurobonds, issued recently, were likely to add to debt-servicing burden in coming years. Therefore, to maintain the same debt-servicing capacity, the country ''s foreign exchange earnings, and particularly export earnings needed to grow faster, she said.

She said that presently the country''s external debt stood 40.1 billion dollars during 2007 financial year and an important feature for 2007 was the sharp rise of 57.1 percent in interest payments on domestic debt. The strongest contribution to the increase was probably from maturing high-cost, zero coupon instruments (DSCs) issued in late 1990s.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Major economic targets achieved ​* 
KARACHI (October 30 2007): Pakistan has achieved major economic targets, including real gross domestic product (GDP) growth, agriculture, services sector, investment, tax revenue during 2007 fiscal year.

At the same time it missed the targets in sectors like manufacturing, large scale, consumer price index (CPI), sensitive price index (SPI) monetary assets (M2), import, export, credit to private sector, budgetary expenditure and budgetary deficit.

The State Bank of Pakistan, in its annual report on the state of economy, said that Pakistan''s economy witnessed a moderate recovery during 2007 financial year with real GDP growth reaching the 7.0 percent, as compared to 6.6 percent growth seen in 2006 financial year.

"The Pakistan is among countries in the region, which have achieved GDP growth at the rate of seven percent and other two countries are China and India," it said.

"This is the fourth successive year of sustained high growth in the economy, with the average annual growth accelerated to seven percent during 2003-07 period. The continued strong performance of the services sector made the major contribution to the 2007 financial year''s outcome, while growth in agriculture and industry also witnessed improvement over the previous year. "The investment to GDP ratio rose to a record 23 percent in 2007 financial year from 21 percent in 2006 financial year.

"This was contributed by a surge in domestic private investment and record foreign direct investment (FDI) flows. As a result, the economy looks well poised to continue on a high growth trajectory in coming years. "However, despite the improvement, the investment to GDP ratio remains low in Pakistan," the report said.

Although the savings to GDP ratio had also increased to 18 percent during 2007 financial year compared with 17.2 percent in the preceding year, it was still low as compared to regional and international standards, said the report.

"To increase the savings rate, it is necessary to expand the network of banks, microfinance institutions, and postal savings to the far-flung areas with simple procedure and friendly atmosphere for small depositors. In addition, savings schemes for school/college students could also help inculcate savings behaviour from an early age," annual report added.

Agriculture sector witnessed a strong growth of five percent in 2007 financial year as against the target of 4.5 percent. "The recovery in the agricultural growth during 2007 financial year is principally driven by a remarkable growth of 7.6 percent by major crop sub-sector.

"A striking feature in 2007 financial year is that the yields obtained on almost all-important major crops were either at or near 10-year highs. Apart from favourable weather, the improvement in yields in recent years was probably helped by tile improved access to credit and supportive government polices (the latter includes ensuring better seed availability, provision of subsidy on DAP fertilisers.

"The industrial sector witnessed a moderate recovery, with 6.8 percent growth during 2007 financial year compared with five percent in 2006 financial year. "This was the second consecutive fiscal year when growth targets for industrial sector remained unachieved. Within the industrial sector, the highest growth was observed," the report observed.

In the construction sub-sector with value-addition rising by 17.2 percent in 2007 financial year, compared with only 5.7 percent in 2006 financial year. The SBP report said that LSM growth remained a significant contributor to the GDP growth during 2007 with value-addition rising by 8.8 percent, down from the 10.7 percent growth in the preceding year and as against the target of 11 percent.

The electricity and gas distribution sub-sector continued to record losses in 2007 financial year, with the value-addition by this sub-group falling by 15.2 percent in 2007 on top of the decline of 23.8 percent in the preceding year.

For yet another year, the services sector growth remained well above target; the eight percent increase in value-addition during 2007 financial year was substantially above the 7.1 percent target. The 2007 financial year target had been set lower than the 9.6 percent growth recorded in 2006 financial year.

The sustained strong growth by the services sector for the last six successive years has contributed to a structural shift in the economy, with services contributing over half of GDP in 2007 financial year.

The sustained high pace of growth in the economy is also reflected in a record level of investment during 2007. The total investment to GDP ratio rose to a record level of 23 percent in 2007, significantly higher than 21.7 percent seen in the preceding year as well as the annual target of 21.5 percent, the SBP said in the report.

"This impressive performance is a result of continued strength of domestic demand, a sharp rise in foreign direct investment (FDI) as well as a healthy increase in the public sector development programme (PSDP).

"Country''s budgetary expenditures and deficit has also surpassed the annual target by reaching 19.2 percent and 4.3 percent of GDP respectively as compared to targets of 17.5 percent and 4.2 percent of GDP.

"Inflationary pressures visibly declined in the domestic economy during the initial months of 2007, pulling down the inflation numbers for the period below that in the preceding fiscal year. This reflects the impact of weaker growth in the prices of non-food components," the SBP annual report said.

However, the targets of the CPI and SPI had not achieved as the CPI stood at 7.8 percent as against the target of 6.5 percent, while CPI stood at 9.4 percent during 2007 financial year.

Inflationary pressures remained strong throughout 2007 financial year despite a visible slowdown in non-food inflation. Strength of food price inflation drove the annual average CPI inflation for 2007 to 7.8 percent, resulting in price index slippage by 1.3 percent relevant to the annual target of 6.5 percent.

Food inflation remained in double digits for most of the months of 2007 financial year due to the following reasons:

-- Rising food prices in international market.

-- Domestic supply shortages of some important minor crops.

-- Higher demand on the back of increasing income levels.

"The latter indicates a significant contribution by policies to contain excessive growth in aggregate demand. Despite these gains, the eventual 2007 financial year inflation outcome was disappointing, given that the average annual CPI inflation of 7.8 percent was considerably higher than the 6.5 percent target for the year.

"A surge was observed in direct tax collections and in non-tax revenues during 2007 financial year, but the fiscal deficit for the year rose to 4.3 percent of GDP, a little higher than the target of 4.2 percent," annual report said.

"As a result of a relative slowdown in the growth of the current account deficit and a record increase in investment inflows, Pakistan''s external account surplus improved substantially to 3.7 billion dollars during 2007 financial year as compared to 1.3 billion dollars in 2006 financial year.

"The 2007 financial year moderation in the growth of current account deficit is attributable mainly to a sharp fall in the growth of imports and strong increase in remittances," it said.

However, the impact of lower import growth (8.1 percent) in 2007 financial year on the trade deficit was lost due to the unanticipated weakness in exports, it said.

Export growth fell from 14.3 percent in 2006 financial year to only 3.2 percent in 2007 year. The slowdown in textile exports was the major contributor to the decline in the overall export growth, but the accompanying fall in exports of non-textile manufacturers and commodity producing sector made matters worse, it said.

Nevertheless, an impressive rise in the foreign private investment continued to moderate the impact of growing current account deficit in 2007 financial year. Specifically, financial account surplus increased substantially from 5.8 billion dollars in 2006 financial year to a record surplus of 10.1 billion dollars during 2007 financial year, the reports said.

This improvement in the financial account was largely contributed by equity flows rather than debt, it said, adding benefiting from the substantial surplus in the external account, Pakistan''s overall reserves increased by 2.5 billion dollars in 2007 as compared to 524 million dollars rise in 2006.

After persistent widening during last four years, the difference between import and export growth seems to be converging during 2007 on the back of substantial slowdown in import growth, from 38.7 percent in 2006 to 6.9 percent in 2007.

However, this welcome slowdown in import growth could not help in reducing the trade deficit due to a concurrent slowdown in export growth from an average 15.9 percent during last four years to 3.4 percent during 2007. As a consequent, the trade deficit reached an all time high of 13.5 billion dollars during the period under review.

Nonetheless, the trade deficit as compared to size of economy slightly declined from record high level of 9.46 percent during 2006 to 9.31 percent during 2007, the SBP said in the annual report. "The country has missed export target and just 3.4 percent growth witnessed in the exports as against the target of 13.1 percent, while the imports show 6.9 percent growth during last fiscal as compared to target of two percent decline.

"On the import side, uncertainly in the global oil prices, increasing commodity prices, anticipated increase in the import of telecom following China''s investment in Pakistan''s telecom sector and likely rise in power generating machinery may put upward pressure on the import bill," the SBP report added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*SPI-based inflation up 8.68 percent ​* 
ISLAMABAD (October 30 2007): The unhindered increase in wheat and wheat flour prices, as pointed out in Sensitive Price Indicators (SPI), has made it difficult for the poor to make both ends meet with chapati price going up from Rs 3 to Rs 4.

The data on weekly SPI released by the Federal Bureau of Statistics here on Monday shows that per kg wheat price has gone up from Rs 14.61 on October 18 to Rs 15.03 on October 25. As a result, the price per kg of average quantity wheat flour touched Rs 16.59 from Rs 16.23 of last week.

The volatility in the prices of essential commodities was a great concern for the poor, as it was eroding their monthly budget. Every week, they were put in a different situation to deal with the price of every commodity as one after another was going up. During the week under review, the prices of tomatoes, onion and chicken declined, while the prices of egg, red chilli, mustard oil and bath soap soared high.

The SPI-based inflation was recorded at 8.68 percent up on the week ending October 25 against the corresponding period last year, but declined to 163.65 from 164.96 last week.

The inflation was recorded 10.75 percent on October 25 for the income group earning Rs 3,000 and 10.61 percent for between Rs 3,000 to Rs 5,000 earners. Food experts believe that if unabated food inflation is not checked in time it could be disastrous in the years to come.

The SPI bulletin, based on data, collected from 17 urban cities across the country on 53 essential items, showed increase in the prices of 14 food items, decrease in 11, whereas prices of 25 items though remained unchanged yet dearer over the same period last year.

The FBS records sharp decline in the price of tomatoes, from Rs 45 during the last week to Rs 32 on week ending October 25, but it was surprising to note that FBS records average price of plain bread medium-size in Rawalpindi and Islamabad Rs 16, in fact, the price of bread is Rs 25 in the twin cities.

Further analysis of the data shows that FBS claims that rice Irri-6 is available at Rs 22 per kg in the twin cities. The fact is that no brand of rice is available at Rs 22 per kg.

Similarly, the price of milk is different from what was reported by the FBS. Milk in the twin cities is being sold at over Rs 30 per liter, but FBS claims its price as Rs 28 per liter. There is also difference between actual prices and the prices reported by the FBS of some other commodities.

The data when compared to last years shows that eggs are 38.13 percent dearer over the same period last year, red chillies 51 percent, mustard oil 45.17 percent, wheat flour 26.457 percent, wheat 27.37 percent and bath soap 22.04 percent.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Debt, liabilities rise by 10 percent in fiscal year 2007 ​* 
KARACHI (October 30 2007): Country's total stock of debt and liabilities (TDL) rose by 10 percent in FY07 to reach Rs 5,023.6 billion. The major causative factors for this increase in TDL were the rising level of country's current account deficit and a large fiscal deficit that raised the financing needs of the country.

State Bank of Pakistan in its annual report on economy has warned that in the coming years, country is likely to face higher burden of debt servicing as repayments of the rescheduled non-ODA Paris club debt stock will resume from FY08, and the maturities of the Eurobond issued in FY04 and Sukuk issued in FY05 will become due in FY09 and FY10 respectively.

In addition, interest payments on various Eurobonds issued recently are likely to add to debt servicing burden in coming years. Therefore, in order to maintain the same debt servicing capacity, the country's foreign exchange earnings, and particularly export earnings need to grow faster.

Despite this increase in the TDL stock, the ratio of total debt and liabilities to GDP continued to decline which shows country's improved debt servicing potential.

During FY07, 62.5 percent share of the new inflows was on floating interest rates, including $750 million 10-year Eurobond issued by the country and a substantial portion of inflows from ADB.

Pakistan's external debt and liabilities (EDL) rose to $40.1 billion during FY07, representing a $2.9 billion increase over the stock in FY06. The rise in the EDL stock constituted inflows from IDA, ADB, and the issuance of a new Eurobond. Private loan inflows also had a sizeable contribution in the increase of the debt stock. Encouragingly despite this rise in the stock of EDL, Pakistan's EDL to GDP ratio continued to improve, reflecting country's improved debt servicing ability, central bank said.

Pakistan's domestic debt stock increased sharply during FY07, registering a growth of 11.9 percent - much higher than the average growth of 7.7 percent during the preceding four years. This rise in stock is driven by the growth in the floating debt category, which accounted for nearly two-thirds of the rise in domestic debt in FY07, central bank added.

However, despite the raise in the TDL, SBP said "the TDL to GDP ratio for FY07 remained significantly below the target of 60 percent set for the country in the Fiscal Responsibility and Debt Limitation Act 2005 to be achieved in FY13."

The SBP said that an important feature for FY07 is the sharp rise of 57.1 percent in interest payments on domestic debt. The strongest contribution to the increase is probably from maturing high-cost, zero coupon instruments (DSCs) issued in late 1990s.

A significant share of the inflows received during FY07 had a long term maturity ranging from 15-40 years. The improved maturity structure of loan inflows to some extent offsets the effects of the floating interest rate structure of these loans, annual report said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Fourth successive year of sustained high growth in economy: SBP ​*
ARTICLE (October 30 2007): Reproduced alongside is the executive summary of State Bank of Pakistan Annual Report 2006-07 released by SBP Governor Dr Shamshad Akhtar on Monday. Pakistan's economy witnessed a moderate recovery during FY07 with real GDP growth reaching the 7.0 percent target, as compared with 6.6 percent growth seen in FY06.

This is the fourth successive year of sustained high growth in the economy, with the average annual growth accelerated to 7.0 percent during FY03-07 period. The continued strong performance of the services sector made the major contribution to the FY07 outcome. Growth in agriculture and industry also witnessed improvement over the previous year.

The disaggregation of the aggregate demand presents an encouraging scenario. Firstly, the growth in real private consumption remained stable, inching up from 3.3 percent during FY06 to 4.1 percent. Secondly (and more importantly) real gross fixed capital formation registered a double digit growth for the third consecutive year, accelerating to 20.6 percent in FY07, due to higher FDI inflows and an acceleration in public investment on the back of a higher PSDP. As a result of the increase in public and private investment, the investment to GDP ratio rose to a record 23.0 percent in FY07.

*AGRICULTURE:* 

Agricultural growth witnessed a recovery in FY07. This was primarily due to a considerably improved performance by the cropping sub-sector that overshadowed the impact of a moderation in the growth of the livestock sub-sector. The contribution of the remaining sub-sectors to overall agricultural growth was not material.

A sharp rise in value addition by crops, in turn, centered essentially around three major crops, ie, wheat, sugarcane and gram, all of which recorded exceptionally strong growth during FY07, comfortably offsetting the disappointing growth in two other cash crops (cotton and rice).

The growth of the livestock sub-sector in FY07 is one of the strongest in a decade (exceeded only by the exceptional FY06 growth). Moreover, consequent to robust demand, this sub-sector is attracting investment in the production, processing, transportation and storage of dairy products. This augurs well for future growth prospects.

In recent years, agriculture credit disbursement has increased substantially reflecting improvements in access (as banks have aggressively expanded activities in the sector), and sustained demand (as farmers were encouraged by strong commodity prices, supportive polices and reasonable weather). This was also seen in FY07, when the annual target was exceeded by 5.5 percentage points to reach Rs 168.8 billion against Rs 137.5 billion disbursed in FY06.

*INDUSTRY:* 

The industrial sector witnessed a moderate recovery, with 6.8 percent growth during FY07 compared with 5.0 percent in FY06. This was the second consecutive fiscal year when growth targets for industrial sector remained unachieved. Within the industrial sector, the highest growth was observed in the construction sub-sector with value-addition rising by 17.2 percent in FY07, compared with only 5.7 percent in FY06. The FY07 growth is not only higher than the 7.0 percent target, it is also the second highest growth recorded by this sub-sector since FY76.

Mining & quarrying sector witnessed 5.6 percent YoY growth during FY07 which is not only higher than the 4.6 percent growth seen in FY06, but also well above the 3.2 percent growth target for FY07.

LSM growth remained a significant contributor to GDP growth during FY07 with value-addition rising by 8.8 percent, down from the 10.7 percent growth in the preceding year. This deceleration in LSM growth appears to reflect a broad moderation in external and domestic aggregate demand, as well as capacity and input constraints in some industries. The textile sector contributed almost a quarter of the increase in value-addition in LSM during FY07.

The electricity and gas distribution sub-sector continued to record losses in FY07, with the value addition by this sub-group falling by 15.2 percent in FY07 on top of the decline of 23.8 percent in the preceding year.

*SERVICES;* 

For yet another year, the services sector growth remained well above target; the 8.0 percent increase in value-addition during FY07 was substantially above the 7.1 percent target. The FY07 target had been set lower than the 9.6 percent growth recorded in FY06 taking into account the anticipated deceleration in some of the larger sub-sectors of the services group, but the performance of two sub- sectors - finance & insurance, and social & community services - proved to be much better than forecast. The sustained strong growth by the services sector for the last six successive years has contributed to a structural shift in the economy, with services contributing over half of GDP in FY07.

*NATIONAL SAVINGS:* 

During FY07, national savings rose sharply by 19.8 percent, raising its share in GDP to 18 percent, the highest in the last four years. It should be noted that the despite a rise in FY07, Pakistan's savings to GDP ratio remains quite low relative to other emerging economies. To maintain the growth momentum, there is a need of investment flows in the economy without putting pressures on external balances. This is only possible by a rise in savings in the economy. The main causes of low savings in Pakistan include low per capita income, lack of proper saving infrastructure (particularly in small towns and rural areas) and high dependency ratio.

To increase the savings rate, it is necessary to expand the network of banks, microfinance institutions, and postal savings to the far flung areas with simple procedure and friendly atmosphere for small depositors. In addition, savings schemes for school/college students could also help inculcate savings behaviour from an early age.

*INVESTMENT:* 

The sustained high pace of growth in the economy is also reflected in a record level of investment during FY07. The total investment to GDP ratio rose to a record level of 23 percent in FY07, significantly higher than 21.7 percent seen in the preceding year as well as the annual target of 21.5 percent.

This impressive performance is a result of continued strength of domestic demand, a sharp rise in foreign direct investment (FDI) as well as a healthy increase in the public sector development program (PSDP).

In real terms, total investment witnessed a growth of 20.6 percent, the highest-ever growth recorded for Pakistan. The sustained double-digit growth in real investment for three years in a row is also an unprecedented phenomenon for Pakistan. The persistent increase in real investment reinforces the view that the current economic growth momentum would continue for a longer period. However, there is a need for effective implementation of second generation reforms, focusing on institution-building, improvement in governance, etc so that the cost of doing business can be reduced substantially in years ahead.

*PRICES:* 

Inflationary pressures visibly declined in the domestic economy during the initial months of FY07, helping pull down the inflation numbers for the period below that in the preceding fiscal year. This evident deceleration in inflation, shown by all of the price indices, mainly reflects the impact of weaker growth in the prices of non-food components. The latter indicates a significant contribution by policies to contain excessive growth in aggregate demand.

Despite these gains, the eventual FY07 inflation outcome was disappointing, given that the average annual CPI inflation of 7.8 percent was considerably higher than the 6.5 percent target for the year.

The inability to achieve the inflation objective was principally due to the unexpected strength of food price inflation during the year, which considerably offset the gains from (1) the demand management policies and (2) the government subsidies that partially cushioned the domestic economy from high international oil prices.

*PUBLIC FINANCE: *

A surge was observed in direct tax collections and in non-tax revenues during FY07 but the fiscal deficit for the year rose to 4.3 percent of GDP a little higher than the target of 4.2 percent. The relatively higher fiscal deficit during FY06 and FY07 is mainly attributed to the exceptional expenditure on account of relief and rehabilitation of earthquake affected areas. In FY07 it is also supported by strong growth in current expenditure.

The large increase in current expenditure, driven by a sharp rise in debt servicing costs, overshadowed the impact of a substantial increase in revenues. The above-target 22.9 percent increase in CBR tax collection pushed up the tax-to-GDP ratio to 10.2 percent in FY07, up from 9.9 percent in the previous year. The strong growth in CBR taxes was caused by an extraordinary growth of 48.2 in direct tax collection during FY07. However, the weak performance in indirect taxes partially offset the impact of this rise. The exceptional tax collection was equally supported by 26.2 percent YoY growth in non-tax revenue.

Reliance to finance the fiscal deficit of Rs 377.5 billion was almost on external and domestic resources during FY07. The major sources of external financing during FY07 were program loans/commodity aid, project aid and borrowings from international capital market through the issuance of various bonds. Domestically, the government obtained an amount of Rs 177.8 billion that was on almost same level in FY06. But a compositional shift in financing was observed in domestic sources as in FY06 government used a large amount of Rs 97 billion from privatisation proceeds to finance the deficit that remained at Rs 19 billion in FY07.

The total provincial revenue receipts stood at Rs 483.4 billion during FY07 with tax revenue contributing Rs 400.1 billion. All the provinces recorded revenue surpluses accompanied with a substantial rise in development expenditure. The provincial share in federal tax receipts increased from 89.1 percent in FY06 to 91.6 percent in FY07.

*MONEY AND BANKING:* 

SBP continued to maintain a tight monetary policy during FY07. This was desirable to further moderate aggregate demand pressures in the economy which were still present despite continued monetary tightening since September 2004. The presence of excessive demand pressures was already obvious in terms of high inflation through most of FY06.

The inflation target for FY07 was set 6.5 percent compared to a high inflation of 7.9 percent in FY06. However, the monetary management during FY07 was complicated by the dual mandate of maintaining price stability and economic growth that required SBP to avoid significant slippage in targeted real GDP growth for FY07 that could have occurred due to excessive tightening.

In this backdrop, the monetary policy framework for FY07 envisaged a further slowdown in monetary expansion (M2) to 13.5 percent from 15.1 percent growth realised in FY06. Simultaneously, as export growth continued to weaken, SBP took measures to partially shelter strategic sectors (textiles, and exports).

In order to achieve the broad money target, SBP first raised the reserve requirements for banks and then increased its policy rate by 50 basis points to 9.5 percent. At the same time, SBP also continued to drain excess liquidity from the interbank market and maintained the overnight rates persistently close to the discount rate through most of FY07. In addition, the SBP provided support to the exporters in the form of reducing rates on export finance scheme (EFS), and a debt-swap facility for strategic sector of the economy that substantially reduced the cost of fixed investment loans acquired in recent years.

SBP monetary policy proved effective in considerably moderating aggregate demand pressures in some sectors of the economy as reflected in a visible slowdown in import demand and private sector credit during FY07. The reduction in aggregate demand was also reflected in the continued downtrend in core inflation (NFNE). More importantly, the monetary tightening was clearly not excessive, given that the real GDP growth during FY07 comfortably achieved its target. Moreover, tight liquidity conditions in the interbank market probably helped in reducing speculative and unproductive demand for credit. In this perspective, it is encouraging to see that the demand for fixed investment loans during FY07 has remained intact, even a part of the slowdown visible in working capital loans appears short-lived (as a few structural factors limited the demand and supply of these loans during the year).

Unfortunately, the impact of the slowdown in aggregate demand pressures in the economy did not translate into a decline in overall CPI inflation during FY07. Average CPI inflation for the year was 1.3 percentage points higher than the annual target, mainly because the gains from a deceleration in aggregate demand growth in some sectors of the economy were largely offset by an unexpected strength in food inflation, particularly during H2-FY07. To put this in perspective, had food inflation in FY07 remained at the average level observed in FY06 (ie, 6.9 percent), CPI inflation would have remained below the 6.5 percent target for the year.

Another problem for monetary policy was the abrupt rise in monetary aggregates during the last month of FY07, entirely caused by a surge in external receipts. As a result, M2 growth exceeded the annual target by 5.8 percentage points to reach 19.3 percent. Since the acceleration in the growth of monetary aggregates was concentrated in the last month of FY07, it probably had only a weak contribution to inflation in FY07, but is more likely to impact FY08 inflation. For that reason, the central bank undertook corrective monetary policy measures in July 2007.

A large part of the slippage in M2 target during FY07 stemmed from government borrowings. In particular, the sharp rise in net foreign assets (NFA) of the banking system during June 20075 principally reflected external financing needs for budgetary expenses of the government (such as receipts from Eurobond and GDR issues, US Aid inflows, multilateral loans, receipts against logistics support etc).

To put this in perspective, M2 growth during Jul-May FY07 was 14.1 percent which was slightly less than the nominal GDP growth of 14.7 percent for the year. This also suggests that the magnitude of slippage in M2 growth from its target would have been substantially lower had the budgetary finance from the external sector been incorporated more accurately in the monetary policy framework for FY07.

While the overall monetary indicators raised a few concerns from inflationary perspectives, financial soundness continued to exhibit improvement during FY07. More importantly, though the rise in interest rates did create some impact on the quality of loans, the stringent provisioning requirements as well as increased capital requirements did not allow the impact of loan quality on financial stability of the banking institutions. Not only did banks remain adequately capitalised, but the overall asset quality measured in terms of NPLs to loan ratio (net of provisioning) continued to decline.

*DOMESTIC & EXTERNAL DEBT: *

Country's total stock of debt and liabilities (TDL) rose by 10 percent YoY in FY07 to reach Rs 5,023.6 billion. The major causative factors for this increase in TDL were the rising level of country's current account deficit and a large fiscal deficit that raised the financing needs of the country. Encouragingly, despite this increase in the TDL stock, the ratio of total debt & liabilities to GDP continued to decline which shows country's improved debt servicing potential. The TDL to GDP ratio for FY07 remained significantly below the target of 60 percent set for the country in the "Fiscal Responsibility and Debt Limitation Act 2005" to be achieved in FY13.

Pakistan's domestic debt stock increased sharply during FY07, registering a growth of 11.9 percent - much higher than the average growth of 7.7 percent during the preceding four year. This rise in stock is driven by the growth in the floating debt category which accounted for nearly two-thirds of the rise in domestic debt in FY07. The share of short term debt continued to rise and reached 43 percent during FY07.

This rising share of short term domestic debt means increased vulnerability to adverse short-term interest rate movements, potentially rendering future debt management more difficult. An important feature for FY07 is the sharp rise of 57.1 percent in interest payments on domestic debt. The strongest contribution to the increase is probably from maturing high-cost, zero coupon instruments (DSCs) issued in late 1990s.

Pakistan's external debt and liabilities (EDL) rose to US $40.1 billion during FY07, representing a US $2.9 billion increase over the stock in FY06. The rise in the EDL stock constituted inflows from IDA, ADB, and the issuance of a new Eurobond. Private loan inflows also had a sizeable contribution in the increase of the debt stock. Encouragingly despite this rise in the stock of EDL, Pakistan's EDL to GDP ratio continued to improve, reflecting country's improved debt servicing ability. This improvement in debt ratios was probably an important factor that led to improvement in sovereign rating; Moody's up-graded country's foreign and local currency bond ratings to B1 from B2 in FY07.

Pakistan also witnessed an improvement in the maturity profile of its external debt stock in FY07. A significant share of the inflows received during FY07 had a long term maturity ranging from 15 - 40 years. The improved maturity structure of loan inflows to some extent offsets the effects of the floating interest rate structure of these loans.

During FY07, 62.5 percent share of the new inflows was on floating interest rates, including US $750 million 10-year Eurobond issued by the country and a substantial portion of inflows from ADB. The rising share of such inflows in the total debt stock calls for the need of greater prudence in the future management of country's debt burden. A higher share of flexible rate loans might translate into increasing debt servicing burden for the country in case of adverse movements in these variable lending rates.

It is worth mentioning that in the coming years, country is likely to face higher burden of debt servicing as (1) repayments of the rescheduled non-ODA Paris club debt stock will resume from FY08, and (2) the maturities of the Eurobond issued in FY04 and Sukuk issued in FY05 will become due in FY09 and FY10 respectively. In addition, interest payments on various Eurobonds issued recently are likely to add to debt servicing burden in coming years. Therefore in order to maintain the same debt servicing capacity, the country's foreign exchange earnings, and particularly export earnings need to grow faster.

*EXTERNAL SECTOR BALANCE OF PAYMENTS:* 

As a result of a relative slowdown in the growth of the current account deficit and a record increase in investment inflows, Pakistan's external account surplus improved substantially to US $3.7 billion during FY07 as compared to US $1.3 billion in FY06. The FY07 moderation in the growth of current account deficit is attributable mainly to a sharp fall in the growth of imports (that compensated for an unexpected deceleration in exports) and strong increase in remittances (that partially offset the rise in investment income outflows).

The deceleration in the imports growth was expected in the wake of falling oil prices, improved domestic production of some key food items and overall slowdown in capacity expansion. However, the impact of lower import growth (8.1 percent) in FY07 on the trade deficit was lost due to the unanticipated weakness in exports.

Export growth fell from 14.3 percent in FY06 to only 3.2 percent in FY07. The slowdown in textiles exports was the major contributor to the decline in the overall exports growth, but the accompanying fall in exports of non-textile manufacturers and commodity producing sector made matters worse.

Nevertheless, an impressive rise in the foreign private investment continued to moderate the impact of growing current account deficit in FY07.

Specifically, financial account surplus increased substantially from US $5.8 billion in FY06 to a record surplus of US $10.1 billion during FY07. This improvement in the financial account was largely contributed by equity flows rather than debt.

Benefiting from the substantial surplus in the external account, Pakistan's overall reserves increased by US $2.5 billion in FY07 compared to US $524 million rise in FY06. During FY07, Pak Rupee exhibited a mixed trend vis-à-vis benchmark currency US Dollar; depreciating by 1.14 percent in the first half and then appreciating by 0.81% in the second half of FY07. In the first half, the widening trade deficit drove the Rupee depreciation while in the second half, improved market related inflows helped Rupee to regain most of its lost ground, consequently the Rupee saw a net depreciation of 0.31 percent during FY07.

*TRADE ACCOUNT:*

After persistent widening during last four years, the difference between import and export growth seems to be converging during FY07 on the back of substantial slowdown in import growth, from 38.7 percent in FY06 to 6.9 percent in FY07. However, this welcome slowdown in import growth could not help in reducing the trade deficit due to a concurrent slowdown in export growth from an average 15.9 percent during last four years to 3.4 percent during FY07.

As a consequent, the trade deficit reached an all time high of US $13.5 billion during the period under review. Nonetheless, the trade deficit as compared to size of economy slightly declined from record high level of 9.46 percent during FY06 to 9.31 percent during FY07.

The broad based slowdown in import growth is mainly attributed to (1) decline in global oil prices, (2) the reduction in excess demand, (3) gradual absorption of one-off impact of liberalising of automobile & telecommunication sectors, and (4) improved domestic production of food items such as sugar and wheat.

On the other hand, the sudden decline in export growth is little confusing given the support to this sector in policy formulation. The poor performance of exports becomes even more worrisome when analysed in the perspective of better environment in the form of robust economic growth in the domestic and key global markets. The slowdown in export growth was also broad based as the textile exports growth declined from last four years average of 14.4 percent to only 4.9 percent during FY07, whereas non-textile export growth declined from last four years' average of 19.2 percent to only 0.6 percent during FY07.

Poor rice, fruit and cotton crops together with EU ban on fish & fish preparations imports from Pakistan and industry specific issues are considered as the main contributory factors behind the sluggish growth in non-textile exports during FY07. On the other hand, slowdown in the textiles exports can be attributed to: (1) low quality of the textile products on account of contaminated cotton and unskilled labour, (2) concentration of exports in the low and middle value added textile items, (3) frequent power failures in the country, and (4) EU market specific issues such as the antidumping duty on the bedwear exports and only partial restoration of GSP facility.

Going forward, the rising cotton price which is main input for textile industry coupled with abolition of China specific textile and clothing safeguards in 2008 by EU and US, along with accession of Vietnam to WTO, are some factors that are likely to give tough time to Pakistan's textile industry. While, the rising cotton prices may not increase Pakistan's relative cost of production against its competitors as global cotton prices are also anticipated to rise, Pakistan's apparel exports to US and EU markets may weaken following the end of the US and EU safeguard measures imposed on China.

On the import side, uncertainly in the global oil prices, increasing commodity prices, anticipated increase in the import of telecom following China's investment in Pakistan's telecom sector and likely rise in power generating machinery may put upward pressure on the import bill. However, increase in hydro power generation on account of better water availability and capacity constrains in the thermal power generation may lead to slower growth of furnace oil import, thereby relieving some pressure from the overall oil import growth.

*RECOMMENDATIONS BY INTER-MINISTERIAL COMMITTEE ON FOOD INFLATION:* 

The prices of food items in Pakistan rose sharply during FY07, leading the government to set up an Inter-Ministerial Committee to assess the causes of the increase and recommend corrective policy measures. The committee found that most of the rise in food inflation was caused by high prices of a small number of commodities.

The increase in the prices of some of these food commodities was found to be structural in nature reflecting diverse factors, such as, rising international prices, where government intervention has a very limited role to play, in the short run. The committee therefore recommended a mix of short-term measures to alleviate the impact of high prices in the short run, as well as, policies to address the structural factors. The key policy recommendations focused on wheat, pulses, sugar, and dairy product prices.

*WHEAT:* 

-- The committee recommended that farmer profitability should be ensured so that the country should be self sufficient in wheat production. In order to achieve this, the committee has suggested that the government should provide support price and promote efficient farming practices resulting in cost reduction.

-- MINFAL has been assigned the task of formulating policies to increase productivity and cost reduction plans in collaboration with the provinces.

*PULSES:* 

-- The committee suggested controlling of pulse prices by adopting a policy of procuring the surplus pulses at market price and later releasing them regularly to maintain the target price and minimise speculators edge.

-- Design a campaign to support farmers before planting. This may include ensuring availability of certified seed with incentives, and announcement of marketing support at support or market price.

-- In case of gram, an aim to procure at least 25% of consumption and a regular intervention is needed to keep gram price from unnecessarily rising throughout the year.

-- MINFAL has been asked to specially focus on the productivity of Mash and Masur and ensure marketability of production and sustain profitability of the farmers.

-- MINFAL has been delegated the task to develop a focused strategy and work with the provinces to predict supply/demand timing, special funding window and incentives for improving farming practices.

*SUGAR: *

-- Farmers should be able to get at least minimum guaranteed support price.

-- Provinces and Federal government should formulate sugarcane/sugar policy in consultation with stakeholders by September 15 every year.

-- Sugar may not be imported until the duration of sugar season is determined by end March. However in case of abnormally high prices of sugar this condition may not be applied.

-- Build up buffer stocks by importing or purchasing from the local mills and use these stocks to intervene to control sugar prices as and when needed.

*LIVESTOCK: *

-- A breakthrough can only be made by attracting expatriates and using them to bridge the yawning knowledge gap. The government should facilitate best research practices and provide alternatives to fodder which is very expensive.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Uranium exploration projects cost may be revised: CDWP meeting on November 3​* 
ISLAMABAD (October 30 2007): The government is likely to revise the cost of two important projects, related to extensive uranium exploration in D G Khan and Bannu-Kohat plateau, sources told Business Recorder on Monday.

They said that the two projects--Detailed Exploration of Uranium Resources in DG Khan worth Rs 2.06 billion, and Detailed Exploration of Uranium in Bannu Basin and Kohat Plateau costing Rs 1.882 billion--would be revised by Central Development Working Party (CDWP) in its meeting on November 3. Pakistan Atomic Energy Commission (PAEC) is the sponsoring agency of the projects.

The meeting, which will be presided over by Planning Commission Deputy Chairman Dr Akram Sheikh, will take up 50 development schemes in various economic and social sectors.

According to PAEC estimates, Pakistan is home to around 1,000 uranium-favourable sites, which could provide the required fuel for its proposed nuclear power plants, and there is need of intensification of uranium exploration activities all over the country. Sources said that exploration in DG Khan has been going on since 2004. This scheme will be completed by 2014.

The project in Kohat was started in 2005 and this would also be completed in 2014. Apart from this, the CDWP will consider PAEC projects of National Tokamak Fusion Programme worth Rs 1.554 billion, Upgradation and Strengthening of Nuclear Institute for Food and Agriculture, Peshawar Rs 246 million, and Gujranwala Institute of Nuclear Medicine and Radiotherapy, costing Rs 423.6 million.

In water resources sector, Punjab's Barani Integrated Water Resources project, costing Rs 6.27 billion is also on the agenda of the CDWP meeting. The Asian Development Bank is expected to provide Rs 4.5 billion for this project. Management of Hill Torent in Chashma Right Bank Canal area in D G Khan worth Rs 1.6 billion will also be taken up in the meeting.

Ports and Shipping Division has sought Rs 6.6 billion for establishment of 'free zone' at Gwadar, and Rs 500 million for acquisition of land for construction of expressway and railway line on east bay of Gwadar port. These two projects will come up for consideration of the CDWP.

In education sector, the CDWP will look into awarding of 100 scholarships to Bangladeshi students in the fields of medicine, engineering, and IT. This project will cost Rs 77 million.

The CDWP will take up six forestry and wildlife projects. These projects are: Development of Forestry Sector Resources for Carbon Sequestration in the four provinces and AJK.

The government would spend Rs 3.7 billion on this project in Punjab, Rs 3.02 billion in NWFP, Rs 2.0 billion in Balochistan, Rs 1.5 billion in Sindh, and Rs 2.34 billion in AJK. Besides this, a multi-sectoral project for Conservation of Juniper Forests in Balochistan worth Rs 495 million, and Concept Clearance of scheme for Conservation and Development of Indus Delta Mangroves in Sindh of Rs 120 million will also be considered by the CDWP.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*PPIB, EEL sign accord for 226.5 megawatts power project ​*
ISLAMABAD (October 30 2007): The Implementation Agreement (IA) for 226.5 MW power project by Engro Energy Limited (EEL) was signed on Monday at Private Power and Infrastructure Board (PPIB). Mohammad Yousuf Memon, Managing Director PPIB signed the agreement on behalf of the Government of Pakistan, while Khalid Mansoor, CEO of Engro Energy (Pvt) Limited (EEL) on behalf of the company.

Earlier on October 26, the company had signed the Power Purchase Agreement (PPA) with NTDC and financial closing of the project is expected very soon. The power plant will be located at Qadirpur, Sindh, using Low BTU permeate gas from Qadirpur field, and will apply combined cycle technology.

The Power Complex will be set up with an estimated cost of $205 million, the sponsor of the project is Engro Chemical Pakistan Limited (ECPL), while the financing will be provided by foreign banks. It is expected that the Power Complex will start supplying power to the national grid by December 2009.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*MoU for exploration of mineral deposits signed ​* 
KARACHI (October 30 2007): A private company named Zaver Mining Company (Private) Ltd would explore'Metallic Mineral' deposits in Nagarparkar district of Sindh with an initial investment of around 200 million dollars.

For the purpose, Directorate General of Mineral Development, Sindh Mines and Mineral Development department signed Monday Memorandum of Understanding (MoU) with Zaver Mining Company (ZAVER) to develop the deposits and produce gold and other minerals. The MoU was signed by Muhammad Khalid Mirza, Director General, Mineral Development Sindh on behalf of government and Naseer Khan, Vice President from ZAVER.

Initially, Mines and Mineral Development department will allocate an area of 1000 square kilometer to ZAVER to carry out reconnaissance operations for one year. ZAVER Mineral plans to start with satellite images and using the latest geological, geophysics and geochemical technology. The reconnaissance operations will lead to exploration and development of metallic minerals.

It may be noted that the Geological Map of Sindh reveals that east of Thar Desert has exposures of Geologically very old rocks, which have been found containing very large deposits of metallic minerals.

The minerals include iron, gold, silver and base metals, ie, copper, tin and zinc. Rajasthan district of India is already producing gold and base metals from the rocks, which extend upto Nagarparkar district.

Since in Nagarparkar district the infrastructure facility was not available, therefore, no serious attempts could be made to explore the metallic potential of the area some time back, said Irfanullah Khan Marwat while presiding over MoU signing ceremony.

"Present government has improved such infrastructure in Thar areas where exploration of minerals of any magnitude can be launched." Considering these facts and ideal law and order situation in the said areas ZAVER minerals which is part of renowned and financially sound Hashwani Group has come forward to explore the metallic minerals potential of Nagarparkar district The minister hoped that this bold step of the firm to explore this area of Sindh would be successful and open a new chapter in the history of minerals development in the province.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Textile exports growth shrink to 4.9 percent ​* 
KARACHI (October 30 2007): The slowdown in the overall export growth was attributed mainly to textile exports growth, which declined from 14.4 percent to only 4.9 percent during last four years from 2004-2007 during last four years The State Bank of Pakistan, in its annual report, said that the country had missed export target, and pointed out just 3.4 percent growth witnessed in the exports as against the target of 13.1 percent and overall exports stood at 17.1 billion dollars during 2007 financial year.

The SBP report said that poor rice, fruit and cotton crops together with European Union (EU) ban on fish and fish preparation imports from Pakistan and industry's specific issues were considered as the main contributory factors behind the sluggish growth in non-textile exports during 2007 financial year.

On the other hand, slowdown in the textiles exports can be attributed to low quality of the textile products on account of contaminated cotton and unskilled labour, besides concentration of exports in the low and middle value-added textile items, report said.

In addition, frequent power failures in the country, and EU market specific issues such as the anti-dumping duty on the bedwear exports and only partial restoration of GSP facility were the other factor responsible for decline in exports, report said.

The rising cotton price, which was main input for textile industry, coupled with abolition of China's specific textile and clothing safeguards in 2008 by the EU and the US, along with accession of Vietnam to World Trade Organisation (WTO), were some factors that were likely to give tough time to Pakistan's textile industry.

While the rising cotton prices might not increase Pakistan's relative cost of production against its competitors as global cotton prices were also anticipated to rise, Pakistan's apparel exports to the US and EU markets might weaken following the end of the US and EU safeguard measures imposed on China, report added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan has 200bn tonnes of coal reserves: Marwat ​* 
Tuesday, October 30, 2007

KARACHI: Sindh Minister for Mines and Minerals, Irfanullah Marwat has said that Pakistan retains over 200 billion tonnes of coal reserves and if every house in Pakistan utilises electricity even then the coal reserves wont end for the next 300 years.

He put the blame on Water and Power Development Authority (WAPDA) for the industries poor performance. Addressing a press conference at the FPCCI, he said that Pakistan has coal companies which have capacity of 150MW but are using only 40MW because it is the responsibility of WAPDA to check on them which it is failing to do. 

He added that the promised power plants have also not been set up due to WAPDAs inconsistency which made the mining sector suffer. The minister accused WAPDA for making them lose a deal that was about to be with China. He said that foreign countries have an image that Pakistan is not serious in its dealings and therefore, they hesitate to invest. 

He also complained that the coal mining sector is unaware of the tariffs that would be charged and they would also discourage investments as no one would like to make blind deals. To a question he said that it was the task of the federal government to announce tariff charges and not of the Sindh government which limits powers.

Marwat also said that an international symposium was being held on October 30 and October 31 Sindh Coal (Lignite) Mining-Challenges and Success it would help to lessen Pakistans non-serious image and was going to be attended by several countries including Germany, Poland and Australia. 

Irfanullah Marwat said that though his tenure was ending in a short while, the symposium was a part of his efforts to attract foreigners to pour investments into the country as he admitted that the problem with Pakistan was that though one governing body started with a project it would never completed it and it was either left pending or was accomplished by the next government.

He also said that a two-member committee had been made at the end of July to co ordinate with other bodies such as WAPDA and NEPRA to set up power plants of which he is a member as well.

Pakistan has 200bn tonnes of coal reserves: Marwat


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## Spring Onion

*10-year PIB cut-off yield at 10.2195pc*

KARACHI: State Bank of Pakistan set a cut-off yield of 10.2195 percent on the benchmark 10-year investment bond on Tuesday, up from 10.1897 percent previously.
The State Bank of Pakistan also set a cut-off yield of 11.1597 percent on the 15-year Pakistan Investment Bond (PIB), up from 11.1494 percent in the last auction on October. 9.
For the five and three-year bonds, the cut-off yield was set at 9.8221 and 9.6495pc, respectively. In the last auction, the cut-off yields on the five- and three- year PIBs were set at 9.8024 and 9.6211pc respectively.
The central bank also set cut-off yields of 11.4132 and 11.6151 percent for the 20- and 30- year PIBs, compared with 11.4103 and 11.6142 set in the last auction.
The central bank said it sold a total of 14.66 billion rupees ($241.59 million) worth of PIBs, after receiving bids worth about 21.757b rupees.
It had set a combined pre-auction target 15 billion rupees. Dealers said the auction was in line with the market expectations.
"The result is according to market expectations and the slight increase in cut-off yields does not come as a surprise," said Naeem-ul-Hasan, chief dealer at brokers Invest Capital and Securities.
The three-, five-, 10-, 15-, and 20-year PIBs carry annual coupons of 9.1, 9.3, 9.6, 10 and 10.5 percent respectively, while the 30-year paper carries a coupon of 11 percent.
It was the third PIB auction to be conducted in the 2007/08 fiscal year, which began on July 1.
Pakistan launched its first long-term Pakistan Investment Bonds in December 2000 to tap institutional investment and set a benchmark for corporate bond yields. It issued a 30-year bond for the first time in December last year. - *Reuters*
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## Neo

*The long wait for market access​*
Pakistan, it seems, will have to patiently wait for another six months before its economic diplomacy bears fruits and a breakthrough in terms of greater market access for its exportable merchandise in the western markets is achieved.

This was the subtle message that our able trade managers got when they put up the case of Pakistan, the umpteenth time, in Brussels to be treated at par, if not preferentially, with its competitors in the region. Of the seven South Asian nations four (Bangladesh, Maldives, Nepal and Bhutan) have a freer access in the huge European market for being categorised as LDCs (least developed nations) that the union wants to support as its responsibility towards poor of the world.

Sri Lanka for reasons not very clear enjoys GSP+ (general system of preference plus) status. Nations covered under the scheme enjoy 15 per cent subsidy in tariffs on their exports. With India that like Pakistan does not get covered by these schemes, the European Union has initiated negotiations for a free trade agreement (FTA). That leaves Pakistan high and dry, all by itself in the sub-continent.

Trade experts consider the trade discrimination by the West against Pakistan a policy gesture of western governments to express their displeasure over the countrys political system. It will require more than skills of persuasion and marketing to get increased market access in US and Europe. They want to have closer trade relations with stable democracies. Our brand of democracy with a military general at helm affairs does not sell there. We will have to learn to behave like a civilised nation to be able to develop closer, cordial commercial relations with the advanced nations of the world, an old time trade negotiator told Dawn.

This has nothing to do with politics, Humayun Akhtar Federal Commerce Minister told Dawn over telephone from Islamabad. Yes, we have not been given any commitment so far that the European Union will initiate negotiations for a free trade agreement with Pakistan as a result of the study that has been initiated by the most powerful regional grouping to analyse the discriminatory impact of its trade policy in South Asia on Pakistans economy, the minister accepted.

Over the years, we lobbied hard to qualify for GSP+ status to secure better terms of trade for Pakistan in EU but did not succeed. We, however, cannot afford to give up. Now we are engaged in bilateral trade talks with EU and succeeded in persuading them to form a sub- group to look into Pakistans trade related demands. In May this year the sub-group met in Islamabad and on October 16 the second round was held in Brussels. We try to sell Pakistan as a high growth country with a promising economic future, the minister worried for dwindling textile export growth disclosed.

He was sounding disappointed with the stubbornness of the West that refused to oblige to, what he calls, just and logical demands of Pakistan, despite its role in West sponsored war on terror.

Pakistans tariff regime is liberal. Those are actually non-tariff barriers that are coming in way of achieving better terms of trade for Pakistan, Tanvir Ahmed Sheikh, President Federation of Chamber of Commerce and Industry said responding from abroad to a call by this scribe.

He viewed the political system in place in the country to be the cause that earned Pakistan ire of leaders of powerful western countries with attractive markets. The private sector is suffering from the discrimination meted out to them in developed markets. The government should do all it takes to get us terms that offer the manufacturers even playing field in the preferred markets with our competitors, he said articulating his concern for the difficulties that the textile exporters are facing in Europe.

The trading partners are demanding restoration of democracy that local business class and other privileged segments did not find so comfortable to work with in the past. It is their dilemma, they are not enthusiastic about democracy but need markets abroad to sustain their business that is denied to them because of the lack of democracy, an expert said.

How the private sector reconciles its two positions is hard to understand? It is, for the time being, leaving no stone unturned and is reaching out to all relevant quarters to get assurance that rules of the game that are tilted to suit its interests, will not be changed with possible political changes in Islamabad.

The economic diplomacy has become a key element of a countrys foreign policy targeting to protect and promote her commercial interests in an era of globalisation and to face the challenges and exploit opportunities thrown up by a fast integrating world. The question is how far is it succeeding?

The long wait for market access -DAWN - Business; October 29, 2007


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## Spring Onion

*SBP prepares guidelines for Internal Credit Risk Rating Systems*

KARACHI: Keeping in viewimportance of internal riskrating systems in credit risk management and to further strengthen risk management functions in banks, DFIs, State Bank of Pakistan has prepared guidelines on Internal Risk Rating Systems. These guidelines will supplement Guidelines on Risk Management already issued vide BSD Circular No. 07 dated August 15, 2003. 
Banks, DFIs are free to adopt any of rating systems, methodologies, techniques keeping in view their size, complexity of operations, clientele base and may have as many credit grades as they wish, a SBP circular said Tuesday. 
However, for reporting purpose to SBP, banks are required to map their ratings to SBP grades defined in Annexure A of guidelines.
The mapping should be based on given definitions and bank's internal definitions of credit ratings.
All banks and DFIs are required to develop their internal credit risk rating policy duly approved by their Board of Directors and formulate a robust risk rating framework. Such developed policy may be made part of their credit risk or risk management policy. 
The policy covering Obligor Ratings, as mentioned in Section 3.2(2) of attached guidelines, must be developed and all exposures must be rated in light of such developed policy latest by June 30, 2008.
A copy of policy should be sent to Banking Surveillance Department, SBP latest by 30th June 2008. Banks, DFIs are further advised to map their internal risk ratings grades to grades provided by SBP and report these mapped ratings in their regular eCIB reporting in the field IBRATING from July 2008.
All Banks, DFIs are encouraged to establish their systems for carrying out Facility Ratings as mentioned in Section 3.2 (2) as soon as possible. They are further advised to submit a plan, latest by 31st March 2008, mentioning therein detail of identified activities with timelines for establishing system for Facility Ratings. 
Eventually all banks will be required to further strengthen their internal risk rating systems as per detailed requirements issued for Internal Rating Based (IRB) approaches of Basel II. *- PPI*
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## Neo

*Foreign investment seen as major tool of growth​*
KARACHI, Oct 29: Foreign investment has been a major growth driver of the Pakistani capital markets during FY07, states the annual report of the State Bank of Pakistan for FY07.

On the one hand, equity markets in Pakistan offered an attractive price-to-earnings (p/e) value of 12.8 times and on the other hand, the market traded at a discount in comparison with regional markets, where the average p/e stood at 15.1 times.

As a result foreign investment flows (in SCRA account) saw a sharp rise from $354 million in FY06 to $980m in FY07. However, the KSE-100 index still lags behind all major stock exchanges in Asia, the report noted.

In overall terms, the benchmark KSE-100 index grew by 37.9 per cent in FY07, in spite of facing two severe market corrections in the first half of financial year: The first one in August and the next in November-December. The report traces factors that led to those set backs.

The Central Bank mentions: One of the reasons for the robust growth in the KSE-100 index in H2-FY07 has been the increase in CFS limit. With rising CFS investment, CFS volumes also rose sharply, indicating investors interest in CFS, the report stated and observed that besides the increase in CFS cap, the exemption from capital gains tax until June 2008 also augmented the market momentum in January 2007.

The SBP indicated that profit after tax (PAT) of companies listed on KSE had increased by 17.5 per cent in calendar year 2006 as compared to 2005.

Dilating on sector-wise performance at the KSE, the bank stated that the KSE was once dominated by oil marketing and exploration companies on account of the number of shares traded and market capitalisation. But owing to rising profitability, the commercial banking sector had managed to take the lead in the market in calendar year 2007. Technology and communications were other sectors which saw increased turnover.

Foreign investment seen as major tool of growth -DAWN - Business; October 30, 2007


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## Neo

*ADB lists lacunas in success of projects​*
ISLAMABAD, Oct 29: Pakistan increased its debt through foreign-funded development programmes in the last two decades in exchange for economic and social benefits that were less than expected  in some cases much less, according to the Asian Development Bank.

In five, out of eight ADB-funded sector loans, the outcome performance over the last 22 years has been either unsuccessful or partly successful.

Delayed implementation, change in objectives and direction during the course of implementation due to inabilities, both of the bank and the government, also resulted in cost overruns and non-achievement of designed objectives for which loans with heavy repayment costs were obtained from lenders.

In areas that have a direct impact on social standards of the people, like health, nutrition, social protection, water supply, sanitation and waste management, the outcome has been described as unsuccessful.

Likewise, the outcomes in agriculture and natural resources, education and finance have been rated as partly successful.

In three major sectors relating to the countrys macro-economy, the performance has been rated as successful, says Operations Evaluation Department of the ADB in its first ever evaluation in Pakistan of its entire operation during 1985-2006.

Delayed project implementation and extensions to loan closing dates are a perennial problem in Pakistan operations, it said.

During this period, 85 per cent of closed loans required an extension, although this improved to 67 per cent for 2001-2006, it added.

The report Country Assistance Programme Evaluation for Pakistan shows that Pakistan projects have a similar level of success as those in Bangladesh and Nepal but lower than those of Bhutan, India and Maldives.

By decade, the success rate of projects in Pakistan has been remarkably static, with no evidence of improving performance. This should be cause of concern, said the bank.

The performance of projects in Bangladesh, by contrast, has improved markedly. India is little changed, Sri Lanka is improving and Nepal has deteriorated.

ADB-wide success ratings have trended up from below 60 per cent for the approvals in the mid-1980s to above 80 per cent for those approved in 1999.

The difficult development context in Pakistan probably contributed to the static performance of its projects over this period.

The analysis of project success by sector shows major differences in performance for Pakistan projects.

Projects in the water supply, sanitation and waste management sector performed the worst, with only 20 per cent success rate overall, albeit on small numbers, and a 50 per cent success rate for projects approved in 1990s.

The next worst performing sectors were education with a 29 per cent success rate and 50 per cent success rate for projects approved in the 1990s.

Finance sector projects with a 30 per cent success rate overall, influenced poorly performing projects with development finance institutions in the 1970s and 1980s and a 50 per cent success rate for later projects.

Health, nutrition and social protection projects had a 40 per cent success rate, improving to 50 per cent for 1990s.

Although many of the balance projects not rated successful were assessed as partly successful (i.e. desired results were not fully or efficiently achieved, or not sustained), this performance is dismal, it said.

Agriculture sector, the largest group with 33 projects had an overall success rate of 55 per cent with no trend to improvement by decade.

Multi-sector projects had a 56 per cent success rate overall. However, the multi-sector success rate dived from 75 per cent for projects approved in 1980s to only 25 per cent for those approved in the 1990s, influenced by the poor performance of projects supporting the Social Action Programme (of the Pakistan Peoples Party).

The ADBs most successful projects have been in the traditional infrastructure areas, with energy sector achieving 81 per cent success rate overall but with a falloff for 1990s approvals to only 50 per cent.

Transport projects had an 89 per cent success rate and consistently good performance for projects approved in 1980s and 1990s.

For the evaluation, the major sectors of ADB operations were defined as those with more than $1 billion of approved loans over 1985-2006.

During this period, ADB approved 171 loans for 127 projects for a total of $14.2 billion. The Asian Development Fund (ADF) accounted for 89 per cent of the loans but only 44 per cent of the amount.

The balance of 11 per cent of the loans and 56 per cent of the amount came from ordinary capital resources (OCRs).

The average level of lending has approximately doubled since 2001 compared with the previous five years.

ADB lists lacunas in success of projects -DAWN - Business; October 30, 2007


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## Neo

*SBPs Annual Report: Industrial sector stages modest recovery in 2006-07​*
* Large Scale Manufacturing grows by 8 percent, Small Scale Manufacturing registers deceleration 
* Construction, cement remain bright spots 

KARACHI: The industrial sector witnessed a moderate recovery during fiscal year 2006-07, largely due to strong growth in the construction sub-sector and lower negative contribution from the electricity and gas distribution sub-sectors, the State Bank of Pakistan said on Monday. 

In its review of the economy contained in its annual report, the central bank said large-scale manufacturing (LSM) sector witnessed a weaker performance in FY07 relative to the preceding year. The LSM sector grew by a little over 8 percent in FY07. The slower growth appears to reflect a broad moderation in external and domestic aggregate demand, as well as capacity and input constraints in some industries. Small-scale manufacturing (SSM) sector also registered deceleration in growth rates during the year. 

Construction: Within the industrial sector, the highest growth was observed in the construction sub-sector during FY07, with value-addition rising by 17.2 percent. This was not only higher than the 7 percent target, but was also the second highest growth recorded by this sub-sector since FY76. The resurgence is mainly attributed to higher development expenditures by the government, increased foreign direct investment (FDI) in the construction sector and record workers remittances. 

Although the construction sector has only a 2.3 percent share in GDP, its share of the employed labor force was disproportionately large at 6.1 percent in FY07. The higher demand for construction workers is also reflected in a continued double-digit rise in their wages since FY05. Their wages increased by 11.1 percent in FY07. 

Mining and quarrying: Provisional data suggests acceleration in mining and quarrying sector with 5.6 percent year-on-year growth during FY07. The above target growth by the sector is impressive given a poor law and order situation in Balochistan and Northern Areas. This sector has tremendous potential to grow, and there is a need to improve infrastructure in mineral rich areas with security arrangements that would help attract foreign investment particularly in copper mining as well as in oil and gas exploration. 

Electricity and gas distribution: This sub-sector continued to record losses in FY07, probably reflecting the increased cost of electricity generation as well as on-going distribution and transmission losses of the countrys two electricity utilities. 

Textiles: The sector staged a strong recovery shrugging off the impact of a relatively disappointing domestic cotton harvest. The FY07 growth in textiles was the second highest since FY01 when the sector had benefited from the removal of export quotas and a substantial increase in investments. 

The central bank says the textile industry needs to focus on technological up-gradation at all production levels; product diversification as well as exploration of new markets; improvement in the quality of products through better material, and design inputs and establishment of large garment industries with modern facilities and management styles. 

Food, beverages and tobacco: Production in this sector also accelerated in fiscal year 2006-07. It grew by about eight percent. Growth in the sector received a significant impetus from the robust sugarcane and wheat harvests (that underpinned the remarkable recovery in sugar industry and acceleration in wheat and grain milling), satisfactory performance of beverages industry and significant FDI inflows. 

Cement: The cement industry was amongst the few bright spots in LSM sector during fiscal year 2006-07. Production growth accelerated during the year, helped by the substantial capacity additions in recent years, a booming domestic construction industry and strong export demand. 

It may be noted that the capacity additions in the cement industry during FY07 meant that at end-June 2007 the industry had excess capacity of about seven million tonnes. However, the industrys prospects remain strong due to (1) the strong potential for exports to India, which faces an acute shortage for at least next two years; and (2) domestic demand is expected to increase in the backdrop of increase in public sector development expenditure, as well as (3) continued strength in the housing construction industry. 

Automobiles: In contrast to a significant contribution from automobile sector in LSM growth in earlier years, the FY07 growth in this sector was a moderate 3.8 percent down from a healthy 25.8 percent growth in the preceding year. 

Factors contributing to the softening demand for domestically produced vehicles include rising interest rates on consumer financing along with efforts of commercial banks to reduce credit risk and availability of various imported vehicles in market at relatively lower prices.

Daily Times - Leading News Resource of Pakistan


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## Neo

*SBP earns record profit of Rs 108bn in 2006-07​*
KARACHI: The State Bank of Pakistan earned a record profit of Rs 108.733 billion for the financial year ended June 30, 2007, posting a significant increase of 59 percent as against Rs 68.184 billion in the previous year. 

Out of the net profit, Rs 78.301 billion was transferred to federal government. The central bank transferred Rs 30.422 billion to banks general reserve fund. 

The elements contributing to the increase in profit included the income on foreign currency assets, discount on market treasury bills, mark-up income on loans and advances, and gain on sale of shares of United Bank Limited. 

The total expenditure (excluding net provisions against impaired assets) for FY07 accumulated to Rs 15.677 billion as against the expenditure of Rs 12.041 billion in the previous year. 

The major components of banks total income were represented by discount, interest/mark up and/or return earned on domestic assets and foreign assets held by the bank. The total earnings under the head increased by 32.3 percent to Rs 92.513 billion from Rs 69.94 billion in the last year. The interest income on foreign assets increased by 44.8 percent and on domestic assets increased by 25.7 percent. 

The interest rate in the international markets also showed higher levels during current financial year as against previous year evidenced by increase in the discount rate of Federal Reserve Bank of New York which remained at 5.25 percent in current year as compared to the band of 3.25 percent to 5.25 percent in financial year 2005-06. 

The factors contributing towards the increase in interest income on domestic assets included the increase in average holdings of market treasury bills and increase in discount rates. 

The exchange income declined from Rs 4.376 billion n 2005-06 to Rs 1.958 billion in 2006-07. The decline is attributable to lower depreciation of Pak Rupee against the US dollar leading to lower exchange gain on US dollar denominated foreign currency assets. 

The banks dividend income for 2006-07 stood at Rs 4.286 billion as compared to Rs 1.975 under the head last year.

Daily Times - Leading News Resource of Pakistan


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## Neo

*USAID to invest $750m in health, education in FATA​*
* Ward says US wants to ensure education, health facilities in backward areas 
* US journalist gives lecture on reporting

PESHAWAR: The United States Agency for International Development (USAID) will invest $750 million in the health and education sectors of tribal areas, stated the agencys Asia and Near East Bureau Head Nike Mike S Ward on Monday.

Ward said this while talking to a radio station during his visit to the Department of Journalism and Mass Communication, University of Peshawar (UoP). Senior US journalist Arnold Skip Issac and two staffers of the US Consulate Peshawar accompanied him.

The USAID official said the United States wanted to get the FATA people educated by setting up schools and colleges for them and to provide basic health and education facilities to people in the backward areas of Pakistan.

Journalist Arnold Skip Issac delivered a lecture to the journalism department students on how to report news stories.

Journalism is search for the truth and a journalist must always speak and write truth, he said, adding: If one does not has the ability to speak truth, no matter what the situation is, he does not deserve to be a journalist. He also taught the students about how to write a perfect news story. If you want to make your story perfect, always quote sources from where you got the information, he said. Even if you are present on a crime or accident scene, you should quote police, hospital officials and eyewitnesses to file a perfect story. He said good journalists always had critical minds.

To a question he said the print media were more reliable than the electronic media. When you report for electronic media you always run out of time while verifying the story from all aspects. Whereas, you do have time in print media, he added. 

He also informed the students about various media organisations working in the US. The journalist also recorded an interview for the Campus Radio, FM 107, a community radio cannel owned by the UoP.

Issac said a good journalist should always be free of political, religious, and communal biases, and ended his lecture on the quote of Confucius that knowledge is to know the thing and know you know it, not know something and you know you do not know it.

Journalism and Mass Communication Department Lecturer Gul Wahab briefed the delegation about the department and thanked the guests, especially Issac, for sharing his experiences with the faculty members.

Later, the delegation members held a meeting with the faculty members and visited various parts of the department.

Daily Times - Leading News Resource of Pakistan


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## Spring Onion

Neo this above news is old as the funds and plan had been approved about two months back.

Work was to be started in Mid October right after Eidul Fitr but unfortunatly the project has been halted for sometimes to be stared.

Now Neo Pleaeeeeeeeeees pray that the project sould commence soon as it will bring much much development to FATA ( and my future is also linked with it to a large extent


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## Neo

*Pakistan should exploit coal for power generation ​* 
Wednesday, October 31, 2007

KARACHI: Pakistan needs political consensus and political will, it should utilise its indigenous resources of coal for power generation and in other projects for longer run rather than rely on short-term projects. This was the consensus of speakers presenting their views on the first day of a two-day international symposium and open house discussion on Sindh Coal (Lignite) Mining Challenges and Success on Tuesday at a local hotel.

Affordability and profitability are the two main areas which should be put forward in any project in which coal is used. Pakistan must curb its dependence at present and start thinking its own which could be a very tough test but this will give the country strong foundation to envisage its future. 

Siddique Sheikh of Federation of Pakistan Chambers of Commerce and Industry said: We have been very late in realizing our mistakes and while emphasizing on the importance of the symposium he said we did all these efforts 20 years back. These symposiums should have been organized in 1987 to avoid this current energy crisis. More and more companies come to Pakistan with their plans to use the coal reserves of Sindh using their technologies and professional skills. He said We go on to ruminate about their pattern which is not well in any case.

However, the inability of the government agencies to come to consensus on the issue of determination of the upfront tariff for the power produced by utilization of vast coal reserves remains the biggest hurdle, experts opined. 

Countries in the world that use coal to generate electricity exploit their own reserves of coal and this is one of the reasons of their success. The government of Sindh should provide proper water supply, roads and security to investors to increase investment.

APP adds: Sindh Chief Minister, Dr Arbab Ghulam Rahim has said that for over 13 years the people of the country and Thar have waited for the Sindh coal reserves in general and the Thar coal reserves in particular to bring energy and prosperity to people of the country. 

From the time John T Boyds team reported one of the richest coal reserves in Sindh, people have been told that these reserves will change the economic conditions of Sindh, provide energy to Pakistan, reduce the burden of Pakistans foreign exchange spent on oil, which is now being sold at above $80 a barrel and completely industrialize Thar and Pakistan. He was speaking as chief guest at the symposium.

Pakistan should exploit coal for power generation


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## Neo

*Pakistan, China take initiative to solve trade imbalance ​* 
Wednesday, October 31, 2007

KARACHI: Shakir Ali smiles slyly as his friends rave about the cool scent of his perfume while he boasts to them that its the latest in the line of CK fragrances and it had cost him a mint of money. His thoughts are far away at a certain shop though, where he paid Rs250 for the CK labelled bottle with Made in China stamped at the back!

Bazaars in Pakistan seem to be flooded with Chinese-made goods ranging from accessories to garments to electronics items. People prefer them to branded products, as they are a cheap alternative despite being of a poorer quality. Chinese-made goods have no guarantee to them as the traders themselves admit that they have a short life span.

The most common consumer items found in the markets are childrens toys, electronics such as stereos, MP3 players, USBs and garments such as jeans and shirts. Home appliances and ladies accessories are also imported from China other than various commodities like plastic, leather goods, cell phones, cars and computers that are slowly being accepted by the local consumers.

Chinese imitations of almost every popular item have hit the markets around the world posing serious threat to brand leaders. People unable to afford the original version buy Made in China look-alikes.

The price difference between the original branded product and Chinese replica may vary from Rs40 to Rs3000 or even more divergence. Shumaila Riaz, a student says There are times when I want something to show off to my friends so what I do is buy cheaper alternatives. Ive noticed that they have mostly been manufactured in China but Ive also seen goods from Taiwan, Indonesia or even India that are offered at low prices.

A research of Institute of Conflict and Peace Studies (ICPS) India, said that Pakistan is Chinas largest market in South Asia in terms of Construction projects. In 2005, Chinese construction projects and large-scale mechanical and electrical product export projects went smoothly, with 43 contracts signed, worth a combined $794 million. 

By the years end, China had signed a total of 444 contracts, worth $7.76 billion. The turnover in 2005 reached $583 million, up 58.33 percent year on year. The accumulated turnover reached $6.16 billion.

According to a report in China Daily, China has also opened its first overseas joint economic zone in Pakistan in a bid to accelerate domestic enterprises overseas investment. The joint economic zone, covering 1.03 square kilometres at Manga Mandi, 40 kilometres south of Lahore, was established by Chinas leading home appliance maker Haier and Pakistani firm Ruba.

The establishment of the economic zone is expected to further boost economic and technological co-operation and the Pakistani side has agreed to provide services to Chinese enterprises, in particular small- and medium-sized firms, to facilitate their investment. Besides manufacturing, Chinese enterprises will also help Pakistan by training staff and providing technological assistance.

The same source also informed that China Mobile is planning to invest $400 million to extend its network in Pakistan and that a wireless data transmission system will be built in the country soon. 

While consumers may enjoy the products and the investment plans may seem rosy, there is a serious concern of trade imbalance between the two countries at the economic forefront. 

At the macro level, China supplies the bulk of cheap commercial goods all over the world and in the process for Pakistan as well while the cost of goods plays a big role in increase of imports from China. Nevertheless, for Pakistan, China matters much as an import market but for China, importance of Pakistan as a market is almost insignificant.

In 2005, China exported goods worth a total of $3.43 billion to Pakistan but imported goods worth only $830 million, with the trade deficit on Pakistani side reaching $2.6 billion. Net investments from China to Pakistan also stood at $0.4 million only during 2004-05, which shows the disinterest that Chinese investors had in Pakistan.

Chinas contractual investment to Pakistan in 2005 totalled $3.67 million, and Pakistan invested in 19 projects in China, with contractual investment hitting $28.12 million and actual investment reaching $7.68 million.

Subsequently, steps were taken to address the matter and in 2006, the Early Harvest Program was launched to encourage bilateral trade, under which China will extend zero-rated tariffs on 767 items while Pakistan would reciprocate by extending the facility on 464 items.

Nevertheless, despite efforts the situation hasnt improved. Pakistans biggest export markets are the US, United Kingdom, United Arab Emirates and Germany. China does not even figure in the list of top ten export destinations.

The problem lies mainly because Pakistan is heavily dependent on the cotton and textile industry for its exports of which China itself is a major manufacturer and to improve on the trade volume, it needs to enlarge on its trade basket.

At the same time, Pakistan has tariffs on very few Chinese goods and has open quota for their products, which unfortunately is not the case vice versa. Though China has promised to reduce tariff on 767 Pakistani goods, the reduction does not make a significant impact.

Third, despite being neighbours, there is a lack of effective means of communication between them. The Karakoram Highway, which opened in 1978, could not be used to increase the volume of trade in any substantial manner.

Most importantly, the political situation greatly affects trade adversely. According to a data of the IPCS out of 400,000 Chinese private investors, only 31 are still present in Pakistan. The rest left after the threat of destabilization became prominent following the unrest in Balochistan and Waziristan and other parts of Pakistan.

Majyd Aziz, ex- President of Karachi Chamber of Commerce and Industry added Over the past decade India has swept away even our market because their private sector took the initiative. We should look at China as a buyer also rather than only a seller. Trade can increase over cross border deals just as India is doing and only then can this problem can be solved.



Bilateral Trade

Chinas Total Trade Volume with Pakistan and other countries

Year 1997 1998 1999 2000 2001 2002 2003 2004 2005

Pakistan* 1.07 (20.21) 0.915 (18.74) 0.971 (17.21) 1.09 (18.88) 1.30 (19.93) 1.80 (19.47) 2.43 (23.38) 3.1 (27.90) 4.26 (34.98)

India 1.83 1.92 1.98 2.77 3.60 4.94 7.6 13.6 18.73

SAARC 3.9 3.89 4.15 5.35 6.43 8.31 - - -

ASEAN 25.06 23.66 27.20 38.55 41.80 54.76 78.2 105.9 120

Japan 60.81 58.02 66.16 83.20 87.88 101.97 130 167.9 200

USA 49.03 54.99 61.49 83.30 80.61 97.31 126 169.4 211.63

(Billion Dollars)

* The figures in brackets refer to the Total External Trade Volume of Pakistan in

billion dollars.

(Sources: United Nations, Statistical Yearbook for Asia and Pacific,3 IMF, Direction of

Trade Statistics and various other sources4 and Economic Survey of Pakistan 2005-06)

Pakistan, China take initiative to solve trade imbalance


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## Neo

*Computer market witnesses 5.7pc rise​*
ISLAMABAD, Oct 30: The computer market  both in personal computer and server  in Pakistan increased by a modest 5.7 per cent as firms shipped 319,838 units here in the first half of (January-June) 2007 as compared to the same period last year.

According to a private research firm  Springboard Research  the lower than expected growth rate was mainly due to the governments non-friendly IT policies and continuation of the 15 per cent general sales tax, as well as from increased terrorist attacks and unstable political conditions.

The research firm said the government has shown little support for the IT sector, with no new policies or allocations for IT announced.

The government is, however, continuing with its IT industry development plan, although its actions and policies do not seem to be in sync with desired growth for the sector.

Pakistans IT market is in between a growth and decline stage, where the countrys political stability will play a major role in overall market performance, said Rehan Ghazi, Springboard Research Analyst.

Also, before the imposition of the 15 per cent GST in June 2006, Pakistans PC/Server market was a diamond in the rough, but since then, a downward trend in the IT market has been noticed.

The governments recent decision not to withdraw or reduce the GST has weakened the growing IT market in the country, he said.

Among the multinationals, HP continued to lead the market with 6.3 per cent share of total PC shipments in first half of 2007, followed by Dell and Acer.

The X86 server segments dominated the market during this period and experienced a growth of 7.7 per cent year-on-year, followed by the desktop and notebook segments. However, for the rest of 2007 and 2008, the portable segment is expected to lead overall PC market growth. This expectation is fuelled by the introduction of the Intel PC Classmate Programme in first half of 2007, which will drive procurement of notebooks from the education sector in upcoming quarters.

Apart from this, the adoption of notebooks from the home segment is also on the rise in the country.

In the application segments, the large enterprises, especially in the telecom, banking and finance sectors continued to be the largest procurers of IT solutions in the market, registering an annual growth of 21 per cent, followed by the government and medium enterprises.

The study said the grey and refurbished markets have continued to flourish substantially after the GST imposition and affected branded machine sales in Pakistan.

According to channel partners, around 15-20 per cent increase was seen in the grey market business in the past few quarters and this trend is expected to gain momentum in the future.

The negative spiralling effect created by unfriendly government policies, is expected to continue in the upcoming few quarters. Springboard Research also expects the second half of 2007 and beginning of 2008 to be politically turbulent.

Considering the current market scenario and political climate, Springboard forecasts a marginal growth for 2007. Nevertheless, from the fourth quarter of 2007 onwards (Oct-Nov), the market is expected to start picking up, as the Intel PC Classmate programme will perk up the portable market in the country. Pakistans government and large enterprises also expected to continue with their automation and IT up-gradation programmes.

The Springboard Research service tracks PC/Server market developments in Bangladesh, Brunei, Cambodia, Sri Lanka and Pakistan on a quarterly basis and contacts IT resellers, vendors, component suppliers and end-users at the local and regional level for the research.

Founded in 2004, Springboard Research serves the needs of its clients globally through offices in the United States, Australia, Singapore and Japan, as well as from global research centres in India, Pakistan and Morocco.

Computer market witnesses 5.7pc rise -DAWN - Business; October 31, 2007


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## Neo

*Indian diplomat for increased trade with Pakistan ​* 
KARACHI (October 31 2007): First Secretary Commercial of Indian High Commission Pankj Tirpathi has said that India wants to increase trade with Pakistan even if balance of trade is in favour of Pakistan Speaking at meeting of Karachi Chamber of Commerce and Industry (KCCI) on Tuesday, he advised business community to visit India and see the existing opportunities of increasing two-way trades.

He noted that smuggling of goods between the two counties had been reduced considerably. Regarding issuance of business visa, he said after receiving application, the High Commission was issuing visa the next day.

Referring to re-opening of visa section in Karachi, he said that as and when Pakistan opened its consulate in Mumbai, India would also open its consulate in Karachi. He said that opening consulate in Karachi would reduce 60 percent burden on Indian High Commission in Islamabad.

About delay of opening Pakistan consulate in Mumbai, he explained that residents of the areas had made some objection on the site selected by Pakistan for opening Pakistan consulate in Mumbai. He hoped that Pakistan would soon get another place for opening of the consulate.

He said that Pakistan importing pulses from India, while India was importing Mash pulses from Pakistan. Welcoming the guests, KCCI President Shamim Ahmed Shamsi invited Indian business community to take part in coming KCCI exhibition, "My Karachi".

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pak-China ties need new direction: envoy ​* 
ISLAMABAD (October 31 2007): Expressing satisfaction at the development of bilateral relations between Pakistan and his country, Ambassador Luo Zhaohui of China has said that the two countries are good friends, good neighbours and good partners. He was speaking at a seminar titled 'Pak-China Relations' here at the Islamabad Institute of Strategic Studies (ISSI) on Monday.

He said the two countries have always supported each other on a number of issues making the bilateral relations a fine example of state to state relations. Luo Zhaohui said that Pakistan was the second country with which China had signed Free Trade agreement (FTA).

However, he said bilateral relations needed new direction in the broad areas of political, economic, and trade sectors. "We should do more to speed up trade and explore new ways to increase the level of trade to achieve the already agreed $20 billion target in five years," he added.

He said that the CM Pak had invested $900 million in Pakistan, and it was for the first time that a Chinese mobile company had invested in other country. Referring to the number of MoUs signed between the two countries, he said their implementation needed highest level of cooperation. "We have good political relations but we should do more in economic and trade cooperation," he added.

Luo Zhaohui said he was grateful to the Pakistan authorities for taking number of steps for the security of Chinese personnel working in Pakistan. Talking about the attack on Chinese personnel in Pakistan, the ISSI director general Dr Shireen Mazari said that it had been used as a ploy to harm relations.

She hoped that China and Pakistan would maintain the steady course without jeopardising the relationship, which had evolved in a substantive manner. Shireen Mazari said that presently the Pakistan-China relationship is undergoing transformation in response to the changing international and regional environments that are in play. "The strategic nature of the Pakistan-China relationship is well-established and is not an issue of debate," Shireen observed.

Former minister of state of foreign affairs, Inamul Haque appreciated China's support to Pakistan in economic, political, diplomatic and military sectors. Speaking at the occasion, Fazal-ur-Rehman said that Pakistan has offered to serve as trade and energy corridor for China adding there are several components of this concept in terms of creating infrastructure facilities.

He said that Gawadar deep-sea port has become operational, understanding has been reached to up-grade KKH, besides railway link, gas pipeline, oil refinery and storage facilities, which are under consideration. He added that once necessary infrastructure is in place, this corridor would play an important role in inter-regional integration between South Asia, Central Asia and the western regions of China.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Increased foreign investment reduces poverty' ​* 
LAHORE (October 31 2007): Chief Minister Punjab Chaudhry Pervaiz Elahi Tuesday said that under the leadership of General Musharraf and due to the prudent economic policies of incumbent government, local and foreign investment in the country had increased, which resulted in poverty alleviation and generation of more job opportunities.

He was addressing inaugural ceremony of Metro Cash & Carry Centre here on Tuesday. He said that development process in the country had been intensified and strengthened through promotion of public-private partnership.

The CM averred that foreign investors were making huge investment due to investment-friendly polices and conducive atmosphere in the province. He said that setting up of wholesale centres in the province would leave a positive impact on national economy and accelerate the process of development.

CM said that Metro Cash & Carry was playing an important role in the provision of quality items to the customers. He said that setting up of wholesale centres would result in substantial decrease in the prices of food items and prosperity of the farmers.

German Ambassador Gunther Mulack, Vice President, International Affairs of Metro Henry Birr and members of Metro Board and Chief Executive Officer, Metro Cash & Carry Thomas M. Huebner were also present on the occasion. Pervaz Elahi said that a number of mega projects including Mubarik Centre, Information Software Technology Park, Ring Road, Sport City as well as universities were being established by the government with the cooperation of foreign countries.

He said that government was setting up industrial zones in the province due to which economic activities were accelerating. Chief Minster further said that six thousand farmers would initially benefit from the launch of Metro in the province, which would also provide guidance to the cultivators with regard to cultivation of crops and the use of seeds and fertilisers.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Lufthansa resumes operation due to good economic climate ​* 
KARACHI (October 31 2007): Due to a positive economic climate in the country the Lufthansa German Airlines (LGA) has resumed its flights in Pakistan, 'which is a growing market with a highly mobile population.'

"What a truly historic moment for the two partners; Lufthansa and Pakistan", Joachim Steinbach, Lufthansa vice-president (sales and services) Southeast Europe, Africa and Middle East/Pakistan, stated at a press conference in a local hotel on Tuesday.

Highlighting the remarkable reception the airline received on its landing in Karachi and Lahore, Steinbach said touch down of the aircraft in the two big cities had marked the successful return of Lufthansa to Pakistan, which has appeared as a new star in the Lufthansa route network.

When asked if there was an investment-friendly climate in Pakistan, Steinbach said: "Lufthansa's move has come at the right time." "Many multinational companies are present in the country and foreign direct investments have considerably increased over the years", he added. The new non-stop connection reduces travel time by up to three hours compared to current connecting flights from the Gulf.

"This is a benefit for the business travellers who will find convenience with both connectivity and time. Our passengers will have access to the extensive route network of Lufthansa connecting through our hub in Frankfurt to other European destinations as well as to the US", he added.

Referring to the tremendous support from the various authorities for a smooth launch of the Lufthansa flights in Pakistan, Steinbach said: "The doors have always been open for us." He said there was a strong demand for air travel to Europe and North America in Pakistan and the new direct link would further promote the commercial and tourism-related activities between Islamabad and Berlin.

He said the Lufthansa would operate three flights a week between Germany and Pakistan. The airline is the first European carrier to start flights from Karachi and for the first time connecting Lahore non-stop to Europe, he added.

In his briefing to the press, Peter Pollak, general manager, Passenger Sales UAE and director, Gulf and Pakistan, said the feedback from the market for the airline's new route had signalled positively.

"With our sales and marketing activities are in full swing, the response from our customers and business partners has been overwhelming. We expect a surge in business for the time ahead," said Pollak. He said a joint Lufthansa/ Swiss marketing and sales organisation is in place and both the carriers would open up the market and further boost sales opportunities in Pakistan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Will plans to use coal to generate power ever materialise? ​* 
Thursday, November 01, 2007

KARACHI: It should have been held before. To organise an international symposium on indigenous coal reserves when the incumbent government has to stay in office for only 15 days in office suggests that the whole endeavour was a face-saving exercise.

The failure on the part of high government functionaries to reach a consensus on the impediments which had thwarted every effort for utilisation of coal for power generation further puts a question mark over the reason for even holding the conference.

If the government acknowledges failing at one thing in its past five-year term that is the power sector. It was a myopic policy to spur the growth in economy without strengthening the engine of that growth. 

Electricity demand has reached a point where load shedding is inevitable and the future looks even darker. While the construction of big dams has been held back by a lack of political consensus, the policymakers did too little too late to augment gas fuel source. 

Nobody really knows where the Iran-Pakistan-India (IPI) gas pipeline stands and the liquefied natural gas (LNG) import project is already behind schedule. Some 15 years ago when one of the worldís largest coal reserves were discovered in Thar, Sindh, there was hope that Pakistan would soon emerge among the countries such as the United States, China and India where the combustible black rock is used for producing power. 

But that was not to be the case for Pakistan where political victimisation of previous officeholders remains high on agenda of every successive government. The Power Policy 1994 is one such example. 

That policy is credited with increasing the power generation, but at the same time is blamed for giving too many incentives for that production growth. Coal-fired power plants have also fallen victim to such state of affairs. 

When political will is missing, it is only natural for the bureaucracy to avoid indulging in an affair which can result in its prosecution. However, Farooq Hassan, chairman of Hassan Associates, holds optimistic in relation to the conference when he says it has delivered its message: a message that upfront tariff is necessary to materialise the dream of power production from coal. 

I have received indications that we will finally get a tariff before the assemblies are dissolved, said Hassan, who has calculated 9.5 cents per kilowatt hour (kWh) for his proposed $2 billion 1,200mw power plant that will use Thar coal. 

The issue has now been taken up by the policymakers. The prime minister will take the final decision. Finding an alternative to natural gas for power generation has become necessary as hydrocarbon prices continue to rise. In the last few decades, natural gas has taken up more than 50 per cent share in the basket of total energy consumption. Its low cost was one reason, bad policies of the government another. 

Average production cost of gas in Pakistan is Rs176 per million British thermal units (MMBTU), highly subsidised considering that even a conservative price estimate of imported gas comes to around Rs360. 

According to a former managing director of Sui Southern Gas Company (SSGC), gas demand is increasing by 10-11 per cent annually whereas production is flat at around 4000 million cubic feet per day (mmcfd).

This increase is the suppressed demand and does not include what is required by upcoming private power producers. According to one estimate, gas demand has outstripped supply by 800mmcfd, which has prompted the government to step up efforts to secure external sources of supply, the most vital being the IPI gas pipeline. 

In the backdrop of such a precarious energy situation, it is only logical for the government to do itself a favour by announcing an upfront tariff for coal-fired power plants. Perhaps it will be remembered like the Pakistan Peoples Party government which introduced the successful power policy of 1994. 

Will plans to use coal to generate power ever materialise?


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## Neo

* Pakistan down in competitiveness ranking ​* 
Thursday, November 01, 2007

ISLAMABAD: Pakistan is ranked 92, down one point over the previous year in the global race for competitiveness among 131 economies, revealed the Global Competitiveness Report 2007-2008, released by World Economic Forum (WEF). While, it (Pakistan) was 44 places behind India at 43 and 22 places from Sri Lanka 79 but, ahead of Bangladeshs 107 and Nepals 114. 

This year, Pakistan ranking deteriorated by a point against last fiscal when it stood at 91. It is pertinent to note that during last 2006-07 ranking, Pakistan was only 12 points behind Sri Lanka and now the gap widened to 22 points. 

Among Islamic countries, Malaysia is the most competitive economy stood in the Global Competitiveness Index (GCI) at 21, Kuwait 30, Qatar 31, Saudi Arabia 35, United Arab Emirates (UAE) 37, Oman 42, Bahrain 43, Jordan 49, turkey 53, Indonesia 54, Kazakhstan 61, Uzbekistan 62, Morocco 64, Azerbaijan 66, Egypt 77, Syria 80 and Libya at 88.

The countries that behind Pakistan are: Nigeria 95, Kenya 99, Tanzania 104, Albania 109 and Tajikistan at 117. 

It is very discouraging that among the Muslim world, Pakistan has been ranked almost at the bottom the reason being lack of institution, infrastructure, health and primary education, goods market efficiency and technological readiness.

According to the GCI, the United States (US) has gained the title as the worlds most competitive economy. Switzerland is in second position followed by Denmark, Sweden , Germany , Finland and Singapore , Japan , United Kingdom and Netherlands respectively.

China and India continue to lead the way among large developing economies. Several countries in the Middle East and North Africa region are in the upper half of the rankings, led by Israel , Kuwait , Qatar , Tunisia , Saudi Arabia and the United Arab Emirates . In sub-Saharan Africa, only South Africa and Mauritius feature in the top half of the rankings, with several countries from the region positioned at the very bottom.

The GCI rankings are calculated from both publicly available data and the Executive Opinion Survey, a comprehensive annual survey conducted by the World Economic Forum together with its network of Partner Institutes (leading research institutes and business organizations) in the countries covered by the Report. This year, over 11,000 business leaders were polled in a record 131 countries.

The GCI is based on 12 pillars of competitiveness, providing a comprehensive picture of the competitiveness landscape in countries around the world at all stages of development. The pillars include: Institutions, Infrastructure, Macroeconomic Stability, Health and Primary Education, Higher Education and Training, Goods Market Efficiency, Labor Market Efficiency, Financial Market Sophistication, Technological Readiness, Market Size, Business Sophistication and Innovation.

The survey questionnaire is designed to capture a broad range of factors affecting an economys business climate that are critical determinants of sustained economic growth. The Forum annually delivers a comprehensive overview of the main strengths and weaknesses in a large number of countries, making it possible to identify key areas for policy formulation and reforms.

Pakistan down in competitiveness ranking


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## Neo

*BA doubles flights ​* 
Thursday, November 01, 2007

ISLAMABAD: British Airways is spreading its wings to Pakistan by doubling its flight schedule between Islamabad and London to six flights a week, to cater to the increased passenger demand between the two countries.

Addressing a press conference here, BA Commercial Manager for Pakistan Paul Dhami said the six flights a week would commence with the airlines winter schedule, and was the result of a growing demand from both business and leisure travellers for flights between Pakistan and Britain.

The new schedule would be operated using Boeing 777s, scaling up overall capacity by 52 per cent compared to the present schedule, with premium capacity increasing by 44 per cent. As a result of the additional flights, the airline hoped that its world cargo capacity from Islamabad will increase by 100 per cent and these new rotations come on the back of new Pakistan freighter routings that were introduced earlier this year. He further said that the flights would offer alternating flights times on different days at 0818AM and 1230PM for even greater choice.

BA doubles flights


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## Neo

*GDP growth not reflected in real sectors : FPCCI on SBP report​*
KARACHI, Oct 31: Leaders of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) are surprised to know from the SBPs annual report for 2006-07 released on Monday that investment ratio to GDP has increased, but private credits from banks have fallen.

The overall growth in economy is good at seven per cent but the real commodity sectors performance is unimpressive.

President of the FPCCI Tanvir Ahmad Sheikh in his statement lauded the seven per cent GDP growth in 2006-07, but pointed out that this growth has no consistency within the economic sectors.

He expressed the view that the seven per cent growth was achieved because of the services sector.

Growth in non-commodity sector always leads to inflation, he stressed while pointing out that the tight monetary policy has failed to contain inflation.

He reminded that the FPCCI had always been advocating a liberal monetary policy, which was not heeded to.

As against a target of Rs390 billion, the banks provided Rs365 billion. One consequence of fall in private sector credit is the failure of large scale manufacturing sector to achieve target of 13 per cent growth against which actual growth was only 8.8 per cent.

High cost of industrial financing, the FPCCI chief said, pushed up production cost and made exports uncompetitive, increased fabulously the profits of the banks and has widened to alarming levels the rich poor gap in the country.Mirza Ikhtiar Baig, the vice-chairman of the FPCCI standing committee on Banking Credit and Finance expressed his concern on rising inflation and expanding current account deficit.

These two factors are serious challenge to the government in face of soaring oil prices, sluggish export growth, mounting import demand and increase in domestic and foreign debt burden.

Current account deficit in 2006-07, according to annual report of SBP, is $7 billion or five per cent of the GDP, he said while pointing out that the current account deficit of over four per cent is an alarm bell that needs to be addressed instantly.

Another point of concern is the 10 per cent increase in debt burden of which domestic debt grew by 12 per cent and foreign debt by eight per cent. Mr Baig warned of increase in debt servicing liability in the future because of Eurobond.

He predicted mounting inflationary pressures in coming days as food prices were all set to rise. The production cost of industry is also rising that makes Pakistans products uncompetitive in world market.

GDP growth not reflected in real sectors : FPCCI on SBP report -DAWN - Business; November 01, 2007


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*Dumping duties: Pakistan second in S. Asia​*
ISLAMABAD, Oct 31: Pakistan has become the second country in South Asia after India to have guarded its borders from cheaper imports as Islamabad imposed four final anti-dumping duties during the first half--January-June 2007-- of the current calendar year, a WTO report says.

Concerning application of new final anti-dumping measures--imposition of additional customs duty besides normal duty--, India, with 16, reported the largest number during the first half of 2007, doubling the eight new measures it reported during the corresponding period of 2006.

The WTO secretariat reported in a report sent to member countries that during the period January 30 - June 2007, the number of initiations of new anti-dumping investigations declined sharply, dropping by 47 per cent compared with the number during the corresponding period of 2006. The number of new measures also declined, by 20 per cent among the 151 member countries.

Argentina, reporting seven new final anti-dumping duties during the January-June 2007 period, was second, followed by the European Communities (six) , China (five), Pakistan (four) , and Canada, Colombia, Turkey, and the United States (three each). These figures represented declines from the corresponding period of 2006 for China, Pakistan and Turkey, and increases for Argentina, Canada, Colombia, the European Communities, and the United States. Australia, Brazil, Chile, Egypt, Peru, South Africa, and Chinese Taipei, each reported applying one new measure during the first half of 2007.

On global level, during January-June 2007, 13 members reported initiating a total of 49 new investigations, compared with 92 initiations in the corresponding period of 2006.

A total of 16 members reported applying 57 new final anti-dumping measures during the first semester of 2007, compared with 71 new measures reported by 15 members for the corresponding period of 2006.

Seventeen of the 49 new initiations were opened by developed members, and 14 of the 57 new final measures were applied by developed members, during the first half of 2007.

This compares with 37 new initiations opened and 10 new measures applied by developed members during the first half of 2006.

The member reporting the highest number of new initiations during January-June 2007 was India, with 13, followed by New Zealand (6).

Ranked next were Korea (five); Brazil, China and Japan (four each); Argentina and South Africa (three each); Mexico and the United States (two each); and Chile, Colombia and Egypt (one each).

These figures represented declines for Argentina, Egypt, India, and Mexico compared with the first half of 2006, and increases for Brazil, Chile, Japan, Korea, New Zealand, South Africa, and the United States.

In addition, Australia, Canada, Costa Rica, the European Communities, Indonesia, Jordan, Pakistan, Peru, Chinese Taipei, and Turkey, each of which reported new initiations for the first half of 2006, reported no new initiations for the first half of 2007.

China remained the most frequent subject of the new investigations, with 16 initiations directed at its exports during January-June 2007, down sharply from the 31 new investigations on exports from China that were reported for the corresponding period of 2006.

Chinese Taipei, the European Communities (including individual member States) and Korea were the second most frequent subjects, with four initiations of new investigations each directed at their exports during the first half of 2007, compared with seven, four and five, respectively, during the first half of 2006.

India, Indonesia, Japan, Malaysia, and the United States were tied for third place, with two initiations each in respect of their exports, compared with three, two, five, five and seven initiations, respectively, during January-June 2006.

Argentina, Australia, Brazil, Canada, Hong Kong China, New Zealand, Russia, Singapore, South Africa, Thailand, and Uruguay, were the subject of one initiation each during the January-June 2007 period.

The products that were most frequently subject to the reported new investigations during the first half of 2007 were in the chemicals sector (24 initiations), followed by pulp and paper (nine initiations) and plastics (six initiations).

Of the 24 reported initiations in respect of chemicals products, India reported 10, China and Japan each reported four, the United States reported two, and Argentina, Brazil, Korea, and South Africa each reported one.

Products exported from China remained the most frequent subject of new measures - accounting for 22 of the 57 new measures reported for the first half of 2007  compared with 15 new measures on products from China during the corresponding period of 2006. Chinese Taipei was in second place, with its exports subject to four new measures, compared with three during the first half of 2006.

India, Indonesia, Korea and Thailand each were subject to three new measures during the first half of 2007. Argentina, Brazil, the European Communities (including individual member States), Hong Kong China, Japan, Malaysia, Mexico, Singapore, South Africa, Switzerland, Ukraine, the United States, and Vietnam, each were the subject of fewer than three new measures during the first half of 2007.

Dumping duties: Pakistan second in S. Asia -DAWN - Business; November 01, 2007


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## Neo

*Pakistan seeks US help for export of vegetables​*
ISLAMABAD, Oct 31: The United States Department of Agriculture (USDA) desires to work with the Pakistan ministry of food, agriculture and livestock (Minfal) for the promotion of plant and livestock research and export of irradiated vegetables to the American market.

After the European Union (EU) and Russia banned import of some of its agricultural products, Pakistan is faced with the challenge of exploring the US market for its vegetables as an alternative. But, the country is allowed to export only irradiated vegetables to the US for which Pakistan lacks capacity and needs a lot of assistance from the US.

A high-level US delegation comprising Caird Rexroad, associate administrator USDA and Margaret Thursland, agricultural counsellor in US embassy in Pakistan, called on Dr M E Tusneem, chairman Pakistan Agricultural Research Council (Parc) on Wednesday and discussed with him the prospects of future collaboration between the two countries in the field of agricultural research, particularly export of irradiated vegetables.

Dr Tusneem briefed the delegation on the various activities being carried out at the Parc and its collaborative activities with international agencies.

Mr Caird said the US would provide assistance to Pakistan in building human resources capacity in the field of agricultural research with emphasis on biotechnology, bio-safety, bio-security, climate change, agriculture policy analysis and international trade, strengthening of animal and plant health services and export of irradiated fruits and vegetables to US.

The Parc chairman informed the US delegation that pests and diseases, declining farm profitability and degradation of natural resources base, including land, water and forests, coupled with high population growth are now posing threat to food security and environmental sustainability of the current production system.

He said that emerging challenges, global warming, climate change, diversification into high-value agriculture, food safety and competitiveness of farm products in international markets needed to be addressed to make agriculture productive, profitable, competitive and sustainable.

Dr Tusneem informed the delegation about the success of Agricultural Linkages Programme (ALP) and proposed to build on the existing excellent cooperation between the concerned departments of Pakistan and US.

He further said that Pakistan was moving towards diversification into high value agriculture, value addition, especially in livestock and horticulture crops and to enhance the productivity by narrowing yield gap.

The Parc chief said that high-efficiency irrigation system and other water-saving technologies, demand driven research for new technologies and innovations, ensuring fair price to farmers, improve market access and infrastructure was imperative to boost agriculture sector.

The officials of both the countries identified the areas for future collaboration, which include plant protection, social sciences, animal sciences, natural resources and training of social scientists in the field of trade and agriculture research and development. Later, the delegation visited animal sciences institute, grain quality testing laboratory, green houses for wheat nurseries, and the biotechnology laboratory, gene bank at plant genetic and racers institute and geo-informatics lab at water resources institute of the National Agri-cultural Research Council (Narc).

Pakistan seeks US help for export of vegetables -DAWN - Business; November 01, 2007


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*WB urged to stop funding mega projects in Pakistan​*
ISLAMABAD: Pakistan Network for Rivers, Dams and People (PNRDP) , representing the people affected by mega water projects, on Wednesday urged the World Bank (WB) to stop funding for these projects which were causing economic, environmental and social losses in addition to massive dislocation of the local people. 

PNRDP President Ijaz Khan  in a statement on the occasion of WB President Robert B Zoellick's visit to Pakistan, said it had been proved that the project executing agencies lacked capacity to deliver in terms of time and cost and had failed in resettling hundreds of thousands of people displaced due to these projects.

The PNRDP, which is housed at Sungi Development Foundation Islamabad, asked the WB president to be cautious and make sure that the voice of stakeholders, specially people affected directly or indirectly by any mega infrastructure project in Pakistan, was heard at the planning, designing and implementation stage. 

Zoellick along with senior WB officials, reached Pakistan on Wednesday on a two-day visit to hold talks with the senior officials. In addition to reviewing work on more than 50 projects worth $7 billion, he will also hold talks on funding new mega projects in Pakistan.

Ijaz Khan said the construction of dams and mega infrastructure projects had become a hot issue in Pakistan as majority of these projects like Tarbela Dam, Ghazi Barotha and Left Bank Outfall Drain (LBOD) had failed to deliver in terms of resettling and rehabilitating victims despite large promises.

Daily Times - Leading News Resource of Pakistan


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*World Bank chief urges deeper reforms ​*
ISLAMABAD (November 01 2007): World Bank President Robert Zoellick on Wednesday urged Pakistan government to deepen reforms in infrastructure to education, saying that the bank could expand its lending programme. The World Bank has already extended around $10 billion in loans to Pakistan, and the government badly needs to find additional funding to build a series of dams to head off water and energy shortages.

"It's very important that the reform process continues," Zoellick told reporters in Islamabad after talks with Prime Minister Shaukat Aziz, describing the government's successes to date as "incredible". "The critical need is to make sure that Pakistan takes advantage of globalisation in a way that is inclusive and sustainable ... and that will require more effort in areas like ports and infrastructure," he said.

"Water resources are obviously a very important part of Pakistan's development."

President Pervez Musharraf aims to build five dams by 2016 at a cost of up to $18 billion, but repeated plans to build the much needed dams have foundered since the 1950s in Pakistan, which is one of the most arid countries in the world and ill-prepared to meet the fallout of climate change.

"We are on track to do about another $1.5 billion of lending (this year) and we will look to see if the conditions would permit to expand that," Zoellick said. The World Bank's private investment arm, the International Finance Corporation (IFC), which has invested around $500 million in Pakistan, was also considering increasing its exposure by up to $300 million - despite volatile politics ahead of general elections due by January and escalating militancy.

Business Recorder [Pakistan's First Financial Daily]


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*Foreign loans: interest payments increase to $1.2 billion ​* 
KARACHI (November 01 2007): Country's interest payments on foreign loans are steadily increasing and these have mounted to 1.2 billion dollars, up by 15 percent during the last fiscal mainly because of higher payment on Eurobonds and surge in interest payment on private loans.

Analysts said that rising foreign debt had compelled the country to pay more interest to the foreign financial institutions, as the country's total stock of debt and liabilities (TDL) rose by 10 percent in 2007 financial year to reach Rs 5,023.6 billion.

The major causative factors for this increase in TDL were the rising level of current account deficit and a large fiscal deficit that raised the financing needs of the country, they added.

The State Bank of Pakistan (SBP) statistics revealed that interest payment on the country's external debt and liabilities witnessed a rise of 197 million dollars during 2007 financial year to 1.21 billion to the International Monetary Fund (IMF), Islamic Development Bank (IDB) and other institutions as against the payments of 1.01 billion during the 2006 fiscal year.

The country has earned an overall 530 million dollars as the interest in 2007 financial year as compared to 382 million dollars during 2006 financial year, depicting an increase of 148 million dollars.

During 2007 financial year, the country paid 128 million dollars interest on Eurobond, 24 million dollars to the IMF, around eight million dollars to the IDB, 664 million on account of long-term loans, 149 million dollars interest has been paid on account of private loans and credits.

The gap between earning and payments has also widened by 49 million dollars to 680 million dollars during 2007 financial year, while in 2006 financial year, it stood at 631 million dollars.

Increase in the interest payments has affected higher earning on the country's international reserves during the year under review. Interest earning on the reserves has gone up by 54 percent, as it has reached 412 million dollars from 268 million dollars.

The SBP said the rise in the interest payment in 2007 financial year was attributed mainly to higher payment on Eurobonds, surge in interest payment on private loans as well as on official loans. However, keeping in view the Eurobond issuance on annual basis and a rising stock of private sector debt, the increase in these two components was not unexpected.

The SBP warned that in the coming years, the country was likely to face higher burden of debt-servicing as repayments of the rescheduled Paris Club debt stock would resume from 2008 financial year and the maturities of the Eurobond issued in 2004 financial year and Sukuk issued in 2005 financial year would become due in 2009 financial year and 2010 financial year, respectively.

In addition, interest payments on various Eurobonds, issued recently, are likely to add to debt-servicing burden in coming years. Therefore, to maintain the same debt-servicing capacity, the country's foreign exchange earnings, and particularly export earnings need to grow faster.
===========================================================
Details of Interest Payments and Receipts
===========================================================
million US Dollar
FY06 FY07 Savings
===========================================================
Payments (I+II) 1013 1210 -197
I Total external debt 840 993 -153
Public & publicly guaranteed 739 820 -81
Long-term 618 664 -46
Military 8 7 1
Euro bonds 91 128 -37
Commercial loans/credits 8 13 -5
IDB 14 8 6
Private loans/credits 85 149 -64
IMF 16 24 -8
II. External liabilities 173 217 -44
Foreign currency deposits 22 33 -11
Special US$ bonds 28 13 15
Central bank deposits 34 27 7
Others 89 144 -55
Receipts 382 530 148
Interest on reserves 268 412 144
Others 114 118 4

Business Recorder [Pakistan's First Financial Daily]


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*Karachi safe for investment: German Counsel General ​* 
KARACHI (November 01 2007): Counsel General of Germany in Karachi Hans-Joachim Kiderlen has said Karachi is safe for investment and the number of foreign companies in the city, as he estimates, will increase at an average 50 companies every year.

The consul general was speaking at a dinner hosted by the management of Lufthansa on the occasion of the launch of its flights from Karachi to Europe and North America at a local hotel on Tuesday. He said there were already 180 companies of various sizes and the addition of at least 50 new companies each year could be seen in coming years.

He dispelled the notion that Karachi was prone to crime and compared its law and order situation with the law and order situation in New York. "Karachi is difficult to understand but can you understand New York?"

He said that Karachi was comparatively a safe city and offered a lot to investors. "Crime rate is high but not very high," he added. He said it was a vibrant city humming with life, the cultural life was absorbing and business activities were showing growth.

Kiderlen said that the Pakistan's economy was expanding and had potential to grow and absorb more investment. In his view investment in Pakistan is safe and offers opportunities for expansion.

He said the coming back of Lufthansa to Pakistan after a long time was a good omen. The management of the airline was free from the German bureaucratic control. "While the German bureaucracy takes four years to take a decision the airline took only 12 months to decide to resume its flights from Pakistan. The element of efficiency could now be seen." It would provide hassle-free service, comfortable and non-stop journey from Karachi and Lahore to European destinations and North America.

Earlier, Vice President Sales and Services, Southeast Europe, Africa and middle East/Pakistan Joachim Steinbach and Peter Pollak spoke about the resumption of Lufthansa's services from Pakistan and the mutual advantages the airlines and the travel industry of Pakistan would draw from this beginning.

Business Recorder [Pakistan's First Financial Daily]


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*Economy can grow in 7-8 percent range: Shamshad ​*
ISLAMABAD (November 01 2007): State Bank of Pakistan (SBP) Governor Dr Shamshad Akhtar said the Pakistani economy has the potential to persistently grow in the range of seven to eight percent of GDP in the coming years. Talking to PTV, she said it is important to recognise the potential of the country's economy in the sectors of industry, agriculture, and water.

"We have to aggressively tap potential of the economy," she added. Last year, Pakistan's GDP grew by 7 percent and after China and India it was the third fastest growing economy in Asia. Next year, Pakistan is expected to achieve growth rate of 7.2 percent.

The SBP governor said economic comparison of China and India with Pakistan was not adequate as their economies are larger in size with huge populations. "We need to focus more on investing in the economy rather than paying attention to other facets of society," she added.

To a question about rising international oil prices, she said the petroleum prices in Pakistan are adjusted by the government and people have to recognise that it is bearing the impact of price-hike through various budgetary measures. There was a time when the oil prices were in the range of $20 to $25 per barrel, she noted.

The SBP governor said it is not appreciated that the economy is taking the burden of seven billion dollars of oil import bill. The oil consumption levels have been maintained and the government has not passed on the shock of rising prices to the consumers, said Shamshad, adding: "We have managed to maintain micro-economic stability."

She also said that international oil prices have gone up to $90 per barrel mark, adding that it can hit the $100 per barrel mark due to geo-political situation especially latest tension at Iraq-Turkey border. International financial volatility and fluctuation in commodity prices further compound the matters, the SBP governor observed.

Business Recorder [Pakistan's First Financial Daily]


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*Need stressed to strengthen university-industry linkage ​* 
LAHORE (November 01 2007): Biotechnology offers tremendous advantages to Pakistan but to benefit from its true potential, the government and all key stakeholders involved in commercial activity, need to strengthen the 'university-industry linkage'.

This was the consensus among speakers at a seminar entitled "commercialisation of biotechnology products", organised by the Lahore Chamber of Commerce and Industry and the National Commission on Biotechnology on Wednesday.

LCCI President Shahid Hassan Sheikh, Dr H U Khan, Director National Commission on Biotechnology, Dr Waheed Akhtar, Director School of Biological Sciences, University of Punjab, Dr Sheikh Riazuddin, Dr Yaqub Chaudhry, Dr Shahjehan Beg, Dr Farid A Malik and LCCI Standing Committee Chairman Mian Shahid Raza spoke and highlighted the importance of commercialisation of biotechnology products.

The speakers stressed the need for commercialisation of biotechnology by establishing links between universities, research institutions and industry to optimise the benefits of available expertise and infrastructure. They called for establishment of a platform for close practical interaction between scientists at institutions of higher learning and the industrial units.

They were of the view that public-private partnership in many industry-related ventures such as diagnostics, drug development and vaccine production would help achieve desired results.

Dr H U Khan said stakeholders should help in establishing a state-of-the-art national institutes and research labs for undertaking goal-oriented research in biotechnology. Dr Waheed Akhtar gave a detailed presentation on the commercial importance on enzymes production terming it a multi-billion dollar industry worldwide.

He said that industrial use of enzymes was increasing rapidly due to their specific activities and the environmental concerns. The enzymes find more and more applications in food, leather, cloth, garment, paper, feed, detergent and other industries, he added.

Dr Yaqub Chaudhry said the patronage of National Commission on Biotechnology had given a boost to the infrastructure and manpower for goal-oriented research in biotechnology.

However, he said, biotechnology transition into industrial products required major brainstorming among scientists, industrialists, international experts and policy makers.

Sheikh said recent advances in biotechnology provided ways of introducing very precise changes to genetic material that allowed, for the first time, the transfer of properties of a single gene from one organism to another.

These new techniques, commonly referred to as "gene technology", involved the modification of organisms by the direct incorporation (or deletion) of one or more genes to introduce or alter a specific characteristic or characteristics.

He said gene technology had wide use in the agriculture sector that was the single largest sector and a dominant driving force for growth and the main source of livelihood for 66 percent of the country's population. But unfortunately 40 percent of the total production is lost because of lack of preservation.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*State Bank's Annual Report ​*
(November 01 2007): The Annual Report released by the State Bank of Pakistan on 29th October contains a good exposition of Pakistan's economy during 2006-07, pinpoints latest economic challenges confronting the country and offers advice to overcome weaknesses in a number of key areas.

It is also educative in the sense that it has discussed policy trade-offs at appropriate places and given the reasons for preferring certain strategies in the larger interest of the economy. As for the achievements during 2006-07, the State Bank seems to be highly pleased with the rate of growth in the country. At 7.0 percent, the real GDP growth was one of the fastest in Asia during FY07, surpassed only by China and India.

A very healthy aspect of the growth of the economy was that this was the third consecutive year in which growth was supported by acceleration in real investment. According to the Report, "sound macro-economic policies have successfully transformed the initial consumption-led growth impetus of a few years back to a greater role for sustainable investment-led growth.

With the investment to GDP ratio at a record 23 percent, complemented with a surge in domestic private investment and record FDI flows, the economy looks well-poised to continue on a high growth trajectory in coming years".

The State Bank also appears to support the contention of the government that the current spell of high, sustained growth is having a desirable impact on alleviating poverty in the country.

However, as opposed to the government, it has not relied on some kind of household survey to prove its point but merely stated that the country witnessed a marked reduction in poverty level during FY79-FY83 when the growth rates were quite high and the relationship between growth and poverty level could also be similar this time.

Gains were not only confined to growth and investment but were also recorded in other areas of the economy. "More specifically, and in proportion to GDP, national savings rose, the external debt burden declined, and total revenue increased while the budget deficit stayed at last year's level of 4.3 percent of GDP".

The State Bank stresses in no uncertain terms that key macroeconomic challenges remain to be fully addressed yet. "The current account deficit widened further in FY07, the tax to GDP ratio is still very low, and inflation remained stubbornly high, showing only a sluggish decline in FY07". If the economy is to continue growing at rates above historical norms, policies and measures have to be implemented to stabilise emerging macroeconomic imbalances.

Justifying continued tight monetary policy, the Report states that such a stance addresses inflationary expectations and prevents the seepage of pressures from rising food prices into the broader economy.

Although monetary policy was effective in containing demand-pull inflationary pressures, the impact of monetary tightening was muted by the unanticipated strength of food inflation, an expansionary fiscal policy and the need for concessional financing for strategic sectors of the economy.

The growing current account deficit, led primarily by a sharp slowdown in export growth, poses another great risk to the economy. In the immediate response to the sluggish growth in exports, the State Bank increased the subsidy for export lending in July, 2006 but concessional lending is no answer to this challenge.

Greater benefits in this area are likely to emerge from policies aiming to reduce the cost of doing business, removing bureaucratic hurdles, reducing the cost of energy and water, and lowering inflation in the economy, rather than short-term palliatives.

Subsidies, in particular, were unsustainable given the shrinking fiscal space available to the government. The State Bank also seems to be concerned about a higher burden of debt servicing in the coming years as repayments of the rescheduled non-ODA Paris Club debt stock will resume from FY08, and the maturities of the Eurobond issued in FY04 and Sukuk issued in FY05 will become due in FY09 and FY10 respectively, besides interest payments on various Eurobonds issued recently.

As for the fiscal policy, the State Bank has recommended restricting public investment to high priority sectors, encouraging public-private partnerships in the provision of infrastructure and expanding the tax base. "In the latter context, a large part of agriculture and the services sector, which account for over two-thirds of GDP, is largely out of the direct tax net. This is not sustainable".

The State Bank has also ventured to guesstimate the direction of major economic aggregates for 2007-08, recognising, of course, that the projections are based on limited data availability. The growth during FY08 was expected to be strong and broad-based, with contributions coming mainly from agriculture and the services sectors.

Aggressive monetary tightening would help contain demand pressures in the economy, with monetary growth forecast to remain close to indicative target of 13.7 percent. Domestic inflation was also expected to be close to the annual target of 6.5 percent.

However, high food commodity prices and rising international energy prices which may force the government to increase domestic oil prices are major risks to the inflation outlook. Current account deficit may be larger than FY07 in absolute terms but is expected to fall as a share of GDP.

The observations and analysis about the economy by the State Bank in its Annual Report, in our view, are fairly objective. Unlike government documents, it is devoid of propaganda element and depicts a true picture of the economy. Also, there is no confusion about the message of the Report.

The State Bank is satisfied with the growth numbers but highly concerned about the emerging weaknesses of the economy which, if left unadvised, could pose a serious challenge to the economic outlook of the country. However, it would be unfair if we did not give high marks and attach enough importance to the achievements recorded during the tenure of the present dispensation through concerted reform efforts and right mix of policies.

There is no denying the fact that the economy has registered a respectable growth rate over the last few years which has resulted in almost doubling the per capita income. The State Bank also seems to be fairly confident about the reduction in poverty level but has refrained from saying anything about the income inequalities, due probably to lack of relevant data.

There were also doubts about the sustainability of growth momentum, which have now largely been laid to rest due to a jump in the investment level in the economy. Hopefully, the gains of high growth trajectory would be passed on to the common people of the country, particularly the poor, by a shift in policy thrust by the government.

Foreign exchange reserves of the country are now at a record level, exchange rate is stable and fiscal deficit is also manageable. The country also does not need to depend on the IMF for borrowing the needed resources and accept its advice.

By any stretch of imagination, these are no mean achievements. It was not long ago that growth rate had almost stagnated and the country was on the verge of default, forcing it to go with the begging bowl before the multilateral institutions, lending agencies and others.

However, the economy seems to be delicately poised at this juncture. The challenges like huge current deficit, rising inflationary pressures and narrow tax base have to be squarely confronted to maintain the growth momentum and impart stability to the process.

The State Bank has, very rightly, de-emphasised the role of subsidised credit and suggested other ways to promote exports. The authorities and other stakeholders need to listen to this sane advice otherwise the country would have to take increasing recourse to the international debt market to bridge the gap between foreign exchange payments and receipts.

Already, Pakistan's external debt and liabilities have reached a record level of 40.1 billion dollars during FY07. This, along with an increasing dependence on sources like Sukuk and Eurobond issues, would increase the debt servicing liability and adversely affect the outcome in the external sector accounts in the coming years.

We wish the government not to indulge in unnecessary propaganda that the issuance of such bonds is some kind of success and represents the confidence of the international community in sound management of the economy.

The nation must be told that the inflow of funds from such sources is a short-term debt obtained at a high cost for balance of payments reasons and to bolster foreign exchange reserves of the country. It is sad that inflation rate is still at an alarmingly high level.

The problem would be exacerbated when the government decides to pass on the effect of rising international oil prices to the domestic market. How to insulate the common man from this ugly situation to maintain social harmony in society is a moot question.

Also, it is very easy to say that agriculture and services sectors should be brought under the tax net for the sake of equity and to mobilise higher level of revenues. We have also been suggesting such measures for a number of years but vested interests appear to be too strong to yield to the pressure of reason.

Coming specifically to the monetary policy, the State Bank could only boast mixed achievements. The spread between deposit and lending rates has come down somewhat due to continuous prodding by the State Bank, which is a healthy sign. It has also not shied away from taking appropriate monetary tightening measures at the right time.

However, the State Bank's record to keep the growth in monetary supply in check and contain inflation has not been very enviable. While money supply grew by 19.3 percent during 2006-07 as against the target of 13.5 percent, CPI rose by 7.8 percent or higher by 1.3 percentage points than the target.

The target for money growth during 2007-08 has been fixed at 13.7 percent which, even if achieved, would almost be equal to the rise in GNP in nominal terms and thus unable to absorb the monetary overhang of the past years.

The assertion by the State Bank that it has a dual mandate of maintaining price stability and economic growth is not very convincing. Its primary focus, like all other central banks, should be on price stability.

In fact, these two objectives are not mutually exclusive and monetary stability would be very helpful in sustaining the present growth rate in the long-term. Overall, we feel that the Report of the State Bank would raise the awareness level in the country, improve the quality of debate on various issues and may prompt the government to take necessary measures in certain weaker areas of the economy.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Power projects​*
(October 31 2007): Minister for Water and Power Liaquat Jatoi has announced at a PPIB meeting in Islamabad that 13 private power projects of 2,456 MW will be commissioned by 2010, of which 554 MW will be available to the national grid next year, while 1,343 MW and 559 MW will enter the system in 2009 and 2010, respectively.

The Board is currently processing 62 multiple-fuel power projects involving the use of oil, coal and gas with a cumulative capacity of 16,790 megawatts, which are expected to be commissioned between 2008 and 2016.

Interestingly, IA for only one hydropower project, ie 84-MW New Bong Hydel, has been signed, which is going to be the country's first hydel power project in the private sector. A number of power producers have, meanwhile, concluded Direct Implementation Agreements with their lenders, while only five IPPs have attained financial closure.

The breakdown of new power projects shows preference for the more expensive, though relatively easily implementable, thermal projects, which is reflective of how the grim situation in our power sector has become. The widening gap between power supply and demand in the country has, in fact, put us in a desperate race for time and investment.

According to one estimate, the country will need an investment of $20.4 billion in the power sector by the year 2013, though the demand for energy by then may have grown beyond our increased production capacity, if fast-track implementation of the projects is not undertaken.

So grim has the energy crisis become that the government had reportedly directed Wapda last year to overcome the power shortage by rehabilitating old power projects on a fast track basis. It seems we are paying a steep price for the neglect, over the decades, of our almost inexhaustible hydropower potential, which has been estimated at over 40,000 megawatts, and so far we are producing only 6,000 megawatts of hydel power.

The government's decision last year to offer seven new sites for harnessing hydel power was a useful initiative to correct the imbalance, though how far it will prove effective in the long-term is yet to be seen. As we have argued in this space earlier, harnessing even the alternate sources, ie coal, wind and solar energy, despite the higher initial cost, will be the second best option after hydropower.

Meanwhile, the soaring oil prices in international market and our depleting gas reserves are bound to blunt our competitiveness in the world market. Incidentally, gas is a fuel of choice for IPPs, though there are already reports in the press that there may not be gas available for future IPPs if exploration is not expedited immediately to find new reserves.

(The Sindh government's recent decision to undertake exploration of methane in the province is a good initiative.) Further, the IPI pipeline offers hope of offsetting the tightening energy squeeze, though how soon the project will be completed depends on its pace of implementation.

As we have pointed out in our comments earlier, the crisis in Pakistan's water and power sector is essentially an outcome of weak governance over the decades, lack of adequate oversight on project execution, poor financial management and corruption.

Secondly, at times the implementing agencies seemed to be working at cross-purposes, which resulted in waste of time and precious resources. Thirdly, the policy of ad-hocism which successive governments have practised over the decades has left us moving in circles instead of pursuing a path of linear progression. Governments at times have appeared to be more interested in securing brownie points than in achieving solid results on the ground.

In fact, lack of requisite political commitment to long-term national goals has been a major reason of where we stand today. This is as true of our water and power sector as of institutional development. There is a need to correct our orientation if we have to attain our national goals of progress and prosperity.

The government should activate its machinery and come down hard on inefficiency and corruption. It should also ensure execution of all water and power projects on a fast-track trajectory to ward off the gathering storm.

Business Recorder [Pakistan's First Financial Daily]


----------



## Neo

*Show-casing Pakistan's economy ​*
Economic managers of the government on their recent visit to Washington to participate in the annual meetings of the IMF and the World Bank tried to assure the international community that the economy of the country is performing well and the present economic policies will be maintained even if there is a change in the government after parliamentary elections to be held in January, 2008.

Speaking at the annual meeting of the Board of Governors of the World Bank and the IMF, Salman Shah, Advisor to the Prime Minister on Finance and Economic Affairs, said that Pakistan's economy had grown at an average rate of almost seven percent per annum over the last four years, positioning itself as one of the fastest growing economies in the Asian region. The size of the economy had more than doubled (from 58 billion dollars to 132 billion dollars) and per capita income almost had doubled (from 438 dollars to 847 dollars) during the last seven years.

There was a sharp pick-up in investment, reaching a new height of 23 percent of GDP, debt profile had improved significantly, exchange rate continued to be stable, foreign exchange reserves were at a record level and home remittances and foreign investment were the highest in the country's history. "Prudent macro-economic policies and wide-ranging structural reforms underpinned Pakistan's economic turnaround and six/seven years of consistent and transparent economic policies along with economic reforms have transformed Pakistan into a stable and resurgent economy," the Advisor claimed.

However, while economic fundamentals have gained strength, relatively higher inflation, largely attributable to higher food prices, and widening of current account deficit, owing mainly to slower growth in exports, remained the key macro-economic challenges confronting the country.

In a separate presentation at the Johns Hopkins University, Ashfaq Khan, Special Secretary to the Ministry of Finance, revealed that despite political differences, there was agreement in Pakistan on the general direction of the economy and the economic reforms introduced by the present government would be maintained. Whoever was elected in the next general elections would continue to build on the solid base provided by the current government.

This assurance was given to Merrill-Lynch, an international financial firm, in interviews by PPP's Naveed Qamar and PML (N)'s Ahsan Iqbal. According to Salman Shah, the government intended to move forward with the privatisation of the power and energy sectors as well as railways and airlines. Islamabad had also planned tax reforms to broaden the tax base and to take steps for enlisting the private sector in infrastructure development. Second-generation reforms would lead to "leaner government and a much more active and aggressive private sector" in the country.

From the above statements, it appears that both Salman Shah and Ashfaq Khan have generally given positive vibes about the economy of Pakistan and its prospects. In the given situation and before an international audience, it was both necessary and expedient. Foreign investment tends to flow to the countries whose economies are stable and there is no threat to the safety of investment or risk to the repatriation of profits. The task of our economic team was made easier because most of the macro-economic indicators were actually moving in the right direction and there was no need to exaggerate the situation to make a positive impact.

It was also appreciable on the part of our economic team to point to the weaknesses of the economy. Dr Salman Shah, while highlighting the achievements of the government, was quick to list the challenges confronting Pakistan which included improving competitiveness for exports growth, increasing savings and investment to support growth momentum and creating job opportunities for the young generation.

He also did not hesitate to say that it was very important for Pakistan to succeed in the war on extremism. We appreciate such a balanced view of the situation. After all, international investors and multilateral institutions are not so naïve. With the information they have, they can easily sift facts from fiction and unnecessary positive spin cannot befool them. However, we are not entirely convinced about the assertions of our economic team that the economic policies of the present government would be maintained by the incoming government and no adjustment is likely to be made.

Naveed Qamar and Ahsan Iqbal must have discussed the overall thrust of economic policies with Merrill-Lynch in their private capacities. Actual positions of the opposition parties would only be known when they announce their manifestos for the coming elections. At present judging from their statements in the media, however, it looks that the next government would be less concerned about growth numbers and more preoccupied with poverty alleviation and employment generation measures.

Business Recorder [Pakistan's First Financial Daily]


----------



## Spring Onion

*Pak-Turkey traders to initiate joint ventures*

LAHORE: A high-level Turkish delegation headed by President Turkey Chamber of Commerce and Industry will visit Pakistan in January 2008 to initiate joint ventures and business deals after identifying areas of mutual cooperation.
Turkish Ambassador Mr Engin Soysal said speaking at a function at the Lahore Chamber of Commerce and Industry on Friday. 
The LCCI President Shahid Hassan Sheikh, Senior Vice President Yaqoob Tahir Izhar, honourary Consul General Mian Tajammal Hussain, former LCCI Presidents Bashir A. Baksh, Mian Misbah-ur-Rehman and former Senior Vice President Sohail Lashari also spoke on the occasion. 
The Ambassador said exchange of high-level delegations is crucial to boost trade relations between the two countries. He said both Pakistan and Turkey have suffered a lot on bilateral trade issue only because of lack of coordination. - APP
Once both the sides focus on this subject, the situation would take a positive turn. 
While appreciating setting up of OIC-ECO-D-8 cell by the Lahore Chamber of Commerce and Industry, the diplomat said it would help strengthen relations among these countries and bring people close further. 
He also urged the Lahore Chamber to prepare a road map for next two years so that Pakistan and Turkey could be able to achieve desired results in economic terms. 
The Ambassador said Pakistan and Turkey, for having a lot of potential, could join hands in various sectors including Engineering, Automobiles, Textiles and infrastructure development for the mutual benefit of  the two countries.
He said as Lahore was fast turning into hub of business activities therefore the Turkish entrepreneurs were interested to do business here and same way the Pakistani could use Turkey to enter into the European market. Engin Soysal also urged to LCCI office-bearers to arrange a delegation to Turkey so the businessmen could be able to have first-hand knowledge of the opportunities available there. LCCI President Shahid Hassan Sheikh said frequent
exchange of visits from both sides at governmental and institutional
levels has remained a distinguished feature of the Pak-Turkish
relations, and there has always been a lively exchange of
ideas and perceptions to promote cooperation between the two
countries. 
Shahid Hassan suggested that Turkey could make direct
investment in Construction, Electrical and Industrial machinery,
IT, Pharmaceutical, Defence production, Engineering,
Automobiles and Agro-based industries, Oil and Gas exploration and
Financial sector. 
APP


----------



## Spring Onion

*Economy is growing and demand of oil is increasing: Nasir*

ISLAMABAD: President Islamabad Chamber of Commerce & Industry Nasir Khan appreciated the agreement for the establishment of oil refinery in Gawadar to complete the deficiency of oil products in the country. While addressing to the executive members of ICCI President said that such mega projects will bring the prosperity in the Baluchistan as well as in the whole country and will also help to decrease the unemployment.
President said that 2006-07 are perhaps the years of high oil prices and which hurt the economies of many countries in the world including Pakistan. He added that Pakistani economy is growing and the demand of oil is increasing rapidly in the country. In 2010 Pakistan will need 18 million tons of oil and he added that Pakistan has five refineries which are producing 11.2 million tons of oil products a year.
President emphasized if Pakistan wants to sustain its high economic growth that it must address its energy needs.
He added that Gawadar refinery, which will be Pakistan biggest, have the capacity to process 300,000 barrels of oil a day. He further said that Pakistan can increase its interaction with Middle East and Central Asian countries after the completion of project.



President Nasir Khan said that strategic location of Baluchistan can play significant role in helping the country emerge as a potential energy for all Asia. The province is ideally situated to cater to energy and trading needs of other countries in the Asian region. He mentioned that Gawadar is situated atop the shipping lane through which at least 60 percent of the worlds oil passes.

The Participants of meeting were Vice President Mohammad Hussain, Munwar Moughal, Mian Shaukat Masood, Khalid Malik, Munwar Iqbal, Saif ul Rehman . Abdul Ghaffar Chadhery and Secretary General Majid Shabbir.
*
Report by Jana *


----------



## Spring Onion

*Sri Lanka seeks more tourist inflow from Pakistan*
Colombo, Nov 2 PPI: 

Sri Lankan tourism industry, reeling under a
severe impact of ongoing LTTE conflict, is now looking at friendly
neighbours like Pakistan to give a boost to ailing sector. 

The tourism sector, is now working on measures to bring in
greater number of visitors from Pakistan and other countries. 

Pakistan High Commissioner to Sri Lanka Shazad A Choudhry said
measures will be undertaken to promote tourism between Pakistan and
Sri Lanka. He said jewellery, garment and leather sector will be
developed for increased trade between two countries. 
The Free Trade Agreement (FTA) between Pakistan and Sri Lanka has
been operational since June 12, 2005. 
Tourist arrivals into island country during September 2007
slipped 3.6% to 37,104 compared to same period in 2006. The drop for
first nine months till September 2007 was 21% to 350,779 as compared
to same period of 2006, Sri Lanka Tourism said. 

*Choudhry said nearly 4,800 tourists visit Pakistan from Sri Lanka
every year and they hope to increase this number. 
Besides eco-tourism, initiatives would be taken to make visitors
aware of Buddhist sites and historical places in Pakistan to
increase tourist inflow between two countries, he added*. - PPI


----------



## Neo

*Dollars fall against euro unlikely to hit Pak economy: experts ​* 
Friday, November 02, 2007

KARACHI: The foreign exchange experts do not foresee an immediate impact on the countrys economy in the backdrop of continuous fall of the US dollar against euro and other currencies in the international market.

Exchange risk transpires when assets are in one currency and reserves in the other, but the SBP is maintaining most of its foreign exchange reserves in the same currency in which it has to make payments, the experts said.

They maintained that at the same time the central bank was strictly following a policy of avoiding taking exchange rate risks. It may be noted that 80 to 90 percent external trade of Pakistan is in US Dollar while its majority of reserves composition is also in Dollar currency. 

However, some experts have had views that it is best time when SBP should think about Asset Value Maximization by diversifying its forex reserves. Though many countries including China, India, Malaysia and Iran are converting their foreign exchange reserves from Dollar to Euro and other currencies, but volume of their reserves are very huge as compared to that of Pakistan, the analysts said. 

Besides short volume of funds country is also facing dearth of expertise in respect of proper management of foreign exchange reserve. In an efficient market, one must have to guess that when one currency would appreciate or depreciate, which creates speculation in currency trade, the analysts said.

Dr. Shamshad Akhtar, Governor State Bank of Pakistan (SBP) was of views that it was not advisable to convert foreign exchange reserves of country from Dollar to Euro or any other currency at this juncture.

Similarly some experts expressed the same views that at this time diversification in reserves would not be beneficial for country particularly in Euro (Ä) when it has surged more than 53 percent against US Dollar, however, they were of view that SBP must have thought about this conversion long time ago.

They also suggested that country must convert 25 percent of foreign exchange reserves from dollar to euro but it should wait till value of dollar starts to move up against Euro and other currency at international market. 

It may be noted that in third quarter of calendar year 2007 euro gained great strength against US dollar at international market. In July 2007 the Euro was trading at $1.3650, three months later it was at record high of $1.4460 when markets closed on Thursday. 

Dollars fall against euro unlikely to hit Pak economy: experts


----------



## Spring Onion

*Pakistan holds $16,354.2 million Liquid Foreign Reserves *

Karachi, Nov.02 (PPI): The total liquid foreign reserves held by
Pakistan stood at $16,354.2 million on 27th October, 2007, the State
Bank of Pakistan announced Friday. 
The break-up of the foreign reserves position is as under: 
Foreign reserves held by the State Bank of Pakistan: $ 14,119.2
million. The Net foreign reserves held by banks (other than SBP): $ 2,235.0 million.


----------



## Neo

*PIA chief favours ailing airlines privatisation ​* 
Flag carrier's accumulated losses reach a whopping Rs35.5 billion

KARACHI: Chairman Pakistan International Airlines (PIA) Zafar Ahmed Khan on Thursday said he believes the state-run airline should be privatised to pull it out of the quagmire of financial losses.

The accumulated losses of the national flag carrier have reached a whopping Rs35.5 billion while the third quarter of the current year ended below the expectations of the management.

Well I have a corporate background and if you ask me, a commercial organisation like PIA should be privatised, he told a news briefing a day after the airline posted Rs3.2 billion losses for the July-September period.

Khan, who took over the ailing airline earlier in the year, acknowledged that the strategy to cut back on unprofitable routes, which could have curtailed the losses, failed. That failure was pronounced by fluctuating oil prices as the airline could not hedge against the rising fuel cost, he said, later adding: I am confused right now, what I expected did not happen.

PIAs profitable route to United Kingdom suffered a setback in the third quarter as its monopoly broke when for the first time a Pakistani private carrier, Air Blue, took off for Manchester from Islamabad in July. 

The national flag carrier also took the hit as fewer passengers went to Saudi Arabia to perform Umrah, the Chairman said and foresaw bad times ahead as fuel cost continue to rise. Nevertheless, he said, a future plan was being worked out and termed the upcoming Hajj season as an opportunity to make up for the past mistake. 

About the demand of engineers to increase their salaries, he said that was legitimate but regretted the subsequent unrest by engineers led to disruption in a record punctuality achieved in October. 

Such actions would not help in stopping the financial haemorrhage, he said. If government sees the management is controlling the losses then they will help us and that will in turn assist the employees.

He ruled out if the management was mulling to downsize the workforce now but said that was something that would be seriously considered in years to come. PIA has a ratio of 440 employees per plain against the international average of 150 to 250 employees. The airline will replace its fleet of B-737s by seven A320 aircraft in 2009. It also intends to introduce A310s in place of B-747s.

PIA chief favours ailing airlines privatisation


----------



## Spring Onion

*Mobile market poised for strong growth*

ISLAMABAD: *Pakistan is set to see an increase of mobile subscribers from 62-million in 2007, to 166-million by 2012, BMI TechKnowledge senior telecoms analyst Richard Hurst stated at the launch of the company's Communication Technologies Handbook 2007. 
This means that Pakistan, with its compound annual growth rate of 22%, would overtake Turkey, which traditionally dominated the market in the Middle East,CNBC reported.*Mobile services would continue to lead the continued market growth,and the main driver would be the need to satisfy the pent-up demand for basic voice services across the country. 
In addition, the country is also expected to see a swift uptake of wireless broadband services as various operators begin to roll out networks using a variety of platforms.
Pakistan awarded six licences for mobile operators, namely Mobilink, Ufone, Warid Telecom, Paktel, Telenor, and Instaphone, which has meant that the doors have now shut for new operators to enter the market. 
Unless new entrants merge or acquire, the existing operators will compete among themselves to benefit from the phenomenal predicted growth.
The total mobile market in the Middle East is expected to reach 416-million mobile subscribers by 2012. Africa, in comparison is expected to grow to over 425- million subscribers by the end of 2012. The BMI TechKnowledge Handbook, in its fifteenth year of publication, has for the first time included the Middle East markets in its comprehensive analysis. 
As the market synergies across the Middle East and Africa regions have seen a handful of operators, such as MTN, Orsacom, Etisalat and MTC, emerge to develop and take advantage of the opportunities in the different developing markets. - APP


----------



## Neo

*Mangla Dam raising project to store 2.8 MAF water ​* 
Friday, November 02, 2007

LAHORE: The Mangla Dam raising project after completion in April 2008, besides generating 644 Gwh more electricity, would store an additional 2.88 million acre feet of irrigation water which would be available in winter next year.

This information was given in a briefing to the participants of the National Defence Course. A delegation, headed by Air Vice Marshall Faaiz Amir, visited Water and Power Development Authority House where WAPDA Member (Water) Muhammad Mushtaq Chaudhry and Pakistan Electric Power Company (PEPCO) MD Munawar B Ahmed briefed the team about the current water and power scenario in the country.

WAPDA Chairman Shakil Durrani and Member (Power) Fazal Ahmed Khan were also present. Addressing the delegation, Member (Water) Muhammad Mushtaq Chaudhry said increasing population and depleting storage capacity of water reservoirs in Pakistan called for constructing more than one mega dams without any further delay.

He said 22.5 million acres of virgin land could be brought under agriculture in the country if new mega dams were built. He revealed Pakistan had already lost water storage capacity by 28 per cent on account of sedimentation, which has now come down to 13.17 MAF from 18.37 MAF.

He said an average of 32.81 MAF of water had been going downstream Kotri barrage annually since 1976. Mushtaq Chaudhry apprised the audience that Pakistan was heading towards a situation of being a water-deficient country as per capita water availability fell to an alarming figure of 1,070 cubic metres this year.

According to universally-accepted parameters, a country is declared water scarce when per capita availability of water falls to 1,000 cubic metres. Referring to hydropower development projects being executed by WAPDA, the member water said the authority was vigorously carrying out studies of 12 mega hydropower projects. 

The WAPDA, he added, expected to produce more than 10,000 MW of electricity from these projects. PEPCO MD Munawar B Ahmed, dilating upon the power sector, told the delegation per capita consumption of energy in Pakistan was only 15m British Thermal Unit against world average of 68m btu.

Mangla Dam raising project to store 2.8 MAF water


----------



## Neo

*ECC approves policy to modernise trucking ​* 
Friday, November 02, 2007

ISLAMABAD: The Economic Coordination Committee (ECC) of the cabinet on Wednesday approved the trucking policy, a part of National Trade Corridor Improvement Programme (NICIP), aimed at reforming and promoting an integrated, modernised and sustainable trucking sector in the country.

The policy was prepared by the Ministry of Industries, Production and Special Initiatives and the Engineering Development Board (EDB) after excessive consultations with stakeholders for the last one and a half years, says a news statement issued here on Thursday.

The policy was approved in principle and trucking was declared as an industry to facilitate fleet operators in acquiring loans from commercial banks at competitive rates. They will also be granted insurance cover, tax incentives and utilities at industrial rates instead of commercial rates to attract much-needed foreign investment.

The ECC has directed EDB to consult Finance Ministry regarding additional proposed incentives including allocation of dedicated funding by State Bank of Pakistan / IFIs - 50 per cent mark-up to be picked up by the GoP, withdrawal of one per cent Federal Insurance Fee and 5 per cent Federal Excise Duty (FED) on gross premium, investment tax credit allowance at 15 per cent to fleet operators and National Freight and Logistics Chamber (NFLC). 

A new Motor Vehicle Registration System (MVRS) will be introduced to consolidation provincial registration systems.

ECC was informed that Ministry of Communication has already established 40 weighbridges for axle load management. A uniformed force of 800 people will be built to operate these. Prime Minister directed Finance Ministry to reconsider the case submitted by Ministry of Communication. 

The trucking policy introduces an effective drivers training and licensing system containing re-training and re-licensing of the existing population of drivers. Besides public sector interested local OEMS, large fleet operators (Shell, Caltex, PSO etc) and NLC will be invited to contribute in this task of national importance. 

Policy presents a concept of Trans Freight Stations (TFS) as a facilitation point outside the main cities to avoid congestion inside the cities. The TFS would have multi purpose parking and resting facilities for trucks and drivers. These stations may be established by National Industrial Parks Development Management Company (NIPS) and managed through public / private partnership. At least one model TFS has been approved to be established in each provincial capital. 

To streamline the trailer manufacturing activity in the country, separate registration of trailers has been made mandatory in the policy. Non-registered Trailer Manufacturer in the informal sector will get registered with EDB as recognized manufacturer within next four years. 

ECC approves policy to modernise trucking


----------



## Spring Onion

*PIA to get Airbus A-320 aircraft*KARACHI: Chairman PIA Zafar A. Khan said here that PIA will acquire Airbus A-320 to replace its ageing Boeing 737 and deliveries will start from 2009. Addressing a press conference, he said all efforts are being made to meet the target of keeping average aircraft age at 10 years or below. He pointed out that PIA has already acquired brand new Boeing 777s and ATRs while plans are afoot for replacement of Boeing 737 with Airbus A-320 to be acquired on 10 years lease which will cost less to PIA in comparison to cost of dollars 55 million per aircraft if ordered to Airbus Industry. He said finally the PIA will dispose of its aeging A-310 aircrafts. He said the new aircrafts would not only help PIA achieve savings on fuel cost but also on maintenance. 
Replying to a question, he said he had found nothing hidden in the purchase of new aircrafts and no one had to-date communicated any concern on the purchase of Boeing 777 in which, otherwise, PIA gets tax advantage. - APP


----------



## Neo

*KSE dips below 14,000 mark on panic selling ​* 
Friday, November 02, 2007

KARACHI: Panic selling was noted throughout the session pushing the Karachi stock market benchmark KSE 100-share Index below 14,000 points psychological level on Thursday after staying above this mark for almost a month.

KSE 100-share Index plummeted 389.50 points to close at 13,929.92 points. At a point the index lost 496.28 points touching intra-day low at 13,823.14 points.

KSE had crossed the 14,000 mark on October 03, 2007. However, it was not for the first time that market had breached this level.

Continuously crumbling law and order situation, uncertainty on political front and likely imposition of emergency or martial law in the country all together empowered speculators to play with the sentiments that turned negative at the Karachi bourse, analysts said.

Quoting a number of politicians statements, analysts observed that if Gen. Musharraf was no more President of Pakistan - in case of Supreme Court declares his candidature invalid in the presidential elections held on October 06, 2007 - then there were strong reservations on investment hand.

Moreover, the delay in Supreme Court verdict might also create a constitutional crisis, as Musharraf tenure as president of Pakistan ends November 15 while his re-election stands challenged.

The ambiguity surrounding status of top slot of the country coupled with attack on Air Force personnel and all out war in Swat never allowed market participants to stay with high holdings and risk, they added.

On the other hand, the free-float market capitalisation based 30-Index recorded a steep plunge of 468.90 points and closed at 16,819.17 points.

The prevailing negative sentiments have overcome the strong fundamentals due to one reason or the other, as the record high oil prices in the international markets stands over $96 a barrel and cut in Fed rates were strong reasons to generate buying at the current shares prices, a leading broker said.

Heavy selling was witnessed especially in blue chips due to the rumours of emergency and deal between political forces and the establishment, S. Kashif Mustafa said. 

However punters claimed that Tgurdays panic selling was the backlash of law and order situation and the upcoming SC decision relating to the merits of Presidents re-election. 

While some day-traders called this as manifestations of results announcement, which did not, matched the investors expectations.

This hefty selling brought the index back below 14,000 level intraday, however index regained some strength and 100 point recovery in the form of buying was seen at lower levels.

Shares of 252 companies lost value and 109 gained on total volume of 267.971 million shares with market capitalisation down Rs114 billion at Rs4.250 trillion.

After the striking performance in last session banking sector once again came under heavy pressure, Investors who off took heavily in last session just surrendered there bids during the day and so panic was observed in this sector. 

BAFL and NBP were the highest volume getter closed with some significant losses. MCB showed some off track performance and closed in positive zone. Selling also continued in E&P sector scrips, OGDC gained the highest volume in this sector closed depreciating by 3.5 per cent. 

PPL and POL also followed the same trend and closed with significant losses.

Low selling volumes were witnessed in cement sector as the major scrip rallied negatively. DGKC and LUCK were the front line losers both closed with normal losses. 

As the season is unsupportable for this sector and also due to the absence of attractive earnings, this sector is out of form and so investors are holding reluctant attitude towards it.

KSE dips below 14,000 mark on panic selling


----------



## Spring Onion

LO theek ha Neo pehala ap kar lo post news


----------



## Spring Onion

*OGDCL's daily oil, gas production reaches to 41,503 barrels, 947 MMcf
*


ISLAMABAD, Nov 2 (APP): *The daily oil and gas production of

state-run Oil and Gas Development Company (OGDCL) including its
share in operated and non-operated fields, has reached to 41,503
barrels and 947 MMcf respectively, this year.
According to annual report of the Company, the average oil and
gas production remained at 38,966 barrels and 946 MMcf during the
last year.
The also made ten oil and gas discoveries this year as
compared to five during the last years*.


Out of these ten discoveries, eight were in Sindh and one each
in Punjab and NWFP provinces.

According to details, the Company accomplished the target date
of completion of Mela Project located in District Kohat, NWFP
during this year.
The project was completed in a record time of 19 weeks in
spite of an unexpected delay of four weeks caused due to
unprecedented rains.
The infrastructure laid for this project is capable of
handling 10,000 barrels of oil per day and 20 MMcfd of gas.
All phases of the project were efficiently handled using the
JITE (Just-in Time Engineering) approach.
The well was put on extended testing during May 2007 after
laying 12 kms pipeline in a very difficult terrain and by
installing processing plant and surface facilities.
The Mela-1 well is currently producing 5,000 barrels per day
of oil and 8 MMcfd gas, Pasakhi North East-01 was put on regular
production during December 26.
The well is currently producing 1,300 barrels of oil per day.
Chanda Well-02 which was put on regular production in
September 2006, an acid stimulation job was carried out on this
well which resulted an increase in daily oil production by 1,400
barrels.
Dhodak-10A gas after direct completion was put on production
with 8.6 MMcfd gas and 270 barrels per day of condensate.
Testing and successfully completion of Dakhni Deep-01 and
Dakhni-10 was also achieved during the year.
Sale of 10 MMcfd of gas to M/s SSGCL also started in May 2007
after completion of 42 kms gas pipeline at Bobi.
According to the report, Annual Bottom Hole Pressure (BHP)
survey at Qadirpur wells completed during the year and Multi-finger
Imaging Tool (MIT) survey carried out in order to check the
condition of tubing of 10 wells.
Additionally, acid stimulation jobs were carried out at
Qadirpur 26 and 28 alongwith drilling of another development well
i.e. Qadirpur 29 which is in progress.
In order to effectively run the processing plants, annual
turnaround were carried out at six gas/condensate plants during the
year.
It may be mentioned here that OGDCL maintained its status as
leading national oil and gas producing company in the country and
it produced 54 percent of total crude oil and 22 percent of gas
during this year.

APP


----------



## Spring Onion

*Collectors asked to help transform FBR into
standard instittion*

ISLAMABAD: Secretary General, Revenue Division & Chairman, Federal Board of Revenue, Mr. M. Abdullah Yusuf called upon the Customs Collectors to play their due role to transform the Board into a progressive transparent and vibrant revenue collecting organisation matching international standards.
He was addressing the Quarterly Conference of Collectors of Customs at FBR House here today. Director General, Customs Intelligence, Members and senior officers of FBR also attended the Conference.
Abdullah Yusuf said that the creation of FBR was not a mere change of the name but it signifies the change of mindset and attitude where tax payers facilitation was of paramount importance. "We all have to work hard to make FBR an institution capable to deliver and provide the funds needed for speedy economic growth of the country," he added.
Appreciating the Government's whole-hearted support in transformation of CBR into FBR, the Chairman observed that in the new economic environment FBR's role was extremely imperative. "Its role in country's economic and material development was ab50lutely essential", he remarked.
All employees of FBR are, therefore, expected to do their job under the revised scheme of things.
He expressed his fim1 belief that they have all the capacity and capabilities to deliver in accordance with the expections of the Government and general public.
Speaking on the requirement of changing systems, rules and procedures and making them transparent and efficient, the Secretary General was of the opinion that we must try and follow the modern best practices at international level with a total reliance on information technology.



The Chairman observed that some of the changes already brought in the systems and procedures have been recognised and appreciated by all the stakeholders especially the taxpayers but still we have a long way to go to achieve the desired results "you are supposed to facilitate and satisfy your customers (the taxpayers)", he urged the collectors.



On the occasion, Chairman greatly appreciated the efforts made by Member (Legal), Mr. Mumtaz Ahmed and his team and Legal Advisor Mr. Bilal Sufi in transformation of CBR into FBR.


Responding, Member (Customs), FBR, Mr- Shahid Rahim Sheikh, assured the Chairman that all out efforts will be made to realise the goals of establishment of FBR. He asked the Collectors to take full advantage of the unprecedented financial and technological resources currently available to improve their performance skills and working environment and to facilitate their clients.



While highlighting the duty collection performance of the Customs Collectorates, Chief (Customs), FBR, Mr. Nasir Masroor, informed the Conference that against the target of Rs. 39.1 bn customs duty collection for the first four months (July-October) of current financial, the total duty collected was Rs. 39.15 bn thus registering 100% achievement of the target.



Similarly, the total customs duty collected in first quarter (Jul-Sept.) of CFY was Rs 28.976 bn against a target of Rs. 28.800 billion. The import value during the quarter under reference has also shown a growth of 8.8%.



Major revenue spinners which have shown positive growth were edible oil (22%), electrical machinery (27%)1 plastic & articles (11%), paper & paperboard (24%), articles of iron & steel (7%) tanning & dyeing (20%) rubber & articles (14%), soap & detergents (22%) etc.



While discussing the strategy to achieve revenue collection target for 2nd quarter (Oct-Dec), the Conference decided to take certain measures to improve duty collections which include: to keep an effective check on under-invoicing valuation, plugging possible avenues of revenue leakages; concerted efforts for quick recovery of out-standing arrears and effective pursuance of court cases involving revenue.



Kh. Tanvir Ahmed, Project Director, Customs Administrative Refom1s (CARE), briefed the pal1icipants on transformation of Pakistan Customs Clearance System (PaCCS) into PCCS. He also gave a comparative analysis of Pakistan Customs Clearance System (PaCCS) clearance at KICT during July-September, 2006 & in the same period, this year. He also identified various problems conforming with Pakistan Customs Clearance System (PaCCS).



Commenting on the psrfonnance of the PaCCS, the Chairman directed the concerned officials to check and minimise the human involvement in customs clearance process. He also asked them to take necessary measures to uproot corruption from the Customs Department

*Report By Jana *


----------



## Spring Onion

*Auto sector's potential need to be explored

*LAHORE, Nov 11 (APP): Pakistan's auto sector has huge
potential and the people attached to it should fully exploit 
it for maximum utility. 
Professor Fuji San, Japanese auto sector expert, said
speaking at a seminar "Lean Manufacturing System" organized by
Toyota in collaboration with Lahore Chamber of Commerce and
Industry, SMEDA and the Association of Overseas Technical
Scholarship (AOTS) at a local hotel on Friday.
The LCCI Senior Vice President Yaqoob Tahir Izhar, the
Chairman AOTS Malik Ikhlaq Ahmad, Vice Chairman Nabeel Hashmi
also spoke on the occasion. 
Professor San said basic purpose of this seminar
was to enhance mutual economic development and friendly
relations between the developing countries and Japan.
Chairman of the Association of Overseas Technical
Scholarship (AOTS) Ikhlaq Ahmad Malik said the
International seminar and conference being organized by the
Lahore Centre would have a far-reaching impact on the auto
sector of Pakistan. 
This would help the participants
particularly the Pakistanis to learn various Japanese
Techniques so that they could be able to enhance their
efficiency while remaining cost effective. 
The Vice Chairman of Association Syed Nabeel Hashmi in
his address said their objective was to give awareness to
the participants about the capacity-building measures being
adopted by the Japanese institutions and to equip them with
latest methodologies for the enhancement of production.

APP


----------



## Spring Onion

*PTA seeks details about activation of answering machines*

ISLAMABAD, Nov 2 (APP): The Pakistan Telecommunication Authority 
(PTA) has sought details from the Pakistan Telecommunication Company 
(PTCL) about fixing of answering machines to phone connections without obtaining consent of the subscribers. 
A PTA official said the Authority would look into the matter as 
it was its responsibility to safeguard and protect the interest of users of telecom services.
A survey conducted by APP revealed that many subscribers in Islamabad and Rawalpindi were perturbed over the unsolicited fixing of answering machines and claimed that the move entailed extra expenses to them.
"The PTCL is not supposed to take such a step without consent of the
subscriber as it is solely meant to generate income illegally. It is also notable
that there is no way you can retrieve the messages left on voice mailbox," said
Rehana Qayyum, an official of a local advertising agency.
Khwaja Imranul Haq, a resident of Rawalpindi, said that when he made a call
to his residential number, the answering machine informed him to record his message.
"I made calls twice but I was told to record the message. 
The residential
number was actually busy and without showing busy tone the calls were interrupted
by answering machine and they were included in our monthly bill," he said.
Aisha Tanveer, a resident of Islamabad, said the PTCL move was tantamount
to "abuse of power." She said the answering machine intervenes immediately without waiting for the call to go through and the obvious purpose is to make the subscriber pay some extra amount.
"We are already paying high charges for local calls and now it will further
increase our telephone bills," she said. 
When contacted, the PTCL official said the subscription of the service was
optional for subscribers and one could contact the company to de-activate it.
To a question on why PTCL has quietly activated the service on phone lines,
he said there was some misunderstanding and "we took remedial steps in this
regard."
"PTCL has sent written letters to all the subscribers and informed them how
to deactivate the service," he said.
Here is the complete procedure for all kinds of call transfers/forwarding.
1) Call forwarding unconditional/immediate to activate *21*Telephone number# To
deactivate *21# 2) For busy to activate: *09*Telephone number# To deactivate *09#
3) For no reply to activate: *06*Telephone number# - To deactivate *06# 

APP


----------



## Neo

* Insurance sector profit grows 26pc ​* 
Friday, November 02, 2007

KARACHI: During the first nine months of the year 2007, most of the private listed non-life insurance companies listed on local bourses depicted a growth of approximately 26 per cent by registering a profit after tax (PAT) of Rs3.9 billion. 

In the corresponding period of last year, these companies had registered a growth of 25 per cent to Rs31bn. In 2006, private non-life insurance sectors gross premium grew by 23 per cent to Rs28bn

Higher investment income is the major reason behind the decent net profit growth of the sector, which registered an upsurge of 31 per cent to Rs3.6bn primarily due to increase in the capital gain income, a research report prepared by First Capital Research said. 

Insurance sector in Pakistan is considered as under penetrated versus region. On the basis of 2005 premium, insurance penetration and insurance density in Pakistan is recorded at 0.4 per cent and US$2.8, which is one of the lowest in the region. Interestingly, average insurance penetration in Asian countries and the world are recorded at 1.67 per cent and 3.18 per cent, respectively. While insurance density in Asia and the world on an average is at the level of US$48.3 and

US$219, respectively. The FCEL in its analysis consisted 11 non-life insurance companies that are listed on local bourses and occupy 82 per cent share in total non-life insurance sector. On the flip side, underwriting business of 11 insurance companies registered a decline of 3.2 per cent to Rs911million. While net premium increased by 10 per cent with a 46 per cent growth in miscellaneous sector at Rs1.3 billion.

Besides this, on the basis of net premium, motor business also witnessed an increase of 13 per cent to Rs6.56bn. Marine and fire insurance segment recorded a modest growth of one per cent and 0.4 per cent, respectively. 

Insurance sector profit grows 26pc


----------



## Neo

*Emaar Pak to invest heavily ​* 
Friday, November 02, 2007

ISLAMABAD: Emaar Pakistan has reiterated its commitment to invest heavily in the countrys real estate sector in the next 20 years. 

Mohammed Al-Falasi, Managing Director, Emaar Pakistan, said the country was one of the most attractive destinations for foreign investment in the real estate sector and underscored the companys objective of developing world-class residences. 

He was addressing a group of officials during a ceremony to launch DHA in Islamabad, the Tunnel Form System (TFT), a construction technique. He said the new system will help Emaar meet its commitment to provide quality residences. TFT which is new to housing projects in Pakistan is the system to ensure speedy construction. 

On an average it will take only two days to complete a villa with high quality construction and better finishes. It will also eliminate chances of any settlement of foundation and give higher tensile compressive strength to walls and roof by strengthening concrete. Emaar Pakistan has unveiled projects of development valuing Rs145.8 billion ($2.4 billion) in Islamabad and Karachi. 

Emaar Pak to invest heavily


----------



## Neo

*Portfolio investment reaches record level​*
KARACHI, Nov 1: Highest-ever inflow of foreign exchange was witnessed in a single month, which was a record for Pakistani stock market.

The portfolio investment came as Special Convertible Rupee Account (SCRA) hit $302 million in October 2007. It was a record high inflow in a single month.

The shares market has been waiting for foreign investment, but it failed to attract or retain investment during the first quarter of the current fiscal.

The portfolio investment was almost negative during July-September.

The four-month, July-October, total inflows in the shares market reached $296 million which are less than the total inflows during October, reflecting a negative total during the first quarter.

It could be strange for political analysts that a sudden jump in foreign inflow was because of political stability in the country. Some analysts believe that the political stability helped build confidence for the record portfolio investment.

The foreign direct investment during the first quarter witnessed a 10 per cent decline, but mainly because of non-availability of privatisation proceeds.

The political instability, which was due to expected general elections, did not allow the government to take any major step for selling public sector units.

Analysts said the portfolio inflows were also important because the total $302 million did not include any inflows through launching of global depository receipts (GDRs).

October witnessed massive inflows and outflows despite record investment. During the month, $639.8 million landed into the shares market while the outflow was $337.8 million, showing the high volume of trading.

In the first four months, July-October, total inflows were $1.804 billion and the outflows were $1.507 billion.

Last year, the portfolio investment were to the tune of $3.2 billion which included GDRs. By excluding the GDRs, the total portfolio investments were about $900 million.

However, the most significant was the unchanged pattern of investment as most of the investments were still coming from United States.

The US investment reached $257.9 million during October and in the four months its total investment was $352.7 million. After US, the United Kingdom showed interest to invest $18.4 million during October but its total investment in four months was negative in terms of outflow of $52.5 million.

Kuwait and Hong Kong were others who remained positive while investing in Pakistan.

Analysts were of divergent views. Few of them said the record crude oil prices which reached $96 on Thursday would add to the liquidity already existing in the international the market. The recent cut in the US interest rate aiming to create liquidity has also found ways to maximise profits by investing in the risky countries like Pakistan.

Analyst said three major political developments produced a stable situation in October. First the Supreme Court allowed presidential election, secondly General Musharaff was re-elected and thirdly the arrival of Benazir Bhutto which removed possibility of any confrontation with the government.

However, it is believed that the recent development in the North of Pakistan, series of bomb explosions and the return of Benazir Bhutto to Dubai could cause an outflow during November.

Portfolio investment reaches record level -DAWN - Business; November 02, 2007


----------



## Neo

*Leading Gulf investors due shortly ​*
KARACHI (November 02 2007): A large number of Gulf investors from UAE, Bahrain, Qatar and Saudi Arabia will be visiting Pakistan to ***** the investment scope in Pakistan, it is reliably learnt.

Despite political uncertainty and poor law and order situation and at a time when the foreigners especially from Western countries are avoiding visiting Pakistan, the Gulf investors' interest in Pakistan's economy is a good sign, experts said.

The delegations are expected to visit Pakistan sometime next week to meet entrepreneurs in oil and gas, cement, power, pharma, banking, insurance and food industry. According to sources the visiting investors have set aside millions of dollars to invest in industrial and financial sectors over the next 12 months.

The groups will attend 'Investors Forum' to explore Shariah-compliant investment opportunities during WorldAsia Islamic Capital Conference starting November 7 in Karachi. Sources said that over 50 Gulf investors have confirmed their participation in the conference. The investor groups include Abraaj, Al Salam, Qatar Islamic Bank, Jefferies and National Bank of Dubai.

Business Recorder [Pakistan's First Financial Daily]


----------



## Neo

*Continued investments reflects world's confidence: Prime Minister​*
ISLAMABAD (November 02 2007): Prime Minister Shaukat Aziz on Thursday said the government's reforms to strengthen banking industry has greatly facilitated in attracting record amount of foreign investment.

The Prime Minister was talking to Francis A Rozario, Chairman NIB Bank and CEO of Fullerton Financial, a company owned by Tamasek a Singapore Government Investment Company, who called on him here at the PM House.

He emphasised that the banking industry which has been transformed from state monopoly to a vibrant private entity has come up with new products and services to serve the less privileged sections of the society. He said that in order to consolidate the banking sector, the government was encouraging mergers and acquisitions so that a few but stronger banks provide a full range of services to the people.

Shaukat Aziz said that far-reaching reforms in every facet of life have transformed Pakistan into a country having record growth. He said the reforms based on de-regulation of the economy, transparent privatisation, creation of a business-friendly environment, rationalisation of taxes and tariffs and transparency in the government transactions, have restored the confidence of the investors.

He said economic stability, continuity and consistency of policies had helped the business to flourish, thus making Pakistan an investment friendly place. The Prime Minister said the interest shown by Tamasek for investment in Pakistan reflects the growing confidence of international community in the success of economic and structural reforms implemented by the government during the last eight years.

Business Recorder [Pakistan's First Financial Daily]


----------



## Neo

*'Investment Division may help enhance FDI targets' ​* 
ISLAMABAD (November 02 2007): The Board of Investment (BOI), which has been made Investment Division, would make policy decisions more efficiently as the Division is having access to the highest level of policy making, a BOI official said on Thursday.

According to the official, this has been done to remove operational snags, as per the rules of business, besides simplifying the procedure for investment. Previously, the BOI could not independently move summaries/proposals for the approval of the prime minister and the ECC on certain issues.

The decision of the prime minister to make BOI Investment Division is in line with the reorganisation approved for BOI and make it similar to the Economic Affairs Division (EAD); which is a multilateral and bilateral debt and grant facilitation agency of the government.

The Investment Division will promote investment, domestic as well as foreign, which incidentally during FY07 has been $8.4 billion, compared to a meagre $322 million in FY02. During FY02, investment as percentage of GDP was 14 percent, which has now increased to 23.9 percent of GDP in FY07. With the creation of Investment Division, FDI targets are likely to be enhanced.

Business Recorder [Pakistan's First Financial Daily]


----------



## Neo

*'13 MoUs with foreign power generating companies signed' ​* 
LAHORE (November 02 2007): Federal Minister for Water and Power Liaquat Ali Jatoi has said that his Ministry has signed 13 memorandum of understandings (MoUs) with the international power generating companies in the last six months to set up power plants to overcome shortfall of 1500MW currently faced by the country.

He told reporters here on Thursday that investment worth $200 billion would be made to establish power generation plants. The government has allocated over 140 billion rupees for the mega projects for the power sector to minimise the load management in the country.

Jatoi said that load shedding currently resorted in the country would be finished soon. The Ministry of Water and Power had also signed an agreement with the Iranian company to import 100MW power to overcome power shortage.

The work on Bhasha Dam will be started in 2009 which would help overcome power shortage on completion, he added. He further said that Mangla Raising Project will be completed in June 2008 and an additional 2.88 million acre feet (MAF) water will be made available to the country for irrigation purpose after the completion of Mangla Dam Raising Project by June 2008. Besides, 644 Gigawatt hour (Gwh) additional electricity will also be generated from the existing powerhouse due to the high head of water.

He added that different power generation companies would invest US $200 billions in the country, which was an uneasy task. The president and the prime minister tried to convince the investors, despite their strong reservations. He said, "It is the top priority of the government to provide smooth and constant power supply to the consumers on the cheap rates."

He further stated, "Wapda had to follow the load management policy because of intensive use of electricity accessories, especially the use of more than 150000 air-conditioners were increasing per year in the country, the industry and housing sectors are booming rapidly which also needs the ample quantity of power. In the last summer there was a shortfall of 1,500 to 2,000MW in the country. It is decreasing rapidly because of pragmatic precautionary measures taken by the Pakistan Electric Power Company (Pepco)."

He said Pepco Managing Director Munawar Baseer had chalked out a plan to control the power shortage by the National Conservation Policy and through it to maintain and repair dreaded power generation plants. Using energy savers would save more than 860MW. He said the Rainy Canal and Kachi Canal project would be completed soon, helping to minimise power-cuts in the country.

The minister said old power generation plants would be repaired and if its spare parts were available in the market they would be replaced. He said in 2010 more than 200MW power would be surplus because of various power generation projects were in the pipeline.

He said he himself was against the National Reconciliation Ordinance (NRO) because of no-compromise on the plundering money of the nation Benazir Bhutto looted more than US $150 billion of the public which is unpardonable crime. "People will elect their candidates keeping in mind their performance. Her arrival never scared me," he added.

Business Recorder [Pakistan's First Financial Daily]


----------



## Neo

*ESOLPK intends to revolutionise small, medium enterprise sector ​* 
LAHORE (November 02 2007): The ESOLPK and the Microsoft jointly held a seminar here at a hotel on Thursday to launch formers services to provide a rapidly deployable and affordable automation solution based on "Microsoft dynamics".

Speakers said the seminar aimed at promoting the Microsoft dynamics ERP system in the industrial sector of Pakistan. Microsoft dynamics is the software enhancing the quality, productivity and the efficiency of business resources.

ESOLPK Managing Director Ahsan Ahmed said his firm intended to revolutionise the small and medium enterprise sector and the government and non-profit organisations by promoting the technology services in Pakistan. "With a vision of a new horizon, Microsoft, through its expertise and partners like ESOLPK, will help and assist the companies in implementation of ERP," he said. SMS and P Manager Microsoft Osman Maqbool said, "Today's businesses face complex challenges and immense opportunities.

Business Recorder [Pakistan's First Financial Daily]


----------



## Neo

*Investment in power sector projects against changes in laws: government is reluctant to indemnify lenders ​*
ISLAMABAD (November 03 2007): The government is reluctant to indemnify foreign lenders and companies investing in projects against changes in Pakistan's laws which can affect the legality and enforceability of the power sector 'Implementation Agreement' (IA), 'Power Purchase Agreement' (PPA) and government guarantee, sources in Private Power Infrastructure Board (PPIB) told Business Recorder here on Friday.

Under Power Policy 2002, the government had approved standardised project IA, PPA, and government sovereign guarantee, governed by the current laws of Pakistan, with arbitration in London Court of International Arbitration (LCIA) for disputes over a certain monetary threshold.

Sources said that the Ministry of Power had submitted a proposal to the Economic Coordination Committee (ECC) of the Cabinet on October 31 to offer a choice to the investors between the laws of Pakistan and England with respect to direct agreements (IA and PPA) but it was not approved, as some stakeholders opposed it.

Agreements signed by PPIB have been executed with Orient, Sail, Sapphire, Attock, Atlas, Nishat, Star and Fauji power project companies. However, independent power producers (IPPs), with participation of foreign lenders, have taken the position during the negotiations that the foreign lenders require English law as the governing law for the GoP guarantee and direct agreements.

Sources said that each foreign lender wants direct agreements (IA and PPA) and GoP guarantee to be subject to and governed by the laws of England to provide protection to them, as per the normal practice with cross-border limited recourse financing of projects of this nature involving international sponsors and lenders, against the invalidity and unenforceability of the GoP guarantee due to change in the laws of Pakistan.

The Ministry of Water and Power was of the view that the Pakistan government under Section 11.2(f) of the IA executes and delivers acknowledgements to the lenders, through direct agreements with respect to any assignment or creation of a security interest granted to them pursuant to article XI of the IA.

It is customary (practice) that the financing documents (including loans agreements, notes, indentures, security agreements, guarantees and other instruments providing security to the lenders) executed between the project company and the lenders are governed by the laws of England or New York, as it allows creation of secured interests in the future revenues and receivables of the project, and assignment of the project company's contractual rights and interests in the project agreements.

"These jurisdictions being major international commercial and banking centres, large number of precedents of the courts and practice are available in such transactions, which reduces the uncertainty regarding the outcome of disputes," the Ministry argued in its summary.

A project company is required under the financing documents to assign its rights and interests to the security trustee, or agent, who shall act for and on the lenders' behalf in the enforcement of their security interest.

Similarly, the IA allows the lenders to designate an agent for exercise of cure or step-in rights on their behalf, in the event of a default by the project company under the financing documents.

Since the security trustee, or agent, are acknowledged by the GoP under the direct agreements, it is essential from the lenders' perspective that the governing laws under the financing documents and direct agreements are the same to prevent any conflict in the enforcement of the lenders' rights.

According to the summary foreign lenders are of the view that since the project agreements (IA and PPA) and GoP guarantee are governed by the laws of Pakistan, a change in law affecting the legality or validity of these agreements shall create a risk that an international arbitration tribunal would be unable to enforce the project agreements.

In such a case international lenders would not be entitled to receive any compensation or other remedy under these project agreements, sources added.

"Lenders are of the view that if IA and PPA should be governed by laws of Pakistan, they must be given protection through GoP guarantee being governed by English law," sources said.

The Ministry of Water and Power, while backing the investors, had argued that to mitigate the risk of change in law, and afford protection to the foreign lenders and project company, GoP should indemnify the project company and its lenders from Pakistan's laws.

The PPIB had recommended that a choice may be given to the lenders to opt the laws of Pakistan, or England, with respect to IA and PPA, which may contain an indemnity to the effect that if the IA, PPA or GoP guarantee becomes unenforceable, illegal or invalid due to change in law, the GoP shall indemnify the project company or the lenders for any cost, loss or liability resulting from such unenforceability, illegality or invalidity, which amount in case of IA, PPA or GoP guarantee.

Business Recorder [Pakistan's First Financial Daily]


----------



## Neo

*Export growth target missed ​*
KARACHI (November 03 2007): The country has failed to achieve overall export growth target in the first quarter of the 2008 fiscal year, mainly because of political uncertainty and deteriorating law and order situation in the country, exporters said. However, a high official of the Ministry of Commerce believes that export during next few months will rapidly increase and export target will be achieved.

The Ministry of Commerce has fixed the target at 19.2 billion dollars for the current fiscal year as against the previous target of 17.01 billion dollars, with a 12.83 percent growth target.

The official export statistics revealed that during the first quarter of the current fiscal year, growth in the overall export stood at 4.77 percent to 4.456 billion dollars, while the required growth rate for the quarter was seven-eight percent to 4.6 billion dollars.

However, the set exports target for the first quarter has been missed by some three percent during July-Septeember of the 2008 fiscal year. Exporters are of the view that months of November and December were important as these two months, the country had experienced much higher shipment of export cargo.

However, they expected that overall export of textile would not show more than one or two percent growth during the 2008 fiscal year. Exporters said that efforts to bring country's economic growth rate to the positive track might get hampered, and added if this present state of political uncertainty did not end in the next few weeks, the exports would further decline.

"Notwithstanding the current political scenario and some problems faced by the textile sector, the exports are likely to pick up in the next months," said Commerce Minster Hamayun Akhtar on phone from Lahore.

He adds, "With the appreciation of the Indian rupee, our exports will increase during the next three quarters." Commenting on the political uncertainty, leading exporter Zubair Motiwala said: "Present political and law and order situation have badly damaged the country's image abroad and leading importers are now reluctant to place orders, as they believe that their orders could be delayed."

He said that textile exports, having 65 share in overall exports, had witnessed 0.53 percent growth during July-September. During the first half of the 2008 fiscal year, there was one percent growth. "Insufficient growth in the industrial production is also a major reason behind decline in the exports," said economist Qaisar Bangali. The Federal government had fixed a 13 percent export growth target without fixing sector-wise targets, which was unrealistic, he added.

Business Recorder [Pakistan's First Financial Daily]


----------



## Neo

*Power generation using wind energy: LoIs issued to 93 local, foreign companies ​*
ISLAMABAD (November 03 2007): Government has issued Letters of Intent (LoIs) to 93 local and foreign companies for power generation using wind energy to meet the country's growing power demand, Business Recorder learnt on Friday.

Sources said five investors have applied for licences to set up such facilities at Gharo-Keti Bandar in Sindh where the Alternative Energy Development Board (AEDB) had identified the potential of around 50,000 MW.

The companies, which were issued licences, include Green Tower, New Park Energy, Tenega, Win Power and Miligro while licences of Zaphyr Power, Zolyu Energy and Beacon Energy are under process.

The tariff of two companies, Green Tower and Win power, has been approved while that of Beacon Energy and Zolu Energy is under process. Sources said the land has been allotted to 15 companies so that each of them could establish plants for 50 mega watts.

They added the major thrust of AEDB is to assist investors for meeting increasing power demand. The country has been facing power crisis as galloping demand-supply gap had resulted in frequent breakdown, hurting not only domestic consumers but also the industry.

Experts say the country needs more power generation to avoid load-shedding in peak hours and to ensure smooth supply to both consumers and the industry. Sources said the generation potential is based on 3-year wind data at Gharo-Keti Bandar gathered by the Meteorological Department.

The AEDB, after conducting an extensive analysis of the data, got four 50-metre high wind measuring masts installed by private sector. The AEDB and Sindh government are working in close co-ordination for the identification and allotment of land in the wind corridor.

A recent official census on electricity highlighted that after household it was the industrial sector, which needed about 32 percent electricity of the total production.

The survey said that household sector was the largest consumer of electricity with 43.7 percent, followed by industry 32 percent, commercial 6.7 percent, agricultural 11.3 percent, public lighting 0.5 percent, and bulk supply and others 5.8 percent.

Experts believe resorting to non-traditional renewable sources like the wind is really a way out to keep the industrial wheel moving and to compete in the global market after full implementation of WTO regime.

Business Recorder [Pakistan's First Financial Daily]


----------



## Neo

*Rs 200 billion earmarked for agriculture credits ​*
ISLAMABAD (November 03 2007): Agriculture credit disbursements target of Rs 200 billion has been fixed for 2007-08 financial year, which is 25 percent and 22.62 percent, respectively, higher than the last year's target and actual disbursement, official sources told Business Recorder here on Friday.

Of the Rs 200 billion, Rs 96.50 billion is to be disbursed by five big commercial banks, National Bank, Habib Bank, Muslim Commercial Bank, United Bank, and Allied Bank; Rs 60 billion by Zarai Taraqiati Bank Ltd (ZTBL); Rs 8 billion by Punjab Provincial Cooperative Bank Ltd, and Rs 35.50 billion by domestic private commercial banks, they said.

According to them, province- and sector-wise targets are 78 percent, 14 percent, 6 percent, 1.5 percent and 0.5 percent for Punjab, Sindh, NWFP, Balochistan and AJK and Northern Areas, respectively, whereas the farm sector, orchards, livestock, poultry, fisheries and others are required to get 76 percent, 4 percent, 11 percent, 4 percent, 3 percent and 2 percent, respectively.

They said credit requirements of the farming community have been increasing over the years mainly due to rise in the use of fertilisers, pesticides and mechanisation. In order to cope with the increasing demand for agricultural credit, institutional credit to farmers is being provided through Zarai Taraqiati Bank Limited, Punjab Provincial Cooperative Bank Limited, five big commercial banks, and domestic private banks.

Sources said the targets are totally voluntary and indicative in nature as the mandatory targets allocations policy has been totally phased out keeping in view the trend of Financial Year 2006, and the targets for the five big commercial banks have also been made voluntary and indicative in live with domestic private the commercial banks.

They said the elimination of mandatory credit targets coupled with active involvement of commercial banks in agri-finance is a major milestone achieved towards mainstreaming of agri-finance in the country's financial system.

The flow of necessary funding to the sector will now be ensured through conducive policy and regulatory environment, policy advocacy and promotional initiatives and monitoring of agri-disbursements and portfolio build-up plans, they added.

They said the credit is advanced to farmers to supplement their resources for purchase of seeds, fertiliser, and pesticides and for purchase of agricultural machinery etc. Government policy with regard to agricultural credit will safeguard the interest of small/medium farmers by extending credit to them on easy terms and conditions as well as to protect them in case of any natural hazards and calamities.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Middle East group agrees to provide gas for LNG Terminal ​*
ISLAMABAD (November 03 2007): A Middle East Group has agreed to supply 1.5 million tonnes of gas per annum for the LNG Terminal at Port Qasim. JJVL's CEO, Iqbal Z Ahmad told a private TV channel that it was initially intended to buy LNG from the spot market for the $160 million project, but now following this assurance of the gas supply the necessary agreement would be finalised within one month.

The Middle East Group under the agreement would supply gas for 15 years, which has the provision of further extension of the period by 10 years or enhancement in the quantum of supply.

Presently, the jetty was being made abroad and the terminal would be completed by March 2008, facilitating the handling of 3.5 million tonnes of LNG imports annually. Iqbal Z Ahmad said that the talks with Sui Southern Gas Company (SSGC) were presently underway for the gas supply agreement.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan's foreign exchange reserves reach $16.3542 billion ​*
KARACHI (November 03 2007): Country's liquid foreign reserves have reached new peak of $16.3542 billion during the week ended on October 27. The foreign reserves, held by the State Bank of Pakistan, stood at $14.1192 billion, while the foreign reserves held by banks stood at $2.235 billion.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Over 0.4 million new job opportunities to be created in fiscal year 2007 ​*
KARACHI (November 03 2007): More than 400,000 new job opportunities will be created in current fiscal year in agriculture, small and medium enterprises, housing and construction, information and communication technology and export sectors with the investment of Rs 435 billion, approximately.

Officials in labour department told Business Recorder here on Friday that Islamabad was seriously considering to invest large amount in said sectors, aimed to create new job opportunities across country, which would be almost 60 percent higher than the allocation made in the preceding years.

"These sectors have potential for a fairly diversified employment generation through direct and indirect ways and hopefully they would be identified as 'labour incentive sectors' for workers, they hoped.

According to Labour Force Surveys (LFSs), around 4.94 million additional work opportunities have been created in the last two years by government, intended to reduce the upward trend in unemployment rate, which skyrocketed in last few years.

Although unemployment rate has declined and stood at 6.2 percent, which was 8.3 percent during last two years, government is adopting fresh strategies to reduce unemployment rate further in current FY, they added.

Officials said that Medium Term Development Framework (MTDF) 2005-10 and Poverty Reduction Strategy Paper (PRSP) had been prepared in line with these developments, which would create a sustainable economic system besides reducing the poverty across country and hoped that these strategies would achieve the Millennium Development Goals (MDGs) by 2015.

Moreover, they hope that it would help enhance competitiveness in these sectors, besides maximising the knowledge and skills of workers, which would directly, be effective on the Total Factor Productivity (TFP).

The Labour Force Participation Rate (LFPR) is being increased in both genders in urban and rural areas, respectively. Despite the fact that females are helping their families out of poverty-circle and stabilising them economically, they said that Labour Force Participation Rate (LFPR) in females were phenomenal in last few years, which was about one fourth in rural areas and around one out of every ten women were active in the labour market, they informed.

It may be mentioned that unemployment rate had shot up to 33 percent of overall population, which was around 45 million people living below poverty line because of unemployment, however, 70 percent of them was young blood and living in rural areas, sources revealed as per independent survey report.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Peshawar motorway to promote economic activities: Prime Minister ​*
ISLAMABAD (November 03 2007): Prime Minister Shaukat Aziz said the newly inaugurated Islamabad-Peshawar Motorway would be a milestone in promoting trade and economic activities in and around the areas. The M-1 motorway would greatly facilitate the people besides cutting the travelling time betweean Islamabad and Peshawar, he said.

The Prime Minister was talking to a delegation of MQM comprising of Minister for Communication, Muhammad Shamim Siddique and Minister for Housing and Works, Iqbal Muhammad Ali Khan, who called on him here on Friday.

He appreciated the role of the ministry of communications particularly the National Highway Authority (NHA) for their efforts in developing and improving the inter-city road links. He said the government is committed to provide better housing facilities to all and is making all out efforts in this regard. The Prime Minister said the government is planning to open new sectors in Islamabad and elsewhere, so that the prices of land could be checked and made affordable for the general public.

He said PML and its allies, including PML (F), MQM, PPP (Sherpao) and BNP Awami would contest the upcoming general election on one platform and expressed confidence that people would vote for them as they have strong candidates, quality programme and good governance to serve the people for the next term. He said the government is committed to facilitate free, fair and transparent elections, in which foreign observers as well as international media are invited to monitor the election process.

The upcoming election would clearly demonstrate that PML and its coalition partners represent the most viable option for Pakistan towards continued growth and development, which would ensure political stability in the country.

The Prime Minister said code of conduct circulated by the Election Commission of Pakistan and the security code distributed by the interior ministry would help ensure peaceful environment for political activities during the general elections.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Investment Division may help enhance FDI targets' ​* 
ISLAMABAD (November 02 2007): The Board of Investment (BOI), which has been made Investment Division, would make policy decisions more efficiently as the Division is having access to the highest level of policy making, a BOI official said on Thursday.

According to the official, this has been done to remove operational snags, as per the rules of business, besides simplifying the procedure for investment. Previously, the BOI could not independently move summaries/proposals for the approval of the prime minister and the ECC on certain issues.

The decision of the prime minister to make BOI Investment Division is in line with the reorganisation approved for BOI and make it similar to the Economic Affairs Division (EAD); which is a multilateral and bilateral debt and grant facilitation agency of the government.

The Investment Division will promote investment, domestic as well as foreign, which incidentally during FY07 has been $8.4 billion, compared to a meagre $322 million in FY02. During FY02, investment as percentage of GDP was 14 percent, which has now increased to 23.9 percent of GDP in FY07. With the creation of Investment Division, FDI targets are likely to be enhanced.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Law and order situation halts exploration activity ​*
ISLAMABAD (November 03 2007): As a result of the worsening law and order situation, seismic and exploration activities in NWFP have come to a halt. This has undermined government efforts to expedite exploration activities in the country's northern regions for increasing indigenous share in oil and gas production.

The security situation in NWFP is so grave that even the Oil and Gas Development Company (OGDC), a public sector company, had to suspend its seismic and exploration activities at Maila field in Kohat district.

Sources said that OGDC's foreign contractor for carrying out seismic activities and drilling at Maila field has pulled out its crew, leaving the contract in force majeure. OGDC officials claim that they are now shifting their own rig to some other field to carry on exploration work at Maila block.

Tullo, Pakistan, another exploration company, has also met the same fate from its foreign contractor. On security concerns, its contractor called back the rig and seismic crew and cancelled the contract for seismic and exploration work in Kohat district.

MOL, a Hungarian firm, had conveyed in writing to Director-General, Petroleum Concessions (DG PC) some time back that due to security reasons it was finding it difficult to carry out exploration activities at Tal block in Kohat district of NWFP.

OGDC, MOL and Tullo Pakistan have taken very bold steps and opted for drilling in hard areas of NWFP which demand more money and long-time drilling. Although some of them hit more than one discovery in that region, from where SNGPL is getting adequate gas for its system to cater the consumers demand.

Since gas produced from northern region is of very high quality, the government wanted to inspire other companies for exploration work. In the new Petroleum policy, exploration and production companies were offered lucrative incentives for achieving the objectives.

President General Pervez Musharraf time and again has sought reports from the Ministry of Petroleum on exploration and production activities in NWFP. But war-like situation in most parts of NWFP have changed the situation from bad to worse. Since exploration and production companies give the rule of security first requirement, as long as NWFP remains turbulent, oil and gas exploration activities may remain suspended. The exploration and production companies give top priority to the safety and security of their personnel and they follow the same rule in any part of the world.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*India-Pakistan trade balloons despite restrictive regime ​* 
Saturday, November 03, 2007

KARACHI: Direct trade between Pakistan and India crossed the $1.5 billion mark in FY 2006-07, up from $850 million in the corresponding period of the previous year, but Indian officials say that the full potential is yet to be realised.

Talking to journalists at a briefing here on Friday, Indian Deputy High Commissioner Manpreet Vohra said that the potential for trade between the two countries is much higher but is being restricted by Pakistan which allows only 1,174 items to be imported from India. 

Vohra said he receives queries from Pakistani businessmen and trading houses, but on many instances he tells them that despite Indian eagerness to do business, the Pakistan government does not allow them to import from India. 

He also informed that the target for setting up Indian banks in Pakistan and Pakistani banks in India was by the end of 2007. We still have a month or so to go, he informed, but pointed out that while the Reserve Bank of India had received applications from two Pakistani banks to open branches there, he was unsure whether any Indian banks had applied for the same permission to operate in Pakistan.

Vohra said that the problem with the banks from the Pakistan side in one or two cases was that the ownership of these banks was not entirely Pakistani which was one of the conditions of the understanding between the two countries.

However, the senior Indian diplomat warned that Pakistan runs the risk of irrelevancy in Indian business circles because of its closed trade policies towards India. He said that very few Indian companies were looking at Pakistan. The world is the oyster and Indian companies are competing the world over. If Pakistan wants to shut Indian companies out, Pakistan will suffer eventually. 

Vohra said that the ultimate sufferers of the restrictive trade policy are the Pakistani businessmen and public since there are many items that India can sell to Pakistan at a fraction of the cost it buys from other countries, but this is not being allowed. There is no point in artificially shackling trade, he commented. 

Vohra also talked about piracy and said that most Indian movies in Pakistan were pirated and this caused losses to genuine quarters and the illegal operators benefited. He also said that many of the Indian channels that were being aired by cable operators in Pakistan were not being done in an entirely legal manner.

The Indian diplomat also said that Pakistani should not be relevant to India for all the negative reasons. He urged the Pakistan government to do more to enhance trade. On the issue of the Iran-Pakistan-India gas pipeline, Vohra said that the stumbling block for India was the high transit fee that the Pakistan government was demanding under the agreement. There is no decision yet, but we are holding talks, he commented. 

India-Pakistan trade balloons despite restrictive regime


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## Neo

*Handicraft industry to be revived​*
KARACHI, Nov 2: The Common Wealth, in collaboration with Sindh Small Industries Corporation (SSIC), has launched a survey to help revive centuries old handicraft industry in the province.

The Common Wealth came to the aid of the handicraft artisans following reports that the traditional handcraft making skill is dying due to lack of financial resources.

Sindh is known in the world for its unique and fine products, like Ajrak printing, Rallis (caps) and wooden lacquer furniture.

Two Common Wealth consultants, Najmul Hussain and Dias Gunasingha, visited handicraft centres in the province in September to inquire about the problems faced by artisans making handicrafts, which reflects the cultural heritage of Sindh.

The consultants along with SSIC officials visited handcraft centres at Hyderabad, Bhit Shah, Hala, Nasarpur, Sukkur, Khairpur, Shikarpur, Larkana and Kashmore. They took special interests in units engaged in Ajrak printing, wooden furniture, various items used in households, women ornaments, ceramic units making decorative tiles and flower vase etc.

The Common Wealth team was informed that the handicraft making units faced acute financial problems and it is feared that not only province will be deprived of its cultural heritage but a large number of artisans, especially women would be out of job.The CW officials were informed that the handicraft units were regarded as the main source of alleviation of poverty in rural areas and their closure would undermine the government efforts to check poverty.

The visitors assured the SSIC officials that on the basis of the survey the CW would provide technical and financial support to save the centurys old professions from extinction. The CW consultants were scheduled to return to the country next month to complete their survey.

They will hold a workshop in Karachi inviting various stakeholders to debate the issue and formulate recommendations for the revival of handicraft industry in the province.

It may be pointed out that presently SSIC does not provide any financing to cottage and handicraft industry due to paucity of funds.

It has submitted Rs500 million financing scheme to the chief minister for approval, which is pending for over a year.

It, however, offers plots in new small industrial estates on 10 per cent payment while the remaining 90 per cent is charged in easy instalments over a period of four years.

The corporation received 8,729 applications for 883 plots available in small industrial estate on Northern Bypass. It has plots of 250 sq yard and 500 sq yards for small and medium enterprises.

About 30 acres area in the estate has been reserved for women to set up cottage industry units. Balloting for the plots is expected soon.

Handicraft industry to be revived -DAWN - Business; November 03, 2007


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## Neo

*Pak-Russia banking cooperation likely​*
ISLAMABAD: Pakistan and Russia are working towards facilitating banks of either country to establish their branches in both territories and an agreement in this regard would be signed soon, sources said. Pakistan has informed the Russian government that National Bank of Pakistan and Askari Bank have shown interest to open their branches in Moscow. Similarly, Russian banks may also establish their network in Pakistan. Islamabad has conveyed this to Moscow and has said that banking relations between the two countries are a must as they cement their economic relationship. Sources said that the Russian Ambassador to Pakistan has conveyed to the government that two countries should enter into an agreement to open the bank branches in the respective countries. Sources also said that the central banks of two countries are working on the agreement that would enable the banks of two sides to open their branches in each country. Pakistani officials from the Economic Affairs Division have visited Russia to hold talks with their counterparts so that the agreement could be finalised. According to sources, the two countries are also working on a Free Trade agreement (FTA) and the federal cabinet has given the approval in this regard. After the FTA takes place and as trade activities between two countries jump up, the traders of both the countries would need banks operating in both the countries for their financing needs. Officials said that both countries are taking interest in increasing their bilateral trade volume by enhancing cooperation in different sectors and banking sector is one in which they can cement their relations.

Daily Times - Leading News Resource of Pakistan


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## fatman17

there seems to be movement on the economic front but unfortunately not on the security or defence related front.


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## Neo

*Emergency to harm economy: businessmen, economists ​* 
Sunday, November 04, 2007

KARACHI: The imposition of emergency in Pakistan would result in adversely affecting the economy and inflow of foreign investment. Sharply reacting over the imposition of emergency, the business community said that it would badly affect the countrys economy and inflow of foreign investment would not only come to a halt but result in disinvestment in several areas of trade and industry. 

The emergencies previously imposed in the country had not suspended the constitution in toto but suspended fundamental rights of the people. But this time Gen Musharraf has suspended the entire constitution which can in no way be considered a legal action, said prominent economist Kaiser Bengali.

The already ailing economy of Pakistan would go backstage once again, Kaiser said, adding that there would be a negative impact on the economy, especially the countrys exports would mostly suffer.

Citing an immediate reaction to the emergency, he said that a group of textile buyers which only arrived in Karachi today (Saturday) to go Faisalabad to negotiate orders for textile items has now decided to go back instead of proceeding to Faisalabad.

The import sector would also badly suffer as all the imports cost would go up due to the possible surcharges by the shipping companies and additional bank charges due to the confirmation of letters of credit ensuring payment to exporters.

The first and foremost impact on imports would be the confirmation of our letters of credit as all the exporting countries would be asking confirmation of the L/Cs from the bank and the banks would charge additional to confirm the L/Cs, said Farooq Azam Khwaja, honorary consul of Rwanda and a prominent importer of Jodia Bazaar.

Khwaja said that the banks charges would result in increasing the import cost up to seven and 10 per cent whereas shipping companies would also be asking similar assurances which may result in additional shipping charges. Furthermore, the insurance costs would also increase due to the situation, he said, adding that all such levies would increase the cost of imports resulting in another wave of price hike in the country.

Whenever emergencies are imposed in the country, it results in price hike, uncertainty prevails and illegal trade flourishes, Khwaja cited the past example of situation arisen due to the imposition of emergency. He said that the effect of such type of situation has a gradual impact on the economy.

The country will lose political credibility, as suspending the basic human rights will definitely result in loss of credibility of the country in general and exports in particular, commented economist and prominent industrialists Eng M A Jabbar. He said that all the business sectors of Pakistan including exports, industry, agriculture and services are vulnerable and such a step of imposition of emergency would obviously have a disastrous impact on our economy, Eng Jabbar added. How can we expect inflow of foreign investment in the country, he questioned. 

Exporters were highly worried over the state of emergency in the country and have even said that it would be better if the government withdrew R&D from the exports sector, but should not impose emergency which would result in total disaster of our external trade.

This was the time when we were in the midst of negotiating orders and collection for 2008-09 season with our buyers but the emergency in the country would destroy our exports, said a former chairman of the Pakistan Leather Garments Manufacturers and Exporters Association, Fawad Ijaz Khan.

Buyers would now be forced to go somewhere else to ensure timely delivery of their orders and the country would lose precious foreign exchange, Fawad added.

Economists were of the view that the financing of the countrys mega projects would also be affected whereas all large scale manufacturing sector, especially automobile, cement, construction and real estate would be badly affected resulting in massive unemployment in the country.

Emergency to harm economy: businessmen, economists


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## Neo

*Businessmen give mixed response ​* 
Sunday, November 04, 2007

KARACHI: Business leaders across the country were shaken by the sudden emergency that has been announced after weeks of speculations but surprisingly some were happy with the step and remarked that this should have been done a long time ago to control the deteriorating law and order situation.

Zubair Tufail, Vice President of Federation of Pakistan Chambers of Commerce and Industry said that with the lawlessness that had been witnessed in Pakistan during the past few months, this was a very good step which the government should have taken months ago.

Look at what is going on in Swat and other parts of Pakistan. I think the government had no option but to impose an emergency and this was the only way to control the deteriorating situation, he said. According to him, while the businesses might have a short term affect, over the long run it would prove to be good for the businesses and now laws would be implemented even if it had to be by force.

Zubyr Soomro, President Overseas Investors Chamber of Commerce and Industry expressed concern over the news and said that as a leader of an international investors chamber, this was a heavy blow to him and Pakistan was going to suffer greatly on the world map. Shamim Ahmed Shamsi, President Karachi Chamber of Commerce and Industry said that in the short run the businesses were not at a threat as the administration policies were to remain intact according to his information.

Shahid Hasan Sheikh, President Lahore Chamber of Commerce and Industry viewed that the emergency would bring discontinuity to the businesses in the country and it was a bad news for him. After having a clear vision of what the emergency specifies, it would be easier to say how far it affects the businesses and government affairs but right now after having spoken to several other businessmen based in Lahore, there is an absolute chaos here, he remarked.

Masood Naqi Chairman Korangi Association of Trade and Industry said that businesses were not to be affected directly but the media and lawyers in the country would face the maximum brunt of the state of affairs. Pakistan has been unstable for the past six months and after the emergency, it is likely to see some stability now. I think, the future is bright for businessmen as eventually the world will see that matters are falling into place again and they would find Pakistan a much better place for their investments.

Rubina Rasheed, President National Women Forum said that internationally Pakistan was worse off, nevertheless there would be continuity in businesses now and the momentum at which trade was progressing in the country was not likely to be disturbed. Siraj Kassim Teli, Patron in Chief of SITE Association also voiced that there was confusion among people as the rules of the emergency were unclear and once the conditions were highlighted, only then the plight of the businessmen would be known. This is a power struggle and the country would be affected adversely, he opined.

Zubair Motiwala, former President Karachi Chamber of Commerce and Industry said that if this was the panacea for the sufferings of the country, then it was a belated step taken by the government. I must say that it is an end to an era which was full of instability. Until we get established and until we have stability, we will not achieve anything and our politics will continue to directly affect our imports and exports. Yet, I say that we are heading towards a better future as we are likely to progress somewhere at least as the earlier four months were wasted.

Source in Islamabad and Rawalpindi informed The News that there was no major reaction from the business community as they all were waiting for General Musharraf to address the nation on the issue of emergency. The only reaction that is feared is from the lawyers that may eventually affect the businesses and normal routine as they are the most affected ones, informed an official on the condition of anonymity.

Businessmen give mixed response


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## Neo

*SPI records 8.87pc increase in commodities prices ​* 
Sunday, November 04, 2007

ISLAMABAD: The Sensitive Price Indicator (SPI) year-on-year of 53 basic commodities for the week ended on November 1, 2007 recorded 8.87 per cent increase as compared to the corresponding week of the last fiscal.

The weekly SPI bulletin released by the Federal Bureau of Statistics (FBS) on Saturday revealed that year-on-year rise in the prices of some necessities and kitchen items was exorbitant. These items were wheat and wheat flour, vegetable, ghee, rice, fresh milk, pulses, powdered milk, cooking oil and fire wood.

Data collected for about 53 items for the SPI bulletin from 17 centres revealed that 11 items recorded an increase and 12 items a tendency of decline, while prices of 30 items remained unchanged. However, further analysis of the data revealed that year on year basis; nine items were dearer by double digits. 

These include red chillies whose price went up by 50 per cent, mustard oil 48 per cent, vegetable ghee loose 47 per cent, masoor pulse 37 per cent, farm egg 34 per cent, wheat 27 per cent, wheat flour 24 per cent, firewood 13 per cent and fresh milk price went up by 12 per cent.

In a week span of time, among these items the prices of red chillies shot up by 2.8 per cent, vegetable ghee loose 2.5 per cent, masoor pulse 1.94 per cent, mustard oil 1.61 per cent, egg (farm) 1.34 per cent and wheat flour prices increased by 0.54 per cent, over previous week.

The FBS figures further revealed that though prices of 30 items posted no change during the week, yet compared to the corresponding week of last year, several items are costly now. For example rice basmati broken is dearer by 58 per cent, vegetable ghee (canister) 29 per cent, cooking oil (canister) 29 per cent, powdered milk 26 per cent, curd 13 per cent and price of plain bread went up by 11 per cent.

The bulletin further indicates that though the prices of 12 items decreased, yet compared to the prices of corresponding week of last year, items which recorded increase in their prices were rice Irri-6 which is dearer by 47 per cent and tomatoes prices up by 28pc.

SPI records 8.87pc increase in commodities prices


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## Neo

*Pak-Japan trade on the rise ​* 
Sunday, November 04, 2007

LAHORE: Pakistan, despite achieving excellent economic growth, could attract a meagre $164 million in Japanese foreign direct investment during the past five years mainly due to security concerns of Japanese investors.

Japanese Ambassador to Pakistan Seiji Kojima stated this while addressing Association for Overseas Technical Scholarships 8th SAFAAS Convention here.

He said though the security situation in Lahore was Ok and not so bad in Karachi, Islamabad and Faisalabad as reported in media but it acted as a main deterrent to investment. However, he added, the trade between the two countries was on the rise.

He said Japan exported goods worth $1.76 billion to Pakistan last year compared with only $208 million exports from Pakistan to Japan. Pakistan could increase its industrial and services exports by improving the quality of products, he suggested.

He said the Japanese government through its scholarship programme had upgraded the skills of more than 135,000 people from all over Asia. About 13,000 of them were from South Asia and 2,000 from Pakistan.

He said the reason for offering fewer scholarships in the region was that most of South Asia had closed economies.

The intra-regional trade in South Asia was also very low, he said and hoped the trade in the region would substantially increase under the South Asia Free Trade Agreement (SAFTA). He said with the opening of economies the number of scholarships for this region would also increase.

Engineering Development Board Chief Operating Officer Almas Hyder, on the occasion, said Pakistan had made commendable efforts for joining the globalisation process. The country has adequate infrastructure, energy and finances but it lacks skilled manpower which has deprived it of taking full advantage of high economic growth.

He said Pakistan needed support from economic giants like Japan for enhancing the skills of its human resource through increased scholarships.

Pak-Japan trade on the rise


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## Neo

*Trade with China: Pakistan suffers trade deficit of $2.957bn​*
ISLAMABAD: Trading with China has given Pakistan a trade deficit of $2.957 billion during the fiscal year 2006-07, Daily Times found out on Saturday.

Pakistans exports to China amounted to $575.903 million as compared to the imports from China of $3.533 billion leaving a trade deficit of $2.957 billion during July-June period of the last fiscal year. 

The figures are based on trade under Preferential Trade Agreement (PTA) and an Early Harvest Programme leading to Free Trade Agreement (FTA) between the two countries and now both the countries have entered into a FTA operational with effect from July 1, 2007. 

According to details regarding the bilateral trade, Pakistan has been unable to benefit the trade with its friendly neighbour China as Pakistan has suffered a trade deficit of $7.552 billion during the last four fiscal years (2003-2007). During the last four years Pakistans total exports to China amounted to $1.682 billion as against the imports from China worth $9.233 billion during 2003-07. 

According to yearly details of bilateral trade for the fiscal year 2005-06, total exports to China were $463.919 million as compared to imports of $2.705 billion projecting a trade deficit of $2.242 billion. 

A trade deficit of $1.488 billion was the result of bilateral trade during the fiscal year 2004-05 when Pakistans exports amounted to $354.092 million as compared to the imports worth $1.842 billion from China in this fiscal year. 

By the end of fiscal year 2003-04 Pakistans exports to China were $288.259 million and imports from China stood at $1.153 billion, which resulted into a trade deficit of $865.211 million. 

Five-Year Development Programme on Trade and Economic Cooperation between Pakistan and China signed between the two countries seeks further liberalisation of bilateral trade under FTA and taking bilateral trade to about $15 billion by the fifth year of five-year programme 2007-2011. The five-year programme is expected to continuously deepen and give major boost to China-Pakistan bilateral and economic cooperation and trade. 

By the fiscal year 2010-11 Pakistans exports to China would be $15 billion. Special Chinese Economic Zones are being set up in Pakistan to allow Chinese investors to set up export-oriented industries and tap potential of the local market as well as regional exports markets. 

An understanding reached between the two countries reveals that bilateral trade between China and Pakistan would be made equally beneficial and both the countries would ensure equal amount of imports as well as exports. Some key importers from China have recently visited Pakistan and had held negotiations with local producers of raw materials as well as semi-finished products so that imports from Pakistan are enhanced to equalise the trade balance between the two countries.

Daily Times - Leading News Resource of Pakistan


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## Neo

*MoU signed for 600 MW coal-powered plant​*
KARACHI: Sindh Coal Authority and Sindh Corbon Energy (Pvt) Ltd signed a memorandum of understand (MoU) on Friday for setting up a 600 MW coal-powered plant in Thar area.

Director Shah Rukh signed the MoU on behalf of Corbon Energy Ltd while Sindh Coal Authority was represented by DG Mines Syed Abbas Ali Shah. 

In a briefing to the minister on the occasion, it was informed that in the first phase, Sindh Corbon Ltd would set up a 300 MW coal-powered plant in Block-VI at a cost of $350 million while $250 million would be spent on the second phase of 300 MW plant.

Talking to the company officers, Minister for Mines Irfanullah Khan Marwat welcomed them and asked them to start work and said the government will extend them all cooperation.

He said this plant would greatly help overcome the power crisis besides flow of large-scale investment into Sindh Province and availability of employment to jobless while the Tharis would be the higher beneficiaries.

Mr Marwat said the signing of agreements for installation of coal power plant would bring a major revolution in the country and a new Thar will emerge.

He said the foremost effort of the government is that all coal plants start operations on their schedule. app

Daily Times - Leading News Resource of Pakistan


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## Neo

*50,000 villages electrified in last four years, says PM​*
ISLAMABAD: Prime Minister Shaukat Aziz has said that the government has electrified 50,000 villages in the last four years whereas previous governments had electrified 10,000 villages only.

The prime minister said this while talking to Federal Minister for Petroleum Liaquat Ali Jatoi, who called on him at the Prime Ministers House on Saturday. He said the growing demand of electricity in the rural areas had increase manifold due to rapid economic growth and improvement in the standard of living of the people.

Jatoi briefed the prime minister about the new power generation projects and said that financial close for 775 MW of new projects had been achieved in the private sector and that several new projects in the private sector were underway to produce a total of 2,000 MW of electricity to meet the growing demand, which would yield $ 2 billion in the power sector.

He said that eleven new hydel projects were being planned in the private sector through the Private Power and Infrastructure Board (PPIB), which would produce an additional 2,500 MW to meet surging demand of electricity across the country including industrial, domestic and agricultural needs.

Aziz also reviewed the water situation and expressed satisfaction that enough water was available in the storages both at the Mangla and Tarbela Dams to meet the needs of the Rabi-Crops.

He emphasised the need for better management and conservation practices in distribution of water at the provincial level so that farmers particularly those at the tail end could get adequate water for their irrigation needs.

It was noted during the meeting that water distribution under Indus River System Authority (IRSA) accord was proceeding satisfactorily as demanded by the provinces. It was also noted that share of the NWFP and Baluchistan province had been enhanced to meet their growing needs, which would further increase their agricultural output, enhance their income and create more job opportunities.

The prime minister said that because of structural reforms agenda and macro-economic policies undertaken by the government, the economic outlook had changed completely. The middle class, he said, was expanding, level of poverty was on decline thus enhancing the buying power of the people resulting in more household appliances and increase in demand for electricity. Record development had taken place both in rural and urban areas during this governments tenure, he added.

The prime minister said that thousands of villages had been provided electricity under Khushal Pakistan Programme besides making provision of electricity for tube wells for agricultural purposes.

The government intended to provide electricity to all areas of the country by the end of the year 2007, he said, adding that the number of tube wells installed during the last four years was around 45,000, which was a record in the sector.

Aziz expressed hope that in the upcoming general elections, the Pakistan Muslim League (PML) and its allies would succeed on the basis of good governance and record development projects. He said people wanted continuity of policies and leadership to ensure continuity of growth and development.

Jatoi updated the prime minister about various initiatives undertaken by his ministry for new projects and for improving the existing ones so as to bridge the gap between demand and supply of electricity. He also updated the prime minister about the status of ongoing development projects initiated in his constituency. The completion of the projects would bring further improvement in the living standards of the people, Jatoi added. nni

Daily Times - Leading News Resource of Pakistan


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## Neo

*Seafood export up 105 percent in September ​* 
KARACHI (November 04 2007): Despite European Union ban, export of fish and its preparations grew by 18.223 million dollars - 105 percent - during September 2007 as compared to 8.907 million dollars in August 2007. Talking to Business Recorder on Saturday, seafood exporters linked the growth with the available catch of August, which could not be exported during that period.

However, they expressed dissatisfaction over the continued EU ban on seafood for the last nine months, pulling down export significantly. "Efforts are not being made sincerely by Marine Fisheries Department (MFD) to get this ban lifted," they alleged.

According to official statistics, the export of fish and its preparations grew by 18.223 million dollars in September 2007 as compared to 8.907 million dollars in August 2007, registering a robust growth of 9.316 million dollars or 105 percent.

However, during the first three months (July-September) of the current fiscal year, export of these items slumped by 11.083 million dollars or 24.36 percent. The export of fish and its preparations shrank to 34.415 million dollars during first three months of the current fiscal year as compared to 45.498 million dollars during the same period of the 2006 fiscal year.

On yearly basis, the export of fish and its preparations also came down by 1.524 million dollars or eight percent during September 2007 as compared to 19.747 million dollars during the same period of the 2006 fiscal year.

"The MFD's newly designated chief does not have any expertise in the field of fisheries and is taking illogical and arbitrary decisions due to which exporters are facing severe problems," said Pakistan Seafood Industries Association Chairman Hanif Khan. About growth in seafood exports during September, he said that though export to the EU was not allowed, it was being made to several other countries in the Far East and the Middle East.

He said the EU ban on the seafood export was unjustified because the export to Japan, China, Egypt, South Africa etc, was being made on a regular basis and these countries never complained about issues raised by the EU.

Criticising the EU ban, he called it a black law, which should not be imposed on raw items as its limits were confined only to finish products and the EU should review its ill-perceived restrictions. Hanif said that local exporters were complying with the general manufacturing practices (GMP) to ensure the safety and hygiene of seafood products.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Fiscal Year 2007: machinery import growth down to 8.1 percent ​* 
KARACHI (November 04 2007): Machinery import growth fell to 8.1 percent during FY07 from 40.6 percent of previous year mainly due to low imports of motor vehicles, textile and telecom machinery. The State Bank data shows that overall machinery imports amounted to $8.999 billion during fiscal year 2000-07 as compared to $8.323 billion during of 2005-06.

In fact, machinery import other than aircraft amounted to 2.6 percent during FY07. The State Bank said that whereas there was decline in motor vehicles, textile machinery and telecom and electrical machinery imports, which together constituted 52 percent of overall machinery imports, there was increase in power generation, agriculture and construction machinery according to the needs of the fast growing domestic economy.

There was robust growth for the third successive year in the import of power generating machinery recorded, at 44.8 percent to $740 million. The imports of construction and mining machinery also registered robust growth of 16.9 percent against 35.2 percent of FY06.

Textile machinery import declined by 38.5 percent to $502 million as against the decline of 12.0 percent to 817 million dollars in FY06. Office machinery imports stood at 309 million dollars, construction and mining at 222 million dollars, electrical machinery & apparatus 651 million dollars, railway vehicles 37 million dollars, road motor vehicles 1.342 billion dollars, aircraft, ships and boats 934 million dollars and import of agricultural machinery & implements stood at 166 million dollars.

As a result of increase in imports of tractors for the third year in a row, the import of agriculture machinery recorded 17.7 percent growth during FY07 as compared to 91.7 percent and 95.8 percent growth during FY06 and FY05 respectively.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*SME industrial estates to be set up in major Punjab towns ​* 
SIALKOT (November 04 2007): The Punjab government has evolved a strategy for the establishment of SME industrial estates in Punjab. Business Recorder learnt through reliable sources here on Saturday that under the plan, the SME industrial estates would be set up in major industrial towns, including Sialkot and work on the plan would be executed in near future.

The step was being taken for the redress of the problems being confronted by the SME sector, which is the backbone of the national economy of the country. All basic facilities would be ensured to the SMEs in these proposed SME estates, sources said.

Special focus was also being accorded on the development of industrial sector on modern and scientific lines aimed at tracking it modern production lines aimed at enhancing export volume and bringing industrial revolution by setting up large-scale industries, including agro-based industries in the province.

Under the programme, the provincial government has introduced certain schemes for the development of small and medium industries besides loan facilities was being extended to the small and medium businessmen enabling them to upgrade their industrial units for setting up new industrial projects in the Punjab.

More than Rs 1 billion had been set aside for diminish the financial problems being faced by the businessmen engaged with small and medium industries as well as for removing the hitches which were hindering the process of setting up of new industrial projects.

Apart from this, the government was also providing loan facilities for the advancement and expansion of agro-based industries and dairy development, engineering and information technology in the province.

The prime aim of setting up of large-scale industries was to ensure strong industrial base and keep the economic wheel moving in the province. The maximum establishment of industries will not only help in doubling the export volume, but also create wide job opportunities for the educated, skilled and unskilled labour, sources added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan an emerging hub of IT in future: experts ​*
WASHINGTON (November 04 2007): Pakistan has a lot of encouraging factors to emerge as a new hub of information technology growth in the next five years, prominent IT experts and global studies that also take into account geo-strategic challenges, say in their latest assessments.

"The prospects remain bright because the fundamentals of the Pakistani economy are solid and the country is expected to sustain high levels of investment and capital inflow, chief executive officer of a California-based company that pioneered IT services business in Pakistan, said in an interview.

Backing up his optimism with his long experience, international trends and global IT companies' search for English speaking workforce for their fast-paced growth, Najeeb Ghauri, the head of Netsol Technologies, says Pakistan can gain its rightful share in the bulging world market.

On the economic front, continued upbeat performance rising investment, a 7 percent average growth, healthy foreign exchange reserves level, soaring home remittances - and global financial institutions forecast of sustained high growth in the medium-term reinforce Ghauris confident outlook.

He said that maintaining political stability and overcoming security challenges will be important to lending further appeal to Pakistan's status as an emerging economy and further bolstering international investor confidence.

"So coming few months will be very important -- but overall the picture is hopeful as far as IT growth is concerned, said Ghauri, whose company expanded its business to one billion rupees in Pakistan last year. According to A T Kearney Global Services Location Index 2007, Pakistan is listed among countries holding out a vast potential and being financially more attractive than some major current destinations while an international study last year rated Pakistan as a major IT business hub in half a decade.

Highlighting advantages the South Asian country offers in terms of its skilled, English proficient yet inexpensive human resource, some of the ingredients considered vital to prospering the IT business, experts put Pakistan ahead of India and China as it also offers increasingly open and well-regulated business environment, Pakistan's exports of IT and services have grown by 50 percent year-on-year for the last three years. An upcoming 17-storey IT park in Lahore and growing software companies in Karachi symbolise the country's aspiration to advance in the futuristic field.

Pakistan Software Export Board now has an ambitious target to boost exports of software, services, call centres and BPO from US $1.4 billion in the fiscal year ended June to about $4.5 billion by 2010. By then, the overall IT and services industry in the country is also expected to grow to $10 billion from the current $2.4 billion a year.

A key advantage that ranks the country ahead of even bigger regional economies is the human capital the South Asian country boasts of in the long-term perspective. About 100 million of its 160 million people are aged below 25 years and with proliferation of IT institutions and infrastructure, a huge number is likely to go for the attractive profession.

Acknowledging the demographic advantage, a leading American entrepreneur told Pakistan's top economic managers in Washington that the country would have the second largest English-conversant population outside the English-speaking world.

Najeeb Ghauri, who is founding member of the US-Pakistan Business Council, says efforts are also underway to foster a better relationship with US companies as a number of them show keen interest in availing opportunities that most notably include services and financial sector. His own Nestol Technologies is slated to launch local public sector, e-government services.

Besides, Pakistan is also striving to enter the offshoring marketplace largely through contact centers and back-office services. Companies have set up approximately 100 contact centers in the country in the past three years. In addition to telemarketing, Pakistani workers provide payroll, accounting and human resources work.

However, the country also needs to establish quality higher education centers to rise to international expectations and demands over the longer-term, stresses Ghauri, who is a member of Pakistan Human Development Fund.

In addition, Pakistani professionals' greater international exposure , he feels, can also enhance its status as an emerging IT hub. In this context, he agrees to the idea of invigorating efforts to maximise the number of H1-B category American visas for Pakistani professionals since that will help market the country's potential and also improve its image.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Punjab Internet City' to be established ​* 
LAHORE (November 03 2007): Punjab government will establish 'Punjab Internet City' with a cost of Rs 1.28 billion near Kala Shah Kaku where local and foreign IT companies would be provided land to enhance direct foreign investment, strengthen international links and promote industrial sector.

This was stated by the Punjab Chief Minister, Pervaiz Elahi while chairing a meeting of the Punjab Information Technology Board (PITB) here on Friday. Elahi said that a 17-storey Software Technology Park was also being constructed in Lahore to expedite the pace of investment in the IT sector and enhance international links besides creating job opportunities for 10,000 people.

He added that 40,000 people have been provided IT training in the province. He said it was a good omen that international companies were taking special interest for investment in the IT sector in Punjab. PITB Chairman, Rizwan Amin Shaikh said in a briefing that 100,000 people would get training in IT in the second phase in 35 districts of the province.

Chief Secretary Punjab Salman Siddique, Chairman P&D Suleman Ghani, Secretary Finance Sohail Ahmed, Secretary Home Khusro Pervez, Chairman Punjab Information Technology Board Rizwan Amin Shaikh, Fast Director Professor Dr Qaiser Durrani and other board members also attended the meeting.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Microsoft launches genuine software initiative in Pakistan ​*
KARACHI (November 03 2007): Microsoft, the global software leader on Friday announced its genuine software initiative programme in Pakistan, aimed at checking software piracy through education and engineering measures.

"Piracy has become a significant issue in Pakistan with eight out of 10 software being used illegally and incurring $143 million loss to the country's IT industry," said Farhan Junejo, License Compliance Manager, Microsoft-Pakistan.

Microsoft will raise awareness among computer users and pirated CDs sellers about the benefits of licensed software and its recognition through education," he said in a press statement issued here. "We will also inform the end-users and resellers about the risks associated with the illegal software," he added.

Through engineering measures, Farhan said, "Microsoft will make greater investment in anti-counterfeiting technologies and product features that are harder to break by pirates." The new technology will also alert the computer users about the presence of pirated software on their systems, if any, he added.

Farhan cautioned that pirated software is a risky affair for the computer users, because it may result in criminal and financial penalties for violation of the copyright law. Executives of the company may also be held individually liable for any copyright infringement within that organisation, he added.

Furthermore, the businesses using unlicensed software are unable to receive valuable product updates that protect the genuine software users from security threats such as viruses, he said.

The persons using non-genuine software are also ineligible for any technical support, when the software develops some fault, he said. Ultimately, businesses that install unlicensed software run the risk of their workforce productivity loss and damage to their reputation, he added.

Farhan has advised businesses to protect themselves from counterfeiters by purchasing software from authorised resellers operating in all the major cities. The customers can also ensure they are purchasing the original software by demanding its Certificate of Authenticity, he added. He said piracy is affecting the global $175 billion software industry, which employs 2.3 million people around the world. Only last year the software industry lost about $40 billion to global software piracy, he added. Farhan hoped the microsoft genuine software initiative being launched in the piracy prone countries will go a long way in reducing current global piracy rate of 35 percent.

Business Recorder [Pakistan's First Financial Daily]


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## Interceptor

Neo said:


> *50,000 villages electrified in last four years, says PM​*
> ISLAMABAD: Prime Minister Shaukat Aziz has said that the government has electrified 50,000 villages in the last four years whereas previous governments had electrified 10,000 villages only.
> 
> The prime minister said this while talking to Federal Minister for Petroleum Liaquat Ali Jatoi, who called on him at the Prime Ministers House on Saturday. He said the growing demand of electricity in the rural areas had increase manifold due to rapid economic growth and improvement in the standard of living of the people.
> 
> Jatoi briefed the prime minister about the new power generation projects and said that financial close for 775 MW of new projects had been achieved in the private sector and that several new projects in the private sector were underway to produce a total of 2,000 MW of electricity to meet the growing demand, which would yield $ 2 billion in the power sector.
> 
> He said that eleven new hydel projects were being planned in the private sector through the Private Power and Infrastructure Board (PPIB), which would produce an additional 2,500 MW to meet surging demand of electricity across the country including industrial, domestic and agricultural needs.
> 
> Aziz also reviewed the water situation and expressed satisfaction that enough water was available in the storages both at the Mangla and Tarbela Dams to meet the needs of the Rabi-Crops.
> 
> He emphasised the need for better management and conservation practices in distribution of water at the provincial level so that farmers particularly those at the tail end could get adequate water for their irrigation needs.
> 
> It was noted during the meeting that water distribution under Indus River System Authority (IRSA) accord was proceeding satisfactorily as demanded by the provinces. It was also noted that share of the NWFP and Baluchistan province had been enhanced to meet their growing needs, which would further increase their agricultural output, enhance their income and create more job opportunities.
> 
> The prime minister said that because of structural reforms agenda and macro-economic policies undertaken by the government, the economic outlook had changed completely. The middle class, he said, was expanding, level of poverty was on decline thus enhancing the buying power of the people resulting in more household appliances and increase in demand for electricity. Record development had taken place both in rural and urban areas during this governments tenure, he added.
> 
> The prime minister said that thousands of villages had been provided electricity under Khushal Pakistan Programme besides making provision of electricity for tube wells for agricultural purposes.
> 
> The government intended to provide electricity to all areas of the country by the end of the year 2007, he said, adding that the number of tube wells installed during the last four years was around 45,000, which was a record in the sector.
> 
> Aziz expressed hope that in the upcoming general elections, the Pakistan Muslim League (PML) and its allies would succeed on the basis of good governance and record development projects. He said people wanted continuity of policies and leadership to ensure continuity of growth and development.
> 
> Jatoi updated the prime minister about various initiatives undertaken by his ministry for new projects and for improving the existing ones so as to bridge the gap between demand and supply of electricity. He also updated the prime minister about the status of ongoing development projects initiated in his constituency. The completion of the projects would bring further improvement in the living standards of the people, Jatoi added. nni
> 
> Daily Times - Leading News Resource of Pakistan



Thats propaganda there is shortage of electricity how in the hell did they find excess electricity.


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## Neo

Interceptor said:


> Thats propaganda there is shortage of electricity how in the hell did they find excess electricity.



Its no propaganda mate, the programme is well supported and ducumented by ADB.
But I agree it doesn't rhyme with the mega shortage we're facing in major cities like Karachi.


----------



## Interceptor

Neo said:


> Its no propaganda mate, the programme is well supported and ducumented by ADB.
> But I agree it doesn't rhyme with the mega shortage we're facing in major cities like Karachi.



Its just propaganda people are sleeping on the streets of Karachi and its like this across every city in Pakistan when its summer.

There are no projects that spell this.

They haven't even aided the Kashmir's and the only thing they are doing is selling Pakistani assets and from that money they then are fixing a road building a bridge polishing a lantern poll.


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## Neo

*Governance reforms: melting resistance to change​*
The Punjab government is all set to receive a soft term credit facility to the tune of $1.550 billion from the Asian Development Bank (ADB) to be disbursed over a period of five years for deepening the governance and economic reforms initiated in 2004, achieve the Millennium Development Goals (MDGs) and to improve administration of justice in the province.

Out of the total loan amount, the Manila-based multilateral lender is providing $750 million to the province for undertaking the second phase of its economic and governance reforms under the umbrella of its flagship  the Punjab Resource Management Programme (PRMP). Launched in the late 2003 to carry out policy reforms to improve governance for rapid economic growth, the PRMP, in the words of senior ADB official Ramesh Subramaniam, is regarded within the bank as a model programme for its replication in other parts of the world in future.

Another $400 million will be provided to the province for improving the administration of justice. The previous financial assistance provided by the bank under this programme, according to officials, could not produce the desired results because it was carried out through the federal government.

It is now being felt at the ADB that the programme will give better results if the access to justice reforms programme is implemented directly by province (under the direct guidance of high court) itself, says an official involved in loan negotiations with the lender.

The remaining sum of $400 million will be disbursed to Punjab to facilitate its effort to achieve the MDGs, which the government has repeatedly claimed in the recent past to achieve in all areas except in public health care.

The provincial government completed in March this year the first phase of governance and economic reforms programme with the financial assistance of $400 million from the ADB. Some of the achievements of that reforms programme include the development of strategies for managing provinces huge expensive debt accumulated in the 1990s, reducing incidence of poverty (Punjab-Poverty Reduction Strategy Paper) and enhancing spending on areas and sectors that can have greatest impact on poverty (Poverty Focused Investment Strategy).

In order to ensure the critical elements of continuity and certainty in the availability of resources for the medium term (three years) development projects, the Medium Term Development Framework (MTDF) was devised. Planning and budgeting processes were linked together through Medium Term Budgetary Framework (MTBF).

Other important achievements included establishment of a pension fund and a GPIF to make the pension and provident fund liability a self-sustaining, off-the-budget item with a view to freeing up financial resources for enhanced spending on pro-poor social and economic sectors. A provincial procurement authority has also been set up.

In the second phase of its reforms programme, government plans to improve provincial public pension and GP fund administration, strengthen linkages between budgeting and expenditure and planning over a medium-term of three years through the development of a Medium Term Expenditure Framework (MTEF), undertake provincial civil service reforms with a view to improve the efficiency and output of provincial bureaucracy for better public service delivery and facilitate growth of private sector as engine of economic growth and as a partner of the government in the provision of quality services to the people of the province.

The PRMP reforms programme seeks to reduce poverty through substantial improvement in public service delivery in the province with particular focus on pro-poor sectors by restructuring the systems and the governments business processes for efficient and effective management of public resources. The focus of these reforms remains capacity building and effective use of people  both civil servants responsible for delivering services to the people, restructuring of institutions and their functions, creation of fiscal space for rescuing resources for pro-poor sectors.

The provincial government used the major portion of the loan  around 80 per cent of the proceeds  received during the first phase of the reforms programme to retire expensive federal cash development loans (CDLs) to create fiscal space for increased spending on the pro-poor sectors.

The loan to be received by government for the second phase of reforms programme  to be called as the Punjab Government Efficiency Improvement Programme (PGEIP)  will also be used to swap the expensive federal loans and capitalise the recently established provincial pension fund as well as the General Provident Investment Fund (GPIF).

Officials admit that there has been a strong resistance to reforms programme, but say, the situation is changing fast. It is not easy to reform or change; to get the people agree to change is always the most difficult part of any reforms programme. But the situation is changing and departments have begun to own the reforms agenda, says a senior PRMP official.

We have been asked to carry out comprehensive assessment of the reforms implemented so far so that we know as to how much distance has been covered and how much is yet to be covered, he says. Several departments also want it. That reflects a change in the mindset within government.

In spite of different development initiatives in social and economic sectors and an expensive image-building media campaign run by government to project its achievements ahead of this years general elections, Punjabs development level remains far below its actual potential and social indicators continue to lag.

The Pakistan Peoples Party alleges that the governing Pakistan Muslim League has already spent Rs8 billion  Rs5 billion during three months from July to September alone  on the

Continued on P.IV

Governance reforms: melting resistance to change -DAWN - Business; November 05, 2007


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## Neo

*Concerns in the growth profile​*
Business leaders, bankers and economists share concerns with the State Bank of Pakistan (SBP) over the emerging challenges facing the national economy  a stubbornly high inflation, widening of current account deficit, sluggish export growth and mounting debt servicing liability  well-articulated in its 2006-07 annual report, released last week.

However, they do not draw the same level of satisfaction as expressed by the central bank on investment-led growth of seven per cent a year for the third consecutive year in 2006-2007, simply because its sustainability is now a big question mark.

Investment mainly flowed in services sector---banking, insurance and telecom---and is almost touching a saturation point, Asad Saeed, an economic consultant observed while expressing doubts whether more investment will come in these sectors in the coming days. The President of the Federation of Pakistan Chambers of Commerce and Industry, Mr Tanvir Sheikh wondered as to how the private sectors demand for bank credit has fallen when investment is driving the economic growth.

 It is because giant telecom companies, big banks and insurance companies have managed to get loans from lending consortia for their investment on a reasonably good discount rate on the basis of big volume of their business. But many of the textiles and other businesses could not obtain such concessions and hence a fall in private credit demand; the 14 per cent plus interest rate is too much, Majyd Aziz, a former President of Karachi Chamber of Commerce and Industry explained.

The unusual high growth in services sector has emerged as a conspicuous factor in the economy that has attracted businessmen as well as economists. The SBP report points out that services sector has proved its significance in the economic growth during the past few years with its share reaching an all-time high of 53.3 per cent. But the bottom line of the report is, the data compilation process is not in line with the importance of the sector.

Not many businessmen and economists however draw any satisfaction from the fact given in the

SBP report that services sector is now 53.3 per cent of the national economy. It showed eight per cent growth in 2006-07 against a target of 7.1 per cent. It was more than 9.6 per cent in 2005-06. Industry was targeted to grow at 9.1 in 2006-07 against which it grew by 6.8 per cent. Agriculture was expected to grow by 4.5 but showed a growth of five per cent. In short, the commodity sectors were projected to grow by seven per cent but grew by six. The President FPCCI said that growth in non -commodity sector is always inflationary. It should be in consistence with the growth in real commodity sectors.

 We have a hollow commodity sector, Asad Saeed observes while pointing out that India and China depend a lot on their commodity sector--agriculture and industry-for their sustainable growth. Bangladesh and Sri Lanka enjoy international community support and show good export growth. We have a demoralised business community, an expansionary fiscal policy and we do not enjoy that level of support from international community as being given to our neighbours a business leader with known political affiliations with ruling Muslim League said.

Ours is still a one-off economy Asad remarked, quoting instances when a growth in livestock pulled up the entire agriculture sector in a year or privatisation proceeds helped balance off the payments in external sector. In 2006-07 it was 17.2 per cent growth in construction that gave some respectable growth number to industry. All these gimmicks put to doubt the sustainability of the economic growth.

 One point of concern in the growth profile is the greater reliance on exceptional growth in key sub-sectors of the economy;  is how the State Bank has observed in its report on the performance of the national economy. In the services sector, banks and insurance contributed 18.2 in 2006-07 as against 33 per cent a year earlier-- in 2005-06. A growth of 6.9 per cent in public administration and defence is the other sub- sector which contributed in overall eight per cent growth of the services sector. This sub sector---public administration and defence---grew by 10 per cent in 2005-06.

In the five per cent growth of agriculture, major crops that include cotton, sugar cane, rice, maize and wheat contributed 7.6 per cent during 2006-07. But market sources question the growth figures of these crops. The

SBP report endorses government assessment of 23.5 million tons of wheat. But traders and millers put this figure at hardly 20 million tons as wheat supply has already become scarce and prices of wheat flour is Rs21 a kilogramme in the market. So is the case with other crops-- rice and cotton.

A conspicuous feature is the lower 6.8 industrial growth in 2006-07 and a negative growth in electricity and gas distribution. Electricity and gas distribution also showed a fall of 23.8 per cent in 2005-06.. In face of this marked depletion of energy supply, manufacturing grew by 8.4 in 2006-07 and by 10 per cent in 05-06. Call it economy of energy in the industry a leader of SITE Association explained.

The SBPs outlook for 2007-08 crops is positive. But reports emerging from different parts of the country do not support the central banks optimism. Two main crops-- cotton and rice-- are under pests and viral attack. The textile industry is thinking of importing hree million bales of cotton. The decline in rice crop will affect export and its price in local market is bound to go up.

Majyd Aziz hopes for some revival of value added textile sector from this month. According to him garment exporters have started booking some orders and he hopes more orders will follow. Fawad Ejaz of leather garments industry is somewhat hopeful as after months, the leather garments export showed improvement for the first time in September this year. The government offered six per cent research and development rebate to shoe makers in January last year. He hopes that this concession will start showing results. The industry is asking for same concessions for leather garments for which a representation has been made to the government.

There are doubts on harvesting a 24 million tons wheat crop next season. Fearing a further price spiral, the government on Wednesday put off the decision to offer Rs500 for 40 kilogramme wheat procurement price to growers. Farmers are demoralised and may not sow wheat in many areas..

On the food inflation, the SBP report has sounded a warning. It concedes the food inflation remained high throughout the fiscal 2006-07 due to a number of supply shocks in commodities such as wheat, sugar, vegetables. This stubbornly high food inflation has raised the suspicion that impact of supply shocks may bring about a permanent increase in underlying inflationary pressures---a phenomenon known as second round effect, said the report. While launching the annual report at a press conference last Monday, the SBP Governor Dr Shamshad Akhtar did not mince words to warn about, further inflationary risks in days to come particularly because of the rising international oil prices. Government circles say that the 2007-08 budget was drawn up on assumption of international oil prices at $57--58 a barrel. Now that it is fast approaching $100 a barrel. Analysts fear that government may have little choice but to pass on the impact of high international prices on to the consumers if petroleum development surcharge proves insufficient to keep prices stable.

Another alarming feature of the report is 10 per cent rise in the stock of debt and liabilities to more than Rs5 trillion. The major causative factors for this increase in the total debt and liability stock were the rising level of the current account deficit and a large fiscal deficit that raised the financing needs of the country, the report says. Euro bonds and Sukuk were the convenient tools for government to offset the current account deficits which are approaching maturity period for repayment in next few years.

All these issues and concerns articulated in the SBP report have not evoked enough response from the government as electioneering is gradually setting in and businessmen and economists fear the economic situation might worsen if no contingency action plan is drawn up and put into operation in next few months.

Concerns in the growth profile -DAWN - Business; November 05, 2007


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## Neo

*Investment boom amid political shadows​*
As gunship helicopters start to hover over the scenic Swat valley, multiple suicide bombers strike at different locations and nation waits for the Supreme Court to render its decision regarding the legality of Pervez Musharrafs re-election, Islamabad is rife with rumours. Political scene is too captivating for people to spare a thought for economy.

The tale, therefore, of a galloping Pakistani economy growing at over seven per cent told by the State Bank in its annual report, released last week, failed to lift the sagging spirits of local manufacturing classes strained by fears, uncertainty and real or perceived economic hardships.

It is more intriguing than interesting that a record level of investment that elevated the total investment to GDP ratio to 23 per cent in FY07 up from 21.7 per cent in 2006 failed to excite the local private sector players who are supposed to act as engines to keep the growth on track.

The State Bank of Pakistan current annual report, however, calls the investment trend impressive that it says is a result of continued strength of domestic demand, a sharp rise in foreign direct investment as well as a healthy increase in public sector development programme. It hails the economic policies being pursued when it states: these have successfully transformed the initial consumption-led growth impetus of a few years back to a greater role for sustainable investment-led growth.

A closer look at the composition of sectors feeding into making of remarkable 23 per cent investment rate clearly demonstrated that record FDI $5.1 billion (above three trillion in rupees) committed in a variety of sectors, over the year 2006-07, contributed substantially to investment numbers.

In the banking sector acquisition of Union Bank by Standard Chartered Bank, of the Prime Bank by ABN Amro Bank, of the Crescent Bank by the Samba Group of Saudi Arabia, etc also contributed. In the telecommunication sector all major international companies (Telenor, Warid, etc) injected new investment to outsmart their competitors in massive Pakistani market. Other sectors that foreigners found attractive were oil and gas exploration, construction, and retail business.

This investment played a deciding role in pulling investment ratios up as percentage of the GDP. Besides, there was a massive rise in portfolio investment that is currently at record levels. The government claims that public sector spending in infrastructural project has also made a contribution in arriving at magnificent numbers.

Leaders of the multinationals belonging to companies instrumental in realisation of strong investment figures were away and not available to comment on the sustainability of the trend. The head of American Business Council Iqbal Bengali and President of Overseas Chamber of Commerce and Industry Zubyr Soomro are out of country and cannot be reached for comments on a short notice Hasan Kemal of ABC told Dawn.

The local private sector representatives, reached by Dawn in different cities were nervous when not depressed. When investment is not directed towards industry in the milieu of Pakistan it will not be sustainable Tanvir Sheikh President Federation of Pakistan Chamber of Commerce and Industry responded. The real wealth of the country is not increasing as a huge percentage of investment made is repatriated by the foreign companies in form of profits and dividends, he said sounding unhappy with the policies that he felt ignored local manufacturers and indigenous entrepreneur class.

Shafqat Ellahi, Chairman All Pakistan Textile Mills Association said from Lahore that it is hard for him to make a generalised comment on the composition of the trend of investment and the prospects of the sustainability of the trend. In textile, the investment has dwindled by no less than 50 per cent for a variety of reasons, he said. The investment is concentrated in areas where the government has engineered good returns such as banking, he said hinting at governments soft policies towards certain sectors.

He still commended the government for achieving good investment rates and felt that the local players in manufacturing sectors share part of the blame for their weak contribution, as they, in his view, are still largely export oriented and have failed to realise the potential of the domestic market.

We will have to find ways to capitalise on highly favourable demography of the country. About 100 million strong people are under 30 years and they are out there in the market waiting for us to provide them viable new options. The government and the private sector need to meet the challenge head on. So far we operate as the government does in our own domains for provision of utilities and security. That is an expensive proposition for a sector operating on narrow margin.

Unfortunately, we are compromising our future without much ado. The growth of large scale manufacturing has declined from 10.7 to 8.8 per cent. Still the attempt is to paint a rosy picture. When investment is limited to a narrow band of sectors and that too in services primarily, in my view, the robust investment trend will not be sustainable in the long run, Ameen Bandukhda, an industry leader from Karachi told Dawn.

This is also a period when the private sector credit off take has actually dwindled, he said.

The strong investment led by foreign companies reflects the confidence of shrewd, trained globe-trotting international investor is an expression of their confivdence in Pakistan and their approval of economic policies being pursued by the present government Dr Salman Shah, a government economic wizard told Dawn recently.

Commenting on the deceleration in large scale manufacturing the SBP annual report says: LSM growth appears to reflect a broad moderation in external and domestic aggregate demand, as well as capacity and input constraints in some industries. The textile sector contributed almost a quarter of the increase in value-addition in LSM during FY07.

Contrary to observations of the private sector, the annual report finds the growth momentum sustainable on the strength of persistent increase in real investment.

The contribution of the portfolio investment was particularly found by most commentators to be symptom of higher availability of liquidity globally. There is a lot of cash roaming around internationally in search of respectable returns. We cannot count too much on this kind of investment either. These investments are footloose and can leave at will, an analyst said referring to the role of portfolio investment in the 1990s East Asian crisis.

The political mess needs to be cleared up, the threat of violence handled in way that atmosphere of distrust recedes. The situation is tumultuous. A transparent transition to civilian rule can rekindle hope amongst people. The local industry is unhappy over many policies of the present dispensation that they see as oriented towards international business interests at their cost. Majority of businessmen still find the current team of rulers more dependable than politicians but are reluctant to defend them, the way they used to a few months back.

Investment boom amid political shadows -DAWN - Business; November 05, 2007


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## AgNoStiC MuSliM

Interceptor said:


> Its just propaganda people are sleeping on the streets of Karachi and its like this across every city in Pakistan when its summer.
> 
> There are no projects that spell this.
> 
> They haven't even aided the Kashmir's and the only thing they are doing is selling Pakistani assets and from that money they then are fixing a road building a bridge polishing a lantern poll.



Its not necessarily propoganda. "Electrifying a village" probably only indicates putting in the required infrastructure - whether there is enough electricity to supply them 24/7 is another matter.


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## Neo

*FTA with Malaysia finalised ​*
ISLAMABAD (November 05 2007): The long-awaited Free Trade Agreement (FTA) with Malaysia has been finalised which would be implemented from January 2008, after formal approval of the Cabinet, sources in Commerce Ministry told Business Recorder.

Initially, an agreement on 'Early Harvest Program' (EHP) was signed in December 2005 during the Prime Minister's visit to Malaysia and effective from January 2006. Sources said that reduction of tariff on palm oil was a major issue in the negotiations as import of palm oil from Malaysia involves substantial quantity having annual value of over $375 million. Pakistan offered to reduce tariff on palm oil by 10 percent on a margin of preference on January 1, 2008 and further 5 percent on January 1, 2010 and to which Malaysia finally agreed.

The schedule of concessions, which is an integral part of the agreement, has been divided into four Faster Tracks (FT) suggesting elimination of tariff in two reductions by January 1, 2009 and Normal Tracks (NT), on products in this track would be eliminated by January 2012.

Sensitive Tracks(ST) has been further divided into three-sub-tracks ie (a)Sensitive track -where tariff will be reduced to 5percent by 2011. In case of Pakistan, however, for certain products, attracting applied MFN tariff of 15percent tariff would be reduced to 5percent in 2014.

(b) Sensitive track (2) - where tariff would be reduced to 10 percent by 2014.

(c) Sensitive track (3) - where tariff will be reduced to 20 percent by 2009 or 2011.

Pakistan has also offered reduction of 20 percent tariff on margin preference concerning 129 tariff lines where Pakistan had given the same treatment to China in FTA.

Sources said that both countries have also kept a list of products in the highly sensitive category where tariff will not be reduced for the present. Besides, there was also an exclusion list, which would be kept outside the bilateral agreement. These products are mostly related to national security requirements, protection of human health or safety, animal or plant health, environment and for religious reasons.

Malaysia will eliminate tariff on about 80 percent of Pakistan's existing imports into Malaysia whereas Pakistan has covered only about 23 percent of current imports of Malaysia in this category.

Commerce Ministry claims that it has protected all its core manufacturing industries which include auto sector, electronics, footwear, leather products, locally manufactured chemicals and machinery, paper, garments and synthetic textiles, articles of wood and furniture etc.

Pakistan has gained market access for all our core products like cotton yarn, cotton textiles, bed linen, home textiles, jewellery, kinnow, mangoes, some engineering goods, leather products and minerals etc.

To ensure that no circumvention takes place and preferential tariff is applied on the goods originating from the respective FTA partners, the provisions of Rules of Origin, appearing in chapter 3 of the agreement would be followed by both the countries.

The criterion to confer origin is that either the goods are wholly produced; or the value-addition is not less than 40 percent of its contents, or that the goods produced undergo a change of tariff heading on 4-digit HS. Besides, product-specific Rules of Origin were also negotiated with the consensus of all the stakeholders in Pakistan.

Sources said that product-specific rules provide further protection to agriculture and industrial products.

For agricultural products including prepared foodstuffs, the criterion of wholly obtained or produced in the territory of exporting country has been adopted. Since Malaysia, except palm oil, depends mostly on imported fruits, vegetables grains and other agricultural produce, the net beneficiary for market access will be Pakistan where such products are produced in large quantities.

For cotton and blended textiles, the criterion of conferring origin would be a 'Yarn Forward Rule' ie only the import of fibers is allowed and spinning, weaving and finishing of fabrics should be carried out within each country to get the benefit of preferential tariffs. Pakistan can easily comply with this criterion of origin.

Accordingly, the tariff reduction modality read with the product-specific Rules of Origin ensures protection to our core industrial and agricultural products.

Although most of the goods placed in the fast track by Malaysia have applied tariff of zero percent, the Bound Rates of Malaysia in WTO are much higher. Under this bilateral FTA, Malaysia has bound the rates of tariff, which were at zero percent on January 1, 2006. The rates of tariff, which were higher, especially textiles, would also be reduced to zero percent creating a level playing field for Pakistan.

Pakistan will authorise Trade Development Authority of Pakistan (TDAP) to issue certificate of origin to the exporters. In the case of Malaysia, the certificate of origin shall be issued by Ministry of International Trade and Industry (MITI).

In the area of trade in services, both countries have offered market access to each other beyond their current multilateral commitments in the WTO.

In the ongoing Doha Round of negotiations, both countries have also tabled their respective initial offers for negotiations at the multilateral level. These initial offers will become binding on both countries after the conclusion of the Doha Round.

While preparing the initial offer to WTO under the Doha Round a mandate was secured by the Ministry of Commerce from the ECC. Under the FTA with Malaysia, Pakistan has offered market access on services to Malaysia within the parameters decided by the ECC. In fact, the ECC had agreed to provide equity of 70 percent in mode 3 (commercial presence) but the equity offered to Malaysia is only 60 percent. In the financial services, the offer of Pakistan is 49 percent. Compared with our multilateral commitments of Uruguay Round, Pakistan's offer to Malaysia is WTO plus.

Malaysia in its schedule of commitment for 'services' has offered a WTO plus package by opening more sectors and sub sectors and increasing equity limits for investment in the field of services. The most important concession secured from Malaysia is in the field of Islamic Banking and Takaful.

Malaysia has allowed 100 percent equity to Pakistan in these sub-sectors sources said, adding that this is a concession which is even beyond Malaysia's initia1offer to the WTO in the Doha Round. Besides, Pakistan will be the first country, which has been offered 100 percent equity in these sectors by Malaysia.

The overall package of trade in services was negotiated with Malaysia with the complete consensus by all relevant stakeholders like State Bank of Pakistan (SBP), Ministries of Information Technology, Industries, Production and Special Incentives, Food Agriculture and Livestock, Higher Education Commission, Board of Investment, Telecommunication Corporation, Securities and Exchange Commission of Pakistan etc.

For real market access in trade in services, mutual recognition arrangements are also necessary. As an overall package of the FTA, a framework agreement on 'Mutual Recognition Arrangements' was also negotiated.

This framework agreement will enable stakeholders of both countries to move forward and avail the market access provided under the FTA.

For initiatives in investment, the negotiations built upon an earlier bilateral agreement on the 'promotion and protection of investment' which was signed in Kuala Lumpur on July 7, 1995. Board of Investment was the focal authority to negotiate the investment chapter.

The commitments negotiated for investment shall not be available to any other country and the bilateral investment treaties signed by Pakistan so far will also have no impact on the bilateral investment regime in FTA.

Both countries have agreed that investors shall be accorded a treatment by both countries not less favourable which is accorded to their own investors. This principle (National Treatment) will have certain exceptions as agreed in the negotiations annexed to the chapter of investment.

For reducing cost of doing business cooperation between customs administrations of both countries is essential as all the imported and exported goods pass through this barrier.

Although both countries have undertaken to reduce/eliminate tariff gradually yet to safeguard against any surge of imports due to trade on preferential tariff bilateral safeguard measures have also been agreed by both countries. The Rights and Obligations to initiate trade remedy measures available under the WTO have been kept intact.

Recognising the fact that to increase bilateral trade, cooperation and harmonising sanitary and phyto-sanitary measures and standards is essential, the agreement contains specific provisions in these areas. The concerned stakeholder Ministries like Ministries of Food, Agriculture and Livestock, Science and Technology and Pakistan Standards and Quality Control Authority will interact with their counterparts in Malaysia to ease non-tariff measures which affect the movement of goods across borders. Similarly, the observations of international applications relating to intellectual property have also been reaffirmed.

While implementing the bilateral FTA, certain disputes relating to interpretation or application of the agreement may arise. A dispute settlement mechanism was agreed.

To resolve the bilateral disputes emphasis has been placed on bilateral consultation. In case disputes are not resolved in this manner, a settlement of arbitral tribunal comprising arbitrators of both countries and chaired by a third arbitrator from a country other than Pakistan and Malaysia has been agreed. The arbitrator will work in accordance with a procedure similar to mechanism of dispute resolution in the WTO.

Sources said that Federal Board of Revenue (FBR) may issue a notification for reduction in tariff for imports from Malaysia with effect from January 1,2008.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*US to review aid after emergency ​*
ISLAMABAD (November 05 2007): The United States will have to review its financial aid to Pakistan after President Pervez Musharraf declared a state of emergency, Secretary of State Condoleezza Rice said on Sunday.

"Obviously we are going to have to review the situation with aid, in part because we have to see what may be triggered by certain statutes," Rice told reporters travelling with her in Jerusalem, adding that the United States still wanted to cooperate with Pakistan on counter-terrorism issues.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Investors uneasy, not panicked ​*
KARACHI (November 05 2007): The state of emergency may shake stocks and rattle creditors when markets open for business on Monday, but the economic fallout from President Pervez Musharraf's move is expected to be limited.

Although the economy has grown by an average 7 percent per year over the past four years and foreign investment has hit record highs, brokers at home and analysts abroad said there were no fears of an imminent stock market crash or a loan payment default.

A perception of higher risk may hurt any premium Pakistan could have demanded on deals such as a global depository receipt, worth at least $644 million, for shares in state-run National Bank of Pakistan, expected on sale next month. Other deals include the acquisition of a majority stake in Saudi Pak Bank by a consortium, including Bank Muscat and Japan's Nomura Holdings and a stake in Pakistani cable and telecom operator World Call by Oman Telecommunications. Brokers expect the Karachi Stock Exchange 100-index to fall at the open by as much as 500 points, or about 3.5 percent, short of the 5 percent fall where a mandatory trade suspension rule kicks in.

In the credit market abroad, where the country has floated four Eurobonds, spreads may widen on its credit default swaps by 50 to 100 points, from around 350 basis points, reflecting higher political risk. "Because of the political risk you could see the CDS trade wider. An actual default is not likely because there's not a lot of paper coming due in the near term," said Lehman Brothers, Hong Kong-based analyst Yang-Myung Hong.

US RESPONSE: Beyond the initial response, the market is likely to assess the situation - the strength of street protests by opposition parties, if any, and possible sanctions by the international community - and if the status quo prevails, a rebound is likely.

"In the medium-term, (what's important is) the response from the US with regard to this. If you think about the political implications (of the state of emergency), it's really the status quo," said J.P. Morgan Asia Pacific equity strategist Adrian Mowat. Brokers in Pakistan termed the US response as 'soft'. Washington has pumped about $10 billion into Pakistan in the past five years and views the country as a bulwark in its battle against al Qaeda. "I don't think foreigners are going to get out of the market," said Aqeel Karim Dhedhi, chairman of AKD Group.

Shuja Rizvi, a director at Capital One Equities, said the exposure of foreign investors to Pakistan was small compared with the global opportunity in emerging markets, and that most would simply ignore political developments.

He estimated that the special convertible rupee account that foreigners use for investing in local capital markets stands at less than $1 billion"

At the end of the day investors, both local and foreign, want to see stability and continuity. Unless that is threatened I don't see a great impact on financial markets," said Munir Ladha, chairman of local brokerage firm, Eastern Capital Ltd.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Symposium recommends coal-based power generation ​*
KARACHI (November 05 2007): The international symposium on Sindh Coal (Lignite) held here recently has called upon Nepra, PPIB, Wapda to realise that development of coal energy was in the larger interests of Pakistan and not Sindh as Sindh is already surplus in power. This assertion came in the recommendations released by the symposium on Sunday.

The symposium urged the authorities to reassure policies, identify gaps and find solutions for development of indigenous resources of energy and coal. Pointing out that Thar coal is minable, the symposium recommended that mining should be taken up on war footing by choosing most economical and technically viable methods.

It called for declaring realistic and flexible upfront tariff for coal-based power projects on original coals of different coal fields. The general concuss for Thar coal tariff was for 9-10 US cents.

It emphasised upon implementation without delay of decision of the meeting held by the President of Pakistan on July 20 on Thar Coal calling upon the energy advisor for determination of upfront tariff for lignite based power projects, prepare a schedule of tariff for power projects of different sizes.

It recommended reconstitution and empowerment of technical committee of the task force on Thar coal and Sindh government approached the advisor to call meeting at the earliest in the light of recommendations of the symposium. The symposium observed that among other technical hindrance which are of minor nature, the issue of tentative tariff is main impediment in the use of Thar coal for energy.

Government of Pakistan must have political will to announce an acceptable tariff if it was at all serious to use these resources for solving energy crisis of Pakistan as it was done in 1994 when an upfront tariff opened the gates to IPPs to come to Pakistan. It recommended that PPIB should allow Sindh province to issue licenses for setting up power plants up to 200 MW instead of 50 MW, which is not viable for coal-based projects.

Representatives of FPCCI recommended that tariff on coal should be based on affordability, profitability, transparency, least dependency and involving fully the stakeholders and Wapda and KESC provide guarantees to buy coal based energy. The symposium called for taking up detailed exploration work for greater resources of Thar, to have complete picture of underground resources, rechargeability of aquifer and sustainability of underground water.

It called upon the Sindh and federal governments to facilitate mining process. It said underground gasification being reportedly a better alternate from economical and environmental point of view be examined and underground mining design must be prepared on urgent basis. The two-day symposium was inaugurated by Sindh Chief Minister Dr Arbab Ghulam Rahim.

Fascinating papers were presented at five technical sessions and 22 presentations made highlighting the dimensions about coal with focus upon Thar coal, its exploration, tariff and qualification in terms of economic principles of demand, supply and price.At the inaugural session Dr Ing Gotz Justus from Germany had stated that coal presents the largest deposits of 175 billion metric tons in Asia and suitable for power. He had termed it better than the lignite deposits of Germany and many other world countries where it is being utilised for power.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Need stressed to build water reservoirs to avoid shortage ​*
ISLAMABAD (November 05 2007): An inquisitive look at the world's history shows that the ancient civilisations usually thrived on the banks of rivers from where they pampered themselves by using water routes for trade purposes, besides setting their armies to venture in their neighbourhood.

In Pakistan, the mighty river Indus along with its tributaries is undoubtedly lifeline for the whole countrymen. It not only nourishes lands and inhabitants but also sustains their livelihood.

However, in the face of population growth, demands on its surging and gushing ******** are today more urgent and critically pressing. Today, we are confronted with acute water shortage, partly due to climatic changes in the shape of El Nino factor and partly due to the fast depletion of underground water cycle.

The bulk of our population is increasing like gigantic rolling snowball and it is estimated that by the year 2025 Pakistan would become fourth most populous country in the world.

One can imagine the hazardous implications of feeding a mammoth population with scant resources. By year 2050, about two third of the world population would be affected by the paucity of water. On one hand water scarcity is plaguing the world population and on the other large quantity of river water go waste directly into the seas without being properly utilised.

Under such uncertainty, many analysts believe that future wars would be flared over the possession of water resources. Many a nations went through pangs of destruction and glory of acme by fettering natural resources especially of fresh water.

One of its forms can be construction of dams, which are built to serve two main purposes, first for irrigation and storing urgently required water in both cases of floods and drought and for hydro-power generation.

In this way they can cater to the water needs of industrial and agriculture sector as well as for household usage. There is no contention over the issue that Pakistan is in the dire need of comprehensive water management, supply of cheap electricity and definitely construction of water reservoirs.

We are indeed fortunate that gracious God has bestowed us with precious wealth in the form of everflowing rivers giving a cosy feeling to its inhabitants.

So to overcome this lingering problem fast construction of fresh water reservoirs like Kalabagh, Bhasha, Akhori, Katzarah Skardu, Gomal Zam, Kurram Tangi etc, dams are need of the hour.

Planning Commission of Pakistan which has started the preparation of the Tenth Five Year Plan (2004-05-2008-09) in July 2004, had advocated the completion of ongoing small and medium dams such as the Gomal 2am Dam (1.14 MAF), Mirani Dam (0.30 MAF), Kurram Tangi Dam (1.2 MAF), Satpara and Sabakzai dams (0.3 MAF).

Their completion within the Tenth Five Year Plan is expected to increase the water availability by 4.69 MAF.

Raising of the Mangla Dam and construction of various canal projects, watercourse-lining etc would further increase the water availability. Wapda has reported in the Ten Years Perspective Plan (2001-2011) that ground water currently supplies over 40 percent of water for agricultural productivity and the sustainable ground water potential is 64 MAF.

However, according to Wapda the gross potential is 26 MAF, but out of this 20 MAF is non-usable saline ground water, thus only 6 MAF is sustainable ground water.

It is indeed unfortunate that Pakistan despite having the precious wealth of rivers teeming with life giving waters has not so far developed inland water transport, which may be the cheapest means of transportation.

This concept was not innovative to this land as from the history of Moenjodaro to Alexander the Great and then onwards to Arabs and British, they utilised this facility.

With the completion of these water reservoirs and inland water transport, national economy would get a spur resulting in new vistas for progress.

Political mistrust, distortion of technical information, prejudice among the previous governments jeopardised these projects.

When China can build 312 dams, Turkey 135 dams, India 34 dams, Japan 132 dams and Iran 80 dams above 50ft to 200ft height, then why cannot we!

The sincerity of the government cannot be doubted as the country would face acute water shortage in 2025 and would require 20MAF water to meet its requirements. It seemed that after all the long-standing issue has been put on the right anvil by the present government. Time is ticking up and calling us to respond to the clarion call otherwise our failure would take us into the blind ally of backwardness without any light on the end of the tunnel.

Business Recorder [Pakistan's First Financial Daily]


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## Spring Onion

Neo did you post the news about KES recorded 17 years bearish trend.

lost 635 points.

Though it has regained today but yesterday it was a record low in last 17 years


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## Always Neutral

In the short time business will maintain their nerve but new overseas investments will definately be delayed. KSE maybe proped up the Govt. artificially so as to paint a rosy picture.

Regards


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## Neo

I agree, this is what we call panic reaction.


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## Always Neutral

KSE loosing points maybe due to Standard and Poors downgrading the investments rating of Pakistan from stable to negative yesterday which makes it very hard for LSE and NYSE companies to invest in Pakistan. I am sure Pakistan PM must be trying to limit the damage to minimum as he is an economist who worked for US banks and understands these things.


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## Neo

*Logistics performance ​* 
Pakistan behind UAE and India

Tuesday, November 06, 2007

LAHORE: Pakistan needs to speed up its National Trade Corridor programme as it is ranked 68th out of 150 economies in the World Bank Logistics Performance Index, much below its competitors UAE and India ranked 20th and 39th respectively.

The WB report, released on Monday, is the first analysis of its kind which provides some insight into the cost of poor logistics in relation to the countrys competitiveness and the sources of higher cost. Beyond cost and time taken to deliver goods, the predictability and reliability of supply chains are increasingly important in a world of just-in-time production sharing.

Using a five-point scale, the Logistics Performance Index aggregates more than 5,000 country evaluations. It is complemented by a number of qualitative and quantitative indicators of the domestic logistics environment, institutions and performance of supply chains (such as costs and delays).

Pakistan is striving to make its ports the hub of trading activities of the region to serve as a transshipment point for the Middle East, South Asia and Central Asian States. Currently, the United Arab Emirates and to some extent Indian ports are preferred for transshipments in the region due to their efficient operations.

The World Bank report shed light on the hurdles which Pakistan would have to overcome before it could hope to challenge its neighbours. Otherwise, according to logistics experts, Pakistan would end up as a trade passage for landlocked countries of Central Asia only. Among various logistics parameters, Pakistan is ranked 69th in efficiency of its Customs department compared with 20th rank achieved by UAE and 47 by India.

In infrastructure, Pakistans position among 150 global economies is 71st, with the UAE at 18th and India 42nd positions. In international shipments, Pakistan score 2.72 points to attain 65th position; UAE with a score of 3.68 was ranked 13th and India 39th scoring 3.08 points.

In logistic competence the World Bank placed Pakistan at 63 with UAE occupying 20th and India 31st position. The ranking was assigned on the basis of tracking and tracing of good, domestic logistic costs and timeliness.

As far as tracking and tracing of consignments is concerned Pakistan with a score of 2.72 is at number 76 position, UAE is ranked 13 and India 42 under this parameter. The domestic logistic cost in Pakistan is lower than the UAE which is ranked 98th in that area. India, at 46th position, has lower domestic logistic cost.

In the case of timing, Pakistan is ranked 68th compared with 17th position enjoyed by the UAE and 47th rank by India. The rate of physical inspection of goods by the Customs is three per cent in the UAE, 10 per cent in Pakistan and 25 per cent in India. The Customs takes 0.9 days for clearance in the UAE and 2.4 days in both India and Pakistan.

Average lead time for export (from shipment to port of loading) is 3.5 days in the UAE, 3.2 days in Pakistan and four days in India. The average lead time for imports is 4.1 days in the UAE, 3.7 days in Pakistan and 4.7 days in India.

Pakistan has reformed its Customs clearance system and in many procedures it is on a par with or in some case has an edge over both India and the UAE. However, as a logistics support package, the country is way behind both the countries. Lopsided improvement instituted in some fields, if not accompanied with matching improvements in other fields, is essential to make Pakistan the hub of trade in the region.

The number of border agencies for exports are four in the UAE, 3.2 in Pakistan and 2.9 in India. The number of border agencies for imports are 3.9 in the UAE, 2.9 in Pakistan and 2.4 in India.

Possibility of review procedures is 36 per cent in the UAE, 60 per cent in Pakistan and 39 per cent in India. Typical charges of a 40-foot export container are $380 in the UAE, $382 in Pakistan and $601 in India. Typical charges for a 40-foot import container are $388 in the UAE, $444 in Pakistan and $619 in India.

Logistics performance


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## Neo

*ADB helps Pakistan develop energy model ​* 
Provides $2m for the project

Tuesday, November 06, 2007

ISLAMABAD: The Asian Development Bank (ADB) is helping Pakistan develop an energy model which will enable the country pursue an energy sector development plan to meet the needs of an expanding economy.

The ADB is extending a $2 million grant for Pakistans Integrated Energy Model estimated to cost $2.5 million. The government of Pakistan will cover the balance, the ADB announced on Monday.

The outcome will be a functioning energy planning unit producing regular integrated analysis of strategic energy options, said Jim Liston, principal energy specialist of ADBs Central and West Asia Department.

Pakistans Medium-Term Development Framework 2005-2010 sets out to achieve an eight per cent annual growth in Gross Domestic Product (GDP), while energy consumption is estimated to expand 12 per cent a year for the same period. This expected growth will put pressure on energy supply.

The countrys energy analysts believe Pakistan needs to come up with an integrated, optimal energy sector plan. The energy sector is covered by various ministries, with no single body having a dominant role in managing the industry. The country is also a net energy importer, with its energy needs supplied by multiple sources.

Advanced computer software applications available in the international market can model a countrys overall energy demand and supply situation, and these integrated energy models can help planners assess the impact of various policy scenarios and support good decision-making.

Pakistan currently does not use such an integrated energy modeling tool. Its primary energy supplies totaled 58 million tons of oil equivalent in 2005-06. All domestic natural gas production is consumed and, without higher production, growth will need to be met through imports.

Rising oil consumption and flat oil production have led to more imports. A lack of refining capacity also leaves Pakistan heavily dependent on petroleum products imports.

Electricity supply is also limited due to insufficient generation capacity, resulting in an estimated 1,500 megawatts (MW) of unmet demand.

The country is currently pursuing a wide range of energy projects, among them the development of international gas pipelines. The government is also looking into the development of coal reserves in Tharparkar deserts and private sector power generation projects with a total capacity of 2,000 megawatts using imported coal.

The government also plans to proceed with a large multi-purpose dam on the Indus River for irrigation needs and to provide 8,000 MW of electricity-generating capacity.

According to the ADB, a trained energy planning team will manage the unit and propose strategies for meeting energy requirements at a low cost and in a sustainable manner for consideration by the national policy-makers. The factors, which will be addressed by the unit, include finance, economics, energy supply, national resources, energy use, environmental impact, technologies, energy efficiencies and socio-political impact.

ADB helps Pakistan develop energy model


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## Neo

*Investments, exports at stake ​* 
Tuesday, November 06, 2007

KARACHI: Equity experts have opined that local markets might come out of current crisis if government announces its future plan regarding the holding of general elections as per schedule in January 2008.

But the statements of politicians were intensifying the uncertainty, as prime minister of Pakistan had hinted one year delay in holding this election, they viewed. On Monday, the first working day at Karachi bourse following emergency, the KSE 100-share Index fell 636 points or 4.57 per cent to close at 13,279.24 points.

Stocks guru, asked not to be named said stocks market run on economic fundamentals, and due to the imposition of ambiguous emergency, which looks more like martial law was about to devastate these fundaments any moment.

Condemnation messages from world political and economic powers, in the backlash of emergency imposed by the Chief of Army Staff, were not just game of words. But they could express their angers by banning Pakistani exports to their countries. Our export orders could divert to other counties as well. This action of world players would put a big dent in our economic fundamentals and its possible negative impact would be seen at the local bourses in the days to come, experts said.

We have only one way out from this crisis situation and that is to hold the general elections as soon as possible. The presentation of general elections plan would minimise the uncertainty on political front and might restore the investors confidence, they added.

Market experts expressed that in this age of technology our military government cannot succeed in hiding the information from everyone any more. The excessive use of Internet and the revival in the usage of transmitters after pulling private TV channels off air would enhance the uncertainty, they further said and added that speculators would use this available open-secret information against the long-term investors to mint the money and run away.

They identified that surging volumes of shares in the bearish market was more alarming as compare to recording lower volumes in bullish market. The enhanced turnover at this juncture showed the widespread confusion among the investors, they further said.

Investments, exports at stake


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## Neo

*Local firms allowed to outsource services: Oil, gas exploration​*
ISLAMABAD, Nov 5: The government has allowed local petroleum companies to outsource up to 70 per cent of technical services to foreign firms for becoming operators of oil and gas fields for exploration and development.

This is one of the many relaxations allowed to the domestic companies on the instructions of President General Pervez Musharraf a few days ago followed by formal approval of the Economic Coordination Committee (ECC) of the cabinet.

A senior government official said the stringent pre-qualification criteria to become eligible to bid for concession agreements in the original policy cleared by the ECC a few months back had been contested by a number of local companies and had been made quite flexible on the intervention of the president.

The domestic companies would now be allowed to form joint ventures among themselves by putting together resources of two or more companies and show contract with foreign services companies for drilling, surveys and seismic activities.

Likewise, the domestic companies would also be allowed to provide upfront bank guarantees up to 50 per cent of their work plan for the exploration and development of natural resources.However, the companies would be tied under the concession agreements to a strict time-line for the implementation work programme and the eligibility criteria would be defined under Management Information System (MIS) programmes for ranking instead of being at the discretion of government functionaries.

The official said standard operating procedures (SOPs) would be developed over the next few weeks in consultation with companies for security of exploration and development fields.

For expeditious development of oil and gas fields, a new prequalification system has been introduced to encourage quality companies with technical expertise, proven track record, and financial capability, to become onshore and offshore operators.

In Policy 2007, the government has also introduced a bid evaluation system to ensure transparency. Bids would now comprise work programme in terms of work units the bidder intended to follow for the quick development of the block, with a 80 per cent weight and Gas Price Gradient (GPG), to be calculated on the basis of 20 per cent weight when the reference crude price is above $45 per barrel. This bid evaluation system will expedite exploration activity and minimise prices.

The price of gas has been linked to the price of a basket of crude oils being imported by Pakistan by offering higher returns through removal of a price cap on gas sale prices.

The new policy also allowed the oil and gas producers to sell gas to third parties, instead of being under compulsion to sell their production to the government alone under the existing policy. However, the producers would be required to pay a windfall levy in case third party sale prices are higher than the prices fixed by the government.

If under this policy, half a trillion cubic feet (TCF) gas is injected into the system by 2009-10, the weighted average price would increase by about 3.5 per cent. The new price of gas, at a $60 per barrel of crude oil reference price, would be around $3.0-3.3/MMBTU.

The government claims that if this quantity is not produced locally, the government would need to import alternative fuels such as LNG and fuel oil. At the $60 a barrel crude oil reference price, LNG price would be around $7/MMBTU and fuel oil price about $10MMBTU.

All the existing domestic and foreign firms have been offered another incentive by allowing same facilities to the existing companies who are not yet in the production phase. However, they, in case of conversion to the terms of policy 2007 would be allowed at a GPG of 0.2 after $45 per barrel crude oil price reference.

Presently, 42 companies are working in Pakistan with 118 exploration licences and 127 leases. The daily production of gas is around four billion cubic feet and 70,000 barrel of oil.

Local firms allowed to outsource services: Oil, gas exploration -DAWN - Business; November 06, 2007


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## Neo

*Moodys reviewing Pakistans ratings​*
SINGAPORE, Nov 5: Moodys Investors Service is reviewing Pakistans ratings and will assess the ensuing developments after Pakistan President Pervez Musharraf declared emergency rule in the country, a senior analyst at the ratings firm said on Monday.

The latest development is quite exceptional and really unexpected, Aninda Mitra, Moodys lead analyst for Pakistan, said in a telephone interview.

Musharraf over the weekend suspended the constitution, in what he claimed was a move in response to rising Islamic militancy and political instability caused by an interfering judiciary. He consolidated his grip on the courts, media and political opposition by blackening private domestic and international television channels, replacing several Supreme Court justices, and detaining about 500 political opponents and human-rights activists.

The move is expected to spur a negative reaction in the countrys financial markets.

Pakistans 5-year credit default swaps - insurance-like contracts against credit defaults and a key indicator of investor sentiment in the country - are expected to widen out 50-100 basis points from around 350 basis points after Musharrafs declaration, according to Lehman Brothers.

Moodys rates Pakistan B1 while Standard & Poors Ratings Services ranks the south Asian nation B+, both with a stable outlook. The ratings of Pakistan have always been under review given how turbulent the situation has been, Mitra said. He said Moodys will want to see what the broader implications of the political developments might have on the sovereign ratings.

US Secretary of State Condoleezza Rice has said that the US would review its financial aid to Pakistan, which has amounted to more than $10 billion over the past five years. A breakdown in Pakistans alliance with the US is among the factors that could bring the countrys credit ratings down.

He said a withdrawal of military support from the US could be a risk that the ratings firm has to watch out for.  Dow Jones

Moodys reviewing Pakistans ratings -DAWN - Business; November 06, 2007


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## Neo

*Punjab and the national economy​*
IF politics proceeds on its promised course, there is likely to be a considerable rearrangement in the distribution of power among different political groups. This will have profound implications for the economic development of Punjab, Pakistans largest province in terms of both population and the contribution it makes to the national economy.

Given that, it is important that all players in the political game must recognise that maintaining the economic momentum picked up in recent years by Punjab is of vital national interest.

Today Punjab is a significant contributor to the national economy. By my estimate, it contributes a slightly higher share to the national output (60.1 per cent) compared to its share in total population (57.4 per cent).

The government of Punjab estimates that in the financial year 2007, the province accounted for 61.3 per cent of wholesale and retail trade, 57 per cent of agriculture and 58.2 per cent of industrial value added in national output. Overall, Punjab contributes more than 50 per cent to the countrys GDP in almost every sector in the national accounts. And yet much of the economic power is wielded by the federal government.

As the current chief minister of the province put it in his vision 2020 statement issued in 2005, the federal government is totally in-charge of fiscal and monetary policies; it frames the tax policies, trade policies and also plays an important part in regulatory environment of firms and companies. Under the current order of things, the provincial governments operate within highly circumscribed space. In fact, this space is even more limited than that envisaged in the Constitution of 1973. That document provided much greater autonomy to the provinces than is currently allowed by those who wield power today.

There was a political reason for Punjabs remarkable economic performance over the last several years when its total output expanded at a rate significantly higher than the increase in the national product. It happened because political power in Islamabad and Lahore resided in the same set of hands. That has not always been the case and may not be the case in the future.

The sharp exchanges between Benazir Bhutto and the current chief ministers of Punjab and Sindh following the unfortunate incident of Oct 18 do not augur well for relations between the centre and the federating units if politics proceeds on the course on which it is travelling at this time.

The tension between the centre and Lahore that developed when governments belonging to different parties assumed power in these two places in 1988 caused considerable economic harm not only to the economy of the province. That particular episode in the countrys history also did a lot of damage to the national economy.

Economists now believe that it is important to bring the government as close as possible to the people it serves. In large federating systems, this means the grant of considerable functional autonomy to the federating units. It also means the creation of a system of local government that passes power on to peoples representatives.

It is interesting to note that the way General Musharraf has governed the country in the last eight years is to accumulate considerable economic and political power in his hands while, at the same time, establishing a system of local government to which considerable power has been devolved. The provinces suffered in this system of governance.

The reason Punjab was able to function with a fair amount of autonomy was not because the system allowed it but because of the very close links between the provinces chief executive and the leader of the party that provided President Musharraf the main base of political support. That situation may not survive.

It is important to recognise that geography has placed Pakistan in a unique situation. It has on its four sides, centres of growing economic activity and potential. China, to Pakistans north, is the largest country in the world in terms of population. It is also the worlds fastest growing economy.

To the east is India, the second billion plus country in the world and also one of the worlds most rapidly growing economies. To the west, are the oil-producing and exporting countries accumulating large amounts of capital surplus to their needs. And to the northwest are the countries of Central Asia with enormous resources and, once they are able to resolve their political problems, enormous economic potential.

It is inevitable that when economies grow rapidly they trade with one another. The four areas of immense economic activity in Pakistans immediate neighbourhood will also develop trade and exchanges among themselves. A significant proportion of this will be the movement of goods and commodities and a good part of this could flow through Pakistan.

There is money to be made in becoming the centre of transit trade but that will require investments in a number of service activities  warehousing, trade financing, servicing of vehicles, provisions for those plying the trade etc. These involvements are better done by the private sector but within the regulatory environment created by the provincial governments. Pakistan will benefit only if politicians operating from different centres of power are able to work together.

The only viable way of approaching the dangers inherent in the way the political system operated in the past is to have the politicians contending for power reach a consensus on the distribution of responsibilities among the three tiers of government  the governments at the federal, provincial and local levels. The arrangements that need to be worked out should be even more generous than those incorporated in the original 1973 Constitution.

One important change that needs to be made is to allow greater authority to the sub-national governments in two areas  trade and finance. While the governments below the federal level have some room available to them in the area of finance, they have none in the area of trade. And yet it is trade that will play an important role in determining the economic future of the countrys four provinces.

Unlike most other large federal systems, all Pakistani provinces and territories have international borders; Punjab and Sindh with India, the NWFP with Afghanistan, Balochistan with Afghanistan and Iran, and the Northern Areas with Afghanistan and China.

There is considerable informal trade between these federating units and the countries they border. This trade is informal since national trade policy has put foreign relations above provincial economic considerations. One way of regularising this trade would be to allow a greater role in this area to the governments below the federal level.

Before a new political order emerges, it would be useful if a consensus could be reached among those who are likely to wield power in different places to work for the national good, not just for their narrow interests.

DAWN - Editorial; November 06, 2007


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## Neo

*$2 billion potential investment in jeopardy ​* 
KARACHI (November 06 2007): Political instability has started taking its toll on around $2 billion potential investment in mega projects of dairy, cattle farming and livestock by a Qatari firm, Business Recorder learnt here on Monday.

Sources in the Land Utilisation Department said that the process of land provision to Qatari government was in final stages but the concerned firm, keeping in view prevalent situation, has stopped talks on acquisition of around 5,000 acres land.

The Qatari firm had asked the provincial government for 10,000 acres of land to initiate a world-class cattle farming project. However, Sindh government has decided to provide 5,000 acres land in District Thatta and livestock experiment station Nabisar Road, Taluka Kunri District Umerkot for 99 years, sources said and added that rest of the land would be provided in different parts of the province at a later time.

About the price of the land and the terms and conditions, sources said that the statement of conditions of land provision for mega projects would be issued after proper vetting by the law department. But at present this process has been halted due to current situation in the country, sources said.

The decision to offer land to Qatari firm in Bani Sar cattle farming area was taken at a high-level meeting held under the chairmanship of Sindh Chief Minister Dr Arbab Ghulam Rahim on April 17, 2007.

In the past, cattle farming areas were also provided to many entrepreneurs on a 30-year lease in Thatta and Keenjhar. But later the land allotments were cancelled, as entrepreneurs didn't turn up to initiate projects. Sources were hopeful that talks with Qatari firm would restart soon to bring huge foreign investment in the country.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*BoI division to further boost investment ​*
ISLAMABAD (November 06 2007): The Investment Division of the Board of Investment (BoI) will further promote investment, domestic as well as foreign, which during the FY 2006-07 stood at US $8.4 billion, compared to a meager amount of $322 million in FY 2002.

"During the FY 2002, investment as percentage of GDP was 14 percent, which has now increased to 23.9 percent of GDP in FY 2006-07, official sources" told APP here on Monday.

They said that the Board of Investment (BoI) has been made into an Investment Division, which would be headed by a full-fledged Federal Secretary. Following this policy the incumbent Secretary, Mushtaq Malik, is independently handling the issues and investment facilitation matters.

In the current scenario, they said that the BoI would be able to make policy decisions more efficiently and directly have access to the highest level of policy makers. The BoI official further emphasised on the fact that this is an important step in order to remove day-to-day operational hurdles, as per the Rules of Business.

This will help further simplifying the procedure for investment. Previously, the BoI could not independently initiate summaries/proposals for the approval of Prime Minister and ECC on any issue, thus creating delays.

The decision of the Prime Minister to make BoI an Investment Division is in line with the reorganisation approved for BoI and similar to the Economic Affairs Division (EAD); which is a multilateral and bilateral debt and grant facilitation agency of the Government, they added.

They said that with the new organisation and the creation of separate Investment Division FDI targets will be enhanced significantly. It may be mentioned here that Prime Minister Shaukat Aziz has approved, in principle the restructuring of Board of Investment (BoI), recently to transform it into a more vibrant organisation, providing one window operation for expeditious finalisation of local and foreign investment projects.

According a statement of BoI, an effective and efficient BOI is critical for macro-economic stability and growth of Foreign Direct Investment (FDI). The new proposal for restructuring enables International Benchmarking of BOI to make it a viable organisation to attract more investment for Pakistan.

The continuous flow of FDI to Pakistan indicates the strength of the economy as well as the confidence of investors in the economic future of the country. This is due to strong macro economic growth, attractive demographics and continuous structural reforms based on liberalisation, deregulation and privatisation, they added.

The Prime Minister urged the BoI that the board should develop a marketing plan, which should be dovetailed with the overall investment and reform strategy of the government. The marketing plan would clearly identify the potential areas of investment and the incentives provided by the government. The restructuring would create two important directorates within BOI, one project development and second facilitation and project implementation.

The marketing plan will also include a clear and comprehensive strategy to achieve the set targets, create awareness at local and foreign level about the investment potential of Pakistan and to sell the investment potential of the country more effectively.

The BoI also plans to develop geographical expertise and conduct researches about the interests of investors in Pakistan and prepare country-specific plans and policies to guide different categories of investors more effectively. The BoI intends to focus on guiding the foreign missions, federal and provincial government departments about the investment policies and potential areas of investment, more effectively.

The priority sectors include identifying major potential areas for investment including IT and telecom, real estate and construction, engineering, agri-business and manufacturing. The BoI plans to develop a strategy to focus more on preparation of promotional and marketing material for the guidance and facilitation of potential investors. After restructuring, BoI will be working under the name of Investment Division thus help further simplifying the procedure for investment.

Business Recorder [Pakistan's First Financial Daily]


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## Spring Onion

Always Neutral said:


> In the short time business will maintain their nerve but new overseas investments will definately be delayed. KSE maybe proped up the Govt. artificially so as to paint a rosy picture.
> 
> Regards




No Qudrati it was not shown by the government but the independent sources quoted that KES regained 146. 51 points today as compare to lose of 635 points yesterday as result of rumors of Musharraf house arrest.

Im posting after watching a business programme in the morning on a int'l channel not from Govt sources.


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## Always Neutral

Jana said:


> No Qudrati it was not shown by the government but the independent sources quoted that KES regained 146. 51 points today as compare to lose of 635 points yesterday as result of rumors of Musharraf house arrest.
> 
> Im posting after watching a business programme in the morning on a int'l channel not from Govt sources.



*Yes You are right. Lets wait and see the longterm effect.

Regards*

BBC NEWS | Business | Pakistan's stock market slides 5%

*Pakistan's stock market slides 5% * 

Police have used tear gas and batons to break up demonstrations 
Pakistan's main stock market has fallen nearly 5% as investors reacted to the emergency rule imposed by President Pervez Musharraf on Saturday. 
The fall was the biggest one-day decline on the Karachi Stock Exchange 100-share index for 16 months. 

The benchmark KSE index ended the day down 4.6% at 13,279.60. 

"I think any long term investment, and any sort of clean and productive money isn't going to come in now," said Asad Saeed, a Karachi-based economist. 

The uncertainty also saw the rupee currency fall to its lowest value since 27 August. 

Political landscape 'uncertain' 

The KSE share index fell by 2.5% when trading got underway on Monday. 

*However, the index fell further on the back of a number of rumours. One of the rumours - denied by officials - said that President Musharraf had been put under house arrest by the vice-chief of the army. *

President Musharraf declared the emergency on Saturday, saying he was acting to curb extremism. 

Some analysts think the move could delay national elections due in January. 

On Monday police used tear gas and batons to break up demonstrations by Pakistani lawyers against the state of emergency. 

"Going back to democracy will take time now. The political landscape is now a lot more uncertain than before," said Dilip Shahani, Hong Kong-based HSBS credit analyst. 

The main stock index has risen more than 1,000% since the end of 2001 and last month reached its peak of 14,908.91.


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## Always Neutral

Dear Jana,

Read the below.

Regards


Pakistan's stock market slides 5&#37; 


*"I think any long term investment, and any sort of clean and productive money isn't going to come in now," said Asad Saeed, a Karachi-based economist. 

The uncertainty also saw the rupee currency fall to its lowest value since 27 August. *


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## Spring Onion

Always Neutral said:


> Dear Jana,
> 
> Read the below.
> 
> Regards
> 
> 
> Pakistan's stock market slides 5%
> 
> 
> *"I think any long term investment, and any sort of clean and productive money isn't going to come in now," said Asad Saeed, a Karachi-based economist.
> 
> The uncertainty also saw the rupee currency fall to its lowest value since 27 August. *



*Stocks rebound from six-week lows*


KARACHI: Shares rebounded to close higher on Tuesday, reversing early losses that came after Moody's Investor Service and Standard & Poor's downgraded their outlook on the country's debt.
Both the ratings agencies changed their ratings outlook to negative, from stable, on Pakistan's foreign- and local-currency bonds following President Musharraf's imposition of emergency rule on Saturday.
Dealers said state-run institutions and local investor were hunting for stocks trading at attractive prices after the market fell as much as 1.5 percent to a six-week low in early trade, extending losses form Monday when it plunged 4.6 percent in its biggest single-day fall in 16 months. *The Karachi Stock Exchange (KSE) benchmark 100-share index ended Tuesday 1.1 percent, or 146.51 points, higher at 13,426.11 on turnover of 219.92 million shares.
The free-float KSE-30 share index was up 0.56 percent to 16,143.88 points.
"State institutions and some retail investors were buying. You can call it bargain hunting as some blue chips have come off quite a bit," said Shuja Rizvi, a director at Capital One Equities.*
However, Rizvi said investors were still wary of political uncertainty and were keenly watching response of the international community to Musharraf's action. US President George W. Bush, who values General Musharraf as an ally in his battle against al Qaeda and the Taliban, urged Pakistan's military ruler on Monday to lift the emergency, hold elections and quit his military post.
[bTop index movers included companies such as Pakistan Petroleum which rose almost 5 percent to 251.25 rupees and National Bank of Pakistan which gained 3.8pc to 235.70 rupees. -


*Reuters*

---------


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## Spring Onion

*UAE keen to boost investment, trade ties with Pakistan*ISLAMABAD: The United Arab Emirates will enhance investment and trade partnership with Pakistan through its public and private companies, Ambassador Ali Mohammed Al Shamsi said Tuesday. 
Two more mega projects in Lahore and in Balochistan will be executed shortly, the ambassador said according to an embassy press release issued here. 
The ambassador said the UAE initiative was cruising in the same streamline of the government's development programmes.  
He said UAE will double its volume of investments in various available sectors as UAE companies have already invested $13 billion last year. 
Al Shamsi stressed the importance of setting up Khalifa Coastal Refinery at Khalifa Point in Balochistan at a cost of five billion dollars. 
He said United Arab Emirates (UAE) will continue to invest in the real estate sector with a mega project planned to be set up in Lahore. 
Ambassador Al Shamsi expressed appreciation for the economic policies of Pakistan, which offers encouraging environment for investment and extend full cooperation towards building closer relations between the two brotherly countries. - APP


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## Always Neutral

Jana said:


> *Stocks rebound from six-week lows*
> 
> 
> KARACHI: Shares rebounded to close higher on Tuesday, reversing early losses that came after Moody's Investor Service and Standard & Poor's downgraded their outlook on the country's debt.
> *Dealers said state-run institutions *
> *Reuters*
> 
> ---------



Dear Jana,

As i stated the govt has ordered the state run institutions to prop up the KSE in the short term.

Regards


----------



## Neo

*Textile exporters uncertain about orders ​* 
Wednesday, November 07, 2007

LAHORE: The exports of value added textile face an uncertain future after the imposition of emergency as quality assurance representatives of foreign buyers have cancelled their trips and those in Pakistan refuse to leave their hotel due to security concerns.

The value added textile sector has just started benefiting from the decline in Indian value added exports after a sharp appreciation of the Indian rupee, but the local industry is now confronted with the threat to even regular exports after the state of emergency in the country.

Pakistan Hosiery Manufacturers Association (Punjab) Chairman Adil Butt, talking to The News, said immediately after the imposition of emergency the foreign buyers, particularly those from the US, started sending queries about the ability of Pakistani knitwear exporters to execute orders on time.

He said they were reminded that the garment and knitwear exporters had made timely deliveries in the past even during the peak of US-led war in Afghanistan. Manufacturing activities in Pakistan continued without interruption irrespective of the political and social upheaval, however the foreign buyers were not prepared to take any risk, he added.

Leading garment and knitwear exporter M I Khurram said the state of emergency would severely hamper exports of garments and knitwear. The main reason, he said, was that the final inspection of garments was done by foreign quality assurance experts appointed by the buyers.

Foreign buyers do not trust local inspectors. The quality assurance experts have refused to visit Pakistan immediately after the proclamation of emergency, he added.

The importers do not accept goods without quality assurance certification by their designated experts and as a result shipments are being delayed. He said a Mersk shipping line vessel left Pakistan on Monday for the US but without a good number of Pakistani garment and knitwear consignments as the products needed inspection. Next shipping line is APL whose ship will leave the Karachi port in next two to three days.

There are little chances of inspection by then, Khurram said, adding the buyers in most of the cases had refused to allow shipments by air. He said the exporters might be forced to ship the goods on their own guarantee, which meant they would be at the mercy of the buyers who might accept or reject the goods. Businessmen the world over are sensitive to any risk to their investment, he added.

He warned if the internal situation in Pakistan did not improve, the orders for value added textiles would be shifted to other countries. Another leading knitwear exporter Sheikh Zafar said the irony of the present situation was that even those quality assurance experts who were in Pakistan generally refused to come out of their hotels and were demanding to fly out of the country from the first available flight.

He said a woman expert from the Philippines, who was due to examine finished products of his company, refused to come out of the hotel room she was staying in. All assurances of her safety failed to convince her to visit the factory and inspect the garments, he added.

An Italian quality assurance expert staying in the same hotel, he said, was prepared to visit the factory and inspect the consignment, but the Filipino woman was even persuading the Italian expert not to go outside.

Zafar said the question of fresh visits by quality experts in coming days did not arise at all until the emergency was removed. In that situation, the value added garment exports would definitely suffer.

Pakistan, he added, did not enjoy monopoly or substantial price advantage in garments and knitwear, so the foreign buyers would look to other countries in the present uncertain situation.

Garments and knitwear on average account for 35 per cent of total textile exports of $10 to $10.5 billion from Pakistan. Separately, knitwear exports are in the vicinity of $2 billion while readymade garment exports range from $1.3 to $1.7 billion.

Textile exporters uncertain about orders


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## Neo

*Experts fear emergency could derail economy ​* 
Wednesday, November 07, 2007

KARACHI: While justifying the imposition of emergency or virtual martial law in the country in his address to the nation on state controlled media, Gen Musharraf enumerated three main causes that led to the imposition of emergency. One of these was to save his governments efforts made for economic growth over the past eight years.

Unfortunately, his abrupt action would put a brake on economic measures nullifying all efforts aimed at economic development, officials in various government departments said. Facts speak for themselves. The credit rating US agency Moodys Investors Service has changed Pakistans rating outlook from stable to negative after the imposition of emergency rule.

At the same time, Standard's and Poor, another international rating agency, also has downgraded its credit ratings outlook on Pakistan to negative. The Karachi stock market, one of the major economic indicators, fell like nine pins on Monday, Nov 5, aptly described as black Monday by economic observers. Nov 5 was the first working day at the Karachi Stock Exchange (KSE) after the declaration of the state of emergency. The market crashed 636 points in a single session wiping out Rs186 billion in market capitalisation. This was the worst- ever single day slump in the history of the KSE.

On Tuesday, however, the KSE 100-share benchmark index posted a handsome recovery of 146 points as buying on dips was definite, analysts said. The Securities and Exchange Commission of Pakistan has suspected irregularity on the KSE on Monday and has said it will order investigations.

Officials in the Privatisation Commission of Pakistan also have, reportedly, reacted negatively to the situation obtaining in the country in the aftermath of the imposition of emergency. The offer of Global Depository Receipts (GDRs) of blue chips such as of National Bank might be postponed for the time being and might not be offered on the international market at least before the general elections, experts expressed the opinion.

The planned launch of GDRs was an option to keep the privatisation programme going as the government has put on hold the privatisation of state-run-entities till the next elected government took the reins of power.

The increased political uncertainty, keeping the 1973 Constitution in abeyance, complete takeover of government by the military and the likely delay in general elections would halt the privatisation programme till political stability is restored.

Privatisation was one of three basic pillars (among liberalisation and deregulation) in the economic reform process of the current regime, which also has been held in abeyance together with the Constitution, though some of the privatisation deals were challenged in court, the experts recalled.

The judiciary (before the imposition of emergency) was questioning the sale of state assets for several reasons. The government disliked the questioning by the judiciary. The cancellation of Pakistan Steel Mills (PSM) privatisation was one of the popular decisions of the Supreme Court on the sale of PSM at a low price.

The judiciarys intervention in state affairs, which the regime described as excessive judicial activism, was one of the other causes of the imposition of emergency. Though Gen Musharraf did not mention this in his TV and radio address, representative of civil society say this was an important cause that led to the declaration of the state of emergency.

A Qatari firm, dealing in dairy, cattle farming and livestock business with an estimated potential investment of $2 billion, is reported to have halted its programme in Pakistan immediately after the imposition of emergency was announced.

After the imposition of emergency, a number of private sector trade delegations from foreign countries have, reportedly, cancelled their visits to Pakistan.

A foreign trade delegation that was to visit Pakistan cancelled the visit when it was about to board a plane at Frankfurt airport after hearing of the imposition of emergency, according to press reports.

The Netherlands has announced suspension of aid to Pakistan. It had budgeted about 15 million euros (21.7 million dollars) in aid to Pakistan for 2007 and about 12 million euros have already been spent. For the next year the Netherlands had planned to give about 40 million euros in aid to Pakistan mostly for education and it is now under review, it was reported.

It is feared that if the uncertainty persists and crackdown on political leaders, civil society representatives, lawyers and journalists is not stopped immediately, the chances of disinvestment in Pakistan by multinational companies and foreign portfolio investment diversion is higher than ever before. 

Experts fear emergency could derail economy


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## Neo

*Moodys downgrades NBP, HBL, UBL, MCB ​* 
Wednesday, November 07, 2007

NEW YORK: Moodys Investors Service has changed the outlook on the B2 long-term foreign-currency deposit ratings of four Pakistani banks to negative from stable.

The banks affected by todays action are National Bank of Pakistan, Habib Bank Limited, United Bank Limited, and MCB Bank Limited. This action is in line with Moodys sovereign teams recent announcement that it changed the outlook on the B2 foreign-currency bank deposit ceiling of Pakistan to negative from stable, following the imposition of emergency rule in the country.

All four banks foreign-currency deposit ratings remain constrained by the country ceiling. The outlook on each banks financial strength rating (BFSR) remains stable. Moodys cautions that, in the event of a possible prolonged heightened political instability that eroded business confidence, the BFSRs could potentially be adversely impacted as well going forward.

For the time being, however, Pakistani banks continue to have satisfactory financial fundamentals and solid franchises, and the prevailing conditions have not so far had any direct impact on their stand alone positions.

As all four banks short-term ratings are already at Not-Prime (NP), the outlook on these ratings remains stable. These Pakistani banks are headquartered in Karachi.

Moodys downgrades NBP, HBL, UBL, MCB


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## Neo

*PIA recovery plan submitted ​* 
Wednesday, November 07, 2007

ISLAMABAD: A comprehensive financial restructuring plan has been submitted to the government seeking approval - for remedy to the worst-ever economic crunch of Pakistan International Airlines PIA.

We have submitted a comprehensive financial restructuring plan to the government seeking approval - for remedy to the worst-ever economic crunch, a spokesman of the Airline, said in a press briefing here.

He said the airline has planned to engage 7 aircraft A-320-200 aircraft from a foreign firm on lease with the aim to expand the fleet. He said the delivery of these fuel-efficient aircraft with seating capacity of 146 passengers each would commence and completed in 2009. At present the airlines has a fleet of 42 aircraft with the break-up of eight Boeing 777, two Boeing 747-200, seven Boeing 737, six Boeing 747-300, 12 A-310 and seven ATR-42.

The average life of the fleet has been curtailed from 25 years to 13 years and it would be further brought down to five years in future, he added. He said PIA has entered into cost cutting measures like, route rationalization, administrative expenditure, and other internal economy measures. Answering a question, the spokesman said the engineers had demanded an increase, which would have put an additional burden of Rs800 million to Rs1 billion per annum on the airline. 

PIA recovery plan submitted


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## Neo

*Current account gap shrinks in 1st quarter​*
ISLAMABAD, Nov 6: The current account deficit in the first quarter (July-September) of the current fiscal shrank by $607 million to $2.145 billion as compared to $2.752 billion over the corresponding period last year reflecting slight improvement in the trade balance.

Official figures compiled by finance ministry showed that as percentage of projected gross domestic product the current account deficit in the quarter stood at 1.3 per cent as against 1.9 per cent in the corresponding period last year.

According to official statistics the exports (on fob basis) grew at an average rate of 5.8 per cent to $4.355 billion during the quarter under review as against $4.118 billion the same period last year. Exports had grown by an average 3.3pc in 2006-07.

On the other hand, imports showed an easy trend and recorded a fall of one per cent to $6.755 billion during the quarter as against $6.822 billion the same period last year.

During the last fiscal year imports had witnessed a growth of 8.2 per cent over the previous year.

The trade deficit showed a contraction of $304 million to $2.4 billion during the quarter from $2.704 billion the same period last year. Import appears to be on the path of moderation and is expected to grow in the range of 6.5 per cent to 7 per cent during the current fiscal.

Adviser to the finance ministry Dr Ashfaq Hassan Khan told Dawn that the narrowing of trade deficit was the direct result of improvement in exports on the one hand and a marginal decline in imports on the other. The trade balance of Pakistan had widened in recent years on the back of strong economic growth sustained by domestic demand, he observed.

He said the improvement in the trade balance was an encouraging development and would have positive impact on the countrys balance of payment.

Invisible balance maintained a surplus of $141 million during July-September 2007-08 as against a deficit of $101 million during the same period last year.

According to the statistics, private transfers also registered an improvement of 19.3 per cent, rising from $2.199 billion to $2.624 billion during the quarter under review. Workers remittances also grew by over 21.6 per cent to $1.500bn.

O the basis of first quarters performance it was expected that both trade and current account deficits would further shrink during the current fiscal year, he added.

The country added $1 billion in its reserves in the first quarter to $16.14 billion by end September 2007 from $15.14 billion in June 2007.

Current account gap shrinks in 1st quarter -DAWN - Business; November 07, 2007


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## Neo

*Stock market fall​*
THE Karachi Stock Exchange index of 100 shares (KSE-100) plummeted by 635 points or five per cent  the biggest ever one-day fall  on what will now be remembered as black Monday in the history of the countrys capital markets. No one expected the KSE to react so violently to the proclamation of emergency and the issuance of the Provisional Constitution Order by the chief of the army staff last weekend. The reason for this optimism was simple: the market had been discounting the emergency for the last fortnight and already adjusted itself by shedding 800 points in that period. The bullish sentiment that had propelled the KSE-100 index to the all-time highest level of 14,903 points on October 22 was already on the wane on speculation of the impending imposition of emergency. The market braced itself for some further erosion in the value of the stocks at the beginning of the week because along with the proclamation of emergency on Saturday came the PCO. For the market players, it was emergency plus. Therefore, a little bit of further adjustment to the new reality was inevitable. But nobody was prepared for such a massive fall on a single day, which eroded market capitalisation by Rs186bn.

What happened on black Monday did not result from the manipulation of the big stock brokers or any inadequacy of regulations. It was a consequence of the governments own doing. With the shutdown of the television news channels investors had no means to verify or refute the fast travelling rumours of a counter coup. That led to panic selling by big and small investors. Along with local jobbers and speculators, foreign portfolio funds are also believed to have taken out $25m from the market during the day. The trend is expected to persist over the next few days, if not weeks, unless state-owned and private institutional investors are forced by the government to intervene. The punters link the forward thrust of the capital markets in the near future closely to two factors on which hinge the fate of Gen Musharraf. One is the intensity of Washingtons reaction to the emergency; the other is the PPPs decision on supporting the pro-democracy movement of the lawyers. Both have been vague in their denunciation of the army chiefs act so far. And the market too has fluctuated accordingly, at one point going up and at another plummeting.

DAWN - Editorial; November 07, 2007


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## Neo

*New Petroleum Policy 2007: Foreign E&P cos allowed to sell gas to third parties​*
* Royalty rate set at 12.5% of value of petroleum at field gate n Income Tax at 40% of profit

ISLAMABAD: The government has determined the royalty payable at the rate of 12.5 percent of the value of petroleum at the field gate and tax on income will be payable at the rate of 40 percent of the profit or gains in the new Petroleum Policy- 2007.

According to the Policy, that was approved on Monday total term of an onshore development and production lease will be up to 25 years plus five years. The Policy reveals that royalty would be paid in cash or kind at the option of government of Pakistan on liquid and gaseous hydrocarbons including LPG, NGL, Solvent oil, gasoline and others, as well as all substances including sulphur, produced in association with such hydrocarbon.

As per policy, tax on income will be payable at the rate of 40 percent of profit or gains in accordance with the Fifth Schedule of the Income Tax Ordinance, 2001 and royalties will be treated as an expense for the purpose of determination of income tax liability.

A committee shall be constituted to address the issues of the implementation of this policy comprising of Minister for Petroleum and Natural Resources Chairman Deputy Chairman Planning Commission Member Secretary, Finance Division Member Secretary, Petroleum and Natural Resources Member Director General Petroleum Concessions Member/Secretary. In order to meet the deadlines, a separate cell headed by Director General Petroleum Concessions (DGPC), as already provided in Petroleum (Exploration & Production) Policy 2001, shall be maintained comprising, Legal Advisor, Financial Consultant, Petroleum Economist, (d) Petroleum Explorationist and other professionals on need basis.

Total term of an onshore development and production lease will be up to 25 years plus five years renewal and for grant of petroleum rights after the expiry of lease period, DGPC will invite bids using the call for bids one year before the end of the lease period from pre-qualified companies seeking to have a petroleum right over the lease area, in relation to any producing field for an additional ten years.

If the foreign E&P companies sell gas to third parties in Pakistan and want to remit sale proceeds in foreign currency abroad, the government will also allow these companies to freely remit a guaranteed percentage of their sale proceeds. The guaranteed percentage shall be 75% of the total gross revenues from any Lease in Zone O and I, 70% of the total gross revenues from any Lease in Zone II and 65% of the total gross revenues from any Lease in Zone III.

The remaining gross income in rupees could be used to pay royalties, taxes, windfall levy and any other payments to the government as well as to meet local operating costs. 

Exploration and Production (E&P) companies operating in Pakistan will be allowed to contract with gas transmission and distribution companies and third parties, other than residential and commercial consumers, for the sale of their share of gas in Pakistan at negotiated prices in accordance with the applicable laws, rules, and regulations.

The gas producer shall construct and operate and maintain the gas pipeline connecting the field to the field gate in accordance with the Policy, applicable law, rules and regulations. All costs associated with such pipeline will be borne by the gas producer and no transportation tariff will be paid by the government/gas buyer nominated by the Government for this purpose.

E&P companies operating in Pakistan will be allowed to construct and operate pipelines for local requirements and for exports of their share of petroleum, which shall be regulated by the regulator concerned in accordance with applicable laws, rules, regulations and the Policy based on an open-access (third party) regime. The E&P companies constructing such pipelines would be allowed priority access based on a firm utilization plan.

The basis of the tariff allowed and paid monthly for delivery from field gate into the transmission system will be determined by the regulator based upon a rate of return on equity basis at the rate of 12 percent with the capita cost being amortized over a minimum of 15 years. Allowable costs will include operating cost and interest payable on the initial capital over the minimum 15-year amortization period. In the post repayment period the operator will be able to make a 12 percent margin over operating costs.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Trade and current account deficits may taper in 2007-08​*
* During Q1 2008 exports grew at an average rate of 5.8% to $4.355bn, imports declined by 1% to $6.755m

ISLAMABAD: Ministry of Finance on Tuesday projected that both trade and current account deficits would narrow down during the current fiscal year with growth in exports. 

Import growth appears to be on the path of moderation and is expected to grow in the range of 6.5 percent to 7.0 percent in the current fiscal year, states a report prepared by the Investors Relations Desk of the ministry. 

The narrowing of trade deficit is the direct result of improvement in exports on the one hand and a marginal decline in imports on the other. The trade balance of Pakistan has widened in recent years on the back of strong economic growth sustained by domestic demand. Improvement in the trade balance during the period under consideration is an encouraging development and will have salutary impact on the countrys overall balance of payment.

This projection is based on the trade performance during the first quarter of the current fiscal year, which highlights that exports on f.o.b basis have grown at an average rate of 5.8 percent during the first three months of the current fiscal year, amounting to $4355 million. It may be noted that exports grew by 3.3 percent in 2006-07. Exports growth of 5.8 percent in the first quarter (July-September) of the current fiscal year is certainly an improvement over last year. 

Exports are targeted to grow by 8-10 percent in the current fiscal year. Imports, on the other hand, declined by 1 percent during the same period, amounting to $6755 million. Imports were up 8.2 percent last year and grew at an average rate of 35 percent during the previous two years (2004-05 and 2005-06). Import growth appears to be on the path of moderation and is expected to grow in the range of 6.5 percent to 7 percent in the current fiscal year. As a result of the developments on exports and imports the trade deficit improved by $304 million from $2704 million to $2400 million. 

Invisible balance maintained a surplus of $141 million as opposed to a deficit of $101 million in the same period last year. Private transfers also registered an improvement of 19.3 percent, that is, rising from $2199 million to $2624 million during the period under consideration. 

Workers remittances  a major component of private transfers also grew by over 21.6 percent to $1500 million in the first three months of the current fiscal year. As a result of these developments the current account deficit in the first quarter of the current fiscal year improved by $607 million and stood at $2145 million. As percentage of GDP the current account deficit in the first three months of the current fiscal year stood at 1.3 percent of the projected GDP for the year as against 1.9 percent in the corresponding period of last year.

Official foreign exchange reserves continue to rise from $15.14 billion in end June, 2007 to $16.14 billion in end September, 2007.

Daily Times - Leading News Resource of Pakistan


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## Neo

*New industrial estate in Islamabad soon​*
ISLAMABAD: A new industrial estate would be established in I-17 sector of Islamabad, said Chairman Capital Development Authority (CDA) Kamran Lashari here Tuesday. 

Taking to a delegation of Islamabad Chamber of Commerce & Industry (ICCI), led by its President Nasir Khan, the CDA chief said that the Authority will acquire the land for the new industrial estate by the the end of this fiscal year.

The ICCI delegation met Chairman CDA Kamran Lashari to discuss the problems of business community. During the meeting the CDA extended lease agreements of all commercial centers of Islamabad and appreciated the role of business community in the expansion of Capital.

It was also decided that plots for business community centers and dispensary would be provided in I-10 Sector soon. The ICCI chief also demanded provision of plots for establishment of separate schools for business communitys children. Member (Estate) Brig. Asad Muneer said that a proposal would be considered positively in the upcoming board meeting. The delegation also demanded upgradation of roads of industrial estate. The CDA also assured that construction and repairing of roads would be started soon. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Complex regulatory structure mars Pakistans energy sector: ADB​*
* ADB will provide $2 million in technical assistance

ISLAMABAD: The Asian Development Bank (ADB) has analysed that Pakistans energy planning is unlikely to be optimal because of the fact that no single ministry or regulatory authority is assigned with the responsibility of this most important sector. 

In its technical assistance report for Pakistan Integrated Energy Model, the ADB has said that it would help identify and develop least-cost energy systems. It will also analyse the effects of regulation, taxes and subsidies, benefits of regional cooperation, cost-effective responses to restrictions on emissions, long-term energy balances under different scenarios and impact of new technologies.

Discussing the issues pertaining to Pakistans energy sector, the ADB report finds that Pakistans energy sector includes separate ministries of Petroleum and Natural Resources; Water and Power; Planning and Development; and Environment, Transport and Communications. It also includes the Pakistan Atomic Energy Commission. There are separate regulatory bodies for oil and gas, and electric power. No single ministry or regulatory body has overarching responsibility for energy.

The ADB has announced provision of two million dollars in technical assistance that would support optimal energy sector development in Pakistan that would facilitate economic growth. The outcome of the technical assistance would be a functioning energy-planning unit, producing regular integrated analysis of strategic energy options. A trained energy planning team would be established. It will operate and maintain the model and propose strategies for meeting energy requirements at the least cost and in a manner that is technically and financially sustainable and environmentally acceptable, for consideration by national policy makers. 

Pakistans energy planning is unlikely to be optimal, or at least it is not demonstrated to be so. Pakistan is a net energy importer, with energy needs supplied from multiple sources. As such, country energy analysts believe there is scope for optimisation through integrated planning. This view is consistent with the approach of other developing and developed countries where least-cost energy plans are developed through a rigorous integrated process.

Sophisticated computer software applications currently available in the international marketplace can model a countrys overall energy demand and supply situation. These integrated energy models can help planners to assess the impact of various policy scenarios and support good decision-making within defined constraints. Pakistan currently does not use such an integrated energy-modeling tool.

Pakistans Medium-Term Development Framework (MTDF) 20052010 sets out a challenging programme to achieve eight percent annual growth in GDP. Associated growth in energy consumption is forecast at 12 percent a year, which can be compared with an ACGR of 6.1 percent from 2000 to 2006. This expected growth will put pressure on all sectors of Pakistans primary energy supplies.

Pakistans primary energy supplies totaled 58 million tonnes of oil equivalent (toe) in 20052006. The supplies comprise natural gas (50 percent), oil (28 percent), hydro-electricity (13 percent), coal (7 percent), nuclear energy (1 percent) and liquefied petroleum gas (less than 1 percent). All domestic natural gas production is consumed and, without higher production, growth will need to be met through imports. The combination of rising oil consumption and flat oil production has led to rising oil imports. In addition, a lack of refining capacity leaves Pakistan heavily dependent on petroleum product imports. Electricity supply is limited due to insufficient generation availability, with an estimated 1,500 megawatts (MW) of demand unmet. Meanwhile, electricity demand is forecast to grow by 8 percent a year during 20052015.

Pakistan is responding to this energy development challenge by pursuing a wide range of domestic and imported energy projects. Growth in domestic gas production is not forecast to meet demand. Several international gas pipeline projects are under development while liquid natural gas import options are being investigated. Development of the significant but challenging coal reserves in Tharparkar desert is being studied by the government. Consideration is also being given to 2,000 MW of power-generation projects in the private sector, using imported coal. 

Further, the government intends to proceed with a large multipurpose dam project on the Indus River to cater for irrigation needs and to supply about 8,000 MW of electric generating capacity, and investigations are being conducted currently into the Central Asia South Asia Regional Electricity Market (CASAREM) project to import more than 2,000 MW of electricity from Tajikistan and Kyrgyz Republic via Afghanistan. Renewable energy projects are being promoted, with a target of 10 percent of energy mix to be met from such sources by 2015. Several energy efficiency projects are at an early stage of development. Meanwhile, a lack of energy efficiency standards has contributed to high carbon dioxide intensity.

Daily Times - Leading News Resource of Pakistan


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## Neo

*S&P revises outlook on Pakistan to negative ​*
NEW YORK (November 07 2007): Standard & Poor's Ratings Services on Tuesday revised its outlook on the long-term foreign and local currency sovereign credit ratings of Pakistan to negative from stable. At the same time, S&P's has affirmed its 'B+/B' foreign currency and 'BB/B' local currency sovereign credit ratings on the country.

-- Says fiscal position remains vulnerable given the government's high debt and debt-service burdens.

-- Believes recent events increasing the risk of exceeding the 4 percent deficit target. "The outlook revision reflects heightened and prolonged political uncertainty after President Pervez Musharraf's declaration on the state of emergency on November 3, and its potential impact on economic growth, fiscal performance, and external vulnerability," said Standard & Poor's credit analyst Agost Benard. The sovereign's political and security situation has deteriorated markedly in recent months.

"With the declaration of the state of emergency, the political turmoil and security concerns reached new highs, and prospect of swift political resolution became more distant," Benard said.

"The negative outlook reflects the likelihood of a downgrade if the current political turmoil results in economic policy setbacks, in weaker economic and fiscal performance, or in higher external debt and debt service burdens.

The outlook could be revised to stable if political pressures ease and the government is able to focus effectively its efforts on fiscal consolidation and further economic reform."

The expansionary stance of the 2007-2008 budget has led to heightened concerns over the country's fiscal position, which remains vulnerable given the government's high debt and debt-service burdens. Recent events exacerbate the risk of expenditure overruns and revenue shortfalls, thereby increasing the risk of exceeding the 4 percent deficit target.

In addition to potential fiscal impact, the political turmoil exposes the sovereign to external pressures if foreign direct investments and other equity inflows, which have funded about two-thirds of the country's large current account deficit (estimated at just under 20 percent of current account receipts in fiscal 2006-2007), diminish significantly.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*US starts reviewing aid to Pakistan ​*
WASHINGTON (November 07 2007): The United States said Tuesday it has begun studying whether to suspend any of its multi-billion-dollar aid program to Pakistan as it again pressed President Pervez Musharraf to lift emergency rule. "People started work on it," State Department spokesman Sean McCormack told reporters, referring to the review that had been promised since Musharraf imposed emergency rule on his country on Saturday.

The review involving the State Department and other government agencies as well as the White House would look at whether Pakistan had violated any US laws or rules that would require Washington to suspend aid.

"Everybody is going to do an inventory of the programs that we have and look at those specifically with respect to the law and our rules and regulations," McCormack said. US officials said Washington has contributed 9.6 billion dollars in military and economic development aid to Pakistan since it became a key US ally in the US war against terrorism following the attacks on September 11, 2001. Another 780 million dollars is due this year.

McCormack said the US government had to weigh its legal obligations against ensuring that it continued to bolster Pakistan in its battles against militants hiding along its border with Afghanistan.

"I don't think anybody expects that the president or the government is going to take a step that might make the United States less safe or might diminish our capabilities to fight terror," McCormack said. "That said, there are potentially certain requirements under the law. We're going to look at what is required and what is triggered by the law," he said.

When asked whether the US government might contemplate suspending academic links with Pakistan such as fellowships and scholarships, McCormack replied he was not aware of such a plan.

"The (exchanges) are very effective means by which two very different societies can better understand one another and really build up those kinds of bonds and links that are important in international relations," he said. McCormack said the US aim was to press Pakistan to resume its path toward democracy in the interest of Pakistanis, their neighbours and the world at large.

Building "robust democratic institutions that serve all of the Pakistani people," he said, will in the long term "be Pakistan's best defence against the violent extremists who seek to take Pakistan in another direction."

The White House meanwhile expressed broad support for "freedom of expression" and assembly in Pakistan but stopped well short of encouraging demonstrations against Musharraf.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*UAE keen to boost trade ties with Pakistan ​*
ISLAMABAD (November 07 2007): The United Arab Emirates (UAE) will enhance investment and trade partnership with Pakistan through its public and private companies, Ambassador Ali Mohammed Al Shamsi said on Tuesday. Two more mega projects in Lahore and in Balochistan will be executed shortly, the ambassador said according to an embassy press release issued here.

The ambassador said UAE initiative was cruising in the same streamline of the government's development programmes. He said UAE will double its volume of investments in various available sectors as UAE companies have already invested $13 billion last year.

Al Shamsi stressed the importance of setting up Khalifa Coastal Refinery at Khalifa Point in Balochistan at a cost of five billion dollars. He said UAE would continue to invest in the real estate sector with a mega project planned to be set up in Lahore. Ambassador Al Shamsi expressed appreciation for the economic policies of Pakistan.

Business Recorder [Pakistan's First Financial Daily]


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## Flintlock

Sorry...wrong thread...


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## Neo

*Deep water port accord to be inked today ​* 
Thursday, November 08, 2007

KARACHI: The Karachi Port Trust (KPT) and Hutchison Port Holdings (HPH), Hong Kong are expected to sign a high-profile concession agreement on Pakistan Deep Water Container Port on Thursday (today) in Islamabad.

The meeting is expected to be attended by President General Pervez Musharraf, Federal Minister for Ports and Shipping Babar Khan Ghauri, senior officials of the KPT and Hutchison Port Holdings (HPH). A KPT press release said that the KPT is setting up a new harbour enclave called Pakistan Deep Water Container Port (PDWCP) at the mouth of the present harbour, east of Keamari Groyne.

In the first phase, a 1,500 meter quay wall is being built to establish the first deep water container terminal in the country and the region with a designed depth of 18 metres. The concession has been awarded to Hutchison Port Holdings (HPH) of Hong Kong, which has 35 years of experience and has 257 berths in 45 ports of 23 countries. The concession is being awarded on Built Operate and Transfer (BOT) basis for the initial lease of 25 years. The total cost of the Phase-I of the project is estimated at US$1 billion.

The project is a public-private partnership venture with KPT to invest $450 million for infrastructure development and the HPH will invest $557 million. The contract guarantees an income of $1.14 billion to the KPT over the 25 years lease period irrespective of the quantum of through put container traffic.

The KPTs investment would, therefore be paid back in six years. Based on the projected business plan, the KPT should receive $3.5 billion during the tenure of the entire concession period and it has planned to hand over the first berth to HPH by 2009 and the subsequent berths at fixed intervals. The first ship is planned to arrive at the new terminal by 2010.

Deep water port accord to be inked today


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## Neo

*Analysts see drop in Pakistan, China cotton output ​* 
Thursday, November 08, 2007

NEW YORK: Rising yields should give another boost to the US cotton crop, but analysts said on Wednesday that crops in China and Pakistan should see some cuts in this weeks government crop report.

The US Agriculture Departments monthly supply/demand report is due out on Friday at 8:30 am EST (1330 GMT). Plentiful rains in states like Texas, the top cotton producing area in the country, have prompted many in the market to forecast that USDA will raise its estimate of the US cotton crop up from last months projection of 18.15 million (480-lb) bales.

From all indications, both the high plains and rolling plains (of Texas) are turning out more than expected, said Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana. 

He and John Flanagan of brokers Flanagan Trading Corp in Fuquay-Varina, North Carolina, forecast the US cotton harvest will rise to 18.25 million (480-lb) bales from USDAs estimate last month of 18.15 million bales. 

Sharon Johnson, cotton expert for First Capitol Group in Atlanta, pegged the US crop at 18.2 million bales. She said in a report that US cotton yields will probably reach around 829 lbs per acre, which will rank at the third highest despite early planting problems in the US Southwest and late growing issues in the Southeast and Delta. 

Analysts said the estimates for the crop in China, the worlds top consumer of the fiber, and Pakistan, which has been rocked by political turmoil, would most likely be cut.

Johnson forecast the crop in China would be down at 35 million bales from last months projection of 35.5 million due to rainy and cool weather during the first half of its harvesting season.

Greater losses could occur as more individual province data become available, but quality may be more of an issue than quantity at this time, she said. 

Flanagan predicted Chinese cotton production may fall as low as 34 million bales. Stevens said a reduction in the Chinese estimate is probably coming down the line, but the USDA may hold back until the Chinese government adjusts its own numbers and there is more concrete evidence of losses in crop size.

All the analysts agreed that Pakistans cotton harvest was almost a sure bet to be reduced as Stevens put it. Johnson said it could go down to 10.3 million bales from the USDA forecast of 11 million bales. Flanagan said the crop could fall by 2.0 million to 9.0 million bales.

The impact of the report, barring any major surprise, could be muted given all that is happening in global economies. Johnson said the fall of the US dollar to new all-time lows, new all-time highs in crude oil, and new multiple-year highs by soybeans, gold and silver are driving other commodities, including cotton. 

Analysts see drop in Pakistan, China cotton output


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## Neo

*Forex reserves up by $18m to record $16.372 bln ​* 
KARACHI (updated on: November 08, 2007, 17:27 PST): Pakistan's total liquid foreign exchange reserves went up by $ 18 million to more than $ 16.372 billion this week.

According to weekly report of State Bank of Pakistan (SBP) here on Friday, the foreign exchange reserves held by the Central Bank were estimated at $ 14.166 billion on November 3, 2007, while reserves held by the banks stood at about $ 2.206 billion. 

Forex reserves up by $18m to record $16.372 bln : Business Recorder | LATEST NEWS


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## Neo

*Gulf firm to set up $225 million cement plant near Dhabeji ​*
KARACHI (November 08 2007): The Sindh government will provide 400 acres of land to a Gulf-based firm to set up a cement plant near Dhabeji, involving an investment of 225 million dollars.

Sources in Sindh Planning and Development (P&D) Department told Business Recorder here on Wednesday that the firm would get land on 99-year lease at the rate of Rs 250,000 per acre in Dhabeji near Port Qasim.

The Sindh government had received an expression of interest (EoI) from the firm belonging to a Gulf country around 10 months back for investment in the province, sources said.

The project was forward by the Prime Minister's Secretariat and the Board of Investment (BoI) to the provincial government. The Planning and Development (P&D) Department also received intimation from the Chairman of Investment Cell, Chief Minister Secretariat, to hold the meeting on the project.

However, an informal meeting took place in the Chief Minister House on March 20 where the Sindh Chief Secretary briefed the Chief Minister about the investment proposals. Chief Minister Dr Arbab Ghulam Rahim expressed willingness to make the land requisite available and also took an aerial view of the proposed site himself.

To finalise the matter, two meetings took place in the office of Additional Chief Secretary and General Administration Department, which were attended by the secretaries of Law Department, Mines and Mineral Development Department and Land Utilisation Department to finalise a draft of lease deed.

After being approved by the Chief Minister, the government decided to provide 400 acres of land which would also earn Rs 100 million revenue for the provincial exchequer, besides bringing an investment of about a quarter billion dollars, the sources added.

Despite the fragile political situation in the country, the sources said, representatives of the firm had assured the government that the investment would not be affected in setting up the cement plant.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Growth in revenue collection to help meet Rs 1.025 trillion target for fiscal year 2008 ​* 
ISLAMABAD (November 08 2007): The imposition of emergency will not affect the economic activities and unhindered growth in revenue collection will help in meeting the target of Rs 1.025 trillion set for fiscal 2007-08. Sources told Business Recorder on Wednesday that business activity is going on as usual contributing handsomely to the national exchequers on revenue day-to-day basis.

While giving an overview of the economic situation, sources said so far, the import and export activities are going on unhindered creating no visible impact on import duties and sales tax/federal excise duty during the first four months of the current fiscal year.

In short-term, all things appeared to be on track, but if the foreign investment slow down this might revenue implications in long-run. Until or unless factories of leading sectors are closed or there is major decrease in imports, the FBR would definitely meet the revenue targets.

The profitability of business has not yet shown any negative signs, but international rating agencies have been taken very seriously by the foreign investment companies and donor agencies. If the consumers demand continues and there is no serious law and order situation, the position of revenue collection would further improve in coming quarters.

Sources said the board has collected Rs 270 billion during July-October (2007-08) against target of Rs 264.1 billion, reflecting an increase of Rs 5.9 billion. The updated figures revealed that the net revenue collection has reached Rs 270 billion during first four months of the current fiscal year against Rs 237.2 billion in the same period last year, showing an increase of Rs 32.8 billion.

The board has faced some problems in revenue generation vis-à-vis target in only two areas during first quarter (2007-08). First, the payment of income tax along with the returns was comparatively less due to change in the tax payment system from fiscal 2007-08. The number of returns filed under the Universal Self Assessment Scheme (USAS) has increased, but amount of tax was less during this period.

At the same time, the advance tax payments have shown reasonable growth during first quarter July-October (2007-08). Taxpayers have been allowed to pay tax in equal instalments on quarterly basis. The board has collected around Rs 25 billion as advance tax during first four months of the current fiscal year against Rs 20 billion during the same period last year, showing the growth of 18-19 percent.

Sources said the growth in withholding tax collection during first four months of the current fiscal year also reflects the momentum of the ongoing economic activities.

On the Federal Excise Duty (FED) side, sources said that one percent special excise duty (SED) regime and collection of FED from international air travels are issued, which would be addressed on top priority basis. The FBR has been smoothly collecting one percent SED at the import stage. However, reporting of SED on local manufacturing, through combined sales tax and federal excise return, has implementation issues. Some taxpayers are not accurately showing SED on the newly devised returns.

Moreover, collection of FED from international air travel would start improving streamlining overall excise duty collection in coming quarters of 2007-08. Sources said the first quarter of every financial year is a transition period where there are difficulties. However, improved situation is evident from the revenue collection of Rs 65 billion in October 2007.

The provisional collection in October was Rs 59.3 billion, which further increased taking the total to Rs 65 billion. The board has witnessed 23 percent growth in revenue collection during October 2007 against the required growth of 21 percent.

Taking into account the current growth trend, the board would definitely meet the target of Rs 1.025 trillion in 2007-08. Giving accurate picture of revised target for first quarter 2007-08, sources said the amount of Rs 6-7 billion has been adjusted in the next few months of the current fiscal year.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Poland wants to enhance trade with Pakistan: Consul General ​* 
KARACHI (November 08 2007): Polish Consul-General Ireneusz Makles said here on Wednesday that he sees Pakistan has the potential to become economic leader in Asia because of its consistent trade and economic policies.

Talking to Business Recorder, he said that Pakistan's growing economy, its strategic location as a regional hub, principal gateway to the Central Asian Republics, a large consumer market, abundant natural resources, talented and entrepreneurial people and skilled and hardworking labour, well established infrastructure, liberal investment and friendly policies, all combined together, offer enormous opportunities to foreign investors.

He said that Pakistan and Poland are privileged by the nature of their location. Pakistan is located at the confluence of three vital regions - South Asia, Central Asia and West Asia--providing the shortest access to sea for the landlocked Central Asian countries and western China. "So, Pakistan is becoming a leading, regional hub with a specific role as trade and energy corridor for China and Central Asian countries."

He said that through the Gwadar Port, Pakistan's businessmen could export Polish products to Afghanistan, Central Asian states such as Tajikistan, Kirgistan, Turkmenistan, and Uzbekistan, and to eastern region of Iran.

Makles said, "Moreover, most of the goods from these countries could be cheaper if exported by sea to Poland and other East and Central European and Baltic countries."

He said that Poland and Pakistan have established co-operation in trade and commerce, energy and agriculture sector, chemicals, machinery, textile etc. "Both countries have concluded agreements on trade cooperation, avoidance of double taxation, maritime and cultural cooperation."

He said that in 2006 the turnover in trade between Poland and Pakistan was 110 million dollars. Poland exported goods for 32.2 million dollars and Pakistan for 75.5 million dollars. "The balance of trade was in favour of Pakistan for 45.4 million dollars. In the first seven months of 2007 (January-July) the turnover in trade was 69.40 million dollars. Poland exported goods worth 10.40 million dollars and Pakistan worth 59 million dollars. The balance of trade is in favour of Pakistan for 48.60 million dollars.

He said that the biggest sector in Pakistan's exports was textile comprising cotton fabrics, cotton yarn, clothes, bedding, and towels. Other items of export were chemical fibre, leather products, sports products, vegetable products and corn (rice) plastics, toys, marble, onyx, medical and veterinary instruments (surgical, dental, pedicure, manicure instruments).

He said that Poland exported to Pakistan machines, chemicals, cast iron and steel, wood pulp and cardboard, fertiliser, newsprint, machinery engines, rolling bearings, oil seeds, and milk powder.

Makles said he was working to improve trade and economic relations, create a better environment for business community and to establish industrial units in joint ventures. He said that Pakistani investors should visit Poland and explore joint venture opportunities.

He said he was convinced that exchange of trade delegations would prove effective and provide opportunity to Pakistan's businessmen to diversify their export preferences. "Polish businessmen are keen to buy Pakistani products, which are of high quality," he added.

Makles said that Poland is celebrating its Independence Day on November 11. After violent 123 years of partitions and uprising, Poland's dream of independence was realised and it again emerged as a sovereign state on November 11, 1918. "Since then, Poland is on the path of economic progress and expanding its business activities in different countries. Pakistan is emerging as one of those countries which have stable and dependable trade and commerce relations with us," he said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*IPI gas pipeline: project falls prey to procrastination ​* 

ISLAMABAD (November 08 2007): Despite tall claims of going ahead on multi-billion-dollar Iran-Pak-India (IPI) gas pipeline project, even without India, the government has now decided to follow 'wait and see' policy, and formulation of a steering committee under the Minister for Petroleum, Aman Ullah Jadoon, was also part of delaying tactics in the face of strong opposition by some of the ECC members, sources close to this development told Business Recorder.

The Petroleum Ministry had placed the gas sale/purchase agreement before the Economic Coordination Committee (ECC) of the Cabinet on October 31 for approval, but it was not cleared due to strong opposition by some of the participants, sources said.

Dr Ashfaque Hasan Khan, Special Secretary, Finance Ministry, had claimed in his press conference after the meeting that the ECC had approved the recommendations of Petroleum Ministry, in principle, but constituted a steering committee under the chairmanship of Minister for Petroleum, comprising Deputy Chairman Planning Commission, Chairman CBR and Secretaries of Finance and Foreign Affairs to further review the documents.

"There was a clear division in the ECC meeting, as one group was of the view that negotiated gas price was high on the one hand and US sanctions on Iran would complicate the situation, on the other, thus asking for adoption of wait and see policy," sources said. They said that Prime Minister Shaukat Aziz wanted ECC to clear the gas sale/purchase agreement, but when he witnessed opposition by some members, he also voted in favour of deferment of the pact between Pakistan and Iran.

However, the Prime Minister was also of the view that if Pakistan did not go ahead with the project, he should be given alternatives to meet future energy needs as Pakistan's gas reserves could only meet 40 percent of requirements.

Sources said that when the proposal was not approved by the ECC in clear words, the Petroleum Ministry took back the summary from the ministers and other officials and when they found one summary missing, the Prime Minister waved the concerned official, saying that it was with him come, "and collect it".

Since the discovery of natural gas reserves in Iran's South Pars fields in 1988, the Iranian government began increasing efforts to promote gas export. The prospects for profit are especially high in South Asian countries like India and Pakistan, where natural gas reserves are low and energy demand is exceeding supply with every passing day.

In 1995, Pakistan and Iran signed a preliminary agreement for construction of a natural gas pipeline linking the Iranian South Pars natural gas field in the Persian Gulf with Karachi, Pakistan's main industrial port located at the Arabian Sea.

Iran later proposed extension of the pipeline from Pakistan to India. Not only would Pakistan benefit from Iranian natural gas exports, but Pakistan territory would be used as a transit route for exporting natural gas to India.

Initially, the Indian government was reluctant to enter into any agreement with Pakistan due to the historically tense relationship between the two neighbours. As an alternative, India suggested the development of a deep sea pipeline where no threat to security of resources could exist.

At present, Indian, Iranian, and Pakistan government officials continue to negotiate the possible routes, modes of transport, and geo-politics of Iran. It may be noted that Petroleum Ministry had submitted its summary to the ECC after final negotiations with the Iranian delegation in Islamabad.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Italian company to install compression facility ​* 
ISLAMABAD (November 08 2007): OMV Pakistan has awarded $100 million contract to 'AAB Process Solutions and Services', SPA, Italy, to install a compression facility at the Sawan gas field. The project will considerably increase the net value of the Sawan asset besides boosting proven developed reserves and prolong the life of the field.

The compression station is planned to be commissioned in Quarter 1, 2010. OMV is the biggest international gas operator in Pakistan and it supplies 16 percent of Pakistan's demand for natural gas.

Sawan gas field is located in Sindh in the central Indus Basin, about 500 km from Karachi. As a partner of an international consortium, OMV is responsible for operation of the field, which was discovered in 1998 and put on stream in 2003.

Sawan is located directly between the markets of the two gas suppliers, Sui Northern Gas Pipelines and Sui Southern Gas Company, which enable OMV to deliver to both networks. QMV Pakistan is 100 percent subsidiary of OMV Aktiengesellschaft. It is actively engaged in exploration and production activities since 1991. OMV (Pakistan) employs 458 Pakistanis and 15 expatriates.

The activities of OMV are currently concentrated in the central Indus region. OMV has invested approximately $150 million in exploration, appraisal activities and field development. It discovered the large Sawan gas field, for which commerciality was declared in December 1999.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Seventy high-tech companies to get space at TIC ​*
ISLAMABAD (November 07 2007): About seventy high-tech start up companies would get a chance to introduce their products at the new Technology Incubation Center (TIC) being established at the cost of Rs 4 billion here in Sector H-12.

It would be a giant step forward by the National University of Sciences and Technology (Nust) to provide an ideal platform and introduce a new culture of research-based technological products.

The multi-purpose and multi-dimensional project is expected to be completed in the next year, a spokesperson for the Nust told APP here on Tuesday. The concept of the new project was given a concrete shape to give a spur to the research based production in diverse scientific fields.

It will increase penchant for scientific fields among the talented and yearning youths of the country, she added. Moreover, the new project would house about 12 Nust institutes under one umbrella concept. The new campus will facilitate close interaction with high-tech industries to meet country's growing requirements. Currently, Nust has 22 institutes with more than 5,000 students enrolled and served by 600 faculty members.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan to explore Irish IT sector ​*
KARACHI (November 06 2007): Pakistan Software Export Board (PSEB) is organising networking events in Dublin, Ireland, from November 7 to 10. A statement here on Monday said that the event would be held in collaboration with the Embassy of Pakistan in Dublin, Ireland Pakistan Business Council (IPBC), Dublin Chamber of Commerce, Irish IT Industry and various other local partners.

It said that Ireland has emerged as the third leading global destination for ICT outsourcing activities after India and Canada and is focusing on South Asia due to the huge IT outsourcing potential of regional states including Pakistan.

"The visit would play a significant role in opening new vistas of collaboration between the companies of both the countries," an official of Pakistan Software Export Board remarked.

The statement pointed out that the PSEB delegation comprises of ten member companies, which are renowned in their respective areas of expertise. These companies include: ALPBusiness Services Management- distributors of highly skilled resources, execution capability, equipment and products to provide customers with low cost and highly profitable business solutions; Electronic Solutions Pakistan- specialising in E-Business and E-Government, retail, healthcare, resource management, and defence and military software; Msoft- providing new and innovative telecommunication products and services that increase business productivity and efficiency of their clients; Voxel Communications- provider of top notch offshore customer contact solutions; Acrologix-provider of comprehensive ERP solutions for Textile and Rice industries as well as industry solution provider for education, document management and archiving, mobile entertainment, B2B/B2C portals etc; Kraysis- providing software quality assurance services; Softech- recognised expert in developing complex software products for the capital and financial sector; EfroTech-providing services for the development of software-based web and client server solutions and media presentations; Sofizar-specialising in bringing relevant search engine traffic as well as creation of brand identity and iNVATERRA- providing efficiency optimisation services.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Business as usual under emergency: finance ministry​*
ISLAMABAD: The Ministry of Finance (MoF) has said that as apposed to past emergencies, the current emergency is of a soft nature, as the federal and provincial are fully functional and economic activities continue as normal. An update by the finance ministry titled, The State of Emergency: Has it Impacted Pakistans Economy? said that the superior judiciary had paralysed various organs of the State and created impediments in the fight against terrorism, which led to imposition of emergency. 

The report points out that the current emergency is of a benign type as the entire government is fully functional. In the past three emergencies imposed during the 1990s, the prime minister, the cabinet, the National Assembly, the provincial chief ministers, the provincial governments and provincial assemblies were dislodged. Since the government is fully functional at all tiers, there is no danger of derailment of economic policies and reform agenda of the government, which lie at the heart of foreign investment decisions, the report said. Economic activities continue as normal, there is no stoppage of production and tax collection. Ports are functioning normally; the Karachi Stock Exchange (KSE) closed positive on Tuesday, up by 147 points; and the exchange rate remains stable. The report mentions that investor confidence was shaken a little when the KSE witnessed a sharp decline of 635 points or 4.57 percent on Monday, first trading after the imposition of emergency. But it points out three reasons for this decline. First, all Asian markets witnessed sharp fall on Monday because of the report that Citigroup faces losses on its subprime lending and a change in its leadership. 

For example, Hong Kong witnessed a decline of 5.0 percent, Indonesia 2.14 percent and India 1.93 percent. Second, Monday was the first working day after emergency was imposed and traders were expecting the market to open on a bearish note. Third, the rumors of change at the head of the government made the investors nervous and selling pressure mounted on them. By the time the dust settled the market was down by 635 points or 4.57 percent. The report said Pakistan was facing challenges because of certain decisions of the superior judiciary paralysing vital pillars of the state (Executive and Legislature), which were not at all conducive for running of the state as well as the economy. 

Media on the other hand, did not help in stabilising the situation either. In some cases they seemed to be helping the cause of extremists and terrorists by showing gory scenes of suicide bombings that encouraged these elements to carry on with their heinous acts. It is in this background that the government took the difficult decision of imposing emergency to avert the weakening of economic fundaments. sajid chaudhry

Daily Times - Leading News Resource of Pakistan


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## Neo

*Govt to establish IT Park for Rs 406.05 million​*
ISLAMABAD: Keeping in view the importance of Information Technology (IT), the government has plan to establish a state of the art IT Park that would provide IT enabled office space and other facilities to IT companies. The project will cost Rs 406.05 million. 

Officials in the ministry of Information Technology told Daily Times here on Wednesday that all set to develop the IT Park at Chak Shahzad, National Park Area Islamabad. For this purpose the government has allocated about 52 acres of land out of which 14.5 acres has been purchased in Phase-I and the remaining portion of 37.5 acres is plan to be purchased from CDA (City Development Authority) in Phase-II. 

The Technical Appraisal committee of the planning commission, after properly studying the project (Purchase of land) revealed that it would cost Rs 406.050 million instead of Rs 410.964 million. The committee also said that the execution period of 24 months is a longer period and said that it would be completed within 12 months, as it involved only payment for the cost of land to the CDA. The CDA has offered the land for establishment of IT Park at the rate of Rs 2250 per square yard, the officials added. The officials said that such parks not only provide the basic office space and Internet connectivity, which is a basic requirement for any IT business, but they also provide a conducive operational environment for IT companies. The IT industry needs proper Internet Cities on the lines of the Dubai Internet City and other similar technology parks across the world, they added. 

Sources in planning commission said that in the Medium Term Development Framework (MTDF) 2005-10, emphasis has been laid on IT industry development and therefore an overall investment programme of Rs 19.3 billion is indicated for this sector. The funds for this project (establishment of IT Park) would be made available from the PSDP (Public Sector Development Project). To further increase the international competitiveness of the local IT industry, IT exports need to be driven by support programmes that help to improve infrastructure in the shape of software technology parks and bandwidth connectivity provision on subsidized rates.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Islamic banking industry to get 12% market share by 2012 ​*
KARACHI: Chairman Islamic Capital Partners, Khalid Rafi has said that Islamic banking in Pakistan would achieve 12 percent share of the overall financial sector of the country by 2012. 

Speaking at Islamic Capital Conference on Wednesday he said that this statement roughly translates into an additional growth of $15 billion or Rs 900 billion in Islamic deposits over the next five years. 

He said Islamic banks have launched an aggressive outreach campaign and have added one hundred and forty branches in just 18 months. The total branch network stands close to 218, and is set to quadruple over next four years, he said. 

He said that overall Islamic banking industry in Pakistan has come a long way, despite various challenges. Today, we have six full Islamic banks operational in the country that have been established with support from leading financial institutions from the GCC (Gulf coordination committee). This is also a justification of the tremendous investment opportunities and the growing interest of Sharia compliant foreign investors in Pakistan, he said. 

President and CEO Meezan Bank Limited, Irfan siddiqui said that Islamic banks have to put extra efforts to attract customers as declaring the products Islamic, demands more innovation.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Hunt says US aid to continue for progress of Pakistan​*
FAISALABAD: The United States will continue to extend aid and technical support to Pakistan for its speedy progress and prosperity, said US Consulate Principal Officer Brian D Hunt.

He told this to the concluding session of 18th All Pakistan Food Science Conference and International Symposium on Emerging trends in Food Science and Technology in a newly constructed senate hall of the University of Agriculture Faisalabad (UAF) here on Wednesday. He said Pakistan and the US are close partners and have enjoyed cordial relations for the last many decades.

He said the US was extending full cooperation in education and research and during recent years, a series of MoUs have been inked between various Pakistani and US universities, and research organisations. 

Hunt said both countries have huge potential for cooperation in the food processing sector. app

Daily Times - Leading News Resource of Pakistan


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## Neo

*Foreign investors offload holdings on KSE ​* 
Friday, November 09, 2007

KARACHI: Massive offloading by the foreign portfolio investors amid day-by-day reducing turnover at the Karachi bourse finally convinced the local players to slash their holdings as well. However, short-covering on dips minimised the day deep losses to moderate.

The KSE 100-share Index posted a modest fall of 76.73 points and closed at 13,423.87 points on Thursday. Market opened in on enormous profit-selling and slid to 13,188.97 points intra-day, losing 311.61 points by the second half of the day session. However, the reshuffling of their (investors) portfolios and change of shares in the intra and inter-sector on board reduced the losses.

The overall turnover in the ready market further declined to 217.513 million shares as compared to 235.769 million shares recorded a day earlier. Analysts said the thin turnover was hinting the cautious behaviour of investors, as they were getting sideline everyday since the emergency imposed in the country on November 3. They (investors) declared themselves dormant and just wanted to observe the fast changing situation at political front thus at KSE as well, they added.

In the backlash of emergency rule in the country, the foreign portfolio investors were lowering their holding everyday. The outflows of a day earlier (ie Wednesday) were recorded over US$102.3 million, which also included $51.1 million outflow from T-Bills, a broker said. While on Tuesday, they sold shares worth of $100 million, he said and added that this figure for Thursday session was yet to be worked out by the central bank and would be made public later.

The major foreign sellers were noted from United States, United Kingdom, Germany, Singapore and Hong Kong, a dealer informed The News. Profit-booking in commodity ie crude oil in the world markets, after making a historical rally above $98 per barrel, on Thursday, continuous recession in the US dollar value and the Pakistan Peoples Partys (PPP) threat to organise a mass based procession on Friday (today) and to hold long march on November 12 to oppose the emergency rule in the country were some prominent factors to have pressurised the players to offload their holding at KSE, analysts viewed.

A bit selling was seen in E&P sector scrip as investors opted for profit booking, POL which was moving very swiftly in previous session faced a bit pressure on selling side, OGDC was the front runner contributed insignificantly. On the other hand PPL remained silent through out the day, Kashif Mustafa, an analyst said. Late renewed buying interest on dips, mainly in oil and gas exploration stocks and at big discount offering counters, recovered more than half of the day deep losses.

The recovery drive accelerated on the news that the prime minister has invited leading brokers and bankers on Friday (today) to discuss the situation, another analyst Hasnain Asghar Ali said and added that the outcome of this meeting will certainly dominate the next sessions. The development that the date for next elections would be announced by Nov 15, has certainly addressed some queries of the participants of the economy that certainly allowed buying on dips, answer to other questions will certainly allow the investors to focus on the fundamentals rather then following political activities, he further added.

Banking sector continued its unimpressive performance as the strong scrip underwent heavy selling. Investors remained reluctant and hold conservative stances by keeping there investment liquid. Bears overpowered the bulls on board, as 202 stocks declined against 133 advanced. Therefore, the value of 31 scrip remained unchanged with total 366 active counters on board. The overall market capitalisation declined by Rs24 billion and stands at Rs4.096 trillion. Highest volumes were witnessed in TRG Pakistan at 18.303 million closing at Rs12.50 with a loss of Rs0.45, followed by Arif Habib Securities at 16.548 million closing at Rs157.75 with a loss of Rs7.50.

Foreign investors offload holdings on KSE


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## Neo

*Turkish businessmen keen to invest in Pakistan ​* 
Friday, November 09, 2007

ISLAMABAD: The Turkish government on Thursday said Islamabad and Ankara should enhance exchange of high-level delegations for boosting bilateral trade relations, as both are facing a lot of trade-related issues due to lack of coordination.

A Turkish business delegation, headed by Verisis General Manager Dr Aydin Kolat, visited the Islamabad Chamber of Commerce and Industry and met its President Nasir Khan and Vice President Mohammad Hussain. The head of the delegation said once both the sides focus on this subject, the situation would improve. He appreciated ICCI president who visited Turkey this year with a trade delegation.

A number of great opportunities exist for Turkey and Pakistan to make joint efforts to realise their trade and economic potential for mutual benefit in the large Euro-Asia market. The delegation expressed the desire to invest in Pakistan in various sectors, particularly in information technology (IT) and considered Pakistan a big market. It offered technical assistance with latest equipment for the growth of production. It said that it wants to computerise every department in Pakistan. 

Pakistan also can enhance its steel production with mutual cooperation. The delegation added that it wants to invest here and find partners for this purpose. ICCI president said Turkey is linked to Europe and Central Asia while Pakistan serves as a major outlet for Central Asia, South East Asia as well as Middle East. He further said that frequent exchange of visits both at government and institutional levels has remained a distinguished feature of Pak-Turkish relations, and there has always been a lively exchange of ideas and perceptions to promote cooperation between the two countries.

He suggested that Turkey could make direct investment in construction, electrical and industrial machinery, IT pharmaceuticals, defense production, engineering, automobiles, agro based industries, oil and gas exploration and financial sector.

Turkish industrialists can also enter into joint ventures with Pakistani counterparts. He invited the Turkish businessmen to invest in Pakistan owing to Pakistans rapidly growing economy, improving indicators and investment-friendly pro-active policies of the government.

There is no limit on foreign equity and foreigners can transfer capital, profits and dividends to their country. No permission is required to establish any industry in Pakistan by the foreign investors.

Turkish businessmen keen to invest in Pakistan


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## Neo

*Govt to spend Rs520bn on NTC ​* 
Friday, November 09, 2007

ISLAMABAD: The government has chalked out an ambitious Rs520 billion plan to develop National Trade Corridor (NTC) in order to boost trade activities and exports. 

A source in Ministry of Communications told APP on Thursday that the NTC will link to upper parts of the country in the North with ports in the South to reduce travel time and fuel cost by improving existing road network and introducing new highways and motorways by 2012. 

The development of NTC would cause multifaceted benefits, reduce the losses and significantly contribute to the national exchequer, he added. On completion of the NTC by 2012 the cargo travel time from Karachi to Peshawar would be reduced from 72 hours to 36 hours, and road losses would be reduced to the tune of over $1 billion per annum which will reduce annual transportation cost by 10 per cent, the source added. 

He said that the main artery and the main North-South corridor linking Karachi with Torkham on Pakistan-Afghanistan border via Lahore, Rawalpindi and Peshawar the National Highway N-5 is the mainstay of the countrys road network and its economic lifeline. 

The great trunk road N-5 is being converted into a dual carriage way. Similarly Indus Highway,(N-55) which is on the left bank of the Indus river, is also being constructed according to the specifications of the Asian Highways recommended by the Asian Development Bank. 

After construction of the Kohat Tunnel, N-55 is set to play a vital role not only for Pakistan but for inter-regional connectivity also, he added. The transport cost of trade goods would be reduced through restructuring and modernization of railway, under the NTC programme, which will contribute in terms of saving of $2 to 2.5 billion per year. The administrative measures, reducing documentation would result in saving of $1.2 billion per annum, he said. 

Govt to spend Rs520bn on NTC


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## Neo

*Privatisationto fetch $3.5 billion in 2007-08​*
ISLAMABAD, Nov 8: Pakistan has targeted $3.5 billion through privatisation of public sector entities in FY2007-08. Talking to newsmen here on Thursday, Federal Minister for Privatisation and Investment, Mohammad Wasi Zafar, said on Thursday that the target achieved for privatisation proceeds for 2006-07 was $2 billion.

He disclosed that from July to November an amount of $440.597 million (Rs26.869 billion) has been received through privatisation proceeds by the Privatisation Commission.

The minister further stated that an impression had been created that privatisation process had been stalled, which was totally incorrect.

The minister said that so far $440.597 million have been received as privatisation proceeds, which was a commendable achievement.

The proceeds relate to UBL GDRs ($85 million), HBL IPO ($196 million-Rs12 billion, Etisalat tranche received on Nov 7 for PTCL privatisation ($133.217 million) and Rs1.6 billion from other privatisation proceeds, which have been deposited into the government account.

He further stated that the total target for the year 2007-08 was around $33.5 billion and hopefully this target would be achieved.APP

Privatisationto fetch $3.5 billion in 2007-08 -DAWN - Business; November 09, 2007


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## Neo

*Foreign investment down $86m in a day​*
By Mushfiq Ahmad 

KARACHI: Foreign portfolio investment in the country declined by $86.128 million on Wednesday, bringing down the total inflow of foreign portfolio investment in the country since July 1 to $267.622 million, SBP website said here on Thursday. 

Foreign portfolio investment is remittances received in the country relating to equity (less than 10%), securities, shares, debentures, certificates and money market instruments, etc. 

There was an inflow of $16.217 million in Special Convertible Rupee Accounts (SCRA) and outflow of $102.346 million during the day. These are the accounts opened by the foreigners in Pak Rupee. The amounts are credited to these accounts after conversion of foreign currency into Pak Rupee for the purpose of investment at stock exchange. The balance may be shifted any time to outside the country after conversion into foreign currency. The outstanding balance in these accounts is a foreign liability. 

Investors in United Kingdom pulled back $62.809 million while investors in United States withdrew $29.711 million. Investors sitting in Hong Kong withdrew $8.997 million. It is interesting, however, that the Karachi Stock Exchanges 100-share index had risen by 74.47 points during the day. Usually, when foreign investors pull out their money, the index plunges. 

There has been a net outflow of $28.714 million during the month of November, indicating a decline in confidence of foreign investors in our economy following the imposition of emergency in the country. The fiscal year 2006-07 ended with a record portfolio investment reaching close to one billion dollars, had provided the government with some more numbers to present as a proof of its successful economic management. The net portfolio investment during the last fiscal year through SCRA stood at $978 million in the last session of stock markets held on June 29. 

Analysts had said at the beginning of the current financial year that if economic growth continued to show strength it exhibited during the last four years, the inflows, including those through SCRA, could set new records during 2007-08. However, it now seems difficult that the foreign portfolio investment will be able to even touch the $1 billion mark this year. That is why some economists have been criticizing the government for relying too much on such undependable inflows instead of focussing on export growth.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistans $845 million 2008 US aid package under possible challenge​*
* Amount includes supplementary request for $60 million

By Khalid Hasan

WASHINGTON: The total sum of $845 million that the Bush administration has requested Congress to approve for fiscal year 2008 could be in jeopardy if the situation in Pakistan does not improve and the state of emergency does not make way for normalcy and elections early next year.

The $845 million includes a supplementary request for $60 million. The $785 million requested in the 2008 Congressional Budget Justification is for: Peace and Security (approximately $342 million): includes Foreign Military Financing, International Military Education and Training, law enforcement reform, counter narcotics, and counter terrorism. The other heads are: Governing Justly and Democratically (around $42 million), which includes rule of law and human rights, support for local governance and decentralisation and civil society. It also consists of a programme called: Investing in People (about $103 million) and roughly the same amounts for health and education. 

Another head is Economic Growth (about $249 million), which includes a $200 million cash transfer to support the Government of Pakistan development initiatives, private sector support, agriculture, and credit. Another item is Humanitarian Assistance (around $50 million), which is to provide continued relief and recovery for areas hit by the 2005 earthquake. The $60 million supplemental amendment is to support economic and social development as well as good governance in the Federally Administered Tribal Areas.

Daily Times - Leading News Resource of Pakistan


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## Neo

*SCRA balances fall to $267.622 million: investors withdraw over $86 million on November 7​*
KARACHI (November 09 2007): A massive outflow of portfolio investment from the country's equity market was witnessed on November 7 as over 86 million dollars were withdrawn only on a single day mainly by the UK, USA and Hong Kong investors.

According to data released by the State Bank of Pakistan (SBP), the special convertible rupee account (SCRA) balances has fallen to 267.622 million dollars on November 7 against 353.751 million dollars a day earlier.

"The foreign investors opted for profit taking and preferred to offload their holdings on available margins mainly due to prevailing uncertainty on political front in the country", a leading analyst said.

He said that selling was witnessed in some oil and fertiliser sector stocks by the foreign investors as these sectors remained among the most attractive ones for them.

Out of the total outflow of 86.128 million dollars, 62.776 million dollars were withdrawn only by the UK investors, while the investors from the US withdrew 18.624 million dollars and 8.843 million dollars by Hong Kong on November 07. As many as 120,514 dollars were withdrawn by Germany, and 608,985 dollars by Singapore on the said day. On the other hand, an inflow of 4.319 million dollars was witnessed from Switzerland, 410,912 dollars from the UAE and 115,056 dollars from Netherlands.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*GDP growth to remain at 6.9 percent: economists ​*
KARACHI (November 09 2007): Despite imposition of the state of emergency, macro-economic environment will remain stable and Pakistan's gross domestic product (GDP) growth will remain at 6.9 percent, driven by domestic consumption, economists said. They believed that if the same situation would linger on, then it could hurt the foreign inflows, besides putting pressure on the foreign exchange reserves.

Leading economist Muzammil Aslam, commenting on the situation, said that emergency had not affected the economy and business practices as the old economic policies were being followed. There were no restrictions on capital movement and foreign exchange regulations had not been disturbed, he said.

Although, two leading credit rating agencies Moody's and S&P had downgraded Pakistan's credit rating outlook from stable to negative, the country may not face capital fight and turmoil in the financial and forex markets.

Referring to Holland's stoppage of aid, he said no country had discontinued the aid and assistance to Pakistan. As regards the country's exports, he said the emergency would not affect the momentum of exports as the all type of industries were functioning normally and there was no indication that export orders would be delayed.

Aslam said that if political uncertainty continued for period, the it could hurt foreign flows, as the issuance of National Bank of Pakistan GDR had delayed. "Obviously, everything here hinges on how long the uncertainty continues. We believe the uncertainty will not last for long," he added.

He, however, warned if the current situation lingered on and it led to a backlash from the opposition, this slow down the private foreign fund inflow. This situation could be manageable if Pakistan's external deficit could be financed by reserves, he added.

In that case the country's reserves would draw down and external debt could, in turn, put some pressure on the exchange rate, he predicted. "As things stand, we expect Pakistan's macro environment to remain stable and GDP growth to remain at 6.9 percent, driven by domestic consumption," he said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*World Bank reassessing poverty reduction efforts ​*
ISLAMABAD (November 09 2007): The World Bank is reassessing Pakistan's performance for poverty reduction to prepare the policy on future financing. A three-member mission headed by Miss Situ Kohkonen is currently in Islamabad to hold meetings with the officials working on poverty reduction programme and senior policy makers of the government.

The mission is collecting fresh data on jobs to unemployed and other steps taken by the government for better income to underprivileged section of the society.

The mission on Thursday held separate meetings with senior officials of the Economic Affair Division (EAD) and Planning Commission and took up poverty reduction measures. The mission is also scheduled to meet the Prime Minister's Advisor on Finance, Dr Salman Shah and senior officials of the Ministry of Finance and Privatisation Commission.

An Islamabad-based official of the World Bank told Business Recorder that the mission was collecting data on poverty for preparing its report besides discussing the steps taken by the government during meetings with the officials.

The official said the mission would review the fresh data provided by the government and consume for its strategy to be suggested to Pakistan to help reduce poverty rate.

Despite repeated claims of the authorities that poverty reduction was more than 10 points, donors doubt the ratio and want the government to take more concrete steps to further cut down poverty and improve the living standard of the people.

The mission will also have a meeting with the officials of the Privatisation Commission to know what percentage of privatisation proceeds were being spent on poverty reduction.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan targets $3.5 billion privatisation proceeds in fiscal year 2007-08 ​*
ISLAMABAD (November 09 2007): Federal Minister for Privatisation and Investment, Muhammad Wasi Zafar said on Thursday that Pakistan has targeted US $3.5 billion through privatisation of public sector entities in FY 2007-08.

He stated this while talking to a group of economic media persons here on Thursday. The target achieved for privatisation proceeds for FY 2006-07 was US $2 billion, he remarked. He disclosed that during the current year (2007-08) from July to November an amount of US $440.597 million equivalent to Pak Rs 26.869 billion have been received through privatisation proceeds by the Privatisation Commission.

The minister further clarified that an impression had been created in a section of the press that the privatisation proceeds had been stalled, was totally incorrect. Judging from the above stated position, the minister stated that so far US $440.597 million has been received as privatisation proceeds, which was a commendable achievement.

The proceeds relate to UBL GDRs (US $85 million), HBL IPO (US $196 million - Rs 12 billion), Etisalat tranche (received on 7th of November) for PTCL privatisation (US $133.217 million) and Rs 1.6 billion from other privatisation proceeds, which have been deposited into the government account. He further stated that the total target for the year 2007-08 was around US $3 3.5 billion and hopefully this target would be achieved.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*$1 billion container terminal to serve as transshipment hub: President ​*
ISLAMABAD (November 09 2007): President General Pervez Musharraf on Thursday said the construction of one billion dollar Deep Sea Container Terminal at Karachi would turn the country into a major transshipment hub for the regional countries, further bolstering Pakistan's trade and commerce.

Addressing after the signing ceremony between the Karachi Port Trust and the Hong Kong based Hutchison Port Holdings limited (HPH) here at the Aiwan-e-Sadr the President said the government has also decided to set up facilities for ship building and repair at the Gwadar deep sea port.

He said Pakistan will be one of the few countries of the region that will not only provide ship building but also repairing facilities and deep sea container terminal that can accommodate some of the largest ships operating. The President said Pakistan serves as a hub for trade between the Central Asian Republics, Western China, Middle East, Africa, and Europe.

He said the country's strategic location would be used for trade and commerce, which will not only be beneficial for Pakistan but for the entire region as well. "Pakistan will be on the world map of ship building, repair and deep sea container handling in three to four years time," President Musharraf said.

The Pakistan Deep Water Container Port Project (PDWCP) will have ten drafts berths at 18 meters depth, of which four will be completed in the first phase by 2010 and will have a terminal capacity of 3.1 M TEUs.

The over one billion dollar project will have a 457 million dollars of Foreign Direct Investment, while the rest of the investment of 550 million dollars for development of infrastructure for Phase-I will be made by the Karachi Port Trust.

Chairman Karachi Port Trust Vice Admiral Ahmad Hayat giving an overview of the project also assured a minimum royalty payment of 1.1 billion dollars to the KPT over the 25 year concession period. He, however, pointed out that the total expected income stands at over 3.5 billion dollars over the same period.

He said the ten berths will be spread over an area of 5 km, and the first vessel is expected to sail into the new terminal by 2010. He said it will also have a road and rail link with the rest of the country including a proposed cargo village.

The Chairman KPT said under this public-private partnership the Build-Operate-Transfer concession would be for an initial period of 25 years and the Hutchison Port Holdings limited (HPH) will be required to develop the site into a full fledged modern container terminal.

He said the port will be able to handle the longest and the deepest vessels that may traverse the seas and added that in Phase I, the terminal will be able to handle Super Post Panamax Container Ships.

The HPH is one of the world's largest container terminal operator and handled 59.1 M TEUs world-wide, of which 13.1 M TEUs were transshipment and operates 257 berths in 45 ports in 23 countries. Earlier, the President witnessed the signing ceremony. Chairman KPT Vice Admiral Ahmad Hayat and HPH's representative John Edward Meredith signed the documents. Minister for Ports and Shipping Babar Khan Ghouri and other ministers attended the ceremony.

Business Recorder [Pakistan's First Financial Daily]


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## Spring Onion

*10.65 million new jobs created over last six years: Dr Ashfaq*


ISLAMABAD: *Strong economic growth on sustainable basis created enormous job opportunities and over the last six-year (2000-2006), the economy created 10.65 million new jobs while during the previous years (1994-1999) the economy could created only 4.6 million new jobs.*This was stated by Special Secretary Finance and Director General Debt office, Dr Ashfaq Hassan Khan in an exclusive interview with APP here Friday.
He said that over 1.0 million jobs have been created in Information Technology (IT) and Telecom sector alone in the last three years.
"Pakistan's economic performance over the last several years has been impressive and sound macro-economic management and wide -ranging structural reforms have contributed to high real GDP growth, a reduction in the debt burden, and an improved business climate", Dr Ashfaq said. He said that adherence to pro-poor policies has helped lower poverty rates and enhanced the income of the people.
Dr Ashfaq said that real GDP growth accelerated to an average of 7.0 percent per annum over the last five years which put Pakistan in the league of the fastest growing economies of the Asian Region. 
He added that as a result of strong economic growth , over US $ 16 billion Foreign Exchange Reserves, stable exchange rate and declining debt burden, the investment climate in the country has improved and Pakistan has attracted US $ 8.4 billion foreign investment in 2006-07. Dr Ashfaq Hassan Khan said that strong economic growth implies greater availability of tax revenues and in the last 8-year (1999-2000 to 2006-07), the Central Board of Revenue (CBR) collected an additional tax revenue of Rs.538 billion while it took 9-years to collect additional tax revenue of Rs.197 billion.
He said that higher economic growth also more than doubled the country's per capita income which was an indicator of the average level of prosperity.
He said that per capita income increased from US $ 438 in 1998-99 to US $925 in 2006-07 which was an increase of 111.2 percent in 8 -years.
Dr Ashfaq said that increase in the per capita income along with enormous job creation led to sharp reduction in poverty.
"In 1998-99 30.6 percent people were living below the poverty line. In 2004-05 only 23.9 percent people living the poverty line", he remarked.
He said that economic recovery of the last several years has not only created more jobs and reduced poverty but it has also improved the living standards of the people. 
He added that rising level of the economic prosperity is reflected by the living conditions of the people.
He added that the number of households living in one room homes have declined significantly and all those living in 2-4 rooms homes have increased substantially.
He said that over 38.0 percent households were living in one-room homes in 1998 and in 2006-07, 24.3 percent households were living in one-room homes.
Dr Ashfaq said that the percentage of households living in 2-4 room homes increased from 55 percent in 1998 to 69.1 percent in 2006-07.
On the otherhand, he said the percentage of the households living in 5 and more rooms remained more or less at 1998 level during the same period.
He said that this is yet another indication of the growth of the middle class adding that middle class generally lives in 2-4 room houses and almost 14 percentage points increase in the households living in 2-4 room houses clearly shows the growing size of middle class and the rising level of economic prosperity in the country.
"Today 86 percent owned houses as compared to 81 percent in 1998, 86.6 percent people use electricity as sources of lighting as compared with 70.5 percent in 1998, similarly 30 percent people use gas as cooking fuel as compared to 20.2 percent in 1998.
Dr Ashfaq Hassan Khan said that 36 percent people use tap water as major source of drinking water as compared with only 26 percent in 1998-99.
Furthermore, he said gross enrollment at primary level increased substantially from 71 percent in 1998-99 to 91 percent in 2006-07.
He further said that electric fans production increased by 102 percent during 1999-2007.
Pakistan, he said used to produce 3 million electric fans a year in 1999 and also use to export 50,000 electric fans and today the Electric fan industry is producing over 6 million electric fans and exporting 2 million fans.
The Special Secretary to Finance Ministry said that the availability of electricity even far flung rural areas has enable the poor and lower middle class to buy electric items such as electric fans, deep freezers, refrigerators and television sets.
The production of television sets has increased from 128,000 in 1998-99 to over 900,000 today, he remarked.
This, he said also suggests that the benefits of the economic growth are trickling down to the lower level as many poor are joining the ranks of middle class.
Dr Ashfaq said that number of cell phones (an indicator of the level of prosperity) increased from 0.2 million in 1998-99 to 69 million by September 15,2007) adding the cellular phone density increased from 0.19 percent to 43 .0 percent in same period September 15. 
He said the rich in Pakistan always possessed cars and the country could produce 32,000 cars in 1998-99 and today, the middle class is in a position to afford cars and as such the number of cars produced in 2006-07 increased to around 200,000.
Dr Ashfaq said that the middle class generally could afford motorcycle in Pakistan and accordingly the country produced 43167 motorcycles in 1998-99.
Today, he said the size of the middle class has grown and the country has produced 839,224 motorcycles in 2006-07 which suggests that poor person who use to afford bicycle are now affording motorcycles and in other words the poor have graduated to middle class.
Accordingly, he said the number of bicycles produced in the country has declined from 504,000 to 486000 during the same period. - APP


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## Spring Onion

*Chines Bank to provide $100m credit line to NBP*


BEIJING: The China Development Bank (CDB) here Friday signed a MoU with NBP to provide US$ 100 million credit line to NBP for project financing in Pakistan.
The credit line, according to NBP sources here, would be utilized for financing projects in power, fertilizer, chemical, telecom, oil and gas and infrastructure.
Both banks have also agreed to identify viable projects in Pakistan to be financed jointly.
The Credit line will be available to NBP next month and the tenor of credit line is 8 year. The MoU was executed by SEVP of NBP Shahid Anwar Khan and General Manager of CDB Xia Qiang. 
It may be noted that the NBP and CDB have been cooperating with each other since 2005 following its Chairman Chen Yuan visit to National Bank of Pakistan (NBP) head office where he held meeting with its President Ali Raza. 
Shahid Anwar Khan, speaking on the occasion pointed out that the execution of MoU shows CDBs long term commitment towards development of Pakistans industrial sector in partnership with NBP. 
The CDB is one of the three largest State Policy banks of China and NBP is largest and most profitable commercial bank of Pakistan. - APP


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## Neo

*Confidence-building measures ​* 
Brokers ask Aziz to abolish Capital Gains Tax, lift CFS cap

Saturday, November 10, 2007

KARACHI: The leading brokers and KSE board of directors on Friday proposed to the prime minister to abolish or at least further extend imposing of Capital Gains Tax on shares business to restore investors confidence that has sank after proclaiming of emergency rule in the country.

This proposal was made at a meeting held at Governor House. The meeting was summoned by Shaukat Aziz Prime Minister of Pakistan to take brokers community into the confidence following the proclamation of emergency rule in the country.

Aziz asked brokers to send their verbally proposed Confidence Building Measures (CBMs) in writing including CGT exemption, which brokers said they would do so in a day or two.The period of CGT exemption is to expire on June 30, 2008. The representatives of the stock exchanges have, therefore, requested PM to abolish capital gain tax in shares business forever or extend the exemption date at least for a further period, Arif Habib, former chairman-KSE informed.

To make their argument acceptable, brokers cited that there was no capital gain tax imposed in the regional equity markets including Singapore, Malaysia, Hong Kong, Sri Lanka and etc.Among the other proposed confidence building measures, the enhancing of existing official cap on Continuous Funding System (CFS), which is currently set at of Rs55 billion, would also give its immediately result in setting equity market back on track, Dawood Jan Muhammad, member-director of KSE board told.

He added that meeting also discussed the early introduction of CFS MK-II product by SECP in the market, which would be providing the unlimited liquidity in leverages market.After attending this meeting, Razi-ur-Rehman, Chairman, Securities and Exchange Commission of Pakistan (SECP) told to The News that Commission had almost finalized the CFS MK-II product and would launch it within next four to six weeks, he replied and added that a fewer modalities in this regard would be finalized on Saturday in another separate meeting between SECP and KSE brokers.

The brokers and bankers also requested prime minister to enhance the cap of 20 per cent of banks capital investment in the equity markets. On the other hand, Aziz urged the representatives of banks to play their active part in improving the local bourses and appear active in accumulations of stocks in the current situation, sources disclosed.

Brokers also demanded of the government to bring the Demutualisation Ordinance 2007 in place to speed up corporatisation and demutualisation process. The meeting, however, did not discuss the KSE worst ever performance recorded on November 05, which SECP had ordered to probe in black Monday, nor took up the issue of withdrawal of funds from the equity and financial markets by the overseas fund managers.

Shaukat Aziz ensured the meeting participants that the next general elections would be held by February 2008. They (brokers) would hear a couple of other good news in this regard including the announcement of elections schedule in two to four days, sources said.

Justifying the imposition of emergency rule in the country, Aziz told the meeting that to control the law and order situation and to keep the democratic process in transition it had become compulsory to do so.

Primer praised the economic performance and remained confident to achieve the set target of seven per cent GDP growth this fiscal year despite historical price-hike in the international oil prices and added that Pakistan has sufficient forex reserves to deal with the situation.

Dr. Shamshad Akhter, Governor of State Bank of Pakistan; Dr. Salman Shah, Advisor to PM on Finance; officials of National Investment Trust (NIT), Financial Institutions and other banks were also among the meeting attendees, it was learnt.

Confidence-building measures


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## Neo

*10.6m jobs created in seven years: Dr Ashfaque ​* 
Saturday, November 10, 2007

ISLAMABAD: Strong economic growth on sustainable basis has created enormous employment opportunities as over the last seven years (2000-2006) the economy generated 10.65 million new jobs. In comparison, the economy could create only 4.6 million jobs during the period 1994-1999.

This was stated by Special Secretary Finance and Debt Office Director General Dr Ashfaque Hassan Khan in an exclusive interview with APP on Friday. He said over one million jobs had been created in the information technology and telecom sector alone in the last three years.

Pakistans economic performance over the last several years has been impressive and sound macro-economic management and wide-ranging structural reforms have contributed to high real GDP growth, a reduction in debt burden and an improved business climate, Dr Ashfaque said.

He said adherence to pro-poor policies had helped lower poverty rate and enhanced the income of the people. Dr Ashfaque said real GDP growth accelerated to an average of seven per cent per annum over the last five years which put Pakistan into the league of fastest growing economies in the Asian region.

As a result of strong economic growth, over US$16 billion foreign exchange reserves, stable exchange rate and declining debt burden, the investment climate in the country improved and Pakistan attracted $8.4 billion foreign investment in 2006-07, he added.

He said strong economic growth implied higher collection of tax revenues and in the last eight years (1999-00 to 2006-07), the Federal Board of Revenue (FBR) collected additional tax revenues of Rs538 billion.

He said higher economic growth also more than doubled the countrys per capita income, which was an indicator of average level of prosperity. He said per capita income increased from $438 in 1998-99 to $925 in 2006-07, a rise of 111.2 per cent.

Dr Ashfaque said increase in per capita income along with enormous job opportunities led to sharp reduction in poverty. In 1998-99, 30.6 per cent people were living below the poverty line. In 2004-05, only 23.9 per cent people were living under the poverty line, he remarked.

He said economic recovery of the last several years not only created more jobs and reduced poverty, but it also improved living standards of the people. He further said electric fans production increased by 102 per cent during 1999-2007. Pakistan, he said, produced three million electric fans in 1999, of which 50,000 fans were exported, but today the electric fan industry is producing over six million fans and exporting two million. 

10.6m jobs created in seven years: Dr Ashfaque


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## Neo

*Economy on solid base: PM ​* 
Saturday, November 10, 2007

KARACHI: Prime Minister Shaukat Aziz said on Friday that the governments consistent and transparent policies have established the economy on solid foundation while attracting substantial investment in the country both from local as well as foreign investors. 

Talking to a delegation of Overseas Investors Chamber of Commerce and Industry at Governors House, the premier said as a result of reform agenda and macroeconomic policies the rate of investment has reached all-time high and foreign investments this year hit the level of $8.4 billion.

He said a strong economy has spawned an ideal climate for investment in the country. The reform agenda had been widely acclaimed by multi-lateral institutions and the investors community, he said adding that the robust economic backdrop presents a strong case for investment in the infrastructure of the country. 

Our strategy for improving investment climate in the country is multi-pronged marked by financial sector taxation reforms, dismantling of archaic procedures, better enforcement of civil contracts, documentation of property rights, infrastructure development and above all ensuring consistency and continuity of government policies.

He said because of high growth during the last five years and expansion in various fields the middle class is rapidly growing and demand for consumer goods is increasing. He said the country offers vast investment opportunities in energy, oil and gas, mining, engineering, automobiles, infrastructure development, information technology and telecom, financial and agriculture sectors. 

Economy on solid base: PM


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## Neo

*15pc decline in export of rice, carpet​*
ISLAMABAD, Nov 9: Pakistans export of traditional products  rice, carpet, leather, engineering and footwear  declined by an average 15 per cent during the first quarter (July-September) of the fiscal year 2007-08 over the corresponding period of last year.

Official figures, compiled by the commerce ministry, showed that export of these products would remain short of the respective targets announced in the last trade policy as the same products from other countries, including India and China were replacing Pakistani products in the international market.

The commerce ministry has turned blind eye to these sectors, as focus of governments policies was just to doll out subsidies to textile sector for the last two-and-a-half years.

While exports from these sectors were steadily on the decline, many industries providing jobs to thousands of people were either declared sick or closed operation.

The statistics showed that negative growth in export of these products in the first two months (July-August) was around 10 per cent this year over the same period last year.

This indicates that percentage decline in export of these products will grow further in the months ahead if government did not take any remedial measures.

Product-wise details showed export of rice dipped by 2.41 per cent during the first quarter of the current fiscal year over last year.

Of these, export of non-basmati was down by 39.05 per cent. However, export of basmati rice rose by 20.53 per cent due to greater demand of the commodity in international market.

The carpets, rugs and mats exports recorded a negative growth of 4.23 per cent; and leather goods (garments and gloves) by 18.42 per cent during the period under review over last year.

Of the leather goods export of leather garments declined by 2.43pc, leather gloves 53.21pc and other leather manufacturers 42.55 pc.

Export of footwear declined by 6.92 per cent during the months of June-Sept 2007 over same months of last year. Of these, export of leather footwear dipped 17.43 per cent, canvas footwear 40.16 pc. However, other footwear recorded a growth of 79.08 per cent.

The statistics showed that export of engineering goods declined by 12.71 per cent, auto parts 24.51 per cent, furniture 13.72 per cent during the period under review over last year.

A further analysis showed that export of surgical instruments and medical equipment increased by 8.97 per cent, cutlery goods 44.56 per cent, gur and gur products 18.42 per cent, cement 0.19 per cent, molasses 18.37 per cent, jewellery 254.53 per cent, and gems 201.23 per cent during the period under review over the last year.

The export of sport goods was up by 7.53 per cent during the period under review over last year.

Of these, export of footballs increased by 16.80 per cent and gloves 184.74 per cent. However, export of other footwear declined by 50.06 per cent during the same period.

Among the primary commodities, export of fish products declined by 24.36 per cent, fruits 6.84 per cent, leguminous vegetables 29.27 per cent, tobacco 7.12 per cent, and all other items 59.51 per cent. However, export of vegetables was up by 88.81 per cent, spices 1.99 per cent, oil seeds 84.78 per cent, and meat 72.98 per cent.

15pc decline in export of rice, carpet -DAWN - Business; November 10, 2007


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## Neo

*Lack of shipping industry in Pakistan: Foreign shipping firms handle 95% of trade​*
KARACHI: Despite having a full-fledged Ministry for Ports and Shipping, with a minister and a secretary, the government has not yet declared shipping business as an industry, a leading shipping agent told Daily Times on Friday.

A leader of Pakistan Shipping Agents Association (PSAA), who is also a life member of FPCCI and SAARC Chambers, who requested not to be named, told this scribe that Pakistans current trade volume was about $50 billion per annum with imports worth $30billion and exports around $18 billion. 

Only five percent of the trade volume was being handled by domestic shipping businessmen while the remaining 95 percent was being handled by foreign enterprises, he said. The annual approximate freight charges are of about $12.5 billion.

Foreign shipping companies have 95 percent of the market share while the Pakistan National Shipping Corporation (PNSC) gets just five percent, he said, adding that this is because PNSC has got only 12 to 15 cargo ships, which all are outdated and have reached their scrapping time. 

PNSC chiefs, he said, were nominated from Islamabad and mainly hailed from the armed forces were incompetent as they lacked the technical knowledge involved in the shipping business.

He said during 1970s, there were some 70 to 80-cargo ships with PNSC and private businessmen but after being nationalised, the private sector is reluctant to remain involved in the shipping business. 

Detailing the deteriorating conditions of the shipping sector, he said the shipping sector is not considered for bank credit like other businesses in Pakistan. A cargo ship normally costs up to $30 or $40 million. Oil business forms a large part of the chartering business but the government had given the PNSC with the first right of refusal. 

The PNSC could not take up the entire load of the business therefore foreign chartering services take up oil shipments. The government should allow level-playing field to all hands in shipping business but unfortunately the case is quite opposite to the needs of domestic businessmen. 

The Karachi Shipyard and Engineering Works (KSEW) has not manufactured more than eight ships since 1960, when it was set-up. Like other institutions related to the shipping business, KSEW too was headed by people not competent to supervise its functioning. 

He said government should privatise the PNSC but the process of privatisation must be neat and clean and it should not be given to hands of folklores. It is the need of the hour that the government should invest at least one billion dollars and give the shipping business the status of industry. 

Coming to the Karachi Port Trust (KPT), he pointed out that the KPT Chairman, Vice Admiral (Retd), Ahmed Hayat has been incumbent for the last seven years although the official tenure for a single chairman was limited to three years. 

A few of KPT berths had collapsed in early of August this year due to lack of proper care. Unfortunately, the KPT is engaged in developmental works outside the port area, making roads and under passes to please others. The KPT needs to be modernised, as it is the backbone of economy, he felt. 

It is worth mentioning here that the shipping business was limited to only a few players and the Parsi community was mainly engaged in the business with just two or three ships in 1947. The PNSC was established in 1960s. The number of ships in both PNSC and private sector were around 90. In 1972, the government nationalised all private ships. At present, some 60 businessmen are in shipping business directly while it becomes about 100 when those who are indirectly linked to shipping business, are counted. The business employs about 5,000 people directly while 10,000 people serve as its indirect manpower. Major foreign ship chartering companies in Pakistan include MAERSK-SEALAND (Europe), HANJIN SHIPPING (Japan), MALAYSIAN SHIPPING (Malaysia), WOCL (Singapore) and AMERICAN PRESIDENT LINE (USA).

Daily Times - Leading News Resource of Pakistan


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## Neo

*Development of mining sector: Pakistan seeks assistance from World Bank​*
ISLAMABAD: The government has sought financial help from World Bank for the development of mining sector in Pakistan and a delegation of World Banks Global Mining Group is expected to visit Pakistan next week.

A high level official of Petroleum and Natural Resources Ministry told this scribe that World Banks Global Mining Group works to provide funding for mining sector and renewable energy including wind, solar, biomass, geothermal, hydropower and energy efficiency projects. Official said Pakistan may enter into an agreement with the World Bank Group regarding the financing for mining sector and Petroleum and Natural Resources ministry has also sought consultation from Finance Division and Law Division in this regard.

Official said the World Bank group would also be asked to finance renewable energy especially for generating coal, solar and wind power in the country.

He said government is fully committed to making the mineral sector in Pakistan one of the most profitable for the country and during the current fiscal year the mining sector has registered a growth rate of 5.6 percent as against 4.58 percent of last year. The increased growth was witnessed due to strong growths recorded in magnetite of 30 percent, dolomite 26.1 percent and limestone 25.2 percent. This sector needs financing and the World Bank Group can play an important role in this regard. Pakistan may also seek technical assistance for the development of mining sector from World Bank Group, the official said. Mineral industry in Pakistan shows that over the last few decades this sector has been allocated very small amount as 0.45 percent to 2.46 percent of the total public sector expenditure since first five-year plan reflecting its contribution to Gross National Product (GNP) of just around 0.5 percent. This sector needs more investment and financial as well as technical assistance for the development.

The government has already started various initiatives, which is evident from the discovery and development of world-class copper-gold deposits in Chagai; Balochistan by Australian Firms that would fetch $500 million to $600 million per year during the lives of these mines.

A delegation of World Bank Group would also visit Quetta where it would be updated about the current status of mining sector in the province of Balochistan, the official said, adding that the delegation would be briefed about Iron Ores reserviours in Balochsitan that has the potential of 1.7 million tonnes iron ores import costing about Rs 3.2 billion per year. Development of Thar coalfield, one of the largest good quality lignite deposits in the world, on completion, would provide additional source of energy, the official added. The government is also working on exploration of minerals including energy minerals (coal), agriculture minerals (rock phosphate, gypsum), metallic minerals (iron ores, copper, gold, zinc-lead, chromite, and antimony), refractory minerals (refractory clays, magnesite, chromite, silica sand, and dolomite) and glass and ceramic minerals (kaolinchina clay, nephyeline syenite, silica sand).

Daily Times - Leading News Resource of Pakistan


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## Always Neutral

Neo said:


> *Lack of shipping industry in Pakistan: Foreign shipping firms handle 95% of trade​*
> KARACHI: Despite having a full-fledged Ministry for Ports and Shipping, with a minister and a secretary, the government has not yet declared shipping business as an industry, a leading shipping agent told Daily Times on Friday.
> 
> 
> Daily Times - Leading News Resource of Pakistan



Dear Neo,

No a good sign as during hardtimes overseas shipping lines will desert / be unreliable. Time for the Govt. to set it right.

Regards


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## Neo

*Forex reserves rise to $16.372 bln: SBP ​* 
KARACHI (updated on: November 10, 2007, 15:38 PST): Foreign exchange reserves were slightly higher at $16.372 billion in the week ending on Nov. 3, from $16.354 billion in the previous week, the State Bank of Pakistan (SBP) said on Saturday.

Reserves held by the State Bank of Pakistan rose to $14.166 billion, from $14.119 billion from a week earlier, however those held by commercial banks were to $2.206 billion from $2.235 billion, the SBP said in a statement.

Pakistan's foreign exchange reserves have grown steadily over the past few months because of rising foreign investment inflows and higher remittances from Pakistanis abroad


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## Neo

*ADB to fund 171 megawatts gas-fired plant near Daharki ​* 
ISLAMABAD (November 10 2007): The Asian Development Bank (ADB) has approved a gas-fired power plant for Pakistan that would provide additional low-cost electricity to consumers to address the looming power shortage. The project involves development of a 171-megawatt combined cycle low Btu (British thermal unit) gas-fired power plant, which is expected to supply base load power to the national grid.

Btu is a basic measure of thermal energy. The facility will be located in Daharki, District Ghotki, in Sindh, and gas would be supplied from the nearby Mari gas field. The plant would increase the net power generation capacity which should help reduce power demand needed for economic growth. About 60 percent of Pakistan's population has access to electricity from the national grid. The rest use kerosene, wood and other bio-fuels for lighting, cooking and heating.

The project will promote efficient management of natural resources, as it would tap an otherwise idle gas resource and pave the way for low-cost generation given the proximity of the plant to the gas field. The project cost is approximately $200 million, which would be the first 'gas only' plant developed under the 2002 power policy of Pakistan and is expected to begin commercial operations in the fourth quarter of 2009.

A growing population and thriving economy need more power. The average annual electricity demand of Pakistan is currently increasing by 11 percent, with urban areas experiencing significantly higher demand growth. However, power supply is not in conformity with the demand. ADB estimates that Pakistan needs to add about 2,000 megawatts every year to avoid shortages in future.

ADB is a major source of external investment in the energy sector in Pakistan, having provided about one-third of the total external sources. "The proposed assistance is consistent with the energy strategies of ADB and the government of Pakistan.

In addition to its long-term partnership with the government in the power sector arising from its public sector activities, ADB is also, since 1996, providing private-sector loans and investments," said Robert Bestani, Director-General of ADB's Private Sector Operations Department.

ADB has approved an equity investment of up to $2.75 million and guarantee for a $44 million loan for the project holding company. Subject to approval of concerned authorities, both the guaranteed loan and the equity investment will be contributed by the holding company as equity in Foundation Power Co Daharki Ltd, which will own the power plant.

Proceeds from the equity investment and guaranteed loan will be partially used for designing and constructing the project. A consortium of local and international banks has provided $150 million in debt financing for the project.

"In addition to the positive development impacts of the gas-fired power plant itself, the proposed transaction is designed to encourage equity investors to again look at the Pakistan generation sector as an attractive investment opportunity, while not increasing costs for the consumers or the government.

Further, it is designed to draw in future offshore funding for power project financing. Such investments are crucial to complement the government's own efforts in the sector," said Martin Tornberg, an Investment Specialist with ADB.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Granite exploration licence tied to $40 million investment ​*
KARACHI (November 10 2007): Sindh government will grant around 60 percent of granite exploration licenses and mining leases in Nangar Parkar to only those companies which invest at least $40 million in projects.

Officials in Sindh Mines & Mineral Development Department told Business Recorder here on Friday that the department had taken this decision after promulgation of Sindh Mining Concession (Granite) Order 2007, for the grant of exploration licenses and mining lease of granite in Thar. The sources said that 20 percent of granite exploration licenses would be granted to local investors while same number of licenses were reserved for firms whose leases were cancelled.

All the earlier granite leases have been cancelled as the lessees were processing granite by using explosive material, which badly damages the deposits, they said. "Under the new policy no firm would be allocated more than 50sqm area for mining." The sources said that firms were invited to submit their formal request to obtain the site plan of the required area.

Sindh government, after demarcation of the area by Directorate, Mines and Mineral Development and technical personal of the concerned company will start allocating area to the companies. In the initial phases the concerned firms would determine suitable quality and quantity of granite which could be economically and safely mined, handled and transported, the sources said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Overseas Chamber praises Pakistan's economic policies ​*
KARACHI (November 10 2007): Prime Minister Shaukat Aziz said here on Friday that the government's consistent and transparent policies have established the economy of Pakistan on solid foundation while attracting substantial investment in the country, both from local and foreign investors.

Talking to a delegation of Overseas Investors' Chamber of Commerce and Industry at Governor's House here, he said that as a result of the reform agenda and macroeconomic policies the rate of investment in the economy had reached all time high and foreign investments this year touched the level of $8.4 billion.

The Prime Minster said that a strong economy had created an ideal climate for investment in Pakistan. The reform agenda initiated by the government had been widely acclaimed by multilateral institutions and the investor community, he said, adding that the robust economic backdrop presented a strong case for investment in the infrastructure of the country.

He said: "Our strategy for improving investment climate in the country is multi-pronged, marked by financial sector taxation reforms, dismantling of archaic procedures, better enforcement of civil contracts, documentation of property rights, infrastructure development and, above all, ensuring consistency and continuity of government policies".

He said that because of high economic growth during last five years, and expansion in various fields, the middle class was rapidly growing and demand for consumer goods was increasing.

He said that apart from a business-friendly policy environment, Pakistan was offering vast investment opportunities in energy, oil and gas, mining, engineering, automobiles, infrastructure development, information technology and telecom, financial and agriculture sectors. The government, he said, had also made progress in reducing the cost of doing business, which was evident from the improved ranking of Pakistan as per the Global Competitiveness Index. He said that the government was focussing on the National Trade Corridor program by developing road and rail networks across the country as it would reduce the cost of doing business while reducing time and increasing efficiency.

The delegation expressed satisfaction over the economic progress made by Pakistan in recent years and appreciated the economic reforms introduced by the government. The economic opportunities and potential in Pakistan, they said, were extensive and the atmosphere was conducive for foreign and local investors.

Sindh Governor Dr Ishrat ul Ibad Khan, Chief Minister Dr Arbab Ghulam Rahim, Advisor to PM on Finance Dr Salman Shah, Adil Siddiqui, Minister for Commerce and Industries, State Bank Governor Dr Shamshad Akhtar and SECP Chairman Razi ur Rahman were also present in the meeting.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*CDB to give $100 million to NBP for project financing ​*
BEIJING (November 10 2007): The China Development Bank (CDB) here on Friday signed a MoU with National Bank Of Pakistan (NBP) to provide 100 million dollar credit line to NBP for project financing in Pakistan.

The credit line, according to National Bank Of Pakistan (NBP) sources here, would be utilised for financing projects in power, fertiliser, chemical, telecom, oil and gas and infrastructure. Both banks have also agreed to identify viable projects in Pakistan to be financed jointly. The Credit line will be available to NBP next month and the tenor of credit line is 8 years. SEVP of NBP Shahid Anwar Khan and General Manager of CDB Xia Qiang executed the MoU.

It may be noted that the NBP and CDB have been co-operating with each other since 2005 following its Chairman Chen Yuan visit to NBP head office where he held meeting with its President Ali Raza.

Shahid Anwar Khan, speaking on the occasion pointed out that the execution of MoU shows CDBs long-term commitment towards development of Pakistan's industrial sector in partnership with NBP.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Government gives high priority to development in Balochistan: Shaukat ​*
KARACHI (November 10 2007): Prime Minister Shaukat Aziz on Friday said the Pakistan Muslim League (PML) government and its allies have always given high priority to development in Balochistan by allocating record funds.

Talking to Balochistan governor Owais Ahmed Ghani and Chief Minister Jam Mohammad Yousuf who called on him at the Governor's House, the Prime Minister said the manifesto of PML and allies is on continuation of development activities in the far flung areas of all the provinces especially Balochistan.

The Prime Minister said the government has prioritised development of a communication network in Balochistan that is essential for realising the full economic potential of the province.

He said the communication network would also facilitate expansion of opportunities and provision of necessities of life to the people at their doorstep. The Prime Minister said that Balochistan has immense potential in tourism, fisheries, livestock, agriculture, oil and gas, and minerals and mining sectors, which were being exploited. He said the coastal belt was also being developed to provide better economic opportunities to the people living in these areas.

The Prime Minister said the government was focusing on providing employment opportunities to the youth of Balochistan and their quota in the federal services has been further increased to six percent to give them better representation in government jobs. Governor Owais Ahmad Ghani briefed the Prime Minister on the law and order situation, the status of federally funded mega projects in Balochistan and other matters relating to the province.

The Chief Minister updated the Prime Minister on the efforts to mobilise the party in the province for the upcoming general elections. He said that development agenda and improved standard of living was recognised by the people as a major contribution of PML government to improve the future of the people of Balochistan. Chief Secretary Balochistan also attended the meeting.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*500,000 housing units needed annually ​*
KARACHI (November 10 2007): Considering the shortage of about six million housing units, government has declared housing sector as priority area for expansion to overcome housing scarcity across the country.

Sources told Business Recorder here on Friday that around 500,000 housing units were needed annually, however, housing sector managed to build 300,000 housing units per annum, causing an annual shortage of 200,000 housing units every year and the deficiency was increasing gradually, due to the rapid increase in population.

Keeping above factor in view Federal Ministry of housing has chalked out a policy to provide shelter to the needy with the aim to overcome the shortage of houses besides generating more employment opportunities across the country. The sources said that the Federal government was facilitating the families through these housing schemes to meet the demand of increasing population.

"Some issues need to be resolved, that are hindering implementation, but once we overcome these, economic activities will increase and generate immense job opportunities in the construction sector", they said.

They further said that large employment opportunities had not been discovered yet in construction sector because it had a largest links with other industries, which was an indication of very high growth and employment potential of the sector.

The industrial linkages include bricks, cement, steel, paints, varnishes, electricity cables and fittings, sanitary ware, tiles, mining (construction stones, marbles, and other ceramic materials), electronics, household appliances and other construction material industries, they added. Due to inflation and poverty, ownership of house by many households become 'dream' and majority of them are compelled to spend their lives in slums, where improper infrastructure are hazarding for their health besides causing to augment encroachments and scatter it in all major cities, they added.

They said that government had started development scheme through City Development Authority (CDA) by which plots had been provided to low-income groups in private and public servants with proper planned infrastructure besides facilitating them to build houses with all amenities by housing loans.

It may be mentioned here that City District Government Karachi (CDGK) had launched three development schemes in collaboration with Sindh government with the name 'Taiser Town' and plots had been allotted fairly and in a affordable price.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*ADB to invest in Fauji Foundations power plant: Extra 2,000MW needed annually​*
ISLAMABAD, Nov 9: The Asian Development Bank will become an investment partner with the Fauji Foundation through a combination of $47 million investment and loan to set up a 171MW gas-based combined cycle power project at Daharki in Sindhs Ghotki district.

The ADB will extend a commercial loan guarantee of $44 million to the Fauji Foundation and make a direct investment of $2.75 million to become a minority shareholder. The plant will provide additional low-cost electricity to consumers, said an ADB announcement.

According to the banks estimates, Pakistan needed an additional power generation of 2,000MW every year to avoid power shortages.

The combined cycle project will use low-BTU (non-pipeline quality) gas to feed electricity to the national grid. Gas for the project will be supplied from nearby Mari gas fields of Mari Gas Company Limited (MGCL), also owned by Fauji Foundation. The plant will increase the net electricity generation capacity of Pakistan and help reduce constraints on economic growth caused by power shortages. About 60 per cent people have access to electricity from the national grid. The rest use kerosene, wood and other bio-fuels for lighting, cooking and heating.

The project will promote efficient management of natural resources because it will tap an otherwise idle gas resource and pave the way for low cost generation given the proximity of the plant to the gas field. The project, to be set up at an estimated cost of $200 million, will be the first gas-only plant developed under the 2002 power policy and is expected to begin commercial operations in the fourth quarter of 2009.

Pakistans average annual electricity demand is increasing by 11 per cent, with urban areas experiencing significantly higher demand growth.

The ADB is a major source of external investment in the energy sector in Pakistan, having provided about one-third of the total finance from external sources.

The proposed assistance is consistent with energy strategies of the ADB and the government of Pakistan. In addition to its long-term partnership with the government in the power sector arising from its public sector activities, the bank is also, since 1996, involved in the sector through private-sector loans and investments, said Robert Bestani, director-general of the ADBs Private Sector Operations Department.

Subject to approval of authorities concerned, both guaranteed loan and equity investment will be contributed by the holding company as equity in Foundation Power Company Daharki Ltd which will own the plant. Proceeds from the equity investment and guaranteed loan will be used to partially fund the costs of designing and constructing the project.

A consortium of local and international banks has provided $150 million in debt financing for the project.

ADB to invest in Fauji Foundations power plant: Extra 2,000MW needed annually -DAWN - Top Stories; November 10, 2007


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## Neo

*Gas export contract finalised with Iran​*
TEHRAN, Nov 10: Pakistan and Iran have finalised a contract for a gas export deal scheduled to be signed within a month.

The content of the peace pipeline contract has been finalised and all the points prepared by the two sides legal experts have been re-read and agreed by the two sides, Irans deputy minister in charge of the project, Hojatollah Ghanimifard, was quoted as saying by the Iranian oil ministrys news service Shana on Saturday.

The remaining points which are technical issues... must be studied within a month to make the contract ready for the simultaneous signing by the heads of the two countries, he said.

The conditions of a contract with India will be exactly the same as with Pakistan. If the Indians are not too late, based on the current market conditions, the price terms will not change, he said.

Mr Ghanimifard stressed that Iran had not received any official statement from India indicating that it had withdrawn from the project.

Talking on the sidelines of talks in the National Iranian Oil Companys guesthouse, Petroleum and Natural Resources Secretary Farrukh Qayyum said Pakistan preferred to meet its gas needs through Iran and it would study other options in next stages.

Given the growth of domestic economy and the development of local industries, the demand for gas has considerably risen in Pakistan during the recent years, he told reporters.

The government would study gas imports from Qatar and Turkmenistan after it finalised the peace pipeline with Iran, he said.

He expressed his satisfaction on the ongoing talks, saying that the two sides had reached an agreement on many points.

Both sides will review the gas pricing mechanism when there is a change in the correlation between Japan LNG and Japan crude oil mix.AFP/APP

Gas export contract finalised with Iran -DAWN - Top Stories; November 11, 2007


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## Neo

*Meagre growth of 1.5 pc in car sales during July-October​*
* Growth in car sales has been coming down since the government allowed import of used cars

KARACHI: Growth in sales of cars in the country declined to 1.5 percent in July-October this year compared to 7.63 percent growth recorded last year. 

The data released by Pakistan Automotive Manufacturing Association (PAMA) released here on Saturday indicated that car sales for the first four months of this fiscal stood at 51,454 units, showing a nominal growth of 1.5 percent when compared to 50,707 units in July-October FY07. 

The growth in car sales has been coming down since the government had allowed import of used cars. Although the government has now limited the import of used cars, by placing a restriction on their age, the local companies have still failed to grow at an impressive pace. Two years ago the car industry was enjoying double-digit growth. 

The government had allowed import of used cars in order to bring to an end the charging of premium by the car assemblers and problem of late delivery. The car assemblers used to charge tens of thousands rupees more than their declared prices for immediate delivery. Otherwise the customers would have to wait for many months to get their cars despite making full payment. Since the assemblers would not deliver cars instantly after payment by the customer, they had a large amount of money on their disposal, which they did not have to spend anywhere. They used to earn interest on that money by keeping it in banks. And then there were a huge number of buyers available to them because banks having huge liquidity were offering auto loans very liberally. Now that banks have had to push interest rates up as a result of monetary tightening by the central bank, fewer people are inclined to buy cars with credit. This has brought the demand for cars drastically down. However, Bilal Hameed, an analyst at JS Research, said in his report on auto industry that the sale of local cars would grow after imposition of age limit on used cars imports. 

He expected tjat the total volumetric sales to reach 363,000 units by FY2012. 

Within these vehicles, sales of LCVs would grow to 69,000 units and cars to 293,000 units by FY2012, he said.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Cotton target set down to 12.8m bales​*
ISLAMABAD: The country is expected to miss the set target of cotton crop as governments updated estimates shows production of only 12.8 million cotton bales against initial target of 14.14 million bales due to mealy bug attack during the current season.

An official told Daily Times Saturday that the government was hoping earlier that the cotton crop would be 13 million bales but now according to the estimates the country would able to achieve 12.8 million cotton bales during the current season due to the bug attack. The situation would be under discussion in the meeting of National Assembly Standing Committee on Food, Agriculture and Livestock that would meet on Monday in Parliament House under the chairmanship of Makhdoom Ahmed Alam Anwar to review the current situation of the cotton crop. 

The committee would also raise the issue of wheat support price that the government has failed to set so far due to tussle between different ministries.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Import of textile machinery drops by 35 percent ​*
KARACHI (November 11 2007): The import of textile machinery has declined by 35 percent during the first quarter of 2008 fiscal year, as the industrialist are reluctant to invest in the textile sector due to persistent crisis in the sector, industrialists told Business Recorder.

"High cost of doing business has brought the country's textile industry into severe crisis, which froze fresh investment," they added. Referring to the promises by the Minister for Textile and other officials, they said the government had not announced relief package to salvage the industry. While, the Federal cabinet had approved the first-ever textile policy, but it had not been announced due to hurdles by the some other departments, they said.

"The government is not taking serious notice of high costs of doing business, which put a serious impact on the growth of textile sector. In this situation, we are not able to compete with our counterparts in the region," they said.

During the first quarter of the 2008 fiscal year, the country has imported textile machinery worth 100.561 million dollars as compared to 154.695 million dollars during the corresponding period of 2007 fiscal year, showing a decrease of 54.134 million dollars during July-September.

They said that the textile machinery imports during September 2007 also dipped by 39 percent to 27.392 million dollars as against the 44.656 million dollars during same period of last fiscal year.

"Due to the uncertain situation of the textile export and the government policy, the industrialists have stopped new investment to expand their plants," said a leading exporter. He said now the textile industrialists were concentrating on modifying their existing plants to meet the demands of the international buyers. He said if the government did not implement the textile policy, the import of textile machinery would further decline in the next months.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan to become largest CNG user in world by next year ​*
KARACHI (November 11 2007): Pakistan is expected to become the largest user of CNG in vehicles by June 2008 with further increase in the number of CNG filling stations and more and more vehicles being converted on this environment friendly fuel.

These views were expressed by speakers at the inaugural ceremony of the 4th International Conference and two-day Exhibition of CNG machinery and tools (Conex-2007) being organised by National Forum for Environment and Health (NFEH) in collaboration with Federal Ministry of Environment, CNG Stations Owners Association of Pakistan (CSOAP), CNG Dealers Association and monthly Energy Update at Expo Center here on Saturday.

State Minister for Petroleum and Natural Resources Mir Naseer Mengal inaugurated both the events. The theme of the conference was "Investment opportunities and New Challenges on the road." The speakers pointed out that at present the number of CNG filling stations has increased to 1,847 with 1.65 million vehicles using Compressed Natural Gas (CNG) as a fuel.

Speaking in his inaugural address, the State Minister for Petroleum and Natural Resources said that the government would continue its support for promotion of CNG in the country. Kalim Siddiqui, Executive Director, Pakistan State Oil (PSO) said that half of Pakistan's energy needs were being met by natural gas, however, its use in vehicle is only 3.5 percent besides CNG and added that the usage of Liquefied Petroleum Gas (LPG) is also increasing in the country.

Most of the industries like cement, fertilisers and thermal power stations are now using natural gas as a fuel. He said enough gas was available in the country, whereas experts forecasted that the availability of about 28 trillion cubic feet gas for Pakistan.

Siddiqui hoped that after Iran-Pakistan-India and Turkmenistan-Afghanistan-Pakistan gas pipelines, the future needs of gas could be met. He said gas pipeline structure in Pakistan is the best in the world.

Malik Khuda Bukhsh, Chairman, CNG Station Owners Association of Pakistan (CSOAP) demanded the government to close down the road-side workshops, which were using substandard CNG kits and cylinders, which caused cylinders explosions, he lamented.

He appreciated the role of Hydrocarbon Development Institute of Pakistan (HDIP), Oil and Gas Regulatory Authority (Ogra) and Ministry of Petroleum and Natural Resources for promotion of CNG in Pakistan. Malik said after Argentina, Pakistan has now become the second largest user of CNG in vehicles. He hoped that Pakistan would soon surpass Argentina and become the top user of CNG in vehicles.

Javed Nazeer, Senior Executive Director, Oil Gas Regulatory Authority said that the government had provided a level playing field to all players in the CNG sector. He pointed out that Ogra has simplified the procedure for obtaining licenses to set up a CNG filling station.

Naeem Qureshi, President National Forum for Environment and Health (NFEH) said that objective of all these events were provided the latest information about developments and technical advancements in the CNG sector from all over the world. A large number of company's representatives, participants and experts were present on the occasion.-PR

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan, Turkey, Iran ties: Prime Minister underlines progress in transport links ​*
ISLAMABAD (November 11 2007): Prime Minister Shaukat Aziz stressed need for progress in establishing transport links between Pakistan, Turkey, Iran through land, air, sea to boost trade and economic activities as these are major drivers for building dependable relations.

He said this while talking to ambassadors of Turkey Engine Soysal and Iran, Mashaalah Shakeri on Saturday in Islamabad. He said Pakistan's relations with Turkey and Iran are based on shared faith, culture, history, geography including people to people contact, which combines to add depth to trilateral ties.

The challenges confronting the region today demand greater unity and solidarity among three countries. Prime Minister emphasised need for early signing of Free Trade Agreement (FTA) to leverage considerable potential of boosting trade, investment opportunities between Pakistan, Iran and Turkey.

He felt existing trade volume between three countries is way below its actual potential, which needs to be increased further through signing of FTA. Ambassadors thanked Prime Minister for his efforts to further promote economic, trade ties and hoped these would further strengthen in future.

Business Recorder [Pakistan's First Financial Daily]


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## Spring Onion

*

Malaysia, Pakistan to cut tariffs from January under free
trade pact* KUALA LUMPUR, Malaysia Nov 12 (APP/AP) _ Malaysia's 
trade ministry said Monday it has sealed a free trade 
agreement with Pakistan to begin cutting tariffs on most goods and 
free up services and investment from January. 
The Malaysia-Pakistan Closer Economic Partnership Agreement, 
signed in Kuala Lumpur last Thursday, was Malaysia's first 
bilateral free trade pact with a Muslim nation, the ministry said 
in a statement. 
It will come into force on 1 Jan. 2008 to
"further facilitate and strengthen the two-way trade and
investment as well as enhance bilateral economic and
industrial cooperation," it said.
The statement said the pact will also cover technical 
cooperation and capacity building in areas such as 
sanitary and phytosanitary measures, intellectual 
property protection, construction, tourism, health care and telecommunications. 
The agreement will replace an early harvest program, under 
which the two countries had already began cutting tariffs 
on selected goods since January 2006. 
Under the new pact, Malaysia will eliminate import duty on 
77 percent of goods from Pakistan and progressively reduce 
import tariffs on other products by 2012, it said. In turn, 
Pakistan will remove import duty on select Malaysian 
agricultural and industrial imports as well as cut tariffs for 
palm oil, the key import item from Malaysia, it added. 
*
APP/AP/rb*ð 12:06/13:31/13:31


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## Neo

*Emergency and the economy​*
How will the imposition of emergency rule impact the economy? Although the state of emergency has created an environment of uncertainty for the business which is extremely bad for investment sentiment  I dont think there will be any adverse impact on the national economy in the short-run, says a businessman who refused to be identified because he is on the boards of various state-owned entities. But the long-term outlook is uncertain, he added.

Several other businessmen and economists subscribe to his views. But, they insist, the government  even if it does not lift emergency in the near future  must announce a schedule for the general election immediately as an expression of its intention to lead the country back to constitutional rule in order to clear the fog produced by suspension of the Constitution. If that is not done forthwith, they warn, the implications for the economy will prove to be devastating in the long-run.

Business looks for clarity and certainty. Once the country is put back on the rails of political stability, things will start looking up, says All Pakistan Textile Mills Association (Aptma) chairman Shafqat Elahi. Others hold that the damage to the economy is already done and investors confidence in its future is on the wane

Whether the emergency is lifted in one week or in six months or more, does not matter much now. The harm is already done and our country perception as a politically stable nation is further eroded around the globe, says former Lahore Chamber of Commerce and Industry president Pervaiz Hanif.

Do what you may, the foreign markets view Pakistan as an unreliable source of goods. Let me tell you, this kind of perception is more dangerous for an economy than any other factor, he says. The imposition of emergency has heightened foreign customers worries about the timely supply of their orders. Such worries can make foreign buyers look toward more stable and reliable suppliers in the region and make exporters reduce their prices to get fresh orders.

Pakistani exporters had already been facing problems in convincing their foreign customers to visit them since 9/11, owing to deteriorating law and order situation, suicide attacks and continuous advance of militants in the tribal areas.

Only recently, some customers had begun sending their representatives for sourcing their orders, says a leading knitwear exporter, who did not give his name for fear of possible repercussions for his business. That flow has again been stemmed. So much for the generals promise of good governance, he says.

 The government may have blocked broadcast of independent news television channels in the country and muzzled the judiciary through the Provisional Constitution Order (PCO), but foreign buyers dont depend on our sources for information. Their own channels and newspapers are providing them images of pro-democracy protests by lawyers and students and civil society. Along with protests, they are also watching the excessive use of brute force by security forces on protestors.

These images are not sending a positive signal to foreign customers, says a fashion designer from Karachi. The confidence of foreign buyers in Pakistan as a reliable supplier has further been shaken after international rating services  Moodys and Standard & Poor  downgraded their outlook for the country hours after proclamation of emergency and suspension of the constitution. There are also reports that Moodys may also downgrade Pakistans debt ratings.

The American administration and some European governments are also reported to be considering curbing their assistance to Islamabad because of the emergency rule. Some businessmen and analysts worry that the United States may clamp economic sanctions as it did during the better part of the 1990s if government delays elections and continues to rule the country under the PCO.

That means foreign lending will become more expensive because of increased political risks. It also means that it will become difficult for companies like National Bank of Pakistan (NBP) to float their GDRs in the international markets. Foreign investment  which stood at $8.3 billion, including foreign direct investment (FDI) of $5.1 billion and portfolio investment of $3.2 billion, last year  is also feared to decline this year.

Similarly, bankers fear that foreign remittances sent by overseas Pakistanis may also fall. The rapidly fluctuating fortunes of stock exchange mean foreign funds are taking out their portfolio investment in view of the uncertain political conditions.

According to the State Bank of Pakistan annual report for the last financial year, only a very insignificant part of FDI was invested in manufacturing sector  leather and textile  which can produce export revenues and the bulk ($5.1 billion) of FDI last year was realised as a result of mergers and acquisitions, mainly in the financial and telecommunication sectors. Other equity flows included investments in oil and gas and power sectors. A part of it was realised through privatisation of state-owned entities which has already been stalled.

If the existing uncertainty continues for long and the government does not move to rectify it, foreign equity and portfolio flows are sure to drop substantially this fiscal year, says a banker. He says the financial sector is unlikely to be hit directly by emergency. But if the overall economy suffers as a result of this action, the sector will also come under stress, he says.

Activity in the home market has also lost luster during the last few weeks. The wholesale and retail markets have been trying to discount imposition of the emergency rule and adjust themselves with the new reality since rumours began spreading in the middle of last month, says a traders leader, Ansar Butt. Sales have dropped as there are fewer customers in the shops.

It is widely believed that if foreign investment flows and remittances decline and activity in the home markets fail to pick up, the government may find it difficult to achieve its budgetary targets, including that of growth (7.2 per cent) and fiscal deficit (4 per cent), for this year.

However, the government, on the other hand, dismisses these gloomy forecasts. Finance ministry advisor Dr Ashfaque Hasan Khan says imposition of the emergency rule will have no implications for the countrys economic advance. Have our factories stopped operating? Have our farmers stopped growing crops? Has our services sector stopped expanding? Investments are being made in all sectors of the economy without any consideration of emergency. If that is so, our economic expansion will not be affected and we shall achieve our GDP growth and other budgetary target, he maintains.

Imposition of emergency is a temporary phenomenon. Things will start looking up once the president takes oath (for his fresh term) and election schedule is announced, he insists.

Dr Khans optimism must be commended in the given circumstances but it seems to be quite out of place. In the final analysis, any kind of disruption in business  closure of a shop or a factory or even a school or a college or courts for any period (from a few hours to weeks or months)  has an economic cost. Therefore, the country will have to pay this cost anyway even if the election schedule is announced and the lingering dispute over the presidents eligibility for another term in office and his military uniform settled leading the country back to constitutional rule as is being hoped by Dr Khan.

Emergency and the economy -DAWN - Business; November 12, 2007


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## Spring Onion

Pak-Malaysia sign free trade pact 

ISLAMABAD: Malaysia and Pakistan have signed a Free Trade Agreement (FTA) that is aimed at boosting trade relations between the two countries and it would further help Pakistan reduction of tariffs on import of palm oil from Malaysia.
Malaysia is the world's largest producer of palm oil, used for cooking, cosmetics and biofuel. 
International Trade and Industry Minister of Malaysia, Datuk Seri Rafidah Aziz and High Commissioner of Pakistan Tahir Mahmood Qazi at Kuala Lumpur signed the Malaysia-Pakistan Closer Economic Partnership (MPCEPA) on Monday that would come into force January 1 next year.
It will further strengthen trade and investment and bilateral economic and industrial cooperation on a long term basis between Malaysia and Pakistan.
The MPCEPA will also facilitate trade through closer collaboration and greater information exchange in the areas of standards, including the establishment of mutual recognition arrangements (MRAs) on testing and conformity assessment procedures.
MRAs will help reduce cost and improve market access for goods and services subjected to standards and technical regulations; and issues relating to the implementation of sanitary and phytosanitary (SPS) measures imposed on agricultural products of trade interest to both sides.
Both countries concluded talks in October 2005, and began implementing in January last year an Early Harvest Programme (EHP) for trade in goods comprising Malaysia's offer of tariff cuts on 140 tariff lines and Pakistan's offer of tariff cuts on 124 tariff lines. This was to accelerate trade benefits ahead of the MPCEPA.
Malaysia's export of EHP products in 2006 to Pakistan totaled RM44.87 million. The FTA agreement encompasses liberalisation in trade in goods and services, investment, as well as bilateral technical cooperation and capacity building in areas such as sanitary and phytosanitary measures, intellectual property protection, construction, tourism, healthcare and telecommunications.
For trade in goods, both Malaysia and Pakistan will progressively reduce or eliminate tariffs on agricultural and industrial products.
*Malaysia will eliminate import duty by 2012, on 74.5 per cent of tariff lines, comprising 77.3 per cent of imports from Pakistan with a value of RM152.7 million in 2006; and reduce import tariffs over a period of five to seven years, on 18 per cent of tariff lines with a value of RM5.95 million in 2006.
In turn, Pakistan will eliminate duties by 2012, on 43.2 per cent of tariff lines involving agricultural and industrial imports from Malaysia worth RM633.7 million in 2006.
It will also reduce import duty on seven palm oil tariff lines by up to 15 per cent Margin of Preference (MoP) with 10 per cent cut in 2008 and an additional fivr per cent in 2010 involving 48.8 per cent of exports with a value of RM1.3 billion in 2006 and 41.3 per cent tariff lines, over a period of five to seven years comprising imports with a value of RM489 million in 2006.
Last year, Malaysia's total trade with Pakistan amounted to RM3.306 billion comprising exports worth RM3.089 billion and imports RM217 million.
Trade during January to September 2007 amounted to RM3.243 billion comprising exports of RM3.016 billion and imports RM227.3 million.
Major exports to Pakistan last year were palm oil and products, chemical products, electrical and electronic products, machinery and parts, and textiles and clothing.
Meanwhile, major imports from Pakistan in 2006 were textiles and clothing, fresh and frozen seafood, cereals including rice, electrical and electronic products and chemicals and chemical products.
Among the products that will benefit from duty elimination and reduction include fruits, natural rubber, leather, tea, cocoa and coffee, processed food, machinery and equipment, chemicals and chemical products, plastics and pharmaceuticals.
MITI also said there is further opportunity to broaden the product coverage and accelerate tariff liberalisation when Malaysia and Pakistan enter into another round of negotiations in 2009.*


*Report by Jana *


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## Neo

*Reform plan failing to meet objectives: ADB​*
ISLAMABAD, Nov 11: The Asian Development Bank-funded $1.8 billion governance-related reform programme is failing to meet its objectives owing to the governments waning interest. But the nation will continue to pay the price for its failure, according to an internal ADB assessment.

The assessment completed by ADBs Operation Evaluation Department says that corruption has devolved with the devolution programme and the government priorities towards major governance projects like access to justice, decentralisation support and province-level resource management now are less clear.

The final outcome of the reform programme may not be different from the poor results of the Social Action Programme of the 90s, says the assessment.

When ADB approved the funds, the government strongly needed them to address a fiscal crisis. This is no longer the case, because the aftermath of the 9/11 resulted in a major increase in funding to Pakistan, said the assessment, adding that technical assistance loans attached to these programmes generally have failed. The OEDs final view, however, rated ADBs own operations in the governance sector between modest and substantial.

Ironically, reasons for failure of technical loans are not clear and appeared to reflect lack of ownership by executing agencies. Since these technical loans were designed to produce outputs essential for the achievement of outcomes, this is a concern. Essentially, such loans were accepted by the government as necessary condition for gaining access to the much larger policy-based loan funds.

Even where the assessment noted some successes, it was noted a decisive influence of a few individuals with a vision derived from a theoretical base, good analytical work and effective communication and advocacy skills.

That a few key individuals could be so influential is instructive in terms of the importance to ADB and its staff. However, reliance on a few key individuals poses risks  if these individuals depart and are not replaced by those with similar skills, the programme quickly can lose its direction and effectiveness.

The bank said that Pakistan had been a subject of unavoidable complex consequences of a coherent and interrelated strategy.

The establishment of a governance unit in ADBs resident mission to support the access to justice programme and decentralisation support programme, but not the resource management programmes, was a positive move in terms of committing resources, although the structural separation from the unit responsible for the administration of delegated projects is questionable, said the report.

Another potential risk, according to the bank, is that ADB could outpace the governments commitment, turning a government-led programme into an ADB-led one.

The experience of the Social Action Programme in the 1990s is instructive. Some evidence suggest that history is repeating itself  namely, that client interest and demand has waned and the development partners have started to own and lead what was a government programme.

The bank said that a paradox of the decentralization support programme is that, as vertical project  managed at the federal level with provincial programme management units  its management structure was not consistent with its purpose i.e. support to the local governments.

According to the bank, one real problem with the situation is that it is not clear what follows the access to justice or decentralization programme have never been widely shared. Devolved social services programme and resource management programme have been replicated in all provinces but again the longer-term strategic direction is unclear, even in broad conceptual form.

The assessment says that much of ADBs programme and those of other funding agencies has continued to circumvent the principal means designed for channelling resources to local governments  the provincial finance commissions. This has two dimensions: the special grants that bypass the provincial finance commissions and vertical projects.

Likewise, the federal programmes like Access to Justice and decentralisation support have suffered because of variable performances of provinces. Poorly performing provinces have held up tranche releases, thereby penalising the better performers.

Reform plan failing to meet objectives: ADB -DAWN - Top Stories; November 12, 2007


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## Neo

*$5 billion Khalifa Coastal Refinery at Gwadar: implementation agreement signing on November 13 ​*
ISLAMABAD (November 12 2007): Pakistan and Abu Dhabi's International Petroleum Investment Company (IPIC) management are going to sign an Implementation Agreement (IA) on November 13, for setting-up a $5 billion Khalifa Coastal Refinery (KCR) at Gwadar.

As per IA, IPIC and its partner, PARCO will complete KCR by 2012. The refinery will help Pakistan meet its local demand and export the rest of refined petroleum products.

Earlier, KCR was supposed to be granted the right to export 100 percent refined petroleum products. However, at the last stage of the negotiations the government managed to persuade IPIC and PARCO for amending the basic principle. The amended agreement provides that KCR will meet Pakistan's demand of petroleum products and export only surplus production.

An official told Business Recorder that IPIC and PARCO have agreed to provide Pakistan as much refined petroleum product as it needs from KCR and export only surplus production. They term it as a good development since the new arrangements will help Pakistan meet its growing petroleum products needed in the future. KCR is a joint venture of IPIC and PARCO with 74 and 26 percent shares respectively.

An IPIC delegation headed by managing director Khadem Al Qubashi is scheduled to reach Islamabad on Monday to sign KCR IP. Petroleum secretary Furrukh Qayyum will sign KCR IP on behalf of government of Pakistan. The ceremony is being arranged in a local hotel for the purpose. Prime Minister Shaukat Aziz will witness the signing.

This is very important development as a strong group like IPIC is coming to Pakistan with multibillion dollar investment. Pakistani authorities hope that International Petroleum Company's coming into Pakistan with huge investment will woo many other bigger investors to Pakistan for investment.

The Economic Coordination Committee ECC of the Federal Cabinet had approved a special package of concession in taxes and duties in its meeting held on October 10. The package promises tax exemption for KCR for 20 years. This was followed by a two member official delegation visit comprising Petroleum Secretary, Farrukh Qayyum and Director General Oil, G.A. Sabri visit to Ahu Dhabi from October 27 to 29. The delegation finalised modalities for IA signing. The official delegation presented the details of IA and outcome of its negotiations with IPIC management to the federal cabinet in its last meeting for endorsement.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*$130 million outflow from SCRAs in two days ​*
KARACHI (November 12 2007): Dollar 130 million were withdrawn in two days as the outflow in portfolio investment from the country's equity market continued during the week ended on November 10. As a result, the SCRAs balance declined to $223 million at the end of the week from $353 million as on November 6.

"The prevailing uncertainty on political front after imposition of emergency and law and order situation in different parts of the country made foreign investors panicky and they opted to offload their holdings", Ahmed Nabeel, COO at JOV & Co said. However, he said he was optimistic that the situation would improve after the announcement of the schedule of general elections. The outflow of over $130 million was mainly by UK, USA and Hong Kong investors.

According to State Bank of Pakistan (SBP) data, there was outflow of $43.695 million on November 8 and over $86 million a day earlier.

USA $28.339 million, UK $10.555 million, and $5.94 million by Hong Kong investors. Australia withdrew $541,848, UAE $510,651, Germany$120,036, and Singapore withdrew $2,105. On the other hand, fresh inflow of $2.320 million was witnessed from Saudi Arabia on the last day of the week.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Air Blue places $700 million orders for 14 A320-200s ​*
KARACHI (November 12 2007): Pakistan's fastest growing private sector carrier, Air Blue, has placed orders worth $700 million for purchase of 14 new A320-200 aircraft. This is the second largest order for outright purchase of brand new aircraft after national carrier PIA's $1.2 billion order placed in 2005 for purchase of eight Boeing aircraft--three 777-ER-200, three 777-ER-300 and two 777-LR-200.

There is, however, a marked difference in the purchase of aircraft by Air Blue and PIA, as the government had to provide sovereign guarantee to the Eximp Bank for the purchase of aircraft by PIA, and the private sector carrier Air Blue provided only Company's guarantee.

Shahid Khaqan Abbasi, Air Blue Chief Executive Officer, told Business Recorder here on Saturday that a formal agreement for the purchase of 14 new A-320-200 would be signed between Airbus Industrie and Air Blue in Dubai on November 13 during the five-day air show, which started on November 11. The Airbus Chairman Industrie would sign the agreement on behalf of the aircraft manufacturer and Shahid Khaqan Abbasi would sign on behalf of Air Blue .

Abbasi left for Dubai late on Saturday afternoon to attend the air show and to sign the agreement.

He said that the first A320-200 aircraft would be delivered in July, 2009, and thereafter one aircraft would be delivered after every three months thus completing the delivery of 14 aircraft by the end of 2012. Following induction of the new aircraft, the Air Blue fleet at present comprising three A-320s and three A-321s, which are on lease, would be returned to the lessor companies.

About the financial health of Air Blue, Abbasi said that from the word 'go', three years back "we have not, for once looked back". Despite the fact that Pakistani carriers, to cover up their failures, have been crying hoarse about the galloping increase in fuel prices, Air Blue, he said, had posted profits year after year in the face of high fuel costs and other expansion expenses.

The annual accounts, which are now being audited, would be announced by the end of next month, Abbasi said, adding that the airline would end up with a profit of around Rs 150 million and a 20 percent return on equity.

He said that Islamabad to Manchester Air Blue flights have proved a roaring success. The seat occupancy, both ways, has been hundred percent, although high season has not yet started, he added.

Similarly, he said, Dubai flights were also doing good business. About future expansion plans, he said that once the new aircraft are inducted into the airline, "we would expand towards West as well as East ie, Europe, Middle East, India, Bangladesh, Malaysia and Thailand would be our future destinations."

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Medium and long-term outlook for investment attractive: Prime Minister ​*
ISLAMABAD (November 12 2007): Prime Minister Shaukat Aziz said the medium and long-term outlook for investment in Pakistan is very attractive due to the reforms undertaken by the government as well as the transparent policies introduced during the last eight years.

The Prime Minister said this while talking to a group of investors including Waqar A. Malik Chief Executive, ICI and Hasib Rehman, CEO Ayesha Steel Mills, who called on him at the PM's House here on Sunday.

The Prime Minister said we have encouraged private sector investment to take advantage of the improved macro-economic situation in Pakistan as a result of which the level of investment has expanded rapidly in the country.

He said in terms of future potential Pakistan's demographic, with 100 million people below the age of 25 out of the total population of 160 million, offers attractive opportunities for growth and investment for private investors.

He highlighted the fact that Pakistan is increasingly becoming a base for skilled people and as such can be used as a regional manufacturing hub for local consumption as well as exports. This, he said, will enable investors to leverage Pakistan's human capital, its location and ease of doing business.

While talking to CEO, Ayesha Steel Mills, the Prime Minister welcomed the fact that it is a major joint venture between Pakistani and Japanese investors.

Shaukat Aziz said that steel is a commodity very much in demand and increased investment in manufacturing will augur well for future growth and development of the country.

He said the infrastructural investments being undertaken by the public and private sectors have increased demand for steel both for industrial as well as construction purposes. He said this will augur well for investments in the steel manufacturing business.

During his meeting with Chief Executive, ICI who have several plants in Pakistan, the Prime Minister welcomed the fact that they are expanding their activities in Pakistan and the various products that they produce including caustic soda, paints and chemicals have grown rapidly and they have taken advantage of the increasing size of the Pakistani market.

The investors appreciated the reforms of the government, the transparent policies and the consistency and continuity of policies which enabled them to invest increased amounts in Pakistan and benefit from the attractive opportunities in the country.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*New industrial zone being set up in AJK ​*
MIRPUR (November 12 2007): The government of Azad Jammu and Kashmir (AJK) is planning to establish a new mega-industrial zone soon over an area of 20,000 kanals in Mirpur, official sources said. Sources informed APP that Moori on Mirpur Jatlan Road has been decided as the proposed location for the new industrial zone and the government will acquire state-owned and private land for the reason.

The sources also said that the AJK government was giving due attention towards promotion of business and industrial activities in the region where a conducive atmosphere was already available. The state government intended to provide all possible facilities to the existing and intending entrepreneurs to bring the facilities at par with other parts of the country.

Further the official said that the government also intended to give relief to those industrialists who have to face huge overhead freight charges of transportation of the raw material from various parts of Pakistan to their industrial units operating in AJK. The industrialisation of AJK will help overcoming unemployment and poverty, maintained the official.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Institutional buying helps KSE recover 232 points ​* 
Tuesday, November 13, 2007

KARACHI: Strong institutional buying restored equity market back on track following the announcement of general election in January 2008. Active buying in banking and fertilizer sectors was prominent beside sluggish appreciation in the energy and telecom stocks.

KSE 100-share Index posted a handsome recovery of 231.80 points from the previous week steep losses and closed at 13,655.67 points on Monday.

Market opened more than 140 points plus and the trend continued during the session touching 13,701.74 points intra-day high posting a maximum surge of 277.87 points.

Analysts see the 13,700 points level the next psychological barrier in recent times. Smart buying beyond this level might completely change the negative sentiments to positive in the market, but one should not ignore the day-to-day political development in the country, they advised.

The junior 30-Index also surged by 298.86 points and closed at 16,312.57 points. The overall volume in the ready market remained dull at 219.544 million. It, however, was slightly up from 217.513 million shares changing hands on the last working day. The future market turnover declined to 35.445 million shares from previous session of 48.056 million shares. 

The market participants were observing changes in political arena and were also noticing the political statement from the government officials, political parties in race of premier seat and parties in opposition. On the basis of this, equity players drove the conclusion that elections were going to be held definitely in the country in January/February 2008 and appeared aggressive in accumulating the stocks on across the board, analysts said. 

The announcement of election schedule appeared as a ray of hope from the deep political darkness in the country. Market participants welcomed this move from the military man Gen. Musharraf and hoped to see continuation of democratic process from that point at which it was left, said analyst Ahsan Mehanti and added that the clear-cut decision of Commonwealth Ministerial Action Group regarding the cancellation of Pakistan membership, in the backlash of emergency rule, would add its importance to the stocks exchange either way.

Analyst Hasnain Asghar Ali said: Ignoring the outflow in SCRA numbers, bearish sentiment in regional and international markets and the statements by certain international organizations, the local markets staged a forward march.

Developments that took place over the weekend, starting from proposals made to the premier by the brokers and commitment by the former on considering them (i.e. extension in capital gain tax exemption for period of 5 years in shares and uncapping of CFS) coupled with developments on political side, mainly the announcement of election period as it has put the country back on road to democracy in its full essence, he added.

Major portion of buying was set in banking sector as almost all the major and low tier scrips contributed in the rally. NBP was the front runner, gained the appreciation of almost four per cent and MCB also moved on the same direction and closed with the appreciation of three per cent, said analyst S. Kashif Mustafa.

E&P sector played silent role but somehow supported the index at higher levels. High activity was seen in OGDC closed with the appreciation of just Re1 only. Other participants also remained silent and did not contribute in the rally, he added.

High activity was also witnessed in telecom sector; high speculation was seen in TRG as over 21.5 million shares were traded, on the other side disappointing results of CTTL cluttered the bullish sentiment of retailers as it showed negative earning in its year-end results, he further said.

The plus sing dominated on board, as 255 stocks advanced against 82 declined, while the value of 29 scrips remained unchanged with total 366 active counters on board.

Highest volumes were witnessed in TRG Pakistan at 21.549 million closing at Rs13.50 with a gain of Re1, followed by Oil and Gas Development Company at 14.064 million closing at Rs116.90 with a gain of Rs1.05, National Bank at 13.730 million closing at Rs239.25 with a gain of Rs9.25, Attock Refinery at 12.414 million closing at Rs280.20 with a gain of Rs12.20 and Pak Petroleum at 7.835 million closing at Rs251.45 with a gain of Rs1.40.

Institutional buying helps KSE recover 232 points


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## Neo

*Exports miss target by $350 million in Jul-Oct​*
ISLAMABAD: Pakistans exports remained $350 million short of target during the July-October period of this fiscal year, as the country exported goods worth $5.865 billion as against the target of $6.210 billion for the period. 

A senior official at Trade Development Authority of Pakistan (TDAP) told Daily Times on Monday that although the monthly targets are indicative in nature, these are set to examine the trade performance during the on-going fiscal year. 

For the month of October, the export target was set at $1.438 billion and against this the actual exports during this month stood at $1.408 billion, leaving a shortfall of $30 million. Exports are targeted to grow by 8-10 percent in the current fiscal year. However, growth in exports was only 6.33 percent in the first four months. 

According to the data released by the Federal Bureau of Statistics, goods worth $5.865 billion were exported during the July-October period of this fiscal year as compared to export of goods worth $5.515 billion in the same period of last fiscal year 2006-07, showing a growth of only 6.33 percent. 

Value of total imports of the country jumped to $11.443 billion during July-October period of this fiscal year as compared to the imports worth $9.557 billion in the same period last fiscal year, showing an increase of 19.74 percent. 

The Ministry of Finance has said in its analysis released recently that import growth appears to be on the path of moderation and is expected to be in the range of 6.5 percent to 7.0 percent in the current fiscal year. 

The country suffered a trade deficit of $5.578 billion during July-October period of on-going fiscal year as against the deficit of $4.041 billion same period last fiscal year, showing an increase of 38 percent. 

Exports during October 2007 stood at $1.408 billion as compared to $1.262 billion in October 2006, showing a growth of 11.59 percent. However, imports during October this year grew by 38 percent to reach $3.358 billion as compared to $2.131 billion in October 2006. Trade deficit in October 2007 stood at $1.976 billion as compared to the deficit of $868 million in October 2006, with an increase of 127 percent.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Oil and gas production up by 7.2 percent in Q1 FY08​*
KARACHI: Oil and gas production in the country registered a growth of 7.2 percent during the first quarter of fiscal 2007-08.

According to oil and gas production data released by Pakistan Petroleum Information Service (PPIS) here Monday a growth of 12.2 percent and 6.7 percent was recorded in oil and gas respectively during the first quarter of fiscal 2007-08.

The oil and gas production (combined) in the country stood at 694 thousand barrels of oil equivalent per day (kboepd) in 1Q 2008, showing a growth of 7.2 percent.

Local gas production in the period stood at 3.9 billion cubic feet per day (bcfd) against 3.6 bcfd produced during the same period last year. Growth in gas production remained healthy despite decline in production from mature fields, which somewhat offset the production growth of new fields. Similarly, oil production stood at 71.9 thousand barrels per day (kbpd), compared to 64.0kbpd last year  YoY growth of 12.2 percent. 

Oil & gas production of OGDC in 1Q 2008 stood at 194.8 kboepd during, against 168.1 kboepd in the corresponding period of 2007. Oil production alone posted an increase of 19.8 percent as it stood at 46.6 kbpd versus 38.9 kbpd in the same period last year. This rise in production was mainly due to commencement of production from Mela-1 and increased oil production from Bobi, Tando Alam and Makori fields. Similarly, gas production stood at 0.9 bcfd, registering an increase of 14.7 percent on year-on-year basis.

In the first quarter of current fiscal, PPLs combined oil and gas production soared by 5.9 percent and stood at 162.0 kboped from 152.9 kboepd produced during the corresponding period in fiscal year 2007. Gas production during the period registered a growth of 4.5 percent and stood at 1.0 bcfd versus 0.9 bcfd in last years corresponding period. This hike in production was mainly led by 72.9 percent and 24.1 percent growth in gas production from Adhi and Sawan fields. However, flat production from Sui field, which contributes around 65 percent of companys total gas production restricted the growth impact from Adhi and Sawan. 

Oil and gas production of POL declined to 13.1 kbpeod in first quarter of fiscal 2007, as against 13.4 kbpeod in the same period last year, posting a decline of 1.8 percent. Gas production registered a marginal increase of 2.7 percent and stood at 0.05 bcfd. On the other hand, oil production registered a decline of 7.1 percent and stood approximately at 5.7 kbpd primarily due to production decline from Pindori field. 

However, as per KSE notice issued last week, oil production from the field is now standing at 4,957 bpd. POL management expects the production to further increase by 200-300 bpd, going forward.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan facing shortage of 7m housing units​*
* Senate body seeks action against land mafia

ISLAMABAD: The government has estimated shortage of up to seven million housing units that will increase in the coming years, secretary to the Ministry of Housing and Works told the Senate Standing Committee on Housing and Works, which met at the Parliament House on Monday with Senator Dr Muhammad Ali Brohi in the chair. 

The secretary said that the annual disbursement of loans by House Building Finance Corporation would be enhanced from Rs 1.2 billion to Rs 7 billion in next five years. The committee demanded the government to take back its land worth billions of rupees from land mafia and initiate strict action against it.

The committee was given a presentation on the National Housing Policy, wherein paucity of the available government land was mentioned as one of the reasons to launch new housing schemes.

It resolved not to let anybody grab the state land and directed the ministry to retrieve 134 kanal of state land, occupied by land mafia in Wafaqi Colony, Lahore, by moving the court and securing cooperation of provincial home department, police and other state-run agencies. It also directed the ministry to obtain rent of government quarters from Punjab Police, which had been occupying them since 1989 in Lahore, and give three months to shift the police station from Wafaqi Colony to proper premises.

The committee members were also concerned over inordinate delay in the renovation and development work at Dargah Sehwan Sharif and termed alleged interferences of district coordination officer of Dadu and administrator of Auqaf in the affairs of its sub-committee a breach of privilege. The committee observed their interferences had delayed the project and affected the overall grandeur and ambience of the shrine by giving it an unimpressive exterior. staff report

Daily Times - Leading News Resource of Pakistan


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## Neo

*Abu Dhabi to build $5 billion refinery in Pakistan ​* 
ISLAMABAD (updated on: November 13, 2007, 14:58 PST): Abu Dhabi signed an implementation agreement on Tuesday to build a $5 billion refinery that will double Pakistan's refining capacity.

Under the deal between Abu Dhabi's International Petroleum Investment Company (IPIC) and Pak-Arab Refinery, the project will be built at Khalifa Point in the Hub district of Balochistan province., about 15 km (9 miles) west of of Karachi.

The Khalifa Coastal Refinery Project will have a refining capacity of between 200,000 to 300,000 barrels per day of middle distillate products.

"It will be a large refinery to meet domestic needs and cater to the export market," said Prime Minister Shaukat Aziz, who witnessed the agreement signing with United Arab Emirates' Energy Minister, Mohammed bin Dhaen al-Hamli in Islamabad.

Abu Dhabi, one of the seven members of the UAE, has a 40 percent stake in the Pak-Arab Refinery at Mehmood Kot in the central province of Punjab.

IPIC, possibly with other UAE government institutions or companies, will hold an initial 74 stake in the Khalifa project, with Pak-Arab Refinery holding the remaining 26 percent stake.

Pakistan, almost totally dependent on oil imports, has an installed refining capacity of 12.82 million tonnes a year (just over 250,000 bpd) from its five refineries.

Pakistan consumes about 15 million tonnes of oil products annually.

Aziz said Pakistan's economy, which has been averaging 7 percent growth annually for the past four years, needed energy and fuel to sustain its growth momentum.

Pakistan's annual energy requirements are expected to surge to 177 million tonnes of oil equivalent by the year 2020 from current needs of about 58 million tonnes.

The Khalifa refinery is expected to be commissioned by December 2012.

The Pakistan government has announced various concessions for the project that includes 20 years tax-free status and up to 1,000 acres free of cost land.

Abu Dhabi to build $5 billion refinery in Pakistan : Business Recorder | LATEST NEWS


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## Neo

*16 projects worth Rs 97.9 billion approved ​* 
ISLAMABAD (November 13 2007): The Executive Committee of National Economic Council (Ecnec) on Monday approved 16 projects costing Rs 97.9 billion in various sectors of economy. The overall foreign exchange component (FEC) has been estimated at Rs 51.7 billion.

The approved projects include Karakoram Highway Upgradation worth Rs 30.9 billion for which China would provide Rs 25.268 billion. The project is of paramount significance for the construction of Bhasha dam, said Planning Commission Deputy Chairman Dr Muhammad Akram Sheikh.

"On behalf of the Planning Commission, I can say that we are on the construction of Basha and all other dams to be built by 2016 in accordance with announcement of President General Pervez Musharraf," he said.

Ecnec meeting, held for the third time in two months, was presided over by Prime Minister Shaukat Aziz. This would be the last Ecnec meeting presided over by Shaukat Aziz, as the National Assembly, according to President Musharraf, would be dissolved on November 15.

The Prime Minister said that in the last eight years, Ecnec had held 27 meetings and approved 649 projects worth Rs 2.4 trillion. That was a record in Pakistan's history and an achievement in itself.

The projects approved by Ecnec in eight years covered all sectors of national economy including 403 projects worth Rs 1903 billion in infrastructure, and 207 costing Rs 466 billion in social and 39 projects worth Rs 72 billion in other sectors.

Briefing newsmen after the meeting, Dr Akram said that Ecnec also approved revision of the bidding and contract documents. This was on the initiative of Pakistan Engineering Council. He, however, gave no reason that forced the committee to change the documents.

According to him, Ecnec approved 11 new projects costing Rs 80.23 billion. The cost of five projects was revised. The cost of the revised projects has been increased from Rs 13.7 billion to 17.7 billion. Muzaffarabad City Development Project of Rs 21.35 billion has also been approved. The project has foreign assistance of 17.62 billion. Apart from this, the cost of Border Security Road Programme Phase I has been increased to Rs 1.15 billion from Rs 840 million.

Most of the 16 projects approved in the Ecnec meeting have got allocations in the overall PSDP 2007-08. The PSDP allocation for most of the projects in the current fiscal year is Rs 4.16 billion. In the earlier two meetings this year, Ecnec had approved 68 projects costing Rs 270.65 billion. Total number of projects so far is 84.

Overall, the Ecnec approved five projects worth Rs 42.55 billion in physical planning and housing sector and one project in energy with cost of Rs 760 million. Four projects worth Rs 17.37 billion pertained to Higher Education Commission (HEC).

Dr Akram said that advisory board comprising Dr Ataur Rahman, Dr Samar Mubarakmand and Dr Akhtar would give advice to the government in which discipline and technology Pakistan should have more graduates so that the shortage of skilled workforce could be overcome. Around 500 projects, or 40 to 50 percent projects initiated in the last years, have been completed. About 15 to 20 projects have cost overrun presently, he said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*July-October trade deficit widens to $5.578 billion ​* 
ISLAMABAD (November 13 2007): Pakistan's trade deficit swelled to $5.578 billion during the first four months (July-October) of the current fiscal year, up by 38.03 percent from $4.041 billion over the same period last year. Experts say Pakistan is increasingly becoming an import-dependant country with an expanding list of food items despite being an agricultural country.

They say that surging trade deficit is also the result of unprecedented increase in oil prices which is causing rise in cost of doing business affecting exports. The growing trade deficit, they fear, could intensify the spate of inflation as Pakistan has been importing a number of food items, including pulses, wheat, medicines, and milk apart from machinery and other items.

The trade deficit worsened as exports rose marginally but imports soared at a much higher rate. According to official figures released here on Monday by the Federal Bureau of Statistics (FBS), the export of goods went up marginally to total of $5.865 billion during the first four months of the current fiscal year as against $5.515 billion over the same period last year.

However, exports declined by 5.64 percent over last month, declining to $1.408 billion in October 2007 from $1.493 billion in September last month. Imports increased by 19.74 percent to $11.443 billion during the first four months of the current fiscal year as against $9.775 billion over the same period last year. This high import growth has pushed up trade deficit further.

The government has set an export target of $19.2 billion for the current fiscal year. The State Bank of Pakistan has recently in its report had warned the government that growing current account deficit, led by sharp slowdown in export growth, was posing key challenge to macroeconomic stability in the country.

It may also be pointed out that State Bank annual report is also apprehensive of the debt payment capacity because of galloping in deficit namely trade imbalance and high inflation.

Further analysis of the data showed that on monthly basis the trade deficit surged by 59.09 percent with trade gap increasing from $1.242 billion in September 2007 to $1.976 billion in October 2007. The economic managers seem to be focused more on increasing revenue ratio rather than giving equal weight to all other economic indicators.

Analysts said rising inflation, capital cost and energy prices during the last few years rendered Pak products less attractive for buyers in international market which could be one of the reasons for falling exports during the period under review.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Euro-Asia Economic Forum: expanding energy, transport linkages to Pakistan urged ​*
BEIJING (November 13 2007): Speakers at Euro-Asia Economic Forum have stressed the importance for further expanding energy and transport linkages to Pakistan and beyond to cope with ever increasing energy demand.

There is a great opportunity for expanding and linking the route to Pakistan with the regional countries as the South Asian country is the shortest route to Arabian Sea, Middle East as well as it will provide greater market access for Pakistani products.

The speakers pointed out at the Euro-Asia Economic Forum that was jointly sponsored by the Secretariat of Shanghai Cooperation Organisation (SCO), the SCO Business Council, the United Nations Development Program, the Secretariat of Eurasian Economic Community, China Development Bank and the Shaanxi provincial government.

SCO, a regional organisation founded in 2001, comprises China, Russia, Uzbekistan, Tajikistan, Kyrgyzstan and Kazakhstan, with Pakistan, Mongolia, Iran and India being observers. The forum, mainly focused on cooperation in energy, tourism and education, had attracted 1,400 delegates from more than 20 countries,

A senior official of Pakistan Embassy who was the part of delegation that participated the forum, said that all the participants stressed the need for greater efforts to increase the supply of oil and other energy resources, including electricity through grid stations for Central Asian States and Russia to China.

The keynote speakers, included Chairman of the National Committee of Chinese People Political Consultative Conference Jia Qinglin, while prominent among those who spoke included Secretary-General SCO Bolat Nurgaliev, Former President of Philippines and Chairman of the Board of Directors, Boao Forum for Asia Fidel Ramos, and Former Prime Minister of Kazakhstan Sergey Terechshenko.

The delegates also highlighted the importance of development of Roads and Rail transport between China and these countries. He said that a meeting of the delegates was also held to examine and for financing various projects in Shaanxi province. Another meeting held for financial cooperation in which speakers discussed and appreciate the steps for creation of a Regional InterBanking Consortium, which will finance such projects and stressed the need for further improving the regulation and legal frame work.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*IFIs may not suspend assistance to Pakistan​*
13 November 2007 

ISLAMABAD  Pakistan government does not believe that due to the promulgation of emergency, bilateral donors and International Financial Institutions (IFI) would suspend the country's assistance.

"I am not a pessimist and believe that as soon as President Musharraf takes oath of his office for the next term, three-fourth of this uncertainty will be gone," said Special Secretary Ministry of Finance Dr Ashfaque Hasan Khan confidently.

"Even if Canada and the Netherlands withdraw $10 million and $7 million assistance it will not make much difference," he told this correspondent. He, however, said that the situation was not all that bad on the economic front as no bilateral donor or any international financial institutions have so far officially communicated anything to the government with regard to suspending their assistance as was widely published in the press.

He was asked to comment on the possible negative impact of the down gradation of credit rating by Moody's International and the Standard and Poors  the two New York based international credit rating agencies. "You must know that there was no down grading as our investment rating remains B-Plus and B-1 by the Standard and Poors and Moody's international respectively. Therefore, there is no change in it and as such it does not warrant any wake up call. 

The change is in their future outlook which according to them is not stable and is negative due to the political uncertainty," Dr Khan said who is also the spokesman of the ministry of finance. He was of the view that it was a short term phenomena and was not expected to last many months. Dr Khan said that the emergency imposed by Gen Musharraf was different from that of 90's when assemblies were dissolved and governments dismissed and the whole thing was torn apart. "But today every thing is in tact as the federal and provincial governments are functioning and the assemblies are performing their duties due to which investor's confidence is still very much there across Pakistan".

He said Musharraf's emergency was soft and benign than those of the previous ones and as such will not bring any big harm to the economy. 

Khaleej Times Online - IFIs may not suspend assistance to Pakistan


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## Neo

*Inflation surges 9.31pc in October ​* 
Wednesday, November 14, 2007

ISLAMABAD: The Consumer Price Index (CPI), a key indicator of inflation, rose 9.31 per cent in October from a year ago, the fastest increase in nearly two and a half years, with the effect of soaring world oil prices still to be felt.

The CPI was also up 1.23 per cent over September, the Federal Bureau of Statistics said on Tuesday. The year-on-year rise in October was the fastest since May 2005. For the July-October period, the CPI rose at an average 7.64 per cent, compared with 8.35 per cent in the corresponding period of last year.

Food prices were the main factor. They were up 14.67 per cent from a year ago and 2.03 per cent from a month ago. The trend in inflation is very alarming, especially considering the fact that the government is yet to pass on the impact of higher global oil prices, said Asif Qureshi, head of research at Invisor Securities, a Karachi-based brokerage house.

It seems unlikely that inflation will come down soon, and will raise pressure on the central bank for some policy action. The government is targeting to curb CPI inflation rate at 6.5 per cent for fiscal year 2007-08.

The State Bank of Pakistan has already warned of mounting inflationary pressures because of high global oil and food prices. Using 2000-01 as the base year, the CPI stood at 153.66 against 151.80 in September. Using the same base year, the Wholesale Price Index stood at 161.30 against 158.42 in September.

Inflation surges 9.31pc in October


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## Neo

*External liabilities rise to $41.66bn ​* 
Wednesday, November 14, 2007

KARACHI: Total external liabilities of the country surged to $41.665 billion on September 30, 2007, which was recorded at $40.172 billion on June 30, 2007. 

Whereas during this period external debt surged to $40.322 billion from $38.699 billion on June 30, 2007. Figures from July-September 2007 depicted that the country paid $647 million for debt servicing out of which $420 million were paid for retirement of principal amount while $227 million for interest payment. 

In total external debt, that is, public and publicly guaranteed debt increased to $36.784 billion till September 30, 2007 which was recorded at $35.290 billion on June 30, 2007. The breakup of external debt depicted that till September 30, 2007 the medium and long term debt (more than one year) accrued to $36.62 billion against $35.265 billion as of June 30, 2007. The total outstanding of Paris Club rose to $13.311 billion from $12.694 billion, mutlitateral debt jumped to $19.440 billion from $18.687 billion and other bilateral debt bulged to $1.025 billion from $1.002 billion while borrowing through euro bonds/ Saindak Bonds slightly reduced to $2.653 billon from $2.655 billion. 

Moreover, military debt recorded a substantial decline to $48 million from $83 million whereas commercial loans and credits remained pegged at $145 million. Similarly, short-term debt (less than one year period) swelled to $162 million from $25 million.

On the other hand, during this period private non-guaranteed debt (more than one year period) increased to $2.102 billion from 2.002 billion out of which $1.435 billion were of the International Monetary Funds 

Moreover, on September 30, 2007 the total foreign exchange liabilities of the country rose to 41.665 billion, which was recorded at $40.172 billion on June 30, 2007. Contrary to this official liquid reserves of the country stood at 13.875bilion as against $13.345 billion. 

The value of special US$ bonds reduced to $148 million which was recorded at $156 million on June 30, 2007. 

The foreign currency bonds reduced to $66 million from $88 million. Central bank deposits remained unchanged at$700 million, NBP/BOC Deposits reduced to 

$400 million from $700 million.

External liabilities rise to $41.66bn


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## Neo

*MGCL strikes gas discovery ​* 
Wednesday, November 14, 2007

ISLAMABAD: Mari Gas Company Limited (MGCL) has made a gas discovery at Bhitai exploratory well No 1 near Daharki district Ghotki Sindh.

Sweet natural gas flowed from the well from two horizons namely Sui Upper and Sui Main Limestone at a cumulative rate of 11.32 million standard cubic feet per day (mmscfd). The drilling operations at Bhitai well No 1 commenced on September 6 and penetrated into Sui Main Limestone formation at 1202 meters, says a press release issued here on Tuesday.

The well after conducting testing on various zones, has successfully been completed as a gas producer. These additional volumes shall be tapped into production stream after in-house installation of production facilities and analysing the testing results for reserve estimation. The Company has embarked upon drilling of two more exploratory wells at two different structure highs for establishing the total production capacity of the field.

Mari Gas Company since 2001 has acquired rights to operate seven exploration blocks representing itself in almost all the regions of Pakistan. Moreover MGCL has working interest in six blocks as joint venture with other oil exploring and producing companies.

MGCL strikes gas discovery


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*Plan under way to modernise HMC with Rs14 billion ​* 
Wednesday, November 14, 2007

ISLAMABAD: The federal government has planned to invest Rs14 billion for modernising the Heavy Mechanical Complex (HMC) in the next five years.

We are making new investment plans for the HMC and a huge amount of Rs14 billion will be invested to modernise its operations in the next five years, Federal Minister for Industries and Production, Jehangir Khan Tareen said while addressing the foundation stone-laying ceremony of a project of 1,800 flats for workers and a sports stadium at HMC Taxila on Tuesday. Federal Minister for Labour and Manpower, Ghulam Sarwar Khan and Sports Minister Shamim Haider were also present on the occasion.

The project to construct 1,800 flats will be completed in the next two years and will be handed over to workers with ownership rights. Tareen also announced one month bonus for the employees of the HMC on the occasion. Later on, Federal Minister for Communication, Shamim Siddiqui, also laid foundation-stone for remodelling of Chowk Sara Kala Taxila.

Tareen said the government had excluded the HMC from the privatisation list as everything should not be sold. After dropping the idea to privatise the HMC, the minister said that the government was making plans to invest Rs14 billion in it to modernise the HMC operations in the next five years. He said the HMC was in the grip of financial crunch and there was deficit related to provident fund of Rs110 million being faced by this industrial unit. Now the amount to overcome this deficit has been provided to the HMC management and more investment plans are under consideration to achieve the desired results.

Tareen was of the view that the PML (Q) and its allied parties would win the upcoming elections on the basis of their performance. He said the government would be completing its tenure in the next two days and his party was confident to come back with clear majority.

Federal Minister for Labour, Manpower and Overseas Pakistanis, Ghulam Sarwar Khan said that although General Musharraf has worn uniform but his attitude was more democratic than those who remained in the power during the decade of 90s. While criticising his opponent political forces, the minister said the masses should reject those people who were in the corridors of power for the last 25 years but they did not initiate projects which were crucial for the welfare of masses.

While appreciating the role of Minister for Industries, Ghulam Sarwar Khan said that Tareen provided land of his ministry for the construction of polytechnic college, sports stadium and labour colony which will serve the coming generations. 

Federal Minister for Sports, Shamim Haider, said on the occasion that the government has increased budgetary allocation for the sports three folds and funds were available to meet the demands of the people in shape of providing basic infrastructure for sports at the districts and Tehsil levels.

Plan under way to modernise HMC with Rs14 billion


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## Neo

*Rs417bn realised through sell-off ​* 
Wednesday, November 14, 2007

ISLAMABAD: Prime Minister Shaukat Aziz disclosed on Tuesday that Rs417 billion has been received through privatisation proceeds during the last eight years of the present government as compared to Rs57 billion of previous governments from 1991 to 1999.

Presiding over a meeting of the Cabinet Committee on Privatisation (CCOP), he said that liberalisation, deregulation and privatisation of the economy have earned dividend for the country and privatisation was the hallmark of the governments economic reforms agenda. He stressed that privatisation process must be carried forward for the sustenance of the economic growth and competitiveness of Pakistans economy.

The CCOP was briefed on the privatisation process and was informed that an amount of Rs26.9 billion has been received in the first four months of the current financial year (2007-08). The committee was also informed about the ongoing transactions that include the privatisation of Heavy Electrical Complex, National Power Construction Co, Hazara Fertilizer, Pakistan Machine Tool Factory, Faisalabad Electric Supply Co and Jamshoro Power Co. The meeting was also informed that capital market transactions coming up in the next quarter include GDR of National Bank and Kot Addu Power Compan. 

Rs417bn realised through sell-off


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*Move to promote machinery manufacturing ​* 
Wednesday, November 14, 2007

LAHORE: The Technology Upgradation and Skill Development Company (TUSDEC) and Pakistan Machine Tool Factory (PMTF) have decided to join hands for the promotion of local manufacturing of machinery, especially machine tools. The decision was reached in a meeting held at TUSDEC head office on Tuesday.

Giving details of the working of PMTF, its Managing Director Dr Muhammad Ashraf Butt said the factory, a precision engineering goods manufacturing enterprise in Pakistan, was engaged in the production of machine tools, automotive transmission and axle components, gears for locomotives, pressure die cast parts and other products.

He urged the TUSDEC to procure machinery, especially the turning centres, from the PMTF for its Tools, Dies and Moulds Centres in Karachi and Gujranwala. Dr Butt also expressed interest in TUSDECs efforts for the development of a better version of ginning machine in Pakistan to help improve ginning practices.

A TUSDEC spokesman said the company was working for the promotion of new technologies and skill development to help the industry become internationally competitive. He said the TUSDEC could be helpful in local production of controls for turning centres, which were presently fitted with imported controls. He said the TUSDEC was ready to sign a Memorandum of Understanding with the PMTF for cooperation.

Move to promote machinery manufacturing


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*CAD to be around 4.7 percent of GDP ​* 
ISLAMABAD (November 14 2007): Dr Ashfaque Hasan, Special Secretary, Finance, said on Tuesday that Pakistan's current account deficit is expected at 4.7 percent of the GDP in the current fiscal year, 2007-08. "Pakistan's current account deficit will be around 4.7 percent of the GDP during the current fiscal year, against 4.9 percent of last year," he said in briefing after ECC meeting.

He said that Commerce Ministry and Chairman, Trading Corporation of Pakistan (TCP) would agree with the price of those parties whose tenders have already been accepted. He said that TCP is meeting wheat import target, as two consignments of 25,000 tons each would reach by the end of current month, while 150,000 tons would come in December, followed by 300,000 tons in January.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Economic uplift: 'Public-Private partnership proves successful' ​*
RAWALPINDI (November 14 2007): The concept of Public-Private Partnership in Pakistan (PPP) has proved successful in developing the economy and we have to take further measures for strengthening this system, said Kokio Tamaki, Representative of the Japan External Trade Organisation (Jetro) and special advisor to the FPCCI here on Tuesday.

"Due to prudent and liberal economic policies of the government, the economic indicators have shown upward trends but still there is a room for improving it," Kokio said while addressing the senior executives and members of the Rawalpindi Chamber of Commerce and Industry (RCCI).

Jetro representative was of the view that active co-operation between public and private sectors was key to economic stability. Speaking on the occasion, the RCCI president Dr Hassan Sarosh Akram said that government should take measures to motivate people running poultry and CNG industries in Potohar region. These are the main job provider to youths in the region, he added.

Sarosh hailed the continuation of the government's economic policies saying that this has brought economic stability and attracted the foreign investment in different sectors of the economy.

He stressed the need for appointment of professional commercial attaches in embassies abroad saying that they would give better results in attracting costumers for Pakistani products.

Sarosh lauded the role of Jetro in bringing Pakistan and Japan closer saying that the trade volume has increased significantly with the positive efforts of both the sides. By involving and facilitating private sector both the countries would succeed in expanding import and export besides enhancing the trade volume, he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Pakistan to have four marble cities soon' ​*
ISLAMABAD (November 14 2007): Minister for Industries, Production and Special Initiatives Jahangir Khan Tareen said here on Tuesday that four marble cities would be established in the country soon aiming at exploring widespread marble reserves and provide job opportunities to the people.

These cities would be established in Federally Administered Tribal Areas (FATA), Risalpur, Northern By-pass Karachi and at Lora Lai in Balochistan province. Talking to journalists at the agreement signing ceremony for the establishment of Marble city in Risalpur, the Minister said, the marble cities would be established in line with Sundar Industrial Estate already established in Lahore.

Chairman and Chief Executive Officer Pakistan Stone Development Company (PASDEC) Ahsanullah Khan and Northern Region Chief Executive National Industrial Parks Development and Management Company (NIPs), Mohsin Syed signed the agreement on behalf of their respective companies. The Minister was of the view that the marble city would attract investors and ensure enhanced job opportunities for the local people.

He said that keeping in view the increasing demands, there would be dire need for establishing about a dozen marble cities in the country. He expressed the hope that changing of governments would not affect the projects, saying, "we have laid foundation to strengthen institutions for the continuation of development projects."

Jahangir Khan said NIP and PASDEC have been provided revolving loans of Rs 2 billion each to execute the project, adding that the marble cities are being established in those areas where no industry has been established so far. To a question, he said that land in the marble cities would be provided on performance basis, adding that if the industrialists fail to show their positive performance within two years, their allotment of plots would be cancelled.

To another question, he said, the provincial governments have been providing land for the projects. Speaking on the occasion, NIP Chief Executive for Northern Region, Mohsin Syed said that the industrial cities would be established in consultation with the stakeholders to make the projects successful and result-oriented. He said that Risalpur city would be developed in line with Sundar Industrial Estate of Lahore.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*EOBI to build 600 megawatts power plant in Karachi ​*
KARACHI (November 14 2007): EOBI is planning to build 600 Mega Watts Power generation Plant to overcome the electricity shortage in Karachi. This was stated by the Chairman EOBI, Brigadier Akhter Zamin (Retd) while giving a briefing to the City Nazim Syed Mustafa Kamal during his visit to EOBI head office and held a meeting with the Chairman EOBI Akhtar Zamin and senior officers of the institution.

The chairman EOBI explained the functions of the EOBI to the City Nazim and its future plans to provide benefits of pension to the employees of industrial and commercial sectors without any difficulty or hardship.

Speaking at the occasion the Chairman said that to increase the profit on the investment in a secure way EOBI has decided to invest in the Real Estate. For this purpose PRIMACO (Pakistan Real Estate Investment and Management Company Ltd) was established which is wholly owned subsidiary of' EOBI, Chairman added.

Akhter Zamin further said that PRIMACO has launched many real state projects, which includes a Commercial Centre at Karachi, in Islamabad. A 4 Star Hotel Project and housing scheme at Lahore and planning to start mega project to increase source of income and to utilise EOBI's assets for the welfare of the citizens of the country.

The Chairman EOBI informed the City Nazim that EOBI is planning to build and operate 600-mega watt Power Plant in Karachi so that the energy crises in the city can be overcome.

Kamal took keen interest in the development of Power Generation Plant and stressed that there is a need of energy for the industrial and commercial activities. Chairman EOBI further informed that EOBI is also interested in dc-sanitation Plant.

Kamal appreciated the activities done by EOBI. Showing his concern over traffic problem and for its improvement, he said that Mass Transit Project is under consideration.

The City Nazim invited EOBI to consider the project, which will be useful for the citizens of Karachi and also beneficial for EOBI. He assured that the city government will help to made this project a success.-PR

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*18 IT projects worth Rs 4.5 billion being executed in Sindh ​* 
KARACHI (November 13 2007): Adviser to Sindh Minister for Information Technology Muhammad Noman Saigal has said that 18 IT projects worth around Rs 4.5 billion are being executed in the province. He disclosed this while speaking with the media personnel on an inauguration ceremony of new office of IT department in Sindh Secretariat here on Monday.

The new office was completed in two and half months at a cost of Rs 3.2 million as per the standard of international firms of IT. "These projects are not only producing more IT experts and manpower in the province but also increasing employment opportunities besides, introducing latest technology," he added.

He said that we had developed a long-term strategy for IT sector with a special emphasis on public welfare. He added that the department, particularly, was working on the project relating to education, health, technical education, security and human resources which would bring positive results."

He told that these projects include establishment of call centres, training program, web portal of Sindh government, e-government project, e-policing computerisation of Advocate General Sindh and its field offices, e-government Sukkur and automation of hospital across the province.

He was of view that these projects, equip with modern technology and development of service structure of IT field would attract investors towards IT sector of the province. A service group for the IT, just like other departments, is being developed in the province, he added.

Responding to a query on non-representation of Sindh in telecom sector, the adviser said that IT and Telecommunication were imperative for each other, however, he admitted that this non-representation causing impediments in uplift of IT at the provincial level. To overcome this problem, there is a dire need to give prior position to Telecommunication sector at the provincial level, he suggested.

He pledged to work on further improving the status of the province in the global IT sector, although he claimed that the province had already got a prominent position in this regard.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Cellphone firms contribute Rs66bn to kitty ​* 
Thursday, November 15, 2007

LAHORE: The mobile phone segment contributed more than Rs66 billion to the national exchequer in the form of taxes in 2007, which is more than 70 per cent of total telecom contribution whereas mobile firms revenues grew by 48 per cent with 78 per cent increase in subscriber base and 95 per cent increase in investments. 

The mobile phone industry had been growing at an average rate of 80 per cent for the last three years, but in 2007 the growth rate dropped due to reduced tariffs and increased taxes. 

According to data of the Pakistan Telecommunication Authority (PTA), Telenor and Warid have witnessed huge growth in their total revenues which have grown by more than 200 per cent. Revenues of Mobilink and Ufone grew at a proportional pace, however, Mobilink remained a major contributor to total revenues of the mobile industry which came from data services and more than 90 per cent revenues came from voice services in 2007. 

Mobilink has still the maximum share in the market in terms of revenue with generation of almost 50 per cent of the industry revenue. Telenor having market share of 17 per cent is the second highest revenue generator of the mobile industry followed by Ufone and Warid. 

According to the data of taxes, in 2006 total activation tax paid by mobile sector was 11.4 billion which grew to Rs17.6 billion showing a growth of 24 per cent whereas withholding tax paid by the sector grew from Rs8.5 billion to Rs17.4 billion showing almost 100 per cent increase. 

The GST contribution by the sector has however been dropped from Rs18 billion to Rs28.3 billion. According to international research companies including Business Monitor and Informa telecoms the mobile subscribers would cross 110 million mark by 2010. 

PTA estimated that users would cross 77 million by the end of 2007-08 making above 2 million monthly average additions during the year. It maintained that by the year 2009-10 the cellular subscribers would reach around 100 million making the cellular penetration 59 per cent. 

The industry witnessed the similar growth in the handset market. Although Pakistan handset market comprises of number of authorized dealers, still large portion of handsets come illegally via smuggling, individual carrier of new, used, refurbished sets from European and Middle Eastern Markets and other routes. 

Cellphone firms contribute Rs66bn to kitty


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## Neo

*Saudi Pak Bank purchase deal seen in two weeks ​* 
Thursday, November 15, 2007

KARACHI: A consortium including Japans Nomura Holdings and Bank Muscat could sign a deal within two weeks to buy a majority stake in Pakistans Saudi Pak Bank for as much as $218 million, bankers with knowledge of the transaction said on Wednesday. 

Foreign buyers have been attracted by the Pakistani banking sectors strong performance and financial reforms that have laid the platform for rapid growth and rising incomes. As no new banking licences are being issued, except for Islamic banking, foreigners must buy their way into the market.

The consortium, led by Pakistani financier Shaukat Tarin, also includes International Finance Corp (IFC), the World Banks private sector arm. The deal could be finalised at 27-28 rupees a share, the bankers said.

The buyers are looking to acquire anywhere between 75 and 95 per cent of the bank, said one banker, who asked not to be named. Bank Muscat is likely to buy a 35 per cent stake, Nomura 10 per cent and IFC 20 per cent. The rest is expected to be bought by local partners led by Tarin, said another banker.

The sale purchase agreement for the deal is likely to be signed pretty soon, maybe in two weeks from now, said the first banker. At 28 rupees a share, a 95 per cent stake in the bank would be worth about $218 million. The price would be around 2.8 times Saudi Pak Banks current net asset value.

Saudi Pak Bank shares were trading down 1.6 per cent at 25.45 rupees at 0755 GMT on the Karachi Stock Exchange (KSE). Britains Standard Chartered, whose local arm is listed on the KSE, last year bought Union Bank for $487 million in the biggest deal in the sector so far, paying 5.6 times the net asset value.

Tarin was president of Union Bank at the time of the deal. Some analysts had feared that Pakistans current political uncertainty, with emergency rule imposed by President Pervez Musharraf earlier this month, could deter foreign buyers, but the Saudi Pak deal is likely to go through regardless.

Talks on this deal have been going on for more than six months, so it was very unlikely this deal would have been affected by the political situation, said a banker. Also, the risk perception of Pakistan for the Middle Eastern investors is pretty different from the West or the Far East, he said. Other buyers in Pakistan in recent years include Dutch ABN AMRO, NIB Bank Ltd, a subsidiary of Singapore state investor Temasek Holdings, and Saudi Arabias Samba Financial Group. 

Saudi Pak Bank purchase deal seen in two weeks


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## Neo

*Foreigners withdraw $88m equity investment in 3 days​*
KARACHI, Nov 14: Foreign investors pulled back $88 million from the countrys equity market in the first three trading days this week, including which the outflow of total foreign portfolio investment stood at the staggering sum of $165 million since imposition of emergency in the country on Nov 3.

The State Bank of Pakistan would release the latest SCRA figures  that show the foreign investors stake in the market -- on Thursday, but fund managers came up with their own conclusions.

On Friday the foreign investors held an investment portfolio of $224 million, which has shrank to $135 million by the close of trading on Wednesday, says a private fund manager. He recalled that the overseas investors had ploughed $300 million in stocks in the current fiscal year until Nov 1. But in the nine days up to Wednesday, $165 million had evaporated, leaving $135 million in the equity market.

Analysts said that another $51 million had been withdrawn by the foreigners from money market (T-Bills).

Uncertainty was the key word. Uncertainty on the future course of events on the political front was driving investors away, says an equity strategist, adding that most people were comfortable with economics, given the government projected healthy economic growth, reserves, remittances and corporate earnings numbers.

But there were worries. Both Moodys and S&P had downgraded Pakistans credit rating outlook from stable to negative; the Commonwealth factor and the reported decisions by a few foreign industrial investors to cut down the size or put their expansion projects on the hold, could hardly boost equity investors confidence.

Some stocks on the banking, cement and insurance had already lost 15-20pc of their value.

Although glum faces could be seen all around the corridors and the trading hall of the stock exchange, many brokers were still selling optimism. Things are not as bad as they were expected to be, says Haji Ghani Haji Usman, a sitting director on the KSE Board.

He argued that the market had been gripped by fear on the day the emergency was clamped, believing the KSE-100 index to plummet by 2,500 or more points, but all that the market had seen was a fall of 800-odd points.

Some stock brokers were sore that the happy conclusions on the waiver of capital gains tax, drawn in their meeting with Prime Minister Shaukat Aziz on Friday had come to naught. The announcement of dissolution of National Assembly came only the day after. How do we know that the interim government would carry on with the decisions? grumbled a member.

With the black out of real-time news from credible electronic media, every rumour monger was making money, while investors were losing it. The statement of President Musharraf to a foreign news channel stating that he had considered resigning was translated by the rumour mongers in the market as he was considering resigning, which saw a free fall of shares on Wednesday.

Analysts said that the Pakistani stocks were trading at attractive valuations of 10.5 times of the earnings, compared with regional average of 16 and Indian market price-to-earnings of 19 times. But for the moment foreign fund managers are treading cautiously due to the rise in systemic risk, says Khurram Schehzad, analyst at stock brokerage firm InvestCap.

Foreigners withdraw $88m equity investment in 3 days -DAWN - Business; November 15, 2007


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*Power plant​*
ISLAMABAD, Nov 14: Atlas Power Limited (APL) has achieved financial closure of its $169 million 225 MW thermal power plant to be set up near Sheikhupura.

The financial closing documents were signed between Private Power and Infrastructure Board (PPIB) and Atlas Power Limited at PPIB Office on Wednesday, said a press release. Senior level officials from both sides attended the signing ceremony.

The sponsors of the project are Shirazi Investments (Atlas Group) and MAN (Germany), while National Bank of Pakistan (NBP), Habib Bank Limited (HBL), United Bank Limited (UBL), MCB Bank, Allied Bank Limited (ABL) and Atlas Bank are the lenders to the project.

The power plant will use residual fuel oil (RFO) and is expected to start its commercial operations by March 2009.

Power plant -DAWN - Business; November 15, 2007


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*ADB assures consistent support to Pakistan​* 

ISLAMABAD: The Asian Development Bank (ADB) Board in its next board meeting would consider projects relating to national trade corridor, power transmission enhancement and reform agenda.

This was informed to the Prime Minister Shaukat Aziz during a meeting with Country Director, Asian Development Bank (ADB) Mr. Peter L. Fedon, who called on him at the PMs House here on Wednesday. 

They discussed financial assistance for the upcoming projects in Pakistan and the ADB assured that the Bank would provide assistance on a consistent basis. 

The Prime Minister said that Pakistan greatly values its partnership with development institutions particularly the ADB whose constant support has enabled it to invest in structural reforms undertaken by the government as well as infrastructure development projects and poverty alleviation. 

The Prime Minster appreciated the active support of ADB for Pakistans reform agenda, which enabled economic turnaround of the country. He expressed the hope that this cooperation would further help Pakistan in achieving its objectives in the construction of large dams, road network as well as improving the social sector particularly the health and education facilities. 

Giving an overview of the economy, the Prime Minister said Pakistans economy maintained a solid pace of growth during the last five years. The size of the economy, he said, has doubled and the GDP is growing at an average rate of 6-8 per cent per annum thus reducing poverty, increasing per capita income, generating more jobs and improving the living standard of the people resulting in growing middle class in the country. The magnitude of growth achieved during this period has positioned Pakistan as one of the fastest growing economies in Asia, he added. 

The Prime Minister said that prudent economic policies and the successful implementation of first generation reforms has transformed Pakistans economic landscape and now the government is actively pursuing the implementation of second generation reforms to ensure shared and equitable growth for all segments of society. 

Mr. Fedon appreciated the support and guidance provided by Prime Minister Shaukat Aziz in cleaning up the loan portfolios and screening out of non performing project loans while focussing on defined sectors to enable Pakistan achieve its desired objectives. 

Mr. Peter Fedon acknowledged the economic performance of Pakistan during the last five years and said the success is mainly due to a strong leadership and efficient economic management. He informed the Prime Minister that ADB in its next board meeting would consider projects relating to national trade corridor, power transmission enhancement and reform agenda. 

He assured the Prime Minister that the Bank would provide assistance on a consistent basis.

Daily Times - Leading News Resource of Pakistan


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## Neo

*EU says still gives Pakistan aid despite crackdown ​* 
STRASBOURG: November 15, 2007: The European Union called on President Musharraf again on Wednesday to end the state of emergency and set a firm date for elections, but said now was not the time to cut aid to the country.

EU External Relations Commissioner Benita Ferrero-Waldner said the situation was "very serious."

"It is of fundamental importance that a firm date for elections is announced as soon as possible, as well as a clear timeframe for ending the emergency," she said.

Ferrero-Waldner said there had been calls for a review of EU aid, but noted that this support focused on areas such as poverty reduction and education.

"Therefore I think at this stage, let us sit back and let us wait for a moment and let us judge very carefully," she told the European Parliament in Strasbourg. "We should not jeopardise the poor people in Pakistan."

Some members of the assembly proposed that aid be channelled through non-governmental organisations rather than the state, others said sanctions should be prepared in case Musharraf failed to respond to appeals.

US Deputy Secretary of State John Negroponte is due in Pakistan late this week to urge Musharraf to end the emergency. He warned last week against cutting aid to an "indispensable" ally in the war against terrorisum.

Speaking for the EU presidency, Portuguese Secretary of State for Europe Manuel Lobos Antunes and leaders of the parliament's political groups also stressed Pakistan's importance as an ally.

Musharraf said at the weekend a national election would take place by Jan. 9, but did not say when the constitution would be restored or the emergency lifted.

The European Union has been considering sending a mission to observe the elections. Ferrero-Waldner said this would not be possible unless the state of emergency was lifted quickly, but it might be possible to send a smaller team of advisers.

The EU's executive Commission has committed 500 million euros ($733 million) in aid to Pakistan since 1976. For 2002-2006 this included 59 million euros for education, 50 million for financial sector reforms, 6 million for trade development and 5 million for prevention of child labour.

Brecorder


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## Neo

*Global Competitiveness Rankings: Pakistan makes improvement of seven ranks ​*
ISLAMABAD (November 15 2007): Pakistan successfully contained inflation from 9.10 percent to 7.20 percent and managed to decrease public debt from 53.5 percent to 52 percent of GDP, says Global Competitiveness Report of 2007-2008.

The World Economic Forum in its Global Competitiveness Report 2007-2008 released on Wednesday, has identified that Pakistan has improved its competitiveness by 7 ranks as compared to last year. Considering methodology used for 2006-2007 for 122 countries Pakistan would have secured the 84th position.

The World Economic Forum has adopted a new methodology for evaluating the Global Competitiveness Index for 2007-2008, which includes breaking out the single pillar on market efficiency into its three sub-components (goods, labour, and financial markets).

The World Economic Forum also included six new countries to measure the Global Competitiveness Index. Therefore straight comparisons to rankings in prior years of the Global Competitiveness Index cannot be made directly. The United States tops the overall ranking in The Global Competitiveness Report of 2007-2008.

Switzerland is in second position followed by Denmark, Sweden, Germany, Finland and Singapore. Pakistan has maintained its position by 92, whereas other major players lost their rankings by significant numbers. India lost 5 ranks on the GCI, whereas, Slovenia and Brazil lost 6 ranks, Egypt lost 14, United Arab Emirates and Indonesia lost 5 and 4 ranks respectively.

Pakistan remained more or less stable with respect to the constant sample and not considering the countries which entered the rankings for the first time this year, above Pakistan.

It seems that the Global Competitiveness Report of the World Economic Forum (WEF) recognises the leadership of the current government's strategy based on deregulation, privatisation and liberalisation, where Pakistan realised important progress in a number of different dimensions captured in the indexes.

Significant improvement were made in institutions, including property right (+0.40), in institutional framework (+0.27 for diversion of public fund variable, +0.35 in the efficiency of the legal framework among other), in the level of security (+0.31). Also private institutions sub-pillar is assessed as more efficient and transparent than last year (+0.24).

The pillar on infrastructure shows improvement with respect to last year (+0.6 overall), with a notable increase in the number of telephone lines (+0.48) in line with the government's effort to improve connectivity and infrastructure.

On the Macroeconomic stability, level of public debt has decreased (from 53.5 percent to 52 percent of GDP) and so has inflation (from 9.10 percent to 7.20 percent).

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Three hydel power stations being built in Skardu ​*
SKARDU (November 15 2007): Three medium-size hydel power stations are being constructed in Skardu District at a cost of Rs 270 million. An official spokesman told PPI on Wednesday that these powerhouses were being constructed at Taloo Rondu, Kindrik and Shamayoul Kharmang Sub Division.

He also said that the federal government was using the water resources to produce energy in these remote areas of the country to accelerate uplift activities.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Accord for thermal power plant signed ​*
ISLAMABAD (November 15 2007): The Private Power and Infrastructure Board (PPIB) and the Atlas Power Limited (APL) on Wednesday signed an agreement for the financial close of 225-MW therrmal power plant situated near Sheikhupura.

Earlier the company signed Power Purchase Agreement (PPA) on September 6, 2007, Implementation Agreement (IA) on September, 18, 2007 and Fuel Supply Agreement (FSA) on October 7, 2007 respectively. Financial closing documents were signed between Private Power and Infrastructure Board (PPIB) and Atlas Power Limited at PPIB Office. Senior officials from both sides attended the signing ceremony.

The sponsors of the project are Shirazi Investments (Atlas Group) and MAN (Germany), while National Bank of Pakistan (NBP), Habib Bank Limited (HBL), United Bank Limited (UBL), Muslim Commercial Bank (MCB), Allied Bank Limited (ABL) and Atlas Bank are the lenders to the project.

The power plant will use Residual Fuel Oil (RFO) and targeted to start its commercial operations by March 2009. The power plant is estimated to be set up at a cost of $169 million. This is yet another achievement towards adding up the megawatts required into the system in coming years.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Sindh government to develop mechanised mine at Thar coalfield ​*
KARACHI (November 15 2007): Sindh government has decided to develop a mechanised coal mine at Thar coalfield which is expected to have annual production of 2 million tonnes. The sources in Sindh Mines and Mineral Development Department told Business Recorder on Wednesday that provincial government will utilise Annual Development Programme (ADP) funds for this purpose.

The annual coal production in the provincial coalfield is presently 0.5 million tonnes while Sindh Mines and Mineral Development Department has set a target of 20 million tonnes by 2015.

The sources hoped that work on mine development would start soon adding that all necessary preparations were almost finalised. As soon as the coal production from the mechanised mine begins, investor firms would be invited for coal-based power projects, the sources added. They said that such mines could also be developed in other coalfields including Lakhra, Sonda-Jherruk, Mettng-Jhampir and Badin.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

* Foreign firms put expansion plans on hold ​* 
Say Competition Commission has anomalies that need to be removed

Friday, November 16, 2007

KARACHI: A number of foreign companies in the regulated sector have put their expansion plans on hold, as the promulgation of the Competition Commission Ordinance 2007, which was prepared quietly and without consulting the stakeholders, contains a lot of anomalies that are creating confusion and increasing risk for businesses, The News learnt on Thursday.

The first and prompt reaction to the ordinance came from representatives of foreign companies, which are working in Pakistan in association with the Overseas Investors Chamber of Commerce & Industry (OICCI), a body of 171 members with its headquarters in Karachi, the hub of economic activities in Pakistan.

In an informal chat with this reporter, foreign stakeholders complained that the provision of holding 40 per cent or more share of a product in the market would be subject to a possible action against the stakeholder by the Competition Commission. The action includes raids, harsh penalties or/and arrest of the officials concerned without producing search warrants. It is an arbitrary power that would discourage investors to go ahead with their future investment plans in the country.

What kind of mechanism the Commission would be having to measure the share of a product of a particular brand in the country, they questioned and said in some of the sectors such as in the smuggled goods sector, and undocumented and unregulated companies could manipulate figures and for that regulated companies would be held responsible.

They avoided naming the companies, which have put their expansion plans on hold. Most of them, however, are related to consumer goods, they disclosed. They said foreign investors, like them, are having a key role in the growth of developing economies like Pakistan, band criticised the government for not consulting them in the drafting of the ordinance.

Moreover, the fast changing political situation in the country and uncertainty are their other concern which should be resolved as soon as possible, they suggested. They said they are not against the rule of law and will with work within the legal framework, that is, the Competition Commission Ordinance 2007, adding: But the ordinance has a number of flaws, which need to be removed.

All the stakeholders should have been given a couple of months to read, understand and point out the flaws in this ordinance and the government should have sought suggestions from all the stakeholders before its promulgation. But the government did nothing of the sort and enforced the ordinance on Oct 2, they said. Now we are having this document in our hands (after promulgation) and have found a number of anomalies, they added.

If the government had contacted all the stakeholders in this regard, then there would have been no confusion and they would have been working as smoothly as they were working earlier, they said.

Secondly, none of the members of the commission, announced a few days ago, have significant practical experience or any experience of working in trade or industry, they said. Khalid Mirza, Chairman of the Competition Commission, has served the IFC, World Bank, SECP and the erstwhile MCA but no commercial entity. Mr Ghaffar is from the Tax Group of Civil Service; Ms Rafat Hassan is a legal practitioner associated with the SECP; Dr Wilson is an associate professor at LUMS. Ms Bangash is the only one with some business experience but it is limited to the financial world.

These members will decide the fate of business in Pakistan, determine the competitive environment and the competitive advantage, if any, that Pakistani businesses as a result enjoy in international markets.

For example, a brand of potato chips holding more than 40 per cent share of potato chips market may be deemed to have a dominant share. However, given the many alternatives available to consumers of potato chips, the correct relevant market will be the snackfood industry. Without sufficient experience of trade and industry, members of the commission are not likely to appreciate the difference, they said.

Appeals against the decision of the commission are to be filed before its own appellate bench which also is composed of the commissions members. So further appeal can be filed with the Supreme Court. The high courts have been bypassed altogether, they pointed out. Contrary to this under the Monopoly Control Authority, there were three levels of appeal as the high courts had not been bypassed, they said. In case of mergers, the commission will adopt a two-phase approach which will take at least 120 days to decide. This is a long and cumbersome procedure for an economy targeting to operate 24 hours, seven days a week, they said.

Moreover, merger and acquisition deals in other countries are kept confidential till they get matured so that the share prices of these particular companies are not speculated on stock exchanges. But in case of the Competition Commission of Pakistan, the deal would be made public at the initial stage that would be not fair with businesses, they argued. 

Foreign firms put expansion plans on hold


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## Neo

* Bank Muscat eyes Pakistan bank buyout ​* 
Friday, November 16, 2007

DUBAI: Omans Bank Muscat has said it expects to agree this year on taking over Pakistans Saudi Pak Bank with partners including Nomura Holdings and is not put off by the countrys political turmoil.

Bank Muscat, Omans largest lender, is in talks to buy 35 per cent of the Karachi-based bank as part of a strategy to expand in the Gulf and South Asia as competition in its home market intensifies, Chief Executive Officer AbdulRazak Ali Issa told Reuters on Thursday.

Bankers familiar with the transaction said on Wednesday the parties were considering a price of 27 rupees to 28 rupees per share, valuing Saudi Pak Bank at about 13.75 billion rupees ($225 million). 

Issa declined to comment on an indicative price. A 35 per cent stake would be worth about $79 million. Pakistan is a growing economy, Issa said. We have been looking at it for a long time.

A purchase would mark the lenders entry into banking in the worlds sixth most populous country where Saudi Pak is the 18th largest lender by market value, out of 25. Asked if the political situation in Pakistan was a concern for Bank Muscat, Issa said: No, Pakistan makes good business sense ... we have not seen any impact so far. 

Bank Muscat eyes Pakistan bank buyout


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## Neo

*EU ban on seafood exports causes $100m loss ​* 
Friday, November 16, 2007

KARACHI: Pakistan has incurred a loss of at least $100 million due to the ban imposed by the European Union (EU) on seafood exports from this country, a senior official of Pakistan Seafood Industries Association (PSIA) told The News, requesting anonymity.

The landing of seafood this season was double as compared to the previous season and had there not been a ban on seafood export to the EU, Pakistan would have exceeded the export target of $200 million this year, he said. 

He said the government has convened a meeting on the fishery policy in Islamabad on Tuesday but no representative of PSIA, boat owners association, mole holders or any other stakeholder has been invited. 

The exports to the EU were banned by the Marine Fisheries Department (MFD), government of Pakistan on April 12, 2007 on the plea that Pakistani seafood exporters were not adhering to the standards required by the EU. The EU complains that traceability and cold chain are not being maintained by Pakistani seafood exporters, said Sardar Muhammad Hanif Khan, Chairman PSIA. 

The EU says the batch number should indicate the boat from where the produce has originated and the required temperature should be maintained in the entire process- from catching to auctioning and ultimately to the processing plants, he explained. 

There are 34 seafood-processing plants in Pakistan and 11 of them have been approved to export their produce to the EU that buys 50 per cent of Pakistans seafood exports. Khan showed his utter disappointment over the performance of MFD that was quick to impose a ban on seafood exports on behalf of the EU but was slow to rectify the problem despite the fact that the lives and livelihood of about 50,000 people, associated with fishing and allied industry was at stake. 

Last year the seafood export target was $210 million and Pakistan managed to fetch $184 million. This year, the target is $200 million but if the ban is not lifted immediately, Pakistan will be a loser, he said. 

Mohammad Ali Shah, chairman, Pakistan Fisherfolk Forum (PFF), a representative body of fishermen accuses the government of bringing a bad name to Pakistan and rendering thousands of fisherfolk jobless. 

The government accrues substantial foreign exchange through export of seafood every year, therefore, if the EU has made any objections regarding standardization, it is the responsibility of the State to rectify them, he said. 

Ironically, the Fisheries Development Commissioner who promised some two months ago to present a report to the EU in October has failed to do so. The sufferers are the ordinary fishermen. 

There was a time when fisherfolk would give Zakat because they were prosperous. Today, thousands of fishermen have no option but to survive on Zakat, said Mohammad Hussain, 38, a fisherman at Karachi Fish Harbour. 

I know there is no defect in our boats because if the EU had any objection on them it would have also banned seafood exports from India where boats are of much inferior quality as compared to Pakistani boats, he maintained. 

He also complained about the highhandedness of Maritime Security Agency (MSA) and Customs Department that harass fishermen on the plea that they were checking their documents and keeps them waiting in the sea for hours. 

We leave at 3am so that by 5am we may reach the deep sea but first we have to seek clearance from MSA that keeps us waiting for hours; followed by a similar drill by the Customs Department. Our diesel keeps burning, he said. This is despite the fact that the Sindh High Court has issued directives that boats could only be stopped by security agencies if somebody was suspected, he said. 

EU ban on seafood exports causes $100m loss


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## Neo

*Manufacturing of electronic gadgets planned ​* 
Friday, November 16, 2007

LAHORE: The Technology Upgradation and Skill Development Company (TUSDEC) is planning to establish an electronics complex in a bid to promote local manufacturing or assembling of electronic gadgets, especially mobile phones.

The proposed electronics complex will act as a common facility centre for the manufacturers and assemblers of electronic gadgets to help bring down the import bill through local production of the gadgets, a TUSDEC representative told a meeting on the electronics sector at the Lahore Chamber of Commerce and Industry (LCCI).

President LCCI Shahid Hassan Sheikh, Senior Vice President Yaqoob Tahir Izhar and Chief Operating Officer of United Mobile Azad A Lalani were also present on the occasion. The TUSDEC spokesman said that the electronics industry was considered one of the worlds fastest growing industries with global revenue worth trillions of dollars per annum. However, he regretted that this vital sector was still in its infancy in Pakistan and never became a major revenue generating industry.

The sector basically focuses on consumer electronics, with activities confined to assembly of conventional TV sets, radios, cassette recorders and other allied consumer electronic products from imported CKD or SKD component kits. He said that TUSDEC has conducted studies on enhancing value added production through a common facility or teaching factory approach to upgrade our electronics industry to enable adoption of modern techniques and generate trained human resources.

The establishment of a common facility centre (CFC) or electronics complex has been proposed to uplift the industry by importing contemporary technology, machinery, obtaining training and skill enhancement together with practical production training. The Electronics Complex, he said, would provide the industry with complete printed circuit solutions commensurate with economy of scale as well as expert services for product design and proto-typing. This centre will be equipped with a modern electronics design and quality assurance lab for design. The CFC will contain high-tech Surface Mount Technology (SMT) machines for assembly of Printed Circuit Boards (PCBs) with both through-hole and surface mount components, he added.

President LCCI, Shahid Hassan Sheikh while lauding TUSDECs efforts for the promotion of electronics sector said that the steps like the establishment of s electronics complex would not only be helpful in import substitution but also make Pakistan a manufacturing hub of the electronic gadgets.

Manufacturing of electronic gadgets planned


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## Neo

*Iran to continue investment in Pakistan ​* 
Friday, November 16, 2007

KARACHI: Iranian Consul General Masood Muhammad Zamani has said the Islamic republic will continue to invest in Pakistan regardless of the political situation here.

He was speaking in a meeting with businessmen at the Karachi Chamber of Commerce and Industry (KCCI) on Thursday. A 24-member trade delegation from Kermanshah province of the Islamic Republic of Iran, headed by Daaryash Panahi, Deputy Director of Commerce Organisation of Kermanshah, visited the KCCI.

Zamani said Pakistans political situation was its internal matter which would be resolved soon but Iran would not back out of investments and its businessmen would continue to visit the country.

He also invited Pakistani businessmen to visit Iran in order to learn more about the country, search for investment opportunities and hold exhibitions there. He said the Iranian people would treat the visitors as their brothers and would ensure that the delegates faced no problems.

Counsel Manager of Trading Organisation of Iran Ahmed Fasihi said Pakistan was the second country in the export list of Kermanshah province, which highlighted the important trade relations between the two sides.

He suggested that the Kermanshah Chamber of Commerce and Industry and the KCCI should join hands and work as one body to promote exports and overcome obstacles faced by the businessmen of both sides.

Iran to continue investment in Pakistan


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## Neo

*Pak pavilion main attraction at IITF-2007 ​* 
Friday, November 16, 2007

KARACHI: Pakistans pavilion at India International Trade Fair (IITF-2007) was the main attraction for visitors in terms of variety of product range among all the stalls.

This was stated by the director of Pakistans pavilion Farooq ASheikh in a communiquÈ sent to the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) from New Delhi on Thursday. He said that President of India Pratibha Patil visited almost all the stalls at Pakistans pavilion and appreciated the products and their craftsmanship. Minister of State and Chief Executive TDAP Tariq Ikram welcomed the Indian president at Pakistan Pavilion, located in the SAARC area.

He said that although 40 countries were participating in IITF, the display of multi products range in Pakistan Pavilion was distinction amongst all international pavilions which is being highly projected by print and electronic media of India. 

Pak pavilion main attraction at IITF-2007


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## Neo

*Auto industry plan approved​*
ISLAMABAD, Nov 15: The government has approved the Auto Industry Development Programme (AIDP) to provide a predictable and transparent investment opportunity.

The Economic Coordination Committee (ECC) of the Cabinet which met on Tuesday cleared a summary on the subject submitted by the Ministry of Industries, Production and Special Initiatives.

The ECC termed the AIDP as a clear roadmap which will lead the auto industry to a sustainable, innovative and competitive development and to enable the industry to attract investment and become a part of global supply chain.

The AIDP has been developed by the Engineering Development Board (EDB) to facilitate and encourage the investment, domestic competition, enhance competitiveness and stimulate innovation through technology acquisition, human resource development, capacity expansion, auto cluster development etc.

The programme is based on the principles which include: encourage continuation and increasing indigenisation; and facilitate auto industrys integration into the global supply chain and the used vehicles import policy will be regulated so as not to impede the growth of the local industry while protecting consumers interest, an EDB announcement said on Thursday.

It provides the targets and goals and a clear development programme through a roadmap for the next five years, realising that the rapid growth in auto industry is difficult to sustain without efficient human resource.

In order to fill the deficiency of skilled personnel, an Auto Industry Skills Development Company (AISDC) will be established to be jointly managed by a board with representatives from industry and the government. Two centres of excellence will be established under the management of AISDC.

Productive Asset Investment Incentive (PAII) provides incentives against the newly-installed productive assets to stimulate investments in the production capacities of auto part manufacturing and to optimally utilise such capacities through supply of output to the vehicle assemblers in the country.

Since technology level remains low in the auto parts manufacturing due to high cost of technology acquisitions and to enhance the technology level, quality and encourage further localisation, matching grants will be provided under the Technology Acquisition Support Scheme.

Furthermore, to complement mutual support and synergy of the vendors, the AIDP provides the establishment of two auto clusters one at Lahore and Karachi each for which the government has already acquired land. AIDP also provides for Auto Industry Investment Policy (AIIP) for the investors to start manufacturing of vehicles in the country.

An Auto Industry Development Committee (AIDC) will be established with the objective to provide focused and continued attention to the auto industry at a governmentprivate level. It will have a regular dialogue and effective communication with the industry and it will steer the implementation of AIDP and conduct an assessment and review of the policy initiatives of AIDP annually and up to 5 years to evaluate the effectiveness of AIDP.

Auto industry plan approved -DAWN - Business; November 16, 2007


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## Neo

*Reserves​*
KARACHI, Nov 15: Pakistans total liquid foreign exchange reserves went up by $15 million to more than $16.387 billion this week.

According to weekly report of SBP here on Thursday, the foreign exchange reserves held by the Central Bank were estimated at $ 14.183 billion on Nov 10 while reserves held by the banks stood at about $2.204 billion.APP

Reserves -DAWN - Business; November 16, 2007


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## Neo

*Oil production by local E&P companies: Govt bags $127.7m in windfall gains​*
ISLAMABAD: The federal government has come out as a major beneficiary of the increase in international prices of crude oil, bagging $127.723 million in windfall gains on local oil production from local exploration and production (E&P) companies, a senior official at the petroleum ministry told Daily Times on Thursday.

The ministry came to this conclusion after accepting the proposals of a committee set up to negotiate discount rates for petroleum bought from local E&P companies. 

According to the official, the government of Pakistan purchases crude oil from different E&P companies in accordance with the pricing provisions of various Crude Oil Sales Agreements (COSAs), Petroleum Concession Agreements (PCAs) signed between the companies and the government. Under the provisions of some of the agreements which were signed prior to Petroleum Policy 2001 with British Petroleum (BP), Orient Petroleum International Inc. (OPII), Pakistan Oilfields Limited (POL), and Oil and Gas Development Company Limited (OGDCL), the sellers of crude oil receive a price for their share sold to the government of Pakistan after applying for a sliding scale discount. The government is the beneficiary of this discount and has deposited the same in the governments treasury. The COSAs and PCAs provide that in the event, the net international crude oil prices exceed $50 a barrel, the parties would meet to determine an appropriate discount for prices above $50 a barrel.

From March 2005 onwards, crude oil prices started registering increase in the international market above $50 a barrel. Therefore, in order to negotiate the discount rates with the producing companies BP, POL, OPII, OGDCL, under the provisions of respective agreements, the secretary Petroleum and Natural Resources (P&NR) Ministry constituted a committee comprising representatives from the Finance Division and the P&NR Division. The committee held various meetings with the above companies to negotiate the discount and later submitted its report, the official added. 

The producing companies were of the view that due to increase in crude oil prices in the international market, the cost of production had also increase manifold. The fields under negotiation had been in production since long and had become technically different and expensive to maintain for which all benefit/windfall of increase in the prices beyond $50/ barrel should be passed on to them for maintaining the production. 

After detailed deliberations, the committee has recommended that provisions of the agreement should be honoured. In this regard the existing petroleum policy has a provision to share windfall profits on a 50:50 basis in case oil prices increase beyond $30/ barrel. 

The committee, therefore, recommended that the principle of the approved petroleum policy could be considered as a logical basis for negotiations. It was revealed that in case the windfall provision of existing policy is applied for prices above $50/ barrel, the gain to government would be higher. The committee therefore, recommended that the crude oil price differential between $50/ barrel and the net market price be shared equally between the government and the producers.

Similarly in case of condensate, the agreements provide that if prices exceed $34/barrel in case of Qadirpur, Block-20 and Tajjal blocks and $50/barrel for Ratana field, the parties shall meet to determine discount prices exceeding the above ceiling. OGDCL, OMV and OPII have approached to negotiate the discount for condensate. The committee also recommended: the condensate price differential may also be shared equally between the government and the producers on 50:50 basis on the analogy of crude oil discount. 

The ministry while endorsing the recommendations of the committee called it as a win-win situation both for the parties. In the light of the recommendations of the committee, the ministry has proposed the government that the present discount rates applicable under the respective agreements may continue up to the ceiling limits mentioned in the respective agreements. The ministry has estimated that based on the said proposal an amount of $127.723 million will accrue to the government for the period the prices started exceeding the existing ceiling limits in the respective agreements and up to May 2007.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Mobilink to invest $500m more in Pakistan​*
KARACHI: Mobilink GSM has so far invested $2 billion in Pakistan and in the coming years it is planning to further invest $500 million. 

This was stated by Omar Manzur, Public Relations Manager, Mobilink Pakistan during a media training workshop for the journalist in Istanbul.

Currently we have laid 6,000 km fiber optic lines in different cities of Pakistan and after lying additional 500 km fiber optic lines Mobilink GSM will become a complete telecom service provider in Pakistan, Manzar added.

He said, after completion Mobilink will divert its traffic on this fiber optic network, which would be available to the other operators also for their traffic. 

Mobilink has always wanted to take the lead in all the sectors and in term of infrastructure it would not be relying on any other companies. Currently our network is based on 2.5 generation and we will upgrade this according to the requirement of our subscribers.

Currently more than 28 million customers are using Mobilink services across the nation. With more than 5,000 cities, towns, and villages throughout Pakistan on its network, it will be covering the entire length and breadth of Pakistan, he added. 

Mobilink Pakistan organized journalist training on the telecommunication industry in Istanbul. The trainer Ms. Eileen M. Wallis, Managing Director of the Portsmouth Group, one of the Middle Easts leading communications consultancies, conducted the workshop. The workshop covered all issues related to quality of service, call tariffs, upcoming technologies, consumer reaction, role of regulator and connectivity problems in the telecom sector. Print and electronic media journalists from all over the country covering the beats of IT and Telecom participated in the workshop. 

The workshop focused on the telecommunication industry especially the mobile phone sector progress rate and the challenges faced by the operators and its solution. To improve the performance of telecom reporters different suggestions and advices were forwarded and at the end of the workshop Mobilink shields were presented to the participants.

Daily Times - Leading News Resource of Pakistan


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## Neo

*US will expand business assistance: Anske ​* 
KARACHI (November 16 2007): The US Consul General, Kay Anske has said that her country would also expand its assistance to Pakistan on business side to enhance bilateral trade between the two countries.

Addressing the members of Federation of Pakistan Chambers of Commerce and Industry at FPCCI building on Thursday, she said that American Business Council (ABC) would continue its role in introducing fresh investment in Pakistan.

She acknowledged that Pakistan was an important trade partner and major ally against the global war on terrorism. However, she stressed on resolutions of some basic issues like alternate dispute resolution and intellectual property rights, which she said, are significant in boosting trade and investment.

Later talking to newsmen after holding meeting with the members of FPCCI, she said that US would support democracy in Pakistan. However, US Consular General ruled out any fresh legislation for imposition of sanction on Pakistan after emergency rule, saying that any decision in this regard would be taken under the already in placed laws.

Sources in the FPCCI told Business Recorder on the basis of anonymity that US Consular General had been quite unclear on several issues during meeting with FPPCI members and avoided expressing any opinion.

They said that during meeting, several issues came under discussion including war on terrorism, trade, political situation and situation in the wake of state of emergency rule in the country. Earlier, addressing the FPCCI members, Zubair Tufail demanded further US assistance to Pakistan for its role against global war on terror that had hit its economy badly since this war had been waged.

He said that Pakistan is the largest trade partner of US and a close ally against war on global terrorism and observed that portfolio investment from US had increased significantly in recent years. Tufail said that war on terrorism had badly hit Pakistan's economy as it had been spending billion of rupees only on maintaining law and order situation in the country particularly in its northern parts.

He said that keeping in view the present political and law and order situation, US could play its role in coping with such increasing challenges to Pakistan's integrity and solidarity besides economy. He invited US investors for undertaking economic ventures, saying that Pakistan was the emerging market with rapid growth of economy adding that textile industrialists in US planning to shift their units from their country could also invest in the same field here in Pakistan, as a prime spot.

He pointed out that there were many potential sectors including oil and gas, aviation, banking, construction, textile etc, for investment. On the occasion, Arshad Alam, Chairman-Pakistan US Business Council and several members of FPCCI were present.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Tusdec plans to set up electronics complex ​*
LAHORE (November 16 2007): The Technology Upgradation and Skill Development Company (Tusdec) is planning to establish an electronics complex to promote the local manufacturing or assembling of electronic gadgets, especially mobile phones.

"The proposed complex will act as a common facility centre for the manufacturers and assemblers of the electronic gadgets to help bring down the import bill through the local production," company Chief Executive Officer Suhail Ahmad revealed this in a meeting on the electronics sector.

Lahore Chamber of Commerce and Industry (LCCI) President Shahid Hassan Sheikh, Senior Vice President Yaqoob Tahir Izhar and Chief Operating Officer of the United Mobile Azad Lalani were also present.

Suhail Ahmed said, "The electronics industry is considered one of the world's fastest growing industries with global revenue worth trillions of dollars per annum."

He said the establishment of a common facility centre or the electronics complex had been proposed to uplift the industry by importing contemporary technology, machinery, obtaining training and skill enhancement together with practical production training. The centre will provide the industry with complete printed circuit solutions commensurate with economy of scale as well as expert services for product design and proto-typing.

This centre will be equipped with a modern electronics design and quality assurance lab for design. "The common facility centre will contain high-tech Surface Mount Technology machines for assembly of Printed Circuit Boards (PCBs) with both through-hole and surface mount components," he added. It will also provide PCB design, lay-out, fabrication and electronic component procurement services. Collaboration with international partners would be made to prevent obsolescence of the machinery and equipment.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan next to Italy in producing motorbike, accessories: PSGMEA ​*
SIALKOT (November 16 2007): Chairman Pakistan Sports Goods Manufactures and Exporters Association (PSGMEA) Professor Safdar Sandel has said that business community of Sialkot engaged with Sports Goods industry was making strenuous efforts for producing high quality and standard products to cope with the international market more easily.

In an interview with Business Recorder here on Thursday he disclosed that Sialkot which is a hub of cottage industry and famous for producing quality and standard sports goods and now had entered into manufacturing of "Motorbike" apparel and accessories and it would be a big ripple in economic activities which would fetch a handsome foreign exchange for the country.

The Chairman PSGMEA revealed that Pakistan is next to Italy in producing motorbike apparel and accessories and competing the global market easily. Similarly, the productions of Martial Art products were gaining momentum and according to a rough estimate about 150 units were engaged with the production of martial art uniforms in and around to Sialkot Professor Sandal said.

The PSGMEA Chairman further told that the demand of hand made soccer ball still exists despite the introduction of mechanised soccer ball because the machine made soccer ball had badly failed in producing sustainable results in the Football World Cup. Professor Safdar foresees that hand-stitched ball would stay with man because of its quality and technicalities.

The hand-stitched soccer ball during the game keeps the targeted direction whereas the machine made failed in maintaining the directions adding that in previous World Football Cup the ratio of field goals remained at lowest ebb. In order to cope with the threats of machined made soccer balls, Small and Medium Enterprise Development (SMEDA) had finalised almost all arrangement for setting up Sports Industry Development Centre in Sialkot for the modernisation of sports goods industry especially the soccer ball manufacturing sector enabling it cope with the new challenges of global market.

The setting up Sports Industries Development Centre (SIDC) project would enable Sports Goods sector to adopt new technology of mechanised ball, which is threatening to the hand-stitched inflatable soccer ball.

It may be added that the Sports Goods sector of Sialkot is the main export sector of the city with total exports of about US 350 million dollar per annum. The city caters to 85 percent of total world demand of hand stitched inflatable balls, which means around 40 million balls annually worth 210 million dollars.

The small and medium units are spread over the whole district of Sialkot, which form nearly 90 percent of all the enterprises and Sialkot is fully entitled to call the city of SMEs Professor Sandal said.

The Chairman Sports Goods further told that under the current global scenario and fast growing global industrialisation, it has been observed that the SME sector has not been able to fully realise its potential. Exclusive handwork and manual caliber is not going to meet the challenges of mechanisation. Sole dependence on human craft is not enough. Lack of automation, scanty use of advanced technologies and methodical contentment is dangerous. The pressures on Small and Medium Businesses today are more intense than ever. Advancement in technology can alone help forestall Small Business's success and meet requirements of the ever changing choices, whims and moods of the World markets.

The government should take appropriate step for extending the facility of "Research and Development" to Sports Goods industry enabling to cope with the global market in the presence of modern trends and customs demands he said.

Professor Sandal said that the Federal Commerce Ministry must come forward as strong player for building and promoting indigenous industries to help the Small Medium Entrepreneurs grow further. The future will be bright, the gloom has to be shed off. Energetic youth have to take forward the chariot as strong steeds and steer the economy with unrivalled determination and vigour he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Zaver Pearl Continental Gwadar completes one year ​*
KARACHI (November 16 2007): It seems like only yesterday that the dream of a luxury hotel in the futuristic new port of Pakistan became a reality but Zaver Pearl Continental Hotel Gwadar is already a robust one year old today.

Since its star-studded inauguration on 16th November 2006, the hotel has played an integral role in changing the face of Gwadar Port. It has been pivotal in developing/creating interest/ awareness, encouraging investment in the new city and attracting foreign as well as domestic travellers.

The new Pearl on the shore has had the privilege of hosting the cabinet meeting in March this year with the President, Prime Minister, Federal and Provincial Ministers and Governors staying at the hotel.-PR

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Pakistan needs more incentive in tourism' ​*
LONDON (November 16 2007): The growth of tourism in Pakistan has been undermined by the lack of adequate incentives both from the private and public sectors. This was stated by an official of the Tourism Development Corporation of Punjab (TDCP) while talking to newsmen at the conclusion of the four-day World Travel Market, the global travel industry show, here on Thursday.

Organised at the cavernous ExCel Exhibition centre in East London, the event attracted 5,500 exhibitors representing 202 countries and regions. Present at the event were all the stakeholders connected with the travel industry including hotels, airlines, tour operators, hospitality and the tourism departments of the participating countries.

"Pakistan has been fortune to possess God's gifted natural beauty from a sunny coastlines in the south to the towering mountains in the north but we need to invest more in building a sound infrastructure to attract tourists," said Shahzad Raza Syed. His organisation was among the 10 units representing Pakistan at the global event.

He said travel advisories issued by the foreign governments from time to time concerning Pakistan was another drawback although the major cities and areas, where the tall mountains are located, are peaceful and problem-free.

Shahzad said the government had declared 2007 as the 'Visit Pakistan year' and though it could be termed as fairly successful yet the number of tourists expected to take advantage of the various incentives offered were inadequate due to the developing situation in the country.

However, he disclosed that TDCP had signed a memorandum of understanding (MoU) with a local travel company to facilitate British Asians to visit Pakistan, and said United Kingdom had a big community of Sikh as well as Hindus and they had shown interest in visiting their holy shrines in Pakistan.

Shahzad also spoke about Pakistan Tourism Fair organised in Lahore from January 15 to 21, which he termed as a 'complete success' as tour operators from 29 countries put up their stalls that attracted large crowds.

He also underlined the need for developing domestic tourism and said scenic places in Sindh, Balochistan, Punjab, NWFP and Azad Kashmir, which had the potential to attract people throughout the year, must be build up to help poverty alleviation in these areas. The TDCP official noted that some of the countries, which participated in the global event, were earning foreign exchange entirely from the tourism. He said the economy of countries like Maldives, Mauritius and certain others in the Caribbean were entirely tourism driven. He was hopeful that tourism would resume its rapid growth in near future in Pakistan, which would lead to maximising economic benefits.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Remittances soared 41pc to $580m in Oct ​* 
Sunday, November 18, 2007

KARACHI: Remittances sent home by overseas Pakistanis reached a record level of $580.24 million in October 2007 compared to $410.61 million in the same month last year, showing a jump of $169.63 million or 41.31 per cent.

The previous highest amount remitted in a single month was recorded in May 2007, when $537.98 million were sent to the country.

In the first four months (July-October) of the current fiscal year 2007-08, the country received $2,081.49 million, showing an increase of $437.29 million or 26.60 per cent over the same period of the last fiscal.

The amount of $2,081.49 million included $0.67 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

The monthly average of remittances for the period July-October 2007 came to $520.37 million as compared to $411.05 million during the corresponding period of the last fiscal year, registering an increase of 26.60 per cent.

The inflow of remittances into Pakistan from most of the countries of the world increased last month as compared to October 2006.

According to the break-up, remittances from the US, the UAE, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), the UK and EU countries amounted to $169.91 million, $97.43 million, $95.92 million, $85 million, $44.59 million and $15.90 million respectively. During October 2006, the remittances stood at $109.89 million, $59.88 million, $75.41 million, $58.14 million, $36.22 million and $11.88 million.

The remittances from Norway, Switzerland, Australia, Canada, Japan and other countries during October 2007 amounted to $71.45 million as compared to $59.15 million during October 2006.

The inflow of remittances in the July-October 2007 period from the US, Saudi Arabia, the UAE, GCC countries, the UK and EU countries amounted to $590.81 million, $390.91 million, $334.82 million, $302.14 million, $164.50 million and $60.68 million respectively.

In the July-October 2006 period, the remittances from the said countries stood at $421.76 million, $318.20 million, $250.70 million, $231.61 million, $138.45 million and $48.31 million respectively.

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the first four months of the current fiscal year amounted to $236.96 million against $234.15 million last year.

Remittances soared 41pc to $580m in Oct


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## Neo

*Conference stresses sustainability of SME, microfinance sectors ​* 
Sunday, November 18, 2007

KARACHI: The overriding opinions on the first day of the 1st SME & Microfinance Conference 2007 were based on pleas for defining parameters for the sustainability and growth of both the sectors within a concise regulatory framework.

More than 300 delegates from the banking, microfinance, SME and social sectors attended the day-long intense sessions with renewed interest. 

Inaugurating the conference, Shahid Rashid, CEO, Small and Medium Enterprise Development Authority (SMEDA) said that there was a need for a broad-based strategy to meet the needs and concerns of the SME sector, as well as a focus on a comprehensive and workable outreach programme in the microfinance sector was the ultimate goal in securing a conducive environment in the two sectors.

There is an urgent need to streamline the implementation process of the regulatory framework and all key players in both the SME and microfinance sectors will have to be taken into confidence to steer growth and sustainability, he elaborated.

Earlier, Menin Rodrigues, the convener and chairman of the conference in his opening remarks and keynote address, stressed that if the fundamental role of the SME sector is to stimulate growth within small and medium sized businesses, and the microfinance sector engaged in transforming the lives of the rural and urban poor, empowering them to redefine their lives, it is after all, a story of making a difference in peoples aspirations, which in the long-run would help in laying the foundations of a healthy economic environment in the country, addressing both employment and poverty. Kazi A Muktadir, Managing Director, National Institute of Banking and Finance (NIBAF) stressed the need for long-term planning in the implementation process of the regulatory framework.

Salim Raza, CEO of Pakistan Business Council (PBC), an eminent banker with several years of international exposure, spoke convincingly on the initiatives and practices driving global SME development. The second working session on microfinance had Muhammad Saleem Umer, CEO, Institute of Bankers, Pakistan in the chair, as Senator Nisar A Memon, the newly appointed Federal Minister for Information in the caretaker government could not attend the conference due to pressing engagements. Ghalib Nishtar, President and CEO, Khushhali Bank noted that commercialisation of microfinance, with its several challenges, was a pre-requisite for growth, and an effective communication strategy could help mitigate some of the challenges.

Ozair A Hanafi of Pak-Oman Microfinance Bank (Ltd) stressed the point that propelling growth through micro-savings would result in the reduction of generational poverty. 

Hussan-Bano Burki, Senior Consultant, ShoreBank International (Ltd) in her demand for savings services among the urban poor reiterated that the urban poor, though through a natural process save, yet there was a need to streamline their saving habits through sustainable savings products.

The post-lunch sessions on microfinance included Empowering Women for Developmental Change and included inspiring presentations from the two prominent organisations from the social sectors, namely the KASHF Foundation through their CEO, Sadaffe Abid and the Rural Support Network Pakistan (RSNP), through their CEO, Shandana Khan.

Dr Rashid Bajwa, CEO, NRSP and Pakistan Microfinance Network (PMN) chaired the last microfinance session on Outreach v/s Sustainability-The Balancing Act which had a sector overview by Ahmad Jamal of Pakistan Poverty Alleviation Fund (PPAF), looking deeper into sustainability and outreach, Inshan Ali Nawaz, Chief Operating Officer of the First Microfinance Bank reviewed the two elements from a diversified perspective. Giving his views on Islamic Mode of Finance in Microfinance, Mujeeb Beig, SVP-Head of Research, Dawood Islamic Bank highlighted the basic difference between conventional and Islamic modes of financing.

Conference stresses sustainability of SME, microfinance sectors


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## Neo

*Foreign funds withdraw $124m this week ​* 
Bears erode another 342 points, Rs92bn on Karachi bourse

Sunday, November 18, 2007

KARACHI: Investors continued distancing themselves from the Karachi bourse this week to avoid any untoward situation in the transitional political system under emergency rule.

The KSE 100-share index recorded another plunge of 341.86 points or 2.55 per cent week-on-week basis and closed at 13,082.01 points.

The 100-index closed this week (November 12 to 16) at an eight-week low, slightly above the psychological mark of 13,000 points, Farhan Mahmood of JS Research observed.

The outgoing week started off on a positive note with the index reaching week-high at 13,655.67 points on Monday. However, the week ended on a negative note for the fourth consecutive week.

At the end of the week, the cumulative decline of the four consecutive weeks stood at 1,705.54 points or 11.533 per cent. Since the market registered the highest record at 14,787.55 points on October 19, 2007, the bourse is under a technical correction phase owing to one reason or the other.

On the other hand, the ready market turnover also fell to a two-month low at 139.337 million shares on the weekend session. The average weekly volume in this market was recorded at 204.209 million shares, which was almost 43 million shares lower as compared to previous week at 247 million.

The announcement of the election to be held in first week of January 2008 reduced the political uncertainty to some extent. Otherwise, the automatic termination of National Assembly at the completion of its fiver-year tenure on November 15 under the emergency rule invited panic selling on Wednesday.

The sale of equities at the regional markets, higher than expected Oct 2007 CPI (Consumer Price Index) number and decline in global oil prices dampened local market sentiments as well, Mahmood added. 

The other analysts were of the view that the maintenance of silence by the farewell Prime Minister Shaukat Aziz over the proposals given by leading brokers and KSE board of directors on last Friday (Nov 09) to him to restore the investors confidence in the market, which they have lost owing to the emergency rule imposed on November 03, also played a negative role this week.

This meeting was summoned by Aziz in which brokers asked him to abolish or extend the date of exemption on Capital Gain Tax (CGT) for a further period, which is going to expire on June 30, 2008. They also proposed premier to lift the upper limit on Continuous Funding System (CFS) from currently set at Rs55 billion to other suitable level. Now the caretaker government is in place, which is believed to take no bothering on CGT and CFS issues, as its only one goal is to hold general election in the country in fair and transparent manners, they added.

Moreover, fast changing political scenario in the country, crackdown on political leaders and workers in the country under the emergency rule and worst law and order situation in Swat and other parts of the country altogether provoked investors to minimize their portfolios on board, they maintained.

The Special Convertible Rupee Account or SCRA balances further reduced to US$99.886 million to date for the fiscal year 2007-08 during the outgoing week.

During the entire week, the overseas investors inflows and outflows in the SCRA account stand at US52 million and US$176 million respectively. Therefore, the foreign portfolio investors withdrew a sum of US$124 million this week as the difference of total inflows and outflows depicted, according to SBP website.

This SCRA amount is invested and disinvested at the local bourses and in government bounds as well.

The selling pressure was witnessed across the board, major correction occurred in the Telecom and E&P sectors which plunged by eight per cent and 2.6 per cent, respectively.

Among the blue chips, the Habib Bank was the only scrip which recovered Rs6.85 on week-on-week basis to Rs252.10. Fortunately, the Bank of Punjab also regained 45 paisa during the during to Rs92.45 otherwise all the other front line stocks closed in negative column.

NBP, OGDCL, SCBL, FFBL, MCB Bank, PTCL and UBL declined in a range of 35 paisa to Rs4.35. LUCK, DGKC and PSO declined in the range of Rs5.55 to Rs9.15. And ENGRO, PPL and POL declined in a range of Rs14 to Rs19.55.

The overall market capitalisation reduced by Rs92 billion to Rs4.004 trillion by the weekend

During the week, CFS investment declined to Rs50 billion, down by 3.9 per cent compared to last week, whereas, CFS rate stood at 10.9 per cent versus 11.1 per cent last week.

Foreign funds withdraw $124m this week


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## Neo

*Privatisation of airports: a viewpoint from safety angle ​* 
Sunday, November 18, 2007

Undoubtedly, privatisation offer significant benefits in certain cases. It relieves states/governments of the burden of heavy capital investment and gives airport management direct access to the open market for loans and capitals for investment in new airports, expansion or rehabilitation projects. 

Privatisation of airports has other advantages from governments point of view of making government resources available for use in other important sectors such as education, health, and housing. Nevertheless, the need to ensure safety of operation at all times remains the most important objective and the responsibility of states for ensuring the safety cannot be overemphasised and the process of airport privatisation with the control of operation and management passing on from government-backed authorities to private entities, usually a conglomerate of companies often led by a financial institutions, may have some safety implications. Privatised airports will aim at ensuring that they operate as profitable commercial enterprises. To this end, experts are of the view that the focus may not be on maximising non aeronautical revenue but also on attracting additional air traffic and inter-airport alliances, through direct and indirect participation in air services agreements. They are in agreement that traffic growth and safety go hand in hand and with this profile, the air transport industrys performance, particularly its safety, is always the focus of the media. 

In addition to this there is also a need for appropriate legislation to enforce safety oversight functions before starting privatisation process. Aviation industry in general and airports in particular are about to experience various important changes in the near future, They will have to cope with the possible evolution from being largely state supported entities to becoming more and more commercial and competitive entities. They may face various conflicting demands from airlines increasing capacity. Similarly, passengers may require easy access to airports and improved terminals facilities while regional and local planning authorities may expect increased social and economical activities in terms of opportunities for employments and business venture. 

Aviation experts all over the world who have got special expertise in the field of safety and security of airports and air passengers are of the view that with the control of operation and management passing governmental authorities to private entities, usually a conglomerate of companies often led by an institution, may have some safety implications. Privatised airports will aim at ensuring that they operate as profitable commercial enterprises. To this end, the focus may not only be to generate maxim non-aeronautical revenues but also on attracting additional air services (and establishing inter-airport alliances/co ordinations) through direct/indirect participation in air services agreements. However, it should be ensured through all means that safety is not compromised, The state concerned should also ensure, before awarding he privatisation contract, that the successful applicant has the necessary, well-qualified and experienced staff to ensure, at all times, that safety is not jeopardised. It is also important that the civil aviation administration continues to exercise its prerogatives to intervene and inspect whenever needed from the safety standpoint, keeping in view its obligations under the relevant convention.

It is a daylight truth that in near future airports are about to experience significant changes. They will have to cope with possible evolution from being largely state-supported entities to becoming more commercial and competitive entities. They may have to face conflicting demands from airlines for increased capacity and from environmentalists seeking to ensure that progress will not be made at the expense of the environment. Passengers may require easy access to airports and improved terminal facilities while regional and local planning authorities will expect increased social and economic activities in terms of opportunities for employment and business ventures. The air transport sectors move towards global alliances will, in some instances, require significant changes to passenger terminal facilities. In addition, privatization of an increasing number of airports may lead to pressure from shareholders for increased profit margins. At the same time, new technologies may revolutionize airport operations and more comprehensive airport management system may become instrumental in running airports efficiently in the future. Hence privatisation requires careful consideration of a number of factors.

Fundamental among these is that an airport is, in essence, a monopoly on which the user, aircraft operator, passengers and shipper alike, are highly dependent. Consequently, a number of safeguards must be implemented before proceeding with privatisation. All obligations such as freedom of access, non-discrimination, the categories of users and conformity with international agreements and obligations should apply to airports regardless of ownership. In particular there is an obligation to conform to ICAO policies and principles, notably those contained in the Convention on International Civil Aviation and its various annexes. 

In addition to above inclusion in the states aviation regulations of the requirement of certification of aerodromes/airports open to public use is necessary for the civil aviation administration to be vested with powers to enforce compliance with the applicable rules and procedures. Aerodrome certification system is one of the basic aviation laws in this regard and there should be an appropriate state entity with the necessary authority and resources to carry out the task of inspection and certification of airports. However, it must be noted that even in the privatised environment aviation security would remain with the state concerned.

Privatisation of airports: a viewpoint from safety angle


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## Neo

* SSGC highlights achievements ​* 
Sunday, November 18, 2007

SAN FRANCISCO: The level of automation achieved by Sui Southern Gas Company (SSGC) over the years won accolades from several visitors at Oracle OpenWorld 2007 here.

The fact that the case study belonged to a country where financial systems are too hard to break and mindsets not easy to change made it popular among the attendants.

The company was represented by its Customer Care & Billing General Manager Irfan Zafar, who brings with him sufficient experience of working with different multinational companies before joining SSGC in 2003.

He told The News that SSGC was a company that had the most comprehensive billing and customer service solution in the country. 

Though an initiative was taken in 1996 also, it was in 2003 that the company decided to go for a structural implementation of the enterprise software primarily for the convenience of the customers.

Irfan said SSGCs former managing director Munawwar Baseer played an instrumental role in introducing automation in the company. He opted for it though the company enjoyed full monopoly and was not pressed by any challenges to improve its customer services, he added. 

The SSGC, he said, had successfully switched its billing, customer care, metering and other customer-related functions to solutions offered by Oracle.

Irfan said the SSGC had purchased modules/softwares pertaining to financial assets and cash management, purchasing, inventory management, human resources, payroll, business intelligence and so on.

We have digitised maps and prepared graphics of all the pipelines. With the help of GPS we can now instantly tell the aspiring customers as to how much time it will take us to give them new connections. This would take weeks in the past.

Irfan said the digitisation helped the company to instantly find out how far away a supply line was from the house of the applicant.

He said the new system also enabled the company officials to track movement of each and every file and official communication, and immediately trace the person responsible causing delays. This has put an end to red tapism as well increased the efficiency.

SSGC highlights achievements


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## Neo

*Slight fall in Oct core inflation recorded​*
ISLAMABAD, Nov 16: The core inflation  non-food and non-energy -- exhibited a slight decline as it stood at 5.7 per cent in October 2007 as against 5.8 per cent recorded during the same month last year.

Tight monetary policy, pursued by the State Bank of Pakistan (SBP), was mainly responsible for stability in core inflation.

The core inflation eliminates energy and food products that can have temporary price shocks because these shocks can diverge from the overall trend of inflation and give a false measure of inflation.

Official figures released here on Friday indicated that the core inflation in the first four months of the current fiscal year witnessed a slight decrease as it stood at 5.4 per cent as compared to 6.3 per cent during the same period last year.

Non-food inflation registered a decline, from 6.4 per cent in October 2006 to 5.4 per cent in October 2007 because of freezing of oil prices during the last few months.

Despite this decrease in core inflation and non-food, the overall inflation stood at 9.3 per cent in October 2007 as against 8.1 per cent in the corresponding month of last year.

This increase in overall inflation in October 2007 is attributed to a surge in food inflation, which moved from 10.5 per cent in October 2006 to 14.6 per cent in October 2007.

According to an official report of the finance ministry, food inflation, on the other hand, accelerated to 14.6 per cent in October 2007 as against 10.5 per cent in the same period last year owing to extraordinary surge in demand for food items, particularly fruits, vegetables, milk, meat, poultry, cooking oil during the month of Ramazan and the commencement of the wedding season after the festival of Eid in Pakistan.

Furthermore, the month of October also witnessed a sharp increase in wheat and flour prices, totally driven by extra market forces.

Although prices of wheat and wheat flour retreated lately, their contribution to the sharp increase in food inflation was already realised.

Food inflation is expected to ease off in the coming months.

Food inflation has emerged as a major source of concern for policy-makers in emerging Asia, including Pakistan.

Food prices rose at an average of 10.1 per cent and contributed 55 per cent to overall inflation in Asia, excluding Japan.

The upward trend in food prices is most evident in China (18.2pc), India (8.4pc), Indonesia (13.0pc) and Pakistan (14pc).

During the first four months (July- October) of the FY08, average inflation declined to 7.6 per cent as compared to 8.3 per cent last year and 8.6 per cent the year before.

In other words, the average inflation in the first four months of the current fiscal year is still the lowest in the last three years.

The non-food inflation averaged five per cent during July- October 2007-08 as against an average of 7.1 per cent in the same period last year.

Food inflation increased slightly to 11.2 per cent in the first four months of current fiscal year as against 10 per cent in the same period last year.

The wedding season is expected to continue in December as well, suggesting that food inflation is likely to ease off at the start of the new calendar year in a months time, added the report.

The current fiscal years (2007-08) inflation target has been set at 6.5 per cent and the current inflation figures suggest that this target is likely to be achieved.

Slight fall in Oct core inflation recorded -DAWN - Business; November 17, 2007


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## Neo

*India buys 35,000 tons cement from Pakistan​*
NEW DELHI, Nov 16: India has imported 35,000 tons of cement from Pakistan during the last three months.

Indian Minister of Commerce Jairam Ramesh stated this while talking to APP after meeting with Chief Executive of Trade Development Authority of Pakistan Tariq Ikram here on Friday.

He said during the meeting the two sides discussed trade through LoC, upgradation of facilities at Wagah, investment in each others country, issue of Geographical Indicators and boosting trade volume.

Mr Ramesh said India had invited Pakistan delegation to discuss the modalities for LoC trade.

He said India was planning to invest Rs70 crores on upgradation of trade faculties at Wagah on its side.

This investment should be synchronised with the investment from Pakistan on its side.

A meeting on technical level would be held between both the countries next month to discuss matters relating to facilities at Wagah. Suggesting to launch investments in each others country, he said by this way trade volume could be increased.

He said he had accepted the invitation from Pakistan to visit Expo Pakistan being held in Karachi in March next year.APP

India buys 35,000 tons cement from Pakistan -DAWN - Business; November 17, 2007


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## Neo

*Pakistan uged to import 4,000MW from CARs​*
ISLAMABAD, Nov 16: The World Bank has advised Pakistan to start working on import of 4,000MW of cheap electricity from Central Asian states, besides working on domestic sources to overcome electricity shortage owing to a 43 per cent expected increase in demand to 20,000MW by 2010.

The World Bank estimates that Pakistans peak demand now exceeds 14,000MW and the present installed capacity of 19,500MW has become inadequate on account of the wide variations in the water availability, which greatly reduces the firm capacity available.

Electricity demand at the generation level is forecast to grow at 7-8 per cent per year to about 20,000MW by fiscal year 2010 and 44,700MW by 2020, a government official told Dawn quoting fresh World Bank estimates.

The country that had a comfortable supply position during the last several years has already started experiencing shortages during peak periods and  it is anticipated that if no new capacity is added, firm power shortage would amount to 5,500MW by fiscal year 2010.

The World Bank understanding that besides improving supply efficiency, demand management, addition of new hydro and thermal power stations, Pakistan should expedite importing 1,000MW from Tajikistan and Kyrgyz Republic in the first phase and then increase such imports to 4,000MW in the second phase.

These imports, the World Bank believes, have two major advantages. First, the cost of supply from Sangtuda, Rogun, Talimardjan and Kambarata power stations in the CARs would range between 2.26 cents to 3.75 cents per unit compared with existing average generation cost in Pakistan at 5.6 cents per unit.

Pakistan is now entering into contracts with independent power producers (IPPS) for thermal power generation at a tariff as high as 14 cents per unit.

Second, the attractive feature of the imports form CARs is that Pakistans peak demand occurs in summer, when the Central Asian power systems have large surpluses from their hydroelectric generation stations.

The WB says that international financial institutions like Asian Development Bank, Islamic Development Bank and USAID and private sector companies like AES Corporation of USA and RAO UES of Russia have already indicated to be part of the project once feasibility studies currently underway are completed.

According to the government of Pakistan estimates, the country is most likely to face a major energy crisis in natural gas, power and oil in the next three to four years that could choke the economic growth for many years to come.

Pakistans total energy requirement would increase by about 48 per cent to 80 million tons of oil equivalent (MTOE) in 2010 from about 54 MTOE currently, but major initiatives of meeting this gap are far from turning into reality. Major shortfall is expected in the natural gas supplies, the sources said.

According to official energy demand forecast the demand for natural gas, having about 50 per cent share in the countrys energy consumption, would increase by 44 per cent to 39 MTOE from 27 MTOE currently.

Partly contributed by gas shortfalls, the power shortage is expected to be little over 5,250MW by 2010, a little lower than World Banks estimates of 5,500MW. Simultaneously, oil demand would also increase by over 23 per cent to about 21 million tons in 2010 from the current demand of 16.8 million tons.

This would leave a total deficit of about nine million tons of diesel and furnace oil imports, sources said.

Since the gas shortfalls were expected to be much higher, the country would need to enhance its dependence on imported oil, thus increasing pressure on foreign exchange situation, more so as international market continues to go up.

Planning Commission sources said the government had planned to add an overall power generation capacity of about 7,880MW by 2010. Of this, about 4,860MW is to be based on natural gas, accounting for 61 per cent of capacity expansion.

However, the gas-based power expansion of about 4,860MW would remain in doubt since these estimates were based on gas import options for completion in 2010, 2015 and 2020. None of these projects could achieve these deadlines.

According to World Bank estimates, the indigenous gas supply would fall from 32.6 MTOE in 2010 to 20.7 MTOE in 2025 while the gas supply-demand gap would rapidly increase as demand is expected to grow continuously, quadrupling in 2025.

Pakistan uged to import 4,000MW from CARs -DAWN - Business; November 17, 2007


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## Neo

*OGDCL discovers gas field​*
KARACHI: The Oil and Gas Development Company Limited (OGDCL) has made a gas and condensate discovery from Moolan exploratory well 01 near Hyderabad in Sindh province. According to the notice issued by Karachi Stock Exchange, the well was delineated in Lashari development and production lease and drilled down to a depth of 2,421 meters. Based on log data, two zones were selected for testing. As per initial tests zone-1 is producing 4.44 mmscfd (million standard cubic feet per day) of gas and 64 bpd of condensate. Similarly zone-2 is producing 6.02 mmscfd gas and 165 bpd (barrels per day) of condensate. This is third discovery of the current fiscal year. Earlier this year the Mari Gas Company Limited (MGCL) and Pakistan Petroleum Limited (PPL) made oil and gas discoveries. 

MGCL has made a gas discovery at Bhitai exploratory well 01 near Daharki in district Ghotki. Natural gas flowed from the well from two horizons namely Sui Upper and Sui Main Limestone at a cumulative rate of 11.32 mmscfd. The drilling operations at Bhitai well no 1 commenced on September 6 and penetrated into Sui Main Limestone formation at 1202 meters. PPL has made a gas condensate discovery in Hala Block at Adam X-1 well in Sindh in September. According to the Pakistan Petroleum Information Services (PPIS), a successful Drill Stem Test was carried out which flowed at a rate of 1,310 bpd (barrels per day) of condensate and 27.4 mmcfd (million cubic feet per day) of gas. This well was spud on April 07, 2007 and drilled to the depth of 3,566 meters. 

The daily production of oil has reached around 70,000 barrels and gas over 4 billion cubic feet in the country this year. The daily oil and gas production remained 696,000 barrels and 967 million cubic feet respectively during the last year. According to official sources, gas is being supplied to more than 4.5 million consumers in the country. Presently, 42 companies are working in Pakistan with 118 exploration licenses and 127 leases. Seventeen new blocks have been opened which would give further impetus to the ongoing exploration activities in the country and would open tremendous opportunities for the prospective investors in diversified fields.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan to assist BD in setting up 10-20MW hydropower plants​*
ISLAMABAD: Pakistan will help Bangladesh to set up 10 to 20 megawatt (MW) hydro power plants by giving support in feasibility studies and detailed engineering of these plants.

According to the documents available, Ministry of Water and Power has given nod to provide help for preparing feasibility studies and detailed engineering for setting up 10 to 20MW hydro power plants in Bangladesh.

Bangladesh has sought help for setting up hydro power plants saying that Pakistan has expertise for feasibility studies and detailed engineering in this regard. After accepting the request of Bangladesh, government had asked the Water and Power ministry to move ahead on the issue.Now the Water and Power ministry had informed that it could provide help for feasibility studies and detailed engineering for establishing 10 to 20MW hydro power plants.

Bangladesh has told Pakistan that it needs the investment in its power sector and informed that the private sector power generation policy of Bangladesh allows Independent Power Producers (IPPs) to avail the fiscal and other incentives for investment in power sector of Bangladesh. Bangladesh has further informed Pakistan authorities that the

Bangladesh Private Sector Infrastructure Guidelines has been issued in order to encourage private sector investments in infrastructure and power sectors on the basis of BOO/BOT and joint ventures.

Daily Times - Leading News Resource of Pakistan


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## Neo

*India, Pakistan expediting trade ​*
NEW DELHI: India and Pakistan have decided to expedite the meeting of Kashmir business leaders and initiate trade across the Line of Control (LoC) as soon as possible. The Trade Development Authority of Pakistan chief executive called on both Union Commerce Minister Kamal Nath and Minister of State Jairam Ramesh and confirmed that progress had been achieved on the issues related to LoC trade. Both sides discussed several proposals at the meeting to further trade.

India proposed joint geographical indicators (GI)s for Kashmiri handicraft products like Pashmeena, Sozni and Kani. A GI is a sign used on goods that have a specific geographical origin and possesses qualities that are specific to the place of origin. Pakistan had objected to assigning these products to Kashmir as they are also produced in other parts of Pakistan. In recent years, GIs have emerged as one of the most important instruments of protecting the quality of goods, which are essentially attributable to their geographical origin. 

Both sides had already exchanged lists of items of trade across the LoC, but are still hesitant to allow trade delegations to finalise modalities. India proposed 14 items to be traded along the Srinagar-Muzaffarabad road, but Pakistan objected to five of these.

The final list includes carpets, Kashmiri woolen products, tapestry, furniture and other wooden items, silk products, Kashmiri plants, spices, fresh fruit, black mushroom, other handicraft items, green tea, etc. Both sides also decided to conduct a meeting of experts at the Wagah checkpost next month to synchronise investments to build modern integrated checkposts on both sides. India is spending Rs 70 million to build facilities on its side and wants an equivalent investment from Pakistan. 

Jairam Ramesh said Tata Consultancy Services was keen on setting up a development centre in Lahore. India will also provide expertise to Pakistans non-diamond gem and jewel industry. A delegation of Pakistani jewellers is arriving here next month to be trained in the cutting and polishing of stones in Surat, Jaipur and Mumbai.

Daily Times - Leading News Resource of Pakistan


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## Neo

*'US working on law for duty-free access of ROZs products' ​*
PESHAWAR (November 17 2007): The United States is working on a law for duty-free access of the products to be produced in the industrial units of the proposed Reconstruction Opportunity Zones (ROZs) to its markets. The legislation in this regard is expected to be completed by the end of the current calendar year.

This was stated by Ghazanfar Bilour, a former president of Sarhad Chamber of Commerce & Industry (SCCI) while addressing a press conference after his return from the United States on Friday.

He said that the US officials had told him that the US administration has sanctioned an amount of $180 million to USAID for initiation of development schemes in tribal areas while President Bush has announced additional $60 million for development works in the bordering areas of Pakistan and Afghanistan. The United States was likely to spend $750 million on the development of tribal areas, he added.

During his stay in the United States, Bilour attended a State Department briefing on ROZs in Washington on October 2 and also attended meetings of US Chamber of Commerce and US-Pakistan Business Council. In Pak embassy in Washington, he held meeting with US Consultant, Hunton and Williams regarding establishment of the proposed ROZs.

He also briefed the US officials on the scope of investment in marble & granite, gems, hydel power generation, agri-engineering, agriculture, furniture, safety matches, fresh & dry fruits, tobacco, textiles, leather, pharmaceuticals, tourism and related services.

"I have told them that industrial and business activities in tribal areas are pre-requisite for the elimination of extremism and terrorism from the region." Ghazanfar said that I have also suggested the officials that Hayatabad Industrial Estate, Gadoon Amazai, Kohat, Bannu and Mardan areas should be given the status of ROZs. He said that he had also called for continuation of incentives of the ROZs for a period of 20 years.

He said that the establishment of the zones would require huge investment besides continuation of incentives, otherwise, the fate of these zones would not be different from that of the Gadoon Amazai Industrial Estate. He said that the US officials had assured him that not only they will consider his recommendations, but also utilise them in the promotion of friendship and trade relations between the two countries.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Tajikistan and Kyrgyzstan to export power to Pakistan ​*
KABUL (November 17 2007): Central Asian states Tajikistan and Kyrgyzstan will export electricity through Afghanistan to Pakistan through a cable network due to be completed by 2012, according to an agreement signed by the four states on Friday.

The Central Asian states use all their electricity in the winter, but are left with a power surplus in the summer months, while Afghan cities are without power for much of the day all year round and growth in Pakistan has been held back by a power shortage. "This is a very big and important power project for Afghanistan," said Afghan Energy and Water Minister Ismail Khan at the signing ceremony.

Khan said 1,300 MW of electricity would be exported through the new cables at first, with Afghanistan allowed to use 300 MW of that power, then once capacity had risen to 4,500 MW of power, Afghanistan would be able to use 1,000 MW. The completion of hydro-electric power projects in the Central Asian states is expected to boost their power generation.

A World Bank report this month said Afghanistan was well placed to serve as a transit hub for energy supplies from Central Asia to the power-hungry Indian sub-continent. Ongoing insecurity as a result of the Taliban insurgency has hampered efforts to build a proposed project to bring gas from Turkmenistan to Pakistan, but the electricity project passes through the more peaceful north of Afghanistan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Oil output reaches 70,000 barrels per day ​*
ISLAMABAD (November 16 2007): The daily production of oil has reached around 70,000 barrels and gas over 4 billion cubic feet in the country this year. The per day oil and gas production remained 696,000 barrels and 967 million cubic feet respectively during the last year.

According to official sources here on Thursday, gas is being supplied to more than 4.5 million consumers in the country. Presently, 42 companies are working in Pakistan with 118 exploration licences and 127 leases.

Seventeen new blocks have been opened which would give further impetus to the ongoing exploration activities in the country and would open tremendous opportunities for the prospective investors in diversified fields. The atate-run Oil and Gas Development Company Limited (OGDCL) is engaged in exploration and production activities in the country for last four decades.

The company holds the largest share of oil 31 percent and gas 31 percent of the total reserves in the country. Presently, it is 100 percent working interest owner in 28 exploration licenses.

In addition, OGDCL is operator in 15 exploration licences and partner in 6 exploration licenses. The company has 40 mining and development and production leases which are operated by it and partner in 32 non-operated mining and development and production leases.

In a bid to enhance oil and gas production in the country, the government has deregulated the petroleum sector and provided the investors a level playing field in a transparent, competitive and business-friendly environment.

In the new petroleum policy, more incentives have been offered to investors for oil and gas exploration and production in the on shore and off shore areas.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Daharki power project ​*
(November 16 2007): The Asian Development Bank has approved a 171-megawatt gas-fired power plant worth $200 million, to be located at Daharki, Ghotki District, in Sindh, to which gas will be supplied from the nearby Mari gasfield, says a Recorder Report. The facility, which is expected to supply base load power to the national grid, will provide additional low-cost electricity to the consumers.

The plant will not only help increase our net power generation capacity but will also promote efficient management of an otherwise idle gas resource, largely due to the proximity of the plant to the gasfield. To be developed under the country's 2002 Power Policy, the project is expected to start commercial operations in the last quarter of 2009.

It should be mentioned here that about 60 percent of Pakistan's population currently has access to electricity from the national grid, while the rest has to rely on the use of kerosene, wood and other biofuels for cooking, lighting and heating purposes. The use of wood for cooking and heating by an energy-starved population, particularly in the mountainous north, has accelerated the process of deforestation, which has in turn generated ecological problems. According to an ADB estimate, Pakistan needs to add about 2,000 megawatts every year to its power generation capacity to forestall power shortages in future, particularly in view of 11 percent growth in its average annual electricity demand.

Meanwhile, as a part of the Ghotki power project, the ADB has approved equity investment of up to $2.75 million, and a guaranteed $44 million loan for the project holding company. Subject to the approval of the authorities concerned, both the guaranteed loan and the equity investment will be contributed by the holding company as equity in Foundation Power Co, Daharki Ltd, which will be the owner of the power plant.

The proceeds from the equity investment and guaranteed loan will be partially used for designing and implementing the project. A consortium of local and international banks has provided $150 million in debt financing for the project, which has been billed as the country's first "gas only" plant to be set up under the 2002 Power Policy.

As the gas will be supplied to the power project from the nearby Mari gas-field, efforts will have to be mounted to develop additional blocks so as to ensure uninterrupted supply of the precious resource. A review undertaken by the Petroleum Ministry some months ago had painted a dismal picture of gas availability in the country, leading to the conjecture that Pakistan might not be able to attract any new gas-fired or duel-fuel IPPs in future.

Keeping in view the commercial operation timeframe of the IPPs, block gas allocation at PPIB's disposal will be 300 mmcfd in 2007-08, 240 mmcfd in 2008-09 and 152 mmcfd in 2009-10. The progressive yearly decline in gas availability will be reflective of rapid depletion of the precious resource. During the past ten years, Pakistan's power sector has emerged as the largest consumer of gas (36.4 percent), followed by fertiliser (21.6 percent), industry (19.1 percent), household (17.8 percent), commercial (2.7 percent), cement (1.1 percent) and transport sector (CNG) 1.0 percent.

This reflects the high degree of dependence the country has developed on natural gas. As we have argued in this space earlier, over-dependence on the thermal option as an easy way out of the energy crisis has, meanwhile, made power supplied by IPPs prohibitively expensive, which in turn has badly eroded our competitiveness.

Incidentally, the thermal option was essentially conceived as only a small portion of the overall energy mix, though it later developed into a full-fledged sector due to a perceived policy shift under pressure of mounting power crisis. ADB has estimated that Pakistan needs to add about 2,000 megawatts every year to its energy generation capacity to forestall future energy shortages.

But can we achieve this feat, given our lethargic pace of project implementation in water and power sector? Even the World Bank has warned us against this "go-slow" policy.

Meanwhile, the average annual increase of 11 percent in Pakistan's energy demand under pressure of a fast growth trajectory poses a huge challenge for the government, which it must meet if the country is to retain its competitive edge.

We believe that fast track, but simultaneous, implementation of water and power projects alone can stave off the crisis that is staring us in the face.

Work needs to be speeded up on all water and power projects in the country. Secondly, there should be rigorous oversight on the implementation of these projects so that these are completed, as scheduled. We have often pointed out the loss our economy has suffered due to delayed implementation of water and power projects.

The government should ensure that its implementation arm, ie, the water and power bureaucracy keeps pace with policy formulation and the speed of approval of the mega projects. The approval by ADB of the Daharki power project augurs well for our energy sector. There is, however, an urgent need to develop such projects elsewhere in the country, as a part of our overall energy strategy.

Business Recorder [Pakistan's First Financial Daily]


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## JF-17 Thunder

Excellent thread Neo.


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## Neo

*Ship-breaking industry on verge of collapse​*
KARACHI, Nov 17: Ship-breaking industry is on the verge of total collapse owing to large-scale import of re-rollable material under the garb of ferrous (re-meltable) scrap which does not have duty and sales tax at import stage.

The Pakistan Ship-Breakers Association (PSBA) has taken up the issue with the chairman, Federal Board of Revenue (FBR), Abdullah Yusuf, and pointed out that it was not only causing huge revenue loss, but also damaging the ship-breaking industry.The ship-breakers alleged that large-scale import of re-rollable material was being cleared by the Model Customs Collectorate (MCC) under the Customs Administrative Reforms (CARe), thereby causing severe damage to ship-breaking industry which provides jobs to a large number of skilled and unskilled workers.

PSBA chairman Azam Malik said due to rampant import of re-rollable scrap under the garb of re-meltable material which does not have 15 per cent sales tax at import stage, it has become impossible for the industry to import ships for scrapping which are presently being quoted at $490 to $520 per ton in the world market.

The government in the budget 2007-08 increased the assessable value for import of re-rollable scrap from $290 per ton to $400 per ton, but the customs authorities did not feed these tariffs in their computer system which caused millions of rupees loss to the national exchequer.

Undoubtedly, he said after the introduction of CARe, there is fast clearance of goods at the customs stage which saves importers from extra cost and long delays.

However, PSBA chief said under this automotive system of clearance a very large number of container loads of re-rollable scrap is making its way into the domestic market.

He also said a huge quantity of misdeclared scrap, such as used ship chain, shafting, pipes, moon shape pipes, channels etc., are available in the local market.

Similarly, he said a large number of trucks loaded with moon shaped pipes (PHARA) are available in the market who are making their way from Taftan and Quetta through RCD highway after being cleared under the garb of re-meltable scrap.

Ship-breaking industry on verge of collapse -DAWN - Business; November 18, 2007


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## Neo

*Canadian firm plans investment in oil, gas​*
ISLAMABAD, Nov 17: Canadian Heritage Company (CHC) has decided to invest in oil and gas exploration sector of Pakistan.

This was disclosed by chief executive of the Canadian oil and gas company Smith Brian in a meeting with Caretaker Federal Minister for Petroleum and Natural Resources Ahsan Ullah Khan here on Saturday.

An official announcement said that Mr Brian briefed the minister about his companys joint venture to be undertaken in Sanjawi block falling in the Loralai and Kohlu districts of Balochistan for exploration of oil and gas with an initial investment of over $10 million.

The minister welcomed the Canadian companys investment plan and assured full cooperation in this regard.

Secretary Petroleum Farrukh Qayyum, chief executives of Sprint and Trekker oil and gas companies and senior officials of the petroleum ministry were also present during the meeting, added the announcement.

Canadian firm plans investment in oil, gas -DAWN - Business; November 18, 2007


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## Neo

*Cellphone imports cost $1bn annually​*
ISLAMABAD, Nov 17: Pakistan spends about $1 billion annually on the import of cellular mobile handsets, which is not only a burden on the countrys foreign reserves but increases the trade deficit as well, said Pakistan Telecommunication Authority (PTA) in its annual report 2007.

The report said that the exponential growth in the countrys fastest growing telecom industry was burdening the overall imports.

In the last four years Pakistan spent $1.7 billion on the import of cellular mobile handsets. In 2006-07 imports of the telecom sector were about 4.4 per cent of the total imports compared to only 2.4 per cent in year 2003-04.

Imports of cellular mobile sets with battery shot up from $144.1 million in 2003-04 to $670.2 in 2006-07. Similarly other telecom apparatus imported into the country went up to $677.5 million in 2006-07 compared to $234.8 million in 2003-04.

Pakistan is striving to decelerate the imports, PTA said in its report. Imports for 2006-07 were targeted to decline by 2.1 per cent. However, the total imports registered 6.8 per cent increase in 2006-07 ($30.5 billion) compared to previous years imports ($28.5 billion).

The authority said that the telecom equipment imports were one of the reasons for increasing the trade gap.

According to the report the government was considering giving incentives to leading manufacturers of cellular mobile handsets and telecom equipment to consider manufacturing mobile sets and other equipment locally where more than two to three million subscribers were being added on cellular mobile networks every month.

According to PTA estimates, cell phone companies could exploit another 40 per cent of the target market.

PTA claimed that the business environment in the country had been conducive for foreign direct investments (FDI) for the last few years and the trend was expected to continue into the future.

According to the PTA report, about 20 per cent of the mobile users changed their hand sets thrice a year, 20 per cent every two years while 13.3 per cent changed handsets 5 times, 6.1 per cent 11 times and so on.

During 2005-06, telecom sector received over $1.8 billion FDI and emerged as the only sector of the economy to attract such a huge investment.

Cellphone imports cost $1bn annually -DAWN - Business; November 18, 2007


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## Neo

*Stocks resist big fall on positive developments​*
STOCKS resisted a larger fall at the fag-end of the last week on active short covering on the blue chip counters aided by some positive developments on the political front, including formation of caretaker cabinet and perception of continuity in financial policies.

Some major market worries are, however, still there but bears seem to have run their course and are assuming the role of bulls and the next week could witness a number of pleasant surprises.

Although the future market outlook is still unclear, but if emergency is lifted during the next couple of weeks the market will bounce back to its pre-reaction levels just in no time.

And that will herald the advent of foreign buying on the oil and banking counters, which at the current level ensure attractive capital gains that too on short-term basis.

It was, however, a terribly disturbing week for the share market as prices fell like the house of cards on nervous selling from all and sundry as the political uncertainty continued to intensify by each passing day. The KSE 100-share index closed the week at 13,082.01, off 341.86 points.

What was more important was a partial exit of some of the leading foreign investors but the satisfying feature was that they did not opt for panic selling and held the fort anticipating some positive corrective steps by the government to defuse the tense situation.

The net outflow by them over the week was said to be around $135 million out of their total stake of about $900m, reflecting that they were not scared and hoped an improvement in the prevailing situation as long as President Musharraf was at the helm of affairs, analysts said.




Click to view the larger image


But local selling both general and institutional was massive as it eroded at one stage about Rs250 billion from the market capital, took away 800 points or six per cent from the KSE 100-share index earlier during the week, they said and added what was next in the offing was not clear.

The dissolution of assemblies, perception of caretaker set up on the economic and financial issues and the law and order situation in the wake of opposition agitation against the imposition of state of emergency and world pressure to lift it continue to take their toll, intensifying the tense political situation.

But leading analysts predict that the market is in for a protracted recession as investors will think twice before resuming covering operations at the attractively lower in the developing scenario, mainly law and order situation and agitation against the emergency by political parties.

In the absence of leading foreign investors, they expect financial support at the lower levels to save the market from a virtual crash and protect the interest of small investors.

Earlier, the announcement of election schedule by the president seems to have ended the one phase on political uncertainty and investors welcomed it by resuming covering purchases at the attractively lower level on almost all counters.

Investors perception that sanity will return to stock trading after the national elections before January 15, next year as the future government will be well in place ending the current agitation and removing many other irritants was the chief factor behind the return of the prodigal sons, said a leading analyst.

He said the assumption that the re-election of the president for the second term appeared to be pretty certain and that could well mean the continuity of the current financial and economic policies sent a wave of optimism in the market leading to snap recovery.

However, return of foreign investors may be further delayed until the emergency was lifted as they will await fresh development on the post-election schedule trading sessions, some others said.

The current lower levels attained by most of the leading shares, however, provide an attractive bait for any prospective investor having strong holding capacity to make fresh investment, said a leading analyst, but low volume figures showed leading among them are still in two minds about the future share market outlook, he added.

FORWARD COUNTER: Leading shares on the cleared list also followed the lead of their counterparts in the ready section and ended with extended losses. The MCB, National Bank, Pakistan Petroleum, Pakistan Oilfields, Lucky Cement, Engro Chemical, OGDC and some others were leading among the losers.

Stocks resist big fall on positive developments -DAWN - Business; November 19, 2007


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## Neo

*ADB to provide $150 million for PIASD project ​*
FAISALABAD (November 19 2007): Asian Development Bank (ADB) will provide 100 million dollars from Ordinary Capital Resources and 50 million dollars from Asian Development Fund for "Punjab Irrigated Agriculture Sector Development (PIASD)-Subproject II" during next year 2008.

According to official sources, the government of Punjab has asked ADB to provide advance contracting with respect to recruitment of all consulting packages for the LBDCIP.

ADB has advised the government of Punjab that procedures for advanced contracting are normally used for recruitment of consultants without delay, however, the contract is not signed prior to signing of the loan and advanced contracting does not commit ADB to finance the project or recruitment costs.

The government of Punjab has asked ADB to consider approval of retroactive financing for the aforementioned activities.

The government of Punjab was informed that expenditures are eligible for retroactive financing up to 12 months prior to signing of the financing agreement not to exceed 20 percent of the loan amount. Retroactive financing may be used in subsequent tranches from the MFF for eligible expenditures, except civil works, with management approval. Retroactive financing in subsequent tranches of the MFF for eligible expenditures, excepting civil works may be considered and allowed by management if the request is indicated in a PFR.

The project will provide rehabilitation and upgrading for the Lower Bari Doab Canal System in Punjab and rehabilitate infrastructure from the headworks of the Baloki Barrage to the minor canals as well as address on-farm water management activities and groundwater management.

This will involve about 700,000 hectare of irrigated area. The project will result in civil works for irrigation infrastructure as well as training and support services for irrigated agriculture.

Significant capacity development activities for farmer organisations and for farmers will be an important part of the project. The Punjab Irrigated Agriculture Investment Programme (PIAIP) will result in economic growth and improved sustainability of water and land resources. This will be achieved through improved management of Punjab's water resources and resulting increased productivity of irrigated agriculture.

THE OUTCOMES FROM THE PROGRAMME AND ITS INVESTMENT PROJECTS INCLUDE: 

(i) physical rehabilitation and upgrading (R&U) of irrigation infrastructure, (ii) improved practices and strengthened institutional frameworks for ground and surface water management, (iii) modernised irrigation management systems operation and procedures, (iv) reformed and restructured institutions for improved and sustainable irrigation service delivery, and (v) capacity development at all levels to support the management and institutional changes.

The approach to implementation of projects supported under the PIAIP is based on comprehensive integration of components to achieve the aforementioned outcomes.

This approach when combined with MFF modality will not only achieve success in a particular project, but facilitates sustained ADB engagement to have a transformative effective on the entire sector.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Cutting-edge technology to enable Pakistan to compete globally: Taseer​*
* Minister lauds TUSDEC efforts to develop local industries

LAHORE: Pakistan would have to adopt new technologies in order to compete with the international products and become more competitive, said Salmaan Taseer, federal minister for industries, production and special initiatives.

He said this on a visit to the Technology Upgradation and Skill Development Company (TUSDEC) head office to review the pace of projects initiated by the company for introducing new industrial technologies and for developing skills among the youth. TUSDEC Chief Executive Officer (CEO), Suhael Ahmed and senior officials of the company also attended the meeting.

The caretaker government is endeavoring to build on the work done by the previous government, Taseer told media personnel, adding that efforts should be made to encourage research and development in Pakistan. This, he said, would enable the country to catch up with the pace of progress in other parts of the world. The local automobile industry has shown significant growth over the last few years, and car- and motorcycle-production has reached new heights, he said.

Foreign investors and experts had no qualms about visiting Pakistan because the situation in the country was quite calm, the minister said. Moreover, the country has shown rapid growth in the past five years, he added.

The minister appreciated TUSDEC for launching projects to help the countrys industry compete internationally in terms of technology and production practices. He lauded the its efforts in developing Pakistans first ever technology upgradation policy for industry and urged TUSDEC to complete this document as soon as possible.

Taseer also spoke about TUSDECs plans for the establishment of an Industrial Technology Upgradation Fund (ITUF), and hoped that these efforts could act as catalysts to accelerate the adoption of new technologies in the local industry. 

He also appreciated TUSDECs efforts for rehabilitating the Cement Research & Development Institute (CRDI) and the Pakistan Industrial Technical Assistance Centre (PITAC).

He said that TUSDEC should also focus on the promotion of hospitality trades in Pakistan. These, the minister said, include hotels, which are always in need of skilled manpower. 

TUSDEC CEO had earlier briefed the meeting on the pace of the projects launched by the company since its inception about three years ago.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Shortfall of 1m bales expected in total cotton production​*
KARACHI: The country would produce around 1 million less bales of cotton against the governments revised figure to 12.8 million bales for the season 2006-07, the ginners and traders said here on Monday.

Apparently it is beyond any doubt that the country will achieve nearly 11.8 million cotton bales during 2006-07 crop season, the dealers said.

The non professional approach of the government in fixing the initial target of 14.14 million bales during 2006-07 was the outcome of not considering the stakeholders, said a senior member of Pakistan Cotton Ginners Association (PCGA) and president of PCGA Sanghar cotton belt region, Raja Abdul Sattar here Monday. Hardly three to four fortnightly reports to appear for the final figure of the cotton yield this season, Raja Sattar said. 

Giving reasons, he said insufficient water supply, poor pest control, inadequate provision of inputs including pesticides to tackle mealy bug, Cotton Leaf Curl Virus (CLCV) and sowing of BT cotton without certification has caused decline in the cotton production.

Raja Sattar said the fine lint consumption deficit would stand more than one million bales as the current Punjabs crop is estimated around 8.5 million bales while Sindh will produce around 1.9-2 million bales. Earlier the Punjab was likely to produce 11 million bales while Sindh production was estimated at 3 million bales. 

He said the rains and mealy bug damaged the standing crop in lower Sindh areas and mealy bug and CLCV caused damage to the countrys largest cotton belt in Punjab.

Around 45 percent of the total cultivation in the country was BT type cotton, he said adding nearly 90 percent of this type was cultivated in Sindh and about 30 percent was cultivated in Punjab.

A senior trader, Ghulam Rabbani said there was no scientific mechanism to make a correct assessment of the cotton crop size as wrong assessment had an adverse impact on the interests of the stakeholders particularly ginners and growers.

Mr Rabbani said, according to fortnightly report of Pakistan Cotton Ginners Association (PCGA), cotton arrival reached around 5.90 million bales mark on November 16, 2007, a shortfall of around 913,000 bales compared to the same period last year.

Out of the total production, textile mills purchased 4.30 million bales from ginners and private sector exporters bought 62,200 bales. Unsold stocks remained at 1.522 million bales. Pressing bales stocks stood at 880,751 bales, he added.

Mr. Rabbani said the arrival of cotton till December 2006 to the ginneries stood around 14.4 million bales, which is much higher as compare to this period. 

Usually the fortnightly reports start from July 1, till January end every year, the peak maturity period of reports start from October 15 to December 15, where one could ***** almost the final arrival of lint, he added.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Irish cos keen to invest in Pakistans IT industry ​*
ISLAMABAD: After getting attracted with the rich potential of outsourcing services of Pakistans Information Technology (IT) industry, several Irish companies have shown interest to enter agreements with local IT companies. 

At least six major Pakistani companies Softech Systems, MSoft, Efrotech, Esolpk, Invaterra and Alp Business Service Management have made major contacts with the Irish IT companies and are in process of signing up projects, the spokesman of Pakistan Software Export Board (PSEB) said in a statement here on Monday. 

The areas of interest included capital market, payments services for telecom and entertainment industry, web development and technical capability sets to manage outsourced testing process, he explained. 

The official stated that PSEB organized a week-long visit of ten Pakistani IT companies to Ireland, which has concluded with a major success. During the visit, the Pakistani delegation attended receptions and business networking meetings with leading Irish companies, which were held in collaboration with the Embassy of Pakistan in Dublin, Ireland-Pakistan Business Council (IPBC), South Dublin Chamber of Commerce, Irish IT Industry and various other local partners. The delegation met with the officials of South Dublin Chamber of Commerce and the Irish state development agency Enterprise Ireland.

Daily Times - Leading News Resource of Pakistan


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## Neo

*AJK government pays special attention to boost business sector ​*
MIRPUR (November 20 2007): The government of the state of Azad Jammu and Kashmir is paying special attention to boost the business sector including the cottage industries in AJK through the maximum involvement of local and foreign investors, official sources said.

The sources told APP here on Monday that the government has evolved an integrated plan for maximum use of local raw material to boost up the industrialisation process in AJK. The plan is also aimed at to generate a big portion of income in form of attractive profit through the maximum utilisation of locally-available raw material. The government has advised the state-run AJK department of Logging and Sawmills Corporation, Forest and Industries to focus fullest attention to achieve the goal.

AKLASC has further been directed to expand the functioning of the AKLASC mills in Mirpur by producing quality furniture and other wooden products. The heads of the public sector institutions have also been advised to concentrate for better marketing of the AKLASC's products locally and rest of the country.

The government has also directed the public servants of various nation-building departments to focus for performing their duties with zeal and under the spirit of hard working in order to strengthen the national economy on better footing. It may be mentioned here that the world's best furniture and other related wooden products for building could be made of the highly valuable and quality timber available in AJK to earn massive income.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pak, UAE to expand bilateral ties in oil and gas: minister​*
ISLAMABAD (November 20 2007): The ambassador of United Arab Emirates, Ali Mohammad Al-Shamsi called on the Caretaker Minister for Petroleum and Natural Resources Ahsan Ullah Khan here on Monday and discussed matters pertaining to enhancing existing level of co-operation in economic, oil and gas fields between the two brotherly countries.

The ambassador felicitated the Minister on assuming the portfolio of Ministry of Petroleum and Natural Resources and hoped that brotherly relations between the two countries would further grow and strengthen during his tenure. He reiterated his leadership's support to the economic policies of President Musharraf and his government.

The Minister informed the envoy about the initiatives being taken by the Government of Pakistan for developing the petroleum sector in accordance with international best practices to meet its growing energy need for rapid socio-economic progress.

He emphasised that there exists an immense potential for promoting the Pak-UAE co-operation in the oil and gas sector for mutual advantage. The Minister particularly mentioned the recent signing of Implementation Agreement between the two countries for setting up 5.0 billion dollar oil refinery in Balochistan which would prove to be a mile-stone in Pak-UAE historic relation and a precursor to petro-chemical projects as well.

The Minister stated that the caretaker government will ensure continuity of existing policies and re-enforcement of efforts towards completion of ongoing projects.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Businessmen urged to diversify exports ​* 
Wednesday, November 21, 2007

KARACHI: Hans-Joachim Kiderlen, Consul General of the Federal Republic of Germany has said that Pakistan needs to diversify its exports to Germany since 80 per cent of its trade is restricted to textiles and leather goods leaving a huge trade balance of about $489.22 million in favour of Germany.

During a meeting with the President Karachi Chamber of Commerce and Industry Shamim Ahmed Shamsi, he said the level of overall trade between the two countries lags behind the existing potential, which is evident from their bilateral trade volume of about US$1,864 million in 2005-06, out of which Pakistans exports and imports were US$687.34 million and US$1176.56 million respectively.

He further added that Germany is the largest economy and the most populous country in Europe and considering Germanys global trade of around US$2,030 billion during 2006, Pak-German trade is very small at $1.864 billion or 0.09 per cent whereas the share of Pakistans exports (US$687.34 million) in Germanys world imports ($916.04 billion) was merely 0.07 per cent.

The German diplomat disclosed that genuine businessmen were given visas within 10 working days. He added that wages in Germany were stable and cost of production, relatively had come down.

Shamim Ahmed Shamsi, expressed his concern over the increase in trade deficit of Pakistan with Germany and said that it had been in favour of Pakistan up to 2002-03, however, thereafter, due to manifold increase in imports from Germany ($ 1176.56 million) as compared to exports to Germany ($ 687.34 million) in 2005-06, it had shifted in favour of Germany. He, therefore, suggested that efforts must be initiated to make trade and joint ventures more meaningful to bridge this yawning gap. He suggested that textile units which are being closed down in Germany mainly due to high cost of production, may be relocated in Pakistan in collaboration with local counterparts, particularly in the fields of processing such as coating of fabrics, non-woven sector etc, for onward export to Europe.

Businessmen urged to diversify exports


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## Neo

*Foreign investment declines due to political turbulence​*
KARACHI: Net foreign investment in the country declined by $92 million or 5.4 percent to $1.610 billion during the first four months of the current financial year. The country had received foreign investment worth $1.702 billion in the same period of last financial year. 

The inflow of foreign investment into the country continues to decline in the current financial year mainly due to withdrawal of money by foreign portfolio managers. 

Foreign portfolio investment by private investors declined by $148.6 million or 30.3 percent to $342.3 million from $490.9 million. Portfolio investment by foreign public sector dropped $7.3 million or 18.7 percent to $31.7 million from $39 million. 

Foreign portfolio investment has declined mainly due to uncertain political situation in the country which has perturbed foreign investors as they fear economy may take a downward course as a result of political turmoil.

Foreign direct investment (FDI) rose by $49.3 million or 3.9 percent to $1,299.4 million from $1,250.1 million. It is interesting to note that except the United States inflow of FDI from most of the countries declined. 

The country received only $156.6 million as FDI from European Union as compared to $450 million last year. Within the European Union, investment from the United Kingdom plunged to $112.4 million against $390.9 million last year. Investment from developing economies also declined to $272.9 million from $313.7 million last year. 

It was only the investment from the US, which exhibited impressive growth. It rose to $641.6 million from $282.4 million. Investment from Japan rose to $39.3 million from $20 million. Investment from Norway and Switzerland also increased. 

Net inflow of foreign investment in the countrys stock exchanges from July 1 to November 19 stood at a mere $103 million, averaging around $28 million a month. Last year the country had attracted about one billion dollars in stock exchanges, averaging around $81.66 million a month. 

Economists had criticised the Shaukat Aziz-led economic management of the country, which relied heavily on undependable foreign exchange inflows like portfolio investment and remittances to cover its current account and trade deficits. Now that the government led by a commercial banker has completed its term, it will be a difficult task for the new government to meet demand for foreign exchange in the country with falling inflows. Countrys current account deficit stood at $2.145 billion during July-September 2007. 

Keeping this scenario in view, it should be expected of the new government to change policies to control imports and raise exports in order to keep its external environment stable. The outgoing government has left difficult challenges for the next government to confront.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan far behind in cotton output per unit of area: ICAC​*
ISLAMABAD: Pakistan, being the fourth largest producer of raw cotton is still lags behind in productivity per unit of area as compared with hectare yields being realized in some other major cotton growing countries, such as Australia, China, Greece, Turkey and Syria. 

The International Cotton Advisory Committee (ICAC) has informed Pakistan that a critical analysis of the situation reveals that national average yield is almost stagnant due to implications of the vagaries of weather, absence of virus resistant varieties, emergence of new insect pest such as Mealy Bug. The government is concentrating on developing practical solutions to raise the yield level, particularly on small farms, which are in bulk official sources said here Tuesday. 

The government of Pakistan has presented a country report in the 66th Plenary Meeting of the ICAC held last month in Turkey and a high level delegation of Pakistan from Ministry of Food, Agriculture and Livestock (MINFAL) attended it. The meeting was informed that the cotton research and development related organizations in Pakistan were concentrating on developing practical solutions to raise the yield level. The Pakistans Cotton Vision envisages enhancing the average yield to at least 1060 kg per hectare by 2015 or even earlier. 

The government has taken several steps for improving yield of cotton. The meeting was informed that Pakistan has emphasizing on control of Cotton Leaf Curl Virus (CLCV) through breeding and crop management and development of commercial cotton hybrids. The government was also stressing on the development of BT cotton, development of heat, insect, salinity and drought resistant and early maturing varieties. 

The Pakistani delegation informed the participants of 48 countries in the ICAC meeting that the CLCV was a major problem in the Punjab. However, by evolving CLCV resistant varieties and management strategy by the Pakistan Central Cotton Committee (PCCC)s research institutes, Pakistan cotton production was sustained to 10 million bales. 

The meeting was informed that Pakistani government was much in favour of introducing BT Cotton cultivation in the country, but through formal means. In this regard the MINFAL in consultation with stakeholders has finalized strategy to regulate release of genetically modified (GM) plant varieties including BT cotton. 

In view of the significance of cotton and textile sector in the national economy, there has been increasing emphasis on quality control or the production of cleaner and contamination free cotton to enable the textile industry to expand the marketing base for Pakistani products to realize their intrinsic values in the international market. The meeting was informed that the ministry of industry in collaboration with the MINFAL as well as private sector stakeholders was also working to implement the Cotton Standardization and Grading System at the grass roots level as early as possible. 

It is however generally realized that under the WTO post quota scenario a larger crop would pay the real dividends only when its quality matches the spinners demand at home and abroad, the MINFAL delegation informed the members countries. 

Pakistani delegation informed the meeting that cotton crop was believed to be the lifeline of the national economy as it accounts for 8.2 percent of the value added in agriculture and about 2 percent to GDP. They said that Pakistan produced an all time record cotton crop of about 14.3 million bales in 2004-05 followed by the second largest crop of 13 million bales in 2006-06 and 2006-07. A much larger crop may be expected in years to come in view of the latent yield potential of the existing cotton varieties, growing awareness among farmers regarding scientific crop production and protection measures, new areas available for cotton cultivation and the suitable government policies. 

The ICAC was informed that Pakistan has made a significant growth in the textile sector and emerged as the third largest cotton consuming country in the world. There was also growing emphasis on the export of more value added textile products instead of confining to the yarn and cloth.

Daily Times - Leading News Resource of Pakistan


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## Neo

*FDI crosses billion-dollar mark in four months ​* 
KARACHI (November 21 2007): Despite political crisis in the country, foreign direct invest (FDI) has crossed one billion-dollar mark, up by four percent during the first four months of current fiscal year 2008.

The State Bank of Pakistan (SBP) statistics on Tuesday revealed that foreign direct investment during the July-October had risen by 3.9 percent, but the portfolio investment declined by 31.3 percent. The net foreign investment, including the FDI and portfolio investment (PI), however, showed a declined of 5.4 percent.

The SBP statistics showed that during the first four months of 2008 fiscal year, the FDI crossed one billion-dollar marks, reaching 1.2994 billion dollars. The FDI stood at 962.5 million dollars during first quarter of 2008 fiscal year as against some 1.2501 billion dollars during the same period of last fiscal year.

Portfolio investment had, however, dipped by 141.3 million dollars to 310.6 million dollars during the first four months as against 451.9 million dollars corresponding period of last fiscal, said the SBP.

According to SBP statistics, net foreign investment has declined by 5.4 percent to 1.610 billion dollars during the July-October of current fiscal mainly due to portfolio inflows ahead of political uncertainty in the country.

"The FDI statistics are very encouraging and despite the political battle, foreign investors are investing in the Pakistan," said Muzammil Aslam, an economist.

He said that it showed that the country's economic fundamentals were strong and had ability to attract foreign investors despite the last few months' uncertainty. "Despite the political crisis, foreign investment figures are a positive sign and it means that still foreign are interested to invest in the Pakistan," he added.

"I believe that after presidential election, foreign investors will once again invest their money in the Pakistani market," he added. During October, the net investment, including FDI and PI, showed significant growth of 63 percent from 990.1 million dollars to 1.161 billion dollars, showing an increase of 619.9 million dollars.

The FDI during October was increased by 35 percent from 962.5 million dollars to 1.2994 billion dollars, while portfolio investment was increased by 1025 percent to 310.6 million dollars from 27.6 million dollars, said the SBP.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Shell scraps offshore drilling contract ​*
ISLAMABAD (November 22 2007): Pakistan's efforts to find some major discovery in deep sea waters have received a big blow as Shell and its partners' offshore drilling project has ended in a failure and as a follow-up the structure was declared as plugged and abandoned (P&A).

Sources told Business Recorder on Wednesday after negative result of a month-long drilling exercise, Shell Pakistan, the project's operator, scrapped the contract and permitted the Tranoscean, the US firm, to remove the rig from the site.

The Shell also sent the final report of the failure of the project to joint venture partners - OGDC, PPL, Government Holding (Pvt) Limited (GHPL), and Premier Kufpc. Since the abandoned project cost over $50 million, half of it will be borne by public sector companies, OGDCL and PPL, being 50 percent share holder 30 and 20 percent respectively and other 50 percent rests with Shell Pakistan and Premier Kufpc.

The project has a typical history and different from Pakistan's efforts made in the past to explore possibilities of carbon presence in its territorial waters. Its cost went up at least 300 times due to long delay and non-availability of ship-mounted rig for years. The project was conceived in 2004, and its cost was estimated at $18 million.

Then the project had many ups and down and at one stage the Shell Pakistan categorically refused to go with the project. Somehow the government managed to get the Shell management mind by offering OGDC and PPL as 50 percent partners. Rising cost and unnecessary expenditures were a bitter controversy between the Shell, the PPL, and the OGDC.

The PPL had raised serious concern over the rig condition and deplored that the operator did not get third party certification for proper maintenance, saying the rig could not function properly when it was tested in sea waters, which delayed start of drilling and increased the cost.

During the drilling, a serious problem of mud-leaking created a lot of complications for the drilling crew. The structure's prospects too remained controversial. Now when the drilling hole has gone dry its going to demand some new approach from the public sector companies and other government authorities for any future initiative for offshore drilling.

The concerned man of the Shell Pakistan was not available for his comments. He did not bother to respond telephone call made to his office in Islamabad for comments.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Assistance programme for Pakistan: ADB says it's not under any pressure ​*
ISLAMABAD (November 22 2007): Apropos a news item "Certain EU states want ADB to stop aid," carried by Business Recorder on Wednesday, the Asian Development Bank has stated:

"ADB rejects the statement published in Business Recorder on 21st November that it is under any pressure regarding its assistance programme for Pakistan.

"In meetings with senior officials, ADB's Country Director took the opportunity to confirm ADB's support to Pakistan's long-term development.

As far as ADB's new commitments in 2007 are concerned, a substantial part has already been approved and the remaining programmes are being processed as per normal practice. "The meeting with the Prime Minister referred to in the news item was a farewell call."

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Serious problems in the energy sector ​*
EDITORIAL (November 20 2007): While consumers in Pakistan continue to face energy shortages, multilateral institutions also seem to be equally worried about the issues in the energy sector. According to a World Bank study on "Potential and Prospects for Regional Energy Trade in the South Asia Region", the huge accumulative losses of Wapda and KESC are a matter of great concern and the government needs to work out a plan to overcome the growing power shortage in the country.

"One estimate places the annual financial losses of Wapda and KESC at about 585 million dollars in the early years of this decade. The losses are increasing since Wapda's losses alone were estimated at 817 million dollars for financial year 2006". The system losses of the two power utilities were also very significant.

During the 10 years between 1996 and 2005, Wapda's total system losses, (including auxiliary consumption of generation plants, transmission and distribution losses) ranged between 24.13 percent (the lowest in the period), and 27.55 percent (the highest in the period), while KESC's system losses ranged between 35.14 percent and 47.39 percent.

Non-payment of bills and theft of electricity in the KESC were so rampant that the army had to be called in to prevent theft and enforce collections. Collection was also particularly difficult in the Federally Administered Tribal Areas. Tariffs have traditionally lagged behind cost of supply and both the power utilities had been accumulating substantial losses despite periodic financial recovery packages.

The World Bank has also discussed the issues relating to natural gas and inter-connection of grids in the regional context. According to its projections, gas demand in Pakistan would grow annually at the rate of seven percent over the next 25 to 30 years, while the supply shortfall would be about four percent to 10 percent till 2010, and thereafter widen to 20 percent or more.

Gas demand in India is forecast to grow at an annual rate of eight percent in the next 25 to 30 years. At present, India and Pakistan have a total gas consumption of about 2.50 tcf. After inter-connection of their grids, Pakistan and India would be able to create a full regional electricity and gas market serving a population of 1.5 billion people.

This market would be largest in the world, whose sheer size would make it easier to mitigate the various risks, bear external shocks, reduce costs, create additional and more profitable trading opportunities and attract investments.

The hydropower import of 1000 MW from Tajikistan and Kyrgyz Republic to Pakistan and Afghanistan was being currently discussed and formulated with the help of multilateral and bilateral development partners led by the World Bank. The Bank believes that Pakistan could also become a major market for surplus energy from Iran and Turkmenistan.

The World Bank's study, in our view, has once again highlighted the issues in the energy sector in a very candid fashion. These may not be new or have been presented dramatically but certainly call for a thorough review of the situation and undertaking of appropriate measures at the earliest to ensure viability and solvency of the power utilities in the country.

It must be understood that inaction on this front is no more an option and could lead to a major economic catastrophe. A very sad aspect of this ugly situation is that every government, instead of taking long-term measures, has relied on adhocism and tried to postpone the inevitable one way or the other. Seen closely, the problems of the energy sector are really mind-boggling.

The magnitude of system losses and the financial haemorrhage borne by Wapda and KESC are too great to be sustained year after year and the government exchequer cannot carry the burden of mismanagement of the power utilities for long due to lack of fiscal space.

In fact, no power utility can hope to survive if its system losses are one third of its total generation. The fact that even the army has not been successful in arresting this hopeless trend speaks volumes about the dishonesty, corruption and institutional decay in the country.

Added to this is the usual reluctance of the sitting governments to adjust power tariffs to cover the losses in response to higher production costs, out of political expediency. The position could somehow be managed if hydropower potential of the country was fully exploited.

But this cheap source of energy remains largely untapped due to political bickering and indecision. Privatisation, once regarded as a way out of the crisis, seems to be in great disrepute as a strategy option after the experience of KESC which has sunk to new lows as far as efficiency and performance are concerned.

The idea of linking of grids between Pakistan and India is both workable and useful but full advantage of such a project could only be realised if there is a complete understanding on political issues between the two countries.

Seen from every angle, the situation is complex and serious and the authorities need to work overtime for the resolution of problems of the energy sector on a long-term basis. Failure on this front could lead to disastrous consequences. The recent rapid progress on the gas line project between Pakistan and Iran shows that a way can always be found if there is a will to succeed.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Chinese company to invest in coal sector ​*
ISLAMABAD (November 22 2007): Pakistan-China Joint Investment Company (PCJIC), a venture co-invested by China Development Bank, is eyeing an equity purchase in an integrated project of coal mine exploration and power generation in the South Asian country. Pakistan's Ambassador to China, Salman Bashir, spoke highly of the Sino-Pakistani fund.

"The Pakistan-China investment company is the most successful one among Pakistan's seven investment joint ventures with foreign countries," he said, CNBC reported.

China's first bilateral government investment fund, it was set up to raise money for Chinese companies' business development in electric power, petroleum, natural gas, infrastructure and manufacturing sectors in Pakistan and will mainly focus on equity investment.

The two neighbouring countries' first joint venture in the financial sector, the Islamabad-headquartered investment firm was launched this July with a registered capital of $200 million, in which China Development Bank and Pakistan's finance ministry each injected $100 million to take a 50-50 stake.

A company operating the Jheruk energy business will soon be set up with a registered capital of $100 million, in which China National Machinery Import and Export Corporation controls 60 percent stake and the rest is held by Hong Kong-based Golden Concord Holdings Ltd, said Chen, who is also an official with China Development Bank (CDB).

The project's two original shareholders have reached a preliminary agreement with Pakistan's Sindh province, where the Jheruk project is based, to develop the coal mine and build a power station in the region through the BOT (Building, Operation, and Transfer) model.

The new fund received $70 million in October, with each side earmarking $35 million, said Xia Qiang, a CDB official named as the fund's director, on the sidelines of a Sino-Pakistani banking co-operation forum earlier this month.

The total investment in the Jheruk project is expected to reach $500 million after several phases of construction, Chen said. "It is also possible that CDB might also offer bank loans to foot the bill for the rest of the money needed for the Jheruk project."

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*EU ban on Pak seafood may not go soon ​* 
Friday, November 23, 2007

ISLAMABAD: Although Islamabad authorities are striving hard to lift EU ban on Pakistani seafood the emergency imposed by Musharraf regime has made it impossible to achieve the desired results on immediate basis, sources in the Ministry of Commerce conceded here on Thursday.

Negotiations under current circumstances would be impossible, the communications with EU have been put on hold lest any thing backfires, sources said. According to the official estimates of Ministry of Food, Agriculture and Livestock (MINFAL) ban in shape of Sanitary Phyto Standards (SPS) imposed by the EU on export of fish from Pakistan was causing annual loss of over $100 million to exporters.

The MINFAL estimates show that Pakistan has potential to export seafood worth over one billion dollars per annum. The federal government, the sources said, is holding Sindh responsible for ban seafood exports, as it is the responsibility of the provincial government to ensure upgrading of boats as per required standards.

The federal government is currently working with the Sindh government to ensure upgrading of boats, the official sources said. Province of Sindh owns the fish harbours and jetties where boats offload their catch. The federal government has offered to bear 50 per cent expenditures to upgrade the boats.

The existing condition of boats is a major hurdle in the way of meeting the SPS requirements of the EU. The fishermen are ready to upgrade their boats but the owners of the boats are creating hurdles in the way of achieving the desired results.

Sindh government, the sources said, has allocated funds in its development programme during the current fiscal year in order to upgrade the boats. The Competitive Support Fund (CSF) has prepared a project to achieve the set goal in this regard.

The EU, the sources said, has evaluated 10 companies out of which three companies are better than others. But these three companies will have to meet the requirements of traceability. Pakistan is facing the ban on the export of seafood from the EU since the beginning of this yeaR.

It caused a slump of around 40 per cent in exports during the first three months of the current fiscal year and the trade authorities are expecting a major shortfall in its exports in months ahead.

Government authorities, the sources said, are moving slowly to take remedial measures to save this fourth largest export earning sector and the livelihood of thousands of fishermen is also at stake.

In the fiscal year 2006-07, the seafood exports fetched around $188 million for Pakistani exporters against $196 million in FY 2005-06, registering a decline due to suspension of exports to EU during that year.

If the ban continues during the current financial year, the country is going to face loss of $100 million, MINFAL authorities say. They said the government is fighting its case with all available forums to convince the EU for lifting this ban. But there is also need to ensure things done related to SPS requirements for avoiding such situation in the future, the sources concluded. 

EU ban on Pak seafood may not go soon


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## Neo

*Demand for housing units to rise up to 500,000 in 20 years ​* 
Friday, November 23, 2007

ISLAMABAD: Due to increasing demand for housing units, there exist tremendous opportunities for investment in real estate and the housing sector.

The demand for houses would reach 500,000 within the next 20 years, Secretary Board of Investment (BoI) Mushtaq Malik said while chairing the first meeting of the Advisory Board on Housing and Infrastructure here on Thursday.

He said housing backlog stood at 4.30 million in 1998 which, according to current projections, stands at 6.19 million, he said, adding that 350,000 housing units were established in year 2006 with an investment of Rs150 billion plus cost of land for the construction.

Malik said that main aim of the advisory board meeting with in the BoI was to addressed the issues faced by the private sector and put forward the recommendations to the relevant authorities.

He also asked for one-window mechanism in different sectors of the economy to attract foreign investment to develop infrastructure in the country. Positive suggestions and constructive critics would be able to enhance institutional work performance, he added.

The meeting was also attended by high officials of the government and private housing construction, cement manufacturing organisations who presented their suggestion before the meeting.NHA officials informed the members of the board about the vision 2030 to develop an industrialised and prosperous Pakistan through rapid and sustainable growth.

NLC officials informed that the NLC has valuable pieces of land across the country for joint investment in public-private partnership. Regarding the cement industry, the board was informed that domestic demand in 2006-07 was 21,034,278 tons which shows a 25 per cent increase. Per capita cement consumption was 137 kg while immense potential is there for cement export to earn foreign exchange for the country. 

Demand for housing units to rise up to 500,000 in 20 years


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## Neo

*Plan to send skilled workers abroad ​* 
Friday, November 23, 2007

ISLAMABAD: Caretaker Labour, Manpower and Overseas Pakistanis Minister Nisar A Ghuman said on Thursday the government would chalk out a comprehensive plan to send more skilled workers abroad for employment.

The minister, during a visit to the Overseas Employment Corporation (OEC), said the ministry would contact the governments of Italy and Turkey to send Pakistans manpower to these countries.

Labour and Manpower Division Secretary Malik Asif Hayat, OEC Managing Director S M Junaid and other senior officials briefed the minister about the working of the organisation. The minister emphasised the need to promote technical education among young people in order to reduce poverty in the country. 

He said the OEC should train manpower according to the requirements of the international market. Overseas Employment Corporation Managing Director S M Junaid said courses in Korean language had been arranged and next week tests would be conducted and those successful would be facilitated for getting employment in South Korea. 

Plan to send skilled workers abroad


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## Neo

*Pak marble has edge over India, China ​* 
Friday, November 23, 2007

ISLAMABAD: Utilisation of modern technology and trained human resource were the prerequisites to explore, evaluate and capitalise on the vast resources of marble and granite in the country.

This was the crux of a meeting the Pakistan Stone Development Company (PASDEC) had with Federal Minister for Industries, Production and Special Initiatives Salman Taseer on Thursday.Salman Taseer assured the PASDEC delegation of the governments cooperation in promoting marble cities and responded positively to several queries on promoting the sector.

He said that Pakistan was rich in marble resources and added that the government had already taken steps to promote the sector.PASDEC Chairman and Chief Executive Officer Ihsan Ullah Khan told the minister that Pakistan had a clear edge over India as well as China to excel in the marble industry due to various varieties of marble in the country. We have about 64 marble types while India and China lag behind, the PASDEC chairman said.

However, he added that 85 per cent of the marble is wasted due to blasting and lack of proper facilities, adding that utilisation of modern technology would reduce the loss up to 45 per cent. He also underlined the need for proper disposal of marble waste to check pollution and save nearby lands.

He gave a detailed presentation about how to improve and promote the marble industry in the country and suggested that clustering of stone industry was vital for its survival. He stressed the need for establishing warehouses to ensure an efficient inventory of raw material adding that there was dire need for human development also by providing training to people.

PASDEC has already initiated efforts to import machinery from Italy, he said and requested the minister to help investors get collateral loans to timely start their businesses. The PASDEC delegation also stressed the need for establishing mineral development bank in FATA and also apprised the minister about sales tax issues to be discussed with Federal Board of Revenue.

It may be recalled that the government is all set to setup four marble cities in the Federally Administered Tribal Areas (FATA), Risalpur, Northern By-pass Karachi and at Lora Lai in Balochistan.

Ihsan Ullah Khan informed the minister that 80 plots would be created in Risalpur, 200 in FATA and 200 in Karachi marble city respectively which would be provided on same conditions as were provided in the Sundar city Multan. He expressed the hope that ground breaking ceremony of FATA marble city would be held soon. 

Pak marble has edge over India, China


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## Neo

*Long-term industrial policy on the cards​*
ISLAMABAD, Nov 22: A long-term industrial policy, with clear goals, targets and sector-specific incentives, is being planned to develop the much-needed engineering goods industry aimed at widening the weak export base of the country.

Informed sources told Dawn on Thursday that all economic ministries were expected to join hands shortly for working out a long-term industrial policy by offering an attractive incentive structure for Pakistani firms to have joint ventures with large multinational corporations to invest in Pakistan and make the country a member of the global supply chain.

The objective is also to help renegotiate existing agreements with foreign partners to permit export of cars, tractors, etc., from Pakistan.

In this regard, the taxation system was further expected to be reformed to ensure effective implementation of research and development (R&D) benefits and timely tax refunds.

The government has been proposed to develop a clear vision to move industry into high technology orbit through product diversification, value addition in disposable instruments category to increase penetration in the European market.

The diversification towards the development of allied products, like plastic disposable, hospital textiles, hospital furniture, has also been proposed.

Similarly, diversification towards non-steel medical devices and electro-medical appliances, exploring non-traditional market which is Middle East, Japan, Africa, South American and developing Pakistan as the supplier of surgical instruments kits has also been proposed to the government by the Policy Planning Cell of the ministry of labour, manpower and overseas Pakistanis.

It was stated that the engineering goods industries demonstrate strong backward and forward linkages essential for rapid economic growth and employment generation.

It currently employees around 600,000 workers and contributes significantly to the GDP.

Pakistan roughly saved $3.75 billion annually through import substitution. The performance of the engineering sector is, however, less than satisfactory. Its share in meeting local demand is merely 25 per cent and the growing domestic demand for imports have almost doubled over the last eight years.

Pakistans share in the worlds export of engineering goods of $6 trillion is only $0.27 billion.

In this regard, it was stated that low technology base and low value-added production largely confined to the agro-based industry and are the characteristics of Pakistans engineering industry. The causes of reported slow growth are : ad hoc approach in policy formation and preferences for import of turn-key plants and machinery, priority to less value-addition areas for investment and tariff support and lack of adequate incentives to attract investment in high value-added sector, unfavourable cost structure due to lack of economies of scale in production, high inventory carrying cost, low labour productivity, high utilities cost and high cost of local inputs, particularly steel products, poor quality culture, lack of R&D, design and support facilities, resulting in the inadequate vending/sub-contracting facilities, and lack of entrepreneurs and management skills. In this behalf, the government was urged to remove discrepancies and anomalies of preferential treatment for duty- free import of products and greater and effective use of existing R&D institutions in close collaboration with the concerned industry established by the ministry of science and technology, such as Pakistan Council for Scientific and Industrial Research (PCSIR), having laboratories in provincial capitals, technology incubators involving many industries in the National University of Science and Technology (NUST) and Pakistan Council for Renewable Energy Technology (PCRET).

The most important step for promotion of engineering sector is to allocate more resources to basic, technical and engineering education.

Also, autonomous boards were proposed for each engineering sector with close collaboration with engineering universities and industry to cater for the industrial needs.

These boards should comprise members from the engineering industry, academics and the government.

The main objective of the board would be to build bridges between the academic institutions and industry.

Long-term industrial policy on the cards -DAWN - Business; November 23, 2007


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## Neo

*Interventions to control rupees value : State Banks foreign exchange reserves decline by $270 million​*
KARACHI: Foreign reserves held by the State Bank of Pakistan (SBP) took a plunge of $270 million during the week ending on November 17. 

The foreign exchange reserves held by the SBP plunged to $13.913 billion on November 17 from $14.183 billion on November 10. 

Bankers said this happened because the central bank was active in the interbank foreign exchange market, selling dollars to support the falling domestic currency. It has been intervening in the market since last week, pouring in as much as $100 million on some occasions. 

The rupee had fallen to Rs 61.19 for a dollar during the last week, which necessitated SBPs intervention. The central bank came into action, pumping in dollars and bringing down the greenbacks value to below Rs 61. 

However, demand pressures persisted due to increased importers buying and outflow from Special Convertible Rupee Accounts (SCRA). As a result, the central bank had to intervene several times during the last week, drawing from its foreign exchange reserves to sell the US currency in the market. 

Importers have increased their forward buying, fearing that the value of dollar might surge in case the government took any extraordinary steps (like freezing of foreign currency accounts), said bankers. 

Pakistans imports have been exceeding its exports by a big margin, putting pressure on its domestic currency. This gap in demand and supply is met through investment and inflows of remittances from abroad. Since portfolio investment has been coming down due to imposition of state of emergency, the pressure on rupee has been increasing. A net outflow of $192 million has been recorded in SCRAs from November 1 to 19. Emergency was imposed on November 3. 

The net foreign reserves held by banks other than SBP also fell. They came down from $2.204 billion on November 10 to 2.184 billion on November 17. 

The total liquid foreign reserves held by the country declined from $16.387 billion on 10th November to $16.097 billion on 17th November.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Textile exports marginally up at $3.6bn in 4 months​*
KARACHI: Export of textile products recorded a marginal growth of 1.03 percent in July-October of current fiscal to $3.649 billion over $3.612 billion in the corresponding period of last year.

In month of October, the export growth was not encouraging as it grew slightly by 2.74 percent to $ 836.855 million over $ 814.552 million in the same month of last year and slumped heavily by 9.28 percent when compared to export figures of preceding month when it stood at $ 922.416 million.

The stagnancy in the growth of the textile sector could be attributed to subsequent negative growths  0.79 per cent in September 2007, 5.55 per cent in August 2007 and marginal growth in July & October 2007. 

The events of past few months on the political front might be held responsible for this sluggish growth coupled with the uncompetitiveness of our products due to high cost of production, exporters opined.

During these four months, the export of a number of textile categories fell particularly the declining trend of value added textile sector was more worrisome, which was on the downward path since the beginning of this fiscal year.

The latest export performance of textile sector established the fact again that billions of rupees incentives doled out to this vital sector of economy could not help raise its export, which should be a source of concern for the economic managers of the country. 

Analysts viewed that the government will have to rethink its policy of giving cash incentives and trace the fault, which lies somewhere else. However, textile exporters contended that this high cost of production, which is stumbling block in the growth of the textile products. How one can expect the growth in export in a situation when cost of manufacturing is growing with each passing day, an exporter remarked while referring to the latest hike in gas prices.

Export of readymade garments witnessed a negative growth of 3 per cent in July-October period of the current fiscal year over the same period last year. A negative growth of 3.46 per cent in export of readymade garments was recorded in the month of October 2007 over the same month last year. Figures showed that export of bedwear also recorded a negative growth of 9.29 per cent in the first four months of the current fiscal year over the last year. However, there was a growth of 2.26 per cent in export of bedwear 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Quarterly update on economy: ADB for ending political uncertainty ​*
ISLAMABAD (November 23 2007): The latest ADB's update makes urgent call for ending political uncertainty, to ensure the present economic growth. In its latest Quarterly Update on Economy, the ADB has listed a number of positive developments on the economic front and spoken of some bottlenecks like upcoming power shortages.

But it stresses that "the fundamental issue is a resolution of the current political uncertainties. The forthcoming presidential and parliamentary elections must be seen by the population as fair and need to ensure the continuity and coherence of economic policy so as to sustain economic and governance reforms". The update sees that economy would continue the growth momentum achieving 6.5 percent by June 2008. This showed slight deceleration, because of tightening of the monetary policy to contain consumer demand, high international prices, and continued slow growth in exports.

In its introductory remarks, the update states that robust and broad based growth marked FY2007 (ended June 2007). Vigorous domestic demand was the catalyst, but it also induced inflation pressures. Monetary policy was tightened while fiscal policy remained expansionary, and a key challenge will be to align the two policies more closely. Encouraging revenue performance helped keep the fiscal deficit unchanged relative to GDP, although the trade and current account deficits widened, financed by strong external inflows. A concern is that these inflows could slow or reverse. The present momentum is expected to continue in FY 2008, moderated by the impact of tight monetary policy conditions, high international oil prices, and slow export growth.

According to the report the overall inflation in FY2008 is expected to subside to 6.5 percent. However, if the government borrows more from the banking system to finance higher than budgeted expenditures resulting in a wider than planned deficit, or if external inflows are unexpectedly strong, SBP will likely find it difficult to offset the impact on the money supply and ultimately inflation.

The government is to continue its expansionary fiscal policy in FY2008 as announced in the June budget, with an increase in salaries and pensions of government employees, larger subsidies, and a 20 percent hike in development spending. Expenditure on earthquake areas will continue, and relief and rehabilitation of districts in Sindh and Balochistan, badly affected by the recent rains and floods, will add to public spending. Servicing the domestic debt will also remain at high levels. The central board of revenue (CBR) expects receipts to stay robust, and the government has set a 21 percent improvement target in revenue collection for FY2008. Taking these factors into account, the update forecasts the fiscal deficit to be 4.2 percent of GDP in FY2008, slightly above the government budget plan of 4.0 percent.

On the external side, relatively slow growth in exports is projected because of continuing weakness in textiles, while import growth is expected to be elevated, reflecting a larger oil bill and continued robust expansion in investment. Accordingly, the trade deficit is likely to remain heavy at 11.4 billion dollars or 7.1 percent of GDP. While the net services and income deficits will continue to widen, workers' remittances, targeted to reach 6.2 billion dollars, should hold the current account deficit to 8.8 billion dollars, or 5.5 percent of GDP, in FY2008. This level is well beyond the ADO 2007 estimate of 3.9 percent of GDP.

Overall, Pakistan's growth over the 4-year period FY2003-2007 has averaged an impressive 7.5 percent, and this rate could be sustained in the medium term if two conditions are met: macroeconomic fundamentals remain strong, and policy commitment to governance and economic reform continues. Also, despite recent improvements, the still-low investment and savings rates represent a constraint to achieving and maintaining high growth, and that has to be addressed.

The lack of industrial and export diversification has to be rectified, to bring down persistent growth in the current account deficits to levels consistent with sustainable financing.

As a matter of some urgency, ongoing power shortages, which could become a bottleneck to growth, need to be resolved. Yet the fundamental issue is a resolution of the current political uncertainties. The forthcoming presidential and parliamentary elections must be seen by the population as fair, and need to ensure the continuity and coherence of economic policy, so as to sustain economic and governance reforms.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Gas pipeline project: Islamabad and Tehran initiate technical parleys ​*
ISLAMABAD (November 23 2007): Following India's exit from the cross-country gas pipeline project, Islamabad and Tehran have initiated technical dialogue for gas transportation from Iran to Pakistan. A technical team from Iran is in Islamabad for discussions to prepare a revised plan for the project. The technical discussions are likely to continue for next two days.

The teams will present their reports on the outcome of the discussions to their respective governments for decision-making. Sources said technical teams were discussing issues such as route for the pipeline, its size, backup storage facility, taxation, security and safety and the pricing system that envisages review of gas rates periodically.

The two sides had agreed in Tehran meeting last month to push forward the project without India. They had also agreed that Iran and Pakistan will lay down the pipeline on their respective territories. The pipeline size will be of big dia to transport at least one bcf gas per day. The two sides also have understanding that they will welcome India whenever it intends to join the project. As long as India stays away from the project Pakistan will buy one bcf gas per day.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Netherlands fifth most important export destination' ​*
SIALKOT (November 23 2007): Netherlands has always been an important economic partner of Pakistan and there is a great potential for further expansion of bilateral trade between the two countries.

Addressing a meeting held here on Thursday in connection with presentation on 'Netherlands Toolkit' President Sialkot Chamber of Commerce and Industries (SCCI) Sheikh Abdul Waheed Sandal said that the support and assistance being extended by Netherlands to Pakistani businessmen would greatly help in this direction.

Sandal said that in European Union, the Netherlands is Pakistan's fifth most important export destination after United Kingdom, Germany, Italy and France.

Pakistan enjoys favourable trade balance with Netherlands, Sandal said adding presently exports to Netherlands are $287 million and imports are around $194 million with the total trade volume of more than $480 million.

He said that in order to further enhance trade volume between the two countries better communication is direly needed. To make progress in this regard active engagements of chambers of both the countries, exchange of trade delegations and holding of joint trade exhibition are more important, he added.

The SCCI President further stated that in recent past Netherlands has emerged as one of the most important foreign direct investor in Pakistan adding presence of 19 Dutch multinationals bear evidence to the strong growth in economic relations between the two countries due to the policies of Pakistan government based on de-regularisation, liberalisation and privatisation.

In his presentation Deputy Head/First Secretary of Royal Netherlands Embassy to Pakistan Marc Leon Mazairac said that Netherlands was making adequate efforts to increase the share of developing countries on the European Union market.

Marc Leon said that CBI, an agency of Dutch Foreign Ministry serves three target groups like exporters in Pakistan and it will offer market information, matchmaking and long-term export development programmes aimed at preparing companies and their products for EU market besides, CBI will also support companies in maintaining or expanding their existing market share.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistani stocks up, led by energy sector​*23 Nov, 2007, 1118 hrs IST, REUTERS



KARACHI: Pakistani shares rose more than 1 per cent in early trade on Friday, led by the energy sector as investors accumulated shares on cheap prices, amid positive developments on the political front, dealers said. 

The Karachi Stock Exchange (KSE) benchmark 100-share index gained 1.08 per cent, or 146.52 points, to 13,689.39 on turnover of 41 million shares by 10:10 a.m. (0510 GMT). 

The free-float KSE-30 share index was up 1.34 per cent to 16,439.53 points. 

"The market is positive today as there have been further positive political developments as Nawaz Sharif expected to come back," said Mohammed Sohail, Director Equity Broking at JS Global Capital Ltd. Former Prime Minister Nawaz Sharif, the man President Pervez Musharraf deposed in 1999, is set to return to Pakistan within days, an aide said on Friday. 

His return is seen as promoting reconciliation and stability. Dealers said the energy sector drew investor interest as it had been underperforming the market. "Energy shares are still at attractive prices compared with the market and even regionally," said Faraz Farooq, an analyst at First Capital Equities Ltd. 

The KSE-index is up almost 35 per cent since the beginning of the year while Oil and Gas Development Co Ltd (OGDCL) is up only 5.8 per cent while Pakistan Oil Fields (POL) is down 4.15 per cent. Among heavyweights, OGDCL rose 1.55 rupees to 122.50, POL was 8.40 rupees higher at 343.40, and National Bank Ltd <NBPK.KA> gained 3.05 rupees to 240.25. 

Pakistani stocks up, led by energy sector- Global Markets-Markets-The Economic Times


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## Neo

*Importance of engineering sector highlighted ​* 
Saturday, November 24, 2007

ISLAMABAD: Minister for Industries, Production and Special Initiatives, Salman Taseer has emphasised the need of accelerating the process of development in the engineering sector as it contributes to economic progress of the country.

He expressed these views during his visit to the Engineering Development Board (EDB) on Friday. Zahid J Yaqoob, General Manager (Policy) briefed him on the boardís working, achievements and future plans. 

The minister described the engineering sector as the most important sector for the future of Pakistan. He directed the authorities that the board should expand its activities so that major sub-sectors of engineering could be developed.

Taseer said that the Ministry of Industries, Production and Special Initiatives was preparing comprehensive industrial policy for rapid industrialisation of the country. He invited EDB to provide necessary inputs on engineering sector for it. Noting the importance of the steel in development of engineering sector, he said that country needs more steel mills so that raw material requirement of the industry could be met.

CEO, EDB Almas Haider briefed the minister about the history of the board and engineering vision. He also highlighted various issues of engineering sector. Haider said that EDB was ready to present five-year tariff programme for each sub-sectors of engineering after successfully introducing the same in auto sector. 

The minister assured full support to EDB in meeting national targets. Secretary, Ministry of Industries, Production and Special Initiatives Shahab Khawaja and Additional Secretary, Abdul Hafeez were also present in the meeting.

Importance of engineering sector highlighted


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## Neo

*Russia lifts ban on citrus, opens rice market​*
ISLAMABAD, Nov 23: Russia on Friday announced lifting of ban on the import of Pakistani citrus fruit and hinted towards re-opening its market for the Pakistani mango and finally rice in the near future.

After three days of deliberations held here, the Pakistani delegation led by the federal food ministrys additional secretary Saleem Jhagra convinced the Russian quarantine team to announce lifting of the ban, which had adversely affected the overall performance of the countrys agricultural exports and its future prospects.

Russia had banned import of Pakistani agricultural products in the end of year 2006 after its phyto-sanitary watchdog found an insect Khapra Beetle in a rice shipment sent from Pakistan.

Meanwhile, a notification has been issued from Moscow directing the countrys customs authorities to immediately facilitate the unhindered access of Pakistani citrus to its market.

This is a major breakthrough and success for our team, Mr Jhagra told Dawn soon after the hours long meeting with the Russian team. He said the notification was issued from Moscow as the countrys quarantine officials in Islamabad called their high ups back home and informed them about their decision.

Now, the seven Central Asian countries, once part of the USSR, will also hopefully re-open their markets for the Pakistani farm products, Mr Jaghra said.

He said these countries followed the Russian food and health safety standards and never allowed import of products, which had been banned by Russia.

The additional secretary said that the export of mango to Russia would also be resumed and another team from Moscow would visit Islamabad to discuss lifting of ban on Pakistani rice.

According to an agreement reached between the two countries a few Russian quarantine inspectors would stay in Sargodha and would inspect kinno consignments meant for Russia.

Hence, there is no chance that the Pakistani consignments would be turned back from Russia as the Russian inspectors would stay here throughout the citrus season, the official added.

Before the ban, Pakistan exported 30,000 tons of citrus to Russia, about 15 per cent of its total export (620,000 tons).

It is hoped that the Pakistani citrus exports to Russia may be double this season due to the increased production of the small size kinno  a hot favourite of the Russian consumers.

The Pakistani inter-ministerial team, which also included representatives of the private sector, had visited Moscow in August to discuss the issue, which ultimately led to the suspension of the ban.

Russia lifts ban on citrus, opens rice market -DAWN - Business; November 24, 2007


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## Neo

*$46m plan to boost microfinancing​*
RAWALPINDI, Nov 23: A $46 million programme will boost commercialisation of the microfinance sector and make it available to about 160,000 new clients -- at least half of them women.

The programme for increasing sustainable microfinance will be partly funded by a loan of $35 million from the International Fund for Agritultural Development (IFAD).

It is time for microfinance in Pakistan, says Nigel Brett, IFAD country programme manager for Pakistan.

Future growth in this sector will depend partly on microfinance institutions and commercial banks forging successful financing partnerships. This programme will work to build such partnerships, he added.

The loan agreement was signed at the IFAD headquarters in Rome on Thursday by the Minister and Charge d Affaires of Pakistan Embassy in Rome, Jamil Ahmad, and IFADs President, Lennart Bege.

Banks and commercial financial institutions in Pakistan will contribute 10.3 million dollars to the programme.

The Pakistan Poverty Alleviation Fund (PPAF) will also provide 700,000 dollars and its partner organisations a further 600,000 dollars.

Access to micro-finance in Pakistan is still very limited and unmet demand is enormous. To date, the sector has relied largely on donor funds.

These existing funds are already failing to meet demand and only limited donor funding can be expected for micro-finance in the future, says Brett. Unless commercial funding sources can be tapped, the growth of the sector will be constrained.

Pakistans government recognises micro-finance as an important tool for reducing poverty in the country and supports the principles of market competition, commercialisation and innovation.

It wants to reach a target of three million borrowers within the next three years.

The countrys banks and micro-finance institutions have said they are willing to work together to expand outreach in services, such as loans, savings, insurance and credit.

The IFAD-supported programme will work with three groups: small farmers, livestock owners, traders and micro-entrepreneurs; women and households, headed solely by women; and vulnerable rural households living below the poverty-line.

When the programme closes, a number of high-performing micro-finance institutions reaching out to these groups will have developed partnerships with commercial banks, says Brett.

Through programme-supported mechanisms, such as cash collateral, guarantees, letters of credit and equity contributions, commercial banks will increase their lending to micro-finance institutions and this will lead to the overall growth of the micro-finance sector.

With this programme, IFAD loans and grants totalling more than $422 million have helped finance 22 programmes and projects in Pakistan.

$46m plan to boost microfinancing -DAWN - Business; November 24, 2007


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## Neo

*$1bn to be raised for Wapda​*
ISLAMABAD, Nov 23: Pakistan plans to raise more than $1 billion from overseas investors next month to enable the cash-starved Water and Power Development Authority (Wapda) to fund some of the projects needed to be undertaken to overcome the countrys worst ever electricity shortage.

A finance ministry official told Dawn the government was assisting Wapda and Pakistan Electric Power Company (Pepco) to issue international bonds of over a billion dollars to meet the needs of some hydropower projects, including the 969MW Neelum-Jhelum Hydropower Project.

After recent restructuring, Wapda is now responsible for irrigation and hydropower projects while Pepco, an umbrella organisation of power sector, looks after thermal power generation and distribution companies.

Some of the funds to be generated through the bonds could be used for general budgetary support in view of rising foreign debt repayment requirements but the primary objective would be Wapdas foreign exchange needs, the official said. The bonds would most probably be of 5- and 10-year maturity and would be backed by the sovereign guarantees of the government of Pakistan, he added.

He said the government was in contact with about a dozen leading local and international banks as part of groundwork leading to the formal launching of the bonds next month so that the transaction could be closed within December. Wapda currently faces a shortage of about 3,000MW in peak hours, resulting in load-shedding across the country, mostly in rural areas. The situation aggravates when generation from the hydel sources drops owing to reduction in river flows. An official said that Wapdas hydel generation had gone below 2,000MW against its total installed capacity of more than 6,500MW.

Wapda has been under immense financial pressure in recent months owing to non-payment of over Rs60 billion bills by the public sector and another Rs30 billion in subsidy being held back by the ministry of finance despite governments commitment made last year. This stems from the 33 per cent tariff increase allowed by the National Electric Power Regulatory Authority (Nepra) last year, but the government decided to pass on only 10 per cent to consumers and promised to subsidise the remaining part.

The finance ministry, however, did not pay this subsidy to Wapda, and is now asking the water and power ministry to notify the remaining 23 per cent tariff increase allowed by Nepra last year.

The power ministry, however, is hesitant to increase tariff at its own unless a fresh government decision is taken. As a result, not only the self-financed development projects of Wapda are getting delayed but the fuel suppliers ability to finance oil supplies is being affected, and problems are being created for independent power producers. This has also triggered a chain of non-payment resulting in creation of a huge inter-corporate circular debt. Pakistan had a comfortable supply position till recently, but started facing shortages due to restrictions on Wapda to develop new thermal power projects and Wapdas refusal to offer reasonable tariff to hydel projects, coupled with higher economic growth over the past few years. As a result, the consumers suffered the worst-ever electricity crisis during summer this year.

The World Bank estimates power shortage to the extent of 5,500MW by fiscal 2010 if new capacity is made available now. These estimates suggest the country is most likely to face a major energy crisis in natural gas, power and oil in three to four years that could choke the economic growth for many years to come.

The total energy requirement would increase by about 48 per cent to 80 million tonnes of oil equivalent (MTOE) in 2010 from about 54 MTOE currently, but major initiatives for meeting this gap are far from turning into reality. A major shortfall is also expected in the natural gas supplies.

According to official energy demand forecast, the demand for natural gas, having about 50 per cent share in the countrys energy consumption, would increase by 44 per cent to 39 MTOE from 27 MTOE currently. Partly contributed by gas shortfalls, the power shortage is expected to be over 5,250MW by 2010, a little lower than World Bank estimates of 5,500MW.

Simultaneously, oil demand would increase by over 23 per cent to about 21 million tonnes in 2010 from the current 16.8 million tonnes. This would leave a deficit of about nine million tonnes of diesel and furnace oil imports, he said. Since the gas shortfalls were expected to be much higher, the country would need to enhance its dependence on imported oil, thus increasing pressure on foreign exchange situation, more so as international market continues to go up.

$1bn to be raised for Wapda -DAWN - Top Stories; November 24, 2007


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## Neo

*Pakistans borrowing from IDB to cross $600m​*
ISLAMABAD: Pakistans borrowing from the Islamic Development Bank (IDB) for imports of crude oil and petroleum products is expected to cross well over the $600 million mark this fiscal year on account of an unprecedented rise in the prices of crude oil in the international market, sources told Daily Times here on Friday.

IDB loans amounting to $270 million, $194 million, and $25 million were utilized during the financial years 2004-05, 2005-06 and 2006-07 respectively. Two agreements of $200 million each were signed with the IDB in April and May 2007  out of these, $300 million have been utilized so far and the remaining $100 million are expected to be utilized in the near future.

Usually loans amounting to around $200 million to $300 million are annually extended by the IDB, and the Finance Division makes budgetary provisions for these. Loans are provided in the trenches of $15-25 million under Import Trade Financing Operations, Export Financing Scheme and Syndicate Morabaha Financing arrangements. There is no financial liability on the part of the petroleum and natural resources ministry or the oil importing companies.

Pakistans borrowing from the IDB has already crossed the $200 million average annual borrowing limit and has touched the $400 million mark. These borrowings are expected to cross well over $600 million this fiscal year.

Pakistans oil import bill surged by 8.68 percent to $2.859 billion during July-October of the current fiscal year (as opposed to $2.631 billion over the same period last year). Official data reveals that the import bill of petroleum crude was up by 18.30 percent to $1.491 billion in first four months of 2007-08 (compared to $1.26 billion over the same period last year). The import of petroleum products, however, was almost flat at $1.368 billion during the period under review (as opposed to $1.371 billion over the corresponding period last year).

Sources said that the IDB loans are arranged annually by the Economic Affair Division for financing the import of petroleum products and crude oil through Pakistan State Oil (PSO) and Pak-Arab Refinery Company (PARCO) respectively. The purpose behind this arrangement is to support the balance of payments.

Loan agreements are signed either by the Petroleum and Natural Resources secretary or Economic Affairs Division secretary on behalf of the Government of Pakistan (GoP). PSO and PARCO act as executing agents and the State Bank of Pakistan (SBP) extends a guarantee on behalf of government of Pakistan. 

Normally the maturity period of these loans is 12 months. PSO and PARCO then open Letters of Credit for the import of oil and deposit rupee equivalent funds with the SBP in the appropriate head of account 30 days after the Bill of Lading date of each oil cargo. Payment to oil suppliers is made directly by the IDB. The repayment of principle and the mark-up amount is made by the SBP after maturity. Repayment instructions to the SBP are issued by the EAD. Moreover, foreign exchange fluctuation is also picked up by the EAD through the SBP.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Meezan Bank takes part in Rs 53bn investment​*
KARACHI: Meezan Bank has made Rs 53 billion worth of investment banking transactions for corporate entities during the year 2007, according to a press release issued Friday. 

This includes Rs 10.6 billion for Liberty Power Tech Limited in a privately-placed Sukuk, Rs 8.58 billion to Attock Gen Limited in a Syndicated Finance facility, Rs 8 billion to Pakistan Water and Power Development Authority (WAPDA) in SLR Eligible Sukuk, Rs 7.7 billion to Dawood Hercules Chemicals Limited in Syndicated Finance, Rs 3 billion to Engro Chemical Pakistan Limited in a privately-placed Sukuk, Rs 2 billion to Sui Southern Gas Company Limited (SSGCL) in a privately-placed Sukuk, Rs 2 billion to the Pakistan International Airline Corporation (PIA) in SLR Eligible Sukuk, Rs 2 billion to the D.G. Khan Cement Company in a Syndicated Finance facility, Rs 500 million to the Quetta Textile Mills Limited in a privately-placed Sukuk, Rs 800 million to Arzoo Textile Mills Limited in a privately-placed Sukuk and Rs 625 million to Sitara Chemical Pakistan Limited in a privately-placed Sukuk. 

Meezan Bank president and CEO, Irfan Siddiqui, said that the bank was striving to ensure a rapid expansion of Islamic banking in all financial spheres, and that the Pakistani industrial sector was showing a significant paradigm shift away from conventional banking to the Islamic mode of finance.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Daily-use items prices rise 8.36pc ​* 
Sunday, November 25, 2007

ISLAMABAD: The Sensitive Price Indicator (SPI) year-on-year of 53 daily-use items for the week ended on November 22, 2007 has shown an 8.36 per cent increase as compared to the corresponding week of last fiscal.

The significant feature of the weekly bulletin of the Federal Bureau of Statistics (FBS) was that year-on-year rise in the prices of some necessities and kitchen items was exorbitant. These items were wheat and wheat flour, rice, vegetable ghee, red chillies, farm egg, chicken (farm), fresh milk, powdered milk, cooking oil and firewood, which hit the low-income group.

The bulletin on SPI, based on data collected for about 53 items from 17 centres, recorded that 18 items registered increase, and 11 items showed decline, while prices of 24 items remained unchanged. However, further analysis of the data revealed that year on year basis, 13 items were dearer by double digits. These include rice basmati (broken) whose price is up by 60 per cent, mustard oil 57 per cent, vegetable ghee (loose) 53 per cent, rice Irri-6 51 per cent, masoor pulse 40 per cent, vegetable ghee (tin) 31 per cent, cooking oil (tin) 30 per cent, wheat 27 per cent, wheat flour 25 per cent, chicken (farm) 24 per cent, washing soap 12 per cent, fresh milk 12 per cent and curd price up by 12 per cent over the same week of the last fiscal.

In a span of one week the prices of chicken (farm) shot up by 2.67 per cent, rice Irri-6 1.75 per cent, washing soap 1.34 per cent and mustard oil 1.12 per cent. The FBS figures further showed that though prices of 24 items posted no change during the week, yet compared to the corresponding week of last year, several items are now costly. For example powdered milk is dearer by 24 per cent, match box 25 per cent, firewood 13 per cent and plain bread up by 13 per cent.

It also indicate that the prices of 11 items decreased, but still compared to the prices of corresponding week of last year, some items recorded increase in their prices ie red chillies up by 42 per cent and egg (farm) by 19 per cent.

Daily-use items prices rise 8.36pc


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## Neo

*KSE recovers 650 points during the week ​* 
Sunday, November 25, 2007

KARACHI: After remaining bearish for the last four consecutive weeks, the positive trends prevailed at Karachi bourse this week (Nov 19-23) and all the five day-long trading sessions managed to finish with extended gains. 

KSE 100-share Index posted a handsome recovery of 650 points or five per cent on week-on-week basis and concluded at 13,732 points this weekend.

During the last one month (prior to this outgoing week), the benchmark 100-Index had lost 1,706 points or 11.5 per cent to 13,082 points by the last weekend (Nov 16) on account of profit booking that later converted into panic selling following imposition of emergency on Nov 03.

The free-float market capitalisation based 30-Index also regained 992 points or almost six per cent to 16,529 points on weekly basis.

The average daily volumes in the ready market surged to 225 million shares from previous week at 204 million shares turnover.

Sentiments turn bulllish: Another analyst said that the local participants widely welcomed the latest moves in the political arena. The Supreme Court dismissal of all petitions against Gen. Pervez Musharraf and accordingly expected oath taking of President of Pakistan in a day or two and doffing of his army uniform simultaneously; all were in line with the market expectations.

These developments in the country turned the negative sentiments in the market to positive during the week.

Energy stocks lead rally: Buying on across the board, under the lead of oil exploration and production (E&P) companies and oil marketing companies (OMC) increased the overall market capitalisation by Rs236 billion and stands at Rs4.240 trillion by the weekend.

International oil prices moved near S$100 per barrel mark this week, resulting in massive buying in the energy sectors. E&P sector led the rally, increasing its market capitalization by 7.4 per cent on week-on-week basis. Moreover, OMCs and refineries, on the expectation of better second quarter results due to inventory gains, showed a rise of 6.5 per cent and four per cent, respectively. Furthermore, expectation of increase in retail petroleum prices improved investor sentiments in OMCs, Bilal Hameed of JS Research reported.

Amongst other sectors, Insurance, Banks and Fertilizer improved by 9.5 per cent, 7.7 per cent and 6.4 per cent, respectively on account of their attractive valuations owing to decrease in stock prices in the past one month, he added. 

Local institutions uphold: Strong buying from the locally run governmental institutions e.g. National Investment Trust (NIT), State Life Insurance, Employees Old Age Benefit Institute (EOBI) and some others was noted in the market that also helped in generating enhanced volumes comparatively.

These institutions extended their possible support to mitigate the bad impression of emergency rule at the bourse following they developed understanding with government to do so, sources informed. The other speculators with small amount and short temperament followed the institutional movement and took high risk of attaining smart price differential or payouts in future.

They also bought shares with borrowed money, as CFS investment surged to the ceiling level of Rs55 billion from Rs50 billion on last weekend.

Foreigners on back foot: However, the foreign fund managers continued to withdraw their funds from the markets due to the prevailing uncertainty on political front. They also paid heed to the Commonwealth decision of suspending Pakistan membership from the 53-nation bloc, as Gen. Musharraf failed to lift the emergency rule in the given timeframe, as was demanded by this organization on Nov 12.

SCRA balances further shrank to US$72 million to date for the fiscal year 2008 from US$100 on the last weekend. During the week, the total overseas inflows and outflows in the account stand at US$108 million and US$136 million respectively. The difference of inflows and outflows calculated at US$28 million were withdrawn this week.

KSE recovers 650 points during the week


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## Neo

*Cotton import hits record 1.24m bales ​* 
Sunday, November 25, 2007

KARACHI: Textile mills have imported highest-ever quantity of 190,055 tonnes or 1.24 million cotton bales worth $286.931 million or Rs17.371 billion by October 31, 2007 from USA, India and other sources due to crop shortage in the country.

Provisional data of the Federal Bureau of Statistics for July-October 2007 shows a phenomenal increase of 154.62 per cent in raw cotton import in just four months.

Mills had imported 81,839 tonnes or 491,034 bales of raw cotton worth $112.688 million during July-October 2006.

Chairman Cotton Brokers Forum, Naseem Usman said that the news about the huge import of cotton has slowed down cotton trade at Karachi Cotton Exchange. The spot rate of Karachi Cotton Association (KCA) has declined by Rs100 to Rs3,125 per bale of 37.3324 kg on Saturday due to lack of interest, he added.

Usman said that rates of good quality cotton have also fallen in Punjab by Rs150 per bale due to declining demand.

Cotton ginning factories have closed down their operations across the country on the call of Pakistan Cotton Ginning Association (PCGA) till Sunday (November 25) as a protest against the mixing of water and wood in cotton by growers and taxes on ginners at various levels.

PCGA has also convened a general body meeting in Multan on November 25, to discuss the market situation over the reports of import of about 2 million bales in the country.

Cotton import hits record 1.24m bales


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## Neo

*Govt borrows Rs960 billion ​* 
Sunday, November 25, 2007

KARACHI: In order to meet its budgetary requirements the government borrowed Rs960.478 billion from the banking sector by the end of September-2007. At June-end, the borrowing stood at Rs898.339 billion. 

According to latest figures released by the central bank, governments net borrowing from the State Bank of Pakistan (SBP) declined to Rs311.389 billion at the end of September 2007, which was recorded at Rs325.360 billion in June-2007 and Rs445.247 billion in September 2006. 

Out of total loans acquired by the government from the banking sector, the central bank credited to government accounts Rs415.598 billion through investment in government securities and Rs11.533 billion as cash loans. In others category it got loans of Rs7.971 billion.

Credit from scheduled banks to government sector swelled to Rs649.085 billion, which was Rs572.959 billion in June-2007 and Rs402.341 billion in September 2006.

In September the banking sector credit to non government sector narrowed to Rs2,600.087 billon, which was Rs2,619.351 billion in June-2007. 

The SBP credit to non government sector stood Rs16.375 billion which was recorded at Rs16.187 billion in June 2007, whereas, the scheduled banks NGS declined to Rs2,583.712 billion from Rs2,603.164 billion in June2007. 

The breakup revealed that scheduled banks credited Rs163.092 billion to Public Sector Enterprises (PSEs) as against this the scheduled banks had disbursed Rs164.140 billion to PSEs in June 2007, similarly scheduled banks credit to NBFCs declined to Rs127.8 billion from Rs144.224 billion. 

The credit to private sector including investment in securities and share of private sector besides of loans to private sector recorded at Rs2,292.820 billion against Rs2,294.8billion in June 2007. 

The total credit disbursed by banking including government sector, trust funds and non profit sectors (NPOs) ballooned to Rs3,560.561 billion in September2007 as compared to Rs3,517.670 billion in June-2007.

Govt borrows Rs960 billion


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## Neo

*SCRAs balance surges to $124.533 million ​*
KARACHI (November 24 2007): After witnessing a massive outflow due to imposition of emergency, the inflow of portfolio investment in the country's equity market has once again started and the special convertible rupee accounts(SCRAs) balances reached 124.533 million dollars on Thursday.

The SCRAs balances increased by 25 million dollars during the last couple of days and according to the State Bank of Pakistan data, the recent inflow of 126,686 dollars was witnessed only from the investors from the US.

A massive inflow of the foreign investment was seen during the current fiscal year as over 2.094 billion dollars has come in the country's equity market from July 1, 2007, while an outflow of 1.970 billion dollars was also witnessed during this period.

The US investors topped the list as the net inflow of portfolio investment from the US reached 302.200 million dollars on November 22, but the UK investors withdrew 133.133 million dollars from the country's equity market.

A massive net outflow of 171.803 million dollars was witnessed during the current month, as a total of 290.396 million dollars came to the country, while 462.200 million dollars were withdrawn by the foreign investors in this period.

The foreign investors opted to withdraw their investment from the country's equity market after imposition of emergency, but the recent inflow was a very positive sign, said Chief Operating Officer (COO) of JOV & Co Ahmed Nabeel He said that the foreign investors took cautious stance due to political uncertainty, but after some positive developments on this front, the inflow of foreign investment had started.

He said that more foreign investment was expected in future and a massive inflow of portfolio investment in the country's equity market was expected after the elections. The recent inflow of 21 million dollars was seen from the US and UK investors, mainly in E&P, OMC and fertiliser sectors, that are still attractive for the foreign investors, he said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Crisis in cotton economy deepening​*
KARACHI, Nov 24: As crisis in cotton economy is deepening, it is causing anxiety and uncertainty in textile industry which is looking for a way out by ensuring supply of quality cotton through higher import of lint cotton from India and other countries.The new cotton season began on negative reports of severe damage to the crop caused by mealy bug, and curl leaf virus attack in the upper Sindh and lower Punjabs cotton growing belts.

Though initially the ministry of food, agriculture and livestock (Minfal) kept denying any such damage, the minister ultimately admitted the fact, and revised the crop estimate from 14.5 million bales to 12.8 million bales.

As a result of short supply of phutti from cotton fields to ginners owing to pest attack, coupled with delay in the opening of cotton bales of standing crop due to hot weather, raw cotton prices in the domestic market moved up to Rs3,300 per 40kg which crippled the spinning industry.

In the meantime, the spinning industry, which historically accumulates cotton stocks during first three months of the crop season (Oct to Dec) became desperate and looked for outside sources to meet their year-long raw material demand.

As crop situation worsened and private sector estimates put the crop size even lesser than what was officially projected, panic griped the spinning industry which entered large-scale import contacts of lint cotton.

It is being privately estimated that crop would not be more than 11 million bales and this would mean that huge quantity of around 4 to 5 million bales would have to be imported to meet the shortfall.

However, some analysts believe that many spindles may close down owing to high cost of production, coupled with recent Ogra decision to increase gas prices by 6.5 per cent and electricity prices by 23 per cent from early next year.

As a result of highly perplexed situation, the Pakistan Cotton Ginners Association (PCGA) has asked its 1,200 member-ginneries to close down for two days as a mark of protest against poor quality phutti being supplied to them by growers.

The PCGA alleged that growers were not only adding moisture, but are also putting wood and other material in phutti which was causing a lot of problems and the ginneries had been suffering financial losses.

They also complained that no government department was taking notice of such practices and it seems that things are deliberately allowed to happen.

The ginners body also took serious notice of large quantity of raw cotton import from India and said spinners have already entered into import contracts to the tune of 2 million bales.

Consequently, the PCGA called an emergent general body meeting on Sunday in Multan to sort out the issue after taking all members into confidence.

However, some private estimates believe that so far around 0.8 million bales have been booked for import from India and about 1.2 to 1.3 million bales have been contracted for import from US, Central Asia and other traditional sources.

It is encouraging to witness that raw cotton prices in the domestic market began to come down and on Saturday these were quoted lower by Rs150 per 40 kg at Rs3,150, and Punjab and Sindh varieties at Rs3,050 to Rs3,100.

The Karachi Cotton Association (KCA) spot rates were also quoted lower at Rs3,175 to Rs3,075 per 40 kg.

The phutti (seed cotton) prices also came down by Rs100 to Rs150 per 40 kg and are being quoted at Rs1,450 to Rs1,500 against previous rates of Rs1,600. The official phutti price was fixed at Rs1,075.

Meanwhile, textile mills have, so far, imported the highest-ever 190,055 metric tons or 1.24 million cotton bales worth $286.931 million (Rs17.371 billion) till Oct 31 from US, India and other sources due to crop shortage in the country, adds APP.

According to the provisional trade data of Federal Bureau of Statistics for July-October 2007, this is a phenomenal increase of 154.62 per cent in raw cotton import in just four months.

Mills had imported 81,839 MT or 491,034 bales of raw cotton worth $ 112.688 million during the same period last year (July-October 2006).

Chairman, Cotton Brokers Forum, Naseem Usman said that the news about the huge import of cotton has slowed down cotton trade at Karachi Cotton Association. The spot rate of Karachi Cotton Association (KCA) declined by Rs100 to Rs3,125 per bales of 37.3324 kg on Saturday due to lack of interest, he added.

Usman said that rates of a good quality cotton has also fallen in Punjab by Rs150 per bale due to declining demand.

Crisis in cotton economy deepening -DAWN - Business; November 25, 2007


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## Neo

*The troubling BIT​*
THAT the curtain seems to have fallen on Pakistans long-drawn talks with the United States for a Bilateral Investment Treaty (BIT)  a step towards the Free Trade Agreement  should not surprise anyone. The US and the European Union have long been pushing bilateralism across the globe. The emphasis on bilateralism increased after the breakdown of multilateral trade talks under the World Trade Organisation (WTO) in Cancun in 2003, mainly because of the refusal of the industrialised economies to allow greater market access to agricultural products and services from the developing nations. Bilateral agreements are often referred to as WTO plus because they move things beyond WTO standards. Both the US and the EU use bilateralism as an extension of their foreign policy tools to advance their political agenda and protect the interests of big business.

Washington agreed to initiate negotiations with Islamabad, its frontline partner in the fight against terrorism, on BIT leading to FTA in June 2003. At that time, the US trade representative had stated that a BIT based on the high standards contained in our model text can play an important role in strengthening Pakistans economy, so as to create new opportunities for exporters and investors in both economies and assist in meeting the economic conditions to counter terrorism. It was against this backdrop that the report about the snags hitting the BIT talks came as a rude shock to some. In view of the USs changing relations with Gen Pervez Musharraf in recent weeks and his rejection of the Bush administrations demand to lift emergency rule for transparent elections, it is but natural to see the suspension of BIT talks as part of the American effort to push for democracy and civil liberties in Pakistan. That may be so, partly. But it is not the whole story.

The Americans had been dragging their feet on BIT negotiations right from the start and trying to force Islamabad to agree to what officials describe as harsh conditions. These mainly relate to Americas insistence on greater intellectual property protection and an agreement on dispute settlement procedures of its choice. By demanding a more stringent IPRs environment and the selection of the International Centre for Settlement of Disputes for arbitration, the US is unduly asking for huge legal protection for its investors and transnational corporations. Thus, the failure to finalise BIT shouldnt distress anyone, especially those in government, because it is far less likely to hamper the flow of foreign investment or affect the economy than the current political turmoil. Instead, the opportunity must be seized to step up efforts for the successful conclusion of multilateral talks under the WTO for a just and fair 

DAWN - Editorial; November 25, 2007


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## Neo

*Pakistani gem, jewellery makers asked to adopt world standards​*
* Unawareness of the latest technology, lack of training and international quality standards are the real impediment in growth of gems and jewellery sector in Pakistan

KARACHI: International gems and jewellery experts have emphasized the need of proper training mechanism for Pakistani jewellery artisans and manufacturers to compete in international markets, where latest fashion designs are in demand. 

These views were expressed by the gems and jewellery experts Mr. Sylvo Schroeder and Ms. Bhavana while addressing a seminar on latest jewellery designing and gemology, organized by Pakistan Gems and Jewellery Development Company here on Saturday.

Mr. Schroeder said that US $1.5 billion gems and jewellery export target by 2017 by Pakistan is achievable provided entrepreneurship are encouraged, provided supportive infrastructure, latest mining, gems cutting & jewellery manufacturing techniques are introduce at the grassroots level and provide the gems and jewellery sector workers with proper training according to the international standards.

Unawareness: He said that unawareness of the latest technology, lack of training and international quality standards are the real impediment in growth of gems and jewellery sector in Pakistan.

Currently Gems and Jewellery sector in Pakistan is highly fragmented, he said adding, now the strategy should be to make Pakistan preferred source of high value-added gems and jewelry products, having the mission to enhance the skill and financial level of every individual associated with the Pakistan gems and jewelry industry to utilize their maximum potential. Ms. Bhavana said that India, by implementing a long-term strategy has gained a sizeable market of gems and diamonds, which is a model for Pakistani gems and jewellery sector. 

She appreciated the idea of creating Pakistan Gems and Jewellery Development Company for development of this sector with a mine to market approach to create a value chain and enhance the workers skills and income that would broaden employment and help alleviating the poverty.

She said that having visited different cities of Pakistan and meeting the gems and jewellery sector stakeholders she believed that Pakistani gems and jewellery sector is far more focused and organized. If the sector is provided with the latest technology and proper training, Pakistan can become a hub of gems and jewellery trading.

Speaking on the occasion Chairman of Pakistan Gems and Jewellery Development company Mateeullah said that Pakistan has the worlds best and most precious gems stones but it is only lacking in training.

Daily Times - Leading News Resource of Pakistan


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## Neo

*LSM growth slumps in July-September 2007-08​*
* Motorcycle production rises by 30 percent

ISLAMABAD: Out of the 37 items manufactured by the large scale-manufacturing (LSM) sector, the production of 14 items has showed negative growth during the first quarter of the current fiscal year (July-Sep 2007). 

Data released by the Ministry of Industries, Production and Special Initiatives showed that production of auto sector remained mainly in negative during the first quarter as compared to the same period a year ago. Governments lax import policy for different vehicles through various schemes was seen as the main reason for this negative production.

Only 300 units of sport utility vehicles were produced this fiscal in the first quarter against 642 units last year in the same period, showing a decline of 53.27 percent. Trucks production dropped to 871 units in first quarter against 1,135 units produced in the same period last year, depicting a decline of 23.26 percent. 

Tractor production dipped to 11,662 units as compared to 12,172 units in the same period a year ago, decreasing b 4.19 percent. 

Production rises: However, motorcycle production climbed to 243,555 units in the period under review as against 186,670 units produced last year in the same period, a rise of 30.47 percent. The production of buses also increased 17.79 percent to 331 units as compared to 281 units last year. A slight increase of 1.8 percent was also observed in car production as total production reached 41,550 units. Last year car productions was 40,815 units. 

The cotton cloth (mill sector) also saw negative growth of 1.23 percent in the first quarter. Production of only 253,600 units was recorded over 256,754 units a year ago. Bicycle production also remained in the negative list. Total production hit 102,867 units in the period under review against its last years production of 128,839 units, a decline by 20.16 percent. The production of sheet/float glass recorded a 3.27 percent decline in in the first quarter of the current fiscal year. Total production remained 4,024 units in July-September 2007-08 against 4,160 units in the same period last year. 

In the steel sector, the production of inguts and billets showed a 4.61 percent decline. Re-rolled items also recorded a decline of 0.43 percent in production during the first quarter of the current fiscal as compared to the same period last year. 

The maximum increase was occurred in the production of di-ammonium phosphate (DAP), which rose by 187.31 percent to total 28,340 units in the period under review while last year its 9,864 units were produced. The following items production recorded positive trends during the first quarter of the current fiscal year. Cigarettes 5.31 percent, cotton yarn 4.53 percent, cotton cloth (non-mill sector) up 3.03 percent, jute goods 19.29 percent, papers by 1.67percent, printing 69.98 percent, chipboard 1.60 percent soda ash 19.81 percent, caustic soda 12.24 percent, total fertilizer production 5.78 percent.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Telecom investment grows to $8bn in 4 years​*
* Telecom sector has emerged as the largest recipient of FDI in Pakistan during the last few years

KARACHI: Telecom companies have invested over $8 billion during the last four years in Pakistan particularly in the mobile sector whose investment share accounts for 73 percent official sources said here Saturday. 

In 2006-07, cellular mobile sector has invested over $2.7 billion, which becomes about 66 percent of total investment by the sector, sources at Pakistan Telecom Authority (PTA) said. Local loop segment of the industry is also taking off and in 2006-07 about $7.8 million were invested by this sector. LDI operators have invested about $603 million in 2006-7, which is about 15 percent of total investment by the sector.

During 2005-06, telecom sector received over $1.8 billion foreign direct investment (FDI) and emerged as the only sector of the economy to attract such huge investment where its share in total FDI crossed 54 percent. During 2006-07, telecom sector has received above $1,824 million FDI, which was about 35 percent of total FDI in the country.

Telecom sector has emerged as the largest recipient of FDI in Pakistan during the last few years. Liberalization and competition in the sector has compelled many companies to expand their infrastructure across the country, which requires more investment from foreign sources. In the last two to three years the telecom sector has attracted record inflows of FDI. 

PTA has created a conducive and investor-friendly environment in the telecom sector by awarding licenses in a fair and transparent manner. All operators are rolling out their networks rapidly all over the country, which requires huge investments. It is expected that the trend of investment may continue in the next five years because large potential market still exists in Pakistan and all operators intend to grab their share. China mobile has acquired Paktel, which has contracted out $500 million worth of project to renowned companies like Ericcson, ZTE and Alcatel to roll out their networks. 

Similarly, Mobilink also plans to invest $500 million in 2007-08 for improvement of quality of service and infrastructure expansion. Wateen Telecom, which has already laid out 5,400 km of optical fiber across the country, has announced to invest $600 million in next two years.

During the last four years Pakistans telecom sector has experienced unprecedented changes with respect to technology, regulation and growth. The liberal FDI policy by the government of Pakistan and deregulation and privatization of the sector has triggered a wave of international acquisitions in the sector. During the last year about $2 billion worth of acquisitions were made in the telecom sector.

It is viewed that stiff competition, squeezing profit margins and lack of investment resources have forced some players in the industry to rethink whether to go on their own thus convincing them to offer their shares to other players who can invest more and heavily and introduce innovation with their experience. Renowned companies from Gulf and East Asian region with in-depth experience in telecom sector are looking at Pakistan as a lucrative market to invest who have purchased shares in different telecom companies worth $1.7 billion. 

Orascom from Egypt, already owning the majority stake in the leading cellular mobile operator of Pakistan has purchased the remaining 11.31 percent shares of Mobilink from the local partners from $290 million. China Mobile, which is the largest cellular mobile operator in the world, has also made its first international venture by acquiring 100 percent shares of Paktel from Millicom and the local partner for $477 million. Similarly, Warid Telecom has sold about 30 percent shares to Singtel, a well-reputed company of Singapore. PTA has facilitated these developments and is taking steps for further growth of the sector. PTA is however, vigilant to ensure that no cartels or monopoly situation is created that can harm competition. Apart from international acquisitions, there are some local acquisitions where leading companies have taken over some small companies. Mobilink has purchased Zarco, which has Wireless Local Loop (WLL) license for Faisalabad and Lahore regions having frequency of 3.5 GHz. Similarly, it has also been purchased Dancom Online, which also has frequency of 3.5 GHz all over the country. Besides, a small ISP and WOL have also been purchased by the subsidiary of Mobilink.

Daily Times - Leading News Resource of Pakistan


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## Neo

*WB report shows impressive rebuilding effort in quake-hit areas​*
Washington: The World Bank has said that out of the 575,000 houses destroyed or damaged in the October 2005 earthquake, 425,000 are at various stages of completion.

The massive reconstruction effort is supported through housing reconstruction grants from the Pakistan government  a programme partly financed by the World Bank through the Emergency Recovery Project (ERP). The earthquake left 73,000 dead and rendered three million without shelter. The consensus after the relief work was that poor quality of building construction killed more people than the earthquake itself - a natural hazard converted into a man-made disaster, the Bank said.

According to a Bank report, The real challenge is to successfully utilise the owner-driven reconstruction approach, not only to reconstruct houses to seismic resistant construction standards in the immediate run, but, in the longer term, to promote a culture of voluntary seismic compliance in an extremely high seismic risk zone. Most of the beneficiaries are following the recommended seismic resistant construction standards. Achieving this success has required reaching out to the affected communities to convince and train them to construct differently from the ways they knew earlier.

In the words of Shahnaz Arshad, World Banks team leader for the rural housing reconstruction programme, An easy solution would have been to provide visible and immediate relief in the face of unrelenting public demand to see results, through supply-driven solutions. However, past experiences with disasters of this nature had shown that a housing reconstruction program executed in such a manner would have resulted in more problems over time. It would have provided for little beneficiary ownership and involvement in the reconstruction process, and run the risk of being unacceptable to the intended occupants.

The Bank said that more than 75 percent of the 450,000 rural housing reconstruction grant beneficiaries have started to rebuild their homes. This progress is based on an unprecedented (6-8 times higher) first year reconstruction response by beneficiaries in Pakistan, in comparison with other recent post-disaster housing programs. The first year reconstruction surge has been followed by sustained physical progress in the second construction cycle as well.

The current trend at the plinth level inspection stage indicates that more than 80 percent of such beneficiaries are adhering to the seismic resistant construction standards developed by the Earthquake Reconstruction and Rehabilitation Authority. This is evident from the fact that around 305,000 beneficiaries have already passed the first floor-level inspections of their houses. Almost 95,000 are nearing completion of their houses to seismic resistant construction standards. The Bank said there are two major challenges that are being gradually met, namely: maximising the judicious use of housing grants or reducing programme dropouts; and further increasing the rate of seismic compliance, especially in problematic areas.

Daily Times - Leading News Resource of Pakistan


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## Neo

*US to restructure, not cut, massive aid to Pakistan​*
* Money will be paid for earmarked items instead of direct transfer 
* US officials believe Musharraf will doff his uniform over weekend

WASHINGTON: The Bush administration plans to try to stave off growing calls to cut aid to anti-terror ally Pakistan by proposing a broad overhaul in how billions of dollars annually is distributed, officials said on Friday.

Hopeful that President Pervez Musharraf will soon lift emergency rule, possibly as early as next week, US officials are close to settling on a strategy that would not reduce assistance but impose tough new conditions and limit or eliminate direct payments to Pakistans government, the officials told The Associated Press.

Such a step would affect hundreds of millions of dollars that currently flow into individual Pakistani agencies, including the defence and interior ministries, with only cursory US oversight and understanding of where it is spent, the officials said.

No direct transfer of money: Instead of direct transfers, under the new policy, money would be used to pay for specific earmarked items requested by the Pakistanis and hire contractors for programmes the US government is not able to run. In addition, all assistance, including that given for democracy and rule of law projects, would be subject to more rigid accounting controls, the officials said.

There is a lot of talk about earmarking the assistance and appropriating it for specific objectives, said an official familiar with an under way review of US aid to Pakistan. 

This would get us out of the practice of making direct payments. The ideas, which still are under discussion, are designed to preserve Musharrafs critical role as an ally in Bushs campaign against terror and foster Pakistans foundering democracy while underscoring Washingtons unhappiness with his actions and demonstrating that they, especially in defiance of US appeals, have consequences, the officials said.

Musharraf has been slow to make good on promises to give up his role as Pakistans military chief, although he has relented somewhat in a crackdown on opposition figures and vowed to hold free and fair legislative elections as planned in January.

Uniform: US officials believe that after winning confirmation of his disputed October election victory on Thursday from a newly appointed compliant Supreme Court, Musharraf will step down from his military position, maybe over the weekend, and shortly thereafter lift emergency rule. Washington insists that must happen before the election is held.

On a visit to Islamabad last weekend, Deputy Secretary of State John Negroponte delivered a stern warning to Musharraf that aid to Pakistan would be jeopardised unless he backed down. 

Shortly before Negropontes Nov 18 visit, the US ambassador to Pakistan, Anne Patterson, sent a classified cable to Washington laying out suggestions for how to boost pressure on Musharraf without precipitously cutting assistance to a nuclear-armed ally critical to fighting the threat from militant Islam, officials said.

Whatever we do from here, we should use the opportunity to make the aid more directed, more focused and more under our control, said one official, paraphrasing elements of Pattersons classified cable. ap

Daily Times - Leading News Resource of Pakistan


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## Neo

*UN agriculture fund supports microfinance in Pakistan ​*
UNITED NATIONS (November 24 2007): The UN International Fund for Agricultural Development (IFAD) has announced that it will provide a $35 million loan to a new $46 million programme making microfinance services available to about 160,000 new clients * at least half of them women.

"It is a pivotal time for microfinance in Pakistan," says Nigel Brett, IFAD's country programme manager for Pakistan, according to a press release issued at UN Headquarters in New York.

"Future growth in this sector will depend partly on microfinance institutions and commercial banks forging successful financing partnerships. This programme will work to build such partnerships." The IFAD-supported programme will work with small farmers, livestock owners, traders and microentrepreneurs; women and households headed solely by women; and vulnerable rural households living below the poverty line.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Korean entrepreneurs make huge investment ​* 
LAHORE (November 24 2007): An investment of more than one billion US dollars has been made in various projects in Pakistan through joint ventures of Pakistani and Korean entrepreneurs. This was stated by Chaudhry Shafay Hussain son of PML-Q President at a dinner hosted in honour of Korean Ambassador in Pakistan, Michi Yan and his wife by Pak-Korea Friendship Society.

Chaudhry Shafay Hussain said that close ties exist between Pakistan and Korea and the two countries are actively co-operating with each other at various international forums. 'Korea was relatively a less known country to the people of Pakistan till a recently but following the appointment of Chaudhry Shujat Hussian as Honorary Consul General, a systematic campaign was started to introduce the Republic of Korea to the people of Pakistan, especially the business community of the country', he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Rising home remittances​*
Overseas Pakistanis sent a record $580 million as home remittances during October, up by 41 per cent over the amount registered for the same month last year. In the first four months of the current fiscal, remittances totalled f $2.81 billion, which was an increase of 26 per cent over the comparative period of last year.

In fact, the amount sent home by overseas residents has risen phenomenally from under $1 billion by the end of 1990s and the beginning of the year 2000. In the last fiscal year, it was a record $5.43 billion. The full potentials of remittances have yet to be realised which are estimated at around $10 billion, more or less on the lines of the Philippines.

In the past, after the remittances had touched almost $3 billion, more and more overseas Pakistanis started using the hundi or hawala for sending the money home. They got more rupees for the dollars through the hawala system. But now because of the western vigilance and monitoring, the use of the hawala channel has been reduced significantly. But if the rupee loses its stability, remittances may start coming through the hawala and the government will be the loser for that.

How best have we used of home remittances? Have we built up adequate foreign exchange reserves with the remittances that came?

We have built up a foreign exchange reserve of $16 billion but initially most of the dollars were bought from the open market and later through the inter-bank operations. Far more could not be saved because of the spending spree which resulted in a trade deficit of over $13 billion in the last financial year. The remittances covered only a part of the large trade deficit.

The rupee has come down to its lowest value in relation to the dollar, although the dollar has been falling steadily in relation to euro and has touched its lowest ebb. The State Bank of Pakistan had to intervene on two occasions to save the imperilled rupee by injecting $80 million.

Appeals are now being made to caretaker prime minister to stabilise the rupee. But it is by no means easy when the supply of dollar is not unlimited and the speculators also trade in dollars. Within the first four months of this financial year, there was a trade deficit of $5.6 billion -- with imports at $11.44 billion and exports at $5.84 billion. The fear is that the trade gap may be wider than last year when it was $13.53 billion

The imports last year were at $30.54 billion and exports were at $17 billion. The trade deficit is likely to get far worse as the oil prices are soaring, bordering on a $100 a barrel. And fuel prices are rising even higher.

In addition, the dollar is sliding and oil may cost more in dollars. In such a situation, the Indian rupee is doing well at 39 to a dollar against 61.40 of Pakistan currency. The Indian Commerce Minister. Kamalnath however says the costly Indian rupee which has risen by fourteen per cent this year against the dollar is hurting Indias exports. He wants measures to be devised to increase the exports.

As far as Pakistan is concerned, inflation will rise in case of 15 per cent increase in POL price, but also because of the 23 per cent proposed rise in power rates and seven per cent rise in gas charges. The inflationary pressures will hurt the rupee unless special remedial measures are adopted.

Meanwhile, India and Pakistan are setting up a study group to jointly promote their exports. They can co-operate well in areas like Banaspat rice, mangoes and even textiles. India has proposed to Pakistan to include 448 items more in its positive import list. Pakistan can respond to some of them positively. There is some progress in the area of trade. Certainly positive moves are being made and the two sides can gain a great deal by cooperating with each other.

Rising home remittances -DAWN - Business; November 26, 2007


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## Neo

*Upgrading of the shipping fleet​*
Left with a mere 14 over-age vessels, the PNSC management is busy trying to mitigate its losses and finds it difficult to show Pakistan Flag world-wide due to the very old ships.. The private sector ceased operating with the closure of Pan-Islamic Steamship Co. in 1998. Its last passenger vessel Safina-e-Arab, was demolished at Gaddani Yard. Since then, the shipping industry has made no progress.

A task force on Ports and Shipping in 1996 drafted a shipping policy and revised the Merchant Shipping Act of 1921 which was presented before the government. However, the government delayed the implementation of recommended measures and entrepreneurs lost all interest. In 2001, a new policy and a Merchant Shipping Act saw the light of the day after a lapse of five years. The document has become outdated in a rapidly changing world.

The private sector did not come forward. It demanded a level playing field with the public sector monopoly. The main disadvantage was that Pakistan flag vessels were denied entry to Indian ports. In 2005, a committee with participation of private entrepreneurs was formed and the shipping policy-2001 was amended. At the same time, a shipping protocol was signed in December 2006 removing some of the impediments. Only one private sector entrepreneur ventured with a container vessel but he too could not survive. Now a major effort is needed to induct private entrepreneurs and replace the PNSCs aging public sector fleet of 14 vessels, of which 11 are nearing 30 years.

Ports are being developed with land lord port concept and new container terminals are emerging, totally dependent on foreign ship owners. Pakistans growing trade of $50 billion remains largely dependent on foreign shipping lines and their local agents who increase freight at their sweet will, making our exports uncompetitive and imports expensive.

Pakistan seafarers who brought annually $70 million not long ago, were virtually jobless after 9/11 and were discriminated against. The Pakistani crew find it hard to survive while the . country continues to loose about $1.8 billion in terms of freight bill annually. Fortunately since 2003, the freight market is firm and due to a shortage of 10,000 officials, Pakistanis now find jobs with better salaries on foreign vessels. China, Philippine and India are emerging as the biggest source of human resource for world wide ship owning sector. Indian seafarers employed on foreign ships remit over $1 billion to their country.

With the changing world scenario, Pakistan has to update its marketing strategy for human resource which is second to none professionally,. . Shipping in the 21 century will be a new game of professionals. Gone are the days of monopoly trade and we have to be competitive to survive in a global free market .

Huge structural changes have taken place in the shipping industrys ownership, financing, management and crewing of the worlds fleet. The organisation of shipping activities has become truly international, with owners, operators, charters and crews coming from many different countries.

The changes have been accompanied by effective deregulation, particularly in the pay and conditions on board for seafarers. Unwittingly and unintentionally, the shipping industry has found itself with the worlds first working example of a relatively open labour market.

The development of international technical standards and their implementation through port state control have not been matched by agreement and enforcement of minimum social condition. In those sectors of the industry exposed to ruthless competition on freight rates , there has been an inevitable temptation to  cut corners 

The world shipping fleet continues to grow. It is estimated that there are around 87,000 merchant vessels of 544 millions tonnes gross, a rise nearly of one-third ( in tonnes ) in a decade. Shipyards are busy and are not accepting new orders till 2010. Certain type of ships, such as cruise ships and container vessels, have seen growth rates of as much as nine per cent per year, although there has been a decline in the number of general cargo and mixed oil, bulk, ore (OBO) carriers.

More importantly for seafarers, the importance of flags of convenience (FOCs) and second register has risen dramatically and they now cover nearly two-thirds of the ocean going merchant fleet measured by tonnage. Just 10 years ago, the proportion was 44.5 per cent  Flagging out to FOCs is primarily caused by a drive to cut costs, even though crew costs as a proportion of total voyage costs kept falling steadily since the 1960s. They are inevitably the first target, as one of the few variable factors ship owners can control in the short-term. However 2006 has seen an increase in crew salaries and shortage compels owners to pay the market rates. Owners who flagged out, when the trend began in the 1980s had a competitive advantage  said to be up to $1 million a year between a typical Netherlands flag tanker and a comparable FOC. A Japanese crew of 11 could be replaced on an FOC vessel by a South East Asian crew of 22 and will save the owner US$ l million.

The industry has seen increased specialisation in both the type of ship containers specially tankers, and roll-on roll-off ferries  and in the management of vessels. A new breed of fleet managers has grown up in the last 20 years and is present in all the traditional shipping centres of the world. Deregulation and intense competition have seen the average pay of seafarers fall by 25 per cent between 1992 and 1999 but improved 30 per cent in 2006.

Nearly a third of those at sea report working more than 12 hours a day and modern ships are just as likely as older vessels to have accommodation that is cramped, noisy and infested with cockroaches. Many seafarers are paid below the International Labour Oranisations minimum basic wage for an AB of $435. Far more fail to reach the ITFs consolidated AB minimum of $1.250 ( as at 2001) although a number of vessel are signing ITF agreements. The largest study of the supply of seafarers suggests there are about 404,000 officers and 823,000 ratings worldwide. They are chasing 1.02 million jobs, split between 420,000 officers and 599,000 ratings

As a consequence, there is a slight shortage of officers and a global surplus of rating. Seafarers increasingly are from the east of Asia, the Indian subcontinent and from eastern Europe. The numbers from the industrialised countries continue to fall.

The most recent survey by the seafarers International Research Centre (SIRC) says crewing levels have stabilised with the average crew for bulkers, container ships and reefers now being 20 and 24 for tankers. Crew of mixed nationality are common, but they are chosen deliberately. Language ability and inter- regional preference are often the deciding factors. While Filipino, Polish and Indian seafarers frequently provide large proportions of crews, they are less likely to form whole crews in FOC ships say SIRC. English language ability is probably the decisive factor in most of these cases.

Serious thinking is necessary for growth of Pakistans merchant fleet and to find lucrative employment to out trained seafarers.

The writer is ex-chairman, Gwadar Port Authority

Upgrading of the shipping fleet -DAWN - Business; November 26, 2007


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## Neo

*Gas project details​*
TEHRAN, Nov 25: Technical details of the gas pipeline to be laid between Iran, Pakistan and India are being finalised without Indias participation.

Irna quoted Hassan Montazer Torbati, representative of the National Iranian Gas Company (NIGC), as saying that changes could be made if and when

New Delhi decided to join the negotiations.

Technical discussions are expected to be finish in a months time when the final document will be ready for signing by officials of the two countries.

India and Pakistan are yet to reach an agreement on gas transit fee.

India says it will join the project after it settles the issue of transit fee with Pakistan.PPI

Gas project details -DAWN - Top Stories; November 26, 2007


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## Neo

*Crisis worries investors: analysts ​*
ISLAMABAD (November 26 2007): With names like Next, McDonald's and Rolls Royce appearing in Pakistan's cities, evidence of growing foreign investment is easy to see-but analysts warn that emergency rule could put it all at risk. President Pervez Musharraf imposed a state of emergency three weeks ago warning that militancy and a meddling judiciary were imperilling not only the country's stability, but also its economy.

The nuclear-armed Islamic republic has experienced a boom since Musharraf seized power in a coup in 1999, with government figures recording growth last year of 7.0 percent - one of the fastest rates in the world. Foreign investment was around 10 billion dollars for the past year, much of it from Arab nations and the United States.

Despite continuing mass poverty, signs of that growth are widespread. Mobile phone masts are popping up everywhere, with people benefiting from lower tariffs due to heated competition between Pakistani, Norwegian, United Arab Emirates, Chinese and Egyptian-owned companies.

In the cities, banks offer easy loans for almost anything - houses, cars, televisions, computers, microwave ovens, refrigerators and air conditioners.

Porsche, Mercedes, Audi and Rolls Royce have all opened gleaming showrooms in the eastern city of Lahore.

But analysts and business leaders say the negative image of emergency rule, together with curbs on the media and the arrests of thousands, may have harmed the country economically.

Credit rating agencies Moody's and Standard & Poor's downgraded Pakistan's debt outlook to negative from stable after Musharraf imposed the emergency.

Mohammad Zubair Khan, an Islamabad-based economic analyst who was commerce minister in the 1996 caretaker government, said the crisis has multiplied the concerns of foreign and domestic investors.

"The possibility of a political confrontation has thrown even the existing business plans in jeopardy," said Khan, also a former International Monetary Fund official.

"Existing export orders are being cancelled because the importers who want their items to be delivered on time are not sure." The instability also hit the stock market, which suffered its biggest ever single day fall-4.57 percent-on November 5 following untrue rumours that Musharraf had been toppled by his army deputy.

"The impact of the emergency has started to be seen," agreed Tanvir Ahmad Sheikh, the president of the Federation of Pakistan Chambers of Commerce and Industry.

"It is bound to have a negative impact on foreign investment as developed countries do not see such measures as favourable," he told AFP. "Also negative travel and business advisories deter investors from putting their money in Pakistan."

Saad Bin Ahmad, head of research at Capital One Securities, said that after November 3, inflows of foreign cash dipped. "Investors seem to be cautious as political risk has increased considerably," he said.

Even the United States-Pakistan's biggest ally and which has effectively propped up the economy with 10 billion dollars in aid since Islamabad joined the "war on terror" in 2001-has expressed concern. US ambassador Anne Patterson said emergency rule was jeopardising economic growth and upward mobility.

"This is an ominous development," she warned in a speech here. US investors were adopting a "wait and see attitude," she said, cautioning that the longer emergency rule remains in place, "the greater the long-term damage to Pakistan's economy."

Even so, the caretaker government insists the country remains on track. Earlier this month it signed off on what it said was its "biggest ever" foreign direct investment, a five-billion-dollar accord with the United Arab Emirates for an oil refinery in south-western Balochistan province.

"It reflects confidence of foreign investors over the investment friendly policies of the government," former premier Shaukat Aziz said at the time. Aziz, a former banker who also served as finance minister under Musharraf until 2004, is considered the man behind Pakistan's economic turn-around.

Underlining investor concerns, however, he has said he will not stand for parliament again when the country votes in January 8 elections.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Reforms' process must continue: Shaukat ​*
ISLAMABAD (November 26 2007): Former Prime Minister Shaukat Aziz Sunday said reforms process must continue to ensure enhanced development especially in the economic field. Addressing a reception held here in his honour, he said the country has witnessed robust economic growth in the last few years and it is imperative to maintain upward trend in the national economy.

The reception was attended by Minister for Information and Broadcasting Nisar A. Memon, AJK Prime Minister Sardar Attique Ahmad Khan, HEC Chairman Dr Attaur Rehman and 30 ambassadors and diplomats stationed in Islamabad. "Our country having a population of 160 million people has a lot of potential and I hope Pakistan of tomorrow would be quite different from Pakistan of today," he said.

The former prime minister said the most important hallmark of the PML government was transparency that enabled the administration to serve the people in a befitting manner.

He said, "It was for the first time that a person from a middle class became prime minister of the country and I was in a much better position to understand the basic problems of a common man."

Shaukat Aziz said President Pervez Musharraf always supported me and encouraged me to do my best for the betterment of the people and country as well.

He said it had been a tremendous experience to remain in a position where I was able to put in my best efforts and pay back to the country that gave me identity and prestige.

"It is an honour for me to leave my office with all the dignity and respect because in the past we witnessed that the prime ministers used to go back from back doors," he said.

Referring to ongoing election process, he said general elections would be held in free, fair and transparent manner that would pave way for a new political landscape in the country.

"All the political parties should participate in the forthcoming elections and play their due role in further strengthening the democratic system," he said.

Editor-in-Chief of Daily Pakistan Observer Zahid Malik said Shaukat Aziz served the country with devotion and determination and his efforts to bring an economic revival would be remembered forever.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*AOTS focusing on human resource development ​* 
LAHORE (November 26 2007): Provincial Minister for Housing, Urban Development and Public Health Engineering Mian Shafqat Ali has said that Association for Overseas Technical Scholarship (AOTS) have so far provided about 2000 professionals from Pakistan with various trainings and the association has been contributing to the human resource development of local industries in Pakistan by organising programmes exclusively designed to meet the specific needs of the Pakistani businessmen and other professionals.

He expressed these views while addressing the inaugural session of a 3-day training programme on the topic of Leadership held in collaboration with Pak-Japan Business Forum here today.

President LCCI Shahid Hassan Sheikh, Regional Head AOTS Japan Y. Suzuki, President AOTS Pakistan Akhlaq Ahmad Malik and other prominent business figures were present on the occasion.

The Minister said that AOTS have formed 70 Alumni Societies in 43 countries around the world which were voluntarily organising management seminars and cultural events to promote mutual understanding between their regions and Japan. He admired the activities of AOTS in South Asia.

Mian Shafqat Ali said that AOTS has so far trained over 135000 people from 170 countries in Japan through different programmes, which include over 13000 participants from the South Asian region. Although the proportion of South Asia participants is very small, in the thick of globalisation, the importance of Association for Overseas Technical Scholarship in this region cannot be defied, he added.

The Minister said that at present world is moving towards economic globalisation today's businesses have to operate in an environment of global economic integration where changes in one part of the world affects another.

He said that we must stay innovative and move up to the technological ladder. He said that AOTS services could play a pivotal role in technology transfer, capacity building and bringing industrial and economic development in this region.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Economic reforms result in record growth rates: World Bank ​*
FAISALABAD (November 25 2007): Pakistan is the most urbanised country in South Asia, with a booming economy, while economic reforms resulted in record growth rates and high levels of investment. However, the natural resource base is stressed and it could undermine growth prospect, said Electronic Newsletter of World Bank.

According to World Bank update reports, environmental federalism poses a number of challenges for effective environmental management in Pakistan, particularly in the clear definition of institutional roles and the allocation of resources to build capacity.

Vertically, the challenges relate to the division of responsibilities between national, provincial and local governments, while horizontal challenges arise as a result of the division of responsibilities between environmental, planning and sectoral agencies. Effective environmental management also requires the active participation of key institutions outside government, in particular the judiciary, civil society advocates, and the media.

Furthermore, to help tighten linkages in the institutional framework for environmental management, the WB reports recommends that clearer guidelines be agreed for the delegation and oversight of environmental authority from federal to provincial levels, and that these be supported with increased funding conditional on improved environmental performance. Capacity could also be strengthened by outsourcing non-binding functions to independent third parties, and the political will for stronger enforcement would be emboldened by empowering civil society and public interest advocacy.

To reduce the costs associated with environmental and natural resource damages in Pakistan, the WB reports provides recommendations targeting institutions, regulations, capacity, and accountability:

Strengthen institutional design, in particular to guide federal oversight of environmental authorities delegated to provinces, to build partnerships between federal, provincial and municipal authorities for clean air, and to define responsibilities for water quality protection.

Update the regulatory framework, to set health-based air quality standards, use-based water quality standards, and standards for drinking water. Vehicle emission and fuel quality standards should also be updated. Build capacity for environmental management, especially for effective EIAs, air quality management and protection of water quality. Environment cells in key sector ministries and planning departments should be further strengthened.

Reinforce incentives and accountability, through greater public consultation and disclosure in the EIA process, by providing public information on air and water quality, and by supporting public interest advocacy for the environment, said WB reports.

Constitutionally, WB report recommended that federal and provincial governments share the concurrent legislative authority for environmental pollution and ecology. In addition, Pakistan EPA has delegated powers under PEPA to provincial EPAs to implement and enforce environmental regulations.

Further, the mid-term review of the NCS and the NEP both emphasise the need to develop the environmental management capacity of provincial and local governments. Appropriate roles for national authorities within this environmental federalist structure include: (i) setting national policy and defining environmental quality goals; (ii) providing resources and oversight to provincial environmental authorities; and (iii) publicly reporting on progress in meeting national environmental objectives.

Provincial environmental authorities should play the primary role in the environmental clearance process, the implementation of compliance and enforcement, as well as the monitoring of ambient environmental conditions.

At the same time, the federal environmental authority has a legal mandate to ensure the enforcement of national laws and regulations, which includes federal oversight and suspension of delegated powers. Bringing greater clarity to this structure would reduce the institutional design constraints to improved environmental outcomes. No oversight guidelines have been established for federal environmental powers delegated to provincial EPAs, WB report pointed out.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Record 1.4 million new domestic gas connections provided ​*
ISLAMABAD (November 24 2007): In a bid to supply natural gas to every nook and corner of the country, the government has provided a record 1.4 million new domestic gas connections to the people during the past five years.

"The past governments were able to give 3.4 million gas connections to domestic consumers prior to year 2002," official sources in the Ministry of Petroleum and Natural Resources said here on Friday. The industrial connections were increased from 4,434 to 7,756 while commercial connections from 46,113 to 67,647 in the above mentioned period.

Giving other details about performance of the petroleum sector especially the gas sector, he said sale of gas has increased from 1,411 million cubic feet per day to 3,351 million cubic feet per day.

He said the number of cities and towns connected with national gas network has enhanced from 1,414 to 2,552 in five years which is also a record. About transmission and distribution system, he said the length of transmission lines has increased to 10,023 kilometers from 7,444 kilometers in 2002. The distribution system has extended to 83,105 kilometers from 56,208 kilometers, he added.

About performance of CNG sector, he said, so far, 1.5 million vehicles have been converted to this cheap and environment friendly fuel. The numbers of CNG stations have reached 1,834 across the country and Pakistan is the second largest country after Argentina in this sector.

Regarding use of LPG, he informed that present production of LPG is about 1,650 ton per day while its demand is 5,000 tons per day and shortfall is covered by its import. About production, he said that 70 percent of natural gas is coming from Sindh province while share of gas in the energy mix is 54 percent.

He said in view of gas shortfall in future owing to growing demands, the government is considering to bring gas through transnational gas pipelines. For this purpose, the discussions are being undertaken on the Pakistan-Iran-India gas pipeline project, Turkmenistan-Afghanistan-Pakistan gas pipeline and Qatar-Pakistan gas pipeline project.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

* CDWP recommends 15 projects worth Rs243.8bn to Ecnec​* 
Tuesday, November 27, 2007

ISLAMABAD: The Central Development Working Party (CDWP) on Monday recommended some 15 projects of paramount importance to the tune of Rs243.8 billion to the Executive Committee of the National Economic Council (Ecnec).

The CDWP also accorded approval to 16 development schemes valuing Rs4.5 billion, including constitution of an experts team for installation of 600 megawatt (MW) and 1,000MW nuclear power plants (NPPs) in Karachi.

The meeting also approved four projects of the energy sector costing Rs25.941 billion which include 450-500MW combined cycle power plant at Nadipur of Rs22.335 billion, uranium mining project valuing Rs2.386 billion at Dera Ghazi Khan, comprehensive exploration of uranium resources in DG Khan and development and installation of 600MW and 1,000MW nuclear power plants in Karachi.

The CDWP, which met with Deputy Chairman Planning Commission Dr Akram Sheikh in the chair, also cleared concept papers for the reconstruction of berths at Karachi port costing Rs6 billion and upgradation of Lok Virsa media centre.

Flanked by Adviser Infrastructure Dr Asad Ali Shah and Member Implementation & Monitoring Lt-Gen (Retd) Muhammad Zubair, spokesman for the Planning Commission Asif Sheikh said that 29 projects to the tune of Rs242 billion will be financed by the federal government.

Since the costs of five projects have been revised upward from Rs9 billion to Rs12 billion, total net addition for new projects is Rs239 billion.

In infrastructure, 13 development schemes costing Rs75 billion with foreign exchange component (FEC) of Rs30 billion have been recommended to the Ecnec. Some 13 projects worth Rs172.1 billion with an FEC of Rs56.2 billion were approved in the social sector. The CDWP also approved five projects worth Rs1.2 billion in other sectors.

The Karachi Port Trust (KPT) expects that World Bank would provide a loan of US$100 million for the project, said the spokesman for the Planning Commission while briefing reporters after the CDWPs fourth meeting in the current fiscal. The PC-I of the scheme will be submitted later, he added.

The overall FEC for 31 projects has been estimated at Rs86.3 billion, said Sheikh. In the earlier three meetings, the CDWP 114 projects costing Rs205.6 billion. Sheikh said that 17 projects, approved in CDWP meeting, will be implemented all over the country. Five projects were approved for Punjab, two projects each for Sindh and Balochistan and one for the NWFP. Of the five projects in Punjab, the Punjab Irrigation System Improvement Project costing Rs6.6 billion will be financed by the provincial government. The Japan Bank for International Cooperation (JBIC) will provide 88 per cent funding for the scheme.

Of the two projects in Balochistan, the construction of different roads in coastal areas will be fully financed with the Omani grant to the government of Balochistan. The total cost of the scheme is Rs934 million.

The CDWP gave a go ahead signal to Wapdas project of 450-500MW Combined Cycle Power Plant at Nadipur, near Daska. 



The project costing Rs22.33 billion would be completed in five years. The Wapda will fund this project from its own resources, said Sheikh.

Detailed exploration of uranium resources in DG Khan (revised) costing Rs856.5 million, and uranium mining project of Rs2.386 billion Taunsa DG Khan, were other important projects in energy sector. In transport and communication, eight projects costing Rs42.45 billion have been approved. Some of these projects are part of the mega project of National Trade Corridor Improvement Programme, said the Adviser Infrastructure.

The most important schemes approved in Mondays meeting are the establishment of universities of engineering and technology (UETs) in collaboration with Austria, Germany, China and Italy. One UET will be established each in Karachi and Islamabad and two in Lahore. The projects cost has been estimated at Rs165 billion. The FEC in the project is Rs55 billion. Sheikh said that the government will not get financial foreign assistance in establishing these universities. The foreign countries will provide the teaching staff for all the four universities, he added and said that the number of scholarships for the students of Indian Held Kashmir has been increased from 100 scholarships to 200. 

CDWP recommends 15 projects worth Rs243.8bn to Ecnec


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## Neo

*Airports privatisation from next year: CAA DG *​ 
Tuesday, November 27, 2007

LAHORE: The privatisation process of the countrys airports will start from next year and Faisalabad Airport would be privatised first. 

Director General Civil Aviation Authority Farooq Rahmatullah addressing a press conference here on Monday said that foreign companies would be allowed to take part in the privatisation process of the airports. 

Responding to a question, the DG said that restructuring process of the CAA had been initiated and so far the CAA had been running in profit. He said that the restructuring process that CAA is undergoing has long been needed to bring it in line with the aviation authorities of international standard. 

The conference also highlighted commercial development projects which include the new Islamabad international airport (NIIA), development of mega airport cities in Karachi and Lahore, as well as the creation of cargo complexes, hotels, shopping malls and attractive retail propositions. He said that the CAA had been renovating all the airports of the country and increased the amount of development fund by Rs5 billion. 

He said that in the first three months of this fiscal year Rs3 billion had been spent on the renovation. On the best performance of the CAA employees, the CAA had given three salaries as bonus which happened in the second time in the history of the CAA, he remarked. 

He said that a new cadre would also be established for the contractual employees of the CAA to improve the fringe benefits. To a question, he said that a project was also underway to improve the radar system of all airports of the country which would be completed by the end of July 2008. 

Farooq mentioned that the performance of CAAs Air Navigation services has witnessed further improvement during the 1st quarter of 2007 and has increased by almost 10 per cent as compared to the 1st quarter of 2006 owing to enhanced air space management capability and transit traffic over flying Pakistan airspace. 

He also highlighted numerous initiatives and developments undertaken by the new management of CAA, which were aimed at enhancing the nations aviation sector while serving national and public interests. 

Fundamental changes made within CAA that were announced during the briefing included CAAs plans to give aviation in the country a significant boost by allowing market forces to determine the price, quality, frequency and range of air services options with a view to increasing its contribution to the nations GDP from 0.1 to 1 per cent over a period of five years. 

Reiterating the CAAs commitment to maintain a proportionate balance between the generation of revenue via aeronautical and commercial operations, the DG said that plans are presently underway to support the development of passenger hubs and cargo transhipment hubs in the country to facilitate the objectives of National Transport Master Plan (NTMP) and National Trade Corridor (NTC).

Airports privatisation from next year: CAA DG


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## Neo

* Economy to withstand external shocks: Shamshad ​*  
Says Pakistani financial markets remain insulated from global turmoil

Tuesday, November 27, 2007

KARACHI: State Bank of Pakistan Governor Dr Shamshad Akhtar has said that the countrys economic prospects would remain strong despite the recent turmoil in the international financial markets and upsurge in global oil prices.

Briefing businessmen and industrialists here on Monday, she said that resilience of the countrys economy was due to underlying financial health and strong macroeconomic fundamentals that have helped Pakistan remain untouched by external shocks like US subprime mortgage market crisis, depreciation of the dollar and rising international oil prices.

Pakistans financial markets remained insulated from the global financial market turmoil as it did not have exposure to mortgage or other asset-backed securities, the Governor said. However, she said the external sector could see some spill over impact of the U.S. slowdown if it turned out to be more severe.

She pointed out that some emerging trends could affect the economic outcome of current fiscal year. On production side, growth is likely to be impacted by setback to two major crops i.e. cotton and rice as they were hit by pest attacks and other problems. Part of the agriculture crop shortfalls could be offset by the higher than expected other crops, for instance sugarcane harvest is likely to touch new high level of 62.3 million tons - up by 13.5 percent relative to last year. 

SBP Governor said the July-October, 2007 data for industrial production reflects mixed picture, as production growth in construction-related industries appeared reasonable including cement, wood, paints and varnish units, followed by fertilizer, pharmaceuticals, petroleum refining and few metal and engineering goods. 

She maintained that in these sectors, Pakistan could reduce rate of import dependency (such as petroleum refining where production capacity is 13.2 million tons relative to consumption which is 18 million tons) through capacity augmentation and exploiting export markets, she said, adding in contrast to some of these sectors, first-quarter results of some industries reflect slower growth. 

Deceleration is evident in cotton yarn and cloth, footwear, automobile, edible oil and vegetable ghee. While demand remained strong, slowdown in manufacturing sector emerged due to demand for import substitutes (as Government relaxed imports of automobile), slowdown in export demand and increase in raw material prices such as palm oil, which recorded 73 percent growth in value.

Both local manufactures and the Government need to take measures to improve competitiveness of domestic goods, the Governor said and added that ensuring quality through innovation, skill development, upgrading technology, reducing costs through economy of scale, diversifying product-line according to market demand, and achieving self sufficiency in raw materials etc. are some of the areas where entrepreneurs need to concentrate.

Adversities in production sectors is, however, likely to be offset by the continued buoyant performance of services sector, which accounts for over half of value added of Gross Domestic Product (GDP), she said. 

Dr Akhtar said the State Banks policy measures have brought down core inflation. Higher non-core inflation penetrates economy in different ways (i) it impacts consumer purchasing powers since cutting down essentials is difficult and there is low price elasticity of food and energy, (ii) even if the Government delays to pass on the impact of higher energy prices to consumers, businesses often pass on higher costs of energy to their consumers immediately, and (iii) with inflationary trends persisting consumers and producers higher inflationary expectations set in trends too. Higher inflation expectations have become self-fulfilling, as they have impacted wage setting and pricing decisions now.

SBP Governor said the inflation currently is a global phenomenon and driven largely by commodity price trends both in energy and food. She said the inflationary pressures could rise, since fiscal imperatives now demand for Government to pass through the impact of the recent oil prices that reached close to $100 per barrel in the international markets.

But for the tight monetary policy that curbed demand pressures and kept core and headline inflation in check, inflationary trends would have been more significant in Pakistan, she added.

Economy to withstand external shocks: Shamshad


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## Neo

*WAPDA studies 12 hydropower projects *​ 
Tuesday, November 27, 2007

LAHORE: The Water and Power Development Authority is vigorously carrying out studies of 12 mega hydropower projects mainly Bunji, Dasu and Kohala with total capacity of more than 17,000MW of electricity.

This was told in a meeting here at the WAPDA House to review the progress on water and hydropower projects presided over by Federal Caretaker Minister of Water and Power Tariq Hamid.

The minister, expressing satisfaction over the progress on the projects, said that the country was in dire need of exploiting water as well as power resources in view of the ever-increasing population and rapid economic growth. He directed WAPDA to complete all such projects on priority basis.

The minister was briefed that the contract for construction of 969MW Neelum-Jhelum hydropower project has already been awarded and the work on the project will commence soon.

The meeting was told that water filling in the raised Mangla Dam would start by April 2008. The additional storage of about 2.88 million acre feet of water will also contribute towards enhancing the power generation capacity of the existing Mangla Power House by 12 per cent.

The three high-head hydropower projects namely Khan, Duber and Allai Khawar would start power generation from 2009 onwards in different phases. On water projects, the minister was told that phase-I of the Kachhi Canal Project comprising 400km-long main canal and allied distribution system was scheduled to be completed by December 2008 while phase-II and III were likely to be completed in 2009 and 2010 respectively.

Work on preparation of detailed engineering design and tender documents for Diamer-Basha Dam are progressing as per the schedule. The minister was also briefed about the Satpara Dam Project, Greater Thal and Rainee canals, and various drainage programmes. 

Later, the minister presided over a conference of the power Distribution Companies (DISCOs). PEPCO Managing Director Munawar B Ahmad briefed the minister about the performance of DISCOs during July ñ October 2007. 

He also apprised the minister of the various measures being taken by PEPCO to minimise the gap between consumption and generation of electricity in the country. The minister, appreciating the measures for conserving electricity, directed PEPCO to provide energy saver bulbs to the shopping centres and hospitals in addition to the domestic consumers for saving electricity. 

WAPDA studies 12 hydropower projects


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## Neo

*Construction industry faces labour shortage ​* 
Tuesday, November 27, 2007

LAHORE: Despite demand the construction boom is stagnating due to a shortage of workforce as increase in building activity has outstripped availability of masons, carpenters, electricians and plumbers.

Industry experts point out that construction activities have doubled during the past four years, which is evident from the increase in annual cement production from 11 million tons in 2002-03 to around 22 million tons now. They said the industry benefited from the unskilled or semi-skilled workforce released by other industries which upgraded their machinery requiring more skilled workers.

They said most of the redundant unskilled workforce was absorbed by the construction sector as laborers and some of whom were trained gradually as masons as well. This kept up the pace of construction.

Training an unskilled labourer as mason is a relatively easy job, said Engineer Akbar Sheikh, a renowned housing developer. He said experienced masons at construction sites guided newly-trained masons in their work. However, he added, the contractors remained on their toes as they could not risk leaving any major construction job with fresh masons.

Arshad Chughtai, an architect, said the workforce in the construction sector came mainly through years of on-job training. The quality of construction, he said, suffered if hastily trained workers were assigned responsibilities in building work.

He said inducting workers as semi-trained masons might be possible but for other technical jobs like electrical fittings, plumbing work and wood work highly-skilled workforce was essential.

He said there was acute shortage of trained electricians, plumbers and carpenters, which was impacting the construction pace, particularly at the finishing stage. Once the basic structure is built, completion of a house takes time more than twice than it took four years ago, he said.

Property developer Khalid Rehman said sometimes the quality of work, particularly in wood work, suffers when purchasers get impatient with the delay to take possession of their new houses due to non-availability of properly skilled technicians.

He said unskilled plumbers could ignore many aspects while laying drainage pipes, sewerage and water connections. He said the leakages likely to occur afterwards would damage the building.

Similarly, he added, an untrained electrician would not know the type of wiring needed in the building. He might even mess up the entire wiring which would make it difficult to repair any fault which might occur in future. There would always be a risk of short-circuit in wiring work done by unskilled person, he added.

Akber Sheikh said construction boom had engulfed entire Asia. He said many skilled workers had found better wages abroad which added to the labour shortage. He said reconstruction activities in earthquake-hit areas had also impacted the availability of workers in other regions.Arshad Chugtai said construction activities in Pakistan had reached a level where reliance on on-job training of workforce would not be advisable. He said the government should establish dedicated institutes to train skilled electricians, masons, plumbers and carpenters to ensure global standard construction.

Construction industry faces labour shortage


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## AgNoStiC MuSliM

^^^ A labor shortage in Pakistan!!


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## Bushroda

AgNoStIc MuSliM said:


> ^^^ A labor shortage in Pakistan!!



Maybe because most are busy constructing towers in Burj Dubai


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## AgNoStiC MuSliM

In a sense perhaps a good thing, as those involved in the services sector start seeing a rise in wages and living standards and become a new part of the middle class. 

The initiative by the GoP to set up vocational training institutes may pay off big if handled properly.


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## ejaz007

Wind power generation: Letters of Intent issued to 93 firms

* AEDB, IRSA to hold meeting of advisory committee on December 4

Staff Report 

ISLAMABAD: Letters of Intent (LoIs) have been issued by the government to 93 local and foreign firms for power generation using wind energy. This is hoped to help meet the countrys growing power demand, Alternative Energy Development Board (AEDB) officials said Tuesday during a meeting with the caretaker federal minister for power and water, Tariq Hameed.

The minister had held two separate meetings with AEDB officials and the Indus River System Authority (IRSA) officials to seek briefings regarding ongoing and upcoming projects.

AEDB officials told the minister that five investors had applied for licenses to set up such facilities at Gharo-Keti Bandar in Sindh where the AEDB had identified the potential of around 50,000 MW, sources told Daily Times. Licenses were issued to (among others) Green Tower, New Park Energy, Tenega, Win Power and Miligro. The licenses of Zephyr Power, Zolyu Energy and Beacon Energy are under process. Moreover, land has been allotted to 15 companies so that each of them could establish plants for 50 mega watts each, the minister was told.

Officials said that the major thrust of the AEDB was to assist investors in meeting the increasing power demand. The country has been facing a power crisis, and the galloping demand-supply gap had resulted in frequent breakdowns, hurting not only domestic consumers but also the industry. Officials further said that the generation potential was based on three-year wind data gathered at Gharo-Keti Bandar by the Meteorological Department.

The AEDB, after conducting an extensive analysis of the data, got four 50-metre-high wind-measuring masts installed by private sector. The AEDB and the Sindh government are now working in close co-ordination for the identification and allotment of land in the wind corridor. In another meeting, IRSA officials told the minister that a meeting of the advisory committee would be held on December 3. During this meeting, all provinces are expected to present their water plan for the Rabi season.

Daily Times - Leading News Resource of Pakistan

Good step in the right direction.
Regards,


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## ejaz007

Pak-Mauritius PTA 

FBR notifies concessions on items

Wednesday, November 28, 2007
By our correspondent

ISLAMABAD: The Federal Board of Revenue (FBR) has notified concessions on items agreed between Pakistan and Mauritius under the Preferential Trade Agreement (PTA).

According to the FBR, Pakistan and Mauritius have signed the PTA, which applied to trade between the two countries relating to a large variety of products. Mauritian market has good potential for Pakistani exports and can also serve as a gateway to the entire African region. The PTA will ensure that Pakistani products have an edge over the products of other countries in the Mauritian market, sources said.

The Pakistan-Mauritius Preferential Trade Agreement will be functional from November 30 and the Government of Pakistan has already issued SRO 1151(I)/2007 dated November 26, 2007 wherein margin of preference of 50 per cent of existing tariff rates to 64 products which include flowers, fruits, tea, sugar, sea food and soap has been granted. This margin of preference shall increase to 100 per cent on these items from November 30, 2008. Similarly, margin of preference ranging from 35 per cent to 50 per cent and tariff rate quota ranging from 200,000 to 300,000 pieces has been granted on 66 textile items. Similarly, Mauritius has offered margin of preference ranging from 15 per cent to 30 per cent for the first year of the PTA on 102 Pakistan Customs Tariff lines which includes products like flowers, fruits, cereals, tobacco items, salt, marble, carpets, bed linen, textiles, furnishing articles and electrical machinery and microwave ovens. This margin of preference will increase to in the range of 50 per cent to 100 per cent from November 30, 2008 onwards.

According to SRO issued by the FBR, in exercise of the powers conferred by section 19 of the Customs Act, 1969 (IV of 1969), the Federal Government is has exempted with effect from the November 30, 2007, the goods specified in column (3) of the table below, falling under the Headings and sub-headings of the First Schedule to the said Act as specified in column (2) of the said table, to the extent of percentage of exemption as specified in columns (4) and (5) of that table, on the import into Pakistan from the Republic of Mauritius, if made in conformity with the Rules of Origin notified by Ministry of Commerce as agreed under the Preferential Trade Agreement between the Islamic Republic of Pakistan and the Republic of Mauritius. 
Pak-Mauritius PTA


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## Introvert

*Nippon Paint to enter Pakistan with US$25 mln investment*

Karachi (ANTARA News/Asia Pulse) - Nippon Paint, the largest paint manufacturer in Asia, announcing its entry into Pakistan on Monday, said the company will be investing US$25 million in Pakistan over the next three to five years, which will include a manufacturing facility in District Kasur, near Lahore. 

Nippon Paint Pakistan general manager Samad Zaheer said: "From today, the Japanese technology and quality of Nippon Paint will transform the Pakistan paint industry into something more vibrant and colourful; it is a proud day for Nippon Paint."

ANTARA News :: Nippon Paint to enter Pakistan with US$25 mln investment


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## Neo

*Crisis not to affect economic growth, says Salman​*
KARACHI, Nov 27: Federal Finance Minister Dr Salman Shah has said that Pakistan will continue to register growth despite recent political developments and its fallout on the country.

He was speaking at a luncheon meeting hosted in his honor by members of the Overseas Investors Chamber of Commerce and Industry in Karachi, a representative body for foreign investors in the country.

Dr Shah discussed investment outlook for Pakistan in the coming years and described it as very positive.

He highlighted the achievements of the government, which he said made great progress under the leadership of President Musharraf.

The finance minister stressed that the country was able to attract huge amount of investment over the past few years due to which the foreign reserves stood at record levels of about $14 billion.

He assured the members that recent economic growth which the country had witnessed in the recent past would continue and that the government was very keen on continuation of economic activity.

Consumer economy has brought boom in the country and the future outlook is positive and the rural economy is now ready to take off in a big way, said Dr Shah.

Pakistan is considered as third largest growing economy in the Asia Pacific region, he added.

Zubyr Soomro, President of the OICCI, appreciated the efforts made by the government in attracting foreign investment in the country and also highlighted the fact that it was only possible due to consistency in economic polices.

He commented that all political parties wishing to contest the forthcoming elections should go to people with their agenda for the economy as this would help long-term investment prospects.

He added that the Overseas Chamber would be happy to host interactive sessions for political leadership wishing to interact with member companies on economic issues.

OICCI is the oldest Chamber of Commerce of Pakistan. The Chambers primary function is to promote commercial, industrial and financial interests of foreign investors engaged in Pakistan.

The OICCI has 171 members, representing all major sectors of economy. A recent survey conducted by KPMG indicated that the OICCI membership contributes over 14pc of the GNP of Pakistan and approximately 32pc of the GDP of the manufacturing sector. Between them, they contribute 33pc of the total tax revenue of the government, and directly employ approximately 100,000 people.

Crisis not to affect economic growth, says Salman -DAWN - Business; November 28, 2007


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## Neo

*Wind power generation: Letters of Intent issued to 93 firms​*
* AEDB, IRSA to hold meeting of advisory committee on December 4

ISLAMABAD: Letters of Intent (LoIs) have been issued by the government to 93 local and foreign firms for power generation using wind energy. This is hoped to help meet the countrys growing power demand, Alternative Energy Development Board (AEDB) officials said Tuesday during a meeting with the caretaker federal minister for power and water, Tariq Hameed.

The minister had held two separate meetings with AEDB officials and the Indus River System Authority (IRSA) officials to seek briefings regarding ongoing and upcoming projects.

AEDB officials told the minister that five investors had applied for licenses to set up such facilities at Gharo-Keti Bandar in Sindh where the AEDB had identified the potential of around 50,000 MW, sources told Daily Times. Licenses were issued to (among others) Green Tower, New Park Energy, Tenega, Win Power and Miligro. The licenses of Zephyr Power, Zolyu Energy and Beacon Energy are under process. Moreover, land has been allotted to 15 companies so that each of them could establish plants for 50 mega watts each, the minister was told.

Officials said that the major thrust of the AEDB was to assist investors in meeting the increasing power demand. The country has been facing a power crisis, and the galloping demand-supply gap had resulted in frequent breakdowns, hurting not only domestic consumers but also the industry. Officials further said that the generation potential was based on three-year wind data gathered at Gharo-Keti Bandar by the Meteorological Department.

The AEDB, after conducting an extensive analysis of the data, got four 50-metre-high wind-measuring masts installed by private sector. The AEDB and the Sindh government are now working in close co-ordination for the identification and allotment of land in the wind corridor. In another meeting, IRSA officials told the minister that a meeting of the advisory committee would be held on December 3. During this meeting, all provinces are expected to present their water plan for the Rabi season.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Telecom sector employment crosses one million: PTA​*
KARACHI: About one million job opportunities have been created since liberalization of the telecom sector in 2003; the mobile companies alone had over 9,500 employees in 2006/07, annual report of Pakistan Telecommuni-cation Authority (PTA) revealed. 

Telecom sector has about 84,000 employees directly on their payroll in 2006-07, the report said adding the sector has vast linkages with all other sectors where it is producing large employment opportunities such as civil work for installation of towers, support service providers, airtime, SIM and hand set retailers, employment in fixed line and network equipment suppliers.

According to the industry analysts, telecommunication is the only sector, which has is showing a positive and healthy competition. Analysts are predicting that there is still a great potential in this sector.

The telecommunications sector in Pakistan has undergone a considerable transformation following the award of two new mobile licenses, FLL and WLL licenses and privatization of PTCL. Stiff competition among operators to grab the market share has compelled operators to roll out their infrastructure rapidly, which has created huge employment opportunities.

Deloitte has estimated that so far about 212,000 employment opportunities have been generated countrywide only by the mobile sector. A study conducted by TEACH has estimated that cellular mobile sector has generated about 743,025 employment opportunities, which included direct, indirect and induced employment in linked sectors of the economy. Study further revealed that about 260,000 employment opportunities have been generated by other segments of the telecom sector including WLL, LDI, card payphones and other new players.

Daily Times - Leading News Resource of Pakistan


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## Introvert

*Pakistan and Mauritius sign Preferential Trade Agreement*
Staff Report

ISLAMABAD: Pakistan and Mauritius have decided to accord each other preferential status effective November 30, 2007, under the bilateral Preferential Trade Agreement (PTA).

According to a press release, the PTA applies to a large number of products traded between the two countries. The Mauritian market has a good potential for Pakistani exports and can also serve as a gateway to the entire African region. The PTA will therefore ensure that Pakistani products have an edge over the products of other countries in the Mauritian market.

In order to put the Pakistan-Mauritius PTA in operation from November 30,2007, the Pakistan government has issued an SRO (No. 1151(I)/2007) in which a 50 percent Margin of Preference of existing tariff rates has been granted to 64 products, including flowers, fruits, tea, sugar, sea food and soap. This Margin of Preference shall increase to 100 percent from November 30, 2008. Similarly, the Margin of Preference ranging from 35 percent to 50 percent and a tariff rate quota ranging from 200,000 to 300,000 pieces has been granted on 66 textile made up items.

Mauritius has offered a Margin of Preference ranging from 15 percent to 30 percent for the first year of the PTA on 102 Pakistan Customs Tariff lines which includes products such as flowers, fruits, cereals, tobacco items, salt, marble, carpets, bed linen, textile furnishing articles, electrical machinery and microwave ovens. This Margin of Preference will increase to the range of 50 percent to 100 percent from November 30, 2008.

Daily Times - Leading News Resource of Pakistan


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## Neo

*TAP ministerial meeting postponed ​*
ISLAMABAD (November 28 2007): It was yet another setback to Pakistan as due to the current political turmoil the delegates have regretted to visit Pakistan to attend the Turkmenistan-Afghanistan-Pakistan (TAP) ministerial meeting, which was scheduled for November 27-28 here.

This left no other option for Pakistan but to postpone the meeting till some more appropriate time. A senior official told Business Recorder on Tuesday that the revised schedule for TAP ministerial meeting would be announced only when the Asian Development Bank (ADB) would co-ordinate with the member countries and get assurance from them for participation.

Not a single word was said, officially, about the postponement of the meeting or indicating the country which regretted to send the delegates to Pakistan for the meeting. But the new development sent a wave of shock to Islamabad.

The officials of the Ministry of Petroleum (MoP) were not aware of the new development till November 26. They were informed at the eleventh hour that due to unavailability of some delegates the meeting had been postponed.

The Asian Development Bank (ADB) informed the officials that the next meeting would be scheduled after coordinating with the member countries of the project. ADB is co-ordinator for TAP gas line project, which has not witnessed any substantial progress despite several meetings in the capitals of the member countries during the last several years.

In the past, security in Afghanistan and gas reserves at the field from where Turkmenistan is supposed to supply gas for the project had been major question marks. ADB despite showing keenness in the project could not help the parties make any substantial progress. They also made extraordinary efforts to invite India for the project as observer.

Officials in Islamabad are not sure whether TAP ministerial meeting will ever materialise to help Pakistan get additional source of gas for meeting its growing energy demand. However, they can not back out from it simply for one reason to keep TAP meeting as an option for importing gas.

The political uncertainty has cost Pakistan in terms of economics very dearly. A number of official and unofficial delegates have declined to travel to Pakistan during the last few months. Just a few days back the delegates of Indian oil minister had regretted to travel to Pakistan for an official visit.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Smeda, Tusdec to expand cooperation for SME sector ​* 
LAHORE (November 28 2007): The Small and Medium Enterprise Development Authority (SMEDA) and Technology Up-gradation and Skill Development Company, (TUSDEC) have decided to expand mutual co-operation to fill in the gap of technology and technical skills in SME sector.

Smeda Chief Executive Officer Shahid Rashid and his Tusdec counterpart, Suhael Ahmed, met here on Tuesday at Smeda head office to exchange information on the projects run by their organisations for developing modern technology and innovation in various sectors of SMEs.

Both organisations exchanged presentations on their running projects and identified the areas of mutual co-operation between Smeda and Tusdec and also agreed to draft a memorandum of understanding to shape the scope of mutual co-operation.

They also agreed to hold more joint meetings in future to strengthen the professional collaboration between SMEDA and Tusdec to enhance technological competitiveness of the SME sector.

Briefing on Smeda's development projects Rashid said TEVTA had agreed to provide a piece of land in Shahdra near Lahore to build a foundry services centre. Smeda General Managers Sultan Tiwana, Syed Iqbal Anwar Kidwai and Muhammad Jamil Afaqi were also present.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Economic prospects remain strong despite political noise: Shamshad ​*
KARACHI (November 27 2007): State Bank of Pakistan Governor Dr Shamshad Akhtar has said that the country's economic prospects have remained strong despite the political noise in the country, recent turmoil in the international financial markets, and the growing challenges in international economic and financial markets, besides upsurge in oil prices.

However, inflationary pressures could rise, since fiscal imperatives now demand for government to pass through the impact of the recent oil prices that reached close to $100 per barrel in the international markets, she added.

Addressing the business community on 'Pakistan's Economic Outlook and Perspectives' at the Federation of Pakistan Chambers of Commerce and Industry here on Monday, she said that economy of Pakistan was continuing to perform well, and Pakistan's financial market had, by and large, remained insulated from the financial market turmoil as it did not have exposure to mortgage or other asset-backed securities.

"Resilience of the country's economy due to underlying financial health and strong macroeconomic fundamentals helped Pakistan to remain 'untouched' by external shocks like US subprime mortgage markets crisis, depreciation of dollar, and rising international oil prices," she said.

However, she added that the external sector, which has thus far been manageable, could see some spillover impact of the US slowdown if it turned out to be more severe. Dr Akhtar pointed out that some emerging trends could have implications for economic outcome of the current 2007-08 fiscal year.

She said that the State Bank's policy measures had undoubtedly been able to more directly impact the core inflation and evidence in FY06 and FY07 had shown that monetary policy had paid dividends in bringing down core inflation. She added that higher inflation expectations have become self-fulfilling as they have impacted wage setting and pricing decisions now.

The SBP Governor said that inflation currently is a global phenomenon and is driven largely by commodity price trends both in energy and food. She said the inflationary pressures could rise, since fiscal imperatives now demand for Government to pass through the impact of the recent oil prices that reached close to $100 per barrel in the international markets.

"But for the tight monetary policy that curbed demand pressures and kept core and headline inflation in check, inflationary trends would have been more significant in Pakistan," she added.

She said that dollar/rupee exchange rate continued to be market-determined, and any market intervention is always aimed at moderating the rate of change or diluting any excessive volatility in the exchange rate, rather than establishing any level for it. The SBP as a policy does not target any specific exchange rate level, and the rate is driven by prevailing demand and supply conditions, she added.

She said that the State Bank has been facilitating both export and long-term refinancing and the outstanding funds provided by SBP and banks to exporters at 7.5 percent reached Rs 132 billion as on November 3, 2007, which is higher than last year's trend.

She said the SBP has honoured applications for around Rs 6.8 billion LTF-EOP contracted prior to July 2007 and at the same time, it announced the implementation of 3 percent interest rate subsidy for spinning sector and continued to pay R&D support expeditiously which has now reached Rs 25 billion on a cumulative basis since its introduction and SBP disposed off almost 270,000 cases of it.

The scheme for Long Term Financing Facility will be operationalised in January 2008 as soon as the details of its workings have been well understood by the commercial banks.

She said on production side, growth is likely to be impacted by setback to two major crops ie cotton and rice as they were hit by pest attacks and other problems. However, part of the agriculture crop shortfalls could be offset by higher than expected other crops.

For instance, sugarcane harvest is likely to touch new high level of 62.3 million tons--up by 13.5 percent relative to last year. Both local manufacturers and the Government need to take measures to improve competitiveness of domestic goods, the Governor said.

She added that ensuring quality through innovation, skill development and technological up-gradation, reducing costs through scale, diversifying product-line in line with the market demand, and achieving self-sufficiency in raw materials etc were some of the areas where entrepreneurs needed to concentrate. Adversities in production sectors are, however, likely to be offset by continued buoyant performance of services sector which accounts for over half of value-added of Gross Domestic Product (GDP), she said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*July-October 2008: 26 percent rise in services sector trade deficit ​*
KARACHI (November 29 2007): Services sector trade deficit has widened by 26 percent, reaching $2 billion during the first four months (July-October) of current fiscal year mainly due to high payments on account of transportation, travel and government services, besides decline in the services sector exports.

The State Bank on Wednesday said that the country's services sector trade performance has been very discouraging, as overall exports stood at $897.46 million against imports of $2.994 billion, depicting a deficit of $2.09 billion during July-October 2007. Services sector deficit during this period was $438 million, or 26 percent, higher than $1.65 billion of July-October of last fiscal year.

Heavy payments on account of transportation, travel services, insurance, technical fee, royalties and government sector were the major contributors in the services trade deficit, economists said. They said that declining exports of services sector also was matter concern, and policy makers should take some steps to check the reason of poor performance in the exports.

Services sector exports during this period declined by 13 percent, to $897 million, from $1.02 billion, while imports of services sector went up by 12 percent to $2.99 billion from $2.68 billion. Only transportation sector contributed around $718 million in overall deficit faced by services sector, analysts said.

Pakistan does not have any shipping line except one flag carrier Pakistan National Shipping Corporation (PNSC). Therefore, both exporters and importers are compelled to hire international shipping lines, they said. "We are expecting that during the current fiscal year the country would face a deficit of over $5 billion in services sector trade account, as increasing shipping lines freights have to further mount the services deficit," they added.

Services deficit stood at $561.667 million during October 2007 as compared to $267.742 million of October 2006, depicting an increased of $109 percent. During October 2007 exports amounted to $240.255 million, while imports reached $801.922 million.

The country earned $361 million on account of transportation services, $86 million from travel, communication $48 million, construction $12 million, insurance $11 million and $44 million from financial sector during July-October.

In addition, $42 million payments were received on account of computer and information sector, royalties and licence fee $9 million, cultural services $0.868 million and other business services earning $116.5 million.

Transportation payments stood at $1.07 billion, travel $453 million, communication $24 million, construction $15 million, insurance $64 million, financial sector $32 million and computer and information sector payments $48 million.

Royalties and licence fee payments reached $47 million, cultural services $0.454 million, government services $150 million and other business services payment at $1.07 billion. The country faced a deficit of $4.125 billion in service trade mainly due to high payments on transportation, construction, financial, computers services and royalties during fiscal year 2007.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*EU lifts ban on PIA ​*
BRUSSELS (November 29 2007): The European Union (EU) on Wednesday completely lifted a ban on Pakistan International Airlines (PIA) from flying in the 27-nation bloc after the airline addressed the safety concerns of the European Union. The European Commission said it had removed PIA and Blue Wing Airlines of Surinam from the bloc's blacklist of banned carriers.

"This latest revision (of the list) shows that when airlines take rapid and sound corrective action to comply with safety standards, they can be withdrawn from the list quickly," Transport Commissioner Jacques Barrot said in a statement. The Commission had previously lifted its ban on some of PIA's aircraft. In March, the EU executive banned most of the airline's fleet, citing concerns about maintenance and the age of some aircraft, especially its Boeing 747s and Airbus 310s.

The EU executive said there remained serious safety deficiencies related to other carriers on the list, including TAAG Angola Airlines, Mahan Air and Ukrainian Mediterranean Airlines, despite some progress. "A decision to withdraw these airlines from the community list would, at this stage, be premature," it said in the statement.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan gains three places in HDI ranking ​*
ISLAMABAD (November 29 2007): The United Nations Human Development Report launched on Wednesday, here showed that Pakistan gained three places in rank jumping to 136th from previous estimated 139th in 2004 with its Human Development Index (HDI) rising by 0.007.

However, it still presents a grim picture about Pakistan showing it 136th among out of 177 countries and areas though with a slight improvement. Its HDI would have been 0.544 for 2004 value, had the updates been available at the time of compiling the last report.

In terms of Human Poverty Index (HPI), Pakistan stands at 77th position among 108 developing countries for which the index has been calculated while Gender Development Index (GDI) value for Pakistan is 95.3 percent.

Out of 156 countries with both HDI and GDI value, 151 countries have a better ratio than Pakistan as in Gender Empowerment Measure (GEM), the country ranks 82nd out of 93 countries with a value of 0.377. For India, 156 countries and for Bangladesh 107 countries have better ratio than these two. In comparison presented in report, India and Bangladesh stand at 128th and 140th respectively with 62nd and 93rd in HDI and HPI.

Giving overview of the report, Alvero Rodriguez, Country Director UNDP Pakistan said, as a result of past Carbon Dioxide (CO2) emissions and other Green House Gases (GHGs), the world in now on course of future climate change. He said Human Development Report (HDR) identifies around 2C unavoidable temperature increase, with irreversible and dangerous climate change impacts.

"We have less than a decade to change course and start living within a sustainable global carbon budget identified at 14.5 gigatonnes of CO2 per annum for the remainder of the 21st century," he said quoting the report's findings.

"Currently emissions are running at twice of this level, if this trend continues, the carbon budget will be set for expiry during the 2030s, setting in motion a process that can lead to temperature increase by 5C or above by the end of century - roughly similar to temperature changes since last ice age (10,000 years ago)," Alvero said.

He said high-income OECD countries meanwhile lead the league of "CO2 transgressors" with just 15 percent of the world's population accounting for half of emissions and the other half by 85 percent of the population.

"If the entire world emits like high-income OECD countries - an average of 13.2 tonne CO2 per person - we would be emitting six times our sustainable carbon budget," he added. Alvero, however appreciated Pakistan for efforts to fight global warming. "Pakistan is doing well. It is moving in right direction," he observed.

With 2.4 percent of world population, Pakistan accounts for 0.4 percent of global emissions - an average of eight tonnes of CO2 per person. Pakistan has signed and ratified Kyoto Protocol and as non-annex-1 party to Protocol, Pakistan is not bound by specific targets for Greenhouse Gases emissions.

"Pakistan is the only country which has formulated Prime Minister's Committee on Climate Change in 2004. We are concentrating on climate change's impact on water and agriculture," said Dr Ashfaq, President Academy of Sciences.

"Water and food security are emerging challenges for Pakistan," he said and regretted that none of Pakistan's universities have a climate change faculty. "We are also yet to excel in modelling and simulation for the new energy technologies." He said population increase had depleted resources over the years and today countries in region need to develop their own energy and climate control models.

"We are vulnerable. Our glaciers are melting," he said and noted, China and India's contribution as significant in climate change. He sought co-operation from the UNDP, IUCN, international organisations, local NGOs and other players for controlling CO2 emissions and that of media for sensitising people to mitigate GHGs emissions.

Assistant Resident Representative UNDP, Arif Alauddin urged immediate measures and said, "the opportunity window of for avoiding the most damaging climate change impacts is fast closing." "As the world has financial resources and technological capability, so what is required, is a sense of urgency, human solidarity and collective interest," Arif said.

He said Climate Change challenges us to reflect on social justice and human rights across countries and generation. "It challenges political leaders and people in the rich countries to acknowledge their responsibility to the problem and initiate early cuts in HGHs emissions." "We must take urgent action to adapt to Climate Change," he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*KESC to start 75 megawatts power generation in December ​*
KARACHI (November 29 2007): Karachi Electric Supply Corporation (KESC), for the first time after 11 years, will start generating 75 MW of electricity on its own by the middle of December 2007.

A meeting held under the chairmanship of Sindh Governor Dr Ishrat-ul-Ibad at Governor House on Wednesday was informed that work was in progress to further improve the power supply situation during next summer as compared to the past year.

Caretaker Chief Minister, former Justice Abdul Qadir Halepota also attended the meeting. The meeting reviewed the present power supply situation and KESC chief Lieutenant General Syed Mohammed Amjad (retd) apprised the meeting about power supply position and future improvement plans.

The Governor called for removing all bottlenecks in the way of power supply and ensuring its immediate and uninterrupted provision to city's residential areas and also keeping the street lights alighted. He directed that street lights installed from Sohrab Goth to Surjani Town be made operational at the earliest and stressed on supply of electricity in the projects of Malir and Lyari Development Authorities on priority basis. The meeting was informed that 12 new Grid Stations are under construction while, besides 75 mw KESC's own power generation, the DHA's 80 mw power generation project will also be operational in December.

It was pointed out that after overhauling of Bin Qasim Plant, the problem of shortage of 200 mw will also be overcome to a great extent and work in this regard is expected to be completed next month.

The KESC authorities thanked Governor Dr Ishrat-ul-Ibad and city Nazim Mustafa Kamal for their co-operation and said that particularly the problems faced during this summer couuld be controlled through thi Co-operation. Home Minister, Brigadier Akhtar Zamin (retd), Chief Secretary Fazlur Rehman, City Nazim Mustafa Kamal and KESC's senior officials attended the meeting.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Work on $200 million IT Tower to start soon, says Kamal ​*
KARACHI (November 29 2007): City Nazim Mustafa Kamal on Wednesday said the construction work of 47-storey IT Tower in the vicinity of Civic Center at a cost of $200 million would start within few weeks. Around 40,000 youth would get employment in the IT Tower.

Which would be the country's tallest building and would have 10,000 call centers of which 6,000 have been booked so far, the Nazim stated this, in his address, to a "Technology Showcase" event held at a local hotel.

The event was organised by the Inbox Business Technologies (IBT), an end-to-end technology solutions company, to highlight various technology-related initiatives taken by the City District Government Karachi (CDGK).

Chief Guest Mustafa Kamal described the importance of using technology to make administration of the city easier and, for the betterment of its citizens.

He said a full-scale Enterprise Resource Planning Application, Health Management and Information System (HMIS) has been introduced at the Abbasi Shaheed Hospital (ASH), city's largest public sector hospital, to ensure the availability of improved patient-care and better administrative controls.

Mustafa Kamal noted how the implementation of HMIS at ASH had increased transparency, reduced pilferage, and increased accountability of the hospital staff for the benefit of patients.

He also stressed the need for the importance of transparency at public sector hospitals through an effective reporting system. "The system would prevent misuse of medical supplies issued to the hospital, so that the truly needy could be able to get the required medicines," he added. Praising the work on Citizen Complaint Management and Information System (CCMIS), the City Nazim termed it a unique system world over.

He said using the CCMIS the citizens of Karachi are able to directly register their complaints related to KWSB, KESC and KMC etc at the city's Call Center 1339. The calls are monitored and logged by the vigilant, efficient and well-educated staffers who have been employed from the private sector to ensure timely actions on complaints, he added.

Kamal surveying progress on the Wireless Video Security and Surveillance System (WVSSS) said by using the system, live video feed from the cameras installed along the two signal-free corridors would be viewed from a central location in the city.

He said the WVSSS would help detect and prevent traffic congestion and minimise suspicious activities and street crimes in the vicinity. Elaborating the Land Management System (LMS), a land lease-related document repository,

Kamal told the seminar that how the system would help citizens identify any ambiguities in ownership of real estate, and prevent fraudulent activities and property-related disputes.

Ghias Khan, Chief Executive Officer, IBT elaborated upon usage of the HMIS to uplift the health sector with better administration of hospitals and efficient utilisation of hospital resources. "Using HMIS, world-standard healthcare best practices can be introduced in public and private sector hospitals in Pakistan," he said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Telecom sector: deregulation attracts record investment, says Soomro ​*
ISLAMABAD (November 29 2007): Caretaker Prime Minister Mohammadmian Soomro has said that as a result of government's policies of deregulation, privatisation and liberalisation the telecom sector has attracted record investments.

The telecom sector, he said, has become a major employer of skilled jobs as its exponential growth has resulted in creation of thousands of jobs. The Prime Minister said this while talking to the CEO, PTCL Walid Irshad, who called on him here at the Prime Minister's Secretariat on Wednesday.

The Prime Minister said that systematic and sustained implementation and management efforts by the government has totally transformed and modernised the telecom sector. It is not often realised, he added, that access to telecom services gives a sense of pride and confidence to the people as it provides instant connectivity across the country and the world.

Prime Minister said people are the major beneficiaries of the telecom sector's success story as majority of the people have access to improved telecom services at substantially reduced tariffs.

The public now has the choice of multiple telephone service providers at competitive rates, he added. He said telecom is among the fastest growing sectors of the economy.

The country has 67 million phones including cellular and fixed lines and the teledensity has increased from 4 percent in 2003 to 46 percent in 2007. Walid Irshad said the economic stability achieved by Pakistan has created a conducive atmosphere for investment.

He said efforts are underway to transform PTCL into a world class company and it will bring expansion in areas of fixed lines, cellular phones, broad band, domestic and long distance calls.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Online banking growing, faulty network stays major impediment ​* 
Thursday, November 29, 2007

KARACHI: Banking sources have affirmed that most of bank branches would become online by the end of current fiscal year.

In the first quarter of 2007-08 the number of Real Time Online Branches (RTOB) in the country increased to 4,444 out of total 7,796 bank branches.

Though online banking is growing with a satisfactory pace but frequent power failure and inefficient telecommunication network are still considered as major impediments in growth of e-banking in the country, the banking sources said. 

According to State Bank of Pakistan (SBP) figures the e-banking transactions during first quarter of current fiscal grew by 7.5 percent to 30.1 million in terms volume and by 9.6 percent to Rs3.4 trillion in terms of value respectively. 

The total number of active cards increased by 11.9 percent to 6.5 million. Credit cards recorded decline of 4.4 percent to 1.6 million, while debit cards witnessed growth of 18.7 percent and stood at 4.7 million and ATM cards reached 0.158 million registering 17.7 percent growth over the previous quarter. 

Total number of ATMs as of Q1 FY07-08 reached 2,470, depicting an increase of 7.7 percent over the previous quarter. 

RTOB recorded 6.3 percent increase in the number of branches compared with the previous quarter. As of Q1 FY07-08, number of Point of Sale (POS) terminals available to customers was 50,004 reflecting a growth of 7.9 percent over the previous quarter.

Total number of ATM transactions increased by 11.2 percent in Q1 FY07-08 and stood at 16.0 million, whereas the amount of such transactions was Rs.104.1 billion; showing a growth of 18.1 percent over the previous quarter.

The number of Real Time Online Banking (RTOB) transactions grew to 9.1 million, reflecting an increase of 1.4 percent as compared to the previous quarter. The value of transactions through RTOB recorded during this quarter was Rs.3.2 trillion showing an increase of 9.4 percent over the previous quarter.

The number of transactions on other e-banking channels (POS, Internet & Call Center/IVR, and Mobile) recorded during the quarter under review was 5.0 million, reflecting a growth of 7.7 percent over the previous quarter. The value of such transactions was Rs.27.6 billion; reflecting an increase of 9.5 percent over the previous quarter.

The use of electronic channels is consistently growing as contribution to electronic transactions increased by 26.1 percent in number terms and 8.5 percent in value terms of total retail transactions, as compared to 14.9 percent and 8.8 percent respectively in the previous quarter. 

But contrary to SBP figures some banking customers told a different picture regarding attitude and lack of efficiency of banks.

Malik Ahmed Khan, a customer told The News that that despite charging a handsome amount in terms of e-transaction fee the banks were shilly- shally regarding e-transactions due to these being more prone to risk as compared to paper deals.

He said that he had to transfer certain amount to his business partner immediately in Punjab but most of the banks excused to execute this e-transaction on the same day. Another customer Hasan Ali said that most of the time he found online system of the banks faulty or non functional, which may cause embarrassment for the clients.

In addition, Rizwan Ahmed a user of ATM card said that he withdrew Rs5000 from his account through ATM card but ATM machine deducted Rs10,000 wrongly, and he was able to get back this amount after 20 days of hectic efforts. 

Online banking growing, faulty network stays major impediment


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## Neo

*Govts reform agenda to boost investment: PM ​* 
Thursday, November 29, 2007

ISLAMABAD: Caretaker Prime Minister Muhammadmian Soomro Wednesday said the caretaker government would continue its journey on the path of reforms agenda to further boost the economic activities in the country.

He was talking to the delegation of investors led by Ramzan Sheikh, Chief Executive Midland Husnain Pakistan Ltd and representatives of Abraaj Capital, who called on him here. The Prime Minister said Pakistan has emerged as a preferred destination for investments and added the total foreign investments, has touched record level of $8.5 billion, which shows the confidence of the foreign investors in our economic policies.

He said now Pakistan stands on a solid footing and has strong fundamentals as well as substantive structural reforms to attract more investments in days to come. Several sectors represent attractive investment opportunities including telecom, IT, financial services, engineering, agri business and real estate, he added.

Giving an overview of Pakistans economy, the Prime Minister said the country maintained a solid economic pace in 2006-07 and achieved 7 per cent growth. The magnitude of growth that Pakistan has achieved during the previous five years has positioned Pakistan as one of the fast growing economies in Asia, he said.

The Prime Minister appreciated the interest shown by the Abraaj Capital in further investment at the Royal Palm Golf Course in Lahore and assured them of every possible support in this regard.

The Prime Minister was apprised by the delegation that Abraaj is planning to invest approximately $50-100 million in the expansion of Royal Palm project. The delegation expressed confidence in Pakistans economy, which they said is based on strong fundamentals that would attract more foreign investment. 

Govts reform agenda to boost investment: PM


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## Neo

*FPCCI, TDAP discuss Pak-China trade statistics ​* 
Thursday, November 29, 2007

KARACHI: In view of Pak-China FTA, signed in July 2007, a preliminary report in the form of a quantitative analysis was presented by the WTO Cell, TDAP, to the Pakistan China Business Council of FPCCI.

The meeting was held at the Federation House, to identify the existing and indicative export potential of Pakistani products to the huge Chinese market. Mujeeb Khan, Head WTO Cell, Trade Development Authority (TDAP), initiated the meeting by giving a brief outline about the inception of the Cell and its operations.

He said a WTO Cell has been established in TDAP to enable better communication between the public and private sector, and to assist in getting better market access for them through research and information in the light of the WTO.

Iqbal Tabish, Unit Head Information and Research, WTO Cell, TDAP, presented in detail the study on Pak-China Trade, Exploring Pakistans Export Potential to China, which highlighted the statistical analysis based on the recent trade data. The study, which has been conducted by the Information & Research Unit of the WTO Cell, flows from the statistical analysis using ITC tools. The objective in discussing the initial conclusions of the report with the Pak-China Business Council is; to identify irritants, non-tariff barriers, and hidden barriers, best known to businessmen trading with China. We require such input and suggestions from all to make the study worthwhile and productive, Tabish said. 

FPCCI, TDAP discuss Pak-China trade statistics


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## Neo

*PSEB seeks venture capital for IT firms ​* 
Thursday, November 29, 2007

ISLAMABAD: Pakistan Software Export Board (PSEB) is launching various initiatives to facilitate access to venture capital, strengthening the equity base of IT companies and promoting world class entrepreneurial culture in the IT industry.

The projects are aimed at raising the fast track development and robust growth of the Pakistans IT industry. One such Programme, the PSEBs Entrepreneurship Project has been initiated to provide consultancy, on due diligence, to selected IT companies with the objective of qualifying them for Initial Public Offering (IPO).

Currently, out of over 1082 IT companies in Pakistan, only two companies are listed on the Karachi Stock Exchange. To get more companies listed, as envisioned under the project, PSEB would subsidise its consultancy by 75 per cent while selected companies would bear the remaining 25 per cent of the consultancy fee, a spokesman of PSEB said in a statement.

In order to facilitate access to venture capital, PSEB would facilitate entrepreneurs in getting venture capital funding through vetting business plans and establishing linkages with Angel, VC, Private Equity, Public and Multilateral funding organisations.

PSEB has also launched an Apprenticeship Programme for creating a pool of skilled resources in Pakistans IT industry matching the advanced and specialised international technological requirements.

Under this initiative, IT companies would recruit IT graduates on apprenticeships and later hire them for a period of at least one year. This would allow fresh graduates to follow a career path provided by the participant companies, thus strengthening the pool human capital in the country.

The spokesman also said that a multinational IT company, Bearing Point, has already expressed its willingness to recruit about 100 IT apprentices out of which 46 have already been placed.

Another major project, the IT industry Internship Programme, said the official spokesman of PSEB, intends to bridge the gap between the IT industry and academic institutions, and would help mould fresh graduates into world-class professionals. Some 3100 internees from 205 universities/institutes were placed in the local IT industry and 235 IT departments of public and private sector organisations. 

PSEB seeks venture capital for IT firms


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## Neo

*OMV to invest $80 million ​* 
Thursday, November 29, 2007

ISLAMABAD: Federal Minister for Petroleum and Natural Resources Ahsanullah Khan has said that the government was providing best incentives and level playing field to the investors in oil and gas exploration, said a PR.

He said this while talking to the Ausrian OMV Petroleum Company General Manager George Wacktal who called on him here on Wednesday. Wacktal informed the minister that OMV has made two more discoveries of gas at Latif and Gambit blocks in Sindh making further investment of $80 million on gas field development. 

The minister said that the new petroleum envisages world standard incentives and facilities for the prospective investors which would attract investment in oil and gas exploration. He said that the government would ensure continuity of reforms and policies introduced in the oil and gas sector and would facilitate the investors in this regard. 

The minister lauded the OMVs contribution for making a sizeable investment in Pakistans oil and gas exploration activities which has been producing 16 per cent gas of the total production. Earlier, The OMV GM felicitated the minister on assuming the portfolio of the ministry and hoped that Pak-OMV relations would further flourish in his tenure. 

OMV to invest $80 million


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## Neo

*France urges Pakistan to increase bilateral trade​*
KARACHI: Francis Widmer, Trade Commissioner of France on Wednesday said Pakistan and France enjoy good economic and trade relations and there exists a great scope of increase in bilateral trade and industrial cooperation between these two countries, however this relationship does not reflected in numbers. 

He said this during a meeting with Mr. Shamim Ahmed, President. Karachi Chamber of Commerce and Industry (KCCI). He said the annual exchange of goods, which was $677.2 million in 2005-06, out of which exports were $336.7 million and imports were $340.5 million from Pakistan. French Trade Commissioner, underscored the need to diversify Pakistani exports to France since most of its foreign trade consisted of conventional items like textiles and leather goods. He said that there is a great scope for joint ventures with France and informed that a French delegation of investors and traders will soon visit Pakistan to explore such potential. 

Pakistan is facing acute shortage in public transport sector and as such French investors could assist Pakistan to overcome this problem. He suggests that Pakistan might also establish warehouse and distribution centers in France for onward export to Euorpean Union (EU) and adjoining countries.

President KCCI said, France is an important member of EU which offers a huge market for Pakistani goods, and Pakistan is one of the major suppliers of textiles to EU but it is a matter of concern that its export especially textiles do not enjoy better access mainly due to the implications of anti-dumping duties on some of textile products and non granting of GSP plus status, as given to Bangladesh etc.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Economy facing numerous challenges​*
KARACHI, Nov 28: There has been a constant decline in the countrys exports for the fourth consecutive month of the current fiscal, which is alarming not only for the balance of trade alone but also indicates that some serious problem is ailing the economy as a whole.

No matter what economic wizards may say in Islamabad in their defence, and even if they suggest some sweet pill to correct the situation easily and induce economy back to the healthy position, the fact remains that in October the trade deficit bulged close to $2 billion.

Beside, the widening of balance of trade, the economy, at present, is confronted with multiple issues on the manufacturing and agriculture sectors.

If the situation is not corrected immediately, it is feared that soon the service sector, which is thriving, may also fall in line and have a snowball affect on economy as a whole.

The biggest indicator of the weakened economy could well be taken from the fact that rupee had depreciated against US dollar which, otherwise, itself is losing ground against major currencies of the world.

However, economic planners in Islamabad are not ready to accept this fact, and they continue to count gains, and say that they have achieved economic growth. This may have relevance with the recent past, but they are yet to narrate the correct current economic situation.

Total exports in October stood at $1.409 billion as against $.558 billion recorded in July 2007, thereby showing a staggering decrease of 9.5 per cent in the first four months of the current fiscal.

The textile industry, which is the largest manufacturing sector of the country and also earns up to 65 per cent in exports, is rapidly heading towards a total collapse owing to high cost of production which has rendered it uncompetitive in the world market.

There was a constant fall in textile exports during the first four month of the current fiscal. In October, these declined to $837 million as against $931 million, a decrease of 10.1 per cent against the corresponding period of last year.

Against this, imports touched $3.385 billion during October.

So far, remittances received from overseas Pakistanis and sale proceeds realised from the sale of national assets helped meet trade deficit, but the question is how long this will go on because there would be a time when trade gap would be wider, if current falling trend in exports was not arrested.

The weakening economys position could well be judged from the fact that the State Bank had to defend the weakened rupee last week by using $80 million out of its valuable reserves. If this trend continues, the SBP would have a tough time to defend the rupee.

On the agriculture sector, almost all the cash crops have failed to meet the target. The governments projection of cotton production of 14.3 million cotton bales this year has been revised downward to 12.8 million bales, but private estimates put it further lower at 11 million bales.

The cotton crop was severely damaged by mealy bug and curl leave virus (CLV) and there was no one to guide growers or even make available relevant pesticide which could have controlled the damage.

Similarly, there had been wheat and rice crises, because both the major crops were badly handled by the government, and it resulted in an acute shortage and price hike in the domestic market.

The sugarcane is not having a different story and like every year, there is price war between growers and millers over the cane.

Economy facing numerous challenges -DAWN - Business; November 29, 2007


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## Neo

*$4bn Tap gas pipeline project in jeopardy​*
ISLAMABAD, Nov 28: The $4 billion Turkmenistan-Afghanistan-Pakistan (Tap) gas pipeline project is unlikely to materialise even in the next decade owing to Russian gas giant Gazproms fresh agreement with Turkmenistan for increased Europe-bound gas supplies at enhanced rates, it is learnt.

Gazprom would be paying about 50 per cent higher price to Turkmenistan from next year.

Informed government sources told Dawn that Pakistan was weighing the new developments in the background of a just postponed ministerial meeting of the three countries and a revised agreement between Gazprom and Ashgabat.

The revised agreement apparently means that the Central Asian state would have little surplus gas available for export to the South Asian region.

Not only that, the price could become a stumbling block because Pakistan and India may find it unaffordable for their economies when compared with the much prosperous European region.

The sources said Pakistan was surprised to know at the eleventh hour that Ashgabat has been holding an international energy conference on the dates that were fixed for a ministerial steering committee meeting in Islamabad on Nov 27-28.

Pakistan has planned to complete the project by 2012 under a energy security plan, but the deadline is becoming beyond imagination, an official said.

The sources said under the revised understanding with Gazprom, Turkmenistan would increase gas deliveries to it to about 50 billion cubic metre (BCM).

Gazprom that delivers about one quarter of Europes total gas needs would now pay $130 per 1,000 cubic metres to Ashgabat early next year and then $150 per 1,000 cubic metre by the end of the next year instead of current rates of $100 per 1,000 cubic metre.

Turkmenistan and Gazprom have a 25-year gas supply agreement valid until 2028 but Ashgabat, the sources said, uses export projects like Tap to improve its price with Gazprom.

The worlds 10th largest gas producer, Turkmenistans total gas output currently is slightly higher than 60 BCM a year. Last year, its total exports stood at around 45 BCM.

Since the death of former President Saparmurat Niyazov last year, the Turkmen economy is opening up for foreign investment.

His successor Gurbanguly Berdymukhammedov plans to quadruple gas output to about 250 BCM by 2030 and Ashgabat would need more than $25 billion to develop its offshore Caspian reserves.

Therefore, enough reserves are apparently not available in the immediate future for a South Asian gas pipeline, the sources said.

Already, Turkmenistan is expecting a major competition among big players like the US, Europe and China to keep Gazprom under pressure on pricing issue.

Likewise, the US and the European Union are using their influence for a pipeline that could link Turkmenistans yet to be developed gas fields with Europe through Turkey in what is called a southern corridor to bypass Russia.

The 1,680km Tap pipeline of 56-inch diametre needs at least 30 BCM of gas per year from Turkmenistan to Pakistan via Afghanistan.

The project cost has now been estimated at $5.3 billion. India had also been invited to join the project last year that started attending steering committee meetings as an observer.

According to the World Bank, however, further progress will depend on the robustness of the gas reserves data, certification of the reserves, extent of possible private interest, ability and willingness of Turkmenistan to fulfil its commitments to Gazprom and still supply Pakistan.

The ability and the willingness of Turkmenistan to feed this pipeline while fully honouring its earlier commitments to Gazprom for the European and former Soviet Union markets and the extent of possible private sector interest will also remain a challenge while the sharp increase in gas prices delivered to the European markets could make the option of exporting to South Asia less attractive to Turkmenistan and thus the export price could also become a major issue.

Challenges in the Tap project also include mitigation of the security risk in Afghanistan, improvement in India-Pakistan relations, and programmes to minimise or phase out fuel subsidies in both countries and finally the ability of the pipeline options to withstand competition from liquefied natural gas (LNG) in the long run, according to the bank.

$4bn Tap gas pipeline project in jeopardy -DAWN - Business; November 29, 2007


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## Neo

*$100m loss in seafood exports feared​*
KARACHI, Nov 28: Pakistan is feared to lose up to $100 million in its seafood exports during the current fiscal year following a ban by the EU coupled with reduced prices being offered by other countries.

Pakistan fetched $45-50 million from the seafood export to the European markets in previous years.

However, after the ban imposed by the EU in April this year exporters had been facing problems in diverting EU destined shipments to other countries because of lower prices.

According to exporters the cumulative loss both in exports to the EU and other countries during July-Nov 2007 was $50 million and it would escalate to nearly $100 million by end of the current fiscal if exports to EU countries remain suspended.

The country had fetched $188 million from seafood exports in 2006-07, including exports to European countries.

A number of meetings between the fish exporters, Minfal officials, launch owners and the Sindh government officials have been held since April 12 ban but no serious efforts were made both at the federal and provincial levels to take immediate measures for restoring exports to the EU countries.

According to President Pakistan Seafood Industries Association (PSIA) Sardar Mohammad Hanif Khan the Minfal high official came up with an idea in Tuesday meeting in Karachi to allow only two to three processing units to export shrimps and other products the EU countries.

He said he had rejected the proposal before seeking clearance from more than 11 units.

He said he had again asked the Additional Secretary Minfal Mohammad Salim Khan to first concentrate on preliminary issues like modifying boats as per the EU standards and removing deficiencies in the auction halls as pointed out by the EU.

After checking early stages, the Minfal should give 10 days notice to the processing units (exporters) for final inspection, he said.

He said Pakistan was suffering on EU exports because of the non-technical staff at the Marine Fisheries Department (MFD), who do not have the technical know-how about the fish trade and exports.

The fish industry will continue to face problems unless the setup of the MFD is changed, he added.

Mr Hanif said that there had been very slow progress on upgrading of boats and meeting the EU standards on auction halls.

He said that the Sindh government informed the Minfal that it had provided Rs290 million for purchase of various equipment for fishing boats modification.

The provincial government will also bear 50 per cent expenses on upgrading of fishing trawlers.

$100m loss in seafood exports feared -DAWN - Business; November 29, 2007


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## ejaz007

India agrees to cut customs duties for Pakistan

By Mubarak Zeb Khan

ISLAMABAD, Nov 28: India has agreed to scale down customs duties below the applied level for two neighbouring countries -- Pakistan and Sri Lanka -- under the South Asian Free Trade Agreement (Safta).

Well-placed sources told Dawn on Wednesday that the decision came in response to Pakistans protest that despite reduction in customs duties in three phases under Safta by India, the duties are still higher than the Indian normal customs duties for Pakistani products under the treaty.

India has unilaterally brought down its customs tariff to around 10 per cent during the last two years. At the time of making commitment for reduction in customs duties under the Safta agreement, the Indian duties were around maximum 15 per cent.

The sources said that the Indian delegation agreed to consider Pakistans proposal at the 13th meeting of the Committee on Economic Cooperation (CEC) of the South Asian Association for Regional Cooperation (Saarc), held after a lapse of three years in Dhaka last week.

The Indian government has also agreed to come up with a roadmap in December for eliminating or mitigating the non-tariff barriers, which restrict entry of goods into the Indian market.

A ministerial task force had already been constituted by the Indian government to identify these barriers and suggest measures for their redressal. The task force report is expected to be submitted to the commerce ministry in December, the sources added.

This move of India would certainly help in facilitating imports from the South Asian countries. However, if these NTBs were either removed or relaxed it would certainly help in increasing export of minerals, marble, and textile products from Pakistan.

Pakistan had already submitted a long list of the NTBs to the Indian government last year for consideration. The removal of these barriers has been linked with the liberalisation of trade with India.

According to the sources commerce secretaries from eight countries have also decided to take a common position on various issues under the Doha Round negotiations for fostering increased regional trade against the backdrop of the changing global scenario.

It was agreed that the Geneva-based ambassadors of the Saarc member states will meet to find out a common stance on the Doha Round negotiations.

During the meeting, the secretaries also decided to undertake a new project to ensure cooperation for development of the small and medium enterprises (SMEs) in the region.

It also endorsed the recommendations made by the standing group on Standards to establish a South Asian Regional Standard Organisation (Sarso), which will be located in Dhaka at the premises of Bangladesh Standard Testing Institute (BSTI).

The meeting underscored the need for exploring the potential of renewable energy and biotechnology through regional cooperation to meet the mounting demand for energy in the Saarc region. India, which has expertise in renewable energy, will undertake necessary actions in this regard.

Regarding the issuance of Safta certificate of origin, the meeting decided that all the member states would inform the Saarc secretariat about the certificates issued by each country every six months. It also decided to scale down the sensitive list to ensure benefit to the least developed countries (LDCs) in the Saarc region.

During the meeting India informed that it would unilaterally provide duty-free access to the LDCs on items, which are not in the sensitive list by December 2007.

India agrees to cut customs duties for Pakistan -DAWN - Business; November 29, 2007


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## Introvert

*French trade team due *

By By our correspondent 
11/29/2007 
KARACHI: French Trade Commissioner Francis Widmer stated that a delegation of French investors will visit Pakistan soon to explore possibilities for joint ventures.

During a meeting with the members and President of Karachi Chamber of Commerce and Industry (KCCI) he said that a great scope existed for joint ventures between the businessmen of France and Pakistan in different areas and this delegation will explore this potential.

He underscored the need to diversify Pakistani exports to France since most of its foreign trade consisted of conventional items like textiles and leather goods. Widmer particularly mentioned that Pakistan was facing acute shortage in public transport sector and as such French investors could assist Pakistan to overcome this problem. 

He also suggested that Pakistan might also establish warehouses and distribution centres in France for onward export to EU and adjoining countries. He further pointed out that Pakistan and France enjoy good economic and trade relations and there exists a great scope of increase in bilateral trade and industrial cooperation.

He added that this was not reflected in the bilateral trade volume which was estimated at $677.2 million in 2005-06. Of the total, exports and imports to and from Pakistan were $336.7 million and $340.5 million respectively. 
French trade team due


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## ejaz007

Ufone to invest $150m in network expansion

KARACHI: Ufone has announced to invest US$ 150 million in network expansion, which will add up more than 1000 additional cities towns and highways in its footprint. 

It is estimated that by the end of June 2008 the company will be covering more than 4500 cities, towns, villages and all major highways in the country, a press release said here Thursday. 

The contract has been awarded to Huawei Technologies, which is one of the most rapidly growing telecom vendors globally and awarding another contract to Huawei shows the companys confidence in professionalism and state of the art technology. Huawei is the vendor of choice in latest 3G Telecommunications Networks, 31 of the worlds top 50 operators worldwide are using their technical infrastructure. 

Walid Irshaid, President and CEO of PTCL while speaking at contract awarding ceremony said that an expansion contract of this magnitude indicates Ufones aggressive strategy towards market growth and expansion, in the wake of tremendous growth and potential of Pakistans cellular market. 

The previous Network Roll-out phase of $550 million was the single largest expansion plan in the history of Pakistan and this region. That record-breaking execution by Huawei is near completion now and this new contract shows Etisalats commitment to the Pakistani market and will also boost investors confidence towards Pakistan.

The project was approved by the Board of Directors to invest in infrastructure and to provide best quality network and facilities its customers. In addition to the major investment commitment, Etisalat brings its extensive experience of Telecom Industry to Pakistan to ensure that THE company has the best network in the country.

Yi Xiang CEO Huawei Pakistan stated that Huawei is fully committed to Pakistan telecom industry as well as implementing this new network expansion contract in the fastest and most seamless fashion. staff report

Daily Times - Leading News Resource of Pakistan


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## ejaz007

*ABN-AMRO to launch new products*
Staff Report 

ISLAMABAD: ABN-AMRO Bank is set to launch new products for small and medium entrepreneurs to strengthen Pakistans industrial base. 

Country Head, Business Banking ABN-AMRO, Ch. Naeem Yaseen announced this in a meeting with President Islamabad Chamber of Commerce and Industry (ICCI), Nasir Khan here on Thursday. 

The bank would provide credit facility with low interest rates. 

ABN-AMRO, Mr Yaseen said was interested in assisting sick units for the industrial revival of the country and as well as for the prosperity of people. 

He also informed that after ABN-AMROs merger with Prime Commercial Bank Ltd in Pakistan from 1st September and it was now ranked in the top 10 global banks and second largest foreign bank in Pakistan. 

Earlier, the ICCI President Nasir Khan said that Pakistan had become an attractive country in banking investment due to high rates in the region. 

He stressed that the bank should facilitate the business community for rapid industrialisation of the country. 

He also stressed them to introduce special packages for sick units which number over 3,500 in the country. Due to a large number of sick units unemployment was gradually increasing.
Daily Times - Leading News Resource of Pakistan


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## bhangra12345

when are the Pakistan quarter results due?


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## Neo

bhangra12345 said:


> when are the Pakistan quarter results due?



Mate,
We've been trying to implement quarterly reporting system since last FY but infrastraucture for data processing isn't still quite ready.
I expect Q1 data by mid Dec, Q2 by Feb according to my source in Karachi.


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## bhangra12345

Neo said:


> Mate,
> We've been trying to implement quarterly reporting system since last FY but infrastraucture for data processing isn't still quite ready.
> I expect Q1 data by mid Dec, Q2 by Feb according to my source in Karachi.



ok thanks.


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## Neo

*Pakistan losing Iranian rice market to India ​* 
Friday, November 30, 2007

KARACHI: Pakistani exporters bemoan that they are gradually loosing all international markets for the only exportable cash crop - rice, due to lack of coordination, weak foreign policy and poor performance of the ministry of commerce as well as apathy of their representative body - Rice Exporters Association of Pakistan.

A drastic drop of exports to Europe, Russia, Middle East and Saudi Arabia was recorded for several reasons but now a traditional buyer of Pakistani rice Iran is caught by arch rival of Pakistan - India successfully.

On the name of crackdown against the illegal trade, the Iranian government has imposed heavy tariffs recently that made legal shipments of Pakistani rice through land routes expensive as compared to the Indian imports through sea.

This provided a big vacuum for the Indian grain traders to fill and now they are gaining milestones on this front. Just three year before, Indian name was not prominent over the Iranian rice import map. During 2006-07, the Indians estimated an export of rice just at the tune of 60,000 tonnes but they successfully exported around 225,000 tonnes.

Indians are not dispatching the consignments to Iran directly but they are using their offices in Dubai to grab the new Iranian market. For the year 2007-08, Indians have already made contracts for the shipping around 150,000 tonnes and they estimated the total exports above the figure of 300,000 tonnes, a big landmark for Indians.

Indian exporters are selling Pusa - 1121 variety, a non-basmati long grain aromatic variety to Iran. Though Pusa - 1121 is technically non-basmati variety but it has aroma, good taste and 30 per cent more elongation as compared to the basmati rice that gave it a good reception in Iran, sources said quoting Indian exporters.

On the other hand, Pakistani exporters working with Iran claimed that sanctions imposed by the Iranians are a tactic of the Iranian government to promote the illegal trade in the area. There are war clouds roaming over Iran and they are trying to pile up grain stocks as much as possible within their limited resources, Haji Fojan, the biggest rice exporter for Iran based in Quetta told The News.

He exported rice worth of five million dollars two years ago but has no hope to get big orders from Iran this year. The Iranian government is trying to curb the official trade with Pakistan, he said and alleging that it was deliberately promoting informal trade. In the informal trade, the Iranian traders either pay in barter or in the Iranian or Pakistani currency thus they are saving their foreign exchange in terms of dollars or Euros, he said.

That is why, the Iranian government forced the Pakistani government to increase the in and out points at Pak-Iran border from one to eight.

It is not right that rice is not going to Iran. You can see several trucks loaded with rice sacks moving towards Iranian boarder everyday but a not a single consignment crosses the border legally, he claimed. By increasing the border openings from one to eight, illegal trade is very much easy that is in the benefit of Iran but not for Pakistan, Haji Fojan said.

Illegal trade to Iran and Afghanistan is also a major cause of price hike, another rice exporter Shamsul Islam Khan said. Due to the illegal trade, no one can quantify the availability of stock for local consumption as well as for the stocks, he said.

The government is well aware of the entire story of eliminating the Pakistani rice from the international market and filling the gap by the Indian archrivals but surprisingly no move was initiated to cope with the situation, Zahid Khawaja, a leading rice exporter for Europe commented while narrating the episode.

Pakistan losing Iranian rice market to India


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## Neo

*Pak textile sector may be severely hit by US slowdown ​* 
Friday, November 30, 2007

LAHORE: Pakistans textile industry exclusively dependent on exports would be more severely affected than China or India as the uncertainty rises on the international textile market on expected economic slowdown in the United States and Europe. 

Textile experts warn that textiles would be the first casualty of the deepening global credit crisis as the first cut that the people world over make in economic slowdown is on clothing. They pointed out that Chinese and Indian textile industries would not suffer much because 70 and 85 per cent of their textile production respectively is consumed domestically. 

Some of the impact of slowdown in developed countries they pointed out would be compensated by increased domestic consumption as both these economies are on a high growth path. They said as far as Pakistan is concerned textile industry has only 15 per cent hold on the domestic market while 85 per cent of its production is exported. 

This dependence on export orders alone they assert is the main reason for the cyclic crisis that local textile industry undergoes periodically. These experts blamed the lower domestic demand for locally produced textiles to the flawed government policies and regulations. 

They said Pakistan failed to develop the blended textile products of cotton and manmade fiber. They said the global use of blended textile is 60 per cent manmade fiber and 40 per cent cotton. In Pakistan the use of manmade fiber has reached only 20 per cent only. 

They said manmade fiber is considered as poor mans choice while 100 per cent cotton clothing is considered the world over as rich mans product. They said in economic slowdown or recession the use of clothing blended with higher percentage of manmade fiber increases as these last longer and are easy to iron. 

They said protect against sovereign guarantee provided to a multinational polyester fiber producer for almost a decade kept manmade fiber rates very high in Pakistan that discouraged its use. 

They said even today the import of cotton is duty free but polyester fiber is subjected to 6.5 per cent import duty. The other reason that kept the demand for domestic textiles limited was the under invoicing and smuggling of foreign clothing in the country. 

They said the practice of bringing children and men garments in unaccompanied baggage are still rampant. The apparels under this mode are cleared without duty by paying a nominal bribe, they said. The markets are flooded with mens shirts and trousers made in Thailand or Indonesia, they added. 

Only a limited quantity is imported though at highly under-invoiced price the rest is all smuggled through personal baggage, they claimed. Another drawback that the local textile industry faces in domestic markets, they added is the unhindered import of second hand clothing, textile experts added. 

They said import of second hand clothing is not allowed in India that has provided its textile industry a huge domestic market. 

Moreover they added given lax regulations in Pakistan even new clothing is imported under the garb of second hand or used apparel. This they added deprives the local industry of a substantial share in the domestic market. 

They said a sharp fall in the dollar would hurt India only as Pakistani rupee and Chinese Yuan are relatively stable against green back. However the surging oil prices would further dampen the global growth prospects that would be more detrimental for Pakistani textile than India, they asserted. 

The decision of European Union to remove quotas on Chinese textile might well spell disaster for exports from low cost textile countries like Pakistan, India, Thailand and Indonesia 

Pak textile sector may be severely hit by US slowdown


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## Neo

* KSE gains 79 points, poised to cross 14,000 mark ​* 
Friday, November 30, 2007

KARACHI: As daily developments on the political front gradually remove uncertainty in the country, the on going show continues to entertain equity investors at the Karachi bourse having breached major resistance level of 13,900 points successfully on Thursday.

The KSE 100-share Index managed to post another modest gain of 79 points and closed at 13,964 points. Investment punters in the ever changing political scenario pushed the benchmark above the 14,000 points psychological level shortly in the wee hours of trading.

Active buying across the board, under the lead of cement stocks, helped the 100-Index hit a 14,051 points intra day high in the middle of the first half. The junior 30-Index also recorded a modest rise of 32 points and closed at 16,684 points.

Due to continuous participation of locals in the market, the volumes relatively remained good at 309.736 million shares in the ready market, but were lower than the 325.659 million that changed hand a day earlier.

On the contrary, volume in the futures market surged to 75.106 million shares compared to 58.110 million a day earlier.The overall market capitalisation rose by Rs23 to stand at Rs4.318 trillion.

ìInvestors have high hopes that President Musharraf would either announce lifting of the emergency rule in the county - as strong rumours suggest since Tuesday morning - in his first address on TV after becoming the president or he would at least set a deadline to do so in the near futureî, said Analyst Ahsan Mehanti.

Now that Musharraf has been sworn in as president of Pakistan for the next five year term, and there was no reason left to prolong army rule in the country, therefore the changing circumstances suggest that the president would restore the 1973 Constitution within a day or two or soon enough, another analyst said.

Therefore, the Cement sector continued to lead the rally. Giant stocks of this sector i.e. Lucky Cement and DG Khan Cement were the top two volume leaders respectively with gains in their share prices notably. 

The MCB Bank also came out of its selling pressure and invited renewed buying on board. On the other hand, Pakistan Petroleum, Pakistan State Oil, Bank of Punjab and Engro Chemical also joined the bears camp along with Oil and Gas Development Company and National Bank of Pakistan that were already present in the camp for the last couple of days.

The reported raise in cement prices in the domestic market with hopes of continuing price-hike in the near future amid lucrative cement stock prices in the market altogether invited great investor enthusiasm in this sector, analysts said.

Moreover, oil prices in the international market again surged to US$95 per barrel after taking a short dip at US$90. For this reason, high activity was seen in the exploration and production companies and other energy stocks, but investors remained cautions.

The local leading financial institutions remained active in the market and changed hands in a number of stocks, a broker said and opined that optimism would prevail in the market if all on the political side goes well in accordance with the National Reconciliation Ordinance (NRO) introduced by President Musharraf.

Faisal Shaji of Khoja Capital Management reported moderate interest from foreign fund mangers in the market and saw an upward thrust in the indices that continued in the market in the short-term. The recovery in the SCRA balances confirmed overseas investors interest in the local market along with the changing political scenario from negative to stable.

Therefore, the SCRA balances reverted high to US$91.728 million to date with a net inflow of US$42.294 million recorded on Nov 28, according to the SBP website. Positive signs led runners in the broader market, as 225 companys stocks closed in the positive column against 151 stocks settled in the red region. Therefore, the value of 34 scrips remained unchanged with a total 410 active counters on board.

Highest volumes were witnessed in Lucky Cement at 19.910 million closing at Rs122.25 with a gain of Rs2.50, followed by DG Khan Cement at 19.501 million closing at Rs97.30 with a gain of Rs4.55, Arif Habib Securities at 18.116 million closing at Rs168.35 with a loss of 10 paisa, Pak Oilfields at 15.573 million closing at Rs352.40 with a gain of Rs2.90 and Oil and Gas Development Company at 14.654 million closing at Rs120.85 with a loss of 40 paisa.

KSE gains 79 points, poised to cross 14,000 mark


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## Neo

*Agri sector should lure investors from Middle East ​* 
Friday, November 30, 2007

LAHORE: Pakistan should further improve the productivity of agriculture sector to tap the international markets and attract direct investment from the Middle East.

These views expressed by the local and international participants of a seminar on Middle East-Pakistan Agriculture and Dairy Investment Forum held at Royal Palm Country Golf Club on Thursday.

Speaking on the occasion, Nestle Middle East SEVP Alexander Cantacuzene said Pakistan had great potential in dairy sector. He said that there was need to develop Pakistan as food basket for the region.

Nestle Milkpak Chairman Syed Yawar Ali in his address said that the prices of agricultural products have doubled in Pakistan. He mentioned that the price of milk powder had reached $4,000 per tonne from $2,000 per tonne.

Similarly rates of other agri products including wheat and rice had also doubled in country, he said adding that 20 per cent further increase in the agri products was forecasted in next year. Talking about the growth of dairy sector, he said that industry had been growing at 20 per cent annually while supply of inputs was growing at only 2 per cent annual rate.

Appreciating the efforts of Pakistan Dairy Development Board, he said that the Board had performed more than the expectations and supporting the industry as well. Representatives of Abraaj Capital Limited of UAE, Al Rabi of Saudi Arabia, Ulker Group, Pinar Group of Turkey and others also spoke on this occasion. Local speakers of the seminar were the representatives of Engro, Tetra Pak, Delaval, Nirala, Makro, BMA Capital and PHDEB.

Agri sector should lure investors from Middle East


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## Neo

*Pak leather, agri goods get access in Malaysia ​* 
Friday, November 30, 2007

ISLAMABAD: Pakistan has secured market access in Malaysia with a huge opportunity of exports for its existing cotton, leather and agricultural based core products by signing The Malaysian Pakistan Closer Economic Participation Agreement (MPCEPA).

According to a message received here on Thursday, the agreement has enlarged the scope of the Free Trade Agreement (FTA). The MPCEPA was signed in Kuala Lumpur by Malaysian International Trade and Industry Minister Daruk Seri Rafidah Aziz and High Commissioner of Pakistan Tahir Mahmood Qazi. 

Considering the marker potential of Malaysia and ASEAN, negotiations on a comprehensive FTA began in 2005. In December 2005, both the countries signed Early Harvest Programme, which was implemented with effect from January 2006. While negotiations on the MPCEPA were concluded in September this year and signed in the outgoing month. The agreement will come into force from January next year.

The MPCEPA is Pakistans first comprehensive agreement on goods, services, investment and economic cooperation with any country of the world. Besides Malaysias first such agreement with any of the countries of South Asia, it is also first such agreement between the two members of the Organisation of Islamic Countries (OIC). The agreement will provide Pakistan a firm foothold in the Association of South East Asian Nations (ASEAN).

Pak leather, agri goods get access in Malaysia


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## Neo

*Current account deficit shrinks by $518m​*
ISLAMABAD, Nov 29: Backed by a slight improvement in trade account, the current account deficit in the first four months of the current fiscal year narrowed by $518 million and stood at $2.996 billion against $3.514 billion last year.

The shrinking trend in the current account has been witnessed for the second consecutive month of the current fiscal year owing to a surge in inflow of remittances, foreign direct investment, particularly the PTCL installment of around $300 million and stagnation in the import bill.

As a result of these developments, the current account deficit in the first four months of the current fiscal year stood at 1.8 per cent of the projected GDP for the year as against 2.4 per cent in the corresponding period of last year.

Analysts said the real barometer of this positive development will be gauged from the second quarter (October-December) figures.

If the trend continued in the second quarter, it is expected that by end June 2008, the current deficit will witness a considerable decline.

The statistics compiled by the finance ministry showed that exports (on fob basis) grew at an average rate of 10.8 per cent during the first four months (July-October) of the current fiscal year, amounting to $5.997 billion against $5.413 billion last year.

This growth in exports was just 4.1 per cent in the same period last year.

Exports grew by 3.3 per cent in the whole year of 2006-07. Export growth of 10.8 per cent in the first four months (July-October) of the current fiscal year is certainly an encouraging trend, which needs to be further improved.

Exports are targeted to grow by 8-10 per cent in the current fiscal year.

Imports, on the other hand, grew at a modest rate of 4.3 per cent, amounting to $9.530 billion against $9.137 billion last year.

However, this growth in import bill was 14.5 per cent in the same period last year.

Imports were up 8.2 per cent in the last year and grew at an average rate of 35 per cent during the previous two years (2004-05 and 2005-06).

Import growth appears to be on the path of moderation and is expected to grow in the range of 6.5 per cent to seven per cent in the current fiscal year.

The tight monetary policy pursued by the State Bank of Pakistan appears to have played a role in moderating import growth.

As a result of developments on exports and imports, the trade deficit reduced by $191 million, from $3.724 billion in the first four months of the last year to $3.533 billion during the first four months this year.

The narrowing of trade deficit is the direct result of improvement in exports on the one hand and a moderate growth in imports on the other.

The trade balance of Pakistan widened in recent years on the back of strong economic growth sustained by domestic demand.

Improvement in the trade balance during the period under consideration is an encouraging development and will have a salutary impact on countrys overall balance of payment.

Invisible balance maintained a surplus of $537 million during the first four months of the current fiscal year as opposed to $210 million in the same period last year.

Private transfers also registered an improvement of 27.4 per cent, rising from $2.899 billion to $3.693 billion during the period under consideration.

Workers remittances  a major component of private transfers also grew by over 26.5 per cent to $2.080 billion in the first four months of the current fiscal year as against $1.644 billion last year.

Current account deficit shrinks by $518m -DAWN - Business; November 30, 2007


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## Neo

*Portfolio investment stages comeback​*
KARACHI, Nov 29: Foreign portfolio investment started flowing back into the country after easing of political uncertainty with positive developments including doffing of army uniform by President Musharraf.

The State Banks figures on Thursday showed that the net inflow of foreign investment in the shares market was $42 million on November 28, the day General Musharraf sheds his uniform.The foreign investment started flowing out from the country since the imposition of emergency. The emergency was imposed on November 3 and a major jolt was noted in the Supreme Court when a dozen judges were removed.

Now it looks that political scenario is clearer than earlier and this is the main reason that the foreign investors have started coming back into the market, said Mohammad Suhail, director Equity Broking at JS Global Securities.

However, he said it was not a big selling after emergency as the total foreign investment in the stocks was about $4.5 to $5 billion while the total selling during November was $250 million.

Analysts said the imposition of emergency has shaken the confidence of the foreign investors resulting into the selling of shares and forcing them to stay away from further investment.

Analysts said it was also felt that the political uncertainty would not allow the country to launch GDRs of its few top companies into the international market as foreign investors were hesitant to enter into any deal after the emergency creating uncertainty.

Since the beginning of the new fiscal the foreign investors were not enthusiastic as inflows were almost negative during the first three months (July-Sept) of the current year but October received record inflows.

The portfolio investment reached $302 million in October, 2007, which were record high inflows in a single month.

Analysts said that now a series of decisions appeared on the political horizon, which showed that the commitments made by the president were being honoured. They said the elections date was given as per the requirement of the Constitution; Supreme Court legalized the presidents election and now the change of guards in the army.

Shedding of uniform and lifting of emergency by mid-December would further strengthen the confidence of the investors, said Mohammad Imran, head of research at First Capital Securities.

The market also believes that the elections would not be boycotted by any major political party. All political parties have filed their nominations for contesting elections.

Some analysts were of the view that the uncertainty would remain looming over investors until a new government settles in Islamabad.

For the last eight years the economic policies were kept unchanged and no major change was witnessed during the period, which boosted confidence of both the local as well as foreign investors, said another analyst.

He said the presence of President Musharraf and his political allies assured continuity of the economic policies, which finally paid dividend during the last four years and the average rate of economic growth was 7 per cent.

Since President Musharraf is no more in a position to assert his policies after the election of the new government and new economic team, we should expect some change, he added.

We can not say what kind of economic change could come but the need for the continuity of economic policies is essential for economic growth, however, it will be clear only after the arrival of the new economic team, till then uncertainty will prevail, said a banker.

Portfolio investment stages comeback -DAWN - Business; November 30, 2007


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## Neo

*PSEB to boost equity base of IT companies​*
ISLAMABAD, Nov 29: Pakistan Software Export Board (PSEB) is launching various initiatives to facilitate access to Venture Capital, strengthen the equity base of IT companies and promote world class entrepreneurial culture in the IT industry.

The projects are aimed at raising the fast track development and robust growth of Pakistans IT industry.

One such programme, the PSEBs Entrepreneurship Project, has been initiated to provide consultancy to selected IT companies with the objective of qualifying them for Initial Public Offering.

Currently, out of more than 1,082 IT companies in Pakistan, only two were listed on the Karachi Stock Exchange.

To get more companies listed, as envisioned under the project, the PSEB will subsidise the consultancy cost by 75 per cent while selected companies will bear the remaining 25 per cent of the consultancy fee, a spokesman for the PSEB and director international marketing, Aon Ashraf Rana, said on Thursday.

In order to facilitate access to venture capital, the PSEB would facilitate entrepreneurs in getting venture capital funding through vetting business plans and establishing linkages with Angel, VC, private equity, public and multilateral funding organisations.

The PSEB had also launched an apprenticeship programme for creating a pool of skilled resources in Pakistans IT industry matching the advanced and specialised international technological requirements.

Under this initiative, IT companies will recruit IT graduates on apprenticeships and later hire them for a period of at least one year. 

This will allow fresh graduates to follow a career path provided by the participating companies, thus strengthening the pool of IT human capital in the country.

Under the programme, 1,058 fresh graduates will be placed as apprentices within Pakistanis IT industry, the spokesman said, and added that a multinational IT company, Bearing Point, has already expressed its willingness to recruit about 100 IT apprentices, out of which 46 had already been placed.

Another major project, the IT industry Internship Programme, the director international marketing said, intended to bridge the gap between the IT industry and the academic institutions, and would help mould fresh graduates into professionals.

Some 3,100 internees from 205 universities and institutes were placed in the local IT/ITes industry and 235 IT departments of public and private sector organisations.

Under its HR capacity building programme, the PSEB provided training to professional staff of 94 leading IT companies in various programmes.

Mr Rana said that the PSEBs expert advisory programme was in the process of being finalised.

The major objective of the programme is to facilitate PSEB member companies to hire foreign experts and expatriates.

The PSEB expects that the international corporate exposure and technical expertise of the experts will assist Pakistan IT companies in addressing gaps in the management of technical teams, and result in achieving fast track growth and capability to compete at a world level.

PSEB to boost equity base of IT companies -DAWN - Business; November 30, 2007


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## Neo

*PSEB to boost equity base of IT companies​*
ISLAMABAD, Nov 29: Pakistan Software Export Board (PSEB) is launching various initiatives to facilitate access to Venture Capital, strengthen the equity base of IT companies and promote world class entrepreneurial culture in the IT industry.

The projects are aimed at raising the fast track development and robust growth of Pakistans IT industry.

One such programme, the PSEBs Entrepreneurship Project, has been initiated to provide consultancy to selected IT companies with the objective of qualifying them for Initial Public Offering.

Currently, out of more than 1,082 IT companies in Pakistan, only two were listed on the Karachi Stock Exchange.

To get more companies listed, as envisioned under the project, the PSEB will subsidise the consultancy cost by 75 per cent while selected companies will bear the remaining 25 per cent of the consultancy fee, a spokesman for the PSEB and director international marketing, Aon Ashraf Rana, said on Thursday.

In order to facilitate access to venture capital, the PSEB would facilitate entrepreneurs in getting venture capital funding through vetting business plans and establishing linkages with Angel, VC, private equity, public and multilateral funding organisations.

The PSEB had also launched an apprenticeship programme for creating a pool of skilled resources in Pakistans IT industry matching the advanced and specialised international technological requirements.

Under this initiative, IT companies will recruit IT graduates on apprenticeships and later hire them for a period of at least one year. 

This will allow fresh graduates to follow a career path provided by the participating companies, thus strengthening the pool of IT human capital in the country.

Under the programme, 1,058 fresh graduates will be placed as apprentices within Pakistanis IT industry, the spokesman said, and added that a multinational IT company, Bearing Point, has already expressed its willingness to recruit about 100 IT apprentices, out of which 46 had already been placed.

Another major project, the IT industry Internship Programme, the director international marketing said, intended to bridge the gap between the IT industry and the academic institutions, and would help mould fresh graduates into professionals.

Some 3,100 internees from 205 universities and institutes were placed in the local IT/ITes industry and 235 IT departments of public and private sector organisations.

Under its HR capacity building programme, the PSEB provided training to professional staff of 94 leading IT companies in various programmes.

Mr Rana said that the PSEBs expert advisory programme was in the process of being finalised.

The major objective of the programme is to facilitate PSEB member companies to hire foreign experts and expatriates.

The PSEB expects that the international corporate exposure and technical expertise of the experts will assist Pakistan IT companies in addressing gaps in the management of technical teams, and result in achieving fast track growth and capability to compete at a world level.

PSEB to boost equity base of IT companies -DAWN - Business; November 30, 2007


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## Neo

*ADB report outlines Pakistans water woes​*
ISLAMABAD, Nov 29: Pakistan has reached the water scarcity threshold of 1,000 cubic metres per person a year and has been ranked among the worst performers in Asia in terms of water use, capacity and quality although water has been on President Musharrafs priority agenda for eight years.

In terms of water resource availability, the per capita total actual renewable water resources value reduced from 2,961 cubic metre a year in 2000 to 1,420 cubic metre in 2005 and just a little over 1,000 cubic metre per year in 2006-07, fractionally over the scarcity threshold, according to Asia Water Development Outlook 2007 report of the Asian Development Bank.

Released on Thursday, the report describes access to water and the water resource in Pakistan as good and fair, respectively, and ranks the country at the 17th position among 23 developing countries in the index of drinking water adequacy (IDWA).

The report said Pakistan was already in the water stress league, the water stress threshold being defined as renewable water resources below 1,700 cubic metres per person per year and will shortly be in the water scarcity league.

It is said the water use value in Pakistan was zero  meaning very poor in efficiency. It noted that this value should improve from zero to 40 as soon as possible. Increasing the domestic per capita consumption IDWA use component value could be achieved through increasing the number of people connected to piped networks, but this raises the question of water availability and system capacity.The report said that in Karachi and several other major cities, water demand already exceeded production capacity by a considerable margin.

The ADB advised Pakistan to increase its water sector spending to a minimum of one per cent of GDP from the current 0.25 per cent. In Pakistan, military spending is 47 times the expenditure in the water sector. It is a small price to pay for improved quality of life, millions of young lives saved, increased productivity and generating an economic return to boost prosperity.

The bank said that lack of planning capacity and strong management, as well as frequent disagreements with provincial governments over water allocation have contributed to major water resource problems. These issues are compounded by application of excessive irrigation water, causing increased salinity and water-logging. As a result, 36 per cent of groundwater resources are now highly saline and untreated effluent discharges from municipalities and industrial areas make the quality of water resources increasingly critical.

The number of tube-wells has increased significantly but despite the unsustainable mining of groundwater, additional wells continue to be installed to meet rural, urban and agricultural needs.

The irrigation system urgently needs rehabilitation and stronger institutional arrangements, the groundwater resource depletion is unsustainable, the coverage, quality and reliability of urban water supply are grossly inadequate, especially in the light of the burgeoning urban population; and urban waste-water treatment is virtually non-existent (only one per cent) with the drainage network collecting agriculture waste along with mostly untreated municipal and industrial effluent and discharging it into the rivers. Salinity in rivers is an increasing problem.

The report said that water supply systems are characterised by limited hours of supply, low pressure, intermittent water supply, high levels of non-revenue -- for example 60 per cent in Islamabad. In the first half of 2006, major outbreaks of waterborne disease epidemics swept Faisalabad, Karachi, Lahore and Peshawar as a result of sewage and industrial waste leaking into drinking water through damaged pipes, necessitating a major emergency public investment programme to finance more than 6,000 filtration plants.

In Karachi and Lahore, 40 per cent of the water supply is unfiltered and 60 per cent of effluents are untreated. In Lahore, there is no sewage treatment and only three out of 100 industries chemically treat their waste-water. In Karachi, the sewerage system is in disrepair and there are no sewage treatment facilities, with even the two largest industrial estates in the country having no effluent treatment plants.

The report said some of Pakistan was heavily constrained by water availability with the situation deteriorating annually. The country needs to pursue conservation aggressively, particularly in the irrigation sector, which is characterised by low productivity relative to other countries. Deteriorating water quality is a further major concern, necessitating the dramatic increase in the treatment of municipal and industrial waste-water as well as modifying agricultural practices.

Very low tariffs, compounded by poor collection and billing practices, mean low cost recovery and the resulting bad state of repair of most water and sanitation systems. Tariff reform is vital not only to ensure sustainability but also to highlight the true value of water and service provision.

It said lack of inadequate and management coordination among water-user organisations, lack of consensus between provinces and high level of poverty were some of the causes of water-related problems in the country.

ADB report outlines Pakistans water woes -DAWN - Top Stories; November 30, 2007


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## Neo

*Ufone to invest $150m in network expansion​*
KARACHI: Ufone has announced to invest US$ 150 million in network expansion, which will add up more than 1000 additional cities towns and highways in its footprint. 

It is estimated that by the end of June 2008 the company will be covering more than 4500 cities, towns, villages and all major highways in the country, a press release said here Thursday. 

The contract has been awarded to Huawei Technologies, which is one of the most rapidly growing telecom vendors globally and awarding another contract to Huawei shows the companys confidence in professionalism and state of the art technology. Huawei is the vendor of choice in latest 3G Telecommunications Networks, 31 of the worlds top 50 operators worldwide are using their technical infrastructure. 

Walid Irshaid, President and CEO of PTCL while speaking at contract awarding ceremony said that an expansion contract of this magnitude indicates Ufones aggressive strategy towards market growth and expansion, in the wake of tremendous growth and potential of Pakistans cellular market. 

The previous Network Roll-out phase of $550 million was the single largest expansion plan in the history of Pakistan and this region. That record-breaking execution by Huawei is near completion now and this new contract shows Etisalats commitment to the Pakistani market and will also boost investors confidence towards Pakistan.

The project was approved by the Board of Directors to invest in infrastructure and to provide best quality network and facilities its customers. In addition to the major investment commitment, Etisalat brings its extensive experience of Telecom Industry to Pakistan to ensure that THE company has the best network in the country.

Yi Xiang CEO Huawei Pakistan stated that Huawei is fully committed to Pakistan telecom industry as well as implementing this new network expansion contract in the fastest and most seamless fashion.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Water resources: Pakistan must spend one percent of GDP: ADB ​*
ISLAMABAD (November 30 2007): The Asian Development Bank (ADB) on Thursday said that Pakistan needed to spend at least 1 percent of the GDP on water resources to avert crisis like situation in future. The Bank deplored that military spending in Pakistan is 47 times higher than the spending in water sector, which is currently only 0.25 percent of the GDP.

The cost of achieving the water sector MDGs has been estimated at $10 billion/year, a seemingly large sum but one that only equates to 5 days' worth of global military spending and less than half of what rich countries spend on mineral water, said the report.

The report also said that Pakistan must focus on tariffs reform, increased wastewater treatment capacity, greater water conservation, and effective implementation of the National Water Policy. To avoid a crisis in water security, developing countries in Asia will have to rethink how they manage their vital water resources, said that report titled the Asian Water Development Outlook (AWDO), authored by a team of experts led by Professor Asit Biswas, the 2006 Stockholm Water Prize Laureate.

The report says that government leaders in the region can protect their nations' water resources, but they will need to concentrate on some key areas to ensure water security for their population, and the region as a whole.

"We can confidently predict," Biswas says, "that Asian developing member countries, (DMCs) should not experience, or expect, a crisis in the future because of physical scarcity of water; there is now enough knowledge, technology and expertise available in Asia to solve all its existing and future water problems. If some Asian DMCs face a water crisis in the future, it will not be because of physical scarcity of water, but because of inadequate or inappropriate water governance."

For 2006-2010, the ADB expects to sharply increase its investments in the water sector through its Water Financing Programme, which directs funds, reforms and capacity development programmes at rural communities, cities and river basins.

It is expected that such investments will be well over $2 billion annually, representing approximately 25 percent of overall ADB lending over a three-year moving average period, and two fold ADB's investments in water compared to 1999.

In Pakistan, the water and power ministry through Wapda manages water resources. However, lack of sector planning capacity and strong management, as well as frequent disagreements among the federal and the four provinces over the allocation of water have contributed to water resource problem. Some 36 percent of groundwater resources are classified as highly saline.

Very low tariffs, compounded by poor collection and billing practices, mean low cost recovery and the resulting bad state of repair of most water and sanitation systems.

The report calls for increased autonomy of water and sanitation agencies. It has been proposed to establish apex body to implement the water sector strategy as well as policies developed by proposed National Water Council.

Financial unsustainability is very common almost in all water organisations. The tariffs should be rationalised at a level that could at least meet the operation and maintenance (O&M) cost. The report also strongly advocated of outsourcing the O&M, billing and revenue collection.

Pakistan has long history of developing and managing water resources infrastructure and has largest contiguous irrigation in the world. It is, however, nearly at the water scarcity threshold of 1,000 cubic meter/person/year.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Turkish investment to cross $600 million: Consul General ​* 
KARACHI (November 30 2007): Turkish Consul General Erdern Mutaf has said that Turkish foreign direct investment (FDI) in Pakistan will cross 600 million dollars in the near future. Addressing members of Karachi Chamber of Commerce and Industry (KCCI) on Thursday, he said that during the last one year, the total Turkish investment in different projects Sindh province had reached 350 million dollars.

Giving details of the major Turkish investment in Sindh, he said that Zorlu Group was establishing wind power plants at Jhimphir, with the initial capacity to produce 50 MW. The installed capacity of this project was expected to reach 300 MW in near future, he added.

He said a Turkish company, Alfapen, entered into joint venture with a Pakistan company in PVC sector for producing UPVC products. Another Turkish confectionery company, having 7.7 billion dollars turnover in 2006, entered into a joint venture with a local company to produce biscuits and cakes in Karachi. The plant will start production by January 15,2008, he added.

The Consul General pointed out that total Turkish investment in Pakistan reached around 1.7 billion dollars between 1993 and 2006. He said that Turkey attached special importance to further improve the trade relations with Pakistan, which would, no doubt, contribute considerably to the excellent relations in every field between the two countries.

Erdern Mutaf said bilateral trade volume increased considerably from 130 million dollars in 2001 to almost 600 million dollars in 2006. However, the current level still did not reflect the potential of both the countries. He said the target was to reach one billion dollars in near future as it was pointed out by Turkish Prime Minister Erdogan some times ago, and added the re-opening of Trade Office in Karachi after eight years was clear sign of Turkish resolve in this respect.

He invited Pakistan companies to take part in exhibitions held in Turkey.

Welcoming the guests, Senior Vice President of KCCI Iftikhar Ahmed Shaikh said that Pakistan had the potential to target Turkish market in areas such as vegetable and fruits, pharmaceutical products, raw hides and skins. Turkey imported these items in large quantity, but share of Pakistan in these segments in negligible, he added.

He said that Turkey could take advantage of Gwadar port to establish production base in Pakistan and tap the huge untapped market of south and Central Asia.

He said that Pakistan and Turkey could also join hands to manufacture textile products in Pakistan in textile and garment cities being established with modern infrastructure at Karachi.

He also emphasised the need of frequent exchange of delegations and data based information on trade and marketing and holding single country exhibitions. Iftikhar Shaikh invited the Turkish business community to participate in KCCI exhibition schedule to be held in June-July 2008.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*ASIA G3 BOND OUTLOOK: Pakistan Bonds May Get Beaten Down More ​*
By Ditas Lopez, Of DOW JONES NEWSWIRES

SINGAPORE -(Dow Jones)- Political uncertainty in Pakistan, even with a return to constitutional rule, will continue to weigh on its U.S. dollar bonds, which have sold off heavily on concern about deepening tensions in the world's sixth- most populous country.

Still less is it likely that the country could tap the market again soon.

Talk is circling in the market that Pakistan has sent request for proposals from banks to meet the funding needs of state-owned utilities for next year. But given the still unstable global credit market and the country's unresolved political woes, the prospect for that issue looks dim.

Yields on Pakistan's overseas bonds and the cost of insuring against default or restructuring of them have increased sharply in the wake of the South Asian country's latest crisis, which flared when President Pervez Musharraf declared a state of emergency on Nov. 3.

The political situation recently has shown signs of coming off the boil, with Musharraf stepping down as army chief Wednesday to hand over control of the military to his deputy before being sworn in Thursday for another term as president. He intends to lift the widely criticized state of emergency on Dec. 16, in preparation for parliamentary elections set for Jan. 8.

But analysts say investors remain on edge.

"Clearly, there's going to be several months of political uncertainty," said Dilip Parameswaran, head of Asia Capital Markets Research at French bank Calyon in Hong Kong.

There are big question marks hanging over Pakistan's outlook. Among them: the conduct and outcome of the elections and the implications of the looming change from an authoritarian administration, which over the years has focused on the economy, to an elected government.

Pakistan's U.S. dollar sovereign bonds due 2017 rose to 86.250 late Thursday from 84.400 mid-week but they were still down from 100 when they were issued on June 1. The yield eased to 9.066% from 9.394% the day before but was still much higher than 6.875% when the bond was issued and from 8.3% just before Musharraf shocked investors with his declaration of the state of emergency.

Pakistan's five-year credit default swaps have widened to 440-540 basis points from around 400 basis points three months ago.

Deepening worries over potential losses financial institutions face from the U.S. subprime mortgage crisis and the damage the crisis could do to liquidity and growth have pushed spreads of U.S. dollar bonds from Asia wider in recent weeks.

But subprime jitters aside, Pakistan's domestic woes are serious enough to keepinvestors from bottom fishing its credit, analysts say. Prices of Pakistan's bonds are trading lower than fellow high-yield sovereign issues from the Philippines and Indonesia.

Pakistan's five-year CDS could swell to as wide as 850 basis points under the "most pessimistic" scenario, said Yang-Myung Hong, a credit analyst at Lehman Brothers in Hong Kong. That was the level Ecuador's CDS hit at the height of a political crisis in that South American country in September - the highest for any country, he said.

"That's sort of saying you're really in a bad situation and the market is in bad situation," Hong said. He added, however, that a stabilization in the spreads is possible over the near term if the political tensions ease.

Favorable Economic Prospects

A shift to constitutional rule would be a move in the right direction but it wouldn't solve all the problems that concern bond investors.

By itself, an alteration in the political system, is "not an argument" for a ratings change. Rather it is the ability of the government to restore investor confidence through continued policy reforms that matters, said Dilip Shahani, head of research at HSBC in Hong Kong.

Shahani cited the case of China, which, despite being dominated by the Chinese Communist Party, enjoys strong investment and growth.

Some analysts warn that the news flow out of Pakistan could become more worrisome in the run-up to the elections, which were threatened early this month when Musharraf suspended the constitution, imposed strict conditions on media broadcasting, fired several justices and ordered the detention of thousands of political opponents.

"Expect political noise to intensify ahead of the Jan. 8 parliamentary election," said Tim Condon, head of research at ING in Singapore.

To be sure, politics isn't the only issue on investors' minds. The economy counts for a lot too, and that picture looks good.

Domestic private investment has grown at an average 27% rate over the past five years while foreign direct investment reached US$5.1 billion, or 3.6% of gross domestic product, in the fiscal year ended June 30, 2007 from only US$300 million in 2001, according to Standard & Poor's Ratings Services. The Asian Development Bank forecasts the country's GDP will expand 7% this year and 6.5% next year.

But that rosy outlook could change.

"The political quagmire or unstable revolving-door governments would be detrimental to policy making and could drag down the country's 7% annual growth to the 4.3% average of the 1990s," said Agost Benard, an analyst at S&P.

Foreign currency inflows could also weaken while the fiscal position could deteriorate, Benard said.

"Parties new to holding the reins of power are likely to be preoccupied with shoring up their positions. Economic policy and decision making could become politicized and suffer delays and/or undue influence from special interests," he said.

Pakistan has ratings of B1 from Moody's Investors Service and B+ from Standard & Poor's.

Nasdaq 100 Flash Quotes


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## Neo

*Revenue shows12.6pc increase in five months​*
ISLAMABAD, Nov 30: The Federal Board of Revenue (FBR) on Friday claimed to have collected revenue amounting to Rs333.6 billion during the first five months of the current fiscal year, which is up by 12.6 per cent from Rs296.3 billion last year.

The official figures released here, however, reveal that the growth in revenue collection materialised on the back of substantial decline in payment of refunds by almost 50 per cent (Rs20 billion) to taxpayers of all the federal taxes  income tax, sales tax, federal excise duty (FED) and customs duty during the period under review.

It is believed that tax authorities withheld the genuine refunds of taxpayers, which helped tax authorities to achieve the revenue collection target for the period under review.

Total refunds paid stood at Rs20.648 billion in July-November this year as against Rs41.137 billion last year.

The tax-wise break-up showed that the payment of income tax refunds to taxpayers declined to Rs4.862 billion in July-November period this year as against Rs15.494 billion last year.

The same trend of decline was witnessed in the payment of sales tax, FED and customs refunds. The sales tax refunds declined by 38.9 per cent to Rs11.578 billion during the period under review against Rs18.947 billion last year.

A decline of 37.2 per cent was recorded in payment of customs refunds to taxpayers and it stood at Rs4.208 billion in July-Nov this year as against Rs6.696 billion last year.

The FED refund dipped by 91.7 per cent to Rs8 million during the period under review against Rs96 million last year.

According to the statistics, even the overall provisional figures collection was up by Rs1.1 billion during the July-November period of the current fiscal year when compared with the target of Rs332.5 billion set for the same period.

Tax-wise collection showed that revenue on account of direct taxes reached Rs110 billion in July-November this year as against Rs96.5 billion last year, showing an increase of 14 per cent.

The sales tax collection stood at Rs142.1 billion during the period under review as against Rs125.7 billion, indicating a growth of 13 per cent whereas the growth in sales tax import stage was 12.4 per cent and domestic sales tax collection increased by 13.9 per cent, respectively, during the period under review over last year.Tax receipts on account of federal excise duties recorded an increase of 24.1 per cent, touching Rs31 billion against Rs25 billion in the past. The collection on account of customs duty stood at Rs50.6 billion as against Rs49.14 billion last year, an increase of 2.9 per cent.

On monthly basis, the revenue collection stood at Rs62.1 billion in November 2007 against Rs59 billion last year, indicating a growth of 5.25 per cent.

Revenue shows12.6pc increase in five months -DAWN - Business; December 01, 2007


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## Neo

*Australia asked to extend farm project term​*
ISLAMABAD, Nov 30: Pakistans premier agricultural research body has requested the Australian authorities to extend the life of the multi-million-dollar Australia-Pakistan Agriculture Sector Linkages Programme (ASLP) up to five years to achieve the project targets.

The three-year programme is focused on the horticulture (mango and citrus) and livestock (dairy) enterprises and simultaneously addresses underlying issues of water management and institutional and technical capacity building.

Pakistan Agricultural Research Council (Parc) Chairman Dr M. E. Tusneem had made a formal request in this regard to Mr Les Baxter, Research Programme Manager Horticulture Australian Centre for International Agriculture Research (ACIAR), who led a delegation of Australian researchers during its nine-day visit to Pakistan which concluded here on Friday.

The delegation during its stay also met with various authorities to gauge the progress work on the ASLP.

Sources told Dawn that high-ups of the Federal Ministry of Food, Agriculture and Livestock (Minfal) were also in favour of the extension of the vital project keeping in view the countrys prospects for the export of citrus and mango.

After a year of ban, the Russia has allowed Pakistan to re-start export of its citrus to its market. Minfal officials also see resumption of mango export to the Russian market along with rice in the near future. And, ASLP is of immense help in this regard.

But this year, sources said, ASLP has seen a sort of stagnation as for as its citrus related component was concerned.

PARC officials were of the view that ASLP had played a vital role in the development of the citrus crop from production up to the marketing chain. Now, the Australian technical support was being taken for the mango crop as well.

A Parc spokesman said that Mr Baxter was of the view that ASLP should speed up work on the citrus component of the project as it was relatively slow, while work on the mango crop was going on at fairly reasonable pace.

He said that Mr Baxter had also acknowledged that delay in the release of funds by the Australian side was mainly responsible for slowing down of the citrus project.

The ASLP has a total budget of 6.6 million Australian dollars. Its objective is to transfer Australian knowledge and expertise to key sectors of Pakistan agribusiness to increase profitability and enhance export potential.

This project is to contribute to poverty alleviation of smallholder farmers through collaborative research and development; and to enhance the capacity of the Pakistan research, development and extension system to deliver targeted and practical research outputs to agribusiness and farmers.

Australia asked to extend farm project term -DAWN - Business; December 01, 2007


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## Neo

*Oil import bill soars to $2.85bn ​* 
Sunday, December 02, 2007

ISLAMABAD: Pakistans oil import bill stood at US$2.859 billion as food items, machinery, transport as well as petroleum products contributed heavily towards swelling the import bill during the first four months of the current fiscal year.

The food items bill stood at $1.048 billion, machinery $2.915 billion and transport sector $968.621 million during the July-Oct period of the current fiscal year. The import of aircraft, ships and boats incurred a cost of $475.388 million during the period.

Pakistan has imported food items worth $1.048 billion including wheat un-milled, milk, sugar, pulses, palm oil, soybean oil, tea and others. The import of palm oil alone consumed $440 million during the period under review as its prices in the international market are mounting.

The food group consumed $1.048 billion during the first four months of the current fiscal year compared to $1.063 billion in the same period of the previous fiscal year, official trade data available with The News showed.

Food inflation had already witnessed new highs during October 2007 by reaching the level of 14.67 per cent, which was eroding the purchasing power of the middle and lower middle class in Pakistan.

The import of milk cream and milk food for infants stood at 8,257MT in the first four months of the current fiscal costing $26.187 million while import of un-milled wheat consumed $5.266 million. The import of dry fruits and nuts totalled 37,388MT at a cost of $23.956 million in the July-Oct period. The import of tea cost $60.483 million for total quantity of 36,357MT while the import of spices cost $20.805 million.

The cost of sugar import stood at $8.025 million in the first four months of the current fiscal year against $246 million in the same period of last year. The caretaker government has to intervene by increasing import duty from 15 per cent to 25 per cent in order to discourage the commodity flooding the domestic market.

The caretaker government also removed 15 per cent export duty on sugar in order to lure exporters to send additional stock to other countries. The import of pulses incurred a cost of $66.450 million in the July-Oct period of the current fiscal against $91.756 million in the same period of the previous year. The cost of all other food items stood at $368.353 million during the first four months of the current fiscal year compared to $246.151 million in the same period of the previous year.

Machinery Group: The import of machinery stood at $2.195 billion in the first four months with power generation machinery $208.027 million, office machines including data processing equipment $84.848 million, textile machinery $145.057 million, construction and mining machinery $72.819 million, telecom sector $795.443 million including mobile phones $244.955 million and other apparatus $550.448 million, agriculture machinery and other inputs $48.259 million and others machinery $583.271 million.

Transport Sector: The import of transport sector was $968.621 million in July-Oct period of the current fiscal year. The import of road motor vehicles (build unit CKD/SKD) was $474.227 million, CBU $125.964 million, buses, trucks and other heavy vehicles $42.880 million and motor cars $79.466 million.

Oil import bill soars to $2.85bn


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## Neo

*FBS restructuring delayed further ​* 
Sunday, December 02, 2007

ISLAMABAD: The much-awaited restructuring of the Federal Bureau of Statistics has been further delayed, forcing the government to appoint acting director general in the neglected department after a lapse of almost five years, it is learnt.

The FBS, which is mainly responsible for collecting data for various sectors of the economy, has been without a director general since 2002, the whole tenure of Shaukat Aziz, first as finance minister and then as prime minister. Now Abdul Hakeem Mukhdoom has been given the charge of acting DG of FBS.

He has been assigned the task to look after day-to-day affairs of the FBS. Earlier, it was thought that the post of DG has been abolished in the wake of proposed restructuring of the bureau.

Heavyweights during the tenure of former prime minister Shaukat Aziz openly used derogatory language against the FBS and spared no chance to criticise its whole operation rather than advising the government to take practical steps to strengthen the neglected department. The Musharraf regime did not take any practical steps for bringing about desired changes in the FBS during the last eight years.

Now the Statistics Division has received a draft bill with certain amendments from the Ministry of Law and it seems that the restructuring process is being further delayed, a source in the finance ministry told The News.

Now the FBS will incorporate certain required changes in the draft bill and then send it again to the Ministry of Law for vetting. The restructuring plan for the FBS had been delayed in the past too and it may take more time to accelerate the process to achieve the desired results.

If the government does not promulgate an ordinance for giving legal cover to the restructuring process of the FBS, then it will be done after the upcoming elections when new assemblies will be in place.

This correspondent tried several times to contact Statistics Division Secretary Asad Elahi for seeking his comments but he did not attend his phone. However, sources said caretaker Finance Minister Dr Salman Shah and State Bank of Pakistan Governor Dr Shamshad Akhtar had conducted interviews of selected candidates a few months ago for appointment as chief statistician in the restructured Pakistan Statistical Authority (PSA), but no appointment has been made so far.

Under the restructuring plan, the government will appoint the chief statistician and five other members in the PSA with MP-1 scale. The federal cabinet had approved the restructuring plan for establishing PSA during Shaukat Azizs tenure. After implementation of the plan, there will be five members including member national accounts, member services, member human resource development, member economic statistics and member social statistics.

Another issue, according to the sources, which will be equally important in this regard, is how much the restructured Pakistan Statistical Authority will be different from the existing Federal Bureau of Statistics as independent economists as well as common people have lost trust in official figures released by the FBS.

If the government gives autonomy in real sense to the upcoming statistical authority, then independent economists will be keen to join it, an economist said. There are many institutions where the government requires economists and statisticians such as the Competition Authority, commissioners for the Securities and Exchange Commission of Pakistan, research organisations, provincial governments and many more.

The sources said the new statistical authority would have to face the problem of capacity-building of its staff as the employees were not fully trained to perform their duties. However, Statistics Division Secretary Asad Elahi has said several times that he is providing training to all his staff without spending any money.

FBS restructuring delayed further


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## Neo

*Food, fuel dearer by up to 4pc ​* 
Sunday, December 02, 2007

ISLAMABAD: The prices of necessary kitchen items have gone further up, as the rates of flour, ghee, cooking oil, and LPG have increased by 1.1 to four percent during a span of one week the Federal Bureau of Statistics (FBS) reported Saturday.

During the week ending on November 29 the prices of wheat went up by 3.98 per cent, flour 2.54 per cent, washing soap 1.87 per cent, vegetable ghee (tin) 1.79 per cent, cooking oil 1.79 per cent, mustard oil 1.21 per cent and LPG (11 kg cylinder) rates were up by 1.13 per cent over previous week.

According to FBS Sensitive Price Indicator (SPI) bulletin released on Saturday the prices of 53 daily use items during the week under review were up 8.42 percent on year-on-year basis (YOY) as compared to the corresponding week of last fiscal.

SPI data collected from 17 centres shows that from the bucket of 53 basic items, 20 registered increase and 20 showed decline, while prices of 13 items remained unchanged.

YOY the FBS weekly review indicates significant rise in prices of some bare necessities and kitchen items. These items were wheat and flour, vegetable ghee, rice, LPG, powder milk, cooking oil and firewood.

Further analysis of the data reveals that YOY 15 items are dearer by double digits. These include; rice basmati broken up 61 per cent, mustard oil 58 per cent, vegetable ghee loose 52 per cent, rice IRRI-6 up 51 per cent, masoor pulse 41 per cent, LPG (11 kg cylinder) 39 per cent, vegetable ghee (tin) 33 per cent, cooking oil (tin) 33 per cent, wheat 32 per cent, flour 28 per cent, washing soap 14 per cent, firewood 14 per cent, plain bread 13 per cent and coarse latha price up by 12 per cent.

The FBS figures further showed that though prices of 20items posted no change during the week, yet compared to the corresponding week of last fiscal, several items are now costly. For example milk powder is dearer by 23 per cent, bath soap 22 per cent and curd prices are up by 11 per cent.

The bulletin further indicates that though the prices of 13 items decreased, yet compared to the prices of corresponding week of last year, items, which showed increase in their prices, were; red chillies, which is dearer by 40 per cent, chicken (farm) 37 per cent and farm egg prices up 18 per cent. 

Food, fuel dearer by up to 4pc


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## Neo

*Punjab to revive closed industrial estates ​* 
Sunday, December 02, 2007

LAHORE: Punjab Caretaker Industries Minister Khawaja Jalaluddin has said the province attaches priority to reviving 70 per cent redundant industrial estates, established specifically for small and medium enterprises, and providing entrepreneurs one window facility to deal with all the departments.

Speaking at a function organised by the Federation of Pakistan Chambers of Commerce and Industry, he said the caretaker set-up would continue with the agenda pursued by the previous government, but would also avail itself of the opportunity to initiate some steps for the benefit of industries.

For instance, he said, a 32-acre land was allocated in the Multan Industrial Estate for establishing a workers colony, adding the Punjab government would build the colony to enable skilled labourers to live near the industries they were working in.

He said houses would be rented out to the industries which could allot them to their workers. Provision of land in other industrial estates would also be explored as at present only the Sundar Industrial Estate had that facility, he added. He said shortfall in cotton production was the main reason for the textile crisis in the country, adding cost of cotton in spinning was around 70 per cent of the total.

He said the government would take urgent steps to introduce BT cotton seed immediately from original manufacturers and continue local research as well which might take some time to produce results. FPCCI President Tanvir Sheikh urged the minister to take immediate remedial steps for the revival and improvement of textile, leather and dairy sectors.

Punjab to revive closed industrial estates


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## Neo

*Mega dams vital for meeting water, power needs ​* 
Sunday, December 02, 2007

LAHORE: WAPDA has contributed substantially to the development of Pakistan in the 50 years of its existence, said WAPDA chairman Shakil Durrani.

He was addressing a delegation of the National Defence University, Islamabad that visited him at WAPDA House on Saturday, according to WAPDA sources. The delegation was headed by War Course Commandant, Maj. Gen. Shahid Iqbal.

WAPDA member (Water) Mushtaq Chaudhry and PEPCO MD, Munawar Ahmed briefed the delegation about current water and power scenario of the country. Members (Power) Fazal Khan and (Finance) Chaudri Abdul Qadeer were also present on the occasion.

WAPDA chief said that work has yet to be done for optimum utilisation of water and hydropower resources to meet the the rapidly increasing demand in the country. Briefing the delegation, member Water said that rising population and depleting storage capacity of water reservoirs in Pakistan call for construction of more than one mega dam.

He revealed that on average 32.81 million acre feet (MAF) water escapes downstream from Kotri Barrage annually, since 1976. He said that another 22.5 million acres of virgin land could be brought under irrigation in the country if more mega dams are constructed.

He told the delegation that Pakistan may reach the point of becoming a water short country by 2012 if the present situation continues. The per capita water availability has already reduced to alarming figures of 1070 cubic meter in 2007, while according to universally accepted parameters, a country is declared water scarce country if the per capita availability of water reduces to 1,000 cubic meters, he disclosed.

Managing director PEPCO, Munawar Ahmed, told the visitors that a crisis management plan has been launched to improve customer services and minimise the gap between consumption and generation of electricity in the country. Briefing the delegation on National Energy Plan, he said the plan envisages maximum utilisation of resources to meet the growing demand on a sustained and affordable basis. 

Mega dams vital for meeting water, power needs


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## Neo

* Economic policies to continue​* 
Sunday, December 02, 2007

ISLAMABAD: The government believes in continuation of economic policies to sustain economic upsurge and attract more foreign investment, said Caretaker Prime Minister Mohammadmian Soomro.

This would augur well for progress and prosperity of the country, he said this while talking to the Chairman, Fattouch Group of Lebanon, Pierre Michel Fattouch, who called on him along with his delegation on Saturday.

The Prime Minister said Pakistan has enormous potential in communication and financial sector and added the reforms agenda introduced by the government was prepared keeping in view the national interest as well as incentives for investors both local and foreign.

He said because of these policies, Pakistan has become a lucrative destination for foreign investment in view of the availability of skilled manpower and comparatively low cost of production and a level playing field which is equally available to both foreign and local investors.

Pierre while appreciating the economic policies of Pakistan mentioned that their meetings with the concerned officials in various fields have been very beneficial and the Fattouch Group is eager to invest in the telecom and infrastructure development projects. The Group, he said is working on a large number of projects in the Middle East and elsewhere in various sectors. 

Economic policies to continue


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## Neo

*Iran wants to see trade with Pakistan at $1 billion ​* 
Sunday, December 02, 2007

ISLAMABAD: Iran wants to increase bilateral trade with Pakistan from the existing $650 million to one billion dollars annually and enhance economic cooperation in other sectors too.

Iranian Commercial Attache Ahmed Fasihi and First Secretary Head of Economy Mohsen Pakpervar said this during a meeting with president Islamabad Chamber of Commerce and Industry president Nasir Khan.

Commercial Attache informed that his office signed 16 memorandums of understanding with chambers and trade delegations in short time and also arranged meeting with 1,800 members in few months for the enhancing bilateral trade. He added that their office was sending minimum three members of trade bodies daily to Iran for the enhancing of bilateral trade.

He expressed dissatisfaction over the present level of bilateral trade and said that it is not up-to the potential of the two countries. 

ICCI president Nasir Khan suggested that to achieve the set target of bilateral trade both countries should encourage border trade by establishing customs ports at borders. He appreciated the role of the commercial section of Iran Consulate Particularly in terms of facilitating the business community of Pakistan .

Ahmed Fasihi also invited President ICCI to send a business delegation to Iran for the enhancing two-way trade. President ICCI Nasir Khan accepted the Proposal and said that about 20 members of ICCI will visit Iran this month.

He said that Pakistan and Iran should make a joint study on their bilateral trade relation and their share in global trade. He stressed that being a brother and neighbouring countries should identify the potential items of import and export between the two countries and give it wide publicity.

Iran wants to see trade with Pakistan at $1 billion


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## Neo

* Online stock trading has promising future ​* 
Sunday, December 02, 2007

KARACHI: Senior Vice President, Multan Chamber of Commerce and Industry (MCCI) Khawaja Muhammad Ali said on Friday that future of online stock trading in Pakistan looked quite promising as the new generation was more comfortable with this technology.

Ali was speaking on the second Investment Road Show on Friday with theme of Future of Online Stock Trading in Pakistan. He pointed out that the economic liberalisation and privatisation policies have unleashed the real potential of Pakistans economy. Sharply improved performance of companies listed on the stock exchanges, has enabled investors, both individuals and institutions to participate in the success of Pakistans corporate sector, he added.

Muhammad Farid Alam, Deputy CEO, AKD Securities Ltd, while expressing his views on Pakistans economic outlook said that higher industrial and agricultural growth and significant improvement of macro-economic indicators were expected to keep the market buoyant despite a few some low points.

Today in Pakistan, the Market Capitalisation is US$72.4 billion against $7.2 billion in June 2002. The concept of Online Stock Trading is also growing in Pakistan. With massive improvements in the telecommunication infrastructure, Online Stock Trading is the way for individual investors to participate in the stock market as the system makes it convenient for the people to buy or sell stocks online, from the comfort of their home or office, on real-time basis with security and ease.

Online stock trading has promising future


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## Neo

*Budget deficit touches 40% of full-year target in 3 mths​*
* Punjab, Sindh, NWFP nearing their targeted deficits 
* Balochistan, most fiscally prudent province of the four provinces, witnesses 15% of targeted deficit in the first quarter 

ISLAMABAD: The overall budget deficit faced by the federal government has reached Rs 158.056 billion during first quarter of the current fiscal year, which is 39.60 percent of the whole fiscal years target of Rs 398 billion. 

According to a report released by the finance ministry, the total revenue during the first quarter was Rs 312.623 billion out of which collection by Federal Board of Revenue stood at Rs 215.578 billion. Petroleum and Gas surcharges yielded Rs.8.77 billion, including Rs 4.151 billion as petroleum development surcharge and Rs 4.626 as gas development surcharge. Non-tax revenue stood at Rs 97.035 billion during the period under reviw. 

According to details, the government spent a total sum of Rs 470.679 billion that includes Rs 39.989 billion in non-development expenditure. The government paid Rs 111.126 billion as interest on local and foreign loans. Out of these, Rs 98.541 billion were spent on servicing of domestic debt and Rs 12.585 billion were spent on foreign debt servicing. Total defence spending stood at Rs 57.546 billion. Development expenditure and net lending during the first quarter stood at Rs 129.817 billion. The budget deficit during the first quarter stood at Rs 158.066 billion that was financed using Rs 36.798 billion from external resources and Rs 121.268 billion from domestic resources. 

Punjab: Provincial revenue of government of Punjab amounted to Rs 63.185 billion against the expenditures of Rs 96.591 billion during the first quarter of the current fiscal year leaving a deficit of Rs 33.406 billion. Punjab received Rs 44.451 billion as revenue share from federal taxes during the said period. The province also received grants worth Rs 846 million from federal government. Development expenditures of the province amounted to Rs 44.95 billion and non-development expenditures were Rs 49.54 billion. The provincial government had targeted a surplus budget for the current fiscal year.

Sindh: Total revenue collection by the government of Sindh stood at Rs 29.769 billion and total expenditures of the province remained Rs 41.119 billion during the first quarter of 2007-08, resulting in budget deficit of Rs 11.350 billion. The government had in the budget speech forecast a deficit of Rs 12.34 billion for the whole year. The three-month budget deficit is almost 90 percent of the forecasted figure. Sindh received Rs 27.963 billion under its share of federal taxes from the federal government during this period. Non-development expenditures of the provincial government stood at Rs 33.599 billion and development spending touched Rs 6.467 billion in the said period. 

NWFP: Total revenue of the NWFP amounted to Rs 17.456 billion and total expenditures of the province stood at Rs 19.517 billion during the July-September period of 2007-08 leaving a budget deficit of Rs 2.061 billion. The figure is almost 40 percent of the targeted budget deficit of 5.489 billion for the complete fiscal year. The NWFP government received Rs 10.785 billion under the existing NFC Award and Net Hydel Profits share of Rs 1.5 billion from the federal government during the said period. 

Balochistan: The government of Balochistan collected Rs 8.950 billion and spent Rs 10.532 billion during the first quarter of the current fiscal year, amounting to a budget deficit of Rs 1.52 billion for the period under review. Earlier in June the provincial government had forecast a deficit of Rs 10.17 billion for the current fiscal year The provincial government received a sum of Rs 7.659 billion from the federal government during the said period.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Gap between local oil production and demand surging ​*
KARACHI: The production gap of local refineries is being widened to bridge the thriving demand of petroleum products, surging imports of these products and import bill of the country. 

According to the refined oil production data of October 2007, released by Oil Companies Advisory Committee (OCAC), the total local refineries could only produce 3.4 million various petroleum products during July-October 2007 versus its estimated demand of 6.3 million tonnes. Particularly, the consumption of diesel and furnace oil, which recorded at 7.4 million tonnes and 7.3 million tonnes in the previous fiscal year, have been increasing substantially during the current year and it is being estimated that their demand will increase to 9.1 million tonnes and 8.1 million this year.

During the previous fiscal year, the local refineries could have capacity produce 12.8 million tonnes oil products as against the demand, which stood at 17.5 million tonnes.

Therefore, the difference was met through imports in which two-heavy weights furnace oil (FO) and diesel (HSD) constitute around 82 to 83 percent of total countrys oil imports. During the last fiscal year, the import of FO and diesel were posted 8.2 million tonnes and is expected to increase in the current fiscal year. 

Analyst, Farhan Mehmood said the local demand and production gap have been increasing due to high consumption of FO and diesel in power and transport sector.

He added that difference of 5 million tonnes in local production and demand will surge to 8 million next year in the country. Hence, the oil manufacturing companies (OMCs) will have to import more petroleum products that will enhance import bill and current account deficit of the country.

Although, local refiners production tonnes of petroleum products is increasing but the thriving demands could only be met by new refineries., he said. The recent overhauling of Pakistan Refinery Limited (PRL) and Park-Arab Refinery Limited (PARCO) production units have enhance production of HSD & FO during Jul-Oct 2007, which was up by 21 percent and 26 percent as against corresponding months of last year respectively. But, these are deficit products as their local production meets only 47 percent and 45 percent of the local demand for HSD and FO, respectively. Hence, any variation in their domestic demand does not have any impact on production.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Great potential for JVs between Pakistan and Turkey​*
KARACHI: Consul General of Turkey, Erdem Mutaf said that there exist a great potential of trade and joint ventures (JVs) between Pakistan and Turkey and both countries could gain fruitful results by mutual cooperation. 

He was talking to the members of Karachi Chamber of Commerce and Industry (KCCI) on Friday.

He said business and trade community of Turkey is interested to initiate JV in the areas of machinery, chemicals, surgical instruments, automotive industry, textile and clothing, natural stones, ceramic, IT and software, shipping, jewellery and construction. 

Mr Mutaf said our bilateral trade volume increased from $130 million in 2001 to nearly $600 million in 2006. We target to reach $1 billion in near future, he added. He pointed out that there were bright chances of investment as cumulative inflow of net foreign direct investment in Turkey exceeded $50 billion during 1980-2006. Tourism industry in Turkey enjoys tax exemption, he said.

He said Turkey has become 17 biggest economy in the world with a nominal GDP exceeding $400 billion, besides GDP per capita income of $5,500 and set a target for 2010 to become one of the ten economies in the world with a GDP per capita income of $10,000. He also informed that senior vice president, KCCI, Iftikhar Ahmed Sheikh said invited the Turkish businessmen to participate in My Karachi, An Oasis of Harmony exhibition on June 6-8, 2008 at Karachi Expo Centre.

He said Karachis share in the countrys financial activities is about 40 percent, 30 percent of manufacturing, 40 percent of large scale manufacturing, 50 percent of bank deposits and 68 percent of tax revenues. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Soomro for highest standards of corporate governance, transparency ​*
* Chairman, Karachi Stock Exchange (KSE) Chairman Shaukat Tareen calls on Soomro at Prime Ministers Secretariat

ISLAMABAD: Caretaker Prime Minister Mohammadmian Soomro has underlined the need to focus on achieving the highest standards of corporate governance, transparency and professionalism in equity market in order to strengthen investors confidence. 

Talking to the Chairman, Karachi Stock Exchange (KSE) Shaukat Tareen, who called on him at the Prime Minister Secretariat here on Friday, Soomro emphasized that high standards of corporate integrity and excellence are of fundamental importance for development of any capital market.

The reforms introduced by the Security Exchange Commission of Pakistan (SECP) to provide transparency and better governance of the capital market needs to be recognized and appreciated, as it would provide solid foundations to attract more investors domestically and internationally, the PM added. 

SECP had been actively pursuing a capital market reform programme, geared towards development of a modern and efficient corporate sector and capital market, based on sound regulatory principles that provide impetus for high economic growth, Soomro said adding that the reforms introduced in the fields of risk management, governance and transparency had significantly contributed towards the growth and development of capital market and building investor confidence, he added. 

The Prime Minister said that the capital market in Pakistan had played a positive role in development and expansion of the economy. Like other sectors of the economy, he said, the capital market had also done remarkably well, although there was a lot of room for further improvement. 

The capital market had witnessed rapid progress through structural reforms in both its institutional set-up and operational matters.

The Prime Minister emphasized that high standards of corporate integrity and excellence are of fundamental importance for development of any capital market. He underlined the need to focus on achieving the highest standards of corporate governance, transparency and professionalism in order to strengthen investors confidence. 

Although companies, he said, had been able to raise some capital but further efforts needed to be made to encourage companies to raise capital through fresh equity offerings, which would serve to deepen the market and develop the retail investor base. 

KSE Chairman briefed the premier about the activities of the KSE and said continuity of reforms, which cover the capital market and insurance would also result in increased economic growth, better transparency and enable Pakistani capital market to attract domestic and foreign capital.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan always welcomes foreign investment: PM​*
ISLAMABAD: Caretaker Prime Minister Mohammadmian Soomro on Friday said Pakistan had always welcomed foreign investment to allow friendly countries to take advantage of Pakistani markets and investment friendly policies. The prime minister said this while talking to Aizaz Sarfraz, Managing Director, Pak-Iran Joint Investment Company, who called on him at the Prime Ministers Secretariat here on Friday. This trend, he said, was being encouraged so that joint-investment companies could participate in industrial projects, financial services as well as infrastructure projects. Iran, he said was an important investor and trading partner of Pakistan and the relations between the two countries were developing well. The Prime Minister said that besides Iran, Pakistan had joint venture investment companies with Kuwait, Saudi Arabia, Libya , Brunei and China. 

There were several other ventures under consideration with other countries, he said. This model of cooperation between institutions of friendly countries had been a catalyst to promote investment and trade between Pakistan and these countries, he added. Soomro said that the government economic strategy was to create an enabling environment for the private sector to become an engine of growth. Our strategy for improving the investment climate is multi-pronged - marked by financial sector, trade and taxation reforms, dismantling of archaic procedures, better enforcement of civil contracts and documentation of property rights, infrastructure development and, above all, ensuring consistency and continuity of government policies, he maintained. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Study identifies 100 items for exports to China​*
* Currently, Pakistan exports $460 million worth of exports to China and the countrys export base is just confined to four or five items

KARACHI: Over 100 items have been identified to enhance and diversify the exports to China under Free Trade Agreement (FTA) contrary to present narrow base, which is consisted of few major items, a government study suggests.

Government and the private sector in Pakistan should make joint efforts to increase the base for production of these items as well as improve their quality preliminary report on Pak-China FTA of WTO Cell, Trade Development Authority of Pakistan (TDAP) recommends.

Officials, however, pointed out that this preliminary study is first phase and now it is being discussed with the private sector to incorporate their recommendations in it to forward to top level to further discuss it with China so that the county could benefit from the FTA maximum in future.

It will not only focus on increasing the existing exportable items but will also focus on diversification of export base by identifying those items which are imported by China from different country sans Pakistan, they added.

Currently, Pakistan exports $460 million worth of exports to China and the countrys export base is just confined to four or five items, which makes major part of the exports. 

Following the signing of FTA with China, export volume of $5 billion is being estimated in the future. This export figure could only be achieved through broadening and diversification of export base, the officials felt.

The study outlines the existing and indicative potential of Pakistans exports to China by placing these items in four different categories (1) top 20 items in terms of value exported from Pakistan to China, (2) top 40 import items of China in terms of value, for which Pakistans share is insignificant, (3) 32 items imported by China for which Pakistans share is nil in terms of value and (4) 29 export items of Pakistan, of which the total or a greater share (66-100 percent) is exported to China. 

Study pointed out that narrow base of the exports to China could be gauged from the fact that there are top 20 items, which constitute 85 percent of Pakistans total exports to China and 9 of these top 20 items belong to the category of cotton yarn and their share in top 20 items is 54 percent. On the other side, the share of the top 20 export items of Pakistan to China, in the total imports China, was only 2.4 percent.

Cotton yarn is the single largest export item, with 47 percent share in the total exports from Pakistan to China. 

Out of these 20 items, only four items relating to fabrics and metals have been zero-rated immediately under FTA whereas 12 items relating to cotton yarn, fish and PTA would be zero rated after 3 years under the provisions of FTA. 

Pakistan is the largest trade partner of China in cotton yarn. However, it is amazing that China has put one item cotton, not carded or combed in the sensitive list despite the fact that China is the biggest importer of this particular item in the world. 

Also, three items relating to leather are out of the Pak-China FTA despite the fact that China is worlds top importer of these items. 

The inclusion of these items in the FTA will not hurt China and its other trade partners because of the fact that the unit price of Pakistani leather goods exported to China is comparatively higher than those imported from other countries, the officials pointed out.

Daily Times - Leading News Resource of Pakistan


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## Neo

*SBI to raise $4 billion to meet credit demand​*
NEW DELHI: State Bank of India (SBI), the countrys biggest bank, will raise 160 billion rupees ($4 billion) to help meet credit demand and compete in the booming economy after the government on Friday approved a rights issue. 

Competition in Indias banking sector may intensify in 2009, when Indian authorities are scheduled to review controls on operations of foreign banks. 

The government, which already owns about 60% of SBI, would invest 100 billion rupees ($2.5 billion) in the issue, Finance Minister Palaniappan Chidambaram told reporters. 

The government will subscribe fully to its share, Chidambaram said. The share sale is likely to be completed in the fiscal year to March 2008, the government said in a statement. 

Shares of SBI, valued at $30 billion, rose as much as 4% before ending up 1.3%. The shares have risen 85% this year, outperforming a 40% gain in the main index. The rights issue would equip SBI with capital to compete with local and foreign rivals, said Jigar Shah, head of equities at brokerage KR Choksey. 

Capital adequacy is a major issue. It will help the bank make investment in technology and other things to transform itself and face the new situation, Shah said. The government would pay for its shares by issuing securities to SBI, but said it had not finalised the number of shares it would subscribe to, or the coupon or tenure of the instruments it would issue. 

SBI is facing tough competition from ICICI Bank, HDFC Bank and foreign banks such as HSBC, Standard Chartered and Citigroup, which are growing in rapidly in India. 

Receipts: The government said its investment in the issue would help it get dividends and taxes amounting to 13.58 billion rupees from the bank in 2008/09 against an estimated expenditure of 7.9 billion rupees for interest to be paid to the bank. In the following year, it would receive 15.52 billion rupees, and in 2010/11 the amount would rise to 18.92 billion rupees, it said. 

(SBI) will gain in terms of its position in the industry, ratings  both in international as well as domestic markets, and increased valuation of its stock, besides boost to the economy at large, the government statement said. 

Indian banks have been raising funds to meet the demand for loans from consumers and corporates in Asias third-largest economy, which grew 9.4% in the fiscal year to March 2007. Chidambaram said on Friday he expected the economy to grow by nearly 9% in the current fiscal year also. 

Earlier this year, leading private bank ICICI Bank raised $4.9 billion in Indias biggest-ever share sale, while HDFC Bank raised $698 million by selling American Depositary Shares to strengthen its capital base and to support future growth. reuters

Daily Times - Leading News Resource of Pakistan


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## Neo

*President asks government to maintain growth trajectory ​*
ISLAMABAD (December 01 2007): President Pervez Musharraf on Friday unveiled agenda in his first address to caretaker Cabinet at Awan-e-Sadar, asking the policy makers to do whatever they can to stop downward trend in the economy. He said he was also all-out for supporting the caretaker government to hold free, fair and transparent general elections on January 8, 2008.

He said: "As a President my first priority would be to make sure that Pakistan's economy maintains its growth trajectory and its effects trickle down to the people for improvement in their living standard." He asked the caretaker Cabinet to remain neutral to establish its credibility for January 8 elections and make all possible arrangements to make them free, fair and transparent.

He said that holding of general elections was a big challenge for the caretaker government and it must come up to the expectations of all parties. He recalled the events of last few months, and Shaukat Aziz's government's economic achievements.

He said that Pakistan's economy absorbed big shocks like October 8, 2005 earthquake and many others during the last few years and it was time to take judicious decisions to make sure that the economy did not suffer any setback.

He said the caretaker government was required to do even more hard work and make Pakistan stronger in all senses. Musharraf said that as President he would be available for the government for all-out support to achieve the objectives for which they have been brought in.

He added that Pakistan was making good progress on economic front for the last five to six years for maintaining economic growth rate over 7 percent for the last four consecutive years. He noted that Pakistan's key fundamentals were indicative of promising economic growth but some unfortunate developments badly affected the economic growth to reverse the process.

He said the caretaker government was a good combination of experienced economists, technocrats and politicians and it should deliver on all fronts to make sure that Pakistan maintains the journey of success in coming years.

He directed for taking all-out measures to overcome the shortage of electricity and other inputs to facilitate the industrial sector for improving its efficiency and produce more for getting more share in the global market for increasing exports to a reasonable level.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Government wants private sector to become an engine of growth: Prime Minister ​*
ISLAMABAD (December 01 2007): Caretaker Prime Minister Mohammadmian Soomro on Friday said Pakistan has always welcomed foreign investment to allow friendly countries to take advantage of Pakistani markets and investment friendly policies.

This trend, the Prime Minister said, is being encouraged so that joint-investment companies can participate in industrial projects, financial services as well as infrastructure projects. He was talking to Aizaz Sarfraz, Managing Director, Pak-Iran Joint Investment Company, who called on him here at the Prime Minister Secretariat on Friday.

The Prime Minister said Iran is a very important investor and trading partner of Pakistan and the relations between the two countries are developing very well. He said besides Iran, Pakistan has joint venture investment companies with Kuwait, Saudi Arabia, Libya, Brunei and China. There are several other ventures under consideration with other countries, the Prime Minister said. This model of cooperation between institutions of friendly countries has been a catalyst to promote investment and trade between Pakistan and these countries, he added.

"Our strategy for improving the investment climate is multi-pronged - marked by financial sector, trade and taxation reforms, dismantling of archaic procedures, better enforcement of civil contracts and documentation of property rights, infrastructure development and, above all, ensuring consistency and continuity of government policies", he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan's poverty rate declined by five percent: World Bank ​* 
KARACHI (December 01 2007): The World Bank is of the view that to end poverty in a generation, South Asian economies must sustain an economic growth rate of 8-10 percent a year. The World Bank Annual Report-2007 made available to the press the other day said Pakistan's poverty rate declined 5 percent in the first half of this decade.

With growth has come an impressive reduction in poverty. "During the 1990s, poverty rates fell 7 percent in India, 9 percent in Bangladesh, and 11 percent in Nepal. Pakistan's poverty rate declined 5 percent in the first half of this decade. But to end poverty in a generation, South Asian economies must sustain an economic growth rate of 8-10 percent a year."

The report says that rapid economic growth and progress in human development have raised the possibility that the region with the greatest number of poor people could end mass poverty within a generation. Following domestic reforms and external assistance, gross domestic product (GDP) in South Asia has grown at an average of nearly 6 percent a year for the past decade.

According to report, growth in the two largest countries, India and Pakistan, reached 7 percent in the past two years. In 2006, GDP in South Asia is estimated to have expanded at very rapid pace of 8.2 percent.

The report has, however, pointed out that South Asia still has some of the worst human deprivation in the world. Levels of child malnutrition in India are nearly twice those of Africa. In Pakistan, one child in ten dies before the age of five, and only one in three completes primary school. About one person in five in South Asia lacks access to water services, and some two-thirds lack access to sanitation.

The report says that perhaps the most fundamental change is the need for improved governance. Several South Asian countries suffer from endemic corruption, with Bangladesh scoring near the bottom of Transparency International's Corruption Perception Index for the past six years.

Weak governance and corruption - reflected for example, in high levels of teacher absenteeism or rampant procurement problems at power plants - are key bottlenecks to human development and growth.

"Confrontational and often personality-based politics plague Bangladesh, Sri Lanka, and some other Indian states, sometimes to the point of political violence. In parts of Afghanistan, Nepal, and Pakistan, conflicts between state and non-state actors plays out regularly." The report says that the challenges facing South Asia can seem daunting, the region's ability to grow and to reduce poverty suggests that they can overcome their problems. The WB sees itself well equipped to support that effort.

The report sees regional integration is one way to achieve some of the goals set for the betterment of the people. South Asia is sitting on a rich potential source of growth.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*$100 million loan for KPT berths: Pakistan and World Bank negotiating interest rate*​
KARACHI (December 02 2007): Pakistan Government and World Bank (WB) are negotiating the interest rate on a $100 million loan sought by Karachi Port Trust (KPT) for the reconstruction of berths at Karachi port. The KPT has sought a $100 million loan from WB under 'Emergency Finance Facility' (EFF) to reconstruct berths No 10 to 17, sources in KPT told Business Recorder on Saturday.

"After conceptual approval of the project by CDWP (Central Development Working Party) the government and the World Bank are negotiating interest rate on the loan", sources in KPT said.

While any breakthrough in the loaning talks were likely to surface in 6 to 7 months, interest rate was likely to take 2 to 3 months to be determined, they said. "The process would roughly take six to seven months, after which we would go for PC-1 of the project, which may include an estimated cost of Rs 6 billion", they said.

According to them, KPT is quite hopeful about the grant of loan from WB. "We entertain great optimism as KPT is the only government institution which is not running in loss...We have great credibility; the Bank has already been engaged with us on the Karachi Dock Labour Board issue and it knows us well", they added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Rain to increase wheat production in arid areas ​*
ISLAMABAD (December 03 2007): The recent rain spell is expected to produce more wheat, worth Rs 8 billion, in the arid areas of upper Punjab and NWFP, which could help the country achieve wheat production close to the annual target of 24 million tons, sources told Business Recorder on Sunday.

However, independent analysts were of the view that achieving wheat production close to ambitious target would remain a distant dream because of the wrong wheat policy being pursued by the present government.

The estimates prepared by the Ministry of Food, Agriculture and Livestock (Minfal) after the recent rain, which ended the over two-month dry spell, would help the country to achieve at least close to target wheat production, sources said.

This year's wheat production target is 24 million tons. The dry spell had dimmed the prospects of achieving, or even closing in, the production targeted, according to sources. At present, the country is in near-to-crisis situation as the government machinery has been unable to stop wheat smuggling because prices in international market are higher than in the country.

The rain would have positive impact on around 4 million acres in arid areas of upper Punjab and NWFP. As the dry is now over, estimates of Minfal now show that 160 kg/acre more wheat could be expected from these areas.

According to sources, the rain has brightened the prospect of achieving the overall agriculture growth target of 4.8 percent for the current fiscal year, though the cotton production remains short of the target.

The government expects that farmers would sow more wheat as there is shortage of the commodity not only within the country but also in the world.

Despite the expectation from the farmers the government has not yet fixed the support price for wheat, and the agriculture managers are still of the view that the farmers would go for extensive wheat sowing both in irrigated and rain-fed areas.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Smeda to modernise sports goods manufacturing ​*
SIALKOT (December 03 2007): Small and Medium Enterprise Development Authority (Smeda) has finalised arrangements for setting up a product development centre at a cost Rs 443 million here to enable local industry aggressively enter the international market of composite based sports items.

Official sources told APP that the step was being taken to enable the sports goods industry adopt new manufacturing technologies including composite material and enter into the largest segment of sports goods exports.

The PDC would extend services like product testing (physical and chemical), provide skilled workforce to the sector, enhance productivity by providing technical support services to new and existing industrial units, help to develop imported machinery locally through reverse engineering and facilitate in increasing exports of composite based sports goods.

Sialkot globally known as producer of quality products in sports goods, surgical instruments, leather garment, gloves and accessories, sportswear and musical instruments.

The 'composites' have replaced traditional materials and have become affordable as well. For instance in the production of tennis rackets wood was the only material for the frames but these are now being made with synthetic high performance materials.

The trend of tubular steel and aluminium rackets started in 70s as these were lighter than wood and remained unaffected by temperature change.

At present 95 percent of all tennis rackets are being produced with composite materials. The other sports goods equipment like field, roller and ice hockey sticks, ice skates, golf clubs, fishing rods, tackles base bats, billiard cues etc are also in composite materials.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Building on economic gains​*
THE business community, though jittery over the risk-ridden phase of political transition, is hoping that the key actors in politics would conduct themselves responsibly to build on, what they call current economic gains.

New investors are watching and waiting but those already committed are still upbeat about the prospects of their investments. Despite many odds and political complexities, they find Pakistan to be an attractive destination for their bet with a promise of profit margins high enough to mitigate the risks involved.

Locals pray for stability and continuity of the current set of policies that they felt encouraged private sector like never before. For once, instead of recalling problems posing threat to their businesses, the corporate hierarchy, sensing the blowing winds of change, focused on reasons that earned General Musharraf their backing and why the next government must follow economic policies of the last regime.

Most businessmen contacted, trying to sound positive, were careful in their choice of words when commenting on the current political developments. The community trying to pose neutral, however, has drifted from its earlier preference for a military dominated dispensation. Now they seem to be making an attempt to rediscover the bright side of a democratic Pakistan for business, particularly in context of international trade.

Zubyr Soomro, Citibanks country officer who heads Overseas Investors Chamber of Commerce and Industry (OICCI) told Dawn that foreign investors who are members of this powerful grouping are going ahead with their investment plans. I do not know of any foreign member company that has put their earlier investment plans on hold. Yes, there is concern over law and order and stability of the future government but measures of the government over the last few weeks have rekindled the hope of a peaceful transition.

There were some reports in newspapers earlier last week suggesting that auto-makers are revising their production targets downwards in wake of falling demand. Some press reports also indicated a fall in the level of activity in luxury items, consumer durables and real estate sector. It, however, is true that so far industrial activity in any part of the country has not been affected in noticeable proportions because of the political turmoil.

Textile tycoons from Punjab were more articulate in explaining their position. We are indifferent towards political parties in the field but hoping that the next elected government would recognise economy as key driver and treat it accordingly, said Shafqat Illahi, Chairman All Pakistan Textile Mills Association (APTMA) from Lahore.

Some international investment advisors have termed fears of abrupt reversal of economic reforms rooted in ignorance.

An analyst of investors advisory group Eurasia reported to have said that fears about the future of economic reforms do not hold ground because General Musharrafs reforms have been institutionalised. No new government is likely to reverse the proforeign investment environment in that country, she said while talking to an Indian newspaper.

Majyd Aziz, a senior business leader and expresident of Karachi Chamber of Commerce and Industry wanted the West to reciprocate the pro-democracy steps taken by the president by removing impediments to closer economic ties that include greater market access to Pakistani exports in their markets on favourable terms.

Mirza Ikhtiar Baig, another business leader from Karachi, who intends to fight in the up coming election on a Peoples Party ticket, also found fears of his community towards a political government misplaced.

A long stability can only be achieved under a democratic government. Look around and see where private sector is prospering most. The growth of the private sector in India proves the point, he said. He felt that political leadership needs to allay the fears of the business community by pledging to give a clean and an efficient government committed to progress with emphasis on continuity of reforms.

Another local leader from Korangi industrial area, Haseeb Khan expressed his frustration over the western powers pressurising General Musharraf unnecessarily. We told all diplomats who invited us over that the imposition of emergency does not affect us in any way and yet they are pushing him to retract steps he took in good faith to deal with chaos in the country, he said.

On the preferred composition of the next elected government and the time process of transition could take, there was divergence of opinion amongst movers and shakers of the community. Zubyr felt that the dust would take another three months to settle down. He said that the caretakers who do not have a burden of constituency could help the next elected government by taking necessary difficult decisions such as readjustment and rationalisation of oil prices right now.

He said he would like to see people of integrity and capability in the next government so that the quality of governance is further improved. He said his members are waiting for the political parties to make their economic vision public so that they could form an opinion on the basis of their economic programmes.

Recently Dr Salman Shah, caretaker finance minister, in an interview, hinted that some harsh economic decisions are on cards and could be announced next week.

Majyd Aziz does not see normalcy restored before June next year. He foresees a coalition government assuming power after elections. He urged all political parties to participate in elections to pull the country out of the current crisis.

Political parties would be disenfranchising people if they decide to boycott the general elections. The next batch of rising stars in business community, in my view, would be those who invested in agribased industry. Nawaz rewarded Chunia crowd, Shaukat Aziz favoured bankers and brokers, time ahead seems to be of businessmen with interest in rural economy, he said.

A senior bureaucrat who heads a powerful regulatory body saw nervousness of businessmen towards a change in the government to be rooted in the culture of patronage. It would be absurd to try to find some philosophical meaning to the discomfiture of businesses towards political transition.

The reason is simple: a change could throw their business feasibility to winds as it is often based on an individuals connections with higher-ups. Let there be strong institutions and let the business be operated professionally to minimise the cost of change to businesses. This would take the wind out of their resistance to change, he stressed.

On November 29, General Pervez Musharraf swore in as civilian president, in presence of about 1,800 VVIPs in Islamabad, presumably to try out the democratic option to deal with the challenges the country is faced with. As a reconciliatory gesture towards political parties or under pressure of friends overseas he also announced lifting of emergency on December 16.

Building on economic gains -DAWN - Business; December 03, 2007


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## Neo

*Has US-Pakistan investment treaty been shelved?​*
WHAT secretary of Pakistans Board of Investment stated mid-November about the future of the US-Pakistan bilateral investment treaty is no different from what other senior officials concerned had been saying during the last two years or what even President Musharraf plainly said on the eve of President Bushs visit to Pakistan in 2006.

Mushtaq Malik was at pains to say that after a long-drawn exercise of negotiations spread over more than three years, the US now appeared unwilling to sign the bilateral treaty. Why the US has assumed this posture was also answered by him. Its so because Pakistan was unwilling to accept the terms  the harsh terms  that the US puts premium on.

An intriguing aspect of how the Americans conduct their dialogue with the developing countries  which are too eager to conclude a free trade agreement with it under an illusion that it will sky-rocket their exports  is the negotiating fatigue which they deliberately employ. Keeping pace with the complex mode of negotiations puts a great strain on under-resourced officials and ministries of a government like Pakistan who often have little access to necessary information.

Pakistan, Mr Malik said, has been informed that the United States is not keen to sign the BIT with it because its socio-political fundamentals were not right for such a treaty or a free trade agreement (FTA), meaning the US does nott stand to gain from it the way it desires.

But if we grant these concessions to the United States, we will have to offer the same to 48 other countries with whom Pakistan had signed (or is in the process of signing) this treaty (or FTA), said Mr Malik. The fact remains that in case of certain countries, the US deems it necessary to conclude a BIT before going for an FTA.

The beauty of Americas snub is that the treaty is neither being signed nor being abandoned, although there is little doubt that its fate has been sealed. Instead, the reports are that the US is more keen on concluding a similar BIT (and later an FTA) with India at the earliest. But the latter is reluctant because of the harsh terms.

Pakistan is supposed to officially reply to the US but since the attorney-general (who is to look at legal aspects of the whole matter again) is too busy at the moment, so it may not do so in near future.

Negotiations with Washington on the investment treaty, which from the very outset has been a non-starter, have been quite problematic. Speculation about its making satisfactory headway has been on-again and off-again during this period. Only five months ago, acting US Ambassador Peter Bodde had told a Pakistani TV network that some headway in mutual investment agreement has been made but a fortnight later an English daily reported that the treaty talks were in doldrums. When President George Bush visited Pakistan in March 2006, there were all indications that a signing ceremony was part of his itinerary but it was later cancelled and its reason, as described by General Musharraf himself, was presence of some provisions in the draft text which were highly objectionable and needed to be re-negotiated.

After the visit, the then US Trade Representative (USTR) Susan Schwab met Pakistans Commerce Minister Humayun Akhtar Khan first in August and then in Cairns (Australia) in September to discuss the treatys progress. Apparently, there was no breakthrough on the contentious issues. But little is known if the controversial provisions, which mostly related to security of investment and intellectual property rights, were re-opened to a fresh round of discussion or not.

Then, in April, Assistant US Trade Representative (AUSTR) Douglas A. Hartwick met Humayun Akhtar in Islamabad and later in October co-chaired the second meeting of the US-Pakistan Trade and Investment Framework Agreement (TIFA) Council in Islamabad. This council is the forum for sorting out each others complaints or demands. Since October 2006, neither any talks have taken place over the BIT, nor had any delegations visited each others country. There prevails an eerie status quo over the matter.

This year, the BIT was not in focus but bilateral discussion on key trade and investment issues did take place between the senior officials of the two sides. In September, the so-called strategic dialogues were held at the foreign office between the US Deputy Secretary of State John Negroponte and Pakistani officials. Later, sub-groups were formed to sort out solution of issues like money laundering, intellectual property rights, investment guarantees, Reconstruction Opportunity Zones in FATA and data exclusivity on pharmaceutical products.

In 2005, the US had given its final text of the proposed BIT and insisted that Islamabad endorse it without any hesitation or amendment. The text included a confidentiality agreement. Pakistan objected to it and stressed that it should be made open so that the investors have no apprehensions about it. Then, there was a clause about pre-establishment phase of investment according to which if a US investor suffers a loss when he is still in the process of establishing his business in Pakistan, he would have to be compensated through a court of law.

Many BITs contain a clause under which if a dispute cannot be settled amicably and procedures for settlement have not yet been agreed to within a specified period, they can be referred, for example, to the World Banks International Centre for Settlement of Investment Disputes (ICSID) or the UN Commission on International Trade Law (UNCITRAL). Nafta lets unhappy investors choose between the two. Both recourses, however, represent the privatisation of commercial justice.

Pakistan is reluctant to accept the ICSID as a forum for dispute resolution or arbitration, which the US favours, but would agree to the UNICITRAL for this purpose. Earlier, the attorney-general of Pakistan and other legal experts had cautioned Islamabad against rushing into signing bilateral investment treaties (BITs) with foreign countries (the US in particular) for these can create painful legal implications.

Americans want intellectual property rights to be part of the treaty as they are too unhappy over the inadequacy of IPR protection in Pakistan. The US Trade Representatives annual report has been placing Pakistan each year, since 1989, on Priority Watch List or Special 301 for piracy and counterfeit problems. The establishment of Pakistan Intellectual Property Organisation (PIPRO), though admired, has not satisfied the US authorities and the US copyright industry remains disappointed.

However, American authorities are now less outspoken because of Pakistans lead role in the war on terror and have asked the USTR to discontinue further investigations into the rampant copyright violations until this phase of relationship is over.

Resumption of negotiations over the bilateral investment treaty shall not take place until Pakistan agrees to have stiff enforcement of IPRs and the resolution of investment disputes the way the US desires, as major clauses of the treaty. Another harsh term to be included is readiness to pay damages to US companies for their future investment in case there was an infringement of IPRs and unilateral cancellation of licences.

According to law ministry officials, US insists that either Islamabad pay immediate compensation to the affected US firms or the World Banks ICSID should pay the compensation and treat the amount as a loan to Pakistan. The US also wants protection of its current investments in various sectors of the Pakistani economy but Pakistan feels that protection and guarantees, if any, can be provided to the investment which comes in after the BIT has been signed.

Experience tells us that the bilateral investment treaties of American initiative often seek following concessions and guarantees from the developing country partner: (1) Every sector of the economy is to be opened to foreign investment. These include health, education, electricity, water and even prisons. (2) National treatment is to be accorded to American companies. National treatment, a WTO term, means equal treatment. (3) US investors will enjoy same privileges as offered to local or any other foreign companies. (4) Expectation of earnings by US businesses must be guaranteed. (5) Compensations to US firms when they do not earn what they expect. (6) US businesses to be protected against any kind of expropriation.

Since WTOs multilateralism has so far failed to deliver as much as many corporations would want, the US and other western governments, on their behalf, are increasingly turning to bilateralism. These negotiations are being used strategically to advance not only US corporate interests, but also the US administrations broader foreign policy and geopolitical goals.

Has US-Pakistan investment treaty been shelved? -DAWN - Business; December 03, 2007


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## Neo

*Options for Punjabs progress​*
By Shahid Javed Burki

PUNJABS future can be portrayed in terms of several different scenarios for the economys growth in the period 2007 to 2020. I will work here with four of them. Which of these will get actually enacted will depend upon public policy choices made by the people who will walk the corridors of power in Islamabad and Lahore in the next few years.

The choices made will cover not only the field of economics but also the areas of politics and foreign affairs. According to the projections made for the four scenarios developed here the provincial GDP would increase at various multiples of the projected increase in population.

The least ambitious picture sees the provinces GDP increasing at a rate equal to twice the rate of population growth. Punjabs population increase is expected to decline to about two per cent per annum over the next decade. Therefore, according to this scenario, GDP increases at a rate of only four per cent. (See the table for details.)

There will be an increase in per capita income of two per cent a year which, given the fairly unequal distribution of income, will not have a significant affect on the incidence of poverty .The provincial gross domestic product will grow by 66 per cent in the 13-year period between 2007--2020.

The number of poor will increase to 30 million and poverty will continue to be a major feature of life in the province. Most of the poor will live in the provinces large cities where they will suffer from the absence of several vital public services. While the level of literacy may increase beyond that reached in 2007, the poor will not have the skills required to find productive employment. With such a large concentration of the poor in large urban centres, the province would come under severe social and political stresses and strains.

The only contribution public policy needs to make to achieve this level of growth rate and sustain it over time is to ensure there are no serious disruptions to overall security in the province, that there is a reasonable amount of continuity in public policy, that the quality of education improves somewhat, that some provision is made for improving health care, and that some effort is made to remove the bottlenecks that have appeared in the availability of fiscal infrastructure. This is a business as usual scenario with no significant change in the structure of the economy.

The second scenario sees an increase in the provincial GDP equal to three times the rate of growth of population. In other words, provincial output will increase at a rate of six per cent a year, with GDP more than doubling in this period. This is very close to the scenario envisaged in the Punjab Economic Report, 2005. This report, prepared in association with the World Bank was based on the assumption that the economy would go through a significant structural change, particularly in the non-farm sectors. It assumed that the economy would be able to create one million jobs a year, a number large enough to absorb the new entrants in the workforce.

To maintain this level of increase in GDP  maintain, since this is the rate at which the provincial output increased in the period 1999-2007  considerable amount of effort will have to be made in creating a pro-growth environment. The 2005 report made a large number of recommendations aimed at realising this growth rate. These focus in particular on improving the productivity of small and medium enterprises and improving the efficiency of the sector of agriculture.

There will be a much larger role for the private sector in the economy with the state confining its activity to mostly regulating private enterprise and making investments in improving physical and human capital. Public policy will also seek to address the problems created by some pick up in the rate of urbanisation. This scenario seems further increase in the proportion of the urban population living in the provinces major cities, in particular in Lahore and the industrial centres of central Punjab.

According to the third scenario, the provincial GDP will increase by eight per cent a year and income per head of the population will grow by six per cent per annum. The size of the provincial GDP will grow by more than two and a half times, increasing from the current $89 billion to $242 billion.

GDP per capita  a better measure of development  will more than double, from less than $1,000 in 2007 to more than $2,000 in 2020.

There will be dramatic effect on the level of poverty, with the proportion of the poor declining to just above eight per cent of the total population to only 10 million.

There will also be a significant change in the distribution of population. By 2020, one half of the 120 million people will live in urban areas. Lahore  counting its suburbs and satellite cities as parts of the city  will have a population of 15 million. It will be one of the worlds mega-cities.

Lahores own output could reach $50 billion with the citys per capita income climbing to $3,300, more than 50 per cent higher than the projected provincial average.

The fourth and final scenario is the most ambitious one. It sees the economy growing at a rate of 10 per cent a year, five times the rate of increase in population.

This scenario will have the province reach the status of a middle income region with the provincial GDP at $360 billion and the income per capita at $3000.

Public policy will play a greater role in achieving this rate of growth. It will focus, in particular, on four aspects.

The main public policy initiative needed to achieve this rate of growth would be to open the economy to the world outside, in particular to India.

This will have a significant impact on the structure of the economy. The ratio of trade to GDP will increaser significantly and reach 50 per cent. In other words, Punjab alone will earn $180 billion in export earnings, most of it from trade with India.

Under this scenario, Punjab will also become the centre of transit trade, with goods and commodities passing through it to and from India, China, Central Asia and the Middle East.

To take full advantage of the opening to India and with the development of transit trade, the province will undertake a major improvement in its physical infrastructure: an intricate network of highways that will serve the traders in all countries with which Pakistan shares common borders.

The government would aid and encourage the development of the components of the service sector needed for handling trade and human traffic.

Some of the major cities and tourist sides will need to be improved to make them attractive for the Indians and people from the neighbouring countries.

The size of the urban areas will not increase beyond those envisaged under the third scenario.

That notwithstanding, the quality of life in the large cities  and to some extent also in the medium- sized and small cities  will improve with better provision of basic services to the population.

One interesting feature of the four scenarios is that the share of agriculture in GDP increases significantly in the last case. This will be the result of the larger proportion of trade in GDP and greater trade with India and the Middle East of high-value added agricultural products.

The share of modern services in the economy will also increase with a sizeable contribution made by the businesses associated with both international trade and transit trade.

In sum, appropriate set of government policies could turn Punjab into a middle-income province within less than a decade and a half.

Its economic transformation would pull along the rest of Pakistan towards a much higher rate of GDP growth than was the case even in the high growth years of the later part of the period of General Pervez Musharraf.



Options for Punjabs progress -DAWN - Business; December 03, 2007


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*Access to housing finance essential for growth ​* 
SBP deputy governor says housing sector generates employment;legal issues restraining development of housing finance

Tuesday, December 04, 2007

KARACHI: Deputy Governor State Bank of Pakistan (SBP) Yaseen Anwar has said that access to housing and reliable urban services are essential for poverty reduction and economic growth in Pakistan.

Despite deficit of six million housing units, absence of legal cover, non-implementation of Recovery Ordinance 2001, frauds in property sale, unregistered transfers and tenancy issues were impeding growth of housing finance, he said.

Addressing the inaugural session of a 12-day Housing Finance Training Program jointly organised by the SBP and International Finance Corporation (IFC), a private sector arm of the World Bank on Monday, Anwar said performance of the country in housing sector was insufficient, Anwar said.

The housing is an important component of the economy that contributes in job creation, expansion of financial services and creation of household wealth, he said. Outstanding mortgage loans in Pakistan were approximately 1 percent of GDP compared to 3 percent in India, 15 percent in Chile and 65 percent in the USA, he pointed out.

The start of housing finance by commercial banks along with state owned House Building Finance Corporation (HBFC) calls for capacity building for improving skills to design the product and ensure that risk attached to such lending was quantified and minimized. 

He said that objective of this SBP-IFC training program is to address the area of expertise in financial institutions, assuming that capacity building in mortgage lending will increase housing finance activity in Pakistan. As the population and urbanization increase we need to develop the housing finance market.

He said Pakistan, with 162 million people, was ranked number sixth on the worlds population index, 70 percent reside in rural areas and 15 million people migrate from rural to urban areas each year and it was forecasted to increase year to year. The obvious reason was that the bulk of the GDP was generated in urban locations. 

According to 1998 official statistics, there were 19.3 million households in Pakistan, with an average household size of 6.6 persons and occupancy at 3.3 persons per room and out of total housing units 39 per cent comprises over mud houses. Currently incremental demand for housing is estimated at 570,000 units annually whereas only 300, 000 units are being built and majority of these are in urban areas.

He also shared that till June 2007, total disbursement by all banks/DFIs in housing sector was Rs116 billion, of which share of government owned HBFC was Rs40 billion and Rs76 billion was of other banks.

He said that in FY04, FY05, FY 06 and FY 07, disbursement data for housing finance reflected substantial growth of 24.8 percent, 56.0 percent, 38.2 percent and 27.7 percent respectively. However, market share of HBFC has declined due to the emergence of the banking sector in housing finance. In 2002-03, the share of HBFC was 89.5 percent, which was reduced to 34.2 percent by FY07. 

The rising trend of commercial banks in respect of their market share in housing finance is likely to continue in the future, Anwar foresaw and maintained that banks were primarily focusing in major cities and selected areas for providing financing and their average loan size is Rs2.5 million while HBFC serves low income borrowers with an average loan size of Rs75,000.

Deputy Governor pointed out that lack of enabling legal framework, non implementation of Recovery Ordinance 2001, fraudulent sale of property after an attachment order to an innocent purchaser without full disclosure, unregistered transfer of immovable property and problems generated by tenancy and urban rent control laws besides of many more are the major constraints in the growth housing sector in the country. 

He told participants that SBP had taken certain initiatives to remove constraints in the growth of housing sector including establishment of a special department for Infrastructure & Housing Finance, Housing Advisory Group (HAG), dissemination of HAGs recommendations to the city and provincial governments besides of capacity building of commercial banks/DFIs on mortgage lending and infrastructure finance with the assistance of World Bank/IFC as around 200 SBP and banks/DFIs officers will be trained in first stage and it will be an ongoing process. 

He hoped that all SBP initiatives and training program would bring together mortgage lending experts and commercial bankers to deliberate all issues confronting mortgage lending in Pakistan.

Access to housing finance essential for growth


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*Pakistan, Turkey talk trade hurdles ​* 
Tuesday, December 04, 2007

ISLAMABAD: Pakistan and Turkey discussed major impediments to enhancing trade on Monday which included lack of land and shipping transportation system, minimal consultation of business communities of both the countries and sharing of information.

The discussion came during a meeting between a 42-member visiting trade delegation of Turkey, led by M Rifat Hisarciklioglu, Chairman of the Union of Chambers and Commodity Exchange and Federation of Pakistan Chambers of Commerce and Industry President Tanvir A Sheikh. Business and trade community of the country was also present.

Currently, bilateral trade between the two countries is about half a billion dollars which is very nominal. However, both the governments have agreed on its enhancement through cooperation in tourism, construction, transport, energy, information technology and other sectors.

For augmenting bilateral trade, Pakistan has also sought Turkish governments certification for high-quality Pakistani leather and surgical goods.

Pakistan is manufacturing quality leather products, ISO-certified surgical equipment and sports goods, which could have a larger share in the Turkish market and the US and EU through Turkey, as there exists scope for third country exports in these areas.

M Rifat Hisarciklioglu said Pakistan was becoming a new trade and energy corridor and its economic performance had been impressive and was one of the fastest economies of the Asian region.

Talking about Turkish economy, he said our economy is the 17th largest in the world with GDP worth $400 billion. Turkish exports during the last five years increased by 100 per cent and currently stand at $100 billion, of which about 92 per cent are industrial goods.

Last year, Ankara attracted $20 billion in foreign direct investment and today about 165 Turkish construction companies are working in other countries. It is worlds 10th best preferred tourism destination and about 20 million tourists visit our country, he said.

FPCCI President Tanvir A Sheikh said there were many areas such as tourism, education and culture where Pakistan and Turkey had common perceptions and interests. However, over the years, the two brotherly countries have not been successful to exploit the tremendous potential that exists for mutual cooperation in trade, business and industrial joint ventures.

Talking about trade, he said for the last six years, bilateral trade volume has improved by 267.8 per cent from $147.6 million in 2001 to $543 million in 2007.

The business community of Pakistan is keenly waiting for the signing of the proposed Free Trade Agreement (FTA) which can even enhance our bilateral trade beyond $1 billion provided serious efforts are made by the private sectors of both countries.

The privatisation programme of Pakistan had attracted investors from the UAE, Malaysia, China and Europe, he informed and said the liberal investment policy included 100 per cent foreign equity in all economic sectors, with attractive incentives like remittances of capital, profits, royalty, technical and franchise fees without obtaining permission from the government. Foreign investment was fully protected under Foreign Private Investment (Promotion & Protection) Act 1976 and Protection of Economic Reforms Act 1992, he added. 

Pakistan, Turkey talk trade hurdles


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*Private sector credit to pick up in H2: SBP governor *​ 
Tuesday, December 04, 2007

KARACHI: Dr Shamshad Akhtar, Governor of the State Bank of Pakistan (SBP), has said disbursement of credit to the private sector gained momentum significantly in October-November 2007 and is likely to pick up further in the second half of the current fiscal year 2007-08.

She was chairing the second meeting of the Private Sector Credit Advisory Council held here at the SBP headquarters on Monday. The meeting dwelt at length on recent trends and issues relating to availability of credit to the private sector and discussed ways and means to enhance credit disbursement to key sectors of the economy.

Dr Akhtar said the growth in private sector credit was broadly in line with last two years comparable period growth, and expanded by Rs103.1 billion in the period from July 1, 2007 to November 24, 2007. Private sector credit growth in FY07-08 mainly reflected convergence to its long-term trend, relative to the surge observed in FY05-06 due to several years of pent-up demand and need for investments in BMR by the industry.

The SBP governor stressed that in FY07 the credit growth supported effectively the growth in real economic activity. It is expected that private sector credit disbursement this year will continue to support economic growth as the SBP has continued to efficiently manage liquidity.

The private sector credit is expected to pick up in the second half of FY08 as investors launch the pending projects and various IPP (Independent Power Producers) projects are also in pipeline involving investment of around Rs100-120 billion, she said.

There was a general agreement that the private sector credit has been impacted, among other things, by (i) banks adopting cautious lending stance given the experience with loan defaults in some sectors; and (ii)mergers and acquisitions have required banks to focus on restructuring, while adjusting their portfolios and rationalising their branch network. However, banks after their restructuring and upgradation of their credit policies and risk management systems are expected to be positioned better for credit delivery in the coming years.

During the meeting, relevant directors of the State Bank made detailed presentations on Agricultural Finance, SMEs Finance, Consumer Finance, Infrastructure & Housing Finance, Microfinance and Islamic Banking Finance to point out issues/constraints in the growth of credit in respective areas and initiatives taken by the SBP to resolves these issues.

While concluding a comprehensive discussion on above-mentioned subjects, the SBP governor announced the setting up of a task force for the development of mortgage financing and a task force to devise a mechanism for rating of SMEs. 

Private sector credit to pick up in H2: SBP governor


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## Neo

*Accor, EOBI sign accord for hotel in Pakistan ​* 
Tuesday, December 04, 2007

KARACHI: Accor here on Monday signed an agreement for the first Novotel hotel in Pakistan, The Novotel Lahore Airport.

Scheduled for opening in mid-2011 with 250 rooms, the 4-star hotel forms an integral component of a mixed-used development which also comprises a shopping centre and residential towers. The Novotel Lahore Airport will be owned by PRIMACO on behalf of the Employees Old-Age Benefits Institution (EOBI) and managed by Accor, said Christophe Landais, Managing Director, Accor Middle East, while speaking at a press conference at the agreement-signing ceremony.

The signing of the Novotel Lahore Airport is an exciting step for us as we further our presence in Pakistan, he said and described the opening of this new modern hotel as a significant development. The Novotel hotel and commercial complex, valued at over rupees five billion will be constructed on a 13,000-square yard plot at Lahore International Airport. 

Accor, EOBI sign accord for hotel in Pakistan


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## Neo

Tuesday, December 04, 2007 

*Industrial land in Karachi, the most expensive in region​*
* Industrial real estate dearer in Karachi than China, Malaysia, Thailand, UAE, Sri Lanka and India

ISLAMABAD: Industrial land in four successful industrial estates in Karachi is more expensive than the real estate available in industrial estates of China, Malaysia, Thailand, UAE, Sri Lanka and India. 

Availability of industrial land in existing industrial estates of Karachi is minimal and over the last few months prices have dampened and stabilised, reveal the findings of a survey details of which were presented before the Economic Coordination Committee (ECC) of the Cabinet. 

Industrial land in Federal "B" Area Karachi costs Rs 85 million per acre for a 99-year lease, Korangi (Main) Rs 56 million per acre for a 99-year lease. Landhi charges Rs 36 million per acre for 99-year lease. An acre in North Karachi industrial costs Rs 65 million for 99-years' lease. Land in S.I.T.E (Main) is priced at Rs 56 million per acre for a 99-year period. 

It is hoped that availability of industrial land at Rs 24.50 million in low-density areas and at Rs 85 million per acre high-density areas of Korangi Creek Industrial Park, Karachi would help overcome the shortage of land for industrial purposes for rapid provincial industrialisation. 

A comparative study was conducted by independent valuer to get an estimate of current market prices of different industrial estate lands in Pakistan and surrounding regions. For land in Karachi, valuers visited areas at Korangi Industrial Estate, Landhi and Quaidabad Industrial Estates, Sindh Industrial and Trading Estate, Federal B Industrial area and Port Qasim Industrial Zone. 

This survey was conducted in a manner that independent valuers contacted several real estate agents and other sources in locality in order to ascertain the current asking price of industrial land. It was visible from the survey that prices of industrial land vary a great extent in different localities depending upon location, size and frontage. 

In Punjab no concept of lease was not in vogue and the survey revealed that industrial land in Punjab is available on ownership basis at competitive rates. M3 City Faisalabad costs Rs 5 million per acre on ownership basis. Sunder Industrial Estate, Lahore is priced Rs 4.3 million per acre. Land in Value Added City, Faisalabad costs Rs 5 million per acre. Sialkot Industrial Estate charges Rs 5 million per acre. 

Prices of industrial land in NWFP show that real estate in Hayatabad costs Rs 4 million for a 99-year lease, Hattar Industrial Estate and Gadoon Industrial Estate charge Rs 0.66 million for a 99-year period. 

The survey also quoted price of industrial land in China. In Beijing Zhongguancun Life Science Park land costs Rs 50.75 million per acre, Shanghai Zhangjiang Hi-tech park Rs 56.86 million per acre and Chengdu High Tech Development Zone at Rs 15.41 million per acre.

Land in Technology Park, Kuala Lumpur, Malaysia is available for Rs 10.38 million per acre and at the Emirates Modern Industrial Area at Rs 29.23 million per acre.

Among the industrial parks in Thailand, the survey quoted prices of the Amata Nakoram Industrial Estate at Rs 10.89 million per acre, Eastern Seaboard Industrial Estate, Rs 10.89 million per acre, Wellgrow Industrial Estate Chachoengsao, Rs 20.19 million per acre and Rojana Industrial Park at Rs13.28 million per acre. 

In Sri Lanka, Seethawak Industrial Park charges Rs 5.5 million per acre, My Phuoc Industrial Park Rs 9.87 million per acre.

Daily Times - Leading News Resource of Pakistan


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## Neo

*LSM growth at 6.93 percent in first quarter 2008*​
* Government may again miss growth target 

KARACHI: The Large Scale Manufacturing (LSM) grew by only 6.93 percent in the first quarter (July-September) of current financial year compared to corresponding period of last fiscal, diminishing the prospects of achieving the growth target of current fiscal, official data said here Monday.

The growth in LSM in the first quarter was even lower from the over 7 percent growth, it posted in the corresponding period of last financial year. It is pertinent to mention that in the last two consecutive financial years LSM targets were missed. For the current fiscal, the government has set 12.5 percent LSM growth target.

In month of September only, LSM index posted a growth of 7.35 percent compared to September of last year, the latest official statistics released indicated.

The LSM index is based on the latest production data of 100 items provided by Oil Companies Advisory Committee (OCAC), Ministry of Industries and Production and provincial Bureaus of Statistics (BoS).

The breakup of data shows that OCAC index registered growth of 14.02 percent during the first three months of 2007-08 followed by provincial BoS index by 7.10 percent and ministry of industries by 7.10 percent over the corresponding period of last year.

On the other hand, in month of September, 2007 OCAC index grew by 9.38 percent, provincial BoS by 11.56 percent and Ministry of Industry 4.67 percent over the same month of previous year. 

Analysts commented that growth figures of LSM in the first quarter 2007-08 again reflected the unrealistic target of this sector set for the current fiscal year. Just to set high GDP projections, government sets such ambitious targets, which, however, unfortunately culminated in failure, an analyst remarked.

Analysts, however, predicted that LSM growth might go up in next financial year because a number of major projects of fertilizers, refineries and others are in pipeline, which would be operational by fiscal year 2008-09 and could contribute substantially in the overall growth.

In petroleum production sector, the statistics show that kerosene oil production was up by 1.7 percent, motor spirits 21.03 percent in first quarter of this fiscal, high-speed diesel 19.83 percent, furnace oil 16.39 percent, LPG 9.41 percent etc.

Whereas jet fuel oil production dipped by 6.26 percent in July-September 2007-08, lubricating oil by 0.46 percent etc. 

In Ministry of Industries Index, in the quarter under review, the production of cigarettes was up by 5.31 percent, cotton yarn 4.53 percent, jute goods 19.29 percent, soda ash 19.81 percent, caustic soda 12.24 percent, Nit. Fertilizers 4.17 percent, Phos. fertilizers 14.04 percent, cement 22.33 percent, steel products 1.77 percent, coke 23.54 percent, pig iron 8.66 percent, buses 17.79 percent, LCVs 26.61 percent, motorcycles 30.47 percent etc.

On the other hand, production of cotton cloth declined by 1.23 percent, paper and paper board 14.64 percent, glass plates and sheets 3.27 percent, billets 4.97 percent, tractors 4.19 percent, trucks 23.26 percent.

In the index of provincial bureau of statistics, in July-September period, cooking oil production was up by 2.83 percent, starch and its products by 1.41 percent, beverages 59.49 percent, cycle tubes 4.72 percent, motor tyres 15.19 percent, power looms 114.94 percent, diesel engines 35.69 percent etc.

Whereas the production of TV sets declined by 7.61 percent, bicycles 4.21 percent, electric bulb 4.91 percent, vegetable ghee 1.55 percent, electric meters 37.93, air-conditions6.37 percent etc.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan seventh largest borrower with $985 million World Bank group loans, credits​*
KARACHI (December 04 2007): Pakistan was the seventh largest borrower with 985 million dollars loans and credits from the World Bank group, whereas India was by far the largest borrower accounting for 3.75 billion dollars or 15 percent of total lending from the group in the 2007 fiscal year.

World Bank Vice President for South Asia Praful Patel has said in a report received here on Monday that "South Asia is home to the largest number of people in the world living below one dollar a day, so the agenda for poverty alleviation in the region remains very large." He said: "The lending numbers from the IDA and IBRD in 2007 fiscal year are in line with the scaling up strategy we developed for the region three years ago.

"Globally the World Bank group committed 34.3 billion dollars in 2007 fiscal, up 2.7 billion dollars (7.8 percent) from 2006 fiscal year." India was by far the largest borrower from IBRD and IDA, accounting for 3.75 billion dollars, or 15 percent of total lending from these two institutions.

"The World Bank's programme in India focuses on providing basic services such as access to clean water and education, improving infrastructure for rural areas, and employment," he said. The increase also reflected 700 million dollars in lending to the health sector to India, which was carried over from the previous year.

He said Pakistan was the bank's seventh largest borrower with 985 million dollars in loans and credits. Detail about the projects on which the money was spent is not provided in the report.

In general, nearly 60 percent of the World Bank group's commitments to seven South Asian countries came from IDA, and more than two-thirds of this lending financed projects in the areas of rural development and human development such as health, education, nutrition, and HIV/AIDS.

In the 2007 fiscal year, Bangladesh received 379 million dollars, Bhutan 30 million dollars, Afghanistan 312 million dollars, Sri Lanka 72 million dollars, Nepal 103 million dollars, Pakistan 985 million dollars, and India 3,751 million dollars. Afghanistan is also included in the region. It received 120 million dollars IDA grant for the Second National Solidarity Programme. Patel is of the opinion that there was a huge prospect for making a real impact on the ground to reduce poverty.

He said these types of programmes would not be possible without the IDA funding, which enabled the government programmes to innovate and scale up. The World Bank group extended loans, credits, grants, equity investments and guarantees, totalling nearly 6.9 billion dollars to South Asia in 2007 fiscal year. This is an increase of 2.3 billion dollars over the previous year.

South Asian countries are using the support of the group in more than 78 projects designed to overcome poverty and enhance growth - for example, by improving education and health services, promoting private sector development, building infrastructure, and strengthening governance and institutions.

Business Recorder [Pakistan's First Financial Daily]


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*Work on 90 Fata development schemes in progress ​* 
PESHAWAR (December 04 2007): Work on 90 development schemes in 13 different social development sectors is in progress at a cost of Rs 3 billion as per schedule in Orakzai Agency of Orakzai Agency tribal belt of the province. Seventy-one percent funds meant for the projects have been utilised and the development schemes would be completed by the end of the year.

This was stated at a review meeting held by NWFP Governor Ali Muhammad Jan Aurakzai at the Governor House here on Monday. The meeting was attended by FATA Additional Chief Secretary Javed Iqbal, Secretary to Governor Azmat Hanif, Secretaries and Heads of the line departments. Orakzai Political Agent Fakhre Alam briefed the meeting. Except one or two projects in the communication sector, which hit snags, work on all projects was progressing satisfactorily, he said. He said that 14 projects were new, and the remaining were ongoing projects.

He said that 100 percent progress had been achieved in Public Health Engineering, Power, Agriculture Extension, Forests and Regional Development sectors, while attainment of targets in respect of Fisheries and Irrigation sectors was more than 80 percent. 

The meeting was informed that in the Education sector, one new Women's Degree College had been completed and classes started, while building of a new higher secondary school had been completed and efforts were underway to complete upgradation at the earliest.

Similarly, upgradation of three middle schools to high and three primary schools to middle schools levels were also in process in the Agency. Besides, progress in respect of Communications and Health sectors was noted as 73 percent and 65 percent, respectively, during the first quarter of the financial year.

The Governor desired that all possible steps be taken to recruit teaching staff for the colleges to ensure their functioning. He noted that progress on under-construction two hostels for female teachers in the Agency was encouraging, and desired that both projects should be completed on priority basis.

The Governor particularly referred to the under-construction Govt Girls Degree College at Ghiljo which is second of its kind in the Agency, and desired that he wanted to see the institution properly functioning during the current financial year. The Governor said that all road projects were of vital importance for ensuring better travel facilities and no efforts should be spared to remove the bottlenecks.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*PQA to build coal, clinker, cement terminal ​*
KARACHI (December 04 2007): The Port Qasim Authority (PQA) is planning to construct a dedicated coal and clinker/cement terminal (CCCT) at Port Qasim at a cost of $150 million. "Technical proposals are being evaluated, which would be followed by financial evaluation of the project", sources in PQA told Business Recorder on Monday.

The terminal, to be built on public-private-partnership (PPP) basis, would enhance the cargo handling capacity of Port Qasim. "With CCCT, the cargo handling capacity of Port Qasim would rise to around 50 million tons per annum by 2010", sources said. The project would be completed in 24 months", they said.

"The cost estimate of the project is open so far, and would be finalised after financial evaluation, but it may cost the investors $100 to $150 million," they added.

They said the PQA has hired National Engineering Services Pakistan (Pvt) Limited (Nespak) as consultant for the project. About date of signing agreement with investors, sources said: "It would take some time, as the consultant would have to see all feasibilities in terms of technique, environment, finance, etc."

After technical evaluation, the project would undergo financial evaluation and approval from Government with permission from Pakistan Navy and all others concerned, they said. When completed, the CCCT along with the Grain and Fertiliser Terminal, to be built at a cost of $78 million from March 2008, would transform Port Qasim into a leading business hub of the region, sources said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Work on Hawksbay desalination plant to begin soon ​*
KARACHI (December 04 2007): The study on $250 million desalination plant project to purify 5 million gallons per day (mgd) at Hawksbay has been completed and work on the project will start in the first quarter of 2008 for which 100 acres of land handed over to Ecolink company.

Mustafa Kamal told journalists at his office here on Monday that only today he held a meeting with the company's concerned officials. He said that this project will not only help overcome water shortage in Karachi but future water requirement of Karachi will also depend on this project which, if proved successful, it would be easy to meet future water needs.

In the first phase, he informed, the company will desalinate 5 mgd water but the actual success is the transfer of technology to the city and operation of the plant which will later be expanded gradually. To a question the Nazim said that Water Board would be the consumer and distributor of this water. He said that 5 mgd water has been dedicated for SITE industry.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Resumption of oil, gas exploration work: no positive response from Beijing ​*
ISLAMABAD (December 04 2007): Islamabad has not received positive response from Beijing for resumption of exploration and production (E&P) and seismic work for oil and gas sector in Pakistan. Since Pakistani E&P companies are continuously wooing Chinese firms for coming back to Pakistan for resuming work in oil and gas sector.

Some of them had offered the Chinese companies with the security arrangements to their satisfaction, but nothing worked for them. The Chinese companies are waiting for positive signal from their government for resuming work in Pakistan.

The Chinese companies were playing a key role in exploitation of carbon reserves in Pakistan by providing rigs, crew for exploration and production or seismic study to know the prospects of different areas.

They are considered cheaper for hard jobs of oil and gas exploration and production, besides conducting seismic survey in the most difficult remote and hard areas of Sindh, NWFP and other provinces. Pakistani exploration and production companies had been comfortable with the Chinese companies and they did make substantial achievements by finding carbon in different areas of Pakistan.

Then some unseen forces moved against Pakistan and they targeted Chinese engineers mostly working in oil and gas sector. The attackers claimed lives of 11 Chinese engineers during the last two years or so. Islamabad moved quickly and it took all possible steps to protect the Chinese engineers, but by the time attackers had caused the loss.

As Pakistan gives great importance to its relationship with Beijing, it offered a joint security mechanism for security of Chinese engineers during their work in Pakistan. It also offered them at the field residence to avoid travelling of Chinese engineers from fields to cities for stay to make them feel that they were safe and sound during their stay in Pakistan, but nothing seems working in it's favour.

The Chinese companies look so frightened that despite Pakistan's different offers for foolproof security arrangements they stopped work at different fields and pulled out their engineers.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Deforestation rate in Pakistan highest in world ​*
ISLAMABAD (December 04 2007): Deforestation rate in Pakistan, estimated at 0.2 per cent to 0.5 per cent annually, is the highest in the world, which accounts for a 4-6 per cent decline in its wood biomass per annum. The total natural forest cover has reduced from 3.59 million hectares to 3.32 million hectares at an average rate of 27,000 hectares annually.

The decline in natural forests is attributed greatly to the dependence of a major proportion of rural population for fuel and construction on wood. The natural resource is decreasing at such an alarming speed that all the forest area will be consumed within the next 15 years.

Three sectors consume wood in Pakistan ie domestic rural use, industrial sector and commercial establishments. In this regard, the household sector has emerged as the largest consumer with 81.8 percent followed by industrial entrepreneurs 14.9 percent and the commercial sector 3.3 percent. The annual wood consumption in Pakistan is 43.761 million meters against the annual forest growth of 14.4 million cubic meters. So, it has to suffer a loss of 29.361million cubic meters per annum.

The unchecked cutting of trees has resulted in rapid deforestation and now the forest cover is less than 5 per cent. With one of the highest rates of deforestation in the world, Pakistan's forests are in urgent need of protection and conservation. The major threat to Pakistan 's forests is uncontrolled and unsustainable cutting for living purposes and timber products. There is dire need to find out alternate and sustainable livelihood methods to ease pressures on this precious natural resource.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Agribusiness Zone ​*
(December 04 2007): In a seminal initiative, the government is planning to carve out an agribusiness zone in Northern Areas, preferably near Gilgit, as part of a larger effort to exploit agriculture sector's immense potential. The proposed zone will play a crucial role in attracting Chinese investment in Pakistan's agriculture sector, which contributes 20.9 percent to the GDP, and employs 43.4 percent of the country's total workforce.

A Recorder Report quoting official sources has said that the issue recently came under detailed discussion at a meeting of Agriculture Advisory Board (AAB). Although Pakistan-China cooperation has diversified into all sectors of the economy, agriculture remains the major focus under the Free Trade Agreement.

A USDA-FAO outlook has predicted rise in agriculture commodity prices globally, in response to this phenomenon agriculture subsidies by the developed countries will be curtailed by the year 2013. This would put Pakistan in a favourable position, because no subsidies are at present being offered in its agriculture sector.

Pakistani companies will, therefore, have to develop greater competitiveness to be able to capture a sizeable chunk of international market by 2013, when the scenario will have changed. As argued by private sector representatives at the AAB meeting, there is an urgent need to establish an investment-focused agency to facilitate more joint ventures in the agribusiness domain.

Private sector representatives have, meanwhile, requested for a tax holiday, and proposed that the current scheme of TDAP should have maximum annual subsidy limit of Rs 5 million, excluding mangoes, and should provide 25 percent freight subsidy in selected countries.

They have also demanded that subsidy be made applicable to all horticulture and processed food products. Minfal representatives have, meanwhile, discussed setting up an Agribusiness Investment Fund, which is a new concept in Pakistan.

The proposed fund should establish an information base for providing technical advice to both government and private sector investors, prepare company profiles and undertake pre-feasibility studies, aside from mobilising domestic and international investment through promotional campaigns.

Establishment of the proposed Agribusiness Zone near Gilgit, the poverty-ridden backyard of Pakistan, can serve as a pilot project, to be replicated in other underdeveloped parts of the country. Although agriculture sector's contribution to Pakistan's GDP has declined from 53.2 percent in 1950 to only 20.9 percent at present, due largely to inadequate focus on developing new seed varieties, the sector retains vast development potential.

The most neglected part of our agriculture has, in fact, been the value addition, which is mainly due to inadequate investment in infrastructure and processing plants, which has in turn restricted our capacity to fully realise the potential of this neglected sector. Although Pakistan is the world's fifth largest producer of milk (37.35 million tons), only 5 percent of the commodity is processed.

Further, despite being the fourth largest exporter of date, the country exports only 13 percent of its total produce. These Minfal figures give a clear idea of untapped potential of Pakistan's agriculture. According to one estimate, the annual growth of agriculture sector in Pakistan has averaged around 4.5 percent over the last three years.

A significant indicator of the trend has been the steep decline in the share of labour force in agriculture - from 65 percent in 1950 to 48 percent at present - though it remains the largest sector in terms of employment. Consequently agriculture's role in poverty alleviation and employment generation has considerably shrunk.

Changes in agriculture productivity have been found to have important implications for poverty alleviation both in rural and urban areas. The declines significantly when household consumption registers an increase due to rising rural incomes.

An important channel of reduction in urban poverty has been the lower food prices as a result of growth in food production. Analysts maintain that diversification in agriculture is associated with commercialisation of agriculture, as high opportunity cost of labour on large farms induces them to substitute machines and modern.

The establishment of the proposed agribusiness zone will probably be the most significant diversification in our agriculture sector. It will also help ensure food security to the local population. While giving liberal incentives, including tax holidays, has become a part of the government's larger strategy to attract investment, the cost-effectiveness of such measures should be kept in mind.

Secondly, there is a need to capitalise on our competitive advantages by investing in developing better seed varieties and increasing the per-acre farm yield to ensure that we retain cost-competitiveness and also improve the quality of agricultural products.

Pakistan ranks among the top 20 producers of rice, mangoes, dates, sugarcane and a vast array of vegetables. However, our export figures depict a depressing picture despite our rich resources. Let us hope agribusiness zones will bring about the desire change and provide a powerful fillip to our agriculture sector.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*ENI, MOL asked to expand oil & gas exploration in Pakistan *​ 
ISLAMABAD: December 04, 2007: Federal Minister for Petroleum and Natural Resources, Ahsanullah Khan has said that the Petroleum Policy- 2007 envisage more incentives in the upstream sector and asked the ENI and MOL Companies to expand oil & gas exploration activities in Pakistan for the mutual advantage.

He said this while talking to the Managing Director of ENI Petroleum of Italy, Mr. Luigi Ciarrochi and Managing Director of MOL Oil Company of Hungary, Mr. Janos Feher who called on him here Tuesday.

The Minister said that the government was taking concrete steps for exploiting the untapped hydrocarbon resources in order to meet the growing energy requirements of the country for sustaining its speedy economic growth.

He said that caretaker government was ensuring continuity of reforms and policies and would extend all out cooperation and guidelines to the prospective investors for their participation in the oil & gas development activities in the country.

The Minister lauded the contribution of ENI and Mol companies for promoting the oil & gas exploration activities in Pakistan and hoped that they would continue to avail the investment opportunities for the mutual benefit.

The Managing Director of ENI informed the Minister that his company has required three blocks in offshore areas and necessary arrangements were being made to start the exploration activities as soon as possible.

The Managing Director MOL briefed the Minister about his companys involvement in oil & gas exploration activities in Tal Block in NWFP. He told that MOL joint venture has planned to develop the Manzalai field and four wells would be drilled to increase the level of production from 50 to 250 mmcfd gas per day.

Secretary Petroleum, Farrukh Qayyum and Director General (Petroleum Concessions) Muhammad Naeem Malik were also present during the meeting.

ENI, MOL asked to expand oil & gas exploration in Pakistan : Business Recorder | LATEST NEWS


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## Introvert

*Pak-Turkey trade up by 268&#37; in last 6 years*

KARACHI: The trade volume between Pakistan and Turkey has increased by 268 percent during the last six years and it can be further enhanced.

This was stated by the Chairman, Union of Turkish Chamber of Commerce and Commodity Exchanges, Rifat Hisareikhogluy while addressing the members of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) in Islamabad.

According to FPCCI here Tuesday, Mr Hisareikhogluy said that Pakistan&#8217;s exports to Turkey were only $100 million six years ago, but now they area $390 million.

He stated that Pakistan has acquired a central position in the fields of trade and energy at the international level. 

Mr Hisareikhogluy stated that few years back, Turkey was also in economic crisis but due to the efforts they have come up as an economically strong nation. 

In the welcome address, president FPCCI Tanvir Ahmad Sheikh underlined the need for a joint agreement between the two brotherly countries to take the volume of bilateral trade to $1 billion. 

He further demanded that the governments of both the countries should take up this matter with Iranian government for land route business and get permission for crossing the borders. 

Business through land routes will reduce the time as well as expenditures, he said. app

Daily Times - Leading News Resource of Pakistan


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## Introvert

*Chinese company-Huawei expands business network in Pakistan * 
ISLAMABAD, Dec 4 (APP): Ufone will be covering more than 4500 cities, towns, villages and all major highways in the country by the end of June, 2008.

The project was approved by the Ufone Board of Directors which reflects the commitment by the share holders to invest in the Ufone infrastructure and to provide best quality network and facilities to Ufone customers.

Ufone, one of the leading telecom operators in the country has announced yet another phase towards expansion of its network amounting a total of $ 150 Million.

The contract has been awarded to Huawei Technologies which is one of the most rapidly growing telecom vendors globally and awarding another contract to Huawei shows Ufone&#8217;s confidence in their professionalism and state-of-the-art technologies.

Huawei is the vendor of choice in latest 3G Telecommunications Networks. 31 of the world&#8217;s Top 50 operators worldwide are using their technical infrastructure.

Mr.Yi Xiang, CEO, Huawei Pakistan further stated that Huawei is fully committed to Pakistan Telecom Industry as well as implementing this new Ufone network expansion contract in the fastest and most seamless fashion.

Unfolding the details of this network expansion, he said that Ufone would be acquiring state-of-the-art network infrastructure based on Release 4 standard for future mobile communication, highly compatible for smooth and seamless migration to the 3G UMTS (Universal Mobile telecommunication).

The expansion plan focuses on the expansion of the network in terms of capacity and coverage in existing and new cities besides providing high speed cellular mobile and wireless data services based on EDGE technology.

This will add up more than 1000 additional cities, towns and highways in Ufone footprints.

Associated Press of Pakistan - Chinese company-Huawei expands business network in Pakistan


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## Neo

*Inflation to further rise amid election fever ​*
Thursday, December 06, 2007

KARACHI: The emergency-clamped nation of Pakistan is expected to face more inflation amidst election fever during the current fiscal as the previous set-up has miserably failed to arrest ever-increasing inflation in the country.

The so-called democratic set-up led by former Prime Minister, Shaukat Aziz had given up the charge of the government soon after the emergency was imposed in the country and a lose and even weaker than outgoing cabinet was set up under Muhammadmian Soomro to take over the charge of the administration. The caretaker government seems to be helpless, as it has no grip on administrative affairs and economy.

Whenever such a situation arises that a government has no grip on the helm of affairs the profiteers take the utmost advantage and feel they have been let lose to loot the consumers. A similar situation is prevailing in the country, as the private sector is free to inflate the already high prices of kitchen items sans an effective administration.

The prices of most of the kitchen items are continuously on the rise despite the fact that the new arrivals are already in the market after the crop harvest. The rice, which had never seen such a skyrocketing trend in its price, is still mounting. The price of super basmati has gone up to Rs65 to Rs70 per kg from Rs55 to Rs60 per kg a few days back. Similarly, the price of sugar has increased by Rs2.50 per kg from Rs28 to Rs30.50 per kg in a few days time. Edible oils and ghee too, have crossed the barrier of Rs105 per kg from Rs95 to Rs98 per kg. The fresh produce such as all fruits and vegetables are still on higher side although new crops have reached the market. Citrus of grade-I have completely disappeared from the outlets this year.

According to survey conducted by Federal Bureau of Statistics (FBS), the city-wise inflation indicates that 26 cities out of 35 were found in the category of high inflation cities. Inflation recorded for all cities depicted a higher level of YoY CPI inflation compared to their relative positions in general and food categories.

Out of five selected cities, all cities have shown an increase in YoY inflation compared to the previous month. City-wise inflation in Islamabad, Karachi, Quetta and Peshawar was recorded at 8.6, 10, 10.1 and 9.5 per cent increase respectively in October 2007.

In October 2007, Islamabad and Lahore were among the category of low inflation cities, whereas Karachi, Quetta and Peshawar were among high inflation cities. The highest level of YoY inflation was recorded in Nawabshah (14.1 per cent) followed by Samundari (13.5 per cent) and Khuzdar (12.7 per cent) during October 2007. On the other hand the lowest YoY inflation was recorded in Okara (7.2 per cent).

State Bank of Pakistan has pointed out this in its new Inflation Monitor for the month of October 2007.

The headline CPI inflation, on year-on-year (YoY) basis, accelerated significantly to 9.3 per cent (highest increase since May 2005) in October 2007 from 8.1 per cent in the same month last year mainly on account of a surge in food inflation that muted the impact of decline in non-food inflation. Food inflation showed acceleration and was recorded at 14.7 per cent (highest since May 2005) in October 2007 compared to 10.5 per cent in the corresponding month last year.

The 12-month moving average (12-mma) CPI (consumer price indicator) inflation for October 2007 show decline, as compared to the same period last year and stood at 7.5 per cent in October 2007 compared to 7.9 per cent in October 2006. Food inflation depicted a significant rise due to double-digit rise in prices most of commodities (10.7 per cent in October 2007 compared to 7.7 per cent in October 2006). 

Monthly CPI inflation was 1.2 per cent in October 2007, which was more than the five-year average of monthly increases in October. This increase in overall monthly CPI inflation was primarily due to a one-month significant increase in food inflation, which was recorded at 2.0 per cent compared to the 0.5 per cent inflation in October 2006.

Monthly non-food inflation also showed increase and was recorded at 0.6 per cent in October 2007 compared to 0.2 per cent in October 2006 and was more than the five-year average.

The core inflation based on NFNE (non-food non-energy) increased to 6.5 per cent in October 2007 from 6.0 per cent in October 2006 on YoY basis.

The WPI (wholesale price indicator) inflation accelerated sharply and witnessed a double digit YoY rise to 11.8 per cent during October 2007 compared to 6.7 per cent in October 2006. This rise was attributed to both WPI food and non-food inflation. SPI (sensitive price indicator) also showed an increase in October 2007 and was recorded at 10.9 per cent compared to 9.9 percent in the corresponding month of last year.

Overall CPI inflation on a year on year (YoY) basis rose by 1.3 percentage points in October 2007. The contribution of house rent index (the largest item of the CPI basket) dropped to 19.5 per cent in October 2007 from 20 per cent during the corresponding month last year.

Food inflation (YoY) was recorded at 14.7 per cent in October 2007 - highest since May 2005 - from 10.5 per cent in October 2006. This sharp (4.2 percentage points) increase is mainly due to an increase in the prices of some food items such as onion, tomatoes, edible oil, different types of rice, wheat, eggs, fresh milk and maida, etc. 

Out of the total 124 commodities included in the food group, 53 commodities including tomatoes, onion, eggs, some fruits, cooking oil, different types of rice and vegetable ghee exhibited YoY inflation in the range of 10 to 100 percent in October 2007.

The ever-increasing inflation in the country has forced the people to discontinue the purchase of various kitchen items of even essential items in order to reduce the cost of living. No one knows when and where the state-sponsored terrorism of price hike will end up. 

Inflation to further rise amid election fever


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## Neo

*Pakistan, Spain to promote investment ​* 
Thursday, December 06, 2007

ISLAMABAD: Pakistan and Spain on Wednesday signed a Memorandum of Understanding (MoU) aimed at jointly assisting and creating a favourable environment for the promotion of investment in all economic sectors of both the countries.

Board of Investment (BOI) Secretary Mushtaq Malik and Embassy of Spain Commercial Attache Antonio Martinez-Ligero signed the MoU on behalf of their respective governments. The Ambassador of the Kingdom of Spain, Jose Maria Robles Fraga and Dr Salman Shah, Minister for Finance witnessed the ceremony while other senior officials were also present. 

Under the MoU, the Investment Division & Board of Investment (BOI) of the Pakistani government and Interes Invest in Spain of Kingdom of Spain would facilitate each other in making investments in various sectors of their countries. 

Both the countries have agreed to grant incentives and other facilities to investors of the respective countries as per the investment policies and packages available from time to time, says a news statement issued here on Wednesday. 

While addressing the participants of the event, Dr. Salman Shah said that Spain and Pakistan are two of the most dynamic economies of the world. Spain is one of the fastest growing economies of Europe with vast infrastructure facilities and industrialization, paving way to huge business potential.

Similarly, Pakistani economy is also growing at a rapid pace, with an average growth rate of 7 per cent. He also highlighted improving economic and investment climate of the country and said that Spanish investors may take advantage of this conducive business environment.

He added that BOI and Interes Invest in Spain should devise strategy for jointly undertaking investment promotion efforts and enhance awareness through joint seminars and interactive forums, so that productive forward linkages among the business communities of both the countries be developed. 

While emphasizing on the importance of the MoU, Secretary BOI said that BOI and Interes Invest in Spain are the key investment promotion agencies that support local and foreign enterprises seeking to set up or expand their businesses in Pakistan and Spain respectively and by joining hands, the two agencies would be more equipped with extended facilitation to investors, enhancement of information sharing, and above all investment promotion of all sectors.

Pakistan, Spain to promote investment


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## Neo

*Sri Lanka keen to import rice and cement from Pakistan ​* 
KARACHI (December 05 2007): Sri Lanka has expressed keen interest to import 350 metric tonnes of rice at the rate of $340 per tonne besides 2,500 metric tonnes of cement on immediate basis.

Visiting Sri Lankan Minister for Trade, Marketing Development and Consumer Affairs, Bandula Gunawardhanthe expressed its country's keenness in import of the aforesaid commodities from Pakistan at a meeting with the officials of Trade Development Authority of Pakistan (TDAP) on Tuesday.

DG Export Supply Management TDAP Jawaid Anwar Khan, DG Policy and Planning, DG Corporate Communication Affairs Mrs Rizwan Khan, ED Marketing Riaz Khan and other officials including Dr Yousuf Khan, Saifullah Khairi, Asad Zahoor, and Junaid Yousuf also attended the meeting.

The Sri Lankan minister was accompanied by Sri Lankan Consul General V.S Sidath Kumar and K.D Anura Shantha.

"We have met the members of Rice Exporters Association of Pakistan (Reap) to finalise the deal for rice import, however progress on rate finalisation is hoped to come about soon," the minister said. Regarding the import of cement from Pakistan, he said that Sri Lanka presently needed 2,500 metric tonnes of cement and hoped that TDAP would help it procure the commodity.

The Sri Lankan minister also shown interest in the purchase of Pakistani steel. However, he emphasised on the purchase of rice and cement on immediate basis.

He said that Sri Lanka was also going to propose a single currency for entire Saarc region like euro in the Europe.

V.S Sidath Kumar pointed out that bilateral trade since the signing of Free Trade Agreement (FTA) had declined by 30 percent.

He said that various trade delegations from Sri Lanka participated in My Karachi Exhibition this year and many of them had negotiated on trade of various commodities with Pakistani traders. He added that a Sri Lankan trade delegation was expected to visit Pakistan in March-April next year.

Jawaid Anwar Khan said that TDAP would make efforts to persuade the local rice and cement exporters to finalise deal on fair and immediate basis and in this regard he added TDAP would hold meetings with them.

He said that presently, Pakistan was exporting cement at $66 per tonne to India, while there was only few local firms having the capacity to export cement in bulk quantity.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan and China sign MoUs for cooperation in various fields ​*
ISLAMABAD (December 05 2007): Pakistan and China have refreshed commitment to continue cooperation in fields of science and technology under the agreement on Scientific & Technological Cooperation, says a press release.

High-level scientists' delegation led by Parvez Butt, Secretary, Ministry of Science and Technology visited China and held meetings with senior scientists of the Chinese Academy of Engineering. Jing Long Industry and Commerce Group, State Oceanographic Commission, Chinese Academy of Sciences and the Ministry of Science and Technology. The delegation also visited a poly-silicon factory at Luoyang in Henan province.

A programme has been mutually agreed for jointly setting up a pilot plant for the production of Photovoltaic Solar Cells from poly silicon in Pakistan. MoUs for cooperation in the fields of herbal medicine and oceanography was also finalised and signed during the visit.

The MoU between Pakistan Council of Scientific & Industrial Research (PCSIR) and Institute of Chinese Materia Medica (ICMM) pertains to government of Pakistan Institute of Traditional Medicines at Peshawar whereas the MoU between National Institute of Oceanography (NIO), Karachi, Pakistan and the Chinese Antarctica and Arctic Administration (CAAA), Beijing pertains to a 5-years programme of cooperation in the field of oceanography, organising of joint expeditions to Antarctica and availing of technical guidance/advice from China to meet the pre-requisites and avail benefits from accession to the Antarctic Treaty.

Besides facilitating collaboration in the technological fields the closer understanding reached in the relevant fields would also be instrumental in further strengthening of friendly relations between the peoples of the two countries.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*SBP move great comfort to banks to meet dollar demand: $400 million to be returned *​ 
KARACHI (December 05 2007): State Bank of Pakistan will return $400 million to the banks and DFIs to give them a temporary liquidity comfort on account of reduction in the Special Cash Reserve Requirement (SCRR) from 15 to 5 percent, according to sources.

The need for this measure arose as banks had placed around $1.3 to 1.4 billion as deposits abroad to take advantage of falling interest rates on US dollar deposits. As a result, the swap activity had become minimal and banks were being forced to do buy/sell activity to meet their clients' needs and pump dollars into their Nostro accounts for trading activity.

Banks hold $3.8 billion in F.E. 25 whereas $2.2 to $2.3 billion form part of the forex reserves, reflecting $1.3 to 1.4 billion utilisation by the banks themselves.

According to sources, the SBP move on Monday has nothing to do with its Monetary Policy. It only indicates Central bank's sensitivity to the dollar crunch domestically as well the liquidity crunch overseas in December 2007 - January 2008.

The SCRR is dollar based that cannot be invested in government securities. Hence, return is given to banks on LIBOR minus one percentage point being service charges.

Interbank foreign exchange market has been facing a dollar liquidity crunch since last couple of months, but banks have been managing to feed their Nostro accounts through Buy/Sell swaps. In November SCRA, oil bill and debt payments could not match the inflows. Thus, a demand for dollar started to weaken the rupee.

Business Recorder spoke to the Treasurers of local and foreign banks to know the fate of FE 25 deposit of $3.8 billion. But no one was able to provide the real numbers. Based on our findings, 20 percent or $760 million is the Special Cash Reserve Requirement placed with SBP. Loans given to customers is $1.3 billion, Deposit in other currency could be equivalent to $400 million and the remaining amount of $1.34 billion is placed overseas.

Deposit Dealers could have placed their funds with overseas banks anticipating better return, as FED is constantly slashing its rates to support US market following turbulence in the US and European markets. The spill-over of the US subprime housing crisis is spreading across the globe. Money market dealers fear that over-the-year lending rates will sharply shoot up if the Global Central Banks do not come to the rescue of banks and financial institutions.

The SBP has clearly stated in its circular that this new SCRR circular is being changed temporarily to provide liquidity comfort to banks and the same will be reviewed in February, which means banks are given sufficient time to mature their foreign currency deposit instead of rollover.

The circular certainly does not guarantee that dollar liquidity position of banks straighten up things unless banks are willing to understand the problem or appreciate the situation. Neither can the central bank be sure that Rupee/Dollar market will get back to normal with this circular. This quick and timely action would defiantly provide opportunity to banks to straighten their books.

Meanwhile, interBank foreign currency dealers said that it was a volatile days in Ready, Spot and forward market, since it was unclear in the morning that when will the circular become effective. Rs/Dollar was hovering in 12 paisa band 61.28-40.

Forward swap premiums in 1 month to 6-month tenor recovered by 15 to 30 paisa respectively. Six-month swap points, which was dealt at 30 paisa premium a day earlier, recovered 35 paisa to close at 65 paisa. Fx dealers are of view that market may witness stability in the interbank market in next couple of days.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*MoU signed to establish coal-fired power plants ​*
QUETTA (December 05 2007): A Memorandum of Understanding (MoU) to setup 50 megawatts coal-fired power plants in Balochistan was signed here on Tuesday by Balochistan government, Balochistan Power Generation (Private) Limited (BPG) and Canadian Everlight Energy Corporation (EEC). Governor Balochistan Awais Ahmed Ghani, the Chief Secretary and other high officials were also present on the occasion.

Provincial Secretary for Irrigation Arbab Mohammad Yusuf, Managing Director EEC Roman G. Mesley and Chief Executive BPG Sardar Anwar Khan Jaffar signed the agreement under which these two companies would prepare feasibility of the project and submit it to Provincial Thermal Power Board for review within a period of six months.

The Board would settle matters relating to tariff and supply of electricity between QESCO and these companies if the project was found feasible. Besides, these companies would be bound to spend five percent of their total revenue on development of social sector in the areas where they supply power.

Speaking on the occasion, the Governor Balochistan appreciated the project and said it would greatly help overcome power shortage in the province by utilising locally extracted coal.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Seven major crops missed MTDF target for 2006-07​*
ISLAMABAD: The government has missed the production targets of seven out of 11 crops fixed under the Medium Term Development Framework (MTDF) in last year 2006-07. 

The crops, in which the government missed the targets, were rice, basmati, maize, cotton, gram, rape and mustard, and onion. However, the production of sugarcane, wheat, tobacco and potato surpassed their production targets. 

The facts and figures revealed during a mid-term review of the MTDF on food, agriculture and livestock are likely to be completed till January 2008. The MTDF has been prepared by the Planning Commission for achieving certain targets leading towards economic development and prosperity till 2010.

The rice production of 5.547 million tonnes during the first year of MTDF was well above its annual target of 5.000 million tonnes by 0.547 million tonnes in 2005-06. However, it declined by two percent to the tune of 5.438 million tonnes during 2006-07. The decline in area cultivated was responsible for decline in rice production due to shifting of area from rice to sugarcane crop. 

The production of maize in 2006-07 was 2.968 million tonnes as against the target of 3.029 million tonnes. This production was less than previous years production achieved in 2005-06 of 3.109 million tonnes. 

Cotton crop is very sensitive to weather conditions and associated with insect/pest flare up. A record production of 14.27 million bales in 2004-05 was achieved due to highly favourable climatic conditions. In subsequent two years, cotton production has declined to 13 million bales, with a grave reduction of 1.27 million bales. The MTDF cotton target in 2006-07 was 15.5 million tonnes. The contributing factors were emergence of Burewala strain of Cotton Leaf Curl Virus, decline in cotton area, crop damage by floods, rain and attack of cotton mealy bug. 

The gram production in 2006-07 remained at 0.842 million tonnes as against the target 0.871 million tonnes. However, this production was higher than the previous year 2005-06 production of 0.479 million tonnes.

Production of rape and mustard also missed its MTDF target for the year 2006-07 as the production remained at 0.148 million tonnes as against the target of 0.312 million tonnes.

The production of onion also missed its target and remained at 1.760 million tonnes as against the target of 2.040 million tonnes. Its production in 2005-06 was 2.055 million tonnes showing a higher production than the achieved crops in 2006-07. Heavy monsoon rains in lower parts of Sindh, which is main onion producing area, damaged nurseries and ultimately the production of onion was adversely affected. 

However, the production of sugarcane, wheat, tobacco and potato achieved their MTDF targets set for the year 2006-07. The sugarcane production has shown fluctuation over the years. The contributing factors were shifting of sugarcane area to cotton crop due to lucrative price of cotton in 2005-06, to sunflower in Sindh, late payment made by sugar mill owners to growers. In 2006-07, sugarcane production increased by 22.8 percent over 2005-06 period primarily due to attractive market prices and high demand. The production remained at 54.741 million tonnes as against the MTDF target of 51.860 million tonnes in the year 2006-07, while previous year it was 44.665 million tonnes in 2005-06. 

During the last five years, the wheat production has increased by 22.5 percent and a record production of 23.3 million tonnes was harvested during 2006-07 as against 21.1 million tonnes production during MTDF base year 2004-05. This was made possible due to balanced use of fertiliser enabled by the government policy of subsidy on phosphatic and potashic fertilisers and timely rains during wheat growing seasons are the main factors responsible for a 10.3 percent increase in wheat production during 2006-07. 

The production of tobacco has surpassed the MTDF target by 90 million tonnes for the year 2006-07 and achieved 125.5 million tonnes production. In the year 2005-06 the tobacco production was 112.6 million tonnes. 

Potato production remained relatively stable around 2 million tonnes during 2002-05. The potato crop was damaged by frost in January 2006 and as a consequence, potato production in 2005-06 declined by 22.6 percent relatively to 2004-05 with a production figure of 1.568 million tonnes. In 2006-07, the potato production increased to 2.47 million tonnes, which represents a 57.6 percent increase over 2005-06.

Daily Times - Leading News Resource of Pakistan


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## Neo

*25-year 8800 megawatts generation plan: nuclear fuel plant to be set up ​*
ISLAMABAD (December 06 2007): Pakistan will set up a Chemical Processing Plant (CPP) and Nuclear Fuel Enrichment Plant (NFEP) costing Rs 37 billion, including Rs 12.5 billion foreign exchange component (FEC), official sources told Business Recorder.

The establishment of these two plants is part of Pakistan's 25-year plan to generate 8800 MW electricity to meet the future growing energy needs, sources said, quoting Pakistan Atomic Energy Commission (PAEC) Chairman as having said in a briefing. They said that 'CPP Phase-1', to be set up in the 'Nuclear Power Fuel Complex' (PNPFC), stipulates attainment of indigenous capability in manufacturing basic feed materials of the 'Enrichment Plant for Nuclear Reactors (EPNR), 'Fuel Fabrication Plant' (FFP) and 'Seamless Tube Plant-I (STP-I), and added that, funded through PSDP, the project would be set up in two phases.

Phases-1 envisages a capacity of 400 tons per annum (TPA), natural UF-6 gas, 40 TPA enriched UO-2 powder, and 30 TPA Zr-4 ingots with the prime objective of developing indigenous capability for fabrication of pressurised water reactors (PWR), fuel technology, sources said.

However, with the installation of additional NPPS, the CPP capacity would have to be increased accordingly during Phase-II. They said that PAEC would also set up 150 tons per annum nuclear enrichment plant to feed fuel for nuclear power generation reactor whose further extension will be phased in other three stages.

"Each phase will span over 5-6 years, in which one module will be set up, having the capacity to enrich about 150 tons per year feed natural gas, and a separative power of 100 tons SWU kg per annum," sources added. The project, to be funded through PSDP, has been approved by the Executive Committee of National Economic Council (Ecnec) with some clarifications from PAEC Chairman.

Sources said that initially the government did not agree with the cost of the project, and directed PAEC Chairman to justify its financial viability.

It had also been emphasised that element of subsidy, if any, must be stated upfront to be presented to the Prime Minister and Finance Ministry. Later on, PAEC Chairman cleared the misconception after presenting project documents to the Prime Minister and Finance Ministry.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Mass transit projects: Ministry turns down Chinese firm's offer ​*
ISLAMABAD (December 06 2007): The Ministry of Communications has turned down a proposal of a Chinese company to launch mass transit projects in Peshawar, Rawalpindi and Islamabad on turn-key basis.

M/s Beijing Urban Construction International Group Ltd (BUCG) had offered to undertake design and construction of the mass transit projects, sources told Business Recorder here on Wednesday. They said the ministry, in response to Economic Affairs Division query, observed that the company failed to submit its financial soundness and resource profile for the consideration of the proposal.

For ensuring transparency and competitiveness, principal method of procurement which includes open bidding in line with the guidelines of Public Procurement Regulatory Authority (PPRA) functioning under the administrative control of the Ministry of Finance should be adopted, they added.

The sources said the ministry suggested that instead of evaluating the proposal offered by a single company, the projects may be advertised in the international press and the Expressions of Interest (EoIs) may be invited from the prospective bidders having the requisite expertise and resources for handling similar projects on turn-key basis.

Following the procedure, a rational and competitive bid having the most favourable terms and conditions particularly for arranging long-term financial credit on reasonable interest rate can be accepted, they added. They suggested that prior to offering these projects to international bidders, a feasibility study be made mandatory for assessing the financial viability of projects.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Economy should grow at least seven percent: SBP chief ​*
FRANKFURT (December 06 2007): Pakistan's economy should grow at least 7 percent in the year to June 2008, central bank chief Shamshad Akhtar said on Wednesday, despite the political turmoil besetting the nation.

Global trends mean food prices are pushing up headline inflation, but past tightening of monetary policy means the current stance is appropriate and weakness in the rupee is not something to be worried about, Akhtar told reporters in Frankfurt.

"Pakistan now for some years has demonstrated a fairly robust economic growth backed by pretty deep structural reforms. We have found that in 2007, despite political noise, economic growth remains on track," she said on the sidelines of a conference of the Islamic Financial Services Board.

Turmoil linked to the future of President Pervez Musharraf, and uncertainty surrounding elections due on January 8, have slowed the inflow of portfolio investment into the country. Inflation is running well above target, while the current account deficit is high and some economists have questioned the realism of Pakistan's 7.2 percent economic growth target for the year to end-June 2008.

Asked whether this growth was likely, Akhtar said: "All the preliminary indications are that it would be. There has been a setback to the cotton crop this year, but we're hoping that it will be relatively limited."

"So 7 percent at least should be manageable, but we need more data to comment further," she said, citing buoyancy in the services sector. Pakistan raised its key discount rate to 10.0 percent, effective August 1, from 9.5 percent. In addition to this surprise move it has taken other steps to tighten the policy stance.

"We're hoping that should suffice but it all depends on the situation in January when data comes in. But at this point we think that the current monetary stance is adequate to take us forward," Akhtar said.

"Core inflation has been curbed quite effectively. It's really food prices, and as we know they are being driven by global supply and demand issues," she said. "Like every country we have food prices growing a bit stronger and this is a complication for the inflation rate. But there's very little monetary policy can do in the short term on food prices." The Pakistani rupee recovered from a three-year low on Tuesday following a central bank decision to decrease the amount of cash reserves that banks have to maintain, but Akhtar said she was not unduly worried about the rupee's weakness.

"There's been a little pressure on the exchange rate but nothing to be disturbed about. We had been pushing ... for a little flexibility in the exchange rate. Market fundamentals are driving the Pakistani rupee."

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Heavy govt Borrowings pushing up inflation​* 

KARACHI, Dec 5: The government made heavy borrowings from the banking system for budgetary support during the first five months of the current fiscal year amid mounting pressure arose from high international oil prices.

The borrowing put more pressure on the State Bank which had to lend heavily to the government which translated into the higher currency supply. The government borrowed Rs145 billion during July-November period which was more than double when compared to Rs62 billion it borrowed the same period last year.

Of the total borrowing, the government raised Rs122 billion through the State Bank. This had been a serious concern for the central bank which had been requesting the government to find new resources for fund raising. The heavy borrowing puts pressure on the monetary policy that targets inflation.

However, the government kept borrowing heavily despite higher revenue collection and reduction in development expenditures for the current fiscal year, which had been causing inflationary pressures.

Analysts said the economy was already under tremendous pressure due to rising oil prices as the government had not been passing on the impact of this increase to the consumers for the last several months, which cost it Rs101 billion.

Some analysts said the government had yet to take any decision in this regard though the loss of Rs101bn had provided enough reason to raise petroleum prices at least by 20 per cent.

They believe that the inflation could touch double digits if the government opts to raise POL prices.

Inflation, measured by CPI, had already entered an alarming zone during last few months. In October 2007, the CPI recorded 9.31pc growth which was 1.23pc higher month-on-month basis. The increase was mainly attributable to the rise in food prices. The food and beverage, with 40pc weightage in the overall CPI basket, registered a growth of 14.67pc on yearly basis in October 2007.

Analysts say the fuel price hike is less harmful than the food prices in the CPI basket, but the cyclic impact of the higher oil prices will hit almost all sectors including the food prices. The reports of shortage of wheat could add fuel to the food inflation as the wheat prices were also on the rise.

Most of the analysts have started reviewing their earlier calculation about the inflation for the year 2007-08 after record oil prices and shortage of wheat in the country. A research head of a brokerage house said the inflation could touch double digit if the trend in oil and wheat prices continued.

He said recent hikes in cement and steel prices were also anticipated to cause a house rent index increment. The house rent index was also expected to move up by 8.5pc on yearly basis as against 7.8pc last month.

We are revising full year FY08 inflation estimate to 8.9pc from previous 7.5pc. Moreover, if 0.8pc monthly increment becomes a trend for upcoming months, a possibility of double digit inflation from January (also at the year end) cannot be ruled out, said the research.

Heavy govt Borrowings pushing up inflation -DAWN - Business; December 06, 2007


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## Neo

*Impact of elections on the economy​*
THE election period in Pakistan is, in fact, a season of promises, some of them very strident. The more the political parties, the more the promises and the more coalition groups contesting the elections, far more the number of promises.

Elections in Pakistan are rare and few and the campaign period is usually limited to three months. At the end of the campaign, there is no certainty if the elections would take place at all. In the United States, the election campaign lasts for two years and since basically it is a non-partisan contest, the number of promises made by the candidates and their parties are a few in number.

The unusually large caretaker government, which keeps on expanding, has decided not to increase the POL rates despite the soaring world prices at least before the elections. President Musharraf is also reported to be not wanting higher POL prices as his first gift to the people after his re-election as president, this time as a civilian.

If the oil price is not raised officially, the government may lose Rs101 billion as revenues but may make up for that loss by charging the people sales tax on petroleum as well as development surcharge which will mobilise Rs90 billion. The consumer will be crushed in the process while the government may eventually walk off with a small liability after it chooses to raise prices at any time.

Simultaneously the proposed 21 per cent raise in power rates and five percent rise in gas rates are to be put off. It will be an awkward task for the newly elected government to come up with a heavy increase in the POL, power and gas rates with all their impact on inflation.

Meanwhile, the furnace oil price has been cut by Rs1035 per tonne and the LPG has been totally deregulated. There is speculation that the forthcoming Opec meeting in Dubai may decide to increase its oil output while noting the sustained fall in the exchange rate of the dollar which is used for trading oil. Meanwhile, the Gulf Cooperation Council has decided to introduce a common currency for the region from 2010 also for fixing prices of their oil.

Prices of cement, wheat, flour, oil and vanaspati have risen in the market along with many other edible items. There was fear that the next wheat crop may fall far short of the target and create a new crisis but the recent rains in the Barani areas have improved the situation.

Iran now wants increase in trade with Pakistan to reach a billion dollars. Turkey wants the same in the face of the small trade between the two friendly countries. The Afghan leaders have been talking of a billion dollar trade target for a long time. We should try to have greater trade with our neighbours instead of being content with the five billion dollar trade we expect in the wake of the FTA agreement with China.

Meanwhile Ms Benazir Bhutto, chairman of the PPP, has come up with a five-point election manifesto promising employment, education, energy, environment and equality. Along with that the old PPP commitment of Roti, Kapra, Makaan has been revived but more as a slogan than as a commitment. Providing jobs to the unemployed, particularly the young and educated, will cost a great deal of money but after the governments outlay on energy which has to be tremendous, little will be left for creating employment and promote education.

The government will have to rely a great deal on the private sector and revive its old strategy of public private partnership which it advocated but could not practise it. For promoting long term prospects of employment, large scale industries will have to be promoted along with SMEs and the system of micro credit on a large scale. The Shaukat Aziz government gave a free hand to the businessmen so that they could invest more and some of them responded to an extent. Some such policy will have to be followed by the new government.

PPPs commitments include employment for the educated young up to the graduate level, micro credit for five million persons and monetary relief for persons above sixty five years who have no income of their own. All this will cost a great deal of.

Foreign governments who are backing Benazir Bhutto as the voice of moderation will step up their aid if she comes to power. But the increase will not be much particularly for education as a good deal of money has been wasted in the manner education was promoted. So, she will have to generate more resources from within the country. At the moment the budgetary income is good, the revenue collection during the first five months of the new financial year exceeds the target by 12.5 per cent but as the industrialists wait for the new government to come in, the revenues can drop.

The PPP in achieving what it seeks or delivering what it promises depends on its ability to achieve high output with moderate input and to mobilise the private sector to perform its social role. But it is also for the businessmen to be realistic instead of hoping to make more money the easy way and the banks to thrive through consumer credit at high interest rates.

If the foreign investors are holding back their fresh investments, it is not surprising. It happens in every country on the eve of general elections or when there is a transition from the military set-up to a civilian regime.

Businessmen want to ensure whether pro-business policies of Musharraf would continue and that they would still have a free hand. But they must fulfil their social role in the country where 30 per cent of the people live below the poverty line of a dollar a day. Foreign investors are bound to be watchful during the transition period.

Meanwhile, the Shell group has opted out of the offshore project which was earlier welcomed by the government and the Dubai international authority has said it is no longer interested in the 450-500 MW power project located in a small town of Punjab.

Foreign investors had serious complaints about the judicial process in Pakistan. They hired the best lawyers when they had a case against the government or a private party but the judgments came too late and then they were not enforced often.

DAWN - Editorial; December 06, 2007


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## Neo

*Zero-rated export-oriented sectors ​* 
FBR says no to WB advice to levy VAT

Friday, December 07, 2007

ISLAMABAD: The Federal Board of Revenue (FBR) has rejected a demand of the World Bank to impose GST in value added tax mode on five zero-rated export-oriented sectors.

The existing arrangement would continue and the FBR would not get dictates from anyone, FBR Chairman Abdullah Yousaf said when a group of journalists asked on Thursday about the WB demand.

The FBR, a few year back, had announced sales tax zero-rated regime for five export-oriented sectors, textile, leather, carpets, surgical and sports to boost exports in these potential areas. Pakistani exports are already dwindling owing to growing regional competition and the exporters cannot face another blow in shape of GST on crucial export oriented sector, said the sources.

The World Bank and UK-based DFID during their last review held a last month pointed out in its report that anomaly existed within the tax regime of the country and they asked to remove it by imposing General Sales Tax again in Value Added Tax (VAT) mode.

The countrys exports stood at $5.865 billion in first four months of the current fiscal year with marginal growth of textile group by 1.03 per cent, there was 15.42 per cent decline in food group, 6.36 per cent fall in petroleum group, and carpets, rugs and mats saw negative growth of 7.57 per cent.

Pakistan mainly relies on textile exports that are 68 per cent of total annual exports. The marginal growth in textile sector in current fiscal has made export target of $19.2 billion very difficult task to be materialised.

The overall exports market for textile products stood at $450 billion and Pakistani exporters are vying for only $135 billion market, as they were not making products of the remaining textile products having $300 billion market share.

Chairman FBR answering another query regarding postponement of capital gains tax by the banking companies announced in the budget and would become effective from January 1, 2008, said that there was no change in the plan and it would be implemented in accordance with the devised strategy.

Zero-rated export-oriented sectors


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## Neo

*Egyptian tourist resort buys Karachi made minibuses ​* 
Friday, December 07, 2007

KARACHI: An Egyptian company running Orascam Hotels in Egypt imported minibuses made in Pakistan for its Elgouna Island picnic resort near Cairo city.

These two traditional minibuses were exported on the special request of Chairman of Orascam Hotels Samih Swairis. The company also deals in telecom, brewery and real estate development projects in Egypt and the Middle East and is also holding major stakes in Mobilink Pakistan. 

Swairis had come to Pakistan with tourism minister of Oman Dr Rajiha Abdul Ameer Ali on an official visit in February 2007 to explore the opportunities for tourism promotion in Gwadar and coastal belt of Pakistan. 

During his stay in Karachi, Sawiris was enthralled by the beautiful colours of the minibuses plying on the city roads and requested to arrange few for his resort in Elgouna. 

After a detail research of the market we started with making two buses after arranging brand new chassis from Gandhara Nissan and short listed M/S Gharib Nawaz Body maker located near Quaidabad to carry out the job on two buses, Vice President Pak- Oman Investment Company Rehan Ahmed said.

He informed that this was a unique bus for M/S Gharib Nawaz as it was supposed to be air-conditioned and left hand-drive as well and he did it successfully and got the proper certificate of fitness of the vehicle from Gandhara Nissan. 

The deco body formation of these buses started in July 2007 and completed on November 7, 2007. Initially we have arranged two 24 seats minibuses and may receive further request of more buses if it would be liked in Egypt, an official of bus exporting company said adding, sole purpose of this special job was to promote Pakistani culture and improve the image of the country abroad.

Rehan Ahmed said that a local vendor M/S Gulzar Chamakpati Maker decorated these buses and he did a fabulous job and decorated the buses like a bride. He said the net cost of one bus is almost $45,000 including the freight also and all paid in advance by Orascom.

The buses were shipped by Dubai Express a liner of APL and will be received in Alexandria-Egypt on December 11, 2007. All the care has been taken to make the buses a piece of art for the tourists in Egypt and promote our culture to the maximum. 

Egyptian tourist resort buys Karachi made minibuses


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## Neo

*KSE up 187 points on buying in front line stocks ​* 
Friday, December 07, 2007

KARACHI: The buying euphoria at the Karachi stock market kept the bulls in full swing throughout the session. Institutions, both local and foreign remained the driving force behind lifting the leading 100-Index above 14,300 points resistance level.

After briefly touching 14,345 points intra-day high, the KSE 100-share Index finally closed at 14,325 points - recording another fresh surge of 187 points or 1.32 per cent on Thursday. The 30-Index also surged by 272 or 1.60 per cent and closed at 17,221 points.

The KSE 100-Index is restored above this 14,300 points level after one month. Index slipped below this level on November 01 following conflicting news regarding the emergency rule. Major support was seen from the banking stocks, followed by energy, fertilizer and telecom stocks. 

Most of the cement counters saw profit taking at available margins and accordingly settled in the red region. MCB Bank alone contributed 45 points in the total score of the index, followed by the United Bank, which included another 20 points, Jahangir Siddiqui Co., added 10 points, Pakistan Telecommunication Company 10 points, Allied Bank nine points and Oil and Gas Development Companys share in the total gains of the 100-Index was nine points.

The others gainers of the day contributed in the range of 0.01 points to nine points in this benchmark. On the other hand, no big loser was registered in this index. The active accumulations on selective front line stocks and in second tier scrips was an extension in the buying euphoria triggered a day earlier. 

The fundamental changes encouraging buying include rise in international oil prices; Oil Marketing Compnies (OMCs) exempted from paying 15 per cent GST on crude import; rise in local cement prices; and increasing cash flow in the inter-bank market after State Bank of Pakistan slashed the special cash reserve requirements from 15 per cent to five per cent, a leading analyst said.

Market also witnessed rising foreign interest in the energy, banking and fertilizer sectors, he explained. Analyst Hasnain Asghar Ali said charged by excitement linked to capital gains being booked by the banks (in order to avoid CGT applicable from Jan 01, 2008) the ghost buyers barged in right from the word go, although a couple of banking stocks failed to join the rally.

Although the sectors, other than the banking, invited modest offloading in the initial hours, prevailing positive sentiments reset market bank on upward track and index closed with handsome surge, he added.

Following the reports by the international research houses, the economy has invited fresh foreign inflows. Therefore, the SCRA numbers should not be taken as parameter to judge the future movement of indices, as they can be withdrawn more quickly than pumping them into the equity markets, he said and added that change in the rules of political game would impact market accordingly.

Owing to institutional participations in the market, the overall volumes in the ready markets slightly surged to 297.442 million shares from 273.900 million shares a day earlier.

Volumes in the future market also surged to 34.407 million as compared with 29.770 million changed hands yesterday. The bullish trends on board also helped in attracting more fresh funds of worth Rs53 billion in the overall market capitalisation that surged to Rs4.420 trillion.

Positive signs led the runners, as 225 stocks advanced against 151 declined, while the value of 43 scrips remained unchanged with total 419 active counters on board. Highest volumes were witnessed in Bosicor Pakistan at 22.008 million closing at Rs20.30 with a gain of Re1, followed by Arif Habib Securities at 20.319 million closing at Rs174.70 with a gain of Rs1.30, Bank of Punjab at 12.503 million closing at Rs102.50 with a gain of 55 paisa, NIB Bank at 11.919 million closing at Rs21.10 with a gain of 70 paisa and Azgard Nine at 11.098 million closing at Rs39.45 with a gain of Rs1.85.

KSE up 187 points on buying in front line stocks


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## Neo

*Scope of Pak-Malaysia FTA expanded ​* 
Friday, December 07, 2007

ISLAMABAD: Pakistan has secured market access in Malaysia with a huge opportunity of exports for its existing cotton, leather and agricultural based core products by signing the Malaysian-Pakistan Closer Economic Participation Agreement (MPCEPA) which has enlarged the scope of Free Trade Agreement.

The agreement was signed by Malaysian International Trade and Industry Minister Datuk Seri Rafidah Aziz and High Commissioner of Pakistan Tahir Mahmood Qazi, in Kuala Lumpur, stated a press release issued on Thursday. Considering the market potential of Malaysia and ASEAN, negotiations on a comprehensive Free Trade Agreement were initiated in 2005. Early Harvest Programme was signed in December 2005 and implemented with effect from January 1, 2006. Negotiations on MPCEPA were concluded in September, 2007, signed on November 8, 2007 and will come into force on January 1, 2008.

The MPCEPA is Pakistans first comprehensive agreement on goods, services, investment and economic co-operation with any country of the world, besides being its first such agreement between the two members of the OIC and Malaysias first such agreement with any of the countries of South Asia.

This agreement will provide Pakistan a firm foothold in Association of South East Asian Nations (ASEAN) region and for achieving summit level partnership with ASEAN. It will also facilitate linkage with efficient and growing economy of ASEAN by providing market access to Pakistans future items of export interest and opportunities to the Pakistani exporters and industrialists to source out raw materials and intermediary goods from China or Malaysia at zero/ reduced duty enabling them to reduce the cost of their export and become competitive in the global market.

This agreement will also open new vistas of opportunities for the qualified Pakistan financial institutions to undertake currencies in Malaysia and insurance companies to establish representative offices in Malaysia and employ Pakistan expatriates in these entities after obtaining new licences on Islamic banking and Takaful, besides the MPCEPA will also cover energy and gas service as well as commitments in financial services and sectors such as maritime transport and franchise. 

Scope of Pak-Malaysia FTA expanded


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## Neo

*Steps taken to tap hydrocarbon resources ​* 
Friday, December 07, 2007

ISLAMABAD: Various concrete steps have been taken to tap the hydrocarbon resources over 627,000 sqkm in sedimentary onshore and offshore areas as the government is very keen to promote oil and gas exploration activities in the country. 

Caretaker Minister for Petroleum and Natural Resources Ahsanullah Khan expressed these views during a meeting with Orient Petroleum chairman here Thursday. The minister encouraged this trend a package of incentives to the prospective investors has been offered. He appreciated the contribution of Orient Petroleum Company for promotion of oil and gas exploration activities in the country. 

He hoped that the company would continue to avail of the investment opportunities in these sectors for the mutual advantage. The chairman informed the minister about the companys involvement in the acquired onshore blocks in Mirpur Khan and Khapro from where around 85 per cent mmccfd gas was being produced. He expressed companys willingness to acquire more blocks. Secretary Petroleum Farrukh Qayyum and Chief Operating Officer of OPI Anwer Moeen were also present, said a press release. 

Steps taken to tap hydrocarbon resources


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## Introvert

*Pak-Sri Lanka trade volume increases 
*
Friday, December 07, 2007
ISLAMABAD: Free Trade Agreement (FTA) has positive impact of bilateral trade between Pakistan and Sri Lanka and the country&#8217;s exports to Sri Lanka touched a figure of 87.9 million dollars during last year.

This was stated by the Vice President Federation of Pakistan Chamber of Commerce and Industry (FPCCI) Zubair F Tufail while talking to Bandula Gunawardena, Trade Minister of Trade Marketing and Consumers Affairs of Sri Lanka on Thursday, says a press release. He said that export of Pakistan to Sri Lanka has increased by 112 per cent in fiscal 2005-06. He added that Sri Lanka was a major buyer of Pakistani cotton yarn and woven fabric which contributes 63.3 per cent in total exports including Iron articles, pharmaceutical products and rice.

He pointed out that Sri Lankan exports to Pakistan also increased by 102 per cent as the total import from Sri Lanka was 71.31 million in 2005-06. He said that Pakistani imports include rubber articles followed by oil seeds, grains, coffee, tea and spices fruits, nuts and wood charcoal, food and its articles.

Tufail said that Free Trade Agreement (FTA) between Pakistan and Sri Lanka had positive impact on bilateral trade, adding that there was huge potential to further boost trade ties in various sectors. He said that Pakistan Cement Industry has great potential to export cement to Sri Lanka. He said that FPCCI was indeed a truly an apex body of trade in Pakistan and representative of entire business community of Pakistan.
Pak-Sri Lanka trade volume increases


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## Neo

*Mismatched data raises doubts over credibility*​
KARACHI, Dec 6: A more than $2 billion difference in trade imbalance figure shown by the Federal Bureau of Statistics (FBS) and those of State Bank of Pakistan during four months of the current fiscal year has again brought into sharp focus the issue of credibility of government data and statistics on trade and in other areas like prices, industrial and agricultural production, poverty assessment, social indicators, etc.

Trade figures released by the FBS for July to October 2007-08 showed trade deficit at $5.58bn. Imports amounted to $11.44bn and exports were worth $5.86bn. The State Bank of Pakistan figures showed trade deficit of $3.53bn which is more than $2bn less than reported by the FBS. The SBP figures show imports at $9.53bn and exports at $5.99bn.

The Customs data indicate a total volume of international trade at $17.30bn against which the State Bank reports transaction of $15.5bn. It leaves a balance of over $2bn with a question mark. If the orders booked for export or for import of goods worth more than $2bn are cancelled and not delivered, would the customs correct these figures? is one question being raised.

One simple reason for difference between FBS and SBP figures is that the Bureau collects information from customs based on letters of credit while State Bank reports actual inflow and outflow of foreign exchange, a senior banker explained.

On the export side the incoming proceeds shown by State Bank of Pakistan is about $130 million more than the amount of export documents lodged at the Customs which is understandable because this may pertain to outstanding proceeds in the pipeline.

But it is difference of $1.91bn in imports being reported by the SBP and Customs that has sparked off speculation in the business. The customs show import at $11.44bn based on letters of credit. But the SBP report clearance of $9.53bn worth of imported goods. Goods worth more than Rs100bn booked for import in Pakistan are either not being delivered or stuck up at the port of origin for some reason.

Whatever the reason, the business circles fear further widening of this difference between the customs and State Bank figures as international oil prices are showing no respite and trade gap is expected to further expand because of import of wheat, edible oil and other commodities.

An independent and professional statistical institution is a nightmare for every government, to quote a retired bureaucrat who said statistics and data have therefore always remained weak areas in Pakistan. He said the General Statistics Act was enforced in 1975 that led to the formation of a Federal Bureau of Statistics.

But it was never supported by the government by way of allocation of funds in the budget or training of the people, he said.

The FBS as many officials recall remained a dumping ground for all those bureaucrats who for one reason or the other fell from the grace of the government of the day. The Bureau is last port of call for every government officer who is on his way out, he said.

Soon after taking over in 1999, the economic managers of President Musharraf announced on many occasions to restructure the FBS into an independent and professional institutions. The World Bank and the International Monetary Fund too advised the government to set up an independent data gathering institution.

A committee that included deputy chairman of Planning Commission, governor of State Bank and adviser to the former prime minister on finance interviewed three foreign qualified persons for appointing him as head of the proposed Statistics Institution, a well-placed and authoritative source in Islamabad disclosed to reveal that none of the three candidates were found competent.

How serious was previous government in setting up an independent and professional statistics and data collecting and information disseminating institution can be understood by the fact that no meeting of Federal Statistical Council has been held in last 10 years.

Trade figures have been in doubt for last several years. The first controversy on trade figures was raised by vice-chairman of the then Export Promotion Bureau Abu Shamim Arif when he found that official export figures were not being reported correctly. This controversy was resolved after the matter was taken up a joint committee of the EPB and Federal Bureau of Statistics.

Responding to the growing public scepticism and advice from international institutions like the World Bank and the International Monetary Fund, the government after the year 2001 decided to restructure Federal Bureau of Statistics to convert it in to an independent and professional institution.

The economists question and people are not willing to accept government claims of growth rate, poverty containment, increase in per capita income and improvement in social indicators unless there is an independent and professional statistics and data body.


Mismatched data raises doubts over credibility -DAWN - Business; December 07, 2007


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## Neo

*Pakistan all set to start mango export to US *​
By Ijaz Kakakhel

ISLAMABAD: Pakistan is ready to start export of mangoes to USA from the next season and to kick off the export to US, concerned officials of both the countries would hold a live videoconference in January 2008, sources in the ministry of food, agriculture and livestock (MINFAL) told Daily Times here on Thursday Times.

In this regard, the government will install proper irradation processing plant soon to eliminate pests in mango orchards. Irradation plants have already been purchased from Canada and when it reaches the country, export of mangoes would start as a first step. Gradually, the export of other fruits would also be started, the officials maintained. 

The government has already established an irradation plant at Lahore and another one would be built at Karachi that would help in increasing mango exports, the official said. 

The US authorities seem to have agreed to allow Pakistan to export mangoes in the coming season. The matter was in its final stages as the US is helping Islamabad in establishing infrastructure for testing the fruits quality. 

The officials claimed that the country was producing 1.34 million tonnes of mangoes per annum and exporting less than six percent of it. If Pakistan succeeds in getting access to US market, mango export was likely to yield $150 million per annum. Such a high return would help increase mangoes production by 50 percent. The government exported 0.11 million tonnes of mango in the outgoing season 2007. 

Pakistan can earn up to $1400 per tonne through mango export if it raises fruit quality, processing, packing, grading standards to the US-level against its present earning of only $350 per tonne, the officials maintained. 

They said that Pakistan was the fifth largest mango producing country but it still lacked modern technology. No other country can compete with Pakistani mango in taste, flavour, pulp and beauty but it was being wasted due to recklessness of institutions concerned and orchard owners. A task force has been constituted under the chairmanship of caretaker Finance Minister Dr Salman Shah for resolving all related issues in order to ensure mango export to the US as early as possible.

Other countries importing mangoes from Pakistan include Canada, Portugal, Russia, Brazil, Chad, Burkina Faso, Spain, Bolivia, Bangladesh, Switzerland, Sweden, Denmark, Norway, Kuwait, Bahrain, Qatar, France, Malaysia, Austria, Lebanon, Syria and Central Asian States. Singapore, Malaysia and Hong Kong have shown interest in certain varieties of mango such as Sindhri, Begum-Phali, Chaunsa and Samar Behisht.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Trade ties with Pakistan to grow further: Iranian CG *​
KARACHI (December 06 2007): The Iranian Commercial Attache, Iranian Consulate General at Karachi Ahmed Fasihi has said that the trade volume between Iran and Pakistan are expanding following the preferential trade agreement signed by two Islamic countries.

Talking to UPP here today he said that following the agreement between Iran and Pakistan the trade volume and value had increased. He said that his office had received one thousand eight hundred calls from Pakistani businessmen, traders and industrialists showing keen interest to promote and expand trade and bilateral exchanges between the Islamic Republic of Iran and Pakistan.

He said that as per plan chalked out many more Pakistani trade groups would be visiting Iran while more delegations of businessmen, traders and industrialists would be visiting Pakistan from Islamic Republic of Iran to realise the full potential of the trade and economic exchanges between the two countries.

Iranian Commercial Attache Ahmed Fasihi also pointed out that Islamic Republic of Iran provided equal opportunities for middle level enterprises to establish businesses and joint projects in the preferential trade zones of Iran on lines similar to those in the UAE. In fact Iran offered very competitive environment and incentives for establishment of joint ventures by Pakistan with Iranian partners.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Fall in exports to Kabul disturbing ​* 
ISLAMABAD (December 08 2007): Islamabad is disturbed over about 20 percent decline in exports to Kabul due to imposition of export duty and enhanced share of other countries in the Afghanistan market, sources told Business Recorder here on Friday.

"Pakistan's exports to Afghanistan, which stood at $1.2 billion last year, have gone down by $250 million due to a number of factors," they said. A businessman from Peshawar had raised the issue with President Pervez Musharraf during the program 'Aiwan-i-Sadr say' on Thursday, that Pakistan's exports to Afghanistan had dropped to $450 million, from $1.2 billion, due to imposition of 50 percent duty on Pakistani products, which stunned the President.

He further said that Afghanistan has discriminated Pakistan as compared to other countries while imposing duty. The President said that he was unaware of this development, and if on ground the situation was the same, he would take up the issue with Afghanistan. Sources said that the Trade Development Authority of Pakistan (TDAP) had analysed the factors which led to decline in exports to Afghanistan. They added that the issue had already been taken up with Kabul.

Another reason, according to TDAP, was enhancement in exports of other regional countries, which dented the market share of Pakistan. They said that two reasons of decline in exports to Kabul were imposition of Regulatory Duty (RD) on steel products by Federal Board of Revenue (FBR), and a dispute with Pakistan Vanaspati Manufacturers Association (PVMA) regarding duty on edible oil/ghee being exported to Afghanistan.

Sources said that Kabul may have imposed duty on goods, including marble products, which are being re-exported to Central Asian States. According to another official, Afghanistan had asked Pakistan to remove export barriers, which was not entertained as per Kabul's aspirations.

Kabul may have imposed duty on Pakistan products as punitive action, after not receiving positive gesture on its proposal, the official said. It is pertinent to note that Pakistan's cement and flour exports to Afghanistan are in full swing.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan's foreign exchange reserves down to $15.764 billion ​*
KARACHI (December 08 2007): Pakistan's foreign exchange reserves were lower by 343 million to $15.764 billion in the week ending on December 1, the central bank said on Friday. Reserves held by the State Bank of Pakistan fell to $13.557 billion from $13.896 billion from a week earlier, while those held by commercial banks were $2.207 billion from $2.211 billion, the central bank said in a statement.

Pakistan's foreign exchange reserves have grown steadily over the past few months because of rising foreign investment inflows and higher remittances from Pakistani abroad. Reserves hit an all-time high of $16.388 billion in the week ending on November 10. However, in the past three weeks, foreign reserves fell because of outflows from the stock market after President Pervez Musharraf imposed emergency on November 3.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*World Bank to provide $75 million for poverty alleviation ​*
ISLAMABAD (December 08 2007): The World Bank will provide $75 million loan to Pakistan for additional financing for the second Poverty Alleviation Fund project to support participatory development through social mobilisation under an agreement signed here on Friday.

The agreement was signed by Akram Malik, Secretary, Economic Affairs Division, on behalf of the Government of Pakistan, Yusupha B Crookes, Country Director, World Bank, and Kamal Hayat, Chief Executive Officer, Pakistan Poverty Alleviation Fund (PPAF).

Akram told Business Recorder that the IDA credit would be provided in two portions: (a) an amount equivalent to $49.7 million @ 4.2 percent annual interest and repayable in 35 years with a grace period of 10 years, and (b) $25.3 million, which would have standard IDA terms ie repayable in 35 years including a grace period of 10 years.

He said the main objective of the project is social mobilisation of about one million rural poor households in more than 50,000 multifunctional and sustainable community organisations in rural areas of 25 poorest districts of the country.

He said these funds would be used through reputed nongovernmental organisations (NGOs) like Pakistan Poverty Alleviation Fund, headed by Hussain Dawood, to alleviate poverty by improving access of the rural and urban poor to economic resources and services.

He said the project would strengthen the mobilisation of existing community organisation to form federations at the Union Council level to form local support organisations to enhance communities access to public and private sector resources and services and to link organised communities more effectively with local governments.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*136MW power project to be inaugurated on Monday ​* 
Saturday, December 08, 2007

KARACHI: Pakistan Power Resources (PPR) 136MW power plant at Bhikhi, Sheikhupura, Punjab, is being inaugurated on Monday.

The $80 million project took about six months to be completed and is currently producing up to 80MW of electricity. The principal sponsor of the project is Lahore-based Associated Group (AG), also Pakistans largest LPG producer.

The power plant symbolises enduring and abiding investor confidence in Pakistan and its economy, said AG spokesman Fasih Ahmed in a statement issued here. He said the project company, PPR, is based in Oklahoma and is co-sponsored by the US states former governor.

PPR power plant is the second of the two fast-track rental power plants that were awarded by the government through a competitive bidding process and which have been set up in the current calendar year. 

AG is also going to be taking charge of the 3x50MW Lakhra power plant for a 20-year period. The rehabilitation of the Lakhra project, Pakistans only coal-fired power plant, should encourage investors to tap indigenous coal for power generation, said Ahmed. US-based Wood Group is the O and M operator of the Bhikhi Plant and has hired and trained Pakistanis who will run the plant at all times.

136MW power project to be inaugurated on Monday


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## Neo

*Pakistan ranked 32 out of 43 markets​*
KARACHI: Pakistan was ranked 32 in a survey that measured the extent to which governments in 43 markets provide key payment services on electronic platforms. 

The Visa International conducted the Government e-Payments Adoption Ranking (GEAR) survey. The GEAR study conducted independently by the Economist Intelligence Unit ranked Canada as the worlds leading nation for government electronic payments (with a score of 92.4 out of 100), because of the governments comprehensive electronic administration procedures.

The 43 markets were chosen to represent all regions, many cultures and political systems, and broad levels of economic development as they account for approximately 83 percent of the total human population and approximately 91 percent of global economic output. The adoption rankings were based on 31 indicators grouped into six payment categories, including consumer-to-government; government-to-consumer; business-to-government; and government-to-business. 

Pakistan ranked within the top 25 in three of the six categories: consumer-to-government, government-to-consumer, and government-to-business. Pakistan also received good indicator scores in the areas of income tax payments; automotive costs; toll roads, bridges, zones, fines, tickets etc.; income tax refunds and sales/VAT tax payments.

Amer Pasha, Visa country manager for Pakistan said: Pakistanis are beginning to see how electronic payments can benefit government and their citizens by streamlining procurement and travel payments, improving financial transparency and citizens relations, and fostering economic growth and financial responsibility. 

The GEAR study provides Visa and our client financial institutions with valuable insights into the government payments sector, helping us generate new ideas to meet governments needs through safe and reliable electronic payments alternatives, said Pasha. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*SAARC Development Fund ​* 
Pakistan, India to contribute $170m

Sunday, December 09, 2007

ISLAMABAD: Pakistan and India will contribute $70 million and $100 million respectively to newly-established SAARC Development Fund (SDF) for meeting infrastructure, social and economic sectors requirements of member states, it is learnt.

Earlier, New Delhi and Islamabad had remained at loggerheads for almost one and a half years on some of the crucial operational issues related to the fund but finally an inter-governmental meeting held recently in Kathmandu helped to iron out differences between the two nuclear-armed neighbours within the SAARC fold.

A major portion of the funding under the umbrella of SDF, having allocated amount of $300 million, will be spent in the least developed countries (LDCs) within the ranks of the SAARC states. Public-private partnership (PPP) will also be utilised for providing funds to member states through the SDF.

Out of total allocated amount of $300 million for SDF establishment, Pakistan and India will be the major donors. Finally, both the countries have been able to overcome their differences during the fourth meeting of the member states, held a month ago, at Kathmandu for establishing a fund to meet various sector requirements of member states, said a diplomatic source in an exclusive talk with The News here on Saturday.

Sources said the inter-governmental committee of SAARC states also decided to allocate one billion Special Drawing Rights (SDR) to the SDF in accordance with the formula adopted by the International Monetary Fund (IMF). The contribution of member states to the SDF was decided in accordance with their share in the budget of the SAARC secretariat.

The initial commitment of $300 million (or 225 million SDR) would be stretched up to one billion SDR for the SDF in coming years, the sources added. So New Delhi and Islamabad will be the major contributors of seed money for the SDF by providing $100 million and $70 million respectively and the remaining $130 million will be shared by all other member states of the SAARC.

The South Asian Development Fund (SADF) was created in 1996 with the merger of SAARC Fund for Regional Projects (SFRP) and SAARC Regional Fund. SADF started with a base of US$5 million under SFRP contributed on pro rata basis by the SAARC member states. It has a fund of about $6.6 million.

In the last few years, the SAARC has been considering proposals like Poverty Alleviation Fund, Infrastructure Fund, South Asian Development Bank, Media Development Fund and Voluntary Fund, in addition to the SADF.

The meeting of financial experts, amongst others, agreed that proliferation of financing mechanisms would pose administrative, financial and operational difficulties, including the question of fund mobilisation and management. It recommended that the SADF be reconstituted into the SAARC Development Fund (SDF), with a permanent Secretariat, with three windows: social, economic and infrastructure.

The thirteenth SAARC summit decided to reconstitute the SADF into SDF to serve as the umbrella financial institution for all SAARC projects and programmes. The leaders directed the finance ministers to look into the operational modalities of the fund.

The second meeting of the financial experts recommended an initial $300 million for the social window. It agreed on the broad principles and essential functional elements for the SDF. The social window would primarily focus on poverty alleviation and social development projects.

The infrastructure window would cover projects in areas such as energy, power, transportation, telecommunications, environment, tourism and others. The economic window would primarily be devoted to non-infrastructural funding. Subsequently, the SDF Board has been constituted. The first meeting of the SDF board considered the inputs developed through studies undertaken on legal architecture and mobilisation/generation of funds and other essential operational issues.

The meeting deliberated on various aspects of creating the SDF as a legal entity. Besides other projects of physical connectivity, air connectivity of Male-New Delhi and Islamabad-New Delhi would be established with the help of the SDF.

SAARC Development Fund


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## Neo

*PR to engage private sector in freight operations ​* 
Sunday, December 09, 2007

ISLAMABAD: Caretaker Minister for Railways Mansoor Tariq said on Saturday that the Pakistan Railways (PR) would encourage the private sector to invest in freight operations for generating more revenues and bringing efficiency in freight logistics.

He was talking to delegations comprising officials of the National Logistic Cell (NLC) and a Dubai-based business group.

The NLC in collaboration with the Dubai based group, which is involved in freight handling all over the world, has offered the PR to operate their own container coaches between Karachi and Lahore in cargo operations.

The minister urged the delegation to avail of the Open Track Policy initiated by the PR where the private parties can operate their own rolling stock while paying track access charges to railways. 

Mansoor Tariq also pushed the delegation for getting these container wagons manufactured at Pakistan Carriage Factory and Moghulpura Workshop. 

He said this would not only save the foreign exchange but also provide financial gains to railways, which is already involved in manufacturing of such wagons in line with international standards.

The minister said introduction of private partnership into the freight logistics would enable the PR bring efficiency and promptness in such business activities. 

As the economy has grown tremendously over the last decade due to consistent and business-friendly policies of the government, there is a dire need to expand the network of freight handling, he said. 

He said the government has provided a level playing field to the private sector as it brings investment and creates job opportunities. Despite holistic efforts made by the PR over the last few years, it could manage to handle only 4 per cent of the total freight business activity, he said. 

The minister said there is a tremendous scope for business related activities besides having lots of opportunities as the country is going to serve as a business hub for Europe and Central and Middle East in the coming years, he added. 

Mansoor Tariq said that the volume of business can be doubled as there is a great demand from the business community to increase the number of fast cargo wagons from Karachi downwards.

The minister told delegation that a number of steps have recently been taken to improve the performance of freight segment.

He said high capacity express container trains have been introduced, which operate on daily basis between Karachi and Lahore, reducing the travel time from 56 to 28 hours.

PR to engage private sector in freight operations


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## aryan2007

Neo said:


> *PR to engage private sector in freight operations ​*
> Sunday, December 09, 2007
> 
> ISLAMABAD: Caretaker Minister for Railways Mansoor Tariq said on Saturday that the Pakistan Railways (PR) would encourage the private sector to invest in freight operations for generating more revenues and bringing efficiency in freight logistics.
> 
> He was talking to delegations comprising officials of the National Logistic Cell (NLC) and a Dubai-based business group.
> 
> The NLC in collaboration with the Dubai based group, which is involved in freight handling all over the world, has offered the PR to operate their own container coaches between Karachi and Lahore in cargo operations.
> 
> The minister urged the delegation to avail of the Open Track Policy initiated by the PR where the private parties can operate their own rolling stock while paying track access charges to railways.
> 
> Mansoor Tariq also pushed the delegation for getting these container wagons manufactured at Pakistan Carriage Factory and Moghulpura Workshop.
> 
> He said this would not only save the foreign exchange but also provide financial gains to railways, which is already involved in manufacturing of such wagons in line with international standards.
> 
> The minister said introduction of private partnership into the freight logistics would enable the PR bring efficiency and promptness in such business activities.
> 
> As the economy has grown tremendously over the last decade due to consistent and business-friendly policies of the government, there is a dire need to expand the network of freight handling, he said.
> 
> He said the government has provided a level playing field to the private sector as it brings investment and creates job opportunities. Despite holistic efforts made by the PR over the last few years, it could manage to handle only 4 per cent of the total freight business activity, he said.
> 
> The minister said there is a tremendous scope for business related activities besides having lots of opportunities as the country is going to serve as a business hub for Europe and Central and Middle East in the coming years, he added.
> 
> Mansoor Tariq said that the volume of business can be doubled as there is a great demand from the business community to increase the number of fast cargo wagons from Karachi downwards.
> 
> The minister told delegation that a number of steps have recently been taken to improve the performance of freight segment.
> 
> He said high capacity express container trains have been introduced, which operate on daily basis between Karachi and Lahore, reducing the travel time from 56 to 28 hours.
> 
> PR to engage private sector in freight operations



this is awesome news for Pakistan...
I don't know why Indian Govt doesn't privatise our railways..though the 5bn$ profit per annum is a detterent yet the investment required to make it world class requires a 100bn$ investment impossible without private participation..


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## Neo

*12 percent rise in November exports ​*
ISLAMABAD (December 10 2007): There are indications that exports have done well in November 2007. Preliminary estimates suggest that exports in the month grew by over 12 percent as compared November 2006.

In an update on Pakistan's economy, Special Secretary, Ministry of Finance, Dr Ashfaque Hasan Khan told Business Recorder that exports (on fob) had grown at an average rate of 10.8 percent during the first four months (July-October) of the current financial year, amounting to $5997 million, against 4.1 percent in the same period of last year.

He said that growth of 10.8 percent in exports was certainly an encouraging trend as the trade and current account deficits continued to register improvement for the second consecutive month of the current fiscal year. He said tat imports, on the other hand, grew at a modest rate of 4.3 percent, amounting to $9530 million, against a growth of 14.5 percent in the same period of last year.

He said tat as a result of the developments on exports and imports, trade deficit reduced by $191 million, from $3724 million to $3533 million. "Improvement in trade balance during the period under consideration is an encouraging development and will have salutary impact on the country's overall balance of payments" he said.

Dr Ashfaque said that private transfers also registered an improvement of 27.4 percent, rising from $2899 million to $3693 million, during four months. He said that remittances, a major component of private transfers, also grew by over 26.5 percent, to $2080 million, during his period.

He said that as a result of these developments the current account deficit in the first four months narrowed by $518 million, to $2996 million, which was 1.8 percent of projected GDP.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Bank credit and the real economy​*
GONE are the days when investors could set up industrial projects involving an investment more than ten times the money they had with them at that time.

Amjad Rashid, Chairman of the Banking and Finance Credit Committee of the Federation of Pakistan Chambers of Commerce and Industry, recalled in the meeting of the Private Sector Credit Advisory Council (PSCAC) of the State Bank of Pakistan on December 3, how in 1983 small and new investors like him were helped by more than half a dozen development financial institutions and other agencies by way of bridge financing, fixed investment loan, working capital etc.

Not so now, he lamented and complained that banks at present were focusing more on speculative business of stocks, real estate and commodities rather than on real sectorsindustry and agriculture.

Many of the big industrial groups owe their present status to the liberal credit policies in the eighties which allowed new and small entrepreneurs to enter the industry and flourish, said Amjad Rashid, who now presides over an industrial and business group after having worked in a bank and then as a consultant for some time.

The banks have closed their doors on new and small business groups, he observed while asking tell me how many new industrialists have come in the field in last 15 years?

A presentation on banking credit to trade and industry, agriculture, housing, consumer finance and small and medium enterprises at the Credit Council meeting by the Governor of State Bank of Pakistan, Dr Shamshad Akhtar, with the help of her directors failed to convince the representatives of business and agriculture on the central banks credit policies.

Credit utilisation by the private sector has been reduced to Rs365.7 billion in 2007 from Rs401.8 billion in 2006, Mirza Ikhtiar Baig of FPCCI Credit Council, who participated in the meeting, said.

This reduction in credit utilisation is because of fall in industrial investment and slowing down of working capital loans, he added.

He pointed out that the growth in loans for large-scale manufacturing came down to eight per cent in 2007 from 18 per cent in 2004. There has been a drop of 37 per cent in import of textile machinery.

The business leaders blame the tight monetary policy for retarding industrial growth. The monetary policy has also failed to control inflation which now appears to be gathering more strength at the end of the current calendar year.

The State Bank shares the perception of a decline in credit utilisation but attributes it to lower demand by the corporate sector and a cautious lending policy by the banks.

Yet, it reveals a pick up in private sectors demand for credit since September 22 that obviously corresponds to increasing demand from textile mills for cotton.

The private sector credit since last week of September stands at Rs123.5 billion - Rs20 billion more than that in the corresponding period last year.

A startling disclosure by the State Bank is a sharp fall in share of the state-run banks in private sector credit up to mid-November.

It has come down to 3.5 per cent from last years corresponding figure of 24 per cent. Private banks and the privatised banks continue to be major lenders and have provided 71 per cent of total loans in fiscal 2007 that has now gone up to 93 per cent in more than five months of the current fiscal year.

Foreign banks offered five per cent of the industrial credit during the last fiscal year. Up to mid-November this year, their share was only 1.1 per cent.

Till mid of November 2007, the private sector credit has expanded by Rs86.9 billion compared to Rs111.7 billion in the same period of last fiscal year.

The State Banks view is that the expansion in credit is in line with last three years comparable average growth.

The textile sector continues to get the lions share in the bank credit and received a total of Rs16.8 billion during July and mid - November as against Rs3 billion in the same period last year.

An analysis showed that textile sector got Rs28.2 billion working capital against the last years retirement of Rs1.6 billion(till mid-Nov). But Rs11.4 billion fixed investment loans were retired as against credit of Rs4.6 billion during the same period last fiscal year.

Construction is one area where bank credit is in much in demand. A total of Rs5.1 billion has been advanced so far as against Rs500 million in the corresponding period of last fiscal year.

Electrical machinery and electricity, gas and water are the other areas which received a little more credit so far this year.

But growth in credit expansion so far in agriculture is substantially lower at Rs7.3 billion as against the comparative figure of Rs12.2 billion of last year.

The State Bank findings show uneven geographical distribution of agriculture credit as bulk of it is going towards Punjab and the share of Sindh and Balochistan is constantly falling for the last five years.

For this, the responsibility, according to Syed Qamaruzzaman Shah, the President of Sindh Chamber of Agriculture, lies on the Sindh government.

The Punjab government has taken adequate measures to ensure that their farmers avail the maximum credit facility. The Punjab Provincial Co-operative Bank is functioning and helping farmers.

The Punjab Bank too contributes a lot to supplement credit of specialised and commercial banks.

The Punjab Board of Revenue did not waste a minute in circulating former Prime Minister Shaukat Azizs decision to increase the value of Production Index Unit (PIU) to Rs1,200 from Rs400 for collateral for bank loans.

In Sindh, the provincial co-operative bank was closed down 18 years ago on account of more than Rs1 billion loan default by big landlords.

More than 250,000 small farmers have not been issued passbooks. And the Board of Revenue is still to circulate the decision on increase value of PIU.

In the Credit Council meeting last Monday, a lady officer from the Sindh government had to cut a sorry figure when she remarked that her province was being given unfair treatment as regards agriculture credit.

I am also from Sindh and want farmers to get their due share in the credit, she said. The State Bank Governor promptly asked her to advise her government to take necessary steps to facilitate farmers to avail agriculture credit.

Mr Shah wants compulsory insurance cover for all bank loans to the farmers in Sindh as was being done in some parts of Punjab. He said that a premium rate of 1.5 to 2 per cent being offered by the government-owned National Insurance Company was acceptable to the farmers.

In Sindh the banks are auctioning small farmers lands because of default, he disclosed. He wants that farm insurance premium be shared by three stakeholdersfarmer, government and the bank.

A State Bank report on agriculture credit found market distortions with lending at lower than market rate by the banks.

One of the participants of the Credit Council meeting said that bulk of the farm loans were being obtained by the influential landlords, commodity brokers and the middlemen.

Small farmers get credit from one of these three powerful segments of rural elite in the shape of inputs at almost double the cost of market rate and on more than 100 per cent interest by offering their crop as collateral. And hence the unending vicious cycle of borrowing and paying back that makes small farmers virtually bonded labour of the rural elite.

Bank credit and the real economy -DAWN - Business; December 10, 2007


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## Neo

*Industry eyeing Indian cotton, man-made fibres​*
The crisis ridden textile industry has renewed its effort to push the caretaker government for dismantling the barriers in the way of import of raw materials  cotton and man-made fibres, from neighbouring India in order to cut down its input costs.

The initiative, led by the spinners, signifies a break from the past as the industry is now focused more on convincing the government to provide easier access to cheaper raw materials rather than seeking cash subsidy. The caretakers  with their limited mandate to hold a free and transparent vote next month, however remain elusive even on the demand although it does not entail any additional financial burden on the exchequer.

We met textile minister Shahzada Alam Monnoo (in the last week of November), but failed to get any firm commitment from him, says All Pakistan Textile Mills Association (Aptma-Punjab) chairman-elect Akber Sheikh. The Aptma delegation focused on the provision of a level playing field to the textile industry and the removal of the anomalies in the stated official policy that seeks to encourage free trade in the textile raw materials from and into the country. The industry is currently seeking free import of all types of cotton from India by road via Wagha  so far the government permits the import of long staple fibre from the neighbouring country and that too by rail or sea .and abolition of 6.5 per cent duty on imported polyester staple fibre (PSF) and 5 per cent duty on viscose imposed to protect the local manufacturers. In addition, it is also asking for permission to import man-made fibres from India.

We arent asking for any subsidy. We are just calling for giving us a level playing field by zero rating import of raw materials for the textile industry in line with the free market economic policy being pursued by the government, says Sheikh. According to him, the industry is spending an extra cost of Rs20-25 billion on the purchase of raw materials because of the restrictions on free import of cotton from India and the protective duty on the imported man-made fibres.

If the government wishes to protect the growers or the local synthetic fibre producers, it should do so from its own pocket instead of putting huge financial burden on the industry, he insists. All Pakistan Textile Association (APTA) chairman Adil Mahmood says the Indian government is ready to export cotton by road through Wagha. But the government is not allowing it to happen, he says, adding Islamabad should encourage containerised trade of cotton by road in order to facilitate the domestic industry. He says the customs have sufficient area at the Wagha border to allow containerised import and carry out fumigation of the natural fibre. He says the industry would save Rs150-200 per maund on import of cotton from Indian Punjab via Wagha.

The entire chain of the textile industry is reeling under the rising production costs for over two years owing mainly to a sharp surge in energy rates, credit price and multiple taxes. It says the huge subsidies given by its regional competitors  India, China and Bangladesh, have made it uncompetitive in the global markets. The recent increase in the raw materials on account of short cotton crop and high petroleum prices has further eroded its comparative advantage in the world markets.

The cotton crop size is estimated to remain 11-12.8 million bales against the target of over 14 million bales and the industrys requirements of close to 16 million bales leading to a hike in the lint market. The man-made fibres have also become expensive because of the surging oil prices. The industry says some 100 mills had already shut down their operations while many others were operating far below their capacity due to high prices of raw materials.

Although the government has given around Rs30 billion to the value added textiles in the form of research & development (R&D) facility and reduction in interest payment on the outstanding loans to the entire chain over the last two years to bail it out, it has failed to lift the countrys exports. The industry, according to official statistics, has increased its exports only by one per cent in the first four months (July-October) of the current fiscal year. Many attribute this meagre growth in textile exports to appreciation in the value of Indian and Chinese currencies rather than any effort on the part of the industry. Indian rupee has appreciated by 10 per cent while Chinese yuan has gained 6 per cent against the American dollar. The situation has given rise to fears that the textile exports could remain far below the target of $12.2 billion for the year.

It is not correct to say that the governments bail-out plan has fallen flat. Had the industry not received the official assistance in the form of cash subsidy and reduction in interest rates, the situation would have been far worse than it is now, says a leading knitwear exporter M.I. Khurram. He says the exporters had a hard time selling their products in wake of travel advisories issued by the United States and European Union countries as well as the months-long political turmoil in the country. The rising cost of production has already thrown us out competition in the international markets. If the situation persists for long, the textile exports could dip further, says Khurram and adds the salvation of the industry lies in substantial reduction in the cost of production. We are around 10-12 per cent more expensive than India and 15 per cent than China. How can we attract buyers in such a situation when political uncertainty is also stopping them from placing orders with us, he says. He too believes that the opening of Wagha for import of cotton from India and duty free import of man-made fibres could help the industry reduce its costs in the short- run and become more competitive in the global markets.

Adil says the government must consider putting in place bankruptcy laws based on the principle of limited liability for the textile manufacturers if it is not in a mood help the industry. At least we deserve an honourable exit strategy, he says. Sheikh endorses his views and adds the government should encourage mergers and acquisitions of smaller units with the larger units by allowing tax incentives to the latter. He says mergers and acquisitions will prevent large-scale closures of the mills.

With the caretaker government having a limited mandate, and life, there is hardly a chance for the textile industry to get itself heard.

Industry eyeing Indian cotton, man-made fibres -DAWN - Business; December 10, 2007


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## Neo

*Akhori dam and the Tarbela links​*
By Engr Akram Khan



The proposed Akhori dam project will store about 8.6 billion cubic metres (seven million acres feet) of surplus Indus River water that is spilled after filling Tarbela reservoir during the monsoon season.

The stored water will be released for mitigating irrigation shortages during the dry season. The project is quite simple and includes a gated intake structure, a 37-km long water conveyance channel, a reservoir, a hydropower station, a spillway, dams and ancillary works.

The reservoir, called Akhori reservoir, will be developed by constructing dams across a valley near Akhori village. The valley is situated between Attock and Fatehjang towns, on the left bank of the Haro River at an approximate distance of 40 kilometres west of Islamabad. Detailed feasibility studies of the project have confirmed its technical and economic viability.

The intake structure will be designed for supplying the water from Tarbela to Akhori reservoir and it will be constructed on the southern periphery of Tarbela reservoir. The intake will function as an additional spillway of Tarbela that will release the water into the conveyance channel for delivering to and storing in Akhori reservoir.

The invert or sill of the intake structure will be at the same level as the crest of two existing spillways of Tarbela. The hydropower station will be designed for harnessing the hydro energy of the stored water before it is released from Akhori reservoir into the Haro River. The released water will join the Indus River downstream of Ghazi Barotha hydropower station.

It is believed that the raised intake sill can divert to Akhori reservoir sediment free water that is near the top surface of the full Tarbela reservoir. This can prevent sedimentation of Akhori reservoir and thus ensure its sustainability. But ultimately the sedimentation of Tarbela is expected to put an end to the availability the sediment free water which can jeopardise the said sustainability.

It is expected that Tarbela reservoir will stop the supply of the sediment free water to Akhori as soon as the accumulated sediment depletes the storage below Tarbela spillways. The annual sediment inflow (the sediment entering Tarbela reservoir) will become equal to sediment outflow (the sediment leaving the reservoir), that is the sediment equilibrium will be established, sometime after the storage below the spillways is depleted.

That eventuality will make Tarbela a run of river hydropower project and it will commence releasing the sediment laden water from all of its outlets, including the future intake structure meant for supplying water to Akhori dam project.

That is how the sedimentation of Tarbela will ultimately affect the sustainability of Akhori reservoir. That eventuality can be avoided only by preventing the accumulation of the sediment in Tarbela reservoir or by establishing the sediment equilibrium before the storage below Tarbela spillways is depleted.

Fortunately, the earlier sediment equilibrium can be established by returning to and releasing from Tarbela during the dry season the water stored in Akhori reservoir.

The release of the returned water during the dry season from Tarbela can scour and flush out increasingly larger portions of new sediment entering the reservoir every year and consequently it can establish the earlier sediment equilibrium. In principle lower the water level in Tarbela more the quantity of the sediment flushed out by the returned water.

Therefore, by rigorously monitoring the sediment and by prudently managing the release of water, a substantial remaining storage capability of Tarbela below its spillways can be saved permanently.

Apparently, there is no immitigable disadvantage of storing the Indus water in Akhori and releasing that water from Tarbela during the dry season. Even the previous sediment management studies indicated that the sedimentation of Tarbela can be mitigated by releasing additional water when Tarbela is at its lowest level.

Therefore, the idea or concept of returning the water from Akhori to Tarbela deserves a detailed investigation because it offers major benefits without affecting the anticipated benefits of Akhori dam project.

Akhori dam and the Tarbela links -DAWN - Business; December 10, 2007


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## Neo

*Rising potato production and export potential​*
By Khawar Jabran and Dr Ehsan Ullah

POTATO is a tasty, nutritive and highly digestible vegetable with 75 per cent water contents. One hundred grams of potato possesses 22g carbohydrate, two gram protein, 90 kilocalories energy, 13mg calcium, 17mg vitamin C, 11mg riboflavin 1.2 mg niacin and traces of certain other minerals and fibre.

Potato is eaten intensively in a variety of forms such as boiled, baked, and cooked. As vegetable it is eaten alone as well as mixed with other vegetables, and as snacks, the most popular of them being the finger chips. It has medical significance.

It is free of cholesterol and also contains some antioxidants which are capable of protecting human beings against cancer and heart diseases.

It has potential to lower high blood pressures due to presence of a compound kukoamine. Potato mask can be employed for skin beauty especially on the pigmented ones.

Potato tubers if exposed to sunlight during growth become green in colour due to formation of poisonous alkaloid compounds solanine and chaconin which are injurious for humans as well as animals and can even cause death.

Potato was introduced to the subcontinent in the 16th century and at present it is being grown as cash crop.

During the year 2006-07 the area under potato was 0.131 million hectares (ha) with a total production of 2.6 million tons which was 67.2 per cent more than the preceding years production of 1.5 million tons.

Punjab, NWFP, Sindh and Balochistan contribute 83, nine, one, and seven per cent respectively to the total potato production.

Average price of potato in the country increased from approximately Rs250 per 40kg in 2000-01 to Rs550 per 40kg in 2005-06. Exports of potato either chilled or fresh during the year 2005-06 were 15.39 million kg earning a foreign exchange worth Rs173.2 million which was lower than the previous years export of 20.76 million kg earning a foreign exchange equal to Rs183.99 million. Sri Lanka, Afghanistan and Malaysia are the major markets of Pakistani potato.

Although there was considerable increase over the time in area and production of the crop in the country, however, the average yield is still lower than the potential.

Various factors accountable for low potato yields include lack of knowledge among farmers about growing techniques, costly seed, diseases, weeds and insect pests, mismanagement of fertiliser and irrigation, and damages caused to potato tubers during harvesting, packing, transport and storage.

Potato can be grown from sea level to 3,000m altitude. The major potato growing districts in Pakistan are Kalat, Pishin and Killa in Balochistan; Sialkot, Okara, Sahiwal, Jhang, Kasur and Gujranwala in Punjab; and Dir, Nowshehra and Mansehra in NWFP.

Three potato crops can be grown in the country in one year, two in plains including autumn and spring and one in hilly areas during the summer season.

The time for plantation of autumn crop, which contributes more than 70 per cent of the total yield, starts in early October and ends in mid November.

Spring crop contributing less than 10 per cent to the total yield, can be sown from mid- December to mid -February while the summer crop contributing more than 15 per cent is sown in early April up to mid- May.

Red and white skin potato varieties are cultivated in the country. The white skin varieties are Sante, Multa, Diamant, Ajax and Patrones while the red skin varieties include Lala Faisal, Ultimas, Desiree, Cardinal, Oscar and Symphonia.

Deep, fertile, well-drained, well-aerated, loose-textured, sandy loam, silt loam and peat soils with a neutral pH are best suited for potato cultivation.

Optimum temperature for germination, vegetative growth and tuber formation in potato is 25°C, 20°C and 16-24°C respectively.

Well decomposed farm yard manure at 20-25 tons per ha is recommended to be incorporated in the soil before land preparation. Field is given a soaking irrigation nearly two weeks before sowing to provide seed tubers with ample moisture for germination.

Field is ploughed 3-4 times using a mould board plough followed by two harrowing to prepare a fine seedbed.

Potato is propagated vegetatively. For acquiring optimal potato yield certified, healthy, vigorous and disease-free seed tubers are indispensable. Seed tubers must be of uniform size and shape without any sign of infection.

One potato tuber can be cut into pieces before sowing but the weight of each piece must be nearly 50g possessing 2-3 eyes. However, the cut pieces are more vulnerable to diseases.

Seed rate is variable depending on the size of the tubers, however 800-1000kg potato tubers are recommended for cultivation of one hectare. Sowing of sprouted seed is preferred which results in higher yields than the un-sprouted ones.

Potato tubers about one week before sowing are taken out of cold storage and spread at a cool and ventilated place usually under the shade of a tree. They start germinating in 7-9 days and are sown when the sprouts are 1cm long.

Potato seed remains dormant for 12-16 weeks so the tubers obtained from autumn crop can not be used to plant spring crop. Seed tubers are treated with fungicides like dithane-M, captan or benlate to protect them from fungal infections.

Potato tubers can be planted either on flat beds, in the furrows or on the ridges; however, ridge sowing is the most preferred method.

Ridges are 30cm high and 60cm wide. Ridges are marked at 60-75cm apart and the seed tubers are kept at 15-20cm distance and at the end the ridges are made using a tractor drawn ridger to cover the seed with soil.

Potato accomplishes its growth very speedily and has high nutrient requirements.

Recommended NPK per ha is 175kg, 125kg and 125kg respectively. All P, K and half N are added at the time of sowing as band placement along with the seed tubers while the remaining N is given 30-40 days after sowing.

Contact between the fertiliser and seed is avoided as it results in deterioration of seed tubers. Zinc sulphate 25 per cent is added at 25kg per ha to cure zinc deficiency.

Potato is irrigated 5-7 days after planting or even earlier and the subsequent irrigations are applied depending on the soil, crop and environmental conditions usually with 7-10 days interval.

Over irrigation causes the water to reach the top of ridges to harden the soil surface and resultantly impede soil aeration, so care must be taken to keep water below the apex.

Severe damages caused to potato crop due to frost in the month of December can be evaded by irrigating the fields.

More or less 15 fungal, bacterial and viral diseases are known to harm potato crop.

Major fungal diseases of potato include early and late blight, wilts, powdery scab, common scab and black scurf while leaf roll, virus Y and mycoplasma are the common viral diseases of potato.

Potato cyst and root knot are caused by nematodes while black leg and hollow heart common bacterial diseases.

Disease management in potato include sowing of healthy, disease free seed, destroying plant debris after harvesting, cultivating crop on well drained soils and raised beds or ridges, controlling insects, proper crop rotation and rouging of infected plants.

Most of fungal diseases can be controlled or at least prevented by following the above mentioned practices along with application of fungicides like dithane-M, benlate and bordeaux mixture.

Aphids, jassids, leaf hoppers, and the cut worms are most damaging insects of potato. Aphid also acts as vector for spread of viral diseases.

Neem extract two per cent solution is effective to control aphids and jassids in potato crop. Cutworms incise young potato plants at ground level and feed on tubers.

They get suppressed by flooding of the field. Moreover, application of carbafuron 3G at 25kg per ha control cutworms and leaf hoppers in potato.

Weeds are serious threat to potato crop and may cause 20-30 per cent losses of the crop. Pre-emergence application of either of the herbicides pendimethalin 330E, gramaxone 20EC or sencor 70WP at 2.25L, 3.0L, 750g per ha respectively, effectively control potato weeds.

Potato crop matures in 100-120 days. Drying of vines, hardening of potato skin and yellowing of leaves are the indications that the tubers have gained maximum size and weight.

Potatoes are reaped either using a mechanical harvester or manually using spade for their digging.

Tubers if kept under shade for 2-3 days harden their skin to avoid its removal during grading and packaging. Tubers are graded for separate packaging of superior grade to get high prices.

Potato tubers which are uninjured, clean, dry and free from diseases are packed in clean, disinfected and unspoiled bags. Potatoes to be kept for seed purposes are stored at 3-4°C while the ones to be marketed after 2-3 months can be stored at 10-15°C.

Rising potato production and export potential -DAWN - Business; December 10, 2007


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## Neo

*Uplift strategy: providing level playing field for all​*
As an emerging market, Pakistan faces a growing intensity of income inequalities between its rural and urban and skilled and unskilled workforce. The immediate impact of the structural reforms and the worsening unemployment have further widened the income gap between the rich and poor.

The governments initiatives to redress inequalities by providing subsidies, safety-nets, special schemes and allocations for disadvantaged population, continue to add to fiscal deficit and they are obviously in conflict with the market-driven path to economic growth.

No doubt, in the scenario of galloping food inflation and rise in core inflation, it is expected of government to increase subsidies and safety nets for economically deprived population.

Yet to achieve real economic growth, it is incumbent upon government to redress income inequalities by putting in place a permanent mechanism of enabling environment for the disadvantaged, giving them access to quality education, new technologies, preventive and health care for the development of a skilled and energetic workforce,

This has to be reinforced by the availability of institutional credit, market access and, of course, minimum safety nets at the initial stage to encourage the less fortunate to traverse entrepreneurial path. The approach should be for creating opportunities for the down- trodden rather than addressing their issues through ad- hoc solutions.

The have-nots have to be provided level playing field to purge inequalities and for that the government needs to divert all resources for human capital development, needed infrastructure to do business, institutional finance and marketing outlets. Providing subsidies and temporary financial and food assistance through Baitul Mal etc is not the answer to a complex problem.

Further, a persons life prospects should not be influenced by his/her peculiar circumstances in which he/she lives. Ones area of birth, gender, race and family origin should never be a deciding factor for his/her capabilities. The outcome of providing enabling environment may differ substantially from individual to individual as a consequence of difference in efforts, talent and, of course, luck. It is essential that policies to create enabling environment should be area and community-specific.

The creation of the local government has proved helpful and likely to prove more effective if things are planned and implemented at the council level, keeping in view social, cultural norms and workers capabilities, natural resources and social strength of each tehsil/town/community.

In this context, infrastructure development initiatives by local governments, particularly construction of roads, motorways, flyovers and under passes, regular water supply arrangements at least in metropolitan cities have helped not only providing employment to thousands of skilled and unskilled workers, but also has eased the problem of supply of civic amenities to poorest of the poor.

For effective management of social sector, it is recommended that education up to secondary level and health care management be made a preserve of local governments to ensure proper monitoring and supervision.

The experience of all low income developing countries has shown that even foreign assistance received for alleviation of poverty has failed to bring desired results. The impulse to generate sustained development must come from within, not from outside. There should be state-led initiatives for developing such a growth strategy, which provides level playing field for all.

No doubt, the focus on labour-intensive industries provide immediate solution for creating employment opportunity. There is a need to promote small scale and micro-enterprises for acquiring the required infrastructure and a wider outreach of the specialised financial institutions like SME banks and micro finance banks. This will promote not only social justice, but will accelerate economic growth rate.

For arresting growing inequalities, there is also the need to expand access to justice, resources and assets for a just, free and fair market environment where cartels and monopolies do not exist. For that all ethics of good governance need to be observed.

In order to improve labour market by creating jobs for both skilled and unskilled labour, the labour laws providing job protection will have to be reviewed. An entrepreneur would not invest in a venture where he / she comes across a workforce where he feels that he/she has hired them for life and even in case of compelling circumstances, it will not be possible to lay off unwanted staff.

No doubt, there should be minimum safety nets available for workers to fall back upon if they loose the job. In other words, a proper mechanism should be in place to ensure labour market flexibility.

At the same time, there is need to design more conducive fiscal and monetary policies in order to provide room to private sector to carry on their business ventures smoothly,

Tax/tariff structure need to be modified, no doubt, according to needs of business class, but most importantly for promoting social justice.

In order to move towards market economy effectively, the feudal system will have to be curbed through effective land reforms. Political inequalities have impacted all spheres of social life.

Despite macro economic turnaround achieved in last eight years, benefits of a sustained high economic growth rate are being reaped by a privileged few, whereas a major chunk of population continues to live on an income less than a dollar per day.

Hence for creating enabling environment and level playing field for have-nots, the government will have to give disadvantaged segments access to legislative process.

Uplift strategy: providing level playing field for all -DAWN - Business; December 10, 2007


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## Neo

*Need for a long-term industrial strategy​*
After losing a great deal of time, the government is to undertake formulating a long-term industrial policy.

In spite of the eight five-year plans and two major perspective plans, the government has been pursuing a sectoral approach to industrial development instead of a robust composite one.

The outcome is obvious. The contentious textile policy is failing and the sugar policy suffers from its frequent setbacks. However, the cement manufacturing policy is currently a success.

A long-term industrial policy is needed for three major reasons: to provide employment, to increase the exports and to accelerate its economic growth.

While a large number of workers are employed in industries, their wages are low, but from an investors point of view the productivity of labour is also low because of lack of education and inadequate technical training.

The industrial policy has to be on a long-term basis as investment is usually made with borrowed capital from banks. And if the industries do not work properly, the lending banks will suffer. Unless the industries are managed well and the loans are serviced diligently the banks would not be ready to lend for industrial investment.

Local businessmen were quick to fill the vacuum in the textile and sugar sectors as the raw materials were readily available in the shape of cotton and sugarcane. The cement industry was also developed in a big way. India now wants three million tons of cement from Pakistan.

While the textile industry developed, no effort was made to manufacture textile machinery which is imported at a heavy cost year after year. The machinery parts are also imported. The textile industry prefers to buy from foreign suppliers because of the large kickback it gets on the imported textile machinery. So, attempts made to manufacture the textile machinery locally have not been a success. India is not only manufacturing the textile machinery but is also willing to offer it to Pakistan at attractive prices, but the import of Indian machinery in a big way is being discouraged for political reasons.

Investment did not go into the coal mining industry although plenty of coal was available. Even now, we are depending on foreign investors to develop the Thar coal fields. Our industrialists want easy profits made from quick business and not to labour too hard.

A major shipbuilding venture Karachi Ship and Engineering Works was set up. But apart from some boats made for China, the shipyard did not make much headway. We ended up in ship breaking industry and in 1980s and 1990s became the biggest ship breaking country in the world.

We wanted to embark on shipbuilding without the basic raw material  steel  Pakistan Steel Mills was producing one fourth of the steel we needed. When it was established, the capacity of the steel mill was to go from one million tons to three million tons. So, any attempt to build ships without the basic steel had to fail.

And now, Pakistan Steel is to be privatised and two ship building yards are proposed to be set up to promote the shipbuilding industry. How much of a success we can achieve without the basic raw material  steel - when prices of the metal are rising all round, remains to be seen.

India could make headway in the steel sector as its steel manufacturing industry is even older than its independence.

There is Japan for example that is a unique country without raw materials that has become an industrial power, its workers are educated, technically trained and disciplined. So Japan has made tremendous progress in the technological sector. But Pakistan cannot make use of its own research. The research work done in the Pakistan Council of Industrial and Scientific Research and the National University of Science and Technology are not utilised by the industrialists.

If we do not make use of our own research and instead cry for the research work done abroad, what kind of industrial progress can we make? The linkage between the research institutes and the industries needs to be strengthened.

The Engineering Development Board (EDB) was very active at the time Mr Razzak Dawood was its chairman. It had taken various measures to promote the industry and recently it had a meeting in Karachi to develop the chemical sector. It is also giving attention to eliminating the freight problems as the transportation system is inefficient.

However, no headway has been made in the engineering sector in spite of the Heavy Mechanical Complex, the Machine Tool Factory, the Heavy Electrical Complex and other such institutions. These units were scheduled to be privatised but the effort has been suspended pending further study of the issue.

We are trying to export of our engineering products at a time when we are buying more and more of Chinese engineering goods. Our water equipment for domestic use is as good as the Chinese one, but there is a preference for the Chinese products as they are cheap.

We should take pride in our products and patronise them instead of preferring foreign products in the belief that anything foreign is better. But efforts should also be made to improve the quality and prices of local products.

Need for a long-term industrial strategy -DAWN - Business; December 10, 2007


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## Neo

*Demand for Balochistan coal​*
Balochistan plans to set up a coal-fired power plant of 50 megawatts to overcome power shortage in the province. Last week, the provincial government signed a memorandum of understanding (MoU) with a Canadian firm for undertaking the project by utilising locally extracted coal.

Under the deal, Balochistan Power Generation Limited (BPG) and Canadian Everlight Energy Corporation (EEC) would prepare project feasibility and submit it to provincial Thermal Power Board for approval. The Board would settle matters relating to tariff and supply of electricity between Quetta Electric Supply Company (QESCO) and these companies. The companies would be bound to spend five per cent of their total revenue on development of social sector in the areas where they supply power.

Pakistan Steel Mills Corporation (PSMC) also plans to purchase 60,000 tons of coal during the current financial year from the province. The PSMC chairman recently visited Balochistan and found the coal of good quality that fulfils the Pakistan Steel criteria.

The coal can be used for power generation and in different industries.

The coal reserves in the province are estimated at 196 million tons. Presently about 1.5 million tons are being mined from the various fields. The 60km-long Chamalang mines produce good quality coal that ranges from high volatile C bituminous to high Volatile A bituminous with a total reserves of six million tons.

Presently, over 80 per cent of the local production of coal is being used by bricks makers, while the rest is being consumed by cement factories to blend it with the imported coal to reduce the cost of production. About one per cent coal is utilised by coal-based power plants.

There is no facility of washing plant, and thats why cement industry is forced to import coal. There is vast scope for investment in coal-washing plants. Raw coal contains different impurities like sulphur, calcite, clay, rock and shale. This impure coal cannot be utilised in the industry hence impurities must be washed out. For saving energy and cost, there is a need to set up coal washing plants in the province.

A few years back, Small and Medium Enterprise Authority (Smeda) Balochistan proposed that coal-washing plants should be set up to meet specific standard of the cement industry. Coal is the cheapest source of thermal energy used in industrial sector. It has the potential to replace other expensive fuels such as furnace oil.

According to an estimate, the use of coal instead of furnace oil can result in a saving of about Rs495 million per year for a plant producing 3,000 tons of cement per day. According to an estimate cement industry requires around 3.5 million tons of coal to run its plants.

The government has decided to increase the share of coal in the countrys energy mix from 7.6 per cent to 18 per cent by the year 2018. In view of the rapidly mounting energy deficit, there is a need to modernise the provinces coal-mining sector.

Pakistans coal mining sector has urged the Federal Board of Revenue (FBR) to extend tax incentives which include duty-free import of mining machinery, equipment and transportation trucks, withdrawal of GST for another five years, bank loans at three per cent interest and the depreciation allowance exceeding 50 per cent of the total investment.

The supply of coal from Chamalang mines, earlier stopped, has started. The Chamalang-Mekhtar track has also been made operational for heavy traffic, enabling coal trucks to go to the markets. The mines were made operational following the tripartite agreement between the Marri and Luni tribes and mine contractors last year.

The project also envisages education facility for 300 students by the army. The package includes free education, books, uniforms, stationery and monthly stipend of Rs500. In the initial stage, the army would bear the cost. Later it would be managed through the Chamalang Development Fund.

Demand for Balochistan coal -DAWN - Business; December 10, 2007


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## Neo

*Foreign buying pushes market upward​*


THE Karachi Stock Exchange 100-share index last week maintained its upward drive towards its next chart point of 15,000 level followed by strong foreign and local buying on selected counters.

The volume, which had dropped to a single session total of 200m shares, soared to well over 300m, a normal figure in a bull market.

The sustained bull-run, in which the market capital swelled to a record Rs133 billion or over 4.4 trillion and the 100-share index by 475 points, reflects investors mood led by a section of foreign funds which covered positions in the leading oil and bank shares.

Stocks, therefore, finished with widespread gains as investors continued to build long positions on the banking, oil and cement sectors after reports of higher corporate earnings and expected handsome payouts.

It appears to be a judicious blend of both local institutional and foreign buying expecting positive developments on the political front despite a loud whispering about the elections boycott, leading analyst Ahsan Mehanti said.

He said foreign investors rarely re-enter the market but on assurance from some quarters which matter.

The locals follow them for good reasons as no one wants to miss a bait of capital gain.

During last week, the KSE index had gone up by about four per cent paving the way for a price flare-up on most of the low-priced blue chips counters.

Analyst Ashraf Zakaria said the market was relying on better corporate earnings and revival of foreign buying, although the year-end buying was still to emerge in a big way.

After the mid-week, the market advance was led by banking shares after reports that their managements were booking capital gains before Jan 1, when capital gain tax may be effective, a leading analyst Hasnain Asghar Ali said adding there was, however, no dearth of ghost buyers at the prevailing rates.

The KSE 100-share index maintained its upward drive for the third session in a row as investors did not want to miss the rising market and capital gains.



It finished with an extended gain of 475.38 points or 4.5 per cent at 14,473.9 as compared to 13,998.52 a week earlier. Its junior partner, the 30-shares index, on the other hand, rose by 629.33 at 17,385.05.

Over the last three sessions, the market rose by 4.5 per cent, adding Rs133 billion to the capital to 4.462 trillion, a hefty increase in a week viewed by any standard, analysts said.

Massive rise of Rs19 in MCB followed by GDR-linked buying and other leading base shares, notably National Bank, OGDC, PTCL and Bank of Punjab were the chief contributors to the current rise in index.

Muslim Commercial Bank alone has the largest weightage 11 per cent in it and adds significantly to its rise in a single session, more than a half, than the combined.

A section of the foreign investors is in the market and making selective covering purchases on the banking, oil and some other counters at the current lower levels, analysts said but failed to pinpoint any specific reason behind the revival of foreign demand.

But some others said that despite a local political mess, they may have found some clue to future share market outlook and were back in the arena.

The current lower levels, the talk of higher corporate earnings and good payouts are the chief motivating factors behind the current run-up, some others said.

Forward counter: A virtual price flare-up in the share of MCB on GDR-linked support highlighted the trading on this counter, which rose by about Rs23 followed by Pakistan Oilfields, OGDC, National Bank, D.G. Khan and Lucky Cement and some others.Muhammad Aslam

Foreign buying pushes market upward -DAWN - Business; December 10, 2007


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## Neo

*Pearl Continental to launch Hotel One ​*
LAHORE (December 11 2007): Hashoo Group Chief Executive Officer Murtaza Hashwani has announced that the Pearl Continental will launch the Hotel One, a budget accommodation, planning to establish 20 new hotels in six locations, beginning operations in the coming three months in Lahore, Sialkot and Faisalabad.

While addressing a press conference to unveil the concept of Hotel One, he said there is a huge potential for budget accommodation in Pakistan that aims to attract both local and foreign tourists at affordable rates. He also said a master franchise agreement was reached between the Pearl Continental and the Hotel One, ensuring strict standards of quality and service whereby quality bathroom and linen standards in line with Pearl Continental practices will be maintained.

"Hotel One would be a three-star hotel that would offer all the conveniences to ensure a pleasant and comfortable stay such as round-the-clock restaurants, overseas direct dialing, mini-bars, 85 satellite channels and car rental services would be available to the guests. Also for value addition, there would be complimentary tea and coffee makers in all rooms and all guests will enjoy access to high speed Wi-Fi Internet connectivity absolutely free of charge. The charges for a room per night would range between Rs 4000 and Rs 4500," he added.

He said in the next two years, the Hotel One planned to establish 20 flew hotels. Up to 250 rooms would be developed at an average of 40-50 rooms per property in the next three months. The expected investment for this ambitious project by the Hashoo Group would be between approximately Rs 2 and Rs 2.5 billion. In respect to employment opportunities, nearly 3000 employees would be hired in the next two years with 500 of those individuals becoming resource personnel and staff members in the next three months.

"With Hotel One, Hashoo Group, the leader in five-star hotel market adds another jewel to their crown. The Hotel One philosophy resolves around bridging the gap between the luxurious and the affordable. This stems from the continued commitment of the Hashoo Group in developing and promoting the hospitality and tourism sector in Pakistan. This vision is further consolidated through the induction of me Hashoo Group's launch of a hospitality institute that helps to nurture employees and the unemployed youth of Pakistan, in respect to their skills and earning potential," he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*China assures Pakistan to cut trade imbalance: FPCCI *​
BEIJING (December 11 2007): China has assured to make every effort to remove trade imbalance currently in its favour, said former President of Federation of Pakistan Chamber of Commerce and Industry (FPCCI) and Patron In-Chin of Pak-China Business Forum, Tariq Sayeed on Monday.

The assurance was given to him at a meeting by Vice-Chairman of Chambers of International Commerce Shanghai, Chen Jian Hua. Later, talking to APP from Shanghai Tariq Sayeed informed that Chen has assured that China "would help support Pakistan in getting market access of its products in order to improve trade imbalance." Tariq Sayeed pointed out that there was huge potential of number of items particularly rice, leather, surgical instruments, fish and fish products that China can import from Pakistan thus improving trade.

He said that Chen informed him that his government was fully alive to the trade imbalance and would make every effort to reduce it. Tariq Sayeed on the occasion highly appreciated China's tremendous support in economic development of Pakistan by setting up various mega projects including establishment of Gwadar Port, Heavy Machine Tool Complex, power stations, etc. He, on the occasion, presented various suggestions to improve the trade deficit including Chinese investment in Pakistan, establishment of joint ventures, and promoting Pakistani products in various exhibitions that are taking place in China.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Private sector role vital for socio-economic growth' ​*
KARACHI (December 11 2007): Fakhruddin G Ebrahim, a former judge of the Supreme Court, has said that socio-economic growth could not be achieved without private sector's participation. Hence, it is the need of the hour to evolve sustainable policy in this regard.

He said this while addressing the inaugural session of 'Employers National Convention 2007', organised by Employers' Federation of Pakistan (EFP) at a hotel here on Monday.

Other key speakers included Jose Manuel Salazar, Executive Director, International Labour Organisation (ILO), Ashraf Tabani, President of EFP, Donglin Li, Drector, ILO, Islamabad, and Khursheed Ahmed, Secretary General, Pakistan Workers Federation.

Fakhruddin said that economy of Pakistan was growing at a rapid pace with the efforts and co-operation of the private sector, but the sector needs sustainable policy, with proper execution by the government.

He said that the government should actively collaborate with the private sector, including employers and workers, for achieving sustainable economic development and fruitful industrial growth.

He lauded the role of ILO in making kind relation between employers and workers for a positive social dialogue, and added that ILO always strove to promote sustainable employment with decent working condition.

Salazar said that enterprises should be managed with modern principles by responsible management, and urged the government, and societies, to create a conducive environment for business.

"There is a need of joint efforts between government and private sector to make business-friendly environment for local and foreign investors for creating better livelihood opportunities for the countrymen," he said.

"It will also help to rehabilitate those who are living below the poverty line in the society," he added.

He said that ILO always called for new forms of co-operation among government, business, labour and society with the aim to provide better working conditions to both labour and employers.

Tabani said that EFP was playing a positive role in the growth of the country's economy and enabling enterprises to be productive and profitable in creating decent job opportunities. A large number of participants from every walk of life attended the convention.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*ADB considering to provide $225 million to Punjab government ​*
FAISALABAD (December 11 2007): Asian Development Bank (ADB) is considering a proposal to provide $225 million for "Effective Implementation of Punjab Government Efficiency Improvement Programme" to improve allocation of public resources by introducing greater performance-orientation in planning and budgeting.

According to sources of Planning and Development Department of Punjab, under this proposed project, a financially sustainable and adequate pension system will be develop in the province, while an efficient and effective civil services programme will be launched.

This programme will develop a dynamic private sector in the province, while all the benefits will contribute to broad based economic growth, employment creation, poverty reduction, and social development, which will significantly raise the living standards in Punjab.

The PGEIP will also support the GoPb in realising its long term vision as articulated in the Punjab Vision 2020 which commits to significantly improving the standards of living for the people of Punjab, especially the poor and the vulnerable. The impact of the proposed PGEIP is to improve the overall functioning of the government machinery at the provincial, district and municipal levels, and thereby improve the quality of public services. Its impact will be in the form of (i) greater performance-orientation in planning and budgeting; (ii) higher efficiency of the civil service apparatus, with sound incentives and merit-based appointment and career-progression; (iii) a fully funded and well-managed pension system that increases the confidence of civil servants and the public, and generates fiscal space for high priority social sector investments; and (iv) a redefined role for the State, and greater private sector participation.

According to official sources, the Punjab government has laid down an ambitious Vision 2020 which aims to double per capita income over the next decade. They has also implemented service delivery reforms through ADB-supported Punjab Devolved Social Services Program (PDSSP) and judicial reforms through the federal level Access to Justice Program. GoPb requested ADB to undertake the second generation reforms to continue the PRMP.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Removal of tariff barriers: Indo-Pak bilateral trade may reach $9 billion ​*
LAHORE (December 11 2007): Lahore Chamber of Commerce and Industry President Shahid Hassan Sheikh has said the removal of tariff and non-tariff barriers between India and Pakistan is a must to boost the bilateral trade.

"There is a need to further improve the transportation and communications infrastructure, procedures and valuation and standardisation and quality control measures," he said when he returned from a five-day tour to Chandigrah and New Delhi in connection with the ITEX-07 arranged by the PHD Chamber of Commerce and Industry.

PHDCCI President Sanjay Bhattia and his Pakistani counterpart, Sheikh, opened the exhibition. The Lahore Chamber of Commerce and Industry arranged the delegation to the ITEX-2007 on an invitation by its Indian counterpart.

"The removal of such barriers can jack up Indo-Pakistani trade to $9 billion in a relatively short timeframe," Sheikh said. He added that certification and standardisation of goods should be fixed on some items to make ease the process.

He had several high-profile meetings including Governor of Indian Punjab SF Rodrigues, Chief Minister of Haryana Bhupinder Singh Hooda and President PHD Chamber of Commerce and Industry Sanjay Bhattia to discuss several issues.

Former LCCI vice President Sheikh Mohammad Arshad was also present in the meetings. Both sides decided to activate Joint Study Group to chalk-out export strategy to increase bilateral trade between India and Pakistan. They believe the trade and industry should be given a chance to drive policy making in both countries.

According to estimate, the present unofficial trade between the two countries is around $2 billion. He said removing trade barriers and opening of new trade channels might pose serious challenges to our industries, but they will be a positive step for the two countries.

The Pakistani delegation members lauding both governments for allowing lorry movement to each other's terminal called for giving permission to cargo traffic at their destination points.

He said such steps would not only help Pakistan but also India. The Pakistani team called for setting up certification and standardisation of goods to be traded between the two countries, particularly for "ayurvedic" products having a steady demand in Pakistan. On Indian side's request, Pakistan Embassy officials handed over a list of 25 items for an early certification.

Commodities like textiles, surgical products, sports and leather items and cutlery that face non-tariff barriers at Indian ports and entry points that restrict exports. Imports from India currently are worth $1.25 billion while Pakistan's exports have grown slowly from $280 million in 2004-05 to $370 million in 2006-07.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Real per capita income: India behind Sri Lanka and Pakistan ​*
ISLAMABAD (December 11 2007): Brunei, Singapore, Hong Kong, China rank among the top five economies in developing Asia and the Pacific in terms of real per capita income, says a new study undertaken on purchasing power parities in the region.

According to the 2005 International Comparison Programme (ICP) in Asia and the Pacific: Purchasing Power Parity and Real Expenditure released on Monday, there is a huge disparity in real per capita Gross Domestic Product (GDP) in the region.

India, one of the fastest growing economies in the region, has a per capita income lower than the regional average, behind its neighbours Sri Lanka and Pakistan. The PRC, the region's growth engine, has above-average real per capita income.

The study, which provides a snapshot of economic measures like income, consumption expenditure and capital formation, is part of a global initiative that allows cross-country comparison purchasing powers of currencies and living standards. The ICP, which was co-ordinated globally by the World Bank, will allow comparison of major economic indicators for 146 countries globally.

The Asian Development Bank (ADB) was the regional co-ordinator for the ICP Asia-Pacific, which accounts for half the world's population. Statistical organisations of the region actively participated in this initiative.

Purchasing Power Parity (PPP) is an idea popularised by The Economist's Big Mac Index, which prices hamburgers in global cities for a quick and crude comparison of inter-country price levels. The ICP is an attempt at a cross-country comparison of key economic indicators based on PPP and provides the most comprehensive cover of a broader range of commodities.

For the first time, the People's Republic of China (PRC) and India, which together make up 64 percent of the total real GDP of the 23 economies participating in ICP Asia-Pacific which simultaneously joined this regional initiative to estimate the purchasing power parities of currencies. However, data collection and price estimation, especially when nation wide price data are not available, of various components of an economy's consumption basket pose challenges for measurement of PPP.

"The data and the results should be interpreted carefully. It is the beginning of a global and regional effort, which, in turn, will improve the robustness of future PPP estimates," says Afzal Ali, Chief Economist of ADB.

The richest economy, Brunei, has a per capita GDP more than 13 times the regional average and more than 40 times larger than the lowest ranked economy, Nepal, says the study. According to ICP, however, both the PRC and India still lag the regional average when ranked in terms of Actual Final Consumption Expenditure (AFCE).

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan has potential to become sixth largest economy: Salman ​*
LAHORE (December 11 2007): Caretaker Finance Minister Dr Salman Shah has said that Pakistan is the sixth largest country in terms of population though it has the potential to become the sixth largest economy.

"Out of Pakistan's 160 million population, one million people are below 25 years who have to participate in the growth and development of the country and run the affairs for up to next 50 years," he told the inaugural session of BMA Trade's Lahore branch here on Monday.

Pakistan's economy was the fastest growing economy in Asia and its macro economic foundation was very strong, he said adding one day it would emerge as the sixth largest economy of the world. He said that the current growth of the stock market showed a strong economic potential of the economy. "Despite political upheavals Pakistan's stock market is growing well and now the index has recovered from the after effects of politics," he added.

Terming the forthcoming elections as good omen for the economic outlook of the county he said that participation of all big parties in the general elections showed their maturity in politics.

Dr Salman said that Pakistan's public debt deficit, which was 100 percent of the GDP in 1999 dropped to 55 percent while it would soon lower to 25 percent. Likewise, Pakistan ratings were very good and are improving because of its strong economic fundamentals, he added.

He further claimed that the GDP, which stood at $63 billion in 1999 had now increased to $160 billion. He added that apart from foreign and local investment, portfolio investments was also pouring all sectors from construction to services.

Appreciating BMA Trade's initiative to open its branch in Lahore, Dr Salman Shah said it had enhanced its operations in the last few years and he was hopeful that it would open more branches. In a speech earlier, BMA Capital Managing Director Moazam Malik said they were present in all major cities and hopefully would open branches in small cities as well.

He said BMA Trade was launched over two years ago, which had rapidly grown into a network of 10 branches in the seven cities across Pakistan. He said, "in Lahore, we will offer complete menu of our services which are being offered in Karachi including futures trading and online trading. We want to be one-stop shop in financial market of the country."

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*MOL awards $130 million contract to under-liquidation company ​*
ISLAMABAD (December 11 2007): MOL Pakistan, a Hungarian oil and gas exploration and production company operating 'TAL' block in NWFP, has disqualified Hanover, an American company, for the over $130 million field development project, on technical grounds, without even opening its envelope and awarded the contract to an under-liquidation company, Presson Descon International Limited (PDIL), on single-source basis.

Sources said that Presson Desscon and Hanover were in the run for MOL Pakistan's over $130 million project at the last stage. The operator disqualified Hanover on technical ground, saying that it did not meet the requirement, but accepted, in a letter, that did not open Hanover's envelope for evaluation of its technical qualification.

MOL's letter, written in response to a Petroleum Ministry query, said: "Based on the first stage of bidding, it was found that Hanover was considered not to have satisfied the criteria in the invitation of bid. However, its technical bid was not opened".

One should wonder how MOL Pakistan determined that Hanover fell short of the technical requirement of the tender, without opening its envelope for evaluation. It establishes that MOL Pakistan wanted to pick up Presson Desscon, by excluding Hanover from the bidding process, for such a big contract. MOL Pakistan owns only 8 percent share in TAL block, and the rest 92 percent stake goes to OGDC and PPL, the public sector companies whose job is to make sure that any contract, wherein public money is involved, is given to any company through a transparent 'procedure of bidding'

It had also disqualified Presson, at an earlier stage, from participating in bidding process on litigation ground. But, taking a lenient view it not only qualified PDIL technically and commercially, knowing well that it was under liquidation, but also approached MoP for seeking its nod to award it the contract on single-source basis. This indicates poor process being followed by MOL for award of a big contract.

PDIL letter, dated October 19, confirmed that a petition filed by Currentage International Marketing (Pvt) Limited was pending for a final decision before the Lahore High Court but it was expecting some out of court settlement with the petitioner. MOL Pakistan has already awarded a $12 million pipeline contact for Gurgari plant through a selected tender, well short of standard procedure for bidding.

MOL's style of working and awarding contract of millions of dollars to 'selected' parties needs to be looked into. It's the prime responsibility of the Ministry of Petroleum to see what goes on in the name of development of Mangali field since its major stakeholders, PPL and OGDC, are from public sector, and the money being spent on their behalf is coming from public exchequer.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Dairy, cattle-farming and livestock: Sindh sends offer for Qatari firm on over $100 million projects ​*
KARACHI (December 11 2007): The Sindh government has officially sent an offer to a Qatari firm through the Board of Investment (BoI) to start work on mega project of dairy, cattle farming and livestock as planned by the firm with an initial investment of over $100 million.

Sources in the Sindh Land Utilisation Department told Business Recorder here on Monday that the offer has been forwarded to the firm concerned 10 days back via BoI to acquire land of around 5,000 acres in Interior Sindh for the mega project.

"But since the offer made, no response from the Qatari firm has been received to the provincial government on acquisition of the land," they said.

The Qatari firm had asked the provincial government to provide 10,000 acres of land to initiate the cattle-farming project at par with the developed countries like Australia and New Zealand.

However, the Sindh government has decided to provide 5,000 acres of land in Thatta district and Livestock experiment station Nabisar Road, Taluka Kunri, Umerkot, on a lease for a period of 99 years, sources said, adding that rest of the land as per demand of the firm would be provided later in different parts of the province.

Responding to a query of price of the land and the procedure on which it would be provided, sources said the statement of conditions of land provision for mega project of dairy, cattle-farming and livestock would be disclosed after getting consent from the firm.

"We are waiting for response in writing from the officials of the Qatari firm over the proposed project aiming at increasing livestock and cattle-farming in the country," they added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan, China to promote ties in oil and gas sector ​*
ISLAMABAD (December 09 2007): Ambassador of China, Lou Zhao Hui called on Minister for Petroleum and Natural Resources, Ahsan Ullah Khan here on Saturday and discussed with him matters pertaining to promoting bilateral co-operation in the petroleum sector.

The ambassador felicitated the minister for assuming the portfolio of the Ministry of Petroleum and Natural Resources in the caretaker cabinet and hoped that Sino-Pak historic friendly relations would further grow and flourish during his tenure.

Business Recorder [Pakistan's First Financial Daily]


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## ejaz007

*PC to set up 20 budget hotels*
By Our Reporter

LAHORE, Dec 10: Pearl-Continental Hotels will establish 20 budget hotels in the country during the next two years with six beginning operations in Lahore, Sialkot, Faisalabad, Gujranwala, Karachi and Multan during the next three months.
Announcing this at a press conference here on Monday, Hashoo Group Chief Executive Officer Murtaza Hashwani said the budget hotels, known as Hotel One, would have an average 40 to 50 rooms each with three to four star facilities.
Approximately, 250 rooms would be developed during the next three months. Hashoo Group would invest Rs2 to 2.5 billion in the project and hire nearly 3,000 employees during the next two years with 500 becoming resource personnel and staff members during the next three months.
He said a master franchise agreement had been reached between the PC hotels and Hotel One for ensuring strict quality and service.
He said that the Hotel One would bridge the gap between the luxurious and the affordable. The hotels meant mainly for the sales force members visiting different cities would have round-the-clock coffee shops instead of banquet halls. The daily room rent would be Rs4,000 to Rs4,500.
Hashoo Group would also make arrangement for providing hospitality training to 10,000 persons in Lahore during the next five years.

PC to set up 20 budget hotels -DAWN - Business; December 11, 2007


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## Neo

*Foreign investors eye Pakistani air routes ​* 
Tuesday, December 11, 2007

KARACHI: The Civil Aviation Authority (CAA) of Pakistan is in negotiations with two Middle Eastern parties interested in starting domestic air service in the country, Director General CAA Farooq Rehmatullah told The News on Monday. 

The prospective air service might also extend to other countries of the region, he said, but preferred not to disclose the names of the potential investors at this point of time. The new aviation policy allows private carriers to go international after completing the mandatory one year operational period on domestic routes. 

This disclosure comes on eve of the formal inauguration of the first privately run airport of the country and coincides with a period which is seeing a growing interest in the international air traffic from Pakistan with some major airlines increasing their number of frequencies and adding more cities to their networks. 

However, this interest in the international passengers has not been complemented by any surge in competition on domestic routes primarily because of the poor financial health of the Pakistan International Airlines (PIA) and inability of other domestic carriers to expand their wings in a big way. 

Even the encouragement offered by the new aviation policy for start of an air service on domestic routes with minimum investment has not materialized. The policy says intercity routes could be allotted to airlines which own small aircraft. 

It is not lack of interest. Such things take a lot of time, Remattullah said. You need engineering support and pilots and the cabin crew needs to be trained. CAA has already accorded permission to a private carrier to operate commuter service between Karachi, Hyderabad and Lahore. 

The airline, Aircraft Sales and Services (ASSL), will use a 48-seater twin engine aircraft on the route that links two domestic transit hubs with a relatively less developed city. ASSL was to start the operations back in September on thrice weekly basis but the inauguration has been delayed till next year. DG CAA also said that a number of private investors have showed interest in building and running private air strips in line with the Sialkot International Airport. 

Foreign investors eye Pakistani air routes


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## Neo

*Oil, gas output maintains upward trend​*
KARACHI: Oil and gas production maintained upward trend in the last five months (Jul-Nov) of fiscal year 2007-08, posting a growth of 4.5 percent against the corresponding period of last year. 

As per recent data released by Pakistan Petroleum Information Services (PPIS) Monday the countrys oil production has enhanced cumulatively to 693 kboepd (thousand barrels of oil equivalent per day) in the five months of the current fiscal. Local gas production in the period stood at 3.9 bcfd (billion cubic feet per day) against 3.7 bcfd produced during the same period last year.

The growth is mainly attributed to 9.9 percent and 3.9 percent increase in oil and gas production, respectively. This healthy growth in gas production came about despite decline in production from mature fields, somewhat offsetting impact of the production growth from new fields. Similarly, oil production stood at 71.7 kbpd (thousand barrels per day) in the period, compared to 65.2 kbpd last year.

This rise in production was mainly due to commencement of production from Mela-1 and increased oil production from Bobi, Tando Alam, Makori, Adhi, and Mela fields. Growth in gas production was mainly led by Qadirpur, Dakhni, and Kandhkot fields.

Daily Times - Leading News Resource of Pakistan


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## Neo

*VIEW: A new approach to development budgeting Syed Mohammad Ali​*
The growing concern about misappropriation of foreign aid implies the need for reliable systems to be put in place for managing, monitoring and reporting utilisation of direct budget support

Aid for development in countries like ours is coming under greater scrutiny. Given the increasing need for more effective utilisation, let us consider how international financial aid can be provided to support budgets of developing countries and the potential benefits that this approach can have. 

Donors have tried to directly support national budgets of poor countries. During the 1970s and 1980s, this contribution largely used to take the form of improving balance of payments, or helping manage external financing constraints. But by the 1990s, the emphasis gradually began shifting from enabling countries to relieve fiscal constraints to trying to directly address poverty reduction goals. 

International aid being funnelled directly to the national budgets of developing countries can basically take two forms; it can either provide a general contribution to the overall national budget, or it can contribute to a national budget in specified sectors such as health or education. Providing direct budget support to a recipient government using their own allocation, procurement and accounting systems is meant to increase a sense of ownership of donor funded development efforts. 

Directly supporting budgets does provide a more simple method to release foreign aid that reduces transaction costs, avoids the need to fulfil varied reporting and accounting procedures, and improves predictability in the flow of development funds. Yet there are some major concerns associated with this seemingly expeditious form of lending international support for fighting widespread global deprivation. 

The growing concern about misappropriation of foreign aid implies the need for reliable systems to be put in place for managing, monitoring and reporting utilisation of direct budget support. Developing countries, therefore, need to demonstrate transparency if more international aid is to be given directly to support their national budgets. 

To judge whether a sufficient commitment to reducing poverty exists, proponents of direct budget support have been insisting upon the need for a formal strategic framework like the Poverty Reduction Strategy Paper, which was introduced by the World Bank in borrowing countries to qualify for its loans. Formulation of other plenary frameworks recommended by international financial institutions like the Mid-term Budget Frameworks also facilitates provision of direct budget support. 

Even the United Nations system has incorporated the principle of direct budget support in its development assistance framework, and UN agencies are hosting discussions between donors and developing countries to share information to further facilitate the adoption of this new approach. Additionally, there are supplemental initiatives like gender responsive budgeting  aiming to highlight the amount of funds being allocated especially for women by disaggregating budgetary allocations to the social sector  that in turn facilitates provision of direct budget support.

International experience of using direct budget support is now beginning to emerge from countries across Africa, Asia and South America. Even Ireland is using direct budget support to develop its Tigray region. In neighbouring Bangladesh, the World Bank is providing direct budget support for the education sector. The state of Andhra Pradesh in India is also getting direct budget support form the United Kingdoms Department for International Development. The UK has, in fact, become among the most active of bilateral donors endorsing this approach and DFID has expressly keen to increase the proportion of its development aid channelled directly through government budgets of poor countries. 

In the case of Pakistan, DFID is supporting the health sector using the above mentioned sector-specific direct budget support approach. DFIDs support to the National Health Facility has aimed to improve access to good quality health services with an emphasis on the poor. For this purpose, DFID is providing the Pakistan government with resources for seven health and population programmes which include the Population Welfare Programme, the Lady Health Worker Programme, the National Tuberculosis Programme, the Expanded Program of Immunisation, the National Aids Control Programme, the National Malaria Programme and the Nutrition Programme. A consortium of international and local companies with expertise in health and population welfare issues has been formed to assist in providing technical inputs. 

The United States has also provided US $200 million as direct budget support for Pakistans Federal Public Sector Development Programme for the financial year 2007-08. Then there is the World Bank which is helping provide additional resources to the provincial education budget through its Punjab Education Development Policy Credit. Several research studies had indicated the need for more funding at the provincial and lower levels to help improve the quality and access of public education in Pakistan. 

However providing direct budget support for this purpose has proven difficult within the context of devolution, which shifted about planning and finance responsibilities between different tiers of the government. Putting in place a relatively new disbursement modality while devolution of fiscal and political responsibilities was taking place has required exhaustive explanations to the concerned authorities. Building capacity at the lower levels of government to improve financial, monitoring and management systems for ensuring transparency of direct budget support has emerged as another practical challenge. 

Donor agencies are providing technical assistance to improve the governments financial management and reporting systems. In this regard, the need for involvement of other actors like NGOs and the private sector has been recognised to facilitate awareness concerning direct budget support. The Human Rights Commission of Pakistan, for example, conducted a participatory budget analysis for primary education. More of such work needs to be undertaken to ensure that direct budget support is increasing the capacity of the government to address on-ground human needs. 

There is considerable potential for collaboration between budget analysts and human rights activists. A well done budget analysis helps determine if the government is actually allocating its resources in line with its stated policy goals, while effective human rights campaigns can compel a shift in existing budgetary priorities to better provide for citizen rights. 

It is by simultaneously making the governments of developing countries more capable and responsive to the needs of the poor that this opportunity of utilising less tightly administered development aid can be availed to lessen the prevailing depravation more quickly than meagre budgetary allocations of resource constrained countries had previously allowed. 

Daily Times - Leading News Resource of Pakistan


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## ejaz007

*ADB to provide $1.15 billion new loans to Pakistan*
* $900 million will go towards a $5.36 billion investment plan by Pakistans National Highway Authority
Staff Report

ISLAMABAD: The Asian Development Bank (ADB) will provide Pakistan up to $1.15 billion in new loans to expand its key north-south highway network and for public sector reforms in Punjab province. 
Both of these programmes will boost the economy, which will generate new jobs and reduces poverty, said Mr. Sean OSullivan, Deputy Director General of ADBs Central and West Asia Department. ADB statement issued here on Tuesday said up to $900 million has been allocated to rehabilitate and expand key sections of the countrys main highway network, which starts from the port city of Karachi and runs northward. Lack of adequate roads in Pakistan is leading to a transport bottleneck. It is a constraint to improving competitiveness and attracting private sector investment.
With trade flows concentrated along one major north-south transport corridor, this programme will make road traffic more efficient and reduce transport costs, said Ms Cleo Kawawaki, a Senior Investment Specialist with ADB. 
Cheaper transport costs will increase private sector productivity, which will help deepen and diversify the industrial base, both of which are necessary to provide jobs for the growing population, she said.
About $900 million will go toward a $5.36 billion investment plan by Pakistans National Highway Authority, which includes upgrading the highway from Karachi to Peshawar, as well as links to the port of Gwadar and the Peoples Republic of China. Once the road improvements have been completed, travel time between Karachi and Peshawar, with a distance of 1,700 kilometers, will be cut from 72 hours to only 36.
The upgrade is also crucial for regional trade flows and will allow Pakistan to act as a transit artery for goods moving between Arabian Sea ports in the south and Central Asia and the Peoples Republic of China in the north.
Funds from the first tranche, $545 million, will be used for two road projects  a 184 kilometer stretch from Faisalabad to Khanewal, as well as a separate 34-km expressway from Torkham, on the Afghan-Pakistan border, to Peshawar. For the subsequent tranches, depending on the appetite from private sector, structures such as guarantees and equity financing can be used under the programme to foster public-private partnership in the road sector. 
In addition to the $900 million, ADB will provide Pakistan with $260.65 million in loans and grants to assist Punjab province to pursue reforms that will improve efficiency in the public sector. Punjab being Pakistans most populous province faces a poverty rate at over 20 percent. However, the provincial economy has staged a major turnaround, from a 0.9 percent contraction in 2001 to a 7.1 percent expansion in 2006. 
The province needs continued infusion of public and private investments to keep apace with the growth requirements of the economy, while at the same time to ensure sound maintenance of the investments made, said Mr. Ramesh Subramaniam, Director of ADBs Central and West Asia Department.
For this to happen, Punjab needs major improvements on three fronts  enhancing public sector efficiency, increasing access to and improving the quality of public services, particularly in education, health and water and sanitation, and accelerating private sector participation in the provision of services.
Punjab province has been a pioneer in first generational public sector reforms. Moving forward, the programme will support second generational reforms in fiscal management, pension and civil service, and private sector development. It will be designed and implemented through three subprogrammes from 2007 to 2011, each within about 18 months. A $250 million loan will fund the first subprogramme.
Daily Times - Leading News Resource of Pakistan


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## ejaz007

*Govt plans to offload shares in seven firms*By Ihtashamul Haque

ISLAMABAD, Dec 11: The caretaker government has agreed to offload Government of Pakistans shareholding in seven joint investment companies through Initial Public Offerings (IPOs) with a view to benefit them and at the same time add value to developing portfolio of stock markets.
Informed sources told Dawn that during a meeting with Finance Minister Dr Salman Shah on Monday, senior representatives of Pak-Kuwait Investment Company (PKIC), Pak-Libya Holding Company (PLHC), Saudi-Pak Industrial Agricultural Investment Company (SPIACO), Pak-Oman Investment Company (POIC), Pak-Brunei Investment Company (PBIC), Pak-Iran Investment Company (PIJIC) and Pak-China Investment Company (PCIC) favoured the proposals.
However, they said some of the issues needed to be worked out before formally opting for IPOs.
In this regard, both sides decided that the ministry of finance and the Privatisation Commission should further evaluate the feasibility of offloading some shares of the GOP in joint ventures with these seven companies.
Sources said the issue was earlier discussed between the State Bank of Pakistan and Ministry of Finance and they were informed about the latest business situation in these companies.
They were told that the PKIC, which was incorporated in 1979 was now having its Rs6 billion paid-up capital.
The State Bank of Pakistan is share-holder in the equity of the company on behalf of Government of Pakistan.
With regard to the subject proposal, PKIC favours the proposal as it would not only benefit institutions but would also add value to developing portfolio of the stock markets.
However, it said the following matters have to be initially deliberated between the stakeholders in Pakistan and subsequently with the foreign partners:
Market appetite for shares to be divested through IPO; reaction of the foreign partners for proportionately divesting along with GOP); the changes required in the existing provisions under the joint venture agreement, including concessions granted to JV by GOP.
*PLHC:* The Pak-Libya Holding Company was incorporated on 14-10-1978. Its paid-up capital presently stands at Rs3.242 billion. With regard to subject proposal it was said that PLHC was established as a private company in terms of the Companies Ordinance, 1984, so the right to transfer its shares is restricted and any invitation to the public to subscribe for any share is prohibited. However, according to the joint venture agreement, the induction of third party is possible only with the consent of two partner countries.
*SPIACO:* Saudi-Pak Industrial Agricultural Investment Company was incorporated on 23-12-1981. Its paid-up capital presently stands at Rs3.0 billion by December 2006. With regard to subject proposal, SPIACO has informed that the proposal is a positive development as it will bring the following advantages:
Instant valuation of the shares, and easing of raising funds from capital market.
The critical factors will be the percentage of shareholding to be off-loaded, pricing of shares, and the timing of flotation. It is presumed that the Saudi government will also have the same option for offloading their part of shareholding to the investors of their choice in the kingdom of Saudi Arabia.
However, the Saudi government would be consulted in the matter at an appropriate time. Its BOD and the shareholders have already approved the conversion of the current private limited status of the company into public limited.
The company is now close to receiving the approval of the governments of the two countries to the change in corporate status of the company.
POIC: PaK-Oman Investment Company company was incorporated on 23-7-2001. Its paid-up capital sands at Rs6 billion at present. GOP is direct share-holder in the equity of the company. The POIC board has in principle decided that the company should be made public listed by having one or two following approaches to offer additional equity to the public up to 20 per cent or to offer existing equity to the public up to 20 per cent.
It was also decided that as and when Pak-Oman would go public through IPOs, listing would be made at the stock exchanges of both the countries.
*PBIC:* The Pak-Brunei Investment Company was incorporated on 25-11-2006. Its paid-up capital stands at Rs3.05 billion. GOP is direct share-holder in the equity of the company. With regard to subject proposal, PBIC has informed that DFIs are currently over-capitalised relative to business activities; this translates into lower return on equity, which is most likely to attract public investors in case of a public offering.
It wanted that a decision to take JICs public should be made after a thorough evaluation of key objectives / strategic; focus, future business plan and profitability targets, and regulatory framework.
*PIJIC:* The Pak-Iran Joint Investment Company was incorporated on 15-1-2007. Its paid-up capital stands at Rs4 billion. About the proposal, the PIJIC has informed that they see significant benefits to the GOP vis-a-vis off-loading the shares through IPOs. However, they would like to add that the following issues need to be addressed internally by the GOP itself: A policy of liquidating mature investments (such as those in PaK-Kuwait, Pak-Libya and SAPICO is generally a welcome step as it would have multiple benefits.
It would deepen Pakistans capital markets and increase its market capitalisation. It would bring in private sector representations on the boards of these companies and provide them to independently raise capital in future if they so desire rather than be dependent upon the GOP and the JV partner to inject more capital.
It is also said that some of the DFIs being considered have significant strategic investments. As such the share-price at IPO should reflect the true value of these strategic investments as well as the current and future earning potential of these DFIs.PCIC: The Pak-China Investment Company was established in July, 2007. Its paid-up capital stands of Rs4.253 billion. The GOP is direct share-bolder in the equity of the company.
It is believed that all joint investment companies favour the offloading of their share-holding through IPOs in consultation with the respective foreign partner countries.

Govt plans to offload shares in seven firms -DAWN - Business; December 12, 2007


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## KEWAN

(WASHINGTON (October 09 2007): An overwhelming majority of Pakistanis are supportive of international trade as they see it good for economic advancement of the country, according to a latest world-wide public opinion survey. The survey by 'Pew Global Attitudes Projects' found that 82 percent Pakistanis favour international trade, 60 percent of the respondents saw people better off in free market economies.)


Dear its all is a game of figures in reallity our local industry will fall to zero and local producer will sufer a lot. As u see in last 2 yrs MNC's are establishing in and our local industry exept major 1's are vanishing. 
Rich is becoming rich n poor is becoming more poor due to our poor agreements with MNC's. We does not offer them to transfer technology but calling them n saying come and use our resources.


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## Neo

*CPI inflation jumps to 8.67pc *​ 
Soaring prices of food items hit low-income families hard

Wednesday, December 12, 2007

ISLAMABAD: The Consumer Price Index (CPI) inflation in November 2007 went up to 8.67 per cent from 8.07 per cent during the same month last year.

For five months (July to November 2007), the inflation fell to 7.85 per cent over the corresponding period of last year (8.29 per cent), but it was still above the target of 6.5 per cent for fiscal 2007-08, the Federal Bureau of Statistics (FBS) reported on Tuesday.

Though average general inflation is coming down, rising prices of food, fuel and lighting, education, healthcare and house rent are still snatching the purchasing power of the low-income group, which is a challenge for the economic managers.

The crushing blow to millions of low and fixed income families came from rising food prices, which during Nov 2007 went into double digit at 12.45 per cent over the corresponding month of last fiscal. 

That hit the low-income families hard by further scuttling their purchasing power. It is interesting to note that high inflation in food has been noticed since the start of the last fiscal 2006-07. In that year, food inflation had been in double-digit, averaging more than 10 per cent.

During July 2006, it stood at 7.44 per cent, August 11.08 per cent, September 11.26 per cent, October 10.54 per cent, November 8.07 per cent, December 12.71 per cent, January 2007, 8.70 per cent, February 9.99 per cent, March 10.74 per cent, April 9.41 per cent, May 11.31 per cent and June 9.68 per cent.

Likewise, at the start of the new financial year 2007-08, it kept the same trajectory and during July 2007 food inflation stood at 8.47 per cent, August 8.62 per cent, September 12.97 per cent, October 14.67 per cent and during the month under review (November 2007) 12.47 per cent.

Despite their adverse impact on the low-income group, no effective steps have been taken by the government to reverse the trend. The authorities seem to be indifferent to the plight of the poor and the lower middle class who find it increasingly difficult to make ends meet with soaring prices of foodstuff and medical expenses.

In CPI basket, during the month under review, the cost of cleaning, laundry and personal appearance increased by 8.77 per cent, apparel, textile and footwear 8.67 per cent, house rent 8.27 per cent, healthcare 7.94 per cent, household, furniture and equipment 5.91 per cent and education 4.27 per cent over the corresponding month of the last fiscal.

More interestingly, the Wholesale Price Index (WPI) during the month also jacked up to 12.64 per cent from 7.46 per cent in same month of the last fiscal, which signifies further increase in general prices in the coming months.

While, main concern is that in the basket of WPI, food prices in November 2007 are costlier by 15.25 per cent, materials 15.09 per cent, fuel lighting and lubricants 14.44 per cent, building materials 9.15 per cent and manufactures up by 5.25 per cent over the corresponding month of the last fiscal.

In the span of one month, cotton seed prices went up by 10.59 per cent, cotton 8.55 per cent and mustard/rapeseed prices up by 4.78 per cent over October 2007. 

Raw materials are also costlier by 5.38 per cent and fuel, lighting and lubricants prices also up by 2.98 per cent over October 2007. Detailed analysis of the CPI data revealed that under food and beverages, the items, which became dearer in November 2007, were mustard oil 15.26 per cent, eggs 12.94 per cent, vegetable ghee 7.36 per cent, masoor pulse 6.69 per cent, spices 4.8 per cent, wheat 4.79 per cent, corn flour 4.62 per cent, beverages 3.77 per cent, wheat flour 3.49 per cent and cooking oil prices up by 3.37 per cent in a span of one month over October 2007.

Though the government has tightened its monetary policy in July, the State Bank of Pakistan tightened its stance by raising its policy rate (the 3-day repo rate, which is its rediscount rate) from nine per cent to 9.5 per cent, and adjusted upward both the banks cash-reserve requirement ratio and their statutory liquidity requirement ratio, yet the accommodative monetary policy prevailed for the last few years would have a boosting effect on the inflation.

CPI inflation jumps to 8.67pc


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## Neo

*Trade deficit widens to $7.2bn ​* 
Wednesday, December 12, 2007

ISLAMABAD: Pakistans trade deficit for the first five months of current fiscal widened to record $7.20 billion around 32.4 per cent higher than $5.44 billion recorded in the same period of last fiscal, the Federal Bureau of Statistics (FBS) said on Tuesday. 

It is feared that at current pace the trade deficit would be more than $14 billion by end this fiscal that would aggravate current account deficit (CAD) position a situation international donors term as potential threat to economic health.

International donors have time and again shown concern over Pakistans soaring trade deficit and cautioned that runaway trade deficit may hurt sustainability of economic growth.

During July-November, 2007-08, Pakistans exports totalled $7.38 billion and imports $14.58 billion against $6.89 billion and $12.33 billion, respectively recorded during the same period last year.Imports were 18.27 percent more than the same period last fiscal, while exports rose only by 7.13 percent. 

Each month, the import growth exceeds exports steadily widening the trade gap, the provisional FBS data revealed. It is important to note that previously, in its trade policy for the fiscal 2007-08, the government targeted imports at $29.6 billion and exports $19 billion with a trade deficit of $10.6 billion.

The current trend of fast growth of imports and slow pace of exports indicate that country would miss the export target and surpass the import target resulting in huge trade gap. Now in the first five months, the country achieved 38.8 percent of exports and 49.25 percent of imports target. The huge import pressure and low exports growth envisages that by the end this fiscal the trade deficit would exceed the set target of $ 10.6 billion. 

In fiscal 2005-06, the government had missed its exports target of $17 billion by a margin of $531 million. During November 2007 local goods worth $1.54 billion were exported, recording an increase of 12.28 percent against exports of $1.37 billion in the same month last year.

Imports were $3.16 billion during November 2007 up 14 percent compared to $2.77 billion in November 2006. However, comparing exports of November 2007 with the previous month, the bulletin reveals increase of 9.56 percent as against exports of the previous month, which stood at $1.41 billion. The imports interestingly declined by 6.59 per cent from $3.38 billion recorded in October 2007.

Trade deficit widens to $7.2bn


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## Neo

*Telecom sector attracts record FDI *​ 
Wednesday, December 12, 2007

ISLAMABAD: The telecom sector has received about 1,824 million dollar, which is 35 per cent of the total Foreign Direct Investment (FDI) in the country, an official of the Pakistan Telecommunication Authority (PTA) said here on Tuesday.

Total share of the telecom sector in FDI in 2001-02 was 1.2 per cent, in 2002-03 1.7 per cent, 2003-04 21.8 per cent, 2004-05 32.5 per cent, 2005-06 54.1 per cent and in 2006-07 35.6 per cent.

In the last couple of years, the telecom sector has attracted record inflows of foreign direct investment and in 2005-06, the sector received over $1.8 billion and emerged the only sector of the economy to have such huge investment.

The telecom sector has attracted about 17 per cent more FDI than the financial sector and 25 per cent more than the oil and gas sector in 2006-07.

Telecom sector attracts record FDI


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## Neo

*Infrastructure improvement ​* 
ADB loans $1.15bn to Pakistan

Wednesday, December 12, 2007

KARACHI: The Asian Development Bank (ADB) will provide Pakistan up to $1.15 billion in new loans to expand its key north-south highway network and for public sector reforms in Punjab. 

Of the total, $900 million will be spent to rehabilitate and expand key sections of the countrys main highway network, which starts at the port city of Karachi and runs northward, the international development lender said in a statement issued here on Tuesday. 

Both of these programmes will boost the economy, which generates new jobs and reduces poverty, said Sean OSullivan, Deputy Director General of ADBs Central and West Asia Department.

A lack of adequate roads in Pakistan is leading to a transport bottleneck. It is a constraint to improving competitiveness and attracting private sector investment, the ADB said. With trade flows concentrated along one major north-south transport corridor, this programme will make road traffic more efficient and reduce transport costs, said ADB Senior Investment Specialist Cleo Kawawaki. 

Cheaper transport costs will increase private sector productivity, which will help deepen and diversify the industrial base, both of which are necessary to provide jobs for the growing population, she said.

The $900 million will go toward a $5.36 billion investment plan by Pakistans National Highway Authority, which includes upgrading the highway from Karachi to Peshawar, as well as links to the port of Gwadar and the Peoples Republic of China. 

Once the road improvements have been completed, travel times between Karachi and Peshawar, a distance of 1,700 kilometers, will be cut from 72 hours to 36. The upgrade is also crucial for regional trade flows and will allow Pakistan to act as a transit artery for goods moving between Arabian Sea ports in the south and Central Asia and China in the north.

Funds from the first trench, $545 million, will be used for two road projects: a 184 kilometer stretch from Faisalabad to Khanewal, as well as a separate 34 kilometer expressway from Torkham, on the Afghan-Pakistan border, to Peshawar. 

For the subsequent tranches, depending on the appetite from private sector, structures such as guarantees and equity financing can be used under the programme to foster public private partnership in the road sector. 

In addition to the $900 million, the ADB will provide Pakistan with $260.65 million in loans and grants to assist Punjab in order to pursue reforms that will improve efficiency in the public sector.

Infrastructure improvement


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## Neo

*IPI gas pipeline project: Pakistan and Iran discuss GSPA *​
ISLAMABAD (December 12 2007): The 11th Pakistan-Iran Joint Working Group (JWG) meeting on Iran-Pakistan-India (IPI) Gas Pipeline project concluded here on Tuesday held an in-depth discussion on the technical, financial, commercial and legal aspects of Gas Sales Purchase Agreement (GSPA), which is at the advance stage of finalisation.

The Iranian delegation was led by Dr H.Ghanimi Fard, Special representative of the Petroleum Ministry of Iran, whereas the Pakistani delegation was led by Farrakh Qayyum, Secretary, Ministry of Petroleum and Natural Resources.

According to a joint press statement issued here, the discussions between the two delegations to include the few remaining issues of the documentation were marked by positive and pragmatic approach and were held in an atmosphere of confidence and mutual understanding to achieve the goal of finalisation of GSPA as early as possible.

The two sides agreed that they had covered a lot of ground on the project agreement at the bilateral level in the last couple of JWG sessions. The Iranian side stated that the window for Indian participation to join the project may not remain open for an indefinite period on the existing terms and conditions of the project.

The two sides noted with satisfaction that each of them had initiated work to a certain level on the project as forty percent of the construction of the pipeline.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Profit outflows soar to $300m in four months ​* 
Thursday, December 13, 2007

KARACHI: Outflows of profits and dividends during July-October 2007 increased by 21.4 per cent to $300 million against $247.2 million sent abroad during the same period of last fiscal.

The steep rise in outflow of dollars in terms of profits and dividends was witnessed in financial business, which surged by 187.9 per cent to $43.2 million. In the corresponding period of preceding year, the repatriation of profit of the sector was $15 million. 

The transportation and automobile (buses, trucks, vans and trail) was another sector where outflows sharply increased by 112.6 per cent to $3 million as compared to $1.4 million last year.

However, the highest outflow in terms of profit and dividend during the first four months was recorded in the power sector, where the outflows amounted to $46.7 million as compared to $26.1 million in the same period of last fiscal.

The communications was another major sector which sent back $34 million abroad against $58.1 million of last year, whereas the petroleum refining was another major sector, which witnessed rise in outflow of dollars. The petroleum refineries sent back $44.1 million, while in corresponding period of previous year the sectors outflow was $39.7 million. 

The food sector recorded outflow of $16.50 million, tobacco & cigarettes $12.6 million, chemicals $12.6 million, oil & gas exploration $31.3 million, pharmaceuticals $2.9 million, fertilizers $1.1 million, transport equipment (automobiles) $6.9 million, trade $6.6 million, tourism $24 million, storage facilities $4.1 million.

Profit outflows soar to $300m in four months


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## Neo

*500,000 bales of Indian cotton to be imported​*
ISLAMABAD, Dec 12: The government on Wednesday allowed import of 500,000 bales of short staple cotton from India through land route (Wagah) to overcome domestic shortage, it is learnt.

Sources said the decision to this effect was taken at a meeting of the Economic Coordination Committee (ECC) of the Cabinet presided over by caretaker Prime Minister Mohammadmian Soomro. Caretaker finance minister Dr Salman Shah did not attend the meeting.

The sources said the ECC directed Deputy Chairman of the Planning Commission Dr Akram Sheikh to ensure that cotton import did not exceed the allowed limit that might cause the domestic cotton prices to crash, to the disadvantage of farmers.

It was for the first time in more than eight years that almost all the leading newspapers were kept out of a briefing on the ECC meeting despite repeated requests.

The briefing by Adviser to the Finance Ministry Dr Ashfaq Hassan was kept restricted to the official media and cameramen of the electronic media. The sources said the ECC also gave a post-facto approval to a Rs18 billion syndicated loan through Habib Bank Limited for payment to Pakistan State Oil (Rs12 billion) and Shell Pakistan (Rs6 billion) at an interest rate of 10 per cent. The government will repay Rs22 billion next year to the banking consortium in one go that would include both the interest as well as the principal amount, the sources said.

The loan has been arranged to improve cash flow problems being faced by the oil companies that has led to the lowest ever oil stocks in Pakistans history. The cash flow problems arise due to a freeze on oil pricing.

The meeting, the sources said, was informed that the Sindh government had provided a full-month wheat quota to flour mills, instead of weekly quota, to overcome flour shortage. As a result, the government claimed that wheat price had declined from Rs19 to Rs17 per kg.

The meeting was also informed that with the imposition of regulatory duty on wheat products a few days ago, the exports to Afghanistan had came to a negligible level.

The ECC also endorsed de-linking of prices of liquefied petroleum gas (LPG) with Saudi Aramco Contract price allowed by the caretaker prime minister early this month.

500,000 bales of Indian cotton to be imported -DAWN - Top Stories; December 13, 2007


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## Neo

*Cabinet approves 969MW Neelum-Jhelum hydropower project​*
* Revised cost of the project is Rs 128.4 billion with a foreign exchange component of $785 million (Rs 46.5 billion)

ISLAMABAD: Federal cabinet on Wednesday formally approved the strategically important Neelum-Jhelum Hydropower project at a revised cost of Rs 128.4 billion with a foreign exchange component of Rs 46.5 billion.

The formal approval was made in the federal cabinet meeting chaired by the caretaker Prime Minister Muhammadmian Soomro. The approval cleared the way for the long- awaited construction of the project. Economic Coordination Committee (ECC) of the cabinet had earlier approved the project in April during the current year.

The project envisages the diversion of Neelum waters at Nosairi in Azad Jammu and Kashmir and it will involve tunneling of 47 km for diversion of the water from Nosairi to the power station. The project, awarded to the Chinese company will be completed in eight years. The project will also be executed through a corporate company, which has since been set up and the debt ratio of the project will b e around 50;50 with equity being raised through a nominal surcharge of electricity excluding 3 million lifeline consumers.

Addressing the cabinet on the occasion, caretaker prime minister expressed satisfaction that the project, which had been delayed for many years will not only help secure Pakistans rights over the Neelum-Jhelum waters but also go a long way in bridging the energy gap in the country through generation of additional 969 megawatt of hydel electricity which is the cheapest form of generation.

The construction of Neelum Jhelum Hydroelectric Project would enable Pakistan to get water usage rights and any further delay in construction of the said project, technically, Pakistan would be obliged under the treaty to allow India to use these waters for power generation without storage.

Official said that government of Pakistan has already approached Kuwait Fund and French financers M/s BNP Paribas for arrangement of the foreign exchange component of the $785 million (Rs 46.5 billion).

In order to arrange foreign exchange component of $785 million the government made a presentation to Kuwait Fund management delegation on March 21, 2007 and a formal request has been sent to Economic Affairs division for further submission to Kuwait Fund. The government officials have also held discussions for availability of foreign exchange component of the project with French financers M/s BNP Paribas head office which is located at Paris on March 29, 2007, the official explained.

Water and Power Development Authority (WAPDA) has already approved award of the contract to the lowest bidder i.e. CGGC-CMEC a joint venture on March 9, 2007 at the contract price of Rs 90.885 billion including foreign exchange of $785 million. The Project Director office is established and is operational at Muzaffarabad to execute the project in the site, the official added.

Government had made an allocation of Rs 5 billion in the Public Sector Development Programme (PSDP) and a sizeable amount is expected to be allocated for the project in the PSDP for the next fiscal year, the official added.

The installed capacity of the project is estimated at 969 MW and annual energy generation capability of 5150 kWh, design discharge at 230 and average head at 450 meters. Two tunnels would be built under the project design; the first would be 15 kilometers each 40 square meters and the second would be of 17 kilometers each 80 square meters. According to the official, the project would be connected with National Grid at Rawat with the construction of two separate transmission lines of 500 kV single circuit.

The official informed that the some 2500 kanals of land would be acquired for the project and in the first phase acquisition of 1123 Kanals of private land is underway. WAPDA has already transferred Rs 336 million to the Azad Jammu and Kashmir government as provisional cost of private land being acquired by it.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Foreign investors: July-October outflows of profit up 21 percent ​*
KARACHI (December 13 2007): Outflows of profit by the foreign investors registered a significant growth of 21 percent to $300 million during first four months of current fiscal year. Huge outflows of profit by the foreigners showed the foreign companies are still earning tremendous profit, analysts said.

The government of Pakistan already has allowed 100 percent repatriation of profit to the foreign investors. Therefore, the foreign investors are fully enjoying the government's policy and sending their profit abroad, they said. Repatriation of profit by the foreign investors witnessed an upsurge of some $52.8 million during the July-October of the current fiscal year.

After this upsurge the overall repatriation has reached $300 million during the first four months of the current fiscal, as it stood at $247.2 million during the same period of the last fiscal, depicting an increase of 21 percent.

Foreign investors have invested millions of dollar during last few years due to rising profit of this sector, as a result the major share of repatriation also witnessed in the financial sector.

Some $43.2 million profit from financial sector was sent back by the investors during first four months of 2007 as compared to $15 million during corresponding period of 2006, depicting an upsurge of 188 percent or $28 million during the July-October.

Earlier, communication sector was the second leading sector, however presently its repatriation has declined by 41 percent to $34 million from $58.1 million. Huge repatriation has also been witnessed in the power sector, while the petroleum refineries are on the second position.

Central Bank's latest statistics shows that foreign investors have sent profit worth $46.7 million from power sector, $44.1 million from petroleum sector, around $31 million from oil and gas exploration companies and $20.6 million from the chemicals sector.

In addition, tobacco and cigarettes sector has sent $12.6 million, $16.5 million from food sector and transport sector has sent some $15 million abroad during the first two months of current fiscal year.

It may be mentioned here that the repatriation by foreign investors is rapidly increasing, as during the last fiscal it showed an increase of $299.8 million or 59 percent to $804.2 million during the last fiscal as compared to $504 million sent during fiscal year 2006.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Iran, Pakistan decide to go ahead with gas pipeline ​*
Wednesday December 12, 2007

Islamabad/New Delhi, Dec 12 (IANS) Pakistan and Iran Wednesday claimed to have 'finally' decided to go ahead with a gas pipeline project without India's participation, and Indian officials termed the move a 'pressure tactic'. 

'We have finally decided to go ahead with the project without New Delhi's involvement,' a senior official of Pakistan's petroleum ministry told IANS a day after the 11th Pakistan-Iran Joint Working Group (JWG) meeting on the Iran-Pakistan-India (IPI) gas pipeline project concluded in Islamabad.

Requesting anonymity, he added the group had decided that India might be included in the project at a later stage. 

He said the pipeline will have the capacity to carry the gas to the Indian border if New Delhi expressed its willingness to join the project.

However, India refused to attach much importance to the official's remark.

'There is no clarity on the subject,' said a senior petroleum ministry official in New Delhi. 'One of the interpretations that we can give is that these (statements) are just pressure tactics,' he added. 

Officials in New Delhi pointed out that there have been similar statements and reports from Islamabad in recent months that India was dropped from the tri-nation project.

At a press meet on Nov 13, Indian Petroleum Secretary M.R. Srinivasan had disputed such reports and noted that there had been only bilateral talks between Iran and Pakistan in Teheran.

'But contrary to media reports... they reread all the provisions of the contract and agreed on most of the contents,' he said. Even reports on a 'deadline' to India to join the project was later denied by Iran.

India has maintained that it is very much interested to participate in the project, but it still has differences with Pakistan on transportation tariff and transit fees. 

India has refused to attend the trilateral talks, as it felt that the bilateral issues needed to be resolved first. 

'Also, the gas price is on the higher side. We are also not desperate for the gas, as there are new sources for energy since the initiation of talks on the pipeline,' said an official in New Delhi, adding that the project had to be commercially viable to ensure India's participation.

India planned to discuss the IPI pipeline project with Pakistan in the last week of November when Petroleum and Natural Gas Minister Murli Deora was to visit Islamabad to attend the steering committee meeting of the ADB-sponsored Turkmenistan-Afghanistan-Pakistan-India pipeline project.

However, the meeting had been cancelled due to domestic developments in Pakistan. The next meeting on the committee may be held in Islamabad in February 2008.

The IPI project involves building a 2,775-km pipeline to deliver natural gas from Iran's South Pars field to Pakistan and India. Expected to be completed in three to five years, its estimated cost is $7 billion.

Meanwhile, the 11th Pakistan-Iran JWG meeting discussed the Gas Sales Purchase Agreement (GSPA) and Intergovernmental Framework Agreement (IGFA).

H. Ghanimi Fard, Special Representative of Iran's Petroleum Minister, led his country's delegation whereas Farrakh Qayyum, secretary of the ministry of petroleum and natural resources, led the Pakistan delegation.

The Iranian team called on Paksitan's Petroleum and Natural Resources Minister Ahsanullah Khan, who conveyed his government's firm support to the project and urged the two delegations to conclude their discussions on the GSPA and IGFA. 

Without mentioning India, the minister said the project will begin as 'soon as possible' and without any further negotiations.

The two sides agreed that they had covered a lot of ground on the project agreement at the bilateral level in the last couple of JWG sessions. 

Iran, Pakistan decide to go ahead with gas pipeline - Yahoo! India News


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## Neo

*Pakistan's national bank to open branch in India ​*
By IANS 
Wednesday December 12, 2007

Islamabad, Dec 12 (IANS) The National Bank of Pakistan (NBP) would soon open its first branch in India, Pakistan's Online news agency reported Wednesday. 

Chief of human resources of NBP Mirza Abrar Baig said a team of bank officials would go to India next year for opening the new branch. Besides India, the bank plans to open new branches in Saudi Arabia, Canada, Bangladesh and other countries, Baig said. 

He said a new branch in Kandahar would be opened soon and one branch in Kabul is already working. 

Baig said the bank has also decided that female managers should be appointed in 30 branches out of 1300 branches across Pakistan by the end of this year. He said currently women managers are successfully working in over 60 branches.

Pakistan's national bank to open branch in India - Yahoo! India News


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## Neo

*Plan to offer investment companies shares through IPO*​ 

13 December 2007 

ISLAMABAD  The caretaker administration plans to offload Government of Pakistan's shareholding in seven joint investment companies through Initial Public Offering (IPO).

The objective is to largely benefit these companies and add value to developing portfolio of stock markets, sources said.

The senior representatives of the seven companies favoured the proposals at a meeting with Finance Minister Dr Salman Shah recently. However, they said that some of the issues needed to be worked out before formally opting for IPOs.

Joint investment companies include Pak-Kuwait Investment Company (PKIC), Pak-Libya Holding Company (PLHC), Saudi Pak Industrial Agricultural Investment Company (SPIACO), Pak Oman Investment Company (POIC), Pak-Brunei Investment Company (PBIC), Pak-Iran Investment Company (PIJIC) and Pak-China Investment Company (PCIC).

Both sides decided at a meeting that the Ministry of Finance and the Privatisation Commission should further evaluate the feasibility of offloading some shares of the GOP in joint ventures with these seven companies.

Sources said that the issue was earlier discussed between the State Bank of Pakistan and Ministry of Finance and they were informed about the latest business situation in these companies.

They were told that PKIC, which was incorporated in 1979, now have a Rs6 billion paid-up capital. The State Bank of Pakistan is share holder in the Equity of the Company on behalf of Government of Pakistan. PKIC also favours the proposal as it would not only benefit the institutions but would also add value to developing portfolio of the stock markets. However, some changes required in the existing provisions under the Joint Venture Agreement including concessions granted to the joint venture by GoP.

Pak-Libya Holding Company (PLHC): This company was incorporated in 1978. Its paid-up capital presently stands at Rs3.242 billion. In this case, the right to transfer its shares is restricted and any invitation to the public to subscribe for any share is prohibited. However, according to the Joint Venture Agreement, the induction of third party is possible only with the consent of two partner countries.

Saudi-Pak Industrial Agricultural Investment Company (SPIAIC): It was incorporated in 1981 and its paid-up capital stands at Rs30 billion by December 2006.

SPIAICO termed the proposal a positive development and said it will bring the following advantages: Instant valuation of the shares, and ease of raising funds from capital market.

The critical factors will be the percentage of shareholding to be off-loaded, pricing of shares, and the timing of flotation. 

PaK-Oman Investment Company (POIC): This company was incorporated in 2001 and its paid-up capital sands at Rs6 billion. GOP is direct share holder in the equity of the Company.

The POIC board has in principle decided that the Company should be made public listed by having one or two following approaches to offer additional equity to the public up to 20 per cent or to offer existing equity to the public up to 20 per cent. It was also decided that as and when Pak Oman would go public through IPOs, listing would be made at the stock exchanges of both the countries.

Pak-Brunei Investment Company (PBIC): This company was incorporated in 2006. Its paid-up capital stands at Rs3.05 billion. GOP is direct share holder in the equity of the company.

With regard to subject proposal, PBIC wanted that a decision to take JICs public should be made after a thorough evaluation of key objectives/strategic; focus, future business plan and profitability targets, and regulatory framework.

Pak-Iran Joint Investment Company (PIJIC): This company was incorporated January this year and its paid-up capital stands at Rs4 billion.

About the proposal, PIJIC has informed that they see significant benefits to the GOP vis-a-vis off-loading the shares through IPOs.

However, they would like to add that some issues need to be addressed internally by the GOP itself.

Pak-China Investment Company (PCIC): The company was established in July 2007. It's paid-up capital stands at Rs4.253 billion. GOP is direct shareholder in the equity of the company. It believed that all Joint investment Companies favour the offloading of their share holding through IPOs in consultation with the respective foreign partner countries.

Khaleej Times Online - Plan to offer investment companies shares through IPO


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## Introvert

*Mobilink opens new customer care centre in pakistan * 

Friday, 14 December 2007 
Mobilink, the country's leading cellular service company with more than 29 million customers and part of the Orascom Telecom Group, inaugurated a new state of the art customers care centre at Shara-e-Faisal, Karachi. The facility offers sales and finances services and provides consumers with a club lounge, offering separate and exclusive desks for priority services to high-end prepaid and post-paid customers.

The centre is equipped with an electronic queue-management system to help better manage waiting times for customers and smooth functioning of daily chores. The centre is designed to offer fast and efficient services to all walks in customers through its one window operation 
Mobilink opens new customer care centre in pakistan - Unique Pakistan


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## Introvert

*Thai trade office to be set up in Islamabad pakistan *

Friday, 14 December 2007 
Thai Consul General Joompol Manaschuang has said Thailand will be establishing its trade office in Islamabad to boost two-way trade and economic activities. Speaking at a meeting of Karachi Chamber of Commerce and Industry (KCCI), he said that the trade office would start functioning by next year. Besides increase in two-way trade, he said Thailand was interested in establishing joint ventures in difference sectors. Joompol Manaschuang said that a Pakistani trade delegation would soon visit Thailand to interact with their Thai counterparts and examine possibilities of joint ventures and increasing trade.

About tourism, he said that around 60,000 Pakistani visited Thailand every year, whereas only 200 Thai visited Pakistan annually, which was a matter of concern. He blamed media for over-publicising different incidents in Pakistan, which panicked the Thai tourists and avoided coming to Pakistan.

Agreeing with a proposal, he said that Thailand could examine possibilities of developing infrastructure at tourist sites, especially Buddhist origin sites, in joint venture with Pakistan. Speaking on the occasion Minister Consellor (Commercial) of Thailand Embassy in Dhaka, Kanyarat Vongskvl said that Thailand was interested to boost two-way trade and tourism with Pakistan.

She stressed the need for frequent exchange of trade delegations to develop person-to-person contact, which could help increase two way trade. Welcoming the guests, KCCI President Shamin Ahmed Shamsi proposed establishment of joint venture in auto parts vender industry, textile, tourism etc. 
Thai trade office to be set up in Islamabad pakistan - Unique Pakistan


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## Introvert

*Pizza Hut opens at PSO outlet in Lahore pakistan *

Thursday, 13 December 2007 
The Pakistan State Oil Company Limited opened an outlet of Pizza Hut at its petrol stations in the provincial metropolis. Executive Director of Pizza Hut Kalim Ahmad Siddiqui opened the Hut, he told reporters that the company would set up 34 outlets of fast food across the country, while his counterpart, Adeel Hassan said the oil company had already started to install 16 ATMs at its petrol stations in various cities.

He said the oil company was open for every one and that negotiation was underway with McDonalds to set up fast-food restaurants at the oil company's stations. He also said the oil company turnover had been increased to Rs 411 billion and 70 percent of the market shares among 11 oil marketing companies.

He said that against the official announcement of 3 percent margin to the oil companies was being realised at 2.2 percent while the Ministry of Petroleum was reviewing a demand to enhance that margin. 
Pizza Hut opens at PSO outlet in Lahore pakistan - Unique Pakistan


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## Neo

*Dependence on textile, clothing exports ​* 
Pakistan has small share in global trade

Friday, December 14, 2007

LAHORE: Pakistans meagre share of less than 0.2 per cent in global trade is the result of its dependence on textile and clothing exports which have only a 4.5 per cent share in total world exports, say economic experts.

According to the World Trade Statistics 2007 released by the World Trade Organisation, in textile and clothing the export of clothing amounted to $311 billion which was 2.6 per cent of the total global merchandise exports in 2006. The export of textile, other than clothing, was $219 billion which was 1.9 per cent of the total global merchandise exports.

Experts point out that even in textile and clothing the share of Pakistans exports is very low. With total textile exports of $7.41 billion, Pakistans share in global textile trade (excluding clothing) stands at 3.4 per cent. It was 0.9 per cent in 2000 and has increased almost four times in six years.

Among major buyers of Pakistans textile in 2006 were US which bought products worth $1.9 billion, Canada $104 million, the European Union $1.73 billion and Japan $71 million. But the performance in the area of clothing worries the economic experts. With total clothing exports of $3.9 billion, Pakistans share in global clothing trade comes to 1.3 per cent compared to 2.8 per cent share enjoyed by Bangladesh and 3.3 per cent by India with exports of $7.8 billion and $10.2 billion respectively.

A look at growth achieved by other nations gives an insight into comparatively poor performance of Pakistan. In 1980, Bangladeshs share in global clothing trade was zero when Pakistan had a 0.3 per cent share. By 1990, Pakistans share increased to 0.9 per cent while Bangladeshs share reached 0.6 per cent.

In 2000, Bangladesh grabbed a 2.1 per cent share in global clothing trade while Pakistans share inched up to only 1.1 per cent. In 2006, Pakistan exported apparel worth $81 million to Canada and $1.63 billion to the US compared to exports of $434 million worth of apparel by Bangladesh to Canada and $3.12 billion to the US.

Pakistans clothing exports to the EU amounted to $1.4 billion compared to exports of $5.7 billion by Bangladesh and $5.1 billion by India. With $120 billion of exports and $174 billion of imports, India is the 28th largest exporter and the 17th largest importer in the world while Pakistan is not among top 50 exporting nations though it is the 50th largest global importer.

The largest exported commodity in the world in 2006 was fuel of different types amounting to $1,771 billion. Pakistan imported fuels worth $7.68 billion (accounting for 25.8 per cent of its total imports in 2006).

The second largest export item was telecom and office equipment worth $1,451 billion. Pakistan is not on the global export map in this sector. Global exports of industrial machines stood at $1,448 billion in 2006 with practically no exports from Pakistan.

Automotive products exports amounted to $1,015 billion the world over while exports from Pakistan were less than $50 million. Its imports in the sector totalled $1.54 billion. The global agriculture products exports stood at $945 billion while Pakistans exports in the sector were limited to $2.21 billion including rice export worth around $1 billion. Pakistan imported agricultural products worth $4.13 billion (which was 13.9 per cent of its import bill).

Global chemical exports stood at $937 billion with no exports from Pakistan. Other major global exports included semi-manufactured products other than machinery worth $795 billion, iron and steel $374 billion, pharmaceuticals $311 billion, non-ferrous metal $306 billion, scientific and controlling equipment $240 billion and ores and minerals $201 billion.

Experts point out that with right policies and investment climate Pakistan has the potential to grab a substantial share in a short time in the agriculture and dairy sectors. Other sectors which could make their mark in the global market in the long run are engineering and automobile, they say.

Dependence on textile, clothing exports


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## Neo

*South Korea to invest in power projects ​* 
Friday, December 14, 2007

ISLAMABAD: South Korea on Thursday showed interest in investing in Pakistans coal-driven and other thermal power projects, which, if materialized, would help in bridging the countrys burgeoning power gap that is currently about 2,500 to 3,000MW.

At present, the countrys power demand is increasing annually by 11 to 14 per cent and the gap between demand and supply is widening which could cast shadow on the economic growth.

A visiting three-member South Korean delegation accompanied by Mian Shahabullah, business development manager of siemens Pakistan visited Investment Division & Board of Investment (ID & BOI) and discussed the investment scenario with the high ups of the government. The delegation said that in South Korea, the demand for power is stagnant and therefore they would like to consider investment options abroad in order to utilize their valuable resources and expertise.

The meeting was chaired by Secretary Mushtaq Malik, while addressing the participants of the meeting he said despite political uncertainties and security concerns the country has been able to attract a record FDI up to the tune of $5.1 billion in the fiscal year 2006-07. 

Malik told the News that the government is seeking avenues to reverse the trend of burgeoning power demand gap by setting up new power projects in the country. He said that there are 1,000MW power projects in pipeline and the government has issued Letters of Support (LoS) to various companies. 

An official from Private Power Infrastructure Board (PPIB) gave a presentation highlighting power sector policies in order to give a better insight to the potential Korean investors. He said that in the country the total installed capacity of power projects is 19,400MW, 61 per cent in public sector and 39 per cent in private sector. The country has untapped potential in power generation from coal. 

Moreover the power transmission system of the country was discussed along with the role of PPIB in terms of further facilitation for the investors and the initiatives taken by the government. The delegation was representing GS Holdings formerly part of LG Corporation. GS Holding specializes in the field of energy and distribution business. 

South Korea to invest in power projects


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## Neo

* Cement use to reach 36m tonnes by 2012 ​* 
Friday, December 14, 2007

LAHORE: At current pace of growth cement consumption in Pakistan is expected to increase from present 21 million tonnes to 36 million tonnes by 2012 while exports would touch 12 million tonnes from present export volume of three million ton.

President Pakistan Engineering Council Engineer Husnain Ahmad stated this at the international conference on strength and durability of cement structures organized by University of Engineering and Technology.

He said per capita cement use is one of the yardsticks to evaluate the developmental status of a nation. Pakistan he added is way behind developed countries in use of cement for construction purposes.

However he added the cement consumption is increasing rapidly in the country. He said the cement consumption has doubled from 10 millionton in 2000 to 21 million ton now. He said the consumption is expected to increase by another 15 million tonnes in next five years.

He said it was commendable that the local cement industry has regularly increased its production capacity much above the local demand. He said this policy is now paying of as the cement exports have already reached three million ton.

He said exports are likely to increase by another ten million tonnes on the strength of demand from neighbouring countries of Afghanistan and India. He said cement production capacity would reach 54 million ton in next five years that would be higher than the combined domestic and export demand. 

Cement use to reach 36m tonnes by 2012


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## Neo

*Machine tools, auto exhibition receives warm response ​* 
Friday, December 14, 2007

KARACHI: On the second day of the show on Thursday, the ongoing auto, auto parts and machine tools exhibition received big feedback from domestic and foreign markets as exhibitors started signing contracts.

On the second day, the international participants were meeting their potential local representatives and business partners in Pakistan at the exhibition and also negotiating several transfers of technology deals with Pakistani entrepreneurs at their production facilities. Adding to some very significant trade contracts signed on Thursday, more such large-scale deals are expected to take place during the remaining days of the show while several other contracts and joint venture MoUs are already under negotiation at the exhibition.

The Export Processing Zone Authority arranged a session on Investment Opportunities for Auto industry in EPZs of Pakistan. The session highlighted EPZAs one window operation facility and easy procedures for doing business at EPZAs of the country and to establish effective interaction with key personnel.

Machine tools, auto exhibition receives warm response


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## Neo

*Iran proposes setting up oil refinery in Sindh ​* 
Friday, December 14, 2007

Karachi: The Iranian Consul General in Karachi Massoud Mohammad Zamani on Thursday called on caretaker Sindh Chief Minister Justice (Retd) Abdul Qadir Halepota at the CM House Karachi and expressed his governments interest in setting up an oil refinery in Sindh.

During the meeting, investment opportunities in the area of livestock, cement and construction of hotels and commercial complexes in Sindh were also discussed. The Iranian Consul General stressed the need for exploiting potential in trade, commerce and industry between Pakistan and Iran and said both the nations should take maximum advantage from the business ties and relations between Tehran and Islamabad.

Caretaker Sindh CM Justice (rtd) Halepota thanked Consul General of Iran in Karachi for presenting proposal regarding establishment of oil refinery in Sindh and assured him of taking up the matter with the federal government.

He expressed the hope that if materialized, the said project will bring prosperity and generate innumerable job opportunities for the people of Sindh in particular. During the meeting, other matters of mutual interest ranging from age-old fraternal ties between the two brotherly Islamic countries in all spheres of life including arts, culture and heritage also came under discussion.

Iran proposes setting up oil refinery in Sindh


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## Neo

*Moodys downgrades outlook for banks​*
KARACHI, Dec 13: The outlook for Pakistani banks was rated negative by Moodys on Thursday, said a report of the rating agency.

The rating had been downgraded due to underlying risks faced by banks in the current, unfavourable political environment, it said. It did, however, say that the banking system should prove to be relatively resilient in the short-term, but may be tested if the political unrest prevails over a longer period.

Nondas Nicolaides, Assistant Vice-President, analyst and author of the report, wrote: The operating environment remains somewhat challenging in light of recent political events. Investor and business confidence have been somewhat impaired and caused some flight of capital by foreign investors away from the local equity markets.

The analyst observed that an extended period of political uncertainty may affect new projects and deter foreign investors, which would have a knock-on effect on future loan growth rates.

Nevertheless, Moodys noted that the efficiency of Pakistans financial system continues to improve. Privatisation and consolidation were paving the way for increased competition and efficiency, as well as driving more viable financial fundamentals, improving industry practices and enabling banks to penetrate previously untapped rural areas.

Credit growth is also strong, significantly boosting banks bottom line. Most banks profitability indicators now compare favourably internationally, and in fact are commensurate with those of higher-rated banks in other markets, says Nicolaides. Capitalisation is improving on the back of good profitability and an influx of fresh capital via rights and subordinated debt issues. This bodes well for the solvency profile of Pakistani banks, he predicts.

Problematic exposures remain high, however. Although Moodys recognises the noticeable improvements that the rated banks and the banking system as a whole have achieved on this front, the level of gross NPLs (7.1pc as of June 2007) is still sizeable by international standards.

Furthermore, whilst the rating agency regards the banks increasingly enhanced and diversified earnings base as a positive rating driver, it cautions that the new lending remains unseasoned and untested in a possible downturn of the economic cycle.

Efforts are being made to enhance regulatory oversight, and the State Bank of Pakistan is working towards establishing a well-recognised system of banking supervision on par with international best practices, he observed in the report. That said, full implementation of more stringent corporate governance regulations by all banks could prove challenging.

Moodys notes that the country will also have to work towards further modernising its banking infrastructure.Reuters

Moodys downgrades outlook for banks -DAWN - Business; December 14, 2007


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## Neo

*Services sector exports decline​*
ISLAMABAD, Dec 13: Services sector exports declined by 12.59 per cent in the first four months of the current fiscal year to $897.560 million against $1,026.817 million over last year, Federal Bureau of Statistics (FBS) said on Thursday.

The decline in export of services proceeds was the outcome of steady decrease in export of services (transportation, communication, construction, business and royalties and license fees) during the period under review.

On a monthly basis, the decline in services exports was more worrisome as it declined by 36.80 per cent to $240.355 million in October 2007 as against $380.338 million in the same month last year.

An official in the commerce ministry told Dawn that Pakistan faces a series of barriers to export its services to the developed countries.

Until these barriers were removed, it would be difficult for Pakistan to get maximum benefits from exporting its services to the developed countries, especially in the areas of allowing movement of natural persons.

There are four ways or modes of supply of trade in services: mode-1 cross border, mode-2 consumption abroad, mode-3 commercial presence and mode-4 temporary movement (presence of natural person under GATS.

He said Pakistan is working on revised offers to be submitted to the WTO secretariat possibly in March next. Pakistan had already submitted initial offers in the services sector as required under the GATS.

On the other hand, Pakistan has opened up its domestic market for foreign services providers, particularly in the banking, insurance, telecommunication, retail and some other sectors, which were flooded by foreign service providers.

This is clear from the fact that import of services were up by 11.52 per cent in the first four months of the current fiscal year to $2.994 billion against $2.684 billion over the corresponding period of last year.

On monthly basis, the growth was even more than 23 per cent to $801.922 million in October 2007 against $648.08 million over the same month last year.

Analysts proposed establishment of an independent task force to prepare the countrys position for making commitments to liberalise various sectors for foreign service providers under the World Trade Organisation (WTO) regime.

They said that the task force should be supervised by a senior advisory group having representatives from regulatory bodies, ministries, civil society and policy-makers, while preparing Pakistans position by the ministry of commerce and WTO -Geneva-based Pakistani mission in the multilateral trade negotiation.

According to details compiled by FBS for first three months, the export of insurance, finance and computer services was up by 108.26 per cent, 233.98 per cent and 35.67 per cent, respectively.

The major chunk in the export of services came from government which included spending on embassies, recorded 32.94 per cent and personal and cultural services which were up by 191.23 per cent.

The export of services which recorded a negative growth included transportation, communication, construction, royalties and other business services during the period under review over last year.

Services sector exports decline -DAWN - Business; December 14, 2007


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## Neo

*Gas field project​*
LAHORE, Dec 13: The Presson Descon International has been awarded the Manzalai Gas Field Development Project in the NWFP. According to company officials, under the project, it will produce 300 million standard cubic feet of natural gas as well as 2,900 barrels per day of condensate, and is expected to save millions of US dollars and also play a key role in the development of the northern areas.

PDILs capabilities have been acknowledged by the oil and gas sector in Pakistan, as well as internationally, especially in Egypt where it successfully completed a turnkey project.

It was a major breakthrough for a Pakistani company where highly technical solution was provided to the utmost satisfaction of the client, they said.

Gas field project -DAWN - Business; December 14, 2007


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## Neo

*Forex reserves plunge by $142 million ​*
KARACHI: The total liquid foreign reserves held by the country plunged by $142 million during the week ending on December 8 (Saturday). 

The foreign exchange reserves declined to $15.622 billion on December 8 from $15.764 billion on December 1. 

Foreign reserves held by the State Bank of Pakistan (SBP) fell to $13.417 billion from $13.557 billion. Net foreign reserves held by banks other than SBP fell to $2.204 billion from $2.207 billion. 

Bankers say this is happening because the central bank has been active in the interbank foreign exchange market, selling dollars to support the falling domestic currency. It has been intervening in the market since last several weeks, pouring in as much as $100 million on some occasions. The rupee had fallen to Rs 61.48 for a dollar last week, which necessitated SBPs intervention. The central bank came into action and pumped in dollars. As a result, the greenback came down. It traded at Rs 61.19 on Thursday. The interbank market has been facing a shortage of dollars since the beginning of the current fiscal year due to outflows from the Special Convertible Rupee Accounts (SCRA). Foreign investors, who open these accounts with banks operating in Pakistan for investment in our stock markets and government securities, had pulled their money back due to political turmoil. As a result, the central bank has had to intervene several times, drawing on its foreign exchange reserves to sell US currency in the market. Importers had also increased their forward buying, fearing extraordinary steps like freezing of foreign currency accounts, bankers said. Pakistans imports have been exceeding its exports by a big margin, putting pressure on its domestic currency. This gap in demand and supply of foreign currency is being met through foreign exchange inflows received in the form of foreign investment and remittances. Since portfolio investment has been coming down at a faster pace due to imposition of emergency, the pressure on rupee has become even more intense. A net outflow of $220 million was recorded in SCRAs during November. 

Emergency in Pakistan was imposed on November 3. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Majority of farmers avoid using improved seeds in Pakistan​*
ISLAMABAD: Despite governments tall claims about increase in per acre agriculture production, above 80 percent of growers are not using improved certified seeds in the country, official sources said here Thursday. 

The distribution of improved seed for different agricultural produce has never exceeded 20 percent of the total seed requirement at the national level. There was an urgent need for using the improved and technology based seeds for increasing per acre agriculture produce. 

On several occasions the president and prime minister have underlined the need for optimum utilization of research and technology and urged the agricultural scientists to help the farmers achieve a quantum jump in per acre yield of crops to improve agriculture sector and alleviate poverty. But the fact is that no such efforts were made on part of the government to increase agriculture production, a farmer told Daily Times by phone. 

Owing to the lack of resources, the small farmer did not use the certified seed and the latest technology in Pakistan and the wheat per-acre production remained lower than many nations in Pakistan, he maintained. 

Per acre wheat production is 3,120 kilograms in Ireland, 2,920 kgs in Israel, 2,880 kgs in Egypt, 2,720 kgs in Mexico, 2,240 kgs in China, 2,040 kgs in South India, and 960 kgs in Pakistan, an official said adding that Pakistan is on the lowest number from several agrarian economies. 

Many developed and under-developed countries have two or three times more wheat per-acre production in comparison with Pakistan. The country needs to be self-reliant in wheat production which can be possible with the usage of latest technology and certified improved seeds, the official maintained. 

Another official in the ministry of food, agriculture and livestock (MINFAL) said Pakistani farmers currently sow Irri-6 rice variety over 94.5 percent of the area. Currently, hybrid rice seed variety is cultivated on around 5.5 percent area. The IRRI-6 variety was imported in 1960 from International Rice Research Institute Philippines. Its per acre yield has stagnated at 50-60 maund per acre for more than four decades. 

Internationally this variety had been replaced by hybrid rice seed varieties. China, being the pioneer in this technology produces the highest yield hybrid rice. The per acre yield from this variety ranges from 100-130 maund that was almost double the production obtained from traditional IRRI-6 variety. 

Pakistan produces two rice varieties  the long grain super basmati grown in central Punjab and coarse grain IRRI variety cultivated in southern part of the country. About 60 percent of the super variety is consumed locally and rest is exported at very high rates. The IRRI variety is mainly cultivated for export purposes. Pakistan could almost double its IRRI variety exports if it shifts to high yielding hybrid variety.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan's foreign exchange reserves decline by five percent in one month ​* 
KARACHI (December 14 2007): Since the imposition of state of emergency on November 3, foreign exchange reserves have shown a significant decline of five percent. During the last one month, major outflows had been witnessed from the special convertible rupee account (SCRA), analyst said.

The State Bank of Pakistan's (SBP) statistics show that overall foreign reserves have registered some five percent declined during the last one month from November 10 to December 8. On Thursday, the country's overall foreign exchange reserves stood at 15.6225 billion dollar, coming down from 16.3875 billion dollars, a historical level during mid-November, indicating a dip of 765 million dollars.

A complete decline has been witnessed in the SBP reserves, which have been declined by 5.5 percent or 765.5 million dollar to 15.6225 billion dollars after the imposition of emergency. On November 10, it stood at 16.3875 billion dollars. While, the reserves held by the banks remain at 2.2048 billion dollars during week ended December 8, 2007 as compared to 2.2043 billion dollars on November 10.

An analyst attributed the decline in outflows from the SCRA account mainly to high payments of oil, and added the foreign investors had also withdrawn their amount from the stock market after the emergency and uncertainty in the country.

He said that some 300 million dollars outflow had been registered in the SCRA during the November, but after President Pervez Musharaf's announcement that emergency would be lifted on December 15, the foreign investors were again investing in the stock market.

Now it is expected that during the next few weeks, the SCRA would regain its previous position. Referring to the oil prices in the world market, which reached 99 dollars per barrel during November, had compelled the government to spend more for the import of oil, said he analyst.

"If the situation continues, it is expected that some 200-250 million dollars more will paid on the account of oil import," he added. Another reason which caused decline in foreign exchange was that no new privatisation had been done during the current fiscal year, he said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Road, rail networks being expanded for better trade: Musharraf ​*
ISLAMABAD (December 14 2007): President Pervez Musharraf, emphasising the importance of communication network in national economic development, said on Thursday that a comprehensive plan was underway to provide efficient inter-country and trade linkages with regional countries.

Giving details of the communication infrastructure development projects on a local channel, the president said the North-South road and rail infrastructure was being developed at a fast pace and several projects would be completed in three to four years.

"The communication sector is vital for country's economic progress, development and improved market mechanism," he said and pointed that National Highway Authority was working on several major projects worth Rs 175 billion.

He said with a vibrant economy today the Public Sector Development Programme has risen from a meagre Rs 80 billion in the 90s, to a whooping Rs 520 billion, providing more funds for vital projects. The president mentioned Pakistan's strategic location in the centre of Gulf Central Asian Republics, the shortest route for China's access to the Gulf and India for trade and energy from the Central Asian Republics.

"Pakistan is a trade and energy corridor of this whole region," the president said. He mentioned about the progress on the RCD highway, linking M-1 to Torkham and Jalalabad in Afghanistan, besides the extension of Makran highway linking Gwadar to Iran.

President Musharraf said Pakistan was moving ahead under a comprehensive strategy of expanding its road and rail network. He said the Grand Trunk road, the Indus Highway the Motorways will provide efficient north-south linkage. He however mentioned the weakness in the East-West linkages and said several projects were being implemented to create new links between Balochistan and other provinces and mentioned the progress on the Quetta-Loralai-Multan road and Quetta-Zhob-D I Khan roads.

President Musharraf said the government was concentrating more on the less developed areas and emphasised that its development budget for Balochistan was far more than that of Punjab. He also pointed several farm-to-market roads completed recently were providing quicker mode of transport and yielding better profits for the farmers. He regretted the poor strategic vision of the governments in the past and said adequate resources have now been allocated to undo the neglects of the past.

President Musharraf said Gwadar was a strategic port and was being developed as a major container terminal. He said the 950-km long Gwadar-Turbat-Ratodero would link the port to the Indus Highway, while the Makran Coastal highway already links with Karachi.

Mentioning the rich tourism potential of country's scenic northern areas, the President said several new road links were being carved out of the treacherous mountains to open up remote areas and increase tourism in the country, a sector that has been ignored for decades.

He said the funds for the development of northern areas has risen by 1500 percent to Rs 7.5 billion from Rs 0.5 billion in five years. The president said a road over the Babusar pass will link the Kaghan valley with the Karakoram Highway, while the Chitral valley would remain open around the year with the completion of the Lowari tunnel while also connecting it with Gilgit through the Shandur pass.

He said Gilgit and Skardu were being connected through another road passing through Astore. The president said the NHA was constructing bypass roads for all major cities including Karachi, Lahore, Peshawar, Rawalpindi and working on eight bridges over the Indus river.

President Musharraf also pointed at the importance of railways as an efficient and cheap mode of transportation. He said in the past few years the Pakistan Railways has improved significantly, with several new trains that were transporting people and cargo swiftly.

He however said there was still room for improvement as this vital sector was neglected in the past and said 1500 wagons and 150 locomotives were added to the fleet. The president said work on the new airports at Islamabad, Gwadar and Skardu was underway.

The president to a question agreed that there was a need for more improvement of inter city roads and said the provincial and district governments need to look into this important aspect and address the complaints of the people.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Government offers skilled manpower to Brunei ​*
ISLAMABAD (December 14 2007): Caretaker Minister for Labour, Manpower and Overseas Pakistanis Nisar Ahmed Ghuman on Thursday offered Brunei Darussalam for the export of professionals and skilled workers from Pakistan.

Talking to the High Commissioner of Brunei Darussalam, Pehin Colonel Abdul Jalil Ahmad (retd) here, the minister said that "Pakistan has sufficient doctors, paramedics, engineers, teachers, IT specialists, skilled and semi-skilled workforce and farmers."

Pakistan can also provide trained workers for services sector, he added. Managing Director, Overseas Employment Corporation (OEC), S M Janaid was also present in the meeting. The minister assured the High Commissioner that Pakistan has introduced computerised identity card and Machine Readable passport to check the persons involved in any crime.

He said Pakistan has been providing skilled persons having good character to various countries of the world particularly Middle East and Gulf states. He hoped that the bilateral relations between Pakistan and Brunei would grow in future.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*SNGPL to invest over Rs 50 billion in five years *​
ISLAMABAD (December 14 2007): The Sui Northern Gas Pipeline Limited (SNGPL) has finalised a plan to inject Rs 10 to Rs 12 billion annually in the system over the next five years to expand the base and improve the services. This was stated by SNGPL Managing Director Abdul Rashid Lon while talking to a private TV channel.

He said that 24 inches pipeline was being replaced with 36 inches from Multan to Sahiwal at a cost of Rs 12 billion to meet the needs of power houses and industrial areas near Lahore. Moreover, Kohat to Peshawar pipeline of 24 inches would be completed in June 2008 at a cost of Rs 3 billion.

He said currently 20 companies, including locals are busy in exploring gas and oil all over the country. The country has resources of around 33 trillion cubic feet of gas sufficient for next 23 years. The biggest reserve of around 10.3 trillion cubic feet gas is at Sui (Balochistan).

In Gurgery field located at Karak (NWFP), the reserves are also significant perhaps second largest after Sui, he added. Efforts are under way to provide maximum population the gas facility. So far, only 23 percent population was enjoying the facility.

Regarding mushroom growth of compressed natural gas (CNG) stations, he said the government was considering restricting it. In future, gas would be provided to CNG stations in areas where pipeline of six inches passes. The SNGPL has devised a plan to gradually reduce line losses up to 6 percent. Whereas Ogra has given the target to restrict the line losses to 5.4 percent. Last year, the company's line losses were 6.7 percent, he said.

About Iran-Pakistan-India (IPI) gas pipeline project, he said price mechanism has already been fixed. He said SNGPL has decided to urge domestic consumers to ensure judicious use of gas aimed at ensuring maximum supply of gas to industries. Domestic consumers have been urged to avoid or restrict use of gas heaters and geysers.

The people should use gas only for cooking purposes and conserve this precious national asset. Responding to a question, he said the Company was self-sufficient and meeting its expenditures by generating resources. It has not borrowed a single penny from the World Bank for the last six years. It has invested about $600 million through its own resources and local borrowing.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Fierce competition with neighbours ​* 
Pakistans exportsto Japan falling

Saturday, December 15, 2007
By Mehtab Haider

ISLAMABAD: Pakistans exports to Japan have been on the decline owing to stiff competition from neighbouring countries especially China, as exports of Pak made-ups stood at $208 million in 2006 compared to $650 million in 1991. 

The bilateral trade between Pakistan and Japan is heavily in favour of Tokyo and the gap is widening every year. Japans exports to Pakistan were $1.76 billion during 2006 against Islamabads exports of only $208 million in the same period. 

Tokyos exports witnessed a three-time increase in the last few years as its exports went up to $1.76 billion in 2006 against $501 million in 2001. Japanese Embassys head of economic and development section, Shu Nakagawa, in an exclusive interview with The News said that overall trade volume has been increasing between the two nations since the 1950s. 

The major items of Japans exports to Pakistan were automobiles, engineering goods, chemicals, metal related products, clothes etc. 

The share of transport machinery in Japans exports to Pakistan stands at 40 per cent, he added. Pakistans exports, he said, are mainly relied upon textile with share of 37 per cent, oil and oil products 32 per cent and the remaining share will consist of food stuff and chemicals. 

The tough competition posed by China is resulting into creating difficult for Islamabads made-ups to boost its exports, he said and added Pakistani exporters must focus on quality and pricing for penetrating into Tokyos markets. 

Nakagawa was of the view that there was huge potential for increasing Japanese investments into Pakistan with large population of 160 million. Suzuki, Honda and other automobile companies have invested in Pakistan, which are renowned for providing quality products in the market, he added. 

Japans investors, he said, have invested $160 million during 2004 to 2006 period. The Foreign Direct Investment (FDI) from Japan stood at $64 million during the last fiscal year 2006-07. 

Japan had invested over one billion dollars in many parts of the world during the last year, he said and added Pakistans share in such a huge pie could be increased manifold. He said the major investment has been done in automobile sector during the previous years and a company YKK made investment in Pakistan during the fiscal year 2006-07. 

Answering a query regarding Official Development Assistance (ODA) being provided by Japan to Pakistan for economic cooperation, he said that Tokyo was set to provide approximately $400 million to Islamabad during the current fiscal year 2007-08. 

He said Japan wants to see utilization of its assistance efficiently, properly and fairly for all economic sectors. The main areas of economic assistance, he said, would be social sectors including health and education, infrastructure, regional development and assisting people at gross roots level. 

Dwelling upon the existing economic assistance for Pakistan, Japans head of economic and development section said that Tokyo provided $600 million for construction of Indus Highway and almost 90 per cent amount of the committed assistance had already been provided to Pakistan. 

For Kohat Tunnel, he said, Japan had provided $100 million for its construction. Recently the Japan government has provided $4 million for polio eradication, he maintained. He said that the government provided assistance to Pakistan in shape of project loans; grant aid, technical assistance under the umbrella of economic cooperation. 

Usually, Japan does not provide budgetary support to the recipient country through ODA. In 2005, he said Japan provided Rs10 billion in shape of economic assistance, grant aid Rs5 billion and another Rs13 billion. The ODA stood at Rs20 billion in 1997 which reduced substantially in 1998 when Pakistan opted to go for nuclear explosion in a tit for tat with its neighboring India. 

However, in the aftermath of 9/11 scenario in 2001, he said Japan decided to resume Islamabads assistance through ODA when the Musharraf government decided to stand with USA in its war against terrorism. 

Fierce competition with neighbours


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## Neo

*Govt urged to bridge revenue gap ​* 
Saturday, December 15, 2007

LAHORE: Economists have advised the government to take immediate steps to fill the revenue gap caused by freezing of petroleum products prices as inaction in this regard is creating distortion in economy.

They said instead of taking measures to widen its revenue base the caretaker government had temporarily eased the pressure on its finances by arranging payment of Rs20 billion to the oil marketing companies.

Economic experts in fact expressed concern over huge liabilities of Rs100 billion the government had accumulated to keep the prices of petroleum products unchanged. They said the petrol price stood at Rs57.80 per litre when global crude oil rates hovered around $65 to $70 per barrel. Then the petroleum rates were reduced under public pressure to the current level when international crude oil prices went down to below $60 per barrel.

But now, they said, crude oil prices ranged from $90 to $100 per barrel, but the government had not even raised the domestic petrol price to Rs57.80 per litre. High petroleum prices are a global reality. The only thing that the government can do in this regard is to abolish all petroleum levies. But even then the rates would have to be increased, an economist said.

The economists said a better alternative for keeping petroleum products prices stable was to generate matching revenues from other avenues. Tax-to-GDP ratio in Pakistan was below 10 per cent, the lowest among all economies of Pakistans size, they said, adding the ratio was 13.5 per cent when the Nawaz government was ousted in 1999.

The economists suggested that an increase of one per cent in the tax-to-GDP ratio would almost wipe out Rs100 billion payments that the government had to make to the oil marketing companies for keeping the petroleum products prices stable.

Total gross domestic product (GDP) of Pakistan, according to Finance Minister Dr Salman Shah, stands at $160 billion. One per cent increase in the tax-to-GDP ratio would fetch the government $1.6 billion, equivalent to Rs90 billion at current dollar rate, they pointed out.

However, the economists warned that keeping petrol prices pegged without enhancing revenues from other sources would widen the budget deficit. That would spark more inflationary pressures than increase in petroleum prices.

They said deficit financing created distortion in economy similar to the one witnessed in 1999 when the military took over power from Nawaz Sharif. They said the macro-economic stability achieved during the past eight years was under pressure as yawning trade deficit coupled with huge budget deficit would have a big inflationary impact.

The central bank would not be able to control inflation if the government deviated from parameters set in the last budget, they warned and said the weakening macro-economic stability was eroding competitiveness of the industries.

The experts were surprised over indecision or hesitance on the part of caretaker government to take necessary corrective but painful measures. They said the caretakers were supposed to be apolitical who could take steps that the political governments avoided due to fear of political backlash.

Govt urged to bridge revenue gap


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## Neo

*Over 212,000 jobs generated in telecom sector ​* 
Saturday, December 15, 2007

ISLAMABAD: Over 212,000 employment opportunities have been generated countrywide in the telecom sector only by the cellular mobile operators.

A study conducted by Deloitte this year revealed that over one million job opportunities have been created since the liberalisation of the sector in 2003. It said that cellular operators alone had over 9,500 employees which was 20 per cent higher than the last year.

The telecom sector (mobile and fixed line) has about 84,000 employees directly on their payroll in 2007. However, the sectors has vast linkages with all other sectors where it was producing large employment opportunities such as civil work for installation of towers, support service providers, Airtime, SIM and handset retailers, jobs in fixed line and network equipment suppliers.

Retailers related to the telecom sector have generated about 300,000 jobs opportunities which include direct, indirect and induced employments in linked sectors of economy. A PTA official said the sector has undergone a considerable transformation following the award of two new mobile licenses FLL, WLL and the privatisation of PTCL. He said that stiff competition among operators to grab market share has compelled operators to roll out their respective infrastructure rapidly which has created huge employment opportunities. 

Over 212,000 jobs generated in telecom sector


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## Neo

*Shortage of trucks hits exports​*
KARACHI, Dec 14: Shortage of trucks and lorries, which are mostly engaged in transporting sacrificial animals, is jeopardising export of many seasonal produces. The worst affected are exporters dealing in rice, molasses, fresh fruits and vegetables as they regularly need trucks and bowsers for the haulage from hinterland to port city of Karachi.

Due to pressing demand, the transporters have doubled their charges which is also causing anxiety among exporters who in order to meet their export commitments are bound to bear extra cost.

There is a shortage of all sorts of transport, including trucks, lorries and bowsers.

Major crops of the country are harvested in Rabi season which also include cotton, rice, sugarcane and there is always great demand for trucks and lorries, as well as bowsers to carry these produces from farm to processing mills and then to domestic markets as well as to port city for export markets.However, as Ziqaad and Zilhaj have fallen at such a time when these major crops are also being harvested and have to be transported from farm to processing units, like ginneries, sugar mills and rice processing units and then onward to market places, but transporters are engaged in carrying animals to cities from rural areas. Consequently, export trade of such produce has been affected badly and many exporters are faced with cancellation of their export contracts on expiry of their Letters of Credit (L/Cs).

Another major item of the season is kinoo which is largely exported to Middle East and European market and earns a great deal of foreign exchange.

The rice crop, whose harvesting also started about two months back is in full bloom because paddy is being transported from fields to processing mills and then to market places for domestic consumption. However, larger quantities of Irri-6 and Basmati have to be exported.

But in the absence of adequate transport facilities, many small and medium-sized rice exporters are in a quandary as they could not get any transport to haulage their produce from interior of Sindh and Punjab to port city of Karachi.

It is being feared many exporters may lose their export contracts if no immediate corrective measures are taken.

Another compelling pressure on transport industry due to winter season is the great demand for bowsers which are mostly used for carrying furnace oil from Karachi to thermal power stations located in different parts of the country.

This creates shortage of bowsers for carrying molasses and alcohol from interior of NWFP, Punjab and Sindh.

During initial crushing season which normally starts in the month of November, there is a great demand from foreign buyers for molasses because of being of prime quality.

However, due to shortage of bowsers, the haulage of molasses and alcohol from sugar mills and distilleries has slowed down and many exporters have to pay demurrage of around $20,000 per day for keeping a vessel at port over and above its normal waiting time.

A spokesman for transporters Tariq Afridi told Dawn that presently around 600 bowsers are detained at the thermal power station located at Muzaffarghar because one of the contracting companies on charges of adulteration is not allowing them to discharge their furnace oil.

He further said this was not only causing shortage of bowsers in the market but was also creating harassment as owners are reluctant to enter into furnace oil haulage contract fearing heavy penalties and long delays in unloading of furnace oil.

Mr Afridi said those who give illegal gratification to the management of the thermal power station get away with everything and are accommodated at the earliest for unloading.

Though cotton crop has mostly found its way to spinners and the export market, a fairly a large quantity of phutti is yet to arrive to ginneries and from there to spinning industry.

Spinners also complain that due to shortage of trucks and lorries and high charges being demand, their stocks of cotton are dwindling fast.

Zulfikar Thaver, president Union of Small and Medium Enterprises (Unisame), told Dawn that the government should come out with permanent solution for such a situation, and suggested that the National Logistic Cell (NLC) would be the best to fill in the gap for a short period and help countrys export trade from being ruined or damaged.

Shortage of trucks hits exports -DAWN - Business; December 15, 2007


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## Neo

*US aid to Pakistan to become conditional, but no financial cuts*​
WASHINGTON: US Congress is almost certain to place some conditions on assistance to Pakistan but without slashing any of the funding.

The conditions will be meant to ensure that Pakistan plays its assigned and promised role in the US-led war against terrorism. The November 3 emergency has loomed large on the Capitol Hill, but since it is going to be lifted in the next 24 hours, it is not going to be the stumbling block it would have been otherwise. The return of democracy and free and fair elections will also figure among the conditions imposed. 

Congress is expected to require the administration to formally certify that Pakistan is doing its bit and that US assistance is being used for the purpose for which it is being extended. 

All this will be finalised before Congress goes into its Christmas recess next week. In practical terms, the congressional move will not make any difference to Pakistan. As long as relations between the two countries remain stable, the administration will continue to supply the certification required of it, as in the past. 

However, if the relationship takes a nosedive or the US no longer feels it needs Pakistan to the extent that it does today, the guillotine will come down, as has happened more than once in the past.

Daily Times - Leading News Resource of Pakistan


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## Neo

*National Trade corridor to cost $5.36 billion ​* 
FAISALABAD (December 15 2007): The total investment cost of National Trade Corridor (NTC) highway investment plan for 2007-2014 is estimated at $5.36 billion, while Asian Development Bank (ADB) has announced that the maximum financing amount of $900 million will be available under Multitranche Financing Facility (MFF) for the programme.

According to final project updates of ADB released here on Friday the MFF comprises $890 million from OCR and $10 million equivalent from ADF resources. ADB observed that the programme is derived from Pakistan's long-term transportation strategy and is an integral part of the NTCIP.

The impact of the program will be trade growth and the outcome will be a more efficient NTC highway network and it will improve Pakistan's competitiveness and link the country more effectively to the outside world and also provide trade routes for others in the region.

The MFF is designed to finance part of the NTC highway investment plan through individual loans. The first tranche will be funded from OCR resources, and the ADF loan will also be provided to address non physical investment needs and the support component. Financing from OCR resources will be subject to interest to be determined in accordance with ADB's London interbank offered rate (LIBOR)-based lending facility.

ADB report stated that Government of Pakistan will make the proceeds of the loans available to NHA according to terms and conditions satisfactory to ADB. According to ADB Project Update Report, under the strategic framework "Vision 2030" the Pakistan Government plans to raise the trade to gross domestic product (GDP) ratio from 30 per cent to about 60 per cent.

This would be equivalent to $600 billion by 2030. To achieve this target, key actions under the strategy will be improving trade competitiveness and export diversification. Logistics are currently seen as a key constraint to raising competitiveness and attracting private sector investment.

They are also a bottleneck to increasing productivity as well as to deepening and diversifying the industrial base, both of which are necessary to provide sustainable jobs for a growing population. The National Highway Authority (NHA) is responsible for the operation, maintenance, and development of the national highway system

As a core component of NTCIP, NHA has developed the National Trade Corridor highway investment plan (NTC highway investment plan). It covers the corridor backbone from Peshawar to Karachi and the outlying links that connect Pakistan to China and Gwadar Port in Balochistan.

The initiative includes not only new road construction but also the improvement of over 3,500 km of roads, national highways, expressways, and motorways. The Asian Development Bank (ADB) is an active partner of the Government in the road sector and is involved in policy formulation including the National Transport Policy.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Sale of all thermal, hydel generation facilities planned ​* 
ISLAMABAD (December 15 2007): The federal government is planning to sell all the existing thermal power plants and hydel generation facilities of Water and Power Development Authority (Wapda), official sources told Business Recorder here on Friday.

The utility submitted this information to the President Secretariat in response to a letter on the subject 'private power concept to solve electricity problem'.

"Transformation of the power sector into a privatised, competitive electricity industry is an evolutionary process that occurs over a certain period of time. Eventually, GoP would privatise all of Wapda's existing thermal generation and mini hydel generation facilities," the sources added.

The sources said that Wapda's strategic plan for the privatisation of power sector, prepared in 1992 to meet the cornerstone goal, power sector was being reformed/ restructured and was presently in a transitional phase. Previously there existed two vertically integrated public sector power utilities, Wapda and KESC.

KESC has already been privatised whereas the restructuring/ privatisation of Wapda was underway. By virtue of the plan, Wapda has been unbundled into generation, distribution and transmission companies.

Through implementation of the plan, GoP aims at providing for the greatest possible role for the private sector and the movement over time towards full competitive market regime, the sources quoted Wapda as conveying to the President secretariat.

"The ultimate of the power sector is envisaged to be such that a number of private generation companies would operate under free market competition," Wapda further elaborated to the presidency.

The sources said that all new thermal generation projects would be solicited through competitive process, offering power purchase contracts that would ultimately be transferred to the distribution companies, retailers or final consumers as they develop the capability to handle such contracts.

According to sources, Presidency has been apprised of Pakistan's power sector privatisation and was presently undergoing 'single buyer' phase as such the proposal like competitive market could not be implemented.

Nevertheless, GoP and its concerned entities like Water and Power ministry, PPIB and Wapda etc were fully committed to reach the stage of competitive market regime as soon as possible, where consumers would have the option of procuring economical electricity from the provided of their own choice, the sources quoted Wapda as promising presidency.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*US energy firm gets exploration licence*​
ISLAMABAD, Dec 15: The government on Saturday granted an exploration licence to Hydcarbex Energy Inc. of USA over block no. 2667-8, covering an area of 1,229 sq km, located in Dadu and Nawabshah districts, Sindh.The US firm would invest $6.30 million in the block to carry out geo/technical studies, acquisition, processing and drilling three exploratory wells during next three years.

Hycarbex is engaged in petroleum exploration activities in Pakistan since 1995. As operator of Yasin Block in Sindh with an investment of over $25m, it has carried out extensive seismic surveys and has established a data bank comprising about 700, 2d line km.

Besides, seismic work, it has drilled six exploratory wells and has recently made a gas discovery of commercial standing at Haseeb structure in the block.

The licence and the petroleum concession agreement were signed by Secretary Petroleum and Natural Resources Farrakh Qayyum and Director General Petroleum Concessions Mohammad Naeem Malik and President and Chief Executive Officer of Hycarbex Inc Dr Iftikhar Zahid.

Federal Minister for Petroleum and Natural Resources Absan Ullah Khan attended the signing ceremony.

US energy firm gets exploration licence -DAWN - Business; December 16, 2007


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## Neo

*Egypt keen to boost trade with Pakistan​*
ISLAMABAD, Dec 15: Acting Deputy Head of Mission, Embassy of Egypt, Ayman Tharwaf said on Saturday that his country had great potential in LPG, pharmaceutical, fertilisers and petroleum products and was keen to enhance trade links with Pakistan.

Talking to President, Islamabad Chamber of Commerce and Industry (ICCI), Nasir Khan, he said that the current trade volume between Pakistan and Egypt was very low and it should be enhanced through active involvement of the chambers of commerce of the two countries.

He said that private sectors of both the countries should come forward for joint ventures and cooperation to help boost the trade activities. He said that Egypt was at number six in production of LPG and Pakistan could import it on comparative rates.

He also invited the ICCI delegation for attending trade expo, to be held in Cairo in March, next year.

President of ICCI, while assuring full cooperation for the promotion of two-way trade, said that Egyptian companies should take advantage of lucrative investment opportunities in Pakistan.

Egypt keen to boost trade with Pakistan -DAWN - Business; December 16, 2007


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## Neo

*Making exports feasible: Textile sector pleads for reduction in cost of production​*By Tanveer Ahmed 

KARACHI: The textile sector has geared up its efforts to secure immediate relief from the government as in a recent move it directly pleaded before the highest office of the government for remedial steps for bringing down the cost of production to make the products competitive for export purposes.

"If the government is unable to give something substantive for the sector, then an honourable exit strategy for companies without dragging them through Courts in Civil and Criminal cases be provided," All Pakistan Textile Association (APTA), mostly comprising spinners asserted in a letter to Caretaker Prime Minister Mohammadmian Soomro.

Drawing a terrible scenario for the country's export sector because of struggling textile products in case government did not come up with relief package for the sector, the association said that country's textile business in general and the textile and spinning sectors in particular are undergoing severe crisis.

"Our industry had not been able to convince the previous government that the crisis is growing and causing, possibly irreversible damage, which could render the closed and sick industry un-revivable," it pointed out.

The disturbing trend of decreasing textile exports, drastic reduction in imports of textile machinery, decrease in private sector industrial borrowing and increasing trend of NPL's, it added are all providing clear proof of the negative trend.

For the last two years our textile manufacturing industry, especially the spinning sector, has been in deep crisis, due to the disproportionate increases in our costs of production. Gas prices have increased by 38 percent in two years and a further 6.38 percent has been approved by OGRA. It includes electricity cost increased recently by 10 percent with constant load shedding and banks have raised mark-up rates to 14 percent, an increase of 300 percent since 2004.

On the other hand, our regional competitors China, India and Bangladesh have given massive subsidies to their industries besides getting tariff incentives in the form of FTA's and LDC status, APTA mentioned. 

It deplored that the textile spinning sector has been labeled as inefficient by the government, whereas international consultants, hired by the Ministry of Commerce, have specifically stated that Pakistan's spinning sector is one of the better equipped and efficient sector among our neighbouring countries. However, inconsistent government policies and related inefficiencies are the main issues, which need to be looked into and corrected, the association stated.

It feared that export target of $19.2 billion set for the current fiscal year is unrealistic in the present circumstances when textile exports are meeting stiff resistances from its competitors due to high prices of our products. 

Listing a number of demands, textile body called for bringing down the mark up rates to 7.5 percent for all outstanding short and long-term loans with a payment period of seven years as this alone is making a bigger part in overall cost of production.

Also, removal of 6.5 percent on import of polyester fibre for sufficient availability of raw materials is also demanded.

"Exports are critical and are the only reliable source to fund the country's foreign exchange requirements besides workers remittances. Mass closure of this industry will result in mass unemployment besides retarding exports," the letter concluded.

Daily Times - Leading News Resource of Pakistan


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## Neo

*WAPDA, ALEL sign PPA for Lakhra Power Plant​*
LAHORE: Associated Lakhra Energy Limited (ALEL) and National Transmission and Dispatch Company Limited (NTDC) signed the Power Purchase Agreement (PPA) for the 3x50MW coal-fired Lakhra Power Plant here on Saturday.

The plant, set up by WAPDA in 1996 is Pakistans only coal-fired power plant and is currently producing about 30MW of power from Lakhra coal. ALEL had been awarded the project through a competitive bidding process and has undertaken to rehabilitate the plant and ramp up production to at least 102MW within nine months. ALEL has been leased out the plant for 20 years.

Speaking at the signing ceremony, Federal Minister for Water and Power Tariq Hameed stressed the need for Pakistan to broaden its energy mix and capitalise on coal for cheap power generation. 

This is the first time we are leasing out a power plant to the private sector and I am very pleased that this project will be completed and brought to the highest international standards within 2008, he said.

Managing Director PEPCO Munawar B. Ahmad said that while 74 percent of Chinas, 55 percent of Indias and 22 percent of Americas energy mix are coal-based, in Pakistan coal-based power generation represents less than 0.5 percent of the energy mix. We went terribly wrong in planning and implementing coal-based power and the projects such as this one are essential for Pakistan, he said adding that Pakistan has the second largest reserves of coal in the world that were enough to last us 500 years.

ALEL Chairman Iqbal Z Ahmed said the coal-based power generation is essential for Pakistan to ensure quick and affordable electricity. The successful rehabilitation of the Lakhra Power Plant will encourage local and foreign investors to look to coal for power generations, he said. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Mega launch of Pak-China Investment Co. on Dec 17, 27​*
ISLAMABAD: The Investment Division and Board of Investment, in collaboration with Pak-China Investment Company Limited (PCICL) are organizing a mega launch of the investment company in Karachi and Lahore on 17th and 27th Dec. 07, respectively.

The PCICL is being established in Pakistan to help various sectors including financial, industrial and agricultural groups of Pakistan to seek Chinese investment.

The establishment of the company is an initiative undertaken under the Pak-China Five-Year Development Programme in financial sector cooperation.

Both the events would be of grandeur in nature, as the venue of the events are the Governor Houses and the Governors of respective provinces would be presiding over the launching ceremonies, while Dr. Salman Shah, Minister for Finance and Economic Affairs/Chairman PCICL would be the chief guest. The events would be participated by senior government officials and dignitaries including Governor, State Bank of Pakistan (SBP).

Daily Times - Leading News Resource of Pakistan


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## Neo

*City Council approves Master Plan-2020: opposition stages walkout ​* 
KARACHI (December 16 2007): After a weeklong heated debate, the City Council on Saturday finally approved the Karachi Strategic Development Plan-2020 (KSDP-2020) making it a legal document. The opposition staged a walkout in protest when their longstanding demand for delaying passage of the KSDP-2020 for at least a month was put in non-compliance by Senior Presiding Officer Ahsan Siddiqui.

The City Council session was held here in the City Council Hall, Old KMC Building, M.A. Jinnah Road. The convenor, in the opening remarks appeared critical of the opposition members, who had been demanding time to make the plan more participatory and mandatory, came up with only 31 suggestions on Master Plan-2020 by December 14, 2007. The convenor, who remained unable to regulate the house throughout the proceeding, said the suggestions would be sent to the Master Plan Committee of the City District Government Karachi (CDGK) government.

The Master Plan would remain open for future inputs the existing suggestions tabled by the council members would be brought in the shape of a resolution in the house for approval, said the convenor. Abdul Jalil and other treasury members supported the convenor's view and insisted on closure of the debate on the KSDP-2020 and put the document forward before the house for voting.

As soon as the session was resumed by the convenor, who remained failed to make the house focused on Master Plan-2020, leader of the house Asif Siddiqui criticised the opposition members for "conspiring" against the local government system in the garb of election campaign.

Leader of opposition Saeed Ghani of Awam Dost panel remained stick to his demand for more time to develop consensus on the so-called controversial document contending that many issues were still yet to be discussed in detail. He claimed that the Haq Parast dominated-house had been less wary of the opposition-backed issues and resolutions like the one condemning mass evacuation of the fishermen from the Bundal and Buddo Islands.

He said the City Council had approved a treasury-backed resolution on forming a "heritage committee" in a bid to save the city's heritage but the opposition-backed resolution was yet to be tabled in the council. Ghani also demanded of the convenor to bring the submitted suggestions before the house. Amid an ear-splitting outcry and ultimate walkout by the opposition the treasury members adopted a resolution to send the 31 suggestions to the Master Plan Committee in the absence of their opponents in the house.

The convenor presented the document for voting when a resolution seeking approval of the KSDP-2020 came from Syed Absarul Hasan, chairman, Master Plan Committee. Rafiq Ahmad of Al-Khidmat panel criticised the Haq Parast members for placing an incomplete document in the City Council Secretariat, which he claimed, was lacking 'terms of reference' and a "copy of the agreement signed between the city government and the consultant".

An opposition member, Zahid Saeed showed a "complete" copy of the KSDP-2020 to the house, which, he said, had included tables, graphs, figures and maps. Asif Siddiqi agreed with Zahid on his argument on an incomplete plan provided to the opposition, saying that the copy was lacking some of the maps.

Jumman Darwan claimed that though 80 to 90 percent uplift projects under the KSDP-2020 were proposed by the City District Government Karachi, but all of them were lacking any protection for residents of the rural towns like Keamari, Gadap, and Bin Qasim. In reply to Darwan's claim Absarul Hassan said the CDGK was paying extraordinary attention to the development of the aforementioned towns. The session was adjourned for an indefinite period.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Sindh chief minister calls for strategy to utilise coal reserves ​*
KARACHI (December 16 2007): Caretaker Sindh Chief Minister Justice (former) Abdul Qadir Halepota has said that Sindh has world's largest coal reserves and practical steps would be taken for their exploitation for power generation and other industrial needs.

In a meeting with Provincial Secretary Minderals and Mineral Development at Chief Minister House, Justice Halepota said that Allah had blessed Sindh province with mineral resources and both federal and provincial governments would make efforts to benefit from the same.

He said it would be seen as to why not a strategy was chalked out so far to bring those world's biggest reserves under use, and directed the secretary to examine the progress achieved in respect of memorandum of understanding (MoUs) signed so far.

He asked him to form a delegation comprising representatives of Chamber of Commerce and other concerned organisations to talk to Caretaker Prime Minister Mohammedmian Soomro so that full advantage of those reserves was taken.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Privatisation of forests​*
By Shoukat Ali, M. Arif Wattoo and Mazhar H. Ranjha

THE community of plants, predominantly of trees, shrubs and herbs, occupying an extensive area of land is called forest. The forests are classified into seven general types recognised from the nine major ecological zones.

These general types include: Alpine forests (northern districts of Chitral, Swat, Dir and Kohistan), coniferous forests (Swat, Dir, Malakand, Mansehra, Abbottabad, and Rawalpindi districts and Balochistan hills), sub-tropical forests (Attock, Rawalpindi, Jhelum, Gujrat, Mansehra, Abbottabad, Mardan, Peshawar and Kohat districts, and the Sulaiman mountains), tropical thorn forests (Panjab plains, southern Sindh and western Balochistan), irrigated plantations (artificial: Changa Manga), riverain forests (Sindh and to some extent in the Punjab) and mangrove/coastal forests (Indus delta). Most of the forests are in the northern part of the country.

Forests are rich sources of timber and other products. In timber products lumber and plywood are the most widely used materials in the construction industry and furniture. Timber provides raw material for paper, sports goods and match industry. Similarly a lot of product can be obtained from forests like honey, mushroom, pine nut, walnut, mulberry fruits, silk cocoon and medicinal products etc.

Forests are also rich source of chemicals produced by trees, which are used in tanning leather and in the manufacture of inks, medicines, dyes, and wood alcohol. In addition, forests protect the land against erosion, hurricanes, floods and subsequent drought. They also play a key role in regulating the global climate and ecosystem.

About 4.2 million hectares are covered with forests, equivalent to 4.8 per cent of the total land area, which is very small when compared with 30 per cent of the world land cover.

Deforestation and changing land use pattern has resulted in the loss of precious forests. Protected forests of northern Balochistan are reported to have been harvested for timber and energy purposes. Due to over-grazing, natural reforestation of the forests has been hindered. Large areas of riverain forests have been cleared for agriculture. Illegal and uncontrolled cutting of trees has further resulted in deforestation.

Similarly other forests are also under danger due to clearing he land for farming.. Due to the menace of deforestation, world wide 976 tree species are facing extinction. The species facing extinction in Malaysia are 197, in Indonesia 121, in India 48, in Brazil 38 and in Pakistan two tree species are facing extinction. This is in addition to loss of thousands of hectares of forests.

The major threat to the countrys forests is uncontrolled and unsustainable cutting. Reasons for unsustainable commercial harvesting in state forests are: lack of political will and commitment, unrealistic forest working plans and weak implementation of forest protection laws. Between 1990 and 2005, Pakistan lost 625,000 hectares of forests which constitute 24.7 per cent of its total forest cover.

This deforestation rate is four to six per cent per annum; the second highest reduction rate in the world. At this rate, the forecast is that the countrys entire woody biomass stock would be consumed by 2020.

Honey, collected from traditional domestic bee hives, is an important source of income of local people. In addition to this, people also extract honey from the forests. Livestock keeping is an important income generating activity for the local people as they harvest fodder from the forests. People also collect edible mushrooms and morals for market purpose. Similarly they collect nuts and fruits to sale out, as an additional source of income. People also collect valuable medicinal plants from the forests for the cure of many diseases by ethno-botanic methods or sell them in the market.

From the branches of trees, the artisans make a number of valuable household items and various types of products, like baskets, trays, grain bins and decoration items, which are attractive to national and international tourists. These economic activities depict miserable living standards of the people living nearby forests.

Therefore, forests are in urgent need of protection, not only to secure the livelihood assets of the indigenous people but also to explore the resources to improve their living standards.

Forest related activities have been supervised and monitored under the umbrella of public sector. In 1955, the government declared the first national forest policy followed by the national forest policies of 1962, 1975, 1980, 1988 as part of the National Agricultural Policy, 1991, and later on the latest one in 2001.

The central concern of these policies was to extend, protect, conserve and explore the potential of forest on sustainable basis. But the picture of last decades poses a very disappointed picture as it exposes the failure of forest reforms to produce desired outcome, On December 7, 2007, the World Forest Day was observed and an international call was given to foster public-private partnership in the forest sector. All international donor agencies and policy maker institutions envisaged the partnership as a tool, for efficient and sustainable utilisation of the forests. In the country, the issue is also being debated..

The NWFP Forest Policy 1999 has focused on the need to encourage the private sector. The NWFP Ordinance 2002, specifically, mentions the power to lease out to the private sector the reserved and protected forest as well as waste lands for plantations, agro-forestry and soil forestry.

Scientists, experts and policy makers are speaking and writing about public-private partnership as a suggested remedy. A policy is likely to be formulated which, in near future, would ensure the participation of private agencies in forest sector. No doubt, there are great business opportunities in the forests which have never been fully exploited, and private sector may have lucrative offer from government side for investment. But the benefits should also be extended to the local people who are living in a miserable condition and have ancestral rights over these resources.

The private sector is profit-driven and works for more and more benefits. In privatisation, it should be ensured that private sector does not deplete the forest resources in the name of sustainable utilisation of forests and does not further marginalise the local communities in the name of development.

One has to look at the experience of the privatisation of agricultural advisory services. A recent study shows that private sector provides agricultural advisory services to the big farmers and landlords and leaves the small farmers ignorant about the latest agricultural technologies. So in privatisation of the forest sector, it is important see whether it is designed to help the commercial enterprises or to help the indigenous communities for their better living standards.

Privatisation of forests -DAWN - Business; December 17, 2007


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## Neo

*Snags in real estate business​*
A sizeable part of the rising remittances is finding its way into real estate investment. There are several reasons for this including very high risks in other sectors such as trading or manufacturing, absence of advice and information on parallel opportunities, aggressive marketing by realtors and the preference for property investments.

Given the current boom in land and property enterprises across the country, the trend of investment is likely to remain stable. However, efficiency in the real estate market is constrained by some basic handicaps. An element of doubt lurks behind the validity of transactions. Complicated documentation procedures, corrupt practices, weak legal safeguards and above all, limited access to information are some barriers that adversely affect the performance of real estate market.

While the sector is in dire need of a reform, few basics have to be improved without any delay. The creation of an efficient and scientifically structured real estate information system is the first step in the proposed process of improvement.

First, a political mandate is necessary to initiate this task. History is replete with half-hearted attempts to launch projects for structuring a database of urban properties. In 1990, the erstwhile Karachi Metropolitan Corporation (KMC) undertook an urban land management study with the assistance of local and Australian consultants. The objective was to take stock of land utilisation patterns, available land reserves, identification of vacant/unutilised land parcels and potential of future land development.

The documentation was aimed to scientifically predict the trends of construction and real estate development. The study had also recommended the creation of a centralised database with a view to serve multiple clients. Unfortunately, not much could be undertaken afterwards.

In 2003, an attempt was made to computerise the records of registered properties by the Excise and Taxation Department of the Sindh government. The initiative had an active start but could not continue at the desirable pace to complete data about the properties in the planned settlements. While individual land management agencies do possess records of ownership and other variables, they are reluctant to share it for the fear of losing control over them.

At times, some of these agencies fall prey to clandestine pressure which results in non-transparent transactions. The construction of a residential settlement for high ranking military personnel next to National Stadium Karachi; construction of the head office of National Highway Authority on land owned by Pakistan Railways and the construction of a high profile tower on Railways land by a consortium of realtors indicate a state of affairs that can only be streamlined through better information systems.

The recent proposal of converting 60,000 acres of Karachis coast into sugar land city  a fancy real estate programme  is still fresh in ones memory. The fear of the revival of this concept plan by powerful realtors is still lurking around us.

The real estate sector has many overt and covert stakeholders. These include international investors of various backgrounds and their front men, defence agencies, local investors, brokers, builders, personnel of land management agencies, infrastructure development units, bankers, contractors, legal practitioners and individual owners and users.

As obvious, the status quo suits the interests of many of them. But the pre-requisites of good governance demand an effective legal and administrative framework to end manipulators and create a level-playing field for all.

All interest groups should have the choice to avail benefits. The law should facilitate a mechanism of transparency.

The next step is to collect, examine and verify land ownership records. It is an extremely complex task. The handicaps are many and varied like multiple formats and procedures of ownership, wilful tempering, concealing and destruction of some records, poor record -keeping and corruption.

However, the only way to begin this exercise is to consult all the institutional stakeholders. After completion of pre-development phase of ownership records, a process of reconciliation needs to be structured. This can remove the anomalies and complete the left- out information. A reconciliation exercise essentially requires legal cover to make it efficient and effective for a worthwhile database preparation.

The more crucial phase arises at the stage of development based information on land. This stage pertains to the variables such as development permissions, amortisation of land uses, disputes, violations, penalties, conversions, regularisations and related information. Experience has shown that this information cannot be collected without well-organised field surveys by teams of competent professionals. It is a continuous task as properties and land development schemes increase periodically.

The records available with building control authorities and related departments are also important to be scrutinised and made available for public access. Public agencies and departments, some of which are owners and managers of large tracts of high value land assets, need to be advised to prepare and publish authenticated versions of their land holdings. This measure alone can remove many corrupt practices and illegal transactions. It will also be useful for different planning assignments such as demarcation of ecological assets, establishing right-of-ways for different proposed modes of transit, densification of certain identified neighbourhoods and protection of sensitive properties.

A sound and user-friendly information system in real estate is essential to help people in their choices and transactions of properties. Much of these transactions take place in an informal manner. It usually harms those weak and simple folks who fall prey to shrewd brokers.

A well-managed information system will also help identify important pending assignments such as property registration procedures/revisions, property taxation systems, land and property acquisition for development projects as well as the administrative measures of managing vacant property assets.

Snags in real estate business -DAWN - Business; December 17, 2007


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## Neo

*Five-year development scheme approved: PSDC to be established *​
HYDERABAD (December 17 2007): Government of Sindh has approved a 5-year development scheme under which Professional Skill Development Centre (PSDC) will be established aimed at training in-service agriculture field assistants and growers to up date their technical knowledge.

Besides, training in the fields of administration and finance will also be provided to the newly promoted District officers of the Agriculture Extension wing before their postings.

This was informed by Director Training Agriculture Extension Sindh, Ghulam Hussain Laghari while addressing the participants of the in service training at the Agriculture Training Institute Sakrand, Sindh Horticulture Research Institute Mirpurkhas and Rice Research Institute Dokri

He said that the government was considering to further strengthen the Sakrand and Jacobabad agriculture training institutes to produce highly trained field assistants and live stock assistants for bringing green revolution in agriculture and live stock sectors. Laghari said that the directorate of training has already trained 400 agriculture officers, 600 field assistants and 160 gardeners under two different development schemes during last 2 years.

Business Recorder [Pakistan's First Financial Daily]


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*UAE Group shows interest in IT sector *​
KARACHI (December 14 2007): Sindh Governor, Dr Ishrat-ul-Ibad Khan has said that land record throughout Sindh is being computerised, while government is paying full attention on promotion of information technology in every field to make its fruits reach the common man.

He was talking to a delegation of UAE's Al_Bawardi Executive Management Team, led by Mansoor Al-Alami at Governor House here Thursday. The delegation showed interest in making investment in the field of Information Technology in Pakistan and particularly in Sindh.

Assuring the delegation of his full cooperation, the Governor pointed to vast opportunities of investment that exist in every sector. There had been an increase in the investment opportunities in every sector because of the government's investment-friendly policies, rules and regulations and infrastructure improvement.

Particularly because of foreign investment in the financial sector and improvement in other related sectors, there had been an increase in the IT related demands, he added.

Pointing out that IT serves as a catalyst for every field, the Governor said Pakistan has rich talented human resource and particularly there is higher ratio of the youth here whose talents are being polished and stress being laid on the attainment of desired objectives. The present government, he informed, strengthened the institutions to ensure continuity of its reforms program and policies.

He told the delegation that government is working on poverty alleviation, bringing improvement in the rural and urban conditions and availability of jobs on priority basis.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Intel Pakistan, IT department NWFP sign MoU *​
PESHAWAR (December 06 2007): The Intel Pakistan Corporation and Department of Information Technology, NWFP, on Tuesday signed a Memorandum of Understanding for promotion of computer education at school and college levels in the province. The memorandum was signed by the representatives of Intel Pakistan Corporation and the Department of IT NWFP at a simple ceremony at a local hotel.

Caretaker Provincial Minister for Information, Information Technology Syed Imtiaz Gilani and Provincial Minister for Education Iftikharud Din Chamkani were also present during the signing ceremony.

According to the memorandum the Intel Pakistan Corporation would provide training to the students and teachers at school and college levels in various subjects to boost their skills imperative for facing the challenges of 21st century.

The Intel Education initiative is a sustained commitment to prepare students with the skills required to thrive in the knowledge economy. Intel collaborates with local governments and educators across the world to help promote professional development programmes and resources for elementary and secondary educators.

Intel Tech Programme is a proven, world wide that has been driving systematic changes in teaching and learning. Under this programme over 135,000 teachers have been imparted training across the country.

Speaking briefly on this occasion the NWFP Caretaker Minister for Information and Information Technology Syed Imtaiz Hussain Gilani said that IT and Computer are just tools which could be utilised for the betterment and development of the nation.

Emphasising the need of information technology he added that without advancement in science and technology no progress could be achieved. He asked the entrepreneurs to come forward and invest in the country for achieving heights in the field of science and technology as no other nation was ready to invest here for our own development.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Pakistan surplus in milk production' ​*
HYDERABAD (December 17 2007): The Vice Chancellor Sindh Agriculture University Tando Jam Professor Dr Bashir Ahmed Sheikh expressed his views during a training course on milk preservation processing and value added product manufacturing technologies applicable to small rural milk producers organised by the department of animal product technologies.

Dr Sheikh presided over the function and said that milk in the traditional diet has important place. Milk and dairy products are rich source of protein lactose fat and minerals and probably the most complex natural food available to man. Due to its complex nature it has a very limited shelf life if not handled properly. Pakistan with a milk production of 32 billion liters per annum from 35 million dairy animals is the 3rd largest milk producer in the world.

Dr Bashir said Pakistan is surplus in milk production but it is least commercialised enterprises due to lack of proper planning collection, transportation and distribution facilities. A major portion of the production is wasted in the far flung areas as result of this we are importing 25, 000 tons of powder milk annually to meet the demand of urban areas at a cost of 300 million dollar per annum.

This training will help the one of the most vulnerable population group the farmers to enough knowledge and technology in milk handling and preservation. This training is being organised by the Department of Animal product technologies under the HEC funded project of development of animal product technology, milk and meat.

Dr Sheikh said that Sindh Agriculture University shall establish a Farmers Radio station at the campus where information regarding livestock agriculture and other related information to be disseminated to the farming community. Besides this the institute of food sciences technology will develop mobile food laboratory through which services will be provided to the farmers on their doorsteps in the far flung areas.

Dr Abdul Qadir Ansari, Rector Alkhair University Islamabad expressed his views as a chief guest and showed great interest. He said that training can enhance the skills of the farmers and he hoped that Sindh Agriculture University should continue to organise such training to the rural women also.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Mechanised irrigation, corporate farming to help propel agriculture productivity ​*
ISLAMABAD (December 17 2007): Mechanised irrigation system and corporate farming would help propel agricultural productivity besides realising the long-term ambitious goals of achieving food self-sufficiency in this sector.

Agriculture sector the backbone of economy has been accorded top priority in the major policy initiatives taken by the government, said sources at the Agriculture Ministry.

The Federal government under the patronage of the President has already provided Rs 120 billion to all provinces with the help of World Bank (WB) for lining of canals and watercourses and using concrete parabolic to save valuable water from seepage, added the sources.

In line with the policy carved out for the agri-sector, the Sindh government has awarded a project to Dewan Group for providing state of the art mechanised irrigation system for water conservation and productivity enhancement. An accord is expected to be inked shortly between the Sindh government and Dewan Group.

The project has been awarded after open biding in which 15 companies participated. Dewan Group is pioneer in bringing and setting up various modernised industrial projects in the country the largest polyester project Dewan Sulman Fiber.

Mechanised irrigation technologies application will greatly help and lead the country on the path of achieving food self-sufficiency observed the sources.

With the application of mechanised irrigation systems and the development of corporate farming projects, Pakistan will not only achieve self-reliance but also reposition itself to export food to Middle East and South East Asian countries.

The Dewan Group also participated in a mega event sponsored by the Ministry of Food, Agriculture and Livestock (Minfal) for introducing high efficiency irrigation systems for water conservation and productivity enhancement this year.

It is worth mentioning the government has allocated over Rs 18 billion under subsidiary programme for five years to facilitate farmers adopting latest irrigation systems and techniques.

They informed Pakistan has the world's largest canal irrigation network, which irrigate about 36 million acres land to produce all major and minor crops including wheat, rice, cotton, sugarcane, maize and pulses to meet domestic consumption as well as to export.

There are about 1,700,00 water courses with a total length of about 1.6 million kilometers, which distribute water with 44 canal system spread over 56073 kilometers, they added.

It is very encouraging that participation of private sector group like Dewan directly entering into the projects of prime national interest, which would ensure success of public sectors, the sources said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Punjab government to build 10 small dams: minister ​*
RAWALPINDI (December 16 2007): Punjab government has planned to construct 10 small dams in four districts of the Potohar region including Chrah Dam with the cost of Rs 550 million, said Dilawar Abbas, Provincial Minister for Irrigation.

"These 10 dams would store more than 25,000 acre ft water, which would help in agriculture development of the region", the minister said during a briefing at under construction Jamal Small Dam in Manghot village of Gujjar Khan.

The minister said that construction of Chrah Dam would help improve water supply to Rawalpindi city as this would have storage capacity both for irrigation and drinking purposes.

Dilawar Abbas said that these reservoirs would help irrigate more than 15,000 acre land in the region and improve the living standard of the people besides adding to economic stability of the country. He said that with completion of the small dams project a new era of economic growth would start in this region. This, he said would help eradicate poverty and unemployment as well.

Giving details of the ten small dams, the minister said that out of ten dams seven dams would be constructed in Chakwal district, two in Attock and one in Jhelum.

Dams to be constructed in Chakwal district are Chrah Dam, Dhok Hum Dam, Mandi Dam, Dhok Jhang Dam, Lakhwal Atwal Dam, Khabir Dam and Taja Bar Dam, while Saddarpal Dam and Shahbazpur Dam would be constructed in Attock and Agham Dam in Jhelum.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*SBP releases Financial Stability Review 2006 *​ 
*Financial sector grows to Rs6.9 trillion​*
Tuesday, December 18, 2007

KARACHI: The overall size of financial sector of Pakistan grew by 15 percent to Rs6864.2 billion during first half of calendar year 2007 which was recorded Rs5966.3 billion in calendar 2006. 

The State Bank of Pakistan (SBP) stated this in its new annual publication Financial Stability Review (FSR) 2006, issued on Monday. FSR offers an exhaustive overview of the financial institutions and markets and in publishing first FSR, SBP has joined the league of central banks around the globe that analyse and comment on financial stability issues on a periodic basis, with the objective of highlighting the strengths as well as potential triggers for systemic risk, the SBP commented.

Financial markets in Pakistan comprise of fairly developed money market, foreign exchange market and capital markets, while the derivative market is still in a nascent stage of development. 

The report said that the financial sector of the country grew substantially both in size and qualitative terms in recent years and the reform process was paving the way for a more diversified financial sector, equipped to facilitate the economic growth process.

However, central bank admitted in FSR that outreach of the financial sector was slow but said that it continued to gain ground with the expanding network of commercial banks, microfinance institutions and Islamic banks in all parts of the country.

The report said that banks with a share of 72.1 percent in total assets continued to dominate the asset base of the financial sector, followed by Central Directorate of National Savings (CDNS) with 14.6 percent, Non Banking Financial Institutions (NBFIs) 9 percent, Insurance 4.1 percent and Micro Finance Banks (MFBs) 0.2 percent.

The FSR is being launched at time when the global financial system is undergoing a severe liquidity crunch and as a result global risk appetite has deteriorated substantially, leading to widening of credit spreads. 

It further said that on-going mergers and acquisitions (M&As) exerted a profound impact on the ownership structure of the financial sector. The financial sector is predominantly led by the private sector, constituting of both domestic and foreign financial institutions, controlling 64.9 percent of overall banking assets. Within the banking sector, private ownership grew to 78 percent of assets and entry of foreign banks, Islamic Banks and microfinance banks were adding depth to the financial sector. In terms of asset holdings, the insurance sector is still dominated by public sector entities and lacks dynamism. 

In the last three years, commercial banks operated on a sound capital base with an enviable record of financial performance. The quality of the risk-based capital provides further comfort as the share of core capital in the overall risk-based capital has reached 80.3 percent by June 2007, compared to 73.7 percent in CY05, the changes in the capital adequacy ratio, together with the improved quality of capital, have enhanced the resilience of the banking sector to withstand unexpected shocks.

The capital markets continue to perform well and the KSE -100 Index depicting a growth of 38 percent over end-June 2006. The salient feature of the year was the volume of capital inflows, and of foreign investment in the equity market. Foreign participation as measured by SCRA flows reached a level of 6.8 percent of the market capitalization by end-June 2007. KSE continues to trade at a discount in comparison with regional economies (average P/E at 15.1x), which is a reflection of its growth potential. 

The report highlights that Pakistan continues to be categorized among the low savers of the world. The analysis suggests that the financial system now needs to focus on providing innovative liability products to give the investor and saver various options to choose from, according to his own risk/return preference. The role of Private Pension Schemes is particularly important as an incentive to smooth out consumption patterns over the life cycle, by providing a forced saving mechanism aimed at overall social security. 

The report pointed out diversification of bank credit in recent years evident in the rise in share of SME, agriculture and consumer finance in outstanding credit to 15.4, 5.8 and 14.3 percent respectively at end-June 2007.

FSR said that liquidity preference of depositors had a significant bearing on the level of banking spreads. 

With SBPs moral suasion, commercial banks have floated new high yielding deposits and Pakistan Banks Association introduced the Enhanced Savings Deposit in November 2007. In addition, the process of a gradual shift towards fixed deposits has already started, as evidenced by the gradual narrowing of banking spreads. These will generate more pronounced impact on curtailing banking spread.

As banks have made rapid inroads into business segments traditionally serviced by NBFIs, market share of NBFCs and Modarabas has eroded considerably, so much so that investment finance and discounting are likely to disappear as stand-alone activities in the non-bank financial sector while leasing and Modaraba sectors are faced with the dilemma of diversify or die. In addition, housing finance and venture capital industries have failed to take off despite significant demand potential. The success story among NBFIs is that of mutual funds. 

The ownership structure of the insurance industry is in sharp contrast to the private sector-led nature of the rest of the financial sector. The insurance industry, comprising of 53 companies, is largely owned and operated by government-based entities. However, private sector entities in both the life and non-life insurance sector have a dominating share of the insurance business, with an 86.7 percent share of total premiums of the industry. Despite fewer companies in the life insurance sector, it accounts for 67 percent of total insurance assets. Concentration of business among the top 10 players, though still high, reduced by 9.0 percentage points in 2006, from 91.6 percent of gross premiums in 2005 to 82.6 percent in 2006. 

SBP releases Financial Stability Review 2006


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## Neo

*Great potential to enhance Pak-China trade to $15bn ​* 
Tuesday, December 18, 2007

KARACHI: Great potential existed to increase Pak-China trade volume from $5 billion to $15 billion within next five years. 

This was stated by the caretaker Minister for Finance and Economic Affairs Dr Salman Shah while speaking at the launching of Pak-China Investment Company Ltd (PCICL) here on Monday. 

He said that Pakistan and China have signed a free trade agreement and the five years development programme which will help in achieving this target. The minister said that 60 Chinese companies were involved in other projects in strategic manufacturing, construction, real estate development and telecommunication and services sectors.

He said that launching of PCICL is another milestone in economic relations as this company will play the role of a catalyst in promoting cooperation project specially in private sector. Dr Shah said that PCICL was a joint venture between China Development Bank and the Ministry of Finance with initial authorized capital of $200 million, making it a largest joint-venture company in Pakistan. 

He said PCICL will invest in infrastructure development projects, establish subsidiary companies in various areas and serve as full service investment company. PCICL Vice Chairman and Managing Director and Managing Director China Development Bank Chen Jianbo said that Pakistan has tremendous potential for economic development as it was bestowed with great natural resources and its economy was growing rapidly. It is high time for us to expand trade and business as China and Pakistan are excellent friends, he noted. 

Great potential to enhance Pak-China trade to $15bn


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## Neo

*SPI inflation rises 8.83pc ​* 
Tuesday, December 18, 2007

ISLAMABAD: The weekly SPI-based inflation covering prices of 53 essential items from 17 cities stood alarmingly high at 8.83 per cent during the last week ending Dec 13 over the corresponding week of the previous fiscal, according to the data of the Federal Statistics Bureau released on Monday. 

The more worrisome is that the rising general prices are going up and up further pushing the masses below the poverty line. Independent economists say that if the government was unable to contain inflation, it would increase the number of poor living below the line. The bulletin says that during the week under review, essential kitchen items prices stood sky high, especially, onions, wheat flour, tomatoes, chicken, wheat, vegetable ghee, cooking oil, rice, mustard oil and all types of pulses.

In a span of one week onions prices went up by 8.27 per cent, wheat flour 5.97 per cent, wheat 5.93 per cent, tomatoes 4.43 per cent, eggs 1.96 per cent, bananas 1.9 per cent, kerosene 1.42 per cent and washing soap price up by 1.29 per cent over previous week. In such circumstances, it has become difficult for low, middle and fixed income groups to make ends meet, adding to the miseries of millions of people living below poverty line.

The SPI bulletin revealed 17 items registered increase, and 15 items recorded decline, while prices of 21 items remained unchanged. However, further analysis of the data revealed that on a year-on-year basis 11 items are dearer by double digits. These include basmati rice whose price went up by 58 per cent, mustard oil 56 per cent, wheat 41 per cent, wheat flour 35 per cent, vegetable ghee (tin) 34 per cent, cooking oil (tin) 33 per cent, masoor pulse 31 per cent, washing soap 17 per cent, plain bread 15 per cent, firewood 14 per cent and eggs by tomatoes whose prices shot up by 113 per cent, red chillies 46 per cent, rice IRRI-6 46 per cent, vegetable ghee loose 43 per cent, mustard oil 41 per cent, eggs 37 per cent, powdered milk 32 per cent, wheat and wheat flour 24 per cent, onions eight per cent, fresh milk 13 per cent and chicken was dearer by 10 per cent.

The figures further revealed that though prices of 25 items posted no change during the week, yet compared to the corresponding week of last year, several items are dearer ie vegetable ghee (tin) 29 per cent, cooking oil (tin) 29 per cent, match box 27 per cent, curd 13 per cent, fire wood 13 per cent and plain bread dearer by 12 per cent over the corresponding week of the last fiscal. Besides, basmati rice price increased by 60 per cent and LPG (11kg cylinder) price also shot up by 11 per cent over the corresponding week of the last fiscal. Prices of powder and fresh milk also up by 21 per cent and 12 per cent respectively.

It is unprecedented that the country produced a bumper wheat crop and in the same season, the government is importing it, as flour shortage continues to hit consumers. As a result, the price of the most important kitchen item has shot up from Rs13 per kg, and now it is being sold at Rs22 to 25 per kg. Similarly, there is no government check on the multinationals, which increase prices of their goods, including processed milk, milk powder, cream and a variety of cereals every now and then.

The latest example is that a multinational firm last week hiked prices of cereals by Rs20-25 per packet. It might be astonishing for many that these fleecing firms do not feel bound to display prices on their items. This gives undue benefit to a shopkeeper to charge at will from the hard-pressed consumers and the authorities miserably failed to keep a check on this. A total of 23.9 per cent of Pakistans 158 million people live in acute poverty.

SPI inflation rises 8.83pc


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## Neo

* Falling dollar hits Pak export earnings ​* 
Tuesday, December 18, 2007

ISLAMABAD: Pakistans exports in real terms remained stagnant last month as increase shown in official figures was mainly due to depreciation of the US dollar.

Pakistan conducts 70 per cent of its export trade in US dollar, which is consistently falling against other major currencies in the international market. Other than the US, Pakistans major trade partners are the European Union, Japan and Gulf countries.

Pakistans exports in terms of volume remained static while in value they increased by more than nine per cent. The country compiles its trade figures in US dollar. The exports have not increased but because of the weakening dollar the result in government documents is positive and encouraging, a well-placed official told The News.

According to the Federal Bureau of Statistics (FBS), the countrys exports during November 2007 registered an increase of 9.56 per cent compared to exports in the previous month, which stood at $1.41 billion. The imports interestingly declined by 6.59 per cent from $3.38 billion recorded in October 2007.

With little surplus available for exports, the exporters were uncompetitive and unable to compete with their rivals, the official lamented and said they always seek benefits to enhance their exports.

They preferred to invest in the low value-added sectors and did not strive to take risk of venturing into high value-addition, the official said. Caretaker Commerce and Textile Minister Shahzada Alam Mannoo has called for increasing R&D support for boosting textile exports and is considering presenting a new case for providing more subsidy for the textile sector.

It is a cause for concern that the exporters do not take advantage of the appreciating value of their competitors currencies, particularly the Indian rupee and Chinese yuan, he deplored and said our exporters always looked to the government for initiatives.

In fiscal year 2006-07, the government missed its export target of $17 billion by a margin of $531 million while for 2007-08, the target has been set at $19.2 billion. There is no foreign direct investment in manufacturing units and also no increase in the capacity of already existing manufacturing units, then how exports can be increased, the official said.

Falling dollar hits Pak export earnings


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*Trade with China to reach $15bn: PCICL launched*​
KARACHI, Dec 17: A formal launch of $200 million Pakistan-China Investment Company Limited (PCICL) was held on Monday on the lawns of Governors House at a ceremony, chaired by Sindh Governor Dr Ishratul Ibad.

Those who attended the ceremony included caretaker finance minister Dr Salman Shah, SBP Governor Dr Shamshad Akhtar, the Chinese consul-general, diplomats and business leaders.

The Pakistan-China Investment Company is the outcome of a joint venture agreement signed between the China Development Bank and the Government of Pakistan on July 18.

Under the memorandum of association, the PCICL has been set up to establish various subsidiary companies to carry out particular projects in financial, infrastructural, industrial, mining, manufacturing and non-manufacturing sectors.

The company will strive to promote economic collaboration between the two countries by way of improving contacts between capital markets and corporate sectors of the two countries, investment in infrastructure projects, development of real-estate projects, participation in the privatisation process, hotels and tourism projects, development of special economic zones, and act as full service investment and merchant bank, and offer a host of financial and advisory services.

One of the first projects, being taken up by the PCICL, is development of 400-acre industrial estate near Lahore while many other projects are also being considered for investment.

The Pakistan-China Investment Company Limited brings into active and close collaboration the economic superpower China  with Pakistan which is an emerging economic market, and it would augur well for regional development and prosperity.

With a capital base of $300 billion, the Development Bank of China is in partnership with Pakistan in the company, he said.

The Development Bank of China, Dr Salman said, is a bigger bank than the World Bank in terms of resources.

China, he said, is a huge exporter of resources and Pakistan is well-positioned to receive resources.

China, he declared, is now driving global markets in energy, steel and commodities, and had achieved excellence in a number of fields, while Pakistan, with 160 million population that include 100 million young people of up to 25 years of age, and with an average economic growth of seven per cent in the last five and six years, has all the potential to prove a worthy partner in economic progress.

We will measure your progress in terms of successful implementation of a number of projects, the minister told the Chinese chief executive and his Pakistani deputy of the company.

State Bank of Pakistan Governor Dr Shamshad Akhtar, in her address, said that the Pakistan-China Investment Company is the seventh financial institution of the country set up with Chinese assistance.

She recalled her association with the Asian Development Bank during which she remained involved in a number of projects in China.

Sindh Governor Dr Ishratul Ibad spoke about economic cooperation between Pakistan and China over the last more than five decades in which the setting up of Pakistan-China Investment Company was an important milestone as it marks collaboration between private sectors of the two countries.

Mr Chen Jianbo, the managing director of the launched company, expressed great prospects for investment by the company.

Mr Jianbo was introduced as a banker, who has, so far, appraised projects worth over $15 billion investment and is managing assets worth $5 billion.

Syed Iqbal Ashraf, the deputy managing director, who represents Pakistan in the PCICL top management, gave a full account of the trade and business relationship between the two agreements and involvement of China in many key projects.

The speakers highlighted many projects that symbolise Pakistan-China friendship. These are Karakoram Highway, Gwadar Sea Port, Heavy Mechanical Complex, Heavy Electrical Complex, Heavy Forge and Foundry, Saindak Copper Mining Complex, the two Chashma Nuclear Power Plants and many other projects of vital strategic nature.

The two-way volume of trade between the two countries is $5 billion which is expected to increase by three times to $15 billion a year in next five years.

A five-year development programme has also been drawn up to increase the level of economic cooperation.

Trade with China to reach $15bn: PCICL launched -DAWN - Business; December 18, 2007


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## Neo

*Remittances rules for airlines relaxed​*
KARACHI, Dec 17: The State Bank has further liberalised remittances rules for airlines and also lifted ban on airlines in Pakistan to issue tickets for Saudi Arabia during Hajj season.

The SBP issued a circular on Monday to facilitate foreign airlines in Pakistan through liberalisation of foreign exchange regime.

Under the existing regulations, airlines are required to submit applications, along with all relevant documents, including passage statement (V-37) to authorised dealers for effecting remittances of surplus passage and freight collection.

Now, it has been decided that instead of V-37, foreign airlines will henceforth submit BSP sales statement which is being provided by the International Air Transport Association (IATA) to each airline in Pakistan, said the SBP circular.

However, data contained in V-37 statement should readily be available with the concerned ticket issuing office, it added.

At present, airlines in Pakistan have been restricted from issuing tickets to Saudi Arabia or its adjoining countries during the Hajj Season i.e. from 10th of Shawwal to 10th of Zilhaj each.

Now, it has been decided to waive this restriction, said the State Bank.

Remittances rules for airlines relaxed -DAWN - Business; December 18, 2007


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## Neo

*Row over Thar power tariff: $5 billion indigenous resource project​*
By Khaleeq Kiani

ISLAMABAD, Dec 17: Caretaker Prime Minister Mohammadmian Soomro is pushing for an expeditious decision on upfront tariff for the Thar coal-based power projects, but his adviser on energy is opposing such a mechanism, terming it impracticable, Dawn has learnt.

The development and exploitation of $5 billion indigenous resource in Sindh has raised political stakes to such an extent that the prime minister has taken a public position for announcing an upfront tariff within days, but his adviser Mukhtar Ahmad says that international competitive bidding is the only way forward.

Mr Soomro has the support of Sindh chief minister Justice (retd) Abdul Qadir Halepoto and former minister for mines Irfanullah Marwat and the Federation of Pakistan Chambers of Commerce and Industry, and also of President Pervez Musharraf.

On the other hand, adviser on energy Mr Ahmad, who is expected to relinquish his post early next month, believes that the National Electric Power Regulatory Authority (Nepra) -- an independent regulator -- would not be in a position to determine the upfront power tariff.

At the heart of dispute is a 1,000 MW integrated power project at Thar being sponsored by Hassan Associates of Farooq Hassan at an estimated cost of $2.2 billion. Mr Farooq Hassan, who was instrumental in setting up the Uch power project under the 1994 policy and who later became one of the major shareholders in the Karachi Electric Supply Company, has offered the government an average tariff of about 10 cents for the Thar project.

Sources close to the adviser said the Sindh authorities were presenting an emergency-like situation to get a tariff of their choice without any consideration for economic principles. They said there was no point in having domestic energy when it did not offer any saving compared with imported energy.

They also said that short-term thermal projects and their costly tariff could not be accepted as a benchmark for long-term energy supplies from domestic sources.

Those supporting the upfront tariff said the competitive bidding envisaged under the 2002 power policy did not yield any results and not a single project could be lined up for development.

On December 12, an Economic Co-ordination Committee (ECC) meeting presided over by the caretaker prime minister considered the request of a committee headed by secretary water and power Ismail Qureshi that suggested separate indicative upfront tariff for different coal fields like Thar, Lakhra, Badin and Sonda and fixed coal price of imported Indonesian coal at Karachi minus freight charges as a benchmark coal price for determination of upfront tariff.

The ECC, however, directed Nepra to come up with upfront tariff in 10-15 days due to opposition from some of the participants.

On December 13, Mr Ahmad who is expected to join Asian Development Bank on January 5, 2008 said that credible capital cost and operating cost estimates were essential for tariff determination -- which at present is not available particularly for coal mining segment of integrated the coal mining and power generation facilities.

He proposed to have a reference tariff, instead of upfront tariff, on the basis of opportunity cost and that too if it was lower than 12 cents per kilowatt-hour of the furnace oil-based thermal projects. With the reference tariff thus established (based on information available with Nepra and PPIB), a competitive bidding process could be implemented for each location (Badin, Thar etc).

On December 15, Mr Soomro reiterated at a business convention in Karachi that the issue of upfront tariff had been referred to Nepra without loss of much time which should signal the beginning of gainful exploitation of the coal.

A day later, Sindh caretaker chief minister wrote a strongly worded letter to Mr Soomro and complained that agencies at the federal level were not forthcoming in providing conditions for development in this sector.

Row over Thar power tariff: $5 trillion indigenous resource project -DAWN - Top Stories; December 18, 2007


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*Kazakhstan keen to strengthen economic ties with Pakistan ​*
ISLAMABAD: The Ambassador of the Republic of Kazakhstan Bakhytbek Shabarbayev on Monday expressed keen interest to strengthen economic relation with Pakistan in various fields particularly in energy sector. The envoy was speaking at a meeting with President Islamabad Chamber of Commerce and Industry Nasir Khan at ICCI. Mr. Shabarbayev stressed the need to increase the current level of trade between the two countries and to facilitate joint venture in the field of trade, industry and services.

He said Kazakhstan is the second largest among the Commonwealth of Independent States (CIS). It was the 9th largest country in the world. Its border extends to about 12,187 km with Russia, China, Kyrgyzstan, Turkmenistan and Uzbekistan. This showed its vital strategic location and its important role in the CIS. He said Pakistan could import oil and gas products from Kazakhstan at cheaper rates. Kazakhstan has oil, coal, iron ore, manganese, chromites, lead, zinc, copper, titanium, bauxite, gold, silver, phosphates, sulfur, iron and steel, tractors and other agriculture machinery, electric motors, construction materials industries. He underlined the need for exchange of trade delegation to enhance the bilateral trade. He said that Kazakhstan is rich in natural resources. He invited Pakistani investors to invest in his country.

Daily Times - Leading News Resource of Pakistan


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## Neo

*'No major break through in trade sector expected​*
ISLAMABAD: Chances of Pakistan making a major break through in the trade sector are quite small, if it is unable to meet challenges like quality control, human resource development, branding and bridging the skill gap in the textile and manufacturing sectors. 

Dr Ather Maqsood Ahmed, Member, Fiscal Research and Statistics concluded this in his research paper on Structure of International Trade in Pakistan: Some Recent Insight that was carried in the First Quarterly Review of the Federal Board of Revenue (FBR), released on Monday. 

Export performance of the textile sector remains a concern that requires a careful review. The argument that there is discriminatory dumping duty on the bed linen might be valid to some extent, but it is also true that international markets are being lost due many other crucial reasons, the analysis added. The first quarter of current fiscal year has witnessed a low growth of only 4.8 percent in exports as compared to the corresponding period of last year. Similar to import structure, the composition of export basket has also been fairly narrow for quite sometime. Whereas, the share of cotton and other made up of textile in total exports has declined as compared to first quarter of previous fiscal, major export items like cotton, articles of apparel and clothing, other made up textile articles and rice have, in fact, recorded negative growth. On the other hand, minor items like salt, sulphur, stones, slag, ash, products of milling industry, mineral fuels, inorganic chemicals, rawhides and skins, articles of leather have performed relatively well. However compared to major sectors, this performance has limited consequence for improving the overall balance of trade position. 

A detailed review confirms that ten major commodity-groups contribute nearly 80 percent of the overall national exports, showing how narrowly the export base has been structured over the years. No doubt that there has been a little improvement during the first quarter of current fiscal and the share of mineral fuel, raw hide and skins, articles of leather, and man-made staple fibres in total exports have increased marginally, there is no doubt that the overall position remains unsatisfactory.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan's foreign exchange reserves to cross $16 billion mark next month: Dr Ashfaque ​*
ISLAMABAD (December 18 2007): The country's foreign exchange reserves will regain their previous position of $16 billion plus as major cash inflows were expected next month, Special Finance Secretary Dr Ashfaque Hasan Khan told Business Recorder on Monday.

He said fluctuation in the foreign exchange reserves is a normal economic phenomenon and recent 5 percent decline could not be wholly attributed to the imposition of emergency in the country.

Explaining the outflow of $700 million from the reserves during November-December, Dr Ashfaque said the yearly bulk payment on the debt servicing takes place in these months. Besides, he said, the oil prices touched all-time high during the same period, which almost doubled the oil bill. He admitted that the emergency shattered the confidence of the foreign investors who withdrew some $200-$250 million investment from the stock market.

However, after the President's announcement to lift the emergency before December 16, foreign investors returned and enlivened the stock market, he added. Dr Ashfaque said the tight monetary policy pursued by the State Bank of Pakistan had played a vital role in moderating import growth.

He said as a result of the developments on exports and imports the trade deficit shrunk by $191 million to $3,533 million from $3,724 million from July to October 2007.

=========================================================================
Table: Current Account Balance (Million $)
=========================================================================
2005-06 2006-07 2007-08 (July-October)
2006 2007
=========================================================================
Exports (f.o.b) 16388 16924 5413 5997
Imports (f.o.b) -24647 -26655 -9137 -9530
Trade Balance -8259 -9731 -3724 -3533
Invisible Balance 2610 2162 210 537
Private Transfer Workers' 9914 10103 2899 3693
Remittances 4600 5494 1644 2080
Current Account Balance -4968 -7055 -3514 -2996
as% of GDP -3.9 -4.9 -2.4 -1.8
=========================================================================

Copyright Business Recorder, 2007


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## Neo

*Caretaker government decision on mega projects: no more financing through levy of new surcharge ​*
ISLAMABAD (December 18 2007): The caretaker government has imposed a ban on financing of mega projects in public sector through levy of any new surcharge, well-placed official sources in the Water and Power Ministry told Business Recorder on Monday.

Referring to the 969-MW Neelum-Jhelum hydropower project, which was cleared by Prime Minister Muhammedmian Soomro after several ' ifs and buts,' the sources said when the project came up for discussion in the Cabinet on December 12, it caused consternation among the participants. Some members were incensed at the move. They protested against the decision saying that by levying 'special surcharge', the government was introducing an entirely new mode of financing for a mega project and that too without taking general public into confidence.

Interestingly, the architect of this mode of financing, Dr Salman Shah, Minister for Finance, was not present in the meeting. "This mode should not be seen as an example or a rule to be followed in future projects in power or any other economic sector by the government later," the sources quoted the members who were arguing strongly against the move as saying. According to the sources, initially the Prime Minister also did not approve of this mode.

The sources said the Ministry of Water and Power had submitted the summary to the Cabinet Division soon after it obtained approval in principle from the Economic Coordination Committee of the Cabinet, headed by former Prime Minister Shaukat Aziz, but the prime minister secretariat did not allow its appearance on the agenda owing to political considerations. The sources said this move by the concerned officials had irritated the caretaker prime minister in the Cabinet meeting.

"Why should the caretaker government clear a controversial mode of financing when the government of Shaukat Aziz had not done so and how would this surcharge affect people at large?" the sources quoted Soomro as saying. The Prime Minister also asked whether a 10 paisa increase would hit the consumers of Karachi Electric Supply Corporation.

"When Wapda sells up to 700 MW electricity to KESC, there is no doubt a 10 paisa raise will be passed on to the latter's consumers but the Water and Power Ministry hid this fact from the Cabinet," the sources added.

They said the concerned officials of the Water and Power Ministry assured the Cabinet that no precedent of financing would be set in for power sector projects as after eight years, which is the deadline for completion of Neelum-Jhelum project, surcharge of 10 paisa would be withdrawn.

According to the sources, the Ministry of Water and Power was also of the view that since the caretaker government did not have political motives, it would be easy for it to approve the projects of national importance.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Steps against threats to economy: IMF to issue corrective guidelines today *​
ISLAMABAD (December 18 2007): For the International Monetary Fund (IMF), rising inflation and huge current account deficit are two potential threats to Pakistan's economy and it is going to issue guidelines to the government for corrections on December 18.

The IMF releases review on Pakistan's economy biannually under Article 4, and asks the government for corrective measures. Since Pakistan is not utilising any IMF loan facility, implementation of its guidelines are not mandatory for it.

An Islamabad-based official IMF official on Monday said the board would review Pakistan's economic situation and suggest various measures for corrections where it thinks are needed. He said that some indicators of Pakistan's economy were showing robust growth in the current fiscal year, but many of them were giving alarming indications.

IMF is encouraged that Pakistan, despite some major shocks to the economy like deadly October 8, 2005 earthquake and unending political turmoil, achieved economy growth target of over 7 percent during last four years, but it is obviously concerned for taking over of the economy by the politics.

The government has failed to take some necessary steps to make the economy less vulnerable to politically motivated decisions. One can refer capping of the oil prices as an evidence. In this case the government was not able to take a bold decision of passing on the actual prices to the consumers.

IMF and other international donors are seriously concerned over Pakistan's huge current account deficit and they, time and again, have suggested to the government to take corrective measures before it got too late. They also suggested to Pakistan to walk out of all kinds of business and leave this role for the private sector, but Islamabad is yet to take this advice to make a difference.

Pakistan has its own limitations to keep on intervening through some public sector organisations, such as Trading Corporation of Pakistan (TCP), Passco, to protect the poor segment of the society from private sector's exploitation. Although this system of protecting the poor from market exploitation is not working up to its expectation, yet even partial success gives satisfaction, and encouragement, to policy-makers to continue intervening in the market.

Similarly, IMF and other international donors are pressing the government to do away with the policy of subsidising power, gas and other utilities, but it is resisting the demand, for various reasons.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Economic indicators testify massive uplift' ​*
VEHARI (December 18 2007): President Pervez Musharraf on Monday said all economic indicators testify that the country has been put on the road to progress and prosperity and record amount was being spent on development projects across the country.

Inaugurating the natural gas supply project to Vehari, he said the nation did not witness as much progress in the 50 years since independence than the achievements made during the past eight years. He said the annual development plan has crossed the figure of Rs 500 billion and countless mega development projects were being executed.

The President said South Punjab gas project will cost the exchequer Rs 3.7 billion benefiting 1.3 million population of three districts and 12 tehsils and towns of the region. The President, praising the accomplishment by Sui Northern Gas Pipeline Limited (SNGPL), said the government would provide Rs 750 million more required to complete this mega project.

He said employment opportunities were expanding, poverty was being alleviated, industrial and agricultural sectors were flourishing and investment was rapidly increasing, all reflecting swift development of the country.

Punjab Governor Khalid Maqbool, Caretaker Chief Minister Ijaz Nisar, Federal Petroleum and Natural Resources Minister Ihsanullah Khan and District Nazim Shahid Mehdi Nasim also attended the event.

President Musharraf said that extremism and terrorism were a big threat to the national development and it was imperative to extirpate it. He sought support of the masses to curb this menace that may reverse the wheel of development and prosperity.

He said suicide attacks are completely un-Islamic and the people should advise such perverts who want to impose their brand of ideology on others. He said he has been to the Holy House of Allah (Khana Kaba) at Makka Mukarrama and sacred Rauza Rasool (PBUH) at Masjid Nabvi, Madina Munawwara several times he never claimed to be a better Muslim than others.

The President urged the people to vote those to power, who may continue the pace of development. He asked the masses to beware of those, who want to stop the wheel of progress and want to spread despondency in the motherland.

He stressed that to him Pakistan comes first and individuals or organisations come later. He said he cherishes to continue to work tirelessly to translate his dream of a developed Pakistan into a reality.

President Musharraf said when he took power the country's development budget stood at Rs 80 billion which has now jumped to Rs 520 billion. He said a huge sum of Rs 87 billion has been spent on Southern Punjab's development during the last five years.

He said in the past only 1,000 villages would get electricity annually, but now this figure has multiplied to 16,000 villages. The gas connections per annum have gone up from 100,000 to 250,000.

He said filtration plants for provision of clean drinking water is being installed all over the country at a cost of Rs 7 billion. This facility will be provided to small villages in the next phase, he added.

The President said some elements wanted to disrupt the pace of progress and tried to create an atmosphere of uncertainty in the country. In order to prevent that he had to impose emergency and now everything had been rectified and normalised.

He announced to set up a campus of agricultural university at Vehari and upgrade the district headquarters hospital from 125 beds to 250 beds. Earlier, Khalid Maqbool and Ihsanullah Khan also spoke. A large numer of ex-MNAs, MPAs and common people, including women attended the ceremony.

Business Recorder [Pakistan's First Financial Daily]


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## ejaz007

*Remittances soar by 23.62% to $2.587bn during July-Nov*Staff Report

KARACHI: Remittances sent home by overseas Pakistanis rose to $2.587 billion during the first five months of the current financial year, showing an increase of $494.26 million or 23.62 percent over the same period of the last fiscal year. 

The monthly average remittances for the above mentioned period comes out to $517.41 million as compared to $418.56 million during the corresponding period of the last fiscal year. 

The inflow of remittances from the USA, Saudi Arabia, UAE, Gulf countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $733.76 million, $481.81 million, $423 million, $380 million, $197.41 million and $76.09 million respectively, as compared to $533.46 million, $398.99 million, $318.12 million, $291.47 million, $180.10 million and $62.57 million respectively, during July-November last year. 

Total remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries amounted to $294.03 million as against $306.93 million in the same period last year. 

During November, Pakistani workers sent $505.58 million, up by $56.97 million or 12.70 percent when compared with $448.61 million sent home in November 2006. 

The inflow of remittances into Pakistan from most of the countries of the world increased last month as compared to November 2006. Remittances from USA, Saudi Arabia, UAE, Gulf countries, UK and EU amounted to $142.95 million, $90.90 million, $88.18 million, $77.86 million, $32.91 million and $15.41 million, respectively, as compared to $111.70 million, $80.79 million, $67.42 million, $59.86 million, $41.65 million and $14.26 million received from these countries during November 2006. 

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during November 2007 amounted to $57.07 million as compared to $72.78 million during November 2006. 

The total remittances include $0.97 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

Daily Times - Leading News Resource of Pakistan


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## ejaz007

*Russia for establishment of Pakistani trade house in Moscow*

KARACHI: Russia desires to establish a Pakistani trade house in Moscow to create awareness about the vast potential of Pakistani products and their competitive pricing. A four-member delegation of Russian Federation led by Ambassador Sergey N. Peskow expressed this desire in a meeting with Chief Executive Officer, Trade Development Authority of Pakistan (TDAP), Tariq Irkam here on Tuesday. Consul General of Russian Federation Valdimir V. Seliverston and others were also a part of the visiting delegation. The delegation also called for the revival of Pakistan-Russian Business Council and for a joint business body. It expressed desire to expand trade opportunities with Pakistan and displayed keen interest in single country exhibition. Russian delegation also informed their hosts of setting up two Pakistani banks viz. National Bank of Pakistan and Askari Bank to facilitate exporters in Moscow. Tariq Ikram told the delegation that during the last eight years Pakistans export to Russia went up from $20 million to $140 million. He gave the delegation an analysis of export of Pakistani products pointing out where imports declined and where the opportunities exist for further expansion of trade ties between the two countries. He spoke of competition and pricing in textile, garment and leather goods where Pakistan has a competitive edge and could be enhanced to the benefit of both. He also assured the delegation to consider setting up of a Pakistan display center as a warehouse that TDAP wishes to establish in Moscow. Mr Ikram asked the delegation to look into possibilities of joint ventures for promotion of trade. He said that there existed a lot potential for export fruits, vegetables, sports goods, man-made textile apparel, footwear, seafood, electronic equipment, pharmaceutical goods etc. staff report

Daily Times - Leading News Resource of Pakistan


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## Introvert

*Pakistan to export 100000 tonnes cement to India *

Tuesday, 18 December 2007 
Pakistan is all set to export about 0.1 million tons cement to India on monthly basis and both the countries are engaged in negotiations to devise a comprehensive mechanism for the export of the commodity. We have been in negotiations with Indian officials for cement export to that country, Federal Minister for Commerce and Textile Industry Shahazada Alam Monnoo told APP in an exclusive interview here on Tuesday.

He said India has great demand for cement and the Pakistani industry has great capacity for producing export quality cement, adding: The cement industry can manage export 0.1 million tons to the neighbouring country, he remarked.

India has shown willingness to import maximum quantity of cement from Pakistan through sea as well as land routes, he said. He said: I had a meeting with the India ambassador to Pakistan on the issue who has shown keenness on his part for cement import from Pakistan. 

However, he was of the view that the immediate barrier in the way of export was inadequate transportation facilities for the lucrative trade across the border. He said both the sides realized the need for improving road transportation facilities for smooth flow of trade.

Due to abolished countervailing duty and additional customs duty on cement imports the Pakistani cement would become competitive in the huge Indian market. Analysts calculate that the landed cost of Pakistani cement in India would be cheap.

The shortage of cement in the region gained well for Pakistani cement manufacturers, which not only resulted in export of a major quantity, but also brought high export price. Regarding textile industry, the minister expressed the hope that the industry would come out of the crisis soon.

He said that the government had already allowed the import of 0.5 million short staple bales from India to facilitate the textile industrialists, adding that the federal cabinet would be approached to approve another junk of cotton through land route if the textile industry showed better performance.

He was of the view that the textile industry was flourishing till two years back however, due to certain mistakes it suffered a setback. However, he expressed the hope that with hard work and better planning the glorious past of the industry would be regained.

Answering a question about rice export, he said the overall rice export had Increased, adding that Pakistan was producing quality rice which had good international market.He said efforts were underway to ensure handling of sea food on international standards for export, particularly to the European Union countries, which had banned seafood exports from Pakistan since April 2007. 

Pakistan to export 100000 tonnes cement to India - Unique Pakistan


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## Introvert

*$200m Pak-China Investment Company launched*
Tuesday, December 18, 2007; Posted: 08:11 PM 

Karachi, Dec 18, 2007 (Asia Pulse Data Source via COMTEX) -- CHXDF | charts | news | PowerRating -- Ministry of Finance, Government of Pakistan, and China Development Bank (CDB) jointly launched $200m Pak-China Investment Company Ltd (PPICL), at a ceremony held in the Sindh Governors House, here on Monday. 

First tranche of capital amounting $70million for the PCICL was received in October this year while rest of capital would arrive by the year 2009. The Federal Finance Minister Dr. Salman Shah would chair PCICL, while its Managing Director (MD) would be the nominee of CDB Mr. Chen Jianbo, Deputy MD Pakistani Syed Iqbal Ashraf with two directors from Chinese and one from Pakistani side. 

Company would invest in sector of engineering, telecom, construction, infrastructure projects, merger and acquisitions, debt syndication and private equity placements. 

Addressing the launching ceremony, Sindh Governor Dr. Ishratul Ibad Khan said that Pakistans liberal and investor-friendly economic policies have made the country attractive for both domestic and foreign investment. 

He said that the PCICL would further strengthen Pak-China friendly ties and help achieving 5-year target of 15 billion USD bilateral trade between the two countries. 

Sindh Governor added that the free market oriented economy of Pakistan has provided great potential to foreign direct investment in oil and gas sectors, power generation, IT and infrastructure development. 

Federal Finance Minster Dr. Salman Shah said on occasion that PCICL must set goal of $160billion for next five years. He said that the success of PCICL would be estimated not from its funds but by the number of projects it conceives and the amount of investment in attracts in both the countries. 

China is worlds emerging economic power while Pakistan is worlds emerging hub of economic investment, and their coalition would boost economy of both the countries Dr. Salman Shah said. 

He said that china is a huge exporter of capital and while in Pakistan there are vast opportunities for investment. There has been 7&#37; growth in Pakistans GDP last year, which has reached to $160 billion from $60 billion in 1999 he said. 

Governor State Bank Dr. Shamshad Akhtar said that Karachi has huge potential for foreign direct investment in infrastructure development. She urged the PCICL to focus on it. She urged upon corporate community to invest in PCICL and make it a success story. 

MD PCICL Mr. Chen Jianbo said that establishment of PCICL would provide open-window opportunities for Chinese investors in Pakistan and for Pakistani investors in China. 

Chinese Consul General at Karachi Chen Shanmin said that his country was already investing in many projects in Pakistan including Gwadar Port, Chashma nuclear power plant, mechanical complexes and many more. 

He added that China would invest $500million in coal-based power generation at Sonda-Jharak Sindh while work on 200 million USD project of Managing Karachis municipal waste would begin soon. PCICL would focus on corporate finance and investment-banking activities, selling credit/ non-credit based products and services and liaison with the Risk Management department in screening of target markets and customers. 

Its functions would include management of assets and liabilities, managing organizations liquidity needs, trading in government securities, and accepting Pakistani rupee deposits under certificate of investment. 

$200m Pak-China Investment Company launched


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## Neo

*Two Pakistani banks to open branches in Moscow ​* 
Wednesday, December 19, 2007

KARACHI: Russian Ambassador to Pakistan Sergey N Peskow said here on Tuesday that two Pakistani banks would open their branches in Moscow in the near future to facilitate exporters.

Theses are National Bank of Pakistan and Askari Commercial Bank. He was talking to the chief executive of the Trade Development Authority of Pakistan (TDAP), Tariq Ikram. Russian Consul-General at Karachi Vladimir V Seliverston and head of the trade commission of Russia Vitaly Glinkin also accompanied him.

He called for revival of the Pakistan-Russian Business Council and setting up of a joint business council body to enhance bilateral trade with Pakistan. The Russian envoy showed keen interest in holding single country exhibitions, besides establishment of a trade house of Pakistan in Moscow for creating awareness in Russia of the vast potential of Pakistani products and their competitive prices.

Tariq Ikram informed him that Pakistans exports to Russia have increased from $20 million to $140 million in the last eight years and added that vast potential existed for expanding bilateral trade. He also assured him of examinine the possibilities of setting up a Pakistan display centre in Moscow. 

Two Pakistani banks to open branches in Moscow


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## Neo

*Khushhali Bank to develop human resource capacity ​* 
Wednesday, December 19, 2007

ISLAMABAD: Khushhali Bank has signed a contract under the United States Agency for International Development (USAID) project of Widening Harmonised Access to Microfinance implemented by Shore Bank International to acquire SBI services for a customised mid-level staff training programme for the bank.

The training programme is supported by the USAID in SBI efforts to develop human resource capacity for the microfinance sector of Pakistan. The USAID support for the Widening Harmonised Access to Microfinance (WHAM) is part of the $1.5 billion aid that the US government is providing for Pakistan over five years to improve economic growth, education, health, governance and for reconstruction of earthquake-affected areas.

As a consultant, the SBI will develop and deliver customised training on staff management and financial analysis & management to Khushhali Banks branch management. The training will be given throughout the banks vast network of branches across different regions.

As part of the agreement, Shore Bank will initially evaluate and assess diverse needs and skills of Khushhali Banks large number of employees across Pakistan to design the training content and material which is relevant and thus effective.

After ensuring a fit between the training material and training needs of the banks staff, the SBI will deliver training following a high impact-oriented methodology and practices tested and institutionalised within its Human Resource Development Initiative (HRDI) for microfinance.

The objective of the training programme is to enhance Khushhali Banks staff capacities through focused sessions emphasising on balancing multiple performance targets, customised design and exclusive delivery of training to the staff.

The SBI will also work hand in hand with the Khushhali Banks management to ensure suitability of training material and provide technical assistance to further enhance the banks internal staff development systems and capacity to track the impact of the training programme.

Stressing its importance, Khushhali Bank President Ghalib Nishtar said we understand the need for consistent training and development to address immediate human resource capacity-building needs of Khushhali Bank. Through this partnership, we hope to provide market-led, high-quality and cost-effective training to our employees.

The SBI has launched HRDI to augment the capacity of microfinance middle-level management, specifically the branch-level management to undertake greater delegation from senior management and to manage further decentralization of quality control and decision making, necessary to achieve sustainable scale.

Shore Bank has vast experience through national and international initiatives for providing training and development for the sectors human resource. This has allowed the SBI to develop a process of preparation, delivery and follow-up and continuous improvement that helps to ensure the effectiveness of training organised under HRDI.

Khushhali Bank to develop human resource capacity


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## Neo

*$1.5bn export target Govt to help jewellery sector*​ 
Wednesday, December 19, 2007

KARACHI: Federal Minister for Industries, Production and Special Initiatives Salman Taseer has said that the government will provide maximum support to the gems and jewellery sector in order to help it achieve $1.5 billion export target by 2017.

He expressed these views while talking to media after being briefed on Pakistani gems and jewellery industry by the Pakistan Gems and Jewellery Development Company (PGJDC) at the office on Tuesday. 

The minister said the sector retains huge potential and currently there are approximately one million Pakistanis working in the sector which can be increased manifold if they are provided with latest technology, training and supportive infrastructure. 

Briefing the minister PGJDC Chief Executive Officer Fawwad Khan said Pakistans current official Gems and Jewellery exports stands at around 40 million dollar, which can be increased by branding the Pakistani jewellery in international markets. 

To promote the different products of this sector PGJDC is participating in different international jewellery exhibitions where Pakistani companies are not only getting heavy export orders but also learning about the latest trends in jewellery designs as well as the requirements of international markets, he said 

The minister was further told that PGJDC is working to raise value chain productivity, improvement of industry marketing and branding, strengthening of policies for increased competitiveness, investment in workforce development and innovative capacity and for strengthening industry organization and supporting institutions.

$1.5bn export target Govt to help jewellery sector


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## Neo

*ADB keen to promote industrial sector *​ 
Wednesday, December 19, 2007

ISLAMABAD: The Asian Development Bank (ADB) has termed the private sector an engine of growth and showed interest in the promotion of Pakistans industrial sector with the collaboration of chambers of commerce.

ADB Senior Economist Donghyun Park, in a meeting with Islamabad Chamber of Commerce and Industry President Nasir Khan, said the chambers were playing a vital role in the process of industrialisation. They wanted to establish technical institutions to produce skilled labour, he added.

Park showed satisfaction that the law and order situation in Pakistan is well and they were moving freely everywhere in the country, said a news statement issued here. Earlier, ICCI President Nasir Khan said political stability was necessary to attract foreign investment. He expressed concern that Pakistan had only one textile college in Faisalabad while the countrys main export product was textile.

The textile industry had been facing difficulties for the last two years, he said, adding we are exporting cotton at cheaper rates while making its import at higher prices. High interest rates were also a cause for worry in the process of industrialisation, he said. Khan said the industries were facing shortage of gas and production was declining. However, he added the construction and building sector was doing well.

ADB keen to promote industrial sector


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## Neo

*$785 million US aid approved*​
WASHINGTON, Dec 18: The US House of Representatives has passed a $785 million aid package for Pakistan for the fiscal 2008 despite its reservations over the state of emergency imposed on Nov 3.

The US Senate is also expected to approve the package, which includes $300 million of military assistance, by Tuesday evening.

The other major item on the approved list is that of $350 million for economic support fund.

The package for Pakistan includes $50.9 million of development assistance, $39.8 million for child survival and health, $10.3 for anti-terrorism activities, $32 million for anti-narcotics efforts, and $2 million for training and education of military officers in the United States.

This is part of a five-year $3.5 billion package signed in June 2003, when President Pervez Musharraf visited the Camp David presidential resort for a meeting with President George W. Bush.

The bill approved by the House also includes a provision authorising the US administration to provide assistance to build the capacity of Pakistans other security forces critical to the success of counter-terrorist operations.

These include the Frontier Corps and other internal security forces specifically responsible for counter-terrorism operations. Forces responsible for border protection and interdiction, including the forces that guard coastal waters, will also benefit from this provision.

Several powerful lawmakers had suggested conditioning US aid to the return of democracy in the country.

The House and the Senate are separately considering some resolutions on this issue. One resolution calls for conditioning US military assistance to demonstrable progress by the government of Pakistan in achieving certain objectives towards the restoration of full democracy.

But the Bush administration warned the lawmakers not to attach conditions to US assistance to Pakistan.

BIDENS CALL TO MUSHARRAF: Earlier, a leading presidential candidate and chairman of the US Senate Foreign Relations Committee Joseph R. Biden telephoned President Pervez Musharraf, urging him to restore an independent judiciary and a free media.

A statement issued by his office quoted him as telling the president that while US lawmakers appreciated his decisions to quit the army and lift emergency, they believed it was not enough.

$785 million US aid approved -DAWN - Top Stories; December 19, 2007


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## Neo

*Russia for establishment of Pakistani trade house in Moscow*​
KARACHI: Russia desires to establish a Pakistani trade house in Moscow to create awareness about the vast potential of Pakistani products and their competitive pricing. A four-member delegation of Russian Federation led by Ambassador Sergey N. Peskow expressed this desire in a meeting with Chief Executive Officer, Trade Development Authority of Pakistan (TDAP), Tariq Irkam here on Tuesday. Consul General of Russian Federation Valdimir V. Seliverston and others were also a part of the visiting delegation.

The delegation also called for the revival of Pakistan-Russian Business Council and for a joint business body. It expressed desire to expand trade opportunities with Pakistan and displayed keen interest in single country exhibition. Russian delegation also informed their hosts of setting up two Pakistani banks viz. National Bank of Pakistan and Askari Bank to facilitate exporters in Moscow. Tariq Ikram told the delegation that during the last eight years Pakistans export to Russia went up from $20 million to $140 million.

He gave the delegation an analysis of export of Pakistani products pointing out where imports declined and where the opportunities exist for further expansion of trade ties between the two countries. He spoke of competition and pricing in textile, garment and leather goods where Pakistan has a competitive edge and could be enhanced to the benefit of both. He also assured the delegation to consider setting up of a Pakistan display center as a warehouse that TDAP wishes to establish in Moscow. Mr Ikram asked the delegation to look into possibilities of joint ventures for promotion of trade. He said that there existed a lot potential for export fruits, vegetables, sports goods, man-made textile apparel, footwear, seafood, electronic equipment, pharmaceutical goods etc.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan second largest importer of palm olien ​*
KARACHI: In the first 15 days of December, Pakistan imported 68,700 metric tonnes of palm olien that ranked it as the second largest importer of the commodity after China, which imported 213,000 metric tonnes during same period, importers told Daily Times on Monday.

Import increases around 20 percent in coming two months on the back of growing domestic demand and consumption due to decline in temperature in the country, senior member of the Pakistan Vanaspati Manufacturers Association (PVMA), Nasir Ibrahim said. The European Union (EU) imported around 114,000 metric tones during same period and ranked third.

The country import during November 2007 witnessed a surge of around 3.31 percent against import in same period last year, which stood at 189,159 metric tonnes.

As the international prices of palm oil surged by around $56 per tonne to $876-$890 per tonne, importers and millers paid around Rs 21 per kg more as Malaysian crude palm oil futures surged on increased international demand in exports.

Pakistan imported around $892 million worth of palm oil during July-June 2007 as against $717 million in the same period last year.

Mr Ibrahim said, This was due to the higher domestic demand as it is going to rise on the back of Eid ul Azha. He said however, Pakistan will reduce tariff on palm oil by 10 percent MOP on January 01, 2008. The prices of palm oil in the international market have witnessed an unprecedented increase. Malaysia and Pakistan sign a free-trade agreement (FTA) that is expected to boost Malaysian palm-oil exports. 

Malaysia is the worlds largest producer of palm oil and counted Pakistan as its second-largest customer in the first eight months of this year. The importers have to pay around 45 percent duty on import value besides paying 50 percent import landing tax to the government, he added. Pakistan imports mostly Malaysian palm oil and olein to meet domestic demand of 1.99 million tonnes, as locally produced cottonseed meets rest of the demand. Edible oil import costs around $ 989 million every year.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan seeks $1.3 billion for power projects​*
ISLAMABAD: Pakistan has sought a soft loan of $1,320.54 million from South Korea for extending its electricity supply network and sustain financial losses of the electric supply corporations, sources told Daily Times on Tuesday.

Sources said that government needed around $2,692.55 million to materialise such projects. The Ministry of Water and Power is seeking $1,320.54 million from Korea and the Economic Affairs Division has sent a formal request to South Korea in this regard.

Sources further said that government would use the money obtained under these heads also for the revamping/rehabilitation of irrigation system in provinces. The money would also be used for a 220-kv grid station and a Dadu-Khuzdar 220-kv transmission line. The project also includes provisions for IESCO (6th secondary transmission and grids), PESCO (6th secondary transmission and grids), FESCO (6th secondary transmission and grids), Punjab Barrages rehabilitation and modernisation project (excluding Khanki barrage) and 6th secondary transmission and grids of GEPCO.

Sources said that ministry of water and power has approached the Economic Affairs Division (EAD) to generate required funds as soft loans from different countries and financial institutions.

The EAD had sent a loan request to Korea but the country is giving money only for the GEPCO project. While this project that will extend six phase of GEPCO will cost $76.5 million; the ministry requires $18.8 million for the project.

Showing reservations over the other projects worth $1,301.74 million, the government of Korea has conveyed that these were commercial projects it could not provide funds as soft loans, an official said.

Sources said that the agreement for the loan is still under consideration.

Daily Times - Leading News Resource of Pakistan


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## Neo

*ADB keen to facilitate industrialisation*​
ISLAMABAD: Senior Economist of the Asian Development Bank (ADB), Mr Donghyun Park in a meeting with the President, Islamabad Chamber of Commerce and Industry (ICCI) Nasir Khan has said that the private sector is main engine of growth and ADB want to promote Pakistani industry with the collaboration of its chambers.

He added that chambers are playing a vital role for the countrys industrialization. 

Mr Park said that they wanted to establish technical institutions to produce skilled labour. He also showed satisfaction over the law and order situation in Pakistan and said that they are moving freely everywhere in the country. 

Earlier, ICCI President, Nasir Khan said that political stability is necessary to attract investment. Mr Khan showed his concern over the fact that Pakistan has only one textile college in Faisalabad and textile products are the countrys main export. He appreciated ADBs is collaboration with chambers. Mr Khan said that industries are facing shortage of gas, energy and production is decreasing.

Daily Times - Leading News Resource of Pakistan


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## Neo

*IPDF processing 44 PPP projects worth $1.4 bn*​
ISLAMABAD: A high level meeting on Tuesday was informed that Infrastructure Project Development Facility (IPDF) is currently processing some 44 projects worth approximately $1.4 billion under Public Private Partnership (PPP) in CNG Buses Project in Karachi urban mass transport, roads, energy and municipal services. 

Federal Minister for Finance Dr. Salman Shah, while chairing the board meeting of the IPDF here said that the newly approved PPP Policy of the government of Pakistan will enhance the confidence of private investors to invest in Pakistans infrastructure opportunities. 

The IPDF board meeting was attended by its members including Secretary Finance Division Ahmad Waqar, Dr. sania Nishter, Mr. Salim Raza, Shehzad Ata Elahi, CEO, IPDF, Aijaz Ahmed. Dr. Ashfaq Hasan Khan, Special Secretary Finance, Senior representatives of Ministry of Finance and IPDF also attended the meeting. 

Dr. Salman Shah emphasized the need for creating an enabling environment though a combination of policy reforms, institutional support, incentives and financing modalities to encourage private sector participation in the financing and managing of infrastructure projects. He stated that the Public Private Partnership policy would go a long way in this regard. 

In this context, Dr. Ashfaq Hasan Khan presented the Risk Management Framework to ensure the sustainability of the development of infrastructure projects under the PPP modality. The meeting also reviewed IPDFs project pipeline currently consisting of 44 projects worth approximately $1.4 billion and emphasized the need for building a robust pipeline of projects in urban mass transport, roads, energy and municipal services. The board, while reviewing the project pipeline emphasized the need for the requisite institutional and administrative measures to support this effort. 

While reviewing the progress on specific projects, the board was updated on the pilot Charsadda Solid Waste Management project and the CNG Buses Project in Karachi. The Nazim of Charsadda Tehsil Municipal Administration Mian Manzoor Ahmed and Director General, Karachi Mass Transport Cell City District Government Karachi Malik Zaheer-ul-Islam attended the meeting by special invitation for their related items. 

The meeting directed that all concerned should extend all support to make these projects successful as these projects would not only help alleviate the sanitation and transportation problems facing the citizens of Charsadda and Karachi but would also have a visible demonstrable effect on the development of infrastructure projects under the PPP modality. 

A number of initiatives are already under way, including, Islamabad IT Park, Multipurpose Water Reservoirs, FBR Automation Project and Kalinger Water Supply. Some other projects proposed to be implemented under the PPP Modality, include: Islamabad Rawalpindi Mass Transit Project, Karachi circular rail, Bus Rapid Transit System Karachi, Intra-City Bus Terminal Facilities Karachi, Hyderabad-Mirpurkhas road, Building of Bridges in Sindh over river Indus, Lahore and Faisalabad Solid Waste Management, Lahore and Faisalabad Water Metering and Billing systems and Office Complexes in Islamabad. 

The meeting was also apprised about the Pakistan Investors Conference scheduled for April 2008 wherein a number of infrastructure projects will be showcased to potential investors, operators and financiers. The multi-faceted forum will primarily serve as an investors conference, bringing together various stakeholders from within Pakistan and around the world.

Daily Times - Leading News Resource of Pakistan


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## Neo

*'Metallic mineral' exploration kicked off in Sindh ​* 
KARACHI (December 19 2007): A local mining company has kicked off 'metallic mineral' exploration/development in Nagarparkar district with an initial investment of around 50-100 million dollars.

The sources in Sindh Mines and Mineral Development Department told Business Recorder on Tuesday that initially, the department had allocated an area of 1,000sq-km to Zaver Mining Company, a subsidiary of Hashwani Group, to carry out mopping up for one year.

The company plans to start exploration with the help of satellite images and latest geological, geophysics and geo-chemical technology, the sources said. The successful reconnaissance will lead to the exploration and development of metallic minerals, the sources added. A memorandum of understanding (MoU) was singed between Directorate General of Mineral Development, Sindh Mines and Mineral Development Department and Zaver Mining Company on October 29, 2007 to develop the deposits and produce gold and other minerals in the area.

The geological map of Sindh reveals East of Thar Desert has exposures of very old rocks, which have been found containing huge deposits of metallic minerals. The sources hoped that the exploration of metallic mineral particularly of gold and silver and their import would earn precious forex for the country.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*SBP to keep a wary eye on export finance loans ​* 
KARACHI (December 20 2007): The State Bank of Pakistan (SBP) has taken stern notice of misuse, by exporters, of loans under export finance scheme and has advised banks to ensure utilisation of the loans for right purpose. The State Bank said it had received complaints that exporters were not utilising for export purpose the loans obtained from banks under EFS.

Under the EFS, SBP disburses over Rs 100 billion annually soft loans at interest rate of 7.5 percent as compared to over 10-15 percent interest charged on other loans: Under the EFS, SBP disburses over Rs 100 billion annually soft loans at lowest interest rate of 7.5 percent as compared to over 10-15 percent interest being charged on other loans, banking sources said.

They said that it had come to the knowledge of SBP that exporters were using these soft loans for hoarding different commodities or in some other businesses. Therefore, the central bank has taken serious notice of the complaints regarding misuse of export finance loans and has instructed the banks to ensure utilisation of the funds for the purposes they are disbursed. In this regard, the SBP on Wednesday issued MFD Circular No 07 to Presidents, CEOs and country heads' of banks.

"It has come to SBP notice that some of the exporters are not using their funds obtained from their respective banks at 7.5 percent for the purpose of execution of the export order," the circular said. This is violation of the instructions of the SBP under EFS as contained in Para 3 of Application/Undertaking for obtaining loan under EFS, SBP added.

SBP said that under these instructions banks are also required to ensure effective internal monitoring system to prevent diversion of funds for the purposes other than for which they have been availed. The central bank has also advised the exporters to avoid these types of practices and use the loans for their right purpose.

"Misusing practice of export loans by the exporters to gain interest arbitrage may attract imposition of fine; exporters are thus advised to avoid from the same practices," SBP warned in the circular. SBP has also advised to the banks that to make ensure that funds obtained under EFS are not utilised for purposes other than execution of export orders.

"However, we shall appreciate if these instructions are not used as a reason for denying export finance facility at 7.5 percent for transactions otherwise eligible under EFS," SBP told the banks. The outstanding amount under EFS stood at Rs 134 billion on June 30 2007 and before July 2007 complete amount of loans was distributed by SBP from its own resources.

However, the central bank has decided to gradually extricate itself from export refinance scheme and transfer it to the banks. Therefore, SBP has introduced some modifications, which have recently been announced in the Monetary Policy by amending the EFS rules and regulations.

On July 31, 2007 SBP had taken some measure under the monetary policy to curb inflation and some 30 percent share was diverted to the banks. Therefore, it expects that banks will provide Rs 40.2 billion loans from their own resources to exporters under the Export Finance Scheme (EFS) during fiscal year 2008, as the central bank has refined composition of EFS by setting the 70:30 ratio.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Barclays granted license to operate in Pakistan ​* 
KARACHI (December 20 2007): The State Bank of Pakistan has granted license to Barclays Bank Plc, UK, to start banking operations in Pakistan. SBP Governor Dr Shamshad Akhtar handed over the license to Chief Executive of Emerging Markets, Global Retail and Commercial Banking, Barclays Bank, Ahmed Khizer Khan, at a simple ceremony held at the SBP on Wednesday.

Khizer announced the appointment of Mohsin Nathani as country head and Managing Director of Barclays in Pakistan. Speaking on the occasion, Dr Akhtar said the entry of Barclays in Pakistan would not only strengthen the banking system of the country, but it would also bring a significant amount of foreign direct investment (FDI) to the country and technology to launch innovative financial products.

The Governor highlighted the speed and efficiency with which both the SBP and Barclays concluded this deal. Referring to the Barclays' extensive network and experience, she said looked forward to Barclays as a partner in development of Pakistan, which would gear itself in due course to enhancing the competition and efficiency in the banking system.

Dr Akhtar said the entry of Barclays in Pakistan reflected the confidence of foreign banks in the coutry's banking system. She further said that in line with the recently released Financial Stability Review, Pakistan's banking system had illustrated its capability to be a strong and robust system, which had great prospects and potential to grow given the retail market of this country as captured by its population base and growing per capita incomes. Pakistan's banking assets in the last five years had grown from Rs 2,223 billion to Rs 4,884 billion; advances from Rs 1,062 billion to Rs 2,603 billion; and deposits from Rs 1,678 billion to Rs 3,691 billion, she added.

Barclays will be established in Pakistan as a foreign banking company and operate in a branch mode with a capital of 100 million dollars and will initially set up 10 branches in various cities of the country.

The issuance of license to the Barclays will add to the presence of foreign banks. It will be the seventh foreign bank operating in Pakistan in a branch mode in addition to a number of foreign banks, having locally incorporated subsidiaries. As per the agreement of the license, Barclays will need to comply with the SBP guidelines if it plans the conversion of its status from branch mode to a local subsidiary.

Barclays has established a track record of successful and sustainable banking operations across the world. The Pakistani operations will benefit significantly from the synergies and knowledge that Barclays, as one of the largest financial service providers, can offer. Further, their presence in the market will translate into superior customer service and also contribute to financial inclusion and modernisation.

Barclays Bank Plc, the second largest global bank in assets size with a regulatory capital of 68.138 billion dollars, is a subsidiary company of Barclays Plc Barclays Plc is listed on London, New York and Tokyo stock exchanges.

Barclays Bank is a major global financial services provider engaged in retail and commercial banking, credit cards, investment banking, wealth management and investment management services. The bank operates in over 50 countries employing 123,000 people and has customer/client base of over 27 million. Barclays Bank and its companies operate 3,913 branches in over 50 countries.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Neelum-Jhelum power project awarded to Chinese firm ​*
LAHORE (December 20 2007): Water and Power Development Authority on Wednesday awarded contract of 969 MW Neelum-Jhelum hydroelectric project costing Rs 90.9 billion to a top class Chinese firm to be executed by 2015.

Speaking on the occasion after the singing ceremony, Wapda Chairman Shakeel Durrani said the total cost of the project is Rs 128 billion, which also includes acquisition of land and other expenditures.

He said 5.15 billion units worth Rs 25 billion will be produced annually with excellent 26 percent rate of return which is highest than all other existing projects in the country. About the funding, Shakeel said Rs 60 billion will be arranged by the Government of Pakistan and Wapda while the remaining will be managed through banks. Regarding the security of staff at the site, he said foolproof arrangements have already been made at all under-construction projects across the country.

He said energy is the basic ingredient of development of a country. The fast-growing energy requirements in Pakistan needed to be met to achieve full economic and social development.

The chairman said the government is focusing on the development of indigenous hydropower resources, as Pakistan possessed colossal potential, which can be fully exploited on long-term basis for provision of power at much lower costs. Member (Water) Muhammad Mushtaq Chaudhry, Member (Power) Fazal Ahmad Khan and other senior officials of both the stakeholders were present on the occasion.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Oil and gas production remains stagnant ​* 
ISLAMABAD (December 20 2007): The efforts by the government to exploit natural carbon resources for increasing indigenous share have been a failure as total local oil and gas production has remained stagnant during 2004-05 to 2006-07.

An official report, giving comparison of last three fiscal years' oil and gas production, indicated that Pakistan's total oil production in 2004-05 was 66,079 barrels a day.

It declined to 65,577 barrels a day in 2005-06. The quantity indicated upward trend in 2006-07, touching 67,438 barrels level, but it did not have any considerable impact to help Pakistan get increased share in total consumption and cut down import in terms of volume and cost.

Gas production also did not show any increase, in contrast to government claims that it was doing a great job by finding new carbon reserves. The report mentioned that domestic gas production in 2004-05 was 3.685 mmcfd and it went up to 3.838 mmcfd in 2005-06. It did not show any increase in 2006-07 and remained stagnant at 3.877 mmcfd.

LPG production increased from 1051 tons in 2004-05 to 1462 tons a day, showing a healthy trend, to supplement the rising domestic consumption. However, it fell almost flat as next years per day production was 1523 tons.

This period was important for oil and gas sector as the government gave a number of lucrative incentives to the exploration and production (E&P) companies and approved ambitious exploration programme for public sector companies with the hope to get increased local share in total production and consumption.

Oil and gas sector experts say that domestic oil production ranges between 60,000 and 66,000 barrels a day for the last many years. It experiences phenomenal decline, or increase, depending on E&P companies' activities. But this trend could not be considered as a major achievement to increase domestic oil and gas production.

They say that Balochistan and upper region of NWFP were two areas which could make a difference for Pakistan in terms of oil and gas production, but exploration activities were almost abandoned in these areas--due to security reasons.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*China to bid for Software Development Park​*
BEIJING, Dec 19: China will participate in the bidding for Software Development Park in Lahore.

A Chinese delegation visited Pakistan to examine the setting up of Software Development Park on BoT basis and submitted its findings to the Ministry of Information and Industry (MII), China.

The Counsellor Technical Affairs at Pakistan Mission, Syed Ai Tallae also accompanying the Chinese delegation said after holding meetings with the Chinese side here, they were convinced to participate in the tender.

He said the delegation informed him that after visit and meetings they understood the working procedure and now convinced to participate in the development of Park.

It is expected that Chinese side will participate in the BoT tender for IT Park to be set up in Lahore, he said.

The tender would be invited by the Pakistan Software Development Board, he said.

He said the government of Pakistan plans to set up software development parks in Karachi, Lahore and Islamabad.

To encourage investors, Ali Tallae pointed out that the government has offered various incentives including plan to offer free of cost land for the project.

Ali Tallae said a high-level Chinese delegation of MII is expected to visit Pakistan early next year to attend the second meeting of the working group for which Chinese side has already held a meeting with him.APP

China to bid for Software Development Park -DAWN - Business; December 20, 2007


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## Neo

*Pakistan-China trade​*
THE launch of the $200m Pak-China Investment Company should be regarded as a major push to the fast-growing economic ties between Islamabad and Beijing. The joint investment company will set up its subsidiaries to undertake projects in the financial, infrastructural, industrial, mining, manufacturing and other sectors of the economy in Pakistan. That is expected to usher in a new era of economic collaboration between the two neighbours. Pakistans economic and trade relations with China are evolving fast and the Free Trade Agreement, which became effective from July this year, is indicative of this trend. Bilateral trade has surged in recent years  the volume of trade went up to over $5bn in 2006 from $4.23bn in 2005 and a mere $875m in 2001. Chinese investment, though still very small in size, is also on the increase. The Free Trade Agreement is projected to triple two-way trade to $15bn in five years, and an agreement on services being negotiated under the FTA would further cement economic cooperation between Pakistan and China.

While the increase in bilateral trade is a sign of maturing economic collaboration, the current trade imbalance in favour of China is worrying many. Should we be concerned about this imbalance? It is our considered opinion that the current trade gap signifies the change in the source of imports into Pakistan from the West to China, which is anything but worrisome. At the request of Islamabad, Beijing is already taking action to bridge the trade imbalance by earmarking $200m for the import of goods from Pakistan. In addition, some conditions have been relaxed on the import of Pakistani fruit and vegetables. Enormous opportunities exist for Pakistani exports, particularly basic and finished textiles, to a country whose economy is growing at an amazing pace. The economic boom in China has raised the income levels of its population. Pakistan is the only major textile producer to have entered into an FTA with the worlds second largest economy. It is high time that Pakistani industry steps forward to capture the worlds largest market.

China intends to zero-rate yarn imports from July next year. It has already reduced import duty on Pakistani fabric and home textiles and plans to halve the duty on garments to eight per cent by 2010. Besides, Pakistani exports to China have also been declared exempt from import tax under the FTA. Yet Pakistans textile exporters are facing one problem: the 19 per cent value-added tax in Chinas domestic market discourages direct textile exports to the mainland. Shipments are booked for Hong Kong and then smuggled to mainland China. This is an issue that needs to be taken up with Beijing. If Islamabad manages to convince Beijing to remove VAT on our textile exports, chances are that the balance will tilt in favour of Pakistan much sooner than expected.

DAWN - Editorial; December 20, 2007


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## Neo

*US Senate clears all but $50m of aid package​*
WASHINGTON, Dec 19: The US Senate has approved a $785 million aid package for Pakistan without conditions but has placed some restrictions on a small portion of military assistance for fiscal 2008.

There are no restrictions on $350 million of economic support assistance and other funds Pakistan receives under a five-year, $3.5 billion package finalised in 2005.

The House of Representatives approved this package on Monday night.

The Senate voted 76 to 17 on Tuesday night to approve a huge $556 billion spending bill for fiscal 2008, which apparently includes the package for Pakistan.

Later, the Senate also voted to provide an additional $70 billion for the wars in Iraq and Afghanistan.

Since this was not included in the House bill, the measure was sent back to the House for a final vote.

Once it clears the House, the measure will go to President George W. Bush for signature. Mr Bush has already indicated that he will sign it.

Out of a total of $300 million of annual military assistance approved for Pakistan, $50 million have been withheld. This amount will be released only after US Secretary of State Condoleezza Rice submits a report saying that Pakistan is making progress in the fight against Al Qaeda and other terrorist groups and has taken steps for the implementation of an unfettered democracy in the country.

The Bush administration has indicated that it will issue the required certificate but the condition may create new problems for Pakistan, particularly after a change of government in Washington.

The terrorism related conditions are included in the 9/11 Commission Recommendations Act passed earlier this year while the section on democracy was proposed by the Committee on Appropriations. Senator Joe Biden who is Chairman of the Senate Foreign Relations Committee, Senator Patrick Leahy of Vermont and Rep. Nita Lowey were the prime movers of this proposal.

The 9/11 act is a bigger cause of concern for Pakistan than the democracy-related restrictions. As the restrictions placed under this act are linked to a law aimed at preventing future terrorist attacks, it will be very difficult for any US administration to undo these conditions.

Since the Bush administration considers Pakistan a strong ally in the war against terror, it is willing to issue the certification needed to qualify for US assistance.

But the administration has only a year left and the next administration may or may not be as friendly. Besides, the certification brings Pakistan under increased US scrutiny which the government and opposition forces both dislike.

We are not happy with the situation, says Pakistans ambassador in Washington.

US Senate clears all but $50m of aid package -DAWN - Top Stories; December 20, 2007


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## Neo

*Dutch firm to facilitate Pakistani engineering firms​*
ISLAMABAD: A high level meeting held here Wednesday reviewed the arrangements between Engineering Development Board (EDB) and PUM, a Dutch experts organization in order to improve relations between the two bodies. 

The EDB CEO led the team of Board and Ben Koreans represented PUM. Imtiaz Rastgar, Vice-Chairman Advisory Council of Ministry of Industries, Production and Special Initiatives was also present. The Dutch expert briefed about his experience with a local leading exporter of engineering goods, Tesla Industries, whom he was advising to improve his export and accounting system and co-relate it with production, procurement and sales since 7 th of this month. It may be recalled that PUM, the Dutch organization provides free services of its experts to business organizations of the developing world in order to improve their efficiency and exports. EDB is working as focal point of the Dutch organization in the country and facilitates the provisions of services of experts to various engineering firms. 

Daily Times - Leading News Resource of Pakistan


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## IceCold

So neo let us suppose if the $785 million aid approved of the year 2008 stops, how badly will it hurt the economy that seems to be on the higher side during musharraf's regime. Will we be able to maintain the GPA that is currently now.


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## Neo

We will be able to stain growth for several reasons. First of all only economic package only makes a third of $785 million, most of it is meant to ease budgetary and monetary dificiencies and debt serving, a little is pumped into development.

Out economic success is based on ongoing reforms and high growth in private sector, FDI will continue to pour into the country specially from ME. Government has assets worth $200 billion during next decade that will be privatised including banking sector, a lot more FDI can be expected.

The effect will be minimum, I'd say 1.00-1.50 decrease in growth, still we'll manage to reach 6%.


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## Neo

*Firms express interest in overhauling CAAs radar system *​ 
Friday, December 21, 2007

KARACHI: Some of the worlds major avionic manufacturers have expressed interest in upgrading the aging aircraft navigational aid systems of Pakistani airports, The News learnt on Thursday.

Thales, Siemens and Raytheon are among those companies, which have responded to a tender by the Civil Aviation Authority (CAA) for overhauling the radar system last updated in 1986. This will allow us to manage the increasing air traffic, said an official involved with the Rs455-million project Refurbishment of Radars and its Allied Equipment and Replacement of Air Traffic Control (ATC).

Work on short-listing and awarding the contract will be completed by February 2008. After a delay of a few months, the government finally approved the amount in November last for the project, which will make the aircraft-guiding equipment compatible with current international standards. Air Traffic Management System and Voice Communication and Control System, part of the navigational aid, would be upgraded in the first phase. Radars for the nine cities including Karachi, Lahore and Islamabad would be upgraded later, the CAA official said.

The refurbishment of radars will allow the application of Reduced Vertical Separation Minimum (RVSM) that increases number of aircraft to safely fly closely with each other. However, this project will not enhance the ability of the systems to guide aircrafts in fog. Each year during foggy winter days, many flights had to be cancelled due to lack of visibility. This is a completely different system. There are plans in this regard as well. While CAA has taken the step at the right time, the expected rise in number of passengers travelling to and from Pakistan will necessitate need for shift from the present ground based navigational aid to more sophisticated Required Navigation Performance (RNP) system as being installed in China.

According to a CAA forecast, Pakistan will see a jump of 94 per cent in number of passengers using its airports from current 17 million to 33 million in next five years as the number of international airlines operating to the country increases to 40 from current 24 by 2012. This forecast is driven from a five-year business plan, which envisages to make Karachi and Lahore regional hubs for West-bound air traffic generating from Asia Pacific region by seeking investments in the airport-related infrastructure of the two cities.

Asia Pacific countries will contribute the highest number of air passengers in the targeted period, said a senior CAA official who has been engaged in formulation of the medium-term strategy. We need to make these Asian airlines drop their passengers here from where the western carriers could take the traffic to Europe and beyond.

According to Boeing, the American aircraft manufacturer, airlines in the Asia Pacific region including China, Singapore, Thailand and Malaysia have altogether ordered some 8,000 aircrafts, he said. The point is substantiated by one of CAAs comparative studies which showed a saving of 47 minutes on Hong Kong-Karachi-Brussels route for a flight going from Hong Kong to Brussels via Dubai.

Firms express interest in overhauling CAAs radar system


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## Neo

*German company intends to invest in financial sector of Pakistan ​* 
Friday, December 21, 2007

KARACHI: German company Deutsche Instititions-und Entwicklungsgesellschaft (DEG), member of KfW banking group, intends to invest in insurance, retail financing, leasing, and asset management sectors in Pakistan. 

First Vice President, Head of Financial DEG Stephan Blanke told The News in an exclusive talk here the other day.

So far DEGs major exposure in Pakistan is in power sector, so we have lot of power investment here, next one now is bank we have bought 24.9 percent share in Atlas Bank, he said. However he added, we do not intend to increase our stakes in Atlas Bank because we are happy to have a minority stakes but we agreed with our partner for future capital contribution. DEG will invest further into the bank, than we will seek opportunities in other sectors. 

Blanke said they have just entered in the market last year and disbursed the equity investment but they would definitely take interest in other opportunities within the market as soon as opportunities would arise. 

I think DEG would be more than interested in insurance, asset management, retail kind of business besides of leasing and corporate financing. However, he said that DEG would not go for investment banking that he termed did not fit with DEGs profile.

He said that Pakistani financial market was one of the most interesting markets in the world, which has huge potential to develop. He said that on basis of Pakistans demography and economic growth it could be predicted that the growth momentum would continue in future.

The potential of Pakistani financial market is evident from the fact that many foreign banks are entering the market for reason one because they all have the same confidence as DEG has in the market.

He commended the efforts which central bank was undertaking to improve financial market within the country. Regarding growing competition in financial sector and high cost of small banks in Pakistan he gave the example of auto industry of Germany and said, Heyco is very small player producing 10,000 cars in a year, but it is highly reputable brand, its very successful and its niche despite competitors like Mercedes and Toyota which are selling much more cars, so its same with Atlas Bank of course there are much larger players within the market, but if you define your niche and if you want to go and if you are one of top three within your niche than you can do excellent business.

We think Atlas Bank will be such an opportunity but it does not depend on your overall market thrust but your standing in certain position on certain niche. Mr. Blanke said that Atlas bank would focus particularly on SME financing, to certain degree retail consumer financing and to a less degree corporate finance.

He said that DEG was very much interested in SME financing. Our group is one of those which have the largest exposure in SME finance not only within the Germany but also in matching countries; we have finance banks with dedicated SME financing loans as a group, we have what we have called transferred technical assistance and we have to build up banks in building up their SME portfolio so this is the niche we are looking for.

Regarding transfer of technology and best practices he said that DEG not only provides capital but also the know-how because now a days capital was easily available all over the world for good banks and good partners. Next to capital our approach is to deliver what we call Know How and Do How and thats what DEG stands for. In respect of human resource training he said DEG had decent track record in this regard and added that they have discussed the matter with management. 

DEG has excellent contact with reputable banking and finance universities who take care of training and assistance in local environment, for example DEG has Finance Banking Academy in China which imparts training to several banks within China and DEG have done a smaller program in other countries as well, and again together with management we have to decide how we could design such programs and which areas and what program should be adopted only for Atlas Bank employees and whom should be opened for other banks and how cost should be shared.

Regarding political uncertainty in country and possible threat to investment he spelled out, We do not feel any threat to our investment, I think it is important to stick to your partner in the time of uncertainty, as a sign of it we trusted to disburse equity investment despite uncertain political environment at the time when other foreign investors pulled out we went into the country. So I think political uncertainty is a part of our business and political uncertainty does not block us from doing business.

German company intends to invest in financial sector of Pakistan


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## Neo

*Pakistan looking at alternate energy resources​*
ISLAMABAD: Owing to the alarming energy crisis in Pakistan, the supply has to be substantially increased to avoid any severe consequences, industry officials say. 

The massive shortage of energy the country is facing is damaging the socio-economics and the sovereignty of the country. 

As the economy grows, population increases and urbanization surges, the demand for energy registers a steep rise. Therefore, the challenges of rising energy demand come to the center stage, especially because the gestation period for generating energy for different sources is large and financial requirement huge, they say. 

The officials of ministry of petroleum and natural resources say, Presently, Pakistan meets its 75 percent energy requirement from domestic resources. We meet 50.4 percent requirement through indigenous gas supply, and 12.7 percent through hydro electricity. Contribution of coal and nuclear energy is limited to 7 percent and 1 percent, respectively. 

The major energy consumption sectors of the country are: industrial (38.3 percent), transport (32.8 percent), residential and commercial (25 percent), agriculture (2.5 percent) and others (2.2 percent). 

During the last 10 years, the consumption of petroleum products has decreased at an average of 0.4 percent per annum due to lower consumption of oil in the household and agriculture sector. The consumption of gas, electricity and coal has increased at an average rate of 7.8 percent, 5.1 percent and 8.8 percent per annum, respectively. 

During this period, the transport sector was the largest user of petroleum products, on average accounting for 50.7 percent of consumption, followed by the power sector (32.1 percent), industry (11.4 percent), government (2.3 percent), household (2.2 percent) and agriculture (1.3 percent). 

As regards electricity, the household sector has been the largest consumer over the last 10 years, on average consuming 44.8 percent, followed by industrial sector (29.4 percent), agriculture (12.2 percent), commercial sector (5.9 percent), street lights (10.6 percent), the officials say. 

The officials say crude oil supply grew at 2.4 percent per annum during the last 10 years reaching 87.5 million barrels output in 2006-07). Gas supplies rose at 7.8 percent per year, petroleum products by about 2 percent per year, coal by 5.7 percent per annum and electricity by 5.1 percent per annum. 

The number of electricity consumers grew from 15.9 million in 2005-06 to 16.7 million in 2007, showing a growth of about 70 percent over the last 10 years. Historically and as of now domestic sector consume most of the electric energy (42.4 percent) followed by industrial sector (26.5 percent), bulk supply at public lighting (12.7 percent), agriculture (12.1 percent) and commercial (6.2 percent). 

They are of the view that of late, a number of countries including Pakistan have realized that traditional sources of energy might not keep pace with demand increase, hence exploring alternative energy sources was not an option but a necessity. 

Pakistan was seeking to explore alternative sources of energy production and use wind and solar technologies with the aim to produce 9,700 MW wind power by 2030, thereby providing electricity to 7,874 off-grid villages in Sindh and Balochistan. 

The government is giving top priority to hydel power with the potential of producing 40,000 mega watt power of which only 15 percent had been exploited so far, they add. 

The coal-based power generation was being given serious consideration to diversify the energy resources, to minimize the rising cost of imported fuel and to supplement the fast depleting gas resources.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Import of mobile phone sets up by 34 percent ​* 
KARACHI (December 21 2007): The import of mobile phone sets have gone up by 34 percent during October 2007 as compared to September 2007, according to officials statistics. The country's import of mobile phone sets during October 2007 stood at $66.447 million as compared to $49.689 million, showing an increase of 34 percent or $16.758 million.

Similarly, import of mobile phone sets during October 2007 surged by 25.06 percent or 13.314 as compared to $53.133 percent during October 2006. However, import mobile phone sets has declined by 11.12 percent or $30.637 million during the July-October 2007 period as it stood at $244.995 million as compared to $275.632 million during the July-October period 2006.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Afghanistan to import Pakistani made diesel engines ​*
LAHORE (December 21 2007): A high level private sector trade delegation from Afghanistan will visit Lahore after Eid-ul-Azha to import Pakistan made diesel engines for agricultural purpose.

Chief executive officer KAM Engineering, Khalid Saeed Khan told APP here on Thursday that the Pakistan made KAM diesel engines have become very popular in Afghanistan, compared to all brands of those made in India, and are being successfully used for agricultural purposes.

He said the Afghan team will visit the state of the art plant and see the engine assembly process, using indigenous technical know how and expertise, which has helped to control the price of the product with minimum overhead expenses.

In their war torn country, the Afghanis are now inclined to bring maximum area under cultivation to meet the ever-increasing need of food grains. For this purpose, they need quality agri inputs and implements, and Pakistan made products offer the guarantee to compete in terms of quality and price, said the firm's Director Marketing, Sh Muhammad Amin.

Business Recorder [Pakistan's First Financial Daily]


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## Logic note

Thursday, December 20, 2007 20:47 [IST]

Washington: Pakistan might lose $50 million in US aid after an omnibus 2008 spending bill passed by the Congress shaved off the chunk, also imposing conditions on the remaining $250 million of military assistance.

The Bush Administration had originally requested $300 million in military aid to Islamabad but lawmakers cut $50 million until the time Secretary of State Condoleezza Rice can certify that Pakistan is restoring democratic rights, including an independent judiciary.

A massive appropriations bill including the Pakistan aid package, which was passed by the lawmakers on Monday, has also said that the remaining $250 million set aside could only be used for anti-terrorism and law enforcement purposes.

*This effectively means the money could not be used for procuring F-16 jets or Sidewinder missiles, seen as nothing to do with the war on terror but only aimed at India.*

Lawmakers on the Capitol Hill have been sharply critical of the fashion in which President Pervez Musharraf has been going about, especially in the aftermath of the declaration of emergency on November 3.

Earlier this month, the administration stopped an annual $200 million cash payment to the Pakistani government, instead converting those funds to programmes for Pakistan that will be administered by the US Agency for International Development.

The omnibus spending bill was approved by the House and the Senate and sent to the President for signature. Since the September 11, 2001 terror attacks, Pakistan has been given about $10 billion in economic and military assistance


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## IceCold

Logic note said:


> *This effectively means the money could not be used for procuring F-16 jets or Sidewinder missiles, seen as nothing to do with the war on terror but only aimed at India.*



Go read the military aviation page and you will know that this will not affect the F-16 deal. And also to inform you that currently bush administration has no issue of not providing pakistan with the military aid, you think Ms rice would think otherwise. Congress just need assurance and that my friend will be given in due time by the bush administration. We need not to worry.

By the way something else is bothering me though, the way you post threads specaliy used against pakistan and then no comment makes me qurious what kind of trolling is this?


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## Malang

Pakistans economy continues to perform well : IMF

WASHINGTON, Dec 23 (APP): Appreciating Pakistans sustained high growth, the International Monetary Fund has noted that the South Asian countrys economy continues to perform well despite recent political developments in the transition period as well as turbulence in the international capital markets.

The global financial institution in its latest report based on the IMF executive directors assessment welcomed Pakistans monetary policy tightening that has occurred since midyear as it also observed that a main challenge will be maintaining economic growth while reducing inflation and the current account deficit.

Executive Directors welcomed that Pakistans economy continued to perform strongly in 2006/07. Real GDP growth increased, the international reserve position strengthened, and debt ratios declined. 

The favorable economic performance and structural reforms to improve the business climate have spurred capital inflows in recent years, it reported on this weeks executive directors conclusions for the year 2007.

The economy has shown considerable resilience to recent domestic political uncertainties and the turbulence in international capital markets, with provisional data for activity in large-scale manufacturing showing continued strong growth in the first quarter of 2007/08, the directors said.

The assessment came after the Executive Board of the International Monetary Fund (IMF) concluded the 2007 Article IV consultation with Pakistan. Under Article IV of the IMFs Articles of Agreement, t he IMF holds bilateral discussions with members, usually every year.

Pakistan has experienced a remarkable turnaround in its economic performance since 2001/02. Sound macro-economic management and wide-ranging structural reforms have contributed to high real GDP growth, a reduction in the debt burden, and an improved business climate, it said.

Adherence to pro-poor policies has helped lower poverty rates, it acknowledged, while briefly recounting the countrys performance in recent years.

Increasingly, Foreign Direct Investment (FDI) and portfolio flows have become an important source of external financing.

Economic developments during the fiscal year ending in June 2007 remained favorable. Real GDP growth increased to 7 percent, with a recovery in agriculture and a strong performance of large-scale manufacturing and services; the debt ratio continued to decline; and the international reserves position strengthened further.

At the same time, the directors referred to challenges including containing inflation, looking after the external current account deficit and said Pakistans external financing needs remain large. They said continued vigilance is required to reduce vulnerabilities and maintain investor confidence.

The economic program for 2007/08 envisages real GDP growth of 7.2 percent, the directors noted and the budget deficit target has been set at 4 percent of GDP.

Looking beyond 2007/08, the IMF directors stressed that further fiscal consolidation will be required to reduce inflation and the external current account deficit while lessening pressures on real interest rates.

They supported a broadening of the tax base and the use of public-private partnerships in infrastructure development.

There was also agreement that the real effective exchange rate is broadly in line with Pakistans economic fundamentals as they underscored that fiscal adjustment accompanied by higher levels of investment and vigorous implementation of structural reforms constitute the main avenues to improve external competitiveness. The directors encouraged implementation of structural reforms in order to sustain growth and poverty reduction.

Pakistan is currently passing through political transition as it heads toward parliamentary polls on January 8, 2008. President Pervez Musharraf, under whose eighth-year tenure the country witnessed a continued economic upturn, has taken oath as civilian President, restored the constitutional rule and pledged fair and free polls as the countrys stock exchange and business community have responded positively to these steps and remain upbeat about future prospects. 

Associated Press of Pakistan - Pakistans economy continues to perform well : IMF


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## Neo

*Trade and economic cooperation among Saarc states top priority ​*
LAHORE (December 24 2007): President elect South Asian Association for Regional Co-operation (Saarc) Chamber of Commerce and Industry Tariq Sayeed has said that all out efforts would be made to accelerate the process of economic and social development among the South Asian countries.

Tariq Sayeed, a former President Federation of Pakistan Chambers of Commerce and Industry and Patron-in-Chief of Pak-China Business Council who will head the SCCI from January 01 next after 14 years in an interview with APP said that SCCI, an apex organisation of Saarc and a representative of the private sector, has been involved in creating awareness about the regional integration through various activities in the region and beyond.

He said SCCI remained committed to playing a pivotal role in deepening and widening economic and regional co-operation under Saarc. SCCI has also always supported the government - industry partnership and remained engaged in dialogue with governments of the Saarc region.

Vice President elect SCCI, Pakistan chapter Iftikhar Ali Malik who is also founder President Pak-US Business Council and former President of FPCCI and LCCI was also present on the occasion.

Tariq Sayeed said that SCCI was established in 1985 with a main agenda to promote regional and economic co-operation in South Asia, however, political tensions and development constraints that the region has faced over the years has played a decelerating role in economic integration of South Asia.

Unfolding the statistic figures, he said as a region, South Asia houses 1.4 billion of the world's population thus representing a large workforce and tremendous business and investment opportunities. In addition, this area is rich in natural resources, which, if properly used can lead to South Asia becoming a hub of business activities.

He said that however, the intra-regional trade figures for South are disappointing. He said according to the world development indicators, trade in the region constitutes only 1.4 percent of the total world imports and 1.2 percent of exports whereas merchandise trade has been only 27.9 percent of GDP, the lowest in the world.

Tariq Sayeed said that although South Asia has significantly reduced import tariffs, the cost of trading across its borders is one of the highest in the world. A number of non-tariff barriers have been identified which hamper trade and increase cost. About South Asian Free Trade Agreement (Safta) will also made more effective to revive economic co-operation for free trade in the region.

He said that Safta has to be implemented in letter and spirit for South Asia to become an integrated and strong bloc. He said all out efforts will be made that Safta to help build confidence among the business communities of both Pakistan and India, the two largest economies in the region.

Vice President elect SCCI Pakistan chapter Iftikhar Ali Malik sharing his views said that it is great honour for Pakistan to head SCCI for a two year term after 14 years.

He said that private sector of Pakistan will help remove constraints of doing business, visa regime and improve communication links, transpiration of goods and infrastructure, banking facilities and insurance, customs and harmonisation of standards, non-tariff barriers on goods.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*IMF praises high economic growth *​ 
LAHORE (December 24 2007): The International Monetary Fund (IMF) has appreciated Pakistan's sustained high growth and also acknowledged that adherence to pro-poor policies has helped lower poverty rates. The IMF has noted that the South Asian country's economy continues to perform well despite recent political developments in the transition period as well as turbulence in the international capital markets.

The IMF in its latest report based on the IMF executive directors' assessment welcomed Pakistan's monetary policy tightening that has occurred since mid-year as it also observed that a main challenge will be maintaining economic growth while reducing inflation and the current account deficit.

According to a message received here, executive directors welcomed that Pakistan's economy continued to perform strongly in 2006-07. Real GDP growth increased, the international reserve position strengthened and debt ratios declined.

"The favourable economic performance and structural reforms to improve the business climate have spurred capital inflows in recent years," the IMF reported on this week's executive directors' conclusions for the year 2007.

"The economy has shown considerable resilience to recent domestic political uncertainties and the turbulence in international capital markets, with provisional data for activity in large-scale manufacturing, showing continued strong growth in the first quarter of 2007-08," the directors said.

The assessment came after the Executive Board of the International Monetary Fund (IMF) concluded the 2007 Article IV consultation with Pakistan. Under Article IV of the IMF Articles of Agreement, the IMF holds bilateral discussions with members usually every year.

It said Pakistan has experienced a remarkable turnaround in its economic performance since 2001/02. Sound macro-economic management and wide-ranging structural reforms have contributed to high real GDP growth, a reduction in the debt burden, and an improved business climate. "Adherence to pro-poor policies has helped lower poverty rates," it acknowledged, while briefly recounting the country's performance in recent years. Increasingly, Foreign Direct Investment (FDI) and portfolio flows have become an important source of external financing.

"Economic developments during the fiscal year ending June 2007 remained favourable. Real GDP growth increased to 7 percent with a recovery in agriculture and a strong performance of large-scale manufacturing and services; the debt ratio continued to decline; and the international reserves position strengthened further."

At the same time, the directors referred to challenges including containing inflation, looking after the external current account deficit and said Pakistan's external financing needs remain large. They said continued vigilance is required to reduce vulnerabilities and maintain investors' confidence.

The economic program for 2007-08 envisages real GDP growth of 7.2 percent, the directors noted and the budget deficit target has been set at 4 percent of GDP.

Looking beyond 2007-08, the IMF directors stressed that further fiscal consolidation will be required to reduce inflation and the external current account deficit, while lessening pressures on real interest rates. They supported a broadening of the tax base and the use of public-private partnerships in infrastructure development.

There was also agreement that the real effective exchange rate is broadly in line with Pakistan's economic fundamentals as they underscored that fiscal adjustment accompanied by higher levels of investment and vigorous implementation of structural reforms constitute the main avenues to improve external competitiveness. The directors encouraged implementation of structural reforms in order to sustain growth and poverty reduction.

Pakistan is currently passing through political transition as it heads toward parliamentary polls on January 8, 2008. President Pervez Musharraf, under whose eighth-year tenure the country witnessed a continued economic upturn, has taken oath as civilian President, restored the constitutional rule and pledged fair and free polls as the country's stock exchange and business community have responded positively to these steps and remain upbeat about future prospects.

Moreover, Caretaker Finance Minister Dr Salman Shah, in an interview to a private channel, said the government is paying Rs 13 billion per month as subsidy to keep the oil prices in check.

"Global oil prices have increased to unprecedented level from $20 to $100 per barrel within a few years. The government will have no option but to ultimately pass on the increase to consumers as huge subsidy is increasing budget deficit", he added.

In next six months of the current financial year, the oil increase will have to be passed on to the consumers in small chunks, he said. Dr Salman Shah said the food prices in the country are increasing at much cheaper rates of 10 to 11 percent as compared to global increase rate of 20 to 25 percent per annum. Ultimately, the food prices in Pakistan will come in line with world food prices.

He said wheat is available in the country at Rs 16 per kg while world price of wheat is Rs 30 kg. A 35 percent regulatory duty has been imposed on wheat product to check its exports.

Ultimately, the prices of wheat, corn, and cotton would also move towards international prices. It will give a big jump to rural economy. The strategy was being devised to provide subsidy to lower income group, he added.

Dr Shah blamed the extremists for affecting country's exports as country's exports could have been over $20 billion as compared to $18 billion right now. The world is being convinced that Pakistan is a safe place to do business, he added.

He said the next government is going to inherit a very healthy economy. Economy is in very strong and solid position and it continues to grow and prosper, if we continue current policies, Dr Salman Shah added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan on track to halve population by 2015: DFID report *​ 
FAISALABAD (December 24 2007): Pakistan is on track to halve the population without access to improved water and sanitation by 2015; income poverty has decreased rapidly recently. If this trend can be sustained, Pakistan will reach the Millennium Development Goals (MDGs) target of halving the income poverty headcount by 2015.

According to a report of Department for International Development (DFID), steady progress has been made towards most of the MDGs in Pakistan since 2000, but a low starting point and slow progress during the 1990s meant that many of the MDG targets would be difficult to reach.

UK and Pakistan had signed a 10-year Development Partnership Arrangement and the UK announced a doubling of aid for the period 2008-2011 to £480m. This is an increase from £236 million for the previous three-year period. Since then, DFID has begun a programme of consultation with other government departments, civil society, academics, MPs and the general public in the UK and Pakistan on how this new money should be spent.

In line with the commitment to improve the effectiveness of aid, DFID has been at the forefront of efforts to harmonise donors' programmes and policies. In 2004, DFID co-founded the Donor-Poverty Reduction Working Group, formed to share information, promote joined up engagement with government, and develop common positions.

The results of the first OECD-DAC survey in Pakistan to monitor progress against the Paris Declaration are due to be published soon. Apart from assistance to federal (national) programmes, DFID is concentrating its assistance on two provinces: Punjab and the North West Frontier Province (NWFP).

In taking this decision, DFID considered need (population size and poverty levels), working relationships and the size and scope of other donors' programmes. DFID also considering working in other areas of Pakistan in the future, DFID the report said.

DFID report stated that Pakistan has undertaken major reforms in governance since 1999, including a decentralisation of functions, power and funds to local governments, a major reform of the justice sector, reforms to the police system and improvements to the revenue collection and administration functions.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*ADB to provide $400,000 for Balochistan resource management programme *​ 
FAISALABAD (December 21 2007): Asian Development Bank will provide $400,000 equivalent on a grant basis from ADB's TA funding programme for preparing the "Second Balochistan Resource Management Programme". According to ADB sources, the TA is estimated to cost $450,000 equivalent in local currency costs.

ADB will provide $400,000 equivalent on a grant basis from ADB's TA funding programme. The government of Balochistan will contribute the remaining local currency cost of $50,000 equivalent in kind by providing office accommodation, counterpart staff, and facilities for seminars and meetings.

The government has been informed that approval of the TA does not commit ADB to finance any ensuing project. The Government of Pakistan has also been informed of the scope of the TA.

According to official sources, this project preparatory TA aims to help the government develop the next generation of public administration reforms to be pursued under BRMP- II. Such continuation and deepening of policy reforms in fiscal and financial management, public administration, and asset management will free resources for pro-poor development and better public service delivery.

This in turn is likely to improve the economic and social outcomes in the province. The expected outcome is greater fiscal space for the province of Balochistan through enhanced flows and improved management of resources.

These outcomes will be achieved through diagnostic and analytical work under the TA, with wide stakeholder consultations (involving the government, civil society groups, and the private sector, among others). Several policy papers will be prepared to help formulate the reform agenda under BRMP II. The consultative nature of the process will raise awareness and build capacity to co-ordinate policy development.

According to an update project report, the Asian Development Bank (ADB) has supported the government of Balochistan (the government) in public resource management reforms through the Balochistan Resource Management Program (BRMP I). BRMP I was approved in November 2004 and closed after the release of the second tranche on 31 May 2007.

In total, BRMP-I provided $130 million to assist the government of Balochistan to enhance provincial finances through fiscal restructuring and better financial management, and improve processes and establish appropriate institutions for public service delivery and private sector development.

In early 2007, the government requested further ADB support to sustain the first phase of reforms. An ADB mission visited Quetta and Islamabad during 3-12 September 2007 to reach general agreement on the scope of the proposed technical assistance (TA) required to prepare the second Balochistan Resource Management Program (BRMP II).

According to ADB Project Report, BRMP-I was successful not only in initiating systemic thinking on strategic reforms in the government and with other stakeholders but also in implementing certain fundamental policy changes. Balochistan had an open-ended subsidy system for electricity for operating agricultural tube wells, which accounted for about 8 percent of provincial current expenditure and had increased by 150 percent between fiscal year (FY) 2001 and FY2006.

Through BRMP-I, the subsidy was capped at Rs 2 billion in nominal terms (about 5% of provincial expenditure in FY2007). This decision was taken despite the fact that most of the larger landowners, the principal beneficiaries of the subsidy, had considerable political influence.

The water resource component of BRMP-I has provided a firmer institutional basis for better water resource management through the adoption of an integrated water resource management policy-a first in Pakistan. Debt restructuring was made possible by using ADB's ordinary capital resources loan to retire the more expensive cash development loans of the province from the Federal Government, thus saving over Rs 1 billion per annum in debt servicing costs.

Initial revenue management reforms have begun to take effect: revenue receipts from tax and non-tax sources increased by an impressive 58.2% in FY2006 over the previous year, although the increase in tax revenue was only 8%. The recovery of irrigation water charges has picked up under an action plan supported by BRMP-I.

ADB report explained that the "throw forward" of Balochistan's public sector development program has been reduced under BRMP reforms. A throw forward is the excess of the cost of a development scheme over the current financial year's allocation, and is one of the measures used to analyse the sustainability of the development budget.

It provides information on how many years it will take to complete a development scheme, or in how many future budgets the scheme will have to appear. In this case, the throw forward was reduced from almost 10 years in 2004 to 4 years in 2007. Another fundamental policy achievement was the establishment of a rule-based transparent system of local government funding. Moving forward, there are three sets of constraints.

The fiscal and public financial management reform agenda is incomplete. While the government has taken a number of important steps7 to improve fiscal discipline, further short and medium-term reforms are required over the next one to five years to strengthen the planning and budgeting systems, and adopt a medium-term expenditure framework to enhance the credibility, predictability, comprehensiveness, and transparency of the budgeting process.

BRMP II will continue to strengthen the devolution agenda. Under the Balochistan Local Governance Ordinance, 2001 the provincial government is no longer a direct implementer exercising complete administrative and financial control.

Under the ordinance, it is now required to define the policy and regulatory frameworks and ensure they are observed at the local level. This requires a more complex and sophisticated monitoring and analysis role, and building capacity at the local level.

ADB report hoped that gradually phase out the remaining subsidies that are deemed to be inefficient, while strengthen property and agriculture tax administration, at both provincial and local government levels; (iv) improve pension administration and contingent liability management; and strengthen accounting, internal control, and audit systems.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Forex reserves down to $15.582 bln: SBP *​ 
KARACHI (updated on: December 24, 2007, 11:09 PST): Foreign reserves of Pakistan fell by $40 million to $15.582 billion in the week ending on Dec. 15, the State Bank of Pakistan (SBP) said on Monday.

Reserves held by the State Bank of Pakistan fell to $13.344 billion, from $13.417 billion a week earlier, while those held by commercial banks were down to $2.238 billion from $2.205 billion, the SBP said in a statement.

Pakistan's foreign reserves hit a all-time high of $16.388 billion in the week ending on Nov. 10. But they later fell because of outflows from the stock market after President Pervez Musharraf imposed emergency rule on Nov. 3.

Emergency rule was lifted on Dec. 15. Analysts said with less political uncertainty and elections scheduled for next month, the foreign reserves were set to rise.

Forex reserves down to $15.582 bln: SBP : Business Recorder | LATEST NEWS


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## Neo

*'2,700 megawatts additional power to be generated in three years' ​*
ISLAMABAD (December 24 2007): Caretaker Minister for Water and Power, Tariq Hameed has said that 2,700 MW additional power will be generated in coming three years with the completion of Private Power Infrastructure Board's (PPIB) projects.

Talking to APP, the minister said PPIB had been directed to remove bottlenecks in small hydel projects having capacity of 100 MW to 200 MW to bridge the power demand and supply gap.

He said to overcome load-shedding problem besides starting effective management Wapda will get one rental plant while two rental plants have already been inaugurated having total capacity of 286 MW. He added that 150 MW power will be produced by 2008 through windmills while 600 houses have been provided solar energy in all the four provinces. He said that Wapda has planned to start new power plant at Guddu to improve additional power upto 800 MW during 2008-09.

Tariq Hameed said Mangla raising project will be completed by June next and its filling will be in next summer due to which capacity generation will increase to estimated 180 MW.

He said development work has been started on Jinnah hydel project at Jinnah Barrage by Wapda to generate 94 MW electricity to be completed in 2010.

Hameed said the ministry had planned to purchase 100,000 energy saver bulbs to be distributed in hospitals, educational institutions and other government offices to help save energy.

He said these saver bulbs would also be placed at Utility Stores, as it saves 80 percent energy than other bulbs. He added the decision of closing shops at 8:00 pm has helped save 300 MW electricity.

He said that all mega power projects would be completed by 2016 including Basha-Diamer, Kalabagh, Akora, Munda and Kurram-Tungi to further generate 9,000 MW electricity in the country.

He said electricity demand would also be met through small and medium power generation projects under public-private partnership. Hameed said that a comprehensive strategy is being chalked out for utilisation of coal in power generation to balance the supply and demand of electricity.

The minister said study on Kalabagh Dam has been completed while engineering work of Basha-Diamer Dam will be completed by the end of 2008.

He said the contract award of the project is likely in 2009 while deadline of 2016 has been fixed for its completion. He added that private sector will complete Munda Dam while pending work of Khuram-Tungi will be started within three months.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*CFS hits 10-month highest level of 14.14 percent ​* 
KARACHI (December 25 2007): The continuous funding system (CFS) rate on Monday hit 10-month highest level of 14.14 percent, mainly due to unavailability of liquidity at the share market on the yearend. Total investment under the CFS remained near its upper cap of Rs 55 billion in the last 10 consecutive session.

"The CFS investment settled near its upper cap at Rs 54.60 billion on Monday, while it was recorded at Rs 54.56 billion on the last trading session of previous week", senior analyst at JS Global Capital Limited Atif Malik said. The similar situation was seen during the last 10 consecutive sessions where the CFS investment remained near its upper cap of Rs 55 billion.

The market participants were of the view that the CFS upper cap should be lifted so that more liquidity would be available for investment at the share market. The KSE-100 index closed at its all time high level of 14,791.92 points on Monday, while the foreign and local brokerage houses reports have indicated that the index would cross potentially 16,500 points level and according to reports oil, banking and fertiliser sectors are undervalue.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan's foreign exchange reserves down by $40.1 million ​* 
KARACHI (December 25 2007): Liquid foreign exchange reserves have further declined by 40.1 million dollars during the week ended on December 15. Latest statistics, issued by the State Bank of Pakistan (SBP), shows that total liquid foreign during the last week stood at 15.5824 billion dollars as compared to 15.6225 billion dollars a week earlier.

Total Liquid Foreign during the last week stood at 15.5824 billion dollars as compared to 15.6225 billion dollars a week earlier: Foreign exchange reserves, held by the SBP, have declined by 73.5 million dollars to 13.3442 billion dollars from 13.4177 billion dollars. While net the foreign exchange reserves, held by banks, other than SBP, showed an increase of 33.4 million dollars to 2.2382 billion dollars from 2.2048 billion dollars.

It may be mentioned here that the country's foreign exchange reserves showed a significant decline over five percent after the imposition of state of emergency. On December 15, the country's overall foreign exchange reserves stood at 15.5824 billion dollars, coming down from historical level of 16.3875 billion dollars, showing a dip of 805 million dollars during the last one month.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Uzbekistan to cater all facilities to Pakistani entrepreneurs ​*
ISLAMABAD (December 25 2007): The Deputy Foreign Minister of Uzbekistan Shoazim Minivoarov has said that his country has decided to provide all possible facilities to the Pakistani entrepreneurs to boost bilateral trade. He stated this while talking to the chairman of the Senate Standing Committee for Interior Affairs Senator Talha Mehmood Ariyan, who called on him at his office.

During the meeting, which lasted an hour, various economic and trade affairs were come under discussion. Both sides stressed on the need to enhance economic ties and promotion of trade between Tashkent and Islamabad.

Speaking on the occasion, the Uzbek ambassador said that his country gives immense importance to cement ties with Pakistan and it is the policy of Uzbek government to further strengthen ties with Pakistan.

He said that the Uzbek government is facilitating Pakistani investors to provide them a congenial atmosphere for enterprising. As a result, a number of Pakistani entrepreneurs have set up industries and established their branches there. He expressed the desire of his government of holding a trade conference in Islamabad. He said it is the desire of his government that after elections in Pakistan on January 8, the newly elected prime minister should visit Uzbekistan first of all.

He said that both countries have taken a decision to make the visa process easier and efforts will be made to remove hurdles in the issue of visa to traders.

On the occasion, Senator Talha Mehmood emphasised the need to exchange parliamentary delegations between the two brotherly countries in order to upgrade the bilateral ties in various sector. He agreed with the Uzbek government to hold a trade conference in Pakistan. He said that the atmosphere is conducive for foreign investment in Pakistan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*KSE-100 index reaches an all-time high ​* 
KARACHI (December 25 2007): Karachi share market continued its upward journey, setting new records, as the KSE-100 index closed at its highest ever level of 14,791.92 points, with a net gain of 133.09 points on Monday on the back of strong fundamentals, coupled with foreign and local investors' interest, mainly in banking and oil sector stocks.

Index closed at its highest ever level of 14,791.92 points, with a net gain of 133.09 points on the back of strong fundamentals, coupled with foreign and local investors' interest mainly in banking and oil sector stocks.

"The foreign brokerage house reports on under-valuation of oil, banks and fertiliser sectors invited healthy buying on the first day after Eid-ul-Azha holidays, mainly in banking and oil sector stocks, which boosted the index to reach its new record level", analyst said.

Earlier, on October 19, the KSE-100 closed at 14,787.55 points' level. The overall market capitalisation surged by Rs 37 billion to reach its record level of Rs 4.546 trillion. The KSE-30 index surged by 208.05 points to close at 17,671.30 points' level.

The market started on a positive point and the KSE-100 index hit 14, 832.30 points' intra-day high level for the first time in its history. Healthy buying was witnessed, mainly in banking and oil sector stocks. Ready market volume, however, declined to 261.983 million shares as compared to 301.556 million shares traded at the end of the previous week, while futures market turnover increased to 60.939 million shares against 31.973 million shares previously.

Trading took place in 384 scrips, out of which 206 scrips closed in positive and 137 in negative, while the value of 41 scrips remained unchanged. Bosicor Pakistan was the star performer of the day with 28.506 million shares and the scrip surged by Rs 0.50 to close at Rs 23.25.

The banking sector led the rally as NIB Bank, Bank Al Falah, Askari Bank, Bankislami Pak, PICIC Bank and Bank of Punjab (BoP) scrips rose by rupee one, Rs 1.20, Rs 0.75, rupee one, Rs 2.05 and Rs 1.20 respectively. They closed at Rs 23.60, Rs 56.80, Rs 105, Rs 17.85, Rs 43.45 and Rs 104.20, in that order.

Fresh buying was also seen in Arif Habib Sec, which gained rupees five to close at Rs 183. Oil and Gas Development Company (OGDC) also remained active and closed at Rs 126.90 with a net gain of Rs 0.45. Rafhan Maize and Jahangir Siddiqui Co were the highest gainers, with Rs 90 and Rs 49.40 gains to close at Rs 2,200 and Rs 1,037.75 respectively, while Treet Corporation and National Foods were th biggest losers. They lost Rs 12.50 and Rs 10.50 to close at Rs 301.50 and Rs 420 respectively.

Ahsan Mehanti at Shehzad Chamdia Securities said that the market performed well on expectations and showed bullishness post December on fresh foreign allocations and local institutional liquidity.

Soaring oil prices in the international market (to over 93 dollars) also prompted investors to take fresh positions in the relevant stocks, he said. He added that the investors' expectations for capital gains on shares of FABL, NBP, BOP, and AKBL, based on no announcement of capital gains tax exemption on stock exchange investments, was another reason, which invited fresh buying interest in banking sector stocks.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Coal reserves found in Cholistan ​*
KHANPUR (December 25 2007): Punjab Minister for Mines and Minerals, Makhdoom Ufkar-ul-Hassan has said that coal reserves were found in Cholistan area in Punjab where drilling was under way at 13 different points.

Talking to newsmen here in Liaqutpur, on Sunday, the minister said that Department of Mines and Minerals was contributing about seven billion rupees on quarterly basis to the exchequer, which has now risen to rupees eight billion during the caretaker government.

To a question about transparency of elections he said, Election Commission of Pakistan would take strong action against all those Nazims, irrespective of their political clout, who were interfering with the election campaign, adding that which ever party wins majority would be duly facilitated in forming the government.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*SBP issues guidelines for horticulture sector ​* 
KARACHI (December 25 2007): State Bank of Pakistan (SBP) in consultation with stakeholders has developed new 'Guidelines on Horticulture Financing' to facilitate banks in developing specific products to increase the flow of credit to the horticulture sector.

The SBP sources said that these guidelines provide details about financing to fruit, vegetables, flowers and ornamental plants production besides providing details about the eligibility criteria for borrowers, types of financing, collateral requirements, fixation of loan limit, repayment terms, loan monitoring mechanism, etc.

Banks may adopt these guidelines in the present form or with some adjustments to suit their organisational and operational needs and market characteristics, subject to compliance with SBP's regulations for agriculture financing, SBP sources said.

Disbursement to horticulture was only around Rs 6.5 billion in 2006-07 against total agri disbursement of Rs 169 billion during the same period, sources said and added that one of the main reasons for low disbursement to horticulture sector is lack of awareness regarding this sector.

Therefore, in order to facilitate the banks, the guidelines for financing have been developed by the SBP in collaboration with banks, Minfal, PHDEB, farmer's representatives and other stakeholders. Banks can benefit from the guidelines to tap the sector that promises high returns to the horticulturist, banks and the economy as a whole. As per guidelines banks are required to develop sound and reliable loan monitoring and tracking system to ensure proper utilisation and quality of loan and its timely repayments.

Individuals/partnership concerns and all types of legal entities engaged in horticulture related activities or desirous to establish new horticulture farming and having sufficient knowledge and relevant experience are eligible to draw loan under horticulture financing scheme, the guidelines said.

Financing facilities may be extended, provided bank is satisfied with the capacity of the borrower/sponsor to manage and run the horticulture activities.

To get financing facility borrower should be a holder of CNIC while usual requirements for corporate clients would apply and not be a defaulter of any bank/financial institution. However, this condition may be relaxed in case the bank is satisfied with creditworthiness of the borrower and that earlier default was circumstantial and not willful.

As per guidelines, banks can provide working capital finance on revolving basis for seeds/root-stock and nursery plants, water - charges for purchase of tube-well water, fertilisers and gypsum, chemicals, including herbicides, weedicides, fungicides, detergents, disinfectants and waxes, sprayers, farm labour, laser levelling charges, labour charges for fruits, vegetables sowing or transplantation etc. In addition charges for purchase of diesel and engine oil for tractor and for tube-well operation.

The loan limit shall be assessed by banks on the basis of financing request appraisal or feasibility report. The banks should undertake due diligence and market survey to assess the prices of equipment's, vehicles and assets to be financed for horticulture farming, the sources said.

Banks at their own discretion may sanction revolving credit limits to the borrowers automatically renewable on annual basis for working capital financing. The loans provided under revolving credit scheme are required to be adjusted every year along with up to date mark up. Moreover, banks can extend medium to long term financing for the capital expenditure.

Regarding the interest, SBP has instructed that banks shall determine mark up rate keeping in view KIBOR rate and their cost of funds etc in line with their credit policy. In case of collateral based lending, banks can accept one or more of the following collaterals as per their lending policies/procedures.

In case of hypothecated stocks or assets, they should be comprehensively insured from reputed insurance company or group of companies. It is advisable that banks should sensitise and educate their borrowers about the importance of having an insurance cover and also make insurance as an integral part of their respective horticulture financing products, the guidelines said.

In order to secure the bank's interest for loan against third party guarantee, bank shall ensure proper security of its exposure in accordance with the relevant SBP regulations.

According to the guidelines, the indirect financiers will have to provide a list of their bonafide horticulture farmers or farms along with their computerised NIC numbers and addresses. Finance would be directly disbursed in the account of bonafide horticulture farmers or farms. The guarantor will be responsible for repayment of loan as per terms and conditions agreed between the bank and the indirect financier.

Banks shall ensure that financing to horticulture sector is being made in compliance with SBP's regulations for agriculture financing, including classification of non-performing loans.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Fiscal deficit may swell to 4.2 percent of GDP *​ 
ISLAMABAD (December 26 2007): The finance ministry is unlikely to implement the directives of Prime Minister Mohammadmian Soomro for keeping fiscal deficit within the targeted limits, it is reliably learnt. The finance ministry had projected fiscal deficit at 4 percent of the GDP for 2007-08.

The Prime Minister had directed the ministry to constantly review the economic situation to ensure that the growth parameters are not adversely affected. He also asked the ministry to check and manage to keep the budget within overall fiscal deficit targets. However, analysts are of the view that the finance ministry may not be able to keep the fiscal deficit within the projected limits because of freezing domestic oil and electricity prices besides slow growth in revenue.

Analysts say fiscal deficit would be around 4.2 percent of GDP and economic managers are not in a position to contain it. According to the sources the country would be facing huge budget deficit of over Rs 535 billion in FY 08.

"If the government does not pass on the impact of rising oil prices to consumers, it will have to bear an additional burden of Rs 136 billion which will shoot up the budget deficit to 5.4 percent of the GDP," the sources added.

They said Finance Minister Dr Salman Shah had made all-out efforts to unfreeze oil and electricity prices and pass the impact on to consumers in phases with the argument that the caretaker government had no political bias. But the plea had been rejected both at the Prime Minister and the President levels.

The International Monetary Fund has also stressed that further fiscal consolidation would be required to reduce inflation and the external deficit while lessening pressures on real interest rates.

In this regard, IMF Directors have noted the low ratio of tax revenue to GDP and recommended to press ahead with the reforms to increase revenue so that it could reduce fiscal deficit while boosting spending on infrastructure and poverty alleviation. The directors have called for broadening the tax base, through expanding taxation of the agriculture and services sectors and reducing tax exemptions. The Fund is also of the view that there exists need to modernise the energy sector's regulatory and tariff framework and revive the privatisation process.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Mercedes-Benz plant project: GoP manages to revive $4 billion investment ​*
ISLAMABAD (December 26 2007): In a bid to secure $4 billion foreign direct investment, the government has managed to revive Mercedes-Benz manufacturing plant project in Sheikhupura.

President Pervez Musharraf, who has been very keen to see Mercedes-Benz coming to Pakistan with its project offering trucks and other long vehicles' manufacturing facility for the army and other clients, used diplomatic channel to convey to the management that their investment in Pakistan was fully secure and the government will provide sovereign guarantee also.

The President asked Pakistan's ambassador in Germany to take up the matter with Mercedes-Benz Group to convince its management to review its decision of walking out of Pakistan regarding its proposed plan to set up a plant in Sheikhupura, Punjab. The sources said the ambassador held a couple of meetings with Mercedes-Benz management to convey the desire of the President of Pakistan.

The sources said in response to Pakistan's offer, Mercedes-Benz's Dubai-based partner Coastal Trading Group's representative Yusaf Najibi visited Pakistan some three weeks back and held separate meetings with President Musharraf and Prime Minister Mohammadmian Soomro and expressed willingness to revive the project on behalf of the Group.

The officials in Islamabad confirmed on Tuesday that Coastal Trading which is playing a key role in reviving the project has conveyed to government of Pakistan the Mercedes Group's interest for reviving the project and visiting Islamabad shortly for a commitment in writing.

The officials working with Coastal Group are very much hopeful that the GoP and Mercedes Group will formally sign a memorandum of understanding for the project sometime in January 2008.

Mercedes-Benz Group had entered Pakistan with its Dubai-based business partner - Coastal Group - in 2006 with a plan to set up a manufacturing plant for large vehicles. It also planned to set up parts manufacturing facility in Pakistan and export it to other countries where it has only assembling facilities. But the project was left unfinished and the investors walked out of Pakistan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Nine foreign firms show interest in port project: Dredging, reclamation work​*
KARACHI, Dec 24: Nine foreign companies have shown interest in dredging and reclamation work for the upcoming Pakistan Deep-Water Container Port (PDWCP) being constructed by the Karachi Port Trust at an estimated cost of $1 billion, official sources said Monday.

The new harbour enclave being developed at the east of Keamari Groyne would need an estimated dredging of 32 million cubic metres. Out of this, 15m cubic metre dredging would be required in approach channel and 17 million cubic metres in basin. However, around 08 million cubic metres of dredged spoil picked from the basin will be utilised for reclamation, sources added.

Last month the KPT has inked an agreement with the Hutchison Port Holdings (HPH) to set up PDWCP project at an estimated cost of $1 billion, out of which $57 million will be foreign direct investment (FDI) and the remaining to be invested by the KPT.Under the first phase, four berths would become functional by 2010 and the remaining six berths by 1212.

The concession has been awarded on built-operate and transfer (BoT) basis for an initial lease of 25 years and could be extended for another 25 years on mutually agreed terms and conditions.

The PDWCT is a green field project in which the Karachi Port will undertake infrastructure development, including building of three new breakwaters, extensive dredging work and construction of 1500 metres long quay wall at a depth of 18 metres.

The HPH will establish a high throughput container terminal, including back-up area, provision of utilities, procurement of gantry cranes and other associated equipment, along with computers and management systems.

They will also develop container yard, storage and transfer areas, operational buildings, ship to shore gantry cranes, rubber gantry and mobile gantries.

Since infrastructure development work has to be done by the Karachi Port, therefore, it will have to undertake dredging work to develop new approach channel for the container port. Sources told Dawn that Sector-I and II of the existing channel will be deepened and widened, and Sector I will be extended to match the depth of new channel.

They further disclosed that new channel will be 16 metre deep with 300 metre width at the entrance and 600 metre in the inner harbour, with a turning circle of 510 metre diametres.

The channel will be protected with three break waters. The estimated time for completion of dredging work has been fixed at 27 to 30 months.

The KPT has already taken geo-technical survey of the area for soil investigation and also took bore logs and laboratory test of the samples.

Sources said that specialist consultant carried out the study and prepared the work plan, including drawings for the proposed channel of the deep water port.

There is an urgent need for expanding container handling capacity of the country because box tariff had been growing at 18 per cent for the last five years.

The two container terminals at KICT and PICT at Karachi Port handled around 0.652 million boxes in 2000-01, and recorded a traffic of over 1.144 million boxes late year.

Similarly, the Qasim terminal at Port Qasim handled around 0.158m containers in the year 2000-01, and witnessed a traffic of 0.544m TEUs in 2005-06.

According to experts, growth of container traffic at the Karachi Port for next three (2009-10) years has been estimated around 1.8 million TEUs and at Qasim International Container Terminal (QICT) it will go up to 0.856 million boxes.

Nine foreign firms show interest in port project: Dredging, reclamation work -DAWN - Business; December 25, 2007


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## Neo

*TDAP to promote medical services for exports​*
KARACHI: Trade Development Authority of Pakistan (TDAP) will promote medical services as part of its strategic thrust, making services as important part of the exports.

Chief Executive Officer (CEO) of TDAP Tariq Ikram had a meeting with Dr. Rasheed Jumma to discuss the modalities to come up with a joint effort to a chalk out a plan between TDAP and Health Ministry, a statement of TDAP stated here Tuesday.

Under this strategy, TDAP is keen on promotion of clinical trial for drugs and medicine under well-established protocol meeting international standards and export medical surgical services, which are of world-class level.

In this connection, both parties will hold discussions with concern stakeholders and conduct seminars to promote and develop better understanding. TDAP and Ministry of Health will provide resources in this context to develop this export service.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Mobilink to invest another $500 million in 2008: CEO*​
KARACHI: Mobilink has invested over $2.5 billion in infrastructure, network rollout and the largest franchise, retail and customer services network across the nation. We plan to inject an additional $500 million in 2008 to meet the growing demands of our services and the needs of our customers, said Zouhair A Khaliq, President and CEO of Mobilink in an exclusive interview to Daily Times. 

He further said that Mobilink has progressed from voice to carrier-class nationwide services by completing its own 6,500 kilometre redundant fibre optic backbone network across Pakistan. It now plans to provide high-speed data connectivity in the urban and rural sector of Pakistan through WiMax services. 

Being a developing country, the expansion of broadband networks and services is of high importance to the Pakistani economy. Broadband connections in the country currently stand at around 0.1 million. With the population figure at over 165 million, this will clearly place Pakistans economic development into the next stages of progress. 

Zuhair said that in WiMax services Mobilink is planning to enter the data arena by deploying a state-of- the-art WiMax network offering high speed internet to its customers. 

WiMax is the latest global technology for delivering broadband services to the end user. 

With Alcatel-Lucent, Huawei and Motorola amongst its list of renowned network vendors, Mobilinks WiMax infrastructure is in good shape to foresee a commercial launch very soon. 

WiMax is bound to bring a broadband revolution in the country with subscriber growth in multiple folds. This would not only bring Pakistan in par with technologically advanced nations but will also stimulate data use in the country. Data services are expected to flourish and demand in new arenas of data handling will be generated. 

In addition to this, Mobilink recently entered into an agreement with four companies viz. DVCOM, DanCom, Zarco and WOL to consolidate its operations aimed at providing better wireless and broadband facilities for its customers. Leveraging on the assets and expertise of these acquired companies Mobilink plans to provide state of the art data services in the country in 2008. With the basic infrastructure in place, keeping pace with technological advancements will be one of Mobilinks key priorities. 

In fibre optics, Pakistan Telecommunication Limited (PTCL) had been the only company that owned an optic fibre backbone. Mobilink has successfully introduced competition through the introduction of a nationwide network. Mobilinks optic fibre backbone provides the perfect platform to Mobilink for connecting its customers nationwide with highest level of voice and data quality with more reliability. 

Deployment of the national backhaul stands completed with full protection, making Mobilink optic fibre backbone fully protected/redundant. By providing last mile connectivity Mobilink has positioned itself as a one-stop shop for meeting all communication requirements of enterprises and individuals. The optic fibre network currently covers 6,500 kilometres and will be increased to cover another 2000 kilometres very soon.

We are envisaging sustainable growth in Pakistan. With mobile penetration still at around 43 percent, the room for growth is immense. The growth is not only limited to mobile telephony, as there are huge opportunities in other fields like broadband (optic fibre, DSL, WiMax), LDI etc. This coupled with the enabling environment being provided by the Pakistan Telecommunications Authority ensures an excellent future for this sector, he said when asked to comment on the companys future plans in Pakistan.

He added that the company plans to maintain its market leadership in all areas from market share to network footprint and coverage. In this regard, the company has aggressive plans for the future to ensure that communication services are provided to each and every Pakistani no matter where he or she lives.

In reply to a question on poor connectivity and frequent call drops he said that, there was a time when this problem existed. However, with intensive investment in our network, we have now successfully achieved over 98 percent call connectivity throughout our network. Hence, call connectivity issues are a thing of past and I do not see this as a problem anymore. 

The recent surveys done by the PTA show that Mobilink is actually better than any of the other networks, he added.

In 2006 Mobilink issued an international bond for $250 million, which was oversubscribed by 16 times at four billion dollars. The success of this bond reflected the awareness in international capital markets of the companys current strengths and prospects for continuing its leadership in Pakistans telecommunication market. 

Mobilink Genie is the first truly secure mobile commerce solution, launched by Mobilink, where mobile subscribers can make financial transactions via their mobile phones. 

The company is also the first to launch a voice portal 555 which is an IVR service providing users easy access to a host of value added services such as ring tones, greetings, news, jokes, cricket services, contests, horoscopes, recipes and a lot more. Speech browsing is a unique feature of this service where customers can browse the menu and access content just by saying it aloud. They are able to select the language, desired category content and download options as well as browse the menu via the voice recognition system. 

The company is also assisting the nation in meeting its Millennium Development Goals. 

Access to broadband networks and services can make important contributions to the quality of life, in terms of education, health services and social inclusion. 

ICT Industries, public administration, financial intermediation, business services, media, R&D, healthcare, manufacturing and the like involved in various economic activities, have been witnessing growth stagnation due to the untapped broadband infrastructure which needs a major uplift.

Mobilink, with a subscriber base of over 29 million finds itself perfectly placed to help fulfil this need, by playing a vital role in bringing broadband to an unconnected Pakistan. 

The way the regulator is facilitating the telecom industry we see positive growth. The last few years have seen a phenomenal expansion in the telecom sector and the future is no less exciting. The market demand is going to get more and more sophisticated. There is going to be a significant demand for data and value added services. The mobile phone has already become a need rather than a luxury. With the BlackBerry solution it has become an office-on-the-go and a personal companion. Such services are going to grow even further as new segments of society come online.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Current account deficit soars to $4.8bn ​* 
Thursday, December 27, 2007
By our correspondent

KARACHI: The current account deficit in the first five months of fiscal 2007-08 further widened to $4.784 billion creating serious problems for the government to fill the gap amid moribund flow of foreign investment, which also plunged by 19.3 per cent during the period.

Latest figures issued by the State Bank of Pakistan (SBP) on Wednesday showed that the current account deficit during July-November 2007 increased to $4.784 billion, which was recorded at $4.077 billion in the same period of last year.

The SBP data showed that in the meantime trade deficit of the country increased to $4.878 billion compared to $4.467 billion during July-November 2006. As the country dispatched goods worth $7.564 billion to different countries during July-Nov 2007, total exports were recorded at $6.837 billion in the same period of last fiscal. Contrary to this, the imports increased to $12.442 billion from $11.304 billion last year.

The data revealed that Pakistan has been paying more in services than it receives in this account. Pakistan paid $3.931 billion for services and received only $1.090 billion in the same account.

Pakistan is facing a stiff competition in the international market, particularly in the textile sector, as India, China and Bangladesh have emerged as the main competitors and have been nibbling market share of Pakistani exports in the US and EU markets, which are the main buyers of Pakistani textile products.

Net foreign investment: Another data issued on the same day by the SBP showed that during July-Nov 2007 net foreign investment in Pakistan declined by 19.3 per cent to $1.818 billion which was recorded at $2.252 billion in the corresponding period of the last financial year.

However, during the aforesaid period, foreign direct investment (FDI) recorded a 15.7 per cent rise. From July-November 2007 total FDI was recorded at $1.712 billion as compared to $1.480 billion in corresponding period of FY07.

In July-Nov 2007 a massive decline of 86.3 percent was recorded in portfolio investment, which shrank to $106 million against $771.9 million of last fiscal year. During first five months of FY08 overall investment in Pakistan from developed countries declined by 10.8 percent to $1.292 billion from $1.449 billion.

However, FDI from developed countries increased by 16.1 percent to $1.119 billion against $963.8 million of last fiscal year. But Portfolio Investment from these countries plunged by 64.3 percent to $173.4 million as compared to $485.5 million in corresponding period of last fiscal year.

Current account deficit soars to $4.8bn


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## Neo

*KSE up 23 points to cross 14,800 level in overbought market ​* 
Thursday, December 27, 2007

KARACHI: Buying on selective counters helped Karachi Stock Exchange benchmark KSE 100-share Index easily breach through the 14,800 points barrier successfully for the first time on Wednesday.

KSE-100 closed at 14,815 points with a modest addition of 23 points to 14,792 points previous all time high hit of last working session on December 24.On the contrary, the 30-Index shed five points and concluded at 17,666 points simultaneously.

The second and third tier stocks, mainly from banking sector, provided support to the 100-Index keeping it above the 14,800 points level by the session closed. 

Market opened with aggressive buying in all categories of stocks on board and took 100-Index to 14,876 points intra-day high in the just opening minutes. It was the defining moment for the investors that whether they wanted to go ahead from here to the next astonishing destination or they wanted to stop here to minimize the risk factor, a leading analyst said.

Jobbers adopted the second strategy and stopped further accumulations at the day higher share prices. From hereon the speculators took over the market in their hands and pushed indices into the red region where most of the frontline scrips stayed till the session end.

In the middle of the session, the index fell to 14,766 points intra day low - losing 110 points from the day peak level. Blue chips close in red: Engro Chemical and Lucky Cement were the only two scrips, which managed to end in the positive column gaining Rs2.70 and 50 paisas respectively. Otherwise all the front line stocks settled in the red territory.

Pakistan Telecommunication Company closed pegged at Rs44.80 with a thin volume at 0.9 million shares. Fauji Fertilizer Bin Qasim, Oil and Gas Development Company and DG Khan Cement shed in a range of 20 paisa to 70 paisa. Pak Petroleum and Pakistan State Oil lost respectively Rs1.10 and Rs1.15. While National Bank, Pakistan Oilfields and MCB Bank share prices declined in a range of Rs2.10 to Rs3.20, it was noted.

The reason behind adjustment in leading stocks and buying in second and third tier stocks was said to be the risk factor. The leading stocks have entered into the overbought zone and buying in these scrips would be more risky. While potential offering second and third tier stocks were yet to be exploited, a broker said.

CFS rate near 10-month high: The CFS rate at present was near 10 months high level at 14.06 per cent owing to the year ending factor and some of the lenders were busy in year-closing business, he added.

And on the other hand, the available funds in CFS were fully utilized at Rs55 billion by the market players that is why the day traders were not buying the CFS eligible scrips that are incidentally the frontline stocks.

Those having hard cash in hand were buying potential offering stocks that fortunately are other than the CFS eligible scrips at present, he added. For this reason, the retail investors participation was very thin in the stock exchange and owing to high risk factor in skyrocketing market they just observed the stocks movement and remained dormant on buying part.

SCRA balance declines: So definitely, it were the only local financial institutions who were continuously inflating the new investment bubble at the local bourse, as the overseas investors retraced footsteps, which is evident with the shrinking SCRA balance these days.

According to the State Bank latest available figures of Dec 24, the SCRA balance declined to US$67.2 million to date for this fiscal year from US$109.7 million was recorded on Dec 18. The decline in SCRA account clearly showed that the foreign fund managers were getting distance from local bourses and disinvesting in government bounds.

Turnover in ready market turned higher to 308 million shares with injecting fresh funds worth of Rs9 billion in the overall market capitalisation surged to Rs4.555 trillion. It was somehow a balance market with 180 stocks advanced against 176 declined, while the value of 29 stocked closed stable with total 385 active counters on board.

Highest volumes were witnessed in TRG Pakistan at 37.697 million closing at Rs14 with a gain of Re1, followed by Allied Bank at 20.687 million closing at Rs141.25 with a gain of Rs6.55, JS Bank at 19.275 million closing at Rs23.95 with a gain of 80 paisa, NIB Bank at 17.403 million closing at Rs23.40 with a loss of 20 paisa and Bosicor Paksitan at 15.085 million closing at Rs23.10 with a loss of 15 paisa.

KSE up 23 points to cross 14,800 level in overbought market


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## Neo

*Containing CAD at 5pc of GDP hard target for govt ​* 
Thursday, December 27, 2007

ISLAMABAD: The target of containing the current account deficit (CAD) at 5 per cent of GDP as envisaged in the Annual Plan is most unlikely to be achieved.

The average monthly incidence of the CAD (excluding official transfers) was $591 million in the last fiscal year 2006-07, but during the first five months of the current fiscal, the average monthly CAD is almost touching $961 million.

During these five months, in spite of strong build-up in current transfers of about more than four and a half billion dollars, the huge $7.72 billion trade deficit in goods and services was instrumental in turning the current account into deficit, the State Bank of Pakistan (SBP) data released on Wednesday said. 

Net current transfers rose to $4.67 billion during the period under review, from $3.9 billion in corresponding period of the last fiscal. Current transfers went up as Pakistan received $2.58 billion in workers remittances or foreign exchange sent back home by overseas Pakistanis during the period, up from $2.1 billion a year-ago. At the same time, the resident deposit holders also deposited $216 million in foreign currency accounts (FCA) compared to $61 million they withdrew from these accounts during corresponding period of the last fiscal.

Inflows in these accounts proved as a cushion in moderating current account deficit, but still outflows due to trade deficit, interest payments and profits and dividends remitted by the foreign companies to their respective countries were so huge, that it, (inflows) were unable to keep the CAD from falling in red zone. International Monetary Fund (IMF) has also expressed its concern over possible slippages on twin deficits. If the current trend persists, there is a possibility that the government would not be able to meet the CAD target. 

It is worth mentioning that during July-November 2007-08, trade imbalance (in goods and services) up from $6.43 billion last year to $7.72 billion this year. Higher oil prices spiral since November 2007 might add to the woes on external front through widening trade imbalance. 

The government is already in a fix to contain fiscal deficit, which has already reached one of the highest level of 1.6 percent of GDP in the first quarter (July-September) for the last seven years. 

Now it has become clear that fiscal deficit target of 4.0 of GDP would be breached by a fair margin and there are chances that current account deficit target would not be achieved as well. In the election year, the government could not shelve its mega development projects and it has to finance fraction of the oil imports bill.

The government is caught between devil and the deep sea in the election year. The pass through of higher international prices has become next to impossible before elections, thus the government has to take the hit for unanticipated rise in the crude oil prices.

One manifestation of the rising twin deficits is the addition of $1.6 billion to the stock of the external debt and Rs.109 billion in domestic debt in the first quarter (July-September) of FY08.

During the last fiscal, Pakistan has added $2.9 billion to the external debt, which is record addition to external debt in one decade. It is also interesting to note that the government has always talked about debt burden. It has also witnessed tremendous rise in the last fiscal year. For instance, external debt and liabilities as percent of foreign exchange earnings are regarded as most reliable indicator of debt burden. 

According to State Bank of Pakistan (SBP) annual report, this indicator has witnessed deterioration from 120 percent in FY 06 to 124.8 percent in FY 07. Another indicator of debt carrying capacity reserves to total external debt and liabilities has deteriorated from 28.9 percent in FY 06 to 33.2 percent in FY 07. 

Rising debt servicing burden has raised serious questions of sustainability of the debt. Public debt is deteriorating both in terms of absolute amount and debt burden.

Containing CAD at 5pc of GDP hard target for govt


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## Neo

*Mobile phone users hit 75m ​* 
Thursday, December 27, 2007

ISLAMABAD: Caretaker Federal Minister for Information Technology and Telecom Dr Abdullah Riar on Wednesday lauded the role of Pakistan Telecommunication Authority (PTA) in developing the countrys telecom sector and termed it a model institution for other government organisations to follow.

Appreciating the recent growth shown by the telecom sector of Pakistan, he said that the telecom industry has made decisive contribution to the national economy.

Talking to media during his visit to the PTA headquarters, he said that broadband revolution is poised to bring positive changes in the country and would enable the citizens to reap the benefits of this revolution during the next few years.

The minister emphasised that there is a need to supplement the telecom revolution with broadband revolution, which impacts every field and segment of life in future. Access to information will not only enhance productivity in every sphere of life but will also contribute towards the overall wellbeing of a common man. 

Earlier, Chairman PTA Maj-Gen (R) Shahzada Alam Malik briefed the minister about the functions of PTA, regulatory initiatives and performance of telecom sector. The chairman said that the foreign investment being attracted by the telecom sector and said that during 2006-07 $1.8 billion FDI came into the telecom sector which was 35.6 per cent of the total FDI. 

He said that the current number of cellphone users has reached 75 million and the usage has increased manifold over recent years. He said that the overall teledensity of the country is 50.88 per cent while the density of mobile phone users is 47.4 per cent. 

Mobile phone users hit 75m


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## Neo

*IFC to finance power project​* 
Thursday, December 27, 2007


ISLAMABAD: The International Finance Corporation (IFC), a member of the World Bank Group, has signed an agreement to support Engro Energys combined cycle power project, which will help meet Pakistans increasing energy needs.

The Engro Energy project includes a 217-megawatt base load plant which will be built in Sindh. The combined cycle power plant will generate electricity using low-quality gas, which would otherwise be flared.

The highly-efficient technology will reduce the average cost of power generation. Substantial investments in power generation in the country are needed to ease serious power shortages, a situation which could deteriorate further in coming years, said a news statement issued here on Wednesday.

The project is being developed by Engro Energy Ltd, a subsidiary of Engro Chemical Pakistan Ltd. IFCs $59.5m financing package will consist of $56.9m in loan and $2.6m in equity. Other contributing development financial institutions include DEG, FMO, OFID, Proparco and Swedfund.

IFC Director for Infrastructure Rashad Kaldany said: The project will help Pakistan meet rapidly-growing demand for power and contribute to the countrys economic growth. The project will also help reduce carbon emissions by avoiding the flaring of gas.

IFC to finance power project


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## Neo

*Appetite for expansion in commercial banking continued in CY07 ​* 
Thursday, December 27, 2007

KARACHI: The appetite for expansion in commercial banking continued during the outgoing calendar year amid robust progress in financial sector. However, the regulatory policies of State Bank of Pakistan (SBP) failed to cut down banking spreads by creating a natural competition among banks. 

In January 2006 the banking spread was 7.27 per cent as banks were lending at interest rate of 9.89 per cent while paying 2.62 per cent interest rate on deposit, in January 2007 the banking spread further widened to 7.44 per cent as banks were lending at 11.18 per cent and paying 3.66 per cent interest to depositors and the high spread continued till August 2007 when difference between lending and deposit rates was recorded 7.23 percent. 

In the last four months from September to December-2007 the banking spread recorded a slight decline, as banks were disbursing funds at 11.32 percent interest rate against paying 4.12 percent interest on deposits. This difference further narrowed to 7.19 percent in October 2007. 

As of end calendar 2006 the banking sector profitability was Rs123.6 billion, whereas a year on year increase in assets during CY06 pushed the overall size of banking sector to Rs4.3 trillion which further increased to Rs5 trillion by end of first half of CY07. 

The high banking spread was the only factor behind record earnings in the banking sector, that was very charming feature in domestic banking industry which lured some renowned foreign banks to start their commercial operations in local market with intention to grab the prevailing opportunity. State Bank of Pakistan (SBP) issued new license to Barclays the worlds second largest bank just two weeks before end of the calendar.

SBP links entry of foreign banks in Pakistan with stable macroeconomic environment along with relatively low penetration level of the banking sector.Consolidation of financial sector continued during the year. The banking sector saw only two mergers & acquisitions in CY07 against eight mergers and acquisitions in CY06.

Majority shares of Crescent Commercial Banks were acquired by Saudi American Bank (SAMBA) Financial Group and acquisition of mid sized Prime Commercial Bank by ABN Amro Bank were the major transactions of the year. It may be noted that in September 2006, Standard Chartered PLC acquired 95.37 per cent stake in Union Bank Ltd, which was the most noteworthy transactions in last two years. 

Since the year 2000 both banks and Non-Banking Financial Institutions (NBFIs) witnessed 50 mergers and acquisitions involving more than 150 financial institutions and out of 30 deals involving commercial banks eight were executed in calendar year 2006. The regulatory capital requirement of SBP is a contributory factor forcing mergers and acquisitions of banks. 

SBP raised the Minimum Paid-up Capital Requirements (MCR) from Rs500 million to Rs1 billion for scheduled banks in 2000 and now banks are required to increased their MCR to Rs6 billion by end of December 2009, compared to an MCR of Rs3 billion as of end December 2006.

A major development taking place prior to saying goodbye to 2007 which could be termed as a good omen for local banking sector in future was that the widow of slain Wall Streets journalist Daniel Pearl withdrew suit against Habib Bank Limited (HBL). 

The western media never misses an opportunity to accuse Pakistani banks of money laundering and other illegal financial transaction. Financial market sources said that withdrawal of suit would be a clearance certificate for local banking sector in future against unfounded and baseless accusations of Western media. 

Appetite for expansion in commercial banking continued in CY07


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## Neo

*Drastic decline in net foreign investment​*
* Drops by $434m or 19.3% during the first five months of FY08

KARACHI: Net foreign investment in the country took a plunge of $434 million or 19.3 percent to $1.8185 billion during the first five months of the current financial year. The country had received foreign investment worth $2.252 billion in the same period of last financial year. 

The inflow of foreign investment into the country continues to decline in the current financial year mainly due to withdrawal of money by foreign portfolio managers. 

Overall foreign portfolio investment declined to $106 million in the first five months of this year, recording a fall of 86.3 percent from $771.9 million in the same period a year ago. 

Foreign portfolio investment has declined mainly due to uncertain political situation in the country, which has perturbed foreign investors as they fear that the economy may take a downward course as a result of political turmoil. 

Net inflow of foreign investment in the countrys stock exchanges from July 1 to December 24 stood at a mere $67.154 million. Last year the country had attracted about a billion dollars in stock exchanges. 

Foreign direct investment (FDI) rose by $232.3 million or 15.7 percent to $1.7125 billion from $1.4802 billion. FDI from Western Europe declined from $541.6 million to $278.3 million. FDI from European Union fell from $491.2 million to $187.9 million. 

However, FDI from United States soared to $735.1 million from $363.7 million. FDI from developing economies also rose, from $384.6 million to $489.4 million. 

The net foreign investment in the country included $133.2 million received as privatisation proceeds and $90.5 million attracted through Global Depository Receipts of UBL. 

Economists had criticised the Shaukat Aziz-led economic management of the country, which relied heavily on undependable foreign exchange inflows like portfolio investment and remittances to cover its current account and trade deficits. Now that the government led by a commercial banker has completed its term, it will be a difficult task for the new government to meet demand for foreign exchange in the country with falling inflows. 

Keeping this scenario in view, it should be expected of the new government to change policies to control imports and raise exports in order to keep its foreign exchange environment stable. The outgoing government has left difficult challenges for the next government.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Neelum-Jhelum hydropower project: Government set to charge 10 paisa/unit from Jan 1​*
Raising n Revising: Approved by the federal Cabinet, the 10 paisa rise in power tariff will meet the financing requirements of the much-delayed 960-MW Neelum-Jhelum hydropower project at a revised cost of Rs 128.4 billion

By Zafar Bhutta

ISLAMABAD: The government would charge 10 paisa per electricity unit from January 1, 2008 onwards to generate around Rs 6 billion for financing Neelum-Jhelum hydropower project, a senior official told Daily Times here Wednesday.

The federal cabinet has also approved a raise of 10 paisa per unit in power tariff for financing the much-delayed 960-MW Neelam-Jhelum hydropower project at a revised cost of Rs 128.4 billion with a foreign exchange component of Rs 46.5 billion, in its meeting on December 12. Official sources said that the increase in tariff for Wapda and KESC consumers would appear in electricity bills as a special surcharge for the month of January.

The sources said the financing plan had been approved by a committee headed by then prime ministers advisor on finance, Dr Salman Shah (now caretaker Finance Minister), which had suggested a 10 paisa per unit increase in Wapda tariff for the fund to be called Neelam-Jhelum Hydropower Development Fund. 

The Economic Co-ordination Committee (ECC) of the cabinet also on August 17, 2007 approved, in principle, an increase in tariff to finance the mega hydel power project with a recommendation that the decision should be placed before the cabinet in its meeting. 

The sources said the Ministry of Water and Power had forwarded the summary to the cabinet in October but the issue was kept pending for the caretaker setup due to political considerations. The cabinet approved rise in power tariff considering the project was vital for economic growth and security and deserved immediate endorsement especially in the context of water sharing with India on Jhelum River.

Official said that the government of Pakistan has already approached Kuwait Fund and French financers M/S BNP Paribas for arrangement of the foreign exchange component of the $785 million (Rs 46.5 billion).

In order to arrange foreign exchange component of $785 million the government made a presentation to Kuwait Fund management delegation on March 21, 2007 and a formal request has been sent to Economic Affairs division for further submission to Kuwait Fund. The government officials have also held discussion for availability of foreign exchange component of the project with French financers M/S BNP Paribas head office of which is located at Paris on March 29, 2007, the official explained.

Water and Power Development Authority (WAPDA) has also approved award of the contract to the lowest bidder i.e. CGGC-CMEC a joint venture on March 9, 2007 at the contract price of Rs 90.885 billion including foreign exchange of $785 million. The project director office is operational at Muzaffarabad to execute the project in the site, the official added.

The government has already made an allocation of Rs 5 billion in the Public Sector Development Programme (PSDP) and a sizeable amount is expected to be allocated for the project in the PSDP for the next fiscal year, the official added.

The installed capacity of the project is estimated at 969 MW and annual energy generation capability of 5150 kWh, design discharge at 230 and average head at 450 meters. Two tunnels would be built under the project design; the first would be 15 kilometers each 40 square meters and the second would be of 17 km each 80 square meters. According to the official, the project would be connected with National Grid at Rawat with the construction of two separate transmission lines of 500 kV single circuit.

The official informed that the some 2500 kanals of land would be acquired for the project and in the first phase acquisition of 1123 kanals of private land is under way. WAPDA has already transferred Rs 336 million to the Azad Jammu and Kashmir government as provisional cost of private land being acquired by it.

Daily Times - Leading News Resource of Pakistan


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## Neo

*LSM growth dull at 7.68% during July-October​*
KARACHI: The Large Scale Manufacturing (LSM) grew by 7.68 percent in the first four months (July-October) of current financial year compared to corresponding period of last fiscal year, which is sign of another dull year for the manufacturing sector. 

Latest official data released on Wednesday showed that in month of October 2007-08, manufacturing growth was 9.83 percent against the same month of last year. For the current fiscal year, government has set 12.5 percent LSM growth target for the fiscal 2007-08. 

In the last two financial years, government missed the LSM growth target and analysts believe that this years target is likely to miss because of performance of manufacturing sector so far during the current year. 

The LSM index is based on the latest production data of 100 items provided by Oil Companies Advisory Committee (OCAC), Ministry of Industries and Production and provincial Bureaus of Statistics (BoS). The breakup of data shows that OCAC index registered growth of 14.98 percent during the four months of this fiscal followed by ministry of industries which grew by 7.28 percent and provincial BoS index registered 7.14 percent growth over the same months of last year. 

While, in month of October, OCAC index rose by 17.84 percent, ministry of industries and provincial BoS indices recorded increase of 9.66 and 8.69 percent respectively. 

According to analysts and industry people, with no major capacities coming in the major heavy weights in the LSM, another dull year is expected for the manufacturing sector. However, major capacities are expected to come on ground after this fiscal year, which would help reverse the lower-than targeted production of this sector through enhancing production base. Industries, which are expected to outperform the sector would be cement, beverages and other industries related to construction e.g. glass, soda ash, etc.

Citing the reasons for lackluster in LSM sector, analysts said that high oil prices and monetary tightening are having their impact on the sector by way of increasing the sectors costs and reducing their competitiveness in the international market. The targets set for the current year are also reflective of unrealistic approach of economic managers of the government, who know the limited production base set ambitious targets just to show high GDP projections, they noted. 

In petroleum production sector, the statistics show that kerosene oil production was up by 15.18 percent, motor spirits 19.52 percent in, high speed diesel 22.49 percent, furnace oil 19.35 percent, LPG 6.68 percent etc. in first four months of this fiscal.

Whereas Jet fuel oil production dipped by 8.07 percent, diesel oil down by 0.65 percent and lubricating oil by 0.92 percent in July-October 2007-08. 

In Ministry of Industries Index, in the months under review, the production of cigarettes was up by 7.45, cotton yarn 4.71 percent, cotton cloth 0.88 percent, jute goods 19.25 percent, soda ash 19.01 percent, caustic soda 13.14 percent, Nit. fertilisers 3.54 percent, Phos. fertilisers 6.79 percent, cement 25.84 percent, coke 19.70 percent, pig iron 3.46 percent, buses 37.13 percent, tractors 3.01 percent, LCVs 28.10 percent, motorcycles 28.85 percent, jeeps and cars 4.76 percent etc.

On the other hand, production of paper and board declined by 16.76 percent, glass and plates 5.47 percent, billets/ingots 3.87 percent and trucks 25.57 percent. In the index of provincial bureau of statistics, in July-October period, cooking oil production was up by 1.30 percent, starch and its products by 2.62 percent, beverages 47.69 percent, footwear by 11.14 percent etc.

Daily Times - Leading News Resource of Pakistan


----------



## Neo

*Kuwaiti company to invest in Pakistani oil sector*

ISLAMABAD: Caretaker minister for petroleum Ahsan Ullah Khan has said that the government is providing a level playing field to investors in oil and gas sector.

Minister stated this during a meeting with the Chief Executive of Bakri Energy Management System of Kuwait Hussain Al-Shama who called on him here on Wednesday and discussed investment potential in the Pakistani oil sector.

During the meeting, minister briefed him about the steps being taken by government to promote the petroleum sector in order to meet the growing energy requirement of the country. The minister said that the government has deregulated the downstream petroleum sector in 2001 that attracted unprecedented investment in the country as well as provided competitive environment.

The Chief Executive of Kuwait Bakri Energy appreciated the growth of petroleum sector in Pakistan during the last few years and investor friendly policies being pursued by government of Pakistan. He said that the Bakri Energy would take full advantage of investment potential in Pakistans petroleum sector for mutual benefit.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Engro signs $154m accord for 217MW power plant​*
KARACHI: Engro Energy (Pvt.) Limited - a 100 percent owned subsidiary of Engro Chemical Pakistan Limited - has signed $154 million financing agreement with a consortium of foreign institutions for its 217-megawatt power plant being constructed near Qadirpur, district Ghotki in Sindh. 

The consortium, comprises of leading international foreign financial institutions including: IFC, DEG, Proparco, FMO, Swedfund International and OPEC Fund for International Development.

This is the first-ever Pakistani private sector power project being funded by Swedfund and Proparco, while the German development finance institution DEG is actively supporting projects in Pakistan as an international finance partner since last two years after resuming its activities in Pakistan. 

The project with a total worth of $205 million shows Engros commitment to invest in Pakistan. Engro Energy on its part is determined to help in alleviating the power crisis in Pakistan by making much-needed investments in the power sector, company sources said. 

The project will generate electricity by consuming low quality permeate gas from Qadirpur gas field, which is being flared currently also resulting in reduced carbon emissions. 

The plant will be based on highly efficient technology being provided by China National Construction & Engineering Company (CNCEC) resulting in lower cost of power generation.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Mobilink achieves 30m customers​*
KARACHI: Mobilink, announced achieving the figure of 30 million customers, a regional milestone in its 13 years of operation and at the same time also formalised the set up of the Mobilink Foundation as its enduring commitment to supporting the social development of Pakistan. 

The companys commitment towards network expansion with aggressive investments, state of the art technology and infrastructure and quality services is a manifestation of its maintaining a leadership position in a six operator market, a company press release said here Wednesday. 

On this achievement, Zouhair A. Khaliq, President and CEO of Mobilink said, we have come full circle to become a shining example of a very successful multi-national organization whose achievements both on the national and international fronts have been recognized by numerous world bodies. 

The formation of the Mobilink Foundation is a testimony to our belief of giving back to the community. 

Daily Times - Leading News Resource of Pakistan


----------



## Contrarian

Neo, quick question, 
are there 3G networks in Pakistan? have 3G services started for mobile phones?


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## Proud to be Pakistani

3G is available in Pakistan since 1.5 years as per my last visit to Pakistan, but i think still video calls are not allowed. Only mobile TV option is there.

Any news..


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## Contrarian

Proud to be Pakistani said:


> 3G is available in Pakistan since 1.5 years as per my last visit to Pakistan, but i think still video calls are not allowed. Only mobile TV option is there.



Mate, 3G does not mean just internet on the mobile. 2G networks have internet as well. 

3G networks by default mean very high data transfer rates which means video calls. Mobile TV is also available in India, though there are no 3G networks in India, it can be done in 2G networks as well.


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## Proud to be Pakistani

malaymishra123 said:


> Mate, 3G does not mean just internet on the mobile. 2G networks have internet as well.
> 
> 3G networks by default mean very high data transfer rates which means video calls. Mobile TV is also available in India, though there are no 3G networks in India, it can be done in 2G networks as well.




In this field....

I have 3G and i know what a 3G network means more than you for a fact.

No offense thou.


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## Contrarian

So then are you sure that there are 3G networks in Pakistan?


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## Proud to be Pakistani

malaymishra123 said:


> So then are you sure that there are 3G networks in Pakistan?



It was to be done in 2004.

Nokia Prepares Telenor Pakistan for 3G


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## Proud to be Pakistani

Mobilink offers Edge Services


Mobilink - New Offers


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## Neo

PtbP is right Malay, he's answered your question.


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## Contrarian

Okay cool!
But how come video calling is not there then?
I was asking because India has edge services as well, but there is no 3G network, which entails video calling...
EDGE has been present for atleast the last 3 years in major cities in India. But 3G is still not present, and im quite keen on using it.

How many operators are there for the cell network in Pakistan?

AFAIK,in India the spectrum for 3G services has not even been allocated yet by the govt, let alone the companies develop the required infrastructure.
In India, ALL the spectrum is kept by the defence services, and they are bloody reluctant to give it. 

The govt in India is again giving spectrum and licence to some new players in the GSM field, and it was taken from the defence services, there is a huge mess over it.


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## Neo

*Karzai urges businessmen to invest in Afghanistan ​* 
Friday, December 28, 2007

ISLAMABAD: Afghan President Hamid Karzai, on Thursday urged the Pakistani business community and investors to take full advantage of the trade potential present in Afghanistan to promote bilateral trade.

Addressing a select gathering of Pakistani business community at a function organised jointly by Board of Investment and Islamabad Chamber of Commerce and Industry (ICCI) at a local hotel, the Afghan President said the investors from Pakistan were welcome to invest in any field. The promotion of trade between the two countries has grown not rapidly but drastically in last six years, said Karzai. He said the trade which was just US$25 million in 2001, has increased to $1.3 billion.

The Afghan President said that besides improvement in the traditional trade between the two countries, there was wide scope for investment in many other areas including hotel industry and other sectors, as Afghanistan was a gateway to Central Asia. Karzai especially mentioned the Chinese investment of $2.8 billion in copper fields. He said that China will also establish rail link which will be extended to Pakistan providing.

The Afghan President said that business community from Pakistan and Afghanistan should join hands to fight extremists and radical elements. Referring to his meeting with President Pervez Musharraf, the Afghan President said that he had very positive conversation with him and shared views to eliminate threat of terrorism and extremism. He also observed that terrorist activities were hampering business and trade activities in the region.

From Afghanistan, we will be with you, if you will take one step, we will take 100 steps, in this war against terror, he added. Referring to the issues and problems being faced by the business community, the Afghan President said that such issues should be discussed in a joint meeting of ministers, officials and representatives of business community from both sides.

Referring to improvement in road network in Afghanistan, the president said the country would link to Tajikistan providing a chance to Pakistan to have link to Tajikistan through Afghanistan. On the issue of bilateral facility for transit trade, the Afghan President said the matter could be discussed in the next meeting of Joint Economic Mission.

Earlier, Federal Minister for Commerce Shahzada Alam Monoo, speaking on the occasion, said that there was a need to rationalise the trade regime between the two countries. Pakistan is ready to enter Free Trade Agreement with Afghanistan as it will be a win-win situation for both countries, he added.

President ICCI, Muhammad Nasir Khan, in his welcome address on this occasion, said the Pakistani business community was interested in promoting trade and economic relations with Afghanistan. 

Karzai urges businessmen to invest in Afghanistan


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## Neo

*China to enhance investment to $15bn in Pakistan ​* 
Friday, December 28, 2007

LAHORE: China will increase its investment in Pakistan from $1 billion to $15 billion by 2012 while trade volume between the two countries by then will also triple from current $5.2 billion to $15 billion. 

Chinese Ambassador Luo Zhao Hui stated this while speaking at a function on Pakistan-China trade at the Punjab Governor House. He, however, stressed the need of balancing the bilateral trade which was highly tilted in favour of China. He said Pakistans exports to China stood at $1.4 billion against Chinese exports of $3.8 billion to Pakistan.

He said the benefits of Free Trade Agreement between the two countries would be visible in the next five years. However, he advised Pakistani entrepreneurs to explore the Chinese market actively in order to bring a balance in trade between the two sides.

He said the Pak-China Investment Company established with an initial capital of Rs12 billion was different from other similar companies as the emphasis of the company would be on involving the private sector in joint ventures between the two countries.

Federal Finance Minister Dr Salman Shah, speaking on the occasion, pointed out that the Chinese Development Bank had a larger investment portfolio than the World Bank and said Pakistan should focus on obtaining assistance from that bank to accelerate its growth.

He said China could benefit from the low labour cost and young age of Pakistani workers, adding with Chinese assistance economic growth of the country could be further accelerated. He said the Chinese for mutual advantage of the two countries could exploit the demographic advantage of Pakistani population.

Pakistan is well poised to become the sixth largest global economy in near future, he said, adding the economic growth of the country would be further accelerated. Punjab Governor Khalid Maqbool said over 5,000 Chinese were working in Punjab and the government had made adequate arrangements to ensure their safety. He said Chinese were establishing the largest fertiliser factory of the country and work on widening the Karakorum Highway was being initiated with the assistance and cooperation of Beijing.

PCICL to facilitate development plan: The Pak-China Investment Company Limited (PCICL) was launched to facilitate the implementation of a five-year development programme between the two sides at the Governor House here on Thursday, adds APP.

Caretaker Federal Minister for Finance, Economic Affairs, Revenue and Statistics Dr Salman Shah was the chief guest while Punjab Governor Lt Gen (R) Khalid Maqbool presided over the launching ceremony.

The PCICL is a joint venture between the China Development Bank (CDB) and Pakistans finance ministry and the company has become operational with an initial paid-up capital of $70 million to be increased to $200 million by 2009.

Dr Salman Shah said bilateral trade between Pakistan and China was $1 billion which would be expanded to $15 billion in the next five years and the PCICL would work to achieve the objectives of the five-year development programme. The primary objective of the five-year programme is to steer and promote rapid, stable and orderly development of bilateral trade and economic cooperation to broaden the scope to achieve a balanced trade and mutually beneficial results.

China to enhance investment to $15bn in Pakistan


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## Neo

*Micro loans to poor increase to 133m ​* 
Friday, December 28, 2007

ISLAMABAD: Micro loans to the poor around the world soared to 133 million last year, up from 13 million just nine years ago, according to a report released by the Microcredit Summit Campaign, a project of the US-based Results Educational Fund, a private civil society organisation, said a press release. 

The dramatic progress was also evident in the campaigns focus on loans to the very poor, those living on less than $1 a day, which reached 93 million families in 2006, just shy of the campaigns goal of reaching 100 million poorest.

Microcredit programmes offer a combination of services and resources to the poor including savings facilities, trainings, networking and peer support which allow families to work to end their own poverty.

The campaign from around the globe brings together microcredit practitioners, advocates, donor agencies, heads of international financial institutions, non-governmental organizations and others involved with microcredit to promote best practices in the field to stimulate the inter-changing of knowledge and to work towards reaching the goals of poverty alleviation in the world. 

The core themes of the campaign are reaching the poorest, empowering women, building financially self-sufficient institutions and ensuring a positive and measurable impact on the lives of the poor and their families. 

Launched in 1997, the campaign is committed to reach 175 million of the worlds poorest families with credit for self-employment and other financial and business services, ensuring 100 million families rise above the $1 a day threshold and lifting half a billion people out of extreme poverty by 2015. 

Currently, around 1.2 billion people (roughly 240 million families) are living on less than $1 a day. Pakistan Poverty Alleviation Fund (PPAF) is the partner of the Microcredit Summit Campaign in the country. 

Since 2000, PPAF has disbursed more than Rs30 billion for various interventions through 70 partner organizations working in 27,000 villages and more than 65,000 communities in over 112 districts across the country. 

PPAFs cumulative operational activities entail over 1.7 million microcredit loans, over 14,000 infrastructure projects, 280,000 trained individuals, staff and communities, 91 health and education facilities as well as financing for more than 113,000 housing units in the earthquake-affected areas. 

Currently, PPAF has the largest share in microfinance services to the poor and marginalized communities across the country. It has so far disbursed over Rs18 billion while maintaining a 100 per cent recovery rate on lending. 

Micro loans to poor increase to 133m


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## Neo

*Pakistan CDS widens 100 bps ​* 
Friday, December 28, 2007

NEW YORK: Pakistans five-year credit default swaps widened by roughly 100 basis points to 480 basis points, traders said on Thursday after Pakistan opposition leader Benazir Bhutto was killed in a gun and bomb attack.

They are about 100 (bps) wider now versus what we saw yesterday with a closing print of about 375 basis points or so. I see a print today on the screen of 480, said one New York based credit trader.

Credit default swaps, or CDS, offer investors protection against defaults or restructurings. Investors bid up CDS prices when they grow concerned about the worthiness of underlying credit.

Im seeing prices with a very wide range here with Pakistan bid at 480 and an ask of 500, said another New York based trader. Pakistans dollar-denominated sovereign debt normally does not trade very actively and the holiday season has drained liquidity from the market. 

Pakistan CDS widens 100 bps


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## Neo

*Bhutto killing worries Pakistan investors, markets ​* 
Friday, December 28, 2007

LONDON: Benazir Bhuttos killing will boost perceived risk in nuclear-armed Pakistan, analysts warned on Thursday, but some said it was not in itself surprising enough to substantially change investor sentiment.

News of her assassination in a suicide gun and bomb attack outside a political rally in the garrison city of Rawalpindi sent global gold and oil prices higher, also unsettling global foreign exchange markets.

The killing of Bhutto will likely lead to further political and social instability in Pakistan and across the subcontinent, Swiss investment bank UBS said in a research note. Credit ratings agency Standard & Poors said Pakistans sovereign foreign currency rating of B+ could be lowered if the assassination was followed by instability, making it more difficult for the country to borrow money in global markets.

If this assassination ushers in a period of heightened political instability, the ratings will be lowered, John Chambers, chairman of S&Ps sovereign rating committee, told Reuters in a telephone interview.

Pakistani five-year credit default swaps, used to insure against restructuring or defaulting debt, widened by around 100 basis points on the news, implying traders felt the countrys debt was higher risk. The attack took place after the Pakistani stock market closed for the day and with little trade reported on the Pakistani rupee. Both were seen potentially falling on Friday.

Mixed views: Politically it is bad news, said Shanat Patel, global emerging equities strategist at Nomura International in London. We will have to wait and see what happens but it is unclear whether it will derail the economic reform process.

Pakistani forecasts growth of 7.2 percent in the year to June 2008, with the country classed by some as one of a new breed of lesser-developed frontier markets offering better returns than mainstream emerging markets such as Eastern Europe.

But some investors were already starting to worry after President Pervez Musharrafs Nov 3 declaration of emergency rule and another suicide attack on Bhutto on her return to the country killed at least 139.

It is well within what we expected might happen... This is not Pakistan itself under threat. This is an assassination in an election campaign and has to be seen in that context, said Jennifer Harbison, Asia desk head for London-based consultancy Control Risks.

The news would put off any immediate investment deals in Pakistan, she said, but most serious investors would already have been awaiting the outcome of the election scheduled for January, which some now expect to be postponed.

But some other analysts were more apocalyptic, pointing to Pakistans ongoing failure to control an Islamist insurgency in the Northwest Frontier province, its nuclear arsenal and sometimes fraught relations with fellow nuclear neighbour India, and warning it outstripped other global worries.

The big take-away from this horrible event is that Pakistan could slide into a civil war of sorts, said Win Thin, senior currency strategist at Brown Brothers Harriman and Co in New York. We cant think of a more scary situation in the region, and believe that the fate of Pakistan could have a much bigger impact on geopolitics that anything Iran could do right now. 

Bhutto killing worries Pakistan investors, markets


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## Neo

*Expats body seeks linkage between Silicon Valley and Pakistans IT industry *​ 
Friday, December 28, 2007

Syed Dilawar Abbas, President of the Organization of Pakistani Entrepreneurs of North America (OPEN), Silicon Valley chapter, is in Pakistan nowadays. Dilawar is also the head of strategic planning and business operations for Yahoo! Platform & Infrastructure and Yahoo! Advanced Products Divisions in Silicon Valley. He is visiting different business centres in Pakistan and striving to form synergies between business empires in Silicon Valley and Pakistani IT industry, academia, entrepreneurs and so on. In an exclusive talk with The News, he discusses different issues related to Pakistans IT industry and professionals in this field. The write-up based on conversation between Syed Dilawar Abbas and The News follows. 

The top Pakistani American business leadership in Silicon Valley is well aware of its responsibilities and following a multi-pronged agenda under the umbrella of OPEN, Silicon Valley chapter (OPEN Silicon Valley) to boost its home countrys IT industry.

Sixth year into its formation, this body has stepped up its mentorship and networking initiatives targeted at the Pakistani entrepreneurs and professionals in Silicon Valley, says Dilawar. 

He says OPEN is increasing its broader role and responsibilities with respect to Pakistan. Many members of the OPEN community have set up significant operations for their high-tech ventures in Pakistan. He says: We are also increasingly attracting talent from Pakistan, and perhaps most importantly, we want to act as a bridge between Silicon Valley and the countrys emerging technology industry and the Pakistani high tech entrepreneur. 

He says OPEN is primarily focussed on forming industry networks and bringing stakeholders together to find solutions to their collective problems. Every year it holds an Open Forum which is OPEN Silicon Valleys annual day-long business conference.

Rational Exuberance and The Rising Tide were the themes of the last two forums held in the last two years. The 5th annual OPEN Forum will be held in June, 2008 and promises to bring together hundreds of Pakistani entrepreneurs, corporate professionals, social leader and academics from across the US and Pakistan.

Dilawar tells The News that President Musharraf, Syed Babar Ali, Imran Khan, Dr Ishrat Husain, Awais Khan Leghari and many top corporate executive and entrepreneurs from the US have delivered keynote addresses at OPEN events. 

He says the global IT industry is experiencing resurgence and there is dire need of talent in Silicon Valley. Our Open Forums have brought entrepreneurs and venture capitalists; corporate recruiters and and jobseekers together under one roof. Dilawar adds. 

He says apart from working on broader topics, OPEN holds regular monthly sessions to address niche topics. Most members of the OPEN community are early-stage corporate professionals who require high-touch mentorship on career management. To address their needs, OPEN has recently held sessions on How to craft your resume, 10 mistakes entrepreneurs make, Legal issues that need to be tackled before launching new business, Challenges faced by Pakistani women professionals, etc. In addition to niche workshops, OPEN arranges Mentorship Breakfasts where selected individuals get a unique chance to chat with top business managers. 

Dilawar tells The News that the number of Pakistani IT professionals in and around the Silicon Valley (San Francisco Bay Area) is between 15,000 and 20,000. About 4,000 people show up at different events hosted by OPEN, which can boast of 45-chartered members who hold top management positions. Charter members have distinguished themselves in their respective fields. OPENs general membership is open to anyone interested in furthering professional and entrepreneurial goals.

Dilawar says during his visit to Pakistan he has held meetings with leading personalities from academia and discussed ways to find more slots for Pakistani professionals in Silicon Valley. Another proposal is to regularly put list of jobs available in Silicon Valley on notice boards of institutions like NUST. 

Dilawar is all out for large scale industrial and business process automation in case Pakistan wants to stay ahead of its competitors. He has held meetings with top entrepreneurs in Lahore as well as with the members of Sialkot Chamber of Commerce and Industry. Entrepreneurship is in the DNA of Sialkots business community and must benefit from increased adoption of IT, he says. 

OPEN is also hosting a delegation of leading IT firms from Pakistan in January 2008. The delegation is being organized by the Pakistan Software Export Board (PSEB). Again, this event is part of our strategy to have a broader impact by engaging more actively with the tech industry in Pakistan and support emerging entrepreneurship in Pakistan, Dilawar concludes.

Expats body seeks linkage between Silicon Valley and Pakistans IT industry


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## Neo

Saturday, December 29, 2007 

*S&P: Bhuttos assassination may hurt Pakistans ratings​*
SINGAPORE: Standard & Poors Ratings Services said on Friday the sovereign credit ratings on Pakistan (foreign currency B+/Negative/B; local currency BB/Negative/B) could be lowered, if the assassination of Benazir Bhutto precipitates heightened levels of violence and political turmoil. 

The death of former prime minister Bhutto, one of the main political contenders in the upcoming general elections, is a significant blow to Pakistans transition to democratic rule, and leaves a considerable political vacuum in Pakistani politics. It therefore casts doubts on whether general elections scheduled for January 8, 2008, will proceed, while violent reactions by supporters could potentially spark escalating civil disorder. The prevailing negative outlook on the ratings on Pakistan encapsulates to a large extent risks to the political process, including attempts on the life of political leaders after a number of such incidents in the past. Hence, the assassination in itself will not result in a rating action. However, a further weakening of Pakistans institutions, in conjunction with rising levels of violence and disorder, and the postponement of the Jan. 8 elections would lead to a rating downgrade. 

A prolonged political stalemate or social disorder would make the rating vulnerable, primarily from an external liquidity and fiscal angle. Foreign direct investment and portfolio flows would likely decline, negatively affecting Pakistans external liquidity position, given its large current account deficit of about 4.8% of GDP. In parallel, the sovereign may encounter increasing difficulty in refinancing its external and domestic debt, as lenders risk aversion toward Pakistan increases. In addition, fiscal slippages may arise, pushing deficits beyond the governments target 4% of GDP, and jeopardizing the currently favorable debt trajectory. In the short term, however, a potential escalation of violence and wide scale social upheaval could impair the sovereigns administrative capacity and interfere with its day-to-day operations. pr

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistans finances may be`undermined: Moody​*
TOKYO: Pakistans fiscal position and external balance of payments may be `undermined if political stability is not restored, said Thomas Byrne, credit analyst for Moodys Investors Service. The perceived risk of Pakistan defaulting on its dollar- denominated debt rose to the highest in a month after former Prime Minister Benazir Bhutto was murdered at an election rally yesterday. Moodys rates Pakistans debt at B1, four levels below investment grade, with a negative outlook, which indicates that the credit assessor is inclined to lower it. Unless political stability is restored, the countrys fiscal position, balance of payments and external balance of payments may be undermined, Byrne said in a telephone interview today. The negative outlook underscores the degree of political uncertainty. pr

Daily Times - Leading News Resource of Pakistan


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## Neo

*Citrus export to Russia: Twelve processing plants allowed ​*
ISLAMABAD: The Russian Federation allowed 12 Pakistani citrus and mangoes processing companies to export their product to Russia who qualified the relevant Phytosanitary standards. 

Officials in the ministry of Food, Agriculture and Livestock (MINFAL) told Daily Times here on Thursday total 73 processing companies applied for the export of citrus and mangoes. 

Among the total only 12 companies had qualified Federal Services for Veterinary and Phytosanitary Surveillance (FSVPS) of the Russian Federation standards and they were allowed to export their products to Russia. 

The officials claimed that any processing plant could apply for export to Russian Federation at any time but they had to meet international standards. The list of 12 processing plant was not final and it could be increase or decrease accordingly, officials said. 

The officials said that list of sites for the pre-shipment monitoring of products subjected to quarantine were specified and they were; Bhalwal, district Sargodha for citrus, Karachi for citrus and mangoes, Lahore and Multan for mangoes exports. 

A six-member Russian team had recently visited Pakistan to inspect citrus export procedures and facilities. 

They had inspected several processing units in different parts of the country and allowed those units, which meet their required criteria. Officials said that Russia has the potential to become the largest market for Pakistani citrus. 

The export consignments from Pakistan of the products (citrus and mangoes) subjected to quarantine on the territory of the Russian Federation would be accompanied by accompanied by the relevant Phytosanitary Certificate, issued in full conformity with the international standards. 

The pre-shipment monitoring of the products subjected to quarantine would be conducted by the officials of the Federal Service for Veterinary and Phytosanitary Surveillance of the Russian Federation within a one-month time span immediately after signing of the present procedure by the parties. Every single authorized officer of the FSVPS, either of the Plant Quarantine Section, Department of Plant Protection (DPP) Karachi or the FSVPS of the Russian Federation, would be personally examined for 3 to 5 times.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Trade, industrial activities halted in deserted city of Karachi​*
* Traders fear losses of billions of rupees due to closure of businesses on Friday and Saturday

KARACHI: Trade and industrial activities in the metropolis were completely crippled on Friday following the assassination of former Prime Minister Benazir Bhutto, as businessmen say they would continue to suffer in the coming days.

Although, the business and industry throughout the country was badly affected because of Thursdays tragic incident in Rawalpindi, Karachi, the business and commercial hub of the country bore the major brunt of the disturbances and violence, triggered following the killing of former premier in a suicide attack in Liaquat Bagh.

As the industrial and trading areas were closed down immediately after the spread of the news of Benazir Bhuttos assassination, the ensuing incidents of violence hit hard the industry and commercial areas of the city. The city witnessed the worst kind of violence and chaos on Thursday and Friday, the business activities were completely halted with the reports of incident of damages and looting in industrial areas especially in North Karachi Industrial area, where miscreants damaged and looted some factories. Traders fear losses of billions of rupees due to closure of businesses on Friday and Saturday. 

Industrialists from various industrial estates of the city told Daily Times Friday that industrial production came to a standstill as all the units in these areas remained closed. Not a single shipment could have been made because of the violence and non-availability of cargo vehicles in the metropolis.

SITE, Korangi, F.B. Area, North Karachi and Landhi industrial areas of the city wore a deserted look as not a single unit was opened with the remote possibility of these areas could be reopened before Monday, if the situation comes to normalcy.

The major trading area of country Joria Bazar was also completely closed as not a single shop was seen opened. The trading activities in other commercial areas were also suspended as the various trade associations announced to shut down their businesses to mourn the demise of former premier.

The supplies of vegetables and fruits to and from new Subzi Mandi at Super Highway were also suspended due to absence of transport vehicles especially the trucks carrying these items from interior were reported to be stranded in different parts of the country. Banks and financial institutions also remained closed following the directives of State Bank of Pakistan (SBP) as part of official 3-day mourning. Karachi Stock Exchange (KSE) was also closed.

Activities at Karachi Port and Qasim Port were also badly affected because the workers could not make it to reach the working place because of absence of public transport.

Leaders of trade associations, condemning the heinous act of assassination of Benazir Bhutto were worried about the economy as the killing of former prime minister in a suicide attack has sent a very bad signal in the outer world. They fear the image of the country would be further distorted. Just think about the magnitude of the problem and what the horrifying consequences it entails for the country. Business community is very scary about the coming days as how future events, triggered by Fridays tragic incident shape up the political scene, Masroor Ahmed Alvi, Chairman F.B. Area Association of Trade & Industry commented.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Rice, footwear, leather exports recover during July-Nov 2008​*
KARACHI: Export of rice, footwear and leather slightly increased during the first five months of the current financial year as the initial declining trend in the export of these items has been reversed. 

Although, very nominal growth has been witnessed in the export of these items, it is encouraging to see the end of declining trend in export of these items, which otherwise were unable to penetrate in the international market for the last few years.

These products, once having a sizeable share in the total exports of the country had started downward trend since the last financial year and despite a number of initiatives announced in the last two trade policies, the negative export trend in these items could not be reversed.

Listed in the traditional items category of export base of the country, the disappointing figures of these items during the first four months of current year resulted in overall decline in the exports of the country. 

Among the exports of these items, rice after showing some decline in initial period of this fiscal was marginally up by 0.88 percent during July-November of 2007-08 by reaching to $420.804 million compared with $ 417.304 million in the corresponding period of the last year.

Rice exporters attributing this marginal growth in exports to lifting of ban on countrys rice by Russia as it was a major obstacle in exports growth of rice when the ban was imposed. However, as with lifting of the ban, some progress was seen and exports could soar in the coming months. 

Likewise, export of leather goods was also slightly up 2.93 percent to $254.362 million in the five months over $247.119 million in the same months of previous year with some items registering growth and few coming down. 

Leather garment export was up by 16.83 percent to $196.653 million in the months under review as compared to $168.331 million in the corresponding months of previous year.

However, leather gloves export was down by 15.68 percent to $46.787 million against $ 55.490 million and other manufactured leathers were also down by 53 percent during the period under review.

Government should also give cash subsidy to this sector, if it wants to put the export of leather goods back on track, an exporter remarked and referred to a number efforts made by the industry to seek some relief, which, however was refused by the authorities.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Amendments in ATTA for Pakistan: Afghanistan to give transit rights for export to CARs*​
ISLAMABAD: Afghanistan would provide transit rights to Pakistan to export its products to Central Asian Republics (CARs) through land route by incorporating amendments in the Afghan Transit Trade Agreement (ATTA).

Dr Anwar Ul-Haq Ahady, Afghan Finance Minister told Daily Times the other day at the sidelines of the Pak-Afghan Business Forum held at a local hotel. 

Dr Ahady said draft of the revised ATTA agreement is ready and would be presented before the Afghan Cabinet in near future. He further informed that this draft would be discussed with Pakistani authorities in the next Pak-Afghan Joint Economic Commission meeting and would be decided bilaterally. The revision in ATTA would provide transit rights to Pakistan to market its products to Central Asian Republics (CARs), similarly, as Pakistan is providing transit rights to Afghanistan for its imports. 

Afghanistan would provide Pakistan transit rights to have access to markets of CARs and increase its trade volume with such states through Afghanistan. 

He expressed concern over the postponement of the Pak-Afghan Joint Economic Commission meeting that could not be held during year. He said We are also going to raise the issue of allowing of Afghan trucks to carry ATTA cargo from Karachi as well as from Peshawar. Afghanistan allows Pakistani trucks to enter but Pakistan does not allow Afghan trucks even into Peshawar. We would like Pakistan to reciprocate and allow Afghan trucks to transport its cargoes from Peshawar as well as from Karachi, he added. 

Earlier during the forum Afghan side suggested that public and private sector of both the countries can sit together at a place and discuss and resolve issues hampering trade and investment including tariff and non-tariff barriers. 

Replying to a query about the concerns about the increase in import duty from 20 percent to 40 percent on import of soft drinks and non-alcoholic beverages from Pakistan, it was informed that this has been done to protect local industry for a limited period and duty would come down by end March 2008. 

While expressing willingness to resolve the issues hampering cement export to Afghanistan and CARs and Afghan side agreed that issuance of additional copy of duty payment by the Afghan customs would be ensured so that Pakistani exporters could use it for legal formalities. It was informed that Afghanistan needs cement from Pakistan and any further difficulty faced by the exporters would be removed. 

Afghan side also assured early refund of guarantee amount charged from Pakistani exporters for making exports to CARs at the time of transit in Afghanistan. Pakistani business community had expressed concern over about one year delay in issuance of such guarantee amount by Afghan authorities. Pakistan side suggested that a Free trade Agreement (FTA) with Afghanistan would create a win-win situation for both the countries.

It was informed to the Afghan side that Pakistani exporters are facing many difficulties in Afghanistan and said that they are charged 110 percent duty on goods in transit from Pakistan to CARs through Afghanistan as security or guarantee and it takes one year for its refund claim. Pakistan side also requested that ban on import of poultry from Pakistan should be lifted to facilitate its exports. To curb the menace of smuggling, it was also suggested to Afghanistan to rationalise its trade regime. 

ICC&I showed interest to sign a Memorandum of Understanding with Afghan Chamber of Commerce, which will ease out exchange of trade related information for business delegations.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Call to implement Rs 4,600 minimum wage in all workplaces ​* 
ISLAMABAD (December 28 2007): Policy Planning Cell, Manpower Division, Chairman Dr Sabbur Ghayyur said the minimum wages of Rs 4,600, announced by the government in budget 2007, now applicable only in the manufacturing sector, should be made applicable without prejudice in all the workplaces. "Even a taxi driver should be paid the same amount," he said.

Speaking at a seminar on Wednesday at the Pakistan Institute of Development Economics (Pide) on the National Employment Policy 2007, he said the decision for reaching the lowest wage criterion must be taken in consultation with the workers, government representatives as well as employers. It must also be based on the actual cost of living, implying that the index wage of Rs 4,600 is less than prices reality obtaining in the market.

The main focus of the policy is on productive employment to result in decent work coupled with fair compensation for which the government must work to overcome constraints in the development of rural areas mainly in the agriculture, livestock, dairy, fisheries, horticulture sectors as well as different industries.

Unemployment of the educated and the youth called for special measures, as well as 'unemployment guarantee schemes in rural areas, promotion of self-employment and extending the coverage of national internship programme' which in his opinion might reduce unemployment. Dr Ghayyur further suggested that to reach the desirable end, 'public works programmes should be integrated with employment guarantee projects.'

Pide Vice Chancellor Dr Rashid Amjad, explaining facets of the same policy, stated that the country would need a better growth rate than the present six to seven percent.

He referred to the complicating factors of about 1.5 million labour force entering the national market annually. To accommodate this huge number, the increasing labour force must be skilled. To meet the mounting annual explosion of workers the country must create efficient, equitable right-based market for them.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Chinese company may be awarded Chichoki Mallian project ​*
ISLAMABAD (December 27 2007): The federal government is likely to award 450-500 MW Chichoki Mallian (Sheikhupura) thermal power project to Dong Feng of China after the proposed sponsors - Qatar Investment Authority decided to stay away, official sources told Business Recorder.

The Economic Coordination Committee of the Cabinet will take up the issue at its meeting on Thursday, December 27 with Prime Minister Muhammedmian Soomro in the chair.

The ECC, in its meeting on October 31, 2007 had directed the Ministry of Water and Power to issue a notice to the proposed sponsors including Alstom-Marubini and QIA to come up with a deadline within a week as to when they intend to file an application to the National Electric Power Regulatory Authority for tariff fixation and project completion to avoid further delay.

The sources said the GoP had written several letters to QIA for this purpose, but they did not pay any heed despite the fact that gas allocation deadline of November 30, 2007 has expired.

Now the government is considering awarding the contract to Dong Feng on same terms and conditions applicable to 450-500 MW combined cycle power plant at Nandipur, the sources maintained.

Though the government had accepted the increased project cost of $525 million from the original estimate of $350 million due to involvement of some top former government functionaries, QIA failed to honour its commitment. The sources said the Chinese company would complete the project within the stipulated cost of $330 million.

The sources said the ECC will also consider a proposal of Private Power Infrastructure Board to indemnify foreign lenders and companies investing in projects against changes in Pakistan's laws which could affect the legality and enforceability of the power sector Implementation Agreement (IA) and Power Purchase Agreement (PPA) and government guarantee.

They said companies investing in projects were facing lending problems, as foreign lenders were reluctant to extend loans in accordance with Pakistani laws. "Each foreign lender wants direct agreements (IA and PPA) and GoP guarantee to be subject to and governed by the laws of England to provide protection to them as per normal practice with cross-border limited recourse financing of projects of this nature involving international sponsors and lenders, against the invalidity and enforceability of the GoP guarantee due to change in the laws of Pakistan," the sources added.

According to the sources, the ECC would also discuss wheat and flour crisis in the country as prices have increased by Rs 100 per 100-kg bag on Wednesday after Punjab imposed ban on inter-provincial movement of the commodity.

The sources said the Ministry of Food, Agriculture and Livestock (Minfal) will submit a report to the ECC regarding availability and releases of wheat to flour mills by the provincial governments. The Trading Corporation of Pakistan (TCP) will also present a report on imported wheat consignment delivered so far and that of in the pipeline.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Qadirpur power plant: Engro Energy signs $154 million financing accord ​*
KARACHI (December 27 2007): Engro Energy (pvt) Limited - a 100 percent owned subsidiary of Engro Chemical Pakistan Limited - has concluded signing of project financing documents with a consortium of foreign institutions for its 217-megawatt capacity power plant being constructed near Qadirpur, District Ghotki, Sindh.

Under the agreement, the lenders will provide 154 million dollars. The project, with a total worth of 205 million dollars, shows Engro's commitment to invest in Pakistan. Engro Energy on its part is determined to help in alleviating the power crisis in Pakistan by making much-needed investments in the power sector.

The project will generate electricity by consuming low quality permeate gas from Qadirpur gas field, which is being flared currently also resulting in reduced carbon emissions.

The plant will be based on highly efficient technology being provided by China National Construction and Engineering Company (CNCEC) resulting in lower cost of power generation. The consortium comprises of leading international foreign financial institutions including IFC, DEG, Proparco, FMO, Swedfund International and Opec Fund for International Development.

This is the first-ever Pakistani private sector power project being funded by Swedfund and Proparco, while the German development finance institution DEC is actively supporting projects in Pakistan as an international finance partner since last two years after resuming its activities in Pakistan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Businessmen foresee bleak trade scenario: Benazirs assassination​*
KARACHI, Dec 27: The trade and industry people, terming the assassination of PPP chairperson Benazir Bhutto after her election meeting in Rawalpindi a national political loss, forecast a bleak scenario for business and export.

They said it would tarnish countrys image as now chances of holding of general elections on Jan 8 are remote. Talking to Dawn in a grim tone, many industrialists declared Friday as a closed holiday in their respective units after various incidents of violence in the city. They said they see little chances of opening of their units any time before Saturday.

Transport has already vanished, and transporters may keep their vehicles off the road till Saturday for fear of increase in violence.

The businessmen also feared a possible suspension of export shipments from Friday to Sunday depending on the citys situation, besides problems in securing future orders from foreign buyers who are already alarmed over various negative political developments which pose another challenge.

They said the shipment that was already at the port by Thursday evening could reach their respective destinations.

They added that foreign buyers, who had already been cautious about visiting Pakistan after March 2007, would now definitely refrain from landing in the country.

The Vice President, Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Zubair Tufail, expressed his disappointment over law and order situation in Pakistan where national leaders were being targeted which has not happened even in Iraq. Banazirs killing is a big political and national loss, he said, adding it was the governments responsibility to provide security to the popular leaders, but it has failed.

Foreign investors and entrepreneurs would now shiver to enter into Pakistan considering it as a dangerous country. Image of Pakistan after this incident hit the rock bottom, he added.

The incident would have a far-reaching impact on the economy and it would take a very long time for its recovery.

Zubair urged the government to control the rising terrorist activities in order to save the countrys tarnishing image.

Chairman, F.B. Area Association of Trade and Industry (Kati), Masroor Ahmed Alvi, said all the industries in the F. B. Area have been closed from the evening after people expressed their anger by resorting to violence in the area.

There is unlikely that business activities would resume on Friday or Saturday as much depends on the law and order situation.

Under the current circumstances, I do not see holding of elections next month, he said adding that exporters will suffer heavily both on getting future orders or meeting timely shipments for the next two to three days.

The economy is likely to remain in turmoil for the next two to three months. The real problem is reviving the countrys image in the foreign countries after the killing of a big leader, he said.

Chairman, Korangi Association of Trade and Industry (Kati), Masood Naqi, said all the industries had been closed down on Thursday evening after deteriorating law and order situation in Korangi.

The most daunting task right now is how to improve the countrys image and come out from a political anarchy in coming months, he said, adding the country has lost the most popular leader of the west. The economy will continue to remain under pressure.

Chairman, North Karachi Association of Trade and Industry (NKATI), Faraz Mirza, said all the industries, which had been closed on Thursday evening, may remain shut for Friday and Saturday.

I think that the general elections will not be held under the current political unrest, he said.

Chairman, Pakistan Leather Garments Manufacturers and Exporters Association (PLGMEA), Fawad Ejaz Khan, said export of leather goods would hit hard as this was the peak time of exporters to make preparations for the 2008.

He said big buyers would either avoid placing huge orders in Pakistan or they would shift towards China while small buyers have been accustomed of the situation in the country.

He was of the view that general elections were unlikely to take place under the heating up of unrest in the country.

Senior Vice Chairman Site Association of Industry, Rauf A. Sattar, said industries in SITE areas may remain closed for two to three days, thus affecting the local as well as export business.

He was of the view that elections would not be held under the current chaos in the country. It would take at least two months for the normalisation of political and economic activities depending on the situation.

Businessmen foresee bleak trade scenario: Benazirs assassination -DAWN - Business; December 28, 2007


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## Neo

*Pakistan enters world cement market in a big way​*
KARACHI, Dec 27: After remaining a traditional supplier of cement to Afghanistan for the last so many years, Pakistan has now entered the world market in a big way.

Shortage of cement in India and strong demand from North African countries, including Yemen, has compelled three major players in cement to further expand their production capacities within a short period of one year.

Industry sources disclosed that Bestway is further expanding its capacity by 4,000 tons per day, and the plant would come into production next year.

Similarly, Luck Cement is also setting up another plant with a capacity of 6,000 tons per day and D G Khan is reported to be also working on similar plans.

So far around three million tons have been exported to these countries but exporters have yet to fully explore Indian market where annual demand stands at around five million tons.

Presently, India faces an acute cement shortage in its Southern states of Tamilnado and Madras and in north Punjab. However, reports indicated that the Indian industry is also working on a fast track to expand their capacity in these regions to off-set the shortfall.

In the meantime, Pakistani exporters were exporting cement to Iraq but due to acute port congestion, it remained irregular though there was great demand for cement after the war for reconstruction work.

However, cement units in northern areas of the country continued to feed the traditional Afghan market by supplying up to 2.5 million tons.

Similarly, strong demand for cement from North African countries, including Sudan, Ethiopia, Algeria and some other states, made its way through the Red Sea port of Djibouti.

On average, cement exports to African countries fetch between $110 and $115 per ton C&F.

Early this year, India began to face cement shortage and it immediately began to look around to supplement cement supplies which could have badly hampered its on going projects.

Consequently, Pakistani exporters taking clue began to explore the non-traditional Indian cement market, but to their utter dismay, they soon came to know that a number of non-tariff barriers (NTB) were hampering their export commitments to India.

Nevertheless, exporters did not lose heart and keep facing odds in order to capture Indian cement market, particularly at a time when trade balance is fully in favour of India.

Out of total trade between the two countries, presently 75 per cent are imports and only 25 per cent exports from Pakistan.

It took four to five months for Pakistani exporters to get registration and certification from the Bureau of Indian Standard (BIS).

A team of BIS experts also visited a number of cement manufacturing facilities. The issue was, however, decided in July during secretaries-level meeting of the ministries of commerce of both the countries.

After intense lobbying by the PHD (Punjab, Harriana and Delhi) Chamber of Commerce and some Pakistani exporters, it was also decided to allow cement exports through road.

Former president of Karachi Chamber of Commerce and Industry (KCCI) Amjad Rafi, who also attended these meetings, told Dawn that it was also agreed that both the sides would allow trucks to move into each others border up to half or one km and construct truck terminal.

However, the National Logistic Cell (NLC) has already developed a truck terminal at Wagha with a capacity to accommodate about 100 truck lorries, but India has yet to construct the facility on its side at Attari border.

As a result of this, cement which is a bulk commodity, could not be exported through road.

Consequently, actual export of cement to India began late September or early October and according to industry sources, around 0.2 million tons have been exported, so far. However, a substantial quantity is in the pipeline because many loads are in high seas and some exporters are holding L/Cs.

Most cement exports to India had, so far, been through sea or by railway. The Pakistan Railways have doubled cement loading capacity to India.

However, exporters complain that railways freight charges for carrying cement from Lahore city to the border are Rs500 per ton ($8 per ton) while it covers only 35 km. Against this, they say on the Indian side, the freight is only $3 per ton for bringing goods from Chundrigar to the border area.

Exporters said cement exports to India through sea on an average earned $85 per ton C&F, and from Wagha border it remained little less. However, all these deals and transactions are finalised through Dubai where L/Cs are negotiated and are opened. There is also huge demand for cement by large Indian state-owned corporations and recently a delegation also visited Pakistan to seek shipment of around two million ton exports on government-to-government basis.

However, exporters lamented that they had been facing a number of problems with regard to cement export to India but no government department or agency had come forward to their help.

They said that the Trade Development Authority of Pakistan (TDAP) had been claiming to support non-traditional items and non-traditional markets, but they did not extend any help to capture the Indian cement market.

Amjad Rafi is highly critical of the TDAP role and said on many occasions, the FPCCI approached the authorities over the issue of cement export to India, particularly with regard to BIS registration and certification, but they did not even took the pain of replying to these communications.

He further said the TDAP had been giving freight subsidy to many non-traditional items and markets but did not take any interest in this non-traditional commodity which is being exported to a non-traditional market.

He said presently cement exports have been badly hit by high freight being charged by tucks and also by foreign shipping companies for the haulage of cement from Pakistan to India.

Zulfikar Thaver, president Union of Small and Medium Enterprises (Unisame), said small and medium exporters are not getting vessels for export of cement because there was little chartering arrangements.

Consequently, cement exports is only going through containerised vessels.

He said if adequate chartering is made, cement exports could be doubled as large-scale enquiries are being received by exporters.

Mr Thaver said that fresh enquiries have been received from Russia and buyers are quoting very attractive prices as Pakistani cement quality is of very high standard and holds good strength.

Pakistan enters world cement market in a big way -DAWN - Business; December 28, 2007


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## ahussains

Good thing about the Cement it means they are going into the Indian Cement Industry and our requirments will be completlty fullfilled .. Keep it Up.


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## Neo

*Economic cost of Benazirs death ​* 
Govt faces tough time to meet export target

Sunday, December 30, 2007

LAHORE: The economic cost of the death of Benazir Bhutto would bring about difficulties for the government to meet its growth, revenue and export targets which were already under pressure due to governments reluctance to take hard economic decisions in the election year. 

The country has lost billions of rupees in revenues and exports besides colossal loss to property and life in two days of strike and riots after the death of former prime minister Benazir Bhutto. 

All economic activities have suddenly stopped. Not only normal trading activities have halted but also the public transport is completely off the roads. 

The industries have been closed. Angry protestors have destroyed valuable infrastructure. Banks have been looted and set on fire. The trains have been burnt and scores of Railway Stations have been demolished. The initial estimates of loss to public property are around Rs10 billion out of which Pakistan Railways alone has suffered a loss of Rs3.5 billion. 

Experts estimate the revenue loss for Rs7 billion during the two days. This appertains to the loss suffered as per revenue targets. 

The loss would be much higher as private sector would book losses for the vehicles burnt and property and stocks lost during the agitation. This would put further pressure on revenue collection. The government is already spending Rs13 billion averagely per month for providing protection to the consumers on petroleum rates. The budget deficit has already ballooned to unmanageable limits. The current pressure could trigger inflation beyond the control of economic managers. 

The government is unlikely to risk its acceptability further by increasing petroleum rates so soon after the demise of the PPPs chairperson. 

Experts pointed out that CBR (now FBR) had been able to overshoot the tax revenue targets for last four years due to uninterrupted industrial and trading activities. 

They said during the last five years neither the industry nor the trade observed any strike or closure even for one day. They said it is for the first time after five years that every economic activity in the country halted for the two days. They said past riots, rallies, protest-march and terrorist activities failed to stop production or trade activities. They said the present disruption has come at a time when revenue generation was already under pressure. 

The exports had remained below targets for the last two years and were likely to remain so this fiscal. The imports on the other hand had shot much above the government estimates that have increased the trade deficit. 

Most of the developed countries had already advised their citizens to avoid traveling to Pakistan after the killing of Benazir. This would further put pressure on exports. Many garment and knitwear exporters informed The News that they have received queries from their buyers on their ability to timely execute the orders already placed with them. 

The exporters apprehend that the new orders would be fewer as the buyers would shift to risk free countries. They said per unit rates of Pakistani products that are already very low would also come under pressure. Economic experts think that it would require some time and effort to restore the confidence of the foreign buyers. 

Economic cost of Benazirs death


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## Neo

*Benazir Bhuttos assassination: Pakistan may miss economic targets​*
* The country may face Rs 50bn losses
* FBR needs Rs 2.739bn additional receipts per day to meet Rs 1.025tr revenue target

ISLAMABAD: The country may not be able to achieve the economic targets set for the current fiscal year as it has faced around Rs 50 billion revenue losses due to marred economic activities after the assassination of former Prime Minister Benazir Bhutto and during the Eid holidays, a senior official told Daily Times.

Besides long Eid holidays, the government departments have been closed from December 28-30 Sunday (today) as official holidays. This would decrease the overall revenue collection in terms of different taxes including income tax, federal excise duty and sales tax during the last ten days of December causing a loss of around Rs 50 billion, an official said. Official in Federal Board of Revenue (FBR) said that during the last 10 days including Eid holidays and after the assassination of former Prime Minister Benazir Bhutto the country has faced around Rs 50 billion losses and FBR would need Rs 2.739 billion additional receipts per day in the coming days to meet the Rs 1.025 trillion revenue target set for the current fiscal year. 

Economic analysts believe that the current negative indicator would continue in future multiplying further losses amounting to billions of rupees in the coming days as the trade and industrial activities are not likely to start soon after the political turmoil followed by (late) Mrs Bhutto. FBR would also lose the collection of income tax, federal excise duty and other levies due to closure of banks and marred economic activities as transportation and telecommunication systems suffered a lot across the country. Official also said that if any delay occurred in the clearance of transshipment goods and cancellation of export orders, it would also cause revenue loss having negative impact on collection.

According to the figures of finance ministry, the total revenue during the first quarter was Rs 312.623 billion out of which collection by FBR stood at Rs 215.578 billion. Petroleum and Gas surcharges yielded Rs 8.77 billion, including Rs 4.151 billion as petroleum development surcharge and Rs 4.626 billion as gas development surcharge. Non-tax revenue stood at Rs 97.035 billion during the period under review. 

The FBR official has claimed that during the last some days the sale of petroleum products dropped and the sales tax collection from petrol and other petroleum products would also decrease. The collection of taxes from furnace oil, consumed in industrial units, would also show downward trend.

Experts also believe that the loss in revenue collection may pose a negative impact on the ongoing development programmes and it would definitely affect the Public Sector Development Prgormme (PSDP) spending.

On the other hand the overall budget deficit faced by the federal government had reached Rs 158.056 billion during first quarter of the current fiscal year, which is 39.60 percent of the whole fiscal years target of Rs 398 billion. If the budget deficient further increased in other three quarters of the current year as the increase was realised in the first quarter (40 percent), it would definitely affect the PSDP spending. Officials in the ministry of finance at the moment are proposing some cut in the allocated amount of PSDP to fill the budget gap.

During the current scenario, if FBR fails to achieve the set target of revenue collection, government may face problems regarding the fund generating for the ongoing development projects and government would have to manage financing from different countries and financial institutions to complete projects in stipulated time. Government spent a total sum of Rs 470.679 billion that includes Rs 39.989 billion in non-development expenditure. 

The government paid Rs 111.126 billion as interest on local and foreign loans. Out of these, Rs 98.541 billion were spent on servicing of domestic debt and Rs 12.585 billion were spent on foreign debt servicing. Total defense spending stood at Rs 57.546 billion. Development expenditure and net lending during the first quarter stood at Rs 129.817 billion.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Turmoil in Pakistan may further delay talks on Turkmen gas project​*
* The talks were scheduled on November 27-28, in Islamabad but due to emergency other partners stayed away

ISLAMABAD: The current political turmoil followed by assassination of the former Prime Minister Benazir Bhutto has caused a further delay in the minister-level talks on Turkmenistan-Afghanistan-Pakistan (TAP) gas pipeline project.

Sources in Petroleum and Natural Resources ministry told Daily Times here Saturday that now the talks on TAP gas pipeline project would be held in February next year. Earlier the talks were scheduled to be held on November 27-28, 2007 in Islamabad but due to imposition of state of emergency in Pakistan, other partners of the project stayed away to join talks.

Other partners like Afghanistan and Turkmenistan have indicated to join the talks in February next year, however, the dates have not been finalized yet, the official added. He said that talks were likely to be held during the next month but the political turmoil may cause further delay in the talks on TAP gas pipeline project.

Sources also said that India has been formally invited to join talks as the fourth stakeholder of Turkmenistan-Afghanistan-Pakistan gas pipeline project but the former wants to hold talks on TAP project in politically stabilised environment.

Earlier India had the status of observer it has been participating in the talks between three countries Turkmenistan , Afghanistan and Pakistan but now the project would become four nations project after the full participation of India in the talks.

India is, reportedly under pressure from the US to scrap the Iran gas pipeline project and it has stayed away from the Iran-Pakistan-India gas pipeline project talks held about four times in Tehran and Islamabad respectively, India is now taking interest to participate TAP project, the official said.

He also noted that the proposed gas project cost has been estimated as $6 to 7$ billion and Asian Development Bank (ADB) is sponsoring the gas project, so other investors would also be invited to carry out the gas pipeline project. The investors would also arrange the financing from different international financial institutions. Oil companies like Shell and many others companies would also be invited to carry out the project, the 

official said adding that the tender would be floated to invite the investors for carrying out the project. Official said the investor that carries out the project would receive the transport fee.

The official said that Pakistan would import 3.2 billion cubic feet gas from Turkmenistan and the said gas would be shared by both India and Pakistan . Turkmenistan claims to have gas reserves of 159 trillion cubic feet at its Dauletabad fields, and Russia is the main importer of gas from Turkmenistan .

The proposed TAP project is being sponsored by the Asian Development Bank (ADB) 

and the proposed 1,680 pipeline will run from Daulatabad gas fields to Afghanistan and from there it will run alongside the highway from Herat to Kandhar and then via Quetta to Multan.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Political parties not clear on key economic issues ​*
ISLAMABAD (December 30 2007): An analysis of the Election 2008 manifestoes of the major political parties indicate that they are not clear as to how each of them plans to address the key economic issues confronting the nation. An important issue which has not received direct or detailed attention from any political party is the fast declining business competitiveness of Pakistan in a globalised world.

The vision, policy and plan to address this critical issue are missing from the party manifestoes. Agriculture in Pakistan is suffering due to shortage of irrigation water. The scarcity of water during the low-rain periods necessitates development of water reservoirs on the rivers. The current reservoirs are silting up and capacity is depleting.

In addition, hydroelectric projects are essential to meet the rising needs of energy at competitive rates. Despite these pressing needs, Pakistan has been unable to build new storage dams and hydroelectric projects because the provinces could not develop consensus. Unfortunately, none of the political parties have proposed a tangible solution to this critical problem and have largely dwelled in generalities and expression of good wishes.

The Pakistan Institute of Legislative Development & Transparency has done an analyses of the manifestoes of the Awami National Party (ANP), Muttahida Majlis-e-Amal (MMA), Muttahidda Quami Movement (MQM), Pakistan Muslim League (PML), Pakistan Muslim League-Nawaz (PML-N) and Pakistan Peoples Party (PPP).

Pildst has analysed stand of these political parties on economic, political and social issues, nuclear policy and foreign relations.

The analysis reveals that on most issues, the Pakistan Peoples Party and the Pakistan Muslim League-Nawaz have outlined detailed or extensive policies.

The analysis said that the PML and the MQM have also presented detailed positions on some issues but in comparison to the PPP and PML-N who have had experience in running the governments at the centre and in the provinces, the positions of other political parties lack comprehensive treatment.

A common feature of the manifestoes is the generality or vagueness of their positions on a number of issues. At times, the articulation of the positions amounts to non-statements. Despite this common flaw, some parties have taken specific positions on some issues and that makes the public accountability of the party easy once it comes into power and serves for a term.

On the broader cluster of economic issues including Unemployment, Poverty Alleviation, Agriculture Development, Water Resources and Energy, the PML-N and the PPP have presented detailed policies followed by the PML and the MQM.

The ANP, mostly focusing on economic issues faced by the NWFP has taken a detailed position only on the Agriculture Development and Water Resources stressing its position against the construction of new water reservoirs.

On the critical issue of energy crisis in the country, both MQM and the PML have outlined no position in their manifestoes while only the PPP has discussed the subject in detail with all remaining parties with a general mention of their position on the issue.

The most striking and bold aspect of the PPP's economic manifesto is the commitment to provide guaranteed employment for at least 1 year.

The section containing political issues included: Independence of the Judiciary, Civil-Military Relations, Sovereignty of the Parliament, Provincial Autonomy, Devolution and the Local Government System, Status of Fata, Policy to Counter Terrorism, Independence of the Media, Corruption and Accountability, it is the PML-N and the PPP that have made extensive pledges.

The PML-N is the only political party that has devoted a chapter in its manifesto to the Independence of the Judiciary and the Civil-Military Relations, taking a clear position on the reinstatement of the deposed judges.

The PML and the MQM, both allies of the Musharraf regime, have taken no position on the question of civil-military relations or on the role of military in politics or the independence of the judiciary.

The PPP is conspicuous by taking a very brief, general and almost vague position on the Independence of Judiciary and by taking no position at all on the reinstatement of the judges deposed on November 3, 2007.

Both PPP and the PML-N have outlined extensive positions on the sovereignty of the Parliament outlining key reform to strengthen the institution of Parliament.

On the issues of Education, Health, Labour, Rights of Women, Non-Muslims, Youth and Environment, the parties' positions follow the same pattern.

Despite Youth constituting a large chunk of the population and notwithstanding youth's role in the overall electorate today and in the days to come, most political parties including the PPP, the ANP, the MMA and the MQM do not mention Youth in their manifestoes with only the PML and the PML-N outlining detailed positions on the subject.

The issue of Health, Women Development, Rights of Non-Muslim Communities and Environment too do not receive adequate levels of attention by the political parties whose manifestoes have been covered in the study.

Issues of Labour, as expected, have been mentioned in the greatest detail and the most specific terms in the PPP manifesto. The PML-N, though, is the only party which has given a specific figure (Rs 5000) for the new minimum monthly wage for labour.

On the Security Policy, especially Nuclear Policy and Pakistan's Foreign Policy with key regional and international players including India, Afghanistan, USA, European Union, China and the Muslim countries, most parties' positions are not a departure from the existing nuclear policy of the country. All parties supporting strengthening of relations with regional and international players.

The PPP wishes to place the command and control of nuclear weapons under the Defence Committee of the Cabinet headed by the Prime Minister unlike the current position where this control has been vested in the President recently. The PPP has also outlined extensive proposals to improve relations with Afghanistan while the PML-N wishes to focus on building economic ties with countries around the world.

Almost all parties except the former ruling party the PML have repeatedly demanded "an independent Election Commission" but surprisingly how these parties, with the small exception of the PML-N, propose to make the Election Commission independent is not touched in the manifestoes.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Plan to boost olive oil production​*
ISLAMABAD, Dec 29: The government has planned to enhance olive oil production and processing areas in 12 districts of Balochistan to bring 6000 acres land for cultivation of olive orchards.

According to the ministry of food and agriculture sources, during the five years, 675000 plants in these districts which are considered as low delta crop for mass propagation of olive oil would be planted.

The sources said to standardise the propagation and cultivation techniques for mass production of olive plants nurseries would be developed during the period.

The official said that about 6,000 acres or equivalent number of trees will be developed as orchards on farmers field during the project period.

The sources said that research wing of Agriculture Department has given a serious consideration to the problem of the drought in the region searching all possible solutions to overcome the crisis pertaining to water deficiency for all kinds of crops particularly olive orchard.

The sources said that fresh and positive experience on Olive (plea europea L.) cultivation in some selected locations of the region performed mainly in horticulture Fruit Experimental Station Baghbana (Khuzdar), Fruit Experimental Station Loralai and Fruit Development Centre Quetta, Pishin, Mastung, Kalat, Kharan, Noshki, Barkhan, Musakhail, Zhob, Sibi (Harnai) has given good indication for promotion of this crop. The sources added that this fact is the most suitable orchards in these areas.

About purchase and installation of machinery and equipment the sources said during the period one green house was already set up at Quetta and 2 olive oil processing units were imported from Italy recently and three shade house were built at Quetta at Loralai for the purpose.

The sources added in this regard 72.22 per cent target of processing of olive has already been achieved.

The sources said that as the olive oil extraction units have come in the country, the demand of olive plantation have been increased and people are taking interest in conversion of wild olive trees not European type in their area, therefore the need and requirement of the project has been increased.APP

Plan to boost olive oil production -DAWN - Business; December 30, 2007


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## Neo

*No business activity across Karachi ​* 

KARACHI (December 30 2007): The countrywide violence has not only brought the industrial activities and export process to a complete halt due to unavailability of transport and labour and not a single export consignment reached the sea ports during the last two days.

INDUSTRIAL ACTIVITIES, EXPORT PROCESS COME TO A COMPLETE HALT: 

Exporters told Business Recorder on Saturday that violence, erupted after the assassination of former prime minister and Pakistan Peoples Party (PPP) Chairperson Benazir Bhutto, had badly affected industrial activities in the country in general and Karachi in particular.

They said since Thursday evening, not a single consignment could be reached to the country's two leading sea ports, Port Qasim and Karachi Port from any part of the country, for shipment.

"Entire chain of export process has been disturbed, as the labour and transport is not available, while the banks and the customs offices are closed," exporters added.

They said that the month of December was the peak season for the exports and normally export figures in this month were higher than the other months.

Confirming this grim situation, Karachi Chamber of Commerce and Industry (KCCI) President Shamim Shamsi said: "The country's exports have completely been halted due to the violence in the city and unavailability of labour and transport."

He said that ready consignments of textile, and other products worth million of rupee were lying in the factories could not be transported to the ports due to unavailability of labour and transport.

Factory workers, who had gone to their homes on Thursday evening, had not reported for duty due to the law and order situation, he added.

"Unavailability of transports is also another factor behind the stoppage of exports," he said, and added since hundred of trucks had been set ablaze during the violence on Thursday, the transporter, therefore, transporters refused to provide services.

He said that banks had been closed, as the State Bank of Pakistan declared three-day holiday, following the mourning announced by President Pervez Musharaf. Similarly, the customs offices had been closed after the death of Benazir Bhutto, he added.

Banks would also remain closed for the next two days on Sunday and Monday due to the annual closing, he added. "We are expecting that export process would resume next week, when the law and order situation in the city would improve," said KCCI Vice-President Haroon Agar.

He said because of the current situation, the exporters were trying to contact their buyers to ensure them on time delivery of export orders.

The delay in export consignments would give rise to cost of exports, as the exporters would be compelled to dispatch their consignment by air or direct ships. He said the exports target would be badly hurt if some of export orders were cancelled.

He feared that after the current violence, the foreign investors would also avoid visiting Pakistan, especially Karachi, due to new travel advice issued by different countries.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*NWFP industrial units on verge of closure *​ 
PESHAWAR (December 30 2007): The growing uncertainty and lawlessness after the killing of Benazir Bhutto has brought all commercial and industrial activities in the country to a standstill.

"Physically, we have had no losses, but it is the lack of transport which has started biting industrial activities in the province," Adeel Rauf, a known industrialist and former president of Sarhad Chamber of Commerce & Industry (SCCI) told Business Recorder.

He said: "The lack of transport is not only creating difficulty for labourers in reaching the industrial units, and has not only stopped the supply of raw material to the industries but also the supply of finished goods to the market. Some industrial units are facing shortage of raw material and if the situation remains the same for next two to three days, then a number of major industrial units would be closed in the province."

He said a number of Letters of Credit (LCs) and export orders have been cancelled. The suspension of business activities has halted supply of Finnish goods at godowns of industrial units. This is causing heavy financial losses to the industrialists.

The protest by PPP workers has halted all business activities. All markets and business centres in Peshawar and other districts of the province had remained closed for two days to mourn the death as also for fear of loot, plunder and arson. All banks branches remained closed.

"Our business has come to a standstill and the supply of oil from depots of the companies has become impossible," Mansoor Sharif, president of Petroleum Cottage Industries said.

He said that fear of ransacking and arson had pushed down the business to zero level. He demanded of the government to take measures for bringing the situation under control.

The stoppage of supply of petrol and diesel has created shortage at the filling stations across the province. All commercial and industrial activities remained closed for second consecutive day. The workers of PPP again came out on the roads for third consecutive day and staged protest marches on city roads.

They were chanting slogans against the government for failure in providing security to their leader. After offering funeral prayers, they marched towards Jinnah Park, where the party has arranged a condolence camp. Two registers have been put for writing comments of the people visiting the camp. Among those who visited the camp were Shabir Ahmad Khan, Afzal and Afzal Panyala of PML-N.

The PPP workers attempted to march on Khyber Road. However, a large contingent of police foiled the attempt.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Government to enhance olive oil production, processing zones in Balochistan ​*
ISLAMABAD (December 30 2007): The government has planned to enhance olive oil production and processing areas in 12 districts of Balochistan to bring 6000 acres land for cultivation of olive orchards.

According to the ministry of food and agriculture sources during the five years, 675000 plants in these districts, which are considered as low delta crop for mass propagation of olive oil would be planted.

The sources said to standardise the propagation and cultivation techniques for mass production of olive plants nurseries would be developed during the period.

The official said that about 6000 acres or equivalent number of trees will be developed as orchards on farmers' field during the project period. The sources said that research wing of Agriculture Department has given a serious consideration to the problem of the drought in the region searching all possible solutions to overcome the crisis pertaining to water deficiency for all kinds of crops particularly olive orchard.

The sources said that fresh and positive experience on Olive (plea europea L.) cultivation in some selected location of the region performed mainly in horticulture Fruit Experimental Station Baghbana (Khuzdar), Fruit.

Experimental Station Loralai and Fruit Development center Quetta, Pishin, Mastung, Kalat, Kharan, Noshki, Barkhan, Musakhail, Zhob, Sibi (Harnai) has given good indication for promotion of this crop. The sources added that this fact is the most suitable orchards in these areas.

About purchase and installation of machinery and equipment the sources said during the period one green house was already set up at Quetta and 2 olive oil processing units were imported from Italy recently and three shade house were built at Quetta at Loralai for the purpose.

The sources added in this regard 72.22 per cent target of processing of olive has already been achieved.

The sources said that as the olive oil extraction unit have come in the country therefore the demand of olive plantation have been increased and people are taking interest in conversion of wild olive trees not European type in their area therefore the need and requirement of the project have been increased.

About justification of this project the official said that Pakistan is importing edible oil worth billion of Rupees annually. Promotion of Olive will help to reduce import bill considerably.

At the same time olive plant is drought tolerant therefore the water requirements is much lower then Apple, Peaches and Apricots and closer to Almonds, Pomegranates and grapes, the official said.

Olive fruits are very important for the human consumption because they are utilised as a fruit after a natural process as table olives and for extraction of virgin Olive oil, which is considered the best fat for our food preparations, he added.

The residual parts of the processing operations like the kernels and the dehydrated pulp is utilized for fuel and animal feed or as fertiliser, he added.

Small branches and leaves, if are not used for propagation purpose, are again utilised as fertiliser during the prouning operations in winter season, he said. The wood is of high value because it is finally graded and used for making handicrafts.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Water resources management suffering due to lack of consensus ​* 
FAISALABAD (December 28 2007): Irrigated land in Pakistan provides about 80 percent of agricultural output. It contributes 25 percent of GDP, employs over 50 percent of the rural labour force and provides 60-70 percent of exports, but frequent disagreements among the federal and four provincial governments is having negative impact over the "Water Resources Management."

According to a report of Asian Development Bank (ADB), the Ministry of Water and Power through its Department (Wapda) manages and develops water resources. However, lack of sector planning capacity and strong management, as well as frequent disagreements among the federal and four provincial governments over the allocation of water resources have contributed to major water resource problems.

These issues are compounded by the inefficient use of water, especially in the irrigation sub-sector, where application of excessive irrigation water has led to increase salinity, water logging, etc. Some 36 percent of groundwater resources are now classified as highly saline, ADB report pointed out.

ADB report added that drainage discharges into watercourses are increasingly saline and, combined with untreated effluent discharges from municipalities and industrial areas, the quality of water resources especially near populated areas is becoming critical.

According to ADB report, Pakistan has a long history of developing and managing water resources infrastructure, and has the largest contiguous irrigation system in the world. Irrigated land provides about 80 percent of agricultural output, contributes 25 percent of GDP, employs over 50 percent of the rural labour force, and provides 60-70 percent of exports.

The Government of Pakistan has produced its Vision 2025 document, which projects an additional 3.75 MAF (million acre-feet) of storage for irrigation through the construction of 5 new dams.

The inefficiency of the present flood irrigation system, however, is recognised. The allocation of water resources is an increasing problem as the water scarcity threshold is approached in Pakistan. The riparian rights of all living within a river basin need to be respected, including those living in urban areas.

However, the irrigation system urgently needs rehabilitation and stronger institutional arrangements. The rate of groundwater resource depletion is unsustainable. The coverage, quality, and reliability of urban water supplies are grossly inadequate, especially in light of the burgeoning urban population.

Moreover, urban wastewater treatment is virtually non-existent (only 1 percent treated) with the drainage network collecting agricultural wastes along with mostly untreated municipal and industrial effluents and discharging it into the rivers.

Salinity in rivers is an increasing problem. Following the introduction of the national electricity grid in the 1970s, the number of tube wells has increased significantly, the annual growth rate of electric tube wells being 6.7 percent and for diesel tube wells around 7.4 percent.

Business Recorder [Pakistan's First Financial Daily]


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## Plasma

Quick question New, what do you think the effect of Bhutto's assassination will be on our economic front? Seems like industrial work has halted and investors are pulling out, how long do you think it will continue?


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## Neo

Plasma said:


> Quick question New, what do you think the effect of Bhutto's assassination will be on our economic front? Seems like industrial work has halted and investors are pulling out, how long do you think it will continue?



Its too early to tell, an analysis by Brecorder put the estimates to 50 billion rupees. Actual figure could be as high as 75 billion


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## Neo

*Political turn and the economy​*
Dr Parvez Hasan

It is not possible to predict the result of upcoming elections and their aftermath. Hopefully, political change will bring more democracy, greater pluralism and reduced violence. But the political transition could also be messy.

In any case, the new political and economic leadership would have to deal, among other things, with a set of serious economic and social challenges that have emerged.

There is clear disaffection with the distribution of growth benefits particularly as inflationary pressures have re-emerged and food and energy prices have risen sharply. However, economic concerns are not limited to issues of equity, employment and poverty. For a variety of reasons, sustained high growth and macroeconomic stability are also threatened.

The triple tasks of aggressively addressing the distribution and poverty issues, solving the structural problems hampering rapid long-term growth, and maintaining macroeconomic stability would make economic and political management very difficult. At the same time, consensus building and firm policy actions would not be easy if no party wins a clear majority.

The rest of this piece discusses nature of these challenges and possible responses to them.

The addressing of the causes of political discontent should be a top priority. But, dispassionate assessments of the extent and sources of this discontent are also necessary. For instance, the view that the benefits of growth reached only 10-12 per cent of the population, mostly in the Punjab and big cities is not supported either by the income distribution data or the real wage data for 2000-05.

Still, there is no denying the fact that the distribution of benefits of growth, a problem area since the beginning of the 1960s, has become even more of a critical issue in recent years because of increasing power of the vested interests and growing dualism in the economy that has enlarged increased income differential between the rich and the poor, urban and rural populations, and among regions.

To add to the turmoil, Pakistans economic and social problems are being complicated by two important worldwide developments.

First, under globalisation, improvements in total factor productivity have become increasingly important driver of both economic growth and exports. Pakistans growth in overall productivity has been limited and hobbled by the lags in social development because of decades of neglect of education including higher education, inadequate rates of investment, and slower adaptation of newer technologies. The loss of competitiveness and momentum in exports and the problems of the textile industry are just a few facets of this problem.

Second, the steep rise in international oil prices has raised petroleum import bill from $3 billion FY 2004 to nearly $7.5 billion in FY 2007. No relief is in sight. Even though crude oil prices are expected to decline from the present level of over $90 per barrel, the average cost of oil for Pakistan during the current fiscal year FY 2008 is likely be substantially higher than the cost of $ 63 per barrel in 2006-07.

The higher oil prices have meant a loss of terms of trade equal to about three per cent of GDP, and have put direct and immediate pressure on the real incomes of middle and lower income groups and also are threatening macroeconomic stability.

How can the model of growth be made fairer without going back on the very substantial liberalisation of the economy and much greater reliance on market forces witnessed since the early 1990s?

Four rather obvious public policy instruments for progress towards a more equitable society are: improved governance especially access of underprivileged to reasonable quality public services, fairer tax and expenditure policies, more equitable access to credit and land for both the rural and urban poor and middle classes. And last but not least tougher, more effective public regulation which reduces anti-competitive behaviour, curbs economic manipulation and guards against economic rent seeking.

Poor governance hurts the poor the most. But they cannot be helped unless they have a greater voice. The creation of political structure at the local government level with Nazim as the elected head of the district government is an important start. But the initiative is not adequately funded and provincial governments support to it remains generally ambivalent.

The decentralisation process needs to be pushed much harder by devolving, in the spirit of the federation, the essentially provincial functions from the centre and funding the local governments more liberally. This will not only streamline administrative processes, but also encourage healthy economic competition among provinces (A la States in India and the US), and give local governments a real chance. Fortunately, all the major parties seem agreed on this.

However, the government cannot deliver adequate and better quality public services without resources. Presence of waste, inefficiency and corruption in the public sector should not obscure the woeful inadequacy of its financial capacity especially taking into account the high expenditure on defense. In Pakistan total non-defense, non-interest public spending as a proportion of GDP, a good measure of size of government, is only around 11 per cent-- much lower than almost all major developing countries (this ratio in India is more than 20 per cent).

Raising tax revenue is a both a moral and practical imperative. But additional revenue must be raised through equitable means. By any standard, the burden of taxation on the rich and the well to do is quite light, there is no tax on income earned abroad by residents, no capital gains tax, and no estate taxation even for the very rich. Individual income tax which in most countries serves as a tool for some redistribution of incomes mobilises only about one per cent of GDP.

Meanwhile, there are few studies of the incidence of tax and expenditures.

Unless fiscal policies can be made more effective and equitable, the free market model would come under Iincreasing attacks.

The allocation of both rural and urban land is heavily tilted in favour of the already well to do. Similarly, despite progress in recent years micro-credit level remain low. Policy changes in these areas can be a very potent tool for helping the poor and the urban middle classes.

In devising a more equitable economic strategy, Pakistan should also draw on international experience and expertise. Larger gaps in incomes between the rich and poor, skilled and the unskilled labor, rural and urban areas, as well as growing regional disparities, appear to be a widespread phenomenon driven in part by globalisation.

Rapid rates of technological change and increasing openness of world economy, are increasing the rate of obsolescence, boosting the share of profits in national income, and raising the returns to education and skill development. There is thus growing recognition universally that protecting the losers from the otherwise beneficial globalisation trends requires public action.

Even with a more equitable distribution of income and opportunities, rapid long- term economic growth would remain the major source of job and income growth. Pakistan can take satisfaction in the relatively high growth rate of over seven per cent per annum during the last five years. However, the sustainability of this growth cannot be taken for granted.

The longer- term growth outlook requires a fresh look. The hubris about the rise in investment levels and very large inflows of foreign private investment needs to be tempered by a closer look at the numbers.

Gross fixed capital formation measured in current prices has risen from 17.2 per cent of GDP in FY 2000 to 22.2 per cent of GDP in 2006-07. But in constant 1999-2000 prices, the fixed investment ratio has increased only very modestly from 17.2 to 17.9 per cent over the period. This means two things: real investment has grown only at a slightly higher pace than the economy and that a substantial part of the increase in investment in nominal terms represents merely a faster rise in investment goods prices than the general price level. It is not thus surprising that that domestic capacity constraints are adding to inflationary pressures. In any case, the present investment levels are not likely to support a sustained annual growth rate to 7-8 per cent per annum.

At the same time, partly because of external shocks, Pakistans perennial problem, an excessive reliance on foreign resources for its development has re-emerged. The foreign savings (defined as current balance of payments deficit before official transfers) as a proportion of total investment were 23 per cent in 2006-07, roughly the same level as the average in the 1990s. This is despite the fact that worker remittances that count as national savings have risen very sharply during the last five years.

The present level of current account balance of payments deficit before official transfer (5.3 per cent of GDP in 2006-07) is not sustainable. Even running of balance of payments deficits of four per cent of GDP on a sustained basis would require steady real export growth of 10-12 per cent annum.

Unfortunately, our exports, after an impressive growth over 2000-05, have stumbled and now face serious structural problems. The weak competitive position of textile industry is likely to come under further pressure due to end of quota restrictions under safeguard measures on China, and entry of Vietnam in the WTO.

Among large developing countries, Pakistan has the least diversified pattern of manufactured exports, with the exception of Bangladesh. Heavily locked into textile and clothing exports is one of the main reasons why the country has not made major headway in international trade. The rate of expansion in the world textile and clothing trade has not been and will not be nearly as robust as the rate of the rest of world manufacturing sector exports.

Pakistans exports of manufactured goods other than textiles and clothing at about $2.5 billion are only a little over 0.03 per cent of world manufactured goods (excluding textiles and clothing) Indias manufactured exports in this category are nearly 25 times that of Pakistan.

The minimal presence of Pakistan in the world market in other manufactured, however, also represents a major opportunity.

It is of course a good thing that a large part of the net foreign inflows is being financed by foreign equity investment rather than by excessive run up of public debt as in the past. However, foreign investment has its costs. Investment income payments related to direct and portfolio investment have almost doubled during the last two years to $3.4 billion in 2006-07 and now far exceed interest payments on public debt.

More worrying from a dynamic growth point of view is the fact the bulk of direct foreign private investment has been in service industries and relatively little in manufacturing and exports. It is ultimately export growth that creates the base for servicing future debt and foreign investment obligations.

The most immediate need is to address macroeconomic imbalances that have worsened as a result of a sharp rise in import petroleum bill, a sharp slow down in exports, and a fiscal policy that has become very expansionary during the last year partly because of the government decision not to pass through the burden of higher oil prices.

Economic adjustment to higher oil prices (and to the more recent rise in international food prices) cannot be avoided. While some subsidies to lower income would remain necessary, the overall fiscal policies must be tightened both through selective scaling back of burgeoning public expenditures and higher revenue mobilisation, giving due attention to equity considerations. This would be a painful process.

However, there are several positive elements that can facilitate orderly transition to more self-reliant and more equitable growth. The full potential of agriculture remains far from being fully exploited and the rise in world food prices provides a great opportunity for expansion of agricultural exports provided improvements in agricultural productivity can be attained.

The lags in social development are being narrowed and larger investment in human capital would begin to pay off. The close relationship with China can play a very important role in growth and structural change in industry and export.There is substantial untapped capacity of taxation of the well to do. Last but not least, prospects for Pakistans access to concessionary assistance; market borrowing and private investment flows remain good. Thus a precipitous adjustment in reduced reliance on foreign inflows can be avoided.

Still, the view that mere continuation of existing policies would solve Pakistans major economic and social issues is likely to prove myopic.

(The author is a former Chief Economist of the World Bank. email:phasan@aol.com)

Political turn and the economy -DAWN - Business; December 31, 2007


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## Neo

*Critical times for industry​*
As Pakistan tries to come to terms with the situation arising after the killing of Benazir Bhutto, nervousness in business community has increased regarding the future in a country struggling to revert to democracy after of eight years of military-led government.

No one is expecting a major breakthrough or a turnaround in the industry in 2008. There are too many ifs clouding the prospects of industry that failed to fully capitalise on the surge in local demand, in a period of economic expansion and growth.

There might be some company level balancing and modernising in certain sectors but chances of anything big happening in the year ahead are remote also because of political turmoil and readjustment, during which, traditionally investment plans are put on hold, an informed professional who interacts with trade bodies told Dawn from Islamabad.

There is huge scope for exports of cement to India that is going to give a boost to cement makers. However, according to people in know of things instead of investing in creating new capacity, the big wigs in the sector are currently focused on marketing.

The restraining factors that inhibited the growth in industry are believed to be both: internal and external, physical and temperamental.

The industry will have to break free of the old mindset and adopt a futuristic approach to face the competition at local as well as international levels. The government will also need to shun short-term ad hoc measures adopted for political expediency in favour of a long- term sustainable industrialisation strategy that addresses real issues such as ensuring supply of quality cotton for textile, flow of credit to small and medium sized industry, etc.

Industry performed well in 2005 but the pace of growth lost momentum and in 2006 and 2007 its performance was below the official target. Though the regional environment is not hostile, it would take the next government some time even with best of intentions to jump start industrialisation on a significant scale Chaudhry Mhd Saeed, ex-president Federation of Pakistan Chamber of Commerce and Industry commented from Mirpur, Kashmir.

Optimism, if any, was tempered by anxiety over the sustainability of growth because of tight monetary policy, high inflation, current account deficit and rising trade deficit.

Amongst entrepreneurs, there were also concerns about the policies of the next democratic government that assumes power after populist measures to appease their supporters, increasing pressure on current accounts forcing the country to go back to IMF for budgetary support.

The credit squeeze has started to impact the investment plans of manufacturing sector. The weakening of dollar will lend some support to exporters especially because of appreciation of Indian and Chinese currencies against the greenback.

The impact of high international oil prices (90 per cent of the oil needs are imported), could impact the countrys reserves. It will limit the capability of the government to provide public subsidies to cushion the rises in food and fuel prices.

Majyd Aziz, a former president of the Karachi Chamber of Commerce and Industry, felt that the problems faced by the industry cannot be wished away or disappear quickly as a political government will not be equipped with a magic wand.

They will need to take hard decisions and opt for a well thought out long- term strategy. This would take time and it would be unrealistic to expect anything before June next when the budget will be announced, he said.

He, however, expected major foreign investment pouring in the construction sector once the political situation stabilises. If his expectation is materialised it would prop up 36 allied industries besides creating job opportunities for people linked to this sector.

He saw good performance in pharmaceutical and cement sectors but a promising future for agro-based industries in years ahead.

Shafqat Illahi, President All Pakistan Textile Mills Association APTMA, the most influential business lobby, was cautiously optimistic. He, however, felt that there is lack of preparedness on the part of industry to take advantage of the government supported increase in consumer demand.

He emphasised the importance of attaining critical mass through amalgamation and consolidation to face the challenge thrown up by intense competition. He felt that government should create conducive environment for industrial growth and for the progress and sustainability of textile sector in particular.

Recently Dr Shamshad Akhtar Governor State Bank of Pakistan speaking during her visit to FPCCI said: 2000 onwards, by and large, the world economy enjoyed a fairly benign economic environment ... Among the key factor impacting global economy is the financial market turmoil.

With this backdrop, I propose to provide briefly Pakistans economic update attempting to lay down some emerging trends for FY08 which require stronger vigilance at economic policy-making level and industry and private sector to be more responsive. In general, it has to be underscored that despite domestic and international events, Pakistan economic prospects remain strong.

She said, July-October 2007 data for industrial production, while preliminary, reflects mixed picture. Production growth in construction related industries appear reasonable including cement, wood, paints and varnish units, followed by fertiliser, pharmaceuticals, petroleum refining and few metal and engineering goods. In these sectors, Pakistan can reduce rate of import dependency (such as petroleum refining where production capacity is 13.2 million tons relative to consumption which is 18 million tons) through capacity augmentation and even consider exploiting export markets.

In contrast to some of these sectors, first quarter results of some industries reflect slower growth. For instance deceleration in cotton yarn and cloth, which has a weight of 20.6 per cent in large scale manufacturing value added, and footwear, automobile, edible oil and vegetable ghee is evident. While demand remained strong, slowdown in manufacturing sector emerged because of combination of reasons including demand for import substitutes (as government relaxed imports of automobile), slowdown in export demand and increase in raw material prices such as palm oil which recorded 73 per cent growth in value of imports, she added.

She suggested that industry and the Government need to take measures to improve competitiveness of domestic goods. Ensuring quality through innovation, skill development and technological up-gradation, reducing costs through scale, diversifying product-line in line with the market demand, and achieving self-sufficiency in raw materials etc. are some of the areas where entrepreneurs need to concentrate.

Dr Afra Sajjad, head of education and policy development, ACCA, Pakistan sent in her comment via mail: Like the rest of Pakistan, 2008 is a crucial year for the industry. Its survival depends upon a government that appreciates that the sustainable development depends upon industry generating employment, attracting foreign investment, increasing productivity, exploring new markets for exports and most importantly, generating sustainable profits.

Critical times for industry -DAWN - Business; December 31, 2007


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## Neo

*Sluggish export growth, soaring imports​*
Realising that a number of factors inhibit foreign buyers to visit the countrys business centres, the government planned to storm markets abroad with a powerful team of manufacturers of local textile and other exportable goods. These market storming trips was to take local manufacturers to top store chains in major cities of the USA and the Europe.

You will see the launching of this drill in next 15 days, Mr Tahir Ikram, the chief executive officer of Trade Development Authority of Pakistan (TDAP) informed a big gathering of exporters who had gathered to receive trophies, awards and medals from the caretaker Prime Minister Mohammad Mian Soomro on December 15.

However earlier this week, all the four top exporters when approached by Dawn to know about the preparations for the proposed storming said they were unaware of any such programme. One of them in Lahore said that he was busy in buying sacrificial animals, the other in Faisalabad was involved in election campaign. An exporter in Karachi who is normally in contact with the government on trade-related issues and had heard the TDAP chief executives speech on December 15 said, no follow-up contact was made with him. The fourth exporter, also from Karachi, is too was unaware of any such programme.

Mr Tahir Ikrams announcement about a powerful team going abroad on a marketing mission was made in the wake of reports of over $7 billion trade imbalance between July--November 2007, with exports at $7.38 billion and the import bill at $14.58 billion. Exports grew by 7.13 while imports swelled by 18.27 per cent, raising fears that trade deficit at the end of this fiscal year may exceed $15 billion. But an official update on the economy issued by the finance ministry last month had expressed confidence about narrowing down of trade and current account deficits during the F2007-08. The ministry expected an improvement in trade deficit and current account imbalance on the basis of the performance during first quarter-July to September 07--when it noted $304 million improvement in trade imbalance. The trade deficit during first three months of 2007-08 came down to $2.4 billion as against $2.70 billion in the same period of 06-07. The exports, during the first quarter, on fob basis grew by 5.8 per cent to $4.35 billion while imports declined by one per cent to $6.75 billion.

The narrowing down of trade deficit is the direct result of the improvement in exports on the one hand and a marginal decline in imports, the finance ministry noted while expressing its optimism.

But at the same time, there are reports of serious and increasing discrepancies in the official trade figures of the Federal Bureau of Statistics and those released by the State Bank of Pakistan. While some difference in figures of the two institutions is always there and is understandable, but a big difference of more than $2 billion in trade deficit of first four months raises doubts about the data credibility.. A team of senior officials is said to be engaged in addressing this issue but when will the officials inform public of their findings is not known.

Earlier at the start of 2007-08, the government projected an export growth of 10 per cent and increase in imports by nine per cent. Trade policy for 2007-08 projected exports at $19.2 billion and imports at $29.6 billion. Exports show a growth at 5.8 per cent while imports at over 17 per cent indicating that exports by the end of next June may be hardly between $18-18.50 billion and imports bill at about $35 billion.

Exporters fear that deficit in services will too go up beyond $6 billion in this fiscal year raising the total trade and services deficit to more than $20 billion. They doubt the effectiveness of market storming strategy and want an effective increase in supply position, the logistics and the infrastructure.

Akbar Sheikh, a former President of All Pakistan Textile Mills Association said from Lahore that unless the government takes adequate measures to improve supply chain of the goods, any market storming will be a useless exercise. We need 16 million good quality cotton bales whereas hardly 13 million are available. Look at India where cotton production has gone up to 32 million bales, he added. .

Aziz Memon, a garment exporter wonders as to how manufacturers will be able to storm American and European markets with nothing in our hands. He wants the government to improve the entire supply line so that there are enough surpluses of exportable goods. Not only the manufacturers and exporters of textiles but those of other sectors-leather, carpet, surgical instruments etc-complain of hardships in their production activities which is hurting the exports.

A billion dollars drop in the exports means pauperisation of one million families, Humayun Akhtar Khan told the British trade minister a few months ago in London while pleading a case for access to market for Pakistan. At home, he acknowledged in last years trade policy speech of lack of surplus exportable goods and a taxation policy that encourages speculative trading rather than manufacturing.

Sluggish export growth, soaring imports -DAWN - Business; December 31, 2007


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## Neo

*Sustaining long-term exchange rate stability​*
Exchange rates have been switching between waxing and waning values, especially after the floating exchange rate regime was adopted in the year 2000. Since then, the value of rupee has always been at the forefront of the economic indicators. While the initial years of reforms did see sharp depreciation of the rupee, a degree of exchange rate stability was achieved with the emergence of macroeconomic stability.

Exchange rate has implications for resource allocation, trade and balance of payments. Strong economic activities along with increasing foreign exchange inflows have resulted in visible changes in exchange market in recent years. In FY07, the foreign exchange market grew substantially, both in capacity and volumes. The market volumes of foreign exchange transactions reached $68.5 billion in Q4-FY07, compared to $55.4 billion during the same period last year.

Rupee gained a considerable stability after the 9/11. The momentum has been sustained over an extended period of time. After a recent decision by the central bank to reduce the amount of cash reserves maintained by banks, the rupee has recovered from a three-year low. During FY07, the rupee exhibited a mixed trend vis-a-vis the benchmark currency (dollar) depreciating by 1.14 per cent in the first half and then appreciating by 0.81 per cent in the second half of FY07.

In the first half, the widening trade deficit drove the rupee depreciation while in the second half, improved market related foreign exchange inflows helped rupee to regain most of its lost ground. Consequently, the rupee saw a net depreciation of 0.31 per cent during FY07.

The exchange rate remains under focus because of the current macro economic fundamentals, inflation, a yawning trade deficit, trimming foreign exchange reserves, sky rocketing oil prices and political uncertainty.

If these issues are not resolved quickly, there is a possibility of depreciation of rupee against the sliding dollar. The rupee is exhibiting a trend of downward spiral against a basket of currencies, yet the deprecation vis-a-vis the dollar is still subtle. The current trend is expected to be sustained in the fiscal 2008 on the back of an increasing trade deficit depleting the foreign exchange reserves.

The uncertain political situation has also led to a decline in the share of foreign direct investment. There has been no issuance of international paper such as GDRs or bonds to raise capital and to manage the possible liquidity crunch. To add to the existing predicament, privatisation has been put on the back burner.

The dollar/rupee exchange rate continues to be market determined. The State Bank, as a policy, intervenes in the market to dilute excess in volatility but does not target any specific exchange rate which is driven by prevailing demand and supply conditions.

In order to promote exports, however, the Central Bank has been providing both export and long-term financing to exporters. The scheme for Long Term Financing Facility will be operational in January, 2008 after the details of its workings are grasped by the commercial banks.

The external sector which has thus far been manageable could see some spill over impact of the US slowdown, if it turns out to be more severe. Efforts similar to these are underway to boost exports to mellow down the increasing trade deficits which can trigger exchange rate crises if the momentum of capital and financial inflows dries up.

Pakistans exports in real terms remained stagnant. Last month an increase in official figures was mainly due to depreciation of the dollar. Since Pakistan conducts 70 per cent of its exports in dollar which is consistently falling against major currencies in the international market, Pakistans exports in terms of volume remains stagnant.

However, the countrys economic prospects continued to remain strong despite political upheavals at home, recent turmoil in the international financial markets and upsurge in oil prices.

Resilience of the countrys economy due to underlying financial health and strong macro-economic fundamentals helped Pakistan to remain untouched by external shocks like US sub-prime mortgage market crisis, depreciation of the dollar and rising international oil prices.

Pakistans financial market had, by and large, remained insulated from the financial market turbulence as it did not have exposure to mortgage or asset-backed securities. Hence it can be deduced that Pakistan will rise to prosperity amid the prevailing fears and transform its weakness into its strengths.

Exports can be a major source of economic growth, which is facilitated through effective exchange rate management. Pakistan can learn from countries that have witnessed export-led growth to ensure exchange rate stability.

Sustaining long-term exchange rate stability -DAWN - Business; December 31, 2007


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## Neo

*Narrow export base​*
As many as 10 major commodity groups contribute nearly 80 per cent of the narrowly based national exports.

Exports were diversified a little during the first quarter of the current fiscal year as the share of mineral fuel, raw hide and skins, articles of leather, and man-made staple fibres in total exports increased marginally. But the overall position remained unsatisfactory, according to the first quarterly report of Federal Board of Revenue (FBR).

While the share of cotton and other textile made-ups in overall exports declined in the same period, major export items like cotton, articles of apparel and clothing, other made-up textile articles and rice recorded a negative growth.

On the other hand, minor items like salt, sulphur, stones, slag, ash, products of milling industry, mineral fuels, inorganic chemicals, performed relatively well. However compared to major sectors, this performance has limited impact on the overall balance of trade (BOT) position. Export performance of the textile sector remains a serious concern and requires careful review.

But the cotton and textile sector continues to dominate the export basket with an overall share of slightly over 60 per cent. Within the overall basket, 18.3 per cent contribution has been made by products listed in Chapter 52 essentially related to raw cotton.

Similarly, 20.2 per cent of export value has originated from knitted and non-knitted apparels and clothing, 17.4 from made-up articles, and 3.4 per cent from man-made staple fibre. Exports of grains (essentially rice), fetched around five per cent of the total export earnings and similar was the contribution of POL products. Unfortunately, the contribution of other traditional export items like leather and leather products, sports and surgical goods has been quite insignificant.

Some of the non-traditional items exported during the first quarter of the current fiscal year were wheat and cement where significant growth has been recorded but the volume was quite small.

Virtually no gains have been made in the export of plant machinery and equipment. Rather, howsoever small the contribution of electrical and mechanical machinery, it registered a further decline.

Over the years, countrys openness increased but broadly due to increasing imports rather than its exports. But its overall composition remains narrow. While bulk of the imports relate to petroleum products and machinery, textile sector literally dominates the export basket.

FBR Member Fiscal Research and Statistics, Dr Ather Maqsood Ahmed, says, it is rather unfortunate that despite concerted official efforts to raise the volume of foreign trade mainly through expansion in exports, very little real progress could be made.

While the openness of the economy defined as ratio of trade flows (imports plus exports) to GDP indeed shows an increasing trend, the same is not true for export to GDP ratio. It has remained either stagnant during the past many years or it has declined - say from 12.8 in 2000-01 to 11.9 per cent in 2006-07. Even in better days, this ratio has not touched 15 per cent, whereas for fast growing economies it has often exceeds 30 per cent.

Compared to this, the surge in imports has vastly improved the import-to-GDP ratio from 14.9 to 21.3 per cent over the comparable period, the imbalance between export and import has widened sharply

The policymakers will have to take more energetic steps to help increase the exports by encouraging new products for new markets through competitive prices.

Concentrating on the textile sector, it is more than evident from experiences of past few months that the international competition would get stiffer in the future. Countries like

China, Bangladesh, Thailand and India have already captured a sizeable international market Resultantly, judging from historical data, it is clear that Pakistans textile exporters have to struggle hard.

There is a limited diversification in exports. Similarly, a large chunk of the import bill relates to few commodities, namely, POL products, automobile, machinery, and consumer products. Despite serious concerns, there has been a limited success in expanding the export base. The rapid growth in imports has not lead to expansion of export based industries.

Nearly 50 per cent of import value relates to three commodity-groups, namely petroleum products, and electrical and mechanical machinery. Around 92 per cent of the import covers 30 commodities. The growth in this sub-group has been 12.9 per cent during the first quarter of the current fiscal year, while the total growth in import bill was around eight per cent.

Some hidden factors are also responsible for decline in export of these selected commodities. The discriminatory dumping duty on the bed linen (home textile) might be valid handicap, but it is also true that international markets are being lost due many other solid reasons. Since huge investments were made in recent years, it seems natural to investigate weather or not the machinery installed was good enough to maintain competitive edge in the international market.

In spite of the research and development support by the government, there is a visible lag in quality control, human resource development, and branding etc . Why the skill gap is so wide, not only in the textile sector, but also in the manufacturing sector as a whole? With such problems, chances of a major breakthrough in the field of foreign trade transactions are quite remote.

Narrow export base -DAWN - Business; December 31, 2007


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## Neo

*Dry land farming technologies​*
Dry land farming pertains to high-yield and high-efficient agricultural production on areas without irrigation and largely depending upon natural rainfall through the adoption of different dry land farming technologies.

Given the severe shortage of water resources, irrigation alone cannot satisfy the water demand in agricultural production and it is necessary to make efforts to promote dry land farming development. Of the total cultivated area of 22.91 million hectares, about 18 million hectares are irrigated. Thus dry land farming is spread over an area of around 4.91 million hectares in different agro-ecological zones of the four provinces.

Dry land farming faces problems including shortage of precipitation, surface water, ground water and soil erosion. Precipitation is distributed unevenly in time and space. Usually, rainfall occurs during spring and early summer. At the same time, water losses and waste in farm land irrigation are serious.

About 25 per cent water is lost from canals in the form of seepage, percolation and evaporation during conveyance and distribution. Similarly, about 24 per cent water losses occur from major and minor water courses. Moreover, 25 per cent water is lost during field application owing to defective irrigation methods. Resultantly, irrigation efficiency of our canal system dubbed as one of the largest canal networks in the world remains very poor.

Soil infertility in dry land farming due to monotonous crop structure that includes mainly cereals and less legume crops also affects crop production adversely. Moreover, desertification and erosion are other problems in dry land farming area.

All these factors contribute to low and unstable agricultural yield. Yield of crops in dry land farming is considerably low compared to that of irrigated farming. Poor level of skills, lack of education and poor socio-economic conditions are also the reasons of low agricultural yields in dry land farming. Farmers largely practice extensive farming with poor harvest. In most of the places, farmers still solely depend on climatic conditions in their farming activities.

Keeping in view the importance of dry land farming in sustainable agricultural growth, it is essential to develop dry land farming on modern lines. Enhancing moisture retention capacity of the soils, retaining rainfall by using agronomic, biological and engineering measures in an integrated way to improve soil fertility, changing farming practices and making full use of resources like light, heat, soil, fertiliser, water and improved seeds to increase agricultural productivity in dry land should be the objectives for the development of dry land agriculture.

Terracing is an important practice to be adopted in dry land area. It aims at building slope land with an angle less than 25 degrees into contour terrace. It is because slope land with an angle of 10-25 degrees is susceptible to soil erosion due to large angle, steep slope, frequent farming activities and high cultivation coefficient, particularly improper farming practices. It has been found that farming activities on such slopes land have led to soil erosion of 0.43 cm of soil layer and loss of 48 tons of surface soil per hectare per annum. Changing such slope land into contour terrace plus other measures like small catchments improvement and biological and agronomic practices would help improve production conditions, prevent water and soil erosion and raises soil fertility, grain yield and sustainable development.

Using farming practices like moisture retention mulched furrow, machine furrow drilling and large furrow help to increase active soil layer, improve moisture retention capacity and soil fertility, reduce soil evaporation and improve eco-system. Furrow drilling is suitable for any slope land with annual rainfall over 400 mm or for terrace land. When it is used for small-angle slope land and terrace land, machines or animals can be employed to reduce labour intensity and speed up engineering progress.

Building water cisterns to collect rainfall as supplementary irrigation water for agriculture is practicable in slope land and terrace land. In case of serious drought, such water could be used for drip irrigation to increase soil moisture. Due to limited volume of water, such technology is usually used together with other water-saving measures such as wet sowing, plastic mulching, root-zone drip irrigation, hole irrigation with mulching so as to enhance crop resistance to drought and enhance stable high yield. It is applicable to places with annual rainfall less than 350 mm.

Mulching with plastic film and crop residue could reduce moisture evaporation, increase moisture retention capacity of soil, alleviate the threat of drought and improve water use efficiency. Plastic film could be used for hole-sown wheat, rice, film-side sowing, multiple crops using the same mulching. Wheat farming with plastic film could bring major breakthrough in increasing wheat yield in these areas. Mulching with crop residues features easily accessible material, low cost, high efficiency, water saving, moisture retention, fertility enhancement, yield increase and no contamination to soil.

Seed coating with drought-resistant chemical agents developed in recent years like water-retention agent, evaporation suppressant and soil regulator could bring very good results at low cost when used at a time of drought. For instance, seed coated with water retention agent could improve moisture use efficiency by 0.05-0.17 kg/mm compared with the control group and wheat seed coated with drought-resistant agent could increase yield by 20 per cent.

Fertilisation aims at application of chemical fertiliser, organic fertilizer and green fertiliser to improve soil fertility and yield to improve soil resistance to drought through the improvement of soil fertility. To establish rational and effective dry land farming, it is essential to increase percentage of legume and green fertiliser crops, increase fertiliser input by combining organic fertiliser with chemical fertiliser and improve scientific fertilisation level and combine farming with fertility improvement. Increased use of chemical fertiliser on dry land farming could bring about twice as much yield as on irrigated land.

Mechanised deep ploughing technology could break the sub-arable layer without disturbing surface soil layer so as to improve soil ventilation and rainfall retention capacity. This technology could be equally effective both for dry land as well as irrigated farming.

Using drought-enduring varieties is the most cost-effective yield increasing technology. At present, most dry areas have their own varieties with good drought resistance. However after a long time, most varieties have experienced degradation in their performance. And the breeding of new varieties is still lagging behind. It is an urgent need to develop drought resistant varieties and accelerate the purification and rejuvenation process in order to improve yield.

Last but not the least, reforming the farming system in accordance with prevailing local conditions in a bid to readjust crop structure, avoid flooding and drought and improve income is imperative. Suitable cost-effective farming systems recommended in dry land farming include grain-gram, grain-cotton, grain-oilseed, grain-vegetable, grain-herb intercropping and rotation of multiple crops.

Moreover, research on and improvement of drought-enduring and drought-resistant varieties and matching technology, setting up demonstration bases for protective farming technology to develop technical capacity in this field, conducing technical exchange in order to train a backbone team of professional equipped with advanced dry land farming technology, developing a group of farm tools and machines suited for dry land farming and promoting financial resources to support the extension of advanced dry land farming technology in the poor areas would help to achieve sustainable agricultural production on dry land farms.

Dry land farming technologies -DAWN - Business; December 31, 2007


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## Neo

*Green manuring for crop production​*
By Hafeez ur rehman, Dr M. Farooq and Mubashir Hussain

The land for agricultural uses has been reduced due to rapid urbanisation, dwindling water resources, erosion, salinity and degradation of soil fertility levels. This has led to indiscriminate use of high priced fertilisers for maximum crop productivity and ecological and environmental concerns.

The situation calls for developing and adopting economically viable, environmentally sustainable, and socially acceptable appropriate soil and crop management practices.

Soil fertility management is one of the most important factors affecting crop production. Green manure production and incorporation represents an alternative source of nutrients to mineral fertilisers. It can increase cropping system sustainability by reducing soil erosion, by increasing nutrient retention, improving soil fertility and by reducing global warming potential. Green manuring can help farmers sustain crop production.

Green manure crops can be leguminous as well as non-leguminous and can be grown or brought from outside as cuttings of trees and shrubs. Mustard, oats, rye, alfalfa cowpeas, clovers are used as green manure crops while sorghum-sudangrass, millet, forage sorghum are used as non-legumes.

Legumes are superior green manure crops compared to non-leguminous crops because they determine atmospheric nitrogen (N). Considerable variation in N fixation can occur, even among legume species. A green manure crop, to be agronomically attractive and economically viable, should have some important characteristics. These can easily be adjusted to produce sufficient dry matter to ameliorate soils physical, chemical, and biological properties to fix adequate N and require minimum cultural practices during growth period.

Legumes are used to maintain soil N fertility. The legume Rhizobium symbiosis is estimated to account for 40 per cent of the worlds fixed N. Symbiotic N2 fixation in legumes is determined by formation of effective nodules on the roots. Formation of effective nodules depends on plant, soil and climatic factors and their interactions. Hence, green manure legumes have different N2-fixation capabilities depending on environmental conditions, management practices adopted, and type of legume species nodulating. Green manure not only fix N but also incorporate other essential plant nutrients in reasonably good amount for succeeding crop.

Decomposition: Soil N availability is determined by its mineralisation, the microbial conversion of organic N to ammonium (NH+4) with further oxidation to nitrate (NO-3). Soil and plant factors mainly determine green manure decomposition and subsequent N release. Among dominant plant factors are quantity and quality of green manure incorporated into the soil. Soil factors, which determine decomposition rate and N release, are texture, structure, acidity, microbial activity, and soil fertility.

Organic residues decomposition is observed slow in soils with high clay content as compared with light textured soils. Similarly, microbial activities are determined by soil physical as well as chemical conditions. Residue decomposition depends mainly on temperature and soil moisture. Values of soil temperature in the range of 20-30æC and soil moisture in the range of -0.01 to -0.05 MPa are reported for fast release of NO-3 following green manure incorporation into soil.

C/N ratio: Carbon to N ratio of green manure or crop residue incorporated into the soil play an important role in the release or immobilisation of soil N because plant tissue is a primary source and sink for C and N. Historically, C/N ratio is most widely used index of crop residue quality and decomposition rate.

When plant residues having C/N ratio greater than 20 are incorporated into the soil, available soil N is immobilised during the first few weeks of decomposition. In aerobic soils, C/N ratios <20 for organic matter are required for net mineralisation to occur. The C/N ratio of legume crops is low as compared with cereals and the narrow C/N ratio of legume residue enhances soil N availability. Availability of C and N, rather than their total concentration in the residue, play a critical role in residue decomposition and nutrient release. Generally, residues with low N content or high C/N ratios have slow decomposition rates.

Amelioration properties: Green manuring has significant positive influence on soil physical chemical and biological properties and consequently on crop yields. It is stated that all other factors being equal, a soil with a high soil organic matter level has good physical conditions. Addition of organic matter by green manuring helps to stabilise soil structure, increase its water holding capacity , and increase infiltration of water into soil and percolation through soil. The process also helps in reducing soil erosion. Improved soil physical conditions may promote root growth and increased use of soil water and nutrients.

Legume crops in rotation improve physical and biochemical properties of soil by increasing labile organic matter. Legume green manures also maintain ground cover, usually between cultivated crops, reducing erosion, and providing weed control. Furthermore, crop uptake of soil NO3, reducing risk of leaching, reduced water run-off, and soil losses during intense rainfall and enhanced N availability to succeeding crop and thus reduce need for N fertiliser

Green manuring promote mycorrisae on the roots of succeeding crops, increase soil phosphorus (P) and micronutrient availability, also suppress plant pests such as nematodes can be used to control weeds and other pests. Weed emergence suppression by green manure may be associated with reducing light penetration and soil temperature fluctuations.

Yield response: Yield increase by green manuring depends on crop species, environmental conditions, and management practices adopted for green manuring crops as well as succeeding field crops. Grain yield increase with green manuring are reported in rice, tomato and sorghum.

Limitations: Green manuring may pose some limitations if not managed properly. Nitrogen immobilisation and consequently N deficiency for succeeding crops may be one, if green manure crop is not incorporated in advance of planting cash crop to allow sufficient time for decomposition. Problems following green manure crops have been also recognised. Reasons for these include low temperature, NH3 toxicity, insect and slug predation, diseases, deleterious rhizosphere micro organisms, and allelopathy. To avoid stand establishment problem, killing of green manure or cover crops with tillage 2-4 weeks prior to sowing subsequent crops is recommended.

Adoption of soil and crop management practices by farmers depends on agronomical and economical viability. However, it also should be minded that green manuring alone cannot supply sufficient essential plant nutrients for maximum or maximum economic crop yields. Hence, the best strategy is to use green manure in conjugation with chemical fertilisers. The combination may reduce application rate of inorganic fertilisers and risk of environmental pollution, and can provides sustainability to crop production systems.

Green manuring for crop production -DAWN - Business; December 31, 2007


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## Neo

*Animal farming in drought-hit areas​*
In spite of large herds of livestock in the country, there is shortage of animal protein. This is mainly because of lack of proper planning and slaughtering of immature and small-sized animals.

Karachi, where over 12 million people live, always faces shortage of meat and milk. To meet the requirement of the metropolis and other bigger cities, there is a need for proper short-term and long-term planning.

Short-term planning is the cross-breeding of local animals with the exotic beef breeds through artificial insemination, and cross breeding of local breed of goats and sheep with the Kamori and the Pateri breeds for producing more beef and mutton and for higher prices of the animals for the farmers.

The area of Tharparkar in Sindh, which is semi-arid, has a lot of potential for producing rich fodder after the rains. If the people of the area are trained in hay and silage making, and provided facilities for the purpose, fodder from this area can be supplied to other parts of the country at cheaper rates. This will consequently help reduce or replace the use of wheat husk and cottonseed cake.

In other words, the cost of these items could be reduced and kept under control which ultimately make milk and meat and other livestock products cheaper. The areas of Tharparkar and its surroundings are the best for cattle farming.

The cattle available in Sindh mainly in Tharparkar and the Kankrej are the fast growing and the best breeds for beef production. If the young calves of these breeds (10-12 months old) are put on proper feeding they grow fast and gain more than one kg daily.

There are more than two million Tharparkar and Kankrej breed cows which produce about two million calves per annum. These calves through good feeding can be reared into fine animals for quality beef.

Arid areas, where there is shortage of water and fodder, are the best for goat and sheep farming. Chhachro, Nagarparkar and its surrounding areas; the Mohal, Kohistan areas of Larkana, Dadu, Jamshoro, Thatta and Malir; and the kachho areas of Dadu and Kamber have the potential for such farming.

The proper and scientific age for slaughtering of animals is the age of adulthood i.e. about 25-26 months in big ruminants, and about 12 to 13 months in goats and sheep. The characteristics of the meat should be mainly proper colour, flavour, taste, nutrition and digestibility, which can be attained only after reaching the slaughtering age. Immature, weaker and diseased animals can not produce quality meat

By adopting the following plan, not only the meat requirement of the country could be met but there would be surplus meat which could be exported.

Breeding Farms: Small cattle breeding farms should be set up on a scale of 10 cows or 30goats. For this at least 2000 farmers from each of the afore- said districts should be provided a credit of Rs1.5 lakh each to meet the cost and other expenses of the animals. The recovery should be started after six months, on monthly basis in 12 equal installments.

Feed lot units: A loan of Rs1,00,000 should be provided to at least 1,000 farmers of the drought-hit districts to purchase 30 two-month-old male buffalo calves and meet the miscellaneous expenses. The recovery should be started after two years in equal six-monthly installments.

In each district 1,000 farmers should be provided a credit of Rs1.5 lakh each to purchase 20 Tharparkar/Kankrej male calves (10-month-old). The recovery should be started after 15 months in equal six-monthly installments.

Forty male goats of Pateri, Tapri or Bari breeds (six months old) should be supplied to 1000 farmers in each of the above districts through credit of Rs1,00,000, and the recovery should be started after six months in six monthly equal installments.

The farmers should also be provided credits for rearing and looking after of their flocks and the recovery should be made in small installments.

Through this project more than 20,000 cattle heads, 40,000 goats and sheep can be reared for the Eid-ul-Azha festival and more than 30,000 tons of high quality beef, over 10,000 tons of mutton, some 6,00,000 hides and skins could be produced annually and more than one lakh farmers and a large number of labourers could be involved in gainful project.

The technical services in the meat development areas may be provided by establishing meat development and extension centres, one centre for about 2,000 farmers having one lakh large ruminants and about the same number of goat and sheep flocks.

Free services should be provided for the maintenance of animal health, parasitic control, training of farmers, natural breeding service through high quality bulls and artificial breeding service through high quality semen. Credit facilities should also be provided for supply of fodder.

The livestock markets/cattle piris be upgraded in each area. Bigger important market should be provided with facilities of fodder, water, sheds for livestock and such other facilities. And changing the old system, the animals should be sold on the basis of their weight.

The suitable cattle for meat farming in Punjab is the Cholistani breed, for Balochistan the Bhaghnari breed, for the NWFP the Dajal and Dhani breeds. For Sindh and for all other provinces, the Tharparkar and the Kankrej breeds are suitable. The available larger breeds of sheep and goats should be reared for mutton farming in the arid areas of the country.

Through this project not only high quality meat would be obtained but also income of farmers would be increased and more job opportunities for rural people would be created.

Animal farming in drought-hit areas -DAWN - Business; December 31, 2007


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## Neo

*The failure to connect with the world​*
Pakistan has many endowments which should have made it possible to better connect with the world than it has actually done.

Had Pakistan correctly played its part on the rapidly changing world economic stage, it would have today trade as a much larger part of its national economy, external capital flows taking up a much higher part of total domestic investment, the country a more cherished destination for foreign firms, a larger Pakistani presence in the international corporate sector. The failure in most of these areas is because of the failure of public policy.

For more than a decade and half, economists have been talking about the process of globalisation and how it affects different parts of the world. However, as the Nobel Prize winning economist Joseph Stiglitz pointed out, globalisation has many discontents. That not withstanding, the process has brought great many rewards to the countries similar to Pakistan  countries with large and young populations, with well endowed agricultural sector, with well developed engineering skills, and with a location that should have made the country an important point of transit trade for the rapidly growing economies in the region.

Pakistan started out its existence much better connected with the outside world. In 1947, the year of countrys birth, international trade accounted for two-thirds of its gross domestic product. India and Afghanistan were the two most important trading partners, accounting for more than two-thirds of exports and imports.

The British, who ruled the area that was now part of Pakistan, had deliberately developed its economy to provide food to the food deficit areas in the northeastern parts of their large Indian domain and to supply the textile mills of Ahmedabad and Bombay the raw cotton they needed.

They also encouraged the Pathan tribes in the northwestern parts of their empire and the southern provinces of Afghanistan to trade with one another. They understood that the Pathans that straddled the border were both good fighters and good traders. It was better to have them engaged in commerce than in war.

This approach to economic development was endorsed by economic theory. A century and half earlier, Adam Smith had identified international trade as an important contributor to economic growth. It helped to expand markets for the domestic producers when their specialization in the development of workers skills encouraged increased productivity and output beyond the domestic capacity to absorb the increased flow of goods.

Trade also kept a check on domestic prices since only those goods will come into the country that were cheaper to producer for the exporter than for the importer to obtain from the domestic market. After Adam Smith, economists went on to formulate what they called the gravity model of trade which suggested that the direction of trade was mostly determined by the size of the trading partners and distance between them. In 1947, India was not only the closest market for the producers in Pakistan, it was also the best connected with the country. The same was the case with Afghanistan.

But things did not work out that way. Within two years of Pakistans birth, relations with both India and Afghanistan had soured to such an extent that trade with them came to a virtual standstill. In this, it must be said, the initiative was not taken by Karachi, Pakistans first capital, but by New Delhi and Kabul. Both had opposed the creation of Pakistan as an independent state for the Muslim population of British India. For the Congress Party of India, Pakistans creation meant a rejection of the idea of India  a state for all the diverse people of South Asia. For the rulers of Kabul, the creation of Pakistan meant making permanent the border the British had drawn across the land occupied by the Pathan tribes. They regarded this as an unnatural border and, therefore, became the only country not to recognise the Pakistani state when it was created.

For the next half century, policymakers in Pakistan were occupied with searching markets for their traditional exports in countries other than India and Afghanistan. There was some success in this endeavor. Over time, some distant markets were found for cotton, leather and textiles that had been mostly exported to India in the 1940s while, as result of the failure of public policy, the country became a net importer of food grains.

Today, sixty years after the creation of Pakistan, the United States is Pakistans largest trading partner. Thousands of miles away from the countrys border, buying mostly textiles, the United States is not the most important market suggested by the gravity model of trade and textile is not the product that would bring dynamism to the countrys trading sector. In other words, policymakers have placed their eggs in the wrong basket. It is no wonder that in the extremely dynamic international trading system that has been created as a result of the process of globalisation, Pakistan is only a marginal player.

Could policymakers even at this relative late stage turn the external sector around and begin to gain for the country what is available in the global trading system and the global financial markets? The answer to the question is yes but it would need a fairly significant restructuring of the domestic economy.

Public policy should aim to create a number of niches for Pakistani exporters; they are available in the more rapidly growing parts of the international trading system. Given Pakistans endowment it will be right to focus on the development of three types of products and services. The first is processed agricultural products. Pakistani made masalas and condiments have begun to be seen in the shelves of the ethnic markets in the United States. There is considerable room available for further expansion of this line of products.

Then there is the possibility of developing trade in such high value added agricultural products as fruits, vegetables, and flowers for the rapidly developing markets in the Middle East. This will require state investment in research and infrastructure in order to ensure that the line of communication for this kind of trade develops so that products can move quickly.

The third area with enormous potential is the use of its young and trainable population to produce the products and services needed by the people-short economies of the West and the Middle East. Pakistan has made some inroads into this area but unfortunately at the lower end. To capture the more high value lines of products and services will need the identifation of where the skills are needed, development of the skills, entering the markets once they have been identified, creating a supply chain that is reliable and does not operate with interruption.

The fourth area is to develop the country as a point of transit for trade in the region. Pakistan occupies an almost unique geographic place. It is the only country besides Nepal, Bhutan and Myanmar that shares borders with China and India, the worlds two largest countries in terms of population and also the most rapidly growing in terms of the development of their economies.

The trade between these two countries is increasing rapidly, a significant amount of it could go through Pakistan provided appropriate infrastructure was created and transit rights were granted. Not too far from Pakistans northern and western borders are the oil rich countries of Central Asia and the Middle East who could use the Pakistani territory to transmit gas and oil to such areas of high levels of consumption as China and India.

The fifth area needing governments attention would also be the most innovative and perhaps the one that will bring in the highest rewards. The state should stet up two triangles, one in central Punjab encompassing the cities of Gujrat, Gurnanwala and Sialkot, for the creation of a parts and components industry aimed at providing inputs to large manufacturers around the globe who increasingly rely on outside suppliers for the inputs they need.

These cities have the beginnings of this industry but they need the infrastructure (roads and airports), research and development, and skill development institutions that only the state can provide. The second triangle should be set up in the deserts of Sindh to cater to the outdoor needs of the Arabs who have always been looking for desert related recreational activities in Pakistan. Once again the state will need to create the infrastructure such a triangle will require to become attractive for foreigners.

Perhaps, the best way of taking advantage of the opportunities that still exist would be to set up a Trade Development Authority headed by a deputy prime minister with highly skilled staff whose compensation is linked to performance. The Authority should be giving the target to aim for trade reaching 80 per cent of the GDP by the year 2020.

By that time Pakistans economy could reach $500 billion. This means that the value of trade will have to reach $320 billion in terms of both exports and imports.

While the economy would be three times its present size in real terms, international trade would be 8 to 10 times as large. This is not an impossible task to achieve. It can be done but it will need real political, bureaucratic, economic, and managerial effort. If Pakistan succeeds, it would have ensured a better place for itself in the international economy and, in the process, also create a vibrant domestic economy.

The failure to connect with the world -DAWN - Business; December 31, 2007


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## Neo

*Economicscenarios​*
Let us try to discern if there will be any change for the benefit of all after the upcoming elections. Without intent, there can be no change at all. While party manifestoes do not delineate the strategy, they depict the direction in which they may give a light deft touch once in the office. This direction needs a closer look.

While PML-Ns manifesto focuses primarily on the means and PPPs primarily on the ends, PML-Qs is a combination of means and ends. PML-Qs D for development, however, should encompass everything under the sun even though their Punjabi advertising jingle on Urdu channels promotes them as more of a provincial party than a national party. Their verbal emphasis though is on infrastructure projects, literacy and health. While emphasis on education and health is fine, their view of development being synonymous with roads and dams building betrays that naïve view according to which roads construction is all there is to development. One feels like asking this lobby if the bones by themselves comprise the entire human body. If not, then roads too are not development but only one of the issues that may factor into it.

We have learnt over time that industrialisation is not development nor is urbanisation development. Nor is education by itself development unless there is a scheme to utilise education for overall national development. For, overall national economic development, the single most important means is found missing in the manifestoes of all major parties.

It is the PPPs manifesto that strikes a chord with the commoners when their E-words begin with employment and end on equality. It remains unclear though how these twin goals will be achieved meaningfully in the absence of land reforms. Over time, the PPP has disavowed Zulfiqar Ali Bhuttos attempt at land reforms and agricultural income tax. While the PPP continues to focus on the issues of the grassroots, economic policy direction will not be significantly different from that given by the IFIs (international financial institutions). This aspect is going to cut across party lines.

Regardless of the major party in the office, we will continue to hear the same old slogans of economic reform here and economic reform there that impacts the urban middle and affluent classes more favourably than the downtrodden. There will be privatisations regardless of who is in the office. But, will there be large-scale labour retrenchment of the kind we experienced during the tenure of Shaukat Azizs government?Probably not under a PPP government with their strong pro-employment view. Probably yes under a PML-Q government that is likely to be performing a balancing act between the external and the internal forces which balance is likely to tilt more in favour of the external forces knowing their past disposition. And, something of the middle-of-the-road under a PML-N government whose power base also comprises the wealthy urban segments with promises for the poor.

It is feared that the PPP will again pack public sector organisations with its loyalists to provide employment to them. It is unclear how the PPP will deliver on its employment promise meaningfully in the absence of land reforms and in the absence of skilful managements that alone can utilise a given amount of workforce. By the same token, it is unclear how economic equity will be promoted by the PPP.

Having said that, commoners concern for prices in general and food prices in particular will factor more into PPPs economic decision-making than will be the case with PML-N or PML-Q already known for totally ignoring the plight of the people on this score.

One might argue that these are the only two differentiating features of the PPP and what is in it for the urbanites who too must have a payoff from the party in office? While the economic status quo of the urbanites is not likely to be impacted by any one of the three major political parties as all three are likely to toe the line given by the foreign lending agencies, it is only the PPP that is likely to impact the issue of terror probably in a meaningful way. With terror are linked the issues of investment and urban prosperity and peace.

PML-N is least likely to put its heart in an operation against the terrorists. PML-Q is right-leaning too and is known for it. So, none of these two parties are likely to be decisive on this front. But the struggle against terrorism cannot be won until the ideological and economic underpinning of terror is rooted out. The economic sources of supply to terror will remain very much in tact unless poverty and deprivation are rooted out that does not appear to be even on PPPs cards yet.

(The article was written before the assassination of Benazir Bhuttto)

Economicscenarios -DAWN - Business; December 31, 2007


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## Neo

Expanding trade with Russia

By Sultan Ahmed



Russia wants larger trade relations with varied economic exchanges with Pakistan and to reactivate the bilateral consultative machinery for such cooperation. It wants economic ties as the backbone of good relations between the two countries. The Pakistan Steel Mills was established in spite of the cold war is a proof of the Russian policy.

Pakistan-Russia trade has increased to $140 million from $20 million in eight years. That is much too small a figure compared to the possibilities and the need for far larger trade.

Now two Pakistani banks- National Bank of Pakistan and the Askari Commercial bank are to open their branches in Russia to facilitate such trade.

There is no agreement for Russian banks to open branches in Pakistan on a reciprocal basis.

The Russian ambassador in Pakistan, Sergey Npescow, who met Mr Tariq Ikram, chairman of the Trade Promotion Authority along with his consul general and commercial secretaries called for the revival of the Pakistan- Russia consultative council to promote larger trade. He also wants single country exhibitions of the products of each country in the other so that the people on both sides will know their products and want to buy them.

The $140 million trade is much too small a fraction of the total trade of the two countries. The Russian ambassador also wants Pakistan to open a trade or display centre in Moscow. There has also been talk of cooperation between Russia and Pakistan in the area of oil and gas exploration and development of the gas industry.

Meanwhile, business representatives of India, China and Russia met in Delhi for the first time and resolved to expand the trilateral trade and form an India, China, Russia partnership. Trade between India and China now stands at $25 billion and trade between Russia and China is double of that and trade between Russia and India is four billion dollars, mostly in the form of Russian arms bought by India. A second meeting of this new partnership will take place in Beijing next year to explore new areas of trade . Pakistan can trade easily with Russia as the goods can pass through the Central Asian States (CAS). But political factors have stood in the way.

The first was Pakistans link-up with the anti-Russian Baghdad Pact and then CENTO. Later Pakistan was backing the Taliban and Afghanistan and prior to that in the civil war in Afghanistan , Pakistan was on the other side facing the Russians.

Anyhow, between the two periods, Russia offered Pakistan the steel mills with an initial capacity of one million tones and eventual capacity of three million tones. Pakistan accepted the offer after considerable prevarication following the initiative of the late Zulfiqar Ali Bhutto. And president Zia ul Haq opened the mill in the 1980s. But that did not pave the way for larger economic cooperation between the two countries, while India traded merrily with Russia including the Central Asia. Eventually the steel mill was sold to a Saudi party and the Supreme Court vetoed it because of the indecent haste in which the sale was done.

Contacts between Russian and Pakistan officials have not been frequent following the link-up of Pakistan with the Taliban. All that was to the advantage of India whose trade with Russia expanded considerably.

After the break-up of the Soviet Union, there was a flurry of visits by Pakistani businessmen to the Central Asian States liberated from Russia but many of the trade deals negotiated could not materialise as the commercial infrastructure was not there. The Russians too were not familiar with the norms of free trade as they were totally new to it so several trade deals fell through and some Pakistanis came to grief but now it is a more settled Russia under Vladmir Putin that Pakistan businessmen have to deal with.

Russia is also an oil and gas exporting nation which has now come up with a 10 per cent tax on oil exports. If the Russian companies can look for oil in Pakistan that should be welcomed. Russia is also reported to be interested in participating in the Iran-Pakistan-India gas pipeline. While India, Russia friendship is very firm, their current total trade at four billion dollars is too small. Compared to that Indias trade with China is at $25 billion. That is because India has de-linked trade from politics and has adopted an economic approach to trade.

Pakistan has no political hang-up with Russia so it should send a large trade mission to Russia which will then break-up in to small groups and negotiate trade deals. That should follow the establishment of two Pakistani banks in Russia whose technical advice will be very helpful.

Pakistan is looking for new areas to export and new products to send abroad. Russia is such new territory. The CAS should also be explored more thoroughly instead of the Pakistani businessmen sticking to the beaten path and making only marginal achievements. Pakistan businessmen have to be far more enterprising and make the initial investment in such exploratory trips.

When Russia , India and China have formed a partnership to expand the $39 billion trade among them, Pakistani businessmen cannot sit tight and expect the government to spoon feed them. Businessmen should lead the way instead of looking for official initiatives.

Expanding trade with Russia -DAWN - Business; December 31, 2007


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## Neo

*Unrest destroying Swat economy​*
THE armed conflict in Swat has badly affected the local economy and the livelihood of the bulk of the population in this scenic valley and a popular tourist resort. The unrest in the area started after the army launched a massive operation against the militants last month.

Whereas the government does not have any authentic data on physical and human losses, according to media reports, more than 300 people, including militants, security personnel and civilians, have been killed and the material losses run into billions of rupees.

Apart from hotel, tourism and horticulture industries, the economy of Swat is based on silk and cosmetics manufacturing units, which provide employments to thousands of local workers.

Information gathered from the volatile region indicates that the ongoing conflict has not only resulted in migrations of people southward but has also badly affected the local businesses.

Since the military operation was launched in the area, more than 350 silk and cosmetics factories have been closed rendering thousands of workers jobless. The prolonged closure of these units is also posing threat to their future operation.

The silk industry is mostly located at Rahimabad, Nengulai, Lower Bandai, upper Bandai, Matta, Kabal, while cosmetics factories have been set up at Gumbad Mera, Navay Kalay and Rehmanabad.

The silk industry, sources say, was already in crisis because of increasing cost of production, and the prevailing unrest may make its survival more difficult.

This industry, which played a significant role in shaping the local economy, was established in early 60s, when the valley was an autonomous state governed by the Wali, Miangul Jehanzeb.

The silk industry was set up in this tax-free zone on the condition that the machinery once installed would not be shifted elsewhere. Investors from Sindh and Punjab had established this industry, which was fed by comparatively cheap raw material from Afghanistan.

Investment in this industry improved the socio-economic condition of the people of the area enabling them to give their children quality education.

Same is the case with the cosmetic industry, which swiftly replaced the silk industry. Many silk units closed down because of higher prices of raw materials. According to locals, most of the leading brands of cosmetics are produced in Swat.

Many of the units are now closed and their revival would take time because most of their technical staff belong to other provinces and are reluctant to return unless the situation improves.

If the clashes continue, the industrialists would scrap the machines, because even now, they are unable to pay the power and water bills and the rent of the factory premises, says a unit owner.

Swat, a valley of scenic beauty, beautiful landscapes and snow-capped mountains, is an attractive resort for both the domestic and international tourists. The area also enjoys a rich historic legacy and has several historical places of tourists interest. This has encouraged the private sector to invested billions of rupees over the years in the tourism industry.

According to Zahid Khan, the president of Hotel Association, more than 25,000 workers are employed by some 500 hotels of the Swat district. The industry is mainly dependent on tourism for its business. Its growth has remained at the lowest ebb because of security concerns for the last couple of years. But still, it is the main source of income for thousands of families.

Horticulture is another source of livelihood and business in Swat districts. It has orchards of fine apples, parsimon (Japanese fruits) peaches, apricots, plums, walnuts and other different fruits.

Heavy shelling by security forces has destroyed hundreds of fruit orchards and vegetable fields, thus depriving the people of their earnings. Those who migrated from the area, have been the worst hit.

The horticulture business involves huge working capital, which the farmers normally borrow from banks for purchasing seeds, pesticides and fertilisers. But this time, most of the people would not be able to get a fair return on their investment because of damages caused by the ongoing conflict.

The conflict has also affected a number of mega development projects in the adjacent areas. Among these projects is the Malakand-III hydropower project initiated by the NWFP government. The project, which will generate 81MW electricity, has been delayed due to various reasons including the current Swat conflict.

According to Sarhad Hydel Development Organisation (SHYDO) officials, the project is now almost complete to start commercial generation but has been delayed as the Chinese engineers have left the area after the deployment of army and are reluctant to return and complete the leftover work.

Work on three other hydro-power projects in districts of Kohistan and Shangla has slowed down because the Chinese engineers have been shifted to Islamabad for security reasons.

Officials at district administration and the local business community want that the government should first gather authentic data about the financial losses and then extend a compensation package as relief to the affected people.

Unrest destroying Swat economy -DAWN - Business; December 31, 2007


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## Neo

*Bullish trend on KSE ​* 
KARACHI (December 31 2007): The share market, Karachi Stock Exchange (KSE), witnessed bullish trend during the outgoing week as the benchmark KSE-100 index hit at all-time high level of 14,814.85 points. It, however, finally closed below that level as the investors opted for profit-taking on available margins.

The KSE-100 index finally closed at 14,772.08 points level with a net gain of 113.25 points on week-on-week basis while the parallel free float market capitalisation-based KSE-30 index surged by 115.53 points on weekly basis and finally settled at 17,578.78 points level on the end of the week.

Trading activity further improved during the week as the average daily volume of ready market increased to 299 million shares as compared to 216 million shares traded a week earlier. The average daily turnover of futures market surged to 61 million shares against 25 million shares of the previous week.

The overall market capitalisation increased by Rs 34 billion to Rs 4.543 trillion on the end of the week as compared to Rs 4.509 trillion on the same day a week earlier.

This week was the three-day week as the market remain closed on December 25 on account of Quaid-e-Azam birth anniversary while the KSE management announced to close the market on December 28 due to law and order situation in the city after assassination of PPP Chairperson Benazir Bhutto. The previous week was also a three-day week due to Eid holidays.

The market started on a bullish trend on Monday and the KSE-100 index broke its previous record (14,787.55 recorded on October 19, 2007) and closed at its all-time highest level of 14,791.92 points. The index gained 133.09 points on the first day of the week on the back of strong interest of foreign and local investors mainly in banking and oil sector stocks.

The KSE-100 index hit 14,832.30 points intra-day highest level for the first time in its history on Monday. The market remained closed on Tuesday due to birth anniversary of Quaid-e-Azam. On Wednesday, the market continued its upward trend and the KSE-100 index closed above the 14,800 historic level for the first time in its history at 14,814.85 points with a fresh gain of 22.93 points. The market started on a positive note and the KSE-100 index hit 14,875.79 points, highest ever intra-day high level, but the profit-taking in some select stocks pushed the index in negative zone at 14,765.88 points intra-day low level.

Late buying in some banking stocks supported the index to close in positive with a marginal gain of 22.93 points. The overall market capitalisation surged by Rs 9 billion to reach new high level of Rs 4.555 trillion.

On Thursday, the market took downturn on the back of profit-taking opted by the market participants. Although the market started on a positive note and the KSE-100 index hit 14,875.40 points intra-day high level, but it failed to continue its upward trend as the market participants opted for profit-taking on available margins. Finally, the KSE-100 index closed at 14,772.08 points level down by 42.77 points.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Oil shortage hits country: PSO declares force majeure *​ 
ISLAMABAD (December 31 2007): The Pakistan State Oil (PSO) has declared force majeure in the wake of riots, showing its unavailability to transport diesel and other petroleum products from Karachi to upcountry.

The PSO declaration created a crisis for the government, which immediately convened an emergent meeting in Islamabad on Saturday last to work out some alternative arrangements to resume supply of oil and avert the looming crisis. PSO and any other Oil Marketing Company (OMC) can declare force majeure to show unavailability in transporting oil from the port or main depots to upcountry in the case of any natural calamity or the crisis unmanageable.

Sources said breaking out of riots following PPP chairperson Benazir Bhutto's killing in Rawalpindi on December 27, PSO could use the option of force majeure. Now the responsibility of oil transportation and supply to upcountry lies with the federal government.

Sources said after PSO declaration, the federal government decided to bring in the National Logistic Cell (NLC) and Pakistan Railways (PR) for transporting oil from Karachi to Punjab and other parts of Pakistan.

The meeting was told here that the on-going riots have affected oil supply from Karachi to other parts of Pakistan and some urgent arrangements were needed to avert a serious crisis in coming days.

After the meeting an official told Business Recorder that the federal government has engaged NLC and PR for lifting oil from Karachi to maintain supply to upcountry.

The riots, which had erupted after Benazir Bhutto's killing in Rawalpindi on December 27, have spread out across Pakistan, bringing life to a standstill. The transport is off the road since the happening. All kinds of activities have come to a complete halt. This situation was of course bound to hit oil supply and threaten its availability to the consumers.

The new arrangements for lifting oil from Karachi to upcountry can hardly work since PR and NLC can not work as the situation is getting out of control in many parts of Pakistan, specially in Sindh. The official said: "We are worried about transportation of oil from Karachi port to other parts of Pakistan as the stocks available with the OMCs and dealers and petrol pumps are perishing quickly.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Oil and gas production ​*
(December 31 2007): The government's efforts to exploit natural carbon resources in Pakistan to increase the indigenous share in energy supplies have proved largely unfruitful, as local oil and gas production remained stagnant during 2004-05 to 2006-07, says a Recorder Report quoting data from an official report.

The study, which covers oil and gas production over the last three years, indicates that the country's total daily oil production in FY2004-05 was 66,079 barrels which, instead of going up, declined to 65,577 barrels in 2005-06, though it showed an upward trend in 2006-07 by touching 67,438 barrels.

However, the impact of the increase in production was not substantial enough to help Pakistan secure an increased share in the total consumption, and thereby cut down oil imports.

According to the report, things in gas production sector too displayed a similar trend, in sharp contrast to official claims, because domestic gas production in 2004-05 was 3.685 mmcfd, which increased to 3.838 mmcfd in 2005-06, but remained stagnant in 2006-07. Like oil and gas, LPG sector too displayed a mixed trend.

The production of liquefied petroleum gas increased from 1,051 tons a day in 2004-05 to 1,462 tons, showing a healthy trend, though the trend lost its vigour the next year, because the daily production could not rise beyond 1,523 tons. Experts maintain that domestic oil production over the last many years has averaged 60,000-66,000 barrels a day, depending on the activities of E&P companies, which cannot be termed a major achievement.

They believe that Balochistan and upper regions of NWFP can make a difference to the country in terms of oil and gas exploration, though the prevailing tenuous security situation there has adversely impacted exploration and production activities.

The largely stagnant trends in oil and gas sector, which our report indicates, should be a cause of serious concern to the government because energy sector serves as a catalyst of economic growth all over the world. It fuels manufacturing, power-generation and services sectors. It has been predicted that when the overall growth rate picks up, the oil import bill too will go up, putting pressure on the balance of payments unless exploration and production activities are geared up well in advance.

According to the available data, as many as 42 companies are at present working in the country, with 118 exploration licences and 127 leases. Further, OGDCL has been engaged in exploration and production work over the last four decades. Even then our exploration and production performance has not been quite enviable. According to a research study, our domestic gas production increased by 23.4 percent, while oil production registered an increase of only 6.6 percent in 2005-06.

Paradoxically enough, despite the increase in domestic production, the country's oil import bill increased by 35 percent to $4.2 billion in 2005 due to its heavy dependence on oil imports as well as the rising oil prices in international market.

This ought to have prompted the government to speed up exploration activities to offset the mounting oil demand. In 2005, our indigenous hydrocarbon production remained skewed towards gas, which is said to have accounted for 90 percent of the combined domestic oil and gas production. But here too the production level has not kept pace with the demand.

A major trade policy concern of Pakistan has been to augment its manufactured exports in the world trade, which calls for greater competitiveness of our exports. But the rising international oil and gas prices, coupled with almost stagnant domestic production will further erode the competitiveness of our exports if additional energy resources are not developed in time.

The widening gap between supply and demand has therefore put us in a desperate race for time and investment. (It is said that we will need an investment of $20.4 billion in power sector alone by the year 2013. But can we arrange this type of investment?)

The government should ask oil and gas companies currently engaged in exploration and production work in the country to undertake fast-track projects so that we are able to retain the competitive edge in international market. There is also need for the energy bureaucracy to activate its field staff to get things done speedily.

Secondly, the government should evolve a strategy to ensure a peaceful environment in Balochistan and parts of insurgency-hit NWFP so that oil and gas exploration activities can be carried out in relative peace. Only by launching a multi-pronged, pro-active initiative can the government achieve these targets.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan needs Rs 66bn to improve irrigation network, says ADB​*
* Report warns countrys dams losing storage capacity 
* Govt claims more than 41,459 watercourses lined from 2004-05 to 2006-07

ISLAMABAD: Pakistan requires over Rs 66 billion to improve its irrigation network, Asian Development Bank (ADB) says in its recent report titled Country Water Action: Pakistan Irrigation Links Government with Farmers. 

The ADB warns in its report that Pakistans water network is on the decline and dams are losing storage capacity due to siltation and huge volumes of water seep through canals in poor condition, wasting an estimated two-thirds of total available water every year.

Pakistan has more than 160,000 watercourses comprising distribution network that takes water directly to the farms. More than half of these watercourses are in Punjab province, the biggest agricultural producer. The system commands a land area of 14.3 million hectares, making it the backbone of Pakistans agriculture and contributes one-fourth of countrys total gross domestic product (GDP). 

The ADB report further says that big reservoirs in Pakistan store some 20 million-acre feet (MAF) of water and farmers across the country also pump an estimated 40 MAF of groundwater to irrigate their lands. Since National programme for the improvement of watercourses (NPIW) started in 2004, 40,300 watercourses have been improved out of a targeted 87,000 watercourses.

Govt claims: However, the government claims the target set for financial years 2004-05 to 2006-07 is to line 38,200 watercourses across the country but the NPIW has been able to line more watercourses than the actual targets. The total watercourses lined during this period are 41,459. The total funds released for this period stand at Rs 19.713 billion of which 8,306.148 million were released to Punjab, 3,803.093 million to NWFP and 2,122.331 million to Balochistan.

The funds released to Sindh and FATA stood at Rs 5,132.399 million and Rs 63.454 million respectively to improve watercourses under NPIW programme. The government has also set the target for 2007-08 of lining 18,700 more watercourses across the country. 

Since the NPIW initiation, farmers say there have been substantial savings on water after their local water systems were given a new lease on life. 

Some farmers claim that their crop production has risen by 30 to 50 percent.

Daily Times - Leading News Resource of Pakistan


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## Neo

*US investors having second thoughts ​* 
Tuesday, January 01, 2008

LAHORE: Benazir Bhuttos assassination has cast a huge shadow on the countrys attractiveness as an investment destination, says Syed Dilawar Abbas, President Organisation of Pakistani Entrepreneurs of North America (OPEN), Silicon Valley chapter who is on a brief visit to Pakistan nowadays.

Talking to The News, he said in the wake of emergency measures and moves against an independent judiciary, the countrys image had already received a major blow. The investors, especially those in the US, who were starting to question Pakistans capacity and commitment to uphold business rules and contracts must now wonder when political stability will return to the country, he said. 

When we hold elections, who will participate, who will provide credible leadership to the PPP, which is poised to do well in fair polls, are now questions of equal interest to investors. The Pakistani diaspora must step up efforts at this challenging time for the country to educate and guide key global influencers and decision-makers, he added.

On the importance of an independent judiciary, Abbas said it was essential for contract-servicing which was a major concern of corporations making overseas investments. That is why the countries having better dispute resolution mechanisms are considered the first choice of foreign investors.

Thanks to the judiciary, Dilawar Abbas said, that Pakistani government honoured contracts signed with Daewoo of Korea and Independent Power Producers (IPPs) despite its reluctance to do so. 

It is critical we move quickly to restore the judiciarys independence in the country and project Pakistan as an investment destination where judicial process is fair and key pillars of the government are in harmony with each other, he added.

US investors having second thoughts


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## Neo

*Banks borrow Rs55bn from SBP, rupee falls *​ 
Tuesday, January 01, 2008

KARACHI: The banks had to borrow from the central bank on Monday as overnight rates stayed glued to top levels ahead of the year-end, dealers said.

Overnight call rates ended at 9.90 per cent, unchanged from Thursdays close, and just below the 10 per cent discount rate at which banks borrowed Rs55.31 billion from the State Bank of Pakistan three-day repo facility.

Banks were closed on Friday and Saturday following the assassination of former prime minister Benazir Bhutto. Banks had borrowed Rs59.32 billion from the facility last week. The market is likely to remain tight the rest of the week as there are no major cash inflows except for Rs27.2 billion on Thursday, said a brokerage dealer. Also, cash demand tends to rise close to year-end, he said.

In the currency market, the rupee closed at 61.55/60 to the dollar after hitting a six-year low of 61.95, and softer than Thursdays close of 61.32/34. Currency traders said the central bank was seen intervening to support the local currency from around 61.80-61.90.

Dealers said the rupee eased on increased dollar demand as importers bought the US currency to clear year-end payments. However, they said the rupee was expected to steady in days ahead. 

Banks borrow Rs55bn from SBP, rupee falls


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## Neo

*Consumer-based growth no more sustainable ​* 
Foreign reserves running dry, no more family silver left to sell

Tuesday, January 01, 2008

LAHORE: The growth based on consumerism has now become unsustainable, as the country does not have enough foreign reserves or family silver to offer to foreign investors to sustain the ever-growing trade deficit.

The government has been plugging trade deficit for the last two years through foreign direct investment (FDI) including the privatisation proceeds obtained by selling family silver in shape of profitable public enterprises, workers remittances and grants/loans. Barring workers remittances, other sources of foreign exchange are under severe pressure.

Pakistans sovereign rating was first downgraded after the proclamation of emergency in November and now the riots and political uncertainty after the killing of Benazir has forced the global rating agencies to warn of another downgrade. 

The government has already disposed off its major banks to the foreigners, the telecom giant PTCL and Ufone are also controlled by the foreigners. Most of the smaller banks have been taken over by major global banks. The investment climate was already deteriorating due to failure of the government to control terrorism. Benazirs removal through terrorist act has put the last nail in the coffin of investment by the foreigners.

What pains most economists is that Pakistan lost a golden opportunity to claim some share in global markets through skewed investments and expenditures during last five years when the money was flowing in the country.

The economic managers fooled the nation for three years by explaining that the increase in imports was due to increase in the import of industrial machines and raw materials. There is no doubt that there was increase in import of these items but then there was simultaneous increase in the import of the luxury goods as well. The import of bigger cars was liberalized and at one stage crossed $1 billion. The mobile phone import added $1 billion to import bill. The food items imports that five years back were below $1 billion crossed the $3.5 billion mark last year. Only oil bill increase was beyond governments control that has increased by $5 billion in last five years.

The increased investment in industry did not translate into increased exports. The increased production in automobiles, television sets, air-conditioners and other home appliances was consumed domestically. The engineering sector exports remained stagnant. The exports increased in textile sector only but not corresponding to the investment made in this sector.

The economic managers adopted the similar policy to sustain growth that was adopted by the highly developed United States after 9/11 that is to contain recession through domestic consumption. They ignored the fact that US economy had the capacity to absorb and tolerate increased pressure on its trade gap while Pakistan cannot sustain this pressure for long. One thing that goes in favour of the US is that its foreign currency inflows are still the highest in the world while FDI in Pakistan is erratic, lopsided and volatile. 

Five years back Pakistans foreign exchange reserves were sufficient to finance a years import bill. Now the available dollars with the central bank can hardly boot its five months import bill. The situation would have gone worst had Pakistan not received huge influx of foreign assistance and remittances during this period. The pressure would now be on the foreign exchange held by the central bank. It would weaken the rupee.

The economic managers of Pakistan compare its economic growth with China and India but they conveniently ignore the fact that these countries have cushioned their currencies against devaluation by amassing foreign exchange reserves equivalent to over a year of their import bill.

Consumer-based growth no more sustainable


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## Neo

*LCCI president vows to boost economic growth *​ 
Tuesday, January 01, 2008

LAHORE: The newly elected LCCI President Muhammad Ali Mian, on Monday unfold his future plans and pledged to work for removing hurdles in the way of economic growth.

I, with the support of the business community, would make all-out efforts to bring down the cost of doing business in this resource-rich country besides taking measures for early building of new water reservoirs to overcome the shortage of power, said Mian speaking at LCCI Annual General Meeting (AGM). Newly elected Senior Vice President Mian Muzaffar Ali, Vice President Shafqat Saeed Piracha, outgoing President Shahid Hassan Sheikh, Outgoing Senior Vice President Yaqoob Tahir Izhar, outgoing Vice President Mubasher Sheikh also spoke on the occasion.

Mian said that country was already passing through a crisis-like situation and the assassination of Benazir Bhutto has further aggravated it and to cope with the situation we all collectively would have to play our role. Unfurling his strategy, he said that he would not only prepare Pakistans first export directory that would definitely help achieve export target but would ensure establishment of Income Tax, Customs, Sales Tax and Nadra Desks/Kiosk at the Lahore Chamber of Commerce and Industry so that the LCCI members problems regarding these departments could be solved expeditiously.

He said that special measures would be adopted to further strengthen public-private relations and to cope with the challenges being faced by the economy of the country. He also called for a solid strategy to solve the issues including shortage of energy, development of infrastructure and creation of employment opportunities.

The newly elected president said that he would ensure dissemination of all trade-related information to the business community so that Pakistani exports could go to the required height. He urged the businessmen to join LCCI Standing Committees and take part in their meetings so their voice could reach the concerned circles. He also demanded of the WAPDA, PTCL, WASA and Sui Northern Gas Pipelines (SNGPL) authorities to announce three-day extension in submission of utility bills as the banking channels remained closed due to the assassination of Bhutto for three days and January 1, was a banking holiday.

He said that due to three-day official mourning observed in connection with PPP chairpersons assassination, it was not possible for the people to submit their utility bills therefore an extension in the date would help people submit their utility bills within date. The newly elected Senior Vice President Mian Muzaffar Ali said that he had a clear vision about the issues need to be tackled on priority basis and he would take up all the problems with the concerned government departments.

The newly elected Vice President Shafqat Saeed Piracha while appreciating the performance of out-going office-bearers said that no efforts would be spared to maintain the status attained by the Lahore Chamber of Commerce and Industry. He said that he would use all his abilities to serve the business community. The out-going LCCI President Shahid Hassan Sheikh, Senior Vice President Yaqoob Tahir Izhar and Vice President Mubasher Sheikh spoke at length on the projects accomplished during the year. The out-going president also sought the approval of accounts from the participants of the meeting. Earlier, the Returning Officer Nadir Kamal Usman formally announced the results of LCCI polls.

LCCI president vows to boost economic growth


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## Neo

*Questions about health of economy in 2008​*
KARACHI, Dec 31: What the year 2008 has in store for Pakistans business and economy? This question begs for an answer from the economic managers, as on the last day of the year 2007, Karachi Stock Exchange, once proclaimed to be the best performers in Asia, dipped down by as many as about 700 points. The rupee exchange value touched bottom lowest in last six years at Rs61.95 for a dollar at one time. It was salvaged only by the central banks intervention.

Wild fluctuations in share values in stock exchange, according to a market analyst, help a set of brokers, and there are reasons to believe that quite a few of them are set to make a few more billions from Monday trading.

So is the case in rupee exchange value fluctuation. Pakistan is one country where rich, powerful with right connections make money from swing of pendulum, whichever way it is, the analyst remarked.

But Pakistan has now taken a plunge in a deep political uncertainty that has engulfed entire business and economic activities in the country.

A well-known leader from Jodia Bazar, the biggest commodity market in South Asia, has said investors of commodity trade are fast moving out of the business.

Existing contracts are being scrapped and no new contract for supply and purchase of commodities is not being made, he said.

Food inflation was already in double digit; much before the present uncertainty has set in. It is now more pronounced and consumers complained on Monday of not being able to get provisions.

Wheat flour was not available in many parts of the city. It was priced at Rs24 to Rs26 a kg where it was available in ration. Sugar, edible oil, pulses, rice, milk and eggs are already costly and there is a fear of prices of many of these items going further up as political situation becomes murkier in the coming days.

Two of three kharif cropscotton and ricedid not give projected production this autumn.

Sugarcane production was more than the target. But the unending battle between the millers and growers has made sugar a bitter commodity for the consumers.

About three million bales of cotton is expected to be imported. It would on the one hand push up import bill and on the other increase production cost. Rice production is below target and is already being sold at a much higher price.

There is already a lot of confusion about wheat production and supply next spring. The government has fixed a production target of 24 million tons. But market watchers doubt of achieving this target as governments tentative approach in drawing up a policy has put growers in confusion. In the current season, the government messed up wheat marketing and in the face of official claim of 23.5 million tons production, the price of wheat flour in August and September was Rs18 and Rs19 a kg.

The lingering political uncertainty is bound to cripple the business and economic activities that may bring down further industrial production which in turn may further retard export growth.

A slowdown in industrial and agricultural production may cause spur in import demand for goods and import bill at the end of June 2008 may touch $36 to 37 billion. The trade deficit by June next may swell over $15 billion and there are businessmen who apprehend it may touch $16 and even 17 billion.

Pakistani rupee is already under severe strain, and the State Bank of Pakistan is intervening on many occasions to keep the Rs61.50 per dollar.

Mondays steep fall in rupee exchange parity with dollar was a manifestation of mounting pressure on rupee in the inter-bank and in open market. Bankers doubt State Banks capacity for intervening on all occasions.

While the State Bank of Pakistan was warned in 2006-07 of economy coming under impact of a double edge sword (rising trade imbalance and mounting current account deficit and a bulging budget deficit), it is becoming a reality in 2007-08 and may show its fall in next six months of 2008.

There is already a talk of reviewing the 2007-08 budget in the context of new developmentsrising oil prices, mounting pressure of subsidies that is forcing government to borrow from the banking sector. But then there is no political leadership to take hard decisions on these issues.

A caretaker setup is incapablemorally and legallyto take economic decisions with long-term implications. There is a big question mark on countrys politics even after the elections are held on schedule on Jan 8 or if elections are put off to a next date?

Questions about health of economy in 2008 -DAWN - Business; January 01, 2008


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## Neo

*Businesses expect 08 to be more productive​*
KARACHI, Dec 31: Discounting the direct impact on the industry of the current crisis, the business expects Calendar 08 more productive for trade and industry than the year 07 that closed at a sad note as Karachi Stock Exchange lost 700 points in response to a political rumour that led to nervous selling.

The current political and law and order situation in the country, however, failed to knock the positive sentiments completely out of the business community. The businessmen of Karachi, however, were comparatively skeptical.

Iqbal Ebrahim, Chairman, All Pakistan Textile Mills Association, (Aptma), who assumed office of the most powerful association of business in Pakistan on Monday, was upbeat about the year ahead.

We have to look at the positive side of the picture to move on. The prospects in certain segments of textile industry (home textile) are good where overseas customers are looking back to Pakistan as preferred destination after trying out our competitors, he said.

Much will depend on the government and the private sectors ability to reposition itself to compete with confidence in a challenging global business environment, said another tycoon from Lahore.

The industry and the government will have to work closely to readjust structurally to achieve the critical mass in industry to perform well, Shafqat Illahi, the outgoing chairman of Aptma, commented.

The government will have to facilitate the consolidation process to minimise the pain to business who call it a day and opt to exit and help others to become bigger to be able to compete internationally, he said.

Illahi was pointing to the need of putting bankruptcy laws and other necessary legal structures in place.

There is a huge demand for Pakistani cement, food products, home textiles, etc., if we get ready to respond in time, said another tycoon from Islamabad.

There are indications that the construction industry is going to pick up in a big way as many Middle East and Far-East investors are waiting for the next government to settle before making a move and if conditions allowed them to enter Pakistan, at least 36 allied industries will be lifted creating immense opportunities for a score of people, he said.

The President of Federation of Pakistan Chamber of Commerce and Industry was not available for his comments, some leading businessmen contacted in Karachi were not as optimistic.

The first six months of 08 should be written off as the situation cannot normalise immediately. What happens next will depend on what it takes to settle in the first half of the year, Majyd Aziz, ex-president Karachi Chamber of Commerce and Industry, said.

The peace is absolutely necessary for the wheel of the economy to move. Uncertainty discourages investment. The must move and move now to pacify the situation and prove its commitment to development or the business would assume that the government does not cares.

Despite a murky outlook for the economy, prices of most consumer items, including food, are seen settling at elevated levels, spelling more pain for consumers and gains to unscrupulous hoarders and traders.

People at the beginning of the year 07 would never have dreamt that prices would reach such levels. The benefit, however, was reaped by overseas suppliers as the locals failed to adjust swiftly to increased demand for many items, another business leader told Dawn.

Hopefully in an election year, the government would be more diligent in sifting corrupt greedy elements to check maneuvered price increases and let the environment be more attractive for the genuine business in Pakistan.

Dec 27 incident will cast its shadow over the business activities in the year 08 and it would be a difficult year for business in Pakistan, Zubair Motiwala said from Karachi.

Businesses expect 08 to be more productive -DAWN - Business; January 01, 2008


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## Neo

*Textile industry: Thousands of cotton bales set on fire​*
KARACHI: At least four textile mills and more than 2,500 bales of cotton were set ablaze in Sindh during violence after assassination of former Prime Minister Benazir Bhutto, inflicting losses of millions of rupees to the country, traders and spinners said on Monday.

Apparently it is beyond any doubt that nearly four textile mills in Kotri were set on fire resulting in more than 600 cotton bales turned to ashes besides heavy damage to textile machinery and building structures, Ghulam Rabbani, a senior trader said. He said on the National Highway near Ghotki and Pano Aqil in Sindh, around seven trailers laden with nearly 2,000 cotton bales, coming from Punjab were set on fire by the miscreants. Each trailer was carrying about 600 cotton bales, of which half of the stuff was of fine quality.

The textile units included Ireland Textile Mills Limited, Standard Textile Mills Limited, Hafiz Textile Mills Limited besides many other small textile units in Kotri industrial area faced the wrath of the miscreants. Cotton bales worth million of rupees have been turned into ashes at these mills while in Landhi Karachi, cotton bales warehouses were also set on fire, he said.

Mr Rabbani expressed the apprehensions about the future state of affairs in the country, which is apparently turned into the worst ever because of the unfortunate incident of Rawalpindi.

He said that trade, business and industry was suffering heavily after the violence, making it hard for the industry and trade to function properly for the time being. A senior member of Pakistan Cotton Ginners Association (PCGA) and president of PCGA Sanghar cotton belt region, Rana Abdul Sattar said the country is already facing shortfall of more than 3.5 million bales during this season.

The recent violence after assassination of PPP chairperson Benazir Bhutto, the owners of the cotton warehouses and ginners in interior Sindh faced losses of millions of rupees as miscreants also set on fire the premises of the industries, he added.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Import of food items increases by 3% in July-Nov 2007-08​*
* The import of soybean oil during July-November 2007 increased by 102.60 percent

ISLAMABAD: Despite having agrarian economy, countrys food imports for selected items registered about 3 percent increase in July-November 2007 as compared to the imports in the same period of the last year. 

Total imports of selected food items in the first five months of the current fiscal years stood at $1.342 billion and the imports of the same commodities last year in July-November 2006 was $1.313 billion. Total food import increased by $29.940 million in current fiscal year as compared to last year, according officials figures obtained by Daily Times from the ministry of commerce here on Monday. 

In total 10 food items, the import of six commodities registered upward trend and four items imports declined. Food items whose imports registered upward trend were milk, cream and milk food for infants, wheat un-milled, tea, soybean oil, palm oil, and all other food items. 

The imports of milk, cream and milk food for infants registered 17.91 percent increase and the current five months imports amounted to $32.928 million against last years $27.927 million. The imports of dry fruits and nuts also increased by 36.04 percent with import of $32.399 million in five months of current year against last years amount of $23.815 million.

The spices import also registered an increase by 2.89 percent. Total spices import in the current five months remained as $1.579 million while last year it was $25.322 million. Total $23.743 spices import increased over the same period last year. 

The import of soybean oil during July-November 2007 increased by 102.60 percent as its import remained at $31.843 million against import of $15.657 million during the same period of last year . 

Palm oil import increased by 47.64 percent in first five months of the current year as compared to the same period of last year. Total import of palm oil amounted to $572.129 million in July-November 2007-08 while last year it was $387.505 million during the same period. 

The import of all other food items also registered an increase of 32.79 percent in current fiscal years five months as compared to the same period of last year. In current five month total import amounted to $463.740 million while last year in July-November it was $349.232 million, showing a net increase of $114.508 million.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pak-Malaysia FTA to be operational from today​*
* Customs duty reduced on import of 5,921 items

ISLAMABAD: Pakistan and Malaysia are set to enter into a free trade arrangement (FTA) from New Year today under Malaysia-Pakistan Closer Economic Partnership Agreement (MPCEPA) 2008-2014. 

In this regard, Federal Board of Revenue (FBR) on Monday announced customs duty reduction on import of 5,921 items under tariff reduction schedule spanned 2008-2014 agreed between the two countries. The ministry of commerce, in this regard, has notified MPCEPA Determination of Origin of Goods Rules, 2007 to facilitate bilateral trade under the agreed framework. 

For trade in goods Pakistan has eliminated tariff on 23 percent of the current imports from Malaysia. On the other hand Malaysia will eliminate tariff on 78 percent of imports from Pakistan. 

The agreement is an initiative by the government of Pakistan to secure market for its export products in Malaysia and deepen the economic and trade relationship with an important member of the region. 

Pakistan has decided to reduce tariff on palm oil by 10 percent MOP on January 01, 2008. The prices of palm oil in the international market have witnessed an unprecedented increase. During the last one year its price has increased from $400 to $900 PMT. It is likely to reach $1,000 by the end of this year. There will, however, be no reduction on the rates of sales tax/federal excise duty levied at 15 percent and withholding tax charged at 2 percent on the imported palm oil. 

Pakistan has given market access to Malaysia on basic raw materials, intermediate goods and machinery. Pakistan has obtained market access for its core export products like fruits and vegetables, seafood, beverages, confectionary, biscuits, gems and jewellery, cotton yarn, cotton fabric, blankets, bed linen, other home textile products and tents and tarpaulins, medicaments and surgical instruments etc. 

Under the tariff reduction schedule import duty on crude oil from January 1, 2008 to be reduced to Rs 8,100 per MT and from January 2014 Rs 7,650 per MT. Palm stearin from January 1, 2008 Rs 8,145 per MT and from January 1, 2014 onwards Rs 7,692.5 per MT. Import duty on import of RBD palm oil from January 1, 2008 Rs 9,720 per MT and from January 2014 Rs 9,180 per MT. Palm oleins import duty from January 1, 2008 and from January 2014 Rs 7,692.5 per MT. Margarine, excluding liquid margarine from January 1, 2008 Rs 1,0260 per MT and from January 2014 onwards Rs 8,640 per MT. 

The issued notification SRO 1261 (I)/2007 stated that in case the rate of customs-duty specified in columns of Table-I and specified in columns of Table-II, as the case may be, is higher than the rate of customs-duty specified in the first schedule to the said act, the lower rate of customs-duty shall be applicable: Provided further that the goods shall be imported in conformity with the MPCEPA Determination of Origin of Goods Rules, 2007 notified by the ministry of commerce vide notification SRO 1205(I)/2007 read with the Import Policy Order as notified by the ministry of commerce, from time to time.

Pakistan and Malaysia Comprehensive Free Trade Agreement (FTA) was signed at Kuala Lumpur Malaysia. FTA is the first bilateral FTA between two Muslim Countries - members of OIC. This agreement is Pakistans first comprehensive FTA incorporating trade in goods, trade in services, investment and economic co-operation and Malaysias first bilateral FTA with any south Asian country. This agreement shall provide a strong foothold to Pakistan in the ASEAN region and help Pakistan achieve summit level partnership with ASEAN. 

Exports from Pakistan were being subjected to higher tariff in Malaysia as compared to similar goods exported from ASEAN member countries. Resultantly, Pakistan was losing market in Malaysia for its core export product. This agreement would provide a level playing field to Pakistani products in Malaysian market.

In trade in services, both countries have provided WTO plus market accesses to each other. In the field of computer and IT related services, Islamic Banking, Islamic Insurance (Takaful) Pakistan has secured 100 percent equity in Malaysia. Market access in services provided by both countries will impact positively on investment and trade in goods. Mutual recognition arrangements are also apart of the FTA. These arrangements will provide a framework for accreditation of education institution and academic programme and facilitate the effective and efficient delivery of services. The agreement also contains a chapter on investment to facilitate entrepreneurs of both countries.

Daily Times - Leading News Resource of Pakistan


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## Neo

Plasma said:


> Quick question New, what do you think the effect of Bhutto's assassination will be on our economic front? Seems like industrial work has halted and investors are pulling out, how long do you think it will continue?



Its worse than I thought! 



> *Pak suffers loss of Rs 300bn after Benazirs killing​*
> ISLAMABAD: A cabinet meeting was told on Monday that the country had suffered a total loss of Rs 300 billion of which banks suffered an estimated loss of Rs 100 billion, Online reported.
> 
> The meeting was told that the country had suffered colossal losses in rioting that erupted after the killing of Benazir Bhutto with a damage of about Rs 12.38 billion to the railways alone, according to staff report.
> 
> Manufacturing, revenue, exports have all suffered badly, the cabinet was told.
> 
> The railway system was hard hit with 22 locomotives and 140 coaches completely burnt and the railway telecommunications and signalling systems damaged, it was told.
> 
> The meeting was told that the supply of fuel and food to all parts of the country had been hit by the trouble. staff report/online
> 
> Daily Times - Leading News Resource of Pakistan


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## Neo

*31 NWFP hydel projects in the doldrums due to lack of funds​*
PESHAWAR: Around 31 hydel projects in the NWFP are in the doldrums due to disinterest of the federal government and lack of funds with WAPDA and the Sarhad Hydel Development Organisation (SHYDO).

A report released by WAPDA said that these hydroelectricity projects, if completed, will produce 13,584 megawatts of electricity which would not only remove power shortage and provide electricity at cheaper rates but would also bring an industrial revolution in the country.

The power projects that have not been launched for the past several years include 2712-megawatt Dasu hydel project in Kohistan district at river Sindh site, 1500-megawatt Churnala project in Kohistan, 1172-MW project in district Pattan Kohistan, 1043-MW Thakot project, 960-MW project at Tarbela Dam, 74-MW project at Munda near River Swat, 652-MW project at Soki Kinari near River Kunhar in Mansehra district, 500-MW hydel project at Spatgah Dasu in Kohistan, 454-MW project at Kundya Kuram in Kohistan, 410-MW project at Kalaam in Swat district, 334-MW project at Gariat in Chitral, 223 MW-project at Korag Pareet in Chitral, 219-MW project at Naraan in Mansehra, 200-MW project at Spatgah Dasu, 150-MW project at Madyan in Swat, 147-MW project at Kalaam, 133-MW project at Spoor Chitral, 133-MW project Puternad near River Kunhar, 127-MW project at Shagosin in Chitral, 115-MW project at Sharmai in district Dir, 110-MW project at Khazana in district Dir, 105-MW hydel project at Gabral Swat, 80-MW project at Poor in Chitral, 79-MW project at Ankht , 65-MW at Loi, 52-MW at Booni, 52-MW at Kotu in Dir, and 51-MW hydel project at Mojugram in Chitral.

The feasibility report of 13,584-MW projects has been prepared but work on the construction of these projects has yet to be started owing to non-availability of funds. The WAPDA report said the NWFP government would annually earn huge royalty amounting to billions of rupees, in addition to development in the province, if funds are provided for construction work on these projects.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Phased tariff cut on 5,921 Malaysian items announced ​* 
ISLAMABAD (January 01 2008): The Federal Board of Revenue (FBR) has announced phase-wise tariff reduction, from 2008 to2014, on import of 5921 items from Malaysia, including crude oil/RBD palm oil. The FBR on Monday issued SRO 1261(I)/2007 to notify reduction of customs duty on the import of these items from Malaysia under Malaysia-Pakistan Closer Economic Partnership Agreement (MPCEPA) 2008-2014.

The Ministry of Commerce had notified MPCEPA Determination of Origin of Goods Rules, 2007 to facilitate bilateral trade under the agreed framework. Pakistan has reduced customs tariff on 23 percent of current imports from Malaysia. On the other hand, Malaysia will eliminate tariff on 78 percent of imports from Pakistan. The agreement is Pakistan's initiative to secure market access for its exportable products to Malaysia and deepen the economic and trade relations with a key member of the region.

Under the tariff reduction schedule, the FBR will charge customs duty at the rate of Rs 8100 per metric ton (PMT) on import of Malaysian crude oil (PCT heading 1511.1000) from January 1, 2008.

Now, the rate of customs duty on crude oil would be Rs 8100 PMT from January 1, 2009; Rs 7650/MT, January 1, 2010; Rs 7650/MT, January 1, 2011; Rs 7650/MT January 1, 2012; Rs 7650/MT January 1, 2013 and duty at Rs 7650/MT would be charged on the import of this item from January 1, 2014.

The reduction in tariff on palm oil was a major issue in the negotiations as import of palm oil from Malaysia involves substantial import having annual value of over $375 million. Pakistan offered to reduce tariff on palm oil by 10 percent on a margin of preference on January 1, 2008 and further 5 percent on January 1, 2010 and to which Malaysia finally agreed.

The rate of duty on the import of palm stearin would be Rs 8145/MT from January 1, 2008; Rs 8145/MT January 1, 2009; Rs 7692.5/MT January 1, 2010; Rs 7692.5/MT January 1, 2011; Rs 7692.5/MT January 1 2012; Rs 7692.5/MT January 2013 and Rs 7692.5/MT would be charged as duty on the import of this item from January 1, 2014.

The duty rate on the import of RBD palm oil would be Rs 9720/MT from January 1, 2008; Rs 9720/MT January 1, 2009; Rs 9180/MT, January 1, 2010; Rs 9180/MT January 1, 2011; Rs 9180/MT January 2012; Rs 9180 /MT January 2013 and Rs 9180/MT would be charged as duty on the import of this item from January 1, 2014.

Customs duty on the import of margarine, excluding liquid margarine, would be Rs 10260/MT from January 1, 2008; Rs 9720/MT January 1, 2009; Rs 9180 January 1, 2010; Rs 8640/MT January 1, 2011; Rs 8640/MT January 1 2012; Rs 8640/MT January 1, 2013 and duty would be Rs 8640/MT on the import of margarine from January 1, 2014.

Pakistan has given market access to Malaysia on basic raw materials, intermediate goods and machinery. Pakistan has obtained market access for its core export products like fruits/vegetables, seafood, beverages, confectionery, biscuits, gems/jewellery, cotton yarn, cotton fabric, blankets, bed linen, other home textile products and tents/tarpaulins, medicaments and surgical instruments etc.

Under the FBR notification, in case the rate of customs-duty specified in columns of Table-I and column of Table-II, as the case may be, is higher than the rate of customs-duty specified in the First Schedule of the Customs Act, the lower rate of customs duty shall be applicable. Provided that the goods shall be imported in conformity with the "MPCEPA Determination of Origin of Goods Rules, 2007" notified by the Ministry of Commerce vide Notification SRO 1205(I)/2007 read with the Import Policy Order as notified by the Ministry of Commerce, from time to time.

Sources said that the Pakistan and Malaysia comprehensive Free Trade Agreement (FTA) was signed at Kuala Lumpur. FTA is the first bilateral agreement between the two countries. This agreement is Pakistan's first comprehensive FTA incorporating trade in goods, trade in services, investment and Economic Co-operation and Malaysia's first bilateral FTA with any south Asian country. This Agreement shall provide a strong foothold to Pakistan in the Asean region and help Pakistan achieve summit level partnership with Asean.

Exports from Pakistan were being subjected to higher tariff in Malaysia as compared to similar goods exported from Asean member countries. Resultantly, Pakistan was losing market in Malaysia for its core export product. This agreement would provide level playing field to Pakistani products in Malaysian market.

In trade in services, both countries have provided WTO plus market accesses to each other. In the field of computer and IT related services, Islamic banking, Islamic insurance (Takaful), Pakistan has secured 100 percent equity in Malaysia. Market access in services provided by both countries will impact positively on investment and trade in goods. Mutual recognition arrangements are also part of the FTA. These arrangements will provide a framework for accreditation of education institution and academic programme and facilitate the effective and efficient delivery of services.

Sources said that the agreement also contains a chapter on investment to facilitate entrepreneurs of both countries. The incentives available to both countries will not be available to investors of other countries and the bilateral investment treaty signed by Pakistan will have no impact on the investment provisions under the FTA.

Although both countries have undertaken to reduce/eliminate tariff gradually yet in order to safeguard against any surge of imports due to trade on preferential tariff bilateral safeguard measures have also been agreed by both countries. The Rights and Obligations to initiate trade remedy measures available under the WTO have been kept intact, sources added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*30 percent foreign investors quit ​* 
ISLAMABAD (January 01 2008): The deteriorating law and order situation has negatively impacted foreign investment as the number of foreign investors has gone down by 25-30 percent as compared to last year, and if the trend is not averted the this percentage is likely to increase further as textile exports.

The main foreign exchange spinner, would reduce by 50 percent till July 2008, Dr Shahzad Arshad, Chairman, Pakistan Cotton Fashion Apparel Manufacturers and Exporters' Association told Business Recorder on Monday.

October, November and December are peak months for textile export orders from foreign businessmen, but the deteriorating political conditions in the country, especially after the assassination of Benazir Bhutto, have hurt the economic activities so drastically that the European customers are hesitant to place orders for the year 2008.

In international market, Pakistan is fast losing its business reputation. "Our output is 40 percent less than the neighbouring countries like Sri Lanka and most of our textile exporters are shifting their business to Bangladesh", Shahzad said.

He said that if the situation remained the same, the country night have to face an extreme reduction of 50 percent in the textile exports by July 2008. Pakistan's share in textile exports is more than 60 percent and a reduction of 60-70 percent would be alarming.

This clearly shows how the political unrest in a country affects its economic conditions. Political stability and the economy stability of a country go hand in hand. A political disorder can make the economy meet the disastrous consequences, he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Enhancing exports ​* 
State Bank introduces new financing facility

Wednesday, January 02, 2008

KARACHI: The State Bank of Pakistan (SBP) is introducing a new long-term financing facility to promote export-led industrial growth in the country. The facility will provide necessary finance to exporters for adopting new technologies and modernising their plant and machinery in line with the international competitive environment.

The SBP in its MFD circular No 7, issued on Tuesday, said exporters (including SMEs) can avail financing under this facility through Participating Financial Institutions (PFIs) for new imported and locally manufactured plant and machinery.

The facility will be available to export-oriented projects with at least 50 per cent of their sales constituting exports or if their annual exports are equivalent to $5 million, whichever is lower. The SBP said that under the new facility financing will be available through commercial banks including Islamic banks and DFIs approved as Participating Financial Institutions (PFIs). The Islamic banks will be eligible to offer LTFF (long-term financing facility) subject to availability of Shariah-compliant products duly approved by the banks and SBPs Shariah Advisor and cleared by SBPs Shariah Board.

SBP in FY 08 will refinance up to 70 per cent of the facility sanctioned by banks while the remaining amount of 30 per cent or more of LTFF shall be financed by PFIs from their own resources to a borrower.

The loans availed under the facility shall be repayable within a maximum period of 10 years including a maximum grace period of 2 years from availment date. However, where financing facilities have been provided for a period of up to five years maximum grace period shall not exceed one year.

SBP shall allocate an overall yearly limit under the facility which shall be sanctioned to individual PFIs on first come first serve basis in line with the internal criteria developed by the State Bank. For January-June 2008, this amount has been fixed at Rs8 billion. The State Bank will assign this allocation among the individual PFIs.

PFIs are instructed to submit their requests for allocation of sub limit within 15 days from issuance of this circular. Subject to the above, there will be no maximum limit for borrowing by the prospective entrepreneurs under the Facility subject to compliance of the relevant Prudential Regulations. 

Refinance under the limit shall be provided to the PFIs on service charge basis, which shall be announced on yearly basis effective from 1st July each year and shall be applicable till end June during the following year. 

For the FY 08 the service charges and rates for end users have been fixed as up to 3 years period of finance the rate of Refinance is 6.50 percent, PFI spread is 1.50 percent while end users rate is 8 percent, whereas, over 3 years and upto five years the rate of Refinance is 6.50 percent while PFI Spread is 2.50 and End Users rate is 9 percent. 

Similarly over five years and upto 10 years rate of Refinance is 7 percent and PFI spread 3 percent and end users rate is 10 percent. Funds provided by the PFIs from their own resources shall be eligible for deduction from the time and demand liabilities determined for the purpose of computation of both Cash Reserve Requirements and Statutory Liquidity Requirements. 

SBP noted that lending under the facility shall also be subject to compliance with the Prudential Regulations as prescribed by the State Bank from time to time for different categories of borrowers.

PFIs shall consider financing based on the debt equity ratio as prescribed in applicable Prudential Regulations for each type of the borrower. The financing PFI may however ask for higher contribution of equity from the borrowers keeping in view their individual risk profile. The new scheme shall be effective as from January 1, 2008. 

Enhancing exports


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## Neo

*KSE recorded 40pc growth in 2007 *​ 
Benazirs assassination, emergency rule cause serious setback to share market

Wednesday, January 02, 2008
By Salman Siddiqui

KARACHI: The year that has just ended, proved to be the record making and breaking period at the Karachi bourse where the assassination of Benazir Bhutto and imposition of emergency rule in the country caused serious setbacks to the glorified shares market.

Though the killing of Bhutto on Dec 27, the news year continued to minimise heavy gains on panic selling, but owing to resuming only one session at the KSE after her demise, the losses of 2007 were borne limited in the 100-index. Despite the fact that the past year was declared as the election year that depicted extreme volatility at the KSE and during this year country faced the worst law and order situation amid uncertainty on political front, the leading benchmark 100-index dared to drive up.

Moreover, the lawyers movement which started in the backdrop of deposed Supreme Court Chief Justice Iftikhar Muhammad Chaudhry, who was first sent on forced leave and later reinstated, and President Musharrafs re-election for the next five year, both badly disturbed the sentiments at the KSE. The KSE 100-share index made a robust raise of 4,035 points or over 40 per cent during the year (January to December, 2007) and finished at 14,076 points on Dec 31 from 10,040.50 points pre-opening level of Jan 3, 2007.

The first half gains in this index stands at 37 per cent where the second half remained sluggish and posted only three per cent gains in the 100-index. Therefore, investors injected more funds worth of Rs1,558.8 billion or over 56 per cent in the overall market capitalisation that surged to Rs4,329.9 billion on Dec 31 from Rs2,771.1 billion on Jan 3, 2007. Amid the average daily turnover of the year stands at 258 million shares in the ready market, Tahir of KASB Securities calculated.

During the year, market resumed as many as 244 trading sessions at KSE floors out of which 153 sessions closed on positive note against 91 sessions concluded on negative note. Therefore, the killing of Bhutto was followed by the worst ever law and order situation in the country, thus, breaking all previous records in 100-index at the KSE.

The Dec 31 trading session ñ the sunset session of year 2007 ñ witnessed the worst ever crash of 696.25 points in a single session. The session broke the early record of single day biggest slump of 636 points recorded on Nov 5, also in the year 2007. The chief reason behind the second biggest fall in KSE history (ie of Nov 05, 2007 session) was said to be the imposition of emergency rule in the country, which lasted for 43 days and was lifted back on Dec 15. The-then Chief of Army Staff Gen Musharraf proclaimed PCO and held 1973 Constitution in abeyance on Nov 3 that hurt the weak positive sentiments of the market very badly.

The black Monday (ie Nov 5) breached the early record of registering a single day maximum decrease of 547.93 points in the 100-index, which was recorded on June 14, 2006.

The year 2007, on the other hand, also created new history by making so many new records in the positive column. The persistent amid cautious buying in the fundamentally strong stocks placed 100-index to all-time high at 14,815 points on Dec 26, where the second and third tier stocks played very critical role in making this new record. This time the accumulation was mostly made in banking stocks on the hope of receiving higher payouts than of the last year, it was learnt.

Earlier, investors gave amazing welcome to Benazir Bhutto on Oct 18 and set index to (previous) all-time high at 14,755 points. Despite the two bombs blasts in her welcome rally in the city, the index moved up in the very next session on strong assumptions that political uncertainty would calm down after Bhuttos safe arrival and assumptions that she would become the next premier of Pakistan.

The sharp fluctuation in the international oil prices, which almost doubled and reached near US$100 per barrel during 2007 on the US oil reserves concerns and tension in the region, also played a key role in inviting new funds in the relevant stocks at the KSE. However, the FTSE Group (Financial Times Stock Exchange Group) removed Pakistan from its Global Index owing to a number of unresolved issues with Pakistan.

However, the KSE broke through series of records and became the 6th best performer among the emerging markets, as defined by MSCI Emerging Market Index, by gaining more than 40 per cent in the year, Ovais Siddiqui of JS Research added. Unlike previous years, 2007 was marked by outburst of foreign funds interest in Pakistan market, thanks to improved fundamentals of the market and substantial liquidity flows into Asian emerging markets. Similarly, owing to handsome performance and listing of two major banks, ie Habib Bank and Standard Chartered Bank, banking sector took over E&P as the largest sector on the KSE, he added.

Banks, cement dominate the show in contrast to the past banks mainly drove the market with 41 per cent returns in 2007, backed by cement sector with 47 per cent returns. On the other hand, fertiliser and OMCs underperformed the market with 38 per cent and 23 per cent returns in the year, respectively. Similarly, E&P sector disappointed investors with a return of just seven per cent.

Coupled with relatively unimpressive earnings growth in FY07, the tremendous increase in the free float, as a result of off-loading of 10 per cent stake in OGDC by the government through GDR, contributed to this bad show of the sector, JS Research added.

Records Made in KSE-100 During 2007

RECORDS FIGURES DATES

Index Year Opening Level 10,040.50 points January-03

Index Year Closing Level 14,075.83 points December-31

Index Year Highest Level 14,814.85 points December-26

Index Year Lowest Level 10,147.36 points January-05

Maximum Increase (Single Day) 385.68 points October-01

Maximum Decrease (Single Day) 696.25 points December-31

Minimum Increase (Single Day) 0.60 point January-19

Minimum Decrease (Single Day) 0.55 point January-23

Maximum Turnover (Single Day) 525 million shares July-13

Minimum Turnover (Single Day) 59 million shares April-02

Yearly Movements in Blue Chips

Symbols Open on Close on Difference 

Jan-03 (Rs.) Dec-31 (Rs.) (Rs.)

DGKC 62.95 94.70 31.75

ENGRO 169 265.75 96.75

FFBL 28.50 42.05 13.55

LUCK 59.90 116.50 56.6

MCB 246.10 399.95 153.15

NBP 224.25 232.15 7.9

OGDCL 114.70 119.45 4.75

POL 349.75 334.40 -15.35

PPL 232 245.05 13.05

PTCL 44.30 42.05 -2.25

KSE recorded 40pc growth in 2007


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## Neo

*FBR faces revenue loss of Rs35bn due to disturbances *​ 
Wednesday, January 02, 2008

Islamabad: The Federal Board of Revenue (FBR) has collected an estimated Rs430 billion in the first half of the current fiscal year against the projected revenue collection in the period reflecting a revenue loss of Rs35 billion.

The shortfall of Rs35 billion is primarily owing to recent tragic developments on the political front and ensuing disturbances in the country, which put the economy on a standstill, said FBR Chairman Abdullah Yusuf in an exclusive panel interview with APP here on Tuesday.

Responding to a query, the FBR chairman said that the month of December is of immense importance with regard to revenue collection in the first half of financial year which, however, proved to be unfortunate in the wake of recent events in the country.

Notwithstanding a major setback of Rs35 billion, Yusuf expressed the confidence that the Board was expected to rope in Rs one trillion revenue collection against the actual target of Rs1.025 trillion.

Giving the break-up of the setback, he said direct taxes suffered a loss of Rs23 billion, sales tax Rs10 billion, federal excise duty Rs One billion and customs duty Rs one billion. In the first five months ( July-Nov) of current fiscal year, tax growth was 14.8 per cent over the same period of last financial year. However, in September there was a slight decrease of Rs five to six billion which could have been made up, had there been no such tragic developments causing economic stagnation, he maintained.

In reply to a question, the FBR chief said certain chunk of Rs20 to 25 billion loss would remain irretrievable even in the rest of the fiscal calendar. During the first five months, Rs340 billion revenue was collected as opposed to Rs296 billion in the corresponding period of last fiscal year depicting an increase of Rs44 billion.

However in the first six months (July-Dec), revenue collection was to the tune of an estimated Rs430 billion against the collection of Rs410 billion in the same period of last fiscal year, showing an increase of Rs20 billion.

The Board is poised to mop up Rs one trillion, provided the economic momentum continues in the second half with other things remaining the same, he said. Around 2.04 million tax returns were filed till December 2007 against 1.52 million returns in the same period of last fiscal year, he added. 

FBR faces revenue loss of Rs35bn due to disturbances


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## Neo

*Govt taking steps to provide employment opportunities: PM *​ 
Wednesday, January 02, 2008

ISLAMABAD: Caretaker Prime Minister Mohammadmian Soomro on Tuesday said the government has been taking steps to provide better employment opportunities to the people of Balochistan

Talking to former Senator Fasih Iqbal here at the PMs Secretariat, the prime minister said the federal government would continue taking more steps to provide better employment opportunities to the people of Balochistan. Soomro said the government would ensure that the people from Balochistan are given their due share at all tiers of federal services.

The prime minister said the federal government has attached high priority to the development of Balochistan. He said a strong communication network is being built which is essential for realizing the full economic potential of the province. The prime minister said Balochistan has immense potential in tourism, fisheries, livestock, agriculture, oil and gas, and minerals and the federal government has allocated huge funds to develop and exploit these sectors for the betterment of the people of the province.

Soomro said the government has already launched numerous mega projects which would help provide employment opportunities to the youth of Balochistan. He said the quota of Balochistan in the federal services has already been increased to six per cent to ensure better representation in federal government jobs.

The prime minister appreciated the role played by the media, particularly the regional media of Balochistan, in the development of the province as well as the unity and integrity of the country. Fasih Iqbal thanked the prime minister for the steps taken by the federal government to bring Balochistan on a par with other parts of the country. 

Govt taking steps to provide employment opportunities: PM


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## Neo

*Bad signals for economy if uncertainty prolongs​*
ISLAMABAD, Jan 1: Pakistans exports, investor confidence, credit rating and debt payment capacity could suffer greatly if the current political uncertainty and law and order situation, particularly in Sindh, prolongs, senior government officials said.

In background discussions, these officials suggest that Pakistans image abroad has been the worst victim on last weeks Liaquat Bagh tragedy that killed 22 people, including former Prime Minister Benazir Bhutto, and subsequent 53 deaths and colossal loss to public and private property in violent protests since then.

They said Karachi was the countrys industrial and business capital as well as a port city where violence ad closure of business can cause nervousness among foreign investors.

They said the government was finding it difficult to get enough tanker lorries to shift oil products from port to the pipeline system or to move petroleum products through rail. That means that business and industrial activity is getting affected across the country.

A senior official said Pakistans exports were already showing signs of stagnation and a further dent would mean that financing of current account deficit would become difficult.

He said the imports may also be affected but that should not be a cause of concern in the short run. He said almost 1,100 points plunge in the stock market was a clear sign of nervousness in the ranks of domestic and foreign investors.

He agreed that uncertainty surrounding the election date was a major cause of concern.

An economist at the planning commission, requesting anonymity, said a series of events taking place in quick successions have exposed governments claims of booming economy and it was time for the president and other institutions to ask Shaukat Aziz where the strength of economic fundamentals has gone.

He said the much talked about foreign exchange reserves are on the decline and inflows have also been affected in the recent weeks.

Most of the economists were already worried about the countrys political situation since March this year and followed by ad hocism in dealing with the crucial economic issues, like rising inflation, food shortages and increasing trend in fiscal and current account deficits ahead of Jan 8 general elections, nothing could have been worst than Liaquat Bagh tragedy.

My worry is that Pakistans capacity to repay foreign debts and service its sovereign bonds would become fragile if the current situations goes out of hand even in the short run, said an economist at a foreign bank.

The first victim of such a situation is always the investment climate that takes a long effort to improve, he said, adding that investors even from the friendly countries, like the Gulf would adopt a wait and see approach even if they dont rethink their investment strategy towards Pakistan.

Economists believe that the situation could lead to slowdown in foreign inflows both in the shape of remittances and foreign investment.

Last year, foreign investment into Pakistan went beyond $7 billion that coupled with substantial remittances from overseas Pakistanis met current account deficit. The current account deficit has again reached almost $5 billion in the first five months of the current year, almost 15 per cent higher than last year. Any reduction in remittances or the foreign investment could be really problematic.

They said the risks to national economy posed by inflation, food shortages, higher fiscal and current account deficit were real even before the government announced a date for general elections, but the killing (of Benazir Bhutto) is an extraordinary event which has the potential to cause extraordinary harm to the economy, a government official said, and added maturity would need to be shown by all the stakeholders.

Dr Ashfaq Hassan Khan, economic adviser to the finance ministry, said it was really a great national tragedy but economy could only be affected when production activity comes to a halt, factories are closed, imports and exports come to a standstill and tax collection becomes difficult.

If all these things happen on a sustained basis, it is going to be a problem, but I dont foresee such a scenario on a large scale. At the moment, it is too early to say about the impact on credit rating and debt repayment capacity, he said, adding the political leadership, particularly those heading the PPP, would never like that to happen with the national economy.

He, however, conceded that such events shy away foreign investment although violent public sentiment at the loss of a national leader was quite a natural element.

This effects adversely the sentiments of foreign investors who will definitely feel nervous towards Pakistan, he said.

Analysts suggest the growing agitation following the death of former prime minister apparently meant stronger hostility towards President Musharraf that could increase the risk of default on countrys $2.7 billion sovereign international bonds.

Bad signals for economy if uncertainty prolongs -DAWN - Business; January 02, 2008


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## Neo

*Subsidised lending scheme for exporters​*
KARACHI, Jan 1: Another subsidised lending scheme for the export-oriented industry has been launched while the State Bank will provide 70 per cent money for these lending at a rate significantly lower than the market.

The new scheme is specially designed for import of latest machines for export-oriented sector carrying major attraction of long-term loans for up to 10 years while grace period of two years is also available.

The main sectors which will benefit from the new scheme are textile and garments (fabrics, garments, made-ups, towels, art silk and synthetic textiles), rice processing, leather and leather products, sports goods, carpets and wool, surgical instruments.Funds provided by the PFIs (Participating Financial institutions) from their own resources will be eligible for deduction from the time and demand liabilities determined for the purpose of computation of both Cash Reserve Requirements and Statutory Liquidity Requirements.

The scheme is effective from the very first day of the year 2008 and all LCs established after announcement of the scheme will be eligible for financing.

The facility will provide necessary finance to exporters for adoption of new technologies and modernising their plant and machinery in line with the international competitive environment.

The SBP introduced the new long-term financing facility to promote export-led industrial growth in the country.

The rising import and slow export growth has been threatening for the country for at least four years and the widening trade deficit is feared to wash out the hard-earned foreign exchange reserves.

The State Bank said the facility will be available to the export- oriented projects with at least 50pc of their sales constituting exports or if their annual exports are equivalent to US$ 5 million, whichever is lower.

Exporters (including SMEs) can avail financing under this facility through Participating Financing Institutions (PFIs) for new imported and locally manufactured plant and machinery.

The loans availed under the facility will be repayable within a maximum period of 10 years, including a maximum grace period of two years from availing date. However, where financing facilities have been provided for a period of up to five years, maximum grace period will not exceed one year.

The mark-up on a loan for three years will be eight per cent, including 1.5 per cent spread of banks while for five-year loan carries mark-up of nine per cent, including 2.5 per cent bank spread.

For the 10-year financing, the total mark is 10 per cent, including three per cent bank spread. The SBP in FY 08 will refinance up to 70pc of the facility sanctioned by banks while the remaining amount of 30pc or more of LTFF will be financed by PFIs from their own resources to a borrower.

The SBP will allocate an overall yearly limit under the facility which will be sanctioned to individual PFIs on first-come-first served basis in line with the internal criteria developed by the State Bank. For January-June 2008, this amount has been fixed at Rs8 billion. Under the new facility, financing will be available through commercial banks, including Islamic Banks and DFIs approved as PFIs.

Islamic Banks will be eligible for offering LTFF subject to availability of Shariah compliant compatible product under the facility duly approved by the banks and SBPs Shariah Advisor and cleared by SBPs Shariah Board.

Period of financing: There will be no maximum limit for borrowing by the prospective entrepreneurs under this facility. However, in case of larger financing requirements, i.e. over Rs300 million, PFIs are encouraged to provide finance under consortium arrangements, said the SBP.

Other sectors which may benefit from the new scheme included fisheries, poultry and meat, fruits and vegetable and processing, cereals, I.T.  software and services, marble and granite, gems and jewellery and engineering goods.

Subsidised lending scheme for exporters -DAWN - Business; January 02, 2008


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## Neo

*Govt plans to hire foreign consultants​*
ISLAMABAD, Jan 1: The government plans to hire foreign consultants to help find out non-traditional international markets for increasing countrys exports.

Official sources told Dawn on Tuesday that initially major attention will be given to surgical instruments, medical devices and appliances industry for their enhanced exports in Middle East, Japan, Africa and South America.

Foreign consultants of different fields will be hired on short-term assignments to also train Pakistani engineers and introduce process efficiencies by upgrading skills and technologies.

This industry of three important export items is currently contributing around $200 million to exports and providing direct employment to 50,000 workers.

In addition to exports, diversification towards the development of allied products for plastic disposables, hospital textiles, hospital furniture, non-steel medical devices and electro-medical appliances will also be explored through foreign consultants.However, sources said there was a dire need to improve the performance of commercial attaches based in Middle East, Japan, Africa and South America for arresting the decline in Pakistani exports.

This industry can be transformed into a modern medical devices and appliances industry by developing and integrating multiple technologies.

The government has been proposed to have a clear vision to move the industry to a high technology orbit through product diversification. Value-addition in disposable instruments category was also proposed.

In the second phase, the country could enter into the surging export market with quality improvement and standardisation.

In this regard, the government was proposed by official planners that incentives should be given to the local development and manufacturing of power generation equipment, especially in collaboration with the Wapda,

Concerted efforts for standardisation of equipment, such as small and medium sized thermal and hydel turbines, etc. up to 50 MW) were required to be made.

Incentives for building plants of electrical appliances according to the domestic potential and proper attention and incentives should be given to the local UPS and generator manufacturing industry due to the growing demand.

The manufacturing of gas, petrol and diesel generators may fill the domestic, industry and commercial electricity deficit.

About the electric fan industry, the official planners called for diversifying and broadening the product range towards plastic and decorative fans. Also, aggressive marketing of the products to penetrate in the American, European, Middle Eastern, Latin American and African markets was proposed. Recommendations were also made about the ceramics industry which contributes about $46 million to the GDP and provides direct employment to around 20,000 workers.

Currently total exports are meager $6 million. Tiles and sanitary industry at present has 83 per cent share in the domestic market.

This sector, planners said, can be promoted by introducing process efficiencies leading to technological up-gradation and enhancement of competitive advantage.

Similarly, sanitary wares industry can gradually increase its export performance through improved product quality by adopting efficient production processes.

The government was urged to conduct a detailed study to improve the performance and growth prospects, as well as employment generation in the ceramics industry.

Machine tools, moulds and dies industry is quite small in size and contributing around $10 million in GDP besides providing job opportunities to around 15,000 workers.

Cost competitive and dynamic machine tools, molds and dyes would go a long way in making this engineering sector competitive in the world market. This would only be possible by integrating new technologies and keeping pace with the technological advancements in line with the global manufacturing trends.

About the electronics industry, it was proposed that core competencies in electronics, including highly qualified manpower and R&D capabilities, should be developed.

Presently some manufacturers are producing small electronics gadgetry, including security systems, pay phones, electronic signboards, stabilisers, UPS, inverters, radio and cassette-players and dish receivers. The existing industry is fragmented and lacks critical mass. Further, there is no domestic supply chain for electronics manufacturing.

Strengthening the capability in assembly and testing of electronics components, and support and development of indigenous supply chain was also proposed.

Govt plans to hire foreign consultants -DAWN - Business; January 02, 2008


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## Neo

*Pakistani raw cotton continues to make a mark​*
KARACHI: Pakistan stands at the fourth slot in the raw cotton-producing sector of the world and has shown significant improvement since it came into being in 1947.

Pakistan is also the third biggest consumer of raw cotton in the world. 

Most of the Pakistani cotton is saw ginned cotton, there are roller gins, which still exists but most of cotton is produced by saw gins. 

An interesting fact is that the year Pakistan came into being (1947), it exported almost all of the cotton produced that year and that amazing figure was 1.1 million bales and this practice kept on going. Pakistan improved the quantity, quality, consumption, export and the import of cotton as well. Cotton export from Pakistan has shown a rise around 47 percent in 2007 as compared to the same period last year.

In the international market, Pakistani cotton was getting more attraction due to higher quality from the traditional and non-traditional cotton importing countries.

During January-December 2007 Pakistan registered an export figure of 96,872 bales.

A senior trader Ghulam Rabbani said shipment of around 30,000 bales to Bangladesh and Far East countries in documentation stage at Trade Development Authority of Pakistan (TDAP) is in the pipeline.

He said the international lint buyers consider Pakistan cotton number one in quality as well as on competitive rates in the international market besides it is the only new harvest in the international market available.

Pakistan exported 3.8 million bales in the crop year 1985-6, 3.9 million bales again in the next crop year 1986-7, 3.2 million bales in the crop year 1987-8, and 4.5 million bales in the year 1988-9. 

This year Pakistan has a space to export about 1.5 million bales of best quality cotton, of which 1 million is still available while the rest is already disposed to Bangladesh, Far East and China. He said our nearest competitor, the Indian cotton merchants are offering a bit higher price while their quality does not conform to the demand of international buyers.

He said still the rates in domestic market are cheaper in the world cotton for the same specification as Indian type J-34 offered at 65-66 cents per pound which accumulated to around Rs 3,225 per maund. He said, A sizeable export will not affect the domestic markets requirements as the countrys import of PIMA grade (US) and other qualities cotton are still a regular feature, as we are already facing a shortfall of around 3 million bales. To fulfill the need and thirst of local textile industry for producing different types of yarns and fabric, Pakistan has to import millions of bales every year for specific production of yarn and fabric. 

The millers, spinning and private sector commercial companies imported around 158,255 tonnes cotton, equivalent to 791,275 bales mainly from USA, India, Brazil and central Asian countries during January-December 2007.

The country imported around Rs 30 billion worth cotton bales during the same period from the foreign buyers. 

The countrys production is expected around 12 million cotton bales this crop season while the demand by textile sector stood around 15.5 million bales. The shortfall was being met by the imports. Keeping the past experience, the economic managers of the country on repeated calls by the Ministry of Textile Industry (MINTEX) and local textile industry allowed import of cotton through land route from neighbouring countries including India to reduce the cost of production and cost of import. 

Ministry of Commerce in May 2007 allowed import of long staple cotton through land route from India and Uzbekistan. The import of long staple cotton through land route from India reduced the cost of import and helped local textile industry to enhance its production and its value addition for increase in textile exports. 

Long staple cotton will be importable through land route as well. Earlier government has allowed the import of cotton and cotton yarn from India through seas or air. Cotton imported through these means was expensive for the local industry. The lint imported from India and United States dominated the cotton markets volumes during this period. 

This is not an end to import and we must be ready for a good quantity still to arrive in the country, around 45,000 cotton bales kept arriving, he added. 

Mr Rabbani said the federal government fixed the cotton production target at 14.14 million bales for the crop 2007-08. 

He said the federal government fixed sowing target at 8.031 million acres, 6.326 million acres for Punjab and 1.581 million acres for Sindh. NWFP and Balochistan share stood 0.14 million area for cotton production. 

He said Punjab was likely to produce 11 million bales while Sindh to produce three million bales. Despite the governments target for the crop season, there would be a shortfall of around 3.4 million bales.

More than half of the production is of grade II (Pakistani type 1467), 1-1/16 plus, 72 Rd, less then 8 +b, 28 GPT strength and almost free from contaminations. 

According to the figures and reports, in this crop year not even a single bale of Afzal and lower, or lower than 1-1/16 staple has yet been produced in Pakistan. Pakistani cotton has improved its quality a great deal in last five years in result of certain serious and practical arrangements by the government to improve the cotton production and quality in order to take good share in the international trading. 

Newly produced seeds are in production and a major part of the crop is a result of BT (Bacillus Thuringiensis).

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan regarded as fastest-growing cellular market​*
KARACHI: The government is taking Pakistans telecom future seriously and has deregulated the sector. As a result, scores of new private entrants are gearing up to provide service, and since October 2007 cellular subscriptions have shot up to 71.5 million making Pakistan one of the fastest-growing cellular markets with a cellular mobile density of 44.51. 

The Indian press reported the results of a survey in which Pakistan is ahead of India in telecom progress. Though the Indian telecom sector surges ahead with six million new mobile connections every month, its penetration among the lowest strata of society, especially in rural areas, is much less than in Pakistan and Sri Lanka, a recent survey has shown. Bangladesh has sought Pakistani cooperation to introduce reforms in the telecommunication sector of their country, while lauding the telecom policies of Pakistan, their effective implementation and the exponential growth shown by the sector during recent years. The deregulation of the countrys telecom industry is fast gaining momentum with dozens of more communication companies and millions of customers entering both the fixed-line and mobile telephone markets.

The sector is currently contributing 2 percent in GDP directly and indirect contribution in other sector of the economy takes this share to about 5 percent. Total revenues of telecom sector in 2006-07 reached Rs 236 billion whereas total investment was $4,108 million. Telecom companies have invested over $8 billion during the last four years in Pakistan particularly the mobile sector whose investment share accounts for 73 percent. In 2006-07, cellular mobile sector has invested over $2.7 billion, which becomes about 66 percent of total investment by the sector. Local loop segment of the industry is also taking off and in 2006-07 about $7.8 million were invested by this sector. LDI operators have invested about $603 million in 2006-7, which is about 15 percent of the total investment by the sector. romail kenneth

Daily Times - Leading News Resource of Pakistan


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## Neo

*Despite turmoil Pakistani stock markets shine in 2007 ​*
* This was the 6th consecutive year of bull-run, 40 percent gain in 2007, lower than previous 5-years' (2002-05) average of 55 percent

KARACHI: Bull-run ruled the Karachi Stock Exchange (KSE) mostly during 2007 with equities posting impressive 40 percent gains despite being one of the most turbulent and violent year in history of the country.

Though 2007 remained an exciting year for the capital market, it would be remembered for the worst law and order situation particularly after the assassination of former Prime Minister Benzair Bhutto at the fag end of 2007, which jolted the entire nation and the world.

Nonetheless, the entire year was marred by the country-wide protests since March 09, when the Supreme Court Chief Justice Iftikhar Chaudhry was removed from the office along with the unprecedented number of suicide attacks, country's stock market well absorbed these shocks and continued its upward journey by breaching a number of psychological barriers and setting new records.

Though, it reacted to some of the negative developments during the year, it again turned to upward march. But first on the occasion of imposition of emergency and then assassination of Benzari Bhutto pushed the market to crash like situation and the market continue to feel pinch of the former incident, which is still being felt by the market.

This was the 6th consecutive year of bull run, 40 percent gain in 2007 was, however, lower than previous 5-years' (2002-05) average of 55 percent. Out of 52 weeks in 2007, market closed in the positive territory 35 times on weekly closing basis translating into the bulls to bears ratio at 7:3.

In 2007, the market recorded its all time high gain at 14,815 points on December 26, 2007. The gain posted by the market during the first half (January-June 2007) was significantly higher than that of its 2nd half (July-December 2007) as against a return of 37 percent recorded in first half 2007, only three percent gain was observed in scond half. "The subdued performance in the second half of 2007 could be linked to the political instability in the country due to proclamation of emergency and assassination of Ms. Bhutto", analysts said. 

Also, calendar year 2007 was one of the better years in terms of stock offerings. Unlike previous calendar year 2006, when only five companies floated their shares through stock exchange, there were eleven IPOs in 2007. 

The total amount offered through IPOs in 2007 stood at Rs 15.7 billion versus just Rs 1.9bn previously. The hefty jump in IPO size during 2007 was due to reappearance of the government offerings like mega issue of Habib Bank Limited (HBL) worth Rs12.2 billion inclusive of green-shoe. 

In contrast to the past, banks mainly drove the market with 41 percent return in 2007 backed by cement sector with 47 percent return. On the other hand, fertiliser and oil marketing companies (OMCs) underperformed the market with 38 percent and 23 percent return in the year respectively. Similarly, E&P sector had disappaointed performance with a return of just 7 percent. 

During the year 2007, aggressive buying by foreign investors was also at the peak as improved fundamentals of the market and substantial liqutidity flows into Asian market directed major foreign funds into the stock market. Aggressive entry of foreign funds into Pakistan market, especially in banking sector, led the market to record highs in first half of 2007. 

Analysts said that despite all the polticial upheavals on the domestic political front, the economic fundamentals remained strong which helped keep the busllish run at the market to new heights. Also, the average retunrs on investment in the local bourses were attractive compared to regional market, which brought more and more foreign equity into the local market. 

However, they said that now a lot depends at how the political situation after assassination of Ms. Bhutto shapes up the events of coming days and to see how the stability restores and its impact on the capital market.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Banks face challenge of sustaining earnings growth momentum​*
KARACHI: After earning strong profits in 2005 and 2006 on the back of a favourable interest rate environment and rapid loan cycle growth, the banking sector now faces the medium-term challenge of sustaining earnings growth momentum, banking analysts said here Monday. 

The banking industry has experienced slower loan growth in recent past due to sluggish demand in interest-rate sensitive consumer financing as well as a high-base effect. Deposit mobilization has been faster as banks attract long-term deposits to match long-term project financing needs. 

In this situation, larger banks are likely to be the winners because they have a solid deposit base and the ability to participate in big-ticket project financing deals, analysts say. Banks with adequate credit quality procedures in the still nascent consumer-financing segment also stand to benefit, they add. 

A combination of factors is behind slower loan growth including the tighter monetary policy adopted by the central bank and higher rates have moderated credit demand, which is in line with the central banks aim to curb inflationary pressures. 

The impact of higher rates has been clearly felt in consumer financing and growth has temporarily moderated in this segment. Secondly, corporate credit demand has also decreased as recent industrial expansion cycle stands completed. 

However, the banks have been able to attract deposits at a fast pace in the recent past, as banks have made efforts to mobilize long-term fixed deposits and the proportion of fixed deposits is gradually increasing. 

The drive for attracting longer-term deposits comes on the back of zero-rating of deposits of tenure greater than one-year for CRR purposes. 

With the industrial expansion cycle kicking off in power and fertilizer sectors, banks are quietly building up deposit base to gear up themselves for future long-term lending projects, said Raza Jafri and Naveed Vakil, analysts at AKD Securities. Project-financing deals will drive the bulk of credit demand, they said in a report. 

On the consumer-financing front, analysts believe, higher rates are likely to continue moderating growth in the near term although immense potential remains in this area. 

With the banking sector having come full circle following the privatisation drive, banks now look to build on their base and expand into relatively under-tapped segments to deliver growth, analysts say. 

On the face of it, the withdrawal of FSV benefit appears to penalize the banking sector. But the fact is that with the recent burst of growth exhibited by banks, the SBP is now keen to maintain the quality of this growth so as to deliver long-term benefits, add analysts. 

Analysts say they are strongly of the view that the new stricter prudential requirement essentially serves to further strengthen the sector. 

In fact, fundamentals are slated to show improvement, as banks are likely to accelerate recovery procedure to minimize the impact of the policy change, they say. 

Mergers and Acquisition: Rising income levels coupled with a newfound inclination for taking on leverage are factors that are fuelling growth in the banking sector and are primary motivations behind continued interest from foreign banks, banking analysts said. 

Several small and medium size banks appear appealing candidates for future mergers and acquisition interest, said a banking analyst. While we cannot disregard the potential for mergers and acquisitions in second-tier banks, third-tier banks offer enough to register on M&A radars.

Profitability: We believe that future reversals, resulting from the sale of illiquid collateral and the likely speedup in recovery procedures will dilute the downward EPS impact, to some extent. It must also be kept in mind that the fundamental position of banks essentially remains intact, said analysts. 

If the proposed policy change is implemented from CY08 under a two-phase implementation, we believe that the major impact will be on CY08 results while in CY09 the impact is not so significant, they said. 

They said they believed that banks are likely to accelerate recovery procedures to minimize the impact of the proposed policy change. Although some earnings volatility is expected in the short run the overall impact will stand the banking sector in good stead in the long term as further balance sheet strengthening takes place, they added. As the fundamentals remain intact, the proposed policy change is actually a positive move for the sector over the long-term horizon, given that the acceleration in NPL recovery is a feasible outcome, they said. 

Monthly Advance Deposit Ratio slid to 71 percent in August and September 2007 (lowest in 3 years) from 80 percent in January 2007, which shows the risk averse lending by banking sector in general and realization of the fact that one of the key sectors, i.e. textile, is off track. 

We expect ADR to stabilize in the range of 72 to 75 percent during 2008, said Saad Bin Ahmad, head of research at Capital One Equities in his report on the banking sector. 

He said the banking sector is witnessing a trend change in Advance Deposit Ratio. Growth in advances and deposits of the banking sector is also showing a trend change from the last three years with total banking deposits showing an upward trend. 

We expect limited growth in advances during CY08, with particular emphasis by banks on real estate, construction, power generation, agriculture and engineering sectors, he said. 

Commercial banks credit concentration has shifted its focus, initially from textile sector to consumer financing (real estate and automobile loans) and now to power generation and real estate, he said. We believe lesser options for asset allocation would result in increasing portfolio investment by banks in CY08, he said. 

Total non-performing loans have increased by 7 percent (quarter-on-quarter as of September 2007). Net NPLs/Net loans have also increased by 50 bps over the quarter. Banks, in the wake of rising NPLs, have recently modified their credit policies in consumer financing sector. We have observed decline in demand for automobile as a result of this decision. We believe that the declining trend in appetite for loans and consequent liquidity are directing towards a slide in interest rates, which will contain growth in banking sector profitability, he said.

Daily Times - Leading News Resource of Pakistan


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## Neo

*156 megawatts Morgah power project to start in October *​
ISLAMABAD (January 02 2008): Construction of five thermal power projects of 1200 MW power capacity, already approved by PPIB will be completed in 2008-2009. Attock General Limited of 156 MW is one of these plants, which is scheduled to be commissioned in October 2008 and other four plants will be commissioned during last three months of 2008.

These observations were made by caretaker Federal Minister for Water and Power, Tariq Hamid during a visit of the site of the under construction plant of Attock General Limited on Tuesday.

The minister expressed the hope that after 15th January 2008, the situation would become better as water to Punjab and Sindh would be released and gas supply to the power plant, would be increased which would indeed generate more electricity enabling Wapda to avert the load management in the country.

Minister for water and power along with representatives of PPIB visited 156 MW Attock General project at Morgah, Rawalpindi. He appreciated the efforts made by Attock General Limited in developing project in private sector, which is scheduled to be commissioned in October 2008.

Adil Khattak, Chief Executive, Attock General Limited along with his team received the minister at the project site. Khattak informed the minister that company would try to ensure timely completion of the project to meet the power shortage.

Chief Executive Attock Refinery Limited (ARL) made a brief presentation, highlighting the salient features of the project. The project has a capacity of 156 MW for which all agreements have been concluded. The project will cost 148.6 million dollars.

The chief executive apprised the minister that the project will get uninterrupted fuel supply from Attock Refinery through a dedicated pipeline. It is the first IPP in north of Lahore and it will increase the reliability in Iesco area, he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*4,852 items from India to be imported at reduced rates ​*
Thursday, January 03, 2008

ISLAMABAD: Palm oil from Malaysia and 4,852 items from India and other SAARC countries would be imported at reduced duties and taxes from January 2008. To this effect, two separate notifications have been issued, one saying that Pakistan and Malaysia have signed a comprehensive Free Trade Agreement for closer economic partnership.

This agreement is meant for improved trade between the two countries relating to a large number of products. The Malaysian market has good potential for Pakistani exports and can also serve as a gateway for the entire ASEAN region.

This Free Trade Agreement (FTA) with Malaysia will ensure that Pakistani products have an edge over products of other countries in the Malaysian market. Tariff on palm oil has been reduced by 10 per cent on a margin of preference which will be reduced by a further 5 per cent on January 1, 2010.

Other notification says that some of the items are exempt from import duty from SAARC member states from so much of the customs duty specified in the First Schedule of the said Act as is in excess of the rates specified in the notification under the Agreement on SAFTA and the Operational Certification Procedures For South Asian Free Trade Area (SAFTA), Rules of Origin and further subject to the Import Policy Order notified by the Ministry of Commerce. 

The items exempted have been listed in the SRO specifying lesser exemption amount for India and greater for other SAARC countries, as they have been declared as Least Developed Countries and need tariff benefit.

4,852 items from India to be imported at reduced rates


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## Neo

* Cement sales jump 24pc, exports soar ​* 
Thursday, January 03, 2008

KARACHI: Pakistani cement sales jumped 24 per cent in the first half of fiscal 2007/08 from a year earlier, driven by growing construction demand at home and abroad, an industry official and an analyst told Reuters on Wednesday.

Sales totalled 13.9 million tonnes for the six months to December, compared with 11.18 million tonnes in the same period of 2006, said Shahzad Ahmed, secretary-general of the All Pakistan Cement Manufacturers Association.

Exports of cement soared 149 per cent to 2.99 million tones from the 1.20 million tonnes shipped a year earlier. The rise can be attributed to increasing local and export demand due to rising construction activities and regional cement shortages, said Bilal Hameed, an analyst at JS Global Capital.

Cement demand is expected to rise further as the 2007/08 budget has earmarked a record 520 billion rupees ($8.45 billion) for the public sector, analysts said. Pakistani cement manufacturers have capitalised on a shortage in the region and have started exporting to India. 

But cement sales for December fell 9.5 per cent to 1.9 million tonnes from the same month in 2006. Exports rose to 0.40 million tonnes in December from 0.21 million tonnes in December 2006. 

Cement sales jump 24pc, exports soar


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## Neo

*Pakistan first in region to launch WiMax ​* 
Thursday, January 03, 2008

ISLAMABAD: WiMax networks and wireless broadband services have been commercially launched across the country achieving a new milestone in the telecom sector of Pakistan.

According to the Pakistan Telecommunication Authority (PTA), the launch of commercial WiMax services has positioned Pakistan as a leader in the region to initiate wireless broadband services that will be available to its consumers nationwide. Other regional countries, including India, are yet to offer such services and analysts believe these countries may take a considerable time to reach the position that Pakistan has attained.

WiMax is the latest, International Telecommunication Union (ITU) recognised, 3G technology capable of providing voice, broadband data and commercial video telephony services. With the launch of WiMax services in Pakistan, the subscribers to this service will be able to make video calls, telephony through special handsets while callers will be able to see live video/picture of each other in addition to voice conversation.

The users will also enjoy wireless broadband services and will be able to use Internet at a much faster speed as compared to normal dialup Internet services or fixed line broadband services.

The operators also aim to provide broadband data solution for corporate users in Pakistan. At present, Wateen Telecom, an international telecom player, is offering commercial WiMax services in most parts of the country.

Mytel, a local operator in Peshawar, has also launched commercial operation of WiMax in Peshawar. On the same front, other wireless local loop operators including Burraq, PTCL, Z-WLL and Cyber Internet are busy in deploying WiMax networks. All of these operators are in their testing phase and will soon be able to offer commercial WiMax services in the country. 

Pakistan first in region to launch WiMax


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## Neo

*Transporters, goods carriers suffer losses of Rs193.8m in violence ​* 
Thursday, January 03, 2008

KARACHI: The first-hand available figures showed accumulated losses of Rs193.8 million to the transporters and goods carriers in Sindh in the four days during violence following the assassination of Benazir Bhutto on December 27. The Karachi Goods Carriers Association (KGCA) has released the figures, however, the figures are yet to be completed considering the huge losses and the amount would certainly increase. 

KGCA Secretary Anees Khan said: We have been collecting the data of torched vehicles and looted goods in the recent riots in the country and yet we have many complaints of which we need to delve into. 

He said the important places where the vehicles had been torched or looted in the country includes Karachi, Ranipur, halah, Moro, Hyderabad, Pano Aqil, Sukkur, Gagar Phatak, Khairpur Bypass, Bhit Shah, Kathor, Jamshoro Toll Plaza and Port Qasim. However, the cargo of vehicles that had been looted include, Tetrapak milk, ghee, chemicals, fertilizers, pulses, wheat, machinery, fiber boards, fruits and vegetables, he added. 

The DCO Camp Office has been asked the KGCA to submit their losses with details consisting of vehicle numbers, chassis number, description of vehicles, model number, location where the damage occurred and damage in monetary terms. 

A number of heavy vehicles for transportation have not been operative and most of them remain out of their normal routine after the recent incidents in the city. Here at this terminal, up to 50 per cent of vehicles are still low, said a heavy vehicle driver at Hawkbay Truck Stand, Karachi, the only Truck Stand in Karachi. 

People are still afraid that anything could happen anywhere at any time and they could lose their belongings. Transporters have been shocked because of the loss of cargo and vehicles, the driver said. 

Another driver said that city has been recovering from the shock and traders and transporters have now been opening their shops and delivering consignments completely. But, it is very depressing for the transporters who have some vehicles, as they would not start their business until their losses were compensated. 

There is also a scarcity of heavy vehicles after the incidents and their owners are still suspicious of countrys law and order situation. We had lodged FIRs in the respective areas where our vehicles were damaged or looted in the Sindh. In our case, mobs first looted the cargo and then torched the vehicles, said Muhammad Aslam Proprietor of Super Asia Goods Transport Company. Sindh still bristles with a disappointing situation, however, Punjab has been better in terms of safety. 

So, from now we decided to send vehicles in a group with our own security with them to ensure proper and safe transportation. Drivers have been afraid and declined to deliver goods in other cities and demand to leave city in groups because of security, He added. Aslam said the company had already applied for compensation and wrote to the KGCA. 

Transporters, goods carriers suffer losses of Rs193.8m in violence


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## Neo

*Power, gas cuts cripple Textile industry​* 

KARACHI, Jan 2: Massive load-shedding of electricity and gas is crippling textile industry which is already confronted with numerous problems, including high cost of production.

The most damaging for the industry is unannounced and sudden shutdown of power for longer durations which results in cancellation of export orders and heavy loss of production hours.

Industry leaders are worried at the worsening power crisis and apprehend that the countrys largest industrial sector might collapse if the government does not take remedial measures at the earliest and tap other energy resources to enhance capacity of power generation.

The fast depleting worldwide energy resources have left little opportunity for countries, like Pakistan, who did not take timely decision in securing and acquiring them to meet their ever growing energy demand. Consequently, only expensive energy resources are now available which make economies unviable, lamented Adil Mahmood, chairman, All-Pakistan Textile Association (Apta), a breakaway wing of the All-Pakistan Textile Mills Association (Aptma).

He said the entire country had been facing frequent unannounced load-shedding of electricity supply for long periods of six to eight hours daily which has also crippled smooth working of industry and export trade.

It is quite evident that no sincere and concrete efforts have been made in tapping sufficient amount of energy resources to comply with the requirement of the economy, he maintained.

Once the wheels of industry come to halt owing to load-shedding, it takes much more time to restore and bring hundreds of thousands of machines back to operation and this further adds to woes of industry which have to meet deadlines of export commitments in the world market.

Adil Mahmood said no doubt the matter of electricity load- shedding is being faced by all segments of economy, but the time span of electricity load-shedding in various electricity distribution companies is discriminatory. It varies not only within the various electricity distribution companies but also varies from location to location.

Furthermore, the supply of gas to industry is either under load-shedding or low pressure, and gas connections of many textile units, he claimed, had been disconnected.

During the last five months of current fiscal, he said, trade deficit reached $7.201 billion and if the current situation with regard to load-shedding and poor gas supply goes on, the deficit will further widen. Therefore, it would be out of question to achieve export target of $19.2 billion for the year 2007-08.

Dr Shahzad Arshad, chairman, Pakistan Cotton Fashion Apparel Manufacturers and Exporters Association (PCFAMEA), drew the attention of caretaker commerce ministry Shahzada Alam Monnoo towards declining trend in textile apparel exports.

He said the industry was not getting a level-playing field against their regional competitors from India, China, Sri Lanka and Bangladesh.

He said increase in cost of utilities, especially gas and electricity, was crippling the industry which has become uncompetitive in the world market.

Constant rise in the mark-up rate during last three years was also pushing end-product cost high and exporters are constantly losing orders from foreign buyers which are being diverted to other regional countries.

The small and medium apparel industry, he said, was vanishing and if the current situation was not corrected, it may totally disappear and close the opportunity for low-income job-seekers across the country.

Power, gas cuts cripple Textile industry -DAWN - Business; January 03, 2008


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## Neo

*Revenue target may be revised downward​*
ISLAMABAD, Jan 2: The Federal Board of Revenue (FBR) is likely to revise downward annual revenue collection target to less than a trillion in the wake of expected revenue shortfall of around Rs60 billion by the end of June 2008, Dawn has learnt.

Provisional figures released here on Wednesday showed that the tax machinery witnessed around Rs36 billion shortfall in revenue as it stood at Rs429 billion during the first half year of the current fiscal year as against the target of Rs465 billion set for the same period.

The shortfall may turn out to be even higher in view of ensuing general elections, which is delayed even by more than a month during which tax machinery generally becomes ineffective due to one reason or the other.

A senior tax official on condition of anonymity told Dawn that formally it has not been decided to revise downward the revenue collection target. However, he said even the chairman of the FBR had admitted that the revenue collection target is not likely to be achieved.

The FBR had already missed the first quarter tax revenue target of Rs218 billion by a wide margin of Rs13 billion. This revision carried a message for the finance ministry that it has set an over-ambitious target for the fiscal year 2007-08.

As the recorded shortfall has been passed on to the third or fourth quarter, it will be a challenge for tax authorities to hit the original target or keep it unchanged. However, the ground realities are not so favourable.

The tax official said many factors are responsible for this lower collection mostly the disturbances occurred one after another during the first half year of the current fiscal year.

Already the law and order situation is hampering normal domestic and foreign trading, impacting revenue generation, he said.

According to an estimate, a single day strike deprives the national exchequer of revenues of around Rs3 billion.

Many factors could be attributed to the low growth in tax revenue, but the major ones among all those are the narrow tax base, loopholes in tax system and suspension of an effective audit.

Official figures showed that the provisional collections were up by Rs20bn during the first half year of the current fiscal year as compared to Rs410bn collected during the same period last year.

The official said the shortfall recorded in the first half year of the current fiscal year was owing to recent tragic development on political front due to assassination of former Prime Minister Benazir Bhutto and Eid holidays.

Revenue target may be revised downward -DAWN - Business; January 03, 2008


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## Neo

*RAZR2 V8 launched in Pakistan​*
KARACHI: Motorola launched the RAZR2 V8 in Pakistan on Wednesday, the ultimate iconic feature phone that illustrates the evolution of the RAZR brand. 

The RAZR2 V8s greatest advantage in Pakistan lies in its lifestyle-focused features which delivers the ultimate mobile experience for consumers in the rapidly growing business market, said Bahjat Mirza, Director Sales, Middle East and Pakistan, Mobile Devices, Motorola. The RAZR2 V8 will satisfy the appetite of even the most demanding consumers, he concluded. staff report

Daily Times - Leading News Resource of Pakistan


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## Neo

*Cotton import up by 107 percent in five months ​* 
KARACHI (January 03 2008): The shortfall in cotton crop has increased the country's dependency on the imported commodity, which has gone up by 107 percent during the first five months of current fiscal year, traders said on Wednesday. They said that rising demand of raw cotton by the textile mills against the short supply was major reason behind increase in import of cotton.

The attack of mealy bug - a dangerous pest for cotton crop - has badly hit the crop and it is feared that during the current fiscal year, country would miss the production target of 14.1 million bales, they added.

"The swing of uncertified seeds and unavailability of pesticide are the major reason behind the mealy bug attack on the cotton crop," they said. Raw cotton import has increased by 107 percent, amounting to 335.566 million dollars during the first five months of the current fiscal as compared to 162 million dollars during same period of the last fiscal year, showing an increase of 173.613 million dollars during the July-November 2007.

In term of weight, some 1.148 million bales have been imported during July-November of current fiscal year as against 0.6 million bales during corresponding period of last fiscal. "Soaring cotton prices in the local market, besides the shortfall in cotton crop is the major factor behind the rising import of cotton," said a leading importer.

Besides, tremendous increase in demand of by textile mills to meet their local requirements and export orders, the shortfall of the commodity is pushing the mills to depend on the imported cotton, he said.

Meanwhile, the Crop Estimation Committee in its first meeting held recently has also indicated that the country will miss its cotton production target of 14.1 million bales by some 1.3 million bales to 12.8 million bales. At present, the country is importing raw cotton from Brazil, the US, India and some other countries to meet the demand of local textile industry, traders said.

Traders believed that import of cotton in the future would increase, as the present Federal government has allowed the import of some 0.5 million short staple bales from India via Wagha border. It may be mentioned here that the country's cotton consumption stood at 16.5 million bales, higher than the expected cotton production of 12.8 million bales, which showed a shortfall of some 3.7 million bales, traders added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Outlook 2008: currencies and gold ​* 
KARACHI (January 03 2008): Currency Market Associates (CMKA) has a cautious outlook for Pakistan for the calendar year 2008. Risk of spillover effect of global credit crunch led by US housing slump and now political developments in the country could destabilise the economic growth, unless the situation reverses quickly.

We remain cautious in our stance, projecting a small dip in growth to 6.5 percent to 6.7 percent by the end of current fiscal year. While next fiscal year we could witness the impact of spillover effect of global slowdown to hit our economy too, which could pull down our growth to 6 percent or less.

In our view, the next elected governments should focus on education, health, human resource development, water, power and agriculture. It is also suggested that discovery of sufficient oil should be on top of the list of national security priority, though country's oil production would soon touch 75,000 barrels per day, which will roughly meet 21 percent or 22 percent of our daily need.

Working on Thar coal reserve should not be delayed any further, because an average GDP growth of 6 percent will require an extras 5,000 megawatts of electricity by 2010. In 2007, coal prices surged by 55 percent in the international market. Neighbours India and China are the two largest buyers of coal from South Africa and Australia.

Inflationary pressure would continue to persist as oil, food and liquidity pose bigger threat. In the calendar year 2008, we are looking for 50 to 100 basis point hike in discount rate with further tightening through Cash Reserve Requirement (CRR).

While we do not favour weak Rupee, but higher oil prices in the international market and import of essential food items to meet domestic demand would weigh on Rupee, that would further widen Current account and Trade deficit gap by a couple of billion of Dollars. Global credit crunch and country's rating could hinder launching of Euro and Sukuk Bonds due to unfavourable pricing, as Pakistan is under scrutiny of the Global Rating Agencies.

Hence, Rupee could slightly weaken. Next level to watch would be 62.80 per US Dollar. Only break of this important psychological barrier could push Rupee to 63.50 zones. Resistance is at 61.20 with major support at 60.80.

The global slowdown would impact regional economies, which could ultimately put pressure on Pakistan's economy too, though economies of Asia and oil producing Middle-Eastern countries may sustain growth.

Theoretically, Pakistan's Trade deficit that is hovering around USD 17 billion may not be a worrisome factor, but USA is a good example where the trade number is on constant rise since last three decades and they are yet unable to get out of the web.

Similarly, our Current Account deficit has been creeping up constantly, which is managed through receivables, but for how long is this going to be sustainable, remains a big question. Unless we are able to raise our exports or curtail imports, pressure from surging oil price is likely to stay for a while. Hence, the C/A number would continue to inflate.

DOMESTIC MARKET: The Macro Economic indicator of Pakistan ie, GDP, Inflation and Employment could pose bigger challenge for the next elected government and to maintain strong growth of over 6.5 percent in the later half of fiscal year, now seems a tough task. For poverty alleviation, stronger growth is required. Education budget should be raised to a minimum of 4 percent of the GDP and fiscal discipline is necessary. Broadening of tax base remains a big challenge, since over 50 percent of the employment is confined to the agriculture sector.

The rise in country's overall trade volume (Import & Export) helped in increasing tax revenue collection. However, in percentage terms, tax to GDP is still hovering around 11 percent, which is too low. Percentage of Tax to GDP cannot rise unless agriculture tax is raised to a required level, or tax percentage is increased in the private sector.

CMKA's view on the Micro Economic front is that the Central bank has to be more vigilant on certain issues. Banking spread, which is one of the highest in the world, needs downward revision or else country's savings ratio will not pick up. It is presently around 16 percent. It is vital for the economy to have a savings ratio of above 20 percent.

Higher savings ratio also helps in containing inflation. Asset Price inflation is another big factor causing inflation, which is being neglected. SBP should take strong note and recommend measures to reduce the level. In our view, it is one of the distorting factors.

Most importantly, we do believe that the State Bank of Pakistan will have to use its monetary tool more effectively and raise Cash Reserve Requirement (CRR) to minimize the inflationary impact. Had SBP used its credit tightening tool earlier, there would have been lesser inflationary impact on the economy. We support immediate hike of CRR by 3 percent that is approximately Rs 100 billion, with more hike recommended, if and when necessary. This will also help in neuteralising the excess liquidity in the banking system.

Secondary Bond market is another neglected area that needs quick attention. Until now, Central bank did not play active role for the development of secondary market. Government borrowing relies heavily on Pakistan Investment Bonds (PIBs). In the current FY, MOF have been consistently offering PIB's through auction However, the main bidder of government paper has been country's largest insurance company that has purchased over 70 percent of securities in period beyond 10 years and the remaining amount of shorter maturities was either picked up by banks and financial institutions, or small buying was done by corporate sector. In Pakistan bond trading beyond 10 years is almost nil due to illiquid market condition. Therefore, bonds up to 10-year bond can be more helpful for the development of secondary market.

SBP should formulate a policy for the development of secondary bond market. Primary dealers should be asked to play active role. Unless there is an inter-bank bond market activity, secondary market will remain dull, corporate interest will remain thin and purchase of PIB for trading purpose could remain meaningless for the investors.

Privatization was a success and Pakistan succeeded in attracting FDI worth $8.4 billion, which helped in improving the financial position of the country. Service industry, which benefited most, is now at a saturated point. It needs a breathing space to avoid increasing NPL's. Hence, more emphasis should be given on industrial and manufacturing sector, which helps in transfer of technology to the country, passing of skills to the local market participants and helps in job creation.

In our view, modernization of agriculture sector through reforms would certainly help to reduce poverty to a great extent. Since it contributes 22 percent towards the GDP and over 50 percent of population is directly or indirectly engaged in the agriculture sector, modernization should also be on a national priority list. 

Shortage of essential food item has become a regular feature. It is required to ensure that unless there is surplus stock of grain available, exports should not be allowed. Pre-emptive measure of taxing on export of grains would help in arresting the volatility and discourage hoarding.

Estimate is that water-logging and salinity has destroyed 20 percent to 30 percent of the cultivated land , and needs quick attention. Irrigation system should be improved. Sprinkler Irrigation saves 40 percent to 50 percent fertilizers and water Drip irrigation is an expensive affair, but it can be provided at subsidized rates. 

SME's and Micro Finance Banks can play major role by providing soft and easy loans to the agricultural sector and help farmers to equip them with better Agri-seeds and pesticides, and creating farming awareness with modern techniques by help in hiring farm experts. With ample liquidity flowing in the country, we support raising agricultural financing target to Rs 400 billion from Rs 200 billion.

Global warming is an important development, which should be taken seriously, as our economy is largely agriculture based. Industrial revolution is producing Greenhouse gases. The temperature is on the up, sea level rising and polar ice melting. This is causing a shift in the global weather pattern resulting in flooding and frequent storms. It may also cause disruption of drinking water and there is a fear of spreading of tropical diseases. Hence, we should prepare ourselves in advance before we are hit by any such calamity.

Textile sector has little to cheer about, as slowdown of global economy and competition by polyester in the major markets could pull down cotton growth, which is expected to fall slightly, There is a risk for an increase in price in the international market. Except for India, world cotton production forecast is not very encouraging as targets could be missed in China (Mainland), Turkey, USA and Pakistan. US economy is heading for recession and therefore, its economy will slow down. China's growth is export led, 40 percent of its trade surplus is from USA, and so China's growth will surely get hurt. Pressure is mounting from American legislatures on China to revalue Yuan. Relations between USA and China will remain a burning issue on US demand for sharp revaluation. China has to take action to cool US reaction. In the past, China has made several reforms, but recently, has slowed down on the issue of currency. Ultimately it has to revalue its currency which would further dent its economy. 

Furthermore, we expect China's GDP to slide, which is led by exports. Its domestic consumption will start feeling the heat. Its equity market will start melting, as individuals own 70% of the shares. So, we do not hesitate to say that China is a Bubble on the edge of American Bubble. This is when we expect Dollar to start making its recovery.

Oil-WTI $96.2: 

Various factors are driving the oil prices in the international market. There are fears that higher oil prices could slowdown the growth. Many are of view that the world economies can easily sustain the current levels and it is the liquidity crunch that has spoiled the growth momentum. 

Apart from demand arising from the Asian economies, it is the calculated move by OPEC and helped by America's stance on Iran, which is pushing oil prices higher. 

If we look at the Geo-Political condition, North Korean front is quiet. Presently, Iran issue does not look too serious. Recession in USA and forecast of slowdown in China means less consumption of oil. Iraq has started to produce to its maximum capacity of 2.5 million barrels per day. All this means that if the tension in the Gulf eases, oil prices could slide. 

In our view, weak Dollar is playing a vital role in keeping oil prices higher. Currencies of oil producing Gulf countries are pegged to the Dollar and as they are unwilling to detach their currencies from the peg, due to expensive imports, oil supplies are kept tight.

Hence, any easing of tension in the region could see oil sliding toward $ 60-70 range. Meanwhile, getting so close to century, Oil will certainly try to test and breach the level, even slight tension in Gulf region would give enough reason for a spike towards $ 120. We still favour a dip in oil prices to $ 70-75 zones in 2008, though we are not expecting a test of $ 50 per barrel.

Commodities: 

With the rising demand for commodities around the globe, the crop market may have an interesting challenge ahead. The crop producers' interest could shift from one crop to another as the shift can be motivated from ethanol based crop, which gives higher return due to continued higher oil prices. 

It is also a matter of grave concern for grain importers that Australia, one of the largest grain exporters, continues to suffer drop of its annual grain harvest, which has fallen to 25 million metric tons from 37 million metric tons. Severe draught and migration from farm sector to urban areas are some of the known causes of drop in Australia's annual grain harvest. 

Global projection for wheat is better acreage, but market fears that forecast of bad weather in USA, India, Argentina and Pakistan could threaten the recovery in 2008. Meanwhile, significant shift has also been noted, as Canadian wheat exporters are producing canola instead of wheat. 

Pakistan has recently witnessed wheat shortage and the recovery would depend on good winter sowing and wheat output. Only massive year-on-year increase with good weather condition may meet the domestic demand, but normally two good years are required for the market to settle down. Our estimate is that with the annual population rise of 3 million, the domestic demand for wheat could surge beyond 24 million tons. Once again, blessings of Mother Nature would be the key to good growth. 

Good sugarcane crop around the world was responsible for drop in sugar prices in the international market. Brazil, India, Pakistan, China and Thailand witnessed surplus sugar production. 

We are expecting surge in global prices despite reports of higher production, as sugar is the cheapest major agriculture commodity. In February sugar will become part of commodity index, therefore, sugar will get bigger share in the weightage of index, which means increase in investment by institutional funds. So buying of sugar could be more due to speculative reasons rather than increase in consumption demand.

Gold $ 834: 

While, the market witnessed Bull Run in the commodity market, demand for gold was seen for the second successive year as investors showed confidence in the yellow metal. Gold gained almost 25 percent during the year to close at $ 834.

We believe that with US economy heading toward recession, precious metal will remain in area of focus for the investors. Since oil, gold and currencies are taken as a hedge against decline, demand for gold will persist. On the downside, Gold has minor support at $ 785 with major support at $ 760. Our target on break of $ 880 is $ 925.

Currencies: 

Euro 1.4650 

We remain bearish for Dollar and do not expect ECB to cut rates aggressively, as inflation remains their major concern. Slowdown of European economy could force a 25 basis point cut, but overall Euro will be a net gainer. Needs to clear 1.4940 convincingly for the next big rally, as our target is 1.5480. Historically Dollar has the tendency to bounce back in January or February, so those who missed out the rally earlier can join the bandwagon. Euro has resistance at 1.4420, which should hold. A break here encourages for 1.4020, which we are expecting in the later half of the year.

GBP 1.9840: 

Since sign of slump in the UK housing market became evident, BOE was quick to act by slashing its rates. We are expecting couple more rate cuts, but Cable has already lost 1300 pips, so it has strong support at 1.9550 which should hold and follow other major currencies. Needs to clear a close above 2.0180 for another feeble attempt towards 2.0620. Should struggle to clear convincingly for a fall to 1.9050.

JPY 111.55: 

Yen gain was seen in the last quarter of 2007, which was best in 2 years, breaching 110 briefly before bouncing back, as speculators rushed to avail carry trade opportunity. Yen's strength was more due to Dollar's weakness rather than strong economic recovery in Japan. However, with FED cutting its rates aggressively, carry trade opportunities are thinning down. Yen has strong support at 114.80, should hold for a rally towards 106.40, a correction could occur before another attack towards 102-103 zones.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Five thermal power projects to be completed in 2008-09 ​*
ISLAMABAD (January 03 2008): Caretaker Minister for Water and Power Tariq Hamid has said the construction of five thermal power projects of 1200 MW capacity will be completed in 2008-09. He said this during a visit to the site of under-construction plant of Attock General Limited along with representatives of Private Power Infrastructure Board (PPIB).

The minister expressed the hope that after January 15 the power situation would become better as water to Punjab and Sindh would be released and gas supply to the power plant would be increased, which would generate more electricity enabling Water and Power Development Authority (Wapda) to avert the load-management in the country.

He appreciated the efforts made by Attock General Limited in developing project in private sector, which was scheduled to be commissioned in October 2008. Attock General Limited Chief Executive Adil Khattak assured the minister for the timely completion of the project to meet the forthcoming power shortage.

ARL Chief Executive made a brief presentation highlighting the salient features of the project. The project has a capacity of 156 MW for which all agreements have been concluded. The Project achieved the financial close on September 25 last.

The Project at a total cost of 148.6 million dollars was being financed through equity of 29.72 million dollars and loan from the local banks for the tune of 118,88 million dollars, he informed.

The Chief Executive apprised the minister that the project would get uninterrupted fuel supply from Attock Refinery through a dedicated pipeline. It was the first IPP in North Lahore and would increase the reliability in IESCO area, he added. Attock General Limited's 156 MW project is one of those plants which is scheduled to be commissioned in October 2008 and other four plants will be commissioned in further months to add additional power of 1200 MW in the national grid system of Wapda to provide benefit to the consumers.

Earlier, the minister visiting the project site witnessed that most of the foundation work had been completed and installation equipment would start shortly. He appreciated that the project was being constructed in well-organised manner and desired that the project be completed as per schedule.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Power shortfall reaches 2500 megawatts: PESCO increases load shedding period *​
PESHAWAR (January 01 2008): Peshawar Electricity Supply Company (PESCO) on Monday resorted to massive load shedding as power shortage aggravated with further increase of 500 MW in power shortfall in the country. The Water & Power Development Authority (WAPDA) was facing a shortage of 2000 MW of electricity due to decline of the water level in the big water reservoirs in the country.

This week the shortfall had further gone up by 500 MW climbing the total shortage to 2500 MW. Talking to Business Recorder a spokesman of Peshawar Electricity Supply Company (PESCO) said the prevailing drought, severe chill and supply of low-pressure gas to power generation plants has further widened the gape between supply and demand of electricity.

The company, he said, in order to overcome the shortage like all other companies was left with no other option other than resorting to load management. The load shedding would be carried out at least three and maximum 5 times in 24 hours.

"The period of load shedding which was earlier from half to one hour had now increased to one-and-half hour that would be carried out thrice in 24-hour," elaborated the spokesman PESCO.

He said that consumption of electricity had increased in prevailing chilly wave in the country. PESCO, he said, in view of the crisis appeals to consumers to extend their cooperation with the utility in the larger interest of the nation and stop unnecessary and illegal use of electricity.

The distribution company has further requested the consumers for conservation of energy by means of less consumption especially during the peak hours ie from 6.00 pm to 11.00 pm. It has further requested avoiding the use of heaters and geysers to help PESCO in overcoming the prevailing gape between supply and demand.

Business Recorder [Pakistan's First Financial Daily]


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## Proud to be Pakistani

* KSE 100-INDEX POSTS 643 POINTS GAIN, CLOSES AT 13997 MARK *​
*Updated at Thursday, January 03, 2008 1515 PST *

KARACHI: Confidence finally returned to the Karachi Stock Exchange, as President Musharraf's speech eased investor concerns pushing the benchmark index to post its biggest gain of 643 points.

100-index closed at 13,997, just 3 points shy of the 14,000 landmark.

The market opened on a positive note and never looked back as a broad-based recovery led to record single-day gains of 643 points.

228 million shares were traded between 383 scrips today, of which 358 advanced... while 16 declined and 9 remained unchanged.

KSE 30-Index gained 764 points to close at 16479 points. 

KSE 100-Index posts 643 points gain, closes at 13997 mark


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## Plasma

^^ Awesome news, but we were well above 14, 000 before the assassination, weren't we?


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## Asghar

Plasma said:


> ^^ Awesome news, but we were well above 14, 000 before the assassination, weren't we?



Agree, excellent to see the KSE make a massive recovery. It touched a record high days before the assassination of 14,815 ish I think, and it's higher now before the during the emergency.

Also excellent news about WiMax finally launching, it's supposed to be the largest network in the world. It's new wireless technology where each "transmitter" has a range of 30 miles and it launched in Pakistan first, ahead of Europe and the US.


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## Plasma

Asghar said:


> Agree, excellent to see the KSE make a massive recovery. It touched a record high days before the assassination of 14,815 ish I think, and it's higher now before the during the emergency.
> 
> Also excellent news about WiMax finally launching, it's supposed to be the largest network in the world. It's new wireless technology where each "transmitter" has a range of 30 miles and it launched in Pakistan first,* ahead of Europe and the US*.


Wow, its even more amazing then!! Awesome news, and going on the Internet wont seem like a punishment now.


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## Neo

*Industrialists plan their own security arrangements ​* 
Say police, Rangers personnel left businesses, citizens at the mercy of anti-social elements during recent disturbances

KARACHI: Industrial associations of Karachi plan their own security arrangements after the loss of property and human lives in industrial areas in the aftermath of Benazir Bhuttos assassination on Dec 27, industrial associations of the city and businessmen said at a press conference at Karachi Press Club on Friday.

Personnel of law-enforcing agencies were nowhere seen when they were most needed during the recent looting and arson, so we plan to have our own security arrangements on public-private basis. This can be possible if the government allows industrial associations and other trade bodies to use some of the share of the taxes that we pay to the government and the rest of the amount would be generated by the associations, said Haseeb Khan, a businessmen. 

S M Muneer, Patron-in-Chief of the Korangi Association of Trade and Industry (KATI), said: We offered sincerest and heartfelt condolence to the family of Ms Bhutto and we will visit Garhi Khuda Bakhsh with our delegation to offer Fateha on behalf the business community. Benazirs death is a great loss for the entire nation. The entire nation is still in a state of shock. Benazir was a great leader of international stature, he said.

Muneer roundly criticised the LEAs for their failure to control looting and arson attacks in Karachi and in other places of Sindh. Where were the Rangers when people needed them desperately, asked Muneer. The deployment of Rangers was made very late. We demand of the government to induct more law enforcers to avoid such incidents in future. It is time to think for future and to take steps on a war footing.

Achieving the export target of $20 billion would be very difficult because of the destructions in the country, said Muneer. The Korangi Industrial Area was turned into a war zone where banks, restaurants, petrol pumps and industrial units were torched, he said, lamenting: The Korangi Industrial Area looks like it has been bombarded.

Many workers lost their jobs as factories they were working at were destroyed he said, informing that 7,000 workers were laid off at one industrial unit alone that has closed after it was destroyed by miscreants.

If governmental indifference continued, repetition of such events could not be ruled out. When we contacted the government about the law-enforcing agencies role, they said: We have insufficient number of the police and Rangers to control entire Sindh, he added. 

The government should include businessmen in meetings concerning law and order along with the police, as we are the party who has credible information and views to share with the government. This can be helpful at times of crisis, he demanded. 

Shaikh Fazle Jalil, Korangi Association of Trade and Industry Chairman, said: There is an accumulated loss of Rs20 billion only in Korangi Industrial Area. Sixteen industrial units, 45 trailers loaded with cargo, 55 vehicles, 4 petrol pumps, 2 car showrooms, and 1 restaurant were torched in Korangi Industrial Area in the riots. The death toll in the industrial area is now 9 and 16,000 workers have lost their jobs, he explained while presenting the losses at Korangi Industrial Area.

Industry is the backbone of any country. Foreign businessmen are very fearful of the law and order situation in Pakistan; many of them say your country lacks working environment, said Masood Naqi, a former chairman of Korangi Association of Trade and Industry.

This has been the first time in the history of country that industrial areas were targeted, we cannot do business in this environment, how can we invest and do business in this environment, he said.

Since, lumpen elements from kachi abadis (slum areas) close to industrial areas were involved in the recent riots, we demand that these slums be removed immediately. For whole two days miscreants looted and vandalised property in Korangi Industrial Area raising questions that there were certain forces using these slums for their own vested interests, he added.

Dawood Usman Jakhura, Vice-Chairman of the Landhi Association of Trade and Industry, said: We cannot link the post-Dec 27 riots to the assassination of Benazir Bhutto. The rioters were anti-social elements who found a good opportunity to plunder property in the absence of law enforcers. Engines were found missing from most of the torched vehicles in our industrial area.

Chairman of the North Karachi Association of Trade and Industry Noor Ahmed Khan said: We have suffered more than Rs53 million losses. Six factories were damaged. We have a significant number of small industries employing mostly semi- skilled women workers. Both the factory owners and the workers are now worried about their survival.

Muhammad Idrees Gigi, Chairman of the sub-committee on Building Project of the Federal B Area Association of Trade and Industry, said: We need to establish our security force to tackle such riots in our industrial areas.

Businessman Mian Zahid Hussain, former Korangi Association of Trade and Industry chairman said: We need crisis management in the country to avoid such incidents. The miscreants involved in the post-Dec 27 riots must be punished in accordance with law.

Industrialists plan their own security arrangements


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## Neo

*Leather exports unlikely to cross $1bn ​* 
Saturday, January 05, 2008

LAHORE: The leather sector has lost all hopes of crossing the $1 billion export mark this fiscal year after a series of recent events from the assassination of former prime minister Benazir Bhutto to acute electricity crisis in the country.

The export of leather and its products, which reached $950 million last fiscal 2006-07, was earlier expected to cross $1 billion mark as exporters were getting a good response for their products from foreign buyers.

Leather industry experts pointed out that the month after Eid-ul-Azha was the most busy and productive period for the industry. During the three days of sacrifice of animals, the industry receives bulk and quality leather from the market.

In that period, they said, usually the industry collected 26 to 28 million pieces of sheep, goat and cow hides. People choose healthy and strong animals for sacrifice, an expert said, adding during the rest of the year the animals slaughtered are not so healthy and strong.

The experts said raw hide was treated with salt and lime to preserve it for tanning process which was performed at the tanneries. All hides were to be processed within a month of slaughter in cold weather and within shorter periods during warmer climate.

They said 20 days after the Eid had been a nightmare for the tanning industry because it remained closed for four days due to Eid holidays and then for another four days following Benazirs murder. Now the industry has been forced to stop operation because of power shortage.

This year, they said, two million cows and 6.7 million sheep and goats had been slaughtered. Lahore Chamber of Commerce and Industry former vice president Sheikh Arshad, who was a leading hide merchant, said the industry closure had badly hurt the tanning process. Hide is a perishable item and long load-shedding has damaged hides at different stages of tanning process.

Explaining the tanning process, he said hide is preserved immediately after slaughter through salting process followed by liming. After 10 to 15 days, it has to be desalted to start the tanning process during which hairs are removed. Then it is pickled chromed to bring it to wet blue stage. After this, the process of finishing is started.

However, he said the hides rot at different stages of tanning and finishing due to frequent power shutdown. This has badly impacted the quality of leather. The experts feared that there would be acute shortage of quality leather in the market in the current year due to the recent chain of events which occurred at a crucial time for leather production.

They pointed out that 45 per cent export earnings came from the export of finished leather and 55 per cent from the export of value-added products like shoes, leather garments and leather gloves.

They said world famous shoe brands like Bali used Pakistani leather, adding the largest national shoe-maker exported its leather shoes and imported cheaper Chinese shoes for the domestic market. Even China imports quality leather from Pakistan. However, they warned the current situation would not be favourable for Pakistani leather mainly due to the damage caused to its quality by the frequent power shutdown.

Leather exports unlikely to cross $1bn


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## Neo

*Retail, foreign investors back on market, KSE gains 263 points ​* 
Saturday, January 05, 2008

KARACHI: Karachi stock market on Friday maintained its recovery drive in the second successive trading day and restored KSE 100-share Index well above 14,200 points level in a long leap.

KSE 100-share Index posted another increase of 263 points or 1.88 per cent and closed at 14,260 points. The 30-Index showed a massive gain of 410 points or 2.49 per cent and concluded at 16,890 points.

The cumulative gains of two consecutive sessions stand at 906.22 points (i.e. 6.78 per cent) from the colossal losses of 1,419 points (i.e.9.6 per cent), which were incurred in 100-Index following Benazir Bhuto assassination on Dec 27.

The recovery in this session was not as aggressive as it was in the previous session. However, about nine stocks hit or closed near their upper circuit breakers including two giant cement scrips i.e. Lucky Cement and DG Khan Cement.

Moreover, some of the heavy weight stocks again played important role in lifting market beyond 14,200 points level. The major contributors to the 100-Index included National Bank, Oil and Gas Development Company, Pak Petroleum, Pakistan Telecommunication Company, MCB Bank, United Bank and JS Co.

The highlight of this session was participation of retail and foreign portfolio investors on buying side, a leading analyst observed and added that in earlier session, majority of the accumulators were the local financial institutions.

The participation from overseas and retail investors has restored confidence in market, he further said.Another analyst said that the oil prices hovering around $100 per barrel, expectations of payouts in upcoming financial results announcements season and increased numbers of cement dispatches kept the stocks fundamentals intact.

Also, the leading political parties confirmation to take part in the rescheduled parliamentary election for Feb 18, 2008, did not allow bears to takeover trading sessions at the local bourse and kept sentiments bullish, he added.

Banking sector continued to lead the gainers on board, as investors showed buying interest in the overall scrips including second tier stocks with higher expected returns. MCB, NBP and UBL remained the major drivers gaining Rs16.40, Rs8.90 and Rs6.65 with NBP ending a volume leader amongst the sector, said S. Kashif Mustafa of ECL Research.

Oil and gas sector also remained in the limelight with giant ODGC index mover in the positive zone. Overall oil and gas scrips gained owing to international crude oil prices touching all time high of $100 a barrel with expected reflection of the prices on the local market, he added.

Owing to increased participation of investors the overall turnover in the ready market slightly surge to 288.081 million shares from 228.785 million shares changing hands a day earlier.The future market turnover also increased to 54.198 million shares as compared with 35.173 million shares of previous session. 

The overall market capitalisation swelled by Rs87 billion and stands at Rs4.352 trillion. Plus signs continued to dominate the board as 206 stocks advanced against 100 stocks declined, while the value of 38 scrips remained unchanged with total 344 active counters in the market.

Highest volumes were witnessed in TRG Pakistan at 32.853 million closing at Rs14.45 with a gain of five paisa, followed by National Bank at 16.488 million closing at Rs233.50 with a gain of Rs8.70, DG Khan Cement at 15.575 million closing at Rs94 with a gain of Rs4.25, Arif Habib Securities at 13.478 million closing at Rs172.35 with a gain of Rs8.20 and Oil and Gas Development Company at 12.087 million closing at Rs121.45 with a gain of Rs2.40.

Retail, foreign investors back on market, KSE gains 263 points


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## Neo

*LSE continues to recover ​* 
Saturday, January 05, 2008

LAHORE: The astonishing recovery on the capital market continued into the second day on Friday with experts unable to explain the unusual buoyancy at a time when nothing concrete has occurred to warrant such speedy recovery.

The Lahore stock market closed at 4,545 points after gaining 120 points in its LSE-25 index during the day long trading on Friday. The trading volume was moderate at 31.1 million shares. The BOSI recording a turnover of 3.4 million shares was the volume leader.

There were 120 active companies whose shares were traded. Out of these the value of 49 increased, 17 declined with no change in 54 companies. Unlike yesterday the recovery was not spread in all sectors. The mutual funds remained under pressure. Some companies in investment banks sector went down while majority gained value. The commercial bank sector was largely positive. All the larger banks gained handsome value except ABL.

Performance of the insurance sector was mixed with bulls having slight edge over the bears. Cement sector companies improved their gains further only a few units ended the day on negative note. Refinery sector was completely bullish all refineries recording substantial gain on last working day of the week. The oil and gas marketing companies and its exploration sector helped push the index up. Even heavy weights like OGDC gaining well over Rs2 per share. 

The experts remained confused about the unusual performance of the market. Some think that big players have picked the stocks available at low values. Others fear that this is a ploy to lure small investors who would not know what hit them when the big players would liquidate their stocks bought at low values in last two days at higher value.

LSE continues to recover


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## Neo

*Rupee touches new 6-year low ​* 
Saturday, January 05, 2008

KARACHI: The Pakistani rupee weakened to a fresh six-year low against the dollar on Friday as importers bought the US currency to clear payments, dealers said.

They said the rupee closed at 62.20/25, its lowest level since October 2001 when it was at 62.28/35. On Thursday, the currency had closed at 61.92/95. Dealers said rising import payments, especially for oil, and outflows from financial markets had boosted dollar demand.

There is increasing demand for the dollar to clear payments, said a dealer with a brokerage house. Short-term money rates rose on Friday as the central bank conducted a repo to mop up liquidity, dealers said.

Overnight call rates ended at 9.5 percent after hitting a low of 6 per cent. They had closed on Thursday at 4 per cent. Pakistans cental bank sold 10 billion rupees ($162 million) of Treasury bills on Friday under three-day repo contracts at 8.86 per cent to mop up funds from the money market. 

Rupee touches new 6-year low


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## Neo

*Govt paying Rs14bn monthly subsidy on oil ​* 
Saturday, January 05, 2008

ISLAMABAD: The government has paid Rs14 billion monthly subsidy to keep the oil prices at a present level and provide solace to poor, caretaker Finance Minister Dr Salman Shah said. 

Talking to Geo News on Friday he said global oil prices have increased to unprecedented level from $20 to $100 per barrel within a few years. The government will have no option but to ultimately pass on the increase to consumers as huge subsidy is increasing the budget deficit. He said food prices in the country are increasing at much cheaper rates of 10 to 11 per cent as compared to global increase rate of 20 to 25 per cent per annum. 

Ultimately, food prices in the country will come in line with world food prices as current price spiral was a global phenomenon. As many as 1.5 million tonnes wheat were being imported from abroad to meet the supply situation. He said wheat is available in the country at Rs16 per kg while world price of wheat is Rs30 per kg. He said 35 per cent regulatory duty has been imposed on wheat product to check its exports. 

He said the next government is going to inherit a very healthy economy. Economy is in very strong and solid position and it would continue to grow and prosper and if the country continues current policies. 

Regarding electricity shortage he said power consumption in the country has increased extremely. The government is striving to enhance the production to meet the shortage. He stressed national consensus on building new dams to increase cheap power production in the country. 

Govt paying Rs14bn monthly subsidy on oil


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## Neo

*Habib Bank unveils massive investment plan ​* 
Saturday, January 05, 2008

KARACHI: Habib Bank Limited has unveiled its worldwide investment strategy for the next five years and for the purpose the bank passed a special resolution with its shareholders consent at an extraordinary general meeting held the other day.

Accordingly, the HBL would increase its shareholding in Urumqi City Bank or in any other entity in China up to 20 per cent, the bank said in an official communique sent to the Karachi Stock Exchange on Friday.

The bank would also increase its shareholding in Diamond Trust Bank Kenya Limited, Kenya and equity in Diamond Trust Bank Uganda Limited and Diamond Trust Bank Tanzania Limited up to 26 per cent, and in Kyrgyz Investment and Credit Bank, Kyrgyz Republic up to 26 per cent.

Shareholders also approved to raise the banks stake in New Jubilee Insurance Company and New Jubilee Life Insurance Company up to 10 per cent in each company. The bank also received shareholders approval to enhance its investment in Habib Allied International Bank Plc, UK by up to 20 million pound and make capital investments in strengthening the banks international franchise in the international markets where the bank has presence or where the bank wishes to have its presence.

During the next five years, the HBL would restructure its shareholding in Platinum Habib Bank Plc, Nigeria to maintain a shareholding of up to 15.3 per cent, the resolution said. The bank would make an investment of up to Rs2 billion in the microfinance sector in an existing microfinance bank or participate in a new initiative. It would also invest up to Rs2 billion over the next three years in the leasing sector by establishing a dedicated leasing company.

However, the bank said all investments would be subject to approval of the State Bank of Pakistan and other regulatory approvals being taken (including Government of Pakistan if required, for overseas investment exceeding US$5 million or other limits prescribed).

The board of directors of Habib Bank are authorised to determine the manner in which and the time and price at which each investment shall be made provided that the equity investment would be made at the fair value of the equity at the time, said the notification.

The shareholders further ratified the investment made to date in New Jubilee Insurance Company Limited (at an average price of Rs103 per share for 5.3 million shares), New Jubilee Life Insurance Company Limited (at an average price of Rs51 per share for three million shares), Diamond Trust Bank Kenya Limited (9.8 per cent shareholding for approximately US$16 million) and Kyrgyz Investment and Credit Bank (at US$2.25 million for approximately 18 per cent shareholding) which had been authorised by the Board of Directors of the bank prior to the change in Section 208 of the Companies Ordinance 1984, the notification added. 

Habib Bank unveils massive investment plan


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## Neo

*Load-shedding affects export orders ​* 
Saturday, January 05, 2008

LAHORE: Quaid-e-Azam Industrial Estate (QIE) President Mian Nauman Kabir has urged the government to take urgent measures to overcome the energy deficit as it is affecting the whole economy.

Chairing a meeting of the QIE board of management on Friday, he said unannounced load-shedding was hitting the industrial production hard. The country had not been achieving the export target for the last two years and if the situation remained the same, it would be very difficult to meet the target set for the current fiscal year, he added.

Kabir said more than 400 industrial units had started functioning at the QIE, out of which 70 per cent units were export-oriented. But these had not been able to execute export orders due to power outages.

He said the closure of those industrial units would deprive more than 40,000 people of their jobs while the government would also lose huge revenue. He said the government should take energy crisis very seriously and make both long-term and short-term plans to resolve the problem.

The long-term plan, he suggested, included utilising all hydel resources by building big water reservoirs and power generation units which was a cheaper way to produce energy. He said Pakistan should also go for alternative energy resources like other countries. Germany is producing more than 21,000 MW and India is generating more than 7,000 MW of power through wind energy. He urged the government to take immediate measures, otherwise the industrial sector would be fully destroyed.

Load-shedding affects export orders


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## Neo

*Cotton crop registers 17.75pc shortfall ​* 
Saturday, January 05, 2008

MULTAN: The new cotton crop at ginneries across the country has been recorded at 9.114 million bales till Jan 1, showing a shortfall of 17.75 per cent. 

Last year the production on Jan 1 stood at 11.082 million bales. Initially the official production target of the silver fibre for the current season had been fixed at Rs14.10 million bales. Later, it was revised to 12.8 million bales. At the moment, 1,008 ginning factories are operating, 818 in Punjab and 190 in Sindh. 

According to a report issued by the Pakistan Cotton Ginners Association (PCGA) head office here on Friday, arrival of cotton at ginneries in Punjab was recorded at 6.865 million bales, compared to last years 8.937 million bales. 

Thus the shortage has been computed at 23.18 per cent. In Sindh, arrival of cotton was recorded at 2.248 million bales, as compared to 2.145 million bales last year. The excess has been computed at 4.84 per cent. The textile mill owners have so far procured 7.126 million bales compared to last years 8.943 million bales in Punjab and Sindh. 

The exporters have purchased 80,800 bales till now compared to 76,650 bales last year. The unsold lint and Phutti stocks have been computed at 1.907 million bales compared to last years 2.062 million bales. 

The approximate existing rate of good quality lint is at Rs3, 200 per maund and that of seed-cotton or Phutti is at Rs1, 550 per 40 kg. The governments support price for Phutti is at Rs1, 050 per 40 kg. 

Cotton crop registers 17.75pc shortfall


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## Neo

*IA, PPA signed for 400 power projects *​ 
Saturday, January 05, 2008

ISLAMABAD: Financial closure has been achieved by two power projects of the Mansha Group, Nishat Power Project and Nishat Chunian Power Project, of 200MW each. Earlier, the group signed the Implementation Agreements (IA) and Power Purchase Agreements (PPA) of both these projects in the last quarter of 2007. 

The projects are being set up at the Kasur district near Lahore. The signing ceremony was held at the Private Power and Infrastructure Board (PPIB) office, attended by Mohammad Yousuf Memon and other senior officials from the PPIB and project companies, said a press release. The sponsors of Nishat Power Project are Nishat Mills Ltd and those of Nishat Chunian Power Project are Nishat Chunian Ltd, both owned by Mian Mohammad Mansha. 

Lenders of both the projects are a consortium of commercial banks including Habib Bank Ltd (HBL), Allied Bank Ltd (ABL), United Bank Ltd (UBL), Standard Chartered Bank (Pakistan) Ltd (SCB) and Faysal Bank Ltd (FBL) being financial advisor and lead arrangers. 

The estimated cost of both the projects is $204 million each and they are targeted to be commissioned by June 2009 and December 2010, respectively. With the financial closure, a total of eight projects with accumulative capacity of 1,667MW has achieved financial close under the 2002 power policy expected to be commissioned by the year 2010, it is a very positive sign showing increase of interest of the investor community in the power sector of the country. 

IA, PPA signed for 400 power projects


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## Neo

*Fighting money laundering: ADB to help SBP set up Financial Management Unit*​
ISLAMABAD: Asian Development Bank (ADB) will assist State Bank of Pakistan (SBP) to strengthen the anti-money laundering regime including effective consolidation of AML/Combating Financing of Terrorism (CFT) monitoring and analytical measures within a single financial intelligence unit.

An international consulting firm will be engaged to provide services pertaining to setting up of a Financial Management Unit in the State Bank of Pakistan in this regard, stated detailed Terms of Reference (TORs) developed for the hiring of the services of international firm and experts for Support to Governance Reforms in Pakistan Strengthening Anti-Money Laundering Regime in Pakistan.

Qualified consulting firm to be appointed that is capable of providing the experts like Anti-Money Laundering Expert, Forensic Accounting Expert, Financial Intelligence Unit Database Expert, Law Enforcement and Legal Expert, Securities and Banking Expert, Assist in the establishment of the Financial Monitoring Unit (FMU) in the State Bank of Pakistan (SBP) in accordance with the new Anti-Money Laundering (AML) Law. 

The Asian Development Bank (ADB) has approved the provision of a technical assistance cluster (TAC) to the Government of Pakistan for a value of $11.5 million for Support to Governance Reforms in Pakistan. The TAC is being financed by the Department for International Department (DFID), UK and provides a flexible financing mechanism to support a range of ongoing governance-related initiatives in Pakistan.

On the request from the SBP, a subproject titled Strengthening Anti-Money Laundering Regime in Pakistan is being financed from the TAC under the sub-cluster Accountability, Transparency and Anticorruption. A consulting firm will be hired under this subproject, to set up a Financial Management Unit in the SBP. Selected firm and experts also to assist in elaborating the roles, functions and organization of the FMU, including preparation of an organization chart; providing recommendations on FMU staffing (number of staff and position/title) for each of the years 2008 and 2009 and projected for subsequent periods. It will prepare draft standard operating procedures for FMU staff. 

It will develop mechanisms for effective cooperation and collaboration among the concerned regulatory and law enforcement agencies, review compliance requirements for banks and non-bank financial institutions under the new AML Law, and, in consultation with SBP and concerned agencies, draft implementing regulations for the new AML law (draft amendments as needed); provide technical advice with respect to AML practices, systems, and programs that should be instituted to ensure compliance with the AML Law.

It will prepare, in consultation with SBP staff, draft Memoranda of Understanding (MOUs) between the FMU and other jurisdictions in accordance with IOSCO principles and best international practices, and assist the FMU in developing coordination mechanisms and procedures for mutual assistance programmes.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Benefiting from WTO framework: Participants emphasise enhancing productivity*​
ISLAMABAD: The Ministry of Food, Agriculture and Livestock (MINFAL) on Friday stressed on enhancing agriculture productivity of all crops so as to get maximum benefits from the World Trade Organisation (WTO) framework. 

Pakistan Agriculture Research Council (PARC) and other agriculture related institutions were asked to find out a new mechanism for enhancing agriculture production not only to meet domestic requirement but also for export purposes. Secretary MINFAL Ziaur Rehman expressed these views while addressing in the concluding session of 3-day workshop. 

Despite having 23.3 million tonnes of wheat production during 2006-07, government is importing the commodity at a high cost of above $500 per tonnes, he added. Instead of gaining from bumper wheat production, the country is losing the market. The wheat production in the current year was above the countrys domestic requirement but still the government is importing wheat at higher cost. 

The MINFAL secretary suggested more incentives for farmers so that they would encourage for increasing their productivity. He assured the participants that the government would encourage farmers through international policies and steps would be taken to keep agriculture produce prices stable in the market. However, he said that researchers could play vital role in increasing agriculture production not only to feed local population but also for export surplus. 

Unlikely, the secretary said that in the first half season there was glut (excess of supply over demand) and farmers were paid nominal. While in the second half season, there was shortage of the commodity and the government imported the same commodity on higher prices. 

To meet the WTO challenges, he asked local growers and processors to meet international standards in lab system and grading system. If surplus production occurred but was unable to meet international standards, then no country would be ready to purchase it. He stressed for maintaining hygienic standards. 

The MINFAL secretary stressed for strengthening the WTO cell in the ministry. He appreciated the ministry for organising the seminar on such important topic. Earlier, the participants were informed about WTO negotiations and agreements on agriculture in detail. Main objective of the seminar was to inform policy makers about development occurred in WTO and position of Pakistan in it. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan, Iran discuss oil, gas sectors co-operation​*
ISLAMABAD: Minister for Petroleum and Natural Resources, Mr Ahsanullah Khan said there exists tremendous scope for promoting Pak-Iran ties in the oil, gas and mineral sectors and invited the Iranian companies to participate in the upcoming petroleum projects for learning a lot from each others experience.

Iranian ambassador, Mr Mashallah Shakeri called on Ahsanullah Khan here Friday and discussed with him matters pertaining to promoting bilateral cooperation in the oil and gas sectors.

During the meeting both sides have expressed satisfaction over the pace of progress on IPI gas pipeline project and reiterated the desire of their leaderships for its early implementation for the benefit of the entire region. 

The Minister said that the government is taking concrete steps for exploiting the untapped hydrocarbon resources, spanning over 627,000 sq. kms sedimentary area in order to meet the speedy socio-economic growth in the country. He said that further onshore and offshore blocks would be opened for enhancing the oil and gas exploration activities in the country, which would provide enormous investment opportunities for the investors. 

Expressing his sentiments, the Iranian Envoy said that IPI gas pipeline project would not only open up new avenues of cooperation among the member states but also help to bring the regional countries closer. Secretary petroleum Farrakh Qayyum was also present during the meeting.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Power Plant : Mansha group achieves financial close​*
ISLAMABAD: Private Power Infrastructure Board (PPIB) and Mansha Group signed financial closing documents for commissioning of 400 MW power projects worth $408 million here on Friday.

According to an official statement issued here financial closure has been achieved by the two power projects by Mansha Group, namely Nishat Power Project and Nishat Chunian Power Project of 200 MW capacity each. Earlier, the company signed Implementation Agreements (IA) and Power Purchase Agreements (PPA) of both these projects in last quarter of 2007. The projects are being set up at Kasur district near Lahore.

The signing ceremony was held at PPIB office, and was attended by Mohammad Yousuf Memon and other senior officials from PPIB and the project companies. 

The sponsors of Nishat Power Project are Nishat Mills Limited and those of Nishat Chunian Power Project are Nishat Chunian Limited, both owned by Mian Mohammad Mansha, while lenders of both projects are the consortium of commercial banks including Habib Bank Limited (HBL), Allied Bank Limited (ABL), United Bank Limited (UBL), Standard Charted Bank (Pakistan) Limited (SCB) and Faysal Bank Limited (FBL) being Financial Advisor and Lead Arrangers.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Deficit in services trade surges to 33% in July-Nov 2007-08​*
KARACHI: The deficit in services trade widened phenomenally by almost 33 percent during the five months of current fiscal year over the corresponding months of last year because of double digit in import of services.

During July-November 2007-08, services imports grew by 18.43 percent against the exports, which posted 7.13 percent growth over the same period of previous year, latest statistics showed the on Friday.

Trade deficit totaled at $7.221 billion in the period under review compared to $5.439 billion in the same months of previous year, which analysts believed to swell further in the remaining part of this fiscal year because of recent chaos and violence, which hit the economy badly.

Services export stood at $7.381 billion during the said period over $6.890 billion of the previous year while imports were $14.603 billion against $12.330 billion of the last year.

In month of November, deficit in trade of services also grew by 15.71 percent to $1.618 billion over $1.398 billion in the same month of last year. Exports during the month grew by 12.28 percent to $1.543 billion against $1.374 billion of the previous year. And imports were up by 14.01 percent to $3.162 billion in month of November as compared to $2.773 billion in the corresponding month of last fiscal.

Services trade deficit, however was narrowed down by 18 percent as it shrunk to $1.618 billion in November of this year against $1.976 billion in preceding month of October with exports growing over nine percent during the month, imports slid by 6.59 percent compared to October of this fiscal.

According to analysts of foreign trade, like goods trade, services sector has also been hit hard by the assassination of former Prime Minister Benazir Bhutto and ensuing violence and riots in the country, which has distorted the image of the country badly abroad.

The consequences of the current disturbances and chaos would be felt in the coming days when the services exports are feared to bear its brunt as particularly tourism sector would be major victim, which brings considerable foreign exchange for the country, the analysts noted.

Countrys service exports comprise of transportation, travel, communication, transportation, financial, information technology and government services with the last having a major share in overall exports.

However, services export is confronted by the issues like quality, acceptance of professional qualifications, visa restrictions and above all the image of the country in the world, they pointed out as well as the tariff and non-tariff barriers are also big hurdles in the way of Pakistans service providers to penetrate in the international market.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan among top countries for offshore outsourcing: Gartner​*
ISLAMABAD: As a result of the policy initiatives taken by the government to position the country as an offshore destination of choice, Pakistan has become a major player in the global Information Technology (IT) industry. 

Gartner, the worlds leading information technology research and advisory company has placed Pakistan amongst the top countries of the world in terms of suitability for offshore outsourcing. Pakistan has been recognized by the global community as Market Leaders and Challengers and has been placed in the First Category countries in 2007. Previously, in 2006 Pakistan was placed in the Third Category countries. 

Gartner, in its recent report Analysis of Pakistan as an Offshore Service Location said the major factor behind the progressing status of Pakistan is the lower salaries and better infrastructure advantages than other offshore destinations. The salaries of IT professionals in Pakistan are approximately 30% lower than those in India, while telecommunication costs are also lower as compared to any other offshore locations, which make Pakistan an attractive outsourcing destination. 

Based on a total of ten criterion, including language, government support, labour pool, infrastructure, education system, cost, political and economic environment, cultural compatibility, global and legal maturity, data and intellectual property security and privacy, Gartner rated Pakistan as very good in cost, good in language and fair in most of the areas despite the prevailing political environment. 

According to Gartner research report, government of Pakistan has devised a comprehensive national IT policy, designed to encourage the private sector. In order to drive development, Pakistan Software Export Board (PSEB) plans to construct new IT parks in major cities while 750,000 square feet of space in PSEB-designated parks has already been leased to IT companies. 

The government is doing a great job of initiating activities in positioning Pakistan as an offshore location, however, it needs to take concrete steps to improve its brand image as an offshore destination, the report adds. 

It may be mentioned here that a number of Pakistani IT companies have developed world class software in areas such as car leasing, enterprise application integration, mortgage lien processing, stock market order management, mobile convergence, data and web content management for some of the top most corporations of the world.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Shareholders allow HBL to further invest locally, overseas*​
KARACHI: Habib Bank Limited has obtained approvals from its shareholders for its plans to invest in local and foreign companies over the next five years. 

In an extraordinary general meeting held on December 26, 2007, the shareholders allowed the bank to acquire up to 20 percent shareholding in Urumqi City Commercial Bank, or in any other entity in China. They also allowed the bank to buy up to 26 percent shareholding in Diamond Trust Bank Kenya Limited, and equity in Diamond Trust Bank Uganda, and Diamond Trust Bank Tanzania. 

The bank will also be buying 26 percent shareholding in Kyrgyz Investment and Credit Bank, and up to 10 percent stake in New Jubilee Insurance Company and up to 10 percent in New Jubilee Life Insurance Company. The bank will enhance its investments in Habib Allied International Bank Plc., UK, by up to 20 million pounds and make capital investments in strengthening the banks international franchise in the international markets where the bank has presence or where the bank wishes to have its presence. The bank will restructure its shareholding in Platinum Habib Bank Plc., Nigeria to maintain a shareholding of up to 15.3 percent. The bank will make investment of up to Rs 2 billion in the micro finance sector in an existing micro finance bank or participating in a new initiative. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Wheat import via Gwadar planned: SPA offers concessional rates​*
ISLAMABAD, Jan 3: The government is likely to import 600,000 tons of wheat at Gwadar Port after having received an offer from Singapore Port Authority (SPA) to charge concessional rates for handling the transaction.

The government plans to import wheat within this month to help meet the growing shortage of the commodity across Pakistan.

Official sources told Dawn that SPA, the operators of Gwadar Deep Sea Port, wanted to make the port fully operational by handling the huge quantity of wheat at concessional rates viz-a- viz other ports of the country.

The government was told that although the SPA had started handling ships and vessels at Gwadar, it would be good for the country if it handled transshipment like that of the import of 600,000 tons of wheat.

Tenders for importing wheat has just been floated by the government.

When contacted, director-general Gwadar Port Authority Ahmad Bukhsh Lehri confirmed that the operators of the Gwadar Port have offered to charge concessional rates for the import of wheat.

He also said interest of the foreign investors was increasing in the region after the port was inaugurated last year.

He said China had expressed its readiness to connect Gwadar port with Sinkiang and develop a corridor for oil as Gwadar was fast becoming the hub of economic activities.

A Chinese company, he said, had also entered an agreement to set up a steel mill in Gwadar.

Responding to a question, Mr Lehri said a survey for laying a railway line had been completed, while 50 beds hospital had already been established at Gwadar. Over 25 banks have opened their branches in Gwadar while more hotels were being opened there, he added. Movement on the coastal highway, he said, was also increasing after its repair. It was hit by floods in 2005.

He said that Gwadar would be connected with other provinces through a network of railway tracks which would be laid along with carpeted roads.

To a question, he said that the PSA had overcome its major problems by having three berths which have successfully started handing the arriving ships at Gwadar port.

Over 20-year tax exemptions had been given to SPA while a 15-year tax holiday in the proposed Export Processing Zone (EPZ) near Gwadar port was also expected to further help attract local and foreign investment there. There would be tax exemption on customs, sales tax and excise duty in the EPZ with a view to promote substantial investment in Gwadar.

Sources said a number of foreign investors have shown interest to establish mega refineries, building storage capacity and undertaking other businesses in Gwadar to help expedite the process of industrialisation in Balochistan.

With the completion of both the phases of Gwadar port, a Special Industrial Development Zone (SIDZ) with an area of 4,000 hectares has also been proposed for setting up various industries. The SIDZ is located on the north of Gwadar town at a distance of about 30 km from the port.

Sources said foreign vessels could come and unload their goods at Gwadar whose first phase of the construction has finished at an upwardly revised cost of $298 million.

The additional funding had been provided by the federal government to install the required equipment, complete the civil work and build roads linking the port with Quetta and other upcoming areas.

The Chinese side had completed its work while the local authorities finished the development of infrastructure, including the building of a road from Gwadar to Karachi.

The second phase of the project is expected to be undertaken in early 2008 at a cost of $865 million and will be completed by 2010.

Phase-1 was built by the public sector with the Chinese assistance and included three multipurpose berths (602m quay length, one service berth (100m length), 4.35 km navigable channel (11.6/12.5m deep), roads, plinths and transit shed, operational craft and equipment, including navigational aids and shore based port buildings and allied facilities.

Concerned officials said completion of phase-2 would help meet strategic needs and standby facility to Port Qasim and Karachi Port in case of emergencies arising out of any mishaps.

The construction of phase-2 would be completed on the basis of Built Operate Own (BOO) and Built Operate Transfer (BOT) basis. However, if the private sector did not respond favourably, public sector financing would be required to develop phase-2 of the port.

The port would generate foreign exchange earning as the vessels registered under foreign flags are required to pay some portion of charges in foreign exchange through their local agents for cargoes.

The amount of foreign exchange earned would not be reflected in Gwadar Port account, but would contribute to national foreign exchange earnings.

At the present rate of Karachi Port Trust (KPT) Tariff, the foreign exchange percentage is estimated at 33 per cent of the charges payable to port authorities.

Officials said that Gwadar had an edge over Port Salalah of Oman and Irans proposed up-gradation of Port Chah Bahar. However, Gwadar would have to compete with both the foreign ports.

Gwadar is expected to serve as mother port at the strategic location opposite to Straits of Hormuz and on the mouth of Persian Gulf and provide port, warehousing, transshipment and industrial facilities for trade with over 20 countries including Gulf states, Central Asian Republics (CAR), Iran, East Africa, Red-Sea countries and North West parts of peoples Republic of China and India.

Wheat import via Gwadar planned: SPA offers concessional rates -DAWN - Business; January 04, 2008


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## Neo

*Oil import bill reaches $3.768bn​*
ISLAMABAD, Jan 3: Pakistans oil import bill reached $3.768 billion which is up by 14.75 per cent from $3.284 billion last year, statistics division said on Thursday.

The import bill is the highest ever during the first five months of the current fiscal year.

Taking this as a benchmark, the countrys oil import bill is expected to hover around $10 billion by end June 2008, which will create serious problems in the balance of payments for economic managers of the newly elected government.

Official figures released by the Federal Bureau of Statistics (FBS) showed that share of oil in total import bill reached 26 per cent during the period under review. As oil price in international market crossed the $100 per barrel mark, the share of oil in total imports will reach around 30 per cent in the up-coming months.

On a monthly basis, the import bill of oil has increased by over 39 per cent in November 2007 over last year. It indicates an upward trend in oil import bill which may escalate in the months ahead.

Official figures showed that the break-up of oil import bill showed that the crude oil increased by 12.63 per cent to $1.819 billion in July-November period of the current fiscal year against $1.615 billion over the corresponding period last year.

The other component of the oil import bill constituted value added products which reached $1.948 billion during the period under review as against $1.668 billion last year, indicating a growth of 16.78 per cent.

Like last year, import bill of oil would seem to be the prime mover of the trade deficit this year because of greater consumption.

The statistics showed that the second component of import bill is machinery which recorded a marginal growth of 6.12 per cent to $2.773 billion in July-Nov against $2.614 billion over the last year.

However, the depressing aspect is that the import of textile machinery declined by more than 26 per cent during the July-November period of 2006 over the last year.

It showed that textile tycoons have stopped import of machinery for modernising their units to enhance the quality of their products and reduce the cost of doing business for making it competitive with those coming from India and China in the international market.

The import bill of machinery mainly pushed by an increase of 11.56 per cent in power generating machinery, agriculture machinery 31.72pc, construction and mining 24.87pc, electrical machinery 14.30pc, other machinery 8.57pc and telecom 9.39pc.

The agriculture and other chemical group increased by 36.54 per cent to $2.323 billion during the July-Nov period of the current fiscal year against $1.701 billion over the same period of last year. Of these import of fertiliser increased by 160.83pc, plastic material 14.53pc, medicinal products 51.26pc and others 23.70 per cent. However, import of insecticide declined by 6.33 per cent during the period under review.

Oil import bill reaches $3.768bn -DAWN - Business; January 04, 2008


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## Neo

*LTFF to help Modernize industries​*
RAWALPINDI, Jan 3: The Engineering Development Board (EDB) has called upon the engineering industry, in general, and exports, in particular, to fully utilise the Long-Term Financing Facility (LTFF) for modernising their production infrastructure to gain more competitiveness and innovative production of goods.

Tracing the background of the scheme, the EDB said it had been pursuing the government to provide the facility for the engineering goods industry, which now has been duly incorporated in the development categories of industrial sector. The engineering industry is in a position to make necessary technological development to boost exports.

The EDB has placed the details of LTFF scheme with requisite forms on its website.

Under the scheme, exporters would be able to get loans for a maximum period of 10 years, including a maximum grace period of two years from commercial banks, including Islamic Banks and approved DFIs.

The State Bank has allocated Rs eight billion to banks for January-June 2008 period.

LTFF to help Modernize industries -DAWN - Business; January 04, 2008


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## Neo

*Reserves rise to $15.74bn​*
KARACHI, Jan 3: Pakistans foreign exchange reserves rose by $14 million to $15.74 billion in the week that ended on Dec 29, the central bank said on Thursday.

Reserves held by the State Bank of Pakistan rose to $13.50 billion from $13.36 billion a week earlier, while those held by commercial banks were unchanged at $2.24 billion, it said.

Pakistans foreign reserves hit an all-time high of $16.39 billion in the week that ended on Nov 10. But they fell because of outflows from the stock market after President Pervez Musharraf imposed emergency rule on Nov 3.

Emergency rule was lifted on Dec 15 but analysts said foreign reserves might come under further pressure due to the tense political situation after the assassination of opposition leader Benazir Bhutto on Dec. 27. Reuters

Reserves rise to $15.74bn -DAWN - Business; January 04, 2008


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## Neo

*Removal of Rangers, police bosses sought: Karachi suffered over Rs80bn losses​*
KARACHI, Jan 3: The Karachi Chamber of Commerce and Industry (KCCI) has demanded removal of top officials of police and Rangers for their failure to maintain law and order during three days after the assassination of former prime minister Benazir Bhutto.

KCCI president Shamim Ahmed Shamsi and Executive Committee member Siraj Kassam Teli said at a press conference here on Thursday that the business community had suffered a loss of Rs80 billion on account of damage to property, looting of factories and warehouses, torching of vehicles and other acts of violence that had shaken the city.

They warned that if the law-enforcement hierarchy was not changed within a week, the KCCI could give a call for a strike.

They said the Sindh government had failed completely to maintain law and order. When mobs ruled the streets in several areas of Karachi from Thursday to Saturday (last week), police and Rangers were nowhere to be seen. Troops were on standby in the cantonment but the caretaker government did not bother to seek their help.

They said the loss of life, incidents of looting and lawlessness would have been 50 per cent less if police and Rangers had remained vigilant and performed their duty. They said the government should seriously consider deputing senior local officials of police and Rangers in Karachi instead of bringing officers from other parts of the country. Both the departments whose duty was to curb violence had let down not only the citizens but also the business community by leaving the city at the mercy of mobs and angry protesters, the KCCI leaders said. They said more than 1,500 trailers had been burnt down in interior Sindh and over 1,000 vehicles in Karachi.

Removal of Rangers, police bosses sought: Karachi suffered over Rs80bn losses -DAWN - Top Stories; January 04, 2008


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## Neo

*NTCHIP Vision 2030: government plans to double the trade to GDP ratio *​ 
FAISALABAD (January 04 2008): Under the strategic framework of National Trade Corridor Highway Investment Programme "Vision 2030" government has planned to raise the trade to gross domestic product (GDP) ratio from 30 percent to about 60 percent, which would be equivalent to $600 billion by 2030.

When programme fully is implemented, these efforts will save $5-$7.5 billion per annum that are currently lost because of inefficient logistics. To achieve this target, National Highway Authority (NHA) sources mentioned that key actions under the strategy would be improving trade competitiveness and export diversification.

Logistics are currently seen as a key constraint to enhancing competitiveness and attract private sector investment. They are also a bottleneck to increasing productivity as well as to deepening and diversifying the industrial base both of which are necessary to provide sustainable jobs for a growing population. Several actions are planned or underway to address the logistics and investment gap. One of these is a comprehensive road network investment programme, sources mentioned.

NHA sources stated that an enhanced road network will cut the time and cost of moving goods and services along the entire logistical chain. Specifically, government intends to double the road density from 0.32 km per-sq-km (km/km2) at present to 0.64 km/km2 by 2030.

In addition to improvements to physical infrastructure, the initiative includes meaningful policy and institutional actions aimed at providing a better enabling environment for investment, for industrial diversification, and for the logistics industry as a whole.

NHA sources said that Pakistan's domestic trade flows are concentrated in one major north-south transport corridor. The proposed actions, while aimed at making this corridor more efficient, will also have a major and broader impact on the performance of the entire transport sector and thus on the economy overall.

This comprehensive approach is embodied in a special initiative called the National Trade Corridor Improvement Program (NTCIP). The Government views NTCIP as a key success factor to the country's growth prospects, to inclusiveness, to employment creation and social service renewal, and to the execution of second generation sector and macroeconomic reforms.

NTCIP represents a flagship endeavour by the Government and the private sector to bring about better connectivity and trade facilitation. Beside roads, the initiative covers ports, railways, airports, customs clearing procedures, tariffs, and the trucking industry.

The rationale for NTCIP is embedded in and emanates from plans for growth, job creation, and trade, said NHA sources. Presently, the NHA is responsible for the operation, maintenance, and development of the national highway system. NHA manages 11,400 km of roads, of which 30 percent are already toll roads.

The efficiency of the road network has been constrained by slow moving traffic, poor quality surfaces, and non-vehicular traffic. Currently, it takes 72 hours to travel between Peshawar and Karachi, a distance of about 1,700-km. The investment in the backbone of the national trade corridor is expected to reduce this travel time to 36 hours after completion.

As a core component of NTCIP, NHA has developed the National Trade Corridor highway investment plan (NTC highway investment plan). It covers the corridor backbone from Peshawar to Karachi and the outlying links that connect Pakistan to the People's Republic of China and Gwadar Port in Balochistan. The initiative includes not only new road construction but also the improvement of over 3,500 km of roads, national highways, expressways, and motorways.

According to official sources, the Asian Development Bank (ADB) is an active partner of the Government in the road sector and is involved in policy formulation including the National Transport Policy.

ADB is currently supporting the engagement of an advisor to formulate a national trade corridor strategy. In view of this long-standing relationship in the sector, the Government has approached ADB along with other financing agencies to finance the investment plan for the medium term.

ADB's proposed share of the NTC highway investment represents about 20 percent of the total. Key sections of the motorway and expressway network will be financed through the National Trade Corridor Highway Investment Programme and key sections of highways will be financed through the National Highway Development Sector Investment Programme (NHDSIP) approved in 2005. The NTC highway investment plan has an estimated economic internal rate of return of 39 percent and a total average economic savings estimated at Rs 200 billion per year.

A road sector development framework (RSDF) was agreed with the Government in 2005. This road map addresses major policy and institutional issues. Some targeted milestones have been completed, others are on schedule, and some have faced delays.

RSDF has been updated to reflect current concerns and lessons learned from those delays and from other ADB projects in the sector. The sequencing of interventions is well focused, the package of modalities includes private and public sector actions, and the policy framework is defined and endorsed by the authorities.

The support components of the Programme are needed not only for best practice purposes in safeguards but also to underpin the reform momentum for the sector and for the RSDF. Specifically, under the Programme assistance will be provided to enable NHA's experienced team to manage the expanded portfolio of assets planned under the NTC highway investment plan. Various actions are also included to reinforce capacity development and thus the implementation of the RSDF.

To advance the concept of industrial diversification and commercial activity along the national trade corridor and to maximise traffic flows, a framework for spatial planning and investment planning along the corridor is required.

An NTC team with representatives from the private sector (eg, business groups and chambers of commerce), government agencies, and academia will be established for this purpose. This team would co-ordinate the development of an NTC highway business plan.

ADB will provide a technical assistance grant of $500,000 equivalent in conjunction with the Programme to develop a business plan for the motorways and expressways between Peshawar and Faisalabad-Khanewal. Meanwhile, ADB is providing support for private sector involvement in the road sector by pursuing pilot projects and advisory work.

In this support and other interventions, ADB's private sector operations department and public sector department will work together to assist the Government. Pilot projects will incorporate lessons learned in structuring and implementation from the recent public-private partnership (PPP) projects in the road sector in Pakistan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Productivity enhancement: Minfal to launch Rs 18 billion water conservation programme ​* 
ISLAMABD (January 04 2008): Ministry of Food, Agriculture and Livestock (Minfal) will launch a programme for water conservation at the cost of Rs 18 billion for productivity enhancement through high efficiency irrigation system. The project envisages for high efficiency irrigation system, which are micro and sprinkler irrigation systems.

High value crop production especially the horticulture sector will be the main beneficiary of this intervention, sources told Business Recorder here on Thursday. Government attaches top priority to the development of water resources to maximise crop production.

This has been done through progressively increasing surface water supplies and conserving water using the latest technologies and protecting land and infrastructure from water logging, salinity, floods and soil erosion, they maintained.

They said the main objectives of the project are to overcome scarcity of water through augmentation and conservation by constructing medium and large dams, efficient utilisation of irrigation water and restoring the productivity of agricultural land through controlling water logging, salinity and floods.

They said about 8.12 million hectares of land falls in the category of culturable wasteland out of which 1.22 and 4.0 million hectares are in NWFP and Balochistan, respectively.

They said the federal government would facilitate the governments of NWFP and Balochistan by providing bulldozers (200 for Balochistan and 100 for NWFP, which would be hired out to the farmers on no profit-no loss basis.

They said around 219,375 hectares of culturable wasteland (NWFP 73,125 and Balochistan 146,250 hectares) would be reclaimed through the use of 300 bulldozers. This will enhance agricultural production in the NWFP and Balochistan provinces.

An integrated programme approach for water management has also been adopted. On-Farm Water Management (OFWM) projects have been implemented on community participation basis in all the four provinces, AJ&K and Federal Agencies, they added.

They said water conservation is being ensured under the President's programme for the improvement and lining of watercourses. This programme envisaged lining improvement of 87,000 watercourses at a cost of Rs 66 billion within 3-4 years.

The initiative will significantly improve water supply at the farm-gate through reduction in the seepage losses. During 2006-07, 18,390 watercourses have been lined and renovated against the target of 18,000 watercourses, the sources informed.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Wheat output may miss 24 million tons target ​* 
ISLAMABAD (January 04 2008): The wheat production target for 2007-08 could not be met if rains do not start in the next 10 days, sources told Business Recorder on Thursday. The contribution of Barani area to wheat production may reduce from 20 to 12 percent if it does not rain in next 10 days.

Sources said the wheat sowing is in process in the country as most of the farmers start sowing after the winter rains, that usually start at the end of November or the first week of December, but this season even after passing December, the winter rains have not started.

The wheat production in 2006-07 surpassed the target by harvesting 23.5 million tonnes. So the government set the wheat production target of 24 million tonnes for 2007-08. It is noteworthy that the factors like favourable weather, timely rains adoption of good agricultural practices by the farmers and balanced use of fertilisers are the primary inputs that help in achieving bumper crop.

The situation has totally changed now as first of all, the winter rains that may be termed as the 'gold water' for the appropriate production of wheat crop, did not start in time.

Moreover, the contribution of Barani areas that is almost 20 percent to the wheat production may reduce 12 percent if the rains do not fall within the next 10 days. Secondly, the farmers are not making balanced use of fertilisers. In order to get the desired per acre yield, the farmers must use two bags of urea and one bag of DAP.

Due to increased DAP prices in domestic market, the farmers are using five bags of urea with one bag of DAP. If the farmers use five bags of urea they must at least use two and a half bags of DAP. This imbalanced use of inputs may lead to the low production of wheat for the next year.

Sources in the Food Ministry told this scribe that it is quite possible that Pakistan may miss the wheat production target for 2007-08 by getting just 20 million tonnes production. It seems the country will have to import more wheat as compared to 2007-08.

Business Recorder [Pakistan's First Financial Daily]


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## Proud to be Pakistani

*BUYING SPREE CONTINUES AS KSE-100 GAINS 263.18, CLOSES AT 14259.60*

*KARACHI (January 05, 2008*)

Buying spree continued on the Karachi share market on the second consecutive day on Friday and the benchmark KSE-100 index gained another 263.18 points to close at 14,259.60 points' level. "The rally was mainly led by retail investors, coupled with institutional support on the back of easing law and order and political situation in the country", an analyst said. 


Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Power outages cause heavy production losses ​* Friday, January 04, 2008 

LAHORE: The failure of the Ministries of Commerce, Industries and Water and Power to coordinate a planned schedule for uninterrupted electricity supply to the industries in order to ensure efficient production without wastages has played havoc with industrial activities.

After suffering huge production losses due to three-day closure after Benazir Bhuttos death, the industrial wheel in Punjab and NWFP has almost halted again this time due to power and energy supply mismanagement. The idea to manage electricity shortage through half-hour load-shedding after every one hour of power supply may work for domestic and commercial consumers, but is not practicable for the industrial sector that in most of the processes for completion of a chain production cycle needs uninterrupted power supply for five to six hours.

After unscheduled load-shedding for short duration in recent weeks, both the small and large industries saw their production graph decline sharply and wastages increase enormously. All Pakistan Textile Mills Association (Punjab Zone) Chairman Akber Sheikh said the spinning industry suffers production and raw material losses every time the process gets stopped due to power failure.

It takes 15 to 20 minutes to restart the spinning process as with abrupt suspension of production the yarn in different stages of production is broken and has to be reloaded at many points.

He said the textile processing industry had been devastated, particularly the dyeing industry as the stoppage of the process due to power failure destroyed the entire lot that was in various stages of dyeing.

He said the processing industry had, in fact, completely stopped production in the uncertain electricity supply situation, adding that resulted in shortage of weaving material and fabric needed by the apparel sector.

Leading knitwear exporter Adil Butt, commenting on the issue, said the stitching and packing process could not be continued under current circumstances when electricity was switched off for 30 minutes after every hour. The workers could not remain sitting on the machines in the dark and left their stations at the time of load-shedding and took 15 to 20 minutes to reassemble when electricity supply was restored, he said, adding as they find their rhythm, the power goes off after 40 minutes again.

The industrialists expressed their dismay over the indifferent attitude of the ministries established to facilitate the manufacturing sector. They alleged that the ministries had not kept liaison either within the government departments or with the industrial sector. Whenever any industrial sector faced problem, they said, it had to move from pillar to post to get it resolved. Ideally, the ministry concerned should adopt a proactive approach and resolve the problem at the initial stage.

They said though the power crisis had been on the horizon, its actual impact was known only to the Ministry of Water and Power and the Water and Power Development Authority. However, they said, both the institutions never bothered to take either the Ministry of Industries or the local industries into confidence to chalk out a contingency plan to minimise the impact of power shortage.

They said the Pakistan Electric Power Company (PEPCO) finally realised its mistake and contacted different industrial sectors to provide them a plan for uninterrupted supply for shorter duration.

The All Pakistan Textile Mills Association (APTMA) was informed that there would be no power supply to its industries from 5pm to 10pm when the electricity demand would be at the peak. The association was assured that after that there would be uninterrupted power supply, they said.

However, the textile millers complained that even after closing their industries during peak consumption hours they still faced periodic power shutdown after short durations which had upset their entire production schedule. The wastage in the industry had increased at a time when the textile sector was under stress due to high cost of doing business, they added.

Other industries like plastic goods manufacturers, light engineering industries, auto parts manufacturers and steel re-rolling mills have been in more difficult condition as they need constant power supply to process raw material put in the machines or suffer total loss. Even the printing presses are facing production losses.

Some large manufacturers having furnace oil or gas-run power generation facilities are managing their production but medium-sized industries having diesel/gas are dependent on inconsistent electricity supply from the WAPDA and are suffering badly. 

Gas connection to all the industries has been severed while producing electricity from diesel costs Rs11 per unit. According to the manufacturers, the cost is too high to remain competitive.

http://www.thenews.com.pk/arc_news.asp?id=3


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## Neo

*Water, food crises loom ​* Friday, January 04, 2008 

By Khalid Mustafa

ISLAMABAD: Pakistans food security is in extreme danger, as Rabi crops may not get last watering imperative for maturity of crops as the government had forced the Indus River System Authority (Irsa) to release 18,000 cusecs of water from Tarbela Dam for three days for power generation. The move came soon after the assassination of Benazir Bhutto, apparently to avoid any further wrath of masses, who were in shock over the tragedy.

The provinces want release of 3,000 cusecs of water per day, but the water regulator has placed the maturity of Rabi crops in the red zone by excessive release of water. Irsa released 18,000 cusecs of water for three days and is now releasing 10,000 cusecs.

Irsa released excessive water, about 2 million acre feet (MAF), during the Sept 15 to October 20 period, when the water regulator had no members and water distribution was managed by irrigation secretaries of the four provinces.

The loss of 2 million acre feet of water during this period has also aggravated the situation in the country. The inflow in Tarbela dam has also dwindled in the last two days by over 2,000 cusecs per day from 17,000 cusecs to 15,000 cusecs because of less than normal snowfall in the catchment areas of both Tarbela and Mangla dams, which has further worsened When contacted Irsa chief Bashir Ahmad Dhahr said that right now country has 1.7 million acre feet of stored water, much less than the stored water in last year, but better that that of 2004, 2005. He admitted that Irsa released excessive water during three days on December 28-30, but he was quick to add that Irsa will be able to store 60 feet more water in Tarbela and Mangla to ensure the last watering. 

When asked as to why Irsa was releasing 10,000 cusecs of water from Tarbela against the demand of only 3,000 cusecs per day, he said that release of that much water was necessary to make Ghazi Barotha Hydropower project operational. 

He recalled that two years back, because of less water release from Tarbela reservoir, the Ghazi Barotha Project had to experience some damages. He said, We are hopeful that country would receive winter rains as forecast by the Met Office from today (January 4) and this will improve the water situation. Now we are banking on weather to wriggle the country out of impending water crisis, he said 

Bashir Dhahr said that wheat-sowing targets have been met and now the issue is to ensure the last watering for maturity of crops. He said this task would also be met keeping in view the winter rains that hopefully are likely to start from today (Jan 4).

He said that Irsa would continue to release 10,000 cusecs of water from Tarbela and 8,000 cusecs from Mangla despite pressure from Pakistan Electric Power Company (Pepco) that wants 15,000 cusecs of water released from Tarbela.

However, Irsa would enhance water release up to 30,000 cusecs by January 25 as barrages will be opened and closure of canals would end by that time, and in the meanwhile we will be able to store massive water as the country would start receiving winter rain from today (Jan 4) up to Jan 12, Dhahr said.

The country, which is already facing 22 percent water shortage and right now, has all time low stored water in reservoirs that stands at 1.76 million acre feet of water. The said quantum of stored water is not enough for last watering of the Rabi crops in all four provinces, a senior official told The News.

We are also 100 percent sure that for early Kharif season, Pakistan will be facing the worst ever water crisis, as Irsa will not be able to mange any water as carryover stock for early Kharif, if the existing scenario is kept in view.

In case, Pakistan receives the winter rains as forecast by the Met Office from today (January 4 to 12), the situation will improve, otherwise the country has no option, but to face massive water deficit that would endanger food security.

The government, which has miserably failed to enhance power generation capacity during the last 8 years, is now left with no option but to risk even the available food security at the cost of unjustified hydro electricity generation despite the fact that dams are built mainly to cater to irrigational requirements of the county. 

We received orders from government to release up to 18,000 cusecs from Tarbela for three days (Dec 28-30) in a bid to bridge electricity deficit so that politically charged masses following the death of Ms Bhutto may not become more aggressive in case of power outages. Now the Pepco is going for 10 to 12 hour load-shedding, but it could not afford such massive load shedding soon after the tragedy.

The water regulator is still under pressure to release 10,000 cusecs of water daily against the demand of federating units of only 3,000 cusecs, just to make Ghazi Barotha Hydropower project operational. But on the other hand, the country stored water is fast depleting and may not have water for last watering of Rabi crops.

The official said that below average rains will not provide the required solace to Irsa as it is experiencing 22 per cent water shortage and has no sufficient carryover stocks. Therefore we will have to depend more on nature and pray for more rains, he said. 

http://www.thenews.com.pk/arc_default.asp


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## Neo

*Punjab government plans to establish SME industrial estates *​ 
SIALKOT (January 05 2008): Punjab government has evolved a strategy for the establishment of SME industrial estates in major industrial towns of the province. Reliable sources informed Business Recorder here on Friday that under the plan SME industrial estates would be set up in major industrial towns including Sialkot and work on the plan would be initiated in near future.

Sources said that the step was being taken to redress the problems confronting the SME sector, which is the backbone of the national economy. All basic facilities would be ensured to the SMEs in these proposed SME estates, sources added.

Special attention is being paid to the development of industrial sector on modern and scientific lines aimed at enhancing export volume and to bring industrial revolution through setting up large-scale industries including agro-based industries in the Province, sources informed.

Sources said that under the programme government has introduced certain schemes for the development of small and medium industries besides loan facility was also being extended to the small and medium businessmen enabling them to upgrade their industrial units and for setting up new industrial projects in the province.

More than one billion rupees had been set aside for diminishing the financial problems being faced by the businessmen engaged with small and medium industries as well as for removing the hitches which were hindering the process of setting up of new industrial projects, they said.

Apart from this, government was also providing loan facilities for the advancement and expansion of agro-based industries and dairy development, engineering and information technology in Punjab, sources added.

Sources said that the prime aim of setting up of large-scale industries was to ensure strong industrial base and to keep the economic wheel in to gear in the province. The establishment of these industries would not only help in doubling the export volume but also create large number of job opportunities, sources added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*2000 to 2007: cellular industry posts robust growth of 119 percent ​* 
KARACHI (January 05 2008): The country's cellular industry has posted a robust growth of 119 percent in terms of subscription during the last seven years from 2000 to 2007, said Mohammed Ali, an economist at the Investment Capital and Securities (Pvt) Ltd on Friday.

He, however, held the absence of direct listing of the prominent cellular operators' in the stock market as major factor that restricted the opportunities for investors to extract financial benefits from their growth. He pointed out that the cellular industry presently grabbing over 74 million subscriptions has witnessed an average addition of more than 2 million subscription ever month during the last two years.

Mobilink is leading the cellular market followed by Ufone- a 100 percent owned cellular subsidiary of the Pakistan Telecommunication Company Limited (PTCL).

The emerging interest in the country's fast growing cellular industry is obvious from the acquisition of Paktel (89 percent shares) by China Mobile -CM Pak at an enterprise value (EV) of $460 million and Warid Telecom (30 percent shares) by Singapore Telecommunication Ltd (Singtel) for EV of $2.9 billion.

The CM Pak's aggressive future strategy on the country's market can be well gauged by its initial launch of $700 million cellular expansion plan, which will be followed by an estimated investment of $400 million a year in Pakistan, Muhammad Ali said.

He called the Mobilink, Ufone, and Telenor the chief market players in terms of cellular subscription. He added that the parent companies of these cellular operators had been listed in Egypt, Pakistan and Norway.

He pointed out that Mobilink had already injected more than $2.5 billion in the country's telecom sector, and still plans for further investment in the future. It's 6,5000 km optic fiber with the plan of further expansion for 2,000 km will help it improve quality of services.

Ufone posted a revenue growth of more than 40 percent in the fiscal year 2007 and was observed to contribute (in PTCL's group revenue) around 20 percent in the fiscal year 2007 as compared to 14 percent in the last fiscal year 2006. The infrastructure-sharing agreement for 10 years between Ufone and Telenor is also expected to generate beneficial results.

Telenor Pak has more than doubled its subscribers base to about 14 million over a year's period (November 2006-07). The growth was also accompanied by the operator's rising market share from around 14 percent to 19 percent over the same period.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Motorola launches RAZR2 ​*
KARACHI (January 05 2008): Motorola, Inc (NYSE: MOT), a global leader in wireless communications, today launched the RAZR2 VS in Pakistan, the ultimate iconic feature phone that illustrates the evolution of the RAZR brand.

The next-generation device packs cuffing-edge features such as CrystalTalkTM technology, up to 512MB of on-board memory, web browsing, real-time point-to-point video and ultra-fast menu navigation all packed into a slimmer, stronger, sleeker design.

"The RAZR2 VS's greatest advantage in Pakistan lies in its lifestyle-focused features, which deliver the ultimate mobile experience for consumers," said Bahjat Mirza, Director Sales, M East & Pakistan, Mobile Devices, Motorola. "The RAZR2 VS will satisfy the appetite of even the most demanding consumers," he concluded.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Dependence on imported cotton? ​*
EDITORIAL (January 05 2008): A shortfall in cotton production, coupled with increased demand by textile mills, pushed up the country's dependence on imported raw cotton by as much as 107 percent in the first five months, ie July-November of the current fiscal year, a Recorder Report quoting market sources has revealed.

As a consequence the country's cotton import bill went up to $335.566 million from $162 million in the corresponding period of last year while in terms of weight, some 1.148 million bales had to be imported as against 0.6 million bales last year. The crop estimation committee at its recent meeting has, meanwhile, indicated that the country is likely to miss its cotton production target, set at 14.1 million bales, by as much as 1.3 million bales, which means a reduction in the country's crop yield to 12.8 million bales.

It should be mentioned here that Pakistan's cotton consumption stands at 16.5 million bales, which is 3.7 million higher than the expected yield of 12.8 million bales this year, due to a number of factors, including the mealy bug attack. At present, Pakistan has to import raw cotton from Brazil, the US, India and some other countries to meet its domestic demand. Obviously, the country's increasing dependence on imported raw cotton does not augur well for our textile industry, which is already facing serious difficulties, largely believed to be of its own making.

The importance of a higher cotton crop yield to the country's economy lies in the fact that cotton accounts for 8.6 percent of the value-added in the agriculture sector while its contribution to the GDP stands at about 1.9 percent. The decline in cotton production is all the more surprising because Pakistan has been one of the largest cotton producing and consuming countries in the world, and once had the potential to become a leading force in the worldwide cotton and textile marketplace.

Among the crude indicators of agricultural productivity, crop yield per unit of land has been used quite widely. Measured against this yardstick, the current yield levels of major crops, except for our cottonseed, are lower than the world average. Lower cotton production in the country has, meanwhile, been attributed to 11 percent decline in areas sown in Sindh due to excessive rains and floods in 2005-06.

Further, the crop yield in some areas was also affected by the cotton leaf curl virus and the mealy bug attack. However, a major factor cited for decline in cotton production in the country is the delayed sowing and late wheat harvesting, which has resulted in lesser acreage coming under cotton cultivation. Despite the government having fixed seed cotton intervention price in 2006-07 at Rs 1,025 per 40 kg as against Rs 975 fixed a year earlier, the decline in cotton crop yield is quite surprising.

Viewed in the overall perspective, a leading cause of decline in our agriculture sector's performance has been lack of focus on research and development, and continued use of traditional, unscientific methods of cultivation pursued by a majority of the farmers. Lack of adequate on-farm guidance and motivation by the field staff has played a role in further stunting the growth potential of this crucial sector of the economy. Secondly, natural disasters such as floods and pest attacks have been instrumental in lowering the per hectare crop yield in the country.

Thirdly, there has been acute paucity of spending on R&D in agriculture, like in many other sectors, which has proved damaging not only to the cotton crop, but also to the entire agriculture sector. Mealy bug attack which has raised fears of the country not being able to meet its cotton production target of 14.1 million bales this year, could have been averted if timely preventive steps had been taken.

As much as 107 percent increase in our cotton imports in just five months signals a serious impending danger. Unless reversed through emergency corrective measures by the government it may result in the creation of dependency syndrome. It is said that cotton and its value-added provides livelihood to about 1.5 percent farming families, and jobs to almost 50 percent of the country's labour force, which is reflective of its pivotal place in our economy.

It is often said that had our textile sector been restructured along scientific lines and the cotton production suitably raised, it would have given us a huge competitive edge in the global market. But the report that Pakistan's cotton imports during July-November, 2007 increased by 107 percent shows that the sector needs drastic restructuring. The government should investigate the matter, determine its causes and initiate corrective action without any loss of time.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Fund's view of the economy ​*
(January 01 2008): In their latest evaluation under Article IV, the Executive Board of the International Monetary Fund (IMF) has largely commended the performance of Pakistan's economy. According to the assessment of Executive Directors, the economy continued to perform strongly, international reserve position strengthened and debt ratios declined during 2006-07.

The favourable economic performance and structural reforms to improve the business climate have spurred capital inflows in recent years. The Fund also welcomed Pakistan's monetary policy tightening and adherence to pro-poor policies that have helped to lower poverty rates.

Besides, the economy has shown considerable resilience to recent domestic political uncertainties and the turbulence in international capital markets. Overall, Pakistan has experienced a remarkable turnaround in its economic performance since 2001-02. Sound macro-economic management and wide-ranging structural reforms have contributed to high real GDP growth, a reduction in debt burden and an improved business climate.

However, continued vigilance was required to reduce vulnerabilities and maintain investor confidence. The Fund directors especially referred to the challenges, including containing inflation and looking after the external current account deficit, and said that Pakistan's external financing needs remained large. Looking beyond 2000-08, the Executive Board stressed that further fiscal consolidation would be required to reduce inflation and contain external current account deficit while lessening pressures on real interest rates. A broadening of the tax base and the use of public-private partnerships in infrastructure development was supported.

There was also agreement that the real effective exchange rate of the rupee was broadly in line with Pakistan's economic fundamentals and fiscal adjustment, accompanied by higher levels of investment and vigorous implementation of structural reforms, constituted the main avenues to improve external competitiveness. The directors encouraged the Pakistani authorities to continue implementing structural reforms in order to sustain growth and poverty reduction. The restoration of constitutional rule, and the promise of a fair and free election by President Musharraf has evoked a positive response from the business community.

Looking at the substance of Fund's analysis of Pakistan's economy, one could easily conclude that its assessment is fairly objective, in view of the fact that the period covered by the IMF staff was upto June, 2007. As is well known, the IMF holds bilateral discussions with its members, usually every year, under Article IV of its Articles of Agreement to undertake a comprehensive review of the members' economies, identifying their weaknesses and the measures needed to overcome the emerging challenges.

Such an exercise is conducted even if the member country is not utilising any of the facilities offered by the Fund. As pointed out by the Executive Board, Pakistan's macro-economic indicators generally showed healthy trends upto 2006-07 and this was possible due mainly to wide-ranging structural reforms.

In the last few years, the GDP growth rate has picked up, there was a surge in home remittances and capital inflows, budget deficit has been contained at a reasonable level, business climate has improved, debt ratios have stabilised, albeit at a lower level, foreign exchange reserves of the country have gone up substantially and poverty level, estimated by various sources, has gone down. All these gains can be better appreciated when compared to the position of earlier years and the fact that Pakistan is more prone to political uncertainties and faced with a terrorism threat.

The challenges highlighted by the IMF, if left unaddressed, could pose a real threat to the economy. It would not be out of place to mention here that these challenges have become more serious during the course of the current fiscal year and as such need bolder policy responses to put the economy on a sustainable path of development.

For instance, the twin deficits of the budget and external sector as well as the inflation rate are now expected to be much more than projected in the beginning of the year. Fiscal deficit is expected to be close to five percent of GDP as against the target of four percent due mainly to the reluctance of the government to adjust the domestic oil prices upwards, while current account deficit during July-November, 2007 has increased by 17 percent to $4.7 billion due mainly to rising services and trade deficits.

This compares unfavourably with the original estimate of $8.11 billion for the whole year. The inflation target of 6.5 percent is also not likely to be achieved. The worsening of these important indicators suggest that the present situation of the economy is grimmer than the observations and conclusions contained in the latest IMF Executive Board review and the authorities need to do much more to reverse or at least arrest the deteriorating trends in the vital sectors of the economy.

Overall, the state of the economy is likely to worsen even further after the unfortunate departure of Benazir Bhutto from the scene that would result in political turmoil in the country and erosion of investors' confidence. We hope that the authorities of Pakistan and the multilateral institutions would re-appraise the whole situation in order to preserve and sustain the gains of last few years.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*FY08 growth likely to be below target of 7.2pc: SBP *​ 
Country could be impacted adversely if domestic demand pressures grow and problems in international market worsen

Sunday, January 06, 2008

KARACHI: The State Bank of Pakistan (SBP) has said that gross domestic product growth in FY08 is likely to be below the 7.2 per cent annual target and may remain in the range of 6.6 to 7.0 per cent. It also warned about increasing risks to the economy in coming months although economy performed reasonably well in the initial months of the current fiscal year.

The SBP, in its first quarterly (July to Sept 2007) report for FY08 released on Saturday, said that the political noise ahead of the upcoming election is impacting investor sentiment, while large external account imbalance grew in FY08, increasing the risk that the country could be impacted adversely particularly if domestic demand pressures grow in coming months and if problems in the international market worsen.

The central bank said that the threat of renewed macroeconomic complications, after five years of good performance, would be further heightened if prompt actions are not undertaken to correct the recent deterioration in fiscal indicators.

The fiscal imbalance has already led to a substantial rise in government borrowings from the central bank, which rose to Rs191.3 billion during July-December 1 FY08 as compared to Rs97.6 billion in the corresponding period of FY07, exceeding both quarterly and annual ceilings and preceding years trend. This enhanced monetary expansion significantly and is likely to fuel inflationary pressures, compounding the impact of the strength in international commodity prices, the SBP said.

All key fiscal performance indicators deteriorated significantly in Q1-FY08 as the fiscal balance widened to -1.6 per cent of the GDP in FY08 against -1.0 per cent in FY07 and -0.5 per cent in FY06, the SBP said.

The report revealed that the revenue balance moved from a surplus in the first quarter of preceding year to a deficit in Q1-FY08, despite an impressive growth of 22.3 per cent in total revenues during Q1-FY08. 

The current trend indicates that the fiscal deficit target will not be met unless appropriate corrective measures are taken promptly, the report said and highlighted that the countrys large external current account deficit was another challenge. It said that recent evidence indicates that the modest contraction seen in July-October 2007 was unlikely to continue in the months ahead.

The SBP said the trade deficit remains high, although it did benefit from an export pickup and import compression. While the growth in remittances by 22 per cent was encouraging, its impact was diluted by continued service and income account deficits.

During July-October 2007, Pakistan recorded a surplus of US$3.2 billion in capital and financial account compared to $2.8 billion last year. Most of the surplus emerged from debt flows as the equity flows were impacted by $2 billion gross outflows in SCRA during July-Nov 2007 and postponement of new privatisation programmes. 

However, the SBP said that notwithstanding modest improvement in the initial months of FY08 the annual current account deficit remains large; current SBP forecasts indicated that annual FY08 deficit could remain around 5.2 per cent of the GDP, very close to the levels seen in the previous fiscal year.

However, the SBP said that growth in exports during FY08 is expected to see a significant improvement over the weak growth in FY07. However, the gains are expected to be offset by rising oil import bill and a jump in imports of machinery particularly as power projects reach financial close. 

It further added that FY08 kharif harvest was hurt by the damage suffered by the cotton and rice crop due to floods and pest attacks. While the overall agri-growth target may yet be achievable, this would however require that the impact of the record 62.3 million tonnes sugarcane harvest be complemented by an exceptional showing of the rabi crops (especially by a substantially above-target wheat harvest) as well as a robust performance by the livestock sub-sector. The aggregate growth of large-scale manufacturing (LSM) has decelerated in Q1FY08 to 6.9 percent as compared to 10.4 percent in FY07 and 9.0 percent in FY06, although disaggregate data reveals a mixed picture.

SBP said that production growth in many industries including fertiliser, pharmaceuticals, petroleum refining and few metal and engineering goods, rebounded strongly in FY08 after disappointing performances in the previous year. 

In contrast, the first quarter outcome of a larger number of industries reflects slower growth, often due to industry-specific circumstances. This is most evident in the cotton yarn and cloth (that suffered due to weak exports demand and a poor cotton crop), automobiles (the government relaxed imports), and edible oil & vegetable ghee (demand slackened in the face of nearly doubled prices).

SBP said that the outlook for the services sector, which accounts for over half of value-added in the economy, remains positive. An acceleration in the retail & wholesale trade (with imports rising), higher profitability of the financial sector, and the robust growth in community services (helped by election-related activities) is expected to lead to strong growth for the sixth successive year. In short, it appears that despite the likelihood of some deceleration, the FY08 growth outcome is likely to remain reasonable. 

The central bank said that GDP growth in FY08 as per SBP prediction is 6.6-7 percent against original targets of 7.2 percent, while original targets of inflation for current fiscal year was 6.5 percent while SBP forecasted inflation in FY08 is 6.5-7.5 percent as compared to 7.8 percent in FY07. 

Exports of country predicted to $18.3 billion against original targets of 18.9 billion for current fiscal year which was recorded $17.1 billion in FY07, whereas SBP foresaw imports $28.9 billion as compared to $29.6 billion and $27 billion last fiscal year. 

In addition SBP predicted workers remittances to $6.0-6.5 billion against original targets $5.8 billion for FY08 and $5.5 billion of FY07. 

The SBP said that the monetary tightening followed throughout FY07 and FY08 was successful in significantly reducing non food inflation in Pakistan but its pass through on headline CPI inflation was offset, particularly in the latter year by the impact of the sustained increases in global food and energy commodity prices. 

The consumer price index CPI inflation rose to 9.3 percent YoY in October 2007 principally driven by a 14.7 percent YoY jump in CPI food inflation.

SBP noted that emergence of a widening inflationary spiral in Pakistan as a result of the high commodity prices suggests that tight monetary stance remains appropriate. Were it not for the monetary tightening that helped curbed demand pressures, and kept core and headline inflation in check, inflationary trends would have been more significant in both FY07 and FY08.

The SBP said after relatively subdued growth in the initial month of FY08 the growth of M2 accelerated in November 2007 and onwards, pushing the July-December FY08 growth to 4.2 percent (almost unchanged from that in corresponding period of FY07). This was led largely by government borrowing that offset the impact of a moderation in private sector growth.

SBP said that banks that had slowed credit activities due to merger and acquisition activity were regaining momentum and seasonal demand was picking up. There is possibility that financing of long delayed power projects may also seen in FY08, the central anticipated. 

FY08 growth likely to be below target of 7.2pc: SBP


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## Neo

*Trucking gets industry status ​* 
Sunday, January 06, 2008

ISLAMABAD: The government has issued a gazette notification declaring trucking as an industry, a spokesman for the Engineering Development Board (EDB) said on Saturday.

In a statement, he added that it will facilitate truck fleet operators to get lending from commercial banks at competitive rates and will encourage the sector to organise itself and have the much-needed investment. He described Pakistans logistic base as essentially under-developed playing a contributory role to inhibiting realisation of the countrys full economic growth potential, though there has been a steady progress in cargo handling capacity at the countrys two premier seaports.

Incidentally, efficient trucking of freight in the minimum possible time can impart a powerful fill up to the export and import sectors, he added. It may be recalled that the government had approved the trucking policy prepared by the EDB a few months back, which aims to reform and promote an integral, ensuring and sustainable modernisation of the trucking sector.

The policy has holistic approach by addressing all related cross sectoral and cross cutting subjects after extensive consultations with stakeholders for the last one-and-a-half year. Declaring trucking sector an industry is a part of broaden impact of modernisation of trucking sector under the National Trade Corridor Improvement Programme (NTCIP). 

This initiative would help in modernising trade and logistics of the country and to make Pakistan a regional hub for international trade by integrating it international transport systems, he said.

Trucking gets industry status


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## Neo

*Turbulent week sees steepest fall, biggest surge ​* 
Sunday, January 06, 2008

KARACHI: It was an eventful, full of actions and thrilling week at the Karachi bourse where the leading benchmark 100-Index made two historical records, but in opposite directions. The assassination of Benazir Bhutto then the rescheduling of parliamentary elections for Feb 18 respectively dominated trading sessions during the week immensely.

The first historical setback in the 100-Index was witnessed on Monday (i.e. Dec 31) when market crashed by massive 696.25 points in a single session following the target killing of Ms. Bhutto.

The second historical record was registered on Thursday when 100-Index made a maximum single session surge of 643.04 points following Election Commission announced on Wednesday evening to reschedule elections in the country for Feb 18, 2008. 

Therefore, the week ended with a net loss of 512.48 points or 3.5 per cent in the Index and concluded at 14,259.60 points.

On the other hand, the 30-Index posted a deep decline of 689.19 points of 3.9 per cent on week-on-week basis and finished at 16,889.59 points from the pre-opening level of 17,578.78 points of Monday.

The week (Dec 31 to Jan 04) started with mourning and crying at KSE on the killing of Ms Bhutto in Rawalpindi on Dec 27 and observed three consecutive black sessions at the Karachi bourse.

The first three day-long trading sessions together recorded a massive decline of 1,419 points or registered a fall of 9.6 per cent in the 100-Index from 14,772.08 points pre-opening level of Monday.

However, the Election Commission decision of delaying, but not for long period, the parliamentary elections in the country for Feb 18, calmed down the charged atmosphere which had emerged in the aftermath of Liaquat Bagh carnage. Also, this election decision invited aggressive buying on dips and helped index recovered more than half of the colossal losses of this week.

The cumulative gains of last two-day long trading sessions of this week stand at 906.22 points or 6.4 per cent from 14,075.83 points pre-opening level of Thursday.

Analyst were of the view that market had already entered into the overbought zone prior to the Liaquat Bagh awful event and was needed technical correction, but the national loss of BBs life in a shot and suicide bomb blast added more vulnerability and marked plummeted on panic sale of shares. Banking stocks led the rally throughout the week where energy stocks also heavily dominated market during the week. Besides, the cement, fertilizer and telecommunication sectors also moved in accordance with the market sentiments.

The soon to start financial results announcement season, particularly in the banking sector, reverted the market sentiments to positive. However, losses were bigger than the recovered one and that is why market closed in negative column, another analyst said.

The touching of $100 per barrel mark by the international oil prices for the first time played equally important role in recovering more than half of the market losses of the week, he added.

Increased numbers in green of cement dispatches, increased urea and DAP prices in the country and fast developing telecom sector also invited renewed buying in their relevant scrips after declining to lucrative levels in the first three sessions, he further said.

The local financial institutions were most active followed by foreign fund managers and local retail investors.

The overseas investors continued to withdraw their funds from the local equity markets and government bonds, as during the under review period, SCRA balances further declined by $39.6 million to $32.9 million to date for this fiscal year from $72.5 million on Dec 27, according to SBP figures available on website.

Despite of heat producing sessions, the average daily turnover of the week reduced to 231 million shares against 299 million shares of last week. Amid the overall market capitalisation fell by Rs19 billion to Rs4.352 trillion on the weekend.

During the week, CFS investment decline by 10.2 per cent and stands at Rs49 billion, whereas the CFS rate too dipped to 11.2 per cent versus 14 per cent in the previous week, reported a brokerage house.

Weekly Movements in Blue Chips

Symbols Open on Close on Difference

Monday (Rs.) Friday (Rs.) (Rs.)

DGKC 99.65 94 -5.65

ENGRO 279.7 262.5 -17.2

FFBL 44.25 43.15 -1.1

LUCK 122.6 118.7 -3.9

MCB 420.95 398.8 -22.15

NBP 244.35 233.5 -10.85

OGDCL 125.7 121.45 -4.25

POL 352 335.5 -16.5

PPL 257.9 248.95 -8.95

PTCL 44.25 41.85 -2.4

Other Active Stocks of The Week

AHSL 182.30 172.35 -9.95

BOSI 22.45 20.60 -185

JSBL 23 21.55 -1.65

TRG 15 14.45 -0.45

Turbulent week sees steepest fall, biggest surge


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## Neo

*Modalities for FTA with Bosnia being finalised ​* 
Sunday, January 06, 2008

LAHORE: Pakistan and Bosnia & Herzegovina are finalising the modalities for a free trade agreement between the two countries in a bid to promote trade and investment and increase the current low volume of two-way trade.

Ambassador-designate to Bosnia Herzegovina Jauhar Saleem stated this while speaking at the Lahore Chamber of Commerce and Industry (LCCI) on Saturday.

LCCI President Mohammad Ali Mian, Senior Vice President Mian Muzaffar Ali, President Punjab Economic Forum Mian Anjum Nisar and former LCCI president Mian Misbaur Rehman also spoke on the occasion.

The ambassador said Bosnia and Herzegovina being located in the heart of Europe had its 43 per cent of the total territory most useful for modern industry, adding the Pakistani business community could avail itself of the opportunity in that particular area.

He said Bosnia and Herzegovina had a large capacity in the wooden industry for production of goods for foreign markets.

Besides, the envoy said, the country was quite rich in the metal industry and opportunities were available in the steel and aluminium sectors.

Speaking on the occasion, LCCI President Mohammad Ali Mian said continuous engagement of diplomatic missions with the business community of both the countries, exchange of business delegations, orientation of products of each others countries and holding of single country exhibitions could be highly fruitful in enhancing trade between the two countries.

He said Bosnia had a highly developed dairy and auto industry and Pakistani business community would like to share technology in the sectors through joint ventures. Pakistan is the fifth largest producer of milk in the world and a big market for automobiles, he added.

Modalities for FTA with Bosnia being finalised


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## Neo

*SBP first quarterly report for FY08 ​* 
Sunday, January 06, 2008

KARACHI: The State Bank of Pakistan in its first quarterly report for financial year 2008 has said that risks to the economy are increasing due to global and local uncertainties while political clamour ahead of upcoming elections is affecting investor sentiments. Following is the text of the overview.

Pakistans economy performed reasonably well in the initial months of FY08, coping with the increased uncertainties in the domestic and international economic environment.

Nonetheless, risks to the economy are increasing, as it is clear that neither the global nor the domestic economic environment is as benign as in past years.

The somewhat. While the domestic economy seemed relatively unscathed, like rest of the Asia, from the turmoil in the international capital markets, the global impact of the subprime mortgage crisis is still unfolding.

Pakistan has had substantial success in managing its large external account imbalances in recent years, but these imbalances have grown in FY08, increasing the risk that the country could be impacted adversely, particularly if the domestic demand pressures grow in forthcoming months and if problems in the international credit markets worsen.

The threat of renewed macroeconomic complications, after five years of good performance, would be further heightened if prompt actions were not undertaken to correct the recent deterioration in fiscal indicators.

The fiscal imbalance has already led to a substantial rise in government borrowings from the central bank, which rose to Rs191.3 billion during July-December 1 FY08, exceeding both quarterly and annual ceilings and preceding years trend. This has enhanced monetary expansion significantly and is likely to fuel inflationary pressures, compounding the impact of the strength in international commodity prices.

The FY08 growth is also likely to be below the 7.2 percent annual target.

The FY08 kharif harvest was hurt by the damage suffered by the cotton and rice crop due to floods and pest attacks.

While the overall agri-growth target may yet be achievable, this would however require that the impact of the record sugarcane harvest be complemented by an exceptional showing of the rabi crops (especially by a substantially above-target wheat harvest) as well as a robust performance by the livestock sub-sector.

The aggregate growth of large-scale manufacturing (LSM) has decelerated in Q1- FY08 (see Table 1.1), although disaggregate data reveals a mixed picture.

Production growth in many industries including fertilizer, pharmaceuticals, petroleum refining and few metal and engineering goods have rebounded strongly in FY08 after disappointing performances in the previous year.

In contrast, the first quarter outcome of a larger number of industries reflects slower growth, often due to industry-specific circumstances.

This is most evident in the cotton yarn and cloth (that suffered due to weak exports demand and a poor cotton crop), automobiles (the government relaxed imports), and edible oil & vegetable ghee (demand slackened in the face of nearly doubled prices).

The outlook for the services sector, which accounts for over half of value-added in the economy, remains positive.

Acceleration in the retail & wholesale trade (with imports rising), higher profitability of the financial sector, and the robust growth in community services (helped by election-related activities) is expected to lead to strong growth for the sixth successive year. In short, it appears that despite the likelihood of some deceleration, the FY08 growth outcome is likely to remain reasonable (see Table 1.2).

Strength in aggregate demand, compounded by the considerable impact of rising global commodity prices is also reflected in the persistence of high domestic inflation.

The monetary tightening followed throughout FY07 and FY08 was successful in significantly reducing non-food inflation in Pakistan, but its pass through on headline CPI inflation was offset, particularly in the latter year, by the impact of the sustained increases in global food and energy commodity prices.

Consumer price index (CPI) inflation rose to 9.3 percent YoY in October 2007 principally driven by a 14.7 percent YoY jump in CPI food inflation.

A part of this jump reversed in November 2007, with overall CPI inflation coming down to 8.7 percent, as food inflation reported to be 12.7 percent, but even this is very high.

Food inflation is often volatile and short-lived, depending on crop cycles, etc.

For example, just four items (wheat, rice, edible oil and milk) contributed around 75 percent of the domestic food inflation during November 2007.

Of these, the direct and indirect impacts of increased demand for bio-fuels are more evident in the prices of edible oil, and dairy products. Here there is less likelihood of relief, in the short-term, unless energy prices decline sharply.

On the other hand, poor crops in major producing countries led to a surge in the international prices of rice and wheat, and the price of these may ease somewhat if global production recovers. More troubling is the fact that the high and volatile food inflation is now increasingly influencing core inflation as well.

Since May 2007 both measures of core inflation (i.e. non-food non-energy and the 20 percent trimmed mean) have been trending up.

In other words, after resisting throughout FY07, the prices of a broader range of the CPI basket is now being impacted by the cost push of high commodity prices, as suppliers of goods and services raised prices to protect their margins.

These inflationary pressures could rise further, if fiscal imperatives force the government to pass through the impact of the recent oil prices.

The risk of such a second round of inflationary spiral was highlighted in the Monetary Policy Statement issued in July 2007.

Since inflation in recent months had been driven substantially by supply-side factors such as food and energy prices, this has given rise to a debate over the need for monetary tightening.

However, the emergence of a widening inflationary spiral in Pakistan as a result of the high commodity prices suggests that a tight monetary stance remains appropriate.

Were it not for the monetary tightening that helped curb demand pressures, and kept core and headline inflation in check, inflationary trends would have been more significant in both FY07 and FY08.

Since a substantial part of the rise in food inflation is a global phenomenon, it tends to restrict the impact of available relief measures.

While government is providing relief by the provision of key staples at subsidized rates through utility stores, its options for broader relief are, in the short-term, limited and involve challenging trade-offs.

(1) Any substantial subsidies involve fiscal costs as well problems in ensuring that it goes only to the vulnerable. For example, traders have the incentive to purchase goods at subsidized rates for re-sale at market prices.

(2) Subsidies can also raise allocation inefficiencies. Inappropriate subsidies may destroy the economic incentives for producers, ensuring that shortages persist for years.

It should also be remembered that the domestic economy is now more open and prone to external shocks than ever before. This has important policy implications going forward. First, domestic prices will be more sensitive to the changes in international prices, despite domestic availability. For example, Pakistan has sufficient exportable surplus of rice in FY07, but following a rise in the international prices of rice, domestic prices also increased.

Second (and more important), the differences between farm gate and import prices have to be narrowed in order to provide incentives to farmers.

This is probably the only way to ensure sustainable productivity gains and smooth supply of agri-produce in the medium to long-run.

This would involve measures to enhance productivity, encouraging market competition, and increasing investment in food processing and storage, etc.

Macroeconomic sustainability during the course of an inflationary period is critical. After relatively subdued growth in the initial months of FY08, the growth of M2 has accelerated in November 2007 and onwards, pushing the Jul-1st Dec FY08 growth to 4.2 percent (almost unchanged from that in corresponding period of FY07).

This was led largely by government borrowing that offset the impact of a moderation in private sector growth.

The M2 growth still is manageable given that in the first 5 months, the net foreign assets flows grew slower than in the preceding year, and that reserve money growth during FY08 has been sharply lower than in the previous year.

The growth in the reserve money during Jul- 1st Dec FY08 has been only 6.3 percent, as compared to 11.8 percent in the corresponding period last year.

The recovery in the growth of private sector credit (net) September 2007 onwards indicates that aggregate demand remains reasonably strong, that there is substantial room for banks to lend (as credit-deposit ratio is low and the liquidity position of banks is eased by OMOs as and when required), and that some of the factors that temporarily depressed demand in FY07, are now abating.

Banks that had slowed credit activities due to merger and acquisition activity (such as Standard Chartered Bank and ABN Amro) are regaining momentum, and seasonal demand is picking up.

Moreover, there is the possibility that financing of long delayed power projects may also be seen in FY08. It is also likely that companies, which met their demand from external borrowings in earlier periods may revert to the domestic markets given the widening of spreads overseas.

All key fiscal performance indicators have deteriorated significantly in Q1-FY08 (see Table 1.3).

This is reflected in the higher recourse to the central bank borrowing in recent weeks (which is infusing pressure on core inflation) despite higher receipts from the National Savings Schemes and the Pakistan Investment Bonds.

The governments budgetary borrowings from the banking system during July- 1st Dec FY08 rose by Rs191.3 billion compared to Rs97.6 billion over the corresponding period in FY07.

Importantly, the revenue balance moved from a surplus in the first quarters of the preceding years to a deficit in Q1- FY08, despite an impressive growth of 22.3 percent in total revenues during Q1- FY08. The current trend indicates that the fiscal deficit target will not be met unless appropriate corrective measures are taken promptly.

Another challenge is the countrys large external current account deficit. Recent evidence indicates that the modest contraction seen in July-October, 2007 is unlikely to continue in months ahead.

The trade deficit remains high, although it did benefit from an export pick up (though growth remained below FY04-06 trends) and import compression.

While the continued growth in remittances by 22 percent was encouraging, its impact was diluted by continued service and income account deficits.

During July-October 2007, Pakistan recorded a surplus of $3.2 billion in the capital and financial account compared to $2.8 billion last year. Most of the surplus emerged from debt flows as the equity flows were impacted by $2.0 billion gross outflows in SCRA during Jul-Nov FY08 and postponement of new privatisation programs.

Given the commitments in the pipeline, momentum in foreign flows could pick up further in the last quarter, possibly supported also by the floatation of global deposit receipts.

However, notwithstanding the modest improvement in the initial months of FY08, the annual current account deficit remains large; current SBP forecasts indicated that the annual FY08 deficit could remain around 5.2 percent of GDP, very close to the levels seen in the previous fiscal year.

While the growth in exports during FY08 are expected to see a significant improvement over the weak growth in FY07, the gains are expected to be offset by a rising oil import bill (particularly if international oil prices remain high), and a jump in imports of machinery (particularly as power projects reach financial close).

SBP first quarterly report for FY08


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## Neo

*Good Rabi crops needed to meet agri growth target​*
KARACHI: The realization of the 4.8 percent agriculture growth target hinges on a good showing of rabi crops as well as a robust performance by the livestock sub-sector after the cotton and rice crops disappointed, said the State Bank on Saturday.

The SBP said in its first quarter report that the sugarcane harvest recorded a new high of 62.3 million tonnes. The maize and rice crops also witnessed increases both in output and yield during kharif of current fiscal year 2008, although the area under each of the crops declined, it said. 

This owed not only to better water availability and favourable weather, but also reflected high sugarcane prices realized in the preceding years that encouraged farmers to bring more acreage under sugarcane and to invest in improving the yield, it said. 

However, a decline in cotton and a significantly lower than targeted rice harvests, mainly as a result of lower acreage under the crops, offset much of these gains, said the central bank. 

A silver lining for the prospects of the agriculture sector is the persistent increase in prices of many agricultural products, such as wheat, milk, rice, etc, it said. This has been instrumental in motivating farmers to use appropriate quality and quantity of inputs, and to invest to raise productivity, it added. 

Farmers appetite for institutional credit has increased despite rising interest rates. It is in recognition of this demand that the central bank has set an indicative agri-credit disbursement target of Rs 200 billion for fiscal year 2008, which is 18.5 percent higher than the actual annual disbursement in fiscal year 2007. The disbursement trend for first quarter of fiscal year 2008 suggests that the eventual full-year fiscal year 2008 outcome will be close to the annual target. 

The disappointing performance of the fiscal year 2008 kharif harvest principally reflects problems in timely and adequate availability of water in some areas while untimely rains and floods hit others. Moreover, the cotton and rice crops, in particular, were hit by pest attacks. Ironically, the excessive water was favorable for sugarcane. 

Acreage under the sugarcane crop increased substantially during kharif fiscal year 2008 at the expense of the other crops. As a result of the increase in area under sugarcane crop and a higher yield, the fiscal year 2008 sugarcane output touched a historically high level of 62.3 million tons, up by 13.5 percent on a year-on-year basis, on top of an impressive rise of 22.9 percent year-on-year basis seen in the preceding year.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Inflationary pressure grips economy​*
KARACHI: The inflationary pressures remained strong in the economy mainly due to high international commodity prices of both food and energy and continued strength of domestic demand, State Bank of Pakistans (SBP) report said on Saturday. 

The upward trend in the headline Consumer Price Inflation (CPI) during the past few months is largely a result of continued rising prices of key food staples, the inflation in CPI food components hit a 30 month high of 14.7 percent in October 2007 before it slowed down in November to 12.5 percent. 

While CPI non-food has also been trending up, in November 2007, as it was still lower than in November 2006. In contrast with CPI, the WPI non-food group inflation saw accelerated growth in November 2007. 

This divergence between the trends in CPI and WPI non-food components simply reflects differences in the composition of the two indices and does not signal divergence in the underlying inflationary pressures, SBP report said.

However, the emergence of a broader inflationary spiral in Pakistan, as a result of the high commodity prices, suggests that a tight monetary stance remains appropriate in order to contain further spread of inflationary pressures into the broader economy.

In fact, CPI inflation (year-on-year basis) moved up by 2.3 percentage points during July-November 2007 principally driven by a rise of 4.0 percentage points in food inflation during July-November 2007.

As a result of significantly high food inflation, the contribution of the food group to overall CPI inflation increased from 54.5 percent in November 2006 to 60.9 percent in November 2007. 

However, pressures on the prices of edible oil and dairy products are likely to be sustained going forward. Therefore, policy responses are needed to increase the levels of domestic production and productivity of these items. In contrast to food inflation, the CPI non-food group witnessed a lower (year-on-year basis) increase of 5.9 percent during November 07 as compared with 6.3 percent in the corresponding month of 2006.

Wholesale Price Index (WPI): WPI inflation continued an upward drive through the first five months of FY08, reaching 12.6 percent (year-on-year basis) in November 2007, the highest since July 2004. This acceleration was attributed to both the food and non-food components of WPI inflation.

WPI food inflation accelerated to 15.3 percent in November 2007 as compared with 9.1 percent of the same month last year. The WPI non-food sub group also increased sharply and jumped to 10.7 percent in November 2007 from 6.3 percent in November 2006. The opposite trend of nonfood inflation in CPI and WPI is principally attributed to the government is sheltering consumers by providing substantial subsidy in the wake of rising international oil prices and on the other, prices of a number of items in WPI fuel and lighting are increasing with international prices of oil. Therefore, WPI fuel and lighting sub-group is showing a higher increase of 11.3 percent in October 2007.

Sensitive Price Indicator (SPI): The weekly SPI inflation (year-on-year basis) on average, increased considerably from 7.7 percent in the last week of FY07 to 8.4 percent by the end of November 2007. Similarly, the long-run trend in weekly SPI inflation, indicated by the 52 week moving average, also remained high, around the 9 percent mark, throughout the first four months of the current fiscal year.

Daily Times - Leading News Resource of Pakistan


----------



## Neo

*Pakistan is 2nd best performer in region​*
KARACHI: Among South Asian countries, Pakistan is the second best performer after the Maldives. It is ranked at 76th in the world and 11th in all Asian economies, according to the report released by the State Bank of Pakistan on Saturday. 

Pakistans ranking in the ease of doing business from regulatory perspectives, though deteriorated slightly during 2007, is still better than most of the economies in the region. 

The ranking is based on 10 indicators of business regulation that follows the time and cost to meet government requirements in business start-up, operation, trade, taxation and closure. However, a detailed analysis suggests that the reversal was brought about by the improvement in ranking of other countries as the regulatory indicators of Pakistan either continued to improve or remained largely unchanged, SBP report said. 

For instance, starting up business used to entail 21.3 percent of per capita income in 2006; however, in 2007 it costs only 14 percent. Similarly, the total tax rate (as percent of profit) has declined to 40.7 percent in 2007 as compared with 43.4 percent in 2006. Indicators where the Pakistans ranking has improved during 2007 include trading across borders and enforcing contracts. 

SBP report explained that the improvement in trading across borders followed from the reforms in 2006 that included introducing the electronic data interchange systems, applying risk management techniques and introducing customs administration reforms. In enforcing contracts, however, the ranking remained still quite low at 154. In fact, globally the time to enforce a contract is lengthiest in South Asian countries with India, Sri Lanka and Bangladesh amongst the 10 countries with most difficulties in enforcing contracts in terms of time and cost to resolve commercial disputes. 

Daily Times - Leading News Resource of Pakistan


----------



## Neo

*External account outlook challenging: SBP report​*
KARACHI: The State Bank of Pakistan (SBP) has described the countrys external account outlook as challenging despite modest recovery in the initial months of current fiscal year.

The annual current account deficit remains large and it could rise to 5.2 percent of GDP by the end of the current fiscal as compared to 4.9 percent in the last fiscal year, the Central Bank revealed in its report on first quarter of 2007-08 released on Saturday.

According to the report, the reduction in the current account deficit along with a continued rise in financial account surplus meant that Pakistans external account deficit modestly declined in July-October 2007-08 as compared to the corresponding period of FY07. 

This improvement in current account balance, central bank stated was broad based, as a rise in export growth was complemented by lower growth in import as well as by a sharp rise in current transfers.

However, the current account deficit is (a) still very high and (b) it is likely that even the modest first quarter improvement may not be sustained in the face of the rise in the international oil prices and expected increase in competition in textile exports, SBP cautioned.

Also, this is already reflected by the leading indicators for November and December of this fiscal with the foreign exchange reserves under pressure, outflows from the SCRA account and weakening of the rupee against the dollar, central bank reported.

Predicting growth in export during current fiscal to show a significant improvement over the anemic growth in last fiscal, it forecast the gains are expected to be offset by a rising oil import bill and a jump in imports of machinery. 

SBP also pointed out that it must also be kept in view that, so far, there is little evidence to suggest that Pakistans economy has been substantially impacted by the turmoil in the international credit markets.

Identifying the various potential risk to the external account, report stated these stems from: (1) possibility of decrease in exports growth, due to slowdown in economies that account for a substantial share of Pakistans exports, and (2) rise in the cost of financing the external deficit. 

Specifically, it would be costlier for Pakistan to raise funds from international capital market if the liquidity crises in the international financial markets were to deepen, it added.

The improvement in overall external balance during July-October 2007-08 enabled the rupee to maintain its parity vis-à-vis the US dollar. The liquidity comfort in the inter-bank market also allowed the central bank to shift part of the oil payments to the interbank market.

The partial shifting of oil payments to the interbank market together with healthy flows in the financial account increased the central bank liquid reserves by $898.4 million to $14.24 billion as on end October of this fiscal.

Likewise, the countrys overall liquid foreign exchange reserves increased to $16.4 billion by end October 2007-08. In the subsequent months (November and mid December FY08), however, the external sector indicators witnessed some deterioration. As a result, the countrys overall liquid foreign exchange reserves reduced to $15.5 billion by December 12, FY08 and the SCRA account experienced out flow of $173.8 million since the imposition of emergency to December 13, FY08. 

Likewise, the rupee depreciation increased to 1.4 percent during July to December 12, FY08 as compared to depreciation of 1.1 percent in the same period of last year, SBP stated.

Daily Times - Leading News Resource of Pakistan


----------



## Neo

*Industrialists concern: Steps to be taken against load shedding​*
LAHORE: The industrialists of the township industrial area have constituted a 10-member high-powered committee to take a final decision as the prolonged unscheduled load shedding has virtually crippled the whole industry. The committee has been empowered to take extreme steps in case the concerned authorities fail to take corrective measures.

The Chairman PIAF Mian Abuzar Shad would head the committee. The other members of the committee include Chairman Lahore Township Industrial Estate Amjad Ali Jawa, Senior Vice Chairman Baber Mehmood Chaudhry besides the representatives of Gulberg Industrial Estate, Riawind Industrial Estate, Ferozepur Industrial Estate and Sheikhupura Chamber of Commerce and industry. 

Daily Times - Leading News Resource of Pakistan


----------



## Neo

*LSM sector performs well coping with economic environment​*
KARACHI: The economy performed reasonably well in the initial months of current fiscal year, coping with the increased uncertainties in the domestic and international economic environment.

The report released by the SBP said average Large Scale Manufacturing (LSM) growth during 1996-2008 remained stable at around eight percent, consistent with the trends seen during the initial months (July-September) of the preceding two years.

The reasons probably influenced the slowdown in certain manufacturing sectors including, growing demand for import substitutes, slowdown in export demand and increase in raw material prices.

Initial data for July-September 2008 suggests a deceleration in the growth of LSM production to only 6.9 percent, the lowest growth since 2003 during this period. This indicates a broad-based moderation of aggregate demand in the economy.

Textiles: Textiles is the largest sector of LSM, accounting for about one-third of the aggregate LSM, registered an anemic growth of 2.0 percent year on year in quarter 1 of 2008 as compared to the 14.3 percent rise during the same period of the previous year.

The report said lacklustre performance of textile sub-group was mainly due to disappointing cotton crop as well as weak external demand (exports of textile group increased by only 0.5 percent in quarter 1 of 2008 compared with a rise of 2.5 percent in the same period of the previous year.

Within textiles, the weakness in the production of ginned cotton and cotton cloth, both reflect the smaller crop.

It said during quarter 1 of 2008, the production of cotton cloth declined by 1.2 percent as against 20.3 percent increase in production seen in the same period of 2007. This performance is also consistent with the 28.4 percent year on year fall in the exports of cotton fabrics during quarter 1 of 2008 in contrast with a rise of 103.8 percent in the exports of synthetic textiles during this period.

Food, beverages and tobacco: It said, the growth in the food, beverages and tobacco sub-sector accelerated to 4.3 percent during quarter 1 of 2008 against a slowdown of 2.5 percent in same period of 2007. This is mainly due to an increase in the production of beverages on the back of strong demand and launch of new products, which more than offset the slowdown in the ghee and cooking oil industry. 

The report said the ghee and cooking oil industry in Pakistan relies heavily on the imported edible oil and spends a hefty foreign exchange on the payment of edible oil imports. Currently, Pakistan spends about $1.0 billion per annum on the import of edible oil.

The non-imposition of GST on tin-plate in FATA/PATA, duty free import of edible oil for industries located in FATA/PATA etc are the good examples of such discriminated policy, which is damaging the industry located in other parts of the economy.

At present the capacity utilisation of ghee or edible oil is about 55 percent. A probable reason for this under utilisation is the existence of unregistered ghee and cooking oil-processing units in the country.

Automobiles: The automobiles industry witnessed a growth of only 5.0 percent during the first quarter of 2008, compared with 11.1 percent achieved in the same period of 2007. The quarter 1 of 2008 growth is the lowest first quarter growth since 2002. 

The growth in the automobile industry is generally influenced by the growth in the production of cars and jeeps with 64.1 percent weight in the sector. 

During quarter 1, 2008, the production growth of cars and jeeps dropped to only 0.9 percent as compared with 12.7 percent in quarter 1 of 2007. Excluding the performance of cars and jeeps, growth in automobile sector accelerated to 17.1 percent, mainly contributed by rise in the production of motorcycles, LCVs and buses during quarter 1 of 2008.

The contradictory trends in the growth of car production and auto financing are a result of extension of auto financing for used and imported cars by some banks. In addition, increased premium on immediate delivery of some high capacity cars.

This weight scheme needs to be reconsidered especially when motorcycle production has increased almost by 10 times and cars and jeeps production has increased by 5 times only, similarly the production of other component industries of automobile sector has changed significantly.

Automobile jeeps and cars growth in automobile sector in quarter 1 and the substantial imports of cars also indicate that domestic demand pressures remain strong. The domestic automobile sector needs to improve efficiency by investing heavily in order to meet the growing domestic as well as external demand. 

The government, in an effort to protect local automobile industry from competition reduced the proposed 2007-08 budget withholding tax levy of 5 percent to 2.5 percent and allowed import of only less than three years old vehicles.

Housing industry: It said production in the construction related industries such as cement, wood, paint and varnish continued to show acceleration or remained stable during the first three months of 2008. 

The housing finance is another encouraging factor for the growth of construction sector in Pakistan, increased by Rs 5.1 billion in quarter 1 of 2008 from Rs 2.2 billion in same period of last year. The share of house financing in total private credit is about 2.2 percent in 2007.

Daily Times - Leading News Resource of Pakistan


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## Neo

*7.2pc growth target unlikely, says SBP​*
* Central bank report says annual inflation may rise to 7.5 percent
* Economy faces challenges including large current account deficit

By Mushfiq Ahmad



KARACHI: The country is likely to miss its GDP growth target of 7.2 percent, and is expected to end the financial year with a 6.6-7.0 percent growth, the State Bank of Pakistan said on Saturday.

Inflation: It said annual inflation might rise to 7.5 percent in 2007/08, as the target is 6.5 percent.

Risks to the economy are increasing, as it is clear that neither the global nor the domestic economic environment is as benign as in past years, the SBP said in its annual report for the first quarter of 2007-08. The political noise ahead of elections is impacting investor sentiment somewhat, it added.

The threat of renewed macroeconomic complications, after five years of good performance, would be further heightened if prompt actions are not undertaken to correct the recent deterioration in fiscal indicators, the SBP said.

The fiscal imbalance has already led to a substantial rise in government borrowings from the central bank, exceeding both quarterly and annual ceilings and preceding years trend. This has enhanced monetary expansion significantly and is likely to fuel inflationary pressures, the SBP said.

The FY08 kharif harvest was hurt by the damage suffered by the cotton and rice crop due to floods and pest attacks. Besides, the aggregate growth of large-scale manufacturing (LSM) decelerated in Q1-FY08.

Since inflation in recent months had been driven substantially by supply-side factors such as food and energy prices, this has given rise to a debate over the need for monetary tightening, the SBP said.

All key fiscal performance indicators have deteriorated significantly in Q1-FY08, the SBP said, adding that this was reflected in the higher recourse to the central bank borrowing in recent weeks (which is infusing pressure on core inflation).

Notwithstanding the modest improvement in the initial months of FY08, the annual current account deficit remains large; current SBP forecasts indicated that the annual FY08 deficit could remain around 5.2 percent of GDP, the SBP said.

The cotton and rice harvests have been disappointing, so the realisation of the 4.8 percent agriculture growth target for FY08 hinges on a good showing of rabi crops as well as a robust performance by the livestock sub-sector.

Growth in net tax collections decelerated due to slower growth in direct taxes. A high growth in imports resulted in improved collection under indirect taxes, partly offsetting the impact of lower growth in direct taxes.

The current account deficit will remain high with the foreign exchange reserves under pressure, large outflows from the SCRA account and a weakening of rupee against the US dollar, the bank said.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Risks to economy increasing, says State Bank​*
KARACHI, Jan 5: All key performance indicators recorded a significant decline during the first quarter of the current financial year and the resulting imbalances could have adverse consequences for the economy, the State Bank of Pakistan said in its quarterly report, released here on Saturday.

The July-September report noted that the political uncertainty ahead of the coming elections was impacting on investor sentiment.

Risks to the economy are increasing as it is clear that neither the global nor the domestic economic environment is as benign as in the past years, it added.

The government was relying heavily on borrowings from the State Bank, which added to the reserve money growth, the report said.

The threat of renewed macroeconomic complications, after five years of good performance would be further heightened if prompt actions are not taken to correct the recent deterioration in fiscal indicators, the report said.

The fiscal imbalance has already led to a substantial rise in government borrowings from the central bank. The borrowings rose to Rs191.3 billion during the first five months of the current year (2007-08), exceeding both quarterly and annual ceilings and the preceding years trend.

This has enhanced monetary expansion significantly and is likely to fuel inflationary pressures, compounding the impact of the strength in international commodity prices, warned the SBP.

The 2007-08 growth was also likely to be below the 7.2 per cent annual target, it said.

The current trend indicates that the fiscal deficit target will not be met unless appropriate corrective measures are taken promptly, the SBP said.

The report said that all key fiscal performance indicators had deteriorated significantly in Q1-FY08 (July to Sept 2007). The governments budgetary borrowings from the banking system during July-1st Dec FY08 rose by Rs191.3 billion compared to Rs97.6 billion over the corresponding period in FY07.

Importantly, the revenue balance moved from a surplus in the first quarters of the preceding years to a deficit in Q1- FY08, despite an impressive growth of 22.3 per cent in total revenues during Q1-FY08, said the report.

Another challenge was the countrys large external current account deficit. Recent evidence indicated that the modest contraction seen in July-September 2007 was unlikely to continue in months ahead, it said.

The report said the annual current account deficit remained large while the SBP predicted that the annual FY08 deficit could remain at around 5.2 per cent of GDP, very close to the levels seen in the previous fiscal year.

More troubling is the fact that the high and volatile food inflation is now increasingly influencing core inflation as well. Since May 2007 both measures of core inflation (i.e. non-food non-energy and the 20 per cent trimmed mean) have been trending up.

These inflationary pressures could rise further, if fiscal imperatives force the government to pass through the impact of the recent oil prices, the SBP report said.The domestic economy is now more open and prone to external shocks than ever before which means domestic prices will be more sensitive to the changes in international prices, despite domestic availability. For example, Pakistan had sufficient exportable surplus of rice in FY07, but following a rise in the international prices of rice, domestic prices also increased, it said.

The report said that the LSM (Large Scale Manufacturing) production data for Q1-FY08 suggested a deceleration in growth that reached only 6.9 per cent, the lowest since FY03 during this period.

The aggregate growth of LSM had decelerated in Q1-FY08, although disaggregate data revealed a mixed picture. The first quarter outcome of a larger number of industries reflected slower growth, said the report.

Risks to economy increasing, says State Bank -DAWN - Top Stories; January 06, 2008


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## Neo

*Incentives likely for pharma industry​*
ISLAMABAD, Jan 5: The government is considering providing incentives to the pharmaceutical industry so that it could compete in the international export market.Official sources told Dawn on Saturday that policy recommendations have been made to the government to enlarge the size of the pharmaceutical sector by providing necessary financial and technical support to help penetrate in the export market in the areas of bulk drugs where competitiveness is almost purely determined by economics of scale.

Successful penetration in the global market was termed a Challenge, to be favourably met by the domestic pharmaceutical industry.

In the context of globalisation, intellectual property rights will formulate the rules. Indeed, serious efforts were required to build up pharmaceutical sector as an important source of export earning.

Although, market of pharmaceutical industry is expanding at the rate of 20 per cent annually, about half of the population still has no access to modern medicines.

In their recommendations, official planners said the major thrust of the policy should be on pharmaceuticals and drugs, diagnosis pharmaceuticals, phyto-pharmaceutics, veterinary pharmaceutics and alternative medicines (homeopathy, biochemic).

Pakistan is rich in resources, which can be used for production of pharmaceutical raw material, both for domestic consumption and for export marker.

They believe that proper utilisation of these resources could help develop this sector. It would also result in saving substantial foreign exchange. The government was asked to focus on manufacturing of drugs based on slaughterhouse waste, such as plasma substitutes, insulin, pituitary extract, oxytocin etc.

Attention also should be paid on manufacturing of fermentation products, inorganic drugs, such as magnesium tri-silicate, aluminum hydroxide gel, attapulgite, ferrous salts, kaolin, sodium alginate, etc.

In this regard, phyto-chemicals, such as opium derivates (codeine, papaverine, morphine), sylimerin, aescin, isaphagula husks, etc., plants need to be cultivated and standardised on scientific grounds, and organic drugs based on imported intermediates were also mentioned.

The government was proposed that high quality material (medicinal herbs) could be the starting point for investment in the research and development (R&D).

Pakistan is among the major exporters of raw herbs and medical plants. However, most of these plants are exported without any quality standards and at very low prices.

R&D investment in this area should focus on assessing and improving the quality of currently available raw material, cultivation and conservation techniques and organic farming. The government was told to help invest on developing cost- effective extraction technologies, raw material analysis and standardisation methods of commercialisation.

True benefits of value-addition could only be utilised through export of finished herbal products. However, a suitable place in the global market for products of Pakistan origin can only occur when they are supported by extensive pharmacological and clinical evidence.

In addition, these products can also play a vital role in meeting domestic health care needs at affordable prices.

In this regard, it was proposed that adequate funds should be allocated and efficiently utilised for conducting pharmacological and clinical investigation on various medicinal plants which could lead to new products or strengthening the scientific basis of existing products.

About Unani medicines, it was proposed that these be developed on scientific lines which would help create niche market for the unique Pakistani products and services to herbal medicines from China and Ayurveda from India.

The government was urged to help in the standardisation and marketing of quality herbal products for exports. Also, testing laboratories of international standards on toxicology, clinical efficacy and a follow-up were proposed.

Incentives likely for pharma industry -DAWN - Business; January 06, 2008


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## Neo

*Growth in export of sports, leather, surgical goods​*
ISLAMABAD, Jan 5: Pakistans export of non-textile products witnessed a robust growth of more than 21 per cent during the first five months of the current fiscal year over the corresponding period last year.

Official figures compiled by the commerce ministry showed that export value of such products increased to $2.894 billion in July-November period of current fiscal, up by 21.59 per cent from $2.38 billion last year.

This unexpected growth in the export of such commodities was an outcome of marginal growth in export of sports goods, leather and value-added leather goods, leather footwear and surgical goods after a slump in the past few years.

Ironically, this growth was recorded in export of these commodities despite the fact that government subsidies were only targeted on the textile sector, which witnessed a negative growth during the period under review.

It showed that the potential is there if the government comes up with some relief package for these traditional sectors and reduces their competitive prices.

The statistics showed that the export of all sports goods (footballs and gloves) were up by 9.84 per cent and 60.66 per cent in July-November this year over last year.

Leather goods exports were up by 2.93 per cent during the period. Of these, leather garments were up by 16.83 per cent. However, export of leather gloves declined by 15.68 per cent and other leather manufactured 53.12 per cent.

The over all footwear exports increased by 5.79 per cent in the first five months of the current fiscal year, mainly owing to increase in export of some low brands.

As export of leather footwear declined by 7.13 per cent, canvas footwear witnessed 73.87 per cent during the period under review. However, other footwear exports were up by 114.52 per cent in July-November this year over last year.

Export of these sectors were on the decline for the last two years despite the fact that government exempted them from sales tax and other duties.

This showed that there were some other problems, which handicapped the growth and export proceeds of these sectors.

The export of surgical goods and medicinal instruments increased by 33.67 per cent, followed by jewellery, up by 403.23 per cent, gems 336.52 per cent, gur and gur preparation 29.44 per cent, cement 115.55 per cent, furniture by 42 per cent during the period under review over last year. The other two leading traditional products, carpets, rugs 7.64 per cent and engineering goods 12.87 per cent during the period under review over the last year.

Among the primary commodities, exports of all kinds of rice rose by 0.84 per cent, meat and meat preparations by 44.95 per cent, oil seeds, nuts 24.25 per cent, spices 5.31 per cent, tobacco 20.02 per cent, vegetables 142.33 per cent, fruits 8.36 per cent, respectively during the period under review.

However, export of fish declined by 12.02 per cent, leguminous vegetables by 40.70 per cent, and all other food items 7.12 per cent.

Growth in export of sports, leather, surgical goods -DAWN - Business; January 06, 2008


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## Neo

*Tax reforms to be ready by next year​*
ISLAMABAD, Jan 5: Chairman, Federal Board of Revenue (FBR), M Abdullah Yusuf, has said that the ongoing reforms programme would be completed by December 2009 with major focus on tax gap analysis, taxpayers facilitation, automation, plugging leakages for broadening tax regime and enhance tax to GDP ratio in the country.

We are in the process of analysing to minimise the tax gap with the help of Data warehouse concept and the models of other countries would also be studied to address the gap and other anomalies, he told APP here on Saturday.

M Abdullah Yusuf said the government had formulated a 10-years tax policy under which the tax to GDP ratio would be increased from existing 9.7 per cent to 15 per cent in 10-year.

He regretted that Pakistan has currently the lowest tax to GDP ratio and under the plan steps will be taken to enhance this ratio.

The FBR chairman said that during the first six months of current financial year and until Dec 31, 2.04 million tax returns have been filed by the tax payers against 1.52 million returns filed by the taxpayers during the same period of last financial year.

The FBR chairman said that his organisation had paid refunds of Rs50 billion during the last financial year while during the fist six months of current financial year, refunds of Rs27 billion have been paid to taxpayers which is almost half of the total paid during the same period this year.

About litigation of tax related matters, he said that historically this was a big issue of pending appeals, he added.

M Abdullah Yusuf said during the past three years, 82,000 pending appeals had been cleared and disposed of.

He expressed the hope that remaining pending appeals would be cleared in next six-months.

However, he attributed the delay in the pendency in the tax related cases to the unavailability of lawyers due to their strikes.

We have no refunds pending now, he remarked.

He said in income tax, 99 per cent refunds claims have been cleared and we have no arrears.

He added that in the sales tax front, 90 per cent refund claims have been cleared.

He said that because of changes in the systems, procedures and adoption of information technology in the organisation , the level of appeals is far less than our actual appeals, he remarked.APP

Tax reforms to be ready by next year -DAWN - Business; January 06, 2008


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## BATMAN

Neo said:


> *Industrialists concern: Steps to be taken against load shedding​*
> LAHORE: The industrialists of the township industrial area have constituted a 10-member high-powered committee to take a final decision as the prolonged unscheduled load shedding has virtually crippled the whole industry. The committee has been empowered to take extreme steps in case the concerned authorities fail to take corrective measures.
> 
> The Chairman PIAF Mian Abuzar Shad would head the committee. The other members of the committee include Chairman Lahore Township Industrial Estate Amjad Ali Jawa, Senior Vice Chairman Baber Mehmood Chaudhry besides the representatives of Gulberg Industrial Estate, Riawind Industrial Estate, Ferozepur Industrial Estate and Sheikhupura Chamber of Commerce and industry.
> 
> Daily Times - Leading News Resource of Pakistan



Who says Pakistan have no problems actually we have lot of those but they are different type.
I guess we need to build dams to compensate the shortage of electricity and water.
If this shortage is pain enough than people should shun the opposing nationalist parties and all those who are in alliance with them for personal gains.


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## Neo

*Investment in textile sector promised​*
KARACHI, Jan 5: The newly-elected chairman of All-Pakistan Textile Mills Association (Aptma) Mohammad Iqbal has pledged to pursue policies for injecting fresh investments in textile industry for improving quality of products and capacity building during his tenure.

Speaking at the 49th annual general meeting of Aptma held at Aptma House, Karachi and zonal offices at Lahore and Peshawar simultaneously on video conference system on Saturday, he also pledged to take up raw material issues and rising production cost problems of the industry with government effectively and transforming Aptma into a fully professional body.

Iqbal further stated that in future Aptma would interact more with government departments and other textile associations to take them along for the growth of textile industry and to restore its due share in the countrys economy. The outgoing chairman Shafqat Ellahi Sheikh, in his speech thanked entire membership of Aptma in extending full support to him and apprised the house on various achievements during his term of office.

Investment in textile sector promised -DAWN - Business; January 06, 2008


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## solid snake

Just to make a comment on the textile sector. I used to go to stores like Macys, Abercrombie & Fitch etc and see a lot of "made in Pakistan" clothes. In recent months, these seem to have disappeared, replaced with "made in India" products. Actually, it's alarming how many clothes of these elite stores are now made in India. Just a few weeks ago I bought a really sleek shirt from Macys that is made in India.

But now with the appreciating Indian rupee and weakening Pakistani rupee, I expect Pakistani clothes to be back on the American market pretty soon.


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## Neo

* Technocrats to play vital role in future government: Salman ​*
ISLAMABAD (January 07 2008): Caretaker Finance Minister Dr Salman Shah on Sunday said technocrats would have an important role to play in future government to sustain economic growth achieved during the last eight years.

"I think they (future government) cannot manage the economy without having outstanding technical expertise, and I presume that they will definitely have this kind of expertise available to them as without that it is impossible to manage this economy," he told a private TV channel.

Salman Shah was responding to a question that not many people were seeing much space for technocrats in the next government.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*SBP report an eye-opener for all: LCCI ​* 
LAHORE (January 07 2008): The Lahore Chamber of Commerce and Industry (LCCI) on Sunday expressed grave concern over the quarterly report of the State Bank of Pakistan (SBP) that sees a significant drop in GDP growth from its target of 7.2 to 6.6 percent.

In a statement, LCCI President Mohammad Ali Mian said the SBP report was an eye-opener for all those, who matter. He said that there were little chances of improvement in the situation unless and until prompt corrective measures were taken. He said that deceleration in textile exports growth is a major area of concern as it employs 38 percent of country's total labour force, contributes 27 percent of value addition, and has 67 percent share in total exports.

The LCCI chief said the SBP report is enough to prove that the existing policies have failed to yield results. He urged the government to immediately convene a meeting with all the economic experts and the country's chamber presidents so new policy guidelines could be evolved to avert the situation.

He said the significant deterioration in all key fiscal indicator calls for urgent measures from the government side as the resulting imbalances could have adverse consequences for the economy.

The LCCI chief said the LCCI had been demanding of the government for the last many years to take steps for improvement in law and order situation but no solid action was ever taken. The deteriorating law and order situation in the country has adversely impacted foreign investment as the number of foreign investors has gone down by 25-30 percent as compared to last year and Pakistan was fast losing its business credibility in the international market. He also called for immediate action to offset the inflationary pressure, which now has started taking its toll.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan IT exports to touch $11 billion mark by 2011 ​* 
ISLAMABAD (January 06 2008): The IT industry of Pakistan with low telecommunication cost, 100 percent ownership of equity and repatriation of the foreign investors profits as well as tax exemption until 2016, has the potential to increase exports from $1.4 to $11 billion by 2011, Business Recorder learnt.

As a result of the government incentive-oriented policy, Pakistan is now emerging as a major player in the global IT market. These initiatives include 100 percent ownership of equity to foreign investors with the incentive to repatriate profits and tax exemption to it companies until 2016. With the overall $2.8 billion IT industry including annual export of about $1.4 billion, Pakistan attracting investment which is likely to touch over $11 billion by 2011.

IT exports in FY 2005-2006, as reported by the State Bank of Pakistan (SBP), were $72.210 million, thus exceeding the target of $72 million. This represents an annual increase of 56 percent as compare to the exports of $46.355 million in FY 2004-2005.

There are about 700 active IT companies in Islamabad, Karachi and Lahore. Other cities are being surveyed, and it is expected that there are around 50 IT companies in other smaller cities and towns. Growth in Islamabad, over the last three years, has been around 300 per cent, Karachi around 180 percent and in Lahore it is around 150 per cent.

The global community has placed Pakistan in the 'First Category' countries in 2007. Previously, in 2006 Pakistan was placed in the 'Third Category' countries. Moreover, Pakistan's IT revenue had grown to 59 percent in 2006. Similarly, new IT parks in major cities are being set up across the country while 750,000 square feet of space has already been leased out to IT companies for new parks.

There are many Pakistani IT companies that have developed world class software's in areas such as car leasing, enterprise application integration, mortgage lien processing, stock market order management, mobile convergence, data and web content management for some of the top most corporations of the world.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*WLL subscribers doubled in a year: PTA ​* 
ISLAMABAD (January 06 2008): The wireless phones are fast replacing fixed-line telephony as the popular mode of connecting coupled with mobile phones. Based on Pakistan Telecommunication Authority (PTA) figures, as of November 30, the Wireless Local Loop (WLL) have doubled their subscribers in a year.

The wireless users have increased to 2,074,275 in 2007 from 1,027,868 in 2006 against 4,597,279 fixed line phones. On the basis of these figures, it could be safely assumed that wireless connections are set to grow further in the time ahead while fixed line phones have come down from 5,277,546 in 2006 to 4,731,805 in 2007 with major cut to the main operator in the country.

Though, the Pakistan Telecommunication Company Limited (PTCL) has lost its fixed line subscribers, yet it emerged as a big player in wireless phones with 1,213,822 subscribers in 2007 against 661,532 in 2006. However, its fixed line users have reduced to 4,597,279 in 2007 from 5,128,442 in 2006, showing a decline of over half a million.

There are currently four players WLL operators and seven in fixed lines with PTCL and World Call operating in both the modes but both losing fixed line subscribers. World Call subscribers have dropped to 9,728 in 2007 from 13,327 in 2006.

Month-wise figures showed that WLL phones subscribers were growing regularly. The PTCL has added over half a million subscribers to its WLL network with total subscribers growing to 1,213,882 in 2007 from 66,132 users in 2006 while 447,455 are subscribing to the service of Tele Card. Tele Card had only 229, 292 subscribers in 2006.

The subscribers of World Call, another WLL operator, increased to 358,254 in 2007 from 115,637 in 2006 while Great Bear who had just 21,407 users in 2006 operates with 54,744 subscribers in 2007.

A PTA official said the trend indicates growing market for the WLL operators and both the WLL and cellular phones have changed the life of people, adding that landlines have their own benefits and will co-exist. "Is it not good that people today have more options?" he posed a question, saying that total teledensity in the country going beyond 50 percent.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Street turmoil, business losses​*
The insurance firms are mulling tariff increase for insurance policies issued against riots, strikes, and fires, anticipating Rs8--Rs10 billion compensation claims on account of huge losses suffered by industry, businessmen, car owners and bankers during the four-day street turmoil following Ms Benazir Bhuttos murder on December 27.

After the situation normalised, the Insurance Association of Pakistan (IAP) met on January 1 to assess the immense losses to their clients. Initial estimate of losses in Karachi alone are of more than Rs4 billion on the assumption that 300 cars were burnt fully while about 1,500 were burnt partially or damaged. Property worth Rs2.5 billion was destroyed in fire while marine cargo valued at Rs500 million was destroyed in transit.

These figures do not include motor cars and vehicle losses and also of property outside Karachi a top executive of one of the leading insurance company informed this scribe. He feared that in the final count, the total losses may go up to twice as high as estimated initially.

In his address to the nation on Wednesday, President Pervez Musharraf put total losses at Rs100 billion indicating the magnitude of the catastrophe that hit the people in Sindh and Punjab.

However, the initial estimate of Rs100 billion losses include Rs50-60 billion suffered by Pakistan Railways as rioters attacked more than two dozen railway stations, destroyed large rail tracks and damaged many other installations at various places in Sindh and southern Punjab. There are reports of cash being taken away from many railway stations. For decades, the Railways has been operating without any insurance cover.

For the last few years, the public sector National Insurance Company Limited has been trying to offer various policies to Railways to cover the damages-- losses of its roll and stock and of cargoes as well as of casualties-- being suffered in a few accidents every year.

Neither the minister of Railways or any top bureaucrat responded positively to our offers, confided a senior executive who was apparently feeling relieved as the company was spared from paying huge compensation for losses in case of insurance arrangement with the Railways.

The National Insurance Corporation (NIC) officials anticipate claims from more than 50 branches of National Bank of Pakistan and First Women Bank that come under insurance over given by them. No NBP branch in Karachi has reported loss of much cash as vaults were pretty fortified and no one could enter safe room, a senior official said. He said that NBP may seek compensation for damages to its furniture and some of the fixtures and of course, for the loss of cash.

As it now emerges, the large scale spree of arson, looting and damages due to horrific rioting has put private general insurance companies under tremendous financial strain. Three main companies-Adamjee, Eastern Federal Union and New Jubilee Insurance-share the biggest chunk of business and obviously would receive big claims. The big companies will somehow sustain these losses but the real crunch will come on small companies and their minor losses will look big in ratios, says an insurance executive.,

But I assure you that no insurance company will collapse under the pressure of these claims, which no doubt are going to be the highest in any single year, and may cause some problems, a top executive pointed out. He ruled out any possibility of seeking financial help from the government. Of course, we will talk to the government to offset any future shock of such nature he said.

While people suffered from the sudden outbreak of rioting and total collapse of law and order machinery in Sindh and Punjab, businessmen are probably worst shaken. Imagine 1,500 trailers carrying transit import-export cargo being damaged, looted and burnt down on the highway, Shamim Ahmad Shamsi, President, Karachi Chamber of Commerce and Industry (KCCI) said. The KCCI has set up a Help Desk to assess the losses suffered by businessmen and shopkeepers.

We, in Lahore, were wondering at the fragile nature of our security system that is not even able to protect the overland transport and trade arteries linking us with the biggest port city  a business leader in Lahore informed Dawn on telephone. With communication links disrupted, businessmen were worried about piling up of inventory of their products in factories. While much to their relief the transport link has been restored, the businessmen in Karachi and upcountry are still haunted by the possibility of a breakdown in future.

The industrialists in Sindh were stunned by the burning down of more than 22 factories by rioters. It never happened before that factories were attacked and people burnt alive, a leader of Korangi industrial area said. Factories in Korangi, North Karachi, Kotri, Gharo, Nooriabad and some other places were attacked and machinery was damaged and both products and raw materials looted.

Many such factories like Colgate, Masco Exports, Sunflower and a few others were almost gutted to ashes causing huge losses,  an industrialist said. Other factories like Clariant, Novartis Pharma in Jamshoro, Color Ital and BASF in Landhi Korangi were severely damaged.

For the first time, as many as 500 bank branches including 50 ATMS were burnt down, a multinational reported back to its principal office in Europe. On January 1, about two dozen businessmen met Sindh Governor Dr Ishraul Ibad. Also present in the meeting were top officials from all law enforcing agencies. They opened their heart to tell the Governor and senior law enforcers of their sufferings on December 27 evening. Never before we felt so insecure and vulnerable as it was that fateful evening, a former President of Karachi Chamber of Commerce and Industry said.

But then from the Governor House meeting emerged a positive proposal. The Governor named Sindh caretaker industries minister, chairman of a committee that will suggest setting up of security hubs around half a dozen industrial areas on public-private partnership basis. I will co-opt a few members in the committee to draw up proposals with consensus Arif Abbasi, the caretaker provincial Industries minister confirmed.

The proposal came only after businessmen offered to pay for the salary and upkeep money for a force of 300 policemen to protect factories. If this proposal gets going, we will consider extending it to commercial areas, a participant of the meeting said.

A feeling of growing insecurity reportedly forced some businessmen from Karachi to buy property worth about Rs5 billion in Dubai in those four days which literally shook Pakistan.

Street turmoil, business losses -DAWN - Business; January 07, 2008


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## Neo

*Energy crisis: serious and worsening​*
Serious energy shortage, massive load-shedding and lowest ever strategic oil reserves are emerging as major risk to the economy.

The situation, it appears, will not be any better in the days ahead given the political uncertainty and policy planning failure over the last few years.

Combined with multi-layered risks including current account deficit, the critical shortage of energy--an ingredient that fuels the economic growth has the potential to choke economic growth.

The shortfall in electricity generation did not emerge suddenly but was developing over the years as the development of cheap and indigenous energy sources was discouraged for lack of any vision. Sponsors of hydropower producers who were offered a tariff of 4.7 cents per unit under the 1997 policy were practically blocked from developing their plants at this tariff rate and offered a much lower rate of 3.3 cents per unit in 1999.

Same happened with development of coal resources. A Chinese firm that had agreed to set up a 600MW project at Thar for 5.79 cents per unit was forced to quit when the authorities refused to offer a tariff of more than 5.39 cents per unit. As a result, no power project could be set up in the last eight years. The regime never tired of criticising political governments for signing costly energy contracts (at the average rate of 5.7 cents per unit). But it allowed signing of contracts for thermal power project at a much higher tariff of up to 15 cents per unit, although none of these projects would be available to the economy in the next 6-12 months.

Likewise, the recent revelation of the countrys strategic oil reserves at a precarious level clearly exposed the governments lack of vigilance and failure of energy companies to meet their contractual obligations. The strategic oil reserves for defence had also been consumed to meet shortage and thus the countrys security has been exposed to great risks.

Under the fuel supply and power purchase agreements, the oil marketing firms and power generation companies - whether in the public or in the private sector  are required to maintain a minimum of 21 days of their fuel requirements. Non-compliance of such contractual obligations is subject to heavy penalties under the law. The government, too, is required under the standard operating procedures defined in the official Blue Book to ensure that it has oil stocks for at least 21 days of consumption to meet any eventuality, either a natural calamity or war or any such event.

The imperative of maintaining stocks for 21 days was highlighted by the blocking of communication routes during the violent protests following the tragic killing of former Prime Minister Benazir Bhutto. The entire episode led to disruption of fuel supply chain that included railway, pipeline and road transport. In varying degrees, it came to light that neither the independent power producers, nor the oil marketing companies including those in the public sector had maintained sufficient stocks as required under the law.

The result would be more load shedding in the days ahead. The export growth that is already stagnating would be hit if enough energy  gas and electricity  is not ensured to the industrial sector.

The power shortage that had officially been estimated to remain in the range of 1000-2000MW during the current year has already touched 3600 MW. The economy is being run at almost 30 per cent energy shortage, which could worsen if oil supplies continue to remain short or the current disruption of oil transportation prolongs.

Wapda estimates that the country could face a power shortage of about 5,500MW by 2010. Overall, Pakistans total energy need is expected to be around 80 million tons of oil equivalents (MTOE) in 2010, up by about 50 per cent from the current years 54 MTOE. And since at least four out of five major initiatives, originally planned for meeting this demand, are uncertain at present or significantly behind schedule, the shortage estimate could be anybodys guess.

Even the closure of business after sunset and reduction in street lightening did not get the desired results, leading to a massive load shedding of almost daily four hours across the country. Most of the industrial and commercial sector has also been deprived of the natural gas since the advent of winter. Energy shortage is severe and widespread in almost all areas, while different sectors contribute to each others problems. Natural gas, power, and oil shortages were all posing risks to the economic growth in medium to long-term period, a government official said.

A major shortfall is expected in natural gas supplies. According to an official energy demand forecast, the demand for natural gas, having about 50 per cent share in the countrys energy consumption, would increase by 44 per cent to 39MTOE from 27MTOE currently. The government had planned to add an overall power generation capacity of about 7,880MW by 2010. Of this, about 4,860MW was to be based on natural gas, accounting for 61 per cent of the capacity expansion. However, the gas-based power expansion of about 4,860MW would remain in doubt since these estimates are based on three gas import options for completion in 2010, 2015 and 2020.

A major part of about 4,860 gas-based plants may not be available and the difference may be met through other costly options. Even if the physical work is started today, it will take at least seven years to complete a pipeline project and it was not clear if construction of Iran to Pakistan pipeline project could be taken in hand in the near future.

Partly contributed by gas shortfalls, the power shortage is expected to be little over 5,500MW by 2010, said a Planning Commission official, adding that the oil demand would also increase by over 23 per cent to about 21 million tons in 2010 from the current 16.8 million tons.

This would leave a total deficit of about nine million tons of diesel and furnace oil imports. Since gas shortfalls are expected to be much higher, the country would need to enhance its dependence on imported oil, increasing pressure on foreign exchange balances.

Energy crisis: serious and worsening -DAWN - Business; January 07, 2008


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## Neo

*Another GI clash with India​*
IN a replay of Superbasmati battle, Pashmina shawl is the latest bone of contention between Pakistan and India over claims to its intellectual property rights. The clash erupted when India went ahead to apply for a geographical indication (GI) of the wool product in order to protect artisans against cheaper, machine-made fakes now flooding the market.

The move has been challenged by Pakistan. India claims that this popular luxury shawl only originates in Indian-held Kashmir territory while the fact remains that it is also produced in Pakistans Northern Areas. Pashmina is a textile which became popular in the West in the late 1990s. It is very soft and warm, and used primarily in scarves and shawls. Its name is derived from the Persian word pashm, which refers to the undercoat of fur on many animals  in this case, the goat.

Pakistan and India have already locked their horns in an unending battle over the registration of Superbasmati as a geographical indication and have failed to reach a satisfactory settlement.

What is of interest in this conflict is the absence of concrete measures by the two countries to seriously solve the problem. This conflict is now set to take a new turn in the months ahead as New Delhi has decided to make lab-produced Pusa 1121 a member of its Basmati family.

And for the purpose, Indian agriculture ministry would soon redefine Basmati. That is bound to trigger a fresh round of clash between the traditional foes. Regarding Pashmina, Pakistan is reportedly ready to accept a joint GI tag over the Kashmiri shawl. But India has certain reservations. It says it would agree to that only if Pakistani Pashmina is proven to be of the same quality as the Indian variety.

The dispute surfaced when the Srinagar-based Craft Development Institute filed an application with the Geographical Indications Registry in Chennai for Pashmina.

The Rawalpindi Chamber of Commerce and Industry immediately challenged this on grounds that Pashmina shawls are also woven in Pakistans Gilgit-Baltistan region and that India could not solely claim the GI right.

The chamber filed a complaint last year (2007) with the registry through a New Delhi-based lawyer Najmi Waziri. Indias case became further complicated when another local body, the Kashmir Handmade Pashmina Promotion Trust, also served a notice. But later the two groups tentatively agreed to jointly apply for the Indian registration.

In India, GIs can be filed under the Geographical Indications of Goods Act, 1999.

The Indian Pashmina shawls industry has annual sales of Rs3500-6500 million and has impressed generations of women for their spectacular ability to slip through a ring. It is made from the fleece of the Changra goat, found in the higher altitudes of the Ladakh and Tibet regions. How Pashmina is faring in Pakistan is not known. Pashmina, however, is not the only case in point of a GI being disputed by different countries.

Other products particularly in the arts and crafts whose origins lie along the border lines in the subcontinent are Kutchi-work in Gujarat, Kantha embroidery and Madhubani paintings in Bihar. All of these have not been registered as GIs simply because it is not clear how are these entities to be treated.

Neither Trips law of the WTO nor the Indian legislation provides for the joint registration of GIs. At best, such an arrangement will have to be arrived at through bilateral or multilateral agreements.

Meanwhile, Pashmina market in Kashmir is facing a parallel flourishing trade in fakes in the wake of a rise in global demand for the luxury product that has now become a fashion statement. Fakes are a fallout of the prolonged state of militancy and violence in the occupied Kashmir as the local industry suffered an acute shortage of raw material.

In disputes between the two countries over GIs, the problem mainly stems from the fact that Pakistan is yet to have a GI law in place. Once Pakistan adopts a GI law, then a possible solution is simultaneous registration of homonymous GIs by both countries. And there are many commodities which are identifiable for being produced in the subcontinent and belonging to more than one country.

Homonyms are names which consist of, or contain, the same identifier for different geographical places. And under the Trips, protection is accorded to each indication, subject to certain provisions.

Meanwhile, Rice Exporters Association of Pakistan has been too critical of the government for its failure to adopt a legislation on the geographical indications (GI), a draft of which was provided by the Association to the ministry concerned.

The delay has benefited India in a big way. While the Association claims that India has notified Superbasmati in the world market as its trade mark (exclusive Indian grain) and as a result its member firms have suffered a loss worth millions of dollars, the fact remains that it is all media reports.

The fact remains that it can only be registered as a GI by New Delhi which has not yet done so. The commerce secretaries of the two countries had been meeting off and one but have failed to reach a definite solution or compromise.

What is problematic is the fact that Basmati is sui generis to both India and Pakistan and, in a sense belongs to both countries.

Pakistan claims that the Superbasmati is an indigenous discovery. Recently Pakistani Association had stated in a presentation to the EU that its Superbasmati is an authentic variety developed as per the original methods under which Basmati-370 was approved for the first time.

Basmati-370 was first found at Kolu Tarrar in Hafizabad district in 1926. India did not grow basmati in commercial quantities since the 1970s and eventually developed a variety called Pusa. What India has done in recent months, and which could be described as a setback to Pakistan, is that it acquired a first mover advantage by making the first move to register the Superbasmati as an Indian GI in the EU.

As a result of this development, the scheduled GI talks between India and Pakistan were called off, with Pakistan alleging that India has resorted to subversive tactics to acquire the IPR and GI. However, the fault lies with Pakistani trade bureaucracy for not enacting a GI law as yet. The next battle will be fought over what Indians describe a distant cousin of the Basmati family -- Pusa 1121. A new definition of Basmati would include this variety.

The agriculture ministry also intends to register Basmati under the International Plant Variety Protection Act. The Act would provide safeguard for only 15 years. Once Pusa 1121 is declared part of the Basmati family, exporters can market it as a cheaper alternative to the more expensive traditional varieties and increase their sales volumes.

Another GI clash with India -DAWN - Business; January 07, 2008


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## Neo

*Biotechnology for raising farm yield​*
LOW productivity in agriculture is a major cause of poverty, food insecurity, and poor nutrition in low-income developing countries. Agricultural biotechnology offers great potential as an instrument for achieving food security and poverty reduction.. It uses advanced plant-breeding techniques to introduce beneficial traits to the crops grown for food and fibre.

The need for food security and economic value of agricultural products highlights their significance for all countries of the world, no matter at what stage of development they may be. It has been estimated that around 70 per cent of poor and food-insecure people reside in rural areas and depend directly or indirectly on agriculture for their livelihoods. Whether in rural or urban areas, poor people spend as much as 5070 per cent of their incomes on food.

In spite of the past advances in food production 800 million people, mostly in developing countries go to bed hungry everyday. Micronutrient deficiencies affect three billion people. Malnutrition hinders the development of human potential and the nations social and economic development.

To face these situations of food scarcity and insecurity to farmers, considerable attention has been focused on the use of biotechnology to improve the quantity and quality of food supply. This interest is fueled, in part, by a growing world population that is expected to double by the year 2025, coupled with the realisation that there are limited options for increasing the amount of land under cultivation for the production of food crops without imposing undesirable environmental costs.

Productivity gains are also essential to assure that food supplies remain adequate as world population increases by 25 per cent to 7.5 billion in 2020. And it is estimated that over 97 per cent of the projected growth will take place in the developing countries.

Applications of agricultural biotechnology to developing countries could address some of these very issues if research focuses on how to reduce the need for inputs and increase efficiency of input use. This could lead to the development of crops that utilise water more efficiently, fix nitrogen from the air, extract phosphate from the soil more effectively, and resist pests without the use of synthetic pesticides.

Successful efforts in this direction would reduce dependence on access to inputs, making the technology more readily available to poor farmers. It is possible that the introduction of agricultural biotechnology in the developing countries like Pakistan can contribute to increased productivity, lower unit costs and prices for food, preservation of forests and fragile land, poverty reduction, and improved nutrition. This depends on whether the research is relevant to poor people, on the economic and social policy environment, and on the nature of the intellectual property rights arrangements governing the technology.

In these days, the emphasis is being put up on using crops that have been evolved by biotechnological ways. So, genetically modified organisms have been produced and used commercially. Globally over 70 different commercially important species of plants have been modified to incorporate mainly seven transgenic traits i.e. herbicide tolerance, insect resistance, viral disease tolerance, fungal disease tolerance, product quality improvements, male sterility traits, others i.e. production of metabolites/chemicals, improvement of nutritional traits, incorporation of marker genes, stress resistance properties etc.

The important crops that have been modified genetically include maize, soybean, cotton, tomato, potato, alphalpha, petunia, rapeseed and mustard, rice, wheat, beet, barley, chickpea, cabbage and tobacco. But at present, four plant species (soybean, maize, cotton and rapeseed) dominate with two traits (herbicide tolerance and insect resistance).

Modern biotechnology is not a silver bullet for achieving food security, but used in conjunction with traditional knowledge and conventional agricultural research methods; it may be a powerful tool in the fight against poverty that should be made available to poor farmers and consumers. It has the potential to help enhance agricultural productivity in developing countries in a way that further reduces poverty, improves food security and nutrition, and promotes sustainable use of natural resources. Solutions to the problems facing small farmers in developing countries will benefit both farmers and consumers.

Biotechnology may offer cost-effective solutions to micronutrient malnutrition, such as vitamin A- and iron-rich crops. By raising productivity in food production, agricultural biotechnology could help further reduce the need to cultivate new lands and help conserve biodiversity and protect fragile ecosystems. Policies must expand and guide research and technology development to solve problems of importance to poor people. Research should focus on crops relevant to small farmers and poor consumers in Pakistan, such as cotton, rice, maize, wheat, and millet, along with livestock.

Expanded enlightened adaptive research on agricultural biotechnology can contribute to food security in developing countries, provided that it focuses on the needs of poor farmers and consumers in those countries, identified in consultation with poor people themselves. Public sector research, particularly through international agricultural research centres and national agricultural research systems, is essential for assuring that molecular biology-based science can fulfill the needs of poor people. Yet at present, public international agricultural research centres are devoting less than 10 per cent of their research budgets to biotechnology.

Agricultural biotechnology must be viewed as one element in a comprehensive sustainable poverty alleviation strategy focused on broad-based agricultural growth, not a technological quick fix for world hunger. There is considerable potential for biotechnology to contribute to improved yields and reduced risks for poor farmers, as well as more plentiful, affordable, and nutritious food for poor consumers. It is not, as some critics have charged, a solution looking for a problem. The problems are genuine and momentous.

The biggest risk of modern biotechnology for developing countries is that technological development will bypass poor people. In such a case, if agricultural biotechnology research is prohibited in the developed countries, opportunities for reducing poverty, food insecurity, child malnutrition, and natural resource degradation will be missed, and the productivity gap between developing and developed country agriculture will widen.

So, it is obvious that the governments and funding agencies should continue and increase their investments in biotechnology as a means of achieving their goals of poverty reduction and food security.

Biotechnology for raising farm yield -DAWN - Business; January 07, 2008


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## Neo

*Three-hour loadshedding from today: minister​*
LAHORE, Jan 6: Power load-shedding will be reduced to three hours every day by Monday evening with power outages lasting half an hour every four hours, says caretaker minister for water and power Tariq Hameed.

Oil supply to Kapco has been restored and thermal power plants in Lahore and Faisalabad will be functional by Monday morning and by the evening the situation will considerably normalise, Mr Hameed told media personnel after briefing caretaker Prime Minister Mohammadmian Somroo about the power crisis on Sunday.

Kapco generates 1,450 megawatts of electricity while thermal plants near Lahore and at Faisalabad produce 150MW and 100MW, respectively. Wapda officials are working on the Balochistan towers (that were blown up a few days ago). By Jan 12, some 300MW power could be restored, said Mr Hameed.

The Indus River System Authority (Irsa) had decided to increase releases from water reservoirs for power generation from Jan 25 that would also improve the situation.

Twelve hydroelectric projects with 1,700MW capacity are on the drawing board. The next government will decide their fates, said Mr Hameed, who was the chairman of the Water and Power Authority (Wapda) during the last government.

Three-hour loadshedding from today: minister -DAWN - Top Stories; January 07, 2008


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## Neo

*Pakistan will hit economic goals, says minister​*
* Shah says consensus among political parties can help in achieving all targets 

ISLAMABAD: Pakistan will still hit its economic targets this year despite a wave of unrest and turmoil following the assassination of former premier Benazir Bhutto, caretaker Finance Minister Salman Shah told AFP on Sunday.

Pakistans central bank, in its first quarter report released on Saturday, said economic growth is expected to remain below the annual target of 7.2 percent.

Shah, however, said the bank had pushed its growth estimates down and he remained sure original targets could be reached.

Pakistan can achieve the 7.2 percent economic growth target if elections are held in a smooth manner, he said.

Pakistans financial year begins on July 1, while elections are scheduled for February 18.

If there is any risk to the economy, it is the political risk, Shah said. 

Consensus can help: If there is reconciliation and consensus on promoting the economy among political parties, we can achieve all economic targets, he added. An increase in global oil prices up to $100 per barrel, which has jacked up costs in Pakistan, has not yet been passed on to consumers but the government will be unable to maintain the current price indefinitely.

We are giving a subsidy of Rs 14 billion on oil prices, but we will now have to gradually pass the cost on to the consumers, Shah said. afp

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan, Iran to finalise gas pipeline project by 25th​*
* Iranian envoy says the two countries cementing economic ties

ISLAMABAD: Pakistan and Iran are set to finalise an agreement on a multi-billion gas pipeline project by January 25 this year, Iranian Ambassador to Pakistan Mashallah Shakeri said on Sunday.

The Iran-Pakistan-India (IPI) gas pipeline project is one of the most important economic projects in the region, which will bring extensive benefits for the three countries, the envoy said in an interview.

He said the measures taken by Pakistan and Iran showed the two countries firm will for executing the project. He said Iran had started executing the project by laying the pipeline from its gas reserves to its border with Pakistan. He hoped that India would also join the project and the project would be pursued trilaterally.

Answering a question about Irans apprehensions on the political unrest in Pakistan, he said, Iran wants a peaceful, developed, independent and stable Pakistan, and it will leave no stone unturned to extend every essential assistance that its brotherly neighbouring country needs. He hoped that the current political crisis in Pakistan would soon be resolved and the country be put on the track of progress and prosperity.

Economic ties: Talking about the economic relations between Pakistan and Iran, the Iranian diplomat said the two countries were enhancing their economic relations.

He said both countries had increased their target of the volume of commercial exchanges to $1 billion in one year. 

He was optimistic that the official trade volume  which now stands at $ 650 million  would soon reach the newly set target. Mashallah Shakeri said Iran was pursuing multilateral talks with the international community for its peaceful nuclear programme.

He said his country was cooperating with international groups, including the International Atomic Energy Agency, on its nuclear programme, by going even beyond its legal obligations. 

He said Iran would continue the dialogue process with the international community for confidence building and to allay their concerns on Irans nuclear programme. He said the international groups had welcomed Irans cooperation and transparency. 

He said the National Intelligence Estimate report released in the US last year confirmed that Irans nuclear programme was for peaceful purposes. nni

Daily Times - Leading News Resource of Pakistan


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## solid snake

I am very concerned about the economy. Especially the sliding Rupee since it directly affects me.

-----

*Economy in trouble*​
THE State Banks First Quarterly Report for fiscal year 2008 underscores the shifting of the economy into a slower gear. This is perhaps the first public admission by a government agency that all is not well with the national economy  something independent experts have emphasised for many months now. The document will come as a rude shock to the countrys economic managers who would have us believe that the economy is on the path of sustainable growth. True, we should not sound alarmist but neither must we forget that the slowdown could tip the economy into recession if the current account deficit becomes unmanageable, inflation gets out of hand and investors and consumers confidence hits rock bottom. The forecast of a global economic downturn on the back of an international credit crunch and high oil prices, and the possibility of serious political turmoil at home, could complicate matters. The ongoing energy crisis, especially the power cuts, could also paralyse the economy.

The report says the economy did reasonably well in the first quarter but admits that the risks are increasing because of an unfavourable global and domestic economic environment. The nation will miss its GDP growth target of 7.2 per cent. The current account deficit, which is predicted to expand to 5.2 per cent of GDP from 4.9 per cent last year on account of high crude prices and a slowdown in exports, is the major threat to economic stability. Foreign exchange reserves are under pressure and depleting. The rupee is weakening against the dollar. The fiscal imbalance has led to government borrowings from the central bank rising to over Rs191bn between July and November, exceeding both quarterly and annual ceilings as well as the preceding years trend and fuelling inflationary pressures. Core inflation will be to the order of 7.5 per cent against the target of 6.5 per cent. It will be impossible to meet the agricultural growth target of 4.8 per cent because of the poor performance of rice and cotton crops and fears of reduction in wheat output. Large-scale manufacturing has decelerated to 6.9 per cent, the lowest growth recorded since 2003. A mere 0.5 per cent expansion in textile exports against 2.5 per cent a year earlier represents a decline in international demand. Production of automobiles slowed down to five per cent from 11 per cent last year, signifying weakening consumer demand.

The housing sector has performed well, the report says. For how long though? The economys weaknesses are so overwhelming that one tends to overlook its few strong points. The report itself stresses the threat of renewed macroeconomic complications, after five years of good performance, would be heightened if prompt actions are not taken to correct the recent drift in the fiscal indicators. Given the governments limited capacity and little room available to it to manoeuvre and fix the fiscal imbalances, we dont yet know how painful the new period of economic downturn will prove. Nor do we know how long it might last. What we do know is that it is time to wake up and take stock of economic policies.

DAWN - Editorial; January 08, 2008


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## Neo

I too fear that Rupee will be devalued soon.


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## Neo

*Activity shifts from manufacturing to trading ​* 
High rate of return major attraction

Tuesday, January 08, 2008

LAHORE: Trading activity won a definite edge over manufacturing in calendar year 2007, which was evident from the huge gap between Pakistans import of goods and services compared with its exports.

The resources have been transferred from manufacturing to trading mainly due to the governments failure to properly tax the traders and keep a check on hoarding and black marketing. High rate of return on investment in trading compared with high cost and less return in manufacturing is slowly drifting the economy away from production to consumption and the year 2007 strengthened that trend.

Federal Board of Revenue Chairman Abdullah Yousuf has admitted on various occasions that the share of traders in Pakistans gross domestic product (GDP) is 16 per cent but their contribution to the tax revenue is only four per cent. Despite admitting the fact in early June 2007, the FBR has reduced the tax rate for traders by 100 per cent, giving a further incentive to the investors to go for trade.

Another fact that Abdullah Yousuf has failed to point out is that the traders control the entire non-documented sector of the economy. The World Bank, a decade ago, estimated that around 50 per cent of Pakistans economy was undocumented. The quantum of informal economy, if not increased, has also not declined in the last decade, which means the traders pay peanuts compared to the business they conduct in a year.

The most worrying thing which gained strength in the previous calendar year was the indulgence of large traders in hoarding of edible commodities. A few years ago, small village artis or commodity traders in towns had been involved in hoarding of small stocks of commodities like wheat, rice or sugar. However, the trend has transformed into hoarding on a massive scale adding more commodities like potatoes, onions, pulses, etc to the list. The food inflation remained very high in 2007 due to that practice, which created artificial shortage of essential commodities.

The economic power of the hoarders could be judged from the fact that according to government figures 2.2 million tonnes of wheat was hoarded this year. Independent experts put the figure at a much higher level than government estimates. The cost of 2.2 million tonnes of wheat at government support price comes to over Rs24 billion. At current rate, the price of hoarded wheat jumps to Rs45 to Rs48 billion.

Trade and business are attracted by a huge domestic market of over 160 million people and they sell goods procured locally from both formal and informal sectors. They also import and sell foreign goods ranging from toys, processed food and cosmetics to heavy machines. In many cases, they resort to under-invoicing in the value of imported goods in a bid to evade import duty. They also misdeclare their imports either to pay less or avoid import tariff.

The traders also procure and sell smuggled goods. The goods brought into the country through the above methods can be found in most of the retail outlets of the country.

The imports, particularly made through smuggling, under-invoicing and misdeclaration, have hurt the local manufacturing sector. The local auto-parts manufacturers, garment manufacturers, artificial leather producers, toy-makers and many other industries have come under pressure or gone out of production due to this practice.

A few years ago, very few consumers had access to imported toilet soaps, toothpastes, shampoos, shoes and apparel as all these products were manufactured and consumed in the country. But now the share of local products is shrinking and imported varieties compete even with multinational brands in the domestic market both in terms of price and quality.

Pakistan used to produce complete window and split air conditioners locally and the manufacturers imported only the compressor. Now manufacturing has been replaced by assembling as the body, grill and all other parts are imported and then assembled in the country.

In telecommunications, the growth in the sector has made mobile phone accessible for one third of the population. Pakistan now has more cellphones than those in Singapore, Hong Kong and Taiwan combined and is one of the fastest growing mobile phone markets in the world.

However, while the above tiny nations manufacture mobile phones, Pakistan is a net importer of cellphones worth over $1 billion.Though exporters complain that foreign buyers do not come to Pakistan due to security concerns, visits of foreign manufacturers and businessmen trying to market their products in the country have increased. 

Similarly, exporters are denied visa more frequently by foreign embassies, but importers get recommendation letters from their foreign suppliers.

Activity shifts from manufacturing to trading


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## Neo

*Stocks tumble as SBP report stokes fears for economy *​ 
Tuesday, January 08, 2008

KARACHI: The SBP quarterly report highlighting under performing economy invited fresh offloading from every quarter of investors at the Karachi bourse on Monday.

KSE 100-share Index shed 96.49 points and finished at 14,163.11 points in a range bound session. Its junior partner the 30-Index depicted a bigger loss of 185.73 points and concluded at 16,703.86 points.

The reason behind witnessing bigger decline in 30-Index than the 100-Index is said to be the correction in heavy weightage banking stocks, which dominate the ruling in the 30-index owing to their bigger share as compare to other sectors, a leading analyst said.

He added that all the blue chips settled in the negative column except the DG Khan Cement and 30-Index is composed primarily of the blue chips.

Negative signals from SBP report and power, gas and flour shortage depressed stakeholders, said analyst Hasnain Asghar Ali. Banks and energy stocks remained big losers contributing most minus points to the 100 Index. Besides, all the other sectors at KSE came under selling pressure and majority of stocks finished in negative column. 

Following the aggressive recovery witnessed in the last two sessions of the last week, the 100-Index opened with extended gains and touched 14,280 points intra day high for a very brief period - adding another 20.40 points from the pre-opening level of 14,259.60.

The index went into the red region in the opening minute and stayed there till the end of session. The index dipped to 14,090.47 points intra-day low losing 189.53 points from the day peak level. Modest buying on the day lowest share price levels, however, invited an upward adjustment in the closing hour. 

Analyst Ahsan Mehanti added that the SPB quarterly report on economic performance, highlighting investors concerns over inflation, deficits and export shortfall altogether convinced the jobbers to offload a part of their holdings in hand to remain on safer side.

Secondly, the concerns over media reports on direct intervention of US military inside Pakistan in the name of so called war on terror equally played the important role in depressing investment sentiments as the SBP report did, he further said.

Moreover, technical correction in the international oil prices, which currently stands near $97 per barrel after breaching through $100 mark last week also invited profit booking in the relevant scrips at the local bourse, he added.

Another analyst was of the view that the prevailing law and order situation amid political uncertainty were the root causes of the day declines. The State Bank of Pakistan has also highlighted the political instability as one of the major factor behind the depleting economy, he added.

Upcoming results (likely to stay inline with the market expectations) might inspire fresh buying while improved law and order situation can ensure smooth surge in the share prices, Ali added.

The overall turnover in the ready market declined to 245.216 million shares from 288.081 million shares on previous Friday. The turnover in the future market also declined to 35.365 million shares against 54.198 million shares of previous sessions. Market capitalisation fell by Rs28 billion to sands at Rs4.324 trillion.

The minus signs dominated the board with 235 decliners 107 advancers and 32 scrips that closed unchanged.

Highest volumes were witnessed in TRG Pakistan at 21.987 million closing at Rs13.85 with a loss of 60 paisa, followed by NIB Bank at 21.733 million closing at Rs23.15 with a gain of Rs1.10, Bosicor Pakistan at 19.535 million closing at Rs21 with a gain of 40 paisa, Arif Habib Securities at 13.683 million closing at Rs170.55 with a loss of Rs1.80 and DG Khan Cement at 11.358 million closing at Rs94.45 with a gain of 45 paisa.

Stocks tumble as SBP report stokes fears for economy


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## Neo

*Airblue growth beats PIA on domestic routes *​ 
KARACHI: The number of domestic passengers who preferred travelling in private airline Airblue has grown whereas the national flag carrier Pakistan International Airlines (PIA) is losing its popularity, data compiled by the Civil Aviation Authority (CAA) revealed.

According to provisional aviation statistics for the year 2006-07, Airblue carried 1.4 million passengers in 2006-07, up around 7.7 per cent from previous year&#8217;s 1.3 million it carried between different cities of Pakistan. The PIA, faced with accumulated losses of more than Rs35 billion, lost domestic market share by 5.7 per cent as it carried five million passengers compared to 5.3 million during the period under review. &#8220;Airblue has capitalised on Aero Asia clientele,&#8221; said an industry official. &#8220;The market lost by Aero Asia in the last couple of years has been taken over by Airblue.&#8221;

After more than a decade of successful operations, Aero Asia was barred from flying by the Civil Aviation Authority (CAA) in May last year owing to safety concerns. Aero Asia carried more than one million passengers in fiscal 2004-05 but the number shrank to 756,308 in the following year and dropped to 278,900 in 2006-07. In contrast, Airblue, which started with only 22,320 passengers in 2003-04, carried 1.4 million passengers in the last fiscal year.

&#8220;Besides, PIA has suffered from a very bad punctuality record in the last couple of years,&#8221; continued the official who requested not to be named. &#8220;This irregularity and financial woes of PIA have also worked to the advantage of Airblue.&#8221; The private carrier has also emerged as a leader in introducing innovation in the aviation industry of the country. It brought the self check-in facility at its Karachi&#8217;s hub of Jinnah International Airport whereby passengers with baggage obtain a boarding card through the touch screen menu without needing to report to the counter.

The concept of booking-first-to-get-the-lowest-fare has also contributed to advance of Airblue in gaining the market share. PIA is now following the suit and has adopted the same strategy. Airblue with its six A320 and A321 aircraft was also able to ride the tide of rising fuel cost, which bankrupted many airlines across the world.

Shahid Khaqan Abbasi, the Chief Executive Officer and the brain behind the success of the private airline is confident that future fuel-related price shocks would be sustained. &#8220;We are in a phase of growth,&#8221; he told The News. &#8220;With aggressive revenue management and increasing the number of passengers we will make through this period.&#8221; However, he hinted that few cost elements would be passed on in fares and others would be absorbed through operation of the aircraft on profitable routes.

Around 305,370 passengers travelled by Shaheen Air International (SAI) in 2006-07 as compared to 55,670 in the previous year. On the international front, PIA carried 3.59 million passengers in 2006-07, Airblue 237,170 and SAI 198,067. Except for the flag carrier, the two domestic airlines have registered growth in previous year.

Airblue growth beats PIA on domestic routes


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## Neo

*Cellular operators invested over $2bn in 2007 ​* 
Tuesday, January 08, 2008

ISLAMABAD: Mobile cellular operators have made investment worth over $2 billion in 2007, realising huge market potentials in the country, an official of the Pakistan Telecommunication Authority (PTA) said on Monday.

An exceptionally good response from the market and an ever increasing potential has kept foreign investors still eying for opportunities to invest in Pakistan, he said.He said China Mobile the largest mobile operator in Asia has entered the mobile market by investing almost 704 million dollars and has bought Paktel Limited.

The official said China Mobiles takeover of Paktel is a promising move that is believed to bring life back to the company.Similarly, he said, Singtel which had been trying to enter the telecom sector has finally gotten successful by buying 30 per cent shares of Warid Telecom and has invested almost 758 million dollars.

Local operators have also been able to access funds from international capital markets and Mobilink has been fairly successful too in this regard, when the company completed 250 million bond offerings in late 2006.

Other cellular companies have also invested heavily in the right areas and narrowing the gap with market leaders, he said. Telecom companies have invested over 8 billion dollars during the last four years particularly the mobile sector whose investment share accounts for 73 per cent.

It is expected that the trend of investments may continue in the next five years because large potential markets still exist in Pakistan and all operators intend to grab their share. The telecom sector has emerged as the largest recipient of Foreign Direct Investment (FDI) during the last few years. Liberalisation and competition in the sector has compelled many companies to expand their infrastructure across the country. 

Cellular operators invested over $2bn in 2007


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## Neo

*Businessmen resist early closing of markets, shopping centres ​* 
Tuesday, January 08, 2008

ISLAMABAD: The Islamabad Chamber of Commerce and Industry (ICCI) and the traders community of the capital city on Monday requested the authorities not to force traders to close their shops in Islamabad between 6:00pm to 8:30pm.

The ICCI President Ijaz Abbasi, in a meeting with the trader associations representatives, said that Islamabad was the city of government servants who always visit markets in the evening for shopping and implementing the closure plan would be unjust. The government should not insist closing of shops between 6:00pm to 8:30pm. However, the traders should install energy savers in their business centres to avoid energy wastage. He added that before taking any decision, the authorities should take the stakeholders into confidence.

About closing of steel mills, Abbasi said that these should not be completely closed but should be notified to stop operation in the peak hours so as to avoid halt in manufacturing and increase in unemployment. In steel mills, on average there are 400 employees and keeping these mills closed would cause more unemployment and ultimately would deteriorate law and order situation, he said.

Furthermore the supply of gas to industry is either under load-shedding coupled with increase in gas tariff by 5 to 10 per cent and or low pressure further the gas supply to textile spinning mills in some areas has also been disconnected. Abbasi said that progress of trade and industry depends on constant supply of electricity; adding, load-shedding is causing loss of billions of rupees to trade and industry.

The business activities in the whole country have been affected owing to frequent power breakdowns resulting in exhausted work force, damage of machinery, and loss of precious working hours. He regretted that export orders are being delayed and production capacity was being negatively affected. He added that no doubt, matter of electricity load-shedding is being faced by all segments of the economy of the country; however, the time span of the load-shedding in various electricity distribution companies was discriminatory. It varies not only within the various electricity distribution companies but also varies from location to location as the priorities are being given to posh urban areas of the cities. The continued and unannounced breakdown of electricity harms the public appliances and affects the businessmen, traders and industries badly. Frequent power failures and fluctuating voltage has paralysed the industrial and commercial activities, which lowered the production and increased the cost of business. President ICCI stressed that under such circumstances, the government has to take up a comprehensive package of generating electricity on top priority basis. Construction of big dams like Kalabagh Dam, putting gas turbines, developing solar and wind energy were very essential steps to be taken soon, he stressed. 

Businessmen resist early closing of markets, shopping centres


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## Neo

*Estimates of water shortage revised​*
ISLAMABAD, Jan 7: The water shortage for Rabi crops has surged to 28 per cent  from the original 22 per cent  owing to continuous releases for power generation on the governments directive despite provincial protests that their crop output may be negatively affected.

Indus River System Authority (Irsa) Chairman Bashir Ahmed Dahar told reporters after a meeting of the advisory committee on Monday that overall shortage for the current Rabi season had increased to 28 per cent and Irsa would continue to release 18,000 cusecs of water to overcome the current national energy crisis probably until January 26.

He confirmed that provincial water requirements for irrigation and drinking stood at 10,000 cusec and an additional 8,000 cusec per day was being released for power generation. He also conceded that provincial objections to the releases were there but we received directives to cooperate and give additional water quantities for power generation.

As a result of these additional releases, the power companies were able to produce about 1200MW of electricity every day, reducing the electricity shortage by similar quantity. He said the provinces had demanded to discontinue additional water releases.

He said these measures were earlier worked out first at the ministry of water and power and then were approved at a meeting presided over by the caretaker prime minister. He said that Irsa had been assured that water releases would be reduced whenever the Wapda-Pepco authorities succeed in improving oil and gas shortage.

He agreed that enhanced water releases for power generation had been going on since December 25  much before the issue was brought before the advisory committee for approval. He said the wheat crop normally required watering for four times and this year this may be reduced to three times. The requirement of fourth watering would be overcome through rationing and better management.

He said storage in Tarbela dam currently stood at 0.88 MAF compared with 2.45 MAF at the same time last year but hoped the situation will improve by current rain pattern that was much delayed than usual circumstances. He said total inflows in Tarbela dam currently stood at 17,000 cusec and 10,000 cusec was being released against a downstream provincial requirement of 3,000 cusec. In contrast, inflows in Mangla were 5500 cusec but about 8000 cusec was being released, which was depleting the storage level.

Estimates of water shortage revised -DAWN - Top Stories; January 08, 2008


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## Neo

*Wheat sowing 8% less than target ​*
* Only 7.874 million hectares have been used for wheat sowing this year against the target of 8.578 million hectares 

By Ijaz Kakakhel

ISLAMABAD: Government is about 8 percent behind the wheat sowing targets set for the year 2007-08 and not a single province has been able to meet the annual targets. 

Two provinces, Punjab and NWFP have even failed to touch the last years crop and are behind one and five percent respectively, officials in the ministry of food, agriculture and livestock told Daily Times here on Monday. 

The MINFAL had set wheat sowing targets for the year 2007-08 at 8.578 million hectares while least year it was 7.89 million hectares, showing a 8.72 percent increase in the sowing areas of wheat. The sowing in Punjab was completed over an area of 6.203 million hectares while the target was 6.433 million hectares for the current year till December 22, 2007. The government was 4 percent behind in achieving the wheat sowing targets for the current year and achieved so for 96 percent targets. 

The Sindh province was behind four percent of its wheat sowing target of 982,000 hectares and up to January 2, 2008 it covered an area of 934,000 hectares. Last year Sindh had covered 885,000 hectares. Target for NWFP was set as 754,000 hectares and out of it 495,000 hector covered till December 1, 2007. The NWFP was 34 percent behind its current year wheat-sowing target. But in the NWFP the wheat-sowing period usually delayed due to its weather conditions, the officials maintained. 

The target for Sindh was 409,000 hectares and till December 3 2007, 242,000 hectares covered the wheat sowing target. Balochistan was 41 percent behind its wheat-sowing target. Last year the covered area for wheat sowing was 240,000 hectares. 

The government has fixed the total target for wheat sowing areas as 8.578 million hectares for current year 2007-08 for achieving 24 million tonnes. But so for the government is behind 8 percent of its current year target and covered 7.874 million hectares, the officials added. 

On contact the official spokesperson of MINFAL Qadir Bukhash Baloch told Daily Times that in Punjab and Sindh the wheat sowing period was continue till January 10. There are enough time for achieving the targets in both the provinces while in the NWFP the sowing period always delays, he maintained. He was confident that the wheat-sowing target would be achieved. 

About current spell of rain, he claimed that this was considered as gift of God as it was essential for rain-fed areas. The government achieved 2 million tonnes wheat from rain-fed areas and expressed the hope that it would be achieved easily if rains occur in future. 

He said the set targets of wheat was for Punjab 18.5 million tonnes, Sindh 3.2 million tonnes, NWFP 1.5 million tonnes and Balochistan 0.8 million tonnes in the current year. 

About other Rabi crops, he expressed the hope that all crops would be increased due to current spell of rains.

Daily Times - Leading News Resource of Pakistan


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## Neo

*8 projects of 1,667 MW achieve financial closure​*
ISLAMABAD: Eight power projects with a cumulative capacity of 1,667 MW have so far achieved financial closure, which is would be commissioned by the year 2010.

According to official sources, these projects have achieved financial closure under the 2002 Power Policy. They said out of these projects two new power projects have achieved financial closures by Mansha Group, namely Nishat Power Project and Nishat Chunian Power Project, of 200 MW capacity each. Earlier, the company signed Implementation Agreements and Power Purchase Agreements of both these projects in last quarter of 2007. The projects are being set up at District Kasur near Lahore. 

The sponsors of Nishat Power Project are Nishat Mills Limited, and those of Nishat Chunian Power Project are Nishat Chunian Limited, both owned by Mian Mohammad Mansha. The lenders of both projects are the consortium of commercial banks including Habib Bank Limited (HBL), Allied Bank Limited (ABL), United Bank Limited (UBL), Standard Chartered Bank (Pakistan) Limited (SCB) and Faysal Bank Limited (FBL) being Financial Advisors and Lead Arrangers. The estimated cost of both the projects are $204 million each and are targeted to be commissioned by June 2009 and December 2010, respectively.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Most of textile exports miss targets in July-November 2007-08​*
* Share of textile products in total export proceeds also fell to 61 percent, which normally stays around 65 percent

KARACHI: Export of most of textile products missed the targets in the first five months of current fiscal year by significant margins, speaking about the gravity of the prevailing crisis in this vital sector of the country.

Also, the share of textile products in the total export proceeds fell to 61 percent during the said period, which normally stays around 65 percent, according to official statistics.

Among all the exportable categories, the worrisome factor was the failure of value-added textile sector to achieve the set target in July-November 2007-08, which makes a bigger part in the foreign exchange earnings.

Details show that readymade garments export stood at $568 million against the target of $587 million during the July-November of current fiscal, knitwear export at $882 million against target of $940 million, bedwear at $786 million against target of $857 million.

Also, export of cotton yarn stood at $579 million against $595 million target, cotton fabrics at $758 million against $880 million target.

While few export items in the textile group met the target, however these have very nominal share in the overall export of this category.

Textile exports remained flat during the period under review as it stood at $4.487 billion against $4.510 billion the same period of last year, showing a negligible growth of 0.51 percent.

Textile exporters, commenting on the export performance of textile feared further deceleration in it because of intense competition as well as rising cost of production of these products, especially the recent hike in gas prices to hit blow to already depressed export.

Also, the chaos and violence after the assassination of Pakistan Peoples Party (PPP) Chairperson Benazir Bhutto last month would have very adverse implications for the future export growth of the textile products.

Already huge number of export orders could not be materialized due to collapse of law and order and disruption of communication network across the country following the death of Ms. Bhutto, which would be bringing down the export of textile products by a big margin, representatives of textile association felt.

They said that now the export orders are being diverted to other countries because of fragile law and order situation and instability in the country, which is keeping the foreign buyers at distance to visit the country and make future business deals.

Drawing a bleak picture for the sector in the coming days, exporters are fearful of post-election scenario as in view of growing tension between the political parties, the situation did not appear to be calming, which would be a bad omen for the export sector particularly textiles. It is worth mentioning that textile sector enjoyed Rs 30 billion as cash subsidy as well as others concessions on bank loan rates and export finance for the last two and half years, however all this could not help to revive its export. 

State Bank of Pakistan (SBP) has also cautioned in its quarterly report released on Saturday about further deceleration in textile export growth in the short terms. Keeping in view the large share of textile exports in total exports, this might translate into the deceleration of overall export growth as well, it stated.

Daily Times - Leading News Resource of Pakistan


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## Neo

*ECC to review power supply for industrial sector​*
* ECC likely to approve much-awaited IPI project worth $7.2bn 

ISLAMABAD: Economic Coordination Committee (ECC) of the Cabinet is expected to approve measures, leading to improved supply of power and water to the industrial sectors and wheat flour to the general public, official sources told Daily Times on Monday.

ECC would meet with the Caretaker Prime Minister, Muhammadmian Soomro in the chair and would review the overall economic situation in the country. 

The official said that the widening gap between power generation and power demand has compelled the authorities to announce closure of some of the important industrial sectors for power management purposes. 

Economic Indicators would also be reviewed with special focus on imports and exports and tax collection during the first half of the current fiscal year 2007-08. Tax and export authorities are facing difficult satiation and are examining to put additional effort to meet their annual targets. ECC would be informed about the measures being taken to meet the annual targets. 

Power and water being essential input for almost all the industries would be ensured so that export targets of the country would be met. 

The coal being most neglected sector would be utilised for power generation purposes. In this regard, the ECC is likely to approve indicative upfront tariff initiative for encouraging investment in coal-fired power plants in the country.

The government has decided to introduce the indicative upfront tariff for electricity generated through coal-fired power plants that would be based on feasibility studies presented by companies, the official said. 

National Electric Power Regulatory Authority (NEPRA) has proposed the indicative upfront tariff of electricity generated through coal-fired power plants and the other stakeholders have agreed in this regard.

According to sources, all stakeholders who attended the high level meeting last week agreed on the proposal of fixing upfront tariff for electricity generated through coal-fired power plants. Now the water and power ministry has decided to get approval of summary from the ECC of the Cabinet. 

Sources also said that the indicative upfront tariff would be made after keeping in view of the feasibility studies presented by different companies that would be interested to work in generating electricity through coal fired power plants. Sources said that government would also ensure that the tariff should not exceed the tariff in oil sector that is 12 cents at present. 

ECC is also expected to approve much-awaited Gas Sales Purchase Agreement (GSPA) of $7.2 billion Iran-Pakistan-India (IPI) gas pipeline project. The Steering Committee on IPI gas pipeline project that met on Tuesday in petroleum ministry has already approved the finalized draft of GSPA on IPI for formal approval in ECC meeting. 

ECC would also review the prices of essential items in the open market and at the utility stores, availability and stock position of the essential commodities and their expected demand in the months to come.

Daily Times - Leading News Resource of Pakistan


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## Neo

*MoU inked to boost foreign investment in Pakistan​*
KARACHI: The Pakistan Link, the biggest newspaper of Pakistani community in North America, and famous call centre and IT service provider company PhoneCost, have inked a memorandum of understanding (MoU) to boost foreign investment in Pakistan by setting up call centres and providing IT services in Karachi. Abdullah Butt, Chief Executive of PhoneCost and President of Association of Call Centres and Outsourcing (ACCO), and Arif Zafar Mansoori, President and Managing Director Pakistan Link, who is also National Director of Pakistan-American Leadership Centre, signed the MoU. 

Under the agreement, Pakistan Link along with PhoneCost would invest in Karachi for setting up modern call centres and BPO. These call centres will have a helpline for overseas Pakistanis through which they could get information for solution of their problems and lodge their complaints. The US and Canadian nationality holder Pakistanis will get information regarding Pakistan authorities and investment opportunities there under one window operation at these centres. ppi

Daily Times - Leading News Resource of Pakistan


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## Neo

*Petroleum sector suffers Rs 1bn loss following BBs assassination*​
ISLAMABAD: Ahsanullah Khan Caretaker Minister for Petroleum and Natural Resources said on Monday the petroleum industry suffered a loss of Rs 1 billion during countrywide protest following assassination of former Prime Minister Benazir Bhutto on December 27 in Rawalpindi.

Addressing a press conference, he said as an aftermath of December 27 incident, condensate from Zamzama and Bhit fields could not be lifted in a timely manner lowering the gas production by 150 mmcfd gas from these fields.

He said as the gas demand spiked high, Sui Northern Gas Pipelines Limited (SNGPL) also experienced partial supply disruption when two pipelines sabotage incidents (from December 15 and December 21 to 27) caused suspension of gas supply from Pirkoh-Loti fields reducing the gas supply by 50-55 mmcfd. 

The minister pointed out that extreme cold weather coupled with supply disruptions has compounded the gas supply demand situation forcing SNGPL to undertake load management to maintain the integrity of pipeline system and safeguard public life and property as much as possible. For the purpose, a well structured load management policy approved by ECC is already in place, being mindful of the socio-economic impact as well as safety concerns, the domestic and commercial consumers get top priority for the gas supply, he added.

Mr Khan said this year, due to an extreme cold weather, SNGPL has recorded a sharp increase in the gas consumption of domestic sector. 

The company does not have sufficient gas supplies available to meet additional demand, expected to last for four to six weeks. This year seasonal swing on SNGPL system has touched an unprecedented high level when the city load shot-up from normal day demand of 1,000 mmcfd to over 1,600 mmcfd, an increase of about 60 percent.

The minister pointed out that gas load management is not a new strategy for managing winter demand on SNGPL system. 

Given supply constraints in winter, SNGPL has, since 1983, singed all contracts for supply of gas to new consumers in industrial and power sectors on basis of nine months supply period while connections for captive power generation are provided gas on as and when available basis. 

During winters the gas supply remains disconnected to these consumers to meet enhanced demand of domestic sector. 

Therefore, all such consumers are fully aware of gas shortages during the winter months and as such, should have alternate fuel arrangement to run their units. Another undesirable dimension also surfaced this year when WAPDA despite having allocation of gas on nine months basis (from March to November), installed rental power plants at Sheikhupura and Bhikki on 12 months power supply contract without any backup fuel system. 

On gas disconnection, these power plants had to be shut down further aggravating the power crisis. 

Therefore, Ministry of Petroleum and natural Resources had to intervene and make arrangements for partial restoration of gas for these plants placing further strain on already stretched gas supplies.

He said SNGPL has contracts with Rousch for supply of 85 mmcfd, for 19 mmcfd, Guddu for 80 mmcfd and Liberty Power for 50 mmcfd on 12 months basis, which contractual obligations are being fully honoured. Talking about measures to arrest the situation, he said notwithstanding the contractual position and being fully cognizant of problems of power and industrial sectors, the ministry took a number of special measures to minimise the impact of gas shortage.

He said 25 mmcfd gas has been diverted from SSGC system to SNGPL out of which 10 mmcfd shall be supplied to rental power plants and 15 mmcfd to power plant at Faisalabad, Muzaffargarh and KAPCO as per priority of Ministry of Water and Power. This diversion will enable them to generate 100 MW of electricity. He said SNGPL will supply on best efforts basis about 2 to 3 mmcfd gas to Muzaffargarh and KAPCO power plants to facilitate their start up and will give at least 2-12 hours advance notice before curtailing gas supply to industrial units.

Mr Khan said industrial consumers who were allowed gas on 12 months basis prior to 1983 will continue to be supplied gas on 12 months basis and SNGPL and APTMA have mutually agreed to supply 90 mmcfd gas (50 percent of their demand). 

This will enable textile industry to run 50 percent of their units on three days rotational basis, which otherwise would not give gas supply under their agreement, he added. He said textile processing units having stentars machines will be allowed to use up to 20 percent of their contractual load and SNGPL will manage load after careful analysis of city load on daily basis so that load curtailment is done as an option of the last resort and that too, in a non discriminatory, fair and transparent manner.

All fertiliser units on SNGPL system have been asked to go on annual maintenance in a phased manner (Pak Arab - Multan from January 1-15 and Dawood Hercules - Sheikupura and Pak American - Daudkhel from January 15-31) to release gas to cater for additional gas requirements. He said this measure will increase 50-70 mmcfd gas supply which will be added to supplies of other priority sectors.

Responding to a question, he informed growth in Pakistans gas sector has been phenomenal during the last seven years as the transmission and distribution system expanded from 60,000 kms in 2000 to 93,000 kms in 2007 registering over 55 percent increase in network expansion. At the same time, total number of consumers also increased from 3.46 million in 2000 to 4.97 million in 2007 showing in increase of about 43 percent. 

The network was connecting 177 cities, town and villages in 2000, which has reached to over 2,550 cities, town and village, and increase of 117 percent. During the period, a total of Rs 65 billion was spent to expand the gas network.

With expansion of gas network to new areas, the gas consumption has also shown sharp increase form 2,100 mmcfd to 3,350 mmcfd showing an increase of 60 percent. app

Daily Times - Leading News Resource of Pakistan


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## Neo

*Bears stage comeback at KSE on dismal economic performance*​
KARACHI: Bearish sentiments prevailed in Karachi stock market on the first trading day of the week in the wake of profit taking after previous two sessions bull run, mainly heavy selling in the post- State Bank of Pakistan (SBP) Quarterly report on economic performance highlighting concern over inflation, export shortfall and prevailing law and order situation in the country. 

The KSE-100 index shed 96.49 points or 0.68 percent on Monday and closed at 14163.11 against previous sessions close of 14,259.60 points. The KSE-30 index closed at 16,703.86 points or 1.1 percent with a loss of 185.73 pts. 

The market turnover went down to 14.88 percent and traded 245.21 million shares as compared to 288.08 million shares in the previous session. The overall market capitalization went down to 0.64 percent to Rs 4.325 trillion compared to Rs 4.353 trillion in the previous session. Out of 374 companies, 107 closed in positive, 235 in negative while 32 remained unchanged. . 

Ahsan Mehanti, senior analyst at Shahzad Chamdia Securities said the market witnessed heavy selling after SBPs Quarterly Report on economic performance and due to concerns over reports about US media reports on direct intervention of US military in Pakistan, oil prices fall in international markets near $97 and prevailing law and order situation in the country. The KSE 100 Index opened in the green zone with positive note, but could not sustain more and end at 14163.11 point with a loss of 96.49 points. 

According to Mr. Mehnati trading activity was better as compared to the last trading session as the ready market volume stood at 245.216 million and Future market volume stands at 35.36 million shares. Atif Malik, analyst at J.S. Global Securities said the market remained negative throughout the session as at one point it shed 150 points but finally recovered some to settled at loss of 96 points.

Profit taking was witnessed in the market after two previous sessions gains in the market. The SBPs report put negative impact on the trading sentiment.

TRG Pakistan for the third consecutive session was the volume leader in the share market with 21.98 million shares traded. It lost 60 paisa to close at Rs 13.85 against its opening rate of Rs 14.45 per share. NIB Bank was traded 21.73 million shares as it closed at Rs 23.15 after gaining Rs 1.10 against opening of Rs 22.05. 

Bosicor Pakistans volumen remained at 19.53 million shares as it closed at Rs 21 after losing 40 paisa against its previous rate of Rs 20.60. Arif Habib Securitiess 13.68 million shares were traded as it closed Rs. 170.55 after losing Rs 1.80. staff report

*LSE sheds 42.58 pts*

LAHORE: The Lahore stock exchange (LSE) declined on Monday because of technical correction, however, the volume of the market remained more, analysts said.

The LSE 25-shares index lost 42.58 points to close at 4,503.13 against previous closing at 4,545.71. The volume of the market improved to 35.44 million shares, which was 4.33 million more than the previous volume of 31.1 million shares.

The market remained in red zone throughout the day with ups and downs and finally settled at the red zone, said analyst Irfan Saaed Chaudhry adding that it was a technical correction as the market could further decline in the coming days. A minor decline would be healthier for the market, the analyst opined.

Attock Refinery was the major gainer which added Rs 7.98 to close at Rs 257.30 against its opening of Rs 249.40. First Capital Equities added Rs 3.25 to close at Rs 71.80 against its opening of Rs 68.55 per share.

MCB was the major loser as it declined Rs 8.75 to close at Rs 390.15 against its opening at Rs 398.9. JOVC lost Rs 7.55 to close at Rs 143.85 against its opening at Rs 151.40. staff report

*ISE slumps 26.75 pts*

ISLAMABAD: The Islamabad stock market on Monday declined as the ISE-10 index shed 26.75 points to close at 2930.12 points from its previous level of 2956.87 points. 

Of the total 138 active companies, 36 climbed upward and 101 turned negative. However, total turnover was increased to 5.347 million shares from 3.779 million shares on previous day showing a total increase by 1.568 million share. 

Siemens Engineering was the top gainer. Its share value shot by Rs 47 to close at Rs 1739 after opening for Rs 1692. Attock Refinery was the second major gainer. Its share price was increased by Rs 7.4 to reach Rs 257.1 after opening for Rs 249.7.

Sitara Chemical was the major loser of the day, as its share price declined by Rs 11.95 to Rs 328 from Rs 339.95. Pakages limited remained as the second highest on the negative column, its share price declined by Rs 11 to reach at Rs 359 after opening for Rs 361. 

In terms of share volume Bosicor Pakistan remained on top with 0.2.354 million shares, while NIB Bank and Arif Habib Securities remained second and third with traded shares at 0.950 million and 0.424 million respectively. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan convinces US on IPI project*​
* Pakistan and Iran to sign GSPA next week 
* Country to save $1bn in terms of energy 
* Indias participation to affect pipelines diameter

ISLAMABAD: Pakistan has convinced the United States on the Iran-Pakistan-India (IPI) gas pipeline project as Pakistan and Iran will sign the Gas Sales Purchase Agreement (GSPA) next week, according to an official.

The officials told Daily Times on Monday that Pakistan had convinced the US over the fact that Pakistans energy demand was increasing and the country was having an energy crisis. 

$1 billion: He said Pakistan had argued before the US that many other countries were purchasing gas from Iran, and the $7 billion IPI project was essential for Pakistan to save around $1 billion in terms of energy. He said India had also been told that Pakistan needed energy to maintain the increase in its gross domestic product (GDP).

He said Pakistans reliance on the import of crude oil would decrease after the materialisation of the IPI project. Separately, Petroleum Minister Ahsanullah, Petroleum Secretary Farrukh Qayyum and Additional Secretary Haytullah Durrani told a news conference that Pakistan and Iran would sign the GSPA next week. 

The minister said that Pakistan would welcome India whenever it would join the IPI project, adding that Indias position on the project would be cleared by the end of January. 

He said the IPI project was feasible according to the Pakistani market and that 2.2 billion cubic feet of natural gas would be imported from Iran, out of which Pakistani share would be 1.05 billion cubic feet. He said if India did not join the project then the whole imported gas would be consumed in Pakistan. Petroleum Secretary Farrukh said that the price of Iranian gas would be linked with the Japan Crude Oil Cocktail. 

Diametre: He said if India became a party then a 56-inch diametre pipeline would be laid, otherwise it would be of 36-inch diameter. About the Turkmenistan-Afghanistan-Pakistan (TAP) gas pipeline project, the secretary said seven rounds of negotiations had been held over it in the past, and Pakistan was in contact with Turkmenistan. He said Turkmenistan would give a new date for negotiations on the TAP gas pipeline project by the end of January. zafar bhutta

Daily Times - Leading News Resource of Pakistan


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## Neo

*Growth rate to stay close to six percent ​* 
KARACHI (January 08 2008): The growth rate of Gross Domestic Product (GDP) in the current financial year (FY08) would be close to six percent, below 6.6 to 7.0 percent growth forecast in the first quarterly report of the State Bank of Pakistan.

The SBP report released on Saturday was written prior to mid-December and had, therefore, failed to capture the data of the fall in industrial output and trade activity following Benazir Bhutto's assassination

According to some knowledgeable economists, the SBP report released on Saturday was written prior to mid-December and had, therefore, failed to capture the data of the fall in industrial output and trade activity following Benazir Bhutto's assassination.

"If the GDP growth is close to six percent - it is not bad," say the economists. "What is more important for the economy is to grow between six and seven percent over the next 10 to 15 years ie for an extended period without causing a high incidence of inflation," they added.

"In the past, we have seen that growth of seven percent or more is not sustainable - as it generates inflation. Unless we improve our productivity it is not yet possible to sustain non-inflationary growth at 7 percent," they added.

"A silver lining is the productivity gain achieved in agriculture. For last three years we have seen higher yields for most crops. In fact in FY07 a 10-year high was achieved. This can be directly correlated with the higher availability of bank credit to agriculture sector," the economists explained.

Besides, non-inflationary growth of over six percent on a long-term basis is a key pre-requisite to have macroeconomic stability. This requires reforms. For the last two years the pace of reform process has slowed down and there has been no major initiative, the economists emphasised.

Further, it is essential to set in motion development of the financial sector capital market. This is now overdue. Without this, no infrastructure development is possible. The capital market must provide the funding for investment rather than just be a conduit for speculation. Infrastructure projects need long term capital. Both the Securities and Exchange rules and the tax system simultaneously need to be attuned towards this goal, the economists argued. "Progress in these areas has been painfully slow" they pointed out.

And, third the progress towards documentation of the economy needs to be further expedited, as part of the tax reforms process. "Unless we create the required fiscal space to generate funds for investment in education and health, sustainable development on a long-term basis is just not possible," they added. At present, both the services sector and agriculture are lightly taxed while industry, corporate sector and fixed income taxpayers are bearing the brunt.

They said the Central bank has rightly called for immediate tackling of the twin deficits - fiscal and current account. The fall in consumer goods imports has been across the board but the sudden jump in oil import bill from October onwards has diminished the results which were expected from a tight monetary stance. The slowdown in aggregate demand for imports was expected - but the oil bill has nullified the expected improvement in bridging the trade gap, they added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*ECC to give green signal to ministry for two IPI deals *​ 
ISLAMABAD (January 08 2008): The Economic Coordination Committee (ECC) of the Cabinet in it meeting here on Tuesday is going to give green signal to the Ministry of Petroleum (MoP) for signing 'Sale/Purchase Agreement' and Implementation Agreement (IA) with Iran for the Iran-Pakistan-India (IPI) gas pipeline.

The ECC approval would allow the MoP to enter the next phase of the project of laying down the pipeline. The ECC signal would also clear the project for the government to seek financing from the international donors. Finance Ministry will brief the ECC on likely sources for financing the project.

Sources said that the project was being pushed forward on fast track basis between Iran and Pakistan and its assessment and financial requirements were also being worked out on bilateral basis. They said that India was no more a party to the project, and Pakistan was not interested to take it on board, at least for the present. The MoP will also brief the ECC on the work completed on the project between Iran and Pakistan, besides submitting its timeframe for the implementation phase.

Officials claim that India is no more on board for the project, but the ECC agenda, made available to Business Recorder for January 8 meeting still lists the project as 'Iran-Pakistan-India gas pipeline project'. Wheat crisis will be another hot topic for the ECC meeting. Ministry of Food, Agriculture and Livestock (Minfal) Secretary will brief the committee on wheat stocks and availability of flour (atta) to the consumers.

The ECC will also be given briefing by State Bank of Pakistan (SBP) Governor Dr Shamshad Akhtar on current account deficit. She would also brief the ECC on Pakistan's exports and imports trend in the first half of the year and the overall economic situation and prospects of economic growth in the second half of the current fiscal year. She will submit to the ECC data on economic indicators.

Other agenda items of the ECC meeting include Sensitive Price Indicator (SPI) for the week ended on January 3, position papers on cement, edible oil/ghee and sugar industry situation/prices. It also includes forecasting of prices of essential items of daily use. Analysis of regional prices of critical consumer items.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*8000 cusecs water release for power generation to continue: Irsa ​* 
ISLAMABAD (January 08 2008): The Indus River System Authority (Irsa) has decided that release of 8000 cusecs additional water for electricity generation would continue despite anticipation that the country could face a 28 percent water shortage in Rabi season, instead of earlier estimated 22 percent.

The decision was taken at a meeting of Irsa advisory committee here on Monday, with Sindh Member and Irsa Chairman Bashir Ahmad Dahar in the chair. The Irsa decision came in the backdrop of various complaints by provinces that Wapda had released more water for power generation which, according to the provinces, could deprive them of water for irrigation later in February and March when the wheat crop would need more water. Keeping this in view, the provinces had opposed the release of additional water from the reservoirs, said Irsa Chairman.

This was the second meeting of the advisory committee in the current Rabi season, which discussed the current power crisis, as Wapda had sought more water releases for generating the much-needed electricity to overcome the shortage, at least to some extent.

Talking to reporters after the meeting, Bashir said that Wapda would generate 1200 MW electricity with the additional water release from Tarbela and Mangla dams from December 25. "The country needs not more than 10,000 cusecs water for irrigation and drinking purposes. We release 18,000 cusecs in order to help Wapda generate power," he said.

He said that Irsa's first priority is to ensure water for irrigation, and not power generation. "We have informed Wapda that not enough water is available in Tarbela and Mangla dams. The provinces are of the view that additional water should not be released from storages, while Wapda is facing an acute power shortage," he said. So far, in the Rabi season, Punjab and Sindh have shared 16 percent and 15 percent water shortage, respectively, he added.

He said that Irsa had ensured water availability for wheat sowing both in Punjab and Sindh. The two provinces informed the meeting that they had completed wheat sowing. The wheat crop, generally, does not need water at this time, he added.

Dahar said that rains spell started late this year. Tarbela had 0.88 MAF water this year compared to 2.45 MAF last year. He said that it would be Irsa's priority that at least one MAF water should be available in Tarbela by January 28.

For this purpose, around 7000 cusecs water is being stored in Tarbela as the total intake of the dam is 17,000 cusecs. Around 8,000 cusecs water is being released from Mangla, he added. The water level in Mangla is 1106.10 ft and the dam dead level is 1040 feet, he added.

The advisory committee also decided that Irsa would review the situation on daily basis. The additional water release could be stopped if thermal power generation situation improved in the coming days, he said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Load-shedding to be eliminated in 2010: PEPCO adviser ​* 
Wednesday, January 09, 2008

LAHORE: Pakistan Electric Power Company (PEPCO) Adviser Saleem Arif has said power outages will decrease in a weeks time as emergency steps are being taken to secure 200 to 250 megawatts of electricity by ensuring supply of oil to some of the thermal units.

He, however, sought the help of business community at the time of national crisis due to which the whole nation was suffering. Speaking at the Lahore Chamber of Commerce and Industry (LCCI) on Tuesday, the PEPCO adviser said the shortage of gas and the incidents after the assassination of PPP chairperson Benazir Bhutto were the major causes of acute shortage of power in the country.

He said low release of water from Mangla also curtailed availability of electricity from 3,600MW to 1,200MW. LCCI President Mohammad Ali Mian, Lahore Electric Supply Co Chief Executive Akram Arian, LCCI Vice President Shafqat Saeed Piracha, former senior vice president Sohail Lashari, former vice presidents Shahzad Ali Malik and Sheikh Mohammad Arshad also spoke on the occasion.

The PEPCO adviser in consultation with the LCCI president constituted two committees to manage the current power crisis. One committee will deal with load management while the other will play a role in policy-making along with the PEPCO.

A number of options including alternate day holiday for the industry and early closure of shopping malls came under discussion. In his briefing, he said the government had allowed the setting up of a 430MW thermal power station in Nandipur, which would be constructed in collaboration with a Chinese firm for which the letter of intent (LoI) had already been issued.

The PEPCO adviser said priority was being given to the industry and agriculture as both were the lifeline of the economy. Saleem Arif informed the participants of the meeting that seven to eight new power stations were coming up in near future which would provide relief to the industry, adding in the year 2010 load-shedding would be completely eliminated.

He urged the business community to adopt power conservation measures to ensure availability of required electricity to their industries. Speaking on the occasion, LCCI President Mohammad Ali Mian said the trade and industry was aware of the acute shortage of electricity and also understood the need for load-shedding.

What the industry actually desires is that the industry be assured uninterrupted power supply for sufficient time to ensure completion of most of the production processes. The schedule provided to the industry should be strictly adhered to.

He said lopsided and unplanned shutdowns had resulted in closure of almost all the industries, which was a matter of great concern for the LCCI. We may point out that reduced but planned power supply will salvage some production.

He said the country would suffer production losses which would be reflected in further pressure on exports and would led to increased imports. Mohammad Ali Mian was of the view that the government should launch a campaign in the media to give a true picture of the electricity situation to the masses so that undue usage of power could be controlled.

LCCI Vice President Shafqat Saeed Piracha said the severe energy crisis has now started taking its toll as more than 600 industrial units have so far stopped production and many more are on the verge of closure. He called for measures to control line losses and improve the efficiency of the system.

Load-shedding to be eliminated in 2010: PEPCO adviser


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## Neo

*SECP registered 4,841 companies in 2007 ​* 
Wednesday, January 09, 2008

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) registered 836 companies during the last quarter of calendar year 2007, said a news statement issued by the commission on Tuesday.

During the full calendar year 2007, a total of 4,841 companies were registered which may be seen in comparison with only 942 companies registered during calendar year 1999. Total corporate portfolio as on December 31, 2007 reached 50,847 registered companies. The new incorporation during the months of October, November and December, 2007 were 233, 348 and 255 companies, respectively.

Of 836 companies registered during the quarter, 819 companies were limited by shares, comprising of 22 public unlisted companies, 761 private companies and 36 single member companies. In addition, eight foreign companies and nine associations not-for-profit were also registered. Total authorised capital and paid-up capital of the 836 companies limited by shares registered during the quarter amounted to Rs8.25 billion and Rs2.18 billion respectively.

Company Registration Office (CRO) Lahore incorporated 299 companies, CRO Karachi 238 companies and CRO Islamabad registered 191 companies. CRO Multan, Faisalabad, Peshawar, Quetta, and Sukkur registered 36, 30, 29, 11 and 2 companies, respectively. The highest number of company incorporation was witnessed in the services sector comprising of 147 companies, followed by 116 in trading sector, 62 in tourism sector, 56 each in construction and communication sector, 42 in information technology, 35 in broadcasting and telecasting, and 30 in textile sector.

SECP registered 4,841 companies in 2007


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## Neo

*Services sector leads registered companies​*
KARACHI, Jan 8: The Securities and Exchange Commission of Pakistan (SECP) announced on Tuesday that a total of 836 companies had been registered during the final quarter of the calendar year 2007, the major chunk of which fell in the services sector.

The commission appeared to take pride in having expanded the corporate portfolio to 50,847 registered companies and bringing a considerably large number of 4,841 companies under the corporate fold. Be that as it may, two important points merit attention.

One, that among the companies registered in 4Q07, the largest number of 147 fell in the services category, which was almost five times, the 30 companies that entered the textile sector. An indicator, perhaps, of the worrisome trend of entrepreneurs to shy away from long-term objective of putting money in setting up industries, in favour of a quick wrap and pack services sector.

And second that during the year, only 14 of the 4,841 registered companies sought listing at the stock exchanges. The oft repeated reasons being no tax incentive for a listed company over an unlisted entity and the hassle of compliance by the former with the complicated and laborious sections of the code of corporate governance.

Companies registered by the SECP during 4Q07 on other counters also portray an interesting trend: The services sector was followed by the trading sector, which registered 116 new companies; 62 companies were incorporated in tourism sector, 56 each in construction and communication, 42 in information technology, 35 in broadcasting and telecasting and last and the least 30 in textile sector.

The commission observed that of the 836 companies registered during the quarter, 819 were limited by shares, comprising 22 public unlisted companies, 761 private companies and 36 single member companies. In addition, eight foreign companies and nine associations not-for-profit were also registered.

Aggregate authorised and paid-up capital of the 836 companies limited by shares registered during the quarter amounted to Rs8.25 billion and Rs2.18 billion, respectively.

The SECP encourages corporatisation of businesses to contribute towards the progressive development of the economy and healthy growth of corporate sector of the country, the commission declared in a statement issued on Tuesday.

It might be difficult to dispute that noble objective of the SECP. But being the front line regulator, the onus of pleading the case with the government for grant of incentives for larger number of registered companies to seek listing at the stock exchanges also falls on the commission.

A quick glance back to June 30, 2004 shows registered companies then totalled 43,700 which have increased by a huge number of 7,147 to 50,847 today. But for the investors in equities that is not of much moment for only 59 of those offered shares to the public including 14 during 2007.

Let the commission take upon itself the task of broadening the base of the equity market. Coaxing entrepreneurs to have faith in the motherland and invest in industrial sector could be left to the government. But for the government that perhaps would have to wait until more pressing issues of governance have been successfully addressed.

Services sector leads registered companies -DAWN - Business; January 09, 2008


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## Neo

*ICCI rejects western economists report ​*
ISLAMABAD: Chief of Islamabad Chamber of Commerce and Industry (ICCI) on Tuesday condemned the report by some Western economists that Pakistan was the most dangerous place in the world. 

The ICCI president Ijaz Abbasi expressed these views during a meeting with the members of Lions Club, Islamabad. He said that Pakistan is the Worlds second most populous Muslim country with the proud tradition of tolerance and moderation. Pakistanis is among the most favorite nations of the world due to their kind hospitality and the act of any individual not counts the act of the nation. 

The ICCI chief stressed the need that in such circumstances the role of commercial attachés is very important to portray the real picture of Pakistan abroad. Pakistani commercial attachés in embassies abroad would have to change their attitude from pushing papers to pushing real goods. The government would have to work hard in getting the market access and a level playing field in major countries and regions. The attachés have to explore the possibilities in joining various preferential trading arrangements (PTAs), the government had to enter into bilateral negotiations at all levels for Free Trade Agreements (FTA). 

The president said that international environment was becoming highly competitive, therefore, this was a wake up call for exporters. They would have to play the leading role while the government should play the role of facilitator. With joint efforts we can transform Pakistan into an export-oriented country. Export is our future. Let us build our future by working side by side, Mr Abbasi maintained.

Daily Times - Leading News Resource of Pakistan


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## Neo

*CDWP to approve 17 projects worth Rs 15.105bn on 12th​*
ISLAMABAD: The Central Development Working Party (CWDP) is likely to recommend and take up 17 developmental projects worth Rs 15.105 billion with Foreign Exchange Component (FEC) of Rs 8.430 billion in nine sectors at its meeting scheduled to be held on January 12. 

Deputy Chairman, Planning Commission, Engr Dr Akram Sheikh will preside over the meeting, which would consider projects in nine sectors including, water resources, governance, physical planning and housing (PP&H), social welfare, health, devolution and area development, manpower, transport and communication, industry and commerce. 

The CDWP can only approve projects costing up to Rs 500 million and the projects costing above this limit are approved by the Executive Committee of the National Economic Council (ECNEC), so the CDWP can recommend those projects to ECNEC for further approval if a project cost is above Rs 500 million. 

The forthcoming CDWP meeting will consider projects of national importance worth Rs 15.105 billion. The CDWP agenda shows the PP&H sector having four projects, worth Rs 9.622 billion with FEC of Rs 7.518 billion. The projects are; construction of south west waste water treatment plant, Lahore worth Rs 9.351 billion with FEC of Rs 7.518 billion, P/1 of LED screen at Jinnah Convention Center Islamabad worth Rs 82.015 million, construction of accommodation for 2-wing Chenab rangers at Ratta Arian, Sialkot worth Rs 113.663 million and construction of CC Blocks, surface drains and brick pavement work in Eid Gah (Matiari Town) public park (Shah Alam) Taluka Matiari Saeedabad and Hala worth Rs 76 million. 

The ministry of industry and commerce has proposed a single project namely, development of infrastructure in various estates of Sindh Industrial Trading Estates Ltd worth Rs 2 billion. The water resources also have a single project, rehabilitation of Nari district Sibi worth Rs 100.915 million. The governance sector project is strengthening of financial accountability by supporting the NWFP public accounts committee (PAC) and PAC cell of provincial assembly of NWFP worth Rs 26.268 million having FEC $23.88 million.

The CDWP agenda further reveals a single project for social welfare sector, preparation of social protection project and capacity building of M/O social welfare and special education and Pakistan Baitul-Mal worth Rs 59.400 million and all is included in FEC. The only project of health sector is for the establishment of cardiac surgery facility at PIMS, Islamabad (revised) worth Rs 1.235 billion. 

The agenda further reveals that the devolution and area development sector consisted of a single project namely Khyber Area Development Project (Revised) worth Rs 901.740 million with FEC Rs 829.130 million. 

The manpower sector consists of five developmental projects worth Rs 555.772 million and transport and communication sector having two projects worth Rs 602.772 million. 

Earlier, the CDWP meeting scheduled to be held on January 5 but was rescheduled due to political turmoil after assassination of former Prime Minister Benazir Bhutto on December 27, 2007. The meeting has been rescheduled for 12 th of this month but it is likely that the agenda for coming meeting will be revised today (Wednesday) which would include some other important developmental projects in the agenda.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Textile registers only two percent growth in first quarter ​*
KARACHI (January 09 2008): Textile industry, the largest sector having a 65 percent share in the country's exports, shows a dismal performance by registering only two percent growth during the first quarter of the current fiscal year as compared to the 14.3 percent growth during the same period of the previous year.

The reasons behind the decline in the growth are said to be high cost of doing business and a shortfall in cotton crop during the current fiscal. The textile is an important sector of large scale manufacturing (LSM), accounting for about one-third of aggregate LSM, but it is apprehended that the LSM target for the current fiscal year might be missed.

The State Bank Pakistan statistics show that textile sector growth is some 12.3 percent lower as compared to the growth of July-September of 2008 fiscal year.

This slowdown has also caused a negative impact on this sector's exports, which have increased by only 0.5 percent in the first quarter of 2008 fiscal year as compared to a raise of 2.5 percent in the same period of the previous year.

"The current weakness in textile sector appears to be a continuation of the pattern prevailing in the industry that a good year of performance is followed by a relatively poor performance, at least during the initial months of fiscal years," SBP said in its first quarterly report.

The SBP also confirmed that a lackluster performance of textile sub-group was disappointing, mainly due to a shortfall in cotton production as well as a weak external demand. Moreover, weakness in the production of ginned cotton and cotton cloth also reflects the smaller crop, shift to production of synthetic fabrics, is not part of the LSM data, also affected the growth.

The production of cotton cloth declined by 1.2 percent during July-September of 2008 fiscal as against 20.3 percent increased in production seen in the same period of 2007 fiscal year.

The government has set a target of 14.12 million cotton bales for the current fiscal year, but the traders are expecting that it would hover around 12 million bales. This performance is also consistent with the 28.4 percent fall in the exports of cotton fabrics during the first quarter in contrast with a rise of 103.8 percent in the exports of synthetic textiles during this period. The high cost of doing business is another major behind slow growth of textile sector.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Power crisis will ease within week' ​* 
LAHORE (January 09 2008): The Advisor of Pakistan Electric Power Company (Pepco), Saleem Arif, has said that power crisis would eased within week, as emergency steps are being taken to secure 200MW to 250 MW electricity by ensuring supply of oil to some of the thermal units.

Addressing a Lahore Chamber of Commerce and Industry (LCCI) meeting here on Tuesday, he requested the business community to help government at this crucial stage to deal the crisis. LCCI President Mohammad Ali Mian, Chief Executive Lesco Akram Arian, Vice President Shafqat Saeed Piracha, Sohail Lashari, Shahzad Ali Malik and Sheikh Mohammad Arshad were also present on the occasion.

The Pepco Advisor in consultation with LCCI President Mohammad Ali Mian constituted two committees to manage ongoing power crisis. One of the committees will deal with load management, while the other will collaborate with Pepco in policy making.

A number of options including alternate day holiday for the industry and early closure of shopping malls also came under discussion. Briefing the participants, Pepco Advisor attribute the worst crisis of power to shortage of gas and violence and rioting in the country in aftermath of Benazir Bhutto's assassination.

Saleem Arif said that the release of less water from Mangla also curtailed the availability of electricity from 3600 MW to 1200 MW. He said the government has allowed a new 430 MW thermal power station in Nandipur that would be put up in collaboration with a Chinese firm for which letter of interest has already been issued.

He said that priority was being given to the industry and the agriculture, as both are lifeline to the economy of the country. He informed the participants that as many as seven to eight new power stations are coming up in near future that would provide relief to the industry, adding that by 2010 load shedding will be eliminated completely.

He urged the business community to adopt power conservation measures to ensure availability of required power to their industries. LCCI President Mohammad Ali Mian said that trade and industry is aware of the acute shortage of electricity.

It also understands the need for load shedding. "What the industry actually desires is that the industry be assured uninterrupted power supply for sufficient time to ensure completion of most production processes" he added. The schedule provided to the industry should be strictly adhered and unscheduled breakdowns should be curtailed, he emphasised.

The lopsided and unplanned shut downs have resulted in closure of almost all industries that is a matter of great concern for LCCI, he said adding that reduced but planned power supply would mitigate industrial production problems.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Warid crosses 10 million subscribers mark ​*
ISLAMABAD (January 09 2008): Warid Telecom has crossed the 10 million subscribers mark in the country. The company has invested over $150 million (Shs255 billion) into its operations and plans to take its total investment in network, services delivery and manpower to over $400 million (Shs680 billion) before 2010.

The company is simultaneously rolling out its network in Congo Brazzaville and also scheduled to be launched by April this year. In 2005, Warid also launched its telecommunication services in Pakistan using the same brand name. Within about three months of its launch Warid Pakistan claims to have attracted more than 1 million service users, a private channel reported.

Warid Telecom next week, plans to unveil the company to the public through a live feed on television. In September last year, Warid one of the three new telecommunication players tested the effectiveness of its network and announced the commercial launch anytime.

The company officials said, it would launch its services as soon as the entire infrastructure is ready. Telecommunication market analysts have predicted the prices of telecommunication services to dive further from the current level once Warid and other Telecom giants start their commercial operations this year.

The Telecom companies besides remitting close to Shs300 billion to the treasury in taxes, are also providing quality service to the subscribers. The entry of new mobile subscribers could also see the amount of taxes from the telecommunication sector to double in less than 5 years.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Coal-fired power plants ​* 
Upfront tariff decision on 11th

Thursday, January 10, 2008

KARACHI: A high-level government meeting on Friday will decide the tariff for coal-fired power plants as the country struggles to cope with a worsening energy crisis, The News has learnt.

The meeting to be attended by the chairmen of Water and Power Development Authority (WAPDA), Pakistan Electric Power Company (PEPCO), National Electric Power Regulatory Authority (NEPRA) and officials of the water and power ministry will be another attempt at solving the contentious issue of upfront tariff.

Lets hope something good is pulled out of this meeting, said a source aware of the agenda of the meeting. An upfront tariff of a little over 11 cents per kilowatt hour wont be bad in present circumstances.

But the NEPRA has already ruled out the possibility of fixing an upfront tariff for electricity produced from coal on the ground that there have been no feasibility studies available to ascertain that.

It continues to stick to the argument that the regulatory body has not received even a single substantial study that could pave the way for utilisation of the vast coal reserves in Sindh estimated at 175 billion tons.

But officials in the Sindh government point out that in 2003-04 a leading German energy firm RWE in its feasibility study found the relevant tariff between seven and 11 cents and also back in the 90s an American expert was commissioned by the government to conduct research.

The Sindh Coal Authority (SCA) has urged the federal government to fix an upfront tariff of at least eight cents per kwh for energy produced from coal-fired power plants. But that was before oil prices surged to $100 per barrel.

Eleven cents is nothing, considering a saving of $700 million in terms of fuel substitution, said a source involved with the proposed $2.2 billion coal-fired power plant of Hassan Associates. Its nothing, considering 14 cents given to oil-based power plants.

An upfront tariff against a competitive bidding could help attract foreign investors, he said arguing unless better rate of return was offered there was no point in investing in Pakistani market.

We have to give them some incentive, something concrete otherwise I dont think anyone will find their investments feasible, an official of the SCA seconded the reason, recalling that a Chinese company had backed off a billion-dollar project after failing to get a reasonable power tariff.

Shenhua Group Corporation of China (SGCC) was disallowed 5.7 cents per kwh when it was days away from starting work on the power plant that would have marked first-time usage of Thar coal reserves since they were discovered in 1992.

Coal-fired power plants


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*US keen to develop industrial estates in FATA ​* 
Thursday, January 10, 2008

ISLAMABAD: The US Embassys Counsellor for Economic and Commercial Affairs, Amy E Holman has said that the USA would start working on infrastructure development in FATA which was one of the major bottlenecks in the establishment of industrial estates in the area.

Talking to Islamabad Chamber of Commerce and Industry (ICCI) President Ijaz Abbasi on Wednesday, she admitted that Pakistan possessed a great strategic importance in the region. She stressed that Washington was keen to enhance bilateral trade with Islamabad and added that through exploiting the strategic importance of Pakistan, the US could increase trade relations with the Central Asian states.

She also stressed the political stability in the country in order to gain economic stability. Holman mentioned that Pakistan was an important ally in war against terrorism. Answering a question about visa issuance, she said that visas would be granted to genuine businessmen after clearance from the State Department.

America funded $750 million for power development projects and was also working for data protection, she added. The commercial counsellors mentioned that the US was keen to export Pakistani cotton, special machinery, animal or vegetable fat, general machinery, fertilizer, transport equipment, organic chemicals and power generating machinery and equipment.

Earlier President ICCI Ijaz Abbasi emphasised the importance of economic relationship and pledged to work to expand bilateral trade and investment opportunities. He suggested starting the 10-year education programme for above 50 per cent population of Pakistan. He expressed his desire to facilitate the business community and urged to enhance the bilateral trade. Abbasi mentioned that major items of export to USA were textile yarn and fabrics, apparel and clothing accessories, leather and leather goods, surgical instruments and sports goods. 

US keen to develop industrial estates in FATA


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*CAA chalks out $3.5bn airport cities plan ​* 
Thursday, January 10, 2008

KARACHI: Director General of Civil Aviation Authority (CAA), Farooq Rahmatullah has revealed that the CAA is looking to invest $3.5 billion to construct airport cities offering facilities like eateries, shopping centres, entertainment ventures, international hotels and business centres, apartments etc.

Talking to The News after after inaugurating the third Makro-Habib wholesale store at Shahra Faisal near Star Gate on Wednesday, he said that the CAA has arranged to facilitate proper infrastructure such as electricity, water, gas and roads and the air port city project has international planners working on it which is yet at its initial planning stage. 

The DG further informed that such a city would be initially built in Karachi and then similar projects would be replicated around Lahore and Islamabad airports to commercialise the vast number of lands surrounding them. 

Rahmatullah also revealed to The News that an airport express train is being planned for which would take passengers directly from the airport to the city and cantt stations with an approximate travelling time of 7 to 8 minutes.

He said that the feasibility report for both the projects are being worked upon and it would take about 15 years for the venture to materialize in any form. He added that the Makro stores being introduced in Pakistan are ideally in line with their strategies and therefore he offers them complete support.

Regarding the political situation he said that the countrys history is full of wars and martial laws but the country has continued to grow and therefore he is optimistic about the future as whatever the circumstances are people strive to improve and achieve success.

Meanwhile inaugurating the third Makro- Habib wholesale store near Star Gate Farooq Rahmatullah said that with the increased focus worldwide by civil aviation bodies on revenue generation, activities based on commercial operations and effective use of real estate within and around airports are in practice.

He said that the trends in CAA Pakistan are also shifting towards exploring this aspect of revenue generation and this is the first step towards achieving the milestone.

CAA chalks out $3.5bn airport cities plan


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*Payment to OMCs: ECC approves govts guarantee to arrange Rs 20bn​*
ISLAMABAD: Economic Coordination Committee (ECC) of the cabinet has approved the government of Pakistan guarantee for arranging Rs 20 billion from the local commercial banks to pay price differential claims to oil marketing companies (OMCs).

Official sources told Daily Times here Wednesday that the government had to owe Rs 41 billion to OMCs in term of differential claims to cap the oil prices due to rise in the prices in international markets. 

Sources said that out of total amount of Rs 41 billion in terms of price differential claims the government has paid Rs 12 billion to Pakistan State Oil (PSO) and Rs 6 billion to Shell. Sources said that commercial banks would now arrange Rs 15 billion for PSO and Rs 5 billion for Shell on the guarantee of government approved in ECC meeting held on Tuesday. 

The official said that government had anticipated Rs 25 billion subsidy in the beginning of the current financial year but it went up due to capping of the prices of petroleum products in the country despite hike in prices in intentional market and added that the amount of price differentia claims had reached to Rs 41 billion so far.

He said that for provision of relief to common men every month, the government is providing a subsidy of Rs14.5 billion out of which Rs13.5 billion per month on diesel prices which is 93 percent of the total subsidy. He said that the government is providing a subsidy of Rs18.5 per liter on Kerosene oil and Rs 17.20 per liter on diesel to cap the oil prices in the country.

Since January 16, 2007 to December 15, 2007, the prices of crude oil in the international market increased by 76.4 percent, diesel up by 68.1 percent and prices of Kerosene oil went up by 69.7 percent but the prices in the country remained frozen, the official added.

He said that the prices in international market since May 2004 until December 15, 2007 saw a rise as diesel 179 percent and the Kerosene oil went up by 175 percent. Contrary to the rise in prices in international market, he said that domestic prices of petrol went up only by 45 percent, diesel prices by 55 percent, and Kerosene oil prices were increased by 47 percent only. The last adjustment in oil prices was made in January 16, 2007, when the government reduced the prices of petrol by Rs 4 per liter and diesel by Rs 1 per liter.

Daily Times - Leading News Resource of Pakistan


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*USA eager to enhance trade ties with Pakistan*​
ISLAMABAD: The USA Embassy Counselor for Economic and Commercial Affairs, Amy E. Holman has said the USA is keen to enhance bilateral trade with Pakistan and provide funding for improvement of latters infrastructure.

Talking to the President of Islamabad Chamber of Commerce and Industry (ICCI) Ijaz Abbasi and SVP Munawar Iqbal here on Wednesday, she said Pakistan is progressive developing country and governments policies for economic growth are appreciative. 

Pakistan has strategic importance and USA can increase trade relations with Central Asian Countries through it. She mentioned that economic stability needs political stability. 

Answering to question about visa issuance, she said visa would be granted to the genuine businessman after clearance of the state department, process is slow but the department can send trade delegations to the USA for the enhancement of mutual trade relations. She informed that the USA has funded $750 million for power development projects. They are also working for data protection and want to see the incensement in tax revenues.

Daily Times - Leading News Resource of Pakistan


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*Steps to minimise loadshedding: gas supply to captive power plants to be reduced ​*
ISLAMABAD (January 10 2008): The Power System Operation Committee (PSOC), constituted by the Ministry of Water and Power, has taken several measures to reduce load shedding, of which top on the list is curtailing of gas supply to captive power plants (CPPs) using RFO and diesel, official sources told Business Recorder here on Wednesday.

The committee comprises senior officials of the Ministry of Water and Power, Pepco, NTDC, SNGPL, SSGC, PSO and Indus River System Authority (Irsa). While reviewing power position, the committee was informed that in winter months (especially December-February) hydroelectric generation is based on Irsa water availability for Rabi.

Irsa's adjusted outflow from Tarbela was 2500 cusecs (average 560 MW) during second ten days' period of December 2007, which was expected to reduce to 6600 cusecs (average 154 MW) during second ten days' period of January 2008. The adjusted outflows would pick up again in February 2008.

The committee noted with concern that reduction in generation from Tarbela from its full capacity of 3748 MW to 154 in second ten days of January would not only aggravate the power supply gap but would also deprive the grid of much-needed support to maintain frequency and voltage essential for system stability. With reduced outflows, the generation from Ghazi Brotha with a capacity of 1450 MW would also cease.

PSOC Member from Irsa clarified that outflows were ascertained keeping in view the demand of the provinces, which in turn depended on canal withdrawal. Furthermore, the outflows this year had been affected by low level of water in reservoir which at 1400 feet was lower than 1500 feet last year.

The committee proposed that the option of increasing outflows at Tarbela in January through storage of water at Chashma barrage be considered for future use. The committee was informed that it would be on outage for inspection and maintenance in January and therefore the proposed option could not be implemented, sources said. They said that the committee also discussed provision of gas supply to thermal power stations.

The committee, after detailed discussion, directed Irsa to reschedule the outages of Chashma barrage for inspection and maintenance to allow increased water flows through Tarbela in January and give at least 48 hours' notice before any lower adjustments in outflows through Tarbela and Mangla to avoid any national grid collapse.

Sources said the committee also decided that as CPPs operate on dual fuel, they can meet their demand by using RFO and diesel. So, SNGPL should curtail 371 MMCFD gas to them and divert it for use in power plants. SNGPL should divert gas allocations of Techna IPP (40 MMCFD) and Chichoki Mallian (90 MMCFD) which are not currently utilised by Kapco and rental power plants.

SNGPL should supply 12 MMCFD gas to Guddu Thermal Power Station (GTPS) Faisalabad, if the same supply is not available during off peak hours. SSGC should spare 12 MMCFD gas and divert to SNGPL for supply to GTPS Faisalabad.

SSGC should reduce 10 MMCFD gas to JPCL and divert to Kotri to further reduce 10-20 MMCFD to JPCL without imposition of penalty on "supply or pay" conditions, and divert to SNGLP at Sawan for supply to Sawan along with additional 20-30 MMCFD for supply to Kapco by SNGPL of 50 MMCFD.

Business Recorder [Pakistan's First Financial Daily]


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*Munda dam: Wapda consults stakeholders ​* 
ISLAMABAD (January 10 2008): The Water and Power Development Authority (Wapda) has taken up with other stakeholders the issue of prolonged delay in finalising the Munda dam action plan as simmering energy crisis in the country is heading from bad to worse.

"Wapda realised the prolonged delay in the project implementation when the people are suffering from long blackouts and the gap in power demand and supply is seen almost impossible to be bridged," sources told Business Recorder on Wednesday.

Sources said that Wapda had taken up the issue with Private Power and Infrastructure Board (PPIB) and the Planning and Development (P&D) division. The issue has been taken only after the country was hit by the worst ever electricity shortage.

Some independent experts are of the view that the policy-makers take action only after the people suffered crisis and according to them, the P&D, PPIB, water and power ministry should have taken quite in advance when there was a delay in the finalisation of detailed feasibility study and PC-I of the project and submit them to the P&D, the sources said.

To be built on the River Swat in NWFP at a cost of over Rs 71 billion, Munda dam is one of important schemes, and according to the government, it has to be completed by 2016 along with other four major dams. The dam would have storage of 0.67 MAF and generate 740 MW hydel electricity.

The construction of the dam is also essential for controlling floods in the Peshawar valley. It is also stated that the construction of Munda dam could soften the NWFP anti-Kalabagh dam (KBD) stance and the latter could be constructed if the federal government makes strenuous efforts for developing national consensus.

The project could not be initiated due to negligence by the authorities concerned. Most of them make announcements about the development projects, but little is done when it comes to the implementation of such schemes, the sources said.

Some officials are of the view that Wapda and the water and power division did not come out of their paradox that the KBD construction should be the top priority. The Munda dam should be constructed only if NWFP is agreed on the construction of KBD.

The Munda dam on River Swat shall alleviate Nowshera flooding and back water of Kalabagh full reservoir only goes up to Akora Khattak. It also says that installation of 4,800 tube-wells in Sindh would address Sindh's apprehension that its lands would go out of production due to control over river because it would affect only 7,000 acres of mangrove forest.

Sources said that it was the responsibility of the PPIB to have issued the Letter of Interest (LoI) to an experienced firm. The PPIB, on the alleged instructions of the President Pervez Musharraf, issued the LOI to a newly formed unlisted US company. The LOI was aimed at upgrading the feasibility study for constructing the $1.2 billion Munda dam. The feasibility study was not completed in its time-frame of 18 months, the sources added.

Japanese consultants, who suggested about 10 cents per unit (Kwh) generation cost, originally conducted the feasibility study. But, the US company is of the view that many assumptions of that study were wrong and the tariff setting stage was far away.

The Munda dam would contribute to overall economic growth and generate Rs 361 million as 'water-user charge' annually for the NWFP government. The Munda dam, on completion, would help improve equity in water allocation, reduce flood risks in Nowshehra and irrigate 29,000 acres, besides benefiting 30,000 acres of already irrigated areas.

Business Recorder [Pakistan's First Financial Daily]


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*Major crops could not progress well in fiscal year 2007 ​* 
ISLAMABAD (January 10 2008): Major crops could not progress well during 2006-07 as they grew by 1.1 percent slightly up from the last year's growth of 0.4 percent. Cotton production at 13 million bales in 2006-07 remained almost unchanged in comparison to 13.02 million bales in 2005-06.

Rice production at 5.4 million tonnes was marginally lower than 5.5 million tonnes produced in 2005-06, sources in the Ministry of Food, Agriculture and Livestock (Minfal) told Business Recorder here on Wednesday.

They said agriculture framework in Pakistan is supported to a great extent by the crop sector. In 2006-07, major crops accounts for 36.3 percent of the value-added in the overall agriculture sector.

They said minor crops account for 11.7 percent of the value addition in agriculture, livestock contributes 49.6 percent to agricultural value addition, which is more than the combined contribution of major and minor crops. The agriculture sector directly or indirectly constitutes 67 percent of country's total foreign exchange earnings.

Sources said the wheat production of 23.295 million tonnes during 2006-07 is highest ever in the country's history, registering an increase of 9.5 percent over 2005-06. The sugarcane production improved by 22.6 percent in 2005-06 to 54.7 million tonnes.

They said the government is trying its best to increase agricultural production by providing agricultural credit, support/intervention prices, encouraging use of the balanced fertiliser by granting subsidy on phosphatic and potashic fertilisers, irrigation water availability, adding favourable weather conditions also play a key role in increasing agriculture production.

Sources said within the crop sector, the import substitution and the crop diversification are two important development priorities of Minfal. Efforts are being made to maximise oilseed production, such as sunflower, canola, etc to substitute imports of edible oil to save foreign exchange, they added.

Like-wise under the crop diversification program, the government has planned to introduce higher value crops to diversify production and enhance net farm income, they maintained.

Business Recorder [Pakistan's First Financial Daily]


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*Terrorism scare haunts oil exploration sector ​* 
ISLAMABAD (January 10 2008): As terrorism nightmare continues, Pakistan's oil and gas sector is in limbo as its exploration and production (E&P) companies are not finding professionals and hi-tech rigs and other services for carrying out activities to increase domestic share in production.

The government has been focusing on exploitation of carbon reserves for quick production of oil and gas to meet the growing energy demands, and its public and private sector companies are heavily depending on Chinese professionals and technology as they cost less, and Chinese, being hardworking, could go into hard and sometimes risky areas for exploration activities.

The Pak-China friendship bond has been working as a catalyst to inspire and encourage Chinese engineers and other professionals to work with Pakistani manpower and help exploit untapped oil and gas reserves.

There are strong feelings between the Chinese and Pakistanis that both are natural allies and friends of each other and they should work in a big way for making Pakistan's economy strong and help it progress and prosper.

This relationship has worked for years not only in oil and gas sector but also in many other fields. Chinese presence in Pakistan is considered as a symbol of success and Pak-China cooperation. Islamabad is really proud of Chinese cooperation and it has the reasons since Beijing is putting in the best efforts to help Pakistan grow and come up to the challenges upfront.

However, some unseen forces moved against Pakistan. They hatched deadly conspiracy against Islamabad by putting into action a plan to target Chinese engineers in Pakistan. The sole purpose of targeting and killing innocent Chinese engineers on Pakistan's soil was to give a strong message to the Chinese that they should either leave the country, or face tragic death.

Pakistan's enemies succeeded in their plan as many Chinese engineers were killed in different parts of Pakistan in 2006 and 2007. These targeted killings left no other option for the Chinese but to flee from Pakistan. The Chinese government, which would have never thought of such obnoxious developments, issued new guidelines to its companies to ask them to stay away from Pakistan. And, it happened, in fact.

Now, not a single Chinese company is permitted to sign any contract for oil and gas or any other sector. This is a painful development for Pakistan. Its several sectors are suffering due to unceremonious exit of Chinese from Pakistan. But the oil and gas sector is one which is suffering the most.

This situation has left both the public and private sector E&P companies in complete bewilderment. They are now left without professionals and technology and in an environment where no one likes to visit Pakistan. Irrespective of public and private sector oil and gas companies, Chief Executive Officers (CEOs) of public and private sectors E&P companies are running from one country to another to hire professionals and bring technology for exploration work at fields, but with no positive result.

The worsening law and order situation is haunting them around the globe. One can not have second argument that the work in oil and gas sector would remain shut as long as law and order situation is bad. Only drastic improvement in law and order can convince the foreign investors and services companies, in particular the Chinese firms, that they can operate in Pakistan without any fear and risk to their staff and machinery.

The insurance premium for Pakistan has gone very high due to worsening law and order situation and high risk. This situation is even disturbing for those E&P companies which have signed ambitious exploration programmes with the government. It is unlikely that in the given situation when no one is ready to come to Pakistan for seismic survey and exploration work they can meet the drilling targets of honour work programmes.

The multinational and domestic E&P companies have very good opinion about the Ministry of Petroleum and other government departments for exploration work. They are of the view that the government has been doing its level best to provide conducive atmosphere for operating successfully in exploration and production work in Pakistan.

The Ministry of Petroleum, which is fully cognisant of the situation on the ground, should take a lenient view of the E&P companies' work programmes and facilitate them to manage bringing of oil and gas sector professionals and technology as early as possible to make sure that exploration work does not suffer for an indefinite period.

The government also has to come up with a comprehensive plan of action to overcome growing power shortage in the country which is threatening to destroy all good work it has done over the years that resulted in the most admirable growth rate.

Business Recorder [Pakistan's First Financial Daily]


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*MINFAL told to procure 7m tonnes wheat at Rs600 per 40kg ​* 
Friday, January 11, 2008

ISLAMABAD: The provincial food secretaries on Thursday clearly told MINFAL to procure seven million tonnes of wheat during next harvest at not lower than Rs600 per 40 kg.

The Economic Coordination Committee (ECC) of the cabinet while deferring wheat support price for the coming crop has asked MINFAL to procure seven million tonnes of wheat at market price.

In a meeting at MINFAL for devising a wheat procurement policy for next crop, all the four provincial food secretaries said that the commodity price presently is hovering around Rs800 to Rs900 per 40 kg and it would be difficult for the procurement agencies to purchase the grain much below the market price, a source privy to the meeting told The News on Thursday.

It would be an uphill task for the procuring agencies to purchase the wheat from the growers at a rate much below the market rate and in the presence of flourmills as third buying party, the procurement targets for the food departments would not be easy, one of the participants of the meeting quoted a provincial food secretary.

Regarding the procurement for the next crop, the same official said that the State Bank of Pakistan (SBP) will provide cash margin only to the flourmills rather to the wheat traders or middlemen, but this time it would be at the rate 80:20 rather than 90:10.

About the procurement price, sources said that the provincial food department would be independent to determine the wheat price at the time of procurement and inter-provincial wheat movement would not be banned.

About the seven million tones procurement of wheat, they said that Punjab would procure 3.5 to 4 million tones, Passco 2 million tones, Sindh one million tones and rest of 0.5 million tones by Balochistan and NWFP through their private sector.

The meeting was chaired by Additional Secretary MINFAL, Shahid Hussain Raja and it was attended by the representative of SBP, Passco and Planning Commission and provincial food secretaries.

MINFAL told to procure 7m tonnes wheat at Rs600 per 40kg


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*Pakistan a flourishing market for call centre industry ​* 
Friday, January 11, 2008

KARACHI: Abdullah Butt is the president of Association of Call Centres & Operators (ACCO) Pakistan, which is the only body that is aggressively promoting Pakistans call centre opportunities on international and domestic fronts.

In an interview to The News, Butt said that ACCO as a forum was working very closely with Hong Kong, India, the UK and the Philippines call centre associations, and added that ACCO was proud to be part of the International Contact Centre Consortium, USA. It is represented in the US, the UK, India, Bangladesh and South Africa, which elaborated the scope of ACCO. This trade body is working with the Pakistan Software Export Board and IT ministry hands in hands to seek opportunities from international business providers for Pakistani call centres.

Butt also heads AsOnTV.com, Pakistans leading tele-shopping network, with its offices in India, the UAE, China, the UK and the US. During the interview, Butt discussed the issues and concerns of the call centres and Business Process Outsource (BPO) in Pakistan and disclosed that for the first time results of elections 2008 could be heard on telephone and also via SMS. The call would be charged at Rs14 per minute and SMS at Rs5.

Another achievement to our credit is that we have come up with a call centre working 24/7 to help pensioners and register their complaints. This project is sponsored by the EOBI and all expenses are borne by it.

He also noted that among major issues in Pakistan, one was that of marketing as local businessmen were not able to properly market yet. India has been in this business for a number of years and they are very good in marketing. They have marketed themselves very well in everything which they offer and have been able to earn more than US$18 billion every year through these services.

He observed that despite support from the government, incentives and even provision of funding to set up this business, investors were still reluctant to invest in the business. Call centre and BPO business is very much there in India, Pakistan, China and the Philippines. But in India this industry is very well established but cost has increased and Pakistan is now an alternative to the west for call centres.

Butt said that Pakistan has all the tools required to catch up with the $50 billion industry with 30 per cent per annum growth rate linked with $700 billion e-commerce trade worldwide. That is the theme, we want to catch on. India has emerged as a major location for IT-enabled services such as call centres, customer support centres. Research suggests that such exports could exceed to $15 billion annually before the end of the decade, Butt said and noted that lower input costs, reasonably good infrastructure, a trained English-speaking workforce and a favourable time zone differential vis--vis the US has spurred the growth of the call centre industry in India. The government of India has already levied an income tax of 36.2 per cent on all call centres owned by foreign companies, while the Indian companies are enjoying a tax-holiday till 2016. He said that there was a proposal under-consideration in New Delhi to tax activities conducted over international private leased connections (IPLC) that carry Indias voice and data traffic.

Butt also cited the latest Gartner report which pointed out that India will loose 45 per cent of its share in call centre market due to shortage of manpower and lack of infrastructure. Pakistan offers a competitive and alternative market as the country possesses workforce with good accent, fair comprehension skills and low cost talent pool. He sighted this as an advantageous and suitable situation for Pakistan to grab the opportunity.

But in Pakistan, the cost of utility is so high. The more you use the more you pay. The process of import is very cumbersome and expensive. Moreover, the visa constraints on international employees and investors also hinder the business. He also pointed out some other loopholes in the sector and said that there was lack of mass knowledge about the industry and no support or encouragement from Pakistani missions abroad and non-cooperative behaviour from overseas Pakistani business houses towards call centre/BPO industry in Pakistan. He also highlighted that there was no facilitation from banks on financing the call centres.

It is important to make financial institutes to understand the concept of call centres. Hiring the services of trained call centre experts Pakistanis/foreign nationals, by the public sector for the industry mass media awareness of the career path in call centre industry is very important in order to boost the industry.

Butt was optimistic regarding the future of call centres and observed that there was so much business available for Pakistan internationally, that even if 100 call centres each of 100 seats were working in Pakistan, still there would be more business coming in. We will have to adopt the right practices, right procedures and provide right incentives for the development of this industry, he underlined the points which he suggested as guideline for the business.

Pakistan a flourishing market for call centre industry


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*CDWP takes up 40 projects of Rs 118 billion on January 12 ​* 
ISLAMABAD (January 11 2008): The Central Development Working Party (CDWP), which will meet on Saturday, will take up 40 development projects worth over Rs 118 billion in economic and social sectors. The CDWP will meet on January 12 as its meeting which was earlier scheduled on January 5 was postponed due to political turmoil as a result of assassination of former premier Benazir Bhutto, sources told Business Recorder on Thursday.

To be presided over by Planning Commission Deputy Chairman Dr Akram Sheikh, the meeting will consider six development projects costing around Rs 59 billion in physical planning and housing, three schemes of Rs 26 billion in energy sector, three projects of Rs 10.67 billion in transport and communications, three schemes with a cost of Rs 6.675 billion in water resources, two projects of Rs 2.8 billion in industries and commerce, and 10 projects of Rs 9 billion in higher education.

The CDWP will also take up one project costing Rs 1.2 billion in health, two schemes of Rs 0.153 billion in governance, five schemes of Rs 0.55 billion in manpower, and some other small schemes being sponsored by other ministries.

Sources said that in energy sector the water and power division sought an allocation of Rs 26 billion for three projects. The projects include power transmission enhancement project worth Rs 25.039 billion, National Power Plan of Rs 0.5 billion and feasibility study for evacuation of power from hydropower project River Indus and its tributaries in Northern Areas costing Rs 0.28 billion.

In physical planning and housing, the agenda of the meeting include the water channel to take water from Tarbela to the cities of Islamabad and Rawalpindi costing over Rs 37 billion. The interior ministry is the sponsoring agency of the development scheme, they added.

Sources said the Erra's project of New Balakot City worth Rs 12 billion will also be taken up by the CDWP. The Planning Commission has already cleared the project in an earlier meeting of the CDWP. The Punjab government development project of construction of south-west waste water treatment plant, Lahore, will also come up for the CDWP consideration. The project will cost Rs 9.35 billion.

In water resources, the Punjab government's Barani integrated water resources sector project worth Rs 6.3 billion is also on the agenda of the meeting. The Asian Development Bank (ADB) will provide a financial assistance of Rs 4.5 billion for the project, they added. In governance, the CDWP will take up the NWFP government project aimed at strengthening the financial accountability of provincial Public Accounts Committee (PAC) and the PAC cell in the provincial assembly.

Besides this, the narcotics control division scheme of Khyber Agency area development project of Rs 0.9 billion is also on the agenda of January 12 meeting. The Pakistan Atomic Energy Commission (PAEC) has sought Rs 0.14 billion for the establishment of center for earthquake studies.

Business Recorder [Pakistan's First Financial Daily]


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*Soomro for advance plan to procure, store new wheat crop ​*
KARACHI (January 11 2008): Prime Minister Mohammedmian Soomro on Thursday called upon the federal and provincial governments for joint advance planning for procurement and storage of wheat of new crop. Chairing a high-level meeting at the Governor's House, he said that farmers should use better technology and inputs to have better yield so as to meet wheat requirements domestically.

Among others, Sindh Governor Dr Ishratul Ibad Khan and Chief Minister Abdul Qadir Halepota attended the meeting. The Prime Minister asked the provincial governments to ensure grinding of wheat and distribution of atta through close monitoring and under the supervision of their respective food departments.

The provincial food departments, he directed, should check the declared stocks of licence holders and any undeclared stocks should be confiscated.

On the occasion, Federal Food Minister Prince Essa Jan informed the meeting that some 32,000 tonnes of wheat is beeing released by Minfal daily. He said the food ministry is importing 1.5 million tonnes of wheat which has started arriving and its entire import will be completed by mid-February.

The Prime Minister was informed that people have started buying atta more than their requirement which is affecting both its availability and prices. The Sind food secretary informed that in Sindh, availability of wheat and atta was not a grave problem as was the high prices and, therefore, there was great rush of people at utility stores because of price difference.

He said the provincial government had several meetings with the Flour Mills Association which agreed to supply atta at ex-mill rate at Rs 17 per kg within 24 hours and will be available in the market within 24 hours at Rs 17.50 per kg.

On the occasion, the Federal Government Commission on damages headed by Captain Usman Ali Essani, briefed the Prime Minister about the assessment work of damages caused after December 27 Rawalpindi tragedy. The Prime Minister said it is a big job to assess the damages throughout the country and expressed the confidence that the Commission will take it as a mission and complete it within the stipulated one-month time.

He asked the Commission that it can co-opt any officer for help in the assessment of damages. He directed that the process of assessment of damages be made transparent and simple for the people to understand while cases of claims of poor people be given priority.

He issued directive for immediate disbursement of Rs 0.3 million to heirs of each deceased of the violence and Rs 50,000 to the injured throughout the country. Commission Chairman Essani informed the Prime Minister that he had held a number of meetings with the provincial government, administration, and local government elected representatives in Karachi and facts and figures provided by various departments are now being scrutinized.

He said that a pro forma has to be filled and signed by claimants and accordingly damages will be assessed so as to eliminate possibilities of false claims and to verify the stipulated quantity of danages. He said the pro forma has been printed and sent to the provinces.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Unabated borrowing from SBP: excessive liquidity stoking inflation ​* 
KARACHI (January 11 2008): Fifty-eight percent of the Federal budget deficit is being financed by the State Bank of Pakistan through money printing with the stock of paper with the Central bank rising to an all time high of Rs 650 billion.

There has been a sharp rise in expenditure under 'economic affairs' reflecting the impact of large subsidies extended to diesel, DAP (fertiliser) and wheat imports by the government: The government borrows from the State Bank of Pakistan in between fortnightly auctions.

For this purpose, MRTBs are created for replenishment of treasury bills (MTBs) sold to scheduled banks. Government borrowing from the banking system for budgetary needs has already crossed Rs 220 billion mainly on account of Rs 340 billion spent as current expenditure. Besides, the oil bill of interest payment on domestic debt have doubled to reach Rs 98.5 billion, quashing the favourable impact of a decline in growth of interest payments on foreign debt.

The 100.7 percent increase in servicing of domestic debt reflects both an increase in the absolute value of the debt stock, and rising interest rates, as well as the impact of large one-off bullet maturities (principal and interest) of long term bonds (Defence Saving Certificates) issued in the aftermath of nuclear test in the late 1990s. Further, after registering a decline of 18.5 percent in the first quarter of FY07, defence expenditure has surged by 20.3 percent in the corresponding period of the current fiscal year. This perhaps reflects engagements of the armed forces in tribal areas and the Swat Valley to maintain law and order.

Finally, there has been a sharp rise in expenditure under "economic affairs" reflecting the impact of large subsidies extended by the government for diesel, DAP (fertiliser) and wheat imports.

The domestic borrowing has doubled despite 14.4 percent higher tax collection and 51.5 percent increase in non-tax receipts as well as higher inflows under National Saving Schemes and significantly more issuance of long terms paper (PIBs) by the government.

The inflationary impact from money creation, ie, borrowing from the Central bank and the possibility of 15 to 20 percent increase in domestic petroleum prices after the elections and prior to induction of new government, the end June CPI inflation would be close to 8.5 percent - considerably higher than even SBP forecast of 7.5 percent, say knowledgeable economists.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Export refinance: banks provided Rs 138.45 billion up to December 15 ​* 
KARACHI (January 11 2008): The export refinance facilities, extended by the commercial banks to the exporters at 7.5 percent, reached Rs 138.45 billion up to December 15, 2007 as against Rs 126.85 billion extended during the corresponding period of the last fiscal year, showing a growth of 9.15 percent.

The modification made in the system of grant of refinance to banks under the Export Finance Scheme has resulted in enhancement of availability of working capital facilities to the exporters, especially exporters of value-added textile sector, at lowest rate of 7.5 percent interest per annum.

State Bank of Pakistan on Thursday said that reports regarding the reduction in the availability of working capital facilities to the exporters were incorrect, baseless and misleading. In the last monitory policy, the SBP has decided to exit from the export refinance and some 30 percent of overall outstanding were diverted to the banks in the July, 2007.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pasdec gets Rs 297.24 million for marble and granite development ​*
ISLAMABAD (January 11 2008): The government has released an amount of Rs 297.24 million to Pakistan Stone Development Company (Pasdec) for development of marble and granite sector in the country. The allocation is out of the total amount of Rs 500 million reserved for the year 2007-08 in public sector development programme for the development of marble and granite sector.

It consists of establishing two machinery pools, one Model Quarry, three Quarry Upgradation, one Common Facility Training Centre and one Warehouse for dimensional stone, sources said. The project of development of marble and granite sector has high potential of earning foreign exchange through its export and the government has approved Rs 1,980 million for this purpose and planned to spend this amount on the project within three year.

Pasdec has been mandated to implement different measures through its projects for the development of sector and has awarded recently a tender to a local agent of DAEWOO Company for import of earth moving machinery from Korea.

Pasdec had also awarded another tender to an Italian machinery manufacturing company DAZZINI Machines for supply of quarry machinery, which would be used in first marble and granite "Model Quarry" in Khuzdar, Balochistan, the sources added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Government to draw Rs 32 billion from banks to rescue Wapda ​* 
ISLAMABAD (January 11 2008): The federal government will arrange to draw Rs 32 billion from banks to pay the hard pressed Independent Power Producers (IPPs) against amounts owed by the Water and Power Development Authority (Wapda), well-informed sources in the Finance Ministry told Business Recorder here on Thursday.

The issue is now being placed before the ECC for provision of GoP guarantee to banks on behalf of Wapda: Independent Power Producers had threatened to call GoP sovereign guarantees in case Wapda failed to clear their outstanding bills, as Wapda did not pay promised 50 percent of overdue amount by December 31, 2007. Wapda had written letters to the federal government including President's Chief of Staff for arranging Rs 52.1 billion of IPPs, oil companies, gas companies and others but the Finance Ministry did not take it seriously and the files were still moving around, the sources added.

The sources said the issue is now being placed before the Economic Coordination Committee (ECC) of the Cabinet for provision of GoP guarantee to banks on behalf of Wapda. Wapda's high ups were of the view that if the government did not fulfil its commitment several IPPs would not only shut down their operations but also call sovereign guarantees.

The sources said, the utility has also written letters to the oil companies to improve their stocks so that required input could be provided to IPPs for power generation during the crisis period. Meanwhile, G A Sabri, a top official of Directorate General Oil, in a letter to Pepco Managing Director Munawar Baseer, has clarified that in December, actual supplies of LSFO were 92,256 tons against the tabled demand of 100,000 tons.

Baseer had earlier accused Petroleum Ministry of short supply of LSFO upto 50,000 tons which according to Directorate General of Oil was 7740 tons. The sources said the Petroleum Ministry clearly conveyed to Pepco that it would supply the required 125,000 tons of furnace oil for January and 100,000 tons for February for Kapco, subject to timely payment and railway movement charges.

As regards the supply of 1000 tons per day LSFO from ARL, the supplies for January and February would be more ie 40,000 and 36,000 tons, respectively, for which effective coordination was required from the railways. HSD supplies by PSO from Mahmoodkot would also be ensured as per Wapda's demand, but of course subject to payment, the sources quoted Sabri as saying, in his letter.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*State Bank develops financing scheme for small farmers​*
* Banks will provide loans to the members of small farmers' group for crop and non-crop activities

KARACHI: The State Bank of Pakistan has developed a financing scheme on group-based methodology for small farmers involved in crop and non-crop activities in order to improve the access to finance for such farmers who are unable to meet adequate collaterals requirements of commercial banks. 

Under the scheme, banks will provide loans to the members of small farmers' group for crop and non-crop activities, based on their cash flow under joint cross guarantee of group members. 

The scheme covers all areas of the group-based financing methodology including group formation, roles and responsibilities of members, bank and group coordinator, size and tenure of loans, documentation and other related matters. However, financing to small farmers under the scheme will be subject to compliance with SBP regulations on agriculture financing. 

It may be pointed out that under group-based lending programmes, loans are given to individuals through a peer group. In this case, group members guarantee repayment of each other's loans and collateral is generally not used but peer pressure and collective responsibilities generated by the group take their place. 

Financing under the scheme will not exceed Rs 200,000 per borrower, which is within the clean lending limits of Prudential Regulations for Agriculture Financing. However, the exact amount of the loan will be determined by the bank based on genuine requirements and cash flow of the applicants. Maximum period of the loan should be fixed as per Prudential Regulations, repayment schedule may be set as per production cycle of the crop/non-crop activities being financed or revolving credit facility for three years subject to mandatory clean up of the entire liabilities (both principal and mark up) once in a year or cash flow of the borrower in case of non-crop activities. Banks are advised that they should have detailed understanding and information about the borrower's business and his/her assets as well as his/her capacity to effectively use and repay the loan. 

Moreover, under the scheme the loan can be extended for working capital requirement of the farming community both for crop as well as non-crop activities. Banks can also provide term loan facility to small farmers for making different types of improvements in the land, construction of sheds/ponds, development of orchards/nurseries, purchase of livestock, farm implements, machinery, tube wells, generators, etc. 

The State Bank has advised the banks to arrange insurance of the amount of loan disbursed for crop and non-crop activities (wherever available) and life insurance of the borrower to safeguard the interests of the borrower and the bank, in case of losses due to natural calamity or events beyond the control of the borrower. 

In addition, where the agricultural loans have been extended for specified purposes, the banks/DFIs are advised to ensure that the loans have been utilised for the same purposes for which they were obtained, the central bank said. 

For this purpose, the banks/DFIs may consider it prudent to make payments directly to the suppliers wherever appropriate. However, this provision will not apply on farmers who are provided loans under Revolving Credit Scheme. 

The outreach of agricultural credit is limited to the extent of about two million borrowers as against total farmers population of 6.6 million. Majority of the country's farmers i.e. 84 percent comprises of small farmers and rely on informal sector credit at exorbitant rates to meet their agricultural credit requirements. One of the main reasons of the financial exclusion of these small farmers has been their inability to provide collateral to banks. It is expected that the problem of financial exclusion will be mitigated with the introduction of group-based financing scheme for small farmers.

Daily Times - Leading News Resource of Pakistan


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## solid snake

*Reserves fall to $15.55bn​*
KARACHI, Jan 11: Pakistan' foreign exchange reserves fell by $19 million to $15.55 billion in the week that ended on Jan 5, the central bank said on Friday.

Reserves held by the State Bank of Pakistan fell to $13.27 billion from $13.50 billion a week earlier, while those held by commercial banks rose to $2.28 billion from $2.24 billion, it said.

Pakistan's foreign reserves hit an all-time high of $16.39 billion in the week that ended on Nov 10. But they fell because of outflows from the stock market after President Pervez Musharraf imposed emergency rule on Nov 3.

Emergency rule was lifted on Dec 15, but analysts said foreign investment is under pressure due to the tense political situation after the assassination of opposition leader Benazir Bhutto on Dec 27. Reuters

Reserves fall to $15.55bn -DAWN - Business; January 12, 2008


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## solid snake

*Banks borrow Rs43bn from State Bank*​
By Shahid Iqbal

KARACHI, Jan 11: Money market on Friday witnessed a serious liquidity crunch, forcing banks to get help from the State Bank which says it will continue to follow tight monetary policy in the future.

Dealers said the overnight rate was 9.9 per cent just below the discount rate but the money was not available even at this rate. Banks borrowed Rs43 billion on Friday while the total borrowing from the SBP reached Rs90 billion this week.

The liquidity crunch was the outcome of the State Banks policy to keep the market dry in fear of inflationary pressure coming out from the inflows of dollars and building up of reserves money.

The SBP holds high food prices for inflation; however, the heavy borrowing by the central government was one of the major factors behind the monetary inflation.

The SBP is in a difficult situation. It succeeded to tighten grip over monetary movement in the market but failed to refuse the government from record borrowing for the budgetary support causing inflation, said a senior banker.

The State Bank would announce its monetary policy for the next six months by the end of this month and no change is expected regarding the tight monetary policy being followed for last two years.

Analysts did not find any chance for further tightening in the next monetary policy. They said more tightening could be counter-productive as flow of credit to private sector has already shrunk.

During the first half of the current fiscal, credit to private sector remained at Rs235 billion compared to Rs250 billion last year which indicates that credit growth will further decline this year.

Bankers said the economy could not afford further increase in the interest rates as the cost of production has already gone high due to inflation.

The SBP in its first quarterly report issued recently said the high CPI (Consumer Price Index) has started affecting the core inflation (non-food inflation).

We are expecting more inflation as the government is planning to pass on the increasing burden of oil prices which recently reached $100 per barrel, said Abid Saleem, an analyst.

Gas prices have already increased while the power rates are also expected to increase significantly in the coming days or weeks.

Analysts believe that collective impact of inflation, along with high food prices, will badly hit the cost of production and hurt the export already under pressure.

Under the circumstances while a host of inflationary elements are active to negate the economic achievements, there is no chance for further increase in the discount rate, said Abid.

Analyst and dealers said the liquidity scarcity will prevail for another six months in the money market and the change can only be expected after the outcome of the economic growth for the current fiscal.

Banks borrow Rs43bn from State Bank -DAWN - Business; January 12, 2008


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## solid snake

*Poverty Alleviation Fund changing the lives of poor: World Bank ​*
RECORDER REPORT 

FAISALABAD (January 12 2008): Pakistan Poverty Alleviation Fund (PPAF) is making a difference in the life of the poor in the country and 1.5 million micro-credit loans (average loan-size US $150) have been provided benefiting nearly 9 million people, said updated World Bank report.

World Bank observed that the PPAF programme is impacting over 10 million people. PPAF has mobilised over 66,000 community organisations (COs) in 27,000 localities across 111 districts in the country. Mobilised communities are helping themselves and accessing services from civil society, government and markets.

According to a World Bank report, over the last 7 years PPAF has driven the micro-finance sector growth from 60,000 borrowers to more than 1.25 million active borrowers in the sector, while "Skill Development and Capacity-building" also improving. Over 200,000 people trained by PPAF in various skills including management, financial, mechanical and technical skills, water conservation, agriculture, horticulture, livestock, and marketing etc, said report.

The report disclosed that more than 13,000 small scale village-based projects have been identified, constructed and maintained by communities right across the country benefiting nearly 6 million people. These projects mainly include drinking water supply schemes, drainage and sanitation, irrigation, roads, culverts and small bridges. PPAF is also doing more innovative schemes that include: Integrated Areas Up-gradation Projects, Drought Mitigation Projects and Technological Innovative Projects, including Reverse Osmoses Plants, Drip Irrigation, and Solar Energy etc. Besides providing social benefits and improving the rural environment these projects have saved significant amounts in health related expenses in addition to providing job opportunities for local communities, WB report mentioned.

WB observed that PPAF supported projects are labour intensive and have generated significant amounts in wages. Health and Education (a recent pilot intervention): nearly 100 new education and health facilities opened by PPAF in the rural areas providing high quality services and benefiting primarily women and girls.

Commenting over the "Earthquake Restoration and Rehabilitation", WB report said that over 100,000 houses and 300 schemes are being reconstructed in the earthquake affected areas, with a special focus on the vulnerable, and disabled. Nearly 20,000 people trained in earthquake resistant construction methods, directly resulting in over 70percent compliance with earthquake standards for all houses under construction. PPAF is also regularly involved in relief work, including for the earthquake victims and more recently the flood affected; and has also initiated a special programme for the fragile coastal areas.

PPAF's institutional mechanism is seen as a best practice public-private partnership model; with its solid governance structure, private sector management and transparent funding mechanism and is being replicated in other Government programmes that are trying to deliver services to the poor. These replications range from education delivery in Balochistan, to rural telecom services across the country. Social Mobilisation has been mainstreamed in public policy and is now part of the poverty reduction policy and the Mid-term Development Framework of the Government.

PPAF has moved beyond being just a project and is now considered the private sector arm of the government's poverty alleviation agenda. The massive earthquake reconstruction work that the Government has assigned speaks of the trust and confidence that it has in the institution.

WB observed that PPAF's investment in civil society (it has 70 civil society partners across the country) has resulted in a new found confidence and greatly enhanced capacities and capabilities of the sector to do much more for the poor. It has also enabled them to leverage support from provincial and local governments; commercial banks and other donor.

Investing in building institutions of the poor that are inclusiveness; participatory; and well governed has high pay-off; for it builds their confidence and social capital, gives them voice and empowers them to participate as active and informed citizens in the development and political process. It ensures better provision of services and delivers far more profound and sustainable development outcomes.

PPAF's long term strategy is to cover all the villages and hamlets in the poorest districts of Pakistan through a comprehensive range of activities. There will be a major effort to build institutions of the poor in these districts, build their capacity and provide occupational skills training leading to exponential growth of micro-enterprises and meeting the key infrastructure needs of these villages, said WB report.

WB report stated that the key challenges ahead include: ensuring that the institutions of the poor continue to be underpinned by the core values of inclusiveness, participation and good governance; the outreach of micro-credit in a potentially huge market; continuing support of the government and donors to this pro-poor agenda and meeting the expectations and galloping demands of the poor; and linking in a more meaningful and productive manner to the local, provincial and federal government structures and programmes.

According to WB report, poverty remains a serious concern in Pakistan, particularly in its rural areas. Inadequate access to basic services and financial and other resources; weaker communities, particularly the exclusion of women from the public sphere and the development process; low social capital; ethnic and religious strife; a spate of natural calamities in recent years; have all contributed towards the persistence of poverty in the country.

The World Bank funded Pakistan Poverty Alleviation Fund Project (PPAF) is designed to reduce poverty and empower the rural and urban poor in Pakistan through the provision of resources and services to the poor, especially women. This is being achieved through an integrated approach that includes building institutions of the poor and then providing them with micro-credit loans; grants for small scale infrastructure projects; training and skill development and social sector interventions. PPAF has also contributed significantly in rebuilding lives, fostering resilience and restoring assets of the poor who have suffered from the earthquake and drought.

The PPAF programme is impacting over 10 million people. PPAF has mobilised over 66,000 community organisations (COs) in 27,000 localities across 111 districts in the country. Mobilised communities are helping themselves and accessing services from civil society, government and markets. PPAF's investment in building institutions of the poor, that gives voice, empowerment and nurtures social capital and trust amongst communities is resulting in; increased collective and self-help initiatives; increased incomes; increased food consumption; increased expenditure on utilities; increased assets acquisition including household repair; and increased social outcomes including improved female mobility and their enhanced social status. (All verified through third party evaluations).

PPAF mobilised communities is also leading to their political empowerment. Community members have contested local government elections and more than 500 members have been elected.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Thai Airways cuts flights to Pakistan ​* 
Saturday, January 12, 2008

This has happened when several foreign airlines increased their number of flights, and three airlines, Lufthansa Oman Air, and Singapore Airlines, have resumed flights to Pakistan

KARACHI: Thai Airways has reduced flights to Pakistan because of the deteriorating law and order situation created in wake of the assassination of former Prime Minister Benazir Bhutto, The News learnt on Friday. 

The Thai flag carrier had recently launched simultaneous flights from Karachi and Lahore to Tokyo via Bangkok. Yes, they have communicated to us their decision to reduce daily flights to five from seven per week between Lahore and Bangkok, confirmed Director General Civil Aviation Authority (CAA) Farooq Rehmatullah. 

Asked if this was going to hurt CAA efforts to attract maximum number of foreign carriers to the country, he said organizations take into consideration the effects of such political turmoil on their business and hoped situation will improve in coming days. No other airline has shown any indications of rolling back their operations, he added. 

The aviation industry has had a booming past year as continuous growth in number of passengers attracted record number of airlines. Passenger traffic in Pakistan jumped to 14.6 million in 2005-06 from 13.5 million in 2004-05 and 11.8 million recorded in 2003-04. 

During 2007, Air Arabia of United Arab Emirates (UAE) commenced operations to Karachi and Peshawar from Sharjah while Etihad airways increased its Karachi and Peshawar operations from 3 to 4 weekly services. Another UAE carrier Ras-al-Khaima (RAK) has requested for designations in Pakistan.

After a gap of nine years, German carrier Lufthansa recommenced its operations with three weekly flights in winter schedule 2007. Oman air also recommenced its operations while Malaysian Airline launched its fourth flight to Karachi. 

Airblue marked a watershed in aviation history of the country by becoming the first private Pakistani airline to start flights to Manchester last June. Its request for designation to Turkey and Jordan has already been approved.

Pakistan has remained in the spotlight of airlines based in England, where a sizable population of Pakistani origin lives. British Airways increased its operations from three weekly flights to six between Islamabad and London Heathrow. Astreaus and European Air charter, the two low cost carriers of UK, were designated to operate services between the two countries.

Another English carrier UK International Airline started flights from Nottingham to Islamabad via Sharjah with twice weekly frequencies effective current winter schedule. It is expected to increase the weekly frequencies to six in ongoing month.

Virgin Atlantic, also of UK, has shown its intent to commence operations in Pakistan from summer. British Midland of UK has also been designated to operate to Pakistan. However, the airline has yet to submit its schedule.

Shaheen Air International (SAI) is likely to commence operations to UK shortly. They have also requested for the operations to Bangladesh and Sri Lanka. Singapore Airline recommenced its operations with three weekly frequencies between Singapore and Pakistan. 

Air Italy the second carrier of Italy has been designated to operate to Pakistan. Al-Jazeera the second carrier of Kuwait has been designated to operate between Kuwait and Pakistan. GMG the second airline of Bangladesh earned rights to operate to Pakistan and is likely to commence operations soon.

Thai Airways cuts flights to Pakistan


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## Neo

*S Asia to maintain strong growth in 08: report *​ 
Saturday, January 12, 2008

ISLAMABAD: South Asia looks to maintain its strong growth in 2008 with an expected GDP growth of 6.7 per cent, a slight deceleration from 6.9 per cent in 2007, says the World economic Situation and Prospects 2008.

Indias economy will continue to grow with an anticipated rate of 8.2 per cent in 2008. The economies of Bangladesh, Pakistan and Sri Lanka also witnessed good performance and are expected to reach GDP growth of 6.2 per cent or more.

Strong performances in industry and services, increased domestic investments, which grew by more than 20 per cent in 2007 in Pakistan, and recovery in agriculture greatly contributed to growth in these economies. Pakistans growth performance in 2008 is surrounded by uncertainty, however, in the light of the recent political turmoil following the Benazirs assassination. 

The Nepalese economy is expected to recover in the wake of cessation of hostilities among rival political groups. However, growth remained low at 2.6 per cent in 2007, in part because of residual unrest in some parts of the country but also because of low investment and poor agricultural performance. However, the current peace process in the country has improved the economic prospects.

Nepal is expected to have a GDP growth of 3.3 per cent in 2008. The report acknowledges that unemployment estimates are not always reliable in the region; nevertheless current data suggest that economic growth is having a positive impact on unemployment. Both Sri Lanka and Pakistan have reduced their unemployment rates to 6.2 per cent.

In spite of these performances, inflation remains a major concern in most economies because of high prices of food, oil and imported commodities. In Sri Lanka, inflation was expected to reach 15.5 per cent in 2007. 

Although inflation remains stable in Pakistan, it is nonetheless close to 7 per cent. All the countries are implementing strict monetary measures to contain inflation; they are also trying to better control import of essential commodities. 

Nevertheless, the World Economic Situation 2008 warns them to remain vigilant. Budget deficits remain high in most countries, the report argues. This is a serious problem as the public debt is putting interest rates under pressure, and inflation is crowding out financial resources for investments.

India and Bangladesh run a budget deficit of about 3.7 per cent of GDP, Pakistan has 4.2 per cent and Sri Lanka 7.6 per cent. In most countries, trade deficits are also widening because import is growing faster than export.

Political tensions, uncertain weather and volatility of oil prices are major sources of uncertainty for the region. Further increase in oil prices could slow down economic growth, raise inflation and cause problem for macroeconomic balances.

The World Economic Situation and Prospects is produced at the beginning of each year jointly by the UN Department of Economic and Social Affairs and the United Nations Conference for Trade and Development and the five United Nations regional commissions. 

S Asia to maintain strong growth in 08: report


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## Neo

*Car sales fall 7.7% in 1st half of 07-08​*
* Analysts attribute the dent in sales to tightened financing by banks and increased prices

KARACHI: Car sales for first half (July-December) of 2007-08 stood at 69,958 units, showing a decline of 7.7 percent when compared to 75,769 units sold in same period of 2006-07. 

Moreover, on monthly basis, sales have declined by a massive 37 percent. Only 7,143 units were sold in December 2007 versus 11,361 units in November 2007. 

Pakistan Automotive Manufacturing Association (PAMA) released figures for the local car sales in December 2007. 

The main reason behind this decline in sales can be attributed to fewer working days during the month of December 2007 on account of Eid holidays and political turmoil after Ms Bhuttos assassination, said Bilal Hameed, an Analyst at JS Research. 

Moreover, price hike following new tax levy and curtailment of auto financing by some banks can also be another contributing factor, he added. 

Combined sales of LCVs (Light Commercial Vehicles) and cars in 1HFY08 declined by 3.7 percent to 88,902 units versus 92,332 units in corresponding period of last year. 

Meanwhile, a research report written by Analysts at Arif Habib Securities stated that automobile production by the four major industry players declined by 3.4 percent during the first half of the current fiscal year. 

The sales of Pak Suzuki, Indus Motors, Honda Cars, and Dewan Motors combined fell to 88,087 units from 91,175 units in the same period of last financial year, the report said. However, production rose by 0.4 percent from 93,483 units to 93,880 units. 

The Arif Habib Analysts said the sales fell in December due to fewer working days on account of days off due to Eid-ul-Azha and closure of businesses following the assassination of Benazir Bhutto. 

They said that higher interest rates and unit prices for this period as compared to last year had also been responsible for dent in sales. 

Besides, stringent checks by major banks due to credit default has also affected car financing negatively, they added. Moreover, the production was also low in December due to maintenance work (an annual or bi-annual procedure of auto assemblers). 

Maintenance work hampered production activities for assemblers in December. Production shall be back in full swing by the end of January. We expect the sales to remain low till elections are held and political stability is established in the country, said the Arif Habib Analysts. 

Yawar Mustafa, an Analyst at Capital One Equities, said, We believe the reason for the decline in sales is tightened car financing by banks in large, coupled with political uncertainty and business shutdown in the country.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Exporters to explore European markets​*
* An exporters delegation will visit Poland and Germany by the end of next month

KARACHI: At least five Pakistani companies have shown interest in visiting Poland, Germany and other European countries with Pakistan Horticulture Development and Export Board (PHDEB) team to explore potential of Pakistani fruits especially Kinnow there.

The exporters delegation will visit Poland and Germany by the end of next month in view of poor export volume of Pakistani fruits. 

Talking to Daily Times here Friday, Abdul Wahid, Chairman, Pakistan Fruit and Vegetable Exporters Association, said such visits provide exporters an opportunity of interaction with buyers and importers of those countries interested in Pakistani fruits. 

The delegation of Kinnow exporters will hold meetings with importers and distributors of the fruits in Poland and participate in a fair in Germany during their weeklong visit.

On first leg of the trip, Pakistani exporters would stay in Poland for two days and visit different super markets and chain stores of that East European country to assess the market. This trip also includes visits to wholesale markets and meetings with big importers and distributors of fruits.

Purpose of the second leg of this trip is participation of the Pakistani companies and PHDEB in a fair in Germany called Food Logitica. PHDEB has leased a stall in the fair where Kinnow and other fruit products of Pakistan would be exhibited.

Mr. Wahid said participation in this fair would provide an opportunity to Pakistani companies to get familiar with new technologies in this field. Participants in the fair included fresh fruit producers as well as allied industries ranging from packaging, seed, and shelf-life enhancing techniques. 

Citing reasons of poor export volume of Pakistani fruits especially to European countries, he said Poland, Germany and majority of Eastern European countries do not import Pakistani fruits directly but through Holland, which is regarded as hub of exported Pakistani fruits, where annually 200 to 250 fruit containers are shipped from Pakistan. 

He said export of Kinnow to European countries could be enhanced manifold, but owing to its poor appearance and presence of seed, it has failed to draw attention of European importers. 

Unless Pakistani farmers do not upgrade standard of Kinnow produced in the country, exports to European countries would remain dismal, he added.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Economic policies to continue uninterrupted​* 

ISLAMABAD: Caretaker Prime Minister Mohammedmian Soomro Friday said the economic policies of the government would continue uninterrupted since it is in the national interest to ensure a positive change in the life of the people. 

He was talking to Admiral (r) Abdul Aziz Mirza, Advisor, Pak Gulf Construction Company here at the Prime Minister Secretariat.

The company is investing Rs 6 billion on the construction of multi-storey Centaurus project in Islamabad. The PM said that Islamabad is a growing city with ever-increasing demand for official and residential accommodation as well as hotels and shopping malls.

He said the Centaurus project would provide much-needed relief to the city. The PM said the government of Pakistan provides a level playing field to both local and foreign investors. Pakistan, he said is the future hub of the economic activities of the region and the investors who join this endeavour are bound to bear the fruits and make profits in the times to come. He said it would be incumbent upon the government to ensure that all the basic facilities are available to the investors and they get all possible assistance through one window facility.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistans GDP growth likely to be lower in 2008: IMF*​
ISLAMABAD: The International Monetary Fund (IMF) has projected that the real Gross Domestic Product (GDP) growth is likely to be lower than the originally projected. The original projection for 2008 was around 7 percent and the external current account deficit will be higher. 

The IMF has said that it is closely monitoring the economic impact of the instability and political difficulty in Pakistan. 

According to a transcript of a press briefing by Masood Ahmed, Director, External Relations Department, International Monetary Fund (IMF) at Washington on Friday, the IMF said that the Fund does not have a financial programme in Pakistan, but it is engaged in Pakistan through its work on surveillance, through the work it does on technical assistance. And obviously, the Fund is monitoring the any economy such as Pakistan that goes through a period of difficulty or instability, or a political difficulty, he added.

The spokesman further said, if you step back a bit and look at Pakistans economic performance over the past few years and just look at the last fiscal year (2006-2007), the economy did perform well and had a GDP growth rate of over 7 percent, and reserves have been strong and strengthening. So thats sort of where were coming from. Also, the economy has shown considerable resilience.

Now, immediately following the assassination of former Prime Minister Bhutto, the local stock market has experienced significant losses after reopening on December 3, 2007 but has recovered, in part, subsequently. There have also been some reserve losses following the attack, but the reserve position remains strong. In terms of currency markets, the Pakistani rupee has depreciated moderately since December 27. And as far as spreads are concerned, the EMBI global sovereign spread for Pakistan has widened by 170 basis points as of January 3, 2008 relative to its level before the attack. So clearly, there was a sort of initial effect.

Our assessment now is that the real GDP growth is likely to be lower than originally projected. The original projection for 2008 was around seven percent. And the external current account deficit will be higher, but in that we should note that this will be as much due to the recent increase in oil prices which is affecting current account deficits in a number of countries andbut also some reduction in capital inflows, in particular portfolio investment flows.

But, having said that, I should say that we still want to stress that the country has a very solid reserve position and also want to stress that it has a strong track record now of macroeconomic performance and growth on which to build.

Daily Times - Leading News Resource of Pakistan


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*Govt assures increased rice production​*
KARACHI: Caretaker Prime Minister, Mohammadmian Soomro assured rice exporters that this government will take strong measure to increase rice production by extensive research and development in new rice seeds with better yield to increase production, exports and to bring domestic prices down to benefit common people.

He was talking to a delegation of Rice Exporters Association of Pakistan (REAP) at the residence of Ex-Chairman REAP and Chairman of Ruling group Mr Abdul Rahim Janoo.

Soomoro said, he will immediately call REAPs delegation in Islamabad for a presentation on problems faced by the rice exporters and its proposals. Rice research institutes at Dhorki and Kala Shah Kaku will be asked to give desired results and REAPs representation will be put on management.

Replying to a suggestion of chairman REAP, Soomro assured to take immediate action on utilisation of RECP godowns at Pipri. Prime Minister urged rice traders to strengthen hands of government by bringing the price down, about law and order situation he assured to take immediate action on the spot and arranged meeting of REAPs delegation with I.G. Sindh police.

Daily Times - Leading News Resource of Pakistan


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*Violence losses amount to 8% of GDP: FPCCI ​*
KARACHI: The losses to national exchequer as well as to the public and private properties due to violence during five days after the assassination of Benazir Bhutto amounted to 8 percent of the Gross Domestic Product (GDP). This was disclosed at a meeting between Caretaker Prime Minister Mohammadmian Soomro and a delegation of Federation of Pakistan Chambers of Commerce and Industry (FPCCI), led by its President Tanveer Ahmed Sheikh and others few days back. Ministers for Finance, Commerce, Food & Agriculture, Water & Power, Petroleum, Interior and Governor State Bank of Pakistan (SBP) were also present. FPCCI president explained in details the after effects of the riots, arson and looting as a result of the tragic death of Motherma Benezir Bhutto on December 27, 2007. 

The delegation also raised the issue of inactivity on the part of the law enforcement agencies, which completely failed to protect the lives and the property of the citizens of Pakistan that was at the complete mercy of the miscreants. PM expressed grief and sorrow on the loss of precious lives as well as damage to public utilities and private properties and assured that strict action will be taken against the miscreants and the indolent officers howsoever senior they may be. The delegation also raised the issue of ever growing menace of load shedding and non-availability of gas for industries. The minister of water and power informed the meeting that due to cleaning of canals reduced water supply was being released from dams. He also informed that a high-powered electricity transmission tower of Hubco was blasted on 30th December, 2007 which disrupted electric supply to Karachi. The minister said that due to severe weather conditions there is abnormal increase in the demand for gas from domestic sector of Punjab and NWFP. 

Daily Times - Leading News Resource of Pakistan


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*12 thermal power projects to produce 2,346MWs of electricity ​*
* Thar deposits hold 175bn tonnes of coal, but are un-exploitable 

ISLAMABAD: Twelve thermal power projects are being finalised to add 2,346 Megawatt (MW) of electricity to the national grid in the next three years.

According to spokesmen of the Ministry of Water and Power and WAPDA, a meeting is planned for tomorrow to resolve issues regarding Thar coal utilisation for power generation. The spokesmen said deposits in Thar hold 175 billion tonnes of coal but require special technology for exploitation because of high contents of sulphur, and the provision of necessary infrastructure for the purpose.

On hydroelectric power, they said that apart from work on the Bhasha dam feasibility, a contract had also been awarded for a 1,000 MW Neelum-Jhelum project, which would be completed in the next five years. Work is also in progress on the 2,200 MW Munda dam feasibility, they added.

The spokesmen said a comprehensive five-year programme for the improvement of the distribution system had been launched to reduce line losses. The Asian Development Bank is providing $600 million and the World Bank $300 million to upgrade grid stations, distribution transformers and improve distribution lines, they added.

They said the power shortage had been caused by a rapid increase in demand, issues of fuel supply and the prevailing law and order situation. Consumers bought about 10 million pieces of electrical appliances such as ACs, refrigerators, freezers, micro-wave ovens, washing machines, TVs and fans in just one year, they said. Moreover, 25,000 villages have been electrified putting further pressure on the supply. 

The spokesmen said independent power producers were required to keep fuel for 21 days to meet any emergency, but fuel was kept for only two to three days. Notices have been issued to them in terms of power purchase agreements, they added. nni

Daily Times - Leading News Resource of Pakistan


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*Punjab to produce 100,000 skilled workers annually​*
LAHORE: At least 100,000 skilled workers will be produced through short training courses in Punjab annually, said Governor Khalid Maqbool on Friday.

According to a press release issued by the Governors House, Maqbool was addressing a meeting, which he had called to review the governments poverty alleviation steps in the province.

The National Vocational, Training and Technical Education Commission (NACTEC) would provide Rs 1.5 billion for this project, the meeting was told.

The governor granted the approval of conducting one-year diploma classes in Information Technology at the Government College University Lahore and at four other universities in the Punjab. 

The governor was told that 4,000 skilled workers had been produced through a technical diploma, approved by him (the governor) last year. Currently, 5,000 students are enrolled in various diploma programmes in the province, the meeting needed. The governor also approved a three-month diploma in the pharmaceutical discipline and called for launching nursing courses in the Punjab hospitals.

Punjab University vice chancellor (VC) Dr Mujahid Kamran, Agriculture University Faisalabad VC Dr Bashir Ahmad, Sargodha University VC Dr Muhammad Akram Chaudhry, University of Health Sciences VC Dr Mubasher Hussain and the Lahore College for Women University VC Prof Bushra Mateen were also present in the meeting.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Govt prepares bailout strategy for sugar industry ​* 
Removal of GST, increasing TCP purchases likely

Sunday, January 13, 2008

ISLAMABAD: The government is recommending a two-point bailout strategy to enable the ailing sugar industry to make payments to growers. The strategy involves removal of GST on sugar and increasing the strategic reserves to one million tonnes 

The Trading Corporation of Pakistan (TCP) will enhance its strategic reserves of 0.5 million tonnes to one million tonnes, as there is a glut in the local production of the sugar, reveals recommendations prepared for the secretaries committee meeting on the commodities and available with The News on Saturday.

The Economic Coordination Committee (ECC) of the Cabinet in its meeting on Nov 29, 2007 waived off 20 percent regulatory duty on the export of sugar, but at the same time, increased the customs duty (CD) by 10 percent from 15 to 25 percent on the import of sugar with an objective to discourage the import of said commodity.

It is interesting to mention that sugar millers are the darlings of the government and their interest is secured in every crisis whether due to shortage or due to glut of sugar supply in the market. In both cases, the sugar millers are beneficiaries and get concessions from the government to keep intact their margins.

Before the start of crushing season, millers and federal government agreed to start the crushing on time and the federal government through TCP would purchase 0.4 million tonnes from the millers at the market price but the stock was later increased to 0.5 million tonnes as record production was estimated for the season.

Now the millers are unwilling to pay growers as their last years stocks are still pledged with the public sector banks. To bail out the millers and ensure payments to the growers the federal government through TCP would purchase sugar from the millers at the market price and would build its reserves to one million tonnes, it added.

About millers demand of selling this extra 0.5 million tonnes abroad, the secretaries would discuss it and decide whether the TCP should keep it or sell it abroad. In case the stock is offloaded in local market the prices would ease due to excess supply.

It is also recommended by the committee to streamline the process for the TCP to purchase this 0.5 million tonnes of sugar from the millers.

The recommendations also suggest the removal of General Sales Tax (GST) on the sugar. Currently, Federal Board of Revenue (FBR) is collecting Rs3.15 per kg as GST on the sale of sugar.

Similarly, secretaries committee meeting on commodities would also deliberate on issue of additional working capital for the millers, as they are finding it hard to pay outstanding of the growers. 

The Ministry of Industries and Production (MOIP) has also submitted a summary with the ECC for the approval of more working capital to handle the payments of growers.

About millers accusation that TCP is not releasing their outstanding amounts for buying sugar from them, TCP would also brief the committee about its operations and regarding the payments made to the millers. 

Govt prepares bailout strategy for sugar industry


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*GDP to drop by 11pc if textile mills close: FPCCI ​* 
Sunday, January 13, 2008

KARACHI: President Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Tanvir Sheikh has claimed that if the textile mills were to close, GDP would drop by 11 per cent while stock market capitalisation will decline by 18 per cent.

The balance of payments will be badly affected and exports of about US$10.8 billion will decline which would show a total collapse of the external sector, he predicted while expressing great concern over the news that the Planning Commission (PC) has opposed incentives-laden relief package for the textile industry.

Sheikh said that Pakistan was the fourth largest producer and fifth largest exporter of textile products and removal of Pakistani textile from international market could create a worldwide crisis in the textile and clothing industry. He said that shortage of textile products could lead to the acceleration in the international prices of clothing and apparel products.

He rejected the statement that private sector did not make investment for its up-gradation and that the sector depended only on subsidies and packages without showing any positive outcome. He said that it was on record that the textile sector has invested more than $5 billion on modernisation and replacement of old plant and machinery and a major part of the investment was based on equity financing.

He further criticised the PCs proposal for investment on the setting up of textile training centres. He mentioned that PC approach was far behind the present stage of textile industry and added the textile industry has set up two world-class institutions of higher education in textile - one in Karachi and the other in Faisalabad.

He said that many universities in private sector were offering BS, MS, BBA and MBA in textile. Degree in textile engineering is also being offered by the Pakistani universities. The demanding degrees with specialisation in textile is an indicator that textile sector is providing and creating job opportunities for qualified persons. He further added that it was also important that all the research based studies carried out by the leading national and international institutions and experts realise the importance of the textile sector and the need for relief packages.

Citing examples, he said that a well-known Swiss consultant recommended fiscal incentives for Pakistani textile sector while Japan International Cooperation Agency (JICA) has also indicated that Pakistani governments support to the textile industry was relatively weak in comparison with the incentives provided by the governments of India, Bangladesh and Sri Lanka to their textile industries.

Quoting more examples, he said that according to a study conducted by Pakistan Institute of Development Economic, COMSTECH and the Higher Education Commission, textiles and clothing sector was facing a number of challenges.

To address these challenges and to facilitate the transformation of the textiles sector into a strong, dynamic, and internationally competitive industry led by the private sector, the public sector must create an conducive environment through a business-friendly regulatory framework, appropriate incentives to the private sector, institutional support and provision of quality infrastructure, Sheikh emphasised. All of these research reports and studies favour the genuine demand of the textile industry and in the light of all the observations it is hard to understand the logic behind the press statement issued by the PC, he concluded.

GDP to drop by 11pc if textile mills close: FPCCI


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*SBP plans to raise Rs20bn in bond auction *​ 
Sunday, January 13, 2008

KARACHI: Pakistans central bank said on Saturday it planned to raise 20 billion rupees ($320 million) through an auction of long-term government bonds this month.

The State Bank of Pakistan said in a statement it planned to reopen an Aug 22, 2007, issue of the 3-, 5- and 10-year Pakistan Investment Bonds (PIBs) on Jan 29.

It would also re-open an Oct 31, 2006, issue of 15- and 20-year PIBs, in addition to reopening a Dec 22, 2006, issue of the 30-year bond, it said.

Settlement will be on Jan 31.

The 3-, 5-, 10-, 15- and 20-year PIBs carry annual coupons of 9.1, 9.3, 9.6, 10 and 10.5 percent respectively, while the 30-year paper carries a coupon of 11 percent.

This will be the fifth PIB auction to be conducted by the government in the 2007/08 fiscal year, which began on July 1.

The last PIB auction was on Nov 29, when the central bank sold only 2 billion rupees worth of 30-year bonds at cut-off and weighted average annual yields of 11.6198 percent and 11.6176 percent, respectively. At that auction, the central bank rejected all bids received for the 3-, 5-, 10- and 15-year PIBs, while it did not receive any bid for the 20-year bond. 

SBP plans to raise Rs20bn in bond auction


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*Steps soon to boost per acre rice yield​*
KARACHI, Jan 12: Prime Minister Mohammadmian Soomro has assured the rice exporters of taking immediate measures to increase rice production by increasing per acre yield which would be achieved by developing new rice seeds through extensive research and development.

He said that the rice research institutes at Dhokri and Kala Shah Kaku would be asked to give the desired results and Rice Exporters Association of Pakistan (REAP) representative would be put on their managements.

The prime minister was talking to a delegation of rice exporters at a hi-tea given in his honour by the former chairman of REAP, Abdul Rahim Janoo, recently.

He further said that the REAP delegation would soon be invited to Islamabad for a presentation on problems and issues faced by rice exporters and also welcome their suggestions.

On a point raised by a REAP member about the fate of RECP godowns at Pipri, the prime minister said soon some pragmatic action would be taken with regard to their utilisation.

Mohammadmian Soomro asked rice traders to strengthen hands of the government by bringing prices down in the domestic market and assured that all measures were being taken to improve law and order situation in the country.

He also promised to arrange a meeting of REAP delegation with the IG Sindh.

The prime minister said that the federal food and agriculture minister would be asked to hold a meeting with REAP members to discuss about rice variety 386 and also to find ways and means to increase exports without disturbing local market.

Abdul Rahim Janoo speaking on the occasion said the Mohammadmian Soomro is a patron of rice trade and visited REAP as Governor of Sindh, chairman of Senate and acting president.

He further said that Mr Soomro was always available to solve rice traders problems and help in getting Nooriabads Rice Zone.

Due to his afforts, Mr Janoo said all stakeholders of rice, including growers, millers and exporters, are now working in harmony in the larger interest of rice trade.

The prime minister was informed that REAP would achieve export target this year in value term because of high prices but export in quantity term would be down due to crop shortage.

Steps soon to boost per acre rice yield -DAWN - Business; January 13, 2008


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*40 percent garments units closed down: high utilities cost, R&D subsidy shift blamed ​* 
ISLAMABAD (January 13 2008): The continuous increase in the cost of utilities and the shift of R&D subsidy towards the real 'research and development' has forced 30-40 percent garments producers to close their businesses, sources told Business Recorder here on Saturday.

They said that the increasing cost of utilities, like electricity and gas, and the grant of 6 percent R&D subsidy to the real 'research and development' of the textile sector instead of giving it to exporters, has forced the garments industrialists to close their factories to avoid any further losses.

The frequent interruptions in gas and electricity supply cause delay in meeting export orders. Therefore, to overcome the delay, the exporters have to send their consignments by air instead of sea which costs Rs 150 per roll of fabric, sources said.

According to Federal Bureau of Statistics, the country's overall trade balance stood at $1.089 billion in July 2007 against $1.12 billion in the same month of 2006. The export growth of Pakistan is not indicating a remarkable development for the last three years. There is just 6 percent R&D subsidy that is being given to the exporters.

With the 30-40 percent garments units' closure, about one million spindles of 160 textile mills are inoperative. In Lahore, Karachi, Faisalabad and Multan, most of the knitwear companies have already shut down.

The government has set export target of $19.2 billion for 2007-08, whereas in the first quarter of this fiscal year, exports grew at less than 5 per cent, to $4.25 billion, while imports grew by 8.5 percent, to over $8 billion.

While total share of Indian textile industry in its export earnings is 16.63 percent, Pakistan's textile industry share is more than 60 percent. Pakistan is giving just 6 percent subsidy to exporters for R & D while India has provided visible and invisible cash subsidies to its exporters in order to get the export target of $50 billion by 2010.

A textile exporter said that the Ministry of Textile has written letters to all textile industrialists that 6 percent subsidy, that was being given to the exporters in the name of R& D, would now be used in real 'research and development'. It means that now the textile exporters will not be paid subsidy on exports.

A committee has also been set up which will monitor whether the exporters are using this 6 percent in real 'research and development' or not. The committee will consist of representatives of 4 garment associations of Karachi, Secretary of Textile Ministry and the Chairman of FPCCI.

Business Recorder [Pakistan's First Financial Daily]


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*CDWP approves 40 projects of Rs 69.3 billion *​ 
ISLAMABAD (January 13 2008): The Central Development Working Party on Saturday referred 10 development projects costing Rs 62.9 billion for approval to the Executive Committee of the National Economic Council (Ecnec) and approved 30 schemes worth Rs 6.4 billion.

The total foreign exchange component has been estimated at Rs 53.2 billion. The CDWP met here with Planning Commission Deputy Chairman Dr Akram Sheikh in the chair. The federal government will finance 32 projects costing Rs 45 billion. In infrastructure sector, the CDWP approved 15 projects costing Rs 54 billion with FEC of Rs 30.3 billion. In social sector the number of approved projects is 21 worth Rs 11.6 billion. In other sectors, 4 projects costing Rs 3.8 billion were approved, Planning Commission spokesman Mohammad Asif Sheikh said.

Speaking at a news briefing after the meeting, Sheikh said that 13 projects costing Rs 23.8 billion were approved on all over the country basis. Nine projects worth Rs 28.6 billion were approved for Punjab, 8 schemes worth Rs 5 billion for Sindh, 4 projects worth Rs 10.2 billion for NWFP, and 3 projects worth Rs 0.5 billion for Balochistan. One project was approved each for Azad Jammu and Kashmir, Fata and Northern Areas. The total cost of the three projects is Rs 2 billion.

Of the projects located in Punjab, 2 projects costing Rs 9.7 billion will be fully financed by the Punjab government. Of the 4 projects in NWFP one project will be fully financed by the government of NWFP. Of the 8 projects in Sindh, one project namely "development of infrastructure in various industrial estates in Sindh costing Rs 2 billion has been recommended on 50:50 cost sharing basis. Sindh government will fully finance 3 projects costing Rs 0.7 billion.

The New Balakot City Development Project costing Rs 12 billion will be financed from the Earthquake Rehabilitation and Reconstruction Authority (Erra) budget. The CDWP also cleared the Punjab government ADB-assisted project of 'Barani integrated water resources sector project' of Rs 6.3 billion and water and power ministry's scheme of 'power distribution enhancement project' costing Rs 20 billion.

Of the 40 projects, cost of 6 projects has been revised and their net addition in total cost is Rs 1.4 billion. In energy sub-sector the CDWP approved 3 projects worth Rs 20.51 billion. In physical planning and housing, five projects costing Rs 21.62 billion stand approved. In transport and communication, the meeting approved five development schemes worth Rs 11.45 billion. In water resources, 2 projects costing Rs 0.35 billion were approved.

The meeting approved 9 projects worth Rs 8.9 billion of the Higher Education Commission (HEC). Five projects Navtec schemes worth Rs 0.55 billion were also approved. The ministry of science and technology scheme of establishing textile testing and research center Faisalabad worth Rs 0.28 billion and Pakistan Atomic Energy Commission (Paec) scheme of establishing center for earthquake studies of Rs 0.14 billion were also approved.

Business Recorder [Pakistan's First Financial Daily]


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*Korea offers support for technical institutions in Pakistan ​*
ISLAMABAD (January 13 2008): Korean Ambassador Un Shin has offered technical assistance for technical training institutes to help increase technical workforce in Pakistan. He made these remarks after visiting Anjuman Faiz-ul-Islam Technical Institute, Rawalpindi.

The Ambassador said that Korea is not only ready to give technical guidance to such institutions but also provide employment opportunities to their students after completion of education. He appreciated the performance especially the technical and social services of the Anjuman, which it provided to orphans and the poor children during the last 40 years.

President of Anjuman, Mian Siddique Akbar, Vice President, Dr M D Khan, Secretary General, Raja Fateh Khan and Professor Niaz Irfan briefed the Korean Ambassador about the performance of the organisation. They also informed the distinguished guest about future plans and their implementation process.

Business Recorder [Pakistan's First Financial Daily]


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*Business community to be compensated for losses suffered: Soomro​*
KARACHI (January 13 2008): Caretaker Prime Minister Mohammadmian Soomro has assured business community that after receiving Issani commission report the government would finalise its strategy to compensate all those who had suffered losses during violence erupted after the assassination of Benazir Bhutto.

He gave this assurance while talking to representatives of Karachi Chamber of Commerce and Industry (KCCI), Site Association of Industry (SAI), Federal B Area Association of Trade and Industry (FBAATI), Korangi Association of Trade and Industry (Kati), North Karachi Association of Trade and Industry (NKATI), Hyderabad Chamber of Commerce and Industry (HCCI).

Sources quoted the caretaker prime minister as saying that the government has already established a commission to ascertain actual losses and prepare a comprehensive report on it. Mohammadmian Soomro said that the commission has been given a task to submit its report on or before February 2, 2008.

The caretaker prime minister advised business community and others to cooperate with the commission and provide details of losses on or before January 21, 2008 to help the commission to finalise its report earlier. He said that the government has already decided to pay compensation to families of those who lost their life during these incidents.

Mohammadmian Soomro said that the government was determined to improve security arrangements in the country in general and in industrial areas in particular so that such incidents do not take place in future. Working capability of law enforcing agencies would also be improved, he added.

Expressing concern over mass scale looting and burning of property after the incident of December 27, 2007, he said that unprecedented behaviour was exhibited largely by those who had no sympathy for life and property.

Governor Sindh Dr Ishratul Ebad Khan, caretaker chief minister Sindh former justice Abdul Qadir Halepota, Governor State Bank Dr Shamshad Akhtar, Inspector General Police, Home Minister and secretary, Director General Rangers, President KCCI Shamim Ahmed Shamsi, Chairman Kati Shaikh Fazal-e-Jalil, Chairman FBAATI Idrees Gigi, Patron-in-chief NKATI Captain Moiz Khan, Chairman Kite Abdul Haseeb Khan and other high officials and business community representatives were present in the meeting.

Business Recorder [Pakistan's First Financial Daily]


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*Load shedding leaves three million jobless ​* 
MULTAN (January 13 2008): All industrial units in Southern Punjab had closed their one shift due to persistent load shedding rendering more than one lakh workers jobless, said a labour leader Ashfaq Ahmed Khan while talking to newsmen here on Saturday.

He said that load shedding has forced over three million labourers on daily wages across the country to sit idle in their homes and wait till the power crisis is over. In addition, over 42,000 factory workers have also been affected and left without any regular sources of income, he added.

Because of heavy load shedding, many small factories are not working and more than three million labourers are sitting idle. "The main reason for this joblessness is privatisation of several public entities," he said, adding the private companies had reduced the number of employees and increased working hours without paying them extra money.

"Before the privatisation of Pakistan Telecommunication Limited (PTCL), the total number of its employees was 65,000 but after privatisation, just 30,000 employees are now working in the organisation," he said.

He said Habib Bank was the biggest bank of Pakistan with 1,425 branches in the country and almost 48 world-wide branches but it was sold out at a throwaway price of Rs 22 billion. "The number of its employees has now been reduced to 7,000, which is four times less than what it was before the privatisation," he added.

He said flour price had reached Rs 30 per kilogram, which was beyond the reach of poor labourers. "In 116 cities, people stand in queues for hours to get flour but mostly return empty handed," he said.

He said that government had fixed the minimum salary of unskilled labourers at Rs 4,600 per month but the mill owners were paying them much lower wages, adding, the government had banned unions, which stood up for rights of under-paid and unemployed labourers.

Business Recorder [Pakistan's First Financial Daily]


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*Poverty Alleviation Fund changing the lives of poor: World Bank ​* 
FAISALABAD (January 12 2008): Pakistan Poverty Alleviation Fund (PPAF) is making a difference in the life of the poor in the country and 1.5 million micro-credit loans (average loan-size US $150) have been provided benefiting nearly 9 million people, said updated World Bank report.

World Bank observed that the PPAF programme is impacting over 10 million people. PPAF has mobilised over 66,000 community organisations (COs) in 27,000 localities across 111 districts in the country. Mobilised communities are helping themselves and accessing services from civil society, government and markets.

According to a World Bank report, over the last 7 years PPAF has driven the micro-finance sector growth from 60,000 borrowers to more than 1.25 million active borrowers in the sector, while "Skill Development and Capacity-building" also improving. Over 200,000 people trained by PPAF in various skills including management, financial, mechanical and technical skills, water conservation, agriculture, horticulture, livestock, and marketing etc, said report.

The report disclosed that more than 13,000 small scale village-based projects have been identified, constructed and maintained by communities right across the country benefiting nearly 6 million people. These projects mainly include drinking water supply schemes, drainage and sanitation, irrigation, roads, culverts and small bridges. PPAF is also doing more innovative schemes that include: Integrated Areas Up-gradation Projects, Drought Mitigation Projects and Technological Innovative Projects, including Reverse Osmoses Plants, Drip Irrigation, and Solar Energy etc. Besides providing social benefits and improving the rural environment these projects have saved significant amounts in health related expenses in addition to providing job opportunities for local communities, WB report mentioned.

WB observed that PPAF supported projects are labour intensive and have generated significant amounts in wages. Health and Education (a recent pilot intervention): nearly 100 new education and health facilities opened by PPAF in the rural areas providing high quality services and benefiting primarily women and girls.

Commenting over the "Earthquake Restoration and Rehabilitation", WB report said that over 100,000 houses and 300 schemes are being reconstructed in the earthquake affected areas, with a special focus on the vulnerable, and disabled. Nearly 20,000 people trained in earthquake resistant construction methods, directly resulting in over 70percent compliance with earthquake standards for all houses under construction. PPAF is also regularly involved in relief work, including for the earthquake victims and more recently the flood affected; and has also initiated a special programme for the fragile coastal areas.

PPAF's institutional mechanism is seen as a best practice public-private partnership model; with its solid governance structure, private sector management and transparent funding mechanism and is being replicated in other Government programmes that are trying to deliver services to the poor. These replications range from education delivery in Balochistan, to rural telecom services across the country. Social Mobilisation has been mainstreamed in public policy and is now part of the poverty reduction policy and the Mid-term Development Framework of the Government.

PPAF has moved beyond being just a project and is now considered the private sector arm of the government's poverty alleviation agenda. The massive earthquake reconstruction work that the Government has assigned speaks of the trust and confidence that it has in the institution.

WB observed that PPAF's investment in civil society (it has 70 civil society partners across the country) has resulted in a new found confidence and greatly enhanced capacities and capabilities of the sector to do much more for the poor. It has also enabled them to leverage support from provincial and local governments; commercial banks and other donor.

Investing in building institutions of the poor that are inclusiveness; participatory; and well governed has high pay-off; for it builds their confidence and social capital, gives them voice and empowers them to participate as active and informed citizens in the development and political process. It ensures better provision of services and delivers far more profound and sustainable development outcomes.

PPAF's long term strategy is to cover all the villages and hamlets in the poorest districts of Pakistan through a comprehensive range of activities. There will be a major effort to build institutions of the poor in these districts, build their capacity and provide occupational skills training leading to exponential growth of micro-enterprises and meeting the key infrastructure needs of these villages, said WB report.

WB report stated that the key challenges ahead include: ensuring that the institutions of the poor continue to be underpinned by the core values of inclusiveness, participation and good governance; the outreach of micro-credit in a potentially huge market; continuing support of the government and donors to this pro-poor agenda and meeting the expectations and galloping demands of the poor; and linking in a more meaningful and productive manner to the local, provincial and federal government structures and programmes.

According to WB report, poverty remains a serious concern in Pakistan, particularly in its rural areas. Inadequate access to basic services and financial and other resources; weaker communities, particularly the exclusion of women from the public sphere and the development process; low social capital; ethnic and religious strife; a spate of natural calamities in recent years; have all contributed towards the persistence of poverty in the country.

The World Bank funded Pakistan Poverty Alleviation Fund Project (PPAF) is designed to reduce poverty and empower the rural and urban poor in Pakistan through the provision of resources and services to the poor, especially women. This is being achieved through an integrated approach that includes building institutions of the poor and then providing them with micro-credit loans; grants for small scale infrastructure projects; training and skill development and social sector interventions. PPAF has also contributed significantly in rebuilding lives, fostering resilience and restoring assets of the poor who have suffered from the earthquake and drought.

The PPAF programme is impacting over 10 million people. PPAF has mobilised over 66,000 community organisations (COs) in 27,000 localities across 111 districts in the country. Mobilised communities are helping themselves and accessing services from civil society, government and markets. PPAF's investment in building institutions of the poor, that gives voice, empowerment and nurtures social capital and trust amongst communities is resulting in; increased collective and self-help initiatives; increased incomes; increased food consumption; increased expenditure on utilities; increased assets acquisition including household repair; and increased social outcomes including improved female mobility and their enhanced social status. (All verified through third party evaluations).

PPAF mobilised communities is also leading to their political empowerment. Community members have contested local government elections and more than 500 members have been elected.

Business Recorder [Pakistan's First Financial Daily]


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*Acer achieves 335.1 percent growth ​*
ISLAMABAD (January 13 2008): Acer Computer is the number one IT vendor in Pakistan with a market share of 6.6 percent, says IDC, the international research and analyst house. Acer notebooks have been very well received in Pakistan. Acer's year-on-year growth for notebooks for Q3 of 2007 was 335.1 percent, says a press release.

"Acer's state-of-the-art productline and innovative technology have helped establish Acer as the leading IT brand in a very difficult market," said Zahid Mahmood, Country Sales Manager Pakistan and Afghanistan, Acer Computers Middle East Ltd. "Acer position in the market is a direct result of our very successful channel business model, our partners have contributed heavily to Acer's success," he added.

IDC's latest figures show that Acer Computer is the vendor of choice both for consumers and business users. Overall, for desktops and notebooks, the company holds the number one position in Pakistan with a market share of 6.6 percent and year-on-year growth of 154.7 percent, whereas the market growth has only been between 30 to 40 percent.

An end-user breakdown of sales in the Pakistani PC market by IDC revealed that the education sector contributed to 6.7 percent of sales. Government spent 9.9 percent whereas small office and home's jointly constituted 29.2 percent. Small and medium businesses contributed a massive 30.6 percent whereas large and very large businesses spent 23.7 percent.

Business Recorder [Pakistan's First Financial Daily]


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## Contrarian

Acer is owned by who Neo? Which country houses the HQ?


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## Plasma

malaymishra123 said:


> Acer is owned by who Neo? Which country houses the HQ?



Taipei, Taiwan


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## Neo

*Rs80bn cut in development budget likely​*
ISLAMABAD, Jan 13: The government is considering reducing development budget by up to Rs80 billion or 15 per cent to partially offset the rising fiscal deficit.

Informed sources told Dawn that a number of proposals were being worked out for the required budgetary adjustments by the ministry of finance. It suggests that the government will need to reduce the allocation for the Public Sector Development Programme along with slightly higher fundraising through national savings schemes to bridge the gap between available resources and expenditures.

The federal and provincial governments were able to utilise Rs128 billion in the first quarter (July-September) of the current fiscal year. Another Rs100 billion was utilised by project executing agencies till December 31, 2007.

The second quarter funds utilisation usually remains higher than the first quarter because of a pick-up in implementation activities after the start-up problems.

The sources said that the pace of implementation had slowed down in the recent weeks because of the elections and overall security environment which also resulted in the evacuation of foreign engineers from the project sites.

Officials at the finance ministry expect the overall development expenditure will remain more or less at the last year level or at best touch Rs450 billion.

Caretaker finance minister Dr Salman Shah said the government had half a year to make fiscal adjustments which may include a reduction in the development budget in the last quarter of the financial year because the government had to meet the overall objective of restricting fiscal deficit at four per cent of GDP.

The government had allocated an amount of Rs520 billion for the current years PSDP (2007-08) which was about 25 per cent higher than the previous years Rs415 billion.

An official at the Planning Commission said that it was yet to receive proposals for a reduced PSDP, but agreed that a mid-year review of the overall economic situation, including the development programme, was currently in the final stage.

He said that there was a likelihood that releases for slow-moving projects or those failing to take off owing to various bottlenecks might be withheld on the basis of mid-year review.

Last year, the federal and provincial governments were able to spend about Rs435 billion or five per cent of GDP. This year, the government has transferred about 25 per cent of total funds to the provincial governments and federal executing agencies at the beginning to help them start the projects.

The utilisation of Rs128 billion funds in the first quarter of this year was, therefore, almost double the Rs68 billion utilised during the same period last year.

As a result, the release of funds in the first three months of the current year stood at 1.3 per cent of GDP, compared with 0.8 per cent of GDP during the same period last year.

Rs80bn cut in development budget likely -DAWN - Top Stories; January 14, 2008


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## Neo

*Revisiting the budgetary targets​*
THE state of the economy as indicated in its first quarterly report 2007-08 by the central bank is likely to lead to a downward revision of the ambitious annual budgetary targets.

Official planners are believed to have sought time from the caretaker prime minister to brief him over the deteriorating economic situation. The objective is to seek the governments approval for revising downward various fiscal targets and goals for 2007-08. That may include possible cut in development expenditure.

A decision is also said to have been taken to make adjustments in the Poverty Reduction Strategy as part of the presentation being planned for the caretaker cabinet.

A joint presentation on the issue by the senior officials of the economic ministries is expected to be given to the caretaker prime minister and his cabinet team very soon. At the same time, the World Bank, the IMF and the Asian Development Bank (ADB) are also being informally contacted to seek their comments.

A major problem is coming from fiscal side and on the external sector mainly on account of unpredictable rise in oil prices. And at the going prices, officials concede that the oil import bill would reach to $10.5 billion and may result in Rs152 billion hit to the budget, if domestic prices remain frozen.

Fiscal indicators were turning weaker primarily due to development expenditure rising by 89.5 per cent to Rs130 billion during the first quarter of 2007-08 compared with the same period last year and the current expenditure increasing simultaneously by 34.34 per cent to Rs340 billion. A slower economic growth than targeted is unlikely to yield estimated tax revenue.

Yet, the officials in the economic ministries have reacted to the State Banks report by maintaining that there was no need to say that risks to the economy were increasing. The central bank report could have termed them as challenges rather than calling them risks to avoiding any panic in the public, an agitated official said. However, he agreed that the finance ministry cannot direct the central bank to do this or do that and the central bank has to offer its own independent views on economic issues.

Former director of the Pakistan Institute of Development Economics (PIDE) Dr A.R. Kamal believes that the government will have to revise downward its fiscal targets set for the current financial year. This was evident much before the assassination of Ms Bhutto while the situation today is extremely alarming. Due to the ongoing load-shedding and the decision of the Federal Bureau of Revenues (FBR) to revise its targets downward and the unprecedented losses that occurred between December 27 to 31, the government is left with no option but to urgently revise to lower its fiscal targets. There was a revenue shortfall and export growth was declining while imports were rising and trade deficit was widening.

Under these circumstances, there is no way the government can achieve its 7.2 per cent GDP growth target or reach even close to that target, Dr Kamal said. The oil import bill was increasing. The money supply had increased because of the governments huge borrowing and these are not good signs for the economy, he added.

Former senior World Bank official Abid Hasan sees the situation very difficult, maintaining that if the government continues with its increased expenditure, it will be forced to revise downward its budgetary targets set for 2007-08.

He said the government might scale down the size of Public Sector Development Programme (PSDP) to meet the situation. There is a serious problem of current account deficit and nobody knows how long the government will finance this deficit through uncertain foreign capital inflows. Then subsiding energy was becoming a serious issue. And his may ultimately cost Rs150 to Rs160 billion to the government. They would try to go for some window dressing to get away with this current serious situation. He called upon the government to take bold decisions to avoid landing in troubled waters.

When contacted Special Secretary to the ministry of finance Dr Ashfaque Hasan Khan said it was premature to talk about revising downward broad economic indicators set for 2007-08. He was hopeful that increased industrial production and improved performance of the agriculture will obviate the need to revise fiscal targets.

He said that industrial production in October was 9.83 per cent over 7.7 per cent of October last. Despite billions of rupees losses due to violence seen during December 27 to 31, the industry is expected to grow at 11-12 per cent rate, he said.

Asked about wheat output, he said with the ongoing rains across the country, wheat production target of 24 million tons was likely to be achieved against 23.3 million tons of last year. Dr Khan said the negative impact on GDP will be when there will be a serious impact on agricultural growth.

Yes the problem will come from cotton production which will be less than the target of 14.1 million bales. He said the government will miss this target. Rice production would be slightly higher than last year. Likewise, he said, that last years sugarcane production at 54 million tons will be surpassed by an expected 62.4 million tons this year.

Large scale manufacturing is expected to grow at an average rate of 10.5 per cent though its performance remained at 7.7 per cent during the first four months of the current fiscal year.

Similarly, this year there will be 40 per cent increase in sugar production and its weight in the GDP is 4.155 per cent. At this stage it cannot be said what will happen to our various budgetary targets, he said hoping that despite various problems the government will manage 6.6 per cent plus GDP growth against the target of 7.2 per cent.

He said growth estimates vary from institution to institution. For example, Merrill Lynch predicted 5.8 per cent GDP growth rate while ADB was projecting it would be 6.5 per cent. The central bank said it would be 6.6 to seven per cent.

The problem with Pakistan, he said, was that it had witnessed seven per cent plus GDP growth in the last 4-5 years. This has built expectations that economy will continue to grow around this level in the foreseeable future. The government, he said, had always been saying that GDP growth would be in the range of 6-8 per cent per annum over the next one decade.

He believes that even six per cent GDP growth indicates a robust economy especially when many countries has been witnessing recession.

The problem, he said, was on the fiscal side and the current account balance, while the inflation primarily food driven, is a global phenomena.

Revisiting the budgetary targets -DAWN - Business; January 14, 2008


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## Neo

*Making exchange rate more competitive​*
The State Bank of Pakistans warning on the growing challenges to the economy was followed by the slide of the rupee in the inter-bank.

In its quarterly report of fiscal 2008 released on Saturday, January 5, the SBP predicted in no uncertain terms the annual current account deficit going up to 5.2 per cent by end June as against 4.9 per cent in the last fiscal year. And from the following Monday, the rupee came under strain and by Thursday noon was quoted in inter-bank market at Rs62.75 a dollar.

The July-October current account imbalance at $3 billion is better than $3.5 billion deficit in the same period of 2006-07, but things went wrong from the second quarter, particularly from November when politics and expediency overtook all economic considerations. Deterioration set in and the chain of events that followed November 3 emergency exposed the national economy to increasing risks.

Market analysts now predict that rupee-dollar parity may go down further by the end of next June. But some exporters want a dollar at Rs70 to boost their foreign sales, no matter how it will impact the import bill and inflation. Caretakers will avoid taking such a decision but the elected government will have a tough time to draw up a strategy, remarked an economist. The central bank believes in a market-driven exchange rate, intervening only in case of abnormal volatility.

The rupee depreciated by 1.4 per cent between July and December 12 as the deterioration set in the external sector in November/December. The SBP report informs that the rupee value depreciation was limited to 0.5 per cent in July-October 07.

Between July and October, 07 the financial and capital account showed a surplus of $3.1 billion and raised the foreign reserves to $16.4 billion. But the subsequent developments between November/December reduced the reserves to $15.5 billion. Financial analysts say there was no respite from the process of haemorrhage of the foreign exchange reserves.

Dollars outflow has overtaken dollars inflow, said an analyst in a money exchange company while trying to explain the slow erosion of rupee value, adding that, the demand for dollars from importers and oil companies in the inter bank is mounting with every passing day. He sees little possibility of any respite as international oil prices are giving no indications of a reversal and merchants are set to import wheat at $450-500 a ton along with many other consumer items.

On the other hand, the inflow of dollars is slowing down. The export growth is too sluggish. The remittances may come under strain after November 3 emergency and following the devastating incidents that shook the country. The latest was the incident on last Thursday of a bomb blast that shattered investors confidence and market watchers now fear a big haemorrhage of portfolio investment. An official justification, issued by the federal finance ministry for imposition of emergency, apparently failed to provide comfort to investors.

And yet, Asad Saeed, a noted economist, is confident that the rupee exchange value will not tumble down. He also rules out a huge devaluation of the rupee to boost exports as it would raise the import bill and push the inflation to un-manageable limits. However he wants a hard look at the budget and economic policies. If the monetary policy is to be retained, the fiscal policy needs to be reviewed, he maintains.

But on the other hand, a retired central banker foresees bad days ahead: I have been warning for the last few years about the growing imbalances, he says, as according to him, a prudent policy-fiscal and monetary-should bring about a balance within four to five years. He estimates the trade imbalances for 2007-08 at around $15-16 billion by end-June next and the current account deficit at around $7-8 billion Foreign borrowing is becoming too expensive.

The government has already borrowed Rs191 billion from the banking sector which is Rs35 billion more than the target and further borrowing will create more reserve money pushing up inflation, he added..

He says that foreign investment came mostly in services sector which, in turn, outgrew the real commodity sectors. It does not provide commodities but it creates demand for the same. No wonder, 56 per cent of our import bill directly or indirectly---is for consumer goods, he said while including mobile phones in the same category.

The SBP report identifies two potential factors that could impact on the economy. The first is the decrease in export growth and the second being the rise in cost of financing for funding external deficit.

Our exports are expensive and too meagre in quantity as compared to our competitors-- India, China, Bangladesh and other countries, the retired central banker said. Mere cosmetic measures will not improve the export performance but a whole revamping of industry and agriculture will have to be done, he says. There has to be long-term policies with periodical reviews.

The SBP report also reminds its readers that domestic economy is now more prone to external shocks than ever before. This has important policy implications going forward, the report says while pointing out that domestic prices will be more sensitive to international prices even in face of surplus availability. The report does not elaborate much but businessmen mention wheat as an example. Farmers produced 23.3 million tons of wheat against the requirement of 22 millions. The growers were paid only Rs425 for 40 kg as against almost three times of this price in the international market. Even now, wheat in Karachi is selling for Rs22 a kg while in Lahore, it is Rs19 a kg.

Making exchange rate more competitive -DAWN - Business; January 14, 2008


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## Neo

*Coping with the worst power shortage​*
THE power consumers of Wapda and KESC are enduring with remarkable patience the worst power shortage since 1980s.

Perhaps, they are conscious that they belong to the lucky 50 per cent population having access to the national power grid. The government has consoled the consumers that power shortage and load-shedding are side effects of the growing national prosperity. That is not the whole truth. The rising power shortage and the looming bankruptcy of the power sector are mainly the result of poor planning, failure to upgrade an old and inefficient power grid, tolerating unsustainable operating losses and an ineffective power policy.

In the past 10 years, there were clear indications of the impending power crisis. The government was fully aware of the looming power shortage at the time of framing the 1998 and 2002 power policies. But there was no will to investigate and adopt a reasonable, cost-effective and lasting remedy.

The power grid includes lot of inefficient and unreliable power generating, transmission and distribution facilities. As a result, the grid normally operates at less than 80 per cent of its installed or de-rated capacity. The capability of the power grid is also affected by an imprudent planning by the KESC and Wapda. For example, the KESC heavily relies on supply of the natural gas for generating 78 per cent of its electricity. At the same time, Wapda depends on hydropower and natural gas for generating 80 per cent of its electricity. The simultaneous shortage of these resources in the winter drastically reduces the power generating capability of the grid. For this reason, in December 2007 the actual output of the power grid fell to 60 per cent of its installed capacity.

Another example of the imprudent planning is the dependence of Wapda on the hydropower developed as a secondary benefit of the irrigation projects. The dependence on the irrigation demand makes the electricity less reliable than the electricity supplied by an independent hydropower project. In fact, most of the countrys hydropower is dependent on three factors, first the irrigation demand, second the water level in reservoirs and third the water flowing in rivers.

On the other hand, the output of the run of river hydropower projects depends on the water flowing in the river only. If Wapda had developed some of the promising run of river hydropower projects, the reliability of the hydropower would have been far better than it is the case at present. However, despite many studies in the last 40 years, no major run of river project was implemented out of the most promising potential.

Wapda and the KESC also annually lose huge amount of their revenue due to extra fuel and loss of electricity, besides the loss of capacity of the grid. The average efficiency of their thermal power plants is so low that their operation requires very high expenditure on fuels. On top of it, about 26 per cent of the generated electricity or 30 billion kilowatt- hour per year is lost in transmission and distribution systems or it is simply stolen. The annual loss of electricity amounts to at least Rs120 billion. Total annual losses suffered by the power sector, including the loss of capacity, the loss due to inefficiency and the loss or pilferage of electricity, are simply unsustainable. If remedial measures are not taken soon, these losses and other short comings of Wapda and the KESC will result in the bankruptcy of the entire energy sector. That eventuality can severely disrupt the economic growth.

Finally the policy called Policy for Power Generation Projects Year 2002 neither prevented the power shortage nor attracted private investment in power generation from the indigenous coal and hydropower. It is futile to expect the policy to attract the required investment for its anticipated 34,885 MW additional demand by 2,027 or an average addition of 1400 MW per year. So far, no hydropower and coal-based project initiated under the policy has achieved the financial closure. Only the low risk gas and fuel oil- based thermal power projects achieved the financial closure.

However, the total output of these projects is too small to make any difference to the rising power shortage. Furthermore, there is an acute shortage of gas which normally shuts down most of the gas-based plants in the winter. For example, even the recently rented power plants were shut down due to gas shortage in December 2007. On the one hand, the fuel oil is an imported and now very costly commodity that is affecting the affordability of electricity and the countrys current account and trade deficits.

The power grid requires an annual infusion of several billion dollars for a foreseeable future on repairs, retrofitting, upgrading, replacements and additions. But it is also clear that the government is not in a position to arrange and manage such a huge investment. Moreover coal and hydropower are the main dependable sources of electricity. But these resources cannot be fully harnessed without private financing and that would be possible only if the power policy offers incentives. The government needs to frame a new policy that offers incentives commensurate with risks and tangible as well as intangible benefits of each technology of power generation.

Although water as an input for hydropower is virtually free and coal is the cheapest fossil fuel, the green field coal and hydropower projects require 100 to 200 per cent more investment per MW than the gas and fuel oil-based power projects. But the price of fuel oil and natural gas is very high and volatile. By the end of 2007, the prices of fossil fuels in the international market in dollar per million British thermal units were 17, seven and three respectively for fuel oil, natural gas and coal. The coal and hydropower-based projects also face a large number of risks, but they provide the following tangible and intangible benefits:

Providing cheap and inflation proof electricity. Reducing the dependence on foreign oil and gas imports and the attendant economic and national security problems Enhancing power system reliability and flexibility. Spending up to 80 per cent of the construction costs on local inputs and jobs The hydropower provides the following additional benefits:

Reduction in the use of non-renewable resources. Reduction in the adverse environmental impacts of thermal power generation, including a relative improvement in air quality and resulting human health.

More than 40,000 MW untapped hydropower can meet Pakistans future demand of electricity but for the stability and the reliability of the power grid the hydropower needs back-up of an inexhaustible Thar coal. The coal is still the most widely used fuel for power generation. This is evident from the share of 39, 19, 16, 15, 10 and one per cent respectively of coal, hydro, nuclear, natural gas, oil and other sources in the total output of electricity in the world. The USA has abundant coal and uses it to generate over 49 per cent of the total electricity. Canada has abundant hydropower and generates 61 per cent of its electricity from hydropower. Pakistan should also make optimum use of its coal and hydropower for achieving the energy security, for overcoming power shortage, for stabilising the price of electricity and for reducing the current account and trade deficits.

Coping with the worst power shortage -DAWN - Business; January 14, 2008


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## Neo

*Hard decisions or IMF bailout?​*
Amid deteriorating economic indicators and continuing political turmoil, independent economists believe that the government - irrespective of who is running the show  is running short of time for taking long pending, tough policy decisions for resource mobilisation.

With mounting risks to macro-economic stability and no remedies yet in sight, financial analysts ask: Is the government taking a path that would put Pakistan again in the lap of International Monetary Fund within a couple of years of breaking the proverbial begging bowl or the national economic sovereignty could be salvaged by bold decisions upfront?

Those within and outside the government concur that the country has moved into the vicious cycle. The prices are out of hand, while fiscal deficit and energy crisis are emerging as a major risk to the current growth momentum.

In the first quarter of the current fiscal year, the fiscal deficit increased to 1.6 per cent of GDP against the targeted one per cent. If the trend continues, this years deficit should not be less than 6.4 per cent, much higher than the target. In the first six months, the Federal Board of Revenue is set to reduce revenue target by Rs35 billion. Coupled with this, another additional burden of Rs100 billion in subsidies on oil and electricity would further raise the overall fiscal deficit.

And the current account deficit is rising every year; foreign capital and financial inflows are adding to outflows; and repayments due this year of the $12.5 billion foreign debt that was re-profiled five years ago, will increase.

The next six months would be crucial for the macroeconomic management of the economy particularly the policy of subsidising oil, power and food items, the central bank chief Dr Shamshad Akhtar warned the federal government on Tuesday last.

Is Musharraf administration strong enough to confront the critical fiscal challenges head on? Is it time to tax real estate and stock market for additional resource mobilisation given the fact that deals worth billions of rupees take place in each sector every day while contributing very little to the real economy? Or the axe has again to fall on general public when the vast majority of the population is already struggling for survival. About 74 per cent  still lives on less than Rs120 per day. Economists understand that policy options are limited and the time, if available at all, is short to remove worsening fiscal imbalances.

Prominent economist Dr A. R Kemal says the situation on fiscal deficit is very dangerous. He explains that current fiscal deficit (expected 6.4 per cent of GDP) is worked out on the revised base of 1999-2000. If calculated on the old base, this deficit would be in excess of eight per cent of GDP. There are only two options to contain this deficit: resource mobilisation and cut in expenditure. Otherwise, the fiscal deficit is going to go up. Easier solution for the government is to cut expenditure because it has not mobilised additional resources. Again, the expected cut on expenditure will be in the form of reduction in public sector development programme that would further hamper the economic growth.

The only option is to introduce new direct taxes, said an economist working with the government. The avenues left are capital gains tax  an area exempted till June 2008  and wealth tax on real estate. And no serious efforts have been made to realise the potential revenue from income-tax on agriculture as this sector is dominated by the influential feudal and military class. These special interests have also so far effectively prevented the development of a proper tax base on real market value rather than fictitious price reported in the sale deeds, says Dr Kemal.

In the absence of these options, the resources to meet fiscal deficit can come either through foreign debt, through loans from the general public or banking borrowing. While the foreign aid or loans would mostly be dependant on geo-political situation with a cost to sovereignty, there will be a need to increase interest rates on national savings or Pakistan Investment Bonds that would multiply the domestic debt servicing cost and put pressure on the banking industry. The third source, loan from domestic banks, is more tricky and costly since the banks would have to bid for the money, the government would require and cost may go beyond 15 per cent. In the short run, however, the government can borrow from the central bank that would result in increased money supply and higher inflation.

The problem is that the only way to contain money supply is to reduce credit to the private sector. If that is done, the investment is going to be hurt and interest rates would rise further. So the only way of controlling money supply is to contain fiscal deficit, which in fact is the real problem and presents a chicken and egg situation. These were the signs that led us to the IMF in the 1990s when the balance of payment and the fiscal deficit were unsustainable. So there can again be the same situation by end of this fiscal year, says Dr Kemal. The only saving grace is around $15.5 billion reserve which can evaporate anytime, and we would be forced to go back to the IMF, he says.

Caretaker minister for finance Dr Salman Shah, however, says the situation today is much different than the 1990s and there is no need to go back to the IMF. He concedes that there are many risks to the economy this year but the country now had huge foreign exchange reserves, a much bigger economy and a lot of inflows and resources to sustain so many shocks. He said the Central Bank projected the economic growth rate at 6.6 per cent but any rate between 6.5 to 8.5 per cent was a good number to have.

I am very optimistic that there will be no difficulty because the objective was to achieve the target of four per cent fiscal deficit and there should be no big deal if it is done through fiscal adjustments that may slash development budget as well. He said the government still had six months to make budget adjustments to overcome the real issue of increasing subsidies. The exchange rate was getting more competitive and competitiveness of exports was not an issue despite domestic violence. He was non-committal on taxing the capital market, the land market and the agriculture but agreed that every sector has to come under the tax net with the passage of time.

Hard decisions or IMF bailout? -DAWN - Business; January 14, 2008


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## Neo

*State of economy: optimism and reality​*
The State Banks quarterly review of the economy was finalised before December 27. That is why its projections about the future trend of key economic indicators seemed overly optimistic but even at the time they were made they bordered on optimism because market started slowing down much before the December tragedy.

The approach of elections shifted government focus away from plugging critical infrastructure gaps, especially in the power sector, although this gap was implicitly (lost working hours) and explicitly (supply contract cancellations and ensuing losses) retarding productivity of every sector and escalating the cost of doing business. This critical gap will magnify over time, and part of the blame there will lie with the industry because it never seriously pushed the government into matching power supply with the rising industry demand.

If elections bless us with a regime that has a credible strategy to plug this gap and the others manifested by the present deficits in trade ($ 7.2 billion), current account ($ 4.8 billion) and revenue (1.6 per cent of GDP), one may see a rebound but it wont make up for slow growth in agriculture and key large-scale manufacturing sectors during the earlier quarters. The focus should be on sustaining productivity by forestalling another violence-driven interruption.

Assuming that this is ensured, SBP expects a rise in retail and wholesale trade to push growth, but consumer good market sentiment (except food) doesnt support this hope. Nor does the financial sector given slow credit off-take, accelerated and stiffer loan loss provisioning requirements, and network losses caused by the recent riots. Leasing sector continues to under perform, and following the recent riots, insurance firms may book large losses since they dont re-insure their entire risk.

The existing political situation exacerbated the existing pressures that took their toll on growth; re-scheduling of elections will stretch their impact into third the quarter. GDP growth of 6.6 per cent is therefore unlikely. GDP can still grow by six per cent registering a modest slow down, as will the other regional economies but a critical factor in achieving this target would be containment of inflation to stabilise the industrys cost structure.

SBPs worst-case expectation is that consumer price index (CPI) will stay below 7.5 per cent. This is a tough task; since July 2007, it has risen by 8.7 per cent and the year-over-year (yoy) increase is 12.7 per cent. This is without a rise in oil price that has been held back reflecting political expediency in the election year. But the worrying part is that rise in the prices of wheat, rice, edible oil and sugar accounts for nearly three-fourths of the rise in CPI.

What is worth noting is that these commodities are traded in the economys large undocumented sector. In spite of claims about market checks through price inspectors having magisterial powers, the government has failed in coaxing this sector into behaving. Worse still, the government lacks a clear strategy for timely and sufficient import of buffer stocks, and the delivery network to upstage the profiteers.

Continued drop in agricultural productivity has forced import of wheat and cotton  crops in which an agricultural economy like Pakistan should have exportable surpluses. To complicate matters, price of oil  another commodity for which Pakistan depends largely on imports  has been rising without any prospect of coming down. In addition thereto, prices of key imported industrial inputs have soared due to a rapid rise in their consumption in India and China.

This trend may reduce imports in general, but import of wheat, cotton and power generating equipment will rise. Deficit in the services sector could rise due to our continued dependence on foreign service-suppliers, especially shipping services. In FY 07-08 so far, the rupee has depreciated by 1.4 per cent. Along with the dollar (to which it is pegged) the rupee will weaken further increasing the dollar and rupee value of all imports. During third quarter FY 07-08, oil price could stay around the present level.

These trends will also undermine Pakistans industrial competitiveness. Every chamber of commerce had pointed them out. Yet, exporters problems were compounded by the limitations imposed on availing subsidised credit. This milieu of domestic and international pressures will not permit achieving export target of $18.9 billion nor prevent imports exceeding last years figure of $30.5.billion. The first five months trade deficit of $7.2 billion may exceed $15 billion by year-end.

In recent years, the current account deficit has been plugged with capital and financial inflows including foreign investment. But weakening of investor sentiment on account of political and security concerns (indicated by SACRA outflows and turning back on some earlier investment commitments), and postponement of privatisation of state assets, foreign investment will be no where near the $8.4 billion received in 06-07.

On top thereof will be the outflow of part repayment of external liabilities that were re-structured in 2001, and profit on the FDI received in recent years. These trends defy hopes of containing the current account deficit within 5.2 per cent of GDP. Besides, Pakistani observers, foreign analysts, IMF, World Bank and ADB had also pointed to this burden that was building up; after December 27 this burden could only rise.

Given these increasing burdens of grave concern is the high fiscal deficit caused largely by current expenditure. In the first quarter alone the government borrowing (Rs191.3 billion) has exceeded the full-year target for 07-08. It may be noted that it doesnt include the liability to the oil industry for the differential between import and retail sales prices of oil. The possibility this current liability of being converting into term debt to avoid recording an even higher current fiscal debt cannot be ruled out.

In spite thereof, in the Q1 the revenue balance recorded a deficit. At its current pace (1.6 per cent of GDP in Q1) it could exceed 6.4 per cent of the GDP by year-end. In spite of 22.3 per cent rise in Q1 tax revenue, and besides high current expenditure, the deficit reflects a failure to expand the tax net fast enough; a higher tax-GDP ratio could provide a larger cushion for absorbing slippages like the unpaid oil price differential.

A harsh reality is that after de-regulation, cuts in import tariffs, and removal of import controls, import-oriented domestic markets become vulnerable to external shocks, and agricultural sectors demand for international prices cant be classified as unreasonable. Since supply shortages worldwide are likely to persist, prices of domestically produced crops could remain volatile. How then you control CPI, the mother of all market distortions? In a vastly undocumented economy, containing CPI with just the monetary policy amounts to wishful thinking.

By implication, the priority of the new government should be to develop new water reservoirs, repair and expand the canal network, line the water courses, expand fertiliser and pesticides production capacity, and re-vitalise agricultural research to increase crop yield. With a third of its population still below the poverty line, Pakistan must grow enough to feed its hungry millions because it cant waste its dwindling export earnings on food imports. Export earnings and other foreign inflows must go into filling the infrastructure gaps to support the industry.

State of economy: optimism and reality -DAWN - Business; January 14, 2008


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## Neo

*Malaysia to put $130m into power plant​*
* Plant to use solid waste to generate electricity

KARACHI: The City District Government Karachi (CDGK) has inked an agreement with a Malaysian firm that will invest $130 million for the installation of a waste-to-energy project which will produce 50MW of electricity.

A Letter of Intent (LoI) for the project was signed Sunday night at a local hotel by EDO Municipal Services Masood Alam and Managing Director Abaseen International (Pvt) Limited Omer Malik in a ceremony that was attended by City Nazim Mustafa Kamal, DCO Karachi Javed Hanif, EDOs and other officials.

This will be the first plant in Karachi that would use the plasma gasification technology, which is being used in the energy sector worldwide to generate electricity from municipal waste. We will facilitate the Malaysian firm in allocation of land and provision of unsorted municipal solid waste for the plant, and the rest would be their responsibility, Kamal said. He said that they had been working on the project for the last 18 months and it will help mitigate the ongoing power crisis and maintain the citys cleanliness as the CDGK would obtain a share from the Carbon Crediting. 

Omer Malik told Daily Times that the plant will be installed on 25 acres of land in Korangi and the agreement to finalize the project will be signed within the next 30 days. Plasma gasification has been used in Malaysia and Karachi will be the second location where electricity will be produced from municipal waste. He mentioned that the project is based on a Build-Operate and Transfer (BOT) basis for a concession period of 25 years and that they will get 15 percent of the profit from energy sale while the rest would go to the KESC.

Responding to a question, he said that the project was environment friendly as the municipal waste will be utilized to produce electricity and its residue could be used as slabs for flooring.

Daily Times - Leading News Resource of Pakistan


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## Neo

* Food prices shot up 12pc in December ​* 
CPI rose 8.79 per cent, WPI 12.14 per cent YoY in December

Tuesday, January 15, 2008

ISLAMABAD: The food prices went up to 12.21 per cent during December 2007, making poor men life more miserable as they consume the major portion of their income only for obtaining the basic necessities of life.

The phenomenal hike in food prices by 12.21 per cent served a crushing blow to the millions of low and fixed income families. It swelled to the double digit over the corresponding month of the last fiscal.

The food inflation has hit low-income families hardest by further eroding their purchasing power. The government is unlikely to achieve its overall inflationary target of 6.5 per cent during the current fiscal year mainly because of sky rocketing food prices in the domestic market.

The government has failed to overcome growing prices of food basket despite making tall claims. Based on 2000-2001 as base year the CPI inflation went up to 8.01 per cent during July-Dec period of the current fiscal year, reinforcing the view that the central banks policy of tightening its monetary stance has failed to yield the desired results.

The data released by the Federal Bureau of Statistics (FBS) on Monday showed food prices increased 12.21 percent from a year earlier, house rent was up 8.84 percent, and apparel, textile and footwear groups were up 8.63 percent.

The consumer price index rose 8.79 percent year-on-year in December from 8.67 percent in November, due to higher food as well as non-food prices. The December index was also up 0.58 percent from November.

For the July-December period, inflation eased to an average 8.01 percent against 8.39 in the same period last year. But it was higher than the 6.5 percent target for the 2007-08 fiscal. The prices of wheat registered an increase of 14.75 per cent, wheat flour 12.73 per cent, spices 9.75 percent, maida 7.70 percent, egg 6.60 percent and rice 2.44 percent during December 2007.

The inflation rates based on CPI, SPI and WPI increased by 8.01 per cent, 11.03 per cent and 10.26 per cent respectively in first half of the current fiscal year. It is interesting to note that high inflation trend in food has been noticed since the start of the last fiscal 2006. Food inflation stood at double-digit, averaging more than 10 per cent during fiscal year 2006-07.

During July 2006, food inflation stood at 7.44 per cent, in August 11.08 per cent, September 11.26 per cent, October 10.54 per cent, November 8.07 per cent, December 12.71 per cent, January 2007, 8.70 per cent, February 9.99 percent, March 10.74 per cent, April 9.41 per cent, May 11.31 per cent and during June 2007 it stood at 9.68 per cent.

Likewise, at the start of the financial year 2007-08, it kept the same trajectory and during July 2007 food inflation stood at 8.47 percent, in August 8.62 percent, September 12.97 percent, October 14.67 percent, November 12.47 percent and December 12.21 percent.

Despite their adverse impact on the low-income group, no effective steps are being taken by the government to reverse the trend. The government seems to be indifferent to the plight of the poor and the lower middle class who find it increasingly difficult to make both ends meet with soaring prices of foodstuff and medical expenses.

The CPI based basket shows that the prices of fuel and lighting increased by 5.51 per cent, household, furniture and equipments by 6.55 per cent, education by 4.44 per cent, cleaning, laundry and personal appearances by 8.85 per cent and medicare by 7.55 per cent in December 2007.

The Wholesale Price Index (WPI) went up to 12.14 per cent during December 2007 in which the food prices witnessed biggest jump by showing surge of 15.79 per cent, fuel, lighting and lubricants 12.73 per cent, building material 9.21 per cent and raw material 9.53 per cent .

Pakistans 40 million people living below the poverty line are the major victims of ballooning food prices during the elections year 2008 owing to double digit hike in food inflation, resulting into eating away the purchasing power of the low-income group.

Food prices shot up 12pc in December


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## Neo

*Trade deficit reaches $8.24bn in 6 months ​* 
Imports up 13.82 per cent, exports rise only 3.67 per cent during the period

Tuesday, January 15, 2008

ISLAMABAD: Pakistan foreign trade deficit during the first half (July-December) of the current fiscal 2007-08, jumped to record high $8.24 billion, which is 27 percent more than $6.49 billion recorded during the same period in last fiscal, the Federal Bureau of Statistics (FBS) said Monday. 

During December 2007 exports were down by 13.6 percent to $1.33 billion against $1.54 billion in same month of the last fiscal. Indicating that 1.11 per cent depreciation of rupee against dollar in one month could not impart fruitful results for increasing exports. 

Depreciating currency to strengthen exports was one of the main demands of the multilateral donors for the last few years, but in Pakistans case this theory, seems to have failed. Benazir Bhuttos assassination on December 27 disrupted trade activities during the concluding four days of year 2007. 

Due to huge aggregate trade deficit for July-December 2007-08, it is feared that with the current pace of deficit growth, by end this fiscal, the trade deficit would reach more than $15 billion, that would further aggravate the current account deficit (CAD) position which has been termed by the international donors as the potential threat to Pakistans economic health.

During July-November, 2007-08, Pakistans exports totalled $8.72 billion and imports $16.95 billion against $8.40 billion and $14.89 billion, respectively recorded during the same period last year. 

Economy pulled in 13.82 percent more imports over the same period last fiscal, while, its exports rose only by 3.67 percent. Each month, the import growth exceeds exports steadily widening the trade gap, the provisional FBS data revealed. 

It is important to note that previously, in its trade policy for the fiscal 2007-08, the government targeted imports at $29.6 billion and exports $19 billion with a trade deficit of $10.6 billion.

Now, in the first half, the country achieved 45.87 percent of exports and 57.26 percent of imports target. The huge import pressure and low exports growth envisages that by the end this fiscal the trade deficit would exceed the set target of $ 10.6 billion. 

During December 2007, the local goods worth $ 1.33 billion have been exported, recording an decrease of 12.05 percent against exports of $ 1.52 billion in the same month last year. Imports have been recorded at $ 2.35 billion during December 2007, which also has reflected a decline of 8.35 percent as compared to imports of $ 2.56 billion registered in December 2006. 

Comparing exports of December 2007 with the previous month, the bulletin reveals decline of 13.59 percent as against exports of the previous month, which stood at $1.54 billion. The imports interestingly declined by 25.67 per cent from $ 3.16 billion recorded in November 2007.

Trade deficit reaches $8.24bn in 6 months


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## Neo

*Crops yield remains below global standards ​* 
Experts say unwise use of fertilisers does not ensure high yield

Tuesday, January 15, 2008

LAHORE: Productivity of all crops in Pakistan has remained below global standard as the unaware farmers continue increasing the fertilizer use without paying attention to other aspects like the quality of soil and seeds. 

Agriculture experts point out that blindly adding fertilizers does not ensure higher yield. They said the quality of soil determines the type and quantity of fertilizer to be added in the soil. They said the quality of seed and the removal of weeds is also crucial for obtaining maximum yield. They said provincial Agriculture Extension Departments have failed to create the awareness about the judicial use of inputs and required treatment of soil for ensuring higher yields. 

They said fertilizers are nutrients and their fair addition in soil does increase the productivity. However they pointed out that the fertilizer use in Pakistan has tripled in case of nitrogen fertilizer during past two decades while the use of phosphate fertilizer has increased nine times during this period without corresponding increase in the productivity of major crops. 

According to the food and Agriculture organization data Pakistan is gradually becoming more dependent on fertilizer imports as the consumption of different fertilizers has increased at much higher pace than the local production. 

Pakistan was self-sufficient in urea (nitrogen fertilizer) in 1990 when its total production of 1.119 million ton was higher than domestic demand. By year 2000 the production of urea increased to 2.053 million metric tons but the consumption 2.254 million metric tons depicting a deficit of 200000 metric ton. The urea consumption increased to 3.073 but the production inched up to only 2.475 million tons. The gap between local production and domestic production increased to 600000 tons.

The production of Phosphate Fertilizer (DAP) was 1,04,700 ton in 1990 while the domestic demand was 1,47,000 metric ton. The productions of DAP increased to 243000 ton but the consumption jumped to 6,75,000 ton. The increase in DAP production failed to keep pace with the increased local demand that jumped to 9,55,000 ton in 2005. 

Pakistan was not producing potash fertilizer till 2005 when it produced 15000 ton of this fertilizer. The consumption of potash fertilizer remained erratic in the country that was 32,000 ton in 1990, 23,000 ton in 2000 and 40,000 ton in 2005. 

A look at the productivity of all major crops during last decade indicate that though the per hectare yield has increased it is far behind the yield of these crops in many countries. Pakistan produced 557 kg of cotton from one hectare of land in 1994 that increased to 704 kg in 2006 that dropped last year to 650 kg per hectare.

The added fertilizer failed to increase the productivity as the planners neglected the mealy bug infestation that intensified last year after impacting the crop below injury level for three years. The BT cotton that provides high yield and pest free varieties was also not introduced in Pakistan. Australia obtains 1,860 kg of cotton from one hectare and China 1242 kg that is three and two times higher than Pakistan. 

Sugarcane per hectare yield in Pakistan was 46,143 kg in 1994 that increased to 49,229 in 2006. China in 1994 produced 59344 kg of sugarcane from one hectare that increased to 82527 kg in 2006. Sugarcane yield is highest in Australia that obtains 92,000 kg from one hectare. 

In wheat that is the staple food of the country Pakistan is far behind European farmers. It obtained 1,893 kg of wheat per hectare in 1994 that increased to 2,518 kg in 2006. The farmers produce 8083 kg of wheat per hectare in United Kingdom and 7,200 kg per hectare in Germany. 

In paddy Pakistani farmers obtained 2,433 kg per hectare in 1994. The paddy production increased to 3,163 kg per hectare in 2006. They are still far behind the best in the world as United States produces 7,694 kg paddy per hectare and China produce 6,300 kg per hectare.

However the increase in paddy yield is better in Pakistan than other crops. The reason for this is that Pakistani farmers are gradually shifting to hybrid rice seed. They would catch with the best producers when 100 per cent farmers shift to hybrid rice. The agricultural experts have appealed the government to pay attention to all aspects that improve productivity in agriculture instead of leaving it to the poor farmers that do not have access to modern technology and inputs. 

Crops yield remains below global standards


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## Neo

*Gas reserves at 32tr cubic feet ​* 
Tuesday, January 15, 2008

ISLAMABAD: The country has retained natural gas reserves around 32 trillion cubic feet as per present gas production of 4 billion cubic feet per day, It will last for next 22 years. 

According to official sources in the Ministry of Petroleum, presently, 42 companies are working in the country with 118 exploration licenses and 127 leases. 17 new blocks have been opened which would give further impetus to the ongoing exploration activities in the country and would open tremendous opportunities for the prospective investors in diversified fields. 

About production, he said that 70 per cent of natural gas is coming from Sindh while share of gas in the energy mix is 54 per cent. In the new petroleum policy, more incentives have been offered to investors for oil and gas exploration and production in the onshore and offshore areas. The state-run Oil and Gas Development Company Ltd (OGDCL) is engaged in exploration and production activities in the country for last four decades. The company holds the largest share of oil and gas reserves in the country. 

Gas reserves at 32tr cubic feet


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## Neo

*PSEB to boost Pakistans IT market in US *​ 
Tuesday, January 15, 2008

Karachi: Pakistan Software Export Board (PSEB) is organising networking events in Houston, Austin, Las Vegas, Palo Alto and Chicago, which are the hub of IT activities in USA.

Networking sessions and meetings have been arranged with the leading companies, Chambers of Commerce and government entities in collaboration with Texas Trade Council (TTC), Organisation of Pakistani Entrepreneurs in North American (OPEN), Pakistans Embassy in USA and various other local partners, a spokesman of PSEB said in a statement. 

With an IT Industry worth more than US$2.8 billion, including annual IT exports exceeding $1.4 billion, Pakistan is eyeing to increase the size of its IT sector to over $11 billion by 2011. The operational costs in Pakistan are 30 per cent lower than neighbouring country India, while the infrastructure advantages of high-speed connectivity in all the major cities are available at competitive rates. 

According to Buying Triangle, the operational cost for a full time employee is $58,598 in USA, while it is $23,708 to $35,562 in India and only $9,000 in Pakistan, the spokesman explained.

PSEB to boost Pakistans IT market in US


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## Neo

*Phenomenal growth in WWL subscribers in 2007*​
KARACHI: The number of countrys wireless local loop (WLL) subscribers has surged to 2.07 million by the end of year 2007, official data revealed here Monday. 

The figures gathered by the telecom watchdog shows that by November 2007 Pakistan Telecommunication Limited led the market share with 1.21 million subscribers followed by Telecard, which is serving 447,455 people, World Call 358,254 and Great Bear 54,744 subscribers across the country.

In the year 2005 total WLL subscribers were over 200,000, which has sharply increased and reached to over 1.02 million subscribers by the end of year 2006.

At present four WLL companies are operating in Pakistan in which PTCL is grabbing the highest number of subscribers.

There is a 682.66 percent increase if such figures are compared with the year 2005. In fact there is an exceptional jump in cellular subscribers number base. The four companies PTCL, Telecard, World Call and Great Bear have earned better market share during the first 11 months of 2007, which attracted subscribers with different tariff packages and incentives.

The cellular density witnessed a phenomenal jump in the last three years as WLL teledensity has reached 1.31. 

Analysts see WLL service growth in line with expectations, but say 2008 appears challenging for the WLL companies as they have also a great competition with the cellular companies, which are gradually increasing and the way mobile companies are reducing their tariff it will create a new atmosphere for the other communication services.

In fact reduced tariff and increase in the number of destinations have brought WLL and cellular service within the reach of low-income groups, the analysts added.

Actually tariff and service quality is almost the same of all the companies, said one of the companies official. So it encouraged the consumers to continue with the same.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Cotton crop estimate slashed to 11.6 million bales ​* 
ISLAMABAD (January 15 2008): The country has failed to achieve the production target of cotton for 2007-08, sources in the Food Ministry told Business Recorder here on Monday.

Sources said that in Cotton Crop Assessment Committee (CCAP) meeting held here on Sunday, it was announced that the estimated crop of cotton achieved by the country is 11.6 million bales while the revised target for 2007-08 was 12.8 million bales. So, the country has a shortfall of 1.2 million bales.

In 2006-07, the cotton crop achieved is 13 million bales while this year, the estimated crop production is 11.6 million bales clearly indicating a difference of nearly 11 percent. The cotton production in Punjab is recorded 8.9 million bales while including the contribution of NWFP and the total cotton production estimates in Sindh and Balochistan is recorded 2.7 million bales.

Sources disclosed that every year the country has to import 2 to 2.5 million bales while 0.5-0.6 million bales are exported. "The overall requirement of cotton by the industry is 15 million bales", they informed. The furious attacks of Cotton Leaf Curl Virus (CLCV), mealy bug, the government's negligence about the import of pesticides and the production of less resistant varieties of cotton may be contributed to be the main reason behind the crop reduction.

In 2006-07, the symptoms of CLCV were recorded on 70 percent spots of the cotton crop while in 2007-08, this attack increased to 71 percent. The attack was four times intense as ever before while attack of mealy bug on the crop this year was six times higher than 2006.

The sources said that the damage caused by CLCV is about 60-67 percent while by mealy bug 30-35 percent to the total loss. On the other hand, the shortage of pesticides at the time of the attacks was other main reason behind this loss.

Sources told this scribe that the government should have arranged the pesticides by importing them immediately at the time of attacks of mealy bug and CLCV but at that time, the market was showing an extreme shortage of pesticides just because of hoarding. The government is claiming to introduce the Bt cotton variety to save the crop but all of its claims have proved to be false.

This clearly shows that if the situation remained the same and the attacks of CLCV and the mealy bug remained uncontrollable along with the shortage of essential pesticides, then the farmers will be left with no other option except to grow any other crop instead of cotton.

The government's negligence about the import of pesticides has already made the country to produce less cotton as compared to 2006-07. The share of agriculture sector in GDP is 21 percent. Similarly, the contribution of cotton that is a major cash crop will affect the GDP growth.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan rupee versus US dollar ​* 
KARACHI (January 15 2008): US dollar has been under severe pressure lately, and continues to slip against other major currencies of the world. There may be technical adjustments occasionally, giving it a short respite, or a boost even, but the underlying trend points to an eventual devaluation to remedy the situation.

Paradoxical as it may seem, Pakistan currency is depreciating against the dollar even faster, bucking the general trend of most other currencies - major or minor. In the kerb market Pak rupee has not only lost its value against other countries - which is to be expected - but against the dollar as well, which can only be explained by weak economic fundamentals in Pakistan, a situation further exacerbated by upheavals following the tragedy of December 27, 2007.

Any improvement in the situation does not appear on the horizon, and the rupee's descent into an abyss continues unabated. Despite SBP's intervention, the parity has gone from around Rs 60 per dollar to about Rs 63 during the last few days, not only in the open market, but also in the interbank sphere.

The question is how much will Pakistan be forced to devalue, if the dollar is devalued officially, which is a strong possibility, considering the Fed's problems. Can a crisis be averted in Pakistan? It is difficult to say, with the dark clouds looming on the political and economic panorama about to rain destruction and disaster.

Things are brewing, but when they came to a head, who knows what will happen to:- the stock exchange indices; wheat and flour prices; sugar cement and other commodities and related industries; and various infrastructure development plans; the budget deficits; balance of payments situation; drying up of FDI trickles; abrupt halt to loans grants and aid from foreign donors - the World Bank, ADB and IDB.

The scenario is frightening. Even the most inveterate optimist will find it hard to overlook the calamities in offing, or predict anything other than blood, toil and tears in the future. Adamant regimes, who have resisted calls for devaluation and have waited too long to do the inevitable, have rued their hesitancy.

It is far better to weigh the pros and cons and take a bold step now, rather than let events take their course with dreadful results. It is far better to cut losses than to run the gauntlet and lose everything in the process.

Devaluation now would mean costlier imports, and lesser foreign exchange earnings from exports. However, it will put a curb on unnecessary and wasteful imports, while giving the exporters a competitive edge that will boost their volume to a level offsetting the exchange losses of devaluation.

Increased quantum of exports will give an impetus to local industry, and a spurt to the employment scene, while putting more money in the hands of families living on remittances from their bread earners working abroad. The balance of payments situation will be rectified. Tourist industry will get a leg up, attracting travellers due to a cheap rupee.

It does have a downside, but the advantages far out-weigh the drawbacks. The most fearful is the inflation factor, but it is a bitter pill which people have to swallow willy-nilly, for the sake of larger national interests.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Punjab's gross provincial product improves in 2006-07 ​* 
LAHORE (January 15 2008): In fiscal year 2006-07 Punjab's Gross Provincial Product (GPP) grew at 7.8 percent as compared to previous fiscal year of 2005-06 and in absolute terms it amounted to Rs 3,067,033 million, 58 percent of the national Gross Domestic Product (GDP).

Punjab Economic Report 2007, which was released by the Planning and Development Department, Government of the Punjab, disclosed here on Monday. The services sector is the largest sector, contributing about 54 percent to GPP. Agriculture accounts for 20.3 percent and industry 25.7 percent.

Changes in the sectoral break-up of GPP over the years are indicative of structural changes away from a reliance on agriculture. The data indicate that the share of agriculture has declined considerably, from 31 to 20.3 percent between FY-1991 and FY-2007, while that of manufacturing and services has increased.

According to the report, the structural changes that are taking place in Punjab's rural economy over time have important implications, particularly for employment.

About 44 percent of Punjab's labour force is associated with the agricultural sector. It is also the only sector other than construction where the labour force absorption rate (as measured by the percentage of total labour employed in that sector) is higher than its share in the provincial economy.

While the impressive growth of the services sector serves to boost GPP, growth in agriculture has a far more wide-ranging effect on incomes, employment, and the incidence of poverty in the province.

"The Punjab government has estimated the decline in poverty headcount to have been about 11.52 percent between FY 2002 and FY 2005. Non-income-based poverty measures, such as the enrolment rate, literacy level, access to safe water and health services, etc, have also improved over time. The Bureau of Statistics estimates that the province is poised to meet nearly all the Millennium Development Goals well before the 2015 target," it added.

The report claimed that the provincial government had significantly increased spending on the social sectors. To maintain social sector expenditure at its desired level, the government had instituted significant financial management reforms for expanding the budgetary fiscal space to shoulder the expenditure requirements of these sectors.

During the last nine years, the total government expenditure averaged 5.6 percent of the GPP, the bulk of which (4.3 percent of GPP) was for recurrent expenditure and the remaining (1.3 percent of GPP) for development expenditure.

The government increased efforts to mobilise its own revenues, focusing its efforts on introducing agricultural income tax, rationalising provincial taxes and improve tax collection by changing the rate structure of urban immovable property tax and stamp duties and tax administration.

Recent initiatives undertaken by the Punjab government to improve resource management include focusing more on social sector expenditure, developing public-private partnerships, pursuing a debt management strategy, and implementing governance reforms, the report adds.

It also suggested that to achieve its ambitious development goals in terms of poverty reduction and accelerated growth, the Punjab government needed to mobilise significantly higher resources for non-inflationary financing of its development programme.

Possible options that the government could exercise, to create the additional fiscal space it needs over the medium term to achieve its development objectives, include:- placing continued emphasis on debt management, improving its expenditure efficiency, aligning policies and outcomes, institutionalising the MTBF process at lower levels of government, reviewing public-private partnerships, harmonising aid programs, making budgets more comprehensive, improving financial reporting systems and promoting transparency.

The report, talking about agriculture, termed it the mainstay of Punjab's economy, with a 20.3 percent share in the GPP. Major crops contributed about 46.5 percent of value-added to agriculture in Punjab in FY-2007, while livestock contributed a further 39.1 percent.

The Government of Punjab is taking several initiatives to optimise agricultural resource use (particularly of fertiliser), improve seed quality and promote farm mechanisation, plant protection, and access to agricultural credit. Other potential areas to increase agriculture productivity and production include promotion of non-traditional agricultural products (eg off-season vegetables), and livestock, and the expansion of effective research and extension.

The report pointed out that several special programmes to develop the less developed areas of the province have been started by the government with the objective of reducing regional disparities and alleviating poverty. Particular attention is being focused on barani (rain-fed) regions of Potohar, Cholistan, and Dera Ghazi Khan.

New initiatives, include drought management efforts, the Barani Village Development Project, Sustainable Livelihoods in Barani Areas Project, Bahawalpur Rural Development Project, and Dera Ghazi Khan Rural Development Project. These initiatives aim to achieve rural development through income-generating employment activities, improvements in regional infrastructure, and provision of financial support for skills development through participatory organisations.

The report disclosed that Punjab has played a significant role in the industrial development of Pakistan, accounting for almost 60 percent the country's industrial production in FY-2007. The industrial sector's share in GPP was 25.7 percent in FY-2007, compared to roughly 17 percent in FY-2000.

The large and small scale manufacturing sub-sectors accounted for 14.14 and 5.27 percent of provincial GPP, respectively, in FY-2007 (value-added from the abbatoirs, which is now classified as an industry, make up the rest).

It also disclosed that the share of the services sector now exceeds the combined total of all the commodity-producing sectors. The wholesale and retail trade sub-sector is the most important in Punjab in terms of its large share, followed by transport, storage and communications, and social, community, and personal services.

The services sector has great potential for employment generation and poverty reduction due to its strong forward and backward linkages, the report added. Punjab, the report maintained, like the rest of Pakistan, is a water-scarce area both with reference to irrigation needs and drinking water and sanitation needs in rural and urban areas.

"Water conservation and management is crucial to ensure continued, adequate water supplies. A water conservation strategy for the province will require the use of innovative technology as well as institutional reforms to achieve the desired results, but the government has already taken some important steps in this direction and plans to do far more. However, judicious use of the country's scarce water resources is crucial to ensure food security and maintain growth in the economy," it added.

"While the government continues to focus its attention on the key areas of reform two inter-related and extremely important aspects need to be further strengthened. Effective policy reform requires a sound monitoring and evaluation system (M&E).

It is important to know what works and what does not; and what can be replicated and up-scaled. And it is crucial to have this information in real time to feed into policy refocusing for greater efficiency. Such a system of monitoring and evaluation is built on sound data. A revitalised data collection system in the province will greatly strengthen this M&E system," the report suggested.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*$800 million ADB loan for city mega project: delegation for final talks to leave for Manila on January 16 *​ 
KARACHI (January 15 2008): Pakistan and Asian Development Bank (ADB) will hold 'final negotiations' on January 16, 2008 for $800 million loan for Karachi Mega City Development Project (KMCDP). The KMCDP is a project sponsored jointly by Sindh government and ADB with the main objective of enhancing the economic potential and living standard of Karachi and strengthening the mega city functions.

A five-member delegation, led by City Nazim Mustafa Kamal, would leave for Manila late on Monday, the Nazim told Business Recorder on Monday. "We are going to hold final negotiations with the ADB on $800 million financial assistance for the Karachi Mega City Development Project", he said.

The delegation during its three-day visit would hold different rounds of talks with the officials of ADB. "We will discuss various modalities and, after successful negotiations, would proceed further", he added. Beside the Nazim, the delegation includes Ghulam Mohammad Mehar, Mumtaz-ur-Rehman, Shoaib Ahmed Siddiqui, and Roshan Ali. Project Co-ordinator Roshan told this reporter that the City government was likely to sign the agreement with the ADB next month. "During the visit we will be holding loan appraisal meeting with the ADB which would be followed by the loan appraisal mission within next weeks and then finally loan negotiations would be held," Roshan said.

He said the delegation would return by January 18. According to official sources the loan would be from the Bank's concessional Fund, and would cover 75 percent of total cost of the project.

The loan would be for a 32-year term including a grace period of eight years with a one-percent interest rate to be charged annually during the grace period and 1.5 percent thereafter. Sindh government would contribute the balance of $3.33 million equivalent, they said.

Projects to be undertaken under KMCDP include technical assistance in organisational development of Mega City Planning and capacity building of the CDGK, town municipal administrations and other civic agencies, water and solid waste management, katchi abadis, Urban Road Transport System, Corridors-I and II, Urban Traffic Control Project etc.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

malaymishra123 said:


> Acer is owned by who Neo? Which country houses the HQ?



Acer is owned by Taiwan.

*Global Headquarters*

Taiwan
Acer Inc. 
8F, 88, Sec.1, Hsin Tai Wu Rd., Hsichih,
Taipei, Hsien 221, Taiwan, R.O.C. 
Tel: +886-2-2696-1234/3131
Fax: +886-2-2696-3535


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## Neo

*About Acer:*

Since its founding in 1976, Acer has constantly pursued the goal of breaking the barriers between people and technology. Focused on marketing its brand-name IT products around the globe, Acer ranks as the world's No. 3 (Q307) vendor for total PCs and No. 2 for notebooks, with the fastest growth among the top-five players. A profitable and sustainable Channel Business Model is instrumental to Acers continued growth, while a successful merger of Gateway Inc. as a wholly owned subsidiary completes the companys global footprint by strengthening its presence in the U.S. and enhancing its strong position in Europe. Acer Inc. employs 5,300 people worldwide. Revenues in 2006 reached US$11.32 billion. 

About Acer


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## solid snake

Wow, I want to cry right now because the rupee keeps sliding and they're about to officially devalue it. I am so pissed at this situation.


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## Neo

*Real estate trade hits all-time low; Gwadar worst affected ​* 
Wednesday, January 16, 2008

KARACHI: Real Estate business in Gwadar has seen a massive set back since the 27th December violence as investors are backing out from mega projects leaving the estate agencies in panic whereas other major cities experience an all time slump in this sector.

Azam Khilji, Sales Manager of Canadian City, Gwadar said that the projects in Gwadar are facing a tough time as they are totally influenced by the government and as the country continues to submerge into political turmoil, the projects are being badly neglected.

He said that the conditions in Karachi and Islamabad are better as the advertised projects are in their construction phase and therefore when investors see the buildings, they gain the confidence to continue investing which is not the case in Gwadar.

He explained that while the other projects of his company are working out well, Gwadar has been the worst hit as, we are selling dreams right now and there is no structure there to prove our progress.

Real estate businessmen say that their sector was already experiencing a slump over the past year and the assassination of the former Prime Minister Benazir Bhutto has further scared off investors which have left them in a lurch as property trading has come to a standstill. The real estate business thrives on commission. Higher number of deals ensures more commission. Higher rates translate into better commission. But no trade means no commission and the property brokers sit idle chatting of days when property rates were soaring and business was roaring. 

Mehdi Raza, of Estate Zone in Karachi said that only those people are selling properties that desperately need money or there are disheartened investors that have lost faith in Pakistani real estate and want to offload their investments before losses mount.

People are holding on to their properties waiting for the prices to reach better levels whereas, investors are vary of investing in downturn bazaar.

He said that the Karachi had experienced a boom until a couple of years ago when property prices had shot up significantly. Heavy investments were made in Karachi and now when real estate prices are receding the investors are selling off their investments at the purchase price or even lesser!

Raza also said that their Gwadar projects are the worst affected, as they only seemed attractive due to the advertisements that promoted them but it will be years before something concrete materialized there and therefore, investors were running away from it.

Basit Mahmood, Project Director at GlobBiz, Lahore informed The News that insecurity amongst investors has been the cause for the further setback being faced by real estate managers. There are many aspects that affect the property sales and for a sector that was already going slow, we are facing further losses.

Mahmood was of view that builders are always ready to spend money, but when they do not get their returns on investment they look elsewhere. Our local builders are ready to spend their money abroad into foreign ventures where there is stability but not here as insecurity makes them lose interest.

Matters look bleaker for the real estate sector as apart from the anxiety of businessmen in the country, some banks have also closed down on their various finance options and development of major projects around the country have also either stopped or are facing delays due to the instability which affected the work progress. 

Most of real estate businessmen refused to put a figure to their losses citing it company information. Nevertheless they blamed the government for the current situation and said that revival of their sector was only possible if the country stabilized which would bring back foreign investors into the country and also encourage local builders to invest again.

Real estate trade hits all-time low; Gwadar worst affected


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## Neo

*Pakistans economy facing tough time ​* 
Wednesday, January 16, 2008

KARACHI: After performing reasonably well in initial months of FY08, Pakistans economy is currently in the midst of a difficult time. Mounting inflation, a yawning trade deficit and uncertain political environment pose some serious challenges to the overall macroeconomic stability. In addition, weak agriculture performance during 1HFY08 has resulted in a twin impact of rising inflation and downward pressure on real GDP growth. 

The growing shortage of staple foods mainly wheat, rice and pulses have recently triggered tremendous inflationary pressure on the food side, as testified by latest CPI and SPI numbers, leading us to believe that CPI target would again be missed in FY08 by a wide margin, said Farhan Rizvi analyst at JS Global Capital. 

According to latest figures for Dec 07, CPI posted a year to year increase of 8.8 per cent with year to date inflation for FY08 of 8.0 per cent. Spiraling inflation has been a black spot on the strong economic performance over the last few years. 

In FY07, for instance, CPI turned out to be 7.80 per cent, far above the government target of 6.50 per cent. In similar vein, inflation has surged once again in 1HFY08 with food inflation in particular posting double digit growth since Oct 07. 

The analyst said as a result, CPI was recorded at 9.3 per cent year to year in Oct 07, its highest level for 29 months. Though there was some respite in the remaining months of 1HFY08, with CPI subsiding below 9 per cent in Nov and Dec 07 as food inflation declined marginally. 

However, the recent spike in prices of essential food commodities mainly wheat, edible oil, rice etc is likely to enthuse additional inflationary pressure in 2HFY08. He said it is believed that inflationary pressures to persist in 2HFY08. Analyzing the SPI numbers for the week ending January 3, 2008, it is clearly evident that surge in wheat prices in late Dec 07 and moving into Jan 08 has resulted in steep rise in SPI which was recorded at 1.5 per cent, its highest level in nearly 39 months. 

With no major respite in food prices thus far, CPI is likely to remain very high in Jan 08. In any case, inflation for the month of January should remain significantly higher than that for Dec 07, as a month to month decline of 0.88 per cent was witnessed in CPI for Jan 07 which would have a compounding base effect on the CPI calculation for Jan 08, he stated. Rizvi said this is very alarming, given the fact that the impact of rising international oil prices is still to be felt. Hence, it is believed inflationary pressure will continue, keeping CPI on the higher side in 2HFY08 as well. Poor agriculture performance could lower GDP growth. 

A major culprit in the recent price spike has been the poor agriculture performance, which has resulted in severe shortage of key commodities such as wheat flour, rice and cotton. While, the element of wheat smuggling to Afghanistan cannot be ignored, it is still important to understand that smuggling of a few million tonnes cannot result in the kind of price spike witnessed in last few weeks. 

With cotton production expected to depict a decline of 11 per cent in FY08, coupled with a wheat crop projected to post a stagnant to negative growth, real GDP growth for FY08 could end up much lower than the government target of 7.2 per cent. 

In the light of the new cotton estimate of 11.6 million bales, he said: We have revised downward our full year FY08 GDP forecast to 6.6 per cent. This forecast could decline even further, if there are any major shocks in store on the wheat production in the coming months. 

He said trade deficit jumps to $8.2 billion in Dec 07. In addition to the inflationary spiral, widening trade deficit also remains a point of concern for the economy. 

According to the latest trade release (Dec 07) from Federal Bureau of Statistics (FBS), trade deficit for 1HFY08 has surged to $8.2 billion as against $6.5 billion in the corresponding period last year an increase of 26 per cent year to year. Driven by rising petroleum and agriculture & chemical import bill, imports have surged by 13 per cent to $17 billion in 1HFY08 compared with $14.9 billion in IHFY07. 

In contrast, exports have shown a modest year to year growth of only 4 per cent in 1HFY08. While trade deficit has jumped to $8.2 billion, there has been some respite in deficit growth in Dec 07. Trade deficit has declined by a massive 60 per cent to $1 billion, as against $1.6 billion in Nov 07. He said: This slowdown though, we believe is extremely short-lived, driven mainly by port inactivity in the aftermath of the assassination of Benazir Bhutto". 

Pakistans economy facing tough time


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## Neo

*Minister terms rupee healthy for economy​*
GENEVA, Jan 15: The current level of Pakistans rupee is acceptable and meets the overall needs of the economy, Trade Minister Shahzada Alam Monnoo said on Tuesday.

Monnoo, a technocrat in Pakistans caretaker government with a background in the key textile industry, said that while Islamabad had to look at broader economic issues than export competitiveness, further rupee weakness would help exporters.

The rupee, which recently hit a 6-year low amid Pakistans political unrest, traded at 62.50 to the US dollar on Tuesday, after being in a range around 60 for several years.

So this impression that its going down is not a proper impression because the rupee in my opinion is quite stable, Monnoo told Reuters in an interview.

In any case, Monnoo said the recent rupee weakness was not showing any signs of deterring investment, as investment decisions were taken over the long term.

If the economy goes down then investment will stop, but in spite of all the terrible incidents the economy is still holding on, he said.

He forecast investment in the current year would hold at around the level in the 2006-07, which he put at more than $6bn.

Monnoo said the economy was showing resilience despite the unrest since President Pervez Musharraf imposed a state of emergency on Nov 3 last year, and which spilled into a wave of violence after opposition leader Benazir Bhutto was killed on December 27.

One indicator of this was the recovery in the Karachi Stock Exchange 100-share index to levels around 14,000 currently from 13,300 in early January. It had dropped in the wake of Bhuttos assassination from near record highs of around 14,800 in December, he said.

Monnoo said that exports would be around $18 billion in the current fiscal year based on the six months to December, after $17 billion in 2006-07.

But exports would have been much higher if textiles, which accounted for 63 per cent of Pakistans exports in 2006/07, were performing at their full potential, he said.

Textiles are Pakistans biggest export product, investment draw and employer, Monnoo said, suggesting Pakistan needed to learn from its regional neighbours, India and Bangladesh.

For instance the Indian government was providing incentives to the textile sector allowing it to withstand recent strength in the Indian rupee, he said.

He noted that India had switched to more productive varieties of cotton, giving it a large surplus over domestic needs, some of which Pakistan is now buying.

At the same time Pakistans textile industry needs to diversify into more value-added areas such as making garments and bed linen rather than simply producing cloth, he said.

Monnoo said power was running at about 80 per cent of normal and full supplies should be restored by the end of January.

Minister terms rupee healthy for economy -DAWN - Business; January 16, 2008


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## Neo

*IT events in US​*
ISLAMABAD, Jan 15: Pakistan Software Export Board (PSEB) is organising networking events in Houston, Austin, Las Vegas, Palo Alto and Chicago, which are the hub of IT activities in USA.

Networking sessions and meetings have been arranged with the leading Blue Chip brand companies, Chambers of Commerce and Government entities in collaboration with Texas Trade Council (TTC), Organisation of Pakistani Entrepreneurs in North American (OPEN), Pakistans Embassy in USA and various other local partners, a spokesman of PSEB said on Tuesday.

The main purpose of these meetings and networking sessions in USA was to promote the incentives and opportunities offered by Pakistan IT sector, rectify the misconceptions generated by media about Pakistan, foster business collaboration with American IT companies, the spokesman explained.

Earlier, PSEB arranged various country-focussed networking events in London, Manchester and Glasgow in UK, and Dublin in Ireland.

With an IT Industry worth more than $2.8 billion, including annual IT exports exceeding $1.4 billion, Pakistan was eyeing to increase the size of its IT sector to over $11 billion by 2011.

IT events in US -DAWN - Business; January 16, 2008


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## Neo

*Declining exports: TDAP working to reverse the drift​*
KARACHI: The Trade Development Authority of Pakistan (TDAP) is working on Export Turnaround Strategy to reverse the declining trend in countrys exports, Daily Times learnt on Tuesday.

According to well-placed sources in TDAP, the dismal performance of exports during the current fiscal year has been a cause of great concern for the economic managers, who earlier projected substantial growth in the export by raising its target as compared to last year.

However, the export performance so far during the current financial year is not up to the mark, which evoked the realisation to take immediate short-term measures for the export growth.

Sources said under this strategy, which is currently in the planning phase and is likely to be implemented soon, various measures are being chalked out to bring visible improvement in the countrys export sector.

Under this plan, various markets are being identified which has the major export potential for the Pakistani products but the performance of the export did not match the actual potential.

Also, the big USA and European markets would also be reviewed in order to find out what is blocking the penetration of our exports in these two major markets, sources said, adding that non-traditional markets would also be targeted under this strategy to explore new markets for the local products.

Besides, trade delegations would also be sent for the export marketing in various parts of the world and maximum participation of private sector would be ensured in these delegations.

It is pertinent to mention that countrys exports during the first half of the current financial year posted just 3.67 percent growth to $8.715 billion over $8.407 billion in the corresponding period of last year. Whereas to meet the export target of $19.2 billion of current fiscal, exports need to register average 18 percent growth each month, which appears to be missed as export growth remained between three to five percent so far during the current year.

The export performance in December was even worst, as there was huge decline of 12 percent over the same month of previous year, which has been attributed to large-scale violence and chaos across the country following the assassination of former Prime Minister Benazir Bhutto.

Exporters commenting on TDAPs initiative termed it a foolish step as the authority is just bent upon giving new policies but practically doing nothing for the countrys export sector.

This can be beneficial for the officials who would be filling the pockets on account of TDAP while visiting abroad but it will be useless for the export sector in the present scenario, a dejected textile industrialist lamented.

Exporters said instead of coming with such sort of impractical ideas, TDAP should do something substantive for the industry as export sector is currently facing crises like high prices of gas and other utilities, load shedding and above all the law and order situation, which disrupted the industry adversely.

What will you gain by marketing the products abroad when the country has no export surplus in the present conditions, Mushtaq Vohra, a leading textile exporter and former office bearer of All Pakistan Textile Mills Association (APTMA) commented.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Government borrowings cross Rs 1 trillion mark ​*
KARACHI (January 16 2008): The government's borrowing for budgetary support has crossed one trillion rupees for the first time in the history of Pakistan, swelling to 248 percent during the first half of the current fiscal year, as against the same period of last fiscal, mainly due to below the target revenue collection and high subsidies on petroleum products.

Rising government expenditure, subsidies on commodities and no new privatisation are the main reasons.

The State Bank of Pakistan's statistics revealed that from July to January 6, 2008, net government borrowing for the budgetary support had gone up by Rs 180.445 billion due to the huge borrowing from the schedule banks as well as the central bank.

After the current upsurge, net government sector borrowing from banking system touched Rs 243.942 billion-mark from July to January 6, as against Rs 63.497 billion during the corresponding period of last fiscal 2007. "Rising government expenditure, subsidies on commodities and no new privatisation are the chief main reasons behind this huge budgetary borrowing," said an economist. He said despite tremendous increase in the oil prices, the government had not raised the prices of petroleum products and was compelled to pay huge subsidy on petroleum products to maintain the prices on the previous level.

Besides, the government is importing wheat on high price to meet the local demand and is distributing the commodity to the flourmills on subsidies rates to keep the essential atta price stable in the domestic market.

The SBP statistics shows that the government budgetary borrowing stock on June 30, 2007 stood at Rs 810.053 and after the first half of the current fiscal year raised to Rs 243.942 billion, the overall government budgetary borrowing stocks reaching a new peak of some Rs 1,054 billion. It is expected that at the end of current fiscal, the net budgetary would decline from one trillion rupees.

Major upsurge has been witnessed in the borrowing from State Bank of Pakistan, which reached Rs 222.129 billion during the first half as against Rs112.222 billion during same period of the last fiscal, registering a decreased of around Rs 110 billion. The government sector budgetary borrowing from banks stood at Rs 21.814 billion from July to January 6, while during the corresponding period of last fiscal it stood in negative position.

"The central bank has already asked the government to minimise its borrowing from the SBP, otherwise central bank would used its powers to control the borrowing," said Dr Shahid Hasan Siddiqui, an economist.

He confirmed that, at present, the government budgetary borrowing had reached new peak level, and said that increasing borrowing would eliminate the fruitful results of the SBP's tight monetary policy.

The rising budgetary borrowing would further increase the inflationary pressure on the economy, which was already showing an upward trend for the last few month, he added.

"Below the target revenue collection and no new privatisation deal, besides the no new foreign debt has the local banking system for the budgetary support," an economist said.

He said that since the government was trying to seek the long-term borrowing, therefore, the issuance of fourth Pakistan Investment Bonds (PIBs) has recently been invited by the central bank.

He said if the government received any big payment from foreign or finalised a privatisation deal, then local banking borrowing would decline in the future.

Similarly, as per the latest statistics Broad Money (M2) has registered a growth of 7.17 percent to Rs 291.567 billion from July to January 6 of the 2008 fiscal year as compared to 6.89 percent to Rs 234.799 billion during the same period of the last fiscal, showing an increase of 0.28 percent during first half.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Oil consumption records 8.3 percent growth ​* 
KARACHI (January 16 2008): The oil consumption in Pakistan has recorded a growth of 8.3 percent in the first half of FY08 as total volume settled at 9.07 million tons during this period against 8.38 million tons registered in the same period in FY07.

The black oil (FO & LDO) has recorded growth of 4.9 percent on year-on-year basis with total volume of 3.74 million tons in the first half of FY08 against 3.56 million tons in the same period in FY07, due to decline in LDO consumption growth. The other oil category, White Oil (Mogas, HSD, HOBC, Kero and JP) has also witnessed increased volume growth of 10.8 percent with 5.32 million tons of volume against 4.80 million tons in the first half of FY07.

Mogas led the growth path in 1HFY08 of the overall POL consumption growth. In volumetric terms, Black Oil still contributed 26 percent to the total volume increase during 1HFY08 whereas Mogas's proportion to the total volume increase remained 24 percent. Mogas demand has soared on the back of minimised Iranian smuggled oil products in the last 4 months of 1HFY08, greater hassle with increased waiting time for CNG filling, increasing number of vehicles in the country and increased variations observed in alternates fuel prices like LPG, Khurram Schehzad at Invest Capital & Securities said.

In addition, Kero's utilisation remained positive due to continuing gas shortages in the remote areas of the country and its near to 100 percent usage in JP-8's production. JP-1's growth remained negative during the period settling with a negative growth of 13.3 percent during 1HFY08 amidst its exports, shortage of the product, erratic supply to the major airports of the country and fluctuation in flight schedules.

HSD's consumption picked up during 1HFY08 because of increased transportation activities countrywide during the period. However, HOBC revealed a growth of 11.6 percent due to increased utilisation of the premier petrol in the high-end vehicles during the period. On the other hand, LDO has shown negative growth of 10.9 percent on YoY basis due to its lower utilisation short supply to agricultural activities observed in 1HFY08.

The three listed oil marketing companies (OMCs) have captured about 88 percent of the total market share. On quarterly basis, Shell has been the only company, which has improved its market share by 80bps in 2QFY08 (against 1QFY08 of 13.0 percent) capturing market share of 13.8 percent in 1HFY08.

PSO's share was eroded by 210bps settling at 68.6 percent while that of APL remained the same at 5.2 percent on quarterly basis. However, on YoY basis, PSO's market share has actually improved by 560bps during 1HFY08 against 63.0 percent last year.

Shell and APL faced an attrition of 70bps and 100bps standing with 14.5 percent and 6.2 percent market share, respectively in 1HFY07. Increase in Shell's market share came on the back of slightly better volumetric growth in 1HFY08 compared to that of peers. On the other hand, volume growth for both PSO and APL has further slipped to 11 percent and -23 percent in 1HFY08 from 15 percent and -22 percent in 5MFY08.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*World Bank concerned at persistent poverty in Pakistan ​* 
ISLAMABAD (January 16 2008): The World Bank has expressed serious concern over the persistent poverty in Pakistan, backing the view of caretaker cabinet which believes that it is increasing due to rapid growth in population.

"Inadequate basic services, financial and other resources, disempowered communities particularly exclusion of women from the public sphere, development process, low social capital, ethnic and religious strife and a spate of natural calamities in recent years have contributed towards poverty in Pakistan," WB said in a latest report.

However, Dr Ashfaque Hasan Khan, Special Secretary Finance, in a briefing to the federal cabinet on December 12, 2007 had argued that different methodologies were adopted to estimate poverty line and due to this reason poverty estimates made by agencies differed and this state of affairs created enormous doubts in the minds of general public. Methodology followed to estimate poverty in Pakistan includes calorie intake approach, 2350 calories per adult equivalence, consumption- based includes food, non-food items and nutrition- based adult equivalence scale with 0.8 weight for person less than 18 years of age and 1.0 for all other individuals, he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Trade deficit may cross $17 billion by year-end: Piaf ​* 
LAHORE (January 16 2008): The law and order situation, shortage of gas and electricity may increase trade deficit which has already reached to a record level of $8.24 billion during first half of the current financial year, ie from July-December 2007.

If the situation is not improved and present state of affairs continue, the trade deficit may cross the level of $17 billion by the end of this financial year and Pakistan would become just a consumer country, Pakistan Industrial and Traders Association Front (PIAF) chairman Mian Abuzar Shad said.

It appears the government experts rather than providing industry-friendly environment have left the indigenous industry at the mercy of circumstances, he added.

The rulers only made tall claims of economic progress and did not take any step for providing cheaper energy to the industry. The industrial units remain closed for hours and thus can not meet export orders whereas the number of foreign buyers is also shrinking day-by-day, he maintained.

The setting up of industrial estate is a good step but the government should have also ensured smooth supply of electricity and gas failing which the estates would not yield desired results, he said. He urged the government to resolve gas and electricity issue and ensure maintenance of law and order in the country.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*SPI inflation at 18.63pc for low-income group *​ 
Tomatoes prices up 99pc, wheat 62pc, wheat flour 58pc, rice 60pc, ghee loose 50pc, red chillies 38pc, bread 21pc on YoY basis

Thursday, January 17, 2008

ISLAMABAD: SPI based inflation has hit hardest the low income families, as it stood at unprecedented 18.63 per cent for low income group, indicating inflation is now in the not fun category, namely food and stuff you have to buy just to stay alive.

Weekly combine Sensitive Price Indicator (SPI) year-on-year of 53 daily use items for the week ending on January 10, 2008 has shown 14.54 percent increase as compared to the corresponding week of last fiscal, revealed the Federal Bureau of Statistics (FBS) data. 

Interestingly, in a span of one week, the SPI inflation was up by 2.16 percentage points as last week that ended on Jan 3, 2008, SPI was at 12.38 per cent. In such circumstances, the cost of living is difficult to afford for low, middle and fixed income groups that are finding it hard to make both ends meet. The miseries of millions of people living below the poverty line cannot be fathomed at times when middle-income groups are in want of food security.

High inflation is mercilessly pushing masses below the poverty line, eating up their purchasing power and leaving them with little money to buy essential food items and fulfil their basic necessities. Affecting the social and economic aspect of common mans life inflation is becoming a source of irritation for the whole nation.

Question arises how would the government reign in the runaway food inflation, how would it plan to bring the masses out of poverty? Would it not bring down the governments popularity graph?

The significant feature of the weekly bulletin of FBS was that year-on-year the rise in the prices of some necessities and kitchen items was exorbitant. These items were tomatoes, wheat, wheat flour, vegetable ghee loose, cooking oil, fresh milk, rice, powder milk, firewood, and all kind of pulses. 

The SPI bulletin, based on data collected for about 53 items from 17 centres, showed that prices of 25 items increased and five declined, while prices of 23 items remained unchanged. However, further analysis of the data revealed that on year-on-year basis 16 items are dearer by double digits. 

These include; tomatoes 99 per cent, wheat 62 per cent, mustard oil 60 per cent, basmati rice 60 per cent, wheat flour 58 per cent, rice irri-6 50 per cent, vegetable ghee loose 50 per cent, L.P.G (11kg cylinder) 40 per cent, red chillies 38 per cent, masoor pulse 35 per cent, vegetable ghee (tin) 33 per cent, cooking oil (tin) 32 per cent, plain bread 21 per cent, firewood 17 per cent, curd 11 per cent and tea (prepared) 11 per cent.

In a short span of one week, among these items the prices of tomatoes grade one increased by 18.79 per cent, wheat flour 7.68 per cent, wheat 5.8 per cent, firewood 4.26 percent, vegetable ghee (loose) 4.07 per cent, mustard oil 3.69 per cent, masoor pulse 2.64 per cent, kerosene 2.63 per cent and L.P.G by 1.49 per cent over previous week.

The figures further showed that though prices of 23 items posted no change during the week, yet compared to the corresponding week of last year, several items are now costly. For example matchbox prices are up by 28 per cent, milk powder 21 per cent, bath soap 21 per cent, washing soap 17 per cent and fresh milk by 12 per cent over the same week prices of the last fiscal. It further adds that the prices of chicken (farm) and egg (farm) also up by 20 per cent and 23 per cent respectively.

SPI inflation at 18.63pc for low-income group


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## Neo

*TDAP proposes outsourcing of fish harbour *​ 
Thursday, January 17, 2008

KARACHI: Trade Development Authority of Pakistan (TDAP) in a meeting with Pakistan Sea Food Industries Association has developed a program to improve fisheries in Pakistan and its exports Wednesday.

Chief Executive TDAP Tariq Ikram presented the outlined program that proposes outsourcing the management of Karachi Fish Harbour to, some international agency of world class, a TDAP press release said.

According to a press release of TDAP the program entails that the Certification of Boats will be made by the Fisheries Department -but the technical experts of Karachi Shipyard will do the inspection and repair of boats. The inspection and certification would be done after every six months.

As per plan processing and peeling units are to be ISO certified, their workers should be imparted proper training, and all seafood boxes should be laminated. Ice flake are to be provided to boats via balloting.

The plan also envisages that National Bank of Pakistan should be requested to fund on 50/50 basis the installation of the upgrading equipment. The association reviewed the calendar events for the year 2008 to explore new markets to expand sea exports. It was proposed to send 3-4 research delegations of fish association to visit the seafood importing countries to identity and explore the possibilities for the further enhancing exports to those counties. The association informed that tuna and mackerel canning plant is already working in the country.

TDAP proposes outsourcing of fish harbour


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## Neo

* Power crisis to last for another two years ​* 
Thursday, January 17, 2008

LAHORE: The power crisis in the country is expected to last for another two years and experts have advised the government to adopt immediate measure to cope with the situation in the best possible manner. 

They pointed out that the national economy would not be able to withstand the type of blunders committed by the planners in electricity management this year. They said some of the mistakes or administrative errors committed during past six months should not be repeated in future. 

They said the mega dams are pipe dreams of the present regime. They said government should look for alternate sources of generating electric power. The dams if ever built would be added bonus. They said the nation lost precious time in the bureaucratic struggle between the WAPDA and the Ministry of Water and Power. They said even most viable projects failed to take off due to this infighting.

They cited the example of Neelum-Jehlum Hydro electric project and Lakhra coal fired electric generation projects both of which were in cold storage but have been launched immediately after former Chairman WAPDA Tariq Hameed took over as Federal caretaker Minister for Water and power. They said authority to sanction new project, decide power purchase rate and tariff should be vested in one institution. Presently they said government of Pakistan through PPIB sanctions the thermal projects and decides the power purchase rate. The tariff is decided by the government that even over ride the decision of NEPRA the regulatory body in this regard. WAPDA they added has to buy and sell electrity at rates determined by the government whether they are commercially viable or not. 

They said there would have been no load shedding this winter had WAPDA or whatever authority monitored the stocks of oil kept by the IPPs. As the managing Director PEPCO revealed that under agreement with the government of Pakistan it is mandatory for the IPPs to keep an oil stock of 21 days but none complied with this regulation. In ordinary circumstances this would have gone unnoticed but when the transport remained suspended for few days the folly of many IPPs was exposed. 

They said WAPDA buys electricity from the IPPs under sovereign guarantee at a very high rate. They said WAPDA paid for electricity production in the past when it had surplus electricity. The IPPs they added are bound to provide the required power or pay heavy penalty. They said any lapse on mandatory regulations would have much serious impact on economy in future. 

They said power conservation plan read by some WAPDA electrical engineers at a seminar revealed that if the entire households shift to energy savers from ordinary lights its would save 1200 MW of electricity. 

This is a big saving. WAPDA is losing money on every unit it supplies to most of the domestic consumers. It requires one million dollar to install electricity generation capacity of one megawatt. Government has to provide WAPDA billions of rupee for generation of thermal electricity. The government could discourage conventional bulbs and tube lights by clamping higher duty. At the same time government could subsidize the energy saver bulbs. The authorities according to experts have not taken any concrete steps to promote use of energy saver bulbs. 

The government had always taken half-hearted measures in imposing the shop timings. This is mandatory under the labor law. The employees working in the shops come in the morning and work till the closure of markets from 10 pm to midnight. This exploitation has to be stopped. After all markets close in developed economies by 5 to 6 pm and do more business. The business would be as usual but the employees would get the necessary relief. That this would save the government 600-MW electricity at peak consumption hours is an additional benefit. 

The experts say that lavish air conditioning in government buildings should be curtailed forthwith. They said lightening at public and private buildings should also be reduced. In fact they added the government should impose additional tax on all lightings outside the buildings to discourage this practice. The experts point out that this measure along with reducing the steeet lights by half would save another 600 MW around the year at peak consumption hours. 

Power crisis to last for another two years


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## Neo

*Bumper cane crop to yield 4m tons of white sugar​*
KARACHI, Jan 16: The bumper sugarcane crop of around 60 million tons for on-going current season is likely to produce about four million tons of white refined sugar which will take the total stocks of the produce in the country to about five million tons.

Contrary to wheat and rice shortages resulting in soaring prices, sugar would be available in abundance because supply will be exceeding the demand which would stay below four million tons.

However, industry sources say this would create its own nature of problem as huge stocks would further depress already lower sugar prices in the domestic market which would result in huge financial losses to the second largest industrial sector of the country.

When the current crushing season began in November last, there were around one million tons of opening stocks of white refined sugar. Of these, about 650,000 tons were with the millers and around 350,000 tons with the state-owned Trading Corporation of Pakistan (TCP).

Consequently, the industry on the one hand is confronting high cost of production, and on the other, plummeting sugar prices owing to imbalance between demand and supply were causing a financial crisis.

The ill-planned import of sugar during 2005-06 when a huge quantity of 1.5 million tons was imported, followed by an additional import of around 0.6 million tons during 2006-07, damaged the local industry, a spokesman for the Pakistan Sugar Mills Association said.

The industry is poised to achieve record four million tons production during the on-going 2007-08 season which would be sufficient to meet the domestic consumption.

It is being anticipated that by the end of this season, the industry would be holding a huge inventory of around one million tons.

It is also being argued that since sugar demand is in-elastic in consumption and stretches over a period of one year, but its production takes place in about four months, piling up stocks at 17 per cent of production rollout per month, adding up to 68 per cent by the end of sugarcane crushing campaign.

As a result of this situation, the industry comes under severe financial constrain and bears significant debt-service.

The PSMA demanded that the government should come forward and rescue the industry by lifting surplus stocks which would also be in line with worldwide practice of creating strategic stocks of food items in the form of buffer stocks.

On the contrary, the industry has complained that the TCP is unloading sugar stocks which is also causing adverse impact on price structure, thereby depressing prices further.

The industry claims that the wholesale prices of sugar presently pitched at the lowest level of Rs22 per kg which include Rs3.15 of sales tax and Rs0.21 federal excise duty, thereby leaving a net revenue of Rs18.64 per kg as against verified cost of production at Rs25.84 per kg, excluding sales tax.

This incurs a loss of Rs7.20 per kg to the industry, they added.

There are strong indications that as the crushing season progresses and sugar stocks keep accumulating, prices would also keep coming under pressure. Therefore, it is being feared by the industry that it would further deepen their financial crisis. The PSMA spokesman also indicated that many mills have already exhausted finances and would shortly be confronting the situation of no funds to pay for sugarcane supplies, and they were bound to bring sugar industry to a grinding halt.

The PSMA (Sindh zone) drew the attention of the Sindh and the federal authorities about the alarming situation that has emerged and urged them for a positive intervention to avert the crisis taking an ugly turn.

It also warned that the sugar industry in Sindh cannot continue its on-going sugarcane crushing owing to fast deteriorating financial position.

Bumper cane crop to yield 4m tons of white sugar -DAWN - Business; January 17, 2008


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## Neo

*Sugar Industry facing Rs42bn shortfall​*
ISLAMABAD, Jan 16: The sugar industry has informed the government that it was facing a cash shortfall of Rs30-42 billion on account of sugarcane price and production cost that would lead to major defaults by the mills and crop losses to farmers.

Informed sources, however, told Dawn the caretaker minister for finance Dr Salman Shah was reluctant to offer any rescue package to the industry on the grounds that it would be politically too difficult for the government to defend dolling out subsidies to sugar industry that it accused last year of amassing indecent profits.

Informed sources said a secretary-level committee has been directed by the caretaker prime minister to look into the sugar crisis in detail and consider some of the proposals presented by the industry.

The committee is yet to hold a meeting, but the industry has recommended exemption of 15 per cent GST on sugar at least for the current year, coupled with the purchase of surplus commodity by the government at a fixed price rather than tenders that was sure to crash sugar prices.

The sugar mills have told the government the sugarcane prices of Rs65 and Rs67 per 40kg were fixed by the provincial governments on the assumption of mill-gate sale price of sugar at Rs29 per 50 kg of last year that has come down to Rs22-23 per kg matching a sugarcane price of Rs40-45 per 40kg.

They said with the present sugarcane prices, the sugar mills would be able to utilise about 50 million metric tons and able to generate Rs80 billion to pay the growers without adding any financial charges.

On the other hand, the return expected from the sales with the present price would be in deficit of about 30 per cent.

After including the general sales and special excise duty, the total manufacturing cost of 4.4 million tons of sugar would reach Rs121 billion while the companies would be able to generate a revenue of Rs91.58 billion on the sale price of Rs21 per kg ex-mill fixed by the government. This would leave a cash shortfall of about Rs30 billion and if shareholders minimum profit of 10 per cent is included, the net profit would surge to Rs42 billion.

In the meanwhile, the total sugar availability for the next year has been estimated at 5.36 million metric tons, including a carryover stock of about one million tons, as of October 2007. With a total consumption of 4.2 million metric tons per annum, the industry expects a surplus of about 1.16 million metric tons for the current year and add to the glut in the market.

To resolve this problem, the government has indicated to purchase about one million tons of sugar from the mills to reduce their cash problems. But the industry believes that international market was also experiencing surplus production that would create problems for the farmers during the current season.

Not only that many sugar mills could lead to closure due to liquidity problems, their inability to pay dues to the farmers would lead to discouragement to growers who would tend to avoid sowing sugarcane crop next year because of problems this year.

Sugar Industry facing Rs42bn shortfall -DAWN - Business; January 17, 2008


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## Neo

*Economic targets may be lowered​*
ISLAMABAD, Jan 16: A meeting held here on Wednesday for a mid-term review of national economy discussed proposals to revise downward various economic targets set for the current financial year.

Sources told Dawn that the meeting held with President Pervez Musharraf in the chair was informed that it would be difficult to achieve 7.2 per cent GDP growth rate during 2007-08 due to a decline in revenues, exports and local and foreign investments. And the situation was compounded by the violence that followed the assassination of PPP chairperson Benazir Bhutto.

Analysts estimate that the violence caused Rs1 trillion losses in the industrial centres.

Caretaker Finance Minister Dr Salman Shah, State Bank Governor Dr Shamshad Akhtar and Federal Board of Revenue Chairman Abdullah Yousuf attended the meeting.

The sources said that the meeting was told that during the first six months (July-December) of the current financial year, economy suffered a great deal on account of increasing terrorist activities and law and order problems.

The FBR chairman briefed the meeting on revenue collection which had suffered heavily over the past two months.

The sources said the finance minister told the meeting that despite shocks and uncertainties the economy was still showing signs of resilience. However, he pleaded for increasing oil prices to avoid more economic problems.

He said it was becoming extremely difficult to continue offering a monthly subsidy of Rs14 billion.

Issues concerning low exports and high imports and wheat and flour crisis also came under discussion. The meeting was informed that the smuggling of flour to Afghanistan had been minimised with the help of Rangers and other law-enforcement agencies and wheat was being exported now only through government-to-government arrangements.

The president told the meeting that he was worried about the state of economy which had performed quite well during 2001-05, but started experiencing problems in 2006 and 2007.

He asked the economic team to make concentrated efforts during the remaining six months of 2007-08 for a broad recovery.

Economic targets may be lowered -DAWN - Top Stories; January 17, 2008


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## Neo

*UK bank to invest $15mn in Pakistan​*
ISLAMABAD: The UK-based Innovative Investment Bank would initially invest $15 million which would increase further substantially in future. Its main areas of services would be financial services, wholesale distribution, retail activities, management and development of commercial as well as residential property.

This was informed to caretaker Prime Minister Mohammedmian Soomro here on Wednesday in a meeting with Syed Mehboob Hussain, CEO of Innovative Investment Bank. 

Soomro said that the banking industry, which has been transformed into a vibrant private sector enterprise as a result of the market based reforms, is playing an important role in the economic growth of the country. 

Pakistan with its growing market, strong economy and emerging middle class offers opportunities for business and investment, he said adding that due to the government policies of deregulation, privatisation and liberalisation, foreign banks are investing in Pakistan. Continuity and consistency in policies, coupled with an investment-friendly and hassle-free environment has made Pakistan a destination of choice for foreign investors, the Prime Minister said.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Copper deposits estimated at 2bn tonnes: ACC Chief​*
ISLAMABAD: Antofagasta Copper Company of Chile Marcelo Awad has informed the government that the Reko Diq Project in Chaghai district of Balohistan has two billion tonnes of copper deposits.

President of Antofagasta Copper Company (ACC) of Chile Marcelo Awad, who along with Chief Executive Officer of Tethyan Copper Company of Australia Hugh James called on the Federal Minister for Petroleum and Natural Resources Ahsanullah Khan here Wednesday and briefed him about the copper reserves. They exchanged views on investment potential in the mineral sector with the Federal Minister.

During the meeting, the President of Antofagasta Company briefed the Minister about the updated progress on Reko Diq Copper Project in Chaghai District of Balochistan Province being undertaken by the Antofagasta Joint Venture. Marcelo Awad informed the Minister that the Reko Diq Project involves multi-billion dollars investment and has two billion tonnes of copper deposits. He said that the company had so far invested $46 million on the development of the project and efforts were underway for the speedy commissioning of this mega copper project. 

The Minister said that the government was keen to develop the mineral sector on modern lines and providing attractive package of incentives to the investors to boost mineral development activities in the country. He said the government was taking concrete steps to ensure availability of infrastructure pre-requisite for the successful mineral exploration. 

The Minister said that annual production of 250,000 tonnes of copper from Reko Diq project would not only bring Pakistan on the world copper map but also help strengthen its economy.

Daily Times - Leading News Resource of Pakistan


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## Neo

*2,376 MW power from thermal plants by 2010*​
* Sources say plan launched to decrease gap between demand and supply

ISLAMABAD: An additional 2,376 MW power will be generated with the start of 12 thermal power plants in the private sector by 2010.

According to official sources, major thermal power projects to be completed in two years include the 235 MW Muridke (Shapphire) power project, the 225 MW Orient Thermal power plant, the 225 MW Altas power plant and the 225 MW Halmore Power project Bhikki. 

Similarly, 516 MW power will also be generated during two years with start of six hydel power plants in the pubic and private sector with the 130 MW Duber Khwar and 121 MW Allai Khwar projects. 

Sources said the power sector had been facing an increasing gap between supply and demand over the past few years due to the increased electricity use in the country. They said several strategies had been made to reduce power supply deficit within two years, which will help save 750 MW from crisis management and 100 MW from load management by December 2008 and a total of 2,000 MW through crisis management by 2010.

Similarly, 1,750 MW will be saved by 2010 through short-term measures including 1,250 MW through supply side management, 300 MW through load management and 200 through energy conservation. Sources said the use of energy saver bulbs would help save 50 MW in the first phase while in the second phase, 200 MW power could be saved with the use of energy savers in the country.

They said by turning off extra lights and other electrical appliances, 50 MW power could be saved while around 150 MW electricity would be saved with the success of the automated meter reading project for domestic, industrial and commercial areas. They said the energy loss reduction plan would save 300 MW electricity through system reinforcement. 

Sources said the Water and Power Ministry had constituted two committees on the directives of the energy task force to take short-term operational measures and medium to long-term development plans to redress the power crisis resulting from the demand and supply gap.

They said all concerned stakeholders including the Indus River System Authority (IRSA), oil and gas companies, the Pakistan Electric Power Company (PEPCO), the National Transmission and Dispatch Company (NTDC) and the Private Power and Infrastructure Board (PPIB) were members of the two committees to look into specific operational and planning issues. 

They said a crisis management plan had been launched to manage the situation arising out of the supply gap with major components including prudent load management, energy conservation and demand reduction with no major impact on citizens convenience.

According to the sources, the power deficit would reduce and further improvements were likely regarding power generation in the shortest time in the country. They said the draft of long-term load forecast up to 2030 would be prepared by February 7 with the final load forecast being prepared by March 7 this year, adding that the load forecast and integrated power plan would be reviewed and updated on a year-by-year rolling basis.

Similarly, power distribution companies (Discos) would initiate a similar planning process to form the input for the integrated power planning of the country. app

Daily Times - Leading News Resource of Pakistan


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## mujahideen

I think Pakistan really needs to produce energy, by using all its resources. Pakistan is sitting on top of one of the biggest coal reserves in the world. But due to political problems these coal reserve cannot be used to produce energy. We only produce 6&#37; of our energy from coal.


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## Neo

Atleast 2 more years and things will improve, see the report I posted earlier today.

Current crisis is a result of decennia of mismanagement and neglect, hope we'll stabalise political crisis and attract more FDI for the sector.


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## mujahideen

Neo said:


> Atleast 2 more years and things will improve, see the report I posted earlier today.
> 
> Current crisis is a result of decennia of mismanagement and neglect, hope we'll stabalise political crisis and attract more FDI for the sector.



What you have said, I only hope these thing happen and happen soon. But the most important thing is that our politicians start thinking about the country and not about themselves.


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## Neo

*Alarming increase in SPI-based inflation ​*
ISLAMABAD (January 17 2008): The alarming surge of 14.54 percent in SPI-based inflation in the second week of January 2008 over the same period last year has soared to 18.63 percent, said Federal Bureau of Statistics (FBS) bulletin. The huge 1.28 percent SPI increase in a week might have been the reason for belated release of data, as it was not issued on due date ie January 10.

The data showed that combined SPI surged by 3.75 percent in last 13 days, as from 10.79 percent on December 27, it surged to 12.38 percent on January 3 and 14.54 percent on January 10.

Such an alarming increase in the SPI in a short span of time has robbed the people's purchasing power with the prices of core kitchen items going out of the reach as dearness for Rs 3,000 income group surged by 18.63 percent, followed by 18.26 percent for Rs 3,000 to Rs 5,000 income group and 16.45 percent between Rs 5,000 to Rs 12,000 income group. The inflation was 11.27 percent on January 10 even for over Rs 12,000 income group, giving an indication how dearness affected all the income groups.

There is no sign the prices would come down in days ahead, experts say, owing to political turmoil, energy crisis, law and order situation, and upcoming general elections, all the indicators would add to the inflation.

The SPI bulletin, based on data collected for about 53 items from 17 centers, said that prices of 25 commodities increased while only five showed moderate decline and 23 remained unchanged, yet higher over the last year.

The prices of tomatoes surged by 18.79 percent during the week under review, per kg tomatoes increased to Rs 31.26 from Rs 26.40 last week. The official figures can be disputed, but showed that per kg wheat flour price has gone up to Rs 22.01 from Rs 20.44 during last week, firewood 40-kg Rs 227.62 from Rs 218.33, vegetable ghee (loose) per kg to Rs 107.53 from Rs 103.22, mustard oil 122.91 from Rs 118.54, red chillies, LPG, tea, gur, kerosene, bananas, gram pulse (washed), beef, mutton and so many other items prices have increased during the week.

The life of salaried and downtrodden classes has been miserable as 15 percent increase in their salaries has already been offset by similar increase previously. There has hardly been any increase in the income of poor, while volatile surge in prices brings every day new challenge for them.

The combined SPI has been recorded 171.06 percent on January 10 from 168.89 percent on January 3, showing substantial increase of 1.28 percent during the week under review. Sources said the officials of the FBS gave caretaker Prime Minister Muhammedmian Soomro a detailed briefing on the prices, but any measures as a result of that meeting are yet to be seen.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Local firm to set up 48 megawatts power plant in Karachi ​*
ISLAMABAD (January 17 2008): A Karachi-based firm will establish a 48-MW rental-based barge mounted power plant in Karachi. Informed sources quoting official documents confirmed to Business Recorder that Karachi Electric Supply Corporation, now a private entity, had declined to purchase power to be generated by the firm for certain reasons.

The sources said when the firm approached a caretaker minister at Lahore on November 26, 2007, they were assured that if KESC was not willing to purchase power, National Power and Dispatch Company (NTDC) of Wapda would procure power and sell it to KESC on an agreed tariff.

To accommodate this firm, the sources said that gas allocated to two of the Independent Power Producers to be established in Karachi has been shut off for setting it aside for the new project.

The plan is very much in progress and the concerned ministry is extending all possible help towards the execution of the project. "We are thankful to you for informing us that it has been decided to accept 48-MW barge mounted power plant and to make the corresponding gas allocation," said, the firm in a letter to the minister on November 27, 2007.

According to the letter, the owners of the barge are making necessary arrangements for relocating it for which the shipping company requires details of the disembarkation port in Pakistan.

The barge mounted gas turbine generator station consists of one 48-MW (ISO) Siemens-Westinghouse W 251B11 distillate or gas fuelled turbines deriving 11.5 kV, 50 Hz brush air cooled alternators with switchgear, parallel systems and all auxiliaries, mounted on a common barge. The barge is fitted with 11/132 kV step-up transformers, which could be changed if any alternative grid voltage is required.

The foreign associates of the company, Messrs. Blue Crest Capital Management, one of the largest hedge funds in Europe had to met the minister in December but it was not confirmed if they had called on him to say 'thank you'.

The firm, in its letter further said that it was doing everything possible to cut the commissioning time after the signing of the contract on the lines as per the understanding reached between NTDC and Alstom Power Rental. In 2008, Karachi's minimum electricity demand is expected to hover around 2,640 MW against KESC supply of around 1,810 MW.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Advanced CAD/CAM centre set up in Peshawar ​*
LAHORE (January 16 2008): Training in designing and manufacturing products is now available to the people of Peshawar, as an advanced computer-aided design/computer-aided manufacturing (CAD/CAM) centre equipped with latest computers and software has been set up in this city.

This brings the total of such facilities set up by Technology Upgradation and Skill Development Company (Tusdec) in the country to five. According to Tusdec spokesman here on Tuesday, the company has already set up National Institute of Design and Analysis (Nida) in Lahore and Advanced CAD/CAM Centres in Karachi, Quetta and Sialkot.

Nida Lahore is playing its role as the hub for these centres. The newly established Peshawar centre will offer courses in Engineering Design, Electrical and Electronics, Civil/Architecture, Mechanical Drafting and Interior/Furniture design as just some of the planned courses. The centre is aimed at producing innovative designers instead of only software operators.

CAD/CAM technology, developed in the United States in 1950s, has been instrumental in the promotion of digital manufacturing in developed as well as developing countries. The major dividends of this technology are improved product quality and cost-effectiveness.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Remittances rise 19pc to $3.066bn ​* 
Friday, January 18, 2008

KARCHI: The remittances sent home by overseas Pakistanis continued to show a rising trend as an amount of $3,066.33 million was received in the first half (July-December 2007) of the current fiscal year 2007-08, showing an increase of $498.31 million or 19.40 percent over the same period of the last fiscal year. 

The amount of $3,066.33 million includes $1.12 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

The monthly average remittances for the period July-December, 2007 comes out to $511.06 million as compared to $428.00 million during the same corresponding period of the last fiscal year, registering an increase of 19.40 percent.

The inflow of remittances in the July-December, 2007 period from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $874.21 million, $563.06 million, $500.33 million, $457.21 million, $227.23 million and $88.99 million, respectively as compared to $659.27 million, $483.32 million, $397.03 million, $358.58 million, $218.67 million and $74.89 million, respectively in the July-December, 2006 period. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the first half of the current fiscal year 2007-08 amounted to $354.18 million as against $374.92 million in the same period last year.

SBP said that during the last month (December 2007), Pakistani workers remitted an amount of $479.26 million, up $4.05 million or 0.85% when compared with an amount of $475.21 million sent home in December 2006.

The inflow of remittances into Pakistan from most of the countries of the world increased last month as compared to December 2006. According to the break up, remittances from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $140.45 million, $81.25 million, $77.33 million, $77.21 million, $29.82 million and $12.90 million, respectively as compared to the corresponding receipts from the respective countries during December 2006, i.e. $125.81 million, $84.33 million, $78.91 million, $67.11 million, $38.57 million and $12.32 million. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during December 2007 amounted to $60.15 million as compared to $67.99 million during December 2006.

Remittances rise 19pc to $3.066bn


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## Neo

*Phase II of enhancing power transmission system on cards ​* 
Friday, January 18, 2008

ISLAMABAD: The government has planned to embark upon the massive work on phase II of power transmission system with the estimated cost of Rs25.04 billion in a bid to strengthen transmission system to meet increasing requirements of power demand growth across the country.

According to a senior official in Ministry of Water and Power, the main objective of the project is enhancement in the power transmission system by extension, argumentation and expansion of existing 500 kv and 220 kv transmission system of national Transmission Dispatch Company (NTDC).

It will also help improve the system security, stability, loss reduction and reliability. The project is proposed to be funded from Asian Development Bank loan (80%) of the project cost and NTDCs own resources (20%).

Under the phase -II, as many as10 projects relating to transmission lines would be completed. The government of Pakistan, the official said, had requested Asian Development Bank for providing assistance for the preparation of a project to enhance overall power transmission system.

In response, ADB made a program to extend the loan under a phased scheme called Multi-trance Financing Facility (MFF) to meet all the requirement of NTDC for financing of the project under short, medium and long tem plans.

Under its first tranche, PC-1 for NTDC Power Transmission Enhancement Project $260 million has been approved by Executive Committee of National Economic Council (Ecnec).

Now for the second phase, the official disclosed, M/c BPI of UK have selected 10 sub projects identified by NTDC for ADB for financing. The same consultants for ADB under project Preparatory Technical Assistance (PPTA) loan have carried out project preparatory feasibility work.

In the recent years, as economic activity picked up in Pakistan, there was a quantum jump in the power demand as a result of which NTDC system has been subjected to stress and congestion at various strategic locations.

As a result, the system was stretched beyond capacity and this caused overloading, which resulted in outages. He said that this has necessitated the extension, upgrading and argumentation of existing grid stations and installation of new substations and transmission system.

In addition, overloaded system is one of the major causes of high transmission losses besides, colossal loss to the economy due to load shedding. He said, a number of transmission lines and grid stations are overloaded up to their capacity causing breakdowns besides increasing losses. In addition a number of 500 KV and 220 KV transmission lines are also under different stages of implementation.

Phase II of enhancing power transmission system on cards


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## Neo

*Work on 18,000MW hydropower projects to start in next 2 years ​* 
Friday, January 18, 2008

LAHORE: WAPDA is vigorously working on the feasibility studies and detailed engineering designs of various hydropower projects with an accumulative generation capacity of about 18,000 MW and these projects would be available for initiating construction work by the next two years. 

This was told in a briefing arranged for Special Assistant to the Prime Minister, Amar Lal during his visit to WAPDA House on Thursday. Pakistan Electric Power Company (PEPCO) Managing Director Munawar Baseer Ahmed, WAPDA Member (Power) Fazal Ahmed Khan, Member (Finance) Chaudhry Abdul Qadeer and other senior officers of WAPDA and PEPCO attended the briefing. 

Speaking on the occasion, Special Assistant to the Prime Minister said that the Government is fully aware of the growing energy requirements of the country and taking all possible measures for reducing the gap between generation and consumption of electricity. He emphasized the need to tap all resources of power generation, particularly hydel, coal, wind and solar energy through coordinated efforts. 

PEPCO MD, dilating upon the current power scenario, apprised the Special Assistant to the Prime Minister that short, medium and long-term strategies are being executed to overcome the problem of electricity shortage in the country. 

He said that besides rehabilitation of the existing thermal power plants, rental powerhouses are also being established in the country for immediate relief. In addition to taking various measures for energy conservation, PEPCO would start distributing 100,000 energy saver bulbs amongst its consumers for replacement of ordinary bulbs of 60 or 100 watt, he added. The MD told that a special plan has been devised for smooth power supply to the domestic consumers during Ashura. 

Work on 18,000MW hydropower projects to start in next 2 years


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## Neo

*Pakistan eyes $500m marble exports ​* 
Friday, January 18, 2008

ISLAMABAD: Pakistan is scouting for increasing marble exports from the existing $23 million to $500 million by 2011, as it has one of the worlds largest marble and granite reserves and clear edge over the neighboring countries i.e. India and China . 

Pakistan has a clear edge over India as well as China to excel in the marble industry as we have 64 types of marbles, which India and China lack, however, 85 percent of the marble is wasted due to blasting and lack of proper facilities. 

The use of modern technology would reduce the losses 45 percent, Shahid Rehman, Director Pakistan Stone Development Company (PASDEC) said briefing Federal Minister for Sports and Culture Sardar Sikindar Hayat Khan Jogezai on Thursday.

PASDEC plans to set up four marble cities in collaboration with the NIPS (National Industrial Parks Development and Management Company). One such marble city in Risalpur is ready for groundbreaking. Shahid Rehman informed the minister that 80 plots would be created in Risalpur, 200 in FATA and 200 in Karachi marble city respectively, he said.

Federal Minister Sardar Sikindar Hayat Khan Jogezai latter while addressing to the large gathering of All Pakistan Marble Association in Islamabad Chamber of Commerce & Industry (ICCI) said that Pakistan is rich in natural resources and has fertile agriculture, sea, hills, coal, gas, oil, and marble reservoirs.

Pakistan eyes $500m marble exports


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## Neo

*Govt to meet Rs 1.025tr revenue target for FY08​*
ISLAMABAD: Ministry of Finance (MoF) has assured the President Pervez Musharraf that there is no need to revise downwards annual tax collection target of Rs 1.025 trillion.

A senior official at Federal Board of Revenue (FBR) told Daily Times on Thursday that this was assured during the presentation on overall economic targets of the country for the current fiscal year 2007-08. The meeting was informed that despite several difficulties faced by the economy the annual tax collection would cross Rs1 trillion marks by June 30, 2008. 

The meeting was also informed about the revenue collection performance during the first half of the ongoing fiscal year. It was informed to the meeting that some Rs 36 billion revenue loss has been calculated till date for the current fiscal year and efforts are there to cross the Rs 1 trillion mark against the annual target of Rs 1.025 trillion. 

Revenue forecast presented during the meeting was encouraging as there was no revenue loss of Rs 100 billion as had been indicated earlier. It was also informed that FBR has received some 11444 corporate tax returns by mid-January 2007 as compared to 9510 returns during same period July-mid January period of last fiscal year indicating an increase of 20 percent. 

To a question, the official said that revenue collection to increase as per economic activity in the country despite many difficulties due to political and law and order situation in the country. However, he maintained that any increase in gas and electricity load shedding schedule might have an impact on revenue collection in months to come.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Govt to meet Rs 1.025tr revenue target for FY08​*
ISLAMABAD: Ministry of Finance (MoF) has assured the President Pervez Musharraf that there is no need to revise downwards annual tax collection target of Rs 1.025 trillion.

A senior official at Federal Board of Revenue (FBR) told Daily Times on Thursday that this was assured during the presentation on overall economic targets of the country for the current fiscal year 2007-08. The meeting was informed that despite several difficulties faced by the economy the annual tax collection would cross Rs1 trillion marks by June 30, 2008. 

The meeting was also informed about the revenue collection performance during the first half of the ongoing fiscal year. It was informed to the meeting that some Rs 36 billion revenue loss has been calculated till date for the current fiscal year and efforts are there to cross the Rs 1 trillion mark against the annual target of Rs 1.025 trillion. 

Revenue forecast presented during the meeting was encouraging as there was no revenue loss of Rs 100 billion as had been indicated earlier. It was also informed that FBR has received some 11444 corporate tax returns by mid-January 2007 as compared to 9510 returns during same period July-mid January period of last fiscal year indicating an increase of 20 percent. 

To a question, the official said that revenue collection to increase as per economic activity in the country despite many difficulties due to political and law and order situation in the country. However, he maintained that any increase in gas and electricity load shedding schedule might have an impact on revenue collection in months to come.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan Economy - News and Updates​*
Continued from : http://www.defence.pk/forums/economy-development/1049-pakistan-economy-daily-update.html


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## Neo

*Remittances rise 19pc to $3.066bn ​* 
Friday, January 18, 2008

KARCHI: The remittances sent home by overseas Pakistanis continued to show a rising trend as an amount of $3,066.33 million was received in the first half (July-December 2007) of the current fiscal year 2007-08, showing an increase of $498.31 million or 19.40 percent over the same period of the last fiscal year. 

The amount of $3,066.33 million includes $1.12 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

The monthly average remittances for the period July-December, 2007 comes out to $511.06 million as compared to $428.00 million during the same corresponding period of the last fiscal year, registering an increase of 19.40 percent.

The inflow of remittances in the July-December, 2007 period from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $874.21 million, $563.06 million, $500.33 million, $457.21 million, $227.23 million and $88.99 million, respectively as compared to $659.27 million, $483.32 million, $397.03 million, $358.58 million, $218.67 million and $74.89 million, respectively in the July-December, 2006 period. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the first half of the current fiscal year 2007-08 amounted to $354.18 million as against $374.92 million in the same period last year.

SBP said that during the last month (December 2007), Pakistani workers remitted an amount of $479.26 million, up $4.05 million or 0.85% when compared with an amount of $475.21 million sent home in December 2006.

The inflow of remittances into Pakistan from most of the countries of the world increased last month as compared to December 2006. According to the break up, remittances from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $140.45 million, $81.25 million, $77.33 million, $77.21 million, $29.82 million and $12.90 million, respectively as compared to the corresponding receipts from the respective countries during December 2006, i.e. $125.81 million, $84.33 million, $78.91 million, $67.11 million, $38.57 million and $12.32 million. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during December 2007 amounted to $60.15 million as compared to $67.99 million during December 2006.

Remittances rise 19pc to $3.066bn


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## Neo

*Local firm to set up 48 megawatts power plant in Karachi ​*
ISLAMABAD (January 17 2008): A Karachi-based firm will establish a 48-MW rental-based barge mounted power plant in Karachi. Informed sources quoting official documents confirmed to Business Recorder that Karachi Electric Supply Corporation, now a private entity, had declined to purchase power to be generated by the firm for certain reasons.

The sources said when the firm approached a caretaker minister at Lahore on November 26, 2007, they were assured that if KESC was not willing to purchase power, National Power and Dispatch Company (NTDC) of Wapda would procure power and sell it to KESC on an agreed tariff.

To accommodate this firm, the sources said that gas allocated to two of the Independent Power Producers to be established in Karachi has been shut off for setting it aside for the new project.

The plan is very much in progress and the concerned ministry is extending all possible help towards the execution of the project. "We are thankful to you for informing us that it has been decided to accept 48-MW barge mounted power plant and to make the corresponding gas allocation," said, the firm in a letter to the minister on November 27, 2007.

According to the letter, the owners of the barge are making necessary arrangements for relocating it for which the shipping company requires details of the disembarkation port in Pakistan.

The barge mounted gas turbine generator station consists of one 48-MW (ISO) Siemens-Westinghouse W 251B11 distillate or gas fuelled turbines deriving 11.5 kV, 50 Hz brush air cooled alternators with switchgear, parallel systems and all auxiliaries, mounted on a common barge. The barge is fitted with 11/132 kV step-up transformers, which could be changed if any alternative grid voltage is required.

The foreign associates of the company, Messrs. Blue Crest Capital Management, one of the largest hedge funds in Europe had to met the minister in December but it was not confirmed if they had called on him to say 'thank you'.

The firm, in its letter further said that it was doing everything possible to cut the commissioning time after the signing of the contract on the lines as per the understanding reached between NTDC and Alstom Power Rental. In 2008, Karachi's minimum electricity demand is expected to hover around 2,640 MW against KESC supply of around 1,810 MW.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Remittances rise 19pc to $3.066bn ​* 
Friday, January 18, 2008

KARCHI: The remittances sent home by overseas Pakistanis continued to show a rising trend as an amount of $3,066.33 million was received in the first half (July-December 2007) of the current fiscal year 2007-08, showing an increase of $498.31 million or 19.40 percent over the same period of the last fiscal year. 

The amount of $3,066.33 million includes $1.12 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

The monthly average remittances for the period July-December, 2007 comes out to $511.06 million as compared to $428.00 million during the same corresponding period of the last fiscal year, registering an increase of 19.40 percent.

The inflow of remittances in the July-December, 2007 period from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $874.21 million, $563.06 million, $500.33 million, $457.21 million, $227.23 million and $88.99 million, respectively as compared to $659.27 million, $483.32 million, $397.03 million, $358.58 million, $218.67 million and $74.89 million, respectively in the July-December, 2006 period. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the first half of the current fiscal year 2007-08 amounted to $354.18 million as against $374.92 million in the same period last year.

SBP said that during the last month (December 2007), Pakistani workers remitted an amount of $479.26 million, up $4.05 million or 0.85% when compared with an amount of $475.21 million sent home in December 2006.

The inflow of remittances into Pakistan from most of the countries of the world increased last month as compared to December 2006. According to the break up, remittances from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $140.45 million, $81.25 million, $77.33 million, $77.21 million, $29.82 million and $12.90 million, respectively as compared to the corresponding receipts from the respective countries during December 2006, i.e. $125.81 million, $84.33 million, $78.91 million, $67.11 million, $38.57 million and $12.32 million. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during December 2007 amounted to $60.15 million as compared to $67.99 million during December 2006.

Remittances rise 19pc to $3.066bn


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## Neo

*Work on 18,000MW hydropower projects to start in next 2 years ​* 
Friday, January 18, 2008

LAHORE: WAPDA is vigorously working on the feasibility studies and detailed engineering designs of various hydropower projects with an accumulative generation capacity of about 18,000 MW and these projects would be available for initiating construction work by the next two years. 

This was told in a briefing arranged for Special Assistant to the Prime Minister, Amar Lal during his visit to WAPDA House on Thursday. Pakistan Electric Power Company (PEPCO) Managing Director Munawar Baseer Ahmed, WAPDA Member (Power) Fazal Ahmed Khan, Member (Finance) Chaudhry Abdul Qadeer and other senior officers of WAPDA and PEPCO attended the briefing. 

Speaking on the occasion, Special Assistant to the Prime Minister said that the Government is fully aware of the growing energy requirements of the country and taking all possible measures for reducing the gap between generation and consumption of electricity. He emphasized the need to tap all resources of power generation, particularly hydel, coal, wind and solar energy through coordinated efforts. 

PEPCO MD, dilating upon the current power scenario, apprised the Special Assistant to the Prime Minister that short, medium and long-term strategies are being executed to overcome the problem of electricity shortage in the country. 

He said that besides rehabilitation of the existing thermal power plants, rental powerhouses are also being established in the country for immediate relief. In addition to taking various measures for energy conservation, PEPCO would start distributing 100,000 energy saver bulbs amongst its consumers for replacement of ordinary bulbs of 60 or 100 watt, he added. The MD told that a special plan has been devised for smooth power supply to the domestic consumers during Ashura. 

Work on 18,000MW hydropower projects to start in next 2 years


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## Neo

*Pakistan eyes $500m marble exports ​* 
Friday, January 18, 2008

ISLAMABAD: Pakistan is scouting for increasing marble exports from the existing $23 million to $500 million by 2011, as it has one of the worlds largest marble and granite reserves and clear edge over the neighboring countries i.e. India and China . 

Pakistan has a clear edge over India as well as China to excel in the marble industry as we have 64 types of marbles, which India and China lack, however, 85 percent of the marble is wasted due to blasting and lack of proper facilities. 

The use of modern technology would reduce the losses 45 percent, Shahid Rehman, Director Pakistan Stone Development Company (PASDEC) said briefing Federal Minister for Sports and Culture Sardar Sikindar Hayat Khan Jogezai on Thursday.

PASDEC plans to set up four marble cities in collaboration with the NIPS (National Industrial Parks Development and Management Company). One such marble city in Risalpur is ready for groundbreaking. Shahid Rehman informed the minister that 80 plots would be created in Risalpur, 200 in FATA and 200 in Karachi marble city respectively, he said.

Federal Minister Sardar Sikindar Hayat Khan Jogezai latter while addressing to the large gathering of All Pakistan Marble Association in Islamabad Chamber of Commerce & Industry (ICCI) said that Pakistan is rich in natural resources and has fertile agriculture, sea, hills, coal, gas, oil, and marble reservoirs.

Pakistan eyes $500m marble exports


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## Neo

*Tullow leaving Pakistan for better returns in Africa ​* 
Saturday, January 19, 2008

KARACHI: Tullow Oil, the European oil and gas exploration and production company, is selling off its assets in Pakistan to concentrate on more lucrative regions in Africa. 

The company will sell off its fields in Pakistan and divert investments for oil and gas exploration to Africa, Stewart Brown, Country Manager of Tullow Pakistan Development Limited, told The News on Friday. 

Financial returns in Africa are higher than what the company gets from Pakistan, he said by phone from Islamabad. So the shareholders have decided to sell off the assets as a going concern. 

The company has two producing fields, Suri and Chachar which produce approximately 19 million cubic feet per day (MMCFD) of gas. It has stakes in two other fields as well. Analysts believe Tullows departure from Pakistan would not leave any drastic impact on oil and exploration scene of the country, which produced 3,873 MMCFD in 2006-07. But it signifies a drifting interest of foreign companies even after introduction of a new petroleum policy that offers better returns. 

Saad Bin Ahmed, head of Research at Capital One Equities, says that record surge in crude oil prices has made companies to cash in on the opportunity by increasing production rather than going for fresh exploration. 

Response to the new petroleum policy was below our expectations even though the cap was raised to $45 per barrel from $36, he said referring the benchmark crude oil price at which the gas could be sold. 

Oil industry officials also argue that the rising price of oil and gas the world over has diluted the incentives offered by the government in Petroleum Exploration and Production Policy 2007. The policy states that companies will be entitled to 50 percent of the cost if crude oil goes beyond $45 per barrel, the rest would go to the government. 

Price of gas in Pakistan is still below what the companies can get elsewhere, said Masood Siddiqui, former Vice Chairman of Pakistan Petroleum Exploration and Production Companies Association (PPEPCA). 

Cost of gas to be imported from Iran will be $8 per MMBTU (million British thermal unit) and local gas is being bought at only $4 per MMBTU, he said and added that better returns could encourage the companies to stay and expand their operations. 

About the position of government that the policy was in line with what other countries in the region offered, he said security concerns in Pakistan necessitates need for offering more incentives. 

Militant-led insurgencies in gas-rich Balochistan province and North West Frontier Province (NWFP) have hampered the oil and gas exploration activity in recent months. But it is unlikely that government will flex its position as the opening lines of the petroleum policy 2007 state: The importance of domestic petroleum industry to the economy of Pakistan cannot be over-emphasized as an issue of national security, national self-reliance and as a major source of government revenue.

Tullow leaving Pakistan for better returns in Africa


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## Neo

*FTSE defers of removing Pak from global index ​* 
Saturday, January 19, 2008

KARACHI: FTSE Group the global index provider has deferred its earlier decision of removing Pakistan from its FTSE Global Equity Index Series (FTSE-GEIS) from June 2008, Securities and Exchange Commission of Pakistan Chairman Razi-ur-Rehman stated at a press conference on Friday.

FTSE on September 20, 2007 had announced removing Pakistan from its FTSE-GEIS from June 2008 and almost a year ago (i.e. on September 12, 2006), it had placed Pakistan on its Watch List for possible removal from its global index, which is used by institutional investors worldwide, he recalled. Pakistan is again on watch list till September 2008.

Since FTSE announced removing Pakistan from its global index, the Securities and Exchange Commission of Pakistan (SECP) was in consultation with it for change of its decision. And SECP has eventually achieved its target, as FTSE Group was convinced to defer its decision of removing Pakistan from its global index, he added.

The FTSE had decided to remove Pakistan from its index on technical grounds and SECP convinced it on technical grounds as well, he said and added that SECP informed FTSE about the recently introduced revised Risk Management System (RMS), Unique Identification Number (UIN) allotted to each customer, transparency in transaction and up-gradation in KATS and hardware in this regards. In light of such significant reforms in the Pakistans capital market, it came as a surprise that Pakistan was being excluded from the FTSE GEIS, he said.

The SECP taking immediate action approached FTSE and held a series of dialogue which included personal representation by the SECP Chairman at the London office of FTSE, as well as arranging an international conference call with the FTSE Index Review Committee wherein key market participants of Pakistan capital market also participated.

As far as the issue of corporatisaion, demutualisation and integration of local bourses is concerned then the summary of the concerned law was lying in caretaker prime ministers office and was required his approval. After the signing of this document by PM, the local bourses would be liable to stand demutualised within 110 days, he said.

FTSE defers of removing Pak from global index


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## Neo

*Pakistan changing accounts base year to 2005-07 ​* 
Seeks subscription to IMF Special Data Dissemination System that requires timely dissemination of data on employment, central government operations

Saturday, January 19, 2008

ISLAMABAD: Pakistan has informed the IMF that quarterly national accounts would be released after changing the base year to 2005-2006.

According to the IMF report on Pakistans data related issues, the countrys data is broadly adequate for effective surveillance, but further improvements in the availability and timeliness of key economic statistics would help policy analysis and formulation.

The authorities have pointed towards the progress in their efforts to subscribe to the funds Special Data Dissemination System (SDDS). In addition, a recent update of the Report on the Observance of Standards and Codes (ROSC) published in February 2007 identified significant improvements in the monetary statistics.

Pakistan participates in the General Data Dissemination System (GDDS) since 2003, meeting the recommendations for the coverage, periodicity, and timeliness of most GDDS data categories. The only exceptions are the timeliness of the GDP and the lack of annual data on wages/earnings. 

For subscription to the Special Data Dissemination Standard (SDDS), Pakistan will need to disseminate (a) quarterly employment and unemployment data with a timeliness of one quarter; (b) monthly data on central government operations wiith a timeliness of one month (c) quarterly data on the national accounts, wages/earnings, and external debt, all with a timeliness of one quarter; (d) more detailed breakdown of data on central government debt and external debt; and (e) update and expand the metadata on compilation and dissemination practices.

In 2004, the Federal Bureau of Statistics (FBS) completed a revision of the national accounts statistics to bring them in line with the concepts and definitions of the 1993 System of National Account. As noted by the December 2004 data ROSC, informal economic activities need to be better captured, while newly emerging activities, such as in the information technology sector, continue to pose challenges. 

The FBS is currently working on producing quarterly national accounts (QNA), which would be completed with a rebasing of the national accounts to the year 2005/06. In mid-2005, an IMF mission provided technical assistance on the development of QNA and the consumer price index (CPI). With respect to labour market statistics, the FBS has recently started to compile quarterly employment/ unemployment data (although not with the frequency required for subscription to the SDDS) and is investigating the feasibility of disseminating data on wages/salaries. The FBS produces three price indices: the CPI, the wholesale price index (WPI), and the sensitive price indicator (SPI). The CPI and WPI are compiled on a monthly basis. The SPI is compiled on a weekly basis and consists of 46 essential commodities that are consumed by the lowest income group.

The concepts and definitions of the CPI and WPI follow international guidelines. Plans have been made to introduce the classification of individual consumption by purpose (COICOP) and to complete the work to develop a Producer Price Index (PPI), with base year 1999/2000; an IMF mission also provided some advice in this regard. 

Pakistan changing accounts base year to 2005-07


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## Neo

*PC achieves $2bn privatisation target ​* 
Saturday, January 19, 2008

KARACHI: Pakistan has achieved the record target of US$2 billion privatisation proceeds through the privatisation of public sector entities in fiscal year 2006-07, the Privatisation Commission (PC) spokesman said on Friday.

He recalled that during the current year (2007-08), from July 2007 to November 2007, an amount of US$446 million (ie Rs27 billion) has been received through privatisation proceeds by the PC. The proceeds are included of UBL-GDRs ($85 million), HBL-IPO ($201 million), M/s Etisalat tranche (received on November 07, 2007) for PTCL privatisation ($133.217 million) and Rs1.6 billion from other privatisation proceeds. 

He further stated that the target for fiscal year 2007-08 would hopefully be achieved through GDR of NBP, HBL, KAPCO and privatisation of NPCC, SME Bank, PTDC Motels, HEC, and HPFL.

Giving details of the ongoing transactions, the spokesman stated that National Power construction company (NPCC), Small & Medium Enterprise Bank, motels and restaurants of PTDC, Heavy Electrical Complex and Hazara Phosphate and Fertilizers, Pakistan Machine Tool Factory etc were at an advanced stage of privatisation as EOIs for most of these transactions have been received and now the next phase to receive Requests for Statement of Qualification (RSOQ) was being processed while the work on GDRs of HBL and NBP were also targeted before the close of the current financial year, he added.

The spokesman further explained that besides the ongoing transactions the PC has an ambitious program ahead, which include PMDC (salt and coal mines), Services International hotel, Printing Corporation of Pakistan, FESCO, PESCO, JPC, IPO of PSML, GDR of PPL.

PC achieves $2bn privatisation target


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## Neo

*Iran seeks increase in bilateral trade volume ​* 
Saturday, January 19, 2008

LAHORE: The Iranian Consul General Saeid Kharazi has said that Pakistan and Iran should enhance their economic cooperation as the existing two-way trade volume has so far failed to benefit from the huge existing potentials between the two countries.

He stated this during his meeting with the Lahore Chamber of Commerce & Industry (LCCI) president Mohammad Ali Mian at the. He said that both countries should evolve a strategy to solve the problem of high tariffs and remove bottlenecks and hurdles in the way of bilateral trade.

He said that the LCCI should urge the government to organise a high-powered delegation to Iran to discuss tariff related issues with the Iranian government. He said that a lack of information was also an obstacle in the way of bilateral trade between the two brotherly nations and this goal could be achieved by frequent exchange of trade delegation and holding of joint trade exhibitions.

He said that a branch of the Iran Central Bank would soon start operations in Pakistan. Kharazi said that the present volume of bilateral trade does not signify a very healthy performance. For the 2006-07 period the total volume of trade was around US$ 573.30 million, out of which imports from Iran were worth US$ 405.8 million and Pakistans export to Iran accounted for US$ 167.5 million, reflecting a considerable trade gap of US$ 238.3 million against Pakistan.

Mohammad Ali Mian said that an analysis of bilateral trade shows that Pakistan is constantly in the negative balance. Cereals were the largest export items to Iran, which accounts for 44.89 percent of total exports.

The LCCI President said that businessmen of Pakistan and Iran could initiate joint ventures in the sectors of agriculture, dairy & food processing, SMEs, oil & gas exploration, hydel & coal based energy projects, paper & paper board, sugar, cement, chemicals, transport and communication etc.

Iran seeks increase in bilateral trade volume


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## Neo

*Govt to build infrastructure at Karachi Shipyard​*

* Federal government has allocated Rs 483.42 million for the fiscal year 2007-08 for KSEW infrastructure

ISLAMABAD: Federal government has decided to build basic infrastructure for construction of surface commercial cargo ships and frigates including F-22 P frigates (warships) in the country at Karachi, official sources said here Friday.

Federal government has allocated Rs 483.42 million for the fiscal year 2007-08 that would be met from local resources and releases would be made from federal Public Sector Development Programme (PSDP). 

Keeping in view the importance, the federal government has already deleted Karachi Shipyard & Engineering Works Limited (KSEW) from its proposed list of privatisation in the recent past. 

It is envisaged that if the shipbuilding project for local organisations like Pakistan Navy, Karachi Port Trust (KPT), Maritime Security Agency (MSA) and Pakistan National Shipping Corporation (PNSC) are undertaken successfully, then KSEW is likely to get export orders from friendly countries. This would significantly contribute towards earning foreign exchange for Pakistan. 

Overall this project would provide enormous benefits to national exchequer in terms of saving foreign exchange, earning foreign exchange, jobs creations, transfer of technology in new shipbuilding techniques etc. 

Construction of basic infrastructure for shipbuilding would be completed within 24 months. Official working paper of the project available with Daily Times here on Friday reveals that the project envisages construction of state of the art workshop for shipbuilding including civil works and up gradation of existing workshop at KSEW for construction of surface commercial cargo ships and frigates including F-22 P frigates (warships) in Pakistan. 

The project envisages indigenous construction of surface ship would be started under the transfer of technology arrangement with China Shipbuilding and trading Company (CSTC). For effective implementation and coordination a project management team has been constituted. 

According to the paper the project would enhance and improve the productivity of KSEW and ever-increasing demand of the industrial sector particularly of the shipbuilding industry of the country. KSEW is the only industry of its type (shipyard) in the entire country, which is fulfilling the needs of other local industries through shipbuilding and repair besides catering the vital needs of other local industries through manufacturing various items of general engineering utility. In order to undertake this project, it was felt mandatory to upgrade various machinery and infrastructure. 

Construction of various types of ships by the government of Pakistan would provide benefits like creation of job opportunities, improvement in local vender industry etc. In addition, KSEW with the inclusion of these facilities would be able to construct more warships for domestic as well as international markets, which would be important source of foreign exchange earnings. 

Re-arrangement for up-gradation of the KSEW workshop includes six areas including construction of foundation of installation of straightener machines and its production line, installation of NC cutting machines, construction of foundation, construction of foundation for two Gantry Cranes of lifting capacity of 50 tones each, construction of production line for edge, short blasting facility, ware house for storage of KOM and other civil works.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan yet to adopt efficient production pattern: WTO​*
ISLAMABAD: Reforms in key sectors in Pakistan have been underway but adjustment toward a more diversified and efficient production pattern has not yet occurred.

This was observed in a report released by the World Trade Organization (WTO) Secretariat on tariff protection in Pakistan. 

It said Pakistan has continued to lower its average level of tariff protection, nonetheless, border protection and domestic support still varies by sector, thus constituting potential impediments to the efficient allocation of resources and its sustainable economic development. 

Agriculture remains the economys mainstay, despite decline of its GDP share from 24.1 percent in 2001/02 to 20.9 percent in 2006/07; it still accounts for more than 4 out of 10 jobs. The sectors productivity is low by international and domestic standards, undermined by inefficient resource use; skewed distribution of farm holdings, accentuated by a thin land market that reflects insecure tenure, inefficient non-price allocation of water (involving significant irrigation subsidies), and irrigation systems in a drought-prone country; as well as poor quality inputs and infrastructure. Food security, based on self-sufficiency, a potentially costly policy, is a major government priority. Reforms since 2001/02 have been directed at a greater role for the private sector, including in marketing, and supplying farm inputs. Reportedly, domestic support measures (price and non-price) hinder diversification, in some cases they periodically penalize farmers (e.g. recently for wheat and rice), and are biased towards relatively low-value, water-intensive crops e.g. sugar cane; sugar seems to be particularly inefficient, with domestic prices exceeding world levels, by at times up to 50-60 percent. 

The edible oil manufacturing industry is protected by relatively high specific tariffs. Certain agricultural exports are covered by various controls, restrictions, and support measures, including direct and indirect subsidies, such as on freight, and income tax concessions. The state-owned Trading Corporation of Pakistan still engages in significant trade of several essential commodities e.g. wheat, sugar, and cotton as a means of providing subsidized foodstuffs to poor households and to cover emergency situations. State regulation (by seemingly independent statutory regulators) of and participation in the energy sectors remains significant. Petroleum, natural gas (state duopoly), and electricity sales are subject to licences and extensive price controls, but are moving at variable speeds towards more competitive regulatory regimes. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan to have 3-G mobile services by 2010: PTA chief​*
ISLAMABAD: Third generation (3-G) mobile phone services will be introduced in the country by 2010 and its licence-issuing process is probably starting at the end of this year. 

Briefing journalists at a press conference here on Friday Chairman PTA Major General (R) Shahzada Alam Malik said that licences would be awarded through competitive bidding.

For this purpose auction of the spectrum would be carried out this year and it was hoped that by the end of 2009 or early in 2010, the 3-G services would be available in Pakistan. The new technology of 3-G mobile services would enable consumers to use Internet facility with high speed, make video calls and other value added data services.

The PTA chairman said the authority had created a conducive and investor friendly environment in the telecom sector by awarding licences in a fair and transparent manner, resulting in huge investment and related socio-economic activities. Through prudent government policy, the telecom sector had attracted $2 billion annually. But a considerable gap still existed between the haves and have-nots in Pakistan, particularly in rural areas, where a large potential existed. All operators (mostly foreign) were rolling out their networks rapidly all over the country, which required huge investments. 

Telecom sector had emerged, over the past few years, as the largest recipient of foreign investment in the Pakistani economy. The liberal policies, level playing field for all operators and competition were major drivers for this influx of FDI in the sector. During 2006-07, telecom sector received over $1824.3 million FDI comprising 35.6 percent of the total FDI in the country. 

Renowned international telecom operators and investors had acquired stakes in Pakistan telecom sector showing utmost confidence in the telecom policies and regulatory environments of the country. 

The PTA chief said country now has 77 million mobile phone subscribers, 2.1 million WLL and 4.7 million fixed line consumers. At present, over 90 percent population is covered by telecom services.

Malik said services of the operators were regularly monitored in order to ensure the quality according to the licencing conditions. During the year 2007, PTA surveyed services of Internet Service Providers (ISPs) and mobile phone operators. Earlier, the surveys were conducted manually but for the first time, this year, the PTA carried out surveys through the latest automated equipment. Results of mobile and ISPs surveys were subsequently highlighted for the awareness of telecom consumers. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*53.7% decline in services export during Nov ​*
KARACHI: The export of services declined heavily by 53.77% in November last compared with November 2006, the latest official data showed on Friday.

Total exports during November 2007 stood at $ 225.390 million against $ 487.543 million of November 2006 whereas import of services posted 19.63% growth to $ 944.426 million against $ 789.433 million of November 2006.

Due to disappointing export performance, the deficit in services trade surged by 138.18% to $ 719.036 million compared to $ 301.890 million of November 2006.

Also, the deficit in services trade widened by 36.38% in November last compared to preceding month of October due to negative growth in export and higher imports that grew by 23.52% during the month under review.

According to analysts of foreign trade, like goods trade, services sector has also been adding burden to the countrys trade deficit due to poor export which is likely to continue in the coming months due to uncertainty and instability caused by recent events especially assassination of former prime minister Benazir Bhutto and ensuing violence and riots leaving adverse impact on countrys service export sector. The consequences of the current disturbance and chaos would be felt in the coming days when the services exports are feared to bear its brunt particularly the tourism sector, which used to earn considerable foreign exchange for the country, analyst Khurram Schehzad predicted. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*FTSE decision helps KSE-100 index gain 200.50 points ​* 
KARACHI (January 19 2008): Late buying has supported the KSE-100 to close in positive at 13,874.54 points level, with a net gain of 200.50 points, mainly due to FTSE decision to defer its previous decision to remove Pakistan from its Global Equity Index Series (GEIS). The KSE-30 index surged by 285.64 points to close at 16,485.91 points level.

On Friday, the market started under pressure and remained volatile during the first half due to prevailing uncertainty on political front and law and order situation in the country, which kept the market participants sidelined and the KSE-100 index hit 13,578.10 points intra-day low level.

However, buying euphoria developed in the second half on the back of FTSE decision, which supported the index to close in green with healthy gains. The market participants opted to take fresh positions in the oversold market.

The market witnessed healthy trading activity as the ready market volume increased to 237.314 million shares as compared to 195.329 million shares traded a day earlier. The futures market turnover surged to 41.917 million shares against 40.731 million shares on Thursday.

The overall market capitalisation increased by Rs 69 billion to Rs 4.264 trillion. Trading took place in 340 scrips, out of which 239 scrips closed in positive and 68 scrips in negative, while the value of 33 scrips remained unchanged.

PTCL was the star performer of the day with 31.091 million shares and the scrip surged by Rs 0.35 to close at Rs 39.05. Azgard Nine was the second highest volume leader with 16.868 million shares, but it declined by Rs 0.85 to close at Rs 49. In banking sector, NIB Bank, NBP and Bankislami surged by Rs 1.05, Rs 6.65 and rupee one to close at Rs 22.20, Rs 227.90 and Rs 19 respectively.

Arif Habib Sec increased by Rs 5.50 to close at Rs 170.80, Lucky Cement gained Rs 2.95 to close at Rs 115.05, TRG Pakistan surged by Rs 0.40 to close at Rs 12.95, Pace (Pak) Limited closed at Rs 30.75, with a net gain of Rs 0.80, while Dost Steel Limited gained Rs 1.65 to close at Rs 37.

Siemens Pakistan and Bata (Pak) were the highest gainers, with Rs 62 and Rs 20 gains to close at Rs 1,719 and Rs 487 respectively, while Rafhan Maize and Jahangir Siddiqui Co were the biggest losers. They lost Rs 110 and Rs 59.70 to close at Rs 2,400 and Rs 1134.35 respectively.

Ahsan Mehanti at Shehzad Chamdia Securities said that buying euphoria witnessed in oversold market in the second half of the session. The investors' confidence revived on the back of the FTSE index provider decisions that not to exclude Pakistan from FTSE Global equity Index series, he added.

The market participants opted to take fresh positions in the oversold market, he said, adding the news regarding new gas reserves would positively affect the PPL earning and rise in LPG/furnace oil prices, affecting earnings of oil sector, were also positive for investors, he said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*NIP developing industrial park at Korangi Creek *​
KARACHI (January 19 2008): The National Industrial Parks Development and Management Company (NIP) is in the process of developing Korangi Creek Industrial Park (KCIP) in Korangi Creek.

According to NIP sources, Jurong International Company, Singapore, renowned internationally for their expertise and wide experience in this field has developed the design concept and master plan of this Industrial Park, whereas Nespak has been given the responsibility for subsequent architectural design, engineering services and supervision of this project.

The park will have two zones namely high density and low density zones. The high density zone is reserved for gems and jewellery and IT while the other zone will accommodate garments, food processing, printing/packaging and light engineering.

The Company will establish its own estate management for the maintenance of the park, its utilities, environment and commercial buildings with a view to satisfy customer's requirements, so as to sustain the investment goals of estate owners and occupants.

The second NIP project, Bin Qasim Industrial Park (BQIP) is being set up by the company on a 930-acre land at Pakistan Steel Downstream Industrial Estate in Karachi. NIP entered into an agreement with Pakistan Steel Mills (PSM) for handing over the physical possession of land for developing, marketing and managing of an Industrial Park catering for medium/large entrepreneurs.

The third project Auto Cluster Industrial Park (ACIP) has been planned at Sheikhupura Road in Lahore, which is spread over an area of over 170 acres of land. In this project auto vendors will be provided manufacturing, assembling and warehousing facilities.

The company offers plot sizes ranging from 4 to 16 kanals to the potential entrepreneur. The prime objective of setting up the ACIP is to support just-in-time deliveries to Original Equipment Manufacturers (OEMs) in the vicinity. This would enable the auto manufacturers to increase their production and add revenue generation to the entire supply chain.

Meanwhile, NIP has signed an agreement with Pakistan Stone Development Company (PASDEC) to establish and develop marble cities at Risalpur and Warsak and demarcation of 100 acres of land for marble city, Risalpur has been completed.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Housing sector wooing foreign investment worth $1.5 billion: minister ​*
ISLAMABAD (January 19 2008): Housing Sector is poised to rope in huge foreign investment of dollars 1.5 billion to address the acute housing problems in the country, Caretaker Minister for Housing and Works Nisar Muhammad Khan said.

"For the first time in the history of the Ministry for Housing and Works such a huge foreign investment will come to the housing sector in Pakistan," he said in an interview with APP here.

The minister said that he had held two meetings with Attorney General of Pakistan to facilitate the foreign investor in signing the Memorandum of Understanding. He said that public-private partnership in overcoming the housing shortage was the need of the hour as private and informal sector plays a vital role in housing construction.

The minister said the time has come that government should play the role of a facilitator and encourage the private sector and foreign investors in the housing sector. To a question about non-implementation of national housing policies prepared in 1992 and 2001, Nisar Khan said that non-implementation complicated the housing situation in the country.

He further said that he would soon meet President Pervez Musharraf and discuss the issue to come up with such policy measures which are pragmatic and implementable. To a question about launching of new housing sectors in the federal capital, he said that unfortunately this should have been done as a top priority and up to the required level.

About delay in acquisition of land in Sector G-14, the minister said that the sector was launched for federal government employees by the Federal Government Employees Housing Foundation in 2003 to meet the growing demand of housing units.

But after a lapse of four years land has not been acquired as yet due to tussle with the landowners, hindering the development work in sector G-14/1,2,3, he said.

He however said that acquisition of land had been delayed due to disputes regarding built-up property in the area. The minister hoped that after getting possession of the land development work would be started during this year.

To a question about sector F-12, the minister said that majority of unauthorised people have occupied the land there and the Capital Development Authority (CDA) has asked the ministry to get it vacated.

He said a proposal has been put forward to reserve sector F-13 for Federal Government Employees Housing Foundation as there is no problem of encroachments in that area. Nisar Khan said that main hurdle to initiating new housing scheme was scarcity of land, particularly in and around urban centers.

He said that land value continues to increase with unchecked tendencies of speculation resulting in virtual non-availability of affordable land especially for low-income groups.

The Ministry of Housing and Works in its advisory committee meeting has asked the federal and provincial governments to purchase cheap land in the outskirts of cities for constructing low-cost housing, he said.

Pakistan Housing Authority (PHA) has launched a scheme to construct 36,000 flats for low-paid federal government employees in the federal capital and all provincial headquarters, Nisar Khan said. Under a pilot project 1,000 flats have already been constructed in sector G-11 in Islamabad while another 1,000 would be built there for which the CDA has been asked to purchase land.

Nisar Khan said that similar schemes were also being undertaken in all the four provincial metropolises to resolve housing problem of federal government employees. To a question about role of financial institutions in housing sector, the minister said that shortage of finance continues to be a major constraint in construction and maintenance of housing.

The country's annual additional requirement is estimated at around 5,70,000 housing units whereas the actual annual production stands at around 3,00,000 housing units resulting in a recurring backlog of 2,70,000 housing units annually, Nisar Khan said. He said that 5,00,000 housing units should be built per annum to meet the growing needs and to also clear the backlog.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*PTA to acquire technical facility in telecom sector *​
ISLAMABAD (January 19 2008): Pakistan Telecommunication Authority (PTA) has singed a contract to get in place a technical facility to root out grey traffic in telecom sector, causing losses of billions to the economy, said its Chairman Shahzada Alam here on Friday.

An official said that grey traffic was causing over rupees three billion financial loss annually, the issue Chairman PTA hoped, would be resolved in weeks. Speaking at a news conference, he said equipment of the system would be shipped to Pakistan in about two weeks.

"The primary source of grey traffic is through utilising the Voice over Internet Protocol (VoIP) due to their low installation and operational costs and the system put in place by the PTA will filter all illegal VoIP traffic, terminated in the country through submarine cables," he said.

The facility would then be able to block all these illegal VoIP flows, he said, adding: "We expect the facility to be operational by the end of February." Shahzada Alam Malik said the PTA would introduce third generation mobile phone service to improve the telecommunication system and facilitate the people. The 3-G mobile service would enable the consumers to use internet with high speed, make video calls and other value-added data services, he said.

He said the auction of the spectrum would be carried out this year and the service would be made available in the country by the end of next year. The PTA had created a conducive and investors-friendly environment in the telecom sector by awarding licenses in a fair and transparent manner, attracting in investment of two billion dollars annually, Malik added.

He said the sector had emerged over the past few years, as the largest recipient of foreign investment expanding the country's economy. He said the PTA granted license to five mobile companies in AJK and Northern Areas and they had started their services in these areas.

He said the PTA deposited Rs 1.2 billion with AJ&K Council and Northern Areas Secretariat on account of initial license fee collected from mobile phone operators.

He said the PTA had also launched the second phase of deregulation of fixed line services in the area in September last year. The PTA Chairman said the recently launched Wimax service in Pakistan would help the subscribers to make video calls and telephony through special handsets, while callers would be able to see live video and picture of each other in addition to voice conversation.

He said the PTA had blocked 170, 000 illegal SIMs in one year and developed a comprehensive SOP for the sale of new mobile connections and verification of antecedents of the users. "This is being implemented in collaboration with the National Data-based Regulatory Authority (Nadra), he added.

"Seventeen franchise companies were closed down as they were involved in selling SIMs to people without meeting required criterion," he added. He said Pakistan was one of the first countries in south-east Asia to implement the Mobile Number Portability within a period of two years. He said approximately 55,000 subscribers had been ported out successfully from one cellular mobile operator to the one of the choice of the subscribers.

He said the PTA instructed all mobile companies to launch an awareness campaign and warn those that were involved in sending unsolicited messages/fraudulent calls to the consumers. In this connection, he said the PTA had established a complaint cell with a toll free number 0800-55055, operational 24 hours.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Telenor: clients exceed 15 million ​*
OSLO (January 17 2008): Norwegian telecom group, Telenor said on Wednesday that its mobile operator in Pakistan had seen its subscribers grow to above 15 million, passing that landmark in less than three years in the business. At the end of November, Telenor Pakistan had 13.91 million customers.

"In 2007, the company grew nearly 200 percent in terms of customers, experiencing the highest growth in the industry in Pakistan by a wide margin compared to its competitors," Telenor said in a statement.

Business Recorder [Pakistan's First Financial Daily]


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## Contrarian

Neo said:


> *Pakistan to have 3-G mobile services by 2010: PTA chief​*



Who was the man who was telling me that Pakistan already has 3-G services, and has had them operational for a while now. And that was when i SPECIFICALLY mentioned that having EDGE does not correspond to having 3-G. The man said Pakistan has 3-G except for video calling...

Feel pissed off at that guy now, dont talk when you dont know.


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## Neo

Can someone clarify please?


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## Proud to be Pakistani

malaymishra123 said:


> Who was the man who was telling me that Pakistan already has 3-G services, and has had them operational for a while now. And that was when i SPECIFICALLY mentioned that having EDGE does not correspond to having 3-G. The man said Pakistan has 3-G except for video calling...
> 
> Feel pissed off at that guy now, dont talk when you dont know.



*I mentioned that Pakistan has EDGE and WIMAX..*

*You didnot mention that having edge is not 3-G service!*

Check the link i also posted at that time from Mobilink, as i also donot live in Pakistan!
*
Here again i Post the same as EDGE!*.....

Mobilink introduces EDGE for the first time in Pakistan. Experience the sharp edge of technology. 

EDGE

When you feel the need to experience the sharp edge of technology, EDGE is the answer for you. With EDGE you can download email or data faster than ever before. Starting from Islamabad and reaching out to other cities, Mobilink leads the way in evolution to the next generation of technology. Separate subscription is not required for EDGE.

Links: Mobilink World - GPRS/EDGE
Mobilink - New Offers


If you did mention what you claim and i still said that Pakistan has 3G then please post the post and i shall agree that i was mistaken!


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## Contrarian

Here it isL
I started by saying:



> Neo, quick question,
> are there 3G networks in Pakistan? have 3G services started for mobile phones?



To which you replied:


> 3G is available in Pakistan since 1.5 years as per my last visit to Pakistan, but i think still video calls are not allowed. Only mobile TV option is there.
> 
> Any news..



Me:


> *Mate, 3G does not mean just internet on the mobile. 2G networks have internet as well.
> 
> 3G networks by default mean very high data transfer rates which means video calls. Mobile TV is also available in India, though there are no 3G networks in India, it can be done in 2G networks as well*.



You:


> In this field....
> 
> *I have 3G and i know what a 3G network means more than you for a fact.*
> 
> No offense thou.



Me:


> So then are you sure that there are 3G networks in Pakistan?



Then you gave me some links.

Then i replied AGAIN:


> Okay cool!
> *But how come video calling is not there then?
> I was asking because India has edge services as well, but there is no 3G network, which entails video calling...*
> EDGE has been present for atleast the last 3 years in major cities in India. But 3G is still not present, and im quite keen on using it.
> 
> How many operators are there for the cell network in Pakistan?
> 
> AFAIK,in India the spectrum for 3G services has not even been allocated yet by the govt, let alone the companies develop the required infrastructure.
> In India, ALL the spectrum is kept by the defence services, and they are bloody reluctant to give it.
> 
> The govt in India is again giving spectrum and licence to some new players in the GSM field, and it was taken from the defence services, there is a huge mess over it.



So as you can see, you were quite clearly saying you KNOW MORE Than me about 3G services and whatnot. I did not contest you, since i did not know about the exact position in Pakistan and took your word for it. This is AFTER mentioning that India has EDGE but its not 3G...!


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## Proud to be Pakistani

*Dear .... *

Please know that i didnot mean to portray that Pakistan is better in telecom then India, If you think that, i said i know 3G because i have it in U.A.E and when i went to Pakistan it was not working but i know that WIMAX service is available in Pakistan and it is by far a better system then 3G tech. Kindly check the WIMAX tech and 3G tech comparison or i can post for mutual information. True that it seems to be wrong but i mentioned that Edge is available and i asked also if Video Calling is available and posted link from mobilink to authenticate by view for mobile TV in pakistan.


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## Neo

*Saudi food group plans acquisitions in Pakistan​*
RIYADH, Jan 19: Saudi food company Savola Group will seek acquisitions of cooking oil firms in Pakistan and other Asian countries and push into real estate at home after its fourth-quarter profit fell 24 per cent as high commodity prices slashed margins.

The worlds largest producer of branded cooking oil wants to take stakes in cooking oil firms in India, Indonesia and Pakistan, as well as firms producing oilseeds, such as corn and sunflower, Chief Executive Sami Baroum said.

We are looking for vertical expansion opportunities, going upstream, to have better control over margins, Baroum told Reuters in an interview.

We are heading to some countries with strong potential, namely India, Indonesia and Pakistan for edible oil in particular, he said.

Savola  which produces 1.4 million tons per year of cooking oil which it sells in markets including Morocco, Turkey and Iran  had not yet identified investments, Baroum said.

Shares of Savola dropped as much as 6.6 per cent after the firm reported profit of 177 million riyals in the three months to December 31 after a global surge in commodity prices slashed its margins and it spent more on marketing.

The stock was down 4.25 per cent at 1218 GMT.

The fourth quarter reflected the worst impact on our earnings from the rise in raw material prices, which hit unprecedented levels, Baroum said.

Savola is constrained in its ability to pass along commodity price rises to consumers and has to shoulder a lot of the increases.

King Abdullah last month ordered subsidies on some food products to ease the impact of inflation on ordinary Saudis after inflation hit 16-year highs of six per cent and 6.5pc in November and December, respectively.

Instead of selling low-margin products we focused on high-margin products, through re-branding, which required investment in marketing and sales, Baroum said.

Savola, also the second-largest sugar refiner and owner of the largest retail chain in the Middle East, has earmarked 18 billion riyals ($4.8 billion) for expansion in North Africa and Central Asia, Baroum said in June.

Some 60 per cent of the funds would go toward expanding existing activities such as edible oils, sugar refining and supermarket retailing, Baroum had said.

The firm expects to start production at its new $140-million edible oil plant in Algeria by end-May at the latest, Baroum said.

The conglomerate also plans to push into the Saudi real estate sector and wants to make more acquisitions of packaging and plastics companies, he said.

Saudi food group plans acquisitions in Pakistan -DAWN - Business; January 20, 2008


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## Neo

*Musharraf to lead team at Davos economic forum​*
RAWALPINDI, Jan 19: A variety of trends and assumptions will drive the development of this years World Economic Forum (WEF) opening at Davos (Switzerland) next week, official sources said on Saturday.

Opening on January 23, the five-day annual meeting of World Economic Forum under the principal theme of The Power of Collaborative Innovation, an interdisciplinary and systematic view of the major economic, political, societal and technological forces currently at work in the world, would form the conceptual pillars of the of the 2008 programme and the framework for the global agenda in Davos. Pakistan has been actively participating in the World Economic Forum for the past several years, and this year, President Pervez Musharraf will lead the Pakistan delegation comprising high profile economic managers and private sector representatives.

A summary of report prepared for the 2008 Annual Meeting says the Forums programme will be based on five conceptual pillars, which are: Business (competing while collaborating); economics and finance (addressing economic insecurity); geopolitics (aligning interests across divides); science and technology (exploring natures new frontiers); and values and society (understanding future shifts).

In the area of competing while collaborating, the report says globalisation will continue to reward those companies that excel at collaborating internally and externally. Innovative products and services, and their speed to market, are increasing dependent on a firms ability to work in an interactive and integrated fashion, linking all its centres of excellence for a common purpose.

Industries are also discovering that much of their future growth depends on the ability to collaborate with different actors to build public-private partnerships, galvanise multiple stakeholders and work with fast-growing competitors. This collaboration requires trust and transparency and zero tolerance for corrupt practices.

While addressing economic insecurity, the report says the meltdown in the US subprime market, and the ensuing international credit drought, laid bare the reality that global financial markets are still navigating uncharted waters despite the proliferation of sophisticated algorithms and the securitisation of credit risks.

Lingering uncertainty in various markets reflects the need to rethink underlying risk management models.

Concern also remains over the growing global influence of private equity firms, hedge funds and sovereign wealth funds with respect to the governance of some of the worlds largest corporations, it says.

The report says shareholder activism is also much more pervasive; minority shareholders are increasingly driving key strategic and operational decisions typically made by a companys management team. As uncertainty looms over the US economy, there is more confidence in China and India and other emerging markets assuming the drivers seat for global growth  despite the fact that over 50 per cent of the global economy still rests in the hands of G-7 countries, the report states.

Discussing the concept of aligning interests across divides, the report says future generations are set to inherit a world replete with such global challenges as climate change, non-proliferation, terrorism, income inequality, natural resource scarcity, and spiralling healthcare and retirement costs.

Countries endowed with energy and natural resources  such as the Arab Gulf States, Iran, Nigeria, Mexico, Brazil, Russia and South Africa  are demanding a greater voice in global governance and international business.

Rebuilding efforts in Iraq and Afghanistan are facing growing uncertainty in terms of future international support, according to the report.

Exploring natures new frontiers, the report says science and technology are an inescapable presence in every facet of life. Almost every major policy issue on the global agenda has a scientific dimension; ageing societies, climate change, disease eradication and natural resource management are but a few of the most pressing examples.

The report says with advances in nanotechnologies, genetics and computer science in combination with other disciplines, the extent to which mankind can control and manipulate the natural world is reaching beyond the comprehension of the general public. At the same time, the mysteries of knowledge, memory, learning and emotion are unravelling with advances in brain and cognitive research.

For over three decades, the World Economic Forum Annual Meeting has provided an unrivalled platform for leaders from all walks of life to shape the global agenda at the start of each year. At the core is its multi-stakeholder model that leverages the collective wisdom of leaders from business, government, the media, academia, the arts and civil society by building a global platform for collaboration and action to address priorities on the global agenda.

Looking to the future, it becomes readily apparent that complexity, competing interests and scarce resources remain the greatest obstacles to progress on the global agenda in the absence of greater leadership and global stewardship.

The forum will also harness the wisdom and experience of diverse and international Co-Chairs: Tony Blair, former Prime Minister of the United Kingdom and Member of the Foundation Board of the World Economic Forum; James Dimon, Chairman and Chief Executive Officer, JPMorgan Chase and Co.; Henry A. Kissinger, Chairman, Kissinger Associates; Indra K. Nooyi, President and Chief Executive Officer, PepsiCo; and Wang Jianzhou, Chairman and Chief Executive, China Mobile Communications Corporation.

Musharraf to lead team at Davos economic forum -DAWN - Business; January 20, 2008


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## Neo

*Six-month oil import bill up by 13pc to $4.238bn​*
ISLAMABAD, Jan 19: The countrys oil import bill soared to $4.238 billion during the first half (July-December) of the current fiscal year, up by 13.13 per cent from $3.746 billion the same period last year.

Official figures, compiled by the Federal Bureau of Statistics (FBS), showed that even the quantity of oil recorded a double digit growth during the period under review on the back of greater local demand.

This growth in oil import is expected to escalate further in the second half of the current fiscal in the wake of highest ever increases in oil prices in the international market which crossed $100 per barrel mark.

Last year, oil import bill had crossed $7 billion and this year the finance ministry anticipates that the oil bill would easily reach $11bn by the end of June 2008, which would further deteriorate balance of payments account.

An increase of 22.18 per cent was recorded in the import bill of products manufactured from petroleum as it stood at $2.343 billion during the half of the current fiscal against $1.917 billion over the same period last year.

However, crude petroleum oil import was up by 3.64 per cent to $1.895 billion during July-December period of the current fiscal against $1.828 billion over the same period last year.

The statistics showed that machinery is the second group after petroleum, whose import stood at $3.249 billion in July-December this year, up by 1.54 per cent from $3.200 billion last year.

This growth in the import bill of machinery group was the outcome of marginal increase in import of agriculture machinery which increased by 13.73pc, construction machinery 11.37pc, electrical machinery 9.45pc and telecom sector 6.76 per cent during the first half of the current fiscal year over last year.

However, textile machinery import declined by 24.65 per cent, power generating machinery 0.55 per cent, office machinery 13.50 per cent during the period under review over last year.

The steady decline in import of textile machinery showed that textile manufacturers have stopped replacement of old machineries to improve the quality of products to make them competitive with those manufactured in other countries.

The import bill of agriculture and other chemicals up by 30.54 per cent to $2.725 billion during the first half year of the current fiscal year against $2.087 billion over the same period last year.

This growth in the import bill is owing to 127.47 per cent increase in the import bill of fertilizer, followed by 34.80 per cent in medicinal products and plastic material 8.77 per cent during the period under review.

The import of food products reached $1.594 billion in the first half of the year as against $1.534 billion over the same period last year, indicating a growth of 3.92 per cent. This growth was mainly due to import of wheat and flour during the period under review to meet the local shortage.

The import bill of both CKD/SKD and CBU vehicles reached $1.285 billion during the period under review as against $1.015 billion over last year, an increase of 26.56 per cent.

The total import bill reached $16.953 billion during the first half of the current fiscal year as against $14.894 billion last year, showing an increase of 13.82 per cent.

Six-month oil import bill up by 13pc to $4.238bn -DAWN - Business; January 20, 2008


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## Neo

*FDP handling over Rs 80 billion trade annually ​* 
FAISALABAD (January 20 2008): The Faisalabad Dry Port (FDP) has been established in line with the spirit of Rotary Club and it was not only extending export and import related facilities to the traders but was also serving the local community, said Faisalabad Dry Port Trust (FDPT) Chairman Sheikh Muhammad Ashfaq.

He was addressing a reception dinner hosted in his honour by Rotary Club of Faisalabad here last night. He said that FDP was established in 1990 under the vision of Syed Nazar Hussain Shah founding president of Faisalabad Chamber of Commerce and Industry (FCCI).

He also mentioned the dynamic leadership of Faisalabad Industrial Estate Management and Development Company (FIEDMC) Chairman Mian Muhammad Latif who removed the bottlenecks by taking bold decision to increase number of its trustees from 11 to 30.

He said that FDP had now become one of the leading up country dry port facility which was handling Rs 80 billion export (approximately 33,000) and import (approximately 7,000) containers annually.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Telecom sector receives $363.9 million FDI in first quarter ​* 
ISLAMABAD (January 20 2008): The telecom sector has received $363.9 million foreign direct investment in the first quarter of current fiscal year, which is 37.71 percent of the total foreign resources pumped into Pakistan's economy, revealed telecom economic indicators released by Pakistan Telecommunication Authority.

The indicators updated by PTA on January 17 showed that Pakistan received a total FDI of $962.5 million during July-September 2007 including $363.9 million solely for telecom sector. It said that during 2005-06, telecom sector received over $1.824 billion FDI and emerged as main sector of the economy with 35.60 percent share in the total FDI.

Telecom sector is keeping up the trend of largest FDI recipient in Pakistan during the last few years following its liberalisation of the sector, which made it attractive for many global telecom giants to invest in Pakistan.

The data showed that both the cellular and WLL operators have been investing to expand their networks visualising the market potential. According to PTA, total numbers of cellular users have crossed 76 million in December 2007, from half a million in 2004, which is 48 per cent of the total population.

The wireless phones have also shown a phenomenal growth in recent years with all the telecom companies investing to expand their networks and attracting more and more subscribers. The total users of wireless phones have increased to 2,123,179 in December 2007 from 265,028 in 2005.

Analysts say it is expected that this upward trend of investment may continue in the next five years because of large market potential, particularly the rural areas where operators have to roll out their network.

Telecom indicators released by the PTA in December 2007 showed over 76,604,582 mobile users are receiving services from five operators, Mobilink, Ufone, Paktel, Telenor and Warid while the license of sixth operator, Instaphone, was cancelled due to non payment of fee.

Mobile companies have been registering phenomenal growth with more and more people subscribing their services. This is also evident from the data which shows seven per cent growth in teledensity in first half of ongoing fiscal.

The mobile teledensity have increased to 58.42 per cent in December 2007 from 41.51 per cent in July 2007. Statistics showed that Mobilink subscribers have increased to 30,660,000 in December 2007, Ufone 16,161,936, Paktel, 980,587, Telenor's 14,596,382 and Warid with 13,205,677 users.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Cotton export declined by 62 percent during December ​* 
KARACHI (January 20 2008): Country's raw cotton export has dipped by 62 percent during December 2007 as compared to same period of last fiscal year mainly due to shortfall in the cotton crop and high contamination ratio in the cotton, exporters said.

They said that in year 2007 the country almost has missed the cotton production target by some 2.5 million bales and as per current estimates of crop assessment committee, country' cotton production would not be higher then 11.6 million bales as against the target of 14.1 million bales set by government for the current fiscal year 2008. "Current year cotton crop has been badly affected by mealy bug and cotton leaf curl virus (CLCV) due to the unavailability of pesticides," they added.

They stated that Pakistan is also producing contaminated cotton and contamination ratio in our crop is higher than India, USA and other competing countries. These factors have brought about constant decline in country's raw cotton export during the current fiscal year.

As per official statistics the country's cotton export has declined by some $3.435 million during December 2007 as compared with corresponding period of last fiscal. During December 2007 country's raw cotton export stood at $2.125 million as against the some $5.56 million during December 2006.

Similarly, overall cotton exports has also declined by 15 percent during the first half of FY08,as compared to same period of last fiscal year 2007, they added.

Pakistan has exported some $20.139 million raw cotton during July-December as compared to 23.665 million dollars during the same period of 2006-07, depicting a decrease of 3.526 million dollars during the first half of 2008. "Contamination ratio in the country's raw cotton is around 9.5 percent as against 3.5 percent in Indian raw cotton," said Ghulam Rabbani, a leading raw cotton trader.

He said that local raw cotton exporters are facing challenges of cotton quality in the international market, which benefits India, while shortfall in the crop also has cast negative impact on the export of cotton and presently traders are preferring to sell the cotton to the local textile industry.

"Local textile industry is facing shortage of 5 million bales during the current fiscal year, as currently our local demand stands at around 15-16 million bales, while expected production is 11.6 million bales during fiscal year 2008," he said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*US attache cuts forecast for Pakistan cotton crop *​
WASHINGTON (January 20 2008): Pakistani cotton production, hit hard by pests and poor weather, will come in lower than previously expected at 8.75 million bales in 2007/08, a US Agriculture Department attache in Islamabad said on Friday.

"Area planted to cotton was lower than targeted, the crop was severely damaged by the cotton leaf curl virus (CLCV) and pesticide-resistant mealy bugs, and harsh weather conditions adversely affected boll size and weight," the attache report said.

The attache previous estimate was 10.4 million bales. Pakistan is a top importer of US Pima cotton. Below are additional excerpts from the report. Attache reports are not official USDA data. To read the full document, please go to: USDA Foreign Agricultural Service (FAS) &mdash; Attache Reports.

"The sowing of illegal Bt cotton varieties, which were not designed for Pakistan's climatic, crop disease and market conditions, also affected the production and quality of this year's crop. The import forecast has been increased based on the latest arrivals registered in country. Demand for US extra long staple and upland cotton is strong as Pakistan's textile industry struggles to remain competitive in world markets.

The size of the MY 2007/08 cotton crop has been scaled back from 2.265 MMT to 1.904 MMT. This is a result of unfavourable weather and severe crop damage in the main cotton belts of Punjab and Sindh, mainly due to cotton leaf curl virus (CLCV) and mealy bugs.

Cotton leaf curl virus (CLCV) has become endemic in Pakistan, affecting over 70 percent of this MY's cotton crop. The virus, which causes stunted growth and poor fiber yield, was first reported in 1985. While scientists focus on developing an effective and durable virus resistant variety, the best control at present is application of pesticides against the insect vector.

Over the past two years, Pakistan has seen a growing invasion of mealy bugs. The insect attacked 12 percent of last year's crop and an alarming 30-35 percent of the 2007 crop.

The illegal Bt cotton varieties planted in about 40 percent of Pakistan's cotton region is not the magic bullet many farmers imagined. It was developed to resist chewing insects, mainly the cotton bollworm. The mealy bug is a sucking insect, unaffected by the Bt toxin, which is best controlled through pesticides.

Business Recorder [Pakistan's First Financial Daily]


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## ejaz007

*Pakistan may export cement to Russia *
Tuesday, January 22, 2008
By M Farhan Zaheer

KARACHI: Cement export to Russia is expected to resume, provided some hurdles are cleared. Cement companies would focus on export as local consumption would decrease in the aftermath of a proposed 15 per cent cut in the Public Sector Development Programme (PSDP).
Local cement demand and exports of the country have been continuously rising, while cement exports to Russia may also resume due to surplus production and high profits in exports, experts said.
So far so good, we are satisfied with the current cement exports of the country, said M Ali Taba, Chief Executive Officer of Lucky Cement. As far as the PSDP proposal is concerned, we cannot comment until it is finalised. Obviously, the government will take action considering the countrys economy and not alone in favour of only the cement industry. So, if the government takes any step to slash PSDP, then we would be concentrating on cement exports. Chances of resumption of exports to Russia are only 30 per cent, Taba added.
Local demand of cement has been rising because of continuously increasing construction activity in the private sector and government expenditure in sectors like power, said Atif Malik, a senior analyst at JS Research.
Regional cement demand has also been mounting as India and Iran previously exported cement but now their rising cement consumption at home has made these countries to import cement, however, Pakistan has many emerging venues of exporting surplus cement unlike other countries in the region, he added. During some preceding months many housing projects came in market due to the declining cement prices and rising supplies in the local market, he noticed.

Pakistan may export cement to Russia


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## ejaz007

*Basmati exports jump 25pc in Dec*
By Mubarak Zeb Khan

ISLAMABAD, Jan 21: The export of basmati rice from Pakistan rose by 25 per cent in December 2007 over last year due to fall in supply of the commodity from leading rice producing countries in the international market, officials and analysts told Dawn.
Almost 19 per cent growth in export of basmati rice was witnessed in November 2007 as Pakistans main competitor India had raised the minimum export price of its basmati and other rice varieties to discourage their exports.
A senior official in the ministry of food, agriculture and livestock told Dawn that the export of basmati rice would increase further in the months ahead on the back of strong demand for the commodity in the Middle East and some European countries.
The statistics showed that the overall export of all rice varieties rose just marginally by 0.07 per cent during the first half of the current fiscal year over the last year. However, the export of other rice varieties dipped by 23 per cent during the period under review.
A break-up for the others (rice) was not available to calculate the actual decline in the export of various types of non-basmati varieties.
The official said that the new rice crop was expected to arrive in October-November next while the price of the commodity in local market had already witnessed more than 100 per cent increase during the last few months because of the higher than expected growth in export.
Another official in the commerce ministry said that the Pakistani exporters were selling basmati $300 to $400 cheaper than the Indian exporters in international market. As for as for non-basmati rice is concerned, India has a minimum export price of $500 a ton, while Pakistan is exporting the commodity at around $350 a ton, which is a big anomaly and needed immediate ratification.
Analysts said the production did not keep pace with the demand during the last few years, resultantly the surplus production for exports had been reduced. They said like India, Pakistan should also introduce a minimum export price to decelerate the pace of export of rice, particularly the basmati rice.
A leading rice exporter on condition of anonymity told Dawn that the government should allow export of rice in containers as against the current practice of shipload. He said that the decision would regulate the export of rice.
The exporter said the government should do away with the unsecured credit sales based on Documents against Acceptance (D/A), particular on export of basmati rice allowed by the State Bank of Pakistan (SBP).
The SBP requires basmati exporters to export double the value for which export refinance is provided to them. This has forced the exporter to sell at low price with long-term supply contracts to achieve the double export performance demanded by the central bank.
The exporter said the buyers were willing to pay in cash for rice but the SBP has yet to do away with the DA system, which also some time created financial crunch for the small rice exporters.
Some of these hapless exporters are now being threatened by their buyers that they must ship the next order at price much below their cost otherwise they might not get payment for the last shipment. The basmati prices have increased by over 100 per cent in last few months in domestic as well as overseas markets because production has fallen and the overall demand has increased, the exporter added.
The system in place by SBP only benefited the biggest exporters of rice who manage such sales due to their financial muscle with local banks for suitable export document discounting facilities and also have their own offices abroad for obtaining payment.

Basmati exports jump 25pc in Dec -DAWN - Business; January 22, 2008


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## ejaz007

*Loan accord signed for Karakoram highway project​*
BEIJING (January 22 2008): The Export Import Bank of China has signed a loan agreement with Pakistan for the upgradation of Karakoram Highway project (KKH). Under the agreement China will provide a credit of $327 million for the expansion of the KKH project.

The qualitative upgradation of Pakistan-China road linkage will further facilitate and enhance tourism and trade between the two friendly neighbouring countries. The expansion project is being executed jointly by the China Road and Bridge Corporation (CRBC) and Pakistan's National Highway Authority (NHA). The agreement was signed by the Ambassador of Pakistan to China, Salman Bashir and Deputy General Manager Commercial of Loan Project, Xin Bin.
Business Recorder [Pakistan's First Financial Daily]


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## Contrarian

Proud to be Pakistani said:


> *Dear .... *
> 
> Please know that i didnot mean to portray that Pakistan is better in telecom then India,


I did not want a comparison of India's and Pakistan's telecom network. All i wanted to know was whether 3G networks have been established in Pakistan or not. 



> i said i know 3G because i have it in U.A.E and when i went to Pakistan it was not working but i know that WIMAX service is available in Pakistan and it is by far a better system then 3G tech. Kindly check the WIMAX tech and 3G tech comparison or i can post for mutual information.


I know about Wimax, as well as HSDPA


> True that it seems to be wrong but i mentioned that Edge is available and i asked also if Video Calling is available and posted link from mobilink to authenticate by view for mobile TV in pakistan.


Fine, just next time, do more research...


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## Proud to be Pakistani

malaymishra123 said:


> I did not want a comparison of India's and Pakistan's telecom network. All i wanted to know was whether 3G networks have been established in Pakistan or not.
> 
> 
> I know about Wimax, as well as HSDPA
> 
> Fine, just next time, do more research...



 .....


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## Neo

*Oil consumption goes up by 9pc ​* 
Tuesday, January 22, 2008

KARACHI: Oil sales in the country jumped nine per cent in the first six months of fiscal 2007-08 on the back of higher uptake of diesel and furnace oil and an unexpected recovery in petrol sales. 

Sales of petroleum products were 9.1 million tonnes during July to December compared to 8.3 million tonnes recorded in the same period of 2006, said a report issued by a brokerage house on Monday. 

Diesel (HSD) and furnace oil, which constitute more than 83 per cent of total oil sales, were up by 10 per cent and 5 per cent respectively, Analyst for JS Global Capital Ltd Faran Mahmood said in his report. 

Petrol sales grew by 29 per cent. Increase in diesel sales by local oil marketing companies (OMCs) was due to reduction in smuggling from Iran and increase in its use by power generators. 

Oil smuggling from Iran, which had swamped the local market with cheaper but low quality products in recent years, has declined since the start of a fuel rationing programme there. This had in part also supported petrol sales, the report adds. Gas shortages in the country and stagnant hydro-power generation led to higher usage of furnace oil for thermal power generation. 

The report expects to see even better sales in the second half as the fuel thirst for power generation rises in coming months. We expect overall volume sales in FY08 to reach 20 million tonnes, an increase of 16 per cent year-on-year. Mahmood also expects to see OMCs posting better profits on back of higher sales despite the cash shortfalls the companies face due to non-payment of dues the government owes to them for not passing on the fuel price hike to consumers. 

Oil consumption goes up by 9pc


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## Neo

*UAE invested $242m in five months *​ 
Tuesday, January 22, 2008

LAHORE: Punjab Governor Lt Gen (R) Khalid Maqbool has said that United Arab Emirates (UAE) investors made investments totalling $242 million in the province during the last five months.

He stated this while talking to Galadari Group of Industries chairperson Ms Abdul Latif Galadari, who called on him at the Governor House on Monday. Galadari is visiting Pakistan to review investment opportunities in the cement, automobile, power, hotel, real estate management and financial services sectors.

Welcoming investments by the Galadari Group, the Governor said the UAE is a brother Islamic country, having similar customs and fraternity is the basis of our friendship. He termed it a good omen that UAEs Dhabi Group made $800m investment in Lahore, Sharjahs Abdur Rehman Bukhater was investing in Lahore Sports City which spans over 3,000 acres of land, opening of the Damas Jewellery outlet and a huge investment by Etisalat in PTCL. Galadari apprised the governor that the group played a vital role in UAEs economic development, adding that 17 companies of the Group are working in different sectors on an international level. 

UAE invested $242m in five months


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## Neo

*UAE keen to increase investment in Pakistan *​ 
Tuesday, January 22, 2008

KARACHI: The United Arab Emirates (UAE) has set Pakistan well amongst its potential list of investment opportunities when it announced last year to double its endeavours to a staggering US$26 billion as trade between the two countries reaches the $5 billion mark.

Chairman, Pak-UAE Business Council, Mirza Ikhtiar Baig pointed out that the UAE was making heavy investments owing to increase in oil prices which have led to additional $400 billion revenue entering into the Gulf region of which the UAE is an active member. Last year, the UAE invested $3 billion into our country which when compared to the $400 billion is insignificant and which can triple in figures. He added that Pakistan was their first choice as the market of the country was not saturated like that of most other countries and it being a third world country offers them better economies of scale than the western countries.

Also since Pakistan is closer to the UAE and is ideally geographically placed, it benefits the Arab country to target it for its investments. He said the council was formed a year back by the foreign ministers of both the countries keeping in view the growing number of investments between the countries. Baig added that though the political instability and the dismal law and order was a major turn off for any foreign investors, the UAE was eager to continue with further investments and is searching to enter unexplored markets.

As major groups continue to participate in Pakistans privatisation programme, the UAE already has investments worth billions of dollars in various sectors of Pakistan such as housing and real estate, telecommunication, banking, mineral exploration, oil and gas, information technology and tourism. Other UAE investments in Pakistan are in the fields of airlines, financial business, hotels and tractors.

The UAE is Pakistans second largest global trading partner and it is also the second largest source of home remittances from Pakistani expatriates. The most notable investments that the Arab country has made into Pakistan includes two in the telecommunication sector where Etisalat acquired management control of the largest telecom entity - the PTCL while Warid Telecom is the fourth largest mobile service provider in the country. Wateen, a subsidiary of Warid Telecom, has earned a milestone in the telecommunication industry by being the first to introduce Wi-Fi (wireless) internet into Pakistan which is also being well received by the public.

In financial sector, Abu Dhabi Group has bought banks in Pakistan such as AlFalah and United Bank Limited while Dubai investors introduced the Dubai Islamic Bank and Emirates Global Islamic Bank which according to its marketing director, Danish Fazal, is rapidly gaining significant market shares. Fazal further stated that the Emirates Investments Group, which owns Emirates Global Islamic Bank, also have ventures in the insurance sector namely Takaful Pakistan Limited and in the real estate project of Karachi Financial Towers. Al-Ghuran is another UAE based real estate which plans to invest Rs45 billion in construction and real estate business in the near future. Similarly Al-Ghurair Giga announced last year the multi million Goldcrest DHA Islamabad project.

Emaar has also turned its attention towards Pakistan and has multi purpose projects worth $2.4 billion in Islamabad and Karachi which would be completed in the next five years. Emaar and Pakistans Port Qasim Authority are also in the process of undertaking a mega joint-venture project to develop an area of 12,000 acres of land into a modern city near Karachi.

Pakistan and the UAE have also entered into a landmark agreement envisaging construction of $5 billion oil refinery at Khalifa Point and renewal of soft loan of $265 million for the construction of dams in Pakistan. According to its website, the project, which would be known as Khalifa Coastal Refinery, would be set up at Khalifa Point in Gwadar and is expected to have a production capacity of 200,000 barrels a week.

Abu Dhabi government-owned International Petroleum Investment Company (IPIC) will hold a 74 per cent stake in the Khalifa Coastal Refinery joint venture, with Pakistans Pak-Arab Refinery (PARCO) holding the remainder. The construction work on the project will start in December 2008 with a planned production from 2012. This is the largest single country commitment for investment in different sectors of Pakistans economy and has the potential not only to make UAE one of the major economic players but would also open up new vistas of development in Pakistan.

About 400,000 Pakistanis are living and working in the UAE who are a source of strength for the Pakistan-UAE relations. Pakistan attracted world attention during the last five years as it made significant economic progress owing to continuity in policies and a rapidly strengthening GDP. Supported by a growing large scale manufacturing sector and services sector, private sector investments into the country helped it to have a stable growth.

Trade statistics of last five years revealed an encouraging trend in bilateral trade between Pakistan and UAE. The trade volume which was $1.4 billion in 1999-2000 increased to $2.8 billion in 2004-2005, depicting 20 per cent growth per year. Trade between the UAE and Pakistan reached new heights as it posted significant growth to cross $5 billion mark following a surge in exports across the sea in 2007. The increase in overall exports has come primarily from non-traditional exports items accounting for 67 per cent of the increase followed by 35 per cent from textile manufacturers and four per cent from other manufacturers.

Baig was of the view that while exports were increasing, the Balance of Payments (BoP) yet remained in favour of the Arab country. The BoP does not present the true picture as much of the imports that are brought into the country from the UAE are those which are actually manufactured elsewhere such as India and Bangladesh and is imported via Dubai. Petroleum imports are another reason for this imbalance, he continued.

Baig said the UAE could play a major role in the primary sector of Pakistan such as livestock which needs to have foreign investments to ensure its uplift. The largest turnover of Pakistan during 2006-07 was with the USA followed by the UAE, China, Saudi Arabia, Germany, Japan, Kuwait, United Kingdom and India. Approximately eight per cent of Pakistans exports are to UAE, making it the second-largest destination for Pakistani exports.

UAE keen to increase investment in Pakistan


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## Neo

*Low cost energy key to industrial survival: LCCI president *​ 
Tuesday, January 22, 2008

LAHORE: The Lahore Chamber of Commerce and Industry (LCCI) President, Mohammad Ali Mian has said survival of the industrial sector depends on the availability of low cost energy that can be produced in Pakistan through available hydel resources.

He was speaking at a workshop on In-house energy cost control methodologies in industries organised by the Bureau of Quality Management. He said that the energy crisis is worsening day by day and that the economy is suffering badly with prolonged power interruptions in the steel industry. The shortage of power to the textile industries is also jeopardising textile exports target, he added.

He said curtailment of trading activities through early closures and load shedding is also impacting the services sector. The LCCI chief also referred to line losses, which are over 25 per cent. He said substandard equipment being used in power generation and distribution and non-availability of facts and figures are having a negative impact on the whole industry sector.

He said Pakistan has tremendous potential and can certainly produce cheap electricity but we are unable to benefit from our natural resources due to regional and political bias. He appealed to the government to exploit all hydel resources to produce cheap energy, which is much needed for our industrial and commercial growth and for domestic consumption.

In his address, Mian Fazal Ahmad who organised the workshop said, local rise in energy tariff is also a handicap to the industry in maintaining its competitiveness and survival. He said that it is highly imperative for our industry to gear up to new challenges without losing further time so as to gain a more competitive edge by cutting production losses and lowering the energy tariff. 

Low cost energy key to industrial survival: LCCI president


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## Neo

* Businessmen urged to improve countrys image ​* 
Tuesday, January 22, 2008

ISLAMABAD: The Federal Minister for Information and Broadcasting Senator Nisar A Memon on Monday termed the past eight years as a tale of Pakistans development, sound strategies and hope for a prosperous future which, he said, had to be depicted well through the media.

He stated this at a meeting with the President of Islamabad Chamber of Commerce and Industry Muhammad Ijaz Abbasi and other officials of the chamber and said that trade without the chambers involvement was not possible.

The resilient nature of Pakistans economy as mentioned by President Pervez Musharraf made it possible to absorb the damages caused by the events following the December 27-29 riots, he said, underlining the strong base of the national economy.

The loss to the government sector is above Rs100 billion and loss to the private sector is Rs80 billion during the riots. Memon urged the business community to help the government improve the countrys image on the basis of facts and successes achieved in the economic sector during the past eight to nine years.

The interim government has three main areas of concentration; provision of enabling environment for free, fair, transparent and peaceful elections; maintenance of law and order and stability of the economy, he said.

However, he added that the key challenge for the caretaker government is to contain the menace of terrorism in the country and the government is gaining success in foiling the nefarious designs of terrorist elements. The police, rangers and army presence has been beefed up and the government would continue with efforts during the elections as well for maintaining peace, he said.

Businessmen urged to improve countrys image


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## Neo

*Basmati exports jump 25pc in Dec​*
ISLAMABAD, Jan 21: The export of basmati rice from Pakistan rose by 25 per cent in December 2007 over last year due to fall in supply of the commodity from leading rice producing countries in the international market, officials and analysts told Dawn.

Almost 19 per cent growth in export of basmati rice was witnessed in November 2007 as Pakistans main competitor India had raised the minimum export price of its basmati and other rice varieties to discourage their exports.

A senior official in the ministry of food, agriculture and livestock told Dawn that the export of basmati rice would increase further in the months ahead on the back of strong demand for the commodity in the Middle East and some European countries.

The statistics showed that the overall export of all rice varieties rose just marginally by 0.07 per cent during the first half of the current fiscal year over the last year. However, the export of other rice varieties dipped by 23 per cent during the period under review.

A break-up for the others (rice) was not available to calculate the actual decline in the export of various types of non-basmati varieties.

The official said that the new rice crop was expected to arrive in October-November next while the price of the commodity in local market had already witnessed more than 100 per cent increase during the last few months because of the higher than expected growth in export.

Another official in the commerce ministry said that the Pakistani exporters were selling basmati $300 to $400 cheaper than the Indian exporters in international market. As for as for non-basmati rice is concerned, India has a minimum export price of $500 a ton, while Pakistan is exporting the commodity at around $350 a ton, which is a big anomaly and needed immediate ratification.

Analysts said the production did not keep pace with the demand during the last few years, resultantly the surplus production for exports had been reduced. They said like India, Pakistan should also introduce a minimum export price to decelerate the pace of export of rice, particularly the basmati rice.

A leading rice exporter on condition of anonymity told Dawn that the government should allow export of rice in containers as against the current practice of shipload. He said that the decision would regulate the export of rice.

The exporter said the government should do away with the unsecured credit sales based on Documents against Acceptance (D/A), particular on export of basmati rice allowed by the State Bank of Pakistan (SBP).

The SBP requires basmati exporters to export double the value for which export refinance is provided to them. This has forced the exporter to sell at low price with long-term supply contracts to achieve the double export performance demanded by the central bank.

The exporter said the buyers were willing to pay in cash for rice but the SBP has yet to do away with the DA system, which also some time created financial crunch for the small rice exporters.

Some of these hapless exporters are now being threatened by their buyers that they must ship the next order at price much below their cost otherwise they might not get payment for the last shipment. The basmati prices have increased by over 100 per cent in last few months in domestic as well as overseas markets because production has fallen and the overall demand has increased, the exporter added.

The system in place by SBP only benefited the biggest exporters of rice who manage such sales due to their financial muscle with local banks for suitable export document discounting facilities and also have their own offices abroad for obtaining payment.

Basmati exports jump 25pc in Dec -DAWN - Business; January 22, 2008


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## Neo

*Inflation poses threat to monetary policy​*
KARACHI, Jan 21: Rising core inflation may push the discount rate higher threatening the viability of current tight monetary policy, market experts said on Monday.

Most of banking and money market experts said that the discount rate might be enhanced by 50 to 100 basis points to check the rising inflationary trends which had pushed up even the core inflation (non-food non-energy).

The core inflation remained low over the past two years. However, it reached 7.2 per cent in December against 6 per cent in July 2007.

The State Bank of Pakistan will announce its new monetary policy on January 31.

Many indicators, including the rising core inflation, showed that the discount rate may be increased by 50 to 100 basis points, said Mohammad Imran, head of research at First Capital Equities Ltd.

The SBP has been defending its tight monetary policy as the core inflation remained lower over the past couple of years and it has blamed the food inflation for higher inflation or Consumer Price Index (CPI).

The CPI rose to 8.8 per cent in December from 6.4 per cent in July against 6.5 per cent target set for 2007-08. The food inflation rose to 12.2 per cent from 8.5 per cent in July showing its influence on the CPI basket.

The experts also pointed out towards the narrowing gap between treasury bills and discount rate. They said this would force further increase in the discount rate.

The SBP has been gradually increasing rates of T-bills narrowing the gap with discount rate. This could be a strategy to slightly push up discount rate to create gap of at least 100 basis points, said Syed Shahid Iqbal, Director, Capital Market at Live Securities.

The one-year T-bill rate is about 9.5 per cent while the benchmark 6-month rate has reached 9.3 per cent. Money market dealers said the discount rate could be increased up to 50 basis points and they found the gap between the two rates as a valid reason for raising the discount rate.

However, a foreign banker said the further increase in the discount rate would not bring any change in the current monetary behaviour of the market and the inflation would continue the same trend.

The SBP has achieved its target of curtailing the monetary expansion through lower credit supply to the market and it was the government which borrowed heavily causing monetary expansion which had resulted in higher inflation, said the banker.

He said the further tightening would only increase the cost of borrowing which might not be helpful for the growth of economy.

Inflation poses threat to monetary policy -DAWN - Business; January 22, 2008


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## Neo

*External debt to rise to $46.571bn by 2011-12 ​*
ISLAMABAD: External debt of the country to reach $46.571 billion by the end of fiscal year 2011-12 from $39.593 billion by the end of the current fiscal year 2007-08. 

Ministry of finance is targeting to bring down external debt to exports ratio from 175.2 percent in the fiscal 2007-08 to 143.4 percent by the end of fiscal year 2011-12.

Estimates agreed by International Monetary Fund (IMF) and ministry of finance reveal that external debt to export ratio was 243.9 percent in the fiscal year 2002-03, which has been brought down to 220.5 percent in fiscal year 2003-04, 191.2 percent in the fiscal year 2004-05, 175.6 in the fiscal year 2005-06, 176.7 percent in the fiscal year 2006-07. 

External debt was $35.679 billion by the end of fiscal year 2005-06; it increased to $37.461 by the end of fiscal 2006-07 and would reach 39.593 billion by the end of current fiscal year. 

According to the new projection, external debt to reach $41.2 billion by the end of fiscal year 2008-09, it would further increase to $43.152 billion in the fiscal year 2009-10, $44.904 billion by the end of fiscal year 2010-2011 and projected to touch $46.571 by the end of fiscal year 2011-12. Debt stabilisation projection and estimates developed by the said authorities reveal that without interest payments Pakistans baseline external debt should be brought down to $20.2 billion by the end of fiscal year 2011-12 from $24.4 billion in the current fiscal year 2007-08. 

Total government debt is projected to be brought down to 42.2 percent of the GDP by the end of fiscal year 2011-12 from current fiscal years 51.3 percent of the GDP projecting a decrease of 9.1 percent. Total government debt was somewhere 57.3 percent of the GDP in the fiscal year 2005-06, 54.6 percent of the GDP in the fiscal year 2006-07, 51.3 percent in the current fiscal year fiscal 2007-08. New projections reveal that total government debt to GDP ratio to be 48.8 percent in the next fiscal year 2008-09, 46.2 percent of the GDP in the fiscal year 2009-2010, 44 percent of the GDP in the fiscal year 2010-11 and finally this would be brought down to 42.2 percent of the GDP by the end of fiscal year 2011-12. 

External debt would be brought down from 23 percent of the GDP in the current fiscal year 2007-08 to 19.9 percent of the GDP in the fiscal year 2011-12. External debt was 26.6 percent of the GDP in the fiscal year 2005-06, which have been brought down to 24 percent in the fiscal year 2006-07 and would be brought down to 23 percent in the current fiscal year. New projections or estimates developed by the authorities state that external debt to be 22.3 percent of the GDP in next fiscal year 2008-09, 21.4 percent of the GDP in fiscal year 2009-10, 20.6 percent of the GDP in the fiscal 2010-11 and 19.9 percent of the GDP in the fiscal year 2011-12.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Upcoming government should continue mining sector reforms​*
KARACHI: Mineral sector holds unanimous importance in the countrys economic progress therefore upcoming government should continue mineral sector initiatives, as taken by former governor of Balochistan, Owais Ghani.

Senior member and former chairman of All Pakistan Marble Mining, Processing, Industry and Exporters Association (APMMPIEA), Sanaullah Khan stated this on Monday

He said due to the efforts Owais Ghani, President Pervez Musharraf announced an amount of Rs 300 million for the upgradation of marble mines in Balochistan during his inauguration ceremony of Marble City at Gadani on May 22, 2006.

Sanaullah said in order to improve the mining practices and quality of production of marble, onyx and granite in Balochistan; government has to upgrade the potential marble mines in the province. 

He informed that this could be done through provision of appropriate mining technology to the mine owners to develop their mines and initiate producing square blocks. 

Former APMMPIEA said as per decision taken, about 20 potential mines would be upgraded in the four major marble, granite and onyx clusters by Pakistan Stone Development Company (PASDEC) by providing the appropriate mining machinery and equipments. 

Khan said PASDEC would also establish 3 model quarries and rock mining training institute in Balochistan on the most potential sites. He said SMEDA Balochistan assisted PASDEC in collection of applications, samples and test fees from 28 mine owners.

Due to Balochistan government, an international investment conference was held on May 8, 2004 at Quetta through facilitation of Small and Medium Enterprises Development Authority (SMEDA) and provincial government departments. 

He said total participants surpassed 200 mark, as many as more than 60 participants from 18 countries attended conference through their Consul Generals, commercial attaches, business and trade related officials and private companies.

Sanaullah Khan said the governor and chief minister Baluchistan jointly announced establishment of Marble City at Gadani in May 2004. The notification for making Gwadar a Free Economic Zone was also announced at the event by the governor. SMEDA facilitated Lasbela Industrial Estate Development Estate (LIEDA) in the preparation of the proposal for the establishment of Marble City Gadani, district Lasbela. Besides value addition activities, this project was envisaged generate enormous employment opportunities for the local inhabitants. 

He said LIEDA is responsible for the allotment of plots and development of infrastructure in the Gadani industrial estate where in the first phase 100 acres land was allocated for allotment to marble and granite processors. 

He said plots of different sizes were being allotted on first come first serve basis to those prospective investors who were willing to invest in projects related to marble and granite processing, warehouses, handicraft development centers and other related businesses.

Khan stated that total numbers of allotted industrial plots are 120, processing units in operation are 18, processing units near completion are 8 and processing units under construction are 70.

Besides number of industries ready to start construction are 7 and Marble City is envisioned to have components including processing units, warehouses, handicrafts and mosaic Development Units, Common Facility and Training Centers (CFTC).

He said sample tests are completed and national and international experts to select the potential mines carried out survey of the marble mines. 

He said Says gems cutting and polishing center at SBK Women University was established at Sardar Bahadur Khan Women University in November 2005 to give technical training to the women of Balochistan. 

Sardar Bahadur Khan Women University Quetta in collaboration with SMEDA Balochistan worked for the establishment of Gems cutting and polishing center at the University in Quetta.

In order to initiate the process, SMEDA was assigned the task to prepare document for the same by former governor Balochistan. 

The governor Balochistan approved proposal for the establishment of this skill development facility at the Women University and advised to plan the project into two phases. At the initial stage, gems cutting, polishing and carving centre will be established and in the second phase handicraft facility will be created. razi syed

Daily Times - Leading News Resource of Pakistan


----------



## Neo

*Net foreign investment lowers by 31.9% in Jul-Dec​*
* Outflow from stock markets was the main reason 

KARACHI: Net foreign investment in the country took a plunge of $1.015 billion or 31.9 percent to $2.1697 billion during the first six months of the current financial year. The country had received foreign investment worth $3.184 billion in the same period of last financial year. 

The inflow of foreign investment into the country continues to decline in the current financial year mainly due to withdrawal of money by foreign portfolio managers from stock markets of the country. 

Overall foreign portfolio investment declined to a mere $103.2 million in the first six months of this year, recording a fall of 92.1 percent from $1.311 billion in the same period of last year. It fell even after the country received $90.5 million through sale of global depositary receipts of United Bank Limited.

Foreign direct investment, however, rose by $193.7 million or 10.3 percent to $2.066 billion from $1.872 billion. It must be mentioned here though that this included $133.2 million received as privatisation proceeds. Excluding this amount, the FDI has increased by only $60.5 or 3.23 percent. 

Foreign portfolio investment has declined mainly due to uncertain political situation in the country which has perturbed foreign investors as they fear economy may take a downward course as a result of political turmoil. Last year the country had attracted about $1 billion dollars in stock exchanges. 

It is political instability that has made the foreign investors withdraw their money. Otherwise the fundamentals are strong despite the energy shortage the country is facing, said Atiq Ahmad, an analyst at Capital One Equities. 

Economists had criticized the Shaukat Aziz-led economic management of the country, which relied heavily on undependable foreign exchange inflows like portfolio investment and remittances to cover its current account and trade deficits. The Shaukat-Aziz led team of economic managers has left a hugely difficult challenge for the new government to facethat of meeting demand for foreign exchange in the country with falling inflows. 

Keeping this scenario in view, it should be expected of the new government to change policies to control imports and raise exports in order to keep its foreign exchange environment stable instead of depending on remittances and portfolio investment.

Daily Times - Leading News Resource of Pakistan


----------



## Neo

*US to transfer cheap electricity technology to Pakistan: Hunt*​
LAHORE: US is all set to transfer technology to Pakistan that could help the country to generate cheaper electricity through use of hydel, coal and windmill methods instead of going for producing expensive electricity through nuclear technology.

Bryan D. Hunt, Principal Officer US Consulate in a meeting with the President, Lahore Chamber of Commerce and Industry (LCCI), Muhammad Ali Mian, stated this here on Tuesday.

He said US could help Pakistan to produce cheaper electricity through coal and his country is ready to help Pakistan for construction of water reservoirs.

Bryan said US has already given $500 million aid to Pakistan and would extend further support, especially for education and health sectors.

Hunt said that US is working on a Free Trade Agreement (FTA) with Pakistan but real situation would clear after US elections. 

While appreciating the role of Pakistani business community, the US diplomat said he would send this message to Washington that Pakistan business community is full with commitments.

Speaking on the occasion, President LCCI said US is a leading export market of Pakistani products accounting for about one quarter of total exports. He said that during 2007, Pakistans exports to USA were $3.9 billion, showing an increase of 5 percent over 2006, in which 90 percent of the exports comprised of textile and apparel products, whereas Pakistans imports from US were around $2 billion almost same as in 2006. 

Muhammad Ali Mian said civilian aircraft and associated equipment accounted for one quarter of the import value, electricity-generating machinery is another notable item imported from US during 2007.

He said that US relations with other South Asian countries are showing an inequality as the area of cooperation between US and India is very high as compared to Pakistan. He said US has extended a number of projects India, including Knowledge Transfer Initiative among the US and Indian business community under FICCI collaboration; US-India Biotech Alliance to foster the growth of the biotechnology industry in India; US-India Fund (USIF) has supported 300 research projects in Science & Technology; and signing of Indo-US S&T agreement; and US-India cooperation in Nano-technology in 2005. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Exporters hope for $500m orders at Heimtextil​*
KARACHI, Jan 22: Pakistani exhibitors negotiated export orders worth over $500 million in the Heimtextil, Frankfurt. Around 170 exhibitors from Pakistan participated in the worlds largest fair of home textiles and displayed their top-line home furnishings and textile made-ups.

The exhibition recently concluded proved to be a major selling venue for the Pakistani textile manufacturers who received trade inquiries during the entire four days and procured orders from buyers, especially European and US importers.

The Pakistani exhibitors had a little edge over their arch rivals from China and India as exporters from both the countries faced difficulties in quoting prices due to various reasons, Said Arif Elahi, an exhibitor from Faisalabad.

He pointed out that due to the slashing of export rebates by the Chinese government and appreciation of yuan has reduced the profitability of the Chinese manufacturers while the Indian manufacturers faced little hardship due to the appreciation of their rupee.

Majority of the exhibitors from Pakistan were of the view that they got very encouraging response from the US and European buyers but they were a bit reluctant in quoting prices for the long-term orders due to the uncertainties at home.

Syed Usman Ali, chairman Towel Manufacturers Association (TMA) said that the towel exporters more or less depended on Heimtextil every year and procured good orders for the season.

He said that the TMA members had demanded of the organisers to hold Heimtextil in Dubai if it is not possible to organise it in Pakistan, says a press release.

Exporters hope for $500m orders at Heimtextil -DAWN - Business; January 23, 2008


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## Neo

*Over $2 billion FDI received in July-December *​ 
KARACHI (January 23 2008): The country attracted over two billion dollars foreign direct investment (FDI), up by 10 percent, during the first half of the current fiscal year despite poor law and order situation and political uncertainty.

However, portfolio investment depicted a declined of 92 percent during the July-December period of current fiscal year mainly due to the emergency imposed in the country in November 2007. The State Bank statistics show that during the first half of current fiscal year net foreign investment declined by some 32 percent mainly due to huge outflow from portfolio investment.

Net foreign investment stood at 2.169 billion dollars during the first half of current fiscal year as compared to 3.184 billion dollars in same period of last fiscal year, depicting a dipped of 1.015 billion dollars.

Foreign investment components were 103 million dollars portfolio investment and 2.066 billion dollars foreign direct investment (FDI). Ther was no returns from privatisation. Out of net foreign investment, FDI has been up by 193.7 million dollar, to 2.066 billion dollars against 1.872 billion dollars during the corresponding period of fiscal year 2007.

Emergency in November badly affected portfolio investment which declined by 92 percent (1.208 billion dollars) as only 103.2 million dollars portfolio investment was registered.

"Although the country is faced with challenges like political instability, deteriorating law and order situation for the last few months, the huge inflow of FDI shows that it is still an investment-friendly country as foreign investors have invested over $2 billion so far," Muzamil Aslam, a well-known economist, said.

He said that despite imposition of emergency, economy has potential to attract foreign investment, which is a positive sign and indicates that further foreign investment would be seen in the future. He said that after imposition of emergency some 400 million dollars had been drawn from SCRAs during November-December 2007.

He said that after the assassination of Benazir, not a major decline had been seen in the portfolio investment. Therefore, it is expected that portfolio investment would boost in the next few months.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan ranked 67th in basic infrastructure category: World Bank report ​*
FAISALABAD (January 23 2008): Poor infrastructure services result in constrained economic activity and reduce the country's growth potential. Elasticity of business sector output and productivity with respect to public core infrastructure investments are usually much higher than those of private business investments in Pakistan, said World Bank study report.

South Asia Sustainable Development Unit (SASSD) South Asia Region's report said that Pakistan Government's ability to plan and deliver infrastructure projects effectively will determine the future pace of growth of the country.

World Bank report mentioned that according to the World Economic Forum Survey (2006-07) of 125 countries, Pakistan ranked 67th in basic infrastructure category. Historically, the balance between demand and supply of infrastructure facilities has faced a chronic imbalance.

For instance (a) the ageing and inadequate irrigation and water infrastructure deficit alone is estimated at Rs 4 trillion (US $70 billion). Pakistan needs to invest almost Rs 60 billion (US $1 billion) per year in new large dams and related infrastructure over the next five years,(b) the under performance of the transport infrastructure costs the economy Rs 300 billion (US $5 billion) per year and (c) existing power shortages of approximately 2,000 megawatts will increase to 6,000 megawatts by the year 2010 and 30,700 megawatts by the year 2020.

The study report stated that the per capita energy consumption in Pakistan is amongst the lowest in the world and a lack of adequate energy resources precludes industrial growth affecting all sectors of the economy.

After the lost decade of the 1990s, World Bank study stated that Pakistan's economy has bounced back and has been exhibiting growth rates of above seven percent in recent years. This, coupled with population growth rates of over two percent, places an acute demand on basic and advanced infrastructure.

World Bank study observed that the recent power shortages are a classic example of the rapidly growing economy's ageing and deficient power infrastructure, which is failing to cope with burgeoning demand and resulting in an energy crisis in the country.

A similar situation also prevails in the supply of the transport infrastructure in Pakistan. It is obvious that lack of appropriate public infrastructure is constraining (a) Pakistan Government's ability to transfer the impact of this growth to the wider public, (b) delivery of basic public services, (c) sustained advancement of traditional sectors such as agriculture and textiles and (d) development of emerging sectors such as services and industries required for continued economic expansion.

Therefore, the Pakistan Government requires heavy investment in physical infrastructure in order to improve delivery of social services and to enhance its internal and global competitiveness. In short, the infrastructure crisis is here, but the 'meltdown' will be inevitable in five to ten years unless the Pakistan Government is able to respond in time.

World Bank study mentioned that the Govt. has responded to this demand by planning extensive infrastructure expansion. The Federal MTDF, allocates Rs 2,162 billion (US $36 billion) to the development of large infrastructure-embarking on an ambitious program to upgrade roads, railways, air, power, water, irrigation and other infrastructure.

Of this, Rs 993 billion (US $16.3 billion) will be through the Public Sector Development Program (PSDP). The MTDF envisages a tripling of the infrastructure PSDP from an average of Rs 150 billion per year to Rs 440 billion per year. The current FY08 PSDP allocation of Rs 520 billion has already eclipsed this target.

There are other emerging infrastructure programs that are required to respond to the rapidly developing economy, and are not entirely included in the MTDF.

These include the National Trade Corridor Improvement Program (NTCIP), the construction of large water reservoirs (Kalabagh, Diamer, Bhasha), the rehabilitation of the key barrages, delivery of clean drinking water, sanitation, and electricity to all and the new Islamabad Airport project (which alone require substantial investments over and above the MTDF).

In addition, provincial governments, districts and towns/municipalities have also embarked on infrastructure improvement in the face of rapid urbanisation. Provincial capital development expenditure has tripled during the last three years alone and is projected to grow as devolution takes root and service delivery improves during the coming years, World Bank study observed.

In formulating development plans, World Bank study mentioned that the various tiers of government have primarily focused on identification of the required infrastructure and on the availability of public financing.

There is also the growing realisation that 'this infrastructure was needed as of yesterday'-that is why, most of the implementation period for this infrastructure delivery is now or at the latest over the next five to seven years. However, very little analysis has been done to factor in the constraints that may or will be posed by the wider construction industry, said World Bank study.

The study highlighted that "Public Infrastructure Implementation" goes through the stages of planning and approvals, financial allocations, detailed engineering, and physical construction, and finally through commencement of operations.

A quick review of the project cycle in Pakistan during the past few years shows weaknesses in all these stages. Of particular interest, and the easiest to find analytical data on, is the planning and financial allocation for the projects. This is the foundation of project implementation and this is where things start to go wrong.

Poor incentive structures motivate an annual 'mad rush' wherein each public agency puts in requests for maximum possible allocations. The agency neither considers their portfolio's throw-forward, nor do they analyse their implementation capacity.

It is common to find that, based on annual project allocations the projected average completion times for projects are seven to eighteen years- figures that should normally not exceed three years, World Bank study disclosed.

The study report pointed out that this occurs because too many projects are taken in hand simultaneously and without proper planning. So even though 'on-the-record' it appears that total public allocations are more or less spent, the picture is much more complicated-expenditures are not in line with plans and priorities- lots of projects are allocated money before they are ready for implementation.

Based on the allocations in the PSDPs/ADPs of the last 5 fiscal years, individual infrastructure projects in Pakistan would take a long time to complete-18 years on an average for irrigation and power (ranging between 3.4 years to 30.8 years) and 8 years on an average for roads (ranging between 4.6 years to 13.6 years).

This assessment is based on analysis of the federal and provincial expenditure portfolio in the power, irrigation and roads sectors over the last three to five years, study report explained.

For example, World Bank study stated that during FY04, two hundred and eighty three projects (costing Rs 43.62 billion) at federal and provincial levels in power, irrigation and roads, were allocated a sum of Rs 5.16 billion, which was never spent.

Conversely, in the same period, fifty-nine projects (costing Rs 241.43 billion) which were not allocated any money in the budget incurred an expenditure of Rs 75.156 billion. So, the agencies started with annual allocations for these two hundred and eighty three projects which were far less than optimal (optimal allocations could be around Rs 12 billion), and in effect indicated to stakeholders that these projects will drag on an average for more than eight years.

Then, the agencies undertook expenditures on fifty-nine new projects, which are not in the portfolio and spent above optimal amounts from unplanned allocations indicating their intent to finish these large, 'unplanned' and politically motivated projects in a three-year period.

As demonstrated above, the public agencies seem to be taking on too much and delivering too little, the 'little' that they do deliver is mostly determined by the political priorities.

But often, even when the government has tried to force public agencies to reduce the portfolio throw-forward, money has been difficult to come-by. The reason behind this lies in the nature of public infrastructure projects and related dynamics of the financial allocations.

Delivery of public infrastructure has long gestation periods and is built to cope with future anticipated demand. This requires visionary planning and often entails seemingly large pre-emptive investments.

These investments are a political-hard-sell as they cater to a future that is often difficult to visualise today. Further, the higher discount rates in developing countries create a challenge to appropriate funds for public infrastructure from urgently needed consumption expenditures.

This in-turn puts huge public pressure on the timely delivery of such projects-high visibility of these projects has often been a political graveyard. Delays therefore, not only have economic costs but also large political costs, World Bank study observed.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Musharraf seeks investment to overcome terrorism ​*
PARIS (January 23 2008): President Pervez Musharraf on Tuesday sought support of the West through investment in Pakistan's economy to help it overcome poverty, illiteracy and depravation, which were the root causes of terrorism.

Addressing the business executives here at a local hotel, the President said western investment would help strengthen the country to overcome poverty and counter terrorism. He said that government would be very tough against agitators who try to interfere with the economic growth achieved by the country.

President Musharraf said that the militants had specific targets that include destabilising Pakistan and derailing the democratic process. Assuring the foreign investors of safety and protection to investment in Pakistan, he pointed out that the terrorists had never hit business entrepreneurs in the country. He added that there were 700 business houses belonging to foreigners and none of them had been targeted.

President said that militancy was confined to a limited area, mainly North and South Waziristan along the border, comprising only 0.3 percent of the total population. President Musharraf said his government had taken various measures to provide safety to the foreigners and ensure protection to investment and maximum return.

About the forthcoming general elections, he reassured that it would be held on the scheduled date and would usher political stability in the country. He further said that nobody would be allowed to create chaos and agitation in the country before or after the polls.

The President highlighted the economic achievements of the country during the past seven years and said Pakistan succeeded in sustaining economic growth of up to 7 percent and further improving the economic indicators like increasing the per capita income, foreign reserves and stock exchange index position. He said there has been an industrial boom in Pakistan in recent years, which was also a factor behind shortage of energy.

Replying to a question, the President allayed concerns and misperceptions among business executives about the law and order and political situation in Pakistan. He assured them that they will find best possible opportunities and a win-win situation in the country to make economic gains.

About assassination of Benazir Bhutto, he said this unfortunate incident was result of terrorism perpetrated by Baitullah Mehsud's group. In this connection he referred to the recent statement by CIA chief Michael Hayden which clearly pointed out the evidence that Baitullah Mehsud targeted the former prime minister.

President Musharraf said there should be no doubt on this as the CIA has a bigger intelligence network to trace such crimes. He stressed that West should see how they could help Pakistan, which is a front-line state in the war against global terrorism to achieve the desired objectives of bringing peace and harmony at regional and international levels.

About the business opportunities, the President said Pakistan had excellent political relations with France and said the political ties were cemented with economic bonds, for which the two sides should move forward to have better interaction at private and public levels. He referred to the political turbulence that was witnessed last year and said it, however, has not upset the economy. He said democratic transition in Pakistan is proceeding smoothly and assured the foreign investors that they will have more investment friendly environment after the elections.

The President spoke about Pakistan's strategic location for business and trade, stating that the country lies in the hub of Middle East, Central Asia and Europe.

He said that Pakistan provides shortest route to do business with the regional countries surrounding Pakistan. President said: "We have corrected the basics of the economic structure in order to sustain economic growth that provides rich opportunities to promote bilateral trade and business interaction."

President Musharraf also referred to the electricity shortage in Pakistan that was the result of rapid industrialisation and said the country is exploiting various traditional and non-traditional resources, including nuclear. Pakistan has tremendous amount of natural resources where the foreign investment could be made, he said, adding that they could have maximum profitability. He pointed out that in recent years, the profitability has gone up to double figures, even up to 60 percent in some cases.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Many UK trade missions plan to visit Pakistan' *​ 
KARACHI (January 23 2008): British Deputy High Commissioner and Director UK Trade and Investment (Pakistan), Hamish St. Clair Daniel, informed business community here on Tuesday that a number of British trade missions have planned to visit Pakistan during the next few months.

Addressing members of Karachi Chamber of Commerce and Industry (KCCI) on Tuesday, he said that UK enjoys best trade and economic relations with Pakistan. He said that during his four-year tenure in Pakistan British investment in this country increased considerably, adding more then 100 British companies are working successfully in Pakistan.

The British Depute High Commissioner praised hospitality of Pakistani peoples and said that 99.9 percent people are friendly and co-operative. He termed Karachi and Pakistan as a vibrant city and country respectively.

Referring to travel advises, he said that travel advisories didn't meant to restrict visit of British nationals instead to caution them to prepare visit plans carefully. Hamish said that he had ancestral relations with this part of the world that is carved as Pakistan as his father was a pilot of Royal Air Force and was posted in this area in 1945.

He said that Pakistan is a country with challenges and has the resilience to convert these challenges into opportunities. Speaking on the occasion, Tony, British visa officer explained the new policy initiative titled Trusted Partner Agreement.

He said under this scheme new and improved links are being formed between the visa service and Pakistan's business community. The Trusted Partner scheme benefits both the commercial enterprises and the British High Commission. The business partners has the advantage of direct access to the commercial visa team at the high commission, thus enabling a rapid service from specialists officers.

Tony said that visa application form has been simplified and has only one page. Visa will be processed in just 24 hours. However it is not guaranteed that visa would be issued. He said that the visa section would also work in collaboration with the chambers for issuance of quality recommendation letters and to put an end to se of fake visa recommendations letters. A method will be devised to verify signatures of officer issuing recommendation letters, he concluded.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Mega projects under PSDP: provinces, federal divisions asked to finalise progress reports ​* 
ISLAMABAD (January 23 2008): Planning Commission (PC) has asked the provinces, all the federal divisions and their subordinate organisations to finalise progress reports on mega projects to identify slow-moving and fast-track schemes.

Sources told Business Recorder on Tuesday that this exercise was being carried out to save the fast moving projects from any cut in the 2007-08 Public Sector Development Programme (PSDP). According to the sources, President Pervez Musharraf will also be briefed on the implementation status of 176 mega projects.

The total number of development projects both small and big being executed under the PSDP is well over 2,000. In infrastructure sector, which includes development schemes in water, energy, communication, railways, physical planning etc, the total mega projects are 38. These projects have the allocation of rupees five billion or above. The number of mega projects in other sectors is 138.

However, the allocations for these projects is rupees one billion and above. The PC is geared up to save the fast moving projects from any cut in development budget. According to the sources, first priority of the PC is to save all the development projects in infrastructure sector. In this regard, the PC is considering various options.

There are special allocation of Rs 35 billion for Earthquake Rehabilitation and Reconstruction Authority (Erra) in the current fiscal year. Some circles are of the view that since the Erra had not come up with any major scheme except New Balakot City project of Rs 12 billion, the federal government could transfer this allocation to other channels.

The Erra will not have any major demand for the current fiscal as the New Balakot City Project will be implemented in around five-year time. The PC had forecast the operational shortfall of Rs 35 billion in Rs 520 billion government-funded PSDP. If these allocations were re-adjusted, then the other sectors could avoid any heavy cut, according to the sources.

According to estimates finalised after the first quarter of the current fiscal year, nearly 40 projects in infrastructure sector were declared slow moving. In other sectors, the rate of slow-moving projects was over 30 percent. The allocations for such projects could also be re-adjusted, the sources added.

The sources said that till the end of first quarter of the current fiscal, almost all the development projects in Balochistan and Fata are slow moving due to security reasons. The allocations for some of these projects can also be re-adjusted. Sources said that if the allocations for such projects are readjusted, there would be only marginal effect on fast-moving and crucial development schemes.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*179 industrial units under construction in Port Qasim Authority ​* 
KARACHI (January 23 2008): Despite limited infrastructure facilities, 179 industrial units are under construction in Port Qasim Authority (PQA) area. This was stated PQA Chairman Rear Admiral Syed Afzal at a networking session and oath taking ceremony of newly elected managing committee of Port Qasim Association of Trade & Industry (PQATI) for 2008 at Country Club on Tuesday.

In his address the new PQATI Chairman, Naeem Ilyas Khanani, highlighted various problems of the industrialists in Port Qasim and presented different proposals and demands to strengthen the PQA-PQATI partnership.

The PQA Chairman said the Authority was open for genuine investors who could come up and establish their industrial units within the allowed period.

The Authority, he said, would only assist the investors by providing infrastructure facilities, approval of drawings, demarcation of land and other prerequisites for starting industrial projects in the PQA area.

Khanani drew attention of PQA chairman towards the problems of the business community in Port Qasim including provision of adequate security during law and order situation, property tax imposed by the city government, sewerage system, effluent treatment plant (ETP), non-utilisation fee (NUF), etc.

He said that PQATI had launched a 'Neighbourhood Watch Scheme' in north-western industrial area of the Port Qasim with an armed security patrol unit and wireless radios for communication on self-help basis.

He said that in view of the current economic downturn, high inflation and cost of doing business, energy crisis and poor law and order situation the PQA should hold its decision on imposition of NUF in those areas which entertain only two committed facilities ie road and potable water.

He said that imposition of NUF should be linked with the provision of sewerage system along with an ETP with 50 percent revised rates in the aforementioned areas.

He proposed a five-member 'PQA-PQATI Facilitation Committee' to review the industrial infrastructural development projects. The PQA chairman said that its Board had decided in 2005 to impose NUF on industrial and commercial plots where at least two committed facilities ie road and potable water were available. He said imposing NUF had resulted in launching and completion of a number of industrial projects in Port Qasim area during e last two years.

"PQA has initiated development projects worth Rs 11,769 million for access roads, water supply and sewerage system and storm water drain on fast track basis and Insha-Allah you all will find this will accomplish within a period of one year or so," the chairman said. He said the property tax issue had been examined for its applicability and would be taken up at the appropriate level.

On security issue, the PQA chairman said with increased patrolling by police of the Port Qasim areas the PQA security staff had also been deployed to increase their patrolling round the clock.

The PQA chairman termed PQATI's proposal on forming a Facilitation Committee as a good move and said directives had been issued to Director General Planning and Development to prepare scope and function of the committee. He assured the PQATI that the PQA management would seriously look into their concerns and allay them with the able guidance of PQA Board.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Terrorists cannot derail journey of economic progress': Musharraf criticises his detractors ​* 
BRUSSELS (January 22 2008): President Pervez Musharraf has said saboteurs and terrorists cannot derail Pakistan's journey of economic progress and prosperity and the critics were maligning the facts to give wrong impression of his seven-eight years outstanding performance on all fronts. He was addressing a gathering of overseas Pakistanis at Conrad Hotel in Brussels on Sunday.

The President said when he took over in 1999, Pakistan was on the verge of economic collapse. Its foreign exchange reserves were only $500 million and overall economic situation was heading for a crash-landing.

He said the policy-makers and implementing agencies did a great job during the last seven-eight years to make Pakistan economically robust with highest-ever foreign exchange reserves of $15.5 billion, fast-growing annual revenue, 100 percent increase in per capita income, many times increase in Public Sector Development Programme (PSDP) and 6-7 percent growth rate every year. He said Pakistan has Rs 520 billion funds for 2007-08, for development programme against Rs 80 billion to Rs 90 billion in 1998-99.

President Musharraf said a former prime minister taking the credit of a motorway between Lahore-Islamabad, but during his tenure a number of such projects were completed and many more were in the process of completion. He said the government was all set to construct Kalabagh dam and many other water storage and conservation projects to meet growing energy demands in the coming years.

He said flour (atta) crisis was not an outcome of the policy of the Shaukat Aziz government. It was created by some elements, who tried to destabilise Pakistan after PPP Chairperson Benazir Bhutto's killing on December 27 last year. He said former chief justice Iftikhar Chaudhry was a corrupt person and after March 7 he used his office to destabilise the entire system in Pakistan.

The President said the critics do not give true picture of Pakistan when they appear in the media and the people should question their judgement criteria. He said the government was following a three-pronged strategy for pushing forward the agenda of 'Pakistan-first'.

It included security, economic progress and the people's prosperity. He said a security cover was a must to take threats to Pakistan's defence head on. He said the armed forces were now fully well prepared to defend integrity and security of Pakistan.

He said some forces were purposefully questioning Pakistan's nuclear programme, but they must understand that Islamabad was aware of their intention and have full capability of defending its missile and nuclear assets.

He said Pakistan's nuclear installations were safe even from any nuclear attack. The President asked overseas Pakistanis to strictly follow the rules of any country where they live to financially support their families and add to Pakistan's economic strength by sending remittances.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Internet penetration to rise 16 percent in three years  ​*
KARACHI (January 24 2008): Pakistan's current internet penetration is around 7.5 percent. This was stated by Monis Rahman, Chief Executive Officer of Naseeb Networks, in a statement on Wednesday. He said that with over 500 million dollar recently invested here in broadband and Wimax infrastructure, they are projecting inter-net penetration to increase to around 16 percent over the next three years.

Naseeb Network, a leading provider of online recruitment, social networking, classifieds and related services in Pakistan, has announced that it has secured Series B financing from two pre-eminent silicon Valley venture capital firms, ePlanet Ventures (ePlanet) and Draper Fisher Jurvetson (DFJ).

Naseeb will use the funding to accelerate its growth and leadership position in target markets by investing in sales force and marketing expansion and enhancing its product portfolio.

"We have seen strong growth in user metrics and financial receipts across our portfolio of online services," said Monis Rahman, Founder and CEO of Naseeb Networks. This funding round provides growth capital and domain expertise from two clear leaders in global venture capital, which will enable us to further dominate our target markets and seize emerging market opportunities."

The round was led by ePlanet with DFJ participating, pursuant to which Ayaz-ul-Haque, Managing Director at ePlanet and Mohanjit Jolly, Director At DFJ have joined Naseeb's board of directors. "We're excited about the progress and momentum that Monis and his team have achieved in the market," said Haque.

"Naseeb Networks, though its portfolio of Internet properties and revenue generating brands including Naseeb.com Rozee PK and Ring Pakistan.com, is a leader in a market that is poised for considerable growth. Our investment in Naseeb will help the company build upon its commanding position." he said.

"The company's business model is consistent with ePlanet's global replication emphasis and represents a unique investment to capture the inflection point in Inter-net growth in Pakistan," he commented.

Commenting on DFJ's participation, Jolly said, "Naseeb Networks has done a phenomenal job of bootstrapping its way to a leadership position. DFJ is proud to be associated with the Naseeb team. This infusion will not only cement the leadership position for Naseeb in social media but also help further catalyse the market in Pakistan and across the global Muslim diaspora."

He said, "By providing the best platform for interaction, collaboration and transaction, Naseeb Networks have the potential of being a truly significant player with a global footprint, both factors being hallmarks of DFJ investments."

Naseeb Networks operates a portfolio of web-sites including Rozee. PK and Naseeb com. Rozee. Pk is Pakistan's largest and fastest growing job portal. The site has delivered over 1.4 million applications to jobs posted by 8,800 employers, Rozee, Pk is used by some of Pakistan's most sought after employers to recruit human capital, including Mobilink, Nestle, Oracle, McDonalds, United Bank Limited, Microsoft, GlaxoSmithKlein, Engro Foods, Mentor Graphics, Teradata, Proctor and Gamble and other.

Rozee.Pk offers employers recruiting solutions including placement of online job ads, access to powerful CV search engine technology, online recruitment workflow management tools and white-labelled corporate job portals.

The company's flagship inter-net property, Naseeb.com, offers match marking and social networking services for the Pakistani and Arab diaspora communities. With over 1.3 billion Muslims worldwide, Naseeb.com has achieved a leadership position in a huge market. The site's features include blogging, instant massaging photo and music sharing, and an innovative algorithm that matches members based on common cultural norms.

Commenting on the market opportunity, Rahman said, "Pakistan's current Internet penetration is around 7.5 percent compared to India's 4.5 percent. With over USD $500 million recently invested here in broadband and WiMAX infrastructure, we are projecting Internet penetration to increase to around 16 percent over the next three years. We will leverage our leadership position to generate cross traffic for other key online services for the benefit of Pakistan's vibrant inter-net community."

Naseeb Networks, which have been cash flow positive since 2004, have 42 employees across its offices in Lahore, Karachi, Islamabad and San Jose and a management team transplanted form Silicon Valley.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*DIB to continue investing in Pakistan ​* 
Thursday, January 24, 2008

KARACHI: Chief Executive Officer (CEO) of Dubai Islamic Bank (DIB) Pakistan MA Mannan has said that DIB recorded a growth of 152 per cent in its total asset base, which expanded to Rs21 billion as of December 2007.

He said this while elaborating achievements of the DIB in Pakistan in the last two years at a press conference here on Wednesday. He said the bank would continue to expand its branch network besides introducing new innovative Shariah-complaint products.

We feel confident, we will continue to invest in Pakistan and we will try to maintain current growth rate in future, the CEO optimistically said and maintained that the bank had 17 branches in seven major cities of the country including Karachi, Lahore, Rawalpindi, Islamabad, Faisalabad, Gujarat and Peshawar which provided employment to 1,700 people.

DIB Pakistan is a subsidiary of UAE-based Dubai Islamic Group. Mannan shared the achievements of the bank with newsmen, saying in a short span of two years DIBs customer base grew by 228 per cent to approximately 21,000 customers in Pakistan as compared to 6,400 in the year 2006, whereas the deposit base grew by 273 per cent to Rs16.1 billion in 2007.

He said that during 2007 DIB remained active abreast of industry by offering a number of world class products and services in corporate and consumer banking and among these products introduced last year, DIB Auto Finance, registered a volume of Rs2.9 billion within nine months after its launching which reflects a great success for the bank in a market where cut throat competition persists. 

He said on the corporate side, DIB was at the forefront of product innovation and development. During last fiscal year DIB arranged Sukuks worth Rs24 billion, which is 41 percent of total domestic Sukuk issued. CEO DIB said that bank also successfully launched SME business which had a portfolio of over Rs1.5 billion 

Similarly, the unique home finance facility, offered by Dubai Islamic Bank garnered an equally overwhelming response, he said and adding that in first three months, DIB home finance was the industry leader in the entire banking industry by far achieving a milestone of the fastest billion mark. 

He maintained that DIB home finance maintained its market leadership throughout the year in 2007 and in only 12 months time DIB Home finance registered a volume of Rs2.6 billion which was the fastest growth rate in the entire industry.

CEO DIB attributed the overwhelming market response to distinctively unique design and features. He said that the success of the bank was not limited to the mortgage front but also resonates in other services offered by Dubai Islamic bank of Pakistan and added that beside from providing regular banking services, DIB was very active in attracting foreign direct investment in and from Pakistan. 

Sharing DIB Pakistans vision for 2008, Mannan said, We see the year 2008 as bright year which will take us to next level of success in terms of growth, our ambition is to continue our growth trajectory and take Islamic products more customers in Pakistan.

DIB to continue investing in Pakistan


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## Neo

*OPEN SV, PSEB to unveil Pak technology ventures ​* 
Thursday, January 24, 2008

PALO ALTO, California: Organisation of Pakistani Entrepreneurs (OPEN) Silicon Valley, in collaboration with Pakistan Software Export Board (PSEB), will introduce several Pakistan-based technology ventures to the business community in Silicon Valley in a series of high-level business meetings and a major OPEN SV networking event. 

The delegations visit is designed to raise the profile of Pakistans software and IT services industry. OPEN SV seeks to enable visitors business relationships with key stakeholders in Silicon Valley. 

The delegates will brief OPEN charter members, distinguished Pakistani-American business leaders and entrepreneurs in Silicon Valley, about the companies products and services and discuss potential for market entry and partnerships. 

OPEN Silicon Valley President Dilawar A Syed said: Silicon Valley leads the world in innovation and entrepreneurship, and Pakistani-American entrepreneurs play a significant role in innovation and economic vitality of Silicon Valley, especially in the high-tech sector. 

Our initiative for the Pakistani ventures, is an excellent opportunity for Pakistani entrepreneurs to connect with leaders of Silicon Valleys success stories, and get guidance on how to grow and expand their ventures globally. 

The companies represented in the PSEB delegation are Alp Business Service Management, CTO 24/7, Digital Prodigy, Digital Processing Systems, GoodCore Software, Intagleo Systems, Invaterra, Palmchip Pakistan, Prislogix, Post Amazers, Server4sale and Xorlogics. 

OPEN SV, PSEB to unveil Pak technology ventures


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## Neo

*British delegations to visit Pakistan ​* 
Thursday, January 24, 2008

KARACHI: The outgoing Deputy High Commissioner of the United Kingdom, Hamish Daniel, has said Pakistan has achieved many of its targets like revenue collection, maintaining GDP growth rate and other positive indicators and based on these facts 11 different companies have expressed their intention to send delegations to Pakistan for expansion of their establishments in the country and to explore further investment plans. 

Visiting the Federation of Pakistan Chambers of Commerce and Industry on Wednesday, he said the country has always proved itself as a trusted trading partner of the UK and despite the ups and downs in the political scenario the business community of Pakistan has played its role for the stability and uplift of economic conditions. 

He said during more than his six years stay in Pakistan he was very secure and comfortable everywhere as Pakistan is a very beautiful country and during his stay he travelled widely around the country. 

Daniel also visited the Overseas Investors Chamber of Commerce and Industry (OICCI) on Monday and held an interactive session with member companies. He thanked the OICCI members for cooperation and support extended to the UK Trade and Investment (UKTI) team during his tenure and said the OICCI had proved to be an important forum for foreign investors to communicate their concerns to the government. 

A presentation on Trusted Partnership Agreement (TPA), which exists between British High Commission and Chambers Of Commerce and Industry and UKTI listed business, was also given. 

British delegations to visit Pakistan


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## Neo

*OGRA to issue 1,000 new licences for CNG stations *​
ISLAMABAD: Oil and Gas Regulatory Authority (OGRA) is likely to grant around 1,000 new provisional licences for setting up CNG stations and more than 300 marketing licences for commercial operations during the current financial year 2007-08, sources told Daily Times on Wednesday.

During the financial year 2006-07, OGRA has issued additional 2,218 licences for construction of CNG stations that means further investment of about Rs 28 billion in the pipeline. Sources also said that gas sector including LPG and CNG has attracted investment amounting to Rs 56 billion made by the financial year 2006-07.

During the current financial year the total number of CNG operational stations in the country would reach to 1,800, the sources said adding that the consumption of CNG as alternate fuel in automotive sector has increased from 38,886 million cft in 2005-06 to 67,296 million tons cft in 2006-07. This tremendous growth is due to the increase in number of CNG converted vehicles and CNG stations over the years, sources added.

In the past few years, the petroleum prices have soared, the gas requirement has increased manifold to meet the energy requirements. Sources said that CNG sector has shown tremendous growth over the past five years and 1,080 operative CNG stations have been set up bringing the investment of more than Rs 45 billion, the sources said. . 

They said that investment in Liquefied Petroleum Gas (LPG) stands around Rs 11 billion so far and in CNG sector it is more than Rs 45 billion. Sources said that more investment in LPG is expected during the next coming years with the consumption of LPG in auto sector.

The financial year 2006-07 remained well performance wise as the production of LPG stood at 1,525 metric tonnes per day and 13 licences have been issued to the marketing companies. Sources further said that OGRA has allowed oil marketing companies to set up LPG auto refuelling stations that would meet international standards.

Daily Times - Leading News Resource of Pakistan


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## Neo

*PIA sell-off proposed to make it competitive *​
ISLAMABAD (January 24 2008): Disappointed with the overall performance, Pakistan International Airlines (PIA) Chairman Zaffar Ali Khan has proposed privatisation of the national flag carrier, with injection of Rs 53 billion to make it competitive in the global market.

"PIA, in government ownership, will find it difficult to compete; its basic restructuring and privatisation must be undertaken for long-term sustainability," he said while unveiling PIA turnaround strategy beyond 2008 corporate plan to the caretaker Cabinet on January 22. The PIA Chairman, who faced tough questions from Cabinet members, also proposed that a consultant of international standing should be engaged to help identify and evaluate turnaround options.

He also projected Rs 38.5 - 41.5 billion accumulated losses in 2007-08, of which Rs 11.8 billion were carried over from 2005. The losses for 2006 and 2007 were Rs 12. 8 and Rs 13.9-16.9 billion, respectively.

Sources told Business Recorder that Zaffar suggested six measures parallel to pursue revenue/cost optimisation beyond those incorporated in 2008 budget ie Voluntary Separation Scheme (VSS) for 5000 employees costing Rs 6 billion in three years; laying off redundant flight engineers; reduction in size of establishment; revenue management system catch-up; third-party engineering business; fleet and routes rationalisation; and lowering of financing cost with injection.

Besides privatisation of the national flag carrier, he recommended sale of property and other surplus assets, in addition to pursuing opportunities to outsource non-core activities, sources said.

While giving an overview of 2007, the PIA boss mentioned four key issues hitting the airline in financial and administrative terms which included erosion of market position; high fuel price; organisational issues; and burdened balance sheets.

"Ineffective marketing, open sky policy, increased competition, EU ban, brand damage, inability to pass through high oil prices, failure in hedging oil prices, use of old planes, oversized establishment, leadership vacuum, ailing corporate culture, negative equity and huge debt servicing bill were the major reasons of PIA's worsened financial position," sources quoted Zaffar as saying.

Giving details of actions taken in 2007, he said that EU restrictions were removed in quick time; 9/15 top managers were hired; several non-profitable routes were eliminated; cutback on expensive foreign/overseas staff and leased aircraft; average of hangars aircraft reduced from 7 to 3.

The PIA management also signed contract for induction of 7 new A-320 aircraft in 2009, commenced implementation of revenue management system and started structured employee engagement, sources quoted Chairman elaborating key actions taken last year.

He projected the economy to grow by 6 percent (plus); fuel prices to hover around $80 per barrel; and the rupee to be further weakened to Rs 62 per dollar. According to him, key concerns for 2008 were uncertainty of fuel price and rupee exchange rate, political scenario and huge Civil Aviation Authority's (CAA) claims.

The PIA board has projected 15 percent growth in passengers, followed by overall revenue growth by 13 percent and increase in limited fixed expense to 1.6 percent, sources added.

Key initiatives for 2008 would include new marketing leadership team, stepping up interaction with travel agents, greater accountability of sales management, launch of new routes/increase frequency on others, opening up of ticket sales on all GDS's, attaining 100 percent e-ticketing, revamping of cargo strategy and securing of Haj fare that recovers cost. PIA has projected Rs 13.2 percent growth in revenue to Rs 79.8 billion in 2008 against Rs 70.5 in 2007.

Operating expenses/fuel cost would increase by 6.9 percent to Rs 32.3 billion in 2008 as compared to Rs 30. 2 billion last year, whereas operating margin would decline to Rs 3.1 billion.

Financial cost would increase by 15.6 percent to Rs 8.4 billion in 2008 as compared to Rs 7.3 billion in 2007 and Rs 4.8 billion in 2006 whereas there will be no other income, and the Chairman termed it as 'worst case'.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Pakistan is a promising destination for investors': President briefs big firms' chief executive officers ​* 
DAVOS (January 24 2008): President Pervez Musharraf said here on Wednesday that Pakistan is a promising destination for investors due to attractive incentives, and the multinational companies should prefer it over other developing countries for investing their money.

He expressed these views during his meetings here with Goldman Sachs Group Inc of USA, Royal Dutch Shell and ENI's Chief Executives Officers {CEOs}. The President briefed the business leaders about conducive investment climate in Pakistan and opportunities available for better return on their investment.

He particularly pointed out the incentives given to foreign investors for different sectors and expressed firm commitment of the government to protect and safeguard investors' interests, besides making possible for them to take out from Pakistan their earnings or any other moveable assets whenever they would want.

He said the cost of doing business in Pakistan is less than other countries of the region and skilled labour was available for all sectors for more production with better quality to help the producers compete in the international market.

The President said that Pakistan enjoys ideal locale in the region, besides many other advantages over other countries, and multinational companies (MNCs) should take their full benefit to earn comparatively more by investing in Pakistan. He maintained that currently 600 MNCs were doing their businesses in Pakistan successfully.

He said that Pakistan 's all-time high $8.4 billion foreign direct investment (FDI) was indicative of the investors confidence. The President noted that Pakistan will firmly stay on course of reforms and the policy of deregulation, liberalisation and privatisation to keep on trusting on the private sector for economic growth in Pakistan.

During the meetings, Musharraf also gave details of Pakistan 's economic achievements for last few years and showed full confidence in government policies to keep the same trend to get even better result for economic growth in the future.

The CEOs who met the President showed great interest in investing in different sectors in Pakistan. Shell and ENI CEOs informed the President about on-going economic operations in Pakistan and expressed interest in investing more to expand their businesses in the coming years.

Shell and ENI are operating in Pakistan 's downstream and upstream petroleum sector. The Goldman Sachs Group Inc, a New York-based firm, is a stimulant for investment in the world banking sector.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Tax relief granted to Japanese, Pakistani banks, financial institutions: revised convention on avoidance of double taxation signed ​* 
ISLAMABAD (January 24 2008): The income tax exemption would be available to Japanese and Pakistani public sector banks and financial institutions under the revised convention on the avoidance of double taxation inked between the two countries on Wednesday.

In this connection, a signing ceremony was held at the FBR House, here. The convention was signed by Abdullah Yusuf, Secretary General, Revenue Division, and Seiji Kojima, Japanese Ambassador. It will be presented to the Cabinet for ratification to initiate the enforcement process. Some key features of the revised convention are that tax exemption has also been provided to public sector banks and financial institutions.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan's foreign exchange reserves show over $1 billion decline after emergency ​* 
KARACHI (January 24 2008): Foreign exchange reserves have shown a significant decline of over $1 billion after imposition of emergency, mainly due to rising imports and current account deficit. In the second week of November the country's foreign exchange reserves were sufficient for imports of some 27 weeks, while now these are sufficient for 25 weeks only.

Since the imposition of emergency, huge outflows have taken place from the Special Convertible Rupee Accounts (SCRA), analysts said. The State Bank of Pakistan's (SBP) reserves statistics show that forex reserves have registered 6 percent dip during November 10 to January 12, 2008.

The country's forex reserves stood at $15.3716 billion on January 12, 2008, down from $16.3875 billion on November 10, 2007, depicting a dip of $1.0159 billion. This happened after the imposition of emergency.

On January 12, reserve held by SBP stood at 13.0921 billion dollars dipped by some 1.0911 billion dollar after the imposition of emergency. Earlier, in the second week of November 2007, foreign reserves held by SBP stood at 14.1832 billion dollar.

However, reserves held by the banks showed strong position and despite the declined in the SBP reserves the banks' foreign exchange reserves have been increased by 3.41 percent. The reserves held by the banks have gone up by 752 million to 2.2795 billion dollars during week ended on January 12, 2008, previously stood at 2.2043 billion dollars on November 10. "After emergency, the foreign investors withdrew some 400 million dollars from the stock market," an economist said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Facilities for foreign investors to yield results' ​*
LAHORE (January 24 2008): Punjab Minister for Trade and Investment M Shafique has said that foreign investment up to 25 billion dollar is expected in the Punjab within the next few years, due to the facilities for foreign investors announced by the government.

Talking to a delegation of traders here on Wednesday, he said that foreign investment will ensure economic uplift in the province, while efforts will be made to make Lahore, the hub of trade activity.

He said the government is focussing on improvement of infrastructure facilities to attract foreign investors, while the provincial government has announced special incentives for Chinese investors due to the special Pak-China relations, he added.

Initiatives by the government in this regard have resulted in 20 percent increase in the trade volume of both countries, he said, adding that efforts are under way to balance trade between Pakistan and China. Traders of both countries should also help prepare comprehensive plans in this regard.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Pakistan losing export market due to high production cost' ​* 
KARACHI (January 24 2008): Former senior vice president, Karachi Chamber of Commerce and Industries (KCCI), Muhammad Mansha has urged the government to take appropriate steps to reduce cost of doing business in the country.

Taking to newsmen, he said that Pakistan was losing export market due to extraordinary high cost of production, rendering locally produced goods uncompetitive in the international market.

Referring to quality of goods, he said that Pakistan was producing high quality goods and locally produced goods were much better than goods produced in many countries of the world.

In his remarks, he noted it is a natural phenomenon that low prices attract customers and they prefer to buy good quality offered at low price. This is the main reason of declining exports, he added.

Foreign buyers are reluctant to visit Pakistan owing to deteriorating law and order situation in the country, which, he added is another reason for exports' reduction. Mansha also urged upon the government to take appropriate measures to overcome load-shedding and ensure uninterrupted power supply.

Suggesting use of coal for power generation, he said that Pakistan had huge reserves of coal and coal-fired power generating projects should be expedited on war footing. Use of coal would also reduce power production cost, he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pak-Uzbek trade ties to grow more: ICCI *​
ISLAMABAD (January 24 2008): Islamabad Chamber of Commerce and Industry President Ijaz Abbasi said on Wednesday that Pakistan would make all-out efforts to improve economic and trade relations with Uzbekistan. Taking to Uzbek ambassador to Pakistan Oybek O Usmanov, Ijaz said Pakistan's economy was rapidly growing due to which its energy needs were increasing at 10 percent per annum.

Ijaz assured the ambassador that a trade delegation of ICCI would visit Uzbekistan in April. He emphasised the need to exchange trade delegations between the two countries to further cement bilateral ties in various sectors.

Both sides decided that a MoU should be signed between ICCI and Tashkent to promote trade and investment. Uzbek ambassador offered Pakistan help to enhance bilateral trade with his country, adding that his country could supply oil, gas, electricity, cotton and minerals such as copper, gold, iron, chromium and lead to Pakistan, while in return Pakistan could export textiles, cement, medicines, shoes, machinery, garments, military and telecommunication equipment's.

Uzbek ambassador said it was the policy of Uzbek government to facilitate Pakistani investors. As a result of investor-friendly policy, a number of Pakistani entrepreneurs have set up industries there. He also offered Pakistan aeroplane on lease.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Coal-fired power plants planned for Balochistan ​*
QUETTA (January 24 2008): The Balochistan government is planning to set up coal-fired power plants to overcome increasing power shortage in the province, sources in provincial Irrigation and Power department told APP here on Wednesday.

They said the provincial government concluded an agreement with two private companies, Balochistan Power Generation and Canadian Everlight Energy Corporation on December 4 last.

Under the agreement, both the companies would prepare feasibility for setting up of 50 megawatt coal-fired power plants on various localities in the province within 180 days after the signing of the agreement.

The Provincial Thermal Power Board (PTPB) would review the feasibility and if it found the project feasible, it would give green signal to these companies to launch physical work on the project, the sources said.

They further said Quetta Electric Supply Company (QESCO) would purchase the electricity generated by these plants on the price recommended by PTPB. Besides, these companies would be bound to spend five percent of their total revenue on the development of social sector in the areas where they supply power. They appreciated the setting up of coal-run power plants, as it would help overcome power shortage by utilising locally extracted coal.

Business Recorder [Pakistan's First Financial Daily]


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## ejaz007

*BankMuscat ready to start operations in Pakistan *
Staff Report

KARACHI: BankMuscat is acquiring a majority stake in Saudi Pak Commercial Bank in Pakistan in association with Sinthos Capital, International Finance Corporation along with Washington and Nomura International. 
The consortium has already signed the Share Purchase Agreement with Saudi Pak Investment Company (SAPICO) to buy a 68% stake in the Bank. 
BankMuscats total stake in the Saudi Pak Commercial Bank will be 35%. BankMuscat has obtained the necessary regulatory approvals in Oman to go ahead with this investment. An approval from the State Bank of Pakistan is currently awaited. 
With assets worth over $9.6 billion, BankMuscat (SAOG) is the largest bank in Oman. Its strong capabilities in Corporate, Consumer and Investment Banking, Treasury, Private Banking, Project Finance and Asset Management. It serves over 43% of the market through its domestic network of 107 branches and over 260 ATMs nationwide. 
Internationally, the Bank has a branches in Kingdom of Saudi Arabia, Dubai and India. To further capitalize on the booming Indian equity markets, the bank also acquired a 43% stake in Mangal Keshav Group, one of the oldest securities firms in India.
Daily Times - Leading News Resource of Pakistan


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## Neo

*Car production may fall short of target: experts ​* 
Friday, January 25, 2008

LAHORE: Car production would be another major industrial target that is likely to be missed as banks reduced car finance due to increase in bad debt while middle class has also opted out of car finance on account of high mark-up. 

Industry experts said it would be impossible for the car production to cross the 200,000 units mark this year as is envisaged in this years target. They said it would be a miracle if the industry could achieve last years production level. They predicted the car production this year would be about 150,000 units that would be 25 per cent below the target. 

The News has learnt the auto-vending sector is in dire trouble as the decline in the car production coupled with tendency of assemblers to import localised parts by paying higher duty has reduced their orders by 40-50 per cent. 

Vendors complain the government failed to implement its auto-policy in its true spirit. They claim that the local auto-parts are much cheaper if actual duty is paid on imported part. They said the government imposed 50 per cent import duty on auto-parts that are manufactured in the country. However these parts in many cases they claimed are imported well below even the cost of raw material used on them. They said this makes the high protection duty meaningless. 

Moreover they added the past government policy of allowing import of used cars impeded the growth of local automobile sector. They said the high mark-up on car financing was already slowing down the car loans but the defaults have practically stopped this process. They said the value of used cars has declined very sharply due to complaints about their quality. 

They said the government stopped unregulated import of used cars when it realized its blunder. The banks compounded damage by granting liberal car financing on those vehicles with the result that the auto-industry is also suffering. 

Former chairman Pakistan Association of Auto-Parts and Accessories Manufacturers (paapam) Syed Nabeel Hashmi said a large number of auto-vendors have closed their units for the time being as they could not afford the losses they suffered from infrequent power outages and non-availability of natural gas. 

In fact he added some vendors even laid off their entire workforce. He said at least 15,000 workers in the auto-vending industry have been unemployed. He said the car production is not likely to suffer as the production has already slowed down but the tractor production is still on the rise. He said most of the tractor parts are made from iron ore or pig iron. He said there is acute shortage of these two vital raw materials. 

Moreover he added the engineering industry that melts steel couldnt operate without sustained supply of gas and electricity. Some vendors complain that the Engineering Development Board and the Custom Department have remained aloof to the miseries faced by the auto-vendors. 

They said tractor manufacturers for instance are importing tractor parts from India via Dubai. They said the import of these parts has been banned. They said their claim could be verified if the officials of these two institutions pay a visit to any tractor assembling facility of the country. They said the parts manufactured in India could be easily found in the assembly lines. 

Car production may fall short of target: experts


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## Neo

*German firm to finance SME exports​*
KARACHI, Jan 24: German financing company DF Deutsche Forfait AG Pakistan Ltd (DFAG) will provide financing facility to small and medium-sized local exporters to boost their exports by $1 billion in three years.

This was stated by the chief executive officer of DF Deutsche Forfait, Salman Mamoon Ahmad, during his meeting with TDAP officials here on Thursday.

Based on forfaiting, export finance services which are utilised the world over, would significantly reduce risks faced by small and medium sized exporters, and help enhance overall exports, Salman said.

German firm to finance SME exports -DAWN - Business; January 25, 2008


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## Neo

*Govt fails to achieve production targets of crops​*
ISLAMABAD: The government failed to meet production targets of cotton, rice, mung and maize fixed for Rabi season for fiscal year 2007-08. However, sugarcane production surpassed its target set for the fiscal year. 

The Federal Committee on Agriculture (FCA) in its meeting held in October last year fixed targets for different Rabi crops. According to the ministry of food, agriculture and livestock (MINFAL) the targets for Cotton was fixed as 14.14 million bales. Whereas the actual production till December 2007 was 12.775 million bales, showing a total 9.65% decrease in production.

The actual production of rice is 5.487 million tonnes but the actual target of rice set in FCA meeting was 5.720 million tonnes. This reduction in rice production shows total reduction by 4.03%. 

Three provinces missed the production targets set for rice and only Sindh surpassed its crop target. The target for Punjab was 3.288 million tonnes and actual production was 3.199 million tonnes. The Sindh target was 1.776 million tonnes and the realized production was 1.813 million tonnes showing an increase over its target. The NWFP rice target was 0.129 million tonnes and the actual production was 0.128 million tonnes. Balochistan province was also missed its rice production target of 0.525 million tonnes and realized production was 0.348 million tonnes. 

The production of maize also missed its target in the year 2007-08 by 0.95%. The actual production of maize is 3.247 million tonnes against the target of 3.278 million tonnes. 

The production of Mung for the year 2007-08 also lags behind its target and declined by 4.71%. The target for mung production was 160000 tonnes but actual production was 152000 tonnes. However, Sindh, NWFP and Balochistan surpassed their Mung production targets. While the target for Punjab was 147000 tonnes but actual production was 136000, officials figure reveal. 

However, major cash crop of the country, sugarcane surpassed its production target set for the year 2007-08. The sugarcane target was 55.876 million tonnes and the actual production was 62.300 million tonnes, showing a total increase by 11.49%. The three provinces surpassed its production target while NWFP succeeded in achieving its production target of 5.153 million tonnes. 

The target for Punjab was 37.5 million tonnes but actual production was 42.841 million tonnes. Sindh sugarcane production target was 11.320 million tonnes but the actual production was 14.278 million tonnes. The sugarcane production target for Balochistan was 22000 tonnes but realized production was 27000 tonnes.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Cement earnings may rise by 89 percent in 2Q 2008​*
KARACHI: The earnings of the local cement sector would grow by 89 percent on year-on-year basis in the second half of the current fiscal, said Muhammad Rehan Khan, an analyst at First Capital Research here. 

This will translate into a full year growth of 19 percent during fiscal year 2007-08 as against 2006-07, he said in his report on cement sectors profitability on Thursday. 

The profitability of the sector is likely to grow by 22 percent annually in next five years. The volumetric sales are likely to maintain an average growth rate of 15 percent for the next five years, the analyst said. 

The cement sector of Pakistan has witnessed notable gashes in profitability during last few quarters because of lower retention prices. 

Khan said the phenomenon started in FY07 when a huge influx of new production capacities forced the manufactures to reduce cement prices in order to achieve certain capacity utilisation levels. Consequently, almost all companies of the sector went through huge bottom-line losses, he said. 

However, during the second quarter of FY08, the prices started recovering and grew 20 percent to Rs 220/bag as against Rs 185/bag in the first quarter. This price recovery is attributed to the outcome of quota arrangements between the cement manufacturers, which was also necessary to compensate the rising fuel cost, he said. 

Khan said he expected the industry wide bottom-line declines to minimize in the second quarter of FY08. The absolute impact would be visible from the third quarter onwards, he added. 

The analyst projected FY08 profitability of the cement sector to be lower by 7 percent to Rs 796 million versus the same quarter last year. 

It is pertinent to mention here that the magnitude of these declines is notably lower than that seen in the previous quarters, he said and added that during 1QFY08, the sectors profitability was 72 percent and 70 percent lower on Y-o-Y and Q-o-Q basis. 

This bottomline recovery in 2QFY08 is attributable to the higher volumetric sales (up 37%) as well as better retention levels (29% higher) on Y-o-Y basis, said Khan. 

On the cost levels, higher coal prices are expected to translate approximately into Rs 350-400/tonne increase in the cost of production. It is though lower than the increase in retention prices. 

Furthermore, financial charges of the sector are also likely to rise by 101 percent over previous year as the local cement companies have started charging this expense to their profit and loss account.

Daily Times - Leading News Resource of Pakistan


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## Neo

*What's in store? economy in 2008 ​*
KARACHI (January 25 2008): The year started in Pakistan with dark clouds on the horizon, but no silver lining visible anywhere. On the contrary, every thing points to toil, turmoil and tears, and more of the same till infinity.

This gloomy prospect is not a hypochondria's raving, but a stark reality facing not only Pakistan but much of the rest of the world. Possible exceptions may be China, India and Russia, in that order.

However, the leader (so far) of the so-called 'Free World' and champion of the 'New World Order' and 'Democracy every where', whose currency was the world's prime choice for international transactions ever since the WII - the USA - is now teetering on the brink of disaster. A lame duck administration limping on its way to the EXIT, has indulged in another of its desperate acts of fantasy, by cutting the basic interest rate, but the malaise which this was intended to cure, simply refuses to go away.

Recession is there and emerging quite briskly out of the shadows, to envelop USA economy, and consequently, much of the globe. Pakistan will be one of the most vulnerable nations on this score, even if it has a plethora of problems all its own, to start worrying about the fate of its prime benefactor.

Talking of lame ducks, we do not lag behind in this field either. Elections or not, our problems are not going to be solved in a short time, by any chance. Pakistan is a target of a multi-pronged attack from a hostile world, and there is no difference between (so-called) friends and foes, on this score. Our institutions are facing or have a potential exposure to a host of problems.

*SOME OF THESE ARE ENUMERATED BELOW: *

*A) THE ADMINISTRATION:* 

i) Budget deficits

ii) Revenue losses

iii) Indiscriminate borrowing - domestic

iv) Foreign aid (donations or loans) sources drying up, or terms becoming too stiff to be acceptable

v) Adverse balance of payments

vi) Dwindling forex reserves

vii) Risk of default on foreign loans at maturity

viii) Inflation - galloping at a ferocious rate

ix) Loss of purchasing power of Pak rupee

x) Mass discontent and violent demonstrations in streets

xi) Expanding terrorist activities

xii) Worsening law and order situation in urban areas

xiii) Loss of tourism income - immediate as well as prospective

xiv) Diversion of development funds to other purposes

xv) Growing hostility of neighbours, and border incidents, with potentialities to blow up into a full-scale war.

xvi) Necessity of devoting even greater amounts to defence, at the cost of civilian sector allocations

xvii) Compounding energy problems

xviii) Fall in production - agricultural and industrial, shrinking the taxation base

xix) Increasing unemployment, poverty incidence and population

xx) Political instability and social unrest

xxi) Brain drain, and so on.

*B)THE PRIVATE SECTOR: *

i) Bank failures

ii) Insurance companies' vulnerability

iii) Widespread insolvencies

iv) Closures of businesses and industries due to financial and energy crunch

v) Rising prices, and consequent under-nourishment and ill health of people

vi) Rise in illiteracy rate

vii) Mass migrations, and dislocations of family life.

viii) Increased divorces and splitting of settled families due to finance- based psychological problems

ix) Increased mortality rate among children and the elderly

x) Rampant unemployment due to layoffs, failing businesses and general despondency

xi) Housing shortages due to unaffordable rates of rent or cost... and so on.

To find an answer to all these problems is a Herculean task beyond a life-time, then who will take care of these and how? The question rings and rings, but nobody picks up the phone at the other end.

The sum total of all the above, reduced to monetary terms in Pak Rupees runs into a figure with astronomical connotations. Our present and future generations have to pay for it, but where are the opportunities to earn or raise that kind of money?

One final word to sceptics who may not agree with what I say. Just have a look at the esteemed daily 'FINANCIAL TIMES' issue of January 23, 2008 - the section titled 'The World in 2008' and the heading 'ALARM FLAGS LITTER THE GLOBE'.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Medium-term policies: 'lack of consistency led to uncertainty and inflation' ​*
ISLAMABAD (January 25 2008): Pakistan's economy faces serious structural constraints, which are hampering future growth prospects, and global competitiveness said Dr Rasid Amjad Chaudhary, VC, PIDE while opening a Panel Discussion on "Socio Economic Development Challenges" faced by Pakistan held at the PIDE here on Thursday.

He said that difficult economic decisions would need to be taken to ensure macro economic stability and sustained economic growth. He emphasised that we need to improve upon the management of the economy to overcome existing shortages in the energy sector and assuring access at reasonable prices of essential commodities.

Dr Wasim Shahid also highlighted numerous factors responsible for the failure of the macroeconomic reforms including institutional arrangement, accountability, transparency, autonomy etc.

He said that lack of consistency in medium-term policies led to uncertainty and inflation in Pakistan. The former director PIDE and the renowned economist Dr A R Kemal, gave a comprehensive presentation of the issues and challenges faced by the industrial sector.

He stated that Pakistan lags behind in growth because of the structural problems in the manufacturing sector which are lack of competitiveness, slow productivity growth, irrational tariff structure, poor product quality and slow development of small and medium sized enterprises (SMEs).

Former Secretary Commerce and till recently Pakistan's Ambassador to Iran Mirza Qamar Baig discussed the challenges of increasing export and suggested possible solutions to meet them. He pointed out that trade liberalisation efforts were initiated twenty years ago. However, these efforts gathered impetus in 2003. He was of the view that opening up of the domestic market or signing of the Free Trade Agreement (FTA) will not bear fruit unless it is translated into foreign investment searching for access to these markets. We must encourage partnerships.

Shahnaz Wazir Ali former advisor to prime minister said that social sector is facing the same problems as faced by the other sectors of the economy. The health and education policies are still silent on reforms and even after 60 years we are still learning. The existing policies have increased inequality and class divide.

Khalid Rehman chairman Competition Commission of Pakistan and Specialist with the PPIB and ADB talked on the challenges faced by the energy sector. He argued that all the emphasis in Mid Term Development Framework is on the supply side totally ignoring the demand management of the energy. The policies talk about energy security; however, these are unable to chalk out a clear-cut strategy to meet the growing energy demand of the country. We need foreword looking policies as adopted by countries like China and India.

Mirza Khalid, the former chairman, Securities and Exchange Commission of Pakistan (SECP), highlighted the difficulties and challenges encountered in implementing the major capital market reforms program during 2000 to 2003. He emphasised that for successful reforms; the regulator should not carry any political agenda and be above any political or vested interest.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan and Malaysia pledge to take business ties to higher level ​*
DAVOS (January 25 2008): President Pervez Musharraf and Malaysian Prime Minister Abdullah Badawi met here on Thursday on the side lines of the annual conference of World Economic Forum and pledged to take their existing trade and economic relations to higher level.

During the meeting, lasting for about half an hour, the two leaders agreed that their existing political and diplomatic ties must match their economic relationships.

They noted that the two Muslim countries enjoyed unanimity of view on various regional and international issues and could work together with the joint strategies.

Both the leaders agreed to take the process of restructuring Organisation of Islamic Conference, the world's important Muslim organisation, forward on fast track basis.

The Malaysian Prime Minister appreciated Pakistan's role in fight against terrorism. With regard to their economic ties, they stressed the need that both private and public sectors of the two countries should undertake joint ventures to increase the volume of their trade and investment.

Later, President Pervez Musharraf also had a meeting with President of Swiss confederation Pascal Couchetin. The two sides discussed wide ranging issues of common interest and agreed to enhance their co-operation in all fields of common interests especially economic and trade.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan and Canada agree to boost economic ties ​*
ISLAMABAD (January 25 2008): Pakistan and Canada have expressed resolve to further enhance their bilateral economic co-operation, a foreign ministry statement said after top diplomats from both countries met here on Thursday.

Caretaker Foreign Minister Inamul Haque discussed with visiting Canadian Deputy Foreign Minister Leonard J. Edwards bilateral relations, recent developments in Pakistan and regional issues of common interest.

Haque underscored Pakistan's commitment to building a broad-based and long-term relationship with Canada marked by growing co-operation in the political, economic, military and cultural fields as well as expanded business and people-to-people contacts.

Edwards stressed the importance Canada attached to a closer relationship with Pakistan. Both sides noted the recent increase in bilateral trade and commercial ties and agreed to further reinforce bilateral economic co-operation through the agreed institutional mechanisms.

Edwards expressed sympathies over the assassination of former prime minister Benazir Bhutto. Noting the importance of free and fair elections, the visiting minister said that Canada would be participating in the international observer mission for poll monitoring. Inam underlined Pakistan's resolve to continue on the democratic path and defeat terrorism. He stated that Pakistan would continue to work with the international partners to promote the process of stabilisation in Afghanistan.

Business Recorder [Pakistan's First Financial Daily]


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*German company to begin operations in Pakistan ​*
KARACHI (January 25 2008): The chief executive officer of DF Deutsche Forfait AG Pakistan (Pvt) Limited, Salman Mamoon Ahmad confirmed that his organisation had decided to tap the virgin Pakistani market by introducing export finance services.

These services, utilised the world over since the last century, have not been available to the market in Pakistan till now, and would be based on forfeiting that would reduce significantly the risks faced by small and medium sized exporters, particularly. This service is also expected to help enhance overall exports of Pakistan by a billion dollars in the first 3 years.

The services of DFAG will be of greater and more significant value in exports to new, emerging and difficult markets for Pakistani exports. DF Deutsche Forfait AG Pakistan (Pvt) Ltd is already registered with the SECP and should commence operations imminently.

In discussion with TDAP, as facilitators, represented by Sajjad Haider Malick, Executive Director Export Finance Services, Mamoon indicated that the offices of DF Deutsche Forfait AG Pakistan (Pvt) Ltd, as a subsidiary of DF Deutsche Forfait AG, Cologne Germany would be located in Lahore and would manage the national export finance needs.

The office, will in effect, act as a Representative Office for marketing and customer services in Pakistan for their global operations based in Cologne, Germany. Mamoon said, "We are grateful to TDAP for all the encouragement and facilitation provided in the numerous interactions by Tariq Ikram, the Chief Executive of TDAP and his team since the very first meeting held with our Vice Chairman, Shezad Rokerya, way back in early 2006 which primarily assisted and encouraged our coming to Pakistan".

TDAP has also facilitated DFAG's linkage and partnering with a strong multinational bank in Pakistan to provide the exporter customers of banks with easy access to DF Deutsche Forfait AG services. DF, as a trade finance company will, in time, develop and offer the Pakistani market an range of Export Finance products to further facilitate the country's exports under the Rapid Growth Strategy and the overall development of trade.

Ulrich Wipperman, the Chairman of DF Deutsche Forfait AG Pakistan (Pvt) Ltd, when contacted, further that he foresee a great potential for business in Pakistan with its robust and sustained economic growth over the last six years coupled with the continued national effort of creating increase in exports of merchandise and services.

Business Recorder [Pakistan's First Financial Daily]


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*ILO to support education, poverty alleviation related projects ​*
RAWALPINDI (January 25 2008): International Labour Organisation (ILO) will provide all possible help and support to industries in education, poverty alleviation, health, green jobs and provision of safe working condition to their workers, said Donglin Li, Director ILO here on Thursday.

The ILO will readily extend the required technical support for such projects, which would help provide education to people and eradicate poverty and unemployment from the society, said Donglin while addressing a one-day seminar "ARL - A Socially Responsible Company" organised by Attock Refinery Ltd (ARL) in pursuance of celebration of value-of-the-month activities.

Director ILO stressed on synergy between ILO Decent Work Agenda and the Global Compact. Today, the challenge is to find the best policies to pursue innovation and entrepreneurship, he added.

Donglin Li, congratulated ARL for becoming the member of Global Compact Pakistan Local Network. He expressed his satisfaction over the fact that ARL is a progressive and a values-conscious company.

Li appreciated the ARL's efforts in the fields of education, poverty alleviation, health, green jobs and provision of safe working condition to their workers. Earlier, in his welcome address, Adil Khattak, Chief Executive Officer of ARL briefed the participants about the objective of the activity.

"At ARL, we believe in respect for the community and preserving the environment for our future generations and keeping national interests paramount in all our actions", Khattak said. He gave a detailed account of different activities that are being executed at ARL, while celebrating its core value of "Social Responsibility", during the current month. Participants of seminar gave detailed presentations on the overall company performance in the areas of environment, community development, and worker welfare.

Business Recorder [Pakistan's First Financial Daily]


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*Advanced technologies needed to avoid food scarcity: experts ​*
ISLAMABAD (January 25 2008): Agriculture experts at a workshop here stressed the need for utilising modern technologies for the development of agriculture sector to avoid food scarcity in future.

"We have no option but to switch to modern technologies to upgrade our farming methodologies for boosting agriculture productivity and for securing better agriculture prospectus for the coming generations," the speakers observed.

The first one-day workshop on Agriculture Decision Support System (ADSS) was jointly organised by Centre for Agro-Informatics Research, National ICT R&D Fund of the Ministry of Information Technology and Foundation for Advancement of Computer and Engineering Sciences (FAST). More than 30 participants relating to agriculture and agriculture support system attended the workshop.

Speaking on the occasion Rector, FAST Dr Amir Mehmood stressed the need for devising comprehensive strategy to cater to the food requirements of future adding that adherence to modern technologies was the only way to secure the agriculture future of the country.

"Our food requirements keep on increasing but we have limited land resources to benefit from and there is no other solution but to consult advanced techniques of farming," he said In his remarks, Project Director ADSS, Dr Ahsan Abdullah briefed the participants about aims and objectives of ADSS saying that the database would help the analysts, policy makers and at the bottom-level to the farmers to control attack of pests on various crops.

Chief Executive Officer National ICT and R&D Fund, Dr Qasim Sheikh described the formation of ADSS as very positive and encouraging, however, underline the importance for developing a mechanism for the collection of correct and reliable data.

Dr Manzoor Soomro of Pakistan Agriculture The ADSS-OLAP provides an interactive way of viewing agriculture data from different points of views with graphs and charts, facilitating the analysts to have correct information about pests crossing the Economic Threshold Level (ETL). Later certificates were distributed among the participants of the workshop.

Business Recorder [Pakistan's First Financial Daily]


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*Current account deficit swells to 31 percent to over $6 billion ​* 
KARACHI (January 26 2008): Pakistan's current account deficit has jumped up by 31 percent to over $6 billion during the first half of current fiscal year, mainly due to rising trade services and income deficit, besides huge payments of interest on account of Euro Bond and loans.

Economists said that trade, services and income deficits were increasing at a fast pace, contributing to the widening of current account deficit. "Despite the several step taken by the government for the promotion of exports, the country has failed to boost exports, while increase in imports is also having negative impact on the current account deficit", they said.

Officials statistics showed on Wednesday that the current account deficit has crossed $6 billion mark during the July-December period of current fiscal year 2008. The country has faced $6.138 billion current account deficit as against $4.679 billion during the same period of last fiscal year, depicting an increased of $1.459 billion.

Statistics show that for the last two months it once again shot up and increased by some $2.16 billion in November-December 2007. Payments of interest and dividends contributed major role, which rose by 69 percent, to $1.09 billion as compared to $645 million during corresponding period of last fiscal year.

"This is the third consecutive year that the country has been missing its exports target, while imports are continuously in upward move. Therefore, the current account deficit is on the rise and is expected to reach $11 billion by the end of the fiscal year", economists said.

Trade deficit has increased by $1 billion to $6.396 billion, services deficit was up by $723 million to 2.531 billion dollars, and income deficit widened by $830 million to 3.281 billion dollars. The overall deficit of income, trade and services has been calculated to $11.581 billion as against the current transfers of 5.531billion dollars.

Economists said that Pakistan has issued Eurobond in the international market and during December the interest payments of these bonds has been also made. The country's altogether income from abroad stood at $881 million as compared to payments of $2.812 billion during July-December. In addition, services sector imports reached at 4.67 billion dollar against the exports of 1.39 billion dollars.

Business Recorder [Pakistan's First Financial Daily]


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*Foreign investors ready to invest in Pakistan: Taseer ​* 
LAHORE (January 26 2008): Federal Minister for Industries, Production and Special Initiatives, Salman Taseer has said foreign investors are hungry for investing in banking, real estate, telecom and the country's steel industry. Taseer's comment came on Friday at a workshop on "challenges and way forward in the steel sector of Pakistan" organised by the Engineering Development Board.

"Pakistan's steel industry is a promising one and there is a huge gap in demand and supply, thus foreign investors can exploit the existing potential of this sector," Taseer said. He also said the foreign investors would be ready to invest in expanding the Pakistan Steel Mills to enhance its production capacity. "India has an edge over Pakistan in the steel industry because of good governance while its bank in abroad direct the flow of investment into India by guiding investors," Taseer added.

His Secretary, Shahab Khawaja, said, "Unfortunately, we have ignored the steel sector and could set up the Pakistan Steel Mills whose production capacity has not been enhanced. Presently, China and India are buying steel on a large scale pushing its prices high internationally. The situation will not be improved unless we develop local resources."

Pakistan Steel Mills Chairman Muhammad Javed then told the audience that workshop would stress the need for developing local resources so that dependence on imported raw material could be minimised. He said iron ore and coal should be explored in the country so that raw material could be provided to the steel industry from the local resources.

"Presently, we are buying coal from Australia and Canada and iron ore from India and China. However, Pakistan steel will sign an agreement with the Sandac project on January 29 to buy 50,000 to 60,000 tonnes of iron ore," he said.

Javed said the purchase of 15,000 tonnes of iron ore from Chagi had also started on experimental basis, which could be enhanced up to 150,000 tonnes. "We are getting coal from Loralai in Balochistan and quantity is likely to cross 50,000 tonnes by the end of this June and will be increased up to 100,000 tonnes gradually. Coal is also being procured from Dera Ghazi Khan on experimental basis. The Pakistan Steel has initiated a step toward procuring local raw material for its steel production which is a good step in right direction," he added.

He urged the business community to engage the Geological Survey of Pakistan for conduct of a survey to identify coal and iron ore deposits in the country. " Pakistan Steel Mills is a commercial entity and produces to earn like any private enterprise.

Consumers take up to 95 percent of the billets production and traders and dealers 5 percent. We can not police or inspect the use of billets provided to the consumers, however, any specific complaint of the zonal authority will be redressed on priority basis," he said.

Engineering Development Board Chief Executive Officer Almas Hyder said earlier his board's role was limited to the steel and auto industry but now the government was helping his board to enhance its role to the energy and telecommunication sectors to tackle the energy crisis.

"The EDB will appoint foreign consultants for identification of iron ore and coal sites in Pakistan, the volume of investment needed for their exploration and future prospectus," he added. About the workshop's aims and objectives, Hyder said groups formed to discuss in detail various issues confronting the steel sector would compile their recommendations.

Business Recorder [Pakistan's First Financial Daily]


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*World Bank to conduct Pakistan's economy review on February 3-8 ​* 
ISLAMABAD (January 26 2008): The World Bank (WB) will review Pakistan's economy, particularly the taxation reforms vis-à-vis recent economic developments. Sources told Business Recorder on Friday that Emesto May, Sector Director, Poverty Reduction and Economic Management, Finance and Private Sector Development, South Asia Region, will visit Pakistan from February 3 to 8 on operational trip.

He will hold meetings with relevant government officials for an update on recent economic developments. Satu Kahkonen, Lead Economist, is also on her visit to Pakistan. During her visit, she will discuss the recent macro-economic developments and get an update on PRSP 2 and PRSP 3. She will also join May in the February 3-8 meetings.

One important meeting of WB experts would be held with FBR Chairman Abdullah Yusaf on the issues of tax policy and on-going revamping of the tax machinery.

The top WB economist would also meet Khalid Mirza, Chairman of Competition Commission of Pakistan, to have an update on organisational strengthening of the Commission.

It is important to mention that the WB in its recent report 'Global Economic Prospects 2008' has highlighted that Pakistan would miss its annual GDP growth target of 7.2 percent as the growth would be around 6.5 percent by the end of 2007-08. The WB experts would start meeting with Finance Secretary Dr Waqar Masood Khan. The agenda of the meeting would be recent macroeconomic developments, and update on PRSP 3 and PRSP 2.

They would also meet Sakib Shirani, ABN Amro Bank Chief Economist and Oracle Corporation Regional Manager Samina Rizwan to discuss recent macroeconomic indicators. The WB officials' meeting with State Bank of Pakistan (SBP) Governor Dr Shamshad Akhtar and Zubair Soomro of Citibank Karachi would also focus on recent macroeconomic developments.

On the same topic, they would also meet Dr Haris Gazdar, Director Collective for Social Science Research; Shahid Kardar, Systems (Pvt) Ltd; Dr Akmal Hussain, Managing Director of Sayyed Engineers Pvt Ltd; Dr Anjum Naseem Lahore University of Management Sciences (LUMS) and Dr Ali Cheema, Lahore University of Management Sciences (LUMS).

The recent macroeconomic developments would also be discussed with Dr Salman Shah, Minister for Finance, Dr Waqar Masood Khan, Secretary Finance and Dr Akram Sheikh, Deputy Chairman of Planning Commission. A meeting with Dr Ishrat Hussain, Chairman of National Commission for Government Reforms is also on the cards to discuss reforms in different departments, sources added.

Business Recorder [Pakistan's First Financial Daily]


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*Musharraf for more access to European markets ​* 
DAVOS (January 26 2008): President Pervez Musharraf on Friday said Pakistan is here to stay and stay as a vibrant state on the world spectrum and Europe should help it make strong economic front by giving it more access to its markets. He was speaking to a gathering at a breakfast meeting arranged by Ikram Majeed Sehgal, a well-known Pakistani journalist here.

Musharraf said Pakistan was facing multidimensional challenges in the aftermath of the Afghan war. The US and Europe, instead of leaving it alone, should help it stand tall to fight off terrorism and extremism. He briefed the gathering on Pakistan's economy and recounted achievements during the last 7 years.

He told the participants that way back in 1999 Pakistan was considered a failed and technically defaulted state and when he assumed power, he and former Prime Minister Shaukat Aziz, who was also present among the participants, went on for a three-pronged strategy based on deregulation, privatisation and liberalisation.

He said Shaukat Aziz evolved workable economic policies to turn Pakistan's economy around for upsurge. He said all economic indicators were showing healthy trend to help the country maintain 6.5 percent to 7 percent growth rate.

He invited investors to see for themselves the pace of economic growth and invest in Pakistan for better return. He added that 700 foreign companies were making huge profits in the country, indicating the people's purchasing power has considerably increased.

The President was confident that the new elected government, to be installed after February 18 elections, would maintain the economic upsurge and provide people better facilities for progress and prosperity. Musharraf assured the participants that the elections would be totally free, fair and as per every international standard.

Dismissing the nuclear safety concerns of the world, Musharraf apprised the participants about nuclear safety mechanism. He said a well-defined military system was in place to ensure complete safety and security of the nuclear assets.

He rejected the accusation of intelligence agencies or his involvement in Benazir Bhutto's killing and said it was a sad and disturbing development, which led to a political crisis-like situation in Pakistan. He said investigations were under way to catch the real culprits. He said the government was getting closer to the network, which was indulged in suicide bombings and other such nefarious activities to destabilise Pakistan.

Business Recorder [Pakistan's First Financial Daily]


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*Export finance facility: Standard Chartered signs MoU with German firm ​*
KARACHI (January 26 2008): The Standard Chartered Bank (Pakistan) and DF Deutsche Forfait AG signed a Memorandum of Understanding (MoU) to launch a first of its kind export finance facility in Pakistan. The signing ceremony was held at the Governor House here on Friday night in the presence of the Caretaker Prime Minister Mohammadmian Soomro.

The MoU was inked by the Chief Executive of Standard Chartered Bank, Pakistan, Badar Kazmi, and Chairman of Deutsche Forfait, Ulrich Wippermann. Governor Sindh, Dr Ishrat ul Ibad Khan, Caretaker Chief Minister, former justice Abdul Qadir Halepota, were also present on the occasion.

Speaking on the occasion, the Prime Minister said, "we are here doing things that are going to make investment here systematically easy." He also spoke of the tremendous opportunities that exist here and assured that the government and the institutions would extend every possible support.

Soomro also expressed pleasure on the confidence shown in Pakistan by the standard Chartered and the Deutsche Forfait. He also hoped that they would find more avenues of investment here.

The MoU is a first of its kind export finance facility in Pakistan. They key feature of this product is to facilitate documentary export collection with a pre-payment arrangement. This will translate into the primary benefits of reducing the exporter's credit risk thus eliminating bad debts and improving cash flows; providing exporters with greatly improved opportunities to explore and penetrate new markets; significantly enhancing export volumes which directly underscores the government mandate of driving the economy via robust export.

Business Recorder [Pakistan's First Financial Daily]


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*Lack of bank financing hampers Balochistan marble and onyx industry ​* 
KARACHI (January 26 2008): Non-availability of financing from banks to the marble industry is retarding the development of this industry despite estimated deposits of 2.5 billion tons marble and onyx worth approximately $60 billion in Balochistan.

The biggest province of the country (in area), Balochistan, which spreads over 347,220 sq km--43 percent of total area of Pakistan--is yet to come on the world map as a marble paradise.

According to figures available, 90 percent of the dimensional stones exported by Pakistan originate from Balochistan. Since mines are leased to the miners and are not their property, banks are reluctant to provide financing to miners and small industrialists who do not have enough resources to purchase modern hi-tech machines for better mining due to non-availability of funds. In the absence of modern mining technology and machines, miners are still using primitive method of mining with the result that approximately 70 percent of this precious wealth is wasted in using blasting methods of mining.

Sources said that out of 28 districts of Balochistan, 13 are rich in a very valuable kind of marble called onyx. Despite the fact that total worth of marble and onyx deposits in Balochistan is approximately $60 billion, which is double the figure of total foreign debt of Pakistan, no serious efforts have been made to capitalise on this treasure that can turn around the destiny of Pakistan.

The first serious effort to creep the benefits of these huge deposits were made in May 2004 during the International Conference on Investment Opportunities in Balochistan (ICICB) when Governor of Balochistan announced marble city Gaddani (MCG) project whose foundation-stone was later laid by the Chief Minister in August 2004 and the project was inaugurated by the President of Pakistan, Pervez Musharraf, on May 22, 2006.

The project, located at a distance of 23 km from Site, Karachi on the main RCD Highway, has an area of 600 acres under the Lasbela Industrial Estates Development Authority (Lieda). In Phase-I of the project, 251 acres is being used for constructing factories; in Phase-II 400 acres would be used for constructing more factories. The Government of Balochistan is also allotting an additional area of 500 acres for further expansion of the project.

The cost of the project for initial 200 acres, as announced, was Rs 148 million, out of the total cost of Rs 50 million, given by the Government of Balochistan and Rs 98 million invested by Lieda as self-investment. While inaugurating this project, President Pervez Musharraf had announced Rs 300 million for the development of marble industry in the 'marble city' project, but its implementation is yet to be seen.

To provide fully efficient infrastructure in the project, it was planned to build roads, provide enough water supply to meet the requirements, uninterrupted power supply, effective sewerage network, gas supply, all kinds of telecommunication facilities, active fire fighting system, banking facilities including opening branches of local and foreign banks, modern medical facilities, and post office facilities. Water supply, which is essentially used during the process of cutting and shaping marble, is also available according to the needs.

Former Chief Minister of Balochistan had announced 25 percent subsidy on electricity charges to the factories in the 'marble city' project but it has not been implemented till date. Sources said that subsidy would have been quite helpful in attracting a large number of industrialists to set up processing factories. Several investors, who booked industrial plots in this project, did not turn up to establish their factories despite availability of basic infrastructure and low prices of plots, as compared to Karachi.

Keeping in view the fact that 90 percent of marble is exported from Balochistan, the 'marble city' is an ideally located project which is easy to reach, and miners could bring raw marble for processing easily. Since the investors always look for the best available incentives and returns on their investment, the government should fulfil its promise of providing 25 percent subsidy on electricity charges so that investors, who had booked plots, could start their operations, sources aid.

Currently, there are 18 operational marble processing factories in the 'marble city' project, while about 70 are under construction. The negative portrayal Balochistan regarding law and order situation, in both local and foreign media, keeps the investors away from investing in marble industry in Balochistan. The government also could not get the project the required projection as was done in the case of other industrial projects in Sindh and Punjab.

Sources urged the authorities to devise some kind of strategy to resolve the issues confronting speedy development of marble industry in Balochistan, which has the potential of giving a big boost to economic development.

Business Recorder [Pakistan's First Financial Daily]


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*Gas, condensate discovered in Hyderabad ​* 
KARACHI (January 26 2008): The Oil and Gas Development Company Limited (OGDC) has discovered gas and condensate in its exploratory Passkhi East Well, located in Hyderabad district. The new discovery will supply an additional 10.7 million cubic feet gas per day, official sources said here on Friday.

The structure of Pasakhi East Well No 1, a joint venture between OGDC and GHPL, with OGDC as partner, was delineated in Tando Allah Yar E L license area, drilled and tested by OGDC in-house expertise. The well was drilled to the depth of 3407 metres, targeting to test the potential of sands of lower Goru Formation of Cretaceous Age.

Based on log data, 2 zones were selected for testing. Production testing of Zone-1 of Lower Goru Sand member started on January 21 this year, which proved productive.

Business Recorder [Pakistan's First Financial Daily]


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*Signing of IPI gas sales purchase agreement in few days *​
ISLAMABAD (January 26 2008): A senior official of the ministry of petroleum has brushed aside speculation about delay by Pakistan and Iran in signing a gas sales purchase agreement (GSPA) on Iran-Pakistan-India gas pipeline project. "The agreement can be signed any time during next few days," the official said while talking to APP.

He said that the Iranian state-run gas company was currently busy in restoring supply of gas suspended owing to heavy snowfall in that country. "Therefore, the company could not arrange a meeting of its board for the approval of the gas sales purchase agreement", he added.

He said that Iranian gas company was still busy in managing the gas supply and hoped the two countries would be able to sign the agreement after improvement in the situation. Responding to a question, he dispelled the impression that there was a delay following Indian refusal to join the project. "If India decides to join the project, even in that case, separate agreements will be made," he added.

The official said that three bilateral agreements would be signed on the project. One would be between Pakistan and Iran on GSPA, second between Iran and India on GSPA and the third between Pakistan and India on transit fee. "Both Pakistan and Iran are ready to include India in the project," he added.

The IPI gas pipeline project is being developed to bring gas from the Iranian South Pars gas field through land route to Pakistan and India. A term sheet was signed between Iran and Pakistan in 2005 for supply of two billion cubic feet per day of natural gas for a period of 30 years.

An agreement on gas pricing formula had already been reached in January last year. Iran has already expressed its desire to finalise the multibillion-dollar gas pipeline deal with Pakistan without participation of India.

Business Recorder [Pakistan's First Financial Daily]


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* Musharraf invites foreign investors ​* 
Saturday, January 26, 2008

DAVOS: President Pervez Musharraf on Friday invited foreign companies to invest in Pakistan and benefit from the countrys liberal investment policies.

In an address to a gathering of local businessmen organised by Chairman Pathfinder Group Ikram Sehgal, President Musharraf assured the business community of investment-friendly environment in Pakistan, offering an attractive profit rate.

Musharraf rejected the impression that recent untoward incidents in Pakistan had affected its economy. He dismissed the western propaganda about insecurity for foreigners in Pakistan and said outlanders were never affected in the terrorist activities.

The President mentioned 700 foreign investment companies currently working in Pakistan and said there was no threat to their safety. President Musharraf defended his country as a moderate state with overwhelming majority of peace-loving people who always greeted the foreigners warmly.

He pointed out the areas of investment where foreigners could get good business rewards. Referring to the power shortfall in recent months, he said Pakistan needed support from foreign investors particularly in energy sector. He said his government undertook seven projects that could be executed with the support of foreign companies on equity basis.

The businessmen appreciated President Musharrafs initiatives for coping with challenges in tribal areas and assured to stand by his mission of sustainable economic growth. They also commended Pakistan for impressive economic progress, decline in unemployment rate, poverty reduction, its improved ranking in human development index and also for becoming a more outward-oriented economy.

The business community recognized that the economic fundamentals had improved in Pakistan but also pointed some challenges posed by persistent structural weaknesses and political uncertainty.

President Musharraf during his stay in Davos held various meetings with top businessmen representing multinational companies in various fields and discussed with them the areas of bilateral cooperation. 

Musharraf invites foreign investors


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*Foreign investors interested in steel sector: Taseer​*
LAHORE: Federal Minister for Industries, Production and Special Initiatives Salmaan Taseer said here Friday that a number of foreign investors are interested to invest in steel sector in Pakistan. 

Presiding over a workshop Challenges and Way Forward In Steel Sector of Pakistan organised by Engineer Development Board (EDB), the minister said steel is the fastest growing industry in Pakistan with a lot of potential for the foreign investment.

The foreign funds especially the investors of the Middle East are very much interested in making investments in Pakistan and steel is one of the major areas for their investment, he added. 

There is a flood of money around the world especially in the Gulf States and we have to make efforts to attract this investment, Taseer said adding that Indian industrialists have not put the entire local money there and it was the foreign direct investment that had led to industrial boom in that country.

He said that the government is playing the role to help industrial sector work efficiently. It is governments job to provide enabling environment with an objective to accelerate the economic activity in the country, he said.

Taseer urged the steel sector to attract foreign investment from different parts of the world by adopting the much-required concepts of good governance in their businesses.

Meshing of academia and the shop floor (industry) are much needed to ensure the utilisation of the research and development work going on in the universities and the research institutions.

Taseer said the response of the government and bureaucracy is always positive and quick. The government has always showed an encouraging response to the investors and businessmen, said the minister. Nauman Wazir, Chief Executive of Frontier Foundry said the energy is the most important element in running the industry and the government should make such arrangements for undisturbed power and gas supply to the steel industry. 

Federal Secretary for Industries, Production and Special Initiatives Shahab Khawaja said that government had set up various companies like Technology Upgradation and Skill Development Company (TUSDEC) under the principle of Public-Private Partnership to give a fillip to industrialisation process in the country.

Pakistan Steel Mills (PSM) Chairman Major General (R) Muhammad Javed said that the PSM is working efficiently like any commercial entity. We are much alive to our role of stabiliser in the market, he said. He urged the industrialists to communicate him about any complaint regarding the steel distribution system.

Daily Times - Leading News Resource of Pakistan


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*IFIs held responsible for economic decline​*
ISLAMABAD, Jan 25: Pakistans economy could have developed faster and would have made substantial gains had governments not invited world bodies to intervene in its development planning.

This was Dr Noor Fatimas assessment in her lecture on International economic agencies and Pakistan economic development.

Speaking at the Pakistan Social Forums fortnightly meeting at TVO on Friday, she described the factors that led to intrusion of IMF and World Bank in economic governance of Pakistan.

Tracing the economic history of the country from 1947 when Pakistan had no sources of revenue she said Pakistan had to find external donors to meet the basic needs but with the passage of time the aid factor magnified due to political expediency of the various governments. Later the developed countries led by the US introduced various plans and philosophies like the Washington Consensus, Neo-Liberalism and Millennium Development Goals (MDGs) transforming the International Financial Institutions into agents of Free Market Economy.

She said that Neo-Liberalism had emerged as a powerful modern ideology over the last two decades.

The economic, political and sociological debates are devoting increasing attention to its ideological foundation, theoretical basis, and practical orientation as a worldwide phenomenon affecting almost all nations including Pakistan, she said.

Not only that, she said, these purely economic aims were buttressed by ideologies like end of history, clash of civilizations and Neo-liberalism to subjugate the economies of the South. Relying on foreign aid for economic development was basically a shortsighted policy bringing what could be termed prosperity without any foundation.

Dr Fatima criticised the role of the comprador bourgeoisie who did not allow the capital goods industry to develop as they were profiteering from imports from developed countries.

She said most of the macro-economic indicators were performing well the IMF entered the arena. It was IMF which created the bogey of economic failure and rapid change of the government made it easy for the economic pundits of the then governments to ask for more loans.

It was then on when the major macro-economic indicators in the 1990s  GDP, inflation, balance of payments  started showing downward trends.

She was of the view that Pakistans economic development could have proceeded well if more attention had been paid to development of capital industries and recourse to consumerism had not been taken.

IFIs held responsible for economic decline -DAWN - Top Stories; January 26, 2008


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*SPI-based inflation up 12.33 percent ​* 
ISLAMABAD (January 27 2008): The weekly inflation, measured through Sensitive Price Indicator, surged by 12.33 percent on week ending January 24 against the same period last year, said Federal Bureau of Statistic (FBS). The SPI released by the FBS on Saturday showed that the increase in the prices of 20 essential commodities was major reason of surge in SPI.

According to the FBS, weekly inflation based on SPI was 14.92 and 14.60 percent, respectively, for Rs 3,000 and Rs 3,000-Rs 5,000 income groups. The volatility in prices of essential commodities coupled with the shortage of one after another commodity has been making harder the life of salaried class and low income group.

As inflation based on SPI was 13.42 percent for households in the income bracket Rs 5,001 to 12,000 and 10.44 percent for above Rs 12 000 on January 24, though on weekly basis the SPI declined by 2.04 percent. The combined SPI after 2.04 percent decline was recorded 165.80 percent on January 24 from 169.26 percent on January 17.

The SPI bulletin, based on data of 53 items collected from 17 urban centers showed that prices of 20 essential commodities increased, 13 declined whereas prices of 20 commodities remained stable.

As compared to last week, the prices of 20 commodities, including vegetable, cooking oil, milk, fruits, and gas witnessed the increase. As the increase of 14.03 percent was noted in the price of tomatoes, 6.57 percent in gas up to 3.3719 mmbtu, 2.88 percent in mustard oil, 2.87 percent increase in the price of 2.5 liter cooking oil tin, 2.58 percent surge in the cost of 2.5 liter vegetable ghee, 2.37 percent in washing soap nylon, 2.15 percent in masoor pulse washed, 1.48 percent in vegetable ghee loose per kg, 1.30 percent in tea (prepared) and 1.20 percent in rice Irri.

Similarly, the price of rice basmati broken increased by 0.75 percent, moong pulse washed 0.93 percent bananas 0.69 percent, gram pulse washed 0.61 percent and milk fresh 0.20 percent per liter.

Shockingly, the prices of 28 commodities have gone up by double digits over the same period last year. These included tomatoes, mustard oil, cooking oil, vegetable ghee, masoor pulse (washed), vegetable ghee (loose), tea (prepared), rice Irri, rice basmati (broken), cooked dal (plate), milk, red chillies, wheat flour, LPG, wheat average quality, chicken, firewood, bread plain (mid-size), milk powdered, etc.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*20 small dams to be built in Karak ​*
KARAK (January 27 2008): The federal and provincial governments have started pondering on construction of 20 dams in the Karak district and Rs 13 billion has been earmarked for the construction of five dams. The funds have been earmarked for small dams at Ghol, Karak, Lwagar, Payal and Mardankhel.

The construction work has been started on Lwagar and Karak dams by the provincial government. Moreover, the former provincial government has completed the survey and prepared the estimated cost for small dams at Payal, Mardankhel and Ghol.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Time for an economic U-turn​*
By S.M. Naseem

WHILE the political failure of the Musharraf regime is now being accepted widely in the country, the claim for its survival and perpetuation is being staked on its dubious economic achievements during the past eight years.

Ironically, while the political U-turn that Musharraf took seven years ago, may be difficult to reverse, the time for an economic U-turn the country has avoided for so long may now have come.

My esteemed friend and former colleague, Professor Aly Ercelan, who has made an admirable transition from the academia to social activism, not unlike that of his more renowned Vanderbilt contemporary, Nobel laureate Yunus, without giving up his forte of rigorous analysis, has forcefully exposed (Dawn, Jan 19.) the thin veneer of success that has been achieved in recent years (as epitomised by the ice-cream-pizza-hamburger consumerism, the bank-credit financed automobile explosion and the LBOD-Chashma-Tarbela-Gwadar mega project development strategy) and its impact on the poor.

The atta crisis is just the tip of the iceberg which has resulted in our titanic economic failures. As the economic shipwreck hovers on the horizon, the embattled crew is busy arranging the deckchairs to assure the passengers that it is nothing but a passing turbulence in the sea. What is really surprising is that the regime and its supporters not only continue to be in denial about the looming disaster, but that the president has made it a prerequisite for future governments to adhere to the continuity of policies that have been its genesis.

The general (retd)-president has embarked on an eight-day largely self-imposed, politically-motivated European tour, including Davos and London, to underline his key role as the guarantor of the flawed western agenda of globalisation in Pakistan. He would try to convince the Davos crowd that, without him, Pakistan will not only become a political, but also an economic disaster. A major aim of the trip is stated to be image-building and there are no prizes for guessing whose image is at risk.

With the Bush administration already having given him the assurance that his services will continue to be needed in the war on terror, he hopes to somehow extricate himself from the external and political pressures mounting on him to give up the reins of government to ensure credible elections. Whether this gratuitous foreign tour in the midst of a critical period of extreme uncertainty and insecurity in the country, is based on false bravado or complacency, the future alone will tell.

Although Pakistans economic development since the Ayub years had been based on elitist and inegalitarian foundations, there was some moderation in them during the democratic interregnum of 1972-77 and 1988-99, forced by the need to adopt populist policies in an electoral democracy. That desirable course was reversed and pushed back by the now-retired Gen Musharraf towards the Ayub era of the 1960s, which for all its faults had at least a modicum of economic rationale behind its development strategy, and failed largely because of its inability to get a majority of the population living a thousand miles away from the centre, into the loop of a virtuous circle of growth.

The Musharraf years have been bereft of any economic vision, other than the regimes focus on reviving the economy through the largesse received from the US and other western countries in lieu of services rendered during the war on terror and the distribution of the benefits of the windfall among the regimes political allies. The underlying socio-economic philosophy of the Musharraf-Shaukat Aziz era was callous towards the poor and obliging towards the privileged.

A fundamental tenet of this tunnel vision has been the almost total withdrawal of the state from its economic and social responsibility, including the provisioning of essential commodities and utilities, as succinctly pointed out by Ercelan. However, the distinctly militarist character of the regime so conspicuous in its political agenda has been equally transparent in its economic programmes.

While profitable public enterprises, such as Pakistan Steel Mills and Pakistan Telecommunications Corporation have been cheaply privatised after being run down by the meddling of the government in their functioning, the military-run commercial enterprises were continually strengthened and kept out of the pale of privatisation.

Luxurious housing complexes, including farm houses and shopping malls, have been developed around major metropolises by the defence housing authority through the acquisition of land from small farmers and transfer of the acquired land at below market prices to military personnel. The military also gave a shot in the arm to feudalism by evicting farmers on its land.

On the other hand, no serious attempt was made to provide affordable housing to the poorer sections of the population, the cost of which along with that of transport, constitutes an increasingly high proportion of their budgets, making it impossible for them to cope with the rising prices of food and fuel.

While the poor stand in long queues outside under-stocked and poorly-managed utility stores (which fail to cater to those who cant afford to buy 20kg bags), the well-heeled and privileged buy their provisions from defence canteens and department stores, providing fuel to the fire of disgust, anger and violence.

Along with the military, the foreign aid and loan dispensing agencies have encouraged the privatisation of social services, especially education and health. Poverty alleviation programmes, allegedly home-grown, were meant mainly as a sop to insistent donors and were bureaucratically-run, with minimal impact on poverty reduction.

A major problem with the assessment of the economic performance of the Musharraf years has been the credibility of the data used for measuring economic growth and poverty alleviation. Despite repeated calls by economic experts for creating an autonomous statistical commission to ensure the quality and reliability of economic data, the government has continued to doctor the data to suit its political ends.

The tall claim of economic resurgence, made on the basis of high foreign exchange reserves and high GDP growth rates is now under serious doubt, as the macro-economic situation (on which the recent quarterly report of the State Bank has raised alarm bells and that poverty reduction and social indicators and the shortfalls in MDG targets indicate) has been rapidly deteriorating in the past few years.

If US foreign aid and foreign direct investment, which have provided artificial respiration to the economy, also react adversely to the worsening perception about the Musharraf regime, worse could follow.

Before it becomes too late, the doctrine of continuity of economic policies should be buried, along with kindred doctrines of necessity, indispensability and unity of command, which were forced down gullible brains in the last eight years or more. The time for taking roads not treaded for fear of upsetting the status quo has come.

The writer is the author of The Unravelling of the 9/11 U-Turn.

DAWN - Editorial; January 27, 2008


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## Neo

*17 trading complexes to be set up in Karachi​*
KARACHI: The City District Government, Karachi (CDGK) has decided to establish 17 trading complexes in the city to promote business activities and attract investment. For this purpose, CDGK has already allocated sector wise land.

This was stated by Executive District Officer (EDO), CDGK Enterprise and Investment Promotion (EIP) Dr Shahab Imam in a meeting with members of Chamber of Commerce and Industry, Karachi (KCCI). 

He said keeping in view the future needs of the city, the CDGK has prepared a Master Plan 2020, under which infrastructure of the city would be improved and better facilities would be provided for increased industrial and trading activities. These steps would generate more economic activities in the city and attract local and foreign investment, he said adding that the city government is making all economic policies in consultation with the business community. It was an outstanding demand of the business community to improve citys infrastructure and the city government is fulfilling that requirement, he added. 

KCCI President Shamim Ahmed Shamsi said on the occasion that Karachi is the revenue engine of the country, but it has not been given its due importance. The traders and industrialists of the city have always played an active role in development of the city, but this mega city has been deprived of basic facilities for many years, he added. 

The KCCI chief said that he wish the 2015 Asian Olympics should be held in the city, where as efforts should be made to host 2040 World Olympics in Karachi. 

He informed Dr Imam that in continuation of its tradition the KCCI holds My Karachi exhibition to attract investors. The main objective of holding this event is to portray Karachis soft image in front of the world, he added. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*PMs visit to China: Pakistan-China relations to be further strengthened​*
ISLAMABAD: Pakistan and China are set to ink three important agreements for promotion of investment, trade, road and rail links during the forth coming visit of the caretaker Prime Minister to China expected in current week, official sources told Daily Times on Saturday. 

First agreement relates to laying railway line from Gwadar port oil city to China. Other is to double Karakuram Highway for enhancing land link of Gwadar Port with China to attract the Chinese investment in Gwadar oil city by providing better communication link.

Third and most important is Chinese lending programme based on soft loans for mega projects being carried out by Chinese companies in Pakistan. Sources said that the laying of railway line track is a part of trade, energy, transport and industrial corridor programme between two countries. Sources said that the corridor would require a set of important measures to make this initiative a success. The laying of railway line track and double Karakuram highway is one of those important measures required. 

They also said that many companies are working in the areas of energy, water and power sectors and therefore China wants to provide soft loan for all the mega projects in these sectors. Sources also said that by double road of Karakuram Highway and laying railway line track between the two countries would help China to open doors for the access to central Asian states through Gwadar port. 

Sources further informed during the forthcoming visit of caretaker prime minister Mohammedmian Soomro to China, two sides may also move ahead on signing agreements on Chinese investment in Gwadar Oil City, incentives for setting up of special economic Zones(SEZ) and Gawader seaport development programme.

Two sides also may sign Memorandum of Understanding (MOU) on cooperation in energy sector and Chinese petroleum ministry had earlier indicated shifting of energy related industry and it access capacity to the port. Chinese ministry has estimated that this zone can attract Chinese investment of around $ 13 billion.

Balochistan government has been asked to identify state land for development of projects at Gwadar out of which 50 square kilometers land would be allocated to Chinese developers for setting up SEZ. China-Saudi Oil refinery would be set up in proposed oil city at Gwadar.

Daily Times - Leading News Resource of Pakistan


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## Neo

*700 villages to be electrified in Balochistan​*
* NHA develops toll culture
* Illegal medical colleges students to be accommodated
* Progress of Utility Stores reviewed

ISLAMABAD: The Senate Functional Committee on Government Assurances has constituted a four member Sub-Committee to ensure the supply of electricity to 700 villages and the construction of three grid stations in Balochistan under the Kuwait Fund.

The sub-committee, headed by Senator Syed Dilawar Abbas, has been constituted with a directive to hold a meeting with the Balochistan chief minister for identifying 700 villages where electricity would be supplied. The committee considered the assurances given by the federal ministers on the floor of the house relating to ministries of communications, water and power, health, women development, religious affairs and industries, production and special initiatives, and underlined the need for timely implementation of the assurances.

NHA toll culture: Regarding the assurance to review the suitability of the toll plaza on DI Khan-Zhob Road and completion of the bridges on the road, it was informed that the road up to Mughal Kot has already been completed and that the work on the remaining project was currently underway.

Considering the assurance given by the then communications minister, regarding the completion of Dargai-Charsada and Tamergarra-Akargram section in response to a question asked by the Senator Sahibzada Khalid Jan, the committee was informed that N-45 originated from Nowshehra and culminated at Chitral and that its possession was transferred to the National Highway Authority because the Frontier Highway Authority could not manage it.

The committee was told that the NHA was trying its best to overcome the challenges and the entire project was likely to be completed by June 30.

To ensure timely completion of the project, the committee decided to authorise the sub-committee, constituted earlier, to review the progress of the project in March and June this year and submit the report to the committee.

It was further told that Rs 13 Million were collected from the said toll plaza during July 2006 to December 2007, which reflected that NHA had been able to develop toll culture in the country.

Illegal medical colleges: While considering the assurance regarding steps taken by the Government to save the future of students studying in illegal medical colleges, it was told that such students took up the case with the apex court and the court, taking a lenient view, directed that these students should be accommodated in the regular medical colleges.

The committee members appreciated the courts decision and directed the Pakistan Medical and Dental Council not to compromise on the standard of education. It directed the ministry to come out with a proper legislation in this regard.

Regarding the completion of Rawalpindi Women and Chest Diseases Hospital, the committee directed the authorities to ensure completion of the project within the shortest possible time. While considering the assurance regarding framing of law for restriction on dowry and marriage gifts in response to the bill moved by Senator Muhammad Anwer Bhinder, the committee regretted the delay and directed the Religious Affairs Ministry to send the bill to the cabinet division within 10 days and the cabinet division should refer the same to the PM Secretariat for inclusion in the agenda of the cabinet at an early date.

Utility stores reviewed: The committee, in its meeting, also reviewed the progress regarding opening of mobile utility stores under the Pakistan Rozgar Scheme. It noted with satisfaction that Utility Stores Corporation (USC), which had accumulated losses up to Rs 1.7 billion seven years ago, had incurred Rs 400 million profit during the last financial year. It was told that the network of Utility Stores was being expanded and that at least one Utility Store would be open in all union councils.

It was informed that 4,500 stores have so far been established and 1,500 will be opened within the next two months. 

Daily Times - Leading News Resource of Pakistan


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## Neo

* feeble voice at Davos​*
Quoting economic numbers or sweet talk at a global investor forum will not help. Pakistan needs to recast its image before it succeeds in attracting new investment or sustaining the investment already being made by the overseas companies.

The image of the country projected abroad over the last one year was not enviable. It was projected to be a country at war with itself, a nation whose judiciary was struggling for justice, and defence personnel hankering for security; a country where civil society was trying to protect its rights, industrial plants closing down for want of uninterrupted energy supply, and where ration cards had to be introduced to cope with food shortages and price hike. It was projected as a country where the writ of the government was weak and despite repeated reassurances people doubt that it would hold free and fair elections and on the announced date.

It was brave of Pakistani leaders to have gone out there and make an attempt to sell Pakistan as a possible destination of investment at this point in time, an influential diplomatic source said commenting on participation of Pakistans delegation in the World Economic Forum.

It was a useless expensive exercise that could have been avoided. If you start on the wrong foot, you will tumble. The credibility of a country for international investors cannot be higher than what it is for the local businessmen. All you need to do is to ask any local investor about his immediate investment plans and you will get the answer, said Dr Zubair Khan from Lahore who was finance minister during Farooq Lagharis interim government.

I am here to dispel misconceptions about Pakistan amongst international investment community, President Pervez Musharraf was reported to have told business elite at Devos. If

local investors were shy and put important investment decisions on hold, it would be absurd to expect foreigners to enter, what the reputable business magazine, Economist called, the most dangerous place on planet, said a senior business leader from Islamabad. We cannot afford to give up. We must participate in international forums. It was the right decision to participate, if nothing to show that we were around. The problem was with the team that represented the country. You need to be both smart and credible to earn investors confidence. Unfortunately our leaders fall short on both counts, said a senior executive working with a lending agency wishing anonymity.

Arthur Bhayan, the CEO of Competitive Support Fund was optimistic. The delegation, I understand, must have tried to convince the prospective investors that fundamentals of the economy were strong with most companies doing very well, the market friendly policies would continue even after the next government assume charge and the elections would be held on specified time of Feb18.

Davos was not a mere parade of those who have reached high enough to have made it to the meeting. It was a gathering of most shrewd men and women who cannot be fooled by pep talk, said another local businessman weary of the prolonged period of uncertainty.

An attempt was made to get official response on the issue but secretary finance was in Karachi and could not make himself available despite repeated requests. None of the other officers of economic ministries reached over telephone were aware of the agenda that the official delegation was supposed to be pursuing at the WEF.

Without the strength of institutions and people no government could deliver. Which investor would dare oblige such uprooted band of self- appointed people?, asked an annoyed analyst in Karachi who wished not to be named.

A senior official accompanying President Musharraf as a member of Pakistan delegation told Dawn on condition of anonymity that the delegation had to conduct business in what he termed hostile environment. We did what we could have done in the current situation: reassure people that fair elections were just round the corner that will put an end to the phase of uncertainty, he said from Davos.

The business and political elite of the world pondered on business strategy and investment options in wake of tumbling key capital markets and fragile state of world financial system at the World Economic Forum.

Chances are slim that Pakistani delegation could have charmed prospective investors or successfully calmed the nervous foreign financiers who have already invested here.

Every year around this time Davos, the scenic ski resort of Switzerland, plays host to the big and mighty of the world. These leaders converge there to strengthen old links and establish new contacts. This year, however, the negative world market news took some shine off the glitzy event. The tumbling key capital markets and fragile global financial system posed fresh questions over the prospects of global economy and reliability of strategies and options pursued so far.

Till the last year, the fault lines of global economic system were not as obvious and news of bumper corporate profits, strong economic growth and tame inflation set the tone that infused optimism in participants. But the current 38th World Economic Forum was held at a time when the global economy was grappling with massive slides in stock markets, fears of a US recession and the rising oil, food and other commodity prices.

The atmosphere, therefore, was not buoyant in Davos. What the World Bank senior delegate called the better-equipped developing countries to cushion the global market fluctuations and strong fundamentals in giant Asian economies, however, provided some solace to the stressed power brokers.

The Pakistani delegation was headed by no less than President Pervez Musharraf and comprised of star members of the economic team of the last government who were not shunted out in the caretaker set-up.

Those who travelled with the President included Dr Salman Shah, the caretaker finance minister, Dr Ashfaque Hasan Khan, the special secretary finance, Dr Shamshad Akhtar, Governor State Bank of Pakistan, Mr Riaz Mohammad Khan, foreign secretary, Mr Mushtaque A. Mullick, Secretary investment. Besides them, there were many more: security and supporting staff that included officers from several embassies in Europe and the US.

There was no one in the ministry of foreign affairs or ministry of finance willing to divulge the exact number of people who travelled as part of the delegation on public expanse or quantum of the money spent on the event.

One could only hope that by the same time next year, under an elected government, Pakistan would have a better deal to offer to the global investors community at WEF 2009.

A feeble voice at Davos -DAWN - Business; January 28, 2008


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## Neo

*Steel Mills accord to buy Balochistans iron ore​*
Pakistan Steel Mill (PSM) has renewed its efforts to purchase coal and iron from Balochistan to cut its expensive imports of these raw materials. However, the question arises: why local iron and coal was not used by the PSM in the past ?

Bolan Mining Enterprises (BME)  a joint venture of Balochistan, the federal government and the PPL  is the lease holder of 50 million tons of magnetite iron deposit at Chigendik and Pachinkoh in Chagai district.

When this scribe asked BME about the PSMs latest offer for buying iron ore, its resident manager (Quetta), Mr Shamim said: We have yet to receive such an offer.

He recalled that a few years back, a deal was finalised between PSM and BME for the supply100,000 tones per year iron ore to Pakistan Steel. The PSM had then blended 10 per cent of local ore with the imported ore to produce sinter and pig iron.

In 2003, Mr.Shamim says the BME had supplied 100,000 tons of iron ore from Dilband mine in Mastung to PSM, but the iron proved to be of low grade. We have not been supplying iron to PSM since then, he said. A feasibility study about ore deposits at Nokandi area was underway. The indigenous resources need to be developed and upgraded through beneficiation plant so that they could replace the high price imported iron, he added.

The BME has been exploring possibilities for upgrading its iron ore through beneficiation process and it recently signed an agreement with a German consultant to carry out engineering studies for setting up such a plant. According to one assessment, iron ores found at Nokkundi and Chaghi have 64 per cent content of iron. Investments can be made for producing sponge iron by direct reduction process using iron ores from these areas.

Iron ore deposits are found at Dilband, Chilghazi, Lasbella, Nokkundi and other areas of district Chagai.

For the supply of iron ore, Pakistan Steel has negotiated with a Chinese company, the Metallurgical Corporation of China (MCC) and the Pakistan Mineral Development Company. The Chinese company is already the lease-holder of copper and gold mine at Saindak in district Chagai.

Under the proposed deal, the Chinese company will set up a plant from its own resources to extract iron ore and the ore supply is expected to begin from April 2008.

Pakistan Steel Chairman Muhammad Javed told a workshop participant in Lahore on Friday that PSM will sign an agreement on January 29 with Chinese company to buy 50,000-60,000 tonnes of iron ore. He said the purchase of 15,000 tons from Chagai had also started on a experimental basis which could be enhanced to 150,000 tonnes.

Pakistan Steel also plans to purchase 60,000 tons of coal during the current financial year from Balochistan. Over the last five years, coal demand increased by 400 per cent. Currently the local coal is being sold at a rate of Rs3000-4000 per ton, while imported coal costs between Rs6000-10000 per ton, says a trader.

Balochistan possesses huge reserves of coal at Hamai, Degari, Mach, Ziarat, Chamalang and Abegum (Table-1). The estimated reserves of coal fields in the province are 217 million tons. The 60km-long Chamalang mines produce good quality of coal ranging from high volatile C bituminous to high Volatile A bituminous with a total reserve of six million tons. Over 80 per cent of the local coal is utilised by bricks makers, while the rest are being consumed by cement plants for blending it with imported coal to reduce the cost of production.

A local businessman dealing in coal mining told this scribe on the condition of anonymity that Balochistan government provides subsidy to coal mine owners who pay only Rs100 a ton as sales tax when about 15-18 per cent a ton of coal is required to be paid as sales tax. He said, If local mine owners supply coal to Pakistan Steel, they have to pay15-18 per cent a ton as sales tax to the government. Hence it is not cost-effective to them and they prefer to sell coal to the cement sector or brick makers.

In reply to the question as to why indigenous coal is not used by the PSM he said: Technically, it is not feasible for Pakistan Steel to use Balochistan coal with larger sulphur content as it gathers in various parts of boiler. On the other hand,it is no longer cost-effective for the Pakistan Steel to continue relying on imported coal, as its price has increased in the international market. What is feasible to mix the cheap local coal with the imported one, hence the Pakistan Steel has planned to buy Balochistan coal, he added.

Moreover, there is a strong lobby that fiercely resisted the use of indigenous iron or coal and other inputs as that would slash their business. Appropriate technology can make relatively cheaper steel available for export and for use in the local market for construction, manufacturing, engineering and automobile sector.

Balochistans Dilband reserves of over 200 million tonnes contains between 30--40 per cent iron, as against 60 per cent used by PSM. Similarly, the local coal has more sulphur content than the required level. Steps need to be taken for establishing beneficiation plants for iron ores and de-sulphurisation plants for coal.

*Table:1*

Coal resources in Balochistan

Deposits Coal Resources

(Million Tons)

Hamai 76

Sor Range-Degari 50

Duki 50

Mach-Abegum 23

Pir Ismail Ziarat 12

Chamalang 6

Sub-Total 217

*Table: 2*

Significant iron ore deposits

in Balochistan

Deposits Size

(Million Tons)

Dilband 200

Shekran 10

Chilghazi 23

Kundi Baluchap 0.13

Pachin Koh 45

Durban Chah 1.125.

Steel Mills accord to buy Balochistans iron ore -DAWN - Business; January 28, 2008


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## Neo

*Is doing business in Pakistan easier?​*
DOING business is seen slightly easier in Pakistan in certain respects than in India although the latter remains a preferred destination for foreign investors.

According to just-released 2008 edition on the ease of doing business, the fifth in a series of annual reports investigating the regulations that enhance or contain business activity, by International Finance Corporation, an arm of the World Bank, Pakistan is ranked 76 among 178 economies of the world and India sits at 120th position. In the context of South Asia, only Maldives is ahead of Pakistan, ranked at 60, but India lags behind other five nations Bangladesh(107), Sri Lanka (101), Nepal (111) and Bhutan (119). India held 134th ranking last year and has, thus, moved up by 14 steps and Pakistan has retreated by two steps.

However, Pakistan fares better in business start-up. Those starting a new business have to go through 11 procedures and spend 24 days in Pakistan compared to 13 procedures and 33 days in case of India. And it costs 14 per cent GNI of income per capita in Pakistan while in India it is 74.6 per cent. Pakistan ranks 59 overall in starting a business while Australia is the top-ranked economy.

Land and construction account for between half and three quarters of the wealth in any country. Thus securing rights to property strengthens incentives to invest and facilitate trade. It takes six procedures in both Pakistan and India but requires 50 days in the former and 62 days in the latter to register a property, the cost of getting registered being 5.3 per cent of the property value in Pakistan and 10.3 per cent in India.

The collateral and bankruptcy laws in most South Asian countries do not effectively protect the legal rights of borrowers and lenders. The regions average is 3.8 in the 0-10 index, the lowest in the world. But in respect of protection of investors, which is crucial to entrepreneurship and investment, it fares relatively well. Pakistan is slightly ahead of India on 0-10 scale by scoring 6.3 compared to six by India.

Regarding number of tax payments in a year, Hong Kong holds an ideal position in the world. There is only one income tax and one fuel tax to be paid by a medium-sized enterprise. Pakistan ranks 146 overall in this respect and is placed slightly better than India. There are 47 tax payments in a year in Pakistan and 560 days are involved, compared to 60 and 271 days in India. And these taxes constitute 40.7 per cent of the companies profits in Pakistan, but 70.6 per cent in India.

In South Asia, doing construction work is a difficult proposition. Complying with building regulations is so costly that many builders would prefer to opt out or pay bribes to pass inspections or simply build illegally. To deal with licences requires 12 procedures, 223 days and costs 869.5 GNI per capita in Pakistan. In India, it requires 20 procedures, 224 days and costs 519.4 per cent GNI per capita.

The pace of reforms has been slow in South Asia. In 2005-06, India took five reforms and Pakistan two and in 2007 both countries another two reforms each to reduce the time, cost, and hassle for businesses to comply with legal and administrative requirements. India took over top position in reforms from Pakistan which held it two years ago.

A country must decide which reforms to tackle first. Four steps to successful reforms are: administrative reforms that need legislative changes, cutting unnecessary procedures and introducing standard application forms. Pakistan, according to the report, did all these things in reforming its trade administration. Apart from implementing risk management techniques, Pakistan also introduced a new customs clearance process that allows importers to file cargo declarations before goods arrive at the port. Hence, trade is easier in Pakistan as customs clearance at container terminal takes only four hours compared to ten days in 2004.

In Pakistan and India, cities vary in their performance on the ease of doing business. Hyderabad in India and Karachi in Pakistan outperform the rest of the cities. If each state were to adopt the countrys best practices, India would rank 79th in the world instead of current ranking of 120th. This means, for example, adopting Jaipurs regulations on starting a business, Bhubaneshwars rules on licensing, contract enforcement and taxes, Hyderabads property regulations and Chennai s trade practices.

The same is true for Pakistan. If each Pakistani region adopted Lahore s regulations on starting a business, Peshawars regulations on dealing with licences, employing workers and contract enforcement and Karachi s regulations on bankruptcy, taxes and property, Pakistans ranking would jump from 76th to 52nd.

The IFC methodology has, however, its limitations. It only studies regulations affecting ten stages of a businesss life but does not take into account the important areas such as a countrys proximity to large markets, quality of infrastructural services, underlying strength of institutions and transparency of government procurement. Then abnormal law and order situation vitiates the business environment. So mere improvement in regulations is not enough to make doing business easier.

Is doing business in Pakistan easier? -DAWN - Business; January 28, 2008


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## Neo

*Foreign trade: challenges ahead​*
IN its third review of Pakistans trade performance released last week, a WTO report says the countrys economic growth has been impressive since 2002, mainly because of its relatively open trade and investment regimes.

However, the country is now facing various challenges, including controlling inflation, fiscal consolidation (together with raising tax revenues), containing the external current account deficit, obtaining foreign financing consistent with the external debt sustainability, and increasing official external reserves.

The economy has been opened up in several areas in the last few years in particular customs procedures have been greatly improved, overall tariff protection considerably reduced, tariff bindings increased, and intellectual property rights strengthened. But more has to be done for sustaining the growth.

In some other areas, however, trade liberalisation has slowed, for example, support for production and exports has increased. At the same time, structural weaknesses, including infrastructural bottlenecks, excessive regulatory controls and labour market rigidities as well as problems concerning governance, have inflated the costs of doing business. The so-called regulatory mechanism fully controlled by the government has worsened the situation as prices of utilities and others witnessed surge without any genuine reasons.

Continued trade liberalisation and other productivity-boosting structural reforms to address these weaknesses together with steps to reduce political uncertainty would help improve the countrys international competitiveness, especially for sensitive sectors such as textiles and clothing, and thus the prospects for sustained economic growth.

These include a distorting tax (and tariff) system, narrow production and export base, the state's prominent role in the economy, infrastructure bottlenecks, weak governance, business hindrances, including burdensome regulation and red tape, labour market rigidities, and political and security uncertainties.

By raising the costs of doing business these hampers private sector growth and efficiency, thereby impeding, inter alia, improvements in productivity and export competitiveness. The overall international competitiveness appears to be declining, including in traditional products (e.g. textiles). Export performance has been mixed and exports as a share of GDP have fallen during the review period and contributed less than previously to growth.

Exports remain highly concentrated and two- thirds were textiles and clothing in 2005-06. Since 2001, the main change in merchandise trade structure has been a rise in the share of mining exports (from 2.3 per cent to 5.5 per cent in 2006) and agriculture (12.5 per cent to 13.7 per cent) at the expense of manufacturing (85 per cent to 80.8 per cent), especially textiles.

There has been little export market diversification. The US and EC remain by far Pakistan's principal markets, accounting for over half of exports in 2006. Partly reflecting the narrow export base, concentrated in low-value-added products and few markets, the shares of exports to Asian, American, and European markets have remained largely unchanged.

However, even the low growth in textile has been aided by several assistance packages, including research and development grants tied to exports, and freight subsidies, but minimal market diversification away from the traditional EC and the United States markets have occurred. But textile production is likely to expand; the clothing segment may contract as it faces greater overseas competition; its real income could decline overall unless productivity improves substantially to capture the potential benefits arising from abolishing quotas.

Pakistan has been unable to benefit from the quota abolition due to its high costs, low labour productivity, and inefficient production processes. Raising productivity by 60 per cent to match the Chinese levels could result in annual welfare gains to Pakistan of over $1 billion.

The report says major reforms have taken place in the engineering products sector, where tariff-based schemes have replaced local-content-based deletion programmes on many products, including motor vehicles. However, while tariffs on motor vehicles have been reduced substantially, they remain high (up to 90 per cent) and provide substantial industry protection for assembly activities, where tariffs on imported CKD kits were reduced.

Some other engineering activities, such as certain equipment (e.g. electrical and electronic goods), are also benefited from recently increased tariffs and/or from tariff-based indigenisation programmes. State involvement in manufacturing remains substantial especially in heavy engineering and steel.

Average manufacturing tariffs have fallen from 20.9 per cent in 200-2 to 15 per cent in 2007-08, and peak ad valorem rates have fallen from 250 per cent to a maximum of 90 per cent. The scope of tariff bindings now 98 per cent has risen considerably since 2001-02, thereby promoting market access transparency and predictability. However, as the bound average tariff is some four times the applied level, substantial leeway exists to raise applied tariffs to protect against imports.

Excluding some areas in the taxation structure which showed improvement, it is difficult to understand which concessions/exemptions still operate and to assess their incidence; the extent to which new exemptions/concessions extend, replace or duplicate previous ones is often unclear. While SROs on exemptions/concessions are published in the official Gazette and simultaneously posted on the CBR website, no integrated schedule or publication of current concessions/exemptions exists.

Their wide use makes the tariff regime complex and less transparent. By altering the structure of tariff incentives unpredictably, with uncertain effects on resource allocation, these concessions/exemptions may potentially counteract economic efficiency, for example, by raising tariff escalation and increasing/widening effective rates of protection. The WTO also came hard on Pakistan duty drawback system, which is termed administratively complex and non-transparent, and as it does not directly relate duty paid on imported inputs to refunds, it is likely to have an uneven impact across export items.

Investment incentives are available to all, including foreign, investors. Boosted by greater openness and privatisation, the FDI rose substantially from 0.7 per cent of GDP in 2001-02 to 3.5 per cent in 2006-07. Inflows originated largely from the United States, EC, and China, and were channeled mainly into telecommunications, information technology, and financial business services.

For achieving greater benefits from liberalisation of trade, Pakistan will have to pay more attention to enhancing the educational and skill levels needed to export value-added and high technology goods and services.

Foreign trade: challenges ahead -DAWN - Business; January 28, 2008


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## Neo

*Delivering critical mega infrastructure: World Bank urges Pakistan to re-engineer construction industry ​*
FAISALABAD (January 28 2008): If Pakistan wants to deliver on the planned critical mega infrastructure, there is an urgent need to re-engineer the construction industry and the processes typically followed in delivering to mega projects.

Construction efficiency is presently constrained due to the segregated processes through which they are generally planned, designed, constructed, operated and maintained, said Infrastructure Implementation Capacity Assessment Report of the World Bank.

According to he WB report, these processes reflect the fragmented structure of the industry, which contributes to a contractual and confrontational culture promoting inefficiencies.

The generally sequential process adopted in the industry is due to separate teams being engaged in designing, supplying inputs, constructing and for operations and maintenance of infrastructure. This typical process is followed with the aim to minimise risks to constructors by precisely defining through specifications and contracts what each of the players in the process is supposed to do.

However, this strategy is now recognised to be inefficient and does not protect well the client's interests. It acts as an effective barrier in using the skills and knowledge of suppliers and constructors effectively in the design and planning of projects. These segregated processes are illustrated in the following figure with discontinuous relationships between all players and a built-in lack of ownership of the end product.

According to the WB report, the conventional processes require procurement of a new team at each stage of the process and for every project a client implements, in the belief that selection of new designers, constructors and suppliers competitively on a least cost basis for each project provides value to the client. Contrary to this belief, repeated selection of new "teams" inhibits learning and the development of the construction industry.

The team found that while current stakeholders in Pakistan's construction industry feel that the total number of contractors available is a constraint, a similar study in UK in 1998, found the reverse that rather the very large number of contractors, working in a segregated environment, is a constraint to the development of the industry.

Processes need to be explored which focus on delivery of the end product, especially large mega infrastructure projects at cost, in time, with quality and functionality.

The findings of report show that the challenges facing Pakistan are not any different from those faced by other developing countries. These challenges have been documented to include a lack of adequate education and training (insufficient HR); a lack of government commitment; absence of long-term vision and planning for the industry; ineffective planning and budgetary procedures; fluctuations in work load; defective contract documents; corrupt contracting procedures; a lack of protection against adverse physical conditions; delays in payments to contractors; problems of bonding and insurance; absence of adequate credit (a lack of financial resources); restrictions on imports; foreign exchange constraints; unfair competition from state-owned contractors and consultants and problems relating to availability of equipment and spare parts; delays, cost overruns, and miscommunication of information.

The WB report pointed out that sustainable development of the construction sector requires a long-term commitment from the government. The impetus for change has to come from the demand-side as many of the key factors requiring significant improvement are related to the role of the government itself. Overtime, the government together with other industry players will have to shift from being just an external player and move towards self-improvement and taking responsibility.

Infrastructure development holds the key to Pakistan's future growth. The infrastructure development sector is greatly benefiting from the government's ambitious infrastructure drive, but much is still required to be done to ensure that adequate capacity is available to ensure the achievement of targets set.

Recognising the enormity of the challenge, the Pakistan government should improve infrastructure industry-related policies through enhancing public-private partnerships, bringing about regulatory reform; improving in governance and removing corruption and focusing on developing the required pool of skilled HR.

Changing mindsets and improving capacity of government are tasks that require immediate attention, the way the Pakistan government conducts business and the culture of government agencies has to be modified.

The thrust of the Infrastructure Implementation Capacity Assessment study of the World Bank was to assess the implementation capacity for delivering the planned large infrastructure projects. However, considering the unique nature of the industry and the supply chains involved, the large infrastructure projects cannot be viewed in complete isolation from smaller projects.

The existing gaps in the quality and quantity of inputs available to the industry have to be addressed and solved to ensure delivery of both through appropriate measures.

The solutions to remedy the shortfalls can be classified as being either short-term or long-term. Short to medium-term measures are needed to assist the Pakistan government in delivery of mega projects and also contribute towards enhancing local capacity, while long-term sustained measures and committed policy and industry reforms are required to optimise and build up the capacity of the local industry over time.

Short, medium and long-term measures would accordingly help the Pakistan government in delivering both "normal" and mega infrastructure planned under the MTDF by optimising, enhancing and supplementing local capacity. However, given that the crunch faced is imminent, delivery of planned projects in the MTDF will remain a challenge.

The WB report observed that the Pakistan government needs to act now to curtail market distortions and stimulate growth by carefully implementing interventions for structural change. The international case studies and the literature highlight the effectiveness of demand-side interventions and the need for a sustained long-term holistic approach for the development of the industry. The interventions can be broadly categorised as:

(A) POLICY INTERVENTIONS: 

-- To adopt long-term planning at all levels.

-- To provide strong government support for the industry by establishing robust, high-level liaison between the government and the industry, investing in strengthening and promoting trade associations.

-- To use procurement to drive behaviour and improve transparency.

-- Policies-backed with legislative and regulatory measures have to be proactively pursued to promote the use of least evaluated cost methods of procurement instead of least cost. The method of lowest bid selection is universally recognised to be the greatest barrier to improvement.

-- Introduce policies to develop the small to medium-sized industry stakeholders as these players deliver a major portion of the actual physical works in partnership with large contractors.

-- Set targets, select relevant performance indicators for the construction industry and monitor and evaluate change on a continuous basis.

-- Improve charge rates for professional services and the construction rates in the industry.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*$132 million Hydro Desulphurization Plant: Parco signs agreement with consortium ​*
KARACHI (January 28 2008): Pak-Arab Refinery Limited (Parco) signed an agreement on Friday with a consortium of China National Chemical Engineering Group Corporation (CNCEC) and Hyundai Engineering Company (HEC) of South Korea for the engineering, procurement and construction of $132 million Diesel Hydro Desulphurization Plant at its 100,000 barrels per day Mid-Country Refinery at Mahmood Kot, Muzaffargarh, says a Press Release.

The new plant will help Parco produce low-sulphur High Speed Diesel (HSD) to meet EURO II Specifications. This will be in line with Government of Pakistan directive and will reduce sulphur contents in HSD from the present 7,000 parts per million to 500 parts per million. It will have a capacity of 26,000 barrels per day. The process design and license for the plant has been obtained from M/s UOP of USA, the release said.

It said that Parco has always remained an environmentally conscious corporate entity. The company pioneered 87 Octane (2001) and 90 Octane (2003) lead-free gasoline and with the introduction of the new plant Parco will again take the lead in producing environment-friendly products. The project is expected to be completed in the third quarter of 2010.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Canadian firm to set up CNG kits manufacturing facility ​*
ISLAMABAD (January 27 2008): "Pakistan is the single largest market for compressed natural gas (CNG) and our company has decided to set up a manufacturing facility in this important country to produce CNG filling stations." Peter R Wressell, President and Chief Operating Officer of FTI International Group Inc, of Canada, said in an interview to Energy Update magazine.

He said that his company has so far sold 1,000 'dispensers' which are installed in various locations in Islamabad, Lahore, Peshawar and Karachi. "Pakistan is a very important market to us. We enjoy a very strong and long relationship with Pakistan."

Wressell said that FTI International has established a company in Pakistan with the name 'FTI International Facility' and physical presence of Pakistani soil. This facility will be completed in the next six to eight months".

Pakistan is a single biggest market in the world for CNG, approaching 1.6 million vehicles. He said that authorities were receiving new applications every day from prospective investors for setting up new CNG filling stations all over Pakistan.

"We had taken a decision last year to register our company for arranging compressors for filling stations. Presently, we are providing a complete filling station from Canada, and we will start manufacturing of complete stations in Pakistan. We want to be a major player in Pakistan and we have to do local manufacturing."

About the quality of FTI products, Wressell said that his company does not compromise on safety at any level and produce a very high standard product. "We use all correct zoning. We install a very high level of protection inside our systems to avoid accident because CNG is a very high pressure item."

Talking of his experience of visiting the exhibition, he said this show offers a good opportunity of interacting with quality producers around the globe. "Very high quality level of exhibitions come here. Major global players in CNG business visit this show. At the same time, leading buyers around the world come here along with the people who buy individual components of CNG filling stations and kits."

Regarding use of alternative energy to produce electricity in the wake of high oil prices and gas, Wressell said that the developing countries were working on several options, including wind and solar energy. Most of the developing countries have decided to minimise their dependence on petroleum and they have chosen natural gas. Pakistan has also taken this decision many years ago.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*OGDC to miss drilling target by 10 wells *​ 
Tuesday, January 29, 2008

KARACHI: Oil and Gas Development Company Ltd (OGDCL) will not be able to meet this years drilling target of 41 wells partly due to the poor law and order situation prevailing in the country, a brokerage house said on Monday. 

This slowdown is primarily due to heavy carryover of drilling tasks to fiscal 2007-08 from the previous year which saw work starting on 16 new wells within 20 days to the close, said a Jehangir Siddiqui report. 

Another reason of this slowdown is the ceased operations of Chinese rig operators due to deteriorating law and order situation in the country, the report said. The company might miss its target by 10 wells. Rising militant insurgency in NWFP and Balochistan and attacks against foreign nationals have hampered oil and gas exploration activities in recent past. 

It said out of the 12 contractual rigs hired by OGDCL, 10 are operated by Chinese who have suspended their activities especially in the NWFP. However, OGDCL believes it will be able to meet the target notwithstanding the security situation. 

We are on track and very hopeful of achieving the target, Irfan Babar, a company spokesman, said in his brief remarks. The company has its own nine rigs, which are being used effectively. 

OGDCL, which besides three local bourses is also listed on London Stock Exchange, posted a daily production level of 41,503 barrels of crude oil and 947 million cubic feet of gas in fiscal 2006-07. 

While security concerns have moved government to announce assurances for the exploration and production companies, analysts see no impact on macro outlook for oil and gas production. 

In the first half of this year (July-Dec 2007-08) 30 wells have been drilled as compared to 28 in the same period of previous year, said Umer Ayaz, JS research analyst, adding that Pakistan Petroleum Ltd (PPL) and Pakistan Oil Fields (POL) were set to achieve their drilling targets. But PPL along with OGDCL has also suffered its share of set-backs arising out of the security concerns. It was in October last year when Shell Development and Offshore Pakistan BV finally started drilling a deep-sea exploration well in Indus Delta after a delay of sixteen months. 

Shell started the drilling of the deep-sea well quietly because of the security concerns as the entire drilling operation is spearheaded by expatriate crew including many Americans, official told The News. 

Saad Bin Ahmed, Head of Research at Capital One Equities, is even more skeptical about the outcome of poor law and order situation. He said the security concerns were not allowing increase in production from development wells. If things dont improve soon Pakistan will have to go for imports, either through pipeline or LNG (liquefied natural gas). 

The countrys reliance on domestic gas reserves to run its economy has amplified in last couple of years, so much so that shortfall between supply and demand touched an unprecedented proportion this winter. 

Reports suggested the country is facing a gas deficit of more than 700mmcfd as production remains flat at around 4000mmcfd.

OGDC to miss drilling target by 10 wells


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## Neo

*Govt plans to boost pharmaceutical exports to $500m ​* 
Tuesday, January 29, 2008

ISLAMABAD: The federal government is making plans to increase exports of the pharmaceutical industry up to US$500 million per annum over the medium term, it is learnt.

Planning Commission Deputy Chairman Dr Akram Sheikh chaired a meeting of the stakeholders concerned of the pharmaceutical industry a couple of days ago in order to fine-tune strategies for boosting exports of the sector in years to come.

According to sources, pharmaceutical exports stood at $50 million per annum, which could be jacked up to $500 million with concerted efforts. Official sources, who participated in the meeting, told The News that pharmaceutical manufacturers apprised the policy-makers of the lingering energy crisis which has badly affected the production and the export target of $1 billion could not be achieved by 2010.

The industry, the sources said, was facing difficulties in the production of life-saving medicines due to gas and electricity load-shedding. Highlighting future prospects of the industry, the sources said that pharmaceutical exports were increasing rapidly at the rate of 20 per cent annually and the industry was expected to attain 40 to 45 per cent growth in manufacturing and exports by 2010. The Middle Eastern, ASEAN and North African countries were lucrative markets for Pakistans pharmaceuticals, since Pakistani medicines were recognised for their high quality.

Govt plans to boost pharmaceutical exports to $500m


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## Neo

*Garment, knitwear exports rise ​* 
Tuesday, January 29, 2008

LAHORE: Twelve foreign garment experts, besides training two local experts, are imparting training in 12 different export-oriented garment and knitwear industries of the country in an effort to boost their quality and productivity.

The impact of this training programme is already visible in the shape of six to 10 per cent increase in exports after six months of training at a time when exports of the sector are generally on the decline. This also gives credence to general impression in official circles that quality and efficiency are the main impediments in the way of increasing apparel exports to their potential.

The News has learnt that after evaluating reports of two international consultants, Werner and Gizri, the federal government decided to remove deficiencies in skills and efficiency faced by the value-added apparel sector. In the short-term, foreign experts were hired to provide on-job training and introduce new technologies in leading industries and at the same time train local trainers who could impart training on a broader scale in governments technical institutes.

These experts, engaged for a period of one year by the Technology Upgradation and Skill Development Company (TUSDEC), started imparting training in March 2007 at the start of the judicial crisis and stayed throughout the period of political uncertainty. This has sent a positive message to foreign buyers that business and foreigners safety has not been compromised due to the law and order situation during the past 10 months.

The experts were engaged after discussions with the local exporters about the various problems they faced in improving their efficiency and quality. According to TUSDEC sources, the main concern of the exporters was about sewing process that included cutting and stitching of garments and knitwear. Other problem areas were dying, finishing, knitting, laundry, packing, industrial engineering and mechanical maintenance of their units.

The most surprising aspect was that the top and big apparel exporters of the country faced these problems. The smaller units too naturally faced multiple of these problems with more severity.

Skill Upgradation Project Director Waqas Munir Qureshi, talking to The News, said the company had decided to start enhancement of skills and technical know-how with the top exporters that had comparatively better workforce, machinery and infrastructure.

He said the company engaged two local experts in the same fields with the foreign experts, adding the idea was to improve the capacity of the local experts to the level of foreign experts who would transfer skills and knowledge to them during their one-year stay in large units. In these units, they were already engaged in improving procedures and skills of the staff.

The local experts would then be placed at the disposal of other exporting units to apply what they learnt from the foreign experts. The News has learnt that five apparel exporting units in Faisalabad, five in Lahore and one each in Karachi and Pindi Bhattian are currently benefiting from the services of these experts. Each unit was given the option to select up to four fields where they needed expert advice on skill and technical improvement.

Many exporters complain that they were not consulted in that process. TUSDEC authorities, however, contend that top exporters were included in the process and said in case of refusal by any unit falling under the training programme on merit the next best was selected.

Garment, knitwear exports rise


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## Neo

*First public sector power plant after 17 years ​* 
Tuesday, January 29, 2008

KARACHI: As a deepening power crisis threatens to hamper its economic growth, Pakistan has finally moved to bridge the shortfall by setting up a power plant in the public sector after 17 long years.

All major newspapers on Monday carried the advertisement which announced signing ceremony of the 450 megawatt Nandipur power plant in Lahore, an initiative taken after power projects in the private sector failed to materialise. The decision to setup the power plant in the public sector is a deviation from the previous government policy of encouraging private investment for power generation.

But experts believe this retraction might just be the answer to the woes of the public and industry. This is the most feasible solution, said a senior official of Institute of Electrical and Electronic Engineers Pakistan (IEEEP). Cost of energy from a 500MW power plant will always be cheaper than a 150MW unit. Projects in the private sector are normally smaller in size while government invests in relatively large projects. Feasibility of a public-sector project vis-a-vis power tariff is further enlarged by elimination of mandatory return, which private investors demand on their investments.

Munawar Baseer Ahmed, Managing Director, PEPCO, told The News by phone from Lahore that financing facility for the project was arranged easily. The financiers have expressed confidence in the country and expressed willingness to finance more such projects. The project will cost US$329 million including foreign financing component by French bank BNP Paribas and local component by Bank of Punjab. Success in securing finances from private banks is a major achievement on part of the government and reflects its independence since shift in power policy, which favoured private power projects, was pressured by development institutions like World Bank.

We could not have waited, responded Baseer on retraction in power policy. Out of the 12 projects in the private sector only nine have reached financial close. Their cumulative production capacity is not even 2000MW, which is the present shortfall. The National Electric Power Regulatory Authority (Nepra) is yet to be approached for a power tariff. Nandipur power plant has been configured to run on fuel oil. 

First public sector power plant after 17 years


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## Neo

*Japan approves $6m for FATA uplift *​ 
Tuesday, January 29, 2008

ISLAMABAD: The government of Japan has extended a grant of 700 million Japanese Yen (approximately $ 6 million) to assist in socio-economic development of FATA through the Non-Project Grant AID (NPGA). 

The documents for this aid were duly signed and exchanged between Secretary for Economic Affairs Division (EAD), Ministry of Economic Affairs, Statistics M Akram Malik and Ambassador of Japan to Pakistan Seiji Kojima here on Monday. 

The secretary said though the allocation of development resources for the area had been increased by the government manifold, FATA still required additional economic resources to address long development lag. He said Japan had been providing assistance to Pakistan in different sectors for the last fifty years and the current aid is yet another step in that direction, which would help facilitate the governments effort for socio-economic uplift of its people. 

The secretary said in the year 2001 Japanese assistance to Pakistan was Rs1.17 billion and it continued growing and at present stood at Rs6.2 billion. The Japanese Ambassador on the occasion expressed his countrys commitment to continue assisting Pakistan in social and economic uplift of its people. 

He said the social and economic projects for FATA would be formulated along with sustainable development plan. About the current aid he said various sectors could be included in the scope of this assistance, however education and health are important for better life in the regions. 

The NPGA will be an investment in the social sector for the sake of a sound and peaceful civil society in FATA, he added. The ambassador said Japan had been implementing the 65 schools rehabilitation project in FATA, the scholarship programme for Pakistani students as well as the NGOs projects, which he added had helped a lot in improving socio-economic condition of the people in the region. 

Japan approves $6m for FATA uplift


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## Neo

*Carmakers curtail production​*
KARACHI, Jan 28: The car assemblers maintained a slow pace in production during January 2008 after slashing parts procurement from their vendors by at least 50 per cent.

They had also revised parts procurement for November and December last year by 50 per cent after a series of violent incidents culminating on the murder of Benazir Bhutto on December 27.

A number of vendors on condition of anonymity said that the imposition of emergency and killing of the PPP chairperson made a negative impact on the consumers buying sentiments thus affecting the local car sales, especially in some versions of Suzuki Cultus, Alto, Mehran, Ravi and Bolan.

Sources in the car industry said that the parts procurement plans for February and onwards has also been slashed for Cultus and Alto, especially.

They said that the makers of Toyota Corolla and Daihatsu Cuore had also curtailed the parts supply for January production by 45 and 28 per cent, respectively.

However, the plant of Indus Motors, maker of Toyota and Cuore, remained shut from the first 10 days of January, 2008 and the depressed demand did not prompt the manufacturer to make additional cars for the rest of working days.

The manufacturer of Honda Civic and City cars had also curtailed purchase of car parts from vendors by at least 40 per cent in January and as a result, their production had remained limited.

The vendors and the assemblers now pin hopes on peaceful passage of elections and the post-election scenario as some vendors think that the demand for cars may pick up slightly by May and June in case everything remains stable both politically and economically.

Suspension of auto financing by many banks, high interest rates, rising default rates on cars instalment payments and increase in prices are some of the main reasons impeding the growth in the locally assembled cars industry. Few years back, car assemblers used to show 25-30 per cent growth in production.

To offset the negative growth in car production and sales, the Pakistan Automotive Manufacturers Association (PAMA), on the instruction of the Engineering Development Board (EDB) included Suzuki Bolan in the category of cars for the last many months despite the fact that Bolan had remained in the LCV category for decades.

This had helped in alleviating the growth in the production figures but in real sense the original car figures have been portraying a dismal growth.Excluding the Bolan Van figures, production and sales of cars in July-December 2007 stood at 75,261 and 69,950 units as compared with 73,005 and 71,027 units, respectively, in the same period in 2006. If Bolan figure is added, then overall production and sales of cars in the last six months amounted to 84,172 and 78,759 units as compared with 79,813 and 77,545 units in July-December 2006, respectively.

Production of Suzuki Cultus in October was recorded at 3,131 units, which fell to 2,047 in November 2007 and 1,739 units in December. However, Alto had 1,590 units in October rising to 1,947 units in November 2007 and then falling to 1,452 units in December. Liana production in October, November and December were 439, 306 and 10 units, respectively.

Honda Civic production in October was 662 units falling to 423 units in November and 363 units in December. Likewise, City production recorded only 297 units in December as compared with 778 in October and 657 units in November.

Toyota Corolla production improved in November 2007 to 2,702 units from Octobers 2,543 but declined to 1,690 units in December.

Hyundai Santro production in October was 134 units but came down to 86 units in November and 81 units in December.

Sales of Daihatsu Cuore in November rose to 960 units from Octobers 749 units but plunged to 443 in December.

Suzuki Mehran in December fell to 2,193 units from 3,475 units in November. It was 2,814 units in October.

An analyst at Jehangir Siddiqui linked the decline in December sales to Eid holidays, killing of Benazir Bhutto, suspension of auto financing by many banks and price hike after new tax levy.However, a vendor said that the companies had rescheduled parts procurement plans several times in January 2008 in view of the uncertain situation after December 27 tragedy followed by various incidents of bombing. He added that the January production of the PAMA will reflect at least 40 per cent decline.

Vendors were of the view that the target of five million cars and LCVs set by the Engineering Development Board (EDB) for 2011 would not be achieved owing to current political uncertainty.

Carmakers curtail production -DAWN - Business; January 29, 2008


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## Neo

*Body to modernise trucking sector​*
ISLAMABAD, Jan 28: The government on Monday decided to form a committee to harmonise age factor of various types of transport as part of modernisation of the trucking sector.

The decision was taken in a meeting held here to review implementation on modernisation of the trucking sector.

An official announcement said that it was also decided that the committee will also deal with other issues concerning provincial governments and various agencies regarding registration, and training etc. It was proposed that only 10-year old trucks should be allowed to ply on motorway while age of trucks for other roads was fixed at 25 years.

The training of drivers was classified as most important issue of the transport sector. The manufacturers assured their willingness to establish driving training institutes in their premises. The need of establishing driving schools at divisional headquarters was also felt.

The meeting directed the Pakistan Standards Quality Authority (PSQA) to finalise national standards and specifications for trucks and trailers by March 31, 2008 so that these could be notified by the ministry of industries. The representative of PSQA briefed the meeting about the progress made so far.

The meeting was informed that the National Industrial Parks Development and Management Company have already acquired land in Lahore and Karachi for establishing Trans-freight stations. The company was also working for the establishment of an industrial estate for trucking sector at Lahore.

The secretary clarified that the role of ministry was limited to coordination as various agencies were concerned with the implementation on trucking policy as approved by the Economic Coordination Committee.

It was decided that the Engineering Development Board (EDB) will hire the services of a consultant, who would determine the burden on national exchequer on account of special financial relief provided to the private sector transport companies.

Body to modernise trucking sector -DAWN - Business; January 29, 2008


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## Neo

*Steel project​*
KARACHI, Jan 28: Tuwairqi Steel Mills Limited (TSML) has signed an agreement with AMZ Securities Ltd to raise funds to finance additional expenditure for its state-of-the-art iron and steel project being set up at Port Qasim.

According to TSML here on Monday, the AMZ will act as the financial adviser and arranger to raise finance for the project which would have a designed capacity of 1.5 million tons per annum and an initial operational capacity of 1.28 million tons per annum of directly reduced iron (DRI) and billets.

Steel project -DAWN - Business; January 29, 2008


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## Neo

*Dealing with the economy​*
HOW should Pakistan address some of the economic problems Islamabads policymakers had not foreseen? Some of these were caused by the assassination of Benazir Bhutto on Dec 27.

However, not all that has gone wrong with the Pakistani economy in recent weeks can be attributed to the killing in Rawalpindi of the PPP chairperson. Some of these are the consequence of the failure of the previous government to put Pakistan on the path of sustainable development.

There was a strongly held belief in Islamabad that having achieved a high rate of growth in the 2002-07 period when the economy expanded at the impressive rate of seven per cent a year, the country was on track to maintain that kind of expansion for years to come. That that was not the case was argued by some of us. I wrote a number of articles for this newspaper to suggest that the impressive performance in the 2002-07 period was the result of both good public policy and happy circumstances.

We suggested that the latter may not always be there. The only way out would be to design public policy in a way that the country was not totally dependent on a conducive external environment for achieving economic prosperity. That said this is not the occasion to repeat some of that old debate. What is of real importance at this time is to rescue the economy from its current difficulties.

The government has already begun to take some actions to address the setback that was caused by the mayhem that followed the death of Benazir Bhutto. If appropriate actions are not taken, the damage done to the asset base of the economy and the loss to the incomes of workers and small traders will take a heavy toll. The country has also suffered a reputational hit which will raise the cost of external borrowing and reduce the interest of potential investors in the country.

My estimate is that the rate of economic growth could decline by as much as two per cent in the current year for these reasons and the year that follows while the medium-term growth rate could decrease by one to 1.25 percentage points. Some of these losses could be averted by public policy. The repair to the assets destroyed will take time but the losses suffered by the people who are vulnerable in these kinds of circumstances can be dealt with by a combination of cash payments and a public works programme aimed at providing employment. The government is doing the former; the latter needs some thought.

The use of public works programmes to provide relief to the poor and vulnerable has been successfully tried in a number of countries, most notably Chile which once had to deal with the kind political upheaval that Pakistan is experiencing these days. One way of launching these programmes across the country would be to provide funds to local governments to implement simple projects  repair of roads and government buildings, planting of trees in public places, removal of trash and its disposal etc.

Such a programme could provide immediate employment to hundreds of thousands of people and provide them with the incomes they need to deal with the rising cost of living. How to pay for such a programme without stretching the already stressed government financing? The best way of doing this would be to cut down non-development expenditure which has increased enormously over the years.

Another step taken recently by the government to deal with the difficulties faced by the poor is the launch of a ration card programme. This will provide a number of essential commodities at highly subsidised prices. While this may help a small number people in the urban areas, it is not a viable, long-term strategy to deal with sharp fluctuations in agriculture prices and ups and downs in agriculture output. What is needed is the formulation of a food security programme built on improving storage, creating buffer stocks and establishing a fund the government can tap for providing relief to the poor during periods of extreme stress.

Having dealt with the immediate problem the government needs to strategise about bringing economic growth to the country in a sustainable way. This is an area in which the government headed by President Pervez Musharraf has failed. It should have done this by incorporating four elements in a strategy aimed at producing long-term sustainable growth. I will mention these briefly in the hope that the government that takes office following the elections scheduled for mid-February will work on developing such a strategy.

First, there must be good understanding of the shape of the global economy. The world production and trading systems have gone through some profound changes which means that Pakistan no longer has the opportunities available to it that propelled forward a number of developing countries in the last quarter century and placed their economies on high-growth trajectories. It must seek new avenues for growth that have become available in the new global production and trading system.

Second, having identified the opportunities available to Pakistan, the new administration should determine what kind of public policy initiatives are needed to realise them. These initiatives will need to cover a wide front including the strengthening of the institutional base, building the required physical and human infrastructure and the provision of financial support to the enterprises operating in a few selected areas.

I am among those economists who, while believing in giving fairly free rein to market forces, would also argue for state intervention to guide the private sector in the developing areas that hold promise.

Third, the new strategy must focus on the diversification of trade both in terms of content of exports as well as the direction in which they are sent. Pakistan is one of the few large developing countries which have deviated from what is suggested by the gravity model of trade. According to this, large trading partners are those that are close to the countrys border and also have a large economic mass. According to this, India should be Pakistans largest trading partner rather than the United States.

Fourth, the strategy should aim at developing a robust relationship between the public and the private sector. The previous administration did well to give a lot of space in which the private sector could operate. It did not, however, build a strong institutional infrastructure for regulating private enterprise, so that it did not work against the welfare of the citizenry.

It is, therefore, incumbent upon those who are likely to take office within a few weeks to restore the confidence of the people both inside and outside the country for the latters economic future. As I have indicated, there is an urgent need to formulate a strategy built upon a few elements which could set Pakistan on a new course. This would ensure a healthy and long-term sustainable rate of economic growth. Only then would the county be able to deal with some of the problems it faces, not only in economics but also in politics.

DAWN - Editorial; January 29, 2008


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## Neo

*Brown to seek economic support for Pakistan ​*
LONDON (January 29 2008): British Prime Minister Gordon Brown has assured President Pervez Musharraf that he will contact the world leaders in weeks time, seeking more economic and political support to Pakistan which will help stemming the scourge of terrorism and extremism.

During joint stakeout, after one-and-half hour talks, more than the scheduled time, which were mostly exclusive at 10 Downing Street, the two leaders described their talks extremely useful and productive. They expressed the joint resolve to continue the fight against terrorism and also pushing forward their economic cooperation in diverse fields.

At the outset, the British Prime Minister said the two countries enjoyed strong links and close cooperation at bilateral and regional levels, describing Pakistan a key ally in the fight against terrorism.

Prime Minister Gordon Brown said that stable Pakistan was essential for peace and stability in the region, and its ability to meet the growing threats of violence was vital for the global community.

The two sides must forge stronger economic cooperation, which was imperative for Pakistan to meet the challenges it was facing, he added. He was confident that the electoral process in Pakistan would be fair, free and transparent and also credible and would remain on track.

Brown said they discussed the steps, which could be helpful in defeating extremism and terrorism. He said his country would provide any amount of assistance, including forensic, to Pakistan in the investigation of the assassination of former prime Minister Benazir Bhutto. President Musharraf, in his remarks, said the two leaders had an excellent interaction, and said he reinforced whatever the Prime Minister had just said.

He said they discussed further enhancing economic cooperation between the two countries, and appreciated the British Prime Minister's desire in assisting Islamabad in the socio-economic uplift of the country. The President said they also discussed further strengthening the cooperation in the fight against terrorism.

Musharraf said he briefed the British Prime Minister about the holistic and multi-pronged strategy to address the complex issue of extremism and terrorism. He said defeating the menace was a challenge for Pakistan, and expressed the firm resolve that the country would meet it successfully.

The President said he also briefed the British leader about the democratic transition in Pakistan and holding of fair, free and peaceful elections on February 18. He reiterated the resolve that peaceful transition would be completed after the elections, hoping it would lead to stable government in the country.

Replying to a question, the British Prime Minister said his country would continue to assist Pakistan economically, and assured that the two sides would further bolster their ties in the fields of trade, economic, investment and joint ventures.

Gordon Brown said he realised the significance of increased economic assistance and cooperation for Pakistan for combating the scourge of terrorism. He said he would contact the leadership of the developed countries for opening window of cooperation for Pakistan in trade and investment, enabling the country to fight extremism and terrorism by bringing down poverty, illiteracy and improving education facilities.

Responding to a question about the security steps taken on Pakistan's border with Afghanistan, President Musharraf said steps had been taken to ensure effective check on movement of militants across the border, including sealing of border and its selective fencing.

He refuted the impression that Pakistan was not succeeding against terrorism, stating that al Qaida had almost been defeated and the remaining few were on the run. He said Pakistan would continue to fight militant Taliban.

To a question, Prime Minister Gordon Brown expressed his support for the "Jirga process" between Pakistan and Afghanistan. These steps, he added, helped reduce the crossing by 42 percent from Pakistan into Afghanistan, which had created desperation among the militants of Baituallah Mehsud, who was attempting to destabilise the country, and detracting the country's democratic transition.

About the incident of taking school children hostage in NWFP, Prime Minister Brown said it was unfortunate that innocent children were made to suffer. President Musharraf informed him that it was not a hostage-taking incident, but in fact the militants running from law-enforcement agencies, took refuge in the school, taking the children hostage, who were later released.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Punjab to set up large number of cottage, small industries ​* 
SIALKOT (January 29 2008): The Punjab government has formulated a strategy for setting up maximum number of cottage and small-scale industries, particularly agro-based industries in the province.

Official sources told Business Recorder here on Monday that the government has set aside huge funds for development of small industries to create more employment opportunities both for skilled and semi-skilled persons.

The agro-based industries would be established preferably in remote and neglected areas by giving incentives and concession to the respective areas entrepreneurs. The Punjab Small Industries Corporation (PSIC) would extend full guidance, assistance and loan facilities to the interested businessmen and newcomers for setting up and upgrading their industrial units in the province.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Plan to develop 'National Energy Efficiency Programme' ​* 
FAISALABAD (January 29 2008): The government is planning to acquire and implement a phased strategy for undertaking a systematic, broad-based 'National Energy Efficiency Programme' with the financial assistance of Asian Development Bank.

In a project report, Dr Akhtar A Awan, Member Energy, Planning Commission said that the ADB financial assistance of $600,000 would enable the government to develop and implement a comprehensive energy efficiency development and investment programme.

He said that the TA will design a suitable programme proposal that supports the government efforts to (i) establish an enabling policy and business environment for energy efficiency; and (ii) provide immediate financing of priority projects.

Key activities will include (i) in-depth energy efficiency market and economic assessment; (ii) awareness building for energy efficiency through short-term policy and regulatory recommendations as well as developing targeted public relations programmes; (iii) strategy and action guidelines for initiating a sustainable long-term national energy efficiency programme; (iv) a roadmap for implementing the national energy efficiency programme with corresponding investment plans; and (v) design of bankable investment projects.

The TA will also require the services of an international consultant (firm) with practical knowledge and expertise in energy efficiency and demand-side issues, energy efficiency project management, project and energy economics, financial analysis and financial management, and energy system planning. A consulting firm or consortium of firms will be engaged by ADB in accordance with its guidelines on the use of consultants. Recruitment of consultants will be under the quality and cost-based selection procedures, and simplified technical proposals will be requested.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Telenor launches environment friendly initiative ​*
ISLAMABAD (January 29 2008): Telenor Pakistan has launched another environment-friendly initiative by using solar energy to power one of its repeater sites in the NWFP. Telenor Pakistan is the country's first mobile communications services provider to have started using solar energy to power a commercial site.

The pilot site, which is in Buner, is a solar-electricity hybrid system that runs entirely on solar energy during the day and switches to electricity or battery power at night. Such Telenor Pakistan's use of alternate energy sources in its operations is of particular significance considering that the company has the fastest growing network in the country.

"Telenor Pakistan continues its efforts to roll out modern networks in a socially responsible manner, delivering on environmental and health and safety standards," says Chief Technical Officer Telenor Pakistan Peter Anthony Dindial. "We are first in the industry to have started using solar energy to power a commercial site. We aim to help reduce the load on the national power grid through innovative solutions and in longer term we mean to upscale this pilot project to other parts of the country after assessing its success.

He said, such solutions are more eco-friendly and less of a burden logistically in difficult terrains, where mobile coverage might be needed the most, and constant generator refuelling might be an issue.

The industry must boldly experiment with alternate energy solutions to connect the remote, unconnected populations of Pakistan in a sustainable manner," he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Construction of Kalabagh dam: government to develop national consensus ​* 
ISLAMABAD (January 29 2008): The government will take fresh initiatives to develop national consensus on Kalabagh dam as big water reservoirs are badly needed to overcome the worsening energy crisis country is facing.

"We have decided to make efforts afresh for consensus on Kalabagh," said the Caretaker Minister for Inter-Provincial Co-ordination (IPC) Dr Muhammad Amjad on Monday. "More water reservoirs including Kalabagh Dam will be built, but this will be done with consensus," said the minister in a news briefing after the meeting of provincial secretaries of the IPC division.

He said that the cabinet had already approved the reconstitution of Council of Common Interest (CCI). He added that the IPC division was in favour of regular meetings of the CCI.

The provincial secretaries meeting was part of preparations being made in connection with holding of a conference in Lahore in the second week of February on confidence building measures to strengthen inter-provincial harmony.

The Lahore conference will also be attended by Caretaker Federal Ministers for Water and Power, Commerce, Interior, provincial ministers for IPC, provincial secretaries and representatives of chambers of commerce of the four provinces. The conference would discuss issues including distribution of revenue among the provinces.

The minister said a multi-facet formula on revenue distribution is under consideration. The proposed formula is more stressful on some other factors instead of the current revenue distribution system that is based on the principle of strength of population of the province.

He said that Kalabagh Dam was a purely technical issue and this project should not be used for political purposes. Dr Amjad said that no major water reservoir was built after Tarbela and Mangla Dams thus the country was facing acute energy crisis. Amjad said the government would try to remove apprehensions of the stakeholders, as opponents to the construction of Kalabagh dam would also be invited to the conference.

The minister said the meeting would formulate ways and means to promote inter-provincial harmony among the federating units and to resolve their issues and concerns from the platform of the ministry.

He said that the conference would formulate recommendations and suggest measures for strengthening integration and harmony among the provinces form the viewpoint of business community.

The conference will make business specific recommendations to National Disaster Management Authority to protect valuable private national business assets. It will also propose specific preventive law and order steps to the law enforcement agencies for protection of industrial sites and factories, he added.

The Minister said that the conference would also recommend appointment of liaison officers of each chamber of commerce and industry to interact with provincial secretaries IPC for action and feedback. The conference will provide business-oriented inputs into provincial commerce trade development plans for consideration by appropriate government forums.

About the draft provincial autonomy bill, he said the Sindh and NWFP have sought a number of amendments in the draft bill. About the agenda of the one-day conference, he said the first session would be on energy crisis in which construction of new water reservoirs in the country would be discussed. In the second session, law and order situation would be discussed while in the third and final session, the corporate business-related issues would come under discussion.

Business Recorder [Pakistan's First Financial Daily]


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## Nafees

Neo said:


> *Pakistan Economy - News and Updates​*
> Continued from : http://www.defence.pk/forums/economy-development/1049-pakistan-economy-daily-update.html



ISLAMABAD, Jan 29 (APP): Excise and Taxation Department has recovered a tax amounting to Rs 340,861,796 during the five months starting from July 1 to November 30 in the financial year 2007-08.

These recoveries included monthly vehicle registration fee, motor token tax, excise duty, professional tax, M.V.D and real estate agents, tobacco vend fee, bed tax, and education cess, an official in E&T told APP here Tuesday. 

Giving breakups of this recovery he said monthly vehicle registration fee stood at Rs230,128,140, motor vehicle token tax Rs.7,56,37,769, excise duty Rs3,23,95,216, professional tax 16,24,190, M.V.D and real estate agents Rs4,38,850, tobacco vend fee Rs12,200, bed tax Rs.1,95,496 and education cess Rs4,29,908 respectively.


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## Neo

*Index closes above 14,000 points level after two weeks ​* 
Wednesday, January 30, 2008

KARACHI: Karachi stock market on Tuesday managed to go higher consecutively on the third trading session with benchmark KSE 100-Index restored above 14,000 points psychological barrier after two weeks.

KSE 100-share Index registered another smart increase of 129 points (i.e. 0.93 per cent) and concluded at 14,009 points. The 30-Index surged by 179 points (i.e.1.09 per cent) and finished up at 16,657 points.

The cumulative gain of three successive bull-runs was 290 points or 2.11 per cent from 13,719 points pre-opening level of 100-Index on Friday.

Ahsan Mehanti CEO of Shahzad Chamdia Securities observed heavy institutional buying in fundamentally strong stocks in the market in the backdrop of financial results announcement season, which had formally kicked-off in the middle of previous week.

Moreover, the rise in international oil prices, which is reportedly being traded near and around $90 per barrel in the world markets, also helped the relevant stocks to surge in accordance with, he added.

Live Securities reported that 100-Index surpassed 14,000 points barrier despite of the news by S&P that the ratings are at risk to downward revisions for Asia-Pacific countries. The index remained in the positive domain from the beginning as the global stocks recover on speculations that the US will cut interest rates to encourage economic growth.

Investment banking led the 100-index as it stood on top among all the sectors contributing 15.6 per cent of the entire turnover supported by AHSL that scored the highest volume of 25.16 million shares.

Banking sector witnessed a minor slump after accumulating 13.9 per cent of the total volume. Fertilizer sector performed identical to the banking sector gathering 14 per cent of the total volume receiving strong support from FFBL that gained 85 paisa.

Hasnain Asghar Ali of Aziz Fidahussain observed that main board stocks witnessed surge in the early hours, although the activity by the local players offered trading opportunities the accumulators of previous sessions opted for profit taking.

S. Kashif Mustafa of ECL Research said that the banking sector was the main driver of the day amidst rumours of increase in discount rate by SBP in the upcoming Monetary Policy statement.

The turnover in the ready market remarkably surged to 235.345 million shares from 171.636 million shares changed hands a day earlier. Also, future market volumes enhanced to 25.187 million shares from 18.089 million shares of yesterday. 

Accordingly, the overall market capitalisation surged by Rs37 billion to Rs4.294 trillion. Value of 212 stocks advanced, 128 declined and 36 remained unchanged with total 376 active counters on board.

Highest volumes were witnessed in Arif Habib Securities at 25.161 million trading at Rs179.60 with gain of Rs6.60 followed by Fauji Fertilizer Bin Qasim at 20.941 million trading at Rs42.60 with a gain of 85 paisa and NIB Bank at 11.087 million trading at Rs23.15 with a gain of 10 paisa.

Index closes above 14,000 points level after two weeks


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## Neo

*Technical training programme designed for vacancies in Punjab ​* 
Wednesday, January 30, 2008

LAHORE: A special training programme has been designed to train unemployed youth of the area around Sheikhupura to make the workforce available to the auto cluster where factories are expected to commence production in the third quarter of June 2009. 

Director National Industrial Park Development and Management Mohsin Syed stated this while briefing newsmen about the first-ever industrial park to support the auto industry in the country to be launched in March 2008. 

The proposed auto cluster project site is located on Lahore-Sheikhupura road having 170 acres of land, which has been acquired and preliminary work has already been started. He said a comprehensive technical programme would be launched in order to give training under a crash programme to residents of the neighbouring areas having qualification of middle and matric classes and training will be provided through mobile training centres in three major disciplines including automobile, mechanical and construction. 

These disciplines he added will cover 23 different sectors including mechanic (petrol), auto mechanic (diesel), motor cycle mechanic, auto electrician, driving and vehicle maintenance, mason, shuttering carpenter, steel fixer, building painter, house carpenter, welder/construction fabricator, plumber, domestic electrician, diesel engine mechanic, site accountant-cum-store keeper, civil surveyor, material technician, quantity surveyor, industrial filter, milling machine operator, turner, molder, electronic equipment repair, industrial electrician, home appliances repair and motor winding etc. 

Training will be provided by TEVTA under its TSTP (TEVTA special training programme). It has already trained 70,000 apprentices for vacancies of various professions in Punjab and they all have been given employment on different technical positions in industrial organisations, he disclosed. 

Technical training programme designed for vacancies in Punjab


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## Neo

*German technical agency praises SMEDAs role *​ 
Wednesday, January 30, 2008

LAHORE: Technical Adviser of the German Technical Cooperation Agency GTZ Bernd Meyhoefer has appreciated cooperation and excellent work done by the Small and Medium Enterprise Development Authority (SMEDA) under the Renewable Energy and Energy Efficiency (REEE) programme. 

Myehoefer said in a meeting held at the SMEDA here on Tuesday. The meeting reviewed the progress of ongoing activities of the REEE programme and introduced Meyhoefer as a new technical adviser, who has recently replaced Tobias Becker, former adviser of GTZ. 

The adviser assured them of complete assistance on behalf of GTZ and his own personal capacity in forthcoming projects of the REEE programme and hoped SMEDA will be one of the focal partner agencies in the execution phase of new projects. 

SMEDA CEO Shahid Rashid briefed about the existing energy scenario of Pakistan and highlighted the importance of energy conservation in industrial sector. SMEDA General Manager Iqbal A Kidwai said fortunately, energy efficiency and conservation procedures are the lowest cost options for meeting energy needs coupled with many other environmental, economic and social benefits. 

SMEDA Deputy General Manager Fayyaz Riaz said recent work done by a joint team of SMEDA and GTZ has created a number of success stories under this programme. This collaboration has also introduced a system for energy audit in the textile sector. 

German technical agency praises SMEDAs role


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## Neo

*2,300 MW projects to be launched by 2009*​
ISLAMABAD, Jan 29: The independent power producers (IPPs) will install new power projects of 2300 MW by 2009 to meet current power shortage in the country.

This was stated by caretaker Minister for Water and Power Tariq Hameed while presiding over a meeting held to decide installation of fast track power projects, which could be operational by the end of the current year.

The minister said that another thirteen power projects totalling 3120 MW will be commissioned by the year 2010.

He said there was a rapid growth in economy and an expansion in the industrial sector was being witnessed because of the development reforms of the present government. He observed that there was a need to augment this with in uninterrupted power supply.

The progress in the power sector is a proof of our commitment towards the development of the country and economic betterment of the people, he remarked.

The meeting decided to create a capacity of around 1,000-1,200 MW for a period of three to four years to bridge demand and supply gap by 2010.

The meeting among others was attended by the Deputy Chairman Planning Commission, additional secretary finance, director general (gas) petroleum and natural resources, director general Board of Investment (BoI), chairman Wapda, managing director Power Projects Infrastructure Board (PPIB), chairman Nepra and MD Pepco.

2,300 MW projects to be launched by 2009 -DAWN - Business; January 30, 2008


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## Neo

*Crescent Petroleum interested in investing in IPI*​
ISLAMABAD: Sharjah based Crescent Petroleum Company is keen to take the contract of laying gas pipeline in Pakistani territory regarding billion dollars Iran-Pakistan-India (IPI) gas pipeline project, sources told Daily Times on Tuesday.

Sources said the company has started lobbying in Pakistan for level playing field to get the contract of laying gas pipeline and is said to make a consortium to carry out project. The cost of laying the pipeline within the Pakistani territory has been estimated at around $3 billion, sources added.

Sources said the company is having a strong involvement in the signing of Gas Sales Purchase Agreement (GSPA) on IPI as the task was assigned to the company to make arrangements for signing GSPA on IPI between Iran and Pakistan in Abu Dhabi on January 25.

Due to involvement of the Crescent Petroleum Company that is having the American shares, Iran stayed away to sign GSPA on IPI with Pakistan in Abu Dhabi in caretaker set up and conveyed to Pakistan it would sign the agreement with the next elected government, sources added. 

Sources said that at present a caretaker Petroleum minister Ahsanullah Khan is playing the role of ladder between Crescent Petroleum Company and government of Pakistan to award the contract of laying gas pipeline in Pakistan to the company. Caretaker minister has earlier been the main player to make a deal between government of Pakistan and UAE based company etisalat on PTCL privatization, sources added.

Sources further said that the Crescent Petroleum Company also contains American shares and the company at present is also negotiating with India for Liquefied Natural Gas (LNG) import. Sources further said that this company was earlier to work on laying Turkmenistan-Afghanistan-Pakistan (TAP) gas pipeline before the hold of Taliban in Afghanistan. But the company stayed away to work on TAP project after the Taliban gripped Afghanistan.

Sources further said that Crescent Company had also involvement in Gulf-South Asia Pipeline project under which Pakistan was to import gas from Qatar but the government of Pakistan stayed away from working on the project, as it was not feasible. 

The Economic Coordination Committee (ECC) of the Cabinet has approved the signing of gas sale/purchase agreement (GSPA) with Iran for the multibillion-dollar Iran-Pakistan-India (IPI) gas pipeline project. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Services trade deficit crosses $3 billion ​* 
KARACHI (January 30 2008): The country's services trade deficit has crossed $3 billion mark, up by 34 percent, during the first half of fiscal year 2007-08 as compared to same period of last fiscal year mainly due to the rising imports and decline in the exports of service.

The exports of services are declining, while the imports are increasing constantly during the current fiscal year and it is expected that during the current fiscal year services deficit would also reach new peak level, like trade deficit.

SBP statistics show that service sector exports stood at 1.392 billion dollars as against the imports of some 4.673 billion dollars during the July-December 2007 period, depicting a deficit of 3.281 billion dollars.

The deficit during the first half year also showed an increased of 829 million dollars, or 34 percent, as against the same period of last fiscal year, as during the July-December of 2006 overall services deficit stood at 2.451 billion dollars.

Heavy payments on account of transportation, travel services, insurance, technical fee, royalties and government sector were the major contributors in the services trade deficit, economists said.

"Rising imports had also played a major role in the services sector deficit, while the raise in the tariff of shipping lines was another leading factor behind it," they added.

Pakistan does not have any shipping line except one flag carrier Pakistan National Shipping Corporation (PNSC). Therefore, exporters and importers both are compelled to hire and pay to the international shipping lines, they said. The overall exports of services sector declined by 22 percent, while imports increased by 11 percent.

Overall services sector exports registered at 1.392 billion dollars as compared to 1.774 billion dollars during corresponding period of last year, a decline of 382 million dollars. Imports of services sector rose by 447 million dollars to 4.673 billion dollars as compared to 4.226 billion dollars during 2007.

The country earned some 501 million dollars on account of transportation against the payments of 1.671 billion dollars. Some 132 million dollars were earned from travel sector as against the payments of 808 million dollars, and communication sector exports stood at 69 million dollars as against the imports of 50 million dollars.

The construction sector earned 16 million dollars, insurance sector 14 million dollars, and 51 million dollars from were earned in financial sector during July-December 2007. About 68.78 million dollars payments were received on account of computer and information sector royalties and licence fees, 23.78 million dollars for cultural services, 1.2 million dollars other business services earning stood at 206 million dollars.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Metropolis to have Media City soon ​*
KARACHI (January 30 2008): A Media City would be established in the metropolis where there would be an investment to the tune of $400 million. Sindh Information Technology Minister Jam Karam Ali stated this. He said this after a presentation by the Smart City Development Limited, Dubai, says a statement on Tuesday.

It was informed that the provincial government has identified 200 acres of land on the National Highway and Super Highway Link Road where the Media City would be established.

The minister said the Media City is being set up for the first time in the country and that there would be an investment of $400 million. He said the information technology sector is making a rapid headway in Sindh where there are a lot of opportunities for the investment. Jam Karam Ali pointed out that Sindh as well as Pakistan offer huge opportunities for investment.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Launching of industrial park in March ​* 
LAHORE (January 30 2008): The National Industrial Park Development and Management Company is working on an industrial park to back the auto industry and will launch it in March 2008, it emerged on Tuesday. "The proposed 'auto cluster' project site is located in Lahore, having 170 acres of land," said company Director Mohsin Syed.

The Ministry of Industries, Production and Special Initiatives has appointed Mohsin's company. Mohsin told a meeting that his company would set up a comprehensive technical programme to train people under a crash programme through mobile training centres in three major areas, including automobile, mechanical and construction. The three areas will cover 23 different sectors - from mechanical (petrol) to appliance repairs and motor winding.

Tevta will provide the training course. Tevta has already trained 70,000 students in different posts in the Punjab and had them employed in different technical positions in industrial organisations. The training aims at creating jobs for the unemployed with the production being expected to begin in the third quarter of June 2009.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Modern wholesale centres: 'establishment leaving positive impact on economy' ​* 
LAHORE (January 30 2008): Caretaker Chief Minister Ejaz Nisar has said that setting up modern wholesale centres in the province is leaving a positive impact on the national economy and accelerating the pace of development.

He said his government was encouraging foreign investment and promoting public-private partnership to strengthen development and that growing investment by international institutions in the Punjab was a good omen to improve the living standard.

He said the system of Metro Cash and Carry is resulting in availability of quality items to the citizens at affordable rates. He was talking to Managing Director of Metro Cash and Carry Giovanni Soranzo at Chief Minister Secretariat, here today. Provincial Housing Minister Mian Shafqat Ali was also present on the occasion.

The Chief Minister said that government is promoting trade and economic ties with the foreign countries. He said that setting up of wholesale centres in the province is resulting in provision of quality items to the consumers at reasonable rates.

He said that government is replacing the old system of trade with the modern system of marketing, which will help in safeguarding the rights of consumers as well as modernising the economy.

Nisar said that setting up of Metro is directly benefiting the farmers who are getting better returns for their produce. He said that establishment of Metro centres will also help in the export of local items to the foreign countries which will result in increase in the income of farmers as well as their prosperity.

Managing Director Metro Cash and Carry Giovanni Soranzo said setting up Metro Cash and Carry Store in Lahore is benefiting agriculture and local industry as well as resulting in availability of essential items to the consumers at affordable rates. He said that besides setting up of another branch in Lahore, Metro Cash and Carry would soon open its centre in Islamabad.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Efforts on to promote economic activities in NWFP, Fata *​ 
PESHAWAR (January 30 2008): NWFP Governor, Owais Ahmed Ghani has said that indeed we are confronted with highly important challenges with restoration of peace at the top. However, he added, we are following a multidimensional approach not only to tackle the problems effectively.

But solid measures will also be taken to promote economic activities and investments especially to encourage foreign investors in the province and Fata.

Addressing the industrialists and traders, during his visit to Sarhad Chamber of Commerce and Industry, Peshawar on Tuesday, the Governor said, "we are faced with an extraordinary situation requiring extraordinary measures to handle it.

However, he pointed out that the root causes of the problems, being faced in our country especially the NWFP and Fata, are the circumstances prevailing in the neighbouring country over the period and therefore the restoration of peace and normalcy in the entire region is linked with the situation in Afghanistan. The governor also dispelled the impression that use of force has always been the last option. He gave the example of Darra Adam Khel where the political administration adopted the process of Jirgas for controlling events. However, the militants did not pay any heed to the Jirgas, which necessitated the use of force.

Owais Ahmed Ghani further pointed out that majority of the people living in Fata were the peace loving and patriotic Pakistanis, however a small minority of the extremists had created all the trouble. He paid tributes to the personnel of security forces who sacrificed their lives while fighting extremists and the elements involved in militancy and said that they were truly martyrs and we are proud of them. The governor also pointed out that Pakistan is a responsible member of the world community and our economic development especially the income through exports and imports is only possible because of our good relationships with the rest of the world and we would continue our role in this respect.

The governor also stressed the effective role of the traders and industrialists in the development process and said that realistic, concrete and broad-based suggestions would be welcomed in this respect. However, he also made it clear that the government is quite conscious of the difficulties being faced by the industrialists, especially because of the demand of making further improvement in infrastructural facilities, provision of congenial atmosphere for investment and availability of required quantity of energy resources and solid measures are underway for this purpose.

Responding to the demands for construction of customs complex at Torkham and establishment of a dry port in the vicinity of Peshawar, the governor assured that necessary initiatives would be taken on top priority in this respect.

Referring to the establishment of carpet village in Peshawar, provision of normal quantity of natural gas to industrial estates of the province, especially the restoration of the facility to Gadoon Industrial Estate, resolving the grievances of flour industry, ensuring smooth trade activities through land route to Afghanistan, resolving traffic congestion problem in Peshawar City and curbing incidents of kidnapping for ransom, the governor assured that effective steps would be taken in this connection. The governor also said that protection of life and property of all citizens was the responsibility of government and we are fully cognisant of our obligations in this respect.

Earlier, the president of the Chamber, Haji Muhammad Asif and the chairman of Businessman Leaders Forum, Senator Ilyas Bilour while welcoming the governor highlighted the problems being faced by the industrialists and the traders of the province. They also thanked the governor for visiting the Chamber. Meanwhile, the governor also responded to the questions and points raised by the participants including representatives of media.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Work on 7-star hotel in jeopardy ​* 
KARACHI (January 30 2008): The joint project of the Sindh government and the Gulf-based company for the construction of 7-star hotel with the cost of around $1 billion is in jeopardy.

Highly placed sources in the Sindh planning and development department told Business Recorder on Tuesday that due to political uncertainty in the country, the huge investment was likely to be stopped by Gulf-based firm for the proposed project of 7-star hotel at Shahrae Faisal.

They apprised that before December 27, firm was waiting for green signal from the provincial government to start the construction of first ever 7-star hotel in Karachi, but after martyrdom of Benazir Bhutto, the company was seriously pondering to wind up the proposed project before its commencement. They said the think-tank of a firm believed that political instability would create hurdles in the construction of 7-star hotel.

Sources said the firm has thoroughly analysed country's current political condition and thereafter they decided that the 7-star hotel would not be constructed unless the democratic government would not be established in the country.

They said the department received a letter from the company in which they informed the department that "The construction of hotel will not be started before elections else if company starts project, it would be a chance to bear huge losses in the project."

Sources in the department said the commencement of a project was now based on country's political stability, which would only be possible after conducting fair and free polls. "They feared that if it sets out the project before election, the huge investment would be stuck during its construction, besides facing difficulties to continue the project in any untoward situation happened", sources maintained.

They said that Karachi had the capacity to have more four and five-star hotels as the number of foreign visitors and tourists besides official delegations was increasing every year. "Rooms in all the big hotels in the metropolis are occupied by foreign and local visitors and you have to reserve the room prior to the arrival at the hotel," they said.

"It shows the urgent need for more luxurious hotels in the city to provide convenient accommodation to the visitors." It may be mentioned that the Sindh government was inviting investors to build four and five-star hotels in Karachi. A scrutiny committee was also set up with the authority to take up the matter and remove all ditches in this regard.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Over 55 percent increase in gas network in seven years ​*
ISLAMABAD (January 30 2008): The gas sector has shown phenomenal growth during last seven years as transmission and distribution system expanded from 60,000 km to 93,000 km, registering over 55 percent increase in network expansion.

According to sources in the Ministry of Petroleum and Natural Resources here on Tuesday, during this time the number of consumers also increased from 3.46 million in to 4.97 million during, showing an increase of about 43 percent.

The network was connecting 1,77 cities, town and villages in 2000, which has now reached up to over 2,550 cities, town and village, with an increase of 117 percent.

During the period, Rs 65 billion was spent to expand the gas network. With expansion of gas network to new areas, consumption has also shown sharp increase--from 2,100 mmcfd to 3,350 mmcfd, showing an increase of 60 percent, sources said.

About increase in compressed natural gas (CNG) sector, sources said, so far, 1.5 million vehicles have been converted to this cheap and environment-friendly fuel. The number of CNG stations has reached 1,834 across the country and Pakistan is the second largest user country after Argentina in this sector.

Regarding use of LPG, sources said that the present production of LPG is about 1,650 tons per day while its demand is 5,000 tons per day and shortfall is covered by import. About production of gas, they said that 70 percent of natural gas is coming from Sindh while the share of gas in the energy mix is 54 percent.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Power crisis to continue in 2008 - I *​
ENGINEER HUSSAIN AHMAD SIDDIQUI 

ARTICLE (January 29 2008): The current power demand-supply gap is playing havoc with the national economy and making lives of the people miserable. Sadly, the year 2008 does not promise any respite either to the nation-wide large-scale loadshedding.

Today, total installed capacity for power generation is 20,456 MW, whereas de-rated/dependable power generation works out to be nearly 18,000 MW. In actual, firm power supply is 16,000 MW in summer and 13,000 MW in winter after taking into account huge thefts, line losses and reduced gas supply and lean period for hydel power generation in winter.

In relation, total peak demand at present is 17,800 MW at national level, based on load demand of June 2007, which is projected to be around 19,000 MW during 2008, at 8&#37; annual growth rate.

Thus there is likely to be shortage of power to the extent of 3,000 MW in the year 2008 at peak load, under the present conditions. Official demand-supply projections however suggest lower power deficit during the year 2008. In fact, there is no reliable system for forecast at national level due to various factors.

For instance, industrial, domestic and commercial consumer demand statistics are not available, various assumptions taken at different times do not hold good, annual growth rate is erratic and deceptive, and projections are not well co-ordinated with provinces and concerned agencies.

Demonstrating its commitment to balance the power demand and supply position, the government has been employing all its resources to meet the projected electricity shortages in the country. Necessary policy measures have been in place for the last many years to ensure reliable and sustainable addition to power generation capacity.

In response to the Power Policy 2002, as many as 64 power projects, of the cumulative capacity of over 17,100 MW, are scheduled to be commissioned by the private sector during 2008-2016. Furthermore, the Water and Power Development Authority (WAPDA)/Pakistan Electric Power Company (PEPCO) has been allowed to establish a number of thermal power plants, of a total capacity of about 1,000 MW, in addition to on-going hydel power projects.

Likewise, wind-farm power generation units of at least 700 MW capacity will be operational within a few years. Karachi Electric Supply Company Ltd (KESC) has also announced its plan to add 780-MW electricity to its existing system by 2010. Another nuclear power plant of 325 MW capacity is under construction.

To meet the energy shortage on immediate basis, the government has adopted various measures. Efforts have been made to expedite commencement of the new projects by the Independent Power Producers (IPPs) without further delay, and simultaneously, WAPDA has been asked to establish fast-track thermal power plants on rental basis. Fast track projects have also been allowed in private sector, circumventing standard procedures and requirements as per power policy in vogue.

These measures however have failed to bring in any new power project on stream in time, in particular in the private sector. This situation is generally perceived to be the result of, first, greed on the part of investors to gain optimum financial benefits out of power crisis that virtually has been created by themselves, and second, the flawed and lopsided policies of the government that also remained inconsistent.

Against the projected additional demand, the IPPs alone of cumulative capacity of 3,000 MW were scheduled to come on stream by the last quarter of 2007/first quarter of 2008. But the investors continued to demand more and more benefits and concessions, through revisions in the Power Policy as well as amendments in the security package documents, time and again. The government has been pressurised to oblige the investors. Thus the Power Policy 2002 has been re-framed and reviewed so much that it has become nearly redundant in its original form.

Yet, there is no end to seeking additional benefits and concessions over and above those granted by the government already. A few of the investors have now asked for review of tariff determination, on one pretext or the other, after accepting up-front tariff announced or tariff determined for the project earlier by the National Electric Power Regulatory Authority (NEPRA). Resultantly, the commencement of project construction delayed in each case and its commercial operation date (COD) was revised a number of times.

Under these conditions, only two power plants of cumulative capacity of 390 MW will be operational in 2008 and that too by the last quarter. Orient Power 225-MW capacity at Balloki, Punjab using natural gas is the first project being implemented under the Power Policy 2002.

The Letter of Interest (LOI) for the project was issued on 12th February 2004, but financial close could be achieved on 16th December 2006 and the plant is now scheduled to generate and sell electricity by December 2008. AttockGen Power of 165 MW capacity, the oil-based project for which the LOI was issued on 21st December 2004, has achieved financial close on 25th September 2007. The project that has the advantage of utilising the existing infrastructure of the Attock Refinery Ltd at Morgah, Rawalpindi is scheduled for operations by October 2008.

Being disappointed with the pace of work on the IPP projects, the government decided, on 2nd December 2005, to involve the leading business houses for processing of fast track projects based on oil, which were required to be commissioned by June 2008.

The fast track projects were to be approved through relaxed processing procedures, which did not require issuance of the LOI and conducting of a feasibility study. The package also offered a tariff with built-in incentives in capacity purchase price for such projects.

Responding to the initiative, many leading business-houses had agreed to establish green-field power plants of a total capacity of 1,600 MW, which were originally scheduled to meet the target COD that was the essence of the scheme. A number of amendments in the Policy were thus made by the ECC of the Cabinet, extending additional fiscal and financial benefits to the prospective investors.

Nonetheless, these time-bound projects were not implemented and projected CODs were revised with passage of every quarter, presenting a new set of incentives and tariff-related indexations demanded by the investors. In final analysis, only three power projects could reach advanced stage. These projects are Atlas Group's 225-MW project at Sheikhupura, Nishat Power 200-MW near Lahore and Nishat Chunian 200-MW at Lahore, now expected to achieve the COD during December 2009-June 2010.

The levelised tariff is as high as US Cents 12.1253 per kWh. The other leading business-houses have finally backed out, wasting more than one year and leaving the nation in lurch. Likewise, the government had asked the existing IPPs to create, by June 2008, an aggregate capacity expansion of up to 775 MW through competitive bidding. These fast track projects based on oil as fuel were to be operational by October 2008 as per the decision of the ECC of the Cabinet. The response was poor.

Only three existing IPPs namely Kohinoor Energy, Japan Power Generation and Tapal Energy had submitted their proposals for cumulative capacity expansion of 400 MW. Even these proposals did not materialise though the government accepted levelised tariff as high as Cents 12.29 per unit. As of today, none of these fast track capacity expansion projects is in the pipeline.

Thus the strategic decision of the government to create fast track capacity addition/expansion could not pay dividend. Not being certain about sponsors' continued seriousness to put up the power projects within the agreed timeframe, the government also allowed, as a standby arrangement, many fast-track projects based on second-hand or refurbished equipment. These include 179-MW Gulf Power at Sahuwala, Tecno Engineering/Taiyo Hills 127 MW at Lahore and Glimmer/Eastern Power at Pasrur of 150 MW capacity.

Business Recorder [Pakistan's First Financial Daily]

*Power crisis to continue in 2008 - II *​
ARTICLE (January 30 2008): The regulatory authority, NEPRA, has already determined electricity tariff for these projects. These oil-based projects on diesel-engine technology were to achieve the COD by October 2008. The sponsors could implement none of these projects in time and now these are re-scheduled for commissioning during March-December 2010, if at all these see light of the day.

The other sponsors, showing non-serious attitude, have either shelved their projects at a belated stage or transformed those from fast track to conventional projects under the Policy framework.

Similar has been the situation with the windfarm power generation. A number of LOIs have been issued by the government for establishing wind farms of 50 MW each in Sindh for the last many years, but not a single project has taken off. Meanwhile, the investors managed the formulation and announcement of an attractive Renewable Energy Policy, almost dictating their own terms and conditions. The up-front tariff of Cents 9.5 per kWh levelised over the term of project was offered in April 2006.

The prospective investors however were not satisfied, asked for higher tariff and were finally granted Cents 10.2852 and Cents 10.4754 per unit. Due to inordinate delay in execution of these projects, only 150 MW is expected to be added by 2008 to the present installed capacity. The projects in advanced stage are New Park Energy, Green Power and Win-Power having recently obtained generation license from NEPRA.

The plan to augment power generation capacity through the public sector is being pursued by the government in parallel. WAPDA's two thermal power plants acquired on rental basis are already operational. These plants, which use natural gas out of allocations available with the WAPDA, include a 150-MW rental plant located at Lahore and another 136-MW capacity plant at Bhikki that was inaugurated in December 2007.

Another 100-MW power plant is being installed on lease/rental basis at Guddu power station, which will be operational in last quarter of 2008. WAPDA is currently being restructured, with the ultimate goal of privatising all its thermal power stations, and its Power Wing and corporate entities are now placed under the management of PEPCO. This was not the opportune time for the restructuring that has created various administrative, human resource and financial problems both for WAPDA and PEPCO, and the situation is likely to affect operations and efficiency of the two organisations for sometime, hampering the progress of on-going projects. Nonetheless, PEPCO has taken measures to improve power supply position.

PEPCO plans to implement rehabilitation of its existing thermal power stations on fast track basis, aiming to recover lost output estimated to be around 300 MW. Instructions have already been given to the thermal power generation companies (GENCOs) to undertake immediate repairs at Guddu and Jamshoro power stations and to improve plant efficiency. It has also been decided to replace the old power plant at Guddu with the advanced and efficient power generation units of 800 MW capacity.

Malakand-III hydropower project of 81 MW capacity constructed by the Government of the NWFP has been commissioned and will generate power by January 2008. However, WAPDA's on-going hydel power projects, namely Duber Khwar, Allai Khwar and Khan Khwar, of an aggregate capacity of 323 MW, have run into snags, once again, as the financing agency (Abu Dhabi Fund for Development) has cancelled the $272 million agreement, and thus completion would be further delayed.

Only the 72-MW capacity Khan Khwar project is likely to be completed by October 2008. Mangla Dam Raising project has also been delayed due to contractor's inefficiency and mismanagement, and is now due for completion by June 2008. The project is expected to add about 180 MW power generation to the installed capacity.

WAPDA's coal-fired Lakhra power plant of total 150 MW installed capacity, which was giving only 23 MW output till recently, has been leased out to a private company. The private company is committed to rehabilitate and revamp the power station on fast track and to generate 100 MW of electricity by September 2008, thereby increasing power generation to full installed capacity in the following year.

Import of electricity from Iran will continue to the level of 1,000 MW, while PEPCO system will shortly have an additional 100 MW in its network through purchase from small power producers like textile mills. Furthermore, PEPCO has launched an effective public awareness campaign and enforcement of energy conservation measures. These demand side measures are expected to save more than 500 MW.

Strengthening and widening of the electricity transmission and distribution systems remain the sole responsibility of WAPDA/PEPCO (excluding KESC system). Accordingly, major revamping, modernisation and expansion of PEPCO's existing transmission and distribution network is currently being undertaken, ensuring dispersal of additional power generated in near future. Asian Development Bank has extended a loan amounting to US $1,450 million for the purpose, to be utilised for transmission/distribution schemes undertaken during the period 2007-2016.

The power scenario of Karachi is complex and different from the rest of the country. The demand for electricity in the metropolis is growing at a fast pace but there seems to be no respite to the residents, businessmen and industrialists in near future due to a number of factors. First, KESC's transmission and distribution system is not capable of taking any additional load, and not much has been done so far to invest in rehabilitating and strengthening the network.

Second, KESC has failed to achieve major physical progress on implementation of its generation capacity expansion plan announced after the take-over. Currently, work on capacity expansion of Korangi thermal power station is in progress and additional 220 MW electricity is expected to be generated by March 2008.

The government has allocated, in June 2007, additional 21-mmcfd gas for 100 MW power generation through rental power plant. However, KESC has not yet firmed up arrangements for establishing power plant on rental basis that is the immediate solution to create additional capacity. To date, WAPDA remains obliged to "export" 700 MW bulk electricity to the KESC system on a regular basis.

To summarise, optimally an additional capability of around 2,000 MW will be available to the national grid, progressively, during January-December 2008 that would partially offset the growing demand for electricity during the year. The redeeming factor is that though the measures would not bring in significant improvement in the power system in 2008 the power crisis is not likely to worsen either.

As for the future, four IPPs of cumulative capacity of 775 MW, all gas-fuelled, are scheduled to go into operation, if everything goes well, during July-December 2009. These are Sapphire Group's 225-MW project at Muridke (Punjab) for which construction has begun, Fauji Foundation's 175-MW on-going project at Mari (Sindh), Halmore's 225-MW project at Bhikki (Punjab) and Engro Group's 150-MW project at Daharki (Sindh). The dispersal of power from all these projects was originally scheduled by 2007-08, whereas financial close for the last two projects is still awaited. A few of the so-called fast-track projects may also come up.

WAPDA's on-going hydel power projects are re-scheduled for completion by 2009. PEPCO will set up two thermal power stations at Nandipur (Gujranwala) and Chichoki Mallian (Sheikhupura), each of 400-500 MW capacity, which are scheduled to go into production by 2009. Originally, the Chichoki Mallian project was scheduled to go into operation in 2008 for which WAPDA had finalised contract sometime in February 2007.

The government then decided to transfer the project to a selected foreign investor who has abandoned the project recently and it is now being reverted to the public sector for implementation. This week PEPCO has issued Letter of Acceptance to the Chinese bidders for award of contract for Chichoki Mallian project.

Business Recorder [Pakistan's First Financial Daily]


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## Introvert

*Pakistan exports sugar first time in 5 years *
Thursday, 31 January 2008 

Pakistan, which has been importing sugar in recent years, has struck its first export sale in five years and could ship as much as 300,000 tonnes in the next nine months, a senior industry official said. The deal to sell 1,000 tonnes of white sugar to Sri Lanka was sealed at $335 a tonne, free on board, for February shipment in containers, Najib Balagamwalla, chief executive of top commodity trader Sea trade Group, told Reuters. 

Pakistan producers are increasingly looking abroad after the government raised import duties and removed an export tax, signalling it believed domestic supplies were comfortable. &#8220;We have just closed the deal. We are aiming to sell another 20,000 tonnes to Southeast Asia and Middle East destinations. Negotiations are at an advanced stage,&#8221; Balagamwalla said. 

&#8220;If London prices rise a little more, we should be able to do a couple of bulk deals,&#8221; he added. White sugar futures in London, which have lagged the broader rally in commodities prices due to big production in Brazil and India, hit a 13-month peak of $361.00 on Jan 18, but the March contract had eased to $346.8 by 1000 GMT. 

&#8220;We can export up to 300,000 tonnes with having any problems about supplies in the domestic market,&#8221; Balagamwalla said. &#8220;The domestic situation looks pretty comfortable now.&#8221; In November, Islamabad raised the duty on sugar imports to 25 per cent from 15 per cent, sending out a signal that supplies had reached comfortable levels. 

Pakistan also removed a 15 per cent duty on sugar exports in the same month, the first signs about its intentions to sell in overseas markets. But no deal had materialised until now as Pakistani sugar prices were not competitive. &#8220;We are facing tough competition from Indian sugar,&#8221; Balagamwalla said. 

Pakistan is expected to produce between 4.3 and 4.5 million tonnes of sugar in 2007/08, compared with 3.6 million tonnes last year. The country has an annual domestic demand of 3.9 million tonnes. It entered the new crop year with carryover stocks of 500,000 tonnes from the previous crop. 

On top of hefty Indian exports, another record crop of Brazilian sugar is expected to weigh heavily on prices this year, Peter Baron, executive director of the International Sugar Organisation, told Reuters earlier this week. 
Pakistan exports sugar first time in 5 years - Unique Pakistan


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## Introvert

*Sri Lanka intends to raise trade volume with Pakistan *
Friday, February 01, 2008 

ISLAMABAD: Sri Lankan Foreign Minister Rohitha Bogollagama on Thursday said his country wants to expand bilateral trade with Pakistan from the existing $385 million to one billion dollar. 

Addressing a press conference here this evening, the Sri Lankan Foreign Minister said during his talks with the President, the Prime Minister and the Foreign Minister of Pakistan the two sides expressed the desire to forge a comprehensive economic partnership for mutual benefit. 

He said in this backdrop, the two countries discussed how to make the Joint Economic Commission and the Joint Council more effective to give boost to trade and economic cooperation. 

He said the two countries are discussing issuance of multiple visa for business travels to facilitate businessmen of the two countries to have more interaction. 

Rohitha Bogollagama said there is great potential for cooperation in shipping and Sri Lanka was interested in utilization of Pakistani tankers for transportation of crude oil from the Middle East. 

He said Sri Lanka was shortly announcing blocks for oil exploration and wants to utilize the Pakistani expertise for this purpose. 

The Sri Lankan Foreign Minister also proposed increase in the number of scholarships by the two countries to boost cooperation in education. 

He said his country has experience in tourism development and was keen to extend cooperation to Pakistan in this regard. 

To a question, he said Pakistan and Sri Lanka have ongoing cooperation in defence field but he did not discuss anything special during the visit. 

Rohitha Bogollagama appreciated Pakistan's contribution in the fight against terrorism and expressed the hope that the country would be able to overcome its difficulties soon. 

He said both Pakistan and Sri Lanka were victims of terrorism and the two countries have been pursuing identical approach on regional and multilateral for emphasizing the need to address the issue of terrorism in all its forms and manifestations. 

He appreciated Pakistan for showing understanding of the Sri Lanka's fight against terrorism and to preserve its sovereignty and territorial integrity. 

Replying to another question he said the Commonwealth Ministerial Action Group hastily enforced its decision of suspending Pakistan's membership and did not allow Pakistan the time required to operationalize reforms. 

He expressed the hope that the Commonwealth would adopt a more realistic appreciation of the steps taken by Pakistan for the consolidation of democracy in the country.


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## Neo

*Engro unveils Rs3.4bn expansion plan ​* 
Friday, February 01, 2008

KARACHI: Engro Food Limited has announced that it will invest about Rs3.4 billion over two years in a bid to expand its current portfolio.

Under the expansion plan, the company would set up a new dairy farm and develop an ice-cream venture in Pakistan, Engro Food CEO Sarfaraz Rehman unveiled this at a press conference here on Thursday.

During the last two years, Engro has launched four new brands in the dairy category with 100 per cent success rate amid increase in its market share to remarkable levels, he said. In the next four to five years, we want to be the market leader in the food industry of Pakistan and have plans to export food products in future as well.

Engro Foods entry into the ice-cream sector was a step forward in achieving its vision of becoming a total food solution company, he said. Sarfaraz Rehman said the company had planned to invest heavily in dairy farming to seize on the available opportunities for growth in the sector.

Giving details of a newly-designed dairy farm, he disclosed that it would be located in Sindh. It will be the first state-of-the-art corporate dairy farm in Pakistan based on imported cattle and manned by international experts.

Sarfaraz Rehman said Engro Food has acquired close to 20 per cent market share in the Ultra Heat Treated (UHT) category in a span of two years. We have the most well-spread milk collection system. Operating from two manufacturing sites, Sukkur and Sahiwal, our brands are present in more than 100 towns.

Engro unveils Rs3.4bn expansion plan


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## Neo

*Pakistan, England strike open skies deal ​* 
Friday, February 01, 2008

KARACHI: Pakistani airlines can now operate unlimited number of flights to anywhere in England including Londons busy Heathrow, Gatwick and Stansted airports, a top Civil Aviation Authority (CAA) official told The News on Thursday. 

An amended air services agreement has also enabled national flag carrier Pakistan International Airlines (PIA) and private airlines Airblue and Shaheen Air to pick passengers from intermediary stops in Middle Eastern and European countries en route to UK, he said.

England has this sort of arrangement with only a few countries, he said, citing the air traffic congestion that the country faces especially at Heathrow and Gatwick. Not even India has this facility.

The agreement was struck between January 23 and 24 when Pakistani aviation authority officials led by Maj Gen Mir Haider Ali Khan, Additional Secretary, Ministry of Defence, met their English counterpart to decide on 10 articles of an air services treaty that covers the broader European region. 

It also allows English and other European airlines to operate unlimited number of flights to Pakistan from England. Under a new European Union (EU) regulation, airlines from its 27-member states can use each others routes, the CAA official said, requesting not to be named. 

Under the agreement, Pakistani airlines can operate unlimited number of flights beyond UK but only six flights a week that allows them to pick passengers from UK for onward destinations. However, these flights cannot be run via Heathrow and Gatwick. 

Airlines operating from UK will have unlimited access beyond Pakistan but they can operate only six flights in a week whereby they can pick traffic from intermediary stops on way to Pakistan. 

Pakistan witnessed a rising interest of foreign carriers last year after the new management of CAA decided to liberalize countrys airspace to facilitate the increasing passenger traffic. Number of passengers who used Pakistani airports increased to 14.6 million in 2005-06 from 13.5 million a year earlier. 

During 2007, the country remained in the spotlight of airlines based in England, where a sizable population of Pakistani origin lives. British Airways increased its operations from three weekly flights to six between Islamabad and London. 

Astreaus and European Air charter, the two low cost carriers of UK, were designated to operate services between the two countries. Another English carrier UK International Airline started flights from Nottingham to Islamabad via Sharjah with twice weekly frequencies. 

Vargin Atlantic, also of UK, has shown its intent to commence operations in Pakistan from summer. British Midland of UK has also been designated to operate to Pakistan. Air Arabia of United Arab Emirates (UAE) commenced operations to Karachi and Peshawar from Sharjah while Etihad airways increased its Karachi and Peshawar operations. 

Another UAE carrier Ras-al-Khaima (RAK) has requested for designations in Pakistan. After a gap of nine years, German carrier Lufthansa recommenced its operations with three weekly flights in winter. Oman air also recommenced its operations while Malaysian Airline launched its fourth flight to Karachi. 

Airblue marked a watershed in aviation history of the country by becoming the first private Pakistani airline to start flights to Manchester last June. Its request for designation to Turkey, Jordan and Sri Lanka has already been approved.

Shaheen Air International (SAI) will commence operations to Bradford, UK, from February 7. They have also requested for starting operations to Bangladesh and Sri Lanka. Singapore Airline recommenced its operations with three weekly frequencies between Singapore and Pakistan with co-terminal rights at Karachi and Lahore.

Air Italy the second carrier of Italy has been designated to operate to Pakistan. Al-Jazeera the second carrier of Kuwait has been designated to operate between Kuwait and Pakistan. GMG the second airline of Bangladesh has been designated to operate to Pakistan.

Pakistan, England strike open skies deal


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## Neo

*Bright prospects await Pakistan in Russian markets ​* 
Friday, February 01, 2008

LAHORE: There are a lot of opportunities and prospects for Pakistani businessmen in Russia; and good quality products from Pakistan could make inroads in Russian markets.

The Russian Ambassador, Sergey Preskov, stated this while speaking to the LCCI President Mohammad Ali Mian during a meeting at the LCCI on Thursday. The ambassador expressed his optimism that both Pakistani and Russian businessmen could enter into joint ventures and benefit mutually, they can also take bilateral trade to new heights while being sector-specific in their endeavours.

He said Russia has a lot to offer to the Pakistani business community and that Pakistani businessmen can adopt a lot from Russias technology up-gradation of its industrial units. The ambassador and the president LCCI also agreed to ink a MoU for the establishment of a Pak-Russia Business Council besides holding single country exhibitions in each others country.

They both were of the view that without taking initiatives, there was little scope for any headway to boost bilateral trade ties. Speaking on the occasion, Mohammad Ali Mian said that Pakistan is grateful to Russia for establishing a mega steel mill at Karachi in the past, which today is playing a vital role in the development of the country.

Pakistan Steel Mill is the biggest steel producer, catering to local demand and value addition in allied products. He said that Pakistan and Russian economies profile suggest bright possibilities for joint ventures in numerous sectors like food processing; oil, gas & mineral exploration; energy; engineering (heavy & light) transport equipments; automobiles; tractors; harvesters; machine tools; cement; fertilisers; industrial chemicals; plastic & rubber products and home appliances etc., in which the Russians have a significant know how and technological edge.

Bright prospects await Pakistan in Russian markets


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## Neo

*KSE to introduce Stock Index Futures soon*​
ISLAMABAD: Karachi Stock Exchange (KSE) after the launch of Deliverable and Cash Settled Futures has been involved in development of another derivative product, which is Stock Index Futures. 

Stock Index Futures are expected to be introduce shortly by KSE in the first quarter of 2008. It is expected that this derivative product will increase the depth in the capital markets and facilitate the investors in a number of ways. 

The KSE 30 Index will act as the underlying for the Index Futures contracts, which will be traded on KSE. The KSE-30 Index is a liquidity-screened and free-float adjusted market capitalization index of 30 stocks listed on the KSE. 

For selection of stock in the Index, 50 percentage weightage is given to market capitalisation and the rest is given to liquidity. The index is composed of the highest capitalization companies that are actively traded in Pakistan. The KSE-30 Index, introduced in September 2006, is a price-based (i.e., not adjusted for cash dividends) index designed to reflect broad, systematic equity market risk in Pakistan.

Two new products, namely future index and options will be introduced in stock market of Pakistan soon, said Chairman Securities and Exchange Commission of Pakistan (SECP) Razi-Ur-Rahman Khan in a press conference a few days ago. 

Officials in the SECP told Daily Times that the stock index futures began trading on US exchanges in the early 1980s and shortly thereafter in other markets. Market participants use stock index futures for a variety of purposes, including, among other things were, hedging, speculation, asset allocation and arbitrage.

Hedging: Stock index futures allow market participants to hedge against market risk. For example, a portfolio manager may sell index futures, reducing the overall exposure of his portfolio to stock price movements and shifting that risk to a market participant more willing to accept it. Index Futures will allow foreigners and other market participants to hedge themselves against negative market expectations, without liquidating their portfolio investment, and pulling out funds from the stock market.

Speculation: Speculators, who assume risk in an attempt to profit from changes in the values of derivatives or the underlying instruments, may use derivatives as a more affordable way to attempt to profit from anticipated price movements.

Asset allocation: Because an index option or future is a single instrument that can be used as a surrogate for a portfolio of stocks, a portfolio manager may also use stock index futures or options to adjust stock and debt portfolios quickly and at relatively low commission costs. 

For example, a manager can convert a debt portfolio to equity by simultaneously selling bond futures and buying stock index futures.

Arbitrage: An arbitrageur seeks to lock in profits when the price of the index derivative and the securities underlying it move out of line with each other. Typically, an arbitrageur will lock in a profit by selling the dearer of an index future and the underlying securities and simultaneously buying the cheaper of the two.

The officials further said that stock future index would be for 90 days, later it would be reduced for 60 and then 30 days. So at a time there would be three types of future index i.e. 90, 60 and 30 days. 

The officials further told Daily Times that Mr. David S. Ruder, former Chairman of US SEC, in his speech said: Although derivative index trading is a beneficial force in todays market environment, index trading strategies may provide opportunities for sophisticated schemes to manipulate the market. 

More specifically, extremely well capitalized traders, or traders using customers money, could attempt to engage in inter-market manipulation. It is no secret that the Commission (US SEC) relies to a great extent on the exchanges for surveillance. In recent years, the exchanges have responded by implementing audit trails, automating surveillance, and forming an Inter-market Surveillance Group. I expect these efforts to continue in the future to keep pace with increasingly complex trading strategies.

Options: An option is a contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specific price on or before a certain date. An option, just like a stock or bond, is a security. It is also a binding contract with strictly defined terms and properties.

The power of options lies in their versatility. They enable you to adapt or adjust your position according to any situation that arises. Options can be as speculative or as conservative as you want. This means you can do everything from protecting a position from a decline to outright betting on the movement of a market or index. This versatility, however, does not come without its costs. Options are complex securities and can be extremely risky. This is why, when trading options, youll see a disclaimer like the following: 

Options involve risks and are not suitable for everyone. Option trading can be speculative in nature and carry substantial risk of loss. Only invest with risk capital. Despite what anybody tells you, option trading involves risk, especially if you dont know what you are doing. Because of this, many people suggest you steer clear of options and forget their existence. 

On the other hand, being ignorant of any type of investment places you in a weak position. Perhaps the speculative nature of options doesnt fit your style. No problem - then dont speculate in options. But, before you decide not to invest in options, you should understand them. Not learning how options function is as dangerous as jumping right in: without knowing about options you would not only forfeit having another item in your investing toolbox but also lose insight into the workings of some of the worlds largest corporations. Whether it is to hedge the risk of foreign-exchange transactions or to give employees ownership in the form of stock options, most multi-nationals today use options in some form or another.

Daily Times - Leading News Resource of Pakistan


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*Growth in M2 is alarming: SBP governor *​
* Net foreign assets have contracted but net domestic assets have risen

KARACHI: The excessive borrowing of the government from the central bank to cover its fiscal deficit has resulted in very high growth of broad money (M2), which is very alarming for the central bank, Governor State Bank of Pakistan Dr Shamshad Akhtar said here Thursday. 

Addressing a press conference here she talked at length about the economic environment, particularly monetary conditions of the country, before announcing the monetary policy for the next six months. 

She said growth in reserve money has so far been less than the growth seen during the same period of last year. However, the government borrowing has transmitted a sharp increase in broad money. Growth was seen in M2 near the end of the last financial year, but this year the growth has already occurred which is very alarming, she said. 

Net foreign assets have contracted but net domestic assets have risen, in which the most significant part was of government borrowing. We dont welcome decline in NFA because it increases reliance of government on borrowing from the central bank to cover fiscal deficit, Akhtar said. 

She categorically rejected the impression that monetary policy has become irrelevant in the country. It is relevant. If there had been no monetary tightening, there would have been double-digit inflation, she said. 

She said the central bank was concerned about rising rates of inflation. The key challenge is to bring down inflation. We are quite concerned about the increase in 20 percent trimmed measure, she said. We see that global commodity prices will remain high. 

Rejecting claims that the lending rates have got too high in the country, she said the real lending rates in the country are the lowest among the regional countries that include Indonesia, India, Malaysia and Bangladesh. People should be looking at real lending rate, not nominal lending rate, she emphasised. 

She said the impact of monetary tightening effected in the last monetary policy was more visible at the short end of the yield curve. KIBOR increased after the hike in discount rate on August 1, 2007, but by the end of December 2007 six-month KIBOR was again at the level where it was before the discount rate hike, she said. 

Its impact on lending rate was lower than ever before. Banks weighted average lending rate on incremental loans was 21 basis points lower in December 2007 than in December 2006, she said. 

Growth of credit to private sector was slow but still decent, she said. We expect private sector credit to be in the range of Rs 365 billion to Rs 400 billion by the end of the year, the central bank Governor said. Long term deposits have risen by Rs 72 billion while there was an increase of only Rs 22 billion in short term deposits after an incentive was given to banks for long term deposit mobilization in the last monetary policy, she said. mushfiq ahmad

Daily Times - Leading News Resource of Pakistan


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*BOCP to invest Rs 214 million in Pakistan*​
KARACHI: BOCP approved an investment of Rs 214 million for the installation of a 23 Tonnes Per Day (TPD) Carbon Dioxide (CO2) plant to be installed at Port Qasim. 

According to a press release on Thursday, the company already has a 100 TPD Air Separation Unit Plant (ASUP). 

A meeting of BOCP board of director was informed that the project was expected to take 7 months for completion and production is expected to commence around September 2008. 

The investment will be funded through the companys own internal cash generation. It will enable BOCP to meet the growing demand of CO2, specifically in the beverage sector and to capture other business opportunities in Pakistan. 

BOCP is part of the Linde Group, which is world-leading gases and engineering company and a leading industrial gases company in the country. It owns and operates various gas plants across the country including a 60TPD CO2 plant at Multan, which was commissioned in 2004. BOCP is company with around 49,000 employees working in more than 70 countries worldwide. 

Daily Times - Leading News Resource of Pakistan


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*Import of 1m cotton bales from India​*
LAHORE: Around one million bales of cotton will arrive from India in the coming three months, the textile industry sources told Daily Times on Thursday.

The industry has also finalised deal of import of five hundred thousand bales of short-staple cotton. They said that the import of cotton would ease the pressure in local market. 

The textile industry in the country was facing cotton shortage because of decrease in local production and the millers made contract with the Indian cotton producers for importing of cotton. These millers have made deals of import around one million bales with the Indian businessmen and the quantity will be imported by the end of March. However, the cotton importers are facing problem because of short time of border opening at Wagah border, said All Pakistan Textile Association (APTA) chairman Adil Mahmood. He said that the deals have been finalised with the Indian traders and only a few Indian traders back out from the deals owing increase in cotton prices. 

The big companies however have given us a green signal, said the chairman adding that if the Wagah border is opened for more time then import of cotton would be eased. Currently, border is opened from 10am to 3:30pm and during that 55 trucks carrying tomatoes are coming from India and a very small quantity of cotton is being imported. If the border is opened for two hours more then more trucks can transport good quantity of cotton. He said that in addition to the raw cotton, around five hundred thousand bales of short staple would also be imported. 

In current circumstances, five hundred thousand short staple cotton via land route through Wagah Border from India shall support the textile industry of the country, he said adding that enhancement from 0.5 to 1 million bales of importable quantity of short staple cotton would revive the textile industry.

About the rate of Indian cotton, he said that majority of deals were signed at the rate of 64 cent per pound and it is almost equal to local rates. The Indian cotton has less waste whereas, the local cotton has more waste. In this way, its cost equals to the local cost, he added.

Daily Times - Leading News Resource of Pakistan


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*GDP growth target will not be revised, says Shamshad *​ 
KARACHI (February 01 2008): Despite several concerns and shocks to the economy of the country, the real Gross Domestic Product's (GDP) growth target would not be revised and it would remain 7 percent for the fiscal year 2008. This was stated by Governor State Bank of Pakistan (SBP), Dr Shamshad Akhtar, during a press conference to announce monetary policy here on Thursday.

SBP Governor said that presently economies across the world were facing challenges and difficulties and GDP growth rates of world economies have been declined by 0.7 percent, adding that although economies of some developed countries including China were growing consistently despite the challenges.

She said that it is expected that despite the several shocks to the country's economy during the last six-months, GDP growth target would be hovered around its target of 7 percent, however she emphasised that the risks of inflation may outweigh the risks to growth in the near future.

She said that real lending in Pakistan is still lower as compared to the other regional countries, however the M2 growth is higher than the target of 13.5 percent to 19.5 percent.

She said that despite SBP instructions to the federal government for reducing its budgetary borrowing from central bank, the same is still higher and has reached to Rs 237 billion.

"During the current fiscal, private sector borrowing statistics showing positive trend and its growth is higher than the last fiscal, presently private sector borrowing's growth stood at 10.4 percent as compared to 10.2 percent during the last fiscal,' she said.

She said that although SBP paid full attention to maintain and bring down the inflation, it has increased by 150 basis points. She cautioned that if the SBP not took steps in the monetary policy to curb the rising inflation, it could reach in double digits.

SBP Governor elaborated that the developments in the first half of FY08 substantially deviated from the monetary policy framework. Most significant among these deviations is the behaviour of the fiscal account. Slippages from the fiscal deficit target have, and will, cause complications for monetary management during the course of the year.

During the course of the year, liquidity management is challenging as the commercial banks and central bank ended up together financing almost 60 percent of the budget deficit for the July 1- January 29, FY08 period, she added.

Notwithstanding the impact of the political uncertainty and pressures of government borrowings on the financial system, private sector credit managed to grow by 10.4 percent during July1 -January 19, FY08 as compared to 10.2 percent over corresponding period of the previous year, Dr Akhtar said.

This was partly helped by the calibrated liquidity injections in the system and a decline in the effective Cash Reserve Requirement (CRR), she said and added that banks and SBP worked closely to ensure export financing was being provided in line with requirements.

As of January 5, 2008 exporters benefited from Rs139.6 billion-export credit against Rs131.6 billion at the same point in FY07. Dr Akhtar said that the monetary stance adopted since April, 2005 has had a visible impact. Core inflation came down during FY06 and FY07, albeit slowly and with the standard lag typically observed in developing countries.

Excessive growth in reserve money during fiscal year 2007 due to exceptional requirements of the textile industry for re-financing and budgets continued recourse during the fiscal year on central bank borrowings, she said. Dr Akhtar stressed that the tight monetary policy stance, especially since the previous policy rate increase, has begun to lose some of its steam.

A moderate increase in KIBOR and banks' lending rates, almost flat Monetary Conditions Index, a fall in the effective CRR, and persistently high annualised M2 growth rate are all manifestations of these developments, she added.

Furthermore, there was a reversal in core inflation trends, which rose to 8.7 percent on a year on year basis by December 2007; 2.3 percentage points above the last year level and 2.4 percentage points above the trough reached in May 2007. Headline CPI inflation reached 8.8 percent by December 2007 reflecting the undercurrents of core inflation and the food inflation, which hit double-digits, to reached 12.2 percent in December 2007, she said.

Business Recorder [Pakistan's First Financial Daily]


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*Pakistan as a transit trade and tourism hub ​* 
ARTICLE (February 01 2008): Pakistan is blessed with a unique position in the world geography, situated as it is on the cross roads of East and West, and as one of the choicest corridors connecting the land-locked Central Asian States to the open sea.

The sea and air connections to the outside world are well known, and need no repetition, even if the ground realities demand serious attention for improvement. However, the land borders with neighbours (China, Afghanistan, Iran, and India) deserve more consideration than has been the case so far.

*THERE ARE SEVERAL CROSSING POINTS ON THE POROUS BORDERS, BUT THE MAIN OFFICIAL OUTPOSTS, WITH FORMAL PARAPHERNALIA, ARE: *

1. North (Chinese Border): Khunjerab along the historical Silk Road

2. N. West (Afghanistan): Khyber (NWFP) and Chaman (Balochistan West (Iran): 3.West (Iran) Taftan and Gwadar (Balochistan)

4 East (India): Wagah (Punjab) and Khokhrapar (Sindh)

*a) KHUNJERAB: *

The road starting from Rawalpindi, and travelling through Hassan Abdal, Abbottabad, Mansehra, onto Besham, runs from that point on, parallel to the River Indus in its northern reaches, via Karakoram Ranges.

It passes through Chilas (skirting Nanga Parbat peak, 8126 metres above sea level) to reach Gilgit, where it changes course along Hunza River. Passing Baltit (Hunza), it travels on through Karakoram Range passes, via Misgar and Bara Khun, to reach Khunjerab Pass, which is the gateway to Sinkiang province of China.

The road is hazardous, built at a tremendous cost of lives with the help of Chinese engineers, and it becomes snow-bound and impossible to travel throughout the winter months. It remains closed for traffic for nearly six months of the year.

The road passes through one of the world's most scenic spots along lofty peaks which are among the world's ten highest (after Everest) and a great tourist attraction. The pristine natural beauty is simply breathtaking, but very few hardy and venturesome souls can reach there.

Developing the infrastructure (hotels, restaurants, telecom facilities, fuel supplies and other amenities along the route) supplemented by worldwide publicity will invite hordes of tourists and nature-lovers. That will give a great fillip to the local economy, besides bringing in valuable foreign exchange,

Widening the roads, and making them safe for vehicular traffic will give a great boost to trade, not only with China, but also with Tajikistan and other neighbours, who have contiguous borders with China. A concerted diplomatic drive, to attract customers, is needed to open-up immense possibilities of transit trade, in addition to tourism.

*b) KHYBER:* 

A few miles out of Peshawar, on the road to Jalalabad (Afghanistan), lies the renowned Khyber Pass, a gateway from times immemorial for adventurers and invaders, tourists and traders of all hues and description. One significant feature of this route and territories alongside it, has been some turbulent and militant tribes inhabiting the area.

Peace in this area will also boost transit trade in the region, for cargoes destined to entire South and South East Asia and farther afield, in their transactions with the land-locked Central Asian States.

An important aspect of this development will be the facilitation of import of energy (oil, gas, and electric power) from the exporting countries of Central Asia to the power hungry sub-continent.

Tourism, of course, will be additional icing on the cake, as the route will open vistas as far west as Europe, to the farthest corners of Asia-Pacific region.

*c) CHAMAN: *

Straddling the southern border of Afghanistan, Chaman has been the transit point for cross-border trade in produce (fruits, - fresh and dry - woollens, rugs, handicrafts, and essential food items and consumables of all description) for centuries. The wars in Afghanistan have affected the area badly, and the influx of refugees and their concomitant smuggling operations - merchandise as well as the detestable arms and drugs - have compounded the problems for achieving a decent, peaceful atmosphere for normal trade. Some foreign elements are also engaged in queering the pitch, for their own interests, one of which is to create problems for Pakistan.

The unsettled state of affairs in the Balochistan province does nothing to ease this situation. The potential for prosperity for the people of Pakistan and Afghanistan, once peace returns to the province of Balochistan, is tremendous.

*d) TAFTAN:* 

On the extreme western border of Balochistan in the north, astride the triangle where the borders of Pakistan, Afghanistan and Iran meet, and close to the copper belt of Saindak, lies Taftan. Besides the road from Quetta, it is also linked by rail that goes from Quetta to Zahidan (Iran) operated by Pakistan Railways. Unfortunately, the state of the railway coaches and its schedule of operations (frequency of services) leave much to be desired.

The train passes through desolated arid deserts and dry hills, where water, even for drinking, is scarce, and the wayside restaurants and bus stops are nothing to be proud of. Worse still is the customs outpost on Pakistan side of the border, where cleanliness is a word nobody ever heard of, to say nothing of the apathetic and often derogatory attitude of the officials towards the travellers and visitors to and from abroad.

Taftan is a vital gateway to Iran and beyond. Pilgrims and others travel to Iran, Iraq, Syria, Turkey and onto Europe even, along this route, quite often. The contrast from the other side of the border, Mir Javeh (Iran), is so striking that one hangs his head in shame for being a Pakistani. It is high time some higher ups visit the place to set things right, as Taftan has the potential to become a focal point of mass transit - both for men and materials, from near and far.

*d) GWADAR: *

Besides being a free port in the making, Gwadar is also significant as a land route point to and from Chahbahar (Iran), a few miles away to its west.

Situated as it is on the coast of Sea of Oman, overlooking the Strait of Hormuz and Gulf, with the deep waters of Arabian Sea in the south, Gwadar is meant to be the gateway for much of Central Asia. In addition, its potential as a land border towards Syria, Turkey, Saudi Arabia, etc) cannot be overlooked for trade and tourism, to say nothing of the pilgrimage traffic. Its development possibilities must be seriously looked into, as the future is great.

*e) EASTERN BORDER POSTS*

*WAGAH AND KHOKHRAPAR:* 

One can only hope for an improvement in the situation, which will greatly benefit not only Pakistan and India, but also, all the Saarc countries, as well as the entire Middle East Region, Central Asian states and South-East Asia. Possibilities could extend to the Oceania and regions on the periphery of the Pacific, all the way to South America in the East.

On the Western side, even countries in Europe and North Africa could benefit from opening of these routes to human and goods traffic, affording huge opportunities to Pakistan for lucrative returns.

To sum up, a set of imperatives are needed to be put in place, in order to optimise the potential benefits of the land, as well as the sea and air routes for inland destinations.

*THESE ARE: *

i) Upgrading the roads and railways to an international standard, with proper maintenance.

ii) Proper facilities on the ground for handling the traffic, whether people or cargoes.

iii) Deployment of a courteous and correct officialdom, at all strategic points

iv) Inculcation of the habit and culture of cleanliness in our own people, in all its manifestations

v) Promotion of the possibilities and potentials of Pakistan as a destination as well as a transit route, to attract world attention.

vi) Training guides for tourists, and consular staff for promotion of trade and associated affairs.

vii) Educating public for being courteous and helpful to well-meaning foreigners, and last, but not the least:

viii) Restoration of peace and tranquillity to the land, to make all this possible.

Some foreign countries owe their economic prosperity exclusively or mainly to tourist trade. Examples: Greece, Spain and Thailand.

Why can't we in Pakistan emulate their example?

Secondly, with WTO looming large on the horizon, we cannot afford to be isolated. To ignore this fact will be at our own peril.

Business Recorder [Pakistan's First Financial Daily]


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*Pakistan and Sri Lanka to enhance trade volume to $1 billion per year*​
ISLAMABAD (February 01 2008): Pakistan and Sri Lanka have agreed to push for enhancing the volume of their bilateral trade to $1 billion per annum from existing $385 million in next few years, officials from both sides said here on Thursday.

Visiting Sri Lankan Foreign Minister Rohitha Bogollagama told a news conference here that the two South Asian states wanted to expand the scope of their Free Trade Agreement (FTA).

"Sri Lanka wants more cooperation with Pakistan in various sectors of economy," he said after meeting with President Pervez Musharraf, caretaker Prime Minister Mohammedmian Soomro and his counterpart Inamul Haque earlier in the day.

A foreign ministry statement on talks between Inam and Rohitha also spoke about the mutual desire of raising the current level of trade. "Inamul Haque stressed the need to expand the scope of the existing FTA by including trade in services, investment and (trade) facilitation," it added.

A bilateral arrangement, the FTA envisages either the complete elimination or the lowering of tariffs and duties on tradable items both countries decide between themselves.

Pakistan and Sri Lanka signed the accord some two years ago and it is now being implemented. Rohitha said, he had sought cooperation from authorities here for the shipment of edible and crude oil to his country through Pakistani water territories and facilities.

The participation of Pakistani businessmen and assistance from the government in Sri Lankan future oil exploration ventures were also discussed, the visiting diplomat told media.

Religious tourism, more scholarships for each others' students and multiple visas for businessmen were the other issues the consensus was developed on, he added.

*MEETING WITH MUSHARRAF:* 

Rohitha said President Musharraf had appreciated the Sri Lankan stance against Pakistan's expulsion from the Commonwealth. The 53-member bloc of former British colonies expelled Pakistan second time as a punishment when Musharraf declared emergency in November last year.

Sri Lanka was the only country that rose voice against the removal of a fellow South Asian state in the Commonwealth Ministerial Action Committee (CMAG). "Musharraf does acknowledge this," Rohitha said and a statement also mentioned about the President gratitude for Sri Lankan.

Business Recorder [Pakistan's First Financial Daily]


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*'Pakistan could export 300,000 tonnes of sugar in next nine months' ​*
SINGAPORE (January 31 2008): Pakistan, which has been importing sugar in recent years, has struck its first export sale in five years and could ship as much as 300,000 tonnes in the next nine months, a senior industry official said on Wednesday.

The deal to sell 1,000 tonnes of white sugar to Sri Lanka was sealed at $335 a tonne, free on board, for February shipment in containers, Najib Balagamwalla, chief executive of top commodity trader Seatrade Group, told Reuters.

Pakistan producers are increasingly looking abroad after the government raised import duties and removed an export tax, signalling it believed domestic supplies were comfortable. "We have just closed the deal. We are aiming to sell another 20,000 tonnes to Southeast Asia and Middle East destinations. Negotiations are at an advanced stage," said Balagamwalla.

"If London prices rise a little more, we should be able to do a couple of bulk deals," he added. However, a senior London sugar trader said the Pakistan news was bearish.

"There's too much white sugar already," he said, adding: "There is no demand. It adds more salt to the wound." White sugar futures in London, which have lagged the broader rally in commodities prices due to big production in Brazil and India, hit a 13-month peak of $361 per tonne on January 18.

The benchmark March contract was up $4.80 to $349.30 per tonne at 1247 GMT. "We can export up to 300,000 tonnes with having any problems about supplies in the domestic market," said Balagamwalla, adding: "The domestic situation looks pretty comfortable now."

In November, Islamabad raised the duty on sugar imports to 25 percent from 15 percent, sending out a signal that supplies had reached comfortable levels. Pakistan also removed a 15 percent duty on sugar exports in the same month, the first signs about its intentions to sell in overseas markets. But no deal had been materialised until now as Pak sugar prices were not competitive.

"We are facing tough competition from Indian sugar," said Balagamwalla. Pakistan is expected to produce between 4.3 million and 4.5 million tonnes of sugar in 2007-08, compared with 3.6 million tonnes last year. The country has an annual domestic demand for 3.9 million tonnes. It entered the new crop year with carryover stocks of 500,000 tonnes from the previous crop.

On top of hefty Indian exports, another record crop of Brazilian sugar is expected to weigh heavily on prices this year, Peter Baron, executive director, International Sugar Organisation, told Reuters earlier this week.

Business Recorder [Pakistan's First Financial Daily]


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*Current account deficit within manageable limits: Ashfaque ​* 
ISLAMABAD (February 01 2008): Advisor and Special Secretary to the Ministry of Finance, Dr Ashfaque Hasan Khan, has said the current account deficit was well within manageable limits as despite unseen hits of billions of rupees to the economy inflows and outflows were not showing any huge difference.

Talking to Business Recorder, Dr Ashfaque Hasan Khan said the government's only worry was the rising oil prices in the world market and its impact on Pakistan's economy as it was adding to the budgetary pressure.

He said subsidy of billions of rupees every month on oil prices was forcing the government to review the budgetary projections for the current fiscal year. He said oil import bill was all time high of 6.5 billion dollars in the first half and at the current level it would cross 11 billion-dollar mark by June 30.

Dr Ashque Hasan Khan advocated immediate change in the policy of capping of the oil prices for minimising its pressure on the economy, and said the Ministry of Finance was strongly recommending at every forum to put an end to the exiting policy for passing on the actual prices to the consumers in different phases.

Dr Ashfaque Hasan Khan added that the government had different options to plug the current account deficit, including floating of a bond in the international market, but this option might be used at an appropriate time. However, he did not see the exiting conditions suitable for issuing any bond in global market.

He said Pakistan was issuing bonds in the international market every year since 2004, and it would like to use this option again once its economic team saw the global market ripe for such a move.

The advisor did not see any harm in borrowing from the State Bank of Pakistan for urgent government needs. He was of the view that the government was fully aware of the borrowing limit and its responsibilities under the Fiscal Responsibility Law.

Wheat import was another factor, which worried the advisor, who termed its import bill as another big blow to the economy that might cost the government 1.2 billion dollars.

The advisor was convinced that some elements created wheat crisis by hoarding stocks and the government measures were going to improve the situation drastically in next couple of weeks.

Business Recorder [Pakistan's First Financial Daily]


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*Foreign reserves post $133.9 million decline ​* 
KARACHI (February 01 2008): The foreign liquid reserves of the country have declined by $133.9 million during the last week. Statistics of State Bank of Pakistan (SBP) show that total liquid foreign reserves held by the country stood at 15.0743 billion dollar on January 19, 2008 as compared to $15.2082 billion in the week ended on January 26, 2008.

Major decline has been witnessed in the reserves held by SBP, which show a decline of $150.3 million dollar to 12.8151 billion during the last week as compared to $12.9654 billion a week earlier. The reserves held by banks have been increased by $16.4 million to $2.2592 billion from $2.2428 billion.

Business Recorder [Pakistan's First Financial Daily]


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*Pakistani entrepreneurs asked to explore untapped Russian market ​* 
LAHORE (February 01 2008): Russian Ambassador Sergey Preskov has said Pakistani entrepreneurs should explore untapped Russian market, having potential for genuine businessmen and Pakistani products.

He told Lahore Chamber of Commerce and Industry President Mohammad Ali Mian when they met on Thursday at the chamber where Senior Vice President Mian Muzaffar Ali and Vice President Shafqat Saeed Piracha also spoke.

Preskov said he had optimism that both Pakistani and Russian businessmen could enter into joint ventures to benefit each other in their respective businesses and could take to level of bilateral trade to new heights with a little.

He said his country had a lot to offer to the Pakistani business community by learning a lot from their Russian counterparts for the technological upgradation of their industrial units.

He said his country was rich in natural resources with business-friendly policies and it was time that potential Pakistani investors availed of the opportunity.

With particular reference to ongoing energy crisis, the ambassador said: "It is a basic issue for Pakistan and talks for construction of power plants are well on way and, hopefully, the things would take a very positive turn in the near future."

The ambassador and the chamber president also agreed to ink a memorandum of understanding (MoU) to establish a Pak-Russia Business Council and hold single-country exhibitions in each other's country.

Mian said Pakistanis thanked Russians for helping Pakistan establish a mega steel mill in Karachi. "Today, this steel mill is the biggest source of steel products, catering to the demand of the country and value addition for related products. But since then, no major initiative has been taken by Russia," he added.

He said both the countries needed to warm up their relations for mutual benefit of the people and to play an overwhelming role in international arena on a sustainable basis. He said the private sector could export various goods to Russia and, in return, Pakistan could supply all types of textile goods, leather and leather products, surgical goods, sports goods, agro-based products and food items, fresh fruits and vegetables, fish and fish preparations, carpets and rugs, pharmaceutical products etc.

He said Russia could also help in introducing Pakistani products in the areas of its influence. He said the profiles of Pakistani and Russian economies suggested brighter chances for joint ventures in food processing, oil, gas and mineral exploration, energy, engineering (heavy and light), transport equipment, automobiles, tractors, harvesters, machine tools, cement, fertilisers, industrial chemicals, plastic and rubber products and home appliances.

Mian said his chamber and the Russian Embassy would also start a language course at its premises to help Pakistani businessmen understand their Russian counterparts.

Business Recorder [Pakistan's First Financial Daily]


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*Chichoki Mallian power project deal scrapped ​* 
ISLAMABAD (February 01 2008): The federal government has formally scrapped 450-500 MW thermal power project deal with Qatar Investment Authority (QIA), which was proposed to be set up in Chichoki Mallian (Sheikhupura), official sources told Business Recorder here on Thursday.

The Economic Coordination Committee of the Cabinet on October 31, 2007 had directed the ministry of water and power to issue a notice to the sponsors of the project, including Alstom-Marubini and QIA to give a deadline within a week as to when they intend to file an application before the National Electric Power Regulatory Authority for tariff fixation and also, by which date would they complete the project to avoid further delay.

The government issued several reminders to QIA to complete procedural formalities but they kept silent. "You have failed to come up with tariff petition by December 15, 2007 and now we cannot work with you," the sources quoted one of the concerned ministries as writing to the QIA top officials.

The sources said the QIA has also been conveyed the message that neither the Board of Investment nor the ministry of water and power or Private Power Infrastructure Board would be in a position to hear their viewpoint.

The ECC, in one of its recent meetings, had directed the ministry of water and power to complete public sector projects in time.

The project was being monitored strictly by Prime Minister House all the time when Shaukat Aziz was the chairman, Water and Power Development Authority but the present Water and Power Minister Tariq Hamid does not support the project.

The sources said initially the project was being handled by the Investment Division, which strived to save the deal, but later on it was transferred to the PPIB headed by Yusuf Memon.

They said the project cost, which the QIA has increased from $350 million to $525 million, is being considered as one of the major hurdles in smooth progress.

They said the justification given by QIA on cost overrun and changes in technical specifications were not acceptable to the concerned stakeholders (including Wapda), as the projected tariff would be too high.

Kenneth Shen, head of Strategic & Private Equity, QIA, also briefed a meeting a couple of months ago in the BoI indicating that strong world economic growth had given immense negotiating power to EPC, Alstom-Marubeni.

Though Marubeni was still interested in setting up the project, however, the revised cost was not acceptable to the government. A Marubeni delegation was also expected to meet the caretaker minister for water and power to seek his unconditional support.

The government, however, intends to award Chichoki Mallian project to M/s Dong Feng of China, which would set up 450 MW thermal power project at Nandipur (Gujranwala).

The contract's award to Dong Feng also created a controversy as one of the bidders ie Euro Dynamics International, a Lahore-based firm, has alleged that the second lowest bidder joint venture of Chinese company does not meet the qualification and requirements of a combined cycle plant.

The firm had also accused Wapda of hiding facts from the ECC on increase in price by the JV, besides violating Public Procurement Regulatory Authority's rules.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Three projects of 600MW to come on stream in a year ​* 
ISLAMABAD (February 01 2008): Three power projects of 600 MW capacity, currently being processed by the Private Power Infrastructure Board, have been scheduled to start generation within a year to help minimise demand-supply gap, official sources told Business Recorder.

The PPIB is working on 58 multiple fuel (oil, coal, gas and hydel) projects having a cumulative capacity of 14,273 MW which are on different stages of completion and their expected commissioning is to start from 2008 and 2016, envisaging an investment of about $13 billion. These three include Attock Generation, Orient Power and Sheikhupura Atlas power projects.

The sources said that Letters of Interest (LoIs) have been issued to 35 projects with a cumulative capacity of 9,615 MW; Letters of Support (LoSs) issued to 14 projects totalling 2,590 MW, while implementation agreements (IAs) have been signed with 12 projects of 2,337 MW. These projects include 225 MW Orient Power, 225 MW Sapphire Power, 225 MW Saif Power, 165 MW Attock Gen, 202 MW Fauji Mari, 200 MW Nishat Chunian, 200 MW Nishat Power, 225 MW Atlas Power, 134 MW Star Power, 225 MW Halmore Power, 227 MW Engro Power and 84 MW New Bong Hydro Power Project. Moreover, IA of 179 Gulf power is ready for signing.

A number of companies have also concluded the Direct Implementation Agreements (DIAs) with their lenders, while eight IPPs of 1,667 MW capacities namely Orient Power Project, Sapphire Power Project, Fauji Mari Project, Attock Gen, Saif Power, Nishat Power Project, Nishat Chunian Power Project and Atlas Power Project have achieved financial closure.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Cement exports hit record 618,000T in Jan ​* Saturday, February 02, 2008 

KARACHI: Cement exports in January hit a record high of 618,000 tonnes breaking the previous record of 575,000 tonnes shipped out in August 2007 data available with the research department of a brokerage house revealed.

As per the data compiled by the JS Global research, January 2008 cement exports have increased by a massive 152 per cent on YoY basis and by 60 per cent when compared to December 2007. On the other hand, local dispatches stood at 1.6 million tonnes in January 2008 down by 13 per cent compared to January 2007. 

The cement exports could go up to one million tonnes per month if Karachi Port Trust (KPT) increases handling facilities at port, said Galadari Cement CEO Badruddin Fakhri. Cement exports can earn up to one billion dollars per annum if required infrastructure is available at KPT, said Fakhri.

Port Qasim is fast developing cargo-handling facilities but KPT too needs speedy developments to facilitate cement exports, he said. Power shortage has been affecting cement production and this could be compensated by further increasing the cement exports. The shortage in local dispatches in the month of January 2008 in the country is due to political uncertainty, he said.

The decline in local cement sales during the period under review was due to the lack of transport available during the first 10 days of the month owing to the political turmoil post Benazir Bhuttos assassination. Moreover, severe cold has considerably reduced working hours affecting local sales. 

This decline in local sales was offset by the higher exports during the month resulting in total dispatches of 2.2 million tonnes in January 2008, an increase of 6 per cent YoY. 

Nevertheless, both local and export sales grew by 13 per cent and 60 per cent respectively when compared to December 2007 as the number of working days during Dec 2007 were significantly low due to Eid-ul-Azha holidays and political tensions.

Cumulatively, cement sales during first 7 months (Jul-Jan) of FY08 depicted an increase of 21 per cent to stand at 16 million tonnes, owing to the expanding local demand and growing cement shortage in the region leading to higher exports. Export sales thus have shown a commendable increase of 148 per cent while local dispatches saw a rise of 6 per cent during the first 7 months of FY08.

In terms of company-wise break-up of JS universe companies, Pakistan Cement posted highest growth of 119 per cent as its sales stood at 1,373,000 tonnes in Jul-Jan 2008 versus 628,000 tonnes in the same period last year. The second highest growth of 73 per cent in dispatches was of Maple Leaf, followed by DG Khan and Lucky Cement, as they posted a growth of 62 per cent, and 28 per cent, respectively. In terms of quantity dispatched, however, Lucky remained the market leader with its highest dispatches of 3,134,000 tonnes. 

However, DG Khan following its expansion at Chakwal also made healthy volumes at 2,242,000 tonnes sales in Jul-Jan FY08. 

http://www.thenews.com.pk/arc_news.asp?id=3


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## Neo

*Rupee down to more than six-year low ​* Saturday, February 02, 2008 

KARACHI: Rupee weakened to a more than six-year low against the dollar on Friday as importers bought the US currency to clear payments, dealers said.

The rupee closed at 62.64/69, its lowest level since October 2001. Dealers said rising import payments, especially for oil, and outflows from financial markets had boosted dollar demand.

Demand for dollar is increasing due to oil and gas payments and also because of outflows from the stock market, said a dealer at a brokerage house. Short-term money rates fell sharply on Friday amid increased cash inflows this week.

Overnight call rates ended at 0.75 per cent, down from Thursdays close of 4 per cent. Yesterday, there was an inflow of 67 billion rupees against an outflow of about 45 billion rupees, so there is still liquidity in the market, said a brokerage dealer. Dealers said the State Bank of Pakistan may conduct a repo on Saturday to mop up liquidity in line with the tightening of the monetary policy for the six months to June 30. The State Bank on Thursday announced an increase in its discount rate to 10.5 per cent from 10.0 percent and the cash reserve requirement to 8.0 per cent from 7.0 per cent. 

http://www.thenews.com.pk/arc_news.asp?id=3


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## Neo

* Web site for farmers ​* Saturday, February 02, 2008 

LAHORE: The Punjab Irrigation and Development Authority (PIDA) is creating its website to facilitate farmer communities and provide fresh information about development activities in the irrigation system of the province. 

Punjab Minister for Irrigation and Power Syed Dilawar Abbas, talking to a farmers delegation in his office, informed them that PIDA website would be completed in two months and for that purpose a contract had been awarded.

He said computer sets had been provided to 84 farmer organisations and a computer literacy programme had been started to train people. He said the farmer organisations would be able to share their experiences with each other and international donor agencies could also have up-to-date information about development activities in irrigation. Vigilance Irrigation & Power Director Brig (R) Ahmad Abbas said the firm designing the website would be responsible for its maintenance for four months after its launch. 

http://www.thenews.com.pk/arc_news.asp?id=3


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## Neo

*Industry be preferred to households: experts ​* Saturday, February 02, 2008 

LAHORE: Economic experts have stressed the government to take some politically tough decisions in the energy sector in an effort to sustain growth by giving preference to the industry over domestic and commercial consumers.

They argue that stoppage of energy supply to the industry would ultimately force them to close their businesses, leading to unemployment on a mass scale. As a result, majority of the domestic consumers would be left with no money even to feed themselves.

It takes years to establish an industry but it goes into the red in few months if the enabling environment is denied to it, an expert warned. The economists said recurring expenses of industries could not be met if they were forced to curtail normal production for which they had hired staff and arranged other facilities.

Once an industry went sick, they warned, its revival would be extremely difficult as liabilities started mounting with every passing day. They said only sustained industrial growth could generate resources for a long-term solution of the electricity and gas crisis.

The economists pointed out that the industry had not been fairly treated during the past decade. At the onset of the energy crisis some five years ago, the industries were encouraged to install big diesel-run power generators. However, when the cost of diesel went up, these generators became redundant. Then, they added, the industries arranged more expensive furnace oil-cum-gas run generators.

Natural gas was the most economical fuel for generating electricity as furnace oil prices tripled in the past two years due to increase in global crude oil rates. They said cutting gas supplies to industries meant producing energy at over Rs10 per unit.

The economists said it was a folly on the part of the government to expand the domestic base of natural gas supplies when it knew that there was shortage of the fuel for already existing consumers. Under that programme, Sui Northern Gas Pipelines Ltd provided 225,000 domestic and 400 CNG connections last year while the industry and power generating companies faced supply cut.

They said suspension of gas supply had double impact on electricity generation, first in the shape of higher fuel cost and second high maintenance cost if generators ran on furnace oil. They said furnace oil or diesel-run thermal generators were required to be stopped after a month or so for cleansing, otherwise their generating capacity would start declining. 

That was the reason when last summer the private producers and Water and Power Development Authority produced much less thermal power than their capacity and shutdowns of thermal units were frequent for repair and maintenance.

They said commercial users like hotels and restaurants, particularly big hotels, should be asked to shift to liquefied petroleum gas instead of natural gas. It might add to the cooking cost, they said, but the impact as percentage of the total would be nominal. The energy thus saved should be provided to industries and power producers.

Similarly, the economists suggested there should be domestic gas loadshedding cyclically in different localities for four hours a day which would spare 8 to 10 per cent of gas for industries. They said closing CNG stations in periods of acute shortage would mean doubling the fuel cost of motorists.

All sectors affected by these measures would naturally protest but the government would have to take the steps in order to ensure the industries kept running. Control over consumption should continue even if the supplies increased, they said.

The conservation of electricity was also of vital importance till new capacities were created, they said adding traders should be forced to close shops by 7pm and all air-conditioners in government offices be removed. The state itself should lead in this conservation drive.

Government offices, they pointed out, still ran electric heaters in winter and air-conditioners in summer, which was not the case a decade ago. However, the efficiency of bureaucracy has not increased due to these facilities.

http://www.thenews.com.pk/arc_news.asp?id=3


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## Neo

*CSF to present second report on Pakistan *​ Saturday, February 02, 2008 

ISLAMABAD: The Competitiveness Support Fund (CSF) is all set to start working on the second Competitiveness Report for Pakistan.

The CSF, a joint initiative of the United States Agency for International Development (USAID) and Ministry of Finance, Government of Pakistan, as partner institution of the World Economic Forum (WEF) in Pakistan is working closely with the Global Competitiveness Network of the WEF on this report. The Competitiveness Report 2008 will track Pakistans performance, spotlighting the areas of progress and areas of further focus.

In addition to explaining the results of the Global Competitiveness Report 2007-2008 of the World Economic Forum and benchmarking Pakistans progress against its peers, the report will evaluate Pakistans progress in raising its competitiveness in 2008-09. Each of the areas of recommendation will be assessed based on tangible, measurable results. This will be completed both at the national as well as regional level.

The current report will spotlight a thematic area that may require focused attention from Pakistans economic leadership. Pakistan is ranked 92 among 131 countries on the global competitiveness rankings. The CSF will start its interaction with the stakeholders in the first week of February 2008, including all relevant ministries, leading public and private sector institutions, business council and trade bodies along with academia and the media.

The CSF will identify the areas to improve Pakistans competitiveness through a consultative initiative with key stakeholders. The report is an important policy tool for governments economic growth agenda and for private sector investment in Pakistan. The report will also include the action plan and timetable to improve key industries that will boost economic growth.

This year, the competitiveness report will assess the global competitiveness index of Pakistans economy on the following pillars ie 1) institutions, 2) infrastructure, 3) macroeconomic stability, 4) health and primary education, 5) higher education and training, 6) goods market efficiency, 7) labour market efficiency, 8) financial market sophistication, 9) technological readiness, 10) market size, 11) business sophistication and 12) innovation.

Pakistans first competitiveness report was launched by former prime minister Shaukat Aziz in March last year. The CSF report for 2007 stated that Pakistan improved its competitiveness position in the rankings of the World Economic Forum. The Competitiveness Report 2008 will take an in-depth look at Pakistans ranking on the Global Competitiveness Report (GCR) of the World Economic Forum (WEF). The report will provide a snapshot of the strengths and weaknesses of Pakistans economy, key positive and negative trends in the economy, regional development in each of the four provinces along with economic potential in the FATA and FANA region.

This year, the Competitiveness Support Fund (CSF) will include a chapter on gender in Pakistans Competitiveness Report 2008, which will identify gender gaps affecting competitiveness in Pakistan, especially the areas identified by the WEF in its Global Gender Gap Report 2007. The report will also provide a framework for capturing the magnitude of gender-based disparities. It will also explain for the policy-makers and business leaders in seeking solutions for talent shortages and how to bridge gender gaps and leverage the talents of both women and men.

http://www.thenews.com.pk/arc_news.asp?id=3


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## Neo

*Monetary policy hits industrial growth: FPCCI *​ Saturday, February 02, 2008 

KARACHI: Federation of Pakistan Chambers of Commerce and Industry President Tanvir Ahmed Sheikh has expressed concern over the monetary policy statement released on Thursday by the State Bank, saying it is a major cause of slow growth in the industrial sector and widening of economic inequalities.

He said the benefits of higher GDP growth rate, building of foreign exchange reserves, accelerated stock market index and record growth of foreign investment had not trickled down to improve the living standards of common man. Simultaneous improvement in macroeconomic indicators and accelerated inflation and poverty had indicated the obstacle in transformation mechanism, he said.

He added little trickledown effect was observed during the macroeconomic growth regime and said the tight monetary policy was one of the major hurdles in the way of transferring the benefits of economic growth to the lower segment of society by enhancing employment-generating activities through promotion of industrial investment.

Sheikh said negative growth in banks financing for the private sector was observed during the last six months, indicating a serious decline in investment activities, while financing of working capital had shown no significant improvement.

Total credit supply to the private sector fell by Rs14 billion during the first five months of the current fiscal year. He continued that all those indicators had shown recession in the industrial sector and the situation might lead to greater unemployment in near future and the monetary policy must address these economic issues.

Sheikh pointed out that the Export Finance Scheme (EFS) had been playing a major role in growth of exports, adding the scheme provided an incentive to exporters when exports were not possible because of competition in the international market where Pakistani products had been facing an uneven playing field, anti-dumping duties and high cost of production.

However, he added, after the announcement of part-I of the current monetary policy in July 2007, export loans under the EFS had depicted substantial net retirement. Now, present changes in the EFS will create further problems for the export-oriented industry, he voiced concern.

The FPCCI chief expressed concern over further tightening of the monetary policy by making a 50-basis-point increase in the discount rate and one per cent increase in the reserve ratio. He warned that this policy measure would hamper the ability of the banking sector to lend and would ultimately adversely affect the industry.

http://www.thenews.com.pk/arc_news.asp?id=3


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## Neo

*Oil & Gas Exploration: Licence granted to NHEPL and KEC in Sindh*​
ISLAMABAD: The government on Friday granted petroleum exploration licence to the joint venture of New Horizon Exploration and Production Limited (NHEPL) (60 percent Operator) and Kuwait Energy Company (KEC) (40 percent) over Block No 2468-9 (Jherruck) covering an area of 733.79 square kilometers.

The block lies in Hyderabad and Thatta districts of Sindh, falling in Zone-Ill.

The venture intends to make an investment of $95 million in the aforesaid block to carry out geological and geophysical studies, acquisition of 150 square kilometers of 3D seismic data or 350 line kms 2D seismic data and drilling of two exploratory wells during phase-I of the initial period of three years.

The KEC is a rapidly growing exploration and production company that is active in Egypt, Oman, Yemen, Indonesia, Syria and Russia. KEC is the largest non-government exploration and production company in Kuwait The licence and the Petroleum Concession Agreement were signed by Secretary Petroleum and Natural Resources, Farrukh Qayyum, on behalf of the President of Pakistan, Director General Petroleum Concessions, Chairman and CEO of NHEPL Syed Wamiq Bokhari and CEO of KEC Mrs Sarah H. M. Akbar. 

Federal Minister for Petroleum and Natural Resources, Ahsan Ullah Khan graced the occasion along with other senior officials of the Ministry including Additional Secretary, Shaukat Hayat Durrani. app

Daily Times - Leading News Resource of Pakistan


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## Neo

*Competitiveness report to assess Pak economy​*
ISLAMABAD: Second State of Pakistans Competitiveness Report 2008 would provide a snapshot of the strengths and weaknesses along with key positive and negative trends in the economy, regional development in each of the four provinces along with economic potential in the Federally Administered Tribal Area (FATA) and FANA region. 

The Competitiveness Support Fund (CSF), a joint initiative of the United States Agency for International Development (USAID) and Ministry of Finance, Government of Pakistan, is starting its work on the second State of Pakistans Competitiveness Report for 2008. CSF, as the partner institution of the World Economic Forum (WEF) in Pakistan is working closely with the Global Competitiveness Network of the WEF on this report. 

The State of Pakistans Competitiveness Report 2008 will track Pakistans performance, spotlighting the areas of progress and areas of further focus. In addition to explaining the results of the Global Competitiveness Report of 2007-2008 of the World Economic Forum and benchmarking Pakistans progress against its peers, the report will evaluate the countrys progress in raising its competitiveness in 2008-09. Each of the areas of recommendation will be assessed based on tangible, measurable results. This will be completed both at the national as well as regional level. The 2008 Report will spotlight a thematic area that may require focused attention from Pakistans economic leadership. Pakistan is ranked 92 among the 131 countries on the global competitiveness rankings. CSF will start its interaction with the stakeholders in the first week of February 2008, including all relevant ministries, leading public and private sector institutions, business councils and trade bodies along with academia and the media. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Thermal power deals to raise production cost​*
ISLAMABAD, Feb 1: The government has been warned that the countrys power generation capacity that is heavily tilting towards expensive thermal generation compared with hydel resources.

The Planning Commission and the National Electric Power Regulatory Authority (Nepra) have told the president and the prime minister that the public concern about shortages would soon turn into a question of unbearable increase in cost of production and affordability, sources told Dawn.

The sources said the ratio of hydroelectric power generation capacity would decline to less than 20 per cent by 2010 from the current 28 per cent because of an increasing number of contracts being signed for thermal power generation.

They said the government had been advised to be careful in increasing generation capacity through the short-term solution of thermal power generation at exorbitant tariffs and strive for maintaining a ratio of 70:30 between thermal and hydel power generation.

While the generation in winter would remain more or less at the current level in the next few years, the power supply from thermal plants will increase substantially as new projects come on line by 2010.

Hydel power generation during the current winter fluctuates in 1,500-2,000MW against total supplies of 11,000-12,000MW, mostly coming from high-cost oil-based thermal projects. Fuel cost accounts for more than two-third of thermal tariff that keeps rising with international prices and currently averages beyond 10 cents (Rs7) per unit. The aggregate hydel power tariff from Tarbela, Mangla and Ghazi Barotha comes to less than 30 paisa per unit.

The president and the prime minister were shocked to know that hydel power generation had dropped to 13 per cent in recent days against its capacity of about 28 per cent because of lower availability of water, the sources said.

While the Wapda Vision 2025 and energy security plan 2030 envisaged improving hydel generation to 35 per cent and the power policies announced by the government called for a bar on thermal projects, most of the agreements signed for power production over the past five years were in the thermal sector, they were told.

The sources said Nepra had declined to approve wind power tariff of more than 10.5 cents it had offered to six power producers with a total capacity of about 300MW. It informed the government that wind-based power tariff in India was 7-8 cents per unit.

None of the wind power producers had been able to achieve financial close as required under the law although they had been given upfront tariffs early last year, the sources said.

Nepra informed the government that the sponsors of the projects had not been able to lock in their contracts with manufacturers by making down payment and said the cost of their non-professional attitude should not be passed on to the consumers.

The president and the prime minister were also convinced after several presentations by Nepra and the Planning Commission that coal-based power projects at Thar could not be offered a rate of 7.8 cents per unit and it should be adopted as reference tariff for international bidding to produce 20,000MW by 2019.

Thermal power deals to raise production cost -DAWN - Business; February 02, 2008


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## Neo

*Pakistan assumes chairmanship of G-77*​
ISLAMABAD, Feb 1: Pakistan has assumed the chairmanship of the Group of 77 and China, Vienna Chapter for 2008, with Ambassador Shahbaz accepting the instrument of office from Sudan in Vienna, Foreign Office said here on Friday.

This is the fourth time since the inception of the Vienna Chapter that Pakistan has assumed its chair.

Pakistan assumed the chair at a ceremony attended by over 30 member states of the Group based in Vienna.

The ambassadors and representatives paid rich tributes to the active contribution of Pakistan in its activities and expressed confidence in its ability to lead the Group during current year, the Foreign Office said.

The Vienna Chapter provides support services for the preparation of meetings for the Vienna-based UN organisations such as Unido, the International Atomic Energy Agency, the United Nations Office at Vienna and the Preparatory Commission for the Comprehensive Nuclear-Test-Ban Treaty Organisation.

The office serves as an institutional memory of the G-77 and China to members of the Group.

OUTGOING SAARC SG: Saarc Secretary General Chankyab Dorji, who is paying his farewell visit to Pakistan, called on caretaker Foreign Minister Inamul Haque and Foreign Secretary Riaz Mohammad Khan separately in the Foreign Office on Friday.

Mr Haque stated that Saarc must establish itself as a credible regional organisation and evolve concrete and result-oriented programmes to reflect the aspirations of the people of the region.

Pakistan assumes chairmanship of G-77 -DAWN - Business; February 02, 2008


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## Neo

*500 foreign buyers to attend Expo​*
KARACHI, Feb 1: Over 500 leading foreign buyers are expected to attend the mega national event of Expo Pakistan being held from March 13 to 16 at Karachi Expo Centre.

The event is expected to improve the image of the country as a large number of visitors from different parts of the world will visit the fair which will also help promote exports.

A review meeting on progress of Expo Pakistan arrangements was held at the Trade Development Authority of Pakistan on Thursday under the chairmanship of minister of state and chief executive of the TDAP, Tariq Ikram.

The minister was updated on the progress made on various activities for Expo Pakistan, including international promotion and local marketing.

Pakistani missions abroad are actively involved in approaching buyers from various trades in their respective countries and profiles of over 200 leading foreign buyers have been received.

Efforts are being made to convince the international community that Pakistan is a business-friendly country with traditional warmth and hospitality.

Official sources said that over 500 leading foreign buyers are expected to attend the fair.

During the meeting, it was also informed that to encourage participation of exhibitors, Expo teams also visited all major export cities of the country and held meetings with respective chambers, trade associations and exporters and manufacturers.

500 foreign buyers to attend Expo -DAWN - Business; February 02, 2008


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## Neo

*Inflation up by 12.47 percent ​* 
ISLAMABAD (February 03 2008): Inflation, measured through Sensitive Price Indicator, surged by 12.47 percent in the week ended on January 31, 2008 against the same period of last year due to increase in the prices of basic food basket, according to Federal Bureau of Statistic.

No sign of decline in inflation was in sight as surge in prices of essential commodities left no other option for low income group but to queue outside utility stores in the hope of purchasing some kitchen items at subsidised rates. The government seemed helpless against hoarders' mafia that controls prices by creating shortage of commodities, one after another, just to make windfall profit on core kitchen items.

According to FBS, relentless increase in prices of 21 essential kitchen items was one of the major reasons for inflation, which was recorded at 14.84 percent for low income group.

The weekly inflation registered an increase of 14.84 and 14.58 percent for Rs 3000 and Rs 3,000-5,000 income groups, respectively, over the same period of last year, followed by 13.49 percent and 10.59 percent for Rs 5000 to Rs 12,000 and above Rs 12,000 income groups.

The volatile prices of essential commodities, coupled with the shortage of one after another commodity, made life harder of salaried class and low income groups. The combined SPI, after 0.23 percent increase, soared to 166.18 percent on January 31 over previous week's 165.80 percent.

The SPI bulletin, based on data of 53 items collected from 17 urban centers showed increase in prices of 21 essential commodities, decline in 10 while prices of 20 commodities remained stable but dearer compared to last year.

As compared to pervious week, the prices of 21 commodities including tomatoes, match box, egg, cooking oil, masoor pulse washed, vegetable ghee tin, potatoes, rice irri-6, rice basmati, washing soap, nylon, mustard oil, cooked dal plate, firewood, shirting, red chillies, gram pulse washed, milk fresh, chicken farm, moong pulse washed, mash pulse washed and kerosene increased with a highest 18.73 percent rise in tomatoes price.

An increase of 6.52 percent was recorded in the price of eggs (per dozen), followed by 4.32 percent in cooking oil, 3.72 percent in masoor pulse washed, 3.56 percent in vegetable ghee, 2.88 percent in potatoes and 1.82 percent in rice.

Moreover, prices of 28 commodities were dearer by double digits as compared to last year. These included tomatoes by 183.07 percent, eggs 50.47 percent, cooking oil 40.03 percent, masoor pulse washed 45.17 percent, vegetable ghee 38.37 percent, rice Irri 55.83 percent, rice basmati broken 63.81 percent, mustard oil 65.93 percent, etc.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Ecnec to approve 32 projects of Rs 87 billion on February 6 ​* 
ISLAMABAD (February 03 2008): The Executive Committee of National Economic Council, which is scheduled to meet on February 6, will approve 32 projects in different sectors worth Rs 87 billion, top of which is procurement of 300 new design high speed railway bogies, probably from China, it has been reliably learnt.

TOP OF WHICH IS PROCUREMENT OF 300 NEW DESIGN HIGH SPEED RAILWAY BOGIES, PROBABLY FROM CHINA: In the energy sector, Ecnec would consider four projects ie uranium mining project (Taunsa-2), Dera Ghazi Khan, detailed exploration of uranium resources, phase-VII (2004-09) revised, 450-500 combined cycle power plant at Nandipur (revised PC-1) and power transmission enhancement project (10 projects of 500 kV and 220 kV sub stations and transmission lines.

The meeting would also approve Punjab Irrigation System Improvement Project, which was already cleared by the Planning Commission. The sources said that Ecnec would consider eight projects in transport and communication sector, of which construction of expressway Faisalabad-Khanewal (E-4) 184 kms, land acquisition, property compensation and shifting of utilities of Khanewal-Lodhran Expressway E.5, widening and strengthening of Rakhi Gaaj-Bewta section (N-70), 33.84 kms, improvement and construction of Jalkand Chilas road.

Replacement of old and obsolete signal gear from Lodharan-Multan-Khanewal to Shahdhara Bagh main line section of Pakistan Railways was also on the agenda.

Eight projects of IT sector would also come under consideration, prominent among them are national ICT scholarship programme, purchase of land from CAA at JIAP, Karachi and AIIAP, Lahore for establishment of IT park, establishment of universities of engineering and technology (Part-II) in collaboration with China, Germany, Austria and Italy, besides establishment of the LUMS School of Science and Engineering, Lahore and strengthening and development of Mehran University of Engineering and Technology, Jamshoro.

Strengthening of HRD in the ministry of science and technology and its organisations (development of 400 PhDs) and extension of Pinstech phase-II laboratories were the projects which have been submitted by the Planning Commission for Ecnec review.

Ecnec would also approve projects of health sector, which include establishment of cardiac surgery facility at PIMS, Islamabad, and institutes of medicine and radiotherapy at Nawabshah, Swat, Bannu and D I Khan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Tricon to start new projects soon ​*
LAHORE (February 03 2008): Tricon Developers will soon start its new projects after wonderful achievements in its ongoing projects like Tricon Village and Tricon Corporate Centre.

This was disclosed by Tricon Developers Chief Executive Asif Kamal while addressing an informal get-together followed by a lunch reception organised in honour of representatives of various real estate agencies of Tricon Developers at Tricon's newly established office, 8-K Main Boulevard Gulberg-II, Lahore.

A number of representatives of real estate agencies and Tricon Developers' Director Ahmed Khalil, GM Marketing & Sales Naveed Chaudhry and others attended this informal session.

The representatives of the agencies made a comprehensive visit of Tricon Developers newly established office, and congratulated Asif Kamal and his team to establish such a wonderful and marvellous office in such a posh area like Gulberg. The representatives, while appreciating Tricon Developers, apprised that people's feedback from Tricon Village and Tricon Corporate Centre was appreciative and quite satisfactory, and the people were demanding Tricon to launch more projects like the earlier ones.

They also praised Tricon Developers for setting up this new office having such a superb infrastructure, interior and courteous staff to facilitate its clients. They were also invited by the CEO to share their expert opinions to accelerate the pace of work on ongoing projects so as Tricon could enable to launch upcoming projects soon. They made various suggestions, which were duly acknowledged by the chair. Earlier, Asif Kamal while talking to the honourable representatives stressed the need to pace the work on ongoing projects. He requested all the representatives to work with zeal and full enthusiasm. Later, lunch was served to the valuable guests.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*China to invest in NWFP energy sector *​ 
PESHAWAR (February 02 2008): The ambassador of the People's Republic of China, Mr Luo Zhao Lui has expressed satisfaction over growing Sino-Pak relations saying that China would make investment in various sectors including energy in NWFP.

Addressing a reception held to honour Chinese mission, he said that Chinese government would arrange seminars on Buddhist civilisations both at the twin cities of Peshawar and Arumchi to which intellectuals from both sides would be invited to participate.

The function besides other authorities was attended by Secretary Administration Colonel Syed Ghulam Hussain (Rtd), Commandant FC Malik Naveed, Director General Local Government and Rural Development, Rehmat Ghazi, Iranian Consulate official, Syed Abul Hassan Jafari and representatives of Pak-China Friendship Association.

Speaking on the occasion Chief Secretary NWFP Sahibzada Riaz Noor said that Pak-China Friendship is time tested and cordial ties between the two neighbouring countries are further cementing with passage of time both at government and peoples level.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Czech investors invited to invest in energy sector ​*
ISLAMABAD (February 02 2008): President, Islamabad Chamber of Commerce and Industry (ICCI) here on Friday invited investors of Czech Republic to invest in energy sector of Pakistan.

Talking to two member trade-delegation of Czech who called on him, the ICCI president stressed the need for enhancing bilateral trade between the two countries besides exchanging trade delegations and for arranging single country exhibition.

The ICCI president was of the view that Pakistani traders should be given chance to reach Czech Republic for which the country should make easier visa policy adding that the chamber was also ready to send its business delegation to the republic to explore markets for Pakistani products.

Speaking on the occasion, Michal Jirkovsky, head of the Czech delegation said that there were possibilities of introducing Pakistani fruit, vegetables, sports goods, surgical instruments and leather goods in the Czech market. He said that Pakistan could import heavy machinery, earth moving machinery, electricity generating plant, heavy trucks and vehicles from the republic.

He informed the ICCI president that they would welcome trade delegation from Pakistan, which would be facilitated by the government. He said that there was also scope for Pakistani and Czech companies to launch joint ventures in various sectors of the economy.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Iran starts power supply to Turbat ​*
ISLAMABAD (February 02 2008): Some areas of Turbat in Balochistan have started receiving electricity from Iran. Quetta Electric Supply Company sources said that Tajaban and its abutting three areas are receiving power supply from Iran, private TV channel, reported.

The cost for provision of power supply to Tajaban was added up to Rs 17.5 million. Following the receipt of power supply, these areas will be relieved of load shedding. The local residents distributed sweets to celebrate power supply. Provision of power supply to other areas is underway.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Government won't reduce PSDP size *​ 
ISLAMABAD (February 02 2008): While rejecting the proposal to cut down the size to spare some resources for financing subsidies, the caretaker government has decided to maintain the Public Sector Development Programme (PSDP) at Rs 520 billion for fiscal year 2007-08.

THE CARETAKER GOVERNMENT HAS DECIDED TO MAINTAIN THE RS 520 BILLION PUBLIC SECTOR DEVELOPMENT PROGRAMME FOR 2007-08: The PSDP size was under question for the last few weeks, especially after President Pervez Musharraf's ruling asking the government to keep on subsidising the oil prices for the consumers.

The Ministry of Finance (MoF) demanded at different meetings held during the last month that PSDP size should be cut down to spare around Rs 50 billion. Its officials' argument in support of proposal was that without sparing some funds from PSDP financing of subsidies for oil, wheat, fertilisers would be a difficult job.

The issue was discussed threadbare at a meeting chaired by the President some time in January this year. The MoF gave argument for cutting down the PSDP and suggested different developmental projects, which its officials claimed were either slow-going or yet to take-off.

The Planning Commission took strong position against the proposal during the decisive meeting and informed the President that cutting down of PSDP size will not only effect pace of progress of the on-going development projects, but also add to criticism on the government. Dr Akram Shaikh, presented the details of the projects undertaken under PSDP this year and informed the participants that the discussion for cut in PSDP when Planning Commission was conducting half-yearly review was totally illogical.

He informed the President that PSDP utilisation for the current fiscal year was all-time high with over 90 percent utilisation of funds and there was no need to cut down the size.

The President agreed with Dr Akram Shaikh and deferred the decision till completion of PSDP half-yearly review and submission of the final report. The Planning Commission completed the review and presented its report to Prime Minister Mohammedmian Soomro a few days back. It reiterated earlier stance and strongly recommended to the caretaker Prime Minister to reject the proposal for cutting down PSDP size.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Interest growing in Emaar project ​* 
Sunday, February 03, 2008

KARACHI: At a time when interest amongst Pakistanis is growing for investing in real estate in the United Arab Emirates, a UAE-based real estate developer seems to be drawing much attention in Pakistan. The centre of focus is the Crescent Bay project, which Emaar Pakistan has launched on Karachis shoreline recently.

Emaar Pakistan will be investing $2.4 billion in its new real estate project Crescent Bay, located within Karachis DHA Phase VIII and in close proximity to the DHA golf course.

The project is part of an ambitious beach development plan of the Defence Housing Authority in Karachi. Sales registration for Crescent Bay commenced in December 2007 and according to real estate dealers, who are working with the project, it received a tremendous response.

The company is understood to have contracted local real estate agents, who had been allotted a quota of residences in advance, which the real estate agents could purchase directly from Emaar Pakistan and then sell to their clients.

The News learnt that now the deal has been called off. This has left many real estate agents in an embarrassing position, they claim.

However, when contacted, the Director Sales and Marketing of Emaar Pakistan, Omar Khalid, defended the policies of the company. The company is open in its policies, he insisted but added he was not authorised to speak regarding such matters.

The Emaar director denied having knowledge of any such controversy that involved promises made to real estate agents or such an arrangement and said that the market was full of people spreading unauthorised information and rumours to tarnish the companys image.

It may be recalled that earlier Emaar Pakistan faced resistance over its proposed Diamond City project. This is a futuristic project that is to be executed on twin islands, off Port Qasim.

Opposition comes mainly from the Pakistan Fisherfolk Forum and representatives of other civil society organisations, who have expressed their reservations about the environmental impact of the project and what effect it would have on the Indus delta region in particular. FN

Interest growing in Emaar project


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## Neo

*Intel National Science Olympiad winners to represent Pakistan at Intel Science & Eng Fair 2008 ​* 
Sunday, February 03, 2008

ISLAMABAD: Following the Intel provincial science fair held recently across Sindh, Punjab, NWFP and Balochistan where pre-college science competitors presented innovative research-based projects in the categories of biology, chemistry, computer sciences, mathematics and physics; Intel Pakistan Corp has marked the end of its exciting nation-wide science festival with the Intel National Science Olympiad. 

Attended by some 300 students and teachers from across Pakistan, the National Science Olympiad which is affiliated with the Intel International Science and Engineering Fair, one of the worlds largest pre-college science competitions, showcased more than 120 science projects submitted by young scientists from all across the nation. 

Projects displayed at the National Science Olympiad were assessed by a panel of renowned judges for further selection in the upcoming Intel ISEF 2008 which will be held in Atlanta, Georgia in May. 

Shahid Ahmed, Additional Secretary, Ministry of Education was Chief Guest at the event.

The Intel National Science Olympiad, which is jointly organised every year by Intel Pakistan Corporation and the MoE Pakistan, is part of Intels efforts to contribute to the promotion of science education and research in Pakistan.

Intel National Science Olympiad winners to represent Pakistan at Intel Science & Eng Fair 2008


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## Neo

*Photo exhibition and tourism workshop: Tri Dev for full exploitation of Pak tourism potential​*
Tourism secretary says Pakistan has so much to offer to tourists but has not succeeded in actualising its great potential​
By Aamir Yasin

RAWALPINDI: A one-day photo exhibition and national tourism workshop was held at a local hotel to promote Pakistans scenic beauty, archaeology, culture and adventure. 

The Tourism Ministry in collaboration with its component organisations organised the photo exhibition and workshop. 

Caretaker Federal Minister for Minorities Raja Tri Dev Roy inaugurated the events attended by tourism experts from all over the world.

Some 100 photographs of the mountain ranges, deserts, plains and images of people were put on show. The natural scenes turned out to be a successful attempt to attract tourist to see the beauty of life in Pakistan. 

The main objective of organising the photo exhibition and national tourism workshop was to introduce and highlight the importance of tourism in the context of overall world tourism activity. 

Another vital aspect was to project Pakistan as an ideal tourist destination endowed with splendid natural wealth and beauty. Addressing the gathering, Raja Tri Dev Roy said, Pakistan is a beautiful country but it needs a lot for promotion of tourism.

He said the government should encourage and help the private sector to attract more tourists in the country. He proposed that promotion of group tourism could bring more fruitful results than handling individual tourists.

So much to offer:

Tourism Secretary Dr Shahzad Qaiser said Pakistan had so much to offer to the domestic and foreign tourists but it had not succeeded in actualising it great potential to its fullness.

There are many internal and external factors hampering the growth of domestic and international tourism in our country, he said, adding that the main reason was inability of the government to provide dynamic incentives to the private sector on a continuous basis. 

He said there had been some incentives for the private sector but they were limited and a few of them had also been withdrawn in the course of time.

He said the government had sincerely realised the importance of the private sector and as a consequence, privatised the PTDC hotels and was in the process of privatising its motels in the north and the south. Richard Garstang, the Tourism Expert on South Asia, also spoke on the occasion.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Competitive bidding for tariff proposed: Coal-based power projects​*
KARACHI, Feb 2: A committee of several top bureaucrats and caretaker ministers, constituted by Caretaker Prime Minister Mohammedmian Soomro on Wednesday, with minister for petroleum and natural resources as its head, has proposed the controversial international competitive bidding for tariff of coal-integrated power generation projects of 1,000 and 2,000 megawatts.

Knowledgeable sources in the Sindh government stated that the committee comprising secretary of water and power, managing director of Private Power Investment Board, Wapda, secretary of petroleum and natural resources, deputy chairman of Planning Commission, secretary of mines and mineral development of Sindh met on Thursday to take decisions on the issues related to coal-based power projects.

A decision was made to float international competitive bidding for integrated coal-mining and power projects of 1,000 to 2,000 MW, a well-placed and knowledgeable source disclosed. Perhaps, the committee anticipates the expected response from investors, which is bound to be negative.

It was also decided to adopt unorthodox approach for working up a fast track system for processing and finalisation of such proposals, said another source.

We issued MoUs to five investors, a majority of whom have lined up foreign investors, disclosed a retired government employee. But after witnessing a harsh treatment given to Chinese investor in 2004 on the issue of tariff, the prospective investors now want an upfront tariff.

The Chinese investor wanted 5.7 cents tariff while the government did not agree to offer more than 5.3 cents per unit. The government is now proposing 7.8 cents on a unit.The committee, however, reiterated Sindhs prerogative of allocating mining sites and composition of royalty on coal in accordance with the Constitution.

Instructions are being issued to Wapda to expedite the laying down of a transmission line to receive power, to be generated from Thar-based coal-fired electric generation projects.

Wapda is also being given the task to construct a conduit and canal that should be sufficient for 20,000 MW projects.

The Sindh government would prepare a blueprint of the project while funds would be provided by the federal government.

The federal government would be asked to provide extra water from irrigation system for this conduit.

A major problem in Thar is presence of sub-soil water for which the Sindh government is expected to prepare a project for extraction and disposal of this water.

The committee also decided to ask the government-managed Thar Coal Mining Company (TCMC) to expedite coal-mining in Thar while Wapda would utilise this coal for power generation.

Officials believe that a government-managed coal-based power project would encourage local and foreign investors to come in a big way. But sources apprehend that exploitation of Sindh resources by the federal government agencies would not remain confined to Wapda, but many other government agencies are in the run to join the race and make a quick buck.

Competitive bidding for tariff proposed: Coal-based power projects -DAWN - Business; February 03, 2008


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## Neo

*Harvard study to help transform economy​*
RAWALPINDI, Feb 2: The Centre for International Development (CID) at the Harvard University will carry out a study to help Pakistan design a plan for structural transformation of the countrys economy and to maintain its current rate of growth.

The Asian Development Bank is funding the study which will be completed by September 2009.

Pakistans objective is to maintain or increase its current economic growth rates  7.5 per cent over the past four years  well into the future.

To help policymakers and entrepreneurs better understand the importance of structural transformation in achieving this goal, and to illustrate what it will take to make the current growth rate sustainable, the study will examine the potential for structural transformation.

Four analytical papers on structural transformation of countrys economy will be prepared, explaining the causes of slow structural transformation of the economy.

The analysis will assess Pakistan vis-à-vis other countries in Asia.

The first paper will provide an assessment of Pakistans economic structure in terms of what a country produces.

The second paper will examine the quality and sophistication of Pakistans exports.

A strong empirical relationship exists between a recently developed measure of a countrys export sophistication and that countrys level of income. This relationship suggests that, as countries develop, they change their export package. The measure also reflects structural transformation.

An in-depth and detailed analysis of Pakistans export structure will provide key information for assessing the speed and direction of its transformation, and for comparisons with other Asian countries.

The third paper is a diagnostics analysis of the impediments to structural transformation in Pakistan.

Structural transformation does not come naturally; rather, it must be induced by policy.

The question is: how? Most often reform is required, either to facilitate the transfer of resources across sectors, to develop new activities, or to increase competition. This raises the next question: which reform will deliver the most benefit? The purpose of this growth diagnostic exercise is to pinpoint where a little reform can go a long way.

The fourth paper will employ the output of the previous three to propose a plan for industrial development in Pakistan, based on the belief that structural transformation is not automatic but must be induced through policy.

The CID team of consultants will work closely with the Planning Commission, and will also make presentations to the three main stakeholders -- the government, policy makers, and entrepreneurs. Each group plays a different and important role. The government must demonstrate the political will to undertake structural transformation; policy makers must take part in designing the plan, and entrepreneurs will be responsible for carrying it out effectively.

A report of ADB says if Pakistan is to maintain, and even increase, its growth rate, it needs to accelerate its structural transformation and improvements in the quality and diversification of its exports.

Pakistans transformation during the last three decades has not been as fast and as intense as that of the successful Asian economies.

Harvard study to help transform economy -DAWN - Business; February 03, 2008


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## Neo

*Monetary policy: a response to fiscal expansion?​*
State Bank Governor Dr Shamshad Akhtar did not mince words while holding fiscal mismanagement during the first half of current fiscal year responsible for the widening fiscal and external account imbalances, making it imperative to further tighten the monetary policy for the next six months.

She disclosed that the commercial banks and the central bank financed almost 60 per cent of budget deficit from July 07 to January 29, 08 making the job of liquidity management quite challenging.

In the policy announced on February 1, the SBP raised the discount rate by 50 basis points to 10.5 per cent that may push the lending rates of commercial banks to 13 per cent plus. The SBP also enhanced cash reserve ratio (CRR) by 100 basis points for deposits of one-year term to eight per cent. Deposits of more than a year have been spared of CRR to give incentive to banks to offer better rates of return to their depositors.

The risk to inflation outweighs the risk to growth, the Governor said, justifying her policy.

The Governor elaborated that the developments in first half of FY 08 substantially deviated from the monetary framework, says a SBP press release on the Governors more than an hour-long speech on Thursday last. It warns complications for monetary management during the course of the year (07-08) mainly because of the slippages on fiscal deficit targets.

Industry and trade leaders came out immediately with their harsh reactions on monetary policy, warning of a further slow down of businesses and closure of enterprises. Monetary policy is a major cause of slow growth in industrial sector and widening of economic inequalities in last few years, President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Mr Tanvir A Sheikh said in a statement on Friday.

We are inviting State Bank of Pakistan Governor for a meeting with businessmen next week, Sheikh Amjad Rasheed, chairman of the FPCCI Banking and Credit Committee informed Dawn from Nowshera over telephone. He said the tight monetary policy has squeezed business activities beyond tolerance limits. Further monetary tightening will be killing for business, he warned.

Textile export factories are closing down and further tightening of monetary policy is bound to prove the proverbial last straw on camels back Shabbir Ahmad, a leader of value added textile products exporters association said.

In their anger and fury, the industry and trade leaders overlook the government over-spending which seems to be showing no respite. The Governor disclosed that the government borrowed over Rs237 billion so far. Last year in the same period, it borrowed only one-third of this amount. The Governor was sceptical if the government would be in a position to retire Rs63.2 billion loans as projected for 07-08 credit plan.

Where is the law that prohibits government to contain budget deficit to four per cent, asked a trader who is confident that State Bank of Pakistan can invoke this law and put a brake on unlimited government borrowing.

Bankers however defend the monetary policy. A top banker said that the monetary policy is the most appropriate and logical response to the current situation. It is true that inflation is on the rise during the current fiscal year he conceded but argued, Imagine what would have been the impact of a loose monetary policy on inflation. His assessment is that had there been no tight monetary policy, the inflationary pressures would have been three times more than at present.

The banker repeated SBP Governors argument that real interest rate is still very low. Our real interest rate is hardly 4-5 per cent if you adjust the banks mark-up with inflation rate is one standard argument offered by all commercial and central bankers in support of present policies. Financial cost is just a small part of the total production cost is another argument of the bankers.

The financial cost was only three per cent of sale proceeds about five years ago, Shabbir Ahmad retorted and said at present the financial cost is eight per cent of sale proceeds and is hitting the endurance limits.

The governments reliance on banking system for borrowing has led to 19.2 per cent monetary expansion in first half of this fiscal year. Dr Shamshad Akhtars advice to the government is to rein in fiscal slippages in next half of thel year. She also wants the government to mutually agree with State Bank to reduce its stock of papers from Rs624.6 billion to Rs305 billion, an average of last five years. Her advice was for holding jumbo auctions of long-term PIBs, more issuance of sharia-compliance instruments and to generate more inflows into National Savings Scheme. While industry and trade leaders were not in a position to offer any comment on this advice of the SBP Governor, a private banker confided that a plan is being prepared to shift burden of treasury bills and short-term papers to long- term instruments.

No further details of this proposal were available but there are indications of consultations and meetings among the bankers on these issues. The private sector has not been crowded out as business people are trying to convey, a banker said. Private sector credit grew by 10.4 per cent during July 07 to January 19 as against 10.2 per cent growth of the same period last year. Till January 5 this year, the exporters were given Rs139.6 billion as against Rs31.6 billion last year.

Under the Long-Term Financing Facility for export-oriented industries, a sum of Rs8 billion has been allocated for utilisation up to June next. The borrowers have been given option to borrow for three different terms. A three- year loan will carry eight per cent interest, five -year loan nine per cent and 10 -year loan 10 per cent.

How can we think of setting up new factories when our existing plants are being closed because of financial and infrastructure problems, Adil Mahmood, a leader of All Pakistan Textile Association (APTA) said. He wants loans on concession rates for upgrading old plants that will also help in saving on electric and gas consumption.

Financial concessions to textile is said to have caused inflation. Akbar Sheikh, a senior APTMA leader in Lahore attributes this monetary overhang to State Banks wrong money supply policy. How can textile industry be held responsible for this when a slight change in money supply can eliminate this possibility, he asserted. Another textile industrialist recalled that it was high lending that turned the industry sick in the 1990s.

Monetary policy: a response to fiscal expansion? -DAWN - Business; February 04, 2008


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## Neo

*Managing the rising budgetary deficit​*
AS expected, the government is taking the easiest course to narrow the rising fiscal gap. Apparently, there is consensus on three things to manage risks These include around Rs80 billion cut in the development programme, over Rs40 billion high cost syndicated debt for payment to oil companies and about Rs45 billion additional fund raising through National Savings Scheme at home and abroad.

The finance ministry estimates that fiscal deficit, based on half-yearly projections, could be around Rs170 billion higher than the annual budgetary target of Rs399 billion. That would mean a much higher deficit of around six per cent of GDP instead of targeted four per cent.

The government has opted to keep the oil and electricity prices unchanged until the general elections on February 18 by which time it would be clearer how to go about. By that time, there may be latest estimates of economic growthmay be closer to six per cent--- on cumulative effect of quasi-fiscal debt and reduction in development programme. So far, the finance ministry has been saying any rate between 6.5 -- 8 per cent will be a good number.

There is no dispute that about 15 per cent cut in the public sector development programme will carry a substantial socio-economic cost. The Rs520 billion PSDP for improving the living standards would be curtailed. So far, the federal and provincial governments have been able to utilise about Rs230 billion( in the first half of the current fiscal year).

The second quarter utilisation of development funds is usually higher than the first quarter because of pick up in the implementation activities after initial the start- up problems. This is not the case this year. The implementation has further slowed down in the recent weeks because of elections and overall security environment resulting in evacuation of foreign engineers from the project sites. Even after the elections are over, the new government would take some time settling down and that would affect the pace of work. Some major cuts in allocations for the Higher Education Commission and the Khushal Pakistan Programme are therefore imminent.

In these circumstances, the overall development spending may remain more or less at the last years level or at best touch Rs450 billion. This years PSDP was about 25 per cent higher than last years Rs415 billion.

The Rs38 billion syndicated loan being borrowed from the banking consortium for payment to oil companies at about 9.9 per cent interest would increase governments debt burden. It has come at a time when fiscal deficits are mounting.

These two loans were arranged in two installments despite reservations expressed by the central bank over interest rates. This included a Rs18 billion loan through a consortium led by the Habib Bank about two months ago, followed by negotiations for another Rs20 billion from consortium led by the National Bank which is being finalised. This would mean the next government will have to pay an extra amount of Rs14 billion in interests out of public money.

Likewise, the interest rates on the National Saving Schemes may need to be increased to attract Rs45 billion additional resources. Of that, the government expects it can fetch about Rs30 billion or so by realising hitherto untouched potential available with the overseas Pakistanis by offering them instruments in foreign exchange. Independent economists understand that even fund raising through National Savings Scheme or investment bonds would increase the governments debt servicing cost and affect the banking industry.

The economic managers have been pleading before the president and the caretaker prime minister that subsidies have been causing a great haemorrhage to the national economy and it was getting difficult to contain fiscal and current accounts deficits in the backdrop of recent depletion in foreign exchange reserves by $1 billion. Their hope about raising funds through NSS is based on recent improvements in inflow of remittances despite a slow down in other sources of foreign inflows (net foreign investment is down by $1billion during July-December 2007) ) in the heat of political uncertainty and imposition of emergency, lifted later.

A long drawn impact of subsidies, President Musharrafs political difficulties and security situation may lead to deterioration in Pakistans credit rating in the international foreign markets where it has over $2.7 billion of sovereign bonds. Such developments coupled with energy shortages are taking a toll on industrial production, posing serious threat to economic growth and revenue collection, already falling short of the target.

The government, it seems so, is in a catch-22 situation given the fact that any increase in interest rates or energy charges could lead to further push in headline inflation running higher at over eight per cent against targeted 6.5 per cent, fuelled by double digit food inflation.

The deficits have increased owing to governments inability to timely rationalise energy prices--- both oil and power  because of political compulsions, general uncertainty after the judicial crisis and to some extent in the aftermath of December 27 assassination of Benazir Bhutto. The economic cost of these developments on future generation may remain unquantifiable but would, no doubt, be far reaching.

While opposing the rationalisation of energy prices, a majority of the cabinet members had taken the position that in the heat of mounting pressures arising out of flour, gas and electricity shortages across the country, an increase in oil prices and electricity tariff could be suicidal. There can be no two opinions about the inflationary impact of such a move but the longer-term risks could be even higher for the national economy.

Managing the rising budgetary deficit -DAWN - Business; February 04, 2008


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## Neo

*Farm forestry to develop agriculture​*
FORESTRY and agriculture, from land use point of view, share the same objective that is an efficient management of soil in the interest of human being, and they together combine to form an essential mode of transforming soil fertility into raw materials needed by man.

 A planned and balanced relationship between these two increases the mutual effectiveness, which ultimately adds to the prosperity of the farmers and brings stability and affluence to human beings that neither agriculture nor forestry alone could achieve.

A farmers needs tree for fuel for his hearth, wood for the implements and building material, as fodder for his animals in time of fodder scarcity, shade for his family and animals, shelter belts and windbreaks to save his crops from desiccation and fruit trees to enrich his diet. But unfortunately in our country these basic necessities are not easily and readily available to farmers to the extent of his requirements.

The major part of our country located in the dry arid zone, experiencing extremes of temperature, scanty rain fall and high velocity winds. As a result of these adverse climatic factors, our natural tree resources are very meagre. We have five per cent of the total area under forests which is far less than the 20 per cent considered necessary for a balanced economy of an agricultural country. It will, therefore, be seen that there is a large gap which needs to be filled up. The details of both productive and protective categories of forest in Sindh are as under:

Category Type Area million % of total land

acres area of Sindh

Productive Riverine forests 0.596 1.71

Forests Irrigated forests 0.203 0.58

Productive Mangroves 0.852 2.45

Forests Range-lands 1.131 3.25

2.782 8.00

So for the energy requirements of the province are concerned, the existing wood energy requirements are estimated at 6.4 million m3 against sustained supply of 1.68 million m3 thus there is a generating gap of 4.72 million m3 between energy supply and demand (FSMP 1991).

This shortage of fuel wood has forced farmer to misuse a very large quantity of cow dung which otherwise would have gone to his fields as fertiliser

Apart from acute shortage of fuel, timber and fodder, our farmer has also to face the menace of salinity, water-logging and erosion by wind and water which threaten our lands. Unfortunately many of our agricultural holdings are on marginal farm lands and it is doubtful, if they are suitable for permanent agriculture. Such farms, on account of improper land use, exhaust their fertility and become unfit for cultivation in few years. This situation is further aggravated by indiscriminate felling of trees to meet the fuel wood and timber requirements. In such problematic areas, raising fast growing tree species on short rotation is an essential component of crop pattern leading towards permanent productive agriculture.

In view of these facts, it is evident that farm forestry is a must in establishing permanently productive agriculture. When we are striving to induce the farmers to increase food production by using improve seed, fertiliser and new techniques, the foresters should also see that the farmers /land lords accept farm-forestry as a normal and profitable proposition, and grow windbreaks live fences and wood lots particularly block plantation of babul (Acacianilotica) locally called Huris on their farms.

In order to induce the farmer to raise windbreaks, live fences, and farm wood lots, what is needed to day is to adopt measures which are purely promotional, including different kinds of assistance. Though we do have some regulative and controlling measures on wood produced on farms, yet the promotional side is still lacking.

Dissemination of technical know-how and celebration of tree weeks, which do have educative value are also lacking in zeal and enthusiasm, with which these were celebrated about 20 to 25 years back. In those days discussions were held on T.V and radio and informative, educative and motivational articles were published in regional and national news papers and such book-lets, brochures. Leaf-lets were also distributed in educational and other institutions, debates were held in schools, NGOs, CBs and VOs were involved at all levels in tree plantation, but now-a-days there is no such activity.

What is required to make farm-forestry a successful campaign is a concrete and substantial monetary and material assistance. Experience has shown time and again that our farmer is not reluctant to accept change, provided he is convinced of its benefits. Farmers attitude towards progress is positive.

What obstruct his progress are financial limitations and liabilities. When supplied free or on nominal rates, the desired planting stock and financial aid to establish them, he will be too happy to practice farm-forestry. Agriculture Development Bank of Pakistan, which is contributing a lot in the development of agriculture, can also help the farmers in this sphere by providing interest-free loans and encouraging them to re-activate an old practice of Hurri-cultivation which was introduced in Sindh as back as 1858.

Farm forestry to develop agriculture -DAWN - Business; February 04, 2008


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## Neo

* tougher year for exports to the US​*
Like other developing countries, 2008 will prove to be tough year for Pakistani exporters in selling their goods to their American customers following expected fall in demand as a result of recession in the US economy.

As the current forecast about a possible recession has been sparked by mounting US sub-prime debt defaults, the purchasing power of the American consumers is expected to fall substantially. US household debt is more than 100 per cent of the US GDP. Given the current rate of debt accumulation, the stimulus package of $145-150 billion on the consumers spending will be negligible. The US Fed interest and discounts rates are likely to further weaken the dollar (and fuel inflation), resulting in cut in costlier imports into the United States.

Some local exporters however think that the downturn in the US economy would create more demand for low priced , low value goods.

But many analysts say the continuing security situation and low value addition in the exportable goodsmainly textile and clothing- may further dampen our export prospects to the US. The situation becomes more complicated by foreign travel advisories and cautious approach of buyers due to unpredictable economic and political situation.

Pakistans 25-27 per cent exports are directed toward the US---the highest export to any country after the 28-member block of the European Union, Afghanistan and United Arab Emirates. This shows that any slowdown in the US economy may have a far reaching impact on our exports.

The US and EU being our principal markets, account for over half of our total exports which gives a clear message to policy makers in Islamabad to explore new markets and to reduce heavy reliance of exports on these few markets.

The exports to US have already witnessed a slight reduction of 0.21 per cent to $4.183 billion during the year 2006-07 against $4.192 billion in the previous year. However, the exports grew to over $4 billion in the year 2006-07 from $2.304 in the year 2003-04, a substantial growth since the abolition of the post textile quota regime. But it seems that export proceeds to US have reached a saturation point and are on decline since 2007.

The latest figures for the current half year are not available to determine the latest export trend to US. However, exporters reported a sizable decline in the shipment of goods to US following imposition of emergency, political uncertainty and turmoil on the streets after Benazirs murder.

The United States is a traditional buyer of Pakistani textile products and Pakistan enjoys a favourable trade balance since long. Our textile sector cater to the need of the lower and middle class.

What is really affecting exports is now the countrys image. Foreigners do not want to buy products with Made in Pakistan written on them, says an exporter. A researcher, Mohammad Sulaiman says that the recession in US economy will have serious repercussions on our exports.

Second, the US economic downturn will also impact Asian economies including that of China. Obviously, countries like Pakistan whose textile exports are vulnerable, we may see the scope of foreign trade shrink.

There have been a host of other factors affecting the export growth particularly to the US which include stiff competition from China, India, Vietnam and Bangladesh, regional preferential arrangements such as North American Free Trade Area (NAFTA), Central American Free Trade Area (CAFTA). The US sponsored Qualified Industrial Zones (QIZs) in Jordan and Egypt which allow duty-free access to their products, have also affected export competitiveness.

Pakistan also has to address other challenges and to put in place pro-active policy measures including a balance in the monetary and fiscal policy. The policies of the previous government focused on revenue generation and reduction of debt to GDP ratio. Moreover, the highest ever increase in interest rates under the tightening of monetary policy for the last two years for controlling the core-inflation also had an impact on industrialisation leading to cash flow problems for some genuine exporters.

But the major challenge is our low productivity and quality, timely delivery and better research and development for keeping pace with international market trends.

The productive capacity suffers because of relatively low investment in new machinery and technology. The tax system favours investment in the non-industrial sectors, particularly speculative businesses such as stocks and real estate.

The export goods fetch low prices because we produce low end and low quality products and many could can be blamed for not developing their own brands. The education system does not produced necessary skills needed for quality goods. Competitiveness does depend on price alone.

Economist Dr A R Kemal said, it would be premature to determine the actual fall out of the slow down in US economy on Pakistans exports. However, he said, it is certain that the demand will decrease which will subsequently impact imports.

Pakistan will not be the only country to be impacted. Other countries like India and China will also experience some fluctuations in their exports.

Statistics shows US imports about $100 billion textile and clothing. Pakistan share is about 3-4 per cent of its total imports.

A Karachi-based industrialist, Engineer M. Jabbar says that consumer spending in the US market is falling and our textile and clothing export may see some decline but it will not be substantial. The price will have to be more competitive with lower profits--, an answer for selling in recession economy.

It is expected that the slow down in US economy might impact the export of high value added products because of higher prices but the recession may nor impact exports will low value added products. But there may be supply constraints.

A tougher year for exports to the US -DAWN - Business; February 04, 2008


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## Neo

*Surge in the current account deficit​*
Pakistan is confronted with a record current account deficit of $6.138 billion at the end of the first six months of the current financial year--a 31 per cent increase over the same period last year. This has happened in a country with a modest foreign exchange reserves of $15 billion coming down by a billion dollars within a few weeks.

In the past, ministers used to brush aside such concerns arguing that foreign investment was pouring in and workers remittances were swelling. But now due to the political turbulence and the increasing violence, the foreign direct investment (FDI) is tapering off and foreign investments in privatisation has drastically slowed down. The home remittances are however increasing as Pakistanis abroad do not want to hold their savings there and be investigated by foreign governments. The portfolio investment from abroad has also plummeted since the emergency was clamped.

On the import side, crude oil price is very much on the high side after touching $100 a barrel and the cost of food imports is also rising. The Opec oil producers have tentatively decided not to increase the oil output and bring down the prices. The oil consumption in Pakistan is increasing by nine percent annually, despite the rising prices. Simultaneously, foreign trade deficit is increasing steadily and during the first six months of the year has reached over $7 billion. The fear is that at the end of the financial year, the total trade deficit may rise to $13 billion.

The IMF and the Asian Development Bank have cautioned Pakistan that it could not sustain large current account deficit in the long- run and it will have to take steps to rectify the situation.

The solution lies in stepped up exports, but increasing the exports is not easy. Factories are closing down for want of electricity or gas. In the Punjab 200-300 textile mills, big and small were closed last week for want of power or gas.

The small and medium enterprises have to play their part in increasing exports but they are also hurt by the shortage of power and frequent load-sheddings Pakistan cannot meet its textile production and export target for want of power.

Exports during the first six months of the year fell five per cent below the modest target. The textile export is confronted with new difficulties in view of the drift towards the global recession. There are serious problems in the US market which consumes quarter of the Pakistans textile exports. One set of American importers are reluctant to place orders for goods for fear the exporters may not be able to meet their target date for delivery because of political convulsions, violence and energy shortage.

Another set of American importers prefer not to buy textiles with the marking made in Pakistan which is not popular in the US market at the moment and so some of them are shifting their purchases to India or Bangladesh. If the political uncertainties continue and production and exports are affected, Pakistans textiles exports will suffer more. There is a new opening for the export of Pakistani kino to the Russian Federation. Russia has removed many of the restrictions on the import of kino and Pakistan can benefit by that in the manner it has been benefiting with the removal of restrictions on citrus imports into China.

Pakistan however suffers from the loss of the $90 million fish imports to the European Union (EU). Eight months have past since the EU imposed the ban , but that has not been lifted in spite of Pakistans efforts. The ban on old PIA planes flying to Europe has been lifted but the ban on the fish imports has not been lifted, as enough efforts to clean up the trade have not been undertaken.

Pakistan has now removed the sales tax on marble and granite. The 2.5 billion tonne marble mines can be dredged for exports and for domestic use. Marble has a large market-- both domestically and externally. Jewellery exports can also increase and we can earn a good deal through the export of Swati emeralds after conditions stabilise there. There is a scope for large-scale export of furniture to the Middle East if the trade is organised properly. There has been a suggestion that soon there will be a surplus of over a million tonne of sugar which can be exported, but the ministry of industries is opposed to the export of sugar while mill owners want the TCP to export half a million tonne of sugar from the existing stocks. The government is afraid the results of the efforts to export sugar may be the same as the anfractuous effort to export wheat which created a serious wheat crisis. In addition, the cost of production of sugar is very high and exports will have to be subsidised in a big way.

The imports have been increasing for fear the rupee will be depreciate further and that will push up import prices. So the businessmen are importing in the hope of selling them at high prices after the expected devaluation. However, a fall of 1.3 million in the import of tyres and tubes during the last six months is a significant development.

Food prices continue to rise not only locally but globally adding to the hardships of the people.

Meanwhile, efforts are being stepped up to increase privatisation and sell more bonds abroad to earn more foreign exchange. But this may not be the time we may get the best price for the bonds. Overall strenuous efforts have to be made to improve the balance of payments and reduce the current account deficit as soon as possible and the bond sale should be the last of the options.

Surge in the current account deficit -DAWN - Business; February 04, 2008


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## Neo

*Pakistan and the global financial crisis​*
The current financial crisis in the West has critically exposed the vulnerabilities of a liberalised financial system. It has also highlighted the challenge that the policymakers and regulators are faced with in an increasingly globalised, ever-changing world.

The domino effect of a trouble sparked by US sub-prime debt defaults underscores apparent and hidden linkages of the complex market capitalism that never ceases to spring surprises. Just when the financial gurus in the West thought that they have devised enough safeguards to avoid repeat of 1996 Far East Asian financial turmoil that shook many countries, they are faced with a new, in a way, more grave situation on their own soil.

How well will they be able to respond is yet to unfold. Whether or not the Fed rate cut and the stimulus package will soften the impeding US recession only time would tell. But some consensus is emerging that the US sub-prime debt crises may linger on for two to three years.

The banking, other financial institutions, fund and asset management giant firms in the West, meanwhile, will come under pressure from depositors and shareholders on how prudent have been their investment and lending policies.

Far away from the US and Europe, Pakistan watched at the tumbling of capital markets, keeping its fingers crossed. The local banking hierarchy and fund managers were concerned. But the primary reason for their anxiety was different. They were worried about issues surrounding upcoming elections and worsening law and order situation. They were also concerned about the infrastructure deficit, particularly energy shortages. All these factors create a congenial environment for foreign capital infows.

When contacted for their comments on the possible impact of troubled Western financial markets on the Pakistans capital market including high performing banking industry, high-placed sources in banking expressed the same views but differently: The global financial crisis has not affected Pakistan in the first round.

When approached through her media manager Dr Shamshad Akhtar declined to give comments on possible impact of the crisis on Pakistan. She also preferred to keep mum over what steps she intends to take to further consolidate the regulatory framework governing banks to rule out possibility of debt defaults and possible scams.

However, the SBPs First Quarterly Report issued last month says that the domestic economy is now more open and prone to external shocks than ever before.

The SBP governor has,however, reinforced the direction of monetary policy that she thinks is best suited to the economy at this juncture. The biggest challenge to the economic fundamentals is posed by increasing pace of inflation. The State Bank moved against the global tide of falling interest rates and further tightened its monetary policy by increasing the discount rate and cash reserve ratios for banks.

During the press conference, Dr Shamshad reported to have said that so far Pakistan escaped the recent economic turmoil emerging from US and engulfing the developed European economies. Much would depend on the nature and duration of the global crisis.

We have been able to escape the affect not because of some superior more efficient safeguards that we had but because we are too weak to figure in global financial matrix, said a senior economist with rich international banking experience.

No it has not affected us so far. We cannot possibly be totally immune but I do not see a big impact in the near future, said Dr Khalid Mirza, head of Competition Commission.

He commended the State Bank for improving its supervisory function to regulate particularly the banking industry.

Zubyr Soomro, a senior Citi Bank executive spoke in his capacity as President, Overseas Chamber of Commerce and Industry, grouping of 168 influential multinationals and foreign companies including 32 members from the financial sector.

Mr Soomro sent his reaction via e-mail. He wrote, The primary impact for us to consider would be tightened terms for access to international debt markets; these are there for emerging markets in particular. Some countries will also need to assess how much their local banks may have invested in some of the problematic instruments that have surfaced.

In our case though this is probably minimal and our banks have benefited from pretty effective financial sector reforms too, thus improving resilience to international shocks, he added.

We cannot afford to be complacent, institutions need to be strengthened , said another senior retired banker.

The banking in Pakistan too is stressed because the other leg of the financial system, the securities market is not developed. For the financial system to cope with demands of an emerging economy with so much potential, it needs the other pillar to be strengthened to provide a sound foundation for an expanding economy.

No decent person can wish others to suffer but the crisis in the West has created a situation pregnant with immense possibilities for Pakistan, a senior banker told Dawn.

Explaining his position, the banker said that he expected a lot of investment funds looking eastward in the near future as options and yields in developed markets dried out.

We need to prepare ourselves on war footing by getting floating barrages from the Middle East to overcome the energy shortages and to receive a fat chunk from the investment that would be diverted to surging economies of Asia, Amir Siddiqui, head of the retail banking of National Bank of Pakistan told Dawn over telephone.

Pakistan and the global financial crisis -DAWN - Business; February 04, 2008


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## Neo

*New strategy to rationalise need-based projects ​* 
ISLAMABAD (February 04 2008): The government has framed new guidelines for the provinces for the current Public Sector Development Programme (PSDP) implementation, directing them to rationalise the need-based projects for people's welfare.

Sources said that the new strategy is meant to ensure utilisation of PSDP funds in a most prudent manner to prioritise the people-centric projects. The strategy is focused on saving of the resources without hurting or slowing down the projects. It says that the new projects will not be included in the PSDP 2007-08.

Budgeted projects not yet started would remain on hold during the second half of the current fiscal year. Expenditure to be incurred during May-June, 2008 on slow moving projects may be delayed till July -August, 2008. It says that fast moving projects and those to be completed by June 2008 would not be disturbed and the required amount will be made available--like Mangla raising project, Chashma nuclear project (C2), etc.

It says that the provincial governments have also been taken on board to rationalise their development programmes in the light of this strategy.

It rules out any possibility of cut in PSDP for the current fiscal year. It notes that announcement of cut in percentage term in the PSDP will further adversely affect the already fragile financial market. However, the financial position of the government would be steadied in line with the new strategy.

The new guidelines highlight the importance of different key sectors and stress the need of doing more in these areas. They say that modern infrastructure is not only necessary for the development but is also required to attract foreign investment. Recent increase in FDI, in addition to the friendly policies, is due to modern infrastructure being developed.

The strategy says that a modern network of rail and roads is being developed. During 2007-08, Rs 166.6 billion, or 50 percent of the total development budget outlay, will be spent on development of infrastructure including water storage and its conservation.

The government has not neglected social sector. Development of social sector is also necessary to improve the quality of the life of the people, to reduce poverty, make available qualified human resources for speedy development etc. Rs 156.0 billion, or 47 percent of total development outlay, is being spent on social sector.

It wants special focus on less developed areas and terms it as a government's priory. In a reference, it says that the share of Balochistan in the PSDP would increase from 2.7 percent in 1999-00 to 14 percent in 2007-08.

Special allocation has been made to develop less developed districts ie Thar, Dera Bugti and Kohlu, and additional funds have been provided to the provinces under the new NFC award. It maintains that the provinces are being encouraged to initiate and execute need-based projects for the benefits of the people.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Saudi giants to invest in energy, steel and pharmaceutical sectors ​*
JEDDAH (February 04 2008): Three leading business groups of Saudi Arabia including Al-Tawairqi, Hubco and Al-Bakri International have shown interest to expand investment in Pakistan's energy, steel and pharmaceutical sectors.

The chief executives of Saudi business giants evinced their readiness for enhancing investment in various fields for accelerating pace of economic development in Pakistan during their separate meetings with Caretaker Prime Minister Mohammadmian Soomro here on Sunday.

Chief Executive of Al-Tawairqi M.Tariq Barlas, Chairman HUBCO Muhammad and Chief of Al-Bakri Abdul Qadir met with Prime Minister Soomro and showed interest for investment in Pakistan.

Reposing confidence in Pakistan's investment-friendly policy, CEO of Al-Tawairqi Tariq Barlas showed immense interest for making investment in the coal based power projects in Pakistan. It may be mentioned that Pakistan government plans to generate 20,000 mega watt energy through coal based and other source of generation.

Barlas appreciated the visionary approach of Caretaker Prime Minister Mohammadmian Soomro for developing alternative energy sources including coal, solar and wind to cater to the growing demands of energy sources in the country. The Prime Minister said the government appreciates investment and expansion plan of Al-Tawairqi group in producing high quality steel.

He expressed the confidence that a plan of enhancing investment in Pakistan will unleash boost to the economic development activities. The Prime Minister was of firm view that investment and business friendly approach of the government was encouraging foreign investment.

Mauhammad Ali Reza, Chairman HUBCO said Pakistan had a strong human bank with a sound economy. He said his company was examining to set up a hospital of international standard in Pakistan. He said investment had already been made for setting up gas distribution depots in Pakistan.

He said the country seriously requires to revise whole pattern of energy production through alternative means for overcoming energy shortage.

Chief of Al-Bakri International Abdul Qadir, the largest oil supplier to Pakistan, observed that Pakistan was a land of opportunities for investment with tremendous potential of development in different sectors.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Domestic debts shoot up by Rs 225.34 billion in five months: SBP *​ 
KARACHI (February 03 2008): Pakistan''s domestic debts shot up by Rs 225.340 billion, or 8.64 percent, to new peak of Rs 2.822 trillion during the first five months (July-November) of the current fiscal year 2008, against Rs 2.596 trillion on June 30, 2007, due to the significant rise in fiscal deficit and slowdown in the privatisation process, according to the State Bank of Pakistan (SBP) on Saturday.

HIGHER FISCAL DEFICIT AND LOW PRIVATISATION PROCESS PUSHED THE DOMESTIC OUTSTANDING DURING THE FIRST FIVE MONTHS: This tremendous rise in debt stock was driven by the growth in the floating debt category, which went up by 14 percent.

The overall floating debts touched the level of Rs 1.264 trillion in November 2007 as against Rs 1.107 trillion in June 2007, depicting an increase of some Rs 156.65 billion during the first five months of current fiscal year.

The floating debt includes three months treasury bills, Market treasury bills and MTBs for Replenishment Permanent debts, which includes market loan, federal government bond, income tax bond etc, has gone up by 7.49 percent or Rs 41.434 billion to Rs 594.409 billion during the July-November 2007 as compared to Rs 552.975 billion stood in June 2007.

Un-funded debt, based on the national saving has mounted to Rs 963.336 billion in November 2007, earlier stood at Rs 936.081 billion at the end of last fiscal year 2007, depicting a jumped of Rs 27.255 billion during the first five months of current fiscal year 2008. "Higher fiscal deficit and low privatisation process pushed the domestic outstanding during the first five months," economists said. They said that presently the government is also increasing its borrowing from the saving schemes and borrowing from saving schemes would further go up, as government is likely to revise its interest rate in upward side during the February. "If the interest rates of saving scheme would increased then it is expected that the government would further borrow from the unfunded debts,'''' they said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Reverse remittances surge by 11.6 per cent ​* 
Power sector sent out $101.8 million, communications and IT $84.3 million, petroleum refining $48.2 million

Tuesday, February 05, 2008

KARACHI: Foreign companies sent back home $497.5 million of profits during the first half (July to Dec 2007) of the current fiscal year, posting a significant growth of 11.6 per cent over $445.8 million remitted during the same period of the last fiscal. Huge outflow of profit shows that the foreign companies are fully utilising governments facility that allows them to remit 100 percent profit back to their countries.

The latest statistic of State Bank of Pakistan (SBP) revealed that during July-December 2007 the power sector (thermal) remained at the top for sending back $101.8 million profit out of the country followed by communication and IT sector which repatriated $84.3 million against $97.4 million that is 13.4 percent less than July-December2006.

In terms of proportion the highest 731.7 percent growth was recorded in personal services sector. During July-December 2007 personal services sector sent abroad $2.5 million as compared to $0.3 million in the matching period of last fiscal year. 

The second highest 304 percent growth in profit flight was recorded in pharmaceutical and OTC products which surged to $19 million from $4.7 million of July-December 2006. In first half of current fiscal year 9.9 percent decline of profit outflow was recorded in food sector which shed to $17.7 million as compared $19.6 million in the respective period of last fiscal year.

Tobacco and cigarettes manufacturers sent out $20.1 million against $15.4 million, while chemicals sector repatriated $27.1 million as compared to $22.3 million. In addition, 5.3 percent growth in exodus of profit was recorded in petroleum refining sector, which rose to $48.2 million against $45.8 million in the corresponding period of last preceding fiscal year. 

From July-December 2007 the oil & gas exploration companies repatriated profit $50 million against $23.1 million of last fiscal year. Moreover, 50.4 percent decline in outflow of profit was recorded in fertilizer sector which stood at $1.6 million against $3.3 million, similarly 4.6 percent reduction was recorded in cement sector as cement manufacturing companies sent back $4.8 million as compared to $5 million in H1FY07. 

From July- December 2007 the automobile sector repatriated $10.9 million, which had dispatched profit $8 million during the same period of fiscal year 2006-07. Further, from July-December 2007 a 45.2 per cent decline was recorded in trade sector, which shrank to $11.7 million as compared to $21.3 million of corresponding period of last fiscal year. 

Storage facilities providing companies sent back $4.1 million against $2 million of last fiscal year. Israr Khan adds from Islamabad: For a country like Pakistan, the huge drain looks very disturbing as it has already been facing a potential threat of burgeoning current account deficit (CAD) continuously for the last couple of years. Multinational donors have time and again cautioned for its negative consequences.

During the period under review, CAD jumped to an alarming $6.17 billion, which was 26.9 per cent more than what the first half of the last fiscal. Interestingly, foreign investors find Pakistan an attractive destination, as they are allowed to invest in any sector and bid for any 

privatising enterprise, can own 100 per cent of the capital or have foreign and local partners. Besides, there is no limit on the profit they can make and can repatriate 100 per cent of the capital anytime and remit total profits to their countries.

Independent economists question whether investment is coming for a manufacturing unit which will create jobs, increase production and augment exports or a service unit with limited options like mobile telephones that have to be imported in large numbers along with supportive equipment.

The answer to the question can be found in whether investment will promote exports or help in import substitution. Pakistan needs more exports and greater import substitution so that the import bill can be reduced. 

If it is a manufacturing unit, will it depend on imported raw material or use the local raw material? We have already a huge raw material import bill, which we cannot afford to expand unless the exports increase.

Though it is very pleasing for Pakistan to receive large foreign direct investment (FDI), but painful aspect of this growth is rising outflow of profits/dividends in foreign exchange. During 2006-07, such outflows on account of remittance of profits and dividends to foreign investors countries of origin amounted to $804.2 million against $504.4 million in 2005-06.

At the moment, these outflows are overshadowed by huge quantum of inflows but in the long-run, the quantum of outflows could exacerbate balance of payments. Can the government be able to sustain inflows in the shape of privatisation proceeds about which the government is very confident and how long they would keep on privatising the state-run entities? There would be one point where all these inflows would stop then what would be the alternative source to finance the current account deficit.

However, now the government is inclined to receive proceeds through the Global Depository Receipts (GDR). According to economic experts, due to outflows, the current account deficit and fiscal deficit may have a significant impact on the value of the rupee. Besides, it would translate into a large increase in Pakistans net foreign debt position. A large and growing public debt could also eventually put upward pressure on interest rates and crowd out private investment.

Reverse remittances surge by 11.6 per cent


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## Neo

*Govt to curtail borrowing in two years ​* 
Dr Shah says new govt must revise petroleum prices, inflation has benefited rural incomes, govt will procure 7mT wheat next season

Tuesday, February 05, 2008

LAHORE: Federal Finance Minister Dr Salman Shah has said the governments dependency on the State Bank for borrowing will ease in a couple of years as the government has been improving its fund-generating schemes including the Pakistan Investment Bond (PIB) and National Saving Schemes (NSS).

He added in the current year the government had fixed the target of Rs125 billion for revenue generation from NSS and had also decided to issue euro bond in March to tackle the budget deficit.

Dr Shah was talking to reporters here after the launch of Real Estate Investment Trust Regulations 2008. Talking about issues that the forthcoming elected government could face after the general election in order to maintain the seven per cent growth rate amid inflationary pressures, Dr Shah said adjustment in petroleum prices in the first six months of the next government would be crucial.

The forthcoming government must revise petroleum products prices in the first six months, he remarked. However, he pointed out that the government could cover the adjustment in petroleum product prices by taking energy conservation measures and efficient use of fuel. For that, he added, both the government and people had to contribute and a massive awareness campaign was also necessary.

He substantiated his argument by saying the world had been facing food inflation and prices of food items had almost doubled worldwide and a similar impact was being witnessed in Pakistan. He quickly added the inflationary trend in food items had increased the income levels of rural areas of the country, which accounted for about 65 per cent of the total. Therefore, Pakistans rural economy and farmers standard of living had improved.

To a question about the surge in ghee prices, he said it was also an international phenomenon as palm oil prices had reached $900 per tonne from $400. If international palm oil prices decrease then local ghee rates will also come down.

In a bid to provide relief on basic kitchen items for targeted people, he said, the government was launching a special scheme which would only benefit the poorest segment of society. Talking about flour prices, he said the government had controlled its prices, which had declined with smooth supply. He was of the view that the flour price in Pakistan was half than prices in the region including India, Afghanistan and Central Asian States.

About the wheat procurement price for the next crop, Dr Shah said the government had targeted to procure seven million tonnes of wheat in that season and the wheat procurement price would be announced according to the market price at the start of harvesting.

Regarding privatisation process, he said in near future the government would launch global depository receipts of National Bank, Habib Bank and Kot Addu Power Co internationally while privatisation of Pak Steel Mills would be done through an initial public offering (IPO).

Earlier, Dr Shah said the Real Estate Investment Trusts (REIT), though new in Pakistan, were introduced in other markets over four decades ago, adding the global REIT market had grown to a total market capitalisation of $764 billion.

This compares to a market capitalisation of $608 billion 12 months ago. The REIT is a fast growing asset class. Asia has beeninstrumental in this growth. In fact, Asia has been called the new REIT tiger.

The year 2007 saw the REIT markets across the Asian region experience a strong performance, particularly in stock prices, total returns and dividend yields, he remarked. He was of the view that REIT was a transparent, tax efficient, income producing, professionally managed collective investment scheme (CIS) that made investments in real estate ventures.

As an alternative asset class, the REIT will provide the people of Pakistan in general and small and middle class investors in particular an opportunity to benefit from real estate upside. The REIT undoubtedly will broaden and diversify the supply side of securities and will provide depth to the capital markets, he said.

He further said the REIT could have been introduced much earlier but since real estate was a provincial subject, a comprehensive series of meetings were arranged by the Ministry of Finance and the Securities and Exchange Commission of Pakistan to convince the provincial governments on the urgent need to create an enabling environment for modern products like REIT. Securities and Exchange Commission of Pakistan Chairman Razi-ur-Rehman also spoke on the occasion.

Govt to curtail borrowing in two years


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## Neo

*FBR reforms may be completed by 2009: Yousuf​*
ISLAMABAD, Feb 4: The government has allowed double salary to 16,500 out of 25,000 employees of the Federal Board of Revenue (FBR) as part of the tax machinery reforms expected to be completed by 2009.

Addressing at the first-ever Employees Workshop here on Monday FBR Chairman M Abdullah Yousuf said that now the concept of living wages existed in the tax machinery.

With the World Bank-funded reform project, the board has allowed the special pay package (double salary) to all its employees from Naib Qasid to senior tax officer. However, the chairman has not made it clear whether to consider the remaining 8,500 employees for the facility or they will be declared as surplus.

We now have to prove and justify this special treatment through our efficiency, performance and results, he asked the employees. He also underlined various on-going projects of infrastructural development, which include building of an additional block of FBR with a total cost of Rs230 million.

Mr. Yousuf said that the total involvement and commitment of FBR employees were required to execute the on-going Tax Administration Reforms Programme (Tarp) and Tax Policy Programme with a complete success.

He said that all officers/officials had to make determined efforts to make FBR an institution of international standard that could facilitate the taxpayers and deliver to the needs of the government.

Besides facilitation and education of taxpayers, the major focus of the programme was on training and re-training of the employees, end-to-end solution of the problems through automation and infrastructural development. A considerable progress had already been made in this regard, he said, adding: We have to make things easy for the taxpayers and improve the efficiency, capability and working environment of our employees to enable them to give better results.

The chairman said that the infrastructural facilities and working environment provided at Regional Tax Offices were comparable to any of the tax institution in the developed countries. He said that the FBR was in the process of acquiring a piece of land for employees residential accommodation.

He said that the primary objective of establishing the FBR Foundation was to ensure the welfare of employees and to look after their housing, educational and health needs. He said the foundation would be fully operative by the end of 2008.

Speaking about the prevailing security environment, he said that the security of the employees and the office buildings was being ensured through a system. A committee had been constituted to dispose of disciplinary cases as early as possible, he said.

Talking about the transformation of CBR into FBR, Mr Yousuf said that it was not simply change of the nomenclature but much more than that. It now gives us much greater autonomy which would help us to grow at a faster pace and become an institution capable of delivering as a prime revenue-generating agency of the country, he added.

FBR reforms may be completed by 2009: Yousuf -DAWN - Business; February 05, 2008


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## Neo

*Bush seeks $830m for Pakistan​*
WASHINGTON, Feb 4: US President George W. Bush on Monday unveiled a $3.1 trillion budget plan for 2009, which includes a financial assistance of $830 million for Pakistan.

The purpose of this assistance is to sustain our strategic partnership with Pakistan, the White House said. Approximately $830 million (will) help Pakistan achieve stability, development, and democracy goals.

The US assistance focuses on security, economic development, and combating terrorism in Pakistans western frontier regions, the White House said.President Bush also has requested $1.1 billion to help build a stable Afghanistan.

On Jan 28, President Bush authorised Secretary of Defence Robert Gates to provide with the concurrence of the Secretary of State, as much as $75 million worth of equipment, supplies and training to build the capacity of the Frontier Corps.

The United States is also considering a proposal to increase the presence of US Special Forces on Pakistani soil in support of the Frontier Corps.

Adm Eric T. Olson, head of Special Operations Command, visited Pakistan last fall and included a stop at the Frontier Corps headquarters. The US troops, however, will only provide counter-insurgency training to Pakistani troops, particularly those from the Frontier Corps.

Meanwhile, the US Congress has attached two unusual clauses to military assistance to Pakistan.

Bush seeks $830m for Pakistan -DAWN - Top Stories; February 05, 2008


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## Neo

*Bank shows willingness to invest in public and private sectors: ​*
*Exim Bank upgrades Pakistans rating​*
ISLAMABAD: The US Exim Bank has made arrangement with three Pakistani banks namely National Bank of Pakistan (NBP), Muslim Commercial Bank (MCB) and Standard Chartered Bank to provide finance for the public sector projects. Afterwards they might proceed to finance the projects in the private sector too, a senior official at Board of Investment told Daily Times on Monday. 

US Export and Import (Exim) Bank has upgraded its sovereign risk rating for Pakistan.

US Ambassador to Pakistan, Anne W Patterson attended the meeting along with Minister for Investment, Privatisation and Commerce, Shahzada Alam Manoo and Federal Secretary Mushtaq Malik, which discussed the potential of US Investment in Pakistan. 

The representative of Eximbank informed the investment division that the bank was now open to finance Pakistans purchases of US goods and services in the public sector, from short-term, 180-day sales to contract on repayment terms of five years or more. The cost of financing would be now 13 percent less. The envoy also expressed USs willingness to assist Pakistan by way of grants, technical training, and preparation of feasibilities and support for debt financing & project loans for the public sector by Eximbank. 

Appreciating the role of the people and the government of Pakistan for struggle against terrorism and sectarian extremism the US Ambassador said that US was committed to long-term business relations with Pakistan. Lauding the governments efforts for the progress and economic growth made during the last few years, she said that Pakistan has tackled some difficult macroeconomic issues and the countrys economic growth has responded positively to the reforms, which have been recognised internationally by global capital markets and international rating agencies. 

While, commenting on the role and mission of the investment division and the Board of Investment (BOI). The Secretary said that foreign investment is one of the major pillars to enhance the competitiveness of the services and manufacturing industries in Pakistan and it has brought with it the know-how, expertise, new technology and financing facilities, resultantly generating employment and reducing poverty. 

The US Ambassador was informed that Pakistan needs more investment from the US and western countries to receive the long term benefits and on behalf of the Investment Division and the BOI, Mr Malik expressed his appreciation and thanked the US Government for its support provided to the BOI through the Competitiveness Support Fund (CSF) to restructure the Board of Investment and enhance the efficiency of its operations. The US Ambassador was further elaborated that in order to enhance the efficiency of it operations the BOI has been given the Investment Division status to deal directly with the high-level decision makers including the Prime Minister. 

This new structure is based on the international best practices where the CSF assisted the Government of Pakistan to benchmark the BOI with other relevant agencies in the region. With the CSF assistance the BOI has formed a Foreign Investor Council (FIC) to serve as a forum for policy dialogue between GOP and the foreign investor community to increase foreign direct investment in Pakistan; bring together the expertise and experience of top multinationals and present it to the Government; generate favourable opinion from international business community on Governments measures to improve Pakistans investment climate for a knowledge-based economy. 

The secretary also informed the Ambassador that the BOI is also trying to build up the capacity of its staff for more professionalism and efficiency. The BOI/ Investment Division has been working, with the assistance of the CSF, to design an investment strategy that will promote foreign and domestic private investment; investment treatment and protection; facilitation of foreign and private investment. Indeed, the CSF has become an important policy instrument to help the government and the private sector as well as academia to form a partnership to promote innovation and investment to enhance the competitiveness of the Pakistans economy, said Mr. Malik. 

Malik Mushtaq, Secretary, Investment Division/BOI briefed the visiting delegation about the structural reform and aggressive investment policies pursued by the government. The policies have started delivering the desired dividends. 

The macro economic indicators & exemplary performance of Pakistans stock market, clearly indicates that the economic progress is upward.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Domestic debt rises to Rs 2.822 trillion: SBP​*
KARACHI: Pakistans domestic debt outstanding rose by Rs 224.555 billion during the first five months of the current financial year, mainly due to high borrowing through treasury bills, Pakistan Investment Bonds and MTBs for replenishment. 

The domestic debt rose by 8.70 percent to Rs 2.822 trillion from Rs 2.596 trillion at the end of the last fiscal, according to data released by the State Bank of Pakistan. 

The government borrowed Rs 65.608 billion through sale of treasury bills during the period mentioned above. The government also borrowed Rs 91.042 billion through MTBs for replenishments. The overall floating debt rose by Rs 156.650 billion. 

The permanent debt of the country rose by Rs 41.434 billion due to inflows of Rs 43.213 billion through sale of Pakistan Investment Bonds and Rs 9.007 billion through sale of prize bonds. Debt under some other heads was repaid. 

The un-funded debt of the country surged by Rs 26.469 billion. Major inflows were recorded in Special Savings Certificates (Rs 5.975 billion), Bahbood Savings Certificates (Rs 16.796 billion), Special Savings Accounts (Rs 5.298 billion) and Pensioners Benefit Accounts (Rs 4.144 billion). 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Exports fall short of target during 1H 08​*
KARACHI: Key export sectors performed dismally in the 1st half of current financial year as majority of exportable items fell short of their targets during this period.

The most worrisome aspect is the poor export of textile, garments and other core categories, which make over 80 percent of total export volume of the country. This led to overall shortfall in the export during July-December period of this fiscal year, official statistics suggested.

Although, developmental categories posted growth during the period under review, little share of these items in exports did not help to enhance the overall volume of export.

Government has set $19.2 billion export target for financial year 2007-08. It will be third consecutive year if exports fell short of target at the end of financial year, analysts said.

It is pertinent to mention that export during the first six months of this financial year totaled at $8.716 billion against $9.219 billion target, which amounted to achieving of 94.5 percent target, thus leaving a shortfall of $503 million. 

According to analysts, the export target of $19.2 billion seems impossible right from the beginning of current financial year because of various issues confronting the export and is likely to be missed in the present scenario when all the economic indicators are showing signs of recession including the exports.

The ongoing uncertain situation as well as deteriorating law & order situation have adverse implications for the countrys export sector and impact of this situation have started emerging and would be more visible in the coming days, analysts added.

According to exporters, big shortfall in actual export against its targets during the first six months was result of cancellation and failure to honour the export commitment marred by countrywide violence and disturbance, triggered by the demise of former Prime Minister Benazir Bhutto.

All the industrial and business activities came to grinding halt as entire country was in a state of mourning on the death of Benazir Bhutto, which caused massive losses to industry including export, they noted.

Financing cost and energy prices during the last few years made Pakistani products less attractive for buyers in international market and more recently the growing energy deficit is hampering the smooth operations of industry.

A closer look on the export performance of various sectors showed that textile and garments sector fetched $5.256 billion export proceeds during 1st half of current fiscal year against the target of $5.895 billion for the said period.

Export of core categories including rice, leather, sports, surgical etc. stood at $1.920 billion against target of $1.925 billion whereas developmental sectors export proceeds totaled $798 million against the target of $754 million.

Daily Times - Leading News Resource of Pakistan


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## Neo

*REITs to boost economic growth: Salman Shah ​*
LAHORE: Real estate is an important sector for investment and REITs would provide an opportunity to the small investors to become shareholders in real estate and benefit from the real estate upside, said Federal Caretaker Minister for Finance, Dr Salman Shah on Monday.

He was speaking as a chief guest at the launching ceremony of regulatory framework for Real Estate Investment Trusts (REITs) held by the Securities and Exchange Commission of Pakistan (SECP). SECP chairman, commissioners and eminent business leaders were present on the occasion.

Shah said that REITs would give opportunity to general public to pool funds for participation in real estate ownership. It would also have an overall positive economic impact on our economy, the minister said adding that such initiatives by the government are part of its investor friendly policies and intend to meet the growing needs of the economy. He said that around the world REITs are seen an important tool for stimulating the growth and development of real estate investment market. 

REIT though new to Pakistan, were introduced over four decades ago. The global REIT market has grown to a total market capitalisation of $764 billion, Shah said adding that Asia has been called the new REIT tiger. He said that 2007 saw the REIT market across the Asian region experience strong performance, particularly in stock prices, total returns and dividend yields.

The minister was of the view that the REIT would provide an investor-friendly atmosphere. Philippines and Germany recently adopted a REIT regime whereas Italy is in the process of doing so, said Shah adding that last month India, issued the draft REIT regulations for public comments.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Govt to develop 1,000 model dairy farms​*
ISLAMABAD: Secretary Ministry of Industries, Production and Special Initiatives (MOIP&SI) Shahab Khawaja on Monday visited model dairy farms and a biogas tank in District Chakwal developed by Pakistan Dairy Development Company (PDDC). 

Geoff Walker, Chief Executive PDDC and senior staff of the MOIP&SI also accompanied the secretary. The purpose of the visit was to review progress made by these farms since their owners have joined the companys model farm programme.

Under the terms of this programme, PDDC (or Dairy Pakistan as it is widely known) provides a range of equipment designed to allow the introduction of more modern and productive farm management and feeding practices. Most importantly, through many visits of dairy Pakistan farm production advisors, and manager farm production, the farmers are provided with the know-how to improve their productivity and profitability.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan ready to lower IPI gas pipeline fee*​
** Petroleum minister invites Indian counterpart to bilateral talks​*
LAHORE: Pakistan is ready to lower the fee it demands from India for the proposed Iran-Pakistan-India gas pipeline, Indian Express reported on Monday.

The report said Pakistan had offered to base the fee on global norms instead of insisting on an arbitrary tariff it had sought last February. We are keen to restart consultations with India to arrive at a mutually acceptable tariff compatible with international norms, said a letter from Ahsanullah Khan, Pakistans minister for petroleum and natural resources to his Indian counterpart Murli Deora. 

Invitation: Khan had invited Deora for bilateral talks in Pakistan, the report said, ahead of a trilateral meeting to discuss the way forward on February 12 and 13. 

I would like to invite you to visit Pakistan on February 7 and 8 before our meeting in Tehran so that we could move ahead on our bilateral transit arrangements, he wrote. Indian Express quoted its sources as saying that Khans invitation had been sent to the Ministry of External Affairs on Friday for approval. 

Since the government in Pakistan is caretaker and elections are scheduled on February 18, it is for the [External Affairs Ministry] to decide whether any talks at this stage would be meaningful, a source told the newspaper.

Daily Times - Leading News Resource of Pakistan


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## Neo

*President for funds utilisation on people-centric plans: cut in PSDP rejected *​ 
ISLAMABAD (February 05 2008): While rejecting any cut in Public Sector Development Programme (PSDP) President Pervez Musharraf on Monday cleared the new strategy for its funds utilisation in the second half of the current fiscal year with focus on people-centric social sector development projects.

The President gave the directions on PSDP during Planning Commission Deputy Chairman, Dr Akram Shaikh's two and a half hour long presentation here. Sources said that the President showed satisfaction over PSDP overall utilisation and pace of the work of the developmental projects.

During his presentation, Dr Akram Shaikh told the President that PSDP utilisation of Rs 109.5 billion during July-December, 2007 period has been achieved against Rs 87.5 billion for the same period last year. He was informed that overall PSDP utilisation-rate for July-December, 2007 was 37 percent against 35 percent of corresponding period of the previous year.

The strategy focused on saving of the financial resources without hurting or slowing down the projects pace of work. The strategy indicated that the new projects will not be included in the PSDP 2007-08. Budgeted projects not yet started would remain on hold during the second half of the current fiscal year. Expenditure to be incurred during May-June, 2008 on slow moving projects may be delayed till July -August, 2008.

It says that fast moving projects and those to be completed by June 2008 would not be disturbed and the required amount will be made available - like Mangla raising project and Chashma nuclear project (C2). Dr Akram said that the provincial governments have also been taken on board to rationalise their development programmes in the light of this strategy.

He said that in the new strategy the importance has been given to different key sectors. Modern infrastructure is not only necessary for the development but is also required to attract foreign investment. Recent increase in FDI, in addition to the friendly policies, is due to modern infrastructure being developed, he added.

The strategy indicated that a modern network of rail and roads is being developed. During 2007-08, Rs 166.6 billion, or 50 percent of the total development budget outlay, will be spent on development of infrastructure including water storage and its conservation.

Dr Akram told the President that the government has not neglected social sector. Development of social sector is also necessary to improve the quality of the life of the people, to reduce poverty, make available qualified human resources for speedy development etc. Rs 156.0 billion, or 47 percent of total development outlay, is being spent on social sector, he said.

He said special allocation has been made to develop less developed districts ie Thar, Dera Bugti and Kohlu, and additional funds have been provided to the provinces under the new NFC award. It maintains that the provinces are being encouraged to initiate and execute need-based projects for the benefit of the people.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*World economic crisis - impact on Pakistan ​* 
KARACHI (February 05 2008): News headlines at the weekend are scary. The fall out of sub-prime crash in USA has the world banking system reeling in disbelief.

The fiasco at Northern Rock in UK, Societe Generale in France, followed by a hit on UBS (Union Bank of Switzerland), rumble at Rabobank in Holland, all point to a disastrous chain of events that are likely to engulf the entire money management teams in the globe.

The esteemed "Newsweek" calls the recession looming large on the US and the world horizon as something comparable to the Great Depression, or even worse. It may be pertinent to ask why problems of mortgages (or sub-prime) faced by banks in the USA affect the rest of the world? NOURIEL ROUBINI, writing under "Meltdown" (NEWSWEEK, February 4 issue) explains:

"We went from a system where banks held mortgages on their books, to one in which banks originate mortgages. (They) then securities and distribute them, to reduce systemic risk by getting the risk of holding mortgages out of banks, and into the capital markets, and out of USA and into the global economy."

He goes on to say (about recession in USA and its global ramifications),"It is worse than 1987, when we just had a Stock Market crash. It is worse than the Savings and Bank crisis of the late 1980s.It is much worse than the Long Term Management crisis of 1998.It is much worse than the Tech burst of 2000 and 2001.

You have to go back to the Great Depression for something comparable." The repercussions across the global banking network have shaken the money managers every where, who now fear a dreadful recession that will wipe out all the advances made during the post WWII period.

With the global population now touching 7 billion mark (as against around one billion after WWI, followed by recession in the late twenties) the problems are tremendous and a lot more people are going to be affected in nearly every country. How is it going to impact on Pakistan's economy?

For starters, let us consider SBP's response by hiking the base rates of interest, contrary to the general trend nearly every where else. The inflation factor here is getting out of control. The money supply is gathering speed, as the government continues to borrow from SBP and other banks at an unprecedented level.

The budget deficits and adverse balances on current accounts, fall in revenues, near disappearance of FDI of any consequence, and the mounting defence expenditure to combat 'terror', have all combined to deliver more than a 'triple whammy' in the words of one renowned international economist. The question is if, when, and how we can hope to come out of this mess?

While US dollar falls in value against all major currencies, in Pakistan the reverse is the case, as the Rupee is falling even faster. Some people think of it as a blessing in disguise, as it can provide a competitive edge to our exports. However, several other factors belie these hopes.

The largest inhibitor is the energy crisis. With oil in the world market hovering around the century mark (in dollars) per barrel, acute shortage of gas supplies and consequent fall in generation of electricity mean shutting down of mills and other industrial/commercial units for extended periods daily. The losses include non-compliance of export orders and customer dissatisfaction leading to a long-term loss of repeat business or fresh orders.

That makes the already grim situation even worse. No wonder we are missing every target of our planned performance. Losses in major state-owned corporations, so far subsidised by government massively, seem to be getting even worse. Planned development projects seldom get off the ground or the drawing board even.

Food shortages and other scarcities, fuelling a run away inflation, are driving the people to despondency, and are one of the contributing causes leading unemployed youth to desperate acts and terrorism.

So a vicious circle has been formed, leaving no chance of breaking out. Social and political unrest is compounding the problems, and it is doubtful if the forthcoming elections will produce a leadership that can overcome these difficulties.

Paradoxically, banks in Pakistan are earning record profits and shine at the stock exchange, acting as the motor for bullish sentiments in an otherwise bearish environment. This, however, is a deceptive phase, and soon the truth will dawn on all concerned.

Questions are being asked about huge loan write-offs, and when the truth emerges, many a banker will rue the day, like their counterparts in USA and Europe now. What other mishaps are in store, no one can say for sure, but if present indications are any guide, things will not be rosy.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan and Iran border trade resumption discussed​*
QUETTA (February 05 2008): Pakistani and Iranian officials met on Monday along the border town of Taftan and discussed resumption of cross-border informal trade, local media reported. Informal trade has been going-on for years at Taftan, a town located in Chagai District, over 600km from Quetta.

But the informal trade had been stopped for one-and-half month, forcing the traditional traders to shift to other places. A Pakistani official Qamar Masood said that the meeting lasted two-and-half hour and discussed options for the re-opening of the trade.

"The Iranian officials assured Pakistani side that they would inform high authorities about the issue," Geo television quoted Masood as saying. Local media reports that around 5000 labours are involved in informal trade and they are waiting for the resumption of the trade via Taftan, the only official land border point between the two countries.

The two countries have an agreement in 1957 for border trade. "Although it was an introductory meeting but the two sides discussed important matters," Masood said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Qatar Group annuls pact for construction of seven-star hotel ​* 
KARACHI (February 05 2008): The Qatar Group of Company (QGC) has annulled the agreement with Sindh government to construct a 7-star hotel at a cost of around one billion dollars at Shahrae Faisal.

Well informed sources in Sindh Planning and Development department told Business Recorder on Monday that QGC had signed Memorandum of Understanding (MoU) with Sindh government for the construction of a 7-star hotel at the prime route towards airport in July 2007.

To a question, they said that due to the political uncertainty in the country, the department was facing difficulties to facilitate the company in getting construction approval from several concerned departments. Sources said that the firm had been waiting for approval from the concerned provincial government departments to start the construction work for the last several months, which created negative impact on the investor besides encouraging it to annul the contract for constructing the proposed project of 7-star hotel.

They apprised that after the martyrdom of Benazir Bhutto, the company had sent a letter to department informing that the 7-star hotel would not be constructed unless a democratic government is established in the country. Therefore, the company has decided to cancel the agreement with Sindh government after thoroughly analysing Pakistan's current political scenario, sources added. Sources said that the think-tank of the firm believed that political instability would create hurdles in the construction of a 7-star hotel and it would bear huge losses in the project.

"Company feared that if they set out the project in current circumstances, the huge investment would be stuck during its construction besides facing difficulties to continue the project in any future untoward situation, therefore company has decided to annul the agreement," sources revealed. They said that the foreign investments for other proposed projects were now based on country's political stability, which would only be possible after conducting fair and free polls.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*ADB to aid country achieve rapid industrialisation​*
ISLAMABAD: Asian Development Bank (ADB) would help Pakistan achieve rapid industrialisation and exports diversification so that the country may sustain its current economic momentum and increase its growth rate in the next decade. 

In this regard, the ADB has approved $350,000 technical assistance titled Competitiveness and Structural Transformation in Pakistan. An ADB report on this project states that the project seeks to accelerate Pakistans pace of structural transformation and improve the sophistication of its exports during the next decade, increase share of manufacturing output in GDP from about 16 percent to about 25 percent and increase share of manufacturing employment in total employment from about 13 percent to about 18 percent.

It also aims to increase labor productivity in manufacturing by an average of 3 percent per annum, increase share of medium-and high-technology manufacturing (non-electrical machinery, electrical machinery and transport equipment) in total manufacturing output from about 12 percent to about 20 percent and increase Center for International Development CIDs index of export sophistication by at least 1,000 points Pakistans national accounts. 

Given the nature of the project and the expertise required, the CID at Harvard University has been identified as the most suitable consultant, the report added. 

This technical assistance (TA) will analyze Pakistans growth prospects for the next decade from the point of view of this kind of structural transformation. Except for economies well endowed with natural resources, prosperity is the result of cumulative economic change. Ultimately, structural transformation is about the transformation of the economy with a view to (i) transferring resources to higher value-added sectors, (ii) diversifying production while upgrading it, and (iii) producing and exporting a more sophisticated range of products. This entails: (i) identifying the products that the country can produce profitably by using its capabilities, (ii) using new inputs and methods of production, and (iii) exploring new activities and developing new capabilities. The key to structural transformation is industrialisation, a process that requires purposeful action. 

The TA consists of four components, the consultant to prepare four reports or papers. The first paper would provide an assessment of Pakistans economic structurein terms of what a country produces and how it does it. This is called the product space. Recent research shows that it is possible to graph or map what a country produces and how closely this basket matches what other countries produce. In this way, the possibilities open to Pakistan to diversify production and increase productivity can be analyzed in light of its technological and social capabilities. The analysis will assess Pakistan vis-à-vis other countries in Asia. A second paper would examine the quality and sophistication of Pakistans exports. A strong empirical relationship exists between a recently developed measure of a countrys export sophistication and that countrys level of income. This relationship suggests that, as countries develop, they change their export package. The measure also reflects structural transformation. An in-depth and detailed analysis of Pakistans export structure will provide key information for assessing the speed and direction of its transformation, and for comparisons with other Asian countries. 

The third paper is a diagnostics analysis of the impediments to structural transformation in Pakistan. Structural transformation does not come naturally; rather, it must be induced by policy. The question is: how? Most often reform is required, either to facilitate the transfer of resources across sectors, to develop new activities, or to increase competition. This raises the next question: which reform will deliver the most benefit? The purpose of this growth diagnostics exercise is to pinpoint where a little reform can go a long way. The fourth paper will employ the output of the previous three to propose a plan for industrial development in Pakistan, based on the belief that structural transformation is not automatic but must be induced through policy.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Four million cotton bales shortfall forecast for this year​*
* ECC asks MINFAL to make arrangements for import of short-staple cotton through Wagah, Torkham, Chaman

ISLAMABAD: The Economic Coordination Committee (ECC) of the cabinet has directed the Ministry of Food, Agriculture and Livestock (MINFAL) to take necessary measure to import short staple cotton through land routes of Wagah, Uzbekistan through Afghanistan. 

According to the official sources, MINFAL is currently in the process of establishing quarantine facilities at Wagah, Torkham and Chamman borders and these arrangements would be completed by the next crop season. 

To run the local cotton industry as per capacity, the country has observed about four million bales shortfall of all types of staple cotton for the current fiscal year. The current expected cotton estimate shows that final production would be in the range of 11-12 million bales against the demand of about 15-16 million bales. 

In this regard, the ministry of textile said that this year the expected production of cotton was less than the target, so there is a need to import short staple cotton to meet countrys requirements. 

The ECC of the cabinet on December 12, 2007 had decided to allow the import of half a million bales of short staple cotton through Wagah border from India. Despite allowing import of 0.5 million bales from India, the textile sector is still behind about 3.5 million bales to meet the total capacity. 

However, officials in the MINFAL told Daily Times on Tuesday that at present long staple cotton is being imported through land and sea routes. They apprehended the import of short and medium staple cotton from India might discourage local farmers as India was subsidising various types of agriculture inputs. 

The ministry of commerce had added short staple cotton as item number 1065 in the importable items list from India, which is the part of Import Policy Order 2007. The ministry has issued SRO 73 (i) 2008 to enforce the ECC decision in this regard. 

The government has asked deputy chairman of Planning Commission Dr Engr Akram Sheikh to review the fumigation facilities at the borders so that the imported items might not be destroyed. 

The commerce ministry had allowed the imports of long staple cotton through land route from India. The import of long staple cotton through land route from India was allowed to reduce the cost of import and help the local textile industry enhance its production and its value-addition for increasing the textile exports. The ECC of the cabinet on May 10, 2007 had agreed to allow the import of long staple cotton through land route from India and Uzbekistan to meet the countrys annual shortfall of 3 million bales. 

According to an official, in the first phase long staple cotton was allowed through land route and it was decided that the government would initiate studies to examine the import of short staple cotton to save local cotton farmers from any adverse impact. 

Pakistan produces about 12 million bales of cotton each year and countrys annual consumption stands at 16 million bales leaving a shortfall of 4 million bales. The decision to allow import of cotton through land route would reduce the cost of import and make textile exports competitive in the international market, officials in Planning Commission said. 

Earlier, the government had allowed the import of cotton and cotton yarn from India through sea or air routes, but imported cotton through these means was expensive for the local industry.

Daily Times - Leading News Resource of Pakistan


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## Neo

*External debt hits$40.322bn in 4 years​*
KARACHI, Feb 5: How much the government added to the external debt is much more important than the build-up of a heap of new record domestic debt, adding a trillion rupees to the total.

The huge external debt, which witnessed an addition of about $7billion to the total of over $40 billion in just four years, is set to start a vicious cycle of borrowing  servicing  borrowing.

The rising bill of external debt-servicing gets more importance in the wake of widening current account deficit.

This deficit curtails the governments ability to pay external bills, forcing it to borrow to meet the requirement or sell the assets it has for yielding foreign exchange.

The government has been paying about $3 billion each year as debt-servicing despite rescheduling of Paris Club consortium debt which has the largest share in the total debt.

The latest figures issued by the State Bank showed that the total external debt reached $40.322 billion from $33.352 billion since 2003-04.

The addition of about $6.9 billion in just four years showed that the government borrowed massively to meet its external payment.

This has increased the cost of debt-servicing. The future government is bound to borrow more to keep itself able to make external payments. This could be the second biggest task of the future government after de-freezing the petroleum prices.

The future government will have to carry out another task to launch Global Depository Receipts (GDRs) to raise dollars for its increasing demand. The dollar demand has multiplied after record oil prices which hit $100 per barrel.

The slow export growth and high import growth is another difficult area which demands more dollars.

The countrys foreign exchange reserves have stared depleting but still these are about $15 billion.

This will be the toughest task for the future government to maintain reserves and keep the payment system smooth.

The foreign exchange reserves have been a trade mark of success of the previous government.

Both the Prime Minister and President referred the forex reserves as one of the biggest successes in numerous speeches they made in last couple of years.

The SBPs data showed that the government of Shaukat Aziz went beyond all records of increasing domestic debt which rose by almost one trillion rupees in five year to make the total as Rs2.7 trillion.

According to the report, the previous government which completed its five-year tenure increased the domestic debt by 58 per cent in five years.

The government broke all records of previous governments to add such huge debt on the back of the weak economy.

The previous government added both the external and domestic debt on such a scale which never happened before.

The caretaker government has followed the same path and has been borrowing at the fastest speed.

The State Bank in its monetary policy criticised huge borrowing from the State Bank.

The SBP accused the government of accelerating inflation through huge borrowing and destroying all efforts of the SBP to control inflation. The government borrowed about Rs237 billion from SBP in six months.

External debt hits$40.322bn in 4 years -DAWN - Business; February 06, 2008


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## Neo

*Albaraka eyes $40m share sale in Pakistan​*
MANAMA, Feb 5: Bahrain Islamic lender Albaraka Banking Group said on Tuesday it was eyeing a $40 million share sale in Pakistan and an Indonesian acquisition of about $60 million to expand the industrys largest branch network.

Albaraka, which sold shares in a Turkish unit last year, is also on track to raise $100 million in an initial public offering in Syria this year, Chief Executive Officer Adnan Yousif told the Reuters Islamic Finance Summit in Manama.

Our next target is going to be the Asian market, both the

Far East as well as India, he said.

Albaraka operates 90 branches in 12 countries, from South

Africa to Pakistan, which Yousif says gives his bank a wider reach than any other lender that complies with Islams ban on interest.

The Indonesian acquisition, worth between $50 million and

$60 million, could be announced this month, Yousif said.

We dont take minority interests. Either it is a majority stake, or a minority stake with a management contract, he said.

The share sale in Pakistan could be completed this year.

Albaraka hopes to sell 40 per cent of a $100 million subsidiary it plans to create in Pakistan to take over operations in that country from its Bahrain-based business.

It is our intention that we want to localise our branches in Pakistan, he said.

Albarakas Syrian affiliate is on track to sell 36 per cent of its shares to the public this year, Yousif said. Albaraka would keep 49 per cent of the unit, he said.

Pakistan and Indonesia are the worlds most populous Muslim countries. Reuters

Albaraka eyes $40m share sale in Pakistan -DAWN - Business; February 06, 2008


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## Neo

*Withholding tax collection: FBR compiles list of 2,300 development projects ​* 
ISLAMABAD (February 06 2008): The Federal Board of Revenue (FBR) has compiled a list of 2,300 public sector development projects, for collection of withholding tax from this major non-compliant area under various provisions of the Income Tax Ordinance 2001.

The board has dispatched a list of 2,300 development projects to the Director Generals, Large Taxpayers Units (LTUs) and Regional Tax Offices (RTOs) for recovery of withholding tax, liable to be paid during the execution of government projects.

Secretary General of Revenue Division M. Abdullah Yousuf has directed the Direct Taxes Wing to chalk out a special monitoring mechanism for the development projects so that the withholding tax must be generated from this hitherto neglected area.

The enforcement system would particularly deal with the 2,300 projects under the withholding tax provisions of the Ordinance 2001. Sources told Business Recorder on Tuesday that the FBR had identified five key areas for improving withholding tax collection in 2007-2008.

The areas are withholding tax on salary paid to government, semi-government and private sector; withholding tax on rental income; withholding tax on imports; deduction of tax from interest on bank deposits and deduction of taxes from payments to non-residents.

If the FBR is able to collect maximum withholding tax from these areas, the direct taxes collection is likely to show extraordinary growth in the remaining months of 2007-08. Sources said that the Director Generals of the LTUs/RTOs would focus on all 2,300 public sector development projects with the help of data available with the Planning Commission. The Board also approached the Planning Commission in this regard.

According to the board's instructions to the field formations, the FBR has identified 2,300 public sector development projects, having huge financial outlays during 2007-08, has been transmitted to the concerned director generals.

A preliminary analysis of the lists submitted by various RTOs has revealed that such projects have not been included in the list of withholding agents. Unless and until they are declared as withholding agents, their monitoring is apparently doubtful.

The Director Generals, LTUs/RTOs, should forthwith include the names and addresses of the Project Directors in the list of concerned RTO. The field officials should also obtain the names and addresses of the project directors for monitoring and documentation purpose.

The board asked the field formations to make concerted efforts for proper enforcement of various provisions of withholding taxes and clear targets of work on withholding taxes should be assigned to the concerned officials, the directive added.

Sources said that the overall collection from withholding tax was Rs 92 billion during July-December 2007-08. This did not commensurate with the overall target of direct taxes and real potential of these taxes that still needed to be fully exploited. Thus, special efforts were thus needed by the field offices to exploit the true potential of WHT for achieving the targets, they said.

Sources said that the salary was considered as one of the potential sources of revenue in the developed tax systems. However, collection figures reveal that a lot of work is still required.

The FBR decided that the formula of deduction of tax from salaries should be examined with reference to the provisions of law and rules. In the cases of computerised organisations, a system audit should be conducted with the help of experts in the domain and information technology. Besides, the FBR should also make arrangements to expand the outreach of the department in far-flung areas.

About the withholding tax from rental income, sources said the field offices are focusing on this most potential area for improving withholding tax collection.

Sources said that the deduction of tax from interest on bank deposits was also an important area. The FBR decided to examine the mechanism used by the banks for deduction of tax to ensure that tax was properly deducted and timely deposited by the banks.

On the issue of deduction of taxes from payments to non-residents, sources said that this provision also needed to be examined with reference to the actual data to be obtained from the State Bank of Pakistan (SBP) and the other sources of information.

The FBR Chairman desired that this matter should be co-ordinated with the SBP accordingly in view of apparent revenue potential. Sources said that the details of deductions of withholding tax under various provisions of the Income Tax Ordinance 2001 needed to be examined. Tax authorities wanted an effective mechanism for monitoring the withholding taxes.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Application of Competition Ordinance: 'banking sector exemption not in country's interest' ​* 
ISLAMABAD (February 06 2008): The Competition Commission of Pakistan (CCP) has told the Ministry of Finance that exempting the banking sector from application of Competitive Ordinance, as desired by the State Bank of Pakistan, is not in the interest either of the country or the public, it is learnt.

Sources told Business Recorder that CCP, in response to SBP letter, said that "granting exemption to the banking sector from Competitive Ordinance would be against the recognised practice, and regarded as counter productive", and added that "such an exemption could neither be in the interest of state nor in the public".

The SBP has called upon the government to invoke its powers under section 52 of the Ordinance to exempt banking sector and its regulator from the purview of the Competition Ordinance 2007. The Ordinance, designed to enhance economic efficiency and to check anti-competitive practices in the country, was promulgated by the President in October 2007.

The powers granted to the CCP under Ordinance have become a matter of concern not only for the SBP but also for 42 commercial banks whose management have been served notices to appear before the Commission on February 12 to 14 at Karachi.

The SBP also expressed concern over not being consulted at the time of framing the law, which "has serious implications for the banking sector". But the regulator also admits issues relating to customers of banks. The SBP said it is in the process of drafting and proposing a consumer protection law under which all matters relating to unhealthy banking practices would be taken care of.

The SBP wants the banking sector to be out of Competitive Ordinance purview, as application of any other law "will hamper" its policy of consolidation. The SBP drew government attention towards some provisions such as CCP powers to summon banks and hold open public hearing on any matter affecting the state of competition. The CCP also has the power under new law to pass order for freezing bank accounts for recovery of penalties from different undertakings and can impose Rs 50 million penalties at its discretion.

The SBP feels that the aforesaid powers of the Commission, in some ways, "will be more harmful" than the former Pakistan Banking Council. The CCP, in response to SBP concerns, said that it defined pre-merger notification thresholds in terms of the "size of the parties" or "size of the transaction", whereas SBP's reference to the 'share' was not clear whether it was share of market, or share of voting rights.

The scope of merger under Competitive Ordinance scope of merger review is to ensure that the proposed merger would not result in substantial lessening of competition in the market.

In line with recognised global practices adopted by a vast majority of competition agencies, holding public hearing and engaging in competition advocacy is part of the mandate of the Competition Commission, and attachment of bank accounts "is a mutual corollary" for effective recovery of penalties, while their imposition was invariably the consequence of judicial proceedings carried out by the Commission entailing due process.

It also said that out of 110 countries, which have competition legislation in place, only a handful of them have exempted the banking sector from its purview. However, to rectify this anomaly, the international competition network in its annual conference 2005 held in Bonn strongly recommended "elimination of exclusions from competition law for financial institutions". "Banks have to respect the EU completion rule", the Commission said, referring to a European court decision.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Munda Dam project: US firm's refusal compels government to seek local funding *​ 
ISLAMABAD (February 06 2008): The government has suffered a serious setback in speeding up the documentation process of Munda Dam, as a US company, which has been issued letter of intent (LoI), has refused to take ahead the project's implementation process.

Sources told Business Recorder on Tuesday that the American firm's refusal had prompted the government to execute the project through local funding. The government will involve the local banks for project's financing, according to the sources.

In a high level meeting held recently in the Planning Commission, matters relating to the project were discussed at length. The meeting was informed that the company gave no response to offers Pakistan made last month, the sources added.

This development came as surprise for the government, which is keen to go ahead with project swiftly amid the energy crisis the country is facing, according to the sources. They said that this development had dented the government bid to involve the private sector companies in Pakistan and abroad in mega development projects.

The Water and Power Development Authority (Wapda) has recently taken up with other stakeholders the issue of prolonged delay in finalising the Munda dam action plan. Wapda, according to the sources, had realised that the prolonged delay in the project implementation would be harmful.

To be built on the River Swat in NWFP at a cost of over Rs 71 billion, Munda dam is one of the important schemes, and according to the government, it has to be completed by 2016 along with other four major dams. The dam would have storage of 0.67 MAF and generate 740 MW hydel electric power.

The construction of the dam is also essential for controlling floods in the Peshawar valley. It is also stated that the construction of Munda dam could soften the NWFP anti-Kalabagh Dam (KBD) stance and the latter could be constructed if the Federal government makes strenuous efforts for developing national consensus.

Some officials are of the view that Wapda and the Water and Power Division did not come out of their paradox that the KBD construction should be the top priority. The Munda dam should be constructed only if NWFP is agreed on the construction of KBD, some official circles are of the view.

The Munda Dam on River Swat will alleviate Nowshera flooding and back water of Kalabagh full reservoir only goes up to Akora Khattak. It also says that installation of 4,800 tube-wells in Sindh would address Sindh's apprehension that its lands would go out of production due to control over river because it would affect only 7,000 acres of mangrove forest.

The Munda Dam would contribute to overall economic growth and generate Rs 361 million as "water-user charge" annually for the NWFP government. The Munda Dam, on completion, would help improve equity in water allocation, reduce flood risks in Nowshehra and irrigate 29,000 acres, besides benefiting 30,000 acres of already irrigated areas.

Sources said that the government should not have issued the LoI to a firm, which lacked the expertise in planning the water and energy projects. There are a lot of other experienced firms, which could have been involved in the construction of the dam.

The Private Power and Infrastructure Board (PPIB), on the alleged instructions of the President Pervez Musharraf, had issued the LoI to a newly formed unlisted US company. The LoI was aimed at upgrading the feasibility study for constructing the 1.2 billion-dollar Munda dam.

Japanese consultants, who worked on the project, had suggested about 10 cents per unit electricity generation cost. These consultants had originally conducted the feasibility study, the sources added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Offsetting budget deficit: government decides to curtail current expenditure ​* 
ISLAMABAD (February 06 2008): The government has decided to curtail current expenditure besides holding current development projects so far not initiated under PSDP-2008 for the next fiscal year. The arrangement has been made to bring down the budgetary deficit to four percent of the GDP as targeted in the current fiscal year budget.

Advisor and Special Secretary to Finance Ministry Dr Ashfaq Hassan Khan told Business Recorder on Tuesday that President Pervez Musharraf had already approved the new saving arrangements to offset pressure on the economy. He said rising oil prices and subsequently huge subsidy incurred on providing subsidised oil has forced the government to take some extraordinary steps to keep budget deficit within targetted limit.

He added that the concept of cut in PSDP size of the current fiscal year was not the right term for the new arrangements introduced to offset pressure on the economy. Rather it is some kind of management to keep the ongoing developmental projects on track and at the same time save some money by delaying those projects which were not started in the first eight months of the current year.

Dr Ashfaq Hasan Khan maintained that the president was given a full presentation on the economy and the rising pressure on it due to subsidies given to subsidise oil prices, fertilisers and import of wheat. It resulted in strong feeling at the highest level that there was no harm in delaying those developmental projects for the next fiscal year, which were yet to be started in current fiscal year.

He said as per decision, planning commission will identify the development projects for deferment to next fiscal year and divert their allocations for financing the subsidies on oil, wheat and fertiliser. Planning Commission had given a detailed presentation to the president on PSDP utilisation and allocation for different development projects.

The President gave the directions on PSDP during Planning Commission Deputy Chairman; Dr Akram Shaikh's two and a half hour long presentation here. Sources said that the President showed satisfaction over PSDP overall utilisation and pace of the work of the developmental projects.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan and Japan formalise arrangement for logistic support ​*
ISLAMABAD (February 06 2008): Pakistan and Japan have formalised logistic support arrangement for Pakistan Navy ships participating in the Operation Enduring Freedom-Maritime Interdiction Operation in the Indian Ocean.

Foreign Minister of Japan, Masahiko Koumura and Pakistan Ambassador, Kamran Niaz formally signed and exchanged notes during a ceremony held at the Japanese Foreign Ministry on Tuesday. Two Japanese ships, a cruiser and an oil tanker have already left on January 25 and 26, respectively, for the Indian Ocean to participate in the counter-terrorism maritime interdiction activities.

Japanese participation in the operation is limited to activities related to provision of fuel and water to the coalition forces. A number of countries including Pakistan and Japan are engaged in the OEF-MIO which is meant to interdict and deter the movement of terrorists, weapons or other material under international cooperation through inspection and verification of vessels sailing in the Indian Ocean.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*IPI gas pipeline project: India not to attend meeting ​* 
KARACHI (February 06 2008): India has decided not to attend the upcoming meeting of IPI gas pipeline project being held in Tehran this month, a private TV channel reported on late Tuesday night. According to the TV channel, India wants to resolve tariff and other issues before attending the meeting.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*2500kms gas transmission network expanded in NWFP: minister ​*
ISLAMABAD (February 05 2008): Federal Minister for Petroleum and Natural Resources Ahsanullah Khan has said that 2,500 KM gas transmission Network expanded in NWFP during the last seven years providing 1,45,000 new connections to the people.

He said this while talking to a delegation of notables from Distric Swabi, which called on him here on Monday to discuss provision of Sui gas to the people of the area. Secretary Petroleum Farrakh Qayyum, D G (Gas) Saeedullah Shah and G M (SNGPL) Peshawar Iqbal Hussain were also present during the meeting.

The Minister said that under the special directive of the President, the government was taking concrete steps for the provision of sui gas facility to the people of remote and less developed areas on priority basis to upgrade the living standard of the people at a fast pace.

He said that SNGPL was carrying out Sui gas projects of Rs 10 billion in Swabi, Mardan, Charsadda, Nowshera, Swat, Kohat and Peshawar. The Minister said that an amount of Rs 2 billion was being sent on gas supply to Hangu, Bannu, Karak, Tank and Lakki Marwat adding that the provision of gas to the people of D I Khan would also be started soon.

Ahsanullah Khan said that SNGPL and SSGC have provided 1.734 million new gas connections to the people across the country which was accelerating the pace of socio-economic progress and prosperity.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*NDS signs pact with Hewlett-Packard ​*
KARACHI (February 05 2008): With a view to provide access to products and solutions by IT users and companies, the NDS Technologies Pvt Ltd has signed an agreement with Hewlett-Packard. This was announced at a press briefing on Monday at a local hotel.

Which was addressed by Pervez Hanif, CEO NDS Technologies Pvt Ltd and Prasenjit Sarkar, General Manager, Vietnam/Asia Emerging Countries, Personal Systems Unit, HP Asia Pacific and Japan.

Being the platinum distributor of Novell, NDS Technologies is the pioneer of network computing in Pakistan and the sole distributor of Novell Inc USA. Widely known for designing the most innovative networking solutions in every major vertical market segment of the country, presently NDS Technologies is playing a key role in helping people and companies address their problems and challenges via effective integration of highly advanced computer technologies and services.

With a revenue of $104 billion for the fiscal year ending October 31, 2007, Hewlett Packard, which currently enjoys 14th place in the fortune 500 ranking, is amongst the world's largest IT companies with its chain of operations set up in more than 170 countries around the globe.

Backed by an impressive technology product portfolio, HP provides infrastructure and business offerings that span from handheld devices to some of the world's most powerful supercomputer installations.

Following Hewlett Packard's alliance with NDS Technologies, HP products will now have the option of Novell's Suse - Linux 0/S for their desktops and servers. Sharing his insights on the alliance, Pervez Hanif, CEO NDS Technologies mentioned that NDS Technologies Pvt Ltd are the sole distributors of Novell Inc USA in Pakistan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Czech investors keen on joint ventures ​* 
Thursday, February 07, 2008

LAHORE: A number of potential investors from the Czech Republic are planning to visit Pakistan to gain first-hand information about available business prospects here and to initiate joint ventures with their Pakistani counterparts.

These views were expressed by a two-member delegation comprising Michal Jirkovsky and Marie Kahounova while talking to LCCI Sr. Vice-president Mian Muzaffar Ali at the Lahore Chamber of Commerce and Industry on Wednesday.

Jirkovsky said that existing volume of trade between Pakistan and the Czech Republic needs special attention along with frequent trade delegations. He said that lack of information is an impediment in bilateral trade.

Speaking on the occasion Mian Muzaffar said that the current level of trade between Pakistan and the Czech Republic needs concrete steps to be taken by both and foremost among them is the exchange of information.

He said to narrow down this information gap, it is vital that Chambers of Commerce of both countries exchange information and send frequent trade delegations on a reciprocal basis while arranging single country exhibitions.

Mian Muzaffar said that Pakistans major exports to the Czech Republic include leather and textile products, but these exports constitutes only a fraction of Czechoslovakias total imports of these commodities.

For instance, the Czech Republics total imports of leather products from around the world in 2005 amounted to $176.1 million; Pakistans share in these imports was only $3 million i.e. 1.7 per cent.

Similarly textile imports from Pakistan amounted to a mere 2.1 per cent of total Czech textile imports from around the world. He said Pakistan can supply products like surgical instruments, sports goods, fresh fruits and vegetables, carpets, handicrafts, rice, fish and its preparations, besides textiles and leather products. 

Czech investors keen on joint ventures


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## Neo

*Tamil Nadu to import Pakistani cement​*
KARACHI, Feb 6: Chief Minister of Tamil Nadu M. Karunanidhi announced that he had given a go-ahead signal to import of cement from Pakistan, an Indian media source, Money Control, said in a report released on Wednesday.

Tamil Nadu, one of the 28 states of India that lies on the eastern coast of the southern Indian Peninsula, is starved of the commodity that it needs for fast growing infrastructure building requirements. And the step taken by the chief minister appeared to be in frustration over the Indian cement companies disregard to urgings to increase supplies and bring down prices.

The Money Control wrote: Karunanidhi seems to be winning round two of the battle between the State government and cement companies. The Tamil Nadu chief minister first gave a nationalisation ultimatum to bring down prices and that didnt work. So now he is importing from Pakistan.

Money Control stated that the Tamil Nadu Cement Corporation or TANCEM would import at comparatively cheaper prices. Mr Chitty Babu of Confederation of Real Estate Developers Association of India stated that builders would be happy to get a huge relief of Rs25 per 50-kg bag.

Analysts at stock brokerage firms in Karachi commented that given the gap between the currency value of the Indian and Pakistani rupee, the exporters would fetch Rs240 per bag. That would doubly benefit the local cement companies.

The export price to India carries significant premium over what the cement fetches in local markets and unlike local sales, exports were exempt from general sales tax (GST) and Central Excise Duty (CED).

The previous week, almost all stock brokerage firms had come up with the latest data for January 2008, which showed cement exports to have touched new peak at 618,000 tons in January. That beat the previous highest export at 575,000 tons achieved in August 2007.

The January figures of sales outside the country were 152 per cent higher on year-on-year basis and 60 per cent up when compared to December 2007. On the other hand, local dispatches stood at 1.6 million tons in the month under review, down by 13 per cent compared to the same month last year.

Analyst Bilal Hameed at JS Global stated in a report on the sector that aggregate (local plus exports) dispatches stood at 2.2 million tons in January 2008, representing an increase of six per cent YoY. That represented growth of six per cent in local dispatches and 148 per cent in exports during the first seven months of FY08.

Tamil Nadu to import Pakistani cement -DAWN - Business; February 07, 2008


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## Neo

*New govt to inherit sound economy, says Salman​*
KARACHI, Feb 6: A jam-packed audience burst into laughter on Wednesday when the caretaker Finance Minister Dr Salman Shah announced that the new setup after the polls will inherit a very sound economy, which no other new government in the past ever inherited.

Speaking at the launching of Real Estate Investment Trust (REIT) regulations 2008, the minister deviated from the subject to say that now the country is moving towards general elections and a new government will come into existence which, according to him, will inherit a very sound economy.

As he spoke these words, many were unable to resist their smiles.

Those in the back rows were relatively more at ease to exhibit their amusement and there were remarks about people experiencing power outages, low gas pressures, wheat flour crisis and of increasing commodity prices.

Dr Shahs argument in favour of his assertion of a sound economy was the existence of a large diversified economy with gross output of 160 billion dollars.

Eight years ago, the size of economy was just 60 billion dollars, he asserted to point out that the growth achieved in last eight years has outperformed the total growth in last 60 years.

In real terms, he said the economy grew at an average rate of seven per cent a year in the last five years.

In terms of current US dollar, the economy has been growing at double digit a year. As a result, per capita income has increased from around 450 dollars to around 1,000 dollars in the last eight years.

The minister also claimed improvement in jobs creation with unemployment rate coming down from 8.3 per cent to 5.5 per cent. Two million jobs were created in the last eight years.

Booming investment was another example given by Dr Salman as he said investment touched eight billion dollars last fiscal from merely a few hundred million dollars a year a decade ago.

Remittances crossed six billion dollars, revenue collection crossed 15 billion dollars, reserves rose to 15 billion dollars and expansion of public sector development programme beyond Rs500 billion were some other instances quoted by the minister, who said the biggest challenge for the new government would be to sustain and carry forward the growth tempo of the last eight years.

Later answering questions from journalists, Dr Salman expressed the hope that the government would maintain a growth tempo in the remaining period of the current fiscal year to achieve the growth target.

He said that the government would be able to retire a big amount of money borrowed from the central and commercial bankers in the coming months.

He explained that governments borrowing in the first half of any fiscal year is always too high which is retired in the second half of the fiscal year when exports pick up.

Revenue collection is improved and all other indicators show positive trends.

The minister said that Pakistans exports are more competitive than those of China and India because of appreciation in value of Indian and Chinese currencies.

The budgetary position, he said would improve when the government would start passing on the impact of rising international oil prices to consumers in the coming days.

New govt to inherit sound economy, says Salman -DAWN - Business; February 07, 2008


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## Neo

*Economy is weakening amid strife sweeping Pakistan​*
NEW YORK, Feb 6: Pakistans economy is weakening amid the strife sweeping the country, according to a report in The Wall Street Journal.

Anaemic textile exports, rising food prices and energy shortages have undercut growth, causing the government to miss a range of economic targets, the newspaper said in a dispatch from Karachi. Last month the government said growth would fall below its original target of 7.2 per cent for the fiscal year ending June 30.

After spasms of violence that followed the assassination of PPP leader Benazir Bhutto, and the approach of national elections on Feb 18 that held the potential for more unrest, the Journal, citing analysts, said that the economy could slacken further. Rioters caused an estimated $1.3 billion in losses, according to Karachi Chamber of Commerce. Power transmission, telecommunications and roads were affected.

President Pervez Musharraf, according to the paper, has been counting on a robust economy to ride out the countrys political shocks. For five years, Pakistan has grown on average 7 per cent annually, with the US providing nearly $11 billion in assistance since the Sept 11, 2001, attacks.

The WSJ quoted Finance Minister Salman Shah as saying that economic fundamentals remained strong and growth should still exceed 6 per cent, which would outstrip many of Pakistans peers in Asia. Last year, the Karachi Stock Exchanges benchmark index advanced more than 40 per cent.

But the report cited Musharrafs opponents as saying that the economy now held huge political hazards because inflation and slower job growth had increased public discontent, especially among the poor. Hes giving the next government a highly unstable economic scenario, Sherry Rehman, a spokeswoman for the PPP, was quoted as saying.

Rising prices for food staples have spurred inflation, with the benchmark inflation rate staying above 8 per cent for the second straight month in December and breeching a government target of 7.5 per cent, the Journal said. Inflation has sapped exports, which declined 12 per cent in December from a year earlier.

The WSJ pointed out that the State Bank said in a recent report that Pakistan risked missing its target of containing its fiscal deficit to 4 per cent of gross domestic product partly because the militancy had spurred heavy defence spending.

Economy is weakening amid strife sweeping Pakistan -DAWN - Top Stories; February 07, 2008


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## Neo

*PTA to start 3-G mobile phone licensing this year ​*
ISLAMABAD (February 07 2008): The Pakistan Telecommunication Authority (PTA) will start 3-G mobile phone licensing process this year, hoping that these modern services would be available in the country by 2009. For this purpose, auction of the spectrum would be carried out this year and licences would be awarded through competitive bidding.

The 3rd-generation mobile services will enable consumers to use Internet with high speed, make video calls and other value-added data services. Pakistan has now 77 million mobile phone subscribers, 2.1 million Wireless Local Loop (WLL) and 4.7 million fixed line consumers.

Enumerating the developments in the telecom sector the unprecedented growth in this area has impacted the overall economy of the country in many direct and indirect ways.

Leading international telecom operators and investors have acquired stakes in Pakistan telecom sector, showing utmost confidence in the telecom policies and regulatory environments of the country. Regarding licensing in AJK, five mobile companies were awarded licences for AJK and Northern Areas (NAs) and they had started their services in these areas.

The Authority deposited Rs 1.2 billion with the AJK Council and NAs Secretariat on account of Initial Licence Fee (ILF) collected from mobile phone operators. PTA had also launched the second phase of deregulation of fixed line services in the area in September 2007 that received overwhelming response with total 81 applications for various licences, including Long Distance International (LDI), FLL, WLL and others.

The recent launch, of Wimax services, has positioned Pakistan as the leader in the region to initiate wireless broadband services, and the subscribers to this service would be able to make video calls and telephony through special handsets.

At present, two operators--Wateen Telecom and Mytel--are offering WiMax services in most parts of the country, whereas other operators, including Burraq, PTCL, Z-WLL and Cyber Internet, are busy in the deployment of WiMax networks. During 2007, PTA surveyed services of Internet Service Providers (ISPs) and mobile phone operators through latest automated equipment.

The recent results show that the services of these companies have considerably improved when compared with the previous survey results. Companies which are not meeting the standards in specific areas have been directed to bring their service quality up to the desired level.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Large projects to increase external debt: MoF​*
ISLAMABAD: Ministry of Finance has warned that large infrastructure projects envisaged in the next decade (including big dams) would increase the external debt burden if sufficient revenues are not generated from within the country.

The first quarter of FY08 saw an increase of External Debt Liabilities (EDLs) by 3.7 percent to $41.67 billion.

Debt Policy Statement 2007-08 issued by the Ministry of Finance has highlighted that although public debt is now on a solid downward footing, sustaining the momentum will be a continuing challenge. 

The coming years will see an increase in borrowing particularly in the foreign currency component to finance the infrastructural development programs. Pakistan need substantial amount of resources for major overhaul of existing human and physical infrastructure. 

This report has been produced by the Debt Policy Coordination Office (DPCO) to fulfill the requirement laid out under Section 7 of the Fiscal Responsibility and Debt Limitation (FRDL) Act 2005.

External debt and liabilities (EDL) at the end of FY07 were $40.17 billion. This shows an increase of $2.93 billion which represents a 7.8 percent increase over the stock at the end of FY06. Majority of the EDLs are in the form of medium and long term borrowing from multilateral and bilateral lenders which accounts for more than 80 percent of outstanding debt. The share of short-term debt is extremely low at 0.1 percent. Pakistan has taken advantage of an earlier Paris Club rescheduling to re-profile its debt at more favourable terms.

The growth of EDLs that had slowed earlier in the decade has started to pick-up pace again partly on account of borrowing for earthquake-related spending. EDLs grew by 4 percent in FY06 while they grew by 7.8 percent in FY07. But because of faster growth in GDP the EDLs as a percentage of GDP have been on a decline. EDLs as percentage of GDP have declined from 29.4 percent in FY06 to 28.0 percent in FY07. During the first quarter of FY08, the EDLs have further declined to 25.7 percent of the projected GDP for the year.

The largest increase in stock was for debt to multilateral donors with a change in stock of $2.16 billion. The foreign exchange liabilities showed a decline of $110 million (7.1 percent), but this was more than compensated for by fresh borrowing from multilateral lenders and Foreign Currency Bonds (including Euro bonds). Interest payments on EDLs were $1.11 billion and the amortization payments stood at $1.87 billion. 

The first quarter of FY08 saw an increase of EDLs by 3.7 percent to $41.67 billion. Public and publicly guaranteed debt increased by $1.5 billion (4.2 percent) mainly on account of borrowing from multilateral lenders while the external liabilities continued on their downward trend, declining by $ 0.13 billion (8.8 percent).

The external debt and liabilities (EDL) declined from 51.0 percent of GDP in FY02 to 25.7 percent of the projected GDP for FY08 by end-September 2007. The EDLs were 297.2 percent of foreign exchange earnings at the end of FY00 but declined to 122.5 percent by end FY07. The EDLs were over 19 times of foreign exchange reserves in FY00 but declined to 2.5 times by end 2007. Interest payments on external debt were 11.9 percent of current account receipts but declined to 3.1 percent during the same period. The maturity profile improved significantly as is evident from the fact that short-term debt was 3.2 percent of EDL at the end of FY00 but has declined to 0.07 percent of EDL by FY07.

Total external debt servicing on external debt and liabilities was $2.98 billion of which $1.87 billion was for principal payments while $1.11 billion was against interest payments.

During the first four years (2000-04), the appreciation of Rupee along-with low domestic inflation contributed to lowering of interest rates but in the next four years (2004-08), the depreciation of rupee along-with higher inflation contributed to negative incidence of real cost of borrowing.

At the end of FY07 total domestic debt stood at Rs 2610.2 billion which is 29 percent of GDP. The net increase in domestic debt was Rs 298.6 billion from end of FY06 where domestic debt was Rs 2311.6 billion. This represents a growth rate of 12.9 percent, which is higher than the average growth rate since FY00 of 6.6 percent but still lower than the pace of growth in domestic debt observed in the 1980's and the 1990's, which were 20 percent and 16 percent, respectively.

Daily Times - Leading News Resource of Pakistan


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## Neo

*ECNEC okays Rs 317bn uplift projects​*
ISLAMABAD: Executive Committee of National Economic Council (ECNEC) on Wednesday approved 32 developmental projects in its meeting with a total cost of Rs 317.277 billion with a foreign exchange component (FEC) of Rs 139.52 billion. 

Caretaker Prime Minister Mohammadmian Somoroo presided the ECNEC meeting and the projects approved were related to energy, physical planning and housing, transport and communications, water resources, health education, , higher education, industries, commerce, agriculture, social welfare, and health. 

Out of total 32 projects, 23 new developmental projects were approved by the ECNEC with a cost of Rs 309.1 billion having FEC of Rs 135.9 billion. The meeting also approved revised estimates for 9 on-going projects from Rs 6.2 billion to Rs 8.2 billion showing a net addition of Rs 2 billion. 

The infrastructure sector had 15 projects worth Rs 132.2 billion with FEC Rs 69.9 billion were approved in the meeting. 15 projects were approved for social sector having value of Rs 183.3 billion with FEC of Rs 68.6 billion, while two other projects were approved worth Rs 1.7 billion with Rs 0.8 billion as FEC. 

To cope with current energy crisis, the ECNEC approved four energy projects worth Rs 45.771 billion having FEC of Rs 26.817 billion. These energy projects were related to Pakistan Atomic Energy Commission and water and power division projects. 

The meeting approved two projects for physical planning and housing sector with cost of Rs 21.351 billion having Rs 15.318 billion as FEC. The ECNEC approved eight projects for transport and communication sector worth Rs 58.528 billion having Rs 21.969 billion FEC. For water sector one project was approved worth Rs 6.572 billion having FEC Rs 5.783 billion. 

For health sector five projects were approved worth Rs 3.898 billion with FEC of Rs 843.540 million. Six developmental projects of Higher Education Commission were approved in the ECNEC meeting worth Rs 171.355 billion with FEC Rs 63.792 billion. The Information Technology sector had 2 projects worth Rs 3.435 billion with FEC of Rs 500 million. The Science and Technology sector had 2 projects worth Rs 4.646 billion with FEC Rs 3.997 billion. 

The ECNEC also approved a project for devolution and area development worth Rs 698.128 million with FEC Rs 829.130 million. The only project for industry and commerce sector was approved in the meeting worth Rs 822.065 million. Secretary Planning Ghayasuddin briefed journalists after the ECNEC meeting. 

He said one project widening/improvement of Pattoki to Kanganpur road length 54.80 kms in district Kasur costing Rs 0.6 billion would be finance by the government of Punjab and federal government on 50:50 basis cost sharing. One project namely construction of road from Nagor Sharif of Sunstar - 54 km costing Rs 0.6 billion would be fully financed by the government of Punjab. The project New Balakot City Development costing Rs 12 billion would be financed from ERRA allocation of Rs 35 billion made during 2007-08.

Spokesperson of Planning Commission Asif Sheikh told journalists that there was no cut in PSDP but slow moving projects would be financed slowly. However, he said that all ongoing power related projects would be fully financed.

Daily Times - Leading News Resource of Pakistan


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## Introvert

*American IT Center and Phonecast to Establish Call Center in Karachi Pakistan *
Thursday, 07 February 2008 
Karachi: American IT Center of Los Angeles, California and Phonecast of Karachi, Pakistan recently signed an agreement for the establishment of a Call Center/IT Center in Karachi. The Center will render multifarious services, including inbound/outbound calling, BPO, and software development. 

The agreement was signed in Karachi by Mr Arif Mansuri, President of American IT Center who is also the President and Managing Editor of Pakistan Link, and Mr Abdullah Butt, Chief Executive of Phonecast, a leading IT company in Pakistan which has a very strong client base in the media sector and provides call center services for many TV networks, including PTV and ATV. Mr Butt is also the President of the Association of Call Centers and Outsourcing (ACCO) of Pakistan. 

Mr Mansuri is a leading industrialist/entrepreneur and a prominent member of the Pakistani-American community. 

The agreement was signed during Mr Mansuri&#8217;s recent visit to Pakistan to launch several developmental ventures. He met a number of high-ranking officials and entrepreneurs to firm up plans for various IT and engineering related projects.

Besides promoting foreign investment in Pakistan, the Call Center will facilitate rapport between Pakistanis residing in North America (United States and Canada) and concerned government agencies and departments with whom the expatriates are required to interact to resolve problems that crop up from time to time. The expatriate Pakistanis will also enjoy access to information relevant to their needs through the Center.

The nature of problems faced by individual Pakistanis and their resolution through the Call Center will be published in Pakistan Link.

Among the many services planned to be offered by the Center would be the much needed service of the online teaching of the Holy Qur&#8217;an for the benefit of the expatriate community.

American IT Center and Phonecast to Establish Call Center in Karachi Pakistan - Unique Pakistan


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## solid snake

*Development fund may be doubled to $16bn*

By Ihtashamul Haque​
ISLAMABAD, Feb 7: The government has finalised a plan to double its annual development expenditure from $8 billion to $16 billion with the help of private sector to improve the crumbling infrastructure.

We will launch this plan this year as part of a public-private partnership programme and it will be formally incorporated into the budget for 2008-09 from the next financial year, Minister for Finance Dr Salman Shah told Dawn here on Thursday.

He said the current development programme of about $8 billion would be doubled with the help of local and foreign investors.

The previous government had initiated the programme with the objective of increasing the development budget by 10 per cent of the GDP through private sector support as it was being done in many other countries, including Japan and South Korea.

Replying to a question, he said that initially local and foreign private funding would be arranged for improving the infrastructure, especially railways, roads, public transport, hospitals and universities. Some of the projects, he said, had already been taken up through public-private partnership.

He said the private sector would be encouraged to join the public sector and all possible fiscal and non-fiscal incentives would be given.

Dr Salman said it was becoming difficult for the government to continue providing development funds and it was time to seek the support of the private sector.

He rejected suggestions that arranging funds from private investors would be difficult and said: there is a need to put a certain framework, which will be introduced soon to lure investment from outside the government.

Earlier speaking at a workshop, Dr Shah said the country was in dire need of more infrastructural projects with collaboration of the public and private sectors.

He said the government had started a training programme for senior officials of the federal ministries concerned and provincial governments so that the private sector investors could be encouraged and guided properly.

Development fund may be doubled to $16bn -DAWN - Top Stories; February 08, 2008


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## solid snake

*The debt trap*​
PAKISTANS external debt burden has gone up to nearly $40bn from about $33bn in the last seven years. A whopping additional load of $7bn has been added since President Pervez Musharraf came on the scene. In this period, the country has received a record $12bn in overt aid, over $6bn in privatisation proceeds, including substantial foreign direct investment, and annual remittances flows of $4.5bn on an average. Over and above this, it has also been blessed with a relief of $1.6bn in loan write-offs by foreign governments in the last eight years and the rescheduling of Paris Club debts that has provided an additional relief of $1.2 to $1.5bn annually in terms of debt service payments. Meanwhile, Pakistan has become a large borrower of the World Bank and the Asian Development Bank. So, 90 per cent of Pakistans borrowings continue to be official, which makes it beholden to foreign governments particularly the US and the multilateral aid agencies under Washingtons influence. Direct assistance from the US  both economic and military  is said to have reached levels that make Pakistan the third largest US aid recipient after Israel and Egypt.

Clearly, Islamabads increasing dependence on the US largesse has drawn it into Washingtons not-so-savoury influence. And some even view this US dole as a payoff to our ruling elite for their support and aid in helping the US in achieving its foreign policy objectives some of which clash with our national interests. All this cannot but have adverse impact on Pakistans political economy. There is no easy way out of this trap. But governments which have the confidence of their people and also their mandate could without worrying about their popularity graph going down take hardship steps like expanding the tax-to-GDP ratio from the current 11 per cent to at least 15 per cent in the next five years; curtailing imports (most of which currently are consumption oriented); diversify the direction of exports and exportables and; setting up a special fund in a hard currency to accumulate all the privatisation proceeds and use that for the early retirement of our external debt. And finally FDIs into sectors without any export bias like banking and telecommunication should be discouraged because profits earned in rupees in these sectors are converted into hard currencies before repatriating them which further widens the current account gap and increases the need for external borrowing.

DAWN - Editorial; February 08, 2008


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## Neo

*PTCL to invest $50m in new telecom cable ​* 
*Project will be ready by end-2009, meet growing capacity requirements*​
Friday, February 08, 2008

KARACHI: The Pakistan Telecommunication Company Limited (PTCL) has made an investment of US$50 million in a submarine cable as part of a consortium that will lay a high-capacity fibre-optic cable, stretching from India to Italy and France via the Middle East.

A consortium of nine leading telecom operators has signed Construction and Maintenance Agreement (C&MA) and Supply Contract for the fibre-optic cable named I-ME-WE (India, Middle East, Western Europe), which will be the fifth in a series of similar systems.

The cable design covers a distance of almost 14,000 kilometres and the system is likely to be available for service by the end of 2009. The system will have a capacity of 3.84 terabits per second.

The PTCL and other members of the consortium intend, through this system, to meet the ever-growing capacity requirement of Asia, the Middle East and Europe, besides satisfying the capacity needs of the US to these regions as well.

The nine companies that form the consortium include Bharti (India), Etisalat (UAE), France Telecom (France), Ogero (Lebanon), PTCL (Pakistan), STC (Saudi Arabia), Telecom Egypt (Egypt), Telecom Italia Sparkle (Italy) and VSNL (India).

PTCL Executive Vice President Sher Bahadur Khan stated that the cable project was an important addition designed to cater to the ever-growing capacity requirements towards the Middle East and western countries with Pakistan in general and PTCL in particular.

He said the project would also play a pivotal role in providing effective resilience to existing cable systems (SMW3 & SMW4) available with PTCL to provide flawless communications for its customers within and outside of Pakistan.

This entire venture is, of course, a result of the untiring teamwork of the consortiums member countries to achieve the target, he added. Earlier, I-ME-WE Consortium Interim Management Committee Chairman K P Tiwari praised all parties involved for their devotion, commitment and untiring efforts over the past one year and a half to address various challenges and make the project a reality and successful.

PTCL to invest $50m in new telecom cable


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## Neo

*Rice output estimated at 5.5m tonnes ​* 
*Govt to help growers, exporters,Countrys rice consumption stands at 2.5mT​*
Friday, February 08, 2008

ISLAMABAD: The government will resolve grievances of rice growers and exporters on a priority basis to enable maximum export of rice, said Federal Food, Agriculture & Livestock minister, Muhammad Isa Jan Baloch.

Chairing a meeting of the Rice Advisory Board on Thursday, the minister said that overall rice harvest and impediments in rice exports were discussed in detail. The meeting also discussed rice research and development. It was discussed that during 2007-08 rice harvest was assessed at 5.5 million tonnes including about 2.5 million tonnes of basmati rice.

The meeting deliberated on domestic consumption of rice which is 2.5 million tonnes and concluded that there was a fairly large exportable surplus available in the country. It was suggested by members to strengthen rice research institutes in the country and help in post-harvest operations as well as BMR (balancing, modernisation and replacement) of rice mills in Sindh.

Aflatoxine and the Khapra beetle were thoroughly discussed and it was agreed that necessary measures be taken at the provincial level to fight these pests. The board also decided to add additional members to the board to make it more constructive.

MINFAL secretary, Zia-ur-Rehman, Additional Secretary, Shahid Hussain Raja, Chairman REAP, Director Rice Research Institutes of Punjab and Sindh, rice growers and other officials of the federal and provincial governments attended the meeting.

Rice output estimated at 5.5m tonnes


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## Neo

*PSEB aims for $200m venture capital funds ​* 
*Pakistans Internet penetration at 7.5pc and Indias at 4.5pc​*
Friday, February 08, 2008

KARACHI: The Pakistan Software Export Board (PSEB) is targeting venture capital funds of around US$200 million by 2011 and intends to launch an entrepreneurship development programme which will assist IT companies in assessing overseas venture capitalists, building boards of advisers and directors and undertaking initial public offering, a PSEB spokesman said in a statement.

The recent example of two leading US-based venture capital (VC) firms, ePlanet Ventures and Draper Fisher Jurvetson (DFJ), providing funds to Naseeb Networks, speaks volumes of the trust placed in the potential of Pakistans IT Industry by foreign investors. Naseeb Networks is a leading provider of online recruitment social networking and related services in Pakistan. 

The spokesman further stated that the funding will be used by Naseeb Networks to accelerate the growth and leadership position in target markets by investing in sales force and marketing expansion.

Another example is of a leading Pakistani IT company LMKR, which received an infusion of private equity from a leading UK-based private equity fund Actis. These investments demonstrate confidence in Pakistans IT industry by international financiers. As Naseeb Networks is focused on the local market rather than export market, the investment also shows confidence in the economy of Pakistan, Internet penetration trends and online usage.

Pakistans current Internet penetration is around 7.5 per cent as compared to Indias 4.5 per cent. With over $500 million recently invested in the countrys broadband and WiMAX infrastructure, the Internet penetration will increase up to 16 per cent over the next three years, the spokesman added.

Several Pakistan-based IT companies like Scrybe, Ultimus, Mobile Complete, Pixsense, and Renaissance 2.0 have already obtained foreign financing from international VC firms and other investors. 

Just like firms in other industries, IT firms also require funding for growth; however traditional financiers like banks the world over do not prefer lending to smaller IT firms. The prime reason for this reluctance is that the only collateral/asset that small IT firms have is intellectual property, which banks find hard to attach a value to. This is why venture capital is so essential to the IT industry.

In addition, venture capital, also referred to as smart money, is suitable for small IT firms which are usually run by engineers with limited financial and marketing expertise. Venture capitalists bridge this gap by providing mentorship and a network of international business contacts.

PSEB aims for $200m venture capital funds


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## Neo

*Aviation sector enters new era of growth ​* 
Friday, February 08, 2008

KARACHI: After remaining in air for over a decade, Aero Asia met its impending fate. It was grounded by Civil Aviation Authority (CAA) last year. Its tumultuous landing was a recurrence of what happened to the private airlines in Pakistan.

Aero Asia was forced to shut operations after it failed to meet flight schedules and started defaulting on CAAs dues for using countrys airspace. Liberalisation of Pakistani airspace in 1993 paved way for private airlines like Bhoja, Hajveri, Raji and Aero Asia to start operations. That marked a turning point in the monopolized aviation history of the country. But it was to be short-lived. 

Weak regulation allowed these airlines to borrow aircraft and crew from other carriers. Large airplanes were hired and all of them started to compete for bigger chunk of the market. Some of them were even allowed to start operations with a single aircraft.

These airlines were started by people who had limited or no aviation-related experience. And allowing them to run service on wet-leased airplanes meant there was no need for them to create own fleet or human resource in the home country. 

But a wet lease, which is a leasing arrangement whereby one airline provides an aircraft, complete crew, maintenance, and insurance to another, is a stopgap measure used by established carriers only in dire circumstances. 

Soon the airlines ran into trouble with their aircraft lessors and as the financial liabilities mounted one by one these carriers went off air, closing the chapter of open skies policy. In August, 2006, when Farooq Rehmatullah, the incumbent Director General CAA, took charge he immediately recognized that regulations were amiss. In the following year, he was able to introduce Draft National Aviation Policy 2007. Deregulation, privatisation, competition and stringent regulations are the hallmarks of this policy.

Learning from the past mistakes, paid-up capital for start-up airline has been increased to encourage only genuine investors, permanent induction of aircraft on wet lease has been restricted, fleet registration in Pakistan has been made mandatory and minimum requirement of 3 aircraft for starting domestic operations imposed. 

When the policy is enforced completely, after Cabinets approval, it has the potential to usher in a new aviation era. From privatisation of airports to construction of private airstrips and permission to use small aircraft for connecting remote areas with rest of the country, the policy contains a lot of progressive aspects. 

But the year 2007 will be remembered for a lot of other reasons as well. It was the year when Pakistan International Airlines (PIA) descended into a quagmire of financial losses following a restriction on its aircraft from flying to Europe. 

Airblue, the brainchild of longtime aviation man Shahid Khaqan Abbasi, marked a watershed in countrys aviation history by becoming the first private airline to land in England. Historically, private carriers have focused on the Middle Eastern region and Airblues maiden flight in June was a departure from that trend. Shaheen Airways become the second private airline to fly to UK on February 7. 

Pakistan also witnessed a rising interest of foreign carriers last year following liberalization of the countrys airspace to facilitate the increasing passenger traffic. According to CAAs provisional statistics, number of passengers who used Pakistani airports increased to more than 14 million in fiscal 2006-07 from 13.5 million in 2004-05. 

UK International Airline and Air Arabia of United Arab Emirates started operations to Pakistan last year. British Airways, Malaysian Airlines and Etihad Airways increased their number of flights while German carrier Lufthansa, Oman Air and Singapore Airlines recommenced their operations. 

Astreaus, European Air charter, Virgin Atlantic, British Midland, UAEs Ras-al-Khaima, Air Italy, Al-Jazeera, the second carrier of Kuwait and Bangladeshs GMG are all poised to come here. While this much of activity is encouraging, it is yet to be seen if strong annual passenger traffic growth of 8 percent is enough for these foreign airlines to ignore the deteriorating law and order situation. 

Aviation sector enters new era of growth


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## Neo

*Pakistan, Iran to sign GSP pact in Tehran next week​*
ISLAMABAD: Pakistan and Iran may sign the Gas Sales Purchase Agreement (GSPA) in Tehran in last week of the current month on Iran-Pakistan-India (IPI) gas pipeline project, sources told Daily Times here on Thursday.

Sources said that Iran has proposed February 24 to sign GSPA on IPI gas pipeline project in Tehran after the general elections in Pakistan. Earlier, Pakistan had proposed January 25 to sign GSPA on IPI in Abu Dhabi but Tehran declined to sign it in Abu Dhabi. Tehran told Pakistan that it wanted to sign agreement in Tehran with the new Pakistani elected government.

Sources said that draft of GSPA on IPI is ready to be signed by both Pakistan and Iran as Pakistani law ministry has vetted the draft of the agreement. Sources added that India was playing tactics with Pakistan to delay the signing of GSPA on IPI between Pakistan and Iran. Pakistan has been inviting India to hold the talks for settling the issue of transit fee for gas transportation but the latter has never responded in better advancement. 

Sources further said that Indian Petroleum Minister Murli Deora was scheduled to reach on February 7 in Islamabad to sort out issues relating to Iran-Pakistan-India gas pipeline project especially transit fee. Pakistan had offered India to talk on transit fee on February 7 here in Islamabad but India neither declined Pakistanis offer to discuss on transit fee neither India officially confirmed the arrival of Indian Petroleum Minister till February 6 to Pakistani concerned authorities.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan's foreign exchange reserves dip to the lowest level ​*
KARACHI (February 08 2008): The country's foreign exchange reserves have dipped to the lowest level of current fiscal year, $14.77 billion, by recording 10 percent decline during the last three months.

High import bill of oil and slow privatisation processes is putting negative impact on the country's foreign exchange reserves, which have shrunk by $296.4 million in the last week and some $1.59 billion during the last three months.

"The surging oil prices in the world market, besides rising import bill of Pakistan, have compelled to spend huge foreign exchange for the oil payments," an economist said. The declining foreign exchange reserves is another threat to country's economy, which is already facing various challenges including increasing trade and current account deficits, inflation and a slow-downed exports and privatisation process, he added.

The country's foreign exchange reserves have been declining consistently and State Bank of Pakistan's (SBP) statistics show that country's foreign reserves have further plunged by some $296.4 million during the last week. Country's foreign exchange reserves have declined from the level of over $15.074 billion to $14.7779 billion during the week ended on February 2, 2008.

The level of $14.77 billion is the lowest level of current fiscal as it was stood at 15.6137 billion dollar on the beginning of current fiscal year, 2007-08. During the last week foreign exchange reserves held by SBP have declined by $285.8 million to 12.5293 billion dollar during a week. Moreover, reserves held by banks also show a decline of $106 million to $2.2486 million during the week ended on February 2, 2008.

The major decline in the foreign exchange reserves has witnessed after the imposition of state of emergency in the country, which shows an average decline of some $0.53 billion monthly during the last three months. During the last 12 weeks, overall foreign exchange reserves have shrunk by some 10 percent or $1.59 billion to $14.7779 billion from $16.3725 billion.

A major decline has been witnessed in the SBP-held reserves, which dipped by 11.5 percent or $1.636 billion to $12.5293 billion after the imposition of emergency rule in the country. On November 3, 2008, the reserves were stood at $14.1661 billion.

While, the reserves held by the banks have up by $422 million to $2.2486 million during the week ended on February 2, 2008 as compared to $2.2064 billion in first week of November.

Economists are terming the declining exchange reserves as another setback for the economy, apprehending that the reserve would further dip if new privatisation transaction are not done in the near future. The post-emergency outflows from the SCRA account and high payments on account of oil import bills are the main reasons behind this decline, they added.

It may be mentioned here that at the end of the last fiscal year, 2006-07, country's foreign exchange reserves witnessed an increase of around 19 percent to 15.6137 billion dollar's benchmark as compared to 13.1369 billion dollar during fiscal year of 2005-06.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Three million tons surplus rice to be exported ​*
ISLAMABAD (February 08 2008): Pakistan will export 3 million tons surplus rice as the production during 2007-08 has been estimated at 5.5 million tons against consumption of about 2.5 million tons. This was discussed in the third meeting of Rice Advisory Board (RAB) chaired by Federal Minister for Food, Agriculture and Livestock (Minfal) Prince Muhammad Esa Jan Baloch here on Thursday.

The meeting was also attended by Minfal Secretary Ziaur Rehman, Reap chairman and other high-ranking officials of federal and provincial governments, growers and exporters of rice.

The meeting also discussed issues concerning rice production and problems millers and exporters are confronted with. The members of the board suggested strengthening of rice research institutions and called for modernisation of post-harvest operation as well as BMR of rice mills in Sindh.

Aflatoxin and Khapra Beetle problem was thoroughly discussed and it was agreed that practical steps would be taken at the provincial level to handle such problems. The board also decided to increase the number of members to make the body more constructive.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan's foreign exchange reserves dip to the lowest level ​*
KARACHI (February 08 2008): The country's foreign exchange reserves have dipped to the lowest level of current fiscal year, $14.77 billion, by recording 10 percent decline during the last three months.

High import bill of oil and slow privatisation processes is putting negative impact on the country's foreign exchange reserves, which have shrunk by $296.4 million in the last week and some $1.59 billion during the last three months.

"The surging oil prices in the world market, besides rising import bill of Pakistan, have compelled to spend huge foreign exchange for the oil payments," an economist said. The declining foreign exchange reserves is another threat to country's economy, which is already facing various challenges including increasing trade and current account deficits, inflation and a slow-downed exports and privatisation process, he added.

The country's foreign exchange reserves have been declining consistently and State Bank of Pakistan's (SBP) statistics show that country's foreign reserves have further plunged by some $296.4 million during the last week. Country's foreign exchange reserves have declined from the level of over $15.074 billion to $14.7779 billion during the week ended on February 2, 2008.

The level of $14.77 billion is the lowest level of current fiscal as it was stood at 15.6137 billion dollar on the beginning of current fiscal year, 2007-08. During the last week foreign exchange reserves held by SBP have declined by $285.8 million to 12.5293 billion dollar during a week. Moreover, reserves held by banks also show a decline of $106 million to $2.2486 million during the week ended on February 2, 2008.

The major decline in the foreign exchange reserves has witnessed after the imposition of state of emergency in the country, which shows an average decline of some $0.53 billion monthly during the last three months. During the last 12 weeks, overall foreign exchange reserves have shrunk by some 10 percent or $1.59 billion to $14.7779 billion from $16.3725 billion.

A major decline has been witnessed in the SBP-held reserves, which dipped by 11.5 percent or $1.636 billion to $12.5293 billion after the imposition of emergency rule in the country. On November 3, 2008, the reserves were stood at $14.1661 billion.

While, the reserves held by the banks have up by $422 million to $2.2486 million during the week ended on February 2, 2008 as compared to $2.2064 billion in first week of November.

Economists are terming the declining exchange reserves as another setback for the economy, apprehending that the reserve would further dip if new privatisation transaction are not done in the near future. The post-emergency outflows from the SCRA account and high payments on account of oil import bills are the main reasons behind this decline, they added.

It may be mentioned here that at the end of the last fiscal year, 2006-07, country's foreign exchange reserves witnessed an increase of around 19 percent to 15.6137 billion dollar's benchmark as compared to 13.1369 billion dollar during fiscal year of 2005-06.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Fiscal deficit has gone up to 2.5 percent of GDP: Salman ​* 
ISLAMABAD (February 08 2008): The fiscal deficit has gone up to 2.5 percent of the GDP, which is well above the current financial year's target of 1.7 percent, and the next government will bridge the gap by increasing the energy prices, said caretaker finance minister Dr Salman Shah.

Talking to reporters here after attending a workshop organised by Infrastructure Project Development Facility (IPDF), in collaboration with the Infrastructure Management Unit (IMU) and Planning Commission (PC), he said that various proposals were being considered to increase the sales tax, but no decision has been taken so far, said the minister without giving any further details.

The minister said that government would also curtail recurring expenditure to keep the fiscal deficit within manageable limits during the second half of the current fiscal.

The minister said that the government was finalising a package to provide some financial assistance to the people living below poverty line in urban areas, which will be finalised soon, he added.

He admitted that the government could not decrease the ghee and oil prices as the palm oil price had touched $900 per ton from $400 per ton. This is a huge increase and the government is in no position to subsidise these two kitchen items, he said.

He said that government was earmarking the areas to be provided water from Mirani and Sabakzai dams, especially for cultivation of oilseed producing crops like sunflower and soyabean etc.

Earlier, addressing the IPDF workshop, Salman Shah said that Pakistan direly needs more infrastructural development projects through private public partnership to accelerate development process.

He said Pakistan needs at least 10 percent GDP allocation for development budget, ranging between 16 to 20 billion US dollars a year. "The budget does not have the flexibility for making such allocations," he said.

The prime purpose of organising this workshop, was to give the senior federal and provincial government officials an introduction and broad-based overview of Public Private Partnership.

Lead Infrastructure Specialist of the World Bank, Clive Harris, President of Americas, Castalia, Alfonso Guzman, and Barrister Ejaz Ishaq Khan from AQLAAL Associates (Legal Consultant IPDF) also gave detailed presentations on international experience of annuity based Public Private Partnerships and the Standardised Public Private Partnership Contractual Provisions.

IPDF's Chief Executive Officer, Aijaz Ahmed gave a comprehensive introduction to the Annuity Based Public Private Partnerships (PPP) and also presented an overview of the recently announced Public Private Partnerships Policy of Pakistan.

He said that under annuity based Public Private Partnership instead of the public sector procuring a capital asset and providing a public service; the private sector creates the asset through a dedicated stand alone business and then delivers the service to the consumers recovering cost from the public sector institution linked to the project.

The PPP modality of developing infrastructure and then delivering services to the consumers permits the public sector to reduce its capital expenditure and convert the infrastructure development costs into affordable operating expenditure spread over time, he added.

Member Implementation & Monitoring, PC and Executive Director of Infrastructure Management Unit Lieutenant General Muhammad Zubair (Retd) said that a decline in public sector investment in infrastructure, as a percentage of GDP, in the 1990s, has resulted in creating a huge backlog and high maintenance costs of the infrastructure.

Efforts to attract private investment, in particular, in power and telecom sector, have shown that these investments can be realised and can contribute to meet funding gaps in infrastructure development, he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*World Bank to lend $600 million to fund process: all set to privatise KDLB, says minister ​*
KARACHI (February 08 2008): The federal government is all set to privatise Karachi Dock Labour Board within next six months and in this regard has finalised negotiations with the World Bank for $600 million soft loan to finance the process.

"The KDLB is going to have new boss from private sector and the World Bank is loaning 600 million dollars to Karachi Port Trust at a nominal interest rate. It can be termed a loan-cum-grant," Ports and Shipping Minister Dr Fahim-ud-Din Ansari told Business Recorder on Thursday.

The minister said, "yes the Board was being wound up. When reminded that private companies would own the dockers, he said, it was a kind of 'privatisation'. "Activity of the KDLB would be outsourced to the private sector through an open bidding," he said.

KPT would use the $600 million loan for meeting the expenses required for completing the privatisation process, the minister added. "Under the concept of a landlord port we are planning to outsource the KDLB which is a source of smuggling, drug trafficking... it has become a nuisance," the minister said.

When asked if the new development was likely to make a large number of labourers devoid of their livelihood, Dr Fahim said, "They are not being rendered jobless. We will give them alternative jobs as they will have private firms as a new boss," he added.

Previously, the stevedoring companies had to consult with the Board for employing the dockers but after sell-off of the KDLB they would need to contact the private firms, said the federal minister.

To a query on transfer of money, the minister said the bank would make payment to the KPT after general elections in the country. "Political uncertainty in the country delayed the loaning process and the bank will make the payment after elections," he added. He said the bank was in direct contacts with the KPT and had determined a long payback time for the loan. "The loaning process will also include the ministries of commerce and ports and shipping as a formal procedure," said the minister.

When asked why the KDLB, which was constituted under Clause-4 of the Dock Workers (Regulation of Employment) Scheme to ensure greater regularity of employment for dockers and speedy transit of goods through the port in 1973, was being privatised, Ansari claimed the Board had outdated and become a "mafia".

"Internationally the concept of doing business has changed and in the new doctrine of ports and shipping there is no room for any institution like KDLB," maintained the federal minister.

The minister said global economy in the future would be greatly dependent on ports and shipping. Meanwhile, Haji Mohammad Hilal, Senior Vice President Collective Bargaining Agent (CBA) warned of a strong resistance if the government went on with sell-off of the KDLB. "We do not know about any such planning and would fully resist if the government did that," Hilal warned.

The CBA official, however, said a few days back a WB team had visited the port and KDLB and KPT offices and invited the CBA for meeting but the labour representative body had refused to meet them. "The World Bank has never been our well wisher, so why should we meet them. We are also busy in preparations for CBA referendum," Hilal added.

The CBA official outrightly rejected the impression that KDLB was a 'mafia' and involved in drug trafficking or smuggling. "No, not at all. This is a baseless allegation. The dockers have nothing to do with the nature of cargo inside a container," he argued. Duty of the dockers was not more than loading and discharging the cargo without knowing that what sort of commodity was being imported or exported, he said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*ADB to provide $220 million for Power Transmission Enhancement Investment plan ​* 
FAISALABAD (February 08 2008): Asian Development Bank (ADB) agreed to provide second tranche of $220 million under Multi-tranche Financing Facility (MFF) to Pakistan for Power Transmission Enhancement Investment Program, while a follow-up mission of ADB will visit during the first quarter of 2008 to review implementation of proposed project management remedial measures.

According to ADB sources, Tranche-1 of MFF between the Asian Development Bank (ADB) and the National Transmission and Dispatch Company (NTDC) for the Power Transmission Enhancement Investment Program (the Program) comprises Loan 2289-PAK for $226 million and Loan 2290-PAK for $10 million. Loan 2289-PAK supports investment in new transmission assets. Loan 2290-PAK supports the preparation and monitoring of financing tranches and capacity strengthening of NTDC.

The investment project comprises 19 sub projects covering new substations and additions to existing substations, the installation of compensation equipment, and a new overhead line. Planned completion dates are staggered from mid-2007 to mid-2009.

ADB sources mentioned that the Program is closely linked to Pakistan's long-term power sector strategy and is an integral part of the power transmission development program. The Program will enhance the efficiency of the overall power transmission system and provide adequate and reliable transmission of power supply to a greater number of industrial, commercial, and residential consumers.

The sources pointed out that the sub projects under the Program will improve power transmission infrastructure through the rehabilitation, augmentation, and expansion of the primary (above 220 kilovolt) transmission network and relieve transmission bottlenecks in the power system. Specifically, (i) NTDC will adhere to its transmission license conditions and comply with the grid security code, (ii) about 10.5 gigawatt-hours of additional power will be supplied through the national grid annually, (iii) the system will be capable of meeting peak demand, with electricity outages significantly reduced by 30% in 2011, and (iv) grid-connected customers will increased to 70% of the population in 2011.

The ongoing Program has two components. First, it will finance subprojects that are part of NTDC's investment plan. Second, it will finance a program support component. The total cost of NTDC's 2006-2016 investment plan is $3.9 billion equivalent to be financed 20 percent by ADB, 30 percent by NTDC and 50 percent by other financiers.

The total cost of Tranche-1 is $292 million of which $282 million is for financing of the subprojects and $10 million is for program support. ADB agreed to finance 80percent of the subprojects and 100% of the program support. NTDC will finance the remaining 20 percent of the subprojects.

The total cost of Tranche-2 is $276 million. ADB has agreed to finance 80 percent of this amount while NTDC will finance the remaining 20 percent. ADB report stated that Loan 2289-PAK covers the addition of 5,965 megavolt-amperes of new transformation capacity.

The Program is broken into 19 subprojects: (i) three new 220 kV transformer and switching substations, (ii) transformer additions in five existing 500 kV and nine existing 220 kV substations, (iii) the installation of static var compensation equipment, and (iv) 50 kilometers of 220 kV overhead line. Completion dates are staggered from mid-2007 to mid-2009, with the total cost estimated at $282 million.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Industries brace for looming power crisis in summer ​* 
*Cut in subsidy on diesel and furnace oil to increase cost of captive power generation​*
Saturday, February 09, 2008

KARACHI: Industrial units depending on their own resources for power generation would be greatly affected in coming months when the government starts reducing subsidy on petroleum products and pass on the burden of higher prices to consumers.

The prices of petroleum products including diesel are subsidised in Pakistan and the government has indicated that it might not be able to sustain that due to rising fiscal deficit. Industrialists already concerned about the gas shortfall are now worried about electricity breakdowns that would hit the peak in summer.

Over the years industrialists have stopped relying on Karachi Electric Supply Company (KESC) and depend on their captive power plants, which mostly run on gas and furnace oil. Only large industrial units can afford to install the captive power plants (CPPs), which are very expensive. Smaller units depend on KESC network their only refuge from power load shedding lies in diesel-fired power generators.

Almost 70 per cent units have CPPS in the Port Qasim Industrial Zone - the latest industrial area that has developed in post power crisis situation - and the rest use diesel powered generators or rely on the unreliable KESC power supply.

CPPs run on heavy furnace oil and their power cost is not much expensive if compared to KESC electricity rates. The unavailability of economical electricity in the industrial area is an impediment in bringing new industrial projects and investors in the area, said Naeem Ilyas Khanani, Chairman of Port Qasim Association of Trade and Industry (PQATI). 

Laege units use CPPs in Port Qasim industrial area while medium and small factories depend on KESC or diesel generators but, Electricity from diesel generators costs 2.5 times more than KESC rates, said Khanani.

Medium and small size units have to finance the power supply from KESC main to their factories. The cost of KESC connection including copper cables, fittings, and substation may run up to 10 million rupees which is not feasible in any case, Khanani explained.

Summer is the time when orders for Christmas and New Year sales season are being prepared in factories. Ironically, power supply is worst in summer. Landhi Association of Trade and Industry Vice Chairman Dawood Usman Jakhura says, We wonder what would be the level of power shortage in summer. 

Running CPPs on gas is very expensive if compared to KESC rates. The rising international furnace oil rates compelled captive power producers to move on gas, said Zubair Motiwala, Managing Director of Diamond Textile (Pvt) Ltd.

According to Korangi Association of Trade and Industry Chairman Skeikh Fazl-e-Jalil: Around 10 per cent units in Korangi Industrial Area (KIA) have captive power plants and rest are using KESC connections. Though, more units have stand-by generators the power crisis is still there, he said. 

We are failing in our export targets due to inadequate power supply. The unannounced power breakdowns in KIA are disappointing, he said. Chairman KATI suggested KESC to change the present formula of load shedding saying it is far better to shut down units for the whole day instead of unannounced load shedding for hours. In this way workers and owners would be at ease and work according to planned load shedding. We would convince our industrialist to shut down their units for the whole day if authorities make announced break downs, said Fazl-e-Jalil.

Industries brace for looming power crisis in summer


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## Neo

*Cotton crop estimated at 11.6m bales ​* 
Saturday, February 09, 2008

ISLAMABAD: Federal Food, Agriculture and Livestock Minister Muhammad Isa Jan Baloch has stressed the need of applying modern techniques in order to get maximum yield of cotton.

Chairing a meeting of the Cotton Crop Assessment Committee (CCAC) here on Friday, he said latest technology should be used in processing and packing of cotton for export to meet the challenges of the international market, an official statement said.

The meeting reviewed the current situation of cotton crop and its size and noted that 866 ginning factories were operating currently as compared to 612 factories that were active at the same time last year. On the basis of feedback provided by provincial crop reporting services and other stakeholders, the committee maintained its earlier cotton production estimate of 11.6 million bales (Punjab 8.9m bales, Sindh 2.6m bales and NWFP and Balochistan 0.1m bales) on ex-farm basis.

The meeting was attended by Shahid Hussain Raja, Additional Secretary of MINFAL, Agricultural Development Commissioner of MINFAL, Dr Kausar Abdullah Malik, member Planning Commission, director general of Federal Seed Certification & Registration Department, VC of Pakistan Central Cotton Committee and senior officers of the provincial departments and PCCC. The private sector was represented by the Karachi Cotton Association chairman and growers from Punjab and Sindh.

Cotton crop estimated at 11.6m bales


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## Neo

*Mills demand for sugarcane price cut rejected​*
Saturday, February 09, 2008

LAHORE: Despite an improvement of sugar content in current crop, the Pakistan Sugar Mills Association (PSMA) Punjab chapter has been putting pressure on the provincial government to reduce the sugarcane procurement price by Rs9 to Rs51 per 40 kg, The News has learnt. 

The sugar content has increased by 0.27 per cent in this years sugarcane crop and was recorded at 8.43 per cent compared to last years crop of 8.16 per cent, a source said. On the other hand, due to ongoing severe cold wave and mist, sugarcane has lost some weight, causing losses to the framers. Previously, sugarcane growers have been selling leaves of cane as fodder and getting Rs70 per 40 kg but the mist has destroyed the leaves, sources commented. 

They said in a meeting held here in the committee room of the Agriculture Department on Friday, Punjab Agriculture Minister Khurshid Zaman Qureshi refused to accept the demand of PSMA Punjab for reduction in the price of sugarcane. 

There is no justification in reducing the sugarcane support price as demanded by PSMA Punjab, it was told in the meeting. The meeting discussed that Sindh government has reduced the price of sugarcane by only Rs4 per 40 kilogram on the basis of low sugar contents while in Punjab the situation is different as increase in sugar contents recovery have recorded this year. 

However, the minister has directed to launch a special campaign to educate growers about cultivation of approved varieties of sugarcane. The sugarcane crushing season 2007-08 was reviewed in the meeting. It agreed that sugar mills will accept sugarcane variety SPF-238 this year but its cultivation will be discouraged as this variety has already been banned. 

It was attended by Fayyaz Bashir Secretary Agriculture, Ahmad Yar Khan, Secretary Food, Sugarcane Commissioner, Agricultural experts, representatives of Punjab Sugar Mills Association (PSMA), and around 22 sugarcane growers and representatives of farmers association. 

The minister urged the representatives of PSMA to ensure timely payments to cane growers within 15 days and in case of delay 11 per cent mark-up should be paid to farmers according to Sugarcane Control Act. 

The millers have also activated some of their private buyers of sugarcane outsides the mills who are paying less money to the growers as compared to fixed rates. On the demand of the growers the minister had directed the cane commissioner to check malpractice of less measuring. 

However, the proposal for purchase of 500,000 tonnes of sugar through Trading Corporation of Pakistan (TCP) given by representatives of PSMA was endorsed in the meeting. The minister has also suggested to the PSMA and farmers associations to hold a joint meeting to consider option of contract farming for sugarcane cultivation in the interest of growers as well as the industry. 

Sugar content in cane increases


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## Neo

*Saturday, February 09, 2008​*
KARACHI: An economic analyst believes that CPI inflation numbers will highlight serious concerns facing the overall macroeconomic stability as it is expected that the Consumer Price Index in January 2008 will stay around 11 to 12 per cent year-on-year.

The Federal Bureau of Statistics (FBS) is expected to release shortly the January CPI inflation numbers. A massive jump in prices of essential food commodities such as wheat, rice, vegetables, etc was witnessed in the immediate aftermath of Benazir Bhuttos assassination. Though the governments drive to ease the skyrocketing food prices made a significant headway as inflation measured by the weekly Sensitive Price Indicator (SPI) showed a steep decline in the last few weeks, the damage had already been done.

With the impact of rising international oil prices still to be felt at the retail level, the CPI target for the whole fiscal year 2007-08 is likely to be missed by a wide margin once again. Accordingly, it is expected that full year FY08 CPI will end up in a range of 8.3 to 8.5 per cent against the government target of 6.5 per cent, said Farhan Rizvi, an analyst at JS Global Capital.

Inflationary pressures, in recent times, have been widely dictated by rising food prices, which has been a global phenomenon. The surge in CPI during FY08 has been driven largely by rising indices in the food and beverages segment, which rose by an average 11.6 per cent year-on-year in the first half of FY08. This is alarming given the fact that food and beverages constitute around 40 per cent of the overall CPI basket.

Farhan Rizvi said the trend continued in January with added momentum provided by acute food supply shortages in the immediate aftermath of Benazirs assassination. In particular, prices of flour, ghee, tomatoes, etc witnessed a substantial hike in the month.

Another important factor to consider is the low base effect of January 2007 when CPI depicted a month-on-month decline of 0.88 per cent. This is likely to provide additional thrust to inflationary pressures in January 2008. As a result, we expect CPI to post a month-on-month increase in the range of 1.1 to 2 per cent, translating into CPI in the range of 11 to 12 per cent year-on-year, the analyst said.

The double-digit CPI level was likely to be one-off though, as the governments drive to bring down the skyrocketing wheat and other food commodity prices had made a significant headway and would help to bring the index to single digit in Feb 2008, he said.

A major concern with the current inflationary situation is the fact that while headline inflation has already reached peak levels, a second round of inflationary pressure in the form of increased domestic oil prices is still in the pipeline. This is very alarming given the fact that CPI in the first half of FY08 was recorded at 8 per cent year to date, way above the governments target of 6.5 per cent.

While fuel and lighting has a weight of only 7 per cent in the overall CPI basket, it is the indirect impact that the oil price increase has on other items which could magnify the inflationary impact of the expected increase in petroleum product prices after the Feb 18 elections.

The State Bank of Pakistan (SBP) last week announced a 50-basis-point hike in the discount rate in an effort to curb surging money supply growth, which rose by 19.2 per cent on an annualised basis during July 1, 2007 to January 19, 2008.

CPI likely to rise 11-12pc in Jan


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## Neo

*Shortage of trained manpower​*
THE country is facing an acute shortage of skilled manpower at a time when a construction boom has created a demand for mid-level technical workers. This problem has been identified by the ministry of labour in a report, Pakistan Employment Trends. It is paradoxical that on the one hand we have a high unemployment rate while on the other there are unfilled vacancies in the construction sector. The fact is that of the 25 million youth in the country only 1.7 per cent can be provided technical education and training. Given the unplanned expansion of education in the country and the failure to link it to the employment sector, the government has not set up an adequate number of vocational institutions and polytechnics. With only 540 institutions to provide mid-level technical education, the countrys capacity to train skilled people is very limited indeed. All the resources appear to be channelled into higher education and technical universities.

This is just the quantitative aspect of the problem. The quality of the training provided by vocational schools and polytechnics is not too satisfactory either. Most of these institutions are ill-equipped to impart even basic training in some areas of expertise. With no vocational guidance provided to students, the enrolment in various disciplines is quite lopsided. Consequently, as pointed out by experts, the demand for a trained workforce in certain sectors continues to be met through the traditional shagirdi system. Qualified engineers in charge of construction projects are forced to hire raw manpower to do the work which should have been done by a trained technical hand. The shagird (apprentice) learns the skills on the job through trial and error. But this indigenous solution to fill the gap between supply and demand of mid-level technical skill has failed to keep abreast of modern technology that has made rapid strides. It is time the government addressed this problem and actually did something about it. There has been a lot of talk but little action. Thus last year, President Musharraf had suggested the opening of technical training centres at union council level but nothing was done. In July 2007, the Sindh governor issued an ordinance to establish the Sindh Technical Education and Vocational Training Authority to formulate policies for technical education in the province. This has also proved to be a non-starter.

DAWN - Editorial; February 09, 2008


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## Neo

*Rs60bn needed to tide over water, power crisis: WB*​
ISLAMABAD, Feb 8: Pakistans water infrastructure is in poor condition and needs Rs60 billion ($1 billion) annual investment in reservoirs and related projects over the next five years, says a World Bank study.

In the energy sector, the country will face severe power shortage of around 6,000 megawatts by 2010, according to the banks latest study  Pakistan Infrastructure Implementation Capacity.

The bank has urged Pakistan to strengthen its capacity to undertake major infrastructure projects needed to boost economic growth and wipe out poverty.

The country suffers from a dearth of infrastructure in the water, irrigation, power, and transport sectors.

The bank believes that Pakistan is one of the most water stressed countries in the world, and its water resources are depleting rapidly.

Similarly, inefficiencies in the transport sector cost the economy between 4-5 per cent of the GDP each year.

To overcome these constraints, the government of Pakistan is tripling its annual infrastructure investment from an average of Rs150 billion ($2.5 billion) to Rs440 billion ($7.3 billion).

However, the report pointed out that mega projects in the past have experienced frequent delays and cost overruns, illustrating a lack of capacity in the industry to plan, programme and execute large projects.

Lack of adequate irrigation, power, and transport infrastructure hinders growth and is affecting all sectors of the economy, said Yusupha Crookes, the World Banks Country Director for Pakistan. It is, therefore, critical to address the core challenges  scarcity of skilled workers and inefficient business processes  to enable the governments very ambitious infrastructure plan to move forward.

In the current environment, the report concludes that the construction industry does not have the capacity to deliver the governments planned infrastructure programme. Its analysis found that contractors keep getting work even though they lack the capacity to perform.

The business environment has delivery constraints, planned projects often take longer to complete, and even longer to achieve a financial close. Issues such as poor project planning, insufficient programming, and weak implementation are common.

Shortage of adequately skilled workers, the report said, is particularly affecting the ability of the construction industry to deliver mega infrastructure. Over half the workers produced each year in civil, electrical, and mechanical engineering fields find employment overseas. The report calls for a development strategy to build up the existing human resources pool and upgrading the skill sets through urgent measures to enhance training capacity and to reverse the brain-drain.

A long term industry overhaul and immediate innovative approaches for mega infrastructure delivery are needed, said Amer Durrani, senior transport specialist and lead author of the report.

A construction industry development organisation should be set up to anchor the development effort and provide an institutional mechanism for reform. In addition, a national construction industry development policy should be prepared and implemented for all stakeholders with immediate actions on procurement with ensured transparency and improved cost estimation, he said.

Rs60bn needed to tide over water, power crisis: WB -DAWN - Top Stories; February 09, 2008


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## Neo

*Plan approved to build Thar power plant​*
ISLAMABAD, Feb 8: A high-level meeting presided over by President Pervez Musharraf decided on Friday to finalise arrangements for starting work on a 1,000-MW coal-fired power plant at Thar in order to meet the growing electricity shortage.

Reliable sources told Dawn that the meeting, which was also attended by caretaker Prime Minister Mohammedmian Soomro, directed the federal and Sindh governments to resolve differences over the tariff issue by inviting open bidding to ensure the early setting up of the plant.

Once the bidding has taken place, the government can determine certain benchmarks about the tariff issue, particularly to address concerns of the Sindh province.

Sindh officials have earlier refused to accept 7.8 per cent tariff as decided by the National Electric Power Regulatory Authority (Nepra) for power generated in Thar and wanted an increased tariff.

The fastest way to resolve the tariff issue is that open bidding should take place quickly, a source who attended the meeting quoted the president as saying.

The meeting was informed that there was 180 billion tons of coal in Thar, which needed to be exploited soon.

The sources said the meeting believed that an early pilot project should be launched in Thar so that national and international companies became interested in investing in the area.

The meeting was apprised about a recent study conducted by M/s Mosley about the cost of mining and the quality of Thar coal and other related issues.

The company believes that the production of 24,000 tons of coal at $17 to $18 per ton would be a feasible venture by using better mining technology and developing the power plant on the new BTU heating capacity. This could then be out-sourced to an international mining company for financial closing.

The sources said the meeting was informed that a couple of thermal power plants were expected to be finalised by December this year. However, a participant said that since furnace oil was 3.5 times more expensive, the government should encourage small hydel projects for which over 200 sites had been identified by Wapda.

The meeting was informed that due to prolonged winter the power crisis had worsened, requiring long hours of loadshedding across the country. The average gas load which was 1,000-14,000 MCFT last year had increased to 1,600-1,800 MCFT this year. The additional 300-400 MCFT load has caused a lot of problems for us, a source said.

According to him, officials of the Alternate Energy Development Board (AEDB) informed the meeting that land had been acquired in Sindh to set up wind power projects.

An official statement issued after the meeting said that President Musharraf had stressed the need of overcoming the energy crisis by taking all possible measures on an emergency basis. He said that Pakistan had abundant energy resources.

Plan approved to build Thar power plant -DAWN - Top Stories; February 09, 2008


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## Neo

*Corruption, nepotism restrict Pakistans development: WB​*
*Report indicates that energy sector will face severe power shortages of approximately 6,000MW by the year 2010​*
ISLAMABAD: Inefficient public expenditure process, higher cost of basic input, lack of skilled human resources, corruption and nepotism restrict Pakistan far behind in development.

A World Bank (WB) official Amer Durrani expressed these views during launching of the WB report on Pakistan Infrastructure Implementation Capacity Assessment (PIICA) here on Friday. The WB, government agencies and other stakeholders have prepared the report. 

The report said Pakistan is suffering from dearth of infrastructure in the water, irrigation, power, and transport sectors. Infrastructure is essential for sustained growth and competitiveness both in the local and international markets. The gaps between demand and supply in these sectors are alarming. 

The WB report further said that unless plans are put in place urgently, these critical shortages would continue to undermine the efforts to improve socio-economic indicators and to reduce poverty. Without adequate irrigation resources, power and transport infrastructure, the very sustainability of Pakistan as an independent nation may be at stake as shortages could lead to increased social discontent and disharmony amongst the federation and the provinces. 

Pakistan is on the list of the most water stressed countries in the world, and forecasts indicate that available resources are depleting rapidly, possibly leading to a state of water scarcity in the next two decades. Much of the water infrastructure is in poor repair and Pakistan has to invest almost Rs 60 billion per year in new large dams and related infrastructure over the next five years. 

In the energy sector, Pakistan will face severe power shortages of approximately 6,000 megawatts by the year 2010 (equivalent to about three Tarbela dams) and 30,700 MW by the year 2020. 

The per capita energy consumption in Pakistan is amongst the lowest in the world and a lack of adequate energy resources precludes industrial growth affecting all sectors of the economy. Similarly, the transport sector inefficiencies are costing the economy between 4 to 5 percent of GDP each year indicating the need for massive investment in roads, rail, air and ports.

During the presentation, Durrani said there were large gaps between the actual and allocated funds for infrastructure development projects. Public agencies were taking too much time and delivery was too little. Majority of the developmental projects were based on political priorities. He said that typical infrastructure projects in Pakistan cost twice as much and takes three times longer than planned time. 

The WB official said that there were 10 known firms in Pakistan and majority of big projects were given to them. There are implementation, monitoring and feedback missing in the projects. He said average cost of every project increases more than double due to several gaps. Given the paucity of human resources and materials, the poor planning and management skills, and the inability to timely attract substitute external implementation resources, it appears difficult that the large infrastructure projects can be implemented on-time and within budget unless some drastic reforms are undertaken. 

Out of the four broad thematic areas of business environment, human resources (HR), plant and equipment and construction materials, HR and business environment were identified as having the maximum number of constraints. 

The report further said that contractors and consultants were not being paid the right cost for products and services. Costs of materials and equipment inputs in Pakistan were found to be about 200 percent higher as compared to other countries in the region, while contractors rates in Pakistan were more or less the same as those prevailing in the region. Local rates despite appearing to be competitive in a regional context are in fact unworkable - most contractors also contend that rates are low, precluding adequate profit margins and allowing better salaries to professionals and workers. Given the current disparity between market rates and actual product costs, demand-supply gaps will widen when the Medium Term Development Framework (MTDF) programme is implemented, unless rates are increased. 

Delays in project implementation reflect poor planning, programming and weak implementation capacity. Public agencies take on too many projects in their development programs and end up delivering little, and what they do deliver is often determined by political priorities.

The report further said that delays in payment, imbalanced contracts, inefficiencies and corruption in the system force contractors to incur additional financial and economic costs resulting in squeezing the already poor margins in the industry. 

The report revealed that lessons from international case studies on the development of the construction industry and the literature reviews clearly show that a holistic long-term planning and a detailed strategy must be evolved with a clear vision and commitment towards developing the industry, and that this process may take as long as a decade or more of sustained effort. There are no shortcuts; however a start must be made if the government wants to continue targeting high growth rates in the future and focus has to be kept on demand side interventions to bring change as these have been shown to be the most effective.

Speaking on the occasion Deputy Chairman, Planning Commission Dr Engr Akram Sheikh said there were some flaws in the system that was why the government felt need of this report. The government wanted to remove these bottlenecks and put the country on path of progress. He stressed for vocational and technical education in the country so that country might progress in all sectors.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Inflation expected to hit double figures​*
KARACHI: Consumer Price Index (CPI) inflation is likely to surge to highest level in January during the current financial year on the back of inflationary trends in the prices of essential food items.

According to analysts forecast CPI inflation is expected to register double digit growth by staying around 11 to 12 percent on Year on year basis, thus posing concerns to overall macro economic stability. Inflation numbers will be released shortly by the government.

During the current fiscal, the highest inflation number was recorded in October when it soared to 9.31 percent, however it eased to below nine percent during the months of November and December of current financial year.

However, analyst said worst food crisis particularly shortage of flour and unprecedented increase in its prices and scarcity of other edible items, triggered by assassination of former prime minister Benazir Bhutto appeared to offset the decline in inflation in the last two months and it seems that CPI inflation would be climbing up to new heights in month of January.

The State Bank of Pakistan (SBP) reinforcing its fight against the rising inflation tightened monetary policy on January 31. However economists see little impact to curb the inflation through tightening monetary stance as CPI inflation is driven largely by escalating prices of food items, which are out of the monetary policy ambit.

In fact, discount rate rise by central bank will do nothing to curtail the inflation but impact adversely the economic growth as pointed out by businessmen, who rejected the tightening of monetary policy on curbing inflation pretext.

Analysts Farhan Rizvi at JS Global Capital said a massive jump in the prices of essential food commodities such as wheat, rice, and vegetables was witnessed in the immediate aftermath of Benazir Bhuttos assassination. He said though government drive to ease off the sky rocketing food commodity prices made significant headway as inflation measured by weekly Sensitive Price Index (SPI) showed steep decline in the last few weeks of the month, the damage had already been done.

Analyst believed that the impact of rising international oil price is still be seen and it will add further fuel to inflation when government goes for raising the domestic oil prices after election. If local prices of oil products are raised after election, current financial year inflation target is likely to be missed by a wide margin.

Government set full year inflation target at 6.5 percent. However if the current inflationary trends persisted during the remaining part of current year, CPI inflation may end up in the range of 8.3 to 8.5 percent as already 1st half inflation stayed above 8 percent.

The surge in CPI during current fiscal year has been driven largely by rising indices in the food & beverages segment which rose by an average of 11.6 percent YoY in first six months. This is alarming given the fact that food and beverages constitute approximately 40 percent of the overall CPI basket. 

Analysts also expected this trend to continue in January with added momentum provided by the acute food supply shortages in the immediate aftermath of Ms Bhuttos assassination. In particular prices of flour, ghee and tomatoes witnessed substantial price hike in January.

According to local market traders, unprecedented increase in food prices could be gauged from the fact that tomatoes price surged by 183 percent, rice by 64 percent, mustard oil 66 percent and red chillies 38 percent, all on YoY basis.

Daily Times - Leading News Resource of Pakistan


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## Neo

*20,000 MW to be generated from Thar Coal reserves by 2019*​
ISLAMABAD: Caretaker Minister for Petroleum and Natural Resources Ehsanullah Khan Friday said that the government has taken effective measures to generate 20,000 MW from Thar Coal reserves by 2019.

He was talking to Caretaker Sindh Chief Minister Abdul Qadir Halipota, who called on him here. Secretary Petroleum Farruk Qayyum was also present in the meeting.

The Minster gave a detailed briefing to the Sindh Chief Minister on the governments efforts for the promotion of energy sector in the country.

He said that Thar Coal reserves has been included in the priority list of projects which is likely to be launched soon, adding the government has already set up a Thar Coal Monitoring Authority to expedite the process. 

Thar Coal reserves, estimated at 175 billion tones, are fifth largest in the world, he said.

Giving details of progress on the project, the minister said that Water and Development Authority (WAPDA) has laid down power transmission lines and Pakistan Telecommunication Company Limited (PTCL) provided network in the area in addition to a road network developed from Karachi to the mining area in Thar. The Minister said that leading multi-national power generating companies would be invited for investment in this mega-project. app

Daily Times - Leading News Resource of Pakistan


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## Neo

*CSF identifies innovation as key driver for economic growth​*
ISLAMABAD: The Competi-tiveness Support Fund (CSF), a joint initiative of the United States Agency for International Development (USAID) and Ministry of Finance (MoF) held a roundtable on innovation here on Friday. 

The key stakeholders influencing the innovation ecosystem attended the roundtable. The participants included representatives from the Higher Education Commission (HEC), Pakistan Science Foundation, National Vocation Education Training Commission (NAVTEC), Board of Investment, Pakistan Software Export Board (PSEB), Intellectual Property Organization (IPO) and representative from the World Economic Forum (WEF). 

The roundtable addressed Pakistans performance on the Global Competitiveness Index of the WEF. CSF informed the participants that the State of Pakistans Competitiveness Report 2008 will identify the gaps in Pakistans economy and will be a policy guideline for the stakeholders in the public and private sectors as well as the academia in Pakistan.

CSF explained the methodology adopted by the WEF for measuring the 131 economies on the 12 pillars. Pakistan among the 131 countries is ranked at 69 on the Innovation pillar. 
Daily Times - Leading News Resource of Pakistan


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## Neo

*Equipment imported for uplift of Gwadar port exempted from GST*​
ISLAMABAD: Federal Board of Revenue (FBR) on Friday allowed general sales tax (GST) exemption for a period of 40 years on the import as well as supply of materials and equipments for construction and operation of Gwadar Port and development of Free Zone for Gwadar Port. 

This exemption would also be available on Ship Bunker Oils bought and sold to the ships calling on visiting Gwadar port by the operating companies having concession agreement with the Gwadar port authority.

This exemption would be subject to some conditionalities and in this regard the tax authorities have notified a detailed procedure to be followed by the Gwadar Port operating companies, notified through S.R.O. 115(I)/2008 issued here.

Conditions and procedure for imports. This exemption shall be admissible only to those companies which hold the Concession Agreement; Ministry of Ports and Shipping shall certify in the prescribed manner and format as per Annex-I that the imported materials and equipments are bonafide requirement for construction and operation of Gwadar port and development of free zone for the port. The authorised officer of that ministry shall furnish all relevant information online to Pakistan Customs Computerized System (PACCS) against a specific user ID and password obtained under section 155D of the Customs Act, 1969 (IV of 1969). In already computerized Collectorate or Customs station, where the PACCS is not operational, the project director or any other person authorised by the Collector in this behalf shall enter the requisite information in the customs computerised system on daily basis, whereas entry of the data obtained from the customs stations which have not yet been computerised shall be made on weekly basis, provided that this condition shall not apply to ship bunker oils; and the goods so imported shall not be sold or disposed of without prior approval of the FBR and payment of sales tax at the time of import, provided that this condition shall not apply to ship bunker oils.

Conditions and procedure for local supply. The exemption shall be admissible only to these companies, which hold Concession Agreement; for claiming exemption on goods, which are otherwise taxable in Pakistan, the operating companies will purchase the materials and equipments for the construction of Gwadar Port and development of free zone for Gwadar Port from the sales tax registered persons only; (iii) invoice of the exempt supply, containing the particulars required under section 23 of the aforesaid Act, shall for each supply be issued by the registered person to the operating company mentioning thereon that the said invoice is being issued under this notification; a monthly statement summarising all the particulars of the supplies made in the month against invoices issued to the operating companies shall be prepared in triplicate by the registered persons making the exempt supplies and shall be signed by the authorised person of the registered person. 

All three copies of the said signed monthly statement shall be verified by the registered person from the person authorised to receive the supplies in the office of operating company, confirming that supplies mentioned in the monthly statement have been duly received; after verification from the operating company, original copy of the monthly statement will be retained by the registered person, duplicate by the operating company and the triplicate provided by the registered person to the collector of sales tax having jurisdiction, by twentieth day of the month following the month in which exempt supplies to the operating companies were made; and the registered person making the exempt supplies shall keep the aforesaid record for presentation to the sales tax department as and when required to do so.

Before certifying, the authorised officer of the Ministry of Ports and Shipping shall ensure that the goods are genuine, bonafide requirement for construction and operation of Gwadar port and development of free zone and that the same are not manufactured locally, the SRO adds. 

In case of clearance through PACCS the above information shall be furnished on line against a specific user ID and password obtained under section 155D of the Customs Act, 1969 (IV of 1969), tax authorities clarified.

Daily Times - Leading News Resource of Pakistan


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## Neo

*India, Pakistan to cooperate on environment protection​*
ISLAMABAD: Pakistan and India agreed to increase cooperation for environment protection on Friday during a meeting between caretaker Environment, Local Governments and Rural Development Minister Syed Wajid Hussain Bokhari and Indian Minister of State for Environment and Forest Namo Narayan.

A press release said both sides would follow decisions of the Technical Advisory Committee and share their experiences in lakes, rivers and vulture preservation to prevent degradation of environment in South Asia.

Bukhari said a regional conference on environment would be held in Pakistan in a couple of months in which representatives from South Asian Association for Regional Cooperation (SAARC) countries would propose ways to keep the environment clean. 

Later, the minister spoke at International Conference on Sustainable Development and Climate Change, organized by the Energy Resources Institute.

He said preserving nature was a common responsibility of everyone. He said Pakistan would be worst hit by climate change in the region.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Trade with Pakistan will increase to $15 billion: Zhaohui ​* 
ISLAMABAD (February 09 2008): Pakistan and China two-way trade will increase to $15 billion in four years, Chinese Ambassador in Islamabad Luo Zhaohui said here tonight. Talking to newsmen after inaugurating the Chinese New Year celebrations at a local hotel, Ambassador Luo Zhaohui said that the current level of bilateral trade is $6.5 billion, which was on the rise.

He said China is conscious that the trade balance is heavily in favour of China, therefore it was taking necessary steps to balance it by importing more goods from Pakistan. Zhaohui said that the Chinese government was pressurising its coal-mining firms to undertake the Thar Coal Project, which is very important to meet the growing energy needs of Pakistan.

He said that China had built the Gwadar deep-sea port and handed it over to Pakistan. "The port is now being run by the Singapore Seaport Authority and China had nothing to do with its operations," he added. In reply to a question Zhaohui said that Pakistan and China were co-operating with each other in war against terrorism and Pakistan was talking all steps to curb extremism and terrorism in the region. He said that Pakistan was an old friend of China and China would never forget Pakistan while promoting its bilateral relations with other countries like India in the region.

Earlier the Ambassador inaugurated the weeklong Chinese New Year celebrations at a local hotel on Friday evening. The Chinese new year is celebrated on the first day of the first moon of the lunar calendar. Traditionally, it is a time for family reunions and gatherings, and for visiting friends and relatives. This holiday, more than any other Chinese holidays, stresses the importance of family ties. Here culture and diversity is celebrated hand in hand with an age long history of tradition.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*World Bank assistance to SME sector discussed ​* 
LAHORE (February 09 2008): A three-member World Bank team has held a meeting with Small and Medium Enterprise Development Authority (Smeda) officials to discuss proposals for the former's assistance in developing the small and medium enterprise (SME) sector in Pakistan.

Authority Chief Executive Officer Shahid Rashid met on Friday the bank delegation, including Private Sector Development specialist, Finance and Private Development Unit, South Asia Region, based in Washington DC, Eric D Manes, financial sector specialist Shamsuddin Ahmed and SME expert of South Asian office, based in Islamabad Anjum Ahmed.

Manes praised the authority's efforts for taking strong strategic measures to develop various sectors of SMEs in Pakistan, and termed the formulation and approval of a full-fledge SME policy a radical step in this direction. He was confident that the bank would soon be able to decide on extending its assistance in the development projects designed in the SME policy.

Rashid told the delegation about the recent initiatives taken by the authority to develop five preferential sectors of SMEs, including dairy farming, gem and jewellery, marble and granite, furniture and hunting and sports arms.

About the SME policy formulation, he said the SME Act ensured its implementation after the previous government had approved it in its last cabinet meeting last November.

He expressed the hop that the establishment of a credit rating company would prove to be the outstanding landmarks in the history of SME development in the country. Policy and Planning Manager Nadia Seth then gave a formal presentation on the SME policy. Authority Policy and Planning and Central Support General Managers Muhammad Jamil Afaqi and Iftikhar Hussain also attended the meeting.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*OPF to set up industrial estate for overseas Pakistanis ​*
ISLAMABAD (February 09 2008): The Overseas Pakistanis Foundation (OPF) would set up an industrial estate for Overseas Pakistanis at Motorway Chakri Interchange Rawalpindi to provide investment opportunities to overseas investors. In this regard, the Foundation had also inked Memorandum of Understanding (MoU) with the Punjab government last year, official told here on Friday.

He said the Industrial Estate will spread over 1000 acres in first phase on Pakistan Motorway. The Punjab government will provide land while OPF will develop and provide complete infrastructure facilities, he added.

Official said that Federal government would guarantee the provision of all basic utilities for the scheme like water, gas, electricity and telephone and also ensure similar incentives for this Industrial Estate as allowed to Chinese specific zone in the country. This estate will be developed on the pattern of Sundar Industrial Estate, Lahore with complete infrastructure facilities.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pak Suzuki crosses another milestone ​*
KARACHI (February 09 2008): Pak Suzuki Motors have crossed another milestone by becoming the biggest manufacturer and seller of locally produced motor cars in Pakistan. It sold as many as 124,000 vehicles out of the total 198,000 cars sold out in Pakistani market from January 1st to December 31st, 2007.

It was disclosed at the Suzuki convention recently held in Bangkok that Pak Suzuki topped the list of car manufacturers in Pakistan and the rest of the local manufacturers put together by selling 74,000 vehicles.

Suzuki Macca Motors was again declared the best dealer by repeating its outstanding sales performance. And Macca Motors has once again lived upto its past performance by selling the highest number of cars. Suzuki Macca Motors credit this outstanding performance to their valued customers besides Pak Suzuki Motor Company for maintaining their quality.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Loadshedding duration shortened across country: minister ​*
ISLAMABAD (February 09 2008): Federal Minister for Water and Power, Tariq Hameed has said load-shedding duration has been decreased across the country as power generation has increased by 1000 megawatt from Mangla and Tarbela dams due to recent rains. He was speaking at a meeting held here to review power and gas supply.

The Minister said the government's top priority is to enhance power generation so that load-shedding could be finished at the earliest. Petroleum Minister Ehsanullah Khan, who also attended the meeting said the government is giving special attention to power sector so that energy demands could be met for expanding industrial sector and achieving economic targets.

He said that over one point seven million commercial and domestic connections were given in the last few years due to increased twelve hundred million cubic feet gas per day. The Petroleum Minister said the government was also focusing on alternative energy production sources including power production from coal.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Trade deficit hits $10.3bn in 7 months ​* 
Sunday, February 10, 2008

ISLAMABAD: Pakistans economy during July-January 2007-08 has racked up a huge $10.32 billion trade deficit with imports at $20.48 billion and exports at only $10.15 billion.

Running this endless huge string of annual trade deficits by importing more goods and services than it manages to export each year, send a worrisome signal. The Federal Bureau of Statistics (FBS) trade figures released on Saturday reveal that during these seven months, imports were more than double that of exports, which is not a good indication for the economy.

In percentage terms, the trade deficit grew by 35.15 per cent during the period under review against the same period of the last fiscal year ($7.64 billion). During July-January of this fiscal, the country exported goods worth $10.15 billion as against $9.58 billion of the last fiscal, showing a sluggish growth of 5.95 per cent while, imports grew my 18.9 per cent to $20.48 billon against $17.22 billion recorded in the corresponding period of the last fiscal. 

In January 2008, trade deficit in absolute terms stood at $2.05 billion as Pakistan purchased goods worth $3.52 billion while sold goods of $1.47 billion in international market. In January 2007, Pakistan exported goods amounting to $1.17 billion as against the imports of $2.32 billion. 

Though during the month under review, exports grew by 25.6 per cent, however, imports grew beyond 51 per cent over the same month of the last year.During the January 2008, exports grew by 10.7 per cent to $1.47 billion as against $1.33 billion recorded in December 2007. On the other hand, imports grew by 50.18 per cent to $3.52 billion against $2.35 billion imports of December 2007.

Trade deficit hits $10.3bn in 7 months


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## Neo

*PM for more trade routes with India *​ 
Sunday, February 10, 2008

LAHORE: Caretaker Prime Minister Muhammadmian Soomro has asked concerned officials to open more trade routes with India to facilitate export of cement and other products to the neighbouring country.

Speaking at the inauguration of Passenger Facilitation Centre, Wagah (Rail & Road) on Saturday, he described the opening of the centre a landmark step to improve trade between the two countries. Governor Punjab Lt Gen (r) Khalid Maqbool, Chairman FBR Abdullah Yousaf, Chief Collector Customs, North, Shahid Rahim Sheikh and Member Customs Mehmood Alam were also present on the occasion.

The Prime Minister said, such facilities will improve trade and cut cost of business between the two countries, adding that promotion of trade between the two will also help rationalise rates of different commodities across the border.

He also underlined the need to promote people-to-people contacts and said this will strengthen peace and stability in South Asia. He appreciated the self-assessment scheme and other reforms introduced in the Federal Board of Revenue, and said these will minimise contact between taxpayer and tax collector, and result in increase in collection of taxes. 

PM for more trade routes with India


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## Neo

*Govt to increase Utility Stores up to 6,000 ​* 
Sunday, February 10, 2008

ISLAMABAD: The government has planned to increase the network of Utility Stores from 4,500 to 6,000 throughout the country. Managing Director of Utility Stores Corporation told this during a meeting of the Senate Standing Committee on Industries and Production, the meeting convened by Senator Anisa Zeb Tahirkheli. 

The USC MD said the expansion was designed to meet the basic requirements of the population by providing essential items at reduced rates. Responding to request made by some members of the committee that at least one branch of USC may be opened in the Parliament Building for its low-paid employees, the USC administration agreed that it would gladly comply with the request if space is provided to them in the building. 

The senator asked for improving the quality of items being provided at USCs. The meeting reviewed the whole gamut of policies which presently govern the industrial sector to identify the weaker areas and bring about further improvements besides suggesting ways and enhancing competitiveness of the local industry. 

Govt to increase Utility Stores up to 6,000


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## Neo

*KPT works on big projects to be of world standard *​ 
Sunday, February 10, 2008

KARACHI: The Karachi Port Trust has realised the changing shipping trend as large vessels are now calling at ports, which carry more goods and save freight charges. To keep in line with the global trend, the KPT has started Pakistan Deep Water Container Port, the deepest port in the region and a very large project consisting of 10 berths.

The KPT has signed an agreement with Hong Kongs Hutchison Port Holdings on build, operate and transfer (BOT) basis for the first four berths of the Deep Water Port. This is phase one of the project, whose total area exceeds five kilometres, and there might be two other phases.

These things were shared by Karachi Port Trust Chairman Vice Admiral Ahmad Hayat in an exclusive interview with The News, in which he discussed various plans and projects of the KPT.

He stressed the need and importance of the project, saying all over the world the shipping trend was changing. Previously, smaller vessels were coming to ports, but now larger and larger ships are being manufactured in various parts of the world. Therefore, we realised that getting larger ships will help the economy because on these vessels more goods can be loaded. In this case, freight charges will drop substantially as these days fuel prices are high so freight is high.

At present, large vessels go to Dubai, Kandla, Mumbai and Colombo ports and from there smaller feeder vessels come to Pakistan, resulting in double handling charges and high freight. He said our motive is to bring mother vessels to Karachi port and avoid feeder vessels, which can be sent from Karachi to the eastern African coast, to the Indian coast and even to Colombo.

We are making the deepest port in the region which will be 18 metres in depth. At present, the deepest container vessel is about 15.5 to 16 metres which has been built by Maersk Line, which has 22 to 23 per cent share in the worlds container shipping.

Maersk Line has made six big ships, three more are in the pipeline, which are called E-type ships that carry 13,000 to 14,000 TEUs (twenty feet equivalent units). There are only a few ports in the world which can handle these vessels. Shanghai and Hong Kong are among those ports, but Dubai cannot handle these large vessels.

Therefore, we are hoping that once this project (Deep Water Container Port) comes up, we will be one of the few ports in the region which will be able to handle these vessels. In the first phase of the project, which may take 60 years, the KPT will not dig up 18 metres, but it will be 16 metres as dredging is very expensive. Once demand comes in and larger vessels call at the port, then dredging will be extended to 18 meters.

That would bring a lot of transshipment business, he said, adding the vessels would come here and unload their containers and from here feeder vessels would take the goods to third country. At present, we only handle that cargo which the country imports or exports.

Another major project of KPT is Cargo Village, which is on the western side and a bridge will be built to connect the Deep Water Port with the village. The Cargo Village will be constructed in three phases and the first phase will cover 1,300 acres and it has been designed by German designers.

Ahmed Hayat said we have floated a tender for dredging of the Deep Water Port along with dredging for Cargo Village. The tender covering the two projects will be awarded to one company in order to cut cost.

The Cargo Village, which will also serve as an industrial complex like in China, will have a 600-metre quay wall at a depth of 16 metres. The Deep Water and Cargo Village are dependent on each other. The Cargo Village will also be linked with National Highway as we are making roads to connect the village to Lyari Expressway and Northern Bypass. Similarly, we are also laying a railway track which will connect the railway to the national grid so whatever cargo comes to the Deep Water Port, through the bridge it will land into the Cargo Village and from there can go to its final destination, Ahmed Hayat said.

In Cargo Village, only infrastructure will be developed by the KPT and the private sector will be invited to do other development work. In this project, the KPT will bear a cost of nearly $200 million. 

He said the connect bridge was a very expensive project, which was being designed by a German agency. We are looking to arrange $600 to $700 million for the bridge as we may not be able to make the bridge on our own, so we are talking to Japan Bank of International Credit.

The timeframe for completing work on the bridge is four to five years and it will be a very high bridge because vessels will cross underneath it. In the case of Deep Water Port, he said, first dredging would be done to 16 metres, second marine protection work would be undertaken and third 1,500 metres quay wall would be built.

We are looking to provide $600 to $700 million of KPT money and around $400 million private sector money, together this will be around $1 billion in these three projects. About competition with Gwadar deep water project which has a depth of 14 metres, but not as deep as KPTs deep water project, he said there was great market demand, so the Gwadar project would not hamper the business of KPT as container traffic growth in the international market was about 13 to 15 per cent annually.

We are trying to make KPT as user-friendly as possible and all projects and policies which are initiated are all on market demand. We are trying to change work culture and automate things in a big way and one of the examples is the wharfage payment system, Ahmed Hayat concluded.

KPT works on big projects to be of world standard


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## Neo

Neo said:


> *Trade deficit hits $10.3bn in 7 months ​*
> Sunday, February 10, 2008
> 
> ISLAMABAD: Pakistans economy during July-January 2007-08 has racked up a huge $10.32 billion trade deficit with imports at $20.48 billion and exports at only $10.15 billion.
> 
> Running this endless huge string of annual trade deficits by importing more goods and services than it manages to export each year, send a worrisome signal. The Federal Bureau of Statistics (FBS) trade figures released on Saturday reveal that during these seven months, imports were more than double that of exports, which is not a good indication for the economy.
> 
> In percentage terms, the trade deficit grew by 35.15 per cent during the period under review against the same period of the last fiscal year ($7.64 billion). During July-January of this fiscal, the country exported goods worth $10.15 billion as against $9.58 billion of the last fiscal, showing a sluggish growth of 5.95 per cent while, imports grew my 18.9 per cent to $20.48 billon against $17.22 billion recorded in the corresponding period of the last fiscal.
> 
> In January 2008, trade deficit in absolute terms stood at $2.05 billion as Pakistan purchased goods worth $3.52 billion while sold goods of $1.47 billion in international market. In January 2007, Pakistan exported goods amounting to $1.17 billion as against the imports of $2.32 billion.
> 
> Though during the month under review, exports grew by 25.6 per cent, however, imports grew beyond 51 per cent over the same month of the last year.During the January 2008, exports grew by 10.7 per cent to $1.47 billion as against $1.33 billion recorded in December 2007. On the other hand, imports grew by 50.18 per cent to $3.52 billion against $2.35 billion imports of December 2007.
> 
> Trade deficit hits $10.3bn in 7 months



*Trade deficit swells to $2.053 billion​*
ISLAMABAD, Feb 9: Pakistans trade deficit increased by 77.84 per cent in January and swelled to $2.053 billion against $1.154 billion last year, mainly due to surging crude oil prices.

The trade gap ballooned as imports rose at a faster pace than exports during the month under review after a slight cut in the deficit in the previous month owing to 15 reduced working days on account of Eid holidays, Quaid-i-Azams birth anniversary, assassination of former prime minister Benazir Bhutto and disturbances after her death.

Official figures available with Dawn showed that the import bill increased by 51.48 per cent to $3.529 billion in January 2008 against $2.329 billion last year.

Exports grew by 25.60 per cent to $1.476 billion in January 2008 against $1.175 billion last year.

This growth in import and export was mainly due to delayed shipments, which were due in December last, but could not be shipped due to reduced working days.

For the first seven months (July-January) of 2007-08, the trade deficit increased by 35.15 per cent to $10.327 billion against $7.641 billion over the same period last year.

With the rising import bill, economists estimate that the trade deficit this year would easily cross $15 billion mark, the highest ever recorded in the history of the country.

Analysts said the trade account worsened sharply because of rising oil import bill, and heavy import of food grains, particularly wheat and pulses. But export growth has also slowed down, which also slightly worsened the trade account.

With the increasing oil prices, hopes for a narrow trade deficit in future have faded, and it may create a serious balance of payments problem for economic manager of the newly-elected government.

Pakistans exports to major US markets have slowed down owing to slow demand in the wake of recession in the US economy.

Official figures showed that exports grew by 5.95 per cent to $10.152 billion during the July-January period of the current fiscal year against $9.582 billion last year.

The government had projected an export target of $19.2 billion in the trade policy last year. For achieving this target, export proceeds should be in the vicinity of $9.048 billion in the next five months (February-June) 2007-08. However, with a slow growth in exports in the last seven months, there is no likelihood that the commerce ministry would even be close to their projected target.

On the other hand, the import bill reached $20.480 billion in July-January period of the current fiscal year, up by 18.90 per cent from $17.224 billion.

Though the government did not project any target for import bill in the trade policy, estimates show that it would easily reach around $35 billion by the end of June. Last year, the import bill had crossed the figure of $30 billion.

Trade deficit swells to $2.053 billion -DAWN - Business; February 10, 2008


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## Neo

*Investment activity declines sharply: Pre-election uncertainty​*
KARACHI, Feb 9: Banking activity has dropped sharply as up to 40 per cent accounts remain idle reflecting the unfriendly investment environment.

Bankers said the prevailing uncertainty linked with the elections had seriously affected the banking activity. They said 30 to 40 per cent account holders were not using their accounts or withdrawing money to invest in the market.

In countries like Pakistan uncertainty before elections is not an unusual thing but it has hit the investment-related activities, which slid significantly over the past couple of months, said a senior banker.

Bankers said that the trade-related banking business was normal but the investment by the private sector had witnessed a slowdown.

One of the major reasons is the slump in the shares market, which is the centre of activities attracting billions of rupees every day but the uncertainty has marred the charm, said treasurer of a large privatised bank.

He said thousands of account-holders used their accounts daily when they deal in the capital market, which is now a risky place to move around. He said only big players were in the market while the middle-class investors were avoiding investing these days.

Another senior banker of a semi-privatised bank said the real estate was another area where investment had dried up.

The real estate business has lost attraction as the risk is very high due to uncertainty linked with the elections, he added.

He said the speculation about the elections outcome had created more uncertainty, especially for the real estate business, which has a tendency of slow movement, whether the prices go up or come down.

The real estate business flourished during the last three years and the banks earned record profits. However, most of the investors got the real benefit when the interest rates slipped below two per cent in 2002.

Bulk of the money went into the real estate sector, especially in land purchasing. When the interest rates went up after a couple of years the land prices shot up and paid huge dividend to the investors.

The real estate transactions these days are insignificant as the investors find it better to sit with their money instead of investing and taking risk, said the banker.

He was hopeful that the situation would change soon after elections. Most of the bankers were of the view that the phenomenon was temporary and would see a change after elections.

Analysts said the decline in investment activity would hurt the economy and the real impact would be felt at the end of the current fiscal.

If the investment activities do not revive just after the elections it would certainly hurt the economy already under stress due to poor agriculture performance and low manufacturing growth, said Abid Saleem, an analyst of a local brokerage house.

Investment activity declines sharply: Pre-election uncertainty -DAWN - Business; February 10, 2008


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## Neo

*2.16bn Neelum-Jhelum hydel project launched​*
ISLAMABAD, Feb 9: President Pervez Musharraf launched here on Saturday the $2.16 billion Neelum-Jhelum hydro-electric project, saying that its completion would contribute in a big way to socio-economic development of the country.

He said the project had a strategic importance and was needed to meet the growing power requirements.

He thanked the Chinese for their assistance, terming the project another symbol of Sino-Pak friendship.

The president said Pakistan had proposed extending oil and gas pipelines and rail network up to the Chinese border, which would be another wonder.

About the project, he said it would have a 47 kilometre-long tunnel and generate 1,000MW of inexpensive hydel power.

The president said the shortage of energy was due to the growing industrial sector which would be overcome through a series of power projects, including hydel, coal, alternative and nuclear. He said the country has to move forward on fast-track basis to generate power to sustain its economic growth.

He said in 2000, there was a surplus of 4000MW of electricity and even it was contemplated to export it to India. He said the industrial growth doubled and economic growth remained over 7 per cent of the GDP during the last seven years resulting in the shortage of electricity and gas.

Today Pakistan needs electricity and gas. We should have moved forward to keep pace with the industrial and economic growth but now all efforts will be made to generate power and explore more gas reservoirs to help meet fast expanding energy requirement of the country.

He said Bhasha dam had already been launched and other water reservoirs including, Kalabagh dam, Akori, Kurram Tangi and Gomal Zam would be constructed to generate electricity.

He said Pakistan was also planning to utilise Thar coal reservoirs. He said China was producing 70 per cent of its energy from coal while Pakistan was producing only 1 per cent of its electricity from coal.

He said the magnitude of the coal reservoirs in Pakistan could be gauged from the fact that their capacity to generate electricity was more than the capacity of Saudi and Iranian oil put together. The president said the gas exploration was being speeded up and new reservoirs were being discovered.

$2.16bn Neelum-Jhelum hydel project launched -DAWN - Top Stories; February 10, 2008


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## Neo

*SBP governor defends monetary policy stance*​
* Brushes aside criticism against increase in discount rate by saying these are allegations and irrelevant

KARACHI: Governor, State Bank of Pakistan (SBP) Dr Shamshad Akhtar has strongly advocated the tightening of monetary policy to contain the inflationary pressures by rejecting the notion that it will adversely affect the economic growth.

Inflation is a monetary phenomenon and talks of irrelevance of monetary policy tightening to curb the inflation is nothing but irresponsible and absurd statements, central bank Governor contended in response to reservations of business community on the issue.

Talking to members of Federation of Pakistan Chamber of Commerce & Industry (FPCCI) and representatives of business and industry at Federation House, she emphatically defended the monetary policy stance of central bank and even termed the statements and comments of some members opposing the discount rate hike as allegations and irrelevant.

However, business community people seemingly unconvinced kept raising flaws in monetary policy, which invited a bit of harsh response from, otherwise, soft-spoken SBP Governor. 

This tightening of monetary policy is to contain the inflation, which has been brought down with the effective monetary stance since 2005, which otherwise have been in the range of double digit, she stated while talking about the rationale behind the discount rate raise. Also, to reduce the demand pressures and absorb the excessive liquidity in the market, it has become inevitable to further tighten the monetary stance. 

SBP chief allaying the apprehensions of industry representatives said that discount rate hike would have minimum affect on the interest rate and there would be no problem to obtain working capital.

Agreeing with the FPCCI President and other participants views that food inflation is rising because of supply side constraints, she described tight monetary policy to hit the core inflation (non-food), which has over 50 percent weightage in CPI basket. We have nothing to do with the supply side constraints but we would be acting to contain the inflation through monetary policy tools to keep it within the range, she added.

She revealed that the International Monetary Fund (IMF) and World Bank (WB) even recommended Pakistan to increase the policy discount rate by 200 basis points but we only raised by 50 basis points in view hardships and difficulties of industrial sector.

SBP Governor described the monetary policy a prerequisite to curtail the macroeconomic imbalances and to boost the growth when some participants talked of its irrelevance in an economy like ours. 

Other officials of SBP, who were present on this occasion also held the excessive borrowings of the government from central bank as a major factor in pushing up the inflation. Government borrowings from central bank shoot up to Rs 335 billion by January 26, 2008.

We are trying to persuade the government to borrow from commercial banks instead of central bank as borrowing from latter has inflationary impact, Dr Shamshad Akhtar pointed out. However, she hoped that with more flows in the coming days, the government would be able to pay off these loans, which would be helping to control money supply growth.

Earlier, FPCCI President Tanveer Ahmed Sheikh in his speech said that this tightening is going to be counterproductive to the exporters in particular and industry in general. The ratio of finance costs to sales for the textile spinning industry was three percent during 2005 and it increased to eight percent in year 2007, he added.

FPCCI chief, while talking about inflation pointed out that excessive government borrowing and expenditure on unproductive and wasteful schemes and total mismanagement of our agricultural and supply management policies are real causes of the soaring inflation.

Daily Times - Leading News Resource of Pakistan


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## Neo

Monetary policy to target core inflation

KARACHI: The Governor State Bank of Pakistan (SBP), Shamshad Akthar, has said that the central bank does not want to stifle growth. We want to ensure adequate macro economic stability which is a prerequisite to attract investment, she emphasised while talking to businessmen at Federation of Pakistan Chambers of Commerce & Industry (FPCCI) on Saturday. 

Dr Akhtar said that monetary policy has more distinct impact on reducing core inflation that excludes food and energy items, which have 51 percent weight in the CPI. It is notable that Pakistan was able to bring down the core inflation to 5.2 percent by May 2007 from a peak of 8.3 percent in October 2005, she said. According to a press release issued by the SBP it was also explained on the occasion that the instructions regarding the provision of bank financing by the commercial banks for procurement of wheat by the functional flour mills during wheat procurement season 2008 shall be issued in consultation with Ministry of Food, Agriculture & Livestock. However, the borrowers from private sector who availed bank financing for procurement of wheat during last year and have failed to retire their loan by 31st January 2008 would be penalised. 

The governor dispelled the impression that consumer financing by banks is hurting financing to other sectors. She explained that unlike other countries where proportion of consumer financing to GDP is very high, this ratio is nominal in Pakistan. She also explained that though the SBP has set limits for banks to extend consumer finance as a proportion of their equity, banks would have to provide for the non-performing loans. Dr Akhtar, however, commented that a large proportion of it has benefited the automobile sector as banks have extended a substantial amounts for buying cars and motorcycles.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Industries to face 1,400MW power shortage by 2010​*
ISLAMABAD: Export oriented and labor intensive industries of the country would be faced with power shortages by 2010 due to demand-supply gap of around 1400 MW, a senior official told Daily Times here Saturday. 

He said that new power projects would take some time to cover the power shortage crisis. The main reasons behind the major power crisis are the power and gas shortage and non-construction of dams, he added.

The official said that Water and Power Development Authority (Wapda) would add 2000 MW power to the current power generation that stands around 10,000 MW surpluses by December 2009. However, the official added that the country would also be facing power shortage after adding 2000 MW power to the current power generation.

He said that 2000 MW power would be generated by rental power plants with which the government has entered into agreements for three years including one year extended period to supply power.

At present, domestic consumers are facing 4-hour load shedding, textile industry 3-hour load shedding and steel melting and re-rolling units 7-hours loads shedding during the day. Total power generation stands at around 10,000 plus MW against the demand of 12300 MW.

However, according to the official, a relief for the domestic consumers and industry is in sight from February 11 by reducing load-shedding hours after increase in 10,000 cusecs water releases from Tarbela and Mangla dams. Pakistan Electric Supply Company (PEPCO) will reduce the load shedding hours from 4 to 3 hours for domestic consumers on February 11 and the reduction in load shedding hours for important industrial sectors is also under consideration.

Indus River System Authority (IRSA) made an increase of 5000 cusecs water from Tarbela to 35,000 cusecs on February 8. It would add 108 MW power generation to the current power generation. After the further increase of 10,000 cusecs water from February 11, 216 MW power generations will further be added. 

IRSA is releasing 57000 cusecs water from these two dams that would be increased to 67,000 cusecs water on February 11. It would add power generation of over 216 MW to existing over 2600 MW hydel power generation. 

In the medium and long-term power projects plan aimed at generating 5842 MW power in future include 12 power projects to be initiated by independent power producers (IPPs) that would generate 2376 MW power by 2010. These projects would be launched by IPPs during the current calendar year. Medium and long term plans included five other projects aimed at generating 2450 MW power. Wapda is also working on small dams that would generate 516 MW power. Wapda in its long-term plan has also included 400 to 500 MW rental power projects that would be completed during the next six months.

Daily Times - Leading News Resource of Pakistan


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## Neo

*WB proposes reform package for construction industry*​
ISLAMABAD: World Bank (WB) has proposed fiscal incentives package for construction industry. The Bank has suggested Pakistans economic managers that implementation of this package and other recommendations within three years time could improve health of the industry. 

WB has projected that this would help the country not only to reduce the cost of doing business but will also help to complete mega infrastructure projects on competitive rates. 

This has been proposed in short term recommendations submitted to the government through Pakistan Infrastructure Implementation Capacity Assessment (PIICA). The bank has said that lack of access to financial resources is a major impediment faced by the industry and also acts as a barrier for many potential new participants. 

World Bank has asked to establish tax laws and related policies that would stimulate growth of the industry. Presently multiple, high and at source tax deductions restrict cash flows and impede progress.

However, presumptive tax should not be the only tax mechanism available; contractors should be encouraged to maintain detailed books of accounts and file annual returns for payment of tax liabilities. This will enhance the credibility of the construction industry, encourage a corporate culture and instill confidence in the banking sector to offer financial facilities, the bank added. 

Duties and taxes should be rationalised on spare parts, plant and equipment in order to encourage import of new equipment and lower the cost of doing business. They should be also reduced on construction materials to make cost of inputs comparable with regional and international prices.

Pre-qualification requirements should be simplified with a focus on technical and managerial capability instead of works in hand or projects completed criteria. Procurement on the basis of least evaluated bid criteria should also be enforced.

Project cost estimates should be based on market rates instead of scheduled rates. A price review committee should be formed to review and set prices of construction inputs on a quarterly basis which should be published for industry wide distribution. The committee can also have the mandate to determine escalation in material prices and rates. The engineers project costs estimates should be realistic with appropriate allowances for profit.

Improve charge rates and construction rates, increased salaries and pay structures will not only motivate existing workers to perform better but also attract better qualified people. At present, professionals are paid 1/6th to 1/12th compared to the remuneration in regional countries. There should be an immediate increase in current contract rates to rectify and reverse brain-drain. Charge rates could be fixed as par with regional countries on Purchasing Power Parity (PPP) basis.

The clients should provide mobilisation advance of at least 30 percent of project costs and recoveries designed according to the planned financial cash flows. Up to 75 percent of the running bill should be paid in advance immediately as an ad hoc payment while the interim payment certificates are being processed. Construction Ombudsmen may be appointed at federal and provincial levels to deal with construction related disputes if arbitration fails. 

The Government should proactively establish and fund short-term training programs for professionals in the private and public sector. Linkages between academia and industry should be proactively developed in order to ensure entry-level professionals to have required sets of skills. Simplification of the process to allow suitably qualified professionals in public sector to take on private sector short-term consultancy work should be done.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Bachat Cards to benefit 6.8m families: Taseer​*
ISLAMABAD: The Bachat Card scheme, initiated by the government will benefit 6.8 million families living below the poverty line and they will get daily useable items at 25 further subsidised rates at Utility Stores Corporation of Pakistan (USC). 

Federal Minister for Industries, Production & Special Initiatives Salmaan Taseer expressed these views during a press conference here on Saturday. Through USC, he said the government is currently providing relief of up to 20 percent on basic essential commodities like flour, rice, pulses, oil/ghee and sugar. 

The minister said the government has decided to provide relief up to 25 percent on these items to the targeted population of the society. For this purpose, he said, the USC would issue Bachat Cards to the families already identified by such relief schemes Baitul-mal, Zakat and other provincial schemes. 

The cards would also be issued to the special venerable sections of the society such as low-income pensioners, senior citizens, low paid government employees, widows and illiterate unemployed population etc. Initially, the minister said verified data of Baitul-mal would be utilised for issuance of the Bachat Cards. Later on verified data of the other similar safety network schemes and all special venerable population would also be included in the scheme within three months. 

To provide easy access to the targeted population, the minister said, USC would also arrange for Mobile Stores and Sasta Bazar in remote and inaccessible areas of the country. This scheme would cater to the entire 6.8 million targeted population, it involved a relief of Rs 3.4 billion per month.

For transparency of the system and to reduce the chances of misuse, a highly developed integrated financial and monitoring system would be put in place to control the entire operation, he assured. According to the minister, the scheme would also ensure availability of essential food items to the targeted population during the crises and shortages. 

Taseer reiterated that the scheme reaffirmed governments commitment to provide relief to the poorest population of the country. 

About USC, the minister said the government had decided in the budget to increase the network of utility stores up to union council level. He informed journalists that the corporation is now operating 52 warehouses and 4,500 stores as against the target of 6,000 by March 2008 and assured that the remaining 1,500 stores would be open soon. 

It is the obligation of the state to help those who do not have enough means and we will ensure that everyone is able to get food at affordable rates, the minister added. He said that the entire target of 6.8 million families would be achieved in three phases.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Energy saving scheme: Strategy finalised for efficient use of fans and pumps​*
ISLAMABAD: To make efficient use of power, the Engineering Development Board (EDB) on Saturday finalised strategy to enhance the efficiency of domestic fans and pumps. 

The leading manufacturers of these products were present to give their inputs. Representatives of concerned government departments also attended these meetings. The increased efficiency will result in lower consumption of the energy and would strengthen the governments endeavors to conserve energy. Discussions focused on different aspects of the products including general design, quality of input materials and the relevant benchmarks.

Zahid J. Yaqub, GM, EDB, who chaired these meetings briefed about the initiatives taken by the government to overcome the energy crisis in the country. One of the strategies adopted is to enhance the efficiencies of the different energy consuming household products currently being produced in the country in collaboration with the relevant private sector industry, he added.

The meeting was informed that 45% of Pakistans electricity consumption was used by domestic sector. It was estimated that every household in Pakistan has minimum of 2-3 fans, putting their strength to more than 30 million. 

The president of fan manufacturers association (FMA) called for reduction in rate of sales tax on various components of fans. He alleged that small units were using substandard components in order to keep the price low and ignoring energy conservation. According to him the industry was manufacturing 5 million units out of which 1 million were exported earning foreign exchange of 30 million dollars. The industry also called for banning export of copper, which was the main component of fans.

The meeting on pumps was told that the enhancement of efficiency of motors used in domestic industrial and agricultural sectors could save 3% to 5% of the total electricity consumption.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Need for quality infrastructure highlighted​*
ISLAMABAD: The participants of roundtable on infrastructure and energy agreed here on Saturday that high-quality infrastructure reduces the effect of distance between suppliers and consumers in and outside Pakistan, with the result of truly integrating the national market and connecting it to markets in other countries and regions. 

The existence of quality infrastructure is critical for ensuring the efficient functioning of the economy, as it is an important factor determining the location of economic activity, this was the conclusion of the roundtable on Infrastructure and Energy conducted by the Competitiveness Support Fund (CSF) for the State of Pakistans Competitiveness Report 2008. Stakeholders attended the roundtable from the energy and petroleum, telecommunications, media and services sectors. Representatives from the Board of Investment and the World Economic Forum (WEF) also attended the meeting. 

Daily Times - Leading News Resource of Pakistan


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## Introvert

* Pakistani Oranges exports may fetch 100 million dollars *​
As compared to last year, exports of kinnow are likely to fetch $100 million this year, thereby exceeding last year's exports by 30 percent to 40 percent, a spokesman for the Pakistan Horticulture Development and Export Board (PHDEB) on telephone from Lahore on Saturday. One of the brighter sides of kinnow export is that Russia is enthusiastically engaged in importing Pakistani kinnow this season following the lifting of ban which it had imposed in 2006-end.

Having satisfied with strict quarantine measures conforming to Sanitary and Phyto-Sanitary requirements taken by the authorities, Russians had by January 31, 2008 imported about 14,000 tonnes of kinnow worth $10 million in 544 containers.

The PHDEB spokesman said by the end of kinnow export season ie April-end, Russia is likely to import kinnow worth between $20 million and $25 million. Last season, only 55,000 tonnes of kinnow were exported to Russia.

Pakistan has since the start of the season exported over 70,000 tonnes of kinnow to different countries. Last year, it had exported 122,000 tonnes, but this year the export figures may hit over 200,000 tonnes fetching around $100 million, he said.

It may be recalled that Russia had announced lifting of ban on the import of kinnow and hinted at re-opening its market for mango export as well following negotiations with officials in December last year. The ban had adversely affected the overall performance of the country's agricultural exports and its future prospects.

Russia had banned import of Pakistani agri products after its Phyto-Sanitary watchdog had found an insect, Khapra Beetle in a rice shipment sent from Pakistan. Following the lifting of ban, Moscow had issued a notification directing customs authorities to immediately facilitate unhindered access of Pakistani citrus fruits to its market.

Now the seven Central Asian states, once part of then USSR, would also re-open their markets to Pakistani agri products, Pakistani officials hope. These countries followed the Russian food and health safety standards and did not allow import of products, which had been banned by Russia.

The PHDEB has also launched a "pre-shipment inspection" scheme to export citrus fruits this year for all destinations except for Middle East and Iran. The matter had also been finalised with the customs authorities and other related agencies. Co-ordination among different departments would help inspect the shipment at one place instead of at different stages of the export process.

With globalisation and loosening up of territorial boundaries under the World Trade Organisation (WTO), every country is trying to increase its export share in the world market. This situation not only leads to intense competition, but also to strict compliance to quality and safety standards. The compliance is vital in case of food products, particularly of horticulture.

Foreign importers demand compliance to safety standards and quality assurance steps at the cultivation, processing and packaging stages before export. This necessitates enforcement of minimum grades and quality standards.

Taking cognisance of this international sensitivity, the government, in consultation with the stakeholders, including growers, processors and exporters, has revised national grades and quality standards and decided to enforce them through third party pre-shipment inspection process.

Pakistani Oranges exports may fetch 100 million dollars - Unique Pakistan


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## solid snake

In order to save electricity, all government buildings across Pakistan should install sensor-controlled lighting. Here in our college, there are some restrooms which only switch on their lights when someone opens the door and crosses the threshold into the bathroom. There is a sensor right by the door, and it detects a persons movement inside. This way, lights don't have to be on all 12 hours of the night, they switch off about 10-20 minutes after the last movement. Streetlights across Pakistan could be powered by solar technology - taking in sulight during the day and staying on for the night.


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## salman nedian

solid snake said:


> In order to save electricity, all government buildings across Pakistan should install sensor-controlled lighting. Here in our college, there are some restrooms which only switch on their lights when someone opens the door and crosses the threshold into the bathroom. There is a sensor right by the door, and it detects a persons movement inside. This way, lights don't have to be on all 12 hours of the night, they switch off about 10-20 minutes after the last movement. Streetlights across Pakistan could be powered by solar technology - taking in sulight during the day and staying on for the night.



I second your post and want to add that alternative sources of energy such as sunlight and wind should be used in households and industries also local trains/tubes should be used as mass transit to save the energy.


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## bhangra12345

solid snake said:


> In order to save electricity, all government buildings across Pakistan should install sensor-controlled lighting. Here in our college, there are some restrooms which only switch on their lights when someone opens the door and crosses the threshold into the bathroom. There is a sensor right by the door, and it detects a persons movement inside. This way, lights don't have to be on all 12 hours of the night, they switch off about 10-20 minutes after the last movement. Streetlights across Pakistan could be powered by solar technology - taking in sulight during the day and staying on for the night.



cost.

Solar energy has not become widespread only because it is not costeffective without HUGE tax breaks amounting to almost 40-50% installation costs.

Sensors cost money, they can be stolen, so security. A govt school, in which teachers themselves are absent (situation across the subcontinent), you expect them to install all these fancy gadjets?


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## Neo

*Plan to conserve energy: solar power-based lights for government buildings proposed ​* 
ISLAMABAD (February 10 2008): The government has decided to use solar energy-based lights on all important buildings, like Prime Minister House and Secretariat, as part of energy-saving strategy, official sources told Business Recorder.

"With appropriate energy conservation policy, a minimum saving up to 25 percent in various segments of the energy sector can bring saving of $2 billion per annum," sources said quoting from a presentation given to Prime Minister Muhammedmian Soomro recently.

They said that federal and provincial governments would start using energy-saving bulbs, whereas Pakistan Electrical Power Company (Pepco) would provide energy-savers free of cost to government offices and hospitals.

The Pakistan Electronic Media Regulatory Authority (Pemra), which welcomed Mushtaq as Chairman, has been directed to co-ordinate with electronic media for launching effective campaign in the masses for energy conservation.

"Citizens should be encouraged to use solar panel geysers, energy saving bulbs and public transport," sources said. They said that public-private partnership should be promoted for facilitating easy access to appropriate technology.

Energy-intensive entities would develop conservation plans and would establish help lines to guide the people and national awards would be given for prominent achievers of energy conservation in respective sectors of economy.

In future, billboards may be converted onto solar energy and government high schools and colleges in the federal capital would introduce buses/vans for pick and drop.

Private schools/colleges having more than 500 students should be advised to arrange school transport through buses and vans for pick and drop and based on energy and industry shall be asked to become more efficient in the use of energy in their industrial operations.

Ministry of Environment will prepare a work plan with timeframe in co-ordination with Ministry of Petroleum and Natural Resources, Ministry of Water & Power and Alternative Energy Development Board to put forward specific schemes and projects for achieving energy saving targets. The said work plan would be phased into short term, medium term and long term. Sources said that Rs 50 million has also been allocated for Enercon and all major entities would have their energy conservation plans with defined timelines.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Kinnow exports may fetch $100 million: PHDEB *​ 
KARACHI (February 10 2008): As compared to last year, exports of kinnow are likely to fetch $100 million this year, thereby exceeding last year's exports by 30 percent to 40 percent, a spokesman for the Pakistan Horticulture Development and Export Board (PHDEB) told Business Recorder on telephone from Lahore on Saturday.

One of the brighter sides of kinnow export is that Russia is enthusiastically engaged in importing Pakistani kinnow this season following the lifting of ban which it had imposed in 2006-end.

Having satisfied with strict quarantine measures conforming to Sanitary and Phyto-Sanitary requirements taken by the authorities, Russians had by January 31, 2008 imported about 14,000 tonnes of kinnow worth $10 million in 544 containers.

The PHDEB spokesman said by the end of kinnow export season ie April-end, Russia is likely to import kinnow worth between $20 million and $25 million. Last season, only 55,000 tonnes of kinnow were exported to Russia.

Pakistan has since the start of the season exported over 70,000 tonnes of kinnow to different countries. Last year, it had exported 122,000 tonnes, but this year the export figures may hit over 200,000 tonnes fetching around $100 million, he said.

It may be recalled that Russia had announced lifting of ban on the import of kinnow and hinted at re-opening its market for mango export as well following negotiations with officials in December last year. The ban had adversely affected the overall performance of the country's agricultural exports and its future prospects.

Russia had banned import of Pakistani agri products after its Phyto-Sanitary watchdog had found an insect, Khapra Beetle in a rice shipment sent from Pakistan. Following the lifting of ban, Moscow had issued a notification directing customs authorities to immediately facilitate unhindered access of Pakistani citrus fruits to its market.

Now the seven Central Asian states, once part of then USSR, would also re-open their markets to Pakistani agri products, Pakistani officials hope. These countries followed the Russian food and health safety standards and did not allow import of products, which had been banned by Russia.

The PHDEB has also launched a "pre-shipment inspection" scheme to export citrus fruits this year for all destinations except for Middle East and Iran. The matter had also been finalised with the customs authorities and other related agencies. Co-ordination among different departments would help inspect the shipment at one place instead of at different stages of the export process.

With globalisation and loosening up of territorial boundaries under the World Trade Organisation (WTO), every country is trying to increase its export share in the world market. This situation not only leads to intense competition, but also to strict compliance to quality and safety standards. The compliance is vital in case of food products, particularly of horticulture.

Foreign importers demand compliance to safety standards and quality assurance steps at the cultivation, processing and packaging stages before export. This necessitates enforcement of minimum grades and quality standards.

Taking cognisance of this international sensitivity, the government, in consultation with the stakeholders, including growers, processors and exporters, has revised national grades and quality standards and decided to enforce them through third party pre-shipment inspection process.

Business Recorder [Pakistan's First Financial Daily]


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## bhangra12345

Neo said:


> *Plan to conserve energy: solar power-based lights for government buildings proposed ​*
> Business Recorder [Pakistan's First Financial Daily]



Excellent start, if they can get the tax packages right and persist with it- you should start seeing noticeable effects in about 5-10 years.


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## Neo

*Demographics pose considerable economic opportunity: Dr Salman ​*
KARACHI (February 10 2008): Pakistan's Premier Investment Group, BMA Capital, recently conducted a global online Investor Forum in Karachi. Dr Salman Shah, Finance Minister, Government of Pakistan, was the keynote speaker on the occasion and delivered his views on Pakistan's fiscal and economic scenario.

Dr Shah said: "Pakistan's demographics pose a considerable economic opportunity. With a majority of Pakistanis under the age of 25, our challenge is to leverage this group into the labour force, providing them with the necessary shills to assist them in raking advantage of the 21st century's interdependent global economy."

He also said that GDR's planned for launch during FY08 including those of NBP, HBL and Kapco should assist in financing Pakistan's current account deficit.

BMA Capitals Chief Executive Farrukh Khan, whilst sharing his insights further added: "With nearly seven billion rupees in assets under management, BMA is Pakistan's premier investment group.

At BMA, research is at the centre of all our work and it is our belief that research, underpinned by rigorous analysis, is fundamental to good investment decision making. This is especially important in the context of rapid developments on the global and domestic front and we hope regular calls such as our Investor Forum series will help keep our clients abreast of key investment ideas and themes generated from our research desk."

BMA Funds Chief Executive Muddassar Malik added: "It is an honour to have the Minister of Finance grace BMA's Global Investor Forum. BMA expects to see attractive gains in the Karachi Stock Exchange in the corning year." Panellists on the forum included 40 participants from Pakistan as well as international participants from London, New York, Singapore, Dubai and Hong Kong, which included representatives from leading financial institutions.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Longton project technology suggested for Bhasha-Diamer dam ​* 
LAHORE (February 10 2008): World known dam designer Dr Peter Mason has said that the design of the Longton Hydropower project in China is innovative and now it is time for the world to adopt the roller compact concrete technology in building high-rise dams because it is the future technology.

He told his audience during a presentation by Chaudhry Foad Hussain on 'The innovative design and construction technologies' used in the project, that Pakistan could solve her energy crisis by adopting the same technology to build high-rise dams.

Pakistan Engineering Congress President Hussain Ahmed said the basic purpose of the Congress was to promote general knowledge about science and technology. "We need industrialisation to improve the economic conditions and, for this purpose, we need energy to run the industry, and Pakistan is facing energy crisis and it can only be overcome by construction of big dams," he said.

In his lecture on 'Longton Hydropower project', NDC (Consultant of Diamer Bhasha dam) Hussain said, "It is a high-rise dam and there are similarities in the design of the Longton power plant and the Diamir Bhasha dam. For example, the height of the Longten power project is 216 feet while that of the Bhasha dam is 217 feet. The Longton power project will produce 4000 MW while the Bhasha dam will produce 4500 MW."

He said the Diamir Bhasha dam cost was up to Rs 8 billion. "Pakistan should start two or three mega hydro-power projects to overcome her energy crisis," he said. "Steps are taken to control seepage problems by constructing drainage problems in the Longton power project."

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Bachat Card' scheme: 44 million low-income people neglected ​*
MULTAN (February 10 2008): Government has neglected in the `Bachat Card' scheme more than 44 million low income people, who are living below the poverty line and their income is $2 or less than $2 per day. Through the scheme the government would accommodate only 6.8 million people who are registered with Zakat & Ushr Committees or Bait-ul-maal.

Government has admitted that more than 34 percent (54.4 million) people are living below the poverty line, while independent circles insist on 43 percent (68.8m), whose income is less than $2 per day. The scheme will provide subsidy on five essential items, which cost Rs 3.4 billion to the national exchequer.

The five basic food commodities which would be provided to the card holders on subsidised rates are flour (atta), ghee , oil, sugar, rice and dal channa through 45,000 utility stores' outlets. This scheme was introduced for only ten percent of destitute as 2 million poor families are registered with the Baitul Maal.

Later on, 2.4 million households registered with Ministry of Zakat and another 1.8 million poor families would be covered in the third phase of the scheme. As there are no network of utility stores in rural areas the rural population could not get benefit from the scheme. Utility Stores Corporation is reluctant to expand its network to the remote areas of the country swiftly so that the problems of the people be eased.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*40-year sales tax holiday for Gwadar port FTZ imported material *​ 
ISLAMABAD (February 09 2008): The Government has given sales tax holiday, for 40 years, on import/supply of all sorts of material/equipment necessary for making Gwadar Port operational, along with establishment of Free Trade Zone and Ship Oil Bunkers.

According to an SRO, No 115(I)/2008, issued by Federal Board of Revenue (FBR) on Friday, sales tax exemption would be available on import and local supply of items used in the development of Free Zone for Gwadar Port and Ship Bunker Oils bought and sold at Gwadar Port, especially by shipping by the companies having concession agreement with the Gwadar Port Authority (GPA).

The FBR has also laid down certain conditions for availing the sales tax exemption. The board has issued two separate procedures for availing sales tax exemption on import and local supply, respectively.

The Ministry of Ports and Shipping shall certify, in the prescribed format, that the imported material and equipment are bona fide requirement for construction and operation of Gwadar Port and development of Gwadar Port Free Zone.

The authorised officer of the Ministry shall furnish all relevant information online to Pakistan Customs Computerised System (PACCS) against a specific user ID and password. In already computerised Collectorate or customs station, where the PACCS is not operational, the Project Director or any other person authorised by the collector shall enter the requisite information in the system on daily basis, whereas entry of the data obtained from the customs stations, which have not yet been computerised, shall be made on weekly basis, provided that this condition shall not apply to ship bunker oils.

Under the procedure, the goods imported shall not be sold or disposed of without prior approval of the FBR, and payment of sales tax leviable at the time of import, provided that this condition shall not apply to ship bunker oils.

In case of local supply, the sales tax exemption shall be admissible only to those companies which hold concession agreement for claiming exemption on goods which are otherwise taxable in Pakistan. The operating companies will purchase the materials and equipment for the construction of Gwadar Port and development of Free Zone from persons only registered with the tax authorities.

Moreover, the invoice of the exempt supply, containing the required particulars shall for each supply be issued by the registered person to the operating company, mentioning thereon that the said invoice is being issued under this notification.

The registered persons, engaged in making the exempt supplies, would prepare a monthly statement summarising all particulars of the supplies made in the month against invoices issued to the operating companies which shall be signed by the authorised person of the registered body.

All three copies of the said signed monthly statement shall be got verified by the registered person from the person authorised to receive the supplies in the office of operating company, confirming that supplies mentioned in the monthly statement have been duly received, the procedure said.

After verification from the operating company, original copy of the monthly statement will be retained by the registered person, duplicate by the operating company, and the triplicate provided to the Collector of Sales Tax. The registered person making the exempt supplies shall keep the aforesaid record for presentation to the sales tax department as and when required.

The authorised officer of the Ministry of Ports and Shipping shall ensure that the goods are genuine, bona fide requirement for construction and operation of Gwadar Port and development of Free Zone for Gwadar Port and that the same are not manufactured locally. On completion of these formalities, the concerned officials would issue the relevant certificate.

In case of clearance through the PACCS, information about the goods shall be furnished online against a specific user ID and password obtained under section 155D of the Customs Act, 1969, the procedure added.

Business Recorder [Pakistan's First Financial Daily]


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## mujahideen

US-Canadian group to invest US $ 200 bln in power sector: Soomro 

KARACHI, Feb 10 (APP): Caretaker Prime Minister, Mohammedmian Soomro Sunday said that an entrepreneurs group from United States and Canada will jointly invest in oil exploration, coal mining and power generation project in Sindh with an initial investment of US $ 200 billion.Prime Minister said foreign investment will help the country attain its goal of self-reliance in power sector.

He was talking to the media after a callon by a foreign investors delegation at his residence here.

He said he was glad for the trust showed by the foreign investors in Pakistan.

The Prime Minister said the United States and Canadian entrepreneurs will finalise their project and work will start soon.

He said the project will help create more employment opportunities. The national exchequer will get tax revenue as well as it will help the country in its endeavour to achieve self-reliance in the energy sector.

Prime Minister Mohammedmian Soomro apprised that the group will jointly bring investment of about US $ 200 billion in the project while later more investment will be made.

Earlier, a delegation of Cathay Oil and Gas Company led by its Executive Chairman Robert M. Miller called on the Prime Minister at his residence here.

The other members of the delegation included Ian Brodie, David Beatty and David Farguharson.

Talking to media, the Executive Chairman Cathay Oil and Gas, Robert M. Miller thanked President Pervez Musharraf and Prime Minister Mohammedmian Soomro for their support for his company in its project. 

He said the Company is going to formally start work on the project in Sindh soon.

Associated Press of Pakistan - US-Canadian group to invest US $ 200 bln in power sector: Soomro


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## Bushroda

mujahideen said:


> Trade deficit swells to $2.053 billion
> 
> By Mubarak Zeb Khan
> 
> Trade deficit swells to $2.053 billion -DAWN - Business; February 10, 2008



This $100/barrel oil is now actually beginning to bite the developing countries. Hopefully US recession should pull down the cost to some bit.


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## Neo

*Non-productive foreign loans​*
Pakistan has obtained a total of $16 billion in loans from the Asian Development Bank for 127 projects since 1985, adding substantially to total foreign debt that together with external liabilities, now stands close to $42 billion. While the socio-political impact of foreign debts may be hard to quantify, the loans have largely been non-productive.

The economic and social benefits of such loans have been much less than designed or targeted, according to the ADBs own assessment. In five, out of eight ADB-funded sector loans, the performances over 22 years (1985-2006) have either been unsuccessful or partly successful. Even in areas where the ADB found its operations as successful, the countrys own problems are more serious than ever before.

For example, ADB has found its performance in energy, transport and communication and law and economic management sectors as successful, but for the nation, the challenges in these areas are enormous today. Delays in project execution, change in direction and objectives during the course of implementation (due to faulty project designing by both the bank and the government) , resulted in cost over-runs and non-achievement of targets, for which loans with heavy repayment costs were obtained from lenders.

The evaluation of ADBs country assistance programme has recently been done by its operation evaluation department. It is first such assessment of ADBs 22 years (1985-2006) of operations in Pakistan.

In areas that have a direct impact on social standards of the people, like health, nutrition, social protection, water supply, sanitation and waste management, the outcome has been described as unsuccessful. Likewise, the outcomes in agriculture and natural resources, education and finance have been rated as partly successful.

Delayed project implementation and extensions to loan closing dates are a perennial problem in Pakistan operations, it said. During this period, 85 per cent of closed loans required an extension, although this improved to 67 per cent for 2001-2006, it added. Pakistan projects have a similar level of success as those in Bangladesh and Nepal but lower than those of Bhutan, India and Maldives. By decade, the success rate of projects in Pakistan has been remarkably static, with no evidence of improving performance. This should be cause of concern, said the bank.

The analysis of project success by sector shows major differences in performance for Pakistan projects. Projects in the water supply, sanitation and waste management sector performed the worst, with only 20 per cent overall success rate, albeit on small numbers, and a 50 per cent success rate for projects approved in 1990s. The bank said that significant governance issues in the water and sanitation sector clearly remain unaddressed. It is most notably corruption that affects performance. The opportunity for rent-seeking activities in the distribution of an essential good such as water is high, it noted

The next worst performing sectors were education with a 29 per cent success rate and 50 per cent success rate for projects approved in the 1990s. Pakistans education sector is marred by corruption, strong gender and regional inequalities and insufficient budget allocations, leading to social imbalances and poor delivery of services in the public sector.

The ADB reports that, Pakistans education indicators are poor, even within the context of South Asia. Gender and regional inequalities are strong. Unless the performance trajectory changes markedly, Pakistan probably will not achieve the education MDGs (millennium development goals), said the report.

Finance sector projects with a 30 per cent overall success rate, influenced poorly performing projects with development finance institutions in the 1970s and 1980s and a 50 per cent success rate for later projects. Health, nutrition and social protection projects had a 40 per cent success rate, improving to 50 per cent for 1990s. Although many of the balance projects not rated successful were assessed as partly successful (i.e. desired results were not fully or efficiently achieved, or not sustained), this performance is dismal, it said.

Agriculture sector, the largest group with 33 projects had an overall success rate of 55 per cent with no noticeable improvement in the trend.

Multi-sector projects had a 56 per cent success rate overall. However, the multi-sector success rate dived from 75 per cent for projects approved in 1980s to only 25 per cent for those approved in the 1990s, influenced by the poor performance of projects supporting the Social Action Programme (of the Pakistan Peoples Party).

The report said Pakistans social and poverty indicators were below those of other countries with similar per capita incomes and have improved more slowly than others with similar growth rates owing mainly to only a 20 per cent overall success rate in areas like water supply, sanitation and waste management. Compared with Bangladesh, India and Sri Lanka, Pakistans school enrolment is lower, adult illiteracy is higher, and infant and child mortality rates are higher.

Pakistans achievement of its Millennium Development Goals (MDG) appears to be fraught with enormous challenges as well. Its average annual economic growth rate of 4.1 per cent over the last 14 years (1993-2006) has contributed to the protracted realisation of the MDG on poverty reduction. Although poverty incidence fell from 29.3 per cent in 1994 to 23.9 per cent in 2005, the proportion of Pakistans population still living in poverty was 32.1 per cent in 2005  significantly above the target of 13 per cent set to be achieved by 2015.

Infant mortality rate is 73 per 1,000 live births, child mortality is 100 per 1,000 live births and maternal mortality is 400 per 100,000 live births. The proportion of population areas at risk for malaria using effective prevention and treatment is 30 per cent, while the proportion of tuberculosis detected and managed through the direct observed treatment short course is 27 per cent. The proportion of the population with access to piped water is 66 per cent, while the proportion with access to sanitation is 54 per cent.

The Asian Bank said that the bottom-up (outcome) assessment of health sector operations was unsuccessful while top-down (physical implementation) assessment is partly successful, although on the lower-end of the scale. The overall sector rating combining bottom-up and top-down assessment is unsuccessful. That means that construction of buildings and capacity improvement may have been on the positive side, the service outcomes may not have improved due to corruption, absentee staff, missing equipment and medical supplies.

The ADB said that projects in urban areas often failed to turn a high rate, though usually much delayed, of output delivery  sometimes of doubtful quality  into positive development outcomes. An important factor is the financial and management weakness of the urban authorities concerned. Institutional strengthening components usually failed to deliver the intended results, or were only partially implemented.

Non-productive foreign loans -DAWN - Business; February 11, 2008


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## Neo

*Barriers in the textile exports​*
For about three dozen top groups, textiles still offers a lot of business prospects despite difficulties. But for many industrialists and traders, textile has become a losing proposition as they have either closed down or are about to shut their shops.

Textile landscape is now littered with dead and dying units, Adil Maehmood, Chairman of All Pakistan Textiles Association (APTA), the breakaway group of APTMA said over telephone from Lahore.

I see good business till June next but beyond summer right up to autumn and winter there is a big question mark, Iqbal Ibrahim, Chairman of All Pakistan Textile Mills Association (APTMA) told Dawn EBR. He represents one of the top textile groups.

As he explained, he was able to get good export orders last autumn which he is servicing now in winter. Of course, there are many problems and challenges he said pointing out that cotton availability remains a major issue for him. But the main problem Iqbal Ibrahim now faces is that his buyers are reluctant to book orders for next autumn and winter on fears of delayed supplies because of what they apprehend turmoil and troubles in the days ahead.

I am shipping textile products for which the buyers issued purchase orders, he said. For next autumn and winter, the buyers do indicate to place orders but with the instructions to hold on till the situation for them becomes clear in the coming weeks.

Almost all of the top groups have a well-laid network of marketing and information gathering infrastructure in Europe and USA. They have also ware housing facilities abroad. They enjoy tremendous clout with the government so much so that 15 textile mills in Punjab belonging to a few of these big groups managed to get their gas supply resumed when it is being denied to more than 150 textile mills alleges Adil Mehmood. He broke away from APTMA on the plea that interest of small textile businessmen was being ignored.

At least 108 mills were reported to have been closed down because of energy crisis. But with all this clout and influence at home, the top groups are not in a position to persuade their foreign buyers to visit Pakistan or convince them that the supplies against their orders will be transported and delivered on time.

Like many other businesses, textiles too is groaning under the impact of severe energy crisis, particularly in Punjab and in the North; high financial cost jacked up further by recent monetary policy has pushed up interest rate to 13 per cent on bank loans. And the drop in cotton crop has forced mills to import over three million bales and, of course, there is the law and order problem.

A series of bomb blasts in January and growing incidents of lawlessness is keeping foreigners away from Pakistan. On Thursday evening, Shabbir Ahmad a leading exporter of home textiles left for Mumbai to meet his buyers from European countries. Market reports suggest that local businessmen are meeting their foreign partners either in Europe, USA, Dubai, Hong Kong or some other places.

While hit by a negative image, many textile exporters are convinced that they could have made good money in western markets despite reports of recession setting in there. China has cut down on many cash incentives of its textile exporters owner of a textile mill said while quoting an American newspaper article which revealed that Chinese textile products are now relatively more expensive in the US market. Indian currency too has appreciated from Rs44 a dollar in May last year to Rs38 a dollar recently.

But when these golden opportunities of getting easy access to USA and European markets looked within reach, the cotton crop failed to yield projected 15 million bales. With promulgation of state of emergency on November 3 in Pakistan and subsequent follow up harsh administrative actions created feelings of political uncertainty. But the worst came in end of December, when Benazir was killed and for three days the upcountry remained cut off from Karachi port. This shattered the confidence of foreign buyers who now fear more bad days ahead. The top business groups took advantage of the situation in summer and autumn when Indian currency value appreciated and Chinese discontinued incentives to their exporters. They managed to secure good amount of export orders. Textile export maintained a sluggish growth from July to October. But from November the trend reversed to marginally negative that became more pronounced in December.

Textile and garments export fetched only $894 million in November which came down to $746 million in December. Total textile exports in July-December 2007-08 amounted to $5.25 billion. We hope some improvement in January export a senior official said over telephone from Islamabad. He is confident that textile export will pick up in February and in next four months net in a total of 12 billion dollars projected export earnings for fiscal year 07-08.

We will consider ourselves fortunate if we end up with $11 billion export earnings this year a Karachi exporter said. Exporters have pinned their hopes on the coming elected government. We can work out a short and long- term strategy with the future decision makers.

Textile industry leaders are convinced that their problems can be best solved if the government addresses industry as a whole. The government has to set in place a reliable infrastructure for the industry within shortest possible time. They also complaint that governments insistence on poverty reduction and improvement of per capita income to 1,000 dollars has denied textile exporters many incentives of access to the EU and the US market. Bangladesh exports more than $8 billion of textiles to US and Europe because it enjoys duty free access to the markets being a low income country. Pakistan is clubbed in middle income group and hence subjected to duties in EU and US.

Pakistan is still a poor country with a very low per capita purchasing capacity argues a businessman. His prescription is that the government should draw a strategy to generate employment in industry and agriculture, improve incomes, and expand domestic market and then create trade surpluses for export growth.

Barriers in the textile exports -DAWN - Business; February 11, 2008


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## Neo

*Developing fish industry​*
THE countrys main source of fish is the Indian Ocean. More than 100 species of fish exist with some 25 having commercial value Production of fish, both inland and marine, in 2006, was about 6,05,000 tons. Fish is a valuable source of foreign exchange earnings.

Other sources of fish are small rivers, dams, barrages, lakes, reservoirs, ponds and canals widely spread all over the country. In these areas of both sweet and brackish water fish of better varieties can be stocked. Facilities for breeding fish, improving its supply, and dissemination of technical know-how for improving its production and quality is being strengthened.

Fish is considered to be the best source of animal protein for human beings. However, Pakistan is one of the protein-deficient countries. Its per capita fish consumption is about 1.95 kg which is very poor as compared to other nations consumption. In Europe the per capita fish consumption is 20 kg and in Japan 64 kg.

Of the total marine fish harvested, about 42 per cent is consumed locally in the form of fresh fish or fish meal. The marine fish are disposed of or marketed as fresh, frozen or canned for local consumption. Fish protein has a high biological value. It contains variable quantities of calcium, phosphorus, fat and other nutrients important for human health and growth. Fish oil is a rich source of soluble fat. Excessive use of fish generally lowers blood cholesterol level and reduces risk of coronary heart diseases. Omega 03 found in fish or fish oil lowers blood pressure, blood become less sticky, and less likely to form clots.

Almost all fish such as salmon, herring, sardines, cod, lobster, tuna, sole, mackerel, crab, sprats, haddock, prawn, pilchards, oysters, plaice etc, contain Omega-3. Fish products are also used in the preparation of anti-viral, anti-biotic and anti-cancer agents. Fishmeal is used in manufacturing poultry feed, fish manure for fertiliser, fish oil as medicine and in the production of printer ink.

The country is endowed with large coastlines encompassing the most productive ocean in the world. The geographical setting is also ideal for the development of fish industry. There appears to be good prospect for further development of inland fish production, especially in the man-made reservoirs, waterlogged areas and the Indus delta region. Meaningful cultural activities, improved gears and fishing techniques are needed to boost this sector to further strengthen the economy.

A properly developed fish industry can be helpful in increasing exports and earning sizeable foreign exchange. Development of fishery can provide employment and growth opportunities to many small and middle-size communities living along the coastlines. A major factor in the development of modern fish industry is the establishment of adequate hatcheries and nurseries for various varieties of fish, and setting up of processing plants, storage and preservation facilities, and adoption of marketing techniques.

In addition, a properly developed fish industry requires the assistance of a host of allied industries such as manufacturers of gears, boats, engines and related items. Fisheries law and regulations should be implemented to protect the resources from over exploitation. Commercially important marine and shore animals and plants require special sanctuaries under the direct supervision of scientists. Whatever the technical, financial and research inputs, the desired rate of expansion of fisheries production and utilisation can be achieved only if due attention is paid to the intensive problem-solving research programmes.

Proper liaison may be established among fishery-related organisations like Parc, Wapda and the PCSIR on the one hand and the federal and provincial fisheries departments on the other. In view of the huge resources available, during the year 2006, out of total production of 604,900 metric tons, 425,000 metric tons was provided by the marine sector, whereas the contribution of inland sector was 179,900 metric tons. In marine sector, out of total production of 425,000 metric tons, 285,000 metric tons was contributed by Sindh coast whereas that of Balochistan was140,000 metric tons.

Different organisations have planned to establish research projects covering both marine and fresh water fisheries and allied aqua culture. Major emphasis has to be put on extensive surveys of fisheries resources conservation and fauna of mangrove forest wetland, post harvest deterioration of marine shrimps, fish and shellfish resources of coastal areas, breeding biology and seed production of commercially important freshwater fishes, feed formulation for fish culture, freshwater prawn culture, trout fish farming and fisheries management.

Developing fish industry -DAWN - Business; February 11, 2008


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## Neo

*Tourisms potential for economic growth​*
As a result of what economists sometimes refer to as post industrialisation, the structure of the global economy has changed profoundly over the last couple of decades. The shares of manufacturing and agriculture have declined significantly while that of the service sector has increased.

In several developed economies, services now contribute up to 80 per cent of the gross domestic product. Within services, some of the fastest growing areas include those that cater to the demographic change occurring in developed countries. The population in these countries is rapidly aging as the rates of fertility decline and advances in health care increases life expectancy. The demands placed on the economy by older people are different from those of the young.

Tourism is one area that has grown enormously as a result of the older citizens wish to travel and see the world. As shown in the Table-1, the number of tourists worldwide has increased by 35 per cent in the nine-year period between 1996 and 2005. In only two of the previous nine years, the rate of growth in tourism did not increase. There was a slight decline in 2001 and 2003 because of security concerns related to the 9/11 incident. Once these concerns were eased, the rate of increase in the number of tourists travelling across the borders of their countries picked up again.

The amount of revenues related to tourism has also increased significantly at a rate higher than the increase in the number of people classified as tourists. In 1996, revenues from tourism were estimated at $438 billion globally; they increased by 42 per cent to $623 billion in 2005. Revenue generated by each tourist increased from $730 to $813 in the 1999-2004 period.

Given this change in the structure of global demand raises an important question: whether Pakistan, like so many other developing countries, can also benefit from this change in the structure of global demand? The destination of foreign tourists now includes many in the developing world. China, India, several countries in East Asia  even the countries in the volatile Middle East  have benefited from this development. Could Pakistan join this league of nations or is Pakistan now regarded too risky a place for the western tourists to contemplate seeing many of its attractive sites? Before answering these questions let us see what is actually happening in Pakistan with respect to tourism.

The number of tourists arriving in Pakistan more than doubled in the 1996-2005 period, increasing from 369,000 to 998,000. The sharp increase in 2004 and 2005 period was the result of the influx of tourists from India, a trend that has not continued.

While the number of people coming to Pakistan has increased significantly it has not translated into a corresponding growth in foreign exchange receipts. Earnings from this activity increased from $146 million in 1996 to $185 million in 2005. Earning per tourist in 2005 was only $231 equal to less than one-third of the global average. Of the four provinces in the country, Punjab has been the most active in developing tourism. Pakistan today is a small player in global tourism.

The number of tourists travelling the country in 2005 was less than one per cent of the world total. Pakistans earning from tourism was only 0.03 per cent of the global average. These proportions are less than Pakistans share in global population (2.75 per cent) or in global output (0.4 per cent). The share of revenues and number of tourists travelling is much greater for the countries of East Asia, China and India. It is obvious from these numbers that Pakistan is not fully realising its potential. This could change if a different approach to the development of tourism was to be developed that first builds on developing an interest on the part of the citizenry to travel for pleasure within the country before attracting people from the world outside. Such an approach is better done by the provinces and by the districts in the provinces. In other words what is require is the local touch.

The sector has received some attention from the provincial government in Punjab since the creation of the Tourism Development Corporation of Punjab (TDCP) in 1987, an autonomous body set up under the Companys Law. The TDCP meets current expenditures from the revenues it generates while relying on the provincial public sector development programme for initiating new projects and programmes. In view of the troubled security situation, the corporation is focusing on the development of domestic tourism.

According to the managing director TDCP Mr Irfan Ali, the development work done by the provincial government over the last several years has considerably improved the infrastructure needed for the promotion of tourism. There has been a significant improvement in the network of roads, railways have improved their operations and begun to attract additional passengers, the standard of inter-city bus transport has improved and the private sector is engaged in building hotels and resorts. The corporation itself is making investments in resort development.

The TDCP strategy is to focus on the development of new sites which will not only open the areas unexplored by tourists. It will also help to lessen the pressure in places such as Murree, Nathiagalli, and Bhurban that have reached their absorptive capacity. Several places in the southern part of the Punjab are the focus of the corporations attention. Cholistan desert and the city of Bahawalpur, the main urban area in the desert, are being developed as tourist sites. The corporation has launched the Cholistan Desert Jeep Rally which has begun to attract a large number of visitors from all parts of the country. Its popularity is likely to result in its designation as an international rally in 2010.

The corporation is also focusing on the conservation of historical sites in some of the major cities in the province, in particular in Lahore, Multan and Bahawalpur. In Lahore, the corporation is engaged in many activities including identifying what it calls hidden sites. These will be of considerable interest particularly to domestic tourists if they are made aware of their historical and cultural significance.

Pakistan  and within Pakistan, Punjab  could draw a lesson from the experience of China in developing tourism. In the 1980s, the Chinese government began to promote domestic tourism. This was done by clustering holidays in certain periods which gave time to the people to travel. Once that was done, the government began to promote tourism among the members of the large Chinese diasporas spread across the globe. To accommodate this group, the government made large investments in developing the historical and traditional sites with which the diasporas were familiar. The third stage was to open parts of the country to foreign tourists. As their number increased, travel to new areas was allowed. This multi-stage strategy was successful in making tourism a large foreign exchange earner. Various provinces in Pakistan could follow a similar strategy.

That the Pakistanis from its various diasporas are important in tourism is indicated by Table 2. It shows that 692,000 tourists arrived in 2006 from the ten largest points of origin. In this the largest shares were from the United States (31 per cent) and the United Kingdom (14 per cent). These two countries have two of the three largest Pakistani diasporas. That Norway also figures amongst the ten largest origins of tourism is because of the fact that this country, albeit small in terms of population, also has a large Pakistani diaspora. There is in other words considerable potential for developing tourism in various provinces in spite of the perception that it is not a secure place for visitors. That perception may change as more and more people get acquainted with the country.

Tourisms potential for economic growth -DAWN - Business; February 11, 2008


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## Neo

*Moving deeper into debt​*
As the economic problems intensify, the government is opting for larger external as well as domestic debt. The external debt has risen to $40.32 billion from $33.32 billion over four years-- an addition of almost seven billion dollars since 2003-04.

Along with that, the domestic debt has also shot up by Rs228.34 billion in the first four months of the current financial year. The foreign exchange reserves have come down from $16 billion to $14.77 billion and the rupee has depreciated to 63 for a dollar in the open market. This has happened because of falling revenues, higher expenditure and widening fiscal and current account deficits. A weaker exchange rate means more payment in rupees for every dollar of debt.

The tax revenues have fallen as too many factories are closed or in partial production for want of power, gas and deteriorating situation. The factories which are doing too well like the cement factories are not paying their full taxes. Day after day, reports appear of massive tax evasion by major companies,. Otherwise doing very well. The tax evasion is also due to the collusion of the taxation officials, particularly in respect of sales tax refund.

The flourishing sectors like the stock exchange or the real estate pay minimal tax. If such low tax revenues are the result of evasion at one end, it is the outcome of corruption at the other end. Radical measures are being discussed to improve the tax collection. But in spite of the many reforms, more proposed than practiced, the revenue collection does not reflect business expansion.

The expenditure is also rising because of the law and order problem including compensation for the dead and the property losses and the need to rush large forces to new areas. The debt is rising because of the sharp rise in the price of crude oil (which recently touched hundred dollars a barrel ) and most imported food items including edible oil, milk powder, tea etc As a result, the sensitive price index which comprises of items consumed by the poor, has risen by 12.3 per cent. The food inflation is really high and is getting worse all the time.

The government is also cutting down the outlay on Public Sector Development Programme by Rs70 billion. But the PSDP is proposed to be doubled from $8 billion to $16 billion through private-public partnership, which is to be pursued seriously now.

The domestic borrowing is to be reduced through eliminating subsidy on oil. Caretaker finance minister Dr Salman Shah says that it will be wiped out in four instalments in as many months so that the next budget will have no subsidy. Meanwhile, the gas prices have been raised to reduce burden on the budget.

The issue is whether the consumers will be exempted from the development surcharge on oil and gas surcharge which is indeed very heavy. Now Dr Salman Shah estimates that Rs125 billion is to be collected through two new National Savings Scheme products. The interest rate on national savings will not however be increased as that could increase the financial burden of the government The borrowings from the national savings is anti-inflationary. The government has been making use of the national savings at a lower rate of interest which is higher than the average bank deposit rates..

In spite of the heavy borrowing, external as well as domestic, Dr Salman Shah says the total borrowing is lower than eight years ago. And the per capita income, he says, has risen from $450 to $1000 so the government can afford to borrow more without causing any serious upsets.

Another drain on the foreign exchange resources is the heavy profit remitted by foreign companies which are allowed to remit 100 per cent of their earnings. In view of the economic uncertainties, the companies are not retaining their profit with them but dispatching them home post haste.

What is not understood is that while the privatisation proceeds are mentioned as part of the revenues, the understanding is that the 90 per cent of the proceeds will be used for repaying the loans and 10 per cent for the development of the country. But now the total income from privatisation is mentioned as the revenue of the state.

Moving deeper into debt -DAWN - Business; February 11, 2008


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## Neo

*What has monetary policy delivered?​*
On January 31, the State Bank of Pakistan (SBP) further tightened the monetary policy (MP) for January-June, 2008. The MP tightening commenced in July,2005 to control inflation which had reached 9.3 per cent a month earlier.

The main ingredients of the MP are: (a ) 0.5 per cent raise in the policy [discount] rate from 10 to 10.5 per cent (this rate was 9 per cent in July,2005 when the tightening policy commenced) and, (b) increase of one per cent in the Cash Reserve Requirement [CRR) on bank deposits up to one year maturity.

SBP authorities say that the monetary policy can impact the core [non-food/non-energy] inflation only if the government takes supply side administrative steps to control the food inflation.

SBP authorities have also been telling the people that a period 12-18 months is required for monetary measures to make an impact. The CPI inflation which was 9.3 by the end FY-05 decelerated to 7.9 per cent by the end of FY-06. The CPI deceleration in FY-06 cannot be attributed to monetary tightening in that year as per the parameters indicated by SBP.

It is, however, strange that the CPI did not decelerate during FY-07 and it stood at 7.8 per cent ( depicting a very marginal change of 10 basis points) at the close of the fiscal. It indicates that monetary tightening did not work.

The situation has become worse in the current fiscal as the CPI has touched 8.8 per cent by December,2008. It is argued that the main factor of rise in overall CPI inflation is the high food inflation put at 12.2 per cent.

As for the core inflation [non-food/non-energy] which, as per SBP, responds to the monetary measures, it was 7.6 per cent in September,2005 and showed decelerating trend in the fiscals FY-06 and FY-07.But after the tightened monetary policy remaining in force for 2 ½ years, it has shot up to 8.7 per cent [year over year]by end December,2008. Thus the CPI and core inflation converged at the same level by the close of first half of the current fiscal. How and why has this happened? Let us examine:

The SBPs view that the food inflation can be controlled only through supply side measures by the government is half truth. Its reports are replete with assertions that bank loans have been misused by borrowers for hoarding of wheat/ sugar and other food items. Was it not incumbent on the SBP to have initiated measures to stop the misuse, inter-alia, by recalling these loans, putting such loans on high margins or completely banning loans against sensitive food items?

No such effective measure were visible during last eight years. No doubt, in 1986 during the serious sugar crisis, the SBP banned bank advances against sugar and the import of sugar on deferred payment basis by precluding opening of usance letters of credit. These measures remained in force for quite sometime.

Some half-hearted efforts were also made by the SBP viz-a-viz the sugar crisis a few months back and it will be relevant to quote the footnote appearing on page 39 of the SBP report for the quarter July-September,2007:

With a view to discourage hoarding of sugar and to ensure stability in its prices, SBP on June 9,2006 directed banks to ensure that all advances against the security sugar stock are fully adjusted latest by 31st October, 2006. Further, all renewals / fresh disbursements were made subject to 50 per cent cash margin requirement with the instruction that such advances are made only after a clean up period of at least one month.

The above policy measures were, however, [promptly] withdrawn on October 27, 2006 [SBP BPRD circulars Nos. 4,10,and 15 of 2006].

Another purpose of monetary policy is to keep the credit/ monetary expansion within specified limits. Keeping in view the projected GDP growth of 7.2 per cent and inflation at 6.5 per cent, the monetary expansion [M-2] during the current fiscal [FY-08] should be 13.7 per cent. However, the annualised monetary expansion for the current fiscal is estimated at much higher level of 19.2 per cent.

The government borrowing from the SBP seems to be the major reason for it because it was asked by the SBP to retire borrowing to the extent of Rs62.3 billion during FY-08 but up to January 19, ,2008, the borrowing from SBP reached Rs237.1 billion. The government borrowed from SBP for retirement of commercial banks debt to the tune of Rs3.1 billion. So the SBPs stock of government Treasury bills have reached Rs624.6 billion.

This has happened despite heavy additional accruals to the government from various domestic sources as follows: (a) higher tax collection--Rs19.4 billion, (b) Pakistan Investment Bonds Rs41 billion and (c) National Savings Scheme Rs26.5 billion. The total (a)+(b)+(c) is at Rs86.9 billion.

Section 9 A (b) of State Bank Pakistan Act,1956, as amended to-date, authorises the board of directors of the bank to determine and enforce, in addition to the overall expansion of liquidity, the limit of credit to be extended by the bank[SBP] to the federal and the provincial governments and other agencies of the Federal government for all purposes, it being understood that the governments will meet their additional credit requirements directly from commercial banks through market based auctioning system to be conducted by the bank [SBP]. In FY-08, just the reverse is happening even though the SBP is cognizant of the fact that the government borrowing from it is highly inflationary.

The question is, why the government is substantially dependant on borrowing from SBP? For the simple reason that these borrowings are virtually cost-free because whatever interest is paid by the government, it reverts back to it, as the SBP profits are transferable to the government.

On whom the responsibility for tall this devolves and why? Obviously on the vulnerability of the SBP before various mafias like wheat, sugar hoarders etc. which have become extra-ordinarily strong during the last decade and because the federal government did not permit institutions to become stronger and play their statutory role in an effective manner.

The net result is that the tightened monetary policy has utterly failed to achieve its designed objectives. It has merely become the tool of increasing lending rates thereby increasing the cost of business as is being continuously complained by the business community and enabling banks to make high profits. The lending/ deposit spread is still 7.1 although the efficient banking warrants it to be around 3-3.5 per cent.

The SBP also seems to be vulnerable before the banking community as they do not accept its advice to share their huge profits with the depositors by giving fair returns. One of the reasons is the monopoly of five large banks which together control about 60 per cent of the deposits/ advances. SBP has further encouraged monopolies in the banking sector though mergers and acquisitions.

What will be outcome of the tightened monetary policy in the long run? The closing down of the businesses due to high cost, discouragement to the depositors resulting in containment or fall in savings/GDP ratio (The ratio is already much lower when compared to the neighbouring countries] and business community shifting to the foreign currency loans because of lower cost resulting in partial dollarisation of the economy.

The MP expects the CPI to remain at eight per cent by June,2008. This does not seem possible because government borrowing from SBP is not expected to halt during the rest of the fiscal and depreciation of rupee against dollar (to the extent of 3.7 per cent during July 1,2007- January,19,2008) The rupee may further depreciate by the close of the fiscal, adding to imported inflation and the elected government will have to pass on the impact of increase in international oil prices to the public.

Apart from that, incapability of the SBP/government to stop misuse of bank loans and the lack of effective control over the hoarders will simply add to the bleak side of the picture. These factors will accelerate the inflationary pressures and one should not be surprised if, by the close of the current fiscal, inflation accelerates to over 9-9.5 per cent.

What has monetary policy delivered? -DAWN - Business; February 11, 2008


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## Neo

*Investors play safe as general elections approach​*
STOCKS last week failed to extend steadiness as investors were not inclined to take long positions even on the blue chip counters ahead of the general elections, but there was no large selling and only extreme gains were pared off at the inflated levels on some of the high-profile shares.

However, larger fall was averted as both bears and bulls maintained a status quo and did not indulge in large selling on any of the counters and mostly held on their positions as was reflected by falling volumes.

With the elections just a week away, investors played safe and did not indulge in speculative buying or bargain-hunting.

Keep-safe appeared to be the hallmark of the entire trading session as was reflected by the either-way fractional price changes and extremely narrow movements of the KSE 100-share index.

It mostly moved within a narrow range of about 60 points, showing modest fall and gain between 14,000 or 13,990 points and finally ended at 13,938.33, off 36.08 points. But, on the other hand, its junior partner the 30-share index gained 35.29 points at 16,701.32.

As leading investors failed to find cue to the keenly contested election results or the possible winner, no one was inclined to make bigger commitments even at the current lower levels because of risks involved in holding long positions in pre-election sessions.

The entire trading appears to be a jobbing affair as investors bought at the fall and sold at the rise the same day, without carrying out the backlog, said a leading broker. Even some of them bailed themselves out the same day at a loss.



That perhaps was natural amid suicide attacks, violence in other forms including death of eight high-ranking army officials in a helicopter crash and political tension and uncertainty, he added.

The cold wave in the city also took a massive toll of the daily volume, which shrank to only 128 million shares as investors preferred to keep themselves warm indoors rather than indulging in business of shares, a leading stock analyst Hasnain Asghar Ali said. The lowest daily figure is well below 100m shares.

The markets real trend will be known after the elections and smooth transition of power to the wining party. If there are protests after the elections on the charges of rigging, the market could pass through further recession, most analysts believe.

Selective support was, however, witnessed on selected counters, which in turn had a stabilising impact on the market and forestalled panic buying from any quarter.

Bulk of the support was terribly cautious, reflecting worries about the general elections and law and order, mainly in the backdrop of occasional suicide attacks.

The heating up of political scenario as the deadline of Feb 18 is approaching, in a way also appears to be an inhibiting factor as no one is clear about precise outcome or the election results, analysts said.

The off-repeated allegations of pre-election rigging, violence during polling and whether or not the contenders of power will accept the verdict of people, are some of the concerns of the investor having toll in the form of daily volumes, they added. But as far as the corporate scenario is concerned, it is fairly encouraging both in terms of company earnings, payouts and exports despite a short cotton crop, which could keep the market in good shape, some others said.

However, despite more than one irritant, buyers are there in the market. Those who were not inclined to take the risk and wanted to play safe opted for the low-priced issues. But big ones are playing in the blue chips according to their whims.

The volatile performance of the market also reflects this phenomenon, indicating that no one is inclined to take risk at this stage at least until the elections.

Forward counter: Mixed trend was seen on the cleared list as investors played on both sides of the fence but mostly selling at the rise. The MCB, Pakistan Oilfields, and Pakistan Petroleum and some others managed to finish with modest to good gains but on the other hand Arif Habib Bank, Bank of Punjab and Fauji Feriliser Bin Qasim and some others tended lower on profit-selling.Muhammad Aslam

Investors play safe as general elections approach -DAWN - Business; February 11, 2008


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## Neo

*Oil, gas E&P companies: FBS seeks 10-year investment data ​* 
ISLAMABAD (February 11 2008): The Federal Bureau of Statistics (FBS) has sought data of investment in Pakistan in last 10 years by all multinational and domestic oil and gas exploration and production (E&P) companies. Sources said that FBS has circulated a four-page form to multinational and domestic E&P companies, seeking volume and area of investment made in oil and gas sector of Pakistan during the past one decade.

They said that data on investment would give the exact size of investment in Pakistan's oil and gas company and enable the authorities to frame policies for the future. The Federal Board of Revenue (FBR) is also working parallel to FBS for seeking fresh data from different sectors for evaluating their taxation potential and actual taxes paid by the taxpayers. The availability of data will make it possible for the authorities to work out an effective strategy for plugging taxes evasion.

Reliable data is a serious problem in Pakistan. One can hardly find any sector which possesses reliable data. This issue is not only confusing the officials to know the exact picture of any sector, but also plaguing Pakistan's economic progress and potential. The officials concede that non-availability of reliable data was making the policy work difficult, besides creating unfavourable environment for those sectors which are comparatively performing well.

The seriousness of the issue has been noted at the highest level following a number of meetings held during the last one-and-a-half years. President Pervez Musharraf took serious notice of contradictory data of different departments, particularly the State Bank of Pakistan (SBP) and Customs, on exports and other several key areas in a meeting held here some time back and directed the FBS to come up with the latest technology and computerised system to compile reliable data. He showed annoyance over poor performance of FBS in collecting the fresh data from the government departments.

A senior official of Science and Technology spoke on data collection and dissemination for information at a roundtable conference here. He shared with the participants the importance of reliable data and its timely dissemination for information of other government departments. He said Pakistan's data collection and dissemination system was not up to the mark but efforts were being made to change the entire system and get reliable statistics as mush as possible.

The data on investment will enable the concerned authorities to come up with a clear picture as to what was the actual volume of investment in Pakistan during the last one decade.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Businessmen urged to invest in food processing sector ​* 
LAHORE (February 11 2008): The Provincial Minister for Livestock and Dairy Development, Mumtaz Khan Mainas, has urged the business community to make investment in food processing industry as it has huge export potential. He was addressing the members of the LCCI where the President, LCCI, Mohammad Ali Mian, Senior Vice President, Mian Muzzaffar Ali and Vice President, Shafqat Saeed Piracha were among the noted speakers.

The minister pointed out that Pakistan is the third largest milk producer and is producing 38-billion litre milk annually, but only 3% of the total production are being processed. He called for mechanised and modern dairy farming, slaughterhouses and butcheries. "China and India are our major competitors in livestock sector", he said.

Further, the minister said that more than 4 million animals were being annually slaughtered during Hajj and these animals are being imported from New Zealand, Australia and some least developed countries like Somalia and Yemen. With such a huge number of live heads available in the country, Pakistan should also capture its share and urged to develop indigenous breed.

The President, LCCI said Pakistan is predominantly an agrarian economy with a vibrant livestock sector and the third largest milk producing country, but has not been able to fully exploit its potentials. He said the government should equip the livestock and dairy sector with modern technology so that Pakistan, after attaining self-sufficiency in milk and meat, could be able to earn much needed foreign exchange by exporting these products.

Business Recorder [Pakistan's First Financial Daily]


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## Introvert

*Pakistan's housing sector to attract huge foreign investment*
Submitted by Mudassir Rizwan on Mon, 02/11/2008 - 11:49. 

Islamabad : The housing sector would attract a huge foreign investment of $1.5 billion to address the acute housing problems in Pakistan, said Caretaker Minister for Housing and Works Nisar Muhammad Khan.

For the first time, such a huge foreign investment will come to the housing sector in Pakistan," he told the reporters.

The minister said a Memorandum of Understanding (MoU) in this regard would be signed very soon.

Khan said their non-implementation of the national housing policies prepared in 1992 and 2001 complicated the housing situation in Pakistan. He said he would soon meet President Pervez Musharraf and discuss the issue.

About the launching of new housing sectors in Islamabad, the minister said unfortunately this should have been done as a top priority and up to the required level.

He said 500,000 housing units should be built per annum to meet the growing needs and clear the backlog.

Pakistan's housing sector to attract huge foreign investment | Indian Muslims


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## Neo

*Competitiveness only way to benefit from globalisation ​* 
Tuesday, February 12, 2008

LAHORE: US Consulates Principal Officer in Lahore Brian Hunt has said the US and Pakistan share bilateral information and they can learn not just from each other but also from all stakeholders that the Competitiveness Support Fund was bringing together.

Speaking during a roundtable on the State of Pakistans Competitiveness Report 2008, he said the report would give a roadmap on Pakistans economy to the government, which was endorsed by the US government.

Brian Hunt said globalisation was a reality that countries could no longer escape and competitiveness was the only way to benefit from globalisation and not become a victim of it.The second State of Pakistans Competitiveness Report 2008 will provide a snapshot of the strengths and weaknesses along with key positive and negative trends in the economy, as well as regional competitiveness trend in each of the provinces.

The report will include recommendations on how to leverage Punjabs strengths and weaknesses in global and domestic markets, through sustainable growth engines tied to investment in human capital.

The preliminary finding highlights Punjabs potential to create world-class manufacturing clusters (geographical agglomeration of firms and related entities), and its sophisticated factor advantages (educational institutions and a relatively well-educated labour force).

However, Punjabs economic sectors are highly vulnerable to international competition. Its products, ranging from agricultural commodities to manufactured goods, are based on easily imitable advantages such as cheap labour with insufficient product differentiation.

Some of the recommended directions for Punjabs firms include investing in sophisticated products through better customer research, exploring forward integration possibilities, understanding the provinces relative position and improving inter-firm cooperation.

The roundtable was jointly organised by the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and the Competitiveness Support Fund (CSF). It was attended by leading representatives of the business, public as well as private sector and academia.

Competitiveness Support Fund Chief Executive Officer Arthur Bayhan told the conference participants that the competitiveness report would be an important policy tool for Pakistans economic growth agenda and for private sector investment. The report will also include an action plan and timetable to improve key industries that will boost economic growth of the country.

Competitiveness only way to benefit from globalisation


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## Neo

*CMC to establish 375MW coal power plant at Thatta*​
KARACHI: A Chinese coal-power producing company, China National Machinery Import and Export Corporation (CMC) is seeking 10 cents per unit to generate electricity in a semi-urban Sonda-Jherruk, Thatta, sources told Daily Times.

The company has dispatched its first tariff proposals to the governments concern department asking to sale electricity at the cost of 10 cents per unit, sources in Sindh Mines and Mineral Department told. 

The CMC has obtained license from the Sindh government for 56.7 square kilometer area at Sonda-Jherruk, Thatta District recently and it has planned to generate 375 mega watts electricity The company has already completed feasibility work of coal mining project. 

Currently, it is conducting thorough project feasibility for coal power plant and it would submit it to Private Power Infrastructure Board (PPIB) for tariff approval at the end of this month, the sources said.

In its another feasibility report, the CMC has identified that coal mining capacity of deposit at Sonda-Jherruk was calculated around 1.2 million tonnes per year, which is considered as a sufficient stock for power plants in next many years. 

The CMC is a Chinas state-own company having sound technical expertise in producing electricity from coal-based power plants. It was previously considering 9 cents per unit but following increasing in cost, the company now demanded 10 cents. The sources said that if the power purchase agreement is finalised with the government authorities then the national grid would get additional 375MW electricity in one and half years. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Indian minister seeks FDI from Pakistan*​
NEW DELHI: The Indian Commerce Ministry has asked the government to allow foreign direct investment (FDI) from Pakistan  currently the only country that is not allowed to do so. 

In a letter to External Affairs Minister Pranab Mukherjee, Minister of State for Commerce Jairam Ramesh said that there was no justification to continue with a blanket ban on the FDI from Pakistan when India had lifted such a ban from Bangladesh and other countries. 

He suggested permitting FDI from Pakistan on case-to-case basis. Dismissing the impression that FDI from Pakistan could cause security concerns, Ramesh recommended to use the Foreign Investment Promotion Board (FIPB) route to vet any security concerns.

He said the case for pushing the Indian FDI into Pakistan would be strengthened if India removed the ban on investment from Pakistan. 

He said such a move would also substantially address Pakistani fears of a huge trade deficit with India, adding that similar concerns seemed to exist in the Indian government on trade with China. Trade bodies and analysts say that such a move would create mutual trust and confidence between India and Pakistan.

Bangladesh was the second last country on the FDI negative list. After its removal from the negative list, Indian corporate giant Tata group has proposed a $3 billion investment plan for Bangladesh in the power, steel and fertiliser sectors. 

The Tata investment, if done, would be almost equal to the total FDI in Bangladesh since 1971.

Sources said that currently the Indian government was reviewing around 744 trade items that were on the negative list of imports from South Asian Association of Regional Corporation countries, adding that the list is likely to be shortened.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Budgetary deficit could widen: Dr Ashfaque ​* 
KARACHI (February 12 2008): Pakistan has got some $9.3 billion assistance from United State during the last six and a half years, while it has not received a single penny for reimbursement during the current fiscal year which could raise the budgetary deficit.

Talking to newsmen after a seminar was held at the Management Association of Pakistan (MAP) on Monday, Finance Special Secretary and General Debt Office Director Dr Ashfaque Hasan Khan said that although US has given huge amount, the actually cash amount is not more than $1.5 billion.

About the US assistance, he said some $5 billion the country has received for reimbursement, which has already been spent on the provision of services to US. In line with the Camp David Agreement, US is to provide to Pakistan with $600 million annually, including $300 million for military assistance and $300 million for economy.

However, thrice some $297 million has been paid during the last three-year in the context of military assistance while the remaining amount would be adjusted for purchasing various equipment, he said. In addition, Pakistan has received $600 million for the economy during the last three-year and some 100 million annually through USAID, while it will receive $300 million in the next two-year through USAID, Dr Ashfaque told the newsmen.

He said that US debt on Pakistan was $3 billion of which some $1.5 million was also adjusted under the same package and overall $1.4 billion was received for military assistance "We are still spending on US services during the current fiscal year, however, not a single penny has received from the US for reimbursement, which may push the budgetary deficit upward in the fiscal 2008," he said.

Presenting the performance outlook of economy, he said that during the current fiscal year, the oil import bill would surpass $10 billion mark following soaring oil prices in the international market. Dr Ashfaque said that high oil prices, food inflation, rising import bill, change in commodity prices, pressure on current account deficit, and budget are the key challenges for the economic growth.

The rising import bill has also put a negative impact on the current account and also pushed the commodity prices upward globally, however, the current account deficit is still lower than 5 percent of GDP, he added.

Dr Ashfaque said that few days back Pakistan was taking dictation from IMF and country's all economic policies depended on the IMF policies, however, at present, the situation has been changed and Pakistan has their own economic policies.

He criticised the media, saying that the media is not playing its role on right way but misguiding the masses as well as foreigners. During the current fiscal year, country's tax collection would be approximately $17 billion, while development expenditure has reached $8.8 billion, Ashfaque added. He said that this perception is wrong that country's debts are increasing, adding that debts have been 55.2 percent of GDP, while law allowed 60 percent debts.

The first half of current fiscal year, all economic indicators have performed well, as LSM, tax collection, exports, imports and forex have significantly gone up, he said. He said at present, the government is paying billions of rupees subsidy to stable the prices of oil and commodities. "If the government could not pay subsidy on the imported wheat then wheat flour would be sold at Rs 45 per kg in the local market," said Dr Ashfaque. On the occasion Farooq Hasan and Aftab Ahmed Khan also spoke.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Raising $250 million from global market: SCB made lead manager for PIA Sukuk bond *​ 
ISLAMABAD (February 12 2008): The government has appointed Standard Chartered Bank as lead manager for PIA Sukuk bond to raise $250 million from the international market, besides picking- up Mezan Bank-led consortium of the local banks for raising Rs 13.7 billion from the local market.

The global Sukuk bond will mature in five years and maturity period for the local Sukuk will be eight years. The profit on both bonds will be equal and its percentage will be worked out in next few weeks.

Sources said the Standard Chartered Bank and the Mezan Bank-led banks' consortium will study the local and international markets and suggest the government the time and exact size of the issue. The PIA and other concerned departments hope that the lead manager will complete the entire process of studying the global and local market. Holding of road shows in the international market for the bond issue and other formalities by the end of March and this will be followed by formal launching of the Sukuk bond.

Three international giants - Standard Chartered Bank, Citi Bank, and Bank of Shanghai - were in the race for getting the job of lead manager for facilitating global Sukuk issue. Similarly, the consortiums of more than three local banks had given presentation to the government economic managers in Islamabad and showed their strong commitment to raising desired money for PIA from the local and international markets.

In a meeting held last week, the authorities of the Ministry of Finance (MoF), two PIA and other departments officials had discussed the detailed presentations of the contestants and finally decided to give the job for global Sukuk to the Standard Chartered Bank and for the local Sukuk to the Mezan Bank-led consortium.

The Sukuk bond floating is a part of PIA's restructuring plan to make this national flag carrier financially strong and take a big leap forward to gain more international market.

The government had approved a restructuring plan for PIA sometimes back. Market analysts are of the view that since the Sukuk bond will be interest-free on sale-purchase principle, the PIA issue is going to get good response from the local as well as international market. They also believe that PIA will be in much comfortable position in terms of financial requirements after raising money through Sukuk.

Business Recorder [Pakistan's First Financial Daily]


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## mujahideen

Rupee price of dollar at six years' peak

KARACHI: The rupee price of dollar jumped to Rs62.94  highest in the past six years- at the close of inter bank market on Tuesday. 

The rate of dollar stood at Rs62.93 on June 13, 2001.

Higher payments of import bills are responsible for increase in demand and resulting rise the rate of dollar, dealers said.

Rupee price of dollar at six years' peak


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## Neo

*5.5m animal sacrifices on Eid may boost leather exports​*
* Buyers from European Union and Far East prefer skin and hides of Pakistani animals​
KARACHI: Around 5.5 million sacrificial animals were slaughtered in three days of the Eid ul Azha in the country, former chief of Pakistan Tanneries Association said here on Monday.

Around 20 percent of the skin and hides are damaged due to mishandling by novices resulting in loss of millions of dollars to the national exchequer, Gulzar Feroze said while talking to Daily Times.

He said some two million cows and calves, more than 3.5 million goats besides nearly one million sheep were sacrificed this year.

International buyers prefer to buy the finished leather especially made from skins and hides of sacrificial animals, as they have much stretching quality, healthy and fresh material, he said adding that European buyers give premium to Pakistani exporters. 

He said the buyers of European Union and Far East prefer skin and hides of Pakistan animals besides leather garments.

PTA rejects the allegations of some quarters that Pakistan is exporting vet leather, which is denting the export potential of the finished goods, he said adding that there is 20 percent duty on vet leather export whose export is only 5 percent. 

Former PTA President said the leather garment share is around 65 percent in our total exports and it is the second largest export of the country after textiles, which stand around $1,125 million during 2005-06. We had some 24 percent decline in our exports during 2006-07 due to various reasons including low grade raw material and demand and supply mechanism.

He said our material meets international standards at par excellence but there is need to bring mechanised slaughtering to boost our exports. Once our exports were in a billion dollar club but due to lack of concentration from the industry as well as government we see a decline, he added.

Mr Feroz suggested resuscitating two slaughterhouses (abattoirs) at Cattle Colony Landhi, which were lying closed for over 25 years. The slaughterers are forced to sacrifice animals in a makeshift slaughterhouse, which has also been damaging the quality of skins and hides.

At present, the building structure of the abattoir, spread over one-acre is in an acceptable condition and needs little renovation work, however, the rust has almost destroyed the costly machinery imported from Yugoslavia in the past.

The highest increase of 115 percent was recorded in export of leather gloves ($152 million) sub sector during 2004-2005 by 64 percent increase in leather goods export ($22 million), 22 percent increase in leather footwear ($96 million) and 18 percent increase in leather export ($296 million) over the corresponding period of 2003-2004.

Export of leather products could jump to one billion dollars again as it is a time to improve our leather products so that we could achieve certain targets and share in the international market, Mr Feroz added.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Govt prepares contingency plan to create Rs60bn fund ​* 
It will allow banks to make speedy payments of PDC to oil companies​
Wednesday, February 13, 2008

ISLAMABAD: The government has prepared a contingency plan by allowing banks to create a fund to the tune of Rs60 billion for ensuring speedy payments of Price Differential Claims (PDC) to the oil marketing companies, enabling them to improve their stocks up to the required minimum level of 21 days. 

Improving cash inflows of major oil marketing companies, the oil reserves have improved from six days to 11 days in the recent few weeks. We want to improve the petroleum oil lubricants(POL) stocks up to the required minimum level of 21 days and efforts are under way to ensure speedy payments related to PDC to the oil marketing companies such as PSO, Shell, etc, a high-level official in the caretaker government told The News here on Tuesday. 

The finance ministry has been pursuing all commercial banks through state-owned National Bank of Pakistan (NBP) for arranging required financing for meeting the growing expenditure side especially related to the payment to major oil marketing companies. 

The banks want a smooth mechanism in order to avoid delays and the federal government is working on this plan for speedy payments in the remaining months of the current fiscal year. The finance ministry in consultation with other stakeholders including Ministry of Law and Justice, State Bank of Pakistan and commercial banks are contemplating upon various options for placing a contingency plan. 

The decision to freeze the POL prices at the existing level would hit the national exchequer by Rs135 billion during the current fiscal year. The Shaukat Aziz government had allocated Rs25 billion subsidy for POL products in the current fiscal years budget so the economic managers are running from the pillar to the post for arranging the remaining required amount of Rs110 billion. 

So far the government has made payments to the oil marketing companies to the tune of Rs50 billion in the current fiscal year, said the sources and added that the government was working to place a mechanism by creating maximum ceiling up to Rs60 billion by establishing a consortium of commercial banks in order to avoid delays in payments to the oil marketing companies in shape of PDC. 

The POL stocks decreased to the minimum level of 6 days in after the December 27 violence mainly because of delayed payments to the oil marketing companies. Neither the independent power producers (IPPs) nor the oil marketing companies have maintained the minimum level of oil stocks owing to which the energy crisis worsened in the recent past few weeks. The payments to the oil marketing companies delayed in the recent past because of prolonged procedures required to get vetting from the Ministry of Law for making payments. 

The scarcity of resources and growing expenditures have left the government with no other option but to pursue the commercial banks for providing the credit-line for financing the fiscal deficit during the ongoing financial year. 

The government is likely to miss its envisaged fiscal deficit target of 4 per cent of the GDP in the current fiscal year which means that the government will have to arrange financing of around Rs400 billion to Rs450 billion in the current financial year. 

Govt prepares contingency plan to create Rs60bn fund


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## Neo

*SBP chief rules out devaluation of rupee​*
KARACHI, Feb 12: State Bank of Pakistan Governor Dr Shamshad Akhtar has firmly ruled out any possibility of devaluation of Pakistani currency and declared in categorical terms that we will continue with the current system of exchange rate.

We will not like exchange rate to be destabilised, the governor warned currency speculators while speaking to members of the All-Pakistan Textile Mills Association (Aptma) on Tuesday in which members from Lahore and Peshawar also participated besides those present in the Karachi office.

Rupee has depreciated in value against dollar, she asserted, while making it clear that it was not a devaluation when someone pointed out that rupee-dollar parity was somewhere Rs62.80 recently.

She recalled that for almost two years, the rupee-dollar parity showed consistency, but from November 2007 when oil import bill went up to 915 million dollars, trade deficit increased and expanded the current account deficit.

In December, the oil import bill claimed another 920 million dollars, she pointed out and warned of this trend showing no respite in future also because we now consume much more oil than previously. Hence, payments on account of oil imports are also higher and its resultant impact was on exchange value.

Coupled with the rising oil bill was the market sentiment because of promulgation of state of emergency on Nov 3 which gave some room to speculators to play their game.

Responding to a suggestion that business be given facility of foreign exchange borrowing, the State Bank governor disclosed that it was on Tuesday morning that she approved one such case after making full assessment.

We can consider such requests on case-to-case basis and if found competitive and viable, there is no reason to deny this facility.

Mr Qasim Nawaz, a director of the SBP, informed Aptma members that a sum of Rs3.2 billion had already been reimbursed to textile mills against approved amount of Rs6 billion under the long-term financing arrangement.

The international environment is getting worrisome, Dr Shamshad Akhtar remarked, while speaking about the sub-prime mortgage crisis in the US which was now impacting Europe also and had started affecting countries, like China, Malaysia, Philippines and Indonesia that depend heavily on US market for their electronic goods export.

Thank God, Pakistan and a few other countries are so far insulated from the affect of this crisis, she said, but wondered as to how long.

She said that a large sector can fight the situation and meet challenges. You try to realise the privileges you enjoy, the governor reminded them of incentives and subsidies.

Aptma chairman Iqbal Ibrahim held governments excessive borrowings mainly responsible for mounting inflationary pressures.

SBP chief rules out devaluation of rupee -DAWN - Business; February 13, 2008


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## Neo

*New govt to face tough economic challenges​*
KARACHI, Feb 12: Whoever wins the February 18 election can be sure of one thing -- there will be no economic honeymoon.

With annual inflation at its highest in over a decade, the rupee at 6-year lows against the dollar, a hefty trade deficit, pressure from high international oil and food prices and domestic energy shortages, there are pressures on all fronts.

There are numerous challenges ahead. There is heaps of trouble, said Asad Sayeed, director of private analysis group, the Collective for Social Science Research.

They (the previous government) have left a monumental mess, virtually on every front.

Compounding matters, whoever comes to power in what will mark a long-awaited transition from military to civilian-led rule, will also face the tug of populist expectations of a mainly rural electorate struggling in the face of high food prices.

Consumer prices in January rose 11.86 per cent from a year earlier, their highest level in 10- years, which analysts attribute to food shortages they say are due to a weaker agricultural crop and government mismanagement.

The caretaker government blames wheat smuggling to neighbouring Afghanistan and hoarding by shopkeepers for the shortfall.

Inflation is high and its accelerating, the governments borrowing is out of control, said Sakib Sherani, chief economist for ABN Amro Pakistan.

The governments interest burden has gone up over the last few months. Its debt servicing burden has gone up, foreign exchange reserves are ... declining, he added. So all in all, its actually going to be a fairly challenging scenario for the next government.

The State Bank of Pakistan last month revised down its economic growth forecast for 2007-08 to 6.6-7 per cent, citing a weak farm sector that has been one of the engines of growth averaging about 7 per cent a year since 2002.

Pakistans trade deficit widened sharply to $2.05 billion in January, double the previous months gap, which analysts attributed in part to factory shutdowns in the wake of the assassination of Benazir Bhutto on December 27.

Foreign investment in the first six months of the fiscal year fell 32 per cent to $2.17 billion from a year earlier, with foreign portfolio investment down 92 per cent, central bank data shows.

New govt to face tough economic challenges -DAWN - Business; February 13, 2008


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## Neo

*Afghan equation in Pakistani economy ​* 
KARACHI (February 13 2008): Traditionally, Afghanistan, a land-locked country with no access to the open sea, has depended on Pakistan for its imports and exports. The most important single item that goes to Kabul via Peshawar is POL (petroleum oil & lubricants). Edibles particularly wheat flour, textiles and other merchandise form the rest.

Much of the goods (including POL) going to Kabul or Qandahar originate in Pakistan. The reverse is also true. Afghan goods (mainly fresh or dried fruits) end up in Pakistani markets.

However, there is sinister element at work in this trade. Goods in transit to Afghanistan do not incur any customs duty or other taxes in Pakistan. But, the porous border with Afghanistan affords an opportunity for some of the goods, (once having crossed the border to enter Afghan territory) to be routed back by unscrupulous operators, into Pakistan.

DUTY FREE: The distortions in market prices created by these phenomena, can be readily imagined. Conversely, some food items and other essentials meant for domestic consumption here, are smuggled to Afghanistan, creating local shortages and a hike in prices locally.

Pakistan's attempts to seal the border by putting up barbed wire fences even on some selected points of the Pak-Afghan frontier are decried by the same people, who accuse Pakistan of harbouring terrorists. Then there are immigrants or refugees from Afghanistan, who have settled in various localities of Pakistan, established businesses and raised families over a period.

Most of them display no intention of moving back to their homeland, under any circumstances. Some have acquired property, or Pakistani nationality even, and masquerade around the world, holding the green passport.

The cumulative disastrous effect of the foregoing on Pakistan's economy in particular is tremendous, and cannot be counted in terms of money alone. Bound as they are by cultural, lingual and family ties, people in both the countries have to learn to live together and find a 'modus vivendi', to exist without hurting each other, financially or otherwise. After all, we are brotherly countries and neighbours.

There is no reason why, we cannot be friends and solve mutual problems to every one's satisfaction. There is a saying that "you can choose friends, but you cannot choose your neighbours." Nevertheless, there is nothing to prevent good neighbours also becoming good friends and learn to live together, in amity.

Absence of hostilities and establishment of good relations can pave the way for a very prosperous future for both countries. Afghanistan happens to be in the middle of the fabulous 'Silk Road', and a favoured transit route for travellers and merchandise between Europe, Central Asia, Middle East, the sub-continent and the Far East.

This strategic situation is slated to grow in importance even further, following the globalisation of trade under WTO. A further impetus is to be provided by the opportunities of energy supplies from Central Asian Republics (former USSR territories) overland to Eastern power-hungry and fast developing or fully developed economies - like China, India, Japan, South Korea, Sri Lanka, Bangladesh etc.

These supplies can be effected by road or rail transport, or through pipelines, all the way through to the ultimate destinations. The other and far cheaper alternative is by land routes via Pakistan (to Karachi and Gwadar ports) and onwards by sea. In fact, Karachi now, and Gwadar in near future, possess a great potential as hubs for global 2-way trade and commerce between the land-locked states in Central Asia and rest of the world.

Given peace and security, the opening up of these routes for trade and tourism will have an enormous impact on the economies of both Afghanistan and Pakistan as the transit stage-ports for the world.

Further, the so far an almost untouched domain of tourism attractions in the two countries (as also some neighbours in the region) both in the historic and natural beauty sense, can attract visitors equal in numbers to those visiting, Egypt, Greece, Spain or Switzerland. Business travellers can also spend some time in such spots, if necessary facilities are put in place, by the respective administrations.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

Neo said:


> *New govt to face tough economic challenges​*
> KARACHI, Feb 12: Whoever wins the February 18 election can be sure of one thing -- there will be no economic honeymoon.
> 
> With annual inflation at its highest in over a decade, the rupee at 6-year lows against the dollar, a hefty trade deficit, pressure from high international oil and food prices and domestic energy shortages, there are pressures on all fronts.
> 
> There are numerous challenges ahead. There is heaps of trouble, said Asad Sayeed, director of private analysis group, the Collective for Social Science Research.
> 
> They (the previous government) have left a monumental mess, virtually on every front.
> 
> Compounding matters, whoever comes to power in what will mark a long-awaited transition from military to civilian-led rule, will also face the tug of populist expectations of a mainly rural electorate struggling in the face of high food prices.
> 
> Consumer prices in January rose 11.86 per cent from a year earlier, their highest level in 10- years, which analysts attribute to food shortages they say are due to a weaker agricultural crop and government mismanagement.
> 
> The caretaker government blames wheat smuggling to neighbouring Afghanistan and hoarding by shopkeepers for the shortfall.
> 
> Inflation is high and its accelerating, the governments borrowing is out of control, said Sakib Sherani, chief economist for ABN Amro Pakistan.
> 
> The governments interest burden has gone up over the last few months. Its debt servicing burden has gone up, foreign exchange reserves are ... declining, he added. So all in all, its actually going to be a fairly challenging scenario for the next government.
> 
> The State Bank of Pakistan last month revised down its economic growth forecast for 2007-08 to 6.6-7 per cent, citing a weak farm sector that has been one of the engines of growth averaging about 7 per cent a year since 2002.
> 
> Pakistans trade deficit widened sharply to $2.05 billion in January, double the previous months gap, which analysts attributed in part to factory shutdowns in the wake of the assassination of Benazir Bhutto on December 27.
> 
> Foreign investment in the first six months of the fiscal year fell 32 per cent to $2.17 billion from a year earlier, with foreign portfolio investment down 92 per cent, central bank data shows.
> 
> New govt to face tough economic challenges -DAWN - Business; February 13, 2008



*Economic headache awaits next government ​*
KARACHI (February 13 2008): Whoever wins upcoming general election can be sure of one thing - there will be no economic honeymoon. With annual inflation at its highest in over a decade, the rupee at 6-year lows against the dollar, a hefty trade deficit, pressure from high international oil and food prices and domestic energy shortages, there are pressures on all fronts.

"There are numerous challenges ahead. There are heaps of trouble," said Asad Sayeed, director of private analysis group the Collective for Social Science Research.

"They (the previous government) have left a monumental mess, virtually on every front." Compounding matters, whoever comes to power in what will mark a long-awaited transition from military to civilian-led rule, will also face the tug of populist expectations of a mainly rural electorate struggling in the face of high food prices.

Consumer prices in January rose 11.86 percent from a year earlier, their highest level in 10-years, which analysts attribute to food shortages they say are due to a weaker agricultural crop and government mismanagement. The caretaker government blames wheat smuggling to neighbouring Afghanistan and hoarding by shopkeepers for the shortfall.

"Inflation is high and it's accelerating, the government's borrowing is out of control," said Sakib Sherani, chief economist for ABN Amro Pakistan. "The government's interest burden has gone up over the last few months. Its debt servicing burden has gone up, foreign exchange reserves are ... declining," he added. "So all in all, it's actually going to be a fairly challenging scenario for the next government."

And is the $160 billion economy facing a slowdown given political instability and macroeconomic worries? "If not immediately, then certainly over the medium term," Sherani said. "It may not have an immediate impact, but certainly when people make investment decisions, look out into the next 5-10 years, it'll start at some stage start clouding their investment sentiment as well."

Analysts say one key factor will be how the next government deals with calls from ordinary Pakistanis to bring down prices of basic essentials, for many a priority in a land where a quarter of the 160 million population is poor, earning about $16 a month.

The state's bill from subsidising fuel at the pump to absorb high international prices is alone set to hit about 150 billion rupees ($2.4 billion) for this fiscal year.

"To be honest, I don't care whoever wins the election. What we want is that at least the essentials of life should be easily available at an affordable cost," said Mansoor Khan, a mid-level manager at a pharmaceutical company in Karachi. "If I have to spend four hours in a queue to get a few kilograms of costly wheat, than I am not too excited even if the GDP growth is 10 percent."

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Plan to develop inland water transport system along Indus River ​* 
ISLAMABAD (February 13 2008): Pakistan is planning to develop inland water transport system along the Indus River that would become part of National Trade Corridor Improvement Programme. Planning Commission Member, Infrastructure, Dr Asad Ali Shah said this in a meeting of NTC task force.

An official close to the meeting told Business Recorder, this idea is at nascent stage and further work will be done on it, which is believed to be breakthrough in the government efforts to reduce the cost of doing business. The water channel would revolutionise the transport system in the country.

Further work including pre-feasibility and feasibility studies would be done by acquiring the services of reputed firm. After these studies, the proposal would be forwarded to the PC.

The issue of provision of water for the transport channel would also be discussed in the pre-feasibility study, said the official. Some circles are of the view that water availability for the channel could be ensured only after the construction of large dams especially the Kalabagh dam.

The task force established a committee on Public-Private Partnership for NTC to accelerate private sector investment in infrastructure along the corridor. The committee will also consider the development of IWTS, the official said. It was agreed that for implementation of the recently approved trucking policy, the Ministry of Industries, Production & Special Initiatives will establish a management unit for the policy implementation.

The task force reviewed the implementation status of various activities under NTC strategic framework. Launched in August 2005, the strategic framework for the National Trade Corridor Implementation Program (NTCIP) has been developed based on a holistic and integrated approach.

The project is aimed at reducing the cost of doing business, improve competitiveness and enhance productivity by improving the trade and transport logistics chain in Pakistan and bringing it up to the international standards.

Chairing a meeting to review the progress of NTC, the PC deputy chairman planning Dr Akram Sheikh said that this was a major strategic initiative to improve the logistics chain throughout the country and to interlink it with all three adjoining regions of South Asia, Central Asia and West Asia. Since inception, substantial progress has been made, undoubtedly NTCIP is moving in the right direction, he said. The task force reviewed the overall progress of all the sectors including; Ports & Shipping, Railways, Trucking, Trade Facilitation, Highways, Aviation & Air Transport, Energy Logistics & Cool Chain.

The operations of KPT, Port Qasim and Gwadar Port were reviewed to enhance their efficiency. The meeting was informed that four "Express Freight Trains" and one wheat special train running daily from Karachi to Lahore has been started. Door-to-door cargo services have been introduced from Faisalabad to Lahore, which will be expanded further to major cities.

At Jamroud construction of multimodal-agency border terminal, including access roads and other facilities has been completed. The Chaman and Taftan border terminals are under construction, while the cargo handling operation at Wagha border terminal will start shortly.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Plan chalked out to achieve $5 billion software export target ​* 
KARACHI (February 13 2008): The federal government has chalked out a plan to facilitate the Information Technology (IT) sector, with a view to achieving the $5 billion target of software export set for 2010-11. Sources in the Technical Education and Vocational Training Authority (TEVTA) told Business Recorder on Tuesday that the current level of software exports of the country was about $50 million per annum.

'As the government realises that in current circumstances the marked target can not be achieved amid the competitive international market with insufficient IT professionals, hence it has taken the initiative of the IT development program to facilitate students by providing quality education and training at affordable fee packages, which would help produce sufficient IT professionals across the country', they said.

"Government has planned to facilitate IT students on the maximum aimed at increasing the production of trained, diversified and well skilled IT professionals upto 53,000 per annum in next two years," they informed. Software development primarily depends upon the qualified professionals, however the targeted growth rate in the domestic software market will require over thousands of software engineers every year, they added.

However, at present about 150 software engineers are being produced by the reputable institutes, while 100 to 150 are being trained by software houses and user organisations, they said. Sources said that about 400 to 500 software engineers were produced by substandard institutions with lack of proper arrangements.

Due to poor education, they failed to meet the market's requirements and earn low salaries as compared to qualified professionals, they said. In wake of the situation, the government has evolved a policy to provide incentives on software exports and manufacturing of computer hardware, besides establishing software technology parks and data networks, they said.

Business Recorder [Pakistan's First Financial Daily]


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## solid snake

*$30bn needed for dams, mass transit plans*

By Ihtasham ul Haque​
ISLAMABAD, Feb 13: Like the previous government, the caretaker set-up also has failed to secure $30 billion foreign funding needed for five big dams and mass transit systems in Karachi, Lahore and Rawalpindi.

It is against this backdrop that the Ministry of Finance is holding an international conference in Islamabad from May 11 to 13 to invite foreign investors, including banks and multinational funding agencies, to take part in Pakistans infrastructure development projects.

Official circles believe that by May the newly elected government will be able to win back foreign investors confidence.

Mr Aijaz Ahmad, chief executive officer of the Infrastructure Project Development Facility (IPDF) of the Ministry of Finance, told Dawn on Wednesday that effort would be made at the conference to arrange about $20 billion funding for five major dams -- Kalabagh, Bahshah, Akhori, Munda and Kurrum Tangi.

Then we need to raise about $10 billion for three mass transit projects in Karachi, Lahore and Islamabad, two shipyards, one in Karachi and the other in Gwadar, CNG bus project in Karachi and some projects in the horticulture sector. We also need funding for the Iran-Pakistan-India (IPI) gas pipeline which will be discussed at the conference, he added.

A number of international law and advisory firms have also been invited.

Mr Ahmad said that Pakistan also needed foreign investment for new power projects. He expected that during the first year of the next government about $2 billion would be raised through foreign investment.

He said that power and telecom sectors had witnessed an increase in private investment in Pakistan. But it has been difficult to attract funding for infrastructure projects.

Mr Ahmad said that 44 infrastructure projects were in the pipeline of which 21 were on the active list while the rest were being developed.

IPDFs active project portfolio consists of 44 such projects worth $1.4 billion, he said.

The IPDF chief expressed the hope that the recently approved public-private partnership policy would greatly enhance the confidence of top international players in the countrys infrastructure development projects.

Sources said that the growing fiscal constraints had forced the government to withdraw from its traditional role of financing PSDP projects by having an effective public-private partnership from the 2008-09 financial year.

Initially, it was proposed to cut 50 per cent government funding in the PSDP and the gap will be filled by the private sector. The World Bank and Asian Development Bank are believed to have approved the proposal in principle and indicated that they would be willing to provide necessary support for improving and expanding infrastructure services for public-private partnership in Pakistan.

The Planning Commission, the IPDF and the two international donors are in touch with leading investors to have the next PSDP shared by public and private sectors on a 50:50 basis.

However, the private sector maintains that the government should first come up with a regulatory framework for the public-private partnership on a sustained basis for a longer period.

A draft law and the regulatory framework are being prepared and expected to be finalised soon.

$30bn needed for dams, mass transit plans -DAWN - Top Stories; February 14, 2008


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## Introvert

*Pakistan: Kinno export may exceed 0.2m tons*

Pakistans kinno export crossed 80,000 tons mark by the end of January, mainly due to the revival of supplies to the Russian market. Exporters hope that the exports will gain momentum in February. Exporters and officials of Pakistan Horticulture Development and Export Board (PHDEB) said that the exports had been slow in January for logistical reasons. Exports to Iran suffered due to political reasons as major shipping lines refused shipments due to US sanctions.

"The country should be able to cross its export target of 200,000 tons easily with abundant crop this year", says Muhammad Iqbal of PHDEB. Before the start of the season export to Russia was uncertain as no shipping line had spared cargo space for shipment. Now these lines are readjusting their shipments and have promised to spare more containers, exporters added. This would accelerate shipments to Russia in the days to come. The shipping lines had also planned their cargo space taking into account last year exports quantity, when the country suffered from a short crop and exported only half of this years target.

The weather, specially the recent chill, improved both the taste and colour of the fruit. The bumper crop this year kept the price to a manageable level and the improved colour and the taste increased its demand in foreign markets, he said.
In addition to increased exports to Russia and Iran, the country has also sent its first kinno container to China. The Chinese market alone could absorb over 100,000 tons if the quality issues do not hit the export in next five years, the PHDEB official said.

"Export has also increased because our close competitor, China, had a bad crop this year", says Daniel Benjimen, a local exporter. The Chinese citrus crop suffered up to 20 per cent damage facilitating demand of Pakistani kinno in markets abroad.
With all these factors helping kinno exports from Pakistan, the country should be able to cross 200,000 tons mark in the next two months, he hoped. 

Pakistan: Kinno export may exceed 0.2m tons


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## Neo

*Govt borrowing balloons to Rs317bn ​* 
Thursday, February 14, 2008

KARACHI: Government borrowing from the State Bank of Pakistan (SBP) ballooned to Rs317 billion on Wednesday from Rs239 billion last week, in a sign of further mounting inflationary pressures on the countrys economy. 

From July 1, 2007 to Feb 2, 2008 in the backdrop of excessive government reliance on borrowing from the central bank, broad money (M2) grew to Rs247.486 billion, which was recorded at Rs236.045 billion in the same period of last fiscal year. 

The central banks latest statistics revealed that bulging net domestic assets of the banking system, which grew by 13.98 per cent from July 1, 2007 to Feb 2, 2008, besides depleting net foreign assets of banks by virtue of governments borrowing mainly for budgetary support, were the major contributory factors behind the current 6.09 per cent expansion of M2 growth. 

The banks figures showed that during aforesaid period government borrowed Rs235.581 billion from banking sector for budgetary support as compared to this during corresponding period of last fiscal year the government had scrounged Rs49.905 billion from banks for budgetary support. 

Out of total governments budgetary borrowings SBP lent Rs316.991 billion to the government from July 1, 2007 to Feb 2, 2008 against Rs34.530 billion last year. However, during this period the government retired Rs56.668 billion of scheduled banks. The government borrows from scheduled banks it is mainly through fortnightly auctioning of market treasury bills and it also borrows for long term by auctioning Pakistan Investment Bonds (PIBs). The federal government also gets loans directly from SBP either through ways and means advance or purchase of market related treasury bills. 

The banks figures showed that during above mentioned period the credit to non-government sector increased to Rs278.328 billion against 224.827 billion of last fiscal year which also played a key role in growth of broad money. 

Govt borrowing balloons to Rs317bn


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## Neo

*Two Chinese pharmaceutical companies to invest in Pakistan ​* 
Thursday, February 14, 2008

ISLAMABAD: Two Chinese pharmaceutical companies have shown interest to invest in the country through joint ventures and desired that their medicines will be standardised and available in a market at low prices. 

A visiting delegation of Chinese Shetang Zhong Industry Co Ltd and China Liu Enterprises Pharmaceutical Group, led by Yang Yu and Liu Kong, called on Islamabad Chamber of Commerce & Industry President Ijaz Abbassi here on Wednesday. 

During the meeting, Yang Yu praised the far-reaching economic reforms introduced by the government of Pakistan, which have resulted in excellent investment opportunities in the country. Abbassi expressed great concern over the prices of medicines in the country, which are higher than other regional countries and multinational companies have a monopoly over the sale of medicines and are earning billions of rupees as profit. He recalled the existing excellent ties between both the sides in various fields and welcomed investment by the pharmaceutical industry. 

He also appreciated the achievements made by China in developing herbal medicines and hoped that Chinese businessmen would also invest in this field and would be transferring their expertise to Pakistan. 

Two Chinese pharmaceutical companies to invest in Pakistan


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## Neo

*Economy grew on wrong path: speakers ​* 
Thursday, February 14, 2008

KARACHI: Praising the frequently quoted average seven per cent GDP growth in the last three years in Pakistan by government officials, the speakers at a one-day seminar on Economic Challenges for the Next Government questioned the quality and pattern of economic growth and observed that the economy was growing on a wrong path.

The seminar was organised by Investment Marketing Conferences (IMC) here at a local hotel on Wednesday, which started after more than one and a half hour delay from its scheduled time.

The speakers identified a number of issues in various economic sectors, which were needed to be addressed by the next political government following the Feb 18 parliamentary election. Having mobile phone in everyones hand and constructing a network of roads and bridges in the country do not mean economic development, but to reduce poverty and create employment in fact, they pointed out.

The theory of trickle-down effect of economic growth to common man had failed, as achievements in some of the macroeconomic areas had not benefited the people so far. The percentage of people living below the poverty line had not come down remarkably with growth in GDP and it stayed around 30 per cent at present. Moreover, creation of employment opportunities in the country remained a big question mark on the governments performance.

The poor are getting poorer and rich becoming richer, said S B Hassan, IMC President in his opening remarks. The speakers developed consensus on removing income inequality among the masses, which could be made possible through spending more on the social sectors ie education and health by the next government. They also agreed on the need to privatise state-owned entities, but called for them to be sold to local managers in the private sector despite giving first priority to foreign buyers.

For how long, can we continue the ongoing privatisation process to overcome the budgetary burden, questioned Shaukat Tarin, Chairman of Karachi Stock Exchange (KSE) and National Commodity Exchange Limited (NCEL).

The sale of government assets to locals would be more beneficiary as compared to foreigners. This step would help the government to increase domestic savings and ultimately it would also help to generate employment and reduce poverty, it was argued.

Tarin suggested forming a club for local investors and entrepreneurs, who would be taking part in the ongoing privatisation and they should be given priority. Government needs to increase revenue to GDP percentage. For this purpose, it has to widen the direct taxpayers net, which is mere 20 per cent in the country, he argued. He proposed to appoint 50 per cent Board of Directors from the private sector in the Federal Board of Revenue (FBR).

Sakib Sherani, Head of Economic Unit of ABN Amro Bank was of the view that the government should pass on increase in international oil prices to domestic consumers and should also withdraw subsidy on POL products gradually to ease the inflationary pressure.

He argued that government borrowing from the central bank for budgetary support and for subsidy was one of the causes, which was increasing inflationary pressure on the economy. Inflation is a monetary phenomenon, said Sherani.

The speakers also called for aggressively focusing on agriculture, textile and manufacturing sectors in order to increase countrys exports. It would help the government to tackle the trade deficit and curb current account deficit too.

The biggest challenge for any government would be to deal with fast growing energy crisis and for that the government needed to restructure WAPDA and KESC, they suggested. Also human resource development, trained and skilled manpower and professional managers would remain another big challenge.

They questioned why people of the country were importing vehicles that was increasing trade deficit when it (Pakistan) was already having assembling plants of vehicles. 

They suggested to make Pakistan an export-based economy by transfer of technology with attracting foreign investment in first phase and then exporting same things ie cars and mobiles in the second phase, they added. Last but not the least, the government needs to construct homes at affordable prices for the poor. 

Economy grew on wrong path: speakers


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## Neo

*Pakistan attracted $8.2bn investment in 2006-07: Soomro ​* 
Thursday, February 14, 2008

KARACHI: Caretaker Prime Minister Mohammedmian Soomro has said that Pakistan has attracted a foreign investment of $8.2bn during 2006-07 due to continuity and consistency of economic policies while the economy has maintained a GDP growth of more than 7 per cent in the past several years.

While talking to a delegation of German investors led by German Consul General Han Joachim Kiderlen at the Governor House on Tuesday, the Prime Minister noted that Pakistans macroeconomic policies were widely acclaimed by the multilateral institutions and investor communities.

He observed that the robust economic growth presents a strong case for investment in the infrastructure of the country. Soomro said 100 million out of 162 million of the population in Pakistan is below 25 years of age, who are a great asset for the country as well as an attraction for foreign investors. 

He stated that because of rapid economic growth there was a surge in energy demand and the government is trying its best to bridge the demand and supply gap. Mohammed Mian Soomro pointed out that besides resorting to conservation of energy, the government has approved a number of projects to increase the power generation as well as working on alternative sources of energy. 

He also appreciated German investment in various sectors of the national economy and welcomed the willingness to invest more in various fields particularly in the energy sector. Replying to a query on intellectual property rights (IPR), he said a body is already in place to check the violation of IPR issues in the country.

Responding to the interest of German delegation to establish special industrial zone in Pakistan, the Prime Minister said Pakistan would welcome the setting up of Pak-German industrial zone. The delegation appreciated the governments policies and expressed the desire to invest more in Pakistan.

Pakistan attracted $8.2bn investment in 2006-07: Soomro


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## Neo

*Government fails to initiate 5 export oriented projects​*
* Nine projects did not utilise 86% released funds​
ISLAMABAD: The ministry of industry production and special initiatives (MIP&SI) has failed to start export oriented five developmental projects, worth Rs 969.97 million related to ceramic development, glass products, foundry services, composite based sports goods and cutlery.

Although first half of the current fiscal has been completed, these projects have totally failed even to spend a single penny. Even till June 2007, these export oriented developmental projects were unsuccessful to start the projects. But during the annual budget for the year 2007-08, the government has allocated a reasonable amount of Rs 452.08 million for these projects for the only aim to enhance countrys exports, sources told Daily Times here on Thursday. 

The government has approved a project namely, Ceramic Development and Training Centre, Gujranwala (ADB assisted) worth Rs 314.470 million. But till December 2007 the ministry has totally failed to get start the project despite of allocation of Rs 220 million in 2007-08.

The Glass Products Design and Manufacturing Centre, Hyderabad Sindh worth Rs 33.500 million had been approved for the development of glass related products that would ultimately lead to increase countrys exports. The government allocated an amount of Rs 37.08 million in 2007-08 and also released Rs 3.75 million. But the project managers failed to get it start till December 2007.

A project, Foundry Services Centre Lahore worth Rs 202 million has been approved by the government and an amount of Rs 90 million has been allocated as well as released in 2007-08.

Similarly, Product Development Centre for Composite based Sports Goods Sialkot approved with a cost of Rs 380 million. An amount of Rs 90 million has been allocated and released during the year 2007-08. But the projects managers of the above schemes failed to spend a single rupee till December 2007. 

The government had also approved a project, namely, Revival of Cultery Institute of Pakistan, Wazirabad with estimated cost of Rs 40 million. An amount of Rs 15 million has been allocated and released during the year 2007-08 but not a single rupee was spent till December last year, sources added. 

Apart from above-mentioned five projects, there are nine other projects, that were failed to utilise completely their allocated /released funds till December 2007. Total released to these nine projects was Rs 847.217 million and they utilised only Rs120.44 million. It showed that 86 percent released funds were not utilised till December 2007. 

These nine projects, that failed to utilise the released funds are: agro food processing facilities Multan, Aik hunar aik nagar, Gujranwala Business Center, sports industries development centers Sialkot, 2 MGD water desalination project, Gawadar industrial estate Balochistan, strengthening of planning monitoring and evaluation cell in MOIP&SI Islamabad, development products of Pakistan Gems and Jewellery Development Co, development of marble and granite sector and dairy Pakistan horizons.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Industrial output target may not be achieved: Slowdown worries planners​*
ISLAMABAD, Feb 13: The industrial production has grown by paltry 6.9 per cent in the first five months (July-November) of the current fiscal year raising serious worries that annual industrial growth target of 10.5 per cent would remain unachievable.

The slump in manufacturing production was witnessed in November 2007, when it grew by a meagre 4.74 per cent, the lowest growth recorded in any month of the past recorded history, Federal Bureau of Statistics (FBS) data revealed on Wednesday.

The figures for December and January have not been compiled as yet, but the worst energy crisis, reduced working days on the back of strikes have dampened the chances of any reverse in industrial growth in the last two months.

The growth in industrial production had been steadily on decline for the last three years as it declined to 8.8 per cent in the year 2006-07 from 19.9 per cent in the year 2004-05 owing to capacity constraints and closure of many units as a result of high cost of doing business in the country.

Analysts said the steady dip in industrial growth will also affect its contribution in the overall GDP, which would make it difficult for the economic managers to achieve the GDP target.

The GDP rate is worked out in the month of May. It would be very difficult to have that much growth in the next three months to recover the plummeting recorded in industrial growth to reach closer to the target.

As there is no industrial policy in the country, except some product-specific policies, the country is going to face the brunt of closing down of vulnerable industries to cheaper imports. And also there is no effective policy or facilities for encouraging small industries to diversify the narrow industrial base of the country.

The industry specific data shows that many sub-sectors were not performing well in the first five months of the current fiscal year mostly electronic goods. As a result of the decline, the import bill of consumer and electronic goods have steadily recorded an upsurge during the period under review. With this slump in the industrial growth, the export of commodities has also affected to a great extent, which recorded a marginal growth of six per cent during the period under review.According to the figures, the production of cigarettes has increased by 8.7 per cent, while cotton yarn grew by 4.57 per cent and cotton cloth production 1.42 per cent during the first five months this year over last year.

In the food sector, the vegetable ghee production declined by 1.06 per cent. However, cooking oil production was up by 1.78 per cent, wheat 6.34 per cent, starch and its products 2.47 per cent, beverages 41.38 per cent during the period under review over the last year.

Among the electrical production, refrigerators recorded a growth of 10.85 per cent, deep freezers 13.05 per cent, TV sets production 19.06 per cent, electric fans 32.27 per cent, switch gear 18.8 per cent, bicycles 3.87 per cent and electric bulbs 2.22 per cent during the period under review over the last year.

However, production of air-conditioners dipped by 6.71 per cent, electric tubes 5.32 per cent, electric motors 12.32 per cent, electric meters 29.09 per cent and electric transformers 36.37 per cent during the period under review over the last year.

The production of paper & board has also dropped by 12.24 per cent. But petroleum products were up by 8.07 per cent and cement 24.15 per cent during the first five months of the current fiscal year over last year.

The production of glass sheet declined by 7.92 per cent, steel products 1.39 per cent, billets 3.92 per cent and HR sheets 0.78 per cent during the period under review over the last year.

However, the coke production was up by 14.72 per cent, pig iron 1.06 per cent, soda ash 17.25 per cent, caustic soda 11.44 per cent, nitrogen fertilisers 3.37 per cent and phosphate fertilisers 5.74 per cent during the period under review.

Industrial output target may not be achieved: Slowdown worries planners -DAWN - Business; February 14, 2008


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## Neo

*Replacing ageing gas system to save $580m​*
RAWALPINDI, Feb 13: While the shortage of gas is felt across the country, a new report of Asian Development Bank says Pakistans gas distribution system is ageing and is suffering from high technical losses of 25 to 30 per cent against the industry standard of five per cent.

Losses could be eliminated by replacing medium- and low-pressure pipes with more efficient and corrosion-free pipes, the bank suggested.

The ADB in a technical assistance report says a more efficient gas distribution system would result in significant national savings up to $580 million per year, and increased use of cleaner fuel by more domestic, industrial and commercial consumers.

Natural gas accounted for 43 billion cubic metres, which is half of the countrys primary energy supply in 2006.

The ADB report has been prepared for the provision of a technical assistance (worth $600,000) on a grant basis to Pakistan for preparing the Sustainable Energy Efficiency Development Programme by the Planning Commission. The technical assistance is estimated to cost $700,000.

The government will finance the remainder $100,000. The technical assistance will design a suitable programme proposal that supports government efforts to establish an enable policy and business environment for energy efficiency, and to provide immediate financing of priority projects.

The public and domestic sectors consume more than 60 per cent of the countrys energy. The government is looking for more efficient utilisation and conservation measures for the public sector and is eager to procure and adopt energy efficient technology in its operations and introduction of energy-efficient building codes, says the ADB report.

The domestic sector currently uses 45 per cent of the power supply. The most effective way to expedite the use of efficient compact fluorescent lamps by domestic consumers is to inject a large volume of such lamps into the market at a low price. This approach has been successful in several countries, where it has immediately reduced customers monthly power bills.

Preliminary analysis suggests that the introduction of 15 million high-quality compact fluorescent lamps into Pakistans domestic market would save customers $78 million over the lifetime of those bulbs with approximate life of 2 years.

During 2001-2006, primary energy supply increased 5.4 per cent per year. Meanwhile, consumption of electricity rose at an average annual rate of 6.8 per cent, natural gas by 10.4 per cent, liquefied petroleum gas by 17.6 per cent, and coal by 22.8 per cent.

Electricity use, in particular, is growing robustly across all sectors recording a 10.2 per cent overall jump in 2005-2006, while generation increases lagged at 9.3 per cent during the same period.

Thus, the country faced serious peak electricity supply shortfalls of 1,500-2,000 megawatts during the summers of 2006 and 2007, necessitating significant forced outages (or load shedding) that curtailed economic activity and delivery of social services.

System-wide transmission and distribution losses remain high at 24.8 per cent of dispatched power. Despite government efforts to electrify all villages, about 45 per cent of the population still does not have access to grid-supplied electricity. A crisis in the energy sector has been looming for the past two years, reveals the report.

The energy efficiency assessment conducted under ADBs Energy Efficiency Initiative determined that Pakistan has a large and untapped energy efficiency market. It identifies several energy efficiency improvement opportunities in gas distribution (supply side) and in the government and residential sectors (demand side) that can be tapped into.

Replacing ageing gas system to save $580m -DAWN - Business; February 14, 2008


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## Neo

*Fear of revenue shortfall: Planning Commission defers non-starter projects ​* 
ISLAMABAD (February 14 2008): The Planning Commission apprehends a big shortfall in revenue collection in 2007-08, which is one of the many factors forcing it to defer yet to start developmental projects for 2008-09. Sources said that the Planning Commission had presented its viewpoint on revenue collection in a meeting chaired by President Pervez Musharraf recently.

THE FBR HAD TAKEN UP AN AMBITIOUS TASK OF COLLECTING RS 1.025 TRILLION THIS YEAR: It said that the shortfall might be bigger as taxes collection trend had not been healthy during the first half of the current fiscal year and, keeping in view its adverse effects on economy and Public Sector Development Programme (PSDP), it had changed the strategy for the developmental projects.

The FBR had taken up an ambitious task of collecting Rs 1.025 trillion this year, which was perhaps unrealistic, even at the time of taking the assignment. But FBR chief Abdullah Yusuf deemed it possible.

It said that the FBR chief might have some new strategy in mind to put in place to make things happen and collect the targeted revenue for the current fiscal year. However, due to poor performance, uncertainty and discouraging response from the taxpayers in the first half of the current fiscal year it was obvious that FBR was going to fall short of the target by many billions. The FBR is facing problem in achieving the target in direct taxes, which are much less than the expected revenue.

The presentation to the President gave a clear picture of expected shortfall and its negative effect on overall economic situation. The shortfall in revenue collection forced the Planning Commission to stop clearing developmental projects for the second part of the current fiscal year.

The Planning Commission is following a new strategy for developmental projects. It has put on hold those projects which were not started by executing agencies, and keeping those projects in the second tier which fall in the slow going category.

The strategy has focused on the on-going projects but seconded the Ministry of Finance for diversion of the funds of those developmental projects, which were not launched in the first half of the current fiscal year.

It said: "To counter adverse effects of likely reduction in revenue collection and enhanced subsidies on oil, wheat and fertilisers, a professional approach has been adopted by the Planning Commission". It added that to achieve the objective of saving resources the provincial governments have been taken on board for rationalisation of the developmental projects.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan will welcome if China joins IPI gas line project: foreign office ​*
ISLAMABAD (February 14 2008): Islamabad says it will welcome if China joins Iran-Pakistan-India (IPI) gas pipeline project whether or not New Delhi stays part of the economic-cum-strategic deal being ruthlessly opposed by the United States. "We will welcome if there are prospects of China joining it," Foreign Office spokesperson Mohammad Sadiq told a weekly news briefing here on Wednesday.

The statement came days after a media report suggested Beijing had conveyed to Islamabad willingness to participate in the multibillion dollar but troubled deal if New Delhi wanted to walk out of negotiations. India refused to attend a meeting called by Iran last week to finalise the long-delayed pipeline as it wanted to settle the transit fee issue with Islamabad before signing the pact.

But experts believe actual reason for Indian reluctance was its still-to-be-secured deal with the US to receive civilian nuclear technology for its pressing energy needs. The halted drive has recently drawn a lot of criticism from a multidimensional polity and there are doubts whether Washington and New Delhi will ever be able to take it home.

The US is opposing IPI primarily to punish an anti-American regime in Tehran seeking to fulfil nuclear ambitions to defy the world sole super power and the whole of Europe. Sadiq said Islamabad wanted India rejoin negotiations but it would go ahead with the project even otherwise because the plan was necessary for its energy security.

"We believe India is still interested in IPI," he replied to a questioner. Pakistan is facing a worse energy shortage of history and experts see IPI a project capable to steer the country out of the deepening crisis that is now posing closure threat to the industry already struggling to meet export orders and cater local demands.

MISSING DIPLOMAT: Sadiq dismissed a suggestion that Taliban had kidnapped a top Pakistani diplomat in lawless tribal areas to use him as a bargain chip for the release of an arrested Afghan commander.

Tariq Azizuddin, the Pakistani ambassador to Afghanistan, went missing on Monday morning when he was travelling to Kabul through Khyber tribal agency near Peshawar.

Some media reports later said he had been kidnapped by militants who were demanding the release of Mullah Mansoor Dadullah. A former operational commander of Afghan Taliban, Mullah Dad was arrested by Pakistani security forces from Balochistan province over the weekend.

But Sadiq said these stories were untrue. "No body has contacted the government of Pakistan (with a demand to release Dadullah for handing over Tariq). No body has claimed responsibility," he said. The spokesperson said he was sure the diplomat was alive and efforts were underway to locate and secure him.

Responding a question, Sadiq gave an impression as if Pakistan were comfortable with a recently signed Indian deal with Russian for obtaining civilian nuclear technology. "We are against anything that steps up arm race in the region," he said, "But any legitimate co-operation, Pakistan will have no objection to that."

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*$250 million creek-side mall cum offices complex to be set up ​* 
KARACHI (February 14 2008): A creek-side shopping mall and offices complex will be developed, at a cost of $250 million, by Abu Dhabi-based Injaz Mena Investment Company, PSC, in collaboration with UK-based Global Haly Investment Ltd.

The joint venture project was announced here on Wednesday under the key sponsorship and patronage of Sheikh Sultan Bin Khalifa Bin Zayed Al Nayhan. Mubarak bin Fahad, Chairman and CEO of Pakistan-based company Global Haly Development (Pvt) Ltd, said here that his company would undertake establishment of the creek-side project.

The complex will be situated next to the Creek Golf Club along the Arabian Sea coastline, benefiting from unrestricted creek view. The planned complex will provide high quality shopping and premium office space on the 5.3 acres plot of land. It will have total built-up area of about 1.7 million sq ft, of which over 0.7 million sq ft will be saleable space.

The complex will have three basement levels for parking, ground floor, first floor and five upper floors, offering well over 0.4 million sq ft of dedicated retail space and the balance of the area will be for offices. The project will have all facilities and infrastructure required to offer a luxurious lifestyle shopping experience. Creek-side will set the benchmark, excellent example of a true mixed-use centre project combining retail, restaurants, safes, world class feed terrace coupled with an exclusive office complex.

Mubarak bin Fahad said that the 'creek-side' is an exclusively designed mixed-use facility that would bring a new level of luxury and enhancement to the standards of shopping expected today. The promoters boasts a design that gracefully maximises sea views whilst maintaining optimal functionality and practicality.

The Royal International, a leading consultant, is providing consultancy services for sub-consultants throughout the design and construction phases. Saunders Global, the lead architects for the project, undertook the structural and building services engineering design for the entire project in liaison with local engineers, Engineering Associates. Due for completion in 2011, the creek-side project is being developed around the concept of delivering a luxury retail experience coupled with executive offices which has required significant liaison with a number of consultants and local bodies to turn the design into reality.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*LSM industries post around seven percent growth *​ 
KARACHI (February 14 2008): Large Scale Manufacturing industries have registered a growth of around 7 percent during the first five months of the current fiscal year due to rise in production of oil and heavy industries. The provisional statistics of Quantum Index Numbers of LSM industries issued by Federal Bureau of Statistics show that the production of major industries in the country have increased.

LSM is one of the major indicator of the economy, which shows the industrial productivity of the 100 items received from different sources ie Oil Companies Advisory Committee (OCAC), Ministry of Industries & Production and Provincial Bureaus of Statistics.

OCAC provided data of 11 items and Ministry of Industries & Production provided data of 35 items, while Provincial Bureaus of Statistics provided data of 54 items. With 6.90 percent growth, overall QIM during July-November of fiscal year 2008 has reached 201.75 points from 188.72 points during the same period of last fiscal year.

The major share in the growth is shared by oil industries' production, as during the first five-month of the current fiscal, oil production (OCAC index) has gone up by 8.07 percent from 159.24 points in July-November of fiscal year 2007 to 172.09 points in July-November of 2008.

LSM indices registered a growth of 4.74 percent during the July-November 2007 to 204.96 points as against 195.67 points during the same period of the last fiscal. Growth in the production of major industries including sugar, motorcycle, cement, coke, beverages, carpet yearn, etc has registered 6.90 percent increase during the July-November of current fiscal.

The production of high speed diesel, motor sprit and Jute oil rise by 14.02 percent, 6.82 percent and 19.03 percent respectively, while the production of Jet fuel oil, kerosene oil and LPG has declined by 9.15 percent, 3.27 percent and 1.17 percent respectively during the first five months of current fiscal.

In addition, production of sugar, cigarettes, soda ash, pig iron, motor cycle and buses have registered a growth of 25 percent, 8.70 percent, 17.25 percent, 1.06 percent, 24.22 percent and 16.06 percent respectively, while the trucks and paper board production dipped by 19.33 percent and 12.24 percent respectively.

It may be mentioned here that during the last fiscal year, the country missed its LSM growth target, as the overall LSM growth stood at 8.50 percent as against the growth target of 13 percent.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Book on Pakistan economy launched ​* 
ISLAMABAD (February 14 2008): The performance of the country's economy was assailed by quite a few discussants who reviewed Dr S M Naseem's new book The 9/11 U-turn: 60 Essays in Pakistan's Economy and Policy in South Asian Perspective(1999-2007).

It was launched on Wednesday at the South Asia Policy Analysis Network (Sapana). An Islamabad based NGO, Pattan, also helped in organising the book-launch ceremony.

Dr Sabiha Malik, an economist from Dr Mahbubul Haque Foundation, reviewing the book remarked that it instigates people to think deeply about the social and development environment. It was apparent that the economy of the country has been dependent on foreign aid and because of this factor; our economy has been bowed to 'external' stimulus.

The economist commented on the rise of consumerism, inequity and unemployment, during the last seven years. Defining the function of economic development 'as a conscious effort to uplift rural areas where the population of poor people was concentrated, she said.

'Contrarily there has been a deficit in people's access to health, education facilities and steep rise in the unemployed people. The Pattan Chief Dr Sarwar Bari, congratulated the author of the book for helping the affecters of the massive earthquake of October 8, 2005, where he also discovered that the quake sufferers had become of bad government when the reconstruction effort was handed over completely to the military authorities and civilians were excluded.

For all that, Dr Bari disagreed with Dr Naseem's analysis that the NGOs were donour-driven. 'They were donor-dependant, he said but he gave credit to Dr Naseem for always being engaged with people's issues in his economic discourses.

Perhaps for this reason Dr Bari said during the discussion that he had received a number of telephone calls enquiring about the content of the book which is to be launched now.

He said that the telephone calls had no number of the caller and perhaps could be from 'hidden persuaders.' Famous economic manager Dr Zubair Khan, formerly of the Planning Commission, regretted that military officers had taken over the management of the department, in a departure from early days when it was studded with brilliant civilian economist. 'The powers that be want to conform to maintaining the status quo.'

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Political uncertainty hurts tourism ​* 
KARACHI (February 14 2008): The ministry of Culture and Tourism, Sindh has failed to attract tourists due to political uncertainty and unfavourable circumstances despite an amount of Rs 700 million allocated to promote tourism in Sindh.

The sources said that the ministry has failed to spend approved money in accordance with the tourism promotion plan to generate foreign exchange from this sector activities, official sources told Business Recorder.

Pakistan is not being effectively projected as a land for travel because political crisis and law and order situation were spoiling its creditability on regular basis besides affecting its policies and planning during current year.

"Although the government celebrated 2007 as 'Year for tourism' and facilitated tourists by lucrative offers aimed to attract the large number of tourists from every part of globe", they said.

Contrary to expectation a small number of tourists visited in its peak season due to poor law and order situation, they added. To a question, they said tourism industry would not be fruitful until instability in the country was creating hurdles in implementation of policies and planning to facilitate tourists.

"Policies and planning alone could not attract tourists to visit Pakistan unless government pave the way and streamline it for their effective execution", they added. However, Amber Raza Nansey, Minister for Culture, Tourism, Sports and Youth Affairs said that policies and planning were being successfully implemented to attract tourists for visiting Pakistan.

She said that several foreign delegations came on ministry's invitation for visiting Sindh's tourist places. Ministry of Culture and Tourism has effectively projected Pakistan as a land for travel before foreign delegation and convinced them for sending tourists in the country, Amber said. She hoped that the government would generate million of dollars revenue by inviting tourists for all over the world to exhibit its culture and heritage of Sindh.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Telecom sector attracted $654.30 million FDI in first half *​ 
ISLAMABAD (February 14 2008): Telecom sector has attracted $654.30 million Foreign Direct Investment that has been 32.64 percent of the total overseas resources injected into Pakistan economy during the first half of current fiscal year, Pakistan Telecommunication Authority said on Wednesday.

Economists say ongoing political uncertainty and insecurity have been hindering the inflow of FDI and more troubling were the reports that money was being shifted to some UAE states.

An industrialist said everything has been held back till the elections. "Let us hope things may improve after the elections." He said the FDI would have been more than this had there been political stability in the country.

What to say of foreign investors, he said even the "local investors were uncertain about tomorrow." The total FDI inflow was $2.14 billion during first half of current fiscal year and telecom sector stood the major contributor with $654 million. Telecom Economic Indicators of the first two quarters revealed total inflow of $962.5 million FDI in July-September 2007 and $1051.10 million in October-December 2007.

The telecom sector contributed $363.9 million in the first quarter, July-September 2007 and $290.4 second quarter, October-December 2007. Thus contribution of telecom sector to the total FDI was 32.64 percent in the first half of current fiscal.

In 2005-06, telecom sector received $1.824 billion FDI and emerged as main sector of the economy with 35.60 percent share in the total FDI. Since liberalisation in 2004, Pakistan Telecom Sector has been major contributor to the FDI as reforms made it attractive for many global telecom giants who had invested in Pakistan.

The cellular and WLL operators have been pumping money into the sector to expand network and exploit its full potential. They have been adding subscribers in huge numbers to their network every month as total users of six cellular operators have touched 78 million in January 2008 from half a million in 2004.

The wireless operators have also shown exceptional growth in recent times and all the companies have been investing to attract more and more customers. In January 2008, the total number of users in WLL has gone up to 2,200,559 from 2,123,179 in December 2007.

Analysts see the trend of investment may continue in the next few years as a large market potential (rural areas) was yet to be exploited. According to the PTA, in January 2008 over 78, 738, 187 mobile users were subscribing services of five operators in Pakistan namely, Mobilink, Ufone, Paktel, Telenor and Warid.

It is evident from the data that these companies have been showing substantial growth every month and thus both the mobile and WLL teledensity has increased to 53.41 in January 2008.

Business Recorder [Pakistan's First Financial Daily]


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## AgNoStiC MuSliM

Creek-side Mall rendering


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## Neo

* Joint venture to develop $250m Defence project​* 
Friday, February 15, 2008

KARACHI: Abu Dhabi-based Injaz Mena Investment Company PSC has joined hands with UK-based Global Haly Investment Limited to develop a shopping mall and office complex project worth over US$250 million in Defence, Phase VIII, Karachi.

The joint-venture project was announced under the key sponsorship and patronage of Dr Sheikh Sultan bin Khalifa bin Zayed Al Nayhan. The complex will be situated next to the Creek Golf Club along the Arabian Sea coastline, benefiting from unrestricted creek views.

The planned complex will provide high-quality shopping as well as premium office space on 5.3 acres of land. It will have a total built-up area of about 1.7 million sq ft of which over 700,000 sq ft will be saleable space.

The complex will have three basement levels for parking, ground floor, first floor and five upper floors, offering well over 400,000 sq ft of dedicated retail space and the balance of the area will be for offices. The project is due for completion in 2011. 

Joint venture to develop $250m Defence project


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## Neo

*Cement companies curtail production ​* 
Friday, February 15, 2008

KARACHI: The cement companies that operate in Karachi have brought down their production capacity to 25-50 per cent, causing cement shortage and price hike in the local market, said Karachi Cement Dealers Action Committee (KCDAC) President Wali Bhai Patel.

He said the companies have not only slashed production in order to raise the commoditys prices but they have also saved millions of rupees in excise duty and sales tax. We have stabilised cement prices in Karachi and maintained the prices equal to Punjab, otherwise the prices would have risen to Rs350 per bag, said Patel.

He appealed to the government to intervene and direct the cement companies to raise their production so that the prices could come down. There is no shortage and our plants are working in full swing. Hundred per cent capacity of plants are being utilised and there is no apparent reason to bring down cement production, said Lucky Cement Chief Executive Officer Muhammad Ali Tabba.

Cement dealers claimed that the companies having plants in Karachi are performing exceptionally well in a local market which shows that these companies are making outstanding profits. These companies have been engaged in investing in their Karachi plants and also expanding their production capacity. 

Cement companies curtail production


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## Neo

*Government fails to initiate 5 export oriented projects​*
* Nine projects did not utilise 86% released funds​
ISLAMABAD: The ministry of industry production and special initiatives (MIP&SI) has failed to start export oriented five developmental projects, worth Rs 969.97 million related to ceramic development, glass products, foundry services, composite based sports goods and cutlery.

Although first half of the current fiscal has been completed, these projects have totally failed even to spend a single penny. Even till June 2007, these export oriented developmental projects were unsuccessful to start the projects. But during the annual budget for the year 2007-08, the government has allocated a reasonable amount of Rs 452.08 million for these projects for the only aim to enhance countrys exports, sources told Daily Times here on Thursday. 

The government has approved a project namely, Ceramic Development and Training Centre, Gujranwala (ADB assisted) worth Rs 314.470 million. But till December 2007 the ministry has totally failed to get start the project despite of allocation of Rs 220 million in 2007-08.

The Glass Products Design and Manufacturing Centre, Hyderabad Sindh worth Rs 33.500 million had been approved for the development of glass related products that would ultimately lead to increase countrys exports. The government allocated an amount of Rs 37.08 million in 2007-08 and also released Rs 3.75 million. But the project managers failed to get it start till December 2007.

A project, Foundry Services Centre Lahore worth Rs 202 million has been approved by the government and an amount of Rs 90 million has been allocated as well as released in 2007-08.

Similarly, Product Development Centre for Composite based Sports Goods Sialkot approved with a cost of Rs 380 million. An amount of Rs 90 million has been allocated and released during the year 2007-08. But the projects managers of the above schemes failed to spend a single rupee till December 2007. 

The government had also approved a project, namely, Revival of Cultery Institute of Pakistan, Wazirabad with estimated cost of Rs 40 million. An amount of Rs 15 million has been allocated and released during the year 2007-08 but not a single rupee was spent till December last year, sources added. 

Apart from above-mentioned five projects, there are nine other projects, that were failed to utilise completely their allocated /released funds till December 2007. Total released to these nine projects was Rs 847.217 million and they utilised only Rs120.44 million. It showed that 86 percent released funds were not utilised till December 2007. 

These nine projects, that failed to utilise the released funds are: agro food processing facilities Multan, Aik hunar aik nagar, Gujranwala Business Center, sports industries development centers Sialkot, 2 MGD water desalination project, Gawadar industrial estate Balochistan, strengthening of planning monitoring and evaluation cell in MOIP&SI Islamabad, development products of Pakistan Gems and Jewellery Development Co, development of marble and granite sector and dairy Pakistan horizons.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Govt to procure 7m tonnes of wheat in current year​*
ISLAMABAD: There is no direction for determining the support price of wheat for current year and the government would procure wheat stocks of about 7 million tonnes at the prevailing market price for the current year. 

Spokesperson for the ministry of food, agriculture and livestock (MINFAL) told Daily Times here on Wednesday that the ministry had send the proposal for wheat support price for three times (in September, October and November), but all times the proposed wheat support price of Rs 500 per 40 kg was rejected by the government. 

He said that the ministry was proposing wheat support price at Rs 640 for current year. Fixing of Rs 640 support prices would result in higher flour prices in the country as the people already suffering by double-digit inflation rate. 

About government-to-government wheat flour export to Afghanistan, the spokesperson said it would continued. Being a neighbor country, Pakistan has to provide wheat flour to Afghanistan till the latter needed the commodity, he maintained. The government has committed to export 0.5 to 0.6 million tonnes wheat flour to Afghanistan per year, he added. 

Answering to a question he said the government would be able to achieve target of above 23 million tonnes of wheat production in the current year. However, the misfortune with the government was that wheat production has missed 2 percent of production area. Wheat was usually growing in three areas, original wheat growing areas, vicinity obtained from rice and cotton productions. The third pick of cotton is delayed and as a result it made 2 percent less areas for wheat production, he explained. Such shortage in areas for wheat production would definitely put the government in trouble to achieve the target of 24 million tonnes. 

However, other officials in the ministry predicts higher prices of wheat both in Pakistan and in international market in the coming years keeping in view the prevailing higher rates of wheat at international level. Main reason of higher prices of wheat was the increase in population and surge in its consumption across the world. About de-linking of wheat support price from procurement price, the officials claimed that it would lead to open competition for growers and purchasers. However, they said that proper planning required for wheat-growers so as to get best return for their hard produce. In absence of wheat support price, the growers have to stock wheat after harvesting if no one offered better price for the commodity. 

The Economic Coordination Committee (ECC) of the cabinet, in its meeting had de-linked the wheat support price from wheat procurement price and decided not to fix the wheat support price for the year 2007-08. However, the officials said the government would procure seven million tonne of wheat on the prevailing market prices. They said that the increase in procurement from five to seven million tonnes of wheat would attract the growers to produce more in the current season. The Ministerial Committee on Core Food Inflation of the outgoing government had recommended Rs 450 as wheat support price for the year 2007-08 but it was not honored by the ECC.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Services trade deficit surges to $3.281bn​*
By Tanveer Ahmed 

KARACHI: Services trade deficit jumped to $3.281 billion in the first half of the current financial year against $2.451 billion in the corresponding period of last year because of major decrease in export of services.

According to the latest figures of Federal Bureau of Statistics on Wednesday, around 34 percent growth was seen in the deficit, which analysts attributed to negative growth in exports caused by political instability and worst law and order situation, which marred this period.

During the period under review, exports fell by over 21 percent to $1.392 billion as compared to $1.774 billion in the same period of previous year whereas imports posted over 10 percent growth to $4.673 billion against $4.226 billion in a year ago period.

However, in month of December alone, the deficit in services trade shrank by 11 percent to $437 million over the same month of last year as well as narrowed down by over 39 percent against the preceding month of November when it was $722 million.

During the said month, exports registered over 20 percent growth to $313 million over $260 million in same month of previous year and over 46 percent over $214 million in preceding month November of this fiscal.

On the other hand, imports remained flat at $750 million in December 2007-08 over $751 million in the last December and saw major fall of almost 20 percent over $936 million in the preceding month of November of this financial year.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Chinese firm expresses desire to invest in Pakistan​*
ISLAMABAD: A delegation of Chinese Shetang Zhong Industry Co Ltd and China Liu enterprises Pharmaceutical Group, expressed the desire to invest in Pakistan through joint ventures in the pharmaceutical sector. It was les by Yang Yu and Liu Kong who called on President Islamabad Chamber of Commerce & Industry (ICCI) Ijaz Abbassi here on Wednesday.

During the meeting, Yang Yu lauded the far-reaching economic reforms introduced by the Government of Pakistan, which have resulted in excellent investment opportunities in the country. 

President ICCI recalled excellent ties between Pakistan and China in various fields and welcomed investment by pharmaceutical industry. He hoped that the group would provide high quality and cost-effective medicines. He also appreciated the achievements made by China in developing herbal medicines and hoped that Chinese businessmen will also invest in this field and transfer their expertise to Pakistan.

He expressed satisfaction over increased trade between the two countries and said that investment climate in Pakistan is encouraging. He invited that more Chinese investors should come to Pakistan and make joint ventures with Pakistani companies. President ICCI showed his great concern that prices of medicines in Pakistan are higher than other regional countries. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*ADB calls for new industrial policy​*
ISLAMABAB, Feb 14: Expressing concerns over Pakistans falling exports, the Asian Development Bank (ADB) has urged the policymakers to develop a new industrial policy, which should ensure strategic collaboration between public and private sectors with a view to effectively compete in the international export market.

This strategic collaboration between the two sectors, the bank believes, is an important tool to increase exports and achieve the objectives of higher productivity.

In its latest analytical report - A Note on Competitiveness and Structural Transformation in Pakistan - it said the share of the top 10 exports in Pakistans total exports had decreased significantly in the last two decades, although it is still highly concentrated in textiles.

The weighted average of the per capita GDPs of the countries importing Pakistans top 10 exports has declined significantly, indicating that the country is stuck in exports that are being exported by even poorer countries. And the income level of Pakistans exports, a proxy for the countrys export complexity and competitiveness, is at the same level it was two decades ago.

It also said that Pakistans growth rate-cum structural transformation-have been lower and slower than those of other countries in Asia.

Accelerating the rate of structural transformation must be a key objective of Pakistans policymakers, it added.

It called for undertaking sector-specific reforms with a view to fostering competition so as to transforming the economy. This requires a dose of good policy as the market alone will not do it.

Industrial policy is not about picking winners, the bank said adding that identification of the product space along the lines of the new literature is the way to identify sectors.

The idea is that a country has given capabilities that allow it to produce some products. These capabilities should also allow it to produce similar goods (because they require similar capabilities). Jumping successfully from the production of less sophisticated products (e.g., textiles) into the production of more sophisticated ones (e.g., electronics and automobiles) is not simply a matter of training more engineers and scientists at school, but of mastering the steps in between, the way the successful Asian countries did it. Without this, the effort at industrial upgrading will be an exercise in futility.

The bank said that as Pakistans growth rate had accelerated in recent years and the contribution of investment to overall growth has increased, policymakers must seize this momentum to implement a growth strategy that aims at transforming the economy in the direction of the successful Asian countries.

This does not mean that Pakistan should aim at emulating Korea, for example. It is not possible to do this, not only because the international environment is very different (perhaps less favourable to Pakistan today than to Korea 30 years ago), but also because the initial conditions of both countries are also very different (e.g., Pakistans degree of poverty and social inequalities).

Despite this, there are lessons that can be studied and appropriately adapted. Perhaps the most important is that structural change requires purposeful actions and a political will.

The bank also said that the industry and services output growth rates are significantly higher than agricultures, and given the service sectors high share in output, services are the major contributor to total output growth rate (over 50 per cent).

The contribution of agriculture and industry are significantly smaller.

Pakistan is a service economy from the point of view of its output structure, but an agricultural economy from the point of view of its employment structure.

Intra-sectoral labour productivity growth has contributed substantially more than reallocation of labour from agriculture into the other two sectors to overall labour productivity growth.

The latter factor in fact plays a minor role accounting for overall labour productivity growth.

Reallocation of labour from agriculture into services has been much more important than from agriculture into industry.

Pakistan, the bank said, suffers from falling labour absorption as the absorption capacity of the service sector is not enough to compensate the falling capacity of agriculture and the stagnation of industry.

Although Pakistans manufacturing share is not low, given its income per capita, trade ratio in GDP, and population, the share of this sector in total output has been stagnant since the 1970s. This contrasts with what has occurred in Indonesia, Malaysia, and Thailand, for example, which have seen their shares increase.

The manufacturing sector, it said, is heavily concentrated in food and beverages and textiles. Together, they account for close to half of the sectors value-addition. The level of technology of Pakistans manufacturing sector is relatively low compared to that of other countries in Asia.

Moreover, the share of manufacturing value-added accounted for

by high-technology products is low and has remained stagnant during the last 40 years. Pakistans level of labour productivity has increased very slowly since the 1970s. There is still plenty of room for catch-up with the developed world.

ADB calls for new industrial policy -DAWN - Business; February 15, 2008


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## Neo

*Pakistan's foreign reserves fall to $227 million ​*
KARACHI (February 15 2008): The country's foreign reserves have declined 227 million dollar during the last week. The country's foreign reserves has been consistently declining after the imposition of emergency and State Bank of Pakistan (SBP) statistics shows that country's foreign reserves have been further plunged by some 227.4 million dollar during the last week.

Country's foreign reserves have declined from the level of over 14.7779 billion-dollar to 14,550.7 billion dollar during the week ended February 9, 2008. During the last week reserves held by SBP have declined by 211 million dollar to 12.3183 billion dollar during a week, earlier stood at 12.5293 billion dollar.

In addition reserves held by banks also shows a dipped of 16.2 million dollar from 2.2324 billion dollar to 2.2486 billion dollar during the week ended on February 9, 2008.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'$9 billion to be spent on improving National Trade Corridor' ​*
ISLAMABAD (February 15 2008): A sum of $9 billion would be spent within a period of next four years to improve country's connectivity with rest of the world especially to Central Asian States and China, member Infrastructure Planning Commission of Pakistan, Dr Asad Shahid said on Thursday.

Talking to a private TV channel, he said that the target of improving National Trade Corridor (NTC) is to improve major highways, railways, ports, etc and focus is to increase country's trade by around $300 billion.

Out of $9 billion, $5 billion would be spent to improve country's highways and $1.5 billion has been allocated to modernise Pakistan Railways and expanding its tracks upto Afghanistan, Dr Shahid said adding that the rest would be spent on improving ports, airports and providing other facilities to improve bilateral trade.

He said that to meet trade targets, trade zones would be established along with motorways while cost of doing business would be reduced significantly aimed at making Pakistani products as competitive and resultantly cheaper as compared to world.

Dr Shahid said that National Highways Authority is spending Rs 30 to 35 million per annum to improve its network. Bridges are being built to reduce Peshawar-Karachi journey by half from 72 hours to 36 hours. He said that Karakoram Highway (KKH) is being improved to attract more and more Chinese tourists in the country. "It is estimated that by 2020 hundred million Chinese tourists would tour the world and Pakistan is planning to attract at least 1 million tourists," he added.

http://www.brecorder.com/index.php?id=694625&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*NPO and PNAC sign MoU to accelerate economic development ​*
ISLAMABAD (February 15 2008): The Pakistan National Accreditation Council (PNAC) and National Productivity Organisation (NPO) will jointly work with the objectives to improve industrial and human quality and productivity for the ultimate aim of enhancing exports and ensuring accelerated economic development.

In this connection, a formal MoU between PNAC and NPO was signed here on Thursday. DG, PNAC Engr. Abdul Rashid Khan and NPO Chief Tariq Bajwa signed the MoU. The main purpose of this MoU is to establish working relationship between the PNAC and the NPO to co-ordinate and organise jointly training seminars and courses under project "Awareness Raising and Training on Conformity Assessment, Quality and Productivity".

The PNAC and the NPO will lock into the possibility of holding joint National Training workshops by employing greener and cleaner production methods with special focus on enhancing exports and protecting environment.

Speaking on the occasion DG, PNAC Engr Abdul Rashid Khan said that in the training programmes offered by PNAC and NPO special emphasis should be given to enhance awareness of conformity assessment, quality and productivity related issues in the context of environment and sustainable development.

He said that competition in the world market grows under the WTO regime by the hour, the demand for the quality products and services duly certified through a third part that is internationally recognised under the accreditation system, is on the rise. He informed that our export, in particular would depend on our ability to respond to customer's requirement.

He hoped that MoU would benefit both the organisations and ultimately boost the country's economy. Tariq Bajwa while thanking DG, PNAC ensured NPO's commitment like in the past to work together in order to create awareness on the benefits of quality and productivity to boost the economy.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Investment-friendly atmosphere vital to curb poverty: Soomro ​*
RAWALPINDI (February 15 2008): Government has encouraged the investment-friendly atmosphere in the country to help eradicate poverty, unemployment and other social problems, said Muhammadmian Soomro, Caretaker Prime Minister here on Thursday.

"Small and Medium Enterprises Development Authority was created to support the small industrial units which would help create jobs and increase the industrial production", Soomro said while inaugurating the New Academic Block at Peer Mehr Ali Shah Arid Agriculture University Rawalpindi.

The premier also laid the foundation stone of three mega projects of Rs 281.5 million including Institute of Bio-Chemical Science, Faculty of Veterinary Sciences and Gymnasium. He also distributed cheques among deserving people for micro-credit financing scheme started by the Sociology Department of the University. Governor Punjab and Chancellor of the University Khalid Muqbool, Vice Chancellor Dr Khalid Mehmood and Vice Chancellors of other varsities also attended the function.

The caretaker premier said that the State Bank has permitted the banks to provide micro-credit loans to people to expand their businesses and move towards self-reliance. He called upon rich and philanthropists to come forward and provide small loans to people for setting up small industrial and business units.

He said that new inventions and progress in science and technology has created competition in the world and nations who follow this high speed competition would attain development in science and technology. "Quality education would lead the nations towards the new horizons of socio-economic development and progress in science and technology", he added.

He said that government was desirous to change the education system to attain the desired results of development and progress. "It is imperative to change the system on primary level to provide solid basis to our young generations", he said.

He said that government was providing all possible resources to provinces for improving in education system and provision of standard and quality education.

He called upon teachers to use their best efforts for imparting quality education to young generations for producing a lot of educated and knowledgeable youths.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Gwadar EPZ may get 20-year tax holiday ​* 
ISLAMABAD (February 15 2008): The Economic Coordination Committee (ECC) of the cabinet, which is scheduled to meet on Friday with caretaker Prime Minister Mohammedmian Soomro in the chair, is likely to approve a package of incentives for Export Processing Zone (EPZ) top of which would be grant of 20 years tax holiday, official sources told Business Recorder.

In September last, the ECC under the chairmanship of former prime minister Shaukat Aziz did not approve a similar proposal rather directed the sponsoring ministry ie Industries Ministry to redraft special incentives for the investors interested in setting up industrial units at EPZ of Gwadar.

The sources said, Industries Ministry has now proposed to the ECC that 20-year income tax exemption may be granted as was given to the Gwadar Port developers despite disagreement by the Federal Board of Revenue (FBR) which supports grant of such incentive for not more than five years.

The sources said 1,000 acres of land has already been leased out free of cost, adding that incentives package had been drafted in consultation with concerned stakeholders and admitted that incentives offered by successful EPZs in India, Bangladesh, China, Malaysia and United Arab Emirates (UAE) were more attractive and result-oriented as compared to the regime of incentives operative in Pakistan EPZs.

It had proposed that 1,000 acres of land provided by the Balochistan government free of cost should be declared as EPZ. Sources said that ECC had observed that the proposal submitted by the Ministry did not contain a comparative study of incentives presently available in the existing EPZs in different parts of the country vis-à-vis those being offered in the Gwadar special economic zone.

The ECC would also discuss prices of essential items and availability of wheat and flour to the people especially at affordable rates. Besides, Pakistan Sugar Mills Association''s (PSMA) demands would also come under discussion as the secretaries committee headed by the Minister for Finance Dr Salman Shah did not discuss the issue due to one or the other reasons. The sources said, Ministry of Food, Agriculture and Livestock (Minfal) would brief the ECC about wheat situation and expected price of new crop.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Gwadar to serve as trade, energy corridor: Durrani ​*
WASHINGTON (February 15 2008): The newly constructed Gwadar deep-sea port and development of extensive infrastructure providing regional linkages would help to transform Pakistan into a trade and energy corridor, Ambassador to the United States, Mahmud Ali Durrani, said.

He told a gathering of students, experts and diplomats at John Hopkins University that Pakistan, through development of the strategically located modern port in the southern Balochistan, was poised to serve as a gateway for commerce and transportation among South Asia, energy-rich but landlocked Central Asia, China and the oil-rich Gulf countries.

Among the major projects being materialised under a master plan, the ambassador listed modernising of highways, shipping, better border terminals, establishment of rail and road network, banking system, insurance, custom clearance, freight management, trucking, increasing efficiency of logistics chain and telecommunication connectivity.

He was confident that with continued economic upsurge and sustained inflow of investment, Pakistan would be able to carry out multi-billion dollars projects in time and utilise Gwadar port's key location to the best economic advantage for its people and the region.

"Any land-based trade between the Gulf region and South Asian states can at best take place through Pakistan. Pakistan's proximity to the Gulf region, Iran, Afghanistan, China and Central Asia makes all of us natural trading partners, on the East, Pakistan is the ideal approach for shipment of Indian goods to Afghanistan and the Central Asian markets," he observed.

In the context of the country's potential to serve as energy corridor, he said, the most economical trans-shipment of fuel from energy-rich Gulf, Iran, and Turkmenistan to energy-deficient India would best transit through Pakistan.

This, he added, was particularly so in respect of natural gas pipelines from Iran and Turkmenistan. He also underlined the importance of security and stability in the region for realisation of ambitious economic development plans.

Ambassador Durrani said the launch of unprecedented development activity in Balochistan had already started accruing benefits to the local people as the pursuance of projects had generated a lot of employment opportunities for them and stepped up overall pace of progress.

To a question, the ambassador stressed that Pakistan had designed the Gwadar for trade and not as some sort of military corridor. "We have designed it purely for trade through road and rail infrastructure," he stated. Pakistan, he said, had signed a quadrilateral agreement with China, Kyrgyzstan and Kazakhstan for transit trade facilitation, which had been operational since 2004.

He informed the gathering that Singapore Port Authority had been awarded a 40-year contract to operate Gwadar port, constructed with the help of China last year. The envoy spoke of plans for future development of the port, which is expected to capture one-third of the national cargo traffic market by 2055, translating into 350 million tones.

Gwadar would also emerge as a major industrial and exports zone following its notification as a tax-free economic zone, he added. Fredrick Star, chairman of the Central Asian Caucuses Institute, moderated the presentation and praised Pakistan's vision for development as inspiring and remarkable.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*ECC to consider purchase of rental power plants today: proposal 'highly manoeuvred' ​*
ISLAMABAD (February 15 2008): The Economic Coordination Committee of the Cabinet will consider on Friday a 'highly manoeuvred' proposal regarding purchase of four rental power plants of 200-300 MW each to be installed in the private sector, informed sources told Business Recorder.

The sources said whatever was approved by Water and Power Minister Tariq Hamid at a meeting had been manipulated by some top officials of the Ministry of Water and Power and Pakistan Electrical Power Company. These officials skilfully influenced the outcome of the meeting or the situation in order to get what they wanted in an unfair way prior to placing the proposal before the ECC. The Pepco Managing Director made a presentation at an inter-ministerial meeting on January 29, suggesting different options to deal with power shortage.

According to the presentation, Pepco MD presented two packages for discussion: Package-A suggested that two power plants of 500-600 MW each (combined capacity 1000-1200 MW) preferably at Dadu and Faisalabad/Chichoki Mallian to enhance capacity of Gencos operating in the public sector.

Package-B proposed four power plants each of 200-300 MW (combined capacity 1000-1200 MW) as rental power plants in private sector located from amongst site such as, Sahiwal, Ghakar, Kot Lakhpat, Sialkot, Shikarpur, Jamshoro, Emanabad and Sheikhupura, etc.

THE MINISTRY OF WATER AND POWER GAVE THE FOLLOWING RECOMMENDATIONS: 

i) In order to meet power shortage in shortest possible time preference will be accorded to package-A proposed by Pepco which would furnish a formal proposal/PC-1 to the Planning Commission.

ii) Keeping in view the shortage of gas, it was decided that proposals for rental power plants ie package-B will be based on dual fuel (gas and RFO), single fuel RFO and will be implemented in shortest possible time.

iii) Rental power plants will be arranged for a period of 3+1 years.

iv) Efforts be made that the tariff for rental power plants is in line with the tariff allowed to the IPPs based on similar technology for their first 10 years.

v) Mandatory storage of oil for rental plants will be for 10 days.

vi) Pepco would re-evaluate the sites for the rental power plants on the basis of space for oil storage, transportation of oil to the site, environmental aspects, power evacuation, etc.

vii) Pepco to prepare a mid-term revised forecast for demand and supply of power and PPIB to provide necessary input/data to Pepco in respect of prospective IPPs.

The sources said the Water and Power Minister was contemplating establishing thermal power plants in public sector whereas Pepco was making efforts to go for rental power plants.

They said the summary had not been moved to the Finance Ministry, Planning Commission, Board of Investment, Nepra and PPIB for comments and it has been presumed that all the stakeholders would agree to the proposal.

http://www.brecorder.com/index.php?id=694552&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Oil, gas July-December production up by 8.4 percent, 2.9 percent ​*
KARACHI (February 15 2008): The oil and gas production for the period July-December 2007 has increased by 8.4 percent and 2.9 percent to 13 million barrels (70.9k bpd) and 713 billion cubic feet (3.8bcfd) respectively.

According to Pakistan Petroleum Information Service, OGDCL and PPL observed a 10.6 percent and 76.3 percent respective increase in oil production to 439000 bpd and 41000 bpd, whereas POL witnessed an 8.8 percent decline to 57000 bpd.

On the gas front, all companies saw an increase in production during the period under review over that in 1H/FY07 with that of OGDCL's registering increase of 7 percent reaching 978mcfd, while PPL and POL registered 2.7 percent and 1.2 percent increase to 991mcfd and 47mcfd respectively.

"With no significant change in numbers over our expectations, we maintain our BUY stance on OGDCL, PPL and POL", Jawad Haleem, senior analyst at Atlas Capital Markets said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Telenor secures two million subscriptions in three months ​*
ISLAMABAD (February 15 2008): Telenor Pakistan has announced financial results for Q4 of 2007, with two million subscriptions within the 3-month period. The company also grew its revenue by 18 percent from Q3 and improved its EBITDA margin by 17 percent from Q3 2007. The company crossed 15 million subscribers in mid-January 2008 - within less than three years of operation.

CEO Telenor Pakistan attributed the success of the company to Telenor Pakistan's belief in "responsible growth." Commenting on what has propelled Telenor Pakistan to achieve such performance in the face of intense competition, Telenor Pakistan's CEO Tore Johnsen said, "I am happy with the way we are growing. Our customer growth comes hand in hand with solid revenue growth. We believe we must grow but we must grow responsibly - balancing the interests of the shareholders, the employees, and the public at large."

The Telenor Group secured 30 million new subscriptions in 2007. Telenor is now ranked as the world's seventh largest mobile operator with a total of 143 million subscriptions in its mobile operations.

http://www.brecorder.com/index.php?id=694658&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Mobilink unveils in-flight mobile phone service ​*
LAHORE (February 13 2008): Mobilink has unveiled yet another landmark achievement by being the only operator in Pakistan to offer in-flight mobile phone service onboard international flights.

Partnering with OnAir, Mobilink offers GSM network onboard aircraft, allowing passengers to not only use their mobile phones for making and receiving calls and text messages, but also enabling them to send and receive data over GPRS.

Air France has become the first airline in the world to offer this service on international flights. Using the Mobile OnAir system, Mobilink subscribers travelling onboard one of the Airbus A318 aircraft operating on European routes can avail SMS and MMS services, exchange emails and browse the web using any phone with Internet access. Customers will be able to make and receive phone calls in the second phase of the trial period, as the service is being regulated to maintain passengers' comfort and well being.

Mobile OnAir enables passengers to use their GSM mobile phones and smart phones, such as BlackBerry, during flights-after takeoff and before landing. The service supports voice communications and text messaging, as well as General Packet Radio Services (GPRS).

Mobile OnAir works like a roaming service on ground. It is billed by the passenger's home mobile operator. To use the service, passengers with an international roaming subscription simply switch on their mobile phones on a Mobile OnAir-equipped aircraft. When a mobile phone is logged on to OnAir's network, the display will show "OnAir" and the passenger can start to use their phone as normal.

Mobilink promises to maintain its technology leadership and customer satisfaction by offering more state-of-the-art services in the near future.

http://www.brecorder.com/index.php?id=693878&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Stock gurus optimistic about economy ​* 
Saturday, February 16, 2008

KARACHI: The crucial general elections in the country on Feb 18 are to decide who will rule the country and it will also set the mood at the local stock exchanges.

While political analysts are unsure about the outcome of the polls following the situation obtaining after Benazir Bhuttos assassination in December last year, stocks gurus are optimistic about the future of local bourses regardless of which political party would be the winners on coming Monday.

Brokers expect to record healthy turnover in the days to come, though many people think voter turnout would be thin at the elections for fear of violence. We hope for the best at the local bourses. Whoever comes into power, things are likely to settle down after a brief stress, said Arif Habib, a former chairman of the Karachi Stock Exchange (KSE).

These days the country is passing through a transitional phase and capital markets too. The outcome of the elections would have its impact on reshaping the investors mindset. This transitional phase would end a few days after the formation of the next government, he added.

Habib also fears law and order situation over the next week and sees negative impact on markets in short to medium term if untoward incidents take place. Political developments during the outgoing week show that elections would be held in peaceful atmosphere. If anyone (or party) tried to sabotage the electoral process, then the police, Rangers and Army personnel would be there to handle the situation, said Dawood Jan Muhammad, Director-Member on the KSE Board.

He maintained that the conclusion of the elections would calm down the charged political atmosphere in the country and generate buying activities on the bourses. Market players had already started exploiting the available potential in the stocks market for two reasons: one the market had already shed massive points on concerns of political uncertainty, law and order situation and a slowdown in domestic and world economies, and second, players were foreseeing an investment-friendly environment at the local bourses in the post-election scenario, he said.

He was of the view that the availability of CFS MK-II product from April 7, which would provide unlimited financing to investors, would also strengthen the bull-run after the elections. Chairman of AKD Securities Aqeel Karim Dhedhi sees continuity of economic policies regardless of the fact which party or a coalition of parties comes to power.

He was of the view that the Pakistan Peoples Party (PPP) and the Pakistan Muslim League (N) both had been in the government twice in the past and if any one of them or both of them formed the next government in coalition, then they would not roll back the liberalisation of the economy. 

Consistency of economic policies would continue to run capital markets on upward trends, he believed. If the Pakistan Muslim League-Q (PML-Q) again came to power and formed government with its allies, then there would neither be political or economic instability in the long run, he added.

The situation in Wana and Swat is under the governments control. Now we expect little reaction from militants, he said. Economic fundamentals were strong enough to let bulls advance their journey on the bourses. The increasing demand for fertilisers, cement and energy in the country, and the setting up of power projects with bank financing on high rate of mark-up would result in banks earning high profits this year too.

Moreover, the decline of the Pakistan rupee against Chinese and Indian currencies was likely to benefit the Pakistan textile sector. Importers would turn more and more to Pakistan this year, Dhedhi said.

Stock gurus optimistic about economy


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## Neo

*US to outsource IT projects to Pak firms ​* 
Saturday, February 16, 2008

KARACHI: Pakistan is expected to acquire a significant share of American companies outsourcing agreements in information technology as a number of firms have shown interest in tapping the rich potential of Pakistans IT industry services.

During a recent series of meetings with a visiting Pakistani delegation, several renowned companies in USA expressed their willingness to outsource various projects to Pakistani companies, a spokesman for Pakistan Software Export Board (PSEB) stated.

The spokesman said that the Mayor of Houston, Bill While, announced 15th of January, 2008 as Pakistan Software Export Board Day. This announcement speaks of the trust and confidence placed by the US business community in the Pakistan IT Industry, he added.

The spokesman expressed hope that outsourcing projects from US companies to Pakistan would increase job opportunities for local skilled professionals, boost IT exports and earn more foreign exchange.

The Pakistani delegation, led by PSEB Managing Director Yusuf Hussain, held detailed meetings and networking sessions with leading corporations, trade chambers, academia and IT companies. These meetings were held in various American cities including Houston, Austin, Polo Alto and Chicago, reputed to be the hub of IT activities. These networking sessions have generated valuable business leads, which are likely to transform into successful business ventures, he mentioned.

He stated that the USA companies that are considering outsourcing IT projects to Pakistan are Yahoo, JP Morgan, Motorola, Sun Microsystems, Continental Airlines, Chase Bank, Houston IT Department, Prime Communications, American International University Houston, Cyber Tex, Cadence and Goldman Sachs. Some American Universities and academic institutions have also shown interest in developing a student exchange program with Pakistan to open training centers in the country, which is an encouraging sign for the local IT Industry.

The visit of Pakistan IT delegation and the networking sessions in USA were arranged by PSEB in collaboration with Texas Trade Council (TTC), Organization of Pakistani Entrepreneurs of North America (OPEN) and Embassy of Pakistan in the USA. The purpose of this visit was to provide a platform to Pakistani IT companies to showcase their products and services in front of a focused audience. 

US to outsource IT projects to Pak firms


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## Neo

*$1.4bn paid for debt servicing ​* 
Saturday, February 16, 2008

KARACHI: The country paid $1.464 billion on external debt-servicing during the first half of the current fiscal year, of which $853 million were used for retiring principal amount while $511 million were spent on interest. 

Besides this, from July-December 2007 the government retired public and publicly guaranteed external liabilities worth $1.023 billion, of which principal loans were $599 million and interest was $413 million. 

These payments were made in two installments, the first installment was paid during July-September 2007 when the government paid $647 million and it retired $717 million in second installment during October-December 2007. 

The SBPs latest statistics showed that $990 million were used for retirement of medium and long-term loans (more than one year period). The break-up showed that $302 million were returned to Paris Club and $288 million were paid back to multilateral whereas $40 million were paid to other bilateral foreign lenders. 

Moreover $64 million paid for Eurobonds & Sandik Metal whereas $38 million were paid for military payments and $27 million were consumed for commercial loans/credits. 

For the short-term loans (less than one year) $28 million were paid back to Islamic Development Bank (IDB). For repayment of private and non-guaranteed loans $255 million were incurred. These all loans were for medium and long term (more than one year). $87 million were paid back to International Monetary Fund (IMF) in which $3 million were used for interest payment.

$1.4bn paid for debt servicing


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## Neo

*Korangi Creek Industrial Park opened ​* 
Saturday, February 16, 2008

KARACHI: Governor Sindh Dr Ishratul Ebad Khan inaugurated the Korangi Creek Industrial Park (KCIP), a project undertaken by the National Industrial Parks Development and Management Company (NIP), a subsidiary of Pakistan Industrial Development Corporation (PIDC), on Friday.

We will make all possible efforts to facilitate both local and foreign businessmen. The industrial progress that Pakistan is making is because of the governments policy of privatisation and public-private partnership, said Ishratul Ebad Khan.

Governor Sindh directed the City Nazim of Karachi, Syed Mustafa Kamal, who was present at the ceremony, to lay the main road leading to the industrial park instantly, to facilitate the KCIP project and to support healthy business activities in the area.

The government will try its best to help improve the security of industrial areas which cannot be neglected any further after the chaos of Dec 27, 2007, Ebad added.

We are striving to support the industrial progress of the country, and to facilitate the businessmen and business activities has been our policy. The govt has been pursuing the policy of creating more and more opportunities for employment and to lessen poverty in the country. One window operation was a far cry in our country, but it is very heartening to see projects like these where one window operation is no longer a dream, he added.

KCIP is a state-of-the-art project which has been developed with the assistance of the internationally renowned Jurong Consultants of Singapore because of their expertise and wide experience. 

Korangi Creek Industrial Park opened


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## Neo

*Real estate sector expects revival after polls ​* 
Key word is stability, HBFC chairman, real estate investors, developers opine

Saturday, February 16, 2008
By Faryal Najeeb

KARACHI: Major players of the real estate and housing and construction industry are desperately hoping for fair elections to witness a revival of their sector which is experiencing an all-time low period while some believe that property prices would shoot up with revival of investors confidence in the country.

Trading of properties is at a standstill now, after the elections properties in Pakistan would spiral up to five times as the new government would be able to offer a stable country to investors, said FPCCI sub-committee for housing and construction Vice President Munir Sultan.

He said that according to the World Bank report of 2007, there is a shortfall of 8.82 million proper houses in Pakistan in comparison to the population while Karachi happens to be the most-affected city of the country. He hoped that the new government would give due attention the neglected housing sector.

The Real Estate Investment Trusts (REIT) are likely to help reduce the housing shortfall, as the sector would become a documented economy and it would be possible to raise the desired amount to start new projects, he said.

A proper white economy would also provide revenue to the government while benefiting small investors as well. This, he said would revive confidence in the market which would lead to property price hike.

Basit Mahmood, Project Director at GlobBiz said that there would be a rise in property prices but one cannot be certain on how much as property prices increase when there is development in a certain area such as infrastructure and airports.

He said that Pakistan was a rapidly developing country but deteriorating law and order and political uncertainty hampered the housing sector growth that lead to loss of investors confidence. He hoped that after polls there would be stability.

Stability ensures secure return on investments, which was the real attraction for the investors, Basit said. House Building Finance Corporation Chairman Zaigham Rizvi was of the view that though the new government was likely to revive investors confidence in general, the same could not be said for the real estate industry as it was a long term investment and not volatile like the stock exchange which might experience a resurge soon after polls.

The new government has to announce its policies first, following which the real estate investors would decide their movements, he said adding it was too early to forecast post-election investment scenario in real estate.

While the local market is at its all time low, Pakistani builders who have ventured into foreign projects are receiving a tremendous response. The UAE based projects of Rufi Builders and Chapal Builders were oversubscribed.

Rauf Chapal of Chapal Builders informed The News that local builders invested abroad after seeing the dismal situation of the local market. I have property here but I cannot work due to the law and order and political situation of Pakistan as I face losses in millions each time, he said.

Chapal was of the view that if the elections were fair the local industry stood a chance to survive but added that nothing could be presumed in advance as it all depends on situation following the polls. Mehdi Raza of Estate Zone said that local investors ventured into foreign projects as those countries offered them better returns on investments which this country failed to do so. He said that they had no other option but to cross the border to other countries to stay in business.

It is ironical that even established businesses in Pakistan now have to look elsewhere to continue with their business just like lot of Pakistanis who go abroad for better education and job opportunities, he commented.

Real estate sector expects revival after polls


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## Neo

*Cellular subscribers hit 78.7m ​* 
Saturday, February 16, 2008

KARACHI: The cellular subscriber base in the country reached 78.7 million in Jan 2008, recording an increase of about 1.9 million subscribers or 2.4 per cent from the previous month, according to latest figures released by Pakistan Telecommunication Authority (PTA).

This addition has taken the cumulative increase over seven months (July-Jan) of FY08 to 15.6 million subscribers or 25 per cent. The cellular mobile density, as a result, has hit 49 per cent against 48.6 per cent in Dec 2007. The major highlight of the January figures was the fact that Telenor became the third cellular operator after Mobilink and Ufone to cross the 15 million mark, as its subscriber base rose by approximately 754,000 in Jan 2008 to 15.4 million. 

While subscriber base of Telenor continues to grow at a brisk pace, Ufone, the cellular subsidiary of PTCL, has seen its market-share dip consistently over the last few months, dropping to 20.9 per cent in January from a high of 22.5 per cent in August 2007. 

The major beneficiary of this marginal decline has been Telenor, improving its market share by 1.9 per cent over the same period to stand at 19.5 per cent. There has however been no change in the market share-based standings of major players, whereby Mobilink continues to occupy the top slot with a market share of 39.2 per cent, followed by Ufone (20.9 per cent), Telenor (19.5 per cent) and Warid (17 per cent). 

Farhan Rizvi, telecom analysts at JS Global Capital, believes that there is still potential in the cellular industry to grow as it has only captured 49 per cent of the total market which is still low. 

The cellular mobile density is expected to hit 70-75 per cent after which there will be some slowdown in the growth rate of the industry. In 2010, the cellular subscribers will go to 100 million with the aggressive marketing of the cellular companies attracting more and more of the youth which is 50 per cent of the population. 

Cellular subscribers hit 78.7m


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## Neo

*CSF report on Pakistan being prepared​*
KARACHI, Feb 15: The Governor of State Bank of Pakistan, Dr Shamshad Akhtar, has asked the Competitive Support Fund (CSF) to prepare an action-oriented report, with clear implications to Pakistans sectors to improve its competitiveness on a global footing.

During her meeting with the officials of the CSF, which is working on State of Pakistans Competitiveness Report 2008, Ms Akhtar lauded the fund for preparing such a report. She provided her valuable input and shared that the report should include defined actions and implications for the respective sectors and especially include relationship between inflation and competitiveness to educate the audience on the inter-linkages between these two.

This includes decomposing macroeconomics and sector level issues, such as energy crisis and competitiveness as well as issues, such as raising per capita income, increasing demand and collusive behaviour. She linked the raised interest rates in Pakistan with worldwide oil prices and global food commodity prices to combat inflation. The report will track Pakistans performance, spotlighting the areas of progress and areas of further focus, says a press release.

CSF report on Pakistan being prepared -DAWN - Business; February 16, 2008


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## Neo

*First half debt, liabilities surge by $2.4 billion to $42.88 billion ​*
KARACHI (February 16 2008): The country's external debt and liabilities witnessed a surge of 2.4 billion dollars to new 42.88 billion dollars during the first half of current fiscal year, primarily due to slowing down of privatisation inflows and soaring oil prices.

"During the current fiscal year, the country has not received a single penny for reimbursement from the US, while the current account deficit is on the rise, which compelled the government for fresh borrowings,' economists said.

The State Bank of Pakistan (SBP) on Friday said that the country's foreign debt and liabilities had gone up by about 6 percent during the July-December period of the current fiscal year. As a result, the overall external debt and liabilities reached new level of 42.882 billion dollars on December 31, 2007, which earlier stood at 40.481 billion dollars at the end of 2006-07.

During this period external debt registered an increase of 6.49 percent to 41.540 billion dollars from 39.008 billion dollars, a raise of $2.532 billion, while foreign liabilities decreased by 8.89 percent to 1.342 billion dollars against 1.473 billion dollars on June 30, 2007.

However, foreign debt, as per ratio of GDP, improved during July-December of 2008 as it declined to 26 percent of GDP against 27 percent at the end of fiscal year 2007. Economists said that rising current account deficit had compelled the government for fresh borrowings from both internal and external sources. Therefore, overall debt from both sources had increasing gradually during the current fiscal year.

During this period the government delayed issuance of Global Depository Receipts (GDR) due to political uncertainty, as negative impact was seen in the shape of rising current account deficit, they said. They said that as per GDP, external debts were still under control and Pakistan's sworn rating B1 and B+ issued by Moody's and Standard and Poors respectively would be stable.

It is likely that the country would further borrow during the current fiscal year to meet external expenditure. However, despite further borrowing, its overall debt (including internal and external) would be under 60 percent of GDP, they said.

SBP statistics depict that country's external debt has been consistently climbing since fiscal year 2004 and overall country has borrowed some 8 billion dollars during last four and a half years, which had never been witnessed in the past.

In the fiscal year 2004 the country's external debt and liabilities stood at 34.887 billion dollars as compared to 42.88 billion dollars in 2008, showing an increased of 23 percent during last four years.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*$100 million Swiss ethanol plant project in jeopardy ​*
KARACHI (February 16 2008): A Swiss company's $100 million plan for setting up maize-based ethanol generation plant near Port Qasim has been jeopardised due to poor law and order situation in the country.

Sources in Sindh Environment and Alternative Energy Department told Business Recorder on Friday that the poor law and order and political instability have put the project in doldrums as the company is reluctant to invest in the country in present scenario.

Without naming the Swiss firm, sources said that a high-level delegation of the firm has called on Mohammadmian Soomro some six months back in Islamabad, when he was Senate Chairman to brief him about the project. Soomro had asked the delegation to work jointly with Board of Investment and Planning Commission to remove the financial and legal hitches in the plan.

Later, the Alternative Energy Development Board was asked to see the possibility of setting up the plant near Port Qasim, the sources said, adding that the AEDB had also started feasibility study of the project in collaboration with Swiss firm.

Sources said the firm was also intending to invest in large-scale projects in oil and gas sector. Sindh Alternative Energy department had also announced setting up of a $110 million ethanol plant on which AEDB was working but this project was also in doldrums owing to indifference of the officials concerned.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'New government should give priority to economic development' ​*
KARACHI (February 16 2008): The speakers in the meeting of Shura Hamdard, Karachi chapter has urged the new democratic government to be formed after the 18th February Elections to put sustainable economic development, distribution of justice, decentralisation and self-reliance in its priority list.

The meeting, held on Thursday, February 14, 2008 was presided over by the Chief Justice, Federal Shariat Court, Justice Haziqul Khairi at a local hotel. The President, Hamdard Foundation Pakistan, Sadia Rashid said that the new democratic government should concentrate on the issues of water, electricity and construction of dams as our industry and agriculture cannot develop without water and energy and consequently the country would have to rely on foreign aid and assistance.

The Rector, Islamic University Islamabad, Dr Manzoor Ahmed, said that the government that is supposed to get into power must promote the Pakistani nationalism, should also decentralise the power as it was essential to create sense of participation among the masses. Strict centralisation creates sense of deprivation among the people.

The national institutions should be strengthened to raise their value and dignity, he added. Dr Mohammed Au Siddiqui, Justice Haziqul Khairi, MA Sabzwari, Qutubuddin Aziz, Dr Syed Amjad Ali Jaffery, Shamim Kazmi, Islamuddin Aga, Dr Khalid Ikramullah Khan and Dr Naeem Qureshi also spoke. At the end of the session, Shura presented a necrology over recent deaths of Dr Anees Khurshid, Idress Ahmed Minai and Professor Dr Zakia Zeba and offered fateha.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Open track policy: Cabinet disallows foreign invesment​*
ISLAMABAD: No foreign investors will be allowed to benefit the Pakistan Railways (PR) open track policy. Only local investors could avail the benefit of this policy for running private trains on official track by making required investment.

The federal cabinet has disallowed foreign investors to use official track of PR, said Caretaker Federal Minister for Railways Mansoor Tariq while talking with Daily Times here on Saturday. However, he said not a single firm or investor showed any interest in this regard. 

Earlier, the ministry of railway inked three transport agreements with Dost Steel Limited, Fatima Fertilizer Company Limited and Suraj Fertilizer Industries (Pvt) Limited. According to the agreements, PR would be able to generate Rs 470 million per annum.

Pakistan Railways revenue would increase to Rs 1 billion in 2010. The three companies would pay as follows: Dost Steel Limited Rs 406 million, Fatima Fertilizer Company Ltd Rs 300 million and Suraj Fertilizer Industries Rs 294 millions. 

Addressing the journalists, minister said that the agreements were signed under the public private partnership programme of the government. He termed it as a step for revenue generation for PR. The government has committed to increase the PR profit by Rs 6 billion per annum.

The ministry of railway also signed an agreement with Pakistan State Oil to transport 140,000 tonnes of oil and it would provide Rs 1.40 billion to railway.

On other side the minister said PR has also stopped 11 trains across the country just to curtail the losses bore by the railway department. But none of them was passenger trains so passengers were not affected from this action of the government. 

The department also decided to lease out six PR hospitals situated in different parts of the country. The department spends Rs 260 million annually by running these hospitals but they failed to provide proper medical facilities. The government, in 1997, decided to lease out all railway hospitals. In 2004, the PR has leased out a Pindi hospital He said that the hospital was leased out on wrong terms and conditions and hence was not generating any revenue for the department. He expressed a lot of reservations over the decision. 

The minister informed that PR has a lot of property at prime locations. There are lucrative properties of PR in Rawalpindi on Bank Road. Some people have taken the possession of that land with the cooperation of some ministry officials. The minister said that he would send this case to NAB against three concerned officials of the railway ministry However, the minister reiterated that the government retrieved PR properties worth Rs 5.28 billion and assured to recover more soon.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Remittances surge by 22.44% to $3.623bn during Jul-Jan​*
* Amount includes $1.71m received through encashment and profit earned on FEBCs and FCBCs​
KARACHI: Pakistan received $3.623 billion as workers remittances in the first seven months of the current fiscal year, showing an increase of $664.05 million or 22.44 percent over the same period of the last fiscal year. 

The amount includes $1.71 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs), the State Bank of Pakistan said here Saturday. 

The inflow of remittances in the July-January period from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries stood at $1.025 billion, $663.67 million, $593.57 million, $539.88 million, $262.88 million and $103.18 million, respectively, as compared to $768.01 million, $552.53 million, $443.87 million, $407.36 million, $247.86 million and $85.61 million, respectively, in the July-January 2006-07 period. 

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the period mentioned above stood at $432.80 million as against $452.71 million in the same period last year, showing a decline of 4.39 percent. 

During the last month (January 2008), Pakistani workers remitted $557.07 million, up $165.74 million or 42.35 percent when compared with $391.33 million sent home in January 2007. 

The inflow of remittances into Pakistan from almost all countries of the world increased last month as compared to January 2007. According to the break up, remittances from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries stood at $151.50 million, $100.61 million, $93.24 million, $82.67 million, $35.65 million and $14.19 million, respectively, as compared to $108.74 million, $69.21 million, $46.84 million, $48.78 million, $29.19 million and $10.72 million received during January 2007. 

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during January 2008 amounted to $78.62 million as compared to $77.79 million during January 2007.

Daily Times - Leading News Resource of Pakistan


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## Neo

*NWFP govt signs agreement for fuel exploration*​
PESHAWAR: The caretaker government in NWFP signed an agreement with Hungarian firm, Millennium Oil Limited (MOL), for exploration and production of oil and gas here on Saturday.

NWFP Caretaker Chief Minister Shamsul Mulk and Managing Director for Pakistan Janos Feher signed the document for acquisition agreement for the Tal Block. 

This will be the first large scale compulsory land acquisition by the provincial government, a MOL statement said after the signing ceremony at the Chief Ministers Secretariat. After the acquisition, the land will be leased out to MOL Pakistan for 30 years. 

Most of the land will be used for laying a gathering system in the Tal Block that is a major natural gas discovery in the province, the statement added.

Janos Feher said that with the agreement the company would be able to complete development and production phase of Manzalai field according to the schedule and to provide natural gas and 4,000 barrels of condensate at the first quarter of next year.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Infrastructure in industrial areas top priority​*
KARACHI: Caretaker Sindh Minister for Industries, Labor, Transport, Commerce and Cooperation Arif Ali Khan Abbasi has said the development of infrastructure in industrial area is being attached top priority so as to accelerate the pace industrialiasation.

This he said while presiding over a meeting of Sindh Industrial Infrastructure Development Board (SIIDB) at his office here on Saturday. Secretary, Industries, Labor and Transport Rasool Bux Phulpoto was also present on the occasion.

Provincial minister said that keeping in view the importance of sound infrastructure in industrial zones, four independent management companies have been formed in Korangi, Landhi, Federal B Area and North Karachi with an amount of Rs 250 million. KITE, LITE, FITE and NITE have been assigned the responsibility of developing the infrastructure in their respective jurisdiction, he added. The proposal of KITE regarding strengthening of security in Korangi Industrial Area also came under discussion in the meeting. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*PJBF wants 'scheduled' uplift works in Karachi ​* 
KARACHI (February 17 2008): The City District Government Karachi (CDGK) should introduce a "schedule" based system to undertake "strictly supervised" developmental projects in the metropolis.

"A schedule should be announced before starting any project... this will not only help ensure transparency but also allow the people to be aware of and ready for the new development in their area," said Abdul Kader Jaffer, President Pakistan Japan Business Forum (PJBF).

He was addressing members of the executive committee of PJBF here at a local hotel on Saturday. The city nazim, who was the chief guest on the occasion, could not attend the event due to illness, said the City Naib Nazim Nasreen Jalil who replaced the nazim as a chief guest.

"Roads are dug up and left incomplete which caused drainage problems for the area people... so strict supervision of the developmental projects should be ensured," the PJBF president maintained.

He said the city government had changed the face of Karachi in terms of development but a lots of works and problems were still there to be addressed to make the city a problem-free place. He said problems like pollution and pressure horns were still unabated, as laws restricting these problems were not being implemented properly.

The PJBF chief also proposed that a "distinguished but non-political" person should accompany the union council nazims as an adviser on the development affairs. Lauding the CDGK for devising the Master Plan 2020 for Karachi, the PJBF chief said the document was the need of the hour and should have been prepared at least 25 years ago.

The PJBF president also offered his help in convincing the Japanese government for granting loan to the city government for infrastructure development of the metropolis. "Japan is interested to make investments in infrastructure development projects like circular railway project etc in Karachi," he said.

In her speech, the Naib City Nazim Nasreen Jalil acknowledged that city of the 16 million people was still stuck with lots of problems as the previous city government had neglected development of Karachi. "All done by the CDGK is like a drop of water in the ocean and we have to do more to develop the previously neglected city," she added.

The deputy nazim welcomed the PJBF's proposals saying that the suggestions would be taken into account on the appropriate forum. "The ideas of schedule, transparency and advisors to the UC nazims sound good and we would take them into considerations," assured Nasreen.

She said some issues like unity of command were halting development of the city, which was being administered by 13 land owning federal and private agencies. "A Supreme Court verdict on transfer of civilian areas to the CDGK is a good omen in this regard" she said.

She said the metropolis had a five-percent growth rate in terms of migration. "People migrate to Karachi and treat it like a transit way and never care for its future," lamented the naib nazim.

She said out of a Rs 45 billion's fiscal budget the CDGK had allocated Rs 25 billion for developmental work in the city. Around 70 percent work on sewerage lines was completed while water was made available for the far-flung areas like Lyari, Korangi, Orangi, Site etc.

Later, the Pakistani and Japanese businessmen questioned the city nazim on various problems related to a bad traffic and transportation system, lack of government's attention towards human development, non-availability of water, maintenance of the historical heritage, dilapidated condition of Quaidabad bridge etc when the latter invited queries from the gathering.

The naib nazim urged Japanese businessmen to extend technical help to Pakistan on competitive rates for development of the friendly country. Senior Vice President of PJBF Masaharu Domichi gave a vote of thanks to the chief guest, who was also given a memento at the end of meeting.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Availability of skilled human resources key challenge for Pakistan: World Bank study ​* 
FAISALABAD (February 17 2008): The key challenge for Pakistan is the availability of adequately qualified and skilled human resources in infrastructure sector, which are essential for sustained growth and development of the capacity of construction industry to undertake large volumes of work with acceptable standards of quality workmanship, said a World Bank study.

According to the report of 'South Asia Sustainable Development Unit, (SASSD), South Asia Region of World Bank, there is need to train a very large number of engineers, junior engineers, and skilled and administrative staff. To work out the cost of training at different levels within Pakistan and abroad seems premature at this stage. It can be a lengthy and complex exercise. At this stage, a simplified way would be to relate cost of training to the size of the infrastructure program at hand.

The World Bank study said that the aggregate size of the program for the 2005-2010 period is approximately Rs 1,400 billion, and a half percent of this program will be Rs 7 billion, or approximately $117 million. If funds are allocated according to this low percentage figure, it would work out to be almost $23 million annually for the next 5 years.

This figure will give a start to the training program and can be modified as it develops. Investment will promote excellence in education and training, and trained manpower would produce results far in excess of the investment.

A detailed and comprehensive program of education and training will also be necessary in consultation with the stakeholders. Lack of trained manpower in Pakistan has been the result of years of neglect. This opportunity should be cashed with a sense of urgency and immediacy. Trained manpower available before the planned infrastructure program gets fully launched will be of great benefit, the World Bank study said.

According to the study, shortage of professional and adequately skilled personnel in the industry (among clients, contractors and consultants) in developing countries both in the form of management and for field operations has been widely cited across the reviewed literature.

Largely, WB study stated, non-professional managers and insufficiently qualified technical personnel head contracting firms in Pakistan. Even though Pakistan Engineering Council (PEC) bylaws make it mandatory to employ graduates, most contractors fail to do so.

This imposes severe limitations on capacity as well as the quality of work. Apart from technical weaknesses they also lack skills for risk management, marketing, financial control, work organisation and quality control. The above-mentioned contractors' inadequacies are further compounded by the dearth of trained operators of machinery, professional engineers and skilled tradesmen.

For delivering the MTDF planned infrastructure, the WB study stated that the professionals and technical staff required is in thousands. The government needs to take steps to enlarge the available pool of skilled HR at the outset, and concurrently increase the level of skills.

To enlarge the pool, appropriate skilled personnel can be imported from regional countries to fill the numbers and skill gap. This could be a temporary stopgap measure. However, keeping in mind the wage differentials, this strategy will be more costly for contractors and consultants when compared with hiring locally.

Another possibility is to reverse the trend of brain drain, which could potentially increase the supply of locally available engineers by a thousand and technical staff by 3,000 or more, each year.

The most viable option is to increase enrolment of students in higher education and technical and vocations institutes leading to professional, vocational and administrative careers in the construction sector and at the same time, arresting and reversing the brain drain by providing better employment opportunities, increasing local salaries and benefits.

Besides restructuring the local salaries, WB study said, one option in this respect would be to put in place policies which offer Pakistanis' with foreign experience wages equivalent to regional countries, such as the UAE, and those Pakistanis who have a foreign nationality, expatriate wages should be considered.

Ultimately, higher salaries and other benefits will have to be the first step in attracting HR into the industry. Once the incentives to enter the industry are in place, the recommendations made pertaining to training and enhancing skills can be used to upgrade the skills of fresh graduates and existing engineers and technical staff to implement large infrastructure projects in Pakistan.

To increase the skill sets, training of current employees in the construction sector should be conducted both within Pakistan and abroad. Foreign training should be considered for specialised fields, where it is not available in the country, and for providing broader training in fields where more experienced personnel can benefit the most. Distance learning programs can also be adopted for such purposes, said the WB study.

At present, some of the foreign consultants, contractors working in Pakistan can train within their organisations, in or out of Pakistan, as part of their contract, and World Bank, USAID, ILO, ADB, Japanese Assistance Programme and others can help with placements, with a combination of university courses combined with field training.

Within Pakistan, WB study pointed out, engineering universities and other professional schools can offer training programs geared towards meeting the needs of this sector and enlarging the pool over the long-term. Where teachers are not available, foreign staff can be recruited and training of trainers programs be started.

Programs in training institutes like NAVTEC, TEVTA, CMTI and others should be expanded and established in all provinces for developing diploma holders and skilled workers. Existing laboratory facilities at Wapda, Road Research Institute Punjab, NTRC and others could be geared for training of technicians at a mass scale.

Similarly, skilled equipment operators and mechanics can be trained with the collaboration of equipment manufacturers and suppliers as was done in China and Malaysia. In addition, the example of the HR Development Fund in Malaysia, which provides for industry demand-driven training, could be emulated to promote skills training.

All these measures will have to be taken to enhance the manpower pool and upgrade the skills on an emergent basis. The WB study said that the quality of engineering and technical education has to be revamped and made applicable to the needs of the construction sector.

It would be safe to say that training is required almost in all fields and at all levels. To quote only one area--highways--consultants need to be trained and equipped in these subjects:

- Survey of alignment with modern methods of survey including aerial and ground survey with the use of modern equipment: Correct alignment can save large sums of money by staking out the most economical routes, identifying soils, locating construction materials and identifying bridge locations, estimating costs before getting into detailed field surveys.

- Geometric design of roads and highways: For ordinary roads or high speed highways, CAD can help geometric design. This ultimately helps safe and functional utility in short-time frame when coupled with advanced survey tools. Some software offers design of allied structure, drainage and quantity calculation.

- Soil analysis and structural design of pavement: It offers identifying soils, correct and economical design of pavements for durability, coupled with field control, material's testing. It can avoid costly mistakes.

- Field training of maintaining and using construction equipment for soil transportation, compaction and handling of various materials during construction.

- Concrete bridges and culverts at design as well as construction planning and supervision stage. Prefabrication, use of prestressed design and industrialised construction can reduce time, cost and improve quality. - Project planning helps consultants, contractor and client's precious time and increases their profits.

Similar, training is required almost in all other fields, be these transmission towers or design and construction of dams. Consultation with stakeholders and reviews of the nature of future projects will determine what exactly is needed.

Fresh graduates should be required to undertake training prior to getting accreditation from PEC and mid-level career exams could be introduced to cultivate a culture of learning.

Motivation could be provided through an appropriate incentives program designed in consultation with the trade associations, regulatory bodies and client agencies. In tackling the human resource problem it is critical to focus not just only on the human resources requirements of consultants and contractors but of the client as well. The fastest way to improve the quality of infrastructure output is from the demand side.

If the client specifies a higher quality of work the standards of infrastructure services and outputs will certainly be improved. The government with its dual role of a client and policy maker is the most effective agent of change but in order for this to happen, managerial and professional capacity of the client has to be enhanced.

Specialised training to appropriate personnel in relevant areas and exposure to international best practices and successful infrastructure experiences in the developed and developing world should be provided.

To provide an incentive for learning, one option could be to link the promotion of civil servant technocrats to the next higher grade with the completion of prescribed technical continuing education and project management courses and public expenditure management training. Revising the remuneration scales and perhaps monetising the perks of civil servants could also prove to be an incentive to attract better qualified staff, the study said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Setting up of cement plant by Qatari company: Red tapism, poor law & order threaten $225 million project ​* 
KARACHI (February 17 2008): A Qatari company's $225 million plan for setting up a cement plant near Dhabeji is in jeopardy owing to the inordinate delay in process of legal documentation for the project by the concerned official and deteriorating law and order situation in the country.

Official sources in Planning and Development department told Business Recorder on Saturday that delaying tactics were being used in processing the legal documents by concerned officials.

Moreover, they said, the poor law and order situation has threatened the project as the company seemed disinterested to invest in the current scenario of law and order. However, the representatives of the firm have assured the government that their investment plan would not be affected by poor law and order situation, they said.

Without naming the Qatar firm, the sources said that Sindh government received an Expression of Interest some ten months back for investing in setting up cement plant at Dhabeji. A high-level delegation of the firm has called on the then Chief Minister Sindh Dr Arbab Ghulam Rahim in March 2007 at Islamabad, where Arbab had asked the delegation to work jointly with Board of Investment and Planning Commission to eliminate the financial and legal hurdles in the plan.

Arbab also assured the company to make the requisite land available and agreed to grant four hundred acres of land for 99 years at the rate of Rs 0.25 million per acre at undeveloped Dhabeji near Port Qasim.

To finalise the matter, two meetings took place in office of Additional Chief Secretary and General Administration Department, which were attended by the secretaries of Law Department, Mines and Mineral Development Department and Land Utilisation Department to finalise a draft lease deed.

Thereafter, the government decided to provide 400 acres land which would also earn Rs 100 million revenue for provincial exchequer besides bringing an investment of about $225 billion but this project was in doldrums owing to indifferent attitude of the concerned official toward finalisation of the legal process, the sources added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Significant share of US companies in IT field expected' ​* 
ISLAMABAD (February 17 2008): Pakistan is expected to acquire a significant share of American companies outsourcing agreements in the field of Information Technology as a number of companies have shown interest in tapping the rich potential of Pakistani IT industry.

"Several renowned companies in USA, during the recent series of meetings with a visiting Pakistani delegation, expressed their willingness to outsource various projects to Pakistani companies," spokesman of Pakistan Software Export Board (PSEB) disclosed while talking to the media here on Saturday.

The spokesman hoped that outsourcing projects from USA companies to Pakistan would provide job opportunities for local skilled professionals, boost IT exports, thus earning foreign exchange.

The Pakistan delegation, led by PSEB Managing Director Yusuf Hussain, held detailed meetings with leading corporations, trade chambers, academia and IT companies at Houston, Austin, Polo Alto and Chicago, reputed to be the hub of IT business.

"These meeting have generated valuable business leads, which are likely to transform into successful business ventures", he mentioned. He stated that the USA companies that are considering outsourcing IT projects to Pakistan are Yahoo, J.P. Morgan, Motorola, Sun Microsystems, Continental Airlines, Chase Bank, Houston IT Department, Prime Communications, American International University Houston, Cyber Tex, Cadence and Goldman Sachs.

Some American universities and institutes of learning have also shown interest in developing a student exchange programme with Pakistan and to open training centres in the country, which is an encouraging sign for the local IT industry.

The visit of Pakistan IT delegation was arranged by PSEB in collaboration with Texas Trade Council (TTC), Organisation of Pakistani Entrepreneurs of North America (Open) and Embassy of Pakistan in the USA. The Pakistani IT companies which participated in these sessions and special events included Alp-BSM, CTO 24/7, Invaterra, LMKR, Netpace, Palmchip Pakistan, Progressive Systems, Server4Sale and Xorlogics Inc.

The Pakistani delegation met the Texas Secretary of State Phil Wilson and briefed him about the tremendous growth generated by the Pakistan IT sector and the investment opportunities available in the country. The delegation also attended a business networking event "Think Global, Act Local", jointly arranged by the Asian Chamber of Commerce, TTC, Asian Pacific American Heritage Association and Galleria Chamber of Commerce.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Work on $200 million IT Tower starts *​
KARACHI (February 17 2008): The construction of Pakistan's tallest 47-storeyed Information Technology (IT) Tower adjacent to Civic Centre started at a cost of 200 million dollars with the signing of an agreement in Kuala Lumpur on Thursday.

City Nazim Syed Mustafa Kamal signed the agreement on behalf of City Government Karachi and Datu Gochi Kon on behalf of Malaysian Construction company I. M. Technologies, a consortium of I.G.M. Investment, Jable-Ali Limited and Mall Park Limited.

The consortium will construct IT Tower in 24 months, which will have three shopping Malls of international standard, 12000 seats Call Centre, 240-room five-Star hotel, Business Centres and car parking facility for 2100 vehicles while 50,000 people would get employment here. Some 5,000 persons will get job during the construction of building while the water used in construction work will be recycled.

The agreement signing ceremony in Malaysia was largely attended, among others, by Pakistan High Commissioner Lieutenant General (Retd) Tahir Mahmood Qazi, DCO Karachi Javed Hanif, EDO Enterprise Dr Shahab Imam, Chief Controller of Buildings Rauf Akhtar Farooqui, CEO and MD I.J.M. Corporation, Datu Krishnan Tun, Director I.M. Technologies (Pakistan) Sarfraz H. Rizvi besides Malaysial federal government level secretaries, high government officials and businessmen, industrialists and members of civil society.

Addressing the ceremony Nazim Karachi Mustafa Kamal said that co-operation of Malaysian companies and investment by them in ongoing mega projects in Karachi would prove helpful in bringing the two countries closer to each other. He said that paper work on this project started one year back and today work on it was starting with signing of the agreement.

He said the importance of the project could be judged from the fact that 4000 out of 10,000 call centre seats have already booked before the start of work. He was confident that with working together, the IT complex project could be completed much before the stipulated time frame of 24 months.

He thanked the Malaysian investors for their confidence in the City Government Karachi by investing in projects like Elevated Expressway and IT Complex. He said the IT Complex would prove a unique project in the region which would give a boost to BPO industry in Pakistan.

Earlier CEO and MD IJM Corporation welcomed the Nazim Karachi and his team in Malaysia and said the IT complex would be a most modern and unique project of its kind in which an investment of 197 million dollars will be made. It will have a spacious car parking facility and 10,000 seats call centres in upper floors.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Karachi IT Towers​*


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## Neo

*Work on $200 million IT Tower to start soon, says Kamal ​*
KARACHI (*November 29 2007): *City Nazim Mustafa Kamal on Wednesday said the construction work of 47-storey IT Tower in the vicinity of Civic Center at a cost of $200 million would start within few weeks. Around 40,000 youth would get employment in the IT Tower.

Which would be the country's tallest building and would have 10,000 call centers of which 6,000 have been booked so far, the Nazim stated this, in his address, to a "Technology Showcase" event held at a local hotel.

The event was organised by the Inbox Business Technologies (IBT), an end-to-end technology solutions company, to highlight various technology-related initiatives taken by the City District Government Karachi (CDGK).

Chief Guest Mustafa Kamal described the importance of using technology to make administration of the city easier and, for the betterment of its citizens.

He said a full-scale Enterprise Resource Planning Application, Health Management and Information System (HMIS) has been introduced at the Abbasi Shaheed Hospital (ASH), city's largest public sector hospital, to ensure the availability of improved patient-care and better administrative controls.

Mustafa Kamal noted how the implementation of HMIS at ASH had increased transparency, reduced pilferage, and increased accountability of the hospital staff for the benefit of patients.

He also stressed the need for the importance of transparency at public sector hospitals through an effective reporting system. "The system would prevent misuse of medical supplies issued to the hospital, so that the truly needy could be able to get the required medicines," he added. Praising the work on Citizen Complaint Management and Information System (CCMIS), the City Nazim termed it a unique system world over.

He said using the CCMIS the citizens of Karachi are able to directly register their complaints related to KWSB, KESC and KMC etc at the city's Call Center 1339. The calls are monitored and logged by the vigilant, efficient and well-educated staffers who have been employed from the private sector to ensure timely actions on complaints, he added.

Kamal surveying progress on the Wireless Video Security and Surveillance System (WVSSS) said by using the system, live video feed from the cameras installed along the two signal-free corridors would be viewed from a central location in the city.

He said the WVSSS would help detect and prevent traffic congestion and minimise suspicious activities and street crimes in the vicinity. Elaborating the Land Management System (LMS), a land lease-related document repository,

Kamal told the seminar that how the system would help citizens identify any ambiguities in ownership of real estate, and prevent fraudulent activities and property-related disputes.

Ghias Khan, Chief Executive Officer, IBT elaborated upon usage of the HMIS to uplift the health sector with better administration of hospitals and efficient utilisation of hospital resources. "Using HMIS, world-standard healthcare best practices can be introduced in public and private sector hospitals in Pakistan," he said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Reducing edible oil imports​*
EDIBLE oil is extracted from seeds of crops like rapeseed, mustard, groundnut, linseed, sunflower, soybean, sesame and canola grown in the country. However, a large quantity of edible oil is obtained from cotton seed.

The total availability of edible oil in 2005-06 was 2.905 million tons. Local production stood at 0.793 million tons which accounts for 27 per cent of the total available quantity while the remaining 73 per cent was procured through imports. During 2006-07, local production of edible oil stood at 0.855 million tons. During this period, 2.201 million tons of edible oil was imported and 0.349 million tons extracted from imported seed.

The country imports edible oil from Malaysia, Indonesia, Norway, Singapore and Argentina. Of the imported quantity, about 56 per cent is of palm oil.

Keeping in view record increase in the prices of edible oil in the world markets due to decline in world production of palm oil and soybean crops, edible oil crisis is looming large over the country. To add to this, the current years overall production of palm oil in South America and soybean production in some other countries, including Argentina and Brazil, has also declined significantly.

Due to rising demand and low supply, palm oil prices in the world market have shot up by $120 per ton to $1170 from $1050 per ton just within one month. Moreover, the prices of edible oil are likely to go up further which might create a crisis in the country. Similarly, in the domestic market, the prices of edible oil have gone up by Rs40 per kilogramme within one month due to the soaring prices of palm oil and soybean oil in the world market so much so that the federal government has decided to reduce taxes on edible oil to bring down its sky-rocketing prices in the open market. Presently, the countrys overall consumption of edible oil stands at three million tons, of which some 0.5 million tons is produced locally, while over 2.5 million tons is imported.

To deal with the looming edible oil crisis, stringent efforts are needed to enhance local production of edible oil by bringing more area under cultivation of oilseed crops as well as increasing per acre yield.

Our farmers mainly grow traditional crops such as rapeseed and mustard. Per hectare yield of such crops is less compared to non-traditional crops of sunflower, soybean, canola etc. for instance, average per hectare yield of rapeseed and cotton seed is 750 kg and 1244 kg compared to per hectare of sunflower, soybean and canola viz.1810 kg, 1207kg and 1246 kg, respectively. There are many other factors such as sowing of poor quality seed, late sowing, inadequate use of fertilisers and poor plant protection that are contributing to low per hectare yield of oilseed crops. It is essential to bring more area under non-traditional oilseed crops to cope with the situation.

Seed selection is a main facet of farming and should not be based on advertising or sales but purely on yield performance. The farmers are, therefore, not afraid while using the yield trial information and look for hybrids that performed well before going for seed selection. Seed performance should be measured keeping in view certain parameters including germination capacity, physical and genetic purity, seed maturity, seed health and vigour etc. Soil type, soil nutrient status, soil moisture and weather conditions are the factors that affect these parameters.

The quality seed has the potential of increasing yield on an average of 20 per cent over traditional seed used by the farmers. But certified seed is largely limited to major crops like wheat, rice and cotton. It is essential to mobilise resources for development of high yielding oilseed crop cultivars as well as agriculture extension wing to inform the farmers about the modern production technology of such crops.

Inputs like fertilisers, irrigations, and pesticides vary with respect to type of cultivar, soil type, soil nutrient status, growth stage and climatic conditions. Certain non-traditional crops such as sunflower require more nutrients. The farmers should use fertilisers in balanced amount in a bid to obtain high crops produce.

A number of sowing techniques are practiced for the cultivation of oil seed crops that have great bearing on seed germination, plant growth, development and production. Bed plantation of sunflower gives 15 per cent higher yield than traditional broadcast method and also ensures conservation of about 45 per cent water.

Cultivation area under oil seed crops is small compared to other crops like wheat, rice, cotton and sugarcane. During 2006-07, rapeseed/mustard, cottonseed, sunflower and canola were grown on an area of 628,000 acres, 7,599,000 acres, 937,000 acres and 359,000 acres, respectively. Small area under oil seed crops is due to competition from other crops like wheat, potato and maize.

One way to increase acreage under oilseed crops is to carry out cultivation on marginal lands and practicing inter-cropping. Saline soils can be managed by using gypsum and sulphuric or nitric acids in proper amounts and application of fertilisers, suitable cropping pattern including green manures and deep ploughing with chisel plough to reduce the severity of salinity/sodicity.

Inter-cropping of selected oilseed crops in wheat, sugarcane and potato is a best approach to enhance cultivation of oilseed crops. This would also increase cropping intensity that is less so far. Inter-cropping of sunflower in wheat, sugarcane and potato fields could yield best results.

Farmers prefer to grow cereals because of sound procurement system. In case of oilseed crops, there is non-existent of sound marketing system. Therefore, the farmers are reluctant to grow these crops. An efficient system of procurement is required to promote cultivation of oil seed crops. It is also essential that marketing system should not allow importers to exploit local producers as it is a usual practice of importers to decrease the market prices of imported edible oil as the maturity period of crops approaches.

In a nutshell, non-availability of hybrid seeds, high cost of foreign imported hybrid seed, high cost of storage, lack of drying facilities, lack of modern production technology, use of marginal lands, non-availability of short duration varieties, lack of rhizobium inoculum, low prices of farmers produce, lopsided marketing system, and high harvesting cost are factors shaping the mindset of the farmers for not opting oilseed crops cultivation.

Reducing edible oil imports -DAWN - Business; February 18, 2008


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## Neo

*Grappling with transit trade​*


The proximity with Afghanistan and the Central Asian Republics (CARs). makes the NWFP a gateway to an emerging regional market. It has the potential to turn itself into a hub of transit trade and it can also supply consumer items to the landlocked countries.

Pakistan signed first-ever transit trade treaty with Afghanistan in 1965.The goods in transit to Afghanistan (Gita) are transported through wagons of Pakistan Railways (PR) and in trucks of the National Logistic Cells (NLC) from Karachi sea port to Peshawar from where they are shifted across the border at Torkham.

This cross-border trade has significantly increased over the years which benefits Pakistan in the shape of revenue from logistic services and NWFP in particular, in shape of thousands jobs. But the transport sector is marred by inefficiency resulting in delays, high costs and low reliability.

According to official estimates inadequate and inefficient transport system countrywide results in losses of four to six per cent of the GDP limiting economic growth and reducing export competitiveness. This include delays and high port costs at Karachi.

Haji Gul Afzal Shinwari, president Pakistan-Afghan Traders Group explains: In normal conditions, 50-60 containers loaded with transit goods arrive daily at Karachi seaport, which are physically examined one by one. Since the port is short of required capacity, this exercise results in congestions at terminals, besides delays in their speedy custom clearance.

He believes that up-gradation of the Karachi seaport with additional facilities is essential for improving the countrys logistic services.

The PR has been a main service provider since 1965 for movement of transit goods from Karachi seaport to Peshawar Dry Port from where they are sent across the border through private trucks. The PRs annual freight business through transit goods is more than Rs480 million and it could increase manifold, if it enhances its capacity.

Traders say they need daily 40-50 wagons from Karachi to Peshawar, whereas actual availability is far less than the demand forcing them to opt for other costly options including the NLC.

Apart from non-availability of required wagons, safe transportation through PR is another issue, where the traders have many concerns. According to them, the PR is responsible for the safe and sound transportation of goods. But there are reports alleging organised pilferage of the goods on their way to Peshawar from Karachi which is managed without cutting the seals of containers. While no compensation is paid to traders for their loss, the customs charges full duty from them which is an injustice, says a trader.

The NLCs trucks are a costlier option as against Rs43000 per wagon fare of PR, the NLC charge Rs85,000 for carrying the same load via road.

A few years ago, the NLC was allowed to operate because the PR lacked the capacity to cater to the growing cross border trade.

Even though, NLCs charges are almost double the PR, traders opt for it to avoid delays in transportation of their goods. According to them, the PR wagons take eight to 10 days to reach Peshawar, whereas the NLC trucks take hardly four days. But NLC also cannot fulfil the demand and traders had to wait for seven to eight days at Karachi to acquire sufficient number of trucks.

The NLC has limited capacity that is why it has acquired heavy duty vehicles from the private sector that carry transit goods on its behalf . About 80-120 trucks reach daily at NLC Amangarh (Nowshera) terminal.

Interestingly, the NLC offers logistic services for the last couple of years, but it has no written agreement with Afghan traders which creates numerous problems in routine operations of the service, explains Mr Shinwari. There is no legal framework that fixes responsibility for the maximum delivery period and clearance of claims in case goods are damaged or go missing on the way.

Likewise, NLCs own fleet is dilapidated, as most of its vehicles are outdated which delays the delivery of goods. The trucks are also handicapped by poor highway conditions and weak highway management that cannot deliver the required levels of service.

According to official statistics, 44 per cent of the roads on this trade corridor are in poor condition, making the journey as slow as around 25 km per hour. The growing volume of the cross-border trade also requires a dry port equipped with modern facilities at Peshawar to ensure speedy clearance of goods.

Unfortunately, the dry port in Peshawar is also one of the victims of ad hocism, as a small portion of Peshawar Cantonment Railway Station is used as dry port which lacks required facilities.

On repeated demands of traders, the provincial government in 1986 allotted three small-size sheds at Peshawar Cantonment Railway Station and pledged for its further development as a dry port.

After that, Sardar Metab-led provincial government approved Rs20 million for establishing a modern dry port and allotted 64-acre land near Azakhel Payan G.T Road. This land was used by UNHCR during Afghan War and had storage infrastructure for goods.

Unfortunately, the project was forgotten after dissolution of that government. Traders however till want a dry port to be set up at Azakhel Payan to boost the transit trade. PRs recent approach to establish new dry ports on the basis of public private partnership is being offered as an alternative.

The caretaker Minister for Railways, Mansoor Tariq in a meeting with traders in Peshawar clarified last month that financial health of the PR doesnt allow investing money in such projects. Annual financial losses of the PR, he says, are in billions that is why it restraining itself from going into such projects. He argues: Traders should come forward and make joint venture for establishment of a new dry port at Azakhel for which the PR will provide land.

On the other hand, the NLC has recently built a terminal at Jamrud, just 35 km away from the Torkham border. But traders have many reservations over shifting of this business from Peshawar and Amangarh station of NLC to tribal region on account of prevailing security situation and lack of facilities there.

Grappling with transit trade -DAWN - Business; February 18, 2008


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## Neo

*Index of economic freedom​*
Pakistans economy is 56.8 percent free which makes it the 93rd freest economy in the world in 2008. According to Index of Economic Freedom, the countrys ranking has worsened over the last two years.

First of all, one needs to look at how this index is computed and what does it explain. After that, the reason for Pakistans slide in economic freedom needs to be discussed.

The index is simple average of 10 individual freedoms, each one of which is important for individual as well as for national prosperity. These ten freedoms are: business freedom (ability to create, operate and close an enterprise quickly), trade freedom (absence of tariff and non-tariff barrier), fiscal freedom ( burden on government from revenue side), government size (government expenditure), monetary freedom ( measures for price stability and price control), Investment freedom (free flow of capital, especially foreign capital), financial freedom (measures for banking security and independence), property rights (an assessment of the ability of individuals to accumulate private property) , freedom from corruption (quantitative data based assessment of the perception of corruption in the business environment, including levels of governmental legal, judicial ,and administrative corruption) and labour freedom (ability of workers and businesses to inter-act without any state restriction).

Each one of the 10 freedoms is graded using a 0 to 100 scale, where 100 represent the maximum freedom. A score of 100 signifies an economic environment or set of policies that is most conducive to economic freedom

Pakistan overall freedom index score is 56.8 reflecting that it lies in the category of the counters which are mostly unfree along with other 57 economies. Its overall score is 1.7 percentage points lower than last year, reflecting worsened scores in six of the 10 economic freedoms. Pakistan is ranked 16th out of 30 countries in the AsiaPacific region, and its overall score is slightly below the regional average.

The table shows the performance in case of individual freedoms. Pakistans scores on business freedom, fiscal freedom, labour freedom, governments size and in monetary freedom are quite reasonable. Freedom from the corruption is the variable which contributed least towards the overall economic freedom score and its value is most unstable and showing declining trend. Corruption is perceived as pervasive. Pakistan ranks 142nd out of 163 countries in Transparency Internationals Corruption Perceptions Index for 2006. Corruption among executive and legislative branch officials is viewed as widespread.

The comparison with India and China shows that overall Pakistan freedom score is the highest among three. Pakistan is leading with regard to four freedoms namely business, fiscal, government size and labour freedom. India is leading in property rights freedom. In trade and monetary freedoms, China is ahead of the rest two. For Pakistan, there is a need to improve the freedom from corruption score but in current circumstances it seems difficult because of political unrest and judicial issues.

Index of economic freedom -DAWN - Business; February 18, 2008


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## Neo

*Financing export-oriented projects​*
Conventional and Islamic banks will soon start long-term financing for export-oriented projects under a scheme initiated by the State Bank of Pakistan with an indicated amount of Rs8 billion being made available for utilisation up to June.

The central bank will allocate more funds for fiscal year 2008-09 depending on the investment trends as reported by banks in May. All exporters including small and medium enterprises are eligible for loans under the scheme.

Almost all banks are participating in the scheme, an SBP official disclosed. Bankers are looking forward to an encouraging response from their clients who, according to them, demand far too long-term financing for projects.

We have been providing long-term financing for 12 years, a top executive of a leading bank informed Dawn on Thursday. A few banks do provide long-term financing but very selectively and only to their chosen clients, a leading industrialist pointed out and said the long-term financing is a very small part of bank lending. The bulk of long-term financing given by banking consortiums is for restructuring of privatised units.

Last week, when the State Bank Governor, Dr Shamshad Akhtar, met businessmen at the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and at All Pakistan Textile Mills Association (APTMA), the most articulated complaint was that industrial investment has become too expensive, banks have become too choosy to offer loan facilities, exports are under strain because of rising production cost in which high interest rate on bank loans is a significant factor. She was told that industrial investment has come to a virtual halt, industrial production growth is down from 19 per cent in 2004-05 to seven to eight per cent and exports are trailing behind the target.

Under the SBP scheme, banks will offer long-term loans from three to 10 years for imported and locally manufactured machinery for the export-oriented projects The facility will be available to only those projects where annual exports fetch $5 million or at least 50 per cent of their sale proceeds is exports, is one of the conditions of the new scheme..

Businessmen fear difficulties in compliance of the condition as they are apprehensive of export performance in general and for textiles in particular. Persisting domestic inflation and likely slowdown in the US and EU economies would increase the cost of production on one hand and lower demand in two major markets, Mr Iqbal Ibrahim, Chairman APTMA warned the SBP Governor with reference to minimum export limit condition of the scheme.

While the SBP is providing 70 per cent refinance facility, the participating bank will put in 30 per cent. For the initial Rs8 billion proposed to be offered, the SBP has fixed service charges for refinance at 6.5 per cent for three years, 6.50 per cent for five years and seven per cent for 10 years. But the banks spread is 1.50 per cent for three years which will take up interest rate to eight per cent for the borrowers. For loans up to five years, the bank spread is 2.5 per cent which will raise the lending rate to nine per cent. On ten- year loans , the spread is at three per cent and interest rate goes up to 10 per cent.

The bank spread is on very high side, complained an industrialist who proposed that it should be one per cent for a period of three years, two per cent for five years and three per cent for 10 years. Industrialists want interest rate on loans to be at 7.5 per cent for three years, 8.5 per cent for five years and 9.5 per cent for 10 years.

Banks are making bulk of their profit from stock exchange and foreign trade, a business leader remarked and said the manufacturing projects have a longer gestation period and need some accommodation in interest payment when the central bank is providing bulk of the loan money. Banks have been advised to take not more than two months in evaluating loan application under the scheme after getting full information from the borrower. Where the request is declined, the bank will explicitly apprise the reason to the borrower, banks have been told in clear words.

There is also no maximum limit for seeking loan under the scheme by the borrowers. But in case, the demand is for more than Rs300 million, banks will be encouraged to form consortiums.

Under the scheme, only new plants, locally manufactured or imported, are eligible for financing. The State Bank has specified the categories of business which are eligible to seek borrowing under the scheme. These are textiles, fabrics, garments, towels, made ups, synthetic textiles, leather and leather goods, rice processing, sport goods, surgical goods, carpets and wools. There are also developmental categories which include, fisheries, poultry, meat, fruits, vegetables and cereals processing, IT software and services, marble, granite, gems, jewellery and engineering goods.

Spinning is conspicuous by its exclusion from the list. The State Bank Governor was asked to include spinning in the list for concession rated financing. We want to encourage value addition, she replied during a volley of questions put to her at the APTMA meeting.

Industrialists have largely welcomed the scheme but believe that the time is not appropriate. Bankers say that enquiries are being made and they intend to publicise the scheme n a big way. But there are doubts about response. Political environment is not conducive. Let the elections be held, a political set-up settled in Islamabad and provincial capitals and let it decide about the long and short- term priorities and policies. Then we will think of investment plans, a leading industrialist remarked.

Bankers too do not expect much response in next few weeks. But a window opening for project financing for export-oriented industries is a good news in otherwise not too congenial environment.

Financing export-oriented projects -DAWN - Business; February 18, 2008


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## Neo

*Soomro for strengthening more Pak-Greece ties ​*
ISLAMABAD (February 18 2008): Caretaker Prime Minister Mohammedmian Soomro has underlined the need for more interaction between businessmen, mediamen and parliamentary delegations of Pakistan and Greece to help further promote relations to cover all areas of interest.

There is a great potential of co-operation in areas of energy, ship-building and tourism where both countries can benefit from each other experiences in promoting bilateral ties and bringing people closer, he said.

Talking to Ambassador of Greece, Petros Mavroidis, who called on him here, the Prime Minister expressed satisfaction over the existing bilateral relations between Pakistan and Greece.

He said Pakistan's economy has benefited a lot from the financial sector reforms and this has been observed and acknowledged by international and local financial institutions and investors.

He said Pakistan has opened up its economy to local and foreign investors in all areas, including banking, telecom, IT, real estate, energy, agribusiness, construction, manufacturing and ship-building. The banking sector, he said, is offering highest return in shape of equity and assets.

The Prime Minister said Pakistan has emerged as a preferred destination for the investors because of its strong economic and structural reforms, which offer great attraction for investments

He said the incentives should be able to attract the Greek business community as well to benefit from and invest in areas of their interest. The ambassador appreciated the economic policies of the government of Pakistan and expressed keen interest in areas of energy, shipbuilding and tourism. He said Pakistanis in Greece are the second largest community and contributing significantly towards its development.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Prime Minister asks Greek investors to benefit from Pakistan's friendly policies ​*
ISLAMABAD (February 17 2008): Caretaker Prime Minister Mohammedmian Soomro Saturday underlined need for more interaction between businessmen, mediamen and parliamentary delegations of Pakistan and Greece to help further promote relation to cover all areas of interest.

"There is a great potential of co-operation in areas of energy, ship-building and tourism where both countries can benefit from each other's experiences in promoting bilateral ties and bringing people closer," he said. Talking to Ambassador of Greece, Petros Mavroidis, who called on him here, the Prime Minister expressed his satisfaction over the existing bilateral relation between Pakistan and Greece.

He said Pakistan's economy has benefited a lot from the financial sector reforms and this has been observed and acknowledged by international and local financial institutions and investors.

He said Pakistan has opened up its economy to local and foreign investors in all areas including banking, telecom, IT, real estate, energy, agribusiness, construction, manufacturing and shipbuilding. The banking sector, he said is offering highest return in shape of equity and assets.

The Prime Minister said Pakistan has emerged as a preferred destination for the investors because of its strong economic and structural reforms, which offer great attraction for investments.

He said the incentives should be able to attract the Greek business community as well to benefit from and invest in areas of their interest. The ambassador appreciated the economic policies of the government of Pakistan and expressed keen interest in areas of energy, shipbuilding and tourism. He said Pakistanis in Greece are the second largest community and contributing significantly towards their development.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*ADB to give $150 million for power distribution project ​* 
FAISALABAD (February 18 2008): Asian Development Bank will provide $150 million for Power Distribution Enhancement Project-1 to Pakistan, which will be implemented by Pakistan Electric Power Company (Pvt.) Limited (Pepco). According to ADB sources, this project will address the capacity shortfalls that currently result in regular system outages and supply interruptions to customers.

This will include (i) addition of circuit and transformer capacity to enable the already overloaded systems to reliably deliver present demand and meet the expected load growth; (ii) loss reduction; and (iii) refurbishment of distribution networks.

ADB is also considering another loan proposal of $810 million MFF - Power Distribution Enhancement to Pakistan. ADB sources stated that this investment programme will enhance the efficiency of the overall power distribution system and provide an adequate and reliable power supply to a greater number of industrial, commercial and residential customers, through funding of investment requirements within each of the eight power distribution companies in Pakistan.

Consulting services will be required for, among others, (i) preparation of sub-projects, (ii) detailed design, and (iii) construction supervision and contract management. Consultants will be selected and engaged in accordance with ADB's guidelines on the Use of Consultants (2007).

Consulting firms will be selected through international competition using the quality- and cost-based selection method. Individual consultants will be recruited for specific assignments in accordance with ADB's procedure. It is envisioned that, because of the continuation of a number of tasks during implementation, single-source selection may be used for certain assignments with the prior approval of ADB.

Procurement will be done in accordance with ADB's Procurement Guidelines (2007). International competitive bidding (ICB) will be used for goods and works. ICB will be utilised for supply contracts estimated to cost the equivalent of or more than $1 million and works contracts estimated to cost the equivalent of more than $5 million.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Business leaders vote with mixed feelings ​* 
Tuesday, February 19, 2008

KARACHI: Business leaders all over the country expect a mixed-party government as they played their part and cast votes for their favoured leader while many small and medium entrepreneurs also ardently voted in Mondays elections.

Federation of Pakistan Chambers of Commerce and Industry Vice President Zubair Tufail, commenting on the ballot, said he had cast his vote at PECHS College polling station in Karachi where turnout of voters had been very good. He said he was happy that the polling had gone smoothly, adding he had witnessed a steady stream of voters throughout the day in most polling stations around PECHS.

Tufail did not wish to reveal whom he voted for, nevertheless he was of the view that Pakistan Peoples Party (PPP) would sweep the votes of the city. He said voting is our right and that was the first thing that I did this morning as we owe it this much to our country.

Lahore Chamber of Commerce and Industry ex-president Shahid Hasan Sheikh said the turnout seemed to be only 15 per cent around his polling station jurisdiction. I live in an elite district and unfortunately these people dont seem to bother too much about voting so the low turnout.

He said not much could be predicted about these elections as all the political parties had equal favour from the people of Pakistan. Sheikh did say Pakistan Muslim League (N) had the highest support from the people of Lahore while PML(Q) seemed to have fared poorly in the city.

The new government would have lots of challenges to face and work on, thats one thing Im sure of, he pointed out. Islamabad Chamber of Commerce and Industry ex-president Muhammad Nasir Khan informed the twin cities of Islamabad and Rawalpindi were strongly supporting the lion (PML-N). He said that was astonishing as the general belief had been in favour of PPP but the city has always been full of surprises.

Khan added the road leading to Sheikh Rashids house was heavily guarded and blocked as violence had been feared. However, he said the entire polling session had gone peacefully while the turnout of voters had been reasonable. Khan said he had voted for PML-N as he believed that a democratic leader was essential to steer the country towards progress.

Sarhad Chamber of Commerce and Industry President Haji Muhammad Asif was of the view that the turnout had been low all over Pakistan due to the presumption that the elections had been rigged. He said people dont believe in any of the parties anymore and moreover with the recent violence in the country, people are plain scared to venture out during such times.

Asaf said the fear was greater amongst the citizens of the country than their sense of responsibility to cast votes. He said in Peshawar the security arrangements were strict and yet the number of voters was dismally thin.

He said while Peshawar was mostly supporting ANP, the results could not be predicted as not a single party is representing the people at the national level anymore. Asaf said he had also voted for ANP while his belief was that PPP was another party closely contesting in Sarhad.

Dera Ismail Khan Chamber of Commerce and Industry President Zafar Jalil Khan said while he had cast his vote for Maulana Fazlur Rehman, the battle for seats in Dera Ismail Khan was between Jamiat Ulema-e-Islam (F) and an independent leader. He said the turnout of voters in his district was about 45 per cent and polling went peacefully.

Overseas Investors Chamber of Commerce and Industry President Zubair Soomro was in Jacobabad to support his father, who was contesting the election on a PML-N ticket. He said the atmosphere in Jacobabad was unusual and the turnout very good as Prime Minister Mohammadmian Soomro had visited the city with his family to visit polling stations and cast votes as Soomros nephew was also contesting.

Sonu Khan from Balochistan informed that the turnout in cities had been better where about 55 per cent voters had turned up whereas rural areas experienced a thin turnout of about 25 per cent. Khan refused to comment whom he predicted would win in the province and said we will have to wait for the results to find out.

The News conducted a short random survey of small entrepreneurs in Karachi and asked them if they had voted on Monday. About 65 per cent of those questioned, answered in affirmative while the remaining 35 per cent said they did not believe their votes could make any difference. They said they preferred to relax at home and watch the results as they did not believe any political party deserves to win.

Business leaders vote with mixed feelings


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## Neo

*Economists for analysing present, past economic successes ​* 
Tuesday, February 19, 2008

LAHORE: Economists have suggested that the upcoming government should analyse difference between economic growths achieved during Musharraf and Ayub Khan regimes, pointing out that current growth has created shortages in contrast to surpluses during Ayubs period.

They say prudent economic managers devise policies that ensure sustained growth and better distribution of resources. Citing an example, the economists say industrial growth during the Ayub regime was accompanied by increase in electricity generation capacity. Agriculture was given same importance as the industry. Besides construction of mega dams, the planners at that time introduced new seed varieties. High-yield Mexi-Pak wheat seed was introduced at that time, besides new Irri rice varieties.

They said early maturing poultry bird was introduced that ensured stability of meat prices. Increase in agricultural commodities production ensured that enhanced demand due to raised incomes did not impact prices of essential items.

However, the economists say, an analysis of growth achieved during the past nine years reveals that success in economy was lopsided. For instance, growth in home appliances manufacturing in the engineering sector remained phenomenal and that increase was accompanied by a decline in prices.

For example, prices of television sets during the past nine years declined by over 50 per cent and that came despite a vast improvement in technology and quality of TVs. Rates of air conditioners and refrigerators fell in the range of Rs3,000 to Rs5,000 per unit. Besides these, washing machines and micro-wave ovens are now within the reach of normal household.

Increase in industrial production like cars, motorcycles, etc resulted in higher income for white collar workers and liberal consumer finances provided them with a chance to buy home appliances and improve the quality of their life.

As the industrial side of economy was performing exceptionally well, it created higher demand for energy. According to statistics of the Water and Power Development Authority (WAPDA), increase in demand of air conditioners alone boosted power consumption by 1,200 megawatts. The electricity demand from the industrial sector grew even more, but the government failed to add new capacities during the period, except for 350MW rental power units last year. The demand now far exceeds supply and shortages of gas and electricity are now well known.

Agriculture, another important sector of economy, depicted lopsided growth. Three years ago, a bumper cotton crop was harvested, but production has been on the decline since then. Wheat production also remained lopsided. Rice production has been stagnant for the last five years while gram output has dropped. The production of edible oil seeds has not picked up despite an abnormal increase in global edible oil rates. Poultry production has not increased in line with domestic demand.

Increase in urban incomes created demand for better food while production remained stagnant and that coupled with growing population further put pressure on supplies. Prices of essential commodities reached historic highs after the supply-demand mechanism was disturbed.

Agriculture is an important sector of economy that contributes over 20 per cent to Pakistans gross domestic product. However, agriculture is also the most vulnerable sector. Farmers are weak stakeholders who lack the capability to withstand unfavourable weather and increase in input cost. They also lack the muscle to confront adulterators of inputs.

The pressure on agricultural supplies has adversely impacted the urban poor and has further weakened the farmers as prices of their produce have not increased in line with the rise in production cost. Though prices of agricultural commodities including grains, vegetables, milk and poultry have increased due to short supply, the additional income has been pocketed by middlemen.

The government has failed to construct any water reservoir during the period. The production of fertilisers has remained stagnant while availability of certified seeds is low. No new seed varieties of wheat, rice, sugarcane or cotton have been introduced while biotech seeds are out of reach of local farmers.

The only immediate solution for the new government would be to boost agriculture production as honeymoon period for the government would be very short. The economists are the view that the next government should give full attention to agriculture that has the potential to produce results in short time. Meanwhile, the government should formulate a cohesive policy for trade and industry in line with the successful policies adopted by many East Asian economies.

Economists for analysing present, past economic successes


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## Neo

*WFP offers $111.8m for education, health and poverty reduction ​* 
Programme would improve household food security for 114,000 vulnerable poor through creation of employment, assets and skills​
Tuesday, February 19, 2008
By Mehtab Haider

ISLAMABAD: The World Food Program (WFP) has proposed a $111.8 million financial support for Pakistan during 2009 and 2010 in areas of education, population welfare and health care, disaster management, rural development and poverty reduction.

The UN and its subsidiary organizations held a consultative meeting recently with Pakistani functionaries to finalize social sector strategy over the next few years. In each year, the WFP would spend $29.2 million on education, $11.8 million on health and population, $1.4 million on disaster risk management, $9.6 million

on environment and $3.9 million on agriculture rural development and poverty reduction, totalling the amount to $55.9 million. The total amount for two years would be $111.8 million for various sectors of Pakistans economy. 

According to a presentation made by the representative of WFP, Wolfgang Herbinger during the consultative meeting, the WFP would improve livelihood and household food security for 114,000 vulnerable poor through creation of employment, creation of assets and skills development particularly in 15 highly food insecure districts located in Balochistan, FATA, NWFP, AJK and Sindh.

The WFP support would increase primary school enrolment by reaching 400,000 children especially girls into the schools in 33 highly food insecure districts with the lowest literacy rate. The WFP support would also provide meals to school going children as well as take home family rations.

In areas of health and nutrition, the WFP support would improve health status of 213,000 young children and their mothers by increasing health access through food incentive rations in 24 most food insecure districts of Pakistan.

It would also address micronutrient deficiency through fortification of wheat flour, oil and blended foods for all 2.6 million beneficiaries of WFP food assistance. The WFP would contribute to the reduction of iodine deficiency in Pakistan by assisting small-scale salt procedure to iodise salt, which is currently reaching 24 million consumers.

In collaboration with WHO, UNAIDS, UNICEF, the WFP would address tuberculosis and HIV/AIDS by assisting 52,000 patients, he added. In area of disaster risk management (DRM), the WFP representative said that they intend to contribute to guidelines on disaster risk management and preparedness with focus on food security, transport and telecommunication. It would also contribute to standard operating procedures for food security needs and damage assessment.

The WFP intervention aimed at enhancing the capacity of 20,000 households in poor communities to rehabilitate and develop natural resources. It would also assist 24,000 food insecure small landholder households in establishing forest and fruit nurseries in FATA. 

The WFP representative said that the available funds with the WFP for 2009 were $46.7 million and they required additional funding of $9.2 million to match with the envisaged target of $55.9 million. In year 2010, the available funds were $37.2 million and the WFP required additional funds to the tune of $ 18.7 million for matching with the desired budgetary estimates of $55.9 million for that period.

WFP offers $111.8m for education, health and poverty reduction


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## Neo

*Businessmen optimistic about economic prospects​*
KARACHI, Feb 18: Irrespective of the results and massive challenges for the new government, businessmen and traders now appear highly optimistic regarding the economic prospects as the nation turned a leaf in the history of the country by completing the polling process peacefully on Monday.

They say they are now more anxious to see the economic and political harmony in days ahead after a series of unfortunate political events in the last one year that led to huge trade and business losses domestically and globally.

The new government will face a tough task in handling various consumer as well as industries related issues like rising prices of essential items, especially rice, pulses, and wheat flour coupled with falling exports of textile items, power and gas load-shedding and maintaining the prices of petroleum products.

They say that reports swirling in the markets for the past 10 days speak about violent elections but overall elections remained peaceful, which means that the political situation may remain under control in future.

Chairman, Korangi Association of Trade and Industry (Kati), Sheikh Fazl-e-Jalil, said: Even if a coalition government is formed, the businessmen hope for economic prosperity. The business community cannot afford further losses on account of violence and political instability.

However, he suggested that the new government should avoid increasing petroleum products prices as it would lead to food inflation, which is already very high. Besides, the government should not make any drastic changes in the economic policies, he added.FPCCI vice-president, Zubair Tufail, said that if the PPP-PML made a government or it was a hung parliament, there will definitely be an improvement on the countrys economic side.

However, he said that the new government would have to face some economic challenges like rising food prices for which it has to chalk out new policies so that the country could not face any wheat and flour crisis this year.

Chairman North Karachi Association of Trade and Industry (Nkati), Noor Ahmed Khan, said that the trade and economy would get a boost after receiving a good signal from peaceful elections. He urged the new government to look into the problems of the textile industry.

Chairman, F.B. Area Association of Trade and Industry (Fbati), Idris Gigi, said the holding of general elections had wiped way the uncertain environment and this would help restore the economic stability no matter which party forms the government.

He said many exporters of textile and other items, who had been losing orders owing to countrys political turmoil, will start getting orders.

Chairman, Karachi Wholesale Grocers Association (KWGA), Anis Majeed, urged all the political parties to accept the outcome of the results so that economic stability could return to the country.

President, Tariq Road Traders and Welfare Action Committee (TRTWAC), Siddiq Memon, said that the peaceful holding of elections augurs well for the economic stability even if two or three political parties jointly form a government. He said the people, who have been avoiding visiting the markets for the last few months will return to the markets from Tuesday.

He said the traders wanted the new government to focus on improvement in law and order situation and the power load shedding.

A commodity trader, who asked not to be named, ruled out any big improvement in countrys business environment in future as the new and old faces, belonging to the PPP and PML-N, are coming back to make a new government. Their governments had been dissolved in the past on various charges of corruption.

Businessmen optimistic about economic prospects -DAWN - Business; February 19, 2008


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## Neo

*Weekly Inflation surges by 11.96pc​*
ISLAMABAD, Feb 18: The weekly inflation measured through the Sensitive Price Index (SPI) increased by 11.96 per cent during the week ending on February 15 over the corresponding week last year, according to the weekly price data released by the Federal Bureau of Statistics (FBS).

A 0.2 per cent increase recorded during the week under review in comparison to the previous week. However, the SPI was on decline in February after reaching the highest ever 14 per cent in January owing to steady increase in prices of wheat, vegetables, edible oil, gas etc.

The increase in prices came very hard on the low-income class. The prices rose by 13.80 per cent for households with Rs3,001-5,000 income and to 14.06 per cent for those at the bottom-incomes up to Rs3,000.

The households with monthly incomes between Rs5,001 to Rs12,000 witnessed an increase of 12.82pc in prices while those in the highest income bracket i.e. above Rs12,000, the increase was much lower to 10.21 per cent.

Prices of 26 items recorded increase under the week under review over the previous week.

Price of soap jumped by 5.84 per cent to Rs18.12 per cake and chicken became costlier by 4.51 per cent to Rs74.42 per kg despite the fear of bird flu during the week.

Masoor pulse (washed) showed 3.88 per cent increase to Rs74.16 per kg, tea packet up by 3.80 per cent to Rs67.47 per 250-gram, tomatoes by 3.08 per cent to Rs39.86 per kg, potatoes by 2.59 per cent to Rs11.49 per kg, banana by 1.80 per cent to Rs32.74 per dozen, rice basmati broken by 1.51 per cent to Rs36.42 per kg, firewood by 1.07 per cent to Rs232.43 per 40 kg.

The vegetable ghee (loose) increased by 0.77 per cent to Rs115.37 per kg, rice irri-6 by 0.76 per cent to Rs26.44 per kg, moong pulse (washed) 0.65 per cent to Rs51.22 per kg, bread plain by 0.62 per cent to Rs19.38 each, coarse latha by 0.59 per cent to Rs29.23 per metre, cooked beef plate up by 0.54 per cent to Rs33.56 each, mash pulse (washed) by 0.45 per cent to Rs70.78 per kg, tea (prepared) by 0.43 per cent to Rs7.03 per cup, voil printed by 0.36 per cent to Rs39.06 per metre.

The price of milk powdered Nido increased 0.30 per cent to Rs145.44 per 400-gram pouch, mutton by 0.22 per cent to Rs234.73 per kg, cooking oil by 0.20 per cent to Rs319.12 per 2.5-liter tin, curd up by 0.17 per cent to Rs34.86 per kg, sugar rose by 0.16 per cent to Rs25.77 per kg, shirting 0.13 per cent to Rs71.74 per metre, gram pulse (washed) 0.12 per cent to Rs41.99 per kg and vegetable ghee up by 0.11 per cent to Rs315 per kg 2.5-kg tin.

Weekly Inflation surges by 11.96pc -DAWN - Business; February 19, 2008


----------



## Neo

*Jan remittances jump by record 42 per cent​*
KARACHI, Feb 18: Overseas Pakistanis have sent 22 per cent more remittances during the last seven months of the current fiscal reflecting the high confidence on economic stability of the country.

In a situation where most of the Pakistanis becoming easy prey to the uncertainty regarding the elections and are prone to quickly accept the negative signals, the continued high rate of remittances would provide a sigh of relief to the economic managers of the country.

During the last seven months, (July-Jan 2007-08), total remittances reached at $3,623 billion, which were 22.4 per cent higher than the corresponding period of the previous year.

This must be encouraging for the government and the investors, who had halted investing in the economy ahead of elections, that the overseas Pakistanis did not show any weakness in their confidence over the economic growth.

In January alone, Pakistanis sent over 42 per cent more remittances compared to the same month of last year. January was one of the most vulnerable months in terms of high degree of political uncertainty.

During January Pakistani workers remitted an amount of $557.07 million, up from $165.74 million or 42.35 per cent. They had sent $391.33 million in January 2007.

The monthly average was even higher than the last year when the country received a record $5.5 billion for the whole year. If the trend continues till end of the current fiscal, the remittances will be another record.

The monthly average remittances for the period July-January, 2007-08 comes out to $517.63 million as compared to $422.76 million during the same period of the last fiscal. It also showed an increase of 22.44 per cent.

The remittances from the United States have crossed $1 billion mark for the first time and the country became the highest remittances sending destination for Pakistan. The increase in seven months is 33 per cent higher than the same period of last year.

The State Bank report said that remittances increased from all over the world. However, the increase from the US was clearly very high.

The high remittances is also encouraging for the country as the trade of goods and services were unexpectedly low soaring the collective deficit of about $9.650 billion in the first 6 months of the current fiscal, which is all time high.

On the other hand, the foreign investment has fallen sharply during the same period while the hope for improvement is linked with the improvement in the countrys political image.

Analysts said the bad image of the country -- emerged after the imposition of emergency, the assassination of former prime minister Benazir Bhutto and purging of judiciary, would be improved after the establishment of a new government in Islamabad.

Jan remittances jump by record 42 per cent -DAWN - Business; February 19, 2008


----------



## Neo

*Telenor invested $1.8bn in Pakistan till end of 2007: CEO​*
KARACHI: By the end of 2007, Telenor had invested some $1.8 billion in Pakistan and it intended to connect the remotest corners of the country with valuable services, Chief Executive Officer (CEO) of Telenor Pakistan Tore Johnsen said here Monday. 

In an exclusive interview with The Daily Times he said we have also signed major investment contracts for network expansion and maintenance within the last 15 months and extended the agreements with Nokia and Siemens on network expansion and services until 2009. The agreements, with a potential to result in $750 million worth of orders from Telenor Pakistan, are some of the largest of their kind in the industry. 

We appreciate the presence of a stable regulatory environment with a clear licensing framework in Pakistan. Ministry of Information Technology (IT) and Pakistan Telecommunication Authority (PTA) have been successful in providing a level playing field and have fostered a culture of industry consultation.

Although, the governments progressive policies have boosted market liberalisation process and discouraged monopolies, mobile phone operators are still facing three main areas of policy emphasis that will help with responsible growth in the future. These are: 3-G, infrastructure sharing and Alternative energy sources.

3G: We understand the governments ambition of introducing 3G in the market, but growth and investment in the basic mobile infrastructure should not be sacrificed, as there are too many people still without basic access to mobile telephony, he said. Right now operators are focused on investing in far flung areas and un-served populations. If a huge fee is demanded for 3G, it will divert this investment with limited benefits for those who are still waiting to be connected with basic voice services. 

Therefore, we demand that the government should consider 3G not as a licensing opportunity, but rather as allocation of additional spectrum linked with roll out obligations and not hefty upfront fee. PTA and FAB should also make additional UMTS spectrum available in order to have equitable spectrum allocation, CEO of Telenor said. 

Telenor feels that our proposed beauty contest approach as adopted by many countries including Malaysia and Norway is much better than open auction, which has resulted in financial problems and major delays in rollout after 3G auctions in Europe. Also, this way, operators will be able to work on 3G side by side, even as they keep on focusing on provision of mobile services to those who are still unconnected and remain a priority. 

Infrastructure sharing: The internationally recommended practice of using one tower to carry antennas for multiple mobile operators instead of having separate towers for each operator makes common sense. At the moment, Telenor Pakistan has the largest number of shared sites and believes that more should be done to encourage and enforce infrastructure sharing. It is an effective way of reducing operational expenditure while achieving long-term environmental benefits and maintaining quality for our customers, he elaborated. 

Alternative energy sources: We are the first in industry to have started using solar energy to power a commercial site, Johnsen said. Here government has a role to play by practically encouraging such innovation and solutions that are more eco-friendly and less of a burden logistically in difficult terrains, where mobile coverage might be needed the most, and constant generator refueling is an issue, he added. 

Also, we sealed a 20-year capacity and services contract with Telekom Malaysia Berhads Pakistani subsidiary, Multinet Pakistan (Private) Limited. The contract has enabled us to utilise fibre optic cable pairs and associated co-location facilities along Multinet Pakistans national long haul optical fibre transmission network. The maintenance and associated services from Multinet further improves the reliability of our services to the growing customer base. The aggregate amount of both the capacity contract and the service contract is some $40 million. 

I see a healthy development on all fronts in the foreseeable future as in a short period of 3 years, facing intense competition; Telenor Pakistan managed to stand as the 2nd largest mobile communications network with 15 million customers in Pakistan. Today, Telenor Pakistan connects Pakistanis over 5,000 sites and is rapidly expanding, he said.

Talking on the WiMAX he said, it is only one of the several ways of delivering broadband to the end consumer. The important aspect to consider while investing in technological infrastructure is the economies of scale that ensure economical, quality and wide coverage to the end user. With heavy investments already made in GSM mobile communications infrastructure, it is technologically and economically optimal to invest in broadband technologies evolving from GSM itself. Technologies like 3G and HSDPA are such options. We believe that HSDPA has more performance and economical advantages over mass deployment. This technology enables and encourages users since the handsets and data cards needed by the customer are available in wide variety and at affordable rates. Therefore, free mobility, a highly desired value, is not sacrificed. 

Giving his views on telecom future in the country, he said, Pakistan is one of the fastest growing telecom markets in the world. The growth numbers have been remarkable.

According to PTA, the current size of the Pakistani telecom market is 77 million subscribers, 48 percent tele-density with an annual growth rate of 100 percent over the fiscal year 2006-2007. The contribution of telecom in Foreign Direct Investment (FDI) is placed at 35 percent of the total FDI and the sector is reported to make up 2 percent of the GDP. 

In FY06-07, the company grew nearly 200 percent in terms of customers, experiencing the highest growth in the industry by a wide margin compared to its competitors. We have just announced excellent financial results for fourth quarter of 2007, with 2 million subscriptions added to its base within the 3-month period. The company crossed 15 million subscribers by mid January 2008 within less than three years of operation.

Daily Times - Leading News Resource of Pakistan


----------



## Neo

*Pakistan rates very highly on State Street models ​*
SINGAPORE (February 19 2008): Stock market investors should be overweight in Pakistan, where election-related uncertainty has overshadowed the country's attractive prospects, a strategist with State Street Global Advisors said on Monday.

The world's largest institutional money manager also thinks that investors should also be overweight cash and underweight stocks and bonds, given the risks of higher inflation and slowing US economy, said Lochiel Crafter, the firm's Asia-Pacific market and investment strategist.

The Singapore-based fund executive said despite fears of violence ahead of Pakistan's general election, it was the firm's third favourite emerging market stock bet after Turkey and Hungary.

State Street Global Advisors is the $2 trillion money management unit of State Street Corp. "We like Pakistan. It rates very highly on our models, overall. It's reasonable value. Our sentiment factor is quite strong and the macro outlook is strong," he told Reuters in an interview.

"(The election) adds risk, but it could also add a buying opportunity if the fundamentals stay strong." Financial markets were closed in Pakistan on Monday with military troops and police on watch over a vote that could return a parliament set on driving President Pervez Musharraf from office.

Crafter, who declined to name State Street's individual stock or bond holdings, said that the firm's other favourite markets in emerging Asia included Indonesia and Thailand.

In both cases, State Street's quantitative models showed their stock markets had healthy momentum. The firm's least favourite market in emerging Asia was India, where a rise in the market to a record high in January had stretched valuations, he said. "It's easily the most overvalued on a relative basis that we have in Asia Pacific," he said.

STOCK, BOND OUTLOOK ROUGH: Boston-based State Street, which managed about $170 billion of assets sourced from the Asia-Pacific region at the end of last year, is favouring cash because it fears the weakening outlook for the global economy could hit first-quarter corporate profits."Our general view is that the first half of 2008 is going to be a bit rough," he told Reuters.

"At this stage, we're bracing the portfolios to make sure that we can weather the storm. It's (a case) of managing risk right now ... we're happy from a risk perspective to be a little conservative."

Bonds often serve as a safe haven when stock markets weaken. But Crafter said bond market yield curves were likely to steepen as inflation concerns were priced into longer-term bonds, hurting prices and driving up yields. In currency markets, the Australian fund executive said Asian currencies were likely to strengthen modestly against the US dollar in the coming year. "Asian economies will continue to grow; therefore, their currencies will continue to be attractive," he said.

Business Recorder [Pakistan's First Financial Daily]


----------



## mujahideen

KSE gains 443 points as market welcomes polls

_Wednesday, February 20, 2008
By Salman Siddiqui_

KARACHI: The Karachi bourse is all set to breach through all time high index level of 14,815 points on Wednesday, as the benchmark KSE 100-sahre Index closed just 18 points away from this historical mark on Tuesday.

The KSE 100-share Index jumped 443 points or 3.09 per cent to close at 14,797 points level only 18 points away from 14,815 points historical peak recorded on December 26, 2007.

This surge in index is a welcoming gesture of equity investors to peace that prevailed on Mondays polls, analysts observed and added, Investors are still having concerns over the making of next government and might react over it (coalition government) in other way if political instability does not ends here.

Settlement between the next government and President Musharraf on some of political issues would be welcomed at the local bourse, but in case of political disturbance lingering on between prime minister and president camps the future scenario of stocks might be depressive, they added.

Therefore, if jobbers invest fresh funds in their favourite stocks on Wednesdays session besides booking intra-day profits in the wee hours or middle of the session the market has potential to surge beyond all time high level, they further added.

Smooth end to the most talked about general elections certainly was a sigh of relief for all the citizens, certainly those who were able to see through dense clouds of uncertainty and went on accumulating, said Hasnain Asghar Ali of Aziz Fidahusein.

What next? The question still floats in the arena, formation of government and the stance of the political parties forming government mainly on dismissed judges and their willingness to work with the President will certainly matter, confirmation on that certainly will take some time, in the meanwhile however rumours on both fronts will keep the volatility alive, he added.

Also, the free-float market capitalisation based the 30-Index recorded a phenomenal growth of 652 points of 3.77 per cent and finished up at 17,948 points. Increased participation from investors enhanced the ready market turnover to 17-weeks high level at 373.441 million shares that is also 28 per cent or 81 million shares higher compared of last working sessions volumes recorded at 292.359 million shares.

Accordingly, the overall market capitalisation attracted massive fresh funds of Rs137 billion and surged to Rs4.560 trillion. Although it was an across the board buying mainly in energy, banking, telecom and cement stocks, therefore, the heavily dominating banking sector led the rally.

Each of five banks i.e. MCB Bank, National Bank, United Bank, Standard Chartered Bank and Abn Amro Bank contributed massive points in range of 11.28 points to 48.17 points in the total surge of 100-Index.

Followed by oil and gas stocks under the lead of giant OGDC that alone included 76.10 points in the 100-Index. Therefore, Pakistan State Oil and Pak Petroleum added another 14.52 points and 24.83 points respectively. While, Pakistan Telecommunication Company contributed another 29.44 points in the total increase of leading benchmark 100-Index.

Investors gave a standing ovation to Bank of Punjab that traded 21 million shares after the Governor of Punjab issued an ordinance, allowing sale of 51 per cent shares of BoP to a strategic investor, reported Live Securities.

S. Kashif Mustafa of ECL Research foresees that future prospects of the market remain favourable as fundamentals of various sectors remain stable in the medium to long-term perspective. Looking forward, introduction newer investment strategies through implementation of demutualization of the stock exchanges and availability of excess liquidity through CFS mark II and involvement of local and foreign institutions is expected to bring harmony in the capital market in medium to longer term.

The plus sign heavily dominated total 361 active counters on board, as 256 stocks advanced against 67 scrips declined besides 38 companies closed unchanged.

Highest volumes were witnessed in OGDC at 44.447 million closing at Rs129.75 with a gain of Rs4.65, followed by NIB at 27.060 million closing at Rs22.60 with a gain of 70 paisa, BoP at 21.054 million closing at Rs101.50 with a gain of Rs4.80, PTCL at 18.871 million closing at Rs43.15 with a gain of Rs2.05 and AH Securities at 17.964 million closing at Rs178.60 with a gain of Rs2.20.

KSE gains 443 points as market welcomes polls


----------



## mujahideen

Banks planning to open 800 new branches 

_No let-up in consumer woes as expansion programmes continue,banks avoiding rural areas despite SBP directives_

Wednesday, February 20, 2008
By Shahzad Anwar

KARACHI: Banks are planning to add 800 more branches in their network during this calendar year that may create 10,000 to 12,000 thousand fresh job opportunities, a knowledgeable banking source said. Last year banks had opened 1,000 new branches.

Banks are also planning to increase their customer base and are estimating lending to one million more borrowers. Currently banks have around six million barrowers. According to SBPs regulations it is mandatory for banks to open 20 percent of their new branches in rural areas but regrettably the banks least care about these regulation and prefer to open new branches in main cities and towns instead of rural areas.

In last few years the financial sector grew rapidly and consumer financing also expanded manifolds. With expansion of banking sector and subsequent surge in consumer financing the different cases in which consumers rights were exploited badly also appeared on the surface. But unfortunately consumer protection laws could not be devised accordingly. 

However, Complaint Division of State Bank of Pakistan (SBP) was entertaining such banks victims. SBP takes serious action against such banks which are found exploiting consumers, a senior official at SBP told The News. But he said that as per policy central bank does not interfere in cases which are under trial or sub-judice.

There are six million borrowers in Pakistan of which SBP receives only four thousand complaints per annum which are very low as compared to total number of borrowers, the official said. 

The Banking Ombudsman court is another forum which hears complaints against banks and provides justice to affectees, but it is very unfortunate that majority of such cases in which consumers rights are exploited are not reported at any of the two forums. Moreover, the legislators also failed to protect rights of consumers through legislation of proper consumer protection laws. The Automatic Teller Machine (ATM) the basic automated banking service has become popular in the country in last few years. The ATM enable banking customers to excess their accounts 24 hour in 7 day, but underneath this facility there are some sinister problems which are shaking trust of ATM users.

The fake, damaged and written over currency notes doled out to customers by ATM machines is another problem among other numerous daily basis technical issues such as network connectivity and lack of currency notes to dispense. 

A customer narrating his saga said, On Feb 12 at around 11 am I withdrew Rs7,000 from an ATM in Clifton and proceeded to pay several bills. At one of these places, the cashier refused to accept a note of Rs500, which he said had a line on the Quaids face written in ink. Despite insistence he said that he could not accept the note. I then went to my bank and asked them to replace it. I did not think it would be a problem because a banks ATM had given me the note and commercial banks are legally bound to replace soiled or damaged notes.

However, to my surprise I found that the bank could not replace the note. I told them that their own ATM had dispensed it but to no avail and as for replacing soiled or damaged notes, a senior official at the branch said that the note was neither, I asked him what it was and he did not give me clear enough reply. He also said that if the note was torn the bank could have replaced it, to which I asked him should I tear it, to that also, he gave no reply. I am stuck with a note that nobody not even the bank whos ATM issued it will accept.

http://thenews.jang.com.pk/daily_detail.asp?id=97177


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## mujahideen

Oil prices, power supply to haunt new govt

_By Sabihuddin Ghausi_

KARACHI, Feb 18: Whichever political party or coalition of parties is thrown up by Mondays general elections, to rule the country for next five years, one thing is certain that the governments future economic policies are bound to be populists, employment generating, promoting some sort of social equity to bridge the wide social and economic disparities created in last eight years because of so called pro-business policies.

The incoming government will have to address immediately the wheat procurement issue, worst power supply problem in summer, the oil prices and, of course, the supply and prices of a vast number of essential commodities.

The choice is either you keep big feudal lords, stock exchange brokers and big businesses in good humour by keeping people in perpetual deprivation or give some relief to the low-wage industrial workers and office employees in cities and small farmers, fishermen and artisans in rural areas, a university teacher said.

Compare the socio-economic situation of today with that of 1968 and 1969 when late Ayub Khans decade of development had given rise to 22 families syndrome, he argued while pointing out that the then undivided Pakistan (East and West Pakistan) was fiercely hit by a backlash wave of capital accumulation policies of Shoaib and Uqaili at the fag end-end of Ayubs decade.

The amount of frustration and pent up emotions are no less now than what were 40 years ago, he observed. Then in 1968, the stage was set for bringing Pakistan Peoples Party in power in 1970 with a popular vote. Conditions are not different now in 2008.

But whichever party, even if it is PML (Q), comes with majority votes, the leaders are bound to give a hard look at the economic policies of their last eight years. These policies are not sustainable and are bound to create a social commotion, he declared.

Chaudhry Pervez Elahi, who led the PML (Q) election campaign, had publicly blamed former prime minister and finance minister Shaukat Aziz on more than one occasion for causing wheat crisis in the country. Induction of new government coincides with the harvesting of new wheat crop, a senior leader of flour milling industry said.

Neither the previous government nor the caretakers announced any support price for wheat this season. More than 80 per cent wheat farmers are small having 2 acres to 12.5 acres of land. All of them are now in a fix so far as disposal of their wheat is concerned.

Unofficially, Sindh and Punjab governments with Passco are expected to procure some 7 million tons of wheat at Rs600 to Rs650 for 40 kg of wheat from the farmers.

Adding to the woes of small farmers is the fact that a good quantity of imported wheat, ordered sometimes in December, will be landing in April when harvesting in Sindh would be in final stages and in full swing in Punjab.

Imagine what price the small wheat farmer will get in such a situation, the flour milling leader said. The previous government and the caretakers have sown seeds of a much severe wheat crisis next season than what we experienced this season, he said.

The warning is that the next government should be ready to face hunger marches on the road and food riots if no steps are taken to give due price to small farmers and ensure uninterrupted supply of wheat flour at affordable prices to consumers in the cities.

Another painful and much-awaited decision for the next government is about oil prices. Oil prices touched about $100 a barrel but the outgoing government preferred to take this hit on the public exchequer. Mounting international pressure has left no choice for the government but to go for elections.

Therefore, a government -- that thrived on support of a small vulgarly rich class -- feared the backlash from the people, if the impact of rising oil prices would have been passed on to the consumers in October or November 2007.

Instead, the government preferred to give oil distribution companies bank bonds thus deferring its liabilities for a few years to the future government. Shahid Javed Burki, the caretaker finance minister in 1996 did the same when he raised interest rates from 16 per cent to 18 per cent on defence saving certificates. Term deposits in banks flew to the defence saving certificates at an unprecedented rate, Dr Ashfaq Khan, special secretary finance disclosed recently while complaining that the present government paid liability of Rs160 billion last year and is paying Rs100 billion this year on ten-year maturity of all those certificates.

How would the government address the shortage of electric power supply is one issue that is closely linked with the industrial and agricultural growth and to beat the scorching heat next summer. Karachi has seen power and water riots since the decade of eighties.

The privatisation of KESC did not bring any joys for some 20 million population of the city. It is same now in other parts of the country. Had Benazir government not initiated private power projects in 1994, the electric supply situation would have been worse. Her government negotiated power projects at six cents a unit on which there was a lot of hue and cry. The present government is offering 10 and 11 cents a unit.

Back in 1995 and 1996, the government negotiated coal-based power projects with foreign investors. The powerful oil lobby in Islamabad is putting all hurdles in setting up these projects. Could the new government make some headway in this direction? ask the eager electorates.

Oil prices, power supply to haunt new govt -DAWN - Business; February 19, 2008


----------



## Neo

*Banks planning to open 800 new branches ​* 
No let-up in consumer woes as expansion programmes continue,banks avoiding rural areas despite SBP directives​
Wednesday, February 20, 2008

KARACHI: Banks are planning to add 800 more branches in their network during this calendar year that may create 10,000 to 12,000 thousand fresh job opportunities, a knowledgeable banking source said. Last year banks had opened 1,000 new branches.

Banks are also planning to increase their customer base and are estimating lending to one million more borrowers. Currently banks have around six million barrowers. According to SBPs regulations it is mandatory for banks to open 20 percent of their new branches in rural areas but regrettably the banks least care about these regulation and prefer to open new branches in main cities and towns instead of rural areas.

In last few years the financial sector grew rapidly and consumer financing also expanded manifolds. With expansion of banking sector and subsequent surge in consumer financing the different cases in which consumers rights were exploited badly also appeared on the surface. But unfortunately consumer protection laws could not be devised accordingly. 

However, Complaint Division of State Bank of Pakistan (SBP) was entertaining such banks victims. SBP takes serious action against such banks which are found exploiting consumers, a senior official at SBP told The News. But he said that as per policy central bank does not interfere in cases which are under trial or sub-judice.

There are six million borrowers in Pakistan of which SBP receives only four thousand complaints per annum which are very low as compared to total number of borrowers, the official said. 

The Banking Ombudsman court is another forum which hears complaints against banks and provides justice to affectees, but it is very unfortunate that majority of such cases in which consumers rights are exploited are not reported at any of the two forums. Moreover, the legislators also failed to protect rights of consumers through legislation of proper consumer protection laws. The Automatic Teller Machine (ATM) the basic automated banking service has become popular in the country in last few years. The ATM enable banking customers to excess their accounts 24 hour in 7 day, but underneath this facility there are some sinister problems which are shaking trust of ATM users.

The fake, damaged and written over currency notes doled out to customers by ATM machines is another problem among other numerous daily basis technical issues such as network connectivity and lack of currency notes to dispense. 

A customer narrating his saga said, On Feb 12 at around 11 am I withdrew Rs7,000 from an ATM in Clifton and proceeded to pay several bills. At one of these places, the cashier refused to accept a note of Rs500, which he said had a line on the Quaids face written in ink. Despite insistence he said that he could not accept the note. I then went to my bank and asked them to replace it. I did not think it would be a problem because a banks ATM had given me the note and commercial banks are legally bound to replace soiled or damaged notes.

However, to my surprise I found that the bank could not replace the note. I told them that their own ATM had dispensed it but to no avail and as for replacing soiled or damaged notes, a senior official at the branch said that the note was neither, I asked him what it was and he did not give me clear enough reply. He also said that if the note was torn the bank could have replaced it, to which I asked him should I tear it, to that also, he gave no reply. I am stuck with a note that nobody not even the bank whos ATM issued it will accept.

Banks planning to open 800 new branches


----------



## Neo

*Omantel buys Worldcall in $193m deal ​* 
Wednesday, February 20, 2008

MUSCAT: Oman Telecommunications Co (Omantel) said it paid $193 million for a controlling stake in Pakistans Worldcall Telecom, its biggest foreign investment so far as competition at home intensifies.

The purchase, which marks Omantels entry to the worlds sixth most-populous nation, will add between 3 and 7 per cent to profit next year, Omantel Chief Executive Officer Mohammed al-Wohaibi told reporters in the Omani capital, Muscat.

State-controlled Omantel said last May it was in talks to buy a Pakistan telecom operator, identifying Worldcall the following month. The company agreed to buy 488.8 million shares equivalent to 60 per cent of Worldcall and will buy another 5 per cent through the Pakistani stock market (KSE), it said in a statement late on Monday.

Entering the Pakistani market is important because it is one of the markets that has the fastest growth rates due to the dense population and low penetration levels in several telecommunication services, Wohaibi said in the statement.

When initially agreed last year, the 60 per cent stake was going to cost $204 million, but it was lower now because the Pakistani rupee was weaker against the dollar, Omantel said. We are not worried about the political situation, Wohaibi told reporters about Pakistan. This transaction is a long-term investment for the future ... we dont feel that those disturbances have any long-term impact. Worldcall posted a $10 million profit in the year to June 30 on revenue of $70 million, which it expects to boost by 20 per cent this fiscal year.

Omantel buys Worldcall in $193m deal


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## Neo

*1m tons of molasses to be exported​*
KARACHI, Feb 19: The country will export over one million tons of molasses worth $5 to 6 million at an average world market rate of $55 to $60 per ton.

According to estimates the expected bumper sugarcane crop of around 60 million tons will yield about 4.5 million tons of white refined sugar and over 2.5 million tons of molasses.

Molasses exporters have received substantial orders from their buyers and brisk activity is going on at the Karachi Port for loading molasses onto ships. Already, 130,977 tons of molasses have been exported and exporters believe that they would export around one million to 1.2 million tons of molasses this season.

The balance quantity of around 1.5 million tons of molasses would be converted by distilleries into 3 million tons of ethanol. Again this will help the country to earn around $140 to $150 million at an average world market rate of $510 per ton. Last year, 250,000 tons of ethanol was exported.According to the exporters, European Union (EU) member states are the major buyers of molasses, who generally place big orders during early crushing season when the produce is normally of good quality. However, the exporters, who follow good management practices (GMP) laid down by Product Dutch Board, Holland, are getting higher price for molasses.

Responding to a question a leading exporter of molasses and ethanol Mohammad Qasim, who also owns a sugar mill, told Dawn that the 14 distilleries had to strike a balance between production of ethanol and export of molasses. Though most of the distilleries are owned by sugar mills but even then they have to buy large quantity of molasses from other mills to produce ethanol.

Consequently, he said the distilleries, running short of molasses, have to buy it at world market rates from other sugar mills, which is calculated in term of export market. This means when any distillery purchases molasses from other sugar mill it has to calculate the cost and profit on the basis of world market of both the products.

However, Mr Qasim said that there were other problems, which are confronted by the distilleries such as liquidity crunch, production and transportation problems. He said there was an acute shortage of tanker-lorries required for the haulage of molasses.

He said a large number of tanker-lorries were set on fire during the unrest after the assassination of former prime minister Benazir Bhutto on December 27. As a result owners of these vehicles were always apprehensive of the law and order situation, which also badly affects cargo movement from the hinterland to port city of Karachi.

However, he said that once the exporters enter into export contracts they become committed and have to strive hard to ensure timely delivery of molasses. Presently, two vessels with a capacity of around 55,000 tons are waiting off port for loading molasses. Mr Qasim said that the molasses and ethanol exporters faced no problem at the port where state-of-the-art loading, unloading system is in place.

1m tons of molasses to be exported -DAWN - Business; February 20, 2008


----------



## Neo

*Stock market buoyant after elections results​*
KARACHI: Countrys stock market joined the jubilations of the winning political parties on their victory in general elections when it surged heavily and stock gurus foresee stability and normalcy in the coming days with the smooth transition of power to the winning party.

Benchmark KSE-100 index registered the heaviest gain of 443 points or over 3 percent, which analysts and market players attributed to holding of free and fair polls without any major incident of violence and disturbance.

It bodes well for the future of the country that elections were held in a peaceful manner and losing parties conceded their defeat gracefully, stock brokers said.

Elections are always considered a major event, which may trigger the stock markets either side depending upon the way of polls are held and following political developments.

However, the market players also feel that a likely smooth power transition would also help in further restoring foreigners confidence and pave the way for resumption of dollar inflows in the equity market.

They believed that fortunately, as evident by the cross-border valuation yardstick, Pakistan qualifies as one of the cheapest investment options, which will encourage and attract portfolio investment in equity market. It will attract the foreign investors and they will be more active in post-election political stability, they added. 

The economy is linked with the politics and any development on the political front has far-reaching impact on the economy, Arif Habib, a leading stock broker and former Chairman Karachi Stock Exchange (KSE) felt and described the holding of general elections in a peaceful and fair environment a positive omen for the economy in general and stock market particular.

He said in a statement that market sentiments were strong and positive today because of free elections and ensuing events of accepting the defeat by losing parties.

Arif Habib did not see any major change in the current economic policies except minor things because elections manifesto of winning and losing parties carried major similarities. 

Also, these were not economic or investment policies, which caused major dent in the popularity of former ruling party but the events on the political side which brought them to knees in the elections.

KSE former Chief noted that peaceful elections have also sent positive signals abroad and would improve the image of the country, subsequently would help in bettering the credit rating.

Stock broker Siddique Dalal welcoming the holding of elections in a peaceful manner said that much challenging times are ahead for the coming government as they would be dealing with some of toughest matters related to economy.

Stock market views the new political development positively, which would restore the much-needed stability, a pre-requisite for the economic activities, he noted.

Though there would not by any major change in the economic policies, Dalal said some hard decisions await the government in the economic front.

Pointing out the post-elections formation of new government, he said the Commonwealth is likely to restore Pakistans membership, which would be playing well with the foreign investors 

Daily Times - Leading News Resource of Pakistan


----------



## Neo

*Transition to democracy : Inflow of portfolio investment to resume ​*
KARACHI: The country is likely to begin attracting foreign investment in its stock markets following the transition to full democracy, stock analysts believe. 

An analyst said the outflow of foreign investment from the countrys stocks would now stop and instead the country would again be a recipient of portfolio investment. He said postponement of elections earlier had been a major setback and now that the elections have been held, it is expected that the foreign investors would return towards the country. Who forms the government is not so important. The important thing is full restoration of democracy, he said. 

The most important thing that should be noted is that every party that has won a significant number of seats is liberal, he said. The impression of Pakistan as a country of militants would be removed as a result of the elections, he said. 

With greater political clarity and (hopefully) an investor-friendly government, investors confidence (particularly offshore funds) is likely to be restored, thereby, propelling renewed interest in the market, Muhammad Imran Khan, an analyst at First Capital, said in a report. 

The election delay was one of the major reasons attributable behind the range-bound performance of the market during last one month, he added. 

The KSE-100 index on Tuesday gained 443.34 points or 3.09 percent to close at 14,797.18 points. The KSE-30 index closed at 17,948.26 points with a gain of 652.29 points or 3.77 percent. 

We believe that the market sentiments would be largely driven by the developments on political front in coming sessions with all eyes on the formation of new setup. A likely smooth power transition would also help in restoring foreigners confidence and pave the way for the resumption of dollar inflows, said the analyst. 

As evident by the cross-border valuation yardstick, Pakistan qualifies as one of the cheapest investment options, which will encourage and attract portfolio investment in equity market, he said. 

Now that political uncertainty has ended, the stocks are expected to make gains, Khurram Shehzad, an analyst at InvestCap said. He said the trade of 373 million shares on Tuesday showed that the investor confidence had increased. Inflow of foreign portfolio investment is also expected to resume, he said.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Hungarian oil firm keen to invest in Pakistan ​*
ISLAMABAD (February 20 2008): Hungarian biggest oil and gas firm MOL intends to boost its range in various countries including Pakistan. The company officials said in an interview that MOL is interested in purchasing the several targets including production sites in countries like Pakistan, India, Russia, Libya and West Africa, a private news channel reported.

MOL has tremendous bulge in income last year and in the fourth quarter of 2007, the company earned $525 million.

Business Recorder [Pakistan's First Financial Daily]


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## mujahideen

New govt asked to fully implement economic policies 

_Thursday, February 21, 2008
By Mansoor Ahmad_

LAHORE: Managing economy would be a delicate issue for the next government as investors would expect continuation of the economic policies that apparently have failed to resolve the problems of common man. 

Economists have said that there was no flaw in the economic reforms introduced by the past regime. The reforms failed to deliver because the state either did not had the political will to implement them in their true spirit or it had lost its writ to ensure compliance. 

They said the tax-to-GDP ratio had declined during the past nine years because many sectors of the economy that were included in the GDP could not be brought under the tax net. Tax compliance by the traders dropped drastically as their fixed tax rates were reduced substantially.

They said reduction in traders tax was surprising as trading activities increased substantially on domestic consumption-based growth. The number of traders paying even this fixed tax did not increase corresponding to the increase in the number of shops or trading activities. 

They said the tax would have to be linked to income. The new set-up would have to muster political courage to impose fair taxes. Tax evasion would have to be discouraged. They said the governance level goes down whenever merit is ignored. The transfer and posting of bureaucracy, they added, on political grounds lower the governance level and spawn opportunities of corruption. They said discretion in posting and transfers would have to go if the new government wants to establish its writ.

The economists said the past regime was against subsidies in its initial years and all financial support to exporters was withdrawn. Special SROs were banned and implicit subsidy through devaluation was stopped. 

The exports, they added, multiplied during this period when everyone was operating on a level-playing field. The exports started stagnating and then declining once the government reintroduced subsidies through R&D grants and other measures. They said rates of DAP fertilizer increased after government subsidy as the amount granted by the government was pocketed by the importers. 

The fudged figures also contributed to the bad electoral performance of the past government. They said the Punjab government claimed that it created 5.8 million jobs in four years. Had this been true the level of unemployment in Punjab would have reduced substantially? They said the performance speaks itself and there is no need to propagate it. 

The economists pointed out that the main concern of the new government would be to control the rates of daily edible items. They said it would not be an easy job. In the long run farmers would have to be motivated to grow more by ensuring higher rates of their produce and availability of quality inputs at reasonable rates. 

They said delay in increasing petroleum rates forced the government to resort to debt. They said it has now been universally proved that the governments debt invariably results in increase in prices and inflation. They said now the surge in oil rates now would have to be managed in different stages.

New govt asked to fully implement economic policies


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## mujahideen

Optimistic investors push KSE to all-time high 

_Banking, cement, telecom scrips lead the rally, oil and energy sectors witness profit-taking

Thursday, February 21, 2008
By Salman Siddiqui_

KARACHI: As expected the Karachi bourse benchmark KSE 100-share Index surged to all time high at 14,830 points on Wednesday inching above its previous peak level of 14,815 points recorded on December 26, 2007.

Overnight gains and 163 points surge in opening hour invited profit taking that restricted gains to moderate levels while losers outnumbered gainers on board. Market has potential to go beyond 15,000 points psychological barrier any moment and it might be Thursday (today) to witness achieving this milestone, foresaw Ahsan Mehanti, CEO of Shahzad Chamdia Securities and added, One should also not ignore the chances of profit booking at current inflated share pries, as winning political parties are yet to form the next government.

The leading benchmark 100-Index also briefly crossed 14,900 points level for the first time in KSE entire history and touched 14,957 points intra-day high in the wee hour - registering a growth of 163 points.

Profit-booking mainly in the energy stocks towards the session end pulled KSE 100-share Index down and finally closed at 14,830 points new historical high level - posting a fresh gain of 32 pints.

Its junior partner the 30-Index also surged by 141 points and closed at a new height of 18,089 points. Turnover remained healthy, but slightly declined to 359.151 million shares as compared to 17-week high of 373.441 million shares changed hands a day earlier.

However, future market volume remained flat at 56.592 million shares against 56.833 million shares generated yesterday. It was the sixth consecutive bull-run session at the local bourse where the cumulative gains of these sessions together stand at 945 points or 6.8 per cent from 13,885 points pre-opening level of Feb 12.

Mehanti sees foreign buying in some of the best performing stocks i.e. Pakistan State Oil, National Bank and MCB Bank. Besides, the local Financial Institution and retail investors participation also remained on higher side, he added.

Today, market failed to sustain high share prices in oil scrips, however, this sector is expected to perform well tomorrow (Thursday), as the oil prices in the international markets have once against surged beyond US$100 per barrel, he added.

Again, it was banking sector that made the day rally backed by cement and telecom scrips too. Exploration and production (oil) stocks came under selling pressure on technical correction while the fertilizer stocks performed in negative to neutral territory.

Live Securities said, Compared to its previous session, profit taking dominated the market. Profit booking was expected on Wednesday as 100-Index surged by more than 400-index point yesterday.

Hasnain Asghar Ali of Aziz Fidahusein said that banking giants witnessed extended buying interest although major buying was of speculative nature. Therefore, positive numbers in main banking stocks (MCB and NBP) allowed the index to keep the positive posture alive, although closing hour saw index make a short visit to negative zone.

With new government still in process of formation, certain questions are still unanswered on political fronts; the economic issues are likely to be addressed after formation of new government the immediate shift in policy stance is therefore expected, he added.

Minus signs, however, led the runners on board, as 214 companies stocks declined against 123 stocks advanced. The value of 45 scrips remained unchanged with total 382 active counters in the broader market.

Highest volumes were witnessed in Arif Habib Securities at 39.027 million closing at Rs182.20 with a gain of Rs3.60, followed by Pakistan Telecommunication Company at 32.135 million closing at Rs44.20 with a gain of Rs1.05, National Bank at 23.927 million closing at Rs259.65 with a gain of Rs2.40, Bank of Punjab at 21.584 million closing at Rs103.70 with a loss of Rs2.70 and Oil and Gas Development Company at 18.764 million closing at Rs128.10 with a loss of Rs1.65.

Optimistic investors push KSE to all-time high


----------



## Neo

*Optimistic investors push KSE to all-time high *​ 
Banking, cement, telecom scrips lead the rally, oil and energy sectors witness profit-taking​
Thursday, February 21, 2008
By Salman Siddiqui

KARACHI: As expected the Karachi bourse benchmark KSE 100-share Index surged to all time high at 14,830 points on Wednesday inching above its previous peak level of 14,815 points recorded on December 26, 2007.

Overnight gains and 163 points surge in opening hour invited profit taking that restricted gains to moderate levels while losers outnumbered gainers on board. Market has potential to go beyond 15,000 points psychological barrier any moment and it might be Thursday (today) to witness achieving this milestone, foresaw Ahsan Mehanti, CEO of Shahzad Chamdia Securities and added, One should also not ignore the chances of profit booking at current inflated share pries, as winning political parties are yet to form the next government.

The leading benchmark 100-Index also briefly crossed 14,900 points level for the first time in KSE entire history and touched 14,957 points intra-day high in the wee hour - registering a growth of 163 points.

Profit-booking mainly in the energy stocks towards the session end pulled KSE 100-share Index down and finally closed at 14,830 points new historical high level - posting a fresh gain of 32 pints.

Its junior partner the 30-Index also surged by 141 points and closed at a new height of 18,089 points. Turnover remained healthy, but slightly declined to 359.151 million shares as compared to 17-week high of 373.441 million shares changed hands a day earlier.

However, future market volume remained flat at 56.592 million shares against 56.833 million shares generated yesterday. It was the sixth consecutive bull-run session at the local bourse where the cumulative gains of these sessions together stand at 945 points or 6.8 per cent from 13,885 points pre-opening level of Feb 12.

Mehanti sees foreign buying in some of the best performing stocks i.e. Pakistan State Oil, National Bank and MCB Bank. Besides, the local Financial Institution and retail investors participation also remained on higher side, he added.

Today, market failed to sustain high share prices in oil scrips, however, this sector is expected to perform well tomorrow (Thursday), as the oil prices in the international markets have once against surged beyond US$100 per barrel, he added.

Again, it was banking sector that made the day rally backed by cement and telecom scrips too. Exploration and production (oil) stocks came under selling pressure on technical correction while the fertilizer stocks performed in negative to neutral territory.

Live Securities said, Compared to its previous session, profit taking dominated the market. Profit booking was expected on Wednesday as 100-Index surged by more than 400-index point yesterday.

Hasnain Asghar Ali of Aziz Fidahusein said that banking giants witnessed extended buying interest although major buying was of speculative nature. Therefore, positive numbers in main banking stocks (MCB and NBP) allowed the index to keep the positive posture alive, although closing hour saw index make a short visit to negative zone.

With new government still in process of formation, certain questions are still unanswered on political fronts; the economic issues are likely to be addressed after formation of new government the immediate shift in policy stance is therefore expected, he added.

Minus signs, however, led the runners on board, as 214 companies stocks declined against 123 stocks advanced. The value of 45 scrips remained unchanged with total 382 active counters in the broader market.

Highest volumes were witnessed in Arif Habib Securities at 39.027 million closing at Rs182.20 with a gain of Rs3.60, followed by Pakistan Telecommunication Company at 32.135 million closing at Rs44.20 with a gain of Rs1.05, National Bank at 23.927 million closing at Rs259.65 with a gain of Rs2.40, Bank of Punjab at 21.584 million closing at Rs103.70 with a loss of Rs2.70 and Oil and Gas Development Company at 18.764 million closing at Rs128.10 with a loss of Rs1.65.

Optimistic investors push KSE to all-time high


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## Neo

*US to discuss boosting trade with Pakistan *​ 
Thursday, February 21, 2008

LAHORE: US Ambassador to Pakistan Anne Patterson has said that she will visit the Lahore Chamber of Commerce and Industry very soon to discuss with the business community as to how trade between Pakistan and the US could be given a further boost.

The US ambassador was talking to LCCI President Mohammad Ali Mian at a luncheon reception, hosted by US Consulate Principal Officer Brian D Hunt at his residence. Frank G Lowenstein, Senior Foreign Policy Adviser to Senator John Kerry, Rexon Y Ryu, Senior Foreign Policy Adviser, Antony J Blinken of Committee on Foreign Relations, US Senate and E Candace Putnam, Political Counsellor, US embassy, also talked to the LCCI president on a number of issues ranging from trade relations to the political situation in Pakistan. The US ambassador said that Pakistan and the United States have excellent bilateral relations, but the trade ties are far behind the desired levels which need to be tackled by both sides on priority basis.

The ambassador assured LCCI President Mohammad Ali Mian that she would take all possible measures to bring both the countries closer in terms of trade and economy. Anne Patterson also spoke highly about the Lahore Chamber of Commerce and Industry for playing a pivotal role in the economic well-being of the country.

The LCCI president informed the US ambassador that Pakistan and the United States have huge trade potential, but it could not be materialised so far only because of a comparatively lesser access allowed to Pakistani businessmen to the US market, as is being given to other regional countries.

Once the Pakistanis are provided the right amount of access to the US market, the country will not be in need of any sort of aid as trade is the best substitute to aid. Mohammad Ali Mian said that Pakistani textiles and textile made-ups are the best in the world but are not getting the right place in the US market for multiple reasons that must be taken care of.

While stressing the need for exchange of more and more trade delegations between Pakistan and the United States, the LCCI President Mohammad Ali Mian said that this is the best available solution to increase the volume of two-way trade and improve the perception of Pakistan, which has been tarnished by unseen forces as a result of their ulterior motives.

US to discuss boosting trade with Pakistan


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## Neo

* SMEDA to help implement UNDP project *​ 
Thursday, February 21, 2008

LAHORE: The United Nations Development Programme (UNDP) has agreed to engage the Small and Medium Enterprise Development Authority (SMEDA) as an implementing partner at the national level to undertake its gender promotion (GenProm) project in Pakistan.

A three-member delegation of UNDP Islamabad in a meeting with SMEDA Chief Executive Officer Shahid Rashid discussed the scope of SMEDAs partnership in the GenProm project and agreed that the authority had adequate capacity to work out the industrial sectors identified by UNDP for the project.

The UNDP delegation included Faiza Effendi, Assistant Resident Representative of Poverty Reduction & Gender Unit, Cyra Syed, Programme Analyst of Poverty Reduction & Gender Unit and Sajeel Butt, National Project Manager of GenProm Faisalabad.

UNDP officials informed the meeting that earlier the project was being carried out in collaboration with the Pakistan Readymade Garment Manufacturers and Exporters Association in the Sindh region and the Faisalabad Institute of Textile and Fashion Design in the Punjab region.

The UNDP has established a project management unit in each region and hired world-renowned consultant company KSA Techopak for all training-related activities. Skill development for females is being carried out in selected garment factories. About 1,300 female operators and 190 master trainers have so far been trained and employed in 20 garment factories countrywide under the GenProm project. SMEDA CEO Shahid Rashid appreciated the GenProm project for focusing on filling the skills gap and generating employment opportunities for female workers in the garment industry.

SMEDA to help implement UNDP project


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## Neo

*Bhasha dam Delay in construction to increase cost​*
ISLAMABAD: The further delay on the construction of Diamer Bhasha Dam project is likely to escalate the project cost, as federal government has not utilised any money for the project, a senior official told the Daily Times on Wednesday. Federal government had allocated Rs 2.6 billion for the land acquisition of Bhasha dam under current financial years Public Sector Development Programme (PSDP). Official said that Diamer Bhasha consultants have estimated tentative project cost of $8.505 billion at present against the earlier projected cost of $6.5 billion in 2005. 

This cost may further escalate due to delay in land acquisition of dam. Government had allocated as many as Rs 10 billion from Public Sector Development Programme (PSDP) 2007-08 for the land acquisition of five big dams including Kalabagh, Munda, Krum Tungi dams. No amount has been utilised even after passing over the half of the current financial year. Official said that financial institutions would arrange the rest of the amount. Official also said that in this regard government had formed a task force headed by Finance Minister to generate money amounting to Rs 35 billion out of PSDP from different financing institutions for five big dams construction. 

He said that now the government would make dam companies like Kalabagh Dam Company, Bhasha Dam Company to generate funds for the construction of five big major dams announced by President Pervez Musharraf.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Domestic debt increases by Rs 280.529bn​*
KARACHI: The countrys domestic debt rose by Rs 280.529 billion during the first half of the current financial year as the fiscal deficit expanded beyond estimates. 

Large amounts were borrowed through treasury bills, Pakistan Investment Bonds and MTBs for replenishment. 

The government borrowed Rs 69.571 billion through sale of treasury bills during the period mentioned above. The government also borrowed Rs 136.942 billion through MTBs for replenishments. The overall floating debt rose by Rs 206.513 billion. 

The permanent debt of the country rose by Rs 39.092 billion due to inflows of Rs 41.236 billion through sale of Pakistan Investment Bonds and Rs 9.007 billion through sale of prize bonds. Debt under some other heads was repaid. 

The un-funded debt of the country surged by Rs 34.922 billion. Major inflows were recorded in Special Savings Certificates (Rs 8.003 billion), Bahbood Savings Certificates (Rs 22.349 billion), Special Savings Accounts (Rs 6.046 billion) and Pensioners Benefit Accounts (Rs 5.426 billion). Outflows through Regular Income Certificates and Savings Accounts were also recorded. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Textile exports may face 14 percent fall in fiscal year 2008 ​* 
ISLAMABAD (February 21 2008): Not fully equipped to cope with the regional competition the country may face 14 percent decline in its textile exports during the current fiscal year as compared with fiscal 2006-07; official sources told Business Recorder here on Wednesday.

The export of textile products decreased to $2.449 billion during the first quarter (July-September) of the current fiscal year against $2.73 billion over the same period last year, thus showing a decline of 10.29 percent. The export of knitwear, bed-wear and towels decreased by 10.08 percent, 19.06 percent and 4.82 percent, respectively, during the first quarter of the current fiscal year as compared with the corresponding period last year.

The textile exports have shown a decline of 5 percent up till now in the ongoing fiscal year. The first six months (July 2007-December 2007), the total textile exports have been recorded worth $5.228 billion as compared with the corresponding period last year when textile exports were $5.489 billion.

This clearly shows that the textile exports are going down rapidly and calls for immediate intervention to avert this trend as our balance of trade largely depends upon exports earnings of the textile sector.

Sources said, at present, the situation is unfavourable to the extent that the export orders worth $57.6 million for readymade garments and knitwear have been diverted to the regional competitors whereas the power shortage in the country is forcing industrialists shift their businesses from Pakistan almost to other countries.

The gravity of the situation could be judged from the fact that almost 75 percent industrial units, including 300 spinning mills and weaving mills were closed. In December 2006, the textile exports were $987.402 million while in December 2007; these were $740.702, showing a decline of 25 percent. "This clearly shows that just in the month of December, the textile exports have shown a downward trend of 25 percent.

An official in the textile ministry told this scribe that the government's plan to establish a 'textile city' 35-km away from Karachi will be completed till 2009. But the government does not have resources sufficient to establish a 'one-window operation system' in the textile sector. "We have power shortage and unskilled labour. So, it is impossible to have one-window system like Bangladesh that is surplus in electricity generation."

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Plan to develop 500 billion dollar waterfront designed ​* 
KARACHI (February 21 2008): Having failed to receive a positive response to the Expression of Interest (EoI), the Sindh planning and development department would now issue Request for Proposal (RfP), for the development of waterfront at Western coastline of Karachi centred around Hawksbay.

Official sources estimate the project would cost around $500 billion to develop waterfront at Western coastline of Karachi. Sources told Business Recorder on Wednesday that the process was in final stages and RFP would be published in all major foreign press, including Financial Times, Dubai Times, Khaleej Times, Straight Time, London, etc, bring initial investment of something between $130 billion and $150 billion to restore the project.

Sources said the project was standstill since August 13, 2007 by the authorities concerned, when they got Expression of Interests (EoIs) from investors and developers of international repute for development of waterfront on the western coastline of Karachi centred around Hawksbay. Sources said the companies with substantial experience and proven capabilities of conceptualisation, planning, and execution of mega urban and waterfront development projects would be asked to submit Request for Proposal.

"Only companies who have $5 billion annual turnover would be preferred to submit their RFP," they added. Sources said the Karachi waterfront project would cover the land from lighthouse to Kannup, which was around 84,000-acre land, possessing by different government organisations, including the Pakistan Navy, the Pakistan Coast Guard, the Karachi Port Trust, etc.

At present, around 21,000-acre land has been allocated for the project while 19,000-acre land will be leased to tender winner, initially, they said, adding the department was striving to convince aforementioned department to provide land for the project.

They said that immense number of foreign investor run away after signing the memorandum of understanding (MoU), hence the department has decided to reserve around $150 billion as guarantee money at the time of RFP submission.

It may be cited that environmentalists have raised several objections to the execution of the project, saying that it might cause great damage to the environment and marine life. They are of the opinion that the project should be started only after carrying out a comprehensive environment survey, which assess the effects of the project on air and marine environment, besides suggesting measures to avoid environmental degradation.

To a question, officials in department said the project would be awarded to the company, which would prove its core business activities, technical and financial capabilities, besides providing assurance that project would not damage the surroundings and marine life.

It should have a proven track record in waterfront development, including major reclamation scheme, if any, a credible record in the development of major cities or townships, which include commercial, recreational and tourism facilities, a conceptual Master Plan for the comprehensive development of coastline and proof of substantial financial capabilities.

Sources said the project, which would provide facilities of business, housing, recreational, and tourism purposes at par with developed countries would take 15 to 25 years to be completed.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Coal reserves enough to meet energy needs for 350 years' ​* 
KARACHI (February 21 2008): Advisor to caretaker Prime Minister and Chairman, Pakistan State Oil (PSO), Sardar Yaseen Malik, has said that Pakistan has enough coal reserves to meet its energy requirement for the next 350 years.

Speaking at a reception, hosted by Honorary Consul General of Albania Zafar Ansari, he said that the government was working on various alternative energy projects to meet the energy requirement. Referring to the PSO, he said that the PSO was meeting around 70 percent oil requirement of the country and its daily sale on working days was around Rs 1.5 billion.

He said that PSO was the first company, which had introduced sale of petrol on credit cards, while this facility was still not available in India. Speaking on the occasion, Managing Director of Karachi Water and Sewerage Board (KWSB) Ghulam Arif Khan said that KWSB was facing financial crunch due to non-payment of water bills by the government department, private sector and general public.

He said that City Nazim Mustafa Kamal had provided Rs 27 billion from the CDGK, which were utilised to change or lay new water and sewerage lines in the city. Referring to Clifton area, he said that this area was developed more than 30 years ago and it was provided around five million gallons of water per day. Now water supply had been increased to 10 million gallons per day.

Speaking next, S.M.Munir said that election process had been completed, the political parties should give up their political differences and work for the betterment of general public. Honorary Consul General of Mozambique Khalid Tawab said the general public was facing a number of problems due to ever-increasing prices of goods, and added that the new government should work for improving living standard of general public.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Long term national energy efficiency programme planned ​* 
FAISALABAD (February 21 2008): Planning Commission of Pakistan is preparing a national strategy to develop and implement a "Comprehensive energy efficiency programme", with the financial assistance of Asian Development Bank and National Assessment of Energy Efficiency Market and Economy will be completed up to July 2008.

According to official sources, short-term policy and regulatory improvement recommendations and targeted public relations programmes will be developed by August 2008 by international consultants.

Strategy and action plans for initiating a long-term national energy efficiency programme will be developed up to September 2008. A Road Map for implementing the national energy efficiency programme with corresponding investment plans will be prepared by September 2008.

Planning Commission sources mentioned that new project will design a suitable programme proposal that supports government efforts to establish an enabling policy and business environment for energy efficiency, and to provide immediate financing of priority projects.

Key activities will include (i) an in-depth assessment of the energy efficiency market and the economy; (ii) an awareness-building program for energy efficiency through short-term policy and regulatory improvement recommendations, as well as targeted public relations programs; (iii) strategy and action guidelines for initiating a sustainable long-term national energy efficiency program; (iv) a road map for implementing the national energy efficiency program with corresponding investment plans; and (v) design of bankable investment projects.

Planning Commission sources disclosed that the energy efficiency market assessment will comprise a detailed analysis of market potential and barriers; programme design; resource (institutional, technical, manpower, material, and financial) evaluation; and effective organisational needs assessment for undertaking phased, prioritised energy efficiency and conservation interventions in all macroeconomic sectors and involving all stakeholder organisations as well as individual end-user interests (including those of the energy-poor and marginalised population segments).

Planning Commission will also develop recommendations for removing the institutional bottlenecks that have prevented government-sponsored energy efficiency and conservation programmes and support mechanisms from more effectively nurturing a nascent energy efficiency industry and consumer culture.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*China Mobile to provide service along Karakoram Highway ​*
KARACHI (February 21 2008): China Mobile Communications Corporation, the world's largest mobile phone network, has welcomed the expansion and widening project of Karakoram Highway (KKH) and announced that its service will soon be available all along the highway.

A statement here on Wednesday said that President Pervez Musharraf has recently launched the expansion and widening project of the 335-kilometer road from Raikot to Khunjerab. It pointed out on this occasion that the President had said that several Chinese companies have been investing in Pakistan and pointed out that China Mobile has already invested $500 million in the country and have plans to invest more.

The statement further said that China Mobile has made the largest investment among all the Chinese investment in Pakistan. Pakistan Telecommunications Authority (PTA) has recently awarded the license for providing cellular service in Azad Jammu Kasmir (AJK) and Northern Areas (NA) to China Mobile.

This region is adjacent to the Pak-China border and as the main traffic stream, KKH carries great amount of freight transportation to and from China. China Mobile will put highway's telecom coverage as the most important task, promoting economic and commercial business between Pakistan and China.

China Mobile ranks as the number-one cellular company in the world in terms of network scale and customer base. The company plans to increase coverage area by several thousands miles, reaching every corner of Pakistan including highways with the capacity of 20 million subscribers, initially, which will be enhanced with the passage of time.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Services export down by 22pc​*
ISLAMABAD, Feb 20: Pakistans services exports dipped by 22 per cent in the first half of the current fiscal year over the same period of last year, suggest official data of the Statistics division issued on Wednesday.

The proceeds from export of services in absolute term reached $1.392 billion during the July-December period of the current fiscal from $1.774 billion over the corresponding period of last year.

An official said the decline in exports was the outcome of the steady decrease in export of services  transportation, communication, construction, business and royalties and license fees -- during the period under review.

On monthly basis, the export of services went up by 20.15 per cent to $313.043 million in December 2007, as against $260.539 million over the corresponding month of last year.

The official said that the export of services would increase in the coming months. The figures for January and February are not available to determine the impact of services exports.

The government is also considering further liberalisation of services sector to increase share of the services exports. Pakistan has also submitted initial offers for foreign services providers in the Geneva-based World Trade Organisation.

Pakistan faces a series of barriers to export its services to the developed countries. Until these barriers were removed, it would be difficult for Pakistan to get maximum benefits from exporting its services to the developed countries, especially in the areas of allowing movement of natural persons.

However, the opening of a few sectors to foreign services providers, the import bill has also increased manifold during the last few years.

This is clear from the fact that the import of services went up by 10.59pc in the first half of the current fiscal year to $4.673 billion against $4.226 billion over the corresponding period of last year.

The import of services, which recorded growth includes  communication, construction, computer, business services, and government services during the period under review. The services import, which declines includes -- transportation, financial services, royalties and personal, culture services during the July-September period this year over the last year.

Statistics show that the trade deficit in services sector has also widened by 33.86 per cent to $3.281 billion in the first half of the current year against $2.451 billion over the same period of last year.

Services export down by 22pc -DAWN - Business; February 21, 2008


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## mujahideen

PM for utilizing alternative energy sources to reduce fuel bill 

ISLAMABAD, Feb 21 (APP): Prime Minister Mohammedmian Soomro Thursday emphasized the need on utilizing alternative sources of energy including possible blending of ethanol with petroleum products. The Prime Minister said this while chairing a high level meeting held here to examine the possibility of using ethanol in petroleum products. He directed all the concerned organizations to focus on developing alternative sources of energy to help reducing the prices of petroleum products as well as saving foreign exchange.

Expressing concern over the escalation of oil prices in the international market, the Prime Minister underlined the need to employ all available alternative sources of energy which could help sustenance of economic growth. 
He directed the Petroleum Ministry to finalize its recommendations and strategy in consultation with all the stakeholders.

Secretary Petroleum informed the meeting that feasibility study for blending of ethanol with petroleum products was earlier carried out and a pilot project was launched in August 2006 which was completed in March 2007. 

He said the project established that the ethanol (E-10) blended fuel is environment friendly and economically viable.

The meeting was apprised that ethanol is a byproduct of molasses which is presently being exported. The local consumption of the product could help reduce the fuel bill and impact the economy in a positive manner.

The meeting was also informed that Brazil is the leading country where ethanol is being used as a major alternative source of energy. 

The other countries which are switching towards this trend include USA, China, European Countries, Australia, Canada, Japan, Thailand and India.

Minister for Petroleum and Natural Resources, Ehsan-ullah-Khan also attended the meeting.

app - PM for utilizing alternative energy sources to reduce fuel bill


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## mujahideen

KSE market capitalisation up by Rs183b after election

_IRFAN MALIK_

KARACHI - Karachi Stock Exchange (KSE) market capitalization has soared by Rs183 billion or US$ 4.39 billion in just three days after the general election.
The ready market volumes grew by 105.34 million shares to 397.79 million shares on Feb 21, 2008 as compared to 292.36 million shares recorded before the general election on Feb.15, 2008.
On the back of free and fair election the equity market reacted positively and benchmark KSE-100 index jumped up by 443 points on the very next day of the election and since the election market index made a new record of 14.971 points on Thursday. The KSE-100 index rose by 618 points on Feb.21 as compared to the last trading day before election on Feb.15, 2008.
The ready market volumes on Feb.20 declined by 14.29 million shares and stood at 359.15 million shares as compared to 373.44 million shares recorded on day earlier. However, on Feb.8, 2008 the average daily volume in ready and future markets were recorded at 138mn shares (Rs14bn) & 19mn shares (Rs4bn), respectively
It was disappointing average daily volumes, the lowest for nearly 46 weeks, and cautious investor sentiment in the run up to elections weighed heavily throughout the week forcing the market to close on a negative note. Analysts attributed the current boom on the stock market with the holding of peaceful election process and acceptance of the election results from all elite political leaders of the main political parties of the country.
With the elections passing peacefully the confidence of foreign and local investor has raised and led the wave of buying spree on the stock market, analysts said.
While the market sentiment is positive at the moment there could be instability in the coming weeks with the political situation, while the future course of action will be determined by the economic policies of political parties who manage to grab the powers, but there is no doubt over the continuity of the economic policies which introduced by the previous government, analysts said.
A correction is due as the market is up by around more than 600 points since the holding of election, and it could well come next week, analysts said.
In upcoming days market index may fall by more than 500 points, analysts said. Analysts said that alliance government of PPP, PML (Q), ANP and MQM would be slightly better for the stock market, comparing the PML-N and PPP alliance government because presence of PML-Q and MQM in the coalition government will make sure the continuity of the Musharraf economic policies in future. 

The Nation


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## mujahideen

Stocks hit record high level at 14981

KARACHI: Stock investors continued to take positions at the local capital market on Friday, pushing the benchmark KSE-100 Index to its all time high level at 14981.

Buying in early hours gave the share market a positive start and at one point the major Index was seen at 15024 points. But later profit taking eroded some of the gains from the market bringing it below the level of 15000 points at the close of the market.

The trade volume was recorded at 310 million which is 50 million shares less than the previous day.

DG Khan Cement emerged as the volume leader which registered an increase of Rs5.05 to close at Rs111.50.

KSE-30 Index gained 124 points to finish at 13387 level. 

Stocks hit record high level at 14981


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## JK!

mujahideen said:


> PM for utilizing alternative energy sources to reduce fuel bill
> 
> ISLAMABAD, Feb 21 (APP): Prime Minister Mohammedmian Soomro Thursday emphasized the need on utilizing alternative sources of energy including possible blending of ethanol with petroleum products. The Prime Minister said this while chairing a high level meeting held here to examine the possibility of using ethanol in petroleum products. He directed all the concerned organizations to focus on developing alternative sources of energy to help reducing the prices of petroleum products as well as saving foreign exchange.
> 
> Expressing concern over the escalation of oil prices in the international market, the Prime Minister underlined the need to employ all available alternative sources of energy which could help sustenance of economic growth.
> He directed the Petroleum Ministry to finalize its recommendations and strategy in consultation with all the stakeholders.
> 
> Secretary Petroleum informed the meeting that feasibility study for blending of ethanol with petroleum products was earlier carried out and a pilot project was launched in August 2006 which was completed in March 2007.
> 
> He said the project established that the ethanol (E-10) blended fuel is environment friendly and economically viable.
> 
> The meeting was apprised that ethanol is a byproduct of molasses which is presently being exported. The local consumption of the product could help reduce the fuel bill and impact the economy in a positive manner.
> 
> The meeting was also informed that Brazil is the leading country where ethanol is being used as a major alternative source of energy.
> 
> The other countries which are switching towards this trend include USA, China, European Countries, Australia, Canada, Japan, Thailand and India.
> 
> Minister for Petroleum and Natural Resources, Ehsan-ullah-Khan also attended the meeting.
> 
> app - PM for utilizing alternative energy sources to reduce fuel bill



A lot has been said about wheat and flour shortages in the forum.

If you grow an ethanol economy you will compromise and sacrifice crops that could be used for food.

This is especially demonstrated as the US has now more farmers producing wheat crops for fuel instead of food hence the current situation globally.


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## Neo

*Business group plans budget hotels ​* 
Friday, February 22, 2008

KARACHI: A leading Pakistani business group is introducing a new network of budget hotels across the country in a bid to target the booming middle class that is looking for better standards of hospitality.

The Hashoo Group, which runs the prestigious Pearl Continental and Marriot hotels in Pakistan, has now decided to offer a downgraded version of its luxury hotels. This is being done to lure those willing to pay more but not able to afford the luxury of higher-end hotels.

It is not without reason that two of the locations chosen for the new hotels are the industrial centres. The target is initially the people who look for good hotels when they come to these towns to do business. The introduction of these hotels in Sialkot and Faisalabad will also help attract more visitors.

It will have the reflection of Pearl Continental, commented Arjumand Hussain, Chief Operating Officer (COO) of Hashwani Hotels Limited, a Hashoo subsidiary that manages the hotels. But at an affordable price.

There is a lot of demand for such hotels where people could have comfort and security at a reasonable price, he said, adding budget hotels will go a long way in promoting internal tourism as well.

The first of these hotels is being constructed in Lahore and the group intends to shift its focus from north to southern parts later. Besides constructing new hotels, the strategy involves purchase and refurbishment of the existing low-quality hotels.

Lack of good hotels is believed to have impeded tourism growth in the country, which is blessed with diversified cultures, beautiful scenery and historical sites.

Tariq bin Yousuf, General Manager of Destination of the World, an international tour facilitator, regretted that a lot of potential remains unexploited because of insufficient number of resorts.

Citing Karachi as a case, he said more than a quarter of a million picnickers throng seaside every weekend and have to use the shabby huts in absence of any hotel.

Budget hotels, he said, could herald a revolution in the tourism industry provided the government gives it due attention.

People associated with the hotel business argue that official apathy has hampered the growth of the industry.

Chairman Pakistan Hotels Association Mustansir Zakir said 8-10 per cent bed tax in addition to a 15pc sales tax artificially takes up the room rent, making hotels an expensive proposition.

Tourism is already suffering because of poor infrastructure. Government must offer some incentives by changing the tax structure and offering land for new hotels at discounted rates, he added.

Business group plans budget hotels


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## Neo

*SCRA receives $62m fresh funds ​* 
Friday, February 22, 2008

KARACHI: Foreign portfolio investors have injected a fresh over $62 million into the Pakistani equity markets over the last two days (or after the elections), as decline in the SCRA balances shrank to $37 million in minus to date for this fiscal year (2008) from around $99 million in minus on Feb 18 of this month.

Ahsan Mehanti, CEO of Shahzad Chamdia Securities, sees improved participation from overseas investors in the local markets besides local financial institutions active accumulation and expects that balances in SCRA account should have improved as against what the available figures show. Tomorrows (Friday) updates by the SBP in this account would reveal the actual position and figures of overseas investment, he added.

Moreover, the international oil prices broke the $101 per barrel mark freshly during the day and linked enhanced trading to the relevant stocks on the KSE with the commoditys price hike.

The market is passing through the financial results announcement season, which normally improves participation as compared with non-result seasons. It was electioneering that had stopped investors from building their position aggressively, another analyst said.

However, the formation of the new government and relationship between President Musharraf and relations between the PPP and the PML (N) would impact equity investors, he added.

SCRA receives $62m fresh funds


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## Neo

*Punjab Economic Report 2007 ​*
*Poverty headcount falls 11.52pc ​*
Friday, February 22, 2008
By our correspondent

LAHORE: The poverty headcount in Punjab had declined by about 11.52 per cent between 2002 and 2005 from 33 per cent to 21.48 per cent, Punjab Chief Economist Dr Shujaat claimed while speaking at the Planning and Development Department here on Thursday.

The province was poised to meet nearly all the Millennium Development Goals well before the 2015 target except for MMR which would be achieved up to 2018, proclaimed in a recently released Punjab Economic Report-2007. 

He has said the province has made a significant progress in all aspects of the economy since the broad-based strategic thrust in Vision 2020. 

He claimed that the progress had been made in the wake of growth in incomes as well as Punjab government efforts to provide social and welfare services to the masses. 

The report was produced to the Planning and Development Department at the Punjab Economic Research Institute with the assistance of Bureau of Statistics and a team of Pakistani consultants. 

The report also identified growth and development challenges that lie ahead to achieve the Vision 2020, he said. 

The chief economist said due to concerted government efforts and planning, the provincial GDP at constant prices of 1999-00 had increased from Rs1,997,943 million in 1999-00 to Rs3,067,033 million in 2006-07 (54 per cent increase). Besides, a significant improvement in the enrolment rate, literacy level and access to safe water and health services was also achieved, he said. 

He said that the report highlighted the driving contribution of the province ranging from 57 per cent to 63 per cent in almost all the sectors of the national economy especially in GDP, community and social services, wholesale and retail trade, agriculture, and industrial value-addition. Overall, Punjab contributed 58.5 per cent to the national GDP. 

He said that services sector in the province remained by far the largest sector, contributing about 54 per cent to the gross provincial product. 

Though the contribution of the agriculture in the GDP declined from 31 per cent in 1990-91 to 20.3 per cent in 2006/07, yet it was one of the major sectors of the economy only next to the industry. 

Structural changes in the relative contribution of different sectors suggest reliance of the economy away from agriculture. 

However, the agriculture in the province still employs about 44 per cent of the labour force with its absorption rate one of the highest. He said Punjab Economic Report proclaimed that the Punjab government was taking several initiatives to optimize agricultural resource particularly in fertilizer as well as improved quality seed and promote farm mechanization, plant protection and access to agricultural inputs especially credit. Other potential areas to increase agriculture productivity and production included promotion of non-traditional agricultural products (e.g. off-season vegetables and livestock), he added. 

Dr Shujat said the government had also started several special programmes to develop the provinces less developed areas with a view to reducing regional disparities and alleviating poverty. 

Special attention was being focused on Barani (rain-fed) regions of Potohar, Cholistan, and Dera Ghazi Khan. These initiatives include drought management efforts, the Barani village development project, sustainable livelihoods in Barani areas project, Bahawalpur rural development project and Dera Ghazi Khan rural development project. 

These initiatives are aimed at achieving rural development through income-generating employment activities, improvements in regional infrastructure, he pointed out. 

Punjab Economic Report 2007


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## Neo

*S&P praises Pak equity markets performance ​* 
Friday, February 22, 2008

SISLAMABAD: Standard and Poors Global Stock Market Review Report World by Numbers has praised the spectacular performance of Pakistans equity market as compared with markets not just in Asia but worldwide.

Major (Retd) Iqbal Ahmad, Executive Director-General of the Investment Division and Board of Investment (ID&BOI), said while commenting on Standard and Poors Global Stock Market Review Report World by Numbers here on Thursday.

According to the report, world markets lost $ 5.2 trillion during the month of January as the new year began with one of its worst starts, and continued to get worse. 

High volatility, quick turnarounds in both the markets and sentiment were observed and lower prices prevailed throughout the month. 

The report said that the January declines wiped out all prior gains, leaving all the develop markets in the red for the trailing three-month period. 

Globally 50 of the 52 markets surveyed were down, with 25 of them posting double-digit losses.

Ahmad said: Despite the political turmoil in the country due to the tragic demise of former prime minister Benazir Bhutto on December 27, 2007, Pakistan was Asias best performing market during January 2008 and also ranked 5th best performing in the world. 

Other regional markets in Asia showed significant losses with China and Turkey losing over a fifth of their market capitalization and India and Russia were also down by over 16 per cent during that period. 

The stock exchanges of Taiwan, Hong Kong, Singapore and South Korea also lost more than a tenth of their value during the month.

Ahmad was of the view that the market fundamentals remain strong in Pakistan with expected GDP growth of over 6 per cent this year. 

In addition to that, a recent analytical report by a leading local securities firm mentioned that local companies remain undervalued compared with sector peers worldwide and the market has the potential to increase by 30 per cent post elections.

&P praises Pak equity markets performance


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## Neo

*Reserves decline further to $14.08 billion​*
KARACHI: The total liquid foreign reserves held by the country declined to $14.080 billion on 16th February, 2008 from $14.550 billion on February 9, showing a fall of $470 million during one week. 

Foreign reserves held by the State Bank of Pakistan fell to $11.868 billion on February 16 from $12.3183 billion a week ago, decreasing by $450 million. Net foreign reserves held by banks other than SBP decreased to $2.211 billion from $2.232 billion, falling by $21 million.

Daily Times - Leading News Resource of Pakistan


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## Neo

*'Punjab makes significant progress in economic field' ​* 
LAHORE (February 22 2008): Punjab Chief Economist Dr Shujaat Ali talking to senior journalists at P&D Board office here on Thursday, said Punjab made significant progress in all aspects of the economy since the broad-based strategic thrust identification in the Vision - 2020.

He said: "This progress accrued from growth in incomes as well as the efforts of the Punjab government to provide social and welfare services to the masses." Dr Shujaat Ali said that poverty headcount in Punjab had declined by about 11.52 percent between 2002 and 2005 from 33 to 21.48 percent.

The province was poised to meet nearly all the millennium development goals (MDGs) well before the 2015 target except MMR, which would be achieved up to 2018, proclaimed in a recently released Punjab Economic Report-2007.

The report was produced within the Planning and Development Department at the Punjab Economic Research Institute with the assistance of Bureau of Statistics and a team of Pakistani consultants. The report also identified growth and development challenges that lie ahead to achieve the Vision - 2020, he dilated.

The chief economist said due to concerted government efforts and planning, while the provincial GDP at constant prices of 1999-2000 had increased from Rs 1,997,943 million in 1999-2000 to Rs 3,067,033 million In 2006-2007 (54 percent increase), a significant improvement in the enrolment rate, literacy level, and access to safe water and health services was also achieved, he said.

Dr Shujaat Ali reiterated that PE Report highlighted the driving contribution of Punjab ranging from 57 to 63 percent in almost all the sectors of the national economy especially in GDP, community and social services, wholesale and retail trade, agriculture, and industrial value-addition. Overall, Punjab contributed 58.5 percent to national GDP.

He said the Services Sector in the Province remained by far the largest sector, contributing about 54 percent to gross provincial product. The contribution of the agriculture in the GDP though declined from 31 percent in 1990-91 to 20.3 percent in 2006-07, but it was one of the major sectors of the economy only next to industry.

Structural changes in the relative contribution of different sectors suggest reliance of the economy away from agriculture. However, the agriculture in the province still employs about 44 percent of the labour force with its absorption rate one of the highest.

He told 'Punjab Economic Report' proclaimed that the Punjab government was taking several initiatives to optimise agricultural resource use particularly fertiliser and improved quality seed and promote farm mechanisation, plant protection and access to agricultural inputs especially credit.

Other potential areas to increase agriculture productivity and production included promotion of non-traditional agricultural products (eg off-season vegetables and livestock), he added. Dr Shujaat, in his especial briefing, said the Punjab government had also started several special programmes to develop the province's less developed areas with the objective of reducing regional disparities and alleviating poverty.

Special attention was being focused on Barani (rain-fed) regions of Potohar, Cholistan, and Dera Ghazi Khan. These initiatives include drought management efforts, the Barani Village Development Project, Sustainable Livelihoods in Barani Areas Project, Bahawalpur Rural Development Project and Dera Ghazi Khan Rural Development Project.

These initiatives aimed at achieving rural development through income-generating employment activities, improvements in regional infrastructure, and provision of financial support for skills development through participatory process, he pointed.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Safe industrial production: call to increase global investments ​* 
ISLAMABAD (February 22 2008): Federal Minister for Environment and Local Government Syed Wajid Hussain Bukhari has stressed on the need for increasing global investments in efficient, clean and safe industrial production methods, as these are key factors for sustainable development.

He expressed these views while addressing 10th special session of the Governing Council / Global Ministerial Environmental Forum of United Nations Environment Protection. The Minister met with Environment Minister of Sweden, Norway, Oman, Russia and Afghanistan. All these countries agreed to work in close liaison with Pakistan on environmental issues and enhance existing co-operation in environment.

The Minister, after the meeting, said that there is a need for assisting countries particularly developing countries in increasing their capacities for sound management of chemicals and hazardous wastes.

"We also need to increase consumer awareness on issues of sustainable consumption and production world over"; the minister added. He said that adaptation, planning, financing and cost-effective preventive actions are needed to be incorporated into national development processes and these actions need to be supported by scientific information, integrated climate impact assessment and local climate data calling for North-South and South-South collaboration.

He urged that UNEP should provide platform for initiating such collaboration. He said improved technologies are needed to be developed, besides devising of mechanisms, whereby these technologies are deployed and obsolete non-environment friendly technologies are phased-out throughout the globe regardless of economic and technological development status of nations. "Strong linkages between the state of eco-systems and human well-being should be promoted including the aspects of poverty and health"; the minister emphasised.

The minister said that Pakistan appreciates the commendable effort made by Executive Director of UNEP in preparing Medium Term Strategy, which focuses on six cross-cutting thematic areas including climate change; disasters and conflicts; ecosystem management; environmental governance, harmful substances and hazardous wastes; resource efficiency - sustainable consumption and production.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Saudi Arabia won't supply oil on deferred payments: request turned down ​* 
ISLAMABAD (February 22 2008): Saudi Arabia has declined a Pakistan request for supply of oil on deferred payments, sources told Business Recorder on Thursday. Sources said Pakistan formally made the request to the Saudi government for the supply of oil on deferred payments during caretaker Prime Minister Mohammadmian Soomro's visit to Saudi Arabia a few weeks back.

However, it got poor response for the request. Soomro had flown to Saudi Arabia to perform Umra, besides holding meetings with King Abdullah and other senior Saudi authorities on bilateral issues, including oil import.

Saudi Arabia is one major source from where Pakistan imports oil to meet its demand. Its second source for oil import is Kuwait. Pakistan's local production meets less than half of its demand annually. Heavy dependence on import for oil demand is always a troubling factor for Pakistan's economy.

Now when Pakistan is facing difficulty in managing fiscal affairs due to slow performing of various key sectors of the economy, its oil import bill is cruising close to 10 billion dollars for 2007-08. Among other options for off-setting mounting pressure on the economy, the caretaker government thought it a better option to approach Saudi Arabia for oil supply on two years' deferred payments.

Before putting it before the Saudi authorities, the proposal was discussed at the highest level and subsequently Soomro's visit to Saudi Arabia was considered the right time to formally made the request for the concession.

Saudi Arabia supplied Pakistan oil on deferred payments for three years from 1998 to 2001 to bail it out from difficult economic situation after its nuke test in May 1998. Pakistan approached Saudi Arabia soon after the nuclear tests in 1998, for supply of oil on deferred payment.

The year 1998 was a crucial time for Islamabad when Nawaz government denoted nuclear bomb to declare Pakistan as a nuclear power and in reaction the US and other major donor countries had imposed economic sanctions on it.

Originally, Saudi Arabia's concession for deferred payments in 1998 was for two years and its net benefit to Pakistan was 3.5 billion dollars. However, after expiry of the stipulated period, Saudi Arabia extended the payments for another one-year. The rulers wanted the same arrangement this time too, but they, perhaps, forgot that now it is 2008 and they had done nothing like 1998.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Prime Minister for alternative energy sources to reduce fuel bill ​*
ISLAMABAD (February 22 2008): Prime Minister Mohammedmian Soomro on Thursday emphasised the need on utilising alternative sources of energy including possible blending of ethanol with petroleum products. The Prime Minister said this while chairing a high level meeting held here to examine the possibility of using ethanol in petroleum products.

He directed all the concerned organisations to focus on developing alternative sources of energy to help reducing the prices of petroleum products as well as saving foreign exchange.

Expressing concern over the escalation of oil prices in the international market, the Prime Minister underlined the need to employ all available alternative sources of energy which could help sustenance of economic growth.

He directed the Petroleum Ministry to finalise its recommendations and strategy in consultation with all the stakeholders. Secretary Petroleum informed the meeting that feasibility study for blending of ethanol with petroleum products was earlier carried out and a pilot project was launched in August 2006 which was completed in March 2007.

He said the project established that the ethanol (E-10) blended fuel is environment friendly and economically viable. The meeting was apprised that ethanol is a by-product of molasses which is presently being exported. The local consumption of the product could help reduce the fuel bill and impact the economy in a positive manner.

The meeting was also informed that Brazil is the leading country where ethanol is being used as a major alternative source of energy. The other countries which are switching towards this trend include USA, China, European Countries, Australia, Canada, Japan, Thailand and India. Minister for Petroleum and Natural Resources, Ehsan-ullah-Khan also attended the meeting.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*AKRSP to launch $16.6 million energy project in Northern Areas and Chitral ​* 
FAISALABAD (February 22 2008): The Aga Khan Rural Support Program (AKRSP) will launch a Project "Pakistan Community-Based Renewable Energy Development" in Northern Areas and in Chitral, which will be completed with the total cost of $16.599 million. The World Bank will also provide financial assistance for this project.

In the update project report, World Bank expert Jeremy Levin said the proposed development objectives of the carbon offset project are: to increase access to modern energy from renewable energy sources and reduce global emissions of carbon dioxide.

The carbon offset project will provide additional support for the achievement of the objectives, namely (a) develop hydropower potential in an environmentally and socially sustainable manner so as to help meet local electricity demand, (b) improve access of rural areas to modern electricity services, and (c) improve standards of living for the poor through provision of community level infrastructure.

Jeremy Levin said this carbon offset project will facilitate greenhouse emission reductions and support the development of the international market mechanism for trading emission reductions (ERs) developed in the framework of the Kyoto Protocol.

The project consists of sale of ERs to the Community Development Carbon Fund (CDCF) which provides carbon finance to small-scale CDM projects in the least developed countries and poorer areas of all developing countries.

Operational since July 2003, Jeremy Levin said the CDCF actively seeks to reach countries and communities that are neither presently benefiting from development through carbon finance nor are likely to benefit greatly from it in the future.

The CDCF also seeks to support projects, which include, as a measurable output, the provision of goods and services that will lead to improvement in the social welfare of the communities involved in the projects.

The project will be partially financed through grant support from the ongoing World Bank Pakistan Second Poverty Alleviation Fund (PPAF) Project, which includes provision of grants for small scale infrastructure projects. The AKRPS's proposed sale of ER credits to the CDCF will allow for the mobilisation of additional resources to fill the current financing gap and fully fund the community-based renewable energy program.

Jeremy Levin mentioned that this carbon offset project consists of purchase of ERs generated from at least 103 run-of-river hydroelectric plants ranging in size from 0.035 MW to 0.6 MW, with combined capacity of 15 MW in different locations in remote Northern Areas and Chitral by the WB-managed CDCF.

The program shall be financed by a combination of PPAF grant funds, government contributions, equity contributions and domestic borrowing repaid through future carbon finance payments and community payments recovered through tariff charges, Jeremy Levin added.

The WB expert said the hydroelectric plants would be managed on a community basis with implementation support provided by the Aga Khan Rural Support Program. The project includes active community involvement at the identification, design, implementation and operation stages.

The operation of these renewable energy systems will provide increased access to modern energy services to an estimated 22,181 households (with associated social benefits) currently depending on traditional fuels, kerosene, and diesel-fired sets to meet their energy needs.

Operational costs will be recovered from users through tariffs, whose level shall be determined by the operator of the plant, a "Maintenance Committee" formed by the beneficiary community, and other stakeholders at a level, which shall be sufficient to cover all maintenance, repair, depreciation and loan repayment expenses, said Jeremy Levin.

He both local and imported technology will by used for the mini hydel units, depending on site conditions and operational specifications. The private equipment supply companies shall provide warranty and after-sales service to the communities.

Technical support will be provided by the AKRSP, with additional support provided by NAPWD and CWD (Chitral Works Department) for assistance in identification and commissioning stages and in capacity building, WB expert's report added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Current account deficit rises to $7.5bn ​* 
Saturday, February 23, 2008

KARACHI: The current account deficit further widened to $7.51 billion during the first seven months of fiscal 2007-08 against $5.106 billion registered in the same period of last fiscal year.

Latest statistics of the State Bank of Pakistan (SBP) revealed that during July-January 2007-08 exporters dispatched goods worth $10.977 billion as compared $9.578 billion exported in the same period of last financial year. 

The aforesaid period saw imports surging to $18.783 billion against imports worth $15.806 billion during same period last fiscal. Moreover, from July-January 2007-08 the exports of services fetched $1.621 billion against $2.284 billion in the last fiscal, whereas for services hired from abroad $5.608 billion were repatriated outside the country whereas during corresponding period of last fiscal $4.915 billion were sent back by this sector.

The total balance on goods and services ballooned to $11.793 billion against $8.859 billion of last year. During first seven month of current fiscal total $6.548 billion were transferred into the country against $5.837 billion of last financial year. 

Out of total inflows the workers remittances stood at $3.621 billion, which was recorded $2.959 billion in the matching period of fiscal 2006-07. In the head of Foreign Currency Account (FCA) Residents the $294 billion credited to the country whereas in capital account country received $49 million against $192 million of last fiscal year. During July-January 2007-08 $4.504 billion were brought into under the head of financial account against $4.597 billion of last fiscal year.

Current account deficit rises to $7.5bn


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## Neo

*Income inequality to be a big challenge for new govt ​* 
Saturday, February 23, 2008

LAHORE: The new governments main concern should be addressing inequalities and poverty and it even before assuming power must have realised that the rapid growth of the last eight years has increased inequalities in the society.

The new planners must realise that a more rapid reduction in income gap and poverty requires an accelerated pace of growth and a more pro-poor pattern, which implies reducing inequalities that limit the prospects for poor to take a share in opportunities created by economic growth.

Credible research has revealed that poverty impact of growth has been more than 10 times higher in those countries that combine growth with falling rather than rising inequality. If one focuses solely on the period since the early 1990s, there have been signs that a positive correlation is emerging between rising inequality and economic growth. It appears that the recent growth processes seen in many economies undergoing reforms, including Pakistan, have put upward pressure on inequality. There are exceptions, however, as with the growth inequality has fallen in some countries but Pakistan is not among those countries.

The planners must realise that unless there is a sufficient change in distribution, people who have a larger initial share in the pie tend to gain a big share after the pies expansion. Among growing economies, the median rate of decline in the $1-a-day headcount index is only about 1 per cent a year for those countries for which growth came with rising inequality. By contrast, poverty declined about 10 per cent a year among countries that combined growth with falling inequality. Either way, poverty tends to fall, but at very different rates. Equitable growth is the fastest way to reduce poverty.

It would be wrong to blame globalisation for poverty. In general, poverty is influenced by globalisation but is seldom mainly caused by it. The world poverty stems from a lack of access to resources and opportunities. Also, dependencies, corruption and other governance failures, and poor peoples lack of rights in the face of traditional local power structures, as well as lack of education and healthcare are all key factors explaining poverty and hunger.

But an analysis of the links between globalisation and poverty must take the dynamics and volatility of globalisation processes into account. Given that the majority of the poor live in rural areas and depend on labour or earn their living as small farmers, the effects of globalisation on employment and small-farm competitiveness are central to determining its impact on poverty.

From the experience of recent elections, the new economic managers must have realised that the poor and hungry people cannot wait for long-term solutions, such as the economic progress that globalisation offers. Overcoming poverty through economic growth alone would require decades, even with a high growth rate.

To tackle the time issue and to cope with emergencies, a social policy is needed. The new regime would have to come up with a social policy aimed at mitigating the miseries of the poorest of poor.

Gender inequality is a common problem in all developing economies. It represents an untapped source for stimulating economic growth and promoting social development. This is particularly true in Pakistan, where women are often systematically deprived of having equal access to social services as well as to physical and social capital. 

Hence, empowering women by improving their living conditions and enabling them to actively participate in the social and economic life of a country may well be the key for long-term sustainable development.

Income inequality to be a big challenge for new govt


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## Neo

*Romania offers Pakistan to supply items ​* 
Saturday, February 23, 2008

KARACHI: Romania has offered Pakistan to supply engineering, industrial, electrical, chemical items, automobiles, tractors and fertilisers to Pakistan for expansion of bilateral trade.

A list of these items was presented at a meeting of the Pakistan-Romania Joint Governmental Commission held in Islamabad last year. The government of Pakistan has sent this list to the Trade Development Authority of Pakistan (TDAP) for distribution among Pakistani importers who are willing to buy these items.

The list include equipment for cement plants and refineries, completely knocked-down (CKD) tractors for agricultural and industrial use and parts of tractors, trucks and lorries for civil and military use and cars, equipment and services for oil and gas exploration/production, machine tools, railways rolling stock and wagons, axles and wheels, electrical transformers and electro-mechanical equipment, ball bearings, fertilisers, synthetic fibers, chemicals and petrochemicals, metallurgical products, paper and articles, soda ash and oilseeds.The TDAP said Romania should be considered a source of supply for these items. 

Romania offers Pakistan to supply items


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## Neo

*ADB discovers delays in project implementation​*
RAWALPINDI, Feb 22: The Asian Development Bank, in a new report, says Pakistan has long delays in implementation of ADB-assisted projects and programme as well as average delays in loan closings.

The ADB picked up five projects each to carry out case studies of ongoing Asian Development Fund operations in Pakistan, Bangladesh, Nepal Laos and Vietnam under a special evaluation study in these countries. The projects were selected based on older operations covering different sectors mainly agriculture and natural resources, social sectors, transport and energy.

Pakistan has had by far the longest average delays in loan closings. Against an average disbursement ratio in 2006 of 19 per cent for the entire ADF loan portfolio, case study countries did not do very well, and Pakistan averaged at 17 per cent. When excluding the usually faster disbursing programme loans, then the performance of the four larger case study countries is again slightly below average, showing Pakistan at 14 per cent, the report says.

Reproductive health project was one of the five projects for which ADB approved $36 million on December 20, 2001 but was signed on March 20, 2003 and the loan became effective on February 24, 2004 for which the processing of PC-I by the Planning Commission took eight months. There had been several discussions to cancel the project loan on the basis of slow progress.

Banks study team provisionally rates the project as likely to be unsuccessful. The stated end date of the project is June 2008. The teams rating was based on poor project design and implementation arrangements, involving a relatively new ministry with little on the ground capacity to implement the project activities; social reluctance to promote reproductive health services.

The Agricultural Sector Programme Loan-II was approved by ADB on December 13, 2001. It was signed on April 1, 2002 and became effective on September 24 the same year. The programme loan included three loans: $123 million from ADF resources, $225 million from OCR and $2 million as technical assistance loan from ADF resources.

As a result of this loan programme, Pakistans agriculture sector is more liberalised with reduced government interference. Steps have been taken to free the sugar sub-sector from distortions but import duties on sugar still exist.

The report says the provincial governments initially perceived the programme design to be too complex with too many policy requirements. They viewed it as federally-driven. However, this perception changed as a result of extensive consultations with the provinces.

Livestock and horticultural development and strengthened research and extension services figured prominently in the list of projects. Many of these projects were considered innovative and providing technology-based infrastructure. However, the Ministry of Food, Agriculture and Livestock failed to collect baseline data at the start of the programme.

Access to justice programme was the third case picked up by ADB for the study. The programme relied on three loans: ADF loan of $243.2 million, an ADF loan of $86.8 million and ADF technical assistance loan of $20 million. The ADB also funded six advisory technical assistances from 1997 to 2004, worth $6.9 million. The programme was set to close on June 30, 2005 but was extended three times and the first two loans were closed on September 30, 2007. The TA loan is expected to close in June 2008. Programme loan utilisation was about 73 per cent while that of the TA loan stood at only 9 per cent in September 2007.

The ADB approved $296.2 million ordinary capital resources loan and ADF loan of $5 million for NWFP road development sector and sub-regional connectivity project in November 2004 but the project became effective after 11 months. At the end of August 2007, contracts awards and disbursements amounted to $41 million and $8.873 million, respectively.

Actual road construction only commenced on June 7, 2006 and most of the progress relates to rural roads component of the project.

The ADB study team considered that the project was likely to be only partly successful, even with its revised scope.

ADB discovers delays in project implementation -DAWN - Business; February 23, 2008


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## Neo

*Asif for close economic ties with India​*
ISLAMABAD, Feb 22: Pakistan Peoples Party co-chairperson Asif Ali Zardari has said that there is great potential for Pakistan and India to further strengthen their socio-economic ties.

In an interview with India Todays Managing Director Raj Chengappa, Mr Zardari said the two countries could develop their bilateral relations, particularly in the economic sector.

We are a small country compared to India, but we are a larger supporter of it. India can be a super economic power if we do things together, he added.

Mr Zardari also spoke about the issues to be tackled by new government in Pakistan. About the judiciary, he said his party would prefer open debate in the parliament for the restoration of the deposed judges.

We need to make the judiciary independent financially too. Then we need to lay down the parameters of what the judiciarys function are, he added.

Replying to a question about PML-N chief Nawaz Sharifs stand over the issue of restoration of judiciary, Mr Zardari said PML-Ns agenda would coincide with PPPs agenda.

The PPP leader said for too long in our history the country had suffered because of judicial decisions. So, we have to be very careful and therefore, I feel there should be an open debate in the parliament.

Mr Zardari said his party was calling for a national consensus government. He said: The nation is in a disarray. There is no governance and institutions have been weakened.

He rejected an alliance with PML-Q and said it had never been a political party. It was a collection of individuals, he said, adding that people had exposed them.

Replying to a question regarding working with President Pervez Musharraf, he said: I will be working with the Parliament. It is the sovereign governing body of the country.

When asked to comment on impeachment of President Musharraf, he said that let the parliament decide about this issue.

We are getting carried away by slogans rather than going to the crux of the matter. The belief was to strengthen democracy, he added.

Mr Zardari said people had voted for democratic forces against fundamentalist forces and the previous government.APP

Asif for close economic ties with India -DAWN - Top Stories; February 23, 2008


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## Neo

*LSM grew by 6.9 percent during July-November*​
ISLAMABAD: Large Scale Manufacturing (LSM) has registered a growth of just 6.9 percent during July-November 2007-08 as compared to the annual growth target of 12.5 percent set for the ongoing fiscal year.

LSM is projected to grow by 12.5 percent in the fiscal year 2007-08 as compared to the estimates of 8.8 percent in the fiscal year 2006-07 and as against the 10.7 percent in 2005-06.

According to a report released by Ministry of Finance on Friday LSM has grown by 6.9 percent in the first five months of the current fiscal year as against 7.7 percent in the corresponding months of the last fiscal year 2006-07. 

The main contributors to this five months (July-November) increase in LSM are sugar (25.0 percent) and cement (24.1 percent). Within automobiles group diesel engines, buses, Light Commercial Vehicles (23%) and motorcycles (24.2%,) have registered impressive double-digit growth in the first five months of 2007-08. Similarly, within electrical groups production of electrical fans (32.2%), refrigerators and TV sets (19.0%) have also registered high double-digit growth. Within this group negative growth was witnessed for air conditioners, electric transformers as well as electric meters. Petroleum production, on the other hand, registered a decline of 17 percent in the month of November 2007-08.

This slow down in petroleum production was brought about due to routine maintenance shut down of a couple of oil refineries like PARCO and ARL. However, during the consolidated first five months of 2007-08, the oil refineries production registered a healthy growth of 8.1 percent.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Mobilinks fibre optic project to be completed by year end​*
KARACHI: Mobilink fiber optic project is expected to be completed by the second half of the current calendar year. Presently it is 6,500 kilometer long. The third phase of expansion for another 2000 km is currently underway, which will provide a third redundant link. The current deployment already has two redundant links, Mobilink official spokesperson told Daily Times here Friday.

He said Mobilink has a state of the art fibre optic network starting from Peshawar to Karachi covering all major cities. Our fiber optic network would be one of the best in Pakistan and after the completion of this phase we will be the only service provider to have three levels of protection. 

The Mobilink spokesperson said: We have introduced latest technology, which automatically shifts traffic to the redundant link in case a link goes down. This all happens in milliseconds and there is no performance degradation of the voice or data traffic. With a capable technical team available 24 hours our response times for restoration and resolving any possible issues are minimal, he added.

We have plans to provide high-speed data connectivity in the urban and rural sectors of Pakistan through WiMax services. Being a developing country, the expansion of broadband networks and services is of high importance to the Pakistani economy, he said adding that broadband connections in the country currently stood at around 0.1 million. With the population figure at over 165 million, this will clearly place Pakistans economic development into the next stages of progress. 

After the completion of fiber optic the company has a plan to divert its traffic on its own fiber optic and would also offer it to the other operators to use it for their traffic. Currently our network is based on 2.5 generation and we will upgrade this according to the requirement of our subscribers, he added.

At present, the company is leading among all the existing mobile operators with more than 30 million customers enjoying its services across the nation. With more than 5,000 cities, towns, and villages throughout Pakistan on our network of services. Mobilink has so far invested $2.5 billion in infrastructure and in 2008 the company is planning to invest $500 million to meet the demands of industry and needs of its subscribers.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Record-breaking rally continues in Karachi stock market​*
* KSE-100 index closes at 14,980.66 points​
KARACHI: Karachi stock market once again made history on the last trading session of the week as its KSE-100 index outshined Thursdays record by closing at another all time high of 14,980 points manifesting growing confidence of local and foreign buyers in the market.

Analyst have attributed continuous positive momentum of the market to the institutional/foreign investors buying on back of expected strong result announcements, continuation of post election rally on back of capital gains expectations and expectations for better political situation in the days to come.

The KSE-100 index gained 8.69 points or 0.06 percent on Friday as it closed at record level of 14,980.66 points against previous sessions 14,971.97 points. The KSE-30 index closed at 18,387.09 points with a gain of 123.70 points or 0.68 percent. 

The market turnover went down to 21.27 percent and traded at 313.08 million shares as compared to 397.69 million shares traded in the previous session. The overall market capitalisation went up to 0.04 percent to Rs 4.608 trillion compared to previous sessions Rs 4.606 trillion. Out of 359 companies, 152 closed in positive, 157 in negative while 50 remained unchanged. 

Atif Malik, analyst at J.S. Global Securities said positive sentiment continued unabatedly in the stock market. The market was volatile from the outset as with the start of trading session, it gained but later it set down to minus 90 points. The KSE-100 index at the end of the trading session closed at the highest 14,980.66 points, which is record in the history of the stock market.

Scrips of Mansha Group including MCB, DGK Cement and Nishat Mills performed positively as they remained in the limelight during the trading session. 

Ahsan Mehanti, senior analyst at Shahzad Chamdia Securities said institutional/foreign investors continued taking positions on back of expected of positive political development and formation of a strong political government, Special Convertible Rupee Accounts (SCRA) balances improves to $37 million for this fiscal year reflecting appearance of foreign interest in the post elections scenario, post election rally in Nishat Group Companies including NML, DGKC, MCB. DGK Cement was the volume leader in the share market with 32.18 million shares traded as it closed at Rs 111.20 after opening at Rs 106.45 making a financial gaining of Rs 4.75 per share. Lucky Cement traded 18.29 million shares to close at Rs 129.50 after opening at Rs128.80 gaining Rs 0.70 per share. staff report

Daily Times - Leading News Resource of Pakistan


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## Neo

*July-January foreign investment down by 35 percent ​* 
KARACHI (February 24 2008): Net foreign investment declined by over $1 billion, or 35 percent, during seven months of the current fiscal year mainly due to high portfolio outflows due to political uncertainty.

The State Bank (SBP) on Saturday issued the statistics of foreign investment, including foreign direct investment (FDI) and portfolio investment, which showed that overall 35 percent decline occurred in foreign investment during July-January period of the current fiscal year as compared to same period of last fiscal year.

Overall foreign investment (FI) stood at $2.262 billion during seven months as compared to $3.478 billion of last fiscal year, depicting a drop of $1.2157 billion. "Major reason behind this dip was 100 percent decline in portfolio inflows as the foreign investors were reluctant to invest in the equity market due to political uncertainty and negative reports regarding the country's stock markets," economic experts said.

They believed that after the reconstitution of new political government, foreign investors once again would invest their money in Pakistan's stock markets. They said that during the current fiscal overall investment would be lower than last fiscal year as during last fiscal year the country had received some extraordinary funding by foreign investors, besides some government level investments.

SBP statistics showed that portfolio investment declined by 100 percent or $1.382 billion. After the current decline, portfolio investment has declined to lowest level of 0.4 million dollars, previously standing at 1.382 billion dollars in the January 2007.

FDI during July-January registered a growth of some 8 percent. However, the declining portfolio investment decreased the overall investment by around 35 percent. FDI had gone up by 7.9 percent to 2.2624 billion dollars as compared to 2.096 billion dollars during the same period of the last fiscal year, depicting an increased of 166.4 million dollars during July-January of current fiscal.

Including privatisation proceeds total private investment showed a decline of 19.8 percent to 2.24 billion dollars, while excluding privatisation proceeds it has dipped by 20.8 percent to 2.108 billion dollars during the first seven months of current fiscal year.

Economist said that issuance of GDR in the future would help to boost the foreign investment in the country, as slow privatisation process is another reason of declined in the foreign investment.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*ADB to provide $1100 million for two Karachi mega projects ​* 
FAISALABAD (February 24 2008): The Asian Development Bank will provide $1100 million for two Karachi projects--'Karachi Mega City Sustainable Development Investment Program (Subproject-1)', and 'MFF-Karachi Mega City Sustainable Development Investment Program (Facility Concept)'.

For strengthened planning, administration and fiscal management, and to increase quality, coverage and reliability of water supply wastewater management, mass transit, and housing.

In an updated project report, Eunkyung Kwon, Principal Urban Development Specialist of ADB, said that the impact of the Investment Program would be an enhanced and sustained contribution of Karachi to national development, and improved quality of life for city residents, particularly the poor.

Project report said that the Investment Program comprises four parts. Part-A of project is designed to provide investment program management and support, addressing (i) program management (establishment and staffing of the Program Reform Monitoring Unit (PRMU) and Program Implementation Unit (PIU), (ii) program support (studies, training and capacity development for Karachi's local governments and service providers, and public awareness and outreach), and (iii) independent monitoring and evaluation. Parts B, C, and D are designed to address the critical sub-sector priorities for improved infrastructure, service provision and low-income housing.

Asian Development Bank will also provide financial assistance for 'MFF-Sindh Cities Improvement Program (Facility Concept)'. In her project report Ms Kathie M Julian, Urban Development of Central and West Asia Department (ADB Division Social Sectors Division, CWRD) said that the proposed program would support infrastructure investments and institutional strengthening in three priority sectors over a 10-year period in select clusters of secondary cities of Sindh province.

The program will support establishment of effective systems for urban service provision. A multi-tranche financing facility (MFF) modality is proposed. The program will support urban planning institutional reforms, public-private partnerships, and capacity development. Physical investment will include water supply, sewerage, drainage and wastewater treatment (wastewater), and solid waste management.

The combination of physical and non-physical investments under the program aim to improve quality, continuity and coverage of urban infrastructure services in water supply, wastewater, and SWM while incentivising and supporting effective management and sustainable financing of urban service providers. This, in turn, will help improve quality of life for residents in Sindh cities, including the poor, and address growing regional development imbalances within Sindh, she added.

The project financing is fully consistent with the increased emphasis on lending for economic infrastructure, including specifically for urban renewal and development, under ADB's recent country strategy and program updates.

First Phase: Urban areas in northern Sindh (Sukkur, New Sukkur, Rohri, Larkana, Khairpur and Shikarpur); Subsequent phase location to be determined as per agreed criteria safeguard planning documents (resettlement frameworks, resettlement plans) in accordance with ADB's 'Environment, Involuntary Resettlement and Indigenous People's Policies' are under preparation. Net environmental benefits, expected to be positive, potential negative impact of the short construction program are expected to be not significant, the report concluded.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*14 development schemes underway in Hyderabad: DCO ​* 
HYDERABAD (February 24 2008): The District Co-ordination Officer (DCO) Hyderabad Aftab Ahmed Khatri has directed the officers of Regional Transport Authority (RTA) and Hyderabad Traffic Police to ensure implementation of transport and traffic rules for maintaining smooth flow of traffic on city's road.

He was presiding over a meeting of Regional Transport Authority at his camp office here on Saturday. Addressing the meeting, DCO said that district government Hyderabad was carrying out more than 14 different development schemes of flyovers, under passes, bridges and traffic engineering system and these would be enough to meet the traffic requirements of next 25 years of the city.

He said that till the schemes are completed, an effective strategy with proper observance of traffic and transport rules was needed to regulate huge traffic within available communication network.

He asked the management of RTA Hyderabad to keep strict vigil on the registered passenger vehicles to know whether the management concerned transport was following all conditions of route permit, facilitating commuters/passengers accordingly or not. He asked the officers to identify the bottlenecks in smooth traffic flow and submit with their recommendations so that the same could be incorporated in future planning.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Construction of LNG terminal at PQ: Pak-Dutch joint venture violating safety standards ​* 
KARACHI (February 24 2008): A Pakistani and Dutch joint venture (JV) is reportedly planning to construct a liquefied natural gas (LNG) terminal in violation of national and international safety standards at Port Qasim.

The Engro Vopak Terminal Limited (EVTL) and the Royal Vopak (RV) of Netherlands are negotiating with a four-member delegation of Port Qasim Authority (PQA) in Dubai on a suitable location for development of the Mashal LNG Terminal (MLT) at Port Qasim.

"EVTL wants the terminal to be set up next to the existing Liquid Chemical Terminal (LCT) while the PQA wants it on the allotted land of Chara Creek or muchakland due to safety concerns," well-placed sources told Business Recorder on Saturday.

If the proposed terminal is built next to LCT, which would cost the builder an estimated $100 million to $1000 million, would not only put the surrounding area into risk, but also violate a three-point criterion set by the ministry of petroleum and natural resources in Liquefied Natural Gas (LNG) Policy, 2006 on safety standards.

According to the criteria based on technical, financial and safety standards the project developer would have to ensure that "the project complies with the World Bank's Health, Safety and Environmental (HSE) guidelines, Pakistan's Environmental Protection Act, 1997, National Environmental Quality Standards, Pakistan's health, environment and safety standards."

They said that in case of any accident like fire eruption, etc the consequences would be far more disastrous than caused by a normal blaze. "Placing LNG and chemical together will be nothing but inviting a health and safety risk," they added. "Constructing a gas terminal in proximity of a chemical terminal will be potentially dangerous and risk safety standards of the port... it should be built on an isolated place," they argued.

Sources also said the development was also likely to cause operational problems at the Port Qasim. "Providing a one-way transit to a LNG vessel destined for the proposed terminal would affect general traffic at the port," they added.

They claimed that the EVTL by sticking to its point on location of MLT, wanted to grab an attractive source of income in future by getting charge of the LNG cargo handling. They said construction of the MLT would be undertaken progressively in two stages and during the first stage the terminal would be used as a floating set-up.

The planned design capacity of initial floating terminal would be of two million tonnes of LNG per annum with a capability to handle vessels of up to 75,000 tonnes.

In the second stage, they said a shore-based installation would be made and capacity of the terminal would be increased as per demand to cater for tank capacities, etc on the allotted land. Sources said that full terminal capacity of the MLT was targeted at seven million tonnes of LNG per annum. According to LNG Policy, 2006, the MLT was to be built by the LNG developer, Shell Gas & Power, but the project would now be undertaken by the EVTL and RV after the former showed lack of interest in the project.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Investors get the jitters before installation of new government ​* 
ISLAMABAD (February 23 2008): International investors are said to be nervous following the victory of anti-Musharraf parties over his allies in February 18 polls.

The sources said official circles dealing with investors were trying to convince the 'worried' investors by arguing that the leadership of winning political parties would not revert the policies of their predecessors as President Musharraf himself was there to help ensure continuity of his economic policies in the best national interests.

However, political analysts were of the view that President Musharraf would not be as strong as he is, after the installation of a coalition government comprising Pakistan Peoples Party, Pakistan Muslim League-Nawaz and Awami National Party. Economic analysts believed that the new government would be taking a close look at economic policies of Shaukat-led government with a view to effecting drastic changes in them.

The sources said the caretaker government has shelved plan to float international bonds because of increasing spread and political uncertainty in the country, adding that the new government might go for it in May.

Global Depository Receipts issues for government shares in two of the largest commercial banks were ready, but their launching has been postponed due to global financial market slowdown and until the installation of new government. They said some of the international banks were being asked to give presentations to the officials for floating bonds so that everything should be ready for launch at a proper occasion.

The sources said the economic managers were also busy negotiating launching of Islamic bonds with 12-13 local banks, mainly to minimise borrowing from the State Bank of Pakistan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*$450 million LNG terminal at Port Qasim: SSGC, Shell finalise LNG import project deal *​ 
KARACHI (February 23 2008): The Sui Southern Gas Corporation (SSGC) and Shell Gas & Power (SG&P) are close to sign an agreement on the establishment of 3.5 million tons per annum (mtpa) LNG import project as an additional source of gas supply to meet soaring demand of the country.

Under the agreement SG&P would also develop a liquefied natural gas (LNG) terminal at Port Qasim as a re-gasification facility at an estimated cost of $450 million, well-placed sources told Business Recorder on Friday.

The Mashal LNG Terminal (MLT) would be constructed under the country's first LNG project "Pakistan Mashal LNG Project" to ensure uninterrupted supply of the ever-needed fuel to industries, power or fertiliser plants etc on sustainable basis.

The SG&P, which would be appointed as "LNG Developer", would also be responsible for purchasing LNG supplies, transporting them to the MLT besides designing, constructing, operating and owning the proposed terminal at Port Qasim.

"The SSGC and Shell Gas & Power have finalised talks on the Mashal LNG Project and Shell would soon formally be appointed as a LNG Developer under an integrated project structure," sources close to the project said.

They said the SSGC, which has been appointed by the government of Pakistan as a project facilitator, had earlier received at least eleven Expressions of Interest (EoIs) from various local and international companies and consortia.

"The SSGC had short-listed the Consortium of Fauji/Fotco/4Gas/Sojitz and Shell Gas & Power in its bidding and now has finally selected the Shell as LNG Developer," sources added.

Those pre-qualified in the Pakistan Mashal LNG Project bidding process included AES Pakistan Ltd, BP Gas Marketing Ltd, Consortium of Fauji/Fotco/4Gas/Sojitz, ENI Pakistan Ltd, Mitsui/Kogas, Persian LNG and Shell Gas & Power, they added.

They said the MLT would be used as an LNG import terminal and have facilities of receiving, storage and re-gasification of the LNG.

"The proposed terminal will have a 3.5 mtpa LNG import capacity which is equivalent to 500 MMCFD of gas," said the sources. They said the government had estimated that supply of gas through the LNG import project would be possible by 2010-11.

Sources said that the SG&P would be allowed to import LNG in accordance with applicable rules and regulations of imports and would have to obtain a license from Oil and Gas Regulatory Authority (Ogra) to construct the MLT in line with Ogra Ordinance, 2002.

They said the LNG terminal would be constructed on the basis of a three-point criterion comprising strict technical, financial and health, safety and environmental standards.

On technical side, they said the terminal would be constructed on technical standards prescribed by the Ogra from time to time and internationally acceptable industry technical standards.

Sources said that the SG&P would also need to ensure that the project complies with World Bank's health, safety & environmental standards, Pakistan's Environmental Protection Act 1997 rules, regulations, National Environmental Quality Standards, Pakistan's health, environment and safety standards etc.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Financial sector grew smartly despite attendant risk' ​* 
KARACHI (February 24 2008): The country's financial sector has experienced extraordinary growth during the last few years and its assets have grown to 180 billion dollars, however growth in financial sector brings with it attendant risk, said Dr Shamshad Akhtar while speaking at the convocation of the Institute of Bankers Pakistan on Saturday.

Although, the sector is confronting the financial risks, but growing macroeconomic imbalances, unless addressed urgently, could threaten the financial stability, she warned.

She said one of the major risks to Pakistan's financial stability is lack of financial sector diversification and major concern is regarding the size of surrounding non-bank sector. "We need to revisit the regulatory and supervisory framework of insurance sector and Non Banking Financial Companies (NBFCs), as these are fragmented and weakly capitalised," the SBP governor added.

She said that for financial sector stability, it is critical that such institutions be better capitalised and a conducive environment is created for the growth of promising segments especially investment schemes, including mutual funds.

The SBP governor said during the last 10 years, the county's financial sector has presented tremendous growth reaching at 125 percent of GDP as compared to 95 percent of GDP in 1997, while financial sector stability has been further fostered by strengthening of banks' system-wide capital base to Rs 372 billion.

The governor said that greater credit diversification is another area where there is scope of strengthening financial sector, while presence of undercapitalised small banks is likely to pose risks particularly during periods of adverse economic cycles.

New Islamic and other foreign banks are expending banking industry in Pakistan and foreign and Islamic banks' presence, besides mergers and acquisitions will enhance competition in the banking sector, she said and added that there is also further scope for enhancing banking sector stability.

She said that due to the high competition and acquisitions, the share of five largest banks has dropped to 50.6 percent of total banking sector assets, which stood at 63.2 percent in 2000.

She said that overall banks' Non Performing Loans have also been improved and reached 7.7 percent from 17 percent, while net NPLs stood at 2.3 percent. The SBP has recently allowed 100 percent provisioning against NPLs.

Some measures for the stability of financial sector have been introduced in Sidney (Australia), however the SBP already has implemented these measures to enhance the stability of the financial sector, Akhtar said.

"The SBP has introduced exhaustive guidelines on corporate governance, risk management, business continuity plan, internal controls and stress testing in order to promote sound banking practices", she added. In addition, banks have also initiated implementation of the standardised approach, as prescribed under Basel II regulations, the governor said.

"Financial stability will further benefit from State Bank efforts to operationalise Real-Time Gross Settlement System (RTGS) named as PRISM (Pakistan Real Time Interbank Settlement Mechanism) in June 2008 that will allow shift from traditional paper-based, end-of-the-day settlement system to electronic payment system for large value, low volume interbank funds' transfers and settlements," she added.

She said the country's prudential regulatory regime has the ability to promote and preserve financial sector stability, therefore, the State Bank has set up a Financial Stability Department, which is being issuing annual reports on the financial sector performance.

Talking about the training of bankers, she said that SBP field offices would deliver and conduct the special training programmes in the IBP, which would be sponsored by the banks and different financial institutions. The chief executive of IBP, Muhammad Saleem and co-ordination director Johar Ali also spoke on the occasion. Later, Dr Shamshad Akhtar awarded gold medals to successful students.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

* Financial sector assets at $180bn: Shamshad ​* 
Underlines diversification for banking sector growth,calls for consumer protection, deposit insurance

Sunday, February 24, 2008

KARACHI: State Bank of Pakistan (SBP) Governor Dr Shamshad Akhtar has underscored that diversification of banks loan portfolio to support more retail and infrastructure financing will be critical for the growth of the banking sector.

Speaking at the convocation of the Institute of Bankers Pakistan (IBP) here on Saturday, she said over 50 per cent of the bank credit portfolio was concentrated in the corporate sector serving few industries.

She said the financial sector was now predominantly owned by the private sector that presents some new challenges. SBP is now working in developing adequate policy framework for consumer protection, development of Financial Safety Nets such as Deposit Insurance, and a well-laid out Lender of Last Resort procedure which strike a balance between enhancing consumer protection and minimizing moral hazard concerns, she said and maintained that SBP also established Consumer Protection Department to safeguard interest of consumers.

At the same time, there is a need to encourage improvements in efficiency of financial intermediation by reducing banking spreads, she stressed and added the State Bank is further developing capacities to monitor operational risks associated with weak internal control systems, delays in adoption of information technology solutions and outsourcing of processes by banks. 

She also underlined that the central bank also needed to develop its capacities to monitor the financial position and probability of default of the corporate and household sector within the stability framework.

The governor said that presence of under-capitalised small banks was likely to pose risks, particularly during periods of adverse economic cycles. Entry of foreign and Islamic banks and mergers and acquisitions will enhance competition, diversify business sources and facilitate further consolidation, she remarked.

Although competition is emerging with the growth of mid-sized banks and foreign acquisitions, five largest banks hold 50.6 percent of total banking sector assets; though there is a clear reduction in the level of concentration which was at 63.2 percent in 2000, she added. 

She said one of the major risks to Pakistans financial stability was its overall lack of financial sector diversification. Of particular concern is the size and issues surrounding the non-bank sector, she said pointing out that of the total financial sector assets the insurance companies account for barely three per cent, mutual funds three per cent and these too are largely sponsored by banks, while other non-bank financial companies account for two per cent of the system and holders of listed private bonds are less than one per cent.

She said the country experienced an extraordinary growth in the financial sector as its assets grew to $180 billion or 125 per cent of the Gross Domestic Product compared to 95 per cent of the GDP at the end of 1997.

She added that financial stability in Pakistan had benefited from structural transformation of the banking sector and policy initiatives of the central bank.

She said the countrys prudential regulatory regime had been crafted to promote and preserve financial sector stability and for this purpose the SBP set up a Financial Stability Department.

Dr Akhtar said the regulatory framework encourages financial sector growth, diversification and innovation, healthy competition and risk taking to ensure a sustainable and aggressive income stream, opportunities for enhancing the franchise value of banks, prudent behaviour and effective risk management and loan provisioning requirement are stringent enough to discourage infection of loan portfolio besides safeguarding social obligations and consumer interests. 

She said that enhancing banks capital base to Rs372 billion had further fostered the financial sector stability. Process of consolidation has been catalysed by 30 odd proactive mergers and acquisitions (both domestic and foreign-led), moratorium on licensing of conventional banks, and rise in minimum capital requirements for banks and DFIs, she said and added that banks have also initiated implementation of the standardized approach, as prescribed under Basel II regulations. Over the period, this is expected to augment the economies of scale and scope, and efficiencies as competition and innovation grows, she opined. 

Dr Akhtar said the enhanced push from the State Bank for delivery of development finance will help diversify the credit portfolio and will alter risk profile as there is relatively low correlation of the inherent risk factors among different sectors. 

She believed that the financial stability would further benefit from SBP efforts to operationalise Real-Time Gross Settlement System (RTGS) named as PRISM (Pakistan Real Time Inter-bank Settlement Mechanism) in June 2008 that will allow shift from traditional paper-based, end-of-the-day settlement system to electronic payment system for large value, low volume inter-bank funds transfers and settlements. 

Moreover, derivative market, which is an important pillar for effective risk management, though still in its infancy, has taken off.

The derivative market is being regulated under SBPs Financial Derivatives Business Regulation. At present, interest rate swaps are allowed in Pak Rupee and in other currencies after SBPs approval. Likewise, forward rate agreements are also allowed in Pak Rupee and other currencies with the approval of SBP. Presently 5 banks have been given the status of Authorized Derivative Dealers by SBP, she added.

Financial sector assets at $180bn: Shamshad


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*Jute exports to meet $15m target ​* 
Sunday, February 24, 2008

ISLAMABAD: The jute industry of the country is all set to achieve an export target of over $15 million in 2007-08, industry sources told The News. 

The industry has the capacity to produce more than 200,000 bales per year. Despite being at a disadvantage position in respect of raw material, this industry is establishing its export market through quality assurance, firm commitment and remarkable service portfolio. 

The jute industry caters to the eco-friendly packaging demand of the government food departments including PASSCO, Punjab food, Sindh food etc.

The industry, however, has many challenges and impediments that need to be addressed immediately. The major impediment in enhancing the export base is volatile procurement schedule of the government departments. 

The most glaring of which is the sudden demand from Trading Corporation of Pakistan. The industry fulfilled the requirement but this uncertain situation disrupted the logistics position. Industry sources say that the most plausible solution to save the industry from keeping more than desired inventories and abrupt orders is the co-ordination among all the government departments with the active participation of industry representatives for chalking out a detailed supply programme. 

The industry believes that the change in the buying pattern and switching it to quarterly basis instead of buying in one go would help sustain and enhance the export potential of the industry. 

This buying pattern will relieve the industry from keeping undesirable inventories in one end of the extreme and keep the exportable surplus for sustained foreign exchange earnings, on the other. 

The industry has also consistently faced problem shipping raw material from Bangladesh as the protocol signed between Bangladesh and Pakistan governments envisages that only the two country flags carriers can transport cargo on this route. This is further aggravated by non-availability of berthing facilities at Karachi Port Trust. 

As the country is a non-cultivating country of the raw jute, the industry should be encouraged by fixing at least two berths for jute shipments. 

Recent shortage of power and gas has also led to non-conformity of production schedule resulting in huge losses for the industry. 

Primarily due to power shortage, the industry switched over to gas generators for keeping its mills running but later on the gas shortages started to disturb the manufacturing process. 

Jute exports to meet $15m target


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## Neo

*Pakistan, Greece to sign MoU for olive oil production ​* 
Sunday, February 24, 2008

KARACHI: Pakistan and Greece are likely to sign a Memorandum of Understanding (MoU) for cooperation in olive cultivation and olive oil production.

According to the information reaching Trade Development Authority (TDAP) here on Saturday, MINFAL has already accepted the draft of the MoU which has now been forwarded to the Greek authorities for finalizing arrangements for signature.

Once signed, the MoU would also provide the necessary framework for collaboration in the field of agriculture.

Pakistani exporters would be able to re-export Greek olive oil to various regions where quality olive oil is needed.

Olive oil is one of the major and eminent products of Greece and is stated to be the finest in the world. The olive oil currently being sold in Pakistani supermarkets is imported mainly from Spain and Italy. These countries mix 30 percent of Greek olive oil with their own product to improve its quality and then re-export under their own brands.

According to the Pakistan Embassy in Athens, Greek entrepreneurs have shown interest in Pakistani market for olive oil.

They seek a base for further future collaboration between Pakistan and Greece through which Pakistan can benefit from Greek expertise and experience to plant olive trees on a large scale and then eventually set up olive oil processing units here.

The weather conditions in the northern part of Punjab and the Hazara area in NWFP are quite similar to those in Greece.

Pakistan with a population of over 160 million is deficient in edible oil, which is imported in vast quantities.

Pakistan, Greece to sign MoU for olive oil production


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## Neo

*Financial sector assets are now 125 percent of GDP: Dr Akhtar​*
KARACHI: The assets of countrys financial sector have grown to $180 billion or 125 percent of the Gross Domestic Product, said Dr Shamshad Akhtar, Governor State Bank of Pakistan (SBP), on Saturday. She said its assets were only 95 percent of GDP in 1997. 

Speaking at the convocation of the Institute of Bankers Pakistan (IBP), the governor said, Financial stability in Pakistan has benefited from structural transformation of the banking sector and wide-ranging policy initiatives of the State Bank.

The countrys prudential regulatory regime has been crafted to promote and preserve financial sector stability and for this purpose the State Bank has set up a Financial Stability Department, she said. 

Dr Akhtar said the regulatory framework encourages (i) financial sector growth, diversification and innovation; (ii) healthy competition and risk-taking to ensure a sustainable and aggressive income streaml; (iii) opportunities for enhancing the franchise value of banks; (iv) prudent behavior, effective risk management and loan provisioning requirement stringent enough to discourage infection of loan portfolio; and (v) safeguarding social obligations and consumer interests. 

SBP governor said the State Bank has introduced exhaustive guidelines on corporate governance, risk management, business continuity plan, internal controls and stress testing in order to promote sound banking practices. 

In 2007, SBP was stringent in overseeing the management and board conduct, their conformity to fit and proper criterion. Furthermore, two major sets of new regulations were introduced under which banks were required to induct independent board members and adopt umbrella risk management guidelines. There is now a survey underway to assess the compliance of banks corporate governance with SBP regulations, Dr Akhtar added. 

She said the financial sector stability has been further fostered by strengthening of banks system-wide capital base to Rs 372 billion. Process of consolidation has been catalyzed by 30 odd proactive mergers and acquisitions (both domestic and foreign-led), moratorium on licensing of conventional banks, and rise in minimum capital requirements for banks and DFIs, she said and added that banks have also initiated implementation of the standardized approach, as prescribed under Basel II regulations. Over the period, this is expected to augment the economies of scale and efficiencies as competition and innovation grows, she opined. 

Dr Akhtar said the enhanced push from the State Bank for delivery of development finance would help diversify the credit portfolio and would alter risk profile. She said the financial stability will further benefit from State Banks efforts to operationalize Real-Time Gross Settlement System (RTGS) named as PRISM (Pakistan Real Time Inter-bank Settlement Mechanism) in June 2008 that will allow shift from traditional paper-based, end-of-the-day settlement system to electronic payment system for large value, low volume inter-bank funds transfers and settlements. 

Dr Akhtar pointed out that money markets stability has also improved with the SBPs efforts to develop an effective market-determined yield curve for government securities which sets the stage for the corporate debt market. 

Moreover, derivative market, which is an important pillar for effective risk management, though still in its infancy, has taken off. The derivative market is being regulated under SBPs Financial Derivatives Business Regulation. At present, interest rate swaps are allowed in Pak Rupee and in other currencies after SBPs approval. Likewise, forward rate agreements are also allowed in Pak Rupee and other currencies with the approval of SBP. Presently there are five banks which have been given the status of Authorized Derivative Dealers by SBP, she added. 

However, Dr Akhtar said the substantial growth in financial sector brings risks as well. She said although it is comforting that financial risks are well contained, growing macroeconomic imbalances, unless addressed urgently, could threaten the financial stability. She said one of the major risks to Pakistans financial stability is its overall lack of financial sector diversification. Of particular concern is the size and issues surrounding non-bank sector, she said and added that of the total financial sector assets insurance companies account for barely 3%, mutual funds 3% and are largely sponsored by banks. Other non-bank financial companies are only 2% of the system and holders of listed private bonds even less than 1% of it, she said. 

Dr Akhtar said the NBFCs are fragmented and weakly capitalized, and added that there is a need to revisit the regulatory and supervisory framework of insurance sector and NBFCs. For financial sector stability, it is critical that such institutions be better capitalized and a conducive environment be created for the growth of promising segments (collective investment schemes including mutual funds), niche markets and products for leasing, modarabas, housing finance and venture capital. 

While market capitalization has grown impressively, its role in raising long-term risk capital or debt for new industry over the last several years has been limited, she added. 

She stressed that there is also further scope for enhancing banking sector stability too. Although competition is emerging with the growth of mid-sized banks and foreign acquisitions, five largest banks hold 50.6 percent of total banking sector assets, though there is a clear reduction in the level of concentration which was at 63.2% in 2000, she added. 

The governor said that presence of undercapitalized small banks is likely to pose risks particularly during periods of adverse economic cycles. Entry of foreign presence and Islamic banks and mergers and acquisitions will enhance competition, diversify business sources and facilitate further consolidation, she remarked. 

The SBP governor pointed out that another area where there is scope of strengthening financial sector stability is the greater credit diversification. She said that over 50% of the bank credit portfolio is concentrated in corporate sector serving fewer industries. 

Diversification of banks loan portfolio to support more retail and infrastructure financing will be critical for the growth of banking sector, she said and added the State Bank also needs to develop its capacities to monitor financial position and probability of default of the corporate and household sector within the stability framework. 

Dr Akhtar said that taking cognizance of maturity mismatches, SBP has introduced different cash reserve requirements for demand and time liabilities to encourage banks to mobilize long-term deposits. 

She said the financial sector is now predominantly owned by the private sector that presents some new challenges. SBP is now working in developing adequate policy framework for consumer protection, development of Financial Safety Nets such as Deposit Insurance, and a well-laid out Lender of Last Resort procedure. 

At the same time, there is a need to encourage improvements in efficiency of financial intermediation by reducing banking spreads, she stressed and added the State Bank is further developing capacities to monitor operational risks associated with weak internal control systems, delays in adoption of information technology solutions and outsourcing of processes by banks. staff report

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pak products fair in London attracts big crowd ​* 
Sunday, February 24, 2008

LONDON: A two-day exhibition and sale of fabric, home ware, fashion wear, jewellery, carpets and gifts by Pakistans women entrepreneurs opened here on Friday at the Kensington Great Hall, Central London, and drew a big crowd which came to see the countrys wide range of products.

Entitled as From Loom to Luxury, the exhibition reflected the quality of manufacturing rooted in the rich heritage of Pakistan. It is being participated by 55 women entrepreneurs. 

The visitors showed keen interest in the products which included textiles, leather, marble, carpets, fine art crafts, herbal food while information on travel and tourism was also available to the guests. The unusual and diverse array of products and items not usually found in trade and business exhibitions caught the eye of the guests drawn from the diplomatic corps, business community, students and the private sector.

Speaking on the occasion, Dr Maleeha Lodhi, Pakistans High Commissioner to the UK, described the event as the first of its kind to be arranged in the British capital for promoting products manufactured by small and medium entrepreneurs of Pakistan. 

She mentioned that the two key objectives of the exhibition were to boost trade and enhance Pakistans image by countering stereotypes. The main purpose of this event is to secure access to the UK and European markets for Pakistani women entrepreneurs, she said.

Dr Lodhi praised the entrepreneurial skills of Pakistani women and said on display are their creative magic. 

According to the High Commissioner, Pakistan is generally known in Europe as the main manufacturer of towels and bed linen but this trade exhibition will show to the British people a wide range of other products manufactured in the South Asian country.

The idea of holding such an event was conceived by the Pakistan High Commission and has been sponsored with the active collaboration of the Trade Development Authority of Pakistan.

Pak products fair in London attracts big crowd


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*CDWP to discuss 36 projects worth Rs 102 billion​*
* The projects are planned in sectors including flood protection, energy, health, governance, physical planning and housing, devolution and area development, transport and communication and higher education

ISLAMABAD: The Central Development Working Party (CWDP) is likely to discuss 36 developmental projects worth Rs 102.124 billions including a foreign exchange component (FEC) of Rs 18.753 billion. 

Earlier the CDWP meeting was scheduled to be held on February 16, but was delayed and now it would be held on Feb 26. The meeting would take up 36 different development projects worth Rs 102.124 billion with foreign exchange component of Rs 18.753 billion. 

The projects are planned in sectors including flood protection, energy, health, governance, physical planning and housing, devolution and area development, transport and communication and higher education. Deputy Chairman Planning Commission Dr Akram Sheikh will preside the meeting. 

The CDWP can only approve projects costing up to Rs 500 million and the projects costing above this limit must be approved by the Executive Committee of the National Economic Council (ECNEC). The CDWP will recommend to ECNEC for approval if a projects cost is above Rs 500 million. The CDWP agenda, obtained by Daily Times, shows that the Flood Protection Project worth Rs 1.997 billion consists of eight different projects. 

The agenda shows 10 projects in the energy sector with total cost of Rs 24.245 billion including a foreign exchange component of Rs 5.043 billion. These projects are: 132 KV substation down town, Gwadar, Qesco; 132 KV substation Sanghar Housing Scheme Gwadar, Qesco; 132 KV substation industrial estate Gwadar, Qesco; interconnection of 9 IPPS with national grid Phase-I; electricity distribution and transmission improvement project Mepco; power distribution enhancement project; electrification of villages under President Kohlu Development Package; development of national integrated energy modeling system for Pakistan; sustainable development programme for energy efficiency; development and operation of test-pit in the leased area comprising block-II of Thar liginate resource Sindh granted to Thar Coal Ministry Company Limited. 

In the health sector the project of providing sterotatic radio surgery facility to Jinnah postgraduate medical center Karachi worth Rs 517.500 million would be undertaken. The governance sector has two projects: Restructuring of PIDE as a Center of Excellence worth Rs 228.122 million with FEC of Rs61.048 million; and establishment of national institute of disaster management (NIDM) January 2008  December 2010, Islamabad Phase-1.

Daily Times - Leading News Resource of Pakistan


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*Inflow of $78.96 million portfolio investment in a signal day ​* 
KARACHI (February 25 2008): A massive inflow of portfolio investment in the country's equity market was witnessed on a single day on February 22 as $78.964 million came in country mainly from USA and UK. On the other hand, an outflow of $11.644 million was seen on the said date and the net flow was recorded at $67.320 on the end of the week.

According to State Bank of Pakistan data, out of the total inflow, $64.352 million came from the USA, $13.714 million from UK, $494,000 from Germany and $404,000 from Hong Kong on the said date while an outflow of $8.12 million was witnessed by UK, $1.611 by USA, $1.345 by Hong Kong, $545,000 by Switzerland and $23,000 by Singapore on February 22.

The data shows that as many as $281.545 million of foreign investment came in the country's equity market during the current month till February 22, while $39.058 million were withdrawn by the foreign investors during this period.

Analysts are of the view that holding of peaceful general elections and improving law and order situation in the country invited fresh foreign investment in the equity market as the foreign investors came back to invest here on their expectations that political stability will come after elections.

Business Recorder [Pakistan's First Financial Daily]


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*ADB considering providing $6.15 million for Lahore RMTS ​* 
FAISALABAD (February 25 2008): The Asian Development Bank (ADB) is considering providing $6 million from Asian Development Fund and $150,000 from Technical Assistance Special Fund for Lahore Rapid Mass Transit System.

In update project, prepared by ADB Officer Ms Eunkyung Kwon, ADB Department Central and West Asia Department Social Sectors Division, CWRD, revealed that the TA loan provides a key intervention of the long-term partnership between the ADB and Pakistan for the development of Lahore's transport sector.

The TA loan supports a recruitment of a transaction advisor to help formulate, structure, and take to the market a public-private partnership (PPP) for the first priority line of a proposed rapid mass transit system (RMTS) in Lahore.

According to the report, a team of two PSP specialists will be recruited to work intermittently during the implementation of the TA loan. The team will work in close coordination with all interested parties of the Punjab government and the major development agencies active in the sector.

The team will assist the Punjab government to review and comment on due diligence report, financial model, regulatory arrangements, transaction structure, draft agreements, pre-qualification and bidding documents, and evaluation report; and facilitate in negotiating with the bidders.

The expected impact of the SSTA and the ensuing project will be the initiation of a long-term transport system investment program that will enable Lahore to make a greater contribution to national development, while improving in the quality of life for the city residents, including the poor. The SSTA outcome will be an investment project design and financing agreed upon by the government and the ADB.

Business Recorder [Pakistan's First Financial Daily]


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*13.5 percent rise projected in sugarcane target ​* 
FAISALABAD (February 25 2008): The sugarcane target for the year 2007-08 was set for production at 55.88 million tons from an area of 1,039,500 hectares. According to official sources, estimated sugarcane 2007-08 production has been projected as 62.3 million tons from an area of 1.15 million ha.

The increase ratio is 13.5per cent over the last year production of 54.9 million tons. The sugarcane (2006-07) area and production was 1.03 million ha and 54.9 million tons respectively. In 2006-07, the sugar production was 3.52 million tons at an average of 74 per cent crushing and 8.7 per cent recovery. For 2007-08, it is expected that about 4 million tons of sugar could be produced at an average of 80 per cent crushing and 8.7 per cent recovery.

In view of the irrigation water shortage, the Ministry of Food, Agriculture and Livestock (Minfal) has successfully conducted experiments to introduce sugar beet as a new crop to produce sugar. It is also encouraging the mills with proper facilities for its marketing, said sources.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Government spending on health increases 5.5 times over last 15 years ​* 
ISLAMABAD (February 25 2008): The government has been spending 0.5-0.8 percent of its GDP on health but Ministry of Health and the provincial health departments do not take into account other public and private sector health services, say Health Indicators of Pakistan 2007.

If these ignored sectors are taken into account, the total expenditure roughly ranges between 2.3-3.7percent of the GDP. The government's spending on health has ranged between 2.6-4 percent which currently stands at 3.2percent, it said.

However, besides utilisation issues, the total government health spending has increased 5.5 times over the last decade and a half, increasing from Rs 7.7 billion in 1990 to Rs 50 billion now. Unfortunately this figure has not been adjusted towards inflation and population growth.

Statistics show that private sector spending on health as a total percentage of the expenditure on health has ranged above 67 percent over the last several years, 98 percent of this is out of pocket budget. This is clearly a significant burden for a greater chunk of the country's population, which lives below poverty line.

The ratio between the development and non-development budgets, a comparison of the federal and provincial development and non-development financial plan shows dominance of non-development budget in the provinces; this gap appears to have widened over the last 10 years.

An analysis of the government expenditure on health reflects that spending has ranged between 63 percent to the current 80 percent over the last five years.

It is difficult to estimate the expenditure on health in the districts because development allocations are made all at once. Data on government spending on health must also be contextualised to its appropriate share of health financing, giving the realisation that public sector contributions are just one of the sources of financing health within the country. The government's spending on health as a percentage of the total spending has ranged below 35 percent over the last several years.

As a contribution to public sector health expenditure, foreign aid is officially quoted as having ranged from 4-16%percent over the last several years.

A major part of the donor contributions is not reflected in the Public Sector Development Programme (PSDP) and other than the contributors like the World Bank and Asian Development Bank. Most of the international departments, however, remained unaccounted for.

World Health Organisation (WHO) has reflected this in a form of sizeable chunk in its recent publications. Considering this, a system for tracking contributions made by donors and development agencies is a prerequisite. There is a dire need to put in place a system for National Health Accounts to enhance efficiency and promote greater transparency in health system.

In line with the Fiscal Responsibility Act 2005, the government has committed to increase health allocations by 1percent of the GDP by 2015. However, even this is far below the internationally recommended level for any government's spending on health, which should be $34 for essential health interventions by the year 2015 to achieve MDGs.

Business Recorder [Pakistan's First Financial Daily]


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*'SME policy to be implemented soon' *​ 
SIALKOT (February 25 2008): Chief Executive Small and Medium Enterprises Development Authority (Smeda), Shahid Rashid has said that the first ever and comprehensive SME policy will be implemented in near future.

The policy has been formulated keeping in view the problems and needs of the SMEs of the country and under the policy credit guarantee fund and sub-contracting exchange would be introduced to facilitate the SMEs, Rashid said.

Talking to Business Recorder here at the Sialkot Chamber of Commerce and Industry, the Smeda Chief Executive said that implementation of the policy will activate more SMEs and ensure rapid development in this sector. Rashid revealed that an Agro Food Processing Facilities centre with a cost of Rs20 crore is being set up in Multan with the aim to provide processing facilities for pulp extraction of various fruits like mango, guava etc. The construction work of the centre would be completed by June next and machinery for the said centre is being imported from Italy, he added.

He said that the project will also facilitate local growers to prepare tomato paste and puree, lead to value addition, and help reduce post harvest losses currently estimated at 30 percent, with the introduction of latest technology.

The proposed centre will expose growers to the latest fruit and vegetable-processing techniques that can add value to the products and fetch increased foreign exchange through exports, Rashid added.

Smeda chief further disclosed that a Business Centre at Gujranwala would be operational in May next adding that this centre has been established jointly by Smeda and Gujranwala Chamber of Commerce and Industry (GCCI) at a cost of Rs20 crore, which will provide a single promotional and display platform for the wide range of products manufactured in that region, to attract national and international buyers.

Rashid said that Women Business Incubation Centre has been established in Lahore and this cell is making strenuous efforts for resolving the women entrepreneurs problems and extending hand-on support including business infrastructure, fully furnished offices with the facility of telephone and internet facilities, display area for exhibition purposes, administrative and business development support to encourage female participation in economic development.

He said that a Sports Industries Development Centre at a cost of Rs272.61 million will be set up in Sialkot enabling the sports goods sector to adopt the new mechanised ball technology which is threatening the current hand-stitched inflatable soccer ball. Work on the proposed centre, he added will be initiated shortly and completed within a year.

Rashid further said that the centre with a production capacity of 3,500 balls per day would provide technical know-how and a trained labour force. He said that work on other projects including Product Development Centre for composite based sports goods and Sialkot Business and Commerce Centre will be initiated shortly.

Business Recorder [Pakistan's First Financial Daily]


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*SME policy to boost small and medium trade: minister ​* 
MULTAN (February 25 2008): Caretaker Punjab Industries Minister Khawaja Muhammad Jalaluddin Roomi said here on Sunday that the first ever and most comprehensive SME policy to boost small and medium businesses will be implemented in the near future.

Talking to newsmen here on Sunday he said the policy has been formulated in view of the problems and needs of small and medium enterprises of the country under the 'credit guarantee fund' and sub-contracting exchange to facilitate the SMEs.

Giving details of the projects under way, and those in the pipeline, he said that implementation of the policy will activate more SMEs and ensure rapid development in this sector.

Apart from this, a database line survey is being conducted in 20 districts of the country to ascertain the problems and requirements of the industrial sector, he added.

Roomi said that an Agro Food Processing Facilities Centre costing Rs 200 million is being set up in Multan to provide processing facilities for pulp extraction of various fruits like mango, guava, etc.

The construction work on the centre will be completed by June, while machinery for the centre will be imported from Italy, he added. The project, with the introduction of the latest technology, will also facilitate local growers to prepare tomato paste and puree, lead to value addition, and help reduce post-harvest losses currently estimated at 30 percent.

The proposed centre will expose farmers to the latest fruit and vegetable-processing techniques that can add value to their products and fetch foreign exchange through exports, he added. The minister also said that a Business Centre at Gujranwala has been established jointly by Smeda and t5he Gujranwala Chamber of Commerce and Industry (GCCI) at a cost of Rs 200 million, which will become functional by May.

It will provide a single promotional and display platform for the wide range of products manufactured in that region to attract national and international buyers, he added. He said that a Women Business Incubation Centre has been established in Lahore, which is a cell set up to resolve any problems being faced by women entrepreneurs, and extend hands-on support such as business infrastructure, fully furnished offices with telephone and internet facilities, display area for exhibition purposes, as well as administrative and business development support.

The minister further said that the Surgical Industry Development Project costing more than a billion rupees will be launched shortly in Sialkot. Similarly, a Sports Industries Development Centre, Product Development Centre for Composite, and Sialkot Business and Commerce Centre have also been initiated by Smeda in Sialkot to facilitate the local industry, he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Encouraging mergers in textile industry​*
Size matters. If it didnt, State Bank Governor Dr Shamshad Akhtar wouldnt push the textile industry into seeking consolidation of the entire chain through mergers and acquisitions in order to face effectively tough global trading environment.

The industry should gear itself to deal with the increasingly tough competition in the international market, she told the textile millers during her address at the All Pakistan Textile Mills Association (Aptma) head-office in Karachi earlier this month.

She was reported to have advised the textile barons I request you people to seriously look into the consolidation of the sector as international and regional competitive pressures are going to further build up, and it would be larger companies that are more likely to survive, Dr Shamshad said.

She was of the view that the textile sector should endeavour to achieve economies of scale. With size comes everything, she maintained. Small-sized enterprises could also benefit by contributing to large-scale export units, she said.

Why so much emphasis on consolidation of the textile chain? The global textile trade has surged very quickly since the quotas were scrapped in January 2005 under the liberalised World Trade Organisation (WTO) trade regime. The world trade in textiles and clothing spiked to $530 billion in 2006 from $483 billion in 2005.

With a strong textile industry supported by locally produced cotton, Pakistan was viewed across the world as one of the few countries that stood to gain maximum advantage from the phasing out of the textile and clothing quotas. But it did not happen. Pakistans share in the global textile and clothing trade remains below three per cent. That is in spite of over $5 billion invested in the basic and value-added sectors since 2002.

The industry blames the inconsistent government policy, poor country perception of Pakistan in the international market because of runaway blasts and suicide attacks (and what not), and the soaring cost of production on the back of rising utility, especially energy prices, credit cost for the failure of the industry to take as much advantage of the removal of the quotas as was expected of it.

On the other hand, the government blames that the textile industry had failed to increase its share in the world textile and clothing trade because of its inefficiencies and smaller size of units, particularly in the value-added sub-sectors. Hence, it has long been urging the industry to move towards consolidation in all sub-sectors in order to create volumes, curb inefficiencies and reduce cost of doing business to become competitive in the global markets.

To encourage mergers and acquisitions in the textile industry, the Shaukat Aziz-led government had decided in March last year on a recommendation of the Planning Commission of Pakistan to allow a 15 per tax credit to buyers of smaller, loss-making units. The commission had floated the idea that the profit-making companies acquiring loss-making units should get a 15 per cent tax incentive on its profits to encourage consolidation in the industry.

Further, it had suggested that the profit-making company should be allowed to indicate the losses of the acquired unit on its balance-sheet. Nothing has so far been done on these recommendations either, said the industry.

We have done our bit. It is now for the industry to realise that it cannot and should not keep looking towards the government to protect it from competition in the new tough international environment, a senior federal finance ministry official in Islamabad told me several weeks ago.

While most textile leaders agree with the government to the extent of consolidating the industry, they do not buy the idea that the industry itself is or was responsible for the current impasse. Is it our failure that foreign buyers are not prepared to deal with us because of political instability and deteriorating law and order? Is it our fault that we do not get power or gas to run our plants because of energy shortages in the country? Is it our fault that our costs have spiralled over the last few years? Is it not the failure of our foreign policy that we have been denied market access in spite of Islamabads leading part in the war on terror?, a leading yarn and clothing exporter asked.

None of these factors are in the control of businessmen. This is the result of ad hoc industrial policies of the previous government, which continued to refuse to give us what we need to stay afloat and compete with our regional competitors like China, India, and Bangladesh. The fact that we are still working and havent closed down despite a hostile domestic and global business environment should be acknowledged, he said.

The industry is full of those supporting and opposing consolidation. We agree that consolidation is crucial to create volumes needed to secure good export orders, said Aptma-Punjab chairman Akber Sheikh. But the authorities should help us consolidate by giving an exit strategy. While the central bank should instruct the banks to stop invoking personal guarantees against the directors/sponsors of loss-making units to prepare such units for acquisitions and mergers, the government must give fiscal incentives as proposed by the Planning Commission of Pakistan to prepare the ground for mergers and acquisitions.

He said the government must ensure that the fiscal incentives were strong enough for a bigger company to acquire a loss-incurring mill. Unless it is done, the consolidation of the industry will not occur.

He said, the provision of fiscal incentives for consolidation would prevent closure of manufacturing capacities, create volumes, reduce intra-industry competition, boost efficiencies and improve marketing and product development. The smaller units cannot do all these things. Unless we achieve consolidation, we should forget competing effectively in the global markets.

All Pakistan Textile Association (Apta) Aptma, chairman Adil Mahmood is opposed to idea of consolidation of the industry. It is simply not possible in the given circumstances, especially in the spinning sector. The textile industry has become unviable. It is absurd to talk about consolidation at this moment, he said.

He said most of the smaller units were making huge losses. Even if a profit-making group acquires loss-making unit(s), it will not be feasible for the former to move the machinery to the same premises in order to reduce the costs because of the extremely high prices of land and construction. Unless you move the machinery to the same premises, how can you reduce the costs?, he wondered.

The best solution to the current impasse in the industry lies in allowing the millers a respectable exit from the business or in writing off their debts as was done under a scheme given by the central bank a few years back to clean up the balance-sheets of the banks, he demanded.

Is what Adil says really a solution to the industrys problems? That may be so, but only partially and for a limited period. The best policy would be to encourage efficient and profit-making mills buy out the loss-making and smaller units to create economies of scale. For that, the government and the central bank must work together to hand out an attractive incentive package to the industry.

Encouraging mergers in textile industry -DAWN - Business; February 25, 2008


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## Neo

*Foreign capital: a boon or bane?​*
Foreign capital plays a crucial role in the current performance by impacting the vital sectors of balance of payments, fiscal position of federal government and national saving\investment.

The following table indicates important elements in the recent balance of payments. The most striking feature is current account deficit, which is more than financed by a surplus on capital account thus adding to the foreign exchange reserves to make them comfortable in an otherwise difficult situation.

External resources have been a significant source of financing the budget. At Rs200 billion, they financed 53 per cent of the consolidated (federal plus provincial governments) deficit during FY 07.

They have also been a big help in meeting saving\investment gap in the country. During FY 07, net external resources are provisionally estimated to have provided five per cent of GDP as against the ratio of 23 per cent for gross total investment .

Foreign capital has certainly been a boon in the short- run as it more than met the deficit in current account of balance of payments, fiscal deficit and saving \investment gap. However, this is not an unmixed blessing since it involves cost to the economy. Foreign capital may be by way of external grants or loans and foreign investment. Foreign grants are few and generally for exceptional purposes. Foreign loans carry liability of repayment of principal on the agreed date and interest is payable regularly at the pre-determined rate according to the schedule.

Outstanding external debt, despite large write- off after 9\11, rose from $33.3 billion in FY03 to $38.7 billion in FY07 and $40.3 billion as of end September 07. Public and Publicly-Guaranteed Debt increased from $29.2 billion to $35.3 billion and $36.8 billion respectively over this period.

Foreign investment differs from external loans in that the amount invested, along with capital appreciation, if any, can be totally taken out at will and the rate of profit\dividend, to be freely remitted, is not pre-determined., This source of capital has assumed increasing importance in recent years and brought in $ 8.3 billion (net) during FY07 as against $4.4 billion in the preceding year. Of this, foreign direct investment (FDI) accounted for $ 5.1 billion, the balance being portfolio investment (FI). An important component of FDI, equity capital almost doubled from $2.9 billion to $4.2 billion, of which privatisation proceeds were $266 million (as against $1.5 billion a year earlier).

As regards the sectoral distribution of FDI, the major share was that of communication, 37.9, (telecommunication, 35.6 per cent); financial business, 18.7 percent; oil and gas exploration, 10.6; tobacco and cigarettes, 7.6; power, 3.8 and others, 22.8 per cent. Significant changes in the shares over the year were that while the share of telecommunication dropped from 54.1 per cent, that of financial business nearly doubled from 9.3 and tobacco and cigarettes shot up from 0.1 per cent.

Net inflow of foreign investment during July December 07 was $2.2 billion as against $3.2 billion in the corresponding period last year. During these periods, while foreign private investment was $2.2 billion as against $2.5 billion, foreign public investment was negative by $ 23 million in contrast to $ 691 million earlier.

Important components of PI in FY07 were equity securities, $2.3 billion, ($986 million a year earlier), reflecting mainly the issue of GDRs by the government for OGDC and UBL and by a private bank. This included investment at the stock market, which accounted for $862 million, up from $351 million in the preceding year. Debt securities brought in $977 million as against $613 million a year earlier. This included euro bonds worth $ 820 million, up from $796 million.

During July Dec. 07, PI declined from $1.3 billion in the same period of FY06 to $103 million. Of this, private investment fell from $620 million to $126 million, whereas public investment was converted from $691 million to a negative figure of $22 million.

Foreign capital entails a price by way of serving it. Repayment of principal of loans apart, interest on loans and profit and dividend on investment have to be paid regularly. This is shown under income account. The deficit in this account increased from $ 2.7 billion in FY06 to $3.6 billion, or by 33.8 per cent. During July December 07, this was $1.9 billion as against $1.8 billion in the same period last year.

The payment of interest on foreign loans (net), despite the post 9\11 rescheduling and remission of loans and interest earned on foreign exchange reserves, was $884 million in FY07 as against $749 billion an year earlier. while profit/dividend remitted was $804 million as against $504 last year. IMF charges and interest on official debt were $735 million in FY07 as against $664 million a year earlier. Profit and dividend on PI shot up from $ 88 million to as much as $ 266 million over the year. Profit remitted (net) abroad by financial business, mostly banks, was a major factor, as this went up from $84 million in FY05 to $127 million in FY06 and were $116 million in FY07.

During July December 07, interest payments were $1.1 billion against as $645 million a year earlier while repatriation of profit and dividend was $300 million as compared with $247 million earlier. Financial business accounted for $43 million, up from just $15 million.

Foreign capital has important long- term implications depending on the fact whether it supplements national effort or serves as a substitute for it and the nature of its actual use. It is welcome, if it supplements national effort and is used to enhance the productive capacity of the economy to the point where it more than pays for itself leaving a surplus to benefit the economy and improves the lot of the common man significantly. In case of Pakistan this criterion is not met and this is manifested in very low saving\investment ratio and the gap, increasing reliance on it for meeting the current deficit of balance of payments and heavy dependence of budget on this source of financing.

The magnitude of future external liabilities would not be that serious if the foreign capital paid for itself, if not more, through adequate growth of the economy through enhanced productive capacity, particularly of the real sector, and its effective utilisation to impact the external sector. There is not much to show in this regard. The structural weakness of the growth process has persisted for a long time and has not been addressed effectively. The latest report of ADB has highlighted the unproductive use of its loans. The current serous domestic economic crisis is its practical manifestation.

The cost of servicing foreign capital is to increase significantly in the near future. Prospects of maintaining the old level of foreign capital are becoming dim. There is not much family silver left to be sold to foreigners, the external debt rescheduled earlier would soon mature, and the benign international environment created for Pakistan by 9\1 1 is likely to change. There are already enough straws in the wind .

Dependence on foreign capital cannot be reduced without self reliance through increased national saving anchored in domestic saving. The government is actively pursuing anti- saving policies in pursuance of a strategy of consumption-led growth, As a result, the rate of domestic saving has declined, despite the higher propensity to save due to economic growth accompanied by concentration of income and wealth and increased inflow of workers remittances. The ratio of domestic saving to GDP (MP) had fallen from 17.4 in FY 03 to 15.2 per cent in FY06 and is provisionally estimated at 15.1 per cent for FY 09. Household saving dropped from 16.8 to 12.4 and was 13.3 per cent respectively over these periods.

The boon of foreign capital is likely to become a bane unless there is a drastic change in economic policies. The strategy of consumption-driven growth has proved inappropriate and must be replaced by investment-driven growth. This is necessary to generate adequate surplus of tradable goods and services, which may be sold in an intensely competitive international markets.

Foreign capital: a boon or bane? -DAWN - Business; February 25, 2008


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## Neo

*Sliding growth in industry, exports​*
THE industrial growth has slowed down to an average 6.9 per cent in the first five months of the current fiscal against annual projected target of 10.5 per cent, plummeting to a meagre 4.74 per cent in November. The figures for December and January have not been compiled as yet, but the worst energy crisis and strikes have dampened the chances of an accelerated growth in the last two months.

The industrial growth has gone down over the last three years to 8.8 per cent in 2006-07 from 19.9 per cent in 2004-05 owing to capacity constraints and closure of many units as a result of high cost of doing business. And not much capacity expansion has been witnessed during the last eight years.

The slower industrial growth has also affected the export proceeds; there are no trade surpluses and achieving the export target of $19.2 billion by end June 2008 is pretty difficult. On the other hand, the import bill will cross the figure of $35 billion this year.

The import of commodities at $20.48 billion during July-January is up by 18.9 per cent from $17.224 billion, while exports have grown by 5.95 per cent to $10.152 billion against $9.582 billion last year.

In seven months, trade deficit has surged by 35.15 per cent to $10.327 billion against $7.641 billion over the same period last year. Economists estimate that the trade deficit would easily cross the highest ever $15 billion mark.

Analysts said the steady dip in growth would also affect its industries contribution to the GDP, which would make it difficult for the economic managers to achieve the GDP growth rate target. The GDP rate of growth is worked out in May. It would be very difficult for growth to recover in the next three months to reach closer to the target.

As there is no effective industrial policy in the country except some product-specific policies, industries vulnerable to cheaper imports may close down. And also there is no effective policy or facilities for encouraging small industries to diversify the narrow industrial base or to encourage regional development. The China and East Asian economies heavily relied on small industries development for economic growth.

A draft industrial policy was announced by former minister for industries Jahangir Khan Tareen, only to be put in a cold storage. The ministry is looking after the interests of highly protected auto manufacturers and some othe industries catering to domestic consumers. The industries-specific policies only protect profit margins of special interest.

An analytical report of Asian Development Bank (ADB)  a note on Competitiveness and Structural Transformation in Pakistan- advises the policymakers to develop a new industrial policy, which should ensure strategic collaboration between public and private sectors with a view to effectively compete in the international export market.

This strategic collaboration between the two sectors, the bank believes, is an important tool to increase exports and achieve the objectives of higher productivity. The share of the  top 10 in total exports has decreased significantly in the last two decades, though highly concentrated in textiles.

The weighted average of the per capita GDP of the countries importing Pakistans top 10 category has declined significantly indicating that the country is stuck in exports. And the income level of Pakistans exports is at the same level it was two decades ago.

The ADB report also said that Pakistans structural transformation had been slower than those of other Asian countries. The bank called for sector-specific reforms to foster competition and transform the economy. This requires a dose of good public policy as the market alone will not be able do it.

Pakistan is a service economy from the point of view of its output structure, but an agricultural economy from the point of view of its employment structure. Intra-sectoral labour productivity growth has contributed substantially more than reallocation of labour from agriculture into the other two sectors to overall labour productivity growth.

The latter factor, in fact, plays a minor role accounting for overall labour productivity growth. Reallocation of labour from agriculture into services has been much more important than from agriculture into industry.

Pakistan, the bank report said, suffered from falling labour absorption as the absorption capacity of the service sector is not enough to compensate the falling capacity of agriculture and the stagnation of industry.

Although Pakistans manufacturing share is not low, given its income per capita, trade ratio in GDP, and population, the share of this sector in total output has been stagnant since the 1970s. This contrasts with what has occurred in Indonesia, Malaysia, and Thailand, for example, which have seen their shares increase.

The manufacturing sector, it said, was heavily concentrated in food and beverages and textiles. Together, they account for close to half of the sectors value-addition. The level of technology of Pakistans manufacturing sector is relatively low compared to that of other countries in Asia.

Moreover, the share of manufacturing value-added accounted for by high-technology products is low and has remained stagnant during the last 40 years. Pakistans level of labour productivity has increased very slowly since the 1970s. There is still plenty of room for catch-up with the developed world.

Sliding growth in industry, exports -DAWN - Business; February 25, 2008


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## Neo

*Productivity and competitiveness​*
BUSINESS excellence has been identified as one of the pre-requisites for sustainable economic growth. It is by increasing productivity and quality through creativity and innovation that daunting global challenges can be overcome.

To improve the level of productivity, the textile industry has invested $5 billion over last five years. And while the manufacturing sector has witnessed robust growth, the sector needs to be consolidated by resolving structural problems.

There is a dire need for linking growth with productivity as an essential factor for sustaining the competitiveness of the industries with comparative global advantage. This requires rise in productivity at a rate higher than that in the competing countries. During 1992-2006, the overall labour productivity grew at a modest rate of 1.7 per cent which is quite low as compared to Indias 5.25 per cent, Koreas 4.86 per cent, Malaysias 4.36 per cent, Chinas 4.15 per cent, Sri Lankas 2.54 per cent and Bangladeshs 1.52 per cent.

However, the labour productivity growth of the manufacturing sector in Pakistan was 2.32 per cent, which is higher than that of Bangladeshs 2.05 per cent and Indias 1.75 per cent, but lower than that of countries, such as Sri Lanka, Taiwan and Korea due to better application of training tools and capacity building of their labour force.

Labour output is only a partial measure of productivity. The total factors of production (TFP) i.e. capital, land and entrepreneurial ability is lower than our competitors. While during 1964-65 to 1969-70 and 1980-81 to 1990-91, the total factor productivity was 4.26 per cent and 5.38 per cent respectively, in the last decade the TFP declined to 1.7 per cent, and in the first half of the current decade was 2.15 per cent.

The factors responsible for low level of industrial production, impeding productivity and competitiveness can be summed up as: lack of industrial diversification, stagnant regulatory framework, weaker infrastructure, high tariff rates, inefficient information and communication technology, lack of research and development (R&D)facilities, lack of advancements in science and technology, limited technological choices, inadequate human resource development, absence of visionary approach and non-conducive business climate. As a result of these weaknesses, business and industry could not attain the required productivity to remain competitive in our local and foreign markets.

A typical businessman, on an average, loses 5.6 per cent of annual output due to power outages as compared with less than two per cent in China. In order to minimise loss of time caused by power failure, firms are often forced to use their own generators. The use of generators ties up capital of about 12 per cent of a firms fixed assets. The average waiting period for a business to obtain power connection is 45 days in Pakistan as against only 15 days in China. In addition to this, about 70 per cent of the national road network is in fair to poor condition.

The unsatisfactory state of the transportation network has imposed enormous costs on the business and the economy. According to a recent estimate, inefficiency in transport alone is reckoned to cost the economy Rs320 billion per year. Poor performance has also been witnessed in terms of human resource development. The budgetary allocations for education, health and research and development are negligibly low than those incurred by the competitors. Pakistan allocated only 1.6 per cent of GDP on education, 0.7 per cent on health and 0.2 per cent on R&D which has resulted in low levels of productivity in total factor productivity.

The government can play an important role in enabling the domestic firms to compete in the world market by facilitating technological upgradation based on three basic elements i.e. production, investment and innovation capability.

The countrys technological base needs to be strengthened by encouraging research and development at the firm level through incentives. More funds may be provided for quality studies in science and technology if the share of manufacturing sector is to be raised from 18 per cent in 2004-05 to 20.5 per cent in 2009-10 as envisaged under the industrial strategy.

To diversify the industrial base, it is necessary to encourage investment in new industries that are capable of exploring comparative advantage, exhibiting strong backward linkages for better growth prospects. The industrial diversification policies need to be designed in close consultation with the private sector. Targeted intervention by the government along with the sound public-private partnership can be fostering a wide range of new industries. Instead of focusing on textile manufacturing, the attention should also be given on other export-oriented industries such as leather, light engineering, customs-build fabrication, minerals, wooden furniture, processing of precious and semi-precious stones, agro-industries etc.

Efficient infrastructure is a pre-requisite for industrial development. High quality infrastructure reduces the transactions costs of doing business and improving productive efficiency. Abundant hydro-electricity potential remains un-tapped owing to inadequate allocation of resources to the development of hydro-power. As thermal power is costly, investment in the hydropower generation is essential for ensuring cheaper electricity to industries. Similarly, by improving the condition of roads, railway tracks and airports, productivity level can be increased to manufacture products on competitive rates.

Human resource development through education and health is considered to be a key determinant of productivity. Pakistan ranks at 136th position in Human Development Index -- below all the South Asian nations. More specifically, quality of scientific manpower produced in the educational institutions is poor and skills imparted in various poly-technical and vocational institutions are not demand-driven. The productivity of various industries is adversely affected due to lack of skilled workers and some of the industries are not set up because of lack of requisite skilled workers. In order to build a sound and diversified production structure in the industrial sector, high priority must be accorded to human resource development.

Due to non-linkage of academia with industry, the graduates are unaware of practical realities that they face when the step into the professional arena. To bridge this gap, there is a desperate need to establish linkage of academia with the industry.

Textiles with its 62 per cent share in total exports and eight per cent share in GDP is the single largest industrial sub-sector but needs technological up-gradation for innovation and creativity to improve value-addition and increase productivity and remain competitive in the global market.

There is an earnest need for strengthening the drivers of productivity such as investment, innovation, skills, enterprise and competition to obtain the desired level of competency. For attracting foreign direct investment (FDI), the government will have to ensure conducive and viable environment for industries, as mere liberalised investment policy cannot work alone. The skill, enterprise and competition can be derived through allocating sufficient budget for R&D activities and human resources development and by providing incentives to the private sector.

There is also the need for reinforcing the engineering industry so that it can provide primary material and components to strengthen the high- tech industry which will ensure the higher level of productivity.

Productivity and competitiveness -DAWN - Business; February 25, 2008


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## Neo

*Net foreign investment declines by 34.9pc ​* 
Tuesday, February 26, 2008

KARACHI: Net foreign investment decreased by 34.9 per cent during the first seven month of current fiscal year. The latest statistics of State Bank of Pakistan (SBP) showed during July-January 2007-08 the total foreign investment recorded $2,262.7 million which was $3,478.4 million in the same period of the last fiscal year. 

SBP figures depicted that foreign investors dragged out almost 100 per cent investment from local stock exchanges during first seven month of FY08 which shrank to $0.4 million against $1,382.4 million in the same period of last fiscal year. However, from July-January 2007-08 Foreign Direct Investment (FDI) surged by 7.9 per cent to $2,262.4 million against $2,096 million in matching period of last fiscal year. 

During July-January 2007-08 total foreign private investment including privatization proceeds dropped by 19.8 per cent to $2,241.2 million against $2,793.4 million in the corresponding period of last fiscal year. 

In first seven month of FY08 the overall foreign direct investment from developed countries including Western Europe, European Union, Luxembourg, Denmark, France, Germany, Netherlands, Sweden, UK, Other Western Europe, Norway, Switzerland, North America, Canada, USA, Australia and Japan recorded 11.7 per cent rise to $1,488 million against $1,332.1 million in the identical period of FY07. 

Whereas during this period portfolio investment for developed countries recorded decline of 77.6 per cent to $137.1 million as compared to $613 million of last fiscal year. Foreign direct investment from developing economies including Caribbean Islands, Libya, Egypt, Mauritius, South Africa, Oman, Iran, Kuwait, Bahrain, Qatar, Saudi Arabia, Turkey, UAE, Bangladesh, China, Hong Kong, Malaysia, Singapore, India, South Korea, etc. rose by 18.8 per cent to $612.8 million against 515.9 million of FY07. 

In addition, during July-January 2007-08 the portfolio investment from developing economies recorded a negative -294.3 percent to $162.3 million which stood at $83.5 million during the first seven months of fiscal year 2006-07. 

The sector wise break-up foreign private direct investment showed that during July-January 2007-08 in terms of volume the highest investment was attracted by telecom sector which stood around $750.3 million against $546.4 million in same period of last fiscal year followed by Oil & Gas Exploration sector which brought about foreign direct investment worth $366.5 million against $329.9 million in similar period of last fiscal year. 

However the cement sector was on the top with increase of 504.9 per cent but the volume of foreign investment in cement sector recorded only $82.9 million followed by social services with increase of 388.9 per cent and quantum of FDI in social services was only $11.2 million. 

Food sector was also another major sector where FDI increased by 86.4 per cent to $15.7 million against $8.4 million in corresponding period of FY07, whereas FDI in transport sector surged by 114.1 per cent to $60.4 million against $28.2 million of last fiscal year. 

Contrary to this in financial business the foreign direct investment declined by 28.6 per cent to $395.1 million against $53.6 million of last fiscal, in power sector investment dropped by 64.8 per cent to 36.1 million which was recorded $102.4 million during July-January 2006-07.

Net foreign investment declines by 34.9pc


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## Neo

*Economists for suspending development work ​* 
Tuesday, February 26, 2008

LAHORE: The economists have advised the next democratic set-up that in order to keep budget deficit within manageable limits they would have to suspend all development projects in the fourth quarter of 2007-08.

They point out that the spending spree of the previous government and the caretakers has left little room for the upcoming government to correct budgetary imbalances even if they take the harshest measures. Morally, it was the responsibility of the previous government to manage the economy according to the budget they got approved from parliament.

The new government would probably assume power just before the start of the April-June quarter. It would be a great handicap if the new regime presents next budget with a very high deficit from the previous year and the best way would be to save Rs250 to Rs260 billion from the current budget to keep the gap within budgetary targets, they say.

This, they add, would also give time to economic managers to evaluate some of the ongoing development projects and the capacity of institutions to absorb the huge development allocations that were announced in the budget for 2007-08. They point out that a large amount from the previous budget was not actually utilised due to low absorption capacity of the institutions but the amount was transferred to the project account. The same thing may happen this year.

A low absorption capacity invariably leads to higher wastages either due to incompetence or corruption. The economists say Pakistans economy is manageable if prudent policies are adopted. The new government would have to increase the governance levels that ensure more development work even with reduced funds.

Currently, the transparency level in Pakistan is only 23 per cent. In other words, for every Rs100 spent by the government, average utilisation is expected to be Rs23 and the rest is wasted either due to incompetence or corruption.

They say all the pressure borne by the economy during the first eight months of the current fiscal year was due to mismanagement both at the administrative and political levels. The increase in the trade deficit was partly due to rise in global crude oil rates, a major chunk was due to inability of the state to control mis-declaration and under-invoicing.

Wheat import has also significantly increased the trade gap which, the economists say, could have been controlled had the hoarders been nabbed immediately after the commoditys harvest. The hoarded wheat was mostly smuggled, causing shortage in the domestic market.

They regret that subsidy under the petroleum head has already crossed Rs100 billion, which has been financed through additional borrowing. The higher petroleum products rates, they suggest, should have been gradually passed on to the consumers.

They say the explanation that freezing of petroleum products prices have kept a check on inflation is said to be flawed. Had the governance been ideal, there would have been no pressure on what rates.

Moreover, a prudent marketing mechanism that eliminates middleman could have kept the vegetable and fruit price in check. Sugar prices in the country remained much above global levels as the government did not have the political will to annoy the strong and influential sugar lobby.

The economists point out that had the prices of commodities been controlled through best management practices, the impact of increased petroleum rates on inflation would have been much lower than the current inflation rate.

Besides these, the prices of edible oil have been beyond the control of the government as the country is dependent of imported oil. The rates of edible oil have risen to peak in the international market.

Economists for suspending development work


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## Neo

*MoUs signed to attract investment in horticulture ​* 
Tuesday, February 26, 2008

ISLAMABAD: The government has planned to attract investment and facilitate investors in the horticulture sector, which is one of the potential sectors having enormous capacity to enhance the countrys exports and boost its economy.

In this regard, the Board of Investment (BoI) on Monday signed two memoranda of understanding (MoUs) with the Small & Medium Enterprises Development Authority (SMEDA) and Punjab Agri-Marketing Company (PAMCO) aimed at extending support and cooperation in terms of facilitating investors in the sector.

Horticulture, which is the art of cultivating fruits, vegetables, flowers or ornamental plants, needs financing which could support private sector activities. The signing ceremony was presided over by Privatisation & Investment Minister Shahzada Alam Monnoo, while Industries & Special Initiatives Secretary Shahab Khawaja, Investment Division & BoI Acting Secretary Major (Retd) Iqbal Ahmad, Punjab Agri-Marketing Company (PAMCO) CEO Shahid Rashid, SMEDA CEO and other government officials were also present.

Shahzada Alam, addressing the participants of the meeting, acknowledged the importance of such MoUs as they serve as a critical force of liaison for public-private partnerships and are also a source of rich dividend to the country in future.

The MoU between the BoI and PAMCO is intended to facilitate and develop internal expertise and products for horticulture financing so as to encourage farmers to adopt modern and efficient horticulture farming techniques.

MoUs signed to attract investment in horticulture


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## Neo

*Industrial growth slows down to 4.46 percent​*
KARACHI: Industrial growth slowed down to an average of 4.46 percent in the first half of current financial year, which has been worst performance of manufacturing sector in the recent years.

It was even worst in the month of December alone when it registered negative growth compared to same month of previous year, which analysts attributed to energy crisis and instability on the political front.

The latest official data, released on Monday, showed that the industrial production in the entire manufacturing group posted decline in month of December, which plunged the overall growth of industrial sector badly during the first half of 2007-08.

The Large Scale Manufacturing (LSM) index is based on the latest production data of 100 items provided by Oil Companies Advisory Committee (OCAC), Ministry of Industries & Production and provincial Bureau of Statistics (BoS).

The breakup of data shows that OCAC index registered growth of 6.15 percent during the first six months of this fiscal year followed by ministry of industries index that grew by 4.27 percent whereas provincial BoS index registered 4.49 percent growth over the same months of last year. 

On the other hand, for the month of December, OCAC, Ministry of Industries and Provincial BoS indexes declined by 2.81, 5.74 and 1.25 percent respectively over the corresponding months of last year. 

The industrial growth has seen major decline in the last three years as it has plummeted to 8.8 percent in 2006-07 from 19.9 percent in the 2004-05 in the wake of rising costs of production, which led to closure of many industrial units especially in textile sector as well as slowing of new investment.

Analysts said that apart from many other issues confronting the industrial sector Decembers negative growth in industrial production was caused by long holidays of Eid followed by violence and chaos, triggered by assassination of Benzair Bhutto.

Analysts said the declining trend in the industrial production would have negative implications for the GDP of the country and it is likely that if the current trend continued, the GDP target for the current fiscal year cannot be achieved. 

This slowdown in the production also caused dent in the countrys export sector, which is leading towards record trade deficit during the current financial year. 

In petroleum production sector, kerosene oil production went up by 1.65 percent, motor spirits 7 percent, high speed diesel 13.17 percent, furnace oil 8.92 percent, lubricating oil 1.59 percent, jute batching oil 15.08 percent, and solvent naphtha 9.36 percent in the first half of this fiscal year.

Whereas Jet fuel oil production dipped by 12.68 percent, diesel oil down by 11.29 percent and LPG by 2.97 percent. 

In Ministry of Industries Index, the production of cement was up by 20.62 percent, cigarettes 5.13 percent, cotton yarn 4.39 percent, cotton cloth 1.63 percent, jute goods 15.57 percent, soda ash 15.33 percent, caustic soda 7.58 percent, Nit Fertilizers 2.71 percent, cement 18.21 percent, buses 15.15 percent, Light Carrier Vehicles (LCVs) 16.96 percent and motor cycles 25.20 percent. 

On the other hand, production of paper & board declined by 10.40 percent, glass plates & sheets 8.89 percent, steel products 7.25 percent, tractors almost one percent, trucks 21.10 percent, jeeps & cars 4.04 percent. 

In the index of provincial bureau of statistics, in July-December period, cooking oil production was up by 0.10 percent, starch and its products by 1.13 percent, beverages 41.22 percent, footwear by 1.78 percent, TV sets 22.67 percent, bicycles 3.44 percent etc.

Whereas the production of vegetable ghee declined by 3.30 percent along with some other items which registered decline in production.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Russia keen to expand economic ties with Pakistan​*
ISLAMABAD: Russia is keen to expand economic, political and bilateral ties with Pakistan and is encouraging its entrepreneurs to launch more projects in Pakistan, said Sergy N Peskov, Russian Ambassador to Pakistan here on Monday.

In a meeting with the Prime Minister, Mohammadmian Soomro, Russian Ambassador appreciated the investment friendly polices and said that Pakistan has good prospects for foreign investment in a host of areas. 

Caretaker Prime Minister said that Pakistan attaches great importance to its multifaceted relationship with Russia and wants to further strengthen the existing diplomatic, political and economic ties besides expanding cooperation in a broad spectrum of areas including trade, investment, education, energy, space science and oil and gas exploration. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Agreement on IPI project to be signed in March*​
ISLAMABAD: Federal Secretary for Ministry of Petroleum and Natural Resources Farrukh Qayyum said on Monday that formal agreement on Iran-Pakistan-India (IPI) gas pipeline is likely to be signed between Pakistan and Iran in next month and the gas supply would begin by September 2012. 

The technical details are being worked out with Iranian officials, he briefed the senates Standing Committee on Petroleum and Natural Resources, which met at Parliament House under the chairmanship of senator Syed Dilawar Abbas. 

Under this agreement, he said, Iran would supply 2.10 billion cubic feet of natural gas to Pakistan on daily basis for a period of 25 years with delivery point pressure of 798 PSI.

The senate body directed the ministry to complete its homework and particularly to intensify efforts for land acquisition, which appears to be a contentious issue.

It also directed that contours and alignments be marked to complete the gigantic project on time.

The committee commended the IPI gas pipeline project and called upon the government to make sure that it must be implemented within the stipulated time frame, as the supply-demand situation would worsen further in the coming years.

The senate body observed that the present growth momentum in the economy cannot be sustained without continuous and reliable supply of energy principally oil and gas, therefore, strenuous efforts be made to enhance and expand the scope of exploratory activities for ensuring energy security in the country. 

Terming the energy as key to development, the Senate body strongly recommended that apart from stepping up the conventional exploratory activities, the country should diversify its sources and go aggressively after acquiring LNG to improve the present situation.

In this connection, the Committee lauded the Mashal LNG Project being pursued by the government terming it as a useful one, which ought to be strengthened. The country has witnessed unprecedented gas load-shedding/management in winter this year not only for the industrial but also for domestic consumers.

The committee members said that better load management and more meticulous planning is needed to improve the supply situation during the winter season as the common perception being that poor people are made to bear the brunt of severe winter due to the inefficiency and lack of proper planning.

The committee also directed both the gas distribution companies, SNGPL and SSGPL, to cut their line losses and pilferage of gas, which presently stands at 3 percent. It observed that this ratio is high as compared to the international standards.

Senator Muhammad Ismail Buledi drew the attention of the chairman that the province of Balochistan is not being given its due share in the senior-grade employees of PPL and SNGPL, which is giving rise to heart burning of the local people. However, the management clarified that appointments at senior level are made strictly on merit and as such there is no quota.

Earlier, PPL MD briefed the committee about the province and grade wise breakup of the company employees and companys present and future exploration, drilling and production activities.

And managing directors of both SSGPL SNGPL briefed the committee about the present availability of gas and future planning of the companies to supply gas in their coverage areas including allocation of gas to industries, commercial and domestic consumers.

The meeting was attended among others by Senators Mir Muhammad Naseer Mengal, Haroon Khan, Seed Ahmed Hashmi, Mrs Rukhsana Zuberi, Dr Muhammad Ismail Buledi, Shahid Hassan Bugti, Mir Mohabat Khan Marri and Muhammad Talha Mahmood besides senior officials of the ministry, MDs of SSGPL, SNGPL and PPL.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Refinancing for first quarter of 2007-08: SBP tells banks to refund fines to exporters ​* 
KARACHI (February 26 2008): The State Bank of Pakistan on Monday asked banks to refund fines to exporters imposed on commercial banks for availing refinancing facilities without valid limits.

The SBP has decided to refund fines totalling Rs 2.354 million for availing refinancing facilities under the defunct scheme of Long Term Financing for Export-Oriented Projects (LTF-EOP) without valid limits in the first quarter (July-September) of the current fiscal year (2007-08). It also asked the banks to refund these fines to the respective exporters.

No limits were sanctioned under LTF-EOP for 2007-08 for the import of plant and machinery and the scheme was withdrawn in October last year. Subsequently, banks/DFIs were allowed to avail refinance facility against Letter of Credits (L/Cs) opened by banks during 2006-07 and retired/or to be retired after 30th June, 2007.

However, due to some misunderstanding, banks inadvertently released refinance to their various clients without valid limits. Banks/DFIs had approached the State Bank for refund of fines saying that the SBP instructions were not violated intentionally but were misunderstood.

In view of the above, the State Bank has now decided to refund the fines recovered from banks. The State Bank has also asked the banks to ensure that the fines refunded to them by it (SBP) should be passed on to the respective exporters.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*$20 billion effluent plants plan in limbo ​* 
KARACHI (February 26 2008): The federal government's Rs $20 billion plan to set up effluent treatment plants in five industrial areas of Karachi has been in limbo last three and half years.

Sources at Sindh Environment and Alternate Energy Department informed Business Recorder here on Monday that the project could not be initiated so far mainly because of the grave concerns over the project, raised by different stakeholders.

However, neither the industrial sector nor the government had tried seriously to resolve the matter via dialogue thus putting the project in cold storage, sources maintained. The plan of setting up five ETPs in industrial areas of Karachi including Korangi, Landhi, F.B Area and New Karachi industrial areas was prepared in late 2004 by the Federal Ministry of Industries.

The basic objective of establishing the plants was to ensure discharge of treated sewerage water into the sea to prevent marine and land environmental degradation in the coastal areas of Karachi. But, the delay in the project is posing threat not only to the marine life, but also the lives of the people living along the coastline due to discharge of untreated chemical wastes of hundreds of factories of the city into the sea.

Sources revealed that most of the reservations of the stakeholders cover the matter of the supervising authority of the plants, as none was named in the prototype model of the project, prepared by a reputable Scandinavian firm.

"In the project, no stakeholder including federal government, city government or private sector was named to run the project, therefore, none of the stakeholder expressed interest in contributing to the project," a provincial government official said.

Meanwhile, the industrial circles blamed the bureaucratic tactics of the government officials for the delay in establishment of ETPs, fearing that the aim of the project could not be achieved if it was owned or run by the government.

Opposing the idea that government should run the project, a renowned industrialist requesting anonymity, said that the industrialists' organisations have already suggested that an independent consortium should be constituted to oversee construction of treatment plants as well as its running.

"All stakeholders including trade persons, federal, provincial and city government and others should be taken onboard in the consortium, which should have full autonomy to run its business," he maintained. He said that the failing in the establishment of the ETPs could harm the exports of the industrial units, as according to the WTO charter, all factories would have to undergo annual environmental auditing in order to continue their exports.

He revealed that the local exporters were facing immense pressure by foreign buyers from many of the European countries to set up sewerage treatment plants to comply with standard set by European Union regarding environment protection.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*LSM posts 4.46 percent growth during July-December 2007: 12.5 percent target likely to be missed ​* 
ISLAMABAD (February 26 2008): Large Scale Manufacturing (LSM) has registered a dismal growth of 4.46 per cent during July-December 2007-08 against 12. 5 per cent projected target for the year.

The industry and Federal Bureau of Statistics (FBS) that collected and released the data Monday on Quantum Index Numbers for Large Scale Manufacturing Industries (QIM) said energy crisis coupled with political instability were major reasons of decline in growth.

With a 2.44 per cent decline in July-December, the LSM growth dipped to 4.46 per cent from 6.9 per cent during July-November 2007-08 as major industrial units remained closed due to power crisis, said an official that compiles data on LSM.

Power and gas crises were responsible for such a sharp drop in growth, he added.

The next month statistics, July-January 2007-08, may be even more dismal due to political turmoil the country went through following the assassination of Benazir Bhutto on December 27.

The government may not be able to achieve projected targets given the current 4.46 percent growth of LSM during the first half of the current fiscal and prevailing political and energy crises that have almost paralysed the industrial activities.

LSM is projected to grow by 12.5 percent in the fiscal 2007-08 against 8.8 percent of last year, the Quantum Index Number (QIM) on LSM released by the FBS showed that the growth may remain far less than the projected target.

The 20.62 percent growth in sugar, 18.21 percent in cement and some contribution by auto sector led to some growth in LSM. Within automobiles, buses registered 15.15 percent growth, motorcycle 25.20 percent and LCVs 16.96 percent.

Among petroleum products, jute batching oil registered 15.08 percent growth, solvan Naptha 9.36 percent, furnace oil 8.23 percent, high speed diesel 13.17 percent, motor spirit 7 percent with over all petroleum products growth of 6.15 percent.

The steel sector was most hurt by the energy crisis and political uncertainty and registered a negative growth of 7.25 percent with production of pig iron down by 1.26 percent, billets/igonts by 3.14 percent and CR sheets, strips, coil and plates by 12.93 percent. Production of jet fuels declined by 12.68 percent during the period under review, diesel oil 11.29 percent, LPG 2.97 percent and other petroleum product by 9.02 percent.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Competition to benefit cellphone users: Entry of China Mobile​*
KARACHI, Feb 25: The cellphone operators are confident that the entry of China Mobile in the local market would not harm their business as they focus more on the sales volume rather than profit margin making them highly competitive.

They felt that the new company might not be able to offer new products as far as the tariff packages are concerned.

The consumers, on the other hand, see coming of China Mobile as a welcome addition to the local cellphone market, which could bring them some new incentives from the producers as a result of ensuing competition.

China Mobile has already invested $500 million in Pakistan and has plans to invest more. The company plans to increase coverage area by several thousand miles, including highways with the capacity of 20m subscribers.

The Chinese company had acquired Paktel for over $460 million enterprise value last year. On May 4, 2007, China Mobile unveiled its new company  CMPak Limited.

The Director Marketing, CMPak Limited, Salman Wasay told Dawn that the company planned to invest $800 million in 2008 under network expansion.

By the end of this year or middle of next year, the company aims to grab a market share of 20-25 per cent, he said, adding that currently, it has over two million subscribers out of total market of 77 million cellphone users.

There is a huge potential to expand the business because keeping aside the number of cellphone users, who have two Sims, the actual number of cellphone users having one Sim, ranges between 50-55 million, Mr Wasay said.

He claimed that besides, offering incentive packages and tariff cuts, the company excels actually in quality of service. China Mobile is known for value-added service, he added.

Meanwhile, a source in Ufone said that it would be hard for the Chinese company to attract the people as customers having enough liquidity have already been covered by the existing players, while people in the lower income bracket are more concerned in meeting their daily necessities first and then think about having a cellphone.

He added that tariffs were coming down and the Chinese company could not afford to sell its product under price.

He said that the Ufone, having 16 million customers base, has invested $1 billion since 2001 in network expansion and plans to invest $150 million more in expanding its coverage this year.

Sources in the Warid Telecom said the company had been going ahead with its expansion plans in various phases and there was no threat from the massive network expansion by the China Mobile.

Warid has invested $1.2 billion in its network expansion since 2005 and has now around 14 million subscribers.

The Manager, Public Relations, Mobilink, Omar Manzur, however, did not give a clear answer whether the company, being a leader in Pakistan, feels any threat from China Mobiles entry in a big way.

However, he said the company had been thriving in a competitive environment and had successfully maintained its position as the market leader. The company has invested $2.5 billion to-date in developing infrastructure and plans to invest an additional $500 million in 2008. It has over 30 million subscribers.

The company has been conscious of meeting its customers needs and has been aggressively adding one million subscribers to its network every month.

The Director, Corporate Communication, Telenor Pakistan, Syed Hasanat Masood, responding to a questionnaire sent to him through e-mail, said: We dont comment on the business moves made by any company as we also have our own investment and expansion plans like the Chinese company.

He said his company had already invested $1.8bn by the end of 2007 and it had 15b customers.

Competition to benefit cellphone users: Entry of China Mobile -DAWN - Business; February 26, 2008


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## Neo

*Uncertainty looms large over Pakistan: Moodys​*
KARACHI, Feb 25: Political uncertainties still abound and a wider process of reconciliation faces deep chasms, said Aninda Mitra, Moodys vice- president and lead analyst, said in a statement on Monday.

The general elections being fair enough made them acceptable to all political parities and has given a hope that the political uncertainty would die with the birth of new democracy in Pakistan.

However, the delay in developing a consensus to resolve the pre-poll political issues like restoration of judiciary created doubts among investors and analysts about smooth functioning of democracy.

Pakistan has been facing tough time from the overseas analysts rating agencies quick to curtail the countrys rating.

Moodys changed the outlook on Pakistans B1 sovereign bond ratings to negative in the immediate aftermath of the imposition of emergency rule in November.

The imposition of emergency proved harmful as the foreign investment started shrinking intensifying the negative impression about the countrys ability to perform smoothly.

At that time, (when emergency imposed) we believed that the suspension of the rule of law had systemically heightened political uncertainty, making stable political outcomes unforeseeable, said Mitra.

Such high levels of political uncertainty and institutional opacity could affect confidence-sensitive investment flows and generally worsen macro-economic stability.

In a recent report, the State Bank has warned that macro-economic imbalances were the threat for the stability of the economy and suggested the government for immediate corrective measures to improve the situation.

The immediate impact of fair elections was felt when the stock market reached a record high level and the rupee gained 2.4 per cent in just two days after the elections.

However, the uncertainty again tightened its hold over the market with the delay in consensus for the formation of a government in Islamabad as well as in the four provinces.

Mitra said concerns about deterioration in Pakistans credit fundamentals were further fueled by the shocks to economic activity, business sentiment, and reduction in foreign investment inflows that followed along with a sharp rise in inflation and widespread power cuts.The State Bank in its latest report expressed serious concern over rise in main inflation, especially food inflation but was more concerned that the non-food and non-energy inflation was on rise despite SBPs tight grip over money flows to the market.

Moodys analyst said that Pakistans recent elections may offer, but do not yet assure, an opportunity for a new coalition government to restore the rule of law, alleviate institutional rifts, and reduce regional, religious and ethnic tensions.

The election brings with it the promise of real political improvements, especially if level of domestic violence is reduced and the government actions are afforded greater legitimacy and predictability, said the analyst,

This would likely improve economic activity, boost domestic business and investors sentiment, and restore foreign investors confidence and support a change in the ratings outlook to stable from negative.

However, he said, until the two main opposition parties demonstrate an ability to restore political stability and forge an effective government, Moodys will retain its negative outlook on Pakistans B1 ratings.

The Pakistan Peoples Party and the Pakistan Muslim League (Nawaz) have a history of animosity with ideological differences on several constitutional as well as socio-political issues, said Mitra.

The most serious credit challenge would probably arise from a synchronization of further political infighting, coupled with policy drift and worsening inflation and the fiscal fundamentals that could further worsen macro-economic as well as socio-political stability, the analyst concludes.

Uncertainty looms large over Pakistan: Moodys -DAWN - Business; February 26, 2008


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## Neo

*Lucky Cement to offer $150m GDR this year*​
KARACHI, Feb 25: Lucky Cement Company Limited intends to offer its stalled GDR worth $150 million during the current financial year, the companys Finance Director Muhammad Abid Ganatra said on Monday.

The company also released its financial results for the half year ended on December 31, 2007, posting after-tax profit at Rs1,349 million, translating into earnings per share (eps) at Rs5.12. In the same time last year, the company had reported taxed profit at Rs792 million and eps at Rs3.01.

The aggregate sales were valued at Rs7,200 million for the period under review compared to Rs5,579 million in the corresponding previous half year, which was supported by exports that rose by 156.05 per cent to Rs3,614 million, from Rs1,404 million. Local sales were down to Rs3,587 million, from Rs4,175 million.

A statement issued by the company said: Overall share of the company has been managed at 18.97 per cent out of total dispatches of the industry, whereas export share of the company was 38.84 per cent for the half year under review. The company stated that during the half year, sales revenue had increased by 29.07 per cent mainly due to quantitative growth.

The company is focussing on exports where it said: The new contract prices for loose cement export executed for calendar year 2008 are better than previous year contract prices, but its impact will start reflecting from third quarter.

The company complained of lower local prices and the finance director stated that the cement industry will have to pass on the increasing cost of production to the consumers by raising prices in the local market. He explained that the cost of coal had risen phenomenally.

So would the increasing trend of the industry to turn to foreign markets create shortage in the local markets? The company does not think so, pointing to surplus production. But ask builders and their associations and they would blurt out unsavoury words for cement industry and its practices.

Lucky Cement to offer $150m GDR this year -DAWN - Business; February 26, 2008


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## solid snake

*Safe Behind Their Walls*​_Security and luxury drive sales at an unlikely gated community in Pakistan.​_
By Joe Cochrane | NEWSWEEK
Mar 3, 2008 Issue | Updated: 11:32 a.m. ET Feb 23, 2008

It's easy to forget about political assassinations, fears of loose nukes and the specter of Islamic militancy from a bench in Hill Park. Nestled in an idyllic neighborhood where children play in the streets and homeowners stroll to the local health club or mini-mart, the park and its manicured grass overlook a sliver of a vast gated residential development of the sort you might see in southern California. But the area, named Bahria Town, is located just outside Islamabad. At 45,000 square acres it is, according to splashy international ads, the largest private development in Asia, and despite Pakistan's well-publicized political and security problems, people are signing deals for six-figure houses, condos and apartments faster than they can be built. "These are changing times for Pakistan," says Salman Ahmed Khan, the development's director of marketing and operations, whose main job is to court prospective buyers away from Dubai and to Bahria Town. "Pakistanis are traveling, they're seeing nice things abroad and we want to provide that for them at home."

This unlikely playground for wealthy Muslims is the vision of Khan's boss and father-in-law, Malik Riaz Hussain, a 59-year-old billionaire Pakistani contractor. Set between the capital Islamabad and its sister city Rawalpindi, Bahria Town is the "masterpiece" of his 40-year career, a $6 billion project he has funded solo to avoid having to deal with outside investors. Its nine phases, too vast to fully appreciate without standing on one of the plateaus that overlook them, will one day mesh together into a planned residential city for 1 million people. The project broke ground in 1996, and already, many of the 50,000 luxury properties in the development are owned by wealthy Pakistan expatriates who swooped into Bahria Town after 9/11 to buy second homes amid fears they would be driven out of places like London, New York and Los Angeles. Equally important was the security and serenity that Bahria Town provides, which drew Pakistan expats and a smattering of wealthy Arab Muslims away from places like Dubai.

The complex offers amenities (24-hour armed security, schools, hospitals, a fire department, retail shopping, restaurants and entertainment centers) that go above and beyond those in many of the gated communities that have become so popular in countries from the United States to Brazil. Given the nation's security issues, it's especially easy to understand why the rich here want to cloister themselves. Rival Pakistani developers, including one owned by the military, have begun copying Hussain's vision, constructing their own gated communities in the suburbs of major Pakistani cities such as Karachi. Hussain himself is developing a second such site in Lahore, where former prime minister Nawaz Sharif already lives in a gated community called Model Town.

Hussain's original inspiration for the mega-community came from the pre-planned town of Reston, Virginia, just outside Washington, D.C. Materials and design inspiration have been imported from everywhere. In the center of roundabouts sit giant Spanish fountains costing $500,000 a pop; the main streets are lined with palm trees brought in from Thailand; grass for the local golf course comes from the U.S. state of Georgia; the education expert for the 1,100-acre university being built is from Seattle. "When I see America, when I see Britain, when I see Turkey, when I see Malaysia," Hussain says, "the only thing I think is, 'Why not Pakistan?' "

This is Hussain's key notionthat Bahria Town is a world away from Taliban and Qaeda militants, the assassination of Benazir Bhutto and weekly suicide bombings. "This is the real Pakistan," Hussain told NEWSWEEK.

But the real Pakistan also has violence. According to the South Asia Terrorism Portal, at least 1,523 civilians were killed in terror-related violence in 2007 and more than twice that number injured. An additional 441 Pakistanis were killed in sectarian violence last year. While most of the carnage occurred in the volatile North-West Frontier Province, where Islamic militancy is strong, there were also suicide bombings in Islamabad and Lahore that killed dozens of innocent bystanders. It's no wonder those who can afford it are drawn to places like Bahria Town, which has retired Army officers as security advisers and former foot soldiers on its police force. And independent power supply and private street cleaners also save residents from maddening daily electricity shortages in cities like Islamabad and garbage fouling the streets.

Hussain's focus and energy toward providing all this are limitless. He's up at his Islamabad residence by 6 most mornings, receiving project managers, local politicians and friends for breakfast before driving out to the project site in a heavily armed motorcade. He spouts off facts and figures about the development with encyclopedic knowledge, and says he frequently changes plans for the phases still being developed to make them better. He added an exact replica of Trafalgar Square at the Bahria Town development in the city of Lahore.

Hussain is familiar with reinvention. Although born into a wealthy family, his father's contracting business collapsed, and he was forced at the age of 19 to start his career as a lowly clerk in Islamabad. He remembers vividly, three years later, having to sell some family silverware just to buy medicine for his sick 2-year-old daughter. "I've never forgotten being poor," Hussain says, pointing out that Bahria Town also includes thousands of low-cost prefabricated houses. Still, there's no missing the fact that Hussain's dream city is mainly for upper-class Pakistanis who "want the good things in life," says Khan, the marketing manager.

Hussain says Bhutto's death has only increased his motivation to push forward his groundbreaking development projects. He claims that Pakistan's instability has not affected sales at Bahria Town. Pakistani economists like Qaisar Bengali aren't so sure: "There are many housing schemes stuck in the middle because real-estate prices have dropped in the last year or so." Nonetheless, Hussain says he's optimistic about the future, especially given that last week's national elections were more peaceful and transparent than people had expected. A new civilian government will take charge in the coming weeks after more than eight years of military rule, which has stymied Pakistan's economy (it grew about 7 percent last year, trailing neighboring India by nearly two points). Corruption, kickbacks and red tape are rife.

Hussain himself maintains close ties to the military establishment; his early business success was due in large part to construction contracts with the Pakistan Navy. ("Bahria" is Urdu for "naval.")

But he and others hope the country is at a turning pointone that will fuel private projects like Bahria Town. Pakistan certainly has no shortage of natural resources or cheap labor; now that elections are settled, economists believe FDI will flow back into the country. Investors from the Middle East (including regional giant Damac, based in Dubai) have already been knocking on Hussain's door, looking to put money in joint ventures here. With the return of civilian government and the removal of the shackles of stringent, military-led development, Hussain is free to ponder his next megaproject: digging a traffic tunnel through the Margalla Hills on the northern outskirts of Islamabad, and putting up a new bedroom residential community in the valley on the other side. If he builds it, says the developer confidently, they will come.

© 2008 Newsweek, Inc.

Safe Behind Their Walls | Newsweek International Edition | Newsweek.com


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## mujahideen

Rupee down against Euro, British Pound

KARACHI: Rupee value witnessed a decrease against Euro and British Pound at the start of open market here on Tuesday. Dollar was sold in Ready and Telegraphic Transfer at Rs60.62 and Rs62.80; British Pound at Rs123.35; Euro Rs93.10, Japanese Yen Rs0.582; UAE Dirham Rs17.09 and; Saudi Riyal Rs16.77. 
_Courtesy Geo_


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## Neo

*KSE crosses 15,000-point mark on selective buying in blue chips ​* 
Zardaris statement on building working relationship with Prsident Musharaff embolden foreign funds retail investors to extend positions

Wednesday, February 27, 2008

KARACHI: Eventually, the consolidating Karachi stock market moved beyond the 15,000 points psychological level successfully for the first time on Tuesday. The leading 100-Index has covered the distance from 14,000 points to 15,000 points milestone in a span of eight months.

KSE 100-share Index gained 109 points to conclude at 15,056 points while its junior partner the 30-Index surged 209 points to close at 18,623 points.

The fully utilised Continuous Funding System indicated active participation from local retail investors while rising Special Convertible Rupee Accounts meant for foreign portfolio investment showed increased accumulation by foreign funds. However, low trading volume and losers outnumbering the gainers point out that buying was selective and limited to fundamentally strong scrips.

PPP Co-Chairman Asif Ali Zardaris statement about building a working relationship with President Musharraf provided rationale to investors for building long positions amid placing market beyond 15,000 points landmark, observed Ahsan Mehanti, CEO of Shahzad Chamdia.

However, the turnover turned thin relatively with losers outnumbering the gainers on board with very small differences, which is not a good omen, another analyst added. Ready market volume stood at 265.668 million shares, which is 7.5 million or approximately three per cent lower than 273.149 million shares changing hands a day earlier.

Out of total 368 active counters on board, 166 suffered losses, 158 registered gains, while 44 stocks closed unchanged. As a matter of record, 100-Index successfully breached through 14,000 points mark for the first time on July 05, 2007. Afterwards, index indulged into the consolidation phase with crossing this historical level so many times in reverse and forward gears. Finally, the benchmark surpassed 15,000 points milestone successfully for the first time today.

Again, foreign portfolio investors are aggressively accumulating fundamentally strong scrips especially in banking and insurance sectors. It seems that they have full confidence in the making of next political government and its friendly relations with President Musharraf, analysts added.

SCRA balances were continuously surging on every passing day since the elections and rose by another US$13 million or by 16.6 per cent on Monday, Feb 25 to US$90.6 million to date for this fiscal year from US$77.6 million on Feb 22.

The CFS financing touched ceiling at Rs54.63 million with enhanced rate of mark up at 11.28 per cent. It showed the improved confidence of retail investors in the local market, analyst added.

Under the lead of cement giants i.e. DG Khan Cement and Lucky Cement, majority of blue chips attracted fresh funds including FFBL, NBP, OGDC, Engro, POL, MCB, PSO and PTCL.

DGKC and LUCK depicted higher volumes despite DGKCs less favourable results. Buying sentiments continued at the end of the trading day as accumulation continued across the board, S. Kashif Mustafa of ECL Research said.

The E&P sector remained the primary mover of the index with OMC following closely. Major actives of OGDC, POL and PPL remained in the limelight on the back of better results of POL and PPL and results of OGDC are expected to experience a growth of around 25 per cent. 

Also, banks continue to expand as healthy earning results continue to pour in. Some accumulation was witnessed in the scrips of NBP and MCB while minor profit taking was witnessed in second and third tier scrips. The sector remains amongst the top picks as the sector is anticipated to perform well in the medium to long term perspective on the back of healthy fundamental growth in the sector with involvement of foreign stake holders, he added.

Accordingly, the overall market capitalisation rose by Rs35 billion to stand at Rs4.633 trillion. Highest volumes were witnessed in DG Khan Cement at 42.195 million closing at Rs112 with a gain of Rs3.50, followed by Lucky 

Cement at 25.347 million closing at Rs131.45 with a gain of Rs3.70, Nishat Mills at 15.620 million closing at Rs114.95 with a gain of Rs5.45, Fauji Fertilizer Bin Qasim at 10.965 million closing at Rs43.75 with a gain of Rs1.35 and National Bank at 10.148 million closing at Rs268.90 with a gain of 90 paisa.

KSE crosses 15,000-point mark on selective buying in blue chips


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## Neo

* Austerity measures may save Rs100bn ​* 
Wednesday, February 27, 2008

LAHORE: The experts have advised the new government to promote austerity as extravagant non-development expenditures during the past eight years have nullified the increase in tax revenues from Rs300 billion to Rs970 billion.

They point out that development expenditures in 1999-00 were Rs100 billion that increased to Rs375 billion this year (the development expenditures of Rs525 billion for the current fiscal year include Rs150 billion funding to be arranged by the private sector).

This means that out of over Rs670 billion increase in tax revenues, the government boosted development spending by Rs275 billion while non-development expenses rose by Rs400 billion. The development expenditure, which was financed through borrowing in 1999-00, is still being financed through the same method.

The experts say it will not be possible to reduce non-development expenditures by a big margin, but the government could still make a saving of Rs70 to Rs100 billion if it adopts prudent austerity measures. In this regard, they say, all non-essential expenditures should be put off.

Citing an example, some analysts point out that the Japanese prime ministers official residence is an old three-storey house that has been denied major repair by Japanese parliament for the past few decades on the plea that the government lacks funds. Japan is the second largest economy of the world.

Besides this, only one or two Japanese prime ministers have chosen to stay in the official residence while others lived in their private residences and were not provided any amount for fixtures, furniture or renovation. However, in Pakistan all federal and provincial ministers enjoy even better perks.

They suggest the expenditures of both the presidency and prime minister would have to be cut back to half or to 1999 levels. The government would have to put a maximum ceiling on foreign travel of ministers and government officials and the practice of taking a planeload of people on a joy ride by the president or PM should be stopped.

The Japanese PM travels by a normal commercial flight when visiting a foreign country and his entourage is limited to three or four persons including some of his cabinet members. They say Pakistan needs to save every penny to spare funds for development and welfare of people. Citing a recent example of extravagance, they point out that the Pakistan Electric Power Company (PEPCO) recently issued advertisements worth Rs3 million inviting the 60 sugar mills of the country to sell their surplus power.

Though the PEPCO is facing acute power shortage and should explore every possible avenue from where it could get some electricity, no advertisement was needed to attract the sugar mills. Telephonic or personal contact would have been sufficient to arouse the interest of sugar mills. In fact, the mills are more interested in disposing of their surplus power as the tariff being offered is very attractive.

The Rs3 million wasted on advertisements might seem a small amount for the authorities but the PEPCO is a huge loss-making public sector company and needs to save every penny to reduce its losses.

The experts said the non-development expenses and lavish perks enjoyed by officials and ministers in the government should be stopped forthwith. There should be performance-based justification of all expenditures of the government.

The federal ministers have now made it a habit to be in their hometown at weekends at government expenses, which should be checked. The non-development budget should be frozen 20 per cent below the current level. They further suggest that austerity should be accompanied by good management practices that ensure prudent spending only.

Austerity measures may save Rs100bn


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## Neo

*Export of readymade garments up 7.2pc ​* 
Overall textile products export falls 3.44pc

Wednesday, February 27, 2008

ISLAMABAD: The export of readymade garments increased by 7.2 per cent during the first seven months of the current fiscal, according to figures released by the Federal Bureau of Statistics on Tuesday.

The export of readymade garments increased from $809 million from July-January 2006-07 to $864 million during the time under review. However, overall the export of textile products declined by 3.44 per cent during the first seven months of the current fiscal as against the export during the same period of the last financial year.

During July-January of the current financial year, total textile exports stood at $6.028bn against the export of $6.242bn in the same period of last financial year. The textile products which witnessed upward trend included, art, silk and synthetic textile, export of which grew by 25.19 per cent, madeup articles (excluding towels, bead-wear) export increase by 19.78 per cent while export of other textile items grew by 0.69 per cent.

According to the figures, export of raw cotton witnessed a decline of 12.79 per cent, cotton yarn 6.02 per cent, cotton cloth 8.26, cotton carded 23.20, yarn other than cotton yearn 19.89, knitwear 11.20 per cent, bed wear 6.21 per cent, towels 6.72 per cent, tents, canvas and tarpaulin 0.62 per cent. 

Export of readymade garments up 7.2pc


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## Neo

*US experts urge trade access, aid hike for Pakistan *​ 
Wednesday, February 27, 2008

WASHINGTON: Seeing Pakistans parliamentary poll as an historic step towards democratic progress, top South Asian experts have urged the United States to bolster economic aid as well as trade access for the country so that the Pakistani people may genuinely feel that America wants their long-term development.

We should try to help Pakistan in its economic development, we should try to do things which masses see as genuine gestures which should be seen as trying to help their interest, which we believe, are also in our long-term interest, said Eric Bjornlund, cofounder of Democracy International that observed last weeks polls in Pakistan.

Speaking on The Pakistani Election: What Next at a Washington think-tank, Bjornlund described the Feb 18 polls as representing a landmark stride in the countrys democratic process. He said: There was general acceptance that the results reflected what people were trying to say and added that it was a remarkable finding for Democracy International. 

Robert M Hathaway, Director Asia Program at the Woodrow Wilson International Centre for Scholars, stressed that one of the best ways to send the message of enduring relationship with the Pakistani people is through materializing a robust assistance package for socio-economic development of the country. Such assistance, he said, may target building hospitals, healthcare delivery, schools, roads and projects that create livelihoods and jobs and touch lives of the people.

The Pakistani nation, he said, deserves democracy dividend as the Pakistani people, for their own reasons and not because the US wanted it, carried out an exercise in political freedom, which has clearly exonerated all of us.

They clearly demonstrated that they believe in political pluralism, and I think it is entirely appropriate for the US to say that after this demonstration that our two people share the values it is all the more reason to build our relationship through economic aid.

Hathaway also favoured the idea of establishing reconstruction opportunity zones and said these should serve both the local populace and the American taxpayers. On boosting access for Pakistani products including textiles in the huge American market he said: I think it is entirely appropriate for the United States to give Pakistanis greater access to the American market, it is difficult political issue, but clearly, and particularly after the election last week I think the US should revisit the entire issue as to what we can do to support Pakistani people. And one way to do that is to give them greater access to the market, including the textile market.

Hassan Abbas, a research fellow at Harvard University, underlined the importance of political stability for sustained economic progress and said in view of challenges facing the country, PPP Co-chairman Asif Ali Zardari should be credited with reaching out to political forces across the spectrum. He stated the leaders of largest winning party plan to move forward with a comprehensive economic strategy. 

Marvin Weinbaum, a scholar associated with the Middle East Institute, said the election was also about bread and butter issues and people want to see improvement in their lives. He emphasized that the Pakistani economic system must ensure that the people benefit from its success. 

US experts urge trade access, aid hike for Pakistan


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## Neo

*Pak-China Investment Co aims to expand business ​* 
Wednesday, February 27, 2008

ISLAMABAD: The Investment Division & Board of Investment (ID&BOI) in collaboration with the Ministry of Finance organised Pak-China investment forum on Tuesday aimed at providing an interactive platform to the newly launched Pak-China Investment Company Ltd (PCICL) so that it can devise its business plan and expand its clientele. 

The meeting was presided over by Privatization & Investment Minister Shahzada Alam Manoo while ID & BOI Acting Secretary Major Iqbal Ahmad (R), Ministry of Finance Investment Advisor Dr Junaid Ahmad along with other BOI officials were also present. 

The prominent participants of the meeting were Chen Jianbo, CEO PCICL, Iqbal Ashraf, Managing Director PCICL, representatives of Plum Qingqi Motors Ltd, China Building Material Industrial Corp (CBMC), Harbin Power Engineering Company, CMPak Ltd and various other Chinese companies operating in the country. 

Manoo said China and Pakistan are strategic partners and have been cooperating in a number of large projects in the energy sector, mining, electronic and telecommunications and infrastructure projects including upgradation of the Pakistan Railways. 

The minister was of the view that the establishment of Pak-China Investment Company is another important milestone in economic relations as the company shall play its role in unleashing the potential of Pakistan. 

PCICL CEO and PCICL MD deliberated about the background of their company and the objectives were highlighted. Ashraf said Pak-China Investment Company is established not only to promote economic cooperation between the corporate sectors of both the countries but they also intend to redefine the role of Development Finance Institutions (DFIs) in underdeveloped countries. 

The participants of the meeting were informed that PCICL is part of the five year economic development cooperation with China and will help various sectors of Pakistan to seek Chinese investments and it has paid up the largest capital of $200 million. 

PCICL would perform investment banking business on commercial basis to carry out activities in the financial, infrastructure, services, mining, industrial manufacturing and non-manufacturing sectors of the country. 

Pak-China Investment Co aims to expand business


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## Neo

*Sindh govt asks firms to start drilling coal​*
KARACHI: The Sindh government will ask foreign and domestic coal-based power generating companies to start its drilling and exploration works in their respective allotted areas, official sources told the Daily Times.

Sources in the Sindh Mines and Mineral Department said the notification orders would be sent very soon to all those companies that have signed Memorandum of Understanding (MoU) with Sindh Coal Authority and Sindh Mines and Mineral Department, and have not started any exploration or drilling so far. Out of seven companies only two have started drilling work in their respective areas.

China National Machinery Import and Export Corporation (CMC) has conducted its operations at Sonda-Jherruk, Thatta and proposed 10 cents per unit to generate electricity whereas Oracle Coal Field has commenced drilling, for 150 MW, the first borehole of a seven hole programme on Block VI of the Thar Coalfield.

Besides, AES Oasis Limited has signed MoU for establishment of 1,000 MW coal fired power plant at Thar. Ukrinterenergo of Ukraine has also inked MoU for Coal Washing Plant of 1.0 million tonnes coal annually. Dadabhoy signed for establishment of 200 MW coal fired power plant at Sonda-Jherruck in district Thatta. 

Soneri Energy (Pvt) Limited is in process of assessment of the Coal Bed Methane, coal and physically associated substances and coal by-products. MoU signed by Associated Group for 500 MW Thar Block-IV. Al-Abbas Group has also inked MoU with Sindh Government.

The Shenhua Group of China has signed an MOU with the Sindh Government to carry out detailed geological and hydro geological investigation to study the feasibility of setting up 1,000 MW coal-fired mine-mouth power plant based on Thar coal. The group, however, left the country after the disagreements with concern ministries but it is reported that ministry is trying to call back this group.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Export target may be missed: APTMA ​*
LAHORE: Owing to the prevailing economic policies of the government, all economic targets including the export target may be missed, said chairman All Pakistan Textile Mills Association (APTMA) here on Tuesday. 

He said excessive interest rates, which are incompatible with the prevailing international rates and the grave energy crisis in the country have started causing de-industrialisation in the country in general and Punjab in particular.

APTMA, Punjab chairman said the textile industry of Pakistan imported machinery worth $928 million in the year 2004-05, which led to a 19.9 percent growth in manufacturing sectors in that year, the subsequent policies of the government have led to reduction in import of textile machinery to about $350 million in 2007-08. 

Resultantly the growth rate of manufacturing sector has come down drastically so much so that the latest figures of manufacturing sector growth for the month of November 2007 have been announced at 4.74 percent (5 month average 6.9 percent against annual target of 10.5 percent). 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Early completion of Doha Round to benefit Pakistan​*
ISLAMABAD, Feb 26: The countrys export will suffer in case the Doha Round negotiations are not concluded this year, observes Pakistan Permanent Representative and Ambassador to WTO Dr Manzoor Ahmad.

He said if the round was not finished this year it might be extended for another two to three years and Pakistan would be end-loser as its products were facing high tariffs in rich countries particularly in the US and EU markets.

The envoy told a select gathering of civil society and journalists here on Tuesday that the seventh ministerial conference of 151 member states of the World Trade Organisation was expected to be convened between March 20 and April 15 to bridge the gap on some thorny issues.

This conference will serve as key barometer to gauge the progress of negotiations on the early conclusion of Doha Development agenda.

The general impression in Geneva is to conclude the round in the current year which would give boost to Pakistans export, Dr Manzoor added.

Answering a question, he said that after a statement from the French president recently the negotiations process in the areas of agriculture got slow down. However, he said, senior-level meeting would be started from the next week for seeking convergence in various areas.

Responding to queries of the civil society, the envoy advised for quality research and feedback on the issues of Pakistans interest. We will welcome comments from civil society, which talks about national interests, he said.

Dr Manzoor said Pakistan was looking for greater market access of textile and clothing sector under the current round of negotiations on industrial goods. He said the text on industrial goods also proposed immediate relief in duty for Pakistan and Sri Lanka on export of textile and clothing products in the rich countries market.

Asked as Pakistan had no domestic policy for industrialisation of non-textile products, he replied that currently the textile was the only potential sector for export for which the mission was seeking greater market access.

Answering another query he said that Pakistan could never be able to export auto parts or cars until there was a mark reduction in tariff protection to the local automobile industry.

Elaborating the recent development in the areas of agriculture, Dr Manzoor said the current round on agriculture would have no impact on farm producers. He said the farm producers would have a sufficient time for protection in case of early conclusion of the round.

He said the agriculture products were highly protected as the average bound tariff on agriculture products was 101 per cent. The duty cuts would be applied on these products, which according to him would give a marked protection to local producers.

Asked what would be an ideal position for Pakistan to get maximum market access, he said that gains were calculated in terms of the whole package at the conclusion of the round.

He said that unlike G-33, Pakistan was demanding lesser number of special products, which would also open South-South trade.

Early completion of Doha Round to benefit Pakistan -DAWN - Business; February 27, 2008


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## Neo

*Qatar Group annuls $225 million cement plant project ​* 
KARACHI (February 27 2008): Qatar Group of Company has annulled $225 million project for setting up cement plant near Dhabeji, due to delay in legal documentation process by the department concerned, it has been reliably learnt.

A highly-placed official in the Planning and Development Department on condition of anonymity told Business Recorder on Tuesday the company was reluctant to invest huge amount in the project, due to delaying tactics, which were on since the company signed the Memorandum of Understanding with the department concerned last year.

Due to sluggish processing, the QGC fears huge losses in the project, hence unwilling to invest, the official said. "It would have been a fat chance! Investing $225 million after thoroughly analysing the working environment of the department concerned," the official quoted the QGC representative as saying.

The official said that two meetings had earlier taken place in the office of the Additional Chief Secretary and the General Administration Department to finalise the deal, which were attended by the secretaries of the Law Department, the Mines and Mineral Development Department and the Land Utilisation Department.

Subsequently, the government decided to provide 400 acres land for the project, which would also earn Rs 100 million revenue for provincial exchequer besides bringing in an investment of about a quarter billion dollars, he added.

"The company was waiting for go-ahead signal by departments concerned for some 10 months but the legal documents have not yet been approved by them, which was essential for commencing the project," he observed. He said the government has spent millions of rupees on PC-1 of the project, which have gone down the drain after annulment of the deal.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Gas load-shedding and yarn shortage: $1 billion textile garments export orders at stake ​* 
KARACHI (February 27 2008): Around one billion dollars of textile garments export orders are at stake due to suspension of fabric processing at dyeing mills in the wake of gas load-shedding and shortage of yarn in the local market, exporters-cum-manufacturers said on Tuesday.

The yarn crisis is looming large to hit the textile garment exports severely in the coming days, they expressed apprehensions, saying that the commodity prices are constantly surging and its volume is decreasing. There is also gas shortage bringing the manufacturing process almost to a suspension, they said.

They apprised that Yarn-10 number about four months ago was available at Rs 460 per 10 pounds, which has now surged to 560 per 10 pounds. Such a sharp rise in raw material price is alarming for the country's shrinking textile garment exports, they added.

"We may not be able to export the already booked consignments of around one billion dollars on time for increasing costs overburdened by the gas disruption, skyrocketing yarn prices and its unavailability," said former chairman of Pakistan readymade garment exporters and manufacturers association (Prgmea), Ijaz Khokhar.

He criticised the yarn exporters for creating artificial shortage of the commodity to multiply their profits at the expense of national exchequer. He said that the dyeing mills are charging 20 percent more since the gas shortage has hit them.

Trade Development Authority of Pakistan (TDAP) has failed to resolve the issues hitting the country's overall exports, Khokhar said alleging the concerned ministry is incapable of running the authority in line with the world market demands.

Expressing apprehensions, he said that the country's image is also at sake and is being tarnished in the world markets due to the TDAP's inaptitude. "Frequent cancellation of exports orders for gas, electricity shortage, deteriorating law and order situation, political turmoil and now soaring yarn prices have dented the country's image abroad," he maintained.

Foreign buyers are now reluctant to place orders with Pakistani manufacturers for persistent delays in shipment, he said. However, Ijaz termed the postponement of Expo-Pakistan fair till October this as a sensible move by the authority.

Urging upon the elected government, he said that it should focus on development of trade and business in the country unlike the previous government and launch policies in this regard. He added that government should not depend on foreign financial assistance but make the local products more competitive to compete in the world markets.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Energy deficit will rise to 53 million TOE in 2015 ​* 
KARACHI (February 26 2008): Pakistan energy deficit will increase to 53 million TOE (tons oil equivalent) in 2015 and 136 million TOE in 2025, against a projected total energy requirements of 114 million TOE and 211 million TOE for the year 2015 and 2025 respectively.

This was stated by Abbas Bilgrami, Managing Director of Progas Pakistan Limited, while talking to a group of journalists during their visit of the Progas Terminal here on Monday. Abbas Bilgrami said that Pakistan's current energy requirements are around 60.4 million TOE against an indigenous supply of 41 million TOE.

He said that since oil and gas will continue to form the bulk of the energy mix, large imports will be needed to bridge the supply and demand gap. He said that Progas Pakistan Limited's import terminal has the necessary infrastructure and large capacity to supply the country's growing needs for future import of fuel oil, LPG, CNG and LNG. It is poised to be the regional bulk breaking centre for distributing hydrocarbons into the Indian Ocean Rim countries.

Progas Pakistan Limited has successfully completed its first year of full operations of the Progas Bin Qasim LPG Terminal. The terminal has operated under world class Health, Safety and Environmental standards. The terminal is an infrastructure of national importance, which has added significantly to Pakistan's energy security. "Progas is committed to developing this terminal into Pakistan's Energy Hub", he added.

He said that the Progas Terminal is a common user facility, which is available to all importers and marketing companies on a hospitality basis. The rates of this service are competitive and with the capacity that this facility has it obviates the need for further investment in LPG storage and import infrastructure for the next decade.

He pointed out that Progas is Pakistan's first company to have developed a fully dedicated multi-user LPG Import Terminal at Port Qasim, Karachi. Its dedicated jetty can currently undertake ships up to 15,000 DWT but designed to be able to handle VLGC with minor modifications. The terminal has a current capacity to handle upto 2 million MT of LPG imports annually. Total LPG imports in 2006-7 have grown to the highest ever in Pakistan's history of over 65,000 MT. The company imported over 30,000 MT of LPG during 2007, making it the single largest LPG importer in the country.

These figures are 80 percent higher than the previous year. The company imported about 15,000 MT of LPG in 2006. Through the importation of this extra LPG the country has been able to meet part of the large existing latent demand for this vital commodity thereby providing greater pricing stability until the current caretaker government's decision to cap local producer prices.

The LPG market growth has been increasing at an average rate of 19 percent annually. The LPG consumption during 2006-7 in Pakistan was more than 628,000 MT the highest it's been ever.

Progas Pakistan Limited imported another shipment of 2,500 Metric Tons of LPG on Sunday February 24, 2008. According to the Hydrocarbon Development Institute of Pakistan (HDIP) Pakistan Energy Yearbook-2007, the Annual Compounded Growth Rate (ACGR) for imported LPG has grown at 48.8 percent between 1999 - 2006.

This demand for imported LPG is expected to remain high for the foreseeable future, with increasing gas shortages, power outages coupled with the expected removal of the cap on the prices of other liquid hydrocarbons. LPG will act as the bridge fuel for those industries and consumers who will be unable to get sufficient quantities of Natural Gas or other liquid hydrocarbons.

Progas Pakistan Limited is a joint venture of KUB Malaysia Berhad, KGL Petroleum Kuwait, Progas Energy Limited and the National Logistics Corporation. Progas's infrastructure also includes Pakistan's largest LPG storage facility with a capacity to store 6,750 MT of LPG or approximately 250,000 Mt per annum of throughput. Apart from this facility there is a state of the art LPG bottling plant with a capacity to fill 5,000 MT of LPG per shift per month. Progas' management believes that imports will contribute a significant part of the energy balance in the coming years.

In addition, Progas Pakistan Limited also has regional distribution centres with bottling and storage facilities at Haripur near Islamabad, Rajpura near Lahore with a total capacity to handle 300 MT of LPG and Mobile storage base consisting of LPG carriers and ISO Containers with a capacity to move around 1000 Metric Tons. "Progas is ready to work with all stakeholders in the industry to better serve the Pakistani consumer and the nation", Abbas Bilgrami said. Muhammad Akhtar, General Manager Finance & Admin gave a detailed presentation on existing supply, demand and other issues of LPG Sector in the country.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Food exports grow by 4.78pc in 7 months ​* 
Export of basmati rice rises 23.95pc and that of other varieties declines​
Thursday, February 28, 2008

ISLAMABAD: Food export from Pakistan has shown an upward trend during the first seven months of the current financial year as it increased by 4.78 per cent when compared with the figures in the corresponding period of the last financial year.

The food group export increased from $1.07 billion from July-January 2006-07 to $1.13 billion from July-January of the current financial year. The export of basmati rice increased by 23.95 per cent during the period under review, however the export of other rice commodities declined by 19.50 per cent, according to the Federal Bureau of Statistics.

The export of fruits from Pakistan grew by 17.36 per cent going up from $71.45 million in 2006-07 to $83.85 million during the period under review. Similarly, the export of vegetables increased by 66.45 per cent by going up from $16.65 million in the last financial year to $ 27.72 million from July-January 2007-08.

The export of fish and fish products declined by 1.4 per cent while export of leguminous vegetables and wheat declined by 55.73 per cent and 100 per cent, respectively. The other items which witnessed an upward trend in export included spices, sugar and meat products, which increased by 5.75, 100 and 27.09 per cent, respectively while the export of oil seeds, nuts and kernals also increased by 161 per cent during the first seven months of the financial year.

When compared with December 2007, food export during January 2008 increased by 12.8 per cent and it increased by 7.6 per cent as against January 2007. APP Our correspondent adds from Karachi: Rice exports have dropped by 27.74 per cent during July-January 2007-2008 Federal Bureau Statistics reported stating that in last seven months rice export fell to 1.3 million tonnes as compared to 1.8 million tonnes during the same period last year.

Price hike and short supply of rice amid dwindling exports is due to hoarders, market sources claimed. Rice Exporters Association of Pakistan (REAP) Vice Chairman Abdul Bashir said that higher rates of local rice have made its export unviable. 

He said that export sales have declined to almost half due to which smaller exporters have shut shop. It has become impossible for small exporters to fulfil export orders due to soaring rates at home, he said explaining that only larger exporters with well-established rice supply chains were surviving in the market.

Pakistan last year produced 5.4 million tonnes of rice and exported about 3.3 million tonnes, and traders were hopeful of exporting even more from the 2007-08 crop estimated at 5.6 million tonnes.

Local consumption of the rice is around 2.5 to 2.6 million tonnes, its contribution in GDP is seven percent and export earnings are around $1.5billion. Exporters fear supply problems could hurt exports and deprive Pakistani exporters of a chance to benefit from good international prices and believe that exports will be less this year if the situation remains the same. 

Food exports grow by 4.78pc in 7 months


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## Neo

*WB approves $25m for water management ​* 
Thursday, February 28, 2008

ISLAMABAD: The World Bank has approved $25 million concessionary lending (IDA credit) for Balochistan aimed at improving the management of scarce water resources in the Pishin Lora Basin, located in the northwestern part of the province, which was severely damaged by drought.

According to the World Bank, the Pishin Lora Basin has been severely impacted by drought since 1998, and this has exacerbated underlying water management problems. The surface water availability has decreased and rangelands have degraded, severely curtailing agricultural and other economic activities. The poor and marginalised sections of society have been most affected, resulting in increased urban migration.

The Balochistan Small-scale Irrigation Project is designed to boost agriculture production and improve the use of water in irrigation by increasing surface water availability and reducing groundwater depletion.

It also aims to boost water productivity through a combination of engineering, management and agricultural measures. Like the rest of the province, the drought has taken its toll on the lives of local population in the Pishin Lora Basin, said Yusupha Crookes, World Bank Country Director for Pakistan. This project will address the main causes behind the current water crisis. It will help the province properly manage its water and land resources and build capacity among farmers and water professionals.

The project will entail partial restoration of the water storage capacity of the Bund Khushdil Khan, and developing small-scale irrigation schemes in the Pishin Lora Basin through a community participation approach.

It will also strengthen and build capacity of the Irrigation and Power Department, water management institutions and farmer and community organisations. Support for farmer organisations and community organisations is critical to ensure they are participatory, inclusive and well-governed, said Manuel Contijoch, World Bank Senior Water Resources Specialist and project team leader. They will be trained in activities such as restoration and management of watersheds and rangelands and in implementation, operation and maintenance of irrigation schemes.

The credit from the International Development Association (IDA), the World Banks concessionary lending arm, carries a 0.75 per cent service fee, a 10-year grace period and maturity of 35 years.

WB approves $25m for water management


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## Neo

*Govt budgetary borrowing surges to Rs 284 billion ​*
KARACHI: Net government sector borrowing from July 1, 2007, to February 16, 2008, surged to Rs 284.149 billion, indicating the problems the government is facing in financing development projects. 

The previous government had boasted of record development expenditure when it announced its last budget. But the huge borrowing shows that the government did not have enough resources to finance this development expenditure. 

The economic managers are facing many crises. On the one hand they have to tackle the widening current account deficit, while on the other they face this fiscal deficit. 

The government has found it difficult to keep its promise that it made with the central bank that it would meet its borrowing requirement more from the scheduled banks and less from the SBP. 

Before the beginning of the current financial year the State Bank had urged the government to cut its borrowing from the central bank because it was inflationary in nature and neutralised the impact of monetary tightening. The government at that time had agreed with the SBP. It was also agreed that quarterly limits would be set for government borrowing from the central bank. 

The government claims it is subsidising transport fuel and it is owing to this subsidy that the fiscal deficit has swelled because oil prices have risen beyond what could be imagined at the time of budget making. The government has to give much larger amounts in subsidy than it had estimated. 

Oil prices have touched $100 per barrel in the international market. While in the recent years the government has covered its fiscal deficits through issuance of bonds in the international market, this year it has so far relied mostly on domestic borrowing. 

The reliance on such borrowing has also increased because the government has failed to move ahead with the issuance of global depository receipts of state-owned institutions as well as privatisation of some of the others. The government was expecting to receive handsome amounts from these transactions and use the same for debt servicing. In the absence of such proceeds now the government has to draw money from other sources to pay its debts.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Energy task force decides to build oil terminal at Gwadar​*
ISLAMABAD: Energy Task Force of Planning Commission decided to establish oil terminal worth over Rs 2 billion at proposed Gwadar Oil City and has set a deadline for finalising the agreement for setting up of LNG Terminal at Port Qasim by April 15, 2008, sources told the Daily Times on Wednesday. 

The Task Force while reviewing the CNG sector situation recommended discouraging new applications for setting up of CNG stations and directed the authorities concerned to ensure the gas availability to the operational CNG stations across the country. Sources said that Task Force backed the idea that new CNG stations should not be set up during the gas deficit scenario. 

The Task Force headed by Deputy Chairman Planning Commission Dr Akram Sheikh met here to review the energy conservation situation. Secretary water and Power Ismail Qureshi, secretary Petroleum Farrukh Qayum and other concerned officials, attended the meeting.

Sources said that The Task Force also directed ENERCON to expedite the process of introducing CNG busses so that the dependence on the use of diesel could be reduced. Task Force said that use of cars should be discouraged and buses should be introduced to save energy.

Task Force also said that the Water and Power Development Authority (WAPDA) in consultation with power distribution companies should expedite the process of delivering the energy savers bulbs among the consumers to save energy.

The meeting was informed that the WAPDA will distribute 10 million energy savers to its consumers, free of cost, as part of government conservation policy. WAPDA was directed to complete the work for provision of 10 million energy savers to consumers. 

Task Force showed concern over the delay of agreement for setting up the Engros LNG terminal project with Port Qasim Authority and directed the authority to finalise the agreement by April 15, 2008 .It is expected that the Terminal will be completed in early 2009. The LNG terminal will be set up by The Engro Vopak Terminal Ltd (EVTL) that is already owns and operates a modern liquid chemicals and LPG terminal at the Port Bin Qasim.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Hydroponic farming to help overcome food shortages​*
ISLAMABAD: To overcome food shortages in the future Pakistan can use hydroponic farming. Hydroponics can be a futuristic technology for Pakistan to ensure proper supply of vegetable and fruits crops. It uses 70 percent to 90 percent less water than irrigated soil based agriculture. No water was lost in the ground or absorbed by weeds or lost in evaporation, Officials in the ministry of Food, Agriculture and Livestock (MINFAL) told the Daily Times here on Wednesday.

With the collaboration of government, the officials said, a hydroponic pilot project has recently been started in Rawat (Islamabad) under the name BioBlitz over just five acres of land. The state-of-the-art five-acre greenhouse facility is producing hydroponic tomatoes of all varieties including tangy, elegant, cherry and others.

The officials said if the same technology is properly deployed, the country could be a huge power player in the market because nobody else in the region is using high-tech hydroponics. 

In the pilot project, a Dutch hydoponic expert was working with the team training Pakistani staff on how to run a hydroponic greenhouse. The project was exactly producing 50,000 kg of tomatoes a week. If the government built 1,000 acres of greenhouses just for tomatoes, they would get about $500 million of revenue per year only on one crop, they said. 

According to them, a high tech hydroponic facility was more expensive to set up than soil farming but once it is set up, operating and maintenance costs were low and the very high and definite yields means that invested money would be recovered in one year. 

Countries, which were world leaders in hydroponics employ what was called a cluster approach where land is allocated just for hydroponic farming practiced by different farmers. To develop a viable hydroponics industry, Pakistan desperately needs to improve its infrastructure facilities, such as availability of electricity and land. Greenhouses need a constant supply of power but the situation in Pakistan is not encouraging, they added. The pilot project BioBlitz for instance was running completely on generators. 

With more than 16 million population, the officials said Pakistan needed to boost its agriculture performance, which was low and erratic compared to other major agriculture producers. If hydroponics is introduced properly, the country can triple the revenues earned on agriculture exports. The new technology also has a social impact.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Tough decisions to improve ailing economy, Zardari tells traders​*
ISLAMABAD, Feb 27: PPP Co-chairman Asif Ali Zardari told a 45-member business delegation on Wednesday that the new government will have to take tough decisions to improve the ailing economy.

While Mr Zardari received suggestions from the businessmen to prepare new economic policies, he regretted that oil and electricity prices were not increased by the previous PML (Q) government and now the incoming government will be forced to take tough decisions in this behalf, said former finance minister Syed Naveed Qamar quoting the PPP leader.

However, the PPP leader, according to Mr Qamar, said that certain safety valve will be provided to the common man in the shape of some subsidy to deal with the expected increase in oil and electricity prices.

Speaking at a news conference along with the head of the delegation of the businessmen Mr Siraj Qasim Teli, Mr Qamar said that a decision has been taken to shortly finalise a roadmap to improve the economy, which he alleged had been destroyed by the previous government.

The delegation comprised senior members of Aptma, Federation of Pakistan Chambers of Commerce and Industry and different other business organisations.

Those who spoke to the media faced harsh questions for their alleged involvement in stock market crash of 2005 and said that they did not meet Mr Zardari to get any benefit in the new government.

However, Mr Qamar, who is also the former chairman of Privatisation Commission, said that those who were involved in any business scam will be brought to book and that PPP was not there to spare any wrongdoer.

In reply to a question, Mr Teli said that the PPP leader has assured the business delegation that 67 per cent of the countrys economy belonged to Karachi whose problems will be solved on priority.

The industry of Karachi faces 700MW power shortage daily in the coming summer and this calls for some urgent planning, he said.

He said that the businessmen were assured by the PPP leader that economic policies would be finalised with the help of business community and that there would be a regular interaction with it aimed at improving the overall economy of the country.

He said that Mr Zardari knew that the new government would be facing a number of challenges on the economic front which demanded careful implementation of the policies.

Mr Teli said that the PPPP co-chairperson has also sought suggestions to improve the business climate of Karachi which had been ruined due to violence and politics in the past.

We told the PPP leader that confrontation should be avoided at all cost with political opponents as the country can no more afford the politics of violence and disturbance, he said.

In reply to a question, Mr Qamar said that the PPP co-chairman told the businessmen that he would take all the people concerned into confidence for promoting trade and business activities across the country.

Asked about the problems being faced by the Karachi Electric Supply Corporation, they both said that new investment was required in the power sector to get rid of the electricity crisis. They said the KESC alone could not do anything and that major investors would be provided incentives to invest in the sector.

Responding to a question, the former finance minister said that inflation was important issue which needed to be brought down to help the poor man to fight price hike.

Former finance minister of Punjab and a central PPP leader Shah Mehmood Qurashi, who also attended the meeting, later told Dawn that without taking tough and unpopular decisions, the new government would not be in a position to find out the solution of various problems. We will convince our people about tough decisions to be taken by the incoming government, he said, accusing former prime minister Shaukat Aziz and his economic team of creating a mess of the economy during the last six years.

Tough decisions to improve ailing economy, Zardari tells traders -DAWN - Business; February 28, 2008


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## Proud to be Pakistani

*KSE-index rise on improved sentiment: 100-share index closed at 15,079.71 points
​* 
KARACHI (updated on: February 28, 2008, 14:58 PST): Shares in Karachi stocks market ended 0.39 percent higher on Thursday as investors got a boost from two reports that were positive about the country however gains were limited as investors booked profits.

The Karachi Stock Exchange (KSE) benchmark 100-share index closed at 15,079.71 points. It set a life high at 15,155.68 points on Wednesday.

Turnover was 263.58 million shares, while losers outnumbered gainers 173 to 168.

The free-float KSE-30 share index ended 0.34 percent higher at 18,644.48 points.

"The market got a sentiment boost from reports by Fitch and Templeton along with higher international oil prices," said Asad Iqbal, managing director at Ismail Iqbal Securities Ltd.

Templeton Asset Management's top emerging markets fund manager, Mark Mobius, said on Thursday Pakistani stocks were attractively priced at forward price-earnings ratios of less than 10.

Fitch Ratings said the Pakistani banking system had been improving, but could be vulnerable to political and economic risks.

Investor sentiment in the Pakistani market has been upbeat since last week's election, which was less violent and more fair than anticipated.

The KSE-100 has gained 5 percent since the Feb. 18 parliamentary polls. It is Asia's top performer this year, up 7.12 percent after a 40 percent rise last year, although many investors still consider it a difficult and illiquid market.

Foreign investors have been active since the election.

According to State Bank of Pakistan data, a net foreign inflow of $13.61 million was seen on Feb. 26, taking the total net foreign inflow for February to about $165.6 million.
 
The two main parties that won the election have vowed to work together to form a government, although that does raise the prospect of them trying to force President Pervez Musharraf from power.

Among the most active companies, Fauji Bin Qasim ended 3.34 percent up at 44.80, bank Al Falah was up 1.5 percent to 62.25, while National Bank of Pakistan rose 1.73 percent to 272.90.

KSE-index rise on improved sentiment : Business Recorder | LATEST NEWS


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## Neo

*Exports become more diversified ​* 
*Exports registered rise of 5.95pc in 7 months​*
Saturday, March 01, 2008

LAHORE: The exports of the country have become more diversified as focus has started shifting from textile to other products. This is evident from the fact that overall exports registered an increase of 5.95 per cent during the first seven months (July-January 2007-08) of the current fiscal year while textile shipments fell 3.44 per cent.

Official statistics show total exports during July to January 2007-08 rose to $10.152 billion compared to exports of $9.582 billion in the corresponding period of last year. The sectors that recorded increase in exports during the period included the food group, led by a 23 per cent surge in Basmati rice export, 17 per cent in fruits and 66 per cent in vegetables. This partly explains the reason for the high prices of rice, fruits and vegetables in the country.

Other sectors whose exports rose were petroleum products, up 34 per cent, leather (tanned) 37.51 per cent, leather products 13.99 per cent and chemical and pharmaceuticals 45.58 per cent.

However, the impact of these increases was small mainly because the export of textiles that accounted for 65 per cent of total shipments registered a decline. The textile exports dropped 3.44 per cent in which all categories of yarn and fabric showed a negative growth. In the value added sector, knitwear exports plunged 11.21 per cent, towels 6.72 per cent and bedwear 6.21 per cent. Only the export of readymade garments, among major value added textiles, rose 7.20 per cent.

The engineering sector also remained under pressure during the period under review as its exports decreased 9.70 per cent. Economic experts point out the textile sector came under pressure after the March 2007 crisis. It is perhaps for the first time in two decades that exports have increased despite a decline in textile shipments.

They say the textile sector came under pressure as foreign buyers were reluctant to place orders due to a wave of terror attacks during the first six months of this fiscal. The textile sectors worst performance was in December last year when the export of its many categories dipped over 20 per cent.

However, the experts say, the sector then showed remarkable resilience as exports rebounded in January, rising 10.38 per cent over the corresponding month of last year. The increase in exports came despite the worst-ever gas and power crisis that hit the country in January. In fact, they say, exports increased because Pakistan enjoyed a competitive edge over its close rival India owing to a difference in currency values. Moreover, shipments being made now are for summer clothing.

The knitwear exports that had been on the decline till December were higher 10.08 per cent in January and readymade garments rose over 39 per cent.The value added clothing exports from Pakistan traditionally increase in the last five months of the fiscal year. The say the buyers have placed large orders for knitted shirts and denim clothing as rates of these products in India are higher. They expect that by the end of this fiscal, textile exports will post a robust growth.

Exports become more diversified


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## Neo

*Kazakhstan invites Pakistani investors ​*
ISLAMABAD: Kazakhstan is keen to further increase bilateral trade with Pakistan as some Pakistani companies have invested and the government encourages more foreign investment. 

This was stated by Yernur Tuyakbayev, First Secretary of Kazakhstan embassy in Islamabad in a meeting with members of Islamabad Chamber of Commerce and Industry here Thursday. 

He said that for investment in Kazakhstan long-term visas are granted to the investors and for citizenship 7 years stay in Kazakhstan is a must. He said that after 15 years of its independence, Kazakhstan s economy is growing well.

Danabekov, who was also accompanied by Yerlan T.Danabekov, Visa Counselor, Embassy of Kazakhstan, said that his embassy greatly facilities for grant of visas to Pakistani businessmen and ratio of issuance of visas is increasing day by day. He said that Kazakhstan is a land locked country and its 85 percent trade is with Russia. Literacy rate in Kazakhstan is about 100 percent and about 5000 students are sent abroad on scholarship each year, he added. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Templeton's Mobius bets on Pakistan's energy stocks ​*
SINGAPORE (February 29 2008): Templeton Asset Management favours Asian energy stocks and has placed a big bet on fast growing but politically volatile Pakistan, the firm's top emerging markets fund manager, Mark Mobius, said on Thursday.

Templeton expects oil prices to stay around $100 a barrel, helped by its soaring demand in China and India, which will shore up earnings at companies such as Petrochina and India's Oil & Natural Gas Corp (ONGC). "The housing crisis is hitting the US market. There is an impact but what we found in the past is that oil consumption does not go down dramatically," said Mobius in a telephone interview with Reuters.

"The swing factor (for oil) is what is happening in China and India," said Mobius, who manages a total of $40 billion in emerging market assets, about half of which is invested in Asia. Mobius' Templeton Asian Growth Fund was 36 percent invested in energy at end-January, and its top holdings included Petrochina, China Petroleum & Chemicals (Sinopec), Korea's SK Energy and India's ONGC.

The $7.7 billion fund was 106 percent invested in equities as Templeton borrowed to meet redemptions last month rather than reduce its shareholdings, at a time of sliding global stock markets as investors worried about a spreading credit squeeze.

"The values were there and we thought there would be a recovery. It's advantageous for existing shareholders as we are not forced to sell down at unreasonable prices," he said. Asian stocks, excluding Japan, fell close to 20 percent at one stage in January, but are now down about 7 percent for the year.

Templeton said its funds can borrow up to 10 percent of their asset value to meet short-term redemptions, giving managers greater flexibility in managing their portfolio when markets are volatile. The Asian Growth Fund returned 36.7 percent in the past 12 months, beating a 22.4 percent rise in its benchmark, the firm said.

PAKISTAN'S PULL: In Pakistan, a market shunned by most institutional investors but which accounted for 5.3 percent of Templeton's Asian Growth Fund's portfolio, Mobius said the country's stocks were attractively priced at forward price-earnings ratios of less than 10.

Pakistan's stock market is Asia's top performer this year, up almost 10 percent on top of a 40 percent rise last year. Economic growth has averaged about 6 percent in the last five years, but Pakistan has been plagued by political instability and militant attacks. A Templeton spokesman said the firm's Pakistani investments included CB Bank, Oil & Gas Development Co, Faysal Bank and Pakistan Telecommunication.

"It's working out for us well," Mobius said, noting that recent elections had replaced an unpopular military-backed government with a civilian government that was likely to retain the previous administration's pro-private enterprise policies "We don't see any huge problem in terms of a big bear market continuing in Asia," Mobius said. "We think there will be a recovery."

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*China to invest $600 million in Sindh coal project ​* 
ISLAMABAD (February 29 2008): China will invest about $600 million for setting up an integrated coal mining-cum-power project in Sindh. The project will produce 180 million tonnes per annum, which is sufficient to fuel the proposed 405 MW power plant.

A five-member delegation led by Qin Ruijan, vice-president, China National Machinery Import & Export Corporation (CMC), submitted an informal proposal to Water and Power Secretary Muhammad Ismail Qureshi in a meeting. Private Power and Infrastructure Board Managing Director Fayyaz Elahi and other senior government officials attended the meeting.

The Chinese delegation appreciated the investor-friendly policies of Pakistan particularly in the power sector. The project will be set up at Sinda-Jherruk coal mines in Sindh.

Ismail Qureshi appreciated CMC's decision to invest in the power sector of Pakistan using local coal, and encouraged them to submit a formal proposal so that it can be processed at the earliest by PPIB as per the provisions of the power policy.

The CMC is the 10th largest state-owned corporation of China. It is the largest foreign trade enterprise engaged in import and export of machinery products in China, having a trade turnover of $73 billion. The CNC has substantial experience in the development of coal mines and coal-based power projects.

The interest of Chinese investors in the power sector of Pakistan is a further step in realising the Pakistan's efforts to speed up investment in the power sector utilising indigenous coal resources of the country.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Political instability, security challenges likely to hinder FDI' ​* 
FAISALABAD (February 29 2008): Political instability and civil conflicts have been found to be a major factor in reducing the attractiveness of South Asia as a host for foreign capital. Afghanistan, Pakistan, and Sri Lanka continue to face political uncertainties and security challenges that are likely to hinder foreign direct investment (FDI).

According to third issue of the South Asia Economic Report (SAER), released by the South Asia Department and the Central and West Asia Department of the Asian Development Bank (ADB), empirical evidence demonstrates that FDI inflows into Sri Lanka are vulnerable to the ongoing civil conflict there. Likewise, in Afghanistan, the pace of foreign investment also may be slow because of the sporadic suicide bombings, kidnappings, and attacks.

The worsening political situation in Pakistan (particularly in late 2007) may also hamper FDI inflows into that country. It is well documented that existing regulatory systems governing investment in South Asia are weak. Specifically, corruption continues to be rampant; governance remains poor; "red tape regulatory obstacles" commonly affect the conduct of business activities; capital flows are stringently controlled; and there are a lack of "facilitating harmonised frameworks on competition and infrastructure".

The 2006 Corruption Perceptions Index (CPI) of Transparency International, based on a survey of 163 countries (Transparency International 2007) showed that Bhutan is the least-corrupt country in South Asia. Conversely, the remaining countries of the region are positioned well down in CPI scores and country ranking.

Bangladesh scored as the most corrupt country in the region and positioned lowest in the ranking of regional countries. Transparency International's Bribe Payers Index (BPI), a measure of the propensity of the leading exporters in a country to offer bribes (out of a sample of 30 countries). Statistics shows that India had the worst BPI in 2006 among the 30 countries sampled, including the 8 Asian countries sampled. Transparency International notes that one of the most corrupt branches of government in South Asia is the judiciary.

According to report, FDI is a vital requirement for sustained economic growth in South Asia. It can generate employment in the host countries, in addition to supplementing domestic savings and helping meet the huge demand for investment. FDI can also bring foreign currencies into the host countries by stimulating exports of goods and services.

Expectations of significant future domestic demand, especially in countries with large populations such as those in South Asia, can result in FDI from foreign companies establishing large production bases for these domestic markets. Such FDI will expand product variety and consumer choices, and promote technology transfers and knowledge spillovers through forward and backward linkages in the host economies.

The report highlights the strong inducements for FDI offered by South Asia, such as its robust economic growth with the impressive showing of the services sector and exports, its large domestic markets, and the positive perceptions of foreign investors. However, the level of FDI inflow into South Asia is still low compared to other Asian regions. This is considered to be the result of the poor business climate, poor infrastructure, restrictive labour policy and labour unrest, political uncertainties and civil conflicts, weak regulatory systems, and rampant corruption.

According to report, South Asia exhibited robust macroeconomic performance in 2006. Economic growth was strong, with savings and investment rates high, inflation moderate, trade and foreign direct investment (FDI) expanding, and fiscal deficits lower. South Asian countries are expected to sustain high growth rates in 2007 and 2008.

Economic growth in South Asia was stronger in 2006, as aggregate gross domestic product (GDP) posted an 8.8 percent expansion. It was the second consecutive year of the highest growth rate in the region since 2003. Most economies in South Asia registered GDP growth rates exceeding 6.0 percent in 2006, largely the result of impressive performance by the services sector and the industrial sector.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan's foreign exchange reserves swell by $57.1 million ​* 
KARACHI (February 29 2008): Country's liquid foreign reserves have increased by 57.1 million dollars during week ended February 23, 2008. Sources said during the last week, a payment of some 289 million dollars has been received from the US on account of reimbursement, therefore, the foreign reserves has shown some upsurge.

The State Bank of Pakistan statistics depicting that during last week, the foreign reserves held by the State Bank of Pakistan (SBP) raised to 11.9632 billion dollars up from 11.8687 billion dollars as on February 16, depicting an upsurge of 94.5 million dollars during the last week.

While reserves held by commercial banks have decreased by 37.4 million dollars to 2.1742 billion dollars on week ended February 23, as compared to 2.2116 billion dollars a week earlier. It may be mentioned here that country's foreign reserves are consistently declining due to the high foreign payments and this is the first raise during the current calendar year.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Master plan for small, medium industrial zone in Multan ready ​*
MULTAN (February 29 2008): The government has finalised a master plan on small and medium industrial zone in Multan to promote the small and medium industry in this area and providing maximum jobs to skilled workers.

Punjab Caretaker Minister for Labour Shehzad Azam Khan said this on Thursday while laying the foundation stone of a modern labour complex over 40 acres of land in Industrial Estate Multan. Punjab Minister for Industries Khawaja Muhammad Jalaluddin Roomi was also present on the occasion.

Addressing the opening ceremony, Jalaluddin Roomi announced to alocate 6.5 acres of land for vocational institute in the industrial estate to produce maximum number of skilled workers. He said that a power-loom cluster, and small and medium enterprises estate was also being developed in Multan.

The government would construct the shelters, which would be allotted to power-loom and, hand-loom operators and other small entrepreneurs on rental basis. He said, "credit goes to the caretaker government which got approved a project of gas supply to this industrial estate within shortest time and also Labour complex project was approved and funds were allocated."

He said a dispensary and schools for boys and girls, recreational parks and 600 homes in the first phase would be constructed, which would be allotted through ballots, while total 1,200 to 1,500 single storey homes would be constructed and equipped with all facilities like gas, electricity, water, drainage etc.

He said, "this project was being shifted to other major city but we used our good offices to stay at Multan". Earlier, Industrial Estate Management Board's President Multan Iqbal Hassan spoke and demanded for not increasing the cost of land in industrial estate Phase-II.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Exposition 2015 in Izmir: Pakistan to be offered free pavilion ​*
ISLAMABAD (February 29 2008): Turkish Ambassador, Gursoz who met Commerce Secretary, Syed Asif Shah here on Thursday said that Pakistan would be offered free pavilion at Expo 2015 to be held in Izmir, says a press release. The ambassador, who is also Special Envoy of the President of Turkish Republic, was accompanied by Mayor of Izmir city and Chairman of Asian Exporters Union.

He appreciated Pakistan's support for organising Expo 2015. Pakistan has made its commitment to Turkey's candidature for Expo 2015. The Turkish envoy has delivered a letter to the President of Pakistan conveying thanks to Islamabad, the release said.

The Turkish envoy said that in recognition to Pakistan's support, Turkey will treat Pakistan as special guest and will offer free pavilion at Expo 2015 provided Turkey wins this campaign. Secretary Commerce thanked the envoy and assured him of Pakistan's continued support in their lobby and wished them success. He also confirmed Pakistan's participation in Expo 2015.-PR

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Holland keen to support 'Energy for All' initiative: ADB ​* 
FAISALABAD (February 29 2008): The Government of the Netherlands has expressed strong interest in supporting an Energy for All initiative with the remaining funds of the Dutch Co-operation Fund for Promotion of Renewable Energy and Energy Efficiency in Asian countries including Pakistan.

According to ADB sources, this initiative will also add to the commitment made by the Dutch government to provide 10 million people with access to modern forms of energy by 2015. The ADB will also serve as a "multiplier" and co-ordinate with the Government of the Netherlands to help achieve that target as well as assist ADB's participating DMCs achieve their MDGs.

According to ADB project report, the potential projects and countries for Energy for All include but are not limited to (i) promotion of community-managed decentralised energy systems (micro hydro, solar, biomass) in Indonesia, Lao People's Democratic Republic (Lao PDR), Pakistan, and the Philippines (where feasible, private entrepreneurs, instead of the community, can also operate the energy system); and (ii) new financing mechanisms using credit enhancement, promoting local financing for individual household-level technologies (eg solar home systems, solar powered white-light-emitting diode lamps) through local financial institutions in Nepal.

These approaches and methodologies will focus on (i) private sector participation, (ii) new and innovative financing mechanisms, and (iii) use of community-based models (eg co-operatives, etc) to improve access to energy. The demonstration projects and modalities will be based on pre-feasibility and feasibility studies undertaken under TA 5972-REG: Promotion of Renewable Energy, Energy Efficiency and Greenhouse Gas Abatement (Prega), as well as other best practices in the region, in consultation with the host developing member countries.

Prega was financed by the Dutch Co-operation Fund for Promotion of Renewable Energy and Energy Efficiency, funded by the Government of the Netherlands. A total of 18 DMCs (Azerbaijan, Bangladesh, Cambodia, People's Republic of China, India, Indonesia, Kazakhstan, Kyrgyz Republic, Lao PDR, Mongolia, Nepal, Pakistan, the Philippines, Samoa, Sri Lanka, Tajikistan, Uzbekistan and Vietnam) participated in Prega, which was completed on December 31, 2006.

The ADB study revealed that Energy Services, in the broadest terms, refer to the benefits of an energy delivery system that meet the needs of the users (eg lighting, cooking, heating, etc). Access to efficient, affordable, and reliable modern energy services is recognised as essential for sustainable development. Yet almost half of the world's population does not have access to modern forms of energy. Some 2.4 billion people are still dependent on traditional biomass fuels to meet their cooking and heating needs, with all the health problems that the practice entails. Almost 70 percent people from developing countries relying on biomass for cooking and heating are in Asia and the Pacific. Similarly, around 27 percent of the world's population (ie, 1.6 billion people) still does not have access to electricity. More than 99 percent of those without electricity live in developing countries. Of that number, around 1 billion people are in developing countries of Asia and the Pacific; and four out of five live in rural areas.

For lack of electricity is not only a rural issue. More than 13 percent of the urban population still do not have electricity in developing countries in Asia and this figure rises to almost 30 percent for South Asia. Fast population growth and rapid urbanisation over the next three decades will intensify the challenge of providing access to electricity in cities of most developing countries, and urban electrification programs will need to accommodate the swelling mass of the urban poor especially those in slums.

Even though no millennium development goals (MDGs) refer to energy explicitly, various studies have shown clear linkages between energy and all of the MDGs and have argued that much greater quality and quantity of energy services will be required to meet the MDGs. One common finding of the 10 task forces of the United Nations Millennium Project is the urgent need to improve energy access so as to attain the MDGs. Without scaling up the availability of affordable and sustainable energy services, not only will the MDGs not be achieved; 1.4 billion people globally will still have no access to electricity in 2030.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*New Nokia 6210 with GPS device launched ​*
KARACHI (February 27 2008): World leaders in telecommunication industry, Nokia, has introduced a new Nokia 6210 Navigator around the globe including Pakistan. The latest of Navigational Series is the company's first GPS-enabled mobile device with a comprehensive integrated compass for pedestrian guidance.

The Nokia 6210 Navigator is estimated to start shipping in the third quarter of 2008 in selected markets with an estimated retail price of euro 300, before taxes and subsidies. The Nokia 6210 Navigator comes with Nokia Maps 2.0, and includes full voice and visual turn by turn guidance at no extra cost.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*15,000 tons of sugar to be exported to Bangladesh ​*
ISLAMABAD (February 29 2008): Pakistan will export 15,000 tonnes of sugar to Bangladesh from the surplus stock. The sugar mills across the country have abundant stocks of surplus sugar and, therefore, it has been decided to export some amount out of the same stock, told sugar industry sources to a private TV channel.

Five sugar mills of Sindh have decided to export surplus amount sugar to make payments to the farmers for sugarcane. The first shipment of sugar export at the rate of between $280 to $386 per tone will be transported from Karachi Port to Chittagong.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Nespak terms Bara, Jabba dams feasible ​* 
PESHAWAR (February 29 2008): NWFP Governor Owais Ahmad Ghani Thursday said that feasibility studies of two dams in Bara and Jamrud sub-divisions of Khyber Agency has almost been completed and both of them have been found feasible for construction. He expressed these views during a presentation on the construction of Bara and Jabba Dams in Khyber Agency here in Governor's House on Thursday.

The Governor was given a detailed presentation on the findings of the feasibility report, prepared by the Nespak, which has recommended the construction of both the dams. Chief Executives Fata Development Authority Muhammad Shahzad Arbab, Secretary to Governor Arbab Muhammad Arif, Secretary Law and Order Fata Ghulam Qadir, Secretary P&D Zafar Hasan and officials of Nespak, Fata secretariat and FDA attended the presentation.

In his presentation the representative of Nespak explained the details of the findings and feasibility, saying that Bara Dam would irrigate about 50,000 acres command area in both Fata and Peshawar valley.

The dam, he added would also become a source of provision of drinking water to the nearby localities adding that 2 cusecs potable water could be provided to Bara Bazar and 8 cusec to Hayatabad township in Peshawar.

He said that 92-meter high Bara Dam will have a total water storage capacity of 88,000 acres ft and would also have the capacity to produce 2 MW, electricity power.

The life of the water reservoir of Bara Dam has been envisaged to be 80 to 100 years. As regard long-term benefits of the dam, the study mentioned that with construction of the dam the Bara River Canal System would become functional again besides greatly reducing flood damages from Bara River.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Khalid for exploiting livestock potential ​* 
LAHORE (February 29 2008): Governor Khalid Maqbool has called for exploiting the agriculture and livestock potential, saying the government is focusing on developing the livestock sector. "Pakistan is lucky to have the best breeds of cows and buffaloes and the number of livestock has increased from 15 to 30 percent during the last seven years."

Governor was speaking at a certificate distribution ceremony of a Leadership Development Programme organised by the Faculty of Livestock Business Management of the University of Veterinary and Animal Sciences.

He said Pakistan was the seventh top milk-producer in 2002 and today it was the third among the top milk producers in the world. He said vaccination coverage of livestock had increased to 40 percent and mortality rate of animals had decreased from 14 to 9 percent. He lauded the role of the UVAS in the development of livestock sector through its academic, training and extension programmes. He also appreciated the new initiatives of the UVAS including the BS (Hons) programmes in fisheries, poultry, dairy technology and microbiology.

He said that Leadership Development Programme of the UVAS was an initiative towards right direction and asked the university to continue this programme. He also called for focusing on the wildlife sector.

Vice Chancellor Professor Dr Muhammad Nawaz said "We have expanded our graduate and postgraduate programmes and are in the process of initiating a new Department of Molecular Biology and Biotechnology".

This department will enhance our capabilities in almost all disciplines," he said. "The bottom line in all our programmes remained the quality of professionalism, ethics and personality development." He said the Leadership Development Programme had been organised by the UVAS in collaboration with Livestock and Dairy Development Department Punjab with focus on developing leadership skills and project management according to future needs of livestock sector.

He said, "The university is also planning to establish a private limited company. Our Ravi Campus (New Campus) at Bhuneki will be the main centre of commercial produce. We plan to develop and run all training facilities as commercial concerns to generate capital for sustenance and development programmes of the university."

The university was in the process of developing a veterinary services centre at the Ravi Campus, Professor Nawaz said, adding that the UVAS had initiated enrolment of commercial farmers to develop an organisation where they could sit together to listen and solve problems for improved livestock production and practices. With changing global dynamics in agricultural and livestock production, we have to prudentially organise our production systems with a shift from subsistence to modernised economy-based efficient and market-oriented livestock production, he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*World Bank to provide $25 million for Balochistan irrigation project ​* 
ISLAMABAD (February 28 2008): The World Bank (WB) would provide 25 million dollar for Balochistan Small-Scale Irrigation Project (BSSIP), which will support efforts by the Government of Balochistan (GoB) to improve the management of scarce water resources in the Pishin Lora Basin (PLB) by reducing the overall impact of the present water crisis.

The project's objectives include increasing surface water availability and reducing groundwater depletion, increasing water productivity through a combination of engineering, management and agricultural measures and expanding local capacity and participation of farmers to implement similar schemes and formulate plans for sustainable water resources development and watershed management.

The project will focus on the PLB in the northern part of Balochistan. The project will follow three components that include partial restoration of the water storage capacity, developing small-scale irrigation schemes in the PLB and strengthening and building the capacity of the Irrigation and Power Department, water management institutions, and farmer and community organisations, and implementing studies.

The project can contribute to strengthening provincial water management capabilities. The World Bank's Board of Executive Directors approved the credit with maturity of 35 years and 10 years grace period.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*NWFP and Balochistan to get bulldozers: around 219,375 hectares cultivable wasteland to be reclaimed *​ 
FAISALABAD (February 28 2008): Federal government will provide 200 bulldozers for Balochistan and 100 for NWFP, which would be hired out to the farmers at no profit no loss basis to facilitate them in reclaiming the cultivable wasteland.

According to the sources in Ministry of Food, Agriculture and Livestock (Minfal), around 219,375 hectares of cultivable wasteland (NWFP 73,125 and Balochistan 146,250 hectares) would be reclaimed through the use of 300 bulldozers. This will enhance agricultural production in the NWFP and Balochistan provinces, sources said.

According to an update Minfal study, about 8.12 million hectares of land falls in the category of cultivable wasteland out of which 1.22 and 4.0 million hectares are in NWFP and Balochistan respectively. Provincial Agriculture Engineering Departments need additional machinery and 900 bulldozers to reclaim the cultivable wasteland.

Minfal sources mentioned that agricultural growth is key to curtailing poverty since poor heavily rely on agricultural goods and services for their livelihood. In line with the objectives of PRSP, Minfal has approved a number of projects for crop maximisation to reduce poverty and food insecurity in Pakistan in PSDP 2006-07. A number of projects assisted by ADB, FAO and UN/WFP for crop maximisation, increasing food security and promoting poverty alleviation are also under implementation.

Sources said that government has given top priority to the development of water resources to maximise crop production. This has been done through progressively increasing surface water supplies and conserving water using the latest technologies and protecting land and infrastructure from water logging, salinity, floods and soil erosion. The main objectives are overcoming the scarcity of water through augmentation and conservation means ie by construction of medium and large dams and by efficient utilisation of irrigation water and restoring the productivity of agricultural land through control of water logging, salinity and floods, sources added.

They said that an integrated programme approach for water management has been adopted. On-farm Water Management (OFWM) projects have been implemented on community participation basis in the provinces, AJ&K and Federal Agencies. Water conservation is being ensured under the President's programme for the improvement and lining of watercourses.

This programme envisaged lining improvement of 87,000 watercourses at a cost of Rs 66 billion within 3-4 years. This initiative will significantly improve water supply at the farm-gate through reduction in the seepage losses. During the year 2006-07, 18,390 watercourses have been lined and renovated against the target of 18,000 watercourses.

Minfal sources stated that the government has fulfilled most of the commitments related to different WTO-specific agreements. Pakistan has already started improving quality and standards of agricultural export commodity markets. Imposition of strict Sanitary and Phyto-Sanitary (SPS) measures and adoption of other significant regulatory steps through the Department of Plant Protection helped increase agricultural exports to the developed countries. Different development projects for the strengthening of laboratories for quality control have been initiated. For grading of agriculture and livestock commodities, grade standards of about 50 commodities, under Grading and Marketing Act, were developed.

According to the Minfal study agriculture sector in Pakistan is facing many serious challenges and constraints for future growth. These challenges are embedded in (i) the rising demand for agricultural products with the growth of population and incomes; (ii) the expanding role of free and competitive markets in agriculture trade at the national and international levels. Increased farm productivity, achieved by sustainable use of natural resources and other inputs, and diversification of production from the low value to high value products in response to market demand have to be the key ingredients of future agriculture strategy to make agriculture both productive and profitable; (iii) wide yield gaps in major and minor crops, inefficient use of water at farms, poor quality and availability of agricultural inputs, frequent insect and pest attacks and high incidence of crop and livestock diseases require effective resolution; and (iv) strengthening of agriculture research system is needed to focus more on emerging areas such as biotechnology, genetic engineering, hybrid seeds etc.

Improving agricultural knowledge system for effective crop forecasting, and undertaking market reforms in preparation of expanding trade regimes of WTO and Safta are other areas in which Minfal is currently focusing on.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*$50bn global trade prospects for Pakistan​*
KARACHI: A $50 billion industry with 30% per annum growth rate linked with $700 billion E-commerce trade world wide is available for Pakistan, said Abdullah Butt, President, Association of Call Centre Operators (ACCO) Pakistan.

Currently there are 70 call centres operating in the country and still there is so much business available internationally, that even if 100 call centres each of 100 seats are working in Pakistan, still there will be more business coming in, he said while talking to Daily Times here on Friday.

Butt said, despite supporting this industry the government has never taken serious steps to promote this industry, which can bring huge investment in the country and could help to an instinct control unemployment, which is rapidly increasing every year. 

For any international call centre operations, the nerve is telecom link and in Pakistan the weakest support one has is the telecom link and the cost of the utility is so high that the more you use the more you pay. The process of import is very cumbersome and expensive, he added.

Visa constraints on international employees and investors; security issues; a very heavy bureaucratic approach towards the industry; lack of mass awareness of this industry by government and private media; no training subsidisation by government; lack of IT- enabled infrastructure are some of the problems.

Daily Times - Leading News Resource of Pakistan


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## Neo

*UK to extend 480m pounds for skill development ​*
ISLAMABAD: British High Commissioner in Pakistan Robert Brinkley on Friday said the UK government would extend 480 million pounds to Pakistan for promotion of skill development and technical education.

The British High Commissioner expressed these views during a meeting with President Islamabad Chamber of Commerce and Industry Muhammad Ijaz Abbasi.

Skilled manpower is playing an important role in the economic development of any country; therefore, the UK would provide assistance for establishment of technical training institutes in Pakistan, he said. In 2006 Pakistan and Britain singed a ten-year partnership, which includes doubling of UK aid to Pakistan. Under this programme in the period of 2008-11, the UK would provide financial aid of 480 million pounds for promotion of technical education in Pakistan for skill development.

Robert Brinkley said the British government was glad on holding of peaceful general election in Pakistan and expressed the hope that a stable government would be established in next few days. A consortium of countries had assisted Pakistan for successful completion of the election process in Pakistan, he added.

The British High Commissioner said that about 100 British companies are operating in Pakistan and a plenty of others are interested in more investment. He said that Bestway Cement was making a further investment of $140 million at its cement manufacturing plant at Ckakwal. Major British players in Pakistan include Unilever, Shell, BP, GlaxoSmithKline, Standard Chartered Bank, International Power and many others.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Gem exporters to attend Indian fair​*
KARACHI: Feb 29: Pakistan Gems and Jewellery Development Company (PGJDC) has arranged Pakistani gems and jewellery exporters participation in IIJS Signature fair, Goa, from February 29 to March 3.

A statement issued by the company on Friday said the delegation comprising of 36 Pakistani gems and jewellery exporters is being led by one of the directors of the company.

The PGJDC has assisted the participants by arranging business visas, hospitality and accommodation for them.

The IIJS Signature has invited a select 250 exhibitors, comprising the most reputed jewellery companies in the Indian industry.

The objective of Pakistani delegation to attend this exhibition is to have the continuity of presence in the Indian jewellery market and to build on contacts developed in 2006 and 2007.

The Pakistani businessmen would also learn about the developments taking place in the Indian gems and jewellery sector through the years.

Pakistani delegates would interact with the representative bodies of the jewellery sector to explore the avenues for the uplift of gems and jewellery sector in Pakistan.--APP

Gem exporters to attend Indian fair -DAWN - Business; March 01, 2008


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## Neo

*Current account deficit may be 6.5 percent of GDP in fiscal year 2008: Merrill Lynch *​ 
KARACHI (March 01 2008): Merrill Lynch has estimated that Pakistan would miss its current account deficit target and it may be 6.5 percent of GDP as against the target of 5 percent during the current fiscal year 2008 due to slow export growth and rising imports.

Despite several attempted to control the increasing imports, the trade gap may not ease in the future due to the slow export growth and commodity imports, and prices are unlikely to slow. Therefore, Merrill Lynch has revised full-year current account deficit estimates.

"Pakistan's current account deficit has widened on account of higher domestic economy and the global price shock," explained Muzamil Aslam, Merrill Lynch economist.

He said that rising imports of commodities at a time when most commodities are at all-time highs has brought tremendous growth in imports, while growth in exports is already slow. Besides crude and edible oil imports, a few one-off imports of wheat, cotton, and military equipment have also resulted in higher imports bill, he added.

He said that due to the rising prices and imports of commodity, revising the previous estimates, it has projected that during the current fiscal year country's current account deficit would be 1.5 percent higher than the target of 5 percent of GDP set by the government.

The country has to face a deficit of 10.5-11 billion dollars during the current fiscal year 2008, while earlier it was projected at 9 billion dollars, he said in the recently issued report on current account deficit.

Higher import bills for commodities and transport services (freight), and a slowdown in export services drove this deficit. Slowdown in services is another chief reason for the higher deficit in the past seven months. Muzamil said that supply deficits should keep commodity prices robust at the global level, which could hit Pakistan's import bill significantly.

This, coupled with rising international sea freight, soaring iron ore and agricultural commodity prices, point at huge upside risks to the import bill, he said, and added that Pakistan does not export any of the commodities, except some agriculture commodities. "Hence, we do not see any upside to export growth."

"Despite political instability, Pakistan has financed its C/A deficit with ease through a mixture of foreign investments, debt accumulation and reserves withdrawal," he said.

He said that new government would be inheriting a strong balance sheet and should be in a solid position to absorb this shock, too, while the recent peaceful conclusion of general elections bodes well for Pakistan and should help attract foreign investments, make foreign loans available on better terms and improve the country's credit rating. "The new foreign investment would also help to fill the gap of current account deficit and bring the deficit under control," he concluded.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*SPI-based inflation surges to 12.16 percent ​* 
ISLAMABAD (March 01 2008): The SPI-based inflation surged by 12.16 percent on week ending February 28 over the same period of last year, conveying a clear message that a bumpy economic path awaits the would-be-government.

The inflation will pose one of the major challenges to the next government forcing it to take some bitter decisions that were held back by their predecessor to get benefit in the polls. The huge increase in prices of vegetable ghee and cooking oil has pushed the weekly inflation to 12.16 percent during the week under review against 11.60 percent last week.

The increase was also seen in the prices of fruits, pulses, wheat, milk fresh, rice, mutton and even bread and bath soap during the week, said the data released by Federal Bureau of Statistic on Friday.

The data showed that more items were becoming expensive from the list of 53 essential commodities used to measure inflation with prices of 24 commodities going up as compared to last week.

The increase in prices affected all income groups but households grouped in Rs 3,000 were affected more as inflation was 15.26 percent, followed by 14.73 percent for Rs 3,000 to Rs 5,000 and 13.29 percent for Rs 5,000 to Rs 12,000 income groups. The inflation was 10.08 percent for above Rs 12,000 income group.

There is no let up for the poor as increase in prices of essential commodities has made their life miserable that also forced the government to revive three decades old ration cards scheme to provide at least some relief to low income groups.

The SPI bulletin, based on data of 53 items collected from 17 urban centres, showed increase in prices of 24 essential commodities, decline in 8 while prices of 21 commodities remained stable, yet higher as compared to last year.

The 24 essential commodities which registered increase in their prices included vegetable ghee being sold at Rs 123.03 per kg after an increase of about Rs 5.75 in a week, cooking oil 2.5 kg being sold at Rs 332.88 after an increase of about Rs 13, vegetable ghee 2.5 kg being sold at Rs 326.76 after an increase of Rs 10 while per kg moong pulse washed during the week under review increased to Rs 53.61 from Rs 52.11, bath soap Rs 18.8 from Rs 18.41, masoor pulse washed to Rs 87 from Rs 76.23, mustard oil to Rs 135.52 from Rs 132.60, milk fresh to Rs 30.26 from Rs 29.79, rice basmati broken to Rs 37.25 from Rs 36.74, mutton to Rs 238.70 from Rs 236.34.

The prices of bread plain, tea, kerosene, gram pulse washed, rice irri, wheat flour average quality, red chillies and mash pulse washed and firewood also registered an increase during the week.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*FDI during 2006 up by 136.5 percent over 2005: ADB *​ 
ISLAMABAD (March 01 2008): The net inflow of foreign direct investment (FDI) into Pakistan increased by 136.5 percent in 2006 as compared to 2005, which placed Pakistan ahead of India where FDI grew by 79.9 percent in the same period. The FDI in Sri Lanka grew by 92.7 percent, said ADB's South Asia Economic Report.

The Bank said that South Asia could become one of the most attractive foreign direct investment (FDI) destinations in developing Asia, but the region will have to improve its business climate and build investor confidence to its full potential.

Liberalised policies, increasing private sector participation, and regional trade agreements have resulted in improved FDI inflows to South Asia. However, the level of FDI in South Asia is still low compared to other Asian sub-regions, the reason being poor infrastructure, restrictive labour policies, weak regulatory framework and rampant corruption.

"Increased foreign investments in South Asia would promote further regional integration and globalisation further," said Kunio Senga, Director-General, ADB South Asia Department. "FDI has the potential to provide great business opportunities to foreign companies while helping develop domestic economies."

At the country level, macro-economic and political stability, appropriate regulatory policies, and infrastructure development are needed to increase FDI, according to the report, the third in a series of biannual reports on economic and development issues in South Asia.

Regionally, harmonised cross-border regulations, including a unified customs system, would facilitate the flow of people and goods and make investing in the region more attractive, it said.

In developing Asia, inflows of FDI, or the foreign acquisition of at least 10 percent of a firm's assets, have risen tremendously, largely due to the liberalisation of investment policies and the lowering or removal of capital controls and other investment barriers.

In South Asia, FDI has been increasing rapidly since 2004. In fiscal 2006 alone, FDI inflow touched $24.3 billion, a 132.9 percent increase than 2005 and the highest FDI growth rate in recent years. This is in sharp contrast to the dismal FDI performance in the region during the early 2000s.

India is by far the leading host country for FDI in South Asia. It received around $19.4 billion in fiscal year 2006, or about 79.9 percent of total regional FDI. India's dominance is, in large part, due to the size of its economy, the largest in the region. However, India's policy reforms geared toward liberalisation also played an important part.

Other countries in the region that also fared well in attracting more FDI in fiscal 2006 were Pakistan and Sri Lanka, with FDI growth of 136.5 percent and 92.7 percent, respectively. Nepal, however, suffered net FDI outflows.

"Pakistan, the second largest economy in the region, has great potential to further improve FDI inflows, and FDI will play an important role in Afghanistan's economic growth," said Juan Miranda, Director General, ADB Central and West Asia Department.

The major source countries of FDI in South Asia are predominantly in developed regions - North America and Western Europe. But other important FDI sources are East Asia and the Middle East.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*German seed firm to help boost sugarbeet yield: MoU with Parc signed ​* 
ISLAMABAD (March 01 2008): A memorandum of understanding (MOU) was signed between Pakistan Agricultural Research Council (Parc) and German-based seed company, Strube-Dieckmann, here on Friday to promote sugarbeet production. Sugarcane is high delta crop and consumes a large quantity of irrigation water.

So, the government has decided to introduce sugarbeet to minimise the area under sugarcane without affecting the sugar production. The main purpose of this collaboration is to study the feasibility of growing sugarbeet to increase sugar yield and supply, bringing down its price, to investigate the potential of sugarbeet cropping pattern of Pakistan, particularly in crop rotations with the local farmers in selected regions of Pakistan, to investigate the opportunity to extend the milling season of sugar mills by processing sugarbeet before and after sugarcane milling; find local and exotic solutions in beet production for agronomy; sowing and harvesting processing and educate farmers and industry with the benefits of growing and processing sugarbeet.

It is to be noted that Pakistan is rapidly becoming the water-deficient and major impact of it is on the production of crops. To mitigate this situation, different options are being considered.

Pakistan programmes for lining the watercourses and a large project of the Ministry of Food, Agriculture and Livestock (Minfal) setting up high efficiency irrigation systems are macro-level steps to promote crops yields.

Under the MoU, Strube-Dieckmánn will provide Pakistan high yielding sugarbeet with more sugar recovery germplam and varieties with a package of technology. Parc will test these varieties in different environments of Pakistan and indigenous package will be developed.

The ceremony was attended by Parc Chairman M.E. Tusneem, member, Plant Sciences Division (PSD) Dr lftikhar Ahmad, member, ASD Shahana Urooj Kazmi, Co-ordinator, Sugar Crops Dr Muhammad Zubair and Deputy Director of PSD Nasir Mahmood Cheema.

Business Recorder [Pakistan's First Financial Daily]


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## mujahideen

33 projects worth Rs42.8bn approved

_By Our Reporter_

*ISLAMABAD, March 1:* The Central Development Working Party (CDWP) of the Planning Commission on Saturday approved 33 projects worth Rs42.8 billion.

The CDWP took the decision at a meeting held with Deputy Chairman Planning Commission Dr Akram Sheikh in the chair.

Briefing reporters after the meeting, Planning Commission spokesman Muhammad Arif Sheikh said that 12 projects worth Rs36.8 billion would be placed before the Executive Committee of the National Economic Council (Ecnec) for approval. These projects included 16 infrastructure development projects, costing Rs37.4 billion and 17 social sector projects worth Rs5.4 billion.

About Rs18.9 billion would be spent on 11 projects in Sindh. The cost of two of the projects worth Rs800 million would be shared by the federal and Sindh governments on the 50:50 basis while one of the projects worth Rs5.1 billion would be financed by the Sindh government.

An amount of Rs15.5 will be spent on two umbrella projects to be financed by the Earthquake Reconstruction and Rehabilitation Authority in the Bagh and Rawalakot areas of Azad Kashmir.

Twenty-seven projects costing Rs20.9 billion will be financed by the federal government. One of the three projects to be initiated in Punjab -- technical assistance loan to the Lahore Rapid Mass Transit System costing Rs500 million -- will be financed by the Punjab government.

The approved infrastructure schemes include six energy-related projects.

About Rs970 million, with a foreign exchange component of Rs179 million, will be spent on 132kv sub-stations in Gwadar while Rs1.108 billion, including Rs126 million in foreign exchange, will be utilised for inter-connection of nine independent power producers with the national grid. An electricity distribution and transmission improvement project in Multan will cost about Rs195.606 million, including Rs122.715 million in foreign exchange.

Sustainable development programme for energy, efficiency, conservation and renewable resources will cost Rs53.710 million with a foreign exchange component of Rs26.770 million.

The development and operation of a test-pit in the leased area comprising Block-II of the Thar Lignite Resource in Sindh will cost Rs1.24 billion, including a foreign exchange component of Rs930 million, while Rs490.48 million will be spent on the national power system expansion plan. Its cost includes Rs318.94 million in foreign exchange.

In the transport and communication sector, over Rs7,834 million has been set aside for the rehabilitation of the railways assets damaged during riots after the assassination of PPP chairperson Benazir Bhutto. The conversion of 135km Mirpurkhas-Khokhrapar metre-gauge railway line into broad-gauge up to the Indian border will cost more than Rs1.885 billion. An estimated amount of Rs974 million will be spent on water and power divisions flood protection projects.

In the social sector, over Rs205 million will be spent on restructuring of the Pakistan Institute of Development Economics. Another Rs360 million has been set aside for monitoring projects financed by the Public Sector Development Programme.

33 projects worth Rs42.8bn approved -DAWN - Top Stories; March 02, 2008


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## mujahideen

Budget deficit widens to Rs 356b

_SHAHBAZ RANA_

*ISLAMABAD  *Contrary to official estimate to restrict the fiscal deficit at 4 per cent of GDP by June 30, 2008, Pakistans budget deficit has widened to 3.6 per cent of GDP during first-half year (July-December 2007-08).
Summary of Fiscal Operations, a copy of which available with TheNation, shows that during the first half of the financial year 2007-08, the economic managers remained unsuccessful to contain the deficit despite the repeated rhetoric to meet desired targets.
The government ended up at 3.6 per cent dearth that is near to the annual target and is more than the first-half year projection. For the first six months the deficit was estimated at 1.9 per cent of GDP or Rs 190.68 billion.
In absolute terms the deficit remained at Rs 356.321 billion. The total income during the under review period stood at Rs 625.591 billion whereas the total expenditures recorded at Rs 981.912 billion.
According to the budget documents, Shaukat Aziz-led economic team projected fiscal deficit at Rs 398.73 billion or 4 per cent of GDP. The government estimated total revenue at Rs 1475.909 billion and total expenditures at Rs 1874.672 billion.
The government has been missing the projected fiscal deficit all the way from the first quarter to onwards. In terms of GDP, the budget deficit in first quarter ballooned by 1.6 per cent of GDP against the projection of one per cent.
The principal reason behind the widening deficit - dwindling current expenditures because of high administrative cost, domestic debt servicing and subsidies provided on oil, electricity and some of the food items.
Recently the caretaker government raised oil and electricity tariffs by over nine per cent citing soaring budget deficit. However, many economists raise questions over the duplicity of official economic management. On one hand the government shifts the burden of oil prices and other key household items onto common people while the Presidency spends Rs 2 million on per night stay in a luxurious hotel in London.
There are millions of poor chaps here who do not have three times meal despite the unprecedented economic growth of the past eight years, says an angry common man.
Of the total expenditures, the government spent Rs 756.2 billion on current expenditures and spending for the development purposes stood at Rs 221.2 billion. The federal share from the total expenditures of Rs 981.92 billion was Rs 559.17 billion while remaining Rs 196.97 billion were the provincial portion. 
A break-up of the current expenditures depicted that a major chunk of Rs 208.79 billion was utilised for servicing of domestic debt. The government has fixed an amount of Rs 318.2 billion in the budget for domestic debt servicing. In addition, an amount of Rs 28.93 billion spent on servicing of foreign loans. 
The government incurred expenditures of Rs 22.8 billion on allowances and pension, Rs 45.3 billion on grants and Rs 47.62 billion on other General Public Services. Under the head of Economic Affairs an amount of Rs 50.95 billion was utilized.
These two heads, Grants and Economic Affairs, indicate towards subsidies. The government allocated Rs 37.9 billion for grants for the whole year but surpassed the estimate in just six months.
The second major chunk of the current expenditures utilised for Defence. An amount of Rs 131.82 billion was spent for Defence Affairs and Services. The total Defence budget is estimated at Rs 275 billion. On Public Orders and Safety Affairs the expenditures stood at Rs 11.82 billion.
The bifurcation of revenue showed that of the total Rs 625.6 billion, an amount of Rs 450.7 billion was of tax collection and Rs 174.9 billion of non-tax revenue. The federal share in tax revenue stood at Rs 432.52 billion out of which the FBR contribution was Rs 431.8 billion.
In order to fill the budget deficit, the government borrowed Rs 286.65 billion from the domestic sources and an amount of Rs 68 billion got from the external sources. The contribution of privatisation proceeds was Rs 1.65 billion. Of the domestic borrowing Rs 228.6 billion were obtained from commercial banks and Rs 58 billion from non-bank sources. 

The Nation


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## mujahideen

Demutualisation to deepen stock market

JAVED MAHMOOD talks to Muhammad Sohail Dayala, CEO, Invest and Finance Securities Limited to look into the current trend and future of Karachi Stock Exchange and its demutualization
Q: What would you suggest to further deepen stock market?
A: The demutualization process of stock exchanges should be completed as soon as possible. The [a1]Members of Karachi Stock Exchange are keenly waiting for the demutualization of the KSE. Because the demutualization of KSE would help the Members [a2]to attract more investment and deepen the stock market. 
Q: What benefit KSE brokers would get from demutualization?
A: Each and every Member[a3] of the KSE would get shares keeping in view the evaluation of the KSE Membership[a4]. The demutualisation plan allows the Member[a5]s to offer 40 per cent shares against this Membership [a6]of brokerage [a7]t[a8]o foreign strategic [a9]investors and can also off-load 20 per cent shares in the shape of the Initial Public Offering. The sale of shares to foreign investors in the wake of demutualization would pave way for easy cross-border listing, adopt the new products [a10]especially at Dubai and other international stock exchanges.
Q: What is the latest status of the demutualization plan?
A: The Demutualisation Ordinance is lying with President Pervez Musharraf and we are hopeful that after the formation of new government, the required legal formality for the demutualisation would be fulfilled.
Q: What next benchmark do you foresee for the KSE? 
A: After recent elections the Karachi Stock Exchange has been performing well. The elections proved peaceful against the speculations of attacks, bombings and clashes and this development has infused a new spirit into the stock market.
Another positive development for stock market is that the foreign investors are once again investing at market. After the gruesome murder of Benazir Bhutto on December 27, 2007, the foreign investors pulled out their investment from the Special Convertible Rupee Account (SCRA) which turned into negative. But after elections the countrys stock market is again receiving the portfolio investment. Resultantly, the KSE-100 index had set a new record by excelling 15,000 points barrier on Tuesday. I believe that the prices of most of the equities are still far below their earnings[a11] depth [a12]and potential. If the coming government continues the business and investment friendly policies, the KSE-100 index has potential to hit 17,000 to 18,000 points benchmark. Because the PE ratio in Pakistan is still much lower than other[a13] the[a14] regional Stock Markets countries stock markets[a15]. 
Q: What is the proportion of foreign investment at stock market?
A: During the past few years the foreign investors have invested a huge amount of 10-12 billion dollars at stock market through Foreign direct investment and Special Convertible Rupee Account [a16]. This investment is not being reflected through the Special Convertible Rupee Account (SCRA), [a17]but the total foreign investment at stock market is within the said range.
Q: Does foreign investment make any impact on stock market?
A: During the past few years a chain of mutual funds and other investment institutions has strengthened the local investment capacity and deepened the stock market. Had the chain of mutual funds not been in place, the stock market could have faced the worst-ever crisis after the gruesome murder of former prime minister Benazir Bhutto. Although the foreign investors ejected their portfolio investment, but the local investors continued to maintain their stake and took fresh positions when equities prices became attractive.
Q: What would be the benefit of future trading of KSE index?
A: The future trading of KSE index would be another important and interesting option of trading at stock market for speculators and it would increase the depth of the market. There is a dearth of derivatives products at the stock market. For example, the Islamic financial institutions do not have products to offer at the stock market. 
The SECP and the KSE are working on some derivatives products to be introduced for trading at stock market in future. I think the future trading of the KSE would be a good omen for the stock market and it would separate the speculators and the investors. 
Q: What would be the new CFS limit? 
A: The Securities and Exchanges Commission of Pakistan is introducing CFS M-II from April this year. The CFS M-II would pave way for the availability of an unlimited amount of money. At present the upper CFS limit for KSE is Rs 55 billion and whenever the CFS hits its upper limit, the Karachi Stock Exchange experiences a slowdown in trading volume and investment. However, after the implementation of the CFS M-II from April, the stock market is expected to experience a new lease of life with the abundant availability of investment by the financial institutions.
Q: What is your assessment about the margin financing? 
A: I will hold banks and some brokers responsible for the failure of the margin financing scheme. The banks strict procedure of documentation flopped the scheme as the small brokers are unable to fulfill the documentation requirement.
Q: You advice to investors!
A: Before buying shares of any company, the investors should carry out research about the pros and cons of the company, where they want to invest their hard-earned money. Instead of seeking tips and making investment on speculations, the investors should go deeper and find out the fundamentals of their selected companies that would save them from sustaining losses and ensure some financial benefit. 

The Nation


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## mujahideen

Maintenance of law and order and good governance must for the industry

ASHRAF JAVED talks to Iftikhar Ali Malik, countrys leading businessman, and Former President of Federation of Pakistan Chamber of Commerce and Industry
As the top political parties are actively holding joint meetings across Pakistan to farm a coalition government to resolve all the disputes, to make the institutions strong and independent and to strengthen the democracy in Pakistan, the business community is expecting a safe and business-friendly environment in Pakistan to boost the countrys economy.
The businessmen want good governance, better law and order situation and security of infrastructure in Pakistan as according to them the political instability always leads to economic turmoil. Mostly the industrialists and businessmen consider Feb 18th elections as free, fare and transparent and hope that holding of elections in peaceful atmosphere in the country will lead to economic stability.
Money Plus talked to Iftikhar Ali Malik, countrys leading businessman, and Former President of Federation of Pakistan Chamber of Commerce and Industry (FPCCI) and asked what would he suggest the new government to improve the countrys economy?
Mr Iftikhar Ali Malik, who is also Vice President of SAARC Chamber of Commerce and Industry, was very hopeful that the new government has the potential to pull out the country from the ongoing energy crises. He also demanded that the policymakers must take all the stakeholders into confidence during policymaking.
Mr Iftikhar Ali Malik, who is the Chief Executive of Guard Group, says that the country is passing through a very crucial period. A number of irking problems are at national horizon. All the political parties should burry their differences, and ensure harmony to reach a consensus. Let all the organizations; give the opportunity to work within their prescribed legal framework without any interference or hindrance. Army, judiciary, news media, parliament and senate all should be made to work with due regard to the national interest, solidarity and harmony.
He said private sector consists of experienced, well-travelled, well-educated, committed and reasonable businessmen. They are the real ambassadors of the country. They earn through foreign trade by spending finances from their own pockets. He was of the view that synergies of this sector should therefore, be used to develop economy through soliciting their views, honouring their suggestions and making policies by taking them into confidence.
He said that the private sector gained confidence through the support of trade bodies  which are democratic institutions of Trade & Industry. It is therefore suggested that trade bodies be invariably involved in the process of formulating economic and trade policies particularly about imports & exports and industrial development.
Our country is facing an acute shortage of energy this time. Load Shedding adversely affects the production activity. Unless energy sources are developed, manufacturing cannot work to its capacity. Energy from coal could be produced because Coal is abundantly available in Pakistan and these sources should be explored, as is being done in USA, Germany and India. Gas is equally important. Import from Iran should be finalized on urgent basis and further exploration activities should be encouraged. Hydro-electricity is cheaper and in this regard, the construction of new dams should be given top priority.
He argued that the institutions, which could impart technical education according to the international standard, should be encouraged. And there is a dire need to establish such more institutions to fulfil the requirements of the industrial sectors. This can be done very easily because Pakistan is a land of opportunities, Ali Malik added. 
There is an argent requirement to upgrade these institutions as well along with setting-up new institutes, which could prepare skilled manpower to operate modern high-tech plants. 
Our present transportation system is inadequate and expensive as well. It is estimated that the imported consignments carry less shipping freight as compared to the freight from Karachi to Northern parts of the country. Present transport system must be streamlined and updated on fast and economical lines. New roads should also be developed as the economy expands. Good roads save the wear and tear of the long vehicles and save transportation time. The increase in population and the migration of labour from villages to cities also demands that the Railways should be modernized and its network should be extended to industrial cities. Agriculture in Pakistan has extensive scope to feed the population and add to export. 
The Agriculture so far has been our mainstay. The majority of the population is residing in villages and is also dependant on agriculture. It is therefore suggested that comprehensive planning should be made keeping in view the yield per hectare of all the crops, which should be increased by introducing mechanized farming, certified seeds varieties. 
The water supply should also be ensured and the forthcoming water shortage should be met through improved irrigation. The Agro-based Industry should be developed to add value to the agriculture produce both in grains, fruits and vegetables. He also said that smuggling of food grains to Central Asian countries must be checked.
Mr Iftikhar Ali Malik said that textile industry is still contributing over 60 per cent to exports. Textile sector is again our mainstay in exports but the value addition in this sector is low as compared to the international standards. It is heartening to note that the Government and Textile Industry are endeavouring to bring improvements. However, the development of ancillary industry could support the textile sector in many ways, for example our garments have a share of 1.5 per cent in the international trade, which is at the bottom even among the Asian countries. The percentage of exports by Bangladesh is over 3 per cent and by India over 5 per cent. We should concentrate on adopting the brand names and new designs through franchise or joint ventures in garments industry and other textile products, Mr Ali Malik maintained. 
He said that the industry in Pakistan is easy to spell but difficult to develop. The poor law and order always scares the foreign investors. Moreover, political uncertainty could not attract the investors in the industry having long gestation period. 
He said that in order to boost the industry to create new employment opportunities and to enhance the ratio of value addition some innovative steps are needed, which could attract technology and investment. To me personally, he said, the brand culture should be encouraged because without this culture the stability and continuity in exports cannot be achieved. The assemblers of auto vehicles are not patronizing the Local Vendor Industry. They generally resort to imported parts although these could be manufactured locally according to the quality required by the assemblers in Pakistan. It is true that the Deletion Program cannot be implemented in the wake of TRIMS, however, assemblers could be advised to patronize the Domestic Vendor Industry of the host country on moral grounds and facilities available. Vendor Industry has invested billions of rupees on capital and labour. It should not go waste. Smuggling and under invoicing must be checked in this regard.
The Industry cannot work without power/energy. The Government should make immediate arrangements to add new sources of energy to the present system in order to meet the increasing requirements of energy for the Industry. Now there is no room for slackness. 
Deficit is our permanent feature of fiscal policies for the last years, he said. Pakistan has always been subject to budget deficit, trade deficit, investment deficit and low savings. Therefore, all efforts of improvement have failed. The main reason seems we do not work on war footing to resolve the problem. Trade deficit cannot reduce unless we concentrate on export of non-traditional items, export of value added items and diversification of markets.
Exports cannot be increased until we produce more to export. Increase in industrial production besides other factors depend on electricity. Have we developed energy resources sufficient to meet domestic demand, he questioned? 
Our leaders kept on crying but they never took the initiative to add to the existing energy resources. New energy resources should be developed without further delay. 
Iftikhar Ali Malik further suggested that food governance is vital not only for administration and maintaining public order but also for business as well. 
The good governance always enhances the efficiency of government departments and ensure peaceful environment for conducting business. It should be the order of the day, providing freehand the people to adopt professions of their own choice and pursue economic activities fearlessly. Main emphasis should be on maintenance law and order and removal of public grievances as regard to various government, semi government departments and cooperation. 

The Nation


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## Neo

*Entertainment sector gets industry status ​* 
LAHORE (March 02 2008): The federal cabinet has granted status of industry to the Entertainment sector comprising studios, production and animation houses. Federal Caretaker Industries, Production and Special Initiatives Minister Salmaan Taseer said in a press briefing held here at the Small and Medium Enterprises Development Authority (Smeda) on Saturday.

Federal Industries Secretary Shahab Khawaja, Smeda CEO Shahid Rashid, Jamshed Zafar, Usman Peerzada, Ms Shireen Pasha, Mekal Hussan, Noorul Hassan and a number of the stakeholders from the entertainment sector were present on this occasion.

The minister said the cabinet, on a recommendation by the industries ministry, had allowed duty-free import of the equipment to be used by entertainment industry. The ministry, in consultation with the stakeholders, would prepare a list of such equipment that would be submitted with the Federal Board of Revenue (FBR) to get a formal SRO released in this connection, he added.

Taseer also said the government will facilitate the entertainment sector to build necessary infrastructure, conduct focused research and expand the skill base through training and house incubation facilities, and power tariff of the entertainment sector would also be taken up separately with Nepra to reduce the cost of entertainment business.

The minister regretted that country's entertainment industry had been plagued by a number of ills, most of them chronic in nature and difficult to eradicate in short run. Given the significance of the sector both in the context of promoting much needed social tranquillity and economic well being of the people associated with it, he said the federal government stands committed to playing a facilitating role in developing the entertainment sector.

Salman Taseer said in 2006, the entertainment industry stood at an estimated $1.45 trillion with a Compound Annual Growth Rate (CAGR) of 7.3 percent to reach $1.9 trillion by 2009. He praised Smeda for conducting a series of meetings with stakeholders of the entertainment sector to prepare phased short to long-term Entertainment Industry development strategy.

It identified several growth barriers with a detailed course of actions to overcome the challenges. Several consultative sessions with the industry key stakeholders were held recently, he said, adding that the proposals emanating from the consultations were presented to the Economic Co-ordination Committee (ECC) of the Cabinet on January 12, 2008.

The ECC has granted approval to the first set of proposals presented by the Ministry of Industries, Production & Special Initiatives, which include declaring the entertainment sector an industry and allowing zero-rated import of the equipment to be used by this industry.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Challenges for the new government​*
The new governments economic managers may hold the key to its success or failure. Inflation, energy crisis, and stagnant exports would need immediate attention. While there is a tendency to look at the economic issues in isolation from politics, the economic policy would need heavy engagement from the new leadership. It will need to demonstrate that it has the capacity to take bold and imaginative decisions.

The new leadership may not have the luxury of any honeymoon period and is likely to face not only a rough ride but also the risk of the bureaucracy or former World Bank types would drive its policy and ensure its failure.

Pakistans major economic issues are usually cited as inflation, energy crisis and the growing current account deficit. This is deceptively simple. While energy crisis is a huge issue and no quick fixes are possible (except import of electricity and oil from the Gulf countries and Iran at favourable terms), inflation and current account deficit represent symptoms not causes.

Low agricultural productivity, narrow tax and export bases, trade policy distortions, and big governments non-development expenditure are among the major reasons why the government has not been able to address these issues for a number of years. While the media, government and the opposition talk a lot about inflation, there is little discussion on its causes and remedies. One reason is the absence of quality research in our business and academic institutions and lack of meaningful and substantive debate in public forums.

Take, for instance, the issue of food inflation. The last years GDP growth of seven per cent was helped by a five per cent growth in the agriculture sector, which accounted for 20.9 per cent of the GDP. However, the growth in the crops sub-sector (which accounts for only 47.9 per cent of the agriculture sector, the livestocks share being 49.6 per cent) masks the fact that the (i) 7.5 per cent growth in major crops was from a low base as prior years growth was negative and (ii) the minor crops grew by only 1.1 per cent during 2006-07.

However, going beyond a single years production data, the last seven years record indicates more fundamental and structural problems with the growth trend of the agricultural crops. The production of cotton, wheat, rice and sugar cane grew by a yearly average of 1.63, 1.23, 0.59 and 1.87 per cent respectively during the seven years from 1999-2000 to 2006-2007 and was below the estimated average population growth of 2.2 per cent or so during this period. An examination of a sample of the production of other agricultural produce reveals similarly low and volatile rates of growth.

The government needs to pay immediate attention to food crops production. The international price of rice and wheat has doubled in the past year while freight costs have also increased sharply on the back of rising fuel prices. International food prices are rising on a mix of strong demand from developing countries; a rising global population; more frequent floods and droughts caused by climate change; and the bio fuel industrys appetite for grains, analysts say. Soya bean prices on February 22nd hit an all-time high of $14.22 a bushel while corn prices jumped to a fresh 12-year high of $5.25 a bushel.

Given the soaring food prices worldwide, the most immediate decision it may have to make is about the issue of procurement price of the next wheat crop. The caretakers have fixed a price of Rs510 per/40 kg but this is too low and should be at least Rs800/kg otherwise this may not be enough to encourage the farmers to grow more wheat due to escalating prices of food crops and inputs.

Another issue is rural poverty - an area where the PPP would need to deliver to keep its vote bank. It is a common misconception that the improvement in agriculture alone holds the key to lift rural population out of poverty. Not entirely! Let see why? Rural population accounts for 70 per cent of the total and 80 per cent of Pakistans poor live in the rural years.

Agriculture (including both crop and livestock production) accounts for only about 40 per cent of rural household incomes and the poorest 40 per cent of rural households derive only about 30 per cent of their total income from agriculture.

The new government must undertake massive infrastructure, particularly in water and transportation, investments to benefit the rural areas besides taking steps to solve high quality seeds, fertiliser and related issues to attack poverty and increase incomes in rural areas. A key to improving crop yields would be modern technology with a special emphasis on growing high-yielding varieties of grains by encouraging free flow of technology transfers and investments from countries such as the United States, China, India and Mexico.

Massive infrastructure investments in the rural areas may sound counter-intuitive to some but the fact is fiscal deficits are not necessarily harmful. However, they can be deadly if they are used to finance wasteful spending rather than productive investments. We have been guilty of big government and wasteful spending. This brings us to the most immediate and pressing issues of inflation and fiscal deficit. The situation calls for a holistic approach involving a comprehensive reorientation of fiscal and trade policies:

(a) from protectionism and big government to fair competition and less government in areas where it is least effective or non-productive; and (b from consumer-led growth to exports-led growth

To rationalise the fiscal regime, the government must (i)allow duty free import of all food items to lower inflation as a short-term measure and make increase in crop yields a top priority, (ii) increase taxes on non-productive areas (such as imports of cars) or those not under the tax net to reduce deficit, (iii) cut taxes on productive areas (e.g. manufacturing) to boost production and exports, and (iv) eliminate guaranteed profits to oil companies to lower or minimise increase in oil prices, and (v)last but no less important, undertake rightsising of the bureaucracy.

Fiscal incentives and lower energy costs would give a shot in the arm to the industry to increase exports. The removal of restrictions/lowering of tariffs on food imports would help lower overall inflation through more supplies and perhaps lower costs. Cutting the overall deficit through new (or higher) taxes would also lower government borrowings and interest rates but that effect will not be felt until after 18 months or so.

The areas where tax policy needs a review include: (a) a cut in income tax rates for the public listed companies (excluding financial sector) to 15 per cent, (b) increase in income tax rates for the banking industry, (c) imposition of income tax on trading income from stocks (d) imposition of tax on capital gains from land and property, (e) withdrawal of blanket exemption to all income from agriculture regardless of income level, etc.

The government should also rationalise payroll and sales taxes for public listed companies because levies such as Employees Old Age Benefits do not profit the workers. Instead, the government should encourage stock options and direct cash compensation to allow the benefits to flow through to the employees. In this respect, the government while doing away with schemes that are de-facto indirect taxes, should increase the minimum wage to Rs8000 per month.

In the arena of monetary and foreign exchange rate policies, the government needs to replace borrowings from the State Bank with market instruments, allow the exchange to be determined by market forces and phase-out subsidised lending schemes prone to abuse.

The measures suggested here are just some examples but illustrate and underscore the need for a qualitative change in policies rather than the so-called continuity that has failed to deliver. Agriculture, energy, and exports-led growth should be the top priorities of our economic policy if serious economic disruptions are to be avoided in the coming months and years.

To implement this three-pronged strategy, we need policy changes that would send a clear message to local and foreign investors that the new government means business.

Challenges for the new government -DAWN - Business; March 03, 2008


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## Neo

*Economic agenda: taking businessmen on board​*
CORPORATE Pakistan has found the outcome of elections 2008 somewhat unsettling. Many business leaders were still in the process of digesting the popular mandate. Commenting on the outcome of the polls they dressed their disappointment in a veil of surprise.

Except for a bunch of private sector notables who have close association with the winners, the big business class was generally apprehensive. They were closely monitoring the post election political developments to fathom the contours of the evolving scene. They have sensed some realignment in power construct and were nervous at the prospects of readjustment and a cost it could entail. For them, it was too early to come forward and take a position.

When contacted most leaders avoided to offer comments off hand. They did come back with their measured responses. Informally they explained that reservations of their community are not rooted in pathological hatred towards a political set-up. It was, they said, based on their past experiences which unfortunately cannot be recounted fondly. Their experience tells them that elected governments are comparatively unstable, unpredictable and less business-friendly.

Some expressed reservations on the credentials of the leadership of political parties and did not see them as honest people committed to what they consider to be the guiding principle of any government: a neutral promoter of trade and business to achieve the growth and development objectives.

Post-election scenario is not instilling confidence in business. Everything is up in the air. No one knows which way it is going to bend. A lot of people have started shifting their money out for they do not foresee stability under a coalition of unnatural partners, a young dynamic corporate manager told Dawn on the condition of anonymity.

The parliamentary system is not suited to our psyche. Many smaller countries in the region (Singapore, Malaysia) do not have parliamentary democracy but they are progressing at enviable pace affording a standard of living that matches with the most advanced developed countries. President Musharraf should have used the time he had to introduce presidential form of government to put all political elements at rest and to allow the space to the private sector to prove its worth, said another top notch businessman.

They were banking a bit too much on Musharraf. The business will have to adapt itself to the changing realities. They need to take a long-term view and abandon their habits of looking for shortcuts. They must give the political setup a fair chance, Sardar Rahim, a businessman and a well known PML-N leader, responded to Dawn.

The perception of business is largely based on one-sided propaganda. We need to leave our past behind and look forward to meet challenges ahead. The perception that PML-N is inclined towards fundamentalism is incorrect.

We have come a long way since IJI. Same is true for PPP which no more adheres to Maoist image or the ANP that has nothing to do with Russia or communism anymore. The world has changed and so have we, he retorted when the business communitys reservations were spelt out.

Iqbal Bengali, the ex-president of American Business Council, a powerful grouping of companies, sounded positive with an effort. Whoever forms the government has experience of the past and we are hoping that the focus of the next government would be on economy and reforms. Yes, there is a fair amount of uncertainty currently. We will wait and see how the next government turns things around, he said.

The big boys of business who have been the principal beneficiaries of the last government were more anxious as compared to the average medium and small businessmen. They tried to pretend to be neutral towards PM office. They were not ready to come on record but said that their chief concern was that the change be peaceful and stability and continuity should be ensured.

There were no evidence to back up the impression but some talked of currency transfers abroad over the last few weeks. You will not be able to find evidence because there is none. The parallel economy is twice the size of formal economy that works totally independent with its own sets of unwritten rules without any book keeping. When the money is not accounted for its transfer can never be traced, a business leader in know of things told Dawn.

Politics is not our domain but the last government was accessible. The fear is that given a chance the politicians will again keep us out of their sight and mind, said another businessman.

No matter how short-sighted and self-centered, the country needs its business class the way it needs its toiling masses and professionals. The political parties would not be able to deliver no matter how hard they try if the huge community of businessmen is not taken on board when deciding the economic agenda.

For development the country needs industrial expansion and boost in commercial activities The next government will need an innovative approach to earn the trust of the entire business community without conceding to the demands of the renter class.

The biggest test of the next government would be how it handles the challenge of distributive justice without scaring away the entrepreneurs.

Economic agenda: taking businessmen on board -DAWN - Business; March 03, 2008


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## Neo

*Encouraging horticulture in NWFP​*
IN spite of immense potentials for horticulture, the area under fruits in the NWFP has not been increased because of lack of incentives and limited technological advancement made so far in this field.

The province has an ideal environment for growing fruits like apple, citrus, guava, apricot, peach, plum, loquat, persimmon, melon etc., which apart from meeting domestic demands, offer great potential for export.

The ecological zoning of the province indicates that every zone has different environment, where different varieties of fruits can be grown. The northern and hilly areas of Malakand region are suitable for high quality apple, peaches, walnut, citrus etc. The plain areas comprising Peshawar valley are ideal for plum, almond, loquat, while the Dera Ismail Khan region is suitable for dates and melons. But the area under fruit is shrinking gradually.

Agriculture Statistics of Pakistan shows that area under fruit in NWFP has shrunk from 47,059 hectares in 1999-2000 to 46,803 hectares in 2005-06, a decline of 256 hectares.

Fruit farmers claim that this has happened mainly because of the government policies revolving around field crops like wheat, cotton etc, with very little attention towards horticulture.

They say that public sector institutions responsible for promotion of horticulture are unable to develop new cost-effective varieties of fruits. The problem is further compounded by the lack of modern technology.

A horticulture expert Ikramullah Khan says old varieties of fruits need to be replaced by internationally accepted ones. The need for internationally certified varieties has increased following the introduction of World Trade Organisation (WTO) regime, where every nation has to secure quality certification.

He suggests that a committee of experts be formed to list new varieties of tropical, sub-tropical, and temperate fruit crops and nuts for different ecological zones as well as identify modern nurseries around the globe. Likewise, horticulturists with knowledge of latest technology and field experience be made available to the farming community at district level.

Since land is limited and population is growing, availability of land for agriculture/horticulture is gradually being reduced. Now, it is time to turn to high-density horticultural farming with drip irrigation system. This can save over 50 per cent of available water and enhance the income manifold, he explains.

Model farms should also be established at various places throughout the province in different ecological zones and the government departments should train the farmers with modern technologies.. He also advocates for affordable credit to farmers at the right time and declaring horticulture as special crop at least for the next two decades.

Special credit lines should be extended by all banks at exactly half the current interest rate for building cold chain, grading and packing facilities for fruits, and portable equipment for taking out field heat at the farm level. Equipment needed in horticultural development should also be exempted from import duty.

Despite witnessing an overall decrease of 256 hectares, the performance of various fruits has improved.. The total apple production in NWFP was up from 1,01,686 tons in 1999-2000 to 1,26,666 tons in 2005-06. Guava production increased from 30,780 tons to 43,164 tons during this period. Similarly, production of peach increased from 14,489 tons to 51, 591 tons.

Officials and farmers say this happened mainly because of growers facilitation programme launched by the government and international donor agencies particularly in the Malakand region.

The areas which lacked government help had poor crop output. For example, citrus production dropped from 39,693 tons in 1999-2000 to 37647 tons in 2005-06, plum from 39,194 tons to 33,108 tons and apricot from 19,949 tons to 18,311 tons.

Researchers in different public sector organisations have different story to tell, as they advocate a multi-sectoral strategy for promotion of horticulture in NWFP. They say research organisations have produced a number of new varieties and are providing constant guidance to the farming community.

But lack of latest equipment, outdated farm management and poor marketing facilities are the factors which keep the farmers away from investing time and money in the horticulture sector.

Ghulam Nabi, a research officer at the Agriculture Research Institute Tarnab, explains that the research bodies in Frontier Province particularly the Tarnab farm have developed hundreds of new varieties of various fruits.

It was because of the efforts of researchers and other allied bodies of public sector which had increased the area under fruit from 26,400 hectares in 1989-1990 to 46,800 hectares in 2005-06, and enhanced fruit production from 2,93,500 tons to 5,19,100 tons during the same period, he says.

However, fruit production improved only in Malakand region where special attention was paid towards apple, peach and apricot production, he said.

The Peshawar valley is ideal for sub-tropical fruits, but farmers here are more interested in field crops, which comparatively involve less labour and are cost effective as compared to fruits.

He says that government has model farm houses at different places, where farmers are trained to produce the developed varieties, but it has been observed that the farmers do not want to invest in new varieties and prefer investment in old ones.

Plantation of new varieties, he explains, needs at least five to six years to mature and most of the farmers cannot afford such a long time to wait and hence their option is for old varieties.

Poor orchard management is also one of the major issues, which contributes substantially to decrease in areas under fruit in NWFP, and the farmers find guidelines expensive because it involves measures to prevent fruit tress from various diseases, he said.

Things can improve if the government pays special attention to horticulture by providing subsidies and facilities for better marketing of their yield.

Encouraging horticulture in NWFP -DAWN - Business; March 03, 2008


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## Neo

Viability of the Thar coal mining company​
On February 8, the President gave a fresh go-ahead signal to embark on exploiting potential of huge Thar coal (lignite) resources for power generation, this time taking the government of Sindh on board on the issue of tariff.

Under the new strategy, the government-owned Thar Coal Mining Company (TCMC) has been activated for the purpose of supplying coal to the prospective Independent Power Producers (IPPs).

As early as in April 2006, the government had decided to unbundle Thar coal integrated projects into mining and power generation, and to set up a coal mining company in the public sector. The formal approval to form the company, at a cost of Rs260.70 million, was accorded in September/October 2006. But it was only in February 2007 that an initial paid up capital of Rs250 million was approved for the TCMC.

There was no progress for another a year and the government announced the company formation again in July 2007 for which allocation of Rs241 million was made in October 2007. Sadly, the TCMC is still on papers and nothing concrete has been done to launch it. The government is yet to finalise companys financial and administrative structure and appoint its chief executive officer.

The proposed company will be responsible for coal mining, handling, transportation and introducing advanced coal mining and refining technology on the basis of the study carried out in 2004 by Rheinbraun Engineering of Germany on a block of 100 square kilometres of Thar coalfields.

In the first phase, a modern mine with an annual output of six million tons of coal would be developed to cater to fuel requirement of a 1,000 MW power plant. The capital cost of developing such a mine is estimated to be around $1 billion, whereas total investment of $4 billion is required to undertake full-scale coal mining at Thar. Nonetheless, the TCMC is being established with an investment of $ 500 million, possibly with public and private shareholding, governments share of equity being even less than $70 million.

The government is setting up the company on the premise that an integrated mining-cum-power generation project, of the size of 1,000 MW capacity, involves major investment (in the range of $ 1.50 billion) that may not attract the potential IPPs. The fact is that the concept of integrated mining-cum-power generation project has already gained response pursuant to the Power Policy 2002. The Chinese and the American investors were interested to make investments of this size and both made reasonable expenditure to undertake studies and due diligence, though the respective integrated projects of 600 MW and 1,000 MW did not materialise eventually. Lately, two integrated projects, each of 1,000 MW capacity, have been sanctioned and mining lease granted to Pakistani sponsors who are seeking partnership with foreign investors and coal mining companies, while another couple of projects are in pipeline.

Indeed, the development of an integrated mining-cum-power generation project is a complex and arduous process posing a number of implementation issues and technical problems. But establishing the company may not be the solution, due to a variety of reasons. First, to start operations, the company immediately needs capital that may not be made available under the circumstances, as the government is facing financial burden and unable to keep development budget to the required size. Total PSDP allocation for 2007-08 to the projects of the ministry of petroleum and natural resources is said to be Rs928.10 million. Government of Sindh will have minor share holding in the venture.

Funds from the international donor agencies will not be forth-coming soon either, as efforts have not been made to seek funds for which lot of preparatory work is needed on the part of the government and process is time-consuming. China was offered in November 2006 to become equity partner in the TCMC, but there has been no positive response so far.

The government also had plans to induct the private sector that has not yet come forward primarily due to peculiar characteristics of the project and risks involved in coal mining. Furthermore, the National Coal Policy is not yet in place, which would govern investment and technology transfer in the coal-mining sector. The policy is under compilation and to be launched earliest by December 2008. Under the circumstances the government may resort to raising loans, but then the company will kick-start with weak financial health and would not be able to deliver.

Second, the company would have to build management and technical capacity and capability over a period of time if international companies are not engaged as partners from the inception, as originally conceived. Reportedly, the National Logistics Corporation (NLC) will be a major stakeholder which in turn will appoint coal geology and mining specialist companies to manage the TCMC. The company is thus likely to prove to be a non-starter since the NLC has no experience, expertise or qualification in the field. The country has no experience of employing advanced mechanised coal mining and lack human resources.

Third, the company has to provide guarantees to the IPPs for regular and continuous supply of coal. This cannot be done unless the company starts its commercial operations that were scheduled by 2012. Consequently, the coal supply agreements between the TCMC and the IPPs cannot be concluded until then.

The most critical aspect of the option will be that of the government or the power purchaser would have to face the risk of failure in coal supply to the IPPs at any given time, as applicable in case of gas- or oil-based thermal power plants. In case the company takes off as planned, it will also have a negative impact on the on-going progress of the two integrated projects already sanctioned. Obviously, the respective sponsors of these projects would like to wait and see what would be most attractive option for them---to develop an integrated project or only a power generation project---depending on price at which the TCMC would market coal. In any case, tariff issue will come up once again. The end result will be further delay in harnessing the Thar coal potential.

It is pertinent to mention that experience of setting up a coal mining company has not been successful in recent past. Lakhra Coal Development Company Limited (LCDC) was established in 1990, with paid up capital of Rs50 million, as a joint venture of the Pakistan Mineral Development Corporation, Wapda and the Government of Sindh, to develop Lakhra coalfields and to supply coal to 150 MW coal-fired power plant at Khanot, District Dadu. After 17 years of its operations the LCDC could develop only 43 coal producing mines out of a total of 149 mines that cover, in total, an area of over 32 square sq. km. with proven coal reserves of 40 million tons.

Support infrastructure including water, electricity, rail/road networks and telecommunication is available in the area since long, and a large number of foreign consultants and agencies were contracted, from time to time, to carry out feasibility studies for mining and/or power generation at Lakhra. The long list of consultants includes the Chinese, the Polish, John T. Boyd & Co, Gilbert Commonwealth International Inc, JICA, USAID and others, who produced voluminous bankable documents.

Yet the company meets optimally 60 per cent of the total current requirements of coal for the power plant that too has been operating at much below its installed capacity. According to the mine design and plan prepared by the LCDC it was to produce 750,000 tons of coal annually, whereas it produced in recent years a maximum of 273,303 tons (in 2001-02) and a minimum of 166,330 tons (in 2006-07). LCDC is already on the active privatisation list and likely to be divested along with Wapdas power station as a package.

Lakhra coalfields cover total area of 67-sq. km, has total indicated coal reserves of 1,328 million tons and total mine-able coal reserves of 305 million tons. In contrast, Thar coalfields are about 9,000-sq. km. and has reserves of 175.50 billion tons, including 2.70 billion tons of measured reserves. If the LCDC at much smaller scale could not achieve its objectives, how can one reassure the investors that the super mega TCMC would meet their requirements fully and timely?

In final analysis, instead of going for a mining company, it becomes imperative for the government to qualify sponsors with strong technical and financial credentials to develop integrated mine-cum-power generation projects, ensuring economy of scale, mine efficiency and safety, operational reliability, pollution control and advanced mining and clean coal technology. The key world-players like Mitsui & Co of Japan and AES Corporation of the USA are willing to invest to the tune of over $1 billion each to set up the respective 1,000-1,200 MW integrated power plants based on imported coal and developing its related infrastructure. Why then should it not be possible to attract foreign investors to develop integrated power plants based on indigenous coal, which are technically and financially feasible?

The exploitation of immense wealth of Thar coal resources, which may last for centuries, will remain a distant reality if the present pace of work on the Thar Coal Mining Company is any indication. National Energy Security Plan has set a target of adding 19,910 MW coal-based power generation capacity to the existing installed total capacity by the year 2030. In the first phase, coal-based power generation of 900 MW was to be attained by 2010, to be followed by an additional 3,000 MW by 2015. Given the present conditions, achieving these targets seems unrealistic.

Viability of the Thar coal mining company -DAWN - Business; March 03, 2008


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## Neo

*Economics and voter rationality​*
Usually, it is the impact of politics that is gauged on economic outcomes. Elections 2008 in Pakistan demonstrate the impact of economics on politics and electoral outcomes. Since the bulk of the population is poor, the poor and the illiterate have spoken. The previous government did nothing to ameliorate their lot. The low and the middle income classes also spoke. They were also getting poor with a growing sense of deprivation than was the case in the past.

The two segments voted in favour of the opposition parties, regional and ethnic vote notwithstanding. So, other than ethnic/regional considerations, the illiterate and the low-income educated voted pretty much similarly. They voted in favour of parties expected to heed the sighs of the commoners groaning under the pressure of ever-rising price spiral and other economic woes. What were the economic factors that topped the agenda and, amongst other factors, drove voting behaviour this time?

Top of the agenda was the steep rise in the market prices of sugar, wheat, edible oil, milk, and vegetables that, in turn, fed into a price spiral. Consumers had to substitute expenditure on other items with that on inelastic basic food items. Wheat/food price increase also has a ratchet effect on the overall price level. The income effect of rising prices left all those poorer whose wages are either not indexed to inflation or are indexed to the official rate of inflation when actually experienced inflation is higher. While the consumers were getting poorer, suppliers of basic food items with inelastic demand became richer. Increase in food prices cannot be explained away by rising international food prices. There was a dynamic process- very domestic in nature-- that led to the fiasco within the country. Hoarding was reported in both sugar and wheat but could not be nabbed for political reasons. Export of wheat was allowed by the then prime minister Mr Shaukat Aziz on the basis of wheat output claims that were later found to be inaccurate as also accepted by him in a recent interview in London.

Smuggling across the borders could not be controlled. This administrative weakness resulted in a further rise in domestic wheat price and government failure to arrest wheat flow across the borders. Political and administrative handicaps combined as well as corruption left the consumers hapless. As the consumers became poorer, there were tall claims made of poverty reduction that smacked of a rising intellectual poverty.

The above clearly indicates why corruption would not be a differentiating feature in elections 2008. For, many may succumb to it. The disadvantaged cannot, therefore, be held responsible for inducting the former accused or maligned back into the formal system when the system was not free from these tendencies even during the tenure of the previous PML(Q) government. A difference, however, is with regards to its scope and scale.

Under the last government, it was a very wide segment of the population that experienced the effect of corruption and maladministration and on a scale that wholesome food on the mat was virtually and actually snatched away significantly, if not fully. This is a situation very hard for the affluent to comprehend who can see corruption at only the macro level but not at the millions of micro household levels who stood virtually robbed.

So, the deprived used their good judgment to vote back the ones who never were food snatchers. They actually always took a humane view of the plight of the deprived. Also, the massive job losses that resulted from the previous governments privatisation policy would swing the vote away from the incumbents to those who attempted to guard the jobs even in the event of privatisation.

The right to eat and the right to work needed to be restored ; something that was not expected of the incumbents as they would always turn a deaf ear to the complaints and the concerns of the ordinary. It is the ordinary whose turn it was to decide at the polling booth. And, they gave a verdict in favour of the ones who had not been so harsh with them in the past. This is voter rationality that needs to be understood in context.

Added to it was the usurpation of a whole bunch of basic human rights that even the dispassionate observers found totally unacceptable. And the voters together turned the tables on the incumbents to reclaim their basic economic and other human rights.

Voting is based on expectations. The party/group voted into office is expected to deliver on the issues faced by the people. They are expected to try hard to live up to the expectations of the people in the interest of their own re-election if not in the true interest of the people. That is why, democracy is considered to be the best bet. According to a Greek philosopher, democracy is not the best form of government but it is the government that works best. According to him, best form of government is intellectual aristocracy. But, the intellectual aristocrats are not inclined to rule.

So, those who are not intellectual aristocrats must put their heads together to decide and let people be the judge of who will decide for them. Worst-case scenario then is a bunch of decision-makers who are self-appointed or manipulated into offices. Such are not the true representatives. They may even put their heads together in virtual isolation of the society. This is the worst case scenario that a relatively fair popular vote saves the people from.

So, knowing the ground realities, it is not the perfect that is sought through the electoral process. But, what is sought is a move away from what is very imperfect to what would be less imperfect. An attempt is made to have the immediate woes, economic and otherwise, redressed. It is thus a shift from a situation in which the woes stood compounded to a situation in which the intensity of the hardships is expected to be reduced.

It is, therefore, also a shift from a government that would not lend its ears to the one that is sure to lend its ears to the most pressing issues as it would be democratically elected. The attempt of the electorate is to have representation, at least, on those serious issues that went entirely unrepresented thus far. Voting behaviour is thus driven by rational considerations. It would be highly irrational to again vote in the incumbents who failed the electorate on more counts than one.

Economics and voter rationality -DAWN - Business; March 03, 2008


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## Neo

*Pakistan worlds second in developing CNG infrastructure ​*
ISLAMABAD: Owing to price differential between CNG and gasoline, the CNG has brought investment of more than Rs 45 billion during the last five years.

According to Oil and Gas Regulatory Authority (OGRA), the CNG sector has shown tremendous growth as more than 1,080 operative CNG stations were set up in the country bringing investment of more than Rs 45 billion. Over 1,450 CNG stations were operating in the country while about 900 were at various stages of completion.

During last financial year, the authority issued an additional 2,218 licences for construction of CNG stations, which means further investment of about Rs 28 billion is in the pipeline. Pakistan has taken a lead role in developing CNG infrastructure and at present, it is second in the world after Argentina.

In 2005-06, total number of operational CNG stations was 965, which increased to 1,450 in last year thus showing growth rate of 50 per cent and similarly CNG vehicles rose to 1,200,000 with growth rate of 20 per cent in the same period. 

Daily Times - Leading News Resource of Pakistan


----------



## Bushroda

*Pakistan takes baby steps to filmdom*
*Reverses embargo on Indian films*

By PATRICK FRATER
Variety, CA

Pakistani cinema is entering the international age with moves to normalize the country's own movie industry and the reversing of a 43-year embargo against Indian films.
Caretaker minister for industries, Salman Taseer on Saturday announced that the entertainment sector has been granted 'industry status' following a decision by the Cabinet.

Spanning studios, production companies and animation, the status is intended to allow the sector to build infrastructure, conduct research and engage in training schemes.

"Duty-free import of equipment related to this industry will also be allowed," he said.

Industry status may also allow normal financial interaction with other parts of the economy. Neighboring India's granting of industry status eight years ago foreshadowed bank lending and outside financial investments in the sector and a modernization boom.

Taseer said Pakistani entertainment could expect to grow by an annual 7% following the reclassification.

"A notification allowing (Indian) imports is expected anytime," said Jamshed Zaffar, chairman of the Pakistan Film Producers' Assn. Other sources reported that government intends to allow 12 Indian films per year.

There have been signs of thawing in cinematic relations with India. High- level political intervention led to the screenings of "Mughal-e-azam" and "Taj Mahal" (both revolving around Muslim emperors of their shared history) to raise funds for earthquake relief.

And for the past three years Pakistan has allowed limited import of Indian films, such as "Bride and Prejudice" and "Goal," that were principally shot outside India.

"Indian films allowed entry since 2004 were those shot on third-country locales and brought here as foreign films. The new regime will do away with these restrictions," Zaffar said.

Pakistan has its own Urdu-language movie industry based in Lahore, which is inevitably nicknamed Lollywood, and its own stars. But Pakistani cinema has dwindled under pressure from intense piracy, cable TV and lack of investment in theatrical circuits.

Lobbying by exhibitors for a reversal of the 1965 ban on Indian films, is both an acknowledgement that video copies of Bollywood movies are widely traded on the black market and a move to drive revenue through Pakistani turnstiles.

Exhibitors urged Indian rights owners to be cooperative, rather than conquering. Day-and-date releasing either side of the border has best chance of B.O. success, but because of limited screen numbers, releases are unlikely to be wide.

The thawing relations look set to go both ways. The first commercial release of a Pakistani film in several decades is set for March 28. Helmed by Shoaib Mansoor Pic, "Khuda ke liye" (In the Name of God) focuses on the rift between radical and liberal versions of Islam. With a cameo role by veteran Indian thesp Naseeruddin Shah pic was a hit in Pakistan last year and previously showed at the Intl. Film Festival of India. India has 140 million Muslims, the largest religious minority.


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## Neo

*800MW to be available by year-end: PEPCO MD ​* 
Tuesday, March 04, 2008

KARACHI: The national power grid would have an additional 6,000MW of electricity by December 2010 to meet the growing deficit but till then the country has to adapt itself to ways of conservation, a seminar on power crisis was told here on Monday.

At least 500MW would be available with WAPDA by the end of this year as rental power plants come online along with 300MW achieved through rehabilitation, Munawar Baseer Ahmed, Managing Director, Pakistan Electric Power Company (PEPCO) informed the participants.

Private sector has failed to come with any new projects, he said referring to the lacklustre response of investors to the idea of Independent Power Producers (IPPs). We could not wait and have decided to set up power plants in the public sector.

The government finally relaxed its position on keeping the power generation in the private sector and last January signed an agreement for a 450MW Nandipur power plant, the first public sector project in the past 17 years. It had approved setting up of 2,000MW in the public sector.

Rental power plants are a stopgap measure and cannot be relied upon beyond three-year period for economical reasons. Baseer, the former MD of Sui Southern Gas Company (SSGC), said future projections show that reliance on natural gas for power generation would persist. With IPI pipeline not happening, no work on gas pipeline from Turkmenistan and LNG project stalled, we are in a serious crisis.

He said policy planning has gone terribly wrong regarding low utilization of coal reserves for power generation. Regulatory framework is out of focus. Nepra and Ogra should restructure themselves as facilitators.

Though he stressed that the power shortfall has not assumed status of a crises, advice was for industry and public at large to try conserving sources of energy to avert a crisis. Excluding Karachi, shutting off billboards, unnecessary streetlights and other means was saving 600MW said Baseer. 

CEO KESC Mohammad Amjad said that demand for electricity was increasing at a rate of 8 percent per annum in Karachi. A project of 220MW was coming up at Port Qasim while work on two power projects will start by end of this month and two more in July this year. They will be completed in July 2009.

He said the utility will likely face a shortage of 300MW in the coming summer, but this will be met with the availability of additional power from KESCs own refurbished units. Stefan Hatt, Vice President ABB, which had organized the seminar, said that Pakistan needs to go for gas-fired power plants which are economical and needs lesser time for commissioning.

Farhat Ali, CEO of ABB, said power equipments were in short supply the world over and countries like Pakistan were finding it hard to purchase new power plants. Government must also focus on improving the transmission and distribution system, he added. 

800MW to be available by year-end: PEPCO MD


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## Neo

*India agrees to remove hurdles to Pak exports: official ​* 
*Pakistan exported 230,000 tonnes of cement to India in past five months​*
Tuesday, March 04, 2008

NEW DELHI: India has agreed to remove obstacles in the way of Pakistans exports in a minimum possible time, Pakistan Commerce Secretary Syed Asif Shah said and added cement exports to India have registered manifold increase over the last six months.

Talking to newsmen after the third meeting of the SAFTA Ministerial Council held here on Monday, Shah said during the last five months, Pakistan exported 230,000 tonnes of cement to India which would further increase as India had given clearance to 17 cement manufacturers.

Two more trains to carry cement to India had been added in addition to the existing one train per day while this frequency would be increased to five trains a day, he said and added Pakistan had already upgraded trade facilities at Wagah border with parking facilities to over 300 trucks.

The secretary said Pakistan had provided a list of 20 items to India to facilitate their exports. India assured of taking positive decision in a couple of months. Similarly, the committee constituted by India to remove barriers on exports to Pakistan would also submit its report soon.

He said during his meeting with Indian counterpart Pillai, it was also decided to complete modalities to increase trade volume and to reduce trade imbalance between the two countries. The Indian side had assured that temporary space will be provided for facilitating loading/unloading Pakistani goods on the Indian side at Wagah border. India had planned to invest Rs1,500 million to develop infrastructure at Wagah for which the land had already been acquired. 

Shah said on his return he would visit Wagah border to see for himself the existing trade facilities on both sides and what could be done in future. He would submit a report to the government and a copy of which would be given to the Indian side. He said Pakistan had great potential to increase trade volume with India as garments, food items, electric fans, carpets, surgical instruments and pharmaceuticals could find way into Indian markets.

India is expected to hold a Pakistan-specific exhibition Made in Pakistan in October here in which Pakistani exporters would exhibit their products. When asked on the outcome of the third meeting of SAFTA Ministerial Council held on Monday, he said there was complete consensus to move forward on the South Asian Trade agreement which was beneficial to the people of South Asia.

The recent initiative to conclude SAFTA Agreement in Trade in Services was a step in the right direction. He said it was decided that member states would forward their proposals to the SAARC secretariat on modalities to be adopted for reduction of the sensitive lists by May 31 for consideration at the next meeting.

The SAFTA Committee of Experts which held its meetings here before the ministerial meeting constituted a sub-group to identify non-tariff measures being maintained by member countries in trade restive manner. 

India agrees to remove hurdles to Pak exports: official


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## Neo

*Bad weather affects 20pc gram crop ​* 
Tuesday, March 04, 2008

ISLAMABAD: Inclement weather, particularly the frost in February, has affected 20 per cent of the gram crop, reveals an official report.

The Ministry of Food, Agriculture and Livestock (MINFAL) has forecasted a decrease in area and production of the crop by 8 per cent and 20 per cent respectively, according to a report prepared by it and submitted to the Federal Food Committee (FFC) on the latest crop situation in all the four provinces.

The gram production during the year 2007-08 is expected to be around 608,000 tonnes against last years production of 838,000 tonnes. The consumption of gram in Pakistan is nearly 550,000 to 600,000 tonnes annually and the Pakistan Agriculture Storage and Supplies Corp (PASSCO) had stocks of 75,000 tonnes from the last crop.

The government had imposed a ban on the export of the commodity to other countries in order to stabilise its prices in the local market, as they touched an all-time high.However, due to the imposition of export ban, the country not only loses international buyers but its prices also fell in the local market.

The report said that an overall decrease of 19.5 per cent is expected in the production of gram in all the four provinces during the harvest of the 2007-08 crops. Punjab, which contributes nearly 90 per cent to the production, is facing a decrease of about 30 per cent.

Sindh is expecting a 22 per cent decrease, NWFP has estimated 10 per cent and Balochistan has anticipated a 17 per cent decrease in the production of gram because of a severe grip of weather during the month of February, it said.

In Punjab, the sowing of gram recorded an increase of 2 per cent in area but the chilling temperature minimized the prospect of the increased area and now the crop is estimated to be around 518,000 tonnes.

The rest of the three provinces are also expecting decrease in their production as Balochistan is expected to produce 25,000 tonnes, NWFP 19,000 tonnes and Sindh 45,000 tonnes during the harvest of 2007-08 crop.

Bad weather affects 20pc gram crop


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## Neo

*PIA losses shoot up to Rs13.3bn ​* 
Tuesday, March 04, 2008

KARACHI: Pakistan International Airlines (PIA) on Monday announced that its losses for the first half of fiscal year 2008 increased by 4.7 per cent to Rs13.3 billion from Rs12.7 billion suffered in the same period of previous year. 

While net revenues for six months (July-Dec 2007) were stagnant at around Rs70.4 billion, operational cost decreased by 4.3 per cent to Rs66 billion from Rs69 billion, taking up the gross profit for the period to Rs4.2 billion from previous years Rs704 million. 

Other expenses including administrative expenses increased by Rs1 billion to Rs11.1 billion from Rs10.1 billion, but real battering came in the shape of huge financial cost, which swelled by 51 per cent to Rs7.1 billion from Rs4.7 billion. 

Current ratio worsened to 0.2 from 0.4 as current liabilities increased and current assets went down. The results have been approved by the board, chaired by outgoing Chairman Zaffar A Khan who announced his resignation last week.

PIA losses shoot up to Rs13.3bn


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## Neo

*Four offshore petroleum exploration licences granted ​*
ISLAMABAD: The federal government on Monday executed offshore petroleum exploration licences to Government Holdings (Pvt.) Limited (GHPL) and signed production-sharing agreements with GHPL and Niko Resources Limited (Niko) over four blocks.

The new blocks included (1) Offshore Indus North (No. 2466-7) covering an area of 2466.24 sq. kms, (2) Offshore Indus X (No.2465-3) covering an area of 2482.83 sq. kms, (3) Offshore Indus Y (No.2465-4) covering an area of 2482.33 sq. kms and (4) Offshore Indus Z (No.2466-6) covering an area of 2489.49 sq. kms. These blocks are located in the Arabian Sea. 

The minimum financial commitment for these blocks is $32.8 million. The company, however, plans to invest more than $200 million subject to availability of viable structures after conducting seismic survey.

The execution of the new production sharing agreements forms an integral part of the governments drive to attract investment in the oil and gas sector and boost Pakistans economy by substituting imported oil and gas with indigenous supplies. To meet this objective, the unexplored offshore region is being given special emphasis where an oil and gas discovery can provide a major impetus for attracting new investments significantly affecting exploration landscape of Pakistan. 

The government is making all out efforts to enhance oil and gas exploration activities through investment friendly policies. Therefore, in order to provide further incentives Petroleum (Exploration & Production) Policy 2007 has recently been promulgated, which is rated as one of the best policies in the region.

M/s Niko is a Canadian company, which has considerable successes in the sub continent being the joint venture partner in a very big discovery made in India during 2002, which is expected to commence production of around 2 billion cubic feet gas per day in 2008. M/s Niko has multiple exploration discoveries and production in India and Bangladesh.

The execution ceremony was witnessed by Ahsanullah Khan, Minister for Petroleum and Natural Resources and Shaukat Hayat Durrani, Additional Secretary, P&NR, Ms Marilyn Denton, Senior Trade Commissioner, Embassy of Canada and other government officials. 

The Exploration Licences and Petroleum Sharing Agreements were signed by Parrakh Qayyum, Secretary, Petroleum and Natural Resources, Mohammad Naeem Malik, Director General Petroleum Concessions, Jehangir Khan Sr. Joint Secretary/Managing Director GHPL, and William T. Hornaday, Chief Operating Officer & Director, Niko. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan has weak travel & tourism regulatory framework​*
ISLAMABAD: Pakistan has been ranked at 103 out of 124 countries around the world, underlining a weak travel and tourism regulatory framework, low prioritisation of the industry by the government, low effectiveness of marketing and branding and a constricted tourism perception. 

These facts and figures were revealed by the World Economic Forums Travel & Tourism Competitiveness Report 2008 (TTCR), which highlighted the competitive advantages and disadvantages in Pakistans tourism and reinforced the importance of environmental sustainability.

Some of the other competitive disadvantages for Pakistan include the poor tourism infrastructure such as provision of competitive hotel rooms (110), available ATMs accepting Visa cards (110), the national and cultural resources (96) and the prevailing security situation (106) among 124 countries.

Despite showing many competitive disadvantages in the travel and tourism industry, Pakistan ranked well on the air (40) and ground transport infrastructure (39). The price competitiveness in the industry maintains a very viable position based on the low fuel price level (23), purchasing power parity (25) and the extent and effect of taxation (33). Pakistan will, however, like many other countries needed to focus on the sustainability of its natural environment.

The data for Pakistan has been prepared based on a combination of data from publicly available sources, international travel and tourism institutions and experts as well as the results of the executive opinion survey, which was carried out last year by the Competitiveness Support Fund (CSF) in Pakistan.

Arthur Bayhan, Chief Executive Officer of the CSF shared that CSF, being the partner institution of the WEF in Pakistan, was deeply engaged in the issues of competitiveness and was working with both the public and private sector as well as the academia in Pakistan to improve the global ranking of the country. He shared that the Executive Opinion Survey was a major component of The Global Competitiveness Report, which is published each year by the WEF. 

CSF further shared that it is currently working on preparing the second State of Pakistans Competitiveness Report for 2007-08. This report is a deeper reflection of the Global Competitiveness Report and will provide a snapshot of the strengths and weaknesses along with key positive and negative trends in the national economy, as well as regional competitiveness trends in each of the provinces.

The report helps Pakistan in measuring the factors that contribute to developing the weak travel and tourism industry and also demonstrates the importance of supportive business and regulatory frameworks, coupled with world-class transport and tourism infrastructure with a strong focus on developing human and natural resources. 

The TTCI measures the factors and policies that make it attractive to develop the weak travel and tourism sector in various countries.

Daily Times - Leading News Resource of Pakistan


----------



## Neo

*Ethanol fuel can save country $500m: PSMA​*
KARACHI: Chairman, Pakistan Sugar Mills Association (PSMA) Punjab Zone, Chaudhry Zaka Ashraf has asked the government to introduce ethanol as alternate fuel, which can significantly help the country reduce its import bill to around $500 million in oil. 

Speaking at a press briefing here on Monday he said a lot of time has been wasted in going ahead for alternate fuel based on local raw material especially sugarcane molasses. 

Molasses is a by-product of sugar and is mainly exported outside the country at lower rates. Therefore, it does not help much the country economically in improving balance of trade. But, he said, if it is processed and refined in to ethanol it can significantly help the country in reducing its import bill. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*PTA to support Connect Pakistan 2008​*
KARACHI: Pakistan Teleco-mmunication Authority has confirmed its support for the 3rd Information & Communications Technology Exhibition & Conference that is scheduled from May 15 to 17 at the Karachi Expo Centre. 

Moreover, Chairman PTA, Major General Shahzada Alam Malik (Retd) also confirmed his visit during the show. The exhibition organised by Pegasus Consultancy will host over 100 local and international companies. Around 7,000 trade and industry professionals from Korea, China, Malaysia, Singapore, UAE & other neighbouring countries are also being invited to visit the show. 

In this context, the event is bringing an exclusive display of emerging technologies one to one business meetings, workshops and seminars, leadership awards, roundtable session, networking dinner and the Telecom Day Celebrations.

Daily Times - Leading News Resource of Pakistan


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## Neo

Neo said:


> *Pakistan has weak travel & tourism regulatory framework​*
> ISLAMABAD: Pakistan has been ranked at 103 out of 124 countries around the world, underlining a weak travel and tourism regulatory framework, low prioritisation of the industry by the government, low effectiveness of marketing and branding and a constricted tourism perception.
> 
> These facts and figures were revealed by the World Economic Forums Travel & Tourism Competitiveness Report 2008 (TTCR), which highlighted the competitive advantages and disadvantages in Pakistans tourism and reinforced the importance of environmental sustainability.
> 
> Some of the other competitive disadvantages for Pakistan include the poor tourism infrastructure such as provision of competitive hotel rooms (110), available ATMs accepting Visa cards (110), the national and cultural resources (96) and the prevailing security situation (106) among 124 countries.
> 
> Despite showing many competitive disadvantages in the travel and tourism industry, Pakistan ranked well on the air (40) and ground transport infrastructure (39). The price competitiveness in the industry maintains a very viable position based on the low fuel price level (23), purchasing power parity (25) and the extent and effect of taxation (33). Pakistan will, however, like many other countries needed to focus on the sustainability of its natural environment.
> 
> The data for Pakistan has been prepared based on a combination of data from publicly available sources, international travel and tourism institutions and experts as well as the results of the executive opinion survey, which was carried out last year by the Competitiveness Support Fund (CSF) in Pakistan.
> 
> Arthur Bayhan, Chief Executive Officer of the CSF shared that CSF, being the partner institution of the WEF in Pakistan, was deeply engaged in the issues of competitiveness and was working with both the public and private sector as well as the academia in Pakistan to improve the global ranking of the country. He shared that the Executive Opinion Survey was a major component of The Global Competitiveness Report, which is published each year by the WEF.
> 
> CSF further shared that it is currently working on preparing the second State of Pakistans Competitiveness Report for 2007-08. This report is a deeper reflection of the Global Competitiveness Report and will provide a snapshot of the strengths and weaknesses along with key positive and negative trends in the national economy, as well as regional competitiveness trends in each of the provinces.
> 
> The report helps Pakistan in measuring the factors that contribute to developing the weak travel and tourism industry and also demonstrates the importance of supportive business and regulatory frameworks, coupled with world-class transport and tourism infrastructure with a strong focus on developing human and natural resources.
> 
> The TTCI measures the factors and policies that make it attractive to develop the weak travel and tourism sector in various countries.
> 
> Daily Times - Leading News Resource of Pakistan



*Pakistan at 103rd on tourism index​*
ISLAMABAD, March 3: The World Economic Forum (WEF) on Monday launched its annual Travel and Tourism Competitiveness Report 2008, in which Pakistan ranked at 103 out of 124 countries because of having a weak travel and tourism regulatory framework and low prioritisation of the industry by the government.

Pakistan also did not have effective marketing and branding strategies and at the same time it was facing a constricted tourism perception.

Some of the other competitive disadvantages for Pakistan include the poor tourism infrastructure such as provision of competitive hotel rooms (110), available ATMs accepting Visa cards (110), the national and cultural resources (96) and the prevailing security situation (106) among 124 countries.

Despite showing many competitive disadvantages in the travel and tourism industry, Pakistan ranked well on the air (40) and ground transport infrastructure (39). The price competitiveness in the industry maintains a very viable position based on the low fuel price level (23), purchasing power parity (25) and the extent and effect of taxation (33).

Pakistan, will however, like many other countries need to focus on the sustainability of its natural environment, the report said. It highlighted the competitive advantages and disadvantages in Pakistans tourism and reinforces the importance of environmental sustainability.

The report provides a cross-country analysis of the drivers of competitiveness in travel and tourism, providing useful comparative information for making business decisions and additional value to governments wishing to improve their travel and tourism environments.

The data for Pakistan has been prepared based on a combination of data from publicly available sources, international travel and tourism institutions and experts as well as the results of the Executive Opinion Survey, which was carried out last year by the Competitiveness Support Fund (CSF) in Pakistan.

Pakistan at 103rd on tourism index -DAWN - Business; March 04, 2008


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## Neo

*11 percent rise in foreign investors' profit repatriation ​*
KARACHI (March 04 2008): Foreign investors sent $519 million as their profits abroad during first seven months of the current fiscal year as compared to $467.9 million of the corresponding period of 2006-07, depicting an upsurge of some 11 percent.

State Bank's statistics show that profit repatriation by foreign investors registered a significantly increase of $51.4 million during July-January of the current fiscal year. The major share of repatriation was witnessed in the power sector, in which foreign investors have done fresh investment during the last few year due to the power shortage in the country.

During the July-January investors sent some 101.8 million dollars profit from financial sector relative to 82.7 million dollar in same period of last fiscal year, depicting an increased of 23.1 percent during first seven months. Communication sector is the second leading sector with 84.3 million dollars repatriation. However, it is less than last fiscal year.

Foreign investors have sent 17.7 million dollars from food sector, 27.3 million dollars from tobacco & cigarettes, 28.4 million dollars from chemical sector, 50.8 million dollars from oil and gas exploration, 19 million dollars from pharmaceutical and 49.9 million dollars from financial sector.

Sector wise, some 5.8 million dollars was sent from food packaging, 13.8 million dollars by trade sector investors, 10.5 million dollars from transport, 2.6 million dollars fertiliser, 48.2 million dollars from petroleum refining and some 23.7 million dollars in the other sector as repatriation during July-January of 2008.

It may be mentioned here that during the last fiscal year 2007 repatriation showed an increased of 299.8 million dollars or 59 percent to 804.2 million dollars as compared to 504 million dollars in fiscal year 2006.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Rs 579.7 billion collected in eight months ​* 
ISLAMABAD (March 04 2008): The Federal Board of Revenue (FBR) collected Rs 579.7 billion during the first eight months (July-February) of 2007-08 fiscal year against Rs 515.1 billion in the corresponding period of last year, showing an increase of 12.5 percent.

According to the provisional figures released on Monday, the collection during February 2008 was Rs 68.3 billion against the month's target of Rs 68.2 billion as compared to Rs 52.4 billion of February 2007, showing a growth of 30.4 percent.

The monthly break-up showed that revenue on account of direct taxes has risen sharply from Rs 13.8 billion last February to Rs 22.1 billion in February 2008 reflecting a growth of 60.2 percent.

The sales tax collection was Rs 27.2 billion against Rs 23.7 billion of last February showing a growth of 14.7 percent. While sales tax on import stage has decreased by 0.6 percent due to zero-rating of crude oil, the increase in the sales tax on domestic consumption was 35.4 percent. The collection of federal excise duty (FED) was Rs 7.9 billion against Rs 5.6 billion, showing an extraordinary growth of 40.8 percent.

The collection of customs duty was Rs 11.2 billion in February 2008 against Rs 9.3 billion in the corresponding period last year, showing a healthy growth of 19.9 percent. The provisional figure of February is expected to increase during the next few days, the FBR added.

Business Recorder [Pakistan's First Financial Daily]


----------



## Neo

Neo said:


> *Pakistan at 103rd on tourism index​*
> ISLAMABAD, March 3: The World Economic Forum (WEF) on Monday launched its annual Travel and Tourism Competitiveness Report 2008, in which Pakistan ranked at 103 out of 124 countries because of having a weak travel and tourism regulatory framework and low prioritisation of the industry by the government.
> 
> Pakistan also did not have effective marketing and branding strategies and at the same time it was facing a constricted tourism perception.
> 
> Some of the other competitive disadvantages for Pakistan include the poor tourism infrastructure such as provision of competitive hotel rooms (110), available ATMs accepting Visa cards (110), the national and cultural resources (96) and the prevailing security situation (106) among 124 countries.
> 
> Despite showing many competitive disadvantages in the travel and tourism industry, Pakistan ranked well on the air (40) and ground transport infrastructure (39). The price competitiveness in the industry maintains a very viable position based on the low fuel price level (23), purchasing power parity (25) and the extent and effect of taxation (33).
> 
> Pakistan, will however, like many other countries need to focus on the sustainability of its natural environment, the report said. It highlighted the competitive advantages and disadvantages in Pakistans tourism and reinforces the importance of environmental sustainability.
> 
> The report provides a cross-country analysis of the drivers of competitiveness in travel and tourism, providing useful comparative information for making business decisions and additional value to governments wishing to improve their travel and tourism environments.
> 
> The data for Pakistan has been prepared based on a combination of data from publicly available sources, international travel and tourism institutions and experts as well as the results of the Executive Opinion Survey, which was carried out last year by the Competitiveness Support Fund (CSF) in Pakistan.
> 
> Pakistan at 103rd on tourism index -DAWN - Business; March 04, 2008



*Pakistan pavilion at Berlin tourism festival ​*
ISLAMABAD (March 04 2008): Pakistan would showcase it spectacular tourism products at International Tourism Bourse (International Tourism Exchange) to be held in Berlin, Germany from March 5 to 9. Pakistani pavilion to be established at an area measuring 44 sq meters would feature magnificent tourism products of Pakistan to let the world see how fascinating this South Asian country is.

In this connection, a 25-member delegation of Pakistan's tourism experts as well as officials of Ministry of Tourism and Pakistan Tourism Development Corporation (PTDC) headed by caretaker Federal Tourism Minister Barrister Muhammad Ali Saif would also attend the event.

This tourism gala is attended by thousands of participants from over 180 countries the world over. Last year, around 180,000 participants attended it. "This year, we are confident to steal the show given the country's rich potential in its fabulous tourism sector," Mukhtiar Ali Amro, who is Director Media of Pakistan Tourism Development Corporation (PTDC) said here on Monday.

"We'll also seize the opportunity to attract nature lovers around the globe to come and explore the beauty of Pakistan," Mukhtiar said. Pakistan is the cradle of some of the world's ancient civilisation - Gandhara, Indus-and it is home to 5 out of 14 mountain peaks (K-2, Nanga Parbat, G I & II and Broad Peak.)

Besides, vast deserts (Cholistan, Thar, Thal, Damaan) serene valleys, gushing rivers and much more are other glaring aspects of Pakistan tourism. "Tourism could earn billions of dollars for the country if marketed effectively. We are eyeing on this event to boost our tourism," Mukhtiar said. Give away items depicting Pakistan tourism sector would be distributed among foreign tourists at the Pakistan stand.

Other members of Pakistani delegation were: Deputy Managing Director Pakistan Tourism Development Corporation (PTDC) Muhammad Yamin, Public Relation Officer Ministry of Tourism Chaudhry Muhammad Sharif, Direct Media Pakistan Tourism Development Corporation (PTDC) Mukhtiar Ali Amro and Anwar Sajid, tourism officer.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*MNCs to invest $30 billion in diverse sectors: advisor ​*
ISLAMABAD (March 04 2008): The multinational companies have pledged 30 billion dollars for investment in Pakistan's energy and other diverse sectors. This was stated by Amar Lal, Advisor to Prime Minister on Minorities Affairs after a meeting with Canadian Ambassador and political representatives of Germany, Netherlands, Poland and Austria.

The multinational companies of these countries have shown interest to invest in mining of Thar coal project for 3,000 megawatt coal-based power plant, wind energy projects and gas turbines projects. In addition to that, investment would be made for laying gas pipeline and crude oil pipeline from Turkemanistan and Kazakistan, another project of Liquid Natural Gas (LNG) costing 10 Billion Dollars.

It was also discussed to set up three oil refineries, each to produce 100,000 barrels per day, 4 electricity power plants to produce 1000 megawatt electricity at Lahore, Faisalabad, Rohri and Jamshoro. The project to set up three oil refineries at Multan, Karachi and Sukkur was discussed in the meeting.

With mutual consultation, it was also decided to invest in upgrading the education, health and tourism training centres up to international standard to make a joint venture with local and international companies for creating one million jobs in the country and another one million abroad.

Housing schemes will also attract substantial investment as Canadian, American and Abu Dhabi companies have submitted proposals for new housing schemes to be launched on modern lines in the country, Amar Lal said. Those proposals, he said, have been submitted to the Prime Minister.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Canadian firm granted four offshore blocks ​*
ISLAMABAD (March 04 2008): The government on Monday executed petroleum exploration licenses with Government Holdings (Pvt) Limited (GHPL) and productions sharing agreements with GHPL and Niko Resources Limited over four blocks, an official statement said.

The four blocks are Offshore Indus North, covering an area of 2466.24 square kilometres; Offshore Indus "X", covering an area of 2482.83 square kilometes; Offshore Indus "Y", covering an area of 2482.33 square kilometres; and Offshore Indus "Z", covering an area of 2489.49 square kilometres. These blocks are located in the Arabian Sea. The minimum financial commitment for these blocks is 32.8 million dollars.

The company, however, plans to invest more than 200 million dollars subject to availability of viable structures after conducting seismic surveys. The execution of the new production sharing agreements forms an integral part of the government's drive to attract investment in the oil and gas sector and to boost Pakistan's economy by substituting imported oil and gas with indigenous supplies.

To meet this objective, the unexplored offshore region is being given special emphasis where an oil and gas discovery can provide a major impetus for attracting new investments significantly affecting exploration landscape of Pakistan.

The government is making all out efforts to enhance oil and gas exploration activities through investment-friendly policies. Therefore, to provide further incentives, the 2007 Petroleum Policy has recently been promulgated, which is rated as one of the best policies in the region.

Niko is a Canadian company, which has considerable success in the sub-continent, being the joint venture partner in a very big discovery made in India during 2002, which is expected to commence production of around two billion cubic feet gas per day in 2008.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*National grid to have additional 6000 megawatts by 2010-11: Baseer ​*
KARACHI (March 04 2008): The national grid will have an additional electricity of 6,000 megawatts by 2010-11, as a result of new projects in both public and private sector on fast track basis.

This was stated by the Pakistan Electric Power Company Managing Director Munawar Baseer Ahmad while delivering a keynote address at a seminar on "Power situation in Pakistan and role of ABB-as a partner in power generation," organised by ABB Pakistan here on Monday.

He pointed out that the financial close of 15 new projects with a generating capacity of 2,868 MW have been achieved and lot of planning and due diligence was going on in this regard. "In addition, a new 500 MW power project will be ready by the end of this year, while another 300 MW project was being rehabilitated by Wapda," he added.

Baseer said that an open cycle power project of 300 MW was also coming up on fast track basis in the private sector, besides a 700 MW power unit. He specifically mentioned that the government has approved the setting up of power projects with a generation capacity of 2,000 MW in the public sector to overcome power shortage in the country.

He said that KESC has to arrange its own power generation to meet the growing demand for Karachi. Baseer made it clear that there was no agreement between Wapda and the KESC for the power purchase. He said KESC was not able to pay the outstanding amount, which runs into billions of rupees. If we (Pepco) do not get the payment against the supplied electricity, how can KESC expect to get power from us, he noted.

He said KESC also needs to recover Rs 15 billion from government departments and PEPCO arrears are more than that amount. He was of the opinion that Pakistan must increase the share of coal-based power projects in the energy mix. The CEO of KESC, Lieutenant General Mohammad Amjad (Retd) said that demand for electricity was increasing at a rate of 8 percent per annum in the metropolis. He said in the early 90s, KESC used to export electricity to Wapda, which now caters to about 27 percent of KESC's total requirements.

He said that a project of 220 MW was coming up at Port Qasim while work on two power projects will start by end of this month and two more in July this year. They will be completed in July 2009. Responding to a question about electricity shortage in Karachi, he said steps were being taken to overcome this problem with the help of combined efforts.

He said the utility company is like to face a shortage of 300 MW in the coming summer, but this will be met with the availability of additional power from KESC's own refurbished units. He pointed out that distribution network has been improved ahead of summer to further reduce load shedding in the city. Amjad said that line losses have been reduced by 2.5 percent in the last six months and KESC was on target to achieve cut of in power theft by 4 percent in a year's time.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Two new powerhouses to generate 350 megawatts' ​* 
LAHORE (March 04 2008): Two powerhouses, having 350 MW generation capacity, will be completed during the current year at Faisalabad, said Ahmad Saeed Akhtar, Chief Executive (CE), Faisalabad Electric Supply Company (Fesco). He told Business Recorder that 150 megawatt powerhouse is being constructed on Sammundri Road. This powerhouse would be completed in the next couple of months.

Another powerhouse would be constructed on Satiana Road with a generation capacity of 200 megawatt, he said, adding that tenders have been floated for this project which would also be completed by the end of December this year. He said that these powerhouses would supply 350 megawatt electricity to national grid.

He said that a new power transformer is also being installed at Gatti Grid Station, which would be completed by April 2008. This would not only provide relief to the overloaded grid but also help solve the problems of fluctuation and low voltages. He said that a 500 KV transmission line from Gatti to Muzaffargarh has been completed to ensure uninterrupted electricity supply from thermal powerhouses situated in southern Punjab. "This line is expected to become functional in the next couple of months", he added. About load shedding, he said it was well under control in spite of visible gap between demand and supply.

Business Recorder [Pakistan's First Financial Daily]


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## ejaz007

*Leather products show healthy growth*​
RAMZAN CHANDIO
KARACHI-The exports of various leather products showed a healthy growth of 13pc during seven months of current FY08. 
Official data showed that an impressive growth of 37 percent has been witnessed in the export of tanned leather and Pakistan earned $230.72 million dollars in seven months of current FY08 against $167.788 million dollars of same period of last year FY07.
The export of leather manufacturers have remained quite satisfactory and 13 percent increase registered during seven months while country received $371.140 million dollars against $325.598 million dollars of same period of last year.
According to leather manufacturers, the influence of Chinese leather products in the world was main reason behind unimpressive performance of Pakistani leather industry in export. The Chinese products are cheap against our products because Chinese prepared finishing model on machinery. 
The Pakistani leather products are expensive due to higher cost of production in comparison of Chinese and other world; manufacturers said claimed that the Pakistani importers are ill fame in world market and their market credibility was poor. Citing an example of poor credibility of Pakistani leather importers he said usually they not provide products on time which irritate exporters. The load shedding of electricity has hampered the leather industry which also can be other reason of not meeting the promises of orders to provide leather material to foreign parties, said manufacturers.
Another manufacturer was of the view that the poor quality of products could be counted as another reason in the shortfall in the export of leather products. 
An expert said that the rampant discharge of untreated effluents tanneries was a growing problem in PakistanÆs leather industry which also hurt the export business while the increase of tanneries causing severe environmental degradation as the untreated effluent used in the tanning process is released into nearby water reservoirs and the sea. He further said the air pollution is on the rise with the tanneries burning residuals from the tanning process into the atmosphere. 
Leather garments export depicted robust growth of 31 percent during July 2007 to January 2008 while country earned $294.740 million dollars against $224.262 million dollars of corresponding period of last year. 
However, country gained $69.574 million dollars from export of leather of gloves in seven months against $73 million dollars of same period of last year which depicted that 5 percent decrease over last year. While a huge decline of 75 percent witnessed in the export of other leather manufactures and country received only $6.826 million dollars against $27 million dollars of corresponding period of last year. Pakistani manufacturers were of the view that Pakistan imports the finishing and other raw material which used in leather garments and other products and labour capability was also a problem. 

The Nation


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## ejaz007

*Pakistan attends Hanover IT fair*​By Jamal Shahid

ISLAMABAD, March 4: As part of its mission to promote the local IT companies potential in international market, Pakistan is participating in the CeBit Hanover -- 2008 fair being held in Germany.

Local IT companies had been jointly selected by Pakistan Software Houses Association (Pasha) and Pakistan Software Export Board, Oun Ashraf Rana, PSEBs director international marketing informed the media on Tuesday.

CeBit is the worlds largest trade fair showcasing digital IT and telecommunications solutions for home and work environment. The key target groups were users from industry, the wholesale and retail sector, skilled traders, banks, the services sector, government agencies, science and technology.

The fair offered an international platform for comparing notes on current industry trends, networking, and products presentations. CeBit is organised by Deutsche Messe AG every year, since 1986.

Mr Rana said that participation in international trade fairs and exhibitions by local companies was integral part of the government policy. It provided a chance to interact with the world renowned IT companies and executives in order to showcase their IT services potential.

He expressed the hope that the delegation would generate valuable business leads with a high probability of transforming into successful business ventures with the participating companies.

He said that amongst the participating companies, Progressive Systems had expertise in web portal, web applications, enterprise mobile applications development and business intelligence and data warehousing.

The GoodCore Software was providing services for the development of business applications; Xorlogics Inc specialised in database applications and mobile applications, while Server4Sale was a known icon in the area of website hosting services with integration of related applications.

According to Mr Rana, Pakistan has immense potential in IT sector outsourcing services and its participation in the CeBit fair would help increase interaction between the Pakistani companies and international IT firms.

With an IT industry worth more than $2.8 billion, including annual IT exports exceeding $1.4 billion, Pakistan is eyeing to increase the size of IT sector to over $11 billion by 2011.

Pakistan attends Hanover IT fair -DAWN - Business; March 05, 2008


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## solid snake

Has any one noticed slightly better economic headlines since the elections? It is amazing how political instability can cripple an entire economy. Let us hope for better days ahead with improving macroeconomic indicators.


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## Neo

*Foreign companies remit $519m ​* 
Wednesday, March 05, 2008

KARACHI: Profit and dividend sent back by foreign companies rose 11 per cent during the first seven months of the current fiscal year, putting pressure on the rupee.

Latest statistics released by the State Bank of Pakistan (SBP) showed during July-January 2007-08 foreign companies remitted $519.3 million as profit and dividend compared to $467.9 million in the corresponding period of last year. 

Power companies, particularly those Independent Power Producers (IPPs) generating thermal electricity, sent back $101.8 million as profit and dividend compared to $82.7 million remitted in the same period last fiscal.

Communications and IT services companies were at second place, which sent $84.3 million as profit against $102.3 million in the corresponding period of last year. Oil and gas exploration companies were also among major contributors to the outflow as they remitted $50.7 million compared to $23.1 million during the first seven months of last year.

However, the profit remitted by foreign companies involved in financial business fell 19.3 per cent to $49.9 million against $61.8 million last year. Other sectors dispatched $23.7 million. In the reverse remittances, the share of transport and automobile companies was $13.8 million against $8 million, showing a rise of 72.1 per cent.

Foreign companies engaged in trade remitted $13.8 million compared to $21.4 million while the tourism industry sent back $2.4 million against $1.8 million last fiscal. Cement companies sent $5.6 million as profit and dividend. Pharmaceutical firms remitted $19 million and petrol refining companies $48.2 million against $45.8 million in the corresponding period of 2006-07.

Chemical manufacturing companies sent $28.4 million as profit while tobacco and cigarette manufacturers $27.3 million against $15.4 million, up 77.1 per cent. Food packaging companies remitted $5.8 million as profit, while profits of foreign food companies dropped to $17.7 million from $19.6 million.

Foreign companies remit $519m


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## Neo

*Pakistan, Nigeria may cooperate in oil, textile ​* 
Wednesday, March 05, 2008

xISLAMABAD: Pakistan and Nigeria have the capacity to boost their bilateral trade manifold by working in pharmaceuticals, petroleum and textile sectors.

Islamabad Chamber of Commerce & Industry (ICCI) President Muhammad Ijaz Abbasi, while talking to R A Mustafa, Acting High Commissioner of Nigeria, in a meeting here, said that trade volume between the two countries was very low. In 2006-07, Pakistans exports to Nigeria were $23.2 million whereas in the same period imports from Nigeria were around $10 million.

He suggested that Nigeria could import products like medical equipment, sports goods, wood work, cotton, medicines, etc. Ijaz said that the economy of Pakistan was growing fast, offering tremendous opportunities for trade and investment in many areas. He said that Nigerian businessmen should visit Pakistan to explore business opportunities for joint ventures.

He further said that trade could be enhanced through regular exchange of business delegations and holding of trade exhibitions on both sides. He emphasised that steps may be taken to further enhance bilateral economic cooperation and increase the level of trade.

Mustafa said that there was a lot of room for improvement of trade between the two countries. He said that both countries should address the problems hampering trade and emphasised that for the exhilaration of trade and commerce, the diplomatic and economic relations were vital.

He said that Nigeria was interested in building strong economic relations with Pakistan and invited Pakistani businessmen to come and explore opportunities of investment in Nigeria. Mustafa further said that Pakistani businessmen could use Nigeria as a platform for business linkages with neighbouring African countries. He said that there were 36 chambers in Nigeria working for the promotion of trade and sought ICCIs collaboration with the main Nigerian chamber for the flow of trade-related information.

Pakistan, Nigeria may cooperate in oil, textile


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## Neo

*Pakistan attends Hanover IT fair*​
ISLAMABAD, March 4: As part of its mission to promote the local IT companies potential in international market, Pakistan is participating in the CeBit Hanover -- 2008 fair being held in Germany.

Local IT companies had been jointly selected by Pakistan Software Houses Association (Pasha) and Pakistan Software Export Board, Oun Ashraf Rana, PSEBs director international marketing informed the media on Tuesday.

CeBit is the worlds largest trade fair showcasing digital IT and telecommunications solutions for home and work environment. The key target groups were users from industry, the wholesale and retail sector, skilled traders, banks, the services sector, government agencies, science and technology.

The fair offered an international platform for comparing notes on current industry trends, networking, and products presentations. CeBit is organised by Deutsche Messe AG every year, since 1986.

Mr Rana said that participation in international trade fairs and exhibitions by local companies was integral part of the government policy. It provided a chance to interact with the world renowned IT companies and executives in order to showcase their IT services potential.

He expressed the hope that the delegation would generate valuable business leads with a high probability of transforming into successful business ventures with the participating companies.

He said that amongst the participating companies, Progressive Systems had expertise in web portal, web applications, enterprise mobile applications development and business intelligence and data warehousing.

The GoodCore Software was providing services for the development of business applications; Xorlogics Inc specialised in database applications and mobile applications, while Server4Sale was a known icon in the area of website hosting services with integration of related applications.

According to Mr Rana, Pakistan has immense potential in IT sector outsourcing services and its participation in the CeBit fair would help increase interaction between the Pakistani companies and international IT firms.

With an IT industry worth more than $2.8 billion, including annual IT exports exceeding $1.4 billion, Pakistan is eyeing to increase the size of IT sector to over $11 billion by 2011.

Pakistan attends Hanover IT fair -DAWN - Business; March 05, 2008


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## Neo

*Italy to fund $20m for Multan plan​*
MULTAN, March 4: The Italian government will spend $20 million on the reservation of cultural heritage and development of education, health, agriculture and other infrastructures in Multan under a Multan the oldest living city in the world programme.

It was stated by Pak-Italian Chamber of Commerce and Industry President Ettore Marzocchi in a meeting with City District Nazim Mian Faisal Mukhtar here on Tuesday.

Mr Marzocchi, also the president of ECS, said the Italian government would provide Rs66 billions to Pakistan in five years for various projects.

He said the projects of water-reservoirs, mines in Balochistan and the Northern Areas, projects to control environmental pollution on the mountains of K-2 and Karakuram and projects for the development of various sectors of Multan were the part of the programme.

He said Italy had planned $20 million plan for Multan because of its historical importance. Under the project, preservation of archeological finds and cultural and historical heritage will be carried out while research will be done on the history of the city.

The plan also includes the development of handicraft, art and music while a fashion and design school will also be established here. The Italian government will also fund model processing plants for mango-related items while modern machinery will be imported for the construction of sewerage and roads projects.

According to the programme, model houses will be built for low-income citizens, while the Italian ambassador to Pakistan will sign an accord on March 7, regarding the combine programme of the city district government and the ECS.

A steering committee will be made consisting of representatives of Multan Chamber of Commerce and City District Government to manage the funds.

Mr Mukhtar told Mr Marzocchi the district government had done all the paper work regarding the cultural heritage, sewerage, education, health and other sectors while initial plans of the projects were also complete.

He praised the Italian government for its help, saying that Multan and Rome would be declared twin cities.

Italy to fund $20m for Multan plan -DAWN - Top Stories; March 05, 2008


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## Neo

*Textile exports miss target during July-January 2008​*
** Textile exports fell short of $794m or 12% of the $6.853bn target​*
KARACHI: Textile products have missed the export target in the first seven months (July-January) of current fiscal year by huge margins, thus making it difficult to achieve the total target at the end of this year, official statistics revealed. 

The textile exports fell short of $794 million or 12 percent of $6.853 billion target set by the government for the months under review, data released by Trade Development Authority of Pakistan (TDAP) said. Textile export proceeds totaled at $6.059 billion during this period, even lower compared to $6.271 billion in the corresponding period last year.

This poor export performance of textile products also reduced the share of these products in overall export volume and it slid below 60 percent during these months, which used to be around 65 percent some years ago. 

Exporters commenting on the export of textile products said apart from unrealistic target set for the textile products in view of intense competition from its competitors in the international market, country-wide incidents of violence and chaos following the assassination of former prime minister Benazir Bhutto was the main reason for the falling export of textile products.

Assassination of Ms Bhutto in December brought to halt not only the industrial activities but huge number of export shipments could not make their way to the sea ports because of strikes and unavailability of cargo transport because of violence, which swept the country for almost one week, they pointed out. 

Category-wise export of textile products indicted that dismal export of value added products hit hard the total export of this group, which is the mainstay of export sector. 

Statistics showed that bedwear exports fell to $1.086 billion against target of $1.210 billion in July-January of 2007-08, knitwear (hosiery) at $1.048 billion against the target of $1.285 billion, towels at $328 million against $386 million target, cotton yarn at $764 million against $852 million target.

Besides, cotton fabrics stood at $1.054 billion against $1.235 billion target, knitted/crocheted fabrics at $36 million against $42 million target, made-ups (exclusive bedwear) at $300 million against $311 million target, art silk and synthetic textiles at $302 million against $370 million target and other textile products at $173 million against $209 million target. 

Only few export category succeeded in surpassing the target, which included readymade garments at $868 million against $583 and tents and canvas exports totaled $46 million against $ 40 million target. 

The local industry has been complaining of the high cost of production, which it says is a major reason for its failure to compete in the international market. However international institutions studies pointed out lack of competitiveness of local textile products for their failure in capturing bigger share in global textile trade and suggested for more research and development and reduce the cost of doing business to compete with the products of China and India in international market. 

State Bank of Pakistan (SBP) has also cautioned in its last quarterly report about further deceleration in textile exports growth in the short term, which would subsequently translate into the deceleration of overall export growth as well.

Daily Times - Leading News Resource of Pakistan


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## Neo

*TDAP sets $500m pharma export target in next 5 years*​
KARACHI: Trade Development Authority of Pakistan (TDAP) has set $500 million pharmaceutical export target for next five years and has asked the stakeholders to develop Pharma Vision 2013 to achieve the target.

Pakistan Pharmaceutical Manufacturers Association (PPMA) should develop a comprehensive strategy paper as Pharma Vision 2013 so that the government and private sector have a clear roadmap on how to achieve this quantum leap, Tariq Ikram, Chief Executive TDAP told a delegation of an association here on Tuesday. Secretary TDAP, Naved Arif, Director General (Planning), Usman Hasan, and representatives of PPMA attended the meeting.

He asked PPMA to strengthen their export department and suggest few names of industry specialists who could be hired in TDAP as well to look after their interests. Pharma exporters have proved their ability to increase exports dramatically, TDAP will establish a 3-member pharma exports cell within the next two months to support pharma efforts on a regular and structured manner. Certain issues were raised by PPMA regarding product registration, opening of offices abroad, provision of sampling to importers abroad on which Tairq Ikram took on the spot decision.

The meeting reviewed the export performance and noted with satisfaction the growth of 223 percent in export of pharma products from $32 million in 199899 to $102 million in 200607. Major export destinations were Afghanistan, Sri Lanka, Philippines, Nigeria, Singapore, UAE, Sudan, Netherlands, Saudi Arabia, US, France and Germany. It was also noted that each year since 199899 exports have progressively grown and major manufacturing companies were registering their products abroad and undertaking structured marketing efforts.

The role of TDAP was to acknowledge in effectively providing day-to-day facilitation in addition to conceptualising various schemes to provide financial support and subsidy for freight subsidy scheme, product registration abroad scheme, bioequivalence testing, brand registration abroad and media and marketing expenditure abroad. It was also noted that the annual exhibition and delegation calendar has been finalised in consultation with PPMA.

TDAP Chief emphasised that even the target of $1 billion was achievable since the local pharma industry successfully competes with multi-national corporations in Pakistan so they can compete with them abroad as well. The growth of 223 percent in last 8 years shows that our export product quality and packing is acceptable and of international level.

Cost of production in Pakistan was lower and our industry was rapidly adopting world class GMP levels supported by the Ministry of Health and Government of Pakistan overall. 

If we can market products in Western Europe, United States and other developed countries surely we can achieve success in other parts of the world as well. Markets of Far East, Middle East, Africa, Eastern Europe, Russia, South-America offer excellent opportunities, Ikram added.

Daily Times - Leading News Resource of Pakistan


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## Neo

*MoC allows $50 R&D support for motorcycles export*​
ISLAMABAD: The Ministry of Commerce has notified allowing $50 Research and Development (R&D) Support to encourage exports of motorcycles from Pakistan. In this regard the ministry has issued S.R.O. 200(I)/2008 notifying Research and Development Support (Motorcycle Industry) Order, 2008 and it shall come into force at once.

According to the Procedure and conditions.  The research and development support shall be provided to every completely built-up unit of motorcycles exported, falling under Heading No.87.11 of the Pakistan Customs Tariff, an equivalent amount of $50 in PKR per motorcycle at the conversion rate indicated in export proceeds realisation certificate subject to the following conditions, namely: - (a) the exporting unit shall spend research and development support as the amount received from the Federal Government, on the following activities, namely:- (i) product development; (ii) skill development and training; (iii) up-gradation of information technology; and (iv) professional consultancy;

(b) the expenditure on the activities referred to in clause (a) shall be reflected in the annual accounts and balance sheets of the exporting units. Exporting units shall, within ninety days of the date of realisation of export proceeds, submit its claims for the research and development support with field offices of the State Bank of Pakistan, Banking Services Corporation, through their authorised dealers. (c) certification for research and development carried out by the exporting unit shall be received from Pakistan Automotive Manufacturers Association in the form as set out in Annexure-IV to this Order. Before verifying the claims, the concerned Association shall carry out due diligence to ensure that the claim of the exporter is based on facts. They shall scrutinise those claims more minutely which are based on the exports to African and Gulf countries;(d) before submitting the claims, the authorised dealers shall scrutinise the application carefully and submit the same duly certified by them as an undertaking in the form as set out in Annexure-II to this Order, to the field offices of the State Bank of Pakistan, Banking Services Corporation. Such applications shall be received by the said field offices during normal public dealing and banking business hours on the working days; (e) the admissible research and development support as approved by the field office of the State Bank of Pakistan, Banking Services Corporation, shall be made by crediting the account of the concerned authorised dealer, who shall pay the amount to the exporters within twenty-four hours of receipt of the credit in their account; (f) authorised dealers, while forwarding applications for payment of research and development support, shall invariably and prominently rubber stamp at the top of the triplicate copy of the relevant E-Form. Research and Development Support of an equivalent amount of $50 in PKR per motorcycle at the conversion rate indicated in Export Proceeds Realisation Certificate shall be claimed for this consignment;

(h) incomplete applications shall be returned to the authorised dealers within two working days between 1430-1530 hours for completion and re-submission within the period as provided in clause (b). While re-submitting the applications, authorised dealers shall quote the reference of the forwarding schedule under which the application was first submitted; (i) no remittance on account of foreign importers subsequent claims for refund of money on account of quality or short quantity, etc., shall be allowed unless proportional amount of research and development support is refunded; and (j) in case of exports against advance payments, claim for research and development support may be submitted once the shipment of the goods has been made, against which advance payment has been received.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Tusdec signs MoU with GMI Malaysia for skill development ​* 
LAHORE (March 05 2008): Malaysia's German-Malaysian Institute (GMI) has signed a Memorandum of Understanding (MoU) with Technology Upgradation and Skill Development Company (TUSDEC) for skill development in line with the needs of industrial sector in Pakistan.

According to a TUSDEC's spokesman, the MoU signing ceremony between the two organisations was held at GMI headquarters in Malaysian capital, Kuala Lumpur during a recent visit of a TUSDEC delegation to the South East Asian country.

TUSDEC Chairman Manzar Shamim and GMI Managing Director Yusoff Muhammad Sahir inked the agreement at a simple ceremony. GMI, a centre for advanced skills training, will extend cooperation to TUSDEC for the development of curricula and practical training material in the fields of tool and die technology, mould technology, mechatronics and process, instrumentation and control in addition to collaborating in short-term and customised courses, staff attachment, training of trainers and promotion of industrial linkages.

It was also agreed, under the MoU, that a team of GMI will soon visit Pakistan to assess the industrial requirements in major industrial hubs of the country especially Lahore and Karachi. GMI with a number of campuses across Malaysia, offers intensive courses with hands-on practical and theory in the fields of production technology and industrial electronics with specialisation in the areas of mould, tool and die, product design and manufacturing, mechatronics, process instrumentation and control, electronics and information technology and network security.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*MNCs to invest $30 billion in diverse sectors: advisor ​*
ISLAMABAD (March 04 2008): The multinational companies have pledged 30 billion dollars for investment in Pakistan's energy and other diverse sectors. This was stated by Amar Lal, Advisor to Prime Minister on Minorities Affairs after a meeting with Canadian Ambassador and political representatives of Germany, Netherlands, Poland and Austria.

The multinational companies of these countries have shown interest to invest in mining of Thar coal project for 3,000 megawatt coal-based power plant, wind energy projects and gas turbines projects. In addition to that, investment would be made for laying gas pipeline and crude oil pipeline from Turkemanistan and Kazakistan, another project of Liquid Natural Gas (LNG) costing 10 Billion Dollars.

It was also discussed to set up three oil refineries, each to produce 100,000 barrels per day, 4 electricity power plants to produce 1000 megawatt electricity at Lahore, Faisalabad, Rohri and Jamshoro. The project to set up three oil refineries at Multan, Karachi and Sukkur was discussed in the meeting.

With mutual consultation, it was also decided to invest in upgrading the education, health and tourism training centres up to international standard to make a joint venture with local and international companies for creating one million jobs in the country and another one million abroad.

Housing schemes will also attract substantial investment as Canadian, American and Abu Dhabi companies have submitted proposals for new housing schemes to be launched on modern lines in the country, Amar Lal said. Those proposals, he said, have been submitted to the Prime Minister.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Banking spread narrows by 39bps to 7.07pc ​* 
*Still considered very high with average lending rates around 11.26 per cent and profit on deposits only almost 4.19 per cent​*
Thursday, March 06, 2008

KARACHI: The average banking spread in January 2008 slightly moved down by 39 basis points to 7.07 percent against 7.46 percent in the same month of year 2007. 

The State Bank of Pakistan (SBP) in its monetary policy for second half of current fiscal year had increased it policy discount rate by 50 basis points from 10 to 10.5 percent and average lending rates of banks also rose by 8 basis points to 11.26 percent from 11.18 percent.

However, in the meantime the deposit rates of banks also inched up by 47 basis points to 4.19 percent from 3.72 percent in January 2007. Though deposit rates increased in January 2008 the accountholders are getting very low return.

The difference between lending and deposit rate shows that returns to accountholders are not commensurate with the profits that banks are earning by investing depositors money. In February 2001, Dr Ishrat Hussain then Governor State Bank of Pakistan (SBP) the sole regulator of banking sector in the country had said that depositors were not getting proper rate of return due to problems of non-performing loans. However, in June 2002 the SBP reported that NPL issue had settled and the volume of NPL was lowest, however banks did not increase the rate of return and SBP also did not take any action against them.

In April 2006 the present Governor Dr Shamshad Aktar had said that banking spread was very high in the county and termed it an inefficiency of banks. However, she said that time is yet to come when SBP should exercise its powers. In December 2006 she said that spreads were high because the sector is not facing competition and it was hurting the economy.

Holding responsible for high banking spread chairman Research Institute of Islamic Banking and Finance Dr Shahid Hassan Siddiqui claimed, SBP is not exercising the powers vested in it to reduce the spread because the local and foreign owners of the banks registered in Pakistan are influencing central banks policies.

He said that by delaying and not exercising its powers SBP was providing an opportunity to these powerful groups to earn undue profits of about Rs80 billion per year the cost of which was being borne by 25 million depositors, which is also hurting the economy and affecting the life of 160 million people. 

Couple of days back the First Capital Equities Limited (FCEL) a local brokerage house in its research analysis said that during calendar year 2007 the profitability of 17 listed banks, constituting 87 percent of overall banking sector assets of the industry, grew by 4.7 percent to Rs73 billion against Rs69 billion of year 2006. 

It may be noted that banks profit during the last seven years gradually increased to new peak of Rs123 billion in 2006 as compared to Rs7 billion in 2000. Although banks earned this profit on the savings of depositors, they did not transfer profit to depositors and during the last seven years depositors profit declined to 3.4 percent in 2006 as against the 6.5 percent in 2000.

Banking spread narrows by 39bps to 7.07pc


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## Neo

*Budget deficit at 3.6pc of GDP ​* 
Thursday, March 06, 2008

KARACHI: Pakistans budget deficit for the first half of the 2007/08 fiscal year was 3.6 per cent of gross domestic product (GDP), the government said on Wednesday, reinforcing views that the full-year target will be missed.

The deficit for the six months from July to December compared with a budget deficit of 1.9 per cent a year ago, according to data posted on the Finance Ministrys Web site. Lower-than-expected revenue growth during the six months, coupled with higher expenditures, were the main causes for the swelling deficit, analysts said.

The full-year number is likely to be in the excess of 5.0 per cent, said Asif Qureshi, head of research at brokerage Invisor Securities. The governments fiscal deficit target for the 2007/08 fiscal year is 4.0 per cent of GDP. It is also targeting GDP growth of 7.2 per cent, though the State Bank of Pakistan has already cut its forecast to 6.6-7.0 per cent.

During July-December, revenue grew by only 1.76 per cent to 625.59 billion rupees ($9.96 billion), while expenditure grew 25.28 per cent to 981.91 billion ($15.62 billion), according to the data.

Higher debt servicing costs, increased outlay on subsidies for energy and food, and increased development spending led to this sharp rise in expenditure. The half-year deficit number is pretty high, and such fiscal slippages may have adverse implications on Pakistans sovereign ratings, said Qureshi. 

Budget deficit at 3.6pc of GDP


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## Neo

*US-Pak trade ties growing ​* 
*USTR 2008 report lauds steps taken by Pakistan​*
Thursday, March 06, 2008
WASHINGTON: The US-Pakistan trade grew in the year 2007 and the two countries continue to expand their bilateral trading relationship, particularly through US helping Pakistan foster a climate conducive to increased foreign investment, a new American annual report said.

The US Trade Representative delivering the 2008 Trade Policy Agenda and 2007 Annual Report to Congress on Tuesday noted that a top priority for the Bush administration in South Asia has been to build a relationship with Pakistan as a strategic partner for the long term.

Americas highest ranking international trade official Susan Schwab also reported that in 2007, the Administration completed drafting the proposed Reconstruction Opportunity Zones (ROZ) legislation and is working with Congress regarding introduction of the requisite legislative measure for launch of the initiative.

Under the plan, President Bush, who proposed the initiative after his meeting with President Musharraf in Islamabad in March 2006, is seeking authorization from Congress to allow certain products manufactured in designated zones in Afghanistan and bordering areas of Pakistan, to enter the United States duty-free. This initiative is designed to support counter-terrorism efforts by spurring job creation and investment in the areas.

Schwab acknowledged that Pakistan has been a critical partner on the front line in the fight against al Qaeda and the struggle to counter extremism. US economic support for Pakistan and our growing bilateral trade relationship have been important contributors to Pakistans significant economic growth and development in the years since 2001.

Continuing, she underscored that the US task is even more important now as the Pakistani people look to democratic transition in the wake of tragic martyrdom of former prime minister Benazir Bhutto.

The United States remains Pakistans largest trading partner, and the two-way trade between the two allies has been growing in the last few years with Pakistans exports to the country, mainly textiles, in the fiscal year 2006-07 totaling around $3.1 billion. 

The US exports to Pakistan have been in the form of high-tech commercial airplanes and modern equipment. In pursuit of enhanced trade and economic ties, in 2003 the United States and Pakistan signed a TIFA and held meetings in 2005 and 2006 .The next meeting is scheduled to be held in the spring of 2008. The report applauded the progress the Pakistani government has made in recent years to improve copyright enforcement, including taking significant steps against unauthorized optical disc production and exports of pirated optical discs. Further, it created the Intellectual Property Rights Organization (IPRO). In 2007, USTR continued efforts to finalize a bilateral investment treaty with Pakistan.

Ambassador Schwab met twice with Pakistans former commerce minister Humayun Khan in 2007, once in Washington and once in Lahore, Pakistan. They covered a number of priorities in the bilateral economic relationship, including ROZs, intellectual property rights, and the status of negotiations on a Bilateral Investment Treaty (BIT).

The USTR also participated in the October 2007 US-Pakistan economic dialogue meetings co-chaired by the State Departments Under Secretary for Economic Affairs Reuben Jeffery and Pakistans Economic Advisor Salman Shah. 

US-Pak trade ties growing


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## Neo

*Pakistan to get $75m to help farmers ​* 
Thursday, March 06, 2008

ISLAMABAD: The Asian Development Bank (ADB) will provide Pakistan with $75 million in loans to build several multipurpose dams, irrigation canals and drinking water supplies at districts of Attock, Rawalpindi, Jhelum and Chakwal.

According to a statement of the ADB issued here, the project will improve the livelihood of about 22,000 farming households by bringing irrigation to 11,500 hectares of agricultural land that used to rely on irregular and unpredictable rainfall, as well as improving existing irrigation networks across another 10,000 hectares.

The project will also increase supplies of water for domestic use to rural communities and small towns in Punjab provinces mentioned districts.Without secure water sources, farming in rain-fed Barani areas usually have low productivity and carry a high risk because crops often fail when there is drought, said Arnaud Cauchois, Rural Development Specialist at ADB.

Barani is a term used to refer to agricultural areas dependent on rain. This project will give farmers a reliable water supply, which will increase crop and livestock productivity and therefore increase peoples incomes. At the same time, it will increase households access to cleaner water, therefore reducing sickness and mortality rates caused by waterborne diseases.

The construction of dams across the Potohar Plateau started as early as the 1960s, but they were not as beneficial as had been hoped because local communities rarely participated in their development. Farmers did not get the financial and technical support necessary to switch from rain-fed agriculture to irrigated farming, and there was no watershed management, resulting in a high reservoir sedimentation rate.

In this new project, a more holistic approach is being used that is simultaneously looking at upstream watershed management and downstream irrigated area development. It will also involve local communities to ensure the project is demand driven.Farming is the traditional source of livelihood across Potohar, but crop yields in the barani areas have been typically less than half compared to those in areas with river-fed irrigation. 

Pakistan to get $75m to help farmers


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## Neo

*Cement and rice to be exported to Sri Lanka ​*
ISLAMABAD (March 06 2008): Pakistan will supply cement and rice to Sri Lanka, a private television channel reported. Sri Lankan government would import cement from Pakistan through the recently set up State Trading Co-operative Wholesale Company Limited to counter the shortage allegedly created by errant traders concealing their stocks, private television channel reported.

The agreement is expected to be signed shortly with a company in Pakistan to import cement. The demand for cement has risen with the commencement of many massive infrastructure projects.

The Trade Development Authority of Pakistan (TDAP), meanwhile, has agreed to export 500 tonnes of Basmati rice to Sri Lanka to bridge its demand-supply gap. The island nation, on its part has allowed the import of these consignments duty free to keep its prices under check and encourage high imports.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan could become IT leader: US diplomat ​*
LAHORE (March 06 2008): The principal officer, United States Consulate, Bryan D Hunt, has said Pakistan has the potential to become one of the leaders in Information Technology, but it would have to take some strategic decisions regarding the implementation of property rights laws.

Hunt's comments came at the closing ceremony of a three-day LCCI IT Fair-2008 on Wednesday. Lahore Chamber of Commerce and Industry (LCCI) President Mohammad Ali Mian, Senior Vice-President Mian Muzaffar Ali, Vice-President Shafqat Saeed Piracha, former LCCI vice-president and the chairman, Standing Committee on Event Management and Achievement Awards, Sheikh Mohammad Arshad, and the chairman, Standing Committee on Information Technology, Ibrahim Qureshi, also spoke on the occasion.

He praised the LCCI for organising the event, saying the IT sector was one of the most promising sectors. He said several Pak companies were receiving tremendous contracts from the US and once the laws pertaining to property rights were enforced properly the situation would get a boost. The LCCI chief said the Lahore Chamber was trying to promote the IT sector and the IT Fair-2008 was a step in that direction.

He said the LCCI through the IT fair has made an attempt to provide an opportunity to the local companies to interact with world renowned IT companies, including Intel and Microsoft. Mohammad Ali Mian said Pakistan has immense potential in the IT sector outsourcing services and it is eyeing to increase the size of the IT sector.

He said that with every global IT company in the world having presence in Pakistan, and with revenues growing by 30-40 percent year on year, the IT industry is the most exciting and dynamic sector in the country today.

He said an industry characterised by 75,000 professionals, major ongoing IT projects within the government and the private sector to the tune of hundreds of millions of US dollars, and world-class software products and services companies bears testimony to the vibrancy of the IT and IT-enabled services sector in Pakistan.

The convergence of communications, computing, and entertainment has resulted in the blurring of boundaries between disciplines and IT companies now come in all shapes and sizes. IT has indeed been taken out of the closet and has been mainstreamed into every aspect of industrial and economic activity within the country, he added.

The LCCI chief said the growth of the IT sector is evident from the fact that Pakistan in term of Internet-users population in Asia is at 10th place with an amazing rate of growth. "Even with this high pace of growth we still believe that a lot of work should be done to give awareness to people especially the business community.

He said with more than 1,000 IT companies registered in the country, IT exports grew by an average of 50 percent in each of the last four years. We still believe that efforts should have been made to facilitate the country's IT industry through its programs in Human Capital, Office Space, Marketing, Company Capability Development, Telecom Bandwidth, Industry Finance, Public Policy, Strategy & Research, and Facilitation.

The LCCI IT Fair-2008 was organised by the Lahore Chamber of Commerce and Industry in collaboration with big Information Technology names, including Intel Pakistan, Microsoft Pakistan and Raffles (Pvt) Limited.

The exhibitors include hardware companies, networking solutions, Internet infrastructure and services, computer peripherals, software houses, computer telephony, data equipment and services and customised software/hardware solution providers.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Netsol launches 'Secure Pakistan' ​* 
LAHORE (March 06 2008): the NetSol Technologies Limited has launched "Secure Pakistan" project to safeguard the digital boundaries of Pakistan by making information and its communication reliable and secure.

The NetSol is the leading IT Company of Pakistan, with its strategic presence in North America, UK/Europe and Asia Pacific, a CMMI Level 5, ISO-27001 (Info. Sec. Mgmt. Sys.) Certified and NASDAQ listed company. 'Secure Pakistan' is another feather in the cap of the NetSol, launched by its Information Security Consulting Department.

The project is launched to ensure securing of critical information, while storing or transferring data especially in the present age of increasing reliance on Information and Communication Technology (ICT). "We have services to safeguard the information, no matter whether it is security of websites or company network, private and confidential data", said the Chief Executive Officer and Chairman of the Company, Salim Ghauri.

We will be the first in Pakistan to offer protection against the alarming rise in computer crime, hacking on corporate financial networks, harassment, identity theft, denial of service attacks and virus threat, he added.

'Secure Pakistan' has established successful partnerships with many global Information Security Consulting Companies including US based company, Business Automation Consultants, IT Butler of Australian, Risk Associates and Pakistan based NIMIS who will be providing consultancy for the project.

Further, the CEO said most public and private organisations had come across multiple instances, where there is a need to handle sensitive data carefully. Since the NetSol is an integral part of nation's growing IT industry, it believes that providing E-security measures would provide credibility and reliability to the undertaking companies.

"We have a clear and concise mission to safeguard the digital infrastructure of the country. We would provide security through 'Secure Pakistan' against both internal and external threats," he said.

"We want to take the lead in the country by providing support in securing the digital boundaries of Pakistan. We also would help creating awareness and designing a clear road map both in public and private sector on securing information assets from external and internal threats", said the NetSol executive.

'Secure Pakistan' is evolving lab for forensic investigation, CERT (Computer Emergency Response Team), round the clock security surveillance centre and training on awareness of computer crime, he maintained.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan to miss wheat crop target: officials ​* 
Friday, March 07, 2008

ISLAMABAD: Pakistan will miss its wheat output target of 24 million tonnes for the 2007/08 crop year and may have to import up to 2 million tonnes for stocks and domestic needs, industry officials said on Thursday.

Late sowing, a fall in the area planted with wheat, a shortage of irrigation water and rising fertiliser prices are reasons for the lower output, which farmers and millers estimated would be between 21 million and 22 million tonnes.

The government may have to import between 1 and 2 million tonnes of wheat to meet requirements, said Naeem Butt, chairman of the private All Pakistan Flour Mills Association.Pakistan consumes about 22 million tonnes of wheat a year while nearly one million tonnes finds its way to neighbours Afghanistan and Iran, traders say.

Pakistan produced 23.3 million tonnes of wheat in the 2006/07 crop year but had to import nearly 1.6 million tonnes after a shortage in September that resulted in soaring prices in the domestic market.

A senior Food and Agriculture Ministry official confirmed the production target would be missed.I can definitely say it wont be possible to achieve the target, ministry joint secretary Seerat Asghar told Reuters.

But he declined to give details saying that the first estimate for the crop was expected early next month.There has been 2.6 percent less cultivation of wheat against a target area of 8.57 million hectares (21 million acres), because farmers have delayed cutting sugarcane in fields they might have planted with wheat, because of a sugar price dispute.

Some wheat traders and food officials also said a delay in the announcement of the procurement price the government pays farmers, and a lower than hoped for price, also led to a fall in wheat cultivation.

Sowing should ideally start around November 20 but almost 60 per cent of it was done in late December, said Ibrahim Mughal, chairman of the Agri-Forum, a farmers association.He said a low procurement price of 510 rupees ($8.17) per 40kg was far less than prices on the international market and would discourage farmers from selling grain to the government. Another food ministry official, who declined to be identified, said it would be difficult for the government to buy wheat at that price and achieve a procurement target of 5 million tonnes.

We will then have to import wheat for stocks, the official said. Pakistan issued tenders for about 1.6 million tonnes of wheat imports between September and January, and Asghar said about 0.8 million tonnes had already arrived while a similar amount was expected in coming weeks. Supplies from the 2007/08 crop have already begun arriving.

Pakistan to miss wheat crop target: officials


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## Neo

*Govt borrowing soars to Rs332bn ​* 
Friday, March 07, 2008

KARACHI: Government borrowings from the State Bank of Pakistan (SBP) ballooned to Rs332.589 billion during July 1, 2007 to February 23, 2008, compared to the Rs25.873 billion borrowing in the same period of the last fiscal year.

The economy has to swallow the bitter pill in the form of inflationary pressure and repercussions of the governments excessive reliance on central bank borrowings for its budgetary support, which is reflected in the growing volume of broad money (M2) which widened at the rate of 6.57 per cent to Rs267.023 billion, compared to Rs257.668 billion in the corresponding period of the last fiscal year.

Latest figures of the State Bank of Pakistan showed that the federal government borrowed Rs296.141 billion for budgetary support against Rs71.773 billion last year, which was the major contributing factor behind the M2 growth.

However, governments loans for the commodity operation came down to Rs21.093 billion, as it acquired loans for Rs33.595 billion for the commodity operation during the corresponding period of the last fiscal year. Nevertheless, in the wake of retirement of some short term loans of scheduled banks which were mainly taken for commodity operation, the net government sector borrowings recorded to Rs274.347 billion as compared to Rs36.287 billion in the corresponding period of last fiscal year.

In the above mentioned period, the credit to the non government sector also surged to Rs307.669 billion against Rs222.186 billion in the similar point of time of last year, whereas credit to the private sector also rose to Rs273.439 billion as compared to Rs227.113 billion of the previous year.

In addition, the credit to the public sector enterprises (PSEs) also increased to Rs32.960 which was recorded as a negative growth of Rs4.989 billion in the same period of last fiscal year.

The SBPs statistics showed that from July-2007 to Feb 23, 2008, a total of Rs160.910 billion currency notes were in circulation against Rs96.765 billion of last year, whereas, during this period the other deposits with SBP recorded a negative growth to Rs1.398 billion from Rs15 million in the matching period of last fiscal.

Govt borrowing soars to Rs332bn


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## Neo

*New aviation policy: new attractions for private sector ​* 
Friday, March 07, 2008

The forth coming National Aviation Policy (NAP), which is ready for the approval of the cabinet, will be opening new doors for private importers, manufacturers, and airlines operators besides promoting national tourism, sports and aviation sectors of the country. 

Special Tax exemptions/holidays and other attractions have been recommended by the Pakistan Civil Aviation Authority. Entire aviation sectors of the country including hot balloon sports organisers are anxiously waiting the final implementation of NAP. Experts in the aviation sector believe that while implementing the policy, the CAA would attract not only new airlines but also open new markets which, according to them, would bring enough boom in the aviation sector. We expect huge changes in the economy, they predict. 

They further say that the forthcoming policy is aligned with national trade corridor, which encompasses the governments vision to route international trade, tourism and passenger traffic through Pakistan. It also aims to provide the public direct connections from Pakistan while ensuring safe, affordable and quality services. Special incentives have been given to domestic & international air careers, ground handlers. However they say that the CAA has not compromised on safety and security of the passengers with international standards which is the main and primary object of the CAA Pakistan.

According to the detailed study of the draft policy, duly approved by the CAA Board in its meeting held a few weeks back at Islamabad, the CAA has recommended that the current policy of zero per cent duties, surcharges and taxes on import of aircraft of all weight categories, engines and spares by all Pakistani operators, the CAA & maintenance companies should be extended to accommodate manufacturers, equipment required for manufacturing and raw material imported for manufacturing of aircraft. 

The same concession , shall also be extended to the Civil Aviation Authority and private operators for the import of Communication, Navigation & Surveillance (CNS), Air Traffic Management (ATM) systems, life saving equipment like BRS (Ballistic Recovery System), emergency medical kits, ELT (Emergency Locator Transmitter) Fire Fighting vehicles & equipment including training equipment like all types of simulators, technical publications & manuals imported by the CAA as well as operators and maintenance companies. The new aviation policy maintain that tax holiday shall be granted to aircraft manufacturers, maintenance companies, flying training schools and ground training schools for 10 years. Security equipment and weapons imported for use by the Airport Security Force, the CAA, and private airports (like Sialkot) and other operators are intended to be exempted from all taxes and custom duties. The government should rationalise and reduce taxes chargeable to passengers on international and domestic routes, says the new NAP.

It was also approved by CAA Pakistan Board of directors to recommend that the government should exempt all taxes and duties on air ticket on secondary destinations. The same privileges shall be extended to operators of small aircraft and helicopters.

The new aviation policy has also touched a very important aspect of market access. It says restricted market access raises prices, creates monopoly and suppresses aviation growth. Liberal air services agreements remove limitations on airlines freedom to increase service, lower fares and promote economic growth. All international airports are to be developed as business & tourists hubs. Since Pakistan is strategically located on the international route, liberal arrangements with our bilateral partners, in addition to providing direct and convenient connections to the local traffic from these airports, shall also facilitate to route the flow of international traffic from east to Europe and North America through Pakistan. To achieve the required results it was decided that Pakistan shall liberalise bilateral arrangements on reciprocal basis with its bilateral partners to provide service from/to Karachi, Lahore and Islamabad (of course after completion of the new airport) to destinations in Western Europe, North America and Africa and to destinations towards east. Furthermore, there would be no mandatory commercial agreements as part of bilateral agreements. However, airlines shall be free to enter into such co-operative marketing arrangements as are mutually agreeable, which will be outside of air services agreements.

For the last many months, the CAA Pakistan is concentrating on bringing great changes in its cargo set up at each airport in general and top five airports (Karachi, Lahore, Islamabad, Faisalabad and Peshawar) in particular. Planes have been chalked out for cargo complexes/villages at major airports with all kinds of international standard facilities. Now special focus haven made on the cargo facilities in the forthcoming NAP in which single-window clearing mechanism was introduced which as per cargo agents shall boost the growing up cargo at all the airports. The top clearing agents, including official of Sialkot airport, say that problems, being faced by the clearing agents shall be curtailed. According to the new NAP, an efficient and quick transit, a single-window clearing mechanism comprising airlines, freight forwarders, customs house agents, customs, regulatory agencies and airline ground handling agents, insurance & banks facilities, etc shall be made available under one roof. 

Furthermore, infrastructure of a cargo village shall include multi-modal transport, cargo terminals, cold storage centres, automatic storage and retrieval systems, mechanised transport of cargo, dedicated express cargo terminals with airside and city side openings, computerisation and automation. Interestingly and encouragingly it was reiterated that Pakistan shall continue to follow open skies policy for cargo operations based on 3rd, 4th & 5th freedom traffic rights. 

Enough attraction was given to Karachi and Gwadar and it was decided that Karachi and Gwadar shall be promoted as transshipments hubs where as cargo villages it was decided shall be established on public-private partnership at major international airports and linked with NTC(national trade corridor).

Soon after the joining of Mr Farooq Rahmatullah as CAA DG, attention was given not only to the commercialisation of the airports, passengers safety and security but stress has been placed on promoting/attracting the private sector for the development and promotion of aviation activities/sector. Studies were conducted and expert opinions were sought from renowned and leading private companies for the promotion of the aviation sectors in the country. 

The CAA is now continuously following a restructuring programme which separates the regulatory, air traffic services and commercial functions to achieve the highest safety standards, to encourage the development of merchant airports, eg, Sialkot International Airport and to efficiently absorb investment in the aviation sector. The process is in advanced stages and after completion shall make the CAA more efficient, responsive and, above all, capable of ensuring international standards of safety, experts add.

Basing on the experts opinions, precedents, and hectic homework recommendations were incorporated in the NAP for smooth and beneficial working relations in the best interest of the country and economy. According to the new aviation policy, airports shall be made safer & user friendly while ensuring world-class airport infrastructure in accordance with demand, ensuring maximum capacity utilisation and efficient management by involving the private sector.

The construction of new commercial airports as per the NAP will be permitted to meet the growth in air traffic. It is decided that the private sector shall be free to construct and operate new/existing airports/airstrips/helipads/ heliports including cargo complexes on BO (build and operate, BOT (build, operate and transfer) or any other management arrangement and to raise non- aeronautical revenues from these premises. Furthermore, it was also approved by the CAA Board that privatisation of airports shall be pursued to make them more efficient and productive.

It is worth mentioning here that, in the aviation world the role of the private sector cannot be ignored. A lot of aviation departments/authorities of the world have given special incentives to the private sector for increasing national revenue. In the past such thing was not visible in the Pakistan. 

However, in the new aviation policy, the private sector was given special attentions and it was decided that fair and equal opportunities shall be afforded to public and private sector airports to market themselves within the framework of national aviation policy & bilateral air services agreements. The private sector shall be encouraged to develop additional revenue streams, ie, passenger charges, cargo levies and commercial activities. However, the CAA shall have the responsibility of economic oversight of all airports.

The new aviation policy which, according to aviation experts, is subject to the approval of the cabinet shall make new high ways for boosting economy in the country and will be a role model for commercialisation in the aviation world. The policy has given tremendous attention to the commercialisation of the airports in the country as the CAA has planned to develop; airport cities which included hotels on public-private partnership at all the major airports. Besides vacant land at airports shall be evaluated and developed for construction of aviation related facilities (eg, cargo complexes and aircraft maintenance facilities, etc. Land at remote and non-operational airports shall be utilised for non-aeronautical commercial and recreational purposes. 

The CAA intends to review and formulate land lease policy to make it commercially viable for the private investors at airports.

In short, the forth coming NAP shall definitely open new skies in the aviation sector and it is expected that great positive effects shall be seen in the economy of the country due to this policy.

New aviation policy: new attractions for private sector


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## Neo

*Negotiations between US and Pakistan on BIT suspended*​
ISLAMABAD: The negotiations between Pakistan and United States on Bilateral Investment Treaty (BIT) are currently suspended as small but significant numbers of differences have persisted on issues of considerable importance to the United States.

In 2007, the Bushs administration completed a draft of the proposed Re-construction Opportunity Zones (ROZ) legislation and is working with Congress regarding introduction of this legislation for formal approval, said a report of United States Trade Representative (USTR) 2008 Trade Policy Agenda and 2007 Annual Report of the President of the United States on the Trade Agreements Program.

The reports said that in 2007, USTR continued efforts to finalise BIT, which would provide US investors in Pakistan with significant legal protections. 

Work continues with the government of Pakistan to enhance and expand our bilateral trading relationship, particularly through helping Pakistan foster a climate conducive to increased foreign investment, a USTR official said.

Ambassador Schwab met twice with Pakistans Commerce Minister Humayun Khan in 2007, once in Washington and once in Lahore, Pakistan. They covered a number of priorities in the bilateral economic relationship, including Reconstruction Opportunity Zones (ROZs), intellectual property rights, and the status of negotiations on a BIT. USTR also participated in the October 2007 US-Pakistan Economic Dialogue meetings co-chaired by the State Departments Under Secretary for Economic Affairs Reuben Jeffery and Pakistans Economic Advisor to the Prime Minister Salman Shah. 

A USTR priority for Pakistan in 2007 has been continued development of the ROZ initiative. USTR and the State Department co-led the effort, which included consultations with Pakistani (and Afghan) government officials, private sector stakeholders, and Congress. 

President Bush had announced the ROZ initiative during a visit to Islamabad, Pakistan in March 2006. Under the plan, President Bush is seeking authorisation from congress to allow certain products manufactured in designated zones in Afghanistan and key border areas of Pakistan to enter the United States duty-free. 

The goal is to facilitate job creation and economic development in these sensitive areas as a bulwark against extremism and terrorism. 

In 2007, the administration completed drafting the proposed ROZ legislation. The administration is working with congress regarding introduction of this legislation.

In addition, State, Commerce, and Agriculture are planning a number of activities to complement the ROZs, aimed at developing small business and agriculture in the region. The government of Pakistan made progress in recent years to improve copyright enforcement, including taking significant steps against unauthorised optical disc production and exports of pirated optical discs.

Further, it created the Intellectual Property Rights Organisation (IPRO). Nevertheless, Pakistan does not provide adequate protection of all intellectual property and in the enforcement area, prosecutions and deterrent sentences for intellectual property infringement are lacking. Book piracy, weak trademark enforcement, lack of data protection for proprietary pharmaceutical and agricultural chemical test data, and problems with Pakistans pharmaceutical patent protection remain serious barriers to trade and investment.

In 2007, Pakistan remained on the Special 301 watch list with an Out-of-Cycle-Review pending action by Pakistan to address book piracy issues, to provide meaningful and effective protection for test and other data submitted by pharmaceutical companies seeking marketing approval for their products as well as to formalise its system of preventing marketing approval of unauthorised copies of patented pharmaceuticals.

USTR continued efforts to finalise a BIT, which would provide US investors in Pakistan with significant legal protections. A small but significant number of differences have persisted on issues of considerable importance to the United States and these negotiations are currently suspended.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Govt to gain Rs 80bn through rise in oil prices​*
ISLAMABAD: The government is likely to receive around Rs 80 billion gains by the end of this current fiscal year from oil and gas surcharges and royalty on production of both products. 

The government gains in terms of royalty and development surcharge on oil and gas production have reached Rs 40.956 billion during the first six months July-December of the current financial year 2007-08, Daily Times learnt.

According to an official, if the current trend of government gains on gas and oil production continues, the government would receive around Rs 80 billion in term of royalty and development surcharge by the end of the current financial year. He said that due to increase in international crude oil prices, the volume of government gains has also increased. 

Government gains during the first quarter of the current fiscal year stood at Rs 20.321 billion that were received in the shape of royalty and development surcharge on gas and oil production that have reached to Rs 40.956 billion in six months of the current fiscal year.

Government received Rs 21.466 billion royalty on oil and gas whereas the development surcharge stood at Rs 12.153 billion and Rs 7.337 billion in the first six months July-Dec of current fiscal year 2007-08. In the second quarter of the current fiscal year, government received royalty and development surcharges worth Rs 20.925 billion on oil and gas against Rs 20.031 billion in the first quarter July-Sep of the current fiscal year. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Telecom Industry: Mobile firms getting 2 million subscribers every month​*
KARACHI: Telecom industry is booming throughout the country as two million mobile subscribers were added every month throughout the last year.

Previous year the sector grew by 80 percent while average growth rate in last four years has been more than 100 percent. 

Network coverage of almost 90 percent of the total population of Pakistan has made the industry even more attractive for foreign investment. Industry analysts said that there is still a great margin of growth in this industry, in 2003-04 the sector was offering 466,068 direct and indirect employments and now in 2006-07 it is more than double at 1,366,698 employment opportunities. An intense competition is seen in the telecom sector and all the companies are trying to take edge on each other, which is helping the subscribers as they are getting advanced and new packages at low prices. 

According to the Pakistan Telecommunication Authority (PTA) Industry Analysis Report 2007, out of 376 tehsils across Pakistan, almost 77 percent are covered with mobile networks, bringing the figure to 290. 

In 2004 there were less than 2000 cell sites installed by all mobile operators for provision of mobile services. Today total cell sites of all mobile operators are more than 17,500. romail kenneth

Daily Times - Leading News Resource of Pakistan


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## Neo

*Msoft to launch new products in Pakistan​*
KARACHI: Microsoft Pakistan, in the mid of march, will launch Windows Server 2008, SQL Server 2008 and Visual Studio 2008 in collaboration with its prestigious sponsors and partners. Launch sponsors are Intel, Dell, Acer and KalSoft in Pakistan.

These new enterprise products will help customers more efficiently and securely manage their entire infrastructure and move to a virtualised environment while also delivering business intelligence and next generation Web experiences to boost business results, said Kamal Ahmed, Country Manager, Microsoft Pakistan.

The theme of the event, at the launch, Heroes Happen Here will highlight the outstanding work that IT professionals, developers and partners do every day to create solutions and cutting-edge applications that keep global commerce and industry running. The IT professionals are using these software the world over to implement more secure platforms, reducing costs and speeding development. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Gwadar Port to see first docking on Monday ​* 
Saturday, March 08, 2008

ISLAMABAD: A vessel carrying imported wheat will be the first to dock at the newly refurbished berths of Gwadar Port.

Port and shipping ministry officials in a meeting with the Federal Food Committee (FFC) assured that berthing of this vessel would not damage the port and its cargo would be safely offloaded, an official attending the meeting told The News on Friday.

The official further said that the ports and shipping officials have only given verbal assurances without any concrete evidence. The vessel carrying imported wheat from Canada is scheduled to berth at the Gwadar Port on March 10 and experts have warned the ministry of ports and shipping that it may damage the berth. We are shifting this vessel from Karachi to Gwadar, as Karachi Port is crowded with a number of vessels waiting at outer anchorage for berthing, a ports and shipping ministry official who wanted not be named said.

MINFAL has arranged the distribution of imported wheat allocating entire shipment to Balochistan govt, as its allocation to other provinces might put unnecessary burden of transportations charges on provinces, a MINFAL official said. Also NWFP is facing difficulty in getting transport to lift allocated wheat from TCP warehouses, he added.

Gwadar Port to see first docking on Monday


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## Neo

*Unilevers success illustrates the promise that Pakistan holds ​* 
Saturday, March 08, 2008

KARACHI: Unilever, Pakistans largest consumer products company, has a problem. It cannot keep up with demand for some of its products. These include laundry powder and the recently launched convenience foods, the soups and Chinese meal-makers. Demand is so strong that, in the case of foods, despite doubling production capacity, Pakistanis cant seem to have enough of them. But this is just the tip of the iceberg, claims Ehsan Malik, the Unilever chairman.

Malik says that things have to be seen in context. Pakistans middle income group comprises about 35 million consumers. They have a combined spending power of Poland. But Unilever is not just targeting the middle income category. With the broadest socio-economic footprint amongst consumer goods competitors, Unilever is also looking at lower income market as well as the higher income bracket with different sets of products.

One of the areas where consumer product companies are increasingly focusing is central and southern Punjab where two factors are driving demand. One, a string of successful harvests has meant rising disposable income for farmers. The second, interestingly, is 40 or so television channels that broadcast to viewers in this area. They are the driving force behind building aspirations, comments Ehsan Malik, adding that this for Unilever is an opportunity for selling its products.

He says that unlike India, where farmers spend a significant portion of the proceeds of harvests on alcohol, in Pakistan the farmer spends his disposable income on little luxuries such as consumer products. In both countries, the saving rate remains low in the rural areas.

Retailing consumer products is Unilevers bread and butter. The company has the biggest retail reach in the country with the company servicing 500,000 outlets, of which 50 per cent are covered direct by the companys distributors and the balance through wholesalers.

This is the companys strength. With rising competition, the company is now focusing on getting the right product at the right shop with the right kind of visibility. For example, Lifebuoy soap is available in almost all retail shops of Pakistan. But with incomes rising, people are now looking at Lux soap as an alternative.

Lux has the distinction of being the most expensive locally produced soap in the country. To make it available to rural customers, Unilever has also made this available in bars of 60 gms as against the standard 130 gms. As a result, Lux sales have nearly doubled in three years.

In the urban areas, with the advent of large supermarkets like Makro, the Unilever chief comments that the company can create excitement in the space that exists there to market its products better.

However, not all Unilever products are facing legitimate competition. Take tea for example. Pakistan is one of the worlds largest importers of tea with a consumption of 150,000 tons annually, which works out to about 1 kg per person per year. Of this, almost 60,000 tons are smuggled into the country under the guise of the Afghan Transit Trade (ATT). With the government unable to check this malpractice, sales volumes for the tax-paying tea producers have declined over the past five years and so has tax collection for the government.

The tea companies have proposed that duties be brought down on imports so that smuggling becomes unviable. The loss in revenue for the government will be compensated with higher incomes after the volumes of these tax-paying companies rise. We have been campaigning with successive governments over this, comments the Unilever head, but so far there has been little response.

Another problem within the tea industry and one that also affects other Unilever products is counterfeiting. One of the tea brands that is most counterfeited is Supreme of Unilever. Three hundred raids have been conducted, but the conviction rate is less than 15. People have gotten away scot-free.

Malik says that the problem here is while the government has worked seriously in areas like software and video piracy, it is unable to give the same attention to consumer products despite the fact that this poses more of a danger to human life. The attitude of the SHO will be to let the person making fake products off with a strict warning. The seriousness of the crime does not dawn on him, comments Malik.

But the implications are serious. Fake tea is made up of coloured saw dust which can cause all sorts of human ailments. Malik says that it is time the government showed its seriousness on fake consumer products. He suggests that they should start with four products in just two areas and give the message. The sectors he suggests are tea, cigarettes, cold drinks (beverages) and soap. The areas where the government can focus include Multan and the central Punjab belt as these are most affected.

Turning to other problems, Ehsan Malik says that Pakistan by and large has a tax-friendly environment comparable to any economy of its size and in a similar stage of development. The problem, says Malik, is when the government uses the regulated sector as tax collectors. The onus is put on the companies to collect withholding tax on behalf of the government, which is a cumbersome procedure. The government finds it easy to tax the already taxed, he says. It needs to broaden its tax base.

Another irritant, says Malik, is the turnover tax. One per cent tax on turnover sounds low, but with about 10pc pre-tax profit margin, it can amount to a 10pc reduction in net of tax income. Also 1pc turnover tax cannot be passed on easily to the consumer as often smaller packs cost Rs2-10 where coinage prevents charging 1pc extra.

Then there is the new Competition Law which has a number of grey areas, says Malik. First of all, he says, how can one define a market when in some cases, like tea, a sizeable chunk of the market is in the informal sector and in which counterfeiting is rife. 

-Another question is how can one determines market dominance, as a company can dominate with 30 per cent share but cannot in other instances even with a 50 per cent share of the market. We are fearful that the first targets of the law would be those who are compliant with both the spirit and letter of the law and those who pay little regard to either, will go scot-free.

In spite of all these worries, Unilever remains on top of the market and is also seen as most of the most sought after employer in Pakistan. MBAs from nine leading business schools rated Unilever as employer of choice in a survey conducted by the Pakistan Society of Human Resource Management.

One of the factors that young talent take note of is the opportunity to move globally, we have 35 people working with Unilever abroad. Also three of the seven people in the global leadership team of Unilever are from the emerging markets, all incidentally with experience of working in South Asia. Nearly 50pc of Unilevers turnover is derived from the emerging markets. So in time, we could find people from Pakistan at the helm of Unilevers global leadership, remarked Malik.

We pay people competitively but that is not the main reason why they work for us. It is the culture and personal development potential that motivates them, he said.

Ehsan Malik was appointed Chairman of Unilever Pakistan Limited and Rafhan Best Foods Limited with effect from 1st September 2006. For five years to August 2006, Ehsan was Chairman and CEO, Unilever Sri Lanka Limited, during which period the business doubled in size.

His earlier international appointments covered Unilevers regional business in Egypt, Lebanon, Jordan, Syria and Sudan as well as the head office in London. These preceded senior commercial and financial roles at Unilever Pakistan. Prior to joining Unilever mid-career, he held a senior position in media.

Looking ahead, Ehsan Malik says that Pakistan holds immense opportunities. When we look closer, there is a lot to be done. We are now digging deeper and sharpening focus. We need to know better who shops, where they shop, why, when and for what.

Malik says that the possibilities are endless. For example, shampoo penetration is one of the lowest in Asia. Fifty per cent of the population still uses laundry soap to wash their clothes. Unilever has 40pc of the market for detergent powder. A switch from laundry soap to detergent powder will be hugely beneficial to Unilever.

The food sector is what Malik calls a blue sky opportunity. He says nobody has really accurately measured what opportunity exists. Noodles as well as packaged convenience foods are doing a roaring business. The same potential exists in ice cream. Currently per capita consumption of ice cream is 0.4 litres annually, which was what Turkeys 15 years ago. Today Turkey has a per capita consumption of 2.5 litres and this is the opportunity that Unilever wants to address.

The rise in spending power of Pakistanis is offering Unilever an opportunity to grow. For example, Clear shampoo launched recently in Pakistan enjoyed the highest growth amongst the select number of countries that it was simultaneously launched in. These are the positive factors that make Unilever continue to invest in products and people in Pakistan. For this company, Pakistan is not just a success story, it is one the company wants to keep telling again and again.

Unilevers success illustrates the promise that Pakistan holds


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## Neo

*Govt to generate 1,804MW more by 2009-10 ​* 
Saturday, March 08, 2008

ISLAMABAD: The government, facing power shortage, is all set to inject 1,804 megawatts of electricity into the national grid by 2009-10 after executing the most important project under which nine independent power producers (IPPs) in Punjab would be interconnected with the national power system, a senior government official of the Pakistan Electric Power Company told The News. 

The projection of power demand based on the historic growth rate shows that it will increase from 15,183MW in 2007-08 to about 20,000MW in 2010-11 in the Water and Power Development Authority system and a severe shortage is feared for the next two years. 

To meet this demand, an additional capacity of about 8,000MW would be needed by 2010. The project will cost Rs1.108 billion and will be giving dividends by 2009-10. 

The National Transmission and Dispatch Company (NTDC) would be the sponsoring agency. The project envisages laying of transmission lines for distribution of power produced by the nine IPPs and their interconnection with the national grid. The cumulative capacity of these IPPs is 1,804MW. The proposed project further includes extension of existing 5 grid stations for interconnection of 9 IPPs to meet the power shortage and to strengthen the existing system of NTDC. 

Earlier there was a proposal comprising interconnection of 16 IPPs with the national grid and would be completed in a span of two years while Private Power and Infrastructure Board (PPIB) had provided no surety whether the 16 IPPs would be commissioned in the net two years or not. 

Later it was decided that a project could be designed after consultations with the PPIBs and IPPS by taking the surety regarding the projects, which would be commissioned in the coming years. 

Under the revised proposal it was then decided that 9 IPPs having the capacity to generate electricity of 1,804MW would be interconnected with the national grid. The existing power generation capacity is not sufficient to meet the ever-increasing demand of the country. In the recent years, as economic activity picked up in the country, there has been a sudden rise in the power demand which has resulted in increase in the supply-demand gap. 

Govt to generate 1,804MW more by 2009-10


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## Neo

*Karachi industry awaits new govt to solve power problem​*
KARACHI: Faced with the acute power shortage, Karachis industry is left with no option but to wait for the formation of new government to see how it addresses the woes caused by growing power deficit in the economic hub of the country.

Though, Council of Karachi Industrial Association, having representation from Korangi, Landhi, F.B. Area and North Karachi Industrial Areas is expected to convene its meeting in next couple of days to formulate the strategy to cope with growing power shortage in Karachi, industry people do not expect any relief at the moment because of caretaker set up in the province and centre because of their limited mandate.

Industrial sector showed signs of recession during the current financial year and will be witnessing further slow down, if the energy and power shortages continue to hit the industry particularly in Karachi, analysts predict. 

Let the new government to find a way out from the tumultuous conditions, the industrial sector has been pushed in, people in the business and industry said when contacted about the impact of schedule of load-shedding announced by Karachi Electric Supply Corporation (KESC) for the industrial areas of the city.

KESC has announced that all industrial feeders will be closed from 1900 to 2300 hours daily due to acute shortage of electricity during the peak hours, which invited sharp reaction from the business and industrial sectors still recovering from the day-long power disconnection a couple of days in the mega city of the country.

Business community leaders were also critical of delays in formation of government, which is further fuelling the instability and uncertainty throughout the country. This delay is costing the public and industry as economic problems faced by both has been put on back burner, they said.

Abdul Haseeb Khan, Chairman Council of Karachi Industrial Association came down hard on KESC for resorting to load-shedding in the industrial area of the city and lamented that whenever the management of KESC is contacted, they come up with false promises.

In my industrial area Korangi, KESC management does not know about the demand of electricity, so how it will be able to fill the gap between demand and supply, he questioned.

Idrees Gigi, Chairman F B Area Association of Trade & Industry anticipating more disasters for the industry particularly in summer season said, If KESC did not pay WAPDA its dues, why the industry is being made to suffer.

He also said that at present any relief with respect to power shortage is not expected. Once the new government is formed, then we can expect any step from the government to redress our problems, he said.

Nisar Shekhani, Chairman SITE Association of Industry, which is also the largest industrial estate of the country hoped that the new government will tackle the power shortage issue especially in Karachi.

Shekhani also termed the obsolete power generation plants of KESC a major cause of power deficit in the city.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Gwadar port may face problems in handling of first shipment​*
KARACHI: The administration of Gwadar Port is likely to face a number of problems including shortage of heavy machineries, technical staff and skilled labour to handle first wheat cargo ship to be anchored at this port on March 10. 

The administration of the port has sought help from Ministry of Ports and Shipping and Karachi Port Trust (KPT). They also demand for required machinery, technical staff and labour, sources told Daily Times.

M. V. Pos Glory carrying 70,000 metric tonnes wheat from Russia is expected to reach the port sometime from March 10. 

Sources said, a local company has chartered this ship and is having problems as it is carrying heavy shipment that cannot be brought at Gwadar Port. Under these circumstances it is expected that 22,900 metric tonnes of wheat would be discharged into another ship near off port area to avoid any mishap. Now M.V. Pos Glory ship will bring only 50,000 metric tonnes of wheat at Gwadar port.

When Daily Times approached key official of the shipping company, he said that for last two weeks there are rumours circulating, the ship will not anchor at the Gwadar Port as such heavy vessels cannot anchor at this port. These are all speculations, as the vessel carrying 72,900 MT wheat is due to reach on 10 March and can anchor at the port, he added.

On the issue of discharging the wheat on another ship he said Due to the safety concern it has been advised to discharge approximately 9,000 tonnes of wheat into another ship but this advise is under consideration and this decision is yet to finalised. He further said that to be on the safe side the port has arranged three tugs instead of two for the ship and everybody involved in this operation is fully prepared to handle it. As this is the first vessel to anchor, therefore there are some safety considerations and if final decision is to discharge some of the wheat then the substitute would be arranged in a week time and this would not have a major effect on price.

He said, no one was willing to bring any vessel on the Gwadar port but Trading Corporation of Pakistan (TCP) has taken this bold step. No one realises that due to this step the port would be finally operational. Harboring the ship at this port is also cutting costs by an amount of $1,239,300.

Although when Daily Times approached the Chairman Gwadar Port he said he is unaware of this issue and the right person to contact is MD Operation. When DT contacted him he refused to give any comments on this issue.

The largest deep-water port is being operational after one year of its inauguration. Initially the port will be used as captive cargo or for trans-shipment purposes only.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Exports of surgical goods surge to $186.664m ​*
KARACHI: The exports of surgical goods, medical instruments and pharmaceutical products have surged to $186.664 million in the first seven months of the current fiscal year.

The exports registered a growth of $37.537 million or 25 percent as compared to $149.127 million during the same period 2006-07. According to Federal Bureau of Statistics (FBS) the exports of surgical goods and medical instruments rose to $129.903 million in July-January 2007-08 as compared to $95.941 million during the same period last year, depicting 35 percent increase.

Major export destinations of these products were Afghanistan, Sri Lanka, Philippines, Nigeria, Singapore, UAE, Sudan, Netherlands, Saudi Arabia, US, France and Germany, according to the Pakistan Pharmaceutical Exporters Association (PPMA).

Similarly, in January 2008, the exports registered 22.99 percent increase to $16.868 million as compared to $13.715 million during January 2007. However, the exports declined by 0.48 percent if compared with $16.95 million during December 2007.

The exports of pharmaceutical products also posted 6.27 percent growth to $56.761 million in the first seven months of the current fiscal year as compared to $53.186 million during the under review period of 2006-07.

The exports of pharmaceutical products stood at $7.125 million in January 2008, showing 1.04 percent growth comparing $7.141 million during the same month of 2007. But it showed healthy growth of 32.95 percent when compared with $5.427 million during December 2007.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pak-US trade: TIFA Council likely to take important decisions in 2008​*
ISLAMABAD: To explore possibilities of further economic support and promotion of bilateral trade Pak-US, Trade and Investment Facilitation Agreement (TIFA) Council is likely to meet in spring 2008. 

US 2008 Trade Policy Agenda and the 2007 Annual Report said that an other top priority for the administration has been to build a relationship with Pakistan as a strategic partner for the long term. 

In the aftermath of 9/11, Pakistan has been a critical partner on the front line in the fight against Al-Qaeda and the struggle to counter extremism. Our task is even more important today as the Pakistani people look to a democratic transition in the wake of the tragic death of Benazir Bhutto. 

US economic support for Pakistan and our growing bilateral trade relationship have been important contributors to Pakistans significant economic growth and development in the years since 2001. In pursuit of these goals, in 2003 the United States and Pakistan signed a TIFA and held meetings in 2005 and 2006. The next meeting is scheduled to be held in the spring of 2008.

In addition to these activities, in March 2006, President Bush announced the Reconstruction Opportunity Zones (ROZ) initiative, which would allow certain items, produced in designated zones within Afghanistan and the border regions of Pakistan duty-free entry into the United States. This initiative is designed to support counter-terrorism efforts by spurring job creation and investment in these sensitive geographic areas. The Administration is working with Congress to put in place enabling legislation. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*WML keen to invest in Pakistan​*
LAHORE: Pakistan has many investment opportunities and current law and order situation would not create problems for the foreign investors, said Ammar Azam CEO of Wenham Major Limited (WML), one of the major leading financial and business advisory firms in the UK.

He said that his company is very much aware of business opportunities in Pakistan and therefore it has taken initiative to start operations in Pakistan. 

While addressing a press conference here on Saturday, Azam said that the profitability in Pakistans market is attractive and therefore a lot of foreign investors are very much interested in doing business in Pakistan.

Ammar Azam who is also Chairman of Wenham Major Dubai and co-owner of its parent Wenham Major Global Capital Partners said that though the law and order situation is not satisfactory but still it is not so grieved that the investors will avoid doing business in Pakistan. 

The market of Pakistan especially the SME and real estate sector is very much attractive for the foreign businessmen and investors, he said adding that it is the reason that his company Wenham Limited would offer consultancy to the foreign investors. If anyone in the UK is interested to invest in Pakistan then we can help them in finding better areas and vice versa, he said. While elaborating his company, Azam said that the company is named as the fastest growing UK accountancy firm by Accountancy Age for the last two years. 

With 140 years experience in the Midlands, our business is founded on trust, he said adding that sound, trusted, strategic, advice is the cornerstone of any successful business and is intrinsic to Wenham Majors approach.

We work in close partnership with our clients to help them achieve their full potential. More than anything, trust has to be earned and building long-term business relationships is at the very heart of Wenham Majors approach, he elaborated.

He said that the companys clients come from across the business spectrum - from sole traders and individuals to owner-managed businesses, to smaller quoted companies and public sector organisations.

Daily Times - Leading News Resource of Pakistan


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## Neo

Dewan Petroleum discovers gas at Salsabil

ISLAMABAD: Dewan Petroleum (Pvt) Ltd., a Pakistani Exploration and Petroleum company and operator of Safed Koh Block (3070-10) has drilled well at Salsabil (Rodho) structure up to the depth of 3305 metres and made first discovery of Gas in Chiltan Limestone and in the Cretaceous Sembar Sands. 

This discovery is believed to have opened a significant new play in general for exploration in Pakistan and could have material impact on the exploration potential of the Safed Koh Block itself in both Rodho and unexplored structure namely Afiband. The gas bearing Salsabil (Rodho) structure in Chiltan has estimated closed area of 23 Sq. Km. and vertical closure of over 500 meters. The Company believes that this is a significant natural gas discovery and will add to the countys gas reserves when fully developed and can produce substantial volume of gas along with condensate. The Safed Koh Block is situated in the tribal areas of district dera ghazi khan of Punjab province and located west of sulaiman foredeep in the middle indus basin of Pakistan. app

Daily Times - Leading News Resource of Pakistan


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## Neo

*Over Rs 55 million sales tax evasion case detected ​* 
ISLAMABAD (March 08 2008): The Directorate General of Intelligence and Investigation has detected a new kind of tax fraud at Karachi, involving sales tax officials, who tampered record to hide sales tax evasion of over Rs 55 million.

A senior official of the directorate told Business Recorder on Friday that the Field Vigilance Unit, Karachi, had unearthed an engineered hush-up of sales tax demand of over Rs 55 million by some tax officials.

The bogus departmental record showed that action had been taken against the evader, but the case was never taken up by any of the FBR's legal forum, ie collectorate of adjudication, sales tax and excise, Karachi, he added. According to the official, the Director General, Intelligence has detected the case after a lapse of five years.

He said the technique used by the sales tax officials was to show legal action against the tax evader on sketchy documents, and added the officials prepared fake papers to prove that the case was duly referred to the adjudication department for completion of legal action against the evader. However, the case was never referred to the adjudication authorities to facilitate the tax evaders, he said.

According to the official, it is first of its kind of fraud, detected by the directorate, where evasion cases were not forwarded to the relevant department for adjudication.

Secondly, different departments, including sales tax and adjudication offices of Karachi to protect the evader changed the record of the tax evader. Details revealed that a contravention report was issued by the Sales Tax, West Office, Karachi, detecting sales tax evasion of the involved amount in 2003.

The report was actually withheld and it was not forwarded to the concerned adjudication collectorate, but the record of Karachi West and concerned adjudication collectorate was tampered to show as if the report was properly sent for adjudication.

Official said that the dispatch register of Karachi West did not show any entry, which might indicate the dispatch of contravention report to the adjudication collectorate. A letter was prepared by the regional office for adjudication, but it was never dispatched to the relevant department, he said.

The name of the tax evader was also changed at different records and tempered register of the relevant collectorate was prepared to protect the evader. The complete track of adjudication record confirmed that neither the case was ever taken up by the department, nor it appeared among the decided cases nor it has been transferred to any authority and nor it is pending with any collectorate.

The Director General, Intelligence, has requested the Director General, Regional Tax Office (RTO), Karachi, to conduct a fact-finding inquiry in the case to fix responsibility on the involved officials. Official added that the recovery efforts be made against the sales tax evader under the relevant rules.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Coca-Cola to spend $100 million on mega project in Karachi ​*
KARACHI (March 08 2008): Coca-Cola Limited will establish a mega plant in Karachi with an investment of 100 million dollars for which the City District Government Karachi (CDGK) will provide all assistance and necessary facilities.

Coca-Cola Country Manager for Pakistan and Afghanistan Rizwan Khan met Karachi Nazim Syed Mustafa Kamal at his office on Friday, and apprissed him about the investment decision taken by the company. He said the company selected Karachi for its mega project as it was impressed by growing investment being made here.

He said the head office of the company had directed him that work on the project be started forthwith. Speaking on the occasion city Nazim Mustafa Kamal said that as a result of the city government's initiatives, a direct investment of 1.8 billion dollars had been made in Karachi during the last two years, while more international companies were making contacts. He said Karachi was appropriate for investment because it had a population of over 18 million and there were only few cities in the world having such a big base of consumers.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Alternate energy projects to be expanded' ​* 
KARACHI (March 08 2008): Caretaker Sindh Minister for Environment, Jam Karam Ali on Friday said that alternate energy projects will be further expanded to overcome the persistent energy crisis in the country. The Minister was taking to newsmen after attending a lecture by Professor Dr Momoko Chiba on 'Environment Devastation and Human Health' at the culture auditorium of the consulate general of Japan.

He said that environment protection would be prioritised in the development of Thar coal project. Japan's role in environment protection has been significant, the Minister said adding that its environmental strategies should be adopted for achieving economic development and ensuring better environment in the country. He said that Pakistan is willing to take advantage of Japan's experience in this field.

Earlier, Professor Dr Chiba termed the persistent decline in the water level of Aral Sea, inland sea straddling the Kazakhstan-Uzbekistan border in western Asia, the biggest environmental catastrophe of the 20th century.

She pointed out that land erosion from 1960 to 2006 has reduced 150-km of the sea. She maintained that sand appearing from the seabed is causing respiratory and eye diseases particularly amongst children. While, rate of life expectancy is on gradual decline in the respective countries, she elaborated. Dr Chiba said that durable economic development could only be achieved if circle of health, nutrition and environment is maintained adequately.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*ADB backed Barani areas water resources project may cost $104.5 million *​ 
FAISALABAD (March 08 2008): The investment cost of Asian Development Bank supported 'Barani Integrated Water Resources Sector Project' is estimated at $104.5 million equivalent, including taxes and duties of $14.4 million equivalent.

While financial charges during implementation (comprising interest during implementation and commitment charges) are estimated at $7.5 million. According to Punjab Irrigation and Power Department (PIPD) sources, this project will increase water storage capacity by undertaking the construction of dams.

Sediment control measures in the dam watershed will also be implemented to prolong the dam's life and improve the sustainability of the water storage capacity of new dams and existing dams that need urgent attention.

Once a site is identified and pre-feasibility studies are undertaken, the main activities in dam construction will consist of (i) selecting candidate sub-projects for a feasibility study, (ii) contracting out the feasibility studies, environment impact assessments, detailed design and construction supervision to the private sector, and (iii) mobilising communities during feasibility studies to ensure full consultation and participation.

The selection of the candidate sub-project will result from three screenings that will take place after (i) identification, (ii) pre-feasibility study, and (iii) feasibility study. Mandatory associated activities will include (i) preparing the land acquisition and resettlement plans and implementing them, (ii) mobilising a panel of experts for approval of the proposed dam designs, (iii) contracting out the construction of the dam, and (iv) supervising the dam impoundment.

The dam construction and watershed management activities account for 70 percent of the total project costs. PIPD sources said that the project would increase the agricultural income of 20,000 households (160,000 people) and provide increased and clean domestic water to 9,050 households (72,400 people).

Other benefits are (i) the provision of bulk water to municipalities, and reforestation and land erosion control in the dam watershed, as well as (ii) increased production opportunities for private fish growers. The core sub-project's economic internal rate of return is 14.3 percent, said official sources.

They said that the main activities in watershed management would consist of (i) training the soil conservation and range officers; (ii) mobilising the community and registering the Citizen Community Board (CCB); (iii) preparing a watershed development plan and implementing it by (a) constructing silt trap structures, (b) covering major erosion spots with vegetation, and (c) controlling erosion in farmers' fields.

The sector project will support the Punjab government's efforts to develop water resources and improve their management in four districts Attock, Rawalpindi, Jhelum, and Chakwal of the barani areas of Punjab that suffer from water scarcity.

The project intends to improve households' income and health by increasing crop and livestock productivity through irrigation development and increased access to water and sanitation.

Activities will include (i) construction of dams and appurtenant structures to increase water availability in the area; (ii) watershed management to enhance the dams' life expectancy; (iii) development of the rural water supply for communities in the vicinity of the dam; (iv) development of community-managed irrigation distribution network; (v) agriculture extension services to support the transition to irrigated agriculture; and (vi) institutional support.

The project will also rehabilitate and develop irrigation schemes, provide extension support, and improve watershed management in existing dams. To address the problem of sustainability and low economic returns observed in previous dam projects in barani areas, the project will change the sub-sector implementation practices and follow an integrated approach looking simultaneously at dam development, watershed management, and command area development.

Similarly, it will support devolution of the water scheme to organised water users and foster a demand-driven approach through the inclusion of social mobilisation support.

ADB project study report said that about one quarter of Pakistan's cultivable area remains outside the Indus canal system and suffers from chronically low agricultural productivity. In Punjab, about 19 percent of cultivable lands lie in barani areas where local rain-fed farming systems and existing water sources can no longer support the growing local population.

Yet significant gains in agriculture and livestock productivity and related economic growth can be obtained through water resources development for which little investment support has been made available to date.

With suitable topography and rainfall, the best potential option is the development of water storage through the construction of dams. Previous experiences, however, show that an integrated approach must be used in developing dams in barani areas to ensure the full attainment of the potential economic benefits.

As such, the provision of infrastructure will need to be demand-driven and accompanied with the development of community-managed irrigation schemes, on-farm water management support, irrigated agriculture support services, and support for developing market linkages, watershed conservation to prevent fast sedimentation, and targeted interventions to ensure the full development of stored water for domestic water supplies.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistanis invited to explore business in Philippines​*
LAHORE, March 8: With a sizeable consumer market and strategic location in a vast free-trade area, Philippines has unlimited business opportunities for Pakistan.

This was stated by Philippine Ambassador Jamie J. Yamboo while addressing businessmen at the Lahore Chamber of Commerce and Industry (LCCI) on Saturday. He said the areas for business with Philippines include electronics, construction material, marine products, organic and natural products, home furniture, giftware, holiday decor, auto parts and components, information technology and its related services.

Mr Yamboo said there was a need to activate framework of agreements on trade adding that the Philippines is an open economy and allows 100 per cent foreign ownership in all sectors.

He informed the LCCI members that in his country, the government corporations were being privatised and banking, insurance, shipping, telecommunications and power industries had been deregulated.

The ambassador said that with the current trade balance in favour of Pakistan, Philippines exports to this country increased by 7.26 per cent, while imports were up by 84 per cent.

Speaking on the occasion, LCCI president Mohammad Ali Mian assured his chambers full cooperation in increasing the volume of two-way trade. Despite 169 per cent increase in trade between the two countries over the last four years, the both have a lot of potential to expand trade, he added.

He said Pakistans major exports to Philippines, include cotton, cereals and pharmaceutical products, but these form a very little component of Philippines total import of these products from other sources.

Pakistan is one of the largest producers of cotton and rice in the world and the aroma and quality of its rice is just superb. It has also a highly developed pharmaceutical industry, he said adding that the Philippine businessmen may consider the quality and price of these Pakistani products to economise on their cost of procurement.

Likewise, Pakistan can increase its import of vehicles, machinery, electrical and electronic equipment and mineral fuels from Philippines, he maintained.

Ali Mian said that frequent exchange of business delegations and holding of single country exhibitions always yield good results in promoting trade.

The LCCI president said that being an agrarian economy, ample opportunities existed in agro-based and food processing sector. Pakistan is deficient in post-harvest technology and would welcome transfer of technology from Philippines through joint ventures, he added.APP

Pakistanis invited to explore business in Philippines -DAWN - Business; March 09, 2008


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## Neo

*Inflation up by 14.53pc*​
ISLAMABAD, March 8: The weekly inflation, measured through the Sensitive Price Index (SPI), increased by the highest-ever 14.53 per cent during the week ended on March 7, over the corresponding period last year, according to the Statistics Division data on Saturday.

The impact of the increase in the SPI was hard-hitting for people from the low income group as compared to the rich, mainly due to recent increase in domestic oil prices. This highest-ever increase in inflation occurred on the back of an increase in the prices of 30 items of daily use during the period under review.

The SPI witnessed an increase of 17.83 per cent and 16.87 per cent, respectively, for households in the two lower income brackets of up to Rs3,000 and Rs3,001-5,000. For households in the income brackets of Rs5,001-12,000, the increase in the SPI was in the range of 15.40 per cent, while for households in the income basket of over Rs12,000, the inflation registered a growth of 12.54 per cent over the week last year.

As compared to the previous week, the SPI registered an increase of 2.54 per cent for almost all income groups. Prices of 30 items went up as compared to the previous week.

The prices of tomatoes increased by 24.65 per cent to Rs36 per kg against Rs28.88 while an increase of 11.99 per cent was witnessed in chicken prices which stood at Rs84.37 per kg during the week under review as against Rs75.34.

The price of petrol increased by 9.42 per cent to Rs58.90 per litre from Rs53.83 and of diesel increased by 9.42 per cent to Rs41.37 per litre against Rs37.86.

The vegetable ghee prices increased by 9.02 per cent to Rs134.13 per kg against Rs123.13; kerosene 7.35 per cent to Rs45.55 per litre from Rs42.43; cooking oil tin 4.47 per cent to Rs347.76 per 2.5 litre as against Rs332.88.

Vegetable ghee tin prices increased 4.32 per cent to Rs340.88 per 2.5 kg as against Rs326.76, mustard oil prices increased by 3.38 per cent to Rs140.10 per kg against Rs135.52.

The gram pulse washed price increased by 2.63 per cent to Rs43.73 per kg as against Rs42.61, cooked dal plate 2.59 per cent to Rs20.99 each against Rs20.46, masoor pulse washed 2.53 per cent to Rs79.97 per kg as against Rs78.

Price of red chillies went up by 2.49 per cent to Rs141.03 per kg as against Rs137.61, wheat flour was up 2.29 per cent to Rs17.01 per kg against Rs16.63.

Banana prices increased by 1.92 per cent to Rs34.46 per dozen as against Rs33.81.

Rice-irri-6 price increased by 1.89 per cent to Rs27.52 per kg against Rs27.01, rice basmati broken 1.80 per cent to Rs37.92 per kg as against Rs37.25, curd 1.67 per cent to Rs35.96 per kg against Rs35.37 and milk fresh 1.55 per cent to Rs30.73 per kg against Rs30.26.

The price of cooked beef plate increased by 1.31 per cent to Rs34.02 each against Rs33.58, potatoes 1.04 per cent to Rs11.63 per kg against Rs11.51, salt powdered 0.95 per cent to Rs5.29 per kg against Rs5.24, tea prepared 0.84 per cent to Rs7.18 against Rs7.12, onions 0.69 per cent to Rs11.70 per kg against Rs11.62.

An increase of 0.59 per cent was witnessed in the price of in coarse latha to Rs39.46 per kg from Rs39.23 while 0.58 per cent increase was seen in washing soap nylon which increased to Rs10.41 per cake as against Rs10.35.

Mash washed increased by 0.35 per cent to Rs71.56 per kg against Rs71.31. A rise of 0.25 per cent was seen in the price of lawn to Rs81.19 per metre as against Rs80.99. There was a 0.12 per cent increase in the prices of mutton which increased to Rs238.99 per kg as against Rs238.70 and 0.04 per cent increase was seen in moong (washed) to Rs53.64 per kg against Rs53.62.

Inflation up by 14.53pc -DAWN - Business; March 09, 2008


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## Neo

*Trade pins high hopes on new budget​*
KARACHI, March 8: Business community pins high hopes on the new government for announcing incentives in its first budget despite tough tasks lying ahead. These include controlling rising food prices, tackling power and wheat crises and reducing high cost of living of the common man.

The trade associations have started formulating their pre-budget proposals so that these could be submitted to the government before March 31, 2008. The associations, which did not send the proposals, last year, are planning to do so this year.

A senior office-bearer of the Karachi Chamber of Commerce and Industry, who asked not to be named, said many businessmen were watching with interest as to what kind of a coalition is formed and who is appointed as the commerce and finance ministers and what are their party affiliations.

The budget proposals will be framed keeping in view these considerations. However, he said that the industry and trade would definitely get the incentives as this would be the first budget of the new government.

He, however, did not foresee many changes in the economic policies keeping in view the international situation.

Federation of Pakistan Chambers of Commerce and Industry (FPCCI) vice-president Zubair Tufail said that the FPCCI wanted the government to first look at the problems of the common man.

The government should think of providing some sort of incentive, like reducing Rs1,000 in the power bill of low income people or by providing some kind of support of Rs1,000 per month so that they could purchase basic essential items easily.

This proposal could become a reality if the government takes austerity measures by drastically cutting its unnecessary expenditures and think about the falling living standard of ordinary citizens, he added.

He was of the view that the industries, some how, could manage good and hard times but common man has been suffering for the last few years owing to rising prices of essential goods, and higher utility bills, etc.

He thought that the next two years would be very tough for the new government in handling power crisis.

He was of the view that the government would provide some incentives to the domestic and export-oriented industries in this budget.

Korangi Association of Trade and Industry chairman Shaikh Fazle Jalil said that the association would send the budget proposals very shortly urging the government to curtail utility charges, and interest rates, and impose tax on stock broking etc.

He said that many businessmen invest in stock markets and property but after getting the profits they do not invest in setting up new industries. The government should check this practice.

Besides, there is a need to encourage setting up industrial parks because a businessman or investor cannot think of purchasing land to open a new unit. In Korangi, he said, the one acre land (facing main road) is available at Rs150 to 160 million, while the price of land inside the industrial area hovers between Rs20 to 50 million.

He said that the new government will face problem in improving the countrys image as currently no foreign buyers are ready to visit Pakistan owing to law and order situation. Besides, the most gigantic task for the new government is to control the sky-rocketing prices of edibles.

Site Association of Industry chairman Nisar Sheikhani was of the view that industries are unlikely to get huge incentives keeping in view the current fragile political and economic situations. He said there were few issues with the Customs, Sales Tax and Income Tax which the association plans to take up.

He said that the government will have to take some drastic steps in tackling power crisis, rising prices and downslide in exports.

The new government may have to work hard in improving the countrys image so that exporters could get more orders through increased market access, he added.

Trade pins high hopes on new budget -DAWN - Business; March 09, 2008


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## Neo

*Countrywide power crisis imminent: PSO refuses to supply oil to generation companies *​ 
ISLAMABAD (March 10 2008): After Karachi, now, a countrywide power crisis is in the offing as the Pakistan State Oil (PSO) has issued notice to the Pakistan Electric Power Company (Pepco) of stopping supply of furnace oil to the thermal power generation units from March 11 onward for default on outstanding payments.

Sources said that PSO issued the notice, to Pepco, in a meeting in Karachi on Thursday last for halting of furnace oil supply to the thermal power generation units, saying that its growing financial crunch was making difficult for it to maintain the supply from March 11 onward.

It added that despite repeated calls Pepco could not make its outstanding payments, leaving the PSO helpless in making purchase of furnace oil from the suppliers for thermal power producing units. PSO claimed in the meeting that its outstanding amount stood at Rs 35 billion, and Pepco's failure in making payments added to its financial problems. PSO has forwarded the copy of the notice to the Ministry of Petroleum (MoP) for information and for pressing Pepco to sort out the issue of payments as early as possible. The Ministry is considering to take the matter with Prime Minister Mohammedmian Soomro for intervention for payment to the PSO to avoid a break in the supply of furnace oil to the thermal power units.

Officials in MoP are convinced that after Pepco's failure in timely payments, PSO had issued notice for halting supply of furnace oil as a last-ditch effort to bring the matter to the notice of all concerned and to get it resolved to avert the looming power crisis.

Pepco's failure in making payments to PSO and subsequent development of issuing notice contradict the government's claims of improving power generation on short-term basis. The new situation indicates that Pepco and other departments' claims of having additional power to improve supply is mere guess working and the ground facts are hinting at a severe power crisis.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Finance taking steps to prepare three-year MTBF: pro forma circulated among ministries ​* 
ISLAMABAD (March 10 2008): The finance ministry has started consultation with other ministries to prepare three-year (2008-11) Medium-Term Budgetary Framework (MTBF), for which a pro forma has already been circulated amongst the ministries for collection of project-wise data, official sources told Business Recorder.

Sources said that provinces has been asked to provide projects-wise utilisation status of federal share in development assistance to provinces during the current fiscal year and demand for total development assistance of the provinces in 2008-09.

The schemes proposed for inclusion in the programme would be arranged in order of priority within each sector/sub-sector, so that if resources fall short of the requirement, low priority schemes may either be dropped or allocations are adjusted accordingly.

Sources said that ministries and divisions have been directed that they should separately mention the amount on the projects to be financed through foreign-aid in rupees, indicating the expenditure on import of goods and services.

"This is necessary because under certain foreign-aid agreements the GoP is required to first incur the expenditure in local currency and thereafter the amount is reimbursed by the donor agency," the sources added.

Sources said the finance ministry has conveyed to all the ministries that allocations to on-going projects, which have reached a fairly advanced level of completion should be adequately provided with the objective to complete them within 2008-09.

Similarly, the finance ministry would ensure that schemes, which have direct bearing on achieving the plan target must get adequate allocation.

"All ministries should scrutinise their projects in the approved portfolio as well as those awaiting approval and determine whether they fall within the parameters of the MTDF," the sources quoted the officials documents circulated by the finance ministry amongst all the ministries/divisions and provincial governments as saying.

While undertaking this exercise, ministries/division should also identify projects that are based on (a) public-private partnership and (b) community/NGOs participation in terms of cost-sharing or otherwise, the sources added.

"Agencies have been directed to indicate their programmes after full deliberations so that request for re-appropriations immediately after the commencement of the fiscal year is avoided," the sources said. As a policy, the Planning Commission would not entertain requests for re-appropriations of funds during July-December period.

Sources said the finance ministry has asked the ministries/divisions and provinces to avoid unnecessary delay in processing the demands for PSDP 2008-09 by the Planning Commission, the requisite material should be made available as early as possible.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Discussion held on development of Singapore ​* 
ISLAMABAD (March 10 2008): An economist, Humayun Iqbal Shami said that Pakistan has reposed great hopes in with the 40 years contract given to a Singapore firm to develop Gwadar port as a sophisticated port facility in the model of Singapore which has become a world maritime centre.

In a public talk given on the development of Singapore, at the Islamabad Cultural Form, on Friday, the economist said Gawadar was equally well placed in a strategic area overlooking sea lanes to the Far East.

Shami looked forward to build Gawadar as a financial hub with excellent transport infrastructure and essential shipping facilities much in the same way as had been done in Singapore.

"The Singapore city-state is a roaring tiger in economy, as well as the business container port in the world," Shami observed.

He recalled that Singapore had no land, little industry, no water yet it had developed faster than most other countries of Asia, and we see the national unity there though the city-state had complex population mix who spoke a variety of languages and also professed a number of faiths.

He said that development of port-city Singapore was achieved on the strength of high quality of education.

The government had placed emphasis on developing early quality education up to high school level. A disciplined task force of educated workers grew out of this policy and the government also found strength in developing banking institutions, free trade, and no taxes were imposed in the country.

One would find presence of all multinational business and banking institutions in Singapore.

During the talk Shami asked why Pakistan could not be built in the same way as Singapore. Pakistan had enormous land and water resources and also good quality manpower. Participants present at the forum gave several replies to the question, and mentioned the controversy over language issue as well as multi-lateral systems of education.

Pakistan so long had paid undue attention solely on developing higher education at the cost of education at primary and junior level. They said a good base of mature education can be built up at the primary level to shape the personality of the child, and help him grow up as good a citizen. Some discussants argued that Pakistan had not followed a fixed development model, veering from British development, the US and then the Chinese models, always experimenting, and never waiting for results.

However a lot many guests also argued that Singapore had its own indigenous development model and did not depend on any one else's. This might be the reason why it was called a roaring tiger, and an object of admiration even of western economic systems.

Pakistan's failure was in not developing a real scientific orientation in development projects, neglecting sciences or linking science education with economy and industry; nor had it encouraged scientists, remarked, Dr Inayetullah, President of Pakistan Social Sciences Council, who chaired the discussion forum. "These were some of the reasons for lagging behind the economies of Asian giants," he observed.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Rs 100 million being spent on industrial estates' upgradation' ​* 
SIALKOT (March 10 2008): Punjab government is spending more than Rs100 million on the upgradation of existing ten industrial estates in the province.

Official sources told Business Recorder here on Sunday that under the programme Daska, Sargodha, Gujrat, Multan, Chakwal, Jhelum, Sahiwal, Gujra Khan Bahawalpur and Gujranwala industrial estates would be upgraded and work on the said project would be carried out shortly.

Under the programme all missing facilities would be ensured in these existing industrial estates to facilitate the business communities of these areas. In addition to this the setting up of SMEs industrial estates in major industrial towns is also on the cards.

The step was being taken for the redressal of the problems being confronted by the SMEs in the Punjab. Besides, loan facilities are being extended to the businessmen and women folk for upgrading their workplaces and to set up new industrial units including agro-based industries in Punjab, sources added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Al-Jamaiya manages $750m loan so far ​* 
ISLAMABAD (March 10 2008): The Al-Jamaiya Group, buyer of Karachi Electric Supply Corporation (KESC), has so far managed to arranged loans of $750 million. Talking to private TV channel, Geo, the KESC administrator Mohammed Amjad said the amount was spent on two powerhouses projects and issuance of priority shares to the government, adding these loans should be taken as investment from the owners.

He said the Al-Jamaiya Group, at the time of purchasing the institution, announced to invest $400 million in five years, which is still awaited.

It is worth mentioning that the government handed over the administrative control of the KESC to the Al-Jamaiya Group in December 2005, for improving the management of the institution to ensure better and effective power supply to Karachi.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*IT a source of strength in 21st Century: Wasim ​*
ISLAMABAD (March 10 2008): Information and communication technology is a source of strength in 21st century and only a strong, technically educated nation would be able to face the challenges of globalisation. This was observed by Senator Wasim Sajjad while addressing the 11th Convocation of National University of Computer and Emerging Sciences (NUCES) here Sunday.

Highlighting the importance of information technology he said that other South Asian countries earned billions of dollars from information technology but we hardly earn 10 to 15 million dollars.

As many as 381 students from batches of 2001, 2002 and 2003 received degrees. Medals were also awarded to the graduates for their excellent academic performance. Eight gold, eight silver and nine bronze medals were awarded to the students.

Wasim Sajjad who is also chancellor of the university said that we had to build up our middle class economically because majority of our educated youth belong to this section. He said technical education would result in poverty alleviation, as it would help generate more job opportunities.

Speaking at the occasion, Rector of the university Dr Amir Muhammed said that just merit was the criteria for admission in the university and no student was denied admission because of inability to pay fee. A sum of Rs 50 million was given as Qarz-e-Hasna to such students who could not pay fee, he added.

Earlier, Director of the university Dr Aftab A Maroof presented welcome address.

Pro-Rector Lieutenant General (r) Syed Refaqat, Secretary General Rana Ghulam Shabbir and other officials of the university were present on the occasion.

Later, Rector of the university Dr Amir Muhammed presented university souvenir to Wasim Sajjad, who was the chief guest on the occasion.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*MoF will ask new government to review projects ​* 
ISLAMABAD (March 09 2008): The Finance Ministry will recommend to the new government to review 'Juma bazaar of projects' initiated by the Planning Commission without keeping in view their benefits and financial constraints, reliable sources told Business Recorder.

The sources said that the Planning Commission, which has rehired almost all the retired officers was backing those projects which were not of national importance but they do not know if the government would be in a position to start these schemes.

The sources said that the new government would be asked to shelve some projects that the Finance Ministry considers unnecessary, that have been recommended by the Planning Commission and the Higher Education Commission including construction of eight new universities, costing Rs 40 billion each.

The federal government has suffered a budget deficit of Rs 356.321 billion during the first half (July-December) of FY08 against whole year's deficit estimate of Rs 399 billion.

The government was forced to finance through borrowing Rs 68.029 billion from external resources and Rs 288.292 billion from local institutions. On February 4, President Pervez Musharraf had directed the Deputy Chairman of Planning Commission to prepare a list of non-starter development projects as well as those on which initial work was in progress.

When this correspondent contacted at least five or six officials of the Planning Commission, the Finance Ministry and the Water and Power Ministry, to have their views that which projects were being axed in the light of the President's directives, the officials said that they did not receive any list from the Planning Commission so far.

The sources said that Public Sector Development Programme utilisation of Rs 109.5 billion during July-December, 2007-08 has been achieved against Rs 87.5 billion for the same period last year showing 37 percent of utilisation against 35 percent in the same period last year.

The strategy focused on saving financial resources without hurting or slowing down the pace of projects. The strategy indicated that the new projects would not be included in PSDP 2007-08. Budgeted projects, not yet started, would remain on hold during the second half of the current fiscal year. Expenditure to be incurred during May-June, 2008 on slow moving projects may be delayed until July-August, 2008.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Punjab may see Rs 56 billion budget deficit *​ 
FAISALABAD (March 09 2008): The medium-term budget framework (MTBF) and medium-term development framework (MTDF) of Punjab have shown that the budget deficit would reach Rs 37.3 billion (about $622 million) in FY2008 and further to Rs 55.9 billion ($932 million) and Rs 42.8 billion (about $714 million) in FY2009 and FY2010, respectively.

Over the medium term, the Planning and Development Department sources said that the sustained growth in Punjab and pro-poor spending put immense pressure on financial resource mobilisation. The government's financing needs will be significant if it is to sustain its target of 7 percent economic growth, create over one million new jobs each year, and raise spending in the social sectors.

According to official sources, the surplus in the net public account in FY2008 somehow relieves the financing pressure, but the overall financing requirement from FY2008 to FY2010 remains significant, averaging around $890 million per year. Absorbing the proposed disbursement of about $300 million yearly will not impair fiscal sustainability. The World Bank estimates show that the net present value of provincial public debt as a percentage of provincial GDP will decline from 1.9 percent in FY2006 to 1 percent in FY2010.

Effective public resource management is a key contributor to economic efficiency, broad based economic growth, employment creation, poverty reduction, and social progress. Reforms in all the four core policy areas of the Punjab Government Efficiency Improvement Program (PGEIP) are essential for providing good governance, creating fiscal space, reducing waste, improving value for money in public finance, and improving public service delivery. Reforms under the PGEIP are crucial in sustaining development in the Punjab, and the opportunity cost of not undertaking reforms will be very high, sources said.

The Planning and Development Department sources said that the financial and economic costs associated with the reforms are expected to be substantial, given the scope of the reforms. Political costs are considerable, as initiatives such as civil service reforms, will significantly shake up the vested interests that benefit from weak governance.

Direct adjustment costs include the following: (i) capitalisation of Punjab Pension Fund (PPF) and General Provident Investment Fund (GPIF), (ii) implementation costs to improve public financial management systems, (iii) increased wage costs as civil service reforms bring compensation more in line with the market rate, (iv) costs to leverage reforms that may face resistance through consensus building, and (v) reduced revenue to the government due to lower compliance costs. While there are costs associated with reforms in the short run, the eventual economic benefits will greatly outweigh the costs in the long run.

Sources said that Punjab Government has laid down an ambitious 'Vision 2020' aimed at doubling per capita income over the next decade. This will require sustained broad-based economic growth, which in turn demands large efficiency improvements in both private and public sectors, accompanied by better public resource management.

Through the Asian Development Bank (ADB)-supported Punjab Resource Management Program (PRMP), implemented during November 2003-August 2007, the Punjab Government has introduced wide-ranging reforms in public resource management. It has enhanced revenues, rationalised expenditures, improved planning and budgeting, and developed the private sector and the civil service.

In parallel, the Provincial government has also implemented reforms in service delivery, through the ADB supported Punjab Devolved Social Services Program (PDSSP), and in the judiciary, through the Access to Justice Program (AJP).

Having laid down a broad foundation for reforms through these three major ADB interventions and support from other development partners in the governance, education, and infrastructure sectors, the Provincial Government launched its second-generation reforms at the fourth Punjab Development Forum in April 2007. These reforms are centered on creating an effective public sector and fostering a dynamic private sector to achieve the 'Vision 2020' goals.

*P&DD SOURCES SAID THAT THE SIX KEY PILLARS OF THE SECOND-GENERATION REFORMS ARE THE FOLLOWING: *

(i) efficient public financial management, to increase the fiscal space for higher pro-poor spending;

(ii) a fully funded and well-governed civil service pension system, to support prudent fiscal management and ensure retirement income security for civil servants;

(iii) civil service reforms, for a responsive, efficient, and effective civil service;

(iv) broad measures supporting private sector development, for economic growth, job creation, and poverty reduction;

(v) attainment of the Millennium Development Goals (MDGs) by 2015; and

(vi) improved access to justice, for greater legal and regulatory certainty and enforceability in all economic spheres.

Building on the PRMP and other programs, P&DD sources said, the PGEIP will support the Govt. in realising the long-term goals expressed in 'Vision 2020', through which the government has committed itself to significantly improving the standard of living of the people of Punjab, especially the poor and vulnerable. The PGEIP will improve the overall functioning of the provincial, district, and municipal governments and the quality of public services.

*THE IMPROVEMENTS WILL TAKE THE FOLLOWING FORMS:* (i) greater performance-oriented planning and budgeting; (ii) a more efficient civil service, with adequate incentives and merit-based appointment and career progression; (iii) a funded and well-managed pension system, which increases the confidence of civil servants and the public, and generates fiscal space for high-priority investments in the social sectors; and (iv) greater private sector contribution to growth and facilitation of public-private partnerships.

As reforms in these areas are complex and would take time to filter through the bureaucracy, PGEIP will be processed as a program cluster comprising three single-tranche Sub Programmes.

This modality provides adequate flexibility to meet emerging reform needs and use program conditions genuinely for policy reform, rather than as rigid prescriptions. ADB's Management and Board will also have greater involvement in recommending measures for future operations within a cluster, in a way that is not possible in traditional multiple-tranche operations.

In order to ensure that all the six pillars of the 'Vision 2020' are in place, Punjab Government has also sought ADB's support for accelerating the attainment of the MDGs and implementation of provincial-level judicial reforms, in addition to the government efficiency improvements under PGEIP.

In line with this request, ADB will also prepare two additional program clusters, namely the PMDGP and PAJP, in an integrated manner along with PGEIP over 2007-2011.

The integrated approach will improve program co-ordination, reduce duplication, minimise inconsistency in policy advice and measures, and focus resources for desired outcomes. The reforms under the three program clusters will accelerate and sustain economic growth, improve the delivery of public services, create more employment opportunities, and reduce poverty.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*New Sindh government to review 2007-08 budget ​*
KARACHI (March 09 2008): One of the first step to be undertaken by the new Sindh government headed by chief minister designate Syed Qaim Ali Shah will be review of the Sindh budget for the year 2007-2008 and revision for the last quarter of the financial year in implementation of the declared manifesto of the Pakistan People's Party on the economic side, UPP understands from informed sources.

The priorities in terms of the development programme with stress on projects that benefit the common people in the province would also be undertaken. And in this respect the advise by the co-chairman Asif Ali Zardari will also be obtained.

The new cabinet headed by chief minister designate Syed Qaim Ali Shah will also have to ensure the preparation of a provincial budget for the new financial year 2008-2009 that matches the various points as incorporated in the manifesto of the PPP for the general elections of 2008. There will be stress on drawing up a development programme for the new financial year such that maximum jobs are created and the unemployed youth are given the opportunity of getting gainfully employed.

A number of suggestions have reportedly been made to the chief minister designate Syed Qaim Ali Shah by members of the think tank of the PPP who are well versed with the economic issues specially of the Sindh province.

It is also gathered that the various expenditure undertaken in the Sindh province over the past eight years would also be under the strict security of the new Sindh provincial cabinet headed by Syed Qaim Ali Shah.

Meanwhile the workers cadre of the PPP in said province has high hopes attached to the expected measures by the new Sindh cabinet of the PPP for maximum generation of employment opportunities in the province of Sindh.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Huge potential for foreign investment exists in Pakistan' ​* 
LAHORE (March 09 2008): Executive chairman Wenham Major, Ammar Azam, has said the economic growth in Pakistan is impressive and there is a huge potential for foreign investment in the real estate, telecommunication, power and banking sectors.

Azam told Business Recorder here on Saturday that Wenhamn Major is one of the leading financial and business advisory firms in the Midlands and also ranked as the 23rd UK biggest accountancy firm.

He said both Pakistan and India are emerging economies and the economic commentators spoke of spectacular economic growth and development, and dynamic and increasingly accessible markets, with the 21st century being described as Asia Pacific's century.

He said liberalisation of the economy continued apace with trade barriers largely removed and privatisation programmers gradually reducing the still-significant role of the public sector in the production and consumption of goods.

"We have established our office in Lahore and also planned to set up one in India this year. We have encountered a global economic hub, which has opened up new opportunities both for our own business to trade with economies, such as Pakistan and India, and for our clients to break into markets in the Asia Pacific rim," he said.

He said dynamics of business had changed altogether in the globalised competitive business environment. "Wenham Major has the resources base to assist the Government of Pakistan in delivering economically sound citizen-centre services to the nation, ensuring greater levels of transparency and sustainable economic development," he added.

He said his group helped its Pakistani investors in making international investment decisions by providing investment expertise. "The Major real estate has developed a separate Non Resident Pakistani division for investment advisory at its UK and Dubai offices for the best facilitation of its expatriates clients," he said.

He said there was a huge scope of promotion of SMEs in Pakistan. By providing solid base to the SMEs sector, Pakistan's economy could achieve a significant growth. But he was critical of high rate of interest in Pakistan. He said high interest rate for SMEs left a negative impact on the growth of SME.

Business Recorder [Pakistan's First Financial Daily]


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## Bushroda

*Pakistan Economy Remains Resilient Amid Crisis*
*Despite being at a political crossroads, strong fundamentals keep the economy buoyant*

By Rafi-uddin Shikoh and Zainab Mansoor 
Dinar Standard, NJ 
March 6th, 2008

Media coverage of Pakistan has been dominated by its political crisis and the now unfortunately regular spate of suicide attacks including the assassination of the prominent opposition leader Benazir Bhutto. 

It would then seemingly defy conventional wisdom that two leading Silicon Valley venture capital firms, ePlanet Ventures and Draper Fisher Jurvetson (DFJ) - funds that helped create companies like Hotmail, Skype and Baidu - would recently invest in a Pakistani Internet company - Naseeb Networks. 

Or it would seem unlikely that a new $158 million private-equity fund, by the JS Group, would close on Dec 31st 2007 to invest solely in Pakistan.



Or that in a year (2007) when the country experienced the highest levels of political turmoil and security breaches, its largest stock exchange, the KSE with 670 companies listed would be up an impressive 40% and that the average dividend yield of its stocks would be 6%. 

Undoubtedly, for such investor confidence, the fundamental attractiveness of an economy has to be solid while the impact of any crisis limited. In Pakistan not only does this seem to be true but its potential remains severely untapped -- offering tremendous opportunities to both domestic and foreign businesses.

*Domestic demand driving economy *

With a large and growing population of 160 million, its real GDP (Gross Domestic Product) has grown at almost 7.0% for the last 3 years and is expected to be at 6.5% for 2008. Meanwhile the most recognized indicator of a nations prosperity  its GDP per capita, is expected to cross US$1,000 this year  and US$2,000 by 2014, according to local financial services firm BMA Capital. Similarly, middle class incomes are rapidly growing and consumer spending consequently growing above 10% CAGR for last 3years. 


[FONT=Verdana, Arial, Helvetica, sans-serif]Image: Emaar Pakistan [/FONT]

At the same time, a Feb 2008 report by the World Bank points out that Pakistan suffers from a dearth of infrastructure in the water, irrigation, power, and transport sectors. With its water infrastructure in poor condition, the report argues that Pakistan has to invest around US$1 billion per year in reservoirs and related infrastructure over the next five years. In the energy sector, the country will face severe power shortages of around 6,000 megawatts by 2010. Similarly, inefficiencies in the transport sector cost the economy between 4-5 percent of GDP each year. To overcome these constraints, Pakistan has tripled its annual infrastructure investment from an average of US$2.5 billion to US$7.3 billion, but increased involvement of the private sector will be needed to meet the gaps.

BMA Capital is amongst the leading financial groups in Pakistan and was the advisor to Etisalat (the UAE based Telecommunication company) on their successful acquisition of a 26% strategic stake in Pakistan Telecommunications Company Limited (PTCL) for US$2.6 billion, the largest M&A transaction and foreign direct investment in Pakistans history. In BMAs 2008 outlook for Pakistan, it highlights the key economic drivers as the role of domestic demand, relative insulation from a US recession, insensitivity to domestic politics, tight monetary policy and high oil and commodity prices. The firm projects earnings growth of Pakistans publicly listed companies in FY08 at 12.2% and FY09 at 18.0% and projects that the FY09 P/E ratios will move up from the current 9.7x to the historical average of 11.4x.

BMA is certainly benefiting from its own advice. Speaking to DinarStandard, Mr. Shehryar Ahmed, Senior Vice President & Head of Marketing and Investor Relations at BMA Capital Management commented that, In 2007, BMAs Pakistan Opportunities Fund, the countrys first and only offshore country fund generated 28.5% in the midst of assassinations and emergencies. I think this is illustrative of the opportunity that Pakistan offers and the international investor is willing to look behind the headlines. Even in an unstable political terrain, Pakistan has posed a great investment opportunity. 

Speaking on the current economic environment he further added, Government spend has increased substantially on infrastructure and other development areas over the last few years and that trend is expected to continue, given the large projects already in implementation and in the pipeline. In 2008, now that elections are behind us, and a new government is to be formed, we are optimistic of the countrys growing economic prospects."

*Local Entrepreneurs Bullish *

Given that the elections were conducted harmoniously and no apparent political upheavals appear in sight, the major players in the local market are hoping for a further boost in the economy.

Naseeb Networks is a leading provider of a portfolio of websites including ROZEE.PK and Naseeb.com. ROZEE.PK is Pakistans largest and fastest growing job website delivering over 1.4 million applications to jobs posted by 8,800 employers that include Mobilink, Nestle, Oracle, McDonalds, United Bank Limited, Microsoft, GlaxoSmithKlein, Engro Foods, Proctor & Gamble and others. 

Its CEO and Founder Mr. Monis Rehman, is looking forward to aggressively expanding its Pakistani presence given the recent cash infusion from its Silicon Valley investors. Speaking to DinarStandard he said, "Investments continue to happen because the fundamentals are strong. Pakistan has a population of 160 million consumers. 70 million of them now have mobile phones. Over $1 Billion has been invested in broadband and WiMAX infrastructure. While there is a lot to be concerned about, there is also a lot to look forward to."

Commenting on the viability of its new media venture in Pakistan, he said, "Pakistan has a rapidly growing 7.5% internet penetration rate compared to India's 4.5%. None of the top 10 sites viewed from within Pakistan are local, which suggests a huge opportunity for creating local content. Online advertising is also at its infancy and with the current market dynamics, is poised for strong growth." 

Similarly, major players in the telecommunication league think no different. Zuhair Khaliq, CEO of Mobilink, the subsidiary of Egypt-based Orascom, when asked to comment on the company's future plans in Pakistan said "We are envisaging sustainable growth in Pakistan. With mobile penetration still at around 43%, the room for growth is immense. The growth is not only limited to mobile telephony, as there are huge opportunities in other fields like broadband (optic fiber, DSL, WiMax), LDI etc. This coupled with the enabling environment being provided by the Pakistan Telecommunications Authority ensures an excellent future for this sector.

Meanwhile, the outlook for banking which serves as the back bone to an economy also seem bright for 2008, as the Central Bank Governor Dr. Shamshad Akhtar announced the country's "extraordinary growth" of financial sector assets which grew to $180 billion or 125% of the Gross Domestic Product (GDP) in 2007. Fitch Ratings also recently reported that the Pakistani banking system, over the last decade, has gradually evolved into an active private sector driven system with the private sector controlling nearly 80 percent of the system assets, as opposed to the early 1990s when 90 percent of the system assets were controlled by the government.

Another growth driver is the growth in Islamic Finance. In Pakistan there are currently six dedicated Islamic Banks with a total of 186 branches along with 102 standalone Islamic Banking branches of conventional banks. According to Meezan Bank, the first IF bank in Pakistan, their total deposit base is over US $1.98 billion while the overall Islamic banking assets are worth $2.83 bill.

*Easier to do Business than in China and India? *

The World Bank annually releases an Ease of Doing Business ranking which provides objective measures of business regulations and their enforcement across 178 countries. Its 2008 report showed Pakistans ranking (#76) as better than the emerging markets of China (#83) and India (#120). It was also identified as one of the leading reformers during 2005-08 and within OIC member countries was only behind Egypt in terms of the number of new business friendly reforms.

An example of such a business reform noted by the project is that customs clearance at the Karachi international container terminal has dropped from 10 days in 2004 to 4 hours in 2007.

Indeed, a variety of business friendly measures during the past few years and relative political stability have played a positive role in investor confidence. Its certainly hoped that the new political structure can only improve upon these measures and resolve the many issues remaining to be addressed. 

*Opportunities to Invest*

The recently created JS Private Equity Fund sees opportunities in both export-related industries such as textiles, leather and medical supplies, as well as domestic-demand related industries such as consumer goods, media and advertising. Speaking to MarketWatch recently, Steve Smith, JS Funds Managing Director, further identified opportunities in inefficiencies within infrastructure, transportation and logistics, as well as agriculture and horticulture. 

The JS Private Equity Fund has already made two investments. The first is for a controlling stake in Optimus, the Hertz franchise in Pakistan, which specializes in long-term vehicle contract-leasing to businesses. The second is a minority investment in Engro Asahi Polymer & Chemicals, the only Pakistani producer of PVC resin. 

Meanwhile, BMA Capital sees the biggest investment opportunities in energy & power, refinery, gas distribution, fertilizer, autos, banks, cement, fmcg (fast moving consumer good), telecom, and textile sectors. 

Overall, the horizon for prosperity and growth seems lustrous for Pakistan. The general sentiment is undimmed and is driving the masses to believe that change for a better economy & a better future is within their sight. Despite being considered a politically unstable terrain, Pakistan as an economy still has a lot to offer and is rightfully called by Mark Matthews of Merrill Lynch as "the greatest information-arbitrage opportunity in the world.


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## Neo

Excellent read Happyfeet, thanks for sharing


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## Bushroda

My Pleasure


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## ejaz007

*First ship arrives at Gwadar port*​
LAHORE: A ship carrying 72,000 tonnes of wheat arrived at Gwadar Port on Monday  the first to come to Pakistans largest deep-water port since its inauguration last year. Dawn News television channel reported that a private company had chartered the ship, which came from Russia and arrived in the evening. Earlier, the Gwadar port administration had asked the Karachi Port Trust and the Ministry of Ports and Shipping for help in handling the ship. According to the channel, the port authorities and the shipping company had not decided until Saturday on how to handle the cargo. The port administration had arranged three tugs instead of the usual two, the channel said. It said the port would initially be used as captive cargo for trans-shipment purposes only.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Trade deficit widens to $12.43bn ​* 
Tuesday, March 11, 2008

ISLAMABAD: The countrys foreign trade deficit during July-February 2007-08 jumped to a record high of $12.43 billion on Monday, which is 39.05 per cent more than the corresponding period of last fiscal ($8.94 billion), the Federal Bureau of Statistics (FBS) said.

Ballooning imports and deflated exports once again returned. The deficit, if unchecked, could further jack up the current account deficit, which is a potential threat to the economy. The economy during the first eight months of the current fiscal pulled in imports worth $24.14 billion while its exports stood only at $11.71 billion. During the same period of last fiscal, imports stood at $19.79 billion and exports at $10.85 billion. 

This depicts 21.95 per cent growth in imports while only 7.86 per cent rise in exports. It indicates that the country is marching toward another huge trade deficit in the current fiscal year. More interestingly, during February 2008, exports were up 5.31 per cent to $1.55 billion while imports rose 3.67 per cent to $3.66 billion over January 2008. During February 2008, imports were up 42.25 per cent and exports 22.25 per cent over February 2007.

Each month, the import growth exceeds that of exports steadily widening the trade gap. It is important to note that previously, in its trade policy for 2007-08, the government targeted imports at $29.6 billion and exports at $19 billion with a trade deficit of $10.6 billion.

Now, during July-February 2007-08, the country achieved 61.63 per cent of exports and 81.55 per cent of imports target. The huge import pressure and low export growth indicates that by the end of this fiscal, trade deficit would reach more than $16 billion that would further aggravate the current account deficit (CAD) that could affect the countrys economic health. Again the country may be confronted with the dilemma of balancing its financial accounts.

Trade deficit widens to $12.43bn


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## Neo

*Making steel from local iron ore becomes viable ​* 
Tuesday, March 11, 2008

LAHORE: With the global steel rates rising, it has become economically viable for steel mills to use local iron ore. Even the Pakistan Steel Mills that has used imported ore for over three decades has started using local iron ore.

Local and international investors are studying the possibility of setting up small to medium steel plants that would use locally available iron ore, the News has learnt. Producing steel from indigenous ore was earlier ignored due to high extraction cost and low iron content. However, the soaring steel and ore price in global market has made the idea of extracting steel from local ore feasible.

The investors are optimistic about safety of their investment as the demand for steel is rising rapidly and the local production is almost stagnant. In 2005-06 the steel smelters and the Pakistan Steel together produced 3.9 million tons of steel products against local demand of 7.3 million tons.

The smelters and re-rolling mills use imported, PSM produced billets or scrap to produce steel products. The PSM continues to increase the rates of steel products in line with the global rates because the iron ore it imports has also become more expensive.

The rates of iron ore from which the steel is extracted in the steel mills have increased sharply in past five years from $27.83 per ton in 2002-03 to $73.45 per ton in 2006-08. The current rates are above $85 per ton. The rates of billets that are the basic raw material for making steel products have increased from $360 per ton in 2005 to $750 per ton in 2007 and are still rising. The rates of steel scrap used by smelters for making billets have increased to $540 per ton.

A study by The News revealed that the major iron ore reserves found in Pakistan amount to 947.5 million ton. The deposits are present in Punjab (Sargodha and Kalabagh), NWFP (Nizampur and Hazara), and Balochistan (Kalat and Chaghi). The ore from these deposits contains 20 to 60 per cent iron. The Pakistan Steel Mills has successfully used local iron ore and is expected to gradually reduce the dependence on imported iron ore.

Over three decades back a plan to establish steel mill at Kalabagh was shelved as the 450 million deposits of iron ore found at that site had iron content of 30-35 per cent. Steel experts state that the extraction of iron from these deposits is now feasible, as the global rates have gone too high.

Another advantage that the investors in steel sector found in Pakistan was the availability of huge deposits of coal that is a main energy source for steel melting. Coal reserves in Pakistan are mainly concentrated in Thar that has got second highest coal reserves in the world. Coal is also found in Punjab and Balochistan and some nominal quantity has also been discovered in Northern areas.

Taking advantage of this situation the Engineering Development Board of Pakistan has chalked out a plan to increase the production capacity of indigenous steel to 10 million tons from the current capacity of 5.190 million tons (the actual current production is lower because some steel melting and re-rolling plants have closed). The Chief Executive officer EDB Almad Hyder is confident that both local and foreign investors would take advantage of the current favorable investment in steel sector in Pakistan. He said a foreign Middle East based group is already installing a unit of the size of PSM at Karachi while some investors have completed their feasibility studies for establishing some units in Punjab and NWFP.

World steel production rose by 49 per cent during 2001-06 reaching 1.3 billion tons in 2007. Global steel experts predicted that the world demand for steel would grow by compound annual growth rate of 4.9 per cent during 2007-2010. The latest projections however suggest that the growth rate in 2008 would be around 6.8 per cent. High growth in India and China is said to have increased steel demand.

Making steel from local iron ore becomes viable


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## Neo

*IMC plans rolling out 70,000 units per year *​ 
*Investment in expansion, technology transfer, capacity building of local vendors to continue, says IMC Director Corporate Planning and Customer Relations​*
Tuesday, March 11, 2008
By Hina Mahgul Rind

KARACHI: Indus Motor Company Limited plans to make investment in enhancing production capacity from 50,000 to 70,000 units per year. 

The company has installed an environment friendly Co-Generation Power Plant, an in house Press Shop to make body parts for vehicles while expansions continue in other sections of the plant. IMC has also made large investments in capacity building of vendors to match Toyotas global quality standards said IMC Director Corporate Planning and Customer Relations Shah M Saad Husain while talking to The News.

The production capacity of the auto assemblers has increased four times in last five years. The gap between supply and demand has already been filled and most of the vehicles are now readily available.

IMC is continuously increasing production capacity to cater to the market demand. Our production capacity has increased from 57 units per day to 200 units per day resulting in reduced delivery periods. Most vehicles are available on 30-day delivery with some variation due to colour, he said.

Despite downward revision of the maximum age for used cars from 5 to 3 years they still continue to enter the country. However the reduction is a welcome step for the local auto industry facing importers using false documentation and purchasing overseas Pakistanis information to bring used cars in the country, he said. Unless there is further reduction in age of used vehicle to 2 years, it will continue to hurt the local auto industry.

Used vehicle imports are still about 14 percent of domestic passenger car and LCV production. The import tariff on used cars still remains considerably lower compared to the protection offered to local manufacturers in India, Thailand and other countries through higher duties and non-tariff restrictions, Saad said. 

Our auto policy should provide tariff and non-tariff barriers to protect and allow the indigenous auto industry to grow, he affirmed. He said that technology transfer is an ongoing process. IMC has a detailed program of Technical Assistance Agreements (TAA) for vendors. Over 60 percent localization was achieved in Corolla and over 65 percent in Coure with major investment of IMC.

Challenges faced by the industry in Pakistan are, technological readiness, infrastructure, inefficiency of legal framework, firm-level technology absorption, low penetration of computers and Internet. Other challenges include the imposition of Custom duty on Royalty and Technical Fee being paid under the TAA. 

Saad said that for the first time after many years a joint government and industry platform in the shape of AIDP has emerged which has fixed the Tariff Regime till 20011-12. If implemented fairly without changes the AIDP should further increase investment in the local manufacturing of automobiles and auto parts he sai adding, however work on many aspects of the AIDP has not started nor has a concrete implementations plan been made. 

It is essential to maintain current industry momentum. For the first time after many years the auto industry sales have declined. He said that the major issues that the auto industry faces include inconsistent policies, used vehicle imports, under invoicing and smuggling of parts, no consultation with the industry while negotiating trade agreements with other countries, 2.5 percent WHT, custom duty on royalty payments, lower depreciation rate on vehicles, documentation of spare parts business and withdrawal of excise duty from franchise services. 

Japan is considered to be the 4th largest investment partner of Pakistan with $400 million investment according to the SBP report.The Auto sector is dominated by Japanese multinationals and there has been increased investment for production capacity enhancement. Investment has also been made in upstream industries. Japanese investment in the automobile sector is expected to increase in coming years.

Pakistan Japan Business forum is already active and working on other possible areas of investment which can provide economic and commercial benefit.Some possible sectors in which Japanese firms could be interested are energy, infrastructure development and technical training. 

IMC plans rolling out 70,000 units per year


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## Neo

*Plan to include stationery items in FTAs ​* 
Tuesday, March 11, 2008

KARACHI: The WTO cell of TDAP has been given a task to work with the stationery industry and develop a proposal for the Ministry of Commerce to include stationery items in the free trade agreement (FTA).

This task was assigned to the WTO cell by the Chief Executive, Trade Development Authority of Pakistan (TDAP), Tariq Ikram at a recently held debriefing of stationery manufacturers who participated in the Paper World China, Shanghai exhibition in November 2007.

It was noticed that none of the existing FTAs benefited the stationery industry. The meeting felt that it was necessary to include stationery items in the FTAs, RTAs and PTAs that have been already signed or are to be signed in the future. TDAP chief formed a seven-member committee led by the Chairman of Writing Instruments Manufacturers Group of Pakistan to chalk-out a strategy paper to boost the export of stationery items.

The exhibitors informed the TDAP that almost all participating booked significant orders not only from buyers in China but also from Turkey, Egypt, North Africa, USA, Europe and various other countries.

Plan to include stationery items in FTAs


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## Neo

*Energy savers can save 1,300MW ​* 
Tuesday, March 11, 2008
By Jawwad Rizvi

LAHORE: Replacement of one incandescent bulb with a Compact Fluorescent Lamp (energy saver) by each of the 17 million users of power utilities means that people can help WAPDA and KESC save about 1,374 megawatts of electricity during peak hours, said energy conservation expert Engineer Arshad Chughtai.

Giving a presentation on Impact of energy management on power planning at Technology Upgradation and Skill Development Company (TUSDEC) head office here, he said that power consumption in Pakistan was presently growing at a rate of 10 per cent per annum, predicting it would double by the year 2015. The major reason for the steep growth is consumers indifference towards saving electricity, Chughtai maintained.

Quoting an example, he said that incandescent bulbs, perfected for mass use by Thomas A Edison in the late 19th century, were being phased out in several developed and developing countries at the moment and replaced with CFLs, which use only 20 per cent of the energy consumed by incandescent bulbs.

Arshad Chughtai said that the use of CFLs would not only help consumers save a lot of money, but would also lead to austerity at the national level, as at present, generation of each megawatt of energy costs US$1 million.

He said unlike other developed and developing nations, in Pakistan most of the energy ie 43 per cent of total generation, was consumed by domestic consumers while industries share in power consumption was just 28 per cent against 63 per cent in China and 43 per cent in India.

He said that Pakistan, with an installed power generation capacity of almost 20,000 megawatts (including that of recently installed two rental power plants), is presently facing a shortfall of 2,500 megawatts. He said that different measures including load management, conservation along with generation of more energy could ensure energy security of the country.

The energy conservation expert said that the installation of Time of Day (ToD) and Time of Use (ToU) meters could also encourage the consumers to minimise consumption of electricity during peak hours, as it would change their consumption behaviour. He also suggested the use of low-pressure sodium vapour lamps for street lights and proper adjustment of thermostats for energy conservation.

Energy savers can save 1,300MW


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## Neo

*Increase in petroleum rates: Prices of kitchen items increased by 20 percent​*
LAHORE: The prices of daily use commodities have witnessed an increase of at least 20 percent after an increase in petroleum prices made on 29 February, a survey conducted by Daily Times found on Monday.

Interestingly, the Caretaker Finance Minister Dr Salman Shah has said that the government made only 9 percent increase in the petroleum products and predicted of 1.5 percent impact. The minister also forecasted minimal impact of petroleum prices on consumer price index (CPI). However, the ground realities are entirely different, as the kitchen items including tea, soap, detergents, milk, pulses, mayonnaise, spices and vegetables have risen by at least 20 percent. Some products have also seen an increase of 40 percent. The major increase was seen in by-products of edible oils. 

A 200-gram pack of tea whose price earlier was Rs 55 is now being sold at Rs 66 thus an increase of 20 percent was made. The standard bath soap, which was earlier available for Rs 25, is now being sold at Rs 28. One Kg pack of an A-class detergent that was available for Rs 120 to Rs 125 is now being sold for Rs 145 to Rs 155 while a B-class detergent that was sold for Rs 40 is now available for Rs 48. One Kg pack of mayonnaise, which was sold for Rs 135 to Rs 140, is now being sold at Rs 165 to Rs 170. One Kg pack of tea whitener that was sold between Rs 250 to 255 is now being sold for Rs 265 to Rs 275 while one Kg pack of milk is sold for Rs 290 to Rs 310, earlier it was available for Rs 275 to Rs 290.

The prices of spices, pulses and vegetables also skyrocketed. The red chillies price was raised from Rs 125 per Kg to Rs 140 to Rs 150 thus an increase of around 20 percent. It was the case with black pepper and rest of the spices. Dal Chana price shoot from Rs 38 per Kg to Rs 48 per Kg. The prices of vegetables have also seen same impact with onion and ginger taking the lead.

The shopkeepers and vendors said that the producers and manufacturers, owing to an increase in transportation charges, have increased the prices while an increase in edible oil prices has also impacted the by-products. They said that all the companies made the latest increase in detergent and soap prices on March 03. We got new supply at higher prices, said a Green Town wholesaler Haider Ali adding that the salesmen of the companies are saying that the transportation charges have increased and there is no other option but to raise prices. The detergent and soap prices have been the most affected, as oil is being used in these items, Ali said.

People said that the increases have made their lives miserable and the new government should help them. The new government should take such steps that a common man gets relief, said a banker Sadeed Ather. He said that if the new government is serious in giving relief to the common man then it should de-link the local prices from international prices. He said that the companies are increasing the prices of commodities taking plea of an increase in international market. He said that giving subsidies on raw materials could control the current inflation. The developed countries are offering subsidies on certain items therefore the government should also give subsidy on the kitchen items, as it would be the best service to people, he said.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Niko to invest $32m in oil exploration*​
ISLAMABAD: To boost Pakistans economy by substituting imported oil and gas with indigenous supplies, a Canadian Company, Niko Resources Limited will invest $32 million for oil and gas exploration over four blocks located in the Arabian Sea. The Company also plans to invest more than $200 million subject to availability of viable structures after conducting seismic survey. 

According to details, the government has already granted Petroleum Exploration Licenses with Government Holdings (Pvt) Limited (GHPL) and Production Sharing Agreements with GHPL and Niko Resources Limited (Niko) over four blocks namely (1) Offshore Indus North (No. 2466-7) covering an area of 2466.24 square kilometers, (2) Offshore Indus X (No.2465-3) covering an area of 2482.83 square kilometers, (3) Offshore Indus Y (No. 2465-4) covering an area of 2482.33 square kilometers and (4) Offshore Indus Z (No.2466-6) covering an area of 2489.49 square kilometers located in the Arabian Sea. The execution of the new production sharing agreements forms an integral part of the governments drive to attract investment in the oil and gas sector and boost Pakistans economy by substituting imported oil and gas with indigenous supplies. To meet this objective, the unexplored offshore region is being given special emphasis where an oil and gas discovery can provide a major impetus for attracting new investments significantly affecting exploration landscape of Pakistan. 

The government is making all out efforts to enhance oil and gas exploration activities through investment friendly policies. Therefore, in order to provide further incentives, Petroleum (exploration and production) Policy 2007 has recently been promulgated which is rated as one of the best policies in the region. Niko has considerable success in the Sub-Continent being the joint venture partner in a big discovery made in India during 2002 which is expected to commence production of around 2 billion cubic feet gas per day in 2008. The company has multiple exploration discoveries and production in India and Bangladesh.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Govt allows WAPDA to set up power plants *​
ISLAMABAD: Federal government has allowed Water and Power Development Authority (WAPDA) to set up 600MW to 1000MW coal based power plants in Thar to overcome the gap between power demand and supply, sources told Daily Times on Monday.

Sources said that Economic Coordination Committee (ECC) of the Cabinet headed by caretaker Prime Minister Mohammedmian Soomro has also hinted the approval in this regard after withdrawing the ban on public sector for setting up thermal and coal based power plants. At present, the total power generation of Pakistan stands at around 10,000MW plus against the demand of 11,500MW per day. 

Sources said that ECC has approved public-private partnership concept under which over 7,927MW power would be added to the existing power generation of around 10,000MW power by the year 2009-10.

ECC has allowed WAPDA to set up coal based power plants but National Electric Power Regulatory Authority (NEPRA) has failed so far to announce the upfront tariff for the investors to set up coal based power plants in Thar.

Following the directions of President Pervez Musharraf, water and power ministry has forwarded a summary to NEPRA containing the observations on indicative upfront tariff for coal based power plants to review the proposed 7.65 cents tariff by NEPRA so that the reservations of Sindh government could be addressed. 

Sources said that Pakistan Electric Power Company (PEPCO) has been allowed to set up the thermal power generation plants of 2,450MW by 2010 to overcome the power shortage crisis. Sources said that PEPCO would complete the projects by 2010.

Sources said that 450 MW power would be added by Nandipur power project and 500MW electricity would be achieved from Chichokimalian. Sources further said that a project of 600 MW would be completed by July 2008 and 550 MW project would be completed by December 2008. Sources further said that PEPCO has been allowed to complete the project of 1000 MW on fast track basis by December of the current year.

Sources also noted that 309MW would enhance the capacity of current existing power generation system during December 2008.

They said that the private sector would set up 15 independent power plants (IPPs) by the year 2009-10 that would generate 2,868MW electricity. At present 16 IPPs are operational in the country that were set up under the power generation policy 1994. Since that time no new investor has made investment to set up IPP. Current IPPs are generating 3,700 MW to 4,500 MW against the generation capacity of over 5,700 MW.

Daily Times - Leading News Resource of Pakistan


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## Neo

*TDAP sets $500m export target for stationery products​*
KARACHI: Trade Development Authority of Pakistan (TDAP) has set $500 million export target for stationery products and a committee has been formed to suggest ways and means to achieve this target.

This was decided in a debriefing meeting, which was chaired by Chief Executive TDAP and Minister of State Tariq Ikram and attended by stakeholders of stationery sector. 

The meeting was held on Monday to review the progress since the participation of stationery industry in Paper World China, Shanghai exhibition in November 2007. 

Discussion revealed that almost all industries, which participated in the exhibition booked significant orders from not only the buyers in China but also from Turkey, Egypt, North Africa, USA, Europe and various other countries. Almost 1,500 exhibitors and a large number of buyers from all over the world were present in the exhibition. Discussion revealed that apart from stationery items of paper, Pakistans stationery industry was producing world-class products of almost the entire range, which is quite large.

Also those international quality standards such as EN71, BS7272, BS5665 and ISO 11540 were being complied with by most leading stationery manufactures in Pakistan. International laboratories have granted these certifications.

It was reported that Pakistan does not have any standards of its own and therefore, international standards were being complied with and in terms of environmental compliance, Pakistani products were not using any hydrocarbons nor xylene or toulene based products. There is no child labor involved and therefore, the industry is socially compliant as well. 

Based on the discussion Tariq Ikram formed a committee of seven persons from the industry and tasked them to develop a strategy paper to raise exports from $5 million to $500 million in 5 years, which the industry felt was achievable.

He asked the committee to develop a directory of manufacturers and exporters of stationery items, a seven minute CD of the industry and a brochure of Pakistans stationery products reflecting the wide range of items along with specifications.

He encouraged the industry to consider joint venture with international companies to be able to produce branded goods with buy back arrangement of the leading stationery brands of the world and reminded the industry to take advantage of the TDAPs scheme to support branding, opening of offices abroad and the warehouse for penetrating African market.

He also offered that the industry could benefit from the TDAPs scheme of bringing in world class consultants for any aspect of business development including design, production, marketing and training. TDAP has an agreement with BESO of UK where from world class consultants can be sourced at a cost of only British pound 3,000 per consultant which would be shared 50 percent by TDAP.

Ikram advised the WTO cell of TDAP to work with the stationery industry and develop proposal for the Ministry of Commerce to include stationery items in the FTAs, RTAs and PTAs that have been already signed or are to be signed in the future. It was noticed that none of the existing FTAs benefited the stationery industry.

Ikram advised the stationery industry to develop application for ensuring that exports are zero rated which would enable the industry to obtain duty and tax refunds on their exports. The industry complained that the existing refunds did not cover the actual duty and tax element. TDAP chief provided the deadline of 30 days for the development of strategy paper on the stationery industry along with the brochure, director and CD. Based on the findings of the strategy paper, Ikram agreed to consider the inclusion of stationery item as one of the developmental sector in TDAPs export strategy. It was also agreed to include stationery in the Export Turnaround Plan of TDAP along with the core and developmental sector to be presented to the major buyers such as Wall Mart, Sams Club, and Target.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Road, rail links be set up for Gwadar​*
ISLAMABAD: Road and rail links with the Gwadar Port must be developed and completed speedily along with other facilities to realise its full potential particularly with regards to facilitating exports so that it could emerge as a major economic hub in the region, observed the Senate Standing Committee on Ports & Shipping, which met at the Parliament House under the Chairpersonship of Senator. Gulshan Saeed on Monday.

Senate Standing Committee on Ports and Shipping on Monday constituted a 3-member Committee to act as an intermediary between National Highway Authority (NHA) and local population / influentials to develop road and rail links with the Gwadar Port. Senator Dr. Abdul Malik heads the committee 

Other members of the sub committee include senators Dr. Muhammad Ismail Buledi and Mir Israrullah Khan to sort out issues with the locals especially regarding acquisition of land and security problems in Balochistan to develop road and rail links for Gwadar Port. 

They called upon the Government to accord the highest priority to the project. 

The Chairman NHA, in his briefing to the Committee, stated that road connectivity with the hinterland is key to market the Port for transit trade with Afghanistan, Central Asian Republics and China. 

The road linkages to Gwadar comprise the following sectors; Gwadar-Turbat-Hoshab-Panjgur-Nag-Basima-Surab (N-85) links Gwadar to N-25 RCD Highway at Surab. The NHA has awarded contract for up-gradation of this federalised road to the FWO. This road shall connect Gwadar to N-85 & N-25- RCD Highway at Khuzdar and N-55 Indus Highway at Ratodero.. This road links Gwadar to Quetta and Chamman through N-25-RCD Highway. 

The Senate Committee was also given a presentation on development of Rs. 100 billion Gwadar-Quetta Rail-link project and the reasons why it was stalled. The Committee took a strong exception to the provincial Governments violation of the ban on sale of state lands imposed by the federal Government in Balochistan. 

The Government/Railway prized land was allegedly sold by the unscrupulous elements in the provincial administration to private housing societies / land developers at throw away prices. 

The same societies, it was alleged, are now demanding millions of Rupees from the railways to provide land for construction of Container Yard. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Engro, Algerian firm set to join hands​*
Karachi, March 10: Engro Pakistan Limited confirmed on Monday that it was interested in forming a joint venture with Ferphos, a National Iron Ore & Mining Company of Algeria, setting at rest weeks of speculation on whether the Pakistani fertiliser-to-food manufacturing giant was setting its sights on Algeria, the second largest country in Africa.

Ruhail Mohammad, vice-president Finance and Admin Services at Engro, talking to Dawn from Italy on Monday evening, said that the majority holdings in the joint venture company would be that of Engro and the cost of project to develop the proposed Phosphatic Fertiliser Complex could range between $1 to 1.5 billion.

He said that the exact modalities would be determined later as the company was still waiting for official confirmation of its selection as Ferphos partner from the concerned government authorities of Algeria. This decision is expected within the next few weeks after the resolution of some issues regarding the exact location of the project site, he informed. The company had earlier endorsed this view in a statement in Karachi.

Engro announced that the fertiliser complex in Algeria would constitute a 3,000 tons per day unit of DAP; three 4,500 tons per day units of sulphuric acid, three 1,500 tons per day units of phosphoric acid and the associated utilities facilities.

The company stated that the project was expected to be constructed in a period of around four years after the completion of successful feasibility study by the joint venture.

Engro had participated in an open and transparent international tendering process that took place in May 2007, the company stated and added that it had secured top position as Ferphoss preferred partner for creation of the joint venture.

However, the official communication of the position had not been made as certain approvals from the government of Algeria were awaited. In Feb 2008, the Algerian Council for State Participation (relevant Algerian government body for taking decisions on foreign investments) approved the creation of the joint venture between Ferphos and a foreign partner (as evident from the local Algerian print media); however, the name of the foreign partner has not been disclosed at this stage, Engro said.

Mr.Ruhail said that the production from the Algerian complex would be predominantly for exports.

Amal Haider, analyst at Elixir Securities Pakistan commented that the investment in the project was expected to further boost Engros bottom-line growth due to the heightened DAP demand. He expressed positive outlook on the company on the back of diversified portfolio basket, urea expansion and now investment in a DAP plant.

Engro, Algerian firm set to join hands -DAWN - Business; March 11, 2008


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## Neo

*Immediate plans to end energy crisis urged​*
LAHORE, March 10: The government needs to tap alternative energy resources and devise an immediate plan to keep the industrial wheel running.

Lahore Chamber of Commerce and Industry President Mohammad Ali Mian stated this in a statement here on Monday while expressing concern over shortage of water in dams.

India has constructed a number of new water reservoirs while Pakistan is facing a big energy crisis, he said, adding, Pakistan will not be able even to ensure water for irrigation and what to talk of hydel power generation due to construction of dams on the Indian side.

He expressed apprehension that load-shedding would be of more than six hours in the coming days.

He said that it would be wiser to evolve a short-term strategy in consultation with private sector for utilisation of alternative energy resources.

Ali Mian said that during the winter season, the industry suffered heavily due to shortage of gas and now the power crisis was haunting the industry.

All long-term projects, he said, would take at least eight to ten years to complete and there is no short-term project which would be able to start power generation before two years.

He said proposed constitution of a committee, comprising members both from public and private sectors, to cope with the situation.

He urged the government to finalise Pak-Iran gas pipeline deal as early as possible.APP

Immediate plans to end energy crisis urged -DAWN - Business; March 11, 2008


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## Neo

*Textile tycoons shifting capital to Dubai​*
KARACHI, March 10: Huge outflow of capital from the country has found its way into real estate business in Dubai, where many Pakistani developers have entered into joint ventures with their local counterparts to reap windfall profits, business sources said.

The boom in construction industry in the Gulf emirate has attracted Pakistani entrepreneurs to avail the opportunity at a time when the textile industry, countrys biggest industrial sector, has been passing through a crisis for the last over two years.

Since Dubai has become the world business and trade hub, many Western and Far Eastern multinational companies have set up their offices from where they interact with their counterparts around the globe.

There is an increasing demand for housing as well as commercial centres, which has generated a construction boom attracting investors from around the globe.

The textile exporters after loosing hope of getting any support from the government for ensuring their viability and competitiveness at the global level are winding up their establishments and moving out their capital to Dubai to make easy money in real estate, a textile tycoon requesting anonymity told Dawn.

The greatest advantage in Dubai is the stable cost of inputs and un-interpreted supply of power with no hassle to deal with large number of government agencies and departments, lamented a leading businessman, who flew back after entering into a big real estate deal in Dubai

He further said that there were no apprehensions about the law and order or political instability and the business organisation only have to worry about their business deals and transactions.

Contrary to this, he said that when doing business in Pakistan every person became parasite including the government departments.

Giving details of the construction industry boom in Dubai, he said, on booking a property a huge margin is earned within couple of weeks and these funds could be again invested in another property.

He said an apartment booked at a cost of around Rs10 million was disposed of at Rs10.10 million in a matter of two weeks time.

Similarly, he said there were many avenues in indenting and trading business, where quick money is made without entering into the hassle of running an industrial set up. Even on setting up an industry, he said, there are fixed rules of the game and every entrepreneur knew about his cost and profit margins.

He said that some leading Pakistani developers were already engaged in construction projects with locals and were involved in big housing and commercial projects.

He said during the tenure of former prime minister Shaukat Aziz only banks made windfall profits followed by the telecom industry. The biggest crime of his government was that it converted the country into a consumer society and also widened the gap between the haves and haves not.

Last year, he said banks made profits of Rs68 billion and this years profits were Rs76 billion, which indicates the robust financial health of the banks.

Textile tycoons shifting capital to Dubai -DAWN - Business; March 11, 2008


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## Neo

*Riyadh offers $300m to offset effects of high oil cost​*
ISLAMABAD, March 10: Saudi Arabia has offered a one-time $300 million budgetary support to Pakistan to help bridge the fiscal gap caused by constantly rising oil prices.

A finance ministry statement issued here on Monday termed it a goodwill gesture and said the Saudi government decided to provide the grant following a request made by President Pervez Musharraf to King Abdullah to help Pakistan in offset the effects of high oil costs.

The statement termed the Saudi governments decision very timely and said it will help Pakistan in meeting the budgetary gaps effectively and (help) promote macroeconomic stability in the country.

Finance Minister Dr Salman Shah said the grant would help the new government to avoid any massive increase in prices of petroleum products.

Denying that the caretaker government planned to increase oil prices before handing over power to the new government, he said: This is good that the new government will not have to go for excessive oil price increases in the second phase. The caretaker government had raised power charges by 9 per cent and increased petrol and diesel prices by Rs5 and Rs3.5 a litre on Feb 29.

Asked if the Saudi government had restored an old facility, the finance minister said that it was a one-time budgetary support.

Riyadh offers $300m to offset effects of high oil cost -DAWN - Top Stories; March 11, 2008


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## Neo

Neo said:


> *Riyadh offers $300m to offset effects of high oil cost​*
> ISLAMABAD, March 10: Saudi Arabia has offered a one-time $300 million budgetary support to Pakistan to help bridge the fiscal gap caused by constantly rising oil prices.
> 
> A finance ministry statement issued here on Monday termed it a goodwill gesture and said the Saudi government decided to provide the grant following a request made by President Pervez Musharraf to King Abdullah to help Pakistan in offset the effects of high oil costs.
> 
> The statement termed the Saudi governments decision very timely and said it will help Pakistan in meeting the budgetary gaps effectively and (help) promote macroeconomic stability in the country.
> 
> Finance Minister Dr Salman Shah said the grant would help the new government to avoid any massive increase in prices of petroleum products.
> 
> Denying that the caretaker government planned to increase oil prices before handing over power to the new government, he said: This is good that the new government will not have to go for excessive oil price increases in the second phase. The caretaker government had raised power charges by 9 per cent and increased petrol and diesel prices by Rs5 and Rs3.5 a litre on Feb 29.
> 
> Asked if the Saudi government had restored an old facility, the finance minister said that it was a one-time budgetary support.
> 
> Riyadh offers $300m to offset effects of high oil cost -DAWN - Top Stories; March 11, 2008



*Pakistan gets $300 million Saudi grant ​*
ISLAMABAD (March 11 2008): Saudi Arabia has extended $300 million budgetary support for Pakistan to help it in easing the growing pressure on its economy. An official announcement made here on Monday said.

"In a goodwill gesture for support for the people, Saudi Arabia has given a budgetary support grant of $300 million to Pakistan. The grant will help Pakistan bridge the fiscal gap in Pakistan that arose due to high global prices of oil and petroleum products."

Pakistan, after nuclear tests in 1998, had enjoyed for three years the facility of oil supply from Saudi Arabia against deferred payments. Pakistan was looking for 1998-like financial support from Saudi Arabia to offset pressure on the economy. The announcement of $300 million for budgetary support seems much less than expected financial help in Islamabad.

The announcement said that the Saudi support had come after President Musharraf's recent visit to Saudi Arabia, during which he requested King Abdullah to help Pakistan in defraying the cost of high oil prices. It added that the decision of the Saudi government was timely and would help Pakistan in meeting the budgetary gaps effectively and promoting macroeconomic stability in the country.

In the wake of growing current account deficit, the government was desperately looking for some financial support from Saudi Arabia. It had taken up the matter with the Saudi government many times.

In the recent past, Prime Minister Mohammedmian Soomro had raised the issue with King Abdullah and sought oil supply against deferred payment. But, for him, the response from the Saudi Arabia was not up to Pakistan's expectations. Then President Musharraf took the issue with Saudi King during his visit. This time the response from Saudi Arabia has been positive.

This is a question mark as to what extent budgetary support of $300 million will ease the pressure on its economy. Other than seeking financial help from Saudi Arabia, the government is taking different steps at home for setting aside the pressure. These include cutting down Public Sector Development Programme (PSDP) size and non-developmental expenditure for the current fiscal year.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Industries, manufacturers: monthly production summary made mandatory ​* 
ISLAMABAD (March 11 2008): The Federal Board of Revenue (FBR) has decided to make it mandatory for certain industries and manufacturers to submit monthly data regarding production, clearance and stocks for improving sales tax collection of the potential sectors.

The board instructed the collectors of sales tax to expand the list of industries, engaged in the filing of production summary. According to the FBR instructions, the collectorates would ensure that all the registered persons file their monthly production reports. They will also recommend names of additional items for production summary in addition to the existing 29 items.

Sources said that an amendment would be made in relevant notification in 2008-09 budget for inclusion of more items to submit the production data. The board would direct the registered manufacturers, making supply of taxable goods to submit details of goods manufactured/supplied and subsequently cleared along with quantitative data.

The details of production, supplies and goods cleared in a month could be used to ascertain actual production for calculating the sales tax. The main purpose for submission of production summary is to analyses the data of potential sectors, which are contributing more to the gross domestic product (GDP). It is an exercise for measuring the economic activities.

The data is being submitted to the Federal Bureau of Statistics for further economic analysis. Sources said that the manufacturers of 29 items, including cars, are submitting their monthly data of production, clearance and stocks to the sales tax department since July 1, 2006.

Presently, the production data has to be submitted by registered manufacturers of sugar, tea blended, cigarettes, aerated waters, cement, motor cars, buses, jeeps, trucks, light commercial/light transport vehicle, motorcycles, air conditioners, refrigerators, deep freezers, washing machines, television sets, paper/paper board, chemicals, gases/acids, flakes/detergent, paints/varnishes, natural gas, liquefied petroleum gas, fertiliser, wires/cables, toilet soap, ceramic tiles and caustic soda to file the "special return."

Sources said that the registered manufacturers, dealing in these 29, items would be required to submit details of production, clearance and stocks on monthly basis. The information so obtained will help the collectorates to identify trends in various sectors and make realistic revenue estimates. The field formations would compare the data with actual market information and accordingly ascertain and investigate the causes of variations.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Sindh Engineering to set up auto joint venture with China's Dong Feng ​* 
KARACHI (March 11 2008): The Sindh Engineering (Pvt) Ltd (SEL) is planning to enter into a joint venture arrangement with Dong Feng Automobile Company of People's Republic of China for manufacturing Dong Feng brand of commercial vehicles. Details of the joint venture will be announced here on March 13. SEL is a company of Pakistan Automobile Corporation Ltd, Ministry of Industries.

According to SEL, such arrangements are envisaged at not only expanding the product range of Dong Feng vehicles, currently being assembled at SEL, but also for ensuring transfer of latest automobile technology to Pakistan.

This will also bring in foreign investment in the shape of equity. The joint venture will help produce world known vehicles at reasonable prices. An SEL delegation would be visiting China next week to finalise details of the joint venture. SEL has made arrangements with Faysal Bank for financing Dong Feng vehicles, which will now be included in the 'President's Rozgar Scheme'.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan to auction oil and gas fields ​* 
*Bids to be invited in coming months​*
Wednesday, March 12, 2008

KARACHI: Amidst stagnant production and rising demand of energy, Pakistan has decided to auction fields for oil and gas exploration under a new petroleum policy, a senior petroleum ministry official told The News.

Incentives offered in Petroleum Exploration and Production Policy 2007 will start having an impact on the countrys energy scene once bids are invited for new blocks in the coming months, Shaukat Durrani, Additional Secretary Ministry of Petroleum said.

Outcome of the policy would be seen once it is implemented, he said, when asked if the much talked about policy has failed in attracting investment. Blocks under the new policy will be put to auction soon, he added. However, he did not give any details about the number and location of fields to be offered to exploration and production (E&P) companies.

Petroleum policy was introduced last year following hectic negotiations between government and E&P companies. The final document also stipulated a better price for natural gas, which has been feeding the economy as the main fuel for last few years.

However, official statistics compiled in the Energy Year Book 2007 suggest that the trend might be shifting a little too fast due to limited gas production. Citing that data, Umer Ayaz, a JS Global analyst, said that the share of gas in the total energy mix has declined to 48.5 per cent from last years 50.4 per cent, replaced by the rising consumption of oil.

This significant growth in oil supplies was primarily led by increased consumption of furnace oil by power sector, amid gas shortage and limited availability of water for hydro electricity generation, he said in a report issued here. Heavy reliance on oil, most of which is imported, had a negative impact on the economy, he added.

With oil prices still rising, Pakistans trade deficit has surged to $12.4 billion in eight months of the current fiscal year, against $8.9bn recorded in the same period of the previous year. Production of gas has not increased in the last couple of years and is limited at 4000 mmcfd against a demand of 4900 mmcfd. Experts say that import of gas is the most viable solution to overcome the energy shortage, but a concerted effort should also be made to exploit local resources.

Industry officials, however, say that E&P companies had some reservations which should be addressed forthwith, if government was serious about increasing indigenous gas production. First and foremost, they say that the government should stop the practice of introducing a new petroleum policy after every few years. Consistency in policy, one of the officials said, would encourage genuine investment.

Another official referred to the clause in Petroleum Policy 2007, which allows government to resale leased land after its expiry. The clause is also applicable to leases granted under previous policies of 1986 and 2001.

Acknowledging that this move was meant to ensure that lease holders develop their fields and not sit idle, he said financial damages to be suffered in such cases would be enormous for E&P companies. Another clause regarding the application of windfall levy should be made clearer, he added.

Pakistan to auction oil and gas fields


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## Neo

*Bright prospects for Basmati exports ​* 
Wednesday, March 12, 2008

LAHORE: Punjab Minister for Agriculture Khurshid Zaman Qureshi terming Pakistans Super Basmati Rice a unique commodity by virtue of its superb grain quality, has said that the World Trade Organisation (WTO) deserves special attention of all the stakeholders, in designing appropriate agricultural and trade policies to comply with the new trade regime.

He expressed these views while speaking at a one-day capacity building workshop on International Standards & Quality Requirements for Rice Production & Export, jointly organised by the Punjab Agriculture Department and the Lahore Chamber of Commerce & Industry on Tuesday.

The minister said that Pakistan had bright prospects of Basmati rice export in the changing scenario of globalisation and hence, could make headway by adopting WTO standards. He said that rice being given high demand in the days to come, improved production technology and appropriate post-harvest operations like thrashing, drying, milling, grading, packing, transportation and storage needed to be encouraged. He, however, urged that there was a dire need to improve the nutritive value of rice grain as well.

He expressed satisfaction that the Pakistani farmers being hard-working; were capable of meeting all the challenges of WTO under able guidance and directions. Meanwhile, he also predicted that Pakistan would gain in rice production and export if all the agreements of WTO would be implemented with true letter and spirit globally.

He said that Pakistan had comparative advantage in producing rice, especially Basmati varieties, stressing that there was a need to translate that advantage into production and export surplus. For that purpose, the farmers and exporters would have to maintain high quality standards and fairness in their trade dealings to attract buyers in the international market, he added.

He said that maintaining the rice exports at the optimum level seemed difficult, since it involved a lot of awareness and marketing skills, which the Pakistanis still needed to excel in. However, he said that the increasing quantum of rice trade would make the effort worthwhile.

Bright prospects for Basmati exports


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## Neo

*Venture capital no more a distant dream for Pakistani companies ​* 
Wednesday, March 12, 2008

LAHORE: At a time when the country is passing through one of the most turbulent times in its history, it is no ordinary development that a Pakistani Internet company has attracted investment from two of the worlds top 25 venture capital funds.

On January 14 2008, amidst political unrest and bomb blasts, Naseeb Networks secured a multi-million dollar venture capital investment from ePlanet Ventures and Draper Fisher Jurvetson (DFJ), according to its Chairman and CEO, Monis Rahman. These two top Silicon Valley funds, which have invested for the first time in a Pakistani company, are well known for their legendary investments in companies such as Hotmail, Skype and Baidu.

Talking to The News, Monis said that this investment was historic because it is the first time that reputed foreign venture capital funds have invested in a Pakistani company that is targeting the local market. Other companies such as Align Technology raised venture funding in the past, but relied on foreign markets for their revenue.

The investments in these companies were made mainly for the reason that engineering and IT costs in this part of the world are low. But, he said, the case of Naseeb Networks is notably different as it is a company that is targeting its revenue from the local market and has won confidence of venture companies by showing extraordinary results in a very short time.

Monis said that although he cannot disclose the exact amount of the multi-million dollar investment, it was more than he originally wanted. However, top venture capital companies are not content with taking control of only a small share in such cases. Funding is just part of the equation. The global expertise and experience that our investors bring to our board are invaluable.

He stated that two venture capitalists from ePlanet Ventures and DFJ are at number 8 and number 23 respectively in Forbes Midas List of top 100 venture capitalists in the world. ePlanet and DFJ have backed companies like Skype and Hotmail, and helped them become what they are now, he said adding, Their investment in a Pakistani Internet company is a huge vote of confidence, not just for what we are doing as a company, but is also a vote of confidence for the potential that Pakistan has to offer. If we are successful, the floodgates of investment can open for other Pakistani companies.

Commenting on his companys rapid growth, Monis told The News that the number of registered users on the companys job portal, ROZEE.PK, have increased to 650,000 from 300,000 recorded last year. Naseeb Networks maintains websites offering online recruitment, social networking and communication services. 

He said that according to different rating agencies, the companys job portal ROZEE.PK, is the second most visited Pakistani website after that of Jang Group. Secondly, Monis said that Naseeb Networks has been profitable since 2004 and this investment will be used as growth capital to expand his business.

In order to attract venture capitalists to invest in Pakistan, Monis said that it was not enough to just demonstrate his companys success. He had to sell the potential of Pakistan as a market.

According to Monis, Internet penetration is growing at an exponential rate in Pakistan. Investment amounting to US$1 billion has been made in the countrys Internet infrastructure by companies including Mobilink, Wateen Telecom, and Burraq Telecom. Public access to high speed Internet would grow dramatically due to technologies such as WiMAX being introduced, he said. 

Pakistans Internet users are likely to increase in the coming years in the same manner as mobile subscribers have grown from less than 3 million in 2002 to over 70 million in 2008, he added.

Monis said that 7.5 per cent of the Pakistani population has access to Internet, as compared to 4.5 per cent in India. These fundamentals can potentially make Pakistan as attractive a destination for investors as India, keeping in view that both the countries have very similar dynamics.

Monis has worked with Intel Corporation in Silicon Valley, where he was awarded several patents for his work designing microprocessors and set up his own company there before coming back to Pakistan after 9/11. He tells The News that Naseeb Networks job portal, ROZEE.PK, which was launched towards the end of 2005, has helped thousands of job seekers get rewarding jobs. Over 8,800 leading companies including UBL, Mobilink, Engro Foods and Nestle use ROZEE.PK in Pakistan today to advertise their jobs and hire the best talent. A significant piece of our revenue comes from employers who advertise on our site, he adds.

In his concluding remarks, Monis said that investors typically have two competing instincts, greed and fear. During the past few months, investors have had plenty to fear in Pakistan. We were fortunate that the strengths of Naseeb Networks, coupled with the potential that Pakistan has to offer, tipped the scales in favour of greed.

Venture capital no more a distant dream for Pakistani companies


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## Neo

* LCCI, TUSDEC aim to make industry competitive ​* 
Wednesday, March 12, 2008

LAHORE: The Lahore Chamber of Commerce and Industry and Technology Upgradation and Skill Development Company (TUSDEC) will work together to make Pakistans industrial sector internationally competitive in terms of technology and human resource.

This was decided in a meeting held here between TUSDEC Chief Executive Officer Suhael Ahmed and LCCI President Mohammad Ali Mian. Briefing the meeting, Suhael Ahmed said the TUSDEC was planning to set up an electronics complex and a common facility centre to help in the local production of electronic gadgets and mobile phones whose import was costing billions of dollars a year.

He said the Federal Institute of Materials and Homologation, being established in Gujranwala, would also go a long way in increasing the share of Pakistani products, especially fans, in the international market.

He said China and a number of other East Asian countries had set up their production units in Vietnam whose exports had touched the mark of US$146 billion. Pakistan, he added, could also emerge as a manufacturing hub of the region by embracing new technologies and diversifying the industrial base. Suhael Ahmed said the Gujranwala Tools, Dies and Moulds Centre was being set up to help the plastics and sheet metal industry get access to new manufacturing technologies.

LCCI, TUSDEC aim to make industry competitive


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## Neo

*Fiscal deficit likely to touch five percent of GDP ​* 
KARACHI (March 12 2008): The country's fiscal deficit is likely to touch 5 percent of GDP by end-June due to rising oil subsidy and domestic debt servicing, besides higher development expenditures, economists believe.

"Funds mismanagement and higher development expenditure by the provinces hurt the fiscal deficit in the first half of the current fiscal year, which pushed it to 3.6 percent of GDP. However, these issues can be easily overcome in the coming months," said Muzamil Aslam, an economist at KASB.

The risk to the deficit being higher than the estimate hinges upon delays in government's decision to slash development expenditures and oil subsidy, he said. However, this figure could be higher if the government is unable to pass on the oil price increases and/or cut PSDP targets for the current year, he said.

He said that any rise in expenditure from this point would be linked with rising oil subsidy, driven by higher international oil prices. "The government recently hiked domestic oil prices by 10 percent, which should help reduce the total monthly oil subsidy by 15 percent. However, it is also believed that the new government will be under pressure to decide on the domestic oil price issue", Aslam elaborated in the report on fiscal deficit.

He said that the government has three options: to pass on the higher oil prices to end-consumers; cut the current Public Sector Development Programme (PSDP) targets by Rs 100 billion to stabilise oil prices at current levels; or a combination of the two, where a portion of the increase is passed on to the end-consumer and the rest is adjusted through a cut in PSDP targets. It is quite likely that the government would be happy to implement the third option.

However, even if the government manages to control the oil risk, the risk to a subsidy spike would remain, as the government would likely bear an additional Rs 20-40 billion through wheat subsidy and Rs 17 billion for PTCL VSS subsidy in the second half of the current fiscal year 2008, he said.

Therefore, it is expected that the fiscal deficit would be 5 percent at the end of the current fiscal year, up from 4.3 percent of last fiscal year, he said, and added that it could be higher if the government is unable to pass on the oil price increases, or cut PSDP targets for the current year.

He said that tax collection was low in December due to long holidays and Benazir Bhutto's murder. As a result, tax collection came in Rs 40 billion below target and caused a 0.4 percentage point increase in fiscal deficit in 1HFY08, while non-tax revenues hurt exclusively due to delays in defence logistics payments from the US.

These two trends have reversed in February, resulting in incrementally lower government borrowing from the State Bank of Pakistan in the past two months, he said. Aslam said that high development expenditure is led by provincial development expenditure up 87 percent YoY and development expenditure for the province of Punjab alone in first half surged by 115 percent YoY to Rs 71.6 billion compared to total provincial development expenditure of Rs 104 billion.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*February food inflation soars to 16.05 percent ​* 
ISLAMABAD (March 12 2008): The Consumer Price Index (CPI), a key indicator of inflation, rose 11.25 percent in February 2008 with soaring 16.05 percent food inflation over the same period of last year.

The February CPI was also up 0.49 percent over January while July-February 8.90 percent inflation has indicated a perpetual rise in overall trend which might go beyond double digits by the end of the year, putting more pressure on the economy.

The data on CPI, released by the Federal Bureau of Statistics on Tuesday, showed that comparing year-on-year basis in February 2008 the CPI rose at an average 11.25 percent against 7.39 percent in the corresponding period of last year.

The food prices were up by 16.25 percent in February from a year ago. The State Bank of Pakistan had already cautioned that continued government borrowings from the bank would result in excessive monetary growth and would perpetuate inflationary pressures.

The food inflation, having 40 percent weight in CPI basket, rose 16.05 percent in February and is likely to go up in March following oil prices adjustment. Economists see the inflationary pressure suppressing wage earners as the pay increase made in the budget has already been offset by previous surge in prices.

The cost of apparel, textile and footwear increased by 6.66 percent during the period under review; house rent 9.96 percent, fuel lighting 6.17 percent, house furniture and equipment 6.35 percent, transport 2.97 percent, recreation and entertainment 0.74 percent education 3.43 percent, cleaning, laundry and personal appearance 13.04 percent and medicare 7.90 percent.

The main commodities, which showed an increase in their prices during February 2008 over previous month included in food & beverages, tomatoes (45.60 percent), vegetables (29.15 percent), pulse masoor (15.79 percent), condiments (15.27 percent), cooking oil (8.58 percent), vegetable ghee (6.28 percent), fresh fruits (5.66 percent), rice (5.22 percent), mustard oil (4.33 percent), readymade food (2.97 percent), tea (2.77 percent), fish (2.57 percent), dry fruits (2.23 percent), sweetmeat and nimco (2.17 percent), pulse gram (2.01 percent), besan (1.17 percent), potatoes (1.11 percent), gram whole (1.09 percent) and betel leaves & nuts (0.95 percent).

Woollen readymade garments (2.61 percent), kerosene (17.16 percent) and firewood (3.08 percent), plastic products (2.13 percent), marriage hall charges (1.88 percent), utensils (1.45 percent), household equipment (1.18 percent) and furniture readymade (1.10 percent), petrol (9.37 percent), diesel (9.29 percent), tyres & tubes (1.63 percent) and vehicles (1.17 percent), toilet soaps (11.77 percent), jewellery (5.31 percent), shaving articles (1.93 percent), hair cut & beauty parlour charges (1.89 percent) and washing soap & detergent (1.64 percent).

The wholesale price impact of that is yet to be passed on to consumers increased by 16.36 percent over the corresponding month of last year with food prices going up 18.26 percent, raw material 8.90 percent, fuel lighting 23.51 percent, manufacturing 8.75 percent and building materials 10.85 percent.

The main commodities, which showed an increase in the prices in February 2008 over last month included tomatoes (36.63 percent), vegetables (26.10 percent), masoor (16.46 percent), condiments (8.99 percent), cooking oil (6.21 percent), bajra (5.92 percent), vegetable prepared/preserved (4.94 percent), vegetable ghee (4.73 percent), jowar (4.70 percent), spices (4.50 percent), rice (4.46 percent), mustard & rapeseed oil (4.08 percent), cottonseed oil (3.49 percent), maize (3.45 percent), beans (3.26 percent), dry fruits (2.74 percent), fresh fruits (2.18 percent), besan (1.64 percent), tea (1.44 percent), gram split (1.32 percent) and oil cakes (1.03 percent).

Raw materials: Mustard/rapeseeds (5.79 percent), tobacco (2.97 percent), hides (1.50 percent), pig iron (1.27 percent), cottonseed (1.19 percent) and skins (1.16 percent). Fuel, lighting & lubricants: Kerosene oil (9.97 percent), motor spirit (9.32 percent), furnace oil (4.42 percent), diesel oil (4.37 percent), firewood (4.19 percent), coke (1.79 percent) and mobil oil (1.47 percent).

Business Recorder [Pakistan's First Financial Daily]


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*Italy for promoting bilateral trade and investment ​* 
MULTAN (March 12 2008): Italian Ambassador Dr Vincenzo Prati has stressed the need for promotion of bilateral trade and investment between Italy and Pakistan in different sectors like manufacturing of heavy machinery, power generation machinery, chemicals, dairy, telecommunication, furnace oil, and pharmaceutical products.

Addressing Multan Chamber of Commerce and Industry (MCCI) executive committee meeting, chaired by Jalaluddin Roomi here on Friday, he said that Italy was buying cotton, cotton yarn, fabrics, readymade garments, leather tanned, leather gloves, footwear, metal manufactures, rice, engineering goods, fruits, cutlery, oilseeds, nuts and kernels, gold jewellery and vegetables worth $58.833 million while in exchange it exports high speed diesel, kerosene oil, transport vehicles, telecommunication appliances/equipment, power generating machinery/equipment, paper and paper board and pharmaceuticals.

He said that trade and financing can be increased by promoting business, tourism, exchange of delegations. Muhammad Yousaf said that MCCI would organise a musical night in the historical old fort in the last week of March or first week of April this year and Ambassadors of different countries would be invited to it.

Upon this the Italian Ambassador and his wife consented to attend it. He said that similar function was organised in the past which was attended by ambassadors of 23 countries.

A Memorandum of Understanding (MoU) was signed between the Multan Chamber of Commerce & Industry (MCCI) and Italian-Pak Chamber of Commerce & Industry (IPCCI). Jalaluddin Roomi signed on behalf of MCCI while Ettore Mazocchi signed for IPCCI in a simple ceremony at Multan Chamber.

The MoU was formalised to market analyses and identification of investment and trade opportunities benefiting, reports on specific sectors for mutual trade development, assistance in developing market entry strategies both in Italy and Pakistan, identification of suppliers and importers both in Italy in Pakistan, identification and selection of industrial and financial partners for joint ventures, sharing of corporate and financial information on potential partners, organisation of individual fact-finding meetings in Italy and Pakistan, dossiers on the existing laws, tax system and on the import duties, interpretation, translation and Italian language courses, customised Italian language courses for companies.

Ettore said that Italian-Pak Chamber of Commerce and Industry is a non-profit organisation recognised by the Italian Government, whose main objective is to promote and enhance trade and economic relations between Pakistan and Italy.

The IPCCI intends to play an active role in organising product exhibitions and international trade fairs, B2B meetings, seminars, conferences and round tables to promote knowledge sharing between the two countries.

The Chamber also co-ordinates and manages business and institutional delegations which stimulate both Italian and Pakistani markets. It is mainly due to these activities that the Chamber has developed strong ties within Pakistan and in Italy mainly with sectoral associations, public and governmental bodies and well known personalities within the industrial and local media sectors. Both partners MCCI and IPCCI recognise that its work extends beyond the office: They recognise the prime importance of personal interaction in all bilateral relationships.

To this end, both intend to organise a wide range of events to both facilitate and promote such interaction in the most favourable locations and ambience. Both Chambers will encourage the extensive programme of conferences, seminars, roundtables, business delegations and participation in international exhibitions in order to foster reciprocal knowledge of the two countries and to assist and promote bilateral business relations.

Roomi in his address of welcome said that Multan is a city of saints, preserves its folds immense heritage, rich culture, and centuries-old traditions of learning, wisdom, trade and commerce .It has been an important trade centre and gateway to central Asian states for centuries. It produces 80 percent of total production of cotton.

Business Recorder [Pakistan's First Financial Daily]


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*'Pakistan, Sri Lanka should take their per capita income to $2500' ​* 
KARACHI (March 12 2008): Governor State Bank of Sri Lanka Ajith Nivard Cabraal has said Pakistan and Sri Lanka will have to take their per capita income to 2500 dollars so that the people could be empowered to exploit the potential Asia offers to the twenty-first Century world.

Cabraal was speaking on "Economic Growth of Asia" at a select gathering of diplomats, bankers, ECOs of financial institutions, prominent businessmen and journalists jointly organised by Ijara Financing and Emirates Global Islamic Bank Limited at a local hotel on Tuesday. He said that the attention of Australia, USA and Europe was now toward Asia and its riches.

He said that these regions were fully prepared to take advantage of the existing opportunities, whereas, less developed Asian countries were still to prepare themselves. Cabraal said that the Asian countries would have to make a firm commitment to its people who want their respective governments to implement their plans. "A lot of talking has been done and it is time to implement our plan," he said.

He said that there must be a vision for economic development during the next fifty years. "The vision should be pragmatic and it should be implemented after taking all the stakeholders on board."

He said that per capita income in the region (Sri Lanka and Pakistan) is low. Sri Lanka has shown 1600 dollar and Pakistan 1000 dollar as per capita income during 2007. "Unless there is money available with the people of these countries, economic development would remain meaningless. People will have no money to spend and therefore, the progress will remain purposeless. It is therefore, necessary to raise the per capita income to minimum 2500 dollar in Pakistan and Sri Lanka." He said that exportable surplus is another option which must be taken up on war footings.

Cabraal said that how Asia impacts 21st century should be examined. "Are we also taking Asia seriously is another question that should be answered."

He said that 40 percent population of the world lives in Asia where the landmass is only 20 percent. In this space there is huge resource, manpower and opportunity to work. The only question remains to be addressed are how to take advantage of this situation.

He said that the private sector should come up with proposals and where the private sector feels shy, the government should play its role. He emphasised the need to improve infrastructure and to invest in education, health, road-network and in the development of similar facilities that were necessary for overall growth.

He said that as far as Pakistan and Sri Lanka were concerned they should implement the Free Trade Agreement (FTA). Private sector should play its role and ensure that trade relations between the two countries make headway.

He said unless we moved nothing would happen. "It is time to develop vision 2050 and move, act and take all stakeholders on board."

Earlier, in his remark Syed Tariq Husain of Emirates Global Islamic Bank Limited said that Islamic banking in Pakistan was growing and it had captured 15 percent share of the total banking industry.

He said that his bank would expand by increasing its branch network from the existing 10 to 25 in the next one year. He said that there would be expansion in the domestic market and it would be followed by cross border expansion. He said that EGIB would play its role in the economic activity in Asia.

Farrukh Ansari, MD and CEO of the Ijara Financing (Pvt) Ltd, said that the growth in Asia was phenomenal and the poor or less developed countries would have to prepare themselves to take advantage of existing opportunities. Others who spoke included Sirajuddin Anwer, Deputy Governor State Bank of Pakistan and Sirajuddin Aziz, chief operating officer, Bank Al-Falah.
Business Recorder [Pakistan's First Financial Daily]


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*Rashid eyes more foreign fiscal help ​*
ISLAMABAD (March 12 2008): Presidential Spokesman Major General Rashid Qureshi (Retd) on Tuesday said that Pakistan will receive more fiscal assistance from abroad after the receipt of 300 million dollars from Saudi Arabia.

In a telephonic interview to PTV, he said that it will not be appropriate to talk about the detail of this assistance at this stage but the entire nation would see when the big amount reaches the country particularly from the countries, which supply oil to Pakistan.

He said that President Musharraf during his visit to Saudi Arabia has briefed the rulers of brotherly oil rich country that due to sky rocketing prices of oil in the international market the economy of Pakistan was under pressure. It is under these efforts that the Saudi government has given generous assistance to Pakistan which will help mend the trade deficit conditions, he said.

Business Recorder [Pakistan's First Financial Daily]


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*'Tusdec planning to set up Electronic Complex' ​* 
LAHORE (March 12 2008): Lahore Chamber of Commerce and Industries (LCCI) and Technology Upgradation and Skill Development Company (Tusdec) will work together to make Pakistan's industrial sector internationally competitive in terms of technology and human resource.

This was decided at a meeting held between Chief Executive Officer, Tusdec, Suhael Ahmed and President LCCI, Muhammad Ali Mian here on Tuesday. Ahmed said that Tusdec was planning to set up Electronics Complex, a common facility centre to help local production of electronic gadgets and mobile phones whose import was presently costing billions of dollars a year.

He said that the Federal Institute of Materials and Homologation (FIMH), being established in Gujranwala, would also go a long way in increasing share of Pakistani products especially fans in the international markets.

China and a number of other East Asian countries had set up their production units in Vietnam whose exports had touched US $146 billion mark and Pakistan could also emerge as a manufacturing hub of the region on embracing new technologies and diversifying its industrial base, Ahmed added.

Business Recorder [Pakistan's First Financial Daily]


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*Strategy devised to set up more cottage industries ​* 
SIALKOT (March 12 2008): Punjab government has formulated a strategy for setting up maximum cottage and small-scale industries including agro-based industries in the province. Official sources told Business Recorder here on Tuesday that the government had set aside huge funds for the development of cottage and small-scale industries aimed at generating large number of employment opportunities for the unemployed skilled and semi-skilled persons in the Punjab.

The government had planned to establish agro-based industries in remote and neglected areas by providing incentives and concession to the interested persons for setting up such industries in their respective areas. The concept of this programme was to generate employment opportunities for the skilled and semi-skilled persons besides to discourage the rapid rural migration towards the cities of the Punjab.

This proposed programme would also serve its dual role in broadening strong industrial base and ensure the development process in far-off and neglected areas of the Punjab. The government had already introduced business and investment-friendly policies for ensuring industrial enlargement and foreign investment in the Punjab.

In addition, the government was constantly stressing the business community to produce non-traditional products along with the routine production of traditional products as well to concentrate on bringing innovation in their products. The diversification of products would be much supportive in increasing the export volume in the Punjab.

The Punjab Small Industries Corporation (PSIC) would extend full guidance, assistance and loan facilities to the interested businessmen and newcomers for setting up and upgrading their industrial units in the province.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan and Iran to sign gas sale accord next month ​*
ISLAMABAD (March 12 2008): Iran will sign a final agreement to export gas via pipeline to Pakistan in April. Iran, the world's No 2 holder of oil and gas reserves, has completed half of the pipeline, which will have a capacity to carry 110 million cubic metres of gas a day to Pakistan, senior pipelines expert at National Iranian Gas Vahid Zeydifard said.

Iran plans to start exporting gas to Pakistan from 2011, a private TV channel reported. The 7.4 billion-dollar project, known as the "peace pipeline," will carry gas from Iran to Pakistan and India to meet the growing energy demand of the two countries.

"Negotiations are at a final stage," Zeydifard said, adding:."Pakistan needs 50 million cubic metres of gas a day, and we can supply the rest to India if they want it."

India currently uses about 108 million cubic metres of gas a day. Iran was unable to commission gas export projects either via pipeline or in liquefied form because US sanctions were preventing international lenders and investors from releasing funds, Zeydifard said.

Pakistan is facing a shortage of gas as domestic fields decline and may have to depend on Iranian fuel to meet demand, which is expanding by five percent a year. Iran and Pakistan had agreed on the pricing formula for transporting natural gas through the proposed pipeline, the official Islamic Republic News Agency reported on October 23.

The National Iranian Oil Company was developing the Kish field, which would transport gas via a 900-kilometre pipeline from Assaluyeh to Iranshar once it was completed, said Zeydifard, whose company transports gas in Iran. Pakistan could start receiving the gas when Iran completed a 400-kilometre section from Iranshar to the Pakistani border, Zeydifard said.

Iran halted gas exports to Turkey in January to meet soaring domestic demand due to extreme winter weather. "We have started exporting gas to Turkey again," said Zeydifard.

"We had supply problems because of the cold weather and disruption of gas supplies from Turkmenistan," he said. Iran sells gas domestically at 20 cents a million British thermal units. The benchmark gas price at Henry Hub, Louisiana, a gas trading point, is 10 dollars a million Btu. Iran might increase exports of gas this year to Turkey by 30 percent to 10 billion cubic meters, Zeydifard said.

Business Recorder [Pakistan's First Financial Daily]


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*Expert suggests steps to save electricity ​* 
LAHORE (March 11 2008): The replacement of one incandescent bulb by a compact fluorescent lamp (CFLs-energy saver) by each of 17 million users of our electric utilities, Wapda and KESC can help save about 1,374 megawatts of electricity during peak hours, said the energy conservation expert, Engr Arshad Chughtai.

Giving a presentation on 'impact of energy management on power planning' at Tusdec head office, he said, at present, the power consumption in the country was growing at a rate of 10 percent per annum, predicting that it would get double by 2015. "Major reason for the high growth is consumers' indifference towards saving electricity," he added.

Quoting an example, he said incandescent bulbs, perfected for mass use by Thomas A Edison in the late 19th century, were being phased out in several developed and developing countries at the moment and replaced with CFLs, which use only 20 percent of the energy consumed by incandescent bulbs.

The expert said the use of the CFLs would not only help consumers save a lot of money but also lead to austerity at the national level as generation of each megawatt of energy, at present, costs $1 million.

He said unlike other developed and developing nations of the world, most of the energy ie 43 percent of total generation, was consumed in Pakistan by domestic consumers while industry's share in power consumption was just 28 percent against 63 percent in China and 43 percent in India.

Engr. Chughtai said Pakistan with an installed power generation capacity of 20,000 megawatts, including that of recently installed two rental power plants, was presently facing a shortfall of 2,500 megawatt. He said the measures, including load management, energy conservation and generation of more energy should go side by side to ensure the energy security of the country.

He said the installation of Time of Day (ToD) and Time of Use (ToU) metres can also encourage the consumers to minimise the consumption of the electricity during peak hours as it would change their consumption behaviour. He also suggested the use of low-pressure sodium vapour lamps for streets and proper adjustment of thermostats for energy conservation. Tusdec Chairman Manzar Shamim and other officials were also present during the presentation.

Business Recorder [Pakistan's First Financial Daily]


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*Pakistan aims to up stationery exports​*
12 March 2008 - Karachi, Pakistan 

Pakistans Trade Development Authority (TDAP) has launched an initiative to boost the countrys stationery exports.

The TDAP recently formed a committee comprising leading stationery manufacturers to look at ways of achieving a $500 million target for stationery exports.

The seven-member committee, led by the chairman of the countrys writing instrument manufacturers association, has been given 30 days to come up with strategic plan to increase the level of stationery exports to $500 million within the next five years.

Office Products International - Pakistan aims to up stationery exports


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*Solid growth forecast for cement sector ​* 
*Exports expected to soar by 107 per cent, dispatches likely to reach 29.6 million tonnes in FY08​*
Thursday, March 13, 2008

KARACHI: Cement sales are expected to rise in the remaining months of fiscal year 2008 (FY08) with rising exports and stable local dispatches, a research report said. Industry sources said that the cement industry is set to increase its sales due to high production and high export orders.

With the advent of the peak local cement demand season in the country and soaring regional prices, demand for Pakistani cement is set to rise further. Hence, it is likely that in remaining months of FY08, we might see record cement sales on both local as well as export front. Already, in the first eight months (Jul-Feb) of FY08, sales have demonstrated a healthy increase in demand of 23 per cent with dispatches of 18.7 million tons, said JS Research.

Considering the sales increase of 23 per cent in the eight months of the current fiscal year, the total dispatches are likely to reach 29.6 million tons in FY08. Total dispatches declined in December 2007, but this decline has been due to lesser working days and winter season.

The peak demand season starts in March with the end of winter and advent of suitable weather for construction work. During this season sales can grow by 22 per cent versus 24.2 million tons cement sales in FY07.

Some of the infrastructure development projects including building of 250,000 houses in five years, new canals, highways, buildings and new dams (like Diamir-Basha Dam), announced in the budget FY08 have already been undertaken which would help rising local cement demand.

The President of Karachi Cement Dealers Action Committee (KCDAC), Walibhai Patel said, Local demand of cement is rising not because of higher local utilisation but due to high exports, and hence less availability of cement is pushing local demand and prices up.

Cement exports are expected to soar by a massive 107 per cent due to the primary source of overall cement growth in FY08, the high exports owing to the cement supply shortage in India and Middle East which lead to rocketing cement prices in the region. 

Pakistani cement companies, due to their excess capacity, are exporting to Middle East, Africa, Afghanistan and India where they are getting a price premium. In the first 8-months of FY08, exports increased by 140 per cent to 4.3 million tons while at the end of the year FY08 the expected total exports would be around 6.6 million tons.

Some Pakistani cement companies have also received orders from Russia where price of cement has reached US$280/ton (Rs860/bag), however, due to logistic problems it seems difficult to export cement to Russia.

In FY08 to-date, Pakistan cement industry brought in 5.84 million tons of new capacity of cement production taking the total cement capacity to 36.1 million tons. This includes DG Khans new Khairpur plant & Maple Leafs new production line of 2.1 million tons each and some other additions of 1.8 million tons.

Going forward, Lucky Cement with its 2 new lines of 1.26 million tons capacity each and Fauji Cement with its 2.1 million tons new line are expected to come online. With these additions and other expansions, the total industry installed capacity is expected to reach 49.1 million tons per annum by FY10.

Solid growth forecast for cement sector


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*Bureaucracy hampers Pakistan and India trade ​* 
*Simplified duty regime, contract honouring mechanism needed to increase trade​*
Thursday, March 13, 2008

LAHORE: Pakistan and India could mutually benefit by promoting bilateral trade provided the mindset of their bureaucracy based on six decades of hostility changes to facilitate trade.

The liberalisation of trade in the past two decades has put pressure on many domestic industries to import from other regions. This has also forced inefficient industries in these economies to improve quality and cut cost to challenge competitors in their own countries. Pakistan and India, however, are not prepared to allow their efficient sectors to compete similarly in their markets.

An Indian economist admits we, in India, will do well by projecting trade as a two-way traffic. However, he adds it will be better if India also dispels the impression that it is interested in tapping the neighbours markets but does not want to open up itself for one reason or the other. Somehow, he says, that is the impression that has got stuck whether it is Bangladesh or Pakistan or even Sri Lanka.

Economists express surprise that both countries have offered their huge markets to competitors from developed economies but have denied the same to each other. The two neighbours show undue resistance in this matter and the tactics used are complex and perplexing.

For instance, the economists say, import duty on fabric in India is 10 per cent or a certain fixed amount per kg whichever is higher. Import duty on fabric in Pakistan is 25 per cent. However, the minimum per kg duty on fabric fixed by India is more than the 25 per cent duty on fabric imposed by Pakistan.

In this way, they say, Pakistani fabric that has great potential in the Indian market cannot be exported because its export is restricted through a tricky duty regime. Pakistans fabric export to India increased from $48.68 million in 2005-06 to $73.70 million in 2006-07. This fabric was used by the Indian apparel industry for manufacturing garments for export.

The economists say Pakistans raw cotton import from India increased from $58 million in 2005-06 to $206.90 million in 2006-07, adding the figure would have been much higher had the Pakistan government allowed timely import of cotton through Wagah border.

Another aspect that is impeding trade between the two countries is the absence of an effective mechanism to enforce contracts. Indian cotton exporters have backed out of many contracts this year as the global cotton rates soar, leaving Pakistani buyers high and dry.

Similarly, they say, there is no mechanism in Pakistan that ensures that contracts signed by traders with their Indian counterparts are honoured. The experts say absence of the most-favoured nation (MFN) status by Pakistan is not a major impediment in the way of increase in trade between the two countries. Though this lapse cannot be overlooked, the Indians have cleverly devised a trade policy that particularly impacts products in which Pakistan enjoys a competitive advantage. If only such hurdles are removed, trade volume could go up considerably, they stress.

The absence of regional trade has also hampered development of business ties between both countries. India is the worlds second most populous country, but is ranked 28th in world merchandise exports while Pakistan is at 65th place. In imports, India is placed at 17th position compared to Pakistans 50th. India commands 1 per cent of global merchandise exports while Pakistans share is 0.15pc.

In global commercial services, Indias share in exports is 2.68pc and 2.41pc in imports. Pakistans exports account for 0.08pc of the total global commercial services exports and 0.31pc of imports.

Bureaucracy hampers Pakistan and India trade


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*Telecom firms invested $8bn in last four years ​* 
Thursday, March 13, 2008

ISLAMABAD: Telecom companies have invested over 8 billion dollars during the last four years, particularly in the mobile sector whose investment share accounts for 73 per cent.

The cellular mobile sector has invested over 2.7 billion dollar, which becomes a major share of investment by the sector. Local loop segment of the industry is also taking off and in 2006-07 about 7.8 million dollars were invested by this sector while LDI operators have invested about 603 million dollars during this period that is about 15 per cent of the total investment by the sector.

It is expected that the trend of investment may continue in the next five years because a large potential market still exists in Pakistan and all operators intend to grab their share. China Mobile acquired Paktel which has contracted out a 500-million-dollar project to renowned companies like Ericcson, ZTE and Alcatel to roll out their networks.

Similarly, Mobilink also planned to invest 500 million dollars in 2007-08 for improvement of quality of service and infrastructure expansion. Wateen Telecom, which has already laid down 5,400 kms of optical fibre across the country, has announced that it will invest 600 million dollars in the next two years for improvement of its infrastructure.

The telecom sector has emerged the largest recipient of Foreign Direct Investment (FDI) in Pakistan during the last few years as competition has compelled many companies to expand their infrastructure, which requires more investment from foreign sources.

The telecom sector has attracted record inflows of FDI in the last two years and has emerged the only sector of the economy that attracted such huge investment where its share in total FDI crossed 54 per cent. 

Telecom firms invested $8bn in last four years


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*Cement exports to rise as UAE removes duty ​*
KARACHI: Pakistani cement exports will be key beneficiaries as the demand for Pakistani cement in Gulf countries will now further rise subsequently after United Arab Emirates (UAE) government has removed 5 percent custom duty on cement to help the fast moving construction sector in Dubai.

This removal of import duty will decrease the cost of importing cement into UAE, in turn increasing the demand for imported cement. The increasing regional cement price is also benefiting Pakistani cement companies who are able to export cement at a price premium. Initially, cement was being exported to UAE at Freight on board price of $60 to $65 per tonne, which has now jumped to $70 to $75 per tonne. With the duty removal in UAE and consequently demand for Pakistani cement rising, local cement companies can further increase export prices.

Already local cement companies have shifted their produce to exports as in the first 8 months (July-February of financial year 2008 have seen record high-level exports of 4.3 million tonnes. It is estimated that As per our estimates, we expect cement exports to reach 6.6 million tonnes in financial year 2008, exporters informed. Cement demand, throughout the world, has been on a consistent rise as construction activities gain pace. This has led to a significant cement price hike especially in countries like India and UAE. Cement prices in UAE have jumped up by over 40 percent in only 2008, forcing UAE government to remove 5 percent custom duty on the import of cement.

The prices of cement have touched record high levels in many countries across the globe. Only in 2008, cement prices in UAE first increased from $87 to $119 per tonne, and are currently standing at more than $136 per tonne. Price of even clinker has jumped to $70 to $80 per tonne in UAE. Similarly, prices in Russia have reached $280 per tonne while in neigbouring India they average around $118 per tonne.

Daily Times - Leading News Resource of Pakistan


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*Experts suggest steps to achieve cotton crop target​*
KARACHI: Pakistan will not be able to achieve next cotton crop target in 2008-09 unless production of quality seeds, supply of quality inputs and adequate water availability is assured, growers and traders said here on Thursday.

They underlined the need for adopting modern agricultural practices to improve and upgrade the cropping standards in the country. 

A senior member of Pakistan Cotton Ginners Association (PCGA) and president PCGA Sanghar cotton belt region Rana Abdul Sattar said quality and volume of the crop, especially the Bacillus Thuringiensis (BT) variety of cotton would not improve because of wide use of uncertified seeds. 

Lack of expertise in fighting cotton virus and minimising crop from heavy rainfall, around 65 percent crop in the interior of Sindh and adjoining areas including Sanghar, Tando Muhammad Khan, Hyderabad, Mirpurkhas, Badin and Umerkot would be affected, he added. 

Sattar said the crop in Digri, Naukot, Sukkur, Khairpur and Nawabshah remained prone to attack of mealy bug and reddening of leaf, where 90 percent of BT cotton crop was sown.

He said we were still lacking to fight against mealy bug and Cotton Leaf Curl Virus (CLCV) attack and reddening of leaf. Concern was building that the mealy bug and CLCV would cause endanger to the countrys largest cotton belt in Punjab. These conditions would bring into question whether Pakistani cotton producers could meet the 2008-09 production targets or not, he added. 

A director on board of Karachi Cotton Association (KCA) and exporter and importer Ghulam Rabbani said the federal government has yet to set the target of crop but would not be able to set above 13 million bales as the country achieved has only 11.8 million bales in the previous season against the target of 14.14 million cotton bales. 

He said experts from multinational companies in the field should help and guide growers to produce quality seeds in the country. Only two seed institutes, one each in Sakrand in Sindh and Khanewal in Punjab are unable to produce and cater to the supply of quality seed to the growers.

Rabbani said around 45 percent of the total cultivation in the country is BT type cotton. Nearly 90 percent of this type is cultivated in Sindh and about 30 percent is cultivated in Punjab.

He said September remained crucial month for the cotton crop as it bore fruit during those days, therefore, it is important for the cotton growers to handle the cotton virus attacks with utmost care and with the help of agricultural scientists.

Due to lack of competency, the farmers would face financial crunch while the country would likely to import around 3.5 million bales in the next crop season to meet the textile sectors requirements.

Next crop in India will be available in July-August 2008, in China during Oct-Nov and in the US in the months of Nov-Dec 2008. The peak maturity months would be Oct-Nov 2008, he added.

He said while many indicators are warning of an economic problem for the world and the US ahead, cotton and copper and other key industrial markets, which have seen significant buying interest. 

Traders are confident for a reduction in the Pakistans crop supply and also a jump in Pakistan imports. Pakistan has multidimensional ecological and climatic zones so that we should have to divide our agricultural research strategies according to the requirements of various zones.

He underlined the need for improving diversity of cultivators, eco-friendly and cost-effective pest management practices, efficient supply system, commercialisation of variegated and alternative usage of crop produce.

He said that agriculture in many parts of the world has become dependent on petrochemicals in the context of plant protection. He termed the gene discovery as a key tool for biotechnology.

Daily Times - Leading News Resource of Pakistan


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*being taken to boost dairy investment​*
KARACHI, March 12: The Board of Investment (BoI) is taking steps to boost investment in dairy farming sector.

This was stated by BoI director general Arif Elahi while presiding over a meeting at the BoI in Karachi. The meeting was attended by BoI investment adviser Mehboob Haq, State Bank of Pakistan director Mohammad Ashraf, Zarai Taraqiati Bank senior vice-president Mohammad Mansha, Smedas provincial chief, and DG fisheries department.

He said that Pakistan was one of the 10 major milk producing countries of the world but unfortunately it had almost no share in the world dairy market.

He said that a two-day seminar will be held in May to discuss ways to develop the dairy farming sector. It will provide knowledge on various techniques to boost dairy farming, including making investment and installation of latest machinery.

The meeting called for devising a long-term policy to get access to the world dairy market. It also stressed the need to form a joint group so as to boost ties among the provincial and the federal governments and the private sector.PPI

Steps being taken to boost dairy investment -DAWN - Business; March 13, 2008


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*Dubais interest in KSE termed a good omen*​
ISLAMABAD, March 12: The reported interest by the Dubai Stock Exchange to take a 40 per cent stake in the Karachi Stock Exchange (KSE) would ultimately prove a good omen for the both.

Under the planned acquisition, members of the Karachi Stock Exchange would become shareholders in the stock market once a key presidential ordinance is signed to allow the change in the ownership provisions. If the deal with the Dubai Stock Exchange is firmed up, the two markets stand to gain.

For the KSE, this would represent not just an expanded ownership by a premier stock exchange, but also the recognition which goes with that change.

For the Dubai stock market, the acquisition helps it establish formal ties with a stock market close to home at a time when the Middle East region as a whole is benefiting from the robust flow of oil money.

For the moment, there are no indications of high petrol prices going into a reverse gear, in spite of clear signs of a global recession.

In fact, oil prices will hold on to their present trends and contribute to the continued flow of revenue to oil producing countries in the Middle East.

With oil prices at an all-time high comes the prospect of a continued flow of revenue to the region surrounding Dubai.

One benefit of the KSEs tie-up with Dubai would also be the brighter prospect of attracting more Gulf investors to the Pakistani market.

Dubais investment in the Karachi Stock Exchange would also bring in much investment inflow for the local equity management and stock brokering community.

Injection of funds at this crucial moment essentially brings investments to perk up the local Pakistani business scene.

But going into the future, a follow-up to this investment will have to be built up by two important measures. These will include encouraging the inflow of world class management and research values at a time when the KSE is in need to modernise further in many ways.APP

Dubais interest in KSE termed a good omen -DAWN - Business; March 13, 2008


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## Neo

*Trading troubles​*
STAGNATING exports and soaring imports have widened the trade gap to dangerous proportions. That, in short, is the woeful story contained in the trade figures released the other day by the Federal Bureau of Statistics. Exports are stagnating because our textile and clothing sector has been under-performing over the last two years, and also because the list of exportable surpluses has remained static for several years. So has the list of export destinations. Imports are soaring because of escalating international oil and food prices and also because of the insatiable appetite of our rich for luxury items. By the end of the current year, the trade deficit is expected to reach a record level of $15bn.

There are no simple solutions to the looming trade problem. With limited exportable surpluses and low quality manufactured items there is no way one could improve export earnings. And there is no way one could add to exportable surpluses or improve the quality of made-ups without improving the performance of our manufacturing and agriculture sectors. Similarly, it is impossible to curb imports without proper economic prioritising and innovation to encourage import substitution. The international prices of food items have doubled in the last one year while freight costs have also increased sharply on the back of rising fuel prices. The food prices are rising on a mix of strong demand from developing countries; an increasing global population and the biofuel industrys demand for grains.

Given this situation and the fact that the production of wheat, rice and sugarcane grew by a yearly average of 1.23, 0.59 and 1.87 per cent respectively during the seven years from 1999-2000 to 2006-2007, the most immediate task of the new government is to review the procurement prices of the next crop, especially of wheat. At the same time, it should undertake and promote massive investment in the rural areas with prudent incentives to attract private and private-public partnership in infrastructure and agro industries for producing exportable surpluses of quality. This should be done even at the cost of over-shooting the budget because fiscal deficit resulting from expenditure on productive areas does not cause any harm to the economy. Meanwhile, in order to bring inflation under control immediately, the new government could allow the duty-free import of all food items as a short-term measure and keep wages globally competitive. Simultaneously, it must increase taxes on non-productive areas or include those not under the tax net to reduce deficit, cut taxes on productive sectors to boost investment, production and exports, eliminate guaranteed profits to oil companies to lower or minimise increase in domestic oil prices and immediately undertake the exercise of rightsizing the government. Fiscal incentives and lower energy costs would give a shot in the arm to the industry to increase exports.

DAWN - Editorial; March 13, 2008


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## Neo

*Rs 14 billion non-development expenses slashed: departments told to save public money ​* 
ISLAMABAD (March 13 2008): The government has cut down non-developmental expenditures by Rs 14 billion to save at least some money to narrow down the budgetary deficit, and has asked all ministries, divisions and corporations to follow a policy of saving the public money to help it take the big hit of the growing subsidies.

Talking to Business Recorder on Wednesday, sources said: "We are facing very difficult time at this point in time when subsidy on oil is making it next to possible for the government to fulfil expenditures and the only option left with the government is to cut down developmental and non-developmental expenditures to keep the budgetary deficit within controllable limit.

The policy makers said that except defence, government employees' salaries and debt servicing all other heads are currently being reviewed to cut down expenditures for saving whatever amount is possible to keep domestic borrowing within a reasonable limit.

The government departments have been instructed, in writing, by the Finance Division not to spend funds on any kind of procurement or other needs which could be avoided so that non-developmental expenditures could be curtailed as much as possible, and this policy of saving public money would be strictly followed for the remaining months of the current fiscal year.

The unchecked rise in oil prices in the international market has created extraordinary situation for the government and it seems determined to take extraordinary measures including cutting down of budgetary allocations to keep the house in order.

The government is, at the same time, struggling to minimise overdraft by paying back to the State Bank of Pakistan (SBP) some of borrowed money to bring domestic debt within a limit given in the Fiscal Responsibility Law.

Following the same policy strictly, the government retired Rs 18 billion to SBP, which it had received in dollar terms from the Saudi government as budgetary support. Early this week, the Saudi government gave Pakistan a grant of $300 million to help it offset pressure on its economy as a result of rising oil prices in the international market.

The policy makers said: "The government will follow the policy of retiring as much as of borrowed money to the SBP to give it a clear signal that the economic managers of the government in Islamabad are fully aware of the negative effects of borrowing beyond a limit and its impact on food inflation to further add to the prices of edible and other than edible items."

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*PSDP-GDP ratio slid during PML-N, PPP governments: Planning Commission says... *​ 
ISLAMABAD (March 13 2008): The Planning Commission has blamed the previous governments of Pakistan Muslim League-Nawaz and Pakistan People's Party, of taking ad hoc decisions that resulted in sharp reduction of Public Sector Development Programme and GDP ratio from 7.8 percent to 2.6 percent.

"In the past ad hoc decisions resulted in sharp reduction of PSDP/GDP ratio that went down from 7.8 per cent in 1991-92 to 2.6 per cent in 1999-2000," said a spokesman of the Planning Commission, Asif Sheikh who is also the Joint Chief Economist, looking after the job of Chief Economist after Dr Pervez Tahir.

Dr Tahir claims that he was transferred on challenging the poverty statistics but the insiders say, he did not honour his commitment before applying for ex-Pakistan leave at the time of budget exercise last year.

Asif Sheikh, in a press release said that Pakistan, being a resource-constrained economy, needs special care for efficient utilisation of resources. He was of the view that there was also a need to invest more in social sector, especially education, Science and Technology, and health to improve quality of life of its people.

He further said that the projects/programme were approved by DDWP, CDWP and Ecnec, depending on the cost of project, with representation of the Finance Ministry at senior level, after technical and economic analysis.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Asean offers $13 billion pharma market to Pakistan ​*
KARACHI (March 13 2008): Fourteen companies from Pakistan are participating in a three-day conference held in Kuala Lumpur, Malaysia, aiming to boost the Pakistan's access to regional medicine trade opportunities in the market of the Association of South-East Asian Nations (Aseaan) worth 13 billion dollars a year.

The conference on the theme of "Asia Healthcare 2008" held under the auspices of Malaysia External Trade Development Corporation (Matrade) and the Geneva-based International Trade Centre (ITC) was inaugurated in Kuala Lumpur on Wednesday.

The event will provide an opportunity to the Pakistani pharmaceutical companies to link across national borders to open new avenues for growth by interacting with 120 participant companies from 13 countries and to enter into one-to-one buyer - seller arrangement, joint sourcing and joint ventures, complementary production, concerted marketing, exchange of know-how and collaboration to improve operational performance.

The conference will provide the Pakistan healthcare companies the new venues to export their low-priced and high quality medical products to the growing and expanding market of Asean countries to meet the regional demand for low-cost drugs and traditional medicines.

The 10-country Asean has identified healthcare as a priority sector in which to accelerate regional integration because of Asia's strong comparative advantages in natural resources, labour skills and cost competitiveness.

The conference will also discuss the issues such as rules and regulations governing trade in pharmaceuticals and intellectual property rights, biotechnologies and quality assurance and safety in drug production.

More than 100 enterprises are participating in the conference, representing countries such as Pakistan, Malaysia, Bangladesh, Cambodia, China, India, Laos, Myanmar, Nepal, Philippines, Singapore, Sri Lanka, Thailand and Vietnam.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Plan to develop urban transport system chalked out ​* 
KARACHI (March 13 2008): The federal government has chalked out a plan to develop the urban transport system and infrastructure with a view to providing fast, reliable, safe, and affordable services to the urban population.

At present, the transport service and infrastructure had not kept pace with the growing demands of urban population, sources in Sindh regional transport department told Business Recorder on Tuesday.

Lacks of proper management of transportation setup, urban areas are suffering from poor road condition, accidents, high-level maintenance cost of public transport, traffic congestion and air pollution, they said. Urban population is compelled to travel in overcrowded and unreliable public transport, besides poorly regulating it by concerned departments, they maintained.

Despite the rapid increase in private vehicles, which are being flooded on roads with more than 50 percent increasing ratio every year, no effective policy has been evolved yet to develop the proper road infrastructure for catering to the need of growing population, they said.

Answering a query, they said the government had designed a comprehensive and effective plan to overwhelm the need of more transport infrastructure with modern maintenance system, besides inviting the private sector to participate in it.

"Condition will not be changed unless the private sector will co-ordinate with government concerned departments in making comprehensive and high quality urban transportation system to cater to the need of growing demand of urban areas", they said.

Accordance to jointly surveyed report by the National Highway Authority (NHA) and the World Bank (WB) that 47 percent of national highways have been deteriorated and only 28 percent of the network is in good condition.

"Due to insufficiency of highways, 30 to 35 percent of agri produce is being spoiled before marketing, which causes huge loss to national exchequer, besides growing inflation due to its shortage, hence, the government has decided to convert inferior roads into high quality roads, they said.

They said the government is striving to generate funds for maintenance and up-gradation of facilities such as traffic signals, roads, sidewalks, intersections, parking spaces and drains aimed to provide better transport infrastructure to urban population.They said the authority concerned is pondering the proposal for restoring mass transit system in different cities, including Rawalpindi, Islamabad, Lahore, Gujranwala, Sialkot, Faisalbad, and Karachi.

They hoped that mass transit system would be restored soon in these cities with a view to minimising the excessive burden on public transport, besides facilitating people by safe, reliable, fast and entertaining transport service.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*ADB pledges $0.6 million grant to develop energy efficiency plan *​ 
FAISALABAD (March 13 2008): The Asian Development Bank (ADB) is helping Pakistan craft, a comprehensive energy efficiency policy and investment programme to meet the growing energy demands of an expanding economy and population. ADB is also providing a $600,000 grant to fund the preparation of the Sustainable Energy Efficiency Development Programme.

According to ADB sources, the activities will include a comprehensive study on the energy efficiency market and build awareness in the country of the need for energy efficiency. It will also draw up a strategy for launching a sustainable long-term national energy efficiency programme and design suitable investment projects.

Rapid economic expansion and population growth in Pakistan have substantially increased energy demand, as the country continues to industrialise and standard of living improved. Pakistan's Medium-Term Development Framework 2005-2010 sets out an 8 percent annual gross domestic product growth target, and to achieve this, energy consumption is forecast to expand at an average rate of 12 percent annually, more than double the rate between 2000 and 2006.

ADB project study revealed that the Pakistan economy has grown at an unprecedented rate in the past 5 years. Coupled with the rapid population growth, this economic expansion is causing energy demand to increase sharply as Pakistan continues to industrialise and standard of living improved.

The Government's Medium Term Development Framework 2005-2010 sets out a challenging program to achieve 8% annual growth in gross domestic product (GDP). To meet this target, energy consumption is forecast to grow at an average rate of 12% per annum, more than double the rate between 2000 and 2006.

This will increasingly strain Pakistan's primary energy supply sources. Rising oil consumption and flat domestic production once again will trigger a rapid increase in oil imports, while declining domestic natural gas reserves-in the absence of substantial new discoveries-will require the country to import gas for the first time in its history, through both pipelines and liquefied natural gas shipments.

Electricity consumption projected to grow an average of 8% per annum until 2015 (although recent experience suggests much higher demand growth), will similarly require large power generation capacity additions.

Higher energy demand and imports will also require massive investments in associated port terminals, storage facilities, refining capacity, pipeline and transmission networks, and surface fuel transport infrastructure. During 2001-2006, primary energy supply increased 5.4 percent per year.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Wind IPP signs up Chinese wind turbines ​*
BEIJING (March 13 2008): A letter of intent (LoI) has been signed between Win Power (Pvt) Ltd (A First Dawood Group Company) and GOLDWIND Science and Technology Co Ltd of Urumqi, China in presence of the Economic Counsellor of the Embassy of Pakistan in Beijing.

The LoI is for supply of latest German technology gearless wind turbines built in China, for a 50 MW wind power project, to be located in Gharo, Sindh Pakistan. Win Power (Pvt) Ltd (WPPL) is one of the leading Wind IPPs which has worked diligently for the last three years to bring this highly popular form of alternate energy to Pakistan.

WPPL intends to exploit the natural wind corridor available to our beaches near the Indus Delta south east of Karachi. WPPL already has an approved feasibility and tariff from Nepra for this project and is planning for a financial close by June this year. The planned COD for the wind farm would be December 2009.

After signing the LoI, Win Power team also visited the GOLDWIND 50 MW wind farm, 100 KM out of Beijing, specially erected to supply "green" energy to the Olympic Village. Summer Olympics 2008 are due to take place this year in Beijing in June/July. Wind turbines used in this Olympic Village wind farm are the same as the one being ordered by WPPL for Pakistan, which are the gearless machines of 1.5 MW production capacity each.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan's forex reserves rise to $14.142 bln*​
KARACHI, March 13 - Pakistan's foreign exchange reserves rose by $79 million to $14.142 billion in the week that ended on March 8, the central bank said on Thursday.

Reserves held by the State Bank of Pakistan rose to $12.030 billion from $11.924 billion a week earlier, however those held by commercial banks dipped to $2.112 billion from $2.139 billion.

Pakistan's foreign exchange reserves hit an all-time high of $16.486 billion on Oct. 31, 2007, but then fell sharply, mainly because of outflows from the stock market after President Pervez Musharraf imposed emergency rule on Nov. 3.

The emergency was lifted on Dec. 15, but foreign investors remained cautious after the assassination of opposition leader Benazir Bhutto on Dec. 27.

However, after a relatively smooth election last month, foreign exchange inflows have started steadying again.

Pakistan's forex reserves rise to &#36;14.142 bln - Yahoo! Malaysia News


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## Neo

*AMI-Partners: SMBs in Pakistan Spent US$1.5 B on ICT in 2007*​Thursday March 13, 2008

Small and medium businesses (SMBs, or companies with up to 999 employees) in Pakistan invested more than US$1.5 billion on ICT (info-communications technology) in 2007. This spending has been fueled by a surge in the number of SBs (small businesses, or companies with up to 99 employees) as evidenced in the latest study by New York-based Access Markets International (AMI) Partners, Inc. 
"SMBs in Pakistan are adopting basic technologies rapidly," says Nilanjana Mitra, Research Analyst at AMI Partners. "Most of Pakistan MBs (medium businesses or companies with 100 to 999 employees) have already attained high usage levels in deploying PCs, printers, basic productivity software tools, antivirus solutions and using the Internet. All of Pakistan's MBs currently use a PC to run their business and almost all of them are connected to the Internet." 

Spending on computing and Internet dominates the IT spending pie for SMBs, as they focus on building a strong IT infrastructure. MBs spend a greater proportion on networking compared to SBs, as MBs are eager to enhance connectivity technologies. 

"Only 14% of SBs in Pakistan have adopted computers at present," says Ms. Mitra. "Nevertheless, this is more as an opportunity rather than a shortcoming. PC vendors can focus on this relatively untapped SB market opportunity in Pakistan to gain significant returns. PC-adoption plans are quite positive among SBs." 

More than one-third of SBs in Pakistan have indicated that they intend to purchase new PCs in the next 12 months. A sizeable proportion of first-time PC buyers are also likely to join in--thus boosting the overall SMB PC market. 

"An uncertain economic environment and industry conditions are considered the most important issues hindering SMBs' business growth in Pakistan," says Ms. Mitra. "These factors are pushing SMBs to think of strategies to control costs while adopting newer technologies to keep up with competition." 

When looking at the vertical segments of Pakistan based SMBs, the FIRE (financial services, insurance and real estate) and professional services (accounting, advertising, data processing, engineering, legal and photography) are the more technologically advanced. These are followed by the manufacturing vertical segment. 

"Together FIRE and professional services constitute 15% of all SMBs in Pakistan," Ms. Mitra says. "About two thirds of these two verticals own PCs, which is quite high compared to a total PC penetration (15%) among all Pakistan-based SMBs. Comparatively, the retail sector represents 55% of all SMBs, but only 8% of the retail sector own PCs." 

Related Studies 

AMI's 2007 Pakistan Small Business Overview and Comprehensive Market Opportunity Assessment and 2007 Pakistan Medium Business Overview and Comprehensive Market Opportunity Assessment studies highlight these and other major trends in the context of current/planned IT, Internet and communications usage and spending. Products and services covered include established and emerging hardware, software, applications and business process solutions. Based on AMI's annual surveys of SMBs in India, the studies track a broad spectrum of issues pertaining to budgets, purchase behaviors, decision influencers, channel preferences, outsourcing, service and support. Also covered are detailed firmographics and critically important technology attitudes and strategic planning priorities. This data points to key opportunities and messaging hot buttons for vendors and service providers seeking to match their offerings to SMB market requirements. 

For more information about this study, AMI-Partners, or our global SMB research, call 212-944-5100, e-mail ask_ami@ami-partners.com, or visit the AMI Web site at AMI-Partners. 

About Access Markets International (AMI) Partners, Inc. 

AMI-Partners specializes in IT, Internet, telecommunications and business services strategy, venture capital, and actionable market intelligence -- with a strong focus on global small and medium business (SMB) enterprises and extending into large enterprises and home-based businesses. The AMI-Partners mission is to empower clients for success with the highest quality data, business strategy perspectives and "go-to-market" solutions. Led by Andy Bose, the firm has built a world-class management team with deep experience cutting across IT, telecommunications and business services sectors in established and emerging markets. 

AMI-Partners has helped shape the go-to-market SMB strategies of more than 150 leading IT, Internet, telecommunications and business services companies over the last ten years. The firm is well known for its IT and Internet adoption-based segmentation of the SMB markets, its annual retainership services based on global SMB tracking surveys in more than 25 countries, and its proprietary database of SMBs and SMB channel partners in the Americas, Europe and Asia-Pacific. The firm invests significantly in collecting survey-based information from several thousand SMBs annually, and is considered the premier source for global SMB trends and analysis.

AMI-Partners: SMBs in Pakistan Spent US&#36;1.5 B on ICT in 2007 - Yahoo!7 Finance


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## Neo

*Hotel Industry Flourishing In Pakistan: Marriott
GM​*
Thursday March 13, 2008

ISLAMABAD, March 13 Asia Pulse - The hotel industry in Pakistan was flourishing with the passage of every day and more development was expected in future.

This was stated by the Clive Webster General Manager Marriott Hotel, while speaking at a news conference here Tuesday. 

He said that hotel industry of Pakistan has been recognized at international level while steps taken by the government was luring foreign investors. There was an equal opportunity for the local and foreign investors in this field, he added.

He said that Islamabad Marriott Hotel recently received two International Awards, The Mustang award and Sales Leadership Award during the running year. The ceremony was held in China, last month and the Islamabad Marriott was chosen from 120 full service properties in the Asia Pacific region and 450 full service Marriott International properties globally in 68 countries.

He said that Mustang Award was conferred to the General Manager and his team in recognition of achieving exceptional business results while maintaining high levels of customer satisfaction.

The sales Leadership Award recognizes the expertise of GM and excellent results he achieved under prevailing market and economic conditions he added. He termed this achievement as a great pride for Pakistan.

Hotel Industry Flourishing In Pakistan: Marriott - Yahoo!7 News


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## Neo

*UK to introduce long-term visa for businessmen ​*
Friday, March 14, 2008

KARACHI: Deputy High Commissioner of the United Kingdom, Robert W Gibson has said that in order to promote link between business communities of the UK and Pakistan, and to facilitate Pakistani businessmen, they will soon introduce new longer term visas. This will enable businessmen to visit the UK whenever required within that period.

In a meeting with the business community at the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), he said that in an effort to increase its support to Pakistan, within the near future nine British trade delegations belonging to different sectors would be visiting Islamabad for exploring the possibilities of expansion in bilateral trade and investment.

FPCCI Vice President Zubair Tufail stated that the government and business community of Pakistan had always attached great importance to the UK, as it was one of the largest investors in Pakistan and had already invested in the power generation, chemicals and pharmaceutical sector.

Tufail further said that Pakistan was in need of further investment in power generation, as the country was facing acute shortage of electricity. He said that Pakistan had very old traditional relations with the UK, adding, We are maintaining close liaison with different chambers of the UK and members of the business community, but still we need to explore the full potential for expansion of trade opportunities.

UK to introduce long-term visa for businessmen


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## Neo

* Horticultural project launched to identify growth potential ​*
Friday, March 14, 2008

LAHORE: The Agribusiness Support Fund (ASF) has launched Participatory Rapid Horticulture Appraisal (PRHA) project with a view to identifying those horticulture crops which offer the greatest potential for growth. 

The project was launched in a meeting held here on Thursday by Additional Secretary, Ministry of Food, Agriculture & Livestock, Mohammad Saleem Khan instead of caretaker MINFAL minister who did not attend the meeting due to some reasons, sources privy to the meeting told The News. 

The meeting was attended by key stakeholders in the horticulture sector, including officials of the Agribusiness Development & Diversification Project, Pakistan Horticulture Development and Export Board and other public and private sector representatives. 

Talking about the objectives of the meeting, they said that the scheme would be a participatory and consultative process and involve all stakeholders, including growers, processors, exporters and technical experts from the private and public sectors. 

By the end of the appraisal process, suitable and effective interventions would have been designed and initiated to address all constraints throughout the value chain including inputs, production, post-harvest practices, processing and delivery mechanisms, they said. 

Other objectives of the PRHA are to conduct a rapid appraisal of the horticulture sub-sector with an aim to prepare individual crop profiles, identify constraints and opportunities and develop commercially viable solutions for high potential clusters. 

Seventeen key horticulture crops would be focused throughout the country. The PRHAs exercise would strengthen support for the entry of small farmers into the agribusiness sector and commercially-viable solutions would help improve quality and production in the target sectors with the result that growers, processors and traders would compete more effectively, domestically as well as in the global markets. 

It had been observed that the agriculture was the backbone of the countrys economy and accounts for almost a quarter of the national GDP. Within agriculture, the horticulture sub-sector offers the maximum growth potential. 

The country has ample natural resources which enable the country to produce over 13 million tonnes of fruits and vegetables annually. However, due to lack of knowledge of modern production techniques and post-harvest handling methods it is estimated that over one-third of fresh produce are lost. 

Despite ample natural resources Pakistans horticulture exports are limited to only around US$140 million out of the total world market of US$80 billion. Furthermore, the country continues to get amongst the lowest international prices for its products because of non-compliance with international standards. 

Horticultural project launched to identify growth potential


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## Neo

*Italian CNG kit maker to boost production ​* 
Friday, March 14, 2008

KARACHI: Landirenzo, the leading Italian CNG auto-kit manufacturer, plans to increase its production in Pakistan, CEO of the Landi Renzo Group, Stefano Landi told a press conference here on Thursday.

Production of the kits from LR Pak, the Pakistani subsidiary of the group, will be increased in the next few years from the current 10,000 per month, he added. Pakistan is one of our major markets, he said, adding that their increasing sale here was one of the main contributors to the companys growth.

Out of the total revenue of 164 million euros the company generated in 2007, 30 million euros came from Pakistan. LR Pak Director Francesco Grillo expressed hope that the business wont be affected if CNG price increased. Prices of petrol and diesel are not reliable and CNG will always remain relatively cheaper, he added.

He said that the company has already exported 1,200 CNG kits to China from its assembling plant in Pakistan and more orders were in the pipeline. Landirenzo is also interested in manufacturing LPG kits for cars, provided that auto-gas stations are established, he added. It sold most of the kits to auto-assemblers.

Italian CNG kit maker to boost production


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## Neo

*PKR PPP versus USD ​* 
ARTICLE (March 14 2008): The fall in the purchasing power of Pak rupee is accelerating in the country with no sign of its stabilising at any level on the horizon. Even more worrisome is the fall in its parity rate against US dollar - a currency that is getting a bashing every where else, around the world. That means the rupee is faring even worse against all other major currencies, as our economy is too much tied to the apron strings of USA.

Policies of the US administration, since the turn of the century, have wreaked havoc around the world, particularly so in Afghanistan and Iraq. The US budget deficits and adverse balance of payments are growing at an unprecedented pace, and so is their debt to foreign countries, holding dollars as a reserve currency. If the Opec and other oil producers, together with Japan and China decide to change their dollar holdings for gold or other strong currencies one day, the Fed will have to declare bankruptcy.

The rising oil and gold prices, as well as those of other commodities such as wheat world-wide, worsen the crisis for the US dollar. That explains the falling value of the US currency. In response to the new UN sanctions, at US behest mainly, concerning Iran's nuclear ambitions, Iran has started, since mid-February, an oil bourse, known as the 'Kish bourse', denominated in euros. It is intended to by-pass London's IPE, and New York's Nymex, both of which are effectively controlled by USA.

The intention is to sell crude oil to the international market, in euros, a measure that will further weaken an already ailing US currency. If joined by other Opec, Oman and Central Asian/Caspian oil producers, this could sound a death knell for the greenback and/or the US economy.

We in Pakistan have our own problems, living in the shadows of American grab for power and resources every where, with the added problem of Indian hegemonic tendencies and ingrained hostility towards Pakistan. Additionally, USA and other Western powers are nurturing and promoting India as a counterweight to the growing Chinese might, which will overwhelm them in a few years if left unchecked.

Thus Pakistan finds itself in a squeeze from all sides, friends and foes alike, and the political and social instability, combined with the deteriorating security situation adds fuel to the fire of rising fuel prices, food shortages, budget deficits and adverse balances of payments. So it is not just inflation (increased money supply chasing a very limited supply of goods) that is causing a fall in PPP. It is the psychological factor and nascent flight of capital, combined with a host of other factors that have brought about the phenomenon of rising prices and losing value of money.

An incoming administration has to set things right in a hurry. Even if they succeed domestically (no easy task) the foreign influences and tentacles vitiating the atmosphere are not likely to disappear from the scene soon, and that is where our position in the geo-political scheme of things is most precarious.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Efforts being made to ensure economic stability: SBP ​* 
SIALKOT (March 14 2008): State Bank of Pakistan (SBP) Governor Dr Shamshad Akhtar has said that national economy is facing ups and downs and is under great mess due to certain reasons. Addressing a reception, hosted in her honour by Hilbro Limited, a leading local surgical industry here on Thursday, she said that adequate efforts were being made to bring out the economy of untidiness.

The SBP Governor further said that efforts were under way to ensure economic stability in the country. She underscored need for the establishment of maximum industrial units in the country, and called upon the business community to come forward and exploit its own resources for setting up maximum industries in the country.

She urged the business community to focus on diversification of products and production of competitive products to cope with the global challenges. The business community could play an instrumental role in strengthening the national economy by enhancing the export volume, she added. The State Bank Governor lauded the efforts of private sector of Sialkot for developing an international airport on self-help basis.

She said the business community of Sialkot had set a unique example, which was role model for others to construct airport in other industrial cities on self-help basis. On this occasion, the State Bank Governor congratulated the Engineer Imran Ashraf on his success in the elections.

Earlier, Engineer Imran Ashraf of Hilbro Limited and MPA-elect, in his welcome address, informed the SBP Governor about the production of surgical instruments and export performance of the company. The SBP Governor along with Sima Chairman Sheraz Safdar went round different sections of the industrial unit, and appreciated the quality of surgical instruments and for providing employment opportunities to the womenfolk.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*New draft of 'Punjab MDG Plan' to be presented to ADB ​* 
FAISALABAD (March 14 2008): The new draft of 'Punjab Millennium Development Goal (MDG) Programme 2008-2011', will be presented to the Asian Development for financial assistance, which will build on the achievements of Punjab Devolved Social Services Programme (PDSSP) and focus on public services delivery particularly in the health sector, and introduce viable health financing mechanisms.

According to Planning and Development Department (P&DD) sources, provincial government is also preparing a new draft of 'Punjab Access to Justice Programme (AJP)', which will be build on reforms introduced through the federal AJP and focus on deepening judicial reforms at provincial level, leading to a well-functioning judiciary supported by measures on alternate dispute resolution mechanisms and greater enforceability of contracts.

Punjab has made significant commitments and initiated key reforms in all of the major areas. Yet, given the complexity of change, the Punjab needs major improvements on three fronts: (i) enhancing public sector efficiency; (ii) increasing access to, as well as the quality, of public services, most critically in education, health and water and sanitation sectors; and (iii) accelerating private sector participation in the provision of services, sources mentioned.

ADB project notes revealed that the Punjab needs a large infusion of public and private investments to keep pace with the growth requirements of its economy. With the population growing at 2.64 percent per year, Punjab will double its size to over 150 million people by 2026.

At present, about 70 percent of the population is considered as vulnerable (children, women and elderly). Significant urban-rural differentials exist in the availability and quality of public services. Basic health indicators in the province are poor.

Over 40 percent of villages have no drainage, and only 3 percent of villages have easy access to proper government hospitals. While infant mortality has declined from above 120 in 1997 to below 75 now, Punjab is still a long way away from its 2015 Millennium Development Goal (MDG) target of 40 per 1,000 live births.

Likewise, maternal mortality remains high at 300 (as of 2004) against a 2015 target of 140 per 100,000 live births. With the growing urban congestion and rural-urban inequalities, Punjab also needs to invest massively in transport, water supply and sanitation and other infrastructure.

These cannot be met by the public sector alone. And, more importantly, the economy needs to grow at a sustained 7-8 percent per year to generate adequate jobs to those entering the labour force.

According to ADB notes, the Punjab Vision 2020 as well as the current medium-term development strategy of the provincial government provide for continuing structural reforms to improve public sector efficiency and create an enabling environment for the private sector.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Rs one billion grant for four industrial zones ​*
KARACHI (March 14 2008): With the view to develop proper infrastructure at all four industrial zones, Sindh government has decided to provide Rs 250 million each in this connection. This was stated by Arif Ali Khan Abbasi, Sindh Minister for Industries, Labour, Transport, and Commerce.

While talking to a joint delegation of North Karachi and Landhi industrial area associations at his office on Thursday. He said that development and management companies have been formed in Korangi, Landhi, FB area and North Karachi, who were sketching plans to utilise funds for developing infrastructure at these zones.

These companies assigned the task to improve the infrastructure facilities in water, sanitation and road sectors in their respective zones, he maintained. Arif further said that the federal government would also provide the same amount as matching grant to these industrial areas.

He asked all four companies to utilise the development amount on priority sector so as to improve the overall infrastructure of that particular sector. Representatives of visiting association members lauded the efforts of the minister for ensuring grant of Rs one billion for developing infrastructure of four industrial zones.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Light commercial vehicles: SEL and DFAC to join hands in manufacturing *​ 
KARACHI (March 14 2008): The Sindh Engineering (Pvt) Limited (SEL) is going to join hands with Dong Feng Automobile Company (DFAC) in manufacturing high quality China brand light commercial vehicles in Pakistan.

This was stated by Midhat Azim Kidwai, Managing Director, SEL along with Abdul Bari Khan, Chief Executive, Pakistan Industrial Development Corporation (PIDC) and others at a press conference held here at a local hotel on Thursday.

Kidwai said that Government of Pakistan had invited DFAC to a joint venture with SEL in manufacturing high quality commercial vehicles at reasonable prices, which would also help SEL expanding its products' range.

He said that the proposed project, planned at 51:49 percent equity sharing between DFAC and SEL respectively with management in the hands of DFAC, is expected to fetch foreign investment of around Rs 220 million.

He hoped that this joint venture would create positive impact on the country's economy besides facilitating the automobile industry by introducing latest trends, technologies and ideas.

Both DFAC and SEL had principally agreed on the preliminaries of the proposed future setup in the meeting between DFAC delegates and the Minister of Industries, Production and Special Initiatives at Islamabad in July 2007.

Kidwai apprised that SEL was a pioneer in light commercial vehicles in the country having produced and sold more than 30,000 Mazda Mini Buses and Trucks since 1978 while DFAC was on top in manufacturing commercial vehicles at China and standing on fourth position in the world.

He said that DFAC was already jointly working with world automobile giants like Cummins of USA, Bosch of Germany, Nissan of Japan, Citroen of France etc and also supplying tactical transport to Chinese army.

Kidwai said that SEL was a government owned unit operating under administrative control of Ministry of Industries, Production and Special Initiatives, through Pakistan Automobile Corporation (Paco). Therefore, in order to facilitate SEL customers in terms of vehicle financing through banks, all arrangements have been finalised with Faysal Bank for providing vehicles at 20 percent down payment, he added.

Later, in a question answer session, Bari said that Islamabad has decided to include Dong Feng vehicles in President's Rozgar Scheme aimed at facilitating more peoples through the scheme. He said that a high level delegation of concerned government department would visit China to negotiate and finalise the major terms of joint venture, shortly. This joint venture will be the first with any Chinese automobile concern in Pakistan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Shortfall in Kinnow export target to cause $70m loss ​*
KARACHI: During the current season, Pakistan would incur an estimated loss of up to $70 million after falling short of Kinnow export target of 2,25,000 tonnes. 

Previous year, export of the most demanding fruit in the foreign markets, was a dismal 88,000 tonnes, which prompted the government to set an ambitious new goal in consultation with fruit exporters. 

With the current slow pace of Kinnow export, Pakistan is likely to export hardly 1,25,000 tonnes of kinnow by the month of April, thus depriving the country from earning precious foreign exchange. 

During the last four to five months, Pakistan has barely touched 100,000 tonnes mark and in the next one and half month, the export target is not likely to cross 25,000 tonnes level, a clear indication of missing 100,000 tonnes out of the total ambitious export target. 

Talking to Daily Times, Chairman of the All Pakistan Fruit Exporters Association (APFEA) Abdul Wahid blamed the situation owing to multifarious impediments faced by the exporters unexpectedly hindering their efforts towards smooth export process.

One of the major problem faced by the exporters during the last three months was non-availability of transport for carrying the yield from farm to port in the wake of torching of more than 1,500 heavy vehicles and large sized trawlers following assassination of chairperson of the Pakistan Peoples Party (PPP).

Exporters had to face immense problems in the post Benazirs assassination developments to transport huge bulk of Kinnow export orders from Bhalwal, district Sargodha, Punjab province to Karachi Port for their onward journey to different destinations. 

He cited other major factor which impeded export goal was unusually extreme cold weather during the winter season that contributed towards destruction of large yield.

Abdul Wahid said delayed permission by the Russian government in the month of December to import Kinnow from Pakistan also contributed towards falling short of export goals. A four member Russian delegation remained in Bhalwal, Sargodha for one month and after thorough inspection of 130 processing factories, they granted permission to only 14 of them consequently very little time was left for the export.

He said the export goal for Russia was set at 2,000 containers but it is expected to hardly touch half mark up to the month of April. 

Replying to a question, he said out of 40 countries which import Kinnow from Pakistan regularly, the only positive gain was from Iran and Philippines while rest of the countries some which include Far Eastern and Gulf countries, Ukraine, Poland and Sri Lanka fell short of import targets.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Indus Refinery project delayed ​* 
*Banks reluctant to provide finance​*
Saturday, March 15, 2008

KARACHI: Indus Refinery Limited (IRL) has failed to reach financial close because banks are susceptible about financing projects in Pakistan amidst terrorist attacks and political turmoil, the companys CEO Sohail Shamsi told The News on Friday.

This has led to a years delay in completion of the 93,000 barrels per day oil refinery, which was earlier expected to come online by the middle of next year, he said. Financial close has been delayed because banks have adopted a wait and see policy regarding Pakistan, he said. How can foreign investors be expected to come here when bombs have been going off and political parties are finding it hard to form government?

The IRL being set up 48km from Karachi on the National Highway in Thatta district is based on the equipment of Petro Canadas Oakville refinery, which was shut down a couple of years back and subsequently dismantled to be exported here.

The cost of the refinery, which has 79 per cent foreign shareholding, has scaled up to $900 million from $750m in 2007 and a plan to take up the production capacity to 133,000 bpd has already been put on the backburner.

It has been a subject of controversy as environmentalists say Petro Canada shut down the four-decade-old unit because of environmental concerns. But IRL says the property prices around the Oakville refinery site along a river in Canadian state of Ontario had skyrocketed.

According to a 2003 press release of Petro-Canada, the plant was closed down to consolidate operations at its Montreal refinery and due to introduction of a more stringent sulphur specification for gasoline.

Nevertheless, delay in the project will further the dependence of the country on imported petroleum products but a senior government official played down any impact saying the existing refineries import most of the crude oil.

I dont think that will make any big difference, said Shaukat Durrani, a petroleum ministry spokesman, when asked if IRLs delay would hit the country economically.At 4.9m tons annual capacity, IRL is capable of producing 1.2m tons of diesel, the main deficit fuel in Pakistan. Between July-January 2007-08, out of total diesel sales of 4.6m tons, 2m tons were processed by the five existing refineries.

According to industry officials, increase in domestic refining of crude oil helps in saving foreign exchange spent on import of petroleum products. Light Arabian crude is selling at $100 a barrel and diesel at $125, said Aftab Hussain, a manager at Pakistan Refinery Limited (PRL). Twenty-five dollars could be saved on a barrel of this product locally produced. Refineries in Pakistan operate under the protective pricing regime whereby they are allowed to collect 10 per cent duty on diesel as part of their revenues.

Indus Refinery project delayed


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## Neo

*Sindh grants Rs250m each to five industrial zones ​* 
Saturday, March 15, 2008

KARACHI: Sindh Governor Dr Ishratul Ebad has announced that Rs250 million have been granted to each of the five industrial zones of Karachi for development of infrastructure and improvement of economy.

He stated this at a ceremony here on Thursday evening held in connection with the 5th My Karachi Exhibition, to be organised by the Karachi Chamber of Commerce and Industry. The governor said the new government should end its politics and take charge of governance to improve the countrys image and condition.

Ebad added the parting government had done its job and proved its commitment by holding free and fair elections. The new government was going to take charge by next week and though they had to face many challenges ahead, they had been elected by the people and therefore they should perform well so as not to disappoint the public who voted for them, he said.

Speaking about My Karachi exhibition, which would be held from June 6 to 8, the governor said such business to business (B2B) exhibitions were highly essential for economic development and to enhance the countrys image, in particular this citys as it was the commercial hub of the country.

He said the government would offer full support to the KCCI during the period and encouraged foreign countries to participate in the event. Karachi should hold more of these events to spread the message across the world that its a safe and lucrative place to invest in, he added.

Sindh grants Rs250m each to five industrial zones


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## Neo

*Media briefed on mobile technology ​* 
Saturday, March 15, 2008

KARACHI: Telenor Pakistan in collaboration with Nokia Siemens Networks organised a training workshop for journalists titled The Future of Mobile Communications here on Friday. The aim of this workshop, part of a nationwide series, was to update the journalists on the frontiers of telecom technology, mobile applications and the dynamics of mobile telecommunications sector development.

The workshop briefed the journalists on the existing telecommunication infrastructure supporting GPRS, EDGE, 3G, WiMax, WCDMA and WiFi in addition to contemporary lifestyle mobile applications like video messaging, push mail, VoIP, online gaming, person tracking, navigation and mobile TV. Rizwan Khan from Telenor Pakistan and Faisal Ansari from Nokia Siemens Networks delivered the presentation. 

Global telecommunication growth stats and trends, emerging market usage behaviours, emerging network, mobile phone technology, business fundamentals, and success measure of mobile communication business were discussed during the workshop.

Hasnat Masood Director Corporate Communication Telenor Pakistan also spoke at the occasion and said, with a boom in the telecom sector in Pakistan and introduction of new technologies, it is important to update the media to facilitate them with progressive reporting through advanced understanding of telecom infrastructure technology and applications. He said that in 2006-07 telecom sector contributed 2 percent in the GDP and FDI share was $1.8 million. 

Pakistan ranks at the 10th in cellular use and has mobile density of 48 percent as compared to fixed line, which is 4.33 percent despite this tremendous growth there is still potential in the industry. Syed Veqar-ul-Islam Country Director Pakistan and Afghanistan, Nokia Siemens Networks also spoke at the occasion and distributed the certificate to the journalists. 

Media briefed on mobile technology


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## Neo

*MoU signed for increasing horticulture exports ​*
ISLAMABAD: The Infrastructure Project Development Facility (IPDF) and Pakistan Horticulture Development and Export Board (PHDEB) have agreed to collaborate on improving the post-harvest management infrastructure through cool chain system for fresh fruits and other horticultural products by developing projects on public-private partnership modality.

Under the cool chain system, 23 cold storages and controlled atmosphere storages will be established in fruit production areas, airports and sea ports. Two reefer yards at Lahore and Karachi, each having a capacity of 250 containers and six testing laboratories would also form part of the Cool Chain System.

Both the organisations on Friday signed a Memorandum of Understanding (MoU). The CEO of IPDF Aijaz Ahmad and the CEO of PHDEB Shamoon Sadiq, on behalf of their respective organisations, at a ceremony which was also attended by senior officials from both sides. 

The MoU was witnessed by Dr. Asad Ali Shah, Member Infrastructure, Planning Commission Government of Pakistan and Dr. Kausar Abdullah Malik, Member Food and Agriculture, Planning Commission, Government of Pakistan.

The PHDEB has planned to establish a cool chain system, with a network of pack houses, reefer yards and cold storages, across the national trade corridor. The project envisages establishment of 39 export/pack houses equipped with grading, washing, waxing, drying, hot water treatment, packing and storage facilities of different capacities at 31 locations in various parts of the country for major horticultural commodities.

Speaking on the occasion, PHDEB CEO Shamoon Sadiq said that the horticulture sector contributes about 12 percent to Pakistans agriculture GDP, and has great potential for increasing the production and export of premium quality horticultural products besides offering multiple employment opportunities throughout the supply chain, particularly in the rural areas.

Pointing out that approximately 12 percent of the 13.67 million tonnes of annual production of fruits and vegetables in the country is lost due to primitive and poor techniques of handling between farms and the end-consumers, he expressed the hope that the proposed project, after completion, would yield good dividends by reducing post harvest losses and enhancing the countrys exports.

IPDF CEO Aijaz Ahmad said that IPDF has been established as the focal point to promote Public Private Partnership projects in the infrastructure related sectors in Pakistan and under the MoU, IPDF will be providing technical assistance in structuring and implementing the project through private sector participation. We are focusing on good governance and regulation through standardised contracts and transparent procurement guidelines which would provide an enabling environment for the generation of investment opportunities in Pakistan to harness the private sector as the engine of growth for the national economy, he added.

He underlined the need that the implementation of the cool chain system project would improve the post-harvest management infrastructure for horticultural products, thus helping reduce post-harvest losses, increase production and also the shelf-life and quality of fresh produce, which would greatly contribute to not only stabilising the prices in the domestic market but also in substantially boosting the exports to highly lucrative and competitive international markets.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Better security to improve FDI: French ambassador​*
ISLAMABAD: The government should take measures for improving security to encourage foreign investors, Ambassador of France Ragis De Belenet said on Friday. 

He said Pakistan is a good place for business and there is a need to build the image of Pakistan in the western world. 

He hoped the incoming government in Pakistan will be stable and must focus for improving the living standards of the people. He said that about 25 percent of population in Pakistan was below the poverty level and face grave problems like inflation and energy shortage. The new government should address the problems to facilitate the people. 

Trade between Pakistan and France was less then one billion dollars, which needs to be more than 1 billion dollars in the coming years. He invited business delegation of Islamabad Chamber of Commerce & Industry (ICCI) for a visit to France to explore the possibilities of business. He said that in April or May he would visit ICCI to address the business community. 

The ambassador expressed these views during a meeting with President ICCI Muhammad Ijaz Abbasi. Speaking on the occasion, the ICCI chief said both countries were enjoying good trade and economic relations, which should be further strengthened. 

Pakistans trade with France had increased from $499.221 million in 2003-04 to $764.86 million in 2006-07, by 53.21 percent during the last four years. Pakistan had a favorable balance of trade with France till 2004-05 but thereafter it became negative mainly due to increased import of machinery, aircrafts & their parts.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Investment in agricultural research declines by 35%​*
ISLAMABAD: The Pakistan Agriculture Research Council (PARC)s Board of Governors was informed on Friday that investment in agricultural research has declined by 35 percent. 

Investment in agricultural research in India increased by 80 percent, in China 85 percent, in Asia and Pacific 55 percent, the meeting was informed. 

Chairman, PARC Dr Tusneem said that agricultural research has been neglected in the decade of 1990s while in 1970s and 1980s it was at reasonable level. He said we are lowest among the SAARC countries in this regard. He further said investment per scientist is also lowest for Pakistan. This is the main reason that Pakistan was behind in frontier technologies for crops, livestock and natural resources, he added.

However, he said that the PARC was focusing on emerging issues of agricultural research for advancement of agriculture sector in the country. The challenges faced by the agriculture are to achieve knowledge based agriculture production, competitiveness with increasing globalisation, high efficiency in production and to move from green to gene revolution. He said green revolution led to doubling of cereals production and five fold increase in production of sugar and some other crops with exportable surplus of rice, cotton, sugar and wheat over the last decade. Last 5 to 6 years were of erratic over and under production, which had both marketing and economic implications.

Tusneem apprised that the Ministry of Food Agriculture and Livestock (MINFAL) had set a target of 4 percent to 6 percent for agricultural growth per year up to 2015 to achieve food security, to become a net exporter of agricultural commodities and major exporter of fruits and set in Medium Term Development Framework (MTDF) and vision 2030. He said National Agricultural Research System (NARS) needs major reforms as it is facing low investment, poor human resource and physical infrastructure. 

To address these issues, he said the PARC had taken several initiatives for reforms in the NARS. He said the PARC would be taking care of germplasm availability, distribution and testing, rust initiatives, global interactions, improve national wheat research system and coordination with provincial research system; develop resource conservation technologies with collaboration of international research institutes.

He further informed that the PARC would conduct policy research, research on agricultural growth and poverty awareness, high value chain, value addition, impact assessment and knowledge sharing. He said the PARC would be dealing with vaccine production for bird flu and other diseases, genetic improvement of feed technologies. He invited the provincial research system to approach the PARC for funding research.

He apprised the participants of the meeting that the PARC undertook several reform initiatives in 2006 to make its research system more efficient, vibrant, and responsive to the emerging challenges. The recent paradigm shift from green to gene revolution, from conventional agriculture to high value agriculture and from domestic to global markets have underscored the need for strategic research on technologies which on the one hand are pro-small farmers, pro-poor and pro-nature, and on the other competitive in the global markets to restructure and reposition itself to deliver science based solutions for a more productive, profitable and sustainable agriculture development, he added.

He said due to gap between production and marketing system; farmers were getting less price of their produce. So there was need to diminish this gap to support small farmers for getting their due right. The meeting suggested that regulatory body on production of vaccine needed to be developed so that quality vaccine may be developed.

Dr. Kausar Abdullah Malik, Member, Planning, gave comprehensive presentation in line with future strategy of PARC for development of agricultural sector in Pakistan.

Member Animal Sciences Division, Dr Shahana Urooj Kazmi, Member, Social Sciences Division Dr Munir Ahmed and Member, Plant Sciences Division Dr Iftikhar Ahmed gave detailed presentations before the coordination committee on their respective divisions.

Representatives of provincial research institutions, vice chancellors of Universities, Pakistan Atomic Energy Commission and technical members of the PARC attended the meeting.

Daily Times - Leading News Resource of Pakistan


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## Neo

*China, United Arab Emirates, Kuwait and Qatar: Pakistan looks for fiscal support ​* 
ISLAMABAD (March 15 2008): After Saudi Arabia, Pakistan has approached four other friendly countries, China, United Arab Emirates (UAE), Kuwait and Qatar, for seeking financial support to reduce budgetary deficit and keep economy on the move.

Sources told Business Recorder on Friday that following a $300 million grant from Saudi Arabia early this week for helping Islamabad offsetting impact of the rising oil prices on the economy now Pakistan has taken the case with other four countries, which could extend it financial support when current account deficit (CAD) was widening to alarming level.

The list of the countries to which Pakistan approached for financial support shows that Islamabad is heavily relying on the friendly countries to come out of the worsening financial crisis.

Economic analysts are of the view that Pakistan needs minimum $5 billion to keep its house in order and to fulfil fiscal responsibilities. Such support is also needed to keep the rupee parity with US dollar at some reasonable level, besides keeping foreign exchange reserves at certain limit to support the rupee.

The government economic wizards seem helpless in plugging budgetary deficit through usual means. Pakistan's move is indicative of serious threats as a result of unprecedented high oil prices in the international market and much poor performance of different key sectors of the economy.

Islamabad can not make things happen smoothly when all key indicators of its economy are not performing up to the mark. Its two major sources- revenue collection and exports-have not been showing any good signs. Revenue collection is likely to remain much less than the targeted figure and, similarly, exports have gone down making it clear to the policy makers that they will be left with Pakistan's huge trade deficit at the end of the current fiscal year.

This disorder can subsequently add to Pakistan's financial woes. For the last few years, the economic managers in Islamabad had been plugging the gap in income and expenditure by raising money from international market through global depository receipt (GDRs), privatisation of national assets and from borrowing.

They managed to create the impression for a common man that Pakistan's economy was robust as a result of reforms and their professional approach to meet the future challenges without any problem.

Perhaps they expected some divine force to come and remove the weaknesses in the economy. The campaign of getting whatever any friendly country can give it for financial support is now telling the true story of the economic successes of the last almost one decade.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Financial institutions lending profitably to MSEs: research ​* 
ISLAMABAD (March 15 2008): Around 85 percent of micro and small enterprises (MSEs) have shown substantial increase in their profits on expanding business after obtaining first-ever loan from a microfinance institution.

Two latest research studies ie "The Microfinance Evolution Toward MSME Lending" and "Survival or Take-off. A Study of MSEs in the Lahore Small Business Finance Market" were conducted by ShoreBank International (SBI) under a three-year USAID sponsored and SBI implemented project called Widening Harmonised Access to Microfinance (WHAM). A spokesman of SBI said here on Friday, the microfinance sector has seen a jump from an outreach of only 600,000 borrowers in 2005 to nearly 1.5 million borrowers at the end of 2007.

The first report addresses the challenges faced by microfinance institutions. It reviews the imperatives attracting these institutions in Pakistan to small and medium enterprise (SME) lending.

The second report uses entrepreneur-specific data to assess the impact of MSE financing in terms of employment generation, production capacity, profitability and management style/outlook.

He said that both the reports explain the best practices for commercial banks and microfinance institutions to profitably provide financial services to MSEs in Pakistan. SBI, a US-based financial advisory and solutions consulting firm, has also highlighted the key experiences and impact observed in assisting both local and multinational financial institutions lending profitably to the country's MSEs.

In addition, SBI under the WHAM project has closely worked with the Pakistan Microfinance Network (PMN) on awareness building and information sharing to make a sustainable and favourable environment for profitable lending in untapped market of MSME lending, he added. The spokesman added that the SBI is ready to continue to work with the financial institutions beyond the delivery of the donor funding in Pakistan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Trade ties with France should be strengthened' ​*
ISLAMABAD (March 15 2008): President Islamabad Chamber of Commerce & Industry (ICCI) Muhammad Ijaz Abbasi, while meeting Ragis De Belenet, Ambassador of France to Pakistan said that both countries enjoy very good trade and economic relations, which should be further strengthened.

President ICCI said that Pakistan's trade with France has increased from 499.221 million dollars in 2003-04 to 764.86 million dollars in 2006-07, ie by 53.21 percent during the last four years, which is a positive sign of growing trade and economic relations.

He said that Pakistan had a favourable balance of trade with France till 2004-05 but thereafter it became negative mainly due to increased import of machinery, aircraft & their parts. He added that Pakistan's exports, after registering growth till 2004-05 declined by 8.4 percent in 2005-06 but exports have however registered marginal increase of 2.9 percent in 2006-07.

Muhammad Ijaz Abbasi said that total FDI from French multinationals companies has remained very low but they have established important subsidiaries in Pakistan like Rhone-Poulenc and Roussel-Uclaf, the two French major brands in chemicals and pharmaceuticals.

He said that Danone, the French agro business giant has a joint venture in Sukkur, producing LU Biscuits and Alcatel is a manufacturer and supplier of PTCL for digital switches. He invited French businessmen to come and invest in Pakistan.

President ICCI said that there is great scope for joint ventures with France, particularly in the area of high technology, which includes telecommunications, nuclear power, chemicals, automobiles, ship building and so on.

He said that that development projects in the infrastructure like mass transit programme in various big cities of Pakistan, railways, port development and electronics as well as the agro-based sector are areas where despite abundant resources and raw-material, value-addition is negligible and therefore can prove to be potential investment zones for French companies.

Ragis De Belenet, Ambassador of France showed great concern on the security situation in Pakistan. He emphasised that government should take measures for improving security to encourage the foreign investors.

He said that the trade between the two countries is less then one billion dollars, which needs to bring more than one billion dollars in the coming years. He invited business delegation of Islamabad Chamber of Commerce & Industry for a visit to France to explore the possibilities of business. He said that in April or May he will visit Islamabad Chamber of Commerce & Industry to address the business community.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Renewable energy production growing rapidly: report ​* 
LAHORE (March 15 2008): The renewable energy industry is stepping up its meteoric rise into the mainstream of the energy sector and renewable energy production capacities are growing rapidly as a result of more countries enacting far-reaching policies. This was stated in REN21 Renewables 2007 Global Status Report.

The report has been prepared by the Renewable Energy Network for the 21st Century (REN21) in collaboration with the Worldwatch Institute. The report paints an encouraging picture of rapidly expanding renewable energy markets, policies, industries, and rural applications around the world.

In 2007, global wind generating capacity is estimated to have increased by 28 percent, while grid-connected solar photovoltaic (PV) capacity surged by 52 percent, the REN21 report revelaed. Researcher Dr Eric Martinot led an international team of 140 researchers and contributors from both developed and developing countries to produce the report.

In the report he says renewable energy sources such as wind, solar, geothermal, and small-scale hydropower offer countries the means to improve their energy security and spur economic development. He also said the renewable energy sector now accounts for 2.4 million jobs globally, and has doubled electric generating capacity since 2004, to 240 gigawatts.

The report said more than 65 countries had national goals to accelerate the use of renewable energy and were enacting far-reaching policies to meet those goals. Multilateral agencies and private investors alike are integrating renewable energy into their mainstream portfolios, capturing the interest of the largest global companies.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*$1 billion LNG terminal project at Port Qasim: Dutch experts due next week to discuss safety issues *​ 
KARACHI (March 15 2008): Despite holding several rounds of negotiations the Port Qasim Authority (PQA) has not been able to convince a Pak-Dutch joint venture (JV) setup about the "disastrous" consequences of constructing a liquefied natural gas (LNG) terminal in the proximity of a chemicals terminal at Port Qasim.

The Engro Vopak Terminal Ltd (EVTL) and Royal Vopak (RV), of Netherlands, have a plan to develop the 'EVTL LNG Terminal' (EVTL-LNGT) next to the existing EVTL liquid chemical terminal (EVTL-LCT) at Port Qasim, for which sources expressed fear that it is likely to threaten national and international safety standards.

The estimated cost of the project, which would be completed in two stages, would range between $100 million and $1 billion. "Last month, the PQA and the Pak-Dutch joint venture held talks in Dubai but no agreement could be reached on the location of the terminal," sources told Business Recorder on Friday.

A four-member PQA delegation had visited Dubai, headquarters of the Dutch firm, to convince the JV, but it failed and returned with a plan of a Dutch experts' visit. "They (JV) are not satisfied with PQA contention and a delegation of experts from Netherlands would visit Pakistan on March 19 for further discussions," sources said. They said that EVTL wants the terminal, to be built as per PQA's Master Plan, to be set up next to EVTL-LCT, while the Authority proposes its construction on the allotted land of 'Chara-Creek', or 'Muchakland' due to safety concerns.

If built next to the EVTL-LCT, the EVTL-LNGT would not only put safety of the surrounding area to risk but would also violate the criteria set by the Ministry of Petroleum and Natural Resources in 'LNG Policy 2006' on safety standards.

According to LNG policy, the project developer would have to ensure that "the project complies with the World Bank's Health, Safety and Environmental (HSE) guidelines, Pakistan's Environmental Protection Act 1997, National Environmental Quality Standards, Pakistan's health, environment and safety standards".

Sources expressed fear that in case of any accident, like fire eruption, etc, the consequences would be far more disastrous than normal. "LNG is a combustible commodity, and placing it near a chemical facility may be dangerous," they said.

Apart from the safety issue, sources said, the development was also likely to cause operational problems at Port Qasim. "Providing a one-way transit to an LNG vessel destined for the proposed terminal would affect general traffic at the port," they added. Construction of EVTL-LNGT would be undertaken progressively in two stages and during the first stage the terminal would be used as a floating set-up with a design capacity of two million tons of LNG per annum.

In the second stage, a shore-based installation would be made and the capacity of the terminal, with the full capacity target of 7 million tons, would be increased as per demand to cater for tank capacities etc on the allotted land.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Govt plans to raise Rs20bn through PIB sale ​* 
Sunday, March 16, 2008

KARACHI: The State Bank of Pakistan (SBP) on Saturday invited tenders for sale of Pakistan Investment Bonds (PIBs) for tenures of 3, 5, 10, 15, 20 and 30 years through primary dealers till March 29.

The central bank has fixed pre-auction target of Rs20 billion. This is the first tender invited by the SBP after last weeks announcement by the government regarding reduction in withholding tax (WHT) on foreign investors, which was lowered to 10 per cent from 30 per cent.

It is a pre-emptive measure which indicates that the government may conduct frequent PIB auctions in coming months to support its budgetary expenditures and minimise reliance on borrowings from the SBP which ultimately increases inflationary pressures, Muhammad Imran at First Capital Equities said.

Currently, yields on Pakistani security papers are very attractive as compared to most of the regional as well as other countries.

Market sources anticipated that in coming weeks the attention of foreign investors could be diverted towards PIBs, however they expected that presence of foreigners could be seen only in the secondary market instead of the primary market.

Tenders for 3, 5, 10 years (5th reopening August 22, 2007 issue), 15 and 20 years (10th reopening 31st October, 2006 issue) and 30 years (9th reopening of December 22, 2006 issue) have been invited, the SBP explained.

The pre-auction target of 3-year bonds is Rs2.50 billion at coupon rate of 9.10 per cent and maturity date is August 22, 2010, while the maturity date of 5 years bonds is August 22, 2012 and coupon is 9.30 per cent whereas the SBP planned to borrow Rs2.50 billion.

In addition maturity of 10 years PIBs is August 22, 2017 with coupon rate 9.60 and target is Rs5 billion, similarly pre auction target of 15 years security papers is Rs5 billion with coupon rate of 10 percent and maturity date October 31, 2021.

Moreover, SBP fixed pre auction target for 20 year PIBs at only Rs2.50 billion with coupon rate of 10.50 and maturity date October 31, 2026, while the coupon rate on 30 years PIBs is 11 percent and maturity is December 22, 2036. SBP wants to raise Rs2.50 billion through long term PIBs.

Govt plans to raise Rs20bn through PIB sale


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## Neo

*Bill moved in Congress to boost exports from Pakistan ​* 
*Seeks to authorise US president to designate ROZs and allow duty-free exports from these zones for 15 years​*
Sunday, March 16, 2008

ISLAMABAD: The Ministry of Commerce here on Saturday announced that in a show of continued support for the people of Pakistan and sustainable economic development of the country, US administration has introduced legislation in the Congress for increasing exports from Pakistan to the US.

According to a statement issued by the Ministry of Commerce, the legislation authorizes the US President to designate special Reconstruction Opportunity Zones (ROZs) in western border regions and earthquake-affected areas of Pakistan.

The bill entitled To Provide Duty Free Treatment to Certain Goods from Designated Reconstruction Opportunity Zones in Afghanistan and Pakistan was introduced in Congress on March 14.

Five powerful and influential senators sponsored this bill, which ensures its early approval by Congress. These Senators are Joe Lieberman, Maria Cantwell and three Republican Senators Hatch, Chuck Hagel and Chris Bond.

A large number of selected goods produced in these designated ROZs in Pakistan would enter the US market duty free.

President George Bush first announced the ROZ initiative during the visit to Islamabad in March 2006.

The announcement was preceded by considerable preparatory work by Pakistans Ministry of Commerce and the US State Department.

Since then, the two Governments have worked to structure an effective arrangement for enhancing exports from Pakistan to the U.S. Markets.

Introduction of this Bill validates Pakistan Governments thinking, more recently also accepted by the US Administration, that extremism and social volatility requires a coordinated approach that combines military, political and economic dimensions.

It is important to create opportunities for sustainable development and generate of employment in areas affected by extremism.

By providing the incentive for duty free entry into the US market ROZs would attract investment into the border provinces of Pakistan i.e. Frontier and Balochistan.

Pakistan Government is also considering to provide incentives to match this substantial US offer to encourage investment into designated ROZs.

The objective is to provide economic opportunity, generate employment and improve livelihood of the people of this region.

The ROZs will be located in existing and new industrial zones in the Frontier province, the earthquake affected areas of AJK and in a hundred mile belt along the Balochistan, border with Afghanistan.

After approval of the Bill by US Congress, USA and Pakistan officials will jointly select individual industrial estates within designated regions of Pakistan.

The Bill covers exports of all goods from Pakistan including most textile and apparel products.

Among textile and apparel products the Bill covers 53 per cent of items that were exported from Pakistan into 2006.

Contrary to usual practice in the USA where such preference programmes have an affective life of two or three years, ROZ Bill has proposed a life of 15 years.

This will provide certainty of long term availability of these benefits to investors in ROZs. The Bill also potentially allows duty free entry of all those products that currently are enjoyed by Least Developed countries.

This Bill therefore is a substantial programme of trade preferences that would considerably enhance exports from Pakistan to USA.

The Ministry of Commerce is happy that the hard work and sustained effort put in by its officials over the past two years has borne fruit with the introduction of this ROZs legislation in the U.S. Congress.

Bill moved in Congress to boost exports from Pakistan


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## Neo

*Chemical industry needs new technology ​* 
Sunday, March 16, 2008

LAHORE: The developing countries, while remaining within the ambit of the World Trade Organisation, should fight for fair treatment of their chemical industries as they need transfer of latest technology to conform to stringent WTO standards for chemical production.

This was the consensus among speakers at a one-day seminar on WTO and chemical-related industries in developing countries.

Speakers from the chemical industry, private sector enterprises and public sector institutions presented 10 papers on different aspects of the WTO that had impacted local chemical industries.

The speakers pointed out that WTO rules almost denied the international markets to chemical industries of developing countries. They said developed economies had graduated to make hi-tech and environment-friendly production after passing through the period that was afflicting the industries in developing economies.

In order to comply with best production standards, they said, the chemical industries of developing countries needed heavy investment and transfer of technology. The WTO should facilitate these industries in acquiring technology and attracting investment, they added.

Pakistan Council of Scientific and Industrial Research Director General Raja Mohammad Saleem, speaking at the seminar, said the WTO rules generally favoured industries of developed economies. He said some leverage should be provided to chemical industries of developing countries so that the transition from non-compliance to compliance with WTO rules was gradual and smooth.

Lahore Chamber of Commerce and Industry former president Mian Anjum Nisar said the government should maintain regular contact with the local chemical manufacturers and facilitate them in achieving WTO standards. Otherwise, he warned, locally-produced chemicals would be restricted to the domestic market only and finally the WTO would extend its reach to inside the country and ban the use of these chemicals for products meant for export.

Engineer Mumtaz Hussain stressed the need for coordinated efforts by industrialists, businessmen and government institutions to ensure a smooth transition of the local chemical industry to meet WTO standards.

Chemical industry needs new technology


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## Neo

*KSE manages to consolidate above 15,000 points ​* 
Sunday, March 16, 2008

KARACHI: Karachi bourse managed to reach all time high level for the third consecutive week ending March 14. Technical correction in the market in line with stocks fundamentals, however, minimized the week gains to modest.

The benchmark KSE 100-share Index consolidated above 15,000 points inching up two points on week-on-week basis to conclude at 15,087 points. As a matter of record, KSE closed at all time high of 15,171 points on Wednesday.

Out of total five trading days, two sessions closed positive, gaining as many as 269 points during the week, while remaining three closed negative shedding 271 points.

The 100-Index managed a positive closing due to selective buying of DG Khan Cement, Lucky Cement, PTCL, PSO and ENGRO scrips during the week. Accumulation was also witnessed in fundamentally strong second tier scrips as well.

Otherwise, the broader look of the market depicted negative growth this week, as majority of market indicators including the parallel running junior 30-Index; KSE All Share Index and overall market capitalisation all covered considerably distance to south with low turnover.

Battering in banking sector: Battering in heavy weightage banking sector dragged the 30-Index down by 112 points and closed at 18,496 points on weekly basis. KSE All Share Index also declined by 28 points to close at 10,714 points on weekend.

The average weekly turnover in the ready market fell to 243 million shares as compared to 259 million shares of previous week. 

Accordingly, the overall market capitalisation fell by Rs25 billion to stand at Rs4.636 trillion. The average future market volume, however, surged to 69 million shares under the review week against 53 million shares last week.

The news of issuing commercial papers by the government to borrow money from small investors instead of central bank and 60 per cent decline in banks advances growth in 2007 compared to average growth of last four years together invited technical correction in the relevant sector, said market analysts.

Negative news about Bank of Punjab and NIB Bank error-full financial statement for the full year of 2007 further dampen the banking sector performance, they added.

Cement sector continues to grow: The cement sector took the credit of sustaining 100-Index in green territory, as this Pakistani commodity price in UAE market increased remarkably after UAE removed custom duty on cement import.

The increase in DAP prices in the world markets also invited sectoral buying at KSE where energy - especially OMC and E&P sector depicted mix performance on board. During the week, the oil prices in the international market traded near US$110 per barrel historical high levels.

Investors were still having concerns over the delay in prime minister nomination by the coalition government while the future course of action at the local broses would finally be determined by March 17 (Monday) National Assembly session.

The foreign portfolio investors aggregately withdrew another Rs1.5 billion this week, according to NCCPL. The retail investors also minimized their positions owing to high rate of market was being applied on CFS financing, analysts added.

Cement sector rose by 3.1 per cent while other sectors i.e. insurance and telecom sectors enhanced by 5.7 per cent and telecom per cent respectively, according to JS Research.

KSE manages to consolidate above 15,000 points


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## Neo

*Chinese team to visit Pakistan to explore CNG sector *​ 
Sunday, March 16, 2008

BEIJING: The growing use and development of Compressed Natural Gas (CNG) in the country has attracted Chinese traders to explore investment opportunities in Pakistan. 

One of the leading Chinese firms dealing in all CNG-related machinery and technical affairs is planning to send soon its senior technical officers delegation to Pakistan to hold business and technical meetings with their counterparts. 

The Master Marketing International delegation would also hold negotiations for carrying out a survey for establishment of CNG stations. Keeping in view the ever-growing CNG market in Pakistan, the company also plans to impart training on modern lines to the staff. 

The delegation plans to visit all the major cities to hold talks with Pakistani officials and businessmen involved in the CNG sector. 

The CNG sector has so far developed by 60 per cent across the country and government wants to further promote it in view of the perpetual increase in prices of petroleum products in the international market and its effect on Pakistans economy. 

It has further been reported that so far Rs9 million has been invested in this sector while Rs2 billion investment is in the pipeline.

Chinese team to visit Pakistan to explore CNG sector


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## Neo

*Pak-Afghan Chamber of Commerce and Industry formed ​* 
Sunday, March 16, 2008

PESHAWR: To boost trade between Afghanistan and Pakistan and to remove the hurdles in the way of bilateral trade, the Federation of Afghanistan Chamber of Commerce and Industry on Saturday signed a memorandum of understanding (MoU) with the Federation of Pakistan Chambers of Commerce & Industry (FPCCI) to form the Pak-Afghan Chamber of Commerce and Industry (PACCI). 

Afghan President Hami Karzai and the-newly elected prime minister of Pakistan would announce the formal approval and announcement of the body during the visit of Afghan President Hamid Karzai scheduled on April 24.

An Afghan delegation, headed by Acting President of the Federation of Afghan Chamber of Commerce and Industry (FACCI) Hamidullah Farooqi, visited the zonal of office of the FPCCI in Peshawar and signed the MoU to promote bilateral trade and connection between the business community of Afghanistan and Pakistan. 

A large number of traders and industrialist from Afghanistan and Pakistan attended the ceremony of MoU signing.

A former vice president of the FPCCI, Faiz Rasool Khan, signed the memorandum on behalf of the FPCCI while a large number of Afghanistan traders, including Khan Jaan Alkozi, Tahir Jaan Hamaadi others were also present on the occasion.

Industrialist Fazal Elahhi, Abdul Wahidn Nauman Wazir, Riaz Arshad, Abdul Hameed Gulwara, Haji Haleem Jan, and Gull Afzal Shinwari represented the Pakistan side and welcomed the signing of MoU to form a body for the solution of traders problem existing in trade between the two countries.

The aims and objectives of the joint trade body is to foster friendship and understanding between the business communities of Afghanistan and Pakistan and promotion of cooperation in trade, investment, technology transfer, services and other industrial sectors between both countries.

The activities of the PACCI would include the exchange of information with regard to trade, economic cooperation and services between the two countries and materials necessary for securing its. The body will also prepare recommendations necessary for promoting more effective economic relations between the two countries and would submit it to the respective governments. It will also promote cooperation between both countries in hosting missions and receiving businessmen and technical experts when considered appropriate and promote and protect the interest of trade, commerce and industry both at domestic and international level.

The president would be nominated for a period two years and a co-president from the other country. 

There would 30 executive members of the newly form body, half of whom would be from Pakistan whereas 15 members would selected from Afghanistan. The first president which tenure would be for 2 years been selected from Pakistan and the traders approved renown businessman Faiz Rasool to head the body from Pakistan side while Hamidullah Farooqi, would represent Afghanistan as co-chairman of the body.

Both sides would hold joint meetings as mutually agreed upon, to consult on various problems pertaining to the promotion of trade, economic cooperation and services between Afghanistan and Pakistan.

However, the joint meeting would have a joint chairman, selected from amongst the representatives of the host country and a vice chairman, selected from amongst the representative of the other country.

Pak-Afghan Chamber of Commerce and Industry formed


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## Neo

*Sindh, South Punjab sugar mills to earn handsome profits​*
LAHORE: Each sugar mill of Sindh and South Punjab would make at least Rs 100 million profit while the mills of upper Punjab and NWFP would be at losing end because of low recovery percentage and frost attack, Pakistan Sugar Mills Association (PSMA) sources told Daily Times on Saturday.

They said that disparity is because of non-consistent government policies and it was the reason, the sugar millers in Sugar Advisory Board (SAB) meeting voiced for linking sugarcane price with recovery level. A number of millers in Punjab and NWFP are of the view that the sugarcane should be linked with recovery percentage instead of uniform price.

The sugar mills in the three provinces including Punjab, Sindh and North West Frontier Province (NWFP) buy sugarcane at the government announced price. The mills of Sindh bought sugarcane between Rs 50 and Rs 55 per maund, Punjab mills paid between Rs 50 to Rs 52 while the NWFP paid around Rs 54. Ironically, the recovery percentage differs in the regions, NWFP mills with lowest recovery level and Sindh and south Punjab mills the highest.

According to PSMA fortnightly report, till 15 February 2008, the recovery of Sindh sugar mills is the highest with 8.95 percent recovery; Punjab is the second with 8.68 percent and NWFP lowest with 7.78 percent recovery.

In 27 Sindh mills, three mills got recovery percentage more than 10 percent, while 11 got more than 9 percent and 13 mills got more than 8 percent recovery.

In 37 sugar mills of Punjab, three mills got recovery more than 10 percent, six got recovery more than 9 percent, 19 mills got recovery more than 8 percent and nine mills extracted recovery of more than 7 percent. In four NWFP mills, only one mill got recovery of more than 9 percent, two crossed 8 percent recovery and one remained in 7 percent recovery level.

The sugar mills sources said that whenever any mill crosses 8 percent recovery from sugarcane then it earns good profit.

The mills of Punjab region including Rahim Yar Khan, Bhawalpure, Toba Tek Singh, Layyah and Khanewal got more than recovery of 9 percent while these mills paid only Rs 52 for sugarcane to the farmers.

Whenever, the recovery level improves and sugarcane price drops, the profit is handsome, the sources said adding that if recovery percentage is 9 percent and price paid to the farmers is Rs 52 per maund then the mills production cost for each kilogram of sugar would be Rs 14.50. With the same formula, the price of sugar with 8 percent recovery would Rs 16.25. 

In such conditions when the millers are not paying good price for sugarcane, the profit would be handsome and will touch at least Rs 100 million per mill.

The mills are only giving between Rs 50 and Rs 55 per maund and also imposing different types of penalties on farmers, said the sources said adding that however, the mills of upper Punjab and NWFP suffered, as the sugarcane was affected due to frost attack and the recovery level has dropped. Only these mills are in losses and at risk of closure, the source said.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Govt cuts PSDP by Rs 15 billion: Officials​*
ISLAMABAD: To ease the increasing budget deficit the government has cut Rs 15 billion on the current year Public Sector Development Programme (PSDP). While at the start of the current fiscal year there was operational shortfall of Rs 35 billion for the current PSDP allocations, officials told Daily Times here on Saturday. 

They rejected the news that the government had withdrawal Rs 50 billion from Public Sector Development Program (PSDP) and informed that the cut if only Rs 15 billion.

They clarified that there would be no cut in the ongoing projects financed by the current fiscal years development budget and all those development projects, which were to be completed till June 2008, would be fully financed.

The current year PSDP having total 2,119 projects including new and ongoing development projects were worth Rs 335 billion for the current year 2007-08, official added. 

However, the officials said funds have been withdrawn from the projects that have not started up till January this year. Several projects had exhibited slow progress in the past six months (July to December 2007) and would be financed according to their progress. 

Keeping in view recent power shortfall, the government has decided to give top priority to all power related ongoing projects. The government would fully finance all power projects, the officials maintained. The Cheshma-II Nuclear power project would be completed seven months before its schedule time and it would also be financed completely, they maintained.

Funding to the mega infrastructure projects, which were important for development of the country, would also continue, they added. They said the Planning Commission had withdrawn the financing from PSDP allocation on the demand of president to reduce the budget deficit.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Cellular phone operators concerned over use of R&D fund*​
KARACHI: Cellular phone companies have expressed reservation over the use of National ICT R&D fund, saying the funds should be employed properly in the Research and Development (R&D) projects instead of using it otherwise.

Government of Pakistan has made it mandatory for all licensees under the current Telecom regime to contribute 0.5 percent of their gross revenues minus inter operator and related PTA/FAB mandated payments to R&D Fund.

They suggested that, R&D fund established for the development of information and communication technology industry in Pakistan, should fundamentally and primarily be focused for research and development purposes of the industry rather than the projects being used on the human resource development projects. According to the statistics published on National ICT R&D website, the revenue worth Rs 1.24 billion has so far been collected on the account of this fund. In this connection, the Ministry of Information and Technology have approved total 31 projects in 2007-08 out of which 13 projects are related to R&D. Official sources in the industry are considering this fund a waste, as it is not delivering its function of flourishing the information communication and technology industry of the country. They added that utilisation of this fund should reach out to the industry and academia proactively to involve them in the R&D process.

Officials of various mobile phone companies said that ICT players are the sole contributors of R&D Fund so they deserve its benefits directly. However, they added that if the government utilises these funds on the other projects besides R&D then it should consult with ICT operators. One of the official spokesperson said, for development projects outside the ICT sector, the sources of funding for those projects should be clearly identified. We strongly support the expenditure of the R&D funds only on ICT projects

Qasim Sheikh, CEO, National ICT R&D Fund, told R&D projects needs the highest level of technical skills and human resource development so that the company had allotted a massive sum for this specific project. He added that the company also approved 13 R&D projects with a total funding of approximately Rs 189 million. Twenty-five R&D related proposals with total funding request of approximately Rs 400 million are under our review process. 

Sheikh mentioned that the department had asked cellular operators to submit proposals in this regard but they seemed to be disinterested on this issue as they are aggressively working to extend their network through out the country.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Cargo handling kicks off at Gwadar Port ​*
ISLAMABAD: Following decades of perseverance, Gwadar Port is finally making history by beginning its cargo handling from today (Saturday). Experts said that besides Pakistan, China, Afghanistan, Central Asian countries-Tajikistan, Kazakhstan, Azerbaijan, Uzbekistan, Turkmenistan and other Russian states would also be using this port, which would be fetching Pakistan huge revenue in terms of foreign exchange.

Gwadar Port would be deeper than all other ports in the Persian Gulf, Arabian Sea, Indian Sea, Bengal Gulf and others located in this sea belt and huge cargo ships up to 0.25 million tonnes could anchor in Gwadar. One phase of the port has already been completed, which included three berths and one ramp 600 meter long capable of accommodating several ships at a time. In the other phase, 10 more berths would be constructed.

Besides, the construction on the road links with the Central Asia was underway-892 kilometers long motorway would be connecting Gwadar with Turbat, Awaran, Khuzdar and Naudero, which would also help paving the way of road communication with China. Besides, a network of roads was being laid to connect Gwadar with Iran and Afghanistan. Experts said that Gwadar city in future would turn into an international hub of industrial and commercial activity, which would not only play a key role in the economic development of Balochistan, but also entire country.

Daily Times - Leading News Resource of Pakistan


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## Neo

*KESC asked to acquire 200 megawatts rental power plants *​ 
ISLAMABAD (March 16 2008): The federal government is said to be proposing to the Karachi Electric Supply Corporation (KESC) to acquire those rental power plants, which the latter had refused to accept in the past, informed sources told Business Recorder.

"If KESC acquires both these rental power plants, it will inject around 200 MW additional power to its system," the sources added. Giving the background, the sources said that M/s Envicon and M/s One World Consultant Inc had expressed interest to set-up 48 MW barge mounted power project and 136 MW rental power project respectively at Karachi.

Accordingly, a summary for Economic Co-ordination Committee (ECC) of the cabinet was moved by Petroleum Ministry, proposing that for 48 MW barge mounted power project 10 to 12 MMFCD at Port Qasim was required by M/s Envicon and for 136 MW power project sponsored by M/s One World Consultant Inc required 32 MMCFD gas at Karachi.

The sources said that the ECC in its decision decided that 60 MMCFD gas, already allocated to SSGC for the two Independent Power Producers (IPPs) sponsored by M/s Tapal and M/s Fauji Korangi, be placed at the disposal of Ministry of Water and Power to undertake fast tack power projects in Karachi by M/s Envicon and M/s One World Consultant Inc.

The facility will be available for a period of two years or start-up of the panned IPPs (M/s Fauji Korangi) whichever is earlier, subject to conditions prescribed by SSGC. M/s One World Consultant Inc contacted KESC for providing necessary commercial guarantees for payments to its rental power plant. However, KESC failed to provide the required guarantee, the sources said, adding that now the company has approached Pakistan Electric Power Company (Pepco) for entering into a rental power agreement.

According to sources, Pepco has proposed installation of 144 MW rental power plant at 132 kV Nooriabad grid station at the outskirts of Karachi, The sources said that the federal government has observed that KESC time and again complains of shortage of power. Therefore, it was appropriate for the power-hungry utility to acquire these rental power plants which will inject around 200 MW of additional power in its system.

It was the considered view of the concerned ministries that this option would also ease out ever increasing KESC payables to Pepco. The gas supply to these power plants is also being maintained out of quota of M/s Tapal and M/s Fauji Korangi to be set up in KESC.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Setting up ROZs in tribal areas: US administration introduces bill in Congress *​ 
ISLAMABAD (March 16 2008): The US administration has introduced the much-talked about legislation in the Congress regarding establishment of Reconstruction Opportunity Zones (ROZs) in the western border regions and earthquake affected areas of the country.

In an official announcement here on Saturday, the commerce ministry has termed it as a show of continued support for the people of Pakistan and sustainable economic development of the country, hoping that the bill would be instrumental in increasing Pakistan's exports to US.

The bill covers exports of all goods from Pakistan, including textile and apparel products. The bill covers 53 percent of items that were exported from Pakistan in 2006. The bill 'to provide duty-free treatment to certain goods from designated ROZs in Afghanistan and Pakistan', was introduced in Congress on March 14, authorising US President to the designated zones.

The commerce ministry is jubilant over the reports that five powerful and influential Senators sponsored the bill, which ensures its early approval by the Congress.

These Senators are; Joe Lieberman, Maria Cantwell and three Republican Senators Hatch, Chuck Hagel and Chris Bond. According to the commerce ministry, a large number of selected goods produced in the designated ROZs would enter the US market duty-free.

The ROZ initiative was first announced during the visit to Islamabad by President George Bush in March 2006 which proceeded by considerable preparatory work by the commerce ministry and the US State Department. Since then, the two governments have worked on structuring an effective arrangement for enhancing exports from Pakistan to the US markets.

The introduction of this bill validates Pakistan government's thinking; more recently also accepted by the US administration that extremism and social volatility requires co-ordinated approach that combines military, political and economic dimensions. It is important to create opportunities for sustainable development and generate employment in areas affected by extremism, the commerce ministry added.

By providing the incentive for duty-free entry into the US market, ROZs would attract investment into the border provinces of the country ie NWFP and Balochistan. Islamabad was also considering extending incentives to match this substantial US offer to encourage investment into designated ROZs for providing economic opportunity, generate employment and improve livelihood of the people of this region.

ROZs will be located in existing and new industrial zones in the Frontier province, the earthquake-affected areas of AJK and in a hundred mile belt along the Balochistan, border with Afghanistan. After approval of the bill, US and Pakistan officials will jointly select individual industrial estates within designated regions of Pakistan.

Contrary to usual practice in US where such preference programs have an affective life of two or three years, ROZ Bill has proposed a life of 15 years. This will provide certainty of a long-term availability of these benefits to investors in ROZs. The bill also potentially allows duty-free entry of all products that currently are enjoyed by least developed countries (LDCs).

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Unabated inflation, deficits to destabilise economy​*
Pakistan faces grim economic prospects in the next 12 months and the situation calls for emergency measures to control one of the highest rates of inflation in the world and a probable drop in the currency value due to the widening current account deficit and dwindling foreign exchange reserves.

Pervez Musharrafs regime has allowed the crisis to develop to a degree where the new government may not have any option but to take tough decisions if it wants to control the situation within 12-18 months because it would take at least that long for the measures to take effect. It is disappointing that the political parties, who won the elections, have not come out with any major policy statement about their plans to address the immediate economic issues.

With oil price having broken the $110-a-barrel barrier and the international commodity and food prices touching record levels, it is easy to forget that the reasons for the countrys economic woes go beyond that. But before we discuss those, it is important to list the most serious near term issues:

* Pakistan has the fifth highest inflation rate in the world after Venezuela, Russia, Egypt, and Sri Lanka, according to Bloomberg data. Clearly oil price is not the only reason for our inflation. The overall inflation in the current fiscal year is around 16.5 per cent compared to the widely cited range of 8-9 per cent by the government officials. Similarly, the food inflation rate reached 21 per cent during the period July-2007 to February-2008.

* The budget deficit could reach 5.9 of the GDP from 4.3 per cent in the previous year. A revenue shortfall of around Rs100 billion or more in the Federal Board of Revenues tax collections and Rs140 billion gap on account of higher oil prices will be two major reasons for this deficit. The governments borrowings from the State Bank increased by Rs240 billion during the first seven months of FY 2007-2008, and have contributed to the inflation already under pressure due to the supply side factors.

* The central banks liquid foreign exchange reserves (excluding gold) dropped to about $10.3 billion at the end of February 2008 and cover only three months of imports. The government may need to raise about $2 billion in medium- term foreign debt to help pay for the rising imports and prevent a further decline in the reserves. Saudi Arabia has recently extended a grant of $300 million but this will not be enough. A further drop of $1.8 billion in the reserves can be expected by end-April.

*The currency has depreciated by about 3.3 per cent since the imposition of the emergency on November 3, 2007 and a weak dollar has prevented a sharper fall. However, with high inflation rate and weakening current account and foreign exchange reserves position, further depreciation of rupee appears to be unavoidable. This will fuel more inflation, and discourage investment flows.

A comprehensive set of actions is needed to control the twin deficits and inflation. A piecemeal and ad hoc approach will only exacerbate the economic woes and is likely to backfire in the next 12 months. A tablet of aspirin cannot work when a strong doze of anti-biotic is needed to kill a fast spreading virus.

Fiscal deficit: Fiscal deficit is one of the core causes of a persistently high inflation rate in Pakistan compared to the other countries. There are three structural reasons for the fiscal deficit: (a) narrow tax base and low tax-to-GDP ratio;( b)wasteful government expenditure; and (c) protection and favourable treatment given to special interest groups.

While there has been a lot of discussion on the first two, I will focus on the third in the context of the current situation and rising oil prices

Oil pricing formula: One example of undue and unfair treatment is the oil pricing formula. The discussions about oil subsidy (of around Rs160 billion) are misleading as they do not take into account the pricing policy which not only guarantees high profits for the refiners, oil marketing companies and petroleum dealers but is also rigged to ensure increasing profits when the oil price is going up. This scandalous policy has resulted in refining margins in Pakistan, which are 2-3 times higher than the comparable margins in Asia.

The new parliament must immediately form a special committee to investigate into this and hold public hearings to bring full transparency to the oil pricing policy. The space here does not permit for a full discussion of the formula but the main components and anomalies, taking diesel oil as an example, are as follows:

The oil pricing formula benefits the oil companies at virtually every stage in an unfair and opaque manner. It violates the fundamental principles of market-based pricing and deregulation. It protects the oil companies at the cost of the consumers without giving them the right to know how exactly the price is calculated.

The government must immediately cut the deemed duty to five from 10 per cent and revise the marketing and dealer margin policy so that these are calculated on per litre basis. This will ease inflationary pressures, to some extent, due to increasing cost of fuel and rising government deficit needed to finance the payments to oil companies.

Income tax rate on bank profits: Given the expected short fall of more than Rs100 billion in the tax collections, a 10 per cent special energy surcharge should be levied on the pre-tax profits of the scheduled banks. According to the State Bank, the pre-tax profits of the banking industry were around Rs170 billion during the six months period ended September 2007. Assuming that their annual pre-tax profits could exceed Rs350 billion, given the rising quarterly trend, an additional 10 per cent surcharge could yield Rs35 billion.

Business or trading income from stocks: Another source of additional revenue is the income of the brokers from trading stocks. The capital value tax (CVT) on stock market transactions yielded around Rs2.24 billion during 2006-07 but this is peanuts compared to the revenue potential from taxing the trading income.

The short- term gains (defined to include periods up to one-year holding period) from trading stocks made by brokers, banks and other financial institutions are treated as business income worldwide and not as capital gains as the policy makers in Pakistan have been led to believe. These trading profits are treated as business income and not as capital gains, and therefore taxed at normal tax rates.

While the government need not tax the capital gains of bonafide foreign institutional investors and long-term investors (or tax them at a lower rate), the business income of stock traders should be taxed at normal corporate tax rates. It is estimated that about 70 per cent of the trading volume is due to the activity of local short-term traders  that too on borrowed funds. The taxation of this activity  as is the practice in all countries without almost any exception - is unlikely to hurt investment activity or trading. The argument that it may cause flight of capital does not have much merit because the locally-borrowed short-term funds just cannot be invested offshore.

Active trading is healthy for capital markets and the government should encourage it by withdrawing CVT on trading but the trading income should be taxed at normal tax rates. While estimates vary and depend on the trading volume, this could bring in a minimum of Rs25 billion in additional revenues.

Trade deficit  oil accounts for only 28 per cent of imports; It is common to blame high oil prices for the rising import bill and the trade deficit. The State Bank data reveals that it is only part of the problem as illustrated below:

The petroleum imports accounted for 28 per cent of total imports of $18.56 billion and around 29 per cent of the total increase of $2.98 billion in the imports during this period. The government needs to take urgent steps to cut imports of non-essential items like mobile phones, generators for private use, motor cars, branded food items for high income groups, and other imports through non-banking channels. This should be done through increase in import duties as well as through administrative measures.

A rationalisation of import policy and review of national priorities has become over due. We must discourage non-essential imports and facilitate imports of raw materials and primary food items at lower tariffs. This will not only help to reduce the current account deficit but would also be anti-inflationary. Why not import raw cotton through road transport from India if it is cheaper to do so and will help reduce costs of our textile mills?

The government must remove fiscal, trade, and monetary policy distortions. It must stop giving favourable and unjustified special treatment to special interest groups at the cost of high inflation, budget and trade deficits and ultimately the destabilisation of the economy which can damaging for the democratic process.

Unabated inflation, deficits to destabilise economy -DAWN - Business; March 17, 2008


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## Neo

*The looming energy crisis​*
From 2004 onwards, the price of oil started soaring in the international market, and for the first time in October 2004, oil prices crossed the benchmark of $50 per barrel. The price continued to fluctuate but kept moving up each year and in 2007 briefly crossed $100. For the past few days it has been hovering around $110 per barrel.

The oil industry has been plagued by two main deficiencies viz. a drop in exploration activity following the economic slowdown of the mid-1990s, and global refining capacity that did not keep pace with the rise in demand in China, India and the Far East beginning 2000. Yet, both Opec and the vertically integrated oil industry have displayed no interest in increasing the output, which needs additional investment in exploration and at last 4-5 years to build additional refining capacity.

All oil-consuming countries, particularly third world countries, have suffered due to the consistently rising demand-driven cost of energy. Pakistan is one of the countries worst hit by the rise in price of energy. The domestic energy generation sources are restricted to hydropower, limited production of oil and gas, and negligible use of coal as the input for power generation. Even the conversion of cement industry to coal required import of coal from Indonesia and some other countries.

Figures I and II below give the position of domestic demand and supply for electrical energy:

According to the PPIB website, during 2008 Pakistan would be short of electricity supply to the tune of 1,457 MWH. This supply gap does not take into account the fact that, during the day, in the peak consumption hours this gap increases well beyond 1,457 MWH. Given this supply shortfall, and few choices for plugging this gap with indigenous energy resources, the planned and projected growth in GDP appears highly unlikely.

If Pakistan chooses to rely on fossil fuel to generate electricity it would be a constant burden on the countrys foreign exchange reserves, and due to continuously increasing price of oil, our exportable surplus would become progressively more uncompetitive, goods for local consumption would become costlier, some industries could face closure/bankruptcy and the country could face economic stress on a wide scale. It is therefore imperative that Pakistan finds workable remedies to the looming energy crisis and such remedies encompass practical solutions to facing up to the problems arising out of growing population and the growing energy needs to support reasonable GDP growth.

For the last 10 years, Pakistan has been importing crude oil and refined petroleum products to generate electricity, besides meeting the increasing demands of its expanding transport sector. The energy being consumed in transport is beyond the scope of this article, and is a subject that should be dealt with separately. Coming back to energy, since all energy-types are inter-convertible, there can be several possible solutions in a comprehensive plan for utilising alternate sources of energy.

The basic idea which I would like to promote is that we must develop a plan which does not impose a constant burden on the countrys foreign exchange reserves, the cost of implementing that plan is not inflated by the depreciation of the rupee, and the dangerous correlation between operating cost of the power sector and future increases in the prices of petroleum products is rapidly contained within manageable limits.

The alternate energy sources need to be explored.

Nuclear (civil) energy: KANUPP was established with the help of the Canadian government in the 1960s, but due to the changed geopolitical realities, expansion of Pakistans nuclear energy base for civilian uses seems unlikely. Although Pakistan has already achieved its goal of assembling nuclear weapons via the uranium enrichment route, and may not need more fissile material, yet the possibility of reprocessing the spent fuel from civil nuclear power units to extract plutonium from the spent fuel may become a matter of concern for those powerful lobbies that advocate non-proliferation and no longer rely on Pakistan since, with the passage time, the trust deficit has grown. The other disadvantage of civil nuclear energy might be the disposal of radioactive material and a constant flow of fuel rods and the required spares to operate the unclear power stations. These factors will again be a burden on the scarce foreign exchange reserves.

Natural gas exploration: Pakistan still has huge untapped gas reserves. If we allocate more resources to their exploration there is a possibility that in the near future part of the energy resource gap may be met from new reserves. To achieve this objective, the government has to revise its gas pricing policy including but not limited to upward revision of the well head prices. The current gas prices and the limits they place on increasing the profitability of this sector would not attract any reasonable amount of investment, whether local or foreign, since the cost of exploration has gone up substantially and current well head prices do not justify further investment at the current rate of return. The other factor discouraging exploration of new gas reserves, which would continue to haunt us, is the law and order situation in most of the areas where gas finds can be a possibility.

Natural gas Import: For quite some time, Pakistan has been planning to import gas through cross-border pipelines. This was never a great possibility but our planners continued to toss this idea around, and gave people false hopes. Any gas pipeline from Turkmenistan must pass through Afghanistan. Laying a gas pipeline through a war-torn and hostile Afghanistan never seemed more than a myth.

Laying the gas pipeline and its maintenance and management through that territory always defied imagination considering the fact that, for the last so many years, Pakistan could not manage and protect its gas pipelines even in Balochistan. Yet, the planners continued to sell the idea of a pipeline from Turkmenistan.

The import of gas from Qatar too had a snag, which was never highlighted. This pipeline was to be laid on the (deep) sea bed, for which global experience has been pretty uneven, limited, and shows this transportation method to be uneconomical. In the case of both Turkmenistan and Qatar, Pakistan did not enter into any sort of binding agreements, and because available supplies with these countries have been sold, no more gas would be available from these countries.

The IPI (Iran-Pakistan-India) gas pipeline project is a long story (global political situation is not being discussed for obvious reasons) but the current plan to lay the 54 inch pipeline through the coastal area has a major flaw. The long route has escalated the projects cost and the route requires building a lot of bridges otherwise the pipeline will have to be buried very deep. These bridges are to be built keeping in view the damage that (has been and) could be caused to the coastal highways by flash floods, which would add a lot to their cost substantially, and the time required to build the pipeline will become uncomfortably long.

The shorter route available through Balochistan is not being considered by the government, which does make sense because of the safety fears referred to earlier. Even if Pakistan starts building the pipeline on priority basis, it may take five years to complete the project (i.e. by 2013), and it may plug the energy gap only thereafter.

LNG is a possibility but there are few issues that need to be addressed. To begin with, there is a global shortage of LNG, and all the current production facilities are booked. At present no surplus is available off the shelf. Hence, Pakistan has to enter into a long-term agreement with a supplier, possibly in the Middle East, or another nearby supplier. During the next few years, both the countries working under a binding agreement would build the facilities, which would make it possible to import LNG in sizeable volumes in four years time after such agreement. There are some sources that promise to supply LNG in a short span of time. These brinks men demand a high price for supply, and a very costly re-gasification plant would have to be installed on the ship bringing the LNG. Finally, the gas could be purchased only from the ready markets that are already over sold.

Solar energy: At present, except for low-ampere domestic use, solar energy is a distant possibility, although in a country like Pakistan where clouds are a rarity for most part of the year, it could be a workable option. There is a simple way of harnessing this energy for the industry, which is dependent on steam generation through oil or gas-fired boilers. Water can be pre-heated by converging sun rays on tanks made of metals/alloys that can easily absorb the heat. This pre-heating can reduce the cost of producing steam and reduce the energy resource gap to an extent, though negligible.

Coal: Pakistan has enormous coal reserves (probably the third largest in the world) that remain untapped and even the industries that have converted from gas to coal as their energy source have to import coal mostly from Indonesia, which is again a drain on Pakistans scarce foreign exchange reserves.

Wind energy: The government is following a policy to encourage investment in wind energy. Two corridors have been identified in Sindh, and land has been allocated to various wind energy projects. But simultaneously, the government of Sindh has raised the price of leased land from Rs500 to Rs1000 per acre, which can act as a deterrent. The other issues confronting the wind power sector are as under:

* Scarcity of equipment: Wind power equipment is in short supply, the world over. Propelled by GDP growth needs, demand for energy has been growing globally, and as cost of energy derived from fossil fuels has increased two-fold during the last three years, the demand of wind power equipment has also grown manifold.

*Due to growth in demand and increase in the cost of metals, especially steel and its products, the price of equipment required for wind power has increased manifold.

*Technical know-how is available but is scarce, which renders this vital input very costly but the bigger problem is getting this input.

*Due to all these stated factors, the cost of generating electricity using wind power technology remains high while the current tariffs being offered by the government are low. Currently, the estimated cost of power generation through this technology is Rs11 to Rs12 per KWH while the tariff allowed by the government ranges from Rs10.5 to Rs10.75 per KWH.

Although the cost of equipment and know how is high, the advantages of wind power are quantifiable, and after a number of years, electricity generated by this technology would become the cheapest compared to alternate sources of energy at that point of time. To boost the wind power energy sector, the government should agree to realistic tariffs so that investment could become attractive and feasible. The case for such adjustment is strengthened by the fact that, at present, the government is subsidising oil prices by paying price differential claims. Diesel alone is being supplied at the parity value equivalent to $52 against an average market price of $93 per barrel.

The wind power project equipment consists of some medium and some high tech equipment. The equipment consists of a mast, which in Sindhs conditions should be a least 80-meter high. There is a lift in the mast and a wind turbine besides other related equipment. The highly technical parts are the wind turbine, electric circuits, and the technology that determines wind speed and direction, and accordingly changes the angle of the blades. Changing the angle of the blades is crucially important for the safety of the mast itself because high winds, storms, or tornados could damage the whole mast and its machinery besides causing loss of life and damage to property around the mast.

To install this initially expensive but eventually very economical technology, in the first instance Pakistan may start importing and installing the equipment to generate electricity but in the long run, it must encourage domestic production of the equipment. If Pakistan can replicate the sophisticated machinery and equipment for uranium enrichment and also can produce or cause to be produced very high RPM centrifuges, machinery, electric circuits, vacuum valves and allied equipment then, probably, Pakistan also has the capacity to produce equipment for wind power. It can also enter into technology transfer agreements with foreign manufacturers. The local capability has the necessary ingredients to deliver which includes a production base in metallurgy, capability for manufacturing other essential components, and know-how of electrical engineering.

In the first instance, simpler equipment could be produced locally and gradually the more complex components could also be fabricated in Pakistan. Since wind power machinery would continue to be scarce globally, in the coming years, the country could become an exporter of some of this equipment through joint ventures with internationally recognised manufacturers.

Initially domestic producers could enter into technology transfer agreements and the industry could grow, which, in the past, has been the case with various other technologies. Small suppliers chains would erupt as we have seen in Sialkot, Gujranwala and Gujrat where, to produce finished goods, many exporters now only have to assemble the components manufactured by domestic suppliers in the small and cottage industries sectors.

The considerations that place wind energy on top of the list are--- that generating energy using this technology requires no fuel, and the energy production process does not pollute the environment. If Pakistan starts producing even a part of the hardware of this technology then, progressively, the equipment would become cheaper, and there would be less drain on the foreign exchange reserves compared to the pressures generated by import of fossil fuels to generate power through heat conversion that requires burning environment damaging fossil fuels.

(The writer is the chairman and the managing director, NIT) The looming energy crisis

The looming energy crisis -DAWN - Business; March 17, 2008


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## Neo

*Fruit production in Balochistan​*
WITH four agro-ecological zones, Balochistan is endowed with a unique environment for the production of a great variety of quality fruits. The province is known as the fruit-basket of the country producing 90 per cent of grapes, cherry and almonds, 60 per cent of peach, pomegranate, apricot, 34 per cent of apple and 70 per cent of date.

The province, with diverse climates ranging from temperate to sub-tropical and tropical, produces various fruit crops. While apple, apricot, cherry and peach are high delta fruits, grape, olive, pistachio and pomegranate belong to the low delta of the province. While mango is a tropical fruit, date palm is a sub-tropical one.

The province produces 130 varieties of date. According to one estimate, Mekran produces about 0.5 million tons of dates annually. Some of the famous date varieties grown in Turbat and Panjgur include Begum Jangi, Kaharaba, Mozawati, Berni, Helini and Sabzo. The province produced over 6,625 tons of mango during fiscal year 2003-04 contributing 0.6 per cent to the total national production.

Fruit crops are grown over an area of 1,49,726 hectares in the province with a yield of about 0.9 million tons annually. Fruit production in highland Balochistan, which contains south-western region, depends on the availability of groundwater. The region is famous for production of commercial varieties of grape such as Kishmishi and Sundarkhani.

While talking to this scribe Raza Tareen, the horticulturist in Agriculture Research Institute (ARI) in Quetta, said: Zoning is essential for growing different fruit crops in Balochistan, as each agro-ecological zone presents specific agro-climatic condition for production of different kinds of fruit.

Grape, the low delta crop, is grown in bulk in Quetta, Pishin, Kalat, Zhob, Loralai and Mastung districts. It may be grown in all types of climates and soils, but the experts believe that the province should be divided into zones for quality fruit production. For instance, for high delta fruits of apricots and plums, an apricot zone or plum zone should be set up in upland Balochistan.

Another expert Muhammad Naseem in ARI said Balochistans tremendous yield potential of high quality fruits can efficiently be tapped by establishing crop specific zone and fruit processing units in the province. The fruit farmers needed to be properly educated about the techniques of growing fruit crops, and pay attention toward zoning for growth of different fruit crops. Efficient crop management could increase the profit of local farmers by reducing the production cost.

The experts in ARI are working on the production of cultivars of different fruits in Balochistan. As a result of agriculture research, cultivars of different fruits have been introduced. For instance, local cultivars of grapes, which have been introduced so far, include Kishmishi, Sundarkhani, Haita, Hussani, Askari, Khal Chini and Khalili. The cultivars of apple include the early-season cultivars, mid-season cultivars and late-season cultivars. So far 52 varieties of apples, 22 of grapes, 14 of peaches, 15 of cherry, 30 of plums, 32 of apricots, 11 of olive, five of almond and four varieties each of pistachios and pomegranates have been introduced.

Muhammad Shakeel, deputy director planning in the Directorate General of Agriculture Research in Quetta, said that research studies had also been conducted on tropical fruit production in the province. New techniques for production of tropical fruits, and cost-effective practices and packages for improvement in production, and new high-yielding and pest-resistant varieties of tropical fruits had also been introduced.

In Lasbella district, a project for improving production of tropical fruits is under way under PSDP schemes. The ARI is also working on insect pest control in Balochistan and it had established the codling moth control on apple and reduced number of sprays from eight to two times.

Farmers problems: Local farmers face a plethora of problems from planting, harvesting to marketing of their fruit crops. Shortage of irrigation water, non-availability of groundwater in highland, lack of marketing infrastructure and facilities like farm-to-market roads and sale centress, dearth of skilled labour and lack of technical knowledge and expertise, are the main problems that prevented long-term investment in fruit production. Moreover, the absence of cold storages and air-conditioned transportation facilities for fruits like grapes also increase the risks of damage to fruits.

Growing fruit crops has become an expensive venture for local farmers, as they lack the essential facilities and infrastructure in the province to market their products and earn profits, said Muhammad Hassan Panizai, a small farmer of Khanozai area of Pishin district in Northern Balochistan. He said, Today, only a financially stronger farmer with well-established market links can survive in fruit growing business. There is no charm for small farmers in this field, he added.

The small farmers have also no access to bank loans to meet their working capital requirements. For the local farmers, obtaining loans is also a complicated process. They need finance at all stages of crop activity from sowing to spraying and harvesting and for making different types of improvements in the land, farm implements, machinery, tube-wells and so on. Fertilisers are essentially used by the growers of fruit crops, but their prices have soared to 30 to 35 per cent. Panizai said: We cannot afford buying fertilisers at the current price.

This year the fruit crop is likely to be affected, as the farmers have not used fertilisers as per their requirement, he added.

Soil test also needs to be conducted on regular basis at the time of planting a fruit crop. For instance, planting season for apple crop in Northern Balochistan commences from February 15 to March 15. The ARI experts should visit the cropping areas during the season and conduct soil tests and educate the local farmers about the deficient element of the soil and recommend them the required fertilisers and its quantity. There is also a need to ensure supply of fertilisers to the fruit growers at subsidised rates.

Local farmers particularly the growers of apple feel extremely worried about attack of mites on the crop. The mites attack the leaves of the fruit plant damaging the chlorophyll and within a short period, the entire crop is affected. The local farmers spray pesticides on the crop four to eight times in a month. The affected plants do not bear quality fruits, and hence the fruits are sold at lower prices. The local farmers also complained the adulterated pesticides were available in bulk in the local market.

Pre-harvest contractors and commission agents largely benefit from the fruit production and the poor farmers continue to reel under the miserable socio-economic conditions.

The small farmers have no option but the pre-harvest sale of their orchards to contractors, as they have no cold-storage facilities to save their produce. Moreover, they are unable to bear the high costs of entire marketing operation for their fruit crops. Only a few farmers with sound financial position have direct contacts with the commission agents to market their produce.

What is direly needed is to enable the farmers to sell their produce directly eliminating the role of middlemen in the marketing channel a local farmer said.

Some farmers suggested that like wheat crop the government should fix support price for fruit crops setting a procurement target for the ex-harvest year and the government agencies should directly purchase the produce from the farmers at the fixed price.

Suggestions: The government should provide relief to the local growers of fruit crops by providing them essential infrastructure facilities like farm to market road, cold-storage houses, and regular and sustainable supply of electricity in order to enhance production and export of quality fruits.

There is a need to overcome the scarcity of water through construction of check/delay action dams in suitable areas of the province. The micro-irrigation systems need to be introduced widely to cope with problem of water shortage in fruit growing areas of the province.

Steps should be taken to check adulteration of pesticides, as the adulterated pesticides adversely affect the quality of fruits.

The ARI should organise regular visits to the orchards and provide guidelines to local farmers on the problems, which arise during various stages of production. The experts should also introduce high yielding, and drought and disease resistance varieties of fruits.

Balochistan has tremendous potential for development of horticulture, particularly the fruit farms. Serious efforts needed to be directed for bringing about a shift from traditional to a technology-based farming system.

The government should extend credit to small farmers for horticulture development. The lack of finance does not enable the cash-starved small farmers to harvest and market their fruit crop. The small farmers access to loan facility should be ensured.

Fruit production in Balochistan -DAWN - Business; March 17, 2008


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## Neo

*Investing in agriculture​*
The World Bank has advised the developing countries to place agriculture at the centre of their development agenda , make huge investments in farming and deliver urgently needed agrarian reforms. The advice has come in the wake of soaring world food prices and absence of modern farming that could boost agriculture production.

Agriculture is the foundation of many of the developing economies and provides raw materials and market for their nascent industries. And yet the vast majority of the people living in rural areas are worst hit by poverty. Pakistan is no exception to the problems arising out of the outdated farming practices and stagnant agriculture.

If the agriculture produce is to be increased to widen rural prosperity, make essential food items available to the urban people at affordable prices, and cut on food imports, expected to touch $2.5 billion this year, massive investment has to be encouraged in farming. Too much money is going into shares market and other non-productive pursuits which needs to be curbed through taxation.

lf you have to eliminate abject poverty from our midst and reduce the number of the poor according the UN millennium goal of half the present number by 2012, the agriculture sector should not be starved of investment and bank credit. . The poor farmers have to be liberated from the grip of the money lenders, middle men and feudal cultural practices.

It is landless farmers and share- croppers who are worst affected by poverty. They are so poor and culturally backward that they imitate the cultural values of the feudal lords and become more indebted and poorer in the process. Some of them and their families end up as bonded labour. They are not able to free themselves from their debt even when their whole family works for the landlord all the year round. The nature of the inequity of the bonded labour system has been exposed time and again but it continues because of the might of the feudal lords in their areas and the helplessness of the borrowers. The poor farmers are unable to raise loans from banks. If the banks charge 14 per cent interest, the money lender charges 50 -100 per cent at compound rate.

The batai or crop sharing system needs to be replaced by cash contract system to facilitate corporate farming for local farmers before attracting foreign investment in agriculture. A simple legislation can do the job.

The banks have been advised time and again to lend more to the small farmers but they are reluctant to do that because of lack of collateral. Some beginning has however been made by extending micro-credit to peasants but not to the poorest of the poor.

Grameen banks founder Mohammed Younus has gone all the way to New York to lend to the American poor who have no bank accounts..

If anyone breaks out of the system, he does not have the opportunity to market his products , much less export them as the government agencies serves big business. In such a context, the Asian Development Bank has come up with a fund for small loans of $320 million in rural areas. The bank finds that when the money is given to the government for lending to the farmers it is used in its own way and the poor farmer does not truly benefit. The intermediaries also grab a share of the money so the bank has come up with a scheme for all kinds of small loans including postal loans through the banks. If the scheme works well, it will help a large number of farmers.

In democracy, there is equality of opportunity and economic rights to improve the lot of every citizen. The elected government has to work for the common good. So if more such lending schemes come up, it will be good for the farmers.

The basic problem with a small land holding is that it is not viable. As the families expand, the land gets divided further and further . Fragmentation of small parts of land has to be discouraged and larger more viable holding encouraged. If the 320 million dollar loan helps in this process in the rural areas, it will be a very beneficial step.

The government of India has decided that commercial banks write off $15 billion given to poor farmers as part of its policy of rural debt relief. The banks will be compensated by the government.

The small farmers need to be encouraged through co-operatives. With the help of a real co-operative system they can buy what they need collectively and cheaply and sell what they produce at competitive prices. Loans and common services like provision of tractors, seeds etc can also be provided by it. They can have supplementary income from cattle farming, chicken breeding, raising flowers and fruits. The crop yield will go up appreciably..

It all begins with the ownership of the land and the family staying together instead of the sons migrating to cities and staying in Katchi Abadi in cities. The need of the hour is that the land be given to the tillers and surplus government land to the landless farmers. Too many people are afloat now and that number has to reduced.

Investing in agriculture -DAWN - Business; March 17, 2008


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## Neo

*Economic choices for the new government​*
People have voted for a new government to have a clear break from the economic policies of the past eight years.

The predominant concern in the recent past was economic growth rate with the ruse of trickle down that is an obsolete and an archaic premise. The trickle-down thesis stands refuted empirically. The state-of the-art borne out in late developers is growth-with-equity. If it can happen there, why can Pakistan not have growth-with-equity too?

As the previous government boasted of high rates of GDP growth, food and other prices soared, current account deficit widened, energy shortages worsened despite the pet prescription of privatisation, unemployment increased as people were ruthlessly retrenched, GDP grew but not job opportunities, and poverty, as measured by incomes, education and health facilities and living conditions showed no signs of abatement for bulk of the population.

Surplus continued to flow from the lower to the upper income groups that stood better off. As food became scarce, incomes of the farmers increased, as this remained the prime concern of policy makers. While there are other factors that also feed into higher agricultural output, focus was on farmers income. Clearly, the past governments decision-making was heavily tilted towards the rich farmers and the rich investors who acquired public enterprises. It was the lower tier that suffered by losing out on jobs, food, and living conditions.

This lower tier was asked to wait for their trickle of benefits. Instead of waiting, they voted that government out to bring in a new one. The previous government had, therefore, bet on the wrong horse. While the upper echelons served as their political base, they did not have power enough to retain the then incumbents in the office. As it turned out in the general elections, power was with the common people. The commoners concerns should be dominating the next economic agenda if the mandate of the electorate is respected..

One of the issues, however, is that, once in power, the office lobbies get crowded by the influential asset owners in various segments who alone are provided access by the system of governance. The electorate gets shunted out and away from the government that has actually been thrown up by the ones who can no longer or with extreme difficulty access their representatives holding position of power.

The agenda is thus dominated by the haves who wish to have more. The decision-makers play to the tunes they hear in the vicinity. Since human memory is short, the tunes of the common electorate begin receding into the background. Once out of active memory and amidst the splendour of high government offices, they are likely to be forgotten. The concerns of the crowd(electorate) thus get crowded out of the agenda.

Even before the next government would take charge, the concerns of the farmers have been trumpeted a lot more than the concerns of the ones who are behind the victory of the winners in this election. It is being demanded that the wheat support price should be increased by more than 100 per cent as the international prices are rising. So, it is said that unless support price is brought up significantly, farmers will not have incentive to produce more. While more production also depends upon inputs and techniques, emphasis only on the support price makes the entire issue of wheat output underspecified.

The question is that when oil prices decreased in the international markets, did our petroleum prices also move in the downward direction? Have our sugar and cotton prices always moved in tandem with international prices for the same? Do people, in general, get international level salaries? Since, for sure, wages and salaries are nowhere near and cannot be at the international level, people can certainly not afford to pay a price of wheat determined in the light of international price for this basic food item. They will be further impoverished if wheat price goes further up as increase in wheat price has a ratchet effect on the overall price level.

Also, to jack up wheat support price for reasons of efficiency is to neglect the issue of equity. In the interest of equity, there should be a trade-off between efficiency and equity. Responsible elected governments determine the extent of surplus that must flow to the consumers most of whom are poor or around it. Support price should then be fixed accordingly and in line with the promises of equity made during the election campaign. Overall price level in general and wheat price in particular will be a significant distributive factor in this tension between the producers and consumers.

The new government will also need to pull out of the GDP growth rate hang-up. In the recent past, much of it was fuelled by creating credit-financed demand for consumer durables. In our country, higher production through better capacity utilisation is deemed as satisfactory growth. Strictly speaking, we should aim at economic growth that takes place when the production possibilities grow beyond what is being produced with full utilisation of resources a country is endowed with.

As far as we are concerned, full resources are far from full utilisation. Our land, human capital, machinery and equipment are all grossly under-utilised as is evident from the land mass that is not cultivated, labour power unemployed or under-employed, and installed machinery that does not operate at capacity. Yet, there is a tendency to be jubilant over growth rates when despite growth the economy remains inside the production possibility frontier. Real growth is to pull the production possibility frontier outwards after all the resources have been deployed.

So, the pre-occupation ought not to be only with figures and quantities. Rather, pre-occupation ought to be with ideas for utilisation of the resources that exist but remain un-/under-utilised. This will generate output and employment. The quality and character of growth need to be targeted so that the goal of growth-with-equity is approached. Who benefits is the key question here.

Lasting solutions to the issue of employment need to be sought failing which the symptom will re-appear. Infrastructure projects provide employment only during the life of the project. Yes, this route was taken in the US and China. It worked there because the economies were ready to absorb the workers freed from infrastructure projects. It is not likely to work here unless the economy generates the same labour-absorbing capacity.

This will happen only if decision-making weighs boldly in favour of the deprived in both the rural-agricultural setting as well as in the urban-industrial areas. If surplus labour is expected to be absorbed in the urban informal sector, the policy will continue to be dualistic instead of being integrative and inclusive. Discontent and resentment will continue to simmer beneath the surface.

Exports will follow as a logical consequence when existing human and material resources are intensively utilised. Equally important will be to build the values of honesty and hard work that under-girded the capitalist revolution in the past. Only then will good managements be found in public, private, and agricultural set-ups. In the absence of these basic values, a case cannot be made for less government yet. For, most economic activity requires the visible hand of the government for supervision and regulation failing which the tendency to hog the resources might exacerbate thus leaving the electorate worse off.

Economic choices for the new government -DAWN - Business; March 17, 2008


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## Neo

*Strengthening electronics manufacturing base​*
While robust GDP growth has been witnessed over the last few years, this growth did not translate into improving the economic security of its people due to high rate of inflation and unemployment. The increasing trade deficit-- a cause of concern- needs to be addressed by policies that facilitate growth of export-related industry while at the same time reliance on imports should be reduced. This will require enhancing the power generation capability, strengthening the manufacturing base, and investing in alternate fuel to reduce dependence on imported oil.

But Pakistan seems content exporting textile products, while the rest of the upcoming economies are investing in high growth and high technology industries and human capital development. This has to change for broadening the middle class and raising the standard of living of the populace. Investment in alternate fuel (e.g., ethanol) and electronic equipment production should be the two prime targets for strengthening the manufacturing base. The focus in this article will be on the need for establishing local electronic manufacturing industry and the ways to achieve this.

According to the Economic Survey of Pakistan, the country spent $1.8 plus billion in importing telecom equipment during July-April of FY2006-07, a growth rate of 17.3 per cent over the same period of 2005-06. With the increasing use of mobile phones and the number of subscribers growing north of 100 million within a few years, the country will be doubling its imports of telecom equipment within a few years. Imports of telecom products will most likely become the second highest ticket item after petroleum if nothing is done to change this now.

If all of these electronic products are produced locally, this will not only provide new employment opportunities in direct and ancillary industries but will also help reduce the trade imbalance. Once Pakistan gets on the map of the world of electronic manufacturing, new opportunities will sprout up where local companies can provide outsource services in RF and ASIC design; printed circuit board design; and electrical, thermal, and mechanical simulations. This may seem optimistic, but having worked in this industry for close to 20 years, I have seen the transfer of electronic manufacturing and design industry from higher cost to lower cost regions of the world. New markets and cost reduction are the constant drivers for this industry and the Nokias, the Samsungs, and the LGs of the world are looking to provide better and cheaper products to the consumers and compete with each other.

There are two distinct models that the industry follows for electronic products manufacturing; the in-house manufacturing model and the fabless model. In the in-house model, the original equipment manufacturers (OEMs) like Nokia and Samsung have their own manufacturing facilities. On the other hand, companies like Sony Ericsson and Cisco follow the fabless model, outsourcing almost all of their manufacturing to electronic manufacturing services (EMS) providers to reduce cost. These EMS houses, such as Foxconn and Flextronics, have seen tremendous growth during the last few years and are opening new facilities all over the world. The EMS model is also attractive because these companies can manufacture any type of electronic products (mobile phones, laptop, desktop, printers, flash drives, and so on) and are not just dedicated to one product type such as a mobile handset.

Given that the consumers prefer name brand such as Nokia and SonyEricsson, Pakistan needs to attract investments from both types of companies to make sure that the electronic manufacturing grows beyond just mobile phone handsets. However, for these companies to make investments, the local conditions must be right. These conditions include factors such as market size  captive or export oriented  as well as investment climate. With a potential of $5 billion the local market within a few years, the assessment would largely be based on the following four factors and it is incumbent upon the new government to work concurrently on all four aspects to be successful in attracting new investments:

*Law and order: The lack of security of a companys investment, properties, and personnel is probably the biggest obstacle that must be overcome. The growth of industry and employment will make it difficult for the militant organisations to recruit new suicide bombers.

*Incentives: Everywhere in the world where companies have re-located or established manufacturing facilities, the host countrys government has offered attractive economic incentives. The Board of Investment must do exhaustive analysis of these incentives  especially the ones offered by India and the countries in Asia-Pacific region - and offer something better.

Special Economic Zones (SEZ) must be developed, dedicated to a particular industry. For electronic industry which depends on just-in-time manufacturing and multiple suppliers, incentives must include duty-free imports of raw material, tax holidays, fast transportation and competitive freight fees, and swift clearance from customs.*Infrastructure: Although headway is being made in improving roads and transportation infrastructure, Pakistan must increase its electrical power generation capacity to meet industrys demand. No company, domestic or foreign, would make investment in a region where constant power outages are the norm. This is one of the main reasons Intel chose Vietnam over India for its new chip assembly plant. A dedicated power generation facility for an SEZ should be considered as it will cut the cost of distribution, reducing the operating expenses.

Solar thermal power generation is becoming more attractive as the cost is coming down and must be considered in the mix, especially with the abundant availability of sunlight.

*Skilled labour force: Although Pakistan does not have the trained labour force to serve the needs of electronic industry, the assembly of electronic systems is not a rocket science either. Special operator and technician training centres can be established in SEZs to provide this training. Also engineers can be trained rather rapidly in the process and quality engineering skills required for this industry.

Many Pakistani engineers are working in the US in electronic industry with extensive experience. They can be tapped to provide training, and many of them will gladly offer their services. At the same time, engineering schools in close proximity to these SEZs would need to modify their curriculum to prepare engineers with the technology and skills necessary for this industry. Local engineering universities and industry partnership should also be encouraged as part of general incentive package to conduct R&D, thus providing a constant stream of trained engineers.

Pakistan has the potential to be at par or better than India in providing low cost manufacturing and engineering resources to the world of electronic products design and manufacturing. Much time has been lost, but sound policies and flawless execution at highest priority can still yield desired results.

Strengthening electronics manufacturing base -DAWN - Business; March 17, 2008


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## Neo

*Political legacy and the trade with India​*
The Commonwealth Games 2010 in India could do for Pakistan what Olympics 2008 did for India: provide an opportunity to enter a massive market next door in a big way.

Over the last five years, dynamics of India-China relationship  one an economic tiger and the other the gigantic economic dragon of Asia  at long last has succeeded in shedding the legacy of embittered history of political relations to realise the benefits that could accrue from closer economic interaction.

The private sector, particularly that of India moved fast to pounce on the opportunity that the changing political scenario threw up and trade picture between the two nations changed dramatically.

The volume of formal trade experienced a metamorphosis when its quantum multiplied several folds from a few hundred dollars in 2002 to around $15 billion currently.

The business leaders of India told Dawn that besides amazing growth in Chinese prosperity the major spur in construction activity in Beijing in a run up to the prestigious international sports event opened new vistas of multifarious businesses for Indian industry.

Manish Mohan of the Federation of Indian Chamber of Commerce and Industry was optimistic that the industry in Pakistan would closely work with Indian industry to complement each other, to feed the stimulus that the sport event of 2010 has generated in the economy.

The leaders of Indian industry felt that necessary framework to back the Pakistan-India economic partnership is in place in form of South Asian Free Trade Agreement (SAFTA) which could play its role in cementing the economic relations between the two countries.

The apex trade body representatives mentioned cement in this regard. As India moves ahead on several mega public works and infrastructure projects, its domestic demand has gone much beyond the current capacity of its cement industry. The quality of Pakistani cement is also of international standard and we are willing to make up for our cement deficit by importing this key ingredient from our neighbour.

Tariq Saeed, a business leader of Pakistan who heads Safta was highly optimistic about the prospects of economic cooperation among major South Asian nations.

My interaction with businessmen on both sides of the border and the deliberations at Safta meetings has helped me in changing my position on trade with India. A few years ago I believed that the issue

of Kashmir needs to be settled first, but today I think that the economic relations must not be kept hostage to lingering political disagreements. Let the industry and trade pave the way for moving closer to resolution of contentious issues.

The money does not sit pretty in coffers. It tends to flow towards avenues with a promise of good returns. The political goodwill is essential but economic integration could play its role in forcing the political leadership to restrain from blowing up controversial issues out of proportion to gain political mileage, a business leader of Pakistan commented requesting anonymity.

The quantum of trade between India and Pakistan increased from $251.01 million in 2002-03 to $1672 million in 2006-07. The more interesting feature is the fact that Pakistan exports have swung from measly $44.5 million in 2002-03 to $323.26 million over the same period.

The balance of trade is still loaded in favour of India as Pakistans imports from the Asian tiger touched $1349.60 million in 2006-07 from $206.16 in 2002-03.

The situation is bound to transform as Pakistani manufacturers have developed an interest to look eastward, said a leading tycoon of India.

The rural economy of the two countries continue to be dependent on vagaries of nature and therefore farm production is not so predictable.

With dependable transport infrastructure in place between India and Pakistan, they can help each other out in situation of distress- in case of short crops of one another other, and even in perishable items, a FICCI functionary told Dawn in Delhi making a case for closer economic relations.

The trade in agriculture has helped the two countries to bridge the short-term supply shortages caused by seasonal crop fluctuations, said another leader.

Indias export basket for Pakistan featured mainly agri-based products like sugar, vegetables, meat, cotton and petro-chemical products.

Whereas items which have witnessed significant jump in import in India from Pakistan include leather, pearl and semi-precious stones, non-ferrous metals, machinery except electronic and electric. ( The writer is currently on a visit to New Delhi)

Political legacy and the trade with India -DAWN - Business; March 17, 2008


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## Neo

*Investors wait for power transfer*​
SELECTIVE support last week prominently figured on the high-growth shares apparently to realise quick gains but instances of long-term investment were not many as investors were not inclined to go all out until the new political set up is in place. The next week could be crucial for the future direction of the market as the new assembly would be in session and signals from its proceedings were expected to be readily picked up by the prospective investors.

How to react to the new political setup and its economic and financial policies would have positive or negative bearing on the capital market, analysts said.

The market, therefore, failed to establish any definite price pattern as investors were not inclined to make long-term commitments even on the blue chip counters till the new political setup was in place.

After having fluctuated either-way between the barrier of 15,000 plus and below it, the KSE 100-share index finally ended at 15,087.47 points, fractionally higher by 2.39 points. But the finish was well below the weeks highest at 15,171.42.

The mid-week witnessed the return of some foreign investors on the oil and banking sectors at the lower levels but later they too followed the general market perception owing to political uncertainty amid conflicting news about the possible standoff between the victors and the presidency on some core issues.

With the dividend news from the leading companies being one of the major stimulants during the last two months, the markets sustained run-up have dried up and investors are looking for smooth transition of power and return of foreign investors, which could boost stock trading, analyst predict.

The volatility of the KSE 100-share index, which hit the high and low of the week at 15,171 and 14,912.78 indicates that investors are still in two minds about smooth sailing on the political front.

The investors closely followed a combination of positive and negative news pouring from Islamabad in each session about the future political setup and generally played to the tune without taking risk, market sources said.

The future direction of the market will be guided by events in Islamabad and there may not be a major breakthrough until process of transition is completed, they said.

Leading base shares, mainly MCB, National Bank, PTCL, OGDC, Engro Chemical and some others came in for active support and led the market advance.

Selective support on the blue chip counters figured prominently as the market made decisive breakthrough as investors resumed their normal activity though played on both sides of the fence.

Although NA session has been called on March 17, conflicting news about the rigid positions taken by both the political parties and the presidency on some issues including restoration of the apex court judges continue to worry investors, floor brokers said.

There may be a long legal battle on the issue but it is not a no-win situation and the truth will finally prevail, they said adding the speculation about a major standoff on some of the issues may keep the buying interest at a low key.

The market has given a volatile performance during the week, but the next week could be crucial for its future direction based on the loud whispering from the assembly session, some others said.

However, foreign investors are expected to wait for further developments on the political front before resuming their normal trading activity mostly on the safe havens for the time being.

Despite higher exports, analysts were worried over the steep fall of 95 per cent in the interim profits of the cement sector, at only Rs65 million as compared to Rs1.347 billion during the same period a year ago.

There are some exceptions too as some of the leading among them, notably Lucky Cement and D.G. Khan Cement maintained their winning stream but based on the entire sector the earnings are terribly low and could have negative fallout on the other counters, they fear.

Forward counter: Price movements on this counter was highly erratic as investors played on both sides of the fence, leading losers being MCB, National Bank, Bank of Punjab and some others. But on the other hand Engro Chemical, PSO, Bank Alfalah, Lucky and D. G. Khan cement and some other managed to finish higher.

Investors wait for power transfer -DAWN - Business; March 17, 2008


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## Neo

*National unit vulnerable on dollar demand​*
Strong demand for dollars by importers because of costlier payments after the higher oil prices in the international market has made the rupee vulnerable against the dollar and European single common currency. Currently the oil prices are hitting a record near $110 in the Asian trading. Gold prices have also touched record highs. Most currency experts fear that the rupee will continue to remain under pressure and weaken further against leading currencies in coming weeks.

The rupee weakness versus the dollar persisted in the inter-bank market this week. The rupee commenced the week on a dismal note as mounting demand for dollar continued to exert downward pressure on the rupee. On March 10, the rupee suffered fresh losses against the US currency. The rupee/dollar parity shed 12 paisa on the buying counter and another 14 paisa on the selling counter, changing hands at Rs62.78 and Rs62.82 against the previous week close of Rs62.66 and Rs62.68.

The rupee attempted to recover some of its overnight losses against the dollar on the second trading day of the week in review moving both ways.

While it managed to pick up one paisa on the selling counter, it further slid by one paisa on the buying counter to trade at Rs62.79 and Rs62.81 against the dollar on March 11.

However, higher dollar demand from the importers to cover up their payment needs pushed the rupee down further against the dollar. The rupee posted fresh losses of 7 paisa and traded at Rs62.86 and Rs62.88 on March 12.

Modest improvement in dollar supplies on March 13 helped the rupee to come out from downward pressure against the dollar in the inter-bank market, gaining 12 paisa to trade at Rs62.74 and Rs62.76.

However, the rupee failed to hold its overnight firmness on March 14 as high demand for dollar to meet import payments requirement exerted downward pressure on the rupee, which shed four paisa and traded at Rs62.78 and Rs62.80 against the dollar. This brings cumulative fall in the inter bank rupee value this week to 12 paisa.

In the open market, the rupee shed five paisa in terms of dollar on the opening day of the week and traded at Rs62.75 and Rs62.85 against previous week close of Rs62.70 and Rs62.80. The rupee, however, failed to hold its overnight firmness versus the dollar on March 11, when it shed 10 paisa, changing hands at Rs62.85 and Rs62.95. It further extended its overnight decline against the dollar on March 12, losing 7 paisa on the buying counter and five paisa on the selling counter to close the day at Rs62.92 and Rs63.00.

On March 13, the rupee continued its decline versus the dollar, posting fresh losses of three paisa at Rs62.95 and Rs63.05. On March 14, however, the rupee managed to recover its overnight losses by gaining five paisa against the dollar. At close, the dollar was at Rs62.90 and Rs63.00. During the entire week in review, the rupee in the open market suffered cumulative loss of 25 paisa against the dollar.

Against the European single common currency, the rupee overnight weakness persisted on March 10, as it sharply shed 20 paisa over the previous week ends Rs95.80 and Rs95.90 touching new lows to trade at Rs96.00 and Rs96.10 on the first trading day of the week. The rupee continued unchanged versus euro on the second day of trading but shed 10 paisa more on the third day trading at Rs62.86 and Rs62.88.

On the fourth trading day of the week, the rupee touched record lows against the euro after falling sharply by Rs1.35 to trade at Rs97.55 and Rs97.65 amid modest trading. However, it managed to recover five paisa on the fifth day and traded at Rs97.50 and Rs97.60 on March 14. This week, the rupee posted a cumulative loss of Rs1.70 against the European single common currency.

On the international front, the yen and Swiss franc firmed broadly as US stocks fell on credit-related worries on the weeks opening day, prompting investors to reduce exposure to risky assets and unwind trades funded by the Japanese and Swiss currencies low rates.

The yen approached eight-year highs against the dollar while the Swiss franc rose to roughly two-year peaks against the euro and was within striking distance of its record high against the greenback.

The dollar, meanwhile, steadied against the euro after Europes top monetary officials expressed concern about excessive movements in currency exchange rates.

On March 10, the greenback hit a session low of 101.57 yen in New York late trade, just shy of last weekends eight-year low around 101.40 yen, before edging back to 101.75 yen, down 0.9 per cent on the day. The dollar dropped 0.6 per cent against the Swiss franc to 1.0192 after hitting a record low at 1.0136 Swiss francs last week close. Against the euro, the dollar traded at $1.5347, slightly up from last weekend levels. The euro had hit a record peak against the dollar on March 8 at around $1.5459. The pound was steady at $2.0161, having earlier risen as high as $2.0220.

On March 11, the dollar surged against the yen and Swiss franc, on pace for its largest daily gain in six and a half months and more than three years respectively, after the Fed said it would lend primary dealers up to $200 billion in Treasury securities and allow them to use agency and mortgage debt as collateral. The dollar also rebounded from a record low against the euro following the announcement of the liquidity measures, which will be co-ordinated with other central banks.

In New York, the dollar hit a session high of 103.54 yen, well off an eight-year low around 101.40 hit last week. It last traded at 103.35 yen, up 1.6 percent on the day, its best daily performance since late August 2007. The euro retreated from an all-time high just short of $1.55 earlier in the session and fell as low as $1.5283 before edging back to $1.5316, down 0.1 per cent from previous days close. The dollar also rose 1.3 percent to 1.0333 Swiss francs.

High-yielding currencies rallied sharply against the dollar and yen, with the New Zealand dollar rising 1.6 percent to US $0.8017. Sterling eased 0.3 per cent to $2.0027, tracking a sharp retreat in euro/dollar from record highs set earlier in the day.

On March 12, the dollar plunged to a record low against the euro and a basket of currencies amid uncertainty about the long-term impact of the Federal Reserves recent efforts to inject money into cash-starved credit markets.

The euro hit a record peak of $1.5559, according to Reuters data, before easing to around $1.5552, up 1.5 per cent from a day earlier. It was the largest daily gain for the euro in more than two years.

The euro has risen 6.5 per cent against the dollar so far this year and is up 18 percent over the past 12 months. Against the Swiss franc, it was 1.9 percent weaker at 1.0143 francs, just shy of a record low at 1.0136. Sterling gained ground against the dollar. It was up 0.6 per cent on the day at $2.0189.

On March 13, the dollar plunged below 100 yen for the first time in more than a decade and hit a fresh lifetime low against the euro as worries deepened on Wall Street that the United States had entered a recession. The dollar traded near parity with the Swiss franc, dropping to a record trough, as data showed a surprising drop in US retail sales, which heightened concern that American consumers were cutting back on spending. The dollar fell to 99.77 yen, its lowest level since October 1995, before easing to 100.67 yen, 0.8 per cent weaker on the day.

The euro hit a fresh lifetime high at $1.5624, before trading back down to $1.5614, up 0.2 per cent on the day. The dollar fell 0.3 per cent to 1.0104 Swiss francs after plumbing a record low of 1.0047 francs. Sterling rose against the dollar on a wave of dollar selling that pushed it to historic lows against many currencies on the view the Federal Reserves recent actions to ease market strains wont work. But the pound emerged as the biggest gainer against the dollar. It was up 0.2 per cent on the day at $2.0310, having traded as high as $2.0391 earlier.

At the close of the week on March 14, the dollar hit a record low against the euro and fell back towards a 12-year low versus the yen. It fell 0.4 per cent from late US trade to 100.30 yen and sank as low as 99.84 yen close to the 12-year low of 99.77 yen hit on the previous day. So far this year, the dollar has shed 10 per cent against the yen. Sterling edged up to three-month highs versus a dollar battered by news of trouble at US banking heavyweight Bear Stearns. It rose as high as $2.0397, its strongest since mid-December.

National unit vulnerable on dollar demand -DAWN - Business; March 17, 2008


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## Neo

*Three new saving schemes shortly ​* 
ISLAMABAD (March 17 2008): The government has decided to launch multipurpose three new saving schemes of short duration for general public, which are aimed to minimise reliance on bank borrowing by the government, sources in Central Directorate of National Savings told Business Recorder on Saturday.

"We are introducing papers of short duration--of three months, six months and one year--on which general public will be given return in proportion to periods of Treasury Bills rates determined by the market," they said.

Currently, CDNS has been issuing papers for three years and 10 years but now the government is going for short duration papers, sources added.

While counting the benefits of new schemes, they said that most of the people maintain their deposits in current accounts but they do not get any return on their deposits. "Banks have nearly one trillion rupees deposits, of which current account deposits range from Rs 400 billion to Rs 450 billion," sources said.

On the one hand, they said, depositors were given zero return by banks on their money and, on the other, rate of prevalent return is very unattractive.

Banks are also investing depositors' money into T-Bills at 9-10 percent interest, but accountholders are getting nothing on their deposits.

The State of Bank of Pakistan Governor, Dr Shamshad Akhtar, has repeatedly stressed on the banks to increase the returns so that the spread should decline, but banks have not paid any heed to her advice.

"We are expecting very encouraging response from the public who will get 8 percent or 9 percent return on their dead amounts to be deposited in current accounts," sources said.

With the launching of this scheme, majority of current accountholders, the government believes, would draw their amounts from banks to invest in new schemes.

However, if the banks want to retain the amount of accountholders, they would have to improve their rate of returns to mobilise deposits, sources said. "Either the banks will lose their deposits or increase the rates of return on deposits," they added.

Analysts are of the view that with this scheme, not only the spread would automatically come down but would also serve the purpose of the SBP. Since the GoP's bank borrowing has also reached its peak, this instrument would pull the money out of the banks and put into the non-banking channels, hence fulfilling the government needs. When contacted, the Director General of CDNC, who was in Karachi, said that he would announce the scheme at a press conference after its formal approval by Finance Ministry.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Load-shedding to continue till 2010: Pepco ​* 
LAHORE (March 17 2008): Power load shedding in the country will continue till 2010 due to its rapidly increasing demand as well as sharp shortfall, well-informed sources in the Pakistan Electric Supply Company (Pepco) told Business Recorder.

There will be no change in the current 4-6 hours power load-shedding daily in urban and 8-10 hours in the rural areas. However constant and uninterrupted supply to the industrial units will be the top priority of Pepco instead of domestic consumers, the sources added.

They also said the country is facing 1,500 MW shortfall currently, while the total demand for electricity stands at 11,700 MW against the present availability of 10,200 MW. The sources said that demand was increasing 12 percent annually against its zero percent generation.

Sources said that Pepco was getting 2,400 MW from hydropower projects against the capacity of 6,400 MW because of severe shortage of water in the dams. At present, Pepco is receiving 3,000 MW from the Independent Power Producers (IPPs), they added.

The water situation in the dams as well as in the canals would improve after the snow starts melting, which would help get more power generation in the hydro sector. Sources said that basic reason of constant load shedding in the country was that the government could not timely execute the power projects.

The caretaker government took the initiative to execute new power generation projects like Chichoki Malian Power Project having capacity of 450 MW and Nandipur 450 MW, which would be accomplished in 2010, the sources added.

High officials, working on the Chichoki Malian and Nandipur power projects, said: "There will be some delay in the completion of these projects because unsatisfactory law and order situation in the country." They also said since foreign engineers were working on these projects, therefore, due to the security threats to their lives, the development work had been stopped many a time in the past.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Mutual funds industry recorded 88 percent growth in 2007 ​* 
KARACHI (March 17 2008): The mutual funds industry performed very well and witnessed a growth of some 88 percent during the calendar year 2007, attaining the size of Rs 330 billion from Rs 175 billion in December 2006.

In an exclusive interview with Business Recorder, Muhammad Ali, chief executive officer of UBL Fund Managers Limited, said that growth in the mutual funds industry was continuing to rise and was likely to touch the mark of Rs 400 billion by the end of December 2008.

Muhammad Ali is a prominent banker. He did MSc in Finance from the University of Strathclyde in Glasgow, Scotland, funded by British Council Scholarship. He is MBA of the Institute of Business Administration (IBA) Karachi with Gold Medal for overall First position in 1988-89 and holds CFA charter.

He have 15 years experience in fund management and investment banking with institutions like Asian Development Bank, United Bank Limited, ANZ Grindlays Bank and Pakistan Kuwait Investment Company.

In fund management industry he has credit of setting up of UBLFM in 2001-02 and launch of UMF. He also managed equity portfolio of UBL (Rs 3 bn) and Pak Kuwait (for a brief period), while turnaround initiated at UBLFM resulting in enhanced market image.

He said that presently some 35 mutual fund companies are working in Pakistan, out of which National Investment Corporation is leading with around 30 percent share. However in the private sector, UBL is the second largest fund manager with a share of 10 percent share.

The industry is rapidly expanding. However, it faces some serious issues including unavailability of human resource and lack of investors' awareness, he said, and added that to meet this challenge some steps had been taken by industry stakeholders for continuous supply of trained manpower.

Ali said that despite the fact that the industry is growing very well, it is still in initial stage and would be mature in the next two or three years.

He said that Pakistan's mutual funds industry's size is not enough "if we compare with our neighbour country, whose mutual funds industry size stands at five trillion Indian rupees.

"The industry has planned some special program for training of new human resource, and we are expecting that this would help further extend the industry," he said.

About UBL fund, he said that presently the UBL Fund Managers is managing some Rs 33 billion worth of funds, which have grow by some 266 percent during the calendar year 2007 and would reach Rs 50 billion by December 2008.

"The funds of UBL stood at Rs 9 billion at the end of the 2006 as compared to Rs 33 billion as of January 31, 2008 all in open-end category, out of which some Rs 3.5 billion has been received under the Islamic fund", he said.

He said that UBL Fund Managers Ltd is a wholly owned subsidiary of United Bank Limited making it the first Asset Management Company to be launched by a bank in Pakistan.

"We have been awarded Management Quality Rating of 'AM2' by JCR-VIS Credit Rating Agency, which has been upgraded by two notches from 'AM3' signifying a strong team of qualified personnel and the management's initiatives to streamline operations,' he said.

Huge flows of funds have made UBL FML the largest private asset management company (AMC) with respect to assets under management (AUM) in open-end mutual funds, he said.

He said: "Performance and achievements in the past year are an indication of our determination to become the leading asset management firm in the country."

Ali said that UBL Fund Managers collaborates closely with UBL in providing high quality investment services on countrywide basis through its wide network providing existing and prospective customers easy access, through a toll free 24x7 call centre and investment information through 'short messaging service' (SMS).

"We offered tax-free returns, no corporate or withholding tax, as per existing laws, and tax rebate on investment of up to Rs 300,000 for individuals', he said.

Low minimum investment amount Rs 5,000 is required to open account and Rs 1,000 for subsequent investments with an encashment period of 3 to 5 days depending on the type of fund, he said.

He said that systematic investment plan is available which will allow employees to invest on monthly basis through standing instructions to HR or through direct debit if he or she has a UBL account.

"We also offer free investment advisory services for individuals for developing portfolios suitable to their risk tolerance and return requirements," he said.

He said that presently UBL Fund Managers is managing six funds, including United Money Market Fund (UMF), United Growth & Income Fund (UGIF), United Composite Islamic Fund (UCIF), United Stock Advantage Fund (USF), United Islamic Income Fund (UIIF) and recently launched UBL Capital Protected Fund-I (UCPF-I).

UBL funds during the last year, he said, had performed well and distributed some 10.26 percent pa return on the UMF; 11.51 percent pa on UGIF, 29.7 percent on USF and 14.9 percent on UCIF.

"We launched operation in 2002 and have some 6,000 investors in the growing industry of Pakistan, which have overall some 0.2 million investors.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Skyrocketing cotton prices endanger $1 billion apparel exports ​* 
KARACHI (March 17 2008): After energy crisis, the skyrocketing prices and shortage of cotton have endangered the dollar one billion export orders of apparel products scheduled for June this year, exporters said on Sunday. They held the local cotton traders responsible for increase in the commodity prices and its shortage in the local market bringing the manufacturing of value-added textile products to a suspension.

Whereas the caretaker textile and commerce ministries are mute and apathetic to respond to the rising crisis that is going to hit the local industry and cause shortfall in the current fiscal year's exports target, they criticised.

Talking to Business Recorder, Ijaz Khokhar, former chairman of Pakistan readymade garment manufacturers and exporters association (Prgmea) said that soaring prices of cotton and yarn have caused severely negative impact on textile garments exports this year.

"Exporters are losing buyers in the world market for not meeting the export shipment targets due to increasing cost of production," he said, adding that when they booked orders from foreign buyers the prices of the raw material were lower than now.

"In June 2007, yarn was available at Rs 480 per 10 pounds which has surged to Rs 630 per 10 pounds, mounting by 30 per cent and cotton was available at Rs 2600-2700 per kg which went up to 3637 per kg in this period," he said.

Expressing fears, he said that local buyers are concerned over losing existing buyers and have completely failed to add new foreign buyers in their business lists. "Future market strategy is still vague to most of the exporters as to what may happen to them in the world market if the prevailing crisis continues," he maintained.

Regarding the closure of foreign buying houses, he said that it is against the national interest and will increase the cost of production by five per cent, as exporters will have to travel to neutral venues to seal deals with the foreign buyers.

Ijaz said that 30 per cent increase in these commodities prices have come from world markets while the local traders drive 70 per cent rise. He accused the local traders of creating an artificial shortage of these commodities so that they could extract maximum profits out of the crisis.

Increasing tariffs of utilities will also give rise to textile garment production cost by 10 per cent, as a result the international buyers will turn towards other countries like India, Bangladesh and China, he maintained.

The country, he said, will not only fall short of the fiscal export target but also fail to generate revenues through export levies, in case exports are reduced significantly due to soaring production costs.

To a question, he said that new orders are not coming to the local exporters due to increasing cost of production. There is a serious shortage of raw material in the local market for future export orders, former Prgmea chairman said.

Appealing to the Trade Development Authority of Pakistan (TDAP), he said that it should immediately set up commercial offices in the world markets to issue guidelines to foreign buyers about Pakistan's local products. "It should also set up mini display centres in the major world markets where local products could be exhibited to attract foreign buyers," he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*PAKISTAN: Textile exports fall by 3.4% in seven months​*
Pakistan's textile and garment exports fell by 3.44% in the first seven months of the current financial year according to the latest figures released by the Federal Bureau of Statistics. 

Total textile and clothing exports were $6.028bn in July 2007 to January 2008, down from $6.242bn in the same period last year. 

By category, exports of cotton yarn were down 12.8%, cotton fabric fell by 6.0%, and knitwear exports slipped 11.2%. However, ready-made garment exports rose 7.2%. 

Political turmoil and rising production and raw material costs are being blamed for the decline.

PAKISTAN: Textile exports fall by 3.4% in seven months: Apparel and textile News & Comment


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## Neo

*Major economic issues stare new coalition govt in Pakistan​*
Islamabad, Mar 17 : The three major coalition partners of the to-be-formed federal government in Pakistan, namely the PPP, the PML-N and the ANP, are said to be devising their future strategy to tackle major economic issues and take practical steps to control the ongoing inflationary trend.

If a prominent official from one of these parties is to be believed, the three parties have agreed to continue the privatisation process and also to take short-term and long-term steps to ensure a quantum leap for boosting the dwindling exports and to avoid fiscal and external vulnerabilities.

The economic wizards of the three parties are also discussing steps to control the yawning trade deficit by minimising the imports of luxury items, he said.

"Yes, all the three parties, including the PPP, PML-N and ANP, are evolving a consensus namely the minimum common agenda, which includes achieving improved macro-economic situation and controlling the galloping prices, especially of food items," The News quoted the person, said to be involved in the consensus-building exercise, as saying.

He further said that the future coalition also agreed to refrain from further burdening the masses by jacking up the POL prices, at least, in the remaining three months of the current fiscal year.

The official said another challenge for the next government would be the consistent cash-bleeding of major public sector institutions such as Wapda, Pakistan International Airlines (PIA) etc as these two institutions were going to cause losses to the national kitty of over Rs 100 billion in the current financial year.

According to the paper, Pakistan's economy is facing numerous challenges, including twin deficits - current account deficit and fiscal deficit - as well as stagnant exports, tax revenues and almost a halted privatisation process. Inflation is another big challenge for the upcoming economic managers and improving the supply side coupled with better management can reduce woes on this front.

The coalition partners are working out a strategy for tackling difficult and complex issues, keeping in view their own manifestos and striving hard to evolve a consensus among the ruling coalition partners.

Official sources in the country's federal Finance Ministry said that the economy could not be put back on the track without bringing our house in order. According to them, the pattern of the 90s could not be followed to run this huge economy on which international investors had invested their money by subscribing to bonds issued by Islamabad. 

Major economic issues stare new coalition govt in Pakistan @ NewKerala.Com News, India


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## Neo

*Pakistan's Textile Sector Facing Intense Competition: Report​*
KARACHI, March 17 Asia Pulse - Since the removal of quota regime, Pakistan's textile sector has been facing intense competition from neighboring countries on the export front. Moreover, rising input and energy costs coupled with higher financial charges have deteriorated the overall sector's performance in the last couple of years.

According to a report prepared by the JS Global, textile sector in the 1st half of FY08 witnessed 10 per cent growth in the top line. However, squeezed gross margins due to higher input and energy costs completely negated the impact of this growth on the bottom line of textile companies. Gross margins in this period stood at 13 per cent versus 14 per cent in the same period last year. Moreover, a 6 per cent growth in the financial charges also limited the bottom line growth to 1 per cent with net margins at just 4 per cent. 

In the 1st half of FY08, composite segment remained the out performer amongst three textile sub sectors. Net sales of this segment posted 11 per cent Year-on-Year growth. Gross margins, however, remained flat at 15 per cent. On the contrary, financial charges depicted a growth of 8 per cent and stood at Rs2.5 billion (US$40 million). As a result, net profit of the composite sector registered a growth of 10 per cent and stood at Rs2.4 billion. For 1HFY08, profits of the spinning sector declined by 40 per cent. Net sales surged by 11 per cent, whereas, gross margins stood at 11 per cent depicting a significant decline of 200bps versus 1HFY07. Moreover, financial charges went up by 3 per cent and stood at Rs1.3 billion in the period under review.

The weaving sector remained in losses in 1HFY08 as net loss of the segment stood at Rs156 million. Revenues of our sample declined by 5 per cent and stood at Rs4.9 billion. However, gross margins of the sector were maintained at 7 per cent. Financial charges, on the other hand, rose by 8 per cent to Rs0.3 billion.

Analyst said since the removal of quota regime, Pakistans textile sector has been facing intense competition from neighboring countries on the export front. Moreover, rising input and energy costs coupled with higher financial charges have deteriorated overall sectors performance in the last couple of years.

Pakistan's Textile Sector Facing Intense Competition: Report - Yahoo!7 News


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## Neo

*Emphasis on structural reforms to address weaknesses of the economy ​*
EDITORIAL (March 17 2008): Some of the top most economic managers of the country, who would continue to serve in the new government, are deeply concerned about the fate of Medium-Term Macroeconomic Stabilisation Programme and the implementation of reform process in order to address the emerging weaknesses of the system.

Delivering her keynote address on "Policy Tradeoffs and Structural Issues" on the occasion of Golden Jubilee Ceremony of the Pakistan Institute of Development Economics (PIDE), State Bank Governor Shamshad Akhtar dwelt at length on the current issues of the economy, with particular reference to the need for structural reforms to address fiscal and external account deficits in the context of the changing global economic environment.

Talking about the foreign sector of the economy, she said that until FY07, capital inflows funded completely the external current account deficit and the residual helped in building foreign exchange reserves. Now the country is faced with global shocks created by international financial market turmoil and unprecedented increase in world commodity prices, which has generated widespread increases in financial costs and other undesirable economic consequences.

The Governor was of the view that "even if the oil prices come down and the growth in foreign inflows is restored, the balance of payments sustainability will still be under stress as export growth may be impacted by global slowdown."

Domestic vulnerabilities triggered by rising twin deficits in the fiscal and external sector accounts have resulted in pressure on exchange rate/foreign exchange reserves and heavy government borrowings from the SBP.

International shocks and domestic deficits, according to the Governor, were inter-related and entail stringent trade-offs when it comes to devising and implementing well-co-ordinated, timely and enduring policy responses. "Tightening of monetary stance and flexible exchange rate management are the two key central bank policy responses.

These, however, will have a more distinct impact if the government reverts to fiscal prudence and efforts in this respect are visible through recent reduction in oil and other subsidies." Accelerating the implementation of structural reforms will be crucial to reinvigorate growth and strengthen economic resilience. Policy advice has also been offered on certain other issues. The new government's broader economic strategy for the next few years should include increasing domestic resource mobilisation to raise revenue/GDP ratio by at least 5 percentage points.

There is also a need to restore the momentum of privatisation of state-owned enterprises. The government had sold off cumulatively about $7 billion worth assets over FY2000-FY2007 and there are around 61 state entities still in the pipeline. Public sector organisations should be given more autonomy, with effective leadership and management, to improve their operational and financial efficiencies.

Besides, there is a need to conduct counter-cyclical policies to curb demand pressures reflected in the widening twin deficits and achieve well-defined short-to-medium term objectives. The enduring solution would be not only how to finance these deficits but more importantly how to introduce structural changes to improve the deficit situation itself.

In our view, what the SBP Governor has said at the Golden Jubilee Ceremony of the PIDE, a premier institute of public policy and economic research, makes eminent sense. The economy of the country, which was on the verge of bankruptcy and facing great challenges a few years ago, was rehabilitated by the Musharraf government by initiating wide-ranging reforms in key areas.

As a result of these reforms, fiscal deficit was brought down substantially, appropriate monetary policy was followed, inflation was contained within reasonable limits, current account turned into surplus, exchange rate stability was restored, foreign exchange reserves were built up and GDP growth rate increased to respectable levels. Credit rating of the country improved and foreign investors' confidence was restored. Back-tracking on reforms coupled with unprecedented increase in international commodity prices in the last one year or so has eroded some of these gains.

The Governor is right in stressing that if the pace of reforms is not maintained, the country could face the risk of losing the benefits of the past few years, particularly when the global economic environment is adverse and calls for accelerating the reform process.

For instance, if the past government had strictly followed the reform agenda of adjusting domestic oil prices with the international market trends, many of the problems now being faced could have been avoided to a certain extent. We feel that the Governor's advice is also timely. The new government needs to be told in clear terms that, instead of talking about providing relief to the public and increasing subsidies, it should first address the basic issues of the economy which were ignored by the previous government for political expediency.

Also, fundamental issues of the economy cannot be resolved by ad hoc measures. The news about the plans of Asif Zardari-Nawaz Sharif visit to Saudi Arabia to request for the supply of oil on a deferred payment basis could provide breathing space but certainly not a solution to the basic problem of rising oil prices. The country has to adjust to the new situation by sticking to the reform agenda, though it would entail a certain degree of pain due to stringent demand management.

However, the Governor's advice in certain other areas needs to be further assessed and reviewed. For instance, she has urged the new government to restore the momentum of privatisation of PSEs which has slowed considerably in the recent past. Although there can be no disagreement on the privatisation policy as such due to the anticipated efficiency gains, the new government should be careful in following such a strategy. The experience of KESC in this regard has been woeful, to say the least.

Its privatisation has brought misery to the residents of Karachi, adversely affected the industrial activity in the city and civil administration should be prepared for a chaotic situation and possibly eruption of riots in the streets in the coming summer. Therefore, the government needs to first devise a proper mechanism to check the credentials of the investors thoroughly before privatisation to ensure better standards of service to the consumers, otherwise economic and political cost of privatisation would be heavy.

Also, there is no denying the fact that national savings have to be increased to reinvigorate growth but, in our view, it is the State Bank which has to play a crucial role in this regard. The State Bank's inability to ensure a reasonable rate of real return to savers because of high spreads between deposit and lending rates of banks has been partly responsible for depressing the saving rate in the economy. The unfair treatment to depositors needs to be reversed by the central bank itself by moral pursuasion or any other means at its disposal.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Remittances rise 21 per cent ​* 
Tuesday, March 18, 2008

KARACHI: Remittances sent home by overseas Pakistanis continued to show a rising trend as $4,126.16 million was received in the first eight months (July 2007-February 2008) of the current fiscal year, an increase of $709.63m or 20.77 per cent over the same period of the last fiscal year.

The State Bank of Pakistan (SBP) said the total amount included $2.01 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

The monthly average of remittances for the period July-February 2007-08 amounts to $515.77m as compared to $427.07m during the corresponding period of last fiscal year, registering an increase of 20.77pc.

The inflow of remittances in the July-February 2007-08 period from USA, Saudi Arabia, the UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), the UK and EU countries amounted to $1,160.39m, $761.84m, $681.88m, $618.83m, $292.87m and $116.12m respectively. These compared to $891.97m, $640.79m, $513.69m, $467.86m, $281.50m and $97.50m respectively in the July-February 2006-07 period.

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the first eight months of the current fiscal year amounted to $492.22m against $521.67m in the same period last year.

During the last month (February 2008), Pakistani workers remitted $502.76m, up $45.58m or 9.97 per cent compared to $457.18m sent home in February 2007.The inflow of remittances into Pakistan from almost all countries of the world increased last month compared to February 2007. According to the break-up, remittances from USA, Saudi Arabia, the UAE, GCC countries, the UK and EU countries amounted to $134.68m, $98.17m, $88.31m, $78.95m, $29.99m and $12.94m respectively compared to receipts from the respective countries during February 2007, ie $123.96m, $88.26m, $69.82m, $60.50m, $33.64m and $11.89m.

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during February 2008 amounted to $59.42 million compared to $68.96m during February 2007.

Remittances rise 21 per cent


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## Neo

*Hopes high new govt will control food prices ​* 
Tuesday, March 18, 2008

ISLAMABAD: Taming the inherited high inflation especially of food items seems to be an uphill task for the upcoming political set-up which could either spoil or improve its reputation despite the fact that the public at large have developed great expectations from the coalition partners. 

The other challenge for them would be netting big fish involved in the profiteering and hoarding of various food items that could further disturb supply chain and ultimately spawn crises. Containing the mother of all economic and social evils (inflation) must be on one of the top priorities for the new government, by doing so, 

The new government could not only win its fame among the masses, but also help boost other economic indicators including augmenting countrys exports, luring investment and fortifying consumption decisions that in turn would help in strengthening Pakistans economic growth. 

Previously, the political setup despite completing its 5-year tenure had completely failed in keeping the elephant in room (inflation) that irritated million of low and middle income Pakistanis. 

After that the caretaker government also did nothing with the high prices and every next week prices went up and up. During February 2008, food inflation stood at 16.05 per cent which jacked up the general inflation to 11.25 per cent from 7.39 per cent recorded in corresponding month of the last fiscal. 

Eight months (July-February, 2007-08) inflation has also gone up to 8.90 per cent over the corresponding period of last year (8.04 per cent) which is about 240 basis points above the set target (6.5 per cent) for the current fiscal. Rising inflation is making it difficult for pensioners and low income masses living on their very nominal amount a month in the country. During the period, inflation rose to the unprecedented level which not only disturbed social and economic life of the common man but, on the other hand also benefited some of the influential, pampered businessmen and other officials involved in hoardings and unfair profiteering. 

Now, it had become a far cry that why these influential involved in such activities were not brought to justice? Interestingly, during that period, judicial crises also erupted in the country that further exacerbated the situation. 

On political side, besides other issues, sky-rocketing inflation was one of the instrumentals due to which the previous government faced the music in the shape of low success ratio in recent elections. 

Average inflation during the last seven months (July-January 2007-08) stands at 8.56 per cent as against 8.14 per cent recorded in the corresponding period of the last fiscal which is much more higher than the annual target of 6.5 per cent. 

The masses had attached big expectation to the new government, as they were unable to receive any respite during the previous tenure. The other resident danger to the economy is shortage of energy as during last 8-year, the government had not even added a single megawatt to the total energy generation. 

Economists fear that in the coming years, there is another row of power shortage expected and coping with the situation would be another cracking challenge for the upcoming government. On economic front, there are various challenges the government had to face in near future including twin deficits (current account and fiscal deficit) which are running above the expectations. 

During the last seven months, the countrys current account deficit has jumped to $7.55 billion as against $5.34 billon in the same period of the last fiscal. It also may face hesitation to contain fiscal deficit which has already reached one of the highest level of 1.6 per cent of GDP in the first quarter (July-September) for the last seven years. 

Now it has become clear that fiscal deficit target of 4.0 of GDP would be breached by a fair margin and there are chances that current account deficit target would not be achieved as well. The government could not be able to shelve its mega-development projects and it has to finance fraction of the oil imports bill. 

The other challenge would be passing through higher international oil prices to the consumer and which would be hard for the new government in their initial months, thus the government has to take the hit for unanticipated rise in the crude oil prices. 

One manifestation of the rising twin deficits is the addition of $2.54 billion to the stock of the external debt and Rs280.53 billion in domestic debt in the first half (July-December) of FY08. During the last fiscal 2006-07, the country has added $2.9 billion to the external debt which is record in addition to external debt in one decade. Interestingly, the government has always talked about debt burden. It has also witnessed tremendous rise in the last fiscal year. 

For instance, external debt and liabilities as per cent of foreign exchange earnings are regarded as most reliable indicator of debt burden. According to State Bank of Pakistan (SBP) annual report, this indicator has witnessed deterioration from 120 per cent in FY06 to 124.8 per cent in FY 07. Another indicator of debt carrying capacity reserves to total external debt and liabilities has deteriorated from 28.9 per cent in FY06 to 33.2 per cent in FY 07. 

Rising debt-servicing burden has raised serious questions of sustainability of the debt. Public debt is deteriorating both in terms of absolute amount and debt burden. 

Hopes high new govt will control food prices


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## Neo

*Number of cellphone users cross 80.30 million​*
KARACHI: The number of cellular subscribers in Pakistan touched 80 million mark with a cellular mobile density of 50.76. Approximately 4 million subscribers were added during the two months of this year, which shows the rapid use of cellular phone in the country.

Latest figures released by the PTA show cellular phone connections reached 80.30 million mark by February 2008. 

The figures gathered by the telecom watchdog show that by February 2008 Mobilink led the market with 31.36 million subscribers followed by Ufone, which was serving 16.84 million people across the country. Telenor Pakistan holds the third position with 16.01 million subscribers and Warid is at the fourth with 13.60 million subscribers. Meanwhile, the aggressively marketed Paktel has managed to grab 2.14 million subscribers.

Industry analysts are predicting that the market share in coming two months may change. Competition for the second and third place is growing fast. There is a very close tie between Ufone and Telenor. Telenor Pakistan is at 3rd place with a difference of only 833,640 subscribers. Telecom industry is booming throughout the country as two million mobile subscribers were added every month throughout the last year. Previous year the sector grew by 80 percent while average growth rate in last four years has been more than 100 percent.

Mobilink continues to remain the leading operator in the sector with maximum market share both in terms of subscribers and revenues. Among all the new entrants, Telenor has shown its strength by capturing a good market share and has left behind its closest competitor, Warid, within one months time to claim the second position.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Industrial output falls 4.12pc in December: Growth target in jeopardy​*
ISLAMABAD, March 17: Industrial output declined by 4.12 per cent in December 2007, compared to the same month last year, according to data issued by the Federal Bureau of Statistics on Monday.

The decrease raised fears that the target of annual industrial growth may not be achieved.Energy crisis and reduced working days, owing to strikes in the wake of assassination of former prime minister Benazir Bhutto, have been attributed as major factors for this slump in production.

Analysts said that negative growth in industrial production has dampened chances of a reversal in the industrial growth in the months ahead, to achieve a 10.5 per cent growth target.

Industrial growth, as measured by quantum index numbers, showed that all major sectors, like manufacturing, mining and electricity, registered a slide in production growth.

This also resulted in the further widening of a gulf between demand and supply issue.

The growth in the industrial production has steadily been on the decline for the last three years as it declined to 8.8 per cent in 2006-07 from 19.9 per cent in 2004-05 owing to capacity constraints and closure of many units as a result of high cost of doing businesses in the country.

An official in the finance ministry, requesting not to be named, said the negative growth was only due to lesser working days in December.

He ruled out the impression that energy shortages led to a drastic cut in the industrial growth.

The industrial production grew by a paltry 4.46 per cent in the first half of the current fiscal year over last year (July-December).

This reduction in industrial output would also affect countrys exports which are now unlikely to reach the target of $19.2 billion.

According to the FBS figures, the production of cigarettes decreased by 11.25 per cent, while cotton yarn output grew by 3.55 per cent and cotton cloth production 2.73 per cent in December 2007 this year over last year.

In the food sector, vegetable ghee production declined by 10.94 per cent, cooking oil production by 4.81 per cent and starch and its products by 5.24 per cent.

However, wheat production grew by 0.10 per cent, beverages 19.82 per cent.

Among the electrical items, refrigerators recorded a negative growth of 5.18 per cent, deep freezers 23.89 per cent, electric bulb 5.56 per cent, electric tubes 0.60 per cent, electric motors 8.8 per cent, electric meters 56.96 per cent and transformers 42.89 per cent.

However, production of air-conditioners went up by 47.76 per cent, electric fans by 31.51 per cent, switch-gears by 58.02 per cent, TV sets 43.43 per cent and bicycles 0.80 per cent.

Production of paper and board also dropped by 1.81 per cent, petroleum products by 26.62 per cent and cement by 4.94 per cent in December 2007 over last year.

Production of glass-sheets declined by 13.47 per cent, billets by 6.57 per cent and HR sheets by 50.56 per cent during the period under review over last year. However, steel products witnessed a growth of 32.13 per cent in December 2007 over last year.

Industrial output falls 4.12pc in December: Growth target in jeopardy -DAWN - Business; March 18, 2008


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## Neo

*Three-pronged strategy to boost exports​*
LAHORE, March 17: Lahore Chamber of Commerce and Industry President Mohammad Ali Mian has proposed a three-pronged strategy to promote countrys exports and improve the perception of the country abroad.

Talking to commercial counsellors-designate for Hong Kong, Geneva, Bangladesh, Italy, Nigeria and South Korea here on Monday, Mr Mohammad Ali said they should maintain a close liaison with potential businessmen and trade bodies, do aggressive marketing of Pakistani products and collect basic trade-related data for its dissemination to all the chambers back home.

He said that the role of the diplomats had always been crucial for promotion of business activity and for economic turnaround of any country.

They were considered to be the special ones who had enough knowledge to pave the way for foreign investment.

The harmony developed between the public and private sectors during the last couple of years was reflected in the economic indicators of the country, he said, adding Pakistan was now among the fastest growing economies in the region that included China, India and Vietnam.

He said that Pakistan is destined to become the logistics, trade, tourism, energy and manufacturing hub after the completion of work on $5 billion North-South trade corridor project, with the participation of World Bank, Asian Development Bank and the private sector.

He said that the government had adopted a liberal investment policy to attract maximum foreign investment where foreign investors could hold 100 per cent equity.

There was no restriction on repatriation of the principal, dividends, profits and royalties, he pointed out.

Three-pronged strategy to boost exports -DAWN - Business; March 18, 2008


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## Neo

*Oil, gas production up​*
KARACHI, March 17: The oil and gas production in Pakistan has increased by 8.4 per cent and 2.9 per cent to 72,487 barrels a day and 3.974 billion cubic feet per day, respectively during July-December 2007.

According to Pakistan Petroleum Information Service (PPIS), Oil and Gas development Company Limited (OGDCL) and Pakistan Petroleum Limited (PPL) observed a 10.6 per cent and 76.3 per cent increase in oil production to 439,000 bpd and 41,000 bpd respectively, whereas, Pakistan Oil Fields Limited (POL) witnessed an 8.8 per cent decline to 57,000 bpd.

On the gas front, all companies saw an increase in production during the period under review over that in the first half of the financial year, with that of OGDCLs increase of seven per cent reaching 978 mcfd, while PPL and POL registered 2.7 per cent and 1.2 per cent rise to 991 mcfd and 47 mcfd, respectively.

Total production of the industry grew at a rate of 3.4 per cent to 746,342 barrels of oil equivalent per day (BOEPD) compared to 721,671 BOEPD in the same period last year.

Oil production in Dec 2007 was down by 5.8 per cent over Nov 2007, while gas production in the same period was up by 5.26 per cent.

The production of liquefied petroleum gas (LPG) has also recorded an increase of 2.20 per cent to 1,547 tons per day.APP

Oil, gas production up -DAWN - Business; March 18, 2008


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## Neo

*World's top banks ask GoP to go for exchangeable bonds ​* 
ISLAMABAD (March 18 2008): The world's top banks and financial institutions are said to have advised the government to go for exchangeable bonds rather than opting for conventional bonds whose prices, according to them, would be too high due to political uncertainty and confrontational politics in the country.

The banks include Morgan Stanley, ABN-Amro Bank, HSBC, Barclays, Citibank, KASB/Merrill Lynch, Goldman Sachs/BMA Capital, Standard Chartered Bank, BNP Paribas, J.P. Morgan, Deutsche Bank, Dubai Islamic Bank and UBS/Global Securities: 

International banks and financial institutions who are closely watching political developments have dispatched their teams to Islamabad to give detailed presentations to the officials concerned on the most feasible options for floating bonds.

The banks include Morgan Stanley, ABN-Amro Bank, HSBC, Barclays, Citibank, KASB/Merrill Lynch, Goldman Sachs/BMA Capital, Standard Chartered Bank, BNP Paribas, J.P. Morgan, Deutsche Bank, Dubai Islamic Bank and UBS/Global Securities, sources in the banking sector told Business Recorder.

"As the spread is not coming down due to uncertainty and confrontational politics, international banks say that if Pakistan goes for conventional bonds in the international market, it has to pay very high cost," the sources added. International banks are of the view that Pakistan should opt for an alternative route, which according to them, was exchangeable bonds.

Exchangeable bond is a bond issued by a company or a sovereign which can be exchanged at the investors option at any time throughout the life of the bond into a fixed number of ordinary shares of another company, the sources said, adding that this bond would be attractive for investors.

The sources said that some of the banks were also proposing the government to go for International Islamic Sukuk, which they would help GoP launch successfully. "International banks are advising us to adopt cautious approach towards conventional bonds for the time being and mulling over a better option for Pakistan," an official told this scribe.

The logic of the international banks is that in the recent months Pakistan's equity market was least co-related with the global equity markets as most of the markets tumbled but Pakistan's market remained bullish.

"Banks are also of the opinion that they will watch how the coalition government can function in a stable way and what will be their future policies," the sources added. Relationship between President Pervez Musharraf and the coalition government would also be the focal point for the international banks, said a political analyst.

"Our spread will not come down until we successfully formulate a stable government, give unambiguous economic policies and see better relationship between the President and the coalition government," said another political economist. Analysts are of the view that in any other case it will be a useless exercise to move for the international market to raise money.

The sources said that the international banks have also advised the Finance Ministry that when the political situation improves, economic managers headed by the Finance Minister should arrange a tour to some of the financial capitals, hold meetings with investors and take them into confidence as 'non-deal roadshow' for which banks were ready to extend all possible assistance.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Over 200 PSDP projects put on hold *​ 
ISLAMABAD (March 18 2008): As a part of the money-saving campaign, over 200 new development projects/schemes under Public Sector Development Programme (PSDP) 2007-08 have been put on hold, for 2008-09, and their Rs 40-45 billion allocations would be diverted for plugging budgetary deficit.

Sources said although all ministries/divisions will share the hit of the government's money-saving exercise as in majority of the cases their new projects/schemes would not have funds in the remaining months of the current fiscal year, but the Ministries of Water and Power, Finance, Food and Agriculture, Industries and Production, Petroleum and Natural Resources, Environment, Health, Population, Higher Education Commission (HEC) and Social Welfare and Special Education Division have taken bigger hit.

The Finance Ministry's Khushhal Pakistan Programme (KPP) would be the biggest loser due to the government's changed strategy. Its over 100 new projects/schemes have been deferred for next fiscal year. It was a Rs 34 billion programme, and almost half of its allocations were spent on the on-going special projects/schemes in the first half of the current year and the rest half, around Rs 17 billion, has been diverted for budgetary support.

The 'Oil City' project, which is part of developing an oil network to be established in Balochistan, comes next in money-saving schemes. Its entire Rs 5 billion allocation has been diverted for reducing pressure on the economy. The Balochistan government has been asked to carry on doing basic work on the 'Oil City'. However, major work will be done on this project from PSDP allocation next year--on top priority.

Likewise, the funds allocated for acquiring land for the Ministry of Water and Power Diamere and Basha dams have been held back and these projects would be given funds next year, on priority basis.

HEC's initiative of setting up 8 universities has also got a dent. Its four universities will be funded in 2007-08 and the rest four would be taken up for allocations in next PSDP.

Other projects/schemes, which have been deferred include 'child protection centre' in Turbat, Balochistan; construction of hostel building for 100 persons in NTB complex, Islamabad; capacity building of the officers of Overseas Pakistan Division, Islamabad; aquaculture and shrimp farming; Derry Pakistan horizons; construction of barracks accommodation at Gwadar Airport; expansion in existing hostels for working women in Islamabad; Faisalabad 'Garmet City'; Implementation of Export Plan; Karachi Garment City; Upgradation of Cotton Fibre Testing Laboratories; and providing and laying dedicated 48-inch diameter mild steel water main for Textile City Karachi.

The Finance Ministry will be free to utilise funds of the deferred projects for making the money available for different subsidies in the next three months of the current fiscal year.

The government is under severe fiscal pressure due to huge volume of subsidising it picked up for different edible and non-edible items, particularly oil, wheat and fertiliser. It started looking for squeezing the volume of subsidies, besides finding other unconventional means to save whatever money it could. PSDP funds was one of the options.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Microsoft launches Windows Server, other products in Pakistan ​*
KARACHI (March 18 2008): Microsoft on Monday launched its three products including Windows Server 2008, SQL Server 2008 and Visual Studio 2008 in Pakistan. This was announced by Kamal Ahmed, country manager of Microsoft Pakistan and Sherif Siddik, regional director North Africa, East Mediterranean and Pakistan in a joint press conference held at a local hotel.

They hoped that the introduction of these products would help Pakistan grow in the field of information technology. Products will also help the country strengthen its IT economy, they added. They maintained that media would also be one of the major beneficiaries of these products to complete their assignment in a better way. The theme of the launch of products in Pakistan is "Heroes happen here," has been chosen as an indication to the potentiality of Pakistani youth in the IT field, the added.

Regarding Microsoft's partnership in Pakistan, they said that it is doing work here along with Zindagi Trust to impart IT education besides its engagements with Pakistan Software Export Board. To a question, they replied that Microsoft irrespective of regional perspectives is committed to every market where it has base and Pakistan is one of them.

Later, talking to Business Recorder, Kamal Ahmed said that Microsoft is facing the issues like intellectual property rights in Pakistan, as even most of the government departments do not have licenses of its products.

Earlier, Dr Abdullah Riaz caretaker federal minister for information technology in his inaugural speech urged on the software manufacturers to reduce the cost of products so that challenges like piracy of products and intellectual property rights could be met successfully.

He also called upon the new government to complete his left assignment of revoking the 15 percent sales tax on PCs with a view to encourage the computer utilisation across the country. Linking the piracy of IT products and violation of intellectual property right in Pakistan with the high costs of these products, he said these factors are giving rise to this kind of issues. Dr Abdullah also urged that youth-driven products should be introduced in the country, which will also help grow the IT sector in the country.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Mangla dam raising project in full swing ​*
MIRPUR (March 18 2008): Construction work of over Rs 100 billion for raising of the country's second biggest Mangla Dam is in full swing and so far over 54 percent of the construction work on the mega project has been completed, official sources said.

Besides, over 67 percent practical work for rehabilitation of about 50,000 victims of the project has also been completed hitherto, AJK-govt controlled Mangla dam resettlement organisation of AJK government told APP here on Monday. Development works at huge residential schemes including new Mirpur garden city and four towns at different locations in the district exclusively for resettlement of the raising project victims is also underway with full pace.

Official sources said that with the completion of the project, the dam would have the storage capacity of an additional 2.88 million acre feet of water and more than 25,000 acre of land will be irrigated. It would also have the capacity to produce 645 mega watt additional electricity thus raising the existing power generation capacity to 12 percent more.

As a result of completion of this gigantic project, not only the economy of the country will boost but it would also open new avenues for investment in the area.

Since the government has allocated required sufficient funds in the federal budget for the construction of the Mangla Dam Raising Project, over Rs One hundred billion project will usher in the new era of speedy progress and prosperity by bringing about green revolution in the country since the project will augment supply of irrigation water in various parts of the country particularly in Punjab and Sindh provinces at a time when country is in dire need, said the official sources.

Highlighting the salient features of the project, the sources said that there will be additional power generation and further flood alleviation as a result of raising by 30 feet of the dam from the existing 1210 feet level. The conservation level of the dam will be raised by 40 feet from existing 1202 feet conservation level.

On the average, annual water availability for irrigation releases for various parts of the country including both Sindh and Punjab would increase by 2.9 million acre feet (MAF).

The quantity of water shall drastically increase which will enhance the agriculture productions in Punjab and Sindh to greater extent. Resultantly more large-scale area shall come under irrigation opening new avenues of employment to the rural population of both the provinces. In addition to that due to additional storage of water in Mangla dam reservoir and availability of constant head the generation of inexpensive hydel electricity shall increase which will reduce the additional burden of expensive thermal energy from IPPs (Independent Power Projects).

Punjab and Sindh will also enjoy the maximum availability of water through canals and subordinate water channels to irrigate more large-scale areas. Azad Jammu Kashmir will also highly benefit from the dam raising project as the down stream areas on thousands of acres of lands in Mirpur and Bhimbher districts shall be brought under irrigation after having water from the dam in the light of the commitment by the government.

Water from the dam could also be utilised for drinking purposes in Mirpur and the adjoining hamlets on the periphery of the Mangla lake through execution of the greater water supply schemes in Mirpur and the adjoining areas.

Since the completion in 1967, the gross storage capacity of Mangla reservoir has reduced by about 20 percent due to sediments deposition. Compensating for the capacity lost to sedimentation was in mind and a provision for raising of the dam was kept in the original design and construction of the dam.

Raising of the dam has now gained importance on account of the ever increasing shortage of irrigation due to sedimentation of the country's two major storage reservoirs at Tarbela and Mangla. Raising of the Mangla Dam will help to regain the reservoir capacity lost to sediment deposition and make provision for future sedimentation.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*E-commerce: barriers to its growth in Pakistan *​ 
ARTICLE (March 18 2008): Among the wonderful inventions of twentieth century, Internet has come to wield immense influence on our lives. From reading newspapers to monitoring the performance of companies on stock exchange, from learning the first aid techniques when in emergency to learning the recipe of making a cake when guests visit, and from listening to music to keeping abreast of the latest cricket scores, our lives have got increasing intertwined with internet.

Doing business online is yet another application of internet, which is changing the way business is done. The term electronic commerce or E-commerce may loosely be defined as doing business over the internet, selling goods and services which are delivered offline as well as products which can be "digitised" and delivered online such as computer software, videos, and music.

E-commerce in its wider sense encompasses all transactions involving business organisations, governments, or consumers that are done online through internet. However, the narrower view of E-commerce focuses only on transactions between Business and Consumers (Business to Consumer E-commerce or B-to-C E-commerce) and among two or more businesses (Business to Business E-commerce or B-to-B E-commerce).

Banking, entertainment, telecommunications, and manufacturing industries globally have already started using E-commerce business models, and have been reaping the benefits in terms of greater revenues and lesser costs.

Within these industries, Internet is used for four major tasks with respect to E-commerce: Firstly, attracting new customers through online marketing and advertising; secondly, serving existing customers via customer service and support function; thirdly, developing new markets and distribution channels for existing products; lastly, developing new information-based "digitised" products, which are then transmitted online.

Like every new technology, the potential uses of E-commerce were at first over-hyped, leading to the Dot Com Boom of 1996-2000, which was briefly followed by a crash that kicked many companies out of business; thereby, temporarily tarnishing the promising role of internet as an effective and state-of-the-art medium of business. However, with the survivors of the crash and the new comers doing well these days, the quantum of business online is expanding with rapid pace.

In Pakistan the size of E-commerce is small and uncertain at the moment. Yet as in most developed countries of the world, it is expected that with the realisation of full potential of this new mode of commerce in future, it is bound to gain a sizable chunk of business in Pakistan as well, due to the several potent advantages that E-commerce enjoys over the conventional mode of commerce like its open structure that surpasses all geographical barriers, low costs of transactions, low barriers to entry and improved access to information, besides more efficient management of supply and distribution.

However, currently the growth of E-commerce in Pakistan is hampered by a number of factors, which are discussed below. These barriers must first be removed for E-commerce to grow in the country.

*1. MISCONCEPTIONS ABOUT E-COMMERCE IN PAKISTAN* Most people in Pakistan have developed wrong conception of E-commerce. They take a very limited view of E-commerce, restricting it to only those products which may be "digitised" and transmitted online through internet and the payments for which is also made online through credit cards.

This narrow view excludes the other three main functions of E-commerce outlined above ie attracting new customers, serving existing customers, and developing new markets and distribution channels for existing products. This misconception is among the main reasons that have held most Pakistani entrepreneurs with existing conventional business back from entry into the 'cyberspace'.

*2. MISTRUST:* Among the most important impediments to the growth of E-commerce in Pakistan is the issue of trust. Counterfeiting and distribution of below par products in the face-to-face transactions is a common problem in the country. How can people be expected to trust the sellers whom they do not know, and who would deliver goods online/offline after the payment is made.

The issue of trust is further aggravated by the lack of confidence people have with respect to the security and privacy of their personal information like credit cards, home addresses, phone numbers etc. The emergence of trustworthy web-based companies, with support/guarantees from Government or trustworthy multinational companies, in the county is required to dispel these fears of the consumers.

*3. TRADITIONALIST NATURE OF PAKISTANI SOCIETY:* A large number of people in Pakistan will take a long time to come round to the idea that they can order goods and make payments through internet from their homes without physically going out. This is due to the fact that on-site commerce has a socialising effect, which is altogether absent from E-commerce. In a strongly relationship-oriented society like Pakistan, people tend to form individual relationships and long term associations with the businessmen and vendors.

These relationships are maintained over the years and may not be easily replaced by the anonymity of the E-commerce transactions. Moreover, most of the retail business in Pakistan is conducted through small local enterprises rather than chains of departmental stores. These small local businesses are run by relatively less educated entrepreneurs who are least eager to embrace the new technology.

*4. LOW LITERACY RATE* The literacy rate of the country, according to official figures, is around 54 percent. Out of these 54 percent literate people at least 50 percent are computer illiterate. Thus, with around 75 percent of the population without computer literacy, the growth of E-commerce in the country cannot be expected to progress at any faster pace.

*5. ACCESS TO TECHNOLOGY:* In order to undertake E-commerce transactions, one must be connected to the World Wide Web, for which possession of a personal computer (PC) or a laptop is a basic requirement. Although the prices of computer hardware have declined in the past few years, yet a personal computer is still not affordable by vast majority of the people of the country. Besides a personal computer, a telephone line or cable line are also required for a user to get connected to the World Wide Web. Thus, high costs of computer hardware are proving to be a bottleneck to the growth of the E-commerce in the country.

*6. ACCESS TO INTERNET SERVICES:* It is true that in the past few years there has been a significant increase in the number of internet users in Pakistan, with some observers claiming that in Pakistan the internet access is now available to 800+ cities, towns and villages covering almost 97 per cent of the population.

Even if this, seemingly exaggerated, estimate is accepted, the per hour cost of internet use in Pakistan, along with the common problems of low speeds and getting disconnected frequently, render this wide accessibility of internet useless. For e-commerce to flourish we need high speed, cheap and reliable internet connections available to the vast majority of the population.

*7. LACK OF E-TRANSACTION SUPPORT IN PAKISTAN:* Online payment systems are an essential part of e-commerce, which require, inter alia, possession of personal credit cards by consumers. However, few people in Pakistan have personal credit cards. Among the various reasons people avoid getting credit cards from banks include possibility of unnecessarily getting into the debt trap.

The unpopularity of personal credit cards in Pakistan is responsible for the weak e-support infrastructure, forcing the use of old mechanism of money transfer like, cash payments, cheques, and postal orders which may work as viable substitutes to credit card for a short term to accommodate limited existing commerce of the country but cannot be relied upon for long.

*8. POOR TRANSPORTATION/DISTRIBUTION CHANNELS* An essential part of e-commerce is establishment of cheap, quick and reliable transportation channels for the physical distribution of those products which cannot be digitised and distributed online. In Pakistan, the Pakistan Postal Service, despite its extensive network and large number of employees is inefficient, to say the least; hence, unreliable. The private courier services, on the other hand, are expensive.

In the absence of any reliable and economical distribution channel, the web-based companies in Pakistan will be faced with the challenge of delivering their products at the doorsteps to their consumers without adding to price of the product.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*NBP GDR to be floated this fiscal *​ 
*May generate $300 million​*
Wednesday, March 19, 2008

ISLAMABAD: The government has decided to float Global Depository Receipts (GDRs) of National Bank of Pakistan on the London Stock Exchange to generate around $300 million during the current fiscal year, The News has learnt.

It is also the desire of the Privatisation Commission to float GDRs of Habib Bank Limited (HBL) and Kot Addu Power Company (KAPCO) as well, in the current fiscal 2007-08, in order to achieve the $1 billion mark for meeting the current account deficit currently being faced by the country.

The Privatisation Commission, the sources said, had prepared a brief for the upcoming government in order to apprise it of the proposed list of units going to be privatised, and the possibility to float GDRs in the months ahead.

It will depend on the upcoming economic managers how much they want to accelerate the privatisation and liberalisation policy, said an official and added the Heavy Electrical Complex, Pakistan Tourism and Development Co and other units were ready to be sold to the private sector.

The turbulence on the political front in the aftermath of March 9, 2007 action by the President to oust judges, imposition of emergency, assassination of Benazir Bhutto and existing confrontational politics had forced the economic managers to delay GDRs of NBP, HBP and KAPCO. Earlier, it was planned by the government to float GDR of NBP by October 2007 but the authorities remained unable to move with this idea.

We are going to arrange roadshows by next month in world capitals including USA, Middle East and Europe to attract potential investors, a high-level official in the government told The News on Tuesday.

The official said that although HBL and KAPCO were in the pipeline of the GDRs, it seemed that they would not be floated within the current fiscal year. It is the estimate of the government that by floating GDRs of NBP, HBL and KAPCO, around $1 billion can be generated, the official said.

The government has attracted foreign direct investment (FDI) to the tune of $2.26 billion during the first seven months of the current fiscal year against $2.09 billion in the same period of last financial year. The portfolio investment stood at $697.4 million in the first seven months of the last fiscal.

Contrary to this trend, there is withdrawal of portfolio investment of $21 million in the first seven months of the current fiscal, painting a worrisome picture for the economic managers. The revised forecast for the external current account is likely to be around 6 per cent of the GDP by touching around $10 billion mark, up from an earlier estimate of US$ 6.5-7.0 billion (approx. 4.3 per cent of GDP). 

The revision mainly reflects a higher oil price assumption, touching up to more than $111 per barrel, as well as a moderately lower GDP base. The current forecast for the overall balance of payments in FY08 is for a net contraction by year-end of approximately less than one billion dollars. In such circumstances, there is a dire need to take steps aiming to support external current account deficit in the current fiscal year.

NBP GDR to be floated this fiscal


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## Neo

*WB to help promote clean industrial production *​ 
Wednesday, March 19, 2008

LAHORE: The leader of Industrial Environmental Management Policy Mission of the World Bank, currently on a visit to Pakistan, has said the industrial environment in Pakistan needs to be addressed properly.

WB mission leader Ernesto Sanshez-Triana made the remark during a meeting with Small and Medium Enterprise Development Authority chief Shahid Rashid at SMEDAs head office here on Tuesday.

He said the World Bank was evaluating the scope of its assistance to help Pakistan promote clean production in the country. The mission, he said, had also held discussions with the leaders of the Federation of Pakistan Chambers of Commerce and Industry on the issue.

The WB mission included Kulsum Ahmed, lead environment specialist, Dan Biller, lead economist and Javaid Afzal, local environment consultant of the World Bank. The mission members expressed keen interest in the role performed by SMEDA for development of small and medium enterprises in Pakistan.

Replying to questions, Shahid Rashid said the SMEDA had completed 10 years of its existence, and was glad if some independent agency like the World Bank conducted an impact analysis of the services rendered by the authority during the last decade.

Besides offering various services to individual SMEs at the micro level, the SMEDA had been performing valuable services to upgrade potential SME clusters in the country, he said, adding development strategies designed by the authority in collaboration with industrial stakeholders were being implemented successfully.

WB to help promote clean industrial production


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## Neo

*Real estate sector still faces tough time: experts ​* 
Wednesday, March 19, 2008

KARACHI: Real estate experts said that their sector is still suffering a recessionary period and have denied any claims that the properties and housing as well as construction sector is on a path of revival adding that these are all rumours to misguide the public. 

Real estate agents in Karachi and Lahore informed The News that there had been no change in the real estate and building sector and their businesses continue to suffer though in certain cases, property holders are demanding high prices for their projects which had sparked rumours of property revival. 

House Building Finance Corporation Chairman Zaigham Rizvi informed The News that all over the world, the real estate sector does not only mean empty plots but instead real estates as in buildings, housing and construction. He said that this was one of the most contributing sectors to the economy and in Pakistan the slump was witnessed as movements within the sector were not up to the mark. 

He added that the new government had a challenge in its hand and should work to revive the sector and we would only come out of this recession of real estate if the government offers stability. The chairman said that it is too soon to predict when this sector would finally experience a comeback and there were several factors that had to be analyzed before the matter could be commented on. 

Chapal Builders Rauf Chapal was of the opinion that revival of the real estate sector should not be considered at least for another six months. He was critical when he said that he believed this because he doubted that the government would be able to stabilize themselves before that time. 

He said that the matters are already seriously out of the hands of the government and cited the suppressed are speaking out now but adversely by spawning riots and hence no one is poised to invest or venture into property buying or even expansions as they dont trust the government. Azam Khilji, Manager Sales of Canadian City, Gwadar, said that some dealers ruminate that they are the best and the ruling kings of this sector and therefore demand exorbitant prices for their properties but the truth is that no one at this stance can afford them and no individual is ready to go and throw in that amount of money. 

Real estate agents in Karachi were of the view that these rumours started after some commercial and residential projects within the city began to lease themselves out while several other project builders announced new plans through advertisements. They said that these were only words of some hopeful investors trying to cash in on their properties but in practice the sector remained as cold as ever. 

Real estate sector still faces tough time: experts


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## Neo

*Industries suffer heavy losses due to transport strike​*
KARACHI: Industrial sector registered considerable production losses on Tuesday because of thin attendance of labour force due to strike of public transport in metropolis against recent increase in prices of domestic petroleum products.

Already feeling the pinch of prolonged power shortage and recent hike in oil prices, the industry received another blow in the shape of production losses because majority of workforce remained absent from duties due to non-availability of public transport, representatives of industrial associations of city lamented.

They put the production losses ranging between 40-50 percent as well as failure to meet the export commitments by the industry because of inability of labour to reach their workplace.

The industrial sectors problems are multiplying with each passing day and there seems no end to string of difficulties, a leader of business community, who was enraged and dejected over the mounting burden on the industry complained.

About the public transport strike in the city, the businessmen said that though, small part of industrial sector had prepared contingency plans to cope with the situation, which averted major losses to some extent, however, these plans failed to completely secure the industry from the effects of strike.

Chairman, SITE Association of Industry Nisar Shaikhani estimated that industries in the SITE area suffered around 40 percent losses in production because of thin attendance of workers.

He said that although large industrial units had made the arrangements to bring their employees from their residence to factories, the small and medium size industry experienced the adverse impact of this strike.

Shaikhani, complaining about the power outage, high oil prices and other related issues, adversely hampering the industry feared that if the situation persisted in the coming days, 25-30 percent industries would not be able to sustain the losses, subsequently closing down their operations.

Because of such a disastrous situation, he pointed out that the industry people are opting for making investment in real estate and stocks as well as shifting their capital to foreign destinations, which offer promising prospects on their investment.

Chairman, F.B. Area Association of Trade and Industry Idris Gigi put the production losses at around 30 percent, which were lower in comparison with other industrial estates because of the location of various labour colonies in close vicinity of his industrial area.

Cap. Moeez, Patron-in-Chief of North Karachi Association of Trade & Industry estimated the production losses due to low attendance of workers at 35-40 percent, which he said has further added to financial woes of the industry, caused by power deficit and rising cost of production because of high oil prices.

Fazal-e-Jalil, Chairman Korangi Association of Trade & Industry estimated 50 percent production losses due to lower attendance of workers and criticised apathy of the government in coming to rescue of the industry, which is crippled under the burden of energy deficit and other problems.

Public transport, he said, is the basic source of mobility of the industrial workforce and if vehicles go on strike, the industry is bound to suffer whatever contingency plans are prepared to cope with the situation.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Consumer financing grows by 12.9%​*
KARACHI: Consumer financing rose to Rs 371.2 billion at end January 2008 from Rs 328.8 billion at end January 2007, showing a growth of 12.9 percent, according to figures compiled by the State Bank of Pakistan. 

Rise in non-performing loans and high interest rates have affected the growth in consumer financing business of banks. The slow growth in consumer financing is not shocking. The credit offtake has been slow in virtually all segments of lending in the recent past. While banks have now adopted a cautious stance, the next growth spurt will coincide with monetary easing. 

There were high consumer-related delinquencies, especially in the auto-financing segment, during the last calendar year. With a high level of defaults in 2007, the banks tightened lending criteria and are now much more vigilant when advancing consumer loans. The central bank has followed a tight monetary stance for over two years, and the rise in delinquencies followed the trend in the interest rate environment. Fresh credit offtake, therefore, has taken a hit. The initial consumer financing boom coincided with the prevalence of low interest rates. 

But analysts believe there is still room for consumer financing to grow. Inherent potential for consumer financing still remains strong, and with more players in the consumer financing business, the second phase of consumer financing growth is likely to be faster than the initial boom observed from 2004 to 2006, says Raza Jafri, an analyst at AKD Securities.

He says some banks have conducted consumer loan book cleanup exercises and are looking for a fresh start in consumer financing. 

An important factor is that banks are now armed with consumer credit histories (through the Credit Information Bureau) and more careful consumer lending can be expected. Banks vigilant stance should curtail non-performing loans now, and lead to higher quality, although slightly slower growth in the near term, Jafri said.

Daily Times - Leading News Resource of Pakistan


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## Neo

*GDP surges to Rs 9,970bn during July-Dec 2007-08*​
ISLAMABAD: The Gross Domestic Product (GDP) of the country has increased to Rs 9,970 billion by December 31, 2007 in the first half of the current fiscal year as compared to GDP of Rs 8,707 billion by June 30, 2007, according to the official figures released here Tuesday. 

The share of total revenues amounted to 6.3 percent of the GDP during July-December period of the current fiscal year as compared to 7 percent in the same period of last fiscal year (2006-07), projecting a decrease of 0.7 percent. Tax revenues stood at 4.5 percent of the GDP during July-December 2007-08 as against the share of 4.9 percent of the GDP in same period of last fiscal year showing a decline of 0.5 percent. Non-tax revenues were 1.8 percent of the GDP during first half of this fiscal year as compared to 2.1 percent in the same period of last fiscal year. Total expenditures of the country remained at 9.8 percent of the GDP during first half of this fiscal as against 8.9 percent in the same period of last fiscal year projecting an increase of 0.9 percent of the GDP. The share of current expenditures has been 7.8 percent of the GDP in this fiscal year as compared to 6.6 percent of the GDP in the same period of last fiscal year showing an increase of 1.2 percent of the GDP.

Interest payments on loans have been 2.4 percent of the GDP in the first half of the ongoing fiscal year, which was 1.8 percent of the GDP in the same period of last fiscal year 2006-07, indicating an increase of 0.6 percent of the GDP. Defense expenditures were 1.3 percent of the GDP during first half as compared to 1.3 percent in the same period of last fiscal. Development expenditures and net lending remained at 2.3 percent of the GDP during the first half of the ongoing fiscal year which were 1.7 percent of the GDP in the same period of last fiscal year, indicating an increase of 0.6 percent. Budget deficit during the first half of the current fiscal year stood at 3.6 percent of the GDP as compared to 1.9 percent of the GDP in the same period of last fiscal year, showing an increase of 1.7 percent of the GDP. The share of the direct taxes in GDP remained at 1.6 percent during the first half of 2007-08 as compared to 2 percent of the GDP in the same period of last fiscal year. 

Taxes on goods and services were 2.1 percent of the GDP in July-December 2007-08 period as compared to 2.1 percent in the same period of last fiscal year. The share of excise duty stood at 0.3 percent of the GDP during first half of ongoing fiscal year that was 0.4 percent of the GDP in the same period of last fiscal year. Contributions of general sales tax in GDP has been 1.7 percent during first half of this fiscal year, which was at the same level of the GDP in the corresponding period last fiscal year.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Realtors, investors ready to boost property business​*
KARACHI: The real estate investors and dealers are flexing their muscles to fuel up the standstill property business in the metropolis after government formation in the country. 

The holding of elections could not heat up the markets situation as the realtors and investors expected it but it is being hoped that with the formation of government, the real estate market will be active again. 

Real estate analyst, Ovais Sohail, told Daily Times that the market had not taken bullish turn after elections but there were some positive buying activities witnessed in commercial side by corporate sectors. The market will take a significant bounce in the next one or two months as strong sentiments prevail among investors circles, he told and added particularly the Real Estate Investment Trust (REIT) will attract big investors whenever their confidence boosts.

Mr Shoail, who is also Chief Operating Officer of Pak Real Estate, a local real estate research house, told that a number of foreign developers and construction companies have been waiting to enter in Pakistans real estate market because of the high returns of as compared to other countries of the region except Dubai. He added that the majority of the foreign developers are interested to invest in Punjab, as they believed that the provincial government would be more stable there as compared to other provinces.

He mentioned the pace investment in Pakistan is continuing at Dubais real estate market as the confidence of local investors is yet to be restored. 

The property business has witnessed a prolong passiveness for last year as the prevailing political uncertainties coupled with law and order situation deteriorated in the country causing negative impact across the board in all investment-favorite posh societies of the major cities.

A retailer of Gulistan-e-Johar area, Syed Mabroor, said even transactions of the properties are very slow contributing to the decline in prices in some localities, now we (real estate agents and brokers) are closely observing the government formation and ready to play our game in the market. We have been advising the investors not to sell their property with low returns so they have also been waiting for resuming of trading activities. And when all the investors involve are re-active in the trading, the market will be skyrocketing, he added.

He said the transactions and values have been increased after elections and hoped that it will take more pace in the next month.

Vice President Real Estate and Constructions sub-committee, Federation of Pakistan Chambers of Commerce and Industry (FPPCI), Munir Sultan said that the local developers and constructors have been adopting wait-and-see policy since the holding of the elections but now they are all set to announce their residential and commercial projects.

He said that some developers had announced their housing projects and societies after elections but they are not getting positive response. He told that a big number of projects will start their booking activities in the next one or two months. As far as Gwadar real estate is concerned, the resident retailer, Saeed Baloch, told that the propertys transaction has gripped the momentum since the commencement of Gwadar seaport. He added that the prices of the commercial and residential plots have increased sharply for the last one week. 

But, some realtors are still very pessimistic about political and governing situation of the country, they said that the rift between elected assembly and President and movement to restore deposed judges are yet to be solved which may impact the real estate market.

Daily Times - Leading News Resource of Pakistan


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## Neo

*WB evaluating scope for Pakistani industries*​
LAHORE: Industrial environmental situation in Pakistan needed to be addressed properly, and the World Bank is evaluating the scope of its assistance to help government of Pakistan promote clean production in the country.

This was stated by Mission Leader, Industrial Environmental Management Policy Mission of the World Bank, Washington Ernesto Sanshez-Triana in a meeting with Chief Executive Officer of Small and Medium Enterprise Development Authority (SMEDA) Shahid Rashid here on Tuesday.

The mission included Task Team Leader Kulsum Ahmed, Lead Environmental Specialist. Dan Biller, Javaid Afzal, the local environment consultant of the World Bank. Whereas, SMEDA chief was accompanied by his team comprising General Managers; Sultan Tiwana, Syed Iqbal A Kidwai, and Muhammad Jameel Afaqi. SMEDA CEO said his organisation had completed 10 years of its existence, and he would be glad if some independent agency like the World Bank conducts an impact analysis of the services rendered by SMEDA during last decade.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Carpet exporters decry attitude of Indian Customs​*
LAHORE: Chairman, Pakistan Carpet Manufacturers and Exporters Association (PCMEA) Mian Javed ur Rehman has deplored the behaviour of Indian Customs officials with Pakistani exporters.

In a statement issued on Tuesday, he said that Pakistani traders face difficulties and appealed the government to raise the issue with the Indian government. He said that a bilateral agreement is present between Indian and Pakistan but the behaviour of Indian Customs officials is not satisfactory.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Aptmas initiative to conserve energy​*
LAHORE, March 18: The All Pakistan Textile Mills Association has launched an initiative for conservation of energy. The National Productivity Organisation (NPO), GTZ and National Energy Conservation Centre (Enercon) have joined hands with Aptma in efforts directed at maximising optimal use of energy.

Aptmas Punjab chairman Akber Sheikh told Dawn on Tuesday that the programme was all the more relevant in the context of present energy crisis and the efforts being directed towards conservation.

A systematic energy audit, encompassing all sectors of the textile industry, had been envisaged to determine the efficient consumption benchmarks for the industry.

He said that the spinning and processing industries were being audited in the first phase. The energy audit of the weaving industry and composite industrial units would be undertaken in the next phase.

The results of earlier energy audits undertaken by Asian Productivity Organisation (APO) and NPO consultants had been encouraging. They had identified 10 to 15 per cent energy saving in sample mills.

He said that as a part of wider strategy the Aptma Punjab was helping the public sector entities in enhancement of expertise and capacity-building to enable them undertake the energy audit of industrial units independently.

The best practices officers of NPO and Small and Medium Enterprises Development Authority (Smeda) and specialists from Textile University, Faisalabad, the University of Engineering and Technology (UET) Lahore and UET Taxila were provided orientation and know-how to create a national pool of energy auditors.

He said that the NPO in association with Aptma was also preparing a programme for providing concessionary finance to the industry for helping it to implement measures suggested by the audit, such as changing equipment, machines and upgrade other production facilities.

The initiative is a part of a long-term strategy to conserve energy and secure sustainable development.

Aptmas initiative to conserve energy -DAWN - Business; March 19, 2008


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## Neo

*Delay in payments by US hurts fiscal targets: rising expenditures due to war on terror *​ 
KARACHI (March 19 2008): The country's rising expenditures on war against terror and delay in payments by US are endangering the budget targets and increasing the government's budgetary borrowing, which has already been up by 215 percent during eight months of the current fiscal year.

"Rising expenditure for fighting against terrorism is continuously hurting the fiscal targets, as Pakistan has spent about one billion dollars during last one year (March 2007 to February 2008) in this connection," sources in Finance Ministry told Business Recorder.

Financial constraints have made the country borrow billions of rupees from local resources to continue the war, they said, adding that despite efforts from previous elected and caretaker governments the budgetary borrowing was continuing due to delay in payments.

They said that the country had received a tranche from US on account of reimbursement in the last week of February 2008. However, it was received after one-year gap, as previously Pakistan had received reimbursement amount in March 2007.

They said that although Pakistan had spent around one billion dollars during the year, instead of full payment the US has paid only $281 million, which was due in fiscal year 2007. "Therefore, the government is compelled to continue borrowing from scheduled banks as well as State Bank of Pakistan to meet budgetary expenditures," they added.

They said that delay in the reimbursement was the chief reason of rising budgetary deficit and it could not be controlled unless US reimbursed over 700 million dollars outstanding amount. "We are continuously informing and sending the details of expenditures to US. However, payments are not received on time, which had created some financial problems for country," they said.

"The US would pay only the principal amount of the expenditures, whereas the country's spending includes bank interests also, which is pushing the budgetary deficit upward," they added.

As per State Bank of Pakistan, the government budgetary borrowing has gone up by 215 percent, to Rs 296.556 billion, during eight months as against Rs 94 billion during the same period of fiscal year 2007. The overall budgetary borrowing stocks have reached at Rs 1.106 trillion as on March 1, 2008, earlier stood at Rs 810.053 billion on June 30, 2008.

Despite the fact that SBP has requested the federal government to reduce borrowing, the budgetary borrowing from central bank has gone up by 1301 percent. After the current upsurge, the budgetary borrowing from central bank has touched new peak of Rs 359 billion during July-February of current fiscal year as compared to Rs 25.636 billion in corresponding period of fiscal year 2007.

However, borrowing from scheduled banks has depicted a declined of Rs 62.771 billion to Rs 465 billion during eight months. Analysts and economists already have shown concerns over the rising budgetary borrowing and expecting that fiscal deficit is expected to reach some 5 percent of the GDP at the end of the current fiscal year.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Over $1.1 billion invested in telecom infrastructure expansion ​* 
ISLAMABAD (March 19 2008): Telecom operators have invested over $1.1 billion during the first two quarters of 2007-08 to expand their infrastructure, said Pakistan Telecommunication Authority on Tuesday.

The PTA in its second quarterly report said that total investment during to the first two quarters of the current fiscal was 1.3 billion with $617 million in the last one, which is 35 per cent higher as compared to April-June quarter of 2007. The huge investment was major factor behind the surge in cellular subscribers, it added.

Giving break-up, the PTA report revealed that in July-September, 2007-08 Mobilink made an investment of $308 million, Ufone $58 million, Instaphone $1 million, Telenor $114 million and Warid 216.3 million.

While in the second quarter, September-December 2007-08, Mobilink invested $308 million, Ufone $58 million, Instaphone $1 million and Telenor251 million. In total $696.8 million investment was made in the first quarter and $618.1 million in the second quarter of 2007-08 fiscal.

Moreover, the PTA said that Warid was also making investments to expand the network for competing in cellular mobile market in Pakistan. IFC, a sister organisation of the World Bank, has extended $100 million loan and arranged a $140 million syndicated loan to expand its GSM network, it added.

According to the telecom indicators, the total FDI inflow was $2.14 billion during first half of current fiscal with telecom sector as major contributor. The cellular and WLL operators have been pumping money into the sector to expand network and exploit the full potential.

They have been adding subscribers in huge numbers to their network every month as total users of six cellular operators have gone beyond 80 million. The wireless operators have also shown exceptional growth in recent times and all the companies have been investing to attract more and more customers. Analysts see the trend of investment may continue in the next few years as a large market potential in rural areas, was yet to be exploited.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*New oil, gas discovery in NWFP ​* 
Thursday, March 20, 2008

ISLAMABAD: MOL Pakistan Oil & Gas Co has made a new discovery of oil and gas in the TAL block, located in the North West Frontier Province (NWFP). 

MOL Pakistan having a 10 per cent working interest (pre-discovery) and as operator of TAL joint venture has been operating this block since 1999 with four other Pakistani companies i.e. OGDCL, PPL, POL and GHPL. 

The pre-discovery working interest of the joint venture companies is MOL (10 per cent), OGDC (30pc), PPL (30pc), POL (25pc) and GHPL (5pc), said a press release issued here on Wednesday. 

Following the completion of seismic acquisition and its interpretation resulting in an attractive geological prospect, the joint venture resolved to drill an exploratory well, Mamikhel-1 in fourth quarter 2006. 

The well was successfully drilled. The well produced 45.8 million standard cubic feet per day (mmscfd) gas and 2,881 Stock Tank Barrels per day (STB/day) of condensate at 56/64 choke through flowing wellhead pressure of 3,239 psig. 

As a result of testing operations which have been carried out so far at Mamikhel-1 well, the presence of significant quantities of oil and gas has been established in Lockhart formation. This is 3rd discovery of the consortium in Tal Block. Following this discovery, the joint venture will be conducting further appraisal through Extended Well Testing (EWT) to evaluate the optimum producing rate, scale and economic viability of the reserves. 

New oil, gas discovery in NWFP


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## Neo

*FATA coal output 0.26m tonnes a month ​* 
Thursday, March 20, 2008

DARRA ADAMKHEL: FATA Minerals Department Director Muhammad Yaqub has said that coal production in the Federally Administered Tribal Areas (FATA) has risen to 266,000 tonnes per month from 30,000 tonnes per month.

Talking to reporters at the office of Fata Development Authority on Wednesday, he said America produced 90 per cent of electricity from coal, China 72 per cent and India 55 per cent, while in Pakistan it was used in brick kilns. He added that it could be used in cement and sugar industries and steam plants.

He said the NWFP governor would soon be briefed on the problems faced by the workers, contractors, leaseholders and mine owners in the production of coal and the responsibilities of the political administration. The insurance for the workers suffering from TB would also be brought into the notice of the governor, he added. 

Yaqub said the Fata Mines Department had introduced state of the art compressors, generators and water pumps in the market to increase the production using scientific techniques. In Hangu, authorities have set up a latest rescue centre, equipped with latest machinery to serve the people of Orakzai, Kurram agencies and Darra Adamkhel, he said.

The official added that the former NWFP governor had approved electricity, emergency centre and construction of a 21-kilometre link road to the site but the project was put in abeyance when the tribal people stopped the production illegally.

He said it was regrettable that investors explored coals through their investment, but the tribal people usurp the deposits, thus rendering the government writ ineffective and discouraging the investment.

The Fata authorities want to explore large deposits of untapped coal in the Frontier Region of Dera Ismail Khan, Orakzai Agency and Peshawar after forwarding a summary of recommendations to the NWFP governor, he added.

FATA coal output 0.26m tonnes a month


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## Neo

*FBR hopes to cross Rs1 trillion mark ​* 
Thursday, March 20, 2008

ISLAMABAD: The Federal Board of Revenue (FBR) has expressed hope that despite all odds the organisation was still in a position to cross the Rs1 trillion tax collection mark by the end of the current financial year.

This was stated by Member Facilitation and Taxpayers Education (FATE) Khawar Khurshid Butt while briefing newsmen about decisions of the Board-in-Council meeting at a press conference on Wednesday.

He said that the FBR has decided to establish a separate window on its Website to facilitate taxpayers and resolve their grievances which are simple in nature. He said the Secretary General, Revenue Division/Chairman, Federal Board of Revenue, M. Abdullah Yusuf presided over the meeting.

Butt said that the Chairman FBR directed Member (IMS)/CEO PRAL to coordinate with technical wings of the Board to clearly identify problems being faced by taxpayers in e-filing of returns, Tax Management System and computerised system of payment of taxes and all possible efforts be made in collaboration with the NBP to resolve these at the earliest.

Referring to the revenue collection for the current financial year, the chairman observed that despite all odds FBR was still in a position to cross the Rs1 trillion mark provided we all work hard and feel our national obligations.

Khawar Khurshid Butt added that current exercise of sectoral examination of sugar/cement also came under discussion. The Chairman, he said also desired early completion of the exercise.

The chairman, he said also directed the Sales Tax Wing to ask Collectors of Sales Tax to conduct selective tax payers audit wherever they have any doubt. He also directed Member (Audit) to evaluate the audits, conducted by LTU, Lahore, and inform the Council about its results.

Expressing his displeasure over thousands of pending refund claims at Export Collectorate and MCC, Karachi, the chairman directed Member (Customs) to take action against officials responsible for this huge back log that has caused inconveniences to exporters/importers alike.

The meeting, however, noted that 80 per cent refund claims were of very small amount which should be paid immediately. The meeting was further informed by Member (FATE) that all representations u/s 7 of FBR, Act: 2008 to the FBR Chairman will be received at the FATE Wing and then forwarded to respective members for comments. 

FBR hopes to cross Rs1 trillion mark


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## Neo

*Record 3.2m cotton bales worth Rs45bn imported by mills ​* 
Thursday, March 20, 2008

KARACHI: Textile mills imported a record 3.2 million bales of cotton worth Rs45 billion upto February 2008 from worldwide sources due to a crop shortage in the country, sources disclosed on Wednesday.

Referring to the Federal Bureau of Statistics provisional trade data for the period between August 2007 to February 2008; Chairman Cotton Brokers Forum, Naseem Usman said mills imported around 519,053 metric tonnes of cotton.

This is the highest volume of cotton imported in the history of Pakistan during a specific period. This huge import has resultantly also slowed down cotton trading at the Karachi Cotton Association, he added.

Usman pointed out that more than half of this import is from India where cotton yield has recorded an unprecedented surge since the cultivation of BT cotton. He anticipated additional imports of 500,000 to 600,000 bales worth Rs55 billion will total cotton imports of around 3.8 to 4 million bales.

He pointed out that mills have further contracted for 2 million cotton bales worth Rs3 billion from Indian suppliers, while some 20 per cent traders are now backing out from earlier deals. Textile Mills have imported cotton from the USA, Brazil, Egypt, Turkmenistan, Sudan, CIS, Nigeria, Cameroon and Turkey. Pakistan is estimated to produce a total of 11.2 million bales of cotton by March 1, 2008. The textile industry in 2007 had consumed 14.5 million bales of cotton due to expansions in capacity by mills. 

Record 3.2m cotton bales worth Rs45bn imported by mills


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## Neo

*Net foreign investment falls by 43.5% in 8 months​*
KARACHI: Net foreign investment has declined by 43.5 percent to $2.612 billion during the first eight months of the current fiscal from $4.627 billion. Foreign direct investment (FDI) during this period fell by 14.9 percent to $2.527 billion from $2.970 billion. Portfolio investment dropped by 94.9 percent to $84.5 million from $1.656 billion. The country has received whatever foreign investment it could have attracted, said Asad Saeed, an independent economist. Even last year quite substantial proportion of foreign direct investment was received in mergers and acquisitions activity in the services sector; we have been unable to attract investment in manufacturing sector. Besides, he said, the construction projects that were planned by foreign real estate giants have faced problems in starting up. 

Foreign investment has been declining this year due to uncertain political situation in the country which has perturbed foreign investors as they fear economy may take a downward course as a result of political turmoil. Add to this the power crisis, which the authorities say will be here for many years to come. It will be repelling any potential foreign investors during all these years. 

The Shaukat Aziz-led team of economic managers has left a hugely difficult challenge for the new government to face - that of meeting demand for foreign exchange in the country with falling inflows. Keeping this scenario in view, it should be expected of the new government to change policies to control imports and raise exports in order to keep its foreign exchange environment stable instead of depending on remittances and portfolio investment. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Private sector urged to comply with international standards ​*
** Non-compliance of labour and safety standards caused Rs 2 billion loss last year​*
RAWALPINDI: Speakers at a seminar on Wednesday asked the private sector to fully comply with the agreed international conventions and protocols particularly in labour and environment standards and implement it to boost countrys exports. 

The workshop, organised by Punjab Resource Management Programme (PRMP) discussed the issue of private sectors persistent non-compliance of labour, environment, safety, health and other social standards. The speakers focused on various sectors like construction, brick kilns and marble of Rawalpindi region where the compliance of international conventions and protocols has become a serious issue. 

The experts pointed out that Pakistan can also get full advantage of the international market by securing its maximum share in terms of increasing volume of exports. Punjab, particularly, with its clusters of cotton, textile, surgical, sports, leather, cutlery, citrus, can improve the overall situation in this regard. However, this is possible only when the private sector fully complies with the agreed international conventions and protocols. Advisor on Bonded Labour, Federal Ministry of Labour Dr. Syed Tauqir Shah expressed the concern over the situation of child labour, gender issues, bonded labour, working conditions, education of workers children and issues of women workplace in Pakistan and said this negative situation is in direct conflict with the internationally ratified conventions and protocols.

He pointed out that the Potohar region has a large number of stone crushers, marble factories, brick kilns and construction sites where health, environment and working standards are not in line with the internationally recognised protocols. 

However, he said that realizing the prevalent grave situation, the government of Pakistan, in close collaboration with ILO and other institutes, is taking valuable initiatives to control child labour from the country and to ensure a healthy working environment for the working women. He mentioned that complying with international conventions and protocols regarding ensuring better working conditions to employers along with meeting other relevant standards by the private sector units would contribute a lot towards improvement in Pakistans ranking in the world.

In his remarks, Zawdu Felleke, Chief Technical of UNIDO said that todays economically integrated world, countries that have strengthened their links with the global economy through trade and investment, have generally grown more rapidly over a sustained period.

One of the major hindrances for the low-income countries, including Pakistan, towards adopting this path is the limited enterprise capacity to comply with international buyers requirements as they are demanding strict compliance to safety, environment, ethical and social standards along with giving priority to product quality. He pointed out that last year, Pakistan had to bear a loss of Rs 2 billion worth annual exports when the Nike Inc. USA cancelled its soccer balls export contract with Saga Sports Sialkot due to non-compliance of labour and safety standards. If such cases continue to happen, it would render a heavy damage to Pakistans overall exports, he remarked. He highlighted various issues related to quality standards lik ISO 9001 SA 8000 and the WTO issues related to quality concerns like TBT and SPS. 

Punjab Secretary for Environment Maj (R) Shahnawaz Badr said that quality and environmental issues dominate the international market and to achieve the sustained growth in exports can lead to economic stability of a state. He also said that developing strong links with the international economic market has been proved to be a key factor behind the sustained progress.

He stressed the need for creating awareness among the private sectors contributors as the issue of non-compliance of international conventions and protocols has come up with serious implications. 

He appreciated the PRMP for launching a series of workshops in the province in order to create awareness among the local industrial, agriculture and commercial units as well as establishing a coordination vehicle regarding coherent information exchange about various international conventions and other standards.

Director, Center for Improvement of Working Conditions Saeed Awan revealed situation in many developing countries like Pakistan is even more grave owing to a number of factors like lack of reliable information and data of the deaths and injuries suffered by the workers every year. He further said that marble factories and brick kilns in Rawalpindi region are the places where health and safety standards are being ignored that commonly leads to many health problems in the working force. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*WB to give $750m for construction of Munda Dam​*
** WAPDA not happy with delay in project​*
ISLAMABAD: The World Bank (WB) has expressed its willingness to provide $750 million to Pakistan to meet the extra cost of building the Munda Dam, sources in the Water and Power Ministry told Daily Times on Wednesday.

According to the government, four dams  Munda, Kalabagh, Akori, and Bhasha  have to be built by 2016. The Munda Dam will be able to store 0.67 million-acre feet of water, and will generate 740 megawatt of hydel electric power. The dam will also help to control flooding in Peshawar.

The sources said the cost of building the dam, which was estimated at $6.1 billion in September 2005, had increased by 10 percent due to a surge in the prices of construction material.

The WB is willing to help Pakistan meet the extra cost of building the dam, the sources said, adding that the government was also sourcing finance from local banks.

Unhappy WAPDA: The sources said the Water and Power Development Authority (WAPDA) had decided to build the dam after a US company, Amzo Corporation, which had been issued a letter of intent, refused to take up the project.

WAPDA is not happy with the delay in the project, the sources said, adding that the authority wanted the project to complete within the given timeframe to meet power shortage in the country.

They said the Water and Power Ministry and WAPDA had warned the Finance Ministry and Planning Commission that further delay in building the dam would increase the cost of construction.

The government allocated Rs 10 billion to acquire the land for five dams, including the Munda Dam, in its Public Sector Development Programme (PSDP) for 2007-08. But not a single penny has been spent on land acquisition, the sources said.

The feasibility study of the dam was originally conducted by Japanese consultants, who suggested about 10 cents per unit (Kwh) generation cost. But an Azmo representative claimed that many assumptions of that study were wrong and the tariff setting stage was far away.

The Munda Dam is being constructed on the River Swat, which is considered an ideal site for a hydro power station. The dam will generate Rs 361 million annually in terms of water-user charge for the NWFP government. It will also help ensure equity in water allocations; reduce flood risks in Nowshehra and irrigate 29,000 acres.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Khanpur Dam Water Supply Project faces delay​*
** ECNEC approved project in 2006 
* Acute water shortage feared in many Pindi areas​*
RAWALPINDI: The third phase of Rs 700 million Khanpur Dam Water Supply Project (KDWSP) could not be launched almost two years after its approval by the Executive Committee of National Economic Council (ECNEC).The project approved on April 8, 2006, was not included in the Public Sector Development Programme (PSDP) for the fiscal year 2007-8.

A senior official of the Rawalpindi Cantonment Board (RCB) on condition of anonymity said the projects cost would increase if the Ministry of Finance did not release the approved amount for the third phase of the KDWSP. He said the RCB had requested the federal government to release at least Rs 150 million from the allocated amount for the phase-III of the project before the federal budget for 2008-09, as the KDWSP was an important project aimed at meeting the future water requirements of the cantonment areas.

Water shortage: Several cantonment areas including Saddar, Gowalmandi, Marir Hassan, Jhanda Chichi, Dhoke Chiragh Din, Tipu Road, Chaklala Scheme-II, Dhoke Kashmirian, Adiala Road, Qalma Chowk, Shelley Valley and adjoining areas were facing acute water shortage, which would be increased in the coming days, he added. These areas are being provided water through tube wells, which is not sufficient to meet the increasing demand of water. The underground water is receding with an estimated rate of one to two metres annually, he said.

He said on completion of the projects phase-III, several areas of Rawalpindi city, Chaklala and cantonment, except some areas, would get 19.6 million gallon of water daily. Besides, the storage capacity of the existing water reservoirs in Rawalpindi would increase from 2.13 million to 7.33 million gallons, which would be enough to meet water demand of 900,000 residents of the cantonment areas. According to the plan, 20,942-metre long water supply lines would be installed in Rawalpindi cantonment areas.

Daily Times - Leading News Resource of Pakistan


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## Neo

*FBR to surpass psychological barrier of Rs one trillion in fiscal year 2008 ​*
ISLAMABAD (March 20 2008): The Federal Board of Revenue will cross the psychological barrier of Rs one trillion mark in 2007-2008, expecting that economy would remain stable in the country.

Explaining board-in-council decisions, FBR official spokesperson and Member Facilitation and Taxpayer Education Khawar Khurshid Butt informed a press conference on Wednesday that the council is hopeful to cross Rs 1 trillion by the end of current fiscal year. However, due to current political situation and other difficulties, annual budgetary tax collection target of Rs 1.025 trillion seems unachievable.

Referring to the revenue collection for the current financial year, the FBR Chairman informed the council that despite all odds FBR was still in a position to cross Rs one trillion mark by June 30, 2008, provided we all work hard and feel our national obligations.

FBR Member Fiscal Research and Statistics informed that revenue loss of Rs 35 billion was estimated due to the political and other reasons. However, during the last two months the improved revenue collection has helped bridge this gap by Rs 10 billion and now the estimated revenue loss stands at Rs 25 billion in 2007-2008.

He said that if there is further improvement in economic activity, the revenue collection could be over and above Rs 1 trillion in 2007-2008. He said that oil and gas sector has contributed Rs 24.6 billion in total revenue collection in 2007-2008 against Rs 18.2 billion in the same period last fiscal, indicating an increase of 35 percent.

Federal excise duty collection from oil sector witnessed a decline during current fiscal, as FED collection amounted to Rs 1.7 billion during July-February (2007-2008) against Rs 2.7 billion during the same period of last fiscal.

The customs duty collection on the petroleum products was Rs 11.6 billion during July-February against Rs 8.9 billion in the same period last fiscal, reflecting growth of 31 percent. Member FRS said that the recent increases announced in POL prices are expected bring around Rs 3 billion additional revenue for the FBR in next four months.

Due to the sales tax zero-rating announced on import of crude oil on November 30, 2007 the FBR has suffered a revenue loss of Rs 3.5 billion which would be recovered during next three months on sales of POL products produced from such crude oil, he explained.

Secretary General, Revenue Division/Chairman, FBR Abdullah Yusuf has directed the Member (IMS)/CEO PRAL to co-ordinate with technical wings of the Board to clearly identify problems being faced by the taxpayers in e-filing of returns, Tax Management System and computerised system of payment of taxes and all possible efforts be made in collaboration with NBP to resolve them at the earliest.

He was addressing the members of the Board-in-Council, which met here yesterday. FBR Chairman presided over the meeting, which lasted for about nine hours. While reviewing the progress of various ongoing reforms projects, the Chairman directed Member (TARP) and the line members to observe time line and expedite completion of refurbishment of the RTOs/MCCs. He also directed the Member (TARP) and Member (IMS) to make necessary arrangements to provide computer hardware to field formations - LTUs & RTOs on priority basis.

The Chairman directed the Sales Tax Wing to ask collectors to conduct selective taxpayers' audit wherever they have any doubt. He also directed Member (Audit) to evaluate the audits, conducted by Large Taxpayer Unit (LTU), Lahore, and inform the Council about its results.

Board-in-Council also dilated upon the security arrangements currently in place at FBR Headquarters and its field formations, particularly in major cities of the country. The Council asked Member (Admn) to ensure foolproof security arrangements at all FBR buildings.

Shortage of staff at FATE/Audit Wings also came under review and the Council decided to ask Member (Admn) to meet their staff requirements. The purchase of buses for pick and drop of staff from the offices will be examined by Member (TP&R) and the issue will be discussed in the next Board meeting.

Member FATE informed the Board that all representations u/s 7 of FBR, Act: 2008 to the Chairman FBR will be received in the FATE Wing and then sent to respective members for their comments. The meeting was informed that a window was being opened in the FBR website where such representations could be submitted on line for redressal of grievances which are simple in nature, Khawar Khurshid Butt added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*New government must sustain economic growth, says Musharraf ​*
ISLAMABAD (March 20 2008): President Pervez Musharraf Wednesday said the new government can meet the challenges of terrorism, energy crisis, rising fuel and food prices through good governance and by always keeping "Pakistan First".

Addressing a farewell dinner in honour of the outgoing caretaker government headed by Prime Minister Mohammadmian Soomro and his 28-member cabinet at the Aiwan-e-Sadr, the President said Pakistan now needs to look forward and progress on path of democracy.

"Politicking has to give way to good governance," the President said and added "I am confident that the new government will consider Pakistan always first and face the challenges it faces."

He said the economy was on the upsurge and all macro-economic indicators were strong. He cited a recent report by Merrill Lynch that attributed these to healthy economic policies over the past several years. The President said the country in the past few months has been through a "turmoil", however stressed that the new government must sustain the economic growth to meet the difficulties it faces.

President Musharraf also pointed at the rising prices of international fuel, edible oil and wheat and said the days of cheap food are now over. He said the current energy shortage was the fallout of rapid industrialisation and said the growth in the energy sector must match the growth in the national economy.

However he pointed that maintenance of law and order was an important prerequisite to achieve this balance. "I hope the new government will meet and understand these challenges and move Pakistan forward on the path of progress, peace and prosperity," he added.

The President also lauded the role of the caretaker government for successfully fulfilling the constitutional obligations in a befitting manner. "You deserve commendation from the whole nation," the President said while noting the role of the caretaker governments in the centre and the provinces. He said the caretaker set-up was announced with "noble intentions" to ensure fair play and for transitioning of one government to another.

He expressed his gratitude to the caretaker government, the election commission and all those related for holding free, fair, transparent election in a peaceful manner. Prime Minister Mohammadmian Soomro said he felt satisfied on accomplishing the task assigned to it, despite all the challenges that cropped up.

He said under the President's guidance, his government ensured that development and economic activity remains on target. He said the electoral process was acknowledged globally and high standards were introduced to bring impartiality and fairness to the process.

"We thank the Almighty Allah that helped us come up to the expectations of the nation," he said and added that without the teamwork, this task would not have been achieved. The dinner was attended by Chief Justice, governors and chief ministers, the Services Chiefs and federal secretaries.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*CPI-based inflation declined marginally in February: Finance *​ 
LAHORE (March 20 2008): The Federal Finance Ministry has claimed that overall CPI-based inflation had registered a marginal decline in February 2008 compared with January 2008 on year-on-year basis.

In its monthly investors advisory, the Ministry said that the headline inflation was 11.2 percent in February 2008 as against 11.8 percent in January 2008 and 7.4 percent in the corresponding month of last year (February 2007).

The decrease in headline inflation in February 2008 as compared with last month is attributable to a meaningful decline in food inflation which moved downward to 16.0 percent from 18.2 percent in January 2008 and 10.0 percent in the corresponding month of last year (February 2007).

The Ministry said that these figures point towards easing of demand pressures on the one side and some improvement on the supply side of food items. However, it added that food inflation has emerged as a major source of concern for policy makers around the world, including Pakistan. The global food price index has been up by 54.1 percent.

It said that food inflation in Pakistan had been fuelled by a combination of domestic demand-driven factors (rise in per capita income), local supply shortage and global trends in the prices of several commodities. Higher prices of edible oil (palm oil and soybean oil) and dependency on their imports transmitted higher international prices to domestic prices.

Pakistan has also witnessed sharp pick-up in wheat and flour prices (despite bumper wheat crop of 23.3 million tons), totally driven by 'extra-market forces'. The Ministry said that there are seven essential food items--wheat and flour; rice, pulses, meat, milk, ghee/cooking oil, and vegetables--accounting for almost 70 percent of total weight of food group, responsible for the sharp pick-up in food inflation in Pakistan.

Like last year, this year's inflation will also be driven by food inflation. During the first eight months (July-February) of the FY08, the average CPI-based inflation stood at 8.9 percent as compared to 8.0 percent of last year. Food inflation increased to 12.9 percent in the first eight months of the current fiscal year as against 10.3 percent in the same period of last year.

However, non-food inflation continued to remain on the declining trend. In the month of February 2008, non-food inflation stood at 7.7 percent as against the figure of 5.6 percent last year. For July-February 2008, non-food inflation witnessed a decline to 5.9 percent as against 6.4 percent in the corresponding period of last year.

Non-food non-energy inflation moved a bit higher in February 2008 (8.0 percent) on account of rising house rent and medicare sub-indices. It is, however, almost at the same level in the first eight months (July-February) of the current fiscal year compared with the corresponding period of last year.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*44 percent decline in foreign investment ​* 
KARACHI (March 20 2008): Political uncertainty and poor law and order situation have reduced foreign investment by about $2 billion, or 44 percent, from $4.62 billion, during eight months of the current fiscal year. However, during February 2008 foreign investment had gone up by 15 percent as compared to January 2008.

The State Bank on Wednesday said that overall foreign investment (including foreign direct and portfolio investment) decreased by $2.1047 billion to $2.612 billion during July-February of current fiscal year 2008 from $4.62 billion during the corresponding period of last fiscal year.

"Major share in this dip has been contributed by record decline in the portfolio inflows, as the foreign investors are reluctant to invest in the equity market due to political uncertainty," an economist said.

Statistics show that foreign direct investment (FDI) registered a dip of 15 percent to $2.52 billion during July-February against $2.97 billion during the same period of last fiscal year. Portfolio investment declined by 94.9 percent to $84.5 million as compared to $1.656 billion during the same period of last fiscal year.

However, analyst said that despite the political crisis $84.5 million inflow in portfolio was a positive sign. Without privatisation proceeds total private investment showed a decline of 33.2 percent to $2.50 billion during July-February of fiscal year 2008 as previously stood at 3.818 billion dollars.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*IT ministry planning to provide broadband subsidy under USF ​* 
ISLAMAABD (March 20 2008): Ministry of Information and Technology is seriously considering to provide broadband subsidy under Universal Services Framework (USF) to enhance its very poor penetration, it was learnt.

Sources said that a study on Broadband penetration conducted by the IT Ministry exposed poor broadband penetration particularly, when the USF Company is targeting one per cent penetration by 2010. Presently there are only 0.1 million users in Pakistan and 1.5 million new connections are required by 2010 to meet the set target.

To realise the broadband penetration, the Ministry has conducted three subsidy options including no broadband subsidy and everything should be left to the market mechanism, broadband subsidy should be handled as part of basic telecom USFC lots and the last that there should be separate broadband subsidy lots.

The Ministry has opted for third option of separate broadband subsidy under improved USF Company Lot framework as this seems the best effort to kick off and proliferate broadband penetration in the country with optimal choice.

The Ministry realising the benefits and importance of broadband penetration proposed five year programme with 4 to 5 per cent penetration targets by end of 2013.

To achieve the above targets an auction process similar to that of the Rural Telephony model would be adopted. The auction process would start with bidding for a region followed by contract signing within 6 weeks of the bidding date. It has been realised that larger number of target broadband connections would require longer time, as such the following target time lines have been proposed.

Pakistan is far behind in broadband penetration, despite the fact that government issued an aggressive Broadband Policy back in 2004 with a modest target of 200K till 2007 (at the end of 2007 there are around 115,000 Broadband connections). Although Pakistan has made big stride in the field of telecom, it has been left behind in the field of Broadband Internet.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Farm sector credit soars to Rs120.4bn ​* 
Friday, March 21, 2008

KARACHI: The disbursement of credit to the agriculture sector by commercial and specialised banks showed a growth of 30.46 per cent year-on-year during the first eight months (July 07-February 08) of the current fiscal year. 

According to the State Bank of Pakistan, banks disbursed Rs120.442 billion to the agriculture sector during July to February as compared to Rs92.319 billion in the same period last year, showing an absolute increase of Rs28.123 billion. 

Overall credit disbursement by five major commercial banks including Allied Bank Ltd (ABL), Habib Bank Ltd (HBL), MCB Bank, National Bank of Pakistan (NBP) and United Bank Ltd (UBL) stood at Rs58.026 billion during July-February 2007-08, compared with Rs43.424 billion during the corresponding period of last year, depicting an increase of Rs14.602 billion or 33.62 per cent. Zarai Taraqiati Bank Ltd (ZTBL), the largest specialized bank, disbursed Rs33.012 billion in July-February period, compared with Rs30.745 billion in corresponding period of last year, while disbursement by Punjab Provincial Co-operative Bank Ltd (PPCBL) recorded at Rs3.873 billion, compared with Rs4.824 billion last year. 

Besides, 14 domestic private banks (DPBs) also loaned a combined Rs25.530 billion during July-February period, up 91.60 per cent against Rs13.324 billion disbursed the last year. SBP had set an indicative target of Rs200 billion for the current fiscal year, up from Rs160 billion in the last fiscal year, showing an increase of Rs40 billion. During the last fiscal year, commercial and specialized banks had disbursed a total Rs168.3 billion to the agriculture sector.

Farm sector credit soars to Rs120.4bn


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## Neo

*Wind-power projects look doubtful ​* 
Friday, March 21, 2008

KARACHI: The energy crisis will only worsen if measures to overcome it are not taken immediately. There has been negligence on the part of the state in developing generation capacity with the growing demand for electric power and diverting the major part of countrys resources in non-productive and defence sectors.

Experts say that upgrading and maintenance of the available power generating means is necessary to curtail power shortage till alternative solutions are introduced. The state of affairs at the KESC is such that at present only 60 per cent of the generators are working and the rest 40 per cent are out of order. These 60 per cent of the generators are producing well below their capacity. The well publicised overhauling of Korangi and Bin Qasim thermal power stations and the claim of rehabilitation of their original capacities never materialised. The frequent breakdowns of various units of these power plants have exposed the incompetence of the privatised KESC management. 

Professor Muhammad Nauman of NED University says: The worst part is that the General Musharraf-led government was fully aware of the situation from day one and yet it failed to add even one megawatt of capacity in the KESC system. Instead of investing in thermal and wind power plants, it preferred to privatise the KESC and that too without taking guarantees from the incumbent operator for the immediate addition of adequate generation capacity.

Power generation through alternative energy resources like wind, solar and hydel is an economical and sustainable solution for Pakistan. Solar and wind energy is being increasingly used in the developed world. In Pakistan, the average mean sunshine is 8.3 hours per day, making solar energy a reliable option. However, the high initial capital cost is a major constraint in utilising it for feeding in the grid.

The most viable option is wind energy which is used in various parts of the world; Holland is known as the land of windmills. Wind energy production requires a minimum wind velocity for the major part of the day. Much higher wind speeds are available on the entire coastal belt of Pakistan that stretches more than 1000 kilometers. The developed world is moving fast towards wind energy. Europe is leaving everyone behind in developing this energy and plans to generate 25 per cent to 30 per cent of its power from wind energy before 2025.

The Alternative Energy Development Board (AEDB) was set up more than 6 years back by the military regime. The ground progress is, however, not satisfactory at all. The government has also provided land to the companies interested in setting Wind Power Projects at very low prices, without tight control and strict conditions on cancellation of such projects that remain stagnant for years.

It could potentially trigger land speculation and prevent serious parties from getting land at the appropriate location. Pakistan has failed to make use of small wind technology, also known as intermediate technology, which only requires the utilisation of local material and is available at nominal cost from the developed world.

There are many areas where grid station and power transmission lines are not available. These remote areas can utilise small wind mills for lifting water up to the depth of 33 feet. By using small wind mills for power generation, we can cater to the need of a small community or install submersible pumps to lift water from any depth. Similarly, small water turbines may be used at springs flowing in Northern Areas to generate electricity for domestic use. The mind-set of our rulers, planners and implementers, however, does not take this kind of development, for the down trodden masses, seriously. Their obsession remains firm for mega projects, especially mega dams, since huge chunks of money can be quickly skimmed from such projects.

The government of NWFP has laid down a policy for the installation of micro-hydel projects for the last two decades without any noticeable progress.

The Metrological Department of Pakistan had carried out a detailed survey for collecting wind data on the entire coast line of Pakistan some 10 years back. It includes the Mekran coast, Gharo and Gadap areas of Karachi, Keti Bandar and Shah Bandar. Gharo and Gadap areas are fortunate because transmission lines pass through them, which make it easy to take equipment and material to the site.

Unfortunately, our government experts selected a height of 30 meters for obtaining wind data. The recommended height useful for medium capacity wind turbines is 90 meters. Thus, accurate data is not available for designing or choosing appropriate turbines.

One wonders why the AEDB has been sitting on this data for years and hasnt been able to take an initiative in arranging for a fresh survey to be conducted at multiple heights utilised by the current turbines.

One highly publicised tidal energy project in the Gharo creek, near Thatta has also gone to cold storage. This was perhaps the most appropriate project of its kind in Pakistan that could have opened avenues and provided expertise to carry out such projects at various places in the Indus delta.

On March 14, 2007, one public hearing was conducted by NEPRA at Karachi. The purpose of the hearing was to enhance the tariff for M/s Win Power (pvt) Ltd that had been mutually accepted by the parties. 

The reason cited by the Win Power Company at the hearing was that the agencies had advised the company that the prevailing Pakistan-India relations would not allow the import of wind turbines from India.

Therefore the company had been forced to look for alternative sources and had selected a Canadian company for the purchase and installation of turbines. The then NEPRA chairman, who was presiding the public hearing, was not only convinced of this absurd argument, but allowed the escalated cost, which was based on the highest plant and machinery cost, highest bank charges and highest risk charges. 

This was done despite raising of objections by all relevant government departments against the proposed raise in tariff. 

The proponents of the projects were not ready even to guarantee that they would not demand further increase in tariff. During the tea time, some staff members of NEPRA shared their resentment with this correspondent, on the dictates of their chairman. 

It is worth mentioning that representatives of the KESC were not ready to sign any agreement for the purchase of electricity from Wind Power.

However, S J Raza, CEO of Win Power, told this correspondent that Win Power had been unable to get a firm commitment for the provision of wind turbines from any supplier around the world due to shortage of equipment, rising demand, especially on account of soaring oil prices, and because of the prevailing uncertainty in Pakistan. He informed us that an agreement has finally been signed with China, and China would provide the equipment in the first quarter of 2009.

According to him, this project will be completed within two years, in two phases. The installed capacity would be 100MW. However, it was learnt that there have not been any financial closures in this regard and no quotations have yet been decided.

The completion of the wind power project looks highly doubtful at this point in time. The dilemma at hand remains that the government has no serious intentions of opting for alternative sources of energy that, indisputably, is the future of this country.

Instead of diverting massive resources towards the setting up of fuel- efficient, environmentally-friendly and modern technology plants, the government is shifting its burden on to private companies and shrinking from its responsibilities towards the nation.

If steps are not taken to immediately to control this crisis, the country will have no choice but to acquire used, inefficient and expensive plants and technologies to produce power at a cost that might not be affordable for the common man. It is bound to have a severe impact on our exports, which will no longer be cost competent in the world market.

Wind-power projects look doubtful


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## Neo

*Conservation is the only way out of energy crisis: experts ​* 
Friday, March 21, 2008

KARACHI: Energy conservation is the only solution to deal with looming energy crisis as industries, the largest consumers of power and fuel in the country, are also the one to waste energy the most, say experts and businesspeople.

If industries follow simple low-cost conservation methods with immediate returns on their investments, then they can save up to 25 per cent of the total energy that is wasted which in real terms is a very significant amount, said chief of Enercon K M Zubair.

There are three different methods for this all varying in cost and time yet very efficient over the long run, he continued. The deal is to persuade industrialists and businessmen to implement these methods and convince them that the returns on their investment would not only be quick but fruitful for their entity and the country at the same time. Zubair further explained that these included methods which cost less than Rs5,000 for which the pay back was also less than six months and which led to 5-10 per cent of energy conservation.

He added that the second step included methods which cost slightly higher and for which the implementation and returns period was six months to one year, saving up to 5-12 per cent while a more capital-intensive method cost much higher and provided returns over the long term but, nevertheless, was highly effective.

The Enercon chief informed that the government was working on implementing rules and regulations for industries to save energy resources and therefore tackle the inevitable energy crises; however the government was not giving energy conservation high the priority it deserved.

He said that the basic institutions looking after the sector were in need of a boost and capacity building to create awareness for general public and for the business community alike.

Zubair commented: Conservation is not rationing of energy. There is no use in switching off lights or implementing useless laws such as ordering early closure of shops. Energy conservation is grossly misunderstood. Conservation doesnt come at the cost of the consumers as it is efficient use of resources available which means same level of output at a lesser level of input. According to Ainul Abedin, a private energy consultant, the most wasteful processes amongst the industrial and business community are those that can easily be dealt with. He informed that power generation tops the list as even large corporate companies do not really care at what efficiency power is being generated on their premises.

He said that most industrialists are quite happy with gas generators operating at 1/3rd efficiency which means that they are wasting 2/3rd energy full time. 

In spite of low efficiencies, their costs are very low since they do not particularly care for the environment and our gas supply to them is heavily subsidized, he added. He suggested that by just making the on-site power generation in our industries and large commercial buildings truly efficient with known and well-tried technologies would make all the difference and large share of gas load-shedding could be avoided.

Abedin informed that Steam/Hot Water Production is a process where most industries and large commercial buildings use conventional boilers to produce steam/hot water for their process requirements which is now considered totally unacceptable due to enormous energy wastage as well as serious pollution levels. 

He said that both steam and hot water can be efficiently produced through cogeneration technology but this is not followed by most industries or hospitals, hotels, airport terminals, etc. Just by tuning up the air and fuel ratio and optimising them can save great amounts of energy while steam leaks can be plugged to avoid their wastage, he added.

Both Zubair and Abedin were of the opinion that alternative resources are not viable in Pakistan as we cannot afford the very high costs. They said that wind power is only economical in the long run if it is off-shore, with very good wind velocities but these are very expensive. Similarly, solar energy is being implemented in small applications in the country but in mass application, it is not cost effective.

The experts said that energy costs will continue to rise with fossil fuels becoming more and more expensive and with alternative resources being a bleak second, the only hope is to conserve energy, they concluded.

Conservation is the only way out of energy crisis: experts


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## Neo

*Coal as cheap source of energy: experience of cement industry ​* 
Friday, March 21, 2008

KARACHI: The sky-rocketing fuel prices have potential to change the very nature of the energy mix of Pakistan. The cement industry being dependent on coal is going through a tough time due to the rising international coal prices. 

Pakistan has considerable coal reserves: tidal, solar and hydel potential. It is ironic that Pakistan has fourth-largest coal reserves in the world but it is importing 2.5 million tonnes of coal per annum for the cement industry. At the same time, due to high cost of energy, the government has also decided to enhance the share of coal in the overall energy mix from 5 to 18 per cent up to 2018. 

Among the other alternative sources, coal is the main source for producing cheaper electricity and its availability is much higher. In view of predictable shortfall of electricity and other energy resources during the next 10 years, demand for indigenous coal would grow in power generation considerably.

Coal is found in all the four provinces of Pakistan. The country has huge coal resources, about 185 billion tonnes, out of which 3.3 billion tonnes are in proven/measured category and about 11 billions are indicated reserves, the bulk of it is found in Sindh.

At present most of the cement companies have switch to coal or gas as their basic fuel; the process has been completed in the last 6 to 7 years. According to the data of the All Pakistan Cement Manufacturing Association of mid-2007, the cost of cement production per tonne by furnace oil was around Rs2,083 whereas the cost of production per tonne by coal was Rs8,68, saving Rs1,215 per tonne. Similarly, the saving per bag was Rs60.75, which is a huge difference. 

During the last 6 months, the prices of coal and furnace oil have doubled and it is increasing with the rising international oil prices generating a direct burden on the 0cement industry as they use coal as the basic fuel. 

Coal consumption during 2005-06 was: brick kilns (54.7 per cent), cement and other industry (36.0pc), power (1.9pc), coke use (7.3pc). At present the brick industry is the biggest user of coal, consuming about 4.2 million tonnes annually, said the Ministry of Petroleum and Natural Resources.

The cement industry of Pakistan is achieving well as it has enhanced its production capacity to historic peak to 17,112 thousand tonnes from 9,876 thousand tonnes in just 5 years from 2001-2005.

The cement industry being the second biggest coal user in the country is important to the country. But unfortunately the industry is using imported coal as a fuel instead of local coal due to the high percentage of sulphur in it. This dependence can be diminished by processing, that is, washing out the sulphur from the local coal and then utilising it in the cement industry.

Javed Ali Khan, CEO of Pioneer Cement, said local coal contains 6pc of sulphur which is not suitable for cement industry; however, the imported coal contains 1pc of sulphur. 

The cement industry has still some energy alternatives except coal, even if the prices of coal go up from the present high prices. The cement industry may go in for used tyres and this can be done to meet the 40pc of fuel requirements of the industry, and the other is recycling of the waste by making it in bundle shape and then these bundles would burn in the kiln. 

These processes will not contribute to pollution or environmental problems, said Badruddin Fakhri, Managing Director of Galadari Cement.

According to a cement companys official, the rising coal prices have already increased the manufacturing cost of cement up to Rs15-20 per bag and they say that there is a need to pass on this burden otherwise the cement industry would suffer considerably. 

If Pakistan imports sulphur washing plants preferably from European countries, then we will be able to utilise our local coal in the cement industry by washing out the sulphur content from it, an industry official suggested this as an alternative to the rising international coal prices. 

The rising coal prices has cut into the profits of the cement industry which is comfortably balanced in southern region of the country, but the northern region is still behind due to high competition in the region. 

Coal as cheap source of energy: experience of cement industry


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## Neo

*Pakistans exports and energy crisis ​* 
Friday, March 21, 2008

KARACHI: The present energy crisis in the country may have a serious impact on our exports, but the decline in the countrys exports could be averted if the newly-elected government put the economy on its prime agenda.

Big industries are aggressively going for their own power production, that is, captive power plants according to their requirements, and now most of them have their own stand-by generators. But the rising diesel prices is likely to cast a negative effect on those who use diesel generators, and which is a big problem, said Masood Naqi, former chairman of the Korangi Association of Trade and Industry.

The other problem is power breakdowns in residential areas where most industrial workers live. Power breakdowns or load-shedding would seriously affect workers energies and ultimately industrial production. Power cost has become a serious problem for industries along with law and order; both are now causing problems for industrialists and our exports are already low this year.

Small industries would close due to the rising cost of production, he said. But if the government puts economy at the top of its agenda and starts facilitating industry, then it can be safely said that our exports would see a positive change the next year. 

We are already reaching the last quarter of this fiscal year and the next year is ahead to us. If the new government formulated long-term economic policies, it would help increase exports in the coming years. If the new government gave top priority to economy, then the next fiscal year would be better than this year, he added.

On the one hand, our energy demand has been increasing rapidly and, on the other, our energy production targets to meet the growing demand are limited and short sighted. This is a serious problem. The growing demand for energy has made it imperative to look for alternative and renewable sources of energy in order to bridge the big demand and supply gap, said Nisar Shekhani, chairman of the SITE Association of Industry. 

Industry would be in serious trouble in the next fiscal year due to the present energy crisis and these conditions are not favourable for industry. We need emergency energy saving measures to tackle the energy crisis, particularly industries need to carve out ways of energy saving. 

There are speculations that gas rates would also be raised in coming days. This is causing jitters among the industrialists who are already facing serious problems in terms of cost of energy. We need to take steps at the micro level like India did for energy-saving measures, he said.

Industrialists are facing difficult times. The government heavily subsidises gas for domestic consumers and fertiliser companies. Now it is time to shift some burden on to domestic consumers and fertiliser producers as industry has already been overburdened, he demanded.

Domestic consumers use about 60 per cent of the total energy production of the country, an expert said. Power rates are likely to be further increased by 40 paisa a unit. Industries will close when they cannot meet the rising cost of production. It is needless to say how industries will suffer if the energy crisis worsens, said Noor Ahmed Khan, chairman of the North Karachi Association of Trade and Industry. Gas is the other alternative for power generation but this is not a viable source in the long run. Industrialists are, however, going for gas power generation, he said. FZ

Pakistans exports and energy crisis


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## Neo

*Second Sukuk coming up to raise $1.5 billion ​* 
ISLAMABAD (March 21 2008): Amid turmoil in the global market following serious US recession, Pakistan has opted to float Sukuk bond to raise $1.5 billion as a support for its ailing economy.

Sources told Business Recorder that a meeting held in the Ministry of Finance on Wednesday, March 19 took stock of the liquidity position in the global market with particular reference to the US economic crisis and decided to focus on Islamic mode for raising money for its financial requirements. The meeting studied all the available channels for floating the bond and decided to work out a plan to float Sukuk in the third quarter of the current fiscal year.

For Sukuk bond, the government would be required to pledge some national strategic assets as a collateral to investors to raise money. It would be Pakistan's second Sukuk bond coming up in last few years. Since 2004 Pakistan is floating bonds in the global market.

Considering that the US crisis has jolted the world economy, the government economic managers have reached the conclusion that any dollar or euro bond may not deliver the goods.

The MoF had invited international banks/financial institutions to take their advice on the possible bond issue and held a series of meetings with each of their representatives during last couple of weeks. As a follow-up to these meetings, the government will probably pick up more than one bank or a consortium of banks to appoint as lead manager for the issue.

The government is also considering floating the bond in the domestic market through some local banks or a consortium of banks to raise money equal to the Sukuk offering. The rate of return on the domestic and the international bond will be similar to that of the Sukuk bond.

Since the economic growth is showing negative trend, the government has to go for some non-traditional means such as bond issue to get at least 4 to 5 billion dollars to close its current account at the end of the current fiscal year on positive note.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Agriculture credit increases by 30 percent in eight months ​*
KARACHI (March 21 2008): Disbursement of credit to the agriculture sector by commercial and specialised banks has shown an impressive growth of 30.46 percent year-on-year basis during the first eight months (July-February) of the current 2007-08 fiscal year.

Banks have disbursed Rs 120.442 billion to the agriculture sector during July-February period as compared to Rs 92.319 billion in the same period last year, showing an absolute increase of Rs 28.123 billion.

Over all credit disbursement by five major commercial banks, including Allied Bank Limited (ABL), Habib Bank Limited (HBL), MCB Bank, National Bank of Pakistan (NBP) and United Bank Limited (UBL) stood at Rs 58.026 billion during the first eight months of the current fiscal year, compared with Rs 43.424 billion during the corresponding period last year, depicting an increase of Rs 14.602 billion in absolute terms or 33.62 per cent.

Zarai Taraqiati Bank Limited (ZTBL), the largest specialised bank, has disbursed Rs 33.012 billion in July-February period, compared with Rs 30.745 billion last year, while disbursement by Punjab Provincial Co-operative Bank Limited (PPCBL) stood at Rs 3.873 billion, compared with Rs 4.824 billion last year. Besides, 14 domestic private banks (DPBs) also loaned a combined Rs 25.530 billion during July-February period, up 91.60 percent when compared with Rs 13.324 billion disbursed last year.

It may be recalled that the State Bank of Pakistan has set an indicative target of Rs 200 billion for the current fiscal year, up from Rs 160 billion in the last fiscal year, showing an increase of Rs 40 billion. During the last fiscal year, commercial and specialised banks had disbursed a total of Rs 168.3 billion to the agriculture sector.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*AEDB fails to set up 18 megawatts wind farm power project ​* 
KARACHI (March 21 2008): The Alternate Energy Development Board (AEDB) of Sindh has failed to implement its project costing $14.18 million to set up 18 MW wind farm for power generation near Karachi.

Official sources in the Sindh government informed Business Recorder that the work on the project could not be initiated so far even though the upfront tariff for the plant's generated energy had been finalised by the National Electric Power Regulatory Authority (Nepra) few months back.

They claimed that the payback period time of the total investment made on the project was estimated at around 7-8 years. But, the unnecessary delay in the process might harm the whole investment and the preparations made for the project till date, they said.

It is worth mentioning here that the power generation through wind turbines would cost Rs 2.5 to Rs 3.00 per kWh, sources said and termed it very cheap and first step towards generating electricity through alternative ways.

Sources said the Pakistan Meteorological Department (PMD) had prepared the feasibility report for the installation of wind power plant some eight months back and Gharo was suggested the best place for setting up the plant.

The feasibility report of the project was based upon the Wind Power Potential Survey that was conducted last year by the PMD along the coastal areas of the country in collaboration with the Ministry of Science and Technology, the sources added.

The study enabled the experts of AEDB to identify the potential areas where economically feasible wind farms could be established to generate power, they said, adding that Gharo town and its vicinities were found to be one of the most suitable places for the purpose.

The 18 MW wind farm that had to comprise thirty 600-k turbines was stated to have net power generation capacity of 31 million kWh per year, officials maintained. They lamented that the financial benefits of the project, after its payback period, could be extended to the government, besides saving huge amount on spending electricity generated through furnace oil and other natural resources.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan's foreign exchange reserves dip by $297 million ​* 
KARACHI (March 21 2008): The foreign exchange reserves of the country declined by $297 million last week, mainly owing to rising oil import bill in the wake of soaring oil prices in the world market. According to State Bank of Pakistan (SBP), country's overall foreign exchange reserves declined from $14.142 billion to $13.844 billion during the week ended March 15, 2008.

The major fall was witnessed in the foreign reserves held by the SBP, declined by about $306 million to $11.723 billion, previously stood at $12.029 billion a week ago.

Business Recorder [Pakistan's First Financial Daily]


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## Plasma

*Aedas regeneration for Karachi Port planned for Spring 2008*

Thursday, 20 March 2008

Tenders for a landmark waterside development at Mai Kolachi adjacent to the Port of Karachi in Pakistan have been received and are currently being evaluated following the implementation of Aedas international competition-winning design for a mixed-use scheme.

Endorsed in 2007 by the Prime Minister of Pakistan, the development will command an iconic presence and provide an instantly recognisable beacon to Pakistans principal city of Karachi and the countrys largest sea port. *The project is expected to commence on site in the second quarter of 2008.*

The scheme which includes five high rise towers focuses around the centrepiece; an elegant 78-storey fully glazed tower The tower comprises 162,000 sq m of office space crowned with a 250-bed six-star luxury hotel with additional serviced apartments. The hotel bedrooms are cleverly arranged around an 85m-high atrium to maximise the magnificent views over the Arabian Sea.

Advanced digital modelling and sustainable design practices have responded to ecological challenges, drastically reducing the buildings carbon footprint and harnessing the potential of natural resources. The development is designed to set an exemplary precedent in Pakistan for environmentally responsible architecture and construction standards though the use of low energy design principles and techniques to maximise the use of passive environmental control.

Designed for the Karachi Port Trust, the development will help satisfy an international and domestic demand for institutionally acceptable British Council for Offices (BCO) standard space. It will also help satisfy a significant shortage of luxury hotel accommodation and aspirational residential property in a city with a population of over 17 million. The development will be the catalyst that creates the heart of a new Central Business District and help realise Karachis optimum commercial and lifestyle potential.

Aedas has worked closely in partnership with the Karachi Port Trust, MM Pakistan and Mott MacDonald UK and Dubai.






Aedas regeneration for Karachi Port planned for Spring 2008


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## Neo

*Naveed Qamar for urgent relief to agri, textile sectors *​
ISLAMABAD: Syed Naveed Qamar, MNA and a key figure of the expected new government has hinted urgent measures for encouragement of wheat growers, textile sector, POL consumers and exporters by providing incentives for them.

Syed Naveed Qamar, ex-Federal Minister for Privatization and MNA of Pakistan Peoples Party said this while talking to a group of reporters at a local hotel here on Thursday. 

The caretaker government has twice revised POL price due to which the petrol price has increased to Rs 62.81 per liter, diesel per litre to Rs 38.96, kerosene oil to Rs 41.44 and HOBC per litre at Rs 74.77, which has not only affected the common men but hardly hit the industrials sector.

Naveed Qamar supported the increase in wheat procurement price and said, we fairly need a higher procurement price for the current wheat crop to encourage the wheat growers, which would also help eliminate wheat smuggling from the country, he added.

Economic Coordination Committee (ECC) of the Cabinet in the caretaker set up had increased the wheat procurement price from Rs 425 to Rs 510 per 40 kg. But, this price has not been instrumental in encouraging the wheat farmers to sell their produce to the government and they are selling their produce to the private sector on much higher price in Sindh. Ministry of Food and Agriculture and Livestock (MINFAL) is trying to convince the economic managers to again upward revision in the procurement price from Rs 510 to Rs 600 per 40 kg. 

He was of the view that agriculture sector is of prime importance and subsidies should be allowed for development of this sector and for improvement of agriculture production, enabling it to meet not only national requirements but also for exports purposes. 

Realizing the trade openness among the South Asia countries he said that Pakistan needed an open trade policy with India including other South Asian Association of Regional Countries (SAARC) member states under the South Asia Free Trade Area (SAFTA) agreement for the development and prosperity of the region. 

India has already handed over to the government of Pakistan a list of over 400 items for inclusion in Importable items list maintained by Ministry of Commerce. India has also offered Pakistan to identify at least 20 items of its exports interests so that import of which is allowed duty free in Indian markets. These two issues are still pending and the new government is expected to take decision on it on priority basis. 

At present, we have bilateral trade with India over a billion dollar and it should be increased according to the existing potential, through openness in our trade policies, he said adding that promotion of trade with other SAARC member states should be encouraged for mutual benefits. 

On textile sector, Naveed Qamar said that the country needed a balanced textile policy, which is capable of benefiting equally to the All Pakistan Textile Mills Association, exporters and cotton growers. Textile sector, which has already enjoyed Research and Development (R&D) support to the tune of Rs 30 billion for increase of textile exports during the last two fiscal years is still in search of more incentives to overcome their difficulties, he added.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Uplift in gem, jewellery sector can push exports​*
LAHORE: Pakistans gems and jewellery sector has the potential for expansion and achieving export target if it is provided with the latest technology, training and supportive infrastructure.

These was stated by Vice President of Lahore Chamber of Commerce and Industry (LCCI) Shafqat Saeed Piracha while speaking at a seminar on gems and jewellery sector, organised by the LCCI Women Resource Center in collaboration with Gem and Jewellery Standing Committee. 

Dr Mandip Sharma, President, Association of Women Entrepreneurs and Career Women, India and Chairperson LCCI Women Resource Center Shamim Akhtar also spoke on the occasion. 

Piracha said that there is a need to create awareness among the stakeholders so they could be able to play their role for boosting economic activity in the country.

Pakistan has been gifted with abundant resources of several precious and semi-precious gemstones, at present mostly found in Northern Areas and NWFP, but with a huge potential in Balochistan, he said adding that most important of the currently found stones are emeralds of Mingora (Swat), pink and golden topaz of Katlang (Mardan) and aquamarine of Chitral and Neelam Valley.

Furthermore, he said, due to lack of realization of its importance as an industry, those who are engaged in the mining, cutting/polishing and trading of gemstones in Pakistan have not been able to exploit the full potential of this sector. Earlier, the Chairperson LCCI Women Resource Center Ms Shamim Akhtar gave a detailed briefing about the aims and objectives of the seminar.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan, Korea should further deepen trade ties​*
ISLAMABAD: Pakistan and Korea are close friends and partners for the development of mutually beneficial relations and should further deepen trade and economic relations, Ambassador of the Republic of Korea, Un Shin, during his visit to Islamabad Chamber of Commerce & Industry (ICCI) said. 

He said that Korea could join hands with Pakistan in telecom systems, laying of rail track network, power plants, ship breaking, and coal mining. The ambassador said that trade volume between the two countries was gradually increasing, which could be further promoted through exchange of business delegations. 

He said Embassy of Korea would provide facilitation for participation of the ICCI delegation in the exhibitions arranged in Korea different sectors. He said a Korean cultural delegation would also visit Pakistan April this year. 

Shin said Korea had expertise in telecommunication sector and could provide assistance to Pakistani companies in the technology transfer. He said Korea could join hands with Pakistan in telecom systems, laying of rail track network, power plants, ship braking, and coal mining and indicated that Korea was price wise is bit expensive due to its quality of services. 

Muhamad Ijaz Abbasi, President of ICCI, said that Pakistan was passing through a transition phase of establishment of new parliament. He said that government had encouraged the foreign investment a great deal, and as a result lot of foreign investment came in Pakistan.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan's foreign exchange reserves dip by $297 million ​* 
KARACHI (March 21 2008): The foreign exchange reserves of the country declined by $297 million last week, mainly owing to rising oil import bill in the wake of soaring oil prices in the world market. According to State Bank of Pakistan (SBP), country's overall foreign exchange reserves declined from $14.142 billion to $13.844 billion during the week ended March 15, 2008.

The major fall was witnessed in the foreign reserves held by the SBP, declined by about $306 million to $11.723 billion, previously stood at $12.029 billion a week ago.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*High cost of air pollution ​*
EDITORIAL (March 21 2008): The prevailing high level of air pollution in the country, particularly in its urban centres, is causing loss of as much as Rs 62 to 65 billion to the economy every year - or one percent of the GDP, with the overall environmental health hazards accounting for over 20 percent of the total burden of diseases in the country.

According to a study conducted by the Ministry of Environment, approximately 16.28 million people or 40 percent of the country's total urban population, is at risk of contracting pollution-related health complications such as cardiac, eye and ENT ailments, the annual cost of which has been worked out at Rs 25.7 billion. The figures show the steep cost the country has to pay for non-compliance with the environmental standards set by the World Health Organisation.

A recent World Bank study has calculated the loss caused by urban air pollution (UAP) to Pakistan's economy at $369 million, which the environmental experts believe, is the second most important contributory factor after municipal solid and liquid waste. The World Bank study has calculated that 60 percent of the 168,000 premature deaths caused annually in Pakistan are attributable to indoor pollution.

According to another study, the suspended particulate matter (SPM) in major cities of Pakistan is six times higher than the normal standard set by WHO. The failure of successive governments in incorporating these factors in economic policies has contributed significantly to the loss of GDP. Experts believe that air quality can be improved by integrating a number of technical and management options and by providing financial incentives, aside from regular monitoring, evaluation and remedial measures.

Overall reduction in the particulate contaminated air and inefficiency in fuel consumption will result in the saving of 19.8 million dollars per annum to vehicle owners due to better fuel consumption, and will result in annual reduction in emission of CO2, lead and hydrocarbons. Better transport planning and traffic management can significantly contribute towards controlling air pollution in the country.

Rapid growth of transport sector, with increased number of vehicles plying on the roads, the use of low quality fuel and the presence of industries in municipal limits are some of the major causes that have contributed to the rapid deterioration of air quality in urban centres of the country. Air pollution in major urban centres, including Karachi, Lahore, Islamabad/Rawalpindi, Peshawar and Quetta is rapidly increasing largely because of growing vehicular traffic. The levels of air pollution in Karachi and Lahore, for instance, are estimated to be 20 times higher than the standard set by WHO.

A study conducted by SUPARCO in 2003-04 had found an extremely high concentration of pollutants in most cities of the country. The Economic Survey for 2005-2006 had noted that suspended particulate matter was the most serious air quality issue in the country, and that a major source of these emissions was motor exhaust. Yet no credible measures were mounted to counter this grave health hazard.

Almost 400-fold increase in the number of vehicles in the country, ie from 0.8 million 20 years ago to over 4 million in 2006, was a major contributory factor in the steep rise in the level of air pollution. This was compounded by unchecked sale of low quality fuel. Above all, the oil refineries' resistance to the government's request for switchover from low quality diesel to better quality Euro-II, has been a major factor in rapid degradation of urban air quality.

The cost in terms lost man-hours has been very high indeed. For instance, a UN study has found that extremely fine carbon particles emitted through motor exhaust can penetrate the deeper recesses of human lungs, causing serious respiratory diseases. Other major fuel sector pollutants vitiating urban environment in Pakistan include carbon monoxide, sulphur dioxide, nitrogen dioxide and lead, with the last mentioned being extremely harmful for young and growing children, because it can cause irreversible mental retardation. (Incidentally, the amount of lead annually released through vehicular emissions into the air in Pakistan is said to be 520 metric tonnes!)

Health services and infrastructure in Pakistan, meanwhile, are among the poorest in the region, with only one doctor for every 1,310 patients, one dentist for every 25,297 citizens and one nurse for every 4,636 patients (2006 figures). Pakistan's infant mortality rate, according to the UNDP World Development Report for 2006 was 74 per 1,000 live births.

These statistics assume ominous dimensions when viewed against the backdrop of lack of standards for quality of ambient air and water in Pakistan, while very little work has been done to develop an integrated air quality management system (AQMS). With limited budgetary allocations made to address the environmental degradation, there is an urgent need for the government to set clear priorities in how it can improve air and water supply quality.

The problem can be addressed to a large extent by making annual tree plantation campaigns more credible, and by launching more clean water supply schemes. The annual loss of Rs 62-65 billion to the economy can be curtailed by spending only a fraction of this amount on preventive measures.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*FBR investigates fall in profits of revenue generating sectors ​* 
*Faces difficult task of collecting Rs1 trillion revenues​*
Sunday, March 23, 2008

ISLAMABAD: Investigations are under way to ascertain reasons for a steep decline in profits of major corporate sectors such as banking, oil and gas as well as telecommunication, which has made it too difficult for the Federal Board of Revenue to even cross the psychological barrier of Rs1 trillion in the current fiscal year. 

In another move, tax authorities have selected certain renowned entities of the corporate sector for conducting a detailed audit in order to detect tax evasion of billions of rupees, The News has learnt. 

The FBR has started selecting renowned entities of the corporate sector for conducting a detailed and full-fledged audit and the exercise in some of the cases is under way for detecting alleged tax evasion, a high-level official in the FBR confirmed while talking to The News here on Saturday. 

Some other cases have been selected and a detailed audit will be initiated very soon, added the official. Yes, we are conducting audit of the corporate sector under a pilot project of the National Audit Plan, Member Audit FBR said when asked in that regard on Saturday. 

The sources said all this is being done to bridge the existing revenue gap in order to move towards the desired tax target of Rs1,025 billion. The real objective is to cross psychological barrier of Rs1 trillion mark in the current fiscal, the official further said. 

FBR has collected revenue of Rs584 billion in first eight months (July-Feb) period of fiscal year 2007-08 with Rs215.642 in shape of Direct Taxes and Rs368.724 billion as Indirect Taxes. 

We have already lost Rs35 billion revenue and the dream of crossing psychological barrier of Rs1 trillion seems un-achievable, another high-level official in the FBR said. 

The official claimed that the Board was inching towards bridging the gap of Rs35 billion but it would be too difficult to achieve the desired tax collection figure of Rs1,025 billion by June 30, 2008. 

We are discussing Rs990 billion revenue target internally, said the official and added that the Board was investigating to ascertain the reasons for massive decline in profits shown by the corporate sector in the current fiscal year. 

The corporate giants such as banking, oil and gas and telecom sectors, the official said, massively under reported their profits on one side and claimed huge refunds amounting to Rs8.5 billion on the other, resulting into huge revenue shortfall in the current fiscal year. 

The banking, oil and gas and telecommunication are perceived huge profit making sectors by billion of rupees in last few years but now they were showing sharp decline in their profits from the current fiscal year. 

Chairman FBR Abdullah Yousaf during the last Board in Council meeting directed the authorities concerned to investigate massive decline in profits of banking, oil and gas and telecom sector which subsequently resulted into less revenue payments, the official further said. 

There is need to conduct study to know about chances of miscalculations in estimation of their expected returns by the corporate sectors where they showed decline in their profits. The banking sector claimed refunds of Rs4.5 billion, oil and gas Rs2.5 billion and telecom sector Rs1.5 billion till December 2007. 

On oil and gas sector tax collection, the official said that the domestic sales tax collection was Rs24.6 billion in first eight months (July-Feb) period of the current fiscal against Rs18.2 billion in the same period of the previous fiscal, showing a growth by 35 per cent. 

The tax collection in shape of excise duty on oil and gas stood at Rs1.7 billion in first months of the current fiscal against Rs2.7 billion in the same period of the previous fiscal. On imports, tax collection on oil and gas sector was Rs11.1 billion in first eight months of the current fiscal against Rs8.9 billion in the same period of the previous financial year. 

The FBR faced a revenue loss of Rs3.5 billion owing to zero-rated crude oil decision taken by the tax authorities on November 30, 2007 on the basis of no tax paid with no refunds. 

The FBR has paid Rs45 billion in shape of refunds in first eight months of the current fiscal compared to Rs58.697 billion in the same period of the previous financial year, showing that the tax authorities paid Rs13 billion less refunds in the current fiscal year. 

Answering a query regarding increase in tax collection owing to recent surge in POL prices, the official said they will generate additional Rs2 to 3 billion in the remaining four months (March-June) period of the current fiscal year.

FBR investigates fall in profits of revenue generating sectors


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## Neo

*Czech businessmen keen to invest in power ​* 
Sunday, March 23, 2008

LAHORE: The Czech Republic has huge business opportunities for potential Pakistani businessmen in sectors like power, textile, pharmaceutical, leather and construction and Czech businessmen are ready to initiate joint ventures with their Pakistani counterparts for mutual benefit.

Board of Investment Acting Secretary Major (R) Iqbal Ahmad stated this while talking to Lahore Chamber of Commerce and Industry Vice President Shafqat Saeed Piracha at the LCCI on Saturday.

The BoI acting secretary, who had recently returned from a four-day visit to the Czech Republic, said Czech businessmen were very serious in doing business in Pakistan, particularly in the power sector.

He informed the LCCI vice president that the Board of Investment had constituted a Czech-specific task force to prepare a set of recommendations for maximum participation of the private sector.

The existing volume of trade between Pakistan and the Czech Republic needed special attention and frequent exchange of delegations, he said, adding lack of information was coming in the way of bilateral trade and the chambers of commerce of both countries should play their role in that regard.

He said the economic growth achieved by Pakistan in recent years had impressed the manufacturers and investors in the Czech Republic and they are now considering Pakistan as the best place for investment. He said there was a need to work together in order to identify possible fields of cooperation and to provide proper information for business communities of both sides.

Speaking on the occasion, the LCCI vice president said the current level of trade between Pakistan and the Czech Republic needed more concrete steps on both sides, foremost among them was exchange of information. In order to bridge the information gap, he said, it was necessary that the chambers of commerce of both countries were involved and delegations organised on reciprocal basis, besides arranging single country exhibitions.

Currently, the two countries are in the process of signing a Bilateral Investment Treaty (BIT) and an agreement for avoidance of double taxation.

Czech businessmen keen to invest in power


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## Neo

*NetSol inks agreement for computer-based training in Pakistan ​* 
Sunday, March 23, 2008

LAHORE: NetSol Technologies Ltd has signed an agreement for Computer Based Training (CBT) with a public sector organisation in Pakistan.

This contract is in continuation of earlier contracts signed by NetSol Technologies with other public sector organisations in the recent past.

The Computer-based Training or Electronic Learning (eLearning) is commonly associated with the field of advanced learning technology (ALT), and deals with associated methodologies in learning using network and/or multimedia technologies.

Under the newly-signed agreement, NetSol Technologies Ltd will develop a computer-based 3D animation of instruments used by concerned public sector organisations for training of its employees.

In the current information age, learning has converted into eLearning, as conventional classroom teaching provides little or no interactivity with the subject matter. It is being replaced now by CBT all around the world.

Chairman and CEO NetSol Salim Ghauri said NetSol is in the process of developing its expertise in CBT and signing of the present agreement proves it has already started gaining customers confidence for such projects.

NetSol inks agreement for computer-based training in Pakistan


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## Neo

*5,000MW hydel power identified in Azad Kashmir ​* 
Sunday, March 23, 2008

ISLAMABAD: AJK Prime Minister Sardar Attique Ahmed Khan has said there has an identified huge potential of 5,000MW hydel power generation in Azad Kashmir, adding that the area has been enriched with the natural resources, imperative for development and making the area self-reliant. He said this while addressing at the 2nd session of the World Water Day seminar here the other day. Besides others ex-foreign Secretary Dr Tanvir Ahmed and Brig (Retd) Ashfaque Ahmed also spoke at the seminar. 

The AJK premier said: The water resources are being reassessed by every nation within their boundaries, the purpose is triple to sustain irrigation; to make available safe drinking water, and to produce electricity. The societies that did not have the wealth of running waters are bound to face three catastrophes: starvation, industrial paralysis and social unrest. 

He said the scenario needs the core attention of the planners to pay the proper heed to this important segment necessary for eneregy requirements and economic prosparity of the area. He was of the view that the Azad Kashmir is enriched with the vast natural wealth, glaciers, rivers, streams, springs and scores of perennial channels to the volumes of almost mini-rivers.

5,000MW hydel power identified in Azad Kashmir


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## Neo

*Oil import surges to new heights​*
** Soaring international oil prices push up both crude, manufactured petroleum products import phenomenally​*
KARACHI: Countrys oil import bill peaked to record $6.338 billion level during the first eight months (July-February) of the current fiscal year, depicting 33.68 percent growth over $4.741 billion in the same period of last year.

Figures released by Federal Bureau of Statistics on Saturday showed that an increase of 43.55 percent was recorded in the import bill of manufactured petroleum products to $3.416 billion during the period under review against $2.379 billion during the same period of last year.

Crude petroleum oil import soared to $2.922 billion during July-February period of the current fiscal year, up by 23.74 percent against $2.361 billion during the same period of last year. 

In month of February of this fiscal year, oil imports grew phenomenally by 154.27 percent to $1.344 billion compared to $528.876 million in the same month of last year on the back of huge growth, over 80 percent, in import of manufactured petroleum products and over 218 percent increase in crude oil import. 

Analysts attribute this high growth to skyrocketing prices of petroleum products in international market, saying that the increasing trend in high import bill will continue in the coming months because of high prices of oil in global market.

Although, international oil prices slid below the $100 dollar mark in the last few days, however, the impact of highest ever oil price of $111 dollar per barrel during the initial days of March would be seen when the figures of oil import will be available, analysts believed. 

Last year, oil import bill had crossed $7 billion and this year the finance ministry estimates that it will hit $11 billion by the end of June 2008, however analysts predict that it would be even touching $15 billion mark if any sharp fall was not seen in international oil prices in near future. 

Machinery is the second largest component in the import bill after petroleum as its import stood at $4.459 billion in July-February this fiscal year, up by over four percent from $4.272 billion last year.

This growth in the import bill of machinery was on the back of almost 35 percent growth in the import of power generation machinery, 10.20 percent growth in electrical machinery & apparatus, a marginal growth of just one percent in telecom import and over four percent growth in other machinery.

On the other hand import of office machinery, textile machinery, construction & mining machinery declined during the period under review. 

The import bill of agriculture and other chemicals was up 31.37 percent to $3.650 billion in July-February of current fiscal compared to $2.779 billion in the corresponding period of last year. In this group, over 150 percent growth was seen in fertilizers, almost ten percent in plastic material and over 30 percent in medical products. 

The import of food items surged to $2.509 billion in the first eight months of current fiscal year as against $1.924 billion during the same period of last year, showing a growth of over 30 percent. This growth was mainly due to import of wheat and soyabean oil.

The import bill of transport was down by around seven percent to $1.470 billion during the said period from $1.579 billion in the same period of previous year. 

The total import bill reached $24.140 billion during the first eight months of current financial year, reflecting a growth of almost 22 percent to $19.796 billion in the corresponding period of last year.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Private sector power plants to produce expensive electricity​*
ISLAMABAD: The country will have most expensive electric power when the new independent power plants set up by the private sector would come into operation within two years, sources in Water and Power Ministry told Daily Times on Saturday.

Previous government had agreed and finalised agreements with new Independent Power Producers (IPPs) on much higher tariff for thermal power generation. Sources said that government has made agreement with IPPs to produce 12,000MW thermal power on high tariff of 12 cents/Kwh to 14 Cents Kwh.

These agreements were finalised realising the fact that during the last five year not a single unit has been added in the national system as against the 8 to 10 percent annual growth in the power demand.

In the first phase, 15 IPP plants would be set up to generate 2,868MW power by 2009-10. The government has granted the 12 cents/Kwh to 14 cents/ Kwh to these IPPs. This tariff has been determined based on Rs 25,500 per tonne furnace oil price and if the price of furnace oil shoots up, the tariff would automatically go up putting additional burden on the consumers, they added. 

They said that if the next government depends on the thermal power generation to meet the power needs, the electricity will be available on much higher rates to the consumers.

They also said that the higher rates would also cause increase of many fold in the cost of production especially for the export-oriented industries like textile and other processing industries, making them uncompetitive in the world markets. In this way, the masses would be facing higher rates of products also in the country too. The exporters who are already facing a tough competition from other countries like India, China and Bangladesh would be facing a new challenge. Sources stressed the need that the country should have to rely on coal and hydel based power generation option. 

Sources said that these tariffs for future IPPs are determined based on the price of Rs 25,500 per tonne furnace oil and the price of furnace oil already stands at Rs 36,000 per tonne at present. They said that if the prices of furnace oil during the operation period of future IPPs shoots up to over Rs 25,500 per metric tonne then the tariff of future IPPs would go up to over 16 to 17 cents/Kwh that would hurt the the electricity consumers badyl.

They said that Water and Power Development Authority (WAPDA) was receiving electricity at the rate of Rs 4.46 per unit from HUBCO that will increase to 16 to 17 cents/Kwh. They said that the rates of future IPPs would be higher than 17 cents/Kwh if the furnace oil prices go up.

They said that government would have to shift its policy from IPPs thermal power generation to hydel and coal based power generation to provide cheaper electricity to the consumers. Government needs building small as well as big dams and develop coal reserves in Thar for generation power to meet the power requirement in the coming years, They added.

They regretted that IPPs were granted higher rates of tariff and a certain lobby is creating difficulty for announcing upfront tariff for coal based power plants. Private sector has demanded the government to fix 10.5 cents/kwh tariff for the coal based power plants but the decision has not been made in spite the country is facing worst power shortage crisis.

The row between Sindh government and National Electric Power Regulatory Authority (Nepra) has not been resolved so far in this regard as NEPRA wants to announce 7.65 cents indicative upfront tariff for coal-based power plants whereas Sindh Coal Authority has demanded to fix 9.5 cents upfront indicative tariff for the electricity generated through coal power plants in Thar.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Replacement of outdated mining system to save foreign exchange ​*
KARACHI: Pakistan can save millions of dollars on import of coal if outdated system of mining is abolished as during mining process, around 50 percent product goes waste, said an official of Sindh Coal Authority (SCA) here on Saturday. 

Thar coalmines would take another five to six years to give production subject to the speedy work and development of infrastructure on modern mining system, said SCA official, Abbas Ali Shah, talking to Daily Times.

World coal consumption likely to increase around 6.3 percent in 2008 due to growing demand by China and India, he said adding that the coal use rose 23 million tonne to 391 million tonne in Asia. Shah said Lakhra mines were providing around 2.5 million tonne of coal, which was meeting about 45 percent domestic needs.

The cement and other industrial sectors import around 3.5 million tonne of coal from South Africa, Indonesia and Australia. He said a large quantity of coal is used in brick kilns while some 10 percent of the production is used domestically.

As the coal use will remain on the higher side this year, it was expected that the price of the commodity would further grow to touch $125 per tonne from $60 per tonne.

He said the world use of coal in power generation has been 32 percent to 60 percent in different countries while in Pakistan it is used only in the cement sector. 

The resource base of Balochistans coal stands at 125 million tonnes compared to 185 billion tones of the country. The coal field of ChamalongBahlol which is recently being opened for exploration and mining through an agreement signed between Marri and Luni tribes with the joint efforts of federal and Baluchistan governments is considered to be the biggest coal field of Asia. Proper and detailed exploration, which is in progress, would prove that the actual coal reserves in Balochistan are much more than 125 million tonne.

Federal government has proposed to set up coal based power generation plants at Keti Bandar near Karachi due to easy access to water. Official said that Sindh province is going to have a third port at Keti Bandar after Karachi Port and Port Qasim as the government has approved PC-1 for setting up that port. Ministry of Ports and Shipping has prepared a master plan and sought views from different ministries regarding the activities on the port. Sindh has the biggest reserves of clay, granite and coal and the Keti Bandar Port would help setting up plants for granite and coal. This would not only help utilise the clay, coal and granite but cause trade activities on the port.

Daily Times - Leading News Resource of Pakistan


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## Neo

*WTO members identify barriers in trade with Pakistan​*
ISLAMABAD: During Pakistan Trade Policy Review at World Trade Organisation (WTO), many WTO members expressed their observations on Pakistans trade and economic policies and suggested ways for improvement. 

United States identified book piracy, weak trademark enforcement, lack of protection for proprietary pharmaceutical and agricultural chemical test data and pharmaceutical patents, as serious barriers to bilateral trade and investment. 

According to the details released by Geneva-based Pakistans WTO Mission, the US representative appreciated the challenging times faced by Pakistan during its political transition. The United States also encouraged Pakistan to submit its 2005 new and full subsidies notification to the WTO for review. It believed trade liberalisation had slowed and the privatisation agenda stalled. Increased government involvement in the economy had burdened the federal budget and created considerable market inefficiencies, it observed. Production and export support had risen, as had monopolistic activities of state-run companies. 

Pakistans economic fundamentals had improved; persistent structural weaknesses had raised the costs of doing business with Pakistan, thereby impeding productivity and competitiveness. Reducing political uncertainty and continuing trade liberalisation and other productivity-boosting structural reforms to promote economic diversification and sustained growth could best address it. The representative of the European Communities referred to Pakistans trade ties with the EC, which remained its first trading partner. The EC appreciated Pakistans steps to significantly reduce peak ad valorem tariff rates but they remained on a number of items, including motor vehicles. While the Capital Value Tax on motor vehicle imports had been withdrawn in June 2007, additional restrictions applied to commercial imports of used vehicles. The EC encouraged Pakistan to re-consider its motor vehicle import policy.

The representative of China said the China-Pakistan free trade agreement, which had entered into force in July 2007, would help deepen and broaden their economic relationship. Negotiations on trade in services commenced in April 2007 and were expected to conclude before long. 

Although Pakistan has not formally recoginsed Israel, the representative of Israel during trade policy review expressed concerns with several of Pakistans policy instruments. In particular, Pakistan did not accord MFN treatment to Israel, banning all imports. Israeli FDI was also prohibited. It sought explanations from the Pakistan delegation on how these measures conformed to WTO requirements on non- discrimination. The representative of India noted areas of concern such as Pakistans low level of tax collection, narrow basket of exports, low agricultural productivity, and regional imbalances. Bilateral trade remained relatively small. A major constraint was Pakistans continued denial of MFN status to India, with Indian exports restricted to a positive list of 1,802 products. India believed Pakistans restrictive trade regime with India sharply reduced the mutual benefits from bilateral trade and prevented the complementarities of the two economies from being realised. It urged Pakistan to reconsider its trade policy regime with India to conform to the GATT, and hoped that implementation of the South Asian Free Trade Agreement from January 2006 would improve the situation. 

The representative of Japan cited Pakistans many challenges included under-invoicing by importers, which unduly lowered import prices and needed remedying to induce more joint-ventures, and a number of excise tax concessions favouring local content that seemed unjustified under WTO SCM Agreement.

The representative of Singapore said while Pakistan had liberalised, there was scope for improvement in tariffs, services, investment, and the use of anti-dumping measures. The representative of Thailand said Pakistans tax refund and rebate procedures for exporters could also be simplified. 

The representative of Turkey identified remaining problems to be addressed included the considerable gap between the bound and applied rates, which reduced predictability, some domestic taxes that discriminated against imports, imposition of regulatory duties in addition to tariffs, the complex tax system, and the strong state involvement in trade. Turkey encouraged Pakistan to further reform these areas so as to improve the transparency and predictability of its trade regime. 

The representative of Norway said that in order to positive FDI trend to continue it was imperative that domestic political risk and uncertainty be managed. The representative of Australia welcomed indications that it would continue to open services to international competition and that new market access would be reflected in its revised Doha Round offer. 

The representative of the Republic of Korea identified that the use of discretionary reference prices had sometimes resulted in friction with importers and delayed clearance. Korea sought an elaboration from the Pakistani delegation on any plans to address this issue and to enhance the transparency of customs procedures.

The representative of Hong Kong and China looked forward to further improvements in Pakistans import tariff regime under the current market access negotiations. The representative of Canada urged Pakistan to reduce the complexity of its overall tariff structure, in particular reducing the 15 percent specific tariff rates and generally simplifying the 14 percent ad valorem rates. Regulatory duties on certain imports had recently become less transparent.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Cellphone imports dip 21pc in Feb​*
KARACHI, March 22: There has been a slowdown in import of mobile phones and a leading importer has attributed the decline to reasons like rising food inflation, increase in snatching incidents, higher sale of used phones and over 80 per cent import of low-cost cellular instruments.

According to figures of Federal Bureau of Statistics (FBS), mobile phone imports plunged by 21 per cent to $66 million in Feb 2008 as compared to $84 million last year. Imports in January stood at $76 million.

Total imports in July-Jan 08 fell by 10 per cent to $507 million from $565 million in the same period last year.

Director and chief operating officer United Mobile Azad Lalani told Dawn that an estimated one million cellphones were sold per month ahead of assassination of Benazir Bhutto. Now the sale ranges between 800,000-900,000 sets.

He said that after sharp rise in food prices and rising cost of living people now think twice before purchasing a mobile.

Around 80-85 per cent of the cellphone sale comprises of low cost instruments ranging between Rs2,000 to Rs3,000 and its buyers are mainly from the rural and semi-urban areas. Even the share of low cost phones in total imports also hovers between 80-85 per cent, he said.

Besides, the average sale price of cell phones has also dropped from $45 to $35 in world markets while $35 phone instrument is now priced at $31.

Lalani said that the habit of changing cellphones by many users has also declined in the last few months. Besides, many people have postponed purchasing costly cellphones after worst looting incidents triggered by the murder of PPP leader Benazir Bhutto on December 27.

The entry of Chinese low-cost phones (imitation of branded phones) and the availability of used phone in the markets have also hurt the sale of new phones, he added.

Director public relations Mobilink Omar Manzur said that the mobile phone penetration in urban areas has crossed over 90 per cent and now most of the demand for new connections is coming from the rural areas.

There might be decline in overall growth this year as compared to 2007 but the overall users in the country has been increasing. He added that many new cellphones, when sold, usually find their way into the rural areas.

According to figures compiled by Pakistan Telecommunication Authority (PTA), the cellular phone density has been increasing. In Feb 2008, it stood at 50.76 per cent as compared to 48.96 per cent in January and 48.61 per cent in December 2007.

Out of the total 160 million population the total cellphone users in the country stands at 80.3 million till February. Of these Mobilink has 31.3 million subscribers followed by Ufone 16.84 million, Telenor 16.1 million, Warid 13.6 million, Paktel 2.1 million and Instaphone 320,238.

Till January, 2008 there were 78.838 million cellphone subscribers while their number was 76.88 million till December 2007.

Cellphone imports dip 21pc in Feb -DAWN - Business; March 23, 2008


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## Neo

*New policy to offer 1m jobs annually: Resource mobilisation​*
ISLAMABAD, March 22: Official planners have finalised recommendations to merge the informal sector into the formal one to achieve new resource moblisation, particularly by encouraging development of cottage industry across the country.

Informed sources told Dawn on Saturday that the officials of the economic ministries have also given an implementation mechanism to substantially raise revenues by providing incentives to the informal sector in this regard.

The informal sector consists of small units producing goods and services with the primary objective of generating employment and incomes to families engaged in these activities.

This sector has been characterised by low levels of capital, skills, access to organised markets and technology, low and unstable incomes and poor and unpredictable working conditions.

Chairman, Policy Planning Cell of the Ministry of Labour, Manpower and Overseas Pakistanis, Dr Ghayur Sabur, was of the view that the informal sector was difficult to be estimated due to non-recording of activities taking place in this sector.

When contacted, he said that detailed recommendations were also given to create new jobs in the small and medium enterprise (SME) sector by prompting cottage industry.

This job, he believed, could be done very well by offering a complete package to the industry and adequately implementing the recommendations both by the federal government and the provinces.

Responding to a question, he said the new national employment policy would be implemented by the incoming government.

It seeks to create one million new jobs every year, mainly in industrial, agricultural, housing and construction sectors.

We have also recommended in the new policy creation of model pilot employment schemes in Sindh and Balochistan to offer jobs to unemployed youth.

The caretaker government, he said, had accepted over 95 per cent of proposals in the new employment policy which is expected to be formally approved after Jan 29.

The government has asked the cell to also propose measures to start pilot projects in gems and jewellery and livestock sectors of NWFP and Balochistan, respectively.

From our side, all recommendations are ready and it depends whether the caretakers would announce the new policy or the matter will be left to the new elected government, he said.

He said over one million new jobs could be created every year in all the major sectors, particularly in industrial, housing, construction and constructions, to reduce employment in the country.

Responding to a question, he said personally he believed that the new-elected government should approve and implement the new employment policy so that its ownership could be accepted in letter and spirit.

To a question, he said through pilot projects 100 assured jobs would be created every month in rural areas and small villages, initially in Sindh and Balochistan, and later this experience can be made in the Punjab and NWFP.

He said there were certain problems in the textile sector, and once these are resolved, a substantial number of jobs could be created in this industry also.

He said that he and his team have given a supporting mechanism to implement the new employment policy and that for the first time, serious measures were proposed to deal with unemployment in rural and urban areas.

New policy to offer 1m jobs annually: Resource mobilisation -DAWN - Business; March 23, 2008


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## Neo

*CSF doing survey on Pakistans economy*​
ISLAMABAD, March 22: The Competitiveness Support Fund (CSF) is in the process of carrying out the 2008 executive opinion survey to rank Pakistans economy for the WEF Global Competitiveness Report 2008-09.

The survey will cover top-level business executives operating in Pakistan to capture their opinion on local business environment, said a statement issued on Saturday.

In this regard the CSF is also holding seminars to encourage greater female participation in the Pakistani economy by involving female students.

This initiative will promote competitiveness as a research topic and will forge linkages between academia and the business, said Professor Riffat Saqlain, Dean of Arts and Social Sciences at the Lahore College for Women University. More importantly, it will help bridge business gender gap by including Pakistani female students in the process, she added.

The CSF is an $11.8 million joint initiative of USAID and the ministry of finance. The programme will be interacting with other leading economic, business and journalism schools across Pakistan to create a network of more than 100 students and faculty members to carryout the survey from January to May 2008.

The initiative will also create competitiveness clubs and opportunities for academia to initiate research papers on competitiveness issues.

Support for CSF is part of the $1.5 billion in aid that the US government is providing, through USAID, to Pakistan over five years to improve economic growth, education, health, and governance and to reconstruct areas affected by the October 2005 earthquake.

CSF doing survey on Pakistans economy -DAWN - Business; March 23, 2008


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## Neo

*Investment treaty with Prague likely​*
LAHORE, March 22: A task force has been set up to formulate recommendations for increasing economic cooperation with the Czech Republic with maximum participation of the private sector.

This was stated by Acting Secretary Board of Investment Major (retd) Iqbal Ahmed, who recently returned from the Czech Republic visit, while talking to Lahore Chamber of Commerce and Industry Vice-President Shafqat Saeed Paracha here on Saturday.

Mr Iqbal said that currently both the countries were in the process of signing a Bilateral Investment Treaty (BIT) and an agreement for Avoidance of Double Taxation.

He said that the Czech Republic had huge business opportunities in power, textile, pharmaceutical, leather and construction sectors and the Czech businessmen were ready to initiate joint ventures with their Pakistani counterparts.

Czech businessmen are already doing business in Pakistan particularly in the power sector.

He said that the existing volume of trade between Pakistan and Czech Republic could be increased by a frequent exchange of trade delegations. Lack of information is a hurdle in the way of bilateral trade and chambers of commerce in both the countries should play an active role in this regard, he added.

The economic growth witnessed by Pakistan in recent years had impressed the Czech people and they now considered Pakistan the best place to make investment. There is a need to identify possible fields of cooperation.

LCCI vice-president Shafqat Saeed Paracha said that Pakistans major exports including leather and textile products to Czech Republic constitute a fraction of the Czechs total imports. Its total imports of leather products in 2005 amounted to $176.1 million but Pakistans share in these imports was only $3 million.

Similarly, textile imports from Pakistan accounted for only 2.1 per cent of Czechs total imports of textile products.

He said that Pakistans major imports from Prague included machinery, paper and paperboard and electrical and electronic equipment.

Investment treaty with Prague likely -DAWN - Business; March 23, 2008


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## Neo

*Inflation up by 17.03 percent ​* 
ISLAMABAD (March 23 2008): The SPI inflation surged by 17.03 percent in week ending March 20 over the same period of last year, according to Federal Bureau of Statistic on Saturday. The Statistic Division noted substantial increase in the prices of essential commodities during the last few weeks.

The twice adjustment in the oil prices during the last few weeks had cumulative effect on inflation. The oil prices have been on the rise in the global market for quite some time, but the government had been enduring the difference through subsidies rather than passing on the increase to the consumers.

The increase in pressure on fiscal and current account has forced the economic managers now to pass on the difference at once to the consumers which otherwise would have been gradual. The State Bank of Pakistan has been pursuing tight monetary policy to control the inflationary pressure that it anticipates to persist and magnify in the months ahead.

The inflation led by demand-supply problems, excessive borrowing by the government and delayed but compulsory adjustment in oil prices poses serious threat to the economy. Weekly data on SPI inflation released by the FBS showed that dearness was 19.03 percent for Rs 3000 income group, 18.40 percent for Rs 3001 to Rs 5000 income group, 17.61 percent for Rs 5001 to Rs 12000 and 15.76 percent for families having above Rs 12,000 monthly income .

During the week price of per kilogram tomatoes went up from Rs 36.67 to Rs 40.24, chicken from Rs 90.67 to Rs 95.54, cooking oil tin 2.5 kg from Rs 366.53 to Rs 374.76, vegetables Rs 357.47 to Rs 363. 94, and red chillies from Rs 146.20, to Rs 153.40.

The prices of 27 essential commodities increased during the week while only 11 items declined from the list of 53 essential commodities being used to measure weekly inflation. The list showed that prices of 15 items remained stable during the week but were dearer as compared to the corresponding period of last year.

The SPI bulletin, based on data of 53 items collected from 17 urban centers, showed no let-up for the poor who have to spend more money to buy the same goods every week.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Pakistan committed to achieve MDGs by 2015' ​*
ISLAMABAD (March 23 2008): President Pervez Musharraf on Saturday said Pakistan is committed to achieving the Millennium Development Goals (MDGs) by 2015 through a variety of interventions.

The interventions include real per capita income growth, expansion of schooling particularly for girls, decreasing pupil-teacher ratio, improving nutritional status of children and providing basic facilities in remote areas. The President stated this in a message issued on the occasion of World Water Day.

He said, the Vision 2030 and Mid Term Development Framework being implemented by the Government of Pakistan considers sanitation as an important sector and aim to improve the water, sanitation and hygiene situation in the country in line with the MDGs through the implementation of National Sanitation Policy.

The World Water Day is celebrated on March 22 every year, which provides a unique opportunity to invite attention of the government, the international community, civil society and individuals to take action.

"This year, the theme 'Sanitation matters,' is a call to reach beyond the community and to capitalise on the energy and commitment of the people, and to achieve a common goal to bring global and local attention and to galvanise action, so that every person on the planet is made less vulnerable to water stress, water related disasters and poor water quality," the President said.

The UN General Assembly decided to designate 2009 as the International Year of Sanitation (IYS), with the overall objective of accelerating progress on sanitation to help save lives and foster economic and social development.

"The IYS is expected to build on decisions taken by the Commission on Sustainable Development and help keep the issue of sanitation at the forefront of the global agenda," he added. The President thanked the Ministry of Environment for promoting and co-ordinating preparatory actions for IYS. "Sanitation is one of the basic necessities, which not only contributes to human dignity and quality of life but is a prerequisite to fighting against diseases," he added.

Every year over 1.5 million people particularly children under five world-wide die of diarrhea apart from typhoid, Acute Respiratory Infection (ARI), Avian Human Influenza (AHI) and Polio resulting from inadequate and unsafe water, poor sanitation and insufficient attention to hygiene behaviours.

It is estimated that about 91 million people of Pakistan lack access to improved sanitation, 48 percent of schools do not have access to toilet facility, around 50 percent of the garbage generated by major cities is disposed of, part of which at informal dumping sites.

Recognising the significance of the issue, the Millennium Development Goals (MDGs) agreed to by UN member states, including Pakistan, committed to have by 2015, the proportion of population without access to sanitation, the President added.

Business Recorder [Pakistan's First Financial Daily]


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*World Water Day: Pakistan may face dry spell in 2009 ​* 
ISLAMABAD (March 23 2008): By 2012 with 1200 cubic meters per capita water availability, Pakistan will face its acute shortage with an obvious impact on the availability of food for large population. Experts are of the view that if the water shortage would continue with the same pace then Pakistan might be facing dry spell in 2009.

Every year on March 22 World Water Day is celebrated in the country with full enthusiasm. Various departments spend a lot of money in spreading the message to conserve water. But, unfortunately, these messages only last till that specific day and in remaining 364 days of the year no one takes the pain to remind this to the masses.

However, considering the immense water shortage along with poor sanitation facilities in the country one could see the effectiveness of these messages. According to an international report, water and sanitation related diseases cause 60 percent child deaths in Pakistan, with diarrhoea killing 2,30,000 children under the age of five each year. Whereas, 48 percent of schools do not have toilet facility.

Government in the Medium-Term Development Framework (MTDF) had allocated Rs 120 billion for implementing water supply and sanitation projects during 2005-10, including 50 percent contribution by the private sector.

However, with the beginning of 2008, almost three years have passed and no considerable improvement has been seen in the water and sanitation sector. Besides, Pakistan had been receiving huge sum foreign aid to overcome water and sanitation problems.

The United States Agency for International Development (USAID) has granted $17.9 million to Pakistan for Safe Drinking Water and Hygiene Promotion. Recently USAID has awarded grants to 20 local non-governmental organisations (NGOs) to instruct communities in 10 districts and two Federally Administered Tribal Areas.

These grants will help improve water and sanitation in Sukkur, Jaffarabad, Dera Ghazi Khan, Khanewal, Okara, Bagh, Rawalakot, Neelum, Kohistan, Upper Dir, Bajaur Agency and Kurrum Agency. However, day by day, the water and sanitation problems in the country are increasing. People especially in rural areas are becoming victims of water borne diseases.

Almost one-third of the population has no access to safe drinking water and around 65 percent has no access to adequate sanitation facilities. In Punjab, almost 84 million population relies on unsafe drinking water, fetched from uncovered wells, rivers and rain or canal-fed ponds.

Further, little more than one quarter of the rural population has access to household latrines. The formal launching of 'The International Year of Sanitation 2008'on March 4 no doubt was a good news for the people of Pakistan who had become victim of water and sanitation related problems.

Talking to Business Recorder, the officials of Ministry of Environment said that though up till now the ministry had designed many projects to tackle the issue yet the problem is with their implementation. Besides this, the lack of awareness among the masses about water conservation and sanitation is another big challenge for the ministry.

"It is the time to seriously consider and address these problems otherwise it would badly affect our next generation", said officials. The officials further said that on this World Water Day, the ministry alone is not organising any event rather will be collaborating with its partner organisations.

Business Recorder [Pakistan's First Financial Daily]


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*'Nation steps into new phase of socio-economic development' ​*
PESHAWAR (March 23 2008): The NWFP Governor Owais Ahmed Ghani has said that the nation has stepped into a new phase of its journey towards socio-economic development and consolidation of democracy and this historic day provides us an opportunity to re-affirm our commitment that we would be ready to offer any sacrifice to translate the aspirations of our elders and achieve the real objectives of the creation of this country.

In his message of "Pakistan Day", the Governor said today, the citizens of the motherland are observing Pakistan Day with great enthusiasm. "I congratulate all the countrymen especially the people of NWFP and FATA on this auspicious occasion. In 1940, on this day the Muslims of South East Asia took the firm decision in the shape Pakistan Resolution to create a separate homeland for them and within a short span of seven years they got their dream translated into reality in the shape of Pakistan".

He said Pakistan enjoys an edge over rest of the Islamic countries of the world, because of two factors. Firstly, it was created on the basis of Islamic Ideology instead of racial, geographical or historical factors and secondly Pakistan has become and atomic and military power through its own efforts by applying indigenous resources and today the entire Muslim world has attached aspirations to it. In fact, the emergence of Pakistan was the first step to achieve the far greater objectives, which in fact demand hard work and constant struggle.

Ghani said this day provides us the opportunity to re-affirm our commitment that in the light of the ground realities, we would be ready to offer any sacrifice to translate the aspirations of our elders to bring socio-economic development in every field of life and unity and solidarity will be maintained at every level in the country.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Castrol's new product for diesel engine consumers ​*
PESHAWAR (March 23 2008): The world's leading lubricants manufacturer Castrol has introduced a new product for Pakistani diesel engine consumers' automobiles. The new CRB Plus is specifically formulated to take care of engine wear during start-up and friction while the engine is performing in extreme hot conditions.

The product is being launched in a countrywide campaign, which includes road shows in 12 major cities of Pakistan. The road show in Peshawar was attended and enjoyed by a large number of people including distributors, transport fleet owners and automobiles technology and maintenance personnel.

Castrol CRB Plus is a multi-grade 20w-50 API CF-4 lubricant, available in new easy-to-use pilfer-proof packing. The Perma-stick molecules in Castrol's latest PSM technology cling to engine surfaces even when the engine is switched off. This provides maximum protection during start up. The lubricant has demonstrated protection under engine temperature as high as 300 degrees. The company prides itself at selling not just any engine oil, but "Liquid Engineering.

Business Recorder [Pakistan's First Financial Daily]


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*World Bank to give $16.5 million for water capacity building project ​* 
FAISALABAD (March 23 2008): World Bank will provide 16.5 million dollars to Pakistan for "water resources planning and management", which will support capacity building of and support to Federal institutions involved in Water Resources Planning, Management and Development.

According to the Ministry of Water and Power (MoWP) sources, this proposed project includes, among other things, support for building human resources and institutional capacity in Federal institutions, and support for preparing studies, strategies, and plans for improving water resources planning and management.

Commenting on the "constrained investment climate in the sector", the World Bank project study report revealed that returns to investment in the water sector - irrigation, hydropower, domestic and industrial uses as well as for environment -) were very high in Pakistan.

Despite large needs for investments in the sector to expand water supplies to improve water management and control and to upgrade and modernise the century-old system, the required investments were not forthcoming, resulting in its continued stagnation and deterioration, it said. The report said the lack of investments was becoming a major constraining factor to developing vibrant water and hydropower sectors.

Many of the multipurpose reservoirs, though primarily constructed for meeting water demands for irrigation, actually recovered their cost from hydropower sales, it observed.

It stressed the need for evolving the financing strategy for multi-purpose storage. "So far, the Pakistan government has tapped only public resources for investments in the water and hydropower systems and currently owns major assets in these sectors," the report said. It said hydropower generation provided substantial financial flows and could be of great interest to the private sector if these investments were structured properly.

The WB report pointed out that the extent of the investment required demanded expanding the range of options to include, for example, non traditional methods for financing these infrastructure and involving the domestic and foreign private sector, and perhaps, even privatising the existing assets and/or building public private partnerships (PPPs).

"The main challenge is to structure a water and hydropower investment programme in a manner that would enable the mobilisation of financing from non-traditional sources so that the system investments can keep pace with the growing demands in the immediate future.

"The water sector issues are enormous and complex, and addressing them would require a series of investments and long-term commitment on the part of the government," the WB report said.

The report said the new proposed project would help the government to address issues related to water resources management in the main river system, allowing a transparent way for water flow forecasting, availability, distribution and accounting, and thus building trust.

To help address water policy, technical issues necessary for the investment programme and to assist in developing a financing strategy and a strategic social and environmental assessment framework necessary for the large investment programme the government was planning, it said. Some support would be provided under the project to provinces to develop better linkages between the Federal and provincial systems, the report said.

The support to provinces was being provided under several ongoing and provincial operations such as the development policy loans (DPLs) to Punjab and Sindh water sector improvement project (WSIP) and it would be scaled up under the Barrage Rehabilitation Programmes in Punjab and Sindh and possibly new operations in Balochistan and North-West Frontier Province (NWFP).

According to the WB sources, the bank has a long history of partnership and collaboration with Pakistan, in particular in the water sector. The bank is seen as the trusted partner, co-ordinator for international financing institutions and other development partners.

As a key partner and principal donor, it has provided support to several main interventions in the development of the IBIS. Therefore, the government is seeking support from the World Bank for its knowledge, expertise and experience in the sector, in addition to its financing. This is particularly the case for this project. The bank is, however, expected to play a key role in providing support for:

-- Strengthening water resource management institutions at the Federal (main system level) and continuation of the measures for institutional strengthening already under way in provinces.

-- Support in developing financing strategies for investment programme in water and hydropower sectors. -Strengthening project planning, development and management, ensuring appropriate technical designs, implementation and environmental and social features.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*PC preparing a study on 'Competitiveness and Structural Transformation' ​* 
FAISALABAD (March 24 2008): The Planning Commission is preparing a study on 'Competitiveness and Structural Transformation', with the cooperation of Asian Development Bank, which will be completed by September 2009.

According to official sources, this study will explain the causes of slow structural transformation of Pakistan's economy; prepare four analytical papers on structural transformation in Pakistan; work closely with the Government, policy makers, and entrepreneurs to guarantee that the results of this study are internalised; make policy recommendations; and disseminate the findings through seminars and publications. According to Planning Commission sources, the study would consist of four components. The first paper will provide an assessment of Pakistan's economic structure in terms of what a country produces and how it does it.

This is called the 'product space'. A rapid upward trajectory depends on a country moving into activities that create productivity gains; and, when these are exhausted, shifting again to newer activities that are even more productive. Recent research shows that it is possible to graph, or map, what a country produces and how closely this basket matches what other countries produce. In this way, the possibilities open to Pakistan to diversify production and increase productivity can be analysed in the light of its technological and social capabilities. The analysis will assess Pakistan vis-à-vis other countries in Asia, sources said.

A second paper will examine the quality and sophistication of Pakistan's exports. A strong empirical relationship exists between a recently developed measure of a country's export sophistication and that country's level of income. This relationship suggests that as countries develop they change their export package. The measure also reflects structural transformation. An in-depth and detailed analysis of Pakistan's export structure will provide key information for assessing the speed and direction of its transformation, and for comparisons with other Asian countries.

According to Planning Commission sources, the third paper is a diagnostics analysis of the impediments to structural transformation in Pakistan. Structural transformation does not come naturally; rather, it must be induced by policy. The question is: how? Most often reform is required either to facilitate the transfer of resources across sectors, to develop new activities, or to increase competition. This raises the next question: which reform will deliver the most benefit? The purpose of this growth diagnostics exercise is to pinpoint where a little reform can go a long way, sources explained.

Sources stated that the fourth paper will employ the output of the previous three to propose a plan for industrial development in Pakistan, based on the belief that structural transformation is not automatic but must be induced through policy.

They expressed hope that the study results would be widely disseminated in Pakistan. To address concerns about how the legal and policy environment in Pakistan may affect the development and implementation of a realistic industrialisation plan, consultants and team members would work closely with the Planning Commission. They will also make presentations to the three main stakeholders--the Government, policy makers, and entrepreneurs.

Each group plays a different and important role. The Government must demonstrate the political will to undertake structural transformation. Policy makers must take part in designing the plan, and entrepreneurs will be responsible for carrying it out effectively. Ultimately, the success of the study project depends on whether the stakeholders internalise its key ideas, sources said.

Meanwhile, Pakistan's transformation during the last three decades has not been as fast and as intense as that of the successful Asian economies. A recent ADB analysis of Pakistan's structural transformation during this period included these main findings:

(i) The output growth rates of industry and services are significantly higher than that of agriculture. Given the service sector's high share in output, services account for more than 50 percent of the total output growth rate. The contributions of agriculture and industry are significantly smaller. The service sector also accounts for the largest share of total labour productivity growth.

(ii) Pakistan is a service economy from the point of view of its output structure, but an agricultural economy from the point of view of employment.

(iii) Labour productivity growth within economic sectors has contributed substantially more to overall labour productivity growth than reallocation of labour from agriculture into the other two sectors. Such reallocation plays a minor role overall. Reallocation of labour from agriculture into services has been much more important than that from agriculture into industry.

Business Recorder [Pakistan's First Financial Daily]


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*Motorbike apparel industry expanding in Sialkot ​* 
SIALKOT (March 24 2008): The business community of Sialkot, engaged with Sports Goods industry is making strenuous efforts for producing high quality products to cope with the international market.

Sialkot, which is the hub of cottage industry and famous for producing quality sports goods has now entered into manufacturing of 'Motorbike' apparel and accessories' products, which would be a big ripple in economic activities and fetch a handsome foreign exchange for the country.

Pakistan is next to Italy in producing motorbike apparel and accessories and its production is gaining momentum with the industrial units expanding in the city. Besides, the demand of handmade soccer ball still exists despite the introduction of mechanised soccer balls as the machine made soccer ball had badly failed in producing sustainable results in the Football World Cup.

The Sports Goods sector of Sialkot is the main export sector of the city with total exports of about US $350 million per annum and the city caters to 85 percent of total world demand of hand stitched inflatable balls, which means around 40 million balls annually worth US $210 million.

The city is globally known for production of value-added products and quality production of sports goods, surgical instruments, leather garments, musical instruments and sportswear etc and contributing US $900 million annually to national exchequer. According to a rough statistics the balls are stitched by a work force of over 60,000 including female stitchers.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*KSE hits record high as market welcomes new PM ​* 
Tuesday, March 25, 2008

KARACHI: The Karachi stocks market managed to hit new all time high record level on Monday, as bazaar celebrated the making of civilian government in advance.

Although the gains of the session were not so big the benchmark KSE 100-share Index finished at 15,182 points historical high level - posting an increase of 189 points or 1.26 per cent.

The parallel running junior 30-Index gained 197 points or 1.07 per cent and concluded at 18,509 points. With the most expected election of Yousuf Raza Gilani, the PPP and PML-N coalition candidate for prime ministers slot, who is virtually also backed by all the winning parties in the parliament except PML-Q, the market travelled to new heights in this session, analysts said and added Market expectations eventually came true after closing on the Monday session. 

Although winners outnumbered the losers on board with a big difference, but the day turnover in the ready market was not so healthy and was recorded near to its average level. The overall volume in the ready market was recorded at 260.023 million shares, slightly higher than of 246.411 million shares of last Thursday. Among 371 active issues 205 advanced, 104 declined and 42 remained unchanged. Market capitalisation surged by Rs51 billion or 1.11 per cent to stand at Rs4.637 trillion.

This session surpassed the previous peak level of 15,171 points made on March 12, 2008 - almost two weeks ago. Moreover, the difference between this and previous all time high levels is mere of 11 points.

With an air pocket opening of this session hit the ever-highest historical level of 15,231 points intra-day high in the wee hours - rising 237 points (i.e. 1.58 per cent). Adjustment during rest of the session minimized the gains to the closing level.

Cement giant stocks i.e. Lucky Cement and DG Khan Cement led the runners in terms of volumes they generated on board while energy stocks contributed massive points in 100-Index. Besides, all the favourite sectors in limelight performed in green.

OGDC, PPL, PTCL, JS CO, and NBP respectively included 36 points, 13 points, 15 points 27 points and 15 points in the total surge of leading benchmark. After witnessing a rise of Rs20-25 per bag on March 6, cement companies have again increased ex-factory cement prices by Rs10-15 per bag in the north, reported Bilal Hameed of JS Research and added, Further hike is also expected in near future owing to continuous rising demand of commodity.

The rising cement export prices and expected delay in CFS MK-II implementation deadline fuelled market participants to upload stocks at higher levels, said Ahsan Mehanti of Shazad Chamdia Securities.

Hasnain Asghar Ali of Aziz Fidahusein said that with main focus on the stocks having speculative tendency the rising cement and oil prices can certainly allow the index to maintain current levels on upside for short period. 

Rollover pressure, however, can stop progressive forces to act and exploit the available potential.

Rate of CFS investment rose by 22 basis points to 11.40 per cent with slight decline in investment volume to Rs54.2 billion from Rs54.6 billion pre-opening level. Highest volumes were witnessed in Lucky Cement at 30.586 million closing at Rs140.65 with a gain of Rs4.15, followed by DG Khan Cement at 20.887 million closing at Rs112.30 with a gain of Rs4.40, Oil and Gas Development Company at 17.039 million closing at Rs136.05 with a gain of Rs2.20, Bank Alfalah at 14.122 million closing at Rs53.85 with a loss of 55 paisa and Bank of Punjab at 12.680 million closing at Rs65.65 with a loss of Rs2.27.

KSE hits record high as market welcomes new PM


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*Textile exports fall, gem sector shows growth ​* 
Tuesday, March 25, 2008

ISLAMABAD: Pakistans textile exports fell by 2.92 per cent to $6.83 billion during July-February 2007-08, from $7.037bn in the last corresponding fiscal period, the Federal Bureau of Statistics (FBS) reported.

Interestingly, the gems and jewellery sector, which has great potential to earn foreign exchange and assist the economy, showed a sizeable growth in exports. During the period under review, gem exports were up by 64 per cent to $6.02 million and jewellery by 455 per cent to $121m while in the corresponding period their exports were $3.67m and $21.82m respectively.

Experts believe that in northern Pakistan, there are various rare types of gems and precious stones. By their exports, Pakistan can earn about $5bn a year, but the constraint is that there are no international standard mining, cutting and polishing techniques, which could make them more valuable.

According to the FBS figures, textile sector exports occupied a major share of 58.36 per cent of the countrys total exports, which stood at $11.70bn. During the period under review, total exports showed an increase of 7.82 per cent against $10.85bn.

A cursory look at the export data reveals that in the textile sector, a sizeable decline was registered in the exports of raw cotton, cotton yarn, cotton cloth, carded or combed cotton, yarn besides cotton yarn, knitwear, bed wear, towels, tents, canvas and tarpaulin, while only readymade garments, art, silk, synthetic textiles and made-up articles such as towels and bed wear registered a little increase in their exports.

During the period under review, bed wear earned $1.234bn against $1.29bn of the previous year, showing a decline of 4.72 per cent. Knitwear earned $1.2bn against $1.3bn, depicting a decline of 8.46 per cent. Cotton cloth earned $1.19bn against $1.32bn, showing a reduction of 10.09 per cent. Cotton yarn revenues were $857.72m against $922.61m, depicting a decrease of 7.03 per cent. Towels earned $377.2m against $392.06m, showing a reduction of 3.78 per cent. Tents, canvas and tarpaulin earned $50.40m against $51m with a reduction of 1.19 per cent. Yarn other than cotton yarn earned $33.3m, which is 19.45 per cent less than $41.38m received in the last corresponding fiscal period. Raw cotton exports also went down by 2.47 per cent to $30.88m.

In contrast, readymade garments exports went up by 7.35 per cent to $970.69m, art, silk and synthetic textile by 31.49 per cent to $347.08m and made-up articles (excluding towels and bed wears) exports increased by 15.69 per cent to $341.75m, over what was earned in July-February 2006-07.

Food group exports also increased total exports, which posted a growth of 9.36 per cent to $1.37bn against $1.25bn last year. Among this, major contributors were rice, fruit, vegetables, meat and meat preparation, oil seeds, nuts and kernels.

Rice category as a whole, posted about 8.84 per cent growth with an earning of $794.5m against $730m last year. Fruits earning also went up by 20.17 per cent to $100.57m, meat and meat preparation by 22 per cent to $33m, vegetables by 40 per cent to $31m and oil seeds, nuts and kernels exports up by 158 per cent to $26.7m over the last corresponding fiscal period. Tobacco exports also showed a growth of 8.25 per cent to $6.14m.

However, in this category items which earned less compared to the last year were fish and fish preparation, by receiving $120.25m against $121.6m, showing a decline of 1.14 per cent and leguminous vegetables exports went down by 59 per cent to $1.43m.

Petroleum group and coal exports went up by 36.39 per cent to $703.44m against $515.76m recorded in the last corresponding fiscal period. Other manufacturing group exports also increased to $2.21bn during the period under review as compared to $1.65bn last year, showing an export growth of about 33.68 per cent.

Under this category, leather manufactures exports went up by 20.12 per cent to $438.27m, chemical pharmaceutical products by 50.36 per cent to $389.8m, leather tanned by 41.29 per cent to $264.2m, sports goods by 5.88 per cent to $185.7m and surgical goods and medical instruments earned $154.46m against $112m and posted a growth of about 38 per cent. Engineering goods exports went down by 12.64 per cent to $122.18m, footwear by one per cent to $74.4m and handicraft exports down by 50 per cent to $1.94m.

Textile exports fall, gem sector shows growth


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*Non-textile exports grow by 21pc​*
ISLAMABAD, March 24: Pakistans export of non-textile products recorded over 21 per cent growth during the first eight months of the current fiscal year as it stood at $4.872 billion against $3.817 billion over the same period last year.

Official figures compiled by the commerce ministry showed that for the first time the export of non-textile products witnessed a robust growth during the period under review after a recession prevailed in the sector during the last few years.

This growth was materialised on the back of substantial increase in export of sports goods, leather value added products, surgical goods, medical instruments, cutlery, gems and jewellery, and furniture etc during the period under review over the last year.

An official source said that this growth in export of non-textile products was achieved without any subsidies or support from the government.

He said that the growth in non-textile sector would enable the government to reach closer to the export target of $19.2 billion by end June 2008. The export target is likely to be missed mainly because of dismal performance of the textile sector despite all support.

Official figures showed that export of rice was up by 8.84 per cent during the July-Feb 08 over last year. Basmati rice export went up by 29.66 per cent.

Export of sports goods increased by 5.88 per cent against the same period of last year. Of these, export of footballs, once considered a major item to the world market, declined by 5.3 per cent. However, export of gloves rose by 79.57 per cent during the same period.

Exports of leather garments were up by 38.68 per cent. However, leather gloves declined by 0.77per cent and other leather manufacturers by 79.68 per cent. The engineering goods export was up by 37.81 per cent in July-Feb over the last year.

The export of gur was up by 25.56 per cent, cement 153.54 per cent, molasses 11.43 per cent, furniture 0.56 per cent, jewellery 455.02 per cent and gems 63.89 per cent during the period under review over last year.

On the other hand, the statistics showed that export of the carpets, rugs and mats recorded a negative growth of 2.39pc. Export of footwear declined by 0.91pc.

Of these, exports of leather footwear dipped by 13.31 per cent and canvas footwear by 60.46 per cent. However, export of other footwear recorded a growth of 103.11 per cent. Export of auto parts declined by 3.25pc and engineering goods by 12.64 per cent.

Among the primary commodities, export of meat and meat preparations were up by 22.05 per cent, sugar 100 per cent, oilseeds 157.74 per cent, spices 7.52 per cent, tobacco 8.25 per cent, vegetables 39.94 per cent and fruits 20.17 per cent.

Non-textile exports grow by 21pc -DAWN - Business; March 25, 2008


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*Afghanistan importing 90pc paints from Pakistan​*
ISLAMABAD, March 24: Pakistan has started export of paints to Afghanistan, and over 90 per cent of paint requirements of Afghanistan are being met from Pakistan.

Pakistans geo-strategic location is a great advantage to capture the markets of Central Asia for all products, including paints, said Khawaja Ijaz Ahmed Sikka, chairman of Brighto Paints while talking to APP here on Monday.

Pakistans paint manufacturing units, he said, were now capable of taking on major share in the markets of Central Asian states and other regional countries due to their quality and standard.

He said very soon export of paints would start to Tajikistan.

He said through Afghanistan, Pakistan can take full advantage of its road network, and expand its trade and economic activities.

Referring to his visit to Tajikistan, he said, the Central Asian states have very good road network and there are plenty of chances for Pakistan to expand its trade with these countries through Afghanistan.

Khawaja Ijaz said paint industry had been facing some problems due to complicated administrative affairs in the government and was also under pressure due to complex duty structure ranging from five to 25 per cent.

He proposed that the duty on paints should not be more than five per cent.

Many paint industries from Pakistan have established their brand name in the international market due to its quality, standard and criterion, he said.

Regarding availability of raw material, Khawaja Ijaz Ahmed said besides their import from European countries, China is one of the biggest sources for import of raw material for paint industry.

He said if the government provides assistance and cooperation, the paint industry can start technical training by establishing institutes to further improve the quality and standard of the paints.

Afghanistan importing 90pc paints from Pakistan -DAWN - Business; March 25, 2008


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*Mexico eyes boosting trade ties with Pakistan​*
ISLAMABAD: Mexican government is keen to accelerate the trade and investment activities with Pakistan considering it an important market for its various products, said Ambassador of Mexico, Arturo Hernandez Basave here Monday.

During a meeting with President of Islamabad Chamber of Commerce & Industry (ICCI) Muhammad Ijaz Abbasi, the Mexican envoy said after 50 years of diplomatic relations with Pakistan, his country has recently opened its Embassy at Islamabad to enhance the trade between the two countries. Ambassador informed that Pakistan had established its Embassy in Mexico 40 years ago, whereas since 1981 Consulate General of Mexico has been working in Karachi. Mr Basave said Pakistan and Mexico formed Political Committee and Committee for Trade and Cooperation in 2006 for strengthening political and economic relations with each other. This committee meets twice a year to discuss various political and economic issues and review the progress. 

The envoy said that Mexico would also open a Consulate General in Lahore in near future. Mexico has restricted visa policy for all the countries around the world, which involves certain documentation for grant of visa. He said 84 percent of Mexican trade is with the USA and it is an export-oriented economy, dominated by a mixture of industries and agriculture. Mexico is the biggest exporter in Latin America with overall exports of $267 billion in 2007. 

The ICCI President, welcoming the Mexican envoy said that the overall trade between Pakistan and Mexico was very low, which remained below $100 million in 2006-07. Balance of trade is in favour of Pakistan as the exporters export textiles, rice, sports goods, surgical instruments, pharmaceuticals, chemicals, leather garments, jewellery, gems and jewellery to Mexico to boost exports. 

He said private sectors of both the countries should come forward and interact more frequently to realize existing potential between Pakistan and Mexico. He said there was enormous scope for expanding and developing cooperation in mutually beneficial fields. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Domestic debt rises to Rs 2.944 trillion in seven months ​* 
KARACHI (March 25 2008): The country's domestic debt has gone up by Rs 347 billion to Rs 2.944 trillion during seven months of the current fiscal year in the wake of slowdown in foreign inflows.

The high fiscal deficit and slow privatisation process since Supreme Court decision against Pakistan Steel sell-off has had negative impact on the overall foreign inflows and compelled the government to utilised its local resources to meet financial requirements.

According to the State Bank of Pakistan (SBP), overall domestic debts include permanent debt, floating debt and unfunded debt stocks have registered a growth of 13.37 percent during July-November period of the current fiscal year.

Domestic debt touched new peak level of Rs 2.944 trillion at the end of January 2008 from Rs 2.597 trillion on June 30, 2007, depicting an increase of Rs 347.481 billion during July-January period.

This tremendous rise in debt stock was driven by growth in the floating debt, which includes Treasury Bills (Three Months), Market treasury bills and MTBs for Replenishment, being up by 21.20 percent during this period.

The floating debts touched the level of Rs 1.343 trillion in January 2008 as against Rs 1.108 trillion in June 2007, depicting an increase of Rs 235.013 billion. Permanent debts, including market loan, federal government bonds, income tax bonds etc, have gone up by 8.49 percent, or Rs 46.978 billion, to Rs 599.953 billion from Rs 552.975 billion in June 2007.

Un-funded debt, based on the national saving schemes, went up to Rs 1.001 trillion in January from Rs 936.081 billion at the end of fiscal year 2007, depicting a jumped of Rs 65.489 billion. Economists said that higher fiscal deficit following the high development expenditure and slow privatisation were the main reasons of rising domestic debt.

They said that after the establishment of new political government it is expected that privatisation would go on a fast track, which would help to boost foreign inflows. "The delay in the US logistics payment is another reason of increasing domestic debt. However, as first payment was received in the last week of February 2008, it is expected that next statistics of domestic debt would be lower than current debts," they added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'QIE a model industrial estate' ​* 
LAHORE (March 25 2008): The Quaid-i-Azam Industrial Estate (QIE) has now become a model industrial estate of the country because of the untiring efforts of its board of management, said estate president Mian Nauman Kabir who revealed in a progress report.

He said that special attention has been given towards improving the infrastructure and sewerage system and that these two areas were creating lot of troubles for industrialists. "They were unable to expand their operations because of non-availability of proper network of roads. Now after one year the industrialists of the area can proudly invite their foreign buyers," he added.

He said a most modern security system was established in the area with round-the-clock policing to ensure the industrialists' safety. "Safety gates have been established at all the entry and exit points. He said that not only streetlights were installed but a separate department of solid waste management was also introduced in the QIE," he added. The report also revealed that 10,000 saplings were planted in the industrial estate.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*ADB may provide $50 million for Renewable Energy Plan Tranche-2 ​* 
FAISALABAD (March 25 2008): The Asian Development Bank (ADB) is considering providing 50 million dollars to Pakistan for "MFF - Renewable Energy Development Sector Investment Program, Tranche-2" (Formerly Renewable Energy Development - Project II) to increase energy production and use of clean energy of small to medium-sized hydropower and wind power sources on a financially sustainable manner.

According to Alternative Energy Development Board (AEDB) sources, the Tranche-2 sub-projects are part of Pakistan's integrated renewable energy development investment program, targeting to reach 3.5 percent of the national power generation by 2015. The investment will contribute to boosting economic development through providing adequate and affordable power supply and reduction in CO2 emission in the Northern Areas and Sindh.

The project outcome will be increased energy production and use of clean energy of small to medium-sized hydropower and wind power sources on a financially sustainable manner, official sources added. AEDB sources said the Project outputs include Part A: construction and operation of four small to medium-sized hydropower plants with a total capacity of 54 MW; and Part B: construction and operation of a 50 MW wind farm project.

The country is at a stage where Alternative Energy has become an attractive option to not only produce electricity to bridge the power-deficit on the national grid, but also to provide electricity to remote, off-grid rural areas. The provision of electricity to such areas would generate economic activity, which, in turn, would create Employment Opportunities, Poverty Alleviation and improvement in health and social uplift; meaning Alternative Renewable Energy can effectively play its part in achieving the millennium development goals (MDGs) as well. In addition, 700 MW of wind energy would be made available to the national grid by the year 2010, which would certainly help in meeting the current energy shortfall in the country, claimed AEDB sources.

On Monday, AEDB sources mentioned that Pakistan is facing energy crisis, and every crisis is an opportunity to rise to glory and honour by accepting the challenges it entails. Rising to this challenge and depending on indigenous alternative energy resources is the need of the hour. The Alternative Energy Development Board has accepted this challenge and would continue to strive for realising the Vision-2030 by fully utilising the Alternative Energy Resources available in the country.

AEDB sources explained that the Economic Coordination Committee (ECC) of the Cabinet has approved the policy for use of bio-diesel as an alternative fuel in its meeting held on February 15, 2008. The policy was formulated by the Alternative Energy Development Board and marks achievement of another major milestone in the Alternative Renewable Energy Sector of Pakistan.

Under this policy, the Ministry of Water & Power in coordination with the AEDB shall be the apex coordinating and facilitating body for the national bio-diesel programme.

The gradual introduction of bio-diesel fuel blends with petroleum diesel so as to achieve a minimum share of 5 percent by volume of the total diesel consumption in the country by 2015 and 10 percent by 2025. The Oil Marketing Companies (OMCs) to purchase bio-diesel (B-100) from bio-diesel manufacturers; and sell this bio-diesel blended with petroleum diesel (starting with B-5) at their Points of Sale. The Ministry of Petroleum & Natural Resources shall come up with the fuel quality standards for B-100 and blends up to B-20.

Ogra shall regulate the pricing mechanism of various blends of bio-diesel (B-5, B-10, etc) and ensure its cost-competitiveness with petroleum diesel. All imported plant, machinery, equipment, and selective raw material, eg Jatropha, for use in production of bio-diesel shall be exempted from customs duty, income tax and sales tax.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Karachi's place in the new setup ​* 
ARTICLE (March 25 2008): Karachi's importance in the national configuration can be ignored only at the peril of the country's economic well-being. This feeling of isolation and perceived hostility from certain quarters gets all the more piquant when one ponders on Karachi's contribution to Pakistan movement before independence and the building up of the nation ever since.

With 12% of the country's population living in this metropolis, and generating above 67% of the provincial revenue as well as 65% of the Federal taxes, the share of the budgetary allocations for the city are a mere pittance.

The conditions of civic services, roads, transport, communications, health facilities, educational institutions, the sewerage system, the water supply, and above all the electricity breakdowns and perennial power shortage are nothing to be proud of.

This sense of deprivation and neglect leads to a callous disregard of all civilised behaviour on the part of the citizenry. The mad rush and hustle-bustle of the city, the traffic chaos and incessant noises and pollution pervading most of the city (except the posh areas of DHA and Clifton), drive most people mad and oblivious to the dangers to the life and limbs of themselves and others. Suicidal tendencies thus fostered give rise to extremism and lead some others to terror and other criminal behaviour.

Despite all these disadvantages, Karachi as the only active sea port and the largest business and industrial centre of the country, acts as a magnet to fortune seekers from far and wide. According to one estimate the number of daily new arrivals in the city exceeds 30,000, piling up ever-increasing pressure on the already meagre resources and feeble city services, strained to the bursting point. The daily influx includes an undetermined number of social undesirables and reprehensible characters, who add to the problems of police and other authorities who have no clue of the antecedents of these new arrivals pouring into the city daily and lost in labyrinthine slums of the city.

What this portends for the older city dwellers and established, genuine Karachiites, can well be imagined. They are swamped literally in the multi-ethnic, mostly illiterate rustics coming from all corners of the country with the sole objective of grabbing money, by fair or foul means, the quickest way. Since such people have no ties to the city or its traditions, except the lure of the lucre, and, in fact, lack the very basic modicum of civilised behaviour, the city has become an overgrown village where the law of the jungle prevails.

It is pertinent to ask, as to what percentage of the national and provincial budget are the authorities prepared to apportion for ameliorating the conditions of Karachi and its residents? Also, what share of the top positions in the government are reserved for the 12% of the country's population living in this city?

Business Recorder [Pakistan's First Financial Daily]


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## khanz

whats happening in karachi is making me sick pakistan is probably the only country that kills it's economic heart.
I really hope they start fixing these problems.I went to karachi a while back all i remember is constant power cuts and the roads being in a terrible state.


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## smt

i love karachi, but its the ugliest city in the world iv ever seen, in my opinion, and iv seen quite a few


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## Neo

smt said:


> i love karachi, but its the ugliest city in the world iv ever seen, in my opinion, and iv seen quite a few



Who ever is tired of Karachi is tired of life!


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## Neo

* Industries suffer after major power breakdown ​* 
Wednesday, March 26, 2008

LAHORE: Tuesdays power breakdown has jolted the industry causing losses of billions of rupees to the sector, as industries in major cities remained inactive for over seven hours.

WAPDA power transmission system tripped from Multan to Islamabad, as a result of which all industries in the province came to a screeching halt. Industrial units that have their own power generating units were operational, although the proportion of such industries is very low.

The prolonged power breakdown affected industries in different cities of Punjab including Multan, Sahiwal, Okara, Kasur, Lahore, Gujranwala, Gujrat, Wazirabad, Sialkot and Faisalabad. These industries include ginning, spinning, weaving, dairy, leather tanneries, steel melting and re-rolling, wood and furniture, sports goods and medical and surgical instruments. These industries are considered to be the backbone of the economy, as they contribute a hefty percentage to the countrys foreign exchange earnings.

In Punjab, more than 200 steel re-rolling and melting units are currently operational. Former chairman of the Pakistan Steel Melters Association Mian Muhammad Saeed said that the industry suffered a loss of millions of rupees.

Shiekh Arshad, a renowned leather industrialist, said that businesspeople were facing two types of losses: one in terms of the shutting down of the industry, the loss of which could be recovered by running an extra unit, and the other loss was a result of the declining credibility of businesspeople in cases where orders were delayed, which brought about irreparable losses.

He said that a large number of industrialists, especially exporters, had faced both types of losses. However, small industries, he stated, in comparison with bigger ones, were suffering greater losses, adding that big industries had already made alternative arrangements for electricity due to the ongoing power shortage in the country.

Mubashir Sheikh, a businessman in the plastic industry, said that the plastic industry consisted of cottage, small and medium units. He said that few people in the plastic industry sector had alternative energy arrangements. 

Hence they suffered huge losses as a result of consistent power failures. Another extensive loss borne by the plastic industry was that of raw materials, which due to sudden power outages were retained by machines, making theme useless in most cases.

Industries suffer after major power breakdown


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## Neo

* Tuwairqi to invest in alternative energy ​* 
Wednesday, March 26, 2008

KARACHI: Tuwairqi Steel Mills a subsidiary of the Al-Tuwairqi Group has planned to invest in alternative energy and utilise Thar coal for power generation, said Zaigham Adil Rizvi, Director Projects while talking to The News at the 5th ITIF Asia 2008 being organised at the Karachi Expo Centre.

In view of rising international steel prices, we as a local steel producer have been trying to limit the local steel prices so that they remain within customers reach and not go beyond its control, but steel prices are shooting to all time high with increasing demand. Steel input is rising with the steel prices in the world, Rizvi said.

He said; Karachis atmosphere is business-friendly and overall we are satisfied with the present political situation of the country.He expressed hope that the new government would work to bring more invertors in Pakistan. But the new government would have to work a lot in energy sector because without power industry cannot be run. 

Tuwairqi is participating in alternative energy and focusing on solar energy in Punjab and wind energy in Sindh. When asked would Pakistan be able to use its huge local coal reserves to produce power for steel industry he replied, Steel industry is not much dependent on coal for power generation rather our industry runs on gas, but we are interested to make use of local coal especially Thar coal and surely devised a plan to generate power through local coal in future.

Many countries including China and Korea are erecting total steel structures because of which steel consumption is increasing but steel has an edge over concrete that it can be recycled completely to be used more than once.

We wish that new steel companies come to the steel sector of Pakistan so that more competition benefits our country. The technology that we use in Tuwairqi Steels is very good and efficient; we would use Japanese technology in first phase and German technology in second phase of the steel mill, said Rizvi.

Tuwairqi to invest in alternative energy


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## Neo

*Delays in alternative energy plans irk investors ​* 
Wednesday, March 26, 2008

KARACHI: Pakistan is moving forward in the alternative energy sector but it needs to learn from the experiences of global leaders in alternative energy to cut short the time and endeavours in acquiring reliable alternative energy supply for the country, Gul Ahmed Energy General Manager Danish Iqbal told The News.

Learning from the experiences of other countries in alternative energy would cut down our learning time to half, Iqbal added talking to the scribe during the 2nd International Conference on Alternative Energy and Power (ICAEP) held in conjunction with 5th ITIF Asia 2008 on Tuesday at Karachi Expo Centre.

Adviser to Prime Minister on Alternative Energy Yaseen Malik, inaugurated the 2nd ICAEP along with Alternative Energy Development Board (AEDB) CEO Air Marshal (R) Shahid Hamid. Another investor in alternative energy told The News that the US has added 4,500MW of electricity in alternative energy only last year because of good planning.

Alternative energy plans in Pakistan are being delayed and if this goes on like this the investors will be fed up because it is offensively unpleasant for the investor who has to wait long for even small things to get done, said Mian Sohail Hussain, an investor in alternative energy.

AEDB must have a full fledge office in Karachi to facilitate investors to avoid going to Islamabad wasting time and money even for minor problems. There is potential of around 0.35 million MW capacity but practical steps are needed.

Sindh Government has provided 34,000 acres of land to Alternative Energy Development Board (AEDB) whereas 5 licenses for micro mini hydroelectric projects have been issued in Punjab and three in Sindh, Air Marshal (r) Shahid Hamid, CEO, AEDB said. FZ

Delays in alternative energy plans irk investors


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## Neo

*Outlook negative on Pakistan debt ​* 
Wednesday, March 26, 2008

LONDON: Standard & Poors maintained its negative outlook on Pakistan on Tuesday despite the appointment of a new prime minister as the country still faced tough decisions over its growing fiscal deficit.

The ratings agency said it would keep its B+/Negative/B foreign currency ratings on the country and its local currency BB/Negative/B ratings.S&P said the newly elected coalition government would ease political tensions in the country following the martyrdom of Benazir Bhutto in late December but warned that Pakistans ratings could be lowered if the new rulers proved too distracted to deal with growing economic challenges.

The incoming administration faces the considerable challenge of arresting growing fiscal and external imbalances against deteriorating external conditions, a task Prime Minister Gilani may prove ill-equipped to handle, given an untested and potentially fractious cabinet, S&P said in a statement. 

Outlook negative on Pakistan debt


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## Neo

*FTAs with China, Malaysia to boost Pakistans exports​*
** Countrys exports to China and Malaysia could jump to $4.50 billion and $1.8 billion by 2012​*
KARACHI: Free Trade Agreements (FTAs) with China and Malaysia hold bright prospects for Pakistans export sector to tap the enormous potential in shape of market access to local products.

Under these trade arrangements, countrys exports could jump to $4.50 billion to China and to $1.8 billion to Malaysia by 2012 if the opportunities were exploited by the local industry, said speakers at a seminar on Exploring Pakistans Export Potential in China & Malaysia in the context of the Free Trade Agreements here on Tuesday.

The seminar was organised by WTO Cell, Trade Development Authority of Pakistan (TDAP) in collaboration with Karachi Chamber of Commerce & Industry (KCCI).

Mujeeb Khan, Head TDAPs WTO Cell highlighting various aspects of the FTAs stated that to exploit full potential of these trade arrangements, TDAP has been extending full support to exporters to benefit from it. About FTA with China, Khan said that Pakistan exported goods worth $ 1 billion to China in 2006. Chinese market offers $5 billion potential for all Pakistans exportable products to China, which after zero-rated access would witness an encouraging growth after three to five years.

However, he felt that tapping the indicative potential needs to improve the base of production, quality and competitiveness of their products through enhanced productivity.

As far as FTA with Malaysia is concerned the TDAP official pointed out that total indicative potential for Pakistans products in Malaysian market has been estimated at $1.17 billion against the present level of only $54 million. The benefit given in the form of concessions under FTA can be materialised to achieve the envisaged potential provided tangible efforts in terms of competency level and quality of products is ensured to the requirements of Malaysian buyers, Mujeeb Khan added. On this occasion, some participants of the seminar identified lack of awareness about FTA in the targeted markets and absence of any assessment about the needs of buyers in these two markets.

Khan said that TDAP has taken the initiative to disseminate the information about the FTA with China and Malaysia and added that Business Support Units in various countries are part of the need assessment exercise in various markets.

KCCI President Shamim Ahmed Shamsi said that exporters are confronting various problems in exporting their products to China and Malaysia because most of the exporters are not well-informed about the needs of various products in these two markets. He requested the TDAP to provide details about the needs of these two markets to local producers so that they could enhance exports to these markets.

Daily Times - Leading News Resource of Pakistan


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## Neo

*SECP taking measures to boost investment in stock market​*
By Ijaz Kakakhel

ISLAMABAD: Securities and Exchange Commission of Pakistan (SECP) have taken several steps for bringing more investment in the stock market of the country in the last two years. 

The SECP has developed new products / system, usually know as market development that helps in improving investment in stock market, official documents obtained by Daily Times revealed. Main features of this system are:

Free Float Index: The KSE-30 Sensitive Index based on free float of scrips was put in place with effect from September 1, 2006. There had been a need to introduce a free float index that is a representative of the market as the capitalisation weighted KSE 100 Index was not representative because of over weightage of a few scrips. Free float means proportion of total shares issued by a company that are readily available for trading at the stock exchange. It generally excludes the shares held by controlling directors/sponsors/promoters, government and other locked-in-shares not available for trading. Free-float index gives a much better market representation than indexes constructed on the basis of total market capitalisation of the companies.

Introduction of Cash Settled Futures Contracts Market: Cash settled futures contracts were introduced at KSE on April 2, 2007 subsequent to promulgation of the Regulations Governing Cash Settled Futures Contracts. Cash Settled Futures Market being a derivatives market provides another avenue of source of financing for the Capital Market, increasing the liquidity thereof. 

Unified Trading System Platform: The introduction of a unified trading platform will enable the exchanges to expand their trading activities and enter into a new era which envisages increased trading volumes, better price discovery, and a better quality of trade execution for the investors. The introduction of this trading facility would help reduce fragmentation of our local markets and facilitate the introduction of new diverse products to cater to various needs of the investors, leading to a progressive deepening of our markets. After approval of the Unified Trading System (UTS) Regulations of Lahore Stock Exchange and Islamabad Stock Exchange by the SECP in April 2007, the UTS system started on April 30, 2007.

Daily Times - Leading News Resource of Pakistan


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## Neo

*DDWP approves 32 uplift projects worth Rs 584m​*
ISLAMABAD: Departmental Development Working Party (DDWP), that met at the Federal Board of Revenue (FBR) here on Tuesday under the chairmanship of Member (Administration), approved 32 development schemes at the total cost outlay of Rs 584 million. 

Representatives of the Reformed Units from all the provinces along with officers from Planning Commission, Ministry of Finance and Pak PWD attended the meeting. 

Out of 35 schemes presented before the DDWP, 32 were approved at the total cost outlay of Rs 584 million. The schemes included construction of various offices, which are currently housed in rented premises and construction of residential units for the officers and staff of FBR.

Purpose of the meeting was to consider and approve various projects relating to the offices and residential accommodation of the officers and staff of FBR as a step forward towards 5-Year Infrastructure Development Plan of the Admn Wing of FBR HQ. 

The Admn Wing is carrying out comprehensive and concerted efforts to improve offices of the field formations and also provide suitable residential accommodation to the officers and staff of Income Tax, Customs, Sales Tax and Federal Excise departments.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Investors Protection Bill to be tabled in parliament ​*
ISLAMABAD: The Islamabad Stock Exchange (ISE) will table a comprehensive Investors Protection Bill in the newly elected parliament. Aim of the bill is to safeguard the interests of the general public whose savings are dependent on the integrity and fairness of the well-functioning stock markets, said the official statement issued here on Tuesday. 

The bill, first ever to be introduced and sponsored by a stock exchange in Pakistan, is aimed at making the local stock markets safe, secure, transparent and cost effective for the investors at large. The ISE believes that the bill, once introduced through the sponsorship of some leading parliamentarians, would attract the bipartisan support of all political parties especially the government coalition parties as the same parties, while in opposition, had been voicing their concerns at the presently insufficient standards of market regulation, oversight and enforcement at the countrys stock exchanges.

Broadly, the bill would require the introduction of new measures so as to bring in enhanced level of protection for the investors, and would place a direct responsibility on the Boards and the management of the stock exchanges to investigate and punish all instances of market abuse/fraud. Some of the most important features of the bill are briefly highlighted hereunder:

The bill would require the establishment of an independent National Investors Protection Trust (NIPT) in the country, which would be funded through the redirection of all proceeds obtained by the SECP on account of its levy presently being charged on the stock exchanges transactions from the exchanges, CDC and NCCPL. Moreover, the exchanges would also be required to redirect and regularly contribute their respective investors protection funds to this trust. The NIPT would work on the lines of Securities Investors Protection Corporation (SIPC) of the United States, and its objective would be to satisfy the investors claims and restore all registered securities and cash funds to the investors lying in their respective accounts in the event of the failure/default/bankruptcy of a brokerage firm. 

The NIPT, would however, not be responsible to make good on the losses suffered by the investors on account of their trading in the stock exchanges, but would only be responsible to return the idle securities and cash lying in the respective accounts of the investors at the time of the failure of a brokerage house.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Furniture industry in doldrums due to imports from China ​*
** Prices of a bedroom set have increased by 15 to 25% in one year​*
KARACHi: Furniture industry of the country is facing a tough situation because of increase in raw material prices and unabated import of China-made furniture in the local market, dealers said.

The prices of locally made furniture have increased by 15 to 25 percent, where as its demand has dropped by 30 percent despite the on-going season of marriages, in which demand of furniture for dowry increases manifold, a survey by Daily Times revealed. 

Instead of purchasing full bedroom sets, the families prefer to buy only essential items of furniture for dowry. The prices of almost all raw materials used in furniture making included timber, foam, chipboard, polish material, colour paints and hardware, have increased manifold, having a spiraling effect on the finished products, traders said. 

They said the timber production in the country has declined because of unchecked cutting of forests in the country. Where as, they said, the local furniture industry is threatened by imported furniture from China. The traders feared that if this situation continued for long, Pakistan would become the import market of Chinese furniture. 

Chairman, Karachi Furniture Dealers Group, Atiq Mir, told Daily Times that about 60 percent raw material, used in furniture making is imported from China. Imported items included chipboard, hardware items, glasses, and MDF board. He said due to shortage of timber in Pakistan, the demand of chipboard has increased. The imported chipboard is widely used in manufacturing of bedroom sets. During the last one year, the price of a sheet of chipboard has increased from Rs 800 to Rs 1,000, he added. Besides wooden furniture, the demand of wrought iron furniture has also increased in the country, said Mir. 

The prices of normal wooden bedroom set has increased from Rs 30,000 in the last year to Rs 55,000 to Rs 60,000 this year, he said adding that the price of a bedroom set manufactured from sissoo wood has increased from Rs 80,000 to Rs 150,000. Similarly, the prices of steel furniture have also surged by 60 percent, he added. The price of a steel-made bedroom set furniture was Rs 50,000 last year, which has increased to Rs 60,000. He said the government should pay serious attention on foresting in the country, otherwise 5 million people, associated with this industry would face starvation. aamir ajmeri

Daily Times - Leading News Resource of Pakistan


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## Neo

*Experts predict minimum wheat crop this year​*
ISLAMABAD: Speakers at a seminar on Assessment of right to food and food security in Pakistan on Tuesday claimed that wheat production would hit lowest level as compared to the production of last several years. 

Higher prices of fertilizer, non availability of water at the time of swing, higher prices of other inputs and not announcing wheat support price before harvesting time were the main factors responsible for expected lower wheat production. The government has planned to procure only 5 million tonnes out of total wheat production target of 24 million tonnes this year. But the government failed even to announce wheat support price for such quantity. 

The speakers also claimed that wheat import was not the demand of people and it was only policy of the establishment for earning money. They expressed dissatisfaction that even wheat balance sheet was not available with the government. 

Action Aid organised the seminar with the collaboration of SAAG (Sustainable Agriculture Action Group) here on Tuesday at a local hotel. Program Development Expert (UNIDO), Sohail Mohammad Khan, presented his research paper on Assessment of right to food and food security in Pakistan. He said that the progress in attaining food security was slow and uneven up to the present time at global level. This situation was likely to continue in to the 21st century unless concerted efforts were made to remove the obstacles to food security and promote overall rural development and poverty eradication. 

About Pakistan he said, the last two years figures of most food production items support the argument that as a whole Pakistan was moving towards a net food insecure country. He said Pakistan had been importing significant quantities of wheat and pulses to feed the fast growing population of the country for almost four decades. ijaz kakakhel

Daily Times - Leading News Resource of Pakistan


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## Neo

*Govt urged for value addition in fruit sector​*
* For the last many years, fruits and vegetables exports are falling short of target, and compared to other countries of the region

KARACHI: Fruit and vegetable exporters have demanded the new government of Pakistan Peoples Party Parliamentarians (PPPP) to focus special attention on value addition in fruit sector to accomplish desired goal of enhancing countrys export to substantial level. 

As claimed by leading fruit exporters, all efforts by successive previous governments to increase quantum of fruit and vegetable exports have so far failed to accomplish desired results mainly due to lack of good agriculture practices leading to poor quality and appearance of exported items. 

Consequently for the last many years, fruits and vegetables exports are falling short of target, and compared to other countries of the region, Pakistan is lagging far behind in export targets. 

Majority of exporters blamed the dismal export situation owing to lack of official interest towards enhancing countrys export as despite bumper crop of fruits and vegetables during the last several years, their export remain stagnant.

Talking to Daily Times, Abdul Wahid, Chairman All Pakistan Fruit and Vegetable Exporters Association (APFVEA), termed the miserable export situation owing to lack of value addition.  All efforts by the stake holders of fruit and vegetable exports to convince successive governments about importance of value addition and its significance in enhancing export to several folds compared to the present level has failed to yield any tangible result he added. 

Citing vital aspect of value addition towards upgrading fruit export, Chairman of the APFVEA claimed that Mango, regarded as vital fruit item for export purpose always drawing high demand world over, hardly costs $ 400 per tonne. The same Mango, after the value addition including Mango pulp process, can fetch $1200 to $1600 per tonne in the international markets.

Ironically out of 3 million to 3.5 million tonnes of local mango production in Punjab and Sindh, hardly 1,00,000 to 1,25,000 tonnes are exported while the rest are either wasted or used for domestic consumption. He said subjecting Mango to value addition process can fetch the country billions of dollars annually. 

Similarly, he said, out of two to two and half million tonnes of Kinnow, produced only in Punjab province, hardly 1,25,000 tonnes are used for export purpose while majority of the yield is either used locally or due to lack of storage facility, is wasted.

The export price of Kinnow is $600 per tonne in the international market and the same fruit after the value addition process including pulp form can fetch upto $1000 per tonne.

Converting the fruit in pulp form, can help increase export value to several billions of dollars thus pushing countrys export to new heights.

According to him, an overwhelming majority of population prefer using juices and by converting our fruits into pulp form, exporters can take advantage of this growing trend of enhanced juice consumption.

Replying to a question, he said, only a single factory named Kargil, is operating in Sargodha district, where Kinnow is processed and converted into pulp form.

However, it is incapable to handle such large quantity of kinnow arriving during the peak season from all over the district simultaneously. 

Consequently due to delay factor, majority of the fruit either perishes or due to extra-ordinary delay, it is sold in the open market at much lower rates causing loss to the growers. 

Abdul Wahid, said similar problems are faced by onion, potato and other vegetable growers as due to lack of value addition, these two items are unable to fetch substantial price in the international markets causing financial loss to the growers.

He urged the new government to pay special attention on good agriculture practices and emphasised on value addition process and improved storage facilities.

Daily Times - Leading News Resource of Pakistan


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## Neo

*US has pumped $12.28bn into Pakistan since 2002​*
WASHINGTON: The US extended $7.74 billion in security-related assistance to Pakistan between financial years 2002 and 2008, against $4.53 billion that went towards the countrys economic support.

According to Alan Kronstadt of the Congressional Research Service, the bulk of the military-related assistance went to Coalition Support Funds ($5.56 billion), followed by Foreign Military Financing ($1.57 billion), International Narcotics Control and Law Enforcement, including border security ($267 milliion), Counternarcotics Funds ($131 million), Frontier Corps training and equipment ($75 million), Nonproliferation, Global Training and Equipment ($53 million), non-proliferation, Anti-Terrorism, Demining and Related support ($52 million), and International Military Education and Training ($11 million). As for economy-related assistance, the bulk of it went to the Economic Support Fund ($2.43 billion), followed by Export and Investment Assistance ($1.43 billion).

The Export-Import Bank accounts for about 75 percent of this amount, while the Overseas Private Investment Corporation accounts for the other 25 percent. Of the rest, Development Assistance represented $286 million, followed by Food Aid ($204 million) and Child Survival and Health ($137 million).

Daily Times - Leading News Resource of Pakistan


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## Neo

*MOL Pakistan signs $119m contract​*
ISLAMABAD, March 25: MOL Pakistan, the operator of Tal Block on has signed a $119 million contract with the consortium of PDIL for the development of Manzalai Field Surface Facilities.

Managing Director of MOL Pakistan Janos Feher and CEO of PDIL Muhammad Khawar Khan signed the contract, according to a company announcement here on Tuesday.

Manzalai field is located in Karak and Hangu districts of the NWFP.

The target of the project is to produce 200 MMscfd natural gas and 4,000 BPD condensate as the second stage of the Manzalai Field Development.

Together with the first stage the planned production from the Manzalai Gas field will be 250 MMscd and 4,500 BPD condensate.

The contract also sought to construct a central processing facility comprising of two 150 MMscfd capacity gas processing trains, supporting utilities, residential facilities for operators and four remote gathering stations and 7 wellheads on turnkey (EPCC) basis.

MOL Pakistan is the operator of the block and JV partners include Pakistan Petroleum Ltd, Oil & Gas Development Company, Pakistan Oilfields Limited and Government Holding of Pakistan. PDIL, represents a consortium Presson Descon International (Pvt) Ltd, Descon Engineering Ltd, Enerflex Systems Ltd.

The members of the consortium are assigned for project management, engineering, procurement, process engineering, fabrication and supply of process equipment, fabrication of equipment and site construction.

MOL Pakistan signs $119m contract -DAWN - Business; March 26, 2008


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## Neo

*S&P maintains negative outlook on Pakistan debt ​*
LONDON (March 26 2008): Standard & Poor's maintained its negative outlook on Pakistan on Tuesday despite the appointment of a new prime minister as the country still faced tough decisions over its growing fiscal deficit. The ratings agency said it would keep its B+/Negative/B foreign currency ratings on the country and its local currency BB/Negative/B ratings.

S&P said the newly elected coalition government would ease political tensions in the country following the assassination of former prime minister Benazir Bhutto in late December but warned that Pakistan's ratings could be lowered if the new rulers proved too distracted to deal with growing economic challenges.

"The incoming administration faces the considerable challenge of arresting growing fiscal and external imbalances against deteriorating external conditions, a task Prime Minister Gilani may prove ill-equipped to handle, given an untested and potentially fractious cabinet," S&P said in a statement.

S&P revised the outlook on the sovereign rating on Pakistan to negative from stable after President Musharraf imposed emergency rule on November 3. He lifted the emergency after six weeks.

RISKS: Analysts in Pakistan said the decision to maintain the negative outlook was a realistic reflection of the problems the new government faced. "Some were expecting initially the outlook to be changed back to stable after smooth elections but S&P has rightly pointed out that there are risks on the fiscal and external side," said Mohammed Sohail, director of Equity Broking at JS Global Capital Ltd.

"This shows their focus has moved from politics to Pakistan's economy," he said. Finance Ministry data released this month showed the fiscal deficit for the first half of the July to June fiscal year was 3.6 percent of gross domestic product (GDP), compared with 1.9 percent a year earlier.

Analysts expect the budget deficit this fiscal year 2007/08 to hit 5 percent of GDP or more, overshooting a target of 4 percent. Trade deficit widened to $2.104 billion in February, compared with $1.30 billion in February last year, the Federal Statistics Bureau said.

Consumer price index (CPI), a key indicator of inflation, rose 11.25 percent in February from a year ago, the bureau said. "The positive thing is that they have not downgraded Pakistan and this states generally what we already know about the economic challenges," said Asif Qureshi, head of research at Invisor Securities Ltd. "The new government will have to show a very serious resolve on the economic challenges facing the country," he said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Major power breakdown hits Islamabad, Lahore ​* 
LAHORE (March 26 2008): The provincial metropolis and Islamabad were without power on Tuesday following a technical fault at the Gutti 500kv power transmission in Multan paralysing life and industrial activities.

The irritating and repetitive power-cuts have prompted a five-member committee headed by senior Technical and Planning Manager Arshad Raza to submit an inquiry report within 72 hours. Pakistan Electricity Power Supply Company Managing Director Munawar Baseer told a press conference on Tuesday.

The power went off at 0905 hours when the 500kv in Multan's Gatti transmission line tripped after the technical fault, resulting in the tripping of other 500 and 220kv transmission lines and loss of 2600mw generation - apparently 25 percent of the available generation capacity.

Baseer said the inter-tripping system put in place by the National Transmission Distribution Company prevented the system from collapsing and damaging the 500kv and 220kv system equipment, such as transformers and generators.

About the subsequent chain of events, he went on to say the inter-tripping scheme had split the system into two parts - North and South of Multan - and limited the power disruption to only the North. The power system South remained normal, he added. "The Southern Punjab, Sindh and Balochistan continued getting power. The power supply through Karachi Electric Supply Company has also remained unaffected," he said.

He also said the National Power Control Centre in Islamabad acted under the Emergency Response System and restored the power to Islamabad at 0947 hours by interconnecting the Mangla system through 220kv Mangla-Rawat line. The Tarbela Hydel Power Station and Tarbela-Sangjani line were restored. The 220kv and 500kv systems to Lahore, Faisalabad and other areas were partially restored by 1430 hours and fully restored at 1513 hours. He told reporters that the committee would submit a comprehensive report covering the analysis of network operations, protective system in place and anomalies.

"The committee will then present clear recommendations and specific solutions in the network protection and control system to avoid such mishaps in the future," he added. He said his company had set up state-of-art call centres in FESCO, LESCO and IESCO under the company's supervision and also rental powerhouses and rehabilitation of the existing thermal power plants.

He went on, "The company is pursuing a plan in two ways - one from the demand side and the second from the supply management. Targeting of 1800mw for 2008, the company is adding 425mw on a fast-track rental generation, 550mw by adding a new rental plant and 300 more by rehabilitating the current GENCO owned generation plants. PEPCO has targeted 1850mw in 2008 by energy conservation initiatives. As earlier mentioned, PEPCO has achieved its target of 500mw of saving by the energy conservation campaign. Further, a medium-term plan to enhance the generation capacity of 6100mw has also been articulated."

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*US share in foreign investment reaches 56 percent ​* 
KARACHI (March 26 2008): The United State of America (USA) share in overall foreign investment has reached 56 percent, exceeding the one billion dollar mark in first eight months of current fiscal year 2008. Analysts said that Pakistan is the one of the major strategic partners of USA in its "war on terror" due to which, trade relations between the two countries are improving.

Consequently, there has been a sharp rise of US investment during last few years. Statistics show that after 9/11 and with the initiation of "war on terror" the USA investment in Pakistan is increasing and it is likely to touch all time high level during the current fiscal.

"We have gained some economic benefits against our support to US on its 'war on terror'. However the overall losses are more than the benefits," they opined. USA investment has increased by about 33.4 percent or $368 million to $1.468 billion during the period of July-February of current fiscal year, as compared to $1.10 billion during the corresponding period of last year.

According to SBP statistics, in the first eight months of the current fiscal year, overall foreign investment stood at $2.641 billion, out of which USA share is $1.468 billion, or 56%,as against the about 23 percent ($1.1 billion} during the corresponding period of last fiscal year.

In fiscal year 2001-02, when war against terror was started, USA investment in Pakistan was $324.7 million, and since then, it has risen gradually, and now exceeded the $1 billion dollar mark. USA is also the leading country in sector-wise investment in Pakistan, as it has the highest share in both portfolio and foreign direct investment.

USA investors have put up $458.9 million in portfolio investment, which is highest by any country during the current fiscal. In FDI, USA share is 40 percent, as its entrepreneurs have invested about $1 billion during the period of July-February of current fiscal year.

Analysts pointed out that better returns in Pakistan, yielding about 40 percent return during the last year, have attracted USA investors to the country's stock market.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Pakistan can increase its share in markets of China and Malaysia' ​* 
KARACHI (March 26 2008): Pakistan has got best opportunity to increase its share in 791 billion dollars import market of China and 131.13 billion dollars import market of Malaysia by improving its marketing strategy, products quality and presentation said Mujeeb Ahmed Khan, Head of WTO Cell, Trade Development Authority of Pakistan (TDAP).

Addressing a seminar on "Exploring Pakistan's export potential in China and Malaysia in the context of the free trade agreement" organised by Karachi Chamber of Commerce and Industry (KCCI) in collaboration of TDAP on Tuesday, he said that Free Trade Agreement (FTA) between Pakistan and China has become effective from July 1, 2007.

He said that under the agreement 2,581 items which comes under fast track constituting 35.5 percent would be gradually zero-rated within three years, 2,604 items comes under normal track on which tariff would be lowered to 5 percent and then to zero percent within five years.

He said sensitive list comprising of 1,133 items, out of which 604 items equivalent to 15 percent of the total items have been declared highly sensitive by China while 529 items fall under sensitive list track two. These items have been given reduction on the basis of margin of performances by 50 percent and 20 percent respectively. The rest of 15 percent items have been fully protected, as they have not been given any concession.

He said that Pakistan will get zero-rated market access within three years on various industrial sectors including industrial alcohol, cotton fabric, bed linen and other home textile, marbles, leather articles, sports goods, mangoes, citrus fruits and other fruits and vegetables, iron and steel products and engineering goods.

Other products which will be benefited from FTA comprises chemicals, fish, dairy sector, frozen orange juice, plastic products, rubber products, leather products, knitwear, woven garments etc.

He said that tariff reduction modality under the FTA has been developed to achieve the twin objective of gradual regularisation of trade with China while providing adequate tariff protection to the existing industry as well as future investments.

Eliminating or reduction of customs duty on raw materials and intermediate goods will make Pakistan's exports competitive not only in China and Malaysia but also in the global market. The FTA would also help Pakistan to improve its balance of trade with China and Malaysia.

He noted that China import petroleum oils obtained from bituminous mineral worth 47.7 billion dollars and was reported as the 3rd largest importer in the world. Pakistan's export size was estimated at 13.9 million dollars to the world, but nothing to China. However this item has been excluded from the Pak-China FTA.

Referring to Malaysia, he said that this was the first bilateral FTA between two Muslim countries and also first comprehensive FTA incorporating trade in goods, trades in services, investment and economic cooperation.

Exports from Pakistan were being subjected to higher tariff in Malaysia as compared to similar goods exported from Asean member countries. Resultantly, Pakistan was losing market in Malaysia for its core export products. This agreement would provide a level playing field to Pakistani products in Malaysian market.

He said Malaysian imports from Pakistan grew only by 5 million dollars during last five years, depicting insignificant annual growth of 1.58 percent while Malaysian exports to Pakistan increased from 525 million dollars to 842.5 million dollars. Balance of trade is in favour of Malaysia. Palm oil constitute 50 percent of the total exports from Malaysia to Pakistan, he added.

He said sports goods and surgical items have been given duty free market access from January 2008. Malaysia has allowed electric fans imports at 20 percent duty by 2010, at 15 percent duty by 2013 and thereafter it will be further reduced to 10 percent.

Except men and boys knitting shirts, Malaysia has given preferential market access to almost every products which includes top 50 exporting commodities of Pakistan, which is not covered under FTA and clothing sectors will not be zero rated by 2015.

Chairman, Export Sub committee of KCCI Shariq Vohra said that China with 1.4 billion people spread over 31 provinces will be the world's largest economy by 2025 and its GDP will be higher than USA. Pakistan should take advantage of its geopolitical location and do something to penetrate in this market. Welcoming the guests, president KCCI Shamim Ahmed Shamsi express concern over non-existing of comprehensive data on import, export and goods produced in the country. He said in the absence of comprehensive data, no planning could be made in respect of import, exports and production.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Ericsson wins expansion order​ *

STOCKHOLM (March 26 2008): Telecom equipment maker Ericsson said on Tuesday it had won an order to expand and upgrade the GSM/GPRS network of Pakistani operator Warid Telecom. Ericsson, the world's biggest mobile network maker, said it would supply and install core radio, microwave and optical transmission network equipment. It gave no financial details of the deal.

Business Recorder [Pakistan's First Financial Daily]


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## opinion786

*Pakistans Economic success: Mercy of 9/11 or Macro-Economic Policies?​*
Afreen Baig

The 1990s was a lost decade for Pakistan, mismanagement at its helm and corruption rampant. Formation of failed policies, coupled with sheer incompetence and lack of commitment, kept deteriorating the economy of the fragile Country. Benazirs era was further characterized by ungoverned manipulation and personal extravagance of her husband Zardari. 

By 1999, not only were the $10 billion Foreign Reserves misspent without any accountability, but it also shattered the confidence of our nation. Expatriate Pakistanis kept a cautious outlook of the situation and held their foreign reserves back. 

In 1999, Revenue generation of around Rs.308 billion could not meet the growing expenditure requirements; with only an average of Rs.80 billion being spent on Public sector development programs (PSDP) annually, and no visible project to boast about. From this Rs.308 billion around 65% was being utilized for debt servicing. In 1988 Pakistans foreign debt was $18 billion, but at the end of 1999 it had accumulated to become $38 billion. A 100% increased burden on the already crippled economy. Public and external debt exceeded 300% of Foreign exchange earnings. Pakistan had become a highly indebted poor country. Poverty levels also increased to become 35% according to economic survey. This glooming situation was not being dispelled.

While the world was progressing, Pakistans economy was stagnated. Overall there was a feeling of despondency and uncertainty. It not only lowered the morals of the business community, but also affected adversely the Foreign Direct Investment (FDI). Foreign Investment started diverting to other promising Asian markets, especially that of India for their future prospects.

Nawaz Sharif and Peoples Party often lament that during their tenures US and IMF Aid was suspended; and that President Musharrafs government received huge aid after 9/11 to overcome the economic problems. To set the record correct, USA and IMF aid was suspended only after the Nuclear Atomic blasts of May 1998, but that too was RESUMED later that year in November, a week before Nawaz met President Clinton in USA. Before May 1998, the governments of Nawaz Sharif and Benazir Bhutto well-received worldwide aid and assistance from USA, IMF, OPEC, European countries, ODA & OOF bilateral agreements and World Bank.

The inheritance of the ailing economy that took place after October 1999 was not an easy task for the leadership of President Musharraf. Pakistan needed quick reforms, resource allocation, stabilization of policies and alluring back the Foreign Reserves and Foreign Direct Investment. 

A misperception persists within some critics that attribute completely the turning around of Pakistans economy to: US aid or 9/11. Therefore, let it be clarified that major economic indicators had improved before 9/11, and the economy had already started showing signs of recovery and revival.

In that *SHORT* span of 2 years *BEFORE 9/11*, Pakistans revenue increased from Rs.308 billion to become Rs.395 billion. Exports increased from $7.5 billion to become $9.2 billion. Foreign Reserves increased from $1 billion to become $3.25 billion. Debt servicing as a ratio to Revenue decreased from 65% to 57%. Public and external debt as a percentage to Foreign exchange earnings declined from 300% to 250%. Current account deficit decreased from $2.4 billion to become $510 million. And, Pakistans large-scale manufacturing grew by 11% in June 2001 against 3.5% in 1998. These facts should set aside the skeptical grumblers.

Therefore, the entire credit of stabilizing Pakistans economy goes to the visionary decisions, sustained macro-economic policies and financial reforms of President Musharraf and the Prime Minister Shaukat Aziz. These also highlight their good intentions and ultimate honesty. Their sense of duty towards the country, honesty and the genuine resolve to address the problems does not arise from 9/11. Unlike their predecessors who swept problems under the carpet.

Now countering the other most popular allegation, i.e. US aid enabled the recent economic achievements. 

The annual flows Pakistan has received during the last six years amount to approximately $ 1.75 billion from all types of US assistance - military, economic, and reimbursements for logistics support. Of these flows, the aid  military and economic accounts for $ 700 million annually. 

This amount is 4.5% of total foreign exchange receipts, 7.2% of total budgetary expenditures, 6.4% of total value of Imports, 4% of total Exports and 5.8% of current account receipts of Pakistan. As a proportion of GDP of Pakistan these gross flows from all sources work out to only 3%. *Negligible!*

These figures by all means indicate the strength of Pakistans booming economy and establish the FACT that Pakistan is no more dependent upon US or foreign aid. Pakistans economy has managed to wriggle out of their clutches.

Pakistans economy grew at 6.5% to emerge as a $160 billion economy in 2007. Pakistans Revenue now stands above Rs.700 billion; as they increased by above 100% in just 7 years. The FBR estimates that there are now around 2.8 million Income Tax payers. A fully functional Tax Management System (TMS) was implemented on International standards with the assistance of World Bank.

Pakistans Public sector development program (PSDP) spending increased by above 400% to become Rs.520 billion. This has initiated major infrastructure programs throughout the country, including 7 Motorways and several Highways. Bridges erected and underpasses paved. 18 new Universities are already functioning and 9 Engineering Universities under construction.

Financial reforms enabled Pakistan to emerge as the 3rd best in Banking profitability according to IMF. Pakistan globally ranks 10th most active in perusing pro-business policies. The Infrastructure Industries Index in 2007 recorded a 26.2% growth in Industrial sector of Pakistan, with large-scale manufacturing growing at 11%. The Securities and Exchange Commission of Pakistan (SECP) registered 1,135 companies in first quarter of 2007. The IT industry registered a 50% growth. 

Under President Musharraf, the government spent over $ 16.7 billion on poverty alleviation programs, and managed to reduce poverty from 35% in 2000-01 to 24% in 2006-07.

The Foreign Direct Investment that the President and the PM managed to attract back into the country is entirely due to their credibility, professional wisdom and personal interaction with the world. Their visionary plans predispose the world to trust them. FDI increased by $ 5.1 billion, for a year-on-year increase of 45.6%.

We as a nation should acknowledge Pakistans accelerating prominence in International relations, give credit open heartedly where something is achieved and criticize positively only to achieve something better. Cynicism and despondency should be avoided. Pakistans National interest should be held foremost and without compromise!


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## opinion786

Economics in nutshell:

 9 world class Engineering universities being developed and 18 Public universities already developed. 

 Private sector institutions have increased from 36,096 (in 1999) to become 81,103 (in 2006). 

 PAK is 3rd best in world Banking profitability. 

 PAK IT industry now values around $2 billion, including $1 billion exports and employs around 90,000 professionals. 

 About 80,000 direct & 500,000 indirect jobs have been created only by the Telecom sector. 

 Industrial Parks are being setup throughout the country for the first time! M3 estate, Sunder industrial estate, Chakri, etc. 

 Major Mega projects like the Saindak, Rekodiq, Marble production, Coal production and Mining & Quarrying are being pursued. 

 In 2006, GDP growth is 6%. Earlier in 1999 was 3.5%. 

 Foreign Reserves from $1 bn to $17 bn. 

 KHI stock market: from 700 points to 13,000 points. 

 Literacy rate improved by 11%. 

 Poverty decreased by 10%. 

 He made 4 dams: Mirani, Subakzai, Gomalzam, Khurram Tangi dams. 

 6 Motorways completed or under construction: M1, M3, M8, M9, M10, M11. 

 Six major highways under construction. 

 GWADAR advance mega Sea port developed under his vision! 

 Historic 100% increase in Tax collection of $11 billion. 

 Large scale manufacturing is 30 year high, and Construction activity is 17 year high. 

 Newly found World class copper- gold deposits in Chagai will fetch $600 million per year. 

 A new Oil refinery with UAE will fetch $5 billion & will process 300,000 oil barrels a day. 

 CNG sector has attracted over $70 billion investment in last 5 years; and created 30,000 jobs. 

 Industrial sector registered 26% growth. 

 PAK in 1999 was a $75 billion economy; and now 2006 it's $160 billion economy! 

 PAK economy is now the 3rd fastest growing economy after China & India. 

And, I have many more.... will post later.....


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## Neo

*KSE hits new record, rises 76 points ​* 
Thursday, March 27, 2008

KARACHI: Continuously rising Karachi stock market again closed at a new record level on Wednesday as leading benchmark 100-share index closed just one point short of the resistance level of 15,200. 

The KSE 100-share index moved up by 76 points or 0.50 per cent and ended at 15,199, the highest-ever level. The parallel running junior 30-index rose by 143 points or 0.77 per cent and ended at 18,588 points. Amicable resolution of some controversial issues in the market i.e. CFS MK-II, persistently mounting cement prices in the north of the country amid increasing export of this commodity, and exploitation of newly-found oil and gas reserves in NWFP altogether invited notable fresh investment in relevant stocks on the KSE, analysts said. 

They maintained banking, telecom and fertiliser sectors also performed well in the sky-rocketing market, but a few blue chips including EFU General Insurance, OGDCL and FFBL failed to end in the positive column. 

With the opening, the 100-index briefly touched 15,263 points, the intra-day high, in early trading, posting the days maximum gain of 140 points. Profit-booking at available margins trimmed the days high gains by the close of market. 

The day closing level of 100-Index surpassed previous peak historic closing level of 15,182 points achieved on Monday, March 24. The difference between the Mondays and this session peak levels was just of 16 points. Trading volume in the ready market was not astonishing and recorded at 219.459 millions shares, which were slightly up against 215.919 million shares changed hands yesterday. 

Rollover week in progress helped future market turnover enhanced marginally as well and registered at 77.332 million shares as compared to 73.050 million of a day earlier. Accordingly, the overall market capitalisation rose by Rs29 billion and improved to Rs4.647 trillion. 

Relaxation in cash margins, which were earlier required to avail financing under CFS MK-II and subsequently gradual application of submitting 100 per cent cash margins by June 2008 encouraged optimistic investors opted for accumulations on fundamentally strong counters, said Hasnain Asghar Ali of Aziz Fidahusein and added that cash deposit had been waived in the new structure up to Rs85 billion. 

Foreign markets rebounded as US economic outlook improved, which were earlier affecting local market sentiment amid SCRA balances improved to $5 million for this fiscal year. The encouraging news improved the confidence level of local investors at KSE too, said Ahsan Mehanti of Shahzad Chamdia Securities. 

The cement manufacturing companies have once again improved their ex-factory prices in North by Rs7-8 per bag where the Pakistani cement demand in Middle East and other parts of the world was rising. 

After witnessing a rise of Rs10-15 per bag on March 24, 2008, cement companies, with a gap of one day, have again hiked up ex-factory cement prices by Rs7-8 per bag in the North. With this spike, average ex-factory cement prices of JS universe cement companies now stand at Rs247-252 per bag, said Bilal Hameed of JS Mild surge in international oil prices and plans of MOL to develop Manzalai fields invited local players to invest more in related scrips, said another analyst. 

The broader market remained in favour of bulls with 175 companies stocks advanced against 148 scrips declined in red region. The value of 40 stocks remained unchanged with total 363 active counters in the market. 

Highest volumes were witnessed in JS Bank at 17.677 million closing at Rs21 with a gain of Re1, followed by Lucky Cement at 15.572 million closing at Rs138.90 with a gain of 70 paisa, DG Khan Cement at 11.925 million closing at Rs111.65 with a gain of Rs1.60, Pak Oilfields at 11.486 million closing at Rs376.40 with a gain of Rs6.80 and Oil and Gas Development Company at 10.566 million closing at Rs134 with a loss of 80 paisa. 

KSE hits new record, rises 76 points


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## Neo

*Work starts on palm tree cultivation in Balochistan ​* 
Thursday, March 27, 2008

KARACHI: Pakistan Oilseed Development Board (PODB) has started work on a big pilot project to cultivate palm trees in Balochistan to see if Pakistans reliance on imported edible oil could be reduced. 

The project that involves plantation of palm trees over 12,000 acres of land in District Uthal is very significant since the price of palm oil in the international market has surged to a record high, PODB Project Director Waris Sheikh told The News on Wednesday. 

Local production of edible oil is only 30 per cent of total consumption, he said. And most of it is met from cotton, sunflower and canola seeds. Pakistans total consumption of edible oil is three million tonnes and it pays hundreds of millions of dollars annually on import of palm oil from Malaysia and Indonesia to meet large part of its demand. 

The edible oil price more than doubled to Rs140 per kg from Rs62 in January 2007 after the hike in imported cost of palm oil that peaked at $1,400 per tonne against $450 a year back. PODB plans to take up edible oil production from locally-produced seeds to 50 per cent by 2010-2011, Sheikh said, adding palm trees could be planted in Thatta, Badin and Tando Allahyar regions of Sindh and the whole coastal belt in Balochistan. 

Though the endeavour to start local plantation of palm trees will take many years, he said, past experience has proved that it is possible if farmers are enticed towards it through monetary incentives. 

Cultivated area under sunflower has increased to 550,000 acres from 43,000 acres in the last five years, he said, adding that happened after government increased taxes on imported sunflower seeds, increasing demand for local produce. 

He said a better support price for domestic sunflower seeds also helped in motivating farmers. The government-fixed support price has been taken up to Rs1,600 per 40kg for current crop against Rs300 that farmers were getting in 2002.

If similar measures are taken with regard to encouraging cultivation of palm trees then there is no point in not being enthusiastic about the project. Sh Amjad Rasheed, a former chairman of Pakistan Vanaspati Manufacturers Association (PVMA), said the government should seriously ruminate about cultivating palm trees, especially when its prices were fluctuating continuously in the international market. 

However, he said, any initiative towards that end would be futile without participation of the private sector. The government should provide land to private parties on long-term lease. He said palm oil seed was preferable over sunflower and canola seed as it was used in making ghee, which is much more popular edible oil product in Pakistan than cooking oil.

The project director of PODB said initially Tenera Hybrid seeds will be imported to cultivate palm plants in the country and subsequently the hybrid will be duplicated through tissue culture techniques. 

Work starts on palm tree cultivation in Balochistan


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## Neo

* Lucky to export cement to S Africa ​*
Delays Global Depository Receipts

Thursday, March 27, 2008

KARACHI: Lucky Cement is optimistic about the expansion process of its first production line (4,200 tonnes per day or 1.26 million tonnes per annum) in its southern plant and plans to start producing clinker by November, which will increase its annual cement capacity to 7.6 million tonnes per annum.

According to the management, the prevailing political scenario has forced Lucky Cement to delay the Global Depository Receipts (GDR) issue, as they do not intend to offer shares at a low price. However, they expect to go with the GDR issue, once political clarity evolves. Meanwhile, the company is further aiming to install the second line of the same capacity after the GDR issue, JS Research reported.

Recent positive development for Lucky was the consent of South African authorities to import cement from Pakistan as it is facing a shortage of cement due to the upcoming football world cup in 2010. Pakistan can potentially export 9.0 million tonnes of cement to South Africa in the next two years. Lucky Cement is the only local cement producer that has received an export certificate from the South African Bureau of Standards.

Cement prices went further up by Rs7-8 per bag. After witnessing a rise of Rs10-15 per bag, cement companies, with a gap of one day, have again increased ex-factory cement prices by Rs7-8 per bag in the Northern region of Pakistan. At present, Lucky Cement is the largest cement producer in Pakistan, having an annual capacity of 6.5 million tonnes (21,840 tonnes per day).

Lucky Cement holds 39 per cent of the total cement export market of Pakistan (as per July-Feb 08 dispatches). It reaps the benefit of having plants both in the North and South regions of the country, enabling it to export through both land and sea at low costs. It exports in bulk through sea to India, Middle East and Africa. The management of Lucky cement believes that commissioning of new capacities in Saudi Arabia and UAE will be less of a threat as the development of new cities will create incremental demand in the region.

Moreover, countries like Qatar and Kuwait have a deficiency of limestone, so their demand for imported cement is expected to rise. This deficiency of limestone in some Middle Eastern countries has enabled the company to think on the lines of establishing grinding facilities in the region.

This can help Lucky Cement export clinker from Pakistan and sell cement in the Gulf. However, no final decision has been taken by the management in this regard.

Lucky Cements officials informed that cement prices have rocketed across the globe due to the construction boom in many countries. In Russia, for instance, cement is being sold at US$280 per tonne (Rs860 per bag), while in UAE, prices have gone up to AED25 (Rs427) per bag. Lucky is currently exporting loose cement at an FOB price range of US$63-66 per tonne and bagged cement at US$67-70 per tonne to the Middle East, Africa and India.

The primary concern for cement manufacturers are the rising power and fuel costs that constitute 65 per cent of the cost of sales. For reducing power costs, Lucky has already converted power generation facility of one of its plant (Pezu) from oil to gas. However, it uses coal for manufacturing purposes. Lucky is also taking measures to run kilns on gas instead of coal as prices of coal have increased by about 62 per cent from the 1st quarter of the fiscal year 08 to date, and are expected to increase further.

Cost reduction measures and benefit of economies of scale were evident in Luckys 1st half of 08 results where its COGS/ton stood at Rs1,995 versus industrys Rs2,304 COGS/ton. FZ

Lucky to export cement to S Africa


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## Neo

*Govt okays Rs 25bn payment to OMCs​*
ISLAMABAD: Government has approved Rs 25 billion to pay differential claims to Oil Marketing Companies (OMCs) to maintain oil stock in the coming months, sources in Petroleum Ministry told Daily Times on Wednesday.

Sources said that the money would be arranged through syndicated term loan from commercial banks and in cash also to pay differential claims to Pakistan State Oil (PSO), Shell and other small OMCs including Chevron.

They said that the decision came in the joint meeting of Petroleum Ministry and Finance Ministry held on the other day (Tuesday).

Sources said that government would arrange Rs 16 billion for PSO and Rs 5 billion for Shell by syndicated term loan facility whereas Rs 4 billion differential claims would be paid to small OMCs in cash. They said that the differential claims of OMCs have reached over Rs 55 billion. 

The decision is also the follow up of the OMCs warning to the government in which they said that the country could face the short of oil stock in the month of May if the differential claims were not paid. They were of the view that OMCs have informed the government that if the differential claims were not paid to them, they would not be able to place orders for the month of May. 

With the increase in the prices of oil in the international market, the volume of subsidy starts rising despite passing on some impact of hike in the oil prices in the international market to the consumers. Despite increase in the oil prices by caretaker government twice during the current month, the government would be bearing the burden of around Rs 20 billion subsidy in the current month due to increase in the oil prices in the international market. The government will have to work out two options, either to pass on the rising impact of oil prices in the international market to the consumers or to bear the burden of subsidy. OMCs claim that they are not able to maintain the oil stock due to financial difficulties created by the former government while capping oil prices for several months. 

They said the companies were paid differential claims in the month of February by which they placed orders for the months of March and April and now they have to still place orders for the month of May. They said that they have to place order in fifteen days on the spot of buying oil in gulf countries. zafar bhutta

Daily Times - Leading News Resource of Pakistan


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## Neo

*US imposes no cap on production in ROZs​*
ISLAMABAD: Under the proposed legislation regarding the Reconstruction Opportunity Zones (ROZs) there will be no production cap unlike the African Growth Opportunity Act (AGOA). 

The proposed legislation does not require joint production with Afghanistan or USA due to the proposed Rules of Origin that are simple and export friendly and they also allow required value addition can take place within Pakistan ROZs exclusively. 50 percent of Pakistans current export of $3.46 billion would be granted duty free access in United States. 

Ministry of Commerces Year Book 2006-07, released recently, highlights the salient features of the draft ROZs legislation and states that the proposed duration of the legislation is fifteen years, which is the longest for any such programme. The proposed zones will be designated in consultation with the government of Pakistan and will include the border areas including FATA, all of NWFP, parts of Balochistan and the earthquake affected areas of AJK. 

Following the constitution of a working group by the Prime Minister on ROZs headed by Secretary Commerce, the Ministry of Commerce obtained feed back from stakeholders in the public and private sector, discussed it with the member of the working group, synthesised the views, and informally conveyed the Governments position to the US Embassy in Islamabad as well as US fact-finding team that visited Pakistan during August, 2006.

Pursuant to President Bushs announcement in March 2006 in Islamabad, the US Government is working in coordination with Pakistani authorities on an arrangement setting up ROZs in Afghanistan and the Tribal Areas of Pakistan, NWFP, Balochistan and earthquake affected areas of AJK. The second TIFA council meeting was held on 3 to 4 October 2006 in Islamabad. One of the items on the agenda was discussion on ROZs. The US side was also conveyed that due to the lack of infrastructure in the trial/border areas of Pakistan, it was highly unlikely that anyone would invest in ROZs located there. Hence, these should be located in the settled districts bordering the tribal areas, and in the earthquake affected zones in the first phase to have a meaningful impact. 

The United States Government has completed its inter-agency process on the proposed legislation for establishment of the ROZs in Pakistan and Afghanistan. The draft legislation has already moved to Congress during the month of March 15, 2008. Once enacted, the law will authorise the US President to give Pakistan the go ahead for duty free exports from ROZs. 

Pakistan would extend existing incentives, regulatory structure available for Export Processing Zones to ROZs which includes full ownership rights, full repatriation of capital and profits, no minimum or maximum limit would be fixed for investment in ROZs, duty free import of machinery, equipments and materials would be allowed to units to be located at ROZs. There would be no sales tax on electricity and gas consumed in the said units and Foreign Exchange Control Regulation of Pakistan would not be applicable to investment made in ROZs.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Exports of developmental sectors surge by 47% in July-Feb 08​*
** Govt has set a $1.555bn target of developmental sector exports for the whole year​*
By Tanveer Ahmed 

KARACHI: Contrary to poor performance by textile export, the export of developmental sectors as a whole registered substantial growth of over 47 percent during July-February period of current financial year over the corresponding period last year.

While countrys traditional exportable sectors are under stress for quite some time, the growth in items in developmental sectors is a positive sign, which are also part of the governments long-term strategy to boost the exports manifold in the coming years.

The developmental sectors comprise of engineering goods including cutlery, marble and granite/onyx manufacturing, fish and fish preparations, fruits and vegetables, chemical products, gems and jewellery, meat and meat preparations, cement, furniture, etc. Country exported $1.184 billion worth of these products during first eight months of current fiscal compared to $801,696 million in the same period of last year. 

Foreign trade analysts termed the substantial growth a positive development, which at least plugged the losses to some extent, incurred by declining export of textile sector, which is resulting in yawning trade gap because of fast growing import bill.

Although the growth was substantial, they believed still a lot of potential exists for further boosting the export of these items especially fisheries, fruits, gem and jewellary, furniture etc. particularly export of fruits could be further enhanced by taking advantage of free trade agreement with China, whose big population offers lucrative market to local products.

Analysts said that growth in export of these items would also help lessen the countrys dependence on textile, which has been passing through turbulent times because of stiff competition from its regional competitors.

Well thought out strategies are needed to enhance the export of these items and increase their share in overall exports, which unfortunately have not been formulated so far, a seafood exporter commented. 

The breakup of the export of developmental categories showed that export of fish and fish preparations during eight months of current fiscal stood was at $120,248 million compared to $121,628 million in the same period of last year, export of fruits fetched $100,575 million over $83,695 million, vegetables export at $31,115 million compared to $22,235 million, meat and meat preparations at $33,008 million against $27,045 million.

Export of onyx totaled at $7,885 million against $7,945 million, chemicals at $389,820 million over $259,257 million, engineering goods at $139,859 million against $122,180 million, Gem exports at $6,023 million against $3,765 million, Jewellary at $121,077 million against $21,815 million, furniture at $7,247 million over $7,207 million, cement at $209,081 million against $82,464 million and cutlery at $36,552 million against $24,771 million. 

The government has set a target of $1.555 billion for the whole year whereas last year total export proceeds of these items fetched $1.396 billion foreign exchange. In view of export performance of these items so far, the target seems to be achievable, which was missed last year, exporters said.

Daily Times - Leading News Resource of Pakistan


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## Neo

*ICCI seeks rail network from China to Gwadar, Karachi ​*
ISLAMABAD: Islamabad Chamber of Commerce and Industry (ICCI) has suggested that a direct rail network from China be created for Gawadar and Karachi, which would help increase the trade between the two countries. 

The ICCI President Muhammad Ijaz Abbasi, in a meeting with a two-member official delegation of the embassy of the Republic of China, including Zhou Zhencheng Consellor Economic and Commercial and Liu Guotao Second Secretary during a meeting at ICCI said that the trade and economic relations of Pakistan and China were growing fast. Zhou Zhencheng said that bilateral trade between the two countries had crossed $6 billion showing 25 percent increase in the last years trade volume. He said that the balance of trade is presently in favaour of China and there is a need to further balance it. He said that Chinese business delegations regularly visit Pakistan for meetings with their Pakistani counterparts for import of various products from Pakistan. He said that Pakistan exports many products including minerals and fiber products to China. 

He said that a large number of Chinese companies are working in Pakistan and more companies are interested to invest in Pakistan. He informed that 60 Chinese companies have permanent offices in Pakistan and recently China Mobile Pakistan has taken over Paktel, making a large investment in the telecom field. He said that through an agreement with Pakistan, Chinese investors would be encouraged to investment in the economic zone at Lahore.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Bush waives law to give millions to Pak anti-terror fight​*
WASHINGTON: US President George Bush granted another waiver to Pakistan, which will enable the continuance of US assistance to the country that would otherwise have been blocked because of a US law that forbids aid to countries where the government has changed through a coup detat, which happened in Pakistan in 1999. 

The president has been according the waiver to Pakistan since Islamabad agreed to join the US-led war against terrorism. Pakistan will not need a waiver next year as it has an elected government now. A review is already underway. The presidential waiver of Section 608 of the relevant law would facilitate the transition to democratic rule in Pakistan; and is important to US efforts to respond to, deter, or prevent acts of international terrorism, according to the presidential directive to the State Department. 

The president authorised the secretary of State to transmit the determination to Congress, as required under law. Pakistan is due to receive $478 million in security-related assistance in financial year 2008 and $467 million in economic-related assistance, or a total of $945 million. Earlier, White House spokeswoman Dana Perino said the US hoped for good co-operation with the new government in the fight against extremism. khalid hasan

Daily Times - Leading News Resource of Pakistan


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## Neo

*40 percent rise in services trade deficit ​* 
KARACHI (March 27 2008): Services trade deficit widened by 40 percent to new high level of $4.224 billion during the eight months of the current fiscal year, breaching all previous records. This was mainly due to higher payments on transportation, travels, financial, computers services and royalties.

According to State Bank statistics on Wednesday, Pakistan received $2.123 billion on account of services export against payments of $6.347 billion on the account of services imports during the July-February period of current fiscal year, depicting a deficit of $4.224 billion.

This year's services sector deficit is higher than last fiscal year's, which stood at $4.125 billion. The deficit is also widened by 40 percent over the same period of last fiscal year, as during July-February 2007 the country faced a deficit of $3 billion with $5.54 billion exports and $2.53 billion imports. Services sector exports during the period declined by 16 percent, while imports went up by 14 percent.

Major contribution in services trade deficit witnessed by transportation services, travel services, and royalties, as only transportation sector contributed around 50 percent share in services sector deficit. However, services sector trade deficit during February depicted a decline of 32 percent over February 2007. During February 2008 deficit stood at 256.809 million dollars as compared to 375.054 millions dollar of February 2007.

The services sector exports February this fiscal year stood at 508 million dollars over the exports of 254 million dollars in February 2007. Big deficit has faced in transportation sector, whose exports stood at 729.620 million dollars against imports of 2.333 billion dollars, depicting a deficit of 1.60 billion dollars in eight months.

Travel was the second sector which registered about $1 billion deficit, as travel exports stood at 177.994 million dollars against imports of 1.049 billion dollars, showing a deficit of 871 million dollars. Insurance service exports stood at 22.5 million dollars against imports of 111 million dollars. Financial services payments stood at 110 million dollars against receipts of 29 million dollars.

The country earned 35.23 million dollars on the account of royalties and licences fee against payments of some 84 million dollars. It may be mentioned here that during the last fiscal year country had faced a deficit of 4.125 billion dollars in service trade with exports of $4.125 billion and imports of $8.250 billion.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

Neo said:


> *Bush waives law to give millions to Pak anti-terror fight​*
> WASHINGTON: US President George Bush granted another waiver to Pakistan, which will enable the continuance of US assistance to the country that would otherwise have been blocked because of a US law that forbids aid to countries where the government has changed through a coup detat, which happened in Pakistan in 1999.
> 
> The president has been according the waiver to Pakistan since Islamabad agreed to join the US-led war against terrorism. Pakistan will not need a waiver next year as it has an elected government now. A review is already underway. The presidential waiver of Section 608 of the relevant law would facilitate the transition to democratic rule in Pakistan; and is important to US efforts to respond to, deter, or prevent acts of international terrorism, according to the presidential directive to the State Department.
> 
> The president authorised the secretary of State to transmit the determination to Congress, as required under law. Pakistan is due to receive $478 million in security-related assistance in financial year 2008 and $467 million in economic-related assistance, or a total of $945 million. Earlier, White House spokeswoman Dana Perino said the US hoped for good co-operation with the new government in the fight against extremism. khalid hasan
> 
> Daily Times - Leading News Resource of Pakistan



*Anti-terror fight: Bush clears way for giving $300 million to Pakistan ​*
WASHINGTON (March 27 2008): President George W Bush has cleared the way for giving millions of dollars to Pakistan to fight terrorism this year, the White House said on Tuesday as a new government took power in Islamabad.

'We are currently assessing the impact of those elections on future requirements for waivers of coup-related sanctions'In a memo to the secretary of state dated Monday, Bush used his authority to exempt Pakistan from a law that restricts funding countries where the legitimate head of state was deposed by a military coup, as in Pakistan.

The waiver, which Bush has approved every year since 2003, opens the way for the United States to provide about 300 million dollars this year to key "war on terror" ally Pakistan to boost its counter-terrorism operations. White House spokesman Gordon Johndroe said the Bush administration still had concerns about the human rights situation in Pakistan, where President Pervez Musharraf took power in 1999, but stressed its major strategic role.

"Pakistan is a key ally in the 'war on terror.' Johndroe stressed that "we continue to have concerns about respect for fundamental civil and political rights in Pakistan," citing last November's state of emergency and the suspension of the constitution.

But he said Musharraf had "kept his commitments" to retire from the military and be sworn in as a civilian president, and to lift the state of emergency. He also noted that multi-party elections had successfully been held. "We are currently assessing the impact of those elections on future requirements for waivers of coup-related sanctions," Johndroe added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*UAE sets $100 billion investment target ​*
ISLAMABAD (March 27 2008): The UAE envoy in Islamabad Ali Mohammed Al-Shamsi said on Wednesday that the Emirates has set the target of $100 billion investment in Pakistan. He, in a statement, said that his country wants stability and progress in Pakistan and assures its full co-operation for building strong economic and trade partnership for the mutual benefit of both the countries.

The envoy said that Pakistan's promising market and its potentials under conducive environment would encourage the UAE companies both public and private for investment target of $100 billion in Pakistan. The UAE investment, at present, stands at $20 billion with assets and projects for Karachi to the tune of $50 billion.

"This is a clear message which indicates the determination and will of the UAE to build a unique economic partnership between the two brotherly countries," said Al-Shamsi, in a statement.

He said the leaders of the United Arab Emirates have expressed their desire to upscale the political and economic relations to the highest level while extending their congratulations to Syed Yousef Raza Gillani on his election as prime minister wishing him success in his new assignment.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Foreign portfolio investment stood at $4.4 billion on Tuesday ​* 
ISLAMABAD (March 27 2008): Total investment in the local stock market by foreign portfolio investors as on March 25, 2008 was $4.4 billion, based on closing rates. This excludes physical shares of PTCL held against GDRs issued by the Company.

According to the data released by the Securities and Exchange Commission of Pakistan (SECP) on Wednesday, the Commission took initiative of disseminating daily net inflow/outflow of foreign investment based on actual trading by foreigners in the market. This was done to provide market participants and general investors with timely and relevant information regarding foreign portfolio investment. To further refine the process and add value to the information provided, cumulative trading activities of foreign investors since February 1, 2008 are being provided by the SECP.

Trading activities of foreign investors on March 25 showed that gross buying of $21,651,575 was made; gross selling of $14,409,990 and net buying/selling by foreign investors was $7,241,585.

The cumulative trading activities of foreign investors from March 1 to 25 showed that gross buying was of $267,446,119; gross selling of $428,036,722 and net buying and selling was $160,590,603.

The cumulative trading activities of foreign investors for the month of February 2008 showed that gross buying was $524,350,293; gross selling $383,763,575 and net buying and selling of $140,586,718 was observed during the period under review.

The SECP has specified that all rupee values have been converted into dollar using conversion rate of $Rs 62.50. The Commission has advised the general public to visit website of National Clearing Company of Pakistan Limited www.nccpl.com.pk for details concerning trading activities of foreign investors on daily basis.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Foreign portfolio investment stood at $4.4 billion on Tuesday ​* 
ISLAMABAD (March 27 2008): Total investment in the local stock market by foreign portfolio investors as on March 25, 2008 was $4.4 billion, based on closing rates. This excludes physical shares of PTCL held against GDRs issued by the Company.

According to the data released by the Securities and Exchange Commission of Pakistan (SECP) on Wednesday, the Commission took initiative of disseminating daily net inflow/outflow of foreign investment based on actual trading by foreigners in the market. This was done to provide market participants and general investors with timely and relevant information regarding foreign portfolio investment. To further refine the process and add value to the information provided, cumulative trading activities of foreign investors since February 1, 2008 are being provided by the SECP.

Trading activities of foreign investors on March 25 showed that gross buying of $21,651,575 was made; gross selling of $14,409,990 and net buying/selling by foreign investors was $7,241,585.

The cumulative trading activities of foreign investors from March 1 to 25 showed that gross buying was of $267,446,119; gross selling of $428,036,722 and net buying and selling was $160,590,603.

The cumulative trading activities of foreign investors for the month of February 2008 showed that gross buying was $524,350,293; gross selling $383,763,575 and net buying and selling of $140,586,718 was observed during the period under review.

The SECP has specified that all rupee values have been converted into dollar using conversion rate of $Rs 62.50. The Commission has advised the general public to visit website of National Clearing Company of Pakistan Limited National Clearing Company of Pakistan Limited for details concerning trading activities of foreign investors on daily basis.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Rs one billion spent on industrial infrastructure uplift in Landhi: Kamal ​*
KARACHI (March 27 2008): Nazim Karachi, Syed Mustafa Kamal Wednesday said that City Government has implemented development works costing Rs one billion in the Landhi Industrial area. He said in the area, which lacked the sewerage system altogether, the grant of sewerage connections to all the factories will start during the next 15 days.

He stated this while addressing a joint meeting of the officials of Landhi Association of Trade and Industry and city government at Chairman office in KWSB. The meeting was attended by DCO Javed Hanif, MD KWSB Ghulam Arif Khan, EDO Works and Services Nisar Sariyo, Chairman Landhi Association of Trade and Industry and other officials.

In the meeting the water and sewerage works carried out in Landhi Industrial area during the last 2 years were reviewed while for the left over schemes, it was decided to speed up the work and complete them by April.

The meeting was informed that since the establishment of Landhi Industrial area, sewerage system was not completely laid while non-availability of water was another factor and the area had been the victim of problems because of battered roads badly affecting industrial production.

The city government has almost completed the laying of sewerage system at a cost of Rs 300 million. However, a 1.5 km line could not be laid because of gas line, which unless shifted, difficulty will be faced in the laying of sewerage line.

On the other hand, internal water and sewerage works have been completed at a cost of Rs 160 million while works and services schemes are in progress at a cost of Rs 465 million.

It was pointed out that work on repair of General Tyre road, Quaidabad bridge and construction of Hospital Chowrangi to National Highway road and internal roads was in progress and completed soon while plan was afoot for construction of Mehran highway at a cost of Rs 273 million.

On the occasion Nazim Karachi directed that gas authorities be immediately contacted for speedy completion of sewerage system and if the gas line cannot be shifted because of technical reason, work on alternative path be started from tomorrow and completed by the middle of April so that work on grant of connections to factories could start.

Mustafa Kamal said that city government itself started work on infrastructure development without any demand because in the past the industrialists made all efforts in this regard but in vain and they gave up making demands.

These areas will now modernise and beautify and its basic problems solved. Nazim Karachi said that pipes were imported for laying the infrastructure in all the four industrial areas, and, therefore, the water and sewerage systems laid here would last for 100 years.

On the occasion Zahid Bashir, Chairman Landhi Association of Trade and Industry and other office-bearers thanked Nazim Karachi and said the works carried out by city government during the last 2 years were beyond the imagination of industrialists and businessmen and today 90 percent problems of the industrial stood solved.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan must act to avert economic crisis - W.Bank​*
ISLAMABAD, March 27 - Pakistan must make rapid adjustments and reforms to avert an economic crisis as it suffers the impact of high international prices for petroleum and food such as wheat, the World Bank said on Thursday.

Pakistan was likely to miss this year's targets for its fiscal deficit, inflation, current account deficit and foreign exchange reserves, the bank said.

"There is not yet a crisis, but the economic picture for Pakistan is not good," said World Bank Vice President Praful Patel at the end of a three-day visit.

The news comes as a new coalition government is set to take power.

Patel said Pakistan had seen robust economic growth over the past few years and foreign direct investment and remittances had maintained pace and the stock market had posted gains.

But growth could be maintained only if the country adjusted to the new global reality, which included high prices for oil and food such as wheat.

"Any adjustment will be painful ... there must be an appropriate safety net for the poor," Patel said in a statement.

Patel held talks with leaders of the new government and its economic advisers and said they had asked for World Bank support.

Analysts say widening fiscal and current account deficits and rising inflation are the major economic problems facing the new government.

Standard & Poor's Ratings Services said on Tuesday it was maintaining its negative outlook on Pakistan, and warned that despite a more positive political outlook, Pakistan's ratings could be lowered if the new rulers proved too distracted to deal with problems.

Pakistan's current account deficit widened to $8.421 billion in the first eight months of the 2007/08 fiscal year to June, compared with $5.857 billion in the same period last year.

The fiscal deficit for the first half of the financial year, to the end of December, was 3.6 percent of gross domestic product compared with 1.9 percent in the same period the previous year.

The consumer price index, a key indicator of inflation, rose 11.25 percent in February from a year ago.

"Pakistan will need the international community's support over the coming months," Patel said.

"If action is not taken, the economy will start to falter but with the right policies and strong support from multilateral and bilateral partners, we believe the high growth and poverty reduction path can be maintained."

Despite the looming problems, Pakistan's main stocks index, one of the best performing in Asia last year, has gained 8.5 percent since the beginning of the year and 6.4 percent since a Feb. 18 general election.

Pakistan must act to avert economic crisis - W.Bank - Yahoo! Singapore News


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## Neo

*UN report says Pakistan's economic growth to remain at 6.5 percent ​*Islamabad, March 27, IRNA 

Pakistan's economy is expected to remain strong growing at 6.5 percent supported by all sectors during the current year despite many challenges, according to a UN report released on Thursday. 

The United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) in its Economic and Social survey appreciated Pakistan's macroeconomic policies of the last few years saying these helped increase the inflow of domestic and foreign investments and sustain a strong economic growth. 

The survey says that sound policies have transformed Pakistan's consumption led growth impetus to the one in which investment led growth can assume a more important role. 

It says Pakistan's economy remained strong during the last six years. 

The agriculture sector grew by five percent during the last year while the manufacturing sector's growth continued at 8.4 percent. 

It further says that record inflow of foreign direct investment amounting to 8.4 billion dollars last year also boosted performance of the economy. 

It says that a credible debt reduction strategy and fast economic growth drastically cut the public debt burden, besides the country successfully reduced its external debt burden, through rescheduling, debt cancellation and prepayment of expensive debt. 

Referring to the higher inflation level in the country, the survey says global increases in some commodity prices, higher utility tariffs and some other factors fuelled the inflation level in Pakistan. 

However, the government made efforts to stem price rises through extension of public sector utility store network and extending subsidies on essential edibles. 

The survey also highlights the government's expansionary fiscal stance to promote investment for growth and increase pro poor spending. 

It also recognizes that development expenditure has increased in recent years. 

However it expressed concern over sharp slowing in the growth of Pakistan's exports and imports during the last year. 

The ESCAP survey predicts that like many other South Asian Countries, the current account deficit is to remain an issue for Pakistan due to higher oil prices and the impact on the garment and textiles trade. 

The report suggests export diversification besides reducing the risk of depending too much on a single sector to meet the challenge. 

UN report says Pakistan's economic growth to remain at 6.5 percent - Irna


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## Neo

*Pakistan envoy supports U.S. economic initiative​*
By Haley Edwards
Seattle Times staff reporter

Pakistan's ambassador to the U.S. on Wednesday endorsed U.S. Sen. Maria Cantwell's proposal to jump-start the economy in the war-ravaged border region between Pakistan and Afghanistan.

Ambassador Mahmud Ali Durrani, speaking at a news conference in Seattle, called the bill sponsored by Cantwell "an effective weapon against extremism and poverty."

The bill, which Cantwell and four other senators introduced earlier this month, proposes to create special zones where Pakistani and Afghan citizens could trade certain products  such as textiles, gemstones and handicrafts  duty-free with the U.S.

These Reconstruction Opportunity Zones, or ROZs, would provide a chance for people in the region, most of whom are impoverished tribal members, to start their own businesses and begin to make money, Cantwell said.

"The idea is increase entrepreneurial opportunities so [local people] don't have to turn to illegal activities to put food on the table," she said.

The border region between Afghanistan and Pakistan has been a hotbed of Taliban violence and recruitment since the war in Afghanistan began in 2001. It also is a thoroughfare for illegal drug trafficking between the two countries.

Sens. Orrin Hatch, R-Utah; Kit Bond, R-Mo.; Joe Lieberman, I-Conn.; and Chuck Hagel, R-Neb., have signed on to the bill. Leaders from the Washington Council on International Trade and the Initiative for Global Development also announced their support on Wednesday.

Both Cantwell, a Democrat from Washington, and Durrani stressed that economic development must come hand-in-hand with improved security and infrastructure in the region.

Durrani called the ROZ bill a "key first step."

"You can't wait for stability to begin development. Neither one comes first. It's a chicken-and-egg thing," Durrani said. "Even when there are security challenges, you have to invest in infrastructure and job development."

The entire nation of Afghanistan and certain parts of Pakistan's border region would be eligible for ROZ designation if the bill passes. Each region would have to demonstrate efforts to establish a market-based economy, eliminate poverty and increase the availability of schools and hospitals, among other criteria, in order to qualify.

The Afghan ambassador to the U.S., Said T. Jawad, expressed "full support" of the bill in a statement issued earlier this month.


Durrani dismissed suggestions that Yousaf Raza Gilani, who was sworn in as prime minister of Pakistan on Tuesday, would be less committed to the plan than his predecessor. Gilani is considered less accommodating of American interests than the current president, Pervez Musharraf.

"Musharraf is still the president. Gilani is a good leader with a lot of experience," Durrani said.

"Americans care too much about the personality of leaders. Personality doesn't matter. What matters is that Pakistan and the U.S. are friends, and this would be good for both countries."

The ROZ bill is loosely modeled after the existing Qualified Industrial Zones plan that was established in Jordan in 1996 and in Egypt in 2004. Cantwell called both programs a "success."

Cantwell said she hopes Congress will approve the bill quickly and have it "waiting on the president's desk by the end of the year."

Nation & World | Pakistan envoy supports U.S. economic initiative | Seattle Times Newspaper


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## Neo

*Current account deficit $8.42bn in 8 months ​* 
Friday, March 28, 2008

KARACHI: Pakistans current account deficit widened to $8.421 billion in the first eight months of the 2007/08 (July-June) fiscal year, the State Bank of Pakistan said on its Web site on Thursday.

That compared with $5.857 billion in the same period last year. The deficit is equivalent to about 5.3 per cent of Pakistans gross domestic product (GDP), compared with a full-year target of 4.8 per cent.

The current account deficit is a key macroeconomic imbalance that has emerged and needs to be addressed quickly and efficiently, said Asif Qureshi, head of research at Invisor Securities Ltd.

Analysts say the widening of the current account deficit is mainly due to rising commodity prices, including oil and food, and a short-term solution could be to reduce domestic demand through fiscal and monetary policy.

Pakistans trade deficit widened to $2.104 billion in February from $1.30 billion in February last year. The consumer price index rose 11.25 per cent in February from a year earlier. Analysts said the new government needed to tackle fiscal and external imbalances or they could lead to a downgrade in Pakistans sovereign ratings.

Standard & Poors maintained its negative outlook on Pakistan this week, despite an improvement in the political outlook with the appointment of a new prime minister, saying the country still faced tough decisions. It said Pakistans ratings could be lowered if the government proved too distracted to deal with growing economic problems.

Current account deficit $8.42bn in 8 months


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## Neo

* Power cost for industry up 30pc in one year ​* 
Friday, March 28, 2008

LAHORE: All Pakistan Textile Mills Association (Punjab) Chairman Akber Sheikh has slammed continuous increase in electricity tariff, raising the cost of power by 30 per cent in just 12 months, which has put an unbearable burden on the cost of doing business and has broken the back of the crisis-hit textile sector.

Talking to newsmen, he deplored the National Electric Power Regulatory Authority had notified three back-to-back tariff increases, first 10 paisa Neelum-Jhelum surcharge with effect from January 1, then around 10 per cent hike in power tariff on Jan 14 and then an additional increase of around 28 paisa per unit from March 1.

Akber said an impression was being given by NEPRA and carried in government circles that electricity rates had been raised by only 9 per cent, whereas the cumulative impact of these increases exceeded 21 per cent within one month. In addition to the recent raise in power tariff, he said, the NEPRA also pushed up electricity tariff by 10 per cent in July 2007.

To make matters worse, he added, the textile sector had been made the scapegoat of merciless load-shedding by Pakistan Electric Power Co (PEPCO). Earlier, during winter months (Jan and Feb 2008) the industry was forced to endure load-shedding for a record 56 days, despite initial assurances from PEPCO that power cut would only be for 15 days.

He said now PEPCO has once again targeted the textile sector for two-hour daily load-shedding since Feb 19. In a typical pattern of misrepresentation, the PEPCO informed APTMA that load-shedding would be conducted only till March 23 due to disruption in gas supply. However, power outage continued to date with no end in sight on one flimsy pretext or another.

The APTMA (Punjab) chairman questioned why is the textile sector being targeted? Can the national economy withstand total annihilation of its most important sector?

APTMA demands that authorities take notice of the situation and provide urgent relief in shape of a review of the exorbitant tariff increase by NEPRA with a view to revising that downward and/or sharing the burden with the textile sector as in the past.

Besides, it also demanded that instead of taking the easy way out by targeting textiles with discriminatory load-shedding at every opportunity, the government should ensure uninterrupted power supply for the export-oriented textile industry.

Power cost for industry up 30pc in one year


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## Neo

*US Ramada Plaza to franchise brand name ​* 
Friday, March 28, 2008

KARACHI: American hotel chain Ramada Plaza, has agreed to franchise its brand name to Karachi Airport Hotel, which up until last month, was run by the management of European market leader Accor, The News learnt on Thursday.

Mercure, one of the brands of Accor, was running the managerial affairs of the airport hotel opened in March 2007, as part of a Civil Aviation Authority (CAA) drive to utilise its commercial estates effectively.

In February last, Accor, which has over 4,000 hotels and other brands like Sofitel and Novatel around the world, announced the annulment of its contract with local United International Group (UIG), which owns the airport hotel property, without citing any reasons.

Ideally located at a few minutes drive from Jinnah International Airport Terminal in the security limits of CAA, Grand Mercure Karachi International Hotel was the first well-known foreign brand to come to Pakistan in the past many years. We will file a lawsuit against Accor in Pakistan, said M Azeem Qureshi, Director Operations at UIG. They have violated terms of the agreement whereby Mercure was supposed to run the management till its replacement was found.

Deliberating on reasons behind Accors rollback, he said hotel operator believed that UIG was not letting its management work by questioning its performance. (Grand Mercure) management had failed to meet revenue target, and expenditures crossed initial estimate as well, he said reflecting on the cause of disagreement, and added that this forced UIG to seek an explanation. I think that offended them.

Qureshi said UIG will use Ramada Plazas franchise while retaining existing human resource as part of the management. Notwithstanding the swift change in managements of Karachi Airport Hotel, the hotel industry in Pakistan is poised to see a lot of growth in the coming years, provided that the security situation improves, people associated with hospitability business say.

Hashoo Group, which runs Pearl Continental and Marriot hotels in Pakistan, has already announced the introduction of a new network of budget hotels across the country, in a bid to target the booming middle class that is looking for better standards of hospitality.

Lack of good hotels is believed to have impeded tourism growth in the country, which is blessed with diversified cultures, beautiful scenery and historical sites. Tariq Bin Yousif, General Manager of Destination of the World, an international tour facilitator, regretted that a lot of potential remains unexploited because of insufficient number of resorts. Citing Karachi as a case, he said more than a quarter million picnickers throng the seaside every weekend, and have to use the shabby huts in the absence of a hotel.

Chairman Pakistan Hotels Association Mustansir Zakir said there was a wide room for hotel business to expand here since the country had only 10-15 international quality hotels. However, he said government assistance in terms of right policy decisions was necessary. He said 8-10 per cent bed tax in addition to a 15pc sales tax, has artificially taken up the room rent, making hotels an expensive proposition. Bed tax is charged on basis of capacity available in a hotel, he said, adding the tax should be collected on basis of actual utilization of capacity. We would really want the new government to waive bed tax, at least now."

US Ramada Plaza to franchise brand name


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## Neo

*UK to invest £480m for trade development ​* 
Friday, March 28, 2008

KARACHI: British Deputy High Commissioner Robert W Gibson has announced that the UK Department of International Development has planned to invest 480 million pounds for trade development and education in Pakistan. 

Speaking to members and office-bearers of the Karachi Chamber of Commerce and Industry (KCCI) on Thursday, he said the EU was considering a Free Trade Agreement (FTA) with Pakistan and Britain was fully supporting the move. 

Gibson said another eight to nine British trade delegations are prepared to arrive here within the next six months as Britain is keen to strengthen trade relations with Pakistan and is working actively to enhance the partnership and cooperation. 

He further said a special team is working here in the country which has know-how of the local market. This team then provides information to potential investors back in the UK and advises them where to invest. 

Gibson said the British government was very happy with the successful free and fair elections that took place in Pakistan and looked forward to working with the new government. He added this has helped enhance the countrys image considerably across the western market and hoped that it would bring in more revenue for the country now. 

UK to invest £480m for trade development


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## Neo

*Pakistan rice exports seen lower at 2.8m tonnes​*
ISLAMABAD: Pakistans rice exports will reach about 2.8 million tonnes in the year to June, about 300,000 tonnes less than a year earlier, a top rice trader said on Thursday. 

Pakistan is due to produce about 5.5 million tonnes of rice in the 2007-08 fiscal year and after domestic consumption should have an exportable surplus of about 3.3 million tonnes, said the chairman of the private Rice Exporters Association of Pakistan. 

But shipment problems and power shortages that have affected rice processing would limit the ability to export more rice. 

Exports this year will not be more than 2.8 million tonnes. It will be a miracle if it goes beyond that, said Azhar Akhtar, chairman of the association that handles most rice exports. 

Demand is there, stocks are there, business is there, but non-availability of vessels is the main problem, he said. Pakistan produced 5.4 million tonnes of rice last year and exported 3.12 million tonnes. 

Rice exports in the first eight months of the fiscal year to February were 1.6 million tonnes, against 2.1 million tonnes in the same period last year, a 23 percent drop, according to data from the state Federal Bureau of Statistics. 

While Basmati rice exports had increased by more than 12 percent to 655,506 tonnes, the export of other varieties fell by 36 percent to 983,112 tonnes, the data showed. Pakistan and India are the two countries that grow and export Basmati rice, while the Middle East and Europe are the main markets. 

Rice, a high valued cash crop, accounts for about 8 percent of Pakistani exports and 1.2 percent of gross domestic product. Pakistan has faced power shortages in recent months which have hurt industrial activity including rice processing, Akhtar said. The government will have to come up with alternative arrangements such as natural gas to ensure maximum industrial production and to increase export volume, he said. But despite the lower volume of exports, Pakistani exporters had earned more than the previous year because of rising global rice prices. Pakistan sold 1.6 million tonnes of rice for $795 million in the July-February period against $730 million it earned by exporting 2.1 million tonnes rice in the same period of the previous fiscal year, according to the official data. Given the upward global pricing trend, in spite of exporting less, we will achieve the target of $1.5 billion worth of rice exports for the year, Akhtar said. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Card Payphone industry shifting towards wireless networks​*
KARACHI: Card Payphone Providers (CPP) sector is continuously losing its business charm due to rising popularity of wireless based networks across the country.

According to the report issued by Pakistan Telecom Authority (PTA), the connections for Public Call Offices (PCO) based on fixed-line have declined sharply by 50 percent for last one year while Wireless Local Loop (WLL) and mobile PCOs have witnessed more than 85 percent growth in the same period. 

There were around 188,438 Fixed-line PCOs all across Pakistan at the end of September 2006 which has declined to 121,358 at the end of December 2007. On the other hand, there was no Mobile PCO in 2006, which has reached 57,936 at the end of December 2007 while WLL PCOs have increased from 156,550 in September 2006 to 262,116 in December 2007. A significant number of entrepreneurs, who run their PCO in the country, are replacing rapidly their Fixed-line PCO system into WLL for its mobile portability, PTA report added. 

Currently there are 300 card pay phone companies operating in Pakistan. Around one year back there were 336 card pay phone companies operating, out of which 36 have cancelled their license. It is mentioned that a number of new companies have applied for Voice Class Value Added services license during the last one and a half year. Now, these companies are joining hands with the existing mobile Companies to establish Mobile PCOs rather than fixed line PCO.

The three private cellular phone giants Mobilink, Telenor and CMPak have been witnessing growth in the WLL and Mobile PCOs since they got license from PTA. Similarly, some old players of CPP industry themselves got licenses for WLL and now they are offering services on their WLL networks. It has been observed that total card payphones have increased by about 43 percent at the end of December 2007 compared to the same period of last year. Total payphones reached to 471,410 at the end of December 2007, which were 321,155 at the end of December 2006. When compared with last quarter, Payphone number has increase by about 19 percent. 

A comparison of payphones by services show that Fixed-line PCO share has declined from 42 percent in March 2007 to 32 percent in December 2007 while the Mobile and WLL PCOs share has increased by 3 percent and 7 percent respectively in same period. Telecard is the main player since 1990 for providing PCO services in Pakistan, which still holds its position in this industry. However, the group has shifted most of its business from fixed- line of PTCL to WLL at their own network. 

Currently, more than 38 percent PCOs belong to Telecard group which counts 179,021 at the end of December 2007. PTCL comes at second place in card Payphone business that still has 151,358 PCOs at their fixed-line and WLL networks. It is expected that Mobile CPP industry will further grow in coming years.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Italy converts $110m of Pak debt into aid​*
ISLAMABAD: A bilateral debt swap agreement has made $110 million available to Islamabad for development in the social sector, Italian Ambassador Vincenzo Prati said on Thursday. 

Prati told Daily Times that the agreement, which was signed in 2003 and came into effect at the end of 2007, had converted some of Pakistans debt to Italy into aid for developing the social sector, with a focus on education and health. He said Pakistan would use the money over five years. 

He said that according to the agreement Pakistan would deposit 20 percent of the total debt amount in a special account every year. 

Prati said that under the initial 2003 agreement, Italy had waived half of the debt, and converted the remaining $110 million into aid for social sector development. 

Prati said that Italy wanted the aid to be spent in the underdeveloped areas of NWFP, Balochistan, Azad Kashmir, and Northern Areas. He said the money would be spent through UN agencies, non-government organisations and relevant Pakistani government departments.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan must act to avert economic crisis: World Bank ​*
ISLAMABAD (March 28 2008): Pakistan must make rapid adjustments and reforms to avert an economic crisis as it suffers the impact of high international prices for petroleum and food such as wheat, the World Bank said on Thursday. Pakistan was likely to miss this year's targets for its fiscal deficit, inflation, current account deficit and foreign exchange reserves, the bank said.

"There is not yet a crisis, but the economic picture for Pakistan is not good," said World Bank Vice President Praful Patel at the end of a three-day visit. The news comes as a new coalition government is set to take power.

Patel said Pakistan had seen robust economic growth over the past few years and foreign direct investment and remittances had maintained pace and the stock market had posted gains.

But growth could be maintained only if the country adjusted to the new global reality, which included high prices for oil and food such as wheat. "Any adjustment will be painful ... there must be an appropriate safety net for the poor," Patel said in a statement. Patel held talks with leaders of the new government and its economic advisers and said they had asked for World Bank support.

Analysts say widening fiscal and current account deficits and rising inflation are the major economic problems facing the new government. Standard & Poor's Ratings Services said on Tuesday it was maintaining its negative outlook on Pakistan, and warned that despite a more positive political outlook, Pakistan's ratings could be lowered if the new rulers proved too distracted to deal with problems.

Pakistan's current account deficit widened to $8.421 billion in the first eight months of the 2007/08 fiscal year to June, compared with $5.857 billion in the same period last year.

The fiscal deficit for the first half of the financial year, to the end of December, was 3.6 percent of gross domestic product compared with 1.9 percent in the same period the previous year. The consumer price index, a key indicator of inflation, rose 11.25 percent in February from a year ago. "Pakistan will need the international community's support over the coming months," Patel said.

"If action is not taken, the economy will start to falter but with the right policies and strong support from multilateral and bilateral partners, we believe the high growth and poverty reduction path can be maintained."

Despite the looming problems, Pakistan's main stocks index, one of the best performing in Asia last year, has gained 8.5 percent since the beginning of the year and 6.4 percent since a February 18 general election.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Gilani hints at reviewing policies ​* 
ISLAMBAD (March 28 2008): In the first-ever briefing, Prime Minister Syed Yusuf Raza Gilani on Thursday hinted at overall review of the existing policies for seizing downward trend in the economy, besides providing immediate relief to under-privileged sections of the society.

He stressed a more active role of private sector in policy making to make economic boost happen in a short span of time. Sources said the Prime Minister asked the economic managers to give him another presentation soon after the Cabinet sworn in to make much-needed changes for making the economy vibrant.

During the presentation, the Prime Minister was informed that Pakistan was facing Herculean task on economic front due to longest-ever spell of high petroleum product prices in the international market, worsening law and order and relatively poor performance of various important sectors of the economy during the first 8 months of the current fiscal year.

The presentation by the government economic team on the economic situation covered available financial resources, dip in exports resulting in widening of trade gap, below target revenue collection, foreign debt and resources required for servicing, privatisation proceeds matured so far, petroleum products' import bill and subsidy provided by the government to protect consumers till February this year.

The Prime Minister was informed about the measures taken for minimising trade deficit including reduction in development and non-development budget for 2007-08. He was informed that non-development expenditure and development budget were slashed to make some resources available for the elected government for possible relief to people from increasing prices of essential items.

Talking to this scribe, a member of the government economic team said "Thursday's presentation to the Prime Minister was an introduction of what policies were bring followed and what steps could be taken to meet the economic challenges".

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Sino-Pak coal-fired power corporation proposed ​* 
ISLAMABAD (March 28 2008): Pakistan and China are likely to establish a joint power corporation, main objective of which is stated to be making arrangements for setting up coal-fired power plants using imported and domestic raw material, sources in Planning Commission told Business Recorder.

The sources said that the issue would be part of the agenda to be discussed during the forthcoming visit of President Pervez Musharraf to Beijing. The project had been proposed by Pakistan's envoy to China Salman Bashir, in a letter to Secretary, Foreign Affairs, a copy of which was also faxed to Deputy Chairman of Planning Commission, Dr Akram Sheikh.

"Main objective of the proposed Pak-China joint power corporation would be to creating 3000 MW power generation capacity in Pakistan, based on imported coal in the short-term ie two to five years and on domestic coal in the medium and long-term, and ultimately by 2030, achieving the target of generating 20,000 MW through coal," the sources added.

The corporation would have a 50:50 equity partnership between the two countries with power supply companies and development financial institutions of the public sector as shareholders.

Being in the public sector, it would provide added security to financing through sovereign guarantees, thereby expediting funds, licensing and regulatory processes, the sources said, adding that fewer propriety issues were expected where exclusive mining right was required.

Pakistan has planned a number of major hydropower projects like Diamer Bhasha dam, Kalabagh dam and Neelum- Jhelum hydropower project in addition to numerous smaller hydroelectric power projects in the Northern Areas, NWFP and Azad Jammu and Kashmir (AJK) to increase its hydel generation capacity from the existing 6460 MW to 32,660 MW by 2030.

However, the time required for the implementation of these projects is too long and capital intensive. For oil-based power generation, the plan was to increase capacity marginally from the current 5400 MW to 7760 MW by 2030 as the rising cost of oil had made it uneconomical for energy production, the sources quoted Pakistan envoy as saying in his letter.

In the coal sector, Pakistan plans to increase its existing capacity of 160 MW to around 20,000 MW by 2030. Similar increases in power generation capacity were envisaged in the gas, nuclear and renewable fields. The total power generation capacity of Pakistan is expected to increase from the present 20,000 MW to more than 160,006 MW by 2030.

Coal-based power generation appears to be the best option for overcoming the energy deficit of Pakistan under the existing circumstances. It has been almost five years since coal reserves of 185 billion tons were estimated at Thar, but the private sector have not been able to make any headway in converting this abundant resource into tangible power generation.

According to the envoy, it appears that to establish coal power plants on a fast track, the projects should be launched in the public sector with equity participation of power companies and development financial institutions from both Pakistan and China.

Initially, coal power plants based on imported coal can be set up in the coastal areas of Pakistan near Karachi in the short-term ie two to three years. "In the intermediate term four to five years, we can set up coal power plants based on domestic coal, like Thar, Sonda Jheruk, Lakhra and Badin," he proposed.

According to him, China has a good experience in coal power generation. In China, more than 75 percent of its energy needs are being met through coal. In 2006 and 2007, China added more than 75,000 MW/year to its national grid.

China is also phasing out its older inefficient coal power plants of capacity 100 MW or less, more than 553 low efficiency plants 50-100mw capacity have been closed in 2007 alone, and instead, it is relying more and more on modem power plants with 300-600 MW capacity based on the latest ultra critical technology as well as advanced coal-fired integrated gasification combined cycle. Chinese companies and financial institutions have also established coal power plants successfully in Indonesia and Bangladesh.

A Chinese company M/s Sinocoal, International Engineering Group (SCIEG), which conducted the technical part of the feasibility study by M/s Shenhua on Thar coal and has recently expressed interest in designing the coal mines.

Chinese companies could generate power from coal by first converting into slurry, they thought that such a process might also prove useful for Thar coal, suggesting that to make Thar coal profitable, Pakistan needed to review not just the power tariffs for coal-based energy, but also the whole policy for coal, including mining, production as well as its import and export.

"They have offered to assist Pakistan review its policy provided they were formally requested through the Chinese government," the sources maintained. The sources said that if the proposal were approved, it would be made part of Pakistan-China Joint five-year programme for economic co-operation between the two countries.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Economy likely to remain strong: Escap survey ​* 
ISLAMABAD (March 28 2008): Pakistan's economy is expected to remain strong in 2008, with 6.5 per cent growth despite political uncertainties and some other disturbances, the United Nations Economic and Social Commission for Asia and the Pacific (Escap) said on Thursday.

In its Economic and Social Survey of Asia and the Pacific 2008, which was launched at the United Nations Information Centre (UNIC) here, the Escap said the growth would be close to seven per cent as recorded in 2007 and the 6.6 per cent in 2006.

"In just a few years, sound macro-economic policies have transformed Pakistan's consumption-led growth to one in which investment-led growth can assume a more important role," said Innovative Development Strategies (IDS) Director Sarfraz Khan Qureshi, while commenting on the Escap survey.

In 2007, the agricultural sector recovered strongly, growing by five per cent from just 1.6 per cent in 2006, while the manufacturing sector's growth sustained at 8.4 per cent in 2007, marginally down from the 10 per cent recorded in 2006.

A major driver of growth was investment. Both domestic private and a record foreign direct investment (FDI), inflows doubled from 2006, touching 8.4 billion dollars last year, helped in boosting the economic performance. "In 2007, investment in real terms increased by over 20 per cent," the Escap said.

While Pakistan's inflation rate was 7.8 per cent in 2007, the main concern is higher food prices, which rose by 10.3 per cent with its effects felt most strongly by "people living on low and fixed incomes." Inflation in 2008 is expected to remain high, close to last year's level.

"The inflation was fuelled by global increases in some commodity prices, higher utility tariffs, and by local supply- and demand-driven factors," the Escap said, adding the government efforts to stem price hike included the expansion of the public sector utility stores network, even extending the programme of subsidies for essential edibles to rural areas.

The Escap said the government's expansionary fiscal policy was seeking to promote investment led growth and pro-poor spending, and added the development expenditure had been taking more share of overall expenditure in recent years. But the central government's budget deficit in 2007 had remained steady at 4.2 per cent of gross domestic product (GDP), it said.

Concerns were evident over a sharp slow down in the growth of Pakistan's exports and imports in 2007. The rates of growth for exports fell 3.4 per cent, while for imports the growth rate dropped by 6.9 per cent.

A widening trade deficit was partly covered by remittances from migrant workers, which in 2007 rose to a record amount of 5.5 billion dollars. At the same time, the current account deficit is expected to further widen in 2008.

The Escap said the current account deficit would remain an issue for both Pakistan and other South Asian countries due to higher oil prices and the impact on the garment and textile trade with the lifting of quota restrictions on Chinese exports over 2008. "To reduce the risk of depending too heavily on a single sector, export diversification should remain an important part of government strategies," the Escap said.

PUBLIC DEBT AND FISCAL DEFICITS: The Escap further said that for most South Asian nations, including Pakistan, public debt remains a serious problem with domestic public debt now accounting for a larger component of total.

"In Pakistan, public debt growth during the 1990s was unprecedented. A credible debt reduction strategy and fast economic growth cut the public debt burden from 84 per cent of GDP in 2000 to 57 per cent by 2006," the Escap said.

Pakistan successfully reduced its external debt burden through rescheduling, a debt swap for social spending, debt cancellation and the prepayment of expensive debt. As a result, the debt service ratio has declined substantially from 2000 to 2006 though some 30 per cent of government revenues were allocated for debt servicing. "An Escap Secretariat analysis shows a further 20 per cent decrease in public debt service to government revenue ratio could increase development spending by 24 per cent," it said.

AGRICULTURE'S REVITALISATION The Escap, in a wider view of the Asia Pacific region, said efforts to reduce poverty, especially in the rural areas, required the promotion of productivity in the agriculture sector. The rural poor accounted for some 70 per cent of the poor in the Asia-Pacific region.

"Agriculture appears to be neglected, even though it still provides jobs for 60 per cent of the working population and generates about a quarter of the region's gross GDP," the Escap said in its Survey.

"In South Asia, growth in agriculture dropped from 3.6 per cent in the 1980s to three per cent in 2002-2003," the Escap said, adding by raising the average agricultural productivity across the region some 218 million, a third of the region's poor, could be taken out of poverty bracket.

It also noted that "large gains in poverty are also possible through comprehensive liberalisation of global agricultural trade, which could lift a further 48 million people out of poverty net in the region."

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Contingency plan to ensure availability of currency in war ​* 
ISLAMABAD (March 28 2008): The government is chalking out a contingency plan to ensure availability of coins and currency notes and their safe transportation in an event of emergency or war for which there is a proposal to increase the storage capacity of National Bank of Pakistan's (NBP) treasuries/chests across Pakistan.

Sources told Business Recorder on Thursday that the issue was discussed in a recent meeting of the Finance Committee on Defence Planning convened at the Ministry of Finance.

It has been proposed to update the provisions of a report prepared by the Finance Committee on Defence Planning in 1994 in consultation with the SBP/NBP to ensure safety and transportation of currency in war like-situation. Some amendments in the report have been prepared for the committee.

According to sources, the government may face two difficulties in war like situation. It encompasses transportation of coins and currency/bank notes and storage facilities for reserve stocks of coins and currency bank notes.

To tackle the situation effectively, a proposal is under study that the State Bank of Pakistan may increase the storage capacity of the NBP Chests to meet the increased requirements of coins and currency/bank notes. The provincial district administration will be responsible for providing escort and transport for movement of coins, bullion and currency/bank notes.

Responding to the proposal, sources said that there are nearly 221 NBP Chests, besides SBP Chests, in 15 cities spread all over the country. Presently, sufficient storage capacity is available to accumulate 100 percent additional coins and currency/bank notes for emergency requirements.

Recently, the provincial governments have created several new districts with new headquarters. The provincial government may give instructions to these districts for responsibilities to arrange transportation and provide police escort in case of emergency.

Sources said there is a proposal that two sets of designs of emergency notes of new designs of Rs 5, Rs 10, Rs 100, Rs 1000, and Rs 5000 should be prepared and approved. The engraved plates should be kept ready with the Pakistan Security Printing Corporation during peacetime. The decision as to which design should be printed will be taken only at the time of printing. In case of any Pakistani notes being forged by an enemy during the war, the existing patterns should be demonetised. The emergency design of Rs 20, Rs 50 and Rs 500 denomination notes need not be prepared.

Responding to the proposal, sources gave justification that the new design bank notes have lower size and variety of security features. The old design emergency notes do not keep the size, design, and the updated security features required for the purpose. Besides, the new denominations of Rs 20 and Rs 5000, introduced recently, are not described in the relevant report, which may be included in the same.

According to another proposal, in case of emergency or war, the Finance Division will inform the SBP about the "Stand-by-Stage" procedure. The SBP will advise the provincial governments of the institution of this stage and will caution all the offices of the SBP to remain alert. The offices will caution the heads of districts as well as the chest officers of their areas.

As soon as the information is received, all chest officers including sub-chest officers in the 3 border areas and danger zones shall keep the following arrangements ready:

Sufficient number of boxes necessary for the packing of currency/banknotes and coins; nails, straps, and signed seals; sufficient quantity of kerosene oil, fire-wood and match boxes; chisels and hammers and selection of a place for destruction of currency/bank notes and coins, if required.

Under the proposed precautionary measures, as soon as information is received by the State Bank from Finance Division at the "Precautionary Stage" about the movement of the enemy, it will inform the provincial governments and the offices of the SBP about the situation.

The offices of the SBP will inform the head of districts and the chest officers in the border areas and danger zones, on receipt of the information. The chest officers will pack up all currency/bank notes and coins, exceeding their two weeks requirements, in the boxes, transfer them to their link chest or reserve chest, which ever is nearest. The district co-ordination officer shall provide transport for the purpose.

Responding to this proposal, committee has been informed that the previous name of Central Directorate of State Bank of Pakistan has been changed to State Bank of Pakistan. The nomenclature of Deputy Commissioner has been changed to District co-ordination officer. The above names require updating and have been proposed accordingly.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Less important projects may be dropped from next year's ADP ​* 
KARACHI (March 28 2008): The Sindh Planning and Development Department will prepare a report on the basis of which projects were assigned priority for execution and funding so that the less important and uncompleted projects could be dropped from the next year's development programme, it was learnt on Thursday.

Sources said that the new and the ongoing projects could not be given impetus during the current financial year as the outgoing cabinet devoted its time in the electioneering of its respective political parties than devoting to development work.

The adversely affected projects were in the health, education, communication and works and irrigation sectors for which 75 percent of the allocation was reserved. Sources said that farm to market roads, lining of canals and opening of new health outlets and schools in the rural Sindh remained a "dream" as funds for projects in these sectors were not released with punctuality.

They said that the foreign assistance was involved in these projects. The progress report and expenditure statements should follow requests for funds from the implementing agency, that did not happen, they added.

They said that repeated requests and even harshly worded reminders did not motivate the implementing authorities to respond to the requirement for the release of funds. Sources said that in the 2008-09 Sindh budget, the ongoing projects would be completed on priority basis, if need be, and no new projects would be initiated in a district unless the old projects were completed.

The priority, sources said, would be given to improvement of agriculture, farm to market roads and lining of canals. Sites for small dams/water reservoirs and availability of potable water sources were the other two areas of concern, they said.

According to one proposal, the arid land in lower Sindh where cultivation is dependent upon rains would be converted into grazing grounds and be given on lease to those farmers, who exclusively depend upon animal husbandry.

A survey proposal of available land for this purpose has been finalised and preparation to assign the task to private consultants to prepare feasibility report has been completed.

To a question if the size of the annual development plan would be enlarged, the sources said that keeping in view the backlog of development work, there was room for only 10 to 15 percent increase in the ADP allocation. "This enlargement does not mean new schemes and fresh allocation but provision to offset effect of inflation."

They said that the next ADP would clearly indicate allocations for urban and rural Sindh. Only those projects would be preferred, which might generate employment, provide infrastructure for the expansion of economic activities and encourage small-scale agro-based industry in the rural area and cottage industry in the urban area, they added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*NPLs of banking sector touch Rs170 billion.​* 
Saturday, March 29, 2008

KARACHI: The gross non performing loans (NPLs) of the banking sector have reached to a level of Rs170 billion in 2007, representing 6.5 percent of gross advances, a year earlier NPLs were recorded at Rs141 billion (5.8 percent of gross advances).

This was revealed in a study conducted by First Capital Equities Limited (FCEL) a local brokerage house on the bases of listed commercial banks which represent 96 percent of overall banking sector assets in the country. 

Segment wise analysis revealed that textile sector witnessed highest increment (in absolute terms) in NPLs that increased by Rs10.4 billion or 25 percent to Rs51 billion. Textile sector was followed by individuals (mainly dominated by consumer financing clients) where NPLs growth was Rs9.8 billion or 111 percent to Rs18.6billion against Rs8.8 billion at the end of 2006. As far as the asset quality of these loans is concern, gross NPLs to gross advances ratio for textile and individuals stood at 9 percent and 4 percent respectively. At the end of 2007, the outstanding advances in these two sectors were recorded Rs565 billion and Rs426 billion correspondingly. 

FCEL considered that high interest rate as the major contributory factor for unprecedented rise of NPLs in these sectors. In addition, rising input cost coupled with lower export sales added further miseries for textile sector. 

The State Bank of Pakistan (SBP) withdrew benefits of forced sales value of assets on non-performing loans and in a result, profitability of the listed commercial banks declined by 7 percent to Rs74.6 billion during the year. However, due to the said regulation, assets quality of the banks improved notably with net NPLs to net advances ratio declining to 1.6 percent. In addition, the loan loss coverage ratio of the banks also improved to 77 percent versus 68 percent a year earlier. 

After studying the international banking sectors, we found to not consider value of collateral while providing provisions as the most appropriate practice followed by commercial banks, FCEL said. 

The analysis report further said that due to withdrawal of forced sale value of assets, loan loss coverage ratio of the banking sector improved to 77 percent at the end of 2007 from 68 percent a year earlier.

Net NPLs to net advances of the sector reduced to 1.6 percent from 1.9 percent at the end of 2006. These ratios could depict further improvement if withdrawal of FSV will also be applicable on agricultural and housing finance loans. The banking sectors outstanding advances in agriculture finance (mentioned as agriculture, forestry, hunting and fishing in annual accounts of the banks) were recorded at Rs107 billion at the end of 2007 while NPLs against these loans were of Rs10.4 billion. The gross NPLs to gross advances ratio of agricultural segment was calculated at 10 percent while net NPLs to net advances arrived at 5 percent. 

Although the macro environment is not very much favourable as compared to last 3-4 years, strict risk management guidelines will force commercial banks to pursue a more vigilant approach on the quality of the loans. We believe this cautious approach will result in improved asset quality of the commercial banks, going forward, FCEL said.

NPLs of banking sector touch Rs170 billion


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## Neo

*Cement sales in March hit record 2.6m tonnes ​* 
Saturday, March 29, 2008

KARACHI: Cement sales during the month of March 2008 have breached the previous monthly record high of 2.56 million tonnes (Nov 2007) to reach 2.61 million tonnes by March 25, 2008. 

This has been achived on the back of record breaking exports of 726,000 tonnes (previous record 645,000 tonnes in Feb 2008) and 1.9 million tonnes local sales (also close to its record for a single month).

The total expected sales at the end of March 2008 would reach 3.2 million tonnes with local sales reaching 2.3 million tonnes and exports 903,000 tonnes, JS Research projected. After analyzing first 25 days sales figures of March 2008, it is expected that the total cement dispatches in March 2008 would reach 3.2 million tonnes. This would translate into a significant growth of 42 per cent on year on year basis and 30 per cent on month on month basis.

Exports, which have already broken the monthly record of 645,000 tonnes set in Feb 2008, are believed to exceed 900,000 tonnes registering a phenominal growth of 143 per cent YoY and 40 per cent MoM. However, the local sales which made a record of 2.0 million tonnes in November 2007 are likely to reach 2.3 million tonnes in March 2008, the report said.

High cement dispatches during this period is a normal phenomena since it marks the start of peak demand season. Winter season has ended and upbeat construction activities, both in the local and the exports market, are on the rise.

Looking at the cement sales figures of March 2008, it is exected that the 9 months (Jul-Mar) of FY08 total dispatches to reach 21.8 million (already reached 21.2 million tonnes till March 25 2008), up by 25 per cent YoY. 

This growth will be on the back of 140 per cent rise in exports from 2.1 million tonnes to 5.2 million tonnes, and 9 per cent rise in local sales from 15.4 million tonnes to 16.7 million tonnes during the period under review.

The company-wise sales breakup reveals that Pakistan Cement and Maple Leaf Cement would be the two companies to post cement dispatches growth of over 100 per cent in 9 months (Jul-Mar) FY08 with sales at 1.8 millon tonnes and 1.9 millon tonnes, respectively. The second highest growth of 76 per cent in dispatches will be of DG Khan, followed 49 per cent and 23 per cent by Pioneer Cement and Lucky Cement, respectively. 

The President of Karachi Cement Dealers Action Committee, (KCDAC) Wali Bhai Patel said that the rise in cement prices is not just because the production cost is not what they riased, and this is just in line to make profits when government control is weak to control cement companies activities.

We demand new government to take serious action of the investigation of Monopoly Control Authorty (MCA) now Competition Commission of Pakistan (CCP) against cement companies in previous government which after its completion did not make public and this is the need of hour to book those who are responsible of cement cartels in the country, he added. Badruddin Fakhri, Managing Director of Galadari Cement says: Due to high demand of cement its prices are rising in many countries and so in Pakistan. Other than that there has been a huge increase in international coal prices which is one of the base of rising cement prices in Pakistan too, which is just in any sense. FZ

Cement sales in March hit record 2.6m tonnes


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## Neo

*94pc urban poor dont keep savings in banks: study ​* 
Study funded by the United States Agency for International Development says that they keep savings either at home or in committees

Saturday, March 29, 2008

ISLAMABAD: A new microfinance research study released on Friday stated that poor people generally saved through keeping cash at home and in committees, generically known as Rotating Credit and Savings Associations.

About 94 per cent of the poor interviewed in the report entitled Mobilising Savings from the Urban Poor in Pakistan: An Initial Enquiry, said they saved money either in cash or committees or both of these forms, but rarely in formal financial institutions including banks.

The research was conducted by ShoreBank International, a consultancy firm working with financial institutions in more than 40 countries across the globe to create access to financial services for low-income population, not served by traditional financial institutions.

The study was funded by the United States Agency for International Development (USAID) under a US$5 million project recently completed by SBI. Authored by Hussan Bano Burki and Shama Mohammed, the report aims at understanding the saving behaviour, preferences and attitudes of low-income potential savers in Pakistan and draw implications for commercial and microfinance banks regarding the design, marketing and delivery of saving products that appeal to the low-income savers, and at the same time are viable for the financial institutions to offer.

The study observed that in general, the low-income savers use multiple means of saving such as cash, prize bonds, gold and land to cater for both, predictable events requiring a large sum of cash in the future and for emergencies in the short and medium term such as illnesses. Savings through committees were also seen to range from Rs2 per week to Rs15, 000 per month by a low-income saver.

The report observes that while microfinance institutions in Pakistan have provided credit to those individuals who had no prior formal access, yet they lag behind considerably in providing access to saving opportunities to the low income population that may want to save, but do not have the access to opportunities for saving with a formal institution.

With only 7,494 branches of licensed banks operating to mobilise and intermediate deposits from the public, the infrastructural access for formal savings in Pakistan remained as low as 4.8 branches per 100,000 people in June 2006 against 6.3 in India and 8.6 in Indonesia (2004 figure), says the reports author Hussan Bano Burki.

The 38-page study provides banks interested in tapping the savings of the poor profitably, the parameters and general guidelines regarding saving product type, marketing strategy and distribution channel options that they should consider to offer for market responsive and viable saving services to the poor.

The authors suggest that the key for banks to mobilise savings from the urban poor, may be in offering saving products that replicate those features of informal saving methods that are popular amongst them and improve upon the disadvantages of these informal saving mechanisms.

The report postulates that given the right terms and conditions of a saving product for the poor, a well thought out marketing strategy will be essential for banks to successfully mobilise savings from the low income people.

The study urges banks to introduce simple processes to open a savings account and to make transactions. Many people cited the long and complicated processes and requirements for opening bank accounts as a reason for not saving with them.

The report advised that banks which want to mobilise savings of the poor, to re-orient their staff towards servicing the low income segment. United States Agency for International Development (USAID) report points out that a number of participants in the study cited attitude of the bank staff as disrespectful and unhelpful.

As the microfinance sectors active borrowers are estimated to more than double by 2010, this sector must begin to prepare to turn to savings as an alternative source of funds for growth, and should begin the groundwork right now, the report concluded.

94pc urban poor dont keep savings in banks: study


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## Neo

*Pakistan may face burden of external debt-servicing​*
ISLAMABAD, March 27: Pakistan is likely to face a higher external debt-servicing burden as repayments of rescheduled non-ODA Paris Club stock resume in 2008 and some foreign currency bonds mature.

A sustained high current account deficit could also hurt the external debt-to-GDP ratio, which may start rising in the medium term, according to the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) report released here on Thursday.

In Pakistan, debt growth during the 1990s was unprecedented.

A credible debt reduction strategy and fast growth cut the public debt burden from 84 per cent of the GDP in 2000 to 57pc in 2006.

Pakistan reduced its external debt burden through rescheduling, a debt swap for social spending, debt cancellation and prepayment of expensive debt.

The debt service ratio has substantially declined in Pakistan over 2000-2006, though about 30 per cent of government revenues remain allocated to debt-servicing.

The report says if Pakistan follows its historical growth path, its debt-to-GDP ratio will continue to decline over the next five years. But an upsurge in the primary deficit would slow the reduction.

Because of a growing budget deficit, improvement in the ratio of domestic public debt-to-GDP since 2001 appears to have bottomed out.

In Pakistan, the share of the banking sector in domestic public debt is rising, and commercial banks are becoming major players. In the year 2007, the share of commercial banks reached 65 per cent, compared with 35 per cent for the central bank.

About the over-all economic performance of Pakistan, the report says the economy of Pakistan maintained its growth momentum in 2007, growing by seven per cent, slightly more than the 6.6 per cent for 2006.

Agricultural sector growth recovered sharply, from 1.6 per cent in 2006 to five per cent in 2007.

Manufacturing sector growth continued at 8.4 per cent in 2007, slightly more moderate than the 10 per cent for 2006.

Services grew at eight per cent in 2007, down from 9.6pc in 2006.

Exports were sluggish in 2007; economic growth was driven mainly by strong domestic demand. Investment overtook consumption, helped by a surge in domestic private investment and record FDI flows. In 2007, investment in real terms increased by more than 20 per cent.

Pakistan increased its development expenditure from about two per cent of the GDP in 2001 to about five per cent of the GDP in recent years, mainly after the government reduced its debt burden, partly due to external debt relief.

A further 20 per cent decrease in the debt service ratio could increase development spending by 24 per cent.

In India, the tax-to-GDP ratio of the central government hovers around 10pc. In Bangladesh, Nepal and Pakistan, tax-to-GDP ratios are also low, ranging from nine to 11 per cent without much improvement over time.

Inflation in the developing countries of Asia and the Pacific rose from a low of three per cent a year in the 60s to more than 10 per cent in the 70s and 12 per cent in the 80s and 90s. Rates have since come down to about six per cent, they remain high in Pakistan, Sri Lanka, the Lao Peoples Democratic Republic, Samoa and Tonga.

The regions five largest recipients of remittances in 2007 were India, China, the Philippines, Bangladesh and Pakistan, with remittances totalling $82bn in 2007.

South Asias strong aggregate economic growth rate of 7.4 per cent for 2007 was spearheaded by India, which grew by nine per cent and appears to be moving on to a new, high-growth phase as rates of investment in the economy rise sharply.

Bangladesh, Pakistan and Sri Lanka continued their growth momentum and grew by more than 6.5 per cent for the year.

North and Central Asia will continue to benefit from consumption and construction, thanks to high energy prices. South and South-West Asia, with traditionally domestic-demand-driven economies, will benefit from strong private consumption and investment and from expansionary fiscal policy in some countries.

Pakistan may face burden of external debt-servicing -DAWN - Business; March 28, 2008


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## Neo

*Two ADB, IFAD-funded projects in progress in Fata ​* 
PESHAWAR (March 29 2008): Two development projects worth Rs 4.698 billion are under implementation in the Federally Administered Tribal Areas (Fata) to raise the living standard of the people of target areas and ensure sustainable socio-economic development. These projects are being executed with the active support and participation of the Asian Development Bank and IFAD.

This was told during a presentation to NWFP Governor Owais Ahmed Ghani on the Fata Rural Development Project and South Fata Development Project, held at the Governor's House here on Friday.

Additional Chief Secretary, Fata, Habibullah Khan, besides Fata Finance Secretary, Directors of Fata line departments and officials of both the projects attended the presentation. The Fata rural development project, it was stated, was for three agencies of Bajaur, Mohmand and Khyber, aiming at poverty alleviation through assisting the communities.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Country facing 3000-megawatts shortage: Mepco ​*
MUZAFFARGARH (March 29 2008): The country is facing power shortage of 3000 mega watts, said an official of the Multan Electric Power Company (Mepco) on Friday. Executive engineer of the Mepco, Wazir Ahmed Sheikh, told APP that the country's requirement is 21,500 mega watts while the production at the moment is 19,500 mega watts.

The production is contributed as under: Hydel power from dams 6450 mega watts, thermal power plants 3900 mega watts, private power plants 5700 mega watts and KESC 2000 mega watts. The Mepco official hoped that more hydel power would be generated by existing plants with increased water levels in the rivers as temperature rises. He said that the shortfall has compelled the Mepco to resort to load shedding.

Business Recorder [Pakistan's First Financial Daily]


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## opinion786

MEPCO mentions above: Hydel 6450 MW + Thermal 3900 MW + Private 5700 MW + KESC 2000 MW = 18,050 MW.

But MEPCO wrote our production capacity at moment is = 19,500 MW.

Have they missed the 1450 MW Ghazi brotha Hydel Power project of 2004, in these above mentioned? Becuz they're falling short of 1450 MW in their calculations? 

We have managed to increase around 5000 MW in last 8 years, keeping in mind that our requirement went up by 70% in the last 10 years! 

As, in 1999 our installed capacity was merely 15,860 MW. (With Hydel 4826 + Thermal 10,897 + Nuclear 137)


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## Neo

*Tajikistan to sell cheap power to Pakistan ​* 
Sunday, March 30, 2008

LAHORE: Tajik Ambassador Said Saidbaig has stated that Tajikistan is constructing a high-power transmission line from Tajikistan to Afghanistan and Pakistan.

He also said that a consortium of Russia, Iran, Kazakhstan, Ukraine and Qatar is executing the construction of two huge hydropower stations.

He was speaking at the inaugural session of a seminar on National Trade Corridor, jointly organised by Lahore Chamber of Commerce and Industry (LCCI) and the Chartered Institute of Logistics and Transport (CILT) at the LCCI on Saturday.

He added that after the completion of these projects in two years, Tajikistan would be able to export cheap electricity to Pakistan and Iran.

The ambassador also said that the construction process of an international road from Tajik capital, Dushanbe to Kyrgyzstan, Uzbekistan and China is well under way. This will give an opportunity to Tajikistan to enter Pakistan and reach the Gwadar Port.

National Highway Authority (NHA) chief said that Gawadar Port is going to play a big role in National Trade Corridor Programme, because by implementing it in true letter and spirit, we would become part of the international community. 

However, he stressed upon technical training to keep abreast with development taking place across the globe.

Speaking on the occasion, LCCI President Mohammad Ali Mian said that with the implementation of National Trade Corridor program declaring Karachi Port as the mother port for Afghanistan, Central Asian Republic and Western China, economic activities in the region will boost considerably.

He said that the key objective of the National Trade Corridor Programme is to reduce share of domestic transport and cost of non-service factors in the total value of commodities, along with the overall reduction in transport and transit costs for goods. It would also help enhance Railways share of long distance traffic of freight, reduce the operating deficit of railways and improve safety of transport and procurement operations.

Tajikistan to sell cheap power to Pakistan


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## Neo

*Foreign-funded projects cost more: Hameed ​* 
Sunday, March 30, 2008

LAHORE: Foreign-funded projects in Pakistan tend to take more time and funds than similar projects completed through local resources. The reason for this is skewed perception of the integrity of Pakistanis.

Former federal minister for water and power Tariq Hameed stated this while speaking at a symposium on Procurement and Contract Management organised by Pakistan Engineering Council.

He said the projects funded by foreign donors required evaluation at each stage by a local consultant which was then sent to a foreign consultant hired by the donors who would reevaluate it and give final approval at each stage of the project. This is time-consuming and involves dual payment for the same job, he said, adding the perception about the integrity of Pakistani engineers was not correct.

Citing a recent example, he said the National Transmission and Dispatch Company of WAPDA initiated two similar projects at Sahiwal and Ghakkar. The loan for the Sahiwal project was arranged locally while the Ghakkar project was funded by a foreign agency.

He said the Sahiwal project was completed in November 2006 at lower than projected cost, while the Ghakkar project was expected to be functional in November 2008 at a much higher cost.

Hameed said current procurement rules that forbade further negotiations with the lowest bidder needed to be changed as the national exchequer had suffered heavy losses due to those rules. In many instances, he added, the lowest bidder quoted inflated rates that could be brought down to reasonable levels through negotiations.

He said from his experience in the Water and Power Development Authority he found that implementation of thermal power projects remained in line with feasibility reports. However, in case of water projects many crucial facts were ignored in haste that resulted in higher costs and prolonged litigations.

It is better to delay the feasibility for six months instead of facing litigation and inflated costs five years later, he suggested.

Pakistan Engineering Council President Engineer Husnain Ahmad said Pakistan followed internationally-accepted procedures and conditions for the award of contract. He said these conditions were generally well-balanced and great care was needed while amending them to incorporate specific needs of the contract. Otherwise, he cautioned, the cost would be unavoidable.

Foreign-funded projects cost more: Hameed


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## Neo

*Govt plans to adopt Brazilian cotton production model​*
** 10.77 percent cotton crop shortfall 2007-08​*
ISLAMABAD: The government is planning to adopt Brazilian cotton production model for achieving the 2008-09 propose cotton production target of 14.11 million bales over the area of 3.2 million hectares in the coming Kharif season. 

Provincial wise expected cotton targets would be, Punjab 11 million bales, Sindh 0.63 million bales, NWFP 0.01 million bales and Balochistan 0.10 million bales. 

Last year 2007-08 the cotton production target was fixed as 14.14 million bales that was revised twice and now is expected at 11.6 million bales. Main reasons of lower cotton production were floods, rains, mealy bug attack, Cotton Leaf Curl Virus (CLCV) and use of sub standard quality of seeds, officials in the Ministry of Food, Agriculture and Livestock told Daily Times here on Saturday. 

According to the Pakistan Cotton Ginners Association current report, cotton arrivals into Ginneries as on 1 February were equivalent to 10.644 million bales as against 11.928 million bales recorded on the same date last year, thus showing a shortfall of 10.77 percent. However, the officials said cotton was still arriving into the ginneries and the final cotton arrival position would be available in April 2008. 

According to the feedback received from the spinners and raw cotton exporters, the officials said there was growing concern about the quality of cotton, they maintained. Cotton prices this season in the country was observed significantly higher than last year. The seed cotton prices during the season so far have average at Rs 1453 per 40 kg as against last years average price of Rs 1164 per 40 kg. 

About the propose cotton target of 14.1 million bales for the year 2008-09, the officials said collaborated approach needs to be pursued including improving the cotton production and its quality in the country. In this regard, a reference to the Brazilian cotton production model for learning lessons from their experiences may not be out of context. Officials said the cotton sector of Brazil has transformed itself and recovered its market position, turning the country from net importer into one of the worlds largest cotton exporters in a relatively short period of time. 

According to the officials, the government has to spent more money over research and development of cotton keeping in view the Brazil as a model for improving cotton production. The present level of national average yield (719 kg as compared to 1334 kg/ha in Brazil) may however, be improved significantly by providing certified seeds of approved varieties and balance use of fertilizers (subsidy on phosphate and potash fertilizers may continue for few years so that the farmers use it). 

For attaining the propose cotton target for year 2008-09, the government proposes to increase area under cultivation in NWFP and Balochistan. The government has established a proposed action plan for increasing cotton production. According to the plan, the officials said cotton area is to be increased at least to 3.20 million hectares. Others factors of the new cotton strategy include, arrangement to be made for availability of 63,000 metric tonnes of certified seeds of approved cotton varieties. Late sowing to be discouraged. Plant population to be increased to 18,000 to 20,000 plants per acre through higher seed rate and timely re-sowing, if so needed. Subsidies on phosphate and potash fertilizers to continue for encouraging the balanced use of fertilizers. Growers to be encouraged to also add micronutrients to the soil for retention of larger number of flowers and bolls. The strategy was to ensure the availability of adequate and insect specific pesticides through out the crop growth and development period, particularly for mealy bug and white fly. 

About world cotton situation, the officials said, at international level production was estimated at 118.8 million bales in 2007-08, 3 percent lower than during the previous season due to decline in world area by 1.2 million hectares to 33.6 million hectares. In 2007-08, cotton production is estimated to decline in the USA by 12 percent, China by 3 percent, Pakistan by 11 percent, Turkey by 12 percent. However, production in 2007-08 estimated to increase in India to a record level by 11 percent and Brazil by 5 percent, the official maintained.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Economy needs hard decisions, says Dar: Consultations started for new policy​*
ISLAMABAD, March 29: It is because of the wrong policies of the previous government that several major budgetary targets will remain unmet during the current financial year, says Ishaq Dar who is likely to be inducted into the cabinet as a finance minister soon.

The budget for 2007-08 warrants special measures and a new strategy to remove various economic distortions that were created by former rulers, he said here on Saturday.

He said he had earlier chaired a special meeting held on the orders of the prime minister to evaluate the state of the economy and propose short- and long-term measures to rebuild it.

He said the trade deficit had increased to more than $12.5 billion in the first eight months of the financial year. Similarly, he said, the fiscal deficit target that was set at four per cent of the GDP could not be met. Food inflation, he said, had increased continuously and needed to be brought down immediately.

Mr Dar said the incoming government would be inheriting a ruined economy and it would take time to set things right.

He said that he had informed the prime minister about various measures needed to be taken urgently for improving the state of the economy.

I have started consulting the officials concerned to firm up a new economic policy to be pursued by the new government during the next five years, Mr Dar remarked. Mr Dar said that one of the toughest challenges the new government faced pertained to the hardships of the common man. I am glad that the prime minister has announced a relief package for farmers and the poor on my recommendations.

He said it would not be an easy task for the new government to deliver under the circumstances obtaining in the country. However, he said, he would seek the support of all major political parties so that the government might come up to the expectations of the people.

Mr Dar said that with the announcement of the reforms package by the premier on Saturday, it was now vital for the government to implement the same in both letter and spirit.

He said that the new government would have to carve out its policies in a very sensible way. But we need to look after our people immediately and we would provide them certain relief, he said.

Economy needs hard decisions, says Dar: Consultations started for new policy -DAWN - Top Stories; March 30, 2008


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## Neo

*Punjab consumes 84pc of farm credit​*
KARACHI, March 29: The Punjab has emerged as the main beneficiary of agricultural loans as the province consumed 84 per cent of entire loans disbursed by the banks during July-Dec 2007-08

According to the State Banks fresh data on agricultural loans, rest of the 16 per cent was consumed by Sindh, the NWFP, Balochistan, Azad Kashmir and Northern Areas.

The SBP released this kind of data for the first time.

The new study of the State Bank has been conducted to give a real picture of the agricultural loan distribution to policy makers. It carried out this study to collect data of district-wise disbursement of loans.

In the first six months of the current fiscal year, banks disbursed Rs90.3 billion to agricultural sector, while Punjab consumed Rs75.6 billion out of this total amount, which makes it 83.7 per cent.

Sindh, being the second largest province got Rs10.2 billion for agriculture sector during the period under review. The situation is pathetic for other provinces as Balochistan looks completely neglected part of the country as far as the agriculture loan is concerned.

During this stated period Balochistan received just Rs200 million, which was even less than AJK which received Rs400m.

The NWFP received only Rs3.9 billion for agricultural sector. This distribution trend shows that either the banks are not interested in areas other than Punjab, or the representatives from the respective provinces never bothered to take care of their agricultural sector. All provinces had their own governments for five years while they also had representations in the lower and upper houses including ministries in the last assembly.

The study showed that almost all districts of Punjab were active participants and all of them received agricultural loans.

The district-wise data reveals that banks disbursed agricultural loans in all 36 districts of Punjab and 23 districts of Sindh whereas the disbursement in NWFP, Balochistan and AJK, NAs and Fata restricted to 20, 22 and 7 districts, out of total districts of 24, 30 and 21, respectively.

The average disbursement per district stood at Rs2.1 billion in Punjab, Rs400 million in Sindh, Rs160 million in the NWFP and only Rs7 million and Rs29 million in Balochistan and AJK, respectively.

The district-wise average disbursement of credit shows the gap is too wide while comparing it with Punjab

Major recipients of agricultural loans were Lahore, Rawalpindi, Sheikhupura, Kasur, Multan, Muzaffargarh, Bahawalpur, Bahawalnagar, Sialkot, Khanewal, and Mianwali in Punjab; Hyderabad, Khairpur, Karachi, Sukkur, Sanghar, Ghotki and Nawabshah in Sindh; Mardan, Charsadda, D.I. Khan, Swabi, Swat, Nowshera and Mansehra in the NWFP; Quetta, Nasirabad and Jaffarabad in Balochistan; Muzaffarabad, Kotli and Bagh in AJK; and Gilgit in Northern Areas.

The data depicts that the major thrust of agricultural financing is towards farm sector. Out of total disbursements of Rs90.3 billion, an amount of Rs66.3 billion (73 per cent) was disbursed in farm sector and Rs24 billion (27 per cent) to non-farm sector

The bank-wise data reveals that the five big commercial banks and Zarai Taraqiati Bank Limited (ZTBL) extended country-wide loans. However, disbursement by other commercial banks was restricted to areas based on their branch network in respective districts.

Punjab Provincial Co-operative Bank Limited (PPCBL), being a provincial bank, has covered all districts of Punjab, while Bank of Punjab covered all districts in the province in addition to one district in Sindh and three districts in the NWFP.

With a view to analysing the current agricultural loaning at the grassroots level and to identify the gaps between demand and supply of agricultural financing, the State Bank has rationalised agricultural credit data base with effect from July 2007, whereby banks are sending agricultural credit data on size of loan, land holding-wise disbursement, and district-wise loan data, etc.

The SBP says the move is part of various initiatives, including guidelines, schemes on agricultural financing, capacity building of banks and creating awareness amongst the farming community, to continuously enhance the flow of credit to the agriculture sector.

The SBP said the data will help researchers, economists, policy-makers and other stakeholders in policy formulation.

Punjab consumes 84pc of farm credit -DAWN - Business; March 30, 2008


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## Neo

*Pakistan gets chance to capture rice markets​*
RIYADH, March 29: With India and Vietnam, the two major rice exporting countries, opting to restrain their rice exports, Pakistani rice exporters could re-enter the regional markets in a big way, experts here think.

India has been the major rice exporter to Saudi Arabia for last many years. The country has also been procuring rice from Pakistan, the United States and Thailand. Pakistani basmati is believed to be preferred in the Eastern Province. In the Western Province of the Kingdom, there is a preference for parboiled rice. The United States and Egypt are among other countries exporting rice to Saudi Arabia.

Saudi Arabian annual rice imports are in excess of one million tons. India currently holds roughly 70 per cent of this market, but this could be in for a major change in view of the recent Indian restriction on exports. Pakistan could be a major beneficiary, re-entering the lost Saudi market in a big way, if proper incentives are provided.

Pakistans share of the market today stands roughly at 11 per cent. A decade ago, Pakistan was holding 50 per cent rice market of Saudi Arabia. In recent years, Pakistani exporters have been endeavouring for a 25 per cent share of the Saudi rice market within the next few years, expanding it to 50pc ultimately.

Reports here indicate that India has raised the minimum sale price for rice exports by more than 50 per cent, effectively ending overseas sales of all but the highest quality grades. India has raised the minimum export price for non-basmati rice to $1,000 per ton from $650 to protect domestic supplies. It also scrapped tax incentives for exporters of non-basmati rice to tame price pressures in local markets.

India traditionally exports about 4 million tons of rice a year. And this year they just stopped, so that 4 million tons out of a market of say 29 million tons was removed, analysts said, adding to the tight global supply scenario of the staple grain.

A couple of days back, Hanoi confirmed also it would cut rice exports by 22 per cent this year. In Vietnam, consumer prices rose by nearly 20 per cent in March, the highest in more than 12 years, while Indias wholesale price inflation has surged to a near 14-month high, posing a major policy challenge at a time when economic growth is slowing.

Vietnam, the worlds second-biggest rice exporter, will limit shipments to 3.5 million tons; down from 4.5 million tons last year, to stabilise local prices, a government statement quoted Prime Minister Nguyen Tan Dung as saying after Hanoi imposed a limit for the first 10-month shipment last week.

Vietnam exported 859,000 tons of rice in the first three months of this year, up by 5.3 per cent from a year earlier, government figures show.

Vietnam will save 1 million tons of rice for Northern provinces and will see prices easing following this cut, rice traders in Ho Chi Minh City, Vietnams largest grain trading market, were reported as saying.

Egypt said earlier this week it would also ban rice exports from April 1 to October, so as to hold down local prices. In the meantime, owing to shortages felt in the local market, the Philippines aims to import up to 2.2 million tons this year in what could be the biggest overseas purchase in a decade.

Pakistan gets chance to capture rice markets -DAWN - Business; March 30, 2008


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## Neo

*11.2 percent decline in textile exports ​* 
ISLAMABAD (March 30 2008): The share of textile exports in the overall exports of the country decreased by 11.2 percent during July-February, 2007-08 period to 56.6 percent from 63.7 percent of July-February 2006-07. Similarly, the share of textile exports in overall exports of the country in February 2008 decreased to 48.6 percent from 64.5 percent in February 2007.

This clearly reflects a decline of 24 percent. The textile exports declined by 3.44 percent during the first seven months of the current fiscal year over the same period of last year. The government's export target for 2007-08 is $19.2 billion, whereas the declining trend of the share of textile exports in the country's overall exports is indicative of the fact that the country might miss the set target.

The long looming energy crisis in the country has forced most of the textile industrialists to shift their business to Bangladesh. The high cost of production due to power interruption that includes shortage of electricity and high gas tariff has forced industrialist to entertain less foreign orders than ever before. According to a rough estimate, the cost of production is 12 percent more than the regional competitors.

For July-February 2007-08 the overall exports of the country were worth $11.7 billion, while for July-February 2006-07 these were worth $10.8 billion. Comparatively it indicates an increase of 7.2 percent, but the case is different as total textile exports of the country were taken as a whole. For July-February 2007-08 these exports are worth $6,630 million whereas in the same period of the last fiscal year these were worth $6,923 million.

Therefore, the difference of approximately 4 percent is indicative of the decline in the value of textile exports. During July-February 2007-08, the textile exports were worth $6.4 billion as compared to $6.7 billion in July-February 2006-07, showing a decrease of 4 percent. The export of synthetic fibre for July-February 2007-08 was $0.3 billion as compared to $0.2 billion during the same period of last fiscal year.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Cheap electricity from Tajikistan likely within two years ​* 
LAHORE (March 30 2008): Tajikistan will be able to export cheap electricity to Pakistan and Iran, Tajik Ambassador Said Saidbaig said here on Saturday. He was speaking at the inaugural session of a seminar on "National Trade Corridor (NTC)," jointly organised by the Lahore Chamber of Commerce and Industry (LCCI) and Chartered Institute of Logistics and Transport (CILT) at the LCCI.

The Tajik Ambassador said his country was constructing a high power transmission line from Tajikistan to Afghanistan and Pakistan. He said a consortium of Russia, Iran, Kazakhastan, Ukraine and Qatar was executing the construction of the two huge hydropower stations of the size Tarbela dam at Raguon.

Within two years after the completion of these projects, Tajkistan would be able to export cheap electricity to Pakistan and Iran. The seminar, presided by National Highway Authority (NHA) Chairman Major General Imtaiz Ahmad, was also addressed by LCCI President Mohmmad Ali Mian, Ambassador of Afghanistan Anwar Anwarzai and LCCI Standing Committee on Transport and Logistics Chairman Muhammad Anwar.

The Ambassador said that the construction process of the international road from Tajikistan capital Dushanbe into the direction of Kyrgyzstan, Uzbekistan and China would give an opportunity to Tajikistan to enter Pakistan and reach Gwadar Port. This road would not only benefit Tajikistan, but would also help Pakistan get additional boost in terms of trade, he added.

NHA Chairman Major General Imtiaz Ahmad said the completion of the National Trade Corridor (NTC) would not only help bring the world resources to Pakistan, but it would also cut the cost of doing business as infrastructure played an important role in promotion of trade and industry.

The NHA chief said Gwadar Port was going to play a big role in the NTC programme because by implementing it in letter and spirit, "we would become part of the international community." He, however, stressed the need for technical training to abreast with the development-taking place across the globe.

LCCI President Mohammad Ali Mian said that with the implementation of NTC programme and declaring Karachi Port as mother port for Afghanistan, Central Asian Republic (CAR) and Western China would give considerable boost to economic activities in the region. He said that the key objective of the NTC programme was to reduce share of domestic transport and cost of non-service factors in total value of commodities.

It would also help enhance railways share of long distance traffic of freight and reduction in the operating deficit of railways and improve safety of transport and procurement operations, he said.

He said that under the NTC programme, it was proposed to set up multi-purpose parking and resting facilities for trucks and drivers at locations close to the main cities.

He said that other carrier companies along with National Logistic Cell (NLC) should be allowed to carry goods in transit to Afghanistan and Central Asian Republics as the NLC had failed to operate in these countries due to economic and political situations in Central Asian Republics and Pakistan.

Stressing the need for the modernisation of freight trucking fleet, Mian said that it was imperative as Pakistan's dependence on road freight was high and was growing fast.

The government should provide all necessary support for the modernisation of infrastructure facilities under the NTCIP, which would contribute in saving of two to 2.5 billion dollars per annum, he said, adding the modernised trucking fleets would reduce fuel import bill by 25 percent and road maintenance cost by one billion dollars. At the end, Mian distributed certificates and shields to participants.

Business Recorder [Pakistan's First Financial Daily]


----------



## Neo

*SPI-based inflation up by 17.35 percent ​* 
ISLAMABAD (March 30 2008): The SPI-based inflation increased by 17.35 percent in the week ending on March 27 2008 over the same period of last year, with prices of 22 essential commodities going up, according to Federal Bureau of Statistic on Saturday.

This is the fifth consecutive week of rising inflation since the start of March with adjustment of oil prices making life harder for everyone. A record 5.18 percent increase in SPI inflation was recorded in a month jumping from 12.16 percent on February 28 to 17.35 percent on March 27.

As a result, prices of essential commodities went up manifold denting people's purchasing power even of food items. Although, the State Bank has been pursuing tight monetary policy to curb inflation which it anticipates to persist and magnify in the months ahead, it seems insurmountable as is evident from the statistics. It remains to be seen how the new government will tackle the situation.

Global increase in food prices, the demand-supply issues and excessive borrowing by the government were major causes of inflation compressing the economy. Weekly data on SPI inflation released by the FBS showed that dearness was 19.12 percent for families grouped in Rs 3000 income, 18.54 percent for Rs 3001 to Rs 5000, 17.84 percent for Rs 5001 to Rs 12000 and 16.09 percent for families with income group of Rs 12,000 per month.

According to FBS, during the week under review, the price per kilogram of chicken went up to Rs 103.81, chicken eggs Rs 42.89, tomatoes Rs 43.16, red chillies Rs 159.72, vegetable ghee 2.5 litre Rs 383, onion per kg Rs 11.17, rice Irri Rs 28.40, rice basmati broken Rs 38.81. One wonders where Basmati rice is available at this prices, milk fresh Rs 31.46 per litre, the market price is Rs 38 per litre, kerosene oil Rs 48.56 per litre, mash pulse washed Rs 72.17, and mustard oil Rs 140.56.

The prices of 22 essential commodities increased during the week while prices of 10 commodities declined from the list of 53 essential commodities used to measure weekly inflation. The list showed that prices of 21 items remained stable during the week but were dearer as compared to the corresponding period of last year.

The SPI bulletin, based on data of 53 items collected from 17 urban centers, showed no let-up for the poor who have to spend more money to buy the same goods every week.

Business Recorder [Pakistan's First Financial Daily]


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## mujahideen

Economic policies will be reversed

_YASIR HABIB KHAN_ 

LAHORE - PPP Co-Chairman Asif Ali Zardari and PML-N Quaid Nawaz Sharif have reiterated their resolve to make Parliament the supreme body of the country and vowed to change the prevailing system in a way, which could be beneficial to the masses 

Addressing a joint Press conference at Raiwind on Sunday, Zardari also gave the idea of declaring the judiciary and police as superior services, fully entitled to have extra benefits. He said that the officers of these services would perform very important duties. 

Ishaq Dar, the Finance Minister-designate, said that all the economic policies of the previous government would be reversed. He said that the new government in 10 days would issue a balance sheet of the economy, which would provide important facts and figures about the present state of the economy. 

It was the first time that Zardari has visited Raiwind, Jati Umra and also held a detailed meeting with Nawaz Sharif. PML-N President Shahbaz Sharif, Ishaq Dar, Senior Minister-designate Ch Nisar Ali Khan and other leaders of both the parties were also present on the occasion. 

Prior to the Press conference, Zardari offered fateha at the grave of Mian Muhammad Sharif, father of Nawaz Sharif and prayed to Allah Almighty to grant eternal peace to the departed soul. 
During the Press briefing, both the leaders showed gesture of unity and friendship towards each other, which is also hallmark of their relationship. Zardari told reporters that he had come here to seek blessings for Sharif family elders, so that our next generation should know what type of relations we had. 

Both the leaders said that the pro-democratic political forces had come together to begin an unmatched era that aimed at changing the system and to put the country on the path of the development and progress. Change of system would be the revenge to the brutal assassination of Benazir Bhutto, they added. 

Nawaz Sharif said that meeting would deliberate the national issues to put the country on the right path. Zardari said that the relations with Sharif family would continue upto new generations. He said that his visit to Raiwind residence of Nawaz Sharif also aimed at strengthening the relationship between the two mainstream political forces in the greater national interest. 
Responding to a question regarding joining hands with the MQM, Zardari said that the political parties always had the reservations with other forces but whereas the induction of MQM in Sindh government was concerned he had yet to talk to Nawaz Sharif about this. 

Nawaz Sharif said that his party still had reservations for MQM and the PML-N would continue its reservations until MQM cleared all the reservations that PML-N had. He however, said that these were not main issues and would be discussed in the meeting with, Zardari. 

Mr Zardari talking about the assassination of Ms Benazir Bhutto said that it was a big conspiracy to put the national stability on stake. He said that some elements were still busy in the same conspiracy to break the country and joint efforts were needed to counter all such conspiracies. 
Answering another question regarding induction of new ministers in the cabinet, Zardari said that more names were being considered for the cabinet. He said that all the decision would be made with mutual understanding keeping in mind the welfare of the people. 

To another question, Nawaz Sharif said that this was the time to ensure the supremacy of the parliament and parliament never wished to develop confrontation with any one. He said that the parliament only could deliver to the masses when its supremacy would be ensured. 

Without naming anyone, he said that the institutions that had never accepted the supremacy of the parliament always went for the confrontation with the parliament but on the other hand the parliament always dealt with the institutions on merit and always avoided its interference. 

When asked about the judicial crises Nawaz Sharif said that this was not such a big issue and would be resolved soon with the mutual understanding and through the parliament. PML-N chief Nawaz Sharif said that parliament will now take decisions about the steps for eradication of terrorism and extremism alleging President Musharraf has used war on terror for the sake of his rule. 

He opined that Pakistan of today was not what it had been on October 12, 1999. A single man trampled the independence and sovereignty of the country. He termed the present transfer of power as transfer of problems. &#8220;We are facing the problems such as emergency, 58(2) b, National Security Council, blood carnage, inflation, water and electricity crisis, foreign debts of Rs 42 billion and domestic debts of 2800 billion. We shall, however, brave these challenges&#8221;, he remarked. 
All the deposed judges will soon be reinstated under Murree declaration and they will resume their duties, he hoped. Every clause of charter of democracy will be adhered to, he announced. &#8220;I advice Musharraf to respect people&#8217;s mandate and step down. He should not become burden on the shoulders of nation&#8221;, he maintained. 

He said that PPP-led coalition government would lay down solid foundations for the rule of law by the following specific measures. 

The Nation


----------



## haviZsultan

Oh no don't tell me..... policies to be reversed???? Same way they were when bhutto came to power? OMG this is sick...


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## Neo

*Ericsson gets $300 mln Warid Telecom Pakistan deal​*
Sun, Mar 30, 2008

ABU DHABI (Reuters) - Abu Dhabi-based Warid Telecom said on Sunday it awarded a $300 million contract to Sweden's Ericsson to expand its network in Pakistan.

Telecom equipment maker Ericsson said on Tuesday it had won the order to expand and upgrade the GSM/GPRS network of Warid Telecom, without giving financial details of the deal.

"The GSM network extension in Pakistan gives us additional capacity for 5 million customers and coverage of additional 100 cities," Warid's CEO Bashir Tahir told Reuters after the contract signing. Warid, the third-largest operator in Pakistan, now covers 250 cities.

Singapore Telecommunications bought a 30 percent stake in Warid in June for $758 million.

Warid has also launched GSM and Wymax services in Uganda and GSM services in the Democratic Republic of Congo, Tahir said.

Warid is currently building a GSM network in the Ivory Coast and the former Soviet state of Georgia. "We expect to become operational before the end of 2008 in these places," he said.

Warid will continue to finance its expansion partly through equity and debt from banks and export credit agencies, he added.

Warid Telecom is part of Abu Dhabi Group, owned by a member of the Gulf Arab emirate's ruling family.

Ericsson gets &#36;300 mln Warid Telecom Pakistan deal - Yahoo! India News


----------



## Neo

*'Pakistan deprived of $500 million in basmati rice export' ​* 
KARACHI (March 31 2008): Pakistan has been deprived of a huge amount of $500 million from its basmati rice export alone in the July-February period of FY08, as the country got low unit price of this commodity against the average unit prices of basmati varieties earned by India, rice exporters said.

The losses of premium from export of coarse rice varieties were besides this, they added. The average unit price of Pakistani super basmati rice came to $855 per ton up to end of February 2008 against the price of Indian basmati rice of $1400 per ton during this period, they said.

Rice exporters told Business Recorder that for shipments effected during July 2007 to February 23, 2008, super basmati fetched average unit price of $855 per ton, Super Basmati Sela (Parboiled) rice could only fetch $680 per ton. The average price achieved for Basmati 385 was $716 per ton during the same period.

The huge difference in export prices could not open the eyes of sleeping concerned quarters although Quality Review Committee (QRC) Inspection Cell reports have been regularly sent to Director General Trade Development Authority of Pakistan (TDAP), Director (Rice) TDAP, Chairman and Vice Chairman of Rice Exporters Association of Pakistan (REAP).

On the other hand, Indian rice exporters remained the sole beneficiary of present rice market scenario and fetched premium prices wisely. According to details, at the movement Indians are exporting 'Sharbati' steamed rice at $950 per ton, 'Pusa' rice at $1100 per ton and newly developed extra long grain non-basmati variety 1121 Sela (Parboiled) at $1500 per ton, while 1121 white rice at $1700 per ton. Indian traditional Basmati rice at $1800 to $2000 per ton depending on brand and packing. The average unit price of Indian Basmati rice was $1400 per ton till end February 2008.

It is worthwhile to note that Indian rice exporters are not being supported by any kind of rebate or subsidy by their government but they have established their rice industry on strong footing by adopting wise strategy both at domestic and international markets.

Contrary to this, Pakistan's rice exporters, enjoying huge amounts of export refinance facilities, coupled with rebate on export packing materials, are hardly getting the cost. The rapidly increasing inflow of bank financing and export refinancing are bitterly increasing the domestic prices and making miserable lives of local consumers.

"There is no solution to arrest the alarming food inflation unless government withdraws bank financing to essential food commodities and export refinance from rice, as financing facilities are boosting speculation and hoarding powers of traders, importers and exporters," rice exporters said.

It was the Export Refinance Scheme of State Bank of Pakistan (SBP) that undermined the value of unit price of Pakistan's grain in the international market as exporters sell this precious staple more desperately to meet their export targets and enter into forward sale contracts to secure their annual export sales, one rice exporter said.

Export Refinance Scheme of State Bank of Pakistan (SBP) is one of the incentives which was originally designed for value-addition in exports but could not play significant role. Rather it has now started showing adverse impact on fetching higher export prices. Further, this facility is also meant for those commodities facing stiff competition abroad and financing at subsidised rate of interest enables that product viable for export.

Though Pakistani rice has never faced such stiff competition in selling abroad but has become the second largest export sector after textile, enjoying SBP Export Refinance facility of more than Rs 50 billion. The beneficiary club of ERS includes highly influential and well connected rice exporters that induced government to allow Export Refinance Facilities to rice.

These few bigwigs in rice export sector enjoy 70 percent of Export Refinance cake offered to rice sector. They are making hasty and long-term sales on much lower prices than that of prevailing domestic prices in order to meet their export performance mandatory against availed ERF facilities.

Incentives to exporters have always been odd tools of all governments to boost exports and fetch higher unit value. In spite of spending huge amount to various sectors, Pakistan's exports could not perform quantum leap and remained stagnant during past many years.

These incentives were aimed to strengthen export-oriented industries and trade but have gone into the pockets of bigwigs, resulting in increased inflation and growing trade deficit, increasing burden on the economy. Basmati, a fine textured long grain aromatic variety of rice, is considered as white gold commodity which is exclusively grown in Pakistan and India.

Both countries enjoy monopoly of producing Basmati due to special climatic and soil conditions, which always fetch premium price as compared to other rice varieties grown on the world. In current scenario of international market, Basmati prices have become almost double in major Basmati rice importing countries during last two years but Pakistani rice exporters have failed to reap true benefits and merely begged the cost owing to their desperate and long term sale of this indigenous staple.

There are many countries on the globe that earn huge premium through value addition despite of fact they do not produce or manufacture those goods at their home but their exports are incredible. Hong Kong, Singapore and UAE are good examples of this prudent practice. This award goes to their government's good governance and healthy policies without spending a single penny on incentives.

Major rice producing and exporting countries are reaping full benefits of current international prices by earning higher export prices while Pakistan has failed to fetch export prices in line with its domestic rice prices owing to lack of wise export strategy.

The Ministry of Commerce and State Bank of Pakistan had allowed export refinance to rice exporters after their pledge of value-addition but rice exporters remained busy in selling commodity at much lower prices as compared to other competitors in the region during past ten years.

Rice Exporters Association of Pakistan (REAP) despite fullest support from government could not change the perception of No 2 quality supplier. The increase in average unit price of Pakistani rice during past years was only windfall benefit of globally increased prices.

The final countdown has begun, if the economic managers do not wake up now, rapidly accelerating food prices may lead looming catastrophe as rising fuel cost may not damage as much as higher food prices will deeply wound lives of the poor masses, exporters said.

Business Recorder [Pakistan's First Financial Daily]


----------



## indiapakistanfriendship

> 'Pakistan deprived of $500 million in basmati rice export'
> 
> 
> KARACHI (March 31 2008): Pakistan has been deprived of a huge amount of $500 million from its basmati rice export alone in the July-February period of FY08, as the country got low unit price of this commodity against the average unit prices of basmati varieties earned by India, rice exporters said.
> 
> The losses of premium from export of coarse rice varieties were besides this, they added. The average unit price of Pakistani super basmati rice came to $855 per ton up to end of February 2008 against the price of Indian basmati rice of $1400 per ton during this period, they said.
> 
> Rice exporters told Business Recorder that for shipments effected during July 2007 to February 23, 2008, super basmati fetched average unit price of $855 per ton, Super Basmati Sela (Parboiled) rice could only fetch $680 per ton. The average price achieved for Basmati 385 was $716 per ton during the same period.
> 
> The huge difference in export prices could not open the eyes of sleeping concerned quarters although Quality Review Committee (QRC) Inspection Cell reports have been regularly sent to Director General Trade Development Authority of Pakistan (TDAP), Director (Rice) TDAP, Chairman and Vice Chairman of Rice Exporters Association of Pakistan (REAP).
> 
> On the other hand, Indian rice exporters remained the sole beneficiary of present rice market scenario and fetched premium prices wisely. According to details, at the movement Indians are exporting 'Sharbati' steamed rice at $950 per ton, 'Pusa' rice at $1100 per ton and newly developed extra long grain non-basmati variety 1121 Sela (Parboiled) at $1500 per ton, while 1121 white rice at $1700 per ton. Indian traditional Basmati rice at $1800 to $2000 per ton depending on brand and packing. The average unit price of Indian Basmati rice was $1400 per ton till end February 2008.
> 
> It is worthwhile to note that Indian rice exporters are not being supported by any kind of rebate or subsidy by their government but they have established their rice industry on strong footing by adopting wise strategy both at domestic and international markets.
> 
> Contrary to this, Pakistan's rice exporters, enjoying huge amounts of export refinance facilities, coupled with rebate on export packing materials, are hardly getting the cost. The rapidly increasing inflow of bank financing and export refinancing are bitterly increasing the domestic prices and making miserable lives of local consumers.
> 
> "There is no solution to arrest the alarming food inflation unless government withdraws bank financing to essential food commodities and export refinance from rice, as financing facilities are boosting speculation and hoarding powers of traders, importers and exporters," rice exporters said.
> 
> It was the Export Refinance Scheme of State Bank of Pakistan (SBP) that undermined the value of unit price of Pakistan's grain in the international market as exporters sell this precious staple more desperately to meet their export targets and enter into forward sale contracts to secure their annual export sales, one rice exporter said.
> 
> Export Refinance Scheme of State Bank of Pakistan (SBP) is one of the incentives which was originally designed for value-addition in exports but could not play significant role. Rather it has now started showing adverse impact on fetching higher export prices. Further, this facility is also meant for those commodities facing stiff competition abroad and financing at subsidised rate of interest enables that product viable for export.
> 
> Though Pakistani rice has never faced such stiff competition in selling abroad but has become the second largest export sector after textile, enjoying SBP Export Refinance facility of more than Rs 50 billion. The beneficiary club of ERS includes highly influential and well connected rice exporters that induced government to allow Export Refinance Facilities to rice.
> 
> These few bigwigs in rice export sector enjoy 70 percent of Export Refinance cake offered to rice sector. They are making hasty and long-term sales on much lower prices than that of prevailing domestic prices in order to meet their export performance mandatory against availed ERF facilities.
> 
> Incentives to exporters have always been odd tools of all governments to boost exports and fetch higher unit value. In spite of spending huge amount to various sectors, Pakistan's exports could not perform quantum leap and remained stagnant during past many years.
> 
> These incentives were aimed to strengthen export-oriented industries and trade but have gone into the pockets of bigwigs, resulting in increased inflation and growing trade deficit, increasing burden on the economy. Basmati, a fine textured long grain aromatic variety of rice, is considered as white gold commodity which is exclusively grown in Pakistan and India.
> 
> Both countries enjoy monopoly of producing Basmati due to special climatic and soil conditions, which always fetch premium price as compared to other rice varieties grown on the world. In current scenario of international market, Basmati prices have become almost double in major Basmati rice importing countries during last two years but Pakistani rice exporters have failed to reap true benefits and merely begged the cost owing to their desperate and long term sale of this indigenous staple.
> 
> There are many countries on the globe that earn huge premium through value addition despite of fact they do not produce or manufacture those goods at their home but their exports are incredible. Hong Kong, Singapore and UAE are good examples of this prudent practice. This award goes to their government's good governance and healthy policies without spending a single penny on incentives.
> 
> Major rice producing and exporting countries are reaping full benefits of current international prices by earning higher export prices while Pakistan has failed to fetch export prices in line with its domestic rice prices owing to lack of wise export strategy.
> 
> The Ministry of Commerce and State Bank of Pakistan had allowed export refinance to rice exporters after their pledge of value-addition but rice exporters remained busy in selling commodity at much lower prices as compared to other competitors in the region during past ten years.
> 
> Rice Exporters Association of Pakistan (REAP) despite fullest support from government could not change the perception of No 2 quality supplier. The increase in average unit price of Pakistani rice during past years was only windfall benefit of globally increased prices.
> 
> The final countdown has begun, if the economic managers do not wake up now, rapidly accelerating food prices may lead looming catastrophe as rising fuel cost may not damage as much as higher food prices will deeply wound lives of the poor masses, exporters said.
> 
> Business Recorder [Pakistan's First Financial Daily]



May be this is something we can co operate on. We can share experiences and learnings , watch ya say neo


----------



## Neo

*Chichoki Mallian: Gilani to sign accord for 525 megawatts plant ​* 
ISLAMABAD (March 31 2008): Prime Minister Yousuf Raza Gilani is all set to ink the first-ever power sector pact of his government with a Chinese company, Dong Fong, here on Monday (today) for setting up 525 MW thermal power plant with an investment of $450 million at Chichoki Mallian (Sheikhupura), sources close to the Private Power Infrastructure Board (PPIB) managing director told Business Recorder.

Sources, however, expressed serious concern over the cost escalation, saying the project cost could have been negotiated by a team of experts. The Dong Fong was already in the process of setting up thermal power plant of 450-500 MW at Nandipur (Gujranwala), though several questions had been raised by the Euro Dynamics International, a Lahore-based firm, that the second lower bidder joint venture of Chinese company does not meet the qualification and requirement of combined cycle plant.

Earlier, former prime minister Shaukat Aziz had signed a memorandum of understanding (MoU) with the Qatar Investment Authority (QIA) and the Alstom-Marubini to set up 450-500 MW thermal power plant at Chichoki Mallian, but a couple of months ago, the pact was terminated when the sponsors did not come up with tariff petition.

The ECC, in its meeting on October 31, 2007, had directed the Ministry of Water and Power to issue a notice to the proposed sponsors, including the Alstom-Marubini and the QIA to come up with a deadline as to when they intend to file an application to the National Electric Power Regulatory Authority (Nepra) for tariff fixation and project completion to avoid any further delay.

The Government of Pakistan had sent several letters to QIA for this purpose, but they did not pay any heed despite the fact that gas allocation deadline of November 30, 2007, had expired.

Now the government has decided to award the contract to Dong Fong on the same terms and conditions applicable to 450-500 MW combined cycle power plant at Nandipur, the sources maintained. An official told this scribe that the Chinese company would complete the project within the estimated cost of $330 million.

Sources said that initially the Investment Division, which saved the deal was handling the project, but later on it was transferred to the PPIB. They said that a ceremony would be held in the Prime Minister House on March 31 to be attended by the Chinese dignitaries and local officials.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Cement industry's contribution to GDP under-reported ​*
ISLAMABAD (March 31 2008): The overall contribution of manufacturing sector particularly cement industry to Gross Domestic Product (GDP) is under-reported due to non-availability of basic/vital statistics of cement units, regarding, production and capacity utilisation.

First study of its kind on cement sector conducted by FBR Fiscal Research and Statistics Wing headed by Dr Ather Maqsood Ahmed, revealed that cement industry haw been enjoying all kinds of tax incentives during the last few years, but no increase in revenue collection was noticed with the manifold hike in production.

The average annual growth in production from 1990-91 to 2001-02 was 2.3 percent, it increased to 16 percent between 2002-03 and 2006-07. The contribution of 10 units was 80 percent of total quantity produced in 2006-07. This share has increased from 64 percent in 2004-05 to 80 percent in 2006-07. The industry's capacity has increased by 37.2 percent whereas the production has increased by 12.3 percent during last three years.

According to FBR analysis, cement manufacturers have increased prices by forming cartel. Average price of cement per bag has varied between Rs 213 and Rs 250 since January 2007. In places like Multan and Hyderabad, the average price was much lower than the national average during most of 2007 while it was generally higher at Quetta and Rawalpindi/Islamabad. The wholesale price index of cement has recorded a declining trend in recent months compared with a steady surge during last five years.

Similarly, the retail price has also declined from over Rs 270 to Rs 250 per bag clearly indicating that price-hike had more to do with the existence of a cartel-like situation rather than the interplay of market forces. The FBR study also confirmed that cement industry has deposited meager amount of duties/taxes despite significant expansion of plant's capacity.

On the basis of available information, the FBR has found that the most disturbing aspect is the tax compliance of distributors, wholesale and retail traders of cement. Despite a regular increase in the number of registered persons within these three categories, the tax compliance has not improved.

Concentrating on tax paid by the industry over the years, it is evident that tax contribution in total tax collection has hovered around 2.5 percent only during the last three years. While indirect taxes were about Rs 20 billion in 2006-07 against Rs 12.6 billion in 2000-01, direct tax contribution has been quite low. It also appears quite inconsistent with expansion in the industry.

On the whole, notwithstanding the expansion in production capacity and boost in economic activity, the contribution of cement industry in total sales tax collection has declined over the time. The declining trend has continued in 2007-08 as well.

The unit-wise analysis reveals that out of 28 manufacturing units, the contribution of top 10 units has varied between 58 percent and 77 percent during last three years. Among the major contributors are the DG Khan Cement with 13.5 percent share in collection, followed by Lucky (12 percent) and Attock (10.4 percent).

The report highlighted that the high input claims by the manufacturers have raised valid concerns in the light of the fact that all plants, machinery and equipment are mostly zero-rated. There is, therefore, a suspicion that the facility of input adjustment is being misused, thereby causing revenue losses to the national exchequer. However, to verify this claim there is a need to undertake comprehensive audit of the industry.

The study pointed out that a comprehensive market analysis of cement industry has not been possible due to non-availability of relevant statistics and gross inconsistencies in information available from different sources like Board of Investment (BoI) sector paper, Cement Wing of Ministry of Industry, and Pakistan Economic Survey.

The anomalies are of peculiar nature. The robustness of data on domestic demand is also not quite sound. Absence of transparency has also been observed as far as the role of All Pakistan Cement Manufacturers Association (APCMA) is concerned.

The analysis uncovered multifaceted issues concerned with the cement industry. There are various question marks, but the situation warrants their solutions. Undoubtedly, the industry witnessed significant expansion in terms of its capacity but its contribution to the national exchequer in the form of tax revenues remained unsatisfactory. In fact, the situation has worsened steadily since 2006-07.

This assertion holds true when viewed within the context of wide array of incentives awarded by the government to the industry from time to time. The reduction in duty and tax rates has been the most visible concession. The simple rationale behind this move was that the revenue loss due to reduced rates would be compensated by expansion in production. However, this anticipated benefit has not taken place.

Instead, the input claims by the industry have risen exponentially over the years thereby jeopardising the collection of tax revenues as per the requirements of the government for its infrastructure development needs. Prima facie, this has not worked well partly due to deficient and inadequate system of audit and penalties to deter tax evasion.

Unfortunately, despite the huge significance attached to this sector some very basic and vital statistics are not available with the government. There is serious discrepancy between available information within various government departments. If it is not for inaccuracy of data, then the natural question is why additional investment, in the expansion of existing plants and new plants is taking place when the existing capacity is not being fully exploited.

One possible reason could be a deliberate attempt of under-reporting of production by the industry. But if this claim turns out to be correct, then it literally means under-reporting of value addition by the industry.

In turn, under-reported value added by one of the leading manufacturing sectors implies that the overall contribution of the manufacturing sector in GDP is under-reported and finally the GDP figures do not remain robust.

This is a serious conclusion with far-reaching implications. Thus, the onus falls on the Federal Bureau of Statistics and the Ministry of Industries to work together for exact statistics of the industrial sector, particularly the cement industry.

Unfortunately, without basic statistics, it is impossible to have proper planning of the economy. As a consequence, the resource mobilisation by FBR would also remain sub-optimal as appears to be the case today, the report added.

Business Recorder [Pakistan's First Financial Daily]


----------



## Neo

*ADB experts say sound industrial policy is imperative ​* 
FAISALABAD (March 31 2008): Sound industrial policy as a central part of Pakistan's Development Strategy is imperative to increase the share of manufacturing sector's output in GDP from about 16 percent to about 25 percent and share of manufacturing employment from 13 percent to about 18 percent in next decade, said Asian Development Bank (ADB) experts.

"If Pakistan is to maintain and even increase its growth rate, then it has to accelerate its structural transformation and improvements in the quality and diversification of its exports", they urged.

They suggested to increase labour productivity in manufacturing by an average of 3 percent per annum and to increase share of medium and high-technology manufacturing (non-electrical machinery, electrical machinery and transport equipment) in total manufacturing output from about 12 percent to about 20 percent during the next decade.

ADB URGED PAKISTAN TO EXAMINE THE FOUR QUESTIONS: 

(i) What information is needed to assess completely where Pakistan's structural transformation stands, and what are the possibilities for upgrading the country's production structure?

(ii) What institutional framework and policies should Pakistan's policy makers design and implement to ensure the successful transformation of its economy and rapid growth, and how should this process be conceptualised and undertaken?

(iii) How are the sectoral imbalances and reallocation of labour that structural transformation entails to be managed?

(iv) How can Pakistan design a plan for structural transformation?

According to update studies of Central and West Asia Department (CWRD) of ADB, developing new activities and products is not easy for most developing countries. Lack of markets and coordination problems can create insurmountable difficulties. For this reason, new activities are rarely created in a vacuum, as their development has to take place in the context of the existing capabilities, which are useful to the extent that they are similar to those of the new products and activities. However, the degree of similarity of capabilities might vary between any pair of activities.

Upgrading Pakistan's production and export structures does not happen without a well thought out and crafted push. Structural transformation in the successful Asian economies did not come naturally or easily.

Pakistan has achieved a technological level that allows it to manufacture nuclear weapons, while Singapore lacks that particular technology. This, however, is no guarantee that Pakistan can undergo successful structural transformation.

The capabilities and institutions needed to develop a broad-based and sophisticated manufacturing sector that employs millions of workers are different from those required to be able to make nuclear weapons.

While both undertakings call for political will, the latter requires the mobilisation and coordination of a much wider group of participants in society, within the context of a market economy where globalisation, fast technical change, competition, and the demand question of what consumers want, are the rules the game. Singaporean companies understand this.

Business Recorder [Pakistan's First Financial Daily]


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## khanz

dimension117 said:


> Oh no don't tell me..... policies to be reversed???? Same way they were when bhutto came to power? OMG this is sick...



i think they will just reverse the bad ones i don't see why they will change ones which have done good.


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## opinion786

Even if they do reverse some policies.... the bottom line is, that the economy should NOT fall below this 2007 perfromance, as recorded by State Bank Pakistan.

These below will always be basis of comparison, of their performance:

Pakistan's economy grew by 100% --- to become $ 160 billion
Revenue grew by 100% --- to become $ 11.4 billion
Foreign Reserves grew by 500% --- to become $ 17 billion
Exports grew by 100% --- to become $ 18.5 billion
Textile exports grew by 100% --- to become $ 10.2 billion
Karachi Stock Exchange grew by 500% --- to become $ 65 billion
Foreign Direct Investment grew by 500% --- to become $ 8 billion
Annual Debt servicing decreased by 35% --- to become 26%
Poverty decreased by 10% --- to become 24%
literacy rate grew by 10% --- to become 54% 
Public development Funds grew by 100% --- to become Rs 520 billion 


Other observations: The external debt and liabilities (EDL) in ratio to Foreign Exchange earnings were:
1999 - 347%
2000  297.2%
2006  137%
2007  122.5%

External debt & liabilities (EDL):
1988 - $ 18 billion
1990 - $ 20 billion
1999 - $ 39 billion 
2007 - $ 40.17 billion

The external debt and liabilities (EDL) *declined* from 51.0 percent of GDP in FY2002 to become *25.7 percent of GDP* by end-September 2007.


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## Neo

*Business community welcomes new government's policy statement ​* 
MULTAN (March 31 2008): The business community has widely welcomed and appreciated the policy speech of Prime Minister of Pakistan Syed Yousaf Raza Gilani, which he made after securing an unprecedented unanimous vote of confidence from National Assembly on Saturday.

The business tycoons were of the view that the policy of the new government spelled out by the Prime Minister in his policy statement was in the "best interest of the country". In a statement issued here President Multan Chamber of Commerce and Industry (MCCI) Khawaja Muhammad Jalaluddin Roomi and other office bearers have congratulated Yousuf Raza Gilani on getting unanimous vote of confidence.

The MCCI leader also appreciated goodwill gesture extended by the opposition parties in the assembly. President of Federation of Pakistan Chamber of Commerce and Industries (FPCCI)Tanvir Ahmed Shaikh while talking to newsmen appreciated the 100-days plan of the government announced by PM and said the decision to increase the support price of wheat to Rs 625 per 40-kg was praiseworthy. He said that the announcement of PM in context of development of coal-based energy generation would motivate foreign and domestic investors.

Chairman All Pakistan Bedsheets & Upholstry Manufacturers Association (APBUMA)Mughis Ahmed Shaikh said that the austerity drive launched by the Prime Minister was the need of the hour and if it is implemented in letter and spirit it would have a long lasting impact.

He said that new premier had the potential to overcome the problems particularly being confronted by textile manufacturers and exporters owing to crucial situation in the international markets by taking long term and bold steps.

Ex-Chairman APBUMA Khawaja Muhammad Younas said it is a matter of great concern that during the first seven month of the current financial year, there has been 6 percent decrease in export of cotton yarn, 8.3 percent in cotton cloth, 6.2 percent in Bedlinen and 6.7 percent in Towel exports as compare to corresponding period of last year.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Indus river pollution a risk to livelihoods​*
A RECENT seminar organised by the Environmental Protection Agency (EPA), Sindh, was informed that the Indus river is highly polluted. The levels of various parameters are high enough to classify the river as polluted. Even the coliform level, which should have not been present in water bodies at all, averaged 800 per 100 ml.

It is a fact that the Indus river is polluted due to indiscriminate discharges of untreated municipal and industrial wastewater, the Manchar Lake discharges make the pollution further distinct during periods of low flows (December-January). But the comparison of water quality of this river and other water bodies with the international standards made at the seminar, was not justified. The water quality of Indus river was compared with the WHOs guidelines for drinking-water and the EUs drinking-water standards.

The international drinking-water guidelines and standards do not apply to waters of the surface water bodies (Indus river, Phuleli Canal, Manchar Lake, Danistar Canal, Haleji Lake, Pinyari Canal, etc). It is just like comparing oranges with apples.

The surface water treatment revolves around pumping of water from a river and its treatment in a water treatment plant. Conventional water treatment plants (rapid-sand filters for major cities; and slow-sand filters for rural towns), depending on the quality of raw water, design and operation of the plant, remove conventional pollutants (fecal coliforms, turbidity, suspended and dissolved solids, colour and inorganic elements) to a varying degree. For example, coagulation and sedimentation are effective in removing colour and turbidity, slow-sand and rapid-sand filters are effective in removing bacteria, colour and turbidity, but have no effect on the hardness of water.

The statement that coliforms should not be present in water bodies reflects lack of understanding of water engineering.

There are eight rivers in North America, 10 in Central and South America, nine in Europe and 14 in Asia and the Pacific, which have fecal coliform levels ranging from 100 to 1,000 per 100 ml. There are three rivers in Asia and the Pacific region with fecal coliform levels of more than 100,000 per 100 ml.

Water pollution in the Indus results from three sources: municipal wastewater discharges, industrial wastewater discharges and, return-agriculture flows through drainage structures. Most cities and towns of Sindh discharge their untreated municipal wastewater into the Indus. With wherever treatment facility exists (e.g., at Tando Muhammad Khan), the wastewater does not receive the desired degree of treatment.

The parameter of major concerns is the discharge of organic matter. This causes depletion of dissolved oxygen in river water. In extreme cases, when the assimilative capacity of the river is exceeded, anaerobic (septic) conditions result. This could be a problem in the river, during the months of low dilution (December and January), or, when there is water shortages in the Indus river. Under anaerobic conditions, iron and manganese become more soluble and become a potential source of groundwater pollution. Due to high coliform content, use of water for drinking purposes without appropriate treatment, would result in water-borne diseases like malaria, typhoid, cholera and dysentery.

Industrial wastewater discharges, depending upon the nature of industry, comprise wide-ranging variables. These include organic matter; ions like sodium, potassium, calcium, magnesium, carbonates and bicarbonates, chloride; other inorganic variables like fluoride, silica, cyanide; metals like cadmium, chromium, copper, mercury, lead, zinc, nickel, etc. The return-agriculture flow characteristics include salinity, total dissolved solids, sodium adsorption ratio (SAR), nitrates, phosphates and pesticides.

In case of industries, like thermal power plants, the variable of major concern is temperature and mercury poisoning which results in death.

At Jamshoro, where power plants are also located, presence of mercury in Indus river water has been reported. Sudden increase in surface water temperature by three degrees Celsius is harmful for marine organisms. Required level of oxygen is usually not available, as the increased water temperature decreases solubility of oxygen in water.

Salinity, in case of return-agriculture flows, is an important property and, in the present case, is of major concern. Disposal of saline effluent in the Indus river degrades its water quality. The ground water quality in the Indus Basin is impacted by the water quality of the river.

According to a case study conducted by the United Nations Economic and Social Commission for Asia and the Pacific, Bangkok, titled Desertification in Indus Basin due to salinity and water-logging, 1989,...ground water is becoming increasingly saline making it less useful for agriculture. A large population in the area is also affected because they are using the saline underground water for drinking purposes.

While the EPA, Sindh, has taken samples from various points, the water quality of the Indus river, at any given point, depends on (a) the proportion of surface run-off from catchment areas, and groundwater, (b) reactions within the river system governed by internal processes, (c) the mixing of water from tributaries of different quality (e.g. from Manchar Lake), and (d) inputs of pollutants from municipal and industrial sources (e.g., municipal wastewater from various towns and, power plants located at Jamshoro).

Water quality variability also depends on the hydrological regime of the river. Dissolved substances in the river are highly variable from one place to another, depending on their sources, pathways and interactions with particulates.

Monitoring water quality of the Indus river, conducted in isolation, would be inadequate if the pollutants are put to true perspective. It is customary in environmental engineering field to conduct biological monitoring along with physiochemical monitoring to have a complete pollution scenario.

Physiochemical monitoring may classify a river as good, when pollutants, not specifically tested for (e.g. pesticides), are present; or where the sampling points do not detect intermittent pollution events. Unlike water quality monitoring which examines the water itself, biological monitoring looks at the abundance and diversity of the tiny creatures (macro-invertebrates) that live in the river. Biological monitoring can reveal the effects of pollution not detected by physiochemical monitoring.

There is a serious water shortage at the Sukkar Barrage. As a result, less water is supplied to the off-taking canals, which in turn, is affecting Rabi crops. The water shortages are further expected to aggravate in the coming days. Despite being the lifeline of Sindh, it seems the Indus river water quality is being taken for granted, with no control over it. No department seems to be responsible for the water quality of the Indus river.

The wake-up calls given by environmental engineers, from time to time, to stop pollution of the Indus river and degradation of the river ecosystems, need to be heeded by the Sindh government. There is a need to set up an Indus river authority to control the discharge of all municipal and industrial wastewater effluents into the river including discharges from other sources (e.g., Manchar Lake).

Polluted Indus threatens the livelihoods of people, affects the agricultural produce and, makes water treatment for drinking purposes increasingly difficult.

http://www.dawn.com/2008/03/31/ebr4.htm


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## Neo

*Paralysed without electricity​*
Eleven hours load-shedding from month- end, says the banner in a sober city newspaper sending a scary message to Karachiites to face the sweltering summer without depending on the KESC.

Press reports have also been carrying messages from official IT experts saying Pakistan will soon be among the ten IT states in the world. The first headline in effect contradicts the second. Without adequate power, Pakistan cannot become an IT centre in real terms. And yet unconcerned with the power situation, the former chief minister of Punjab, Shahbaz Sharif talks of converting the chief ministers chamber in Lahore into an I.T centre. The shortage resulting in the prolonged load shedding may take at least a year or two to run its course.

The load shedding is not scheduled and it may occur any time. Sometimes it is brief, often it is very long. The breakdowns in the system are frequent. Promises of repairing and rehabilitating of the old and ill-maintained system have not materialised. Privatisation of the KESC has made the system worse and the utilitys financial crisis is deepening. .

Many persons who use uninterrupted power supply (UPS) find they have run out of options as the UPS can provide relief only for about two hours or so. And after that it is darkness again.

Those who bring generators find they have to invest heavily both on the rising cost of generators and on the high-priced oil. Generators have become too expensive to maintain and can run out of oil late at night. Efforts are being made to develop the Alternate Energy System but the approach is not very scientific and systematic. The companies which want to set up the wind power in Sindh cannot get the land and have run into endless hassles. Instead of facilitating, the government machinery makes things more difficult..

How does one become an IT centre without enough power? Serious thought is not given to this problem and earnest and sustained efforts are not being made. This is the age of call centres for export. Some developing countries like India have made major headway in this area but Pakistan suffers from a handicap for want of power.

How do we attract enough foreign investment without power? Every foreign investor who may need large amount of energy, may not be willing to make huge additional investment on energy in a period of rising oil price. The investor depends on the government for power instead of making additional investment to reduce profits. Self-employment is a means of solving joblessness but how can it be promoted without energy?

The former industries minister, Jehangir Tareen wanted to follow the Thai model and develop one industry in one village and made some headway but couldnt achieve much for want of adequate power in the rural areas. Does that mean that each village should invest on its own power plant? No model of development can be a success without adequate power. Lack of smooth power hurts the women who work in their homes. They stitch clothes of various kinds and earn a living. In Bangladesh, the women are a major work force. They work in their homes and have helped the Bangladesh exports in a big way.

The women are behind the success of the Bangladesh garment industry and the Grameen Bank. Self-employment can be promoted only if there is enough power to run women enterprises.

How do the children study without enough light? In the good old days, some of the successful students studied under street lights but now many street lights are not on or they are bright enough. Children ,of course, cannot study sitting on noisy and traffic congested thoroughfares.

One hears plenty about power from coal, particularly from Thar, and about wind power, but with very little progress. One cannot become an IT country by having an IT minister or minister for state but by having the right policy and a consistent approach to pursue it.

When there is no power, there is no water at home to drink, to bathe, to cook or to wash clothes. The childrens education also suffers due to these sudden power outages. Electricity breakdowns have led to a shortage of clean drinking water and bottle water cannot be trusted for its purity and many a times is found to be adulterated.

http://www.dawn.com/2008/03/31/ebr7.htm


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## Neo

*A new approach to raise remittances​*
The workers remittances rose nearly 21 per cent to $4.126 billion during the July-February compared to the same period during last fiscal year. In 2007, the remittances were at a healthy $6.1 billion as compared to Indias $27 billion. However, a new approach is required to increase these remittances to finance economic growth and improve peoples livelihood.

In other South Asian states, remittances are not only the largest source of foreign exchange but these contribute to economic development. Remittances of $1.6 billion now exceed exports and tourism in Nepal. In Sri Lanka, remittances of $2.7 billion are more than tea exports. In Bangladesh, remittances of $6.4 billion are five times the foreign assistance.

For the last two decades, remittances in Bagladesh have been around 35 per cent of export earnings, making it the single largest source of foreign currency earner for the country.

This has been used in financing the import of capital goods and raw materials for industrial development. The steady flow of remittances has eased the foreign exchange constraints, improved the balance of payments, and helped increase the supply of national savings.

The remittances also help promote access to financial services for both--the sender and recipient--- increasing financial and social inclusion. About 10 per cent increase in per capita remittances, according to some estimates, leads to a 3.5 per cent decline in the share of poor people. A striking example of the effects of remittances on poverty reduction comes from Nepal where the poverty headcount ratio has declined by 11 percentage points between 1995 and 2004  a time of great economic and political difficulties.

In Pakistan, remittances have more than doubled over the past five years. However, remittances through hundi/money courier, friends, relatives, and parents are still high.

Hundi system provides the quickest method for sending money while bank transaction requires complex paper work.

The system uses the social network of migrants with a door-to-door service. And the cost of remittance transfer through official channels at both sending and receiving ends are high. At the receiving end, the official channel costs include service charge, speed money, conveyance, etc. For hundi, costs involve phone charges, conveyance, and small fees for transaction.

Normally, remittances through official channels take a week or four working days as compared to a hundi which takes 24 hours to three days.

The government has taken steps to rejuvenate the banking system by reducing the minimum limit for the reimbursement charges from $200 to $100, converting money changers into foreign exchange companies and enhancing the bank efficiencies.

But the cost of transferring money through banking channels are still high and should be rationalised. A typical poor migrant sends about $200 or less per transaction. For sending $100, he would typically have to pay $16. Reducing remittance fees would increase the disposable income of poor migrants, as well as their incentives to send more money home. Banks tend to provide cheaper remittance services than money transfer operators. Encouraging account-to-account transfers is likely to increase savings from remittances, and will contribute to financial development of remittance recipient countries.

The transfer time needs to be minimised and the banks efficiency also needs are improved. The banking industry exploits different technologies to deliver financial services with the proliferation of automated teller machine (ATM) and point-of-sale (POS) network and devices.

The use of a mobile phone to conduct payment and banking transactions (m-banking) is at an early stage in a number of developing countries and is growing as mobile phone service providers are penetrating the developing markets. Some banks have started improving their infrastructure for the purpose.

A good percentage of those who are remitting money and their families are less educated, and are not familiar in dealing with formal institutions. Migrants are not aware about the need for having a bank account. But bank officials should be trained and motivated about the importance of remittance. Migrant workers should be encouraged to open accounts before their departures abroad.

The State Bank may consider allowing banks to appoint brokers/agents who help in mobilising individual remittances. This appears to be an effective tool to mobilise remittances of Bangladeshi migrants.

Both sending and receiving countries can increase banking access of migrants by allowing origin country banks to operate overseas, providing identification cards (such as the Mexican matricula consular) which are accepted by banks to open accounts, and facilitating participation of microfinance institutions and credit unions in the remittance market. These institutions can deliver remittance services in poorer communities and in remote areas. They can in turn benefit as the availability of remittance services may attract customers for their loan products.

A segment of migrants mainly send remittances through informal channels. Therefore bank procedure must be simplified for them. In Philippine, banks overseas facilitate opening of account by accepting documents other than passport.

Foreign missions can organise regular meetings with community associations to encourage official remittances. In order to design their targeted interventions, they should collect information regarding a number of migrants, their professional background and area of concentration in the receiving countries. Indian government has generated global data on migrants of Indian origin.

Bilateral agreements for training and skill development of migrants also increase the flow of remittances. A MOU on Temporary Migration Programme has been signed between Pakistan and South Korea to train and employ Pakistani workers there. Incentives shouldalso be provided to private recruiting agencies to undertake such training programmes.

Vocational training should be incorporated in mainstream primary and secondary level curricula. Even, in provinces and federal level syllabus Arabic should be treated as an international language. The migrants from India, Sri Lanka and Bangladesh in their first three months put all their efforts in GCC states to learn Arabic to get a better job.

The Bureau of Emigration & Overseas Employment says that in the last seven years, more than 271,000 Pakistanis left abroad for employment. It means that , on an average, over 38,700 Pakistani workers set foot on foreign soils every year. Officials do admit that the number is low and Pakistan needs to export at least 60,000 workers annually to compete effectively with countries like Bangladesh, Sri Lanka and the Philippinesthe countries that are fast outnumbering Pakistanis in the Middle East.

In this situation, the government should take measures and equip their migrants with modern skills and needs. Philippine raised the number of nursing schools from 13 to 700 to compete the demand of hospital attendants and today nursing is a main source of remittances it receives. Now India and China are following suit. Pakistan can also learn from the experiences of other Asian countries to increase its remittances.

http://www.dawn.com/2008/03/31/ebr8.htm


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## Neo

*Encouraging investment in renewable energy​*
OIL prices remain an important macroeconomic variable. Higher prices inflict substantial damage on the economies of oil-importing countries and the global economy as a whole. Oil importing developing countries like Pakistan generally suffer the most as their economies are more oil-intensive and less able to weather the financial turmoil wrought by higher oil-import costs.

Majority of our power generation is thermal, with furnace oil, high speed diesel and natural gas as fuels; coal is almost non-existent. As per Energy Yearbook 2007, around 65 per cent power generation in 2006 was from thermal sources; the break-up is 36.4 per cent by natural gas, 28.5 per cent by oil, and coal is only 0.1 per cent.

Majority of our upcoming power projects would be based on oil and gas. According to the PPIB, 23 new projects with cumulative power generation of 5,129 MW have been planned with oil and gas as fuel. This represents our fragile and vulnerable power generation scenario.

Now the furnace oil is touching Rs40,000 per ton and the IPI gas pipeline is hanging in the balance. Even if it materialises one can easily guess the rate of natural gas at which this multi-billion dollar gas pipeline will deliver. Any pricing and supply-chain issue with these fuels can impede the power generation capacity and seriously affect the economy.

Cost of power generation from thermal resources increases every quarter of the year due to fast changing fuel prices. Since tariff of thermal power is heavily dependent on the cost of fuel, it will rise almost with the same ratio the cost of fuel increases. It can be easily assumed that if a new thermal power plant based on furnace oil gets a tariff of 14 US cents per kWh today, it will be around 22 cents per kWh in the tenth year and 34 cents per kWh in the twentieth year. This alone is a frightening scenario. But our regulatory authorities, in a state of dilemma, are knowingly making these expensive power deals.

The brighter side of the picture is that Pakistan is located in one of the most abundant renewable energy resources zone on earth. Whether we talk about hydro with both dam and run of stream projects with sizes ranging from micro hydro project on a canal to large multi-billion dollar mega dam projects, or we talk about power generation by wind blowing moderately well in southern Sindh, Balochistan and northern parts of the country. And last but not the least the potential of solar thermal power projects for which Pakistan presents a very good case, having one of the best solar insulation in the world.

Talking about these three renewable resources one by one, first we take the much discussed about and less worked through resource of hydro energy. Since many decades we have been told by authorities and experts that Pakistan has hydro resource of around 40,000 MW, but unfortunately we are exploiting only 16 per cent of it, a meager 6,500 MW.

Wapdas vision 2025 indicates that a total of 20,770 MW of new hydro power generation will be added to the system in next 17 years with 14 new projects at a cost of $32 billion. Moreover, the PPIB is also sponsoring 22 hydro projects with a cumulative power generation of 5,720 MW with an estimated investment of $6.5 billion. Some of these hydro projects would provide water storage also. Due to not having enough storage capacity in the country, either we are facing flood or drought, both extremes in the same calendar year. On one hand flood devastates our infrastructure costing us billions and on the other drought increases import bill of essential food commodities; so it is a two-edged sword ripping apart our economy.

Therefore, we should focus sincerely on implementing these 26,500 MW projects and expeditiously search for other mini and micro hydro projects.

Wind: Another renewable resource is the wind energy. However, despite many multi-pronged efforts by the government and the private quarters, the country does not have a single grid connected wind farm on ground.

According to a detailed study conducted by the National Renewable Energy Laboratory, USA (NREL) in collaboration with the USAID and the Pakistan Meteorological Department, the total exploitable wind potential is 132,000 MW. The NREL has prepared solar and wind maps of Pakistan indicating the potential of power and prospective locations of the projects.

The potential wind corridors highlighted for the wind farming are southern Sindh (Keti Bander-Gharo-Hyderabad), northern Punjab (Kallar Kahar), Mardan area in NWFP, Nokundi, Kolpur, Makran and Chaghai areas in Balochistan. By virtue of actual wind measurements and calculations, Pakistan Met Department has defined the potential of only one corridor i.e. Keti Bander-Gharo-Hyderabad as 43,000 MW. One can easily understand if all these corridors added together can go up to 132,000 MW. Only one quarter of this value i.e. 33,000 MW can be attained without a puff of fuel, there can be nothing like this.

The Met Department of Pakistan, after completing six years wind data acquisition project in the coastal areas of Sindh and Balochistan, has launched second phase of the project which will collect imperative wind data in the northern areas. Additionally, the UNDP Pakistan is also planning to install some weather stations specifically for wind data acquisition in some potential areas like northern Punjab, etc. These exercises will definitely pave the way for wind power generation with full government support to the private sector.

For wind power generation, the actual land use is very small as compared to the total area. In fact only 2-3 per cent area is used by the installation of turbines, sub-station and internal wind farm roads. The rest of the area is available for any low height cultivation or cattle grazing. Coincidentally almost all potential wind corridors in Pakistan are situated in barren areas; hence wind farming is the best utilisation of that barren land.

Wind energy is now increasing more than any other power technology in Europe. The world has already seen 95,000 MW wind power projects installed on its face and some concrete plans to enhance this figure to 185,000 MW in 2020 and 300,000 MW before the sun of 2030 sets. European Union is under an obligation that by 2020 they must have at least 20 per cent of their energy needs through renewable resources and wind is among the top choices along with hydro, solar and biomass. EU has also set a binding minimum target of 10 per cent for the share of bio-fuels in overall transport petrol and diesel consumption by 2020. Across the Atlantic, USA is doubling its installed wind power every year, currently standing at 19,000 MW (if it is really called standing).

Why the technologically advanced world is dying for wind power projects? And why we are so reluctant in adopting it?

Investment: It is time to discuss why investors from private sector have not been able to implement wind power projects. First, our policy makers did not foresee the changing technology needs and are still skeptical about it.

Second, for every new technology there is an incubation period. One has to follow a learning curve to gain confidence about the new technology, whether it is the investor or the regulator.

Third, our late start has put us in most unfavorable position to launch the projects. The booming wind market makes it almost impossible to ink a deal with the turbine manufacturers within a three-year period even with hefty advance payments. Apart from turbines, other allied equipment like generators, transformers and HV/MV equipment have long delivery dates. The North American and Chinese markets absorb much of the global production of these equipment. This is a source of frustration for the investors and narrows down their choices.

Fourth is the law and order situation. The turbine manufacturers are now reluctant to come because travel advisories by several countries are adopting a safety-first and wait-and-see approach for the time being.

Fifth, is the GoP policy and the power purchase agreement. Although agencies like AEDB, NEPRA and NTDC have put in lot of efforts to prepare these documents for wind power projects, improvement is required to make them clear and attractive for investors. The government functionaries need to enhance their capabilities through active training and visits to running wind farms, preferably in the European Union and China. Two issues that need immediate attention are the extension of validity date of the Renewable Energy Policy and the ownership of CERs that can be generated through these projects.

Sixth is the problem of availability of land and its lease/sub-lease to investors. Although enough land is available in the wind corridor of southern Sindh, its lease/sub-lease to investors is a very long drawn process. Co-operation and active follow-up by GoP and the Sindh government is essentially required for leasing this land. It will bring in lot of economic and infrastructural up-gradation activities in the area.

Solar radiations: There are two main techniques of power generation through solar radiation; one is solar PV technology and the other is concentrated solar power technology (CSP). The PV is best suited for stand alone power requirements of homes and offices. Although the world has experience of grid connected solar PV power plants, still it is a kind of domestic business. In contrary, the CSP technology is best suited for grid connected power plants; however, examples of small size captive power generation through sterling dish also exist in this technology.

In addition to power generation, solar energy is also used for heating, cooling and cooking purposes with very simple-to-use technologies. In Pakistan, except some isolated examples, there is no mass scale implementation of these simple technologies. Solar cookers in northern areas can greatly help in saving forests. Solar water heaters in cities can save valuable natural gas. There are many individuals making effort in this field but we have to integrate them for focused efforts and better results.

An area where solar PV can be used on mass scale is the lighting, indoor and outdoor. Indoor lighting meant for offices and homes for which solar PV modules can be coupled with LED lights which require very little electrical energy for the same luminosity and at the same time have very long life.

Alternatively we can use energy saver bulbs. Outdoor lights mainly comprised street lights. It is the time when city fathers should plan and implement a phased change-out of traditional lights with solar PV and LED lights for streets and parks; we can start with alternate light poles, if not all. Housing societies like DHA, Bahria Town, etc., builders like Emaar and Al-Ghurair Giga and the townships of industrial units must also come forward to launch such projects. These projects will trigger local mass production of solar PV modules and LED lights, which will result in low cost of such systems.

Whenever one talks about these renewable energy sources in Pakistan, it is often taken as very expensive, un-reliable technologies. If it is so, why world markets of these technologies are exploding? In fact these renewable technologies are very reliable and are not expensive if the whole lifecycle of the project is taken into consideration.

As earlier discussed a thermal power plant starting the tariff with 14 cents will reach to 22 cents in 10th year and 34 cents in 20th year. In contrary a wind power plant, if started with 14 cents per kWh will continue to be almost the same during first ten years with minor changes due to increase in operation and maintenance (O&M) charges, but with start of 11th year the tariff will drastically decrease to around five cents per kWh and continue to be around the same till the end.

The same is true for hydro and solar with different starting points on the tariff ladder. The energy price of power generated through Wapda hydro facilities is around 0.5 cents per kWh. This is what is called energy security.

Pakistan, therefore, must increase its share of indigenous and renewable resources to reduce dependence on oil imports.

http://www.dawn.com/2008/03/31/ebr13.htm


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## Neo

*economic vulnerabilities​*
PAKISTAN Peoples Party and Pakistan Muslim League-Nawaz have told the international donor agencies that the countrys economic and financial system was crumbling and new innovative policies were needed to tackle the looming crisis.

Representatives of the donor agencies, who met PPP and PML-N leaders, were also told that from now onwards the defence budget would be discussed in parliament to gain public support to defence spending.

Party sources said World Bank Vice-President for South Asian Region Praful Patel could not get an assurance from PPP co- chairman Asif Zardari that the new government would not bring any major shift in the economic policy pursued so far.

When officials of the donor agencies meet politicians they generally prefer to listen more than talk, but this time Mr Patel discussed serious economic issues with Mr Zardari, PPP spokesman Farhatullah Babar told Dawn.

Farhatullah Babar said: Mr Patel was interested to know how the new government would offer new subsidies to the people and whether it would economically be a viable solution. He also wanted to know about the policy direction of the new government. Mr Zardari told him that macroeconomic stability had to be achieved but that did not mean we should forget the common man as was done by previous rulers.

Mr Zardari regretted that former prime minister Shaukat Aziz had left behind a mountain of economic problems and that the new government would facing numerous challenges.

He also informed Mr Patel that the coalition partners had serious reservations over the privatisation policy pursued over the last eight years. People need to know how the sale proceeds of the privatisation were spent by the previous government. Zardari wants to spend this money more for the welfare of the people.

The new government would encourage transparent sell-off that did not deprive employees of the privatised corporations from their jobs. There will be an audit of sale proceeds of the previous government.

There was also a need to audit $10 billion US aid received over the last few years. A lot of funds were provided by the United States for tackling terrorism and militancy. The issue is whether these funds were actually used for addressing the menace of terrorism and militancy. A number of serious economic issues were needed to be sorted out .

Ahsan Iqbal: Central information secretary of the PML (N) told Dawn that the international donors were being taken into confidence about the state of the economy and to suggest measures to improve it drastically for the benefit of the people.

We want to know from everyone including the donors to tell us where the $70 billion has gone which came to Pakistan after 9/11. Giving the details, he said $30 billion was sent by the overseas Pakistanis and $10 billion provided by the US. The central bank purchased $15 billion from the market during this period and foreign loans worth $14 billion were acquired. And then they also received $5 billion from privatisation. This makes a total of $70 billion.

While $70 billion came after 9/11, not a single power project was installed. Not a single mega project started. Not a single hydro project and not a single infrastructure project launched and where had these $70 billion gone, he asked.

The nation wants to know where the $70 billion has gone specially when there was no poverty reduction, no significant job creation and bigger economic activity. The donor community should also try to know where this huge money had gone. The agricultural production today was the same it was eight years back in 1999-2000. Wheat and rice production were at 21 million and 5 million tons respectively in 1999-2000 which stood at the same figures today.

He was filing a reference as to who should be held responsible for the current energy crisis. While there will be an internal accountability, issues concerning donors will also be raised with a view to ensuring judicious spending of foreign assistance.

Trade deficit has reached $12.5 billion during the first eight months of the current fiscal year. There were all indications that it would touch $17 billion at the end of 2007-08 and this would be very bad for the new government.

The people were ready to give a chance to the new government, provided it conducted itself with honesty, dedication and sincerity. But if that does not happen, I am afraid, we cannot escape the wrath of the people.

Analysts said that the PPP-led coalition face tough challenges ahead and quote the recent remarks of State Bank Governor Dr Shamshad Akthar:  unless immediately addressed the present economic vulnerabilities emerging in Pakistans economy risks reversal of the high growth trajectory and even disruption of gains achieved. It is facing the twin shocks, global and domestic.

A World Bank source, when approached, said it was basically establishing a contact with the new government and its political leaders. The donors were also offering possible solutions to various issues.

Donors are currently in a listening mode and that is why they are meeting different politicians, the source said. However, he said donors had assured Mr Zardari and others that they would remain active partners to help Pakistan resolve its economic problems.

PPP manifesto: A glimpse of the PPPs economic manifesto indicates the programme and polices it is likely to pursue with the support of its coalition partners.

While anchored on social market economy, the manifesto 2008, approved by the electorate in February, is a blend of continuity and change in policies.

It aims to reinforce economic liberalism with strong social democratic agenda. Pursuing business-friendly farmers-friendly and taxpayers- friendly policies, it promises economic growth with social justice.

Investment: PPP has pledged to embark on an investment climate reforms programme to ensure a favourable and enabling environment for all businesses, foreign and domestic, especially for small and micro-businesses, to flourish. The private sector and export-led development will be the main engines of growth. Foreign direct investment will be encouraged in export goods manufacturing. Reforms will be initiated to reduce cost of doing business and market-based and fiscally affordable incentives will be extended to develop non-traditional exports.

Growth with equity: PPP will help individuals set up small businesses and provide a framework for development of a vibrant middle class It will address the basic needs of the low income persons. Food , clothing and shelter will be provided through unique emphasis  on full employment. It will develop a welfare state where market forces are balanced with safety nets for the poor. PPP recognises the right of every individual to food, clothing and shelter.

Agriculture: Farming and rural development will be an important pillar of growth and poverty reduction strategy. As a farmer-friendly party, the PPP will help farmers boost production and obtain fair prices. It will provide surplus electric power during off peak hours for tube- wells free of cost to farmers. Banks would be encouraged to expand rural lending , while maintaining sound credit policies.

Employment: High growth will be the main driver of full employment. A Public Works Programme to guarantee employment , for at least one year, to one working member of the poorest 25 per cent of the families of the country.

A short-term employment to educated youth would be provided through a Literacy and Health Corp Scheme. Employment for two years will be guaranteed to all youth completing intermediate, graduation and post-graduation in a single year.

Wages: Minimum wages would be enhanced to meet escalating needs of the labour.

Inflation: High inflation will be managed by prudent fiscal and monetary policies and special steps, including more agricultural credit to increase food grain production; enhancing competition in manufacturing and domestic trading and reducing supply chain constraints so that costs of essential goods are reduced; unleash competitive forces and combat monopolies and cartels.

Woman empowerment: The 10 per cent job quota for women in public service initiated by Benazirgovernment will be increased to 20 per cent.

Fiscal autonomy: Concurrent Legislative List to be abolished. Provinces to be given their share in]their natural resources. NFC Award to take into account contribution to revenues, geographical size, backwardness, level of development and population. Natural gas rates and royalty formula will be determined by 1973 Constitution

Sales tax will be progressively returned to the provinces. Octroi will return to local governments.

Companies engaged in exploration and exploitation of natural resources will be required to train local people and allocate funds for social development.

Privatisation: Provinces will be given a part of the sale proceeds of federal assets.

http://www.dawn.com/2008/03/31/ebr15.htm


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## Neo

*Thar coal: elusive fuel option​*
AT a time when about two-thirds of the world coal deposits are being used to run electricity plants and the remaining one third for industrial purpose, Pakistan has yet to begin productive use of its rich coal deposits. It still finds itself locked in working out pre-production modalities for its future coal-based projects and has no option but to keep spending a huge amount of foreign exchange on importing oil to meet the countrys vital needs.

Globally, demand of coal is fast increasing and its consumption has grown by 30 per cent in the past six years, twice as much as any other energy source. It is no more an abundant and cheap source of energy as it used to be in old days. It is now scarce, expensive and in high demand. It is a major source of energy, only second to oil, in industrialising countries.

While Pakistan remains one of the most electricity-starved countries, there is no shortage of coal. The only self-imposed misfortune is that its reserves are mostly lying waste. The bureaucracy has spent over a decade only in talking to interested companies and in calculating and re-calculating cost and tariff. It never reached firm decision in national interest, perhaps under the influence of oil lobby, to let the vast reserves be commercially exploited and turned into electricity whose shortage has now reached catastrophic proportions, posing a severe threat to the economy and normal life. The electricity deficit has soared to over 40 per cent and since 1947 the per capita electricity dependence has grown 82-fold.

In fact, it has been a colossal waste of time and unforgivable delay if one looks at the latest figures of oil import bill as oils international price hovers around a hundred dollar a barrel. The bill is set to reach $11 billion by the end of the current fiscal year; last year, it had crossed seven billion dollars. As a corollary, foreign exchange reserves have in recent months started falling. These stood at $13.84 billion on March 15, down from $16.48 billion at the beginning of November 2007, which was the highest level ever.

The new democratic government intends to embark on a 100-days crash programme to come to grips with critical deficits in vital sectors, including power, and it remains to be seen what measures it takes in this direction.

But, according to Planning Commission officials, it will still take two to three months to complete procedural formalities before international bids are invited for setting up coal fired power plants. The total coal reserves, as reported by Geological Survey of Pakistan, are around 185 billion tonnes. Of these, about 175 billion tonnes are located in the Thar desert region, discovered in 1992. The other places containing coal reserves are Lakhra, Sonda-Jherruk and Badin.

In terms of quality, the coal in Pakistan is described to be between bituminous and lignite. The Thar coal, is however, lignite and can be developed primarily as a fuel for power generation. The latest thinking is that both public and private sectors should be engaged in commercial exploitation of coal  coal mining in the public sector and power production in the private sector. For the purpose, the government has set up its own firm called Thar Coal Mining Company.

So far, coals contribution to power generation has been nominal  only 150MW as compared to total power generation capacity which is 19,000MW. Mainly, it is used for firing brick kilns. It is ironic to note that coal reserves which can be used for power production for at least 200 years have been ignored and instead natural gas preferred for the purpose though its reserves would last for a mere another 20 years in view of its faster consumption.

Coal is a leading component of the worlds energy mix, contributing about 40-60 per cent to the total. China, the worlds largest consumer of coal, produces 75 per cent of its electricity from this fuel. It consumes more coal than the United States, and Japan combined. And its consumption is increasing by about 10 percent a year. In 2006, it installed power plants with more capacity than all of .. Since its growing appetite has outstripped production despite the vast resources, in 2007 it imported more coal than it exported for the first time, according to official figures.

Indias coal mining is mostly in the hands of government-owned companies. The biggest, Coal India, produces four-fifths of the countrys coal. Because the government is worried about social unrest, the prices for coal and electricity are kept low. Although Indias coal reserves are vast, they havent been fully developed.

Developing countries are not the only ones using more coal. Britains coal consumption has climbed steadily over the past six years. Coal has now surpassed gas once again as the leading fuel for electricity plants.

Meanwhile, there are signs of coal crisis in the making in the wake of an untimely confluence of bad weather, flawed energy policies, low stockpiles and a rising demand in. These factors have raised international spot prices of coal by 50 per cent or more in the past five months, surpassing the escalation in oil prices.

As a result, mining companies are enjoying a windfall. Old coal mines in have been re-opened or expanded. European and Japanese coal buyers, worried about future supplies, have begun locking in long-term contracts at high prices, and world steel and concrete prices have risen already, fuelling inflation.

http://www.dawn.com/2008/03/31/ebr16.htm


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## Neo

*Pakistan Nat'l Bank Cuts Growth Forecast​*
Monday March 31, 2008

*Pakistan National Bank Cuts Economic Growth Forecast to 6-6.5 Percent​*
KARACHI, Pakistan (AP) -- Pakistan's national bank has cut its forecast for the country's economic growth this fiscal year to 6.0-6.5 percent.
The State Bank of Pakistan said Monday it was revising its forecast for the year ending June 30 in the light of "domestic turbulence and external shocks."

The bank predicted growth of 7.2 percent at the start of the fiscal year.

The bank forecast in its most recent quarterly report that this year's inflation rate would be between 8 percent and 9 percent.

A new government now taking office in Pakistan is scrambling to protect its fast-growing economy from rising prices and widening budget and trade deficits.

http://biz.yahoo.com/ap/080331/pakistan_economy.html?.v=1


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## Neo

*State Bank cuts growth target to 6-6.5pc ​* 
*Inflation rising to 9 per cent, govt borrowing hits Rs359.3bn, cotton, rice crops to miss targets, LSM growth declining​*
Tuesday, April 01, 2008
By Shahzad Anwar

KARACHI: The State Bank of Pakistan (SBP) has reflected a deteriorated performance of key economic indicators of the country during second quarter of current fiscal 2007-08.

The SBP in its second quarterly report issued on Monday estimated that real Gross Domestic Product (GDP) of the country would be in the range of 6.0 to 6.5 percent against original target of 7.2 percent besides of elevated inflation in the range of 8.0 to 9.0 percent much above the target of 6.5 percent for year, thanks to unanticipated high commodity prices, a main cause to bring about stringent inflationary pressure in the economy. 

In FY08 the central bank projected Monetary Asset (M2) growth in the range of 15.5 to 17.5 percent against initial target of 13.7 percent, which was recorded at 19.3 percent in FY07. The current account deficit is projected to be around 6.0 percent of GDP during FY08 reflecting the rising import growth and slow expansion in textile exports, SBP said.

The central bank estimated exports at $19.7 billion for current fiscal year against $18.9 billion of original target and $17.1 billion in FY07, contrary to this central bank projected import to $32.1 billion, which was recorded $17.1 billion in FY07.

SBP calculated worker remittances in the range of $6.0-6.5 billion compared to $5.8 billion original target and $5.5 billion of FY07. Central bank observed that reducing the fiscal deficit in remaining part of the fiscal year will be challenging but is nonetheless essential.

The SBP said that a part of deceleration in revenue growth during H1-FY08 was likely to be reversed as substantial non-tax receipts were expected in the later half of the fiscal year however; the annual growth in tax collection was likely to remain weak.

The report added the combination of rising fiscal deficit and weak external receipts had pushed the government borrowings from SBP to a record Rs359.3 billion during July -March FY08, compared to only Rs25.6 billion in the corresponding period of last fiscal year. This has been instrumental in sustaining the growth in broad money (M2) for the period at 17.6 percent YoY, significantly offsetting the central banks efforts to tighten monetary policy, the Report added.

Growing macroeconomic imbalances, particularly widening fiscal and current account deficits continued to create complications and add to inflationary pressure, the SBP said and maintained that Pakistan had been so far largely been untouched by continuing turmoil in the international credit markets.

SBP observed that rise in fiscal deficit in H1-FY08 had more troubling implication than the increase in previous year and noted that modest increase in the fiscal deficit during the preceding two years had been relatively less troubling, as (1) revenue growth had remained strong, and (2) rise in spending essentially reflected the impact of post earthquake relief and reconstruction (excluding this the fiscal deficit remained below 4.0 percent of GDP); these substantive expenditures would fall sharply in a few years. 

In both of the year the current expenditure during the first half of the fiscal year had remained below 7.0 percent of the full year GDP, in the contrast, the fiscal deficit during the first half of FY08 is estimated to be roughly 3.6 percent of the estimated annual GDP- nearly twice the figures for the last two years, this incorporated a decline in revenue growth as well as rising current spending.

The report said that impact of the widening current account deficit, driven essentially be the trade deficit was compounded by a decline in financial & capital account balance in the same period. 

The SBP said that sustained larger current account deficits pose risks to macroeconomic stability. Over the last few years, Pakistan was able to comfortably sustain current account deficit due to favourable domestic and international investment conditions that encouraged large non-debt creating financial inflows into the country.

As a result, Pakistan was not only able to run large deficit but also added to its foreign exchange reserves. However, that will be an increasingly risky strategy, given the stresses on the domestic economy as well as the relatively less favourable dynamics in the international capital markets.

Report also suggested that volatility in portfolio investment points to the need to reduce dependence on these flows and the corresponding need to increase domestic savings. The latter, in particular would increase market depth and lower dependence on potentially volatile external flows.

Pakistans need to improve its infrastructure and its dependence on imported inputs, reducing the current account deficit to sustainable levels must perforce target export growth. The most efficient measure here would be those targeting a reduction in inflation and to reduce the cost of doing business in Pakistan. 

The Report said the information available by mid-February 2008 suggests that agriculture sector is likely to record reasonable growth during the fiscal year. Prospects of achieving the targeted 4.8 percent growth for the year, however, remain dim, largely due to disappointing performance of cotton and rice crops. 

The Report pointed out that large-scale manufacturing (LSM) has been encountering headwinds since the start of FY08. Domestic as well as external factors are responsible for the relatively slower growth in this sector compared to the stellar performance of preceding years. These factors include: the continued strong increases in the international commodity prices, domestic energy woes and dampened demand (particularly for textile exports). Economic losses in the aftermath of December 27, 2007 have further weakened the chances of meeting the annual target. Overall, the slowdown in LSM during H1-FY08 was broad based and was seen in 11 out of 15 industrial groups.

Most of the indicators for the services sector suggest robust growth in this sector during the first half of FY08. Wholesale and retail trade seems likely to perform well given a significant increase in imports (which accounts for more than half of the value addition in this sub-sector). 

This sub-sector is also likely to benefit from expansion in the network of domestic and foreign chain store, the Report added.

State Bank cuts growth target to 6-6.5pc


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## Neo

*PIA suffered Rs13.39bn loss in 2007 ​* 
Tuesday, April 01, 2008

KARACHI: Chairman of Pakistan International Airlines (PIA), Kamran Rasool, on Monday said the airline suffered a loss of Rs13.399 billion during financial year 2007, which turned out to be an exceptionally difficult year due to many reasons.

Addressing PIAs 51st Annual General Meeting held here, he said that PIA is making all efforts to increase its profitability and improve the services of the airline.

According to a handout, he made a specific reference to the rise in fuel prices in the second half of the year, which severely impacted operating cost. As a consequence, the planned recovery remained elusive and key financial targets were missed, it added.

He said that the airlines Hajj operation 2007-2008 was substantially conducted with PIAs own fleet, and was one of the most successful Hajj operations in PIAs history. With regard to PIAs fleet modernization plan, Chairman PIA said that the airline had inducted two more Boeing 777s during the year 2007, apart from the earlier induction of the six new Boeing 777s aircraft.

PIA also added four ATR 42 aircraft in the first half of 2007, increasing its ATR-42 fleet to seven. With these additions, the average age of the fleet has come down from 14 years in 2006 to 13 years in December 2007.

He said that one more Boeing 777 had joined the PIA fleet a few days back. Furthermore, seven new Airbus 320-200 aircraft will be inducted in the PIA fleet, with deliveries starting from the year 2009. 

The younger fleet will bring efficiency in fuel consumption, reduction in aircraft maintenance cost and improved customer comfort, he added. Chairman PIA informed the shareholders that during the year 2007, the customer convenience remained one of the focal-points for PIA. Ten stations across the network were linked to PIAs own Airport Check-in System (ACSI). Six more stations are planned to be integrated to ACSI during 2008.

In order to facilitate transit passengers, check-in facility was introduced across the network and passengers are now issued boarding passes for the whole itinerary at the stations of origin. Same day return check-in facility was also introduced on domestic routes.

During the meeting, two new members of the Board, namely Mubashir Iftikhar and Malik Nazir Ahmad, were elected. At the conclusion of the meeting, Chairman PIA said the airline was undergoing a change process and with the support of the Federal Government, Board Members and shareholders, as well as the dedication of employees, PIA will once again become Great People to Fly With. 

He expressed his confidence in Aslam R Khan, Managing Director PIA, and the employees of the airline, assuring that with their team effort, PIA will be able to meet the challenges faced ahead.

PIA suffered Rs13.39bn loss in 2007


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## Neo

*PC proposes Rs623bn PSDP for next fiscal ​* 
Tuesday, April 01, 2008

ISLAMABAD: The Planning Commission has proposed annual development outlay of Rs623 billion (5.4 per cent of GDP) in the shape of Public Sector Development Programme (PSDP) for the next financial year, including an allocation for construction of Diamer-Basha dam, The News has learnt.

The Planning Commission proposed substantial allocations for construction of mega water dams, especially Diamer-Basha dam as its technical feasibility report has already been prepared. For construction of roads, which is imperative for ensuring linkage to the site of Basha dam, an allocation of Rs14 billion has been proposed in the PSDP for 2008-09.

For provinces share, the PC has proposed allocation of Rs200-220 billion in the next PSDP against Rs150 billion envisaged for the current financial year. The PC wants to jack up the size of PSDP by Rs138 billion in the budget for 2008-09, to Rs623 billion compared to Rs485 billion envisaged for the ongoing fiscal year 2007-08. 

But the Finance Ministry is clearly opposing it on the pretext that resource constraints are a major stumbling block in the way and the next PSDP should be increased by Rs100 billion maximum, in view of capacity constraints as well. So the PSDP size will be hovering around Rs550 to Rs585 billion in the next budget for 2008-09, the sources added. 

The budget preparation exercise kick-started on Monday for proposing the size of the overall PSDP in the next budget, as priorities committee held its maiden session here at Q Block (Finance Ministry). 

Finance Ministry and Planning Commission may reconcile on total size of the PSDP in the range of hovering around Rs550 to Rs585 billion for the next financial year, keeping in view available resource position, a high-level official in the Finance Ministry, who also participated in the priorities committee meeting, told The News here on Monday. 

The official said that the allocation for Earthquake Reconstruction and Rehabilitation Authority (ERRA) would remain separate for the next budget, and allocation in this regard is likely to be Rs30-35 billion for the next budget.

The sources said that the priorities committee meetings would continue its meetings with ministries/divisions and provinces till April 10, 2008 and after incorporating demands from them, consultation would be started with the Finance Ministry for recommending the size of the PSDP to Annual Plan Coordination Committee (APCC). 

The APCC will then forward its recommended projects and size to the National Economic Council (NEC), to finally approve the PSDP size and projects for the next financial year. The NEC meets under the chairmanship of the Prime Minister for approving the PSDP size and projects before the announcement of the budget.

The sources were of the view that there were over 2000 development projects within the PSDP, resulting into a growing throw forward ranging up to Rs2 trillion. We have included only 14 per cent new projects in the PSDP for the current fiscal year, and it is expected to remain the same by the next fiscal years PSDP, to cater to the needs of the throw forward, effectively, said the official. According to the broad infrastructure needs outlined by the Infrastructure Project Development Facility (IPDF), throw forward of infrastructure project stood at $20 billion-$30 billion. 

The multiple water reservoir requirements stand at $22 billion, other energy projects at $18 billion, transport and communication including National Trade Corridor (NTC) Shipyards, NHA and Railways at $16 billion, Urban Mass Transport  Karachi and Lahore Metro at $4 billion, Municipal Services (Water, Sanitation, Solid Waste) at $2.5 billion, and Health and Education (physical Infrastructure) at $4 to $5 billion. Total requirements stand at $100 billion and the per annum demand for allocation is $20 billion. 

PC proposes Rs623bn PSDP for next fiscal


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## Neo

*14m bales cotton output target suggested ​* 
Tuesday, April 01, 2008

KARACHI: Stakeholders in a meeting with the Ministry of Food, Agriculture and Livestock (MINFAL) have suggested setting cotton production target at 14 million bales for the next fiscal year 2008-09, which looks ambitious but achievable.

The estimated revised target for the current fiscal year is 11.6 million bales. Therefore, if we take the measures agreed at the meeting, then the suggested target for next year is achievable, responded Dr Ibad Badar Siddiqui, Vice President, Pakistan Central Cotton Committee, MINFAL.

The meeting that was held late last week under the chairmanship of Secretary MINFAL, agreed to increase the cotton harvesting areas to at least 3.20 million hectares from 3.01 million hectares at present.

Moreover, the arrangement of 63,000 metric tons of certified seeds of approved cotton varieties should also be made available, the meeting resolved. The major reasons for lowering cotton production from the record level of 14.3 million bales realized in 2004-05, were the shifting of cotton area to other crops, the meeting noted.

Setting up of sugar mills in potential cotton areas had negatively influenced the cotton production prospects, while wide gap between the scale of adoption of production and protection technologies by different categories of growers had been resulting in insignificant growth in hectare yield, said a press statement issued here on Monday.

In an eleven-point cotton production enhancement strategy for 2008-09, the meeting decided to discourage sugarcane cultivation in cotton sowing areas beside increasing area for harvesting and making appropriate amount of certified seeds for cotton production.

D I Khan in NWFP and Ghotki in Sindh are two major areas of cotton production where the sugarcane was being harvested and causing lower production in cotton, Dr Ibad identified. Furthermore, the subsidy on phosphate and potash fertilizers should be continued for encouraging the balanced use of fertilizers; availability of adequate and insect specific pesticides should be ensured throughout the crop growth and development period, particularly for mealy bug and white fly.

Special campaigns should be launched by the MINFAL and Provincial Agriculture Departments, also through electronic media, to forewarn and guide the growers on mealy bug infestation and cotton measures.

Late sowing should be discouraged and the practices of reducing yield gap between average and progressive farmers should be adopted, the meeting highlighted. Plant production should be increased to 18,000-20,000 plants per acre through higher seed rate (at least eight kgs. per acre) and timely re-swing, if needed.

In order to minimize and yield the gap and to supplement the efforts being made by the provincial extension services, a project worth over Rs8,000 million was recently launched by MINFAL, for productivity enhancement of small farmers in 1,012 villages covering 50,000 farms.

Besides, a project to introduce cotton cultivation in Mirani Dam, commanding an area in Balochistan amounting to Rs39.5 million, has also been launched this year. Another project for introducing and promoting organic cotton production, particularly in Balochistan, was prepared with financial assistance from the Common Fund for Commodities through the International Cotton Advisory Committee.

MINFAL has also been encouraging and facilitating both the multinationals and local expertise to introduce BT Cotton cultivation and the availability of two such local varieties is expected next year, the statement added.

14m bales cotton output target suggested


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## Neo

*Laptops increasingly popular in Karachi; thefts also on the rise ​* 
Tuesday, April 01, 2008

KARACHI: Information technology gadgets and services demand are on the rise to provide alternative relief to the city of Karachi, which faces a plethora of problems leaving its residents irked.

One such gadget is the laptop, which is steadily gaining popularity, both amongst students and the employed alike. Earlier, considered to be expensive far beyond ones means, the laptops have now become affordable as smuggled and second hand versions are flooding the market.

Umama Jalal, a student of CBM commented that she purchased a second hand Sony laptop after her group of friends decided to invest in the computer to do their assignments with ease, without interruptions caused by power failures.

She said that after she bought the portable computer, many of her woes were eased. The best part occurred when Wateen introduced WiMAX in Karachi and I found a very convenient spot where I could access the internet with ease. Now I find that I can accomplish most tasks without much hassle.

Saira Tariq, an ex student of Preston University also invested in a second hand Dell laptop for the same reason, saying, I bought the thing for Rs23,000, which I personally believe was worth every penny as I did not have to fear for my hard work going to waste if the PC shut down due to electricity breakdown.

Both the girls said that the laptop also proved to be a blessing when they had to give presentations in their respective universities and had all the preparations saved in the machine in advance. They said that it helped them perform better as it did not matter if the electricity went during their presentation time.

This brings us to another reason why laptops are growing in popularity. WiMAX is a link to the internet which does not require any physical use of wires, dial up connections or modems, and can be connected anywhere in the city where signals for the service are available.

Wateen Telecom launched its WiMAX/HFC services for the consumer market in collaboration with Motorola last year and according to Wateen, its the largest WiMAX network ever installed. The service has received great response from its users and is available in 22 cities of Pakistan.

Many businessmen and part of the employed force in the city have also turned towards laptops for the ease it provides in getting their tasks accomplished while on the move. Saira informed that she realised laptops are being used increasingly in offices too, especially since it is the best alternative to tackle increasing electricity crises. Ashna, an ex-student of Bahria University narrates that she was delighted when her alma mater made laptops a part of their curriculum. Whereas most of the students found it to be a financial burden and tiresome, I was happy because I had always wanted a laptop to save my personal data.

However, she laments that her joy was short lived, as the laptop she treasured so much was stolen just months after she had put it to use. She explained, I used to carry the laptop to my university and one day while I waited for my bus to arrive; two masked boys snatched my laptop bag and rushed away in a motorcycle.

Ashna says that she has heard of several similar incidents in the city, which are on the rise after mobile theft crimes. Laptop bags are easy to identify and I guess that is how the men could differentiate between a laptop bag and my ordinary school bag.

This is where concerns are raised, as while these gadgets continue to rise in demand, thefts would also increase and the stolen equipment would eventually find its way into the second hand market again. Another concern is that at the same time, it further encourages smuggled versions to enter the country in greater quantities.

Ashna comments Mobiles have gone through a similar phase and now I guess its laptops. Its sad to see our city behave the way it does, but at the same time we cannot ignore the fact that laptop sales have helped to prosper the IT industry further.

Laptops increasingly popular in Karachi; thefts also on the rise


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## Neo

*Overview of SBPs Q2 FY08 report​* 
Tuesday, April 01, 2008

KARACHI: The State Bank of Pakistan on Monday released second quarter report for fiscal year 2007-08 on the state of economy. Following is the text of overview and executive summary. 

*Economic Outlook​*
The countrys economy continues to show resilience to domestic and international shocks. Although these have taken their toll, the economy is expected to turn in a reasonable growth performance during FY08, albeit substantially lower than target. So far, the principal drag on the years growth has been the outcome of kharif harvests and the slowdown in LSM growth (particularly in December 2007). The services sector, on the other hand, seems set to show good performance for the sixth consecutive year.

However, growing macroeconomic imbalances, particularly the widening fiscal and current account deficits continued to create complications and add to inflationary pressures. On the other hand, Pakistan has so far largely been untouched by the continuing turmoil in the international credit markets.

The rise in the fiscal deficit during H1-FY08 has more troubling implications than the increase in the previous year. The modest increase in the fiscal deficit during the preceding two years had been relatively less troubling, as (1) revenue growth had remained strong, and (2) rise in spending essentially reflected the impact of post-earthquake relief and reconstruction (excluding this, the fiscal deficit remained below 4.0 per cent of GDP); these substantive expenditures would fall sharply in a few years. In both years, the current expenditure during the first half of the fiscal year had remained below 7.0 per cent of the full year GDP. In contrast, the fiscal deficit during the first half of FY08 is estimated to be roughly 3.6 per cent of the estimated annual GDP - nearly twice the figures for the last two years. This incorporates a decline in revenue growth, as well as rising current spending.

A part of the deceleration in revenue growth during H1-FY08 is likely to be reversed as substantial non-tax receipts are expected in the later half of the fiscal year. However, the annual growth in tax collections is likely to remain weak relative to the previous year. Another troubling aspect is that the fiscal deficit may be understated. Evidence suggests that at least a part of the subsidy on fuel prices during Jul-Feb FY08 was not financed from government account.

Reducing the fiscal deficit in the remaining part of the fiscal year will thus be challenging, but is nonetheless essential. Support to aggregate demand due to fiscal deficit contributed directly to a rise in monetary aggregates, raising inflationary pressures, complicating monetary management, and stoking the growth of the current account deficit. International credit rating agencies have already cited the growth of the fiscal deficit as a key negative indicator for Pakistans sovereign credit rating.

The combination of rising fiscal deficit and weak external receipts has pushed the government borrowings from SBP to a record Rs359.3 billion during Jul-1st Mar FY08, compared to only Rs25.6bn in the corresponding period of last fiscal year. This has been instrumental in sustaining the growth in broad money (M2) for the period at 17.6 per cent YoY, significantly offsetting the central banks efforts to tighten monetary policy.

The government borrowings from the central bank are also the most inflationary form of financing the deficit. It seems likely that the exceptionally strong growth in these borrowings supported a rise in inflation. The impact of this was significantly augmented by the unanticipated strength of international commodity prices. Moreover, the rise in food prices was probably also aggravated by anti-competitive market structures and practices in the domestic market, as well as supply disruptions. The government has limited options to ease inflationary pressures. Efforts to reduce government subsidies on fuel will raise inflation in the short-run. Further, given limited fiscal space, any subsidies need to be carefully targeted and should be limited in scope.

Policy actions should not distort price signals, as these are essential to ensure investment and productivity increases needed to remove the shortages in future, as well as to modulate consumption. For example, the governments laudable desire to reduce current cost pressures in the domestic economy through a subsidy on key fuel prices, had the unintended consequence of supporting the widening of the current account deficit, as demand was not rationalized to reflect the higher international prices.

The growth of the current account deficit indicates that the exceptional fiscal expansion supported aggregate demand in the economy. The impact of the strong domestic demand on the current account deficit was compounded by the weakness in demand for textile in key markets. During the Jul-Jan FY08, textile imports in both the US and the EU slowed significantly (see Table 1.2). Pakistans textile exports also suffered in December 2007 due to extended business closures.

The impact of the widening current account deficit, driven essentially by the trade deficit, on the countrys overall balance was compounded by a decline in the financial & capital account balance in the same period, while FDI flows witnessed a year-on-year increase in Jul-Jan FY08. Portfolio investment observed a net outflow.

*These developments highlight three points:*

(1) Sustained large current account deficits pose risks to the countrys macroeconomic stability. Over the last few years, Pakistan was able to comfortably sustain current account deficit due to favorable domestic and international investment conditions that encouraged large non-debt creating financial inflows into the country. As a result, Pakistan was not only able to run a large deficit but also added to its foreign exchange reserves. However, that will be an increasingly risky strategy, given the stresses on the domestic economy as well as the relatively less favorable dynamics in the international capital markets.

(2) The volatility in portfolio investment points to the need to reduce dependence on these flows and the corresponding need to increase domestic savings. The latter, in particular would increase market depth and lower dependence on potentially volatile external flows.

(3) Pakistans need to improve its infrastructure and its dependence on imported inputs, reducing the current account deficit to sustainable levels must perforce target export growth. The most efficient measure here would be those targeting a reduction in inflation, and to reduce the cost of doing business in Pakistan.

Given domestic turbulence and external shocks, SBP estimates suggest that FY08 real GDP growth would be in the range of 6.0-6.5 per cent (see Table 1.3). This below target growth nonetheless remains strong. An unanticipated strength in international commodity prices is mainly responsible for cost push driven inflationary pressures in the economy. These pressures further intensified due to strong aggregate demand amidst a continuing fiscal stimulus. As a result, it is likely that FY08 inflation would be in the range of 8.0-9.0 per cent, significantly above the target of 6.5 per cent for the year.

The impact of the higher international commodity prices and strong domestic demand is also reflected in the deteriorating external imbalances during FY08. The current account deficit is projected to be around 6.0 per cent of GDP during FY08 reflecting the rising imports growth (led by rising commodity prices) and slow growth in textile exports.

*Executive Summary*

*Real Sector​*
Agriculture: Information available by mid-February 2008 suggests that agriculture sector is likely to record reasonable growth during the fiscal year. Prospects of achieving the targeted 4.8 per cent growth for the year remain dim. The record sugarcane and maize harvests, anticipated good wheat harvest, and above-target growth in minor crops, are unlikely to overcome the drag from the disappointing performance of some major kharif crops (cotton and rice). Livestock sub-sector, hit by bird flu virus may see some slowdown in growth.

Relatively weak aggregate performance of the crops, in the face of strong international prices of most agri-commodities, indicate not only the sectors vulnerability to the vagaries of nature but also the urgent need to enact reforms targeting distortions in the incentive structure for farmers, and the substantial wastage due to inadequate infrastructure. Investment in farm-to-market roads, agri-storage facilities, and small processing units can significantly reduce wastage and increase value addition in agriculture.

Institutional credit disbursement to agri-sector increased significantly by Rs23.8bn to Rs104.8bn during Jul-Jan FY08. The growth in agri-credit disbursement was due to aggressive lending by commercial banks. A sharp jump in non-farm credit also contributed in agri-credit growth acceleration during Jul-Jan FY08. The substantial rise in commercial bank lending compensated for a contraction in lending by the specialized banks during Jul-Jan FY08.

The aggregate fertilizer off-take witnessed recovery during Jul-Jan FY08 in contrast to a decline during the corresponding period of FY07. This growth was entirely driven by significantly higher off-take of urea. Despite a significant subsidy on DAP fertilizer, 4 its off-take saw a sharp decline in Jul-Jan FY08 amid a much sharper increase in international prices.

Large Scale Manufacturing: Pakistans large scale manufacturing (LSM) has been encountering headwinds since the start of FY08. Domestic as well as external factors are responsible for the relatively slower growth in this sector compared to the stellar performance of preceding years. These factors include: the continued strong increases in the international commodity prices, domestic energy woes and dampened demand (particularly for textile exports). Economic losses in the aftermath of December 27, 2007 have further weakened the chances of meeting the annual target. Overall, the slowdown in LSM during H1-FY08 was broad based and was seen in 11 out of 15 industrial groups. Of these, paper & board, metals, fertilizer and electronics industries registered a decline in production. In contrast to these under-performers, pharmaceuticals, POL, cement, engineering and wood industries depict reasonably strong growth.

Services: Most of the indicators for the services sector suggest robust growth in this sector during the first half of FY08. Wholesale and retail trade seems likely to perform well given a significant increase in imports (which accounts for more than half of the value addition in this sub-sector). This sub-sector is also likely to benefit from expansion in the network of domestic and foreign chain stores.

In the transport & communication sub-sector, a relative weakness in transportation sub-sector could be offset by a strong growth in the electronic media and tele-communication sub-sectors on the back of governments liberal policy as well as large FDI in recent years. In particular, expansion in cellular services is impressive as cellular density has more than doubled during July 2006 to December 2007.

The combined impact of a likely improvement in the profitability of the overall banking sector, coupled with some improvement in value-addition by other financial institutions is expected to support the high growth momentum in finance & insurance sub-sector as well. In addition, growth in value addition by public administration & defense as well as community & social services (other services) is likely to be strong.

Prices: Inflationary pressures in the domestic economy have continued to mount throughout Jul-Feb FY08, with particularly sharp increases in the later months of the period, despite the central banks efforts to contain the growth in aggregate demand. The headline CPI inflation rose to 11.3 per cent (YoY) in February 2008 from 7.0 per cent in June 2007. This reflects not only the stimulus from the expansionary fiscal policy but also the unanticipated strength of international commodity prices. The impact for food commodity prices was probably also aggravated by anti-competitive market structures and practices in the domestic market, as well as supply disruptions.

CPI food inflation (YoY) started to strengthen since September 2007 and was recorded at 16.0 per cent in February 2008 after reaching to a local peak of 18.2 per cent during January 2008; the highest level seen since April 1995. The rise in the food inflation is now increasingly being supplemented by acceleration in non-food prices. The latter is driven partly by high energy prices, but there is also evidence that the sustained rise in food and energy prices is engendering broad second round effects on inflation. This view is supported by the sustained increase in both measures of core inflation, seen since June 2007. On a YoY basis, NFNE (non-food, non-energy) core inflation increased to 8.1 per cent in February 2008 (the highest since November 2005) from 6.0 per cent in February 2007.

The inflationary pressures in the economy stemmed from strong aggregate demand were further strengthened due to rising international commodity prices (both food and energy), supply disruptions and market inefficiencies. The latter can clearly be tackled through fiscal and administrative measures. However, given evidence that these cost push inflationary pressures are generating second round inflationary cycle, continued monetary tightening was essential and guided the SBP decision to accentuate its monetary tightening. The monetary measures aimed at siphoning out the excess demand in the economy need to be supplemented by greater fiscal discipline, as well as administrative and policy measures to correct market distortions.

Money and Banking: The sustained increase in food commodity prices and the impact of rising costs of oil products led to unexpected rise in inflationary pressures in the economy during the first half of FY08. At the same time, risks to macroeconomic stability increased considerably as the fiscal and current account deficits turned out to be considerably wider than envisaged in the monetary policy framework. These developments eroded the impact of monetary tightening measures undertaken in August 2007, and increased the risks of further surge in inflationary pressures.

The rising fiscal deficit and its financing posed severe complications for the Monetary Policy Framework for FY08. Besides adding to aggregate demand pressures in the economy, the impact of higher fiscal deficit was also evident in a sharp rise in budgetary borrowings from the central bank ñthe most inflationary in nature. The borrowings from SBP reached Rs359.3bn during Jul-1st Mar FY08, instead of the net retirement recommended in the Monetary Policy Statement for Jul-Dec FY08. The sharp rise in budgetary borrowings was the major driving force behind the high annualized M2 growth. YoY M2 growth of 17.6 per cent as on 1st March 2008 is a source of concern for SBP as it has the potential to add to the excess demand pressures in the economy.

SBP responded aggressively by further raising its policy discount rate by 50 bps to 10.5 per cent and the cash reserve requirement of the banking system by 100 bps on current deposits effective from 1st February 2008.

SBP believes that monetary policy can best contribute to long-run economic growth by creating an environment with a stable price level or a low and predictable rate of inflation. In the medium term stable prices also help in moderating the fluctuations in output. In this backdrop, addressing widening macroeconomic imbalances becomes essential as these imbalances not only add to inflationary pressures, but also harm economic growth prospects.

The importance of low and stable inflation in achieving high long run growth also provides a cornerstone for monetary and fiscal policy coordination. It is therefore essential that government improves its fiscal discipline and limits its borrowings from the central bank within the targets recommended in the monetary policy framework. Otherwise, the time path for achieving a stable and low inflation would be extended, raising the cost of adjustment for economic agents.

The available data suggests that private sector credit has grown by 11.7 per cent during Jul-1st Mar FY08; slightly higher than that in the corresponding period of the preceding year. The demand for working capital is on the rise as (1) delays in the settlement of price differential claims led IPPs and OMCs to resort to financing from bank sources for their working capital requirements, and (2) a sharp surge in raw material prices, both in the domestic and global markets, had pushed up the credit demand from the corporate sector.

Although the demand for fixed investment loans moderated in a number of industries, this is more a reflection of the fact that some industries had already expanded their activities in recent years, whereas others are using foreign currency loans & investments and issuing debt in the domestic market.

Fiscal Developments: Deterioration in key fiscal indicators seen during Q1-FY08, accelerated sharply in the next quarter, as revenue growth stagnated, even when expenditures continued to rise. As a result, the cumulative fiscal deficit for H1-FY08 as a per cent of (estimated) annual GDP was almost twice that seen in the previous two years, reaching a seven-year high for the period. Similarly, the revenue deficit and the primary deficit ratios for H1-FY08 increased substantially relative to the preceding years.

The fiscal performance is expected to improve in the remaining two quarters of the financial year, with greater discipline in spending being complemented by an anticipated improvement in revenues. Nonetheless, it is likely that the annual fiscal deficit will exceed 4.0 per cent of GDP target. The fiscal concerns are also heightened by the substantial (Rs54.6bn) issuance of contingent liabilities of the government in the first six months of FY08.

*External Sector​*
Balance of Payments: Pakistan could not sustain the modest improvement in the current account deficit seen during Q1-FY08, and it widened sharply in succeeding months. Consequently, the cumulative Jul-Jan FY08 current account deficit rose by 47.1 per cent YoY, compared to the 51.0 per cent YoY increase in the same period of the previous year. The dominant contribution to the post-Q1-FY08 deterioration in the current account was from an abrupt rise in the countrys oil bill, large one-off aircraft import, the impact of political disturbance in December 2007 as well as delays in the receipt of coalition support funds, all of which overshadowed the sustained increase in remittances.

The impact of the widening current account deficit on the countrys overall external balance was compounded by a decline in the financial and capital account surplus in the same period. In particular, while FDI flows improved slightly, there was a precipitous US$1.4 billion drop in net foreign portfolio investment flows. The decline reflected the outflows partly from the equity markets due to perceptions of increased political risk, and partly due to the delays in the planned floatation of Global Depository Receipts (GDRs) in the face of global financial turmoil and a perceived increase in country risk. Apart from the impact of the fall in portfolio investment was also lowered by a large rise in other investments, including FE-25 nostros, short-term loans, etc.

Given that the decline in the financial account surplus was quite moderate, it is clear that the decline in the countrys foreign exchange reserves essentially reflects the sharp increase in the current account deficit. Overall foreign exchange reserves declined to US$14.0bn by end February of FY08 compared with US$15.6bn as at the end June FY07.

As a result of worsening of external account during Jul-Jan FY08, Pak Rupee could not hold its grounds against the US dollar and depreciated by 3.5 per cent during Jul-Feb FY08.

Foreign Trade: Rising international commodity prices coupled with domestic supply constraints of some key commodities resulted in a 21.9 per cent YoY rise in imports growth during Jul-Feb FY08 that outpaced 7.9 per cent growth in exports during this period. Resultantly, the trade deficit recorded a sharp US$3.5bn YoY increase during the period.

Almost half of the total increase in the import bill during Jul-Jan FY08 was contributed by rising international commodity prices: oil, fertilizers, palm oil, etc. In addition, imports of wheat and cotton were necessitated due to domestic shortages. The import bill was further inflated due to a large one-off import in the category of aircrafts, ships and boats. In the absence of all these factors, import growth, and thus the trade deficit, would have been significantly lower than the current level. The significant slowdown in the imports after adjusting for these factors represents a deceleration of the real demand for imports, which can, in part, be attributed to the tight monetary policy being pursued by SBP.

The growth in exports during Jul-Jan FY08 was entirely due to rise in the non-textile exports ñ mainly other manufactures and petroleum group; whereas textile exports recorded 3.4 per cent YoY fall during this period. The decline in the textile exports was broad based with only the exports of synthetic textiles, ready-made garments and textile made-ups registering positive growth.

1 Instead, in order to mitigate the financial difficulties of the various institutions (particularly the oil marketing companies) with unpaid price differential claims, the government provided guarantees against which these public and private sector institutions could borrow the amounts from financial institutions. Such a financing structure simply shifts most of the cost of the financing from the current fiscal year to the fiscal deficit in future years (when the principal amount is paid off).

2 It is instructive to note that approximately 21 per cent of the rise in the imports during Jul-Jan FY08 is on account of the oil bill.

3 The impact of extended holidays for the Eid festival was compounded by political disruptions, following the assassination of a former prime minister.

4 Subsidy of Rs470 per 50 kg bag of DAP fertilizer was extended for the FY08 cropping seasons to encourage farmers to use a balanced mix of fertilizers.

5 The incentive to accelerate development spending ahead of the elections will no longer hold. Indeed, media reports indicate that concerned by the ballooning fiscal deficit, the government has sharply curtailed expenditure growth in H2-FY08.

6 The impact of a general increase in risk-averseness in the troubled global financial market was compounded by the increased risk perceptions on Pakistan due to the pre-election uncertainty, particularly following the assassination of a former prime minister. As a result, the sovereign spread rose from 140 bps at end-June 2007 to 620 bps at end-January 2008 on 5 year bond.

7 This analysis is based on the provisional data provided by Federal Bureau of Statistics, which is subject to revisions. This data may not tally with the exchange record numbers reported in the section on Balance of Payments.

8 The price impact for the 50.2 per cent imports for which price and quantum data was available was around 49 per cent of the total rise in the import bill during Jul-Jan FY08.

9 The broad analysis of trade deficit is based on Jul-Feb FY08 data. However the detailed exports and imports trends are discussed for the period Jul-Jan FY08, since detailed monthly data is not available for February FY08.

10 In the absence of these two factors, the import growth for Jul-Jan FY08 would have been mere 4.6 per cent, which implies a trade deficit of US$7.9bn for this period.

Table 1.1: Selected Economic Indicators 

FY06 FY07 FY08

Growth rate (percent)

LSM Jul-Dec 8.7 8.3 4.5

Exports (fob) Jul-Feb 18.8 3.4 7.9

Imports (fob) Jul-Feb 46.3 9.9 21.9

Tax revenue (FBR) Jul-Jan 21.8 25.1 10.6

CPI (12 month MA) Jul-Feb 8.9 7.7 8.4

Private sector credit Jul-1st Mar 18.9 11.2 11.7

Money supply (M2) Jul-1st Mar 9.5 8.7 7.1

billion US dollars

Total liquid reserves1 end-Feb 11.5 13.3 14.1

Home remittances Jul-Jan 2.4 3.0 3.6

Net foreign investment Jul-Jan 1.5 3.4 2.3

Percentage of GDP2

Fiscal deficit Jul-Dec 1.8 1.9 3.6

Trade deficit Jul-Feb 5.9 6.2 7.9

Current a/c deficit Jul-Jan 2.7 3.6 4.8

1. With SBP & commercial banks.

2. Based on full-year GDP in the denominator. For FY08, estimated

full-year GDP has been used. 

Table 1.3: Major Economic Indicators

FY08

Provisional Original SBP 

FY07 target projections

Growth rates (per cent)

GDP 7.0 7.2 6.0 - 6.5*

Inflation 7.8 6.5 8.0 - 9.0

Monetary assets (M2) 19.3 13.7** 15.5 - 17.5

billion US dollars

Exports (fob-BoP data) 17.1 18.9 19.7

Imports (fob- BoP data) 27.0 29.6 32.1

Exports (fob-customs data) 17.0 19.2 19.2

Imports (cif-customs data) 30.5 32.3 35.1

Workers remittances 5.5 5.8 6.0 - 6.5

Percentage of GDP

Budgetary balance -4.3 -4.03*** -5.2

Current account balance -5.3 -5.0 -6.0

* Estimated range is based on the assumption of 12.7 million bales of cotton and 24.0 million tonnes of wheat crop.

** Announced in MPS Jul-Dec FY08

*** Budget estimates

Table 1.2: Overall Import Growth of Textiles

CY06 CY07

EU* 8.3 4.7

USA* 6.4 1.3

* Source: Eurostat (CY07 Data available for Jul-Oct)

* Source: US CY07 Census Bureau (data available for Jul-Nov)
Overview of SBPs Q2 FY08 report


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## Neo

*SBP forecasts further worsening of trade deficit​*
KARACHI: State Bank of Pakistan (SBP) anticipates further widening of trade deficit in the remaining part of the current financial year on account of impact of rising international commodity prices and high international prices and growing demand of various products.

According to second quarterly report 2007-08 on the state of Pakistans economy released on Monday, central bank said that rising international commodity prices coupled with domestic supply constraints of some key commodities resulted in 21.9 percent YoY rise in imports growth during July-February 2007-08 that outpaced 7.9 percent growth in exports during this period.

Resultantly, the trade deficit recorded a sharp $3.5 billion YoY increase during the period. With this expansion, the ratio of trade deficit to GDP worsened from 6.2 percent in July-February of last fiscal year to 7.9 percent in corresponding period of July-February t his year.

In contrast to financial year 2005 and 2006, SBP pointed out that the sharp surge in import growth during July-January of this fiscal year was not due to any structural shift in demand as around half of the total increase in the import bill was contributed by rising international commodity prices: oil, fertilizers and palm oil.

In addition, imports of wheat and cotton were necessitated due to supply shortages, it mentioned and noted that the import bill was further inflated due a large one-off import in the category of aircrafts, ships and boats. 

In the absence of all these factors, SBP believed import growth and thus the trade deficit would have been significantly lower than the current level and added that the significant slowdown in the imports after adjusting for these factors represents a deceleration of the real demand for imports, which can in part be attributed to its tight monetary policy.

The composition of export growth, it said on the other hand does represent a structural shift. The growth in exports during July-January of 2007-08 was on account of a rise in non-textile exports  mainly other manufacturers and petroleum group; whereas textile exports recorded 3.4 percent YoY fall during this period. 

The decline in the textile exports was broad based with only the exports of synthetic textiles, ready-made garments and textile made-ups registering growth, it pointed out.

Central bank attributed the fall in the textile exports to both supply and demand factors. On the supply side, textile exports were adversely affected by the rising cost of production due to increase in domestic cotton prices and tariff rates, as well as by the frequent power shortages and political unrest.

On the demand side, textile and apparel products exports appear to have suffered from the slowdown in the US economy. In this scenario, the growth in the non-textile exports is all the more encouraging. 

However, SBP expects the recovery of textile exports, once political environment in the country improves and importers become confident with regard to timely fulfillment of export orders. 

The recovery may not be sharp due to acute power shortages and rising domestic cost of production, it cautioned and stated that the overall export growth is nevertheless, likely to pick up on the back of rising non-textile exports. 

Imports, on the other hand, central bank said are expected to continue to rise, as the current trend of rising international commodity prices is unlikely to reverse in the short-term. 

Apart from the price impact, the import bill is also likely to increase on account of rising demand. Particularly, the import of wheat, agriculture & chemicals group, raw cotton and metal group along with power generation machinery is likely to increase, it added.

Daily Times - Leading News Resource of Pakistan


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## Neo

*This years fiscal deficit is more troubling: SBP ​*
KARACHI: The rise in the fiscal deficit during first half of financial year 2008 has more troubling implications than the increase in the previous year, the State Bank of Pakistan said on Monday in its second quarterly report on the state of Pakistans economy. 

The modest increase in the fiscal deficit during the preceding two years had been relatively less troubling, because (1) revenue growth had remained strong, and (2) rise in spending essentially reflected the impact of post-earthquake relief and reconstruction (excluding this, the fiscal deficit remained below 4 percent of GDP). 

In contrast, the fiscal deficit during the first half of financial year 2008 is estimated to be roughly 3.6 percent of the estimated annual GDP - nearly twice the figures for the last two years. This incorporates a decline in revenue growth, as well as rising current spending. 

Another troubling aspect is that the fiscal deficit may be understated. Evidence suggests that at least a part of the subsidy on fuel prices during July-February of financial year 2008 was not financed from government account. 

Instead, in order to mitigate the financial difficulties of the various institutions (particularly the oil marketing companies) with unpaid price differential claims, the government provided guarantees against which these public and private sector institutions could borrow the amounts from financial institutions. Such a financing structure simply shifts most of the cost of the financing from the current fiscal year to the fiscal deficit in future years (when the principal amount is paid off). 

A part of the deceleration in revenue growth during first half of financial year 2008 is likely to be reversed as substantial non-tax receipts are expected in the later half of the fiscal year. However, the annual growth in tax collections is likely to remain weak relative to the previous year.

Daily Times - Leading News Resource of Pakistan


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## Neo

*LSM witnesses tepid performance​*
KARACHI: Pakistans large scale manufacturing (LSM) has been encountering headwinds since the start of the fiscal year 2007-08 on the consequence of continued spiral in the international commodity prices, domestic energy woes and dampened demand of the local products in the global markets, particularly for textile exports.

The second quarterly report released by State Bank of Pakistan (SBP) said the domestic as well as external factors are responsible for the relatively slower growth in this sector compared to the stellar performance of preceding years. However, economic losses in the aftermath of 27th December 2007 have further weakened the chances of meeting the annual target of the sectors included in LSM.

Overall, the slowdown in LSM during first half of financial year 2008 was broad based and was seen in 11 out of 15 industrial groups. Of these, paper & board, metals, fertilizer and electronics industries registered a decline in production. Paper & board industry has done rather dismally as few plants in the sector were temporarily closed for expansion activities during the period. Similarly, the decline in fertilizer production during was mainly due to the closure of a large Di-Ammonium Phosphate (DAP) producing plant in the country for balancing, modernisation and replacement activities. As a result, the imports of non-urea fertilizer shot up during the period.

However, liberal automobile import policy of the last two years has adversely affected local auto industry. Government in 2008 budget tightened the policy by only allowing imports of automobiles up to three years old. This measure has reduced the import of completely built units (CBUs); but could not spur local production. 

As a result, car manufacturers cut productionduring H1-FY08. However, robust growth in completely knocked down (CKD) imports of 14.5 percent during Q2-FY08 suggests that car manufacturing may recover in the second half of the year, when 70 percent of annual production usually takes place. Poor performance of textile sector is mainly a reflection of sharp slowdown in its exports. Ironically, the deceleration in textile exports is despite the substantially high subsidized financing for working capital, fixed investment, and concessional export finance in recent

years, and appears to be driven by structural impediments in the industry as well as recent slowdown in US demand for textiles. 

Poor cotton harvest and the resultant growth in cotton prices; appears to be the most critical factor in deteriorating competitiveness of domestic textile. In contrast to these under-performers, pharmaceuticals, POL, cement, engineering and wood producing industries witnessed a reasonably strong growth. While growth in cement production is mainly due to export demand, growth in petroleum products is driven mainly by robust domestic consumption as well as productivity gains following the overhauling of plants in two refineries in the preceding year. 

Sugar and pharmaceutical industries managed to perform well due to ample availability of raw materials. Pharmaceuticals recorded an unprecedented growth of 36.4 percent during first half of financial year 2008, driven mainly by increase in the outreach of public sector health related activities in the year as well as reduction in duties on raw-material imports announced in federal budget for 2008. Similarly, robust growth in sugar production is an outcome of record sugarcane crop during the year. However, the food, beverages and tobacco sub-group decelerated slightly due to the decline in the production of edible oil/ghee.

Cement production registered a robust growth of 18.2 percent in financial year 2008, decelerated only marginally from 18.8 percent in the preceding year. However, production of other items in nonmetallic minerals group declined sharply.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Agri growth target likely to be missed: SBP report​*
KARACHI: The prospects of achieving the agriculture growth target of 4.8 percent are not promising during the current financial year, State Bank of Pakistan (SBP) cautioned while forecasting reasonable growth in agriculture sector.

The second quarterly report 2007-08, released on Monday, pointed out that dim prospects are unlikely to overcome the drag from the disappointing performance of some major Kharif crops of cotton and rice. 

Relatively weak aggregate performance of the crops, in the face of strong international prices of most agriculture commodities indicates not only the sectors vulnerability to the vagaries of nature but also the urgent need to enact reforms. 

It should target distortions in the incentive structure for farmers and the substantial wastage due to inadequate infrastructure. 

Wheat prices, both international as well as domestic retail prices, surged through most of the 2007, but farmers did not appear to be capitalising on this opportunity. 

Delayed announcement of the support price, leading to uncertainty on the eventual sale prices. The government purchased only 4.4 million tonnes out of 23.3 million tonnes of the 2007 crop. It appears that farm-gate prices are not keeping pace with international market prices. 

The bout of the bird flu incidence in domestic poultry industry during January 2008 in urban Sindh caused a decrease in the output of the poultry farms with no reported culling of the grandparent and parent resources by the one day old chick producers. 

The report said delay in crushing season also goes against the farmers as weight of sugarcane gets reduced with each passing day due to evaporation of water content in sugarcane. 

In this backdrop, delayed crushing amid price dispute between farmers and sugar mills during 2007 is likely to adversely impact 2008 sugarcane crop, which would lead to sugar shortage next year and hike in the domestic sugar prices. 

The strong growth in dairy sector is a case in point with support for small dairy farmers for storage units helping the milk processing industry which recorded strong growth, leading to increase investment across the value-added chain, and supporting income prospects for farmers.

The latest data on 2008 Rabi crops indicates that area under wheat cultivation decreased by 0.2 percent, which is a consequence of delayed sugarcane crushing and extended cotton picking season. 

As a result, achieving the wheat harvest target of 24 million tonnes for 2008 will be difficult. However, impact of lower wheat plantation was somewhat offset by increase in water supply for irrigation purposes by recent rains and snowfall. 

Initial data on various minor crops suggests that in 2008, growth of minor crops will be substantially higher than previous years. Other crops like bajra, jawar, chili, moong, potatoes also performed well. 

Water shortage was estimated to be around 22 percent lower than the normal levels compared with a shortfall of 14.3 percent in Rabi 2007. 

Institutional credit disbursement to agri-sector increased significantly by Rs 23.8 billion to Rs 104.8 billion during July-January 2008.

Commercial banks also responded positively and have introduced new financial products for agri-credit with aggressive marketing. As a result, agri-credit disbursement by the five largest commercial banks increased significantly by 33.2 percent YoY during July-January 2008 against only 0.9 percent rise witnessed in the same period of the previous year.

In contrast, weaker performance of agri-credit disbursement by the specialised banks during is largely a reflection of restructuring and stress on revolving credit scheme by ZTBL. 

The major hindrance is non-availability of appropriate collateral for small farmers. SBP has therefore designed a financing scheme for small farmers to increase the outreach of the agri-credit. SBP introduced Financing Scheme for Small Farmers (FSSF). This is an attempt to resolve the root cause of market failure in agriculture credit, non-availability of collateral. This scheme offers an opportunity to small farmers in mainstream institutional credit, which is likely to impact lives of thousands small farmers. It is expected that this scheme would yield desired results and number of borrowers would increase in agriculture sector. Since agri-credit disbursement is based on revolving credit formula, the performance of disbursements is also mirrored in the recoveries. Despite a slowdown in agri-credit recovery growth by the five largest commercial banks and DPBs, their performance remained buoyant during July-January 2008.

Daily Times - Leading News Resource of Pakistan


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## Neo

*SBP cuts GDP growth forecast to 6-6.5pc​*
** Current account deficit to be 6 percent of GDP 
* Inflation will rise to 8 to 9 percent 
* 4.8 percent agriculture growth target may not be achieved​*
KARACHI: The State Bank of Pakistan has cut its forecast for full-year gross domestic product (GDP) growth from the 7.2 percent target set in the beginning of this fiscal year to 6 or 6.5 percent, citing domestic turbulence and external shocks as the reasons. 

Due to strong aggregate demand amidst a continuing fiscal stimulus, inflation in the fiscal year 2008 would be in the range of eight and nine percent, significantly above the target of 6.5 percent for the year, said the central bank. 

M2 (money supply) growth is likely to be in the range of 15.5 and 17.5 percent against the target of 13.7 percent. 

The bank projects the current account deficit to be around six percent of GDP during the year against the target of five percent, reflecting the rising imports growth and slow growth in textile exports. 

It is likely that the annual fiscal deficit will exceed the four percent of GDP target, the central bank said. The cumulative fiscal deficit for the first half of fiscal year 2008 as a percentage of estimated annual GDP was almost twice that seen in the previous two years, reaching a seven-year high for the period. 

The principal drag on the years growth has been the outcome of kharif harvests and the slowdown in large-scale manufacturing growth. The services sector, on the other hand, seems set to show good performance for the sixth consecutive year. 

Agriculture growth: Prospects of achieving the targeted 4.8 percent agriculture growth for the year remain dim, the bank said. The record sugarcane and maize harvests, anticipated good wheat harvest, and above-target growth in minor crops, are unlikely to overcome the drag from the disappointing performance of cotton and rice crops. 

Overall, the slowdown in large-scale manufacturing during the first half of fiscal year 2008 was broad-based and was seen in 11 out of 15 industrial groups. 

Inflationary pressures in the domestic economy have continued to mount throughout the July to February period, with particularly sharp increases in the later months of the period, despite the central banks efforts to contain the growth in aggregate demand. 

Consumer price index food inflation began to strengthen in September 2007 and was recorded at 16 percent in February 2008 after reaching a local peak of 18.2 percent during January 2008, the highest level seen since April 1995. 

Pakistan could not sustain the modest improvement in the current account deficit seen during the first quarter of fiscal year 2008, and it widened sharply in succeeding months. The cumulative July to January current account deficit rose by 47.1 percent year-over-year, compared to the 51 percent increase in the same period of the previous year. 

Given that the decline in the financial account surplus was quite moderate, it is clear that the decline in the countrys foreign exchange reserves essentially reflects the sharp increase in the current account deficit. Overall foreign exchange reserves declined to $14 billion by the end of February (fiscal year 2008) compared with $15.6 billion as at the end of June in fiscal year 2007. 

As a result of the worsening of external account during the July to January period in fiscal year 2008, the Pakistani rupee could not hold its grounds against the US dollar and depreciated by 3.5 percent during July to February. 

Growing macroeconomic imbalances, particularly the widening fiscal and current account deficits, continued to create complications and add to inflationary pressures. 

The fiscal deficit during the first half of this fiscal year is estimated to be roughly 3.6 percent of the estimated annual GDP - nearly twice the figures for the last two years. This incorporates a decline in revenue growth, as well as rising current spending.

Support to aggregate demand due to fiscal deficit contributed directly to a rise in monetary aggregates; raising inflationary pressures, complicating monetary management, and stoking the growth of the current account deficit. 

The impact of the widening current account deficit on the countrys overall balance was also compounded by a decline in the financial and capital account balance.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Govt told to restrict borrowing​*
KARACHI, March 31: The country will miss the growth target of 7.2 per cent for the current fiscal year as both agriculture and large-scale industry under performed and its impact on the growth rate could not be compensated by strong growth in the services sector.

The State Bank of Pakistan has advised the government to exercise fiscal responsibility, restrain and restrict direct borrowing from the central bank to finance its expenditures. This is necessary to arrest the spiralling price trend as the deficit financing has a strong direct relationship with inflation.

The SBP released on Monday its second quarterly report for FY08 on the state of Pakistans economy. Commenting on the prospects of growth it says, The economy is expected to turn in a reasonable growth performance during FY08, albeit substantially lower than the target.

Explaining the key reason for moderation in growth rate it says, So far, the principal drag on the years growth has been the outcome of Kharif harvests and slowdown in LSM (large scale manufacturing) growth, particularly in December 07. The services sector, on the other hand, is set to show good performance for the sixth consecutive year.

Identifying the disturbing indicators impacting on the countrys evaluation by international creditors and donors, the report indicates, However, the macroeconomic imbalances, particularly the widening fiscal and current account deficits, continued to create complications and add to inflationary pressures.

The State Bank has accepted that the tight monetary policy has failed to yield the targeted results as inflationary pressures continue to mount all through the first half of the current fiscal year.

It attributed the troubling price scenario to the irresponsible fiscal management of the government that resorted to uninhibited deficit financing against the SBP advice. In addition to high oil prices, the unexpected commodity price surge has augmented the trend of rising prices as weak agricultural performance necessitated import of edibles at a high cost.

The last government and the caretakers setup did not take the SBP advice seriously and continued to depend heavily on short cut of the SBP borrowed money to bridge the gap between the revenue and expenditure. Will the Gilani government be able to control the temptation of easy money and opt for difficult but prudent economic management practices?

There are huge doubts over the ability of the democratic government to control government expenditure, especially when people and many segments are expecting a relief package immediately.

Govt told to restrict borrowing -DAWN - Business; April 01, 2008


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## Neo

*CPI rises to 11.3 percent ​* 
KARACHI (April 01 2008): The headline consumer price index (CPI) rose to 11.3 percent (YoY) in February 2008, from 7.0 percent in June 2007 because of expansionary fiscal policy and unanticipated strength of international commodity prices. The increase has hit hard the lower and the lower-middle income groups.

The second quarterly report for the year 2007-08 of the central board of State Bank of Pakistan issued on Monday said that inflationary pressures in the domestic economy have continued to mount throughout July-February FY08, with particularly sharp increase in the later months of the period, despite the central bank's efforts to contain the growth in aggregate demand.

During the period under review, CPI increased to 11.3 percent from 7.0 percent, CPI food inflation stood at 16.0 percent, and CPI non-food inflation increased to 7.8 percent from 4.7 percent. The WPI inflation (YoY) exhibited a steep rise and was recorded at 16.4 percent--the highest since February 1995. The SPI inflation (YoY) rose to 12.3 percent in February 2008 as compared to 8.8 percent in February 2007.

Similarly, the weekly SPI showed acceleration and was recorded at 15.7 percent in the second week of March 2008 compared to 12.5 percent in the last week of January 2008. Increase in weekly SPI, the report says, is mainly due to increase in the prices of essential items such as wheat, rice, LPG, and vegetable ghee.

The report shows that CPI upsurge was mainly due to a stubbornly high food inflation that has remained in double digits since September 2007.

Due to persistent high food inflation, the contribution of food group in overall inflation has increased from 55.4 percent in February 2007 to 59.0 percent in February 2008. The high food inflation implies that it is hurting low-income group disproportionately.

The lowest income group (income up to Rs 3000 per month) and middle income group (Rs 3001-Rs 5000 per month) witnessed highest inflation of 13.4 and 13.0 percent respectively, followed by 12.0 percent in upper-middle income group (Rs 5001-Rs 12000) and 10.1 percent for the highest income group (above Rs 12000 per month).

Food inflation for the lower-middle income group was the highest, showing that this group is more vulnerable, given the constraints to avail targeted subsidy through utility stores compared to low income group.

Consumer price index food inflation during the periods under review started to strengthen since September 2007 and was recorded at 16.0 percent in February 2008, after reaching a local peak of 18.2 percent during January 2008--the highest level since April 1995.

The report says that this persistence in CPI food inflation reflects the dynamics of international markets as well as factors specific to the domestic economy. To explain the CPI food inflation phenomenon further the report says that in the domestic markets the prices of key staples including wheat, rice and edible oil have seen an uptrend throughout FY08. The rise in domestic wheat prices has been attributed mainly to speculative hoarding done on insufficient stock position of the government.

The low level of stocks impaired government's ability to intervene in the market to stabilise the prices. It is also important to note, the report says, that continued export of wheat flour to Afghanistan and illegal cross-border movement of wheat further aggravated the supply shortage.

In comparison to CPI food inflation (YoY), CPI non-food inflation also showed increase to 7.8 percent in February 2008 from 4.7 percent in May 2007. The recent upsurge in non-food inflation was mainly due to an increase in non-food sub-group including house rent, fuel & lighting and household furniture and equipment.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Poor textile sector output main cause of low exports ​* 
KARACHI (April 01 2008): The State Bank of Pakistan (SBP) said on Monday that poor performance of the textile sector was mainly a reflection of sharp slowdown in its exports. In its second quarterly report, the SBP said that the country's overall exports went up by 7.9 percent to $11.7 billion, while imports grew by 22 percent during July-February FY08 mainly due to the rising international commodity prices coupled with domestic supply constraints of some key commodities.

As a result, the trade deficit recorded a sharp $3.5 billion rise to $12.5 billion YoY increase during the period. With this expansion, the ratio of trade deficit to GDP worsened from 6.2 percent in July-February FY07 to 7.9 percent in July-February FY08, the report added.

Ironically, the deceleration in textile exports was despite the substantially high subsidised financing for working capital, fixed investment, and concessional export finance in recent years, and appeared to be driven by structural impediments in the industry as well as recent slowdown in US demand for textiles, the SBP said.

"Besides this, supply and operational bottlenecks like decline in fiscal year 2008 cotton harvest, electricity & gas shortages and deteriorating law and order situation in the country, further worsened the textile sector's weak performance during the period", the report said.

The SBP said that poor cotton harvest and the resultant growth in cotton prices appeared to be the most critical factor in deteriorating competitiveness of domestic textile.

The composition of export growth, on the other hand, represented a structural shift. The growth in exports during July-January FY08 was on account of a rise in non-textile exports--mainly other manufactures and petroleum group--whereas textile exports recorded 3.4 percent year on year fall during this period.

The decline in the textile exports was broad based with only the exports of synthetic textiles, readymade garments and textile made-ups registering growth.

Fall in the textile exports was attributed to both supply and demand factors. On the supply side, textile exports were adversely affected by the rising cost of production due to increase in domestic cotton prices and tariff rates, as well as by the frequent power shortages and political unrest. On the demand side, textile and apparel product exports appeared to have suffered from the slowdown in the US economy.

However, the SBP projected that textile exports were expected to recover when political environment in the country improves and importers become confident with regard to timely fulfilment of export orders.

Having said this, the recovery may not be sharp due to acute power shortages and rising domestic cost of production. The overall export growth was nevertheless likely to pick up on the back of rising non-textile exports, the SBP added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Rs 54 billion written-off loans: SBP submits details to Supreme Court ​* 
LAHORE (April 01 2008): The State Bank of Pakistan on Monday provided details of Rs 54 billion written-off loans to the Supreme Court of Pakistan. The apex court had directed the SBP to submit details of all those persons/concerns whose loans were written off by the outing government.

In Islamabad, a three-member bench of the Supreme Court, comprising Justice Mohammad Nawaz Abbassi, Justice Hamid Farooq and Justice Mohammad Farrukh Mehmood, held further hearing of the case of written-off loans of which it had taken suo moto notice.

During the hearing, Justice Abbasi observed it was strange that poor defaulters of the House Building Finance Corporation (HBFC) or small business loans were put behind the bar, whereas no action was taken against the rich people to recover the state money.

Attorney General Malik Mohammad Qayyum agreed with the court either loans of all people irrespective their status be written off, or no one should be spared. The court appointed prominent lawyers, Abdul Hafeez Pirzada and S.M. Zafar, as amicus curaie, and issued notice to the Attorney General for April 10.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Swelling of current account deficit ​*
EDITORIAL (April 01 2008): The performance of external sector of the economy continues to deteriorate. According to the latest figures released by the State Bank of Pakistan, current account balance of the country, which is a real barometer of the position of the foreign sector, registered a record deficit of $8.4 billion during the first eight months (July-February, 2008) of the current fiscal year, depicting a huge increase of almost 44 percent over the deficit of $5.86 billion recorded in the same period of last year.

Such a large gap in the current receipts and payments of the country was caused mainly by the imbalance in merchandise trade which touched the level of $9.09 billion, with exports of only $12.63 billion as against the imports of $21.72 billion. Services sector and income deficits also rose to $4.22 billion and $2.4 billion respectively. Total foreign investment, which had cushioned the external imbalance in the previous year to a large extent, also dropped significantly during July-February, 2008. Workers' remittances increased substantially but these were not enough to check the deteriorating trend in the current account.

The severity of the problem could be gauged from the fact that the current account deficit has not only reached the highest-ever level in the country's history but has already exceeded the full year's projection of $8.11 billion or 4.8 percent of GDP and if the present trend continues, it could amount to nearly $12 billion during 2007-08 as against last year's record deficit of $7.0 billion.

By all indications, the situation in the external sector is alarming. It was unfortunate that neither the Shaukat Aziz government nor the caretaker regime paid any heed to the widening of current account deficit and allowed the problem to fester over time. Of course, there was an easy explanation that higher oil prices in the international market, sudden jump in the import of food items, especially wheat, and huge import of products like power generators was the main cause of the soaring deficit, but no worthwhile effort was made to increase the foreign exchange earning capacity of the country and restrict the level of non-essential imports.

The indifferent attitude of the authorities in the past could be ascribed to the fact that resolution of the problem could be postponed for some time by increasing external indebtedness or drawing down foreign exchange reserves of the country. But no such luxury will be available to the new set-up if it wants to manage the economy on sound lines. Continuing with this trend would result in further depreciation in the rupee rate, acceleration in the inflation rate, depletion of foreign exchange reserves, down-grading of Pakistan's credit rating and threaten the solvency of the country.

A stage could be reached when the country would find it difficult to make payments for its foreign liabilities, leading to disruption in industrial and capital goods imports, with highly negative consequences for employment level and growth prospects of the economy. The problem may be further compounded as Pakistan is likely to face a higher external debt-servicing burden as repayments of rescheduled non-ODA Paris Club stock would resume in 2008 and some foreign currency bonds will also mature.

We feel sorry for the incoming government that has inherited a major challenge on the external front but the reality has to be faced that no developing country can afford to incur a huge current deficit of around five percent of GDP for a considerably long period. To consume resources much beyond the level of existing GDP by borrowing from outside sources is an open invitation to trouble and embarrassment later on.

Reserve currency countries like USA and UK can indulge in such a luxury for sometime but countries like Pakistan whose currencies are not freely convertible have to learn to keep a proper balance between their foreign exchange receipts and payments. It is true that some of the exogenous factors like abnormal increase in the international prices of oil and food have added to our woes, but it is essentially our own responsibility to adjust ourselves to these shocks by undertaking necessary measures.

Economic managers of the country may propose the issuance of foreign currency bonds and other borrowing techniques to tide over the situation, but such alternatives increase external debt servicing and constrain the ability of the country to import in future. Hopefully, the incoming government would not try to find easy options but make a concerted effort to tackle the problem head-on.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Time to catch up with biotech farming ​*
EDITORIAL (March 30 2008): Brooding over the grim realities behind the too low and poor quality of cotton produced this year, a meeting at the Ministry of Food, Agriculture and Livestock is reported to have conclude that the government is left with no option but to provide the growers an improved, resistible variety of Bt cottonseeds for the next cotton season.

Thankfully, better late than never, it dawned upon them that the setback this time was owed, among other factors, to the use of poor quality non-certified seeds, non-availability of the right pesticides effectively to combat mealy bug and CLCV attacks. Mention, in this context, was also made of the use of poor quality Bt cotton seeds smuggled from India by private sector, despite the government's restrictions.

More to this, it also appears to have been deemed expedient to ask the growers to increase the per acre yield of seeds. It was noted that due to high temperature with higher level of humidity last year, seed germination would suffer a negative impact this year. As for the availability of seeds, it was contended that it was twice the quantity we had last year, implying that the country already has 60 percent of its seed requirement.

To avert the risks of crop damage from mealy bug and CLCV attacks, Minfal was stated to be is in the process of coming up with certain tips for the farmers to boost the efficiency of pesticides. Over and above all else, the meeting decided to initiate a three-year project 'Biological Control of Major Cotton Pests with Emphasis on Mealy Bug' in 2009.

From all indications, it sounded like some kind of a message to the new government that while the situation on the cotton front maybe serious enough, Minfal is properly seized with it in an appropriate manner, or so it appears. Be that as it may, the grim fact remains that Pakistan is lagging far behind other countries in so far as biotechnological farming is concerned.

It was only in October last year that the Member, Planning Commission on Agriculture had given the happy tidings of adoption of biotechnology crops in Pakistan, saying the matter was under serious consideration of the government, as over 500,000 acres were already under cultivation of Bt cotton.

Belated though that initiative appeared to be, however, it should have been attributed to the lead taken by the farming community, rather than the government. For, as then pointed out in these comes, the Planning Commission official himself, had revealed on that occasion, that Pakistan had yet to approve of any variety of Bt seeds for future cultivation, to the need for regularisation of which the government seemed to have eventually wisened.

However, we found even this as encouraging that Biotechnology Safety Commission had been put in place with a keen eye on approval of all Bt varieties on a fast track.

Again, as we had then pointed out, impetus to the programme might have been provided by the presence of Clive James, Chairman of International Services for Acquisition of Agri-Biotech Application (ISAAA), who had come to Pakistan with the idea of adding to its existing list of nine members already benefiting from Bt cotton.

He was then reported to have pointed out that Pakistan, as the fourth largest producer of cotton in the world could derive more benefit as its tenth member. Referring to biotech as a big opportunity for Pakistan, he had laid marked emphasis on its prospects for alleviation of poverty, a task on the high priority list of the government.

According to him, Global Biotech Crop area had increased by 12 million hectares (13%) to reach 102 million hectares in 2006, which should have inspired Pakistan to catch up fast with this unfailing trend. This should have been all the more so because over 90 percent or 9.3 million farmers growing biotech crops comprised small, resource-poor, farmers from the developing world, making a modest contribution to alleviation of their poverty though biotechnology.

To them also belongs India in a big way rather. It has significantly increased its cotton production from 308-kg lint per hectare, in 2001-2002, to 450-kg per hectare in 2005-2006. For once, it should beckon us to emulate the Indian example.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Agriculture sector unlikely to meet fiscal year 2008 target despite reasonable growth ​* 
FAISALABAD (April 01 2008): Agriculture sector is likely to record reasonable growth during the current fiscal year but the prospects of achieving the target of 4.8 percent growth for the year still remain dim.

According to Ministry of Food, Agriculture and Livestock's (Minfal) statistics gathered by mid-February of FY08, the record sugarcane and maize harvests and anticipated good wheat harvest besides above-target growth in minor crops are unlikely to overcome the drag from the disappointing performance of some major Kharif crops like cotton and rice.

Minfal has estimated provisionally the wheat sowing area by end of January 2008 at 8400 thousand hectares as compared to 8420 thousand hectares by January 2007, which depict 0.2 percent decline in the wheat cultivation area, while the poultry sector that hit by bird flu virus might register some negative growth in the fiscal year.

Furthermore, price dispute between farmers and sugar mills during FY08 may adversely affect FY09 sugarcane crop, which would lead to sugar shortage next year and hike in the domestic sugar prices.

According to official sources, relatively weak aggregate performance of the crops in the face of strong international prices of most agri commodities, indicates not only the sector's vulnerability to the vagaries of nature but also the urgent need to enact reforms. It should target distortions in the incentive structure for farmers and the substantial wastage due to inadequate infrastructure.

For example, official sources mentioned that the disconnect between price signals to farmers and the prevailing international market prices is, in some measure, captured by the small decline in the acreage under wheat during the FY08 Rabi season. Wheat prices, both international as well as domestic retail prices, surged through most of the FY07, but farmers did not appear to be capitalising on this opportunity. Some farmers preferred to delay sowing. An active futures market for wheat could provide some benchmark price to the farmers to help them taking timely sowing decisions, sources mentioned.

According to agriculture experts, future market for agri-produce is even stronger in the case of sugarcane. While government announces procurement prices, sugar mills offer lower prices than the announced benchmark prices and clear payments with significant lags. Delay in crushing season also goes against the farmers as weight of sugarcane gets reduced with each passing day due to evaporation of water content in sugarcane, the added.

The latest data on FY08 Rabi crops indicates that area under wheat cultivation decreased by 0.2 percent, which is a consequence of delayed sugarcane crushing and extended cotton picking season. Other factors responsible for lower area under wheat cultivation are: (1) an anticipated reduction in availability of irrigation water during Rabi FY08, (2) delay in announcement of wheat support price, (3) rising input cost particularly prices of fertilisers and (4) load shedding (that reduced water supply from tubewells).

It has been reported that growers (in Multan, Rahim Yar Khan and Khanewal) shifted cultivation area from wheat to sunflower and also to gram pulse. According to Agri experts that increase in cost of wheat production (due to increase in DAP prices) growers have shifted soil to sunflower plantation; they are anticipating higher earnings as compare to wheat.

In wake of the given situation, the wheat harvest target of 24.0 million tonnes for FY08 is unlikely to be met. Meanwhile, the low temperature would have significant effect on yield, especially at early growth stage, which has brightened the prospects of good wheat harvest. The main beneficiary of rain spell are the barani areas (un-irrigated land), where approximately 14.0 percent of total wheat is sowed, they observed.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Insurance sector profit up 102pc in CY07 ​* 
Wednesday, April 02, 2008

KARACHI: The profitability of insurance sector soared by 102 per cent to Rs27 billion during the year 2007. The major upsurge was witnessed in EFUs profitability whose after-tax profit swelled by almost 18 times to Rs14.5 billion.

The reason behind EFU Generals abnormal growth was the sale of its subsidiary company, First Capital Equity Limited (FCEL) said in its analytical report compiled on the basis of results of major insurance companies representing 88 per cent of the total insurance sectors market capitalisation. The analysis said that profitability of the sector was jacked up by one-time capital gains.

A day earlier after announcement of EFU Generals financial results all major non-life insurance companies announced their full-year results for 2007.

The insurance sectors underwriting profits declined by 72 per cent to Rs585 million, FCEL said and maintained that insurance companies might incur losses in their fire and motor segment. Net claims to net advances increased to the level of 71 percent versus 63 percent of previous. Almost all major insurance companies witnessed increased losses in Fire and Marine business in fourth quarter of 2007. The losses in these two segments were the consequence of riots that occurred across the country after the assassination of PPP leader Ms Benenair Bhutto on December 27, 2007. 

Moreover, the investment income of the sector (dominated by the capital gains) soared by 119 percent to Rs27.9billion. Most of the insurance companies sold investment holdings and then re-bought them in order to avoid capital gain tax liability, which is likely to be enforced in the prevailing calendar year 2008. 

These transactions were only accounting entries which did not translate any impact on the financial health of insurance companies, FCEL opined. 

Insurance sector profit up 102pc in CY07


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## Neo

*KSE seeks further delay in levying CGT despite robust growth ​* 
Wednesday, April 02, 2008

KARACHI: Pakistan is passing through a tough time owing to a number of imbalances in the local economy. Inflation, current account deficit and trade deficit that remained at their historical high level since long are continuously hitting hard the middle and lower income groups.

Flaws in the economy occur as a result of poor policies and practices the government makes. One example of that practice is giving favour to a particular business, class, group or community over others in making and presenting the budget.

In fact, exempting or reducing taxes on a particular business and levying others heavily to achieve the set revenue target for the fiscal year starts creating problems at macro levels. The trickle-down affect of that inappropriate policy reach different income groups and impact them with different intensities.

Collecting of Capital Gain Tax (CGT) on share trading business in the country would start from next fiscal year (2008-09) as per decision the previous government took in year 2006.

On the other hand, the officials of Karachi Stock Exchange (KSE) have once again proposed to the Ministry of Finance to extend the date of exemption of CGT for another five years - up till 2013.

KSE is enjoying this tax exemption since 1974 and some officials in tax department are of the view that Pakistan is losing billions of rupees by not levying CGT in shares market.

Citing from last Economic Survey of Pakistan, Director General, Large Taxpayers Unit, Mukhtar Gondal says that the national exchequer is losing around Rs112 billion by not collecting CGT on shares market.

KSE authorities and brokers are still striving hard to get CGT exemption extended for another period. They argue that this tax would further lower the turnover in the market.

The introduction of Capital Value Tax (CVT) in Karachi bourse on July 01, 2004 at the rate of 0.01 per cent and its doubling to 0.02 per cent in Federal Budget for 2006-07 has resulted in reducing the average daily volume in ready market to 230 million shares from 389 million shares early in 2004 and before it, according the KSE budget proposal for 2008-09.

The CVT is applied on share purchasing while another tax i.e. Withholding Tax (WHT) is collected at the sale of stocks at the rate of 0.01 per cent. Capital Gain Tax, if applied from July 01, 2008, would be the third tax on securities transaction in row, it was learnt.

Contrary to the reduction in trading volumes, as highlighted by KSE, the collection of revenue under CVT on securities transaction increased remarkably.

The rate of CVT on stock exchanges was increased to 0.01 per cent to 0.02 per cent on the purchase value of shares during fiscal year 2006-07. The collection of CVT from stock exchanges has increased from Rs182.6 million to Rs425.7 million during first quarter of fiscal year 2006-07. Thus an additional collection of Rs243.1 million was realised from this source, said CBR in its quarterly review for the period of July to September 2006.

As a matter of record, the doubling of CVT rate on share business did not lower the amount of revenue collected on this counter and since then it was increasing all the times.

The CVT collection for the first eight months of current fiscal year (2007-08) has increased to Rs2.783 billion from Rs2.487 billion during the corresponding period last year - recording a notable surge of 12 per cent, officials told in tax collection department.

Some of the analysts believe that reduction in trading volume was not due to CVT. The retail and large individual investors had lost confidence in stocks business after the March 2005 and March 2006 scandals on KSE. Many investors were deprived of billion of dollars collectively due to these scams and it is alleged that the broker community was behind the staged market fall.

Nonetheless, the KSE has recorded a 40 per cent growth in 100-Index during the calendar year 2007 - improved to 14,076 points on December 31, 2007, from 10,040.50 on January 03, 2007. The market capitalisation has gone up by 56 per cent during the same period from Rs2,771 billion to Rs4,323 billion registering an increase of Rs1,552 billion.

The local bourse was registering robust growth all the times, thus, further taxing on securities transaction should be levied in the coming federal budget for the fiscal year 2008-09, said FBR officials.

Independent economists argue that investment in stocks market is of a non-productive nature, which should be taxed to encourage investment in productive sectors. This would help in generating employment and alleviate poverty. 

Also, increased taxation in shares business would reduce speculation and encourage the long term investors at the local bourse. Moreover, tax contribution of stocks market would increase to the required level. 

KSE seeks further delay in levying CGT despite robust growth


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## Neo

*Seafood smuggling to Iran on the rise ​* 
Wednesday, April 02, 2008

KARACHI: Seafood exporters are blaming the authorities for delay in the efforts to lift the EU ban on seafood of Pakistani origin.

The efforts initiated by the caretaker government are standstill and the plans are not pragmatic as there is no outcome yet, exporters said.

This has lead to smuggling of fish to Iran and fishermen at present have forgotten the EU issue and trying to net maximum from this opportunity as they are getting more than double price of their catch.

Sardar Hanif Khan, Chairman Pakistan Seafood Industry Association, said that seafood-processing factories are facing closures due to inefficiency of the authorities and the consistent ban on exports to the EU.

The ban has opened unofficial channel of seafood exports leading to a price hike and shortage of raw material, especially shrimps Hanif said fuming that the government has not yet taken any action. The smuggling of seafood was not beneficial in the long run, he said.

Trade Development Authority of Pakistan (TDAP) had devised a long-term plan to improve the standard of the harbour to convince EU authorities to lift embargo from seafood of Pakistani origin. However, the TDAP has not given any time frame as to when would this plan would be implemented

The caretaker chief minister of Sindh, R Justice Abdul Qadir Halepota had inaugurated an auction hall built at a cost of Rs4.5 billion at the Karachi Fish Harbour. The project was completed in consultation with the United Nations Industrial Development Organisation (UNIDO), according to the requirements of the European Union.

The Auction Hall K-II has been specially designed for the export of seafood to the EU, which had reservations regarding onboard boat and marketing facilities at the harbour.

Marine Fisheries Department (MFD), which is supposed to update the EU regarding the improvement at the harbour but they seem least bothered about it and have not yet informed the EU, since there is no further progress regarding the ban issue, stakeholders in seafood business informed.

Seafood smuggling to Iran on the rise


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## Neo

*Chinese subsidy cut to help Pak textile ​* 
*New 28-head embroider to be displayed at Textile Asia​*
Wednesday, April 02, 2008

KARACHI: Chinese textile industry is now facing major problems as the Chinese government has slashed subsidy to the industry from 18 per cent to 5 per cent, which will help Pakistan in competing with its major regional rival, Asif Ali Rashid, CEO of Almurtaza Machinery told The News.

Almurtaza Machinery Company (AMCL) would display latest embroidery machines in the 5th Textile Asia International Exhibition scheduled from April 4 to 7 at the Karachi Expo Centre, the CEO said at the companys head office at Shahra-e-Faisal. This year, Almurtaza is featuring Tajimas Sequin Device II, a twin device which is the first of its kind.

It is now possible to embroider a maximum of four different sizes, shapes and colours on each head. This device will be placed on Tajimas new 28-head machine, especially made for the South Asian market, where Shalwar Qameez are used including Pakistan, India, Sri Lanka and Bangladesh.

This next generation sequin device permits more design options and improves production efficiency. AMCL will also be displaying first time the Coiling/Taping Device with Chenille embroidery machine.

AMCL is also featuring a laser bridge developed by SEIT Electronica of Italy, which will be demonstrated on a Tajima embroidery machine in the upcoming Textile Asia 2008.

A laser bridge combines the feature of embroidery machine and laser cutting in one smooth operation, which helps prepare unique apparel and textile items with maximum value addition.

Asif Ali Rashid said: In the textile sector, Pakistan has now some good opportunities when Chinese textile industry is facing 30 per cent higher production cost because of currency appreciation and cut in subsidy by the government. Similarly, Indian textile sector is facing currency appreciation which helps Pakistan in competing with these two countries, but Bangladesh having an export edge in the US and Europe is still in good position.

Pakistani companies need to develop brands and then market them, he said adding, We always lag behind to make the most of our products.

Pakistani companies always talk about high cost of production and quota problems but always neglect one of the most important things, the marketing. Some Pakistani companies are making 30 per cent more profit on their products with the same quality as their competitors offer just because of their marketing strategies, he added.

http://www.thenews.com.pk/daily_detail.asp?id=104368


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## AgNoStiC MuSliM

Neo - do you know what Pakistani government subsidies for the textile sector amount to, and how they compare to the Indian subsidies (R&D support and all manner of "hidden" support)? Bushroda?

I know that the last couple of years the GoP has flat out refused to provide much more in way of Govt. support, arguing instead that the Textile sector should go in for BMR, mergers and increase in productivity and efficiencies.


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## AgNoStiC MuSliM

Found two interesting articles to compare levels of Govt. support for textiles in India and Pakistan:


> *
> No subsidy for textiles: Mushtaq Cheema*​ Sources:The News.
> ISLAMABAD: The government will not extend any subsidy to the textile industry for enhancing its dwindling export, rather it would facilitate the sector by enforcing policies.
> 
> Talking to media-men on Monday, Federal Minister for Textile Industry, Mushtaq Cheema, said that subsidy is not a remedy for declining textile export, but the sector has to be more efficient by competing with its rivals.
> 
> The sector should focus on skill development, productivity enhancement and reducing cost of doing business through efficiency, the minister added. The sector should be balanced by organising and all sectors should feed each other and not be dependent on government funding, otherwise, the industry would not survive, said Cheema.
> 
> Without attracting big investors or orders from abroad, the weaving sector cannot compete or flourish, adding that the sector is also not organized; so as to get loan facilities for expanding their businesses and is performing below its capacity, said the minister.
> 
> The minister said that there should be harmony in the finished products otherwise, the exports would not be increase. To a question about textile policy, the Minister said, that it would be approved at the end of June or in the first week of July and the process of consultation with the stakeholders is on.
> 
> The government wanted to introduce a complete policy for the sector so that all sub-sectors should work as one unit for the overall betterment of the sector, he added. Zafar Mehmud, Secretary Textile said, that garment cities would be established within in 2-3 years while the garment city in Karachi would be established in Pakistan Textile City Limited and in Lahore it would be set up in Sundar Industrial State.





> * INDIA: Govt plans to modify TUFS (May 26, 07)​*NEW DELHI: The government, with an aim to give additional benefit of 10 percent capital subsidy to textile companies plans to modify the Technology Upgradation Fund Scheme (TUFS) in the next couple of months, Textile Commissioner J N Singh said here on May 24.
> 
> J N Singh while speaking at the 'Medical Textiles 2007' workshop organised by FICCI added that they are looking to modify TUFS in the next 1-2 months and the additional benefit of 10 percent capital subsidy would be over and above the 5 percent interest reimbursement in line with specified processing machinery.
> 
> Further, the government was considering setting standards on the lines of international ones for different items of technical textiles to facilitate adherence to stringent functional requirements and parameters, while emphasising the need for maintaining quality standards in technical textiles.
> 
> He informed that the production and consumption of technical and medical textiles in India would increase rapidly in view of the buoyancy in economy and government initiatives and the medical textile market is likely to grow to Rs 2,260 crore by 2011 from Rs 1,260 crore in 2006-07.
> 
> The government would also setup six Centers of Excellence for major segments of technical textiles at an investment of Rs 100 crore at Textile Research Associations (TRAs)/IITs with one centre exclusively for medical textiles.



Based on that article, the GoI is still providing about 15 percent support (under the guise of technology upgradation).


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## opinion786

The government of Pakistan in 2005-06 also approved many incentives for textile sector, including, due to which Textiles exports increased from mere $5.2 billion to $11 billion:

Investment Policy & Incentives for Vision 2005-2010: 

	Whole of textile sector is included in list of value added industries.
	Lowering custom duty to 5% on imported machinery if not available/manufactured locally.
	Tax relief: Initial Depreciation allowance (IDA) at 50% of machinery & equipment cost.

Pakistani government 2006 approved Technology-based Industrial vision and strategy for socio-economic which calls for technology up-gradation, human resource development, and establishment of a fully integrated chemical industry in the country.

Yes, the textile sector faces external threats also, as an anti-dumping of 5.8% has been imposed by the European Union. This renders us commercially uncompetitive compared to our traditional competitors i.e. China and India.

Government of Musharraf promoted cotton growing culture in rural areas of Balochistan providing official patronage to the local growers of cotton. Many switched over to cotton from rice sowing. Three ginning factories have been established in Naseerabad district and the government plans to establish two more ginning factories at Khuzdar and Lasbela.

In the year 2000-01, the cotton was cultivated on 100,000 acres of land and Baluchistan produced 112,000 bales of superb quality cotton, more than the estimated target of 100,000 bales. During FY 2001-02, 150,000 acres of land brought under cotton cultivation and the set target was also achieved.

This local growth of cotton will make us less dependent upon cotton imports, thus saving the cost of manufacturing for textile goods.


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## Neo

AM,

You're question is already answered.


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## Neo

*Privatisation programme to be made worker friendly​*
ISLAMABAD: The Privatisation Programme will be made people and workers friendly, which will contribute to the overall economy by generating more taxes and employments, increasing production and improving quality and efficiency, said Syed Naveed Qamar Federal Minister for Privatisation. The PPP led government has decided to bring on board trade unions in the privatisation process of the State Owned Enterprises (SOEs) in order to safeguard their legitimate interests.

It has been directed to the Privatisation Commission to put up realistic timeline for the privatisation of public sector entities in a professional manner. Syed Naveed Qamar Federal Minister for Privatisation has conveyed this to the officials of the Privatisation Commission while chairing a meeting of the Privatisation Commission. The minister was given an update regarding the ongoing transactions including the international offerings of GoP shares through Global Depository Receipts (GDRs) of Kot Adu Power Company (KAPCO), Habib Bank Limited (HBL) and National Bank of Pakistan (NBP). The minister was also apprised about the progress regarding the privatisation process of SME Bank and industrial units transactions of Hazara Phosphate & Fertilizers Limited (HPFL), Pakistan Machine Tool Factory (PMTF), Heavy Electrical Complex (HEC) and National Power Construction Company (NPCC).

The target of privatization is $3.5 billion through privatisation proceeds during the ongoing fiscal year. During the current fiscal year 2007-08 from July 2007 to November 2007 an amount of $440.597 million equivalent to Rs 26.869 billion have been received through privatisation proceeds by the Privatisation Commission. The privatisation Program, apart from GDRs, through sale of public sector enterprises for this fiscal year was targeted to fetch Rs 114 billion against which an amount of Rs27 billion has already been achieved during First half. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*FBR announces Export Oriented Unit Scheme​*
ISLAMABAD: In order to expand Pakistans exports oriented industrial base, the Federal Board of Revenue on Tuesday announced Export Oriented Unit Scheme. 

According to S.R.O. 326(I)/2008 issued here, under this scheme, exemption from customs duties, sales tax and federal excise duty would be available on all the goods imported into and exported from an Export Oriented Unit including import of raw materials, plants machinery and other required products. Exemption from customs duties, sales tax and federal excise duty would be subject to the provisions of the Export Oriented Units and Small and Medium Enterprises Rules, 2008, notified here through S.R.O.327(I)/2008. 

Humayun Akhtar Khan, Former Commerce Minister while presenting Trade Policy 2007-08 had announced introduction of such scheme for promotion of exports from the country. Export Oriented Units and Small and Medium Enterprises Rules, 2008 would be applicable only to the units licensed as export oriented units which are registered as manufacturers-cum-exporters under the Sales Tax Act, 1990. These rules shall come into force at once. 

According to the definition export oriented unit includes a small and medium enterprise and means a manufacturer having in-house manufacturing facility located in the tariff area of Pakistan and licensed as such by the Collector under rule 3, and exporting , at least 80 percent of its production to other countries if established before 1st July, 2007; or (ii) 100 percent of its production to other countries if established on or after 1st July 2007.

Input goods means all goods whether imported or procured locally by an Export Oriented Unit from the tariff area such as raw materials, accessories, sub-components, components, assemblies, sub-assemblies used in the manufacture of output goods as approved by the Collector in the analysis certificate; licensee means any person or firm to whom license is granted.

Any person or firm desirous of establishing or operating an export oriented unit shall apply to the Collector along with the following documents, namely: - the site plan of the proposed export oriented unit indicating the location of the premises and the details of the total area, covered area and manufacturing area and separate storage areas for manufactured goods, factory rejects and wastages. National Tax Number certificate; bankers certificate, directly forwarded by the bank to the Collector in a sealed envelope, regarding financial transactions of the applicant during the last two years; Memorandum and Articles of Association in the case where the applicant is registered under the Companies Ordinance, 1984 (XLVII of 1984), or partnership deed if it is a partnership firm; copy of the national identity card of owner and directors of the company; general bond in the form set out in Appendix-II; lease or tenancy agreement with the written permission from the landlord to use the premises as an export oriented unit for a period of at least two years; certificate from supplier of fire fighting equipment installed in the premises regarding its validity date; comprehensive insurance policy covering all risks such as fire , burglary, riots, strikes, malicious damage and allied perils, issued by an insurance company having paid up capital not less than Rs.120 million, registered with the Controller of Insurance, Ministry of Commerce, in the sum equal to the maximum face value of proposed license, covering the total amount of the customs-duties, federal excise duty, sales tax and any other tax leviable on the imported goods or locally procured goods, in an export oriented unit. 

An undertaking by an insurance company duly approved by the Controller of Insurance, Ministry of Commerce, on the stamp paper undertaking that- full premium under the aforesaid insurance policy has been duly received; in case the licensee does not make the required stock declaration in time, the company shall immediately inform the Collector; and (iii) breach of warranty by the licensee or non-compliance or omission of any nature by the licensee shall not prejudice any claim lodged by the Collector. Recommendations of the relevant representative trade association, or Chamber of Commerce and Industry, or Trade Development Authority of Pakistan.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Declining fish exports: Efforts afoot to explore new markets ​*
KARACHI: In order to nullify the adverse impact of European Unions (EU) ban on exports from Pakistan, the seafood sector is engaged in exploring new markets as well as enhancing the export volume to the existing markets.

According to sources in seafood sector and Trade Development Authority of Pakistan (TDAP), a number of delegations, comprising the industry people and government officials would visit different countries to explore the export potential in these markets. The targeted markets included countries of Middle East, Central Asia, Africa, Far East and Australia, for which the government is planning to send the delegations in near future. As a first step, a delegation comprising officials of TDAP, Marine Fisheries Department (MFD) and Ministry o Food, Agriculture and Livestock (Minfal) is expected to visit Australia sometime next month to meet the concerned government authorities and to explore the opportunities for seafood exports to Australia.

The visit was earlier planned in March, however, due to political situation and formation of the government, it was put off for sometime later, an official of TDAP told Daily Times here Tuesday. On the other hand, Vice Chairman, Pakistan Seafood Industries Association (PSIA) Faisal Iftikhar revealed that a number of delegations to visit Central Asia, Middle East and African markets are also being planned and modalities are being finalised with TDAP in this regard.

Industry has lost the hopes of removal of ban on exports to EU and to recover the losses suffered due to this ban, new markets should be found out to increase the export, industry people said.

Also, EU market has become irrelevant for the moment because a good quantity of fisheries products is being exported to other markets, which has fetched precious foreign exchange reserves to the industry, they said. A good quantity of fisheries products could be exported to a number of new markets if aggressive marketing is undertaken by the government and industry because of less stringent regulations in these markets compared to EU, the government officials said. For instance, Australia offers good potential to our seafood products and these can easily penetrate because of favourable regulations for export when compared to EU, which often resulted in suspension of import of fisheries products from Pakistan. About the exports, the industry people said that the export figures which were reduced to half in first six months of current fiscal year have now been improving with the export of bulk quantity of fish to Far Eastern markets.

Daily Times - Leading News Resource of Pakistan


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## Neo

*PIA takes delivery of 9th Boeing 777 aircraft​*
KARACHI: Boeing and Pakistan International Airlines (PIA) have celebrated the delivery of the carriers 9th 777 aircraft. 

PIAs newest airplane, a Boeing 777-300ER, departed Paine Field on a delivery flight to its home base in Karachi, a press release issued here Tuesday said. PIAs new 777-300ER, shown landing during a test flight, sports a tail design representing Pakistans Northwest Frontier Province. Two previous 777-300s have been delivered to the airline with similar themed tail designs in honor of the countrys Punjab and Sind provinces.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Mobile numbers changed from 7 to 8 digits ​*
ISLAMABAD: Pakistan Telecommunication Authority (PTA) on Tuesday announced successful migration of cellular mobile subscriber numbers from 7 to 8 digits as of 1st April 2008. The dialing codes of all mobile companies have also been changed from 4 digits to 3 digits.

According to details, as part of new mobile numbering plan, all mobile numbers in the country would now comprise of 8 digits by moving the last digit of the dialing code into subscriber number such that the dialing code would be reduced to 3 digits (i.e 0333-51xxxxx would now be 033-351xxxxx). 

It is important to note that numbers of Mobilink, Warid, Ufone and Telenor will remain the same 11 digits as before. For Paktel (China Mobile), Instaphone and SCOM (AJK& Northern Areas), in addition to aforementioned shifting of subscriber numbers, digits of their dialing code would also change.

All these changes have become effective from April 1, 2008. Until June 30, 2008 all old and new numbers could be dialed. From 1 July 2008 onwards only new numbers will be valid, PTA spokesman said. 

The spokesman said that the PTA with the help of all cellular, fixed line and WLL operators has ensured that this change remains hassle-free for consumers. However, in case callers face any difficulty they may contact their concerned operator and may contact the PTA complaint cell number 0800-55055, if the interruption in their service continues. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Govt setting up company to generate $355m for 525MW power plant​*
ISLAMABAD: The government will set up a special purpose company to generate financing worth $355 million from both local and foreign financial institutions for carrying out the 525-Megawatt gas based thermal power plant at Chichoki Mallian, sources told Daily Times here on Tuesday.

They said that cost of the project is $355 million that was negotiated between Pakistan Electric Power Company (PEPCO) and Chinese company Dong Fong. They said that a special purpose company would be set up to generate financing of $355 million from local as well as foreign banks.

At present the country is mainly depending on hydel power generation and due to water shortage the hydel power generation has dropped to around 2300 MW per day from 3200 MW. The officials are of the view that the country would be facing around 1400 MW power shortfall by 2010.

At present the thermal power generation stands at 4800 MW by IPPs and 3000 MW by Wapda. After the completion of the thermal power plant at Chichoki Mallian, 525 MW thermal power would be added to the national power system in the next two years. 

Sources said that the cost of electricity generated through the project would stand at $0.67 million per MW and added that it would be the lowest cost than the electricity generated through Independent Power Producers (IPPs). They said that the cost of electricity generated through IPPs was $1.2 million per MW.

Sources further said that the plant would be operated on gas and the per unit cost of the electricity generated through Chichoki Mallian thermal power plant would be 5.35 cents per unit or Rs 3.31 per unit. Sources also informed that PEPCO was receiving power from HUBCO at 17.50 cents per unit or Rs 10.40 per unit. 

By setting up 525 MW gas based thermal power plant at Chichoki Mallian, public sector will be able to provide electricity at cheaper rates than the electricity being provided by IPPs, sources added. He said that the project would be completed within two years by 2010.

They said that 450 MW power project at Nandipur (Gujranwala) was also being set up by public sector at the cost of $ 329 million and 525 Megawatt gas based thermal power plant at Chichoki Mallian would be the second project that would be owned by public sector.

Chinese company Dong Fong Electric Corporation has already completed the hydro power plant at Ghazi Barotha project that is delivering 1450 MW power. The company is also recently working on five other power projects of 869 MW. 

A 4-member Chinese delegation headed by Si Zefu, Chairman M/S Dongfang Electric Company called on Federal Minister for Water and Power Raja Pervez Ashraf here on Tuesday. The minister invited the firm to participate in the power sector and asked to complete the projects by the company in Pakistan in the stipulated time.

The minister said we recognize the professional experience of the company and expressed the hope that the Chinese government would extend its support and assistance enabling Pakistan to overcome the power crisis. The Chairman of the Company said that his company is well aware of the power situation in Pakistan and assured that it would complete the project as per schedule.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Number of foreigners visiting Pakistan decreases ​*
** Decrease due to law and order situation​*
LAHORE: The number of people coming from abroad has decreased because of the law and order situation in Pakistan. 

At the same time, the number of people going abroad has increased during the last couple of weeks. A senior Civil Aviation Authority (CAA) official at Allama Iqbal International Airport, Lahore, said on the condition of anonymity that due to bomb blasts in major cities the number of people coming from abroad had reduced.

In January and February, a large number of people living abroad, including foreigners and Pakistanis, visited Pakistan; however, the number has decreased in March, he added. He said a large number of people from Pakistan went abroad during March. 

Nauman Chatta, owner of an immigration consultancy firm, said he had witnessed a large number of people leaving the country during the last month. Most people were conscious about the security situation in Pakistan, he said.

Mrs Zahida Masood, a Pakistani-born UK national, said via telephone, Its very safe in the UK and why should I put my life in risk by coming to Pakistan? Natasha Janwani, a US resident, told Daily Times over the telephone that she was planning to visit Pakistan in April but her husband would not allow her due to deteriorating law and order.

Kamran Malik, the public relations officer of the CAA, said the number of people visiting Pakistan from abroad had not decreased, but said that foreigners were concerned about the security situation in Pakistan.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Editorial: 100 days of economic challenges​*
The State Bank has cut its growth forecast from 7.2 percent of the GDP to 6.6 percent for the current fiscal year ending in June, and is worried about the rising annual budget deficit which is threatening to hit 6 per cent, far above the targeted 4 percent. The services sector  mostly on the consumer side  has performed well but agriculture and manufacture have slumped. In the next hundred days, the coalition government in Islamabad will be hard put to straighten out the problems faced by the people as a result of an economy which threatens to falter further.

Some of the crisis has arisen from the style of economic governance adopted by the outgoing government. But the hardship of the common man is also owed to a downturn in the global agricultural economy and the sky-rocketing of the price of energy. Pakistan used to pay just over one billion dollars for its oil in the 1990s; now it pays six billion, and oil prices are expected to stay high. Unfortunately the government in 2007 decided not to pass on the rising oil prices to the consumer, which means that the current government will have to let the real price fall on the people or risk carrying a dangerously large fiscal deficit pregnant with possibilities of galloping inflation.

The coming wheat crop is said to be greatly affected by lack of water. In consequence, the farmers in Sindh have collected a significantly reduced per acre yield. So we could be looking at an even bigger shortage of flour in the country once again. Therefore, given our inability to deploy a system of special distribution for sections of population directly affected by this shortage, one can say that the masses are likely to become quickly disenchanted with the new government. And the problem of flour smuggling to neighbouring countries will remain because we cannot dare equalise the lingering price differential, given our conditions. True, the Federal Board of Revenue (FBR) on Monday empowered the Frontier Constabulary (FC) and Rangers to end the smuggling of wheat and wheat products, rice and all types of pulses to other countries from Pakistan. But whether this will work or not, given the extent of corruption in the works and the difficulties of policing a porous and long border, remains to be seen.

When we talk about the FC we are referring to the porous borders with Afghanistan; and a reference to the Rangers means our border with India. To get cheap flour to the low-income consumer, we will have to keep it priced far below the international price. Inevitably, smuggling will follow. The government had recently fixed the wheat price at Rs 510 per 40kg but the farmers want it raised to Rs 600  refixed since by the prime minister at Rs 620  because India is giving Rs 660 and the landed cost of imported wheat is Rs 1350! In 2007 the support price for wheat was Rs 425, which gives us an inkling of the extent of smuggling that Pakistan has experienced.

That might happen again. And the government will have to bend its back to stop it from happening as it doles out subsidised flour imported at a price double that of its new support price. Other agricultural items too are under threat as the global economy continues to underperform. This means that flour will not be the only item the government might have to protect for the survival of the population and its own survival. And the money it will spread around to organise its distribution system might stoke inflation and erode the income of the lower classes.

It has been observed by economists that global food cost is linked to the cost of energy. And that once again is a zone of challenge for the government. Had the former government paid all its bills to the distribution companies, the crisis would have been a little less extreme, but the IOU on the oil side is also a mountain by now. The energy sector is where the former government is most to blame. It was warned by the World Bank in 2003 that energy would run dangerously short unless special steps were taken. Heady with high growth rates, the government refused to listen because it had shattered the begging bowl.

In the coming one hundred days, the only thing going in favour of the new coalition government is its wide political base and an opposition in parliament which must feel a little hot under the collar for the crises that envelop the country. The people will nevertheless burn during the summer as power outages increase in number and duration. With food expensive and in short supply, the masses will be forced to complain loudly. So the government should let the people have information about the nature of the crisis. And for that the myth of cheap food in India will have to be broken by allowing the people to watch Indian TV news channels instead of just Bollywood song and dance. Indeed, the coming hundred days should on no account be used up in foreign policy adventures to satisfy the raw public passions that only time will help interpret correctly. *

Daily Times - Leading News Resource of Pakistan


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## Neo

*project to be functional in 2009​*
BEIJING, April 1: Chinas state-backed mining and metals firm MCC Group said on Tuesday that its Pakistani Dapua copper project would start production in the first quarter of 2009.

Groups vice president Wang Yongguang also told reporters MCC was expected to bring its Papua New Guinea nickel and cobalt mine into commercial production early next year.

He said the group would get its final approval for a public share offering very soon.

The approval for the whole listing will come very soon. We have entered the final stage, Wang said on the sidelines of a conference.

He said the proposal had won approvals from eight relevant ministries.Reuters

Copper project to be functional in 2009 -DAWN - Business; April 02, 2008


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## Neo

*WB to help Achieve economic stability​*
ISLAMABAD, April 1: The World Bank will continue to work with Pakistan to reduce poverty and achieve economic stability and welfare of the people.

This was stated by World Bank Country Director Yusupha B. Crookes, who called on Finance Minister Ishaq Dar here on Tuesday, with a WB team presently visiting Pakistan.

The two sides exchanged views on the current economic situation and expressed the hope that the new government would give a viable and transparent plan for economic development and overcome impediments and imbalances in the economy through well-thought-out policy interventions.

Mr Dar briefed the visitors about economic priorities of the government and indicated that a statement of current financial status inherited by the government would soon be presented to people through parliament to bring greater transparency and fact-sharing with the nation.

He said that with public support Pakistan would hopefully come out of the present economic turbulence and address the economic issues confronting the public through adjustments in monetary and fiscal policies. He said that relationship with WB would be based on transparency, mutual trust and confidence.PPI

WB to help Achieve economic stability -DAWN - Business; April 02, 2008


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## Neo

*Tajikistan seeks joint ventures​*
FAISALABAD, April 1: Both Pakistan and Tajikistan have incredible potential in the field of textile, and joint ventures would improve the situation further.

This was stated by Tajikistans Ambassador to Pakistan Saidbeg Saidov while speaking to members of the Faisalabad Chamber of Commerce Industry here on Tuesday.

Tajikistan, Mr Saidov said, was an agriculture-based country, and its 73 per cent population was attached with this sector.

He said cotton was a major crop of Tajikistan and provides livelihood to thousands of people.

Mr Saidov said business community of his country was fervent to join hands with the Pakistani textile exporters and this approach would be beneficial for both the countries.

He urged Pakistani businessmen to invest in Tajikistan in the fields of gems and electricity as both sectors had a lot of potential for earnings.

FCCI President Asim Khursheed said Pakistan and Tajikistan had cordial relations which needed to be augmented. Businessmen from both sides should come forward and make efforts for joint ventures, he said.

Tajikistan seeks joint ventures -DAWN - Business; April 02, 2008


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## Neo

*July-December current expenditures up by 33 percent ​* 
KARACHI (April 02 2008): The country's current expenditures presented strong growth of 33 percent during the first half of current fiscal year due to the substantial rise in both current and development spending.

As per details provided by Ministry of Finance, during the July-December period of current fiscal year, 2008, overall expenditures reached Rs 775.1 billion as compared to Rs 581.4 billion during the same period of last fiscal year, depicting an upsurge of Rs 193.7 billion. The increase in the current expenditures during first half of 2006-07 was 10.7 percent from Rs 111.4 billion to Rs 155.8 billion.

The tremendous rise in expenditure has been on account of high interest payments, which amounted to Rs 237.7 billion by the end of December 2007 as compared to Rs 155.8 billion during first half of 2006-07.

Second major share in the expenditures was witnessed by provinces, which amounted to Rs 210.1 billion during July-December 2007-08 over the Rs 176.7 billion in corresponding period of last year. Defence expenditure went up by 15 percent to Rs 131.8 billion from previous Rs 114.9 billion.

Actual expenditures showed a sizeable growth in July-December compared to a decline in the corresponding period of last year, and spending under economic affairs reached Rs 50.9 billion in first half of current fiscal year, up by 173.3 percent year on year basis compared to a fall in some period of last fiscal. Expenditure under superannuation allowance and pension increased by Rs 10.1 billion to reach Rs 22.8 billion compared to a fall of Rs 5.3 billion in first half of fiscal year 2007.

Grants (other than provinces) jumped to Rs 45.2 billion, up by 71.5 percent, on account of non-receipt of logistic support grant from the US. Development expenditures also increased significantly by 48.2 percent YoY during July-December FY08 compared to 16.4 percent during July-December FY07.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*$14.837 million towel products export orders lost ​* 
KARACHI (April 02 2008): With increasing complaints from foreign buyers over the escalating prices of towel products, the country has lost foreign orders worth $14.837 million of towel products during July-February period of the current fiscal year, exporters said on Tuesday.

"This was only because of the soaring yarn prices and political unrest in the country which made production costlier and difficult to reach the foreign buyers on time," they said. The state of political turmoil prevailing for the last one year was restricting the foreign buyers from visiting Pakistan. To sell products in the world markets, local exporters have to visit neutral venues to finalise business deals, they said.

On the other hand, there is an acute shortage, of about 1.1 million bales of cotton, which the last government had completely overlooked, resulting in crisis-like situation in the local market, they added.

They said that foreign buyers are still inclined towards Pakistani products but their higher prices than countries like India, China, and Bangladesh have pulled down their growth in world markets.

About innovation in the products to stand firm against other competitors in world markets, they said that the government is not financially supporting such moves. "Traditional towel products still have demand. Therefore, there is no need to go for innovation without any government support. It is also an expensive venture with no lucrative outcome," they added.

Pakistan has exported $377.220 million worth of towel products during eight months of the current fiscal year as compared to $392.057 million during the same period of last fiscal year, declining by 4 percent or $14.837, according to official statistics.

However, a robust growth of 16.28 percent, or $6.516 million in exports of towel products was seen in February 2008 to $46.552 million as compared to $40.036 million of February 2007.

Exporters complained that local yarn exporters are damaging the country's towel and other textile related products in the world market. "Towel products and other value-added textile items are made with local yarn by the some countries against Pakistani products in the international arena. As a result, exports decline," they said.

Turkey and Portugal are big markets of Pakistani towel products, they said, and added that shortage of quality yarn had made the manufacturers to use substandard yarn, which subdues the quality of products. Consequently, complaints from foreign buyers rise.

Exporters said that manufacturers are not able to produce on world standards for the unavailability of quality yarn, whereas the foreign buyers want a continued shipment for four months. "These buyers want us seal a deal for a longer period, minimum four to six months, while increasing cost of production during the same period does not allow us to go for such a risky venture," they elaborated.

Regarding dispatching the newly designed samples of items to foreign buyers, exporters said that they are constantly demanding for them but it is not viable for many exporters to fulfil for cost reasons.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistani businesses not equipped to comply with world standards: report ​* 
ISLAMABAD (April 02 2008): The businesses in Pakistan are not fully equipped to comply with the international labour and social standards which dented export earnings to the tune of $3 million in 2007, a report said.

Competitiveness of business enterprises is a key concern in Pakistan as exporters are under immense pressure to stay in the world market due to poor labour, environment, safety and health standards. In the international market, quality standards of a product are also judged in the light of international labour and social standards in vogue in the exporting country.

For example, the ban on exports of seafood by the European Union clearly indicates that the country has lost precious $128 million foreign exchange, reason being substandard seafood ,while EU has already imposed 100 percent check on import of frozen fish products from Pakistan.

Under the World Trade Organisation regime, 'Technical Barriers to Trade' (TBT) arise whenever an exporter is required to comply with particular requirements of the importing country. Such requirements may entail consideration of health and safety of consumers and requirements to do with environmental protection.

In this world, which is heading towards economic integrity, the countries that have strengthened their links with the global economy through trade and investment have generally grown more rapidly over a sustained period, while one of the major hindrances for the low-income countries towards adopting this path is the limited enterprise capacity to comply with international buyers' requirements.

International buyers are increasingly demanding compliance to labour, environment, safety and health and other social standards, along with demands for product quality and reliability.

Keeping the above in view, Punjab Resource Management Program (PRMP), assisted by Asian Development Bank (ADB), has been specially designed for promotion of the core labour, environmental and quality standards. It has now been extended for five years as a cluster program with Punjab Government Efficiency Improvement Program (PGEIP) that focuses on development of the private sector.

The strategy made by PGEIP will focus on some certain themes including international labour standards (ILS), occupational health and safety, issues related to women work force, environmental standards, WTO and other quality standards.

ILS address the diverse issues including freedom of association, occupational health and safety, forced and bonded labour, child labour, social security, labour inspection, tripartite consultation, vocational guidance, employment policy, non-discrimination, wages, work duration and maternity.

The recent recall in USA of Chinese-made toys due to high lead level indicates the major challenges of quality, product safety, food handling and other manufacturing standards, the compliance of which is essential to remain competitive in the global arena.

The report says that even informal and agriculture sectors are being increasingly covered by the global standards. An example is the Better Cotton Initiative, started by major garment importing companies who intend to improve the standards at the tail end of their supply chain.

The businesses are faced with a two-pronged dilemma. On the one hand, they are faced with the issue of costs of compliance with international standards on labour, environment and quality. The businesses lack the requisite capacity to handle the costs associated with compliance of these standards. On the other hand, the costs of non-compliance are also significant.

The report says that globally about 2.2 million workers suffer serious non-fatal injuries and another 160 million workers suffer from short or long-term illness from work-related causes. Those in favour of universal labour laws advocate that weak labour standards could give exporters a comparative advantage.

Pakistan has committed to update domestic labour policies. However, upon examining closely, one finds many gaps and discrepancies within the policy framework. There is an urgent need to concentrate more on international standards of labour to increase output while putting a better input than ever before.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Indian curbs on rice export likely to help Pakistan ​*
NEW DELHI (April 02 2008): Indian restrictions on rice exports will spur global prices and help fellow exporters like Pakistan and Thailand because overseas sales from India will fall to a fraction of last year's, a trade body said.

Exports from India are likely to fall to 250,000 tonnes this financial year from 5.5 million tonnes in 2007/08, Sanjay Sethia, president of the All India Rice Exporters' Association, told Reuters in an interview on Tuesday.

"Pakistan, Thailand and other exporting countries will make money, while India will lose out," he said. India banned non-basmati exports on Monday to try to ease pressure on prices, which has pushed wholesale price inflation to a 14-month high.

"It is a hasty decision and needs to be relooked at by the government. Unnecessarily, India could end up inflating world prices," Sethia said. Governments from Cairo to Manila have announced steps to ensure domestic rice supplies at a time global stockpiles have halved and prices have doubled to multi-year highs.

"I feel that India's exports will now fall to about 250,000 tonnes during 2008/09, as only some traditional basmati rice can be exported," he said. He said Pakistani and Thai rice traders had increased prices by about $150 to $200 per tonne on some rice grades after India raised the minimum export price for non-basmati rice last week to $1,000 per tonne from $650 per tonne free on board.

On Monday, the minimum export price for basmati was increased to $1,200 per tonne from $1,100. Trade officials said India exported 5.5 million tonnes of rice in the year to March 31, 2008, up from 3.8 million tonnes last year but that the new restrictions have tempered sales. Out of the 5.5 million tonnes, 4 million tonnes is estimated to be non-basmati rice and 1.5 million tonnes superior quality rice including basmati.

INFLATION: Sethia said last week's increase in the minimum export price was so steep that it ruled out the export of coarse grades of non-basmati rice, generally given by the government to the poor under public distribution scheme.

He said the Indian government's move would also block exports of superior quality non basmati which is quoted at between $1,200 per tonne and $1,700 per tonne, while basmati rice above $1,200 per tonne could be sold overseas. The prices for India's superior quality rice compared with $1,100 to $1,200 per tonne in Pakistan.

Sethia said the government's decision to hike the export price limit had already caused local rice prices to fall. Prices in southern India have fallen to 17 rupees per kg from 20 to 22 rupees (49 to 54 cents) a year ago. Rising food prices have been a major trigger for India's widely watched wholesale price inflation, which surged to an annual 6.68 percent in mid-March, posing a major policy challenge at a time when economic growth is slowing.

On March 20, the government scrapped the 70 percent import duty on rice, spurring Indian traders to look at the Pakistani market for the possibility of buying rice there.

"People have started checking for the import of rice from Pakistan, milled and semi-milled," Sethia said. But he added the sudden change in rice export policy was likely to sow confusion in the trade about government policies and the imports may not now materialise.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan's economic growth may pick up to 6.5 percent next year: ADB ​* 
ISLAMABAD (April 03 2008): Economic growth in Pakistan is expected to be moderate, to 6.3 percent, in the 2007-08 and may slightly pick up, to 6.5 percent in 2008-09. The forecast is lower than the average 7 percent growth rate during the recent years, Asian Development Bank (ADB) said in a report on Wednesday.

The growth momentum in Pakistan, Bangladesh and Sri Lanka will be affected by economic deceleration in major markets. The growth in these South Asian countries will be affected mainly by moderation of growth in India, said the ADB annual report 'Asian Development Outlook (ADO) 2008'.

The forecast for the current and next fiscal years are also lower than Pakistan's own projections of maintaining growth trajectory of around 7 percent as stipulated in the five-year (2005-10) programme. In its recent report, the State Bank of Pakistan (SBP) also stated that growth rate could be around 6 to 6.5 percent in the current fiscal year.

The ADB forecast looks to be a bit speculative as the new government is yet to announce its economic policy. Most of the ADB forecast is based on SBP figures. It is still premature to forecast growth for Pakistan, which is in transition and a lot may depend on next budget. It will be seen whether new political regime gives growth-oriented budget or it will give relief to the common man, said an independent analyst.

"Political uncertainty and the security environment and formation of the government may curtail investment and drag down economic performance," said the ADO. Revenue shortfalls produced by slowing economic activity and expenditure overruns may limit fiscal space and reduce public investment. This may affect private investment and growth, said the report.

The declaration of November 2007 emergency and the downgrading of Pakistan credit rating outlook resulted in net outflow of $243 million from special convertible Pakistan rupee account held by foreigners during November 2007.

The ongoing energy shortages caused by an ageing energy infrastructure, chronic underinvestment in expansion and maintenance, and unsustainable pricing regimes slow production and badly affect domestic and foreign investment.

According to the report, Pakistan could face difficulties in global financial market that could further affect capital inflows. In addition, planned issues of global depository receipts may not materialise.

The agriculture growth will be lower than earlier expected because of pest attacks and floods. These two factors are resulting in shortfall in cotton production in moderating textile manufacturing sector growth and an overall slowdown in large-scale manufacturing sector growth in the first six months of 2007-08.

Despite tight monetary conditions and moderating growth, inflation is expected to overshoot SBP's target 6.5 percent and reach 8 percent. There would be continued pressure on food prices and pass-through of some higher global oil prices. The tight monetary policy will have only a limited impact on controlling food inflation.

The fiscal deficit is likely to exceed the government target of 4 percent of the GDP in the current fiscal year. In the election year, the government deferred the pass-through of higher international oil prices to consumers until March 1. The ADO says the increase in the prices of petroleum products by the government is small in relation to the international oil price rise. The government subsidy on this account expanded to Rs 60 billion.

With fiscal deficit widening and external inflows remaining subdued, the government borrowings from SBP in 2007-08 had risen more than threefold by January 2008 relative to the same period in the last fiscal year.

The current account deficit in the first 7 months of the current fiscal worsened by 47 percent compared with the same period of the last fiscal year and is likely to widen to 6.3 percent of the GDP for the full year.

The income account may also feel the strain of larger external borrowing by the government to finance the deficits, the increased cost of commercial borrowing resulting from downgrading Pakistan credit rating outlook from stable to negative in November 2007 and the start of payments in 2008 on the debt rescheduled by the Paris Club.

The ADB has suggested that Pakistan has to build greater capacity to finance its investment needs with internal resources ie savings. Pakistan will also have to improve competitiveness of exports, attract FDI in manufacturing industries and expand tax base.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*ADB doubtful about Pak growth sustainability ​* 
Thursday, April 03, 2008

ISLAMABAD: The Asian Development Bank (ADB) has raised doubts about long-term sustainability of growth patterns for Pakistan, owing to domestic political uncertainty, higher global oil and commodity prices.

The ADB also lowered down Pakistans GDP growth forecast to 6.3 per cent against the actual target of 7 per cent, due to the lingering energy crisis, while the revised upward inflations touched 8 per cent against the envisaged annual target of 6.5 per cent for the current fiscal year.

Issues of long-term sustainability therefore, arise, especially in the context of high global oil and commodity prices and domestic political uncertainties, stated the Asian Development Outlook (ADO-2008) released by the ADB states on Wednesday.

The ADO 2008 also outlined twin deficits ó current account deficit and fiscal deficit, as major challenges for Pakistan in the future line of action. External debt rose by another $2.5 billion in the first half of FY2008 as a consequence of the rising current account and fiscal deficits, while foreign currency reserves were also depleting.

Revenue shortfalls produced by slowing economic activity and expenditure overruns, may limit fiscal space and reduce public investment, which in turn may affect private investment and growth. In addition, continued tight monetary policy conditions in view of persistent inflation could serve to dampen demand and limit any expansion.

Despite tight monetary conditions and moderating growth, inflation is expected to overshoot SBPs target of 6.5 per cent and reach 8 per cent, reflecting continued pressure on food prices and the pass-through of some higher global oil prices.

Yet, inflation pressures have persisted, with food prices rising to 11.6 per cent in January 2008 (based on a 12-month moving average), compared to the 8.5 per cent, a year earlier.

The fiscal deficit is likely to exceed the Governments target of 4 per cent of GDP for the FY 2008, mainly on higher interest payments and a rise in development expenditures.

With the fiscal deficit widening, and external inflows remaining subdued, the Governments borrowings from SBP in FY2008 had risen more than threefold by 19 January 2008, relative to the same period in FY2007.

This led to a sharp 90 per cent increase in the net domestic assets of the banking system, and resulted in an annualized growth of 19.2 per cent in M2.

The current account deficit in the first 7 months of FY2008 worsened by 47 per cent, compared to the same period in FY2007, and is likely to widen to 6.3 per cent of GDP for the full year. The trade gap widened by over 25 per cent in the first 7 months of this fiscal year.

The financing of the current account deficit remains a key issue, given the deterioration in the financial account caused by the halt in foreign portfolio investment in the first 7 months of FY2008.

Difficulties in global financial markets could further affect capital inflows. In addition, planned issues of global depository receipts may not materialize. The declaration of emergency on 3 November 2007 and the downgrading of Pakistans credit rating outlook resulted in a net outflow of $243 million from special convertible Pakistani rupee accounts held by foreigners during the month. Altogether, net foreign investment tumbled by 34.9 per cent in the first 7 months of FY2008 relative to the same period in FY2007, caused by a slowdown in FDI growth and virtually no portfolio investment as foreign investors shied away from the stock marketsóa demonstration of the high level of volatility of such inflows.

With a weakened financial account, the burgeoning current account deficit led to a drawdown on SBPs foreign reserves of almost $1.5 billion between 31 July 2007 and 15 February 2008.

External debt rose by another $2.5 billion in the first half of FY2008 as a consequence of the rising current account and fiscal deficits.

Improved economic fundamentals have enhanced the resilience of the economy and helped absorb shocks, including higher global oil prices and 2005s devastating earthquake.

Growth, however, has generated a heavy imbalance in the external current account, which could affect the economic momentum. The current account deficit has been financed largely from strong incoming foreign investment. External sources have also been employed, increasingly, to finance the fiscal deficit.

ADB doubtful about Pak growth sustainability


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## Neo

*Govt should focus on macroeconomic stability ​* 
Thursday, April 03, 2008

ABN Amro analysis says in first two years govt should keep populist impulse under check

ISLAMABAD: The coalition government is taking over the reins at a time of severe challenges for Pakistan on external as well domestic fronts of the countrys economy.

According to an analysis by the ABN-Amro Bank, the new administration is left to face the consequences of fiscal profligacy by its predecessor set-up.

While Pakistan faces multiple challenges on a wide range of fronts, some compounded by inaction and others by flawed policies, we believe that the foremost task facing the incoming government is to arrest the accelerating erosion of macroeconomic stability that has occurred over the past two years, the analysis said.

While pressure on the coalition government to reduce the economic hardship of the electorate is understandably intense, ABN Amro said it believes that policy response needs to balance the alleviation of palpable hardship in the short term, with the ability to provide sustained benefits over the longer term. In the long run, it is a misconception to view the available choices in purely binary terms, i.e. macroeconomic stability is mutually exclusive to pro-poor agendas.

Despite its many distractions, the new coalition government will have to concentrate on tackling the difficult fiscal situation as a matter of priority, the analysis said.

While challenging, the situation is not irretrievable. It will, however require that for the first two years in office, the parties in power shun their growth-centric manifestos and strong populist impulse - or their largely under-whelming performance of the 1990s - as they chart their way forward, ABN Amro opined.

The most immediate, as well as pressing, economic challenge facing the incoming administration is to restore fiscal order. In our view, without macroeconomic stability, the political government will not be able to deliver on its electoral promises in a sustainable manner.

Among the many issues, which range from high inflation to power deficits and water stress, the most immediate and pressing is the need to restore fiscal order, ABN Amro pointed out.

Given the sharp constriction in available fiscal space, it is our belief that adopting a policy course in the short run that raises expectations of relief may not be wise, in either political or economic terms. (It follows from this that we have reservations about 100-day programs), the analysis read.

In essence, the dilemma of delivering short run gains that may come at the expense of longer-term interests or health of the economy, distils into an issue at the heart of governance - how to incentivise the elected political governments to think beyond an election cycle, said the bank.

The budget deficit is likely to cross 6 per cent of GDP, even after countervailing measures. 

In addition, the external account has posted widening imbalances, with the current account on course to cross $10.5 billion in FY08 (to over 6.6 per cent of GDP).

Forex reserves have been depleting since the start of the fiscal year, with a net haemorrhaging of $3.6 billion from July to 15 March (net foreign assets of the banking system, based on weekly monetary data).

Based on the last available numbers, we estimate unencumbered liquid Forex reserves with the central bank to total $11 billion (net of forward sales/swaps) for the week ending 29 February.

Compared to the corresponding period of FY07, the fiscal deficit has widened 111 per cent for 1HFY08 (July-December 2007). 

Expenditure growth has outstripped revenue collection. Current expenditures have ballooned 33 per cent, accelerating a trend recorded over the past several years. 

On the back of higher public sector borrowing, a turn in interest rates, and unanticipated lumpy repayments of national savings scheme instruments, debt servicing (interest portion) has recorded a substantial increase, rising 52.6 per cent in 1HFY08 vs 1HFY07. In addition, defence spending has also registered a 14.7 per cent increase.

The other big contributor to the sharp rise in public expenditure is the Public Sector Development Program (PSDP).

PSDP expenditures have risen nearly 53 per cent, making them the second biggest contribution in absolute terms to the increase in the fiscal gap for the first half of FY08 (after interest payments). 

The increase in PSDP spending is a continuation of the trend over the past few years.

While the rise in PSDP spending has been touted as an achievement of the Musharraf-Shaukat Aziz era. Apart from the fact that some portion of non-civilian spending is parked under this heading (such as construction of strategic highways and new cantonments), the PSDP appears to have been used as an instrument of political patronage, in our view, especially in the run up to the national elections. MH

Govt should focus on macroeconomic stability


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## Neo

*Pakistan, Mauritius to form trade body ​* 
Thursday, April 03, 2008

ISLAMABAD: Pak-Mauritius Joint Working Group has endorsed the establishment of a joint trade committee of officials as well as a joint committee of customs officials in order to facilitate implementation of the Preferential Trade Agreement (PTA).

The Pak-Mauritius Group, in its seventh round of talks which started here on Wednesday, reviewed the progress on implementation of the PTA, signed on July 30, 2007 and became operational on November 30 the same year.

Commerce Secretary Syed Asif Shah, during his meeting with International Trade and Foreign Affairs Secretary of the Republic of Mauritius Anund Priyay Neewoor, said the people of Pakistan felt honoured when Mauritius retained the name of a street in Port Louis as Quaid-e-Azam Muhammad Ali Jinnah.

The commerce secretary termed the Preferential Trade Agreement a big achievement, which would give new impetus to existing strong relations between the two countries. 

Neewoor, who was leading a 10-member delegation, expressed the view that bonds of friendship between the people of both countries were strong, which was evident from the fact that 70 per cent of Mauritius population traced its roots in the subcontinent. The Pakistani side comprised Ashraf Hayat, Additional Secretary Commerce and other officials. Both sides discussed issues relating to cooperation in various fields of mutual interest.

Pakistan, Mauritius to form trade body


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## Neo

*MOL signs $119m project ​* 
Thursday, April 03, 2008

LAHORE: MOL Pakistan Oil and Gas Company along with its joint venture partners (OGDCL, PPL, POL and GHPL) has signed a $119 million project with leading EPC contractor Presson Descon International Ltd (PDIL) along with its consortium partners, Enerflex Systems Ltd and Descon Engineering Ltd (Pakistan), for the Manzalai Field Development Surface Facilities Project in NWFP. 

After completion, this enormous project shall produce 300 mmscfd of processed natural gas and 2,900 barrels of condensate per day and is to be completed on a fast track basis. 

The contract was awarded to PDIL in November 2007 through competitive bidding and project activities have already commenced successfully. Previously, the PDIL had successfully completed the Gurguri Field Development project for MOL Pakistan in 2005. 

MOL signs $119m project


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## Neo

*Experts urge govt to go for quality growth ​* 
Thursday, April 03, 2008

LAHORE: The government would have to aim for quality growth in the medium term that might be slower than the accelerated consumption-based growth of recent years, which has created vast income disparities.

Economic experts have advised the new government to go for an export-led growth strategy that would create job opportunities. The experience in Pakistan has proved that high growth is not necessarily inclusive. They said the government should rather aim at higher revenue growth to at least 15 per cent of the GDP, which would resolve all problems without going for a higher growth trajectory.

They said that after five years of high growth, the real picture of the economy after completion of the third quarter of this fiscal year is even worse than the assessment of the economy done by the central bank on the six-month performance of the past government.

The economic experts evaluate that if the economic performance of the third quarter of this fiscal year is factored in, the GDP growth would be even less than the lower growth rate predicted by the State Bank of Pakistan.

Elaborating their point, they stated that the unusual gas shortage did not occur in the first half of this fiscal year. They said that the large industries were either forced to curtail their production by 50 per cent, or close down for a period ranging from 30 to 45 days in Punjab and NWFP. Many small industries have not been able recover from the long closures due to suspension of gas supplies. This they added would impact growth.

They said electricity load shedding was at its worst in the history of Pakistan in the third quarter of this fiscal. The industries in Karachi they added, have been devastated by the long power surges. The industries in Punjab and NWFP are also facing a power cut of four hours daily. They said the planners while providing growth targets, did not take into account aspects that impede growth.

Experts said that the global crude oil and edible oil scenario was also at its worst in the third quarter. Edible oil rates reached their historic peak during this period, though they are on the decline now. Crude oil prices crossed the $110 per barrel barrier during the third quarter.

The Atta shortage and its subsequent price hike also occurred in the period. The law and order situation was also at its worst during the third quarter of this fiscal that has definitely impacted the economic and industrial growth.

They pointed out that all the major crops registered a decline in production or the production remained stagnant. They said even the wheat crop that is at the harvesting stage would be lower by 10-15 per cent than the crop harvested last year. Stating that agricultural production last year was a major contributor in high growth achieved by the country. This support to economy, they added would not be available this year.

They said the petrol, gas and electricity rates were increased in the third quarter of this fiscal. These increases are also expected to increase the inflation by over three per cent. The real impact of these increases would be visible in the fourth quarter of this financial year.

The economists said that a consolation point for the new economic managers is that high GDP growth of the past has failed to benefit the common man. They said that the economic managers would find the electorate more responsive at lower growth rates if they are included in the economic cycle.

They said the new federal cabinet took oath at the start of the fourth quarter of this fiscal as the central bank reduced growth prospects on the basis of half year performance of the past government. The performance of the not yet reported third quarter would be even worse than they predicted. And the growth in the fourth quarter would follow the same pattern, until the government comes out with its own economic strategy in the next budget.

Experts urge govt to go for quality growth


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## Neo

*New govt inherited sound economy​*
LAHORE, April 2: Dr Salman Shah, former adviser on finance to prime minister Shaukat Aziz, says the new coalition government has inherited a sound economy from its predecessors to build on further and achieve a higher growth next fiscal year.

Talking to Dawn on Wednesday, Dr Shah, who was the finance minister in the outgoing caretaker government, rejected the suggestion that the State Bank of Pakistans second quarterly report accused the previous government of having lied by understating the growing fiscal deficit. I find the report a very positive commentary on the economic performance during this year, Dr Shah said.

The central bank says the economy will grow at six to 6.5 per cent this year. The Asian Development Bank (ADB), too, has forecast 6.5 per cent growth. This is going to happen despite political uncertainty overshadowed the economy throughout these past years and we had to suffer worst kind of terrorism in which Benazir Bhutto was assassinated. So if the country attains that kind of growth despite all these negative factors, it means our economy is quite resilient and has sound foundations to build on further, he argued.

He said 5 to 5.5 per cent fiscal deficit did not matter much in view of the record high global crude prices and the massive subsidy offered by the previous government on domestic oil prices and food. In India, for example, they are experiencing as high a fiscal deficit as 8 per cent, said Dr Shah.

He said, the expected tax revenue collection of Rs1,000 billion against the Rs1,025 billion target for the current financial year, strong foreign exchange reserves of $14 billion and other growth numbers signify that the economy was in good shape.

If the new government managed to attract foreign investment by improving the current policies, it could achieve 7 to 7.5 per cent growth next year, he said.

New govt inherited sound economy -DAWN - Business; April 03, 2008


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## Neo

*Qatar to invest in Pakistan​*
KARACHI, April 2: Sheikh Ali Bin Abdullah Al-Thani, a member of Qatar Royal Family and chairman Board of Directors of Pak-Qatar Family Takaful and Pak-Qatar General Takaful, has said that his country would further invest millions of dollars in different projects in Pakistan.

While chairing the annual general meetings of these companies in Doha recently, he pointed out that Pakistan offers tremendous returns on investment.

According to a statement issued here on Wednesday, the meetings were attended by a large number of shareholders.

These companies, incorporated in Pakistan, are sponsored by Qatar National Bank, Qatar Islamic Bank, Qatar International Islamic Bank, Qatar Islamic Insurance Company, Masraf Al-Rayan and Amwal QSC.-APP

Qatar to invest in Pakistan -DAWN - Business; April 03, 2008


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## Neo

*Economic relief package before budget unlikely​*
ISLAMABAD, April 2: The coalition government is finding it difficult to offer any immediate economic relief to the people because of what is being described as precarious financial position. The matter of relief has now been left for the next budget.

Sources told Dawn on Tuesday that the government had been informed by the finance ministry that 2007-8 would be a challenging year for national economy.

The year has witnessed heightened political activity, a disturbed law and order situation, rising food inflation, an extraordinary increase in global oil prices and the spillover from the United States sub-prime issues and credit crunch.

This year will also witness a new government taking charge of the affairs of the state. Maintaining financial discipline in such an extraordinary environment will indeed be a difficult task for the government, says the ministrys report.

At the same time, there is no alternative to financial discipline for sustaining the current growth momentum. There was need for decisions to achieve key fiscal targets and the government should not hesitate in sustaining growth momentum in a stable macroeconomic environment, the ministry advised.

It said a sound fiscal policy was essential for preventing macroeconomic imbalances and realising full growth potential. Every effort should be made to continue improving the fiscal balance, notwithstanding the pressure generated by the extraordinary increase in the international price of oil.

Going forward, Pakistan will have to allocate substantially large resources for strengthening the countrys physical and human infrastructure to sustain growth momentum, it said.

The challenge would be to significantly enhance the tax-to-GDP ratio to generate the resources required to finance the development of both human and physical infrastructure, it said.

The ministry said the government would have to make efforts to extend the tax base to untaxed and under-taxed sectors. The broadening of the tax base would enable the government to reduce marginal tax rates which would help stimulate investment and production and promote voluntary tax compliance. It would also ensure fair distribution of the tax burden among various sectors of the economy.

The overall services sector, including wholesale and retail trade, as well as agriculture are potential candidates for broadening the tax base, the report said.

The government last month withdrew Rs50 billion from the current Rs335 billion federal Public Sector Development Programme (PSDP) to manage its day-to-day affairs.

Except for strategically important development projects, including Mangla Dam raising and Chashma-2 nuclear power plant, no funding will be available for other projects during the remaining three months of the financial year.

Economic relief package before budget unlikely -DAWN - Top Stories; April 03, 2008


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## Neo

*Basha Diamer Dam Project: Setting up of 4 hydropower stations recommended​*
ISLAMABAD: Bhasha consultant, the German Company Lemhyer has recommended the government to set up four hydropower stations of 1,150MW under Bhasha Diamer Dam Project for the royalty to North West Frontier Province (NWFP) and Northern Areas, sources told Daily Times on Wednesday.

The German Company Lemhyer has recently completed the draft of detailed engineering design of Bhasha Dam Project. The draft has been circulated to concerned departments and ministries. However, the final engineering design would formally be issued by June 30. Bhasha dam is one of the five major reservoirs that President Pervez Musharraf announced in 2005.

In the detailed draft engineering design circulated to different concerned departments, sources said, the company has recommended to keep flow rate of water at the level to fill the dam in four years. 

According to the initial design, it was recommended to fill the dam in two years. The company has also recommended storing 60 percent water in the dam from the water inflows and release 40 percent water from dam to generate power and irrigation, sources said. 

The official informed that German Company has also recommended to the government to maintain outflow of 35,000 cusecs water from the dam every month. In the draft, the company has asked to keep 1,160-meter height of the dam instead of 1,170 meters height set earlier. The company has said that this change in height will help to store the water at the time of sudden melting of glaciers.

The company will give the presentation to the Water and Power Development Authority (WAPDA) on April 7 on the resettlement action plan in which recommendations have been made to resettle the affected population followed by the construction of Bhasha dam.

They said the company in the draft had indicated that 27,000 families would be affected by the construction of the Bhasha dam. The company has recommended setting up nine model villages near Gilgit to accommodate these affected families. The company has also recommended allotting five Marlas for residence per family and six canals to one family for agriculture purpose. 

The company will brief the WAPDA on April 30 about the environmental impact of the dams construction and all stakeholders will hold meeting to review the environmental impact of the dam construction in the third week in Gilgat, sources said. Diamer Bhasha consultants in the detailed engineering design have indicated cost of $8.505 billion at present against the earlier projected cost of $6.5 billion in year 2005.

Government had allocated Rs 2 billion for the land acquisition of the Bhasha dam under Public Sector Development Programme (PSDP) 2007-08 that has not been released to acquire land, an official added. Government will also generate funds from foreign financial institutions to carry out the project.

We are waiting from the call of North West Frontier Province (NWFP) government and will provide money whenever NWFP government calls for it, official said adding that the work on the land acquisition of Bhasha dam has not been started so far.

Official said that the work on a Karakuram Highway to link Bhasha dam was in progress but no progress on land acquisition has been made because not a single penny had been spent in this regard so far. Karakuram Highway for Bhasha dam project would be upgraded at cost of Rs 11.578 billion to link Karakuram Highway with Bhasha dam, official said.

Daily Times - Leading News Resource of Pakistan


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## Neo

*FPCCI budget proposals: Development and investment should be promoted​*
KARACHI: Federation of Pakistan Chambers of Commerce & Industry (FPCCI) has emphasised sustainable development and investment promotions in the new budget.

In its proposals for budget 2008-09, FPCCI has given special importance to inflation controlling and investment enhancement strategies in the budgetary proposals. The budget proposals have investment oriented and have long-term implications strategy. 

About taxation side in different sectors, FPCCI proposed that capital gains should be taxed. Incentive should be given to new industrial sectors so that we earn from exports. 

Taxes on engineering sector either be eliminated or reduced to improve the inflow of foreign investment. Dyes and chemicals for textile industry should be exempted from duty to avoid crises in the revenue-generating sector of the economy, it proposed. Textile is the major contributor in GDP, apex trade body said and in order to reduce down factor cost captive power Generator accessories and essential parts for weaving should be exempt from custom duty. It will support production and will increase export, hence foreign inflow of capital. 

FPCCI stated that surgical industry has developed image in the international market. The surgical raw material such as steel wires, sheet, rod be exempted from custom duty, which will support export of surgical goods, it said.

It also stressed to focus on export of textile, leather garments, sport goods; these sectors of economy have potential to earn from abroad. FPCCI said that though proposals may effect revenue collection and feasibility negatively but ultimately revenue will increase because of high investment and production activities which are the ultimately consequence of the budgetary proposals.

In order to compete in the world market, we have to provide raw materials to our major industries at competitive price, hence it is recommended that raw material not locally manufactured or produced be zero rated customs duty, Tax credit and fiscal benefits be offered to encourage those industries which provided import substitution and or help us to ease power crisis in the country.

It also suggested to reduce sales tax on local manufacturing and imports to 10 percent instead of 15 percent, this proposal will not reduce the final revenue of sales tax as compared to last or current year, because prices of majority raw materials (iron and steel, fertilizer, chemicals, petroleum products, edible oil, paper etc) increased by more than 100 percent in last one year.

Unfortunately last five years all FDI came in the services sectors (banking, telecom & oil/gas) and no major investment in the field of manufacturing was observed, thus creating high unemployment and law & order situation in the urban areas. Situation requires war like action to address the above issues without making committees and deciding issues across the table, it added. About the other economic indicators, it pointed out that inflation has become very important and burning issue for the government, which has also its social and political consequences. The higher inflation ultimately leads to enhance the level of poverty. It said that the budget demonstrates the governments emphasis on attempting to improve the socio-economic condition of the masses through higher outlays on welfare.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Property sectors input in GNP should be increased: Taseer​*
KARACHI: The real estate sector should contribute handsomely in the countrys Gross National Product (GNP) with rapid growth in an organised and transparent manner, former caretaker Minister of Industries, Production and Special Incentives Salmaan Taseer said.

He was speaking at closing of Rs 2 billion Sukuk for Pace Pakistan Limited (PPL) here on Wednesday. Pak Brunei Investment Company Limited and BankIslami Pakistan Limited were the Lead Advisors and Arrangers for the transaction.

Taseer stressed the real estate sector should adopt advance construction technology and proper management system to deal and to ensure investors and other stakeholders in this lucrative market.

We have introduced state-of-art developments, transparent governance and professionalism in real estate throughout the country, aiming to attract big investors in the most secure and growing market, the Chairman and CEO of the First Capital/Worldcall group said. He further said that PPL paid-up capital has raised to $200 million in six-year and it has planned to expand it up to $900 million through its 10 billion square feet land.

Taseer, who is also Chief Executive Officer Pace Pakistan Limited said that he has planned to launch real estate projects in the coming future like seven star hotels, commerce centres, shopping plazas, apartments, high rise and middle cost housing societies in the country.

Pace Pakistan Limited has set a new trend in the real estate market particularly standards and formula of construction and financial advisory and transparency in the functions, he further said. PPL CEO noted the real estate cost is lowest in comparison of other countries of the region and expressed his confident over the growth and values of real estate sector of the country.

We have been working with a little group of venture capitalists who invest in our projects to get handsome returns in shortest time period, Taseer added. 

He said the Pace Pakistan Limited is analyzing the features of Real Estate Investment Trusts (RIETs), likewise all the financial institutions and it will finalize its involvement in the next six months 

CEO BankIslami Hasan Bilgrami said that Bank will issue five Sukuk bonds of worth Rs 13 to Rs 14 billion in the future and it also considers joining RIETs.

MD Pak-Brunei Investment Company Aysha Aziz also expressed interest to be a part of RIETs in the future.

Daily Times - Leading News Resource of Pakistan


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## Neo

*ADB lowers Pakistans GDP growth forecast​*
ISLAMABAD: Asian Development Outlook 2008 (ADO 2008) has further lowered Pakistans GDP growth prospects from earlier 6.5 percent to 6.3 percent as against the target of 7.2 percent for the current fiscal year.

Political uncertainty and the security environment in the lead up to the recent general elections and the subsequent formation of a new government have impacted on capital inflows, and may curtail investment, dragging down economic performance. Revenue shortfalls produced by slowing economic activity and expenditure overruns may limit fiscal space and reduce public investment, which in turn may affect private investment and growth. In addition, continued tight monetary policy conditions in view of persistent inflation could serve to dampen demand and limit any expansion. 

ADBs flagship annual publication, released on Wednesday highlighted that GDP growth is expected to be moderate at 6.3 percent in financial year 2008 and then pick up slightly to 6.5 percent in financial year 2009, underpinned by consumption expenditures. These forecasts are lower than the average 7 percent growth rate of recent years, as the ongoing power and gas shortages caused by an aging energy infrastructure, chronic under investment in expansion and maintenance, and unsustainable pricing regimes slow production and constrain domestic and foreign investment. 

Agriculture: The growth of agriculture will be lower than earlier expected because of pest attacks and floods. Accompanying the resulting shortfall in cotton production, moderating textile manufacturing sector growth and an overall slowdown in large-scale manufacturing in the first half of financial year 2008. 

Inflation: Despite tight monetary conditions and moderating growth, inflation is expected to overshoot SBPs target of 6.5 percent and reach 8.0 percent, reflecting continued pressure on food prices and the passing on of some higher global oil prices. Recognising that continued monetary policy tightening will have only a limited impact on controlling food inflation, the Government has announced various administrative measures, such as banning export of wheat and allowing its import, cracking down on hoarding, expanding the network of utility stores that provide subsidised food items, and most recently raising the procurement price of wheat to improve the supply response.

Fiscal Deficit: The fiscal deficit will likely exceed the Governments target of 4 percent of GDP mainly on higher interest payments and a rise in development expenditures. In an election year, the Government deferred the pass-through of the higher international oil prices to consumers until 1 March. But as this was small relative to the international oil price rise, the subsidy expanded to estimated Rs 60 billion (0.6 percent of GDP) in the first half of current fiscal year. 

Revenues: On the revenue side, as a result of slowing economic activity, tax collection by the Federal Board of Revenue stayed below the target for the first half of the fiscal year. Direct tax collection fell relative to the same period of previous fiscal year. 

Bank Borrowing: With the fiscal deficit widening, and external inflows remaining subdued, the Governments borrowings from SBP in current financial year had risen more than threefold by 19 percent in January 2008 relative to the same period last year.

Current Account Deficit: The current account deficit in the first 7 months of financial year 2008 worsened by 47 percent compared with the same period in financial year 2007, and is likely to widen to 6.3 percent of GDP for the full year. The current account deficit is under pressure because of a higher oil import bill and deteriorating income and services accounts, despite moderate growth in exports and continued strong receipts of workers remittances. The financing of the current account deficit remains a key issue given the deterioration in the financial account caused by the halt in foreign portfolio investment in the first 7 months of financial year 2008. Difficulties in global financial markets could further affect capital inflows. In addition, planned issues of global depository receipts may not materialise. The declaration of emergency on 3 November 2007 and the downgrading of Pakistans credit rating outlook resulted in a net outflow of $243 million from special convertible Pakistan rupee accounts held by foreigners during the month.

Trade Gap: The trade gap widened by over 25 percent in the first 7 months of this fiscal year. Textile exports remained, and will continue to be, weak, on expected lower cotton production and increased regional competition as the effect is felt of the ending of safeguard measures imposed on clothing exports from the Peoples Republic of China by the European Union and the United States. Higher shipping costs following the increase in oil prices will affect the services account further, which had already widened by almost 52 percent in the first 7 months of financial year 2008. 

External Debt: The income account may also feel the strain of larger external borrowings by the Government to finance the deficits, the increased cost of commercial borrowing resulting from the downgrading of Pakistans credit rating outlook from stable to negative in early November 2007, and the start of payments in 2008 on the debt rescheduled by the Paris Club. Altogether, net foreign investment tumbled by 34.9 percent in the first 7 months of financial year 20008 relative to the same period in last year, caused by a slowdown in FDI growth and virtually no portfolio investment as foreign investors shied away from the stock marketsa demonstration of the high level of volatility of such inflows. External debt rose by another $2.5 billion in the first half of financial year 2008 as a consequence of the rising current account and fiscal deficits. The position needs to be closely monitored.

Daily Times - Leading News Resource of Pakistan


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## Neo

*7.5 percent surge in KSE-100 index in January-March ​* 
KARACHI (April 03 2008): The Karachi share market continued its upward move and the KSE-100 index surged by 7.5 percent in the first quarter of 2008 (January-March) to close at 15,125.29 points level on March 31, 2008.

"Despite unrest on political front and turbulence in world stock markets due to the sub-prime crisis in the US, Pakistan's stock market stood as star performer in the first quarter of 2008", Atif Malik, senior analyst at JS Global Capital, said.

"It seems that KSE-100 will see another positive year in terms of growth in the index--a seventh in succession", Jawad Haleem at Atlas Capital Markets said. "For the nine months period ended on March 31, 2008, the market rose by 9.8 percent to close at 15,125, around 150 points short of its all-time high of 15,275 recorded on March 27", he added.

During the same period last year, the index rose by 12.8 percent. The higher index level was also complemented with higher volumes which averaged 256 million shares as against an average turnover of 181 million shares recorded previously, an increase of 41 percent.

The KSE-100 Index rose by 7.5 percent in the first quarter of 2008, far better than Asian emerging markets as defined by MSCI EM Index and MSCI Asia ex Japan indices which during the same period declined by 11.3 percent and 14.7 percent, respectively. "Interestingly, this drop in MSCI's measure of Asian stocks outside Japan in 1Q2008 was its worst quarter in over 5 years ie since the quarter ended in September 2002", Atif said.

Moreover, besides out-performance, Pakistan stock market was among the only two indices in MSCI Asian emerging markets which showed positive movement in 1Q2008, the other being Taiwan's SETI index with a meagre 0.8 percent increase. In 1Q2008, China 's SSEA index stood as the worst performer since it fell by a massive 35 percent.

Although net foreign selling of $78.5 million, as measured by the National Clearing Company of Pakistan Limited (NCCPL) data, was witnessed in the local bourses during the quarter under review, the impact of this was minimised from the strong support by local investors. Investors all around the world pulled out their investments in stock markets. However, the impact of this was not gravely felt in Pakistan's market since foreigners hold only 6.7 percent of the total market capitalisation (24 percent of the available free float).

"There is also no direct effect likely of the sub-prime crisis in the US on our economy since none of our banks has a direct exposure in that market", Atif added. Defying the general financial concept of 'higher-the risk-high-the potential returns', the KSE-100 index in 1Q2008 posted the highest average daily return of 0.1 percent, amongst the other regional indices, with the lowest volatility of 1.2 percent.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Master Plan ready for execution in southern Punjab' ​* 
MULTAN (April 03 2008): Smeda Chief Executive Officer Shahid Rashid has said that Mater Plan for southern Punjab is ready for execution. However, we have to set the priorities to demand sufficient funds from the government to bring this neglected area at par with developed areas of the country.

In this connection, a meeting of chambers of commerce and industry of southern Punjab would be convened soon. Delivering his speech at the Multan Chamber of Commerce and Industry (MCCI) chaired by its President Khawaja Muhammad Jalaluddin Roomi while FPCCI President was the chief guest, Shahid Rashid said the government had introduced a support fund for small and medium enterprises and financial assistance of Rs 1.8 million would be given under matching grant scheme for expanding business, consultancy. However, this grant cannot be spent on civil works, and purchasing machinery.

The Smeda CEO said that work on the project of Agro-Food Processing Plant had begun and it would be completed by June 2008 and the civil work and machinery installation would be completed by May 2008. He said that mango pulp, grading, and processing of fruits like mangoes, kinnos and vegetables would be carried out in this centre. It would serve under the control of a board of management.

Shahid hailed the offer of Khawaja Jalaluddin Roomi for provision of land/space for a Women Exhibition Centre in Multan like Lahore and said that this centre would be established on top priority basis to facilitate the women entrepreneurs of southern Punjab. He stressed the need for encouraging the "Ahan" (Aik Hunar Aik Nagar) programme as there was a big scope of hand-knitted garments, handloom products, silver jewellery, blue pottery, hand-knotted carpets.

He said this project is initiated with the help of the All Pakistan Handloom Association in the surrounding area of Multan called Samejabad. Initially, five following product have been selected for the interventions: floor rugs, table mats/accessories, cushion covers, bed covers, and chic fabric Multan handloom manufacturers and running its operations nearly 90 percent for exports, having 100 percent in-house facilities from weaving to dyeing and bleaching will be involved in this activity.

The Multan Chamber of Commerce and Industry has urged Smeda to ensure project feasibility-based lending to SMEs besides strengthening banks-academia-SMEs linkage for the promotion of small and medium enterprises in the country.

MCCI President Khawaja Muhammad Jalaluddin Roomi informed the Smeda CEO that the SMEs are suffering from a number of weaknesses, which hamper their ability to take full advantage of the opening of economy and increasingly accessible world markets. Major areas responsible for the low performance are identified as labour, taxation, trade capacity, finance and credit availability.

The MCCI chief said that lending money to SMEs is still a problem and SME policy cannot be successful without ensuring guarantee free loans to small and medium enterprises. He said that lending to the SMEs should be based on the feasibility of the projects instead of collateral-based lending as the collateral-based lending is also coming in the way of promotion of SMEs.

Jalaluddin Roomi stressed the need for a strong financial institutions-academia-SMEs linkage to achieve the desired results. He said that Lahore Chamber of Commerce and Industry being the premier chamber of the country has always emphasised an elaborated role of SMEs in economic development.

SMEs constitute 99% of 3.2 million business enterprises in Pakistan, employ nearly 78 per cent of the non-agriculture labour force. It also contributes over 30% to the GDP, Rs 140 billion in exports and account 25% of the exports of manufactured goods besides sharing 35% in value added manufacturing. Despite all these figures our SME sector has not been able to realise its full potential. He also called for establishment of Business Information Centers in collaboration with Chambers in the country so that the process on Marketing Intelligence could be strengthened.

The MCCI chief said that inter-linking of different institutions like Smeda, Business Support Fund, Competitive Support Fund, Small Industries Corporation, SME Bank and chambers of commerce and industry is also of utmost importance for the promotion of small and medium enterprises.

Nine universities are working under Small & Medium Enterprises and Regional Innovation (a government agency) and Japan Chamber of Commerce and Industry to provide management support, financial support and taxation related support to the local SMEs.

He informed the meeting that Foundry Service Center, which has been approved, would soon start working in collaboration with University of Engineering and Technology for the people attached with steel sector. Earlier, prayers were offered for the departed soul of renowned industrialist Mian.

TPFC INAUGURATED: Meanwhile, Smeda CEO Shahid Rashid inaugurated a "Third Party Facilitation Centre (TPFC) which was established in collaboration with Smeda and the Multan Chamber of Commerce and Industry (MCCI) to provide legal advice to the MCCI members in their legal issues but not limited to taxation, labour, customs, company incorporation, IPRs, environment, banking, regulation relating to local government and Utilities, etc. Utilising Network, of legal service providers for practical assistance to SMEs before courts, tribunals, and authorities, etc.

Business Recorder [Pakistan's First Financial Daily]


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## ejaz007

*Metro Cash and Carry Intl plans to invest Rs 20bn *

ISLAMABAD: Prime Minister, Syed Yousaf Raza Gillani, while appreciating the initiative taken by the Metro Group in launching a whole sale business in Pakistan in the name of Cash and Carry Pakistan said that this would encourage other foreign investors to invest in Pakistan. 

The Prime Minister was talking to a delegation of Metro Cash & Carry International headed by its Chief Executive Officer, Frans W. H. Muller, who called on him here at the Prime Ministers House.

The Prime Minister said that Metro Cash & Carry would be a good addition in food and general merchandise sector which would help in enhancing more economic activity, generating job opportunities, ensuring availability of fresh products and facilitating the whole sale business in the country. He said that the proposed investment by the Metro Cash & Carry reflects the companys confidence on the demographic dividend of Pakistan, comprising 160 million people.

The Prime Minister while appreciating their efforts for establishing facilities for storage and packaging of perishable products like mangoes and kinos said that this would help in increasing the export of perishable items and make these products competitive in the international market. staff report

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistans sugar exports seen at 250,000 T in 07-08 ​* 
Friday, April 04, 2008

MUMBAI: Pakistan, which entered the world sugar market in January after a gap of five years, plans to export about 250,000 tonnes in the current crop year to September, a leading producer said on Thursday.

An importer of sugar in recent years, Pakistan struck its first deal to export the sweetener in early 2008 by selling 1,000 tonnes of whites to Sri Lanka and has been ramping up overseas sales since then.

Mills have so far contracted to export 150,000-200,000 tonnes of sugar from the new season, Ahmed Ebrahim Hasham, a director at Mehran Sugar Mills Ltd, told Reuters on the sidelines of a sugar conference in Mumbai.

Out of the total contracts for exports this season, some have already been shipped to Bangladesh, Sri Lanka and Yemen, he said.

Sugarcane crushing season in Pakistan runs from October to September.

Mills in the country plan to export 50,000 tonnes sugar more and they would like to tap markets in the Middle East and Bangladesh, he said.

Pakistan, which consumes around 4.2 million tonnes of sugar annually, is expected to produce between 4.6 million tonnes to 4.8 million tonnes this year, up from 3.5 million tonnes last year, Hasham said.

Production is expected to be slightly lower next year as farmers have not been paid well for their cane this time due to low sugar prices in the country. While production is expected to fall slightly next year, and consumption has started rising by about 5 percent annually, he said.

The country was not likely to import sugar next year despite expected drop in output as last years carryover stocks would help meet domestic demand, Hasham said.

Pakistan imported around one million tonnes of sugar in the year to September 2007, including 700,000-800,000 tonnes from India. 

Pakistans sugar exports seen at 250,000 T in 07-08


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## Neo

*Cement sales up 25pc in July-March ​* 
Friday, April 04, 2008

KARACHI: Pakistani cement sales surged 25 per cent in the first nine months of the 2007/08 (July-June) fiscal year, compared with the previous year, driven by growing construction demand, an industry official said on Thursday.

Cement sales during the period totalled 21.9 million tonnes, compared with 17.5 million tonnes sold in the same period last year, said Shahzad Ahmed, secretary-general of the private All Pakistan Cement Manufacturers Association.

March to June is the peak demand season for cement as local construction activities resume after the winter season, said Bilal Hameed, an analyst at brokers JS Global Capital.

The 2007/08 budget earmarked a record 520 billion rupees for the public sector, which means more construction as development spending is channelled into sectors such as health, education and infrastructure.

During the July-March period, cement exports from Pakistan jumped 140 per cent to a record 5.16 million tonnes, compared with 2.15 million tonnes shipped a year earlier.

Pakistani cement manufacturers have capitalised on a shortage in the region and started exporting to India and analysts said they were now looking for new markets.

Pakistan also exports to Afghanistan and the Middle East.

In March, Dubai said it decided to lift custom duties on cement and steel until further notice to control rising costs of building materials, which analysts said would benefit Pakistani cement-makers as the countrys cement is relatively cheap.

Cement sales up 25pc in July-March


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## Neo

*Italy turns loan into development fund ​* 
Friday, April 04, 2008

ISLAMABAD: The Italian government has converted a loan of $100 million into development project funding under a swap arrangement.

Inaugurating a meeting of the joint management committee for conversion of Italian debt into development project funding here on Thursday, Minister for Finance and Economic Affairs, Ishaq Dar said that the selection of projects should be linked with the policy framework of the newly elected government.

The minister further emphasised that the government would contribute to the development of social sector, in particular the poor segment of the society. It would also prioritise the projects aimed at rural development, poverty alleviation and education.

The loan under the swap is proposed to be offset in five equal annual tranches. The government of Pakistan has set aside $20m (Rs1.2 billion) for this purpose.

Secretary Economic Affairs Division (EAD) and Italian ambassador would lead their sides respectively.

The Italian government on the request of the government of Pakistan initially agreed to wave its loan of 85 million euros on presentation of a record of expenditure incurred on the upkeep of Afghan refugees since 2001. The debt cancellation occurred in 2006 and the agreement was signed in 2007.

The payments eligible for swap operations are to be made from budgetary resources of the government of Pakistan, and shall be spent on jointly agreed social and development projects by the joint management committee.

Italy turns loan into development fund


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## Neo

*ADB reforms did not produce desired results ​* 
Friday, April 04, 2008

KARACHI: ADB Country Director Peter L Fedon has said Asian Development Bank (ADB) assistance of $18.6 billion for Pakistan was meant for reforms for promoting economic growth and development but at times these reforms do not produce envisaged results.

One of priority of ADB is better implementation of projects with balanced approach. He said this while addressing Pakistan Institute of International Affairs members at a meeting presided by its Chairman Fatehyab Ali Khan on Thursday in Karachi. 

He spelt sectoral composition of ADB assistance as of on December 31, 2007, social sector 7.80 percent, governance 6.90 percent, industry 9 percent, transport 11.30 percent, finance 13.20 percent energy 21.50 percent, agriculture 20.90 percent and multisector 9.40 percent.

He also highlighted principal reforms supported by ADB in Pakistan including Capital Markets Development Program (CMDP) Trade, Export Promotion and Industry Program, Energy Sector Restructuring Program (ESRP-$355 million), Agriculture Sector Program Loan II (ASPL-II-$350 million), Access to Justice Program (AJP-$350 million), Decentralisation Support Program (DSP-$300 million), Financial (non-bank) Market and Governance Progarm (FMGP-$266 million), Microfinance Sector Development Program (MFSDP-$150 million).

Fedon said considerable controversy had been generated in Pakistan on the use of conditions or policy reform measures/actions as part of external assistance programs supporting reforms. In ADB experience, the key difference between successful and failed reform efforts is in the degree of government ownership and political commitment. Conditionality which attempts to buy reform from an unwilling partner has rarely worked, he underlined and maintained that best designed reform packages and programs could fail to deliver if they were not implemented properly.

He said despite considerable effort, the power sector reform program is yet to fully achieve its desired objectives. He said power sector in Pakistan was characterized historically by huge losses (technical and commercial), which had to be picked up by government. Every year the government has to provide a subsidy of close to $1 billion to make up for difference between the notified tariff and actual cost of electricity. The accumulated debt overhang/arrears to date stand at $4billion.

He said that chronic under investments in power sector has led to the generation shortfall, transmission constraints and distribution bottlenecks as well as a distorted mix of energy sources. 

Infrastructure and logistics- for connectivity, competitiveness and productivity, energy for efficiency, savings and security, urban services- for quality of life and development of city clusters, reforms for risk cutting, predictability and stability are our proposed future strategy, he disclosed However, he noted that overall reforms effort had remained slow and needs to be expedited to ensure energy security and current situation of power sector highlights the very high economic costs to the nation.

ADB reforms did not produce desired results


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## Neo

*Metro to invest 200m euros ​* 
Friday, April 04, 2008

ISLAMABAD: Metro Cash and Carry International of Germany on Thursday announced to invest 200 million euros (Rs20 billion) for expansion of its business network in Pakistan in the next two to three years.

We are planning to open 10 more outlets in different cities of Pakistan with our business-to-business concept in the next two to three years, Chief Executive Officer (CEO) of Metro, Frans Muller said while speaking at the opening of companys second outlet in Pakistan here in sector I-11/4.

He said with more than 600 wholesale centres and 100,000 employees in 29 countries, we reached sales volume of Rs31.7 billion euros in 2007.

Muller said they also called on Prime Minister Syed Yousuf Raza Gilani who appreciated the initiative taken by the Metro Group to launch a wholesale business in Pakistan in the name of Cash and Carry Pakistan. He said this would encourage other foreign investors to invest in Pakistan.

Metro to invest 200m euros


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## Neo

*Textile industry could save energy up to 15pc ​* 
Friday, April 04, 2008

LAHORE: Asian Production Organisation expert Pawan Kumar, after conducting audits in Pakistani textile industries has revealed that 10 to 15 per cent energy could be conserved on adoption of measures indicated by the energy audits.

He was speaking on the completion of the second phase of energy audits at the All Pakistan Textile Mills Association (APTMA) office in Lahore. The APTMA in partnership with the National Productivity Organisation (NPO) had launched a high-profile initiative for the conservation of energy in the textile industry.

He also recommended that industrial units should have internal energy auditors so that energy audits could be undertaken on a continuous basis.

Akber Sheikh, Chairman APTMA Punjab while speaking at the wrap-up session of the energy audits, emphasised the need for quick and broad-based energy audits. Such, that energy saving in meaningful terms could be achieved and an un-interrupted supply of electricity to the textile industry is ensured.

He observed that besides maximising the optimal use of energy, audits organised by APTMA in association with NPO had created a pool of energy conservation specialists, which had the capability of undertaking energy audits independently.

Meanwhile, Chairman APTMA Punjab extended his cooperation & support to the newly installed ministers for water & power and petroleum & natural resources of the textile industry, towards energy conservation and the formulation of an Electricity Load Management and Natural Gas Allocation Policy. Correct formulation of these policies is vital for the Export Oriented Textile Industry to meet international quality and supply standards, as well as to save on production losses.

He urged NPO to expedite concessionary finance that had been agreed in principle, to the industry for helping it to implement audit measures, such as change of equipment, machines and up-gradation of production facilities. Akber Sheikh reminded that the initiative underway was part of a long term strategy to conserve energy and secure sustainable development.

Textile industry could save energy up to 15pc


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## Neo

*Pakistan and China to sign MoU for Basha Dam financing ​*
ISLAMABAD: Pakistan and China are set to sign Memorandum of Understanding (MOU) in the next week to seek soft loan from China for carrying out the construction Diamer Bhasha Dam project, official sources in Water and Power Ministry told Daily Times on Thursday.

Sources told that President Pervez Musharraf would visit China on April 8 to 10 according to tentative schedule and two sides would sign MOU for Bhasha dam financing. 

They said that Pakistani authorities would present the draft of detailed engineering design to the Chinese authorities to seek loan for the construction of Bhasha dam. After analysing the draft design of the dam, China will give comments on it and offer the loan for the dam construction, official added.

Sources said that World Banks terms and conditions for the loan for the construction of such mega project are tight and keeping in view that scenario Pakistan has decided to seek loan from China that would offer loan on soft terms and conditions.

Sources said that the whole funding would not be generated from China and however major chunk of the money would come from it after MOU signed between two countries. They said that China would be a main player in joint venture for generating financing for the construction of Bhasha dam. 

When asked whether China would participate in the construction of the project, sources said, that China would want to take award of the construction of the dam project because it has been the policy of china to take project for the construction for which it provides financing.

Chinese state run company Dong Fong has recently signed the contract with Pakistan for carrying out the 525MW gas based thermal power plant at Chichoki Mallian and it is also working on 450MW power project at Nandipur (Gujranwala). Chinese company has the experience of working on dam also like Gomal Zam dam and China may take the project for the construction, sources added. Chinese company is also working Neelum-Jhelum Hydropower Project.

Sources said that Pakistan would also sign agreement with Chinese Company Sino Coal that is willing to work on coal in Thar. The Chinese company will initiate the project of coal in Thar, sources added.

The Chinese company, Shenhua after spending three years rolled back from the project for mining coal in Thar. The company has spent around 25 million dollars during the project on the construction of road, water and power availability. When it mined the coal that was not of high quality, the company was further asked to further process the coal but company denied and rolled back, sources said. Now, Chinese Company Sino Coal is willing to work on coal projects in Thar and agreement would be signed with the company during upcoming President Pervez Musharraf visit to China, sources added.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan could become cash magnet if new govt passes economic tests​*
NEW DELHI: Pakistans largely peaceful elections and swearing-in of a new prime minister have brought it some stability. But foreign capital  which stopped coming in because of the nations political turmoil  is still sitting on the sidelines.

Investors say they are eager to start putting money back into the country, one of the few emerging markets performing well this year. (The Karachi 100 Stock Exchange 100 Index is up about 8 percent in 2008.)

However, they are waiting to see whether the new government will restart privatisation process halted last year and take other measures to repair an economy plagued by a budget shortfall, a staggering current-account deficit and inflation.

For years prior to 2007, foreign investment in Pakistan rose steadily. For the fiscal year that ended in June, the country received $5.2 billion in foreign direct investment and $1.8 billion in portfolio investment.

But that was a high-water mark, followed by a temporary state of emergency, riots and the killing of opposition leader Benazir Bhutto. Investors turned sour; in the eight months that ended in February, foreign investment was just two-thirds what it was in the same period one year earlier.

At Pakistans stock market, the numbers look surprisingly good. Even with the turbulence of 2007s last months, the Karachi 100 index was still up 40 percent for the year. And its performance so far in 2008 compares favorably not just with Western markets, but with the Bombay Stock Exchanges Sensex index, which has dropped 23 percent.

Still, the Pakistani markets performance hasnt been enough to tempt people to invest further. Were not ready yet to put in a lot more, says Slim Feriani of Progressive Asset Management, a London-based emerging markets fund that has invested $3.2 million in Pakistan. We just want to let the dust settle a bit.

This is despite the peaceful transition of power that appears to be under way after nine years of President Pervez Musharrafs military-backed rule. In Februarys democratic parliamentary elections, which Musharraf ushered in, his supporters were roundly defeated. The new government has been formed by two opposition parties, including Bhuttos Pakistan Peoples Party.

Investors and analysts point to a few areas where the new government needs to prove itself before the foreign capital comes back. One is the stalled process of privatising the banking sector. Many credit the sale of shares in United Bank in 2002 as the trigger for five years of strong capital inflows. But the past eight months have seen little activity in a sector heavily favored by foreign investors keen on trying to tap Pakistans growing consumer base.

The new governments first test is coming up. Last year, Pakistan announced plans to sell stakes in the National Bank of Pakistan and Habib Bank through global depositary receipts, or GDRs, on the London Stock Exchange. As political storm clouds gathered, the sales  expected to be for a 23 percent stake in NBP and a 7.5 percent stake in Habib Bank  didnt materialise.

What everyone is hoping is that the government will resume the GDR process, says Salman Ali, head of research in Pakistan for Citigroup. It has very little choice if it wants to send the signal that its business as usual.

Investors say they would also like to see more privatisation in the oil sector, which also draws a large share of foreign capital. But unlike in banking, the Musharraf-led government made no promises to open up oil exploration to further private investment.

A bigger, potentially thornier task for policy makers still lies ahead. Pakistan is facing a large budget shortfall and a current-account deficit equivalent to 5.3 percent of its gross domestic product. Skyrocketing oil costs threaten to lead to energy shortages for much of the country. And climbing food prices could raise inflation to as high as 9 percent, the central bank said last week. In February, inflation was 8.4 percent on an annual basis.

Investors are asking if the new government, formed by parties that have promoted populist policies, can take the measures needed to avert an economic crisis. Lets not skirt around the issue that these guys have been in power in the past and theyve had a pretty bad track record in governance and also dealing with foreign investors, says Sakib Sherani, an economist with ABN Amro Bank in Pakistan.

In spite of the economic woes, some observers expect the Karachi market to gain 20 percent to 25 percent in 2008, in line with growth in corporate earnings. The expectations are based on the idea that some sectors of the economy, such as real estate, are undervalued, and on the continuing attractive valuation of Pakistani stocks. By some estimates, stocks in Pakistan have a historic average price-earnings ratio of 11.

The prospect of a significant US recession, which worries investors in most countries, doesnt seem to be on many radar screens in Pakistan. Unlike India, Pakistan isnt a large trade partner of the US It goes in our favor that because of our low level of exports, we are insulated from global developments, says Khurram Shehzad, who manages a $500 million equities fund at Karachi-based National Fullerton Asset Management.

The uncertain fate of Musharraf also doesnt seem to bother investors. While he was elected in November for another five-year term, officials in the new government have vowed to remove him from power. Most investors say Musharrafs defeat in the February polls, and his reduced standing with parliamentary democracy restored, make him a less important factor in Pakistans future. Hes no longer as relevant, Sherani says. courtesy wall street journal

Daily Times - Leading News Resource of Pakistan


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## Neo

*exports set to fall 15pc: Reap​*
ISLAMABAD, April 3: Pakistan may export 15 per cent less rice this year after an ongoing power crisis affected milling, a senior official in the worlds fifth biggest rice exporting nation said Thursday.

The announcement could further affect world rice prices which are near record highs, a key issue particularly in Asia where the grain is a staple.

Pakistan exported 3.3 million metric tons of rice last year but this year it will drop to 2.8 million tons, said Muhammad Azhar, chairman of the Rice Exporters Association of Pakistan.

The decline in our rice export will mainly occur due to power shortages, Mr Azhar told AFP.

Mills have not been working to their full capacity due to electricity shortages. The power shortages have also badly affected husking and packing of the crop, he added.

Pakistan has been badly affected by power cuts in recent months, caused by a lack of electricity generating infrastructure and theft of electricity.

He said the 2.8 million tons was expected to fetch 1.2 billion dollars for Pakistan.

Unlike most of the rest of Asia, wheat is the main diet staple in Pakistan.

Pakistan therefore would not need to follow neighbouring India in imposing a rice export ban, Azhar said.

There was also no domestic shortage of rice and the country had sufficient carryover stocks before the new crop arrives in September, he said, adding that Pakistans total production this year would be 5.5 million tons.

He had, however, suggested to the government not to export basmati rice to India to prevent re-export of the commodity by the country.

We will lose the market if the government allows export of rice to India, he added.AFP

Rice exports set to fall 15pc: Reap -DAWN - Business; April 04, 2008


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## Neo

*Wall Street Journal calls Pakistan a cash magnet​*
NEW DELHI, April 3: Wall Street Journal has called Pakistan a cash magnet.

The paper, in an article posted on Wednesday, says the Pakistani stock market continues to be a profitable index to invest in. Those missing the boat on profits do it at their own discretion. The Pakistani market has a strong record of growth for 33 per cent in the past decade. Foreign investors are eager to invest in Pakistan.

The Wall Street Journal article is mainly discussing American investment. Arab and Asian investment in Pakistan is continuing at a rapid pace.

Many in Pakistan want to peacefully end the aid relationship with the USA, so that investment worth $10 billion a year can come into a stable economy, saiid the paper. Emaar International is investing more than $28 billion in the housing sector and there have been huge investment in the telcom sector.

Pakistan Could Become Cash Magnet If New Government Passes Some Tests, said the paper.

Pakistans largely peaceful elections and swearing-in of a new prime minister have brought it some stability. But foreign capital  which stopped coming in because of the nations political turmoil  is still sitting on the sidelines, it added.

Investors say they are eager to start putting money back into the country, one of the few emerging markets performing well this year. (The Karachi 100 Stock Exchange 100 Index is up about 8 per cent in 2008.)

However, they are waiting to see whether the new government will restart privatization moves halted last year and take other measures to repair an economy plagued by a budget sh For years prior to 2007, foreign investment in Pakistan rose steadily.

For the fiscal year that ended in June, the country received $5.2 billion in foreign direct investment and $1.8 billion in portfolio investment.

But that was a high-water mark, followed by a temporary state of emergency, riots and the killing of opposition leader Benazir Bhutto. Investors turned sour; in the eight months that ended in February, foreign investment was just two-thirds what it was in the same period one year earlier.

At Pakistans stock market, the numbers look surprisingly good. Even with the turbulence of 2007s last months, the Karachi 100 index was still up 40 per cent for the year. And its performance so far in 2008 compares favorably not just with Western markets, but with the Bombay Stock Exchanges Sensex index, which has dropped 23 per cent.

Still, the Pakistani markets performance hasnt been enough to tempt people to invest further. Were not ready yet to put in a lot more, says Slim Feriani of Progressive Asset Management, a London-based emerging markets fund that has invested $3.2 million in Pakistan. We just want to let the dust settle a bit.

The new governments first test is coming up. Last year, Pakistan announced plans to sell stakes in the National Bank of Pakistan and Habib Bank through global depositary receipts, or GDRs, on the London Stock Exchange. As political storm clouds gathered, the sales  expected to be for a 23 per cent stake in NBP and a 7.5 per cent stake in Habib Bank  didnt materialise.

Investors say they would also like to see more privatization in the oil sector, which also draws a large share of foreign capital. But unlike in banking, the Musharraf-led government made no promises to open up oil exploration to further private investment.

A bigger, potentially thornier task for policy makers still lies ahead. Pakistan is facing a large budget shortfall and a current-account deficit equivalent to 5.3 per cent of its gross domestic product.

Investors are asking if the new government, formed by parties that have promoted populist policies, can take the measures needed to avert an economic crisis. Lets not skirt around the issue that these guys have been in power in the past and theyve had a pretty bad track record in governance and also dealing with foreign investors, says Sakib Sherani, an economist with ABN Amro Bank in Pakistan.

In spite of the economic woes, some observers expect the Karachi market to gain 20 per cent to 25 per cent in 2008, in line with growth in corporate earnings. The expectations are based on the idea that some sectors of the economy, such as real estate, are undervalued, and on the continuing attractive valuation of Pakistani stocks. By some estimates, stocks in Pakistan have a historic average price-earnings ratio of 11.

Wall Street Journal calls Pakistan a cash magnet -DAWN - Business; April 04, 2008


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## Neo

*Pakistan lacks widespread social assistance plan: World Bank ​* 
FAISALABAD (April 04 2008): Pakistan does not have a widespread social assistance program that targets the poorest of the poor, said a World Bank report. According to a report on "World Food Prices", most Pakistani families consume the same kind of wheat, making it difficult to target poor people and any subsidy on wheat will thus be an untargeted subsidy.

Since a newly elected government has just come into power, it is imperative that it withstands pressure to act in ways that may not be efficient in addressing the needs of poor.

During a recent visit to Pakistan, the report mentioned that Praful Patel, World Bank Vice President for South Asia, said that high international prices for petroleum and food commodities are creating challenges for the Pakistan's economy. Patel discussed with Pakistani leaders' ways to protect the poor as domestic prices are adjusted.

Patel offered World Bank technical assistance to build upon international best practice in responding to the current situation. "Any adjustment will be painful," said Patel. "But there must be an appropriate safety net for the poor. The incoming government has requested our support, and we will help ensure there are smart subsidies to the poorest.

These must be well targeted and efficient programs, including cash transfers, where leakage is minimised. We know this can be done because we saw the excellent response from the government after the earthquake where affected families were provided relief and cash transfers quickly and effectively", WB report added.

In South Asia, which has the largest concentration of poor people in the world, WB report said that the increase in food prices is particularly damaging since food accounts for a substantial share of poor people's income. South Asian countries, however, have very few options available to deal with the challenge. WB experts advised that governments have to be careful that such measures do not end up hurting those they want to help.

World food prices have been increasing rapidly since 2006, and the rate of increase during 2007 had been much higher than average. According to the Food and Agriculture Organisation (FAO), overall food prices have increased by 75 percent in dollar terms since 2000. "Most countries in South Asia are net importers of food and have suffered severe terms of trade shocks of 1 percent of GDP," said Devarajan. The foreign exchange earnings and international purchasing power for these countries have also decreased.

In the past, South Asian governments have resorted to imposing price controls, which actually created food shortages that ultimately hurt the poor. "Imposing price controls benefits the middle-class families and the non-poor," said Devarajan. If food prices are controlled, it makes farmers less likely to produce crops to meet the increasing demand. This will have an even more adverse impact on food prices.

Devarajan also recommended against untargeted subsidies, which are mostly counter-productive as they put bigger stress on the budget because governments have to pay for the support. Borrowing from the central bank is one way of financing the subsidies, but this lead to higher inflation.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*July-February local refinery output stands at 6.3 million tons ​* 
KARACHI (April 04 2008): Total local refinery production stood at 6.3 million tonnes during eight months (Jul-Feb) of FY08 as against demand for 12.2 million tonnes for the same period. The difference was met through imports, which were recorded at 5.7 million tonnes during eight months period of FY08.

Amongst imports, two-heavy weights, furnace oil and diesel (HSD) constituted around 97 percent. Out of four major listed refiners', production growth from Pakistan Refinery Limited (PRL) witnessed an increase of 25 percent on year-on-year basis in the period under review.

"In last couple of months, local refiners' including Pak-Arab Refinery (Parco) and Attock Refinery (ARL) incurred some unexpected refinery shutdowns that lowered industry production numbers", said Farhan Mahmood, an analyst at JS Global Capital Limited.

However, lower base affect helped the overall industry to maintain positive growth momentum during the eight months period of FY08. Lower production last year was primarily due to 28 days of complete maintenance shutdown by the Pakistan Refinery Limited (PRL), which took place in August 2006, he added.

During the eight months period of FY08, local production of diesel (HSD) and furnace oil stood at 2.3 million tonnes and 2.2 million tonnes, as against demand for 5.3 million tonnes and 5 million tonnes, respectively. Owing to refining constraints in HSD and furnace oil, the import of HSD stood at 2.8 million tonnes, up by 12 percent on year-on-year basis, whereas, furnace oil imports were recorded at 2.7 million tonnes, up by 4 percent on yearly basis. With 16 percent share in HSD market and 29 percent share in furnace oil market, the PRL mainly contributed to this increase in both the products. However, production of diesel from Parco, Pakistan's largest fuel refinery, remained flat at 856,000 tonnes during the period.

In contrast to furnace oil and HSD, the demand for MS (petrol) and JP (jet fuels) is mainly met through indigenous production. Total petrol production during eight months of FY08 stood at 880,000 tonnes, up by 8 percent on yearly basis as compared to demand for 974,000 tonnes, up by 31 percent on yearly basis.

Owing to unexpected rise in demand for local petrol this year (due to decline in smuggled Iranian petrol), 127,000 tonnes of MS was imported during the period. The JP production, on the other hand, due to unexpected refinery shutdowns, went down by 9 percent to 702,000 tonnes. In order to meet the local JP demand of 735,000 tonnes during eight months period of FY08, 58,000 tonnes of jet fuel was also imported.

During the eight months of FY08, market share of the PRL increased to 20 percent from 17 percent last year. In contrast, market share of Parco and NRL dropped to 38 percent and 19 percent, respectively from the respective 39 percent and 20 percent last year. The ARL on the other hand, maintained its market share of 16 percent.

Average global gross refinery margins (GRMs-Singapore Crack) have declined by 15 percent to $6.6 per barrel during third quarter of FY08, versus an average of $7.8 per barrel in the second quarter of FY08.

"Although there is slight decline in global refinery margin on quarter-on-quarter basis, we might see better earnings for refineries in Pakistan during the third quarter of FY08 just similar to the first quarter of the same year fuel earnings where we saw average GRMs recorded at $6.7 per barrel", said Farhan Mahmood.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*KESC to install 220 megawatts plant from its own resources: Senate body informed ​*
KARACHI (April 04 2008): The Senate Functional Committee on Water and Power, led by Senator Mir Wali Mahmend Badeni visited KESC head office on Thursday and held a meeting which was attended by senior KESC, federal and Sindh governments officials. In the meeting, KESC Chief Executive Syed Mohammed Amjad presented a comparative statement of power supply .

The meeting was informed that the KESC is installing a 220 MW plant from its own resources while an agreement for setting up a 560 MW plant will soon be concluded. It was informed that the KESC has prepared its power supply plan up to 2013 so that dependence on Wapda could be reduced and done away with altogether gradually.

Senator Wali Mehmend Badeni supported the principled stand for enforcing 'power holiday' on various days. He urged Pepco and KESC officials concerned to solve the problem with a spirit of patriotism, and appreciated the efforts being made by the KESC.

In the meeting, the Committee members revieewed MNAs development schemes The meeting was told that under Khushhal Pakistan Programme, funds have been released for 18 schemes out of total 46 schemes and completed by KESC. It was informed that estimates for 261 schemes under Village Electrification Programme have been released regarding which the Sindh government's views were presentted. In this regard, a second meeting between the Sindh government and the KESC will be held on April 15 to discuss reduction in estimates of these schemes.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Nearly half of Pakistanis food insecure: WFP ​* 
Saturday, April 05, 2008

ISLAMABAD: Nearly half of Pakistans 160 million people are at risk of going short of food due to a surge in prices, the World Food Programme said on Friday.

The WFP survey covering the year to March showed the number of people deemed food insecure had risen 28 per cent to 77 million from 60 million in the previous year.

The WFP estimates that anyone consuming less than 2,350 calories per day is below the food security line.

Sahib Haq, an official with the WFPs Vulnerability Analysis & Mapping Unit in Pakistan, said food prices rose at least 35 per cent in the past year compared with an 18 per cent rise in minimum wages.

There is a very big gap between the increase in prices and increase in wages ... the purchasing power of the poor has gone down by almost 50 per cent, Haq said.

The latest findings comes a week after the World Bank urged Pakistan to make rapid adjustments and reforms to avert an economic crisis as it reels from the impact of high global prices for petroleum and food.

The price of wheat flour in January was between 24-25 rupees (38 US cents) per kg in three of Pakistans four provinces, compared with 15 rupees per kg in January 2007, the WFP said.

Prices have since moderated to around 17 rupees but are expected to shoot up 40 per cent or more in the coming months, according to grain industry officials.

There will be a big crisis, Haq said.

Wheat flour is used to make roti and naan, the flat unleavened breads that are a the central component of the Pakistani diet.

Pakistan consumes about 22 million tonnes of wheat a year.

Prices for rice, vegetables and cooking oil have also risen sharply, and the economic hardships faced by ordinary people played a big part in an election in February that resulted in President Pervez Musharrafs political allies being thrown out of government.

The new coalition government, which took power last month, raised the support price it pays farmers to buy wheat to ensure adequate supplies, but Haq said the move would result in sharply higher flour prices in months ahead.

The consumer price index, a key indicator of inflation, rose 11.25 per cent in February from a year ago, mainly due to food prices.

Due to the previous administrations reluctance to reduce subsidies for food and fuel, the government is saddled with a widening fiscal deficit. While wanting to alleviate the hardship of the poor, the new government will face some painful economic choices.

Nearly half of Pakistanis food insecure: WFP


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## Neo

*Textile exports fell due to energy crisis, riots: secretary ​* 
Saturday, April 05, 2008

KARACHI: Slowdown in Pakistans textile exports during the current fiscal is a result of energy crisis and violence that erupted in the wake of martyrdom of Benazir Bhutto in December 2007.

Federal Textile Secretary Zafar Mahmood stated this in reply to a query made by journalists at the inaugural of fifth Textile Asia 2008, an international textile & garment machinery show.

He added that owing to these reasons the textile exporters failed to deliver orders that they had received earlier from different countries causing a slowdown in textile export.

As a matter of record, the textile exports of country declined almost three per cent to $6,831,592 thousand in the first eight months of current fiscal from $7,037,395 thousand in the corresponding period of last fiscal, according to Federal Bureau of Statistics of Pakistan.

The exhibition is a four-day official event of Federal Ministry of Textile Industry, which would remain open till Monday, April 07, evening, at Karachi Expo Centre.

Around 132 exhibitors including 50 from Pakistan are displaying 500 brands of different companies and countries. Major exhibitors are from Italy, Germany, Switzerland, Spain, UK, India, Japan, China, Korea, Taiwan and Turkey.

Some 273 foreign delegates from 27 countries are visiting this event, which is being held on an area of 12,000 sq meters ay Expo. 

Federal Textile Secretary further said that the event was of great benefit to local textile players, as they required state-of-the-art machinery to make their business competitive at the regional level. And for that purpose they have to go nowhere. They can see and buy that innovative equipment at this exhibition, he added.

The reason behind production of low quality and quantity of cotton in the country was said to be the smuggled sowing seeds, he informed.

As far as the delay in Textile Policy is concerned it had been prepared at the end of Shaukat Aziz era. The interim minister did not announce it as well as it was not his job. Now, the newly installed government would unveil this policy very soon, Mahmood explained.

Textile exports fell due to energy crisis, riots: secretary


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## Neo

*Karachi gas demand to rise to 1.2bcf ​* 
Saturday, April 05, 2008

KARACHI: Sui Southern Gas Company (SSGC) projects that gas demand of Karachi will increase to 1.2 billion cubic feet by 2010 from the current 800mmcfd, said an SSGC press release on Friday.

Karachi is Pakistans biggest load centre, greater than Lahore, Gujranwala and Faisalabad combined, stated Azim Iqbal Siddiqui, Managing Director SSGC, while giving a presentation to the members of the Senate Functional Committee for Less Developed Areas here.

The Committee was led by Senator Mir Wali M Badani, who was accompanied by committee members Amjad Abbas and Hafiz Rasheed Ahmed.

Siddiqui informed the senators that in order to ensure efficient and uninterrupted supply of gas, the SSGC was putting together a system by placing additional lines. He pointed out that as part of gas infrastructure and rehabilitation projects in Balochistan, a gas sales agreement (GSA) was signed with Mari Gas Company Ltd (MGCL) in 2006 to receive 22 million cubic feet per day of gas from Zarghun South Gas Field. Under that accord, the SSGC will construct a 64km, 12-inch diameter pipeline from the field to the Quetta transmission network. The proposed project would be completed by December 2008.

He said that SSGC was laying several other important pipelines including an 18-inch diameter, 18km Abegum to Mach loopline, and an 18-inch diameter, 53km Dhadher to Abb-e-gum line. All of these will collectively benefit domestic customers in Balochistan.

The MD noted that in 2006-07, SSGC supplied gas to 210 towns and villages, of which 90 destinations were covered in Balochistan and 110 in Sindh. This, he added was a far cry from the situation that existed in 2000, when not a single town or village in Balochistan had gas connection. He said that SSGC, under its comprehensive 5-year plan has profoundly increased its gas supply to neglected areas in the past, which was a proof of its abiding commitment to the province.

In reply to a query from a senator, he said that in certain areas of Balochistan, SSGC has not been able to provide gas because the population was extremely dispersed. In such areas, he said that SSGC had proposed LPG air mix, whereby LPG could be transported through a satellite system through bowsers. Earlier, representatives of the Works and Services Department of the City District Govt Karachi and KWSB gave a presentation to the senators and the SSGC management, about the schemes completed by senators and MNAs under the Tameer-e-Watan Programme 2004-07.

Karachi gas demand to rise to 1.2bcf


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## Neo

*Pakistan, Mauritius to activate FTA in 18 months ​* 
Saturday, April 05, 2008

ISLAMABAD: Pakistan and Mauritius on Friday agreed to operationalise a free trade agreement between the two countries within 18 months to boost South-South trade.

Addressing a press conference at the Ministry of Commerce after the conclusion of a three-day 7th Joint Working Group (JWG) meeting, Anand Priyay Neewoor, the head of Mauritius delegation, said the issue of sensitive products would be settled once the FTA became operational between the two countries.

Anand said Pakistani business community could benefit from high per capita income of Mauritius by exporting goods and services. Also Pakistani traders could use Mauritius as a hub for neighbouring African countries having a combined population of more than 500 million, he added.

The JWG underlined that visa facilities for the business community and direct air links were crucial for the expansion of bilateral trade and investment, said an official statement. The JWG deliberated on the framework and modalities for bilateral cooperation in the fields of science and technology, fisheries and software development.

Pakistan government is considering financing an Urdu House project in Mauritius, which is estimated to cost Rs199 million. Project details have been prepared by the National Engineering Services of Pakistan (NESPAK).

The JWG noted that a Pakistani consortium had expressed its willingness to construct Jinnah Tower in Plaine Verte, Mauritius.

The meeting also reviewed progress on the implementation of the Preferential Trade Agreement (PTA), which came into force on November 30, 2007. Both sides expressed satisfaction that the PTA had started generating positive synergy among businesspeople of the two countries.

They agreed to further broaden the benefits of PTA by organising trade shows and market surveys. Both sides also agreed to fully highlight the PTA during Expo 2008 scheduled to take place in October in Karachi. The JWG reiterated the need for the PTA to culminate in the Free Trade Agreement (FTA) whereby mostly all products would be traded duty-free.

The FTA will go beyond trade in goods and encompass trade in services and trade-related investment.

Pakistan, Mauritius to activate FTA in 18 months


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## Neo

*Political instability and GST hinder PC growth rate ​* 
Saturday, April 05, 2008

KARACHI Pakistans PC/server market experienced a slowdown in 2007 with its annual growth rate declining to 9.6 per cent from 16.4 per cent recorded during the previous year, according to latest data released by Springboard Research.

As per Springboards Asian Emerging Countries Tracker report, Pakistan registered a shipment of 629,836 units of PCs and servers in 2007. In the last period, i.e. the 4th quarter of 2007, the market grew by 11 per cent year-on-year with 148,613 PC and server unit shipments.

The data also indicated that market slowdown was a result of increasing political unrest and instability in the country, along with the continuation of 15 per cent GST imposed by the government on IT goods and imports.

Although the GST imposed on IT goods hampered Pakistans overall PC/server sales; demand from large organisations in the telecom, banking and financial sectors, as well as the government and education sectors, helped drive growth during a difficult year, said Rehan Ghazi, Market Analyst at Springboard Research.

The home segment in the past few quarters has also witnessed an increase in PC procurement, particularly for notebooks, on account of rising consumer awareness fuelled by aggressive MNC marketing, Ghazi added.

Springboard further reported that among the application segments, the large enterprises held 27.4 per cent of total PC shipments, followed by the government and home segments. 

Among brand players, HP sustained its market leadership with 8.7 per cent share in Q4 2007, while Lenovo continued to witness a decline in its market share, registering a negative annual growth rate. Toshiba emerged as a strong contender in the portable segment in the fourth quarter with its 82.8 per cent year-on-year growth rate.

The notebook segment continued to drive Pakistans PC/Server market growth throughout 2007. It is believed that increased consumer demand and new marketing strategies from the MNCs will help the notebook segment to further lead market growth in 2008 and beyond.

Deep-seated issues such as political instability, the widening fiscal deficit and rising inflation rate are likely to dampen Pakistans PC/Server market growth in the near future. 

On the other hand, growing infrastructure investments and the governments positive outlook on Information and Communication Technology (ICT) implementation in the country are likely to favorably impact the market.

Given the current market conditions, the report predicts that the PC/Server market in Pakistan will experience a growth slowdown, especially in the first two quarters of 2008. However, if the new government withdraws the GST on IT products in its June 2008 budget as expected, than it is predicted that the market will record accelerated growth, noticeable especially in the second half of 2008.

The outlook remains particularly positive for portables, as Springboard expects the segment to register a Compound Annual growth Rate (CAGR) of 24.6 per cent until 2010.

Nevertheless, Pakistans political climate continues to play a major role in the countrys overall market performance.

Political instability and GST hinder PC growth rate


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## Neo

*French diplomat for enhancing Pak image ​* 
Saturday, April 05, 2008

KARACHI: French Commercial Counsellor Francis Widmer has stated Pakistan is a good market for South Asia and participation of French businessmen in local trade fairs will be very helpful to commercial ties between the two countries.

During a meeting with a delegation of the Karachi Chamber of Commerce and Industry comprising Muhammad Haroon Agar, Vice President, A Abdullah Zaki, Chairman and Muhammad Idrees, Co-chairman Fairs and Exhibitions, he said, we should enhance the positive image of Pakistan in general, particularly that of Karachi and increase trade ties between the two countries.

He said he would contact the Paris Chamber and the Lyon Chamber and ask them to disseminate information about KCCIs My Karachi exhibition and invite French business entities to the fair.

French diplomat for enhancing Pak image


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## Neo

*First textile policy to be announced soon: Zafar Mahmood​*
KARACHI: The first textile policy of the country for a period of five years would be unveiled by the newly elected government in coming days, said Zafar Mahmood, Federal Secretary, Ministry of Textile Industry here on Friday.

Previous government led by Prime Minister Shaukat Aziz, despite approving the first textile policy, failed to unveil it owing to ending of its constitutional tenure and now it would be announced by the present coalition government, he said while replying to queries of the representatives of the electronic and the print media after inaugurating the 5th Textile Asia 2008 International exhibition at Karachi Expo Center. 

He said previous caretaker government due to its limited nature of the assigned task, lacked required power to announce the much awaited unveiling of the policy which is expected to herald new era of development for the textile industry. 

According to him Pakistan is regarded as a major player of the region in the textile sector for its quality products with growing global demand, however, owing to multifarious reasons, its is unable to perform up to its full potential. 

Major deterrent factors includes paucity of water faced by the country, utilisation of quality and certified seeds for cotton growing, usage of pesticides to prevent the crop from falling prey to mealybug, American worms and boll worm besides Cotton Leaf Curl Virus (CLCV).

In response to a question he regarded stupendous increase in oil prices in the international market as one of the major deterrent factor which had adverse impact on the economy of the country in general and textile sector in particular. 

On account of increase in the oil prices, the cost of production in the textile sector surged sharply, discouraging foreign importers in the process. The Federal Secretary said holding of such exhibitions on regular basis would greatly benefit local buyers by providing them ample opportunity to avail easy opportunity to purchase state-of-the-art machineries within their country.

Replying to another question relating to decline in textile exports he attributed ongoing energy crisis and widespread violence in the country after the assassination of former premier, Benazir Bhutto as major causes, which contributed towards this problem. 

Other reasons include utilisation of smuggled Bio-technical cottonseeds in the country which led to the lower cotton yield. 

Earlier Zafar Mahmood, alongwith Nail Ersoy, Turkish Commercial Attaché and Dr Khursheed Nizam, President, Ecommerce Gateway inaugurated the exhibition.

A number of foreign delegates from China, Germany, India, Italy, Japan, Korea, Spain, Switzerland, Taiwan, Turkey, and UK were also present at the inauguration.

The Exhibition is covering 12,000 sqm where 132 foreign & domestic exhibitors are representing more than 500 international brands. Some 273 foreign Delegates from more than 27 countries are attending the Textile Asia Exhibition.

The exhibition encompasses all the major industries including textile machinery, garment machinery, weaving machinery, embroidery machinery, knitwear machinery and accessories.

Daily Times - Leading News Resource of Pakistan


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## Neo

Neo said:


> *French diplomat for enhancing Pak image ​*
> Saturday, April 05, 2008
> 
> KARACHI: French Commercial Counsellor Francis Widmer has stated Pakistan is a good market for South Asia and participation of French businessmen in local trade fairs will be very helpful to commercial ties between the two countries.
> 
> During a meeting with a delegation of the Karachi Chamber of Commerce and Industry comprising Muhammad Haroon Agar, Vice President, A Abdullah Zaki, Chairman and Muhammad Idrees, Co-chairman Fairs and Exhibitions, he said, we should enhance the positive image of Pakistan in general, particularly that of Karachi and increase trade ties between the two countries.
> 
> He said he would contact the Paris Chamber and the Lyon Chamber and ask them to disseminate information about KCCIs My Karachi exhibition and invite French business entities to the fair.
> 
> French diplomat for enhancing Pak image



*Pak-French trade ties should be increased​*
KARACHI: Pakistan is a good market and trade ties between French trade and business community with Karachi Chamber of Commerce and Industry (KCCI) will be increased, French commercial Counsellor, Francis Widmer said on Friday.

Talking to members of KCCI he said, We should enhance the positive image of Pakistan in general, particularly Karachi. He said KCCI is the renowned chamber of Pakistan, with prominent and matured industrialists and businessmen. He said, I am convinced that participation of French businessmen will be very helpful to the commercial ties between both the countries. Counselor said he would contact Paris Chamber and Lyon Chamber and ask them to disseminate the information of My Karachi Exhibition 2008 and invite French business entities in the exhibition.

Haroon Agar, vice president, KCCI said, this event is going to be held on 6 to 8 June 2008 at Karachi Expo Centre. Over the years since its initiation in 2004 the event My Karachi-Oasis of Harmony has created a tremendous enthusiasm among the exhibitors and visitors and registered a significant growth in terms of participants, sales and promotion of product and services. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan-Malaysia FTA in final stages​*
KARACHI: Government is working on Pakistan-Malaysia Free Trade Agreement (FTA) Technical Support Project to exploit the potential at the optimum level under this arrangement.

According to officials, Foreign Trade Institute of Pakistan (FTIP) has been carrying out this task, which after finalisation would be submitted to Ministry of Commerce (MoC) for final approval by April 15, 2008.

FTIP has also sought assistance from WTO Cell of Trade Development Authority of Pakistan (TDAP) for finalising this project. It is pertinent to mention that WTO Cell is also working on Pak-Malaysia FTA and in currently in the process of getting inputs from industrys people to benefit from the market access to Far East Asia country. Pak-Malaysia FTA came into effectiv from 1st January of this year. Under Technical Support Project, Pak-Malaysia FTA communication strategy will be developed and implemented as well as export promotion programs would also be devised for the industry people to benefit from the enormous potential to export Malaysia.

Export promotion programmes envisages detail on various sectors and development of general and sector specific promotional activities. Besides FTIP will also issue six-monthly Pak-Malaysia FTA review.

Publication of handbook on FTA between the two countries highlighting opportunities & challenges for Pak exports to Malaysia will also be part of this project.

According to estimates of government and private sector, total indicative export potential for Pakistan to Malaysia is around $1.17 billion per annum against the present export volume of $54 million. The benefit given in the form of concessions under FTA can be materialised to achieve the envisaged potential provided tangible efforts in terms of competency level and quality of products is ensured to the requirements of Malaysian buyers, officials said. They also believed that tapping the indicative potential needs to improve the base of production, quality and competitiveness of their products through enhanced productivity.

Daily Times - Leading News Resource of Pakistan


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## Neo

*PC recommends Rs 1.795bn in PSDP for construction sector​*
ISLAMABAD: The Physical Planning and Housing (PP&H) sector of the planning commission has recommended Rs 1.795 billion for Public Sector Development Programme (PSDP) for the year 2008-09.

The above amount was recommended for total 64 constructions related projects (36 ongoing projects and 28 new approved projects). There are 27 other projects for which the PP&H has not recommended any allocations in PSDP for the year 2008-09. 

Officials in the planning commission told Daily Times here on Friday that there were 61 ongoing construction related projects, 30 new approved projects and 9 new unapproved projects. The sum total projects is 91. 

In total 61 ongoing projects, the PP&H has recommended Rs1.582 billion for 36 projects. Over all demand for these 61 ongoing projects is Rs 2.988 billion in PSDP for the year 2008-09. For 30 new approved projects, the PP&H has recommended Rs 213 million for 28 projects. Total demand for these 30 projects was Rs 503 million. 

The PP&H has not made any recommendation for new unapproved nine projects. However, for these new projects, the demand is Rs 729 million in the PSDP for next fiscal year. 

Explaining details of the over all construction related projects, the officials said the estimated cost for 61 ongoing projects are Rs 7.728 billion. Actual expenditures on these projects till June 2007 were Rs 2.646 billion. Total allocation for these 61 projects in 2007-08 was Rs 1.426 billion. 

About 30 new approved housing and works related projects, the officials said total allocation was Rs 597 million and till June 2007 only Rs 3.303 million had been spent. However, for these projects no allocation has been made in the PSDP for year 2007-08, so there was no question of expenses on these projects in the current fiscal year. For 2008-09 PSDP, the net demand for these 30 new approved projects is Rs 503.425 million and the PP&H has recommended Rs 213.769 million for PSDP. 

Total cost for nine unapproved projects is Rs 1.882 billion and the demand is Rs 729.390 million only. For these projects the PP&H has not made any recommendations in the PSDP. 

The government deferred some projects that failed to start by January 2008. These projects were not scraped but deferred due to due to some financial constraints. They said there was no cut in current year PSDP. 

All ongoing projects would be financed as per requirements and assured that energy related projects would be fully financed and will be provided more funds if demanded. 

However, projects with slow moving progress would be financed according to their progress, they maintained.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Conflict resolution to boost Indo-Pak trade​*
LAHORE: Peace, tranquility and resolution of all outstanding political issues are prerequisite to boost up the mutual trade between Pakistan and India. 

This was the consensus developed at a meeting between a delegation of former Ambassadors of India and Pakistan. 

The head of the delegation, former Indian Ambassador to Pakistan, Mr Ishrat Aziz, said that all issues would be solved if both the Pakistan and India have strong economic ties.

He also said that the trade relations are the best Confidence Building Measures (CBMs) unless and until both Pakistan and India have strong economic ties, it is near to impossible for both the countries to have right place in the globalised world. Therefore, the trade between Pakistan and India should be freed from all shackles.

The former Indian Ambassador said that the private sectors of the two countries should come forward and convince their respective governments to take steps for bringing the business communities further closer.

He said that at the moment when the Indian government is making moves to convert the country into a global manufacturing hub, efforts are afoot to expedite business with neighboring countries including Pakistan.

Ishrat Aziz was of the view that exchange of trade delegations and joint exhibitions were among the most modern techniques to increase bilateral businesses so the LCCI should arrange a delegation to India so that the Pakistani businessmen could join hands with their Indian counterparts. He said that with a population of 1.1 billion people, India has a lot of economic opportunities for Pakistani businessmen.

Speaking on the occasion, the LCCI President Mohammad Ali Mian, appreciated both the governments of Pakistan and India for allowing cross-border movements of trucks and suggested that time allowed for the trucks movement is very short so there should be some special space so that the drivers of each side could take some rest and bring their respective consignment the other day.

He called for early solution of all outstanding issues saying that because of the decade old issues the trade between India and Pakistan has remained stunted. India and Pakistan together have a population of 1.295 billion (Indian 1.13 billion and Pakistani 165 million). Their total international trade amounts to $347.55 billion, out of which the trade between our two countries amounts to only $1.095 billion, which works out to 0.315 percent of their total international trade.

He said that while Pakistans imports from India through proper channels had increased from $382.2 million to $802 million during the last 3 years, Pakistans exports to India had increased from $93.8 million to $293.3 million. Pakistan has always experienced a deficit balance of trade with India, which had increased from $288.4 million in 2003-04 to $508.7 million in 2005-06. The deficit would increase manifold if the trade through third countries such as Dubai and Singapore is taken into account.

He said that while the businessmen of the two countries are interested to gain from the opportunities of trade, an unfriendly visa policy of the two countries is hampering the businessmen of the two countries to visit each others market and negotiate trade deals. 

He said Pakistans access to Indian markets is also denied due to a number of Indian tariff and non-tariff barriers and problems of clearance at Wagah Border is restricting flow of trade between the two countries. 

Mohammad Ali Mian said that the talks between the Commerce Secretaries of the two countries in July-August, 2007 have raised hopes that the trade between our two countries can increase to 10 billion dollars in the next three years. 

He hoped that Joint Study Group of the two countries would help develop a policy framework to maximise benefits of geographical proximity, identify opportunities for enhancing economic cooperation and create a framework to boost trade in goods including such as custom cooperation, standards and certification system. 

He said that once the outstanding issues between the two countries are resolved and the confidence is restored, Indian companies can also come forward by entering into joint ventures in the fields of software development, telecommunication, information technology, computer engineering, bio-technology, light engineering, foundry machinery items, metallurgy, precious and semi precious gemstones and petrochemicals. Joint ventures will increase interest in each others countries and provide opportunity to utilise potentials available in India and Pakistan.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Economy needs a damage control programme​*
** POL prices and power tariff need further upward revision​*
ISLAMABAD: Almost all the major economic targets fixed for the current fiscal year are going to be missed and the country needs a Damage Control Programme leading to economic recovery in the short term and consolidation in the medium term, this has been suggested to the economic managers of the new coalition government. 

In this regard, some tough decision would need to be taken including adjusting POL prices according to the international market requirements, power tariff adjustment and strong administrative measures to correct supply side constraints leading to easy availability of food items on affordable prices, officials said. 

The damage done to the economy during the last 14 months of the last government would take at least two fiscal years to recover and there would be limited options for the new elected government to please the nation because of nil fiscal space, official sources told Daily Times on Friday.

The main challenges before the newly sworn in coalition government are meeting budget deficit, managing external account deficit and having effective control over the inflation which is badly effecting common man of the country, the official added. 

The budget deficit is likely to reach at 6.5 percent of the GDP and would cross over Rs 650 billion by the end of current fiscal year 2007-08 as compared to the budgetary target, limiting budget deficit to 4 percent of the GDP or Rs 399 billion by June 30, 2008, said the official. Declining exports, rising imports and sky rocketing oil prices in the international market would further increase the external account deficit. Increase in Wheat procurement price and two-time increase in POL prices along with increase in power tariff would definitely increase the inflation in the country. 

Over and above the budgetary allocations, allowing un-bearable POL subsidies, electricity tariff subsidy, food and non-food subsidies were announced during the budget to win the support of the general public for the general elections 2008. Delay in the release of US assistance of $800 million committed by the Bush administration for the current fiscal year 2007-08 and additional expenditures incurred to control the law and order situation as well as non-development expenditures worsened the economic balance of the country during the last 14 months of the last government, the official explained. 

The government had allocated in the Budget 2007-08 Rs 15 billion for providing subsidy on POL prices so that consumers are saved from adverse impact of rising oil prices in the international market. 

However, the situation on ground is totally different and federal government has provided subsidy to the tune of over Rs 80 billion for subsidising POL prices. During March-June period of this fiscal year the subsidy for POL prices was estimated at Rs 56 billion and two time increase in the POL prices has reduced the burden and volume of subsidy from 56 billion to Rs 30.7 billion for March June period of this fiscal year. 

Officials are of the view that oil prices in the international market witnessed all time high price of $111 per barrel and if the POL prices are not increased till June 30, 2008 the government would have to bear further Rs 48 billion to Rs 50 billion hit on budget and national exchequer would have to be burdened with borrowing from local banks or non-banking instruments, the official maintained. 

In the case of Power tariff, the official informed that the government had allocated Rs 25 billion for providing subsidy on power tariff to the consumers across the country. However, on the ground situation reveals that power tariff subsidy for this fiscal year (July-June) has been estimated at Rs 67 billion at ministry of finance. 

The government has provided subsidy to the tune of Rs 39.8 billion on power tariff during July-February period of this fiscal year. The 9 percent increase in power tariff announced recently would reduce the volume of subsidy by Rs 9.8 billion. The volume of the power tariff subsidy has been reduced from Rs 67 billion to Rs 572 billion for the current fiscal year. If the new government decides not to increase power tariff further till end June 2008 the burden of power tariff subsidy of Rs 57.2 billion would continue to remain on national exchequer.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Inflation all time high ​* 
ISLAMABAD (April 05 2008): The inflation measured through SPI has gone up to an all time high mark of 19.83 percent on the week ended April 3 as compared to corresponding period of last year due to continuous rise in the prices of essential commodities.

The data released by the Federal Bureau of Statistics (FBS) on Friday showed that SPI based inflation, since adjustment of oil prices last month, surged to 19.83 percent on April 4 from 12.16 percent on February 12, making life harder for the low-income group.

The purchasing power of low-income group has almost squeezed as a result of sky rocketing prices of essential commodities, particularly the food items. The State Bank of Pakistan (SBP) pursuing a tight monetary policy to curb the inflation anticipated to persist and magnify in the months ahead.

It is to be seen as how the new government will tackle the situation. The major reasons for high inflation are said to be global increase in food prices, demand-supply issues and excessive borrowing by the government.

Weekly data showed that dearness was 21.44 percent for families grouped in Rs 3000 monthly income, 21.17 percent for Rs 3001 to Rs 5000 income, 20.35 percent for Rs 5001 to Rs 12000 and 18.20 percent for families with income of Rs 12000.

According to FBS, during the week under review, the per kilogram price of wheat flour average quality increased from Rs 17.25 to Rs 18.50, egg (farm) dozen from Rs 42.89 to Rs 44.47, wheat average quality from Rs 16.78 per kilogram to Rs 17.32, cooked dal plate from Rs 21.67 to Rs 22.11, red chillies from Rs 159.72 to Rs 162.85 per kg, milk fresh Rs 31.46 to Rs 31.93 per liter, potatoes from Rs 11.13 to Rs 11.29 per kg, gram pulse washed Rs 44.13 to Rs 44.67 pr kg, rice irri-6 Rs 28.40 to Rs 28.72 per kg, Tea (prepared) Rs 7.24 to Rs 7.31, curd Rs 36.97 to Rs 37.33, voil printed per meter Rs 41.18 to Rs 41.52, 0.83, lawn Rs 85.94 to Rs 86.53, cooked beef plate Rs 34.52 to Rs 34.74, rice basmati broken per kg.Rs 38.81 to Rs 38.99, 0.46, shirting per meter, Rs 71.94 to Rs 72.24, 0.42; masoor pulse washed per kg Rs 81.46 to Rs 81.76, 0.37; coarse latha per meter Rs 40.05 to Rs 40.19, electricity bulb 60 watts Rs 12.94 to Rs 12.97, bananas Rs 34.57, mash pulse washed from Rs 72.29 per kg to Rs 72.41, electricity charges 1-100 per units from Rs 2.65 to Rs 2.92 and Chappal Spng. (Bata) per pair 99 to 109.

The prices of 23 essential commodities increased during the week while 11 declined from the list of 53 essential commodities used to measure weekly inflation. The SPI bulletin, based on data of 53 items collected from 17 urban centers, showed no let up for the poor from price hike, who have to spend more money to buy the same good every week.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan's foreign exchange reserves dip to $13.275 billion ​*
KARACHI (April 05 2008): Foreign reserves fell by $224 million to $13.275 billion in the week that ended on March 29, the central bank said on Friday. Reserves held by the State Bank of Pakistan (SBP) fell to $11.100 billion from $11.356 billion a week earlier, while those held by commercial banks rose to $2.175 billion from $2.143 billion.

Foreign exchange reserves hit an all-time high of $16.486 billion on October 31. 2007 but then plummeted, mainly because of outflows from the stock market after President Pervez Musharraf imposed emergency on November 3.

The emergency was lifted on December 15, but foreign investors remained cautious after the assassination of Benazir Bhutto on December 27. However, after a relatively smooth election last month, foreign exchange inflows rose in the week that ended on March 8.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Sino-Pak trade through Sust border to resume from May 1 ​* 
ISLAMABAD (April 05 2008): The bilateral trade between Pakistan and China would be resumed from May 1 through Sust dry port for which the Federal Board of Revenue (FBR) has finalised arrangements for electronic exchange of import/export data between the customs authorities of both the countries.

Sources told Business Recorder on Friday that the imports from China through Sust border was not taking place due to blockage of route due to snowfall. The FBR is making necessary arrangements to install an "information exchange portal" for online connectivity with the Chinese customs.

It would be a web-based customs data exchange facility for the customs officials of both the countries. It is worth mentioning that the board wanted to control massive under-invoicing of Chinese goods and improve revenue collection from the Sust customs station.

According to sources, the FBR has obtained data from Urumchi Customs for comparing the import data available with the Chinese customs with the database of Pakistani tax authorities. It has revealed massive under-invoicing of imported goods from China. The FBR is co-ordinating with the Urumchi Customs to control the menace of under-invoicing.

The Chinese government has agreed to provide prior information about the details of containers to be transported through Sust customs station into Pakistan. Pakistan would get detailed information about the containers before moving from China so that the authorities will be able to obtain data in advance to avoid physical examination of each and every container passing through Sust.

Sources added that bilateral co-operation between Pakistan and China would cover prevention, investigation and combating of customs offences in valuation, classification, importation and exportation of goods etc. It lays down a framework for exchange of information on trafficking of illicit or contraband goods, and provides for mutual investigation in such matters.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Minister for expeditious oil and gas exploration ​*
ISLAMABAD (April 05 2008): Minister for Petroleum and Natural Resources, Khawaja Muhammad Asif has directed the ministry to expedite the Oil and Gas exploration in the country to meet the challenges of soaring international oil prices and reduction of oil import bill.

The minister expressed these views while taking a briefing from the senior official of the ministry. Secretary Petroleum and Natural Resources, Farrakh Qayum briefed the minister about organisation, functions and on-going projects of the ministry.

The minister was pleased to know that Pakistan has a high success rate with regard to oil and gas exploration. Khawaja Asif also took note of the huge potential of development of mineral wealth ie coal and copper. He took special interest in all the projects aimed at developing mineral in the country.

The minister said the energy is the life line of the economy and stated that Ministry of Petroleum and Natural Resources would make consorted efforts for the development of energy resources in the country. He welcomed the indication that Indian petroleum minister is likely to visit Pakistan to discuss matters of mutual interest.

The meeting was also attended by Addl. Secretary, Director General (Mineral), Director General, (Oil), Director General (Gas), Director General (Admin), Director General (Hydrocarbon Development), Managing Director Inter State Gas System and other senior officials.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'SSGC provides 800 mmcfd gas to Karachi' ​*
KARACHI (April 05 2008): "Sui Southern Gas Company (SSGC) provides nearly 800 mmcfd of gas to Karachi, making the city Pakistan's biggest load centre, greater than Lahore, Gujranwala and Faisalabad combined, and the figure is projected to increase to 1.2 bcf by 2010."

This was stated by Azim Iqbal Siddiqui, Managing Director SSGC while giving a presentation to the members of the Senate Functional Committee for Less Developed Areas here at head office of the company on Friday. The Committee was led by Senator Mir Wali M. Badani, who was accompanied by the committee members Amjad Abbas and Hafiz Rasheed Ahmed.

Siddiqui was joined by members of his senior management including Captain Mohammad Arif (Retd), Senior General Manager (Customer Services) and Arbab Mohammad Hashim, Senior General Manager (Distribution). Siddiqui informed the senators that in order to ensure an efficient and uninterrupted supply of gas, SSGC was putting together a system by placing additional lines.

He pointed out that as part of the gas infrastructure and rehabilitation projects in Balochistan, a gas sales agreement (GSA) was signed with Mari Gas Company Limited (MGCL) in 2006 to receive 22 mmcfd of gas from Zarghun South Gas Field whereby SSGC will construct a 64 km, 12 dia pipeline from the field to Quetta pipeline transmission network.

He said that the proposed project would be completed by December 2008. He said that SSGC was laying down several other important pipelines including 18" dia, 18 Km Abegum-Mach loopline and 18" dia 53 km Dhadher to Abb-e-gum lines, all of which will collectively benefit the domestic customers in Balochistan.

The MD SSGC pointed out that in 2006-07, SSGC supplied gas to 210 towns and villages, of which 90 destinations were covered in Balochistan and 110 in Sindh which was a far cry from the situation that existed in 2000 when not a single town or villages in Balochistan had gas connection.

Siddiqui said that SSGC under its comprehensive 5-year plan has sharply increased its gas supply to neglected areas in the past which was a proof of its abiding commitment to the province. He said that in certain areas of Balochistan, SSGC has not been able to provide gas because the population was hugely dispersed. In such areas, the MD said that SSGC had proposed LPG air mix whereby LPG could be transported through a satellite system through bousers.

The senators appreciated SSGC's role the expansion of transmission and distribution network of gas in the neglected areas of Sindh and Balochistan. Senator Mir Wali M. Badani identified certain areas of Balochistan such as Noshki and Loralai where gas had not yet reached.

The MD assured them that as soon as SSGC received funds, it would go full-throttle into completing the projects in these deprived areas. Earlier, representatives of the Works and Services Department of the City District Government Karachi and Karachi Water and Sewerage Board (KW&SB) gave a presentation to the senators and the SSGC management about the schemes completed by senators and MNAs under the Tameer-e-Watan Programme 2004-07.-PR

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan searches solution for power shortages ​*
ISLAMABAD (April 05 2008): Pakistan's electricity production was nearly 3,000 megawatts short of demand in March. The country made up the difference by turning off lights, and everything else, for several hours a day. Prime Minister Yousuf Raza Gillani after being sworn in March 25 put the "energy crisis" up with terrorism as a top issue to address during his first 100 days in office.

But things will get worse before they get better, Gillani warned, with power outages increasing through June when air conditioners are turned on to beat the heat.

Pakistan is experiencing these shortages despite its miserly electricity use with per-capita consumption of 546 kilowatt hours per year, a fifth of the global average of 2,586 kilowatt hours, according to statistics from the seven-nation South Asia Association for Regional Co-operation. The problem stems from the fact that Pakistan has failed to build new power plants to keep up with the demand for electricity.

As a result, the poor who are connected to the grid are going without during the nearly four hours of outages that are occurring per day this month. In wealthier neighbourhoods, however, the streets come alive with the sounds of generators.

The power outages have increased generator sales - and their price tags - but have also cooled sales of fans, air conditioners and other appliances with consumers asking why have such devices without the electricity to run them. A graver concern for the economy is the outages' effects on the industrial sector, which is Pakistan's biggest consumer of electricity, and factories having to shut down during the outages.

Police have also reported increased crime during the blackouts in bigger cities. The blackouts have shed light on many problems, but just as many solutions are on offer. Of Pakistan's 19,500 megawatts of production capacity, a little more than 60 per cent is from imported oil and domestic natural gas power plants. Hydropower generated from the country's two major dams accounts for about 30 per cent, and its one nuclear power plant produces less than 5 per cent.

Coal plant production is even less, but that could change if Pakistan exploits what has been estimated as the world's third-largest known coal reserves in the south-eastern part of the country. "The answer lies in using local coal," Tahir Basharat Cheema with DG Energy Management said in a recent televised debate about the energy crisis.

Cheema suggested the government's Water and Power Development Authority develop coal generation, adding Pakistan cannot "solely depend on the private sector, [which] wants everything developed" for them.

More nuclear plants and dams are other options often put forward while others tout solar and wind power. Ejaz Ahmad, deputy director of the Pakistani branch of the World Wide Fund For Nature, or WWF, said a big part of the answer is blowing in the wind. "It is practical for cost reasons as well as environmental," he told Deutsche Presse-Agentur dpa.

With power needed immediately, wind farms look good because they are relatively fast to install whereas dams and nuclear power plants take five to six years to complete and thermal power plants a couple of years at least, he said. The WWF erected three 500-watt windmills in a rural area of the south-western province of Sindh. Each windmill cost about 1,000 dollars, including installation, and provides electricity to homes that never had it before. "It's a small project to show wind works," Amad said. Real small - the country would need at least 6 million more of those windmills to meet the electricity shortfalls it is experiencing in early April.

The windmills are in the region of Pakistan's coal reserves, which Amad warned would be a political as well as environmental disaster if they are mined. "The winds blow to India, so the pollution would blow into India, and that would cause political problems," he said. Harvest that wind instead, he suggested.

Professor Irfan Younas with the Institute of Information Technology in Rawalpindi agreed wind should play a big part of solving Pakistan's energy shortages, adding that comprehensive wind maps have already been researched in the country.

"Karachi's energy problem could be answered with wind energy," he said of Pakistan's biggest city of about 15 million people on the southern coast, where there are consistent breezes all year. Cost-effectiveness attracted Younas to both wind and solar energy, he said, but added that in the long-term, Pakistan should also build more nuclear plants and dams. "There is money to be made, no doubt about it," he said. "We need people to come and invest in independent power producers here." "We are at the point that people really need to act," he said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Government urged to build dams ​* 
SIALKOT (April 05 2008): People belonging to different walks of life have urged the government to construct new dams for overcoming the electricity crisis and averting threats of drought in the country.

The President of Sialkot Chamber of Commerce and Industry (SCCI), Dr Khurram Khawaja, while talking to media here on Friday said that construction of dams is a must to meet the future needs of water and power.

He said that the government should concentrate on construction maximum number of big and small dams for meeting future needs of water and power. He also called upon the government to take steps for introducing solar energy for providing cheap electricity to the masses.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*China Mobile being launched today​*
ISLAMABAD, April 4: Chief Executive of China Mobile Wang Jianzhou announced its rollout, with a massive investment exceeding $1.5 billion and introducing attractive packages when it is officially launched on Saturday evening.

Mr Wang Jianzhou, who has specially flown into the capital for the launch, told Dawn on Friday that China Mobile was going to further heat up the already supercharged cell-phone industry by pumping another $800 million into Pakistans telecom sector.

China Mobile has injected more than $800 million into Pakistans telecom sector after a landmark takeover of Paktels operations late February 2007.

Shrugging off concerns about the countrys mobile sector already dominated by big operators, the China Mobile CE saw a considerable potential in the cell-phone market without getting into a low-rate war.

CM intends to change the business landscape by taking control in rural areas which Mr Wang Jianzhou considered as his companys specialty.

Elaborating on his market penetration strategies, Mr Jianzhou suggested introduction of more value-added services, like mobile TV, mobile music, news, billing for subscribers specially the young population.

Expressing confidence in Pakistani mobile communications market, Mr Jianzhou said: Based on our experiences in China, we have good understanding in emerging markets. We are very successful in fast growing economies and we would like to apply those practices here.

Huge subscriber base and expertise was what made China Mobile different, Mr Jianjhou believed.

We are already serving a 380 million subscriber base and can get good price when we roll out. And because of that we put our Pakistan procurement as part of CM centralised procurement programme and so it will lower our capital expenditure.

As investors, the target was to make profit, he said, and hoped to get a better margin. We will be investing another $800 million and hope we can get preferential policy as foreign investors.

Describing future plans of China Mobile, the Companys CE said, Pakistan is the right choice for international expansion and we will continue to improve and strengthen our network. We have 2,500 base stations today compared with the 900 when we took over last year. And our future investments will depend on our financial performances.

China Mobile being launched today -DAWN - Business; April 05, 2008


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## Neo

*KSE at all time high despite selling by foreign funds ​* 
Sunday, April 06, 2008

KARACHI: Despite of some grave concerns in the local economy and foreign portfolio investors offloading throughout the week, the Karachi bourse closed at the ever-highest peak level this week.

The KSE-100 share Index concluded just 28 points short of 15,500 points the next psychological level i.e. at 15,472 points new record level - gaining another 204 points or 1.34 per cent on weekly basis.

The free-float market capitalisation based 30-Index rose by 156 points or 0.83 per cent to conclude at 18,860 points on week-on-week basis.

Despite foreigners being net sellers at local bourses, the local institutions and retailers supported the market during the week. Smooth transition of new cabinet and comparatively better law and order situation ensured that market remained less volatile during the outgoing week, said Farhan Mahmood of JS Research.

The offshore investors cumulatively withdrew more than $29 million from the local bourses this week, according to NCCPL.

Positive trends prevailed at the Karachi stocks market throughout the week. The Analysts said that foreign portfolio investors successfully shifted their risk to the local financial institutions and retail investors, as they had invested aggressively and found net buyers last week, but this week they sold-off a part of their holding at the historical high burning levels.

The interesting thing that analysts highlighted was calling Pakistan a cash magnet by Wall Street Journal while foreign investors were themselves net sellers here.

On the other hand, the international capital markets showed strong recovery hoping the worst was over for sub-prime mortgage credit woes, said another market analyst Ahsan Mehanti.

Farhan Mahmood of JS Research observed, Cements, on the back of record dispatches in Mar 2008, and fertilizers, on account of higher international DAP prices, captured the top slot during the week as they went up by 5.1 per cent and 4.5 per cent, respectively.

Within these sectors, selective buying was observed in scrips like Lucky, on the back of its higher export sales, and Engro on news regarding its new investment in Algeria and higher DAP prices. As a result, these two posted weekly return of 3.8 per cent and 4.5 per cent, respectively.

Interest in banking remained low mainly due to low foreign interest while OMCs, especially PSO, under performed on rumours that Castrol had terminated lube agreement with PSO. The rumor, however, was proved wrong on Friday, he added.

Average weekly volume in the ready market stood at 286 million shares, recording a rise of 23 per cent on week-on-week basis as compared with 233 million share of last week. While average daily turnover in the futures market at 58.2 million shares went down by 35 per cent.

The overall market capitalisation surged by Rs70 billion to Rs4.739 trillion. CFS investment remained near its cap and stood at Rs54.5 billionn while CFS rate declined by 16 basis points to 11.9 per cent, JS reported.

Weekly Movement in Blue Chips

Symbols Open on Close on Difference 

Monday (Rs.) Friday (Rs.) (Rs.)

DGKC 113.9 115 1.1

ENGRO 325.7 340.2 14.5

FFBL 45.4 45.9 0.5

HBL 277.25 279 1.75

LUCK 138.75 144.05 5.3

MCB 421.7 413.5 -8.2

NBP 235.9 237.95 2.05

OGDCL 134.85 137.25 2.4

POL 370.25 370.1 -0.15

PPL 264.15 264.65 0.5

PSO 529.9 517.95 -11.95

PTCL 46 48.05 2.05

Weekly Movement in Blue Chips

Symbols Open on Close on Difference 

Monday (Rs.) Friday (Rs.) (Rs.)

DGKC 113.9 115 1.1

ENGRO 325.7 340.2 14.5

FFBL 45.4 45.9 0.5

HBL 277.25 279 1.75

LUCK 138.75 144.05 5.3

MCB 421.7 413.5 -8.2

NBP 235.9 237.95 2.05

OGDCL 134.85 137.25 2.4

POL 370.25 370.1 -0.15

PPL 264.15 264.65 0.5

PSO 529.9 517.95 -11.95

PTCL 46 48.05 2.05

KSE at all time high despite selling by foreign funds


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## Neo

*Govt to consult businessmen on economic policies: Gilani ​* 
Sunday, April 06, 2008

KARACHI: Prime Minister Syed Yousaf Raza Gilani has said that the government is aware of the problems of businessmen and will try to solve them on priority basis.

At a meeting held at the Governors House Sindh the other day Yousaf Raza Gilani assured a delegation of the Korangi Association of Trade and Industry (KATI), that he has directed relevant ministries to stay in contact with the business community to solve their problems.

Finance Minister Ishaq Dar and Commerce Minister Khaqan Abbasi will hold meetings with the business community next week as part of consultation for preparing economic policies in the country. Sindh Governor Dr. Ishrat-ul- Ebad Khan and Caretaker Chief Minister Justice (Rtd) Abdul Qadir Halepota were also present on the occasion. Former president FPCCI and founder of KATI, S.M. Muneer was leading the delegation which included President Fazle Jamil, Mohammad Haseeb Khan, Mian Zahid Husain and Farhan-ur- Rehman.

The Prime Minister said that the government wants to strengthen the economy with the business community assistance. He said Karachi was the hub of industrial and commercial activities and the government wants it to remain peaceful. Political stability brings economic stability, he siad.

The KATI delegation assured the Prime Minister of their full support and hoped that industrial growth would increase under the new government.

Govt to consult businessmen on economic policies: Gilani


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*Wheat crop estimates lowered to 22m tonnes ​*
ISLAMABAD: Keeping in view the finding of crop assessment committees, the government has lowered the wheat crop production estimates from 24 million tonnes to over 22 million tonnes for the current year 2007-08. 

Officials in the ministry of Food, Agriculture and Livestock (MINFAL) told Daily Times here on Saturday that multiple factors were responsible for lower wheat production estimates including late sowing, a fall in the area planted with wheat, a shortage of irrigation water and rising fertiliser prices and many others. 

Sowing should ideally start around 20 November but almost 60 percent of it was done in late December, a representatives of farmers association informed. Officials in the ministry said there has been 2.6 percent less cultivation of wheat against a target area of 8.57 million hectares, because farmers have delayed cutting sugarcane in fields they might have planted with wheat, because of a sugar price dispute.

Another misfortune with the government was that wheat production has missed 2 percent production area. Wheat was usually growing in three areas, original wheat growing areas, vicinity obtained from rice and cotton productions. The third pick of cotton delayed and as a result it made 2 percent less areas for wheat production, the officials explained. Such shortage in areas for wheat production would definitely put the government in trouble to achieve the earlier set target of 24 million tonnes.

The growers have used lower DAP fertilizer at the time of sowing due to higher prices. The DAP prices remained Rs 1300 to Rs 1400 per 50 kg bag at the time of sowing while last year its price remained within the range of Rs 850 to Rs 900 per 50 kg bag. At present the DAP price reached to Rs 3000 per 50 kg bag. Lower fertilizer used is also responsible for lower wheat production. The fertilizer application till December 2007 was 36 per cent less than the last year wheat crop season, the officials maintained.

Daily Times - Leading News Resource of Pakistan


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*Govt plans to add 2,200MW power by year-end​*
ISLAMABAD: Prime Minister Yousaf Raza Gillani has approved a plan of adding 2,200MW power to the current power generation system this year to overcome the power shortages crisis in the country, a senior official told Daily Times on Saturday.

Sources said that Pakistan Electric Power Company (PEPCO) authorities have given briefing to the Prime Minister about the plan of adding 2,200MW power to the current power system in one year. Premier has directed the concerned authorities to carry out the plan. Prime Minister has also directed the public sector also to go side by side with the private sector for setting up power plants so that the dependence on the private sector could be minimised. 

Sources said that PEPCO has informed the Prime Minister that 1100MW power would be added to the current power system by rental plants during this calendar year. PEPCO also informed that 450MW by rental plants would be added by June 2008 and the rest power would be added by December 2008. Prime Minister was informed that the capacity of current existing power generation system would be enhanced by 309 MW during December 2008.

Sources said that two Independent Power Producers (IPPS) that include Saif and Orient would add around 500MW power to the current power system. Sources said that Saif would start providing power by July whereas Orient would supply power by October 2008. Sources said that the remaining 600MW would be achieved by the power plants on fast track basis.

At present the country is facing a power shortfall of 1500MW to 2000MW. The total Power generation stands at 10,000MW against demand of 12500MW. The power crisis emerged as the private sector has not increased its power generation capacity. 

Official said that for the first time, public sector has been allowed to set up thermal power generation plants in the country and public private partnership programme has been introduced in the power sector. Sources said that Prime Minister also endorsed the programme and directed the concerned authorities to move ahead in this programme to enhance power generation. 

Sources also said that Prime Minister has been briefed that federal government has allowed Water and Power Development Authority (WAPDA) to set up 600MW to 1,000MW coal based power plants in Thar to overcome the gap between power demand and supply.

Sources said that Prime Minister has been updated that under the public-private partnership concept over 7,927MW power would be added to the existing power generation of around 10,000MW plus power by the year 2009-10.

Pakistan Electric Power Company (PEPCO) has been allowed to set up the thermal power generation plants of 2,450MW by 2010 to overcome the power shortages crisis. Sources said that PEPCO would complete the projects of 2,450MW by 2010.

They said that the private sector would set up 15 independent power producers (IPPs) by the year 2009-10 that would generate 2,868MW electricity. At present 16 IPPs are operational in the country that were set up under the power generation policy 1994. Since that time no new investor has made investment to set up IPP. Current IPPs are generating 3,700MW to 4,500MW against the generation capacity over 5,700MW.

Daily Times - Leading News Resource of Pakistan


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*EU urged to relax visa policy for businessmen ​*
ISLAMABAD (April 06 2008): The president, Islamabad Chamber of Commerce and Industry (ICCI), Muhammad Ijaz Abbasi, called upon the European Union (EU) to relax visa policy for businessmen which would encourage them to visit Norway and other European countries for exploring trade opportunities. In a meeting with Norway's Ambassador Aud Marit Wiig, he said that during 2006-07 bilateral trade between Pakistan and Norway was around $74 million.

These figures reflect that trade and economic activities between the two countries were not up to the mark as per existing potential, he added. The balance of trade was in favour of Pakistan, he stressed the need for enhancing trade between Norway and Pakistan for the benefit of both the countries.

"Major items of exports from Pakistan to Norway included fabrics, towels, garments, cotton yarn, textile made-ups, hosiery and sports goods," he added. Abbasi also underlined the need for diversifying the products to increase the existing volume of trade. He also said both countries should exchange business delegations, so as to explore the possibilities of the trade and investment in the areas of mutual interest.

Speaking on the occasion, Norwegian Ambassador Aud Marit Wiig said that it was encouraging that Pakistani companies were importing plants and machinery from the Norwegian companies, which will help building strong trade and economic links between the two countries.

The envoy emphasised the need for building image of Pakistan abroad, so as to attract foreign investment and generate economic activities between the two countries.

She said that Telenor has substantial investment in Pakistan in the telecom sector and more companies were interested in investing in Pakistan because they consider Pakistan a good destination for investment in many areas. The ambassador said that Norway sought transformation of government in Pakistan in a positive manner, which will help strengthen the trade and economic relations between the two countries.

Business Recorder [Pakistan's First Financial Daily]


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*New industries to be set up for reducing unemployment: Prime Minister ​*
KARACHI (April 06 2008): Prime Minister Syed Yousuf Raza Gilani on Saturday said that a comprehensive policy will be formulated to ensure setting up of new industries to generate employment opportunities in the country. Speaking to a delegation of Federation of Pakistan Chamber of Commerce and Industry.

Gilani said that the FPCCI will continue to serve as a think tank for fine tuning the government's trade and business policies and to provide it with the latest business pulse for policy formulation. He appreciated the historical role of FPCCI in serving as a platform for the business community of Pakistan to interact with the government on all issues concerning trade, commerce, local and international markets.

The Prime Minister said the ongoing energy crisis being faced by the country will be addressed on top priority. "We have already announced certain measures which have been endorsed by the Cabinet in its very first meeting," he added. Regarding impending shortage of water, Gilani said the government intends to construct small dams in the short term and large dams in the long term.

Gilani said the government would also make all possible efforts to bolster exports and all necessary steps would be taken to facilitate the exporter community. Similarly, he said concrete measures will be adopted to increase the confidence of foreign investors. He thanked FPCCI for its continuing role in the economic development of the country.

Business Recorder [Pakistan's First Financial Daily]


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*President's visit: China to announce $500 million support ​* 
ISLAMABAD (April 07 2008): China has once again come up to Pakistan's expectations to prove itself as Islamabad's time-tested friend by agreeing to place $500 million to support balance of payments. Formal announcement is expected to be made during President Pervez Musharraf's visit scheduled for April 10-15 to China.

This is a second time that China has responded to help Pakistan. Earlier, after the imposition of sanctions in the wake of nuclear test in 1998, China had placed a similar amount. The placement was rolled over. And, the first tranche of around $100 million is expected to be returned to China in September this year.

Forex placement from China will definitely ease pressure on Pakistan's economy and help the government plug its widening current account deficit, which is severally under pressure due to the ever-increasing oil import, as well as food imports.

FY 2008 being an election year and the transition to a new government, coupled with turmoil in the international banking scene, it has resulted in delaying Pakistan's foray into the bond market as well delaying raising of money through global depository receipt (GDR) for its public sector entities.

China is the second friendly country which has responded to Pakistan's call for BOP support. Earlier, Saudi Arabia had announced $300 million grant for Pakistan last month. With $500 million placement from Beijing, Pakistan's total BOP support will reach to $800 million.

Pakistan is facing serious financial crisis for multiple reasons and, after exhausting the normal resources for revenue generation, it is now desperately looking for help from friendly countries.

Some one-and-a-half months back, it had approached half a dozen close and trusted friendly countries, including China, to get financial support. Other countries, which were approached, included United Arab Emirates (UAE), Qatar, Kuwait and Saudi Arabia.

Sources said that Pakistan is expecting positive response for its call for help from the remaining selected countries soon. Pakistan's ambassadors in these countries are already pursuing the case.

Since Pakistan's major economic indicators are not showing healthy trend, it would need $4 to 5 billion for plugging in the current account deficit.

Sources in Finance Ministry told Business Recorder on Saturday that Pakistan's embassies in the remaining listed countries were keeping the officials in Islamabad informed on the progress, and hopefully more budgetary support will come in next couple of weeks.

It is ironical that Pakistan today stands at a crossroads as far as its financial health is concerned. In total contrast to economic wizards like former Prime Minister Shaukat Aziz and former Finance Minister Dr Salman Shah's claim of making Pakistan strong economically to absorb major shocks it is begging for help from close friends just to tide over the current account deficit. Its economic situation is so bad that the new government is facing it difficult to handle even day-to-day affairs.

Pakistan's correct financial strength could be gauged easily from its weakening currency. Pak rupee is depreciating against an ever weakening dollar. Critics of Shaukat Aziz/Salman Shah say there was no major investment in manufacturing sector for job creation last eight years. Delays in sanctioning public as well as private sector power projects were covered with excuses of 15 percent rise in demand for power as against six percent forecast. And, expansion of cellular network and unprecedented sales of mobile phones became the touchstone for economic progress.

Demographic of a young society were cited as the future potential for growth. However, providing the right skills for the ever-growing workforce was given lip service. Untrained and illiterate youngsters are said to be the ready fodder for terrorist groups. There was no effort to induce agriculture-based industries and bring value-addition for agriculture produce.

The new economic team, headed by Finance Minister Ishaq Dar, is already working on a white paper to apprise the nation about those who destroyed Pakistan's economy and left the new government to beg from friendly country for budgetary support.

Business Recorder [Pakistan's First Financial Daily]


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*An analysis of fiscal 2007-08 textiles, apparel exports ​*
Analysis by Tariq Ikram 

ARTICLE (April 07 2008): This is a sector and country wise export analysis based on provisional figures July-December 2007. The purpose is to provide our exporters and policy formulators a factual awareness of where the problems and opportunities lie, related to products and countries and therefore assist, specially the private sector in planning their sectoral and geographic export efforts.

*SOME OF THE THOUGHTS THAT SHOULD CROSS THE EXPORT ENTERPRISES ARE: *

a) Are their existing markets or those of their interest, on the increase or decrease. If on the increase they should attempt to understand why buyers in that country are wanting to buy from Pakistan and use their arguments to convince existing or new customers to enhance orders.

b) If their exports are declining but the Pakistan's export to the same country are growing they need to discuss with customers what can they do better giving examples of over all export growing from Pakistan. Develop a sense of partnership with buyers to assist each other.

c) Also in case of (b) above exporters should review their vendor management and again in a spirit of partnership with their vendors to improve their product quality and meet deadlines.

d) If exporters are not exporting to countries where their product sectors are growing they should try to establish new customers.

e) Where markets are showing high percentage growth rates it means something is going in right direction for Pakistan. This is an opportunity to consider market diversification; equally if an exporter is absent from a market and the growth rate is significant, such markets offer opportunity for growth.

The above are some strategic marketing initiatives but exporters must carefully analyse their own position and take appropriate action. TDAP is here to help and stimulate the thinking process. It may be noted that in this analysis major focus is behind the increases and decreases in exports and the absolute value of exports is only mentioned where required to contextualize the analysis.

Detailed statistics and graphs reflecting current position and trends are available on the TDAP Website (Welcome to Trade Development Authority of Pakistan), under "Export Statistics".

*TOTAL TEXTILES AND APPAREL (T&A): *

Textile and Apparel as defined by TDAP, for purposes of this analysis, includes all products starting from raw cotton and ending up with even cotton waste inclusive of tents and canvas. It, of course, includes products made from cotton and manmade yarn and fiber.

Total T&A exports for six months ending December 2007 were US $5.2 billion. These were US $280 million less than last year ie 5%. Of the total exports of US $5.2 billion, countries where exports increased accounted for US $2.7 billion ie almost half. The balance exports of US $2.5 were from countries where exports declined.

All countries where exports were higher, produced a combined increase of US $128 million. Those countries which reflected a decline generated a total decrease of US $408 million resulting in the net decline of US $280 million. On a total T&A basis, the countries generating the major part of the above increases of US $128 million were Italy US $20 million, Turkey US $30 million, Netherlands US $18 million and a host of non traditional markets ("others") that jointly produced increase of US $21 million. It is noteworthy that the non-traditional markets generated US $21 million out of the total increase of US $128 million. This reflects the efforts being made by the exporters, supported by TDAP, to venture into new markets. Of the decline in exports of US $408 million, the major countries pulling down Pakistan's exports were USA US $311 million, Hong Kong US $49 million, Saudi Arabia US $12 million and China US $10 million.

It is however, noteworthy that on a total T&A basis, an actual decline over last year was seen only in a total of nine countries. In all other countries, exports were either equal or higher than last year. However the largest declines in the US, China, Canada and Hong Kong could not be made up by the growth in the rest of the world.

This clearly reflects that Pakistan is not competitive and serious attention needs to be paid to this primarily by the government (for short term support) and the private sector (for both short and long term). Whether we like it or not the fact is that today Pakistan's GDP growth, export levels, trade deficit, foreign exchange reserves, local investment in (trail-blazer for FDI), employment generation, revenue generation welfare of the farming community, welfare of the women employed in the rural areas and indeed the overall national economic activity are all seriously dependant upon the textile and garment sector. A lot has been done to address the issues and leverage the opportunities but a lot more is required. Question is not 'whether Pakistan can afford to, the question is 'whether Pakistan can afford not to'!

There is no doubt that during 1999 to 2005 when exports of T&A were growing at a fast pace (8 years increase of over US $5 billion!) and returning revenue and cash flows to the government and the industry, fundamental issues could not be completely addressed.

These are need for increase in cotton production, minimising cotton contamination, improved growing capacity and technology, standardisation of cotton, new cotton seed development through research, incentives etc to the value added sectors, increase in scale of production in garments, training of human resource, use of ICT in industry, JVs and FDI for technology, marketing and better management. Today, with earnings not increasing and government revenues under pressure to invest further behind these, albeit essential, feels painful to both the government and the private sector.

The above analysis is for all textiles and apparel. Within this large export sector there are various product groups such as cotton, yarn, fabric, garments, bed ware, towels etc. The export increases and decreases by country, in each of these country and product groups are significantly different. The analysis that follows is therefore product group wise.

*RAW COTTON: *

Exports for six months ending December 2007, were a total of only US $20 million. These were US $4 million lower than last year ie 18%. Exports made were primarily to China of US $2 million, Myanmar US $0.7 million, Bangladesh US $7.5 million, Indonesia US $5 million. It may be noted that exports to China and Myanmar (last year were virtually nil) and that exports declined to Bangladesh and Indonesia by 19% and 41% respectively.

*COTTON YARN: *

Total exports for six months ending December 2007 were US $673.5 million ie 7.8% of Pakistan's total exports. Compared to last year these were US $28.2 million or 4.0% lower.

Exports increased over last year to Turkey US $28.8 million or 151%, Bahrain US $8.0 million or 382%, Portugal US $6.2 million or 17.6%, Bangladesh US $4.6 million ie 13%, Netherlands US $4 million ie 225%, Germany US $2.2 million or 161%, Belgium US $2.1 million or 67%, Vietnam US $2.0 million or 75%, Philippines US $1.7 million or 62%, UAE US $1.5 million or 62%.

However, decreases outweighed the increases and export over last year declined in USA US $24.4 million or 52%, Hong Kong US $24 million or 12.5%, China US $11.9 million or 7.6%, South Korea US $6.3 million or 13.6%, Japan US $3.5 million or 12.9%, Egypt US $2.5 or 24%, Indonesia US $3.7 million or 40%, Brazil US $2.7 million or 61%, Austria US $2.7 million or 99.9%. Net of the increasing and decreasing countries, total exports were US $28.2 million or 4% lower than.

Nil exports compared to last year were made to Yemen, Iraq, Kuwait, Russia, Denmark, North Korea, Sweden, Ireland, Qatar, Norway and a few other countries.

*YARN OTHER THAN COTTON YARN: *

The product range included here is cotton yarn mixed with manmade fibre and filament yarn etc. Total exports were US $25.5 million which were US $7.1 million lower than last year ie a decline of 21.9%.

Significant increases in value were achieved in Turkey US $1.6 million or 91%, South Korea US $1.3 million or 223%, Brazil US $787K (Nil last year), Bangladesh US $676K ie 39%, Sri Lanka US $552K or 90%. Other countries where exports also increased by US $l00K to US $150K were Portugal, Philippines, Argentina and Kenya.

In terms of trends, significant percentage increases were achieved in Argentina (5600%), Australia 1666%, Hungary 4100%, Denmark 1600%, Morocco 49%.

Significant decline in exports was experienced in India US $3.2 million or 100%, Hong Kong US $1.5 million ie 66%, China US $1.3 million ie 79%, Iran US $829K ie 74%, Bahrain US $698K or 87%, Italy US $667K or 65%, Egypt US$479 ie 7 1%, Germany US $436K or 83%. Other countries of a decline between US $100 to US $315K were Afghanistan, Canada, Austria, Belgium, Japan, Saudi Arabia, UK, Mauritius, and France. It is noteworthy that in all countries where exports declined, the percentage declines were high which suggests sudden decline in demand. Besides countries to which zero exports could be made compared to last year were Austria, Malaysia, Russia, Myanmar, Algeria, Thailand, Poland, Oman, Azerbaijan, Czech Republic, Qatar, Switzerland, Greece, Jordan, New Zealand, Romania and few others. Exports to these countries last year were small but nil exports suddenly to a large number of countries is note worthy.

*COTTON FABRIC: *

This included fabric greige and dyed finished but made of cotton only. Does not include made up items of fabric such as bed sheets, etc. Total exports were US $905 million which was a decline of US $89 million over last year or 9%.

Countries where significant growth in export value was achieved were (and note the high percentage increase in some cases), Italy US $7.9 million ie 14%, Russia US $6 million ie 42%, Brazil US $4.4 million ie 120%, Ukraine US $4.4 million ie 144%, Belgium US $3.7 million ie 14%, Spain US $2.8 million ie 9%, Romania US $2.6 million ie 247%, Netherlands US $2.4 million ie 16%, Finland US $2.2 million ie 46%, countries with increases of US $1 to US $2 million were Portugal, Egypt, Mexico, France, Estonia, Bahrain, Latvia and Azerbaijan.

Countries reflecting significant percentage increase trends were Russia 42%, Brazil 120%, Ukraine 143%, Finland 46%, Bahrain 51%, Romania 247%, Lebanon 50%, Latvia 369%, Czech Republic 121%, Azerbaijan 1838%, Afghanistan 508%. Against nil exports last year, exports were achieved in Myanmar, Maldives and Uzbekistan this year.

Countries where export declined were significant were US $35.4 million ie 36%, Hong Kong US $21.5 million ie 42%, UAE US $12.8 million or 40%, Sri Lanka US $9.7 million or 18%, South Africa US $7.3 million ie 26%, UK US $7.0 million ie 22%, India US $6.8 million or 23%, Saudi Arabia US $4 million ie 29%, Indonesia US $3.6 million ie 64%, Canada US $3.4 million ie 46%; other relatively significant countries where exports declined by between US $1 million to US $3 million were Turkey, Australia, Jordan, Japan, Norway, Niger, Philippines, Qatar, Nigeria and Iraq.

*KNITTED CROCHETED FABRICS: *

Products included are all kinds of knitted fabric but not made ups of knitted material. Exports at US $32.8 million were US $2.8 million more than last year or 9%. Significant countries remaining lower than last year were the USA US $2.2 million ie 50%, UAE US $2.1 million or 48% and Jordan US $1.0 million or 45%.

Significant increases in countries that more than offset the decreases were achieved in Sri Lanka US $2.3 million ie 72% and India US $1.0 million ie 320%.

*READYMADE GARMENTS: *

Products included here are all kinds of readymade garments made from woven material for men, boys, girls, ladies but do not include garments made from knitted material (such as housing, T-shirts etc). Garments made from cloth made of manmade fiber are also included here.

Exports at US $714 million were 8.2% of total exports of Pakistan (last year 9.6%). Exports declined over last year by US $93.5 million or 11.6%.

The significant markets where exports increased were Spain US $2.0 million ie 4%, Italy US $3.0 million ie 9%, Netherlands US $2.4 million ie 9.9%, and UAE US $1.0 million ie 5.7% and Turkey US $3.9 million ie 119%.

Exports increased in 35 other countries as well but in dollar term these increases were less than US $500K in any one country. Some high growth trends were seen in Brazil 178%, Hong Kong 38%, Japan 64%, Argentina 51%, Lithuania 920%, Algeria 280%, Russia 73%, Ukraine 274%, Estonia 1023%, Latvia 126%, Kenya 55%, Lebanon 767%, Egypt 680%, Libya 1000%, Malta 80% and Zimbabwe 150%. This reflects the exporters search for new markets as the traditional US and EU markets become more competitive.

Major declines in exports were seen in the USA of US $76 million or 21%, UK US $5.6 million or 6%, Belgium US $11 million or 33%, Saudi Arabia US $3.2 million or 33%. Exports declines of around US $1 million to US $2 million were seen in Ireland, Sweden, Canada and France. Minor declines were seen in over 40 other countries. Significant decline trends in percentage terms were seen in Singapore 68%, Luxembourg 99.7%, Kuwait 78%, Oman 54%, Switzerland 55%, Mexico 49%, Sri Lanka 53%, Nigeria 97%, India 80%, Iran 68%, Bahrain 58%, Afghanistan 96%, and few others.

*KNITWEAR:* 

The product range covered is jackets, blazers, men/boys knitted trousers, shirts, T-shirts, track suits, socks, gloves and other knitted garments of cotton, wool, artificial synthetic and other fibers, etc.

Total exports for six months ending December 2007 at US $936 million were 11% of total Pakistan exports (last year 11.5%). These were US $30 million below last year ie 3%. Combined export value of all countries where exports declined at US $693 million, was much more than the combined export value of countries where exports increased ie US $242 million.

Of countries where exports were less than last year the total decline was US $65 million. Of this USA alone declined by and US $46 million ie 7.3%, Netherlands US $8 million ie 17.7%, Spain US $2.6 million ie 8% and Hungary US $2.5 million ie 54%. All other countries that declined were lower than last year by less than US $450K each.

Of countries where exports were higher than last year, Germany led the growth and increased by US $7 million ie 23% followed by Italy US $5.7 million ie 19%, UAE US $5.5 million ie 65%, UK US $3.8 million ie 5%, Belgium US $2.3 million ie 12%, France US $1.7 million ie 11%, Saudi Arabia US $1.6 million ie 62%, Norway US $1.0 million ie 166%, Sweden US $1 million ie 32%. All other countries where exports were higher than last year produced an increase of less than US $500K in anyone country.

Some noteworthy trends in percentage term were Ireland 20%, Mexico 35%, Australia 20%, Sri Lanka 28%, Switzerland 56%. More than 30 countries were where exports increased over last year and where exports were more than US $1 million. With increasing competition in the traditional markets, this reflects the exporters efforts to seek new markets such as Poland, Qatar, Estonia, Russia, Argentina, Azerbaijan, Slovenia, Bahrain, Senegal, Morocco, Kyrgyzstan, Cyprus, Egypt, Iraq etc. TDAP continues to support these efforts with organised delegation and higher level of participation in exhibitions.

*MADE-UPS OF TEXTILES: *

The product range covered includes sanitary towels, napkins, dishcloth, wash cloth, bar mops, other cleaning cloth, bath mats and curtains etc. It does not include bed ware, pillow covers, towels etc.

Total exports for the 6 months ending December 2007 were US $255 million ie 3% of Pakistan's total exports and about the same as last year. These exports increased over last year by US $17.9 million ie 7.5%. Of the total net exports of US $255 million, countries where exports increased had a combined export value of US $233 million and those where exports declined were a total of US $22 million.

Export value of countries where exports grew was much more than export value of countries where exports declined.

In the countries where exports increased, the total increase was recorded at US $24 million. Of this US $24 million, significant increases were in USA US $7.4 million ie 5%, UK US $6.8 million ie 20%, Germany US2.0 million ie 25%, Netherlands US $1.3 million 30%, South Africa US $1.4 million ie 82%, UAE US $1.0 million ie 33% and Australia US $0.8 million ie 35%. There were 43 other countries where exports increased but no one country exceeding an increase of US $500K.

Some significant trends in percentage growth term were Poland 19%, Greece 37%, Kuwait 74%, Portugal 48%, India 130%, Brazil +678%.

In countries where exports declined the combined decline was US $6.0 million. This was mainly because of Italy US $1.2 million ie 12%, France US $1.2 million ie 22%, Spain US $0.6 million ie 18%. Some other significant declines in percentage terms were Ireland, Australia, Malaysia, Norway, Iran, Mexico, Russia and Sri Lanka.

*BED WARE:* 

The product range includes woven and knitted products such as bed sheets, bed/pillow covers, bed linen, table linen/covers etc. Total exports for six months ending December 2007 were US $959 million. These exports were US $69 million lower than last year ie 6.7%. Out of the total exports of US $959 million, countries where exports increased were a total of US $378 million and where exports declined were a total of US $581 million.

Of the countries where exports were higher than last year, the total increase achieved was US $60 million. Of the total increase, the significant increases were achieved in Belgium US $10 million ie 86%, UK US $5.3 million ie 6%, Italy US $5.8 million ie 19%, Denmark US $4 million ie 48%, Brazil US $3.7 million ie 368%, Kenya US $1.3 million ie 50%, Poland US $1.0 million ie 38% and Greece US $0.7 million ie 30%. Increases were also recorded in 24 other countries and some significant percentage increases were in Estonia 132%, Philippines 97% and Egypt 1102%.

Of countries which remained lower than last year, the total decline was US $128 million. Of the major declines USA led with a drop of US $99 million ie 20%, Germany US $6 million ie 10%, UAE US $3.5 million ie 15%, Austria US $4.0 million ie 73%, Canada US $2.5 million ie 11%, Turkey US $2.0 million ie 93%, Switzerland US $1.4 million ie 53%, Australia US $1.2 million ie 6%, France US $1.1 million ie 2%, and Hungary US $1.0 million ie 48%. In addition to these countries exports declined in 32 other countries. Some significant declines in percentage terms were in Czech Republic 29%, Mexico 52%, Portugal 58%, Ukraine 57%, Indonesia 78%, China 90%, Japan 70%, Maldives 91% and Bangladesh 96%.

*TOWELS:* 

Products included in this group are towels and products of towel material of cotton, mill made. Total exports were US $284 million or 3.3% of total Pakistan's exports (last year 3.9%). Exports declined over last year by US $39 million ie 12.2%. Of the total exports of US $284 million, countries where exports increased over last year were US $67 million only. Where exports declined, the total exports were US $217 million.

The total increase in exports achieved from countries where exports were higher than last year was US $15 million. Of this, the significant contributors were UAE US $2.4 million ie 24%, Spain US $1.4 million ie 17%, Sri Lanka US $1.2 million ie 350%, Netherlands US $1.0 million ie 15%, South Africa US $1.0 million ie +16%, Saudi Arabia US $0.7 million ie 22%, Brazil US $0.7 million 46%.

Apart from these countries exports increased in more than 35 other countries.

Some significant growth in percentage term was achieve in Ireland 34%, Portugal 55%, Malaysia 104%, Romania 99%, Argentina 404%, Austria 173%, Cyprus 97%, Lithuania 257%, Philippine 209%, Jordan 125% and Hong Kong 319%. These reflect the exporters and TDAP's efforts to diversify into newer markets.

The total decline in exports in countries which remained lower than last year was US $54 million. Of this, major countries which were lower than last year were USA US $43 million ie 23%, Canada US $1.4 million ie 18%, France US $1.4 million ie 33%, Sweden US $1.0 million ie 37%, Czech Republic US $0.8 million ie 56%, Russia US $0.7 million ie 37%, New Zealand US $0.8 million ie 22% and Belgium US $0.7 million ie 15%. Additionally declines were recorded in 27 other countries as well, with no one country declining by more than US $500 K. Some significant and noteworthy declines in percentage terms were Denmark 22%, Norway 18%, Turkey 93%, Mexico 81%, India 100%, Germany 3.48%, Italy 6.4%, Slovenia 36.3% and Kenya 29.5%.

*ARTIFICIAL SILK AND SYNTHETIC TEXTILES: *

The product range included is fabrics, synthetic filament, printed dyed or mixed, manmade staple fibers. Worldwide, textiles and apparel produced from manmade fiber or with manmade fiber is the dominant sector. In Pakistan this sector has remained depressed partly on account of poor growth in the filament yarn sector.

Be as that may, the current exports for six months ending December 2007 were US $256 million. This is an increase of US $41 million over last year ie 19%. It may be recalled that artificial silk and synthetic textiles exports, even last year, grew by 115% contributing US $229 million to the growth in Pakistan's exports.

Of the total exports of US $256 million. The countries that were performing better than last year produced a total export level of US $198 million. Those that remained below over last year were of a total export value of US $58 million.

The total increase generated by countries performing better than last year was US $58 million. Of this, the major contributors were UAE US $13.9 million ie 91%, South Africa US $8 million ie 77%, Saudi Arabia US $3.3 million ie 45%, Argentina US $2.8 million ie 43%, Mexico US $3.0 million ie 51%, Netherlands US $2.9 million ie 136%, UK US $2.0 million ie 16%, USA US $2.0 million ie 13%, Egypt US $1.0 million ie 27%, Greece US $1.0 million ie 25%, Vietnam US $1.1 million ie 763%, Malaysia US $0.8 million ie 197%, Sudan US $0.9 million ie 120%, Indonesia US $0.9 million ie 142%, Kenya US $0.8 million ie 134%. In addition to these countries exports increased to more than 32 countries.

Some noteworthy and significant trends in terms of percentage increases were Finland 32%, Hungary 41%, Australia 72%, Morocco 144%, New Zealand 133%, Romania US $0.6 million ie 2800%, Thailand US $0.6 million ie 1670% and Canada 19%.

Total decrease in exports as a total of all countries that remained below last year was US $18 million. Of this, significant declines were in Spain US $2.7 million ie 23%, Italy US $2.7 million ie 29%, Niger US $1.7 million ie 53%, Poland US $1.5 million or 31%, Belgium US $1.1 million ie 21%.

Exports of artificial silk and synthetic textiles has in last few years shown a very healthy growth trend and producers, exporters should fully capitalise on this opportunity. It appears that the opportunity is widespread as exports are not concentrated in a few markets and a large number of countries are reflecting a willingness to buy from Pakistan.

*TENTS AND CANVAS: *

This product group includes products such as sails, tents, tarpaulins, awaning, sunblinding, etc. Total exports for six months ending December 2007 were US $42 million and remained US $0.6 million or 1% below last year. The major countries contributing to increases over last year were Sudan US $9 million, with increases in Jordan, Kenya and Yemen remaining between US $1.0 million to US $1.3 million each; the major countries which pulled down Pakistan's exports were Saudi Arabia US $9.3 million ie 52% and Kuwait US $1.7 million ie 25%. This product group largely remains dependent on donor purchases and there is an enormous potential and need to diversify product range including products of the leisure industry.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Livestock sector helps boost agriculture sector income ​*
MUZAFFARGARH (April 07 2008): Live-stock sector has recorded an upsurge in generating income in agriculture sector during last one and a half decades in Pakistan.

The share of livestock sector in agriculture income has increased from 29.8 per cent in 1990-91 to 49.6 percent in 2005-06 and its share in export-related earning has been recorded at 10 percent, says a survey report 2005-06 of State Bank of Pakistan (SBP).

The report, however, also noted that crops' share in agriculture related income has decreased from 65.1 percent to 47.5 per cent during the same period. It may be noted that Pakistan has been ranked fifth in the world with regard to national milk production and income generated from milk alone was recorded higher than what was generated by two major crops including wheat and cotton.

Muzaffargarh was among those districts which were declared model districts and an over Rs 400 million pilot project titled livestock support services has been completed in June last year that was meant to facilitate cattle rearers. Experts believe that a boom in livestock sector will translate into additional income to small farmers that will help improve their life style.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Faltering economy: a reality check​*
The State Bank of Pakistans quarterly report covering the economic performance for the first six months (July-December 2007) of the current fiscal year confirmed what was already in the public domain. Key economic targets for the current fiscal year will be missed and the governments finances are under pressure. But a close examination of the official data has led us to raise the following critical questions:

Is the government revealing the correct real GDP growth numbers by under-stating the rate of inflation? Is the economy growing at 6-6 per cent?

Is oil price the only or real reason for the ballooning fiscal deficit and consequently for the rapid growth in money supply and inflation?

The answer to both the questions is a no in the light of information published by the bank itself. The report begins with a rather benign view of the economy by stating, the countrys economy continues to show resilience to domestic and international shocks. Although these have taken their toll, the economy is expected to turn in a reasonable growth performance during FY08, albeit substantially lower than target. The SBP has revised the key targets for the full year as follows:

Two of the most important indicators, real GDP growth and inflation, if correct, would justify the SBPs remarks about the performance and growth expectations of the economy. But are they correct even if the estimates about cotton and wheat crops turn out to be right? Remember that the wheat crop estimates were deliberately overstated last year to present a better picture of the GDP growth but the previous years growth numbers have still not been officially adjusted.

In simple terms, GDP (gross domestic product) is the short hand for the income of a country. The real growth rate is calculated (in lay mans terms) by adjusting nominal growth for inflation. For example, if the income of person grows by 10 per cent from Rs100 to 110 in a year and the inflation during the year was four per cent, it can be stated that his real income grew by approximately six per cent, leaving aside mathematical complications. The key to calculating the real growth is the inflation rate. If a rate lower than the actual rate is used, real growth rate will look better or vice versa.

The government maintains that the inflation rate during the current fiscal year will be in the range of 89 per cent. That is, no more than 0.2 to 1.2 percentage points higher than 7.8 per cent for FY 2007. However, its own month by month data comparing inflation rate in the current fiscal year to FY 2007 does not support this as shown in the following graph. It illustrates that increase in the consumer price inflation (CPI) and wholesale price inflation (WPI) during the current year has been much higher than 1.2 per cent as the government or the SBP appears to suggest.

This graph shows for the CPI and WPI, the percentage increase in a given month in 2007 and 2008 over the corresponding month of the previous year. For 2008, this number is significantly higher than eight or nine per cent as indicated by the sharp upturn from August 2007 onwards.

During the eight months from July 2007 to February 2008, the cumulative rise in the CPI was 9.15 per cent and 11.31 per cent in the WPI. Obviously, it will be higher for the entire 12-month period. Based on the eight months rise, the annualised inflation rate works out to be 14.03 per cent for the CPI and 17.43 per cent for the WPI. It is important to note that much of the real GDP data is calculated using the wholesale price index (WPI). In any case, pick any inflation index using 11 or 12 per cent average inflation rate, the real GDP growth may be around 3.5 per cent or even less in FY 2008 unless the (previous) governments economic managers can provide a robust and full explanation of the glaring inconsistencies in what are the most important set of macroeconomic indicators.

Revision of growth estimates and even that of the entire set of national income accounts is not uncommon even in the developed world. The new government may wish to do this by appointing a permanent head of the Federal Bureau of Statistics and conducting a full and independent investigation into the data to get a picture of the true state of the economy.

Coming to the budget or fiscal deficit, the SBP report candidly acknowledges, another troubling aspect is that the fiscal deficit may be under-stated. Evidence suggests that at least a part of the subsidy on fuel prices during July-February FY08 was not financed from government account. It goes on to explain as follows:

Instead, in order to mitigate the financial difficulties of the various institutions (particularly the oil marketing companies) with unpaid price differential claims, the government provided guarantees against which these public and private sector institutions could borrow the amounts from financial institutions. Such a financing structure simply shifts most of the cost of the financing from the current fiscal year to the fiscal deficit in future years.

Leaving aside the issue of understating the real level of fiscal deficit due to the non-inclusion of guarantees to the oil companies, let us take a look at the governments revenue and expenditure for the first half of FY 2008 in the table below:

Table: Revenue and Expenditure Summary

Government officials and many others have attributed the ballooning deficit to the rise in the oil prices but the data does not fully support this contention. Against a full years revenue target of Rs1475 billion, the governments revenue for the first half were Rs625.6 billion. That is, the total revenue grew by only 1.8 per cent against the target of 20 per cent (per annum) and the tax revenues grew by only four per cent against the target of 21 per cent. (per annum).

The weakness in Q2-FY08 fiscal revenues stemmed from a variety of factors. For example, direct taxes declined due to a fall in expected taxable profits of key industries (e.g. banks, cement, etc.). Similarly, the weakness in non-tax revenues mainly reflected the delayed disbursement of logistic support grant (indicated by a fall in defence receipts), and low collections of surcharges on petroleum and gas.

On the other hand, expenditures appeared to have gone out of control in an election year as summarised below:

In the backdrop of 1.8 per cent increase in the total revenues, no effort seemed to have been made to control the expenditures that grew by 25.3 per cent. While current and unexplained expenditure increased by Rs120.2 billion (18.9 per cent), development expenditure jumped by Rs77.9 billion or 52.7 per cent. The net result was a deficit of Rs356.3 billion (3.6 per cent of full year GDP) for just the first six months only against the full year target of Rs398 billion or 4.2 per cent of the GDP. At this rate, the deficit is likely to exceed six per cent of the GDP.

Contrary to the widely held view, the subsidies for oil and other commodities contributed to no more than five per cent of the total current expenditure during the first half of FY 2008. This is evident from the following table in which subsidies are included in the Economic affairs expenses.

Interest payments on debt, defence, payments to provinces, and expenditure other than subsidies accounted for Rs161 billion or 83 per cent of the increase in current expenditure during the half-year ended December 2007 or 86 per cent of Rs187 billion rise in the budget deficit during the period.

Here it should also be noted that the sharp rise in the oil price came only towards the end of October 2007 when it broke the $90-a-barrel level after trading in the $70-80 range during July-September 2007. The hard fact is that interest payments, defence, and payments to the provinces were the three largest items and accounted for 75 per cent of the total current expenditure.

The overall picture emerging from this analysis is that President Musharrafs administration did not exercise any financial discipline in the election year and did not take any action to stop the politically-driven escalation in spending even when the revenue growth stalled. This came at the cost of overall higher inflation and an all-time record fiscal deficit.

The deficit was financed mostly by borrowings from the State Bank or in simple terms by printing money as illustrated in the following table:

Compared to the first half of FY2007, the deficit more than doubled to Rs356.3 billion. The worst aspect was that 64 per cent of this was financed by highly inflationary bank borrowing compared to only 18.6 per cent in the previous year.

In conclusion, the hard evidence points to some unpleasant facts. The economic growth during FY08 is probably going to be much less what the government claims and which the multilateral lenders seem to accept without much questioning. The inflation is a lot higher than what the previous economic managers have been telling us. And most importantly, low single digit growth in tax revenues, election year spending spree together with interest on past borrowings, and not the oil price or subsidies, are the principal reasons behind the record level of budget deficit during the first-half of the current fiscal year.

Faltering economy: a reality check -DAWN - Business; April 07, 2008


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## Neo

*Balochistans effort to modernise dairy farming​*
BALOCHISTAN is striving to enhance its dairy production and to move from subsistence to market-oriented dairy farming with its main focus on milk sector. It plans to tap its enormous potential in milk sector both for domestic consumption and export to foreign markets.

The province has 15 major dairy and cattle farms and three sheep and goat farms. Livestock contributes Rs20 billion in terms of production of meat, milk, eggs, skin, hides and wool and provide livelihood to over 70 per cent of population.. Milk contributes 35 per cent of the total earning from livestock. As per 2006 livestock census, the province maintains 2.25 million of cattle, 12.8 million of sheep, 11.78 million of goats and 0.319 million of buffaloes.

We have selected five districts including Jaffarabad, Naseerabad, Lasbella, Pishin and Kuchlak (Quetta) for milk collection, said Zafarullah Baloch, secretary livestock, Balochistan. He said work for dairy development had already started in Pishin and Kuchlak. We have at least 25,000 Friesian cows in Pishin only, he added

Mr Baloch told this scribe that the ongoing white revolution project includes milk collection from small and landless farmers, support to market-oriented rural dairy farmers and production of quality breeding animals. The livestock department is taking steps for setting up milk collection plants on modern lines and also introducing proper milk preservation techniques. We are scrutinising different areas of dairy farming and encouraging local farmers to keep breeds of cattle with high milk production.

Presently, two projects for construction of research centre for dairy development farms each in Awaran and Bela districts are under way at an estimated cost of over Rs41 million and Rs49 million, respectively. These projects include the construction of office blocks, sheds and pens and purchase of livestock, dairy equipment and medicine. The proposed projects for the current fiscal year include establishment of dairy farms at Killa Saifullah and Dalbandin at an estimated cost of Rs80 million and strengthening of government dairy farm in Quetta at an estimated cost of Rs25 million.

Quetta dairy farm has 176 animals of two breed- Frisians and Achi. The farm has 87 Frisians, which is a foreign breed and it produces 1400kg of milk per day. Achi breed is a local breed, which is particularly used for meat purpose, as it produces less milk. Frisian hardly survives in summer; hence it is kept under special sheds during summer. For non-availability of green fodder in Quetta during winter, the fodder for animals is brought from central Balochistan. Presently, Hilal feed, containing food supplements and concentrates, is being used to increase milk production in these dairy farms.

The local experts are of the view that proper milk let-down is only possible through milking machines, as hand-milking by dairy farmers is also causing different diseases in the animals. Generally, mastitis is caused by hand-milking. Mastitis is the inflammation of animals udder, which is caused by infected hands of the dairy farmers, said Syed Khurram Farid, a researcher in the Centre for Advanced Studies in Vaccinology & Biotechnology (CASVAB) in Quetta. The animals are kept under unhygienic conditions and the rough surface cause hooves injury in cattle and buffaloes. Mr Farid said other diseases which were caused by mismanagement in dairy farms .

The experts stress the need for establishing milk pasteurisation plants in various districts of the province. There is an urgent need to improve extension services to increase dairy production in the province. The local dairy farmers should be provided overall technical support including automated milking machines and herd management. They should also be given feeding recipes for the animals in different seasons.

Local dairy farmers: Small dairy farmers in Balochistan generally keep animals as a part of tradition for meeting household milk needs. They consider dairy a side income, as commercial dairy farming is non-existent in the province. The animals are not properly fed, as majority of the households keeping the livestock are landless. They sell only morning milk.

The milk marketing channels are not organised on modern lines. The marketing is done through middleman, as the average milk sold per household is less than five litres a day. The farmers have a fragmented distribution system in which majority of dairying households maintain herds of one to two animals, while others maintain herds of three -- four animals. There is a need to strengthen livestock markets in the province.

Local farmers lack knowledge on animal husbandry and are unaware of modern techniques of dairy farming. Low fodder and water availability in summer causes seasonality in milk supply. Presently, the local farmers do not follow breeding through artificial insemination due to low conception rate and non-accessibility. Except the public sector organisation, the veterinary service delivery network is not available in the province, and hence the coverage is meager.

Suggestions: A strategy needs to be formulated to improve milk collection network, increase the number of available cows, buffaloes, sheep and goats and modernise milk processing and marketing.

Dairy farmers associations should be formed to provide subsidised veterinary/breading cover and balanced feed and assistance for fodder production and its storage, and marketing of milk and animals.

Local farmers should be provided short-term training on different aspects of dairy farming. Modern techniques of milk preservation should be adopted and more chilling units for collection of milk from rural areas should be set up..

Enabling environment should be provided to harvest the benefits of corporate livestock farming.

Balochistans effort to modernise dairy farming -DAWN - Business; April 07, 2008


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## Neo

*Promoting industrial technology​*
Science, technology and engineering play a catalytic role in the growth of economic sectors including agriculture, infrastructure, energy, mining, manufacturing and service sectors. Technology is said to be the lifeline of industry. It caters to improved productivity and rapid industrialisation.

Unfortunately, this key element of development has not been recognised as such and thus not been provided with a conducive environment. For almost a decade, Pakistan has virtually remained without an industrial policy and a worthwhile science and technology policy.

There has been a lot of lip service and programming at the highest levels, but, it was accorded least priority .For example, the National Commission for Science and Technology (NCST) has not met since December 1, 2001. The commission headed by the prime minister, is the apex body for science and technology development. Being dormant from the very early days of its inception in 1984, the NCST was revived in the year 2000 but since then it could hold only two meetings. The commission is mandated to promoting science and technology, accelerating scientific and technological capacity building, and creating linkages with production sector and development plans, by implementing major projects.

Though a number of projects were initiated in the last meeting of the NCST, with the exception of those in higher education, most of them have run into snags due to lack of political will and commitment. There has been no review of the vital projects at the NCST level. For instance, Pakistan Technology Board was constituted with the objective to commercialise indigenous technologies and to channelise transfer of advanced technologies in capital intensive projects. Nothing concrete has been done in this direction.

A half-hearted effort was made in 2005 to launch the, technology-based Industrial Vision and Strategy for Pakistans Socio-economic Development. It was a non-starter as the assignment was given to the Higher Education Commission (HEC) and Pakistan Institute of Development Economics (PIDE), whereas the key stakeholders were not associated with the exercise.

The study, along with a set of recommendations to optimise technologys contribution to economic growth, was nonetheless presented to the government in October 2006. The Cabinet approved the document after almost a year---on August 18, 2007 but till now the proposed action plan has not been initiated.

The 270-page report has critically analysed the status of agriculture and major segments of the industry like textiles, leather, materials, chemicals, engineering goods, electronics, and infrastructure including energy-power, telecommunication, construction and housing and transport. It recognised the gap that exists between Pakistan and the developed countries, and highlighted need to bridge it through strengthening its technological and engineering base and formulating a long-term industrial policy.

Outline of an action plan, separately for each sub-sector, provided for improving the policy and regulatory framework, technology up-gradation, incentives for value-addition, improving product quality and manpower development, had been proposed. The government was urged to invest $10-12 billion by 2010 for increasing the share of industrial sector in GDP to 25 per cent and the share of engineering goods to 30 per cent of manufacturing, in the first phase. It was expected this would provide goods of international quality at competitive prices and facilitate in exploiting the niche in global translocation of industrial production, which could take Pakistan to the path of rapid industrial development. All these objectives seem unrealistic to achieve under the given conditions.

The new government, which should be pro-active in promoting industrial technology, would be well advised to consider adopting concrete measures, on priority basis. For creating global competitiveness in all sectors of economy, it is needed to simultaneously develop environment, technological infrastructure and policy instruments.

The government should formulate the policy for selection, assimilation, diffusion and use of technology in industry and business as well as in agriculture, infrastructure and other economic sectors. Also, the government has to play key role in commercialization of the selected technologies, through a system of cooperation between R&D on one part and industrial and related sectors on the other.

Promoting industrial technology -DAWN - Business; April 07, 2008


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## Neo

*Pakistan searches for solution to power shortages​*6 Apr, 2008

ISLAMABAD: Pakistan's electricity production was nearly 3,000 megawatts short of demand in March. The country made up the difference by turning off lights, and everything else, for several hours a day. 

Prime Minister Syed Yousuf Raza Gillani after being sworn in March 25 put the "energy crisis" up with terrorism as a top issue to address during his first 100 days in office. But things will get worse before they get better, Gillani warned, with power outages increasing through June when air conditioners are turned on to beat the heat. 

Pakistan is experiencing these shortages despite its miserly electricity use with per-capita consumption of 546-kilowatt hours per year, a fifth of the global average of 2,586-kilowatt hours, according to statistics from the seven-nation South Asia Association for Regional Cooperation. 

The problem stems from the fact that Pakistan has failed to build new power plants to keep up with the demand for electricity. 

As a result, the poor who are connected to the grid are going without during the nearly four hours of outages that are occurring per day this month. In wealthier neighbourhoods, however, the streets come alive with the sounds of generators. 

The power outages have increased generator sales - and their price tags - but have also cooled sales of fans, air conditioners and other appliances with consumers asking why have such devices without the electricity to run them. 

A graver concern for the economy is the outages' effects on the industrial sector, which is Pakistan's biggest consumer of electricity, and factories having to shut down during the outages. Police have also reported increased crime during the blackouts in bigger cities. 

The blackouts have shed light on many problems, but just as many solutions are on offer. 

Of Pakistan's 19,500 megawatts of production capacity, a little more than 60 per cent is from imported oil and domestic natural gas power plants. Hydropower generated from the country's two major dams accounts for about 30 per cent, and its one nuclear power plant produces less than five per cent. 

Coal plant production is even less, but that could change if Pakistan exploits what has been estimated as the world's third-largest known coal reserves in the south-eastern part of the country. 

"The answer lies in using local coal," Tahir Basharat Cheema with DG Energy Management said in a recent televised debate about the energy crisis. 

Cheema suggested the government's Water and Power Development Authority develop coal generation, adding Pakistan cannot "solely depend on the private sector, (which) wants everything developed" for them. 


More nuclear plants and dams are other options often put forward while others tout solar and wind power. 

Ejaz Ahmad, deputy director of the Pakistani branch of the World Wide Fund For Nature (WWF), said a big part of the answer is blowing in the wind. "It is practical for cost reasons as well as environmental," he said. 

With power needed immediately, wind farms look good because they are relatively fast to install whereas dams and nuclear power plants take five to six years to complete and thermal power plants a couple of years at least, he said. 

The WWF erected three 500-watt windmills in a rural area of the southwestern province of Sindh. Each windmill cost about $1,000, including installation, and provides electricity to homes that never had it before. 

"It's a small project to show wind works," Amad said. 

Real small - the country would need at least six million more of those windmills to meet the electricity shortfalls it is experiencing in early April. 

The windmills are in the region of Pakistan's coal reserves, which Amad warned would be a political as well as environmental disaster if they are mined. 

"The winds blow to India, so the pollution would blow into India, and that would cause political problems," he said. Harvest that wind instead, he suggested. 

Professor Irfan Younas with the Institute of Information Technology in Rawalpindi agreed wind should play a big part of solving Pakistan's energy shortages, adding that comprehensive wind maps have already been researched in the country. 

"Karachi's energy problem could be answered with wind energy," he said of Pakistan's biggest city of about 15 million people on the southern coast, where there are consistent breezes all year. 

Cost-effectiveness attracted Younas to both wind and solar energy, he said, but added that in the long-term, Pakistan should also build more nuclear plants and dams. 

"There is money to be made, no doubt about it," he said. "We need people to come and invest in independent power producers here." 

"We are at the point that people really need to act," he said. 

Pakistan searches for solution to power shortages- Politics/Nation-News-The Economic Times


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## Neo

*Aziz admits energy policy was flawed​*
NEW YORK, April 5: Former prime minister Shaukat Aziz said that energy consumption in Pakistan had increased rapidly and his government could not foresee the huge demand to be created by the growing economy.

In an interview with Dawn during a visit to New York, he attributed the shortage of electricity in the country to unprecedented huge energy demands.

The demand for fuel is growing rapidly which is reflected in the consumption of electricity, where contrary to estimates of seven to eight per cent the demand grew by as much as 15 per cent, he said.

The growth estimates we made were lower than the actual ones, creating a supply demand mismatch coupled with distribution problems and delayed implementation of electricity projects.

He said his government had approved power projects of over 2,000MW which were under way.

Fast track projects of around 400MW had been installed and commissioned to meet unexpected growth and demand.

Commenting on the huge increase in the prices of flour in December, the former premier said the shortages were due to administrative inadequacies and smuggling of wheat to neighbouring countries.

We are fortunate that wheat prices in Pakistan are lower than the world. However, there is no denying that there is a global pressure on food prices which will push up inflation and make it challenging for the low-income people who have limited income.

Aziz admits energy policy was flawed -DAWN - Top Stories; April 06, 2008


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## Neo

*Country faces 3,000MW shortfall ​* 
*WAPDA to supply 300MW more to KESC​*
Tuesday, April 08, 2008

KARACHI: It would be a challenging start for Federal Minister for Water and Power Pervaiz Ashraf as he announced at his first press conference here on Monday that the country was facing a power shortfall of 3,000 megawatts and the government required three years to overcome it.

Speaking to newsmen after chairing a high-level meeting to review the power crisis in Karachi, he blamed the last government for failing to meet power demand, which had reached 10,000MW.

I take pain in saying that this is the opening balance given to us by the last government, he said, regretting that not a single megawatt was added to the national grid in the last 10 to 11 years.

The meeting, he said, had decided that the Water and Power Development Authority (WAPDA) would increase power supply to the KESC from 200MW to 500MW in order to give immediate relief to citizens.

This move, he explained, would not completely overcome the shortfall of around 800MW in the city and the utility had committed to adding 400MW in the next six months. The WAPDA would also set up a 140MW rental power plant in Nooriabad, specifically for Karachi, he added.

Asked about the steps he intended to take for promoting energy conservation, he ruled out any forced closure of shops and markets but said people would have to adopt all such measures voluntarily which could help save power.

The announcement to increase power supply to the KESC, the countrys only privatised utility, comes days after the WAPDA signed a deal to set up a power plant in the public sector, only the second in the past 17 years.

Managing Director Pakistan Electric Power Company (PEPCO), Munawar Baseer, told The News taking power generation to the public sector was not a policy shift but rather an outcome of the slow progress of independent power producers (IPPs).

However, according to another PEPCO official, the decision was based more on economic feasibility as could be seen from 525MW Chichoki Mallian power project, which was signed earlier this month.

Chichoki Mallian project will cost us $355 million whereas private investors have put the cost at more than $600 million, he said. Most importantly, the tariff of this gas-fuel configured power plant was just 5.35 cents per unit, he added. In January this year, the government signed an agreement for setting up 450MW Nandipur power plant, which was the first project in the public sector in the past 17 years.

Country faces 3,000MW shortfall


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## Neo

*KESC stops load-shedding in industrial areas ​* 
Tuesday, April 08, 2008

KARACHI: The KESC sent a letter to industrial associations of Karachi on Monday, stating that it would stop load-shedding in industrial areas and thus, there would be no power breakdowns in future, said Nisar Shekhani, Chairman SITE Association of Trade and Industry.

This was stated in a high-level meeting, held in Karachi in which Raja Pervez Ashraf, Federal Minster for Water and Power also announced supply of 300MW additional power to Karachi Electric Supply Corporation (KESC) from Pepco.

The announcement of KESC to stop power outage was highly appreciated by industrialists. Earlier, it was announced that there would be daily load shedding of 4 hours, from 7pm to 11pm, along with unannounced load shedding of another 2 hours. However, this should not be repeated after the commendable announcement of KESC to abolish load shedding in the industrial areas of Karachi, Shekhani informed.

He added that the announcements of Raja Pervez Ashraf to provide 300MW additional power to Karachi, and KESC to cease load shedding in the industrial areas would help industries regain their full productivity, which they desperately need to overcome the production loss they have faced in the last couple of months.

Noor Ahmed Khan, Chairman North Karachi Association of Trade and Industry welcomed the announcement of 300MW more power to Karachi and hoped that this would help limit the problems of industrialists. This, however, will not solve the industrial power problems altogether, as this must be increased up to 3 times, he added.

Muhammad Idrees Gigi, Chairman FB Area of Trade and Industry appreciated the Federal Ministers announcement, but said the problem is that KESC does not know what the total electricity consumption of Karachi is, and what is required. However, he noted that the governments announcement to invest in the power sector is a constructive step and has also been taken to produce power through wind energy in two to three years.The power consumption in Karachi is expanding on a daily basis, which is evident from the daily household item sales in the city. We wish the government luck in its efforts to invest in power generation, which is extremely important, especially when our power consumption is surging. Uninterrupted power supply is a pre-requisite of industrial production. The cost of production is also increasing as our machine components are affected by regular power break downs. Some times we need to import machine components, and this interrupts the whole production process for days, he said. 60 per cent of our industries have stand-by generators; the rest of the 40 per cent would breathe a sigh of relief with this 300MW increment to KESC, Gigi added.

KESC stops load-shedding in industrial areas


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## Neo

*Engineering exports to hit $1bn in 2 years ​* 
Tuesday, April 08, 2008

LAHORE: Engineering Development Board (EDB) Chief Executive Officer Almas Hyder has said Pakistans engineering industry is now progressing by leaps and bounds. 

Our electric fan exports, which were zero about five years ago, have now reached $50 million. The engineering sector exports touched $850 million and are expected to hit $1 billion during the next two years, he said. 

Talking to reporters at a pre-departure training workshop on effective participation in Hanover trade fair, he said that the engineering sector constituted 55 per cent of the world trade, but the country had a negligible share in the world market. 

The engineering sector is very vast and its exports have become vital for us to get out of the trade deficit. We should reduce our export reliance on the textile sector, he said. He said Pakistan Steel Mills had now started consumption of local raw material from Chagi and the EDB is well aware of the rising demand for steel and taking appropriate measures in this regard. 

Earlier speakers said that because of continuous participation in the Hanover trade fairs, Pakistani industry people learned how to improve the quality of products, presentable packaging, and pricing of products, which considerably raise the standard of our exportable goods. The exports were 300-400 million dollars about three-four years back and as a result, the exports have been increased to $850 million. 

Out of 14,000, Gujranwala with 9,000 engineering industrial units has strong base for producing of engineering goods, they said. They stressed the need for collaboration with the institutions concerned for improving technical skills and capacity building of the workforce. They said that out of the total cost of Rs900,000, the EDB was providing Rs850,000 to each of 55 exhibitors, while every one has to bear the cost of only Rs50,000 for attending the trade fair. 

Hyder urged the participants to take care of the public money being provided to them for the trade fair so that desired results could be achieved. 

Engineering exports to hit $1bn in 2 years


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## Neo

*India mulls more cement imports from Pakistan ​* 
Tuesday, April 08, 2008

NEW DELHI: India will look at importing more cement from Pakistan to check spiraling domestic prices, as a neighbouring country has surplus production this year, a top official in the Industry Ministry said. 

We are looking at importing more cement from Pakistan through north western border, Ajay Shankar, secretary in the Department of Industrial Policy & Promotion, said. We are watching the situation very carefully, Shankar said, referring to internal monitoring of some commodity prices to act if their prices go out of control.

Capacity expansion is taking place and we expect demand-supply situation to balance this year, he said, referring to the plan to enhance cement capacity by 118 million tonnes over the next four years to touch 298 million tonnes.

State-run canalising agency Minerals & Metals Trading Corp could be asked to import cement from Pakistan at around Rs210-Rs220 per 50-kg bag, against the domestic price of over Rs230.

India mulls more cement imports from Pakistan


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## Neo

*Computer industry wants GST withdrawn​*
ISLAMABAD, April 7: PC (personal computer) and server market in Pakistan declined to 9.6 per cent in 2007 from the 16.4pc recorded a year ago.

The slowdown is a matter of grave concern not only for the computer industry but also for overall growth of the country because information technology is the backbone of all formal and informal sectors of economy, said Pakistan Computer Association president Munawar Iqbal at the executive body meeting of the association. He called it a grim situation.Quoting a research report, he said the decline was because of the highly unsteady political situation during 2007. Another reason for this slowdown was imposition of 15 per cent General Sales Tax on IT goods and imports.

The PCA president said the association had drawn the attention of the previous government towards the impact of 15pc GST on computers and its components.

The issue was raised with the then prime minister, the then IT minister and the then state finance minister, but to no avail.

Despite assurances to provide immediate relief, nothing tangible was done to resolve the issue, he said, and added that even the Senate and the previous National Assembly had taken notice of the matter.

He said that according to latest reports published by international researchers during 2006-07, total import of PCs and servers in the country was 630,000 units, which dropped to 149,000 at the end of 2007, a decline of 40pc.

Mr Munawar Iqbal further stated that there not been imports under vigorous expansion, autonomous strengthening of infrastructure and technological upgradation programmes by the banking, financial, telecommunication and education sectors, and with the introduction of e-government, these figures would have been more depressing.

While giving a comparative analysis of the region, he said that other countries have granted a host of tariff and non-tariff concessions to this industry.

Pakistan, he said, has a 1.5pc computer density, whereas in the neighbouring countries, it was much higher. Computer density, he said, plays an important role in economic development of the country, and the government should pay special attention to this sector.

The PCA executive body also appealed to the government to abolish 15 per cent GST on import of computers and computer accessories to provide an immediate relief to common users and students.

Computer industry wants GST withdrawn -DAWN - Business; April 08, 2008


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## Neo

*PNSC to acquire new vessels​*
KARACHI: Pakistan National Shipping Corporation (PNSC) has planned acquiring new double-hull vessels or oil tankers worth $135 million by end 2010, official sources told Daily Times.

Official sources in the PNSC told that the state-run shipping company, in this regard, would borrow commercial loan without any government security or guarantee from ABN Amro bank.

PNSC needs to acquire new vessels till 2010 as per International Marie Time Organisation (IMO) rule as all single-hulled ships will have to stop sailing by 2010, which may leave the industry short of tankers. It is also expected due to the short of tankers IMO might give another two-year relaxation. The main reason to abandon single hull ship is to reduce the risk of pollution if a ship is damaged in an accident, it is learnt.

The space in between the two hull layers is often used as storage tanks for fuel or ballast water. Double hulls are more extensive safety measure than double bottoms, which have two hull layers only in the bottom of the ship and not the sides.. In case of grounding or other underwater damage, most of the time the damage is limited to flooding the bottom compartment, and the main occupied areas of the ship remain intact. In case of collision with another ship, most of the time the damage is limited to flooding the side compartment, and the main occupied compartments also remain intact. 

In 1979 PNSC had 41 ships in its fleet with a cumulative weight of 310 thousands dead weight tonnage and now in 2008 they have only 14 ships weighing 346 thousand dead weight tonnage. 

Latest vessels acquired by PNSC are an oil tanker, which was built 1986, and the PNSC bought it in 2006. Officials told that PNSC is facing problems due to the long and complex procedure of approvals. Due to this the private companies take advantage on PNSC, sources added.

Pakistan has only three vessels despite many seaports, causing loss of business in the shipping sector, On the other hand, he added, India has 500 vessels. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan wants UK aid to develop Tribal Areas: PM​*
* Yousaf Raza Gillani says govt to follow multi-pronged strategy to address terrorism
* UK Home secretary announces increase in development funding for Pakistan

ISLAMABAD: Pakistan will welcome British assistance in the development of the Tribal Areas, Prime Minister Yousaf Raza Gillani said on Monday.

Talking to visiting British Home Secretary Jacqui Smith at Prime Ministers House, he said the new democratic government would focus on improving the socio-economic conditions, reducing poverty and generating job opportunities for the people living along the border with Afghanistan. 

During his talk, according to a statement from Prime Ministers House, Gillani underlined the need to regulate madrassas to equip them to provide modern education, which would enable the youth of the area to contribute towards the economic uplift of the region.

Multi-pronged: The prime minister told Smith that the government would follow a multi-pronged strategy to address terrorism and extremism. He said terrorism was a worldwide threat and the global community should focus on its root-causes of economic disparity and unresolved political issues.

Gillani stressed the need to expand Pak-UK relations in all areas to boost existing economic and trade relations. 

Smith told the premier that she appreciated Pakistans role in curtailing terrorism and extremism, adding that the UK government would provide full support to the new government and for an early return of Pakistan to the Commonwealth.

Also on Monday, Smith said that the terrorists and extremists posing a threat to Britain had connections to violent extremist groups in Pakistan. Addressing the opening ceremony of an exhibition of Islamic calligraphy at the National Art Gallery, she said dialogue and co-operation between the security agencies of Pakistan and Britain was vital to effectively handle the terrorism threat. 

Increase: The UK Home secretary also announced an increase of British assistance to Pakistan: Through our Department For International Development (DFID), the UK is doubling its spending in Pakistan to 480 million pounds for the period of 2008 to 2011.

She said that some of the DFID funding was earmarked for development programmes in the Tribal Areas, Reuters reported.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Government hints at reviewing policy on capital earnings ​* 
ISLAMABAD (April 08 2008): The government on Monday dropped the strongest of hints so far that it might end tax immunity on capital earnings through stock exchanges from next fiscal year. Finance Minister Ishaq Dar told a Senate standing committee that continuing with exemptions would not be possible any more.

*FINANCE MINISTER ISHAQ DAR TOLD A SENATE STANDING COMMITTEE THAT CONTINUING WITH EXEMPTIONS WOULD NOT BE POSSIBLE ANY MORE:* He, however, took a cautious stance and did not outrightly say that the government had firm plans to impose capital gain tax (CGT). "We need to collect more revenue...we will have to broaden the tax base by bringing more sectors into the net," he said.

There has, of late, been a lot of criticism on the policy of previous regimes exempting rich stock brokers from paying tax on what they earn through trading in the capital markets. The exemption on capital gain is applicable on stock exchanges for the last many years.

Ishaq said the government wanted to raise, by at least four to five percent, the ratio of tax collection to Gross National Product (GDP) over the next couple of year.

Revenue collection is about 9 percent of GDP at the moment, and officials are eyeing to double it in a decade. Experts believe that it would not be possible without taxing the stock exchanges earnings and agriculture sector, another exempted area. Members of the committee suggested that CGT must come into force immediately. It, however, formed a three-member subcommittee to hold negotiations with stock brokers before giving its final recommendations to the government over the issue.

Representatives of Karachi and Islamabad stock exchanges contested the proposal, arguing that it would suffocate the inflow of both direct and portfolio investment. They sought exemption for another five years with additional demand to do away with overlapping taxation.

*ECONOMY IN A SHAMBLES:* Dar told the committee that the economy was under immense pressure due to previous government's policy of giving subsidies on various products and utilities. The worse part, he said, was that these subsidies were announced but were either not paid at all or paid partially, making it difficult for the new government to strike a balance now.

"What has been given to us is almost a crashed economy...we have to rebuild it now," he told the committee. Abrupt rise in oil prices further aggravated the economic situation, he added.

*CONVENTIONAL MODEL:* The minister said that the government was planning to focus more on agriculture sector, instead of services, giving the idea that the new regime would follow a conventional economic model.

Experts believe it is more a compulsion than a desire because of the non-availability of power and other essentials to take an aggressive stance. "It's going to be like a fresh start by the primitive sector historically," one of them opined, referring to agriculture.

http://www.brecorder.com/index.php?id=720371&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*KESC to get 500 megawatts additional power from Pepco ​* 
KARACHI (April 08 2008): The Government has announced to establish new power generating plants in Karachi of 540 MW capacity in next six months besides increasing the Supply from Pakistan Electric Power Company (Pepco) to the city up to 500 MW.

Federal Minister for Water and Power, Raja Pervez Ashraf announced this while addressing a press briefing after a high-level meeting held here on Monday to discuss the power crisis in Karachi.

Minister for Privatisation and Investment, Syed Naved Qamar; Ambassador at large Salman Farooqui; Federal Secretaries for Water and Power; Finance and Privatisation, Chief Secretary Sindh; Chairmen Wapda, Pepco and Nepra; representatives of National Industries Kuwait and Al-Jomaih Saudi Arabia and other stakeholders also attended the meeting.

Ashraf said that the KESC has been asked to establish a rental power plant of 400 MW capacity in next six months. While the Pepco would also establish a rental plant of 140 MW in Nooriabad area, besides increasing its supply to the city up to 500 MW.

The Minister also announced to constitute three committees over different power related issues including a high-powered two-member committee comprising himself and Syed Naved Qamar to oversee the matters of the KESC and its post-privatisation progress.

However, he dispelled the impression that the government is going to nationalise the KESC saying that the company has depicted a responsible behaviour in overcoming the difficulties of Karachiites.

One of the other two committees, he added, headed by the Chairman Wapda would submit its report within 10 days over the disputed matters between the KESC and Pepco. While, the other would be responsible to make sure the implementation of all the decisions taken by the meeting and would be chaired by the Federal Secretary for Water and Power, he maintained.

Ashraf said that the meeting reviewed the power situation of the city in detail and various measures have been decided unanimously to overcome the energy crisis of the metropolis.

The Minister also appealed the nation to conserve the energy and claimed that the power load shedding would completely be ended in the country after three years by the government's, what he claimed, revolutionary steps.

He was of the view that the closure of markets before 8 pm is necessary for the load management and the energy conservation but maintained that the nation should adopt such measures voluntarily.

Ashraf said that only the consumers of Karachi could save nearly 200 MW by taking conservatory measures. The Minister hinted at launching a media campaign for creating awareness among the masses regarding energy conservation. The minister vowed to work with full commitment and dignity and said that no hindrances in the interests of common people would be tolerated.

He maintained that the country is facing a shortfall of about 3,000 MW as compared to the demand that lies around 10,000 MW. He said that the situation demanded war-footing steps to overcome the crisis.

He charged the past regime of not taking necessary measures for setting up new power plants in view of increasing power demands of the country and said that not even a single MW has been added in power generation during last eight years.

Nasir Al Maani, owner of the National Industries Group Kuwait, the largest shareholder of KESC, said that more time is needed to develop the KESC. He said that his group would make further investment in KESC in coming years adding that the situation would improve in this summer while the load shedding would completely be ended in next summer.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*SNGPL presents five-year investment plan ​*
ISLAMABAD (April 08 2008): The Sui Northern Gas Pipeline (SNGPL) management on Monday submitted a Rs 30 billion 5-year investment plan to the Minister for Petroleum, Muhammad Asif, here for expansion and improvement of its gas distribution network.

Sources told Business Recorder that Managing Director Rashid Lone gave a detailed presentation to the Minister on SNGPL technical and financial health, besides apprising him of the 5-year investment plan. He informed the Minister that SNGPL would generate funds, to make its investment plan a reality, from indigenous resources.

He said the plan has been prepared keeping in mind the infrastructure requirements for the growing gas demand in SNGPL coverage area. He said SNGPL was making annual profit of Rs 8 to 9 billion and, after paying taxes to the government and dividend to the shareholders, it could spare the required funds for development and expansion of its network.

SNGPL is responsible to supply gas to Punjab, NWFP and Azad Kashmir, and the Sui Southern Gas Company (SSGC) to the remaining two provinces-Sindh and Balochistan. Since SNGPL area for gas supply is comparatively larger it gets more than half of total gas available for the consumers.

Rashid told the Minister that SNGPL was a profit-making entity and it invested over $500 million during last five years to enhance efficiency and expand its distribution network, besides paying substantial revenue as gas development surcharge (GDS) to the government. He said that SNGPL gas consumers were increasing on regular basis and just in past five year it added one million new households and 2000 industrial consumers in its system.

Asif appreciated SNGPL role and, in particular, its management's attitude to rely on its indigenous resources to keep on expanding the network to meet the growing demand of gas in its jurisdiction. He assured the SGNPL management all-out support on behalf of the Ministry for betterment of its system and improving quality of service to its consumers.

SNGPL's presentation was part of sensitisation programme to apprise the Minister about the ministry and its departments' working. Earlier, PSO and a few other attached departments had apprised the minister of their working, liabilities, technical and financial position besides their role in revenue generation and giving services to the people in different areas. SSGC, OGDC and other public sector exploration and production companies are yet to present their cases to the minister.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Saudi Arabia to give Rs 4.2 billion loan for Rawalakot projects ​*
ISLAMABAD (April 08 2008): Saudi Arabia will provide a loan of Rs 4.2 billion to Pakistan for different development projects to be implemented under Rawalakot City Development Project (RCDP), to reconstruct the city infrastructure in public and private sectors, which was damaged by 2005 devastating earthquake.

The Earthquake Rehabilitation and Reconstruction Authority (Erra) has submitted a detailed programme in this regard to the Planning and Development (P&D) Division, sources told Business Recorder on Monday. Sources said the total cost of the project is Rs 8.4 billion with the government contribution of Rs 4.2 billion. The government allocation will be funded from Erra's allocation of Rs 35 billion for the current fiscal year.

This will be a mega project with a number of sub-projects in health, education, sanitation, sewerage, road infrastructure areas. The sources said that Erra has prepared umbrella PC-I of the project.

The government has already approved different projects for Azad Jammu and Kashmir, which include Muzaffarabad City Development Project costing Rs 21 billion, Balakot City Development Project of Rs 12 billion,. etc and Bagh City Development Project costing Rs 7.31 billion. These projects are also being implemented from Erra's this year budget.

According to Erra's assessment, Rawalakot district has suffered a significant loss due to the October 2005 earthquake. Around 83 percent of the private houses were fully damaged. The damage to the education sector is 95 percent as 923 schools were damaged in both public and private sectors.

About 213 health facilities were fully or partially damaged. The direct and the indirect losses to agriculture have been estimated at Rs 8.49 billion and Rs 4.22 billion respectively. The road infrastructure, 45.4-km metalled and 507-km of link roads with four bridges were damaged.

The National Engineering Service Pakistan (Nespak), according to the sources, had undertaken a master plan and it had suggested 33 projects involving roads, bridges, government buildings and urban settlements, etc Nespak had proposed the cost of all the projects at Rs 7.31 billion.

According to Erra, the 1,120 persons died whereas 1,883 persons were injured in the earthquake. A total of Rs 873.115 million has been paid as compensation for death and injury cases in Rawalakot district till March 2007. According to some analysts, Erra has a lot of funds, but the Authority is said to have problems with the utilisation.

The execution of some of the important projects has not been up to mark in most of the cases. Erra is all in all in projects' execution, and it has no assistance from other divisions and departments. This very issue, sometimes, creates a lot of hardships in implementing the projects as the Authority is always short of skilled workforce.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*1,500 shortlisted for jobs in South Korea ​*
KARACHI (April 08 2008): A South Korean delegation has finalised the list of 1,500 successful candidates, of them 100 will be flying to Korea by the end of May 2008. Officials in Overseas Employment Corporation told Business Recorder on Monday that the corporation has completed the documentation of successful candidates and sent to Korea, hoping that around 100 candidates would be offered Korean visa in first phase.

They said that out of total 2,000 applicants, 1,500 passed the Korean language test. Around 400 candidates were enrolled at Karachi office and the rest from all over the country.

They said that Korea was immensely looking for manpower for its industries. The annual labour requirement of Korea was about 3,000 and the majority workforce is being inducted from pacific. Officials hoped that Korea would recruit more than 4,000 skilled and unskilled workers from Pakistan.

The high-ups of Pakistan and Korea had signed an agreement envisaging the former to provide skilled and unskilled manpower to the latter for its industrial needs. Korea would provide.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Two thermal power stations of 700 megawatts for Faisalabad planned ​* 
FAISALABAD (April 08 2008): Two new thermal power stations of 700 megawatts are being constructed here to cope with the shortage of electricity, said sources in Water and Power Development Authority (Wapda).

Sources stated that construction of a 200 megawatt thermal power station at Satiana would start next month, while the construction of 500-megawatt thermal power station on Canal Road near old thermal power station would also be initiated before the end of this financial year.

According to the Wapda sources, the Satiana Road thermal power station, having generation capacity of 200 megawatts, would be accomplished within 165 days in the private sector.

The Canal Road thermal power station of 500-megawatt capacity would three turbines and it would be completed in three phases. Two turbines of this plant would be completed in the first phase, while the third would operate with help of exhaust of the first two turbines.

Official sources expressed the hope that these new thermal power plants would start generating electricity within the next three years, under the "fast track programme."

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Creative Energy Resources acquires a strategic stake in Gas fired Power plant in Pakistan​*
Creative Energy Resources Corporation today announced that it has bought a strategic stake in the 586 MW Uch power plant in Pakistan from an affiliate of GE Energy Financial Services Financial details of the transaction were not disclosed.

CER is a regional power company owned by Swicorp Joussour Company (Saudi Arabia) that will build, acquire, own and operate power generation, transmission and distribution facilities in the Middle East, North Africa, and South Asia (MENASA) region. 

The generation projects will be based on conventional, thermal, as well as renewable energy. CER intends to partner with key players in the region to develop these facilities and today's announcement is in line with this strategy. 

The Uch Power Limited (UPL) plant is a 586MW combined cycle thermal power plant that generates electricity, using low British Thermal Unit (BTU) gas from the indigenous Uch gas field, which is supplied under a long-term agreement by the Oil and Gas Development Corporation, majority owned by the Government of Pakistan. 

The plant's output is sold to WAPDA, the national utility owned by the Government of Pakistan, under a long-term contract. The plant is the lowest cost source of thermal power generation in Pakistan. 

UPL is well placed to leverage the plentiful reserves of the Uch gas field by converting the low BTU gas into electricity at the plant. 

Generation of power using clean fuel presents a compelling opportunity for CER, in a country where rapidly increasing demand for power has led to severe shortfalls of supply. 

Shahid Khan, Investment Director, Swicorp Joussour Company said: 
'Power is an important asset class for our investors, and we are pleased with the addition of Uch power to the CER power platform. We are confident that the Uch investment offers our investors access to high quality, risk-adjusted returns. We look forward to continuing to work with the CER management team to develop and acquire further power related projects in the MENASA region where the growing economies and population levels have led to acute shortages of power that we hope to address'.

Commenting on the announcement, Shahzad Qasim, Founder and CEO of CER stated: 'The closing of this transaction is an important milestone for CER. We are excited about expanding the generation capacity at Uch to help meet the growing power demand in the country. We are pleased to partner with International Power plc, Hawkins International, Inc. and Hasan Associates and look forward to developing a fruitful relationship going forward. We would like to express our gratitude for the trust and confidence the Government of Pakistan and other stakeholders in the plant have placed in CER. 

The Swicorp Joussour Company is a private equity vehicle that is structured as a Saudi Joint Stock Company, and is focused on petrochemicals, energy-intensive industries, gas & oil, and infrastructure investments in the MENASA region. 

The company is managed by Swicorp, a diversified financial services firm operating through an extensive network of offices in the Middle East and North Africa. 

Founded in 1987 and licensed by the Capital Market Authority of the Kingdom of Saudi Arabia, Swicorp has an extensive track record of pioneering transactions across the MENA region over the last 20 years. 

Swicorp's offices in Riyadh, Jeddah, Tunis, Dubai and Algiers provide in-depth local knowledge, plus its Geneva presence (offering financial advisory services) and proximity to major European financial centers provides access to international corporations and leading edge expertise.

Creative Energy Resources acquires a strategic stake in Gas fired Power plant in Pakistan | Swicorp


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## ejaz007

*ZONG launched all across Pakistan*

KARACHI: China Mobile launched its first international brand ZONG simultaneously all across Pakistan today. 

WANG Jianzhou, Executive Director, Chairman and CEO China Mobile Communications Corporation, said, It is a landmark day for China Mobile but also for the cellular industry in Pakistan as we are continuing to invest hundreds of millions of dollars in Pakistan and we have a very long-term view of this market. 

He said, Pakistan is our first venture outside China and we are very optimistic about its success. China Mobile has the resources and technical expertise to aim at becoming one of the largest operators of Pakistan also. Marked as the biggest cellular launch in the country, the brand will be available in all four provinces and Azad Jammu Kashmir simultaneously. With the launch of ZONG, China Mobile will adhere to its core value proposition of Responsibility Makes Perfection and spare no effort to improve its competitiveness by implementing the concept of scientific development.

China Mobile aims to establish a comprehensive network with large coverage, high quality, rich variety of businesses and first-class customer services. It has provided GSM roaming services in 206 countries and regions and GPRS roaming services in 101 countries and regions in the world. China Mobile is not only a profitable company with robust financial performance and stable cash flow, but also the one with growing potentials and prospects. Looking forward, China Mobile defines its strategic goal of becoming a worldwide leader in the telecommunications world and achieving leapfrog evolution from excellence to pre-eminence. staff report

Daily Times - Leading News Resource of Pakistan


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## ejaz007

*Power plants offered tax relief*
By Mubarak Zeb Khan

ISLAMABAD, April 8: The government has approved a package of tax relief for 11 projects that will generate 2,500 megawatts by December 2009 in order to meet rising energy demand.

Under the package, customs duty has been reduced to five per cent from 20 per cent on import of cooling towers, heat recovery steam generators and feed water pumps as a one-time relaxation.

The decision was taken at a meeting of the Economic Coordination Committee (ECC) presided over by Prime Minister Syed Yusuf Raza Gilani on Tuesday.

An official in the ministry of water and power told Dawn that half of the projects would be operational by the end of the current year and the remaining would come into operation by December 2009.

He said the projects included the Orient, Atlas, Muridke, Fauji, Saif, Nishad, Halmore and Angro power units.

The official said the projects had achieved or were likely to achieve financial close by April 30 and they were in an advanced stage of commissioning.

The ECC also approved giving exemption from income tax to projects of independent power producers (IPPs) by amending the Income Tax Ordinance, 2001.

The amendment reads as: Provided further that exemption under this clause shall also be available to the expansion projects of existing independent power projects already in operation.

Power plants offered tax relief -DAWN - Top Stories; April 09, 2008


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## Neo

*IPI pipeline project on track: Asif ​* 
Wednesday, April 09, 2008

ISLAMABAD: Federal Minister for Petroleum Khawaja Mohammad Asif has said progress on the multi-billion-dollar Iran-Pakistan-India (IPI) gas pipeline is on track and an agreement on the project will be reached. To discuss the issue, Indian petroleum minister is arriving in Pakistan this month.

Talking to mediamen after addressing the inaugural session of the 2nd International LPG Conference and Exhibition on Tuesday, the minister said the government was trying its best to meet the energy requirement of all consumers while priority would be given to domestic consumers.

About reducing petroleum prices, which the caretaker government increased twice last month, the minister said it had not yet been decided.

The government is working on increasing usage of LPG from current 0.5 per cent to the maximum level in the household energy basket. In India, its usage is 50 per cent and in Brazil 100 per cent, Mohammad Asif, the PML-N leader, pointed out.

The conference had been organised in an effort to highlight the true growth potential of the LPG industry and also to focus on issues related to price regulation and safety standards. The exhibition is arranging a comprehensive display of latest products and services available to the LPG industry including auto gas and industrial automation equipment.

The LPG sector has attracted an investment of $200 million since 2000 and more investment is also expected.

The conference was attended by LPG producers, LPG marketing companies, senior officials of the Ministry of Petroleum and Natural Resources, Oil and Gas Regulatory Authority and vendors.

IPI pipeline project on track: Asif


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## Neo

*Controlling inflation top priority: Gilani ​* 
Wednesday, April 09, 2008

ISLAMABAD: Prime Minister Syed Yousaf Raza Gilani has stressed the need for adopting practical measures to effectively control inflation and prices of essential commodities, besides ensuring a sustainable economic development policy.

He said this while speaking to the Governor State Bank of Pakistan, Dr Shamshad Akhtar, who called on him on Tuesday.

He said controlling inflation is the governments top priority, so that the benefits of economic growth are passed on to the masses.

Underlining the importance of a well functioning financial sector for economic stability, the PM said a strong banking system is a must.

He however underscored the need for lowering excessive government borrowings to reduce inflationary pressures. 

The prime minister also said the banking sector has an obligation to cater to the needs of low-income people, small and medium enterprises, self-employed people, youth and farmers.

Micro credit facility is an effective tool to generate economic activities, reduce poverty and improve living standards. This would provide opportunities to augment income and allow the common man to rise on the social ladder.

He said the banking sector also needed to increase the volume of agricultural credits, which in turn will lead to an increase in the yield of crops and ultimately in the income of farmers.

The SBP Governor, Dr Shamshad Akhtar briefed the prime minister on various monetary policy measures being undertaken to control inflation and also updated him on developments in the banking sector, status of current foreign exchange reserves held and the exchange rate situation.

Controlling inflation top priority: Gilani


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## Neo

*Nuclear power plants of 1280MW: Pakistan to seek financing from China​*
ISLAMABAD: Pakistan has decided to seek major chunk of financing from China for setting up four new nuclear power units of 1280MW to bridge gap between supply and demand, sources told Daily Times on Tuesday.

Sources said that Pakistan would place request before Chinese authorities during the upcoming visit of President Pervez Musharraf to China.

Sources said that proposed nuclear units of 320MW each would be set up to generate 1280MW power by nuclear resources under the vision 2030. Two units of 320MW each will be set up in Chashma and two units will be established in Karachi.

They said that Finance Ministry is working on the process of getting financing from different countries including China and it would also chalk out the strategy to generate financing through joint venture by different countries.

The first phase project of Chashma Nuclear Plant was commissioned in September 2000. Chinese Company is already working on second phase of Chashma nuclear power plant and in May 2004,Pakistan and China signed a contract to jointly build the second phase project of Chashma Nuclear Power Plant. China agreed to provide $350 million credit and will complete the project in 2011.

They said that the current installed electricity generation capacity stands at 19,400MW that would be increased to 162,590MW by 2030 as the energy consumption would rise to 7 fold by 2030.Government has planned a major shift to coal, nuclear and renewable resources to achieve the set target of electricity generation.

At present Pakistan is mainly depending on hydel power generation that has dropped to 2000 MW power due to water shortages in the country. Pakistan is now looking towards wind, coal, and nuclear and solar resources to increase the power generation. Pakistan is said to face around 1400 MW power shortfall constantly by 2010.

At present the country is facing a power shortfall of 1500MW to 2000MW.The power crisis emerged as the private sector has not increased its power generation capacity and new Independent Power Producers (IPPs) were not set up for many years. 

Sources said that Pakistan Electric Power Company (PEPCO) authorities have given briefing to the Prime Minister about the plan of adding 2200 MW power to the current power system in one year. Premier has directed the concerned authorities to carry out the plan. Prime Minister has also directed the public sector also to go side by side with the private sector for setting up power plants so that the dependence on the private sector could be minimised. 

On the other hand, PEPCO would add 1100MW power to the current power system by rental plants during current calendar year. 450MW by rental plants would be added by June 2008 and the rest power would be added by December 2008.The capacity of current existing power generation system would be enhanced by 309MW during 2008.

Two IPPs that include Saif and Orient would add around 500MW power to the current power system. Saif IPP would start providing power supply by July whereas Orient would supply power by October 2008.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Expatriate Pakistanis can help economy​*
LAHORE: Pakistans exports are under tremendous pressure at the moment and it could be eased out if expatriate Pakistanis living in the United Kingdom come forward and join hands with their Pakistani counterparts to help the economy. 

LCCI President Mohammad Ali Mian stated this on Tuesday while addressing a six-member delegation led by Hanzala Malik, Councilor Glasgow City Council. 

Mohammad Ali Mian said Glasgow being the third largest city of the United Kingdom has huge business opportunities but the volume of two-way trade is not very encouraging. He called for well-directed, sector-specific moves to achieve the desired results.

He said that Pakistan was particularly keen in British investment that could provide transfer of technology and help it become a knowledge-based economy. He said that exchange of business delegations and holding of single country exhibitions can boost the bilateral trade. These marketing tools need to be studied by the Chambers and the diplomatic missions of the two countries.

He said that these are the areas where UK-Pakistan entrepreneurs can sit together and chalk out a comprehensive business strategy for their mutual benefits. Keeping in view the current low level of trade between UK and Pakistan there is a need for more focused efforts for expanding economic cooperation. 

The trade between the two countries is steadily increasing. The total volume of trade between both countries during 2004-05 was $1379.1 million, which is on increasing trend and had reached to $1649 million in 2006-07.

Mohammad Ali Mian said that Pakistan is offering tremendous investment opportunities in the fields of information technology, telecommunication, infrastructure, education, and food preservation technologies. 

Speaking on the occasion, the head of the delegation, Mr Hanzla Malik, while stressing the need for more interaction between the two sides, urged the LCCI office-bearers to arrange a delegation to Glasgow to increase the volume of two-way trade. 

The LCCI Vice President, Shafqat Saeed Piracha, said that the visit would prove beneficial for the industrialists of both the sides. He said that there are a lot of opportunities waiting for the potential investors particularly in the field of Textiles and leather.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Dutch government to resume some development aid to Pakistan​*
THE HAGUE: The Dutch government said on Tuesday that it is partially resuming aid to Pakistan, five months after suspending it over President Pervez Musharraf's imposition of emergency rule.

Development Aid Minister Bert Koenders said the decision to restart parts of the aid programme was prompted by the appointment of the new government under Prime Minister Yousaf Raza Gillani. In a statement, Koenders called recent political developments in Pakistan a good first step toward the full restoration of the rule of law in Pakistan. 

Dutch aid will be targeted at education, the environment, and good governance. The monetary value of the projects being resumed was not immediately clear, but the government said it has earmarked $63 million for programmes in Pakistan over the coming years as part of its efforts to promote stability in the country. 

A democratic and stable Pakistan in the long term contributes to the resolution of the conflict in Afghanistan and [to] security in the Netherlands, said Koenders. ap

Daily Times - Leading News Resource of Pakistan


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## Neo

*Philip Morris investment blows up in smoke​*
KARACHI, April 8: On Monday, Lakson Tobacco Company unveiled results for the six months ended on December 31, 2007, posting after-tax profit at Rs471 million. Those marked the first of the figures released by the company, following the devastating events of the end of December last year, when the Lakson Tobacco became one of the targets of looting, arson and riots.

Early last week, the company had notified that the factory had to be closed down as a result of destruction and the management planned to lay off all employees. The company announced that it was in no position to resume all manufacturing operations as that required a significant investment, among others, in installing new plant, machinery, equipment and incurring costs relating to civil works.

So the wage-earners, already groaning under the burden of burgeoning inflation became the first casualty of the grim events of Dec 27, 28 and 29.

Another unhappy party should be Philip Morris International (PMI) -- one of the largest tobacco companies in the world which, in January last year had acquired 50.21 per cent shares in Lakson Tobacco Company at $339 million (Rs21 billion), adding to its already held equity interest of 47 per cent in the company.

It has perhaps witnessed much of its investment blow up in smoke even before the year was out. The market price of the share in Lakson Tobacco has plunged from Rs480 on Dec 27 last year to Rs366 on April 8. A greater fall has perhaps been averted for lack of floating stock.

Auditors had inserted a qualification in the Laksons accounts released on Monday, stating that the company had filed claims of Rs275 million in respect of damage to property, plant and equipment. Another claim in respect of partially damaged assets was also lodged with the insurance company. Assessment of the level of impairment had still to be finalised.

Lakson Tobacco has been the countrys second largest tobacco company, which rolled out 29.8 million cigarettes in the year ended on June 30, 2006, generating net revenues of Rs10 billion.

Informed sources said that the company employed over 5,000 persons at its factory in Korangi and four others at Kotri, Quadirabad district Sahiwal; village; Mandra tehsil Gujar Khan and 5th at Ismaila, district Swabi. The company also has a leaf division in Mardan, the city reputed as the capital of tobacco-growing areas in Pakistan.

Another 1,500 people earned livelihood from work at the companys leaf division during the leaf buying and processing seasons. It was not clear whether the company intended to cut jobs at just the Karachi site or other locations as well.

Industrialisation as it is already on the halt, it is painful to watch even the flourishing businesses being burnt down to ashes and labour thrown out of work.

Lakson Tobacco was doing very well until the riots of December. At the close of last financial year, the company held fixed assets of the value of Rs2.5 billion and total assets of Rs6.6 billion. It had stood 13th in the list of top 25 companies at the Karachi Stock Exchange for 2005.

Following the acquisition of almost entire equity stake by Philip Morris in the winter of last year, eight of the 11 seats on the company board were occupied by foreigners. Salman Hameed had stepped in the shoes of Iqbal Ali Lakhani as the chairman & CEO of the company.

The new chief was not available on Tuesday for more information on recent developments and prognosis for the future.

Philip Morris investment blows up in smoke -DAWN - Business; April 09, 2008


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## Neo

*US working with donors to supply electricity to Pakistan ​*
WASHINGTON (April 09 2008): The United States is working with international donors to realise supply of electricity from energy-rich Central Asian region to Afghanistan and Pakistan, a senior US official said Tuesday.

Richard Boucher, the top US official for South Asia, told a Congressional hearing that trade in electricity can benefit both sides, providing "much-needed energy to South Asia and serving as a major source of future revenue for the countries of Central Asia."

"Together with other donors, we are also exploring ways to export electricity from Central Asia beyond Afghanistan to Pakistan and eventually India." In his prepared statement before a House sub-committee on foreign affairs, the US Assistant Secretary of State for both regions said the US is advocating for the countries of Central Asia to supply power to northern Afghanistan, and helping to develop the Afghan electricity system so Afghans can benefit from that connection.

Continuing on efforts to foster economic and trade ties between the two regions, Boucher referred to August 2007 opening of a new bridge spanning the Pyanzh River that now connects Tajikistan and Afghanistan.

"The bridge is an important piece of a future regional highway network extending from Karachi, Pakistan to Astana, Kazakhstan, including a network of more than 2,400 miles of roads within Afghanistan that have been constructed or reconstructed since 2001." Already, since the bridge opened, Afghan vehicle traffic to Tajikistan has increased seven-fold and border tax revenue ten-fold, he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Saudi company acquires 18 percent stake in Uch power plant ​* 
ISLAMABAD (April 09 2008): Creative Energy Resources Corporation (CER) announced on Monday that it had bought a strategic stake in the 586 MW Uch power plant in Pakistan from an affiliate of GE Energy Financial Services. But it did not disclose financial details of the transaction.

However, some knowledgeable sources confided to Business Recorder on Tuesday that the CER, which is a regional power company owned by Swicorp Joussour (Saudi Arabia), had acquired an 18 percent stake in the power plant.

According to the sources, International Power Plc, which has been operating with interests in over 40 power stations and some closely linked businesses around the world, has bought over 70 percent stake in this energy deal. The Hassan Associates is said to have acquired a small stake in the plant.

The Uch Power Limited (UPL) plant is a 586MW combined cycle thermal power plant that generates electricity, using low British Thermal Unit (BTU) gas from the indigenous Uch gas field, which is supplied under a long-term agreement by the Oil and Gas Development Corporation, majority owned by the Government of Pakistan.

The plant's output is sold to Wapda under a long-term contract. The plant is the lowest cost source of thermal power generation in Pakistan. In its Riyadh(Saudi Arabia)-datelined press release, the CER said that it will build, acquire, own and operate power generation, transmission and distribution facilities in the Middle East, North Africa, and South Asia (MENASA) region.

The generation projects will be based on conventional, thermal, as well as renewable energy. CER intends to partner with key players in the region to develop these facilities and the announcement is in line with this strategy.

Shahid Khan, Director of Investments, Swicorp Joussour said: "Power is an important asset class for our investors, and we are pleased with the addition of Uch power to the CER power platform. We are confident that the Uch investment offers our investors access to high quality, risk-adjusted returns.

We look forward to continuing to work with the CER management team to develop and acquire further power related projects in the MENASA region where the growing economies and population levels have led to acute shortages of power that we hope to address."

Commenting on the announcement, Shahzad Qasim, Founder and CEO of CER stated: "The closing of this transaction is an important milestone for CER. We are excited about expanding the generation capacity at Uch to help meet the growing power demand in the country. We are pleased to partner with International Power plc, Hawkins International, Inc and Hasan Associates and look forward to developing a fruitful relationship going forward We would like to express our gratitude for the trust and confidence the Government of Pakistan and other stakeholders in the plant have placed in CER."

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan To Have Zero-Rated Access To Malaysian Market By Jan 2009​*
KARACHI, April9 Asia Pulse - Pakistan will have a zero-rated access to Malaysian market by January 2009 due tothe elimination of tariffs on 6,669 items out of the 10,593 products offered in Free Trade Agreement (FTA) titled Malaysia-Pakistan Close Economic Partnership Agreement MPCEPA.

These items have been placed in Fast Track category; however, most of Pakistani products under the Core category are either out of the ambit of FTA or have been put in Sensitive list. 

The tariff on the 6,669 items under Fast Track Category will be reduced to zero per cent, indicating that Pakistan's products will be successful in penetrating potential market of Malaysia.

The items under Fast Track Category will have an edge on the products of competing countries like India, China and Bangladesh and its effects would be visible by the end of next year.

Exploring Pakistans Export Potential to Malaysia in the context of MPCEPA, Mujeeb Ahmed Khan, Head WTO Cell, TDAP in his research paper wrote, the total indicative potential for Pakistans export products in Malaysian market, the third biggest economy in South East Asia, has been estimated at $US1.17 billion against the present level of only $US54 million.

The benefit, given in the form of concessions under FTA between Pakistan and Malaysia, can be materialized to achieve the envisaged potential provided tangible efforts, in terms of competency level and quality of products, is ensured to the requirements of the Malaysian buyer.

This research output disseminated information on the tariffs, non tariff barriers and the administrative procedures under MPECPA which gave identification of support needed by the exporters to boost and increase exports to Malaysia and to consider KCCI as an outreach station of WTO Cell.

Perceiving gains from MPCEPA, out of 97 items under the Core Category, only seven items have been placed in Fast Track while 75 items have been placed in category of Normal Track which means that most of the items would get zero-rated tariff by 2012. Although the present value of core products has been estimated at $US19.87 million the untapped potential of such products has been estimated $US275 million.

Out of 20 items under Other Core Category, 10 items have been placed in Fast Track Category which mean that they will become zero-rated by January 2009 and help achieving the indicative potential of $US497 million against its present value of $US13.7 million. It indicates that the focused attention on these products, considerable growth can be witnessed in Malaysian Market.

The Developmental Category is perceived to have more benefits as out of 71 products, 58 have been placed under Fast Track Category which means that the products under this category will have zero-rated access to Malaysia by Jan 2009. There is hence an ample opportunity for these products to improve the current value of $US22.6 million to more than $US425 million as the indicative potential of such products has been estimated $US405 million.

Amongst top- 20 export products from Pakistan to Malaysia, six items have been placed in Fast Track Category, which means that by the end of next year, most of them would be given market access at par with regional member countries of ASEAN while ten items have been placed under Normal track Category. .The indicative potential of top-20 export items has been estimated at $US414 million. It is expected that the concessions given under FTA will help tap the indicative potential with greater pace.

In the Normal Track, 1215 items including cotton, yarn, cotton cloth, art silk and synthetic yarn, knitted or crotched fabrics, ready made garments, bed linen and textile made-ups will get zero rated market access by 1st January 2012. While, 2111 items have been placed in Sensitive track which would be further divided in 3 categories; under ST1 224 items would have only 5 per cent duty by 2011, under ST2 616 items would have 10ercent duty on 1-01-2014 and under ST3 1271 items would have 20 per cent duty on 1-01- 2011 knit wears/hosiery and embroidery of textile materials.

Sixteen items would be importable by Malaysia under the Tariff Quota and a further 450 items are in Highly Sensitive List (HSL. While 102 items are in Exclusion List which would not be given any preferential market access by Malaysia.

Malaysia ranks 3rd largest economy in the ASEAN region with $US148.9 billion GDP and leading Muslim country in terms of exports over $US200 billion. It is a high middle-income, export-oriented economy, with GDP per capita of $US5718 and a worlds leading exporter of Palm oil and major oil and gas exporter in the region.

Malaysian imports from Pakistan grew only by $US5 million during five years, depicting insignificant annual growth of 1.8 per cent while Malaysian exports to Pakistan increased by $US317.5 million (From US$525 million to US$842.5 million), showing 7.6 per cent growth per annum. Balance or trade was in favour of Malaysia by US$738 million in the year 2006.

Rice, Fish, Cotton Yarn, Textile fabrics, bed linens and sports balls were the main exporting items from Pakistan to Malaysia.

Palm oil, which is overall the fifth largest import product of Pakistan, was the largest item exported by Malaysia, which constituted 50 per cent of the total exports from Malaysia to Pakistan. The balance of Trade remains in favour of Malaysia mainly due to Palm Oil export to Pakistan.

MPCEPA Signed on 08-11-2007, the first bilateral FTA between two Muslim countries and the first comprehensive FTA incorporating trade in goods, trade in services, investment and economic co-operation. Malaysia has offered 10593 products in all at nine-digit level of HS Code. The base rate for reduction and elimination of tariff is the applied Most-favoured-Nation (MFN) tariff rates as of: (a) 1 January 2006 in the case of Malaysia; and (b) 1 July 2006 in the case of Pakistan.

Pakistan To Have Zero-Rated Access To Malaysian Market By Jan 2009 - Yahoo!7 News


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## Neo

*$104.5 million Barani water project to be launched from July: PIPD ​* 
FAISALABAD (April 09 2008): The Barani Integrated Water Resources Sector Project will be launched next fiscal year from July 2008, and it will be completed during 2014 by the Punjab Irrigation and Power Department (PIPD) with the financial assistance of the Asian Development Bank (ADB).

According to update project investment plan, PIPD sources said the investment cost of the project is estimated at $104.5 million equivalent, including taxes and duties of $14.4 million equivalent. Financial charges during implementation (comprising interest during implementation and commitment charges) are estimated at $7.5 million.

Sources stated that the project's impact is to improve households' income and health in the four districts of Attock, Rawalpindi, Jhelum, and Chakwal in the Barani Areas of Punjab. The project's outcome is to increase agriculture and livestock productivity and household access to domestic water supply.

The project outcome will also be increased sustainable water storage capacity; sustainable and profitable command areas and domestic water supply developed; and enhanced dam planning, management, and implementation capacity.

The second output will be developed sustainable rural water supplies and sanitation and increased small towns, domestic water entitlements; efficient community-based management irrigation schemes, and improved farmers' access to production support and market services.

They said the sector project will support the Punjab government's efforts to develop water resources and improve their management in four districts of the Barani areas of Punjab that suffer from water scarcity. The project intends to improve households' income and health by increasing crop and livestock productivity through irrigation development and increased access to water and sanitation.

Activities will include (i) the construction of dams and appurtenant structures to increase water availability in the area; (ii) watershed management to enhance the dams' life expectancy; (iii) development of the rural water supply for communities in the vicinity of the dam; (iv) development of community-managed irrigation distribution network; (v) agriculture extension services to support the transition to irrigated agriculture; and (vi) institutional support.

The project will also rehabilitate and develop irrigation schemes, provide extension support, and improve watershed management in existing dams. To address the problem of sustainability and low economic returns observed in previous dam projects in Barani areas, the project will change the sub-sector implementation practices and follow an integrated approach looking simultaneously at dam development, watershed management, and command area development. Similarly, it will support devolution of the water scheme to organised water users and foster a demand-driven approach through the inclusion of social mobilisation support.

While figures from the government of Punjab indicate that between 75 and 80 percent of the population have access to safe drinking water in the Pothowar plateau, the real availability of water to households in this area is extremely limited.

As early as in the 1960s, the sources said that dams were developed to increase water availability in the Pothowar plateau. To date, a total of 50 dams from 11 to 40 meters (m) high and with reservoir storage of from 600,000 to 54 million cubic meters (m3) have been commissioned by the Small Dams Organisation (SDO) under the Punjab Irrigation and Power Department (PIPD), with a total canal command area of around 24,500 hectares. This storage represents 12 percent of the estimated 2,320 million total runoff generated in the plateau and only a small portion of the many potential dam sites that have already been identified.

The PIPD will be the executing agency for the project and responsible for overall project management and implementation. A PMU headed by a PIPD-appointed project director will be established. Three PMU field offices, one for Attock and Rawalpindi districts, one for Chakwal district, and one for Jhelum district will be established. Each office will be staffed with a full-time specialist seconded from the Punjab government departments of agriculture, livestock, and forestry.

The PMU will assume the following roles: (i) overall interagency and district coordination; (ii) recruiting consultants and non-government organisations (NGOs), and awarding procurement and consulting contracts, as well as all project financial management; (iii) consolidating, reviewing, and submitting regular progress and financial reports to the Project Steering Committee (PSC) and the ADB; and (iv) monitoring and evaluating project outputs and results. The PMU will also be responsible for directly implementing the watershed management activities under the first, second, and third outputs. The Small Dams Organisation (SDO) will be responsible for implementing dam planning and construction activities under the first output.

In implementing those activities, SDO will receive specific advisory support on safeguard and technical matters from the PMU. For each subproject under its responsibility, the SDO will appoint a sub-divisional officer who will supervise the dam feasibility and, detail design studies, and the engineering construction supervision consultants. In implementing the water supply-related activities, the PMU will involve the relevant tehsil municipal administration (TMAs) in (i) assessing the demand for water supplies, (ii) organising the future water supply users, and (iii) supervising the overall execution of works and services related to water supply activities.

To expedite project implementation, the PIPD sources mentioned that the sub-projects will be prepared in batches equivalent to 2,000 hectares (ha) of irrigated agriculture development (between one and four sub-projects).

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Telenor Pakistan selects Acision for dramatic growth ​* 
KARACHI (April 09 2008): Messaging, charging and usage monitoring to help improve customer experience Acision, the messaging and charging company of choice for over 300 network operators and service providers, announced today that Telenor Pakistan has selected Acision to provide its high performance Next Generation Short Message Service Centre (SMSC), Pre-delivery Service Agent (PSA).

A gateway for message charging, and Business Tools platform. As Telenor Pakistan continues to aggressively expand its market share in the region, these new solutions will help to quickly implement new services, understand customer usage patterns and ensure sufficient capacity for expansion in the future.

Telenor Pakistan's decision to expand with Acision's highly scalable solutions will allow the operator to trial new messaging services and key features with customers before commercially launching them to the market, providing the highest quality experience for its subscriber base.

As a result of strong and sustained development in the region's mobile market, Telenor Pakistan, the country's fastest growing operator, is competing for new subscribers from a rapidly increasing customer base.

Acision's Pre-delivery Agent will help Telenor Pakistan to benefit from a simplified message charging architecture, which reduces the complexity and cost of launching new service plans across both pre- and post-paid subscriber bases. In addition to managing performance and efficiency, Telenor Pakistan will use Acision's Business tools to analyse subscriber usage patterns and obtain operational intelligence.

This allows Telenor Pakistan to understand what their customers want and offer them value-added services through targeted marketing campaigns, thereby enhancing subscriber satisfaction while at the same time ensuring future revenue growth.

Chief Technical Officer Telenor Pakistan, Peter Anthony Dindial, commented: "In what is an exciting, fast moving market, we must be ready to meet growing subscriber numbers and offer them the reliable and robust services that they demand. Telenor and Acision have a relationship that spans the globe across all Telenor entities.

Our decision to work with Acision in Pakistan is based on their ability to deliver comprehensive solutions in terms of value add for our end subscribers, helping Telenor Pakistan to benefit from Acision's expertise as a leader in the global mobile market."

Boudewijn Pesch, Managing Director for Acision in Asia Pacific, added: "For an operator to harness a strong subscriber base, it is paramount that services offered can cope with the growing demand of future subscribers. Telenor Pakistan has recognised that Acision delivers robust, scalable market-leading solutions in Messaging and Charging, coupled with the experience and support capability to assist Telenor Pakistan with its future long-term growth."

Business Recorder [Pakistan's First Financial Daily]


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## fatman17

Pakistan sugar exports seen at 250,000T in 07-08 

MUMBAI: Pakistan, which entered the world sugar market in January after a gap of five years, has planned to export about 250,000 tonnes in the current crop year to September, a leading producer said on Thursday. 

An importer of sugar in recent years, Pakistan struck its first deal to export the sweetener in early 2008 by selling 1,000 tonnes of whites to Sri Lanka and has been ramping up overseas sales since then. 

&#8220;Mills have so far contracted to export 150,000-200,000 tonnes of sugar from the new season,&#8221; Ahmed Ebrahim Hasham, a director at Mehran Sugar Mills Ltd, told Reuters on the sidelines of a sugar conference in Mumbai. 

&#8220;Out of the total contracts for exports this season, some have already been shipped to Bangladesh, Sri Lanka and Yemen,&#8221; he said. 

Sugarcane crushing season in Pakistan runs from October to September. 

Mills in the country plan to export 50,000 tonnes sugar more and they would like to tap markets in the Middle East and Bangladesh, he said. Pakistan, which consumes around 4.2 million tonnes of sugar annually, is expected to produce between 4.6-4.8 million tonnes this year, up from 3.5 million tonnes last year, Hasham said. 

&#8220;Production is expected to be slightly lower next year as farmers have not been paid well for their cane this time due to low sugar prices in the country. While production is expected to fall slightly next year, consumption has started rising by about 5 percent annually,&#8221; he said. 

The country was not likely to import sugar next year despite expected drop in output as last year&#8217;s carryover stocks would help meet domestic demand, Hasham said. Pakistan imported around one million tonnes of sugar in the year to September 2007, including 700,000-800,000 tonnes from India. reuters


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## ejaz007

*Pakistan, S Lanka to strengthen trade relations*

LAHORE: Both Pakistan and Sri Lanka are lucrative investment locations for each others exporters as Pakistan is a gateway to resource-rich Central Asian States while on the other hand Sri Lanka enjoys duty-free access to huge European and Indian markets.

This was the consensus developed at a meeting between Sri Lankan High Commissioner Dr Wijeratne Bandara Dorakumbure and Lahore Chamber of Commerce and Industry (LCCI) President Mohammad Ali Mian here at LCCI on Wednesday. 

The Sri Lankan High Commissioner said that under Generalised System of Preference (GSP) Sri Lanka has a free access to huge European market and under the regional pact it enjoys same facility with India that could be availed by Pakistani exporters for re-export to these markets.

He said both Pakistan and Sri Lanka had signed Free Trade Agreement (FTA) and the accord should be utilised to the maximum for the promotion of two-way trade.

Sri Lanka has secured duty-free access for as many as 7,200 products to the European Union Market under the EUs GSP Plus Scheme. The main product categories which have vast potential in Sri Lanka under the GSP Plus Scheme include apparel and textiles, clothing accessories, sea foods, activated carbon, artificial flowers, foliage plants, rubber-based products tableware and bicycles. staff report

Daily Times - Leading News Resource of Pakistan


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## ejaz007

*Yemen seeks support in pharmaceutical surgical sectors*

ISLAMABAD: The Yemen Ambassador to Pakistan, Abdul Elah Mohamad Hajar, on Wednesday asked for Pakistani support in developing the Yemens Pharmaceuticals and surgical industry. 

As Pakistan had achieved tremendous development in both the sectors, the ambassador said the assistance in this regard would be very fruitful for both the countries. The ambassador expressed these views during a meeting with President Islamabad Chamber of Commerce and Industry (ICCI) Ijaz Abbasi here today. He said that both Yemen and Pakistan could work together in different sectors of the economy, particularly in trade.

For further enhancing the bilateral trade, Hajar said the Yemen Embassy had increased the issuing of visas for Pakistani businessmen. It has considerably increased bilateral trade between the two countries. At present he said the total volume of bilateral trade was $82 million. Pakistan export to Yemen was $77.9 million and its imports are $4 million and thus the balance of trade was in favour of Pakistan. 

There were a number of sectors, in which joint ventures could be established between the local and Yemen businessmen. Despite of some deficiencies, the atmosphere of Pakistan was very suitable for foreign investors due to its strategic location in South Asia. Pakistan could be used as a gateway for whole Central Asian Republics due to easy access to these markets. The countrys stock exchange was going well and geographic condition of Pakistan is strategically important as the newly constructed Gwadar Sea Port could play a vital role in expanding trade activities in the region. About the manufacturing of surgical instruments, he said the country was manufacturing two types of instruments, i.e. disposable and reusable instruments. ijaz kakakhel

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan ranked 89th in Global IT Report ​* 
Thursday, April 10, 2008

ISLAMABAD: The World Economic Forum Global Information Technology Report 2008 has ranked Pakistan at 89th position, out of 127 countries, in terms of preparedness to effectively promote business, improve investment climate and develop infrastructure.

The Competitiveness Support Fund (CSF), a partner institute of the World Economic Forum (WEF) in Pakistan, released the report on Wednesday.

This years ranking shows a five-point decline for Pakistan from last year when it was ranked 84th out of 122 countries.

Although telecoms operators are aggressively upgrading their networks infrastructure to launch broadband data and multimedia services, Pakistan still ranks low in terms of the cost of broadband and security of Internet servers. Furthermore, the number of days and procedures required to enforce a contract in Pakistan is also a key challenge in achieving a sustainable impact. The decline is a result of a weakened political and regulatory environment and infrastructure environment, which refers to network facilities, network capacity and capabilities.

Published for the seventh consecutive year, the Global Information Technology Report is the worlds most comprehensive and authoritative international assessment of the impact of information and communications technologies on the nations development and competitiveness.

It is evident that technology is playing a leading role in accelerating economic growth and promoting development, said CSF Chief Executive Officer Arthur Bayhan.

A coherent government vision on information and communications technologies, coupled with an early focus on education and innovation, is the key to spur network readiness and to lay the foundations for sustainable growth.

The support for CSF is part of the $1.5 billion in aid that the US government is providing, through USAID, to Pakistan over five years to improve economic growth, education, health, governance and earthquake reconstruction.

Pakistan ranked 89th in Global IT Report


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## Neo

*2,200MW more electricity to be produced ​* 
Thursday, April 10, 2008

ISLAMABAD: The Ministry of Water and Power has finalised a plan to produce an additional 2200 MW electricity within a year in line with the directives of the prime minister.

This was informed to the members of Senate Standing Committee on Water and Power which met on Wednesday under the Chairmanship of Senator Hafiz Malik Qadri to receive briefing on current power crisis in the country.

The committee was informed that as a result of the measures taken by the government the shortage of electricity would decrease and year 2009 would be a load manageable year.

The load shedding in the country is likely to come to an end by year 2010, the Committee was told.

Secretary Ministry of Water and Power Ismail Qureshi gave a brief account of the overall power shortage and the steps being taken to overcome the crisis.

MD Pakistan Electric Power Company (PEPCO) gave a comprehensive account of the background of the country power sector. 

The meeting was told that a sustained and aggressive action plan based on a combination of supply as well as demand and continuing conservation of energy plans are likely to eliminate power shortfall by 2011.

2,200MW more electricity to be produced


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## Neo

*IDB finances new projects in Pakistan ​* 
Thursday, April 10, 2008

JEDDAH: The Board of Executive Directors of the Islamic Development Bank has approved new $570.4 million for financing nine development projects in Pakistan, Iran, Uzbekistan, Niger, Cote dIvoire, Guinea, Syria, Morocco, Qatar, and grants from Waqf Fund in favour of six Muslim communities in Bosnia- Herzegovina, India, the USA, Kenya and China. 

The board approved $93 million Istisna financing for reconstruction of rural infrastructure for victims of October 2005 earthquake in Shangla & Kohistan districts under the IDBs earthquake assistance package for Pakistan.

$121.44 million instalment sale for Abadan Combined Cycle Power Plant Project, Iran. $15 million Second Line of Financing to National Bank of Uzbekistan. $50 million Loan Financing & Instalment Sale for Construction of Kandadji Dam Project, Niger. $37.3 million Istisna financing for Upgrading, Expansion of Abidjan International Airport Freight Terminal, Cote dIvoire.

IDB finances new projects in Pakistan


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## Neo

*Govt to protect overseas Pakistanis investment in country: Khurshid ​* 
Thursday, April 10, 2008

ISLAMABAD: Minister for Labour, Manpower and Overseas Pakistanis Syed Khurshid Ahmed Shah on Wednesday said the government would provide complete protection to the investments made by Overseas Pakistanis in the country.

Speaking to a 15 member delegation led by Chaudhry Liaqat Ali, Lord Mayor of London Borogh of Waltham Forest, United Kingdom, here, the minister said the government would give complete assurance to the Overseas Pakistanis investors to come forward and make investment in the country for the progress and prosperity of the people.

Managing Director of the Overseas Pakistanis Foundation (OPF) Syed Nayyer Hasnain Haider and Director Administration Habib ur Rehman Khan were also present in the meeting.

The minister said that OPF is working to establish an industrial estate for Overseas Pakistanis at Chakri Interchange in the collaboration with the government of Punjab.

This Industrial Estate would be attractive point for Overseas Pakistanis Investors, he said.

He urged that the Pakistani community living abroad should play their due role in building of the country by making investment of their valuable earnings.

Shah assured the delegation that the issue of right of vote to Overseas Pakistanis has been taken up with the Election Commission to evolve a mechanism through which they could be able to exercise their right of vote from abroad.

The minister asked the delegation to bring suggestions and proposals for the welfare of Overseas Pakistanis. He stressed the need for establishing strong interaction with Overseas Pakistanis, so that their problems could be addressed effectively.

He appreciated the contribution of Overseas Pakistanis which they made by remitting billion of dollars to Pakistan.

Govt to protect overseas Pakistanis investment in country: Khurshid


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## Neo

*Govt to protect overseas Pakistanis investment in country: Khurshid ​* 
Thursday, April 10, 2008

ISLAMABAD: Minister for Labour, Manpower and Overseas Pakistanis Syed Khurshid Ahmed Shah on Wednesday said the government would provide complete protection to the investments made by Overseas Pakistanis in the country.

Speaking to a 15 member delegation led by Chaudhry Liaqat Ali, Lord Mayor of London Borogh of Waltham Forest, United Kingdom, here, the minister said the government would give complete assurance to the Overseas Pakistanis investors to come forward and make investment in the country for the progress and prosperity of the people.

Managing Director of the Overseas Pakistanis Foundation (OPF) Syed Nayyer Hasnain Haider and Director Administration Habib ur Rehman Khan were also present in the meeting.

The minister said that OPF is working to establish an industrial estate for Overseas Pakistanis at Chakri Interchange in the collaboration with the government of Punjab.

This Industrial Estate would be attractive point for Overseas Pakistanis Investors, he said.

He urged that the Pakistani community living abroad should play their due role in building of the country by making investment of their valuable earnings.

Shah assured the delegation that the issue of right of vote to Overseas Pakistanis has been taken up with the Election Commission to evolve a mechanism through which they could be able to exercise their right of vote from abroad.

The minister asked the delegation to bring suggestions and proposals for the welfare of Overseas Pakistanis. He stressed the need for establishing strong interaction with Overseas Pakistanis, so that their problems could be addressed effectively.

He appreciated the contribution of Overseas Pakistanis which they made by remitting billion of dollars to Pakistan.

Govt to protect overseas Pakistanis investment in country: Khurshid


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## Neo

*Presidents visit to China: Agreements to be signed to attract Chinese investment​*
ISLAMABAD: During the President of Pakistans visit to China both the countries are set to sign agreements or MoUs on Chinese investment in Gwadar Oil City, incentives for setting up of Special Economic Zones, Gwadar seaport development programme for expansion, oil and gas exploration by Chinese companies. 

All these initiatives are considered to be essential for the success of Trade Energy, Transport and Industrial Corridor between Pakistan and China, a senior government official told Daily Times on Wednesday. 

A Steering Committee headed by Deputy Chairman Planning Commission and comprising Minister of State for investment, Secretary General Revenue Division, Prime Ministers Advisor on Energy and members from all four provinces, and concerned federal ministries have developed proposals including incentive packages for Chinese investors for realising the targets.

Energy Advisor Wing has developed the oil concessions for Chinese companies with the objective of attracting them to bring in at least 200 rigs to Pakistan. This policy would be open to other interested exploration companies as well. 

To implement the initiatives for realising the objectives of the Corridor, President has already approved constitution of a 16 member Policy and Supervisory Board and constitution of over 10 members Steering Committee. 

The Corridor would require a set of 14 important measures to make this initiative a success. It has been decided that Pak-China bilateral working group would be constituted to prepare and finalise action plan for building the Multi-Modal Corridor. General attractive concessions would be given for the development of Special Economic Zone (SEZ).

Site for China-Saudi Oil refinery in proposed Oil City at Gwadar should be identified and terms and conditions for investment to be decided on priority basis. Government of Balochistan has already been asked to identify state land for development of projects at Gwadar out of which 50 square kilometers land be allocated to Chinese developers at nominal rates for establishment of (SEZ). 

The Gwadar Sea Port development programme, which has been approved, would be negotiated with Chinese Investors to attract investment in this area. Financial incentives equal or batter than Chinese SEZ would be provided to the investors in the said area.

Under the Corridor Plan a high speed and capacity link of Gwadar with international optical fiber cables is to be established.

Federal government has already showed its willingness to resolve the issue of land for economic zones in different parts of the country, in addition to special lease of land at Karachi, Lahore, Islamabad and Peshawar for international entrepreneurs investors including Chinese companies to build 15 to 20 story offices and business support centres residency blocks for the perspective investors. 

The Policy and Supervisory Board has been constituted for providing strategic vision laying down policy guidelines, ensuring timely decisions and regularly monitoring the progress. It has been decided that President of Pakistan will head the Board and other members are Prime Minister, Federal Ministers of Ports and Shipping, Communication, Railways, Petroleum and Natural Resources, Industries and Production, Commerce, Water and Power, Governor and Chief Minister Balochistan, Minister of State for Investment, Deputy Chairman Planning Commission, Secretary General Finance, Secretary General revenue Division and Secretary Foreign Affairs.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Industrial production witnesses slackened growth​*
KARACHI: Industrial production slowed down further by 5.29 percent in first seven months of current financial year compared to corresponding period of last year, official data indicated on Wednesday.

The slow down in industrial output, caused by numerous factors has raised the fears of failure to meet the annual target for Large Scale Manufacturing (LSM), analysts believed.

State Bank of Pakistan (SBP) in its 2nd quarterly report recently also pointed out domestic as well as external factors are responsible for the relatively slower growth in this sector compared to the stellar performance of preceding years.

These factors include the continued strong increases in the international commodity prices, domestic energy woes and dampened demand (particularly for textile exports). Economic losses in the aftermath of 27th December 2007 have further weakened the chances of meeting the annual target, Central Bank citing the reasons for slower growth in industrial production said.

The industrial growth has seen steady decline in the last three years as it has plummeted to 8.8 percent in 2006-07 from 19.9 percent in the 2004-05 in the wake of rising cost of production, which led to closure of many industrial units especially in textile sector and hampering of new investment in the capacity expansion.

Analysts said that this decreasing trend will also adversely impact the GDP rate, which already is forecasted to remain in between 6 to 6.5 percent by the end of current fiscal year, against the target of 7.2 percent. 

It would also also have negative implications for the countrys exports, which are unlikely to reach the target of $19.2 billion in present situation. 

The LSM index is based on the latest production data of 100 items provided by Oil Companies Advisory Committee (OCAC), Ministry of Industries & Production and provincial Bureau of Statistics (BoS).

The breakup of data shows that OCAC index registered growth of 5.05 percent during the first seven months of this fiscal year followed by ministry of industries index, which grew by 6.057 percent, and provincial BoS index registered 4.06 percent growth over the same months of last year. 

On the other hand, in month of January, OCAC index posted negative growth of 1.23 percent, Ministry of Industries index grew by 13.65 percent and Provincial BoS was up by 1.50 percent over the same month of last year. 

According to the Federal Bureau of Statistics (FBS) figures, in petroleum sector, production of Jet fuel oil declined by 13.81 percent, kerosene oil down by 1.89 percent, diesel oil down by 3.43 percent, LPG down by 4.43 percent.

The production of motor spirits was up by 6.28 percent, high-speed diesel up by 11.32 percent, furnace oil up by 7.95 percent.

In the food sector, vegetable ghee production declined by 2.63 per cent, cooking oil production remained flat and starch and its products were up by 4.10 percent. Wheat production grew by 4.14 percent and beverages 41.50 percent.

Among the electrical items, refrigerators recorded a growth of 8.28 percent, deep freezers down by 2.90 percent, electric bulb up by 7.28 per cent, electric tubes down by 2.60 percent, electric motors down by 14.63 per cent, electric meters down by 36.80 percent and transformers down by 38.34 percent.

Production of air-conditioners went down by 13.93 percent, electric fans down by 2.28 pe cent, switch-gears up by 29.45 percent, TV sets up by 24.41 percent and bicycles up by 4.40 percent.

Production of paper and board also dropped by 9.86 percent, production of glass-sheets declined by 7.83 percent, billets by down by 12.41 percent and HR sheets down by 8.43 percent.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Germany funds Pakistans development, not war on terror​*
LAHORE: Germany does not finance Pakistan for the war on terror like the US, but for the development of the people of Pakistan. The European Union provided 100 million euros in humanitarian aid for the October 8, 2005 earthquake-stricken areas of Pakistan, said German Ambassador to Pakistan Dr Gunter Mulack on Wednesday.

He was delivering a lecture on Security Concerns About Pakistan: The European View organised by the Quaid-e-Azam Political Science Society at the GCU.

He said, We should co-operate and try to preserve peace and stability around the world. People with superficial knowledge beget wrong interpretation of religious teachings. We should teach people about inter-cultural and inter-civilisation harmony. 

He said that pluralism, tolerance, acceptance, respect for others could lead to international peace and stability. Europes economic prosperity mainly depends on raw material and goods. It has an elementary interest in peaceful competition, open world trade system and unrestricted transportation facilities and access.

He said that in FATA, the NWFP and Balochistan there was a need to start a dialogue with the elders in order to improve the law and order situation there. 

Answering a question on observing purdah by the Muslim girls in Germany, he said Muslim girls in all universities and colleges were allowed to cover themselves or wear scarves. He said Islam had become a European religion and it was growing at a fast pace there. GCU Vice Chancellor Prof Dr Khalid Aftab praised Dr Gunter for his insightful lecture. He also awarded the university shield to Dr Gunter Mulack.

Political Science Department Chairman Prof M Azhar, AVM (r) Anwar Mehmood, Arts and Social Sciences Dean Prof Dr Khalid Pervaiz, Faculty of Sciences and Technology Dean Prof Dr Aminul Haq Khan, and students attended the lecture.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Load shedding to continue till 2010​*
** NA body calls for nationalisation of KESC
* Plan chalked out to produce additional 2,200 MW power within year​*
ISLAMABAD: The government said on Wednesday that the countrywide electricity load shedding would continue till 2010, prompting strong protests from the Senate Standing Committee on Water and Power over the worsening power crisis.

Presided over by Senator Hafiz Abdul Malik Qadri, the Senate body called for the nationalisation of the Karachi Electric Supply Corporation (KESC). 

Water and Power Ministry Secretary Ismail Qureshi and Pakistan Electric Power Company (PEPCO) Director General Munawar Baseer Ahmed briefed the committee on the current situation and plans to improve it. In 2010, we will be quite okay. This is what our predictions are, Qureshi told angry committee members, who demanded an early end to the load shedding.

Qureshi and Ahmed informed the committee that there had been an electricity deficit of 3,154 megawatts (MW) until March, as the governments power generation capability was 9,856 MW against the demand of 13,010 MW.

They said that the government estimated a net deficit of 820 MW by the end of this year and that the situation would further improve by 2010. The committee members questioned these estimates and demanded that a policy to overcome the power crisis be formed immediately.

Plan: The committee was told that a plan had been tabled to produce additional 2,200 MW of electricity within a year, in line with directives from Prime Minister Yousaf Raza Gillani.

The members pressed the authorities to establish hydro-electricity generation plants, and to look for alternative energy resources like burning coal to ease the situation. They said agriculture and industry had been adversely affected by load shedding. Some members, including Senator Raza Muhammad Raza, voiced opposition to the privatisation of the KESC, claiming that it had resulted in the worst electricity shortage Karachi had seen. They said the nationalisation of the KESC was the only solution to resolve the problem.

The committee directed the Water and Power Ministry and other authorities concerned to present a complete report on the power crisis in Karachi in its next meeting. It also directed the ministry to catch the big fish involved in power theft.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Swedish firm to help boost farm output​*
KARACHI, April 9: An international giant, Ikea, a company of Swedish origin, has agreed, in principle, to provide technical support to a project of the Ministry of Agriculture and Livestock to ensure compliance of global agricultural practices (GAP).

Dr Qadir Bux Baloch, Agriculture Development Executive Commissioner, told Dawn over telephone from Islamabad that the deal would be signed shortly between Ikea and the crop maximisation programme under which about 1,000 villages would be targeted to boost agricultural production, with an active involvement of the farming community.

According to him, the current world scenario is not so congenial for the country because Pakistans farming practices are perceived to be too primitive and chaotic.

To be able to make the countrys presence felt internationally in the commodity market, the adoption of certain standards in agriculture production has become absolutely necessary.

The collaboration with a global player would address the issue of meeting international standards in commodity trade.

Under the programme, the ministry has identified certain districts to launch this extensive programme that aims to empower the farming community by ensuring that it shares the benefits of better international prices and play its role in raising the agricultural production to feed the local demand and produce exportable surpluses.

He said the said the company that had earlier been involved, in collaboration with the World Wildlife Programme on Integrated Pest Management (IPM) project of the ministry, had shown interest in raising the level of its involvement in the country.

Swedish firm to help boost farm output -DAWN - Business; April 10, 2008


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## Neo

*Emergency rescue plan approved: Dar ​* 
ISLAMABAD (April 10 2008): The federal cabinet, which met here on Tuesday with Prime Minister, Syed Yusuf Raza Gilani, approved an emergency rescue programme for bringing Pakistan out of financial crisis, primarily an outcome of Shaukat Aziz government's fudged budgetary figures.

Finance Minister, Ishaq Dar, gave a detailed presentation to the cabinet on the wrongdoings of Shaukat Aziz government, seriously damaging Pakistan's fiscal discipline.

Later on, briefing on the cabinet decisions Ishaq Dar who was accompanying Information minister, Sherry Rehman, told medimen that the cabinet took serious notice of the previous government's wrong decisions and gave a go ahead signal to an emergency fighting back programme to pull Pakistan out of fiscal mess by implementing a new strategy based on materialising $2.5 billion on war footing from various sources to plug in current account deficit.

He said firefighting business to correct the economy and putting in place a comprehensive fiscal discipline was already under way. He said the new government will bring down inflation to keep the prices of essential items within the common man buying power besides lessening reliance on borrowing from the SBP. He said the new government will also focus on increasing tax to GDP ratio, push up exports and encourage foreign direct investment (FDI) to take the economy on the strong footing.

He said Shaukat Aziz government intentionally presented underestimated figures in the last budget to show good performance to cheat the masses and get the people votes in the February 18, elections. He shared his presentation with the mediamen giving an outlook of the economy the corrective measures needed and the government strong will to overcome the crisis on war-footing.

It listed tempering of wheat production figures, ill timed export at low rates and then import after two months at 100 percent more rates and fudging of 2007-08, budget figures.

He said that the cabinet decided to take the matter of fudged budgetary projection and other wrong decision of the previous government to the Parliament to fix responsibility and hold those accountable who were responsible of creating fiscal crisis and passing on the buck to the elected government.

He said the Parliament will form a committee of the House to summon any body to whom its members will consider was needed for questioning. He avoided to nominate anybody including former Prime Minister Shaukat Aziz for the fiscal crisis. However, he showed confidence that the parliamentary committee will hold the responsible accountable for wrong decisions to damage Pakistan's economy.

The Finance minister added that previous government's performance economic front in the first 8 months was extremely dismal. It missed all major targets. Agriculture growth was 3.8 percent of GDP against its target of 5 percent, large scale manufacturing 7.5 against 8.8 percent, manufacturing and other sectors were 7.1 and 6.8 percent, showing less growth than estimated in the last budget. He said Shaukat Aziz borrowed massively from the State Bank of Pakistan (SBP) which fuel inflation to give new heights to price hike and make the common man life miserable.

Revenue collection was short of target. The Federal Board of Revenue (FBR) collected Rs 535 billion as on March 31, showing shot fall of Rs 33.5 billion and apprehended less revenue collection of Rs 35 billion by June 30.

He said Shaukat Aziz government allocated only Rs 52 billion for power subsidy but it cost Rs 123.5 billion to the national kitty in first 8 months of 2007-08. Oil subsidy was projected at Rs 15 billion and it in actual terms cost Rs 138.5 billion.

He said the new elected government has inherited sick economy with poor fiscal discipline, but being the people's representative it can not just sit and wait for passing on the time and keeping its balance sheet clean.

He said instead doing nothing the new government has taken the challenge of correcting the economy upfront and started a number of corrected measures. He said the new government was focusing on bringing home $2.5 billion in next two months to keep current account deficit at an acceptable level.

He said as on March 31, current account deficit stood at $8.5 billion and if corrective measures had not been taken it could have gone over $10 billion by June 30. He said the pervious governments during 1999 to 2007 added $5 billion in Pakistan's external debt. He said the government will give top priority to agriculture and manufacturing sectors in the policy making for their better performance for economic growth.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Serious economic problems attributed to Shaukat government ​* 
ISLAMABAD (April 10 2008): The government is facing serious economic challenges attributed to Shaukat Aziz government's economic policies. While being fully cognisant of these challenges, and committed to turning the economy around, the Finance Ministry, nonetheless, lacks specificity of its own reform agenda.

What is required is a visionary policy to improve economic and monetary Finance Minister Ishaq Dar, who on Wednesday gave a detailed presentation to the Cabinet on balance sheet of country's economy as on March 31, 2008, just floated cosmetic proposals like freezing of non-salary expenditure during 2008-09, bringing it to the existing level of the current financial year, official sources told Business Recorder.

According to the revised macroeconomic framework 2007-08, GDP growth was expected to be 6 percent whereas inflation would be 10 percent against the target of 6.5 percent and fiscal deficit has been projected at 9.5 percent of the GDP against the set target of 4 percent during the current fiscal year.

This high fiscal deficit is likely to force the government into taking structural adjustment loans from IMF, which may have grave consequences for policy and on the common man. The country's bond spread has been revised to 600 basis points, against the target of 200 basis points, due to political and economic uncertainty, as the existing spread was 549 basis points.

According to the Finance Ministry, Pakistan's credit rating would be B2/B against the projected rating of B1/B+S, as the current rating was B1/B+N. This rating may be optimistic in the light of the budget deficit. Sources said that FBR's revised revenue target was Rs 990 billion as compared to Rs 1.025 trillion as the July-February (2007-08) revenue collection was Rs 584.4 billion.

They said that money growth would hover around 19 percent against the target of 13.7 percent as it has already achieved 7.5 percent. However, the tussle between the Finance Minister and the State Bank Governor during the first meeting of the ECC may well presage a growth rate different from that given by Finance Ministry.

Current account was projected -9.2 percent of the GDP against the target of -5.9 percent, sources said, adding that the country's forex reserves, which were $16 billion in 2006-07, were projected at $13.7 billion against the target of $17.7 billion. Foreign exchange reserves have been reduced to $14 billion, as of March 31. The Finance Ministry has also projected that reserves/month imports would be around $4.3 billion, against the target of $6.4 billion.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Growth targets revised ​*
ISLAMABAD (April 10 2008): The government has revised the growth targets for the current fiscal year as the targets which, according to Finance Ministry, had nothing to do with ground realities as far as economy of the country was concerned.

Sources said that agriculture growth target has been revised to 3.8 percent from 4.8 percent, whereas LSM target would now be 7.5 percent against previous target of 10.5 percent.

Manufacturing target of small and medium sectors has been revised to 7.1 percent against the actual target of 9.9 percent, while growth in other sectors has been projected to 6.8 percent as compared to 7.1 percent. It means that real GDP growth would be 6 percent against the target of 7.2 percent.-MG

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Defence expenditure projections revised upward ​*
ISLAMABAD (April 10 2008): Defence expenditure projections have been revised upward, from Rs 275 billion to Rs 350 billion, for the fiscal year 2007-08 as compared to Rs 252.6 billion revised budget in 2006-07. This increase is difficult to justify, given the rhetorical commitment by the newly elected government, to engage in dialogue instead of continuing military operations.

Sources said that interest on payments has increased by Rs 124.8 billion from Rs 374.6 billion to Rs 499.4 billion. They said that net lending for fiscal deficit has been projected to Rs 534.3 billion against the budget target of - 450.6 billion, which has touched Rs -984.8 billion.

The federal government's borrowing from SBP as on April 5 was Rs 382.3 billion, whereas stock as on the same date was Rs 834.4 billion against Rs 452.1 billion as on June 30, 2007. The projected borrowing during the current fiscal year was Rs 441.0 billion and projected stock as on June 30, 2008 was said to be Rs 893.1 billion.-MG

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*LSM posts 5.29 percent dismal growth in July-January ​* 
ISLAMABAD (April 10 2008): The Large Scale Manufacturing (LSM) registered a dismal growth of 5.29 percent during July-January 2007-08 over the same period last year against 10.5 percent target for the year.

The figures released by the Federal Bureau of Statistics (FBS) on Wednesday about Quantum Index Numbers for LSM showed that it would be a great challenge for the new government to achieve even the revised target of 7.5 percent due to prevailing energy crisis and high inputs cost.

The new government is faced with immense challenges of soaring inflation, low LSM growth and ballooning fiscal, current accounts and trade deficits. The provisional figures show that only sugar and cement sectors registered substantial growth, 51 and 16.14 percent respectively, which were followed by cotton yarn 4.28 percent and cotton cloth 2.18 percent.

The steel sector is most affected by the energy crisis and political uncertainty during the period under review which is reflected by 15 percent negative growth with 12.41 percent production decline billet/ingots, a major raw material for long steel products, 8.43 percent in HRC sheets and 4.36 percent in coke-Pakistan.

It remains to be seen how the new government will cope with the situation and achieve growth particularly in the steel sector, which is energy-intensive in terms of input. The LSM growth was 6.9 percent in July-November 2007, but growth declined in the preceding months due to energy and raw material shortages.

Among petroleum products, growth in jet fuel oil declined by 13.81 percent, kerosene oil 1.89 percent, diesel oil 3.43 percent, liquefied petroleum gas (LPG) 4.30 percent and while in the auto sector, the tractor production declined by 0.44 percent and trucks by 8.74 percent.

The statistics showed a 5 percent growth in petroleum products which was contributed by 6.28 percent increase in the production of motor spirits, 11.32 percent in high speed diesel, 7.95 percent in furnace oil, 11.2 percent in jute batching oil and 8.99 percent in solvent Naptha. Within automobiles, buses registered 30.20 percent growth, light car vehicles (LCVs) 22.03 percent and motorcycle 26.67 percent while in the steel sector only pig iron registered a growth of 10.47 percent.

Among fertiliser, NIT fertiliser growth was 1.35 percent while phosphate fertilizer declined by 16.70 percent. The production of cigarettes grew by 6.38 percent and soda ash 15.16 percent. The data on LSM is based on latest production figures for July-January, based on 100 items collected from sources, Oil Companies Advisory Committee (OCAC), Ministry of Industries and Production and Provincial Bureau of Statistics.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*President to discuss bilateral, defence ties with Chinese leaders ​*
ISLAMABAD (April 10 2008): President Pervez Musharraf will leave on a six-day state visit to China Thursday to discuss bilateral relations, regional and international issues besides talks with Chinese leaders to further strengthen defence and trade co-operation.

The visit, from April 10 to 15, at the invitation of Chinese President Hu Jintao is part of regular high-level interaction between the two countries that is reflective of close bilateral ties, the Foreign Office said.

"The President's visit will reinforce the all-weather, time-tested friendship between the two countries and further enhance and deepen our strategic co-operative partnership," Foreign Office spokesman Mohammad Sadiq. President Pervez Musharraf will begin his visit from Sanya and where he will hold talks with President Hu Jintao.

The President and the Chinese leadership will review the entire gamut of Pak-China bilateral relations besides discussing regional issues and international developments. Various agreements and Memorandum of Understandings are expected to be signed at Sanya to give an impetus to bilateral co-operation.

President Musharraf will also be the keynote speaker at BOAO Forum for Asia. President Musharraf will be meeting world leaders attending the BOAO Forum including the President of Sri Lanka, prime ministers of Australia and Kazakhstan.

THE THEME FOR THIS YEAR IS "GREEN ASIA: 

Moving Towards Win-Win Through Changes". In Beijing, the President will hold talks with Premier Wen Jiabao, Wu Bangguo Chairman of National Congress and Jia Qinglin Chairman of Chinese People's Political Consultative Conference. The President would also visit the Tsinghua University which has been a cradle of learning for top Chinese leadership.

President will visit Urumqi, the capital of Muslim majority Xinjiang Uygur Autonomous Region of China that borders Pakistan and meet with Xinjiang leadership at the last leg of his visit. The President will discuss prospects of increased co-operation between Xinjiang region and Pakistan's Northern Areas and North West Frontier Province.

The President will be accompanied by Minister for Foreign Affairs Shah Mehmood Qureshi and Minister for Defence Chaudhry Ahmed Mukhtar Chairman Higher Education Commission, Chairman Trade Development Authority of Pakistan and the Deputy Chairman Planning Commission.

China is a major source of investment, trade and defence for Pakistan. Bilateral trade between the two countries has touched US 6.8 billion dollars. Pakistan and China signed a free trade pact in 2006 and hope to raise two-way trade to $15 billion within the next five years.

Pakistan-China Joint Five-Year Economic Plan was signed in November 2006 and the Free Trade Agreement operational since last year has bolstered the economic co-operation between the two countries. Pakistan-China Joint Investment Company, established in 2007, is geared to promote joint ventures and investments. In recent years, Chinese investments in Pakistan have shown an upward trend and several projects of national significance are being executed with Chinese assistance.

Both the countries have maintained long-term exchanges and multi-level co-operation in many areas, particularly defence. The visit is aimed at further promoting exchanges and bilateral co-operation for the development of strategic co-operative partnership of the two countries. A Shanghai shipyard launched the first of four F-22P frigates to be delivered to Pakistan on Monday.

The fourth and last vessel will be completed at a Karachi shipyard in 2013. The Pakistan Air Force has also inducted in its fleet JF-17 Thunder, a fighter aircraft, co-produced with China.

Pakistan was the first Islamic country to recognise People's Republic of China on 4 January 1950. Diplomatic relations were established between the two countries on 21 May 1951. The multi-faceted relations between Pakistan and China are built on commonality of interests in peace, security and development of the region, spokesman Mohammad Sadiq said.

The President will also be meeting the Chinese business community at Beijing and in Urumqi. Leaders of business and corporate sector of China will call on the President. His media engagements also include several interviews with the print and electronic media.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Energy saver bulbs: Tusdec planning to set up CFC to encourage local manufacturing ​* 
LAHORE (April 10 2008): The Technology Upgradation and Skill Development Company (Tusdec) is planning to set up a Common Facility Centre (CFC) to encourage local manufacturing of energy efficient Compact Fluorescent Lamps (CFLs) with an ultimate objective to help bridge gap between energy generation and consumption in Pakistan.

This was revealed in a meeting on 'Energy Conservation and Load Management', chaired by Federal Secretary for Industries, Production and Special Initiatives, Shahab Khawaja on Wednesday.

The Federal Secretary said that it was high time to encourage the replacement of the incandescent bulbs with energy savers (CFLs) to help quickly ensure the energy security of the country. He hoped the establishment of the CFC would go a long way in the promotion of energy-efficient illumination gadgets in the country.

Giving presentation on 'Impact of Energy Management on Power Planning', Energy Conservation Expert, Engr Arshad Chughtai said that replacement of one incandescent bulb by a CFL by each of 17 million users of our electric utilities, Wapda and KESC can help save over 1,300 megawatts of electricity during peak hours. He said that power consumption in Pakistan was presently growing at a rate of 10 percent per annum, predicting that it would get double by the year 2015. He billed the consumers' indifference towards saving electricity as one of the major reasons for the steep growth in power consumption.

Quoting examples from other parts of the world, Chughtai said that incandescent bulbs, perfected for mass use by Thomas A Edison in the late 19th century, were being phased out in several developed and developing countries at the moment and replaced with CFLs, which use only 20 percent of the energy consumed by incandescent bulbs.

He said that the use of the CFLs would not only help consumers save a lot of money but also lead to austerity at national level as generation of each megawatt of energy, at present, costs one million US dollars.

Chughtai said, unlike other developed and developing nations of the world, most of the energy ie 43 percent of total generation, was consumed in Pakistan by domestic consumers while industry's share in power consumption was just 28 percent against 63 percent in China and 43 percent in India.

He said that Pakistan with an installed power generation capacity of almost 20,000-megawatt (including that of recently installed two rental power plants) was presently facing a shortfall of 2,500 megawatt. He added that the measures including load management, energy conservation and generation of more energy should go side by side to ensure the energy security of the country.

Energy Conservation expert said that the installation of Time of Day (ToD) and Time of Use (ToU) meters can also encourage the consumers to minimise the consumption of the electricity during peak hours as it would change their consumption behaviour. He added there was a critical need to add capacitors at the street or house level to further impact conservation.

He illustrated the measures adopted by developed nations like Japan where they use load limiters and anyone exceeding their agreed load is cut-off. He also suggested the use of low-pressure sodium vapour lamps for streetlight and proper adjustment of thermostats for energy conservation.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Irrigation department to set up five hydropower units ​* 
LAHORE (April 10 2008): Punjab Irrigation and Power Secretary Arif Nadeem has announced that the Irrigation Department is planning to set up five hydropower units on canals producing 25 megawatts of electricity to meet the current shortages.

Nadeem said careful use of available water for irrigation by applying modern techniques, the agriculture produce could be enhanced manifold. He said the Punjab was building 20 small dams costing Rs 4 billion, adding that 10 of them had been completed. He also said his government would finish nine others by June and outline a strategy to introduce the drip irrigation system in the province.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Dairy sector to create 1.2 million new jobs for farmers ​*
ISLAMABAD (April 10 2008): Dairy sector has been geared to create 1.2 million new jobs for landless farmers and the rural women during the next five years. Geoff Walker, Chief Executive Officer, Pakistan Dairy Development Company, said this while visiting a model farm developed by Pakistan Dairy Development Company (PDDC) at Saelah, District Jehlum under a special programme aimed at completing 1000 model dairy farms by next year.

Walker said that Pakistan had become the fourth largest milk producer in the world by producing 32 billion litres per annum. He expressed satisfaction over performance of the PDDC and hoped that the company would be able to attain its goals by improving productivity, quality and affordability of the milk and milk products in the country. "We expect an investment of over Rs 12 billion in dairy sector during next five years", he added. Responding to a question, he informed that Pakistan Dairy was nearing its 200th model farm implementation, and excellent results were being achieved for the farmers on the programme without exception, and across all of Pakistan.-PR

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*$104.5 million Barani water project to be launched from July: PIPD ​* 
FAISALABAD (April 09 2008): The Barani Integrated Water Resources Sector Project will be launched next fiscal year from July 2008, and it will be completed during 2014 by the Punjab Irrigation and Power Department (PIPD) with the financial assistance of the Asian Development Bank (ADB).

According to update project investment plan, PIPD sources said the investment cost of the project is estimated at $104.5 million equivalent, including taxes and duties of $14.4 million equivalent. Financial charges during implementation (comprising interest during implementation and commitment charges) are estimated at $7.5 million.

Sources stated that the project's impact is to improve households' income and health in the four districts of Attock, Rawalpindi, Jhelum, and Chakwal in the Barani Areas of Punjab. The project's outcome is to increase agriculture and livestock productivity and household access to domestic water supply.

The project outcome will also be increased sustainable water storage capacity; sustainable and profitable command areas and domestic water supply developed; and enhanced dam planning, management, and implementation capacity.

The second output will be developed sustainable rural water supplies and sanitation and increased small towns, domestic water entitlements; efficient community-based management irrigation schemes, and improved farmers' access to production support and market services.

They said the sector project will support the Punjab government's efforts to develop water resources and improve their management in four districts of the Barani areas of Punjab that suffer from water scarcity. The project intends to improve households' income and health by increasing crop and livestock productivity through irrigation development and increased access to water and sanitation.

Activities will include (i) the construction of dams and appurtenant structures to increase water availability in the area; (ii) watershed management to enhance the dams' life expectancy; (iii) development of the rural water supply for communities in the vicinity of the dam; (iv) development of community-managed irrigation distribution network; (v) agriculture extension services to support the transition to irrigated agriculture; and (vi) institutional support.

The project will also rehabilitate and develop irrigation schemes, provide extension support, and improve watershed management in existing dams. To address the problem of sustainability and low economic returns observed in previous dam projects in Barani areas, the project will change the sub-sector implementation practices and follow an integrated approach looking simultaneously at dam development, watershed management, and command area development. Similarly, it will support devolution of the water scheme to organised water users and foster a demand-driven approach through the inclusion of social mobilisation support.

While figures from the government of Punjab indicate that between 75 and 80 percent of the population have access to safe drinking water in the Pothowar plateau, the real availability of water to households in this area is extremely limited.

As early as in the 1960s, the sources said that dams were developed to increase water availability in the Pothowar plateau. To date, a total of 50 dams from 11 to 40 meters (m) high and with reservoir storage of from 600,000 to 54 million cubic meters (m3) have been commissioned by the Small Dams Organisation (SDO) under the Punjab Irrigation and Power Department (PIPD), with a total canal command area of around 24,500 hectares. This storage represents 12 percent of the estimated 2,320 million total runoff generated in the plateau and only a small portion of the many potential dam sites that have already been identified.

The PIPD will be the executing agency for the project and responsible for overall project management and implementation. A PMU headed by a PIPD-appointed project director will be established. Three PMU field offices, one for Attock and Rawalpindi districts, one for Chakwal district, and one for Jhelum district will be established. Each office will be staffed with a full-time specialist seconded from the Punjab government departments of agriculture, livestock, and forestry.

The PMU will assume the following roles: (i) overall interagency and district coordination; (ii) recruiting consultants and non-government organisations (NGOs), and awarding procurement and consulting contracts, as well as all project financial management; (iii) consolidating, reviewing, and submitting regular progress and financial reports to the Project Steering Committee (PSC) and the ADB; and (iv) monitoring and evaluating project outputs and results. The PMU will also be responsible for directly implementing the watershed management activities under the first, second, and third outputs. The Small Dams Organisation (SDO) will be responsible for implementing dam planning and construction activities under the first output.

In implementing those activities, SDO will receive specific advisory support on safeguard and technical matters from the PMU. For each subproject under its responsibility, the SDO will appoint a sub-divisional officer who will supervise the dam feasibility and, detail design studies, and the engineering construction supervision consultants. In implementing the water supply-related activities, the PMU will involve the relevant tehsil municipal administration (TMAs) in (i) assessing the demand for water supplies, (ii) organising the future water supply users, and (iii) supervising the overall execution of works and services related to water supply activities.

To expedite project implementation, the PIPD sources mentioned that the sub-projects will be prepared in batches equivalent to 2,000 hectares (ha) of irrigated agriculture development (between one and four sub-projects).

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Food prices surge by 18.57 per cent ​* 
Friday, April 11, 2008

ISLAMABAD: The prices of essential food items registered a massive surge of around 18.57 per cent in March 2008, badly affecting the purchasing power of salaried and low-income groups, as they consumed a major chunk of their earnings to buy food items only.

According to official figures released by the Federal Bureau of Statistics (FBS) on Thursday, the CPI-based inflation surged by 14.12 per cent in March 2008, Sensitive Price Index by 18.57 per cent and Wholesale Price Index by 19.79 per cent.

During the first nine months (July-March) period, the inflation rates based on CPI, SPI and WPI for the year 2007-08 increased by 9.49 per cent, 12.87 per cent and 12.59 per cent respectively, over the corresponding period of 2006-07.

It increased by 8.00 per cent, 11.45 per cent and 7.02 per cent respectively in 2006-07 over the corresponding period of 2005-06.

In 2005-06, the rate of inflation increased by 8.25 per cent, 6.65 per cent and 10.57 per cent respectively over the same period of 2004-05. 

An analysis of data for the last three years for the same period indicates that CPI, SPI & WPI were higher as compared to the last two years.

CPI, SPI and WPI in March 2007 increased by 7.67 per cent, 9.66 per cent and 6.11 per cent respectively over March 2006, and in March 2006, the CPI, SPI and WPI increased by 6.91 per cent, 6.77 per cent and 8.51 per cent respectively over March 2005.

In March 2008, the prices of vegetables increased by 22.42 per cent, chicken farm 22.32 per cent, cooking oil 16.14 per cent, vegetable ghee 14.30 per cent, fresh fruits 11.46 per cent, pulse masoor 10.76 per cent, mustard oil 9.06 per cent, rice 6.50 per cent, gram whole 5.83 per cent, milk products 5.25 per cent, milk fresh 4.91 per cent, tea 4.38 per cent, pulse gram 3.29 per cent, betel leaves & nuts 3.10 per cent, dry fruit 2.93 per cent, sweetmeat & nimco 2.65 per cent, cereals 2.35 per cent, jam, tomato, pickles & vinegar 2.14 per cent, besan 1.96 per cent, wheat flour 1.90 per cent, beverages 1.42 per cent, honey 1.26 per cent, readymade food 1.22 per cent, pulse moong 1.15 per cent and milk powder 0.98 per cent.

The prices of footwear increased by 4.10 per cent, cotton cloth 1.96 per cent, electricity 6.44 per cent, kerosene 5.51 per cent, firewood 2.62 per cent, diesel 7.02 per cent, petrol 7.01 per cent, CNG filling charges 4.61 per cent, service charges 1.90 per cent, transport fare charges 1.59 per cent and vehicles 1.47 per cent.

Food prices surge by 18.57 per cent


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## Neo

*Telenor launches mobile medical service ​* 
Friday, April 11, 2008

KARACHI: Telenor Pakistan has announced the commercial launch of its mobile medical service, Telenor Tele-Doctor 1911.

The service aims to provide Telenor Pakistan subscribers an easy and instant access to medical advice wherever and whenever needed, stated a Telenor press release.

The service provides Telenor Pakistan subscribers 24/7 telephonic access to general practitioners. These online Tele-Doctors will be able to provide subscribers with basic health information, medical advice and laboratory report interpretations in the opted local language of the subscriber in addition to Urdu and English.

Female callers wishing to talk to female doctors will also be facilitated.

These preferences will be provided to callers via a specially designed call forwarding facility. 

Tele-Doctor 1911 service is designed to provide callers with an assessment of symptoms and complete awareness on medical health-related questions based on internationally accepted and recognised medical decision-making protocols.

Telenors Tele-Doctor is all set to establish a new benchmark in corporate social responsibility in the industry by providing valuable medical advice to Telenor Pakistan subscribers. The service has been endorsed by the Ministry of Health, Government of Sindh.

Telenor launches mobile medical service


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## Neo

*Prices of LPG can be reduced by enhancing production​*
LAHORE: The prices of Liquefied Petroleum Gas (LPG) could come down to Rs 35 per kg if the production of LPG is enhanced, said Irfan Khokhar Zonal Chairman of FPCCI Standing Committee for LPG on Thursday.

He said the committee has made some recommendations and in the coming days would present it to the Prime Minister. He said that enhancement in production of LPG will not only reduce the price of the commodity but also the import bill of petroleum. By investing in LPG, the government could reduce at least 15 to 20 percent petroleum products import bill, Khokhar said adding that the price would ultimately come down to Rs 35 and Rs 40 per Kg. He said that the international price of LPG is higher and its sold for Rs 55,000 per metric tonnes. Khokhar said that before linking the price with the international market in December 2006, the prevailing price in Pakistan was around Rs 25,000 per metric tonne. When they were de-linked from the International market in September 2007, the price came down to Rs 39,000 per metric tonnes.

Still the LPG producers are earning handsome money on the product but there is a possibility of reducing the prices, he said adding that the government should promote LPG use in cars and other transport.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Water losses in Indus River recorded at 19%​*
ISLAMABAD: Average water losses in Indus River System have been recorded at about 19 percent according to the last ten years water flows in the system.

While talking to Daily Times spokesman of WAPDA said that water losses and gains in the river system is a natural phenomena and analysis of data for the last ten years flows shows that the average losses in the Indus River System are about 19 percent.

He said that technical committee of Indus River System Authority (IRSA) adopted a figure of 17 percent for the current Kharif season with consensus which was endorsed by IRSAs advisory committee also. 

He said that WAPDA only reports the flows at Tarbela and Chashma whereas Irrigation departments of respective provinces report flows on other control points on Indus. That is why WAPDA cannot be blamed for water losses and cannot be held responsible for any incorrect reporting and losses for the water system, he said.

He said that WAPDA has been stressing IRSA for adhering to the minimum release requirement of 15,050 cusecs from Tarbela. Minimum discharge requirement below Tarbela cannot be taken as causing the water shortages, the spokesman said. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Trade deficit to hit $19.525bn as imports rise beyond estimate​*
ISLAMABAD: Trade balance of the country based on latest balance of payment estimates is likely to reach at negative $19.525 billion against the budgetary estimates of $14.022 billion, official sources told Daily Times on Thursday.

Balance of payment estimates finalised by the new government, based on latest data, revealed that exports target was envisaged at $18.992 billion and the exports of the country during July-February period of current fiscal year amounted to $11.703 billion. It is now projected that exports of the country would fetch $18.650 billion by the end of current fiscal year against the budgetary target of $18.992 billion. 

In the Trade Policy 2007-08 the Ministry of Commerce had fixed an exports target of $19.2 billion and realisation of $18.650 billion through exports would mean a shortfall in exports to the tune of $550 million during the current fiscal year 2007-08. 

The imports were projected to be $33.014 billion at the time of the announcement of the budget; however, the imports have reached at $24.140 billion during July-February period. The imports of the country are now projected to be around $38.175 billion by end of current fiscal year as compared to the budgetary target of $33.014 billion, projecting an increase in imports by $5.161 billion in the current fiscal year 2007-08. 

Invisible balance was estimated at $4.351 billion in the current years budget and during the July-February period this balance stood at $2.414 billion. The latest projections suggest that invisible balance during July-June period is to be $4.570 billion as against the budgetary projections of $4.351 billion. 

Services (net) balance was estimated at 7.279 billion and during July-February period this balance amounted to $4.844 billion. According to the latest projections services balance will reach at $6.680 billion by June 30, 2008.

Private transfers were estimated at $11.630 billion during the current years budget and during July-February period private transfers amounted to $7.258 billion. The latest estimates suggest that private transfers are going to reach at $11.250 billion by the end of current fiscal year against the budgetary projection of $$11.630, leaving a shortfall of 38 million. 

Workers remittances were projected in the budget to be $6.200 billion and in July-February period of ongoing fiscal year remittances have reached at $4.126 billion. According to the latest estimates remittances would be around $6.300 billion by the end of current fiscal year. 

Latest import growth estimates suggest that imports would grow by 25 percent during this fiscal year and during July-February period a growth in imports was recorded at 21.9 percent. Exports growth would reach at 9.9 percent, suggest the latest estimates. The growth in exports during July-February period was recorded at 7.8 percent against the budgetary projection of 11.9 percent for the current fiscal year. 

According to Asian Development Outlook 2008 released recently, the trade gap widened by over 25 percent in the first 7 months of this fiscal year. Textile exports remained, and will continue to be weak on expected lower cotton production and increased regional competition after the US and EU have ended the safeguard measures on textile imports from China. Higher shipping costs following the increase in oil prices will affect the services account further, which had already widened by almost 52 percent in the first 7 months of financial year 2008.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Car sales down by 9 percent in July-March 2007-08​*
** Situation improved slightly in March as compared to February thanks to tax suspension, say analysts​*
By Mushfiq Ahmad 

KARACHI: Sale of locally manufactured cars during first nine months of the current fiscal year fell by 9 percent to 107,262 units from 117,295 sold in the same period of last year. 

Analysts keeping a keen eye on the developments in this industry say the reduced financing by financial institutions was to blame for the decline in sales. Also, the financing that is now on offer is very expensive for the common man and the general salaried class, they add. 

When the car sales had surged under the previous governments policies, it was not because disposable incomes of people had increased as was suggested by the then rulers. It was because of the cheap financing offered by financial institutionswhich were then flooded by the overseas Pakistanis moneythat the auto sector enjoyed large sales volumes. 

Price hikes, slowdown in car financing and higher mark up rates by banks and DFIs are the major factors attributable to auto sales slowdown during nine months of this financial year, said Muhammad Rehan Khan, an analyst at First Capital Equities. 

However, on month-on-month basis, sales depicted a growth of 17 percent, reaching 13,871 units in March as against 11,845 units in February. This improvement in sales is the direct impact of removal of withholding tax (WHT) of 2.5 percent for 2 months effective February 21, 2008, said Bilal Hameed, an analyst at JS Research. 

The year-on-year comparison of the month, however, reveals an 11 percent decline. 

On segregated basis, all the car manufacturers recorded decline in their sales volumes during the period under review. 

On segment basis, sales of 800cc, 1000cc and 1300cc and above segment decreased by 2 percent, 7 percent and 15 percent, respectively, during the first nine months. 

Combined sales of cars and LCVs for the first nine months (Jul-Mar) of this financial year stood at 136,587 units, showing a decline of 5 percent when compared to 144,072 units sold in the same period of last year. The share break up for Cars & LCVs in auto sales is 79 percent and 21 percent, respectively. 

Pak Suzukis sales declined by 2 percent from 85,031 units in July-March last financial year to 83,677 in Jul-Mar for current financial year. Other assemblers posted negative growth of 3 percent (Indus Motors), 22 percent (Dewan Farooq) and 21 percent (Honda Atlas), respectively. 

We believe the reasons for year-on-year decline in sales are tightened car financing by banks, increasing trend of steel prices in international market and depreciating Rupee against Dollar and Yen. This has led to increased cost of production and ultimately an increase in car prices, said Yawar Mustafa, an analyst at Capital One Equities. 

PSMCs market share stood at 75 percent in 800cc segment, 97 percent in1000cc segment and 5 percent in 1300cc segment with total market share of 63 percent. Induss market share stood at 25 percent in 800 cc segment and 69 percent in 1300cc segment with total market share of 26 percent. HCARs market share in 1300cc segment stood at 26 percent with total market share of 7 percent in March 2008. DFMLs market share in 1000cc was around 3 percent. 

We expect further raise in prices in the near future due to depreciating rupee yen parity and high steel prices, said Mustafa. 

Daily Times - Leading News Resource of Pakistan


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## ejaz007

*Coal exploration starts at two new Thar blocks*

KARACHI: Another local company, Deep Rock Drilling, has started drilling work recently for coal exploration at two new blocks of the Thar coal sites.

Sources in Sindh Coal Authority (SCA) told Daily Times on Friday that the authority had awarded drilling work contract to Deep Rock Drilling company at Block VII and VIII. 

The company started drilling on Thursday and it would drill 80 holes in both the blocks and would complete the work in three months.

The sources said that the work on developing further two blocks at Thar had been started early this year and 100 square kilometers area is allocated for each block.

The entire development work at the blocks would be completed by end of this year, the sources said, adding that both the blocks have potential of six billion tonnes of coal reserves.

The SCA has developed six blocks so far at the Thar where an estimated 12 billion tonnes reserves of coa liesl.

The sources said that the new blocks would attract investors for coal-based power generation because of larger area and the development work was being done on modern lines.

The SCA had awarded licences at the six blocks to American AES, Hassan Associates, Australian-based Couger Energy, Sindh Carbon Energy Limited, Associated Group and Thar Coal Mine Company.

The Geological Survey of Pakistan had discovered the huge deposits of coal at Thar in 1992 during the research programme assissted by United States Geological Survey (USGS).

The area of Thar coal is spread over 9100 square kilometers with dimension of 140 km (north-south) and 65 km (east-west).

Geologists believed that the estimated reserves of Thar are about 175.506 billion tonnes of coal and are sufficient to meet fuel requirements of the country for centuries, having potential for generating about 100,000MW of electricity. muhammad yasir
Daily Times - Leading News Resource of Pakistan


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## Neo

*Trade deficit outpaces exports​*
ISLAMABAD, April 11: Trade deficit hit an all-time high of $14.486 billion in the first nine months of the current fiscal year, up by 44.27 per cent from $10.041 billion recorded last year, mainly due to surging oil prices and high import of consumer items.

The deficit exceeded the exports of $13.476 billion.

The gap widened as the import of mobile phones, gold, luxury vehicles, perfumes, cosmetics, bullet proof vehicles etc penetrated the local market due to changing lifestyles.

The import bill of wheat and palm oil witnessed highest-ever increase due to rise in their prices in the international market.

The trade deficit escalated to $13.54 billion in 2006-07 from $1.412 billion in 1999-2000. The trend shows that the trade deficit in the current fiscal year will cross the figure of $20 billion putting an extensive pressure on the balance of payments.

If the non-debt creating inflows -- foreign direct investment, portfolios investment, GDRs and grants -- did not match the gap, the new government will be left with no option but to seek debts from donor agencies and domestic sources for financing the balance of payments.

Official figures released on Friday by the Federal Bureau of Statistics (FBS) showed that the import bill increased by 24.73 per cent to $27.962 billion in July-March 2007-08, against $22.419 billion last year. It witnessed an alarming increase of 45.78 per cent in March 2008 when it stood at $3.823 billion against $2.622 billion in the same month last year.

Exports grew by 8.87 per cent to $13.476 billion in July-March against $12.377 billion last year. The export growth recorded the highest-ever increase of 17.29 per cent in March 2008. This growth was the second straight in a row in the current fiscal year, which is unprecedented because the average growth over the past two years has been six per cent per month.

Analysts said the government should rationalise duty and taxes to regulate imports of the luxury items.

They say government should also focus on the value-added sector and diversify the export base instead of focusing on textile sector which is fetching maximum financial support.

With the rising oil bill, it is expected that the import bill will cross the figure of $36 billion by the end of June 2008. Last year the import bill was around $30 billion.

The export target of $19.2 billion has now become a far cry as the textile exports are steadily on the decline for last few months despite doling out huge subsidies from the national kitty. As the food inflation recorded the highest-ever increase, the government was compelled to slap a ban on export of certain food commodities to avert domestic shortages.

Due to this highest-ever trade deficits in goods and services the current account deficit has also reached an alarming level. The current account deficit will cross over $10 billion by the end of June 2008. Last year the current account deficit was $8.114 billion from over $500 million of 1999-2000.

Trade deficit outpaces exports -DAWN - Business; April 12, 2008


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## Neo

*Weekly inflation up by 20pc​*
ISLAMABAD, April 11: The prices of 22 essential kitchen items witnessed an average seven per cent increase during the week ended on April 10, over the previous week.

According to the statistics division data issued here on Friday, the increase in the prices of kitchen items pushed up the weekly inflation, measured through the Sensitive Price Index (SPI), up by 20 per cent during the week under review over the corresponding period last year.

The impact of the increase in SPI was hard-hitting for the lower income group as compared to the rich people. The SPI witnessed an increase of 23.10 per cent and 22.72 per cent for households in the lower income brackets of up to Rs3,000 and Rs3,001-5,000, respectively.

For households in income brackets of Rs5,001-12,000, the increase in the SPI was 21.30 per cent, while for households in the income group basket of over Rs12,000, the inflation registered a growth of 18.72 per cent over the week last year.

As compared to the previous week, the SPI, however, registered an increase of 0.97 per cent for almost all income groups.

Prices of 22 items went up as compared to the previous week.

The prices of egg increased by 13.60 per cent to Rs50.52 per dozen against Rs44.47; an increase of 7.71 per cent in potatoes, which stood at Rs12 per kg during the week under review as against Rs11.29.

The price of wheat flour increased by 6.32 per cent to Rs19.67 per kg from Rs18.50, rice Irri-6, 5.36 per cent to Rs30.26 per kg against Rs28.72, 4.39 per cent in wheat to Rs18.08 per kg against Rs17.32, gram pulse washed 3.81 per cent to Rs46.37 per kg from Rs44.67, onions 2.78 per cent to Rs11.46 per kg as against Rs11.15, chicken 2.37 per cent to Rs104.87 per kg as against Rs102.44, basmati broken 2.23 per cent to Rs39.86 per kg against Rs38.99.

The lawn (cloth) price increased by 1.87 per cent to Rs88.15 per metre against Rs86.53, coarse latha 1.84 per cent to Rs40.93 per metre against Rs40.19, voil printed 1.83 per cent to Rs42.28 per metre as against Rs41.52, bananas by 1.10 per cent to Rs35.02 per dozen as against Rs34.64, red chillies 1.04 per cent to Rs164.55 per kg against Rs162.85, masoor pulse washed 0.67 per cent to Rs82.31 per kg as against Rs81.76, firewood 0.65 per cent to Rs235.39 per 40 kg against Rs233.87, washing soap nylon 0.56 per cent to Rs10.82 per cake as against Rs10.76, cooked beef plate 0.55 per cent to Rs34.93 per plate against Rs34.74, and shirting 0.40 per cent to Rs72.53 per metre against Rs72.24.

The price of mash pulse washed went up by 0.15 per cent to Rs72.52 per kg against Rs72.41, mutton 0.02 per cent to Rs240.67 per kg against Rs240.63, and vegetable ghee loose 0.02 per cent to Rs123.81 per kg against Rs123.78.

Weekly inflation up by 20pc -DAWN - Business; April 12, 2008


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## Neo

*Services trade deficit widens by 40.35%​*
KARACHI: The Services trade deficit widens to $4.223 billion, an increase of 40.35 percent, in first eight months (July-February) of current financial year exceeding by $3.009 billion compared to corresponding month last year, latest data released by Federal Bureau of Statistics (FBS) show. However, it narrowed down by 32.14 percent in the month of February to $256.529 million compared to $378.054 million for the same month last year. Furthermore, it declined by 61.76 percent against preceding month of January when it stood at $ 670.905 million. During July-February 2007-08, services export declined by 16.34 percent to $2.123 billion against $2.538 billion previous year whereas imports surged by 14.41 percent to $6.347 billion over $5.547 billion in the last year. 

The exports depicted healthy gains of almost 100 percent in the month of February to $508.951 million over $ 254.919 million in the previous year. However, imports also increased by almost 21 percent during February to $765.480 million against $632.973 million in the last fiscal year. Analysts said that robust performance of export helped to curtail the overall deficit during the current fiscal year, otherwise it would have been much larger, putting further pressure on the deteriorating balance of payment position. In order to enhance exports, analysts say that government needs to resolve a number of issues like: quality, acceptance of professional credentials, visa problems and most importantly the image problem, which has marred to exploit the major potential in this area.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan, China to bolster defence, energy, trade ties​*
** Chinese president describes relations with Pakistan as high priority​*
SANYA: Vowing to enhance co-operation in defence, energy and trade, President Pervez Musharraf and his Chinese counterpart Hu Jintao hoped on Friday that these would be further strengthened as the new government comes into power in Pakistan.

President Hu Jintao described ties with Pakistan as a high priority relationship, Foreign Minister Shah Mehmood Qureshi told reporters after the meeting.

He said that the two leaders had discussed co-operation in nuclear energy. Both countries hoped to raise bilateral trade between them to $15 billion, he added.

During the meeting, Islamabad proposed that the two countries could improve connectivity by adding a fibre-optic line, an oil and gas pipeline and a rail track linking the Karakorum Highway to Gwadar.

Musharraf also extended Pakistans full support to China for the Beijing Olympics and assured Hu that the Olympic torch relay in Islamabad later this month would be held peaceably.

Following the formal talks, the two leaders witnessed signing of two memorandums of understanding (MoU) and an agreement, one of which seeks to extend co-operation in managing water resources and hydroelectric power.

Following the meeting, Hu hosted a dinner in honour of Musharraf and his entourage, which includes Foreign Minister Shah Mehmood Qureshi and Defence Minister Chaudhry Ahmed Mukhtar. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Sugar production all-time high ​* 
ISLAMABAD (April 12 2008): At a time when majority of the key sectors of the economy is not performing well, sugarcane crop has done extraordinarily by producing all time high 4.365 million tons stock till March 31, and as the mills in northern Sindh and southern Punjab are still operational.

Pakistan Sugar Mills Association (PSMA) hopes that net output would be between 4.5 and 4.6 million tons before ending of the crushing season 2007-08. This is for the first time that Pakistan's sugar production cross 4 million mark. Last crushing season had ended up at 3.5 million tons. Unsold stocks as on March 31, stood at 2.91 million tons, which is again a record.

Historically high sugar production is a good news for Pakistan. Huge production will lift up Pakistan's agriculture crops and to some extent improve overall performance of the agriculture sector, which will be positive thing for Pakistan's economy.

But, the growers, who should have given credit of producing bumper crop, are at the losing end. As they in majority of the cases have not been paid for their produce. Rabia Sultan of Farmer Association of Pakistan (FAP) claims that sugar industry has withheld Rs 40 billion of the growers. Outstanding amount is roughly half of the total money, which is supposed to go into rural economy from sugarcane crop. Despite continuous protest by the growers the payment issue is yet to be resolved, she deplored.

It has become a routine that the government uses the issue as a slogan every year and issues a few statements and then leaves the growers in disarray. Sources said the FAP took the issue at different meetings including one of the sugar board and demanded of the government authorities to take action against chronic defaulters of the growers' payments. The growers after producing bumper crop have been left at the mills owners mercy who by all mean want to make money.

A negative side of the story is that the government's share in revenue from sugar has shrunk considerably. The Federal Board of Revenue (FBR) collected Rs 14 billion revenue from sugar sale against Rs 18 billion of the last year. Lower prices have been reportedly the basic reason of Rs 4 billion less revenue from sugar production.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Wartsila wins 134 million euro power plant deal ​*
ISLAMABAD (April 12 2008): Wartsila Corporation has been awarded a turnkey contract worth Euro 134 million by Nishat Power Ltd, an independent power producer that will supply electricity to the national grid in Pakistan. The power plant will have a total gross electrical power output of 200 MWe, CNBC reported.

The power plant, which will run on heavy fuel oil, is due to be operational by September 2009, and will be located near Lahore. The plant will comprise eleven Wartsila 46 diesel generating sets. It would supply the plant equipment, then erect, test and commission the plant and provide local construction supervision.

A contract to operate and maintain the power plant is also under negotiation. "Our satisfactory experience with Wartsila products and services encouraged us to set up this project with them. Their power plants are fuel efficient, reliable and thereafter, sales support very responsive," said Mian Mansha, Chairman of the Nishat Group.

This power plant to Nishat Group will further strengthen Wartsila's position as the market leader in the supply of private power plants in Pakistan. A total of 1000 MWe of Wartsila power plants are already in service in Pakistan. The Nishat Group is one of the leading business groups in Pakistan with interests in the textile, cement, insurance and banking sectors.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*SME development programme: $12 million ADB assistance to set up four CFCs ​* 
LAHORE (April 12 2008): The Technology Upgradation and Skill Development Company (Tusdec) will set up four common facility centres, one each in every province of Pakistan, under the Asian Development Bank's 12 million-dollar SME development programme.

This was revealed in a meeting held here on Friday to discuss new initiatives and review the progress of the current ceramics-oriented project being implemented by the company.

The CFCs include Ceramics Complex in Gujranwala and proposed Engineering Support Centres in Peshawar, Hyderabad and Quetta. Manila-based ADB economist Joao Farinha-Fernandes and chief of Core Programme Management Unit, Ministry of Finance Badar Hashmi were also present in the meeting.

Speaking on the occasion, Joao Farinha-Fernandes said that Pakistan would benefit from initiatives such as an electronics complex, Federal Institute of Materials and Homologation and Composite Materials Institute.

He expressed the hope that these projects would be instrumental in accelerating the industrial growth in this part of the world. He said that Pakistan's economy had been very resilient, adding that it did not experience any bust, unlike some other countries of the region. Drawing a parallel between Pakistan and South Korea, Fernandes said Pakistan was trying to catch up with the developed world in the field of manufacturing the way Korea did some years ago.

He also dilated upon the ADB's efforts to support the developing economies of Asia like Pakistan. Giving a briefing on this occasion, Tusdec Chief Executive Officer Suhael Ahmad said that the CFCs, including Ceramics Complex in Gujranwala, Peshawar Engineering Support Centre, Hyderabad Engineering Support Centre and Quetta Engineering Support Centre, would provide technological assistance to the small and medium enterprise (SME) clusters.

He said that the construction of the Rs 314 million ceramics complex, for which land had been identified, would start in July next. He also gave details about the upcoming projects of the company, including Electronics Complex, Federal Institute of Materials and Homologation (FIMH), the Composite Materials Institute, Industrial Technology Upgradation FUnd (ITUF), Industrial Technology Upgradation Policy (ITUP) and Senior Expert Advisory Service (SEAS).

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan taking steps to meet Qatar manpower needs: minister ​*
ISLAMABAD (April 12 2008): The Federal Minister for Labour, Manpower and Overseas Pakistanis, Khursheed Ahmed Shah, has said that Pakistan is taking all measures to meet manpower requirements of Qatar as excellent training facilities in technical and professional fields have been evolved.

He stated this while talking to Qatri Ambassador Hamad Ali Al-Hanzab, who called on him here on Friday. The Minister said that Pakistan is ready to offer manpower to Qatar in the categories of IT professionals, engineers, doctors, technical skilled and semi-skilled workforce for the industrial sector and skilled construction workers to meet the requirement of Qatar.

The Ambassador said that Pakistani manpower is rendering service in various sectors of economy of Qatar for the last many years. However, the flow of manpower to Qatar could not be increased during last few years. He said that an agreement on regulation of manpower from Pakistan to Qatar already exist between the two countries since 1987.

"We are now signing the additional protocol, which is to be signed during the visit of Minister of Labour of the State of Qatar to Pakistan in the first week of May 2008." The Ambassador also recalled the tenure of ZA Bhutto during which he played vital role to unite the Muslim Ummah on one platform to strengthening their economy. The Minister expressed hope that new vistas would open for Pakistanis' employment after signing additional protocol with Qatar.

Business Recorder [Pakistan's First Financial Daily]


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*Minister for devising investment-friendly strategy ​* 
PESHAWAR (April 12 2008): Provincial Minister for Industries, Syed Ahmed Hussain Shah has asked the provincial Department of Industries for devising a strategy to improve the input of the department and attract investment into the province. He was speaking at a high-level briefing of his department held in the Civil Secretariat here on Friday.

The Minister expressed concern over the low pace of industrialisation and growing number of sick industrial units. He termed sustainable industrialisation and rapid promotion of Information Technology inevitable for a stable economy and strong source to overcome unemployment and lawlessness in the province. He underlined the need for a devoted and serious contribution by the managers of Industries Department instead of frustration and disappointment.

Expressing his resolve to take concrete steps for exploring new industrial investment opportunities in the province, the Minister was of the view that taking benefit of same parties' coalition governments in centre and the province, we should expect positive results of our initiatives within six months.

The NWFP Secretary Industries, Shah Wali Khan and heads of all the sectors of Industries Department attended the briefing and apprised the minister of the objectives, current activities, achievements, policies, revenues, targets and future plans of their respective attached departments.

They also highlighted difficulties involved in their smooth working as well as bottlenecks in industrial development and implementation of industrial laws as well.

The minister was told that a sizeable amount of Rs 3,250 million has been allocated to improve the condition of infrastructure facilities in the existing Industrial Estates, extension thereof, and establishment of new industries at different locations including a China Industrial Estate at Haripur.

While as many as 149 development schemes have been initiated in the industry sector of NWFP at a total cost of Rs 538.298 million. The minister urged the need for an effective coordination and consultation between the Provincial government and the investors.

He said that such proposals would be presented in the next Regional Investment Conference for consideration. Describing the Frontier Province best suitable for investment in mineral, power generation and tourism development, he directed to identify the idol mineral leases and urged the need to enact laws for cancellation of such lease agreements.

About rich potential in upper Hazara, he stressed the need to conduct a feasibility study for setting up a Limestone Zone and a Marble City therein. The minister particularly asked the authorities concerned to explore the opportunities for establishing industrial estates in the remote and hilly areas having potential for small-scale power generation.

Terming the Information Technology wing the most important component of Industries Department, the provincial minister asked the concerned officials to take comprehensive measures to make this section fully functional and beneficial.

Expressing dissatisfaction over the poor condition of technical institutions across the board, he said that certain steps would be taken to strengthen this department after its withdrawal from the devolution structure in the next financial year.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*EFU plans to expand business across Asia ​* 
KARACHI (April 12 2008): The Eastern Federal Union (EFU) has planned to expand its business activities across Asia. This was stated by Managing Director, EFU, Safiuddin N Zoomkawala at a programme, organised by 21st Century Business and Economic Club at a local hotel on Thursday night. The theme of event was 'How the EFU Group is Made Success Story: A Pakistan Case study'.

Safiuddin said that the EFU was considering expansion of its business circles across Asia and for this purpose EFU's regional offices would be established in Sri Lanka, Maldives, Nepal and Bangladesh shortly. He said that EFU was established in 1932 and is the pioneer of Islamic insurance. He added that the EFU's services cover almost every sector including health insurance, life insurance, Islamic insurance, agricultural insurance, and livestock insurance.

Safiuddin apprised that EFU's annual premium increased up to Rs 14.5 billion and its assets reached up to Rs 50 billion in 2007. He added that the EFU has captured almost 60 percent of market shares with share capital of 1,000 million in last year.

He lauded the efforts of 21st Century Business and Economic Club in highlighting successful business personalities and making people aware of their success stories. A large number of people from every walk of life were present on the occasion.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan and China to sign 16 pacts during Musharraf's visit ​* 
ISLAMABAD (April 12 2008): Pakistan and China are going to sign 16 framework agreements and Memorandum of Understandings (MoUs) during President Pervez Musharraf's visit for enhancing co-operation in a number of key areas with focus on bringing more Chinese investment in energy sector.

A Memorandum of Understanding will be singed between the Ministry of Water Resources of China and the Ministry of Water and Power of Pakistan.

OTHER AGREEMENTS INCLUDE: Cooperation in the field of management of natural disasters; an agreement on sports co-operation between the general administration of sports of China and Sports Ministry of Pakistan;

A MoU for co-operation on architectural design, research and constructions between CDA and the consortium of China Architecture Design and Research Group and Chinese Academy of Sciences Architecture Design and Research Company Ltd;

Agreement between Ministry of Food, Agriculture and Livestock, government of Pakistan and the Ministry of Commerce, Ministry of Science and Technology, Government of China for co-operation and collaboration for promotion of high efficiency Irrigation system in Pakistan;

Agreement between Ministry of Food, Agriculture and Livestock, government of Pakistan and the Ministry of Agriculture of China on Water Saving Irrigation;

MoU for co-operation in engineering and technical sciences between the Chinese Academy of Engineering of China and the Ministry of Science and Technology of Pakistan; framework agreement for co-operation in the field of information, media and broadcasting between Ministry of Information and Broadcasting, government of Pakistan and the State Administration of Radio, Film and Television of China;

MoU on co-operation in the field of information between Ministry of Information and Broadcasting, government of Pakistan and the State Council Information Office of China;

MoU on financial sector co-operation between Pakistan and China; agreement between the Ministry of Science and Technology of government of Pakistan for establishment of Pak-China S&T Forum;

A framework agreement will be signed for co-operation in the field of minerals between the Ministry of Petroleum and Natural Resources of Pakistan and National Development and Reform Commission (NDRC) of China;

MoU for co-operation in the geological, mineral and energy sector between Ministry of Petroleum and Natural Resources of Pakistan and the government of China; agreement on co-operation in cricket between Chinese Cricket Association, China and Pakistan Cricket Board, of Pakistan and framework agreement on Environmental Protection Co-operation between the State Environmental Protection Administration of China and the Ministry of Environment of Pakistan.

A bilateral agreement will be signed between the Higher Education Commission of Pakistan and the Chinese Ministry of Education for the establishment of University of Engineering, Science and Technology Pakistan (UESTP) including a Technology park.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Musharraf, Jintao vow to bolster defence and trade: three agreements signed ​*
SANYA (April 12 2008): President Pervez Musharraf and his Chinese counterpart on Friday vowed to enhance co-operation in defence, energy and trade, and hoped that these would be further strengthened with the coming into power of a new government in Pakistan.

The talks here at China's southernmost city of Sanya covered a wide range of issues with particular focus on Pak-China bilateral relations, besides discussions on regional issues and international developments. Following the round of formal talks, the two leaders also witnessed signing of two Memorandums of Understanding and an agreement.

These included an MoU between the Ministries of Water and Power of the two countries, and on co-operation in sports. The third was for co-operation in the area of engineering, sciences and technology. President Musharraf and President Hu Jintao had over half an hour long restricted meeting, where the former was accompanied by Ministers of Foreign Affairs and Defence.

Later the two sides went in for delegation level talks that reflected convergence of views on regional and global issues. President Musharraf in his initial remarks termed Pak-China relations as time-tested and broad-based, and added that these have permeated down to the people's level.

The Chinese President described President Musharraf as an old friend, who has visited China eight times in as many years, and said that it was a manifestation of the strategic partnership between the two countries. President Musharraf thanked President Hu Jintao for the cordiality and warmth extended to him by the Chinese leadership.

Earlier, President Musharraf, who arrived here on Thursday night, was presented an impressive formal welcome ceremony at the picturesque Sanya city, in the Hainan province. With the backdrop of Yalong Bay on the South China Sea, a smart contingent of the People's Liberation Army, comprising the three services, presented him a salute. The President reviewed the guard of honour.

President Hu Jintao received President Musharraf and national anthems of the two countries were played. Minister for Defence Ahmed Mukhtar, Foreign Affairs Minister Shah Mahmood Qureshi, Higher Education Commission Chairman Dr Atta-ur-Rehman, Planning Commission Deputy Chairman Dr Muhammad Akram Sheikh and Trade Development Authority of Pakistan Chairman assisted the President during the talks.

China is a major source of investment in Pakistan and has been supporting the country in various sectors, particularly infrastructure development, energy, roads and dams and, in this regard, a Pakistan-China Joint Investment Company has been working since 2007.

Bilateral trade between the two countries has touched $6.8 billion. Pakistan and China signed a free trade pact in 2006 and hope to raise two-way trade to $15 billion within the next five years. Pakistan-China Joint Five-Year Economic Plan was signed in November 2006, and the Free Trade Agreement, operational since last year, has bolstered the economic co-operation between the two countries.

Both countries have maintained long-term exchanges and multi-level co-operation in many areas, particularly defence. President Musharraf's visit is aimed at further promoting exchanges and bilateral co-operation for the development of strategic co-operative partnership of the two countries. Pakistan was the first Islamic country to recognise People's Republic of China on January 4,1950. Diplomatic relations were established between the two countries on May 21, 1951.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Ministry faces problems in arranging Rs200bn ​* 
Sunday, April 13, 2008

ISLAMABAD: Owing to the liquidity crunch faced by the domestic market, the finance ministry is facing the most difficult task of arranging over Rs200 billion for making payments to cover oil price differential claims and for the losses incurred by WAPDA and PIA in the current fiscal year, The News has learnt.

The price differential claims (PDCs) owed to oil marketing companies touched Rs123 billion during the current fiscal year and the government is striving hard to arrange financing for them.

The oil marketing companies may demand a penalty owing to delays in payments of these outstanding bills, said an official, who is involved in negotiations to arrange financing.

The delayed payments are causing problems for the oil marketing companies. They are threatening to disrupt oil supply to various parts of the country if payments are not made on time.

Secretary Finance Dr Waqar Masood, in the recent past, ran from pillar to post to arrange funds to make the payments on time, but presently, things are not as streamlined as claimed by the high-ups of the finance ministry.

The official said the government has allocated Rs54 billion for providing subsidy to WAPDA during the current fiscal year, however, the losses made by WAPDA, caused by non-implementation of raising power tariff, are over Rs70-Rs80 billion. The total estimate of losses faced by WAPDA is over Rs100 billion, owing to the non-payment of FATA consumers, as that head alone stuck up the payment of over Rs60 billion.

The government had raised power tariff by 9 per cent during the caretaker set-up but the power tariff needs to be jacked up by 80 paisas per kilowatt, as determined by the NEPRA in order to overcome WAPDAs losses.

Rather than blaming WAPDA for all the ills, the official said, the government should make arrangements to ensure the recovery of arrears from FATA as well as from the public sector institutions in order to achieve a clean balance sheet for the WAPDA.

The cash-bleeding Pakistan International Airlines (PIA) is another source of concern for the budget makers as they allocated Rs14 billion worth of subsidy to the national flag carrier, which proved just peanuts on the face of the yawning deficits being faced by the PIA. PIA losses are mounting to new heights and are likely to touch Rs65 billion by the end of the current fiscal year.

The government is making efforts to come up with an economically viable solution for PIA, and negotiations are underway with domestic and multinational financial institutions to eliminate the woes of the airline, said the official.

PIA, the sources said, will have to lay off around 3000-5000 staff workers and rationalize its routes in order to reduce its burden. 

This cannot be done without the induction of a professional head of the national flag carrier who, with the complete support of the government should take tough decisions to achieve the desired results.

The Financial Improvement Plan (FIP) to turnaround the national flag carrier, demands immediate attention from the incumbent regime as complete ownership and effective implementation can pull PIA out of its existing crisis.

Ministry faces problems in arranging Rs200bn


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*Increasing exports only way to overcome trade deficit: minister ​* 
Sunday, April 13, 2008

LAHORE: Federal Commerce Minister Shahid Khaqan Abbasi has said the increasing exports is the only way to plug the trade deficit as checking it through import restrictions would not be a prudent measure in this regard.

He was talking to the media after meeting with the members of All Pakistan Textile Mills Association. He suggested reducing cost of doing business in areas where competitors have an edge. However, he clarified that the higher costs due to high energy and power rates are global phenomena and impact the cost of doing business. 

In his interaction from APTMA Lahore office through videoconference with APTMA members from Sindh and NWFP he asked the members to apprise him about their difficulties and suggest ways to increase exports. He was non-committal on all their queries stating that he is new at the job and would assess the situation after getting input from them and his staff at the Ministry of Commerce. He said that since he is from private sector he would try to address all their genuine concerns.

The textile industry representatives complained that the textile exports from Pakistan are under pressure due to multiple factors. These include low cotton production, as Pakistan has not adopted the new BT cotton technology. They said the cotton production in Pakistan and India was at the same level in 1992, however Indian production has doubled after shift to BT cotton while Pakistans cotton production is even lower than 1992 level.

They also demanded RND grant for the spinning sector as all other sectors of textile were getting these subsidies. The APTMA members protested the cross subsidies of Rs30 billion that the industry pays, as domestic and fertilizer sectors are heavily subsidized. They also deplored high electricity tariff. The members urged the government to give preference to the industry over other sectors in continued supply of electricity and gas. The NWFP members deplored higher cost of electricity for NWFP industries than Punjab.

Abbassi assured the members that their point of views would be considered and all genuine impediments would be removed to increase exports. He told the newsmen that the countdown on restoration of judges has already started.

Increasing exports only way to overcome trade deficit: minister


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## Neo

*Kalabagh dam not to be built at cost of unity: Pervez ​* 
Sunday, April 13, 2008

LAHORE: Federal Minister of Water and Power Raja Pervaiz has said that the Kalabagh dam would not be built at the cost of the unity of federating units, adding that the whole project would be reviewed in line with the reservations of its opponents.

He was taking to the media after a lunch hosted in his honour by PPP leaders. He stated that the energy needs of the country are enormous and the government would like to explore every avenue from which power could be generated. However, he clarified that the Kalabagh dam could only be built if all the federating units give their consent.

He said it is unrealistic to think that load shedding can be eliminated immediately. He said electricity production capacity is generated in 30-36 months. He deplored allegations that no power generation capacity was added in the system during last nine years, adding that immediately after assuming power the democratic government has arranged 2000 MW rental generating units that would be commissioned in the next six to seven months. Meanwhile he asked the people to be prepared for eight hours of load shedding during the peak of this summer as the supply of electricity would be 3000 MW less than the demand.

He assured that the menace of load shedding would be controlled within three years, when adequate capacities would be added in the system to plug the supply gap. He said the government would tap every opportunity to generate electricity from the run of river projects, besides establishing wind mills in the Coastal areas of Sindh and Balochistan.

He said the impact of load shedding would be minimised through prudent load management. He said all segments of society would be asked to cooperate with the government in conserving energy. He noted that the Prime Minister would initiate the conservation by installing energy savers in the PM House. He said energy saver bulbs would be provided to the general consumers on subsidised rates.

Later talking to the newsmen, Raja Pervaiz said that he would appeal to the traders to close their shops by 7 p.m. He said a proposal for staggering weekly holidays for industrial and commercial concerns is also under consideration. He stated that Pakistani domestic consumers alone could reduce consumption by 1200 MW daily if they replace all their electric lighting with energy savers. 

Kalabagh dam not to be built at cost of unity: Pervez


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*Dar invites US entrepreneurs to invest in Pakistan ​* 
Sunday, April 13, 2008

WASHINGTON: Holding out the new governments commitment to foreign direct investment related policies, Finance Minister Ishaq Dar has invited American entrepreneurs to avail of investment opportunities Pakistan offers in various sectors.

He was addressing members of the US-Pakistan Business Council here at the US Chamber of Commerce and Industries on Friday afternoon.

The newly elected government in Pakistan will continue the FDI linked policies, which we had introduced and which the previous government continued, obviously there will be continuity in these policies, he said.

At the same time, Dar added, the government would also strive to improve monetary and fiscal policies.

He informed the entrepreneurs about priorities of the new democratic coalition government and said it had given market economy to the country (in 1990s), introduced foreign direct investment policies as well as various other economic reforms.

The business leaders said they valued these reforms very much and said a delegation (of US entrepreneurs) will visit Pakistan in the near future, Dar later said.

The finance minister was optimistic about increased inflow of US investment into various economic sectors as the business leaders showed a keen interest during the interaction.

The members of Pakistani delegation, who are here for World Bank-IMF annual spring meetings, including State Bank Governor Dr Shamshad Akhtar, Secretary Finance Dr Waqar Masood Khan and Pakistans diplomat in Washington Muhammad Aslam Khan also attended the meeting .

The Pakistani delegates also took part in G-24 Deputies Meeting at the World Bank where they presented Pakistans views on the issue of increase in food prices. On the sidelines of the global gathering of finance leaders, Ishaq Dar also held meetings with his counterparts from other countries.

Earlier, the finance minister had a meeting with the chairman of the US-Pakistan Business Council, Jay Collins, who said the US business community is optimistic about Pakistans future, about continuing to invest and commit long-term to Pakistan.

Dar invites US entrepreneurs to invest in Pakistan


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*Work on Basha dam to start in 2009 ​* 
Sunday, April 13, 2008

LAHORE: The construction work on the Diamer-Basha dam project will commence in 2009 after an international competitive bidding.

The draft detailed engineering designs and tender documents of Diamer-Basha Dam project, submitted by consultants was being reviewed, to be finalised shortly.

This was stated at a briefing to the 37th PN staff Course, Naval War College, Lahore at the WAPDA house on Saturday.

Pakistan is fast heading towards being a critically water-short-country, as per capita water availability has already declined to the alarming figure of 1,070 cubic meters in the year 2007, the delegation was informed.

A country, according to the universally accepted parameters, is declared a water scarce country if per capita availability of water declines to 1,000 cubic meters.

The delegation was briefed that the accumulative gross storage capacity at Tarbela, Mangla and Chashma reservoirs that used to be 18.37 million acre feet (MAF) originally, has now declined to 13.22 MAF due to sedimentation, resulting in 28 per cent loss of storage capacity.

Another 20 million acres of virgin land could be brought under irrigated agriculture if additional water is made available by constructing new water reservoirs in Pakistan.

It was further told that engineering studies of 15 hydropower projects with a cumulative generation capacity of 25,270 MW was being carried out by WAPDA.

PEPCO is striving hard to minimise the gap between consumption and generation of electricity by adopting various short, medium and long-term measures.

Work on Basha dam to start in 2009


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## Neo

*Gwadar women project in doldrums​*
ISLAMABAD, April 12: An audit report has detected slow implementation, under-utilisation of funds and ineffective coordination between stakeholders in the Rs39.785 million Jafakash Aurat project.

The project was launched in partnership between the Ministry of Women Development and the Khushali Bank for reducing poverty through a micro-credit programme in Gwadar district.

The project started with an objective to enable rural women to supplement their livelihood by creating strong linkage between micro-credit and skill development.

One of the aims was to provide skill and enterprise training to 3,500 rural women and create 2,000 direct and 8,000 indirect jobs through extending micro credit to trained rural women.

Till the completion of audit in April 2007, only 364 rural women were trained and micro credit facility was extended to 25 rural women in the district.

According to the 2006-07 report forwarded to the National Assemblys Public Accounts Committee, local women were not informed of the opportunities coming up as a result of current development activities in Gwadar.

Focus should have been to understand current development programmes, forecast future trends and link the capital market with local opportunities.

Instead, decision-making was given into the hands of local women who were unaware of future market needs of the Gwadar Port.

The report said that almost 98 per cent women repaid loans, but loans were disbursed without imparting any training to them in the first place.

According to the report, the Ministry of Women Development made an agreement with the Khushali Bank Limited, Gwadar branch, and released Rs21.8 million for execution of the project.

The bank had, however, utilised only 1.165 per cent of the amount.

Due to non-utilisation of funds, the objectives of the project were not achieved.

The report cited non-availability of women staff for non-utilisation of the funds.

The report recommended revisiting training need assessment, conduct impact assessment, charging the correct mark-up, and improving coordination with stakeholders to expedite the disbursement process.

Gwadar women project in doldrums -DAWN - Top Stories; April 13, 2008


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## Neo

*Growers see 22 million tons wheat output​*
MULTAN, April 12: The growers and agricultural experts from southern Punjab are optimistic that the country would produce 22 million tons wheat, which would fulfill the required consumption of the country.

The government has set the wheat target of 24 million tons for this season, while last year the country produced the record 23.3 million tons.

Khawaja Muhammad Shoaib of Farmers Vision Forum estimated the wheat production at 22 million tons, 1.3 million ton less as compared to last year. He put the consumption of wheat at 21.5 million tons.

He said that now all the responsibility had been shifted towards the government institutions and if they succeeded in controlling the border and kept an eye on flourmills, a wheat crisis could be averted.

He said that last year due to low prices of wheat, the grain was used as fodder and in the preparation of poultry feed, which was also a factor for last years wheat crisis.

Malik Manzoor Jauta a progressive farmer from District Layyah said despite the harm done to the crop ready for harvesting by inclement weather, he was optimistic that the quantity of wheat would be sufficient for the district as compared to the last year.

He said that last year the price of husk increased to Rs150 per 40 kg and the people preferred to use the wheat as fodder and in making poultry feed.

He said that the farmers were unable to store the crop because they have not godowns and they would ultimately sale their crop to the government.

He said that the farmers would be forced to sell their crop to the government because the private sector has not yet become active in the district to purchase the crop. There was a strong possibility that the government institutions would succeed in achieving their target, he said.

He said that if the private sector came forward to purchase the crop, farmers would prefer to sell wheat to them.

Former president PPP Kisan Wing, Muzaffargarh, Dr Suhail Alam said that last year the government agencies in the district failed to achieve the procurement target and it seems that it would be very hard for them again this year.

He said that the district could face 15 to 20 per cent deficiency in crop production due to delay in sowing, increasing trend of sugarcane cultivation and rapid increase in inputs prices.

He said that the cold climate and rains were a blessing in disguise at a time when the farmers were facing difficulties due to the shortage of irrigation water.

He said that government should take the wheat issue seriously and should monitor the performance of its agencies because their irregularities have created distrust among the farming community.

Growers see 22 million tons wheat output -DAWN - Business; April 13, 2008


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## Neo

*Investment in ISE up by 66.59% ​*
ISLAMABAD: Although the Lahore and Karachi incidence that in return affects the stock market but over all the volume in ISE recorded a tremendous increase of 64.59 percent in the out going week as compared to last week. The political reconciliation process particularly in Karachi have been positively taken by the investors of capital market and invested more in the capital market. However, the ISE-10 remained negative on April 7 to April 10 and observed bullish sentiments in the outgoing week. 

Analysts said the market would further improve with the passage of time. Total volume of transactions at ISE has been increased by 64.59 percent and reached to 15.577 million shares and it was 9.464 million shares last week, showing a net increase of 6.113 million shares. The Islamabad market remained negative for three days and positive on April 8 and April 11. The maximum transaction in the outgoing week were recorded on April 9 when the market at ISE reached to 4.202 million shares when the ISE-10 index dropped by 7.03 points to close at 3269.19 points from 3276.22 points. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*10.45 percent rise in oil products consumption in nine months ​* 
KARACHI (April 13 2008): Petroleum consumption in the country increased by 10.45 percent in the first nine months' period of the current fiscal year FY08 to 13.85 million tons against 12.54 million tons of the corresponding period in FY07.

The consumption of two of the major white oil products, Mogas and high speed diesel (HSD) were leading the growth path by rising consistently, posting a growth of 30.5 percent and 14.5 percent, respectively. The combined volumes of the these two major drivers of the POL consumption growth were 7.06 million tons in 9MFY08 from 6.05 million tons in 9MFY07 due to resuming Mogas demand amid reduced smuggling of the Iranian products, Khurram Schehzad, an analyst at Invest Capital & Securities, said.

High speed diesel volumes were on the rise due to increased utilisation in generators due to acute shortage and electricity breakdowns being observed. Along with Mogas and HSD, other white oil products--HOBC & Kerosene--also witnessed higher volume growth of 14.4 percent with 8.05 million tons of volume against 7.03 million tons last year, than black oil (FO & LDO) which posted growth of 5.41 percent with 5.80 million tons in 9MFY08 against 5.50 million tons in the same period last year.

He said that Mogas and HSD were main drivers of overall POL consumption growth during the period (black oil's contribution to the rise became stagnant). It was witnessed from the fact that, in volumetric terms, black oil contributed only 23 percent to the total volume increase during 9MFY08 whereas Mogas's and HSD's proportions to the total volume increase were 19 percent and 58 percent (77 percent combined).

Furnace oil growth of 5.7 percent came on the back of Wapda and other IPPs' increased demand due to reduced gas supplies to power plants during the period (slower growth amid 47 percent steep rise in its price during July-March, 2008 while 76 percent on YoY increase).

The consumption of POL products during March recorded decent growth of 12.53 percent mainly driven by Mogas (24.2 percent) and HSD (19 percent on YoY basis). Black oil recorded a growth of only 4.9 percent YoY (5.7 percent for FO and -43.7 percent for LDO) on YoY basis during March-08 amid sharp decline in LDO consumption due to changing weather patterns, ending Kharif season, and low agricultural activities due to elections' lag impact.

Mogas consumption has been climbing, despite its greater price differential with its alternatives like CNG and LPG, on the back of minimised Iranian smuggled oil products, rising number of vehicle, greater hassle and increased waiting time at CNG filling and HOBC volumes replaced by Mogas due to HOBC's increased price differential with it.

In addition, kerosene utilisation was also on consistent rise amid frequent electricity breakdowns in the remote areas of the country and its 100 percent usage in JP-8 production. JP-1, on the other hand, has been showing continuous decline (due to the assumed shortage of the product, erratic and limited supply from refineries because of the capacity constraints).

Whereas, HOBC revealed a YoY decline of 26 percent in March-2008 due to increased end-consumer prices and larger differential with Mogas. JP-8's exports also settled higher at burgeoning 89 percent in 9MFY08 on the back of increased Defence-related activities in the neighbouring country.

Only PSO's market share improved considerably to 76.9 percent during 9MFY08 against 66.9 percent in the same period of last year due to punching in extraordinary growth in three major products - FO with 22 percent YoY, HSD with 33 percent, and Mogas with 54 percent growth during 9MFY08.

PSO posted 26.4 percent growth in volumes during 9MFY08. Shell stood with improved 15 percent market share, up from 14.1 percent with significant volumetric growth of 17 percent YoY based on HSD and Mogas growth of 16 percent and 27 percent on YoY basis, respectively. APL lost 30bps on YoY basis in its market share from 5.8 percent in 9MFY08 to 5.5 percent during 9MFY08 while recorded a POL volume growth of 4 percent on YoY basis during 9MFY08.

"The reason for this decline in APL's share was 40 bps fall in furnace oil market share during March with 8 percent decline in its volumetric growth (as APL is the second largest provider of FO which constitutes 56 percent weight in the overall POL product volumes)", Khurram said.

He said that the summer season with expected greater power breakdowns would wake the need of increased FO and HSD demand for IPPs and household generators. On the other hand, Mogas and Kero consumption has already kicked up.

However, Mogas's consumption may slowdown due to expected widening of its price differential with the alternates (CNG and LPG), as GoP may continue passing on the oil price increase in international market to the end-consumer. "Therefore, we expect full-year demand growth to range between 12 percent to 14 percent for POL products", he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Delayed sell-off of PTCL costs exchequer $6 billion ​* 
ISLAMABAD (April 13 2008): The Auditor General of Pakistan has pointed out that delayed privatisation of Pakistan Telecommunication Company Limited by successive governments caused $6 billion loss to the exchequer. The AGP in audit report for 2006, laid before the National Assembly, observed that according to financial experts and analysts, PTCL's value plummeted from $8 billion to $2 billion.

The government could have fetched higher proceeds in the competitive environment in telecom sector in the 90s besides saving substantial financial and human resources consumed in the lengthy process, it added. The process of PTCL privatisation started in 1991 with a target date of mid-1993, which was later extended to June 1996.

The Privatisation Commission contended that the process was delayed without any plausible reason. Moreover, the revised agreement on March 12, 2006 also cost the government 50 percent of Voluntary Separation Scheme i.e. $50 million for operation and maintenance by Etisalat. The government also pledged to provide clear titles for properties currently under possession of PTCL with permission to sale as well as receiving proceeds from such sale.

The revised Share Purchase Agreement (SPA) and Shareholders Agreement (SA) also reduced per price share from the said value of $1.96 to $1.27 with total impact of $914.940 million as per the PC documents but the independent financial and economic analysts say it was more than $1 billion.

The government instead of allowing major modification in the original bid offer should have terminated the contract and confiscated the bidding amount under the rules, according to the audit report.

FLAWS IN VALUATION: The AGP said as per clause 34 of PC Ordinance 2000, the valuation of property shall be performed, in the prescribed manner, by independent valuers who shall issue a valuation report to the Commission.

The audit is of the opinion that Net Asset Valuation (NAV) methods should have been employed in the case of PTCL in order to ensure that GoP gets full value out of underlying assets.

But it was observed that no attempt was made to ascertain the NAV of PTCL probably due to the weaknesses in accounting records and systems. Moreover, audit is sceptical regarding objectivity and reliability in the valuation of entity as the consortium has basically relied on the assumption and parameters provided by the PTCL without carrying out technical evaluation. It said that rescheduling of payments contrary to provisions of terms and conditions of bidding document having substantial financial implications have raised questions on transparency and fairness of the whole process.

Business Recorder [Pakistan's First Financial Daily]


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*India plans to double cement imports from Pakistan: ban likely on steel exports ​*
NEW DELHI (April 13 2008): Indian Trade Secretary G.K. Pillai has said India is aiming at doubling cement imports from Pakistan to 4,000 tonnes a day, and added the ban on cement exports by the government could help meet the demand-supply gap.

"When there is a shortage, why allow exports? We are going to double imports from May," he told reporters after a business conference on Saturday. India allowed duty-free import of cement from Pakistan in 2007, as domestic firms like Grasim Industries Limited, UltraTech Cement, ACC Limited and Ambuja Cements Limited are running almost at near full capacity and cannot match the growing demand in near future.

Indian firms plan to add another 100 million tonnes in capacity by 2010 at a cost of 400 billion rupees. "This would ease the pressure on prices," Pillai added. India's cement output grew by 7.5 percent from a year earlier to 151.24 million tonnes during April-February in the 2007-08, of which exports were at 3.33 million tonnes, according to industry body, Cement Association of India.

Meanwhile, Trade Minister Kamal Nath told reporters after a business conference on Saturday India had banned export of cement from Friday and was considering a similar move for steel, confirming that the government aimed to calm inflation that leaped to a three-year high level.

"We have issued a notification on Friday night, banning export of cement," Kamal Nath said. He said the cabinet ministers, scheduled to meet next week, and would also debate on a proposal to ban steel exports. India's headline inflation raced to an annual 7.41 percent in late March, its highest since November 2004, due to higher prices of food and metals, the government data showed on Friday.

Over the last few weeks, the government has cut duties on edible oils, banned export of non-basmati rice and withdrew export incentives for cement and steel to increase local supplies and tame inflation.

Policymakers also contemplate an upward pressure on cement prices, as demand outpaces supply in Asia's third largest economy that is scaling up its creaky infrastructure at a cost of 500 billion dollars to sustain an average annual growth of nine percent until 2012. "India is growing by 8-9 percent. I largely see this momentum continuing," Nath said.

Business Recorder [Pakistan's First Financial Daily]


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*'Government to reduce deficit by increasing export' ​* 
LAHORE (April 13 2008): The trade deficit has reached to 14 billion dollars and the government has chalked out a comprehensive plan by increasing export to bridge the gap in trade deficit. "The principle of devaluation of money will not be followed to decrease it.

The business community and trade organisations will be consulted to get first-hand information before the government spells out its final trade policy," said Federal Minister for Trade Shahid Khaqan Abbasi at the Lahore office of All Pakistan Textile Mills Association (Aptma), on Saturday.

He said that textile sector would be taken into confidence and their opinion would be given priority before finalising the trade policy by the ministry of trade. He said that 25 percent increase in the prices of palm oil and petrol at the international market was the basic reasons for trade deficit.

He said, "There is royal road to bridge the trade deficit, which is increase in export. By increasing the export, the country can be saved from the huge trade deficit," he added. The minister said that the short and medium-term policies would be made to control the deficit.

All Pakistan Textile Mills Association Chairman Akbar Sheikh said the textile sector was playing vital role for the progress of the country and providing employment to the masses and government should pay heed to the sinking textile sector.

He suggested that textile export should be zero-rated and two percent income tax on the export of textile commodities should be waived because it would help to enhance the export as well as to decrease the trade deficit. Akbar Sheikh further said that entire textile chain should be declared tax free export industry.

Former Aptma president Shafqat Ellahi Sheikh said that manufacturing sector of various industries are badly suffering due to energy crisis and constant power load-shedding in the country. To eradicate sorrows and suffering of the manufacturing sector, the government should give top priority to the provision of uninterrupted smooth supply of power to the manufactures, he added.

Business Recorder [Pakistan's First Financial Daily]


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*Need to capture minimum one percent world trade: Ishrat ​* 
ISLAMABAD (April 13 2008): Pakistan's economy is worth 150 billion dollars, hence there is a need to capture at least one per cent of the world trade. This was stated by former Governor of State Bank Dr Ishrat Hussain, while addressing the participants of a seminar on "mainstreaming development issues in Pakistan's trade policies," jointly organised by Sustainable Development Policy Institute (SDPI) and Foreign Trade Institute of Pakistan here on Saturday.

Dr Ishrat said that trade had become a powerful means for a country's economic and social development. By increasing its share in the +world trade, Pakistan could enhance its trade volume with China up to 12 billion dollars, he added. Referring to the annual report of the FTIP, he said that it provided a proof that trade and development were interlinked.

Dr Sohail Malik of Innovative Development Strategy (Pvt) Limited, speaking on the occasion, asked the government to review the entire policy framework to integrate different aspects of trade, development and investment, and called for a clear national strategy.

He said that there was a need to bridge the gap between policies and their implementation. He regretted that the existing trade policy had become hostage to fiscal and monitoring space, while the state of domestic commerce was extremely poor.

He stressed the need for promoting knowledge-based education to excel in engineering and technology to earn the fruits of comparative advantages, adding that the production cycle changes with reaping of the benefits of comparative advantage.

He advised Pakistanis to move in information technology (IT) direction like Indians and get benefit from services sector, which was 53 percent of our economy. He lamented that even Vietnam and other so many countries had made rapid progress than to Pakistan by properly utilising their potentials.

He urged Pakistan to get united and work for the development of the country, lamenting that the mindset of not wishing to compete and lack of confidence as two main problems of Pakistanis. He urged host organisations to concentrate on empirical research.

Speaking next, Director General of Foreign Trade Institute of Pakistan Dr Abid Suleri observed that Nairobi-based United Nations Conference on Trade and Development had no powers to implement its decisions, and said Pakistan, along with other developing countries, should adopt a collective position instead of symbolic position in the UNCTAD.

He said that our national policies needed genuine reassessment, development of competitiveness and parallel governance mechanisms to support the high growth. Dr Safdar Sohail stressed the need for evolving effective co-ordination and implementation mechanisms to use the trade policy for the development of the country.

Dr Sajjad Akhtar of the Centre for Research on Poverty Reduction and Income, urged Pakistan to invest in competitiveness, adopt strategic trade policies, restore a focus on agriculture, combat joblessness, prepare a new tax regime, maintain stable exchange rates, persist with multilateralism and co-operation with neighbours to mainstream the development with the trade policy of Pakistan.

KASB Bank Chairman H. U. Baig said that growth had to be supported by other policies and mechanisms, in addition to a strong implementation and co-ordination mechanism in place for policies, and also suggested formation of a cabinet co-ordination committee for this purpose.

Syed Hasan Javed of Ministry of Foreign Affairs and Syed Irtiqa Ahmed Zaidi of Ministry of Commerce shared Pakistan's perspective and positions in the United Nations Conference on Development (UNCTAD), a UN forum which was formed 44 years ago, to debate the trade and development related issues of member countries.

Teepu Sultan of Trade Development Authority of Pakistan (TDAP) differed with the perception whether there existed any nexus between trade and development, adding that the role of UNCTAD should be the capacity building, human development and food security of the member countries than to support for export-oriented policies.

Other experts called Pakistan to review its domestic trade policy framework to integrate different aspects in it and also bridge the gap between policy and implementation to capitalise its comparative advantages in the era of competitiveness under globalisation.

Business Recorder [Pakistan's First Financial Daily]


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*Malakand-III power project to start functioning soon ​* 
PESHAWAR (April 13 2008): NWFP Minister for Irrigation and Power Mohammad Hamayun Khan has said that Malakand-III hydropower generation will start functioning soon. He said the project would prove a milestone in the development of Malakand.

Addressing various delegations from Sakhakot, Dargai, Piran, Batkhela, Thana, Palai and other areas of Malakand, which called on him at his Jolagram residence in Malakand on Saturday. The minister disclosed those small hydel development projects had also been under study in Malakand Agency, and added work on these projects would be was to be initiated very soon.

He said after completion of the feasibility studies on the small power projects, the area would be given bulk of power share and there would no load shedding. He said that the new government had announced its priorities in which the most important was the restoration of peace and ensuring social development.

The Irrigation Minister said the people had seen a democratic era after decade-long dictatorship and the PPP-ANP joint coalition had established a solid mechanism for ensuring durable peace in the province, particularly in Malakand division.

Hamayun Khan regretted that due to wrong policies, the NWFP in general and Malakand division in particular was converted into a war zone. He said the region would once turn into Switzerland of Pakistan and a global tourists resort.

He said the military operations there turned the region economically more backward. The Irrigation Minister said he would fully honour the mandate of the people and had devised a well-conceived strategy with the officers of the irrigation and power departments to provide basic facilities like roads, drinking water, power, health and sanitation etc.

He said he had directed the authorities concerned and they were preparing feasibility reports regarding dozens of developmental projects in the irrigation and power sector. Meanwhile, a big delegation of Piran, consisting of Pir Azeem Shah, Pir Suleman Shah, Pir Sher Ali Khan, Pir Haimen Shah, Pir Daud Shah, Pir Sultan Room and Khurshed, also called on the minister, and felicitated him on his becoming the minister. The assured of their full support to Hamayun Khan.

Business Recorder [Pakistan's First Financial Daily]


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*Keti Bunder: dredging cost and connectivity ​* 
(April 13 2008): The newly elected Prime Minister of Pakistan in his opening speech promised to give nation a new Port Keti Bunder along-with 100 days priority agenda. It is a welcome sign for all Pakistanis in particular for seafaring community and Maritime professionals.

Port Qasim was also conceived in the 70's and it is likely to turn into Industrial Hub Port by 2020.Whilst, Port Qasim is helping the nation but it is seriously effected by silting due to be in the proximity of Indus Delta and South West Monsoon. The annual maintenance dredging cost runs into 1 billion rupees to maintain 11.0 meter draft.

The plans are on way to deepen the port to 14 meter, costing about $140 million. Present annual dredging BOQ is 5 million cubic meter and when dredged further, it is estimated that annual maintenance dredging will be around 10 mill cu meter thus costing in excess of 2-3 billions rupees to maintain the desired depth.

When Port Qasim was conceived ie returning to old medieval site of Indus River Port Dewal, which was conquered by Mohammad in Qasim ( A History of Indus by J.C. Powell, A Voyage on Indus by Alexander Burnes 1831).

The initial planners and hydrographers at the time of conceiving the port faltered and could not rightly estimate the annual maintenance dredging quantum and cost which was far low comparing as of today's 5 per $ per cubic meter and cutter dredging cost of $20/- per cubic meter.

Furthermore channel is 40 km with sharp bends restricting night navigation, when compared to Karachi and Gwadar of 3.5 km, where vessel can berth/sail 24/7/365. Time is money for ships and ship owners of today and economy of scale is the key to profitability, thus deep drafts are required. Non availability of night navigation for deep draft and long channels are considered as dis-advantage in port planning.

It is presumed that planners of Keti Bunder must have studied the geological history of Indus Delta, coastal hydraulic survey, currents, littoral drift, hydraulic model studies, coastal geomorphology, Alexander Burnes surveys of river Indus and earthquake epic centre and geologic structure of indus basin whilst carrying out hydrographic survey, wave patterns, forming of breakers in monsoon and the coast being low and not discernable except at close quarters for the safety of navigation.

Whilst referring to Indus Delta Map Keti bunder is approachable via Hajamaro creek, which runs beyond Ghora Bari. Since no hydrographic and other studies are available which were carried out in last decade, it could be any body's guess that how much dredging will be required to meet today's generation vessels of 14/16 meter draft and thereafter quantum of annual maintenance dredging to maintain the channel.

It is presumed that a proper feasibility by competent hydragraphers and port consultants be carried out evaluating dredging and maintenance cost bearing in mind high cost at port Qasim. The other aspect to be borne in mind is excellent hinter land connectivity before port is built.

We must learn from the experience of Gwadar Port, which is handicapped due to non existent hinterland connectivity. It is imperative that hard core professionals having experience of Port development may be engaged and this assignment of national importance may not be left at the mercy of generalist having no track of maritime faculty.

We must also learn from the experience of dredging cost at Port Qasim and that of our neighbours ie India, Bangladesh and Thailand etc. The Hoogly river has silted Calcutta Port thus forcing development of new port of Haldia at the mouth of Hoogly, Bombay offshore port, Colombo south port, Chittagong offshore port at Juldia, so has been the case in Bangkok, where new Port has been developed at the mouth of the river to cater deep draft vessels of 4th and fifth generation.

The next generation vessels are post panamax needing 16/18 meter depth and futuristic vision is Suezmax, Malaca Max of 21 meter, thus in all probability a site which is prone to heavy siltation being in Indus Delta costing billions in dredging and thereafter incurring annual maintenance dredging cost of billions, may only be considered after hydrographic surveys and financial feasibility to cater deep draft vessels of future.

We, must have more ports to develop the region and to cater our futuristic needs. Port development is a science and all issues have to be addressed professionally to cater the futuristic development in the maritime industry.

India has 12 major ports and 185 small ports and they are investing $15 billion in port sector and $12 Billions in developing quadruple triangle ie logistics connecting all major city's to cater 1 billion tons of Impo/Expo by 2010.

It is a welcome announcement, however a proper latest feasibility be carried out bearing in mind that it may take 10 years to port be operational from the drawing board, thus ships calling after a decade and their specification be bench marked to make a success story for our future generation.

Since a policy statement has been made thus same must be duly supported with credible latest studies, thus it is expected that the democratic government will make all plans public and will consider the views of local expertise available in selection of site.

Needless to mention as per historical fact the Indus River had many ports in the past ie Patala, Debal, Lahori Bunder, Shah Bunder, Gharo, Keti Bunder, Vikar, Daragi and Bambhore, these ports were destroyed due to the ravages of Indus River or by the change of its course, thus we must learn from the history and a very scientific and cautious approach is recommended in selecting the site of new port.

Meantime, we must concentrate to make new commercial port Gwadur fully operational and optimum utilisation of Karachi and Port Qasim. It is equally important to do traffic fore casting and our needs for 25/50 years.

Business Recorder [Pakistan's First Financial Daily]


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*Smuggling of urea to Afghanistan on the rise ​* 
ISLAMABAD (April 13 2008): Smuggling of urea to Afghanistan is on the rise from different border points but Chaman and Mohmand Agency are said to be much notorious in such activities where concerned administration and security official are completely backing the smugglers, well-placed sources in the Minfal told Business Recorder.

"We are receiving a number of complaints from certain quarters, intimating that huge quantity of urea is being smuggled to Afghanistan every day via Chaman and Mohmand Agency," the sources quoted one of the Minfal officials as saying. The official has written a letter to the Interior Ministry on Saturday, intimating the high-ups about the situation.

Pakistan produces around 90 percent of urea for its local consumption while remaining 10 percent is imported from different countries for meeting domestic needs. The government pays huge subsidy to urea manufacturers to keep the prices within the reach of growers. Consequently, the government was losing huge revenue on account of illegal fertiliser trade.

Minfal, in its letter to the Interior Ministry, has proposed that necessary instructions to all the relevant agencies be issued, asking them to take all possible effective measures to stop fertiliser smuggling.

The issue of urea smuggling has also been taken up by flour millers, who say that besides wheat and flour, huge quantity of urea and other fertilisers were also being sent to Afghanistan through illegal means.

Political Agent of Mohmand Agency issues permits of 300 fertiliser bags for the agency every day. Most of the bags were being smuggled to Afghanistan in connivance with the Khasdars through buses, the sources said.

An official who requested not to be named confirmed that 50-60 buses, carrying 10,000 to 20,000 urea bags were being smuggled to Afghanistan via Chaman whereas 50-60 fertiliser trucks were crossing the border via Mohmand Agency.

Flour millers have proposed to Minfal that the powers to issue quota of urea and other fertiliser by the Mohmand Agency PA having nominal consumption should be withdrawn.

Moreover, FC pickets must be established at the appropriate points to stop smuggling of urea and other fertilisers to Afghanistan, the sources quoted millers as suggesting the Interior Ministry.

The sources said that the Federal Board of Revenue has issued a notification, which says that joint teams of all the concerned agencies would monitor and control smuggling of wheat and other commodities to neighbouring countries especially Afghanistan.

They said, the Economic Co-ordination Committee of the Cabinet, which met a few days ago with Prime Minister Yousuf Raza Gilani in the chair, had expressed serious concerns over the smuggling of wheat and flour to Afghanistan. "The ECC has directed the authorities to take strict measures to control smuggling to Afghanistan," the sources concluded.

Business Recorder [Pakistan's First Financial Daily]


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*India-Pakistan to resolve IPI tariff issues​*
ISLAMABAD  Pakistan and India have decided to resolve their differences over tariff and transit fee for the proposed Iran-Pakistan-India (IPI) gas pipeline project by holding talks in Islamabad on April 16-18.

Later the petroleum ministers of both Pakistan and India would meet on April 23 of this month to finalise the issue. Informed sources said on Thursday that technical teams of both the countries would meet to firm up their recommendations to be placed before the petroleum ministers of Pakistan and India who were scheduled to meet in Islamabad on April 23, 2008.

Both sides had earlier resolved their differences over the transportation fee and they now were focussing on tariff and transit fee issues for the Iranian gas to be transported to India through Pakistani border.

An official of the ministry of petroleum and natural resources when approached said that both the technical level and ministerial level talks were very important to finalise their talks on gas pipeline project after which further meetings will be lined up with Iran in May.

'Iranian side will be briefed next month about the outcome of talks between Pakistan and India', he said hoping that all the 'lingering issues' will be sorted out within this month between the two countries over the gas pipeline project costing $5.4 billion.

The official also said that both sides would also discuss issues concerning $6 billion, 2000 Km Turkemenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project. "TAPI is a parallel project that India and Pakistan are also discussing simultaneously," he said.

The Asian Development Bank (ADB), he said, is expected to invite the officials of all the all the four countries in the third week of this month to revive their dormant TAPI gas pipeline project to ease the energy crisis in the region.

However, there still existed various challenges to the TAPI project. They said the security situation in Afghanistan and relations between Pakistan and India need to improve and fuel subsidies in the two countries have to be phased out.

The TAP gas pipeline of 56 inch diameter needs at least 30 billion cubic meter (BCM) of gas per year from Turkmenistan to reach Pakistan via Afghanistan.

Sources also said that senior Pakistani officials have been informed by Iran that it has sorted out 40-50 per cent 'logistic issues' to undertake the work on Iran, Pakistan and India (IPI) gas pipeline.

Pakistan was told that Iran has asked India to join the project without caring for the opposition of the United States. India conceded that while it continued to face pressure from the United States 'not' to join the project, it cannot ignore its increasing gas requirements and that it was still interested to 'pick up substantial quantities of gas from Teheran'.

Pakistan had also asked Iran to enhance gas volumes for Islamabad by 50 per cent under the pipeline project in case India stays away from the trans-national deal.

Pakistan would soon be making a formal request to the Iranian side to allocate an additional volume of 1.05 BCFD (billion cubic feet of gas per day), to Pakistan in case India does not join the project.

Originally, Pakistan was to get a total of 2.1 BCFD of gas from the 2600-km Iran-Pakistan-India pipeline project and India was to receive 3.2 BCFD, making total to 5.3 BCFD. The pipeline length will come down to about 1600-km, resultantly reducing the project cost, in case India decides to stay away. Gas volumes to Pakistan would, therefore, increase to about 3.2 BCFD. 

Sources also said that in the absence of both Iran and Turkmenistan gas pipeline projects, the government has started working on another project to meet its growing gas requirements.

Khaleej Times Online - India-Pakistan to resolve IPI tariff issues


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*Pakistan's trade gap narrows to $2.03b in Feb​*
ISLAMABAD  Pakistan's trade deficit narrowed to $2.03 billion in March from $2.104 billion in February, but remained almost double the year ago level, a commerce ministry source said yesterday.

The deficit stood at $1.09 billion in March last year.

Exports stood at $1.78 billion in March this year, up from $1.52 billion in March 2007. Imports increased to $3.82 billion compared with $2.62 billion in the same period last year.

The Federal Bureau of Statistics has yet to release the figures officially.

Trade deficit for the first nine months of the fiscal year 2007/08 to March reached $14.48 billion, almost $1 billion more than for the whole of 2006/07 (July/June), according to the official.

For the July-March period, exports were worth $13.47 billion against $12.43 billion in the corresponding period of last year.

Imports increased to $27.96 billion against $22.42 billion imports in the same period last year.

The full breakdown of trade for March was not available, but in the July-February period finished good exports, including sports, leather and surgical items, was up 33.68 per cent to $2.21 billion and food exports increased by 9.36 per cent to $1.36 billion.

Cotton and textile exports, that account for nearly 60 per cent of Pakistan's exports, fell by nearly 3 per cent to $6.83 billion in the first eight months of the year to February. 

Textile traders say rising input costs and low production of domestic cotton are eroding competitiveness.

Imports of raw cotton and other textile products posted the heaviest 62.97 per cent increase to $1.60 billion in July-February period.

Petroleum products imports were up 33.68 per cent to $6.33 billion from $4.74 billion in the first eight months of the 2007/08 fiscal year. Pakistan, which produces just over 65,000 barrels of oil a day, relies heavily on imported oil. 

Khaleej Times Online - Pakistan's trade gap narrows to $2.03b in Feb


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*Pakistan, 35 other states face shortage​*
WASHINGTON: The worlds financial experts, now meeting in Washington, have placed Pakistan on a list of 36 countries that face a serious food crisis, warning that if the situation worsens people may raid storage facilities for food.

Reports distributed at the World Banks spring meetings noted that in Pakistan and Thailand, army troops have been deployed to avoid seizing of food from the fields and from warehouses. India, Egypt, Indonesia, Peru, Haiti, Burkina Faso and Mauritania are also on the list of countries where food shortage has already led to deadly riots.

The reports, prepared by various agencies affiliated with the World Bank, sited insecurity and past floods for food shortages in Pakistan, adding that its among the 36 countries that need immediate external assistance to prevent further deterioration.

Most of the countries on this list - except India, Pakistan, Bangladesh and Afghanistan - are in Africa and are among the poorest in the world. But a World Bank report also noted that wheat crop prospects for 2008 in Pakistan are quite good. Current indications suggest that the 2008 output may equal last years crop. The report, however, said Pakistan did not have a widespread social assistance programme targeting the poorest of the poor.

Pakistan, 35 other states face shortage -DAWN - Top Stories; April 14, 2008


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*Pakistan, China working on transit trade accord​*
BEIJING, April 13: Pakistan and China have made substantial progress in their talks to work out a transit trade agreement and expand the scope of a free trade agreement, besides identifying new areas of cooperation to strengthen their multi-faceted ties.

The talks, held between President Pervez Musharraf and the Chinese leaders, including President Hu Jintao and Prime Minister Wen Jiabao, have made a significant headway on a host of issues.

The president, who arrived in Beijing after attending the annual Boao Forum for Asia and holding talks with President Hu Jintao in Sanya, in Hainan island, met Prime Minister Wen Jiabao at the Prime Minister Office on Sunday.

The two leaders reaffirmed their resolve to further strengthen their ties in all spheres. President Musharraf said he was in China to see its progress and rapid development.

We rejoice the success, achievements and progress of China that remains our time-tested and all-weather friend, President Musharraf said.

Prime Minister Wen Jiabao said the visit of President Musharraf would further promote the friendly relations between the two countries. He said the two leaders had had several meetings over the past several years that signified excellent relations between them.

Foreign Minister Shah Mahmood Qureshi told APP that in several rounds of talks the two sides had also discussed the need for adopting corrective mechanism to offset their trade imbalance.

He said the two countries had agreed on a five-year trade and economic development plan, and the projects falling in this category would get concessionary credit.

Both the countries also identified several new areas where they can extend cooperation through the already existing mechanism.

Pakistan and China signed a free trade pact in 2006 that covers goods and investments and are looking at ways to add the segment of trade and services besides raising the two-way trade to $15 billion much before the stipulated time.APP

Pakistan, China working on transit trade accord -DAWN - Top Stories; April 14, 2008


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*to sell $1bn bonds to tide over deficit​*
WASHINGTON, April 13: Pakistan plans to sell one billion dollars worth of bonds exchangeable into shares of a state-owned company as the government seeks to finance its budget deficit, says Finance Minister Ishaq Dar.

The minister, who is visiting Washington for the annual spring meetings of the World Bank, told a gathering at the Pakistan Embassy on Saturday evening that the previous government had borrowed Rs422 billion over and above the laid-down limit of Rs80 billion, thus widening the financial deficit.

Later, Ashfaque Khan, director-general of the debt management cell, told Dawn that Pakistan last week hired JP Morgan Chase & Company, Barclays Plc and ABN Amro Holding NV to manage the deal, the first since a 1997 issue.

Pakistans bonds will be exchangeable into shares of the state-controlled Oil and Gas Development Corporation. Shares in the Islamabad-based company, 85 per cent of which is owned by the government, have climbed 15 per cent in the past year. The company in February reported an 8 per cent gain in second-quarter profit, spurred by the surge in oil prices.

Pakistani officials are working with the banks on details including the size and terms of the offering, Mr Khan said. The government opted for these exchangeable bonds because they are less expensive than conventional or Islamic debt, he said.

Pakistans foreign-currency bonds are rated B+ by Standard & Poors and an equivalent B1 by Moodys Investors Service, the fourth-highest non-investment, or junk, grade.

Meanwhile, the finance minister spoke of the need to expand Pakistans capability to produce nuclear energy to meet a serious energy crisis at home.

The United States is negotiating a deal with India to sell civilian nuclear power reactors to the country but has declined to make a similar offer to Pakistan because of the alleged involvement of its scientists in proliferation activities. But Mr Dar raised the issue again in the presence of a number of senior US officials at the embassy, indicating that Islamabad might renew its request to Washington to help it meets its energy needs.

Govt to sell $1bn bonds to tide over deficit -DAWN - Top Stories; April 14, 2008


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*Initiatives for development in Sindh​*
After getting a vote of confidence from Sindh Assembly, the Chief Minister-elect, Syed Qaim Ali Shah, unfolded last week an ambitious and a populist programme that includes the setting up of a Sindh Bank.

The PPP also intends to offer 40,000 new jobs, give land to the landless peasants and provide loans to a targeted 0.6 million small farmers. It also plans to launch a training programme for the youth and to improve health and education services.

But the announcement about setting up of a bank has reminded many of the fate of Provincial Co-operative Bank of Sindh--closed down in 1989-- and the scandals pertaining to infamous Mehran Bank that was finally merged into the National Bank of Pakistan..

The State Bank, time and again, has shown reluctance to give permission, to Sindh government for setting up a bank, disclosed a retired bureaucrat who said official efforts were thus frustrated since the year 2002-03. Later the idea of setting up a micro-finance bank to provide credit at grass roots level in rural and urban areas was floated, but with no outcome. Sindh government argues that there is Bank of Punjab in Lahore, Khyber Bank in Peshawar and hence the justification for a provincial bank in Sindh.

An official said, pension, provident, and social security funds provide small amount of loans in cities and villages and therefore we need to have our own bank. The PPP government too would go with same logic in an environment in which it will also be heading the coalition government at the federal level..

Syed Qaim Ali Shah also plans to provide job opportunities to 40,000 persons in the province. At the same time, his government will review appointments made by the caretaker government. But the caretaker chief minister withdrew governments discretionary powers to grant promotion and extension to retired employees,  one of the ministers in the outgoing cabinet disclosed and said this has clipped chief ministers power to oblige his cronies in the bureaucracy.

He did not deny that many ad hoc appointments were made by the caretaker chief minister but wondered, how would anyone justify the new 40,000 appointments when those appointed by the previous caretaker government are to be screened. Appointments were also made by the previous government headed by Arbab Rahim in the last days of his term of office. Obviously, all these will come under scrutiny but how would one justify recruitment of a new workforce in the government ?

Syed Qaim Ali Shah did say where and how the 40,000 people will be provided jobs. How many would get regular government jobs and how many will be absorbed in the government sponsored new employment schemes. The PPP manifesto provides for labour-intensive Public Works Programme under which guaranteed employment, of at least one year, will be given to one working member of the poorest 25 per cent families. Under the PPPs scheme for Literacy and Health Corps, employment guarantee of two years has been promised to all youth completing Intermediate, Graduation and Post-Graduation in a given year.

All the successive governments in Sindh have considered government employment a convenient solution for tackling growing unemployment in the province. No wonder in the last decade or so, the number of employees has swollen from about 225,000 in 1990-91 to about 450,000. More than 40 per cent of Sindhs annual budget is spent on salaries and pensions. About three years ago, the World Bank found the ratio of employees to population highest in Sindh as compared to all other provinces.

Yet, the delivery of services-education, health, water supply, sanitation, irrigation etc-is worst when compared to other provinces. Adding a new layer of fat over a bulging bureaucratic machinery will only make it more inert and inefficient is a view of a professional manager who suggests that PPP leadership should work out a transparent method of retirement and recruitment and set criteria for promotion and rewards on the basis of performance and skills.

However, the PPPs programme to offer 0.2 million acres in kutcha area and non-irrigated land to landless peasants is far more practical and relevant. But for this, the government will have to do a lot of preparatory work. In 1992, the Nawaz Sharif government drew up a programme to carry out development in Sindhs kutcha area by way of clear demarcation, construction of roads, building of schools, police stations and health units.

The army was given the job to carry out necessary survey work. The idea was to allocate subsistence land holdings to the landless peasants with proper documents so that they could have access to bank credit and would get all inputs. But as army started survey, the leaders of the area issued statements against the programme which had to be abandoned.

Professionals now suggest re-organisation and revamping of the Board of Revenue, computerisation of land ownership record with setting up of a back-up arrangement.

Syed Qaim Ali Shah announced that the reach of bank loans will be extended to 0.6 million small farmers but the move will be meaningful only if the amount goes to the right people and is utilised for right purpose and paid back after giving all benefits to the farmer. How will this be done is expected to be spelt out after the government is settled and the relevant people are engaged for this job. Another PPP leader, Syed Murad Ali Shah said despite a very short time available, the PPP government will engage opposition parties, businessmen and civil society in the budget making for the next year. We do have some idea, as for the last four years the PPP had been holding pre-budget reviews regularly. He was convinced that there is trickle down effect of the economic mismanagement at the centre and in all the provinces, and we will have to assess it in our province.

The Sindh planners have drawn up the provinces contribution in the national gross domestic production (GDP) which needs to be reviewed, scrutinised and redrawn by a team of economists and statisticians in the PPP government as there seems to be many discrepancies. According to these planners, the provinces share in the national GDP has come down to 31.2 per cent in 2006-07 from 32.5 per cent in 2005-06. These planners complain they have no access to data and information of some of the sectors and that has made their task difficult. For example, the banks do not give them figures of credit disbursement in Sindh. The tax authorities do not share information about revenue collection in the province. Information collection about industrial production is primitive, irrelevant and outdated.

The Bureau of Sindh Statistics (BSS) does not have enough infrastructure to collect information about agriculture. Its 42 offices in the province used to provide information about various sectors every month. Now all these offices have been merged with the district government offices and the bureau depends entirely on the line departments.

Managers and business executives say that an independent and professional Bureau of Statistics that has economists, statisticians and analysts can play a vital role in the planning, budget making, development monitoring and assessment of social indicators in the province. Sindh needs to go ahead in this direction.

Initiatives for development in Sindh -DAWN - Business; April 14, 2008


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## Neo

*Another wheat crisis in the making ?​*
IT is surprising that in the manifestos of various political parties, not much attention has been paid to the problems and challenges faced by the agriculture sector. In the 24- member of the cabinet, no one was given the portfolio of agriculture. An additional charge has been given to the communications minister who is also the senior minister of the cabinet.

The issues related to development of agriculture need urgent attention of the policy-makers. Pricing policy is one of them. Once the concept of support price for agricultural produce is clear, i.e., if the market price in a good harvest year falls below the announced support price, which generally happens immediately after the harvest, the government is obliged to purchase the produce that is offered to it by the growers.

But, if and when, the market price goes above this level, farmers should be free to sell their produce to anyone at the ruling price. And if the government intends to procure the produce for its own purpose ( which includes the supply to the armed forces, to build up reserve stocks to be used for stabilising the prices when such a need arises, for strategic reserves and to meet the demand of the Northern Areas and Azad Kashmir), the government should buy at the market prices..

When the government finds that the free market price has arisen to a level where the government thinks that the cost of meeting the objectives for which it intends to buy, would be enormous and would involve great subsidies, then it announces what is called the procurement price, which is generally lower than the free market price but higher than the support price. Such a decision would, no doubt, be against the of the farmers, but due to the financial limitations, the government has to take such an unwelcome decision.

The Shaukat Aziz government diluted the working of this system gradually. In fact the government had almost decided to abandon the support price system but the adviser to the Chief Executive/President pleaded against such a decision. So a committee was set up under the chairmanship of the adviser and on its recommendations the system was allowed to continue only for four crops, wheat, cotton, sugarcane and rice.

In practice, the system was made workable for wheat and cotton but for the other two crops it was just nominal; meaning that it was not seriously implemented. Besides other things, one main reason was that there was no political strength behind the system to function in its true sense. The second lesson was that the institution, the APCom set up in 1981 to professionally work out the support prices for recommendations to the government, did not have a professional economist as its chairman for a number of years. There have been quick changes in the position of chairman, so much so that from 1989 to date 13 changes have taken place. The commission, which originally was set up as an autonomous body, has now been made an attached department of the ministry of food & agriculture and renamed as Agriculture Policy Institute in 2006.

It was said then that necessary competent staff would be provided and a board of governors constituted to guide and supervise the work. Almost three years have passed, but no progress had since taken place. A senior officer of the ministry has been given the additional charge of the chairman the position, which in fact, does not exist in the changed set-up. Therefore, recommendations of the defunct commission, now Agriculture Policy Institute (API), are not taken seriously. In the absence of the professional, competent and full time chairman and the frustrated staff, one is rather skeptical about the soundness of the recommendations.

Take the case of wheat crop, 2006-07. The commission had recommended Rs425 for 40 kg of wheat against the cost of production of Rs433 of an average farmer of Punjab. But the government fixed it at Rs415, irrespective of the recommendations of the commission and its estimates of cost of production. This meant that the farmers would get less than had been incurred by them in its production. Strangely enough, the commission (API- does it have a mandate to do it now) did not submit any report for wheat price for 2007-08, as of today. The result was that every body assumed that as no announcement for the support price had been made; the earlier fixed price for the 2006-07 crop of Rs415 per 40 kg would also apply to the 2007-08 crop.

However, as the actual production from the 2006-07 crop fell short of the target and private sector cashed the opportunity by purchasing as much produce as possible at the prevailing market price which was much higher than the support price. Accordingly, the procurement target of five million tons in the public sector could not be achieved either. The government, somehow, remained under the false impression that unprecedented harvest had been achieved, so they hastened to export whatever stuff they could.

Early this year (i.e. the mid-year of the crop) the government realised that any support price for 2007-08 crop was not fixed. They then declared that the support price would be Rs510 per 40 kg. In true sense, this was not support price; it could at best be termed as procurement price.

After the new government took over, the procurement price has been raised from Rs510 to Rs625 per 40 kg. The cost of production, calculated at the prices prevailing at the time of sowing the crop, has been estimated by two growers at very close to Rs600. The government has a target of procuring about seven million tons. But it would doubtful that the target can be achieved.

First, the crop is going to be much short than being thought of by Minfal for various reasons and second, market price is go. In such a situation, the private sector is likely to procure as much wheat as it can and then earn a profit either through exports or by charging higher price from domestic consumers. If they pay the farmers market-driven price at harvest which, if it is higher than their cost of production, the growers would not be the sufferers. There could thus be another year of wheat crisis.

If such distorted situation continues, the country would continue facing shortages in future. The result would be that farmers would divert wheat areas to other more remunerative crops, deepening wheat shortages.

Agriculture is the backbone of the economy. It is, therefore, warranted that the government reviews the performance of the agriculture sector in its entirety and sets a policy which promotes its development and does not transfer resources from poor farmers to other sectors and urbanites.

The poverty trend can only be reduced if the farmers get remunerative prices for their produce  may it be wheat, cotton, sugarcane, rice or any other crop. If the agriculture sector improves, it would also improve the health of the economy through its many forward and backward linkages.

The Agriculture Policy Institute should be made independent and provided with adequate resources and above all competent leadership to provide in-depth analysis of the emerging challenges and issues for policy formulation. The method of estimation of crops, and their demand projections also need to be reviewed by competent people.

The writer is the former adviser to the Chief Executive of Pakistan on Food & Agricultur.)

Another wheat crisis in the making ? -DAWN - Business; April 14, 2008


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## Neo

*Surging rice price, domestic consumers and exports​*
RICE prices continue to rise with non-basmati varieties witnessing the highest increase. The situation makes the task of the new government extremely difficult in controlling food inflation. As the common man continues to be burdened by high fuel to food costs, curbs on rice export may be seen as the easiest option to improve supply and control the prices.

But, on the other hand, the poor farmers from the rice-growing belts, would be the worst affected by any rice export curb or ban. Any such step might bring short-term relief but will hurt the long-term growth prospects of the agriculture sector.

Moreover, it will be resented by 70 per cent of the rural population which is directly or indirectly depends on its livelihood to agriculture. Farmers already are frustrated by low procurement price of wheat, now fixed at Rs625 per 40kg. The farmers associations across Punjab and Sindh have disapproved the latest procurement price which is far below the international market rates, while prices of inputs (DAP and urea) are closely linked with global prices.

With the wheat price standoff with farmers, curb on rice exports would simply add insult to injury as prices paid to farmers for rice paddy will definitely fall.Further, it can be argued that the rural population is not affected by rising food prices as it keeps part of the produce for its their own yearly consumption..

But still, what is the solution for the high food bill of the urbanites? Is there any possibility of stabilising food prices especially prices of rice? The answer lies in a multi-faceted approach of short-term, medium-term and long-term measures that will assure stability of rice prices and growth in foreign exchange earnings through rice export.

Short-term measures: Like wheat, a lot of our rice finds its way to Afghanistan through our porous borders. This rice smuggled across the border through semi-barter trading goes undocumented and does not bring any foreign exchange or any income tax earnings. The first priority of the government should be to ensure that rice is not smuggled into Afghanistan; instead it is exported via official channels.

The table shows that rice production dipped by only two per cent last year. But because of increased prices, our volume of exports fell by 15.2 per cent. Somehow, our local consumption increased by a staggering 24.2 per cent. These large swings in local consumption are not increases in domestic consumption but represent cross-border smuggling. The notion that local prices of rice have increased due to increased exports is not right. If smuggling is effectively checked, the domestic availability will increase and local prices will stabilise.

Financing offered to industries/businesses other than rice is mis-used for speculative rice buying.. Many businesses that had nothing to do with rice, for instance textiles and fertiliser dealers, were buying rice with banking facilities extended to them for other purposes. The State Bank should ensure that bank credit was not directed towards speculative trading.

Within the rice value chain, the SBP should implement specific lending policies for rice huskers, rice brokers, and rice middle-men that ensure a smooth rice trade without any hoarding/price manipulation by middlemen. For this purpose, margin for pledge should be increased and it should be required that banking facilities are revolved/settled within 90 days by rice huskers and middlemen.

Medium-term measures: According to International Rice Research Institute (IRRI): Post-harvest grain losses across all Asian countries have been estimated at 1015 per cent and, when combined with the loss of quality, the potential loss in value is between 2550 per cent. The same is the case in Pakistan as a significant portion of the rice crop is destroyed and wasted due to improper handling and lack of storage facilities and logistics.

If this wastage is reduced, the rice production will increase and prices stabilised. The widespread use of automatic harvesters makes the process of paddy harvesting quicker, but at the same time the moisture content is much higher than in the past. Paddy with moisture levels of over 20  25 per cent is very likely to develop fungus and aflatoxin if not dried quickly and properly.

Unfortunately rice dryers (a common sight in most rice-growing nations) are rarely seen in Pakistan as most husking units employ the traditional sun-drying method which leaves rice at the mercy of rain and fog during the period of harvest.

Additionally, after paddy is dried, it is stacked in jute bags out in the open due to limited warehousing instead of being stored in grain silos. If the government assists rice farmers in acquiring husking units, it will improve rice handling infra-structure on favourable terms, and will go a long way in reducing wastage and stabilising prices in the medium-term.

Long-term measures: As part of the overall agricultural strategy, the future of rice cultivation should also be carefully chalked out. Like other agricultural produce, yield of rice per hectare is also below that of regional countries -- India, Thailand, Vietnam and China. Effort needs to be made through rice research institutions to introduce high-yielding varieties. There is also need to bring more land under cultivation by improving water and irrigation management systems. And finally there is need to increase research and technical expertise of farmers with reference to rice cultivation.

With a broad picture in mind, the government may be successful in stabilising rice prices and increasing foreign exchange earnings instead of a knee-jerk reaction of curbing rice exports. To quote experts: Banning exports does nothing to encourage farmers to increase supply or improve productivity. A ban only exacerbates the price spiral problems. It does not solve it.

The writer is Director of Matco Rice Processing (Pvt) Limited

Surging rice price, domestic consumers and exports -DAWN - Business; April 14, 2008


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## Neo

*Streamlining domestic commerce​*
Economists have long been pleading for unleashing the potential of domestic commerce  which includes retail and wholesale trade, entertainment, construction, transport, storage, warehousing, communication, real estate, financial and personal services, etc  for sustainable economic growth.

Yet little has so far been done to fix this under-developed sector as it remains the most neglected area owing to the skewed official policies, the successive governments obsession with production for foreign markets and over- regulation of the national markets.

The growth of domestic commerce and trade remains as distorted as ever in spite of the recent years of economic expansion and consumption boom. While the previous government  particularly its former commerce minister Humayun Akhtar Khan  showed interest in the development of domestic commerce, the momentum generated seems to have died down.

Recognising the critical importance of domestic commerce  which employs some 35 to 40 per cent of the countrys total labour force and contributes above 50 per cent to the GDP, the trade policy for 2007-08 promised to undertake projects and put in place policies to improve this vital sector.

The commerce ministry also undertook a review of the sector and commissioned several studies on the state of domestic commerce covering sub-sectors like competitiveness, protection, subsidies, market regulations, wholesale and retail markets, storage and warehousing, transport and real estate.

The findings of these studies brought to light numerous factors constraining growth of domestic commerce and gave specific recommendations for removal of impediments hampering its smooth functioning. A Domestic Commerce Wing was also created within the commerce ministry and the minister announced in the trade policy to enhance its scope to engage additional core experts and consultants to prepare specific action plans.

The trade policy describes a vibrant domestic commerce as a pre-requisite for innovation, entrepreneurship, quality assurance and product development. It stimulates private sector led growth and positions countries to effectively tap international markets.

But its growth and development continues to be stunted by a number of factors  poor physical infrastructure, high land prices and rentals, insecure and unclean land titles, costly utilities, over regulation of the markets, absence of efficient transport, lack of space for commercial activities even in major cities, missing links in the distribution chains of agriculture and industrial products, deteriorating law and order conditions, weak contract enforcement, paucity of warehousing and storage facilities, a visible official bias in favour of industry against trading activity, lack of access to formal finance, inequitable and cumbersome taxation, etc.

Domestic commerce can be used for poverty alleviation, job generation and overcome crisis caused by food shortages like the one experienced by the entire country last winter. No pro-poor growth strategy can afford to ignore the state of domestic commerce, says Dr Sohail Jehangir Malik, an economist and one of the authors of the studies on the subject. He is of the view that the government could obtain one to two per cent growth every year by creating enabling conditions for domestic trade.

In addition, the development of domestic retail markets could also help build up brands and later shore up value added exports.

Commerce ministry officials privately admit that the focus on the development of domestic commercial and trade activity had been lost in the recent months because of a number of factors  political as well as economic. It is true that we could not sustain the momentum generated before and after the announcement of the trade policy. The political situation obtaining before and after the Feb 18 election was the primary reason for the ministry to lose its focus on domestic commerce, a senior commerce ministry official, who does not want to be identified, says.

Besides, political reasons, the official says, there were a number of other issues involved that had and would continue to obstruct the implementation of actions recommended for the removal of snags in the growth of domestic commercial and trade sector.

The official further observed: Most of the recommendations made by the consultants in the studies relate to several other federal divisions and provincial ministries, city and district governments, and the central bank. Unless all these federal and provincial agencies and departments evolve some mechanism for co-ordinating with one another on the issues and snags identified in the studies on various aspects of domestic commerce, it would be presumptuous to expect a change.

And before agreeing to coordinate and work with each other, all these departments and agencies would have to agree on the importance of domestic commercial and trade sectors.

It is now for the new government to look into and examine the issues obstructing the development of domestic commerce and decide its priorities.

. But the new government is not expected to focus its attention on the issues facing domestic commerce in the immediate future as it is more likely to remain engaged in fixing the deteriorating fiscal imbalances for quite some time.

Streamlining domestic commerce -DAWN - Business; April 14, 2008


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## Neo

*Incentives for agriculture manufacturing​*
Confronted with slow growth in revenue generation and exports, not enough to manage fiscal and current account deficits, the newly elected government plans to focus on agriculture manufacturing for which private sector will be provided fiscal stimulus. It also intends to step up mechanisation of farms to increase the existing low agricultural productivity.  Our major focus would be on agriculture manufacturing and in this behalf, we would soon be assigning a special task to the Planning Commission to come up with viable recommendations, Minister for Finance, Senator Ishaq Dar told Dawn.

The incentives will be given to the private sector to go into the agriculture manufacturing so that there is no shortage of food and the surplus commodities are exported.

We have to go back to agriculture and that demands formulation of a new agriculture policy, he said, adding that the new policy will be finalised and approved shortly by the federal cabinet.

The minister observed: agricultural resources are required to be developed sensibly. The farm surpluses for exports required competitive prices and efficient development and utilisation of existing resources.

While the new fiscal policy was being framed, efforts were also being made to strengthen the agriculture sector. We have asked our planners to take into account the need for promoting agriculture manufacturing and we know that it is not possible without offering certain incentives, the minister said.

Member, Food and Agriculture of the Planning Commission, Dr Abdullah Kausar Malik when approached, said: all commodities needed value addition and this was not possible unless there was a policy shift towards the agriculture manufacturing. As soon as broad policy objectives are given to the Planning Commission by the higher authorities, work would start for preparing recommendations over the issue.

New technology was required to manufacture quality plants and machinery to improve the overall agriculture productivity aimed at increasing its exports. Horticulture should receive more emphasis and patronage. Dr Abdullah regretted that the export of citrus fruits could not be adequately increased over the years and that the issue needed the attention of the new government.

The demand for tractors has outstripped local production. Time lag in delivery is reported to be 11 months. The supply-demand gap of 20,000-25,000 tractors per annum has been observed against the existing production capacity of manufacturing units. In order to meet the demand, the government had recently allowed import of new and used tractors in CBU at zero tariff. The use of laser land levellers, ridge and broad-bed farming is also being encouraged.

A senior official of the Board of Investment (BoI) when contacted said that the United States Agency for International Development has agreed to offer financial assistance to help improve the competitiveness of the horticulture sector for exports. For this, the Competitiveness Support Fund (CSF), has proposed an action plan. The governments resources are not being used efficiently and there was also duplication of work, the official said requesting anonymity.

The CSF has identified harvest losses up to 25-40 per cent. The industry exports only about five per cent of the total harvest at relatively low export price because of great difficulties in maintaining quality at the destinations. Other problems are high air transport cost as compared to low profit margins, inadequate international market information, lack of research and training opportunities.

The PML(N) manifesto has pledged to  turn agriculture into a fully viable industry by changing the policy framework in favour of farming; convert Pakistan into a large net exporter of food and move towards self-sufficiency in oil seeds; initiate schemes for crop insurance through private insurance companies to protect farmers against the vagaries of nature.

Incentives for agriculture manufacturing -DAWN - Business; April 14, 2008


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## Neo

*China assures help for development projects ​*
BEIJING (April 14 2008): China on Sunday assured full support in financing of various ongoing and planned infrastructure development programs in Pakistan as it believed that an economically strong Pakistan would bring prosperity to its people and strengthen the region.

Governor China Development Bank Chen Yuan who called on President Pervez Musharraf here, evinced keen interest of his bank in providing funding for several development projects in Pakistan.

He said the CDB could provide support for Bhasha-Diamer Dam, the proposed rail link along the Karakoram Highway that may also have an oil and gas pipeline, besides development of additional facilities at the Gwadar Port.

President Pervez Musharraf said the Pakistan-China joint infrastructure development ventures would not only strengthen ties between the two countries, but also help bring stability and prosperity to the region, by enhancing transit trade and greater interaction among the regional countries.

Over the past decade, CDB has issued an accumulated total of 1.6 trillion RMB in loans to more than 4,000 projects involving key fields of infrastructure, and basic and pillar industries, mostly in China.

The Joint Investment Company between Pakistan and China was established in November 2006 to implement the joint economic cooperation plan. The company is working as a window of the China Development Bank for evaluation of joint ventures between the two countries.

Minister for Defence Chaudhry Ahmed Mukhtar, Minister for Foreign Affairs Shah Mahmood Qureshi also attended the talks. Later, Chairman CPPCC Jia Qinglin hosted a banquet in honour of President Pervez Musharraf and his delegation.

Pakistan and China have made substantial progress towards entering a Transit Trade Agreement, expanding the scope of Free Trade Agreement, besides identifying new areas of cooperation to further strengthen their multi-faceted ties.

The President who is on a six-day visit to China to hold wide-ranging talks with its leaders made significant headway on a host of issues during the several rounds of talks with the Chinese leaders including President Hu Jintao and Premier Wen Jiabao.

President Pervez Musharraf who arrived here in China's capital after attending the annual Boao Forum for Asia and holding talks with President Hu Jintao at Sanya, in Hainan Island met Premier Wen Jiabao at the Prime Minister Office - Zhong Nanhai. The two leaders reaffirmed their resolve to further strengthen their ties in all spheres.

President Pervez Musharraf said he was here in China to see its progress and rapid development. "We rejoice the success, achievements and progress of China that remains our time-tested and all-weather friend," President Musharraf said. Premier Wen Jiabao said the visit of the President would further promote the friendly ties between the two countries.

He said the two leaders have had several meetings over the past several years that signified the excellent relations the two countries had. Foreign Minister Shah Mahmood Qureshi told APP that in several rounds of talks the two sides also discussed the need for adopting "corrective mechanism" to offset their trade imbalance.

He said the two countries have agreed on a five-year trade and economic development plan, and the projects falling in this category will get concessional credit.

Both the countries also identified several new areas, where they can extend cooperation through the already existing mechanism. Pakistan and China signed a free trade pact in 2006 that covers goods and investments and are looking at ways to add the segment of Trade and Services besides raising the two-way trade to US 15 billion dollars much before the stipulated time.

Bilateral trade between the two countries is around US 7 billion dollars. The two countries also inked three more agreements on cooperation between the Ministries of Finance, town planning and construction and Pakistan Television Corporation and the China Central Television (CCTV) for enhanced exchanges and television joint productions.

The agreement on finance aims at bringing the banking sectors of the two countries closer in policy making, information exchange, planning and co-ordinating while dealing with international financial institutions.

Another agreement between the Capital Development Authority and the Chinese Academy for Architecture and Design will assist the body in construction and assisting in building designs, landscaping and town planning.

The agreement between the two state-owned television channels aims at increasing joint-productions, exchange of technical expertise. Pakistan and China earlier inked three agreements at Sanya on Friday following two rounds of formal talks between President Pervez Musharraf and President Hu Jintao. These included an MoU between the Ministries of Water and Power of the two countries to extend cooperation in managing water resources and hydel power, another on cooperation in sports and culture and the third for cooperation in the area of engineering, sciences and technology.

Under the agreement a consortium of Chinese universities will help set-up a modern international level university in Islamabad. During the talks the two sides also discussed in detail the possibility of materialising the proposal made by President Pervez Musharraf of building a rail link along the Karakoram Highway for linking the Gwadar port with China. A Chinese firm has already conducted the feasibility study and has submitted its report to President Hu Jintao.

President Musharraf in his talks with the Chinese leaders said that when completed the project could claim to be the ninth wonder of the world and would go a long way in further boosting trade and commerce ties between the two countries. The feasibility of having a fibre cable connectivity between the two countries for enhanced data, voice and video traffic also came under discussion. The two countries also reviewed the prospects of building an oil and gas pipeline along the KKH to meet the future energy needs of the two countries.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*New government will unveil energy policy soon: Dar ​*
WASHINGTON (April 14 2008): The coalition government will strive for growth in agriculture and manufacturing sectors for sustainable economic progress, Finance Minister Ishaq Dar said on Saturday evening, while also pledging to facilitate foreign investment and use all available resources to meet fast-expanding energy requirements.

He told a gathering of Pakistani Americans and US officials at the Pakistani embassy that the new government would soon unveil its energy policy and endeavour to bring fiscal and monetary discipline to improve the overall state of the national economy.

Dar, who is in Washington for World Bank-IMF annual spring meetings, also affirmed commitment to autonomy for the State Bank of Pakistan. He felt it is essential to convert the Federal Bureau of Statistics into an autonomous body to enhance its credibility.

"We have to be open and transparent and the government will be ready to listen to independent economists about how they view the economy and what corrective steps need to be taken." "We are working to reduce fiscal deficit, reduce government borrowing from the central bank and correct other macro economic indicators. We have already started damage controlling the situation including curbing the inflation and want to achieve maximum targets before the closing of this financial year."

"We are hopeful that we will reverse the negative trend and have a year of consolidation next year," he said while briefly touching on negative indicators, which he ascribed partly to external shocks in the form of soaring oil prices and mismanagement by the previous government during the last year.

On fulfilling energy requirements, he said, the government will try to make use of all sources including water and coal and go for energy conservation as well. "We will encourage private sector to invest in energy projects," he said. The Finance Minister favoured looking into the possibility of setting up another nuclear power plant.

He described the coalition government as the best possible political dispensation for the country and was confident that democratic government would bring much-needed political stability.

"The coalition government of the two mainstream and other parties will work very well and you can expect political stability in the years to come," he said. Pakistan, he said, needs a very strong parliamentary system.

Dar assured the foreign entrepreneurs that their investment would be protected and the government would continue the foreign direct investment policies which it had introduced in the 1990s and which were also sustained by the last government. "There will be no reversals, no derailment we will go for consistency and improvement."

He said the growth path followed by the former regime was not sustainable but observed the baseline of the economy is resilient. "We've to work hard in line with international trends and focus on maximising agricultural output through introduction of proper incentives, provision of credit and in-time announcement of support prices to attain self-sufficiency in food and head off any wheat crisis in future." Dar, who is the first minister of the new coalition government to visit Washington after its inception last month, said the international financial institutions have expressed their solidarity with the government as it moves ahead to achieve economic targets.

Deputy Chief of Mission, Muhammad Aslam Khan welcomed the Finance Minister and introduced members of his delegation including State Bank Governor, Finance Secretary and Special Secretary to the Finance Ministry.

Earlier, he met with Executive Vice President of International Finance Corporation, Lars Thunell at the World Bank and on the sidelines of the moot met with finance ministers of China, Afghanistan, Iran and development minister of Germany and discussed economic relations.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Development process accelerates in Tank ​*
TANK (April 14 2008): To give further impetus to development process in Tank district, the government is spending a fabulous amount of Rs 1014.405 million on various ongoing uplift projects in remote southern district of NWFP.

To accelerate the pace of development in Tank, the government has taken momentous steps by started scores of gigantic schemes in the rural and urban areas of the district to improve the socio-economic conditions of marginalised and down trodden masses.

Talking to APP, Deputy Director Works & Services Department Tank, Engr Abdur Rashid Khan said that special focus are being given on infrastructure improvement in under developed areas of the province. The government in fiscal year 2005-06 and 2006-07, he said executed dozens of developmental projects in education, health, communication, agriculture, sanitation and other social sectors that showing positive results. In communication sector, he said Rs 355.34 millions are being spent on major schemes like repair and widening of 24-kms black topped Tajori road via Daud Khel, Umar Adda, Kiri Haider, Chesan Kach, construction of remaining portion of Tank-Pezu road besides Waren Bridge on Tank Wana road, up-gradation of Tank Chowk square and dualisation of black topped road leading to Jandola and D I Khan (7.03 kilometer).

Special focus are being made on education sector, he said adding that schemes worth millions of rupees include construction of three additional classrooms, up-gradation of primary schools to middle level in NWFP with phase-II GGPS Tajori (Sharif Abbad), provision of basic facilities including construction of wash rooms, boundary walls, sitting up of GGPS in Mohallah Mahsudan Tank City-II and GPS Urdu Kalay Dabarah will help improve infrastructure, standard of education and increase students enrolment.

"The provincial government is mulling to upgrade 108 middle schools to high level in NWFP whereas in Tank's share is up gradation of GGMS Pai and GGMS No 1 Amakhel." In another package of basic facilities to primary schools scheme phase IV, the provincial government has allocated a special fund of Rs 9.590 million, he added.

Under NWFP Phase-III Project, three primary schools in Pehlwan Koruna, Kahu and Rashmen Kach were being set up in addition to GGPS at Jalalkot, Mohallah Barkiabad, Imam Din Koruna, Din Muhammad Koruna, and boys primary schools at Muhammad Jan Pir Kach, Yar Muham mad Nar Naurang and Rehmat Shah Tank.

Up-gradation of GGPS Yar Muhammad Koruna Pathankot to middle level and establishment of seven new primary schools bother for girls and boys were being built under various ADP schemes. Referring to developmental works in secondary education, Rashid Khan informed that Rs 157.863 million are being spent on 11 schemes whereas three of them had already been completed. Apart from reconstruction of compact building of Government Centennial Model High School No 1 Tank, up-gradation of GMS Maghzai and GGMS Shahbaz, construction/repair of GGHSs and GHHS No 2 Tank City, GGHS Gul Imam and construction of additional class rooms in GGPS Chesan Kach, GGPS Mohallah Mahsudan, Tank City and GGPS Raghza, Govt High School Amakhel mega schemes will help increase the children enrolment.

Under various ADP schemes, he said that new classrooms in primary, middle and high schools would be constructed besides up-gradating middle and high schools.

Likewise, he said that government has given special focus on the promotion of health sector to mitigate suffering of ailing humanity. Likewise Rs 321.645 million will be utilised on improvement and standardisation of District Headquarter Hospital Tank, up gradation of RHC Amakhel to Category-D hospital, rehabilitation/repair of health outlets and establishment of BHUs etc in Tank. The official said that PC-I for the construction of new building for Patwar Khana and Muhafiz Khana had been sent to the Chief Engineer Works and Services Peshawar for approval. Pakistan is a agriculture country, he said adding that green revolution will come only by giving top priority to this sector.

Construction work on new blocks in veterinary dispensary Seri Naurang and Mian Bagh was in progress and would be completed with an estimated cost of Rs 3.994 million. He said that Technical and Vocational Center (for Women) will also be set up in Tank. Engineer Rashid Khan hoped that all the ongoing projects would be completed before the schedule time. Now it is hoped that after the formation of NWFP government, the development would further accelerated in Tank.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Industries facing severe crisis ​* 
MULTAN (April 14 2008): Mango, cotton and power looms industries are facing severe crisis in absence of facilities par to international standard, industry sources said. These industries are threatened with cloudy future due to surge in imports and fall in the export orders.

Sources maintained that the trade balance between the imports and exports has been risen up to 100 percent. The export target set for the year 2007-08 was about US $20.2 billion that has to be reduced at a later stage and a continuos decrease in export volume has aggravated the country's economy.

Further, sources said that earlier, during last few years, Pakistan happened to be among the countries that export cotton but now from the last couple of years it is importing cotton to meet the national requirement.

Pakistan exports mangoes of about US $1 billion but a continuous decline in its export volume have been recorded from the last couple of years. Similarly, Power looms industry has failed to achieve export targets during last few years, sources added.

Business Recorder [Pakistan's First Financial Daily]


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## ejaz007

*Exports to China and Malaysia to touch $5b figure*

ISLAMABAD (APP) - Exports from Pakistan to China under Free Trade Agreement (FTA) would reach to $3 billion in next three years, Head of World Trade Organisation (WTO) Cell, Trade Development Authority of Pakistan (TDAP), Mujeeb Ahmed Khan said here on Monday.
The Exports from Pakistan to Malaysia, which were just $ 84.2 million in 2006 are expected to touch the figure of $1.8 by 2015.
Mujeeb Khan was speaking at a day-long trade seminar to explore Pakistans export potential in China and Malaysia in the context of the Free Trade Agreement (FTA).
The seminar was organized by Trade Development Authority of Pakistan (TDAP) in collaboration with Foreign Trade Institute of Pakistan (FTIP) and Islamabad Chamber of Commerce and Industry (ICCI). Main objectives of the seminar were to disseminate information about the existing and indicative potential of export products to China and Malaysia besides highlighting the issues of the tariffs, non tariff barriers and the administrative procedures under the perspective FTAs.
Presenting statistics of Pak-China bilateral trade, Khan said that an encouraging growth of about 25 per cent per annum during the last four years had been witnessed. 
However, the balance of trade remains in favour of China, which reached $3.23bn in 2006.
Mujeeb Khan said that China was the third largest import marked of worth US$791 billion, providing an excellent opportunity for export products. However, he lamented that Pakistans share in this whole import market was very nominal.
Giving analysis of top-20 products exported to China, he said that these items constitute 85 per cent of Pakistans total export to China, adding that cotton yarn has been identified as the single largest export item, which constituted 47 per cent share in the total exports from Pakistan to China.
He said that Pakistan was largest trade partner of China in cotton yarn, however, China has put one item of it (cotton not carder of comber) in the no concession list despite the fact that it was the biggest importer of this particular item in the world by importing it to the tune of $ 3 billion. He said that Pakistan and China were the worlds top exporter and importer of plain weave cotton fabrics and terry toweling respectively, however Pakistans share in Chinese imports in this commodity was just 1 per cent.
He said that Chinese imports of core products of cotton year, cotton cloth, cotton waste, cotton, not carder or combed, cotton carded or comber and others was about $10.3 billion and Pakistans share in it was just $36 million.
About Malaysian market, Mujeeb said that it was one of the potential import markets with $131.13 import capacity however, Pakistans share in this market was just 84 million in 2006 which is just 0.045 percent.
He said that Pakistan was the leading supplying country of the about 9 items in Malaysia which included textile products. These items constituted only $7.385 million, which is 12.5 per cent of the total imports form Pakistan to Malaysia.
The indicative potential of top-20 export items has been estimated at $414 million. It is expected that the concessions given under FTA will help tap the indicative potential with greater pace. The total indicative potential for Pakistans export products in Malaysian market has been estimated at $1.17bn against the present level of only $54 million.
It may be recalled that Pakistan signed bilateral FTA with China on November 24, 2006 which became effective from July 1,2007. Similarly FTA between Pakistan and Malaysia was signed on November 8, 2007.
Khan said that WTO cell has been organizing series of such seminars to get feedback from the stakeholders for formulating better trade policies to enhance countrys exports. Similar kind of seminar was held in Karachi in the last week of March. 
The Nation


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## ejaz007

*Cement exports to Middle East and African countries rise by 80%*

By Muhammad Yasir 

KARACHI: High demand of Pakistans cement in the Middle East and African countries has enhanced significantly countrys exports by 80 percent in the three quarters of the current fiscal year to stand at 2.632 million tonnes. 

According to the All Pakistan Cement Manufacturer Association (APCMA), the cement exports have registered 139 percent growth to reach at 5.1 million tonnes so far in the fiscal year with the rising construction boom in Middle East, African countries, and India.

The cement exports to Middle East and African countries were recorded 1.463 million tonnes in three quarters of previous fiscal year.

However, exports to Afghanistan have registered 34.7 percent growth with 2.067 million tonnes in the three quarters of the current fiscal year as compared to 1.72 million tonnes during same period of last fiscal year.

Pakistani cement exports have surged to United Arab Emirates (UAE) after its government removed 5 percent custom duty on cement to help the fast moving construction sector in Dubai, it is learnt.

As far as prices of foreign countries are concerned, the increasing regional cement price is benefiting Pakistani cement companies who are able to export cement at a price premium. Initially, cement was being exported to UAE at FOB price of $60 to $65 per tones, which has now jumped to $70 to $75 per tonne.

Cement demand has been rising as the construction season began in a full swing locally and in the exporting countries in March.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan to approach friendly countries ​* 
Tuesday, April 15, 2008

ISLAMABAD: Pakistan has decided to approach friendly countries such as China, Saudi Arabia and others to generate $500 million to $1 billion in the current fiscal year, in a bid to mitigate financial woes owing to rising petroleum, wheat and palm oil prices.

The finance ministry has projected to generate additional $2.5 billion till June 30, in order to control the dwindling foreign currency reserves that have already fallen to around $13 billion. The foreign currency reserves of various banks are around $2.5 billion and the remaining precious reserves are with the central bank.

Islamabad is going to launch convertible bonds by offering OGDC shares in the international market to generate approximately $1 billion, as well as issuing GDRs of National Bank of Pakistan to generate $500 million before June 30, 2008, official sources in the finance ministry confirmed while talking to The News here on Monday.

To bridge the remaining gap of $1 billion out of the total projected additional inflows of $2.5 billion, sources said that the coalition government is set to approach China, Saudi Arabia and other friendly states to achieve its desired objective in the remaining two and a half months.

President Musharraf is currently visiting China where he discussed the possibility of bilateral loan on soft terms and conditions with Beijing authorities, the sources said. Musharrafs six-day visit to China ending April 15 is his first trip abroad since a new government packed with opponents was sworn in last month.

Chinas foreign currency reserves are over $1500 billion and Beijing is among the capital exporting countries. China may provide $500 million in loans to Islamabad in order to remove the financial woes due to higher POL and commodities prices.

Pakistans oil import bill has surged by $3 billion so far against its budgetary estimates, and wheat import also burdened the economy by $1 billion, sources maintained.

Sources added that Finance Minister Ishaq Dar would give final touches to the proposed strategy for seeking financial assistance. Assistance from Saudi Arabia would come in the shape of deferred oil payment and in various forms from other friendly countries in the next two months, to accomplish the required homework before the scheduling of any high-level visit of leaders.

The sources also said that Pakistan Development Forum (PDF) is likely to be held in May 2008. Representatives of bilateral and multilateral donors will participate in this upcoming event to be held in Islamabad, to give a detailed input to creditors for generating the desired amount in a short span of time.

Answering a query about the Finance Ministrys expected inflows from the multilateral creditors in the remaining months of the current fiscal year, sources said that Islamabad would get assistance from the World Bank and Asian Development Bank as per schedule. However, additional funding on immediate basis could not be arranged from multilateral creditors.

Although, the official said that there is a possibility to arrange commodities related financing from the Islamic Development Bank (IDB). We will present all the proposals before the Finance Minister Ishaq Dar, who will give his final approval about the future course of action for generating $2.5 billion additional financing, a high-level official in the Economic Affairs Division (EAD) said. He added that the finance minister would decide this crucial issue after his return from attending the WB, IMF annual spring meeting currently underway in Washington, USA.

Pakistan to approach friendly countries


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## Neo

*FBR expects to collect Rs990bn revenue ​* 
Tuesday, April 15, 2008

HYDERABAD: The Federal Board of Revenue (FBR) would likely miss the revenue collection target of Rs1,025 billion for the current fiscal 2007-08 owing to economic and law and order reasons, and the board is expected to collect Rs990 billion.

As the country is facing an energy crisis and because of the law and order problems, we are expecting that the target of Rs1,025 billion will not be achieved by the end of the fiscal year, FBR Chairman Abdullah Yousuf revealed here on Monday.

Speaking to a group of newsmen at the Regional Tax Office before addressing a workshop, he said that under the present circumstances the board would be able to collect Rs990 billion, adding that the power and gas shortages and the law and order situation affects the overall economy and hence, naturally decreases the targeted collection.

To a question about the next fiscal years target, he said that it is premature to comment on the coming fiscal target since the budget exercise would start shortly and proposals have already been invited from the chambers of commerce and trade bodies of the country.

He was of the view that the FBR is undergoing a major reform process with an objective to improve tax administration and facilitate the taxpayers to retain their confidence.

He said that the introduction of self assessment in income tax would further enhance the confidence of taxpayers on FBR, adding that the pilot projects have been introduced at three terminals in Karachi in customs, to improve efficiency as well as transparency.

Yusuf further said that reforms are also being introduced in the tax policy and new systems are being brought in to fill the gaps and loopholes in the existing system.To another question, he said that the board would work further to improve operations under the guidelines and policies of the new government.

During his address to the employees workshop, he made announcements for the welfare of the employees of the FBR and called upon the employees to work efficiently and transparently.He said that all the taxes are now being collected under one roof and this would also help in storing the data of tax collection and added that the general perception of corruption is also being minimized.

He was of the view that growth in revenue collection is essential for the progress of the country and informed that the salaries and facilities of FBR employees have been enhanced and doubled to meet the challenges.

He said that the budget of the FBR is Rs7.5 billion in the current year, and would be increased to RS10 billion in the coming fiscal year. He was of the view that the numbers of taxpayers should be increased from two million.

FBR officials including Munir Qureshi, Khawer Khursheed Butt and Khalid Siddiqui also spoke at the occasion.Later, the chairman visited Hyderabad Chamber of Commerce and Industry (HCCI) and discussed various matters with the members of the business community.

FBR expects to collect Rs990bn revenue


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## Neo

* Salman defends economic strategy of past govt ​* 
Tuesday, April 15, 2008

LAHORE: Former federal finance minister Dr Salman Shah has defended the overall economic strategy of the past government, stating that undue pressure created by high oil and commodity rates did put temporary pressures.

He was speaking at a discussion arranged by SAFMA on the State of Pakistans economy.Defending the increase in petroleum rates by the interim government, he said that budget deficit would have gone out of hand had these raises not been made. He said the new government in fact should announce similar increases in petroleum rates before the end of the current fiscal.

He said even then the government would be burdened with subsidies on petroleum products. He advised the government to eliminate all subsidies on petrol by the end of next year.He said the government promoted use of locally produced natural gas that has kept the petroleum demand to almost the same level as in 1999. He said now that entire available gas production is being utilized the import of petroleum products is on rise. He said Pakistan would pay $11.5 billion for the same amount of oil it imported in 1999-2000 for $3.1 billion.

He said global wheat rates were at almost the same level as in Pakistan only 16 months back. Today he added even after increasing the wheat support price to Rs625 per maund the international wheat rates are double the local rates. 

He said that there is no overshooting of expenses. He said Rs400 billion budget deficit amounts to four per cent of GDP. It would be higher this year due to high oil and commodity rates that burdened the national exchequer.

He claimed that the growth, inflation and debit indicators have improved vastly during past eight years. The GDP he added has shot up from $65 billion to $160 billion. Tax revenues he continued have shot-up from Rs300 billion in 1999 to around one trillion rupees now. He said these increased revenues in fact facilitated the government in accelerating growth and development work.

He said it was wrong to assume that 9/11 facilitated the transformation in economy. He claimed that Ghazi-Brotha hydropower project completed in 2004 added over 1400 MW power in the system. He said the electricity consumption however increased by higher percentage than envisaged by the planners. He added that there was a lapse on the part of the government to neglect further addition in electricity production. However he clarified that 3000MW power projects were initiated by the previous regime that would be operational in 16 months. 

Salman defends economic strategy of past govt


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## Neo

*Pak fails to boost exports ​* 
Tuesday, April 15, 2008

ISLAMABAD: Although Pakistan was signing Free Trade Agreements (FTAs) with various countries of the world for boosting its exports, unfortunately, it has failed to achieve the desired results, said Muhammad Ijaz Abbasi, President of Islamabad Chamber of Commerce & Industry (ICCI).

He was speaking at a seminar titled Exploring Pakistans Export Potential in China and Malaysia in the context of the Free Trade Agreements here on Monday. After signing the FTAs, Pakistans imports have increased immensely, while exports have not increased to the desirable level. He added that the current total volume of trade between China and Pakistan has crossed $6 billion, but the balance of trade is heavily tilted in favour of China.

He said Pakistans trade gap is increasing gradually, which is a matter of concern. He stressed that Pakistan should devise a comprehensive strategy to bridge the gap between the imports and exports, for bridging the trade deficit.

The seminar was held here in ICCI, in collaboration with the World Trade Organization (WTO) Cell, Trade Development Authority of Pakistan (TDAP) and Foreign Trade Institute of Pakistan (FTIP).

After 60 years of independence of Pakistan, total exports are hovering around $18 billion, which does not reflect Pakistans existing potential. He emphasised that before signing the FTAs, stakeholders should be consulted, for productive results of the agreements.

Abbasi said that the business community was not consulted well before the time of signing the agreements; consequently, desired results were not achieved. Pakistan is already under great economic pressure and increased imports in many sectors may badly harm the local industry. He emphasised that attention should also be given towards the development of the infrastructure for the growth of industries and the acceleration of exports and road network from the farm to the market, should also be improved for the speedy transportation of goods.

At this occasion, Majeeb Ahmed Khan, Head WTO, Cell Trade Development Authority of Pakistan said that China is the fourth largest economy with its GDP being US$2644.6 billion and the third largest exporter in the world. Identifying a potential of $5 billion available in China, he said that exporters should pinpoint those issues, the resolution of which could help increase Pakistans exports to China. He said that there exists a huge potential to increase Pakistans exports and stressed for the involvement of regional chambers for collaboration with the TDAP, WTO for better results.

Pak fails to boost exports


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## Neo

*Reserves at year-end will be enough for 4.3 months import ​*
ISLAMABAD: The amount of foreign exchange that the country will have at the end of the current fiscal year will be sufficient to cover import bills only for 4.3 months. 

Recent estimates for foreign exchange reserves show Pakistan will have $13.689 billion foreign exchange reserves at the end of the year even after receiving some inflows from abroad during the remaining months of the fiscal. 

Latest data released by the State Bank of Pakistan showed that the total liquid foreign reserves held by the country dropped by $142 million to $13.133 billion on April 5, 2008. 

The country's foreign exchange reserves were $17.697 billion, which were enough to finance 6.4 months imports at the start of the current fiscal year 2007-08. 

However, during July-February period these reserves have witnessed a decline and amounted to $14.059 billion and were able to finance 4.7 months imports of the country. The projection suggests that the country's foreign exchange reserves would decrease further and may touch $13.689 billion by the end of current fiscal and would be able to finance 4.3 months imports. 

According to the estimates the current account deficit during the current fiscal year was estimated at $9.671 billion. However, during the period July-February current account deficit has already crossed over to $10.024 billion against the annual budgetary projection of $9.671 billion. Rising current account deficit is expected to touch $14.955 billion and would cause a hit to the tune of over $4 billion to the foreign exchange reserves of the country till the end of current fiscal year 2007-08. The current account deficit would be $5.284 billion more than the anticipated deficit $9.671 billion at the start of the fiscal year 2007-08.

Pakistan's oil import bill, which was estimated at $10 billion at the start of the fiscal year, has now been projected to be around $12 billion due to skyrocketing oil prices in the international market. In Pakistan, fuel imports represent more than 20 percent of its total merchandise imports. 

Shortfall in wheat production is also feared and the initial estimates suggest that wheat production of the country to stand at 21.8 million tonnes as against the target of 24 million tonnes set for the current fiscal. Economic Coordination Committee (ECC) in its last meeting has postponed the further wheat import option till the availability of final estimates of the wheat production in the current fiscal. 

Possible decision for the import of wheat in the month of May would add more burden on foreign exchange reserves, current account deficit and finally the trade deficit by the end of the current fiscal, a senior official said. Donor community has already highlighted the importance of increase in foreign exchange reserves and pointed out that in Pakistan foreign exchange reserve import cover has been estimated as relatively comfortable for 4 months, however, cautioned that foreign exchange reserves are on a declining trend and suggested that further adjustments are required.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan seeks energy supplies from Qatar​*
ISLAMABAD: Pakistan seeks energy supplies from Qatar Liquefied Natural Gas for Sui Southern Gas Company (SSGC) Limited terminals in order to meet with the pressing energy demand and to overcome the energy shortage. 

Syed Naveed Qamar Federal Minister for Privatisation, Investment, Ports, Shipping, Industries and Production placed this request during a meeting with Hamad Ali Al-Hinzab, Qatars Ambassador to Pakistan who called on him here on Monday. 

The minister appreciated the role of Qatari investors towards contributing in Pakistans economy and said that any investment from Qatari Business Groups/ investors in Pakistan would be fully supported by the people of Pakistan in view of the strong brotherly relations between both the countries. 

It would also provide an opportunity to the business groups of both the countries to identify new avenues for enhancing the existing economic relations who required exchange of investor groups, he said. 

Qamar informed the envoy regarding Pakistans privatisation policy. He said there was a need to accelerate our efforts to further transform and strengthen our close relations into commercial interaction. Pakistan is the most promising area in the region for the local and foreign investors for business activity in almost all the sectors. Pakistan would continue to provide new investment avenues with remarkable incentives for the private sector in the region, he added. 

The minister assured maximum support both at federal and provincial levels for materialising the investment projects of Qatari investors on fast track basis and also to remove all sorts of bottlenecks in the process. Hamad Ali Al-Hinzab said the government of Qatar shares an excellent rapport with the government in place and intended to expand its cooperation both on economic and political fronts for mutual growth and benefit of both the countries. 

He apprised the minister that the Qatar governments cement project was at initial phase and a delegation has recently visited Pakistan to discuss and finalise important matters and modalities with Sindh government in this regard. Pakistan has vast resources and potential for investment activity and Qatari Business groups/ Companies were keen to take part in the privatisation process of Pakistan and to focus on the investment opportunities such as the Live Stock and milk processing sectors of Pakistan, which would generate job opportunities at home, he said. 

The Qatari ambassador expressed his complete satisfaction over the on going Qatari investment projects in Pakistan and appreciated Board Of Investment (BoIs) support and facilitating them in this regard. 

Ahmed Waqar, secretary Investment Division & BoI, and executive director general, Maj (R) Iqbal Ahmad along with other BoI officials were present during the meeting.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Chinese investors to generate employment by investing in Pakistan​*
BEIJING: President Pervez Musharraf has called upon the Chinese Investors to contribute maximum to the industrialisation of Pakistan to generate employment opportunities that would help curb the menace of extremism and terrorism.

Addressing the Pakistan-China Business Forum here Monday, the President pointed out that Pakistan offers great opportunities for investment in various sectors including joint ventures with a win-win situation for both sides.

He said that he personally feels that the environment in China and Pakistan is very conducive for creating business opportunities.

The President said that Pakistan is a big market with a population of 160 million. For the last five years the Pakistan economy has grown at the rate of over 7 percent while the GDP has more than doubled, he said, adding when the demand-supply gap reduces the profitability is increased.

President Musharraf told the gathering that more than 600 companies in Pakistan were earning a very high-level of profit.

He said that he knows that many companies are making profits in double figures and most of are earning profit of 20 per cent and above.

This is the kind of profitability available in Pakistan, he noted.

He said that Pakistan offers lot of opportunities for Chinese investors and the people of Pakistan love the people of China from the core of their heart. 

The geo-strategic location of Pakistan, the President said, is also very important as it is located at the cross-road of West Asia, Central Asia, Central China and South Asia. He said that Pakistan offers shortest route for trade and business among all these countries and the Gulf.

The President said that Pakistan is developing its communication system and the construction of Gwadar Port is one of these measures while expansion of Karakorum Highway is in progress.

Pakistan, the President said also offers cheap labour and is working on improving the quality of manpower by establishing engineering universities with the assistance of foreign countries.

We are equally paying attention towards vocational and skill training for the labour force. The President said that Pakistan offers numerous incentives for the Chinese investors and lauded those who are already doing business including China Mobile and Hair-Ruba.

President Musharraf also mentioned the mega projects Pakistan has awarded to China, including expansion of Karakoram Highway and the Neelum-Jehlum hydropower project. He said that during his meetings with the top Chinese leadership he has proposed laying of railway line to connect China with Pakistan and investment in energy sector, while the tow countries are already cooperating in nuclear energy field.

The President said that the 21st century is the era of geo-economic and therefore the focus ought to be on the economic, trade, commercial and investment cooperation and joint ventures.

He said that Pakistan and China have already signed a Free Trade Agreement and to make it more comprehensive both the countries are in the process of signing such accord in the services sector as well.

This, he said would further increase the trade between Pakistan and China.

The level of bilateral trade now stands at $6.8 billion dollars, but he said that we can not rest as we are targeting to raise it to $16 billion dollars by 2011. This is a big target, but with the joint contributions, and with the wish and resolve of both the sides from the private sector he was very confident that this target is achievable.

Referring to the establishment of the Pakistan-China Joint Investment Company, the President said that it would facilitate business cooperation for the mutual benefit.

We also have a 5-year Joint Economic and Trade plan and call upon the business sector to avail all these advantages.

The President said that during his stay he held very useful and constructive talks with the Chinese leaders and there was complete consonance on all regional, international and bilateral issue. The base of our friendship is very large, he said.

Earlier, Ambassador Salman Bashir said that the visit of President Musharraf reflects the great tradition of close friendship and partnership that so happily exists between Pakistan and China.

The Chinese Minister of Commerce, Chen Deming, said that the leadership of the two countries in the 21st century is visionary and they have established closer strategic partnership.

He said that the cooperative partnership has further promoted the in-depth development of Sino-Pak cooperation. 

The minister said that during the past five years the Chinese economy has been growing at the rate of over ten percent per year, while Pakistan for the past few years has witnessed growth rate of 7 percent per year. Pakistan has become one of the fastest growing economies in the world, he said. He said that with the strong support of the leadership of the two countries as well as the business community the China-Pakistan trade and economic cooperation has been surging continuously. app

Daily Times - Leading News Resource of Pakistan


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## Neo

*Musharraf pushes China to build IPC oil, gas pipelines​*
** President vows security for Olympic Torch relay 
* Seeks Chinese and Russian help on stability in Afghanistan​*
BEIJING: President Pervez Musharraf said on Monday that he was lobbying Beijing to build oil and gas pipelines linking Pakistan with western China, as the two longtime allies expand commercial ties.

China is sharply increasing oil and gas imports to fuel its booming economy, and Musharraf said he hoped it would see Pakistan as an energy and trade corridor to the Middle East.

Pakistan is very much in favour of a pipeline between the Gulf and China through Pakistan, and I have been speaking with your leadership ... about this, Musharraf told a student audience at Beijings Tsinghua University.

Im very sure in the future  Inshallah  it will happen, he said. He acknowledged the challenges of building a pipeline that would have to cross soaring mountain passes up to 15,000 feet high.

Technical experts thought it might not be possible at such heights, he said, adding, But experts say [an] oil and gas pipeline could be pumped upward up to the border, and that the larger distance in China would be down flowing. So technically its very feasible.

Olympic torch: Musharraf condemned protests that have marred the Beijing Olympic torch relay and vowed to maintain security when the flame arrives in Pakistan on Wednesday. There is no one in Pakistan, not one man, who would like to do anything against the interests of China, he said.

The relays European and US legs were marred last week by protests in London, Paris and San Francisco, directed mainly against Chinas ongoing crackdown on violent unrest in Tibet.

Musharraf reiterated his position that Tibet was a part of China and an internal affair that should be handled by Beijing, free of foreign interference.

In an interview with the China Daily on Sunday, Musharraf accused Western leaders and media of politicising the Olympics by criticising Chinas human rights record and crackdown in Tibet, CNN reported.

First of all, we consider Tibet an inalienable part of China ... [If] anyone is harbouring or abetting the separatists, we condemn that, he said.

You cannot superimpose the human rights and democracy environment of a Western country onto other countries, Musharraf said, adding, That is the error that the West and the Western media makes. This does not work at all and this must stop.

Afghan stability: Musharraf said he would welcome a Central Asian grouping that includes China and Russia working alongside NATO to bring peace and stability to Afghanistan. In a joint cooperative effort, if the SCO [Shanghai Co-operation Organisation] can do something, yes indeed it should come forward and co-operate toward the security of Afghanistan ... Im for it, the president said.

But, he added, If the SCO can come along, then we would need to ensure that there is no confrontation with NATO. 

Separately, the Chinese defence minister, Chinese Exim Bank president, China Investment Corporation chairman and the China International Investment Corporation CEO met Musharraf and assured him of Chinas support in the ongoing and future ventures in all areas.

Musharraf later arrived in Urumqi on the last leg of his visit to China. agencies/daily times monitor

Daily Times - Leading News Resource of Pakistan


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## Neo

*FBR working to impose taxes on luxury goods, services ​* 
ISLAMABAD (April 15 2008): The Federal Board of Revenue (FBR) is chalking out a new policy to impose taxes on luxury goods and services used by the elite class. Sources told Business Recorder on Monday that the new tax policy is being focused on consumption items of the rich segment of the society.

The board is actively going through the list of luxury items consumed by the rich for analysing the ratio of taxes paid on them. In the case of poor, the basic expenditure is on food items, but the situation is entirely different for the rich class of the society. They comparatively spend more on non-food items.

For example, treatment like cosmetic surgery and hair transplants could only be offered by the rich people. The use of luxury vehicles, over 1600cc, import of items like Spanish tiles in newly constructed bungalows and travel packages and vacations in Dubai and other foreign countries are other examples of luxurious lifestyle. There are extraordinary expensive schools, clubs, etc, which could only be afforded by the elite class.

Therefore, taxation of luxury items is on top priority under the new tax policy, sources said. They said that it was difficult to tax professional service providers like doctors, lawyers, chartered accountants etc. Nobody demands receipt from specialist doctors charging over Rs 1000 per patient. Without documentation, the FBR could not get anything even after bringing professional services into the tax net. On the pattern of sugar mills, it is impossible to depute sales tax officials at a doctor's clinic.

However, the FBR is satisfied with the current pace of revenue collection from banks, air travel, insurance and franchise services, etc. The revenue from services including international air travel (IAT), non-fund services (NFS), franchise and insurance have gained prominent position in the overall Federal Excise Duty (FED) collection.

The share of this new head has increased from 7 percent in the first half of 2006-07 to 15.5 percent in half of 2007-08 in the domestically collected FED revenue. Within services, 69 percent of collection has been realised from IAT, followed by insurance (16 percent), NFS (13 percent) and Franchise (2 percent). In absolute terms, Rs 5.1 billion had been collected during first half of 2007-08, against Rs 1.9 billion in the corresponding period of last year.

It is worth mentioning that the half-yearly collection has exceeded the target by Rs 600 million and, if this trend of revenue realisation continues, it is expected that the annual revenue target from services would be achieved.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

Great move to impose tax on luxury goods. It will not only boost FBR revenue but also make imports of such items more expensive.


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## Neo

*Breaking the jinx of Gwadar port ​* 
ARTICLE (April 15 2008): Gwadar Port Project is beset by a 'comedy' of errors (or is it a "tragedy of errors")? A press report says, "Gwadar Port finally made history by beginning its cargo handling from March 15, 2008."

Once it is fully operational, and all its facilities and infra-structure in place(in complete working order after due testing and trial runs), Gwadar has the potential to be a much more lucrative port than Karachi or Port Qassim, for several reasons:

1) Its geographical and strategic location at the mouth of Strait of Hormuz, and as a deep water open sea port, an advantage not enjoyed by Dubai, Khark Island or Kish (in the Gulf) for instance. There may be competition with Chahbahar port in Iran, but certain political and economic constraints of Iran tend to negate the prospects of Chahbahar in comparison with Gwadar. As a gateway to the landlocked states in Central Asia, and China, Gwadar has no peer.

The advantages of Dubai as a free port, and a tax-free regime, can be overcome by declaring Gwadar also, as a free port for entrepot trade.

2) Climate: Though Gwadar is terribly hot during summer, it does not suffer from the "boiler-room" humidity of the ports in the Gulf, so comparatively, it is a more salubrious place for its inhabitants. Of course, Dubai is far more developed as a really cosmopolitan city and international trade centre, with a fairly long history of trade relations. It is more so because of oil, and the ostentatious display of immense wealth, which Pakistan will take years to emulate. Probably this factor can also work into Gwadar's favour as a much cheaper place and a better locale for cost of doing business, as well as a much better educated and sophisticated human resource powerhouse.

3) It is true that Pakistan is no match for UAE or Iran or other Gulf States in terms of financial strength. However, the backing it receives from China, and the in-built advantage of direct access to nd from Central Asian States (and through them by overland routes to Russia and Europe on one hand, and Korea and Japan on the other), offers to Pakistan a unique opportunity to cash in on its fortunate geo-strategic locale. In years to come, particularly when Balochistan is fully developed and its natural resources harnessed to the optimum, there are good chances, in the not too distant future, to achieve a degree of prosperity rivalling the oil producers.

4) It is obvious that development of Gwadar as a thriving port, depends on adequate and modern infra-structure in its hinterland, and it is assumed that the authorities are alive to the dire necessity of immediate attention to this aspect.

5) The emerging new oil and gas centres around the Caspian seek outlets for their products and Gwadar offers a two-way outlet to markets East and West, North and South, unhampered by the conflicts in much of the region.

6) Initially some dissuasion is to be expected from the existing port facilities in the region, who would naturally be miffed at emergence of a strong contender, but that will gradually subside when they realise the potential of expanding their own business through these new facilities.

7) One big constraint is financing the project with all its paraphernalia and infra-structure, but the future revenue generation potential of the new port will soon recoup the initial outlay, and much more besides.

8) The boon to employment opportunities and social uplift it will bring about will solve the age-old problems faced by the so-far most neglected province of Pakistan, although it has the largest landmass among all the provinces. The fillip to industries, mining, agriculture, horticulture, animal husbandry, trade and commerce in Balochistan will have a domino-effect on other regions as well, all for the better.

9) The cumulative effect of all the above and other factors too numerous to mention will be the gateway for a prosperous and powerful Pakistan, God willing.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Kabul persuading Islamabad for wheat procurement ​* 
ISLAMABAD (April 15 2008): The Afghan government is reported to be persuading Pakistan for procuring wheat after the Food and Agriculture Organisation (FAO) has placed Afghanistan on top of the first three countries that would face severe food shortage, well-placed sources in Foreign Office told Business Recorder.

The other two countries are Sudan and Somalia where food riots are feared to erupt in the coming days. Pakistan imposed a ban on wheat/flour export to Afghanistan through private sector after acute shortage of flour. However, it had been decided that any deal for export of wheat or flour to Afghanistan would be at the government level for which Pakistan would sell wheat at the international price.

Sources said that Afghan Commerce Minister Dr Amin Farhang was desperate to meet his Pakistani counterpart Shahid Khaqan Abbasi to resolve wheat price issue. It may be noted that wheat price has increased by 50 percent during the last two-three weeks due to its acute shortage. "Majority of the Afghan population do not enjoy food security, and a significant minority is vulnerable to acute food insecurity," the sources added.

Reports reaching here suggest that there was exchange of fire between Frontier Corps and Afghan security forces at the Chaman border on Monday over flour smuggling to Kabul. Islamabad had recently delegated powers to Civil Armed Forces (CAF) to control smuggling of essential items ie wheat/flour, sugar, edible oil/ ghee, rice and pulses to Afghanistan.

"Food item prices, particularly of wheat, have shot up between 40-50 percent during the last fortnight in Afghanistan," the sources quoted a letter written by Pakistani Embassy in Kabul to the Foreign Affairs Ministry. Sources said the Afghan commerce minister has requested Islamabad to look into the precarious situation in his country and for this purpose, he would like to visit Pakistan.

"Farhang is even willing to visit Islamabad as and when his Pakistani counterpart feels convenient," the sources maintained. Sources said the Foreign Office would dispatch the request for a visit of the Afghan commerce minister to the commerce ministry.

Food insecurity has had a particularly negative impact on rural population, which was at the bottom of the ladder of access to resources. Sources said that both the countries were yet to finalise the wheat procurement arrangements, besides its price as the prevalent international price would hardly be acceptable to Kabul.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Qatar to expand economic ties with Pakistan ​*
ISLAMABAD (April 15 2008): Qatar has shown keen interest in exploring upper and lower Sindh for dairy sector investment projects especially along the coastline of Badin and Thatta. The ambassador of Qatar Hamad Ali Al-Hinzab said this at a meeting with the Minister for Privatisation and Investment Syed Naveed Qamar here on Monday, says a press release.

The Qatari ambassador congratulated the minister on his appointment as Investment and Privatisation Minister and appreciated government for holding free and fair elections. Qatar shares an excellent rapport with the present government and intends to expand its cooperation both on economic and political fronts for mutual growth and benefit of both the countries.

He also apprised the Minister that the Qatar government's cement project is in initial phase and a delegation has recently visited Pakistan to discuss and finalise important matters and modalities with the Government of Sindh. The minister reciprocated by admiring and appreciating confidence and trust shared by the government of Qatar with the GoP and also assured maximum support both at federal and provincial level for materialising investment projects of the Qatari investors on fast track basis in Pakistan.-PR

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Pakistan will have duty-free access to Chinese market in three years' ​* 
ISLAMABAD (April 15 2008): Pakistan will have duty-free access to Chinese market within 3 years for industrial products like textile, cotton fabrics, industrial alcohol, leather articles, sports goods, fruits and vegetables, iron and steel products and engineering goods under the Free Trade Agreement (FTA).

This was disclosed by Dr Safdar Sohail, Director-General of Foreign Trade Institute of Pakistan (FTIP) at a seminar on 'Exploring Pakistan's Potential in China and Malaysia in the Context of the Free Trade Agreements', organised by WTO Cell, Trade Development Authority of Pakistan in collaboration with FTIP and Islamabad Chamber of Commerce, held here on Monday. Mohammad Ijaz Abbasi, President, ICCI, was also present on the occasion.

Pakistan and China signed Free Trade Agreement in 2006 which included trade in goods and investments in various sectors. The Tariff Reduction Modality under FTA has been developed to achieve the twin objectives of gradual trade regularisation and providing adequate tariff protection to the existing industry and future investments.

"Elimination of customs duty on raw material and intermediate goods will make Pakistan's exports competitive not only in China but also in the global market while improving its balance of trade with China", Safdar said.

He said that under the agreement China is bound to reduce its tariff by 50 percent on fish, dairy sector, leather products, knitwear and woven garments. "The import of machinery and chemicals from China on reduced or zero percent duty would help the industries to reduce the much-needed cost of production and setting up of the new industrial units while making the local industrial sector more competitive", he added.

Pakistan exported goods worth $1 billion to China in 2006. However, International Trade Centre (ITC) has calculated the potential of $5 billion for all of the Pakistan's exports to China, which after zero-rated access in the Chinese market, would witness an encouraging growth within three to five years, the Director General stated.

Pakistan is the largest trade partner of China in cotton yarn. However, it is worth noting that China has put one item of cotton yarn ie "Cotton, not carded or combed" in the 'No Concession' list despite the fact that China is the biggest importer of this particular item the world over and annually imports this item to the tune of $3 billion.

M Ijaz said that Free Trade Agreement between Pakistan and Malaysia was signed in 2007 that was the first bilateral FTA between two Muslim countries to develop incorporation in trading goods, services and investment.

"Pakistan has given market access to Malaysia on basic raw materials and intermediate goods and machinery while in trade in services, both countries have provided WTO plus market accesses to each other", he said.

In the field of IT related services, Islamic banking and insurance, Pakistan has secured 100 percent equity in Malaysia. "Total indicative potential for Pakistan's export products in Malaysian market has been estimated at $1.17 billion against the present level of only $54 million", Ijaz said.

In reply of a question, Dr Safdar said that there are certain trade barriers that Pak traders have to face while importing or exporting goods from India through Wagah border. "The traders have to face transportation problems in this regard due to the inter-state barriers of India but the matter will be solved soon as we are trying our best to remove these barriers", he added. The participants were informed that the government was making efforts to open a 'trade office' in China.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Budget proposals: KCCI for setting up free-trade zone at Port Qasim ​* 
KARACHI (April 15 2008): Karachi Chamber of Commerce and Industry (KCCI) has suggested that a free-trade zone be established at Port Qasim or the existing Export Processing Zone (EPZ) be converted into free-trade zone to facilitate trading and warehousing on a international scale.

In its budget proposal for 2008-09, to be submitted to the Federal Finance and Commerce Ministers and to the Chairman, Federal Board of Revenue (FBR), KCCI President Shamim Ahmed Shamsi said that free-trade zone, if established, would help build buffer stocks of raw material and commodities at low prices. Besides, it would create tremendous opportunities for re-export trade, making Pakistan a regional trading hub.

He said that this would also help enhance the image of Pakistan as a favoured destination for investment. It would also provide a trade corridor for Central Asian states, including Afghanistan, China and other countries in the region, and help generate port revenues in foreign exchange, besides creating employment opportunities.

Referring to Dubai and Singapore where re-export trade thrived, he noted that Pakistan had virtually no such facility due to its obsolete policies and procedures. Pakistan' business community was very enterprising and capable of handling such trade and earn huge amounts of foreign exchange. As such, the KCCI President stressed the need for evolving positive policies to optimise benefits from Port Qasim and Gwadar port.

He noted that customs duty, 15 percent sales tax and withholding tax on import of industrial raw material had resulted in substantial increase in the cost of finished products. High prices of consumer goods had badly affected domestic demand, he said, adding that higher prices of Pakistani products were unable to compete with the Chinese, Indian and other countries' products in the world markets, hence the demand for Pakistani products was on the decline, which negatively affected the gross domestic product (GDP) grwoth.

The KCCI President proposed that all raw materials, imported for industrial consumption, should have zero rated duty and lower rate of sales tax with a view to reducing cost of production and expanding industrial output. He recommended that taxes other than general sales tax and income tax be phased out to reduce number of taxes and cost of collecting taxes.

He noted that Pakistani ports were most expensive in the entire region, and added that the port charges needed to be substantially reduced to cut the cost of raw materials. He also demanded tax incentives to establish basic industries such as chemicals, pharmaceuticals raw materials, petrochemicals, heavy machinery and machine tools to enhance competitiveness.

The KCCI President also recommended that there should be a single rate of sales tax at 10 percent to encourage tax culture and expand tax base. The reduction would also provide relief to consumers. He said at present existing sales tax rates were 15 percent, 17.5 percent and 20 percent, which were too high, and termed it an incentive for tax evasion and smuggling, and a burden on existing tax base.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Eni starts production from badhra gas field ​* 
KARACHI (April 15 2008): Eni has started production from its Badhra gas field, located south-east of the Bhit gas field, within the Sindh province in Pakistan, approximately 250 kilometers northeast of Karachi. Eni also completed the commissioning of the third train at Bhit gas treatment plant, which will process gas from the nearby Badhra gas field, following the Badhra Development and Bhit Acceleration Project.

The Badhra Development and Bhit Acceleration Project increases the existing Bhit plant capacity by 17% from 270 MMscfd to 315 MMscfd, and enhances gas sales to the gas utility companies to help fulfil the ever increasing demand of energy in Pakistan. Total investment in the Badhra Development and Bhit Acceleration Project will be approximately US $50 million.

Kirthar Joint Venture, the title holder of Bhit and Badhra gas fields, is composed of Eni Pakistan Limited, a subsidiary of Eni SpA, (40%); Kirthar Pakistan B.V., a Royal Dutch Shell Group company, (28%); Oil & Gas Development Company Ltd (20%); PKP Kirthar 2 B.V., a subsidiary of Premier Oil Overseas B.V., (6%); and PKP Kirthar B.V., a subsidiary of Kuwait Foreign Petroleum Exploration Co (6%).

Eni has been present in Pakistan since 2000 with 12 onshore exploration licences, 5 of which are operated by Eni and 3 operated offshore exploration blocks. The production fields operated by Eni are Bhit and Badhra (Eni 40%) and Kadanwari (Eni 18.42%). Eni also holds interests in producing fields of Sawan (Eni 23.68%), Zamzama (Eni 17.75%), Miano (Eni 15.16%) and Rehmat (Eni 30%).

Eni is the largest foreign gas producer in Pakistan. In addition to its substantial investment and as part of an integrated worldwide strategy, Eni is committed to support sustainable development in Pakistan, through significant community development initiatives.

http://www.brecorder.com/index.php?id=723295&currPageNo=1&query=&search=&term=&supDate=


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## solid snake

Neo said:


> Great move to impose tax on luxury goods. It will not only boost FBR revenue but also make imports of such items more expensive.



Will this move make video games and game consoles more expensive? But yes, this is a good move as the government can collect more revenue plus it will reduce our trade deficit.


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## ejaz007

*Beijing keen on pipeline project *
Wednesday, April 16, 2008
By Quddsia Akhlaque

ISLAMABAD: With President Pervez Musharraf's emphatic and open invitation for China to become a partner in the proposed $7.5 billion Iran-Pakistan-India (IPI) gas pipeline project, initial indications from the Chinese diplomatic circles are that if the new political government in Islamabad pursues it further, Beijing may review its earlier feasibility study that did not fully endorse it.

"It now depends on the new political leadership in Pakistan. If Chinese leadership gets a strong signal that the new Pakistani prime minister is as interested then Beijing could launch fresh efforts to further explore the viability of the project which could subsequently lead to a joint survey of the area," sources said, adding the first step could be talks between the two relevant ministries where Pakistan side could also share data.

Noting that Pakistan's offer to China to join the project was a "very good suggestion and an encouraging symbol", Islamabad-based Chinese Strategic Analyst Zhou Rong told The News: "China may be interested in conducting a joint feasibility study of the proposed project by technical experts from both sides."

He said Beijing's decision would ultimately depend on technical and financial viability of the multi-billion dollar project. The Pakistan-China Joint Press Statement issued at the end of President Musharraf's six-day official visit to China on Tuesday noted that China "expressed its readiness" to assist Pakistan for the development of the energy sector.

However, with Beijing's current preoccupation and focus on the Olympic games being hosted by China in August, no movement on the pipeline project is possible till the mega event is over, sources maintained.

A feasibility report prepared by the Chinese experts around three years back in 2005 had pointed to 'geological obstacles' in the pipeline that would run from Iran to Pakistan and then on to China through the Karakoram Highway (KKH) via Gilgit in Northern Areas if China joins the project.

According to a Chinese source, experts had cited several technological challenges posed by the rugged terrain of the area through which the pipeline would have to pass. Hence, their conclusion was that from technical standpoint it would be very difficult, making it into a high cost project both in terms of money and time.

While China may be interested in the project it is clear that the key question of whether it will participate or not will be determined purely on technical grounds, a Chinese analyst said. "It is not just an issue of intentions, the political leaderships on both sides may have the best of intentions to back the IPI gas pipeline project but it cannot take-off without the green light from technical experts," the analyst cautioned as he pointed out: "This is not Karachi or Gwadar."

Apparently neither Iran nor India have formally discussed with Beijing the possibility of China joining the IPI project, nor China has directly conveyed its interest in this regard to any of them, sources close to Chinese government maintain.

However, President Pervez Musharraf during his recent meetings with the top Chinese leadership in Beijing did discuss prospects of China participating in the project as he also indicated in his response to questions by students of Beijing's Tsinghua University on Monday.

He declared Pakistan was very much in favour of a pipeline between the Gulf and China through Pakistan and told a student: "I have been speaking with your leadership, the president and the prime minister, about this."

Specifically referring to the IPI project, he suggested that it could be transformed into IPC pipeline ó Iran-Pakistan-China pipeline ó also. However, the Chinese who measure everything very carefully have not so far gone public with their response or position on the offer.

While acknowledging the challenges of building a pipeline that would have to cross towering and rugged mountain passes up to 15,000 feet (4,500 meters) high and admitting that technical experts had thought it might not be possible at such heights, President Musharraf still tried to make a case for it, saying: "But experts say (an) oil and gas pipeline could be pumped upward up to the border, but the larger distance in China would be down-flowing. So technically it's very feasible.'

Some observers believe that the president's proposal could put India under pressure to move fast on the project. Also a hint that if New Delhi continues to drag its feet on the proposed project China may emerge as a potential partner in the 2,600-kilometer gas pipeline originally aimed at supplying natural gas from Iran to Pakistan and then onwards to India.

While both Iran and Pakistan have been pushing for early conclusion of the project New Delhi seems to be employing delaying tactics because it is in the process of firming up a civilian nuclear deal with the US, which is opposed to Indian participation in the project.

China is seen by Pakistan as a viable partner in the IPI project having both the resources and the expertise in addition to the obvious advantages associated with its current status of the world's second-largest economy.

There is a view in Pakistani official quarters that China's inclusion in the project would give it more security and stability. Officials are also quick to point out that KKH is being made into an all-weather road.

Asia Times had reported just ahead of President's current China visit: "China, always on the lookout for new energy sources, has conveyed to Pakistan it would be willing to import 1.05 billion cubic feet (bcf) of gas per day if India opts out of the project, according to reports quoting officials in Islamabad." It added: "Pakistan plans to import 2.2 bcf of gas a day from Iran through the pipeline."

Islamabad has consistently maintained that it would welcome China's inclusion in the proposed project. Last month when foreign office spokesperson Mohammad Sadiq was specifically asked about the prospects of China joining the IPI project his response was: "With or without India, we will welcome it. Pakistan is committed to the pipeline because of its desire to achieve energy security."

The Iranian foreign ministry spokesperson had indicated China's keenness to join the project during a visit to New Delhi earlier in February. He said: "Other countries are eager for implementation of the (IPI) project. China is also applying pressure and wants to join the project. We don't have a lot of time. It is time to expedite the decision-making."

Iran, which is said to have the world's second-largest gas reserves after Russia, has reportedly completed almost 20 per cent of the work on the pipeline. But Pakistan has not started work on a 1,000-km stretch of the pipeline to connect Iran with India.

The Indian petroleum minister and secretary will be in Islamabad next week to discuss in further detail the IPI project and more specifically to sort out the issue of transit and transportation fee that India would also have to pay to Pakistan. The question of China joining the project is also likely to figure in the bilateral discussions at the next meeting. 

Meanwhile, reports from New Delhi suggest that since India is concerned about issues related to safety, commercial viability and security of the IPI pipeline, it has been advocating involvement of independent monitors and the Russian firm, Gazprom, as an investor in the project.

Beijing keen on pipeline project


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## ejaz007

*More strength for Lanka, Pakistan bilateral trade *
Walter Jayawardhana 

Bilateral trade between Sri Lanka and Pakistan will greatly expand following successful talks between President Mahinda Rajapaksa and the Pakistani counterpart Pervez Musharaff in China, Pakistani officials said. 

The two Presidents met with their Foreign and Trade Ministers in high level talk on the sidelines of Boao Forum in Hainan last week. 

After the People's Republic of China, Sri Lanka is the second country with which Pakistan has signed a Free Trade Agreement. 

The two countries have already decided to expand the scope of the Free Trade Agreement to areas not covered so far. 

The trade agreement has opened central Asian countries adjacent to Pakistan to new Sri Lankan exports. 

The bilateral talks between the two Presidents has elevated trade between the countries to the highest level, Foreign Minister Rohitha Bogollagama told correspondents in Hainan. 

Bogollagama said Sri Lanka wanted to see Pakistan back in the Commonwealth soon. 

The minister in his comment on Free Trade Agreement said the two countries had Comprehensive Economic Partnership Agreement and they desired to further enhance their cooperation in economic terms. 

Sri Lanka News | Online edition of Daily News - Lakehouse Newspapers


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## Neo

*Italys Eni starts gas output from Pakistan field ​* 
Wednesday, April 16, 2008

MILAN: Italian oil company Eni SpA has started production from its Badhra natural gas field in Pakistan and completed boosting capacity at the Bhit treatment plant fed by Badhra, Eni said on Tuesday.

The Badhra and Bhit projects have increase the Bhit plant capacity by 17 per cent to 315 million metric standard cubic feet per day, it said in a statement.

Eni has completed commissioning Bhits third train, it said.

The Badhra field is about 250 km (155 miles) northeast of Karachi.

Total investment in the Badhra Development and Bhit Acceleration Project will be approximately $50 million, Eni said.

Kirthar Joint Venture, the title holder of the Bhit and Badhra gas fields, comprises Eni, with a 40 per cent share, Royal Dutch Shell Plc, with 28 per cent, Pakistans Oil & Gas Development Co Ltd with a 20 percent stake, and Premier Oil Overseas BV and Kuwait Foreign Petroleum Exploration Co at 6 per cent each.

Italys Eni starts gas output from Pakistan field


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## Neo

*KSE hits all-time high of 15,538 points ​* 
Wednesday, April 16, 2008

KARACHI: The Karachi stock market successfully crossed the 15,500 points psychological level for the first time and concluded at 15,538 points all time high on Tuesday.

Leading benchmark KSE 100-share Index jumped up by 101 points or 0.65 per cent and finished at 15,538 points new record level. As a matter of record, the day session breached through earlier made all time high record level of 15,474 points registered on April 08, 2008.

M. Yousuf at Live Securities said that despite the support by E&P sector, institutional investors were reluctant to enter the market owing to expected meeting among PPP Co-Chairperson and his coalition allies to resolve the judiciary reinstatement issue.

For the last two weeks, market was seeking consolidation near and around 15,400 points resistance level. The political uncertainty and law and order situation, according to market analysts, were not letting the bulls to show their muscles. However, the 100-Index surpassed 15,500 points coveted level in a dramatic move while energy sector led the gainers on board, analyst added.

Analysts questioned the sustainability of index near and around the current psychological level, as the reasons that analysts quoted for keeping index below 15,400 points in near past were yet to be addressed.

Trust deficit between the two provincial political parties was continuously rising higher with the passage of time, issue of reinstating deposed judges and flaws found in the local economy can impact the market.

Overseas investors disinvested net $8.6 million from the local equity markets including Karachi bourse, according to NCCPL website.

Hasnain Asghar Ali at Aziz Fidahusein said that rising international oil prices and foreign inflow recorded on Monday allowed the bulls to openly display their muscle while growth reported in cement exports and chances of increase in strategic investment in the local banks also extended their support to bull-run on board.

However, the reinstatement issue of deposed judges and certain other economic, foreign policy and budgetary issues restricted the surge to 101 points, he added.

Ahsan Malik at Shahzad Chamdia Securities observed that likely increase in local POL products prices would also inflate the bottom line profits of oil companies and that is why the relevant stocks attracted fresh funds. While fertilizer sector also depicted growth in the concerning scrips following DAP price crossed Rs4000 per kg in the local commodity market, he added.

Market moved by 121 points either way in a range of 15,559 points intra-day high and 15,438 points intra-day low. Turnover in the ready market further declined to 222 million shares as compared to 226 million shares changed hands a day earlier. 

The KSE 30-Index posted a fresh rise of 155 points or 0.82 per cent and finished at 18,971.75 points new high level.

Overall market capitalisation reached new highest level of Rs4.752 trillion by attracting fresh funds worth of Rs29 billion. 

Among the 347 active counters on board, 179 advanced, 127 declined and the value of 41 scrips remained unchanged.

Highest volumes were witnessed in Pak Oilfields at 20.756 million closing at Rs402.50 with a gain of Rs13, followed by Pace (Pak) at 17.409 million closing at Rs39.30 with a gain of Rs1.85, Fauji Fertilizer Bin Qasim at 12.793 million closing at Rs41.55 with a gain of 65 paisa, Bank of Punjab at 12.349 million closing at Rs61.75 with a gain of Rs1.20 and Nishat Mills at 9.735 million closing at Rs126.80 with a gain of Rs1.80.

KSE hits all-time high of 15,538 points


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## Neo

*Dar discusses Pak economy with Moodys, S&P ​* 
NEW YORK: Federal Finance Minister Muhammad Ishaq Dar wound up his hectic five-day visit to the United States, after in-depth discussions with senior officials of rating agencies M/s Standard & Poor and Moodys, on Monday.

A Pakistan Mission press release said that they exchanged views on the current state of Pakistans economy and future challenges.

Afterwards, Dar flew back to Pakistan. He arrived on Sunday night in New York from Washington where he led the Pakistan delegation to the spring World Bank -International Monetary Fund (IMF) meetings. He also conferred with a numbers of his counterparts attending those meetings and heads of international financial institutions.

The finance minister apprised the rating agencies that the current financial imbalances were largely caused by external shocks, particularly the unprecedented increase in oil and commodity prices as well as steps taken by the previous government for political expediencies.

For over a year, the previous regime did not pass on to the consumers the rising international oil prices. The minister briefed rating agencies officials on the measures taken by the government to address the situation for the remaining months of the current fiscal year.

In doing so, he also reaffirmed the governments commitment to restore macro-economic stability in a reasonable timeframe.

Outlining his governments priorities, Dar stated that it will focus on agriculture and large scale manufacturing as priority areas to achieve sustained growth.

Coupled with that will be a variety of measures to reduce government borrowing from the State Bank with a view to slowing down the growth of money supply and controlling inflation.

The rating agencies appreciated the candid analysis of Pakistans economic situation and expressed their confidence in the ministers ability and the policies and measures contemplated by the present government to address the situation, the press release said.

The minister was accompanied by State Bank Governor Dr Shamshad Akhtar, Finance Secretary Dr Waqar Masood, Special Secretary & Adviser on Finance Dr Ashfaq Khan and Wajid Rana, Economic Minister at the Pakistan Embassy in Washington.

Managing Directors of Sovereign Ratings John Chamber and Ms Marie Cavanaugh led the team representing Standard & Poor while Senior Vice President Guindo Cipriani and Vice President Christopher Kimbel led the team representing Moodys.

Dar discusses Pak economy with Moodys, S&P


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## Neo

*Tax-to-GDP ratio should rise: FBR ​* 
Wednesday, April 16, 2008

KARACHI: Chairman of Federal Board of Revenue (FBR), Muhammad Abdullah Yousuf has pointed out that the tax to GDP ratio was only 11 per cent, whereas the country should have at least 16 per cent ratio, which could help collect taxes of Rs50 billion per year.

During a meeting with Karachi Chamber of Commerce and Industry (KCCI) members on Monday night, he said that this 11 per cent ratio stood against 16 to 18 per cent in the region, whereas, in most of the countries worldwide, this ratio ranged between 25 and 30 per cent.

Listing the reforms made in FBR, he agreed that much was needed to be done to make sales tax collection system efficient and facilitating. He further informed the business community that from 1st July this year, they could file their returns through an e-system.

He added that they could also send their sales summary electronically, and the information forwarded by them would be processed the same way. The verification of their bank accounts would be done electronically also, he added.

Yousuf assured them that under the new programme, they could get their refunds within a period of one month from the filing of their returns. He said that over the last five years, the rate of sales tax and other taxes has drastically cut down, and this could reduce further if the tax base increases.

On the customs side, he said that various programmes like Customs Administrative Reforms (CARE) had been launched to make the system paperless, while more reforms were in the pipeline.

Tax-to-GDP ratio should rise: FBR


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## Neo

*Trade deficit can settle around $16bn: Khaqan Abbasi​*
KARACHI: Countrys trade deficit can settle around $16 billion during the current financial year, says Federal Commerce Minister Shahid Khaqan Abbasi. Talking to newsmen during a visit of Trade Development Authority of Pakistan (TDAP) here on Tuesday, he cited soaring prices of oil in international market, import of food items and rising prices of palm oil as major contributors in burgeoning trade deficit. About any short-term plan to contain this deficit, he said that it could be reduced through increase in exports, however at the moment it is hard to have quantum jump in exports whereas the domestic requirements also make it difficult to cut the import bill. When asked about boosting trade ties with India, Abbasi held the political issues especially Kashmir dispute as major obstacles to move forward. It is difficult to grant Most Favoured Nation status to neighbouring country without resolving the main dispute of Kashmir, he stated. 

The News - International - Wednesday, April 16, 2008


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## Neo

*Pakistan unable to improve cotton quality​*
KARACHI: Pakistan is still unable to improve the quality and enhance volume of Bacillus Thuringiensis (BT) cotton variety and to use certified seeds, ginners and traders said on Monday.

They were of the view that country would not be able to achieve next cotton crop target in 2008-09, which is set by the federal government at around 14.11 million bales.

Director on Board of Karachi Cotton Association (KCA), exporter, importer and ginner, Ghulam Rabbani, said unless production of quality seeds, supply of quality inputs and water availability is not assured, the production would reach only around 12.80 million bales.

He said cotton sowing season has started in April but the growers and farmers are unable to get certified seeds according to their demand.

He said, according to a report, a broad range of countries was switching from cotton to other fibers attributed to price considerations. Cotton is one of the commodity markets that traders still see as relatively cheap, and the market remains in a short-term up trend despite negative news from the USDA this week.

He said we were still lacking to fight against mealy bug and Cotton Leaf Curl Virus (CLCV) attack.

He said there was need of cotton experts and patent rights to the multinational companies in the field in order to help and guide growers to produce quality seeds in the country.

He said seed institutes, one each in Sakrand in Sindh and Khanewal in Punjab, were unable to produce and cater the supply of quality seed to the growers. He said around 50 percent of the total cultivation in the country is BT type cotton. Nearly 90 percent of this type is cultivated in Sindh and about 30 percent is cultivated in Punjab.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Industrial development: NWFP to seek special incentives from centre, says minister ​* 
PESHAWAR (April 16 2008): NWFP Minister for Industries Syed Ahmad Hussain Shah has said that the provincial government would approach federal government for special incentives and other facilities for development of industrial sector of the province.

Addressing a meeting of industrialists and traders here at Sarhad Chamber of Commerce & Industry (SCCI), he also intended to invite proposals from all the industries and trade bodies of the province.

The provincial secretary Industries Shah Wali Khan, official of the department, President SCCI Haji Muhammad Asif and other office bearers of the chamber also attended the meeting. Describing the current load shedding as genuine cause of concern for the industrialists, he stressed the need for establishing small hydropower stations in northern NWFP. He said that it would help generate 16000 MW additional electricity than of our demands.

Assuring the industrialists of every possible security measures for Hayatabad Industrial Estate (HIE), he emphasised on the need for mutual co-operation between the government and the industrialists and investors for facing the challenge of law and order.

Terming sustainable industrialisation and economic activities the only solution to the growing lawlessness and unemployment, Ahmad Hussain Shah urged the industrialists not to hesitate from investment despite the prevailing unfavourable conditions and strengthen the government by playing their pivotal role.

The minister assured SCCI members that the government would take measures for setting up of an additional sector in HIE and an Export Display Centre in Peshawar.

He also announced to construct boundary wall around HIE, establishment of new industrial estates in the tribal areas and the earthquake affected districts, promotion of quality technical education and issuance of arms licences to the industrialists. Earlier, President SCCI highlighted the problems being faced by the industrial and trading community and appreciated the provincial ministers commitment to boost the industrial sector.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*NSN to help eradicate unemployment ​* 
ISLAMABAD (April 16 2008): Nokia Siemens Network (NSN) is working to groom people to help eradicate unemployment and create an energy-efficient and environment-friendly system. "Our products are designed with an environmental lifecycle in mind and everything we produce must provide greater environmental benefits and minimise any impact otherwise", said Jan Cron, NSN head of Middle East and Africa region here on Tuesday.

He was addressing a press conference on the occasion of first anniversary of the merger of Nokia and Siemens. Veqarul Islam, Country Director, Pakistan and Afghanistan was also present on the occasion.

"We have recorded some large deals with Zain in Saudi Arabia accounting for almost $1 million of mobile network implementation and development. In Pakistan, we have proved to be the fastest network enabler to roll out Radio and Core R4 in the telecommunications history of Pakistan, he added. He said that NSN worked to develop its environmental campaign to reduce energy consumption and maximise energy efficiency of its network infrastructure equipment.

Nokia Siemens Network is also strengthening its work in new markets with innovative solutions such as the village connection, which lets service providers leverage the potential of rural markets by offering mobile connectivity to villages at relatively low levels of investment, he said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*New free trade accord with China soon: Musharraf​*
URUMQI, April 15: President Pervez Musharraf said on Tuesday that Pakistan and China were close to signing another Free Trade Agreement (FTA) on trade and services that would further boost their economic and commercial ties.

Addressing the China Xinjiang-Pakistan Economic Forum in Urumqi, the capital of Xinjiang autonomous region, he urged closer cooperation in trade and commerce and investment.

The president informed the business leaders that there was immense scope for investment in Pakistan in the energy sector, particularly in coal-powered and solar and hydro-electric plants.

He said Pakistan and China were also discussing proposals to set up more nuclear power plants to help meet the requirements of fast expanding economy.

He said Pakistan had proposed an integrated border management regime and transit trade agreement.

The president said that in view of close ties between the two countries, special investment zones would be created in Pakistan for Chinese entrepreneurs.

Inviting Bank of China to enter Pakistani banking scene to help business communities of the two countries, he said several foreign banks were operating in the country.

He said Xinjiang could vastly benefit from its proximity to Pakistan.

He said Pakistan and China had already embarked on a plan to upgrade the Karakoram Highway for allowing all types of heavy traffic. This would be besides a rail link connecting Pakistan Railways with China Rail.

We can even have fibre optic link and oil and gas pipeline along the same route that will bring the two countries closer, the president said.

Xinjiang Governor Nur Bakari and Vice-Governor Masood Qureshi and members of the Pakistani delegation attended the meeting.

Meanwhile, according to a joint statement issued simultaneously from Beijing and Islamabad at the end of President Musharrafs six-day state visit, China has expressed its readiness to assist Pakistan for the development of energy, mineral and mining sectors, extend cooperation in financial sector and upgrade communication and transportation links.

Both sides agreed to further strengthen defence cooperation and enhance collaboration between their respective defence industries, the statement said.

China expressed its full support for Pakistans efforts to preserve its sovereignty, independence, territorial integrity and expressed appreciation for Pakistans important role in promoting peace, stability and security and its contribution to counter terrorism.

Pakistan reiterated its full support to the One China policy and the return of Taiwan to the motherland. It also condemned and rejected the three evil forces i.e. secessionism, separatism and terrorism.

During the visit, President Musharraf held official talks with President Hu Jintao in Sanya, met NPC Standing Committee Chairman Wu Bangguo, Premier Wen Jiabao and CPPCC Chairman Jia Qinglin in Beijing as well as the leadership of Xinjiang Uighur Autonomous Region in Urumqi.

The president was accompanied by Foreign Minister Shah Mehmood Qureshi, Defence Minister Ahmed Mukhtar, Higher Education Commission Chairman Dr Atta ur Rehman, Chairman Trade Development Authority Tariq Ikram and Deputy Chairman Planning Commission Dr Akram Sheikh.

The two countries signed 10 memoranda of understanding on water, cooperation in engineering and technological sciences, finance, research and exchange of TV news.

They also agreed to set up Pakistan Culture and Communication Center at Tsinghua University, and promote economic and trade cooperation between the Foreign Trade and Economic Cooperation Bureau of Xinjiang Uighur Autonomous Region and Ministry of Commerce of Pakistan.

The countries also decided to encourage international investment and establish relations of friendship and good neighbourly cooperation between Xinjiang and the NWFP.APP

New free trade accord with China soon: Musharraf -DAWN - Top Stories; April 16, 2008


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## Neo

*Pakistan may double wheat import this year​*
SINGAPORE, April 15: Pakistan could double its wheat imports this year and may slap a tax on rice exports to rein in inflation, a senior trader said on Tuesday, adding to global anxiety over record food prices and thinning supplies.

As major rice exporters Vietnam and India clamp down on shipments, buyers have rushed to Pakistan, the worlds fifth-largest seller, said Najib Balagamwalla, chief executive of Sea Trade, a leading Pakistan-based commodities trader.

But with inflation at a 13-year high, Islamabad could join the growing list of governments seeking to tame rising prices by discouraging overseas sales. At the same time, with nearly half the country at risk of running short of food, it may buy as much as 3.5 million tonnes of wheat, he said.

The government will probably put a duty on rice exports, Balagamwalla told Reuters in an interview.

Local rice prices have doubled in a few months and will rise another 50 per cent if there is no immediate government intervention.

Pakistan is expected to produce 5.5 million tonnes of rice in the year to June 2008, and after domestic consumption should have an exportable surplus of about 3.3 million tonnes, according to officials of the Rice Exporters Association of Pakistan.

The country produced 5.4 million tonnes of rice and exported about 3.1 million tonnes in the previous year, equal to about one tenth of world rice trade.

Importers are scrambling to buy Pakistani rice and exporters are of course getting very good prices. But the concern is building up in the domestic market, Balagamwalla added.

Exporters would resist any move to impose a duty.

Rice, a high-value cash crop, accounts for about eight per cent of Pakistani exports and 1.2 per cent of gross domestic product.

High food prices lifted Pakistans consumer price inflation to 14.12 per cent year-on-year in March, the highest in 13 years.

Pakistan produced 23.3 million tonnes of wheat in the 2006/07 crop year and had to import 1.7 million tonnes after a shortage in September that resulted in soaring domestic prices.

But Balagamwalla said output could fall to 22 million tonnes this year, about 2 million tonnes lower than earlier estimates, due to erratic weather and a delay in announcing the procurement price the government pays farmers. A lower than hoped-for price also led to a fall in wheat cultivation, he said.

We are at the start of the wheat season but we are already in a crisis, Balagamwalla said.

I think we should be importing at least 3.5 million tonnes of wheat this season. He said that provincial governments were struggling to procure wheat from farmers who were hoping to get even higher prices in the open market.

The government has announced a procurement price of 510 rupees ($8.17) per 40 kg, far less than global prices. Food ministry officials say it will be difficult for the government to meet its target of buying 5 million tonnes at that price.Reuters

Pakistan may double wheat import this year -DAWN - Top Stories; April 16, 2008


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## Neo

*Change in agriculture can meet food needs​*
RAWALPINDI, April 15: Agricultural production will be increasingly constrained by the declining availability and degradation of water in the countries of Asia and the Pacific with implications for food production, says a report which puts development at heart of Asia-Pacific security.

At a time of record high prices for food commodities, the report, International Assessment of Agricultural Science and Technology for Development (IAASTD), released on Tuesday, says by 2020 per capita water availability is estimated to decline to between 15 per cent and 35 per cent of that available in 1950.

The way the world grows its food will have to change radically to better serve the poor and hungry if the world is to cope with a growing population and climate change while avoiding social breakdown and environmental collapse  a message from the report prepared by over 400 scientists, released by the United Nations Educational, Scientific and Cultural Organisation (Unesco).

The report says rapid urbanisation and industrialisation in the region leads to competition for productive land resources. In addition, there are problems of increasing land degradation, declining soil fertility, increasing toxicity, and salinity/alkalinity. Projects to reclaim degraded lands for arable purposes will only make a small contribution to future growth in food production, it warns.

Along with increases in productivity there is also a need for systems of compensation, payments and other rewards that might increase the supply of environmental public goods linked to particular forms of land use. These can be coupled with stringent environmental regulations that will ensure the most productive and effective use of limited resources, the report emphasises.

The report predicts that by the year 2020 nitrogen pollution from food production (fertiliser use and domestic animal waste) and consumption systems will increase by 1.3-1.6 times in East Asian countries from 2002 levels.

The report warns that agricultural production in the region will be threatened by climate change and variability. Through emissions from rice cultivation and livestock, and deforestation, agriculture in the region contributes substantially to GHG emissions. To mitigate the effects of climate change, agricultural knowledge, science and technology (AKST) development to reduce emissions from agriculture, is needed. In order to adapt to climate change, AKST development is required to meet the challenges of cultivation that is resistant to drought, long inundation, salt, high temperatures, and so on. As water availability will be highly variable over time and space, AKST development also is necessary for conserving water and increasing irrigation efficiency.

Unless there is a determination to promote development, much of eastern Asia faces the prospect of serious social problems and an increasingly degraded environment. The assessment report says current patterns of agricultural development will increase pollution and environmental deterioration and pose major challenges for growing food and reducing poverty. Without political commitment by key decision-makers to ensure development, the downward spiral towards socio-economic turmoil and ecological degradation may be rapid and perhaps even irreversible, it says.

The report argues that some of the gains of the region's high growth can and should be used to build safety nets for the rural poor, the majority of whom are women: it advocates policies designed to secure gender equity and social inclusion.

The report's detailed recommendations on using agricultural knowledge to help the region include ways of arresting the loss of forests and grasslands, tackling land and water degradation, conserving biodiversity, and both mitigating and adapting to climate change. And with conflicts increasing over natural resources and anxieties evident in disputes about fishing rights and water sharing, it sees a need to develop regional co-operation and conflict resolution systems.

It calls for multi-functional agriculture, serving our multiple demands for sustainability, equity, development and food. There are, it concludes, unprecedented challenges ahead. It believes the way to meet them lies in re-directing the wealth of agricultural knowledge and expertise the world has built up: it should be targeted towards agro-ecological strategies that combine productivity with protecting natural resources like soils, water, forests, and biodiversity.

Change in agriculture can meet food needs -DAWN - Business; April 16, 2008


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## Neo

*Phone calls to Pakistan made costlier​*
KARACHI, April 15: The Pakistan Telecommunication Authority (PTA) has increased Approved Settlement Rate (ASR) by 100 per cent, which would make calling to Pakistan more expensive. The move is believed to address rising demand of the local operators.

However, sources in telecom sector believe the move may also encourage voice trafficking through illegal means to the country, which currently causes more than $50 million losses to the exchequer every year.

The authority, after due deliberation and hearing the arguments of different stakeholders, has decided to revise the ASR for long distance and international (LDI) operators at $0.10 from $0.5 per minute with effect from May 1, 2008, said a source quoting a PTA notification.

The PTA, in fact, has addressed the demand of local operators, who have been pleading for increase in such rates, as it would not affect the local consumers of the facility, said the source. But it would naturally increase the cost of calling to Pakistan from outside.

The experts raised serious concerns over the telecom watchdogs decision, who termed it contradictory to the measures it had earlier taken to curb the illegal voice trafficking.

The PTA in 2006 cut ASR by 38.61 per cent in an effort to reduce financial incentives in grey telephony.

If the ASR is increased it will cause illegal international call rerouting by LDI operators and some illegal operators may also increase rates seeing the opportunity, said Ansar-ul-Haq, a telecom consultant.

The increase in ASR will also increase the tele-density gap and the private operators would not launch telecom services in comparatively lower profit-earning rural areas, he added.

Grey telephony is a term referred to the illegal telecom traffic in which calls from foreign countries are brought in the country as local calls, while using illegal means. This is an offence under Telecom Reorganisation Act, 1996.

The sources privy to the PTA, however, argued the increase in ASR rate was unlikely to damage the revenue, as the authority had already deployed technical solutions to check grey traffic brought into the country through illegal means.

The main objectives of the technical solution include automated detection of grey traffic for its consequent elimination, and revenue assurance for LDI operators, said the source.

After successful deployment, the solution would be able to filter IP traffic of the country for detection of illegal VoIP on data circuits for consequent legal action against the culprits.

In such situation, he said, the PTA was confident that a large volume of illegal voice traffic always remained under check of the authority and could not damage the legal telecoms business.

Phone calls to Pakistan made costlier -DAWN - Business; April 16, 2008


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## ejaz007

*Remittances touch record level of $602.21 million*

KARACHI: Overseas Pakistanis sent home a record $602.21 million in March this year as against $520.24 million in the same month of last year, showing a jump of $81.97 million or 15.76%. 

Previously, the highest amount sent in a single month by Pakistani workers was $580.24 million in October 2007. 

The inflow of remittances into Pakistan from almost all countries of the world increased last month as compared to March 2007. According to the break up, remittances from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $151.95 million, $120.11 million, $111.74 million, $85.44 million, $41.98 million and $15.01 million, respectively, as compared to $142.72 million, $92.69 million, $82.29 million, $70.43 million, $37.75 million and $12.88 million received in the corresponding period of last year. 

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during March 2008 amounted to $75.84 million as compared to $81.13 million during March 2007. 

Remittances sent home by overseas Pakistanis continued to rise in the first nine months of the current financial year. 

The country received $4.728 billion in July 2007-March 2008, showing an increase of $791.60 million or 20.11 percent over the same period of the last fiscal year. The monthly average of remittances for this period was $525.37 million as compared to $437.42 million during the same period of last fiscal year. 

The inflow of remittances in this period from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $1.312 billion, $881.95 million, $793.62 million, $704.27 million, $334.85 million and $131.13 million, respectively as compared to $1.034 billion, $733.48 million, $595.98 million, $538.29 million, $319.25 million and $110.38 million, respectively, in the July-March 2006-07 period. 

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the first nine months of the current fiscal year amounted to $568.06 million as against $602.80 million in the same period last year. 

The amount of $4.728 billion includes $2.15 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs). staff report

Daily Times - Leading News Resource of Pakistan


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## Neo

*IMF asks Pakistan to ensure transparency in fiscal matters ​* 
Thursday, April 17, 2008

ISLAMABAD: The International Monetary Fund (IMF) has asked Pakistan to provide an overview of the potential risk to its fiscal position through budget documents, in a bid to bring more transparency in matters related to data.

A report on the observance of standards and codesófiscal transparency module, an update released by the IMF on Wednesday, stated that elements of fiscal risk are covered in the present budget documents. However, no summary overview of potential risks to the governments fiscal position was provided.

Risks arising from explicit and implicit contingent liabilities, such as risk statement, should cover macroeconomic risks arising from changes to key macroeconomic parameters including price, interest or exchange rate. It could also provide an analysis of control risks, based on an examination of original budget estimates versus actual budget outcomes.

The staff encourages the Auditor General of Pakistan (AGP) to amend the legal framework for audits, to permit all areas of risk to public finances to be audited under the AGPs direction. As noted, current audit practices are under review, with the expectation that regulatory changes will be introduced to extend the AGPs oversight to all areas of government operations.

Some further efforts are needed to promote reforms of procurement practice at all levels of the government and implement the regulations, now in place at the federal level. The AGP already identified procurement as an area of high risk.

The initiative to establish effective internal control and financial management systems in line ministries will take time to be implemented, but is central to long-term reforms.

A road-map for organisational change associated with the major reforms should be prepared and its implementation monitored at a high level. A number of significant changes in organisational roles and responsibilities for fiscal management, both among central agencies and within line ministries, are clearly required.

These changes include a redefinition of the roles of the Planning and Development Division (PDD) and the Ministry of Finance (MOF), discussed above. It also includes development of closer coordination between the Budget and Expenditure Wings of the MOF, and changes in responsibilities between the central agencies and line ministries, as the Medium Term Budgetary Framework (MTBF) and effective internal controls are put in place.

The IMF also proposed that a programme classification, based on sub-detail functions, covering all ministries should be developed as part of the full MTBF rollout.

IMF asks Pakistan to ensure transparency in fiscal matters


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## Neo

*Ban on rice export to hit farmers ​* 
Thursday, April 17, 2008

ISLAMABAD: The governments intervention at any level in rice trade will not only shatter the confidence of exporters, but also ruin domestic trade, a leading Basmati grower has warned.

It will ultimately hit the growers as a ban on the export of the commodity will only serve the interest of a lobby, Basmati Growers Association President Hamid Malhi said by telephone from Lahore when contacted to comment on the issue.

The federal government is being advised to ban the export of rice, likewise India, in order to stabilise its prices in the local market and also make it available in abundance.

Pakistans rice exports have been rapidly going up for the last two years, and this year the exporters are expected to achieve the $1.3 billion target one month before the close of fiscal 2007-08 in June.

The government can only ban export of one staple food at a time and it has already restricted the export of wheat and banning rice is out of question, said a senior government official.

It is a foreign exchange earning commodity and if a ban is imposed, traders will lose the market, which they have grabbed after the withdrawal of major regional countries, the official said, adding the government should export rice other than coarse varieties.

About the Indian ban on rice exports, the official said rice in India is a staple food while in Pakistan wheat is the staple food.

The farmers would be deprived of the benefits, which the traders had reaped during the last eight months as the average price of the commodity rose gradually from $641 per tonne in July last year to over $880, Malhi anticipated.

About the ban, he said it would not benefit the consumers as well as prices would stay at higher levels due to smuggling and high rates in neighbouring countries.

He warned that the farmer community would be the hardest hit from the ban on rice trade and next in line would be the domestic trade and ultimately the consumers.

It is a conspiracy to create a mess in the transparent and independent rice trade, he said, adding ample stocks at the local level were available to feed the population and also for exports.

Pakistan is expected to export rice worth $1.5 billion in 2007-08. Out of 5.5 million tonnes of rice production during the year, three million tonnes would be available for exports. Apart from exportable quantity, the current years rice crop would be able to meet the domestic requirement of 2.5 million tonnes. AM

Ban on rice export to hit farmers


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## Neo

*Govt plans to export 3m tonnes rice this year​*
ISLAMABAD: The government is planning to export 3 million tonnes of surplus rice during the current financial year of 2007-08, earning a precious foreign exchange of $1.8 billion.

Total exportable surplus from 2007-08 rice crop is estimated at 3 million tonnes, Qadir Bux Baloch, agriculture development commissioner told APP here on Wednesday.

He said that out of 3 million tonnes exportable rice 1 million tonnes Basmati and 2 million tonnes IRRI and earn foreign exchange of $1 billion and from basmati while US $0.8 billion from other rice.

Baloch said that the rice was cultivated on about 2.5 million hectares of land with production of 5.5 million tonnes.

He further said that Pakistan produces about 2.5 million tonnes of world-class famous aromatic basmati rice and due to its superior quality it fetches the highest prices in the international market. The year 2007-08 is characterized with record high prices of rice fetched by Pak Basmati at $ 1100/tonne.

He further said that Basmati rice is a rich source of foreign exchange earning.

About the policy issues and challenges being faced by the country, he said that increasing productivity to enhance export surplus and reduce cost of production is a challenge.

He said wide productivity gap between progressive and subsistence farmers, low plant population, unprecedented increase in DAP prices, imbalanced use of fertilizers, transfer of technology to all farmers, insect and pest attack problem, poor harvesting , threshing and processing, boosting rice export, compliance of SPS measures and malpractices in trade are the policy issues being faced by the country. app

Daily Times - Leading News Resource of Pakistan


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## Neo

*US, World Bank and IMF assure full support to Pakistan​*
** Development partners informed agriculture and manufacturing will be basis for growth​*
ISLAMABAD: Pakistans three key development partners  the United States, World Bank and the International Monetary Fund (IMF)  assured the new government of their full support in its efforts to meet economic challenges. 

They also expressed the hope that the new democratic government would be capable, with the donor communitys help and support, to meet economic challenges for the welfare of the people of Pakistan.

A senior official at the Ministry of Finance, after returning from a visit to Washington, told Daily Times that this was an excellent opportunity for the Finance minister to meet the heads of the World Bank and IMF and inform them of the priorities of the new democratic government. 

Basis: They were informed that agriculture and manufacturing would be the basis for economic growth in the new government, as this pattern would enable the country to achieve sustainable economic growth with job creation. The services sector would get due attention so it could contribute substantially to the Gross Domestic Product (GDP), the official added. 

In the current fiscal year, GDP growth is projected to be around 6 percent and corrective measures must be taken to consolidate the economy to face current and future economic imbalances, he said.

According to the official, the donors were informed that external shocks, such as rising oil prices, high commodity prices and economic mismanagement in the last 13 months of the previous government, were the main causes of Pakistans current economic imbalance. This greatly added to the burden on the newly elected government, the official added.

It was informed that the previous government, due to political expediency, did not pass on rising oil prices and power generation costs, due to which a huge backlog had piled up on the national exchequer. It would be unfair to pass on the full impact of the increased oil prices immediately, and this task would be met through gradual measures in the months to come, he added.

The official said that the new government would take decisions in the best interest of the masses, keeping in view their needs and demands. Continuity of policies would be ensured to reduce poverty and supplement growth requirements, he added. 

The meeting with the US State Department was fruitful, as the economic team got full support from US authorities for implementation of its ambitious development agenda. The assurance was that US authorities would help the new democratic government in many sectors, the official added. 

The delegation also informed the US business community, during a meeting, that a policy of de-regulation, liberalisation and privatisation would continue and a level playing field would be ensured for local, as well as foreign, investors in Pakistan.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan committed to IPI gas pipeline project, US told​*
** Minister tells Patterson govt also committed to materialising TAP gas pipeline project​*
ISLAMABAD: Pakistan on Wednesday told the United States that it was committed to signing the Iran-Pakistan-India (IPI) gas pipeline deal with Iran to meet its emerging energy requirements, well-placed sources told Daily Times.

The sources said Federal Minister for Petroleum and Natural Resources Khawaja Asif informed US Ambassador Anne W Patterson, who called on him, that Pakistan and Iran were in the final stages of signing the IPI gas pipeline project deal.

When the US ambassador inquired about progress on the project, Asif told her that Pakistan and India would hold talks on the transit issue on April 25. Indian Petroleum Minister Murli Deora would represent his country at the talks, he told her. 

Patterson was also told that the Indian ambassador would meet with the Pakistani petroleum minister on Thursday (today) to discuss developments on the project, the sources added.

TAP project: The US ambassador was also briefed on the current status of the Turkmenistan-Afghanistan-Pakistan (TAP) gas pipeline project. Patterson was told that Pakistan was committed to materialising the TAP project, and that the steering committee for this project would meet from April 23-24 to discuss project modalilities. She was told that Turkmenistan would present a certification of gas reserves at the meeting, so that the deal could proceed.

Asif also told the ambassador that the new government would take steps to mine Thar coal deposits for power generation, to meet the challenges of soaring international oil prices and to reduce the $12 billion oil import bill. Patterson said the US was mindful of Pakistans energy requirements and was keen to assist in developing the countrys energy sector. She said the US was reviving the dialogue on energy and sought Pakistans participation in the process.

Daily Times - Leading News Resource of Pakistan


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## Neo

*KESC to submit plan for improved supply​*
KARACHI, April 16: The Karachi Electric Supply Company is submitting a short-term plan to the government next week for improved electricity supply during summer.

Privatisation Minister Naveed Qamar disclosed this to Dawn from Islamabad on telephone, which was confirmed by KESC chief executive Lt Gen (retd) S. M. Amjad here on Wednesday.

We are not going to tinker with KESC privatisation transaction, the minister replied in response to a question but revealed that the new investors had been asked in a meeting held early this month to give a short-term improvement plan in three weeks time.

The federal water and power secretary held a meeting with us on Monday on this issue and we are preparing a plan to be given shortly, the KESC chief executive said. He was confident that the current summer would not be as difficult as the last one.

As against a minimum shortfall of 300 megawatt last summer, we expect a shortfall of 250MW in the current summer, he said about the expected load management and distribution. He said the KESC was engaged in upgrading the systems with funds of Rs13 billion announced by the government before the privatisation and the investors were also putting some money in it. He disclosed that the KESC was taking up an energy conservation programme with the help of the government and the media as part of augmenting electric supply programme and cutting down on loadshedding time. He said that many relevant issues would be taken up by the board of directors in a meeting to be held late this month.

Responding to a question, the privatisation minister called Privatisation Ordinance, 2000, as a complete and comprehensive law, which does not warrant a review. But, of course, we will improve the procedures, he remarked to emphasise the point on making process more transparent. He said the procedure for appointment of a financial adviser of any entity would be made more transparent.

As for the controversial privatisation deals in last seven or eight years, Naveed Qamar said these would be taken up by the Public Accounts Committee of the National Assembly in the light of objections raised by the Auditor General. He announced that the privatisation board would soon be reconstituted.

Privatisation came to a virtual halt in 2008 and the only announcement came after February 18 elections and induction of the new government is about the invitation of expressions of interest to divest 93.88 per cent of shares of the SME Bank.

KESC to submit plan for improved supply -DAWN - Business; April 17, 2008


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## Neo

*Record $602 million remittances received in March ​* 
KARACHI (April 17 2008): The country received a record $602.21 million from overseas Pakistanis during March 2008, against $520.24 million during the same month of last year, depicting a rise of $81.97 million, or 15.76 percent. The previous highest amount remitted in a single month by Pakistani workers was $580.24 million in October 2007.

The inflow of remittances into Pakistan from almost all countries of the world rose last month as compared to March 2007. According to break-up, remittances from the USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $151.95 million, $120.11 million, $111.74 million, $85.44 million, $41.98 million and $15.01 million, respectively, as compared to the corresponding receipts from the respective countries during March 2007, ie $142.72 million, $92.69 million, $82.29 million, $70.43 million, $37.75 million and $12.88 million respectively.

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during March 2008 amounted to $75.84 million as compared to $81.13 million during March 2007.

Remittances sent home by overseas Pakistanis continued to show rising trend as $4,728.37 million has been received in nine months (July 2007-March 2008) of the current fiscal year, showing an increase of $791.60 million, or 20.11 percent, over the same period of the last fiscal year.

The amount of $4,728.37 million includes $2.15 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs). The monthly average of remittances for the period July-March, 2007-08 comes out to $525.37 million as compared to $437.42 million during the same corresponding period of the last fiscal year, registering an increase of 20.11 percent.

The inflow of remittances in the July-March 2007-08 period from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $1,312.34 million, $881.95 million, $793.62 million, $704.27 million, $334.85 million and $131.13 million, respectively as compared to $1,034.69 million, $733.48 million, $595.98 million, $538.29 million, $319.25 million and $110.38 million, respectively in the July-March, 2006-07 period.

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the first nine months of the current fiscal year amounted to $568.06 million as against $602.80 million in the same period last year.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Hurdles in way of economic growth will be removed: Prime Minister ​* 
LAHORE (April 17 2008): Prime Minister Syed Yusuf Raza Gilani has said that Pakistan as a free market economy possesses enormous potential for investment, and called upon the business community of the member countries of South Asian Association for Regional Co-operation (Saarc) to benefit from Pakistan's liberalised investment and trade policies.

The Prime Minister said the government machinery would serve as a facilitator rather than a "regulator" and that all unnecessary barriers in way of economic growth would be removed. It would not only help strengthen bilateral relations, but would also contribute positively towards the regional development of Saarc, he added He was addressing a seminar on "Economic freedom - a stimulator in achieving business excellence in South Asia", organised by Saarc Chamber of Commerce and Industry (SCCI), in collaboration with the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), supported by Friedrich Naumani Stiftung (FNS) held here on Wednesday.

Referring to the achievements of the organisation, Gilani said optimistically they might have achieved much, but certainly there was a potential to achieve much more. He urged the member nations to transform Saarc into a free-trade area in the form of Safta, it was time to seize the moment to overcome challenges. "To overcome challenges, let us move from debate and deliberations to concrete actions," he added.

Stating that being committed to the Saarc process it was their collective responsibility to demonstrate the courage, commitment and foresight to transform South Asia into a progressive, peaceful and prosperous region. "Achieving this sincere and earnest desire shall require a paradigm shift of our thinking and our attitude as a whole," he added.

The Prime Minister said Saarc had entered third decade of its establishment. "Our progress remains short of our aspirations. South Asia is yet to forge the quality and intensity of regional co-operation, which could match with the revolutionary transformation brought about in the lives of people of many other regions of the world."

He said intra-regional trade of only six percent did not reflect the potential available in the region. "Business community of Saarc will surely play its due role to tap the existing and indicative potential as all the Saarc member states are committed to achieving the goals perceived under the Safta," he added.

The Prime Minster said they were hopeful that the trade liberalisation programme, to be concluded by 2016, would provide a level playing field to all member states.

"It is heartening to know that trade in services has recently been included in Safta negotiations. This would further widen the sphere of commercial activities in the region," he added. Gilani hoped that the free-trade agreement (FTA) would usher in a new phase towards achieving the ultimate goal of a South Asian Economic Union and accelerate the pace of growth and regional integration.

Referring to the policy of his government, the Prime Minister said that they had embarked upon a liberalised economic policy. "This would not only help expansion of economy, but would also promote economic freedom in the country," he said.

Gilani further said that Pakistan, as a free market economy, possessed enormous potential for investment, called upon the business community of Saarc member states to benefit from their liberalised investment and trade policies. He said that it would not only help strengthen bilateral relations, but would also contribute positively towards the regional development of Saarc.

Referring to the manifesto of his government, the Prime Minister said it ensure the socio-economic freedom of the society. "We realise that due to the prejudiced policies of the past regimes in the region, economic freedom has been one of the neglected areas of our agenda. Our party is a fervent supporter of economic freedom.

"It perceives economic freedom as an instrument of economic well being of the country. Economic freedom ensures rule of law, promotes democracy, secures basic human rights and confers rights of doing business," he added.

The Prime Minister, referring to the role of private sector, said it played a leading role in the economic development of the country. "Our government considers the private sector as an engine of growth," he added. Besides the Saarc President, Saarc from Sri Lanka, Bangladesh, seven-member delegation from India President FPCCI Tanvir Ahmad Shaikh, Vice President and executive committee members of SCCI were present in the moot.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan grappling with rising import bill, food shortage ​*
KARACHI (April 17 2008): After five years of solid growth, Pakistan's economy is facing an import payment crisis and an acute food shortage to feed its ballooning population of 170 million. Finance Minister Ishaq Dar, last week revised the country's expected growth rate to 6 percent from 6.5 percent.

Pakistan has witnessed phenomenal annual growth rate of around 8 percent since 2002, thanks in part to billions of dollars in US aid to fight extremism after 9/11. According to local reports, Pakistan has received close to 11 billion dollars of such aid since 9/11.

"The new government needs to clear the mess by the military government. It is no doubt a daunting task which may have social and political implications for the new setup," Hari Ram Lohano, a senior economist at the country's premier think tank - Social Policy and Development Centre - told Deutsche Presse-Agentur.

Pakistan's new democratic government has promised to end food shortages and work to eradicate poverty.

Commerce Minister Khaqan Abbasi said this week Pakistan would face at least a 16-billion-dollar deficit in fiscal year 2007-08, which will end on June 30. Meanwhile, former finance minister Salman Shah painted a gloomier picture, telling the media Pakistan would face a trade deficit of 18-19 billion dollars in 2008-09.

Given the country's fragile foreign exchange reserves of around 14 billion dollars, this places Pakistan's balance of payment task to a crisis level amid rising international oil and agricultural commodities prices and an acute wheat shortage across the country. Wheat is Pakistan's staple food.

"The government has to design innovative policies to fight with this twin devil (balance of payments and food shortages) and protect consumers at the same time," says Lohano.

Lohano said the government must adopt stringent disciplinary policies in terms of its current account deficit, which mainly involves debt servicing, oil imports and the defence budget. The country has over 40 billion dollars in external debt and over one-third of its imports consist of crude and refined oil products According to sources in the Ministry of Finance, the country's total oil import bill will be about 11-12 billion dollars as the fiscal year ends on June 30.

The oil import bill rose by a phenomenal 30 percent to 6.338 billion dollars in the July-February period of the current fiscal year from 4.741 billion dollars over the corresponding period last year, according to the figures complied by Federal Bureau of Statistics.

A hefty spike in global oil prices, which topped 114 dollars per barrel on Tuesday's international trading, is the chief reason for this increase. Dar on April 9 at a press conference announced an emergency programme to pull Pakistan out of crisis and mobilise 2.5 billion dollars from various sources to plug in current account deficit. This may also include 500 million dollars in support already announced by China recently.

On top of the balance of payments problem, an almost 40 percent increase in international wheat prices had led Pakistan's bulk wheat to be smuggled to Afghanistan and India. The illegal trade has created massive shortages in the domestic market and near-riot situations in many cities, especially in NWFP, which is also undergoing a civil war between militants and the government, and central Punjab.

Paramilitary forces have been deployed to oversee wheat and flour distribution, as the World Bank has expressed concern about Pakistan's agriculture shortages in its spring report released this week.

The World Bank cited "insecurity and past floods" for food shortages in Pakistan, putting the country among the 36 countries, which require urgent international aid to avoid any further flare-ups. The government recently increased wheat support price to encourage private flourmills to supply flour in the local markets instead of smuggling the staple food across the border. However, long queues outside the utility stores and other shops tell a different story.

"It will take time till the situation improves or gives us any direction to predict," says Ansar Javed, former president of Pakistan Flour Mills Association.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan and China agree on cooperation in various sectors ​*
ISLAMABAD (April 17 2008): China has agreed to give Pakistan its full support for development in the sectors of energy, minerals and mining, extending co-operation in monetary sector and co-ordination in communication and transportation.

At the conclusion of the visit of China by President Pervez Musharraf, a joint communiqué has been released from Beijing and Islamabad, according to which both countries have agreed on further strengthening the strategic co-operation in defence and signed ten memorandums of reconciliation, private TV channel reported.

The officials of the Pakistan ministry of water and electricity and Chinese ministry of water resources signed the agreements. Pakistan's ministry of science and technology and China's Academy of Engineering also signed a memorandum. Besides, Pakistan's ministry of sports and China's General Administration of Sports and the finance ministries of both countries, the Capital Development Authority of Islamabad and the Consortium of China Architecture Design and Research Group signed the memorandums.

This has been said in the joint communiqué that China and Pakistan have agreed on getting maximum benefits from the agreement on free trade. China lauded the efforts of Pakistan for maintaining its sovereignty, independence and regional integrity and elimination of terrorism, promotion of peace, solidarity and security.

Both countries have agreed to achieve the trade target of 15 billion dollars at their earliest. Pakistan reiterated its complete support to one China policy and Taiwan's inclusion in China. Chinese president Hu Jintao accepted the invitation from President Musharraf to visit Pakistan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Services trade deficit up by 40.35 percent till February ​* 
ISLAMABAD (April 17 2008): Pakistan's trade deficit in the services sector surged by $4.223 billion during eight months of the current fiscal year showing 40.35 percent increase over last year's $3.009 billion. According to the figures released by Federal Bureau of Statistics (FBS), exports were $2.213 billion during July-February against $6.347 billion imports, depicting $4.223 billion deficit.

This shows that Pakistan's imports in services increased significantly compared to exports during, going up from $5.547 billion to $6.347 billion, while exports declined from $2.538 billion to $2.213 billion for the same period.

Further analysis of the data showed that exports picked up during February over the last month by 127 percent, going up from $223.886 million in January to $508.951 million in February. The imports also declined by 14.65 per cent from $894.771 million in January to $765.480 million in February. Total imports in February were of $765.480 million against exports of $508.951 million, showing a deficit of $256.529 million.

The data for the period under review showed an increase of 99.65 percent in exports in February 2008 over the same period last year, going up from $254.919 million in February 2007 to $508.951 million in February 2008. A surge of 20.93 percent was recorded in imports during the same period, up from $632.973 million to $765.480 million which helped in reducing balance of trade by 32.14 per cent. According to analysts, the negative growth in exports of services was owing to many reasons, including political instability.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Sick industrial units to be revived: minister ​* 
PESHAWAR (April 17 2008): The NWFP Senior Minister for Finance Rahimdad Khan said Wednesday that special measures were being taken by the government to promote technical education in the country as the skilled labour on working abroad would not only boost the economy of the country but also earn their livelihood in an honourable manner.

Talking to a 30-members delegation of Pakistan Peoples Labour Bureau NWFP that called on him under the leadership of its provincial President Tilla Muhammad at Civil Secretariat Peshawar, he said that PPP had always given respect to the labour community and the provincial government would ensure strict implementation of the labour laws to end exploitation of the labourers as well as safeguard their rights.

He said, "we have been elevated to power by the poor masses; therefore, we would leave no stone unturned in addressing their problems and would make judicious use of the available resources to uplift their life standard as per their expectations".

Steps for the revival of sick industrial units and production of cheaper electricity in the province, he said, were also being taken to provide employment opportunities to the locals and thus curtail the growing problem of unemployment.

The Senior Minister said that present government after coming into power had lifted ban on the students' unions and was striving for the promotion of real democracy, establishment of free judiciary and free media in the country so that every person in the society including labourers could get their due right and lead a respectable life.

The 100-days programme announced by the Prime Minister Yousaf Raza Gilani to bail the country out of the present challenges, he said, would be implemented in the Frontier Province too by the provincial government in the interest of the local people.

Rahimdad Khan exhorted upon the labour community to shun grouping and work shoulder to shoulder with the government to put country on the track for speedy progress and prosperity.

He also assured that the problems facing the labourers would be resolved by taking them up with the quarters concerned at the earliest. Earlier, 'Fateha' was offered for the slain PPP leader and former Prime Minister Benazir Bhutto Shaheed and others. Members of the delegation thanked the Senior Minister for giving patient hearing to them and taking keen interest in the redressal of their problems.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Turkmen minister to discuss gas pipeline with Pakistan ​*
ASHKABAD (April 17 2008): Turkmenistan's Industry Minister Baimyrat Khodjmukhammedov will travel to Pakistan at the end of this month to discuss plans to build a gas pipeline linking the two countries via Afghanistan, state press agency TDH reported on Wednesday.

Turkmen President Gurbanguly Berdimuhamedov in July 2007 said during a visit by his Pakistani counterpart that he was prepared to study proposals for a gas pipeline with capacity of 30 billion cubic metres per year.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Construction of dams must to overcome food and power crises' ​*
PESHAWAR (April 17 2008): The central leader of Tehreek-e-Istiqlal, Rehmat Khan Wardag, while expressing great concern over the electricity and wheat crises in the country, on Wednesday said that construction of five big dams, including Kala Bagh, would not only resolve these problems but would also put the country back on the track to development.

He expressed these views while talking to a delegation of office-bearers and workers of the Tehreek here. He said that power crisis has been created due to non-construction of new dams, and added that prolonged suspension of power has crippled daily life activities and industries that has badly affected the economy and increased unemployment.

Rahmat said that any further delay in the construction of the dams would deepen the food crisis in the country. President Pervez Musharraf has fulfilled his promise of holding free and fair elections and transfer of power to the elected representatives, he said, adding that the political parties should work for promotion of national reconciliation.

He said that political parties should work for resolution of the problems faced by common people instead of playing the politics of vested interests.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*NWFP to install solar wood seasoning plants ​* 
PESHAWAR (April 17 2008): The NWFP Minister for Environment and Forest, Wajid Ali Khan has said that the provincial government will install solar wood seasoning plants at two major timber markets of the Forest Development Corporation (FDC). The plants to be installed at Chakdara (Swat) and Goharabad (Havelian) would enhance the wood quality that would produce durable furniture.

The minister said this in a briefing of the FDC in Peshawar on Wednesday where the Secretary Environment, Hussain Zada Khan, Managing Director FDC, Dr Iqbal Sial, General Manager Finance, General Manager Operations and other concerned officials were present.

He directed the FDC authorities to design a comprehensive plan for enhancing forest-covered area to 25 percent as per international standard. He also ordered launching of infrastructure and other similar projects for the development of forest covered areas so as to improve people's living standard in these areas.

Khan further asked the FDC to launch a mega project for increasing forest-covered area in Swat valley that could conserve natural resources of the area and make the environment pollution free as well. He said that his government would evolve an effective strategy for giving maximum benefit to forest owners and forest connectionist in order to save forest from further destruction.

The MD, FDC informed the minister that the organisation earned Rs 766 million profit since its establishment. Out of this amount he said, 35 percent had been spent on raising nurseries and afforestation schemes, constructed more than 1000KM roads and 26 bridges in forest covered areas as part of its development schemes. He also said that the FDC had granted financial assistance of Rs 290 millions to the NWFP for making the environment pollution free.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

Continued from here:

http://www.defence.pk/forums/econom...stan-economy-daily-update-822.html#post151562


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## Neo

To be continued here:

http://www.defence.pk/forums/economy-development/10993-pakistan-economy-news-updates.html#post151563


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## Neo

*Record $602 million remittances received in March ​* 
KARACHI (April 17 2008): The country received a record $602.21 million from overseas Pakistanis during March 2008, against $520.24 million during the same month of last year, depicting a rise of $81.97 million, or 15.76 percent. The previous highest amount remitted in a single month by Pakistani workers was $580.24 million in October 2007.

The inflow of remittances into Pakistan from almost all countries of the world rose last month as compared to March 2007. According to break-up, remittances from the USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $151.95 million, $120.11 million, $111.74 million, $85.44 million, $41.98 million and $15.01 million, respectively, as compared to the corresponding receipts from the respective countries during March 2007, ie $142.72 million, $92.69 million, $82.29 million, $70.43 million, $37.75 million and $12.88 million respectively.

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during March 2008 amounted to $75.84 million as compared to $81.13 million during March 2007.

Remittances sent home by overseas Pakistanis continued to show rising trend as $4,728.37 million has been received in nine months (July 2007-March 2008) of the current fiscal year, showing an increase of $791.60 million, or 20.11 percent, over the same period of the last fiscal year.

The amount of $4,728.37 million includes $2.15 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs). The monthly average of remittances for the period July-March, 2007-08 comes out to $525.37 million as compared to $437.42 million during the same corresponding period of the last fiscal year, registering an increase of 20.11 percent.

The inflow of remittances in the July-March 2007-08 period from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $1,312.34 million, $881.95 million, $793.62 million, $704.27 million, $334.85 million and $131.13 million, respectively as compared to $1,034.69 million, $733.48 million, $595.98 million, $538.29 million, $319.25 million and $110.38 million, respectively in the July-March, 2006-07 period.

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the first nine months of the current fiscal year amounted to $568.06 million as against $602.80 million in the same period last year.

Business Recorder [Pakistan's First Financial Daily]


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## ejaz007

*Pakistan wants to sign GSPA on IPI project in May*

* India indicates desire to re-join project

ISLAMABAD: Pakistan has expressed its desire to sign the Gas Sales Purchase Agreement (GSPA) with Iran in May, regardless of Indias participation in the Iran-Pakistan-India (IPI) gas pipeline project, sources said on Thursday.

The sources quoted Pakistani officials as telling Mashallah Shakari, the Iranian ambassador in Pakistan, during his meeting with Federal Minister for Petroleum and Natural Resources Khawaja Muhammad Asif, that Pakistan wished to finalise the project within a month. 

Khawaja Asif said the early implementation of the project would strengthen and expand economic relations between the regional countries. He welcomed Indias participation in the project, and assured that Pakistan would provide all possible transit facilities for the natural gas to reach India. 

India: The sources said Indian delegation that visited the petroleum minister on Wednesday had indicated a desire to rejoin the IPI gas project. 

The sources quoted the delegation as telling the minister that Indias energy needs were higher than Pakistans and that it needed gas to meet its energy needs.

Khawaja Asif told the Iranian ambassador that Pakistan was also pursuing the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project, to meet its growing energy demands and reduce dependence on the import of furnace oil. Pakistan and India will hold a round of negotiations on April 25 to resolve the issue of the transit fee that Pakistan will receive from India in return for the passage of gas from Iran to India. 

Indian Oil Minister Murli Deora will visit Pakistan to represent his country. India has stayed away from previous talks on the IPI project and wanted first to resolve the issue of transit fee before entering into any agreement. Pakistan and Iran have finalised the draft of the GSPA for the IPI project. Officials said India and Iran could enter into a separate GSPA on the IPI project. Sapar Berdiniyaov, the ambassador of Turkmenistan to Pakistan, also visited Asif. 

The minister told the ambassador that the upcoming steering committee meeting on the TAPI project, scheduled for April 22, would produce a positive outcome in the negotiation on the project. staff report

Daily Times - Leading News Resource of Pakistan


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## ejaz007

*Private consortium to establish steel mill at Kalabagh*
By Ijaz Kakakhel

ISLAMABAD: A consortium of eight local steel manufacturers on Thursday offered to develop iron ore deposits of Kalabagh and establish a steel mill having a capacity of one million tonnes per annum. 

The offer was made in a meeting of follow up committee on steel workshop held on 25 January this year. Mohsin Syed, Member Board of Management of EDB presided it. The consortium informed the participants that a Chinese company had expressed readiness to transfer technology related to extraction of mines at Kalabagh. 

However, they said main hurdle in establishing a steel mill at Kalabagh was the provision of land on lease as well as the provision of roads, rails, gas, power and other infrastructure related facilities. They lamented that all infrastructures related facilities were provided to foreign investors but the local were denied such provision. Main purpose of establishment of steel mill at Kalabagh was to utilise locally extracted iron ore. 

In order to resolve all such issues confronting steel sector, the consortium would meet in Lahore on 24th April. During the meeting they would sort out the issues pertaining to logistics like railways and leasing of mines. The Engineering Development Board was asked to take up the issue with the concerned authorities and present a progress report in the proposed meeting. 

For purchase of heavy machinery, the private stakeholders demanded the government to purchase machineries and provide them on rent to the stakeholders. But the committee stressed on private sector to make investment in heavy machinery and also forward it on rent to others. If the government purchase the machinery, then several problems will arise like, where to keep it and maintenance of the machinery would also be a problem, the committee added. However, the committee ensured the stakeholders that government would provide various incentives in this regard including exemption from various taxes. 

The private stakeholders were asked to establish an action plan for enhancing investment in steel sector of the economy. The committee recommended that Pakistan Steel Mills should simultaneously increase its steel prices with the increase in international market so that the importers could comfortably import the raw material. This measure would help arrest the shortage of raw material. It was also proposed that Pakistan Steel might adjust steel prices after specific interval on the pattern of petroleum products. At present 20 percent steel demand was met through local resources and the remaining 80 percent through imports. Main purpose of linking the prices of steel products with international market was to ensure smooth supply of steel products across the country. 

The committee emphasised the need for preparation of an action plan by private sector for encouraging new investment in the steel sector so that the government could facilitate the local investors. A majority of them pleaded for level playing field and suggested that the government should extend the same support as being extended to foreign investors. The representatives of the industry raised the question of abolishment of custom duties on steel products as reported by a section of press.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Post-tensioning construction technique reaches Pakistan ​* 
Friday, April 18, 2008


KARACHI: Pakistan is experiencing a wonderful real estate growth with some landmark projects, and in future this pace will increase, as the country is now on track moving ahead rapidly in the sector.

Hilmi Ghandour, Chief Executive Officer of Arabtec Pakistan told The News on the sidelines of a presentation on post-tensioning slab technique, organised by the company in collaboration with world-renowned CCL Gulf Prestressed Concrete LLC recently.

Post Tensioning is a technique of pre-loading the concrete in a manner which controls stresses and deflections that are inducted by the self weight and applied loads, while the structure is in service. Billions of square meters of post-tensioned slabs have been built in high-rise, commercial, residential and office buildings, parking structures, hotels, schools and hospitals.

It has been in extensive use internationally since decades in many parts of the world. Post-tensioned floor construction gained prominence during the construction boom in the 1980s and now consumes more than 50pc of the total quantity of post tensioning steel used worldwide, said Bhandour.

This would be a new technology to Pakistan though it has been successfully used and improved over the years in many other countries of the region. The technology reduces steel consumption in the projects, providing more space by cutting number of beams in the structure, and provides opportunity to the contractor to complete projects in less than half time, he elaborated. Roland Asaker, regional manager, CCL Gulf Prestressed Concrete LLC said the real estate growth in Pakistan is an offshoot of developments in the MENESA region (Middle East, North Africa and South Asia). 

Arabtec Pakistan, through collaboration agreement with CCL plans to use post tensioning technique in the currently under-construction Karachi Financial Towers, being developed by EHSHAANLC Development in Karachi. This will avail the expertise of one of the world leaders in this technique for the construction of mega projects, which Arabtec Pakistan hopes to build in the coming future. The presentation was attended by the architects and engineering sector people, the licensing authorities, and the developers from private and public sector. CCL are one of the pioneers in pre-stressed construction methods in the world market.

Post-tensioning construction technique reaches Pakistan


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## Neo

*Iran offers Pakistan help in water, power sectors ​* 
Friday, April 18, 2008

ISLAMABAD: Ambassador of Iran to Pakistan Masha Allah Shakeri on Thursday called on the Minister for Water and Power, Raja Pervez Ashraf, and discussed matters of mutual interest and bilateral relations to further boost economic ties between the brotherly two countries.

Pakistan and Iran have agreed to expedite the process of importing 1,000MW power by Pakistan from Iran on fast track basis for early completion of the project. 

They also agreed to work out the possibilities of import of an additional 1,000MW power from Iran.

The ambassador offered to supply power and gas and also wind turbines to Pakistan to promote alternative energy from Iran. He said Iran is also interested to work in the water sector of Pakistan. 

He said that joint investment companies may also be set up to boost economic ties in various other sectors. He also said Iran is also interested to invest in infrastructure development projects in Pakistan. 

The ambassador praised the growing economic situation of Pakistan and offered investment in water and power sectors, particularly construction of dams. 

He also suggested establishment of a joint investment company to look into the exchange of expertise to pave the way for investment opportunity in water and power sectors.

He offered sizeable investment in hydropower plants and expressed intention to finance power projects in Pakistan. The minister said that Pakistan has close brotherly relations with Iran and values the help and support of Iran and is desirous of expanding bilateral trade to the maximum possible extent. 

The minister lauded the Iranian offer and said Pakistan has already signed an agreement to purchase 25MW electricity from Mund (Iran) and recently signed another agreement for purchase of 125MW and 1,000MW power from Iran. 

He also assured full support and assistance to facilitate Iranian investors to invest in water and power sectors. 

The Minister invited the energy minister of Iran to visit Pakistan to further discuss the investment in water and power sectors.

Iran offers Pakistan help in water, power sectors


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## Neo

*ADB offers heavy investment in water, power ​* 
*Country facing electricity shortfall of over 3,000MW: minister​*
Friday, April 18, 2008

ISLAMABAD: The Asian Development Bank has offered investment worth millions of dollars in the water and power sectors in Pakistan in the coming years.

This assurance was given by the head of the four member delegation of Asian Development Bank, Sean O Sullivan during a meeting with the Minister for Water and Power, Raja Pervez Ashraf here on Thursday.

The investment opportunities as well as the progress of on-going projects in water and power sectors were discussed in the meeting.

They assured technical and financial support and assistance for major water and power sector projects including the upgradation of the existing distribution systems and transmission lines in order to improve the efficiency of the system and the supply of electricity to the consumers, besides major rehabilitation and infrastructure projects in the water sector.

The Minister while welcoming the delegation informed that the present democratic government was keen on attracting foreign investment in the power sector as according to him there is great scope in this sector.

The Minister informed that currently Pakistan is facing a shortfall of more than 3,000MW of electricity, and the government is encouraging private investors to come forward and invest in the power sector.

He stated that the confidence of the domestic as well as foreign investors would get a boost and the economy would be made more stable through adopting rationale policies to remove all hindrances and bottlenecks in this respect.

He informed the delegation that Pakistan was also focusing on alternative energy projects like wind, solar energy, coal-based generation and hydropower and that the banks support in these fields would be a great help.

He said that to meet the shortfall in power, the government wants to increase the generation capacity and intends to install a large run of river hydropower projects, such as Kohala and Bunji, for which he sought the technical and financial assistance of ADB.

The delegation appreciated the needs of Pakistan and assured to provide all technical and financial assistance in this respect.

The head of the ADB delegation appreciated the efforts of the government on the growing steps to cope with energy needs.

He said that ADB was a major financer for the power sector in Pakistan, and it had also extended help in the water sectors mega projects including power transmission enhancement project, power distribution enhancement project, energy efficiency improvement and renewable energy development projects.

He said that to meet the financial requirements of these projects, a multi tranche financing facility to the extent of US$800 million extendable to $1200 million had been agreed up on.

He added that ADB is also assisting Pakistan in capacity building of the power sector institutions for which technical assistance was being extended.

The minister also informed the delegation that Pakistan was embarking on the construction of multipurpose dams which would meet the power needs on a long term basis.

This will involve an overall investment of over $18 billion in the next 5-10 years.

He expressed the hope that ADB would extend liberal financial assistance, particularly for the Diamir Bhasha Dam work, which is to be started early 2009.

The minister informed the delegation that to meet the urgent needs of power, some thermal projects were being started in the public sector but stressed the need for the involvement of private sector as a long term objective, and the continuity of the reform agenda in the power sector.

ADB offers heavy investment in water, power


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## Neo

*OGDC makes oil discovery ​* 
Saturday, April 19, 2008

SINGAPORE: State-owned Oil and Gas Development Co (OGDC), Pakistans biggest listed firm, announced on Friday a small oil discovery in southern Sindh province, raising its oil output by 1,150 barrels per day (bpd).

OGDC, which is also listed in London, has ramped up investment in an effort to reduce Pakistans dependence on imported fuel at a time of record high prices.

This is a small discovery for OGDC with a per share impact of 0.17 paisa (100th of a rupee). We expect production from this discovery to start in the next 18 months, said Umer Bin Ayaz, an analyst at JS Global Capital Ltd.

The discovery was made in the companys wholly-owned Exploratory Moolan North Well No 1.

OGDC reported flat July-December earnings and is due to report nine-month results to end-March on April 28.

OGDCs oil production totalled 45,221 bpd and 1,171 million metric cubic feet a day in March, according to its website.

Last week, Pakistan finalised plans to issue an exchangeable bond with an option for OGDC shares, to be jointly managed by ABN AMRO, Barclays and JP Morgan.

OGDC shares were off 0.4 per cent on Friday in a broader market that was up 0.4 per cent at a record high.

OGDC makes oil discovery


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## Neo

*Omantel acquiring 65pc stake in Worldcall for $200m ​* 
Saturday, April 19, 2008

LAHORE: The auction for licences of 3rd Generation (3G) mobile phone services is planned through an open biding process and only three cellular service providers would be awarded these.

Chairman Pakistan Telecommunication Authority Major General Retd Shahzada Alam Malik has said that the process of awarding the licences would be completed by the end of this year.

He was talking to reporters at the signing ceremony of Omantel SAOG and Worldcall Telecom Limited. Ambassador of Oman to Pakistan, Mohammad Bin Said Bin Mohamed Al-Lawati was also present.

After launching of 3G services, the mobile users will be able to use Internet with high speed, make video calls and other value-added data services which is dream in Pakistan. He said that deliberations for issuing the 3G licences were almost complete.

Later, Worldcalls CEO Salman Taseer said that it was great pleasure that Omantel SAOG and Worldcall Telecom Limited announce acquisition by Omantel of a majority stake in Worldcall Telecom Limited. Omantel is acquiring 488.8 million (65 per cent of available) shares of Worldcall. Of this, 451.2 million shares are from sponsors while 37.5 million are being purchased from the public through the securities markets. The total value of this landmark transaction is around $200 million.

He said that Worldcall was positioned in a unique way being the only true Multi Service Operator (MSO) in Pakistan telecom landscape with proven track record and established market position in various segments of its operations. 

Through this acquisition, Omantel has acquired direct access to a market of 170 million with immense potential for growth in core telecom and broadband services, he remarked. 

He further informed that Worldcall had licenses to operate LDI, WLL and other telecom services across Pakistan as well as rights to a nationwide long haul network. Its WLL services cover 46 cities while its distribution network, which is one of the largest, reaches 59,000 outlets in 220 cities and towns, Taseer added.

Omantels CEO Dr. Mohammed bin Ali Al Wohaibi said that Omantel plans to escalate existing Worldcall operations to excel in telecom offerings with further enhancement of network reach and delivery capacity targeting a rapid growth in market share. Focus of rollout will principally target broadband segment with sustained growth of voice centric services. This planned expansion coupled with initial investment would see a sizable inflow of capital into Pakistan, he added. He said the new board members for Worldcall had now been nominated. 

Omantel is a publicly traded telecom company, majority owned by the government, based in Oman with diversified operations. Acquisition of majority stake in Worldcall is its first overseas venture.

Omantel acquiring 65pc stake in Worldcall for $200m


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## Neo

*UK to invest more in Pakistan ​* 
Saturday, April 19, 2008

KARACHI: British Deputy High Commissioner Robert Gibson has said that in the coming years his office will encourage more companies from Britain to invest in Pakistan and act as a significant proponent of the country as an emerging market for foreign investors. 

In a meeting held with Waqar Malik, President of Overseas Investors Chamber of Commerce & Industry (OICCI), he stressed the importance of taking a strategic approach towards finding and utilising investment opportunities in the country. he said that this will require efforts to maintain a favourable business climate. 

Malik acknowledged the long-standing relationship that the two organisations have enjoyed over the years. He briefed Gibson about the role and ongoing activities of the chamber, the contribution of OICCI members to Pakistans economy and the role of UK-based companies amongst overseas investors. 

He added that the overall business climate in the country is positive for foreign investors. However, the countrys current law and order situation requires improvement, adding that consistency in government policies and the growing domestic economy are key contributors to making Pakistan an attractive investment destination. Malik also emphasized that Pakistan has immense growth potential and incentives to promote several areas such as; food processing, infrastructural development, engineering and information technology. 

UK to invest more in Pakistan


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## Neo

*PSEB targets Canada to explore opportunities ​* 
Saturday, April 19, 2008

KARACHI: The Pakistan Software Export Board (PSEB) is all set to explore opportunities in the Canadian information technology market. Targeting Montreal, Ottawa and Toronto as its prospective business and IT hub, the PSEB is organising meetings in Canada from April 21 to 30, stated a press release.

These meetings are being organised in association with Canada Pakistan Business Council (CPBC), Export Development Canada (EDC), Canadian Advanced Technology Alliance (CATA), Canadian Imperial Bank of Commerce (CIBC), The Indus Entrepreneur (TIE) and Royal Bank of Canada (RBC).

A PSEB official stated that the visit will enable Pakistani IT companies to learn from successful experiences of their counterparts and expand their presence globally.

These meetings will provide an international platform for member IT companies to interact with the Canadian market. The PSEB will showcase the success of Pakistans IT industry to the international investors so as to attract them to open development centres in Pakistan. With lucrative government incentives, top of the line IT infrastructure and competitive workforce, Pakistan is emerging as a destination of choice for global outsourcing vendors.

The PSEB delegation comprises of 21 member companies, which are renowned in their respective areas of expertise particularly in software/hardware development, web applications, graphics, animation multimedia, and other business process management services. The participating companies include: Netsol Technologies, Palm Chip, Xorlogics, Voxel Communication, Webiz Media, Super Technologies Inc., Softech Systems, Server4Sale, Sapphire Consulting Services, PrisLogix, PMS (Pvt) Ltd, Matora Digionics, Mansha Soft, Invaterra, East West Systems, EfroTech Services, DataFocal Systems, AKSA-SDS, A2Z Creatorz, 110 Solutions and PIBAS Pakistan.

According to the Centre for Outsourcing Research & Education Canada (CORE) Canadas IT infrastructure and Business Process Outsourcing (BPO) is worth more than $50 billion. In addition, the sector is also focusing on expanding its outsourcing activities. Large organisations in Canada have already started adopting outsourcing as their operational strategy to access expertise and additional capabilities and to save costs. The report also confirms that the financial sector including banking and insurance is ranked highest for outsourcing, followed by telecommunications, public sector and energy/utilities.

PSEB targets Canada to explore opportunities


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## Neo

*US offers Pakistan $7 bn in non-military aid ​* 
Friday, April 18, 2008 

WASHINGTON: The US has promised to curb air strikes by drones against suspected militants in Pakistan as part of a joint counter-terrorism strategy agreed with the new civilian government in Islamabad, the Guardian has learnt.

That strategy will be supported by an aid package potentially worth more than $7 billon (£3.55 billon), which is due to go before Congress for approval in the next few months. The package would triple the amount of American non-military aid to Pakistan, and is aimed at "redefining" the bilateral relationship, US officials say.

Pakistan will also be given a "democracy dividend" of up to $1 billon, a reward for holding peaceful elections and forming a coalition government. Of that, $200 million could be approved in the next few days.

The aid package, being put together by Democratic Senator Joseph Biden, will mark a decisive break in the US policy on Pakistan, which for much of the past nine years focused on President Pervez Musharraf and the Pakistani military as Washington's primary partners in the "war on terror". Officials in Washington said on Wednesday that the shift had already been made.

"Senator Biden wants to show the relationship is much broader than a military one, and that we are willing to sustain it over time," one of the senator's senior aides said on Wednesday. A US administration official said: "Each day Musharraf's influence becomes less and less. Civilians are in control. People aren't meeting with Musharraf any more ... we are very pleased with the new civilian government."

Pakistani officials say much of the new counter-terrorism aid will be spent on civilian law enforcement institutions, such as the interior ministry, the Intelligence Bureau and the Federal Investigation Agency, rather than being channelled almost exclusively through the Army and the military-run Inter-Services Intelligence (ISI).

The new government says it has also won American support for its policy of opening a dialogue with tribes along the Afghan border, led by the Awami National Party. The new understanding on air strikes by US Predator drones is seen in Islamabad as a critical benchmark for the new relationship.

In January senior US intelligence officials flew to Islamabad and struck an agreement with Musharraf to give the American military a freer hand in the use of Predators against targets in Pakistan's tribal areas, which have become havens for al-Qaeda and other foreign Jihadists as well as Taliban forces fighting Nato forces and the government in Afghanistan, according to The Guardian.

The subsequent increase in Predator strikes  estimates of the number range up to eight  caused outrage in Pakistan. Britain also broke with Washington over the reliance on air strikes often guided by uncertain intelligence.

Pakistani officials say they have been given assurances by Washington that there will be close consultation with the civilian government, not with Musharraf, before any future strikes. However, the use of Predators is held as a closely-guarded secret and US intelligence is reluctant to share information about targets, and there is some skepticism in Islamabad over whether the deal will stick.

"We'll have to take them at their word, won't we," said Information Minister, Sherry Rehman, in an interview in Islamabad. She added that Washington's previous emphasis on ties to Musharraf and the Pakistani military "hasn't provided the results that were supposed to happen on the ground".

The US has given Pakistan about $10 bn in military aid during the past seven years, but it has not diminished the Taliban insurgency in Afghanistan, while Pakistani extremism is also on the rise. Some officials in Washington believe most of the money has been used to build up Pakistan's conventional forces for use in a possible future conflict with India, rather than spent on counter-insurgency.

Furthermore, much of the money being used for counter-terrorism is being misspent, both Pakistan and US government officials say. As an example they say that Musharraf distributed the $25 million reward money for capturing or killing "high value" al-Qaeda targets in the form of an "inverted pyramid".

"A few thousand would go to the police constable on the ground, who actually spotted the guy, but the millions go to the generals up the chain," a Pakistani official said. No wonder, he added, the tip-offs stopped coming in and the number of high-profile arrests dropped. 

http://www.thenews.com.pk/arc_default.asp


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## Neo

*The irresistible rise of stock market ​* Friday, April 18, 2008 

KARACHI: The Karachi bourse on Thursday crossed 15,600 points resistance level very easily.

Benchmark KSE 100-share Index closed at 15,622 points marking a hat-trick of record closing on third consecutive day - posting a notable gain of 82 points or 0.53 per cent in this session only.

The free-float market capitalisation based 30-Index rose by 48 points or 0.25 per cent to end at 18,996 points new level - just four points short of 19,000 points.

The energy giant stocks OGDC remained dormant throughout the session and not even a single share was traded on board. The banking blue chips also came under selling pressure owing to Competition Commission probe and curb on alleged banking cartel, analysts observed.

Energy, cement, fertilizer and telecom sectors attracted fresh funds on board, they added. 

Development on internal and external political fronts gave a green signal to bulls going ahead, analysts said.

They maintained that the US Congress approval of Democratic Dividend package of $1.5 billion per annum for the next 10 years for Pakistan, and shift in its foreign policy towards Pakistan - from Musharraf centric to parliament centric - are all good signs for the country. 

Therefore, KSE was running fast in forward way on the back of rise in international oil, DAP and cement prices.

Crude oil reaching above $115 per barrel convinced investors to pump more funds in equity markets, said Ahsan Mehanti a market analyst.

Soon to commence financial result announcement season for the quarter ended on March 31, 2008, also intimated buyers to upload fundamentally strong stocks.

S. Kashif Mustafa said that telecom sector lead the index with PTCL playing a pivotal role gaining Re0.95 per share on volume of around 8.5 million shares.

ENGRO, FFBL and FFC gained values with healthy volumes. We anticipate investors to remain confident in fertilizer sector with DAP and urea prices on the rise, Kashif added.

Oil and gas gained momentum during the session with core stocks of the E&P sector. OMCs also gained values with oil prices reaching about $115 per barrel and anticipated passing of the oil prices in the local market, Mustafa said.

Major banking stocks, NBP, UBL and HBL remained depressed, however some respite was seen from gains in MCB, he added.

Turnover in the ready market slightly surged to 290 million shares from 268 million shares recorded a day earlier. Future market turnover enhanced to 74 million shares as compared to 69 million shares of previous session.

Accordingly, the overall market capitalisation improved by Rs26 billion to stand at Rs4.779 trillion.

Among 377 counters on board 233 posted gains, 113 suffered losses and value of 31 scrips remained unchanged.

Highest volumes were witnessed in Nishat Mills at 23.012 million closing at Rs132.80 with a gain of Rs6.30, followed by DG Khan Cement at 22.990 million closing at Rs118.85 with a gain of Rs3.75, Bank of Punjab at 16.167 million closing at Rs62.70 with a gain of 45 paisa, Bank Al-Falah at 15.607 million closing at Rs55.60 with a gain of Rs1.10 and Engro Chemical at 12.965 million closing at Rs373.75 with a gain of Rs3.55.

http://www.thenews.com.pk/arc_news.asp?id=3


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## Neo

*US share in Pakistani exports falls to 22 percent ​*
KARACHI: The share of United States of America in overall exports from Pakistan has dropped to 22 percent during the first half of current financial year from 26 percent in the same period of last year, official statistics indicated. 

However, it is still the single largest buyer of Pakistani products. 

Pakistan exports almost all textile products to USA as well as surgical items, rice, fruits, sports goods, footwear, chemical goods, engineering items, etc. Exporters, however pointed out that the base of products exported to USA was confined largely to traditional textile sector and value added sector could not post higher growth during the said period.

Analysts said that due to narrow base of Pakistani products and intense competition put up by its regional competitors, the share of local products remained stagnant to its major markets like USA and European Union (EU).

Comparative analysis of export to various parts of the world shows that export to United Arab Emirates (UAE) and Afghanistan only registered substantial growth as share of these two markets in overall export jumped substantially during the July-December period of current fiscal year.

UAE share jumped to almost ten percent during this period from 6.68 percent in the last year in total export whereas share of Afghanistan also surged to 5.79 percent from 4.96 percent during the last year.

In European market, export to United Kingdom (UK) stood at 5.66 percent of total exports, which was 5.84 percent last year. Share of Germany remained almost stagnant at 4.28 percent during the first half compared to 4.24 percent in the previous year.

Exports to Italy were 3.80 percent of total export whereas share of export to Spain Turkey, Netherlands, Belgium and France stood at 2.89, 2.67, 2.66, 2.16 and 2.10 percent, respectively.

In Asian market, despite having Free Trade Agreements (FTAs) with China and Malaysia, exports could not register major gains as share of these two markets in total export of the country was 3.38 and 1.15 percent compared to 3.16 and 1.09 percent for the corresponding period last year, respectively.

The exports to other Asian markets like Hong Kongs share decreased to 3.12 percent from 3.82 percent last year whereas export to India also declined to 1.50 percent from 1.62 percent during the period under review. Bangladesh and Korea Republics shares remained stagnant.

In Middle East market export made to Saudi Arabia were also stagnant at 1.76 percent from 1.82 percent during the last year.

Despite governments pledges, country could not penetrate in the big African market as no big market was found for local products and like previous years, only South Africa was among the top 20 exporting markets, whose share in overall export also fell to 1.49 percent during first half of this fiscal year compared to 2.16 percent in the previous year.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Privatisation unable to stop budget drain​*
ISLAMABAD: A staff team of the International Monetary Fund (IMF) has noted that despite the privatisation of the Karachi Electricity Supply Corporation (KESC) and commercialisation of the Water and Power Development Authority (WAPDA), the overall drain on the budget from WAPDA, and other state enterprises such as Pakistan Railways and Pakistan International Airlines remains substantial. 

Subsidies to KESC also continue largely as a function of regulation of electricity tariffs. 

IMF Report on Observance of Standards and Codes Fiscal Transparency Module-an update on Pakistan reveals that the IMF staff encourages the Auditor General Pakistan (AGP) to amend the legal framework for audit to permit all areas of risk to the public finances to be audited under the AGPs direction. 

Current audit practices are under review, with the expectation that regulatory changes will be introduced to extend the AGP oversight to all areas of government operations. Medium- and long-term measures recommended by staff team of the IMF require that a program classification, based on sub-detail functions, covering all ministries should be developed as part of the full Medium Term Budgetary Framework (MTBF) rollout. The MTBF implementation is following an ambitious rollout plan. A unified classification derived from the existing chart of accounts will build on the present system and support the top-down allocation process. Fiscal affairs department staff suggests that the present budget classification permits evolution to a more focused programme approach, which will help to address a number of critical long-term change issues. Operational programmes so defined would incorporate both development and recurrent budgets relevant to that function element. Starting from an across-the-board classification within the existing chart of accounts would contribute to several important transparency and management objectives. 

It would help develop 10-year medium-term economic framework paper. For instance, the full cost of energy subsidies could be estimated from the discounted value of the price differential between controlled and market prices (incorporating different policy assumptions in the analysis). 

Unify the development and recurrent budget processesnew proposal submissions for programmes should be evaluated in a similar way to development projects, but cover both capital and recurrent spending. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan plans investment moots in Saudi Arabia​*
ISLAMABAD: Pakistan is planning to hold investment conferences at Jeddah and Riyadh to interact with Saudi investors and to apprise them about the privatisation and investment opportunities in Pakistan and to explore areas of investment in the Kingdom of Saudi Arabia for the Pakistani business groups. 

Syed Naveed Qamar, Federal Minister for Privatisation, Investment, Ports and Shipping, Industries & Production, stated this during a meeting with Ali Awadh Asseri, Ambassador of Kingdom of Saudi Arabia to Pakistan, who called on him here Thursday. 

Qamar said that the leadership on both sides is getting closer and government intends to further strengthen and deepen brotherly relations by accelerating the existing economic interaction by associating the Saudi investors in the privatisation programme of Pakistan. Pakistan had strong bonds in every sphere of life with the Kingdom of Saudi Arabia, he added. 

The Saudi envoy conveyed that the kingdom and the people of Saudi Arabia believed that the united, prosper and stable Pakistan was in the interest of the region, which he observed that with the induction of new government would become certain. He assured that all efforts would be made to promote the existing links and translate them into strong economic relations to benefit both the people and the countries. Pakistan has promising investment environment and the Saudi investors were keen to invest in Pakistan and to broaden the existing economic interaction. 

Ahmad Waqar, secretary investment division, and senior officials of Privatisation Commission and Board of Investment were also present during the meeting.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Private consortium to establish steel mill at Kalabagh​*
ISLAMABAD: A consortium of eight local steel manufacturers on Thursday offered to develop iron ore deposits of Kalabagh and establish a steel mill having a capacity of one million tonnes per annum. 

The offer was made in a meeting of follow up committee on steel workshop held on 25 January this year. Mohsin Syed, Member Board of Management of EDB presided it. The consortium informed the participants that a Chinese company had expressed readiness to transfer technology related to extraction of mines at Kalabagh. 

However, they said main hurdle in establishing a steel mill at Kalabagh was the provision of land on lease as well as the provision of roads, rails, gas, power and other infrastructure related facilities. They lamented that all infrastructures related facilities were provided to foreign investors but the local were denied such provision. Main purpose of establishment of steel mill at Kalabagh was to utilise locally extracted iron ore. 

In order to resolve all such issues confronting steel sector, the consortium would meet in Lahore on 24th April. During the meeting they would sort out the issues pertaining to logistics like railways and leasing of mines. The Engineering Development Board was asked to take up the issue with the concerned authorities and present a progress report in the proposed meeting. 

For purchase of heavy machinery, the private stakeholders demanded the government to purchase machineries and provide them on rent to the stakeholders. But the committee stressed on private sector to make investment in heavy machinery and also forward it on rent to others. If the government purchase the machinery, then several problems will arise like, where to keep it and maintenance of the machinery would also be a problem, the committee added. However, the committee ensured the stakeholders that government would provide various incentives in this regard including exemption from various taxes. 

The private stakeholders were asked to establish an action plan for enhancing investment in steel sector of the economy. The committee recommended that Pakistan Steel Mills should simultaneously increase its steel prices with the increase in international market so that the importers could comfortably import the raw material. This measure would help arrest the shortage of raw material. It was also proposed that Pakistan Steel might adjust steel prices after specific interval on the pattern of petroleum products. At present 20 percent steel demand was met through local resources and the remaining 80 percent through imports. Main purpose of linking the prices of steel products with international market was to ensure smooth supply of steel products across the country. 

The committee emphasised the need for preparation of an action plan by private sector for encouraging new investment in the steel sector so that the government could facilitate the local investors. A majority of them pleaded for level playing field and suggested that the government should extend the same support as being extended to foreign investors. The representatives of the industry raised the question of abolishment of custom duties on steel products as reported by a section of press.

Daily Times - Leading News Resource of Pakistan


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## Neo

*ADB offers $800m for water, power projects​*
ISLAMABAD, April 17: The Asian Development Bank offered investment to the extent of $800 million on Thursday in water and power sectors in the coming years. 

The ADB assured technical and financial support and assistance for major water and power sector projects, including up- gradation of existing distribution systems and transmission lines to improve system efficiency and supply of electricity to the consumers besides major rehabilitation and infrastructure projects in water sector.

The assurance was given by the head of a four-member ADB delegation, Sean O Sullivan, during a meeting with Federal Minister for Water and Power Raja Pervez Ashraf here.

Investment opportunities, as well as progress of on-going projects in water and power sectors, were discussed in the meeting.

The minister informed the delegation that at present Pakistan was facing a shortfall of more than 3,000MW and encouraging private investors to come forward to make investment in power sector.

He stated that the confidence of domestic and foreign investors would get a boost as economy would be stabilised by adopting rationale policies to remove hindrances and bottlenecks.

The minister also sought banks assistance in pursuing alternative energy projects, like wind, solar energy, coal-based generation and hydropower.

He said to overcome power shortfall, the government wanted to increase its generation capacity and intended to install large run- off-river hydropower projects, such as Kohala and Bunji, for which he sought technical and financial assistance of the bank.

The Asian Bank has also extended help in the water sector mega projects, including power transmission enhancement project, power distribution enhancement project, energy efficiency improvement and renewable energy development projects.

He said that to meet financial requirements of these projects, a multi-tranche financing facility to the extent of $800 million, extendable to $1,200 million, had been agreed.

He added that the ADB was also assisting Pakistan in capacity- building of power sector institutions for which technical assistance was being extended.

The minister also informed the delegation that Pakistan was embarking on construction of multipurpose dams which would meet power needs on a long term basis.

This would involve an overall investment of over $18 billion in the next five to 10 years.

He expressed the hope that the ADB would extend liberal financial assistance, particularly for Diamir Bhasha dam work on which is expected to be started in early 2009.

Minister informed the delegation that to meet urgent needs of power, some thermal projects were being started in public sector but stressed the need for involvement of private sector as a long-term objective and continuity of reforms agenda in the power sector.

ADB offers $800m for water, power projects -DAWN - Business; April 18, 2008


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## Neo

*Government to bring down money growth, Dar tells National Assembly ​* 
ISLAMABAD (April 18 2008): The government on Thursday said it would bring down the money growth from existing 19 per cent in an effort to control price hike in the country. Federal Minister for Finance Ishaq Dar said in the National Assembly while responding to a question by Mrs Nelum Husnain about current state of inflation in the country and measures being taken by the government to address it.

"The inflation has been sky-rocketing. Our government policy is to control the money growth," Dar said that Rs 400 billion borrowing by the previous government against the annual target of Rs 81 billion has been one of the major reasons of inflation.

He said the money growth has mounted to 19 per cent from 6 per cent in 1999 that will be controlled. The Minister who drew the attention of the house towards IMF and World Bank warning about hovering food crisis said the government would offer incentives to agriculture sector in the Finance bill to attract more yield of wheat.

He said the wheat crop was less than expectations this year because of previous government that did not raise support price at the time of sowing, hoping that recent raise and incentives in finance bill would boost farmer's morale and crops in next season.

He said that utility stores have not been able to cater to the needs of people and the government would provide targeted relief to the poor. The total amount of external and internal loans of the government on December 1999 were $28.047 billion and Rs 1544.9 billion respectively, he added.

The National Assembly also referred the issue of alleged misappropriations into funds by Earthquake Reconstruction and Rehabilitation Authority (ERRA) to the concerned standing committee for a detailed probe.

The parliamentarians raised serious doubts over the figures given by the ERRA and construction and rehabilitation work in the affected areas so far carried out, demanding a thorough probe to let the people know whether the money was utilised honestly.

According to the figures placed before the Lower House, the global community had pledged $6.5 billion but committed $5.9 billion of which disbursed $3.41 billion while $2.5 billion are in balance. Minister Incharge of the Prime Minister's Secretariat Farooq H Naik said the government has no objection for probing rather would facilitate and co-ordinate to ascertain the truth. "I have no objection whatever modus operandi would be decided by the house to probe the issue.

Speaker National Assembly Faisal Karim Kundi referred the issue of alleged misappropriations to the standing committee concerned which is likely to be of cabinet secretariat. Diplomatic passports: The National Assembly was informed that the government has printed 3,500 diplomatic and 85,000 official passports during 2006-07 and 2007-08 besides 50,05,000 ordinary passports.

Responding to a question, Commerce Minister Shahid Khaqan Abbasi said the government imported 135,915 metric tons of wheat during 2006-07 and the figure jumped to 1,574,874 metric ton in 2007-08 (July-April). He said the country would face wheat shortage this year.

Abbasi said the wheat shortage was purely due faulty policies of the last government that plunged the country into crises. The National Assembly was informed that the government was not contemplating privatisation of Pakistan Steel Mills at this stage.

Minister for Privatisation and Investment in, Naveed Qamar in a written reply to a question of Chaudhary Muhammad Barjees Tahir said no action was taken against those who were found involved in previous privatisation of the PSM. The government privatised 29 entities that earned it Rs 344.855 billion during 2004 and 2007.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Consortium offers to establish steel mill: Kalabagh iron ore deposits to be developed ​* 
ISLAMABAD (April 18 2008): The Engineering Development (EDB) has said that a consortium of eight local steel units has offered to develop iron ore deposits of Kalabagh and establish a steel mill of one million tons annual capacity.

The offer was made at a meeting of follow up committee on steel workshop, which was presided over by Mohsin Syed, Member Board of Management of EDB, said a statement on Thursday.

The consortium will meet in Lahore on April 24 to finalise issues pertaining to logistics support like Railways and leasing of mines. Meanwhile, the EDB will take up the issue with the concerned authorities and present a progress report in the proposed meeting.

The committee recommended that Pakistan Steel Mills should simultaneously increase its steel prices with the increase in international market so that the importers could comfortably import the raw material. This measure would help arrest the shortage of raw material.

It was also proposed that Pakistan Steel may adjust steel prices after specific interval on the pattern of petroleum products. The committee emphasised the need for preparation of an action plan by private sector for encouraging new investment in the steel sector so that the government could facilitate the local investors.

A majority of them pleaded for level playing field and suggested that the government should extend the same treatment as being meted out to foreign investors.

The representatives of the industry raised the question of abolishment of custom duties on steel products as reported by a section of press. They were assured that a clarification in this regard will be issued. An official told Business Recorder that 350 million tons iron ore reserves, with 30.35 percent Fe content in Kalabagh were available.

Giving details, he said in Mianwali District, 200 million tons, with 30-35 percent Fe in Dilband, Kallat District, 110 million tons up to 60 percent Fe iron content in Kirana, Sargodha District, 100 million tons with 25-35 percent Fe content in Nazampur, NWFP, and 66 million tons with 30-34 percent Fe in Pezu, NWFP.

Similarly, 45 million tons iron ore reserves with 30-34 percent Fe content are in Pachinkho, Chaghi District, 30 million tons with 30-34 percent Fe in Langrial, Hazara Division, 23 million tons with 10-55 percent Fe in Chilghazi, Chaghi District, 12 million tons with 50-60 percent Fe in Amir Chah, Chaghi District, 6.5 million tons with 60-65 percent Fe in Dammer Nisar, Chitral District, and 5 million tons with 20-60 percent Fe in Chigendik, Chaghi District.

The industry, they said, also believes in exploiting local reserves as the only way out of the crisis permanently in the wake of soaring steel prices.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*China to give $500 million: Shah Mahmood ​* 
ISLAMABAD (April 18 2008): China will provide Pakistan 500 million dollars concessional loan for improving its balance of payments position and will strengthen defence and strategic co-operation along with guarding regional instability.

This was stated Minister for Foreign Affairs Shah Mahmood Qureshi in his weekly press briefing after returning from China on Thursday. "External forces will not be allowed to dent our close strategic co-operation. We strongly believe in one China policy," he asserted.

In defence, Pakistan and China are jointly developing JF-17 Thunder, FC-20 and Hawks aircraft to make air defence impregnable. Recognising the energy needs of Pakistan, he said a number of projects were discussed to meet the demand-supply gap, including hydel, thermal and nuclear power generation. Prospect of developing Thar coal mining were explored, he said, adding that if it was not possible, imported coal could be used as an alternate prior to tapping resources in Thar to start power generation.

He said China also showed keen interest in construction of Basha Dam as the country had enough technological expertise and financial resources to undertake the project of this magnitude with the generation capacity of 5,500 MW and water storage capacity would be 6.5 million acres feet and its debt return would be 25 percent per annum.

Heavy Mechanical Complex upgradation also came under discussion to produce power plants locally, he said, and added that about 4,000 Chinese workers were engaged in different mega projects and a joint taskforce would be established to ensure their security. The Minister that Pakistan had 6.8 billion-dollar bilateral trade with China, which would increase to 15 billion dollars by 2011.

Negotiations on free-trade agreement (FTA) in services were also under way, he said, adding that China would be allowed to use Karachi and Gwadar as transport base for export of goods to other countries. It could also use Pakistani soil as a base for undertaking development projects in Afghanistan.

In banking sector, co-operation would also be enhanced and Beijing would be asked bring down steep assets limit to open new Pakistani bank branches in China, he said. In communication sector, he said China Mobile had made an investment of 800 million dollars, which would expand employment opportunities in the communication sector.

He said China also wanted to cooperate in housing and construction sector, along with agro-based industries.

*A LOT MORE WAS DESIRED TO FURTHER ENHANCE ECONOMIC TIES BETWEEN THE TWO COUNTRIES. THE FOLLOWING ARE MAIN POINTS:* 

-- Joint five-year plan and availability of credit to make it viable.

-- Joint Pak-China investment company.

-- Free Trade Agreement to further promote trade.

-- Special incentives for setting up industrial zones.

-- Developing of shipyard at Gwadar, which will initially undertake repair followed by the construction of ships.

-- Railway connection will be developed between Gwadar and China for increasing Chinese trade with Central Asian State.

-- China also showed desire to be part of the IPI.

-- Laying optic fibre link between the two countries was also discussed along with upgradation of Karakurram Highway.

-- It was also agreed to increase people-to-people contact for promotion of tourism between the two countries.

-- About six Chinese universities have agreed to set up centre of excellence in Islamabad, besides building a university here.

The Minister said the Chinese Foreign Minister had agreed to visit Pakistan from April 25 to 26.

He said China was happy with the political developments in Pakistan and smooth transaction to democracy, and added Beijing would invite Prime Minister of Pakistan to visit China at a convenient date and time.

Responding to a question about Iran, Pakistan, India, China (IPIC) gas pipeline project, he said China termed it viable project.

About the feasibility of laying gas pipeline from Iran to China, he said that the Chinese would pump up gas in the mountain region and down hill cost would be too less. Answering a question, he said that imbalance in trade would be rectified as China was sending a mission to study what its businessmen could buy from Pakistan. To another question about nuclear co-operation, he said Pakistan needed 8800 MW of electricity in 2030, so more co-operations and help from China was required.

To yet another question about China's response on political situation in Pakistan, he said Beijing had a policy of non-interference in political matters of other countries.

He said, he would form two task forces in the Ministry of Foreign Affairs, ie economic diplomacy for establishing economic linkages and to ensure security of Pakistan. A new direction would be given to foreign policy as far as geo-political situation was concerned, he said.

Replying to a question that in case of US attack on Pakistan, China assured its support, he said, adding: "The use of force would be devastating. Moreover, this matter can't be discussed in a press briefing." Responding a question about Chinese role in energy crisis in Pakistan, he said thermal, nuclear and hydel power could be produced to overcome energy crisis as China had 1.8 trillion-dollar liquidity and was a consistent and reliable friend of Pakistan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Smeda working to promote business development service providers' ​* 
LAHORE (April 18 2008): The Small and Medium Enterprise Development Authority (Smeda) is working to promote the business development services' providers through various programmes, including consultant database, panels of experts and Smeda accounting package for the benefit of SMEs.

This was stated by Smeda General Manager B&BSDS Sultan Tiwana at a seminar on "market opportunities for business development service providers", which was organised by Smeda and the Business Support Fund at the Lahore Chamber of Commerce and Industry (LCCI) on Thursday. Consultants and service providers from various sectors of the economy were also present.

Working under the Ministry of Industries, Production and Special Initiative, Smeda was established in October 1998 to take on the challenge of developing Small and Medium Enterprise in Pakistan. Smeda is not only an SME policy-advisory body for the government of Pakistan but also helps other stakeholders in addressing their SME development agendas, Tiwana said.

BSF Chief Operating Officer Ali Sarfraz said BSF could pay up to 50 percent of the fees of service providers for various SME consultancy projects. He said BSF is committed to support to over 300 SME projects from all over Pakistan. Consultants have been engaged for the IT services, product development, process improvement, marketing, quality management, human resource development, certification and training.

The SME Business Support Fund was established in 2005 by the Ministry of Finance with the assistance of the Asian Development Bank to provide financial assistance of up to Rs 1.8 million to SMEs. Its objectives are to support SMEs and promote consultants, he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan and China agree on cooperation in various sectors ​*
ISLAMABAD (April 17 2008): China has agreed to give Pakistan its full support for development in the sectors of energy, minerals and mining, extending co-operation in monetary sector and co-ordination in communication and transportation.

At the conclusion of the visit of China by President Pervez Musharraf, a joint communiqué has been released from Beijing and Islamabad, according to which both countries have agreed on further strengthening the strategic co-operation in defence and signed ten memorandums of reconciliation, private TV channel reported.

The officials of the Pakistan ministry of water and electricity and Chinese ministry of water resources signed the agreements. Pakistan's ministry of science and technology and China's Academy of Engineering also signed a memorandum. Besides, Pakistan's ministry of sports and China's General Administration of Sports and the finance ministries of both countries, the Capital Development Authority of Islamabad and the Consortium of China Architecture Design and Research Group signed the memorandums.

This has been said in the joint communiqué that China and Pakistan have agreed on getting maximum benefits from the agreement on free trade. China lauded the efforts of Pakistan for maintaining its sovereignty, independence and regional integrity and elimination of terrorism, promotion of peace, solidarity and security.

Both countries have agreed to achieve the trade target of 15 billion dollars at their earliest. Pakistan reiterated its complete support to one China policy and Taiwan's inclusion in China. Chinese president Hu Jintao accepted the invitation from President Musharraf to visit Pakistan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Gas import from Iran: ADB won't lend a helping hand ​* 
ISLAMABAD (April 19 2008): The Asian Development Bank (ADB) will help Pakistan in importing energy from Central Asia, but not from Iran, as Iran is not an ADB member country, said Juan Miranda, Director-General, Central and West Asia Department.

The bank is persuading Pakistan and India to import gas and electricity from Central Asia despite the fact that Russia has already last month made an agreement with all three countries contiguous to Afghanistan (namely Turkmenistan, Tajikistan and Uzbekistan) to procure all their surplus energy.

According to the agreement, Russia's state-owned Gazprom would pay European market price for Central Asian natural gas. Gazprom will start purchasing gas in 2009. The US has been pressing Pakistan and India not to import gas from Iran, which according to US is in direct confrontation with it over Tehran's nuclear programme.

The power and gas import to South Asian countries of Pakistan and India through Afghanistan seems to be a difficult task, given that power transmission lines as well as oil pipelines could be the prime target of the Taliban.

"We are not stopping Pakistan from importing gas from Iran," said Miranda while talking to reporters here on Friday. He, along with a delegation, was on two-day visit here and met officials of the new government. He also met some political leaders, including minister Nawaz Sharif, in Lahore.

He said that ministerial meeting would be held on energy import from Central Asia next week in Islamabad. The meeting would be attended by ministers and officials of Pakistan, India, Afghanistan, Tajikistan, Uzbekistan and Turkmenistan.

He said that ADB would provide assistance to Pakistan in constructing planned major dams, provided it ensured that international best practices are followed. The first thing Pakistan must ensure is that it should develop national consensus, he added. However, he remarked that Pakistan should have built these dams some 25 years ago.

Pakistan's priority areas for ADB co-operation are energy security, urban transport, better services in cities, rural development. These are the areas where Pakistan needs more assistance from international donors. He said that ADB would not decrease the volume of annual assistance of $1.5 to $2 billion to Pakistan. "We are decreasing the number of projects. We are taking some big and important projects."

Of total assistance Pakistan receives annually, $600 million is made available on concessional rates. The remaining amount is given on commercial rates. But despite of commercial rates, ADB money is the cheapest money, being made available to Pakistan, he added. He said very soon the ADB would release a tranche of $200 million for the 2005 earthquake affected area.

Pakistan's GDP growth for the current fiscal could be close to the projections of the government. GDP growth could be more if Pakistan used its full potential, he added. On short-term basis, Pakistan should concentrate on energy efficiency. "We think Pakistan can save energy if international best practices of energy consumption were adopted. The renewable energy is the best option to be resorted to for helping bridge the widening power demand and supply gap."

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan's foreign exchange reserves fall by $90 million ​*
KARACHI (April 19 2008): Foreign reserves fell by about $90 million to $13.044 billion in the week that ended on April 17, the central bank said on Friday. Reserves held by the State Bank of Pakistan (SBP) fell to $10.862 billion from $10.991 billion a week earlier, while those held by commercial banks rose to $2.183 billion from $2.143 billion.

Pakistan's foreign exchange reserves hit an all-time high of $16.486 billion on October 31. 2007 but then fell sharply, mainly because of outflows from the stock market after President Pervez Musharraf imposed emergency rule on November 3.

The emergency was lifted on December 15, but foreign investors remained cautious after the assassination of former premier Benazir Bhutto on December 27. However, new Finance Minister Ishaq Dar said at a news conference last week foreign exchange reserves were projected to rise to about $13.7 billion by the end of the 2007/08 fiscal year on June 30.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Iran, Pakistan agreed to expedite importing 1000 mw power ​*
Islamabad, April 17, IRNA 

Ambassador of Iran to Pakistan, Masha'Allah Shakeri on Thursday met Pakistan's Minister for Water and Power, Raja Pervez Ashraf and discussed matters of mutual interest, bilateral relation to further boost economic ties between the two countries, officials said. 

Both sides agreed to expedite the process of importing 1000 MW power by Pakistan from Iran on fast track basis to early complete the project, a statement from the Pakistani Ministry for Water and Power said. 

"They also agreed to work out the possibilities of import of additional 1000 MW power from Iran." 
The Ambassador offered to supply power and gas and also wind turbines to Pakistan to promote alternative energy from Iran. 

He said that Iran is also interested to work in the water sector of Pakistan. 

He added that joint investment companies may also be set up to boost economic ties in various other sectors. 

He also noted that Iran is also interested to invest in infrastructure development project in Pakistan. 

The Ambassador of Iran appreciated the growing economic situation of Pakistan and offered investment in water and power sectors particularly construction of dams. 

He also suggested for establishment of joint investment company to look into the exchange of expertise to pave way for investment opportunity in water and power sectors. 

He offered sizable investment in Hydro-power plants and expressed intention to finance power projects in Pakistan. 

The Minister, while welcoming the Iranian envoy said that Pakistan had a close brotherly relation with Iran. 

Pakistan values the help and support of Iran and is desirous of expanding bilateral trade at maximum possible extent. 

The Minister lauded the offer of the Iranian side and said that Pakistan has already signed agreement to purchase of 25 MW electricity from Mund (Iran) and recently signed another agreement of 125 MW and 1000 MW from Iran. 

He also assured his full support and assistance to facilitate Iranian investors to invest in water and power sectors in Pakistan. 

He also expressed that this meeting would further enhance the bilateral and trade relations between the two countries. 

He said that import of Iran will help to meet the energy crisis in Pakistan. 

The Minister also invited the Energy Minister of Iran to visit Pakistan to further discuss the investment in water and power sector. 

Iran, Pakistan agreed to expedite importing 1000 mw power - Irna


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## Neo

*Pakistan asks China to join IPI gas line​*
Published: April 17, 2008 

ISLAMABAD, Pakistan, April 17 (UPI) -- Pakistani President Pervez Musharraf has asked China to be part of the $7.5 billion Iran-Pakistan-India gas pipeline.

After a prior invitation, Chinese officials indicated they may review the feasibility study that previously led them to refuse the offer. The first study, done in 2005, suggested geological and technical challenges would push the cost up.

One analyst said China may be interested in conducting a joint feasibility study of the proposed project by technical experts from both sides, Pakistan's News newspaper reported.

"It now depends on the new political leadership in Pakistan. If Chinese leadership gets a strong signal that the new Pakistani prime minister is interested then Beijing could launch fresh efforts," said Islamabad-based Chinese Strategic Analyst Zhou Rong.

Pakistan asks China to join IPI gas line - UPI.com


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## Neo

*Al Baraka Islamic Bank to Invest $80M On Pakistan Expansion ​*
Friday, Apr 18, 2008

ISLAMABAD (Dow Jones)--Bahrain-based Al Baraka Islamic BankAl Baraka Islamic BankAl Baraka Islamic Bank is planning to convert itself into a local bank in Pakistan and invest $80 million to expand its network to 30 branches from the current 12, a statement from the Pakistan Prime Minister's office said Friday. 

The bank's expansion shows its confidence in the growing Pakistani economy, Mohammad Isa Al-Mutaweh, chief executive of Al Baraka Islamic BankAl Baraka Islamic BankAl Baraka Islamic Bank, said in the statement. 

Al Baraka currently operates in Pakistan as a scheduled commercial bank with its branches operating as international branches of its parent, Al Baraka Islamic BankAl Baraka Islamic BankAl Baraka Islamic Bank. It is now seeking to operate as a local bank.

Al Baraka Islamic Bank to Invest $80M On Pakistan Expansion - Middle East News


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## Neo

*Basha dam delay feared to cause billions of rupees loss ​* 
*The dam is to produce 4,500MW electricity​*
Saturday, April 19, 2008
By Mansoor Ahmad

LAHORE: Pakistan is feared to suffer losses of billions of rupees in the shape of lost revenues as the Basha Dam, the only non-controversial mega water project, is facing delays because the original site recommended by NESPAK for its construction has been rejected by a firm designing the project.

Though the country is facing a huge shortage of electricity and irrigation water, authorities concerned seem to be not taking the issue seriously. The Kalabagh dam has been put on the back burner while Basha is the only mega dam where consensus exists. Originally, the dam was scheduled to be completed in 2013 but uncalled for delays may extend the completion date by two to three years.

The loss of revenue due to delay in its 4,500 megawatts electricity generation capacity alone would go into billions of rupees besides loss of irrigation water. What concerns most engineering consultants is that the delay could have been avoided had the project been taken seriously by the circles concerned.

The News has learnt that the feasibility report made under PC2 for Basha dam was awarded to the National Engineering Services of Pakistan (NESPAK), a state-owned engineering consultant, for Rs900 million in 2002. Based on that feasibility report, a contract for designing the project was awarded to the National Development Consultant (NDC), a private concern.

Experts point out that normally the designing contract is awarded to the consultant that prepares the feasibility study. However, other firms offering better terms do get the designing contract. They say the designers do not have the mandate to reject the proposed site for which they have been awarded the contract.

However, since mega dams are built after a careful evaluation of the site, any change in design has to be accompanied with irrefutable proof of flaw in the feasibility that warrants change of site. In that case, the firm that has prepared the feasibility report should be asked to pay penalty for recommending a faulty site. Instead it is learnt that a new firm would now be paid for preparing a new feasibility study according to the new site that it has selected.

This would delay the project for two to three years.

This brings into question the competence of those that are managing the affairs of the Water Wing of WAPDA. Basha is not the only water reservoir project that is facing delays. Work on small dams like Naulang dam, Winder dam and Suklegi dam is also not on schedule and delays are increasing the costs of these projects. The cost of Kachi Canal Phase I has increased from Rs31 billion to Rs51 billion.

All this calls for some type of accountability. Instead the WAPDAs member power was awarded extension in service by the interim government. His tenure was due to expire in April. The News has learnt that the summary for his extension was moved in December last year probably to approve it before the installation of the elected set-up.

The post of WAPDA chairman is always filled by an outsider. The water and power members are appointed from among the carrier officers in the WAPDA. 

Providing extension to these members without merit discourages the entire chain of engineers whose promotions are linked to elevation of one of them to the members post.

Basha dam delay feared to cause billions of rupees loss


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## Neo

*IMCs revenue up by 4 per cent ​* 
Saturday, April 19, 2008

KARACHI: Indus Motor Companys sales revenue for the nine months ended on March 31, 2008 increasing by 4 per cent to Rs29.3 billion as compared to the revenue of Rs28.3 billion in the same period last year.

Profit after tax came to Rs1.9 billion, which was almost the same as that earned in the previous period, the Board of Directors of the company announced here on Friday.

Indus Motor CEO Pervez Ghias, while briefing the media, said that the domestic automobile industrys demand for passenger cars and light commercial vehicles (LCV), which fell for two successive quarters for the first time in the current fiscal year since 2002, recovered slightly during the January-March 2008 quarter but was still down by 8 per cent to 47,638 units compared to 51,740 units sold in the same period last year.

However, the governments decision to suspend the application of 2.5 per cent withholding tax for two months until April 21 averted a further drop.

He said that despite the prevailing adverse market environment, the companys sales Toyota and Daihatsu brands completely knocked down (CKD) and completely built units (CBU) for the quarter, recorded an increase of 4 per cent to 13,307 units compared to 12799 units sold for the same period last year.

On year to date basis the sales volume of passenger cars and LCV at 36,455 units declined by 1 per cent from 36,704 units, while production at 34,925 units was slightly up from 34,819 units produced for the same period in 2007.

During the period Indus was able to improve its market share by 2 per cent to 23 per cent.

He said that an increase in the cost of production on account of the rising yen and dollar, coupled with higher costs of steel, consumables and other inputs caused erosion in margins, even though the company was able to partially offset some of this burden by way of increase in retail selling prices of its products.

He further mentioned that the last quarter, April/June was traditionally the strongest for the automobile industry owing to the agricultural income cycle and farmer liquidity that contributes by way of strong demand for our products in rural areas.

He said that companys sales are expected to remain robust during the quarter but earnings will decline and the company absorbs cost up pressures owing to the inflationary trends and the effect of exchange rate that has significantly weakened the rupee.

He added that they are hopeful that the new government will take proactive steps to encourage growth of the automobile sector which provides robust revenue stream to the government, creates thousands of job opportunities throughout the industry, enables technology transfer for localisation, and above all provides affordable mobility for the economic prosperity of the country. Despite the recent slowdown in the market, the company expects the sales to rebound in the new fiscal year with political stability returning amidst continuity of economic policies for sustainable development.

IMCs revenue up by 4 per cent


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## Neo

*Aviation industry should focus on revenue management​*
ISLAMABAD: Better revenue management is the only solution to the ills of aviation. This was stated by Shahid Khaqan Abbasi, Federal Minister for commerce while addressing a seminar on the aviation industry in Pakistan. The federal minister said that we should focus on better management because the competitors in the industry are highly skilled. The minister said Asia pacific region has a lot of potential in aviation. The future of aviation is bright in the region. 

The seminar was titled Opportunities, challenges and future of Aviation industry, A Pakistan Perspective and organised by Revenue And Management Solution (RAMS).

RAMS is a global provider of training and automation solution in the airline industry. The company primary focus is pricing and revenue management solution for airlines (passenger and cargo), skill development and management skills. Santos Miguel, Director International Sales Boeing corporation USA, gave a detailed presentation on commercial aviation in Pakistan. 

He termed the Asia pacific as the future hub for aviation in future. The principal, civil Aviation institute, Mujahid Khan enlightened the participants on the role of Civil Aviation Authority (CAA) in Pakistan. The role of CAA is facilitation and controlling aviation and preparing plans for efficient aviation in the country.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Six rivers lose 1.88 MAF annually: Irrigation water in Punjab, NWFP​*
RAWALPINDI, April 18: At a time when the countrys agricultural production is being hampered by less availability of irrigation water, six rivers in the Barani areas of the Punjab and NWFP are losing 1.88 million acre feet (MAF) of water on annual basis, an official study says.

Merely, 0.22 MAF is currently being tapped across a total basin area of 22,307 square kilometres, comprising the rivers of Soan, Haro, Reshi, Bunha, Kahan and Kanshi, according to statistics compiled by the Asian Development Bank (ADB).

However, the ADB has agreed to finance a community water storage and irrigated agriculture project, which has been proposed by the governments of Punjab and NWFP, to contribute to sustained long-term social and economic development and reduced drought vulnerability in Punjabs Potohar region and barani areas of NWFP.

The total cost of the project is estimated at $103.36 million. ADBs share in total project cost would amount to 72.6 per cent, while the government and beneficiary shares would amount to 25.3 per cent and 2.1 per cent, respectively.

With a vast untapped potential both provincial governments are pursuing small dam development with Public Sector Development Programme (PSDP) financing.

However, while a commitment to small dam development at the level of the government is there, the programmes do not extend beyond securing funds from the PSDP and construction of dams, the ADB noted.

Though the absence of a productive section of the population that has sought its main source of livelihood off-farm due to the arid conditions of barani, agriculture has played a big role in holding back the anticipated benefits in agriculture from investment in the sub-sector, unarticulated policy, institutional dynamics and capacity compound to keep the potential of these small dams dormant, the study pointed out.

Devoid of participatory planning, involvement and inclusion of other stakeholders and direct beneficiaries, and in the absence of a dedicated irrigated agriculture advisory and support services with a well-thought out strategy to work as an initial catalyst, water remains unutilised for remunerative agriculture once the dam is built.

From a sample of 28 dams, 60 per cent of the dams were able to develop only 20 per cent to 40 per cent of their command area. On the rest of the dams, on an average, 87 per cent of the planned area could be developed.

Since 1961, a total of 41 small dams have been constructed in the rain-fed areas of the Potohar Plateau in the Punjab Province, 12 of which were financed through the ADB under the Small Dams Project during 1986 to 1993.

Nine dams are currently under different stages of construction. Out of the dams under construction, four are in Chakwal, three in Jhelum and one each in Rawalpindi and Attock.

Similarly, since 1962, 15 small dams have been built and are operational in the NWFP, five of them under ADB funding of the Drought Emergency Relief Assistance programme, and one exclusively for municipal water supplies in Karak.

In both provinces there is a marked contrast between the irrigated and non-irrigated/barani areas.

In Punjab, these barani areas mainly lie in the Potohar Plateau between the Indus and Jhelum rivers that covers an area of 2.2 million hectares of which one million hectares are under rain-fed agriculture.

There are around 2,600 villages having population of 4.2 million, and these people generally have far more limited opportunities for productive agriculture and the livelihoods it supports than the farmers in the irrigated areas.

In NWFP 800,000 hectares of cultivable land is not irrigated. Barani agriculture in the Punjab represents about 20 per cent of the cultivated area, whereas in NWFP this is about 59 per cent. Rains are very erratic and a major portion is received during the monsoon months in July-August.

Characteristics related to barani farming system are low cropping intensities and lower yields compared to irrigated agriculture due to mainly poor soil and water management, lack of access to services, modern inputs and production technologies, and a large number of unviable and below subsistence land holding sizes, the study said.

Both NWFP and the Punjab are pursuing a small dam development programme to harvest waters from river basins in their respective rain-fed areas. Similar to the Indus Basin canal systems, the small dams are mainly conceived to supply water to agriculture.

However, unlike the Indus Basin canal system where the water mostly originates in neighbouring countries or comes from snow melt in the Himalayas, water for the small dams in barani areas is harvested from relatively close proximity.

Through small dam projects the provinces ensure that runoff generated within catchments that lie in their territorial jurisdictions is not lost and is stored.

While a rationale for water resource development to meet the needs of a growing population and to support a growing economy clearly exists for barani areas, utilisation of small dams constructed in the past 40 years to add value to agriculture has not been adequate.

Assumptions about transfer to remunerative irrigated agriculture, with hitherto unavailable water provided through small dams, have not proven correct.

By and large farmers continue to practice rain-fed agriculture with conjunctive use of reservoir irrigation water rather than growing crops under an irrigation regime and commensurate cultural practices.

Barani farmers in both NWFP and Potohar generally produce subsistence crops (wheat), along with some cash crops and fodder.

A large proportion of their household income comes from off- farm sources.

In on-farm activities their primary concern is livestock which is mainly tended by women who do not migrate with the men for work and stay at home.

Six rivers lose 1.88 MAF annually: Irrigation water in Punjab, NWFP -DAWN - Top Stories; April 19, 2008


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## Neo

*$956 million US funds for infrastructure likely​*
WASHINGTON, April 18: The United States intends to provide $956 million to Pakistan between 2008 and 2011 as part of a comprehensive plan to expand its engagement with the country from military to civilian sectors.

In its latest report, the US Government Accountability Office noted that if approved, this fund will be used for development, security, capacity building and infrastructure.

The need to enhance US engagement in Pakistan followed a realisation in Washington that the military alone cannot rid the country of terrorism.

The GAO noted that terrorism had spread beyond the tribal areas and was now threatening the entire country. The terrorist assassination of former prime minister Benazir Bhutto could encourage terrorists to strike the Pakistani establishment anywhere in the country  radical elements now have the potential to undermine Pakistan itself, the report warned.

The GAO assessment of terrorism threats in Pakistan covers the period from July 2007 through April 2008 and strongly backs the US Embassys recommendation that Washington needs to develop a multifaceted approach to deal with terrorism in Pakistan.

The new approach, if approved by the administration and key US government agencies, would constitute the US governments first attempt to focus more attention on key elements other than military ones to address US counterterrorism goals in Pakistan. These elements include development assistance and public diplomacy, as well as counterinsurgency training, which have not been part of the previous military approach.

The new strategy also calls for greater levels of direct US planning, implementation, coordination and oversight.

But the report noted that this new approach does not yet constitute a comprehensive plan, and all of the agencies individual efforts have not been fully approved in Washington.

The report also pointed out that such efforts suffer from funding shortfalls, and support by the recently elected government of Pakistan is also uncertain.

The GAO reported that the United State is also supporting Pakistans Sustainable Development Plan for the Fata. Pakistans plan is a nine-year, $2 billion effort to provide economic development, extend the influence of the Pakistani government and establish security in the Fata.

To assist this effort, the Pentagon undertook a counterinsurgency assessment in the Fata and began developing its Security Development Plan. At the same time, USAID provided technical assistance to the Pakistani government to help formalise its Sustainable Development Plan, as well as to plan USAID-development activities in the Fata.

All development efforts in the Fata will be directly planned, implemented, coordinated and monitored by the US Embassy in Pakistan. As of September 2007, the embassy planned to spend $187.6 million on this initial effort using fiscal year 2007 funds.

Since 2002, the United States relied principally on the military to address US national security goals in Pakistan.

Of the over $10.5 billion that the United States has provided to Pakistan from 2002 through 2007, the GAO identified about $5.8 billion specifically for the Fata and border regions; about 96 per cent of this funding reimbursed Pakistan for military operations in the Fata and the border region.

There have been limited efforts, however, to address other underlying causes of terrorism in the Fata by providing development assistance or by addressing the Fatas political needs, the GAO noted.

$956 million US funds for infrastructure likely -DAWN - Top Stories; April 19, 2008


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## Neo

*ADB willing to finance four-nation gas project​*
ISLAMABAD, April 18: The Asian Development Bank (ADB) is willing to invest $5 billion in the Turkmenistan-Afghanistan-Pakistan-India (Tapi) gas pipeline and wants to support energy sector projects in Pakistan.

Talking to reporters at the end of his two-day visit on Friday, ADBs Director-General for Central and West Asia Department Jaun M. Miranda said that although the bank was willing to finance the Tapi project, it would not finance the $7 billion Iran-Pakistan-India gas pipeline project on which the United States had reservations.

The Tapi project is expected to transport 100 million standard cubic metres per day (mscmd) of gas, of which Indias share is likely to be 60 mscmd. The 1,680-km pipeline will run from the Dauletabad gas field in Turkmenistan to Afghanistan.

Mr Miranda said the ADB would not reduce its annual financing to Pakistan, currently ranging between $1.5 billion and 2 billion. However, the bank would try to focus on priority areas. The ADB is at present funding 60 projects in Pakistan.

He said the bank was also willing to invest in dams and projects to reduce electricity transmission losses and improve private sectors power production capacity.

Energy topped ADBs priorities which included infrastructure, irrigation, urban services and reforms for the decentralisation process. He said the bank would restructure all slow-paced projects to accelerate their progress.

Next week, he said, the bank would release another $200 million for reconstruction activities in earthquake-hit areas.

ADB willing to finance four-nation gas project -DAWN - Top Stories; April 19, 2008


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## Neo

*Local wedding industry is worth Rs900bn: research ​* 
Sunday, April 20, 2008

KARACHI: Project Director at Creative Circle Pvt Ltd, Imran M Sheikh has informed that Pakistans wedding industry is worth Rs900 billion per annum, of which Karachi alone contributes Rs168 billion and yet the industrys optimum potential has not been utilised.

Presenting a research conducted by his organisation over a six-month period, during a seminar Wedding industry, its growth, potential and recognition at the Karachi Chamber of Commerce and Industry (KCCI), he said that of these figures, Rs14 billion is put into the economy and that the average wedding expenditure for a family comes around Rs1.3million.

He said that as the per capita income of an individual has increased by 13 per cent per annum, people are more willing to spend on luxurious weddings. He further stated that an estimated 125,000 wedding ceremonies take place in Karachi alone, of which on an average the overall wedding expenditure on the brides side is estimated to be Rs832,500 while the groom spends about Rs513,500.

Breaking down the revenue enjoyed by various stakeholders in the wedding sector, Sheikh stated that beauty parlours get 2 per cent of the total expenditure, decorators get 4 per cent, while caterers get 16 per cent.

He continued to say that the venue costs 6 per cent of the total expenditures to the bride and groom while furniture, boutique and jewelers take 7 per cent, 13 per cent and 17 per cent respectively whereas, other small expenditures mount to 35 per cent of the total expenses.

Sheikh further informed that his company, Creative Circle Pvt Ltd had come out with the second edition of Real Estate Agents Directory (READ) which would now be followed with a directory dedicated to the wedding industry.

He said, Indias wedding industry is worth Rs119 billion and look where they have reached while we still remain unrecognised despite having a much larger industry. 

This is because of the lack of awareness, which this directory would help to promote.

Many people said that they had faced various challenges when planning their weddings and could not find venues, caterers etc. This directory would include one to all from food to beauty to wedding planners he stated.

Local wedding industry is worth Rs900bn: research


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## Neo

*Govt to review ports and shipping policy ​* 
Sunday, April 20, 2008

KARACHI: Syed Naveed Qamar, Minister for Ports and shipping, Industries, Production and Privatisation, stated that the previous ports and shipping policy will be reviewed and necessary changes would be made in order to update the sector up to international standards. He said this while briefing the media at Port Qasim Authority.

He added that there are various flaws in the port policy, which needs critical assessment and requires changes to improve the standard of the ports.

He said that though Port Qasims performance has been satisfactory, there is a lot of room for improvements in it. The government would focus on that and further improve the performance of the port. He added that in the future policy, more terminals and berths would be added in Port Qasim as there is a lot of capacity.

He said that KPT and Port Qasim are the gateway of the economy, as they are based in the commercial capital of the country. Gawadar Port still lacks communication links.

He noted that there are various things to be examined in the sector concerning allotment of land and employment.

On a question regarding major corruption in the sector, he said that all corruption charges will be examined and will be dealt accordingly.

About the Bundel and Bunndu Island, he stated that the issue is still prevailing and has not yet been settled, however, it will also be resolved. There are various aspects of the island which have to be considered and it still needs to be decided whether the land belongs to the federal government or the provincial government.

He added that there are several issues which need to be resolved, but it will all take some time as the government has only taken charge a few days back.

Chairman PQA Rear Admiral (Retd) Syed Afzal, briefed the minister about the progress of the Port Qasim Authority.

Govt to review ports and shipping policy


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## Neo

*Cement exporters eye $400 million mark​*
** Cement exports remained $190 million in 2006-07, while production increased by 32%​*
LAHORE: Pakistani cement exports have witnessed huge jump in the recent months and the manufacturers are eyeing $400 million mark. The cement production has also witnessed around 32 percent increase this year, the sources in industry told Daily Times on Saturday.

They said that the Indian government has banned its cement exports and ultimately it would benefit Pakistan, as the construction boom is taking place in Gulf countries. India exported around 0.55 million tonnes of cement to UAE while Pakistan exports remained 0.25 million tonnes. In such situation, the local manufacturers are set to capture the Middle Eastern market. The cement export in 2006-07 remained 2.79 million tonnes and Pakistani manufacturers got orders between $65 to $70 per tonne. Resolutely, the industry fetched around $190 million. However, this year the price is roaming at $70 to $75 per tonnes. So far, the exports in recent nine months are at 4.45 million tonnes and the manufacturers are expecting to export 5.5 million tonnes of cement by July, getting around $400 million.

Currently, Pakistan is producing 28 million tonnes of cement annually and the capacity with addition of new projects would be enhanced to 37 million tonnes, the sources said adding that a number of plants including Lucky, Bestway, Kohat and Gharibwal would start production and it would enhance the cement production in the country.

Pakistan in nine months (July 2007 to March 2008) produced 21.88 million tonnes of cement and exported around 4.45 million tonnes to different countries like India, Afghanistan, Middle East and some of African countries.

Pakistan exported 2.06 million tonnes of cement to Afghanistan and only 0.45 million tonnes of cement to India. Around 1.92 million tonnes of cement was exported through sea to other countries like UAE, South Africa, Sril Lanka and Djibouti.

In 2008, the cement exports have witnessed a huge increment, as in 2007 Pakistan exported around 2.79 million tonnes of cement including 1.72 million tonnes to Afghanistan and 1.07 million tonnes to other countries. This year, the Indian government allowed cement import and it remained attractive market for the Pakistani producers.

So far, the industry has witnessed around 50 percent enhancement in cement exports while clinker exports have also seen huge improvement. In 2007, clinker exports stood at 0.39 million tonnes while in the previous nine months, they remained 0.7 million tonnes.

Maple Leaf Chief Operating Officer, SM Imran , while talking to Daily Times said, India is facing huge shortage of cement and it is the reason it has banned cement exports. India is currently facing a shortfall of at least five million tonnes of cement. He said that Indian ban would have a less impact on the Pakistani exports to India; however, he said Pakistani manufacturers are getting constant inquiries from other countries. We have received inquiries from Russia, where construction boom may take place in near future, he said. Cement exports to India faced a number of problems in the recent months, as India instead of following European standard or American Standard for Testing Materials standards has maintained its own Board of Indian Standards. The Pakistani cement exporters are bound to send product in Hindi written scripts bag, said Imran adding that, in EN standard, the cement grade can be 42.5 while in India it should be 43. All Pakistan Cement Manufacturers Association (APCMA) Chairman, Aizaz Khan, said that if the government give the industry incentives then the exports could be raised more than expectations. The cement industry has a lot of potential and if given proper opportunities then it could fetch maximum foreign exchange for the country, Khan said.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Qatar to invest $5bn, Jordan to sign FTA​*
ISLAMABAD: Qatar will invest $5 billion in Pakistan to tap Pakistans investment potential in different sectors, and Free Trade Agreement (FTA) between Pakistan and Jordan is expected to be signed in August this year, Ambassadors of Qatar and Jordan informed the Federal Minister for Finance, Revenue, Economic Affairs and Statistics Senator Ishaq Dar on Saturday. 

They also reassured him of their countrys support for the democratic government. Minister said that Pakistan would like to work in unison with our brotherly Islamic countries with view to increasing economic cooperation in trade and investment. Ambassador of Qatar, Hamad Ali Al-Hanzab, said Qatar would be investing $5 billion in Pakistan. 

He said that Qatar has launched Islamic Takaful Insurance Company in Pakistan, and hoped that more investment would be made in the financial sector for the mutual benefit of two countries. The two sides also agreed to convene the meeting of Joint Ministerial Commission at the mutually convenient dates. 

Dr Saleh Ahmed Aljawarneh, Ambassador of Jordan, proposed convening of the meeting of the Joint Economic Ministerial commission and the meeting of Joint Business Council to increase economic cooperation between two countries. He informed the Finance Minister that Free Trade Agreement (FTA) was expected to be signed in August between two countries to increase the volume of bilateral trade. The two sides also reviewed the cooperation in the field of agriculture and railways. A possibility of joint venture in manufacturing of phosphate fertilizer was also discussed. 

The Ambassador of Muscat Mohamed Said Mohamed Al-Lawti discussed the role of Pak-Oman Investment Company in promotion of economic cooperation between the two countries. He said Muscat has been instrumental in accelerating development in Balochistan. 

The two sides agreed to accelerate implementation of various projects in Balochistan costing around $27.5 million being financed through grant from Muscat. The two sides also noted positive development of purchase of 65 percent shares by Pak-Oman Joint Investment Company of World Call Shares, its interest in telecommunication and power sector. The Ambassador also expressed the interest to develop tourism in Balochistan.

Daily Times - Leading News Resource of Pakistan


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## Neo

*PC to initiate construction of two dams in Balochistan​*
** CDWP likely to recommend 39 projects worth Rs 133.395bn​*
ISLAMABAD: The Planning Commission is to initiate the construction of two small dams in Balochistan, worth Rs 4.791 billion, in line with the agenda of the policy speech of Prime Minister Syed Yousaf Raza Gillani. 

The construction of these two dams is presented in the agenda of Central Development Working Party (CDWP) that is to be held on 26th of this month. The two projects are; Construction of Shadi Kaur storage dam, Pasni Gwadar worth Rs 2.637 billion and Construction of 100 Delay Action Dams in Balochistan worth Rs 2.154 billion. 

After taking the vote of confidence in the national assembly, the PM announced that more power generation projects would be initiated on priority basis so as to over come the power deficiency in the country. 

Apart from these two projects in Balochistan, official in the Planning Commission told Daily Times here on Saturday that construction of 2 to 3 small dams in Punjab, NWFP and Sindh are in pipeline and expected to present these projects in next CDWP meeting. The official said, purpose of these small dams to meet power shortfall about 3,000MW at present and also to ensure smooth supply of power to industrial units. 

The CWDP is likely to recommend and take up 39 developmental projects worth Rs 133.395 billions including with foreign exchange component (FEC) worth Rs 64.521 billion. The projects are; agriculture and food, forestry & wildlife, water resources, energy, health, physical planning and housing (PP&H), industry and commerce, education, manpower, devolution and area development, governance, information technology and higher education commission (HEC). 

The CDWP can only approve projects costing up to Rs 500 million and the projects costing above this limit must be approved by the Executive Committee of the National Economic Council (ECNEC). The CDWP agenda, obtained by Daily Times, shows that the Agriculture and Food sector consists of five projects worth Rs 2.637 billion including Rs 99.047 million as FEC. The Forestry & Wildlife has single project, namely Mangla Watershed Management worth Rs 319.750 million. 

The agenda shows six projects for water resources sector with total cost of Rs 15.966 billion with FEC Rs 3.286 billion. 

The Energy sector consists of four projects worth Rs 60.711 billion including Rs 37.368 billion as FEC. 

The health sector has only one project, namely Roll Back Malaria (RBM) in Pakistan worth Rs 664.707 million. 

The physical planning and housing sector has five projects worth Rs 5.091 billion having Rs 2.829 billion as FEC. Industry and Commerce sector has three projects worth Rs 1.817 billion having Rs 555.24 million as FEC. 

The education sector has just one project namely, establishment of government training courses under prime ministers special initiatives worth Rs 237.951 million. 

Manpower sector has two projects worth Rs 579.78 million and the devolution and area development sector consists of three projects worth Rs 18.676 billion having Rs 2.933 billion as FEC. 

The Governance sector consists of four projects worth Rs 6.856 billion with Rs 312.70 million as FEC. 

The Information Technology sector has two projects worth Rs 19.307 billion having Rs 17.136 billion as FEC while Higher Education Commission (HEC) has two projects worth Rs 528.79 billion. ijaz kakakhel

Daily Times - Leading News Resource of Pakistan


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## Neo

*Govt should modify, not scrap previous policies​*
PESHAWAR: Former governor State Bank of Pakistan (SBP), Dr Ishrat Hussain has asked the new government to modify the policies followed by the previous administration instead of starting from scratch after scrapping the policies of its predecessors, which he said, had been a dominant trend in the past.

The low growth rate throughout the 1990s was a result of such policies and it had led to disenchantment on the part of electorates, he said while addressing a one-day policy dialogue, Reforms in Micro Financing and Growth of SMEs, jointly arranged by the Sarhad University, NWFP Ministry of Finance and SBP here on Saturday. 

The number of people availing the micro finance facility has reached to around 1.5 million over the past few years while it was zero in 1999-2000, former central bank head said, urging the government to review the past work and policies and modify these for the benefit of the people.

There is no magic wand or a quick poverty reduction strategy for Pakistan. Rather it requires hard work in a continuous manner and the success of the Grameen Bank in Bangladesh was testimony of this fact, he said. He said that around 16 percent of population in United States also lives under the poverty line and this problem is not limited to the poor counties. 

Micro finance institutions are helpful to the poor in a sense that there is no collateral or security attached to the loan, which is a dominant feature in other kinds of financing, he said. He said that Pakistan is the first country in the world which brought the micro finance institutions under the regulatory control of the central bank to keep away these institutions from potential scams and to protect their money.

SBP has the target of reaching out to around 3 million people out of 40 million poor in the country, he said. He said that microfinance institutions could not eliminate poverty but they provide a procedure for reducing it.

Daily Times - Leading News Resource of Pakistan


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## Neo

*100 small dams to be built in Balochistan: CDWP meeting on April 26​* 
ISLAMABAD (April 20 2008): The government will build 100 small dams in Balochistan as a plan of constructing first 20 dams, costing over Rs 2.15 billion in the province has been finalised by the Water and Power Ministry, sources told Business Recorder on Saturday.

This will be the first step in line with Prime Minister's announcement of constructing small dams for water conservation and power generation. Sources said that Punjab, Sindh and NWFP have also been directed to present their plan, of constructing small dams, to the Planning Commission (PC) as early as possible.

The Water and Power Ministry's plan of constructing 20 small dams in Balochistan will be taken up by the Central Development Working Party (CDWP) in its meeting to be held on April 26.

The CDWP will take up total 36 development projects, costing around Rs 43 billion. The concept clearance of three development projects worth Rs 11.7 billion would also be taken by the meeting, which will be chaired by PC Deputy Chairman Dr Akram Sheikh.

In the energy sector, total four projects, valuing Rs 8.6 billion, are on the agenda of the meeting. Two projects, namely establishment of 500 MW combined cycle power plants at Faisalabad and Dadu will cost Rs 2.85 billion and Rs 2.92 billion respectively. The other two hydro-power projects with a capacity of 16 and 14 MW will be executed by the Kashmir and Northern Areas (Kana) Division. These will be established in Gilgit at a cost of Rs 2.8 billion.

In the water resources sector, six projects, costing around Rs 16 billion, will come for consideration of the CDWP. The World Bank (WB)-assisted project of water Indus water sector capacity building costing Rs 3.28 billion, construction of Shadi Kaur storage dam, Pasni, Gwadar worth Rs 2.63 billion, Balochistan effluent disposal valuing Rs 6.53 billion, revamping of irrigation and drainage system in Sindh costing Rs 0.92 billion are some of the important projects in the sector.

The CDWP will take up two projects costing over Rs 18.8 billion in information technology sector. Suparco has demanded an amount of Rs 18.81 billion for setting up Pakistan communication satellite system.

In industries and commerce sector, three projects costing Rs 2.32 billion will also be considered by the CDWP. The important scheme in the sector has been forwarded by Pakistan Atomic Energy Commission (PAEC) that wants to conduct a new mineral survey by spending more than Rs 1.35 billion.

The CDWP will take up four projects worth Rs 6.85 billion in governance sector. The revised project of raising Balochistan constabulary costing Rs 5.95 billion is the most important scheme to be considered. In food and agriculture sector, five projects worth Rs 2.6 billion will be taken up. The most important development scheme among the projects is national pesticides monitoring system in Pakistan costing Rs 1.21 billion.

In devolution and area development, Payara Kashmir programme costing Rs 11.11 billion will be taken up by the CDWP. The Balochistan government will give concept clearance (CC) on local services delivery and governance programme costing Rs 4.8 billion to the CDWP. This project is likely to be assisted by the WB and UK's Department for International Development (DFID). The other CC on Chitral Area Support Project costing Rs 2.77 billion has been submitted by the NWFP government.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*SPI up by 22.71 percent ​* 
ISLAMABAD (April 20 2008): The inflation, measured through Sensitive Price Index (SPI) surged by 22.71 percent in the week ended on April 17 over the same period of last year owing to wild increase in the prices of essential commodities.

The data released by Federal Bureau of Statistics (FBS) on Saturday showed that SPI inflation, skyrocketing since the adjustment of oil prices in March, surged to 22.71 percent on April 17 from 12.16 percent on February 28, making life harder for the low-income group.

The purchasing power of low-income group squeezed by the last increase is yet to bear the impact of first adjustment made by the new government in the wake of increasing oil prices in the international market.

The inflation is one of the major challenges for the government, along with trade, current and fiscal deficits which the Finance Minister intends to curtail by money growth. The State Bank of Pakistan (SBP), already pursuing a tight monetary policy, anticipates that inflation would persist and magnify in the months ahead.

It is yet to be seen as to how the new government will tackle this uphill task it has inherited. The major reasons for high inflation are said to be global increase in food prices, demand-supply issues and excessive borrowing by the government.

Weekly data showed that dearness during the week has gone up from 21.44 percent to 25.58 percent for families bracketed in Rs 3000 group, 21.17 to 25.17 percent for Rs 3001 to Rs 5000, 20.35 to 23.47 percent for Rs 5001 to Rs 12000 and 18.20 to 20.09 percent for families with income of above Rs 12000.

The prices of 27 essential commodities increased during the week while 6 showed decline from the list of 53 items used to measure weekly inflation, based on data collected from 17 urban centres.

According to FBS, during the week under review, price of per kg rice Irri-6 increased to 34.82 from Rs 30.26, wheat flour average quality increased to Rs 21.81 from Rs 19.67, rice basmati broken per kg to Rs 42.39 from Rs 39.86, egg hen (farm) dozen to Rs 53.58 from Rs 50.52, red chillies per kg to Rs 172.55 from Rs 164.55, wheat average quality per kg to Rs 18.89 from Rs 18.08, bananas dozen to Rs 36.29 from Rs 35.02. potatoes per kg to Rs 12.59 from Rs 12.16, onions per kg to Rs 11.76 from Rs 11.46, gram pulse washed per kg to Rs 47.50 from Rs 46.37, vegetable ghee loose per kg to Rs 126.28 from Rs 123.81, mustard oil per kg to Rs 142.11 from Rs 139.66, chicken (farm) per kg to Rs 106.11 from Rs 104.87, washing soap cake to Rs 10.94 from Rs 10.82, voil printed metre to Rs 42.71 from Rs 42.28, curd per kg to Rs 37.65 from Rs 37.29, masoor pulse washed kg. to Rs 83.02 from Rs 82.31, cooked beef plate each to Rs 35.19 from Rs 34.93, moong pulse washed kg to Rs 52.71 from Rs 52.37 shirting metre to Rs 72.97 from Rs 72.53, milk fresh liter to Rs 31.95 from Rs 31.76, salt powdered kg to Rs 5.38 from Rs 5.35, lawn metre to Rs 88.59 from Rs 88.15, mutton kg to Rs 241.84 from Rs 240.67, beef kg to Rs 124.87 from Rs 124.37, bread plain mid size each to Rs 19.68 from Rs 19.62 mash pulse washed kg to Rs 72.62 from Rs 72.52. This shows no let-up for the poor who find it hard to meet both ends and also a big challenge for the new government.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan to boost trade ties with Islamic states: Dar ​* 
ISLAMABAD (April 20 2008): Finance Minister Ishaq Dar on Saturday said Pakistan would work with brotherly Islamic countries to increase economic co-operation to promote trade and investment. He said this during separate meetings with ambassadors of Qatar, Jordan, and Muscat, who called on him here to reassure their countries' support for Pakistan.

An official handout issued here said that Qatar Ambassador Hamad Ali Al-Hauzab told the minister during the meeting that Qatar would be investing $5 billion in Pakistan in next few years. He said that Qatar has launched Islamic Taqaful Insurance Company in Pakistan and it will enhance investment of his country in Pakistan mutual benefit of the two countries. The two sides also agreed to convene the meeting of joint ministerial commission (JMC) shortly.

Jordan's Ambassador Saleh Ahmed Aljawarneh proposed convening of the meeting of the Joint Economic Ministerial Commission and the meeting of Joint Business Council to increase economic co-operation between the two countries.

He informed the finance minister that free trade agreement (FTA) was expected to be signed in August between the two countries. The two sides also reviewed the co-operation in the field of agriculture and railways. Possibilities of joint venture in manufacturing of phosphate fertiliser was also discussed.

Muscat's Ambassador Mohamed Said Mohamed Al-Lawati discussed the role of Pak-Oman Investment Company in promotion of economic co-operation between die two countries. He said Muscat by financing various projects has been instrumental in accelerating development in Balochistan.

It was also noted that Pak-Oman micro finance is playing a positive role in poverty alleviation. The two sides agreed to accelerate implementation of various projects in Balochistan costing around $27.5 million being financed through grant from Muscat.

The two sides also noted positive development of purchase of 65 percent shares by Pak-Oman Joint Investment Company of World Call shares, its interest in telecommunication and power sector. The Muscat envoy also expressed the interest to develop tourism in Balochistan. Ishaq Dar assured the envoys of his full co-operation in promoting the increased economic ties.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Pakistan and Turkey need to expand trade to $1 billion' ​* 
ISLAMABAD (April 20 2008): Pakistan has strong political and defence relations with Turkey, but efforts need to be made to expand trade to one billion dollars within the next two years, which at present amounts to $6.9 million.

This was stated by Foreign Affairs Minster Shah Mahmood Qureshi at a joint press briefing here on Saturday with his Turkish counterpart Ali Babacan, who especially has come to felicitate the government for smooth transfer of power.

"We have excellent defence co-operation, and both sides desire co-production in defence, which is of mutual benefit, for which a common approach is to be adopted to initiate "strategic dialogue between the two countries at foreign ministers level to further comment our relations", Qureshi said.

He emphasised that both countries have to revisit their approach on Afghanistan issue as they have the potential to play an important role in reconstruction and stability of Afghanistan.

Joint working group is of great significance. Its meeting was scheduled for January 2008, which was postponed due to the death of Benazir Bhutto. Now it is planned for May, 2008. The two countries also agreed on third round of tripartite talks among Pakistan, Turkey and Afghanistan in May. Summit meeting is to be held in June.

Reciprocating, Turkish Foreign Minister congratulated the people of Pakistan for their commitment to democracy and holding fair and transparent elections. "Turkey and Pakistan have unique nature of relations as we share similar concern on all regional and global issues," he said, adding that Pakistan has the strength to overcome all challenges.

"Turkey stands by its commitment to help Pakistan in its development," he concluded. Responding to a question about relations with Pakistan as opposition parties have been elected to power, but Turkey had good relations with Musharraf Government, he asserted that there are strong signals of solidarity as the coalition Government in Pakistan has been given vote of confidence by the opposition, (Musharraf Government).

Qureshi said that Pakistan and Turkey have deep-rooted ties that go beyond individuals and beyond Governments as they are higher than Himalayas and deeper than Indian Ocean. Replying to a question about reported arrests of Turkish nationals involved in acts of terrorism, Ali said: "Terror has no boundaries and no religion. It is a global threat; no one is immune to terrorism." But later on Qureshi said these reports were baseless.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan and China to sign MoU on economic cooperation on April 23 ​*
BEIJING (April 20 2008): Pakistan and China will sign a Memorandum of Understanding (MoU) on April 23 for expanding economic co-operation between the two countries. The MoU will be inked between the Lahore Chamber of Commerce and Industry (LCCI) and Hangzhou Federation of Chambers and will cover all the major areas of co-operation. These include enhancing trade, exchange and transfer of technologies between Pakistan and China.

"The MoU will help the Pakistani businessmen to have maximum interaction with their Chinese counterparts with the objective to give boost to the bilateral trade", said the President of LCCI Mohammad Ali Mian while talking to APP. The President LCCI, who is visiting Shanghai to attend an International exhibition on Plastic, will hold meetings with the members of Chinese Plastic Association and other businessmen.

He has also been officially invited by the Federation of Hardware and Tools of Jiangzhou province to inaugurate a grand exhibition on April 22. The Governor of Jiangzhou will also attend the ceremony. The President LCCI has also attended the famous Canton Fair and held very successful meetings with the organisers of the fair.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Institute of surgical goods technology for Sialkot ​* 
SIALKOT (April 20 2008): A comprehensive plan has been prepared for setting up a full-fledged institute of surgical technology in Sialkot costing more than Rs 211.974 million. The step is being taken for tracking surgical industry to diversify its production lines from old techniques to high value medical devices.

Official sources told Business Recorder here on Saturday that the proposed institute in this export-oriented city will help in advancement of surgical industry and it will much supportive in increasing the export.

The potential world-wide market for surgical devices are estimated to be over 30 billion dollars whereas exports from Sialkot are around 191 million dollars during financial year 2006-07.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Govt has no plan to privatise Port Qasim: minister​*
KARACHI, April 19: Federal Minister for Ports and Shipping Syed Naveed Qamar said on Saturday that the government has no plan to privatise Port Qasim.

Talking to the media after being briefed by Port Qasim Authority (PQA) officials at the port, he, however, said that the option to privatise the PQ might be mulled in future.

It is yet to be decided that the land given to the port is owned by the federal government or Sindh government. He said that the government would conduct a probe into a corruption case of land sale by the PQA at Rs0.8 million per acre.

The minister said that the land sold to industrialists by the PQA was under a policy to boost industrialisation. He said that Saturdays meeting was focused on employment, allotment of land and accounting system of the port.

He said that the Karachi Port and PQ were the gateway to economy and the government was evolving a comprehensive policy to improve shipping system. He said that Port Qasim had a capacity of establishing more terminals and berths.

To a question, Mr Qamar said that the PPP government would also give importance to an agreement made between the then government and dwellers of nearby villages when the PQ project was initiated.

An agreement was made in ZA Bhutto regime that the government would provide jobs to the residents of nearby areas at the port and also construct new houses for them whose villages and lands were included in Port Qasim.

The minister also said that a cement-handling berth would also be constructed at the port.

Earlier, PQA Chairman Rear Admiral (Retd) Syed Afzal briefed the minister about progress being made by the authority.

He said that during 2007-08, the PQA achieved a record cargo handling of 24.4 million tons, registering a growth of 13 per cent over the previous year.

For capacity enhancement, 10 private sector projects were being implemented as against three projects in last 24 years, he added.

He said that with the completion of these projects by 2010, the PQs handling capacity would rise to 82 million tons, showing an increase of 164 per cent while number of berths would be raised from 10 to 20. Simultaneously, the PQA was also striving for deepening of navigation channel to attract major shipping lines to the port, he added.

The PQA chairman said that so far 30 wheat ships had already been handled at the port and a total of 1.2 million tons of wheat had been handled so far.

He informed the minister that average wheat handling had been more than 7,400 tons per day.PPI

Govt has no plan to privatise Port Qasim: minister -DAWN - Business; April 20, 2008


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## Neo

*Gulf countries assure economic assistance​*
ISLAMABAD, April 19: The Gulf states have assured the newly established democratic government of massive economic assistance and investment in Pakistan.

The offer was made by the ambassadors of the three Gulf States to Pakistan -- Qatar, Jordan and Muscat -- in separate meetings with Minister for Finance Ishaq Dar here on Saturday.

An official announcement issued here after the meeting said that ambassador of Qatar Hamad Ali Al-Hanzab told the minister that Qatar would be investing $5bn in Pakistan in various sectors.

He said that Qatar had launched Islamic Taqaful Insurance Company in Pakistan and hoped that more investment would be made in the financial sector to tap Pakistans investment potential for the mutual benefit of the two countries.

The two sides also agreed to convene the meeting of Joint Ministerial Commission at the mutually convenient dates.

Ambassador of Jordan Dr Saleh Ahmed Aljawarneh has proposed convening of the meeting of the Joint Economic Ministerial Commission and the meeting of Joint Business Council to increase economic cooperation between the two countries.

He informed the minister that Free Trade Agreement (FTA) between the two countries was expected to be signed in August. The two sides also reviewed the cooperation in the fields of agriculture and railways. Possibilities of joint venture in manufacturing of phosphate fertiliser were also discussed.

Ambassador of Muscat Mohamed Said Mohamed Al-Lawati discussed the role of Pak-Oman Investment Company in promotion of economic cooperation between the two countries.

He said Muscat, by financing various projects, had been instrumental in accelerating development in Balochistan. It was also noted that Pak-Oman microfinance is playing a positive role in poverty alleviation in Pakistan.

The two sides agreed to accelerate implementation of various projects in Balochistan costing around $27.5 million being financed through grant from Muscat.

The two sides also noted positive development of purchase of 65 per cent shares by Pak-Oman Joint Investment Company of Worldcall shares, its interest in telecommunication and power sector. The Muscat ambassador also expressed the interest to develop tourism in Balochistan.

Gulf countries assure economic assistance -DAWN - Business; April 20, 2008


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## Neo

*Leverage buying at Rs84bn suggests caution​*
KARACHI, April 19: When the bulls begin to charge, they usually do it relentlessly. Analysts and equity market followers tire of repeating the same old phrase every passing day: The KSE-100 index has hit record high.

But that exactly is what is happening. The KSE has been blessed with a one direction, north, regardless of where the developed and regional markets are heading. The stock prices at the Pakistani market are crossing over the high barriers set by many of the timid analysts.

The index on Friday, the last trading day this week closed at 15,676 points, safely above the 15,000 level. The market capitalisation stood only a shade short of the incredible mark of Rs5 trillion; $76 billion.And when the bulls begin to charge, they do so with a fixed gaze on the positives. Quite clearly politics and not economy, is driving the market. There is general depression over the economic numbers, all of which set at the start of the fiscal year, have gone astray.

If the stock market in modern times is still regarded to be the barometer of a countrys economy, the one that hangs over the KSE looks desperately in need of repairs.

Brokerage firm, InvestCap listed positives during the week that included the rise of crude to record $117 per barrel; increase of petrol and diesel prices by Rs3 per litre; remittances scaling to over $600m in March and the consent of Asian Bank to provide $800 million for power projects.

The negatives, shrugged off by the market included provision of Rs33.2 billion by banks against non-performing loans in 1Q08; decline in cement prices by Rs10-15 per bag; PSOs decision to close the tap supplying furnace oil to Hubco and from the international front news that European Union pronounced Pakistan polls short of meeting international standards.

Some of the market pundits looking back over such neck-breaking speed of the stock index suggest caution. One reason being the total leverage buying, which at the weekend aggregated to a huge order of Rs84 billion. So are the small investors biting more than they can chew?

Investment under the Continuous Funding System (CFS) almost touched the upper limit, and stood at Rs54.5 billion. Investment in CFS Mk-II was Rs1.84 billion on April 17, ten days after the launch of the new financing product on April 7.

And finally the amount of future open interest grew by significant 57.5 per cent during the week to Rs29.3 billion, one reason being the change in method of calculating outstanding open interest from a brokerage house basis to a UIN basis (each individual investor).

Doddering at that height, the KSE index could lure unsuspecting investors and no one can say if the peak isnt still further up. In case of a sharp plunge, however, it would be unfair for the investor to blame the broker (even if he, at such a torrid time is still to be found in his room) for the brokers livelihood depends on selling optimism.

The rule of caveat emptor (buyer beware) prevails for investor, particularly the one with small means.

Leverage buying at Rs84bn suggests caution -DAWN - Business; April 20, 2008


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## Neo

*Pak-China trade figures disparity questioned​*
KARACHI, April 19: The difference of more than two billion dollars in the two-way trade figures between China and Pakistan, being given by the customs of two countries, is creating a lot of confusion among businessmen who seek an explanation from the government.

There are claims that manipulators in Pakistan are indulging in under-invoicing and making wrong declarations to circumvent levy of duties and taxes even after the operation of the Free Trade Agreement.

This is creating distortion in trade deficits, said a member of the Pakistan-China Business Council of the Federation of Pakistan Chambers of Commerce and Industry.

I doubt if the council ever discussed the difference in trade figures reported by the customs of two countries, he said and did not mince words that a lot of facts and figures were being concealed, with the active connivance of the customs, under a new system, CARE.

According to Pakistan Customs, the volume of two-way trade between Pakistan and China increased to $4.10 billion in 2006-07 from $3.16 billion in 2005-06.

China tabulates trade figures on the basis of calendar year and reported $6.88 billion trade in 2007 as against $5.24 billion in 2005-06.

Some difference between trade figures of the two sources is understandable because Pakistan calculates figures from July to June and Chinese Customs tabulates figures from January to December in a year.

But a comparison of the volumes of two-way trade in 2006-07 given by Pakistan customs with that of 2007 trade figures of China shows a huge difference of $2.78 billion.

Similarly the difference between trade figures in 2005-06 with those of 2006 shows another difference of more than two billion dollars.

An analysis of the two-way trade structure shows that Pakistan Customs reported exports of $575.90 million in 2006-07 while Chinese Customs showed almost a 100 per cent increase of more than one billion dollars export to China.

This difference is much wider in imports from China reported at $3.53 billion in 2006-07 by the Pakistan Customs as against $5.78 billion by the Chinese customs in 2007.

In 2006, Chinese customs reported $4.24 billion imports into Pakistan as compared with $2.70 billion by the Pakistan customs.

Tanned leather export is one item which is being declared wrongly to evade 20 per cent export duty and the issue was raised by the leaders of leather garments industry with the government.

Tanned leather is the basic input of leather garment industry as yarn is needed for value-addition in textiles.

China is a big importer of tanned leather and a big exporter of leather garments to Europe and the US.

Chinese customs reported import of raw hides and skins from Pakistan in 2007 worth $70.78 million as against $61.79 million imports in 2006.

Pakistan customs reports leather export of $31.11 million in 2006-07 as against $29.65 million in 2005-06.

According to leather garment industry, there is a nexus of Pakistani leather importers with leather garment factories in China and stores in Italy and other European countries who are thriving on this trade for the last few years.

The Chief Collector of Customs (South) is said to have promised to discuss this issue with local leather garment exporters, but it was blamed that the promised meeting is being delayed on one pretext or the other.

Also worth mentioning is the fact related to Pakistan-China business. Many Pakistani garment operators are getting their apparels, including shirts with embroidery work, prepared in China.

These imports are being offered as local product in the market. So is the case in footwear, in which reputed and well-established companies are importing shoes from China for sale in Pakistan as a local product.

A gentleman, who represents an established footwear company and is involved in this business, is now a federal minister in the cabinet.

A study, sponsored by the World Bank through a local organisation, estimates volume of informal trade between Pakistan and China at one to three billion dollars in a year.

Another study by the Central Board of Revenue reveals the route through which the informal trade between Pakistan and China is being carried out.

After Dubai, China has become one of the most popular destinations of businessmen from Pakistan, and many traders visit as many as half a dozen times in a year.

There is also a lot of confusion on wide and unexplained difference in trade statistics of State Bank of Pakistan and those being released through the private sector arm of the Central Board of Revenue, the Pakistan Revenue Automation Limited (PRAL). The previous government announced to convert the Federal Bureau of Statistics into an independent and professional organisation, but no headway was made in almost nine years. No professional statisticians, analysts, tabulators and mathematicians were engaged to run and operate the bureau as an independent and professional body.

Pak-China trade figures disparity questioned -DAWN - Business; April 20, 2008


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## Neo

*Food, fuel and fiscal crises​*
The sky-rocketing food prices have emerged as the new crisis not only in Pakistan, but also on the global economic horizon, eclipsing the already looming fuel and financial crises, which had been dominating the headlines.

The world is thus engulfed in a new hydra-headed crisis, with three essential components: food, fuel and finance. The three components have different geographical origins and their effect on different segments of the globe and their inhabitants is highly uneven. But the transmission of these crises in the global economy has become much easier and faster since the regime of liberalisation of trade, capital flows, deregulation and privatisation was imposed through the Washington Consensus in the early 1990s in the name of achieving higher growth and reducing global poverty.

Pakistan is affected by all the three components of the mega-crisis in varying degrees. But its economic managers have always tried to deal with such crises individually, rather than as a whole, and in an ad hoc, rather than a systematic manner.

The new government, which has yet to come to grips even with the more immediate problems facing the economy, has hardly given much thought to these issues, while the outgoing government had hardly paid any attention to these developments as it relied on the continuing aid and investment, epitomised by its parroting of the precept of a minimalist role of the government in the economy. However, with the economy once again in dire straits and these external shocks looming like a meteorite to strike any time, it is about time to be prepared for the worst and consider pro-active economic policies  both domestic and external  which can provide some protection against them, at least to those most vulnerable to them.

Although the food crisis is now a world-wide phenomenon, ordinary Pakistanis are more concerned about whether to buy an additional nan or a 10kg atta bag (the minimum size carried by utility stores, which costs as much as the daily minimum wage) or to buy medicines, shoes or books for the child or to walk five miles to work to save the enhanced bus fare than about knowing how the markets are loaded against the poor, both at home and abroad.

The government in its zeal to publicise its stellar economic performance and growth record, did not pay much attention to the needs of the poor. It mistakenly believed that the government could outsource to the market through the trickle down effects  the responsibility towards protecting them against any calamity, such as the one stalking them now in the shape of food inflation.

The current food crisis in Pakistan is often blamed on the past governments ineptitude  wilful or otherwise  in over-estimating last years wheat crop and in allowing the export of 0.5 million tons of wheat and then having to import 1.7 million tons of wheat at much higher prices, costing about $1 billion.

Plausible and reprehensible as this may be about the culpability of a discredited regime, it oversimplifies the complex issues underlying the current food crisis, which are not unique to Pakistan. From Haiti to Hanoi, the food crisis is rearing its head in all corners of the globe, especially  though not exclusively  in the developing world, where food consumption constitutes up to 70 per cent of the family budget.

A dramatic rise in the worldwide cost of food is provoking riots in many developing countries where millions more of the worlds most vulnerable people are facing starvation as food shortages grow and cereal prices soar.

It threatens to become the biggest crisis of the 21st century  a century in which poverty is supposed to become history. However, unlike the past, food shortages and famines are not the result of the Malthusian spectre of population growth  which most developing countries have managed to control dramatically in the last half-century  or even the Ricardian concern about decreasing returns, but much more the result of the inequalities of income and the growing geographical disparities  both within and across national borders  in the degree of development and incidence of poverty. Some of the problems facing these countries are structural and global, rather than cyclical or transitory and contextual or domestic, in nature. Among the structural problems on the supply side are climatic changes, natural disasters (such as tsunami and earthquakes) and the decline in productivity as a result of the petering out of the Green Revolution. These factors have had particularly adverse impact on the access to land and other income-earning assets (e.g. coastal catchment areas for fish-farmers or terraced lands in mountainous areas) of the poor, whose incomes have fallen, while average per capita incomes have shown steady increases.

On the demand side, the structural shifts have arisen from a rise in the incomes of middle classes and the shifts from food grains to cash crops and the increase in demand for processed foods, such as bakery products and fast foods, as well as increase in poultry and meat consumption. The latter has also led to increase in the acreage and production of corn used in raising livestock and poultry  it takes eight kgs of grain to produce one kg of beef  at the expense of wheat and other food crops.

As a result of globalization, there has also been considerable increase in demand for agricultural exports, especially of non-food crops, such as vegetables and fruits, reducing the acreage for and supply of food crops. Further, the rapid pace of urbanisation, especially in Pakistan, has made severe encroachments on farmlands in contiguous areas, which also results in the diversion of irrigation water to meet urban needs.

Water is likely to soon become as scarce as oil, the most important ingredient of the second major global crisis, i.e. that of fuel or energy

With the price of oil per barrel likely to remain in triple digits in dollars (if not in euros), it has also both direct and indirect effects on the pocketbooks of ordinary people. Transport costs, which feed into all other economic activities, are the main carriers of inflationary pressures from this source.

The rise in oil prices has also had the inadvertent effect of increasing corn production for the sake of producing ethanol as a partial substitute for oil, but resulting in the lower production of consumable food grains and raising corn prices.

The other main effect of the fuel crisis is the generation of electric power, which affects both industrial and home-based activities that are playing an increasing role after the introduction of computers, internet, cell-phones and other electronic gadgets. This has led to increased load-shedding with consequential loss of working days in factories and wages for the workers.

Rising transport costs, load-shedding and food inflation are conflating to produce a combustible bomb of social unrest, which may prove more potent than the terrorist threat that has preoccupied public attention.

The rising onslaught of consumerism in which Pakistan has always had a lead has further aggravated the problem and has resulted in imports rising much faster than exports and giving rise to unsustainable current account and fiscal imbalances (as much of the domestic energy consumption is subsidised).

This leads us to the third most important crisis in the global arena, which could engulf the world into a deep recession comparable to the Great Depression of the 1930s, which also started in the US, with incalculable political and economic consequences.

The present financial crisis in the United States owes its origin in the sub-prime crisis triggered by the housing bubble which started sputtering two years ago and was itself the result of the central banks efforts to combatan earlier recession in the wake of the bursting of the dotcom boom in 2001, through a series of interest rate reductions.

The US economys growth after that recession was largely jobless, and the Federal Reserve remained deeply concerned about the possibility of Japanese-style prolonged economic stagnation. What the US central failed to do, however, was to prevent the banking sector from financing the housing boom without due diligence and prescience about the consequences of indiscriminate lending.

Over the last two decades banks had lobbied in the US to get the government out of its business and to obtain freer rein for financial innovation, such as hedge funds and mortgage-backed securities. However, when the housing bubble burst and the banks losses climbed into trillions and when the likes of Citibank and Bear Stearns and UBS came on the brink of bankruptcy, they lobbied for the Federal Reserve to intervene and bail them out through an unprecedented government rescue plan.

Whether this bail-out will succeed in saving the United States financial system on which the global economy rests or whether it would result in a de-coupling of the US economy with the rest of the world remains to be seen.

The structural shifts taking place in the global economy need to be factored in to the economic management of Pakistan, along with the domestic political imperatives emanating from the 18 February elections, by the countrys new economic managers.

There is a need for new thinking and new institutions, as well as the revival and re-tooling of the old institutions, such as the Planning Commission, the National Tariff Commission and the Security and Exchange Commission, along with the countrys think tanks and NGOs to prepare Pakistan for facing the challenges of the domestic and global crises.

Food, fuel and fiscal crises -DAWN - Business; April 21, 2008


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## Neo

*Punjab: unlocking growth potential​*
Unlike the new provincial government in Sindh, the coalition of the Pakistan Muslim League-Nawaz (PML-N) and the Pakistan Peoples Party (PPP) in Punjab has yet to put together and articulate its economic development agenda.

Currently, it finds itself pre-occupied with the wholesale administrative reshuffle at the provincial and district levels to flush out officials considered loyal to the previous rulers.

Management of the provinces wheat market for ensuring availability of flour to the people at the officially fixed price is another immediate issue occupying the minds of the elected government. Little wonder then that many do not expect the PML-N led coalition to spell out its economic policy and assemble its development agenda over the next several weeks  at least, not until the next provincial budget.

The government too does not appear to be in a hurry and is taking its time to settle down and sort out the issues related to the distribution of the cabinet portfolios between the coalition partners before it comes out with its economic strategy.

How can you expect a week old government to take stock of the existing economic situation of the province and formulate its own strategy?, argues a senior provincial government official. Others insist that the recent changes in the provincial administrative set-up have shifted the focus of the bureaucracy from the economy and the ongoing governance reforms for the time being.

The new officials replacing the previous ones would also need some time before they could understand and focus their attention on the twin issues of economy and governance reforms, says an official of the provincial planning & development (P&D) department. He says the new government is not expected to bring about any major changes in the existing policies, but would certainly want to revisit the provinces development priorities and change them according to its own needs and vision.

Punjab  which contributes approximately 60 per cent to the countrys gross domestic product (GDP), has grown significantly fast at an average annual rate of above eight per cent since FY2003, with its Gross Provincial Product (GPP) peaking to 9.35 per cent in 2005.

The kind of growth achieved in the province and its consistency to pursue governance reforms in the province to improve public service delivery and create substantial fiscal space for greater spending on social sector actually endeared the financial and economic managers of the previous government to the multilateral donors like the Asian Development Bank (ADB) and the World Bank.

On the basis of the considerably high growth rate, the Federal Bureau of Statistics (BoS) estimated that per capita income rose 67 per cent to $990 in FY2007 from $601 in FY2003 at the current factor cost. An estimated 3.5 million new jobs were estimated to have been created in the province in three years preceding 2006 while the incidence of poverty was claimed to have dropped down by 11 per cent from above 32 per cent in FY2002. It was also claimed that the incidence of poverty in Punjab would drop to a single digit figure by 2015.

Though the critics of the development priorities of the previous government did not agree with its claims of the trickle-down effect of the high economic growth, they agreed that the growth figures were impressive. The growth achieved during the years between 2003 and 2007 was impressive. But it could have been much higher, and it could be used to improve the lot of the rural and urban poor living across the province, argues an economic expert, who has been working with the provincial government for several years now. He feels that Punjab could have grown at 10 per cent or more had the previous government used the opportunity to restructure the productive sectors  industry and agriculture.

Punjab has huge potential for growth. But this potential has to be unlocked to put it on the rails of sustainable economic growth for a longer period, says a private consultant who has worked with the provincial government on governance reforms. The new government can unlock this potential provided it focuses its attention on agriculture and industry. That will not only boost growth but also create employment opportunities and reduce the incidence of poverty, he argues.

Unlocking the untapped growth potential of agriculture and industry in Punjab means huge investment in human resource, infrastructure  education, health, roads, power, transport, etc , and improvement in the working of the government. With the federal tax revenue collection falling short of the target for this fiscal in many years, some fear that the provincial government would have lesser resources to spare for the maintenance of the physical and social infrastructure built in the recent years and undertake new projects that are needed to facilitate industry and agriculture both for increasing productivity and achieve a higher growth.

But a leading economic expert, who has been working for the multilateral donors, does not agree with this assessment. Money is no issue. I can assure you on this count. The donors are ready to give the province any amount of money for any project. But for that the government would have to assure the donors that it means business and would not scrap any project  and add to the already huge throw-forward of incomplete projects in the province  just because it was initiated by its preceding government, he says.

Punjab: unlocking growth potential -DAWN - Business; April 21, 2008


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## Neo

*Tapping wind turbine-making facility​*
Pakistan is presently short of 3500 mega watts (MW) of electricity. If fossil fuel is utilised for this purpose, it would be extremely costly as oil recently peaked at $114 per barrel. Hence some other means should be adopted for the production of electricity. This article dwells on the generation of electricity through wind and focuses on manufacturing of wind turbines, the machines used for the generation of electricity.

Generation of electricity through wind is not something new. India, the fourth in line of countries in the world for the generation of electricity, is producing more than 8000 MW of electricity by utilising wind turbines. It is manufacturing these turbines and exporting them. One would be surprised to know that in the region of Nevarra, Spain, 70 per cent of the regions energy needs are fulfilled by wind and solar energy. Its a classic example of using renewable energy in any country. The question that automatically comes to ones mind is: If it can be done in Spain, why cant it be done in Pakistan? The answer is a big Yes.

A layman would ask as to what a wind turbine is? Simply put, a wind turbine is a machine that is used for the generation of electricity from wind. Its installed on a tower at a windy location to capture wind so as to generate electricity. The faster the wind blows, the more electricity would be produced. Once a wind turbine is installed, it would produce energy for 25-30 years free of cost as no other fuel is used except wind.

A typical wind turbine comprises a rotor with one, two or three blades, a gearbox, two shafts, a generator and a controller. It is installed on a steel tower facing the wind. The higher the turbine is installed, the more electricity it would produce. If the wind is slow and turbulent near the ground, that would not be suitable for energy generation. The turbine operates for 363 out of 365 days a year and stopped only for two days during the year for carrying out its scheduled maintenance.

A question often asked is: If we go for the wind energy option, we would be needing hundreds of wind turbines in order to make up for the shortfall of electricity. Why cant we manufacture these turbines ourselves? Yes, we can, if theres a will. We cannot expect foreign manufacturers to provide these turbines to us as and when we need them due to the long lead time involved. Moreover, we would be dependent on manufacturers for the supply of spares.

Pakistan can manufacture these turbines and also export them to other countries as its an emerging mode of generating electricity and the wind turbines are in short supply the world over. One has to wait quite a bit for an order to materialise. So, if we have to choose the option of producing electricity from the wind, we will have to manufacture wind turbines in our own country.

Our country is blessed with excellent manpower thats extremely cheap and hardworking. Here I would like to narrate a small incident. We wanted to manufacture a certain item in Pakistan Aeronautical Complex, Kamra for which we had to collaborate with a French company. The French team evaluated the expertise of our technicians. The French team leader asked his counterpart as to what would be the charges for the expertise of his technicians if it was decided to manufacture the item in Kamra. Our team leader just said off-the-cuff that he would charge $10 per hour per technician.

On hearing this, the French team leader said, he would be saving $35 per hour per technician as a technician of such calibre was charging $45 per hour in France. Such technicians can be used for manufacturing wind turbines. Shaheen Foundation, Islamabad maintains a record of such technicians.

The cost of manufacture can be brought down drastically if we were to utilise the existing facilities for manufacturing parts and components of turbines and assemble them at a central location, followed by rigorous testing.

During a survey of the manufacturing facilities, I got convinced that parts and components of wind turbine could be easily manufactured indigenously. Blades and hubs (the item to which blades are firmly connected) can be produced without any hassle at Aircraft Manufacturing Factory (AMF), Kamra. If Kamra is unable to undertake this job due to its over-commitment, there are other reputable concerns where this job could be undertaken. The gearbox and the two shafts are purely mechanical items, nothing special about them.The services and expertise of Machine Tools Factory, Landhi, Karachi or at Heavy Mechanical Complex, Taxila or any other facility dealing in mechanical items can be utilised..

The electrical generator installed behind the gearbox can be produced by any of the electrical concerns at Lahore or Karachi. The same goes for controller that utilises electronics besides computer software. Much more complicated projects are undertaken in our electromechanical-cum-electronics-cum computers concerns. As for the steel towers on which the turbines would be installed; these are being manufactured in the country.

Wapda is using thousands of them on the roadside. These towers could be designed and modified as per the desired specifications for use with the wind turbines. Regarding cables, we have numerous manufacturing factories. If required, their existing capacity could be upgraded to produce cables of the required specs that could be used to connect wind turbines to a home, business, factory or the national grid.

Lastly, instead of setting up manufacturing facilities for each and every part of wind turbine, the facilities available to their optimum level for manufacturing these parts should be utilised. Wherever required, these facilities could be upgraded. It only requires excellent management and sincerity of purpose and nothing else. By following this strategy, the cost of manufacturing would come down drastically. If we plan carefully and apply all tools of modern management, theres no reason why we cannot make this experience a success. The only requirement is that our manpower and facilities may be harnessed to get the maximum out of them.

The writer is the ex-managing director, Kamra Avionics & Radar Factory.

Tapping wind turbine-making facility -DAWN - Business; April 21, 2008


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## Neo

*Using remittances for development​*
REMITTANCES have emerged as a major source of foreign exchange. Global official remittances have increased from $2 billion in 1970 to the present level of over $80 billion. About sixty per cent of the global remittances flow towards developing countries. And these exceed the global official development assistance as well as capital market flows to the developing countries.

However, over the years, concerns have been expressed on the limited productive use of these remittances. It is estimated that 50-60 per cent of remittances are spent on current consumption and only about 10 per cent go into investment.

Much of the remittances are used for repayment of loans, in daily expenses such as food, clothing, child education and healthcare and basic subsistence needs. Funds are also spent on building or improving housing, buying land or cattle or durable ,consumer goods such as washing machines and televisions. Remittances are also utilised for financing migration of other family members on social ceremonies and community development activities.

Generally, only a small percentage of remittances is used for savings and what is termed productive investment e.g. income and employment-generating activities such as buying land or tools, starting a business and other economic activities with multiplier effects.

Due to poor infrastructure, lack of access to credit, and limited opportunities for small-scale investment, the migrants are making rational decisions about the use of their remittances.

While Overseas Pakistanis Foundation (OPF), offers investment advisory services to returning migrants and assists them in obtaining services from relevant government departments in setting up business, much more effort is needed to influence the pattern of utilisation of remittances for productive purposes.

First, there is a need for policy change to promote remittances. For migrants, the desire to remit savings through official channels is a function of convenience, flexibility and profitability of their transaction. Convenience depends on the ready availability of financial intermediaries who can easily remit funds to their families. Flexibility affects deposits more than remittances and is related to the availability of facilities for migrants to keep their deposits in foreign exchange and make withdrawals when desired. Profitability is determined primarily by the gap between the official rate of exchange and the unofficial rate available to the migrants. Besides this gap other important factors relate to the real interest rate, inflation rate and exchange rate, as well as expectations regarding changes in these rates.

In order to encourage migrants to hold their saving balances in financial assets at home as opposed to the host country, the government has introduced foreign currency denominated bonds. A special package of foreign exchange remittance card (FERC) has been implemented and under these, five categories of remittance cards are offered to those overseas Pakistanis who remit $2,500 to $50,000 in a year. A wide range of incentives are also being offered to the foreign exchange remittance card holders.

To encourage savings, the government provides temporary and permanent migrant workers with the incentives to remit to foreigncurrency accounts (RCFAs), which can be repatriated, by domestic banks by offering a premium over and above the interest rates available in the international financial market. However, Bangladesh offers additional incentives through a preferential exchange scheme applied to conversions of foreign exchange from the RCFAs to local currency. Its Wage Earners Scheme (WES) enables migrants to sell their foreign exchange to importers at daily auctions at a premium over the official exchange rate.

In India, non-resident Indians are allowed to open foreign currency non-resident accounts which can be denominated in dollars or pounds sterling. The balances on these accounts and interest earned are repatriable The deposits are also exempt from wealth tax.

In terms of productive investment of remittances, it is noted that the focus of the incentive policy regime is on the high skill/income migrants living abroad permanently, either in the industrialised or developing countries. There is very little effort that is addressed to low skill, low income, temporary migrants, mostly workers in the Middle East who provide a substantial amount of foreign exchange through transfers and re-enter the labour market in search of employment on their return. The prospective returnee should be provided an enabling environment to place her/his saving into productive investment.

South Korea has launched an experimental training programme for returning migrants. It aims at training returning migrants in new skills so that they can move to other industries or establish their own businesses. In Thailand, banks offer an advisory service on investment opportunities to its migrant-worker customers. The workers who seek advice are also eligible to obtain supplementary loans from the bank if they have a good record of savings.

In the Philippines, the POEA (Philippines Overseas Employment Administration) in collaboration with the ILO has established training centres in various high-migration regions. These centres provide business consultancy, information services, training in small-scale business management and financial supports to returning migrants and their family members. In Sri Lanka, the Department of Labor initiated a counseling service for return migrant. A Return Migration Branch was established in the Research and Development Division of the Ministry of Labour, to identify the problems of returning migrants and provide counseling and advice.

Along this, Pakistan has a Non-Repatriable Investment Scheme under which overseas Pakistanis (including those returning permanently) are allowed to import machinery and equipment at concessionary rates of duty to establish manufacturing enterprises. Migrant workers are also encouraged to invest in export processing industrial zones. In India migrant workers are given preferential access to capital goods and raw materials. Even Bangladesh offers special incentives for domestic investment..

Sri Lanka was the first labour-exporting country in Asia to launch an entrepreneurship development programme for returning migrants. This programme, inaugurated in 1982 by the Sri Lankan Ministry of Labour in collaboration with the Merchant Bank of Sri Lanka (referred to as ML-MB Programme) aimed at guiding returning migrants in business creation. In Turkey and Yugoslavia, investment by migrants, is encouraged through workers companies and village development cooperatives.

Policy makers in Pakistan need to focus on diverting remittances into productive avenues.

Using remittances for development -DAWN - Business; April 21, 2008


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## Neo

*Banks eying business on rising trade​*
Pakistans trade with China has nearly doubled to $4 billion in fiscal year 2007 from $2.2 billion in 2005, according to State Bank figures. But the Chinese Customs statistics put the two-way trade at $6.86 billion in 2007, up from $3 billion in 2004.

Whatever may be the actual figures, the fast growing trade between the two neighbours is luring Pakistans major banks--- the National Bank of Pakistan and the Habib Bank Limited -- to explore possibility of opening their full fledged branches in China. But they face the stringent rules that forbid any foreign bank with less than $20 billion assets to open branches there.

For more than 20 years, the NBP and the HBL have representative offices in China. But the bankers have now managed to persuade the government to raise the banking issues for inclusion in the next proposed bilateral Free Trade Agreement with China on services. If allowed to open branches, Pakistani banks can increase their business as the bilateral trade is expected to go up to $15 billion by 2012. Accordingly, President Musharraf took up the issue of a fresh FTA that should address the issue of expanding and upgrading banking linkages.

With assets worth more than $10 billion, the NBP is also exploring option of establishing a wholly or jointly owned subsidiary in China. The bank meets the threshold of total assets to set up a locally incorporated bank in China, a senior official disclosed.

Also on the bank agenda is a joint venture in Pakistan in collaboration with the Industrial and Commercial Bank of China (ICBC) with 30 per cent stake. The ICBC is the second largest bank in the world with $1.11 trillion assets and 18,000 global branches network. The bank officials claim of having created substantial ground for the joint venture project.

Sometimes back, the Indian media reported that China was relaxing its stringent rules to provide a big Pakistan-specific concession to allow opening of branches with $250 million worth of assets. Pakistani bankers denied having any knowledge of it.

The NBP also claims it is now close to reaching an agreement with China Development Bank for a $100 million credit for financing industrial projects. This line of credit will remain in operation for eight years.

Pakistan offers the largest market to China in projects construction, say bankers. More than 30 Chinese companies are working on construction projects. By the end of 2005, China had signed 444 contracts that involved an investment of $7.76 billion.

But the growing trade imbalance is a matter of concern for both the government and business. According to SBP figures, imports were to the tune of $3.53 billion in fiscal year 2007 against exports of $575 million.

But who is to be blamed for increasing trade deficit? There are conflicting answers. Pakistans production base is too narrow to offer a wide range of products to China. And imports from China are also project-related besides cheap consumer and other low value items.

Pakistans exports to China lack diversity and both the countries are competitors in the textile sector a senior officer of the Trade Development Authority of Pakistan (TDAP) observed. He advised exporters to diversify exports to non-traditional items which can lead to narrowing down of trade gap. Dont forget our businessmen too prefer imports from China mainly because of low value and relatively less freight, the officer argued.

The State Banks latest quarterly report mentions preference of Pakistans importers of cell phones from China over other countries as unit values offered by China are significantly lower than the unit values offered by alternate suppliers.

Recently, the officials provided a detailed analysis of structure of two-way trade before a large gathering of businessmen to identify items which have marketing potential in China but are not being exported either out of ignorance or not included in concession-rated tariff lists of export under FTA. For example, China imports petroleum oils from bitumen minerals worth $47.7 billion. Pakistans overall export of this item is $13.9 million. This is not included in Pakistan-China FTA list of items.

There are more than half a dozen categories of value-added textile products of which China is a big importer and Pakistan a significant exporter. But these are not exported to China.

The government is putting hurdles in import of automobiles from China due to Japanese investors lobby, says an import of small cars. Abdul Wahid, a director of Pak-China Business Council, says he imported 1,200 units of a Chinese car of 800 c.c. engine. It draws a taxation of almost 100 per cent which makes it uneconomical he said. He says he plans to set up a car manufacturing plant but alleges that it is being obstructed by the competitors.

To expand bilateral economic and business relations, a special economic zone was set up recently in Lahore where a few projects of Chinese investors are in operation. More such economic zones are planned for Chinese investors.

Banks eying business on rising trade -DAWN - Business; April 21, 2008


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## Neo

*Unusual trading pushes stocks to new heights​*
THE share market maintained its run-up throughout the last week as investors were not inclined to take even a technical breather in a highly overbought market and no one was in a mood to miss the bandwagon at this stage.

An idea of unprecedented prices flare-up may well be had from the fact that most of the leading shares were subjected to upper locks and after clearance they rose higher in the absence of floating stocks.

It was a very unusual trading week as the index did not look back after the opening increase and finished with most of the earlier gains fully sustained.

The KSE 100-share index steadily progressed towards its new target of 16,000 points and analysts believed it was not an elusive goal as a new group of moneyed people had opted for the share business together with foreign and institutional traders. The index achieved a major breakthrough beyond the barrier of 15,500 points at 15,676 boosted by heavy buying in the leading oil, cement, fertiliser and bank shares, they said adding it had apparently crossed the last barrier to hit the next target of 16,000 points.

Although it ended below the weeks high of 15,693, it scored a fresh rise of well over 238.5 points at 15,676.34 as compared to 15,430.89 a week earlier, adding Rs68 billion to the market capital at Rs4,791 billion. The free float 30-shares index also rose by 175.04 points at 18,991.92.

Analysts said the market performance during the week showed that pent up demand from almost all quarters may not dry up in the near future and could lead to fresh price flare-up on some counters where the potential of capital gains was fairly attractive.

The sustained price flare-up in the backdrop of market talk of withdrawal of capital gain tax exemption in the budget and some new taxes on the corporate sector did not deter investors, and they continued to build-up long positions at the current levels.

Analysts said technical correction was overdue, but ruled out massive fall as in the changed political scenario investors seemed to be more optimistic than before.

They said the period of political uncertainty was over as the governments were in place both at the centre and the provinces allowing investors to plan long-term investment and the leading among them were said to be busy in new portfolio building.

There could be technical corrections here and there, but the general perception was that the market had decided to go in unison with the positive basic fundamentals.

The fact that the market had ignored negative developments on the local political front and bad economy, spoke a lot about the future of share business, and those who could read between the lines were busy in moping operations on selected counters, analyst Ahsan Mehanti believed.

The reports that world crude prices had crossed the $117 barrier triggered buy stops in leading oil shares, mainly Pakistan Oilfields, OGDC and Pakistan Petroleum on the perception of an identical increase in their profitability.

An upper lock in the Pakistan oilfields after its share value soared by a limit gain in session and some others reflected that the new set by the investors were not that ambitious. Its highly inflated rate evoked sympathetic price flare-ups in other leading oil shares. An identical performance by the MCB, which also jumped up from the previous close, was another supporting factor behind the current run-up.

It was a judicious blend of both local and foreign buying and for good reasons too, said analyst Faisal A. Rajababli. But the important feature is that leading shares on other counters also traded higher, he added.

He predicted the index could hit its next chart point of 16,000 levels on the strength of payouts for the year ended March 31, by some leading companies, which were expected to be in line with the general perception.

Forward counters: Trading on the cleared list was also maintained on the higher side on active follow-up support coming from all quarters. As a result all leading shares, which came in for trading were generally higher amid brisk activity.

Leading gainers among them were Nishat Mills, Arif Habib Securities, OGDC, Pakistan Oilfields, Pakistan Petroleum on reports of a record rise in world oil prices, Engro Chemical and second liners, notably Azgard Nine, Sitara Peroxide and some others also recorded gain.

Unusual trading pushes stocks to new heights -DAWN - Business; April 21, 2008


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## Neo

*Britain backs reconciliation with militants: support in economic and other fields to continue ​* 
PESHAWAR (April 21 2008): British Foreign Secretary David Miliband has said that Britain backs the efforts to reconcile with militants on the Afghan-Pakistani border. Addressing a press conference here at a local hotel on Sunday, he said his country would support the reconciliation process being initiated by Pakistan's government with those who believe in non-violence and negotiations.

"We have been strong supporter of reconciliation both in Afghanistan and Pakistan. But reconciliation must be on the basis of some clear bottom-lines," However, he said that the reconciliation was aimed at marginalising those, who were using extremists' means for ideological reasons.

"We should negotiate with those who are willing to negotiate and we should reconcile with those who are willing to reconcile," Miliband said.

"Those who are willing to renounce violence, I think it's important to reconcile with them and to make sure that they find place within the political process," he said. "There is no question that across the Afghan-Pakistan border is an area that is of major interest to us ... because the origin of a significant amount of terrorism that we face has links back to here," he said.

He said Pakistan has been passed through a national trauma for the last three to four months. However, it is showing very strong signs coming out of this trauma with strengthening of the democracy.

He said Britain wants strong and independent institutions in Pakistan on the basis of serving society.

Referring to his talks with NWFP Chief Minister, Governor and nationalist leaders, Miliband said, "The reconciliation I heard about today (Sunday) of the people who are willing to participate in non-violence, and political means.

The British Foreign secretary arrived in the Peshawar here on Sunday and held meetings with NWFP Chief Minister Ameer Haider Khan Hoti, NWFP Governor Awais Ahmad Ghani and nationalist leaders Asfandyar Wali Khan and Afrasiyab Khattak at Frontier House.

He also met the victims of terrorism and had a lunch with people from different walks of life. However, the British envoy had a very little time for media people and only answered four questions in his hardly seven-minutes press conference, started earlier from its scheduled time.

When asked about his government stance regarding security concern on tribal belt lying between Pakistan and Afghanistan, the British Foreign secretary said that like others the United Kingdom has a major concern about security challenges in the region as the terrorism they face has links here.

"Terrorism is a big challenge for Pakistan as it poses threat to the people, who are living here," he said and added that the UK wanted to work closely with the Pakistani authorities on security issues.

He welcomed the endeavour of Prime Minister Yusuf Raza Gillani for identifying combating terrorism as top priority of his government in all its shapes and added that it would not only benefit Pakistan but the whole region.

"We are not here for quick-fix policy as there is no quick-fix solution to any problem either militarily or politically," he said and added that they were partners for long term not only against terrorism but in the fields of economic, social and political development.

During meeting with NWFP Governor Owais Ahmed Ghani, David Miliband discussed matters of common interest with particular reference to the situation in the region.

The Governor briefed the visiting guests about the law and order situation in NWFP and Fata and highlighted the government's initiatives for the socio-economic development of tribal areas.

He said that a comprehensive development strategy was being implemented to bring these backward and remote border areas to the main stream of development. The Governor appreciated the British government's contribution towards development and investment in Fata and termed it as "valuable and encouraging".

The Governor expressed the desire that the international community should accelerate its efforts for bringing ever-lasting peace in Afghanistan, which would ultimately have positive impact on the peace and stability of the entire region.

The Governor in this context also made a mention of the Pak-Afghan Jirga and said that it was a positive initiative for reconciliation in Afghanistan with an aim to bring peace and stability to that war torn country through a traditionally established Jirga process. The British Secretary of State reiterated his govt. support and assistance for the development of Fata. He also appreciated the Pakistan's role in war on terror and described it very positive and effective.

App adds: Miliband said that Britain will continue multi-pronged and long term relations with Pakistan for its active role in war against terrorism. He said relations between Britain and Pakistan are focused on three fields including economic, political and security.

He said British is a strong partner of Pakistan and will continue its support to the country in these sectors. British Foreign Secretary also dispelled the impression as portrayed internationally about NWFP province. He said he has not found any such threat in the province as being projected in the western countries. While responding to a question, British Foreign Secretary said Britain wanted independence of judiciary in Pakistan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Government plans to increase software exports up to $5 billion by end of 2010​* 
KARACHI (April 21 2008): The Federal government has planned to increase software exports up to $5 billion by the end of 2010. Sources told Business Recorder on Saturday that the current level of software export was about $50 million per annum, sector needs more support from government to increase its exports.

For this purpose, the federal government is facilitating Information Technology (IT) sector through its industry friendly policies, which would help sector to enhance its software exports, they said.

They said, "government is very keen to promote IT and has taken various concrete steps in this regard like formulation of IT policy, waiver of taxes for software houses, major scholarships in IT education and training, cheaper bandwidth rates, etc".

To a question, they said government realised that it seemed to be difficult to enhance software export up to that extent in a competitive international market with insufficient IT professionals.

In view to increasing the number of IT professionals, government is considering the commencement of IT Development Programme (ITDP) aimed to facilitate students by providing quality education and training in a affordable fee packages, they said and hoping that it would play a key role in producing sufficient IT professionals across the country. They apprised that government has planned to increase the production of trained, diversified and well skilled IT professionals up to 53,000 per annum in next two years through ITDP.

Software development primarily depends upon the qualified professional, however, the estimated growth rate of 20 percent per annum in the domestic software market will require over thousand software engineers every year, they added.

However, the reputable institutes produce not more than 150 software engineers annually, where 80 percent of them, are being trained during jobs at software houses and user organisations, they said. "Immense livelihood opportunities are present in IT field and it is wide open for professionals to enter in it and earn lucrative salaries besides playing vital role in the growth of country's economy," they maintained.

To a question, they replied that about 400 to 500 software engineers were produced in substandard institutions with lack of proper and qualified arrangements causing to produce low quality IT professionals across country.

Due to poor education, they have failed to meet the market requirement and earn low salaries as compared to qualified professionals across globe, they said.

"Our software industry is not investing enough in the IT sector and the market is characterised by old technologies leading to low charge rates. Therefore, products are competing in lower value-added segments of the global services market," they lamented.

Keeping the view, the government has evolved a policy to provide incentives on software exports and manufacturing of computer hardware, besides establishing software technology parks, data networks, they said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Rice export ban to cause $1.2 billion foreign exchange loss ​* 
KARACHI (April 21 2008): The country will have to face a loss of about $1.2 billion, in foreign exchange, in case the government imposed ban on rice export, rice exporters said. On the other hand, they said, the national exchequer would also have to lose on account of withholding tax and other levies.

Sources said that the country would also lose all its traditional markets globally, which have been established after long efforts. It will not be possible to re-capture these markets for rice exports, they added. They said that the main causes behind the increase in rice prices in local market are hoarding rice by non- exporters of rice and smuggling to Iran, Afghanistan and India, Anwar Mianoor, a rice exporter and former vice-chairman of Rice Exporters Association of Pakistan (Reap) told Business Recorder on Sunday.

He said that rice exports were continuing on low average price from Quetta on only $330 per ton against the average price of $1500 for rice export of same quality from Karachi. He said that the government should take steps to curb rice smuggling to Iran, Afghanistan and India.

The government should give a 10-day ultimatum to rice hoarders for releasing their rice stocks into the market and strict action should be taken against them.

He suggested that the government should ban rice export on D/A and D/P basis and the rice export should only be allowed against L/C. He said that Pakistan produces over 5.5 million tons best quality rice annually, "and we have over 3 million tons rice available for export", as local consumption of this commodity is about 2 million tons. "We earn huge amount in the shape of foreign exchange, as Pakistan's rice exports stood at $1.2 billion last year", he added.

He said that the government wants to ensure proper stock of rice to avoid any shortage in the country and rice exporters are ready to provide required quantity of rice for utility stores and Passco. Mianoor said that government has asked the rice exporters to provide 0.7 million tons for utility stores and Passco. He said that the rice exporters can supply 0.2 million tons of rice immediately for utility stores and Passco. "We are able to provide 50,000 tons of rice monthly to utility stores", he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*SCCI demands decision on big dams ​* 
PESHAWAR (April 21 2008): Sarhad Chamber of Commerce and Industry (SCCI) has called for decisions on the construction of large water reservoirs for promotion of industrialisation to cater to the growing unemployment in the country.

In its recommendations for inclusion in the national budget for financial year 2008-09, it said that keeping in view the present atmosphere of national reconciliation reaching consensus on construction of large dams would not be difficult.

The present energy crisis is growing rapidly and in year 2010, the load management is likely to climb to 10 to 12 hours a day. The chamber has called for taking benefit of the reconciliation process that began with the establishment of the coalition government to make budgetary allocations for the project in the budget.

The chambers, which is under extreme influence of senior leadership of the nationalist Awami National Party (ANP) remained short of mentioning the name of disputed Kalabagh Dam for the construction.

The recommendations have also suggested building of small hydropower projects (SHPs) for resolution of the shortage of power, urging on the federal government to design a clear policy for building SHPs, which it said is very viable as they do not require building of large water reservoirs. "Comparatively small capital investment and short gestation periods are required to complete these projects and they cause minimal transmission losses as compared to Water and Power Development Authority (Wapda)," maintain the recommendations of the chamber.

It said that our neighbour India is developing small hydropower projects at a fast pace and is one of the components of their energy policy. It has urged on the Ministry of Water and Power for utilisation of the outsourcing of power to meet the growing demand of electricity and devising strategy to import electricity from Central Asian Region via Afghanistan on war footing.

It has suggested to the new government for announcing a clear cut energy policy to attract investors to produce electricity and sell to the consumers commercially without any policy hindrances.

It has also called for enhancing institutional capacity through introduction of reforms in WAPDA for decentralisation to increase its efficiency. The World Bank has identified WAPDA as the major contributing factor behind the present Pakistani energy crisis and has asked for curtailment of the centralised status of the authority.

The chamber has further proposed restructuring of Sarhad Hydel Power Development Organisation (SHPDO), saying the lacking of autonomous status has rendered it totally ineffective. It might have done a good job in identifying the key hydropower potential sites, but failed in luring investment in the sector. It has also urged on the federal government for extending technical assistance to the provincial organisation for enhancement of its skill in making effective feasibility studies.

The recommendations also include drastic cut in excessive defence spending and non-productive expenditures called for de-classification of public sector borrowing from commercial banks to all stakeholders. It has proposed adoption of transparent budget mechanism of international standard, saying each government that departs is blamed for fudging figures and statistics. "It is a democratic demand of civil society that the government should share the true picture of the economy with them," the proposals added.

For resolution of water crisis, the chamber in its recommendations has urged the government for announcing special budgetary allocations for the development of water reservoirs, irrigation canals and cementing of water channels on priority basis. The mechanism it said will help quell the menace of ongoing water shortage in the country.

Regarding guaranteeing food security, it called for framing of a policy to ensure provision of food supplies round the year on affordable prices. It has attributed the successive wheat, sugar, onions, potatoes etc to the ineffective and defective policies of successive governments. It has called for improvement in marketing system and productivity of crops to meet the needs of the growing population.

The agriculture sector, which it said is almost 21percent of our GDP can only be revived with bridging the wide gap between the price paid by the consumers and what the farmers receive. It said that according to a recent study farmers are getting only 25percent while all other intermediaries are pocketing 75percent of the prices.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Korea offers help in providing generators for power supply ​*
KARACHI (April 21 2008): Nazim Karachi Syed Mustafa Kamal has said that the city government is carrying out development works in the city on preferential basis as a result of which the city is becoming beautiful and getting equipped with modern facilities.

He said this fast developing city of 18 million has become attractive for foreign investors and, therefore, the government is encouraging them so that completion of mega projects under public-private partnership could become possible.

He described power shortage in Karachi a most important issue because of which not only industrial production is getting affected, but the businessmen and citizens are also faced with problems.

He said it is not possible for KESC to supply electricity as per requirement and, therefore, city government is also encouraging power supply projects. He stated this while talking to Chief of the Mission, Korean Embassy, Dr Kyoung Young Kim. President of Pak-Korea Business Forum, Ahsan Mukhtar Rizvi also accompanied him.

Nazim Karachi said the city government is employing all resources for supply of electricity to the citizens and, therefore, foreign investment and projects are being encouraged in this sector. Although it is not the responsibility of city government, but it wants immediate solution to the problem to provide facilities to the citizens.

On the occasion Chief of the Mission of Korean Embassy informed the Nazim that Korean companies possess all expertise in the production of electric generators and can produce such moving generators which can supply 1.5 or more MW electricity and those can be taken anywhere easily. He said one generator can supply electricity to 3000 houses.

Nazim Mustafa Kamal said the city government will seriously examine the possibility of installation of these generators in LDA, MDA and Water and Sewerage Board. He said the city government can enter into long term agreement with the company under public-private partnership and would need technical experts and electrical engineers to implement the project once the agreement is concluded.

He said if the agreement materialises, immediate supply of generators would be given preference because we would like immediate implementation without wasting time. He asked EDO Enterprise and Investment Promotion to take steps for settlement of issues with the company. Mustafa Kamal informed Dr Kyoung about talks held with the Mayor of Anchan City to make it sister city of Karachi. Chief of the mission assured of making headway in this regard.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Land for International IT Park Islamabad being acquired: PSEB ​*
ISLAMABAD (April 21 2008): Pakistan Software Export Board (PSEB) has announced that land measuring 33.3 acres for the establishment of International Information Technology (IT) Park at Islamabad is in the process of acquisition.

In this regard, a Letter of Intent (LOI) will be sent to the short listed developer soon following approval by the PSEB's board of directors, an official at PSEB said here on Sunday.

The official said that PSEB also plans to build IT Parks in different cities and currently operates over 750,000 square feet of Software Technology Parks (STP) in eleven buildings across the country.

He said purchase of land measuring six acres each for the establishment of International IT Parks at Lahore and Karachi Airport has also been approved in the last meeting of Ecnec.

The PSEB, a department of Ministry of Information Technology which promotes the image of the Pakistan's IT industry in key markets abroad, has sponsored participation of 51 member companies in six international trade shows in the current fiscal year 2007-08.

The official said to date in the current fiscal year, nine international promotional campaigns were run and 225 business leads were passed on to member companies in addition to over 1,000 indirect leads.

He said most potential customers and investors contact PSEB member companies directly after getting information from the PSEB web site which receives a million hits each month with 70 percent of the hits received from overseas.

PSEB participated at the world's largest IT event CeBIT held in Hanover, Germany along with its member companies. A customised country pavilion for the exhibiting companies was established at the event.

One to one business meetings were also held with the leading IT companies based in Europe. The event was a huge success in terms of significant leads acquired by the exhibiting companies.

The official said that PSEB is also organising a 10-day networking event in Canada from April 20-30. Around 21 companies are participating in the events and meetings arranged in Toronto, Montreal and Ottawa with the objective of strengthening trade relations between Canada and Pakistan.

He said PSEB, which also arranges specialised training of young IT graduates in different companies has placed 380 during the current fiscal year. The apprenticeship programme has also been approved for seven companies in the current fiscal year and the contracts of these companies are being finalised by ICT R&D Fund, the official added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan needs to revamp water infrastructures: WB ​* 
FAISALABAD (April 21 2008): Lack of a co-ordination between political parties and consensus among provinces is leading to difficulties in adoption and implementation of pending structural reforms, including water policy, power and Indus River System management in Pakistan.

World Bank (WB) experts in an updated project report of "Water Sector Capacity Building and Advisory Services Project (WCAP)", which will be completed with a cost of US $53.3 million, highlighted the Risk factors of the Project.

According to the report, slow economic growth tumbled down the global economy and internal volatile situation is leading to reduced investments. Structural impediments to economic growth in the country are also a major risk. Fiscal deficit deriving from low tax-collection and increased spending in addition to external pressures, stemming from rising international prices of oil, it added.

The report said, federal procurement practices, while generally strong, can be improved in terms of efficiency, international bidding and contract management.

It revealed that the WCAP, is financed only by the Government and IDA, Pakistan's water, irrigation and drainage and hydropower programs are fully co-ordinated with other major donors like the Asian Development Bank (ADB), Netherlands and DFID.

The implementation of project activities would be co-ordinated with other donors and stakeholders in Pakistan while the Ministry of Water and Power (MoWP) would be the implementing agency for the project.

The Project Steering Committee (PSC) headed by the Secretary, MoWP would provide policy guidance and monitor overall project implementation and outcome. The members of PSC would be the Secretaries of Finance, Privatisation Commission, Ministry of Food, Agriculture and Livestock (Minfal) and Environment, Member Planning Commission, Chairman Irsa, Chairman Wapda, Chief Executive IPDF, Chief Executive of Board of Investment, Advisor MoWP, and the Provincial Secretaries of Irrigation and Power.

The MoWP would be responsible for the overall implementation and co-ordination with other ministries and agencies in the government. The MoWP would anchor the project within the newly created Project Management and Policy Implementation Unit (PMPIU).

Further, the WB report mentioned that the key challenge for Pakistan is to sustain its recent growth performance in order to reduce poverty. Pakistan's recent growth performance is encouraging, but sustained growth will require continued sound macroeconomic management along with further improvements in the investment climate.

"Pakistan's infrastructure platform needs significant investment in order to support the growth and service delivery goals. Infrastructure services including electricity, paved roads, municipal services, and telecommunications are in reach of relatively low proportion of the total population", quoted the report.

Improvements in basic infrastructure are crucial to improve human development outcomes. Approximately 40 percent of the population lack access to power and about 75 percent of rural population lack health, education and market facilities. Similarly, the limited availability of water and sanitation services is the cause of human sufferings, it added.

The infrastructure challenge is particularly acute in terms of water as Pakistan relies on the largest contiguous irrigation system in the world, the Indus Basin Irrigation System (IBIS), to provide basic food security (90 percent of food production and 25 percent of the Gross Domestic Product GDP). The IBIS canals are in fact main waterways supplying water for all uses in addition to irrigation and lifeline for the civilisation in the area, the WB recorded.

However, this massive infrastructure is deteriorating and needs rehabilitation with reforms to improve the allocation of water as well as the efficiency of its use.

Moreover, competition for water is growing fast among the provinces and for irrigation, industrial and domestic use and the environment. The WB update said that Pakistan has already begun ramping up its investments, beginning with the urgent rehabilitation of barrages and raising Mangla Dam will create additional storage.

Yet the country needs new water infrastructure including hydropower generation and urban-industrial and domestic supplies (50 percent of the population is not served by a formal supply system, sanitation and water treatment reaches less than 10 percent of the population).

The WB report observed that Pakistan successfully tackled the issues resulting from division of the Indus Waters (Indus Water Treaty of 1960 with India) and developed the IBIS into a colossal water system that is very unique in the world.

However, it showed concern that Pakistan today faces crises like increasing water stress, with limited groundwater that can be mobilised therefore, need building surface water storage facilities requiring huge investments. Secondly, acute power shortages and increasing demands need development of untapped hydropower resources.

The third is irrigation and drainage sector including low-surface water delivery efficiency, low productivity, water logging and salinity and degradation of the resource base, poor operation and maintenance and low cost recovery resulted in dilapidated infrastructure. The fourth crisis is basin-wide resources management issues, meeting flows to the delta region and finally the constrained investment climate in the sector, requiring huge investments to resolve all, added the WB update.

Business Recorder [Pakistan's First Financial Daily]


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## ejaz007

*ADB ready to provide financing for IPI project*
By Zafar Bhutta 

ISLAMABAD: The Asian Development Bank (ADB) has assured Pakistan to provide financing for materialising the billion dollars Iran-Pakistan-India (IPI) gas pipeline project, well-placed sources in Petroleum Ministry told Daily Times on Monday. 

ADB is also a sponsor of Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project. ADB has conveyed to Pakistan, besides sponsoring TAPI gas pipeline project, it is ready to provide financing for other major gas pipeline project too. 

Source informed the country director of ADB in Pakistan, Peter L Feden assured this to Federal Minister for Petroleum and Natural Resources, Khawaja Asif in a meeting on last Friday. 

Pakistan will import 2.2 billion cubic feet gas per day from Iran that will be shared by India if it joins the project. 

ADB country director said, Pakistan is the second country, after India, for which ADB is contributing for the development projects and that normal contribution of ADB for Pakistan stands at $1.5 billion. 

The cost of the IPI gas pipeline has been estimated over $7 billion, whereas TAPI gas pipeline project is estimated around $6 billion to $7 billion. 

Government of Pakistan, after signing IPI gas pipeline deal with Iran, will prepare the feasibility report of the project and financial plan would be chalked out to seek financing from international financial institutions, ADB may be the main contributor in this regard, sources said. 

Pakistan and Iran have finalised the draft of Gas Sales Purchase Agreement (GSPA) on IPI gas pipeline deal that is ready to be signed between two sides. The draft of GSAP on IPI had been finalised during the round of talks between Iran and Pakistan here in Islamabad, but it has not been signed so far. Sources said that Iranian President would visit Pakistan on 28 April and progress would be made on the project. 

Sources said that Indian Minister for oil, Murli Deora, would arrive Islamabad on Tuesday (today) evening to attend the meeting of steering committee on TAPI gas pipeline deal.

The meeting will start on 23 April and conclude on 24 April and will be attended by all petroleum ministers. After participating in the steering committee meeting, Indian Minister for oil will also discuss IPI gas pipeline with Pakistan on 25 April. 

Sources said that India has formally joined the TAPI gas pipeline project, as earlier it has been attending the meeting of steering committee on TAPI as an observer, now it will participate as the fourth stake holder. 

Two-day technical level talks on the TAPI started in Islamabad on Monday to discuss technical issues of the project. Pakistan would import 3.2 billion cubic feet gas from Turkmenistan, which would be shared by Pakistan and India. 

Turkmenistan claims to have gas reserves of 159 trillion cubic feet from its Dauletabad fields and sources said that progress would be made on the project after Turkmenistan presents certification about the gas reserves. 

Sources said Turkmenistan has failed so far to present the report about the gas reserves and is expected to present the report during the meeting of steering committee on TAPI. 

Sources said during the technical level talks, Pakistan will be represented by secretary petroleum, Farrukh Qayum, and experts will discuss technical issues including the structure of gas pipeline, gas pricing formula and other modalities of the project. Turkmenistan, Uzbekistan and Russia have also signed an agreement about the gas project and China is also importing gas from Turkmenistan. ADB is sponsoring the proposed TAPI project and it is expected that the pipeline would be completed by 2011-12.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Foreign investment drops by 46 per cent ​* 
Tuesday, April 22, 2008

KARACHI: Foreign investment recorded a significant drop of 46 per cent during the first nine months (July-March 2007-08) of the current fiscal year, compared to the same period of the last fiscal year.

The country attracted an all-time high foreign investment during the same period of fiscal year 2006-07. The foreign investment remained in a narrow band, even after democracy was restored in the country through general elections on February 18.

The current statistics of State Bank of Pakistan (SBP) showed that in March 2008, Pakistan attracted only $300 million foreign investment. This is less than the expectations of economic experts, who were predicting much more investment under a democratic government.

However, economists are confident that in the remaining three months of the current fiscal year, overall investment would grow robustly due to the issuance of Global Depository Receipts (GDR) of National Bank of Pakistan (NBP) and some other companies.

As per official statistics of SBP, during July-March 2007-08, net foreign investment stood at $2.98 billion compared to $5.55 billion in the same period of the last fiscal year. This meant that foreign investment dropped by $2.57 billion during the first nine months.

It seems that foreign investors are still reluctant to invest in Pakistan, despite the fact the election process has been smoothly completed without any problems. The new government has taken charge and the law and order situation is improving gradually.

Major decline was recorded in portfolio investment, which fell by 103 per cent, with a decrease of $53 million during the first nine months of the current fiscal year, compared to an investment of $1.69 billion during the corresponding period of fiscal year 2007-08.

Analysts were of the view that the current growth in foreign investment was not sufficient to meet the expanding current account deficit of $11 billion and the government would be compelled to rely on international debt.

We are expecting that at the end of current fiscal year, overall investment would reach near $4 billion, as presently the average quarterly foreign investment stood at one billion dollars, stated an economist. However, he said that if the GDR of NBP and other private companies is issued, then overall foreign investment could cross $5 billion mark by the end of June 2008.

Foreign investment drops by 46 per cent


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## Neo

*Increasing development spending needed ​* 
*Now per head development expenditure on 160m Pakistanis is Rs3,031​*
Tuesday, April 22, 2008

ISLAMABAD: Per head development expenditure on the 160 million people of Pakistan is just Rs3,031 per annum, prompting the need for increasing development spending in the next budget in order to create job opportunities and reduce poverty.

The budget preparation process is gaining momentum in the finance ministry and the Planning Commission, triggering a tug of war on the exact size of the Public Sector Development Programme (PSDP) in the next budget.

The per head development spending is just Rs3,031 in the current fiscal year. The government has allocated Rs485 billion in the shape of PSDP. The countrys total population is 160 million, and the amount is quite insufficient to meet the growing needs of development, a high-level official in the Planning Commission told The News here on Monday.

However, the finance ministry high-ups say that throw forward amount is touching Rs2 trillion mark. This means that if the incumbent regime decides not to initiate any new project in its five-year term, it would be able to complete the ongoing projects. However, the priorities committees have accomplished their assigned tasks by incorporating projects of all ministries/divisions for the next fiscal years PSDP.

The Planning Commission has proposed an annual development outlay of Rs623 billion, which is 5.4 per cent of the GDP, in the shape of PSDP for the next financial year. The Planning Commission also recommended substantial allocations for the construction of mega water dams, especially Diamer-Basha dam as its technical feasibility has already been prepared. For construction of roads, which is imperative for ensuring linkage to the site of Basha dam, the Karakoram Highway has sought Rs14 billion allocation in the next PSDP.

For provinces share, the Planning Commission has proposed allocations of Rs200-220 billion in the next PSDP, against Rs150 billion envisaged for the current financial year. The Planning Commission wants to jack up the size of the PSDP by Rs138 billion in the budget for 2008-09, to Rs623 billion, compared to Rs485 billion envisaged for the ongoing fiscal year.

However, the finance ministry is clearly opposing it on the ground that resource constraints are a major stumbling block in the way. The ministry is of the view that keeping in mind capacity constraints, the next PSDP should be increased by Rs100 billion maximum. Thus, the PSDP size will be hovering around Rs550-585 billion in the next budget, sources added.

The official said that the allocation for the Earthquake Reconstruction and Rehabilitation Authority (ERRA) would remain separate in the next budget. The allocation in this regard is likely to be Rs30-35 billion.

Now the Annual Plan Coordination Committee (APCC) will forward its recommended projects and size to the National Economic Council (NEC), which is the competent forum to finally approve the PSDP size and projects for the next financial year. NEC meets under the chairmanship of the Prime Minister to approve the PSDP size and projects before the announcement of the budget.

Sources stated that there were over 2119 development projects within the PSDP, resulting into growing throw forward ranging up to Rs2 trillion. We have included only 14 per cent of the new projects in the PSDP for the current fiscal year. This is expected to remain in the same range by the next fiscal years PSDP, to cater to the needs of the throw forward effectively, said the official.

http://www.thenews.com.pk/daily_detail.asp?id=108125


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## Neo

*US to discuss energy strategy with Pakistan ​* 
Tuesday, April 22, 2008

ISLAMABAD: The United States has hinted at arranging an early meeting with Pakistan on energy strategy, as part of the ongoing strategic ties between the two countries.

In view of the huge coal reserves in Pakistan, which can potentially generate 25,000MW of electricity, such meetings will provide needed impetus, sources privy to the meeting between US envoy in Pakistan, Anne Patterson and Federal Minister for Water and Power, Raja Pervaiz Ashraf here on Monday.

A US-based multinational company will establish a coal-fired power project of 1,200MW costing over $1 billion. The plant is initially designed on imported coal which can later be substituted by local coal, they added.

The US ambassador to Pakistan has also offered to extend cooperation in the power sector and to hold a joint international investment conference on coal-based projects in Islamabad in May/June 2008, said an official announcement issued after the meeting.

The statement further said that the US also offered to provide every possible technical and financial assistance to Pakistan, to promote investment in the power sector. The US envoy in Pakistan had already met the Pakistani minister along with officials of the energy sector, while talks on TAPI and IPI between Pakistan and India are likely to be held in Islamabad this week, to seal the deal on the multi-billion dollar project.

The ambassador also informed the minister that US Aid will launch a 3-year, $30 million activity to assist Pakistan in achieving this goal. Earlier, federal minister for water & power, also sought the assistance of the US for developing affordable power by using indigenous resources, as Pakistan has large reserves of over 180 billion tonnes at Thar, the statement said. 

US to discuss energy strategy with Pakistan


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## Neo

*Pakistan largest borrower of ADB loans in 2007: annual report ​* 
Tuesday, April 22, 2008

ISLAMABAD: The Asian Development Bank (ADB), approved $10.1 billion in loans in 2007, a 37 per cent increase over the previous year, in response to demands for development assistance, according to ADBs 2007 Annual Report.

It was a very busy, productive, and exciting year for ADB, ADB President Haruhiko Kuroda said in the report, which was released ahead of ADBs 41st Annual Meeting to be held on 3-6 May in Madrid, Spain.

Our annual loan approvals grew from $7.4 billion in 2006 to $10.1 billion in 2007, clearly demonstrating the growing demand for ADB assistance in all parts of the region. The 2007 amount is the highest in ADBs 41-year history, the report said.

Pakistan was the largest borrower with $2 billion, or 20 per cent of the total loans ADB extended last year. The operational sector with the biggest share of loans was transport and communications with $3.9 billion, or 39 per cent of total loans, more than double the amount in 2006. Loans with government guarantees last year totalled $9.2 billion for 61 projects.

Of this amount, $7.4 billion came from the ordinary capital resources of ADB, while the balance was sourced from the concessional Asian Development Fund. ADB approved a further $672.7 million of assistance in grants in 2007, up 25 per cent from the previous year.

Of the total, $519.3 million came from ADF IX; $30 million from the Pakistan Earthquake Fund; and $123.4 million from external sources with full or partial administration by ADB. A total of 242 technical assistance projects were approved worth $243.4 million, all of which were also provided as grants.

Recognising the important role of the private sector in generating jobs and economic growth, ADB approved $760.3 million for 19 non-sovereign loans to the private sector and $105 million for three non-sovereign loans to the public sector.

On project performance last year, ADB showed an improvement in disbursement to $6.8 billion from $5.7 billion in 2006. Of the total, $5.2 billion were disbursements from ordinary capital resources while ADF disbursements accounted for the balance. 

Pakistan largest borrower of ADB loans in 2007: annual report


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## Neo

*Innovation key to SME growth: economists ​* 
Tuesday, April 22, 2008

LAHORE: The economists, while terming innovation the key engine of growth for small and medium enterprises, have warned that their inability to innovate on a regular basis would impede their potential for growth both in the domestic and foreign markets.

They say the absence of innovation is the malaise that has plagued local industries. Most entrepreneurs limit innovation to introducing new products. But innovation is about coming up with solutions to customer problems. Imported products are fascinating local buyers due to their innovative designs, packing, colour and finishing. Successful firms prefer continuous innovation under which the existing product is regularly improved by adding new features, removing a feature, combining two products into one, dividing one product into two, substituting components or materials, reducing component size, embedding the product into another or adding complimentary functions.

The economists say the SMEs enlarge their markets through these small innovations in design and ease of use. They suggest the SMEs should first strengthen themselves by exploring those domestic and foreign markets that are not occupied by other companies. Pakistans narrow export market reveals that all entrepreneurs, whether small or big, are concentrating their efforts on already discovered markets and are competing with each other. The SMEs could find a better response to their products from clothing to home appliances in less developed economies.

The experts point out that innovators must realise that any innovation has to meet either customer needs or wants. Any innovation addressing a stronger need of a large number of people stands a higher chance of success.

However, they caution many innovations that met either a strong want or need have still failed. Successful innovations additionally require triggers, specifically a market shift and technology. Innovators have to ensure that both technology and markets are ready. Companies that want to innovate also need to create a culture of innovation within the organisation.

The experts say the local home appliance industry wiped out foreign competitors at the start of this century by introducing innovative designs and new features in television sets and refrigerators. However, the foreign competitors have now started regaining their market by improving on the features introduced by local manufacturers who have failed to continue innovation.

They say Pakistans textile industry has failed to make its mark in the global market because the exporters do not make their own designs and simply produce clothes for big chains at low prices.

The experts point out that many companies, particularly those targeting export markets, are adopting certifications such as Six Sigma or ISO 9001 which put in place standard processes to follow. These procedures facilitate companies in achieving operational efficiency, but often end up stifling innovation.

If the core management and staff, the economists say, are required to follow rules all the time, the entrepreneurs should forget that they would make innovations. It is by responsibly breaking some rules that you are able to think and innovate. 

All companies face the tough balancing act between improving operational efficiencies and providing an environment and culture for creating innovations. The companies that find the magic balancing formula will certainly emerge as winners in the innovation game.

The experts say Pakistani entrepreneurs should take cue from the experience of developed economies. Sixty per cent of Fortune 500 companies disappeared from the list between 1975 and 1995 and the key reason for the high attrition rate was that those companies lacked sustained innovation.

Innovation key to SME growth: economists


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## Neo

*Lucky Cement profit surges by 50pc ​* 
Tuesday, April 22, 2008

KARACHI: Lucky Cement posted a net increase of 50 per cent in its profits for the nine months period ended on March 31, 2008, to Rs2,014 billion as compared to Rs1,345 million recorded in the same period last year.

Accordingly, the earning pre-share of the company surged to Rs7.65 in the under review period against Rs5.11 in 2007. However, board of directors of the Company, announced no payouts for the shareholders.

The gross profit increased by a considerable 24 per cent to Rs3.1 billion, versus Rs2.5 billion in 2007. The companys distribution and administrative expenses took a significant jump to Rs821 million from Rs365 million - also up by 125 per cent.

In the first nine months, the local cement dispatches of the company declined by 11 per cent to 2.18 million tonnes compared to 2.45 million tonnes last year. Conversely, exports rose by a substantial 113 per cent to 1.95 million tonnes. 

Lucky Cement profit surges by 50pc


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## Neo

*ADB ready to provide financing for IPI project​*
ISLAMABAD: The Asian Development Bank (ADB) has assured Pakistan to provide financing for materialising the billion dollars Iran-Pakistan-India (IPI) gas pipeline project, well-placed sources in Petroleum Ministry told Daily Times on Monday. 

ADB is also a sponsor of Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project. ADB has conveyed to Pakistan, besides sponsoring TAPI gas pipeline project, it is ready to provide financing for other major gas pipeline project too. 

Source informed the country director of ADB in Pakistan, Peter L Feden assured this to Federal Minister for Petroleum and Natural Resources, Khawaja Asif in a meeting on last Friday. 

Pakistan will import 2.2 billion cubic feet gas per day from Iran that will be shared by India if it joins the project. 

ADB country director said, Pakistan is the second country, after India, for which ADB is contributing for the development projects and that normal contribution of ADB for Pakistan stands at $1.5 billion. 

The cost of the IPI gas pipeline has been estimated over $7 billion, whereas TAPI gas pipeline project is estimated around $6 billion to $7 billion. 

Government of Pakistan, after signing IPI gas pipeline deal with Iran, will prepare the feasibility report of the project and financial plan would be chalked out to seek financing from international financial institutions, ADB may be the main contributor in this regard, sources said. 

Pakistan and Iran have finalised the draft of Gas Sales Purchase Agreement (GSPA) on IPI gas pipeline deal that is ready to be signed between two sides. The draft of GSAP on IPI had been finalised during the round of talks between Iran and Pakistan here in Islamabad, but it has not been signed so far. Sources said that Iranian President would visit Pakistan on 28 April and progress would be made on the project. 

Sources said that Indian Minister for oil, Murli Deora, would arrive Islamabad on Tuesday (today) evening to attend the meeting of steering committee on TAPI gas pipeline deal.

The meeting will start on 23 April and conclude on 24 April and will be attended by all petroleum ministers. After participating in the steering committee meeting, Indian Minister for oil will also discuss IPI gas pipeline with Pakistan on 25 April. 

Sources said that India has formally joined the TAPI gas pipeline project, as earlier it has been attending the meeting of steering committee on TAPI as an observer, now it will participate as the fourth stake holder. 

Two-day technical level talks on the TAPI started in Islamabad on Monday to discuss technical issues of the project. Pakistan would import 3.2 billion cubic feet gas from Turkmenistan, which would be shared by Pakistan and India. 

Turkmenistan claims to have gas reserves of 159 trillion cubic feet from its Dauletabad fields and sources said that progress would be made on the project after Turkmenistan presents certification about the gas reserves. 

Sources said Turkmenistan has failed so far to present the report about the gas reserves and is expected to present the report during the meeting of steering committee on TAPI. 

Sources said during the technical level talks, Pakistan will be represented by secretary petroleum, Farrukh Qayum, and experts will discuss technical issues including the structure of gas pipeline, gas pricing formula and other modalities of the project. Turkmenistan, Uzbekistan and Russia have also signed an agreement about the gas project and China is also importing gas from Turkmenistan. ADB is sponsoring the proposed TAPI project and it is expected that the pipeline would be completed by 2011-12.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Fruit exporters to explore European markets soon​*
KARACHI: A 16-member delegation of fruit and vegetable exporters from across the country will embark on a eight-day trip to four European countries in mid of May 2008 to explore the potential of vast market and seek opportunity for enhancing exports of mango. 

Chairman Pakistan Fruit and Vegetable Exporters Association (PFVEA), Abdul Wahid told Daily Times on Monday the tour, planned in consultation with Trade and Development Authority of Pakistan (TDAP), has pledged to bear half of the traveling and lodging expenditures of members of the delegation, and would be first of its kind to promote fruit exports of the country.

During tour, 16 members of the delegation, comprising leading fruit exporters would cover four countries including Switzerland, Germany, Austria and United Kingdom, he added. For smooth and expeditious execution of the traveling objective, the 16-member delegation would be split into two parts and would be assigned countries of their choice. 

The plan was envisaged by the fruit exporters following dismal and stagnant export of Pakistani fruits specially mango to European countries as during the previous season, Pakistans total mango export stood at 1,25,000 tonnes out of which share of the European countries remained between 11,000 tonnes to 13,000 tonnes, which is far low compared to other countries of the region. He said hitherto no effort was made at the official level to boost countrys fruit exporters especially in European countries. Currently Pakistans fruit exports are confined to three regions only which includes Gulf, European countries and Iran consequently all efforts to enhance export quantity to substantial level has failed to elicit desired objectives. 

Referring to the potential of the European markets for Pakistani fruits specially kinno and mango, he claimed in next few years upto 400,000 to 500,000 tonnes of their export targets could be accomplished by sustained marketing endeavours and improving shelf life of exported material. One the major reason of low import to European countries identified by the exporters is short shelf life of fruits and very high air cargo charges rendering them uncompetitive compared fruits exported by other countries through sea cargo.

Drawing a comparison between sea cargo and air cargo charges, he said one kg of fruit destined for European countries through air cargo costs exporters Rs 95 while the same weight through sea cargo is Rs 25 clearly manifesting the massive price difference between both mode of transportation. Highlighting other problems faced by the fruit exporters, Abdul Wahid said very few international and local airlines operate their cargo services for European destinations. 

Consequently little space is available at few airlines running their services for fruit exports to European countries, hampering endeavours of the fruit exporters towards enhancing fruit export to substantial level. 

He claimed efforts were underway by the fruit exporters to enhance shelf life of exported mango from the current year thus enabling them to dispatch their products to European countries through sea line service which was likely to yield desired results of enhancing export of the most demanding fruit of the summer season.

Daily Times - Leading News Resource of Pakistan


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## Neo

*FDI dips 21pc in nine months: Services sector gets lion share​*
KARACHI, April 21: Foreign investment fell by 21 per cent in the last nine months, but the most important factor was the dominance of services sector which remained over 60 per cent of the total foreign direct investment (FDI), State Bank data showed on Monday.

Analysts said that domination of services sector in foreign inflows means less-productive activities and higher outflows.

Despite a troubled year, the country received Foreign Direct Investment (FDI) to the tune of $2.905 billion (without privatisation proceeds) during July-March 2008, which was 21 per cent less than the corresponding year of last year.

The services sector contribution was about $1.743 billion. In this sector, communications (especially telecommunications) and financial services remained a dominant force. The communications sector contributed $923 million during the period while financial sector made an investment of $685.5 million. It gives a clear picture that the foreign inflows were not making contribution to the productivity of the country.

The services sector investment means investment would make more money and the outflows will continue to rise with accumulation of foreign investment in the services sector, said a researcher, Abid Saleem.

Earlier, reports suggested that dividends and profit outflow from Pakistan have started soaring and could cross over 1.3 billion by the end of this fiscal.

At this time while the country is facing a huge trade deficit of over $14 billion in nine months, the rising outflow of dollars from the country will only add to the burden of the country, said another analyst. The trade deficit has gone beyond the total exports during this period.

For the last five years, the country has been facing the same phenomenon and the production or industrial sector received very little foreign investment, almost ignorable. However, no effort was made to analyse the situation.

The previous government took credit of attracting foreign investment, but the continued inflows in this sector show that the inflows in the services sector were irrelevant to the government.

The investment in telecommunication and banking is highly profitable. It never stopped despite serious political turmoil in the country, said the analyst.

The only sector, other than services sector, which attracted significant foreign inflows, was oil and gas exploration.

The investment in this sector was $465 million, 10 per cent higher than the previous years nine months.

During the last five years, the services sector contributed higher than any sector which contributed to Gross Domestic Product (GDP).

It shows the national economy is mostly dependent on services sector which does not provide a sound base for a long-term economic growth, said the analyst.

FDI dips 21pc in nine months: Services sector gets lion share -DAWN - Business; April 22, 2008


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## Neo

*Core inflation up 9.5pc in March​*
ISLAMABAD, April 21: Core inflation non-food and non-energy ballooned to 9.5 per cent in March, the highest in the past couple of years as against 5.3 per cent last year, finance ministry said on Monday.

This increase in the core inflation since February 2006 from 5.7 per cent was on account of rising house rent and medicare sub-indices despite tight monetary policy of the State Bank of Pakistan during the period under review.

The core inflation also increased in the first nine months (July-March) of the current fiscal year (6.5 per cent), compared with the corresponding period of last year (5.8pc).

Analysts said that the persistent increase in the house rent and health-care are creating serious threats, intensifying housing and health problems.

The non-food inflation is also ascending upward as second round of food inflation is building pressure on non-food inflation.

In March 2008, non-food inflation spiked to 9.4 per cent as against 5.5 per cent of last year on the back of a two-time increase in the domestic petroleum prices.

The non-food inflation would easily cross the double digit mark due to recent third time increase in the local petroleum price.

For July-March 2008, the non-food inflation remained more or less at last years level of 6.3pc.

A report of the finance ministry showed the overall CPI-based inflation registered an increase in March 2008 as compared with previous month (February 2008) on year-on-year basis.

The headline inflation was 14.1 per cent in March 2008 as against 11.2 per cent in February 2008 and 7.6 per cent in the corresponding month of last year (March 2007).

The increase in headline inflation in March 2008 as compared with last month is attributable to a global rise in food inflation which moved upward to 20.6 per cent from 16 per cent in February 2008 and 10.7 per cent in the corresponding month of last year (March 2007).

It is a well-known fact that food inflation has emerged as a major source of concern for policy-makers around the world, including Pakistan. The global food price index is up by 54.1 per cent.

Food inflation in Pakistan has been fuelled by a combination of domestic demand driven factors (rising per capita income), local supply shortage and global trends in prices of several commodities.

Higher prices of edible oil (palm oil and soybean) and dependency on their imports transmitted higher international prices to domestic prices.

The new governments decisions on prices and availability of essential food items are expected to bring inflation within a tolerable range.

Pakistan has witnessed sharp increase in wheat and flour prices (despite bumper wheat crop of 23.3 million tons), totally driven by extra-market forces.

Seven essential food items (wheat and flour; rice, pulses, meat, milk, ghee / cooking oil, and vegetables), accounting for almost 70 per cent of total weight of food group, are responsible for a sharp increase in food inflation in Pakistan.

Like last year, this years inflation is also fuelled by food inflation.

During the first nine months (July- March) of the FY08, the average CPI-based inflation stood at 9.5 per cent as compared to eight per cent last year.

Food inflation increased to 13.8 per cent in the first nine months of the current fiscal year as against 10.3 per cent in the same period last year.

Core inflation up 9.5pc in March -DAWN - Business; April 22, 2008


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## Neo

*PIA sell-off ruled out ​* 
ISLAMABAD (April 22 2008): The government on Monday ruled out any possibility of Pakistan International Airline (PIA) privatisation, saying that efforts were afoot to make the national flag carrier a profitable entity in three years.

The Minister for Defence, Ahmed Mukhtar, stated this in the National Assembly while responding to a question by Abdul Sattar regarding loss suffered by PIA during 2005-07.

He said that a detailed presentation was given to the Prime Minister and a plan was being prepared in consultation with Finance Ministry to ascertain reasons of loss, and suggesting measures to control them. The Minister held the previous government responsible for financial crisis in PIA, which he said had appointed a person who "ruined the organisation", while agreeing with some members that Parliament, being the highest forum, must probe the matter.

Giving details of losses, he said PIA suffered a loss of Rs 4,412 million after tax in 2005, Rs 12,763 million in 2006 and Rs 13,399 million in 2007 for reasons of competitive market, huge increase in fuel prices, increasing financial cost on bank borrowing and imposition of operating restrictions by European Union.

He assured the house that the new management would bring down the losses within two to three years, brushing aside the impression that any subsidy was being given to it. The government only provides guarantees on behalf of PIA to institutions, he added.

Minister for Petroleum and Natural Resources Muhammad Asif told the house that oil prices, already subsidised by the government, would not be reduced. Local exploration of oil and gas would be expedited to increase production and to reduce foreign exchange burden on exchequer caused by oil import, he added. He said that 96 exploration licences were granted to various exploration and production companies from 2003 to 2007 to enhance the local production. At present, 124 exploration licences are active, he added.

Moreover, he informed the house that a 'Basin Study' was near completion to evaluate the hydrocarbon potential of different sedimentary basins to attract new investors. The current oil and gas production in the country stands at 73,000 barrels per day oil and 4 billion cubic feet gas against 64,268 oil (BOPD) and 2719 billion cubic feet per day production of gas in 2002-03.

The government is also exploring possibilities to import gas from Iran and Turkmenistan, while Iran-Pakistan-India gas pipeline project is in final stages. The import of LNG gas is also under consideration as well as establishment of an oil refinery project at Khalifa point, which is expected to be completed by the year 2012.

Environment Minister Hameedullah Jan Afridi said that 16 projects of environment were launched in 2007-08 at a cost of Rs 12616.85 million while in 2005-06 22 projects were launched with a cost of Rs 1709.758 million. Eight projects with a cost of Rs 906.262 million were launched in 2006-07, he informed the house.

He said the government is also implementing 'Protection Area Management Project' with the grant assistance of $10.7 million from Global Environment Facility through the World Bank.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Pakistan can increase its exports to India through Sri Lanka' ​* 
KARACHI (April 22 2008): Pakistan has good opportunity to increase its export to India through Sri Lanka by exploiting the Free Trade Agreement (FTA) between Sri Lanka and India, said Consul General of Sri Lanka, V.S. Sidath Kumar here on Monday.

Addressing members of Karachi Chamber of Commerce and Industry's (KCCI) sub committee on diplomatic affairs, he said that FTA between India and Sri Lanka includes 2004 items.

Pakistan can export its products to Sri Lanka and after some value addition these could be exported to India, he added. He inform that a high-powered Sri Lanka business and investment delegation will visit Pakistan in May to explore possibilities of investment and establishing industrial units as joint venture.

He said the delegation will prepare suggestions for increase two-way trade and identify areas wherein investment can be made or joint ventures be executed.

Referring to FTA between Pakistan and Sri Lanka, he said that both the countries need to work deductively to achieve one billion dollars bilateral trade's target.

He said that the government of Pakistan has allowed Sri Lanka airline to operate 7 flights a week, whereas the airline is operating only three flights a week between Karachi and Sri Lanka. Sidath Kumar said that the airline has also planning to start its flights from Islamabad and Lahore.

He said that Colombo Chamber of Commerce and Industry (CCCI) has indicated to singe Memorandum of Understanding (MOU) with KCCI on mutual co-operation. He assured that business community of his country would take part in KCCI's annual exhibition, which is scheduled to be held in June this year.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Government has no plan to impose ban on rice export: official ​* 
ISLAMABAD (April 22 2008): The government has no plan to ban rice exports at present, a senior government official told Business Recorder, requesting anonymity. "We have no plan to impose ban on rice exports as Pakistan's position is entirely different from India, Vietnam, Philippines and Bangladesh where rice is a staple food," the official added.

The official was of the view that possible ban on rice exports would negatively impact paddy sowing and consequently, the country may have to face a crisis similar to the ongoing wheat crisis. He alleged that exporters were creating confusion with the objective of cancelling their previous contracts with foreign buyers to renegotiate at the current high rate.

Another reason, according to the official was the high input costs attributed to skyrocketing diesel prices, fertiliser and low electricity availability. "No farmer will opt for sowing rice in case of ban on exports and an increase in cost of production," the official added.

The official said the issue has been raised by rice exporters who struck deals a few months ago when the international prices were low and now these exceed contract rates. The official further said that some of the exporters were actively lobbying for a ban on exports but it would be difficult for the concerned officials to endorse their proposal.

"If the government goes for export ban it will be deprived of substantial foreign exchange which will also negatively hit the export target," the official maintained. The sources said that the issue has been discussed in the secretaries committee meeting held on Monday to discuss the prices of essential items.

According to the FAO world rice production is expected to increase in 2008 by 12 million tons or 1.8 percent, assuming normal weather conditions. Production increase would ease the current very tight supply situation in key rice producing countries, according to the first FAO forecast for this year.

Sizeable production increase is expected in all the major Asian rice producing countries, especially Bangladesh, China, India, Indonesia, Myanmar, the Philippines and Thailand, where supply and demand are currently over stretched. Governments in these countries have already announced a series of incentives to raise production.

Production outlook is also positive in Africa, where high world prices may sustain a two percent growth, particularly in Egypt, Guinea, Nigeria and Sierra Leone. Concerns about food import dependency in the region have led to a mobilisation of resources towards the rice sector. Production is expected to recover strongly in Latin America. Rice production in the European Union is also expected to rise while it may contract in Japan, one of the few countries where farm prices fell last year. International trade in rice in 2008 is currently foreseen to reach 29.9 million tonnes, 1.1 million tonnes lower than the revised 2007 trade estimate.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan, Canada discuss economic co-op to reduce poverty ​*April 22, 2008 

Canada and Pakistan discussed increased economic cooperation with the objective to support sustainable development in order to reduce poverty and contribute to a more secure, equitable and prosperous Pakistan. 

The initiatives were discussed in a meeting between David B. Collins Canadian High Commissioner and Senator Ishaq Dar, Federal Minister for Finance, Revenue, Economic Affairs and Statistics here on Tuesday, the News Network International news agency reported. 

The two sides discussed steady increase in the Canadian assistance for water supply, sanitation, health and reproductive health projects to be implement through Canadian International Development Agency (CIDA). The bilateral 10-year strategy proposed by CIDA focusing on basic education, gender equality and democratic accountability was also discussed at the meeting. 

It was noted that through annual bilateral consultation the two governments would discuss implementation of the Canadian assistance. The consultations are held alternatively in Pakistan and Canada. 

Ishaq Dar reiterated that the Pakistani government would pursue the policy of transparency and was committed to bringing down fiscal deficit and inflation to a manageable level. 

Pakistan, Canada discuss economic co-op to reduce poverty - People's Daily Online


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## Neo

*Pakistan to receive record $3b remittances from GCC ​*
Khaleej Times - 22/04/2008 

(MENAFN - Khaleej Times) Overseas Pakistanis residing in GCC states remitted 21.5 per cent more foreign exchange to the country by sending $2.37 billion in first nine-months of financial year 2007-08.

Pakistani workers in the UAE remitted 33 per cent more as the amount is estimated at $793.62 million in July-March 2008 period as against $595.9 million in the same period of 2006-07. In this regard, Dubai contributed significant share as the amount remitted from the emirate stood at $552.45 million in first nine months of present fiscal year. Workers in Abu Dhabi and Sharjah also remitted $218 million and $21.5 million respectively.

$6 billion mark: Meanwhile, banking officials in Pakistan told this correspondent that remittances are likely to cross $6 billion mark for the first time on strong inflows from the GCC region.

"GCC contributes about 50 per cent in total remittances and this year inflows from the region are likely to cross $3 billion by June," they said. Last year, remittances from GCC states exceeded $2.5 billion mark.

"The significant increase in remittances from Gulf region is due to booming regional economies owing to bullish oil market and robust growth in construction and real estate sectors," they said.

Saudi Arabia ($881.95 million) and UAE ($793.62 million) remained on top by keeping strong inflows to Pakistan, while other GCC states - Kuwait ($272.93 million), Qatar ($167.15 million), Oman ($159.81 million) and Bahrain ($104.38 million) - also contributed significantly during first nine months of present financial year. 

Record remittances: Pakistan received the highest-ever $5.49 billion remittances during fiscal year 2006-07 and the present trend indicates that inflows from top three regions - GCC, US and European Union - will continue in last quarter. 

State Bank of Pakistan (SBP), the central bank, received $4.72 billion remittances in July-March 2008 period, showing an increase of $791.6 million or 20.1 per cent over the same period of previous fiscal year. It also includes $2.15 million received through encashment and profit earned on Foreign Exchange Bearer Certificates and Foreign Currency Bearer Certificates.

Single largest contributor: Latest statistics from SBP revealed that the United States is the single largest contributor in remittances as overseas Pakistanis in US sent $1.32 billion in first nine months of 2007-08. Remittances from European Union amounted to $465.98 million in which United Kingdom ($334.85 million) contributed the major share. Moreover inflows from Norway, Switzerland, Australia, Canada, Japan and other countries also recorded 5.76 per cent increase and amounted to $568.06 million in July-March 2008.

Highest monthly inflows: Workers' remittances recorded highest ever increase in March this year as the inflows surged to $602.21 million as against $520.24 million in March 2007, reflecting an increase of 15.76 per cent. However, in terms of percentage change, remittance inflows surged 42.35 per cent in January ($557.07 million) this year. Remittances registered only 0.85 per cent growth in December 2007 when the country received $479.26 million as against $475.21 million in December 2006.

Talking to Khaleej Times, a senior official at a local bank said remittances remained on higher side in previous two fiscal years and inflows are likely to hit record $6 billion mark by June 30 this year.

"Strong growth in remittances will not only help bridge widening gap between imports and exports but it would also support weakening rupee," they said.

Pak rupee lost five per cent against the US dollar in the past 12 months due to dwindling exports and rising imports chiefly because of high oil and food prices in the international market.

"Foreign direct investment also slowed due to political upheaval in past one year and record remittances will definitely ease pressure on balance of payments and foreign exchange reserves," he added. 

The inflow of higher remittances despite unstable economic situation would be a cool breeze for the new government, which has no other option but take harsh measures to correct the economic imbalances.

"The most worrisome issue for the government is the rising trade deficit which even surpassed total exports of the country in the first nine months of the current fiscal. The higher foreign exchange inflows would support the government to meet some of its huge deficits," he concluded.

MENAFN - Middle East North Africa . Financial Network News: Pakistan to receive record $3b remittances from GCC


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## ejaz007

*OGDC makes discovery at Pakhro Well*

KARACHI: The Oil and Gas Development Companies (OGDC) Limited has announced a discovery at Pakhro Well No 1 in NIM exploration site, where the company owns a 95 percent production stake (5 percent owned by Government Holdings private limited). 

The well was drilled down to the depth of 3,692 metres, and according to initial tests, condensate and gas flow from the well stood at 9 barrels per day of condensate oil and 8.2 mmcfd of gas.

As per initial reports, the production will commence from the well within next 20 months. Targeting to test the potentials of sands of lower goru formation of creataceous age. This well is based on log data, 03 zones. The production testing of Zone-3 (Basal Sands) of lower goru sand member proved to be productive. 

This is the second discovery of this month. Earlier, OGDC had announced its small discovery in southern Sindh province, raising its oil output by 1,150 barrels per day (bpd). The company has spudded 7 wells and made one discovery, at Moolan -1 during first quarter of 2008.

OGDCL is the national oil and gas company of Pakistan and the flagship of the countrys exploration and production sector. The company is the local market leader in terms of reserves, production and acreage, and is listed on all three stock exchanges in Pakistan and also on the London Stock Exchange since December 2006. staff report

Daily Times - Leading News Resource of Pakistan


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## Neo

*Domestic debt near Rs3 trillion ​* 
Wednesday, April 23, 2008

ISLAMABAD: Pakistans total outstanding domestic debt rose to Rs2.967 trillion ($48 billion) by the end of February 2008, from Rs2.6 trillion ($41 billion) recorded at the end of fiscal year 2006-07. This depicted a worrisome increase of Rs366 billion or $5.8 billion during the eight months, the State Bank of Pakistan (SBP) said.

An interesting feature of the provisional data released by the bank was that the increase in domestic debt during July-February 2007-08 was mostly due to a rise in the stocks of floating debt. The unfunded and permanent debts have also jacked up the total debt to a sizeable amount.

During the eight months, the floating debt went up by Rs270.6 billion, permanent debt by Rs48.89 billion and un-funded debt increased by Rs46.69 billion.

The permanent domestic debt comprising medium and long-term market loans, federal government loans, special government loans, federal instruments and prize bonds, stands at Rs601.86 billion, which totalled Rs552.97 billion at the end of the fiscal year 2006-07.

The floating domestic debt, mainly comprising short-term debt instruments and market treasury bills, maintained a rising trend and was recorded at Rs1.107 trillion at the end of June 2007. During the following eight months, it went up to Rs1.378 trillion. Un-funded domestic debt comprising National Saving Schemes (NSS) stand at Rs986.69 billion, which at the end of the last fiscal year was at Rs940 billion.

The data reveals that net mobilisation under all instruments of the NSS were on the rise during the period under review, against the corresponding period of the last fiscal year. The reason for this is the attractive interest rate extended by the government on these instruments.

Saving instruments such as Bahbood Saving Certificates, Defence Saving Certificates, Pensioners Benefit Accounts, Special Saving Accounts and Special Saving Certificates increased, while deposits in Regular Income Certificates, Mahana Amadani Accounts and GP fund accounts declined.

Domestic debt near Rs3 trillion


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## Neo

*Exports rise by 21.26 per cent ​* 
Wednesday, April 23, 2008

ISLAMABAD: Exports from Pakistan during March 2008 amounted to Rs112,097 million as against Rs97,368 million in February, 2008 and Rs.92,442 million during March, 2007 showing an increase of 15.13 per cent and 21.26 per cent respectively.

According to the provisional figures released by the Federal Bureau of Statistics, exports from July to March of the current financial year totalled Rs827,359 million as against Rs750,350 million during the corresponding period of last year showing an increase of 10.26 per cent. 

Main commodities of exports during March, 2008 were cotton cloth (Rs10,645 million), bedwear (Rs9,935 million), knitwear (Rs8,622 million), readymade garments (Rs8,273 million), cotton yarn (Rs.6,655 million), rice basmati (Rs5,246 million), rice others (Rs4,541 million), petroleum products (excl Top Naphta) (Rs4,109 million), art, silk & synthetic textile (Rs4,036 million) and leather garments (Rs3,429 million).

On the other hand, imports into Pakistan during March 2008 amounted to Rs239,910 million as against Rs229,133 million in February 2008 and Rs159,172 million during March 2007 showing an increase of 4.70 per cent and 50.72 per cent respectively.

Imports from July-March (2007-2008) amounted Rs1,718,636 million as against Rs1,359,186 million during the corresponding period of last year, showing an increase of 26.45 per cent.

Main commodities of imports during March 2008 were petroleum products (Rs35,938 million), petroleum crude (Rs.31,606 million), wheat unmilled (Rs16,847 million), raw cotton (Rs9,407 million), other apparatus (telecom) (Rs9,216 million), fertilizer manufactured (Rs8,075 million), palm oil (Rs7,829 million), plastic materials (Rs7,449 million), iron & steel (Rs7,438 million) and power generating machinery (Rs.5,619 million). 

Based on the provisional figures of imports and exports the balance of trade in March 2008 was (-)127,813 million in terms of rupees and (-)2,036,859 thousands in US dollars. 

The balance of trade figures cumulative from July-March (2007-2008) were (-)891,277 million in terms of rupees and (-)14,486,852 thousand in US dollars.

Exports rise by 21.26 per cent


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## Neo

*Italy seeks JVs in infrastructure projects ​* 
Wednesday, April 23, 2008

ISLAMABAD: Pakistan offers investment opportunities and policies that attract foreign investors, the Italian trade team head said in a meeting with the officials of Infrastructure Project Development Facility (Ministry of Finance), and Investment Division & Board of Investment.

Ambassador of Italy Vinchenzo Parti led the delegation comprising Gerado Carante Diplomatic Counselor ANCE, Bernadino Chiaia Vice Rector Politecnico di Torino, Dr. Gastone Guerrini Guerrini Company, Dr Alberto Regis Cuerrini Pivato Company, Shamsher Alam GM Guerrini Privato Company, and Dr Michele Bulgaro of Verona Expo.

Ambassador of Italy, Vinchenzo Prati said that Italy wants to invest in hydropower generation, railways, roads and infrastructure projects in Pakistan in collaboration with the local companies.

Ahmed Waqar, Secretary Investment Division & Board of Investment welcomed the construction and development industry leaders from Italy and said that in past Italian construction and development firms have been very active in Pakistan, particularly in the water energy infrastructure projects. 

Pakistan would again welcome the Italian private sector and have them proactively participate in infrastructure projects in Pakistan.

IPDF Chief Executive Officer Aijaz Ahmad briefed the delegation on the Public Private Partnership framework and the policies for foreign investments in the countrys infrastructure development. He said that presently the IPDF has identified 44 projects worth around $1.4 billion and is focusing on identified projects in fields of airports, seaports, railways, bridges, roads, mass transit system, municipal services and hydropower projects.

Italy seeks JVs in infrastructure projects


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## Neo

*Pakistan, Canada discuss increase in assistance ​* 
Wednesday, April 23, 2008

ISLAMABAD: Canada and Pakistan have discussed increasing economic cooperation aimed at supporting sustainable development in order to reduce poverty and contribute to a more secure, equitable and prosperous Pakistan.

The discussions were held between Canadian High Commissioner David B Collins and Federal Finance, Revenue, Economic Affairs and Statistics Minister Ishaq Dar here on Tuesday.

The two sides discussed a steady increase in Canadian assistance for water supply, sanitation and reproductive health projects to be implemented through the Canadian International Development Agency (CIDA). Current Canadian assistance stands at around C$48 million a year.

The CIDA is also discussing with the Balochistan government extension in its assistance for improving the capacity of administration of certain districts of the province.

The two sides also discussed a bilateral 10-year strategy proposed by CIDA focusing on basic education, gender equality and accountability. It was noted that through annual bilateral consultations the two governments would discuss implementation of the Canadian assistance. The consultations are held alternatively in Pakistan and Canada.

Finance Minister Ishaq Dar appreciated the signing of a memorandum of understanding for Canadian debt swap involving C$449 million to be utilised by Pakistan in the education sector, particularly for teachers training at federal and provincial training institutes over the next five years. He appreciated Canadian assistance for energy resource development.

The two sides also noted Canadian grant of C$123 million for earthquake relief/reconstruction through the UN and the Red Cross. 

Out of this amount, $83 million have been provided for emergency relief assistance and remaining $40 million have been partially utilised for the construction of primary schools in Azad Jammu and Kashmir. Ishaq Dar reiterated that the government would pursue a policy of transparency and was committed to bringing down fiscal deficit and inflation to manageable levels.

Pakistan, Canada discuss increase in assistance


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## Neo

*IT team to explore opportunities in Canada ​* 
Wednesday, April 23, 2008

ISLAMABAD: A delegation of twenty one leading Pakistani IT and software development companies reached Canada to explore opportunities for enhanced trade in the areas of software/hardware development, web applications, graphics, animation, multimedia and other business process management services.

According to the Press Counselor, Pakistan High Commission, Canada, the visit has been organised by the Pakistan Software Export Board (PSEB) in coordination with the Pakistan High Commission.

The visit will enable Pakistani IT companies to learn from the successful experiences of their Canadian counterparts and expand their presence globally. Canadian companies would also be invited to set up their development centers in Pakistan.

With an IT industry worth more than US$2.8 billion, including the annual IT exports exceeding $1.4 billion, Pakistan is eyeing to increase the size of its IT sector to over $11 billion by 2011. Presently, there are 1161 active IT companies in Pakistan, 110 of which are also ISO certified.

IT team to explore opportunities in Canada


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## Neo

*Oil import bill grows by 40.52pc in July-March​*
KARACHI: Countrys oil import bill swelled to $7.416 billion during the first nine months (July-March) of the current fiscal year, reflecting 40.52 percent growth, figures released by Federal Bureau of Statistics shows. The oil import stood at over $5.227 billion during the same period of last year.

The import of manufactured petroleum products registered 48.52 percent growth to $3.989 billion during the period under review against $2.686 billion in the corresponding period of previous year. 

Crude petroleum oil import soared to $3.426 billion during July-March period of the current fiscal year, up by 32.23 percent against $2.591 billion during the same period of last year. 

During the month of March this fiscal year, oil imports grew phenomenally by over 100 percent to $1.076 billion compared to $535.841 million in the same month of last year 

This growth is attributed to the increase in import of manufactured petroleum products, which grew by over 86 percent and an increase of 120 percent in crude oil import. However, oil imports declined by almost 20 percent during the month of February over preceding month of March when $1.344 billion worth of oil products were imported.

According to analysts, increase in the oil import bill has been caused by skyrocketing prices of petroleum products in international market, which at the moment are not showing any signs of declining and analysts forecast further increase in imports of oil products in the coming months. 

International oil prices hit $118 per barrel mark on Tuesday and during the month of March prices remained above $100 per barrel in the international market. If the prices stayed at the same level during the remaining part of this fiscal year, oil import bill will balloon further, they added. 

Apart from price factor, the quantity of oil imports has also been contributing in swelling import bill, as during the period under review, quantity of oil products showed substantial growth because of growing needs domestically, especially for electricity generations. 

Last year, oil import bill crossed $7 billion and analysts predict that it would be settling over $10 billion, if the prices in the international market did not fall in near future. 

Machinery is the second largest component in the import bill after petroleum as its import stood at $5.146 billion in July-March of this fiscal year, up by 5.86 percent from $4.861 billion last year.

This growth in the import bill of machinery was due to over 43 percent growth in the import of power generation machinery, 16.85 percent growth in construction and mining machinery, 12.97 percent growth in electrical machinery and apparatus and 4.10 percent in other machinery. 

Import of office machinery dropped by 6.32 percent, textile machinery by 19.65 percent while import of telecom and agriculture machinery and implements remained flat. 

The import bill of agriculture and other chemicals was up 35.14 percent to $4.213 billion in July-March of current fiscal year compared to $3.117 billion in the corresponding period of last year. In this group, over 190 percent growth was seen in fertilizers, over 12 percent in plastic material and over 27 percent in medical products. 

The import of food items surged to $3.036 billion in the first nine months of current fiscal year as against $2.125 billion during the same period of last year, showing a growth of over 42 percent. This growth was mainly due to import of wheat, soyabean oil and palm oil.

The import bill of transport was down by 16 percent to $1.581 billion during the said period from $1.887 billion in the same period of previous year.

The total import bill reached $27.962 billion during the first nine months of current financial year, reflecting a growth of over 24 percent as compared to $22.41996 billion in the corresponding period of last year.

Daily Times - Leading News Resource of Pakistan


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## Neo

*CIDA to provide financial support to Pakistan​*
ISLAMABAD: Canadian International Development Agency (CIDA) to provide financial assistance to Pakistan for bilateral ten-year strategy proposed by CIDA focusing on basic education, gender equality and democratic accountability. 

The initiatives were discussed in a meeting between David B Collins, Canadian High Commissioner and Senator Ishaq Dar, Federal Minister for Finance, Revenue, Economic Affairs and Statistics on Tuesday. 

Canada and Pakistan discussed increased economic cooperation with the objective to support sustainable development in order to reduce poverty and contribute to a more secure, equitable and prosperous Pakistan.

The current Canadian assistance is approximately CD$48 million a year. The two sides discussed steady increase in the Canadian assistance for water supply, sanitation, health and reproductive health projects to be implement through CIDA.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Focus on poverty reduction: Pakistan and Canada to enhance economic cooperation ​* 
ISLMABAD (April 23 2008): Pakistan and Canada will increase economic cooperation with an objective to support sustainable development to reduce poverty and to contribute to a more secure, equitable and prosperous Pakistan.

The initiatives for increasing bilateral economic cooperation were discussed in a meeting between Canadian High Commissioner David B. Collins and Federal Minister for Finance, Revenue, Economic Affairs and Statistics Senator Ishaq Dar here on Tuesday. According to a press release, the current Canadian assistance is approximately 48 million Canadian dollars a year.

The two sides discussed steady increase in the Canadian assistance for water supply, sanitation, health and reproductive health projects to be implement through Canadian International Development Agency (CIDA). The two sides also discussed 10-year bilateral strategy, proposed by CIDA focusing on basic education, gender equality and democratic accountability.

It was noted that through annual bilateral consultation, the two governments would discuss implementation of the Canadian assistance. The consultations are held alternatively in Pakistan and Canada. Ishaq Dar appreciated signing of memorandum of understanding (MOU) on Canadian debt swap of 449 million Canadian dollars to be utilised by Pakistan in education sector, particularly for teachers' training at the Federal and provincial teachers' training institutes over the next five years.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Government to remove hurdles in progress of trade and industry: Zardari ​* 
FAISALABAD (April 23 2008): Co-chairperson of Pakistan Peoples Party (PPP) Asif Ali Zardari, in a message to Chairman of Faisalabad Dry Port Trust (FDPT) Sheikh Ashfaq Ahmed, has said that the victory of the PPP in general elections owes to Shaheed Benazir Bhutto, who laid down her life for a better, prosperous and more democratic Pakistan.

He recalled that Benazir Bhutto, in her capacity of prime minister of Pakistan, inaugurated the Faisalabad Dry Port in April, 1994, which had now been emerged as the biggest dry port of the country. Set up in the private sector, the port handles over 33,000 export cargo containers and about 5,500 import consignments per annum, valuing Rs 80,000 million.

Asif Zardari further said that the PPP government, in collaboration with its coalition partners, would try its best to remove impediments in the progress of trade and industry in the country and augment the exports to earn direly needed foreign exchange.

He said that priorities of the government included improvement of the socio-economic condition of the country, provide job opportunities to jobless people and solve their problems envisioned by Shaheed Benazir Bhutto.

Federal Minister for Finance, Revenue and Economic Affairs Muhammad Ishaq Dar, in a separate message to the FDPT Chairman, said that our economy was facing pressures similar to that of post-nuclear detonation era of 1998.

"We are confident that the coalition government would steer the deteriorating economy of the country away from the looming dark economic clouds. He said that this daunting task could only be accomplished through team work and unreserved cooperation from the trade and industry.

Dar lauded the efforts of traders and entreprenuers of the country, who were trying hard to promote their business in critical economic conditions. He said that the government would try to solve multiple problems of the trade and industry and create ample job opportunities to the people.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*OGDCL discovers gas and oil in Hyderabad ​* 
KARACHI (April 23 2008): The Oil and Gas Development Company Limited (OGDCL) has discovered gas and condensate in its exploratory, Pankhro Well No 01, in district Hyderabad, Sindh. It is a joint venture between OGDCL with 95 percent share and the GHPL with 5 percent share with OGDCL as operator.

According to an information sent to the Karachi Stock Exchange here on Tuesday, the Pakhro Exploratory Well No 01 was delineated in NIM Exploratory Licence area and was drilled down to the dept of 3,692 meters, targeting to test the potentials of sand to Lower Goru Formation of Creataceous age.

Based on log data, 03 zones were selected for testing. Production testing of zone-3 (Basal Sands) of Lower Goru Sand member started on April 17, 2008, which proved to be productive. The short duration initial testing results of zone-3 are tabulated as Choke sizes 32/64 inches, WHFP (PSI) 1465, quantity of gas 8.248 mmscfd and quantity of condensate 9bpd.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Credit to agriculture rises by 25pc​*
KARACHI, April 22: Penetration of commercial banks into agriculture sector has rapidly increased as their share in credit to agriculture sector has reached 70 per cent.

The State Bank of Pakistan on Tuesday reported that credit to agriculture increased by 25 per cent during the first 9 months of the current fiscal year.

The total disbursement of credit to agriculture sector reached Rs138.6 billion during the said period which was Rs27.4 billion higher than the corresponding period of last year.

The agriculture sector has been the lowest recipient of credit from commercial banks despite its high contribution to the GDP. The agriculture sector is 23 per cent of the GDP.The change was also noted in the pattern of disbursement as not only the five big commercial banks increased the share in credit to agriculture sector but other domestic banks also contributed significantly higher than last year.

The State Bank reported that overall credit disbursement by five major commercial banks including Allied Bank Limited, Habib Bank Limited, MCB Bank, National Bank of Pakistan and United Bank Limited stood at Rs65.125 billion during July-March, compared with Rs48.962 billion during the corresponding period last year, depicting an increase of Rs16.163 billion in absolute terms or 33.01 per cent.

Zarai Taraqiati Bank Limited, the largest specialised bank, disbursed Rs39.561 billion in the July-March period, compared with Rs40.881 billion last year, while disbursement by Punjab Provincial Cooperative Bank Limited stood at Rs3.935 billion, compared with Rs5.270 billion last year.

Besides, 14 domestic private banks also loaned a combined Rs29.976 billion during July-March period, up 86.39 per cent when compared with Rs16.082 billion disbursed last year.

The SBP has set a target of Rs200 billion for the current fiscal year, up from Rs160 billion in the last fiscal year, showing an increase of Rs40 billion.

During the last fiscal year, commercial and specialised banks had disbursed a total of Rs168.83 billion to the agriculture sector.

Credit to agriculture rises by 25pc -DAWN - Business; April 23, 2008


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## Neo

*Number of food insecure people rises to 77m​*
RAWALPINDI, April 22: Households in Pakistan are devoting a larger proportion of resources to food and cutting back on consumption, with the number of food insecure people increasing from 60 million to 77 million in 2007-08, resulting in increased levels of malnutrition.

The International Fund for Agricultural Development (IFAD) has issued a short paper with the objective of improving the understanding of what soaring food prices at the global level mean for poor rural people across the developing world.

The paper reveals that the prices of basic food commodities have increased rapidly over the past three years. In only the first quarter of 2008, wheat and maize prices increased by 130 per cent and 30 per cent respectively. The paper is based on a questionnaire sent to IFAD country offices and responses were received from over 40 countries, including Pakistan.

Rice prices, which increased moderately in 2006 and in 2007, rose 10 per cent in February, 2008, and a further 10 per cent in March. The threat to food security in developing countries is on the rise, the paper says.It is clear from the responses received that in almost all developing countries food prices have increased during 2007 and early 2008. In some cases, prices have more than doubled, and in some countries there have been absolute scarcities of food in local markets. Yet it is not immediately apparent that poor rural people face a single and uniform crisis of food prices.

On the contrary, the situation varies considerably from one country to another and in the urban and rural areas of each country. Not only does the extent of the price hikes differ enormously but also the factors shaping these prices vary profoundly. Feedback from many countries suggests that increasing fuel prices are a major driving force behind rising food prices. This has affected both input prices and transport costs. But in the final analysis, food prices are ultimately determined  today as they have always been  in large part by production levels and in a number of countries rising prices reflect, above all else, unfavourable agro-climatic conditions, the paper says.

In the most countries, IFADs target group  poor rural people  are both sellers of food commodities and buyers of foodstuff, at different times of year. Typically, they sell immediately after harvest to meet their immediate cash requirements and buy food in the months prior to the next harvest.

In all regions, and in most countries, prices paid to food producers have increased over the past year. The extent to which they have increased varies considerably country by country and crop by crop.

Number of food insecure people rises to 77m -DAWN - Top Stories; April 23, 2008


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## Neo

*Rice exports to reach $4bn if ban not imposed ​* 
Thursday, April 24, 2008

ISLAMABAD: As the government faces huge twin deficits, rice exporters hope that they can fetch over $4 billion in exports, provided the government does not ban rice exports.

In a meeting with the Finance Minister Ishaq Dar on Tuesday night, representatives of rice exporters assured the government that their association would come up with a new mechanism, which would avert any future crisis by ensuring the availability of rice in the local market, Rice Exporters Association of Pakistan (REAP) Chairman Haji Muhammad Azhar Akhtar said while talking to The News.

Export figures will definitely double next year if the government does not curb export of the commodity, he hoped. Rice exports would touch $4 billion, while last year it was only $1.2 billion and were expected to remain at $1.5 billion this year.

Increasing prices of the commodity have made rice exporters quite optimistic to achieve this export target. It is also due to major rice producing countries being out of business because of domestic constraints, the REAP chairman said.

We have accepted all the demands of the government and the government has accepted the demands from our side. However, the association is fine-tuning the modalities for making trade more liberal and transparent, Haji added.

Although some of our members have reservations about stocking one million tonnes of the commodity without pledging or taking finance from the government. We are doing it purely for the national interest, REAP Chairman stated.

The Association is also working on setting up fair price shops throughout the country. This will ensure supply of rice in the local markets at affordable prices, Vice chairman REAP, Abdul Basir said.

Besides providing nearly 800,000 tonnes of rice as strategic reserves, they would also provide 200,000 tonnes at less than 10 per cent of the market price for USC operation, Basir added.

Pakistan has a total requirement of 700,000 tonnes basmati rice and 1.5 million tonnes of broken rice, whereas it had an estimated production of 5.5 million tonnes for this year.

Rice exports to reach $4bn if ban not imposed


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## Neo

*HBL declares Rs4.3bn profit, Engro $819m ​* 
Thursday, April 24, 2008

KARACHI: Habib Bank has announced a consolidated net profit of Rs4.3 billion for the first quarter ended on March 31, 2008. This is 29.6 per cent higher than Rs3.3 billion that the bank recorded in the corresponding period last year.

The Board of Directors of HBL, at their meeting held here on Wednesday, have recommended no dividend, bonus, rights or other entitlement for shareholders, according to a notification by the bank dispatched to KSE.

Earning Per Share (EPS) of the bank enhanced to Rs6.17, from Rs4.74 EPS last year. This growth was mainly registered due to high mark-up and non mark-up interest income, which rose by 21 per cent to over Rs17 billion, against over Rs14 billion in the same period last year. On the provision front, the bank continued to recognize higher provisions in this quarter as well. The total provision and write-offs were recorded at Rs436 million as against Rs353 million in the same period last year.

On the other hand, operating expenditures of the bank remained more or less stagnant and stood at Rs4.7 billion, up by a mere five per cent from Rs4.5 billion in the last corresponding quarter.

Engro Chemical earned Rs819 million profit after tax in the first quarter ended on March 31, 2008, 153 per cent up from Rs323.5 million last year.

This increase has been depicted on the back of massive increases in urea and DAP prices, compared to the same period last year, reported JS Research House. Accordingly, the basic and diluted EPS of the Company surged to Rs4.23, from Rs1.81 in the first quarter of the last fiscal year.

Net sales of the company were recorded at Rs4.6 billion versus Rs1.9 billion in the same period last year, depicting an increase of 138 per cent on year-on-year basis.

HBL declares Rs4.3bn profit, Engro $819m


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## Neo

*Delay in TAPI project doubled its cost: ADB​*
ISLAMABAD: The Asian Development Bank (ADB) has warned that the delay in the materialisation of Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline has escalated the cost of the project from $3.3 billion to $7 billion, well-placed source told Daily Times on Wednesday. 

The country director of Asian Development Bank, Peter L Feden, during the two-day meeting of steering committee on TAPI that started on Wednesday, warned all stake holders of the TAPI gas pipeline project that further delay in the implementation of the project would cause further escalation in the cost of the project. 

Source said that the representatives of four countries, pledged to sign Frame Work Agreement (FWA) on the project in which the gas pricing, transit fee and security measure would be settled down. 

Source said that during the concluding session of the TAPI gas pipeline deal talks on Thursday (today), the security situation, transit fee and gas pricing issues would come under discussion. They added that after finalisation of the issues of transit fee, gas pricing and security situation in Afghanistan, four countries representatives would sign FWA on the TAPI gas pipeline project on Thursday. 

Source said that the country director of Asian Development Bank showed concern over the delay of the project and sought early implementation. He said that the cost of the project had jumped to $7 billion present from $3.3 billion. He assured all stakeholders of the project that ADB would fully finance it.

We dont want more delay in the implementation of the project and want immediate implementation, source said quoting the ADB country director. 

Pakistani and Indian sides insisted on Turkmenistan, during a meeting, to provide the certification of the gas reserves to move ahead on the project. During the meeting, it was decided that Pakistan would get 30 billion cubic meter gas annually under the project and Indian Petroleum Minister also committed to get 30 billion cubic meter gas annually. However, Afghanistan decided to get 5 million cubic meter gas annually under the TAPI project, sources added. Sources said that the gas pipeline would come from Afghanistan via Halmand and Kandhar to Pakistan. 

Petroleum Minister of Turkmenistan, Dr BayMurad Haja Muhamedov, briefed about the gas reserves and said, Turkmenistan had gas reserves of 8 trillion cubic meters. He said, the documented certification about the gas reserves would be provided to all stakeholders within next two months.

Sources said that he assured commitment to provide the gas to Pakistan, Afghanistan and India without any disruption. He said that Dulatabad had enough gas reserves and the exploration for more gas reserves was in progress, therefore audited document of gas reserves would be provided within two months. 

Sources said Petroleum Minister of Afghanistan, Muhammad Abrahim, told the meeting that they had planned more than 1,000 industrial units near the route of TAPI gas pipeline they would need gas to run those industrial units. 

Afghan minister said that 300 industrial units near the route of TAPI gas pipeline had already been established and therefore the early implementation of the project was essential to meet their requirements.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Countrys traditional exports grow by 17 percent​*
KARACHI: Contrary to the disappointing export show of textile goods, countrys traditional export items made substantial gains during the first nine months of current year by posting 17 percent growth over the corresponding period of previous year.

Beginning the current fiscal year with a declining trend, export of these items recovered in last two to three months and helped to avert, to some extent, the shortfall in the overall exports caused by dismal performance of textile products.

The traditional items include: rice, sports goods, footwear, leather goods, surgical & medical equipment. The total export of these items stood at $1.948 billion during July-March of this fiscal year over $1.670 billion in the same period of previous year, official statistics released on Wednesday indicated.

Export of rice jumped to $956.376 million during this period from $834.871 million in the corresponding period of previous year, depicting a growth of 14.55 percent. The export of Basmati rice grew by almost 33 percent whereas export of other varieties of rice dipped slightly by 2.38 percent.

Sports goods export posted almost four percent increase to $214.446 million during this period against $206.312 million of the previous year. Football export declined by 6.14 percent, gloves up by 69.38 percent whereas other sports items declined by 21.47 percent.

Footwear exports also grew by almost three percent to $87.073 million in the first nine months of 2007-08 over $84.752 million. 

Surgical and medical equipment exports were up by 35.33 percent to $175.739 million over $128.858 million in the last fiscal year. The export of leather manufactured goods also grew by 24.08 percent to $515.065 million against $415.098 million in the previous year. Leather garments and gloves posted 42.49 percent and 1.88 percent growth, respectively during this period. 

Analysts termed the growth in export of these items encouraging and said, government should focus more on boosting the export of these items as well as of other developing areas to boost the countrys export sector.

In view of stiff competition faced by the textile sector in international market any substantial jump in the export of textile goods seems difficult to be achieved, analysts said adding that there is major potential for export of other items from the country to make up the losses caused by declining export of textile goods. 

Much relies on the new government on how it goes for increasing the exports, and major focus would be on the new trade policy, they added.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Saudi Arabia to finance projects of $473 million​*
ISLAMABAD: Saudi Arabia has agreed to finance over ten projects amounting to $473 million under Saudi Fund for Development (SFD) aiming at providing concessional loans for infrastructure projects in social sector.

Pakistan holds Saudi Arabia in high esteem and we greatly appreciate the continued economic assistance extended to Pakistan said Senator Ishaq Dar, Minister for Finance, Revenue, Economic Affairs and Statistics in a meeting with Ali S Awadh Asseri, Ambassador of Saudi Arabia Wednesday. 

The assistance of establishment of SFD for providing concessional loans for infrastructure projects in social sector such as health, education and water supply in rural areas were also appreciated. Under this facility Saudi Arabia has agreed to finance over ten projects amounting to $473 million. Out of this, projects worth $286 million are on going project. The remaining projects are in the pipeline. 

The major projects being financed under this facility include, Makran Coastal Highway, reconstruction of AJK university, government hospitals, educational institutions and hospitals in AJK and NWFP. 

Asseri assured Saudi governments full cooperation for the democratic government. He said Saudi Arabia wants to see stable, strong, prosperous and democratic Pakistan and would continue to enhance its cooperation at bilateral and multilateral level to promote brotherhood between the peoples of the two countries. 

Senator Ishaq Dar appreciated one time Saudi oil facility of $300 million to offset the impact of oil import bill due to the increase in international oil prices.

Pakistan appreciated Saudi pledge of $573 million as assistance for earthquake. Out of this amount $133 million was grant for the development projects in earthquake affected areas. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*UK firm to add 1200MW power in Pakistan​*
ISLAMABAD: International Power (IP) of UK has planned to add 1,200MW power in Pakistan to overcome power shortfall that stands at around 3,000 MW, causing series of load shedding in the country. 

IP has planned to invest more in Pakistan to expand KAPCO power plant by 400MW and Uch power plant by 600MW to meet the future growing demand of electricity. This was stated by Vince Haris, Regional Managing Director (Asia) of International Power, UK who called on the Federal Minister for Water and Power, Raja Pervez Ashraf, here in his office. 

He said Pakistan has become an attractive power investment destination and stated that the company has also decided to invest for a 200MW project near Sialkot, which would be completed on fast track basis. He also shared the future investment strategy for power generation expansion in Pakistan with the minister wherein local and imported coal projects are a high priority. 

The minister appreciated the confidence of IP in Pakistan and asked to look into the possibility of investment in indigenous coal fired generation. He said that power sector has great potential and the government would facilitate the investors in this sector and provide all assistance and cooperation. It may be mentioned here that IP investment holdings in Pakistan comprise HUBCO (1292MW), KAPCO (1638MW) and Uch (586MW). 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan will excel in livestock production​*
LAHORE: Pakistan will be a prominent focal point in the world with regard to livestock production in the coming days, said Governor Lt Gen (r) Khalid Maqbool.

He was addressing at the concluding session of a two-day International Livestock and Poultry Congress on Wednesday. The governor said that America and Europe had set up heavy machinery industry instead of dairy farming, due to which prices of food items were increasing rapidly. It is a golden opportunity for us to enhance our potential in agriculture and livestock and get the share of the international market, he added.

Maqbool said that Pakistan could prosper through breeding of cattle on a commercial basis. He said that there was a lot of potential for the promotion of sheep, goats, fish and chickens in the country, and 14 billion eggs had been brought to the market from the existing hatcheries of Pakistan in a year. He said that government was paying special attention to the promotion of the livestock sector.

Daily Times - Leading News Resource of Pakistan


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## Neo

*WAPDA looking into generating 25,000MW​*
LAHORE: The Water and Power Development Authority (WAPDA) is carrying out feasibility studies and assessing engineering designs for a number of hydropower projects with a cumulative electricity generation capacity of more than 25,000 megawatts, and most of these studies are nearing completion, WAPDA Chairman Shakil Durrani said on Wednesday. Addressing a delegation attending a management course at WAPDA House, Durrani gave a briefing on the water and power situation in the country. He said that after its bifurcation in October last year, WAPDA had become more focused on harnessing the countrys hydropower resources.

Daily Times - Leading News Resource of Pakistan


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*Britain grants 30m pounds as budgetary support to Pakistan ​* 
ISLAMABAD: April 24, 2008, The British Government has decided to provide 30 million Pound Sterling as budgetary support to Pakistan before the end of the current financial year.

This was stated by Robert Brinkley, British High Commissioner during a meeting with Finance Minister Senator Ishaq Dar here on Thursday.

He said that British assistance to Pakistan would be doubled to Pound Sterling 480 million gradually over three years under arrangements between the two governments for long term development partnership for ten years.

The assistance would be utilized for reducing poverty, improving financial management and fortifying the principles of democracy.

The two sides agreed to put in place a mechanism to make the assistance performance oriented.

Economic cooperation for high quality technical capacity development, reducing poverty, strengthening financial management and accountability, increasing incomes of the poor, service delivery in education and health under countries assistance plan to achieve Millennium Development Goals consistent with PRSP and MTDF was also discussed.

Ishaq Dar emphasized the need for DFID to expand their operation to other parts of the country especially far flung areas of Balochistan, Sindh and Fata under the upcoming country assistance plan.

He informed the British High Commissioner that his team was in the process of formulating tools of financial management to induct transparency in the system. He said that a council of economic experts would work on mechanism of targeting pro-poor measures.

Pakistan also sought British assistance for evolving coherent, uniform and credible system of compiling statistics and British support for the next census.

Britain grants 30m pounds as budgetary support to Pakistan : Business Recorder | LATEST NEWS


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*1.5 million tons of wheat to be imported ​* 
ISLAMABAD (April 24 2008): The government will import 1.5 million tons wheat and procure 5 million tons locally to address the swelling flour crisis in the country that has deepened the miseries of the inflation-ridden masses. This decision was taken by the Cabinet in its meeting here on Wednesday, chaired by Prime Minister Yousaf Raza Gillani.

The Cabinet tasked the Secretaries' Committee, already established under the Finance Minister, to take up the issue of wheat procurement, supply, and import and to consult all stakeholders and suggest measures to be incorporated in the short and medium terms.

Briefing newsmen after the meeting, Minister for Information Sherry Rehman said that the Cabinet was given a detailed briefing about flour and energy crises in the country by the concerned ministries.

The Ministry of Water and Power briefed about its emergency, and short- and long-term plans to address the prevailing power crisis, affecting the industrial growth and the households. There would be no load shedding in the country by next three years, the meeting was told, and that 310 MW had already been brought into the system by conservation, and more 510 MW would be achieved by the end of this month.

She said that the Cabinet was informed that not a single penny was invested by the previous government in power generation, and only 7000 MW existed in the system, of which 5000 MW were set up by previous governments led by Benazir Bhutto.

About accountability, she said that those who plunged the country into crisis would be held accountable before the Public Accounts Committee (PAC) of the Parliament urging stakeholders (public) to use their right of public petition process to make the issue more forceful.

The Minister said that arrangements would be made for live coverage of the proceedings of Parliamentary committees in a bid to communicate accurate situation to the people.

Giving details about judges issues, she said a committee comprising six members, three from each party, was constituted that would meet on Thursday to finalise the modalities of judges' reinstatement in line with Murree declaration. The committee, being represented by Raza Rabbani, Sherry Rehman, Rehman Malik from PPP and Nisar Ali Khan, lshaq Dar and Muhammad Asif from PML-N would also hold meting with legal fraternity.

She said it was decided in the meeting that a resolution for seeking UN probe into the assassination of Benazir would be forwarded soon by the Foreign Ministry after finalising.

She said that the Prime Minister told the meeting that it would deliberate on the 100-day action plan. Referring to incidents in Lahore and Karachi, the Prime Minister regretted that despite the condemnation of what happened to Dr Arbab Ghulam Rahim and Dr Sher Afgan, widespread violence in Karachi was unleashed. The government would not tolerate any conspiracy to destabilise democracy through violence, he added.

The Cabinet approved an MOU with South Africa for cooperation in combating illicit trafficking of narcotics, and with Cuba on establishment of Pakistan-Cuba Joint Economic Commission to enhance bilateral economic cooperation.

Business Recorder [Pakistan's First Financial Daily]


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*Cotton output target missed by 2.7 million bales ​* 
KARACHI (April 24 2008): The country has missed both its original and revised cotton production targets by about 0.2 million and 2.7 million bales respectively due to pest attack and delay in action by concerned officials. Despite three times revision of production target the production would not be more than 11.4 million bales.

However, the final data by Pakistan Cotton Ginners Association (PCGA) would be released during next week, Sources said. Another peculiar thing occurred during the current year, The ginners have cut the average weight of cotton bale from 170 kg to 155 kg. Therefore, a bale is some 15 kg less than the usual bale. Thus, if the cotton production of 11.4 million bales is converted into standard bales, then overall production would come to about 10.6 million bales.

The PCGA's last report regarding cotton production, issued on April 4, 2008 showed that till April 1, 2008 11.33 million bales had arrived in ginning factories. However, report for fortnight ending on April 14 has not been issued due to nominal arrivals of Phutti in the ginning factories.

"The PCGA would conduct its final survey next week for the collection of final production data. However, during the last 20 days of April only some 25,000 bales have arrived in ginning factories and at the end of the current season production would not be more then 11.4 million bales," said a trader Ghulam Rabbani.

He said that during the current season, first time in the history, Ministry of Food Agriculture and Livestock (Minfal) allowed sowing of Bt cotton in the country to get more production, but it failed to control the attack of pest.

He said that mealy bug damaged some 15 percent crop across the country comprising some 11 percent in the Punjab and 4 percent in the Sindh provinces. Cotton was cultivated on 31.8 million hectares in the country and Bt coton was sown on only one million hectares area, Rabbani said.

"In mid-September we projected that the country would miss its cotton production target, which was rejected by the government, and Minfal claimed that cotton crop was well progressing," he said. He said that decline in cotton production necessitated cotton import and compelled that government to spend more foreign exchange reserves for it.

Business Recorder [Pakistan's First Financial Daily]


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*Work on both Tapi, IPI gas lines to be on fast track ​* 
ISLAMABAD (April 24 2008): All parties to Turkmenistan-Afghanistan-Pakistan-India (Tapi) gas pipeline have agreed to make the project a reality on fast track basis and complete the modalities for it side by side with India-Pakistan-Iran (IPI) gas line.

Sources said that the Indian side is participating in the talks with a clear indication to stay on board for both Tapi and IPI simultaneously. Its Oil Minister Murli Duara is in Pakistan to participate in the talks being held here on the project for the last three days. The ministerial level talks on Tapi are going to conclude on Thursday and their outcome is likely to be announced by the teams' leaders at a press conference at a hotel here.

An official, part of Pakistan's team, told Business Recorder that talks held so far on Tapi were very fruitful and provided a clear vision for moving forward to complete the project on fast track basis. He said the project was economically feasible as it can supplement the interested parties' efforts to meet their growing energy demands from external sources in the future.

According to him, the Turkmen side had provided a certification showing adequate gas reserves at Daultabad gas field to ensure continuous supply for Tapi for at least 30 years.

Gas reserves certification was demanded by Pakistan in the last steering committee meeting held in Islamabad some one year back. The law and order situation in Afghanistan is another question mark for Tapi. Pakistan and other parties to it want a clear guarantee from Afghanistan for foolproof system for protection of the pipeline. The Tapi talks would be followed by a fresh round of bilateral talks between Islamabad and New Delhi on IPI.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'India's direct trade volume with Pakistan amounts to $2 billion' ​* 
ISLAMABAD (April 24 2008): Major reforms in infrastructure, education, business climate and efficiency in public sector expenditure in India have been instrumental to a great extent, in raising potential output growth.

This was the crux of special lecture on "Economic Reforms and India's economic performance" by Dr Rajiv Kumar, Director and Chief Executive, Indian Council for Research on International Economic Relations (ICRIER) at a local hotel here on Wednesday.

The trade volume with Pakistan directly amounts to 2 billion dollar but via other routes such as Dubai, it might go up to 7-9 billion dollar. India's tax to GDP ratio is low (16 percent) as compared to average in developed countries (35 percent).

There was a tremendous shift in economic integration with the rest of the world from 1980's onwards, though India still faces economic challenges in the face of post-reform economic development.

The notion of self-reliance has been challenged, as the trade deficit grew from 19 percent of GDP in 1990-91 to more than 50 percent in 2007, but that is bridged with entrepreneurial and other remittances inflow from abroad, he opined.

He said one of the reasons could be the reduction in real interest rate as compared to rest of the world. It has a fair bit of impact of all global trends, eg there is negative relation of GDP to international oil prices. But that also shows week planning on the part of alternate energy sources development, as the real oil prices were the highest in 2006 after 1974.

Share of consumption fell in 2000, but still higher than in China. High growth driven by domestic investment, consumption and net exports in China, while net exports contribution was negative in India from 2001-07, he added.

Services sector has the highest share in economic growth of India (more than 61 percent) although agriculture being the major source of employment has only 18 percent.

He said Manufacturing growth rate was higher than services sector in 15 out of 31 quarters from 2000-01. Industrial growth subject to government price control, was lower than those firms, where prices are market-determined.

Analysing the employment situation in India, Rajiv said that overwhelming proportion of workforce is in the fast shrinking agriculture sector, as there is limited labour absorption in the booming services sector. Continued growth in manufacturing calls for employment growth. However, job opportunities grew during 2000-05 in all sectors and 61 million new jobs created during the above mentioned period.

Commenting on Balance of Payments (BoP) he said "widening trade deficit was compensated by rising invisibles surplus. Huge capital inflows continuing and to cross 9 percent of GDP this year. Trend shows that mounting gap represents lost opportunities to raise investment levels. Hence reforms were necessary to raise absorption capacity.

Now the direction of India's trade is major shift towards China. To a question Rajiv replied that there are income imbalances. Performance for reducing poverty, which is 24 percent is not satisfactory.

Responding to a question on role of education and infrastructure in alleviating poverty, he said "poor are intelligent enough to reap fruits of development if given opportunities. Rural infrastructure programme did not achieve in terms of poverty reduction. Money spent on education and infrastructure help the poor far more. This is why they want my (Rajiv) reforms agenda, he maintained.

Democracy is the key strength to overcome external pressures as it distributes resources on the basis of equity, balance.

With all the shortcomings quality of life has improved as 80 percent of the population in India earns 2.5 dollar a day, quoted from Dr Arjun Singh Gupta, but it is a fact.

To a question on rural poverty Rajiv commented that urban poor are more in trouble. Agriculture remains in India a controlled sector with heavy subsidies. Liberalisation would bring better results in the long run along with elimination of the role of middleman who takes major chunk of the profit.

Lastly, he concluded Information Technology (IT) revolution in India was a private sector endeavour, adding that when Chinese visited Banglore they complained to Asian Development Bank (ADB) that government has not briefed us on its IT policy. In fact there was no IT policy, private sector achieved all this. Shahnaz Wazir Ali (MNA) reaffirmed the four point reforms for Pakistan's current civilian democratic government.

Business Recorder [Pakistan's First Financial Daily]


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*Pakistan needs to tap hydropower potential: World Bank ​* 
FAISALABAD (April 24 2008): Energy is the lifeline of economic development, but unfortunately, Pakistan has historically suffered from energy shortages and demand suppression because of limited supplies and lack of adequate infrastructure development for provision of energy to the industrial sector.

Furthermore, the capacity of Pakistan's existing reservoirs (Tarbela, Mangla and Chashma) has declined by 27 percent and the cumulative decline will increase to 35 percent by 2012 and to 57 percent by 2025.

According to World Bank study report, the major energy consuming sectors of the country are: industrial (38 percent), transport (32 percent), residential and commercial (25 percent), agriculture (2.5 percent) and others (2.5 percent).

The lack of sustained and affordable energy to industry has restrained economic growth and created declining trends for industrial investment in the country. The per capita energy consumption, which is one of the key development indicators as well as measures of quality of life of a country, is low with only 14 million BTU, as compared to 92 million BTU for Malaysia and 34 million BTU for China, the report said.

Currently, the power sector is experiencing acute shortages. Electricity sales rose 40 percent in the last five years (ending June 30, 2007), while generation capacity remained practically stagnant. It is estimated that the system lacks about 2,000 MW to cover current demand with acceptable reliability. Demand, however, is expected to grow at expected rate of 7-8 percent per year in the medium-term.

The WB report observed that this requires accelerated expansion in the power generation systems for which Pakistan has to tap hydropower potential. With multipurpose storages and cost sharing among other sectors (irrigation, domestic water use, flood, environment etc), high altitudes in the north with substantial water flows and relatively sparse population in these areas, the hydropower is most attractive source of energy for Pakistan. However, the country has developed only 15 percent of its estimated 40,000 MW of economically viable potential, a proportion much lower than neighbouring countries (India and China utilise over 30 percent of potential) and much lower than industrialised countries (which utilise around 75 percent).

At present, Pakistan is planning for hydropower to provide about half of new generation in the medium term, since it has recognised that the value of power is not subject to market volatility, that it generates substantial local economic multipliers (the mostly-local construction content of hydropower is about 80 percent versus about 20 percent for thermal power), and that it provides high-value peaking power (which is likely to be worth about four times the value of a unit of base load).

When river flow is variable, storage is required so that water supply can more closely match demand. Lack of storage capacity and control structures is another major constraint to proper water resources management in Pakistan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Wapda to generate 2,500 megawatts more electricity within one year: minister tells National Assembly ​* 
ISLAMABAD (April 24 2008): The Minister for Water and Power Raja Pervaiz Ashraf on Wednesday told the National Assembly that the Wapda would generate 2500 mw additional electricity within one year and would get rid of the burgeoning power crisis in at least three years.

Winding up the ongoing debate on water and power crisis on an adjournment motion in the National Assembly, the Minister informed the House that after taking charge a month back, the new government has added 300MW electricity to the system through short planning and would generate 2200 mw to 2500 mw till April 2009 for which the government is working on war footing.

"The country will get rid of the burgeoning power crisis in at least three years through long and short term planning which the government has already initiated," he added.

Pervaiz, however, made it clear that PPP believes in strengthening the federation and would not build any controversial dam including Kalabagh dam at the cost of the federation and would dig up other sources of energy.

The Minister opined that Bhasha dam could produce power more than Kalabagh at a cheap cost as well in short time, which would be materialised. He sought co-operation of all segments of society, including parliamentarians from both sides of the House for collective action to convert the power crisis into opportunity.

By avoiding any criticism on the previous government, the Minister said that it is not time to waste time in blame game on the national issues and time to face the challenge collectively.

He underlined that demand and supply gap is the basic reason of the ongoing power crisis due to not adding any additional power plant for the last ten years. Besides, he said, hydro power generation has reduced by 60 percent due to shortage of water in major dams, where the water level is 50 percent less than the previous year.

The Minister highlighted that the 16 Independent Power Plant (IPPs) which were launched in 1994 during the PPP government is the main sources of power by producing 5000 mw electricity.

He further told the House that under the short term planning, the government has got rentals for power generation, which would be run through public and private sector.

The existing power plants, he said, need to be renovated to save the electricity and through which at least 500mw electricity could be saved and the government has started working on this.

The Minister also informed the House that the government is going to import 10 million energy savers. These energy savers, he said, would be provided free of cost to the charity organisations, hospitals and schools and the remaining would be given to the general public at a reasonable cost which would be collected by including in the electricity bills.

The Minister further said that the government would focus on the hydro power projects and alternative energy sources eg like coal and wind. Our government, he said, has also planned to call an International Energy Conference in Islamabad on the Thar coal resources to generate electricity though coal.

He also informed the House that the government has disconnected electricity from the hoardings and signboards across the country in a bid to save the electricity. The House would meet again on Thursday at 4. pm.

Business Recorder [Pakistan's First Financial Daily]


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*CDGK, UAE firm ink MoU to build power plant ​*
KARACHI (April 24 2008): A MoU was signed between the City District Government of Karachi (CDGK) and Dubai-based Dhabeen Power Engineering Ltd here on Wednesday to work on the installation of a 1,800 MW power plant to help overcome power crisis in the city.

Under first phase of MoU, work on installation of power turbines, donated by UAE, will start within three months. These turbines would generate 360 MW electricity. However, the power plant will have the capacity to be increased to 1,800 MW phased-wise. DCO Karachi Javed Hanif, MD Water Board Ghulam Arif Khan and EDO Enterprise were present on MoU signing ceremony.

Talking to the media, City Nazim, Mustafa Kamal said that the power turbines being installed were donated by UAE government to overcome power crisis. Furthermore, he said that an experienced company was needed to operate the power plant, therefore, MoU was signed today between the city government and Dhabeen Power Engineering Ltd.

He pointed out that demand for electricity in the city is fast rising, therefore, it was imperative to work in this sector on fast track. He informed that turbines will reach here in few months and installed on a location near Bin Qasim. However, other locations are also under consideration.

On the occasion the Company's Director General Khalfan Saeed Al-Mazoori said UAE and Pakistan enjoy very old brotherly relations and we are not only investing here for its progress and prosperity but also extending all cooperation.

He reiterated that UAE gave turbines to Pakistan as a gift and the MoU signed was aimed at their installation and operation in a transparent manner. He said the project will be visible on ground within three months and electricity problem of Karachiites will be solved to a great extent.

Business Recorder [Pakistan's First Financial Daily]


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*Hydropower projects: Wapda studies, engineering designs to complete soon ​* 
LAHORE (April 24 2008): Water and Power Development Authority (Wapda) is vigorously carrying out feasibility studies and engineering designs of various hydropower projects with accumulative generation capacity of more than 25,000 MW and most of these studies are at the advance stage of their completion.

Wapda Chairman Shakil Durrani said this while addressing a delegation of the 88th national management course here on Wednesday. Principal of National Management College, Lahore, Lieutenant General Javed Hassan (Retd) led the delegation. The Wapda Chairman, giving an overview of the water and power scenario, said the Wapda, after its bifurcation in October last year, was now more focused towards harnessing the water and hydropower resources in the country.

Later, Wapda member (Water) Muhammad Mushtaq Chaudhry and Pakistan Electric Power Company (Pepco) Managing Director Munawar B. Ahmed briefed the delegation on water and power sectors respectively.

He said per capita availability of water in Pakistan had reduced to an alarming level of 1,070 cubic meter in 2007 and if the storage capacity was not enhanced by building new water reservoirs, the country would have to face an acute shortage of water in 2012.

He said Pakistan had been blessed with the ample resources of water, but could develop only 13 percent storage capacity of the annual water flows of its rivers, and that too was fast depleting due to sedimentation in the reservoirs of Tarbela, Mangla and Chashma.

The delegation was told that the United States had developed 497 percent storage capacity of the annual flow of River Colorado. Likewise, Egypt possessed 281 percent storage capacity on River Nile and India 35 percent on Sutlej-Bias basin, he added.

He said the increasing population and depleting storage capacity of the water reservoirs in Pakistan called for constructing more than one-mega dams without any further delay. Building just one mega water reservoir would be a replacement of the lost capacity of the existing reservoirs. It was further told that more than 20 million acres of virgin land could be irrigated provided additional water was made available by constructing new water reservoirs in Pakistan.

The delegation was also briefed about the projects being executed by the Wapda in water and hydropower sectors. Later, Wapda Chairman Shakil Durrani and Pepco Managing Director responded to the various questions asked by the delegation. Souvenirs were also exchanged as memento to the visit.

Business Recorder [Pakistan's First Financial Daily]


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*Pakistan raises prospect of rice export curbs ​*
Friday, April 25, 2008 

ISLAMABAD: Pakistan raised the prospect on Thursday of curbs on rice exports if the price of the grain rose in the domestic market because of shipments.

Pakistan expects rice production of 5.5 million tones during this fiscal year and, after domestic consumption, it should have an exportable surplus of 2.5 million tonnes, Minister of Food Chaudhry Nisar Ali Khan told a news conference.

Khan said the government would allow rice exports unless they affected domestic rice prices:If we feel that the export of rice has some negative impact on domestic prices, we can think of all kind of actions.

Asked if the government would ban or tax exports, Khan said: There are certain options but we will talk to exporters about that.

Rice, a high-value cash crop, accounts for about 8 per cent of Pakistani exports and 1.2 per cent of gross domestic product.

Pakistan produced 5.4 million tonnes of rice last year and exported 3.12 million, equal to about a 10th of world rice trade.

Rice is an important foreign exchange earner but it is also very important for us to ensure its domestic prices at the given price, he said.

Rice prices in Pakistan, the world fifth-largest rice exporter, have doubled in the past few months.

Pakistan exported 1.6 million tonnes of rice in the first eight months of this fiscal year, according to official data.

http://www.thenews.com.pk/arc_news.asp?id=3


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## Neo

*account deficit swells to $10.36bn ​* Friday, April 25, 2008 

ISLAMABAD: The current account deficit (CAD) in the first nine months (July-March) of the current fiscal year stood at a hefty $10.46 billion which is up by 60 per cent or $3.85 billion than $6.41 billion recorded in the corresponding period of the last fiscal. 

More worrisome was that during a month the CAD moved up by more than half a billion dollars ($0.58 billion) as during February 2008, it stood at $1.029 billion which further jacked up to $1.61 billion in March 2008.

The galloping current account deficit nature was very steep since the start of this fiscal as in the first quarter July-September, CAD stood at $2.24 billion, July-December $6.04 billion and now during the period under review it scaled up to unprecedented $10.46 billion. 

During July-March, trade imbalance (in goods and services) goes up from $11.1 billion last year to $15.79 billion this year. Likewise, the current account deficit of the last year also included huge trade deficit owing to import of used cars, which were banned in the federal budget 2006-07 and resultantly CAD was slowed down in the later part of the year. 

The average monthly incidence of the current account deficit was $712 million in the last fiscal year, but during the current fiscal year, the average monthly current account deficit is touching $1.14 billion.

This implies that the target of containing the current account deficit at 5 per cent of GDP as envisaged in the Annual Plan is most unlikely to be achieved. 

Higher oil prices spiral since November 2007 might add to the woes on external front through widening trade imbalance. The government is already in a fix to contain fiscal deficit which has already hit one of the highest level of 3.6 per cent of GDP in the first half (July-December) for the last seven years. 

Now it has become clear that fiscal deficit target of 4.0 of GDP would be breached by a fair margin and there are chances that current account deficit target would not be achieved as well. The new political set-up would also not be in a position to shelve its mega development projects and it has to finance fraction of the oil imports bill. 

http://www.thenews.com.pk/arc_news.asp?id=3


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*Inflation nullifies minimum wage rise ​* Friday, April 25, 2008 

LAHORE: Though minimum wage is still low in Pakistan, the recent increase announced by the government has been nullified by inflation while industries have stopped further recruitments as the cost of doing business has increased.

The News has found that the increase in minimum wage to Rs6,000 has put an additional burden of Rs1.68 million annually on small industries employing 100 workers and Rs8.4 million on medium industries having a workforce of 500. These small and medium industries are established mostly in the textile sector that accounts for over 30 per cent of the total industrial force of the country. The rest work in medium and small engineering concerns, plastic and agro-based industries. New enterprises are not coming up which could have absorbed the unemployed.

The large capital-intensive enterprises employ a small number of people compared to the labour-intensive ones, which are under pressure but given the enabling environment, can employ more.

All Pakistan Textile Mills Association (APTMA) former chairman Abid Farooq, while commenting on the issue, said the increase in wages was announced at a time when the textile sector was already under pressure.

He said many factors were impacting the productivity of all industrial sectors. Industries remained closed for up to eight hours a day due to power shutdowns and even the most efficient industries could not survive if their production was curtailed by 33 per cent. Retrenchment was on the cards in all small and medium industries on this count only, he added.

He said the increase in minimum wages was announced immediately after the industries were burdened with a 23 per cent increase in electricity rates (the industrial electricity rates have been increased from Rs3.40 per unit to Rs5.04 per unit). He said a 16 per cent increase in petroleum rates in March and another seven per cent last week had also adversely impacted the costs of all industries, adding larger units might help survive all these additional cost factors because they at least have their own power generation units that ensure full productivity.

He said the SMEs had stopped further recruitments and the vacancies left unfilled were not being occupied just to cut costs. He said many SMEs were on the verge of collapse which would increase unemployment.

Chairman APTMA Punjab, Akber Shiekh, said the local textile industry buys cotton at import substitution rates because the local production has fallen short of industry demand. This adds to the cost as cotton constitutes for 70 per cent of the total input cost of yarn. He said no efforts have been made to increase cotton production through the certified BT cotton seed.

He said increased wages would not have hurt the industry if other costs were not increased. He said on average, spinning mills of 25000 spindles now pay Rs2.95 million due to the addition in electricity charges. He said the corruption and incompetence cost of the bureaucracy is even higher.

The News found that the construction industry that generally provides employment on a daily wage basis has not been impacted by the increase in minimum wage. The informal sector that also provides substantial employment has not implemented the minimum wage directive either, as it operates outside the ambit of law. The agriculture sector is also exempted from the minimum wage law. Only the registered productive sector has been affected by this directive.

The workers now face a dual dilemma of managing to keep their jobs intact and balancing their budgets on the increased minimum wage. The 23 per cent increase in petroleum rates in the past six weeks, 9 per cent increase in electricity rates and high food inflation during this period, has increased their expenses more than the increase in their wages.

The creation of productive income-earning opportunities to absorb the existing unemployed people and the future labour force, remains a formidable task in the context of resource constraint that Pakistan has been facing since the last two decades, and the inability of its planners to boost its industrial sector through increased market access.

http://www.thenews.com.pk/arc_news.asp?id=3


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## Neo

*Gems, jewellery sector asked to focus on US market ​* Friday, April 25, 2008 

KARACHI: Pakistan Chamber of Commerce USA (PCC-USA) Vice President Abdul Qayyum Khan Kundi has said that Pakistan should concentrate on trading with the US gems and jewellery industry, which is worth over $13.6 billion and ideal to expand trade. 

During a press conference here on Thursday, he said the countrys exports to the US were only worth $1.5 million in the gems and jewellery sector whereas India was the top most leading exporter closely followed by China, Thailand and Italy. 

He further said that if Pakistan wanted to increase trade with USA then it would have to make efforts for increasing exports. He said that sadly, even while PCC-USA made the efforts to edge up joint ventures between the two countries, there was no response from the local counterparts here. Kundi said that according to a survey conducted by his organization, the gems and jewelry sector, handicrafts, marble and furniture are the most lucrative industries where Pakistan could enhance trade with the western country. 

In this context, Pakistan Gems and Jewellery Development Company (PGJDC) in collaboration with Pakistan Chamber of Commerce USA (PCC-USA) are planning to organize a three day, single country gems and jewellery exhibition in Houston, USA in October 2008. 

PGJDC CEO Fawad H Khan said that in this regard the MoU between PGJDC and PCC-USA has been finalized which will lead to organizing several single country gems and jewellery exhibitions in USA. He said that so far more than 55 Pakistani gems and jewellery traders from all over the country have shown their firm interest for participating in this exhibition. They will represent the sector from a wide variety of gems and jewellery including rough and cut gem stones and mineral specimen, plain and stone studded gold and silver jewellery he added. 

Khan said that this exhibition would greatly help in tapping the new industrial links for gems and jewellery sector and would also pave the way for the industry to develop further business links to enhance the level of their designs and technology. PCC-USA President Muhammad Saeed Sheikh added that an American trade delegation was all set to travel to Pakistan during the summer to assess investment opportunities here led by the Texas state governor. 

PGJDC Chairman Mutiullah Sheikh said that PGJDC is establishing Gems and Jewellery Common Facility Training & Manufacturing Centres (CFTMCs) enabling the industry to get staff trained on latest machines as well as use these facilities for the production of the orders. 

http://www.thenews.com.pk/arc_news.asp?id=3


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*Pakistan, Germany to finalise investment protection draft ​* Friday, April 25, 2008 

LAHORE: Hectic negotiations are under way on a Bilateral Investment Protection Agreement between Pakistan and Germany, and hopefully a final decision on the text of the accord would be made this year.

This was stated by German Commercial Attache Patrick Heinz while talking to LCCI Acting President Mian Muzaffar Ali at the Lahore Chamber of Commerce and Industry on Thursday.

Heinz, who was quite optimistic about future trade relations between the two countries, said a large number of German companies have already started operations in Pakistan while renowned German IT giant SAP was also keen on investing in Pakistan.

Heinz added that within the EU, Germany was Pakistans biggest trading partner and that the German embassy in Islamabad was making efforts to further mutual trade between the two countries. He also emphasised the need for rapid exchange of delegations and frequent interactions between businessmen to boost foreign investment in Pakistan.

Speaking on the occasion, Mian Muzaffar Ali said Pakistan is strategically located, and with the construction of the Gwadar deep-sea port, foreign investors can further seek to boost trade relations with neighbouring Central Asian States and in the South Asian region.

http://www.thenews.com.pk/arc_news.asp?id=3


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## Neo

*Minister supports lucrative power sector for investors​*
ISLAMABAD: In order to make power sector cash magnet for investors and to create investment friendly atmosphere, the policies should be investment friendly with simplified procedures.

Federal Minister for Water and Power, Raja Pervez Ashraf, stated this Thursday during a briefing given to him by Private Power and Infrastructure Board (PPIB). He also advised that after meeting the immediate power requirements, the focus should be on indigenous fuels and resources like Hydro and Coal. 

Pervaiz said the government was committed to end the menace of load shedding in the country within the next three years and local and foreign investors might be welcomed with open hands in this respect. 

Currently the portfolio of priority projects being processed by PPIB includes 39 power projects of around 10,000 MW, on different fuels and resources. The Minister was informed that eight projects totaling 1,667 have achieved financial closure, while another eight projects of 1,494 MW are expected to achieve their financial closures this year. It was informed that 615 MW of power will be available to the national grid by April 2009 from the private sector, which will increase to 1,667 MW by end of 2010, and a total of 3,750 MW will be supplied by the private sector by the end of year 2011. Two thermal power projects of 500 MW each at Faisalabad and Dadu are also being processed, through International Competitive Bidding (ICB) basis, and the response of the local and foreign investors has been very encouraging. 

It was also briefed that 20 hydropower projects of about 4,500 MW are at different stages of processing, out of which, 15 projects of 3,950 MW have already been issued Letters of Interest (LOIs). Similarly for development of indigenous coal, LOIs have been issued to 4 companies with a cumulative capacity of 1,550 MW, while another 1,000 MW project based on Thar coal is being processed under international competitive bidding. In addition, two projects of 1,000 MW each on imported coal will be set up at Gadani by 2013, which will eventually use local coal from Thar. 

Second Meeting: The Federal Minister for Water and Power also reviewed progress on Alternative Energy Projects. Chief Executive Officer, Alternate Energy Development Board (AEDB), Air Marshal (R) Shahid Hamid gave a briefing to the Minister today. 

The Minister was informed that various projects of wind powered IPPs are being processed by AEDB, each of 50MW capacity. These projects will be installed along the general wind corridor along the coastline in Sindh. An area of 33,976 acres has been leased for these projects, which have been provisionally allocated for 24 such projects. The Minister was informed that Zolru Enerji of Turkey has initiated the energy purchase agreement with National Transmission and Dispatch Company for its 50MW wind power project The company also plans to install 06MW in the first phase of its 50MW wind power project, groundbreaking ceremony for which is likely to take place at the end of June 2008.

The minister was further informed that as part of 100 Days Programme, 1,762 homes in 31 remote, off-grid villages in all four provinces are being provided electricity by AEDB. AEDB is also to provide power to 4,00 villages in Balochistan and Sindh through Solar energy. So far 1,064 homes of District Tharparker in Sindh have been provided electricity by Solar Energy. A total of 2,500 homes will be provided with electricity in District Tharparker by AEDB by June 2008.

Daily Times - Leading News Resource of Pakistan


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*Great potential to boost Pak, Swiss trade volume​*
KARACHI: Bilateral trade between Pakistan and Switzerland has grown steadily in the last few year, however it is still less than the existing potential for trade between both the countries, Swiss Consul General in Karachi, Martin Beinz, said here on Thursday.

More efforts are required to boost the bilateral trade volume by tapping this potential, he said while speaking to members of Pakistan Hosiery Manufacturers Association (PHMA).

He said trade between the two countries could be enhanced through exchange of delegations and greater contacts between the businessmen of the two countries.

About the existing trade ties between the two countries, Consul General said, Switzerlands exports to Pakistan are mainly comprised of machinery, pharmaceuticals, and chemicals with textile machinery being on top.

Whereas exports to Switzerland from Pakistan mostly consist of textile and garments and agricultural products as well as Switzerland remained among the top seven countries to make Foreign Direct Investment (FDI) in Pakistan. 

Daily Times - Leading News Resource of Pakistan


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*USAID launches project to improve education system​*
ISLAMABAD: United States Director of Foreign Assistance and Administrator of the US Agency for International Development (USAID) Henrietta H Fore and Federal Minister for Education Ahsan Iqbal on Thursday launched a $90 million project to strengthen the basic education system in Pakistan.

Pakistans basic education system must earn the trust and confidence of parents that their children will receive quality education, and we want to help in building a system that delivers on its promises, a statement from the US Embassy quoted Fore as saying on the occasion.

She said it was up to the government and people of Pakistan to define the countrys goals towards education and to mobilise the resources that may help turn such goals into reality.

Separately, Fore also visited Prime Minister Yousaf Raza Gillani and Finance Minister Ishaq Dar to discuss the US development assistance to Pakistan. She reiterated the US governments commitment to helping Pakistan in addressing its development challenges.

The commitment includes the provision of $750 million in projects to support development in the Federally Administered Tribal Areas (FATA). Since 2002, the USAID has provided more than a quarter of a billion dollars to reform and revitalise Pakistans educational system.

Gillani told Fore on Wednesday that Pakistan wanted to further expand its economic and trade links with the US to strengthen the long-term strategic relations between the two nations.

Daily Times - Leading News Resource of Pakistan


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*Saudi Arabia pledges $187 million soft loan ​*
ISLAMABAD (April 25 2008): Saudi government has pledged a soft loan of 187 million dollar to Pakistan. This was stated in a meeting of Minister for Finance, Ishaq Dar and Ambassador of Saudi Arabia Ali S Awadh Asseri in Islamabad, a private TV channel reported.

Out of the loan 40 million dollars have been allocated for the Golan Goal Hydro Power Project. The remaining amount of 147 million dollar would be utilised for development projects in Balakot and Rawalakot cities to offset impact of earthquake.

Business Recorder [Pakistan's First Financial Daily]


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*South Asian products: PCC-USA proposes to develop Houston as distribution centre ​* 
KARACHI (April 25 2008): President, Pakistan Chamber of Commerce USA (PCC-USA), Muhammad Saeed Sheikh has said that the chamber has initiated a proposal to develop Houston as a distribution centre for South Asian merchandise with Pakistani products taking a lead.

Speaking at a meeting of Karachi Chamber of Commerce and Industry (KCCI), he said that the chamber would continue working on this proposal to contribute towards the economy of Houston and create new markets for Pakistani products.

He said that the chamber peruses its agenda of strengthening the friendship of Pakistan and USA through trade and development. In order to create market access for Pakistani exporters the chamber will organise a merchandise Expo by third quarter of 2008. This initiative will pave the way for our future leaders to achieve higher milestones.

He said that the chamber is also striving to improve Pakistan's image through promotion of trade and investment between the two countries. Muhammad Saeed Sheikh and President KCCI Shamam Ahmed Shamsi have agreed to form a 6-member consultative committee to co-ordinate dissemination of trade and investment news, rules and regulations, and other related information. He invited KCCI delegation to visit USA.

Business Recorder [Pakistan's First Financial Daily]


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*Thar coal only answer to energy crisis​*
KARACHI, April 24: Experts at a seminar on Thursday expressed concern over very low power generation during the last nine years, and emphasised that huge deposits of Thar coal are the only answer to energy crisis in the country.

They said that the execution of Thar Coal Project, which is an integrated project of mining and power generation, be solely assigned to the Sindh Coal Authority after making it an independent professional organisation, with all decision-making and administrative powers so that companies engaged in this mega project be provided one-window facility.

At present, various provincial and federal ministries and other public sector organisations are involved at various stages or components which was leading to duplication of work and wastage of time and money.

The seminar also recommended that the Sindh Coal Authority should have its own independent chairman, instead of administered by the provincial minister for minerals.

The seminar titled energy crisis: power generation from coal, a major option, was organised by the Institute of Engineers Pakistan, in collaboration with the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) at the Federation House.Those who spoke included PPP Sindh council member Wali Mohammad Rahimoon, acting FPCCI President Mohammad Farooq Dadabhoy, Institute of Engineers Pakistan Chairman Zaffaruddin A. Zuberi, K K Sharma, PSO Chairman Sardar M. Yasin Malik, Aftab Ali Rahimoon, Dr Rafique Ahmed Khan, Syed Sibte Ahmed Jafri, Mohammad Abdullah Farooqui, Dr M Yaqoob Chugtai and Shiraz Ali Motandas. They gave presentations on how to make best use of huge coal deposits in Thar for the much-needed eclectic power generation and other industries without wasting further time.

The participants recommended that for realisation of targets and goals of mining coal of Thar for power generation on a fast track basis, the government should discourage use of gas and oil for new thermal power plants.

They, however, stated that the existing aging units in public sector be modernised and converted to combine cycle for enhancement of capacity and efficiency wherever possible.

It was suggested that apart from government functionaries, the following set of stakeholders be considered as an integral part of the project for their services:

The consultants who worked at Thar Coal Field on Coal Mining; investors for coal field and for setting up of power plant; experts working in mines and construction of plants.

They recommended formation of a task force, comprising three to four members from private forums, such as FPCCI, IEP, the consultants and the renowned professionals, to have an official status to liaise with government functionaries at federal and provincial levels for giving them an independent opinion on the status of the projects undertaken by the private and the public sector on the development of the coal mining and the integrated power plants.

For making Pakistan competitively attractive for investment in coal-mining, it was proposed that sovereign guarantees be provided on investment by investors and power purchase tariff should be on the basis of feasibility report without compromising the national interests.

The participants proposed display of all studies and recommendations on the website and for making public the comments from consultants, experts and other stakeholders for conclusions as to the viability of the Thar coal fields for mining and setting up of power plants at the mines mouth or other places and feeding the coal through transportation.

The government should ensure security of investment to investors on a long-term basis, and formulate an investor-friendly coal-mining policy without undue thresholds.

The experts recommended tax holidays for 15-25 years on all the required mining equipment, transportation equipment, power plant equipment and infrastructure.

Wali Mohammad Rahimoon, who is from Thar, emphasised that huge deposits of Thar coal are the only answer to energy crisis in the country.APP

Thar coal only answer to energy crisis -DAWN - Business; April 25, 2008


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*Basic accord for Turkmen gas project signed​*
ISLAMABAD, April 24: Pakistan, India and Afghanistan on Thursday signed a framework agreement to buy natural gas from Turkmenistan, despite the cost of laying a pipeline from the Central Asian state having increased to $7.6 billion from the earlier estimate of $3.3 billion.

The original agreement signed by three countries in December 2002 was revised to allow India to join the US-backed gas pipeline project for importing gas from Turkmenistan by 2015 to meet its growing energy needs.

Thursdays agreement came amid uncertainties surrounding the Iran-Pakistan-India (IPI) pipeline project.

Indian oil minister Murli Deora who attended the meeting here on Thursday, will hold a meeting on the unresolved issues of transit fees and transportation tariff for the IPI project with his Pakistani counterpart on Friday.

The United States is discouraging Pakistan and India from importing gas from Iran through the $7 billion pipeline and has been backing the Turkmenistan project as an alternative.

Ministers from Turkmenistan, Afghanistan, Pakistan and India agreed in their 10th steering committee meeting held over the past two days to start work on the much delayed TAPI project in 2010.

The project will supply 3.2 billion cubic feet of gas per day through the 56-inch diameter pipeline starting from the Dauletabad field in Turkmenistan to Fazilka at the Pakistan-India border, passing through Herat and Kandahar in Afghanistan and Multan.

Addressing a joint press conference, Minister for Petroleum and Natural Resources Khwaja Mohammad Asif said that despite the significant increase in project cost estimates it was considered economically and financially viable.

Turkmen Minister for Oil and Gas Industry Dr Baymurad Hojamuhamedov said huge new gas reserves had been found in his country and it would award the contract for certification of reserves of various fields to a British consultant by the end of the current month.

He said the total gas reserves in Turkmenistan were about eight trillion cubic metres.

Mr Asif said the countries had agreed to formulate a long-term pricing mechanism which would be attractive to the buyers as well as the seller, and reflect the new market trends.

Indian Minister Murli Deora confirmed that talks were being held on the IPI pipeline plan with his Pakistani counterpart.

Asian development Banks country director Peter Fedon said the bank had facilitated the signing of the TAPI agreement. However, he evaded answering a question about possible assistance for the IPI project.

Turkmenistan informed the meeting that the audit report on certification of its reserves would be available by Sept 30.

The parties agreed that a technical working group would prepare a draft of the gas sales and purchase agreement by Dec 31. The next meeting of the group will be held in New Delhi by October.

The ADB agreed to take up the issue of a comprehensive review of the feasibility study in order to move forward to the next phase of inviting investors interest in the project.

The parties agreed to form a consortium of investors to undertake the detailed feasibility study and further actions.

Afghanistan proposed to take up to five million cubic metres per day in the first two years after implementation of the agreement and up to 14 million cubic metres of the 90 million cubic metres allocated to the project from the third year. Pakistan and India agreed to equally share the remaining volume.

The member countries will discuss the issues of payment of transit fees to Afghanistan and Pakistan, taxation structure and consortium procedures by 2009.

Basic accord for Turkmen gas project signed -DAWN - Top Stories; April 25, 2008


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*Rethinking Development Strategy: Pakistan can take advantage of world commodity crisis​*
LAHORE: The states role in facilitating development in countries such as Pakistan through technical advice and financial support is very important, while the policies based on the Washington Consensus may not necessarily be ideal for the developing countries and thereby should be taken with a pinch of salt. 

Participants expressed these views at the second day of the Fourth Annual Conference on the Management of the Pakistan Economy, held at Lahore School of Economics (LSE) on Friday. 

The day started with the session on Rethinking Development Strategy. Dr Shahid Javed Burki chaired the session. 

Dr Naved Hamid, former Senior Economist, Asian Development Bank, said that unlike the development trajectory followed by the newly industrialised countries, growth prospects could no longer remain dependent on manufacturing and export orientation. 

The change can essentially be attributed to an in exhaustive labour supply in China due to which it is attracting high FDI flows, he said adding that the new path is that of outsourcing tradable services encapsulating both high and low skill jobs. 

The acceleration of globalisation has been made possible through the Information and Communication technology sector, which has resulted in the death of distance. Further propounding on the benefits of services led growth strategy, he said that the balance of payments constraint would be relaxed in addition to greater employment generation. 

A key role must also be played by regional cooperation through which market access can be widened and higher investment levels can be achieved. However, to exploit this opportunity Pakistan must invest in expanding its knowledge economy. 

The second sector deserving attention is the agricultural sector, as Pakistan can benefit from the rise in the international price of food commodities if it chooses to remove widespread distortions in the system. Dr Rajiv Kumar, Director and Chief Executive, Indian Council for Research on International economic relations, highlighted the problems being faced by the Indian economy with regards to the services sector development. He referred to it as unsustainable and conducive to the development of a dualistic society. This assertion was based on the fact that more than 50 percent of the Indian population is employed in the agriculture sector, which is only about 18 percent of the GDP. 

He further briefed on the performance of the Indian economy and stressed on the need to revise prices upwards given the rising global prices scenario. 

His participation was much appreciated due to the insight he provided on the various constraints that the Indian policy makers are faced with and their similarities with problems in Pakistan. The fifth session of the conference was a panel discussion on Inflation, Macroeconomic Stability and Growth. This session was aimed at delineating different perspectives on why inflation, global and domestic is rising, and what is the new route to be taken to minimise the impact of the crisis. The panellists were Dr Azam Chaudhry, Dean of Economics Department, LSE, Riaz Riazuddin, Economic Advisor, SBP and Sakib Sherani, Chief Economist, ABN Amro Bank.

The discussion in this session took into account both the monetarist and structuralist point of view with regards to the causative factors of inflation. The main conclusions pointed towards the need to remove distortions in the agriculture and oil sector in Pakistan so that the impact of rising food and oil prices can be dampened. It was also highlighted that the impact of food inflation is higher on poverty in rural areas as compared to rising fuel costs. However, in the longer-term rising food prices will benefit the rural poor engaged in farming of food crops, as the price of their produce will rise. Another interesting point raised in the session highlighted how rigorous monetary tightening can control food inflation. The adequacy of monetary tightening was also questioned, as peaks in reserve money have not been lowered in the contractionary phase post financial year 2005.

The effort made by the Lahore School in organising such an event must be lauded, given the urgent need to resolve economic issues impacting political stability in the country. It can be further said that such an event has not been organised before considering the quality of the papers presented by prominent policy makers and academicians.

Daily Times - Leading News Resource of Pakistan


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*SPI weekly inflation surges by 24 percent​*
KARACHI: The Sensitive Price Index (SPI) based weekly inflation surged sharply by 23.71 percent during the week ended April 24, 2008 over the corresponding period of previous year.

Weekly inflation also increased by 1.13 percent during the week under review compared to preceding week, official data indicated on Friday.

The big jump in the weekly inflation was caused by major increase in the prices of kitchen items, triggered by raise in the prices of domestic oil prices. 

The steep rise in the inflation has burdened the poor segments of the society more because the low-income group was hit hard by the inflationary trends during the week. 

The households in the two lower income brackets of upto Rs 3000 and Rs 3001-5000 felt the pinch of this weekly inflation surge more as it shoot up by 26.65 and 26.15 percent respectively.

SPI increases by 24.32 percent for the households in the income group of Rs 5001-12000 and was up by 21.16 percent for income group above Rs 12,000. 

The SPI basket is consisted of 53 essential items for all income groups in 17 urban centers of the country. During the week, prices of 29 items increased and only four items registered decline whereas as prices of 22 items remained unchanged over the previous week. Prices of 27 items went up as compared to the previous week. The prices of red chillies went up by 26.42 percent to Rs 218.14 per kg as against Rs 172.55, rice Irri-6 up by 8.01 percent to Rs 37.61 from Rs 34.82, rice Basmati broken up by 6.86 percent to Rs 45.30 against Rs 42.39.

Price of diesel increased by 6.85 percent to Rs 47.28 over Rs 44.25, gram pulse washed up by 6.40 percent to Rs 50.54 over Rs 47.50, petrol up by 4.79 percent to Rs 66.03 against Rs 63.01.

An increase of 4.61 percent was seen in the price of potatoes to Rs 13.17 against Rs 12.59, 3.06 percent in price of bananas to Rs 37.40 per dozen against Rs 36.29, 2.89 percent in price of egg to Rs 55.13 per dozen against Rs 53.58, 2.21 percent in price of onion to Rs 12.02 per kg against Rs 11.76. The prices of wheat flour, masoor pulse washed, wheat average also witnessed visible upward change during the week.

Daily Times - Leading News Resource of Pakistan


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*Pak-Thai bilateral trade to grow: Abbasi​*
KARACHI: Federal Minister for Commerce, Trade and Industry, Shahid Khaqan Abbasi Friday hoped bilateral trade volume between Pakistan and Thailand would grow manifold with the regular holding of trade exhibition. 

At the inaugural ceremony of the 4th Thailand Exhibition, the minister said holding of such exhibitions on regular basis, would go a long highlighting Karachi worldwide as a normal city where trade activities were continuing without any fear of violence. 

He hoped Pakistani exporters would also display their products in Thailand to draw attention of their buyers, which would ultimately help boosting countrys export in diversified field.

Thai Consul-General to Karachi, Joompol Manaschuang said we have full confidence in the economic potential of Pakistan as hub of trade activities of the region and this consecutive trade exhibition bears testimony to this fact.

He said by the end of the current year or beginning of the next year, Thailand would open permanent commercial office in Islamabad, which would help strengthen trade ties between both the countries. 

He said during the tenure of the present government, bilateral trade relations between Pakistan and Thailand would grow with leaps and bounds. He said there were many potential sectors in which Pakistan and Thailand could mutually benefit which includes hotel and tourism, construction, leather, agro-based industries and fisheries, power generation and infrastructure development. 

Department of Export Promotion, Ministry of Commerce Royal Thai Government and managed by the Thai Trade Center in association with the Royal Thai Consulate-General Karachi organised the event.

Daily Times - Leading News Resource of Pakistan


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*Pakistan, Japan hold talks on bilateral co-operation, investment​*
ISLAMABAD: Japan and Pakistan held in-depth deliberations to increase bilateral cooperation, especially Japanese financial assistance to Pakistan. The two sides also discussed ways and means to encourage Japanese investment in the country.

Seiji Kojima, Ambassador of Japan meeting with Senator Ishaq Dar, Finance Minister on Friday reviewed overall economic cooperation, discussed ODA assistance, grant assistance, non-project grant assistance and the role of JICA for bridging the gap between the two peoples. The two sides also discussed high-level policy dialogue 2008 in Tokyo and forthcoming deliberation on aid and its effectiveness at Accra Forum and Japan s role as a leading development partner of Asian countries.

Pakistan appreciated Japans non-project grant assistance of $6 million for the development of FATA. Japan has indicated ODA assistance of $478 million for the year 2007-08. 

The two sides agreed that at mutually convenient dates both would sign and exchange the notes and identify projects to be financed under this facility. Finalization of $92.6 million grant assistance for seven new projects was also discussed.

The role of JICA in promoting cooperation to engage Japanese experts and volunteers was emphasized. JICA has played an important role in human resource development through capacity building courses. It was hoped that the JICA would help Pakistan to meet its training needs for capacity building, research to increase out put in agriculture, livestock, fisheries, biotechnology, horticulture and seafood.

Pakistan sought Japanese assistance to increase ODA volume over the medium term, diversify economic assistance and explore new areas of cooperation including renewable energy. Pakistan also evinced interest in charting new country assistance strategy and enhanced Japanese support for human development projects.

Since 1961, cumulative Japanese assistance to Pakistan comes to around $5.7 billion. Its annual assistance averages to $200 million inclusive of grant and loans. 

Senator Dar emphasised the need for economic dialogue between the private sectors of the two countries and hoped that bilateral trade would increase. He shared Pakistans financial and economic performance and his deliberations with IMF and World Bank during the recent Spring Meetings in Washington. He hoped Japan as one of the major development partners would increase its bilateral assistance to facilitate its economic growth. 

Daily Times - Leading News Resource of Pakistan


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*Acer announces 51.4% sales growth in 2007​*
KARACHI: Acer Computer, the worlds Third largest IT vendor, has announced a 51.4 percent year-on-year growth in 2007 for sales in the Middle East, and Africa (MEA) region, said Jacob Varghese, Regional Sales Manager of Acer Computer Middle East.

Pakistan also falls in the same region. Acers consolidated revenue in 2006 rose 16 percent to $14 billion. In the MEA region Acer holds the top position in the supply of Notebooks, backed by a 73.1 percent year-on-year growth. 

In the Kingdom of Saudi Arabia it holds the same position with a 26.8 percent market share in Notebooks. 

It commands an overall market share of 20.1 percent in UAE, which has also seen a 73.1 percent year-on-year growth in the supply of Notebooks, and in Turkey it holds the number two spot with a market share of 13 percent. 

Daily Times - Leading News Resource of Pakistan


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*Pak engineering products attract foreign attention​*
ISLAMABAD: Engineering Development Board (EDB), Ministry of Industries and Production organised participation of 55 engineering companies in Hannover Messe, a leading technology exhibition in Germany from April 21 to April 25, 2008. 

Pakistan pavilions at subcontracting and Energy/Power Transmission Technology categories attracted the customers due to the quality of products and the décor of the pavilion. 

The Ambassador of Pakistan to Germany, Shahid Kamal, accompanied by the commercial counsellors of Germany and Netherlands visited pavilion. 

The exhibitors praised the efforts of EDB for organising participation of Pakistani engineering industry in the world-class events and stressed the continuity of participation in Hannover Messe in upcoming years. Due to the repeated participation since 2005, each exhibitor has received more business queries in comparison to the previous years, which will result in increase of exports of engineering goods and services. 

The representatives from various international chambers of commerce, business support organisations, western organizations for import promotion from Asian region and European research organizations visited Pakistan pavilion to witness technologies including castings, forgings, precision machined components, electrical goods, plastic, rubber and sheet metal parts displayed by engineering sector of Pakistan at the event. 

The representatives from CBI, Import Promotion Organisation of the Netherlands, SIPPO-Swiss Import Promotion Organisation, Turkish Chamber of Commerce and Industry, Spanish, Italian, French and various German chambers and trade associations met Pakistani delegation to discuss possibilities to boost trade of engineering goods and services with Pakistan.

Daily Times - Leading News Resource of Pakistan


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*How can TAPI and IPI save Pakistan? ​*
Pakistan, Afghanistan and India have signed a Government Framework Agreement in Islamabad to initiate the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project to supply gas to the three downstream countries. India has formally joined a project that was earlier called TAP without India. The Asian Development Bank (ADB) is pushing the project whose feasibility was already approved in 2003. Later, it was discovered that the project would be profitable to Turkmenistan only if India joined to take 60 percent of the supply. India wanted to join the project but was sitting on a see-saw about actually formalising its entry into the deal.

Are we out of the wilderness on a plan that was set on foot in the early 1990s and got snagged in global politics? The Taliban decided to take on the world instead of taking the American bait on the Turkmen pipeline, and the project was laid off after a hopeful American company left Kabul. An alternative emerged in the shape of the Iran-Pakistan-India (IPI) pipeline, but once again got snagged in international politics. Iran decided to take on the world on its nuclear programme, which scared India off and left Pakistan alone carrying the bag while Tehran played tough on price-fixing. Fear of American sanctions scared off prospective financiers like the ADB and suddenly IPI began to slip and TAP came on line again as TAPI.

The TAPI pipeline will run from the Daulatabad gasfield to Afghanistan, from there it will go alongside the highway running from Herat to Kandahar, and then via Quetta and Multan in Pakistan to India. The final destination will be the Indian town of Fazilka. It will supply 33 billion cubic meters (bcm) of natural gas annually, its major customer being India. There will be six compressor stations along the entire length of the pipeline and it will have to be guarded by the states they pass through, apart from the pipeline. The largest stretch will fall to the share of Pakistan, between Quetta and Multan and the Indian border. The cost of the project was just over $3 billion in 2003; today it is $7.6 billion. The supply is to begin in 2015 if TAPI too is not sabotaged.

The Indian press says that IPI is as good as dead and that TAPI is on. Most officials get riled at the idea that the states have backed off because of the American threat to apply sanctions to whosoever helps in building the IPI, but the ADB is clear in its mind that the IPI is not feasible in the current circumstances. And it is feasible only if India joins it. This applies to TAPI as well. After India dilly-dallied, Pakistan tried to revive the IPI by getting China in on the pipeline at the cost of creating an eighth wonder of the world in the shape of a high-altitude pipeline into Sinkiang, once called High Asia. 

India and Pakistan need gas to survive. India is actually more desperate because of its steady high growth rate but its efforts to get gas from the east from Bangladesh and Burma have not brought fruit. When it glanced towards the West it saw Pakistan sitting athwart a geo-strategic terrain demanding a solution to Kashmir as a pre-condition. So it decided to build a fleet of carrier ships for Liquefied Natural Gas (LNG) from Iran and Central Asia via Iran. But developments inside Pakistan have damaged Pakistans geopolitical importance. And both Iran (on price) and India (on transit fee) have pointedly negated Pakistans geopolitical advantage of being in the middle. The military textbooks on geopolitics therefore need to be revised.

The IPI has also become subject to non-credibility because of the depredations of the Balochistan Liberation Army (BLA) which blows up pipelines that already exist in the province. The last time the federal government talked to the political parties in Balochistan through two senate committees, the consensus was that there should be no new cantonments built in the province, a prospect without which the IPI would have been jeopardised. Now the new chief minister of Balochistan wants his province to be given sovereignty under the 1940 Lahore Resolution which means he wants the sovereign right to decide the IPI and the not the federation. This is easier said than done.

The TAPI pipeline too will come from Kandahar and enter Balochistan to reach Quetta from where it will proceed towards Multan. So once again the BLA will target it, and without proper military supervision, the pipeline will not be safe. The fact to be kept in mind is that both Afghanistan and Pakistan are domains of disorder lying between two economically upward-mobile regions. Both are proud, which means inclined to isolationism and deaf to pragmatic advice from outside. Afghanistan is only reluctantly better controlled because of foreign occupation, but Pakistan is fractured in opinion and the writ of the state. Therefore one conclusion is inescapable: unless both IPI and TAPI become good devices of leverage on, and self-realisation in, Pakistan to set its house in order and become a normal state, the projects are doomed. *

Daily Times - Leading News Resource of Pakistan


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*Pakistan, India agree on basics to finalise IPI gasline project​*
** Petroleum ministers say US has no reservations about project​*
ISLAMABAD: Terming the Iran-Pakistan-India (IPI) gas pipeline project a peace and prosperity project, Pakistan and India on Friday agreed on basic principles to finalise the bilateral agreement of the project within the next few weeks.

Addressing a joint press conference at the conclusion of a bilateral ministerial level meeting, Petroleum Minister Khawaja Asif and Indian Petroleum Minister Shri Murli Deora said that three bilateral issues pertaining to the project were discussed during the meeting  the structure of the pipeline company that would execute and manage the project, transportation tariff and the transit fee that Pakistan would charge from India..

No reservations: The two ministers said that they would consult their respective governments during the next two weeks for an early conclusion of the agreement. To questioning, they said that the United States had not conveyed any reservations about the project to them, adding, We are only dictated by our energy needs for economic development and prosperity.

Khawaja Asif told the conference that the recommencement of talks with India would help the project complete according to schedule. He said the construction of the pipeline would start by 2009 and would be completed by September 2012.

Elaborating on the proposed route of the pipeline, Asif said it would start from Iran and enter Indian state Jaisalmir via Gwadar and Nawabshah. He said Pakistans pipeline component would cost $3 billion.

The Indian minister said that consensus between the two governments on bilateral issues relating to the IPI project would help them finalise the agreement within days or weeks. He said the Indian government believed the project to be of immense economic and strategic value for both countries, adding that it would add a new dimension to the bilateral relationship.

Daily Times - Leading News Resource of Pakistan


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*Islamabad and Delhi agree on IPI deadline: project completion by 2013 ​* 
ISLAMABAD (April 26 2008): While calling it a project of peace and progress, Pakistan and India on Friday declared that they have made substantial progress on controversial issues regarding $7.5 billion Iran-Pakistan-India (IPI) gas line project and a formal agreement to commence practical work was now only a matter of days.

Petroleum ministers of both countries held a crucial round of talks here and discussed three outstanding issues. These included the structure of pipeline company, which will execute and mange the project, transportation tariff and transit fee.

At a joint press conference, Petroleum Minister Khawaja Asif and his Indian counterpart Murli Deora sounded confident over reaching a formal agreement on IPI project timeframe and completion of the gas line by 2013. They also had identical approaches on the issue of US pressure for blocking IPI.

They ruled out any such possibility and said India and Pakistan were badly in need of the project to meet their growing energy demand and none of them could succumb to external pressure. They said their own countries' economics will dictate priorities for IPI gas line project.

Khawaja Asif and Murli Deora said they will present the report on the outcome of Islamabad meeting to their respective governments and this would be followed by formal signing of the agreement on execution of the project.

On the question of Pakistan's invitation to China to join IPI project, Deora said Pakistan side did not convey any such thing during the talks and he has nothing to say on it. He also did not divulge on the details of transit fee and security cover to be given to IPI gas line. He said these issues were discussed at the meeting and their outcome will be announced at an appropriate time.

Khawaja Asif denied any change in the gas line route and said the initial route was intact and gas line will pass through Pakistan along coastal highway in Balochistan and then from southern Punjab to reach the Indian part from Wagha, Lahore. He said that financial support will be sought from international donors once the project reaches that stage.

A joint written statement issued after the meeting said the petroleum ministers of Pakistan and India met on Friday in Islamabad with their respective delegations to discuss bilateral issues pertaining to IPI gas line project.

It added the meeting was held in a cordial atmosphere and both sides had complete mutual understanding on key issues relating to the structure of the pipeline company, which will execute and manage the project. Other issues which were discussed during the meeting were transportation tariff and transit fee. It maintained that consensus was reached in principle and this will be followed by a bilateral agreement between the two sides.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'We're working with Tajikistan to help bring electricity to Pakistan' ​* 
KARACHI (April 26 2008): US Assistant Secretary of State for South and Central Asia Richard Boucher has said his country is working with Tajikistan to help bring electricity south to Pakistan, where Pakistan really needs the electricity.

In the State Department Foreign Press Center briefing, the senior official also speaks at length about Pakistan government's approach of negotiating with the tribes. According to him: "It [negotiating with tribes] is not something new in this area. President Musharraf's government [PML(Q)-led coalition] did it, previous Pakistani governments did it and British governments did it."

"Go back as far as you can and you find out that there has always been an element of negotiation, an element of force, an element of development. In a way, that's Basic Counterinsurgency 101. If you look at how anybody's operating in those kind of situations, you see that you have to talk to people," he says.

The US State Department official also says that his country is working with Tajikistan, Uzbekistan and Turkmenistan to develop electricity lines and supply for Afghanistan, because Afghanistan needs electricity and they can generate it. We're working with Tajikistan to help bring electricity south to Pakistan, where Pakistan really needs the electricity. The following are excerpts from State Department Foreign Press Center briefing on "the years ahead in South and Central Asia" by Richard Boucher in Washington on Wednesday:

BOUCHER: But I wanted to make a few comments in the beginning. And you know, in a way it's good that it took me so long to get over here because a lot of what we're going to do this year, what we're dealing with this year has to do with what's happened in the last few months.

And I think there's a new sense of momentum, a new sense of energy in a lot of parts of this region of South and Central Asia. And a lot of new opportunities have opened up, particularly because some of the things that happened in the early part of this year.

We've had an election in Pakistan. It's a successful transition to democratic government. As we'd said before the election - we hoped the election would produce a democratic government with a strong moderate center - and indeed they formed a coalition of centrist parties. And everybody there, I think, is looking at how to move forward as a modern society and to encourage moderation and have a stable basis themselves to fight the extremism and the terrorism that afflicts Pakistan as well the neighbourhood and the world beyond.

I think one of the most key things that I keep hearing, from Pakistanis in the new government, is they understand this is their struggle, this is their war, and that they want to approach it using all possible means, which means providing people with better opportunity and education but also using force when necessary.

The democratic transformation in Pakistan offers us, I think, a clear opportunity. And we ourselves in the United States government are talking to the new government and looking ourselves at how we can be more engaged in this sort of broad-based approach to, you might say, modernising Pakistan, stabilising Pakistan.

We've also had a very significant meeting on Afghanistan, with our Nato and ISAF partners, in Bucharest where you heard, from the international community, a strong long-term commitment, again broad-based, using all available tools and means to bring stability to Afghanistan.

And we've had one of the appointments that I think sort of reflects where I'd like to see the effort concentrate this year. And that's the appointment of Kai Eide as the new special representative for the UN secretary-general for Afghanistan. He's already been out in Afghanistan. He'll be visiting Washington next week. You'll have a chance to talk to him further.

But one of the really important efforts this year is to better co-ordinate all aspects of the effort in Afghanistan, is to improve the co-ordination and concentrate the effort, so that particularly when you get down to district level in Afghanistan, if you can bring in military forces necessary to deal with the bad guys, the insurgents, then you need to bring in good governance; you need to bring in police; you need to bring in small projects; you need to talk to the people and the tribes who are there; you need to start connecting them to the national grid, electronics, the electrical system, connecting them to the road system.

And so a real opportunity there, I think, if we can co-ordinate well, that's what brings stability. Extending the government, extending the capabilities of the government, into the districts, is what brings real stability in Afghanistan.

And so the appointment of Kai Eide, as a better co-ordinator for the international community, I think, is also a sign of our intention to co-ordinate all these efforts, between ISAF, between the UN, between the donors and between the Afghan government.

Q: Let me just read you this - oh, I'm sorry. Barry Schweid, Associated Press. For clarity, I might as well read you the AP lead here: "Pakistan freed a pro-Taliban cleric and quickly signed an accord with his hard-line group Monday, the first major step by the new government to talk peace with militants and break with President Pervez Musharraf's policy of using force."

You spoke positively of developments in Pakistan. You, I think, described them as on a path of democracy. Is this an isolated case, do you think? Or can we now expect democracy to represent itself by making deals with Taliban fighters and other hard-liners. Is that what the US wants?

BOUCHER: You want me to rewrite the lead for you? (Laughter.) Or you just want a general comment?

Q: I wanted a general - he's an elderly guy, say, and maybe it's a hard case.

BOUCHER: I'm happy to rewrite the lead for you if you want me to make it more accurate.

Q: All right.

BOUCHER: But let's not do that here. I think we understand, the Pakistani government has always understood, that there is an element of force; there is an element of negotiation. I mean, negotiating with the tribes in this area is not something new. President Musharraf's government did it. Previous Pakistani governments did it. British governments did it.

Go back as far as you can and you find out that there has always been an element of negotiation, an element of force, an element of development. In a way, that's Basic Counterinsurgency 101. If you look at how anybody's operating in those kind of situations, you see that you have to talk to people.

I just spent an hour, probably an hour-and-a-half with about 10 representatives of - various tribal elders and representatives of tribes from the border areas, both the Pakistan side and the Afghan side. And the message I got from them is, work with us; support the Jirga process; we can talk these things out; we can bring people over and we can work with you as necessary where there are violent elements that have to be dealt with.

So I think that is the approach that all of us share. The Pakistani government is engaged in a number of discussions and negotiations right now. The release of Sufi Muhammad came as a result of one of those agreements. As far as we understand it, the agreement says that they - his group will not resort to violence. They will abandon violence. They will stop supporting violent elements. And whatever they want to advocate, they will advocate peacefully.

That's important. Getting the tribes on your side is important. Getting people who have been involved in violence, in the past, to abandon violence and take on a peaceful path is important. Now, what's been the problem? The problem has been that many times, those deals are reached and they're not enforced; that if one side - the other side violates the agreements, the other side, as in the past, has said there will be no Taliban, there will be no al Qaeda activity around here, and then that activity starts up again, who's going to deal with it?

So I think to us, negotiations are a tactic. They're a part of the whole picture. One of the keys is to have enforceable agreements, enforceable negotiations and a willingness to make sure these things are followed. So I don't think there's - you know, it's not the negotiation per se. It's not a new tactic but it's got to be done with a way to make sure it produces results. The results are what matter. The outcome is what matters.

There has to be less violent activity. There has to be an end to the al Qaeda elements, who are very dangerous, who are up there plotting and planning, not so much in this case in the Swat Valley but certainly in the cases of Waziristan, where there's negotiations going on. And that's the outcome that matters, and everybody has to be focused on that.

Q: (Name inaudible) - from Pakistan's Dawn Newspaper.Two things. This is about the peace deal between Pakistan and the militants. Did they take you into confidence before they started the negotiations? And did you give some sort of a sketch or an outline, what you expect from these talks and how you want Pakistan to deal with it if the militants break their promise and go back to violence?

And also, there was a statement today - it's attributed to one of your senior officials who visited Islamabad - saying that the United States does not want to impose its views on Pakistan on the judicial issue and that they will have no problem with the reinstatement either way; they're not for it or against it. So is it some bit of a change in US attitude on this issue?

BOUCHER: No. And the answer to the first part is, a little bit. We've had - I guess the subject of negotiations, the subject of approaches to the tribal areas, whether it's the economic development of these areas, tribal area strategic development plan, whether it's a question of security transformation and dealing with the security problem, or whether it's the issue of the political context of negotiations, it's a matter of these are all things we discuss very frequently with Pakistani officials.

During Under - Deputy secretary Negroponte's trip, in some of the meetings I had afterwards, we talked about all these issues with the new political leaders, the prime minister and others, talked about them with people in the military and people we knew who had been in the government for a while.

So to that extent, yes, this is a regular subject of conversation with members of the Pakistani government. We've heard a lot of their views and will continue to listen to their views and discuss these issues with them.

As far as a particular deal having been discussed with us, frankly I haven't had any conversations about Sufi Muhammad or some of the things going on in Waziristan. But I'm sure our embassy has. I just don't know. I mean, I think we generally kind of know what's going on. We probably read your newspaper every morning to find out. But we also have our own conversations.

So I'd just say generally we're pretty much aware of the ideas and plans the Pakistani government makes, to try to solve the problems in the tribal areas. We're supportive. That's, I think, our main role, is to support these things; support the transformation of the Frontier Corps into a capable security organisation; support the sustainable development plan so that people can get an education, can get jobs instead of having to take up a gun in those areas; and support the political context, which is really mostly a Pakistani effort of the new government, to change the political context for those areas as well.

Q: (Name and affiliation inaudible.)In relation to Afghanistan, given the developments in Afghanistan and problems, especially the security one, does it have any bad impact on Central Asian countries, given the fact that they can use Afghanistan as their trade route with other countries? If you can, comment on that. Thank you.

BOUCHER: I think Afghanistan is vital to the Central Asian countries, for good and for bad, that what's happening now in Afghanistan, stabilising Afghanistan as an open economy, as a friendly nation for everyone, is really not just necessary to fight the terrorism that we're all concerned about, but it's a strategic and historic shift. I mean, for several hundred years - some would say for thousand years - Afghanistan has been a barrier between Central Asia and South Asia.

It's prevented, largely prevented people from moving across. Certainly for the last couple hundred years, it's been the barrier between empires. Now for Afghanistan to open up - as an open nation, a trading nation, a nation with good relations all around - really presents everybody in the region with a new strategic opportunity - everybody from India, with a potential new source of energy and a place to export to; to Pakistan, which becomes a logical port and hub for a lot of this trade; Afghanistan, which becomes a transit point and contributor to the trade; or Central Asia which, in addition to their ties to Russia, China, Europe, gets to open up another set of export routes and avenues.

So we do believe that the development in Afghanistan is vital to these countries and presents a tremendous opportunity. At the same time, the problems of Afghanistan, the problems of terrorism and narcotics are very much of concern to the countries of Central Asia. So we're working with them on how to control the problems, how to deal with terrorism, how to deal with better control of borders, how to deal with narcotics flow, working together at the center that is being organised in Almaty on sharing information on narcotics trafficking so we can stop it better.

But we're also working with them on the opportunities we opened last August. Secretary Gutierrez and I opened a bridge between Afghanistan and Tajikistan. And if you look at what's going on in the region, there's enough roads being built by us and Japan and the Asian Development Bank and the Chinese and others that there's really coming together an Almaty-to-Karachi highway that this bridge is part of.

That's new, that's different, that's good, and that's an opportunity. Customs revenues across that bridge have already increased 10 times since last August across that crossing point. So there's definitely an opportunity there.

We're working with all the countries, all the neighbouring countries of the North - Tajikistan, Uzbekistan and Turkmenistan - to develop electricity lines and supply for Afghanistan, because Afghanistan needs electricity and they can generate it. We're working with Tajikistan to help bring electricity south to Pakistan, where Pakistan really needs the electricity.

So all these things are happening. So I think, yes, the problems of Afghanistan are problems for the region, but the opportunities of Afghanistan are strategic and historic opportunities for the region as well, and we work on it all.

Q: Thank you. Good afternoon, I'm Meredith Buel with Voice of America. To follow up on Barry's question and the correspondent from Dawn's question, to be clear, Dawn has on the front page today that Pakistan's new government has drafted a peace agreement with Taliban militants in the tribal belt. And it quotes both Taliban spokesmen by name and Pakistani officials unnamed as confirming this.

In the past, the United States has said it was very concerned about this sort of an agreement, that these agreements have not worked in the past and have only allowed the Taliban to regroup and al Qaeda to regroup in an environment under which they are under no military pressure. This would also appear to be a major change in Pakistan's policy on how to deal with militants, certainly from the time before this election.

Has the United States changed its approach or policy or feeling about this type of negotiations and peace deal, or are you still concerned that it could allow the militants in the tribal areas to regroup, to plan attacks against the West, and some of the other concerns that you've had in the past?

BOUCHER: I guess - I'm happy to give you the same answer I gave to your colleagues. And I don't understand a question that says, gosh, this is new and it hasn't worked in the past; because it's either not new or it has no history to it. So let's deal with the issue of, you know, previous agreements have put on paper things like -

Q: (Off mike) - what?

BOUCHER: Previous agreements in these areas have put on paper things like no Taliban activity, no "Talibanization," no al Qaeda activity, no cross-border activity. Where these agreements have failed is not in what they put on the piece of paper, not the understandings reached with the militants or the tribes. It was the understandings were not kept and that there was no - no one made clear that they had to be enforced.

And so if you look back at what we said, say, in September 2006 when they reached the deal, we said maybe it will work; and by the end of the year, we say, hey, this is not working because it wasn't enforced. And it was the lack of enforcement that I think was the real problem there.

So, everybody involved in doing this again - and it has happened many more times in various places. Sometimes I supposed it's worked. But in reaching those agreements now, we just have to keep that experience in mind and make sure that everybody understands that it is important to work with the tribal leaders.

And some of those involved in these discussions already make the distinctions that these are understandings being reached with the tribes, not with the militant organisations. We'll see. That may be a better formula.

But in the end, it's the outcome that matters; are these agreements going to produce an end to the cross-border infiltration, an end to the suicide bombers that head into other parts of Pakistan as well as into Pakistan, an end to the plotting and planning of al Qaeda from this area?

The gentlemen that I talked to today, the tribal leaders - tribal elders from both sides of the border, said they can; that given the right agreements and the right support, they can make sure it results in that kind of outcome. But we all understand, you know, it's the outcome that matters, and we all have to be careful to make sure it achieves that outcome.

Q: Can I follow up?

BOUCHER: Sure.

Q: Thank you. So is the United States supporting Pakistan's effort to negotiate with the Taliban and reach a peace agreement with the Taliban and al Qaeda-supporting groups in the tribal areas of Pakistan?

BOUCHER: We understand that negotiating with the tribes - I make a distinction between the tribes and the Taliban and al Qaeda - but negotiating with the tribes especially is one of the tactics that needs to be used along with other measures. But in the end, any particular agreement can only be judged by whether it stops militant activity and produces the safest situation for all.

Business Recorder [Pakistan's First Financial Daily]


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*1.5 million tons wheat import to cost around $1 billion ​* 
KARACHI (April 26 2008): The national exchequer has to bear around one billion dollar burden following the federal government's decision to import 1.5 million tons of wheat to arrest the swelling wheat flour crisis in the country.

Prime Minister Syed Yousuf Raza Gilani has instructed the concerned ministry to import 1.5 million tons of wheat to fulfil the local demand besides arresting the swelling flour crisis.

Whereas, traders and economists firmly believe that the government's move will put further burden on the national exchequer as prices of the commodity in world markets are on the rise due to global food crisis. Wheat in the world's many countries is short of demand, they said.

"If now Pakistan imports wheat from world markets, the commodity will be costlier and its prices will be ranging approximately 640-660 dollar per ton," said a leading wheat trader.

Analysts estimate that the government will spend one billion dollar to import wheat. They held the previous government responsible for the rising wheat crisis in the country. They linked the commodity shortage with its unabated smuggling to Afghanistan and huge hoarding mainly by exporters.

Pakistan being an agricultural state, mainly depends on its agri products, which not only fulfil local demand but also earn huge national exchequer through exports, they observed. However, smuggling and illegally hoarding of commodities besides unabated exports are the major reasons behind price hike of commodities and their shortage in the local markets, they said.

Apart from one billion dollar, the government will also have to pay billions of rupees on account of taxes and duties, which have been so far imposed on the import of wheat.

The federal government has already spent some $900 million on import of 1.7 million tons of wheat, while some $600 million have been paid as subsidy to maintain prices of wheat at Rs 1,225 per 100-kg bag.

Earlier, last September, the federal government had taken a decision for import of one million tonnes of wheat after two years gap following the soaring prices of wheat and flour in the domestic markets. Later, Trading Corporation of Pakistan (TCP) was given a task to import wheat from Australia, USA, Canada, Russia and Ukraine on emergency basis to fulfil the local demand.

Following the federal government instruction, TCP so far has imported around 1.7 million tons of wheat from USA, Ukraine, Russia and Australia. However, the commodity's import made from Russia arrived in Karachi port on December 2007 failed to rein in the flour prices in the local market, which persistently continued to rise.

Wheat crisis is still looming large on the local markets of the country. Commodity crisis has largely been linked by the sources in Minfal to some internal elements. They said that presently wheat in the world markets is not available due to its insufficiency, while prices of the available stocks are higher than the previously imported wheat.

"The white wheat is also not available in the international markets, making the country import only red variety of wheat for local consumption on higher rates," they added. They said that the task for the import of 1.5 million tons will also be assigned to TCP, which is already monitoring the international market closely.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*$15 billion Pak-China trade target to be achieved, hopes Chinese foreign minister ​*
BEIJING (April 26 2008): Chinese Foreign Minister, Yang Jiechi has expressed the hope that with the joint efforts of Pakistan and China, the goal of increasing trade volume to over US $15 billion would be achieved and the business ties would continue to grow.

In an interview with APP ahead of his visit to Islamabad that started on Friday, the Foreign Minister said that China and Pakistan "are partners for mutually beneficial economic co-operation." China, he said, greatly values its business co-operation with Pakistan and in recent years, continuous progress has been made in business and investment co-operation.

"Pakistan is the first country in South Asia that signed a Free Trade Agreement with China," he pointed out. The China-Pakistan Joint Investment Company, China's first overseas financial co-operation institution, has also started operation.

"I believe that with our joint efforts, the goal of increasing our trade volume to over US $15 billion will be achieved and our business ties will continue to forge ahead." Jiechi said: "Over the years, Pakistan has given firm support to China on Taiwan, Tibet, human rights and other issues that are crucial to China's core interests."

He said the Olympic torch relay that took place in Islamabad was a "great success." The event not only promoted the Olympic spirit, but also showed to the world the all-weather friendship between China and Pakistan, Jiechi said. "I am convinced that with the support of Pakistan and the entire international community, the Beijing Olympic Games will be a crowning success," he said.

He said that Pakistan had also played "a major and constructive role" in advancing the peace process with India and promoting regional co-operation in South Asia, thus making positive contribution to peace and development in the sub-region.

Regarding Pakistan's role in Shanghai Co-operation Organisation (SCO), the Chinese Foreign Minister said that as an observer in the SCO, Pakistan has actively participated in its activities in all fields.

"As an all-weather friend of Pakistan, we welcome Pakistan's desire to play a bigger role in the SCO," he said. Jiechi said that the admission of new members needs to be discussed and decided by all SCO members.

About China's contribution in South Asian Association for Regional Co-operation (Saarc), Jiechi said: "As a friendly neighbour of South Asian countries, China is ready to have dialogue and practical co-operation with Saarc on the basis of respect for the aspirations of Saarc members, equality, mutual trust and co-operation for win-win results, and play a constructive role in promoting Saarc co-operation."

The Chinese Foreign Minister said he would hold meetings with President Pervez Musharraf, Prime Minister Syed Yousuf Raza Gilani, Foreign Minister Shah Mehmood Qureshi and leaders of Pakistan's major political parties.

"We will exchange views on how to strengthen the China-Pakistan strategic partnership and promote the friendly co-operation between the two countries in various areas," he said. He said the visit was part of the friendly exchanges between China and Pakistan since the new government of the two countries took office.

Referring to the recent visit of President Pervez Musharraf to China, Jiechi said the visit added new dimensions to China-Pakistan co-operation and deepened the strategic partnership between the two countries. "China applauds the results of the visit," he observed.

Business Recorder [Pakistan's First Financial Daily]


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*US officials review investment potential in Punjab ​* 
LAHORE (April 26 2008): The Economic Affairs Officer, State Department of United States, Shamila N Chaudhry and Antone C Greubel of the United States Consulate met with Punjab Commerce and Investment Secretary, Tahir Raza Naqvi on Friday to get a closer visual of Punjab govt's policy and investment potential in the province.

The secretary apprised the US officials of how the Commerce and Investment Department was working as a facilitator in tapping investment potential and working of various projects that were helping to materialise the government's vision of a prosperous Punjab.

Chaudhry said these projects and business avenues in Punjab could attract more investors from the US. Greubel said many companies from the US had already established their business in Punjab and more were joining in.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*LCCI and China Hardware Centre join hands ​* 
LAHORE (April 26 2008): The Lahore Chamber of Commerce & Industry (LCCI) and the China Hardware Centre (CHC) have mutually agreed to cooperate in promoting electrical and mechanical hardware and machinery. The agreement came between LCCI and the CHC at the sidelines of China Tools and Hardware Show in Jiangsu province where LCCI President Muhammad Ali Mian and Managing Director Zhou Caibing represented their respective organisations.

The Chinese also offered the chamber a free-of-cost venue for office use for two years and the latter agreed to forward the former with prompt, accurate and reliable purchasing information and trading service and investment opportunities available in Pakistan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Sindh government may consider small dams' construction: big dams ruled out ​*
HYDERABAD (April 26 2008): Sindh Irrigation Minister Saifullah Dharejo has ruled out consideration of construction of big dams on Indus river. However, he said the government could consider construction of small dams, for storage of water.

He said this while talking to a group of media persons here on Friday after a briefing given to him by the officers of Sindh Irrigation Department and Sindh Irrigation and Drainage Authority (Sida) regarding availability of water in the canals system of the province.

The minister said that the province suffered 40 percent water shortage during the current year, and the Irrigation Department was making all-out efforts to meet the challenge of acute shortage of water by ensuring its judicious distribution to the growers for crop cultivation.

Terming the shortage of water as natural, he expressed dissatisfaction over the distribution of water to the provinces. "This province is suffering worst situation," he added. Dharejo said that to overcome the situation, his Department has decided to formulate a comprehensive water rotation programme, and would ensure its judicious distribution to all.

Commenting on Telemetry System, the Minister said that complaints had been received regarding improper functioning of this system. The present government would review the system at length and would remove all complaints regarding improper functioning of Telemetry System, he added.

He said that both in Centre and Sindh, PPP governments are in power and efforts are being made to settle all issues including water issue with a consensus of all provinces of the country.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Steel industrys survival linked to using local iron ore ​* 
*High global prices lead Pak Steel to use ore from Chaghi; Tuwairqi may go for ore in Kalabagh​*
Sunday, April 27, 2008

KARACHI: The steel industry is chalking out plans to tap supply line of local iron ore and produce inexpensive steel as soaring international steel prices are eating up steel industry margins threatening its very survival. 

ÒWe are seriously working to chalk out plan of using iron ore from Kalabagh and other reserves,Ó Tuwairqi Steel Mills Director Projects Zaigham Adil Rizvi told The News from Peshawar over phone.

He hoped that Pakistan would be in a position to utilise local iron ore comfortably in the next couple of years. ÒUsing local iron ore is an effort for the survival of steel industry of Pakistan,Ó he added.

Soaring international steel prices are bringing changes in the steel industry that depends on imported raw materials and imported steel due to high demand and low production. 

A managing partner in re-rolling mills from Karachi said, the efforts to utilise local iron ore for steel production seem serious, but considering the lethargic attitude of government one must not over estimate the recent developments and efforts that have been taken in this regard.

He said that utilising local iron ore reserves was neglected in the past but now there are number of reasons to believe that industry and government are serious to do something. Pakistan has iron ore reserves but unfortunately they stay unutilised. Using local iron ore would reduce dependence on steel imports and support Pakistan Steel Mills and other steel mills in the country, he added.

Pakistan Steel Mill (PSM) is using iron ore from Chaghi, Balochistan apart from this there are many other places where PSM is working to get raw material, PSM sources said. 

Sources in PSM said that PSM had conducted its own study to find out the total steel production of Pakistan that was estimated at around 5.5 million tonnes in which long products share around 4 million tonnes and flat products accounts from 1.2 to 1.5 million tonnes. 

According to a rough estimate, sources in PSM said there is a difference of about 2 million tonnes in demand and production of steel in Pakistan.

When asked why no mega steel projects were launched, he said, ÒPakistan has done many researches for mega steel projects but unfortunately these the projects were never completed for number of reasons.Ó Using local raw material is now a very popular idea for the Pakistani steel sector as global steel prices are soaring pushing hard the local steel industry to find cheap and reliable raw material sources. 

At present local steel mills are using scrap or imported raw material to make steel, unfortunately scrap and imported raw-material both have seen rise in prices, the rising iron ore prices are making it unviable to produce cheap steel products in the country.

Sources in PSM said that steel industry would run smoothly and attain sustainable growth by using more and more local raw materials. Experts are expecting that Pakistan will achieve the target of utilising 40 per cent of local raw material by 2010. 

China, the top steel producer is now producing over 450 million tonnes of steel and India is also expanding its steel production capacity from present 50 million tonnes, unfortunately Pakistan is far behind in this important sector. 

Investors in steel sector say that steel production in Pakistan is almost stagnant while demand is continuously increasing, which highlights the need of huge investment potential in this sector.

India has very old history of steel industry far before its independence in 1947 while Pakistan started developing steel industry after its independence so there is a huge difference between the two steel industries of countries, sources in PSM said, adding private sectors role is very crucial in establishing and developing steel industry in Pakistan.

Steel industrys survival linked to using local iron ore


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*India to import more cement ​* 
Sunday, April 27, 2008

NEW DELHI: The Indian government would import more cement, if necessary, to address the demand-supply mismatch in the domestic market and check any rise in prices. 

ÒWe have allowed cement import and already a substantial quantity of 1.3 lakh tonnes have arrived in the country from Pakistan. If further imports are necessary to address the demand-supply mismatch, it will be done,Ó Minister of State for Industry Ashwani Kumar told reporters on the sidelines of a FICCI seminar here on Saturday. 

Kumar, however, did not give the quantity of cement that would be imported. Trading firm MMTC is one of the firms designated to import the building material. 

Besides looking at ways to increase the domestic production capacity of cement, Kumar said the government is engaged with cement producers to ensure there is no cartelisation in the sector. While companies can make profits, profiteering will not be allowed, he said. 

The government had banned cement exports to boost domestic supplies and keep a check on rising prices.

India to import more cement


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## Neo

*Budget deficit reaches Rs 500bn in July-March​*
ISLAMABAD: The overall budget deficit during July-March period of the current fiscal year 2007-08 has reached around Rs 500 billion, 5 percent of the projected Gross Domestic Product (GDP), official data revealed on Saturday. 

The reason is said to be the inclusion of the 7 unjustified items by the government of Shaukat Aziz in the budget.

The last government made an allocation of Rs 386 billion for three items-domestic debt interest payments, WAPDA subsidies and oil differential claims in the budget. However, total expenditure of the said 7 unjustified items have caused a financial drain of additional Rs 66.2 billion with the total budget and out of the budget expenditures Rs 452.2 billion during July-March period of current fiscal year, reveals the official data.

Based on estimated revenue shortfall of Rs 35.8 billion and excess expenditures of Rs 522 billion, the overall fiscal deficit estimated at 4 percent of GDP will increase to Rs 957 billion or 9.5 percent of the GDP by the end of fiscal year 2007-08, according to the revised budget estimates.

Ministry of Finance has indicated that it would arrange $3 billion from different sources to reduce the overall budget deficit to 6 percent of the projected GDP or Rs 600 billion against the projected Rs 957 billion for the current fiscal year. Increase in POL prices, electricity tariff and reduction in non-development expenditures would not be enough to bridge the gap of revenues and expenditures. However, with further increase in oil prices in the international market, the overall budget deficit is expected to remain at the level of Rs 700 billion or 7 percent of the GDP. 

According to the details of the unjustified budget items: The government of Shaukat Aziz had shown domestic debt interest payments at Rs 318.2 billion for the full fiscal year; however, during July-March period the interest payments have reached at Rs 312.8 billion. It has been projected that these interest payments would reach Rs 443 billion by the end of this fiscal year indicating an increase of Rs 124 billion.

There was no allocation of the miscellaneous development programme in the budget, however, an amount of Rs 38.5 billion has been spent on this programme and by the end of the current fiscal year, this programme will cost Rs 75 billion over and above the budget estimates.

The State Bank of Pakistan is disbursing Research and Development (R&D) Support to the textile and other sectors without any budgetary provision. R&D Support for the textile and other sectors was approved by the ECC in the last government and was not the part of the budget. The government has provided Rs 26.6 billion support during July-March period to the textile sector, and in total this support is to cost to the national exchequer above Rs 43 billion and above the actual budget till the end of this fiscal year. 

Due to the increase in POL prices and non-increase of electricity tariff the government has spent Rs 45.3 billion to subsidise the electricity tariff for WAPDA during July-March period of this fiscal. The government had allocated in the budget Rs 52.8 billion for WAPDA subsidies and it is projected that WAPDA subsidies to cost the national kitty a total of Rs 123 billion indicating an unjustified increase of Rs 70.7 billion. 

The government had allocated Rs 15 billion for subsidising POL products through Oil Differential Claims payments; however, against the budgetary allocation the government has paid Rs 17 billion and it has been projected that oil differential claim to reach at Rs 153.6 billion projecting an unjustified hit to the budget of Rs 138.6 billion till June 30, 2008.

Due to the shortage of wheat in the country, the government had decided to import 1.7 million tonnes of wheat. As there is difference in the imported cost and domestic sale price, the federal government, as subsidy, is paying the difference. No provision has been made in the budget for the wheat subsidy. It has been estimated that the government would have to pay an amount of Rs 44.9 billion as subsidy for the import of wheat till end of the fiscal. 

Due to the some unavoidable requirements during the current fiscal year regular supplementary grant of Rs 12 billion has been sanctioned mainly for Law and Order, PDC and relief package. It is estimated that a total amount of Rs 25 billion would be required as supplementary grant during the current fiscal year.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Clinical trial business: Pakistan has potential to earn $100m in foreign exchange​*
KARACHI: Pakistan has the potential to earn $50-100 million foreign exchange in clinical trial business in three years as well as can generate major employment in this area. 

Tariq Ikram, Chief Executive Officer (CEO) of Trade Development Authority of Pakistan (TDAP) stated this while speaking at a seminar on Clinical Research Management in Pakistan here on Saturday. Mr Ikram said though, clinical trial business is a new area, enormous potential exists in the country for which concerted efforts are needed to tap this potential. The seminar was organised jointly by TDAP and Ministry of Health. 

Pointing out that developed world gained enormously in this field, he mentioned that because of high cost factor in the developed countries, the focus is now shifting to developing nations and cited the example of India that earned $400 million foreign exchange through clinical trial export in five years.

However, in Pakistan, he said the work is on the initial stage and TDAP, in collaboration with other stakeholders, is working on clinical trial business and said that holding of the seminar is a part of achieving this objective.

Mr Ikram, who is also minister of state, however noted that firstly it would be necessary to know about the clinical trial business and what the country could bring in this business as well as to know about the success stories around the world in this particular field.

Listing the clinical trial business in services export sector, he described the services sector a vital component of the economy which contributed to 20 percent of world GDP and added that it, too contributed substantially in Pakistans economy with 56 percent in countrys GDP and employing 36 percent of workforce.

TDAP chief said as part of export diversification plan, services sector was identified to be developed to boost the overall exports and was put along with other sectors in developmental category in 2000.

About the employment opportunities to be generated through development of clinical trial business, he stated that it offers major employment potential because of a long chain of persons is involved at various stages of clinical trial management. On this occasion Anand Tharmaratnam of Quintiles Singapore, Dr Celia Habita from Arrianne Consulting Asia and Dr Guljit Chaudhri of Research India made their presentations on dynamics of clinical trial business and its status in various parts of the world.

Daily Times - Leading News Resource of Pakistan


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## Neo

*China may fail to contain inflation​*
SHANGHAI, April 26: China will find it difficult to meet its target of limiting consumer price inflation to about 4.8 per cent this year, a senior official at the National Bureau of Statistics was quoted as saying.

The 4.8 per cent figure is an aspiration, and the figures for the first quarter suggest this target will be very hard to hit, Peng Zhilong, director general of the department of national accounts, was quoted by Saturdays official Shanghai Securities News as telling an economic seminar.

They were excessive demand caused by rapid economic growth; flows of money into China for trade, investment and speculation; rising wages; the central banks interest rate hikes, which had raised companies costs; and rising asset prices.

Peng was also quoted as saying Chinas macroeconomic tightening policies and slower growth in the global economy made a slowdown in the Chinese economy this year inevitable.

But he said it was premature to talk about the possibility of China facing stagflation, since the country would be able to maintain growth of about 9 per cent this year and inflation remained within a controllable range.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Iran backs proposal for China to get gas via Pakistan ​*
ISLAMABAD (April 27 2008): Iran on Saturday supporting the idea of providing gas to China through Pakistan said it can make a commitment only after conducting a feasibility study. Iranian Ambassador to Pakistan Masha'allah Shakeri responding to question about inclusion of China into the Iran-Pakistan-India gas pipeline project said.

"We basically support, but we cannot comment about it at this stage. We have to work about and see how it can become viable." Pakistan has recently offered China to allow a transit gas pipeline through its territory, along the historic Karakoram Highway, to help it meet its growing industrial needs.

The Iranian ambassador however said the IPI was initially designed to incorporate the three countries. He said inclusion of fourth country in the project will require a feasibility study, before a final decision can be taken. There was no plan to ink the IPI agreement during President Mahmoud Ahmadinejad's "brief official stopover" in Islamabad, while on his way to a state visit to Sri Lanka.

He said involvement of multiple partners in the gas pipeline project will bring stability and viability to the multi-billion dollar project. Ahmadinejad in his talks with President Pervez Musharraf and Prime Minister Yousuf Raza Gilani will discuss bilateral matters, issues faced by the region and the Islamic world and the trilateral co-operation between Iran, Pakistan and Afghanistan with a view to bring peace and stability to the region.

The Iranian President who will be leading a high-level delegation including its Foreign and Commerce Ministers, besides its Minister for Petroleum and Energy and head of Exim Bank of Iran.

About the Iranian President's brief visit, the Iranian ambassador said his country attaches great importance to its ties with Pakistan in all areas and they will continue to have extensive co-operation in political, security and other areas.

He said following President Khatami's visit to Pakistan, it was now President Musharraf's turn to come to Iran and his visit was awaited. Ambassador Shakeri was appreciative of Pakistan's stance on Iran's nuclear programme for peaceful purposes.

About the delay in launching the bus service, he said Iran's central and provincial government had already put in place the entire infrastructure and plan for the launch of the service, however it was now up to the government in Balochistan to provide the necessary facilities.

He said the service was viable, as there were considerable number of passengers who wished to visit the other country for tourism and pilgrimage. When asked about meeting of Iran's President with any political leaders, he said it was for the host country to decide the schedule during the four-hour stopover.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Finance's figures more accurate than those of SBP's: presentation to Cabinet on April 9 ​*
ISLAMABAD (April 27 2008): The Finance Ministry has come up with a documentary proof to substantiate its claim that the projected figures presented to the federal cabinet on 9 April 2008 by the Finance Minister were more accurate estimates than those presented by the Governor State Bank of Pakistan (SBP).

Well-placed sources in the Finance Ministry told Business Recorder that Finance Minister Ishaq Dar, in his presentation to the first meeting of the federal cabinet, had projected that R&D subsidy on textile sector and others would be around Rs 43 billion in 2007-08 while the Governor SBP, Shamshad Akhtar, had presented the much lower figure of Rs 20 billion.

The federal cabinet, after the contrary figures presented by the Finance Minister and the Governor SBP, had directed the Finance Secretary, Dr Waqar Masood, to revisit the figures of projected expenditure for R&D and oil differential claims.

In pursuance of the cabinet decision, the Finance Secretary took up the matter with the SBP and the Accountant General of Pakistan Revenue (AGPR). The SBP stated that till March 31, 2008 the subsidy paid under R&D head stood at Rs 26.6 billion of which Rs 13 billion related to textiles.

The SBP further projected an amount of Rs 8.9 billion for the remaining three months of the current financial year. Thus, according to the central bank, R&D subsidy for textile and others for the current financial year was projected at Rs 35.5 billion, the sources added.

However, the office of AGPR has informed the Finance Ministry that till 31 March 2008 the subsidy paid to the textile sector amounted to Rs 23 billion against Rs 13 billion claimed by the SBP, indicating a vast difference of Rs 10.3 billion.

If the Rs 10.3 billion difference as provided by AGPR is added to the tally, the R&D subsidy, would be Rs 45.8 billion (Rs 35.5+10.3 billion), well placed sources quoted the Finance Secretary as saying in a summary submitted to the cabinet a couple of days ago.

The sources said that the SBP and the AGPR were currently working together to reconcile the discrepancy in figures. The Finance Secretary is of the view that in light of figures submitted by the SBP and the AGPR, it can be safely assumed that Rs 43 billion for subsidies paid to the R&D textile and other sectors, as projected by the Finance Minister during the presentation, was a more accurate estimate.

He was hopeful that the final figure which would emerge as a result of reconciliation between the SBP and the AGPR would be in the range of projected estimates by his Ministry, the sources added.

As regards projected figures relating to expenditure on oil differential claims, the Finance Secretary said that the figures were worked out by the Petroleum Ministry in consultation with the Finance Ministry and the SBP was not part of this process, the sources further added.

The sources said the figures for oil differential claims estimated on March 31, 2008 for the current fiscal year stood at Rs 153.6 billion as stated in the presentation, adding that these figures are revised on a fortnightly basis keeping in view the fluctuation in the international prices.

The Finance Secretary further clarified that the Governor SBP was "mistaking the financing arrangements worked out with the banks for deferred payments for these claims as if this was leading to any reduction in government expenditures. As directed by the Finance Minister, expenditures even when incurred temporarily on deferred payment basis, have been fully recognised and built into budgetary estimates and were presented to the cabinet on April 9, 2008," the sources quoted the Secretary Finance as stating.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*The fiscal imperative of tax reforms​*
Pakistans fiscal crisis is deep and cannot be easily resolved. Taxes are insufficient for debt service and defence. If the tax to GDP ratio does not increase significantly, Pakistan cannot be governed effectively, essential public services cannot be delivered and high inflation is inevitable. Reform of tax administration is the single most important economic task for the government.

[Quote from report of General Musharrafs June 2000 Task Force on Reform of Tax Administration]

If the big business and landed aristocracy could be convinced that by eliminating the budget deficits, they stand a good chance of trebling the value of their property and stock holdings, they might start paying taxes. But what might persuade them to do that?

When President Bill Clinton took over in 1992, the US economy was in recession and government finances were in bad shape. The fiscal deficit had hit a record level of almost $300 billion (or 4.7 per cent of the GDP), that is, more than double its $145 billion-level in 1987.

He introduced his historic deficit-reduction budget in 1993, worked to reduce the deficit every year and within a matter of six years, was able to turn it into a surplus of nearly $40 billion. Under his leadership, the US economy grew at a rate of more than four per cent in the late nineties compared to 2.7 per cent average during 1987-1992 period.

Inflation dropped to an average of less than two per cent compared to over four per cent annual average period during 1987-1992, and the stock market skyrocketed and trebled in value by 1998 from its depressed levels in 1992.

There were a host of factors that helped the US at the time but one lesson is unmistakably clear: deficit reduction can translate into huge benefits for the entire economy; for consumers, businesses, and property owners. And this is why the businesses and agriculturists should pay serious attention to the deficit and demand that the government reduce it to less than two per cent of the GDP as soon as possible.

The number one reason of persistent budget deficits is the low tax-to-GDP ratio, which is around 10 per cent compared to average of 18 percent for the developing countries. It may sound like a paradox but if these businesses and agriculturists start paying taxes and help cut the deficit, they will be the greatest beneficiaries of not only lower inflation and interest rates, but more significantly of the rise in value of their assets that will follow. Historically, taxation has been treated as a political patronage tool or the public debate has focused on the administrative aspects.

But the current crisis demands that a political economy approach be adopted to expand the revenue base and cut budget deficits. The stakeholders need to appreciate that the current system is weakening the state, is regressive, inflationary, and unable to mobilise the resources needed to enable the state to perform its core functions of maintaining law and order and developing the infrastructure. In other words, it is in the interest of the large stakeholders that comprehensive tax reforms are introduced.

The history of tax reform around the world provides more than ample evidence that the single most important ingredient for effective tax administration is clear recognition at the highest levels of politics of the importance of the task and the willingness to support good administrative practices even if political friends are hurt in the short-term.

The institutionalisation of corruption, the extent of criminalisation of politics and standards of public morality are generally regarded as significant factors upon which the extent and nature of feasible tax administration reform depend.

Public acceptance is a necessary condition for a tax system to work successfully. If the taxpayers have doubts about either the fairness of the system or the legitimacy of government spending, they may not co-operate to make a reform programme work. Pakistan has generally treated tax reform as an administrative issue with the most commonly heard refrain being, it is only a matter of implementation. Wrong!

Pakistan has not made any significant progress in reforming its tax administration during the past decade. Its ministers and bureaucrats have been misleading public opinion by just quoting numbers of absolute growth in tax revenues which is meaningless if not adjusted for inflation and size of the economy.

A recent study, Paying Taxes 2008 published jointly by the World Bank and PricewaterhouseCoopers (one of the biggest accounting firms in the world), compares the ease of paying taxes in 178 countries around the world.

The study is subject to a system of ranking based on three indicators; namely, the number of tax payments, the number of hours to comply with the companys tax obligations, and the Total Tax Rate (TTR). Pakistans rankings are as follows:

Ease of paying taxes (overall rank) 146

Number of tax payments 138

Time to comply 156

Total tax rate 80

These rankings point to not just an urgent need to introduce tax reforms but also to Pakistans failure to address what was described as the single most important economic task for the government in June 2000. But designing tax reforms can not be left to just bureaucrats and accountants. The political leadership must get the help of economists and public finance professionals. Turkey got help from external professionals of a World Bank study group and Egypt utilised the services of the experts from the Organisation Economic Cooperation and Development (OECD).

Pakistans current tax structure is anti-development, anti-growth and anti-poor. It discourages investment in the real sectors, particularly manufacturing. It passes on most of the ultimate burden of the taxes to middle and lower income classes and is one of the reasons for persistently higher inflation rate compared to other Asian countries.

While the salaried class pays more than Rs14 billion in taxes, textile barons and stock brokers combined pay less than that. The indirect taxes currently account for 62per cent of the total revenues. The largest among the indirect taxes is the general sales tax (GST) which accounts for 39 per cent of the total tax collections. Such indirect taxes are regressive, inflationary, and hurt consumer spending which is a key driver of economic growth.

Many countries have benefited from the experience of East Asian countries and followed their policies. In Bolivia, a highly complicated tax system existed until 1985 with around 400 taxes and it had one of the highest rates of tax evasion in the Western hemisphere.

The Tax Reform Law of 1985 repealed all the previous taxes and replaced them with seven new taxes. More recently, Turkey and Egypt have made notable progress in introducing and implementing tax reforms. Some key common features of successful reform programmes have been as follows:

* The overall numbers of taxes are reduced to a dozen or less.

* Maximum rates are slashed as high rates have historically encouraged tax evasion.

* Rebates, exemptions and special treatments are eliminated or reduced to a few.

* Tax administration is simplified using technology.

High tax rates can force companies into the informal sector. In the Democratic Republic of Congo, with taxes twice as high as the commercial profit for a company with a profit margin of 20 per cent, businesses have a strong incentive to evade taxes.

Indeed, half the countrys manufacturing activity is in the informal sector. Even countries with a smaller informal sector can gain from this strategy. Greece saw its corporate tax revenue grow from four per cent of GDP to five per cent after reducing the corporate tax rate in 2005. Egypt saw the number of complying taxpayers increase by 47 per cent to 2.5 million in just one year after reducing both corporate and personal income tax rates in 2005. Turkey reduced the top rate for corporate income tax from 30 per cent in 2005 to 20 per cent in 2006 and introduced a new corporate tax code. Turkey also reduced the tax on interest from 18-15 per cent in 2006 and simplified other taxes, such as the property tax and the tax on cheque transactions.

Pakistans tax regime resembles, in general, to more that of Latin America countries where indirect taxes, and in particular sales tax, occupies a relatively higher share within the overall tax. Pakistan indirect tax to GDP ratio is around six per cent, and its direct tax to GDP ratio is four per cent and less than two per cent if withholding taxes are excluded. The following data contains a comparison of the structure of direct and indirect taxes between East Asia and Latin America over selected periods during 1975-2002.

East Asia countries (even if exclude China and India) have enjoyed high growth rates for decades compared to Latin American countries. They grew at an annual average rate of 5.25 per cent during the last twenty years, which is almost double the average growth rate for Latin America. Pakistans political, agriculture, and industry leaders should ask themselves: which taxation and growth model they want to follow?

The fiscal imperative of tax reforms -DAWN - Business; April 28, 2008


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## Neo

*Manufacturing textile machinery​*
TEXTILE is the countrys single largest industry. Yet it is totally dependant on imported machinery, equipment, accessories and spares. The local facilities for manufacturing textile machinery items practically do not exist though worldwide, the sector has been harbinger to the development of capital goods industry.

Today, the textile industry has total spinning capacity of 1,550 million kg of yarn, weaving and finishing capacity of 4,368 million sq. meter of fabric, production capacity of 670-million unit of garments, 400-million unit of knitwear and 53-million kg of towels. In spite of the investment of over $4 billion during last few years under the Textile Vision 2005, the sector may not meet its export target of $13 billion for the current fiscal. Still, the industry has great potential for expansion on increasing global and domestic demand of textiles and made-ups.

Significant revamping and modernisation of the industry is expected. International suppliers of machinery participating in textile machinery exposition held at Karachi have booked orders for a large number of units. MEGATEX 2008, one of the biggest textile exhibitions, was held during April 15-18, and 160 companies from 22 nations had exhibited their products.

The situation highlights the potential of domestic textile industry that has imported machinery worth $ 281 million during July 2007-February 2008 under adverse conditions. The City District Government of Karachi has recently allotted land for developing five industrial zones exclusively for setting up textile units.

No capital goods industry in a developing country can bring out its products in a short time comparable in quality of similar products of multinational manufacturers having extensive experience gained over decades of research and development. This equally applies to the manufacturing of textile machinery. Therefore joint venture agreements with renowned international technology partners need to be negotiated and finalised. The modalities may include having equity participation or licensing arrangement or joint manufacturing under technology transfer agreements.

Besides setting up new industrial units, the existing facilities at various engineering industrial units can be gainfully utilised for undertaking progressive manufacturing of a large variety of equipment required by textile sector. These items may include ring spinning frames, automatic winder, blow room equipment, carding machinery, draw frames, shuttle-less/air-jet/water-jet looms, dyeing and sizing machines, bleaching and finishing machines, etc.

In view of the persistent widening trade deficit, it is imperative to evolve a strategy to progressively reduce dependence on imported textile machinery and encourage indigenous efforts for manufacturing of a wide range of basic textile machinery.

Efforts were made in 1973 to create an engineering base in the public sector for the local manufacturing of textile machinery. Consequently, Textile Machinery Company was set up at Korangi, Karachi, to produce manual and automatic cone winding machines. Spinning Machinery Company was set up at Kot Lakhpat, Lahore, to produce ring spinning frames/machines. A nationalised company, Pakistan Engineering Company Ltd (PECO), at Lahore was already manufacturing and marketing power looms.

By early 1990s production of all these textile machinery items came to a halt. Textile Machinery Co was privatised and remains closed after transfer of ownership to the private sector. The production of ring spinning frames at Spinning Machinery Co was discontinued. Power loom works at PECO was closed down.

Textile Machinery Co was set up in 1975 with an installed capacity to manufacture 50 winding machines annually. Gilbos of Belgium had provided technical know-how under a licensing agreement. Having commenced production in 1978, the company remained grossly under-utilised from the very beginning.

PECO produced automatic shuttle looms in collaboration with Iwama of Japan. Starting from producing 250 looms of a variety of sizes, the company had progressively reached an annual production of 600 looms. Negotiations were also in advanced stage with the global leaders for assembly-cum-manufacturing of modern shuttle-less looms under license. This however did not materialise due to on-going privatisation process of PECO.

Spinning Machinery Co was set up in 1977 to produce ring spinning frames under license from Schubert and Salzer of Germany. It went into commercial production in June 1982, but could not achieve full capacity of producing 250 frames of 476 spindles annually in any given year. The capacity utilisation remained around 20 per cent as total sales until June 1989, when its production was discontinued, was 231 frames valued at Rs155 million. Obviously, the company lacked economy of scale, suffered higher production cost and thus incurred huge financial losses.

In fact, the textile industry never liked to promote domestic engineering industry. As a result of lobbying by the powerful textile industry, the government policies too remained non-supportive and inconsistent in promoting engineering industry. The local manufacturing of textile machinery had inadequate tariff protection, and continuous unrestricted import of these equipment was allowed either at nil or at concessional duties.

This was despite comparable quality and selling price of indigenous products versus imported units. The companies failed to capture the market for their products. The Chinese and the Japanese manufacturers of textile machinery, with whom the holding corporation State Engineering Corporation was negotiating licensing agreements for future production of machinery in line with the market demand, backed out due to prevailing environment.

After the closure of operations at the Spinning Machinery Co, another public enterprise Pakistan Machine Tool Factory at Karachi ventured into producing ring spinning frames under license from Jingwei Textile Machinery Co of the Peoples Republic of China. The selected brand/model, having major population of installed units, was already popular in domestic market. It was planned to manufacture 300 frames annually in the final phase, achieving 60 per cent deletion over a period of five years.

The Chinese had transferred almost complete technical know-how for the local manufacturing. But the initial plans faced serious problems, again due to negative attitude adopted by the textile industry and unfavorable tariff structure. Finally, the company launched the product in December 1998. But there was lack of response from textile industry and the production/sales projections could not be attained, as investors continually preferred to import these units.

Private sector has been hesitant to invest in the engineering sector in a big way. Still, significant contribution has been made by the private sector in recent years towards manufacturing of parts, accessories and some items of textile machinery.

Nonetheless, these SMEs in non-organised sector have been unable to achieve sizeable quantum of production. The long list of locally produced items includes power looms, warping machines, twisting machines, dobbies, winders, washing machines, calendaring machines, sizing machines, scouring machines, textile spindles, spinning and twisting rings, fluted rollers, textile shuttles, metallic card clothing, textile inspection machines and air-conditioning and humidification equipment for textile industry.

Local manufacturing of textile machinery had remained on the agenda of successive governments, as efforts continued to be made by the public sector engineering industry to diversify their product range to include textile machinery, but without results. The ECC of the cabinet had considered in 1989 a summary on the domestic manufacturing of textile machinery, approving a number of measures to be adopted by the government in this direction, but nothing concrete worked out. A National Commission on Textiles was created in 1999 that was mandated also to promote indigenous manufacturing of textile machinery. Again, textile industry prevailed and related proposals remained on drawing board only.

The writer is a former Chairman of State Engineering Corporation

Manufacturing textile machinery -DAWN - Business; April 28, 2008


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## Neo

*The choice between imported coal and furnace oil​*
The new PPP-led government has inherited the daunting task of overcoming the longer and increasing periods of load-shedding. However, overcoming load-shedding is not a new or baffling task for the PPP. The situation in early nineteen-nineties was almost the same with respect to load-shedding when the then PPP government announced the much hyped power generation policy of 1994.

The Power Policy of 1994, though hiking the electricity prices, had at least succeeded in alluring internationally reputed firms to invest in private power generation and in overcoming the load-shedding. But the recent fire-fighting by the government does not support that notion. It appears that this time something is missing and the matters would go awry.

Instead of focusing on coal-based power generation, the government chose to sign accord with Dong Fang of China for a 525 MW at ChichoMalian combined cycle power project. Experts are of the opinion that provided the gas is available, combined cycle technology is a good choice, especially for the purpose of tariff. But the same technology based on furnace oil as fuel is not only a nightmare for people operating the machinery but very costly in terms of cost. The tariff on furnace oil on current world oil prices may well cross over 18 cents (above Rs11) per unit.

It is known that gas is a scarce and precious commodity. Its availability in coming years is very bleak for power generation. The government has already prioritised gas available for fertiliser and domestic sectors. In such a scenario, gas availability Chichoand the other recently signed combined power plant of around 450 MW at Nadipur would surely run on furnace oil.

If the government is willing to import the furnace oil why is it not thinking for developing projects based on imported coal. Experts estimate that bigger projects of 1800 MW (even involving construction of jetties) would not cost more than nine cents per unit i.e. half of the cost involved in furnace oil. Further, the projects based on imported coal would create know-how and skill development much needed for developing local coal resources, which are still untapped.

Somehow the rich coal potential, especially of Thar (Sindh) with its 175 billion-ton reserves that are sufficient to meet the current electricity demand for next 100 years, have failed to attract attention of succeeding governments.

The notion that something is amiss that gets impetus from the tug of war recently started between two government entities responsible for bringing additional power generation. PEPCO (organisation that has assumed responsibilities of Wapdas power wing) and PPIB has recently called expressions of interest for developing combined cycle power generation projects of 500 MW each at Dadu (Sindh), and Faisalabad (Punjab).

Ironically, PEPCO and PPIB are not doing different projects, rather they are consuming their energies on the mutually exclusive projects i.e. PEPCO (for public sector) and PPIB (for private sector) are in a tug of war for the same projects, and the winner of the two will complete the projects. Probably, the government has decided to embark upon competitiveness by allowing two of its organisations to compete with each other. Both of these organisations have invited technology suitable for three fuels i.e. gas, diesel and furnace oil. The cheaper of these fuels i.e. gas is not available for full utilisation of 500 MW capacity at either of the sites advertised by these two organisations. The partial availability of gas is only for about one and a half year.

PPIB is already processing a heavy portfolio of private power generation based on oil and with the addition of 2x500 primarily oil-based projects, the impact on consumer tariff would be drastic.

With the price of only six cents per unit pursuant to 94-policy, the consumers had to bear the brunt for spiralling the electricity prices. Probably, the economic managers can still justify that costly electricity is better than no electricity; but given the tug of war between PPIB and PEPCO, the chances of having new generating units coming into operation are not bright. As always, the net loser in the sum game would be the ordinary consumer.

The new government would have to review the overall structure of power sector. It may be pointed that electricity is the one subject which is also on concurrent list.

There is a long list of questions such as, how much the provinces are geared to assume the responsibility of an integrated power grid, how well the provinces would espouse with the restructuring and reforms programme started in power sector way back in 1990s at the behest of World Bank and other such institutions, what will be role of power regulator  Nepra, what would be the fate of long-term IPP agreements, who will benefit from the cheaper hydro electricity, who will control nuclear generation, how economies of scale would be achieved at Thar and how Thar would be developed for its potential of generating more than 100,000 MW and so on.

The choice between imported coal and furnace oil -DAWN - Business; April 28, 2008


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## Neo

*Reconstruction opportunity zones: a ray of hope for exports?​*
As the eight-year long economic miracle begins to unravel, one of its more obvious manifestations is the galloping trade deficit that by the end of the current fiscal could exceed our total foreign exchange reserves. Other than checking the import of the less essential goods, any attempt to curtail the import bill will be counter-productive, even if it was possible. It is the other part of the equation, exports - that offers hope.

Admittedly, exports are not likely to yield more than a five per cent compound average growth rate this year over fiscal 2007. Exports face serious challenges. The hardening of Indian and Chinese currencies, and the 20 per cent plus inflation in Viet Nam, has only softened the blow. The measures initiated by the ministry of commerce during 2000-2003, that resulted in doubling of our exports over the last eight-year period, have run out of steam.

Several factors contribute to the limping export growth. Some of these are structural in nature, requiring longer term response. Of a more immediate concern are the others that are really a function of costs. The uncertainties surrounding our export capacities - from higher costs to security issues and travel advisories to power and gas outages - demand countervailing measures.

The exporters expect monetary compensation: interest rate moratoria, if not substantial write-offs; cheaper export refinance and subsidised utilities. Some would even argue in favour of exchange rate realignment. Unless a significant shift in Real Effective Exchange Rate warrants it, the re-alignment is fraught with serious risks to the macroeconomic framework, whose stability is critical to export growth. Past experience establishes the limitations of this option, it has never yielded durable export gains.

There is one more path-- market access. A favourable access can mitigate several challenges, some of which are not of our making. It also draws its inspiration from all the heady talk of the democracy bonus. A preferential trading arrangement with our principal trading partners--the EU and the US-- will considerably offset our export disadvantages.

With the EU, Pakistan had successfully negotiated a duty-free market access arrangement. It came at a price  we had to get our textile import tariffs bound with the WTO on the applied rate basis  but it was well worth it. It not only led to a substantial growth in exports to the EU but also provided leverage for more gainful deals in the US. Unfortunately ,this was lost in 2006, arguably because of a flawed strategy. We were seen to be demanding compensation (for the price we were paying for our role in the war on terror), rather than negotiating a deal.

With a competent team of negotiators, it should be possible to resurrect a fair arrangement. It will of course need the full backing of the new government that has to accept that the other side will expect a quid pro quo  social compliance, for instance.

With the US we used up precious political space negotiating the Bilateral Investment Treaty, presented as the precursor to the Free Trade Agreement. This was always a non-starter, as the senior ministry of commerce officials of the time had maintained. Focus then shifted to the Reconstruction Opportunity Zones (ROZs) in Balochistan, NWFP, and certain other parts that will have duty-free access to the US market. The bill has now been moved in the US congress.

If the kudos and the laurels to the advent of the ROZs have been slow in coming, it is simply because enough is not known and the fear of the devil in the details haunts the Pakistani exporter. Yes, certain business people were associated with the negotiating process but the inconsistent versions that have percolated down to the exporters makes it a guessing game. A singular absence of authentic official statements gives rise to concerns.

Of course, no government can negotiate through the media and everyone respects the required confidentiality during the negotiating process, but by the same token, the affected parties have a right to know what is in store for them. This becomes even more unassailable now that the legislative process has started. What the exporters are hankering for are answers to three fundamental questions:

* What sort of export gains are estimated over a five year period? (A projection beyond five years will be of a distorting nature as there will be far too many variables to factor in, including possible overall reductions, autonomous or negotiated, in the US tariffs).

* Could there be any implications for non ROZ exports ? (Special anti-circumvention measures, safeguard measures, surveillance arrangements etc. etc.). This is of critical importance given the novelty of the initiative that covers virtually half of a country, and is not at all comparable to the US experience of other special zones.

* What, if any, quid pro quo was promised?

If the ROZ gains are not substantial, or if it in any way affects the normal exports to the US, especially of textiles, it is time to engage the US authorities. It will be unfair for us to let our US friends to go through what they perceive to be a huge favour and then complain of inadequacy. We may retrieve it on the grounds of a new regime that believes in full and transparent consultations.

The most efficacious route to an alleviation of our export challenges, over the short term, is through market access. What is needed is political will and a competent team. Everyone knows the time interval between the initiation of negotiations and their finalisation but even the formal initiation gives a powerful signal to the market.

The writer is chairman of Pakistan Bed-wear Exporters Association

Reconstruction opportunity zones: a ray of hope for exports? -DAWN - Business; April 28, 2008


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## Neo

*Foreign exchange reserves holding was not that dismal when Musharraf took over ​* 
ISLAMABAD (April 28 2008): The Finance Ministry has informed the cabinet, that foreign exchange reserves of the country in the last full year of Pakistan Muslim League (N) Government was $2.4 billion and not $1.7 billion as claimed by the previous government.

Mandarins at the ministry had to revise the table shown to the Cabinet on April 9, 2008 after Federal Minister of Finance Ishaq Dar noted some inconsistencies in the data relating to reserves held by commercial banks, which were counted for more in recent times and not for years prior to 1999-2000. When taken on consistent basis at the end of June 1999 they amounted to $2.4 billion ie 40 percent more than earlier shown in the presentation to cabinet.

The two charts now submitted by the Finance Ministry show significant discrepancies between the data that was presented at the April 9 cabinet meeting and the corrected version. The correct chart prepared at the end of March 2008 now shows that foreign exchange reserves in 1990-91 were $0.7 billion and the original chart of April 1st gives reserves of $0.6 billion. Likewise, figures of 1991-92, in corrected version show reserves of $1.1 billion which were originally submitted as $1.0 billion.

Under the current definition private deposits placed with banks under the F.E. 25 Scheme do not form part of SBP's liquid forex reserves. Commercial banks forex deposits less advances are now shown as net forex with banks.

Apparently the original forex position is based on weekly liquid forex available to SBP. And, the corrected version is based on SBP's statistical bulletin which includes NOSTRO forex funds with the banks to undertake trade transactions. NOSTRO funds go up and down on a daily basis.

The forex held by banks in their NOSTRO accounts are part of net foreign assets (NFA) of the banking system and are not shown as SBP forex holdings. After swap deals undertaken by some telecom companies in 2005-06 the NOSTRO amounts have exploded from $50m to as high as $800 million at present.

As a consequence, one can note the big difference in the original April 1st data and the revised March 31st data. SBP only counts forex in its accounts plus SDR available for draw down.

According to knowledgeable economist forex holdings are co-related to the number of weeks/months import bill. Adverse trade balance and bloating current account deficit 8in the current fiscal year has reduced Pakistan's ability to meet its forex obligations largely due to abnormally high oil payments and unanticipated wheat imports.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Industries testing laboratory to be set up ​*
SIALKOT (April 28 2008): Government will establish an international standard testing and checking laboratory, at a cost of Rs 300 million, in Sialkot where sports items, surgical equipment and leather goods would be inspected. Paperwork has been completed in this regard.

According to official sources, with setting up of this laboratory, industries will promote further.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Encouraging local investment will boost economy: ICCI chief ​*
ISLAMABAD (April 28 2008): The President of Islamabad Chamber of Commerce & Industry (ICCI), Muhammad Ijaz Abbasi, has said that by encouraging local investment and imposing 1 to 2 percent investment tax would help in bringing the irregular economy in the regular sector, according to a statement issued here on Sunday.

Talking to Marvi Memon, Member, National Assembly, he stressed that the government should focus on construction of industries to boost the economy.

He said that more than 40 businesses are associated with the construction industry. He said that with boost in the construction industry, a lot of employment opportunities and economic activities would be generated in the country.

He gave the example of UAE, where there had been massive construction activity in the last few years, which helped in accelerating its economy. He said that UAE also planned to invest 100 billion dollars in Pakistan in the construction sector in the next 4-5 years.

The ICCI president said that according to an estimate overseas Pakistanis had about 45 billion dollars and they must be inclined to invest in Pakistan. He said that confidence of overseas Pakistanis needed to be built so that they could be encouraged to invest in various sectors in the country. He said that there must be political stability and everyone should seriously think for the economic development and progress of Pakistan.

Abbasi stressed that the government must also introduce housing schemes for construction of small houses and give these on lease at reasonably low rates. He said that mortgage scheme should be introduced, and at with a small initial investment, ownership rights should be given to the purchaser of property.

He said that this would also help in increasing the tax base and generation of economic activity, boosting exports, and reducing inflation in the country.

He suggested that the government should launch stores only containing flour, sugar and oil for the poor segment of society and should give them cards for purchase of these commodities at subsidised rates. He said these cards should be directly delivered to the low income people using Nadra identity system.

Ms Marvi said that in the last few years the economy of Pakistan was strengthened and a lot more was desired to be done in this respect. She said that all parties should work together for the economic development of Pakistan and their party would support those government decisions, which would be taken for the betterment of the country.

She said that one of her aims was to co-ordinate with the Chambers in Pakistan to know the problems of the business community, which she would take on the floor for consideration of Parliament. She said that the business community faced a number of problems, which should be brought to the notice of the parliament, which would help the government in making good policies for the economic development of Pakistan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Budgetary support: multilateral agencies to lend $3 billion: Dar ​* 
ISLAMABAD (April 27 2008): Pakistan will borrow $3 billion from multilateral sources for budgetary support and to maintain foreign exchange reserves at a reasonable level, which are expected to go down to $10 billion by year-end due to increasing oil and wheat import bill.

Pakistan is eligible for some concessions on borrowing. Given that this must attach with stringent conditions, therefore, need to focus on negotiating in Pakistan interest. Finance Minister Ishaq Dar told the Senate Standing Committee on Finance here on Saturday that he held meetings with multilateral agencies who have agreed to lend $3 billion to the new government while promising Pakistan will not go into IMF programme.

Dar said it was a big challenge for the new government how to pay to oil companies and Wapda, as there is no space with the State Bank of Pakistan. The previous government had borrowed Rs 400 billion from the central bank against the target of Rs 181 billion for the year.

The SBP, he said, has told the Cabinet very clearly that there was no space with it to lend more money to the government that is already with Rs 555 billion budget-overrun. The reason being the under-budgeting by the previous government, he added.

He said the government did not mention Rs 125 billion payment on interest in the budget, which would be Rs 443 billion against Rs 318 billion target for the year. The government should have provided accurate budgetary allocation for interest payment as it knew how much it would have been at the close of year, he added.

There was no allocation of Rs 38 billion in the budget spent on development work, because it was election year, that would also go up to Rs 75 billion at the close of the year besides Rs 43 billion paid for research and development of textile, and subsidy on fertiliser directly by the State Bank.

The subsidy on electricity, he said, has gone up to Rs 123 billion against budgetary allocation of only Rs 52 billion while on oil it may go beyond Rs 153 billion against Rs 13 billion allocated in the budget for the year.

Import of wheat was never expected but Rs 44.9 billion cost the exchequer because of previous government mismanagement that had allowed export at $200 per ton and then imported at $500 per ton.

"I don't want to go into blame game but these are facts every one must know," he said. Freedom of media: The newsmen were surprised when Minister for Finance wanted the journalist to leave the meeting so that he could brief the meeting about development expenditures earmarked for a specific area.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*World Bank may give $6 million for hydropower environment ​* 
FAISALABAD (April 28 2008): The World Bank is considering providing $6 million for Infrastructure Project Development Facility (IPDF) to develop an enabling environment for hydropower business in Pakistan.

According to WB sources, the component will build the capacity of the Infrastructure Project Development Facility (IPDF), in particular the new water cell tasked with developing financing strategies for water sector programmes and hydropower infrastructure and with providing advice on a variety of financial, fiscal, legal and regulatory issues.

The project will help to review existing institutional, legal and administrative framework for financing water infrastructure and the potential for private sector participation in the development of multipurpose water resources development projects based on international best practices, asset ownership, benefit-sharing alternatives, etc.

The project will also help for development of an enabling framework for licensing and regulating hydropower projects (both run of river and reservoir based projects); for establishing tariffs and a carbon credit mechanism; and for scrutinising existing assets to generate funding for investments in water and hydropower development.

Infrastructure Project Development Facility (IPDF), the WB consultants to review of financial and fiscal regimes for private sector, domestic and foreign involvement in the development of major hydropower projects in the Indus system, and identification of appropriate sources of financing worldwide.

According to update project report, returns to investment in the water sector (irrigation, hydropower, domestic and industrial uses as well as for environment) are very high in Pakistan. Despite large needs for investments in the sector to expand water supplies, to improve water management and control and to upgrade and modernise the century old system, the required investments are not forthcoming, resulting in its continued stagnation and deterioration.

There has to be a shift in the financing strategy for multipurpose storages. So far, the government has only tapped public resources for investments in the water and hydropower systems and currently owns major assets in these sectors. Hydropower generation provides substantial financial flows and could be of great interest to the private sector if these investments are structured properly, WB report added.

WB report mentioned that the extent of the investment required demands expanding the range of options to include, for example, non-traditional methods for financing these infrastructure, and involving the domestic and foreign private sector, and perhaps even privatising the existing assets and/or building public private partnerships (PPPs).

WB report mentioned that the main challenge is to structure a water and hydropower investment programme in a manner that would enable the mobilisation of financing from non-traditional sources so that the system investments can keep pace with growing demands in the immediate future.

The water sector issues are enormous and complex, and addressing them would require a series of investments and long-term commitment on the part of the government. The proposed project would help the government to address issues related to water resources management in the main river system, allowing a transparent way for water flow forecasting, availability, distribution and accounting, and thus building trust.

The project will also help to address water policy, technical issues necessary for the investment programme and assist in developing a financing strategy and a strategic social and environmental assessment framework necessary for the large investment programme.

Some support would be provided under the project to provinces to develop better linkages between the federal and provincial systems. The support to provinces is being provided under several ongoing and provincial operations such as the development policy loans (DPLs) to Punjab and Sindh Water Sector Improvement Project (WSIP) and it will be scaled up under Barrage Rehabilitation Programmes in Punjab and Sindh and possibly new operations in Balochistan and North West Frontier Province (NWFP).

It may be recalled that Pakistan government is seeking support from the World Bank for its knowledge, expertise and experience in the sector, in addition to its financing. This is particularly the case for this Project. More specifically, the Bank is expected to play a key role in providing support for: (i) strengthening water resource management institutions at the federal (main system level) and continuation of the measures for institutional strengthening already underway in provinces; (ii) support in developing financing strategies for investment program in water and hydropower sectors; (iii) strengthening project planning, development and management, ensuring appropriate technical designs, implementation and environmental and social features.

Business Recorder [Pakistan's First Financial Daily]


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## ejaz007

*IPI deal to be clinched soon: India*

NEW DELHI: Indicating that the $7.4 billion Iran-Pakistan-India (IPI) gas pipeline deal would be clinched soon, Indian Petroleum and Natural Gas Minister Murli Deora said he would notify Indian Prime Minister Manmohan Singh of talks in Pakistan during his recent visit to Islamabad. He said India and Pakistan had almost established a general agreement on the transit fee. Deora said Iranian President Mahmoud Ahmadinejads visit to Delhi on Tuesday would be utilised to pave the way for trilateral talks on the deal. The talks with the Pakistani leadership were very cordial and assuring. I will be updating prime minister on all issues, including IPI pipeline, and also $7.3 billion Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline, which India has formally joined this time, he said. The next round of ministerial talks on the TAPI pipeline are scheduled to be held in October after certification of Turkmenistans gas assets. I am very optimistic about the IPI pipeline as it would go a long way in meeting Indias energy requirements in the long run. The 2,700-kilometer-long pipeline, due to be completed by 2011, will initially carry 600 million cubic metres of gas per day. ppi

Daily Times - Leading News Resource of Pakistan


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## ejaz007

*Iran to provide 1100 megawatts of power: IPI project issues resolved *

ISLAMABAD (April 29 2008): Pakistan and Iran on Monday resolved all issues regarding the $7.5 billion gas pipeline project, paving way for inking an agreement soon at a mutually agreed date in Tehran. Iran also agreed to provide 1100 MW of electricity to Pakistan to help it overcome the shortage, particularly in areas adjoining Iran.

President Pervez Musharraf and his Iranian counterpart Mahmoud Ahmadinejad in over an hour long talks at the Aiwan-e-Sadr deliberated on their bilateral ties, issues faced by the region and the Islamic world and the trilateral cooperation between Iran, Pakistan and Afghanistan with a view to bringing peace and stability to the region.

The Iranian president who made a brief "official stopover" at Pakistan, while on his way to Sri Lanka, led a high-level delegation including its Foreign and Commerce ministers, besides its minister for Petroleum and head of EXIM Bank of Iran. He is due to arrive in India on Tuesday.

The two leaders held an exclusive meeting. Later, they were joined by their respective delegations. Foreign minister Shah Mahmood Qureshi later told reporters that the talks were positive and covered all aspects of their wide ranging relationship. "The two leaders said the IPI project will promote peace and friendship," Qureshi said and added that the two foreign ministers had been tasked to agree on a mutually convenient date for signing the agreement.

He said the two leaders expressed satisfaction over the resolution of all issues that had delayed a final agreement and hoped the project would help meet future energy needs of Pakistan. Iran also gave a positive response about the Pakistani proposal for allowing a gas pipeline through its territory to provide gas to China, along the historic Karakoram Highway, to help it meet its growing industrial needs, Qureshi said.

"And they recognised that all outstanding issues have been resolved and Iranian president will soon invite Pakistani president to visit Tehran where an agreement will be signed."

If all goes well, construction could start next year and the pipeline, linking the world's second largest gas reserves to the fast growing South Asian economies, could be completed by 2012. It would initially transport 60 million cubic metres of gas (2.2 billion cubic feet) daily to Pakistan and India, half for each country, but capacity would be raised later to 150 million cubic metres.

Talks on the 2,600-kilometre (1,615-mile) Iran-Pakistan-India pipeline began in 1994 but have been stalled by tensions between India and Pakistan and disagreements over transit fees.

The Iranian president said his country would provide 1100 MW of electricity to Pakistan to help it meet its needs, particularly in Gwadar and adjoining areas. Currently Iran is providing 35 MW for areas adjoining the Pak-Iran border. The two leaders also discussed the situation in Afghanistan and stressed that peace and stability was vital for the region.

President Musharraf and President Nejad reviewed their economic relations and said that they needed to be further upgraded to bring these at par with their political and diplomatic ties.

Foreign Minister Shah Mahmood Qureshi said the two countries already had a Preferential Trade Agreement and a Joint Investment Company and hoped the trade would soon touch the US one billion dollar mark. About Pakistan's stance on Iran's nuclear issue, he said, "we support Iran's use of nuclear energy for peaceful purposes, under the IAEA guidelines."

During the talks President Musharraf was assisted by Foreign Minister Makhdoom Shah Mahmood Qureshi, Minister for Water and Power Raja Pervez Ashraf and senior officials. The Iranian delegation including Ministers for Foreign Affairs and Commerce, the Vice President and Chairman of Archaeology and Tourism Department and Deputy Ministers for Water and Power and Petroleum assisted President Ahmedinejad.

Earlier, the Iranian President upon arrival at the Aiwan-e-Sadr was received by President Pervez Musharraf and Prime Minister Syed Yousuf Raza Gilani. A red carpet was rolled out for President Ahmedinejad as he arrived at the Aiwan-e-Sadr.

A smartly turned-out contingent of the armed forces presented him salute. Iranian President reviewed the guard of honour. National anthems of the two countries were played. President Musharraf introduced the Iranian President with members of the federal cabinet and other senior officials. Ahmadinejad later held talks with new prime minister Yousaf Raza Gilani, his first meeting with an official from a new government that took power last month after defeating Musharraf's allies in elections.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*China offers Pakistan joint ventures in Halal Food ​*
BEIJING: China invited Pakistan for joint ventures in Halal Food for the common benefit of the people and to promote Muslim commodities in Europe and various Islamic countries.

The Vice Governor of Ningxia Hui Autonomous Region Li Rui said while replying to a question at a press conference held here at the Great Hall of the People Monday to brief the media on upcoming International Halal Food and Muslim Commodities Festival and Ningxia Investment and Trade Fair.

The annual Fair will be held from September 10-13 in Yinchuan, the capital city of Ningxia on the occasion of celebrations of the 50th anniversary of the founding of Ningxia Hui Autonomous Region. Mr Li invited the Pakistani enterprises to visit the upcoming exhibition and hold negotiations with Chinese counterparts to establish joint ventures and enter business agreement to meet the need of Halal food products, specially beef, chicken, meat of Pakistan.

In this connection, he pointed out that China is ready to establish business contacts with the Pakistani counterparts. He said by establishing contacts the enterprises of both the countries would be able to share their experiences.

This year, Ningxia is striving to make the festival and trade fair a brand with local characteristics by further broadening its scale, raising its level, making close contacts with Muslim regions and countries, thus making Ningxia to hold Chinas front position open to Muslim countries, he observed. He pointed out that Malaysia is the top most importers of Halal Food products, followed by Thailand, Kuwait, Bahrain, UAE, etc. app

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistans recent growth rate unsustainable​*
* Institute of Public Policy chairman says domestic savings have to be improved to maintain growth rate

Washington: Noted economist Shahid Javed Burki has faulted Pakistans major political parties for not paying much attention to the economic conditions in the country when campaigning for office, while expressing doubts about the countrys ability to sustain its impressive growth rate of recent years.

Burki, chairman of the Institute of Public Policy, told the Centre for Strategic and International Security (CSIS) in a speech recently that economic factors turned out to be pivotal in influencing election results since the common man was more concerned with economic challenges than domestic political infighting. He said the election results reflect the ongoing disconnect between the leaders and the led. He said Pakistan will not be able to sustain the 7 percent growth rate it has enjoyed in the last seven years, given the current investment ratio of only 18 percent. He credited President Pervez Musharraf with providing a stable environment where policy changes were not arbitrary, and which resulted in a significant portion of pent-up growth being released in the economy. The weather was also kind to Pakistan and there was considerable investment by the Pakistani diaspora. However, no economys growth can rely solely on foreign investments or good weather.

Burki noted that the US has brought down its investment in Pakistan and is now only the third largest source of Pakistans foreign direct investment (FDI) income. He said Pakistans impressive growth in the recent past has not benefited the poor. Privatisation was placed at the top of the economic agenda, but that could not be sufficient by itself since Pakistans regulatory sector remains very weak. The government has not placed sufficient constraints on the expansion of the private sector and has not regulated the emergence of monopolies. As a result, Pakistan has experienced a sharp increase in prices. This is especially true of telecommunications, real estate, and construction. He pointed out that there has been no long-term creation of jobs for the poor and uneducated rural population. He noted that Pakistans trade deficit is now between $12 - $13 billion. The government has failed to manage the agricultural sector properly and failed to invest in the power sector. The poor management of the agricultural sector is compounded by the smuggling of wheat into Afghanistan. No serious analysis of the impact of economic growth on energy has been undertaken.

Improve domestic savings: Burki, a former vice president of the World Bank, said that Pakistan could not maintain a strong economic growth rate without considerable improvement in domestic savings, which can be encouraged by implementing programme loans and adopting institutional reforms.

He pointed out that Pakistan has one of the youngest populations in the world, so there needs to be focused investment in education, particularly at the primary and secondary school level and in technical schools. He also called for decentralisation of economic decision-making. Punjab could sustain a 10 percent growth rate. He also proposed that Pakistan should be opened up as a transit route for the region, thereby creating an opportunity for FDI. He suggested that the government should address shortages that occur in certain economic sectors, such as natural gas and cement, when any given economy begins to grow.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Country utilised over $4 billion liquid foreign exchange reserves ​*
KARACHI (April 29 2008): The country has utilised over four billion dollars liquid foreign reserves to meet its continuously rising current account deficit as inflows of foreign direct investment were insufficient during current fiscal year, sources in banking industry told Business Recorder on Monday.

They said that political uncertainty and law and order situation pre and post election have badly hit the foreign investment, which depicts a decline of 26 percent during the current fiscal year as against all time high foreign investment during the last fiscal year.

Decline in foreign investment inflows and rapidly increasing current account deficit made the policy-makers borrow fresh loans from international financial institutions or utilise foreign reserves. However, policy makers prefer to utilise liquid foreign reserves, which stood at 16.0789 billion dollars on July 31, 2007.

Although, the rising home remittances helped to fulfil foreign payments, however the inflow of foreign investments were not sufficient to fulfil the complete requirement of current account. Therefore, the country has spent 4.1 billion dollars from liquid foreign reserves to meet the current account deficit of all time high level of 9.85 billion dollars during the first nine months of current fiscal year.

Whereas during the same period of last fiscal year the country's foreign reserves were up by some 427 million-dollars. Foreign reserves held by State Bank of Pakistan declined to 11.51 billion dollars at the end of March 2008, which earlier stood at 15.022 billion dollars on July 1, 2007, due to huge utilisation.

Despite the country's foreign reserves' gradual decline, the economists believe that the spent reserves will be recouped by the end of June this year, as government is expecting huge inflows during the next two months from different countries. Decline in foreign reserves also put pressure on Pak rupee over US dollar, as it has declined by around 4.5 percent to Rs 64.20 per dollar in the interbank.

Economists said that recently the State Bank of Pakistan moved to strengthen the Pak rupee by allowing exchange companies to get 250,000 dollars at Rs 64.50. This also shows that a lot of inflows are in pipeline. "We are expecting that in the next few months over two billion dollars inflows will be witnessed, which will help SBP to maintain its liquid reserves," they added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*US investors show confidence in new government ​* 
LAHORE (April 29 2008): United States Principal Officer Bryan Hunt has said US investors have confidence in the new government and they are willing to further invest in the country. He said this while talking to newsmen at the inaugural ceremony of a three-day Pakistan Banking Expo here on Monday, which was organised by the Pakistan Guarantee Export Corporation Limited (PGECL).

Punjab Excise and Taxation Minister Mujtaba Shuja-ur-Rahman was the chief guest and PGECL Chairman Mian Mahmoood was also present on the occasion. He also said with the installation of new government, confidence of American entrepreneurs has restored.

The Punjab Excise Minister told reporters that the exhibition on banking, finance and information technology would provide an opportunity to general pubic to attain first hand information about banking, and it would also create awareness among the masses about financial institutions.

At the Expo, stalls were set by National Bank of Pakistan, Habib Bank Limited, MCB Bank Limited, Askari Bank Limited, Altas Bank Limited, The First Microfinance Bank Limited, National Investment Trust, National Savings, Adamjee Insurance, SME Business Support Fund, Pakistan Post, PTCL, IBM Pakistan, IT Absolute and National Data Consultants.

Business Recorder [Pakistan's First Financial Daily]


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## Contrarian

Pakistan seems to be going back to the 90's...


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## khanz

*Engineering exports to hit $1bn in 2 years *​ 


LAHORE: Engineering Development Board (EDB) Chief Executive Officer Almas Hyder has said Pakistans engineering industry is now progressing by leaps and bounds. 

Our electric fan exports, which were zero about five years ago, have now reached $50 million. The engineering sector exports touched $850 million and are expected to hit $1 billion during the next two years, he said. 

Talking to reporters at a pre-departure training workshop on effective participation in Hanover trade fair, he said that the engineering sector constituted 55 per cent of the world trade, but the country had a negligible share in the world market. 

The engineering sector is very vast and its exports have become vital for us to get out of the trade deficit. We should reduce our export reliance on the textile sector, he said. He said Pakistan Steel Mills had now started consumption of local raw material from Chagi and the EDB is well aware of the rising demand for steel and taking appropriate measures in this regard. 

Earlier speakers said that because of continuous participation in the Hanover trade fairs, Pakistani industry people learned how to improve the quality of products, presentable packaging, and pricing of products, which considerably raise the standard of our exportable goods. The exports were 300-400 million dollars about three-four years back and as a result, the exports have been increased to $850 million. 

Out of 14,000, Gujranwala with 9,000 engineering industrial units has strong base for producing of engineering goods, they said. They stressed the need for collaboration with the institutions concerned for improving technical skills and capacity building of the workforce. They said that out of the total cost of Rs900,000, the EDB was providing Rs850,000 to each of 55 exhibitors, while every one has to bear the cost of only Rs50,000 for attending the trade fair. 

Hyder urged the participants to take care of the public money being provided to them for the trade fair so that desired results could be achieved.


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## Neo

*15pc of inward remittances to be sold in interbank market ​* 
Wednesday, April 30, 2008

KARACHI: State Bank of Pakistan (SBP) has amended rule and regulations for exchange companies. 

For the out bound remittances made on account of imports the central bank in its FE circular No 02 issued Tuesday directed that exchange companies would be required to bring a minimum of 25 per cent of foreign currencies exported by them in their FCY Accounts maintained with banks in Pakistan on an ongoing basis. Out of the amounts so brought in, exchange companies would be required to sell at least 10 per cent in the Interbank Market, whereas balance amount should be withdrawn in cash US dollars from FCY Accounts maintained with banks in Pakistan.

Regarding inward remittances on account of home remittances, export earnings etc the SBP said, A minimum of 15 percent, instead of earlier 10 percent of foreign currencies received by the exchange companies on account of inward home remittance, in equivalent US dollar, must invariably be sold in the Interbank Market on an ongoing basis.

Every exchange company would have to submit a report on every Monday to SBPs relevant department giving aggregate FCY amounts mobilized under these two categories and amounts sold in the Interbank Market along with the name of the counter parties & relevant dates.

The exchange companies would have to report all transactions of $5000 or above (or equivalent thereof) made by the exchange company on account of i) sale/purchase over the counter and ii) outward remittances with all related particulars on daily basis.

SBP directed that the daily data in excel sheet should reach Exchange Policy Department on the SBPs prescribed format at ec.epd@sbp.org.pk by 7:00 pm. 

Earlier as per SBP regulations exchange companies were required to ensure that a minimum of 10 percent of foreign currencies exported by them and a minimum of 10pc of foreign exchange received by them on account of inward home remittances, in equivalent US dollars, must invariably be sold in the Interbank Market on an ongoing basis. 

15pc of inward remittances to be sold in interbank market


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## Neo

*German consulate contributes to IRC under micro-project scheme ​* 
Wednesday, April 30, 2008

ISLAMABAD: The Federal Republic of Germanys Consul-General Hans-Joachim Kiderlen and Executive Director of Indus Resource Centre (IRC), Sadiqa Salahuddin the other day signed an understanding for a financial contribution of Rs400,000 for the up-gradation of a vocational training-cum-work centre at Khairpur.

This project is being funded by the German Consulate under its Micro-Project-Scheme.

Established in the year 1999, the IRC is a non-profit, non-governmental organisation working with marginalised communities of rural Sindh. IRCs goal is to create a society in which all citizens, irrespective of their gender, class, religion or creed can learn, work and become full members in the participatory governance of their areas. 

In this regard the German Consulate in Karachi is to support this initiative and has, therefore, signed an understanding to up-grade the centre by providing for purchases of sewing machines, wood processing tools and other related equipments.

German consulate contributes to IRC under micro-project scheme


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## Neo

*Agreement inked: Kyrgyzstan to help Pakistan control power shortfall​*
ISLAMABAD: Kyrgystan is keen to help Pakistan in power shortfall as country has surplus electricity of one billion kilo watt, Ambassador of Kyrgyzstan, Dr Nurlan Aitmurzaev said on Tuesday.

Kyrgystan has inked an agreement to export it to Central Asian and South Asian Region of Electricity Market (CASAREM) including four countries, Tajikistan, Kyrgystan, Afghanistan and Pakistan. 

He said electricity would be exported to these countries with the financial assistance of World Bank and Asian Development Bank. 

It will establish a secretariat in Afghanistan and Kyrgyzstan is building two new Hydel energy plants and invites Pakistani businessmen to invest in these projects.

He expressed these views during a meeting with president, Islamabad Chamber of Commerce and Industry (ICCI), Mohammad Ijaz Abbasi. 

He said Pakistan is a very important country for Kyrgyzstan and was the most suitable route of trade. He said Kyrgyzstan prefers brotherly countries for investment and invited Pakistani companies to invest in Kyrgyzstan. 

Dr Nurlan promised to give a briefing on trade potentials and investment opportunities of Kyrgyzstan at the ICCI to the business community. He further said the two countries should cooperate with each other to improve trade and economic relations. 

He said Pakistani businessmen were participating in Kyrgyzstans business activities and invited the ICCI to bring a group of businessmen for visit to Kyrgyzstan and seek possibilities for trade and investment. 

Speaking on the occasion President ICCI Muhammad Ijaz Abbasi said, Pakistan and Kyrgyzstan have to work for strengthening trade and economic relations. 

Ambassador of Kyrgyzstan visited ICCI along with Almazbek Idiriov, Third Secretary and said that total trade of Kyrgyzstan with Pakistan was extremely low and needs to be enhanced aggressively. He said that Kyrgyzstan was a growing economy and its major export was electricity, electrical products, semi-conductors and etc. 

Abbasi said the trade volume between Pakistan and Kyrgyzstan is very low and suggested for its enhancement through joint ventures in various fields. 

He said that Pakistan was short of energy and could benefit from Kyrgyzstan to meet Pakistans energy requirements. He said both countries could also cooperate in information technology, agriculture, textile and tourism sectors to explore more opportunities for investment. 

The ICCI chief said there exists good scope for exports of ready-made garments, cotton products, engineering goods, consumer goods, pharmaceutical, rice, textile fabrics, sports good, surgical instruments and tents from Pakistan and import of electricity, electrical products from Kyrgyzstan.

Daily Times - Leading News Resource of Pakistan


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## Neo

*1st Emaar plan completion by December-end​*
ISLAMABAD: First batch of 96 Mirador Villas in Emaars Canyon View would be ready for handing over to its owners by the end of December 2008.

According to a press release on Tuesday, Canyon View is one of the major housing projects of Emaar Pakistan, the country subsidiary of Emaar Properties PJSC. 

Emaar has introduced the newly introduced Tunnel form System, which is considered to be an innovation in construction, for the first time in Pakistan. It is helping Emaar to meet its commitment to providing quality residences.

Canyon View is the first of the three Emaar Pakistan projects being developed at the cost of Rs 145 billion ($2.4 billion). Canyon View will serve as benchmark in developing master-planned communities in Pakistan. 

To give a unique identity to the vast neighborhood, Canyon View will have separate community districts that derive individuality through varying architectural styles of constructions. The villas will be of Mediterranean, Tuscan, Mughal, Arab or Spanish style with distinctive arches, gateways and frills to lend character.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Experts advocate increase in PDL on gas production ​* 
KARACHI (April 30 2008): With sharp increases in international price of oil, staggered fortnightly domestic price increases will neither fully address the problem of circular debt in the energy sector nor will these help reduce the growing fiscal deficit. The only option is to raise the Petroleum Development Levy (PDL) on domestic natural gas production, according to oil industry experts and analysts requesting anonymity.

At a meeting of the Oil Companies Advisory Committee (OCAC) held in Karachi, the oil experts pointed out that Pakistan is expected to import natural gas from Iran at $8 MMCF while the local price is under $3 MMCF. The government, therefore, has a cushion available in this differential to raise the PDL to not only clear the existing outstanding amount to oil industry of around Rs 76 billion but also continue to absorb/subsidise both diesel and kerosene.

Under the approved pricing formula, domestic sale prices are linked with international (Arabian Gulf) market product prices. They are determined and fixed by Oil and Gas Regulatory Authority (OGRA) on fortnightly basis. Since February 1999, crude oil prices have continuously escalated from $10 per barrel to almost $120 per barrel this month.

Since May 2004, the government has most of the time capped the domestic price and refrained from passing the international price rise to the consumers. In fact, between March last year and until late February this year, there had been a total freeze. Between May 2004 and mid-April 2008, Arabian Light crude price on average went up from $32.96/bbl to $99.73 ie by $66.77 or a 213 percent increase.

As a consequence, the ex-depot sale price of POL products in international market has gone up by over 200 percent. HSD in May 2004 was at the rate of $40.46/bbl. As of April 18 HSD abroad rose to $129.42 per bbl - up by $91.87 or 245 percent. Whereas in Pakistan, during the corresponding period, HSD price soared from Rs 24.37 per litre to Rs 47.13 per litre ie by Rs 22.46 or 93 percent only.

In order to shield the consumers from price hikes government has been absorbing this additional burden through reduction in collection of PDL and with cross product subsidies through price differential claims (PDCs) mechanism evolved with oil marketing companies (OMCs) and refineries.

According to industry estimates, PDCs collected by end of April would amount to Rs 175.5 billion. Out of which government has so far refunded Rs 99.619 billion based on audit claims of the industry. The outstanding PDCs still payable to oil industry is around Rs 76 billion.

The current PDC/subsidy rates (April 18 to 30th) on HSD, kerosene and LDO are: Rs 20.46, Rs 22.54 and Rs 17.36 per litre respectively. On current prices fortnightly PDC collection is said to be Rs 13.7 billion.

Besides enhancing the PDL on natural gas, government also needs to address the lopsided consumption of various POL products due to price distortions, says the oil industry.

Motor spirit (Petrol) consumption had come down due to people's strong preference for CNG and diesel on account of lower price. As a result, Pakistan now has surplus production of MS and has to export it at a loss because of highly subsidised rates of both diesel and CNG at the pumps.

Petrol is being sold at Rs 65 per litre while Diesel is sold at Rs 18 less ie Rs 47 per litre. Whereas CNG being consumed by car is sold at a 40 percent less price than petrol consumed by two wheelers - a vehicle mainly used by people from middle and lower classes.

Due to this price distortion the consumption ratio of diesel to petrol is 7:1. It is also leading to smuggling of diesel from Pakistan into Afghanistan. As a result, diesel consumption has gone up by 14 percent. Plugging of oil smuggling from Iran has helped somewhat in checking the falling consumption of petrol. Its sale has gone up by 30 percent.

On account of huge outstanding of PDCs, oil industry is suffering from severe financial constraints with some MNCs threatening to close down operations by end June. PDC payment outstanding to PSO is Rs 42 billion. The government has hurriedly arranged Rs 15 billion payment against sovereign guarantee from banks - yet to be disbursed - as the local oil giant faces default to meet its obligations against existing L/Cs due by May 8th.

Besides PDCs outstandings, Wapda owes Rs 12 billion to furnace oil supplies received from PSO. Pakistan International Airlines owes Rs 2 billion against sale of JP1 Aviation fuel. And, Hubco owes Rs 3 billion to PSO on account of furnace oil supplies.

Shell is said to have Rs 13 billion in receivables from the government against PDCs claim. OMCs point out that those complaining that OMCs are getting high margins in Pakistan also need to take into account the financial cost incurred due to inordinate delays building up to such huge receivables from the government.

OMCs are willing to have their margin capped if existing outstandings are cleared and timely PDC payments received. Defending the deemed duty payment to refineries the industry representatives point out that they were under obligation to incur $100 to 150 million in capital cost to reduce the sulphur content in their products from one to 0.5 percent. Engineering, design and procurement in this regard is already underway and PARCO the largest refinery, is said to be executing the sulphur content reduction plan in the next three months.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*MoUs on Thar coal projects termed fraudulent: Sindh cabinet annuls contract employments ​* 
KARACHI (April 30 2008): Sindh government has announced to annul all employments on contract and OPS against higher posts in the province from BPS 1 to 22, and hinted at lifting the ban, in a couple of months, on recruitment on around 44,000 vacant slots. This was decided in the Sindh cabinet meeting held here on Tuesday, which was presided over by Chief Minister Qaim Ali Shah.

The cabinet also termed the MoUs, signed in connection with Thar coal and coal-based power projects by the previous government, as fraudulent and suggested that the government should take stern action against all found involved in it.

Briefing the newsmen about the cabinet decision, Sindh Information Minister Shazia Marri, giving details of termination of contract employees, said that in exceptional cases where services of technical experts would be required, the Chief Minister would have the authority to allow such contract employees to continue.

She said that the services of employees working under OPS (Own Pay Scale) on higher posts have been terminated with immediate effect. However, she said that senior police postings and postings of DCOs may be exempted from the decision as these are strategic, and at times, due to non-availability of senior officers having the required skills for these positions, the officers having next grade and requisite skills would continue working at their posts.

She said this decision would pave the way to induct new, though less experienced persons into employment, and added that the officers/officials re-employed included those of Grade 22 to 1 and the decision is same for all. Regarding contract employees, she said that the cabinet had directed all departments to prepare their lists.

She said that the cabinet took notice of employees whose promotions remained withheld for want of meetings of Departmental Promotion Committees (DPC) for last many years, in various departments.

As per cabinet decision, she said, the DPCs would meet within one month and decide all such cases of promotions, after which, the ban on the recruitment for more than 44,000 vacant slots from BPS 1-22 may be lifted. She said that in the cabinet meeting, recommendations for amendments in certain laws were also made, which the cabinet approved.

One such law, she said, was Sindh Gothabad Housing Scheme and the definition of "rural areas" was incorporated in the 1987 Act. Similarly, she said, in the wake of a resolution passed by Sindh Assembly for renaming District Nawabshah as Benazir Bhutto District, an amendment in 1967 Act was also approved to provide the provision in the law for renaming of any district or Taluka as and when resolved by Sindh Assembly.

The minister said that the cabinet also reviewed food situation in the province and lauded the achievements of the Food Minister on this account. The cabinet, she said, was informed that over 200,000 tons wheat has been procured so far while the process was still continuing for which the department was being provided more vehicles.

As regards law and order, she said the matter was reviewed and it was decided to remove all tinted glasses and fancy number plates from vehicles without any discrimination between influential and the common man. To a query, Shazia said that the MQM-PPP dialogue did not come under discussion, as it was not on the agenda.

Terming the MoUs signed in connection with Thar coal and coal-based power projects by the previous government as fraudulent, Shazia said that the cabinet also decided to take suitable action as per law against all found involved in this fraud.

She said that millions of government money was wasted through fraudulent MoUs signed during the last five years, and added that a report was being prepared in this regard that would soon be presented to the Chief Minister for action. She said the cabinet was briefed about the Thar coal project as the project was initiated during the Government of Benazir in 1995-96.

"The project cost was one billion dollars at that time for generating 3000 MW electricity but could not be implemented as the government had been dismissed", she observed. Shazia said that the cabinet was informed of the steps taken for coal exploration during the previous government and many anomalies came to light and almost all MoUs signed between 2002-07 proved a fraud.

"Even, an MoU was signed with Sonery Energy (Pvt) Ltd for coal exploration and its utilisation for power generation in Thar that was just a paper-company and does not exist at all", she said. She said that the cabinet observed that Sindh is rich in coal reserves and expressed the desire that the province and its people should be its beneficiaries. However, in the wake of setting up of coal-based power plant, Wapda and federal government would be consulted for project's funding and expertise.

The minister pointed out that in Pakistan coal use is less than one percent as against 69 percent in India, 80 percent in Australia and 78 percent in China. She said that Pakistan has the potential to use its coal reserves for 100 years.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Dar's criticism termed 'financial engineering' ​* 
ISLAMABAD (April 30 2008): The unadjusted budget figures for fiscal year 2007-08, as presented by Finance Minister Ishaq Dar during the first Cabinet meeting on April 9 constitute 'financial engineering', according to well placed sources. "One of the major flaws in the analysis of the unadjusted figures was failure of the Finance Minister to disclose the $800-900 million financing committed by the US for logistic support for Pakistan's war on terror.

This amount would be part of non-tax revenue," analysts argued. An economic analyst told Business Recorder here on Tuesday that if the new government prepared its case against the previous government on assumptions of outflows, it must, in all fairness, also mention expected inflows. "It is not fair if we inform the public about the slippages, and not the expected income," the analyst said.

The Finance Minister in the Cabinet meeting had given Rs 443 billion as the projected domestic interest payment, in contrast to the budgeted amount of Rs 318.2 billion. However, this discrepancy between the budgeted and the projected amount was, according to former Minister of State Umar Ayub Khan, the fault of policies of the governments between the years 1996 and 1999.

Umar in his budget speech last year had announced that during the current fiscal year and up till 2009-10 there would be a significant rise in deficit financing, because high interest-bearing Defence Savings Certificates would mature this year and would require Rs 80 billion in 2007-08 and Rs 163 billion next fiscal year.

The present Finance Minister had also projected wheat subsidy at Rs 45 billion as an amount not budgeted, as a wheat crisis was not anticipated at the time of the budget. However, according to sources, subsidy on wheat was unlikely to exceed Rs 20-25 billion. In addition, the projected subsidy of Rs 123 billion to Wapda was unlikely, given that till February this year only Rs 34.5 billion subsidy is given.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Wapda officials asked to ensure early completion of hydropower projects ​*
LAHORE (April 30 2008): Water and Power Development Authority (Wapda) Chairman Shakil Durrani has directed the project authorities to ensure completion of the hydropower projects as per schedule. He expressed these views while presiding over a meeting at Wapda House to review the progress on water and hydropower projects being executed by the Water Wing here on Tuesday.

Wapda member (Water) Muhammad Mushtaq Chaudhry; member (Power) Fazal Ahmed Khan; General Manager of the Water Wing, Project Directors and consultants also attended the meeting. He said that on time completion of the water and hydropower projects had become all the more important in view of the growing needs of water and electricity in the country.

He commended the pace of work on Mangla Dam Raising Project, Kurram Tangi Dam, Gomal Zam Dam and Greater Thal Canal during the first quarter of 2008, and said that the other projects should also follow suit.

Later, detailed deliberations were made on the projects. The meeting was told that the Mangla Dam Raising Project would be completed in September this year, whereas the filling of water in the raised dam could be started during the current season.

The meeting was briefed that Satpara Dam project was nearing completion and filling of water in the reservoir would commence from May 10. It was further told that the three high head hydropower projects, commonly known as Khwar projects with accumulative power generation capacity of 323 MW would start contributing to be National Grid one by one from the next year.

The meeting was apprised of the feasibility studies and engineering designs of various hydropower projects with total generation capacity of more than 25,000 MW. Most of these studies were at the advance stage of their completion, the meeting was told.

The comparative water availability in the reservoirs and hydel generation from the various powerhouses were also reviewed. He told officials to speed up the repair and rehabilitation work being carried out on hydel stations, particularly on Warsak and Jabban hydropower projects.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Ahmadinejad says gas pipeline deal in 45 days​*
NEW DELHI, April 29: Oil ministers of Iran, Pakistan and India would meet within the next 45 days to agree on a final draft for the Iran-Pakistan-India (IPI) pipeline that would be then signed by the political heads of the three countries, Iranian President Mahmoud Ahmadinejad said here on Tuesday.

All pending issues and agreements would be finalised within 45 days and given to the leadership of the three countries. Afterwards we will decide, Mr Ahmadinejad told a news conference after a meeting with Prime Minister Dr Manmohan Singh.

It was not clear whether the Indian prime minister, who had expressed lack of confidence in the financial support for the project, had changed his mind. The Indian response to the talks appeared to indicate lingering doubts.

For example, the Press Trust of India quoted Indian Foreign Secretary Shivshankar Menon as saying that the pipeline was a doable project though a lot of work needs to be done to ensure that it is commercially viable, secure and there were assured supplies. The Iranian comments seemed to be a little more positive.

When Mr Menon was asked to comment on western concerns over Iran, he said, according to PTI, that India saw Tehran as a factor of stability in the region.

On his part, far from exuding worry from the escalating US and Israeli military postures that could torpedo many calculations, including the IPI project, the Iranian president poked fun at the United States. It is in its last phase. It is printing worthless currency, which is causing the oil prices to escalate. Its time for them to pack up and leave the region alone.

Flatly denying that Iran was planning to build nuclear weapons, Mr

Ahmadinejad said nuclear weapons were immoral and all countries possessing them should destroy their arsenal.

He also added mysteriously that it would be a strange development for the United States if it would allow a black person or a woman to be elected as president. On a new proposal to extend the IPI pipeline to include China, he said: We have received one proposal. We will evaluate it and consider its merit and evaluate all aspects.

Mr Ahmadinejad who was on a six-hour transit in Delhi on his way home from Colombo played down his countrys surprise at Indias decision to vote against it at the IAEA. Ours is a deep and historic relationship. The two sides are too close to each other and hope in the future we will finalise the gas pipeline project.

Mr Menon said a meeting of the India-Iran Joint Commission would be held in the middle of the year when the two countries will discuss ways to strengthen their relationship.

Asked whether Mr Ahmadinejad requested Dr Singh to intervene in sorting out Irans strained ties with the West, the foreign secretary said no. The two leaders agreed to triple bilateral trade to 30 billion US dollars but set no date.

Apparently responding to concerns in Washington about the visit, Mr Menon was quoted as saying: I do not think what we are doing with Iran should worry anybody. The more the engagement, the better it is for us all.

Ahmadinejad says gas pipeline deal in 45 days -DAWN - Top Stories; April 30, 2008


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## Neo

*ADB accepts govts request for $650 million support​*
ISLAMABAD, April 29: The Asian Development Bank (ADB) has accepted the coalition governments request for $650 million emergency budgetary support.

We have decided to disburse $650 million on a fast-track basis to help improve the governments budgetary position and contain fiscal deficit, ADBs Country Director Peter L. Fedon told Dawn here on Tuesday.

He said the remaining $1 billion funding, out of the $1.9 billion annual assistance lined up for the calendar year 2008, was being accelerated and maximum funding would be made available before June 30 this year so that the government could manage its financial affairs.

Earlier, Saudi Arabia had pledged $300 million oil facility and China promised to help the new government with $500 million balance of payment support.

According to Finance Minister Ishaq Dar, there was a Rs522 billion over-run expenditure, which if not arranged by June 30, fiscal deficit would go as high as nine per cent against the target of four per cent set for the current financial year.

He said Rs522 billion was desperately needed to contain the deficit at six per cent of the GDP.

When asked about the over-run expenditure, the ADB country director said the new government understood this issue better. But as far as the ADB was concerned, he said, it would play its role and help the new government by providing timely financial support.

Responding to a question, he said the ADB had proposed a tax on agriculture income and on services sector for new resource mobilisation.

More taxes or any other measure needed for this purpose will have to be decided by your government and we cannot say anything about it, Mr Fedon said.

He agreed that the increasing international oil prices would cause more problems for countries like Pakistan. International prices, he said, were intensifying food inflation throughout the world and everybody appeared to be helpless.

Asked about the growing energy problems, he said that his bank had provided $2 billion to Pakistans distribution and transmission companies to cope with power pressure. He called for establishing more power plants by the private sector to meet 3000MW of daily electricity shortage. He was of the view that the tariff issue needed to be settled to attract more IPPs in the country.

Answering another question, he said the ADB would provide necessary support to Turkmenistan, Afghanistan, Pakistan and India to help build TAPI gas pipeline.

We are trying to be an honest broker to push forward the regional cooperation in the shape of the gas pipeline project, he said.

However, he said, the bank was not responsible for establishing any consortium to arrange funding for the project and that it had to be decided by the countries involved in it.

ADB accepts govts request for $650 million support -DAWN - Top Stories; April 30, 2008


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## Moin91

*Pakistan among top for doing business: WB*

*Thursday, May 01, 2008
KARACHI: Pakistan has been ranked as one of the top favourable economies in the world, states Doing Business 2008, a recent report released by the World Bank.

According to the report, Pakistan ranks second compared to other South Asian countries, based on certain economic indicators such as ease of doing business, dealing with licences and protecting investors as identified by the analysts.

The following countries are Sri Lanka, Bangladesh and Nepal. Pakistan has a comparatively better business environment in terms of paying taxes and registration of assets, the report adds.

The report evaluates business activities based on regulations affecting the 10 stages of a business life, which are starting a business, dealing with licences, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business.

It is pertinent to note that in the overall global rating of 178 countries, Pakistan is rated 76th, as compared to India at 120. With Pakistans fast-paced IT industry, it is emerging as a powerhouse in the South Asian region due to the governments friendly policies.

These include 100 per cent foreign equity ownership, 100 per cent repatriation of profits for foreign investors and tax exemption for the sector till 2013.

The availability of a large pool of English-proficient skilled professionals, affordable connectivity rates, competitive infrastructure and operational costs are some of the other benefits that Pakistan enjoys. Due to the same, an increasing number of foreign IT companies prefer Pakistan for their outsourcing operations and setting up development centres.

Doing Business 2008 is the fifth in a series of annual reports that evaluates the regulations which directly impact economic growth, provides objective measures of business regulations and their enforcement. The data is collected across 178 countries and selected cities at the sub-national and regional level.*


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## Neo

*Economies of scale, efficiency key to boosting exports ​* 
Thursday, May 01, 2008

LAHORE: Government policy-makers are struggling to bring about a change in the exporters mindset, who demand concessions instead of favourable policies to compete in the international market and put the country on a sustainable growth path.

Commerce Minister Shahid Khaqan Abbasi is in constant touch with all export and trade associations of the country. Last week, he spent five hours in a meeting with all major exporters in Islamabad, but the input he got was disappointing which gave an impression that the cost of doing business in Pakistan had gone quite high and exports without government subsidies would not be possible.

Surprisingly, they claim the factors that have added to their cost include increase in petroleum prices, hike in gas and electricity rates, high interest rates and rise in wages. But economic experts say except for one or two factors all others are a global phenomenon which has impacted the cost of doing business in all countries that compete with Pakistans exports. In fact, the energy rates in Pakistan are lower than many of its competitors.

They say the negative factors affecting exports have been offset by some positive areas where Pakistan has an advantage. Minimum wages in Pakistan are still lower than those in Indian and Chinese textile industries. Petrol and electricity rates in these countries are higher or the same as in Pakistan. Gas tariff in Pakistan is lower than these two countries. However, interest rates are somewhat lower in India and China because their inflation is 3 to 4 per cent less than Pakistan.

Local export industries, particularly textile exporters, have over the years lost markets not only to India and China but to newcomers like Bangladesh and Vietnam. What contributed to the decline in textile exports, the experts say, were lack of innovation, inability to improve skills, poor marketing and non-professional management. Had the depression in exports been due to government policies, they point out, it would have been reflected in the performance of all companies in that particular sector.

However, in the textile sector there are some high-performing exporters operating in the yarn, fabric and clothing sub-sectors. It seems, they say, planners and entrepreneurs tend to ignore the fact that they are operating in a liberalised global market and economies of scale and efficiency are essential to compete in these conditions. Time is now ripe for mergers and acquisitions in all industrial sectors of the country to stay competitive both in export and domestic markets.

Even minnows like Bangladesh and Vietnam are edging out Pakistani exporters because they have much larger textile manufacturing companies than Pakistan.

The experts say the new trade policy should be framed in a manner that rewards efficient industries and those that pool their individual small resources together to form a larger concern. Otherwise, they warn that exports would continue to suffer and imports would grow even faster if the economies of scale and efficiency are not achieved by the local industry.

Export industries provide bulk of the industrial employment in the country and any pressure on exports has an adverse impact on employment. Sustainable export growth is only possible through mergers and acquisition of small and fragmented manufacturing concerns of the country.

Economies of scale, efficiency key to boosting exports


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## Neo

*CDWP approves 33 projects worth Rs163.8bn ​* 
Thursday, May 01, 2008

ISLAMABAD: The Central Development Working Party (CDWP) on Wednesday approved 33 projects costing Rs163.8 billion, including foreign component of Rs20.8 billion. 

The CDWP held its 7th meeting of the current financial year here under the chairmanship of Deputy Chairman, Planning Commission, M Akram Sheikh. 

Of the 33 projects, fifteen projects of Rs138.8 billion are related to infrastructure building, 12 projects costing Rs22.6 billion are in the social sector, while six projects costing Rs2.4 billion belong to other sectors. 

He said of the total projects approved today, cost of the each 12 projects was over 500 million, while the total cost of those projects was Rs157.5 billion, which would be placed before Executive Committee of National Economic Council (ECNEC) for approval. 

He said 31 projects, costing Rs163.3 billion would be financed by the federal government, while of the four projects located in Punjab, two projects would be financed by the provincial government of Punjab. Briefing the newsmen, Spokesman Planning Commission Asif Sheikh said that in earlier six meetings, the CDWP had approved 218 projects costing Rs565.85 billion. He said of the 33 projects, 7 projects had been revised and their net addition in total cost was Rs53.5 billion. Of the revised projects two projects, costing Rs101.6 billion are in AJK. These are: Mangla Dam Raising Project (Revised PC-1) and Mangla Watershed Management Project, he added. 

He said it was interesting to note that the construction cost of these projects had decreased but re-settlement amount which was earlier Rs26 billion had now jumped to over Rs60 billion. He said Mangla Dam Raising Project was delayed six months due to the bad weather, however he expressed the hope that by the end of current year rainwater would begin to store in the dam according to the programme. 

He said the CDWP approved 18 projects in all Pakistan costing Rs30 billion. It approved four projects in Punjab province costing Rs1.2 billion. He said the CDWP approved one project for Sindh, namely Revamping of Irrigation System, which he said would cost Rs16.0 billion. 

Sheikh said two projects in energy sector, costing Rs2.8 billion had been approved for Northern Areas (NAs) to generate power from self-resources. He said the CDWP also gave conceptional clearance to five projects in different sectors adding that according to it executive agencies would be able to acquire foreign loans. 

Sheikh said the total additional cost of the projects approved on Wednesday was Rs67.3 billion. The fifteen projects approved in infrastructure include two projects in energy sector, six in physical planning and housing and seven in water resources. 

Twelve projects approved in social sector include one each in environment and forestry and wildlife, while two each in governance, health, HEC and manpower. Among other projects, three projects were approved in agriculture and food, while three in industries and commerce. 

He said Dadu and Faisalabad thermal power projects did not get approval because Public Sector Development Programme (PSDP) did not deal with the projects related to thermal power. WAPDA has been asked to get equity from the private sector for these projects, he said.

CDWP approves 33 projects worth Rs163.8bn


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## Neo

*New satellite among 33 projects approved​*
By Ihtasham ul Haque

ISLAMABAD, April 30: The Central Development Working Party (CDWP) of the Planning Commission on Tuesday approved 33 projects to be executed at a cost of Rs164 billion, including indigenous development of a communications satellite.

Planning Commission spokesman Dr Asif Sheikh told journalists that 15 infrastructure projects of about Rs139 billion, 12 of social sector of Rs22.6 billion and six projects of Rs2.4 billion relating to other sectors had been approved. The meeting was presided over by Planning Commission Deputy Chairman Dr Mohammad Akram Sheikh.

*The spokesman said the Space and Upper Atmosphere Research Commission (Suparco) would develop the Pakistan Communications Satellite System at a cost of Rs18.8 billion to replace the countrys existing satellite whose life would expire in two years.*

He said the Mangla dam raising project had been completed and the reservoir had an additional capacity of 2.9 million acre feet of water.

The project had been completed on time at Rs5 billion less than the estimated expenditure but the resettlement expenditure had increased from Rs26 billion to Rs60 billion, raising the overall cost to Rs101 billion, he said.

The CDWP approved construction of 100 delay-action dams in Balochistan at a cost of over Rs2 billion, revamping and rehabilitation of irrigation and drainage system in Sindh at Rs16 billion and a scheme for disposal of effluent from Balochistan in the Right Bank Outfall Drain at a cost of Rs6.5 billion.

It cleared construction of water storage dams in Shadi Kaur, Pasni and Gwadar at a cost of Rs2.6 billion.

The meeting approved a project for acquisition of land for a pilot project of 1,000 apartments for low-paid federal government employees at a cost of Rs258 million.

It approved two hydroelectric power projects of 16 and 14 megawatts in Nalter in Gilgit district at a cost of Rs2.9 billion.

A project worth Rs494 million was approved for strengthening the National Tuberculosis Control Programme by ensuring uninterrupted supply of drugs. The Roll Back Malaria Programme of Rs659 million was also approved. The CDWP approved a project for replacement of equipment of the Pakistan Security Printing Corporation and asked it to market its services and get orders for printing currency notes from other countries.

Answering a question, the spokesman said an Integrated Border Management System worth Rs496 million had been approved for computerised checking of travel documents at 24 exit and entry points in the country.

New satellite among 33 projects approved -DAWN - Top Stories; May 01, 2008


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## Neo

*UAE to set up refinery, bank​*
ISLAMABAD, April 30: The United Arab Emirates will set up an oil refinery in Pakistan and would further invest by participating in privatisation of public sector entities.

This was stated by Ambassador of UAE in Pakistan Ali Mohammed Al Shamsi during a meeting with Federal Minister for Privatisation, Investment, Ports, Shipping, Industries and Production Syed Naveed Qamar on Tuesday.

The UAE envoy assured full support to further promote the private sector and his governments investment in the fields of energy, petrochemical and real estate sectors.

In order to encourage farmers, the UAE was planning to establish an agriculture bank to improve quality of rice, wheat, vegetables and other farm products through financing, he added.

Naveed Qamar said that Pakistan provided tremendous investment opportunities to the investors in every sector of economy with liberal investment policies and unmatchable incentives in the region with a level-playing field.

He informed the envoy that the government was planning to sell a specific number of shares of Habib Bank Limited to the institutions through block sale, while expressions of interest have been invited for the sale of SME Bank.

We are in the process of setting priorities for our privatisation programme, which would be announced soon, he said.

UAE to set up refinery, bank -DAWN - Business; May 01, 2008


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## Neo

*5.6 million mobile subscribers added in 2008​*
KARACHI: In the first three months of 2008 more than 5.6 million mobile subscribers were added, registering an increase of 6.82 percent. Figures released by Pakistan Telecommunication Authority (PTA) show.

Total number of subscribers now stands at 82 million with a mobile density of 52.16. In December 2007, the mobile phone subscribers stood at 76.88 million. 

Ufone retained its second position with 17.19 million subscribers followed by Telenor with 16.70 million subscribers. Mobilink is still leading the market with 31.75 million subscribers, while Warid stands on fourth position with 14.39 million subscribers.

China Mobile lost growth in terms of subscribers, but according to industry analysts, after the launch of Zong the next month figures are expected to be positive. 

In Pakistans competitive and heated mobile market, operators survival lies in getting into new areas, exploring new Value Added products, and providing better quality of services.

China Mobile has already invested $500 million in the country and has plans to invest more. China Mobile has made the largest investment among all the Chinese investment in Pakistan. PTA has recently awarded the license for providing cellular service in Azad Jammu Kashmir and Northern Areas to China Mobile. 

A steady growth witnessed addition of more than two million mobile subscribers every month throughout the last year, according to the PTA data. In the previous year the sector grew by 80 percent whereas average growth rate in last 4 years has been more than 100 percent. Network coverage of almost 90 percent of the total population of Pakistan has made mobile industry even more attractive for foreign investment.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pharmaceutical export registers 30% growth​*
KARACHI: Pakistans pharmaceutical products exports has registered more than 30 percent surge during previous year mainly due to aggressive marketing by the pharmaceutical companies and improving quality of their produced material in line with the international standard. 

The export of medicines to some 52 countries across the globe stands at $125 million compared to $90 million to $95 million during corresponding period of the previous year. 

However, compared to other countries, Pakistan is lagging far behind in volumes of the exported medicines owing to number of impediments hampering fast track progress of the pharmaceutical industry during several decades.

Former chairman, Pakistan Pharmaceutical Manufacturer Association (PPMA), Dr Qaiser Waheed, claimed that it was only during the last few years that local pharmaceutical industry has been able to display its true potential and made its presence felt in the international markets.

Earlier, export of the pharmaceutical products was disorganised , consequently countrys export volume remained stagnant.

Currently, bulk of medicines is exported to African countries, Central Asian States, Philippines, Vietnam, Myanmar and Sri Lanka.

Citing major problems faced by the pharma industry Waheed said, ironically the

potential of this sector was never recognised by the officials in Federal Health Ministry due to their lack of knowledge about the needs of this enormous field, which can fetch annually several millions of dollars for the national exchequer.

Unlike all other industries in the country, which fall under the administrative control of the Ministry of Industries, the pharma industry is managed by Federal Health Ministry, which has squarely failed to promote growth and interest of this sector.

In response to another question, he claimed that an overwhelming majority of the officials at health ministry have pharmacy degrees due to which their mindset is limited only to oversee and regulate quantity of locally produced medicines, while they are incapable promoting export.

Suggesting measures for progress of pharma sector on sound footing, he said the government in consultation with the stakeholders should evolve a comprehensive policy for promotion of the sector for at least five years period.

The newly evolved policy after securing the legal cover would remain unaffected even with the change of the government in centre or provinces, which would spell salutary impact for the industry.

Qaiser urged the new government to remove all taxes on packaging material and raw materials needed for manufacturing of medicines as currently, heavy taxation is adding to the manufacturing cost of medicines and its packing process.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pierlite of Australia to invest $20m in Pakistan​*
KARACHI: Pierlite, the largest Australian lighting company based in Sydney, is all set to invest $20 million in Pakistan by launching a joint venture company under the name of Pierlite Pakistan. 

In this connection, a formal launching ceremony was held with Australian High Commissioner Ms Zorica McCarthy as chief guest on the occasion.

According to a statement released on Wednesday, the investment in Pakistan is one of many global investments by the group to reach their Global sales target of $1 billion. This new joint venture will bring foreign investment in Pakistan by an Australian group giving new products, design technology and of course employment opportunities to the people of Pakistan by setting up local production facility, said Zorica McCarthy.

She said, I am glad to know that Pierlite Group wishes to set up a State of the Art factory to produce top quality lighting products for domestic market and to export to neighboring Middle Eastern countries. She said, Current development in Pakistan and construction boom in neighboring Middle Eastern countries will surely provide an opportunity to Pierlite to grow business in this part of the world.

Speaking on the occasion, Director Pierlite Pakistan, Pervez H. Madraswala said, Appreciation of Pierlites products in Pakistan paved way for a new joint venture company Pierlite Pakistan (Pvt) Ltd in collaboration with Pierlite Australia to cater to the lighting need of the country and neighboring markets.

Madraswala said, Pierlite Pakistan is currently expanding its sales and distribution facilities throughout the country. We are planning to invest around $20 million in Pakistan to set up local production facilities as well.

He said, Pierlite is the global brand of Gerard Lighting group of Australia, which also owns an array of lighting brands including Sylvania, Crompton, Moonlighting and Austube amongst others.

Daily Times - Leading News Resource of Pakistan


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## Neo

*UAE keen to invest in Pakistan​*
ISLAMABAD: UAE is all set to establish oil refinery in Pakistan and to further accelerate economic interaction by targeting upcoming investment and privatisation opportunities, Ali Mohammed Al Shamsi, Ambassador of UAE to Pakistan, said in a meeting with Syed Naveed Qamar Federal Minister for Privatisation, Investment, Ports, Shipping, Industries and Production here Wednesday. 

The UAE Envoy assured full support of UAE government to further promote the private sector and UAE governments investment in Pakistan in the fields of energy, petrochemical and real estate sectors. In order to encourage the farmers, UAE is planning to establish an agriculture bank to improve quality control of rice, wheat, vegetables and other agri-products through financing, he added. 

Syed Naveed Qamar said that Pakistan provided tremendous investment opportunities to all investors in every sector of economy with liberal investment policy and unmatchable incentives in the region with a level playing field. 

He informed the envoy that the government was planning to sell a specific quantity of shares of Habib Bank Limited to the institutions through block sale while expressions of interest have been invited for privatisation of SME Bank. We are in the process of prioritising our privatisation Program, which would be announced soon, he stated. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Trade between China, Pakistan increasing: Ijaz​*
ISLAMABAD: Pakistan and China have very strong friendship, trade and economic relations, which shall be further strengthened, said president of Islamabad Chamber of Commerce and Industry (ICCI) on Wednesday.

Muhammad Ijaz Abbasi during a meeting with a Chinese delegation at the chamber said the trade volume between the two countries was increasing which has crossed more than $6 billion after signing FTA and it was heavily in favour of China. 

He emphasised Pakistan should also make efforts to increase its exports to China, which were around $1 billion, whereas China offers tremendous opportunities of exports.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistanis full of hope but groaning under economic challenges​*
** Experts say post-election change provides opportunity to redress countrys institutional weaknesses 
* Another military intervention likely if civilian govt fails to deliver​*
By Khalid Hasan

WASHINGTON: Speakers at a discussion on post-election Pakistan were one in stating that while the popular mood in Pakistan was one of optimism, sharply rising prices of essential commodities of daily use had left the new government facing its biggest challenge.

They also agreed that the performance in office of elected politicians will be judged and scrutinised by those who sent them there and disillusionment would be swift if they failed to deliver what was expected of them, namely good government, security, good law and order and basic necessities that could not be done without. If the civilian government let the people down, Pakistan could slide back into the old musical chairs routine of civilian/military rule.

The discussion, moderated by Teresita Schaffer at the Centre for Strategic and International Studies (CSIS) featured Rick Barton and Karin von Hippel of the CSIS, Glenn Cowan of Democracy International and Brian Katulis of the Centre for American Progress. All speakers had had the opportunity to pay several visits to Pakistan to study the situation.

Change: In her introductory remarks, Schaffer, who heads the South Asia programme at the CSIS, said the change in Pakistan provides an opportunity to redress institutional weaknesses and effectively deal with both internal and external insurgencies that threaten the life of the nation. She said those elected wished to distance themselves from the United States because they saw the war on terrorism as not their but Americas war. Pakistans problems had been made worse by US policy assumptions. She hoped that these challenges would be addressed by both sides successfully.

Cowan said he had found no political will in Pakistan on the part of those in charge to undertake reform. Everything, it was being assumed, was fine till the next elections, when it was not so. He called the Pakistani political parties undemocratic and operating under a system that was feudal. Only candidates who could pay their way were awarded party tickets to run for public office. Campaign spending was uncontrolled and went unreported. The parties could not thus be said to represent the will of the people. He said that only the Muttahida Qaumi Movement (MQM) practised internal party democracy. He was of the view that Pakistan would remain in turmoil unless these shortcomings were addressed.

Katulis, who made three trips to Pakistan in five months, said what Pakistan had today was a historic window of opportunity. While there had been irregularities during the February elections, the people wanted to move beyond them. President Pervez Musharrafs continued presence posed a problem. He felt that what Pakistan has today is a fractured National Assembly and a hung parliament. The national landscape itself is fractured. The politicians appear to have no appetite for electoral reform. The constitutional deviations and imbalances Pakistan has suffered also need to be corrected. President Musharrafs future poses a major question. There is no accord on the judges issue. People feel that Pakistan has been made to pay the price for Americas so-called war on terror. The economic difficulties facing the people are huge. Then there is the challenge of dealing with terrorism and extremism. Pakistan also needs to deal with the question of balance of power between the president and the prime minister. 

The international community is also expected by the Pakistani people to come to their aid. In short, he concluded, it is a complicated landscape.
Intervention: Hyman said there is a feeling of hope in Pakistan today and a sense of optimism. Support for democracy is to be found from one end of the country to another. The question is: Can the government perform and deliver? If the civilians are unable to do so, chances of another military intervention will remain high. The army, he added, is licking its wounds and had returned to the barracks. It is now or the politicians, who in the past have played footsie with the army to prove their mettle. He said there is support for the chief justice because he stood up for the rule of law. 

People also want a system of checks and balances so that the government in power can be held to account. There are serious structural problems, coupled with economic difficulties. On the face of it, there is no obvious set of politicians that shows the ability to take charge and deal with these issues so that the peoples expectations do not go unfulfilled. If the situation remains un-redressed, then it will be back to military rule in three to four years.
Von Happel, who studied the situation in the Federally Administered Tribal Areas (FATA) during her visits to Pakistan, told the meeting that violence in Pakistan was no longer confined to Waziristan. She said there was popular support for negotiating with the Pakistani component of the militants while isolating the foreigners, reportedly made up of Arabs and Central Asians. Some issues, such as the establishment of Khilafat, were not negotiable, as far as the Taliban were concerned. The present ceasefire had enabled the FATA militants to slip into Afghanistan. 

The Awami National Party was confident that it could deal with the militants, its policy being to come to terms with the locals and flush out the foreigners, something the US was not willing to endorse, but it had taken a back seat for the present. She pointed out that no one was actually able to go into Waziristan and other conflict-prone areas, including, the NWFP police chief. There was a good deal of confusion as to the agenda of the militants. It was also known that some of those operating in those areas were criminals. The effort currently was to drive a wedge between different groups.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan and India set to announce IPI gas transit fee​*
** Expected to agree on 40 cents per mmbtu​*
ISLAMABAD: Pakistan and India are set to announce the gas transit fee within a week for the transmission of gas to India under the billion dollar Iran-Pakistan-India (IPI) gas pipeline project, sources told Daily Times on Wednesday.

The sources said that Pakistan and India are expected to agree on 40 cents per million British thermal units (MMBTU) as the gas transit fee. If both countries agree to this rate, Pakistan would receive around $148 million per annum from India in transit fee.

If international norms applicable to gas transit fees are adhered to, the transit fee under the IPI deal will amount to $180 million per annum. But the two countries are expected to sign the agreement at the lower rate, the sources said. 

India sought Pakistans agreement on a transit fee lower than international standards in talks between two sides on April 25 in Islamabad. The Pakistani side had argued for a transit fee corresponding to international norms, but agreed to fixing the transit fee a little lower than international standards for the sake of inking a deal it termed as a peace pipeline between Pakistan and India.

Sources also said that India wants Pakistan to fix the transit fee for the lifetime of the project, without any further revisions to the transit fee. However, Pakistan is of the view that the mechanism for determining the transit fee should be linked to the international gas sales price, and that the transit fee should also be open to revision according to variations in the gas price charged by Iran.

The sources said there had never been an agreement anywhere in the world where a transit fee was fixed and did not allow for revisions. International norms require revisions in transit fees as the gas price is revised by gas exporting countries, they added. 

The sources also said transportation charges would be determined after the project feasibility report was finalised, and that a company would be set up to implement the project and ensure its security according to a mutually agreed framework.

Meanwhile, Pakistan and Iran have agreed on the draft of the Gas Sales Purchase Agreement (GSPA) for the IPI project, and both sides are ready to sign on it. The Cabinet Economic Co-ordination Committee (ECC) has also received of the copy of the GSPA draft, the sources said.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Senate question hour : Govt working on generating 2,200MW on emergency basis​*
** Water and Power minister says govt working on emergency short and long-term strategies to overcome power crisis​*
ISLAMABAD: The country is facing a power deficit of more than 3,000MW and the elected government is chalking out short and long-term strategies to overcome the crisis, including arrangements to generate 2,200MW on an emergency basis, Water and Power Minister Raja Pervez Ashraf told the Upper House during the Senate question hour on Wednesday.

Responding to queries from senators on the power crisis, Ashraf said: The country has been facing a power crisis for the last two years due to the gap in supply and demand. Presently there is an over 3,000MW shortfall in the system. Both short term and long term planning is being done to overcome this crisis. 

Ashraf said arrangements were being made to generate 2,200MW on an emergency basis. He said 500MW power had been generated by enhancing the capacity of various existing units. Besides this, the government is also working on saving power by controlling pilferages, he added. 

Long-term plans include the private and public sector generating 3,000 megawatts each, and the government is also looking into alternate energy resources to respond to the situation, he said. 

To minimise load shedding and ensure continuous power supply, Ashraf said the PEPCO had initiated immediate crisis management, and a high-level Load Management Commission has been set up to oversee the load management programme. 

About the construction of hydropower projects, Ashraf said the government had allocated over Rs 2.8 billion for the construction of the Kurram Tangi Dam, and Rs 847 million of this amount had been released to WAPDA. The construction work has not started yet. It will take four years to complete after it starts, he added. 

In a written response to a question from Senator Raza Muhammad Raza, Ashraf informed the House that the contract of the Gomal Zam Dam project had been re-awarded and that 18.6 percent of the work on the dam had been completed so far.

The Frontier Works Organisation is responsible for the designing and execution of works through their sub-contractors M/s Sino-hydro Corporation for the dam and hydropower component, and M/s Tekser for the Irrigation component, he elaborated. To a supplementary question, Ashraf said that work on the Gomal Zam Dam had been restarted after a significant delay.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Plan to set up thermal power plants rejected ​* 
ISLAMABAD (May 01 2008): The government on Wednesday rejected water and power ministry's plan for establishing two thermal power plants that is believed to be a serious setback to the ministry's efforts for generating thermal power through public sector funding.

The water and power ministry plan was rejected at the Central Development Working Party (CDWP) meeting held here with Planning Commission Deputy Chairman Dr Akram Sheikh in the chair, said Planning Commission spokesman Muhammad Asif Sheikh.

The ministry had sought a funding of Rs 5.77 billion from the Public Sector Development Programme (PSDP) allocation for establishing combined cycle power plants in Faisalabad district and Dadu district.

The drive of establishing thermal power plants in public sector was launched by the water and power ministry amid signs that private investors are not coming forward to invest heavily in thermal power generation. "We have asked water and power authorities to look for investors from the private sector. The government will not release any fund from the PSDP," said the spokesman.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Textile sector to provide 200 megawatts of power if KESC pays for fuel ​* 
ISLAMABAD (May 01 2008): The textile sector having own captive power plants has shown willingness to provide 150-200MW to Karachi city if KESC pays for fuel. It was decided in a meeting recently held in Karachi headed by the Chief Secretary of Sindh, Fazul-ur Rehman, which was attended by the textile industrialists and the KESC representatives.

Sources disclosed that the textile sector was already supplying 200MW to Punjab through Wapda grid. "The sector has 400MW surplus self-generated electricity whereas KESC is suffering from a shortfall of 500MW," sources said.

"So, it has been decided to supply electricity to KESC with a condition that fuel will be paid by it. KESC will have to pay at the rate of Rs 1.40 per unit and the gas charges will be paid by KESC itself," they confirmed it to this scribe.

The textile industries have their own captive power plants dependent on furnace oil or gas as input. "A single power plant has a capacity to generate 50MW. Sources said that basically this proposal was floated by the former prime minister Shaukat Aziz who had given the textile industrialists the idea of selling extra electricity produced through captive power plants.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Chinese urged to relocate industries to Pakistan ​* 
Friday, May 02, 2008

LAHORE: Globalisation has provided Chinese investors with a golden opportunity to relocate their large-scale industries to Pakistan to reap the benefits of its most conducive business policies as compared to other regional countries.

This was the gist of speeches made by Provincial Food Minister Malik Nadeem Kamran and Lahore Chamber of Commerce and Industry President Mohammad Ali Mian to a 14-member Chinese delegation, led by Shenzen Chamber of International Commerce President He Xuewen.

The Chinese team comprised representatives of real estate developers, construction companies, computer hardware trading, investment consultants as well as high-ranking government officers.

In his speech, Shenzen Chamber President He Xuewen said the delegation was visiting Pakistan for having first-hand knowledge about available business opportunities and hoped in the coming days the trade between Pakistan and China would touch new heights.

He said Shenzen being the fourth best-performing economy with a 15 per cent annual growth rate had a huge business potential for Pakistani entrepreneurs, adding Shenzen had 300,000 business entities that were busy in all types of businesses and this makes a very strong point for the LCCI to arrange a visit to Shenzen.

The provincial minister, who was representing both Pakistan Muslim League (N) President Shahbaz Sharif and Punjab Chief Minister Sardar Dost Mohammad Khosa, said the government would extend maximum facilitation to Chinese investors for setting up industries in Punjab.

He said the Punjab government was ready to develop a consultancy exchange programme with Shenzen for the development of industrial infrastructure, hi-tech agricultural parks, logistics and transport, branding strategies and promotion of IT industry. LCCI President Mohammad Ali Mian informed the delegation that the February 18 elections and the consequent formation of democratic governments at the federal and provincial levels had sent strong positive signals to the outer world and a large number of foreign investors are now planning to shift their businesses to Pakistan.

He said Pakistan is strategically located providing the shortest route for China to the Middle East, Africa and Europe. As per available figures, he said, 10,000 industries were relocating per annum in China and Pakistan could be a lucrative location for many of these industries.

He said the trade between Pakistan and China through proper channel increased from US$1,489 million in 2004-05 to $2,956 million in 2006-07, a rise of around 100 per cent over a period of three years. The volume of trade is expected to jump to $15 billion over the next five years as a result of a free trade agreement between the two sides.

Chinese urged to relocate industries to Pakistan


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## Neo

*Phenomenal decline of computer industry in Pakistan ​* 
Friday, May 02, 2008

The computer industry has assumed unprecedented importance in the global economic arena and it is regarded as the fourth pillar of economy. In Pakistan, the private sector has been contributing as the main driver for growth in this industry from the last so many years. Its a fact that the importance of the industry has always been acknowledged at the official level and the government(s) has also expressed a strong resolve to take steps for the promotion of the industry but the ground realities are depicting the picture otherwise. One of the harsh ground realities is that the Personal Computer density in Pakistan is 1.5, which compares unfavourably with other countries of the Asia-Pacific region. We often talk about how to compete with these countries and what needs to be done to enhance computer density as the computer density co-relates to several other parameters of development it is necessary that steps be taken to improve the PC penetration and thereby bridge the digital divide.

A recent report is quite alarming in regard with Pakistans PC/server market as it shows that the market has experienced a slowdown in 2007 with its annual growth rate declining to 9.6 per cent from 16.4 per cent recorded during the previous year. The latest data in this regard released by Springboard Research, a leading innovator in the IT market industry, says that Pakistan registered 629,836 unit shipments of PCs and servers in 2007. For the last reported period, Q4 2007, the market grew 11 per cent YTY with 148,613 PC and server unit shipments.

While we make comparison with the growth of the IT and computer industry in other countries of the region, a serious question arises that why we are not on a par with them when the private sector is striving hard to promote this vital sector of the economy and the government has also declared the promotion of the sector one of its top-most priority. To answer this question we need to have a comparative look at the state of affairs and the actual role and incentives provided by governments concerned to their IT industry. Turkey has exempted its computer industry from GST, import duty and corporate income tax while it has allowed personal income tax for 10 years. Vietnam has given the industry exemption from GST and import duty besides 4 years exemption from corporate income tax and relaxation in personal income tax ranging from 3 to 35 per cent. Thailand and Malaysia have also offered a similar sort of incentives to their industry which is being translated into steady growth of this sector in the above-mentioned countries.

Despite the poor computer density in Pakistan, the private sector has made huge efforts to streamline the sector which is the backbone of the national economy as well all other sectors of the economy. 

As a result of this hard work Pakistan has achieved a certain level of success over the years, but the sudden slowdown has created a panic in the market which needs to be addressed without further delay and the government ought to come forward and rescue this ailing sector and to reinitiate the progress and growth of the sector.

The Competitiveness Support Fund (CSF), a partner institute of the World Economic Forum (WEF) in Pakistan, has recently issued WEF Global Information Technology Report 2007-2008, which ranks Pakistan 89th out of 127 countries in terms of nations preparedness to effectively promote business, improve investment climate and develop infrastructure. Pakistan was ranked 84 in the previous year and report shows a five-point decline just in one year. The report also suggested that a coherent government vision on information and communication technologies, coupled with an early focus on education are keys to spur network readiness and to lay the foundations for sustainable growth. The contents of the report ought to be an eye-opener for the decision-makers, especially with regard to policies related to IT and computer industry.

While revisiting to the report of Springboard Research, we find some interesting comments regarding the computer industry of Pakistan. The reports says that Pakistans IT market is in between a growth and decline stage, where the countrys political stability will play a major role in overall market performance. The report also says that before the imposition of the 15 per cent GST in June 2006, Pakistans PC/server market was a diamond in the rough, but since then, a downward trend in the IT market has been noticed. The governments recent decision not to withdraw or reduce the GST has weakened the growing IT market in the country, as well as decreased the confidence of the private investor.

The reports and data available suggest that the introduction of the 15 per cent sales tax in the financial year 2006-07 increased the price of computers which increased the cost of doing business. The average price of PC reported by local assemblers and retailers increased up to 20 per cent. This is one of the factors which have negatively impacted the growth of the IT sector as evident by export figures for the first six months of the financial year 2007-08. If the value of exports for the first six months is extrapolated to the full year it would be 149.37 million, which is a growth of 28.7 per cent over the previous year. This is well below the growth registered in previous years. 

Though the previous governments could not comprehend the effects of a slowdown of the computer industry in Pakistan, it is heartening to note that the Economic Coordination Committee of the Cabinet considered the Ministry of Information Technology Summary sent in February last that recommends that certain relief steps ought to be taken to save the computer industry of the country. It is worth mentioning here that in the IT policy approved by the Cabinet in the year 2000 comprised various incentives to promote the IT sector of the country. Initially these steps made a positive impact on the domestic growth as well as IT exports, but the derailing and reversing of the policy has resulted in huge damage for the industry as well as the interests of the computer-literate community in the country, which needs to be strengthened instead of discouragement. The computer industry is still optimistic that sanity will finally prevail at the decision-making level and Pakistan will again be on the path of growth and progress of this vital sector. 

The writer is the founding president of the Pakistan Computer Association, a representative body of the computer industry in Pakistan. e-mail: info@pakcomputerassociation.com

Phenomenal decline of computer industry in Pakistan


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## Neo

*$4bn peace plan for NWFP​*
PESHAWAR, May 1: Chief Minister of NWFP Ameer Haider Khan Hoti will unveil a $4 billion peace plan that envisages a 30 per cent reduction in militancy within three years, retrieval of the areas lost to militants and improvement in the writ of the state, according to a document obtained by Dawn.

The plan, put together by a task force of the Awami National Party, envisions a peace jirga comprising provincial ministers and legislators.

The government has set up a peace committee for Malakand to restore peace in Swat but the plan proposes a larger jirga with its terms of reference outlined.

Sources said the chief minister would unveil the plan in the NWFP assembly, to be convened soon.

The speech will outline the objectives of the plan  reducing the level of insurgency in the province by 30 per cent within three years, including attacks on security forces and suicide and roadside bombings, reclaiming areas lost to militants and strengthening the writ of the state.

It envisages an increase in the number of police personnel by 8,000 men and Frontier Constabulary by 6,000.

It seeks reforms in police, revival of executive magistracy, support for the recently-established regional coordinating officers and 10 Regional Peace Conferences of Ulema.

A member of the task force said a donors conference would be convened to finance the peace plan.

He said some countries had already shown interest in financing the plan.

There is a great deal of interest. The Saudis, Americans, European Union, Scandinavians and Chinese have all shown interest in the peace plan, said Khalid Aziz who played a key role in drafting the plan.

Mr Aziz, a former chief secretary and head of the Regional Institute of Policy Research and Training, is a member of the task force co-chaired by ANPs Afrasiab Khattak and another retired civil servant, Humayoun Khan.

It includes MNA Bushra Gohar, academician Ijaz Khan, Mohammad Raza Khan, Bacha Khan Education Trust chief Zubaida Khatoon and Ijaz Anwar, a chartered accountant.

The plan provides for creation of a permanent Provincial Peace Board to oversee, review, discuss, analyse and recommend actions to restore peace.

The eight-page document calls for setting up a board to help implement a media strategy in communities and social circles and work towards improving the monitoring and communication network.

It includes the setting up of 1,000 community FM radio stations.

It also provides for creation of a board for legal and institutional changes to suggest reforms to address the larger issue of delivery of justice not only through institutional reforms but also by developing an alternative dispute resolution system.

It includes a plan for the capacity building of police and Frontier Constabulary and training and raising their strength.

A social, economic and psychological rehabilitation programme for 12,000 militants is also planned.

The plan proposes a Provincial Livelihood Programme to develop income-generation strategy.

It calls for introduction of social sector reforms, including syllabus reforms and a health insurance scheme.

It provides for generation of employment through a labour-intensive infrastructure development programme, setting up corporations in fruit, vegetables, agriculture and livestock sectors and re-establishment of the Industrial Investment and Revival Corporation.

It includes a Rs600 million Rural Mobilisation Endowment Fund, formation of 5,000 village peace committees, micro-credit schemes at the community level and skill development projects in 500 seminaries.

The peace plan envisages creation of 7,000 jobs annually for the three-year period and 10,000 daily-wage jobs annually through public works.

It calls for closer coordination and a mechanism for institutional support among various state organs involved in security cover, including the military, Frontier Corps, Frontier Constabulary and police.

Mr Aziz , however, acknowledged that the NWFP did not have the capacity to implement such an all-encompassing plan.

At present, the province has the capacity to spend and utilise up to $800 million, according to available record.

The government will have to hire people from private sector to increase its capacity and spend the money through communities to achieve the desired results, said Mr Aziz.

He underlined the need for taking a holistic view of the situation in the NWFP in terms of the situation in Afghanistan and the tribal region.

You cannot view the situation in the NWFP in isolation, he said, adding that the success of the plan would also depend on the overall political and economic reform package for the Federally Administered Tribal Areas and the revival, strengthening and integration of the Pakistan-Afghan Peace Jirga.

Commenting on the peace plan, Chief Minister Hoti told Dawn: The international community needs to understand that instead of firing a multi-million dollar missile that causes collateral damage it is better to invest that money to improve the lives of the people. They need to send out a powerful message to the people that this whole war on terror is not just about killing, its also about changing their lives for the better.He was optimistic that international donors would respond to his call for contributing to the plan.

He said he had told the British foreign minister that the international community needed to invest in education, health and drinking water projects to improve the lives of the people.

I was told by a western diplomat that the bureaucracy in their country was like a slow-moving elephant and I told them that the elephant needs to run a bit faster now. We need help and its urgent.

$4bn peace plan for NWFP -DAWN - Top Stories; May 02, 2008


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## Neo

*Power shortage rises to 3,000MW​*
LAHORE, May 1: Power shortage in the country increased to 3,000 megawatts on Thursday as supply dropped to about 11,500MW against a demand of 14,500MW.

Officials of the Pakistan Electric Power Company (Pepco) attributed the shortage to a substantial drop in hydel generation. They said the hydel source last year had contributed over 5,000MW for 20 hours a day. Its contribution declined to 3,500MW on Thursday and that too only for five hours, they added.

Pepco is surviving on independent power producers (IPPs) and its own thermal generation for almost 20 hours and concentrating all hydel generation during the peak hours -- 6pm to 10pm, the officials said.

Giving details about Thursdays generation, Tahir Basharat Cheema, director general of Pepco for energy conservation, said IPPs generated 4,800MW, companys own thermal units a record 3,130MW, hydel source 3,500MW and rental units 130MW. The total generation was 11,560MW against the demand of 14,560MW.

The water level in Tarbela Dam is around 60 feet below last years level. For power generation, the height counts more than the quantity of water.

The drop in water height had cost Pepco dearly, bringing the generation from 5,000MW for 20 hours to 3,500 for five hours, Mr Cheema said.

These are 24-hour average figures, said an official of the power wing of Wapda. The situation kept both improving and worsening, he said, adding that the fluctuation generated conflicting reports in the media.

The media picture depends on a particular point of time which forms the benchmark; at one point of time during the peak hours, the deficit may go up to 3,500MW or even more for a few minutes before returning to normal shortage.

If one takes that peak as a reference point, the picture may change drastically. Otherwise, the entire generation and distribution is computerised and could be calculated to the last units, he said.

There was no denying that the country was facing its worst energy crisis, but the company could hardly cheat on figures beyond a point, he added.

Power shortage rises to 3,000MW -DAWN - Top Stories; May 02, 2008


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## Neo

*Shortages boost food inflation to 10.3pc: ADB​*
ISLAMABAD, May 1: The Asian Development Bank (ADB) has said that Pakistans imports are increasing in 2007-08 because of higher international oil prices and rising demand for raw material for industrial use.

With the expectation of a moderate expansion in global trade and a slowdown in US economy, export growth is expected to remain contained in the face of an increased competition in global textile markets and a continued lack of diversification of both export commodities and markets, it further stated.

FY2008 is thus likely to see the trade deficit deteriorate to 7.1pc of the GDP, and the current account deficit would remain high at 5.5pc of the GDP, says banks South Asian economic report also made available to Dawn.

It also said that continuation of tight monetary policy, high international oil prices, and slow export growth are expected to curb GDP growth to 6.5pc in 2007-08.

It said expansionary fiscal policy is expected to continue during the current financial year, with a large increase in spending on development and relief measures announced in the federal budget.

Public sector development expenditures, including expenditure on rehabilitation of earthquake affected areas, are projected to increase by 19.9pc from the FY2007 level.

After a slight reduction in the pace of expansion in FY2006, Pakistans economy posted a robust and broad-based growth in FY2007, expanding 7.0pc.

The momentum of growth is expected to continue into FY2008 in the wake of budgetary measures aimed at supporting productivity in the agriculture sector and boosting investment in the manufacturing sector.

Strong aggregate demand in recent years has catalysed growth in Pakistan, but has also generated inflationary pressures.

Inflation peaked at 9.3pc during FY2005, but declined only marginally to 7.8pc in FY2007 from 7.9pc in FY2006.

Measures taken by the central bank during the first half of FY2007 (tightening monetary conditions) led to control of overall core inflation. However, shortages of some essential food items, such as rice, edible oil, meat, pulses, milk and fresh vegetables  notwithstanding the overall strong recovery of the agriculture sector  boosted inflation of food to 10.3pc in FY2007.

Food prices increased further to 10.7pc in October 2007. Overall inflation, however, continued a gradual decline to 7.5pc due mainly to reduced inflation for non-food items and maintenance of tight monetary conditions.

Notwithstanding the tight monetary policy, fiscal policy continued to be expansionary.

Total public expenditure in FY2007, at Rs1,675bn, was 19.5pc higher than the previous year.

Actual development expenditure in FY2007, at Rs434bn, also was higher (18.9pc) than development expenditure the previous year.

Despite strong revenue performance, the fiscal deficit as a percentage of GDP rose to 4.3pc in FY2007.

The remarkable increase (around 20pc) in revenue collection the same year did not prevent tax revenue as percentage of the GDP from falling slightly to 10.5pc in FY2007 from 10.6pc in FY2006.

Import growth decelerated sharply to 7.9pc in FY2007 from 33.3pc the preceding year, a result of the reduced demand for consumer goods and industrial inputs, as well as softening of international oil prices during the first half of the fiscal year.

Shortages boost food inflation to 10.3pc: ADB -DAWN - Business; May 02, 2008


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## Neo

*Structural reforms needed to hedge against inflation​*
KARACHI: The inflationary trends in the prices of essential commodities are set to rise further, thanks to the latest increase in domestic oil prices; however, economists underlined the need for bringing in major structural changes in the economy to safeguard the common man from the salvo of rising inflation.

Though, they admit that domestic price hike is linked with soaring prices of crude petroleum in the global market, they believed that some way out has to be found as a safety valve against the imported component of inflation.

Stressing for continuing with the subsidies on oil products to domestic consumers, economists called for exploring avenues to finance these subsidies, which otherwise, are causing a whooping budget deficit. 

The latest increase in local oil prices was the fourth raise since March 15, when caretaker government raised the prices following a cap on domestic oil products for more than one year despite surging world oil prices. The March CPI rose by 14.12 percent because of high inflation, which registered 20 percent growth because of higher food and oil prices. This was the highest CPI rise country has witnessed in the last thirteen years. 

Though, electricity and petroleum products have a weight of 6.4 percent in the CPI basket, analysts said that it has a spiraling impact on the prices of transport, leading to food inflation. 

Economists painted further gloomy picture as far as the April inflation data is concerned because it would be having the impact the upward revision in the oil prices in March, which could not be seen in inflation of that month. 

Dr Kaisar Bangali, a well-known economist, thinks that government should come up with a short-term relief strategy for the common man, however a long-term policy is needed to cope with the pressing challenges to economy.

Advocating the subsidy on domestic oil prices to provide relief to masses, he however stated that avenues should be explored to finance these subsidies. The parameters on which economy was run in the past need changes and a whole range of structural reforms are required to sustain the economic growth as well as to bring about a real change in quality of life of the common man, he emphasised.

Dr Asad Sayeed, renowned economist, said that high petroleum prices burden is either being borne by government or masses, however the oil marketing companies are making the windfall profits in this situation. These companies are enjoying high profit margins, which needs to be reviewed in order to provide relief to the people, he said.

When asked how the people could be hedged from high inflation, Dr Sayeed said that it would definitely be done through raise in the salaries and wages. Government already increased minimum wage and must come with more such measures so that the people, especially poor strata of the society could be safeguarded against these shocks, he contended.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan to import 3m lint bales amid low production ​*
KARACHI: An expected shortfall in cotton production is likely to fuel jump in imports from India, USA and other prime cotton producing countries this year. 

We expect to import around 3 million bales of various qualities amounting to $46.5 billion till end this year Director on Board of Karachi Cotton Association (KCA), exporter, importer and ginner, Ghulam Rabbani said on Thursday.

He said countrys demand for raw cotton has gone up to around 15 million bales (of 175 kg each), while the production this year, due to short supply of water and pesticides besides use of un-certified seed is expected to be 12 million bales.

Rabbani said, in last crop season 2007-08, the country achieved only 11.8 million bales against a target of 14.14 million cotton bales. Textile and spinning sector has to bear load of the imports.

We are expecting a shortfall of more than three million bales, unlike Pakistan, India is expecting a better cotton crop led in part by an increase in cultivation of genetically modified cotton and a rise in the acreage.

He said among the leading producers of cotton, India is seen as an emerging force in the global market as production continues to outpace domestic demand. 

A lot of cotton is already being imported from USA as it is of good quality. At current price levels, importing Indian and US cotton is not a viable proposition. 

Currently, US lint is available around 82 cents per pound while Indian cotton is available for about 79 cents per pound.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Sugar and textile mills can produce 2,500MW electricity​*
LAHORE: The country can overcome electricity shortfall by getting 2,500MW from the sugar and textile mills, which they are ready to provide to the power supplying companies, the industry sources said.

An industrialist said, the sugar and textile mills can produce at least 2,500MW of electricity. The current shortfall is estimated at around 3,000MW, and if both sectors provide electricity then the shortfall would be narrowed.

The source told Daily Times here on Tuesday that the government has evolved a policy for the sugar mills to produce electricity and currently it is receiving 22MW from two sugar mills. If the tariff issue is resolved and the sugar millers are facilitated then around 2,000MW can be produced in one to two years.

Textile sector has also shown willingness for providing around 200MW to Karachi Electricity Supply Company (KESC) if it pays for fuel.

The source said, though the policy for buying electricity from sugar mills has been established but yet it needs implementation.

The sugar millers have to replace their ordinary boilers with pressure boilers. In sugar industry, electricity would be produced adding bagasse (sugarcane waist) with coal.

Pakistan Sugar Mills Association (PSMA) Vice Chairman, Iskandar M Khan, said that the government made policy of buying electricity from PSMA and now only tariff issue is impeding the electricity production. He said that sugar mills are self sufficient in electricity generation and If the government provides us with sufficient finance then the current power shortage would end in one year, There are around 84 sugar mills in the country and at least 74 are in operation. Each mill can produce around 20 to 25MW of electricity, he added.

Faisalabad Electricity Supply Corporation (FESCO) and Peshawar Electricity Supply Corporation (PESCO) signed agreements with two sugar mills for providing electricity.

FESCO is taking 7MW from Skaharganj Sugar Mill at the rate of Rs 5.14 per Kilowatt- hour. PESCO signed agreement with Almoiz Sugam Mills and would buy 15MW at the rate of Rs 4.88.

Reportedly, PEPCO Managing Director, Munawar Baseer, has said that the country would follow suit with other Asian developing countries where bagasee-based generation already contributes to five to six percent of their energy resources.

India has a vision of approaching 9,000MW of power generation through baggase by the year 2017.

The textile industry sources said that the mills are already providing around 200MW and still they have a capacity of producing 400MW. They claimed that the cost of the electricity production by the textile mills would be less than that of Independent Power Producers.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan one of top favourable economies: World Bank ​* 
ISLAMABAD (May 02 2008): Pakistan has been ranked as one of the top favourable economies in the world in terms of economic performance states "Doing Business 2008", a recent report released by the World Bank said.

According to the report, Pakistan is at the second place compared to other South Asian countries based on certain economic indicators such as; ease of doing business, dealing with licenses, and protecting investors as identified by the analysts. The other countries include Sri Lanka, Bangladesh and Nepal. Pakistan has comparatively better business environment in terms of paying taxes and registration of assets, the report added.

The report evaluates business activities based on regulations affecting the 10 stages of a business's life; starting a business, dealing with licenses, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business. It is pertinent to note that in the overall global rating of 178 countries, Pakistan is rated at 76th as compared to India rated at 120th.

With its fast paced IT industry, Pakistan is emerging as a powerhouse in the South Asian region due to the government's friendly policies. These include 100 percent foreign equity ownership, 100 percent repatriation of profits for foreign investors and tax exemption for the sector till 2013.

The availability of a large pool of English-proficient skilled professionals, affordable connectivity rates and competitive infrastructure and operational costs are some of the other benefits that Pakistan enjoys. Due to the same factors, an increased number of foreign IT companies prefer Pakistan for their outsourcing operations and setting up development centers.

'Doing Business 2008' is the fifth in a series of annual reports that evaluates the regulations that directly impact economic growth provides objective measures of business regulations and their enforcement. The data is collected across 178 countries and selected cities at the sub-national and regional level.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*IRO-2002 repealed, minimum wage fixed at Rs 6,000 ​* 
ISLAMABAD (May 02 2008): A special incentive package was prepared for the labourers welfare, fixing minimum wage at Rs 6,000, announced by Labour, Manpower and Overseas Pakistanis Minister Syed Khurshid Shah on the occasion of May Day at the Convention Centre here on Thursday.

The previously minimum wage was Rs 4,600, which was not even sufficient to buy two times meal. The package also contains 33 percent increase in workers pension. Khurshid Shah said that 80,000 new housing units would be constructed for the labour class, adding the Punjab government will give ownership rights to the low-paid employees living in government quarters.

Trade unions leaders of industrial units especially those privatised by the successive governments in the past demanded of the government that some workers were terminated without golden handshake as their cases were not processed properly depriving them of their rights.

After listening to the grievances of trade unions leaders, Prime Minister Syed Yousuf Raza Gilani had formed a Committee comprising Labour Minister Syed Khurshid Shah, Leader of the House in Senate Raza Rabbani and former MNA Chaudhry Manzoor Hussain. The Committee drafted the package taking into account the genuine grievances of the workers on case to case basis and submitted its recommendations to the Prime Minister.

The Prime Minister after detailed review approved the package on April 30 as a gift to labourers, who had been facing hardships for such a long time. The package will also help in rehabilitating workers laid off from industrial units without proper service benefits.

Khurshid Shah said that Services Special Powers Ordinance, 2002, would also be repealed, which gives unlimited powers to the owners to hire or fire any employee without mentioning specific offence committed by him. The package also encompasses rehabilitation of workers, who were handicapped in performance of their duties and will help in modifying old-age benefit scheme.

APP ADDS: Announcing more attractive packages for labour class, the minister said that government has decided to repeal IRO-2002 Ordinance and would restore the relevant clauses of IRO-1969 to create conformity for friendly industrial relations.

"It is not just an announcement, but a reality to modify all Labour Laws according to the ratified International Labour Organisation conventions to safeguard the interests of workers," Shah said.

Minister for Information and Broadcasting Sherry Rehman, Senator Dr Akbar Khawaja, Secretary Labour and Manpower Malik Asif Hayat and PPP leaders Nayyer Hussain Bukhari, Manzoor Hussain, Dr Israr Ahmed, Qazi Sultan Mehmood and a large number of union leaders and workers were also present.

The government wants to eliminate discrepancies among regular and contractual workers, the minister said adding that PPP government was against "contractual employment".

The minister also announced to increase minimum pension from Rs1,500 to Rs2,000. Under Workers Welfare Fund (WWF), he said the marriage grant for workers' children, would be given now without holding any `lucky draw' to facilitating every one. Earlier the grant was given only to the winner of lucky draws. He said that workers profit funds of Rs18,400 paid previously to a worker in a year has been enhanced to Rs24,000.

Khurshid Shah said the government would set up hospitals in every city for providing medical facilities to the industrial workers. Besides, schools would also be established in those districts where large number of workers are living.

However, he said that all high schools being run under the worker welfare fund would be upgraded to the level of higher secondary schools.

The minister said that the government is also actively working to repeal the section 27/2-B under which a ban on banking unions was imposed. A special committee has already been formed in this regard, he added.

He paid rich tribute to the leadership qualities of the two former prime ministers Shaheed Zulfiqar Ali Bhutto and his daughter Shaheed Mohtarama Benazir Bhutto.

Zulfiqar Ali Bhutto was the first who announced to celebrate May 1 with work force, he added. "I am among one of you and as a worker of PPP and citizen of Pakistan, it is my promise that I would live and die with you," he said.

Earlier, the Minister also attended another seminar at Aabpara Community Centre and criticised the previous government for the ongoing wheat and power crisis. The Minister said that use of cell phones by a large number of people does not mean that the country was on the path of development. "We are committed to overcome these crises, but we need some time and the people have to cooperate with us," he said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Relocation of big industries: Chinese investors briefed about government incentives, facilities ​* 
LAHORE (May 02 2008): The globalisation has provided Chinese investors a golden opportunity to relocate their large scale industries to Pakistan to reap the benefits of its most conducive business policies as compared to other regional countries. As per available figures as many as 10,000 industries are relocating per annum in China.

This was the consensus of the speeches made by Provincial Minister for Food Malik Nadeem Kamran and Lahore Chamber of Commerce and Industry (LCCI) President Mohammad Ali Mian while addressing a 14-member potential Chinese delegation, led by President of Shenzen Chamber of International Commerce He Xuewen. LCCI Senior Vice-President Mian Muzaffar Ali, Vice-President Shafqat Saeed Piracha also spoke on the occasion.

The Chinese delegation comprised people from real estate developers, construction companies, computer hardware trading, investment, consultants and high-ranking government officers. The Provincial Minister, who was representing Punjab Chief Minister Sardar Dost Mohammad Khosa, said the government would extend maximum facilitation to the Chinese investors for setting up their industry in Punjab.

He said the government of Punjab was ready to develop consultancy exchange programme with Shenzen for development of industrial infrastructure, high tech agricultural parks, logistics and transport sector, promotion of information technology (IT) industry and development of branding strategies.

LCCI President Mohammad Ali Mian told the delegation that the February 18 elections and the formation of democratic governments at the Federal and provincial levels had sent a positive signal to the outside world with several foreign investors now planning to shift their businesses to Pakistan. He said Pakistan was strategically located, providing shortest route to China for the Middle East, Africa and Europe.

He said the trade between Pakistan and China through proper channel had increased from 1,489 million dollars in 2004-05 to 2,956 million dollars in 2006-07, showing an increase of around 100 percent over a period of three years. The volume of trade between the two countries was expected to increase to 15 billion dollars during the next five years as a result of free trade agreement (FTA) between the two countries, he opined.

Mian said that the balance of trade between the two countries was heavily in favour of China, which required to be turned into a win-win situation for both the countries. Major imports of Pakistan from China include iron, steel products, tyres, tubes, chemical, medical, pharma products, fertilisers, yarn and thread of synthetic fibre, railway vehicles, hand tools and hardware products etc, he added.

Specific areas for investment/joint ventures could be coal mining, power generation, machinery, chemicals, building materials, especially cement production, textiles, synthetic fabrics, electronics, leather, paper and paper products and foodstuffs.

The possibilities of joint ventures for "Halal" meat production for export to the Muslim countries would be one of the most promising propositions for the Chinese investors, he maintained.

The LCCI President said that the government had prepared a special incentive package for the Chinese companies under Special Economic Zone, which offered exemption of customs duties (on import of machinery/equipment) income tax and sales tax to attract foreign investment from China.

Likewise, he added, the government of Punjab had allocated 500 acres of land to China National Power Company Limited in Faisalabad Industrial Estate to establish an industrial area, including 50-megawatt power project. An exclusive Chinese industrial park was also being developed at Lilla on Lahore-Rawalpindi Motorway, he said, adding that 65 acres of land in Sundar Industrial Estate had been earmarked by the government of Punjab for Chinese investors, out of which 44 acres had been allotted to the Chinese investors so far.

The balance of 21 acres was still available for Chinese investors, he added. Pakistan IT industry (PC) was growing at a rate of 12 percent per annum, he said, and added 1.2 million computers were sold in local market, out of which around 50 percent PCs were assembled by local vendors.

"We are of the opinion that Chinese companies should come forward for joint ventures to produce key boards, mouse, power supply and casing in Pakistan," he said, and assured all out cooperation with the Chinese investors.

Speaking on the occasion, President of Shenzen Chamber of International Commerce He Xuewen said that his delegation was visiting Pakistan for having first-hand knowledge about available business opportunities here. He hoped that in the coming days, the trade between Pakistan and China would touch new highs.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*World Bank chalks out plan to promote industrial sector in AJK ​*
MIRPUR (May 02 2008): The World Bank is chalking out a comprehensive plan to promote and encourage collective and mutual potential of private and public sectors for industrial progress and to accelerate business activities in Azad Jammu & Kashmir, official sources said.

The sources told APP here on Thursday that close liaison and interaction between the private and public sectors in the field of industries as well as in small business sector is imperative to promote and gear up business activities in AJK.

The sources observed that it could also help in producing quality goods through the utilisation of the raw material from local areas. The World Bank, the sources indicated, intends to encourage this gesture of close interaction and mutual cooperation between the private sector and public sector institutions in the country including AJK.

It may be added that the industrial and investment potential of AJ&K, backed by a strong and reliable information database for local and foreign investment in AJK specially from lakhs of Kashmiri expatriates, was considered as one of the best areas of cooperation for promotion of industrial development in AJK.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan's forex reserves fall to $12.611 bln*​
KARACHI, May 2 - Pakistan's foreign reserves fell by $41 million to $12.611 billion in the week that ended on April 26, the central bank said on Friday.

Reserves held by the State Bank of Pakistan fell to $10.367 billion from $10.447 billion a week earlier, while those held by commercial banks rose to $2.244 billion from $2.204 billion.

Pakistan's foreign exchange reserves hit an all-time high of $16.486 billion on Oct. 31. 2007, but then fell sharply, partly because of outflows from the stock market after President Pervez Musharraf imposed emergency rule on Nov. 3.

The emergency was lifted on Dec. 15, but foreign investors remained cautious after the assassination of former prime minister Benazir Bhutto on Dec. 27.

On Friday, the rupee closed at a record low of 64.90/95 to the dollar, breaching the previous closing low of 64.66/70 on April 25. See [ID:nISL94596].

Pakistan's forex reserves fall to &#36;12.611 bln - Yahoo! Singapore News


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## Neo

*Rupee falls to lowest level against dollar ​* 
Saturday, May 03, 2008

KARACHI: Panic continued to surround interbank market on Friday as rupee ended at lowest closing ever against US dollar on the back of escalating demand.

The national currency was being traded slightly below Rs65 against the greenback when the market closed on Friday.

The measures adopted by State Bank of Pakistan (SBP) in the beginning of outgoing week to curb speculation and ease depreciation in the value of rupee against greenback seem to be ineffective, analysts said.

Widening trade gap, global oil price hike, low inflow of foreign investment due to ongoing uncertain political situation and annual June payments are simply causing dollar inflows to dry up, leaving the market with only one way to go -down, a prominent forex trader Malik Bostan said.

He said high demand for dollar in interbank market compared to supply was creating panic in interbank market.

The country was expecting to receive home remittances worth $6 billion, $3 billion in the form of foreign investment and $3 billion through privatisation proceeds besides of remittance of one billion dollar by foreign exchange companies. However, foreign investors are shy to land Pakistan amid unstable political situation, whereas international lenders are also not extending a welcome hand in the prevailing world financial crunch.

The rupee commenced new days trading against dollar at Rs64.54. The dollar further stabilised its position to Rs64.92 till closure of the market. 

In the open market too rupee remained under pressure against US dollar on another demand packed day of the week. Till late evening, dollar was buying at Rs65.70 and selling at Rs65.90 respectively. 

On the international desks, dollars recovery due to another rate cut by the US Federal Reserve Bank also put technical pressure on rupee.

Rupee falls to lowest level against dollar


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## Neo

*Gulf states to heavily invest in agri, dairy ​* 
Saturday, May 03, 2008

KARACHI: The countrys agriculture and dairy sectors are looking forward to the inflow of precious foreign investment worth hundreds of millions of dollars as a number of Gulf states and multinational companies have announced at the Middle East-Pakistan Agriculture and Dairy Investment Forum held in Dubai to invest largely in Pakistan. 

Speaking at the inaugural session of the investment forum recently, the Chairman Abu Zahabi Group, Sheikh Nahayan Mubarak Al Nahayan, announced that his group is planning to set up a sugar mill in Pakistan and would be looking at agri-dairy investments as well. 

Qatari Livestock Company and Abraaj Captial UAE would also invest in dairy farming and value-added dairy products from its $250 million fund for Pakistan. 

Emirates Investment Group has also planned to invest in agri and dairy sector in the country and would announce the detail of its investment plan later on. 

MAP Services Group, UAE in partnership with Gulf Partners has set up Middle-East Food Fund MFFñ Gulfs food production basket. 

MFF will make investments in Pakistan, Egypt and Georgia for food and food related products to be produced for the requirements in the Gulf. 

A major Saudi food company, Al Rabie ñ Saudi Arabia, has also shown interest to source tomato paste, citrus pulp and packed beans from Pakistan. DFID-UK has announced to grant a 25 million pound project for dairy and agriculture infrastructure investment in Punjab. The company would also spell out detail of its plan soon. 

The objective of the forum was to showcase Pakistans dairy and agriculture sector for the Middle East/ Gulf investors and for compatible Pakistani and Gulf business houses to exchange contacts, experiences and network with a view to generating interest in investments and JV opportunities in the sector. 

Pakistan was listed as one of the major emerging markets, placing the country on a list of 25 countries displaying continued moderate to strong growth over a sustained period of time. 

Gulf states to heavily invest in agri, dairy


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## Neo

* SPI hits all-time high at 23.93pc ​* 
Saturday, May 03, 2008

ISLAMABAD: The coalition government seems to have failed in controlling the inflation, which is the main concern of poor and fixed income families suffering the everyday increase in prices of essential food items.

Like the previous government the present set up too seems helpless in controlling the runaway food inflation. For the millions earning barely enough to eat one meal a day there is no difference in the current and previous government. 

The policymakers have not come up with any measure to reign in galloping food prices. This would not only erode reputation of the government but could also spark riots in the country. 

The Federal Bureau of Statistics (FBS) on Friday reported that weekly Sensitive Price Indicator (SPI) inflation year-on-year for 53 daily use kitchen items for week ending on April 30 has increased by an all time high of 23.93 per cent as compared to the corresponding week of the last fiscal. 

Rising food and fuel inflation would have severe social implications on the lives of poor and fixed income families.

The trend of the weekly SPI with base year 2000-2001 during the last 16 weeks as compared to their corresponding weeks of last fiscal shows a steep trend. For the week ending January 17, 2008 SPI stood at 14.46 per cent, January 24 (12.33 per cent), January 31 (12.47 per cent), February 7 (12.04 per cent), February 14 (11.96 per cent), February 21 (11.6 per cent), February 28 (12.16 per cent), March 6 (14.53 per cent), March 13 (15.67 per cent), March 20 (17.03 per cent), March 27 (17.35 per cent), April 3 (19.67 per cent), April 10 (20.83 per cent), April 17 (22.71 per cent), April 24 (23.71 per cent) and now at the week ending on April 30, it stood at 23.93 per cent. For lowest income group earning below Rs3000 per month, SPI registered an increase of 27.06 per cent. For income group Rs3,001 to Rs5,000 SPI stood at 26.51 per cent, for Rs5,000 to Rs12,000 it was at 24.56 per cent and for Rs12,000 and more income earners SPI stood at 21.16 per cent as compared to the same week of the last fiscal. 

According to the SPI bulletin, year-on-year the rise in the prices of some necessities and kitchen items was exorbitant. These items were wheat and wheat flour, rice, fresh milk, potatoes, sugar, gur, tomatoes, vegetable ghee,cooking oil, mustard oil and all type of pulses.

The bulletin on SPI, based on data collected for about 53 items from 17 centres, showed that 23 items registered increase whereas six items showed decline while prices of 24 items remained unchanged. 

However, further analysis of the data revealed that year-on-year basis; several items were dearer by double digits. These include rice IRRI-6 up by 110 per cent, masoor pulse 103 per cent, fresh milk 93 per cent, basmati rice broken 77 per cent, vegetable ghee (loose) 58 per cent, gram pulse 58 per cent, washing soap 34 per cent, bath soap 28 per cent, potatoes 20 per cent, firewood 18 per cent, fresh milk 16 per cent, curd 16 per cent, bananas 14 per cent and tea (prepared) price up by 12 per cent over the corresponding week of last fiscal. Prices of six items decreased, yet compared to the prices of corresponding week of last year, items which showed increase in their prices were; wheat flour which is dearer by 59 per cent, wheat 56 per cent, egg farm 89 per cent and chicken price up by 24 per cent.

Besides, 24 items showed no change in their prices as compared to previous week, but still were costlier by double digit against corresponding week of the last fiscal. These items were mustard oil up by 71 per cent, cooking oil (tin) 59 per cent, vegetable ghee (tin) 55 per cent, match box 32 per cent, plain bread 27 per cent, kerosene 25 per cent, diesel 25 per cent, petrol 23 per cent and electricity charges were up by 23 per cent over the corresponding week of the last fiscal.

SPI hits all-time high at 23.93pc


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## Neo

*Power crisis can be overcome by closing markets at 8pm ​* 
Saturday, May 03, 2008

ISLAMABAD: The federal government has estimated that the torturous load-shedding can be overcome by saving 4,000MW electricity if the authorities are able to close down all markets and shopping malls by 8:00p.m. 

The country is facing electricity shortage in the range of 3,000-3,500MW at the moment, a high-level official in the finance ministry told The News here on Friday. 

Owing to skyrocketing oil prices, the finance ministry has also proposed energy audit of WAPDAs machines, which are swallowing oil for producing electricity.

Criticising Prime Minister Yousuf Raza Gilani for announcing eye-wash measures to save electricity, sources said that the premier should set an example by switching off at least one electricity light of the Prime Ministers House. Switching off one light all over the country by each household and market, around 250MW can be saved. 

The torturous load-shedding is aggravating and touching new heights by yawning power deficit up to 3,000 to 3,500MW, which was also putting pressure on oil import bill in the current fiscal year. 

The countrys economy is at risk owing to higher oil prices. The current account deficit has hit $10 billion in first nine months (July-March) period of the current fiscal. 

The imports increased by 60 per cent alone in March and such a high-level increase cannot be sustained on long term basis. 

The major factor for increasing trade and current account imbalances are soaring oil prices. There is also need to conduct WAPDAs energy audit, the official said. He also pointed out that there was a price differential related to oil in Pakistan and India as the price of diesel stood at Rs47 per liter here in this part while it was Rs63 per liter in India. We cannot rule out smuggling of diesel to India, said the sources. They said when wheat could be smuggled to India because of the economic incentives so why diesel could not be sneaked into neighboring countries on the same pretext. They said Textile Ministry was going to conduct energy audit of textile industries in order to gauge efficiency of the sector then why the WAPDAs high-ups were reluctant to conduct audit of their machines to come up with facts. 

The official said WAPDA employees got free of cost electricity as there were no meters installed at residence of their staff. This issue was raised in the World Bank (WB) meeting back in 1998 where it was estimated that WAPDAs own staff consumed Rs10.5 billion free of cost electricity at that time, said the sources. 

They said during the oil shock of 1973, the western world brought changes in the life style and adjusted them with new realities. Now there is time to bring changes in our style and awareness should be created among the masses to achieve the desired results, said the sources. 

A senior bureaucrat told this scribe that WAPDAs officials are misusing 1,500MW as there are no meters installed at their residence all over the country.

He said the WAPDAs high-ups are misguiding the government as there is no problem to overcome load-shedding within one and a half months period. He said there are still 3,750MW within the system of WAPDA and it can eliminate load-shedding within the above cited period.

Power crisis can be overcome by closing markets at 8pm


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## Neo

*Maybank signals major acquisition in Pakistan ​* 
Saturday, May 03, 2008

KUALA LUMPUR: Malaysias largest lender, Malayan Banking Bhd (Maybank), suspended trade in its shares on Friday, pending announcement of a material acquisition amid talk that it was expanding into Pakistan.

Maybank, which last month denied a media report it was in talks to buy a strategic stake in Pakistans MCB Bank, made the comment in a stock-exchange statement, but gave no more details. A bank spokesman had no immediate comment.

MCB is the largest bank in Pakistan in terms of market value and is worth around $4 billion. Pakistans strongly performing banking industry ranks among the worlds most profitable after years of financial reform, economic growth and rising incomes. MCB shares were up 3 per cent at 427.5 rupees by 0951 GMT in afternoon trade on the Karachi Stock Exchange, while Maybank shares last traded at 8 ringgit. Maybank has lost 13 per cent of its value so far this year.

One dealer at a Malayian brokerage said Maybank was preparing to announce an acquisition in Pakistan, despite facing criticism over paying too much for a stake in an Indonesian bank in March.

Last month, Malaysian weekly the Edge quoted unidentified sources as saying Maybank was interested in buying a stake of 10 to 20 per cent in MCB.

But Maybank shares were sold down heavily after it agreed to buy Indonesias sixth-largest bank, Bank International Indonesia, for a steep 4.6 times book value.

Maybank signals major acquisition in Pakistan


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## Neo

*Silk Route ​* 
*Dry Port at Sost starts business operations​*
Saturday, May 03, 2008

ISLAMABAD: Pakistan and China have re-opened border for trade and tourism at Khunjrab from May 1.

According to a statement issued by the management of the Silk Route Dry Port, the port has also started its business operations with the taking over of the new management of the port at Sost (Upper Hunza) near Khunjarab. 

The inaugural ceremony of the Silk port with its new management was held in the presence of Chinese friends who came to Sost to attend the ceremony. 

Officials of the Northern Areas Administration, management of the Silk Route Dry Port and a large number of people of Hunza hailing from Kilick to Mayun were present there to warmly welcome their Chinese fiends at the ceremony.

The nine-member Chinese delegation at the ceremony was led by Mr Dang.

Speakers said that people of Hunza are playing a vital role in the socio- economic development of Pakistan and would continue to play their important role in future as well. 

The newly elected Chairman of the Silk Route Dry Port, Ali Afsar, assured of his complete support to Pakistans local administration, customs officials and Chinese customs officials at the dry port. 

Silk Route


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## Neo

*Energy crisis ​* 
*Inefficiency, corruption major factors​*
Saturday, May 03, 2008

LAHORE: High electricity demand and low production capacity are not the only factors that have exacerbated the present energy crisis, but political appointments on professional positions in the previous government have also played a major role.

The energy crisis has been linked to soaring international oil prices, which is an easy explanation, putting a cover on Pakistan Electric Power Company (PEPCO)s internal inefficiencies, corruption and poor leadership.

Last year too, the power shortage was acute but the duration of load-shedding was restricted to four to five hours and each supply cut was not more than 30 minutes. The economy remained under pressure during the period after that. However, if it is accepted that demand this year has increased by 10 per cent over last year, the load-shedding should have increased by 10 per cent and not 60 to 100 per cent as is happening these days.

The high power outage is due to decline in thermal production which is the result of incompetence. The PEPCO is in dire financial straits not only because of high oil prices, but also due to mismanaged finances by allowing the receivables to accumulate to unmanageable levels and in return withholding of payments for the energy it buys from the private sector.

The company buys more than half of its thermal power from the private sector. It has failed to pay the independent power producers (IPPs) in time, forcing them to reduce production according to the resources available to buy fuel to run the generators.

The dues of the Karachi Electric Supply Company were allowed to pile up to over Rs33 billion before suddenly taking a drastic step of reducing supplies.

The entity should have been warned when the dues had crossed Rs4 billion which it could arrange with some efforts. The burden of non-payment of KESC dues was passed on to the IPPs whose outstanding amount was withheld as a result.

Thermal production from PEPCOs own plants this year is far less than its installed capacity. This has caused more shortage than it should be if the institution was managed professionally or efficiently.

Previous Water and Power Development Authority (WAPDA) chairman had been pleading with the government to arrange rental power as a stopgap arrangement till new generation capacities were added to the system. He succeeded in arranging 350 megawatts rental power during his tenure. The end-price paid for gas-fired plants was 6.89 cents per kilowatt hour (kwh). Now PEPCO management has agreed to install new rental gas-fired plants which have been acquired at 9.26 cents per kwh.

However, this process is not transparent which should have been carried out through international competitive bidding as laid down in governments policy. Despite reservations from some government circles, the National Electric Power Regulatory Authority (NEPRA) has approved the plan, stating the authority considers that the project has proceeded to a stage where not ratifying or denying the rates agreed between parties (the PEPCO and the renter) would result in stalling the process of provision of adequate generation capacity on fast-track basis.

Energy crisis


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## Neo

*No discrimination against foreign investors ​* 
Saturday, May 03, 2008

LAHORE: Domestic and foreign investors are treated in Pakistan equally with regards to facilitation and taxation, and there is no discrimination whatsoever.

The policy of remittances in the country is also very liberal, Investment Division & BoI Office, Lahores incharge Syed Asghar Abbas Rizvi told a 14 member Chinese delegation visiting the Lahore Chamber of Commerce and Industry here on Friday, headed by president Xuewen of the Chamber of International Commerce Shenzhen.

The Chinese delegation is currently visiting Pakistan to explore possibilities of a Joint Venture and to expand mutual business ties.

Asghar Abbas Rizvi apprised the delegates of very liberal and business friendly investment policies in Pakistan, its resource base and potentials including Pakistans competitive edge for investments in various vibrant sectors of the economy, including telecommunications, engineering, mining and services.

There is no restriction on remittances of capital and profits, he added.

The leader of the Chinese delegation appreciated these incentives offered in Pakistan and the warmth and affection shown by the people of Pakistan during their visit.

He also assured that business meetings between both countries will finalise Joint Venture agreements in various sectors to the mutual benefit of both.

The Director, Investment Division & BOI on the occasion distributed a set of BOI promotional publications which included investment guides and sectoral profiles on potential sectors.

No discrimination against foreign investors


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## Neo

*Reserves investment in foreign countries: FBR wants SBPs fund managers taxed​*
*By Muhammad Yasir MINFAL seeks approval from ECC on Bt cotton​*
KARACHI: The Federal Board of Revenue (FBR) is insisting the State Bank of Pakistan (SBP) to collect income taxes from those foreign fund managers engaged in investing money in various global markets, sources told Daily Times.

According to the sources, the tax authority estimated more than Rs one billion taxes from the foreign fund managers earning on behalf of the SBPs money in foreign countries. The FBR is demanding this tax under the fee for technical services section 2(23) levied on the financial advisors whether they are non-resident or they dont have any establish office inside the country.

The SBP invests its money through foreign fund managers and keeps deposits in other countries after closing working hours in Pakistan. The detailed scrutiny of SBPs financial statements for the period 2006-07 revealed that the central bank made a record profit Rs 818.148 billion in 2007 and Rs 686.966 billion in 2006 through investment and deposits accounts in the international market that also shows 19 percent growth in a year.

The officials said the FBR, in a meeting with SBP, has explained the legal tax position on payments made to the non-resident fund managers, as contained in the Income Tax Ordinance, 2001, and the bilateral Avoidance of Double Taxation Treaties.

The definition of Technical Service as given Section 2 (23) of the Income Tax Ordinance 2001, has a wider scope and it covers the managerial services and consultancy service. The services of non-resident fund mangers being managerial and consultancy nature fall within the ambit of the mentioned definitions, sources quoted as saying by FBR officials.

The tax authority asked SBP as a withholding agent deducting or collecting income tax from the gross amount of payments made to the non-resident fund managers and foreign banks as service charges u/s 152 of the Income Tax ordinance 2001.

On the other hand, SBP tax consultant, Shabber Zaidi expressed his contention and said the nature of work done by the non-resident fund by the non-resident fund mangers falls within the ambit of business income rather than fee for technical services. He made references to Indian case law in this connection. 

The investments in the international market are made through foreign fund managers, and the deposits are kept with the foreign banks and financial institutions. Both the foreign fund managers and the banks charge SBP for their services, it is learnt. These financial advisors charge two percent money from SBP as initial consultancy fees.

Sources disclosed said that taxmen claim that these financial advisors, under the taxation laws of various countries, are also liable to pay 12 to 15 percent withholding income tax to the immediate tax authority. 

During the scrutiny, FBR identified three foreign managers in UK and one in Singapore have been doing investments of SBP money for different time period, they further disclosed. Various meeting were held between officials of FBR and SBP on this issue, but the central bank is reluctant to collect taxes from their foreign financial advisors, they told. In view of the sensitivity of the matter it was concluded that the issue would be settled through a meeting between the chairman FBR and governor SBP.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Public Sector Development Programme: Infrastructure, health and education on govts priority list​*
ISLAMABAD: New elected government is likely to re-prioritise the Public Sector Development Programme (PSDP) with infrastructure, health and education as main priorities for the next fiscal year 2008-09, official sources told Daily Times on Friday. 

A PSDP clean up exercise has been carried out to create a reasonable space for the new elected government to include its own new projects in the next years PSDP by deleting some big as well as politically motivated projects announced in the government of Pakistan Muslim League (Q), sources added. 

The process for prioritising the projects for the next years PSDP is expected to initiate during Annual Plan Coordination Committee Meeting likely to meet in third or fourth week of May 2008. 

Projects not benefiting general public and were designed and approved to gain political motives and giving benefits to influential were expected to be dropped from the PSDP in the next fiscal year, sources disclosed. 

A careful selection of projects would be undertaken which would be financed through bilateral as well as multilateral loans to avoid excessive foreign borrowing. No extension in projects would be granted, giving desired results especially rural development in provinces, sources said. 

Although the Planning Commission officials are claiming that no cut has been made in the PSDP for the current fiscal year 2007-08, however, putting on hold those projects work on which not started during the first half of the current fiscal are being seen as cut in development programme.

During the last government, thousands of projects worth Rs 2,500 billion have already been approved and if the new government allows implementation of such projects than it would not be able to include its single project in PSDP in next 7 years, sources added.

The country requires infrastructure development on war footing to put the economy on actual track, achieving required growth rate of 8 percent or more in coming years to address the issue of reducing poverty. 

Energy and food crisis in the country requires the government to focus development of infrastructure for water storage, hydel power generation, highways and establishing rail and road links with neighbouring countries with cool chains and where housing facilities along. 

A renewed effort is expected to be made during the five-year tenure of the new elected government for infrastructure development including dams, ports, rail and road links, said the sources. 

National Trade Corridor (NTC) would also be re-prioritised to make it more beneficial for the international trade and link between China, Central Asian Republics and Russia and Gulf States as well as rest of the world, sources added.

Health and education being basic needs of the 160 million people of the country would be the second and third priorities in the next years PSDP at the federal as well as in the provincial annual development plans (ADPs). 

In the last government, many foreign funded projects, which were allowed to continue after actual completion period provided people to continue enjoy handsome salaries, luxury vehicles and other monetary benefits, said the sources. 

In some cases, projects were designed and started to give jobs and benefit to dear ones through PSDP allocation. 

The sources added that in the last government, Planning Commission was used as project approval authority and its role in the new government would as a think tank to recommend the government steps required for rapid economic development with concrete proposal for its implementation. 

Planning Commission would be tasked to carryout sectoral development studies as well as other studies in the new set up, which were being arranged in the last government through consultants of International Financial Institutions (IFIs), sources informed.

Daily Times - Leading News Resource of Pakistan


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## Neo

*PSDP 2008-09 may range up to Rs 550 billion ​* 
ISLAMABAD (May 03 2008): The Public Sector Development Programme (PSDP) for the year 2008-09 is likely to range between Rs 535 billion and Rs 550 billion despite the fact the new government is facing the overspending of over Rs 500 billion in the current year.

Given the tough challenges being faced by the government, the likely allocation for development is showing the new government commitment to the development of the country, sources told Business Recorder on Friday. To take the development agenda ahead is essential for infrastructure development, which plays an important role in attracting role in maintaining the growth trajectory around 7 percent.

The government may pass on the total differential of oil prices to the consumers before close of 2007-08. This would give the government some fiscal space to make considerable budgetary allocations for development, sources said.

The Finance Division's priorities committee has completed its exercise of consolidating the development allocation. The Planning Commission (PC) is of the view that PSDP size should be at least Rs 550 billion in the next fiscal year. The Finance, on the other hand, says that Rs 535 billion should be enough allocation for PSDP. Sources said that both Finance and PC will give their opinions in the Annual Plan Coordination Committee (APCC).

According to sources, before the priorities committee began the exercise, the PC was striving for allocation of around Rs 624 billion for next year's PSDP. "The proposed allocation of Rs 624 billion was being made, keeping in view the demands of the ministries," sources added.

The allocation for the development budget was a tough task for the government. But the decision of the government to pass on the oil prices differential to the consumers is seen to be a factor that the government is making at least reasonable allocation for development budget.

Even in current fiscal year there has been a great pressure on the development budget and the government had to adjust the available funds in order to furnish some savings in PSDP 2007-08, which is Rs 485 billion. Keeping the operational shortfall of Rs 35 billion, the actual PSDP size is 450 billion. An allocation of Rs 150 billion is for provincial development programmes in the current fiscal year. The allocation outside PSDP for development is Rs 239 billion.

According to the proposal of the priorities committee, the allocation for provincial development programmes could be curtailed to Rs 100 billion in the next budget. The rest, which could be between Rs 435 to 450 billion, would be for federal development programmes.

Around 667 new schemes were accommodated in the 2007-08 PSDP with an allocation of Rs 45 billion, whereas in the current fiscal year so far the Planning and Development (P&D) Division has approved 218 development projects costing more than Rs 565 billion. Apart from this, 1444 development projects are those which have been under execution for the last some years.

Sources said that if looked into the quantity of the projects, there would be a lot of pressure on the Finance Division to substantially increase the PSDP size. But the finance division is of the view that all the projects' executing agencies must concentrate more on timely execution so that the number of time overrun and cost overrun schemes could be brought down.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Efforts on to bring maximum foreign investment: Fehmida ​*
BADIN (May 03 2008): National Assembly Speaker Dr Fahmida Mirza has said that all out efforts are being made to bring maximum foreign investment to establish industries. This would also help overcome the problems of unemployment, she said while addressing an open Katchery in Tando Bago, some 25 kilomters away from here on Thursday.

The country was suffering multi-dimension challenges both in internal and external sides and there was the need of sincere efforts to meet the tasks in effective and collaborative manners, she added. The NA Speaker said the country was in grip of internal and external threats and there was the need that we should realise their responsibilities and bring out the country from the crisis.

Besides unemployment, the countrymen are also suffering many issues including price hike, shortage of essential commodities and water, and sincere efforts are underway to provide maximum relief to the masses by launching effective projects for their welfare.

She said that because of the efforts of the present government, the issues of the masses had been started addressing, however, adding that resolving the peoples' issues from grassroots level would take some time.

Dr Fahmida Mirza termed her election as NA Speaker a great honour, adding that Sindh was the land, which received many honours including the first Muslim Woman Prime Minister and first Woman Speaker of the Assembly in Asia. She informed that she came in the field of politics on the advice of Shaheed Mohtarma Benazir Bhutto who wanted to see her to serve the masses and help in completion of the mission of Zulfiqar Ali Bhutto.

She thanked the people of Badin for expressing confidence on her and elected three times from the constituency and assured the people that all out efforts would be made to address the grievances of the people of Badin at the earliest.

She also thanked PPP Co-Chairperson Asif Ali Zradari and other senior party leaders for expressing confidence upon her and nominated for NA Speaker. Being the Speaker, she said that all out efforts would be made to come up to the expectation of the people of the country.

While hearing the problems of the people, the NA Speaker asked the officers of Sindh Irrigation Department to ensure the judicious distribution of water and take stern action against water theft. She also asked the officers concerned to improve water distribution system and ensure the availability of irrigation water at the tails of the canals so that the growers could face no difficulty in cultivating crops.

All illegal connections should be cut off and cases should be registered against those, who involved in water tempering, she directed, adding that strict disciplinary action would be initiated against those officers who found negligence in their duty.

Dr Fahmida Mirza vowed to bring such system in this country, under which, the people could take sigh of relief by getting all basic facilities at their nearest. She informed that a complaint cell was being established in Badin where the people could submit their complaints. The genuine demands of the people would be addressed without any discrimination, she maintained.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Asphalt production expected about 299,000 metric tons in Pakistan: World Bank ​* 
FAISALABAD (May 03 2008): Asphalt production is expected to remain at around 299,000 metric tons (MT) in Pakistan, while the total asphalt requirement is estimated to be between 395,000 MT during 2005, and expected to increase to 438,000 MT by 2010, said a study of South Asia Sustainable Development Unit (SASSD) of World Bank.

Commenting over the "Possible Shortage of Asphalt", World Bank study mentioned that the total estimated demand, asphalt requirements for infrastructure projects under the federal and provincial governments over the next five years are estimated to vary from approximately 246,000 MT during 2005-06, to approximately 277,000 MT during 2009-10. In addition, other stakeholders such as city district governments, the housing sectors, township developers and others are estimated to require between 150,000 to 160,000 MT during the 2005 and 2010 period.

Study statistics revealed that the demand supply gap is estimated to be between 96,000 to 140,000 MT per year over the next five years. The shortage of bitumen is reported to have already become a foremost issue with several on-going projects suffering delays because of the non-availability of bitumen for road works in the country.

All Pakistan Contractors Association (APCA) is reported to be engaged in formal talks with the Federal Minister for Communications, FBR and other concerned departments to address the crisis situation in bitumen supplies. A proposal has been submitted to allow import of bitumen from all countries including India, and to reduce the duties and tariffs to control the price.

Cost of local bitumen is Rs 23,000/MT while imported is Rs 30,760/MT during 2006-07. Availability of asphalt could be further affected as exports to Afghanistan increase during the coming years. Study mentioned, "Cement Availability Doubtful unless Capacity Expansion Programs Materialise".

The country produces about 23 million MT of cement of which about 10 percent is exported. According to industry estimates, out of the remaining amount, 50 percent is consumed by the housing sector, 20 percent by the industrial sector, and the rest is available for public sector projects.

Cement demand for the major infrastructure projects under the MTDF is expected to range between 3.3 million MT to 6.7 million MT per year over the next five years, with the highest demand during 2006-07. Local availability of cement for the projects has been estimated at about 3.4 to 4.0 million MT per year.

This projected availability does not account for the increase in demand over the years from other competing sectors such as housing, which are likely to experience enhanced growth rates and any increased demands from projects in Afghanistan.

Though capacity enhancement has been planned over the next few years in the industry (42 million MT installed capacity by 2009), nevertheless, the import of cement is likely in the short term of around 2 to 3 million MT to meet the increase in demand.

Supply of Quality Billets and Overall Steel Shortage is also a Serious Concern, WB mentioned and added that the gap between domestic production and demand, and the availability of quality billets for producing reinforcement bars appears to be of concern.

Total consumption in Pakistan was estimated at 4.7 million MT during 2004-05, with Pakistan Steel Mills (PSM) producing about 1 million MT of quality steel, while the other local re-rolling and smelting mills (which use imported scrap) produce about 2.3 million MT of steel.

The balance requirement of 1.4 million MT is met through imports. The estimated import requirement for steel over the MTDF period varies between 2 million MT during 2006-07 to 3.0 million MT during 2009-10.

Statistics shows the projected shortfall in overall steel production, which may have to be met through imports. Besides, the overall shortage of locally produced steel products, the main concern for the construction industry is with respect to the production of quality rolled billets and long products. The PSM produces about 0.3 million MT of steel billets while the demand for long products was about 2.5 million MT in 2004-05.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Microsoft signs agreement with SSC ​*
LAHORE (May 03 2008): Microsoft signed an agreement with Service Sales Corporation (SSC), Pakistan's largest footwear company and a part of the Servis Group, at Service Sales Corporations' office in Lahore. "Microsoft has always been committed to business solutions that empower employees, by investing more than seven billion dollars annually in research.

Microsoft has and will further increase its commitment to the business houses of Pakistan to keep providing easy to use, cost effective business solutions at par or better with what is available in the market," said Kamal Ahmed, Country Manager, Microsoft Pakistan.

"Service Sales Corporation has chosen Microsoft Dynamics due to its reliability, ease of use and seamless integration with the existing Microsoft products," said Aamer Mohsin, Country Head Retail Operations, Service Sales Corporation (SSC).

Hashim Ali, CEO Mantaq Systems said, "SSC's addition to our rapidly growing customer base strengthens our belief that the rapidly growing organised retailing industry in Pakistan needs solutions, based on reliable and easy to use world class software like RMS and MS Dynamics."

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*TeleCON'2008 concludes: roadmap for integrated approach promised ​*
KARACHI (May 03 2008): Pakistan's first global telecommunication congress, TeleCON'2008, concluded here with industry leaders resolving clearly and defining the future roadmap for an integrated, consolidated and vision-sharing approach to future challenges confronting the industry in the immediate future.

Barrister Shahida Jamil, a former Federal Law minister, while speaking as chief guest emphasised the importance of telecommunication in future development of the country. "Globally, the world is geared towards convergence of technologies and good governance and I don't find any reason why Pakistan should not follow the same success model", she said.

The recommendations of the congress stressed that Regulatory Body PTA should take into confidence all players in the industry for an integrated, consolidated and vision-sharing approach to address issues and opportunities that drive the telecommunication industry.

It is the opportune time, since deregulation came into effect, that all stakeholders should walk the extra mile in consolidating each other's domains and work toward the next frontiers of the telecommunication challenges in Pakistan.

It said that a focused customer-centred and socially conscious commitment was an absolute necessity. As the world moves forward, Pakistan stands at the threshold of an unprecedented challenge - the challenge to accept or reject the versatility of technology to human development.

An eminent panel of 21 speakers addressed delegates in the seven tracks spread over two-day meeting stressed the need for a committed approach. Delegates from all over the country including diplomatic representations from US and Russia also attended the congress.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Total exports of Pakistan: Textiles share drops to 58% in July-March 07-08​*
KARACHI: The textile sector lost considerable share in overall export of the country as it dropped to below 58 percent in July-March of current fiscal year, which used to be around 65 percent in the past.

According to official statistics, textile exports fetched $7.805 billion of total export of $13.476 billion during the first nine-month.

The deteriorating export figures of textile products were also reflective of the disappointing situation in the sector as it fell by over three percent over the export figures of the corresponding period of last year as well as missing the target for the period under review with a huge margin of $979 million or 11 percent.

A high government official commenting on the situation pointed out that along with host of other factors, the low-value added textile products are a major reason for bringing less unit price compared to its competitors, which went for high value addition and earning more foreign exchange compared to our country.

Out of thirteen items, that constitute textile group, only few managed to post some growth during the July-March of this fiscal whereas other items export posted negative growth. 

Until we go for high valued added products, the issues related to textile exports will persisted to block sizeable growth in its export, official of Federal Textile Ministry felt.

He said that since the dismantling of quota regime, the growth in our textile exports was less compared to gains made by China and India and added that even Pakistan was behind to some other countries of the region as far as the post quota regime opportunities were concerned.

Official also cited high cotton prices during the current financial year a major blow to growth prospects because cotton cost coupled with cost of other inputs proved disaster for the export.

He, however said that some growth was seen in the export of textile products in February and March, which if continued would be helpful in recovery of textile products to some extent.

About the falling share of textile goods, he pointed out that as price of commodities in international market rose in the recent months, Pakistan commodity based export also fetched good amount of foreign exchange, which rose their share in overall export, resultantly pushing down the export of textile.

People in textile industry were of view that it is the cost factor, which is main obstacle in the export growth as skyrocketting prices of inputs used in the textile manufacturing in recent months dealt a big blow to textile exports.

Textile sector has been given billions of rupees cash incentives and subsidies in the last few years to compete with its regional competitors in the international market, however industry people said despite this the intense competition is depriving the country of its share in various markets because of uncompetitiveness of local products due to high cost of production. 

However, questions have been raised over the quality of local products by different international organisations, which also stressed on improvement in the quality of products along with cutting down the cost of production.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan, Japan sign accord for soft loan of Rs 29bn ​*
ISLAMABAD: Japan will provide soft loan of $478 million (Rs 29 billion) to Pakistan for different projects of roads, basic needs of life and grid station. The agreement for the soft loan was signed here at Foreign Office on Saturday by Foreign Minister Shah Mahmood Qureshi and his Japanese counterpart Masahiko Koumura after their formal talks. The soft loan being provided under Official Development Assistance (ODA) will be utilised for Punjab Transmission Lines and Grid Stations Project (Phase I), Punjab Irrigation System Improvement Project, Rural Road Construction Project (Phase II), (Sindh), and the East-West Road Improvement Project (N70)(Phase I). 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Govt plans 500MW power generation at Dadu ​*
ISLAMABAD: To serve the long-standing purpose of meeting power demand through the utilisation of indigenous resources, the government plans to initiate 500MW Combined Cycle Power Plant at Dadu, Sindh.

The project will cost Rs 29.260 billion including Rs 18.687 billion as foreign exchange component. At present the country is facing 3,000MW shortage of power and the power demand is increasing at the average rate of 8 percent, the proposed project will help the government to meet power demand up to some extent. The propose project will complete within two years duration it may be funded from Public Sector Development Programme.

The project envisages installation of 500MW Combined Cycle Power Plant at Dadu comprising of three gas turbines (126MW) each and one steam turbine (148MW). 

The plant will be connected with the National Grid by laying one-kilometre KV double circuit transmission lines including necessary transformation and protection equipments. 

Natural gas will be used as primary fuel and furnace oil will be used as back up fuel during the period of non-availability of natural gas. 

The existing power generation capacity is not sufficient to meet the ever-increasing demand of the country. In the recent years, as economic activity picked up, there has been a sudden rise in the power demand, as a result of which there is a supply and demand gap in the existing system. 3,154MW power deficit recorded in March 2008. 

The power demand projection based on growth rate shows that power demand will increase from 15,138MW in 2007-08 to about 20,874MW in 2010-11 in the PEPCO/WAPDA system and severe shortage of power is expected in the next 2 to three years. 

In order to meet the every increasing power demand, emphasis is laid on the development of indigenous resources i.e. hydro, renewable, coal, natural gas and nuclear. The power sector is one of the fundamental infrastructure sectors in Pakistan, which requires immediate enhancement in capacity to meet the economic growth targets. 

The government planned to add about 1260MW hydro, 700MW on renewable, 900MW on coal, 4860MW on gas, 160MW on oil and 325MW nuclear capacities in to the system by the year 2010. 

The proposed project will meet the future requirement of power and will cover the power demand-supply gap in the PEPCO/WAPDA system beyond the year 2008-09, thus reducing extend of load shedding in the country in future years.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Gas shortage in Pakistan is likely to be 26 MMSCMD in 2011-12​*
ISLAMABAD: Growing acute energy shortfall of 101.55 MMSCMD by 2011-12 forced India to join Iran, Pakistan and India (IPI) as well as Turkmenistan, Afghanistan, Pakistan and India (TAPI) gas pipeline projects, reveals official meeting protocol paper available with Daily Times on Thursday.

Pakistans energy demand supply gap has been estimated at 26 MMSCMD by 2011, 77 MMSCMD by 2015 and 293 MMSCMD by 2025 due to the domestic gas sources are depleting and demand for gas grows in line with economic expansion, the paper stated. 

Pakistan: Meeting Protocol paper, which was presented during the Tenth Steering Committee Meeting of the Turkmenistan Afghanistan, Pakistan and India (TAPI) held here recently, states that the energy supply mix for Pakistan was 48.6 percent gas and 30 percent oil in 2006-07. 

Power sector of Pakistan consumes the largest portion of gas at 35.5 percent. As the domestic sources are depleted and the demand for gas grows in line with economic expansion, the supply-demand of gas in Pakistan is expected to be 26 MMSCMD in 2011-12, 77 MMSCMD in 2015 and 293 MMSCMD in 2025.

India: Indias supply-demand scenario explained in the paper reveals that India is the 5th largest consumer of energy with 30 percent dependence on oil of which 73 percent is imported. There is need to triple its power generation by 2025 to feed the fast-growing technology and manufacturing industries. Currently, natural gas makes up to 8.5% of Indias energy mix. This is expected to be increased to 20% by 2025. 

The existing demand for natural gas is 179.17 MMSCMD. Demand expected to double by 321.77 MMSCMD in 2011-12 and 920 MMSCMD by 2013-32. Power would remain key sector consuming around 44-45% and fertiliser sector would account for 27% of demand. Efforts to augment supply are ongoing. 

Recent gas discoveries have been made recently in KG Basin on east coast, commercial production likely to start in couple of years. Around 12.5 MMT capacity is likely to be added at Dahej, Dhabhol and Kochi terminals during XI plan to bring imported LNG to the country. Transnational pipelines are being considered. The supply available was 106 MMSCMD in 2006-07 (Domestic 83.8 MMSCMD, LNG 22.3 MMSCMD) and conservation estimated to be 220.22 MMSCMD in 2011-12 (domestic 164.23 MMSCMD), LNG 56 MMSCMD. In 2011-12, the estimated demand supply gap is 101.55 MMSCMD. 

Turkmenistan: The Turkmen-istan delegation made a presentation on the status of current national gas reserves. It was informed to the meeting that Turkmenistans natural gas reserves estimates have been updated to 8 trillion cubic meters (TCM). The current production in the country remains at 80 billion cubic meters per year, of which 20 billion cubic meters is used for domestic consumption and 60 billion cubic meters is exported. The meeting was assured by the Turkmenistan side that at least 30 billion cubic meters would be available for the TAPI project annually for the lifetime of the project. 

The independent third party audit of the gas reserves for Dauletabad filed and two other fields are undergoing, in this regard, Turkman Geology has signed the contract with the firm in April 2008. The audit would be completed by July 2008. Subsequently the Turkman side would provide required gas certification to all relevant parties of TAPI. 

Afghanistan: Afghan delegation present in TAPI meeting informed that there would be many new factories, government agencies, entrepreneurs and residents on the project route. It was proposed that off-take for Afghanistan be revised to 2 billion cubic meter annually in first two years and 5 billion cubic meters from the start of the third year. 

The TAPI Gas Pipeline, under the routing discussed by the consultant, would pass through the west and south east of Afghanistan through five provinces i.e. Heart, Farah, Nimroz, Helmand and Kandahar. There is highly possibility of deposits of gas and oil in these areas.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Powerless Pakistan ​* 
Sunday, May 04, 2008

Coal has always been a dirty four-letter word in our power vocabulary. Reluctantly and only recently, have the policymakers been forced to look at indigenous coal as a serious power generation option. Contrary to popular perception, coal not oil is the single largest source of global energy.

Of late gas-fired power generation is also being promoted in tandem with oil. Ironically, the same was not done when we had plentiful gas reserves. Now that we might have to import it, the policymakers have suddenly woken up anew to its benefits. Share of gas in the IPPs energy generation has actually fallen since 2004 from 75 per cent to 56 per cent due to shortages.

Pakistans rivers have (or had) the potential to generate 40,0000MW of cheap hydel power. At present we are facing a severe water shortage due to the effects of global warming and the construction of upstream dams like Baghliar and Kishan Ganga by India in violation of the Indus Water Treaty. It is ironically now that we hear the aggressive hyperbole advocating construction of mega dams for hydel power generation. Apart from being rife with political connotations does our recent telemetry of the Indus River System support these grandiose schemes? Likewise with the ever-spiraling oil prices, relying on indigenous coal is the only medium-to-long-term solution to our energy and economic woes. 

The world generates 38 per cent of its power from coal. Germany, the USA, the UK, India and China generate more than 50 per cent of their electric power from coal. Australia, Poland and South Africa are dependent upon coal for more than 80 per cent of their energy needs. Indonesia generates 93 per cent of its electricity from coal. Pakistan with coal deposits of 185 billion tons, astoundingly, does not generate even 1 per cent of its electricity from coal.

The only coal based power generation plant of any significance in the country (with an installed capacity of 150MW) is Lakhra Power. For most of its long chequered history, the plant has either been closed or has operated at less than 50 per cent capacity utilisation. 

Thar Coal Field in Sindh, with LigniteñB (Brown Coal) deposits of 175 billion tones makes up for 94 per cent of our total coal reserves. It is spread over an area of 9,100 square kilometers in Tharparkar. Only 350 square kilometers, 3.8 per cent of this vast coal field has been geologically investigated which verified deposits of 12 billion tons. This itself is sufficient to generate more than 40,000MW electricity for decades to come. Lignite-B is hazardous to stack and does not lend itself to easy transportation. Such deposits, worldwide, are considered ideal for mine mouth power generation.

It was in 2001 that the Thar Coal Task Force was formed, headed by President Musharraf himself. Rheinbraun of Germany, specialising in Brown Coal mining to support mine mouth power generation was engaged. They were supposed to carry out a Thar mining bankable feasibility to support a power plant of 1,000MW capacity. The fate of this report on which upfront tariff for coal-based power generation was to be based, remains a mystery. Without a credible Bankable Feasibility no international investor of merit will show interest in Thar coal.

In the absence of a credible power policy and the aftermath of the Hubco tariff fiasco, international power generation companies were wary of doing business with Pakistan. The only country willing to help was China. Lt-Gen Ghulam Ahmed (may his soul rest in peace), the then COS to President Musharraf, was instrumental in spearheading (behind the scene) the Thar initiative and engaging the Chinese at the highest level.

With a request to the Chinese prime minister himself, the response was immediate. Within no time, the head of the Shenhua Energy Group, the largest coal mining state-owned enterprise in Mainland China and the second largest in the world, arrived in Pakistan. He was personally heading a team to evaluate Thar Coal Fields potential for power generation. 

Shenhua owns and operates coal-based mine mouth power generation assets of over 10,000MW in Mainland China. The group chairman enjoys the status of a vice minister and had been personally instructed by the Chinese premier to do everything possible to help Pakistans coal power generation. This visit commenced with signing of a letter of intent. 

Within months an MoU was signed between Shenhua and the Sindh government whereby the former agreed to incrementally set up a 900MW mine mouth coal-fired power plant initially on a build, own & operate (BOO) basis. The Chinese also undertook, at their own expense, to first establish a Thar mining feasibility by carrying out a detailed geological investigation of a coal block allotted to them. This would then form the basis of an integrated mining and power generation feasibility and viable tariff negotiations. The entire project was to be financed by the Chinese themselves; all they wanted was a fair and viable tariff.

It was then that the usual detractors came into play. WAPDA insisted that the Chinese build the Thar/national grid power transmission at their own expense. The Ministry of Water and Power balked at providing adequate water supply at site. To complicate matters further the Ministry of Petroleum and Natural Resources started lobbying for federal control of the Thar Coal Resource itself. The Pakistan Mineral Development Corporation started putting down strip mining and came up with alternative suggestions like In-Situ Gasification of Thar Coal; at best a commercially unproven nascent technology. These were some of the many convenient impediments that started cropping up ever so aggressively to sabotage this initiative of national import.

Immediately after signing the MoU, more than 150 Chinese arrived to carry out detailed geological investigations. Their coal drilling rigs, sampling equipment and machinery arrived at Karachi Port as temporary imports (exempt from taxes as they would be re-exported after completion of the project). 

Despite earlier assurances, the Pakistan Customs refused clearance till import duties and taxes were paid. Shaukat Aziz, our economic czar and then finance minister, was not exactly helpful in the situation. General Musharraf personally heading the Thar Task Force seemed powerless as ultimately the Shenhua fiasco proved. The clearance issue was only resolved when the Chinese displeasure was conveyed to the very top through our then ambassador to Beijing Riaz Khokhar.

Working round the clock, the Chinese carried out the technical and commercial evaluation in record time. Shenhua was ready and more than eager to build the integrated mining and power generation complex at a guaranteed power tariff of 5.75cents/kWH. Negotiations started between Shenhua and the Private Power Infrastructure Board (PPIB) and later with NEPRA ended in a stalemate as NEPRA in its own wisdom refused to go above 5.34 cents.

In the mean time, a newly-elected government took over in Sindh. The Thar Task Force was no longer in charge. The new Sindh government having other priorities, the Thar Coal Initiative literally came to a grinding halt.

For more than two years Shenhua desperately tried to negotiate a reasonable tariff with the power barons but in vain. Negotiations were deliberately sabotaged by interest groups who viewed coal generation as an infringement on their exclusive domain. 

A new but highly flawed power policy called Power Policy 2002 was implemented by the incumbent government in 2003. An utter failure, not a single megawatt was added to the national grid under this policy in the last about nine years. The corner stone of this policy was stripping WAPDA of its self-power generation mandate. The flawed privatisation of the KESC too was a fallout of this policy. The list of failure and anomalies is too long to pen here.

It also put paid to all hopes that Shenhua might have had to set up the Thar Coal Power Plant. In terms of this policy the special dispensation allowed to Shenhua in that they were specially invited and given 52 square miles in the Thar Coal Field to set up mine mouth generation became invalid. PM Shaukat Aziz had the effrontery to point this out to the Chinese in a televised press conference. Shenhua Group was told to stand in line like everyone else and take part in competitive bidding for setting up a coal-based power plant in Thar as and when the government got around inviting such bids. 

The Shenhua Group packed up and left. With them went all hopes of Thar coal based power generation. Nine years later the federal government has yet to come up with an upfront acceptable power tariff for coal. Meanwhile, the costs have escalated and even 9 cents is no longer viable. The minimum upfront coal tariff recently demanded by the Sindh government is 11 cents. 

In its profound wisdom the federal government has recently decided to delink Thar Coal Mining and Power Generation and has formed the Thar Coal Mining Company. God help us all! Instead of starting from scratch Shenhua should be persuaded to come back with a workable tariff offered to them. 

As for their going back in the first place, needless to say, no heads will roll in a power-less Pakistan.

Powerless Pakistan


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## Neo

*Pakistan to focus on economic ties: Salman Bashir ​* 
Sunday, May 04, 2008

ISLAMABAD: Pakistans Foreign missions abroad need to concentrate more on economic diplomacy developing country-to-country relationship, said Foreign Secretary Salman Bashir.

Salman Bashir who assumed office on Saturday, said that Pakistan, being a developing country has to work more aggressively deepening its economic ties with friendly nations.

The present government has already set up a task force to suggest ways and means; strengthening economic diplomacy, aimed at making foreign policy different from the past; where foreign policy focused on geo-politics alone.

Talking to APP on his arrival from Beijing after serving as the countrys ambassador, he said, Pakistans foreign policy should be geared more towards the economy for improving socio-economic conditions of the people.

He said, I truly feel that the foreign service and foreign missions abroad are great national assets that could be geared up to meet national aspirations.

He expressed the resolve to match the expectations of the new government and the people, and fulfil the confidence reposed in him to serve national interests and to build a better national image abroad.

Pakistan to focus on economic ties: Salman Bashir


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## Neo

* Indus Motor committed to enhancing production ​* 
Sunday, May 04, 2008

KARACHI: NED University Vice Chancellor Engr Abul Kalam has said Toyota and Indus are committed to further enhancing local production and developing human capital for the engineering industry.

He said this while speaking at the annual suppliers convention organised by Indus Motor Company (IMC) under the theme Bridge to the Future, said a press release. He appreciated IMCs role in the transfer of technology, particularly in the development and localisation of parts for the automobile industry. He welcomed IMCs initiatives for enhancing collaboration with engineering institutions and for providing training and employment opportunities to engineering graduates.

IMC Chairman Ali S Habib highlighted the significant role of the auto industry in the countrys development and its contribution to the GDP. He pointed out that there was a slowdown in sales of passenger cars and light commercial vehicles owing to the application of 2.5 per cent withholding tax, decrease in auto financing and an uncertain environment. He praised the governments decision to suspend the withholding tax till June 30 and hoped that it would be permanently withdrawn. He said the country bristles with tremendous motorization potential and with political stability and economic growth, there should be resurgence in automobile demand.

IMC CEO Parvez Ghias mentioned the company is continuously increasing production to meet demand. He requested the vendors and suppliers to continue to work together as one team and to focus on meeting the growing expectations of the customers.

Emphasising the need for promoting safety, protecting environment and becoming good corporate citizens, he requested the vendors to join hands with IMC in its corporate social responsibility (CSR) initiatives.

IMC Product Development General Manager Hamid Rasul reviewed the previous years vendor performance, based on quality, cost, delivery and product development. He urged the suppliers to gear up for the challenges ahead and to comply with global standards in order to make the country an international auto parts exporter. Suppliers were recognized for their achievements and received awards in various categories.

The convention was attended by senior management of Toyota Motor Corporation, Daihatsu Motor Corporation, House of Habib, IMCs vendors and suppliers, Dealers, business partners, representatives from the automobile industry, educational institutions and the management of IMC.

Indus Motor committed to enhancing production


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## Neo

*Japan to give $480 million loan for various schemes ​* 
ISLAMABAD (May 04 2008): The government of Japan will extend about $480 million (48 billion yen) loan on 1.2 percent rate of interest, double the amount of previous year's loan to promote economic stability and development efforts. Agreement to this effect was signed by Japanese Foreign Minister Masahiko Koumura and Foreign Minister Makhdoom Shah Mahmood Qureshi here on Saturday.

Qureshi said that the loan will be used for Punjab Power Transmission Lines and Grid Stations Project, Punjab Irrigation System Improvement Project; Rural Roads Construction Project (Sindh) and East-West Road Improvement Project (N-70).

Commenting on trade and investment between the two counties, Qureshi said that bilateral trade stands at $2 million at present and there is further room for investment and expansion of trade, adding that a task force to be constituted on economic diplomacy soon will invite Japanese businessmen to understand the potential of economic growth in Pakistan.

Assistance for tribal areas especially in education and health was also discussed and Japan showed the desire to set up schools and improve medical facilities in these areas, the minister added. Qureshi said that as chair of G-8, Japan may lobby for Pakistan to improve conditions in tribal belt on both sides of Pak-Afghan border.

The multi-faceted strategy of the present government to counter terrorism was also discussed at length. Japan is also providing fuel and water to Pakistan Navy for free. Pakistan also sought assistance for developing a modern science and technology university.

Reciprocating, the Japanese Foreign Minister said: "Stability and development in Pakistan is linked with global peace." To help Pakistan eradicate terrorism and strengthen democracy, Japan would convince other G-8 members to assist the country for achieving these objectives.

Responding to a question about new government policy against terrorism, Qureshi said: "The new government is aware of peace and security in the region. However a small number of terrorists in tribal belt are threatening peace. The tribal people want socio-economic development in the area. We will root out terrorism to materialise this objective, he asserted.

Japanese FM said: "In my understanding Pakistan must be helped in fight against terrorism and we will facilitate democracy and stability in Pakistan". Replying to a question about multi-pronged strategy on terrorism, Japanese FM said he discussed these issues in meetings with Prime Minister Yusuf Raza Gilani and President Pervez Musharraf.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Plan to produce 2,379,000 tonnes of maize in fiscal year 2009 prepared ​* 
FAISALABAD (May 04 2008): The Ministry of Food, Agriculture and Livestock (Minfal) is chalking out a plan to cultivate maize crop over 1001,000 hectare to produce 2,379,000 tonnes of maize to fulfil the domestic maize consumption during 2008-09.

According to official sources, the maize crop is an essential food crop, which is being used in different food items as well as to prepare animal, poultry feed and edible oil. According to agri scientists, this crop is grown twice in a year. They said that in some areas it is a substitute of wheat. Moreover, the farmers use its stems as animal fodder, they added.

They mentioned that to achieve the target, special focus is being given on creating awareness among the farmers to improve productivity of spring maize, by sowing of hybrid maize varieties. Sources said the provincial research and extension institutes are also concentrating on introducing hybrid crop production technology through awareness programme and efforts are also being made to produce hybrid maize at the local level.

Presenting the province-wise details, the official informed that in Punjab, the maize crop will be cultivated over 530,000 hectare to get 2,593,000 tonnes of maize. In Sindh, Balochistan, and NWFP more land area has been brought to cultivate the maize to obtain 533, 1,583 and 1,000 tonnes of maize crop respectively, official plan said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*ADB to spend $300 million on Sindh cities' improvement programme ​*
KARACHI (May 04 2008): Sindh Government is carrying out planning for $300 million Sindh Cities Improvement Program with the co-operation of Asian Development Bank (ADB). This was informed by Additional Chief Secretary Planning and Development, Nazar Hussain Maher, in a briefing on ADB-funded projects given to Sindh Chief Minister Syed Qaim Ali Shah here on Saturday.

The objective of the program is to improve the standard of life in Sindh's cities with reforms in the basic structure of cities as per modern day requirements. ACS said the program will be launched under Taluka Municipal Administration and Sukkur, New Sukkur, Rohri, Shikarpur, Larkana and Khairpur will be taken up under Phase-I.

In order to raise the living standard in these cities, modern civic facilities would be provided through implementation of water and sewerage schemes and steps taken for solid waste management, Chief Minister was informed. ACS said that improvement does not mean spending billion rupees on construction of buildings because this cannot lead to attainment of stable development targets. He described the performance of Public Health Engineering department as disappointed.

He said the reason thereof is that the department does complete the scheme, but takes up no responsibility to operate it and, therefore, this department was not held responsible for failure of any scheme. He informed that in Sindh there are some 1700 water supply and drainage schemes out of which 700 are non-functional.

Nazar Hussain Maher said a Public Utility Service Corporation, to be named as Sindh Urban Services Corporation, will be setup to provide better basic facilities to cities under Sindh Cities Improvement project.

Briefing the meeting about present situation in Sindh regarding water supply and drainage, waste management, problems of existing infrastructure and other related issues, Ms Cathey Julian, leader of the ADB Cities Projects team, informed that objective of Sindh Cities program is to focus on the problems of water supply, drainage and solid waste management.

The Phase-I of 300 million dollar project would be completed with an investment of 30 million dollars whereby North Sindh Urban Services Corporation will be setup with Headquarter at Sukkur, she told the meeting.

The Chief Minister welcomed the ADB team and appreciated its Cities Improvement Program. He said previous government failed to produce results and people of Pakistan have suffered a lot and now wants development and people-friendly projects so that poverty is alleviated on one hand and they gets access to basic facilities of life on the other. Approving the project, Syed Qaim Ali Shah issued directive for the establishment of Sindh Urban Services Corporation under Companies Ordinance 1984.

He said that other cities of Sindh, including central Sindh and cities in the South should also be studied. He directed that timeframe for the project be reduced so that it is completed at the earliest and people are provided better and modern facilities of life. Sindh Local Government Minister Agha Siraj Durrani, Chief Secretary Fazlur Rehman, Secretary Local Government Aftab Memon and other officials were also present in the meeting.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Making retail businesses competitive​*
Grocery shopping is entering a new age with the advent of global retailers like Makro and Metro. The French retailer Carrefour is also expected to open up a hypermarket in Lahore, making its own mark on the retail landscape. But while a blessing for thousands of shopaholics, they are also ringing an alarm for thousands of small to medium-sized retailers, who are competing in the same market place.

While these local businesses may not be adversely affected in the short run, they are likely to see a decline in their sales and profitability over the next few years, owing to opening up of these mega retailers all over the major cosmopolitans, their competitive prices and wide product variety and the consequent change in consumer shopping patterns, who are increasingly shifting to these new stores.

The phenomenon of wiping off small businesses due to opening of mega-retailers is not new and has been witnessed in the West. In US, specifically, it is also sometimes termed as the Wal-Mart phenomenon, named after the worlds biggest discount retailer, which revolutionised the shopping landscape over the last 46 years. The news of opening up of a mega retailer like Wal-Mart is the worst nightmare for a small retailer in the United States, as it does not have the muscle to compete with these enormous corporations due to their massive marketing budgets, low prices and variety of products. This is exactly what is likely to happen in Pakistani retail market.

With increasing competition and introduction of global retailers, the industry is likely to witness a wave of consolidation, eliminating several small to mid-sized retailers in this race of competition. Moreover, these trends are just the beginning, with the likelihood of more and more global retail chains eyeing the Pakistani consumer market. In 2005, Pakistans foray for the first time into the A. T. Kearneys Global Retail Development Index, an index of 30 emerging retail markets that are attractive for investment, was a clear indicator that Pakistan is very well on its path to becoming an attractive destination for global retail chains.

Such a scenario may be very beneficial to the overall market, as it makes the industry more competitive, offering consumers variety of choice at competitive prices, this may at the same time serve as the death warrant to a number of small-to-medium businesses in the long run, who will find themselves helpless in this competition, based on their limited capacity to compete. Not only would their size be a disadvantage for them to compete with their giant counterparts in terms of costs, but their traditional approach of doing business can also prove to be a drag for them in adopting new business practices.

These retailers however, can put their act together right now and come up with appropriate measures to counter this upcoming threat. The sooner they realise this threat the better theyll be able to counter it. The only answer to this threat lies in enhancing the business competitiveness of these retail business enterprises.

Competitiveness at the firm level can be broadly defined as the ability to compete effectively with its competitors in the market place. Enhancing competitiveness for these SMEs however is easier said than done. Not only does it require awareness of this threat and a change in general mindset but also necessitate a few concrete steps by these enterprises as well as by the government.

Industry collaboration, for instance, can serve as a highly effective tool to counter competition from the big retailers. This collaboration can be geared towards forming buying groups or consortia for collective purchasing and bulk-buying. Such an association will allow these small retailers to enjoy almost the same margins as enjoyed by their big brothers. The idea of forming buying consortia is not new and has been tried and tested in various countries and across several industries. Such a step however, is hindered by the traditional competitive mentality of our retailers, and must be preceded by some confidence-building measures.

A good first step can be to strengthen the existing market associations, which can then be used to develop these cartels. At a later stage, these cartels can also be used to launch private brands offering greater value to the consumers in terms of low prices, while offering healthier margins to the retailers.

Retail promotions come next, which is an area that has traditionally been ignored by our retailers. While the trade promotions, offered by consumer good companies to retailers, as well as consumer promotions, offered by these companies to consumers through the retailers, are common in the marketplace, any retail promotion from the retailers end is a rare phenomenon.Such promotions coupled with limited local advertising, however, have the potential to do wonders for any retailer.

Due to the similarity in product offerings, most of these retailers are either competing on prices or sometimes due to personalised relationship with the clients. However, through well-designed promotions, such as off-shelf price discounts, product bundling, loyalty programmes, coupons, etc., these retailers can compete well in the market place and even snatch the consumers from other retailers.

Several strategies have been developed in the West to design excellent promotions, providing value to the customers but at the same time increasing the customers basket size. These promotions can also help the retailers in getting rid of the unwanted inventory, which causes a drag on their working capital.

Operational excellence is another area, which can greatly help an enterprise in squeezing hefty margins from the existing business. This excellence can be achieved through better inventory management solutions, POS (point-of-sales) software, restricting shop-lifting and wastages, etc. A heavy focus on customer relations is also a critical factor to make the small retailers more competitive.

Although most of these small retail store owners have personalised relationship with some of their clients, very often they are resistant to go out of the way to serve their clients. Some of the problems faced by the customers are in the area of product returns, which is a normal practice in the West but has been severely resisted in the local retail market. Introduction of such practices, however, is likely to go a long way in enhancing customer loyalty.

Considering that 14.67 per cent of our labour force is employed by the retail and wholesale trade segment (including hotels and restaurants) and it contributes substantially to our GDP, this must be a high priority area for the government.

Some of the immediate steps, which can be taken by the government, are to sensitise the SME sector about this upcoming threat, through awareness campaigns and educational seminars, launching capacity-building initiatives for industry associations as well as for individual business enterprises and offering financial incentives.

Government organisations like SMEDA can forge partnership with educational institutions to offer retail management training for these retailers and these programmes can be offered through trade and market associations. Providing financial support for selected areas is another area, which can motivate these SMEs to adopt state-of-the-art business practices. Business Support Fund, a project established by ministry of finance and SMEDA and funded by Asian Development Bank, is already providing financial assistance to SMEs for procurement of business development service on a matching grant basis.

While the modalities of this model might raise a few questions, the initiative is helping a number of SMEs in addressing their business needs. Such projects can also focus on targeted interventions, ranging from simple cookie cutter solutions like developing and implementing ERP solutions for these small-to-medium retailers to more innovative initiatives, such as enabling the retailers to transform their businesses into multi-outlet enterprises, through better monitoring and control systems.

The government should also encourage other international donor organisations to focus on the retail sector and dedicate some of their technical assistance funding within their economic growth portfolio and enterprise development programmes on enhancing the retail competitiveness, especially within the SME segment.

While the government should encourage the FDI flow through these global retail chains, it must also consider strengthening the SME segment within the industry, providing employment to millions of people.

Making retail businesses competitive -DAWN - Business; May 05, 2008


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## Neo

*Unemployment in rural Sindh​*
Unemployment in rural areas is the most daunting challenge being faced by the new Sindh government. The rural areas are fast losing their agriculture-based employment potential due to persistent shortage of water and land degradation. Almost 14 million people in rural Sindh directly depend on agriculture as their major source of livelihood.

However, this source of livelihood and employment is under severe pressure due to variety of reasons. Drought, faulty water distribution mechanism, poor management of water resources, land degradation, lack of research and inept market policies are the few among the long list of reasons taking toll of agriculture economy.

The situation can be gauged from the following table showing the the decline in area under cultivation. The table shows the decline in area sown under important crops from 1995-96 to 2004-05

Declining produce has a direct bearing on rural poverty and employment. A World Bank report, Securing Sindhs Future-The Prospects and Challenges Ahead paints a very grim picture of unemployment in Sindh. It reveals that due to growing population, rise in literacy and migration, nearly 600,000 additional people would be entering in job market each year in Sindh. This is in contrast with the long-term annual job creation rate of 350,000 in the province.

Over the recent decade, Sindh has been frequently denied its due share in water distribution. Growers have been complaining that water shortage in canals and distributaries of Sindh has become a perennial problem. The new government would have to tackle this issue through effective representation in IRSA and Wapda . Only judicious share and efficient use of water can improve agriculture-related employment in rural Sindh.

However, climate change effect is likely to increase in the coming years and availability of water in river system would continue to be a question mark. To manage this risk, there is a need to diversify employment opportunities both in rural as well as urban areas of the province. The Sindh government needs to explore non-conventional avenues to create employment opportunities apart from revitalising its agriculture sector.

Agro-based industry could provide some relief but incentives are required to attract investment in rural areas. Poor law and order conditions and weak infrastructure have also been a barrier to growth of agro-based industry. The industry in Sindh is mainly concentrated in Karachi except handful of units in Hyderabad, Kotri and Sukkur. Presently, about 11,500 small and large industrial units are located in four major industrial areas of Karachi, providing employment to over 2.5 million people.

Since rural Sindh has predominantly agriculture based economy, human resource required for industrial sector has not been developed there. No significant investment was made in infrastructure required for promoting rural industry. Due to lack of demand and poor administration, institutes of vocational training and job skills are also in bad shape in rural areas.

Presently, 45 polytechnic and mono-technical institutes are operating in Sindh having about 18,000 registered students. However only 8,000 of them studied in institutions located outside Karachi. Likewise, the Directorate of Manpower and Training is operating about 33 training centres including technical, apprenticeship and youth vocational training centres. Most of such centres in rural areas are dysfunctional due to various reasons. Proper training through revamped institutions could open doors of urban- based employment for rural youth.

Quality education institutes in the rural areas also deserve attention for creating human resource with advanced degrees. Public sector universities in rural Sindh are victims of lack of resources, quality faculty and infrastructure. Graduates from these universities cannot compete with graduates from urban-based private sector institutions. This is resulting in frustration among qualified rural youth.

Quality education institutions are mostly centred in Karachi, which are too expensive for lower and middle class families of rural areas. Presently, there are 25 HEC recognised degree awarding private sector institutes in Sindh; 23 of them are located in Karachi and remaining two in Hyderabad. From 2001/02 to 2005/06 these institutions produced over 36,000 graduates, all from Karachi except 900 from Hyderabad.

Information technology is a promising sector offering wide spectrum of jobs nationally and internationally. However, rural areas are deprived from any significant benefit from this sector. According to a research report of Pakistan Software Export Board (PSEB), this sector is providing jobs to about 138,000 employees and the number of job opportunities is expected to be around 235,000 in 2009-10. Rural areas are far from the scene. PESB website shows 1,161 registered IT companies in the country. This includes 412 in Karachi, 331 in Islamabad, 418 in Lahore and remaining in other cities/towns.

In Sindh, some 25 institutions offer degree courses in IT sector; 23 of which are in Karachi alone and one each in Hyderabad and Tando Allahyar. Due to such gap of access to IT education, rural youth have very limited opportunities to benefit from this fast growing job market. It is time that quality education centres in IT should be established in all district headquarters to create more job opportunities for educated youth from rural areas.

The Sindh government should devise a comprehensive strategy to tackle the challenge of unemployment specially in rural areas. It would be advisable set up a human resource development and employment authority to execute long-term strategies for creating job opportunities for rural and urban youth to reach out to national and international job markets.

To create a socio-economic balance in urban and urban areas, there is a dire need to provide basic educational training facilities and employment opportunities across the province.

Unemployment in rural Sindh -DAWN - Business; May 05, 2008


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## Neo

*Squeeze in spending to contain fiscal deficit​*
A MAJOR cut in the development spending and $3 billion capital inflows including quick loan disbursements by international financial institutions is expected to help contain the surging fiscal deficit.

Sources said that a further Rs40-50 billion cut is envisaged in the Public Sector Development Programme (PSDP), which earlier was slashed by Rs70 billion by the PML (Q) government.

Talking to Dawn Federal Finance Minister Ishaq Dar said that $1.5 billion was expected from the World Bank (WB), Asian Development Bank (ADB) and the Islamic Development Bank (IDB). Another $1 billion will come as foreign direct investment (FDI) and rest will be secured from international financial markets.

This funding will help us maintain our fiscal deficit at 6.5 per cent of the GDP against the original target of four per cent set for 2007-08.

Mr Dar said the World Bank had frozen its assistance during the PML(Q) government for presenting unreliable economic data and various other budgetary figures In the joint World Bank/IMF annual meetings held last month, he was told to stick to four per cent fiscal deficit target. But I informed them it was not possible and that they should not expect fudging of figures from us as was done by the Shukat Aziz government.

Eventually, Mr Dar said he convinced particularly the World Bank officials on the issue. I am glad to tell you that the World Bank has now decided to resume its usual annual assistance to Pakistan.

He, however, said that new resources would have to be mobilized for the budget 2008-09 through rationalisation of existing taxes and widening the narrow tax base. He regretted that the tax-to-GDP ratio was currently less than 10 per cent of the GDP. Untaxed sectors would have to be brought under the tax net to improve countrys financial health.

Taxing agriculture income and the services sector were important issues which would be decided with mutual understanding of the coalition partners, he said while responding to a question.

The finance minister also hinted at the possibility of withdrawing various subsidies and exemptions in the next budget. He said only targeted subsidy would be offered to the poor.

We are identifying five million poor families i.e. around 30 million people to be offered certain relief in the next budget, Mr Dar said.

Only the deserving people will get the targeted subsidy particularly on food items. This could also include food stamps. He said adding some credible method would be adopted to identify vulnerable groups to be offered some specific relief in the budget.

Mr Dar said he would not rely on Zakat Committees, and would collect data about the poor from the credible sources all political parties trust.

Attracting investment was another important area which would get due importance in the next budget. The government would look into extending necessary incentives to attract increased investment particularly foreign investment

Chief economist of the ABN Amro Bank Saqib Sherani, when approached, said the conventional wisdom demanded that the current fiscal crisis should be tackled by taking timely decisions. The new government needed to first rationalise its expenditures and take sufficient revenue raising measures in the next budge..

He was of the view that economic stability was equally important like political stability and, therefore, it must get full attention of the new coalition government.

To a question, he said IFIs timely support could help solve some of the pressing financial problems of the government during the current financial year. But for 2008-09, the government should introduce new taxes to improve its revenue collection.

He said capital gain tax on stock exchanges and equities must be levied in the next budget and that the issue must not go unnoticed by the coalition government if it was serious at all in solving the financial problems. Then tax on real estate transactions, should be introduced besides bringing services sector into the formal tax net, he said.

Mr Sherani also called for announcing tax on agriculture income in the budget. He did not believe that all the segments of society deserved subsidies including on oil consumption. Only the targeted subsidies should be given to the poor.

A senior economist in the Policy Planning Cell of the ministry of labour and manpower, Dr Zafar Moeen Nasir, was of the view that the government should revamp its taxation system to plug leakages and levy tax on farm incomes..

Squeeze in spending to contain fiscal deficit -DAWN - Business; May 05, 2008


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## Neo

*Rs140 billion capital eroded over political concerns​*
AFTER having jealously guarded the index level above the barrier of 15,000 points for the last several months, the KSE 100-share index broke through it last week as investors were not sure about the political scenario amid conflicting legal interpretations of the judges issue. The index quoted at 14,956.82 point last week, eroding 140 billion from the market capital and 478 points from it.

Stocks, therefore, fell throughout the week but erosion were generally creeping and seldom attained proportion of panic or hasty selling, analysts said and added that bulk of the selling was from foreign investors who wanted to get out of the market fearing confrontations between the power contenders.

However, most of the overvalued shares did pass through successive lower locks on selling without finding many buyers. The market showed guarded optimism to the reported break-though in Dubai talks on the issue of judges.

Earlier, the deadlock on judges issue between the PPP and PML-N adversely affected the trading and share values fell like the house of cards on selling triggered by fears of collapse of the coalition government at the centre.

The KSE 100-share index breached through the barrier of 15,000 after several months and was last quoted at 14,956.82 points, off 478 points or 4.5 per cent, eroding well over Rs140 billion from the market capital. The KSE 30-share index also shed 636 points at 18,011 points.

The market passed through another lean week as pruning operations were well sustained on the overvalued counters despite higher corporate earnings and payouts by most of the leading companies. Even sharp recovery staged by MCB, the market continued to erode ground in the absence of fresh support.

Some technical factors and negative reports from the political front contributed to the extension of the sell-off, although it was well-absorbed on certain leading counters.

The weakness of the rupee has a close relationship with the share business as both provide safe haven to each other at the time of an impending crisis, but when both are under pressure the weaker link suffers the most, said a leading analyst Hasnain Asghar Ali.

That was why the market failed to extend the early run-up as unofficial devaluation of the rupee against the dollar by about Rs5 inspired both the local and foreign investors to sell off their shares.

We are trapped by the double-edged weapon of declining share values and depreciating rupee and the continuous erosion in the value of our savings compels us to sell, said a leading stock analyst Faisal A.Rajabali.

The opening, however, was on the higher side on active follow-up support aided partly by higher dividend and partly to active foreign buying in the leading oil shares, reflecting that investors had ignored the reports of fresh probe into the market crash of March 2005.

An idea of strong early buying euphoria may well be had from the fact that the KSE index crossed the barrier of 15,500 and was close to breach through the next barrier of 15,600 at 15,595.13 before bears fought back.

The interesting feature was that unlike the price movements in normal trading, there were odd changes in some of the leading shares, mainly in Indus Motors which witnessed a rise of Rs16.59, PPL Rs.6.07 and BOC Pakistan Rs5.98.

The fact that the index had earlier sustained over the last couple of weeks, its newly established base above 15,000 points reflected that it could rise further to its new target supported by positive news from political and corporate fronts, but news from Dubai worked against it and it fell below the barrier.

The budget is still five weeks away possibly in the first week of June, most of the feelings originating from the relevant quarters about taxing the share business, the investors morale was high, said a leading stock analyst Ashraf Zakaria said.

The firm opening despite negative news including reopening of investigation into the March 2005 market crash, which wiped out Rs700 billion from the savings of small investors, by the finance committee, and delay in the announcement of restoration of superior judiciary to the Nov 3 position, investors seem to be inclined to go by the market fundamentals at least for the time rather than any other immediate depressant, analysts said.

Higher interim dividend by OGDC and Fauji Fertiliser at 22.5 per cent and 35 percent respectively and some others did encourage fresh buying, keeping the market in a good shape.

Working results and EPS of some leading banks including Askari, Allied and United Bank were on the lower side of the analysts, but they failed to have a negative impact on the overall market trend perhaps owing to higher return to its shareholders by Bank Alfalah.

Positive earning reports from some other leading companies are due and indications are that the market could sustain the current levels.

Forward counter: Barring MCB, Engro Chemical and others, which managed to on-balance higher, other leading shares on the cleared generally fell under the lead of Bank of Punjab, Nishat Mills, OGDC, Pakistan Oilseeds, and some others amid active two-way activity. Muhammad Aslam

Rs140 billion capital eroded over political concerns -DAWN - Business; May 05, 2008


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## Neo

*Qatar to hire 30,000 Pakistani workers ​*
ISLAMABAD (May 05 2008): The Gulf state of Qatar would hire 30,000 skilled and semi-skilled workers from Pakistan this year. In this regard, an additional protocol has been signed pertaining to the existing labour agreement, which was inked between the two countries in 1987 to regulate export of manpower to Qatar.

The agreement was signed by Federal Minister for Labour and Manpower Khursheed Ahmed Shah and the visiting Qatar Minister for Labour and Social Affairs, Dr Sultan Bin Hassan al Dhabit al Dousari. This agreement will provide an opportunity for more people to be accommodated in Qatar and also in rehabilitating those Pakistanis whose contracts expire subsequently.

It will also help those workers who, after the expiry of their contract, or otherwise, will be able to get their full benefits in terms of social security, wages or any other emoluments being their legal dues.

Under the articles of the additional protocol, it will be a step forward to ensure additional employment opportunities in Qatar, and it will be reviewed once a year through a joint committee to facilitate Pakistani workers.

Talking to media, the Minister said that around 75,000 Pakistanis are working in Qatar so far. Under this agreement, he said, 'We would send 30,000 workers to Qatar in 2008". Khursheed said that HE would soon visit Qatar to discuss matters relating to export of IT experts, doctors and engineers.

He said that Qatar has been demanding skilled manpower, "but we are facing a shortage of trained workers due to discontinuation in policies during last many years".

However, the government is making a plan to set up more vocational institutes countrywide to train workers to meet requirements of international labour markets, he added. He said that the government was also making a comprehensive plan to curb child labour through education and financial aid.

The Minister said that he would visit Saudi Arabia on Monday to discuss the Haj policy with the Saudi government. The new Haj policy would be announced in near future, he added. He said that Haj would be expensive this year due to growing oil prices in the international market.

The Qatar government is committed to invest more than $2 billion in Pakistan. It is now the fastest growing economy in the world, and is in the process of building up its infrastructure. The major sources of Qatar are liquefied natural gas (LNG) and oil.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*SMEs seek incentives to increase exports ​*
SIALKOT (May 05 2008): World trotters have introduced Sialkot as total export-oriented city of Pakistan. Since this place possesses century old industrial heritage. It has developed a remarkable export culture over the period and contributing more than 900 million dollars to the national exchequer annually.

Still the exporter community is trying its utmost for doubling the export volume despite of tough competition in the world market for fetching valuable foreign exchange for the country.

Undoubtedly, the Small and Medium Enterprise (SMEs) were playing a significant role not only in strengthening the national exchequer but also providing employment to thousands workers in Sialkot.

In order to develop true and secure "Small and Medium Culture" of Sialkot the government should formulate a special package of incentives and concessions for SMEs of the area for increasing the export volume to many folds and to redress their problems.

The development of cottage industries in Sialkot has assumed a model status for the developing world. The city is sprinkled with thousands of small and medium enterprises, which are engaged in honouring their global commitments for export of valve-added quality goods such as sports goods, surgical instruments, leather goods, gloves, badges and musical instruments etc.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Foreign investors remit $580m profit, dividends ​* 
Tuesday, May 06, 2008

ISLAMABAD: Foreign investors remitted $580 million profit and dividends during the first nine months of the current fiscal with the biggest outflow of $126.5 million from the power sector followed by communications ($88.2 million) and oil and gas exploration sector with $60.5 million. 

During July-March 2007-08, total outflows of $580.1 million were about 5.1 per cent more than what it was recorded in the corresponding period of the last fiscal ($551.8 million), the State Bank of Pakistan (SBP) said on Monday. 

Independent economists believe that for a country like Pakistan, huge drain of foreign exchange looks very disturbing as it has already been facing a potential threat of burgeoning current account deficit (CAD) continuously for the last couple of years. 

During the period under review, the CAD jumped to an alarming $10.26 billion which is about 60 per cent more than the corresponding period of the last fiscal ($6.41 billion). They question whether an investment is coming for a manufacturing unit which will create jobs, increase production and augment exports or a service unit with limited options like mobile telephones that have to be imported in large numbers along with supportive equipment. 

The answer to the question is to be found that whether investment will promote exports or help in import substitution as the country needs more exports and greater import substitution so that the import bill could be reduced. 

If it is a manufacturing unit, will it depend on imported raw materials or use the local raw materials? the country has already a huge raw materials import bill, which it cannot afford to expand unless the exports increase. 

At the moment, these outflows are overshadowed by huge quantum of inflows but, in the long-run, the quantum of outflows could exacerbate balance of payments. Can the government be able to sustain inflows in the shape of privatization proceeds about which the government is very confident and how long it would keep on privatizing its state-run entities? 

There would be one point where all these inflows would dry then what would be the alternate source to finance current account deficit. However, now the government had inclined to receive proceeds through Global Depository Receipts (GDR) which is not a true

http://www.thenews.com.pk/daily_detail.asp?id=110775


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## Neo

*privatization because it not is even qualifying the definition of privatization. ​* 
Tuesday, May 06, 2008

Interestingly, foreign investors find the country an attractive destination, as they are allowed to invest in any sector and bid for any privatized enterprise. Besides, there is no limit to the profit they can make and they can repatriate 100 per cent of the capital anytime and remit their total profits to their countries. 

Though, it is very pleasing for the country to receive large foreign direct investment (FDI), but painful aspect of this growth is raising outflow of profits/dividends in foreign exchange. 

As during the FY2006-07, such outflows on account of remittance of profits and dividends to foreign investors countries of origin amounted to $804.2 million against $504.4 million in FY2005-06. 

Power sector, especially thermal stood at the top of the list with highest profit and dividend remitted by the foreign investors to their countries was $126.5 million last year during the same period it was $102 million. 

Communication and financial business sectors which due to high profit ratio have proved as a magnet for foreign investors form these sectors; investors remitted about $88.2 million and $52.1 million respectively. 

Unfortunately, these sectors create not sizeable jobs or help in incensing countrys exports. Outflow in terms of profit and dividend during the period under review from oil and gas exploration sector was $60.5 million, petroleum refining ($48.2 million), chemicals ($29.4 million), tobacco and cigarette ($27.3 million), food ($21.69 million), pharmaceuticals and OTC products ($19 million), transport ($15 million), trade ($14.4 million), transport equipment (automobiles) ($13.8 million), food packaging ($5.8 million), cement ($5.6 million), storage facilities ($5.1 million), personnel services ($2.5 million), tourism ($2.4 million) and from textiles sector these investors remitted $1.4 million during the period under review. 

According to economic experts, due to outflows, the current account deficit and fiscal deficit (twin deficits) may have a significant impact on the value of the rupee, a matter attracting keen attention around the country. 

http://www.thenews.com.pk/daily_detail.asp?id=110776


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## Neo

*Pak citiesneed $10bn for infrastructure: WB ​* 
Tuesday, May 06, 2008

ISLAMABAD: The World Bank (WB) has estimated that Pakistans cities require $5 to $10 billion for improving water, sanitation and solid waste management facilities in order to meet its future challenges.

The World Bank is ready to provide financing on the basis of demand, but the private sector will have to be involved to improve municipal services in major urban centers, Mihaly Kopanyi, Senior Infrastructure Specialist, the World Bank said while talking to selected group of journalists after attending a workshop on Public Private Partnership (PPP) and Municipal Services. The workshop was organised by the Infrastructure Development Financing Facility (IPDF) at the WB office here on Monday.

He said that the WB was working along with Pakistani authorities to devise an institutional mechanism to improve infrastructure in five major urban centers of Punjab including Lahore, Gujranwala, Multan, Rawalpindi and Faisalabad.

The institutional mechanism will be in place by September 2008, he hoped and added that the World Bank had committed $300 million for improvements in Punjab. Earlier, during his presentation in the workshop, he criticised the PC-1 exercise, saying that it did not provide complete details about the project.

On the basis of his research done in a few districts of Punjab, the WB official said no reliable data is available to analyse the situation that exists on the ground related to provision of water, sanitation and solid management.

The IPDF CEO, Ijaz Ahmed Khan said that Pakistan requires $100 billion for meeting infrastructure related challenges in the future. 

Elaborating on the $100 billion need, IPDF CEO said that the country requires $22 billion for multipurpose water reservoirs, throw forward of infrastructure projects which are $20 billion, maintenance backlog $10 billion, other energy projects $18 billion, transport and communication (National Trade Corridor, shipyards, NHA, Railway) $16 billion, urban mass transit (Karachi and Lahore metro) $4 billion, municipal services $2.5 billion and health and education (physical infrastructure) $4 to $5 billion.

The Government of Pakistan realises the need to fill gaps between the demand and supply of infrastructure in a manner that leverages private resources as far as possible and yields optimum benefits for every rupee that the government spends, stated Advisor, Ministry of Finance, Ghafoor Mirza, in his opening remarks at the inaugural session of the workshop.

Ghafoor Mirza said that the Government of Pakistan has established IPDF under the umbrella of the Ministry of Finance, in order to develop a comprehensive PPP programme, an important economic reform policy tool, for generating growth and closing gaps between the supply and demand of the infrastructure requirements of the country.

Pak citiesneed $10bn for infrastructure: WB


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## Neo

*SACC terms Pakistan area of investment ​* 
Tuesday, May 06, 2008

KARACHI: Swiss-Asia Chamber of Commerce President Peter Zuellig and Swiss Consul General Martin Bienz have described Pakistan as an area of investment due to its geo-strategic location in Asia. 

The dignitaries held a meeting with Waqar Malik, President of Overseas Investors Chamber of Commerce & Industry (OICCI) they identified and discussed issues of mutual interest that will positively affect foreign investment in the country.

They said in the coming years their office will look towards encouraging more companies from Switzerland to invest in the country and acting as a significant proponent of Pakistan as an emerging market for foreign investors.

Malik emphasized Pakistan has immense potential for growth and incentives to promote several areas such as food processing, infrastructural development, engineering, and information technology. He stressed he importance of perceiving low performing sectors and those areas with low investment as avenues for future business and development. 

SACC terms Pakistan area of investment


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## Neo

*ADB releases $214m for reconstruction ​* 
Tuesday, May 06, 2008

ISLAMABAD: The Asian Development Bank (ADB) on Monday released $214 million to the Government of Pakistan under the Earthquake Displaced People Livelihood Restoration Programme.

The ADB said the amount is the second tranche of a $400 million loan aimed at helping Pakistan meet the rebuilding cost of about 585,000 rural houses damaged or destroyed in the earthquake.

The funds being provided to the ERRA will help expedite disbursement of housing compensation to the earthquake-affected families and will enable people to complete reconstruction of their damaged and destroyed houses during summer, said Peter Fedon, Country Director of ADB in Pakistan on Monday.

We are committed to supporting the governments efforts in meeting the reconstruction challenge all the way through, building on the strong momentum in the reconstruction process and we will continue to assist ERRA until the job is done, he added.

The ADB pledged $1 billion for reconstruction and rehabilitation, mainly in the housing, power, health, education, transport and social protection sector. To date, ADB has committed about $820 million in loans and grants and leveraged another $100 million in the form of bilateral grant funds from its co-financing partners Australia, Belgium, the European Union, Finland, and Norway.

Rebuilding of over half a million destroyed or badly damaged rural houses was a phenomenal challenge, however, the decision by the Government to provide a Rs150,000 housing grant to each affected family has been a major successful initiative. The decision to let people take charge and build their own houses has been extremely useful in terms of assisting people in rebuilding their houses based on their own needs and time frame and using seismically compliant designs approved by ERRA says Shaukat Shafi, senior ADB project implementation officer.

ADB, based in Manila, is trying to reduce poverty in the Asia and Pacific region through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members ñ 48 from the region. In 2007, it approved $10.1 billion of loans, $673 million of grant projects, and technical assistance amounting to $243 million.

ADB releases $214m for reconstruction


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## Neo

*Cement sales increase by 24pc ​* 
Tuesday, May 06, 2008

KARACHI: Cement sales during the first 10 months (July-April) of fiscal year 2008 depicted an increase of 24 per cent to stand at 24.5 million tonnes due to growing local demand and increasing cement shortage in the region leading to higher exports.

Export sales have shown a commendable increase of 142 per cent while local dispatches saw a rise of 8 per cent during the period. Similarly, a 23 per cent growth was witnessed in April 2008 on a year-on-year (YoY) basis, mainly driven by a 157 per cent surge in exports and 1 per cent increase in local cement sales, JS research reported.

Cement exports are expected to remain buoyant as significant cement shortage exists in regional countries like India and the UAE, while South Africa is looking to import cement in order to meet its demand and to check rising cement prices. Local cement sales are also likely to pick up due to private sector projects and infrastructure development.

On the contrary, on a month-on-month (MoM) basis (Apr 2008 over Mar 2008), total cement sales have shown a decline of 16 per cent in Apr 2008. Exports have decreased by 11 per cent and local sales have shown a dip of 17 per cent. This considerable decline in cement dispatches during Apr 2008 is attributed to the seasonal slow down in construction activities during the harvesting season. Labor force as well as transportation is not available in the harvesting period that causes construction activities to decline, negatively impacting the cement demand.

Cement sales increase by 24pc


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## Neo

*Pak Suzuki plans to assemble Euro-II cars​*
KARACHI, May 5: A leading auto assembler is lobbying ahead of the new budget for the permission to import Euro-II compliant auto parts from India at zero rated duty for manufacturing cars with Euro-II engine locally.

However, the local auto vendor industry has strongly opposed the assemblers move in a meeting of the sub committee of the Auto Industry Development Committee (AIDC) held last week in Islamabad at the Engineering Development Board (EDB).

Sources in the auto sector said that Pak Suzuki Motor Company Limited (PSMCL) has floated this proposal because Indias Maruti Suzuki also produces the same model with Euro II engines.

Despite the fact that trade with India is not allowed in the auto sector, the local company is looking forward for the approval ahead of the next budget.

An official in the EDB, who asked not to be named, also said that the PSMCL had taken up this issue but the decision cannot be taken overnight.

The matter would again be discussed in the high-level meeting of the AIDC but it will not be an easy decision because it is a major shift from one technology to another.

He added that the local vendors had been strongly resisting this proposal.

Members of Pakistan Association of Automotive Parts and Accessories Manufacturers, on condition of anonymity, said that the Euro was an advance technology and environmental friendly but the models especially produced by Suzuki in Pakistan are decades old.

They said that a vending base had developed but it cannot be transformed abruptly without taking the local vendor industry into confidence.

They said that they would not tolerate the import of Indian auto parts. If the PSMCL is interested in bringing Indian parts they can procure it from other sources at the 35 per cent duty rate for completely knocked down kits (CKD) under the Tariff Based System (TBS).

Vendors said that the PSMCL knows that the Suzuki car prices would shoot up in case Euro-II parts are imported at 35 per cent duty, thats why they are keen for import from India at zero rated duty because Japan does not produce Euro-II compliant parts.

They said Pakistan did not have the infrastructure like green fuel for Euro-II compliant cars. They added that the Japanese manufacturer should think of a joint venture between the local vendors and the Indian vendors in producing Euro-II engines and its parts rather than directly importing them from India. Vendors also said that other Japanese manufacturers had opposed the Pak Suzukis proposal.

Besides, assemblers of bikes and a local tractor manufacturer have also sought permission to import of Euro II compliant parts from different sources.

Meanwhile, a car spare parts maker said that the vendors of Honda were already perturbed after the launching of new Honda VTI last year in which most of the parts are imported.

In the previous model I was supplying 15 auto parts but in the new model the company is taking only one part, he said.

Pak Suzuki plans to assemble Euro-II cars -DAWN - Business; May 06, 2008


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## Neo

*Pakistans economic growth hailed​*
DUBAI, May 5: His Highness Sheikh Nahyan Bin Mubarak Al Nahyan, chairman of the Abu Dhabi Group, hailed Pakistans economy for growing steadily at an impressive rate. A wide range of reforms enacted in the country helped it to achieve high levels of economic growth.

The confidence of the private sector is high and international investments are increasing, he said.

He was addressing at the first Middle East-Pakistan Agriculture and Dairy Investment Forum held at Madinat Jumeirah on April 29 where investors, institutions and entrepreneurs gathered with high expectations of billions of dollars in new investments in Pakistans agriculture and dairy sectors.

He said aagriculture is crucial to Pakistans economic prosperity and Investment opportunities in this sector are attractive, says a press release.

Federal Minister for Investment Naveed Qamar said that the government was willing to facilitate investments and remove any bottlenecks that investors might encounter.

Pakistans economic growth hailed -DAWN - Business; May 06, 2008


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## Neo

*Rs1.2trn revenue target in new budget​*
ISLAMABAD, May 5: The Ministry of Finance has given a revenue collection target of Rs1.2 trillion to the Federal Bureau of Revenue (FBR) for the fiscal year 2008-09 and asked it to identify new sectors for taxation, including the levy of capital gains tax on property and stock markets.

Informed sources told Dawn on Monday that a 15 per cent increase in revenue was being projected in the next budget. A relief package for the poor will also be announced in the budget. The coalition government has failed to announce the package before the budget because of the precarious financial position.

The sources said the government had suffered a revenue shortfall of Rs35 billion and had to revise the annual collection target from Rs1.025 trillion to Rs990 billion for the fiscal year 2007-08.

The government plans to collect Rs210 billion more in the next financial year to achieve the 15 per cent growth in revenue, the sources said.

Representatives of stock markets on Monday met officials of the Ministry of Finance and FBR and opposed the levy of capital gains tax. They said that except for India, no country in South Asia and South East Asia had ever imposed such a levy on bourses.

The sources said that the current two per cent Capital Value Tax on property was likely to be increased in the budget to improve governments weak funding position.

The ministry has also asked the FBR to finalise its exercise of determining the total wealth of the country with a view to taking into account the revival of wealth tax.

However, the government had no plans to revise upward the income tax exemption of Rs150,000, the sources said. Some officials in the ministry believe that it is on the higher side and needs to be revised downward to increase the revenue during the next financial year.

FBR chief Abdullah Yousuf confirmed to Dawn that a 15 per cent growth in revenue was being projected in the budget. He said a number of new areas would have to be explored to increase the revenue collection.

He expressed the hope that the government would succeed in achieving the new resource mobilisation in 2008-09.

Rs1.2trn revenue target in new budget -DAWN - Top Stories; May 06, 2008


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## Neo

*Kamal says he is in US to seek investment​*
WASHINGTON, May 5: Karachi City Nazim Mustafa Kamal said on Monday that he had come to the United States to urge American businessmen to invest in his city.

We have built the infrastructure. We have created facilities. Now we need investment, the mayor told Dawn. Yes, there is a risk factor but we are here to convince the businessmen that it is a risk worth taking.

The mayors visit to Washington led to widespread speculations in the media, particularly in Pakistan, that he is here on a mission to strengthen President Pervez Musharraf.

Some reports also claimed that the US was trying to put together an alliance of like-minded parties to back the next political set-up in Pakistan should the PML-N quit the government.

Even CNN -- in a brief interview with Mr Kamal -- noted that the MQM leader had come to the United States at a time when Americas friendship with Pakistan isnt exactly what it was. A power shift and Pakistans new relationship with extremists is testing that bond. So the State Department was working to build bridges with Pakistans future, the report added.

CNNs State Department correspondent Zain Verjee noted that Mr Kamal had received star treatment at the State Department and that the mayor of Karachi is a guest with a mission.

It is not my domain, said Mr Kamal when asked if he was here for talks aimed at strengthening President Musharraf. I was not here to discuss this sort of things. My role remains confined to Karachi. I had no political talks.

A State Department spokesman, when asked to comment on Mr Kamals meetings with officials at the department, said: If you are looking for an ulterior motive, theres none.

The mayors 40-minute meeting with Assistant Secretary Richard Boucher was his only at the State, said the official.

Mr Boucher talks to a lot of people, said the official. They had met in Pakistan a month ago when Mr Boucher visited Karachi. We got word that he was in town, wanted to come by, say hello to Mr Boucher and present an album of his trip to Karachi.

Mr Kamal also denied having a hidden agenda. All I can say is that Karachi is a very important city and has a very strategic role to play in Pakistan, said the mayor. People are realising Karachis importance. We have developed that city and now we are seeking investment.

He said that the US State Department had helped arrange his meetings with the American business community and officials in various cities. He has already met the mayors of Chicago and Houston and the deputy mayor in Washington. In New York, he has a series of meetings with potential investors and is also meeting the board of directors of the worlds largest stock exchange.

Kamal says he is in US to seek investment -DAWN - Top Stories; May 06, 2008


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## Neo

*Cement exports rise to record six million tons ​* 
KARACHI (May 06 2008): The cement sector has marked another record of exports, which showed a healthy growth of 142 percent to the level of around 6 million tons due to rising international demand for the commodity, industry sources said. They said that it is expected that by the end of the current fiscal year cement exports would exceed 7 million tons.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Textile industry grossly misused R&D funds: SBP governor tells ECC ​* 
ISLAMABAD (May 06 2008): State Bank of Pakistan (SBP) Governor Dr Shamshad Akhtar has informed the Economic Coordination Committee (ECC) of the Cabinet that the textile industry was grossly misusing the research and development (R&D) fund, and the government should review its policy of injecting billions of rupees for protecting this inefficient sector of the economy.

Sources said that while giving a report to the ECC on textile industry's performance during first 9 months of the current fiscal year in its last meeting, Dr Akhtar said that the government had provided the textile industry Rs 40 billion up to April 15 for R&D with a view to help it compete in the global market, and get more export share for the country. But its performance remained dismal during this period.

She presented Federal Bureau of Statistics (FBS) figures on exports, indicating over 3 percent negative growth, in support of her claim. The report indicated that Pakistan textile exports dipped by 3.14 percent in nine months to $7.765 billion from $8.017 billion for the same period of last year. Such a huge drop in textile exports resulted in serious repercussion on balance of payments as this sector traditionally contributes 67 percent to total exports.

Previously, the textile industry was enjoying refund and rebate facility on exports. However, this policy was discontinued in 2006-07 on reports that a number of inefficient textile units were getting huge fake refunds, misusing the facility.

The ECC took SBP Governor's views very seriously and asked the Ministry of Finance (MoF) to come up with some other strategy to help the textile industry to become more result-oriented to compete with other players in the world market in the future.

The textile industry's performance is a big question mark. Despite huge financial support from the government in different forms over years it has failed to deliver. Its share in exports is continuously declining. Many special packages granted for it, by the government, have simply gone waste.

However, the SBP Governor's activism on this industry seemed a new phenomenon. Being SBP Governor, she was an important member of Shaukat Aziz team and by opposing the idea in the beginning she could have helped in saving billions of tax payers' money spent on R&D of the textile industry.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Foreign investment to be encouraged in Sindh' ​*
KARACHI (May 06 2008): The Sindh Minister for Information, Shazia Marri has said the Government will make all out efforts to encourage automobile, IT and Energy sectors of Pakistan. She was talking to a delegation of Japanese businessmen on Monday. The delegation informed the Minister that Japan was the second biggest economy of the world and around 10,000 people from Pakistan were engaged in the business sector of Japan.

They said the Japanese businessmen were eager interested in investment in various sectors of Pakistan and a Japanese company was already willing to establish a Automobile City either at Gawadar or in Karachi Port with an investment of dollars50 million.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Korean team visits ID & BoI ​*
ISLAMABAD (May 06 2008): A four-member Korean delegation visited Investment Division and Board of Investment (ID & BoI). Kim Kil Hwan, General Manager Sambu Pakistan (Pvt) Ltd; Erica Owen, In-House Lawyer; Choe Eyi Kyoung, Country Manager PDI and World Group LLC are the members of the delegation.

Ahmed Waqar, Secretary ID & BOI welcomed the Korean entourage and highlighted the policy parameters of investment in Pakistan. He underlined the policy which allows 100 percent foreign equity in the major sectors and full repatriation of profits and dividends in all the sectors.

Ahmed Waqar further explained that the average rate of return is almost 30 percent and in some cases up to 50 percent. The concept of SEZs and special incentives being offered was also projected with the emphasis on the Korean delegates to capitalise on this opportunity.

The delegation was explained that since the visit is on the short notice, it would be more fruitful when the Korean side may work out some specific sectors. So that in the next formal meeting Pakistani entrepreneurs and businessmen may also be invited for interaction and participation so as to generate investment and joint ventures between the two countries.-PR

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Dar briefs S&P about efforts to streamline economy ​*
ISLAMABAD (May 06 2008): Finance Minister Muhammad Ishaq Dar has told the Standard and Poors, the credit rating agency, that Pakistan is making all efforrts to streamline the economy David T. Beers of Standard and Poors called on Ishaq Dar in Madrid on Monday, and discussed the macro-economic situation in the country, especially imbalances caused by food and oil prices, according to a message received here.

The Finance Minister apprised the credit rating agency of the government's efforts to streamline the economy. He said the next finance bill would definitely focus more on revenue generation, targeting subsidies for the poor and bringing the central bank borrowing in its place.

Ishaq Dar said: "We are focusing on credible database. Our special stress will be on agriculture and manufacturing sectors". He added that credit would be made available to these sectors with a view not to subsidising but for efficient management of these sectors.

For agency: "We are preparing an energy plan, but we need infrastructure support", he added. Dar stated that "our budget was doubly hit; one by increase in prices and the other by price adjustments." The subsidies were not budgeted properly in the past, he observed.

On the bond issue, the Finance Minister stated that "we still have appetite for the sovereign bond but the question is of the pricing. "Price has improved and we are considering the issue. We are not interested in exchangeable bonds", he remarked.

The Finance Minister also spoke about the current prices shocks being faced by the developing countries in general and the South Asian countries in particular. He stated that the achievements made so far by developing countries for MDGs might be eroded due to price increase in food and oil, and proposed the Saarc should discuss the issue in the forum to find out solutions.

On Pakistan's intervention, the Saarc forum was moved to consider the proposal, which was approved to become part of agenda of the next Saarc Finance Minister's meeting. Heads of the Nordic Investment Bank (NIB) and European Investment Bank (EIB) also held separate meetings with Ishaq Dar separately. Both the leading banks showed their keen interest in extending financial assistance to Pakistan.

The NIB showed its interest in providing financial support in power sector. Ishaq Dar welcomed the NIB's offer and invited them to finance hydel projects. To facilitate their investment, a financing framework agreement will be concluded between the NIB and Pakistan.

The EIB, which is a European Union investment institution, also expressed their desire to the possibilities of financing projects in Pakistan in viable public and private sector projects in infrastructure, industry, agro-industry, mining and services.

They expressed their keenness for partnership with other multilateral development banks, especially ADB with focus on electricity generation projects as co-financier in joint venture projects. Dar asked the EIB to finance hydel projects, especially Basha Dam, in a consortium with other banks and financial institutions.

He also asked the bank to help Pakistan in energy management, ie energy conservation and efficiency. A team, of HSBC also met the Finance Minister and discussed the possibility of HSBC's participation in the government bond issue and operations of HSBC in Pakistan.

State Bank of Pakistan Governor Dr Shamshad Akhtar also joined the meeting. The Finance Minister also appreciated the keenness of HSBC for the future government issues and their operation in the banking sector in Pakistan. He stated that the new government was making a policy review to avoid pressure on foreign exchange reserves in future.

"We are keen in medium to long term gains instead of short term benefits", he remarked. The HSBC team showed keenness in expansion of their operations in Pakistan. The SBP Governor stated that HSBC should also come into the small and medium enterprises (SME) sector.

She said that Pakistan was the most liberal regime in banking sector policy and regulations in the whole of Asia. The HSBC acknowledged that Pakistan was a great potential market for investment. Director General of Asian Development Bank Juan Miranda and his team also met the Finance Minister.

Miranda confirmed that ADB had already disbursed 300 million dollars and by June 2008, another up to 650 million dollars would be disbursed. The SBP Governor, who also attended the meeting, asked the ADB to provide 500 million dollars on Fast Track Basis for strengthening of the State Bank of Pakistan The Finance Minister ensured the ADB team that the reforms in the financial sector would be implemented as agreed with a the ADB.

Dr Shamshad Akhtar, Executive Director Sibtain Fazle Haleem, Ambassador Pakistan in Spain Humour Hasan, Joint Secretary of EAD Zafar Hasan Reza and Commercial Councillor in Pakistan Embassy in Madrid Basat Hayat Tarar also accompanied Ishaq Dar. The Finance Minister also attended a meeting of the Finance Ministers of the member countries of the South Asian Association for Regional Cooperation (Saarc) in Madrid on April 4.

He is currently in Madrid to attend the 41st annual meeting of the Asian Development Bank (ADB), which started on May 3. The meeting, to be concluded on Tuesday (May 6) was held on the sideline of the ADB annual meeting. Earlier two meetings were held in India in 2006 and Japan in 2007.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Increase in exports government's top priority: Naveed ​*
KARACHI (May 06 2008): Federal Industries and Production Minister Syed Naveed Qamar said here on Monday said that boosting exports is one of the prime objectives of the new government, as we have to work towards narrowing of the wide trade imbalance, said a press release of the Export Processing Zone Authority (EPZA).

He said: "I believe that we not only have to create new zones but also have to market the existing as well as the upcoming zones on the local and international horizon in an effective manner so that we may achieve our objectives." He emphasised that new zone should be built to meet the cut-throat competition in the global export industry. He said: "We not only need quality exports zones but we also require diversification in our exports and market them locally and internationally."

Naveed Qamar said that EPZs are the need of the hour to boost our exports and consecutively the economic development of Pakistan. "EPZA can help the government in achieving its exports targets, however, the overall potential of nearly all the EPZ's has not been utilised properly. On the issue exports targets, the minister said that there should be no compromise on this issue and these units should be given to all the owners of the non-operating units should meet all the commitments made by him.

He said that although the figures provided by the Authority are impressive, however there is tremendous room for improvement. Qamar said that the Authority has informed me that they have received a proposal to build IT Tower in Karachi, which is a very good idea as our neighbouring countries already have it. He assured the EPZA management that the ministry would support all measures taken up by the Authority to increase exports and investment in the country.

EPZA Chairman Kamran Y. Mirza briefed the minister that exports by the EPZA units increased by 18 percent in the first 10 months of the current fiscal year as compared to the same period last year.

He elaborated that in the current 10 months, the Karachi Export Processing Zone (KEPZ) export has registered an increase of 19 percent; Saindak EPZ 17 percent; Sailkot EPZ 43 percent and Risalpur EPZ 133 percent. The increase in exports by EPZ's units in Pakistan is partly attributed to a number of measures taken by EPZA to boost exports by stimulating the units located at the zones. Of the EPZA exports 71 percent was contributed by the garment industry followed by worn clothing, exports of trading goods, chemicals and allied products, PVC plastic/paper and machinery and engineering was 29 percent.-PR

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'$100 billion needed for infrastructure-related projects' ​* 
ISLAMABAD (May 06 2008): Pakistan needs around $100 billion for meeting infrastructure-related challenges, said Ijaz Ahmed Khan, CEO of Infrastructure Project Development Facility (IPDF), an agency working under Finance Ministry to look for public-private partnership in infrastructure development.

The country needs $22 billion for multipurpose water reservoirs, $20 billion for throw forward of infrastructure projects, $10 billion for maintenance of available resources, $18 billion for energy projects, $16 billion for transport and communication, $4 billion for urban mass transit (Karachi and Lahore metro), $2.5 billion for municipal services and $4 to 5 billion for health and education, physical planning etc, he said.

He was speaking at a workshop on public-private partnership (PPP) and municipal services, organised by IPDF here on Monday. The World Bank infrastructure specialist, Mihaly Kopanyi, said that Pakistan would have to spend 5 to 10 billion dollars to improve supply of drinking water, sanitation and solid waste management in cities. "This is a huge amount, and the government can manage it to a large extent by involving private sector in the development projects," he added.

"Our bank is ready to provide financing, but it will be the private sector investment, which will bail out the government to give better services in urban centers." He said that the WB was working with Pakistani authorities to devise institutional mechanism to improve infrastructure in five major urban centres of Punjab including Lahore, Gujranwala, Multan, Rawalpindi and Faisalabad, with a financial package of $300 million. The institutional mechanism will be put in place by September, 2008.

He said that on the basis of his research done in selected districts of Punjab no reliable data was available to analyse the provision of water, sanitation and solid waste management standards. He criticised the PC-1 exercise, saying that it did not provide complete details about the project.

Ghafoor Mirza, adviser to ministry of finance, said that the government realised the need to fill gaps between the demand and supply in infrastructure projects by involving the private sector.

He said that the government had established IPDF to develop a comprehensive public-private partnership (PPP) program, an important economic reform policy tool, for generating growth and closing gaps between the supply and demand of infrastructure requirements of the country. The main focus of the program is to financially assist and promote sustainable and viable projects by using the potential market forces that deliver critical goods and services to the people at affordable prices, he added.

Earlier, the World Bank's Operations Advisor, Said Al-Hasby, highlighted the importance of public-private partnerships as an integral reform policy tool to fund future infrastructure investment in the country.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Turkish investment in power sector likely ​* 
PESHAWAR (May 06 2008): Turkish investors are likely to invest in the power sector in NWFP, said President of Sarhad Chamber of Commerce and Industry (SCCI), Haji Mohammad Asaf here on Monday. Addressing a press conference here after attending Euro-Asia investment summit at Istanbul, Turkey, he said a Turkish delegation was due to visit the province on May 8.

Which would be followed by a meeting of the Turkish Ambassador in Islamabad with the senior officials of the NWFP government. The SCCI chief was flanked by Senior Vice- President Inayat Khan, Vice-President Mohammad Nawaz Khan and former president Liaquat Ahmad Khan.

He said that the investment summit was attended by 22 countries, including five former presidents, three former prime ministers and representatives of the trade and industries ministers of the member countries. During the summit, Haji Mohammad Asaf said that he briefed the investors of the participating countries on the potential of investment in NWFP, particularly in the hydel power generation, marble, gems and jewellery and other sectors and invited them for investments in these sectors.

He said that a number of investors held meetings with him, and expressed interest in making investments in these sectors through joint ventures with the local businessmen. A delegation of the Turkish investors, he said, was due on May 8, which would be followed by the visit to Turkish Ambassador in Islamabad to the provincial metropolis. During the visit, he said the Turkish diplomat would hold meetings with both the Governor and Chief Minister of the province.

He announced that the chamber was going to celebrate its golden jubilee in a befitting manner from May 5 to 7. The Chief Minister Ameer Haider Khan Hoti would the chief guest at the golden jubilee function. The purpose of the function was to honour the founding presidents and their predecessors for their services for the business community of the province, he said.

Besides, the services of founding members of SCCI, including the Gul Muhammad Khan, Syed Phool Badshah, Syed Taj Mir Shah, Qazi Inayatullah, Haji Noor Elahi, Khwaja Muhammad Asif and Yousaf Ali Shah, who were no more with us, would also be recalled. He said he wanted to highlight the services of those who worked for the promotion of business and trade in the province and for the prosperity of people of the area.

Sarhad Chamber, fourth premier trade body of the country, established in 1958. During the ceremony, gold medals would also be awarded to all the former presidents of chamber, Asaf said. On the occasion, the SCCI will publish a special bulletin, containing complete life sketches of all those businessmen, who worked for the promotion of industry and trade in the province.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Talks on power import from Iran this month' ​*
ISLAMABAD (May 06 2008): Minister for Water and Power, Raja Pervez Ashraf on Monday said negotiations between Pakistan and Iran for import of 1,000 MW electricity will be started this month. Talking to journalists here after attending the energy conservation walk, the minister said that Iranian Energy Minister will visit Pakistan on May 13 to discuss the technicalities and other aspects of power import.

He said that during recent visit of Iranian President to Pakistan, the issue was also discussed and it was agreed that the negotiation process will be completed as early as possible.

"We are also planning to get electricity from Central Asian States through Afghanistan to overcome the increasing power demand and supply gap," the minister said adding that several other proposals are also under consideration to improve power situation in the country.

Earlier, addressing the participants of power conservation walk, the minister said the present government will be in a position to control load shedding problem within three years while the government will try to improve the power situation within one and half year.

He said that the government has prepared long-term and short-term plans to generate power in the country including running power plants on rent and inviting private sector to invest in power sector. Raja Ashraf said, "we need some time to have efficient power generation system and for this present government is taking all possible steps."

He said that the past government didn't make any plan to generate electricity due to which the gap between demand and supply is continuously increasing. He directed the Pakistan Electric Power Company (Pepco) not to provide extra electricity to those wedding halls, which are not following the energy conservation plan and misusing the electricity in the name of decoration.

The minister announced that the ministry will provide scholarships for those school children who will play their role regarding energy conservation. He also appealed to the citizens to help government by playing their role in its energy conservation plan. Managing Director Pepco, Manawar Baseer directed all power distribution companies to follow ministry's energy conservation plan to overcome power crisis.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Export of labour to Qatar ​*
EDITORIAL (May 06 2008): The Federal Minister for Labour and Manpower, Khurshid Ahmed Shah, and his counterpart from Qatar currently on a visit to Pakistan, signed an additional protocol to the 1987 agreement between the two countries to regulate export of manpower to Qatar.

The additional protocol envisages the establishment of a joint committee which will undertake an annual review to facilitate Pakistani workers, increase the export of more people, skilled and unskilled, and rehabilitate those Pakistanis whose contracts have expired as well as to assist them to get their full benefits in terms of social security, wages and other emoluments.

Remittance income is a major component of our foreign exchange reserves and its contribution to provide balance of payments support is considerable. In 2006-07 the July-April figure for remittances was a hefty 4.4 billion dollars. Interestingly, the largest remittances are sent from the United States, accounting for 26.44 percent of Pakistan's total remittance income, followed by Saudi Arabia with a percentage share of 18.61 percent and United Arab Emirates is in third place accounting for 11.15 percent. Qatar in contrast accounted for 136.79 million dollars and its percentage share was 0.37 percent.

While comparatively speaking, Qatar's share is considerably less than that of other countries yet there is potential to improve in this regard. Hence there is need for the government to provide all-out assistance to the Qatar government to use Pakistani labour. That this new agreement is a reflection of that initiative must, therefore, be lauded. However while such agreements are demand driven and the actual supply of labour will be a function of what Qatar demands, yet from our end we can do a lot to ensure that we export more skilled labour relative to unskilled so that we can expand our remittance income from Qatar.

Pakistan remains largely an exporter of unskilled labour and, therefore, there is an urgent need for the government to ensure that vocational institutes that encourage the development of skills are set up with the objective of increasing our remittance income. In this context it is relevant to note that the government is planning to set up vocational institutes throughout the country in an effort to meet the demand for skilled labour internationally.

Two elements that may act as a deterrent need to be mentioned in this context: first and foremost, there is a need to carefully look at skills required by any country and the skills of the applicant. In many instances the applicant claims a skill set that he/she does not possess. This has led to many a foreign country reluctant to accept skilled labour from Pakistan. There is therefore a need for the government to make vigorous checks on the skills of each applicant.

And, second, the government has not really facilitated our overseas workers in spite of the fact that they contribute significantly to the country's foreign exchange reserves. In the Philippine, for example, the overseas Filipino workers are given special treatment at all airports and sea ports. It is imperative for the government of Pakistan to take similar measures in an effort to ensure that the overseas workers feel that they are valuable assets to this country.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Switzerland to increase investment​*
KARACHI: Swiss-Asia Chamber of Commerce, Switzerland expressed positive views on Pakistan as an area of investment, stressing on Pakistans geo-strategic location in Asia as one of Pakistans key assets. 

According to a press release on Monday, Peter Zuellig, president, Swiss-Asia Chamber of Commerce along with Martin Benz, Swiss Consul General held a meeting with Waqar Malik, president Overseas Investors Chamber of Commerce and Industry OICCI. 

They identified and discussed several other matters that would affect foreign investment in Pakistan, such as the overseas perception of Pakistan as constructed by the local and international media. They said in the coming years, their office would be looking towards encouraging more companies from Switzerland to invest in Pakistan and acting as a significant proponent of Pakistan as an emerging market for foreign investors.

Waqar Malik, accompanied by Secretary General OICCI, Ms Unjela Siddiqi briefed Zuellig and Benz on the role and ongoing activities of the chamber, contribution of OICCI members to the Pakistan economy and the role of Switzerland based companies amongst overseas investors. 

There are about 15 Swiss OICCI member companies operating in Pakistan, representing a wide range of sectors, including pharmaceuticals oil, gas and energy. Switzerland contributes approximately 4.2 percent of FDI in Pakistan according to figures for the first nine months of the current fiscal year. Malik said the overall business climate in Pakistan is positive for foreign investors. However, Pakistans current law and order situation requires improvement.

He emphasized Pakistan has immense potential for growth and incentives to promote several area such as food processing, infrastructural development, engineering, information technology. 

He stressed on the importance of perceiving low performing sectors and those areas with low investment as avenues for future business and development. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*ADBs $214m for quake reconstruction​*
ISLAMABAD: The Asian Development Bank (ADB) today released $214 million to the Government of Pakistan under the Earthquake Displaced People Livelihood Restoration Programme. 

The amount is the second tranche of a $400 million loan aimed at helping Pakistan meet the rebuilding cost of about 585,000 rural houses damaged or destroyed in the earthquake. The funds being provided to Earthquake Reconstruction and Reconstruction Authority (ERRA) and will help expedite disbursement of housing compensation to the earthquake affected families. This will enable people to complete reconstruction of their damaged and destroyed houses during the summer said Peter Fedon, country Director of ADB in Pakistan. We are committed to support the Governments efforts in meeting the reconstruction challenge all the way through, building on the strong momentum in the reconstruction process and we will continue to assist ERRA until the job is done. he added. 

ADB pledged $1 billion for reconstruction and rehabilitation, mainly in the housing, power, health, education, transport, and social protection sectors. To date ADB has committed about $820 million in loans and grants and leveraged another $100 million in the form of bilateral grant funds from its co-financing partners: Australia, Belgium, the European Union, Finland, and Norway. Rebuilding of over half a million destroyed or badly damaged rural houses was a phenomenal challenge, however, the decision by the Government to provide Rs 150,000 housing grant to each affected family has been a successful initiative. The decision to let people take charge and build their own houses has been extremely useful in terms of assisting people rebuild their houses based on their own needs and time frame, using seismically compliant designs approved by ERRA says Shaukat Shafi, senior ADB project implementation officer. 

ADB, based in Manila, is dedicated to reducing poverty in the Asia and Pacific region through inclusive and environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members  48 from the region. In 2007, it approved $10.1 billion of loans, $673 million of grant projects, and technical assistance amounting to $243 million.

Daily Times - Leading News Resource of Pakistan


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## Neo

*World Bank to give $350m for development of 24 Punjab cities​*
ISLAMABAD: The World Bank will provide $350 million for the development of five large and 19 small cities of Punjab and a loan agreement is expected to be signed in September, World Bank Senior Infrastructure Specialist Mihaly Kopanyi said on Monday. 

He said the bank would provide $300 million for the development of Lahore, Multan, Rawalpindi, Gujranwala and Faisalabad, and another $50 million for the development of 19 small cities of the province. 

Kopanyi was talking to Daily Times at a two-day workshop on Public-Private Partnerships and Municipal Services organised by the Infrastructure Project Development Facility (IPDF) in collaboration with the World Bank. Kopanyi said the funds would be spent for the provision of basic services such as sanitation, solid waste management and water supply. He said the World Bank had finalised the policy and institutional framework for executing the programme and the implementation phase would start after the signing of the loan agreement with the Pakistani government. 

Kopanyi said that $5-10 billion were required to develop all the big and small cities of the country, but a single institution or government could not provide such a huge amount. Finance Ministry Adviser Ghafoor Mirza told the workshop participants that effective policies were needed for the sustainable development of Pakistans infrastructure facilities. 

Mirza said the government had set up the IPDF under the Finance Ministry in order to develop a public-private partnership programme for promoting growth and closing gaps between the supply and demand of infrastructure requirements of the country. IPDF Chief Executive Officer Ajaz Ahmed said that Pakistan immediately needed a $100 billion investment in physical infrastructure to improve the delivery of services and to enhance its internal and global competitiveness. 

Earlier, World Bank Operations Adviser Said al-Hasby in his welcome address highlighted the importance of public-private partnerships in funding future infrastructure investments in the country.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan, Yemen to ink agreement on fisheries trade​*
ISLAMABAD: Pakistan and Yemen are likely to sign an agreement, at Marine Fisheries department Karachi, for improving fisheries trade and quality. 

The agreements will be signed Tuesday (today) at the concluding of 5th Pak-Yemen Joint Ministerial Commission (JMC). Officials who attended the meeting told Daily Times that Yemen asked for providing proper training to its people in Pakistan. During the technical session held here Monday between the two countries, it was decided to ink agreement in this regard. Both the countries are likely to sign several agreements in bilateral trade, labour and manpower, food and agriculture and many others after the conclusion of the two-day JMC today. 

During the inaugural session of the JMC, Federal Minister for Privatisation and Investment, Syed Naveed Qamar stressed for diversifying two-way trade because significant opportunities existed for expansion of bilateral trade. Our bilateral trade is about $80 million mark and has shown upward trend, he maintained. The minister said Pakistan would increase cooperation with Yemen in the fields of education, science and technology, energy, transport, banking, labour and manpower. 

The minister claimed that Pakistan had gained technical experiences in variety of fields that could be shared with the. Minister of Industries and Trade of Yemen Dr Yahya Y. Almutawakel represented the other side of the JMC meeting. The minister said there was a growing realisation on both sides for the need of increased cooperation for the mutual benefit of people of both countries. 

He added that the visits of president and prime ministers of Pakistan to Yemen and President of Yemen to Pakistan in recent years have given opportunity to move forward in this direction. Signing of a number of agreements between the two governments had provided a platform for meaningful cooperation between the two countries in the coming years, he maintained. 

About the JMC, the minister said it would provide an institutional framework to adequately address those obstacles, which impede economic and commercial ties between the two countries. For further fostering the economic and technical relations between our two brotherly countries, it would be necessary that the JMC meets regularly and that its recommendations are followed through, he remarked. 

Pakistan, he said that over the years, has successfully produced highly competitive and value added products, such as garments, pharmaceuticals, engineering goods, agricultural machinery and electronic equipment.  We would be happy to meet Yemeni requirements in these fields. Pakistan is today being rated as a country most conducive for foreign investment, he added. 

The minister said that in the present scenario of market based and deregulated global economy, the private sectors role in boosting bilateral trade relations was crucial. 

It is imperative that our governments facilitate interaction and collaboration between the private sectors of the two countries. Regular exchange of information on the facilities and incentives provided by each side would be an important first step in this direction, he remarked. 

Almutawakel said bilateral trade between Pakistan and Yemen in the year 2006-07 was $77 million and Yemen would welcome the imports from Pakistan for further enhancing the trade between the two countries.

Daily Times - Leading News Resource of Pakistan


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## sohailbutt

*Maybank Banking On Pakistan Expansion*

HONG KONG - While most Western banks are taking a pause from expansion to solve their credit problems at home, Malayan Banking is accelerating its acquisition ambitions, in an attempt to strengthen its regional footprint. Malaysia's biggest lender said Monday it would buy up to 20% of Pakistan's MCB Bank for $933 million, its third takeover in the region in two months.

Malayan Banking (other-otc: MLYBY - news - people ), widely known as Maybank, said in a filing with the stock exchange in Kuala Lumpur on Monday that it had agreed to buy 15% of MCB Bank, Pakistan's fourth-largest bank by asset value, for 2.17 billion ringgit ($685.5 million). Maybank also has secured the right to buy an additional 5% stake in MCB Bank for a maximum of $247 million from three other institutional investors, potentially bringing its ownership up to 20%.

"It is an attractive opportunity for us to enter a high growth and profitable market. It is extending Maybank's reach in South Asia," in line with its plan to become a key regional player, Chief Executive Abdul Wahid Omar of Maybank told reporters. Volatility in the global financial markets notwithstanding, Pakistan's economic outlook remains steady, and there is "limited execution risk," he added.

The deal, which will be completed by the end of June, is expected to provide an opening for Maybank to expand into Islamic banking, retail services, credit cards and small-to-medium enterprise banking in Pakistan. MCB Bank has 1,026 branches, including eight Islamic banking branches within Pakistan and six branches outside the country, with a deposit base of about. 280 billion Pakistani rupees ($4.3 billion) and total assets of around 300 billion Pakistani rupees ($4.6 billion), according to the bank's Web site.

Seeking prospects beyond its maturing home market, Maybank recently stepped up the pace of regional acquisitions. It announced last month it had agreed to acquire a 56% stake in Bank Internasional Indonesia, that nation's sixth-largest bank, from Singapore's state-directed Temasek Holdings and South Korea's Kookmin Bank (nyse: KB - news - people ) for 4.8 billion ringgit ($1.5 billion). The bank will also make a tender offer for the remaining 44.3% shares of Bank Internasional Indonesia (other-otc: PKIDF - news - people ) for approximately 3.8 billion ringgit ($1.2 billion), bringing the total value of the potential acquisition to about 8.6 billion ringgit ($2.7 billion).

Shortly before the Indonesian acquisition, Maybank bought a 15% stake in Vietnam's An Binh Commercial Joint Stock Bank for cash considerations of approximately 430 million ringgit ($136.1 million). Maybank said it might take up an additional 5% equity stake in the near future, pending approval by the Vietnamese government

Maybank Banking On Pakistan Expansion - Forbes.com


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## sohailbutt

*KARACHI: EIA of Karachi circular railway being planned*

KARACHI, May 5: The Karachi Urban Transport Corporation has initiated the process of carrying out the Environment Impact Assessment of the Karachi Circular Railway project, it has been reliably learnt.

The KUTC, which is the executing agency of the KCR, has invited organizations with the relevant experience to submit proposals so that they could be entrusted with the task of carrying out the EIA.

Sources told Dawn that a team of Japanese experts was in the city, carrying out a study on the projected number of passengers who would be using the KCR in the future.

They said the KCR was being revived with Japanese technical as well as financial assistance and the project work on the ground was expected to be started in June 2009.

They added that the project was expected to be completed in three years, give or take a few months.

Under the project, a 50-kilometre-long dual track would be laid and all the 18 level crossings would be replaced either with overhead bridges or underpasses so that electric trains running at around 100 kilometres per hour, with an interval of five minutes between two trains, could complete their journey without any hindrance, the sources said.

They added that the KCR was expected to require around 45 megawatts for its train operations.

The sources said that the project was being financed by Japanese assistance of over $ 870 million, with an interest rate of 0.2 per cent a year. The amount is payable in 40 years, with a grace period of 10 years.

The sources said that besides the 44-kilometre-long old route of the circular railway that connected Karachi City station with Drigh Road and passed through Lyari, SITE, Nazimabad, Manghopir, Gulshan-i-Iqbal and also ran parallel to the main line from Karachi City to Landhi, a six-kilometre-long new underground track would also be laid to connect the Jinnah Terminal with the Drigh Road station.

They said that since the KCR passed through the congested and thickly populated areas of the city, the entire track would be fenced so that people living near the track were not harmed by the fast-moving trains.

They said that more than 240 eight-coach trains would be transporting around 700,000 passengers from early morning to midnight daily between the 26 stations, which would be connected by the buses so that people could easily get to the station from their homes or places of work.

The fare would be fixed in accordance with the prevailing bus fare and was expected to be around Rs15, they said.

The sources said that the citys population, which at the time of independence had been around 300,000, was, according to some estimates, now touching the 15-million mark and while the number of passengers was increasing at a rate of seven per cent, vehicles on the roads were increasing at the rate around 17 per cent, choking the already over-burdened road network.

Tracing the history of the KCR, they said that the system had been conceived in the late 1950s and was started in 1964. It touched its peak in 1984 when over 104 trains operated daily, carrying over six million passengers annually.

The so-called transport mafia was said to have manipulated the government or decision-makers in such a way that less and less resources were allocated for its infrastructure improvement, with the result that the system collapsed in 1999 when only two trains were being operated, leaving the commuters at the mercy of the transport mafia.

The sources said that another mass transit system of trams, which had transported a large number of commuters in the congested areas since pre-partition days, also succumbed to the onslaught of the transporters and collapsed in the early 1970s.

Following squeals of protests by commuters, the government reactivated the main-line portion of the KCR in 2005 with just 10 trains. However, the number of trains dropped over the years and at present around four trains were being operated.

Representatives of the Sindh government, the city government and the Pakistan Railways are on the board of the directors of the KUTC, which would be run by a managing director on a day-to-day basis.

Responding to Dawn queries, KUTC managing director Nasreen Haque said that the government was giving the KCR its due priority and things had started to move. She said the road network was already choking and with the number of vehicles growing fast it would be almost impossible to move around the city in the next few years without a rail-based mass transit system.

KARACHI: EIA of Karachi circular railway being planned -DAWN - Local; May 06, 2008


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## Neo

*Textile sector got Rs176bn export refinance up to Q3 ​* 
*Received Rs4bn under long-term financing​*
Wednesday, May 07, 2008

KARACHI: The State Bank of Pakistan and commercial banks provided Rs273 billion under the Export Refinance Scheme (EFS) to all eligible export-oriented sectors during the first three quarters of financial year 2008. Of that figure, a handsome amount of Rs176 billion or 65 per cent was received by the textile sector at 7.5 per cent, which was lower than the current six-month Karachi Inter-bank Offered Rate (KIBOR) of around 10.32 per cent.

The SBP said the amount was the same as that provided to the textile sector during the same period of FY07. The textile sector also availed over Rs4 billion during the same period as long-term financing at 6 to 7 per cent, which was even below the current EFS rate.

The SBP had sanctioned Rs8 billion under its newly-announced Long-term Financing Facility (LTFF) for disbursement to the textile sector during January-June 2008.

During the period from FY03 to December 2007, the State Bank provided refinance amounting to Rs897.5 billion to the textile sector at mark-up rates which were below current rates, providing sufficient savings to the sector.

Furthermore, the textile sector availed refinance amounting to Rs54 billion under the Long-term Financing for Export-Oriented Projects (LTF-EOP) scheme since its inception in May 2004 to February 15, 2008 at a fixed mark-up rate of either 6 or 7 per cent for the full tenure of loans which can extend up to 7-1/2 years.

The SBP said the above-mentioned facts were sufficient to dispel an impression created by a news item that the SBP governor while addressing a meeting of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) recently had refused provision of financial assistance at low mark-up to the textile industry.

The SBP pointed out that pursuant to the release of monetary policy statement for January-June 2008, the central bank held many discussions with the stakeholders including the FPCCI. During these meetings and discussions, the SBP explained that the monetary tightening was carried out to contain macroeconomic imbalances, creating inflationary pressures in the economy. 

Regarding provision of low mark-up financing to the textile industry, the SBP reiterated that the sector had always been one of the major beneficiaries of the incentives provided by the SBP in the shape of various schemes ie EFS, LTF-EOP and LTFF. The value-added sectors of the textile group were the major beneficiaries of the refinance granted under these schemes.

The central bank said the LTFF was available to the value-added sector including fabrics, garments, made-ups, towels and art silk & synthetic textile sub-sectors of textile.

Textile sector got Rs176bn export refinance up to Q3


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## Neo

*Poverty likely to increase ​* 
Wednesday, May 07, 2008

LAHORE: As growth prospects continue to remain dim due to high inflation and interest rates, slowing investment and declining production in most of the industries, poverty is likely to increase because the government lacks resources to provide effective relief.

Economic managers are at loss to find out the best strategy to steer the country out of the present economic mess as most of its resources are tied with keeping public sector companies afloat. It is providing hundreds of billions in taxpayers money to Pakistan Electric Power Co (PEPCO), the Railways and Pakistan International Airlines (PIA) to cover up their inefficiencies. However, high food and fuel rates in the global market are not helping its cause. 

The present regime is faced with the daunting task of controlling inflation without impacting growth and unemployment that would further aggravate the miseries of lower and middle-class segments of society. While Indian and Chinese economies are facing inflation mainly because of higher food prices, Pakistani consumers face higher inflationary pressures because of additional factors like depreciating currency and over-spending by the state.

The appreciation of Indian and Chinese currencies in the last 12 months has shielded their consumers which is the reason that inflation in these countries is 4 to 5 per cent lower than Pakistan.

The depreciation of Pakistani currency has put additional pressure on government resources. Its foreign debt servicing cost has increased by 5 to 6 per cent while consumers would bear additional burden of Rs90 billion on import items as the total import bill would increase from Rs1,800 billion to Rs1,890 billion (dollar rate rose from Rs60 to Rs63).

The exports are likely to remain stagnant as depreciation of the currency has never increased exports from Pakistan. With tax revenue likely to fall further from the revised target of Rs990 billion, the task of managing the economy has become more difficult.

The dilemma for the new economic managers is that every step they take to remove distortions from the economy would fuel further inflation in the short run. Petrol prices would be further hiked, increase in gas rates is on the cards and further rise in electricity rates cannot be ruled out.

Economic experts point out that there are two ways of coming out of the current crisis. The easy way out is to burden all citizens with indirect taxes that the rulers have been doing in the past or to muster the political will to force the influential segments of society to pay taxes according to their capacity.

If Pakistan achieves the tax-to-GDP ratio of 18 per cent, which is in line with countries having similar per capita income, they say, the tax revenue would be Rs1.8 trillion and would remove the entire resource gap.

Achieving this tax-to-GDP ratio would take some time but a beginning should be made particularly in the services sector where doctors, engineers, accountants, lawyers and restaurants remain outside the tax net. Big landlords should be brought into the income tax net. Traders and transporters that have a share of 22 per cent in the gross domestic product (GDP) and contribute only five per cent to tax revenue should be forced to pay their due taxes.

They say Pakistan at the moment needs fair and transparent administrative machinery. Rules should immediately be formulated to make the bureaucracy accountable by free flow of information that deters them from overstepping their mandated responsibility.

Poverty likely to increase


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## Neo

*Pakistan urges China to invest in water reservoirs ​* 
Wednesday, May 07, 2008

ISLAMABAD: Pakistan has requested China to invest in water reservoirs, especially Basha Dam. Finance Minister Muhammad Ishaq Dar met Chinese Finance Minister Xie at Madrid on the sidelines of the annual meeting of ADB.

State Bank of Pakistan Governor Dr Shamshad Akhtar also attended the meeting. Dar invited his Chinese counterpart to visit Pakistan for the joint economic commission and this was accepted by the Chinese finance minister.

During the discussion, the possibility of financing water reservoirs/hydel projects especially the Basha Dam came under discussion. The Chinese finance minister reiterated his governments continued support for the newly-elected government in its development efforts.

In another meeting, Dar accompanied by Dr Shamshad met Haruhiku Kuroda, President Asian Development Bank on the sidelines of the 41st Annual Meeting of ADB Board of Governors. 

Dar, who is also the governor for Pakistan in the ADB Board of Governors, apprised the president of the economic roadmap of Pakistan for macro-economic stability to improve financial deficit.

ADB president appreciated all the actions taken by the government and assured that ADB will continue its support to Pakistan for its development agenda. Finance Minister took up the resolution of issues surrounding the ongoing capital market operations project which had slowed down in the past. 

The matter was resolved and as such the project would soon be back on course. Dar also invited ADB president to visit Pakistan. 

Pakistan urges China to invest in water reservoirs


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## Neo

* Pakistan sees Saudi investment in power ​* 
Wednesday, May 07, 2008

ISLAMABAD: The coalition government is taking concerted steps to attract investment in power generation, oil and gas, said Federal Minister for Petroleum and Natural Resources Khawaja Muhammad Asif.

We look forward to receiving more investment and support from the Saudi government in these sectors, the minister said while talking to Saudi Ambassador in Pakistan Ali S Awadh Asseri, who called on him at his office here on Tuesday.

The minister informed the envoy about the huge potential of coal deposits and the steps being taken by the government for utilising 185 billion tonnes of coal reserves of the country. He sought Saudi cooperation and investment so that the huge coal deposits could be utilised for power generation and gasification.

The minister said the coalition government would soon be able to put the country on the path of economic development and resolve issues like power shortfall, law and order situation and wheat shortage.

Pakistan sees Saudi investment in power


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## Neo

*Centre allocates $35m to commercially unviable projects ​* 
Wednesday, May 07, 2008

ISLAMABAD: The federal government has decided to allocate $35 million in the next budget for 2008-09 for providing targeted subsidy to ensure private sector participation to those projects which are quite crucial but commercially unviable. 

This targeted subsidy will be jacked up to $500 million over the next five years under the concept of Public-Private Partnership (PPP). The government plans to negotiate concessional loans from multilateral donors to arrange financing in this regard, Infrastructure Project Development Facility (IPDF) CEO Ijaz Ahmed told The News during a workshop on Public-Private Partnership and Municipal Services organised by the IPDF on Tuesday in collaboration with Urban Unit Lahore, the second day of the workshop focused on water & sanitation and solid waste management sectors. 

He said the Viability Gap Fund (VGF) Company is going to be established for catering to the needs of targeted subsidy for those projects which will be commercially unviable and the private sector will really feel shy to invest in it. 

At the initial stage, he said the targeted subsidy will require smaller amounts as the VGF stage will come after the completion stage of the project. 

The IPDF has sought $35 million for the next budget and this amount will be jacked to $500 million over the next five years, he added. 

During the second day long workshop, the World Bank (WB) has decided to provide Technical Assistance (TA) loan to the IPDF by the next financial year for enhancing its capacity in the water sector, World Banks Operations Advisor Said Al-Hasby said. 

Water & sanitation and solid waste management sectors offer tremendous potential for private sector participation while bringing improvement in the quality of life of the citizens. 

The workshop was largely attended by representatives of the relevant public sector implementation agencies, federal, provincial and local governments and private sector stakeholders. World Banks Consultant Timothy F Hunt in his presentations provided an overview of the requirements and issues facing private sector participation in the solid waste management along with the lessons and experience derived from the global experience and their relevance and application to Pakistans local environment. 

In his presentations, Hunt highlighted pertinent issues which included legal and policy framework, public-private-partnership (PPP) potential of solid waste collection and transport, disposal/landfill, composting/energy generation. The panelists for the sessions on the solid waste management included: World Banks Senior Infrastructure Specialist Mihaly Kopanyi, Chairman Solid Waste Management Association Jamil Asghar Bhatti and others. 

The speakers underlined the importance of managing solid waste and measures that need to be undertaken to increase private sector participation in this sector. 

DSI Group (USA) Consultant David Stiggers, in his presentations, on water and sanitation sector, highlighted the scope and potential of private sector involvement in the sector. 

The presentations also identified various pertinent issues in the sector including policy and regulatory framework and potential for PPP projects in water and sanitation. 

Centre allocates $35m to commercially unviable projects


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## Neo

*Foreign firms repatriate $580 million in nine months​*
KARACHI: Repatriation of profits from the country rose by 5.1 percent during the first nine months of the current financial year, putting further pressure on an already weakening rupee. 

Companies operating in the country with foreign shareholding sent $580.1 million abroad from July 2007 to March 2008, up from $551.8 million repatriated in the corresponding period of last year. 

Thermal power generation companies sent $126.5 million, the highest amount by any sector of economy. This was 24 percent higher than $102 million sent last year. 

The oil and gas exploration companies sent $60.5 million, up by 72.4 percent from $35.1 million last year. It was followed by the telecommunications sector, which sent $87.4 million during July-March period. It was 18.5 percent lower than $107.3 million sent last year. 

Repatriation of profits by companies making pharmaceuticals and OTC products rose from $4.7 million to $19 million. Tobacco and cigarettes sector sent abroad $27.3 million as compared to $17.6 million last year. 

Petroleum refining sector repatriated $48.2 million compared to $45.9 million sent abroad last year. Chemicals-making companies profit repatriation declined from $36.2 million to $29.4 million. The repatriation of profit by financial businesses fell by 28.1 percent from $72.5 million to $52.1 million. 

The huge repatriation of profits shows how short-sighted our policy makers have been during the last few years, as they allowed the foreign companies to repatriate 100 percent profits to their owners abroad. This highly liberalized policy is now showing its results. It is true that thanks to this policy the government managed to attract foreign direct investment of a few billion dollars during the last few years. 

What now? The companies, who brought in capital during the last few years providing the government with dollars that it needed to meet its trade and current account deficits, will be sending profits to their owners for as long as they are here. 

What impact is it going to have on the foreign exchange environment of the country? Already the dollar has gained about six rupees against the local currency, which has necessitated intervention by the central bank and has resulted in decline in foreign exchange reserves of the country. This raises the question why the government of Pakistan has had to go to such extent to attract investment when the other governments of the region have attracted investment without allowing 100 percent repatriation of profit.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Exports Scheme: Banks provide Rs 273bn to export oriented sectors in July-March ​*
*"Out of this amount, Rs 176 billion or 65 percent was availed by the textile sector at 7.5 percent, lower than ongoing 6-month Karachi Inter-Bank Offered Rate (KIBOR) of around 10.32 percent"​*Statement 
State Bank of Pakistan

KARACHI: The State Bank of Pakistan (SBP) and commercial banks have provided Rs 273 billion under the Export Refinance Scheme (EFS) to all eligible export-oriented sectors during the first three quarters of 2007-08.

Out of this amount, Rs 176 billion or 65 percent was availed by the textile sector at 7.5 percent, lower than ongoing 6-month Karachi Inter-Bank Offered Rate (KIBOR) of around 10.32 percent, central bank stated on Tuesday.

The said amount is equivalent to the amount provided to the textile sector during the same period of last financial year.

Likewise, textile sector has also availed over Rs 4 billion during the same period as a long-term financing at 6 percent to 7 percent, which is even below the ongoing EFS rates. 

The SBP has also sanctioned an amount of Rs 8 billion under its newly-announced Long Term Financing Facility (LTFF) for disbursement to the textile sector during January-June 2008. The funds so far disbursed under this scheme have been availed by the textile sector. Central bank also pointed out that during the period from 2003 to December 2007, the State Bank has provided refinance amounting to Rs 897.5 billion to the textile sector under EFS at the mark up rates, which were below the ongoing market rates providing sufficient savings to the sector. 

Further, textile sector has availed refinance amounting to Rs 54 billion under Long Term Financing for Export Oriented Projects (LTF-EOP) scheme since its inception in May 2004 to February 15, 2008 at a fixed rate of mark up of either 6 or 7 percent for the full tenure of the loan which can extend up to 7-1/2 years.

The above-referred facts, SBP said are sufficient to dispel an impression, created by a news item published in a section of the press, that the SBP governor, while addressing a meeting of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) recently, has refused provision of financial assistance with low mark up for textile industry. Regarding provisions of low mark-up financing to the textile industry, it is reiterated that textile sector has always been one of the major beneficiaries of the incentives provided by the SBP in the shape of its various schemes like EFS, LTF-EOP and LTFF. The value-added sectors of the textile group have remained the major beneficiaries of the refinance granted under these schemes. 

Therefore, it is incorrect to assume that the SBP is not providing long-term financing to the value added textile sector; in fact LTTF is available to value added sector including fabrics, garments, made up, towels, and art silk and synthetic textiles sub sectors of textile sector, central bank claimed.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Saudi Arabia assures support to Pakistan ​*
ISLAMABAD: Saudi Arabia has assured Pakistan to support for overcoming the energy crisis on Tuesday. Saudi Ambassador in Pakistan, Ali S Awadh Asseri assured this to federal minister for Petroleum and Natural Resources, Khawaja Muhammad Asif. Minister said coalition government was taking concerted steps to attract investment in power generation, oil and gas sector. We look forward for more investment and support by Saudi government in these sectors.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Government building up wheat reserves: Harvest in full swing​*
KARACHI, May 6: The government is building up reserves of seven million tons of wheat and has decided to import 250,000 tons at a time when harvest is in full swing in the Punjab and approaching last phases in Sindh.

Farmers are reportedly reluctant to sell their grains to officials at Rs625 for 40kgs despite a virtual state of siege under inter-district and inter-provincial movement restrictions.

On Tuesday, the Economic Coordination Committee decided to go for a quick import of 250,000 tons of wheat just after a decision to increase the procurement target for Punjab to six million tons from three million tons.

The decision comes after the NWFP and Balochistan mount pressures on Islamabad for supply of wheat as Punjab government has put a restriction on inter-district and inter-provincial movement of wheat to counter wheat smuggling to Afghanistan.

Officials of the Sindh food department now feel shy to face the media and answer questions on wheat procurement from farmers.

Reports from market suggest that administrative restrictions on wheat movement are not proving much successful as grains continue to be transported to other areas despite deployment of rangers and police.

Much more money is now being pumped in the commodity trade after a negative trading trend at the stock exchanges, worsening rupee-dollar parity, international oil price-hike and signs of political instability as doubts emerge on ruling coalition, observed a Jodia Bazar merchant.

Businessmen were upbeat on the formation of ruling coalition and joining of one political party after the other. But now there seems to be a total confusion and uncertainty gripping the market which is in an ideal condition for manipulators, speculators and hoarders to play their game.

The negative trend in stock exchanges, worsening rupee-dollar parity and rising international oil prices are bringing more money for speculators who have set up a nation-wide network of manipulators to buy and hoard commodities and regulate supplies and create shortages and dictate on prices.

The real testing time for the ruling coalition will come in the late August and in early September when Ramazan would be there and real sharks of business would show their real strength in the market, said a trader.

In Karachi, the millers are getting wheat from fresh crop and consumers get flour, but at much higher price than indicated by the government.

You cannot now expect to get wheat flour at Rs16 or Rs18 a kg, a business leader said while pointing out that wheat price for millers would be Rs700 to Rs750 for 40kgs.

Wheat in Afghanistan and in Central Asia is close to Rs1,000 for 40kgs, he said to stress that wheat is bound to flow out from Pakistan no matter how much forces you deploy.

The only answer to stop wheat smuggling is to increase domestic prices and improve levels of incomes for the urban population.

Different trade bodies and associations and individual businessmen have prepared themselves or are in the process of preparing strategy papers to counter commodity shortages, check price-hike, ensure availability of essential goods to low-income people and contingency measures.

They are seeking interviews with the prime minister, finance minister, chief ministers of the four provinces and other political leaders at various levels.

Government building up wheat reserves: Harvest in full swing -DAWN - Business; May 07, 2008


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## Neo

*Inflation causes poverty resurgence ​* 
LAHORE (May 07 2008): The burden of high prices, especially of basic food items, has become intolerable for poor households while poverty is consequently on the rise again and whatever decline was achieved in poverty appears to have been wiped out. Also, structural problems impeding growth have come dramatically to the forefront with major power shortages and massive loadshedding.

This was stated in the report titled "State of the Economy: Challenges and Opportunities," launched by the Institute of Public Policy (IPP) of the Beaconhouse National University here on Tuesday. The report was prepared by a team of eminent economists-Sartaj Aziz, Shahid Javed Burki, Dr Hafiz A Pasha, Dr Parvez Hasan, Dr Akmal Hussain and Dr Aisha Ghaus-Pasha.

Former chief minister Shahbaz Sharif was scheduled to grace the occasion as Chief Guest but he did not turn up due to his pre-occupations out of the city. However, the Punjab Minister for Excise and Taxation Mujtaba Shuja ur Rehman represented him at the function. Shahid Javed Burki, Dr Hafiz A. Pasha, Dr Parvez Hasan, Dr Akmal Hussain and Dr Aisha Ghaus-Pasha highlighted their views depicted in the report while Sartaj Aziz, Saqib Sheerani and Ameena Syed their views regarding the report.

Addressing on the occasion, Shahid Javed Burki said macroeconomic balances have deteriorated very sharply while inflation has touched record levels this year on the back of three previous years of high single-digit inflation. He was of the view that inflation is the result of two developments ie bad economic management and enormous rise in food prices. He called for evolving a mechanism to provide protection to poor while there must be significant involvement of people in policy formulation.

Burki said the major instrument of economic adjustment, however, must be the fiscal policy. Fortunately, fiscal adjustment can take place in an environment much more favourable than in the 1990s when elected governments had little fiscal space because of the extraordinary burden of interest payments on public debt. He said real public non-interest spending which had shown no increase in the decades of 1990s because of the growing burden of interest payments, has expanded, adjusted for inflation, by over 60 percent during the period 2004-07 and would show a further increase this year because of huge subsidies on oil.

Dr Akmal Hussain said on the occasion that Pakistan is in the grip of gravest poverty circle where some 57 million people are living below poverty line. During the last three years, 11 million people were pushed into ranks of poor. He said the poor in Pakistan continue to face markets, institutions and local power structures which discriminate against their access to resources, public services and governance decisions.

He said for the Musharraf period as a whole (1999-2008), the percentage of population below the poverty line increased from 30 percent in 1998-99 to almost one-thirds currently, with an additional 16 million people being pushed into poverty during this period.

Dr Akmal said the central policy lesson of the economic performance of the Musharraf regime is that poverty levels increased in spite of high GDP growth in later years because of the fact that growth has heavily tilted in favour of the rich and high food inflation was not controlled. He was of the view that policy challenge is to change the composition and structure of growth and take immediate policy decision to address the poverty problem. He proposed extending loans to rural population for buying the animals and giving unused agriculture land to farmers.

Dr Hafiz A. Pasha said that there are major problems that relate to the private sector development and public sector priorities. There is a crisis in the power sector while insufficient investment in generation and distribution and inefficiencies not only increase the costs for the private sector by requiring alternative generating capacity but also result in big large losses for public entities which are a significant drain on public resources, he added. On a year to year basis the inflation in food prices is currently running at 20 percent, he added. He suggested that the government must provide relief to poor masses and middle class, contain non-developmental expenditures, introduce a comprehensive petroleum policy, impose regulatory duty on non-essential imports, levy sales tax on services and also impose capital gains tax on property and stock exchange profits.

The Punjab Minister for Excise & Taxation Mujtaba Shuja ur Rehman said the PML-N government will accord priority to the development of less developed districts of the province while relief will be extended to the poor ensuring food security to them.

He said the PML-N is determined to address the problem of poverty and also take steps for the welfare of public. Sartaj Aziz highlighted salient features of the report while Begum Nasreen Kasuri also graced the occasion. Sartaj said the main objective of the report is to outline a comprehensive economic and governance strategy that will facilitate the tackling of the above mentioned challenges that require the urgent attention of the new leadership.

The report says that Pakistan's economy is once again at a critical juncture. After a period of strong economic expansion, relative macroeconomic stability, and increased foreign investor confidence, over the years 2003-2006, the country is facing very serious economic strains and social challenge across a broad front. Macroeconomic balances have deteriorated very sharply. The erosion of competitiveness of the country's main exports, textiles and clothing, and an upsurge in imports, especially due to high oil prices have led to a large increase in the trade imbalance. This has led to a continuing decline in the level of foreign exchange reserves and in the value of the rupee, the report adds.

In attempting to assess the present position, the report analyses the short-term causes of the economic unravelling as well as the underlying longer term factors that continue to impede our economic and social progress. The main message of the report is that growth, equity, and financial soundness must be pursued simultaneously. The strategic shift being recommended has several mutually reinforcing elements as summarised below:

-- Making a radical macroeconomic adjustment by a sharp cutback and a restructuring of public spending that has grown sharply during the last five years, a determined effort to mobilise tax revenue from segments of society whose contribution to tax revenues has come down sharply and those who escape the tax net; improving incentives for savings and discouraging luxury consumption.

-- Expanding the safety net for the poor by allocating at least Rs 50 billion to minimise the impact of rise in food prices.

-- Making expansion and diversification of exports a central plank of growth revival strategy with special focus on agriculture and promising labour-intensive manufactured exports, based on geographical comparative advantage.

-- Strengthening decentralising by devolving governance and expenditure from the center to provinces and from provinces to local governments.

-- Expanding education at all levels, by improving the quality of public education upto secondary level and increasing outlays for research and development, especially for agricultural research and extension.

The report stresses that the required macroeconomic adjustments must fully safeguard the livelihood of low-income families. Adjustments have to be combined simultaneously with measures that improve governance and service delivery, increase participation and genuinely empower the people, following the return to democracy. In particular, food security of the poor must be protected in order to avoid a big fall in nutrition levels.

This can best be achieved through implementation of well-designed and targeted social safety nets for the poor like income supplements, employment guarantees and food for work program.

The Prime Minister has announced in his 100 day package the intention of his government to launch an employment guarantee scheme in the more backward districts of the country. Initiatives like these have to be implemented on urgent basis, the report added.

The report is in eight parts focusing respectively on the state of the economy, on the strategy for accelerating sustainable growth, on the institutional imperatives for poverty reduction, on the distribution and stabilisation role of fiscal policy, on provincial imperatives for development, on fiscal federalism, on decentralisation of governance and on the promise and potential of Pakistan's exports.

The authors of report believe that, not withstanding the difficulties faced at this time, the economy has the potential for getting back to a high growth path, but one which is more sustainable and inclusive. For this to be realised the state will need to be strongly engaged, but in ways different from the approach adopted earlier. Concerted effort and strong leadership will be required at federal, provincial and local levels, they added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*French Development Organization To Give $200 Million Aid To Pakistan​*
ISLAMABAD -(Dow Jones)- Agence Francaise de Developpement is likely to provide $200 million in assistance to Pakistan to help in developmental projects, an official statement from Pakistan's finance ministry said Wednesday.

The assistance from the development organization of the French government will be utilized in energy, urban development and agricultural projects in the country, the statement, quoting Pakistan Finance Minister Ishaq Dar, said.

However, the statement didn't mention when the assistance will be provided to Pakistan.

Dar earlier met French officials in Madrid on the sidelines of the annual meeting of the Manila-based Asian Development Bank.

The French development organization is also establishing an office in Islamabad to improve bilateral economic relations, the statement said.

Earlier, Nordic Investment Bank and the European Investment Bank had met Ishaq Dar and had shown interest in providing financial support in the power sector.

"The finance minister welcomed Nordic Investment Bank's offer and invited them to finance hydel-projects. To facilitate their investment, a financing framework agreement will be concluded between Nordic Investment Bank and Pakistan," the statement said.

European Investment Bank officials are considering the possibility of financing public and private-sector projects in infrastructure, industry, agricultural industry, mining and services.

http://www.nasdaq.com/aspxcontent/NewsStory.aspx?cpath=20080507%5cACQDJON200805070856DOWJONESDJONLINE000715.htm&&mypage=newsheadlines&title=French%20Development%20Organization%20To%20Give%20$200%20Million%20Aid%20To%20Pakistan


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## sohailbutt

*$2.5bn inflow by June 30 may stabilise rupee*

KARACHI, May 7: The country expects an inflow of $2.5 billion by June 30, which will help stabilise rupee falling freely since the beginning of this year.

Sources in the ministry of finance and State Bank said a total of $2.5 billion from various sources, including selling of MCB Banks share, was expected to add to the countrys foreign exchange reserves.

The speculative forces are benefiting from the current devaluation of rupee against the dollar and this was only because of huge oil import bill and decline in the countrys forex reserves, said the sources.

On Wednesday, the rupee again fell sharply against the greenback and lost 1.5 per cent in a single day. The dollar was traded at Rs66.55 to Rs66.60.

Currency dealers said the speculation was more effective than the demand factor of the dollars. The importers got panic fearing further devaluation that could hit their imports.

This is true that the dollar is in short supply but the market is still capable to feed the importers and has been providing dollars as per the demand for more than four months, said Atif Ali, a currency dealer.

He said despite availability of dollars, which is clearly visible from very high rise in the import figures during the last four months, a crisis like situation has been created.

Senior officials in the banking circles said that the MCB Bank-Maybank inflows of $680 million and about $100 million of Barclays Bank were expected to come in a month.

At the same time, the $500 million promised by China and $400 million by Saudi Arabia were also expected to come by the end of this fiscal year on June 30.

The officials were of the view that a total $2.5 billion could enter into Pakistan till the end of this fiscal.

The total inflows, included borrowing by the government from various sources. They said the speculators, who played a key role in sharp decline in the rupee value, could face sever dent in their profits.

The State Bank, which has been trying to get hold on the exchange rate, could not pump enough dollars to save the falling rupee and it was mainly the pressure coming from sharp increase in imports.

The oil is essential for import but the luxury vehicles, including the bullet- proof cars have loaded the import bill making it unbearable for the country, said Mohammad Imran, head of research at a brokerage house.

The import bill of 9 months was so high that it resulted into a trade deficit higher than the total exports of the country. The trade deficit reached over $14 billion in 9 months.

However, the newly-elected government is yet to come up with any plan to cut the import bills, instead, the minister of finance is trying to borrow $3 billion to meet the immediate need for rising current account deficit.

Sources said that the first tranche of $1 billion from the Asian Development Bank was also expected within this fiscal year.

$2.5bn inflow by June 30 may stabilise rupee -DAWN - Business; May 08, 2008


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## sohailbutt

*Govt plans to train 100,000 skilled workers in a year*

ISLAMABAD: To meet the emerging demand of skilled workers within the country and abroad, the government is planning to train 100,000 unemployed youth belonging to lower income group of the society in employment skills. 

Under this project, the government envisages to train 37592 persons for light industry and services sector through its 55 institutes during one-year period. 

The project will commence from June this year and will complete by May 31, 2009, officials in the Planning Commission told Daily Times on Wednesday. 

Main aim of the project was the productive adjustment of youth, particularly from less privileged class in the socio economic system and turning them to be useful member of the society. 

The programme would be implemented with the collaboration of National Vocational and Technical Education Commission (NAVTEC) and Technical Education and Vocational Training Authority (TEVTA) Punjab. 

Under this programme, the courses mason, shuttering, carpenter, steel fixer, domestic electrician, diesel engine mechanic, building painter, welder, plumber, house carpenter, automobile mechanic, turner etc consist of three months duration would be offered in 55 institutions. 

He said skill training would help in expanding the pool of literate skilled labour and emphasised on diversification so as to transform the system from supply oriented to demand-driven. 

During the training, the youth would be taught special courses of skill development to cater the demand of specific sectors.

Daily Times - Leading News Resource of Pakistan


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## sohailbutt

*Yields on T-bills rise sharply *

KARACHI: The State Bank of Pakistan sharply raised the yields on all three Treasury Bills (T-Bills) Wednesday, as the dealers were unwilling to offer money at low yields. The yield on three-month paper went up to 9.7746 percent from 9.5929 percent, six-month paper to 9.9570 percent from 9.8686 percent and one-year bills to 10.2452 from 10.1357 percent. Still, the central bank failed to meet its target of Rs 53 billion. It raised Rs 29.523 billion only. It raised Rs 11.24 billion through three-month papers, Rs 3.43 billion through six-month papers, and Rs 14.83 billion through one-year bills. Some dealers even demanded return as high as 10.5 percent on the one-year paper, said a banker. The dealers will continue to put pressure on the central bank to raise the yields, and if it goes up any more, the discount rate will have to be increased. There is an inflow of Rs 80 billion in the market on Thursday and it is likely the State Bank will conduct an open market operation to mop up the excess liquidity. The banker said the failure of the auction will force the government to borrow money from the central bank which will fuel inflation. The government needs to enhance savings in the country by raising return on different national savings schemes as well as prices of petroleum products to their original level if it wants to curtail inflation and attract money for itself. In the foreign exchange market, the dollar rose near Rs 67 level in intra day trade, but closed lower after the State Banks intervention. staff report

Daily Times - Leading News Resource of Pakistan


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## sohailbutt

*Pakistan and India to sign gas transit fee agreement soon*

ISLAMABAD: Pakistan and India will sign gas transit fee agreement for transmission of gas to India under Iran-Pakistan-India (IPI) gas pipeline deal. 

Talking to the reporters, Federal Petroleum Minister, Khawaja Asif said, the progress on the gas transit fee issue has been made between India and Pakistan on positive note and two countries would soon sign the gas transit agreement. 

Minister said five to six communicative exchanges have been made between Pakistan and India during the recent days and all matters regarding the gas transit fee agreement would be settled within next few days. 

According to a senior official in Petroleum Ministry, Pakistan and India are expected to agree on 40 cents per million British thermal unit (MMBTU) gas transit fee *that would generate around $148 million per annum for Pakistan from India as transit fee*. 

When asked whether government would cap the oil prices in the country before the upcoming budget to facilitate the consumers, minister did not make any commitment for keeping oil prices unchanged before the announcement of next budget. 

It is not right to presume some thing about the hike in oil prices before the next budget, he said. 

However, he linked the stability of oil prices in Pakistan with the oil prices in the international market. The situation regarding the stability in oil prices in Pakistan is linked with the stability of oil prices in international market, minister added. 

Addressing Society of Petroleum Engineers (SPE) annual technical conference 2008, minister said the spiralling prices of crude oil have created a new paradigm for the energy deficit economies like Pakistan. 

Minister said Pakistan depends more than 85 percent of primary energy supplies on fossil fuels and added that Pakistans energy requirement is expected to hike six times in the next 25 years.

In order to ensure the security of our energy supplies, we are pursuing policies of increasing domestic supplies, attracting foreign investment, diversifying imports to include natural gas, coal, electricity and supporting renewable energy resources and regional cooperation, he said.

He said countries like Pakistan have been suffering by rising oil prices on one hand and higher technology cost on the other hand. 

He hoped professional associations like SPE would suggest ways and means to ensure availability of affordable and suitable technologies for developing energy resources in a sustainable manner. Chairman SPE, Farhan Siddique, said imbalance between supply and demand of oil in Pakistan was a big challenge for the government that had resulted in hike in oil prices in country. 

He said energy requirements could be met by ensuring gas supplies from the central Asian Estates. He also urged the government to take measures for enhancing production to control the hike in the oil prices.

Daily Times - Leading News Resource of Pakistan


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## Neo

*High food prices threaten existence of microfinance ​* 
Thursday, May 08, 2008

LAHORE: High food rates threaten the existence of microfinance institutions. Beneficiaries have to bear a 40 to 60 per cent hike in food prices, so they 

find themselves unable to service their micro-loans. Now food consumes the major proportion of their budget.

Even government statistics reveal that prior to the hike in food rates, an average Pakistani consumed 42 per cent of the monthly budget on food. For poorer segments of the society, food accounted for 60-80 per cent of the total monthly expenditures of a family.

Micro loans are provided to the poor to facilitate them in earning some additional amount to supplement their regular incomes. The poor work for over 12 hours a day to service the micro-credit, and at the same time earn some additional income from the loan that carries a mark-up of up to 24 per cent.

Now after the increase in food prices, the poor, particularly those residing in urban areas would not be able to afford three square meals. Now, instead of having 40-20 per cent of their income spared after food consumption for everything else, they would be left with none.

Even the best-case economic scenario in the country fails to address the challenge to microfinance. In fact, it cannot even address the pain of individual borrowers, which are the ones hit hardest by the food crisis.

Experts point out that the basic approach of the government about the factors that cause poverty is flawed. They said that it is emphasised on all forums, the people are in a poverty trap because of poor health, poor education and poor infrastructure. These factors are in fact the final outcome of bad planning, corruption, and ineffective execution that is hindering development in Pakistan.

Governments, international agencies and donors have spent billions of dollars to address poverty. For example, successive governments in Pakistan have spent significant funds on subsidies (for electricity, fertiliser, fuels, etc.), food rations, price supports, land allocation/distribution, job training and financial assistance for initiatives in agriculture and small businesses.

The beneficiaries in most of the cases have usually been corrupt officials who manage and distribute funds, and landlords and powerbrokers who directly or indirectly extract benefits for themselves. Many poor farmers now do not have the resources to cultivate their own land. They depend on informal lenders that know how to recover money not only from the borrower, but also from his next generation. This is in fact, is the main reason of their poverty. Micro-credit was a ray of hope for these poor.

The assumption is that poor people can be rescued quickly and easily with a modicum of money. Micro-credit is intended mainly for starting or expanding small businesses run by borrowers. The claim is that micro-credit (loans of around $100) has lifted tens of millions out of poverty in the developing world. However, assertions that more than 90 per cent of the people who receive micro-credit are poor, that most of them succeed in businesses started with these loans, and that they repay the loans at 24 per cent annual interest or higher, go unchallenged.

So far, there has not been any outcry on the high rate of interest. The poor do not have any voice in, or understanding of, financial markets. They are happy to get loans to meet personal emergencies such as expenses toward surgery, marriage or dowry, or to pay off financial obligations to local money lenders who charge even higher rates. Micro-credit intermediaries claim that this is social entrepreneurship, and not living on the backs of the poor.

However the extraordinary increase in food rates would change the perception of poor borrowers about micro-credit. Their first priority would be to feed their family, with high interest rates only a haunting concern. The micro-credit institutions might for the first time face large-scale defaults, which might threaten their existence.

High food prices threaten existence of microfinance


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## Neo

*Textile sector faces uncertainty ​* 
Thursday, May 08, 2008

KARACHI: The textile industry is working in uncertainty because of non-availability of infrastructure and financing. The law and order situation is also impacting textile export business badly in Pakistan in indirect ways.

The office bearers of All Pakistan Associations of Apparel and Home Textiles stated this at a press conference held here on Wednesday.

Council of Textile Association Chairman, Wajid Jawad responded that all the commercial banks working in Pakistan were not providing Export Refinancing to the textile sector, as directed by SBP to provide 50 per cent of the required funds.

Under the recommendations of Textile Vision 2001, the industry made a huge investment in Plant and Equipment to build capacity. The prevailing interest rates were between 3-4 per cent, which were now prevailing at 13-16 per cent, he said.

He maintained that this was just like a mark-up Tsunami for investors who believed the repeated assertions by the then Finance Minister and Governor SBP that low levels of interest were sustainable. Similarly the mark up rate on export finance was also enhanced from three per cent to nine per cent earlier. This rate was recently reduced to 7.5 per cent, but banks were very reluctant, he added.

Towel Manufacturers Association of Pakistan President, Syed Usman Ali said that the industry was not provided the required infrastructure such as utilities. Before building a factor, they have to set up a power plant, water and sewerage systems, and telephone services as well. Moreover, the land is available at very high cost, he added. These hurdles were making Pakistani textile sector less competitive at the regional and world level.

Owing to this reason, a number of knitwear factories were being shifted to Bangladesh and China. While the towel and bed Lenin business of Pakistan was being shifted to India, he highlighted at the sideline of the press conference.

The regional competitors have provided very attractive export promotion packages with huge incentives and concessions, jointly by the federal and state governments. These incentives include direct equity support and special reduced interest rates. They have also provided huge infrastructure support in the form of labour housing, free and cheap land and cheap utilities, Jawad said.

The prevailing situation regarding massive load shedding and increase in the cost of utilities such as gas and electricity, have caused an unprecedented disruption in the industrial production all over the country, they noted.

The law and order situation in the country deterred the foreign buyer and customers and their representatives from coming to Pakistan. Owing to this reason, textile exporters have to travel abroad and meet the customers. This enhances the cost of doing business in textile. It also hampered the products and design development, for which their staff was not ready to come to Pakistan and prefer to go to safer destinations, they added.

They also clarified their position on utilising research and development funds (R&D Fund), and said the fund was purely used for designing and developing new products. They said that the Governor of SBPs assessment of the textile sector misusing R&D funds was completely wrong.

Textile sector faces uncertainty


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## Neo

*Pak economy faces severe inflationary pressure ​* 
Thursday, May 08, 2008

ISLAMABAD: Prices of fertilisers have jacked up in the range of 15 per cent to 187 per cent, Compressed Natural Gas (CNG) charges up by 14.56 per cent and cement up by 12.48 per cent during the week ended on April 30, 2008 over the corresponding week of the last fiscal.

It indicates that if persistent increase in the prices of fertilisers, CNG and cement is not capped, these may hit agriculture growth, the backbone of Pakistans economy, and inflate its produce prices, confront big development projects with cost overrun and swell transportation cost in the coming months.

The entire nation faces severe inflationary pressure that has crippled the day to day social life of the poor. Food prices and transportation charges are sky high, yet there is no respite available to the poor from the government. The government seems to be indifferent to the plight of the poor and the lower middle class who find it increasingly difficult to make both ends meet with soaring prices of foodstuff.

It is interesting to note that higher energy and fertiliser costs (important inputs for agricultural produce) have contributed to higher prices for all agricultural commodities which look to be permanent.

In a span of one week, the prices of fertilisers increased in a range of 0.14 to 11.76 per cent for different varieties, revealed the latest Federal Bureau of Statistics (FBS) figures available with The News.

Growers financial miseries have already multiplied as the government has also increased the power tariffs of agriculture tube wells in all federating units. The increase in fertilisers will also aggravate the situation for the farmers community as electricity and fertilisers are the main inputs for crops yield.

For the last few years, the agriculture sector has been unable to perform up to the mark and the financial miseries of farmers have swelled, owing to which the agriculture growth is most likely to receive a jerk.

In India, while the farmers community is being extended huge subsidies in billions of rupees because of which the Indian Punjab ñ the food basket for the whole of India, is not only successfully catering to the food requirements of the country, but also exporting its yield and earning foreign exchange.

Pakistani agriculturists are also facing a shortage of financing, since the government is only giving them Rs100 billion while India is financing its farmer with around Rs1500 billion annually. More interestingly, New Delhi is also subsidising its farmers in the shape of low electricity charges for their tube wells to irrigate their lands and other agricultural inputs especially fertilisers and pesticides.

Though the government is extending subsidy on the fertilisers and putting burden on the national kitty, it has never bothered to keep vigilance on the prices of fertiliser producers to keep agriculture input prices in check.

Due to the high agriculture input prices, most of the poor farmers leave their holdings uncultivated. If, they do cultivate, their output is always lower than expected because of using lesser than the required amount of fertilisers.

Even with the fact that Pakistan has the largest canal irrigation system in the world, its average wheat yield ranked 9th, rice (paddy) 14th, sugarcane 14th, seed-cotton 11th and maize 18th in the world.

During the period under review, cement prices as compared to the corresponding week of the last fiscal, are up by 12.48 per cent. The cement cartels in Pakistan have a free hand and they are earning abnormal profits worth billions of rupees at the cost of the consumers. This is not only hitting the consumers, but also development works that may further snag economic activities.

Pak economy faces severe inflationary pressure


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## Neo

*41st annual meeting of ADB: Flexibility needed in Strategy 2020 implementation: Dar​*
ISLAMABAD: The Asian Development Bank (ADB) should realise the need for diversity and dynamism while implementing Strategy 2020, which spans over the period of 12 years, and should allow flexibility in implementing the strategy, Senator Ishaq Dar, Federal Minister for Finance said. 

Finance Minister, who is also the Governor for Pakistan in the Asian Development Banks Board of Governors, attended the opening session of the 41st annual meeting of ADB yesterday at Madrid. 

During the first business session of the meeting, Dar stated the world was facing new economic challenges as unusual surge in the food and oil prices has already hit the economies of the developing member countries. The implications are serious both for the developing countries and our development partners. 

He said this phenomenon has highlighted the pressing need for a much broader engagement in agriculture for which the bank and other donors should take measures to help developing countries. 

He thanked the donor countries for successfully concluding Asian Development Fund ADF negotiations. ADF is a soft window of assistance by the ADB for the countries facing poverty and serious economic problems. 

He had a meeting with United State Delegation, meeting was also attended by Dr Shamshad Akhtar, Governor, State Bank of Pakistan and members of the Pakistan Delegation. Clay Lowery, Assistant Secretary International Affairs who is also Governor of United States in the ADB Board of Governor led the US team. Both sides discussed the macro-economic situation of Pakistan and bilateral cooperation. 

Finance Minister said Pakistan s fiscal situation faced difficulties with reference to pressures on the economy due to oil and food prices. 

He said the newly elected government was making efforts to manage the imbalances in the economy and would be able to manage imbalances within a short period of time as the government was working on policies relating to all sectors of economy. 

US delegation also discussed their views about the measures taken by Government of Pakistan regarding anti-money laundering. 

Finance Minister and Governor State Bank informed the United State delegation that Pakistan was implementing United Nations framework on the subject and was also in the process of updating the legislation, and that Pakistan was fully implementing and complying with the United Nation procedures. 

US delegation expressed satisfaction about measures taken by the Government of Pakistan and State bank of Pakistan in this regard. 

French delegation also met the Finance Minister to discuss the ongoing economic cooperation between the two countries and the future possibilities of further deepening it. French delegation briefed the Finance Minister about the assistance provided to Pakistan. The delegation further apprised that French government was looking forward to deepen its economic cooperation within Pakistan. 

As such, the office of the Agence Franchaise de Development (AFD) has been established in Pakistan for local representation. French side showed their keenness in providing assistance in energy, urban development and agriculture sectors with funding up to $200 million. 

Finance Minister appreciated the initiative of the French Government for establishing AFD office in Islamabad and hoped it would be instrumental in further deepening the economic relations between the two countries. 

He suggested that AFDs assistance in energy related project i.e. energy generation and energy efficiency. Finance Minister also invited the French Development Agency for the assistance in agriculture sector in view of the food crisis the world over esp. in the developing countries. 

Shahid Malik, head of the UK delegation met the Finance Minister, Governor SBP and members of Pakistan delegation in Madrid, Spain. Both sides exchanged views on matters of common interest. 

He informed the UK has a sizeable development program in Pakistan especially in health and education. He reiterated UK s resolve to continue to work with Pakistan in its socio- economic development. 

Governor, SBP invited attention of the UK delegation to the problems associated with the DFID program in microfinance sector in Pakistan. 

Malik assured he would look into the matter and ensure its early resolution. He also noted the challenges in fiscal and macro-economic imbalances and appreciated the actions being taken by the new government to manage these challenges.

Daily Times - Leading News Resource of Pakistan


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## Neo

*India once wanted to learn from Pakistans economic strategy​*
** War on terror in Pakistans interest: Fatemi​*
By Khalid Hasan

WASHINGTON: Narasimah Rao, when he was prime minister of India, told his Pakistani counterpart Nawaz Sharif that he would like to send a delegation to Pakistan led by Dr Manmohan Singh to study the countrys ongoing privatisation programme.

The visit did not materialise because of the removal of the Sharif government. Sharifs then adviser on foreign affairs, retired ambassador Tariq Fatemi, disclosed this, while he was speaking on the political situation in Pakistan at the Carnegie Endowment for International Peace. 

Explaining the judges issue, Fatemi said there was no difference of opinion between the Pakistan Peoples Party (PPP) and the Pakistan Muslim League-N leadership, except that while the latter wanted immediate reinstatement, the PPP wanted to achieve the same end but in a more gradual manner and without running into what it considered avoidable confrontation. He said the departure of Fakharuddin Ebrahim from the committee set up to resolve the judges issue, was unfortunate. The much-respected former judge had all along been of the opinion that since the removal of the judges by the President was ab initio illegal and unconstitutional, a simple executive order could restore them to office. There was no need for a constitutional amendment as some lawyers and politicians had argued. 

Interest:

On relations with the United States, Fatemi was of the opinion that there will be no major changes. However, there was need for satisfying the people of Pakistan that the war on terror was not Americas war that Pakistan was fighting but something in Pakistans own interest. However, the kind of unilateral military operations that had been conducted by the US on Pakistani soil will have to cease as they impinged on the countrys sovereignty. The former diplomat was critical of the World Bank and the International Monetary Fund, which did not tire of praising the great economic turnaround brought about by former prime minister Shaukat Aziz, but was now unable to justify that praise given the dire economic straits in which the Aziz government had left Pakistan. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Ministry told to generate 2200 megawatts by year-end ​* 
ISLAMABAD (May 08 2008): The Cabinet on Wednesday directed the Ministry of Water and Power to generate 2200 MW by the end of this year to minimise the power crisis, halting industrial output and the miseries of the masses.

"An urgent meeting of the Cabinet will be convened, exclusively to discuss energy crisis with Ministry of Water and Power, giving a detailed briefing, Minister of Information Sherry Rehman told journalists while briefing about the issues taken up by the Cabinet earlier in the day. The meeting was chaired by Prime Minister Yusuf Raza Gilani.

The Enercon also gave its proposal how the power crisis could be minimised by adopting energy conservation measures which would also be discussed in the special meeting of the Cabinet and comprehensive strategy would be chalked out in the light of that proposal.

The meeting also discussed about five-day working plan with the purpose to save some energy, but it was agreed that detailed view would be sought from energy experts with all pros and cons, ahead of implementation.

The Minister's assertion that "Cabinet noted with reference to Sensitive Price Indicator (SPI) that prices of essential commodities stabilised" surprised newsmen who were expecting that the government would be aware of price hike and might unveil some relief for the poor. "How any government could frame pro-poor policies when it is provided this kind of feedback on most burning issues," whispered some journalists over the Minister's statement, while one asked why the new government, now in power, did not take any action against oil marketing companies and withdrew sale tax on petroleum products which they had criticised most when in opposition.

"We will look into the issue of oil marketing companies" tye Minister responded, saying that the Prime Minister had directed the Passco and Sindh government to provide 150,000 tons wheat to Balochistan.

She said that the government would also announce a relief scheme for the poor before budget. The meeting was also given briefing by the Housing Minister about houses deficit in the country with a plan of constructing over 100,000 houses. There would be no food deficit in next few years, she said, as government was talking concerted measures to address the problems with import as well as procuring locally.

A special cell would be set up to ensure implementation of MOUs signed with foreign countries, the minister said. The Cabinet also accorded approval to MOUs signed recently with Malaysia and other countries, she added. The Minister avoided the question whether the government would take any punitive action against Rehman Malik for putting at stake the alliance by causing delay in by-elections, and said that it seemed "a severe case of miscommunication".

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan's weight up in MSCI EM Index ​* 
KARACHI (May 08 2008): Pakistan will be the relative gainer of the latest MSCI rebalancing, as its weight within MSCI EM Index has increased to 0.18 percent from 0.16 percent. Though 7 local companies have been deleted from the MSCI Index, the increase in weight for Pakistan in MSCI EM Index was mainly due to the simultaneous exclusion of companies for other markets in EM, Faraz Farooq, an analyst at First Capital Equities said.

Morgan Stanley Capital International (MSCI), a leading provider of benchmark indices and risk management analytical products, has announced the result of May 2008 Annual Index Review of its indices. Pakistan has representation in three key MSCI Indices, namely MSCI ACWI (All Country World Index), MSCI EM (Emerging Market) and MSCI AC (All Countries) Asia Pacific.

India's weight, on the other hand, fell to 7.15 percent from 7.20 percent in the MSCI EM Index. Pakistan and India both have witnessed a net deletion of 5 scrips in May 2008 Annual Rebalancing. "For our counterpart, India, one security has been added while 6 companies have been deleted that is net deletion of 5 securities", Faraz said.

For the enhanced standard indexes, MSCI Barra is targeting a coverage range of around 85 percent of the free float adjusted market cap in each market, with the enhanced small cap indexes targeting companies that fall below the size threshold of the enhanced standard indexes.

Due to the deletion of 5 companies on net basis, the first thought arises is that Pakistan might have lost its weightage in the EM Index. However, since other emerging markets have also witnessed deletions (on net basis), it may be safe to assume that the weight of Pakistan in EM Index might not have fallen by a greater magnitude, rather Pakistan could have gained its weightage in the Index due to the simultaneous decline in the representations by other countries in the list.

Before May 2008 Annual Rebalancing, Pakistan's 13 companies were in MSCI EM including Oil and Gas Development Company, National Bank of Pakistan, Pakistan Petroleum Limited, MCB Bank, Lucky Cement, Nishat Mills Limited, Faisal Bank Limited, Pakistan State Oil, Engro Chemical, Sui Northern Gas Pipelines Limited, Hub Power Company, United Bank and Fauji Fertiliser Company.

In the May 2008 Annual Rebalancing, Pakistan's seven companies were deleted. With the inclusion of two new companies Pakistan's eight companies, including Jahangir Siddqui Company Limited, Pakistan Telecom, United Bank, MCB Bank, Fauji Fertiliser Company, National Bank of Pakistan, Pakistan State Oil and Oil and Gas Development Company are now in the MSCI EM Index.

There are 25 countries in MSCI EM Index. In latest rebalancing weights of 19 countries witnessed downward revision. The biggest decline was noted for Korea (29bps). Indian market witnessed a decline of 4bps from 7.20 percent to 7.15 percent. Out of remaining 6 countries, weights of 5 countries increased while weight of Brazil remained unchanged at 15.89 percent which still remains the biggest single EM market. Though, China's weight saw highest increase of 80bps to 15.77 percent it maintains the second biggest single market after Brazil.

The move holds broad implications for foreign investors (particularly equity investors) who benchmark their portfolio with the weights assigned to a particular market and the respective scrips at the time of funds allocation.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Ghani woos Turkish traders to invest in various NWFP sectors ​* 
PESHAWAR (May 08 2008): NWFP Governor Owais Ahmed Ghani has said the economy of the country is in the growing trend providing sufficient sources for making successful entrepreneurship opportunities in both trade and industrial sectors of the country.

Talking to a visiting delegation of Turkish businessmen at Governor's House here on Wednesday, he said that both Pakistan and Turkey have a long association and exist vast potential for promotion of relationships especially in the fields of trade and industrialisation. Prominent Turkish businessman Rasim Oz was leading the delegation.

Owais Ahmed Ghani particularly mentioned the mineral sector, saying the government has already developed a lot of data about the potential sectors which could be assessed to look into the possibility to develop joint ventures by the respective business communities.

He also appreciated the keen interest expressed by the members of the delegation in the trade of precious and semi-precious stones. He said that historic city of Peshawar has already become the hub of business activities in this particular field which offers rare as well as the famous varieties of gemstones.

"One can find a very big market of precious and semi-precious stones in the provincial capital", he said. "We have also developed training and skill development facilities in this field in the shape of Institute of Gemology in this city which has been contributing a lot to ensuring efficient development of the potential", he added.

Referring to a point, the governor highly welcomed the holding of an international congregation of businessmen at Istanbul in Turkey next month and assured his all out support and co-operation in ensuring meaningful participation from this part of Pakistan in the event as well.

"We do need a lot of co-operation in every field of economy in the best interests of our people and there exists sufficient potential in this respect", he said.

Referring to the law and order situation, the governor said that things have already started improving and there must not be any worries in this respect. Owais Ahmed Ghani also highly appreciated the services being extended by Turkish business community for running a quality educational institution in the name of Pak-Turkish International School at Hayatabad, Peshawar.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Czech-Pakistan JBC formed to boost trade ​*
ISLAMABAD (May 08 2008): The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and Czech Chamber of Commerce formed a Czech-Pakistan Joint Business Council (JBC) to enhance trade cooperation between the two countries. The JBC was established during FPCCI delegation's visit to the republic. The deletion was led by FPCCI President, Tanvir Ahmed Sheikh.

The JBC would be responsible for identifying potential sectors for joint venture opportunities, holding of single country exhibition on reciprocal basis and identifying new areas of cooperation. The meeting of the Joint Business Council would be held in Pakistan later this year, said FPCCI press statement here on Wednesday.

The visit was the follow up of the memorandum of understanding on cooperation between FPCCI and Chamber of Commerce of the Czech Republic signed during the Czech Prime Minister, Mirek Topolanek to Pakistan in May last year.

The visit of FPCCI delegation, which was arranged by the Embassy of Pakistan, Prague, was undertaken with the aim to promote great interaction between the businessmen of the two countries, the press release said, adding that it also aimed to explore the ways and means of enhancing bilateral trade.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Construction industry vital to economic growth: Prime Minister ​*
ISLAMABAD (May 08 2008): Prime Minister Yousuf Raza Gilani has said that the construction industry is very important for country's economic growth, infrastructure development and employment generation. The government, he said, would take steps for solving its problems and ensuring its growth and progress.

He said this while talking to members of a delegation of All Pakistan Contractors Association (APCA), who called on him at PM's Secretariat on Wednesday. The Prime Minister asked all concerned ministries to adopt concerted approach in consultation with the representatives of APCA for removing the difficulties which the construction industry is facing. He asked the construction industry to train manpower not only for meeting the country's domestic requirements but also the needs of foreign markets. He asked the representatives of APCA to keep in touch with government bodies like Tevta and Navtec in this regard.

The representatives of the construction industry assured the Prime Minister that despite operational difficulties they would gear up efforts so that the government's vision of ensuring housing for all can be achieved.

The Prime Minister was apprised that the construction sector provides direct employment to unskilled labourers who are trained in various disciplines. He was further informed that 29 local technology based industries are directly related to the construction business.

The APCA delegation also briefed the Prime Minister about the potential in the construction sector with regards to improving national economy, infrastructure development and employment generation in addition to meeting the housing needs of the people.

The Prime Minister was further informed that the construction sector of the country is almost entirely working within the country and if it gets organised the sector has the potential of exporting its labour as well as consultancy services which can help the country earn foreign exchange worth billions of dollars. Planning Commission Deputy Chairman, FBR Chairman, Communication Secretary, Industries & Production Secretary and Housing Secretary were also present in the meeting.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Rs 400 million to be allocated for Sindh villages electrification ​* 
KARACHI (May 08 2008): The Sindh government would allocate Rs 400 million in the provincial budget for fiscal 2008-09 for the electrification of 360 villages of the province. The Sindh irrigation and power department has already forwarded the proposal of the project to the finance department for its inclusion in the next budget, a high-up of the department informed Business Recorder here on Wednesday.

The department would put up the proposal for its official approval in a meeting, scheduled on Thursday (today) with the Sindh additional chief secretary in the chair, fficial said. It is hopeful that the meeting would approve the project and its amount after which it would be included in the next fiscal year's budget, he added.

It is worth mentioning here that the budget for the electrification of the villages and far-flung rural areas of the province is being allocated after a period of three years.

In the past, Rs 800 million was allocated for the purpose in fiscal 2004-05 budget of the province. The electrification of 900 villages had to be done with the budgeted amount during the period of three years, said the official, adding that the project's duration is June 2008.

The official claimed that the amount of the project has been fully utilised by the department and near 900 villages of the province were electrified during the said period, while the work at some places is still underway and would be completed in a couple of months.

The villages from almost all the districts of the province had been included in the last project, official said, adding that the proposal is also based on the same formula, as the villages from each district would be electrified under the project.

He said the department has recently issued the last payment of the previous allocated budget to Hesco, the implementing authority of the project. He said that Hesco would also execute the project on behalf of the Sindh government.

Business Recorder [Pakistan's First Financial Daily]


----------



## Neo

*Patterson launches Apple Computers in Lahore ​*
LAHORE (May 03 2008): US Ambassador to Pakistan Anne W. Patterson termed the launch of Apple Computers in Lahore as a " landmark of American investors' confidence" in Pakistan. "The partnership between Apple and Raffles Systems - representing our two countries - will promote growth and prosperity in Pakistan," said the Ambassador.

"I hope this partnership, and others between American and Pakistani companies, will keep growing." Since 1977, Apple Computers has been a global market leader for personal computers, portable media players, cell phones, computer software and other electronic products.

"Information technology, especially in the personal computer sector, has grown phenomenally in Pakistan," said the Ambassador. "The combination of internationally competitive costs and high-speed connectivity make Pakistan an attractive destination for IT investment." More than 80 US firms currently operate in Pakistan, employing more than 41,000 people directly and an additional one million indirectly.

Business Recorder [Pakistan's First Financial Daily]


----------



## sohailbutt

*Foreign reserves decline to $9.92 bn*

KARACHI: The foreign exchange reserves of the country have witnessed a slide of 355.5 million dollars and now stand at 9.92 billion dollars  lower than 10 billion.

According to the figures released by the State Bank of Pakistan (SBP), the foreign exchange reserves of Pakistan fell below 10 billion dollars for the first time after 2003.

Banking experts say the decline in reserves is being seen because the SBP has supplied large quantity of dollars in the market to stabilize the value of rupee against dollar. 

Foreign reserves decline to $9.92 bn - GEO.tv


----------



## sohailbutt

*Dollar hits new record high at Rs67.35*

KARACHI: The Pakistani rupee slid further to close at a new low at in inter bank trade on Thursday, as the market remained burdened by currency imbalances. 

The rupee fell 0.95 percent to finish at 67.35 to the U.S dollar.

Dealers say, with rising oil prices and slowing exports there is dearth of dollars on the currency market.

They say the market requires an urgent inflow of up to 500 million dollars  much higher than the central banks injection of 6 million dollars on Wednesday. 

Many are also concerned on the state of economy, with inflation running at 13-year high and swelling external deficits.

But while many are citing worries of 70 per U.S dollar -- there are some who expect rupee to recover in the short to medium term -- with the help of disbursements by foreign lending agencies. 

Dollar hits new record high at Rs67.35 - GEO.tv


----------



## sohailbutt

*SBP warns exchange companies to refrain from speculation*

KARACHI: Governor, State Bank of Pakistan, Dr Shamshad Akhtar Thursday directed the exchange companies to refrain from indulging in speculative activities forthwith.

Talking to the heads of exchange companies here she said urged them to bring dollar-rupee parity within normal limits and warned of illegal action in case of failure.

``Our intention is to take you (exchange companies) forward and promote your businesses provided you abide by rules of business.'' She urged them to seek mergers, acquisitions to consolidate, strengthen sector and increase its efficiency.

On recent speculative trends in kerb market, she told exchange companies to keep dollar-rupee parity differential between Inter-Bank and Kerb markets at rational levels, restrain from speculation, focus on bringing in home remittances into the country. This differential should not be beyond normal trends seen in past, she said.

Exchange companies representatives gave firm commitment they will ensure dollar-rupee parity differential between Inter-Bank and Kerb market comes down to normal levels within a week. They assured cooperation to work with SBP.

Dr Akhtar said instead of curbing speculative trends, some exchange companies are playing a role in speculation that is totally unacceptable. ``You should not be led by speculation -it is time to serve country not to mint money through irregularities.'' 

She said whole idea behind setting up exchange companies was that these would play pivotal role in attracting home remittances and curbing activities of illegal operators. But, it has been noted some companies are indulging in illegal activities. ``Any evidence obtained against any exchange company would be sufficient to suspend or cancel its licence,'' she warned.

SBP warns exchange companies to refrain from speculation - GEO.tv


----------



## Neo

*Pakistan's Lucky Cement raises $109 mln via GDRs​*
KARACHI, May 8 - Lucky Cement , Pakistan's biggest cement maker, said on Thursday it raised $109.3 million through the issue of global depositary receipts to be listed on the London Stock Exchange.

Lucky said it sold 15 million GDRs at $7.28, or 480 Pakistani rupees, each. Each GDR is equivalent to four shares of Lucky.

"An overwhelming response was received from the international investors and the issue was oversubscribed more than 2.5 times," the company said in a statement to the Karachi Stock Exchange.

Lucky had said in July last year it would use the funds raised through the global listing for expansion.

It plans to raise its cement manufacturing capacity by 2.5 million tonnes a year by building two additional lines in Karachi.

Lucky has about an 18 percent share of the Pakistani cement market and an installed production capacity of 6.55 million tonnes a year.

Lucky's GDR issue was managed by Merrill Lynch and Pakistan's KASB Capital

Pakistan's Lucky Cement raises &#36;109 mln via GDRs - Yahoo! Singapore News


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## PakistaniPatriot

*More strict measures to save rupee likely: foreign exchange companies meeting in SBP today.*


KARACHI (May 08 2008): The State Bank of Pakistan (SBP) has disbursed about $6 million to 'A' category exchange companies to maintain the rupee value versus dollar at a reasonable level. However, due to the declining value of the rupee the SBP has decided to take more strict measures to control the declining the rupee value and has called a meeting of exchange companies on Thursday, sources in banking industry said.

They said that disbursement of some $6 million to exchange companies did not help the rupee in retaining its value at earlier level and it remains under pressure, touching the record lowest level of Rs 67 to a dollar.

They said that despite disbursement of this amount, the rupee value is continuously declining in the interbank and open markets which makes the State Bank of Pakistan (SBP) take more strict measures aimed to control the declining Pak rupee value.

Sources said that the Thursday meeting will be chaired by SBP Governor and will be attended by representatives of 'A' category exchange companies, and some new strict measures or a combined strategy for the stability of Pak rupee is expected.

"Some 24 foreign exchange companies of 'A' category licence holders have received around six million dollars from SBP during the last two weeks to improve the supply of dollars in the open market," they said. These funds have been disbursed directly by SBP at fixed rate of Rs 64.50 per dollar. However, these exchange companies will be required to retire this amount by May 15, 2008.


Business Recorder [Pakistan's First Financial Daily]


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## Flintlock

*Pakistan stock market has huge potential: US ambassador*

Staff Report

KARACHI: US Ambassador to Pakistan, Anne W Patterson, Thursday visited Karachi Stock Exchange (KSE) and held a meeting with its management and board of directors.

US Consul General Kay L Anske and Press Attache Elizabeth O Colton were also present on the occasion.

Speaking on this occasion, she said that Pakistan stock market has a huge upside potential and she was keen to be at the premier stock exchange of Pakistan.

I was preparing for the job and I picked up the Wall Street Journal one day and there was a front page article on terrorism in Pakistan and on the business page there was a story on KSE being the most successful stock exchange in the world. So I wanted to visit this stock exchange (KSE) which is the symbol of Pakistans growth and of hopefulness in the economy, she said.

I had also heard a lot about the distinguished and impressive management the stock market had here, she said. Earlier, Managing Director KSE, Adnan Afridi, gave a presentation on countrys economy, stock market and performance of Pakistans premier bourse.

He said Pakistan has experienced a sustainable growth and can continue on the path provided there is continuity and longevity of economy policies. It is one of the most open investment regimes in the world with 100 percent repatriation of profits that has helped in attracting investment, he said.

Adnan pointed out that financial services and telecom sector were deregulated with the help of strong, professional regulators adopting global practices and benefiting from favourable demographics.

He said KSE was the top performer in the emerging stock markets of the world with a growth of 8.73 percent during 2008. Taiwan is the second with 5.69 percent followed by Bangkok and Singapore.

He said the growth rate of KSE is over 35 percent per annum for the last ten years as its market capitalisation has grown to $75 billion.

He said KSE was heading for de-mutualization which will make it a member of developed stock markets of the world.

Responding to a question about the prospects of long-term investment in the backdrop of security concerns, Adnan pointed out that despite ups and downs and political uncertainty in the country, foreign investment has continued to flow in.

Other members of the board of directors told US Ambassador that there were big upside expectations, once the security situation is improved. What they (fund managers) are worried is the falling rupee and lack of economic road map.

US Ambassador was told that KSE has the average multiple of 10 to 11 whereas neighboring markets including India has 17 while Bangladesh 23.

Daily Times - Leading News Resource of Pakistan


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## Neo

*KSE a symbol of what Pakistan will be: US envoy ​* 
Friday, May 09, 2008

KARACHI: The Karachi Stock Exchange (KSE) has huge potential and is a symbol of Pakistans hope and growth in the economy.

US Ambassador Anne W Patterson stated this during her visit to the KSE on Thursday. She was accompanied by US Consul General Kay L Anske and Press Attache Elizabeth O Colton.

I was preparing for my job and picked up the Wall Street Journal one day. There was a front page article on terrorism in Pakistan and on the business page there was a story on how this (KSE) was the most successful stock exchange in the world. So I wanted to visit this stock exchange, which is the symbol of Pakistans growth and hopefulness in the economy, she said. I had also heard a lot about the distinguished and impressive management the stock market had here. She termed the KSE a symbol of what Pakistan can and will be.

Earlier, MD KSE Adnan Afridi gave a presentation on the countrys economy, stock market and performance of the bourse. He said Pakistan has experienced sustainable growth and can continue on the same path, provided there is continuity and longevity of economic policies. It is one of the most open investment regimes in the world, with 100 per cent repatriation of profits that has helped in attracting investment, he added according to a press statement.

He said KSE was the top performer in the emerging stock markets of the world with a growth of 8.73 per cent during 2008. Taiwan is second with 5.69 per cent, followed by Bangkok and Singapore. He said the growth rate of KSE is over 35 per cent per annum for the last ten years, as its market capitalisation has grown to $75 billion.

Other members of the board of directors told the US Ambassador that there were big upside expectations once the security situation was improved. Fund managers were, however, worried about the falling rupee and lack of economic road map.

KSE a symbol of what Pakistan will be: US envoy


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## Neo

*Govt borrowings soar to Rs361.6bn ​* 
Friday, May 09, 2008

KARACHI: Net government borrowings surged to Rs361.608 billion from July 2007 to April 26, 2008 which expanded broad money (M2) growth to Rs343.671 billion and continued inflationary pressures on the economy.

Although during the corresponding period of the last fiscal year (July-April 28, 2006-07) governments net borrowings were very low (Rs120.721 billion), M2 growth was 12.16 per cent to Rs414.415 billion.

According to State Bank of Pakistans statistics, the government borrowed Rs484.950 billion from the SBP during the aforesaid period, which pushed broad money growth to 8.45 per cent. However, at the same time, it retired Rs150.079 billion loans of scheduled banks.

From July-April 26, 2007-08 government borrowings for budgetary support ballooned to Rs334.871 billion as compared to Rs170.987 billion in the corresponding period of the last fiscal year. The government borrowed Rs2.459 billion for commodity operations and Rs278 million for other purposes.

It is pertinent to note that the federal government may borrow directly from the SBP either as advances or purchase of market treasury bills. Advance is extended for government borrowings up to Rs100 million at an interest rate of 4pc per annum, whereas higher amounts are borrowed through SBP purchases of six-month MTBs at the weighted average yield determined in the most recent fortnightly auction of the paper.

The provincial governments and Government of Azad Jammu & Kashmir may also borrow directly from SBP through raising their debtor balances (over drafts) within limits defined for them.

In the aforementioned period, credit to the non government sector augmented to Rs413.215 billion against Rs278.002 billion in the corresponding period of the last fiscal year, whereas credit to the Public Sector Enterprises (PSEs) increased to Rs41.730 billion which stood at Rs4.068 billion in the similar point in time of the preceding fiscal year. The SBP credit to Non Banking Financial Institutions recorded Rs214 million compared to Rs373 million of the last year.

According to SBP statistics from July-April 26, 2007-08 the amount in circulation was Rs152.880 billion, contrary to that in July-April 28, 2007-08. During this period the other deposits with SBP reduced by Rs2.718 billion contrary to which, Rs1.168 billion was increased.

Govt borrowings soar to Rs361.6bn


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## Neo

*Pakistan negotiates $500m loan with World Bank ​* 
Friday, May 09, 2008

ISLAMABAD: Pakistan is negotiating with the visiting mission of the World Bank (WB) for finalising a new programme to get $500 million loan before June 30, 2008, in order to curb its financial difficulties owing to higher POL and commodity prices.

Pakistani authorities are striving hard to obtain consent of the visiting WB mission for a fresh programme. However, if Islamabad remained unable to do so, they are also proposing the Bank to disburse $500 million in advance for the next fiscal year programmes, to remove its woes owing to growing imbalances on the external front.

The WB mission has asked Pakistan to convert advance assistance by providing rupee against dollar by next year if WB extends its decision in favor of Pakistan, said a high-level official who is involved in the negotiating process with the WB mission, while talking to The News here on Thursday.

According to the official, Pakistani authorities are reluctant to accept such demands from the WB. They are pursuing Bank authorities for approving and disbursing the desired amount under the new programme on a speedy basis before June 30, 2008.

The worries of economic managers are increasing, owing to the depleting foreign currency reserves and consistently weakening of rupee against the dollar.

The World Bank portfolio stands at less than 20 programmes, as it wants to extend its support only for those areas where it can run its operation effectively, a WB official said in a background discussion with this correspondent.

A few programmes of the WB involving millions of dollars got delayed during the current fiscal year, such as the Poverty Reduction Strategy Paper (PRSP-II), for which the Bank would extend around $500 million to Islamabad for reducing the menace of poverty.

As the finalisation of PRSP-II was delayed by Pakistani authorities, there was no approval, and subsequently no disbursements were received by Islamabad, which were actually in the pipeline on the occasion of the budget preparation process for FY 2007-08.

Yes, the Pakistani authorities have approached us for a new programme, which also includes provision of financing for establishing social safety nets in the wake of growing POL and commodities prices, said a WB official.

The countrys federal cabinet on Wednesday assessed that 70 per cent of the population is earning less than $2 a day. The government is finding ways and means to provide targeted subsidy, but devising a mechanism for reaching out the real needy people will be the most difficult task for the incumbent regime.

We are discussing a conditional cash transfer programme under the social safety nets, said the official. But the WB has raised certain questions over it by wondering how the government can provide targeted subsidy to 70 per cent of the population, who are earning less than $2 per day.

WB has proposed the government to identify certain districts of Pakistan where the incidence of poverty is more severe and apparent, said the official, and added that the discussions were underway. The outcome was expected with a full-fledged strategy in the next couple of weeks.

The growing food inflation has made life miserable for the common citizen, especially salaried, pensioners and low-income groups.

When a high-level official was contacted for comments on Thursday night, he confirmed that the negotiations were underway with the WB mission for obtaining a $500 million loan during the current fiscal year.

If Pakistan is not able to get this money from the WB in the current fiscal, the inflows seem quite strong and Islamabad will be able to manage $2.5 to $3 billion before June 30, 2008, he added.

Citing an example of Lucky Cements GDR, he said that this transaction brought over $100 million. Jehangir Siddqui is planning to move ahead with a transaction which may bring $160 million. ADB has committed around $1 billion with Pakistan, which will be received before June 30, 2008. Some other transactions are also in the pipeline, which will help Islamabad to achieve its envisaged target by generating $3 billion during the current fiscal year.

Pakistan negotiates $500m loan with World Bank


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## Neo

*Uncertainty surrounds windmill project​*
KARACHI, May 8: Even though it has its reservations over the tariff approved by the National Electric Power Regulatory Authority (Nepra), a Turkish firm is reported to have started shipping equipment to Pakistan for setting up the countrys first wind energy project.

According to sources in the know of things, some of the equipment has already reached Karachi and the rest is expected to arrive in the next couple of weeks. To be put up near Jhimpir, the five units of 1.2MW each, which are only 12 per cent of the actual (50MW) project, will hopefully get functional by early August.

Zorlu is said to be one of the eight entities that had received the generation license from among the 21 potential investors who were given land allocations by the Alternative Energy development Board (AEDB) so that they could prepare feasibility studies regarding their projects. None of the investors, however, could agree to the Nepra tariff of 10.49 cents per kilowatt in addition to a raise of 1 to 1.5 cents on carbon credit account.

The Turkish firm is the only one that has re-applied so far, while two other companies, Green Power and Win Power, are in the process of filing revised applications.

Requesting anonymity, the sources said that the Turkish firm has been given a tacit understanding by the AEDB that it would somehow make Nepra see the light of reason and take a long-term view of the countrys crunching need to build alternative energy resources to offset the soaring cost of conventional energy.

The removal of AEDB CEO Shahid Hamid, which came about late on Wednesday evening through a federal government notification, may have an impact on the Zorlu deal because the change has come at a crucial time, especially for the Turkish firm which may find itself stranded.

Only a few weeks earlier, the AEDB had talked of plans to install windmills in Sindh to produce 1,200 megawatts of power. It had even talked of having acquired 34,000 acres of land for the purpose. But, insiders say, allocation of land is only the beginning of the process. Simply being a facilitator, the AEDB can only locate potential investors, convince them to take up relevant projects, and help them out in terms of technical feasibility.

The real action starts when it comes to the financial feasibility. A narrow, short-sighted vision on the part of the regulatory authorities is generally blamed for having killed many an option. Citing wind energy negotiations as a yardstick, the sources say that the time taken by the regulators in negotiation with the entrepreneurs has only allowed the prices of wind turbines to go up and their delivery times extended by up to three years.

Nepra offices in Islamabad were approached more than once, both through telephone and email, for their side of the story, but all messages left for Director Tariff Syed Insaf Ahmed remained unanswered.

Uncertainty surrounds windmill project -DAWN - Business; May 09, 2008


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## Neo

*PSDP to be set below Rs 500 billion in 2008-09​*
ISLAMABAD: Due to the financial constraints, the Public Sector Development Programme (PSDP) for the next fiscal year 2008-09 would be less than Rs 500 billion, official sources told Daily Times on Thursday. 

An important meeting of the Annual Plan Coordination Committee (APCC) of the federal government has been convened on May 23, to finalise recommendations for PSDP and macro economic framework for the next fiscal year, the official added. 

According to the priorities set by the new government infrastructure, health and education would be the main priorities of the PSDP for the next fiscal year 2008-09. 

This revision would result into deletion of many projects in the next fiscal year for creating a space for the new government to add its own new projects in the next years PSDP, the official informed. 

Official sources informed that for the first time in the history of the country some infrastructure development projects would be financed through private sector investment under public-private partnership (PPP). Infrastructure Projects Development Facility (IPDF) management has held a detailed meeting with infrastructure development cell of the Planning Commission to transfer some infrastructure development projects to the IPDF secretariat so these could be financed and carried out through private investment on PPP basis. 

Official sources informed that due to the huge expenditures incurred during the current fiscal year, fiscal space is limited and the government would try to be realistic and would prepare the next years PSDP within its financial resources. 

In the current fiscal year the actual development programme of the Federal Government as well as all four provincial governments was fixed at Rs 485 billion including Rs 335 billion federal development programme and Rs 150 billion provincial annual development plan. 

Some Rs 204.570 billion were projected to be spent by the public sector corporations and enterprises out of the PSDP like Water and Power Development Authority, National Highway Authority and other organisations. 

Earthquake Reconstruction and Rehabilitation Programme for the current fiscal year were set at Rs 35 billion. Total development outlay of the Federal Government, provincial governments, public sector enterprises and earthquake reconstruction was estimated at Rs 725.510 billion. 

However, due to the large budget deficit of Rs 956 billion as against the projected budget deficit of Rs 400 billion for the current fiscal year the government, after the mid-term review of the PSDP, had stopped the fund releases for the projects which were yet to start by end December 2007. 

The development expenditure and net lending of the federal as well as provincial governments during the first half July-December period of current fiscal year stood at Rs 225.768 billion. 

Punjab spent Rs 71.608 billion on development programme, province of Sindh has spent Rs 14.220 billion on development projects, NWFP has spent Rs 12.942 billion as development expenditures and development expenditures in Balochistan amounted to Rs 5.384 billion in July-December period of the current fiscal year.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan has potential to capture more of $45 billion BPO market: managing director TRG ​*
KARACHI (May 09 2008): Pakistan has the potential to capture more of the $45 billion Business Process Outsourcing (BPO) market since it is still a relatively new entrant with an ample supply of high caliber labour, whereas the Indian labour pool has now reached saturation.

This was stated by Nadeem Ilahi, Managing Director and Country Manager-Pakistan The Resource Group (TRG) in his presentation at a event organised by 21st Century Business & Economic Club at a hotel here on Thursday.

He said that a viable BPO industry in Pakistan is the best solution to employ the skilled youth and significantly enhance foreign exchange earnings of the country. The BPO industry in Pakistan faces numerous challenges, which TRG has successfully mitigated in order to become the market leader.

Besides problems in infrastructure, Pakistan is also perceived as a high-risk country in international markets. He said that TRG is a multinational KSE-listed company, providing Business Process Outsourcing services to high profile, Fortune-1000 and FTSE 100 companies in North America and Europe.

He said that TRG's services portfolio consists of Contact Centre Services, Software Development, Finance back-office and Data-Entry. TRG is amongst the largest software development concern in Pakistan.

TRG began operations in 2002 with only 60 employees, and today employs over 1,000 employees in Pakistan and over 5,000 worldwide. In addition to Pakistan, TRG has large-scale operations in the USA, Canada, Brazil, UK, Senegal and the Philippines, he said and added TRG is ranked amongst the world's largest offshore-based BPO companies.

"It is the industry pioneer in Pakistan and has made a concerted effort to introduce Pakistan into the global BPO market as a viable location for such services", he added. TRG serves a variety of customers in several industries such as Telecom, Financial services, Healthcare, Consumer Goods & Media. Commitment to deliver top quality service is what differentiates TRG from other companies in the industry.

Highly skilled manpower, world-class training, state-of-the-art technology and facilities, form the backbone of the organisation. With approximately Rs 9 billion in annual revenues, TRG is well on its way to realise its vision of becoming a global leader in the BPO sector as well as the largest employer in Pakistan. With the growth of the consumer market in Pakistan, TRG is also poised to become a leading provider of services to the local market.

About the BPO industry in Pakistan, he said that the industry provides a variety of outsourced services such as Customer Care, Payroll Processing and other Business Administration functions primarily to large-scale, service-based organisations such as financial institutions and telecom companies.

The worldwide BPO market is approximately $45 billion with India holding a dominant presence with 70 percent market-share. India's IT and BPO exports are over $30 billion per annum and it employs over 500,000 skilled workers. Syed S. Haider, Founder President of 21st Century Business & Economic Club also spoke on this occasion.

Business Recorder [Pakistan's First Financial Daily]


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## A.Rahman

*Pakistan Stops Export Of Sterling, Euros, Dirhams, so much for investor confidence;*

KARACHI, May 9 (Reuters) - Pakistan's central bank stopped exchange companies from sending cash abroad in sterling, euro and United Arab Emirate dirhams, the chief spokesperson told Reuters on Friday.

"Exchange companies are not allowed to export cash in UK pound sterling, euro and UAE dihrams," said Syed Wasimuddin, chief spokesman for the State Bank of Pakistan.

The rupee <PKR=PK> ended 3.5 percent lower at 69.40/60 to the dollar, compared to a previous low of 67.08/20 set on Thursday.

(Reporting by Sahar Ahmed; editing by Simon Cameron-Moore)

Pakistan stops export of sterling, euros, dirhams | Reuters


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## A.Rahman

*Pakistan rupee falls to 70 to dollar on foreign currency export ban

*
May 9, 2008, 9:15 GMT


Karachi - *The Pakistani rupee saw its biggest fall in five years Friday*, hitting 70 to the US dollar after the central bank imposed an export ban on euros and other foreign currencies, dealers said.

'There is virtual panic everywhere in the market,' said treasury dealer Ali Kadir at Invest Cap Securities.

The rupee hit 70/70.10 (buying/selling) in an unofficial open market against the dollar, compared with 67.50/67.80 Thursday.

On the interbank market, the rupee traded at 69.60/69.80, compared with 67.08/67.20 Thursday.

*The central State Bank of Pakistan on Friday imposed bans on exports of euros, pounds and United Arab Emirate dhirams by foreign exchange companies. These companies used hard currencies to buy US dollars abroad.*

'We have taken this decision to stop the flight of capital,' said Wasim Ahmed, a central bank spokesman.

The move came on the heels of a meeting Thursday chaired by bank Governor Shamshad Akhtar with top executives of foreign exchange companies in which she warned them to stop speculating after the rupee's nearly 10-per-cent fall in the past two months.

Akhtar told executives that the difference between the open market rates and the interbank rates should be within 50 to 60 paisas, not about 2 rupees as has been witnessed in the past couple of weeks.

*The foreign exchange export ban created panic in the market, and dealers said the US dollar was not available even at 70 rupees.
*
'There is a severe shortage of dollars on the market,' said Nabeel Iqbal, marketing manager at Khanani and Kalia, Pakistan's largest foreign exchange firm.

Meanwhile, the latest foreign exchange reserves position showed the central bank had lost another 400 million dollars last week on rising imports, holding 12.2 billion dollars last week, compared with 12.65 billion dollars a week earlier.

*With the new figures, the central bank has so far lost more than 4.5 billion dollars during the past five months from a peak of 16.48 billion in October last year.*

Rising oil import costs are considered the chief reason for eroding reserves, coupled with domestic food shortages and low exports.


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## Neo

*Pakistan c.bank expects forex inflows of $3.5 bln​*Fri May 9, 2008 

KARACHI, May 9 (Reuters) - Pakistýn should expect foreign inflows of up to $3.5 billion in the short to medium term which would help stabilize the rupee, said the central bank chief said on Friday after the currency fell 3.5 percent.

"We aren't in a crisis like situation... several measures are in place to remove macro-economic imbalances," State Bank of Pakistan Governor Shamshad Akhtar said in a statement.

The statement came after the rupee <PKR=PK> slumped to an all time closing low of 69.40/60 to the dollar, compared to a previous low of 67.08/20 set on Thursday.

In a meeting with the heads of commercial banks, the governor assured them there would be no reversal of foreign exchange liberalization measures, and said the currency market's behaviour "is totally out of line".

Governor Shamshad Akhtar said the government is taking measures to control inflation and the central bank will continue to remain in a monetary tightening phase.

She said the central bank is vigilant, will take necessary steps as the situation warrants.

Some of the inflows that are expected include $2.1 billion from multilateral banks, $500 million from friendly countries, $200 million from earthquake relief, $100 million from Britain, $700 million from MCB Bank's stake (MCB.KA: Quote, Profile, Research) sale to a Malaysian bank, $100 million investment by Barclays Bank and the rest through private sector GDRs (global depository receipts) and other regular sources, the statement said.

The pressure on the rupee is a largely a result of Pakistan's ballooning oil import bill and fears that the country was mired in political and economic instability.

UPDATE 1-Pakistan c.bank expects forex inflows of $3.5 bln | Reuters


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## ejaz007

*Manora Cantt Board going to Dubai-based firm*

* Initial investment of $20b for development, hotels, 
apartments 
* Shaukat Aziz signed MoU in 2006

By Shahzad Shah Jillani

KARACHI: The Manora Cantonment Board (MCB) is soon going to be handed over to a Dubai-based firm for development, Daily Times has learnt. 

The boards spokesman has told Daily Times that Pakistans Ministry for Ports and Shipping signed a Memorandum of Understanding (MoU) in 2006 with Dubai World, M/s Limitless and Dubai Islamic Bank (DIB) for the redevelopment of Manora Island. Former prime minister Shaukat Aziz brought the companies in as part of the plan to attract direct foreign investment for beach front projects at Sea View and Gwadar, he said. 

The Karachi Port Trust (KPT) and all military establishments will vacate the island and hand it over to the companies. 

The development will comprise high-rise hotels and apartment buildings in addition to beach huts for foreigners, the spokesman said, adding that according to the design, the island would be turned into a tourist resort with a water sports arena on the shore.

M/S Limitless is the same company behind The Palm Jumeirah and Jumeirah Islands and is known for its master planned communities. 

Sheikh Mohammed of Dubai signed the MoU with the Government of Pakistan, according to a spokesman for the Ministry of Ports and Shipping. The Manora Island project was named Sugar Land City with an initial investment of $20 billion, he said. It is very disappointing that the project was unnecessarily halted due to resistance from the fishermen community. A total investment of forty billion US dollars will be made soon by addressing all the apprehensions of those opposing the project, said the spokesman. He added that investors had already suffered as they spent millions of dollars on the design. It would have been easier for people associated with the shipping business and also the picnickers if the Manora-Clifton bridge was made with seven billion rupees. 

Manora is a small 2.5-square-kilometre island located just south of the port of Karachi. It is connected to the mainland by a 12-kilometer long causeway called Sandspit and a 13.4 km one from Mauripur Town. Manora and neighboring islands form a protective barrier between the Karachi harbor to the north and the Arabian Sea to the south. The western bay of the harbor contains endangered mangrove forests which border Sandspit and Manora island. To the east are the Karachi Bay and the beach towns of Keamari and Clifton. According to the 1998 census, Manoras population was 9,987 and has since dropped by half. 

Three types of civilians are residents of the Manora Cantonment Board: leaseholders, employees of federal departments including KPT and fishermen. Most of the KPT employees left Manora after receiving a golden handshake from the trust and have now moved to other parts of the city, leading to a drop in the population, explained the boards spokesman. The fishing community has said that it comes under the City District Government Karachi (CDGK). The fishermen were at a distance from the board and were located in Salehabad that comes under the CDGK administration, the spokesman said. The CDGK was responsible for providing them basic civic facilities and not us. 

The former chief executive officer of the Manora Cantonment Board, S.M Shaukat Najmi, retired in February. Irfan Asghar, the CEO of the Korangi Cantonment Board (KCB), has been given the additional charge of the Manora Cantonment Board.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Rupee tumbles 3.5pc ​* 
Saturday, May 10, 2008

KARACHI: The Pakistani rupee slumped 3.5 per cent against the dollar on Friday, under pressure from a rising oil import bill and fears that the country was mired in political and economic instability.

Since the start of the year the rupee has fallen 12.7 per cent against the dollar.

Critics fear divisions within the month-old coalition over how to reinstate judges dismissed by President Pervez Musharraf during a brief period of emergency rule last November, have diverted Prime Minister Yusuf Raza Gilanis government from addressing pressing economic problems.

We need greater leadership on the ground, said a currency trader, who requested anonymity because of the sensitivity of the subject in a market closely shepherded by the central bank.

Amid these worries, rupee closed at 69.40/60 on Friday, compared with Thursdays close of 67.08/20.

The central bank has been intervening to curb volatility, but its reserves are dwindling.

When the State Bank reserves are less than $10 billion, how much can they possibly intervene, said a treasury head of a local bank.

Reserves held by the State Bank of Pakistan fell to $9.926 billion in the week ended on May 3 from $10.367 billion a week earlier, while those held by commercial banks rose marginally.

One senior banker said earlier this week the rupee could recover if Pakistan managed to secure funding from multilateral lenders and friendly governments.

Inherited debacle: Soon after taking office Finance Minister Ishaq Dar spoke of the dire state of the economy taken over from the caretaker government and the previous government led by Musharrafs allies.

Inflation is running at a 13-year high, while the new coalition has inherited burgeoning trade and fiscal deficits.

Yet, Musharraf had insisted the economy was a success story.

Pakistan was on the brink of bankruptcy when he came to power as a general in a coup in 1999, but it turned into one of the regions fastest growing economies after Musharraf became a US ally in the war on terror in 2001 and billions of dollars of financial support flowed in.

This funding, however, delayed much needed economic reforms and the rupees fall was overdue, according to some analysts.

The impact of dollar increase is going to be good for exports and, of course bad, for imports. So it is better for the domestic industry, Zubair Khan, a former commerce minister, said. But, of course, it has an inflationary impact, he added.

Economic growth is seen slowing to 6 per cent in the year ending June 30, after averaging at 7 per cent in the past four years.

The Pakistani stock market has long appeared immune to poor economic data, but sentiment turned just over two weeks ago.

The Karachi Stock Exchange (KSE) index hit a three-month low on Thursday, though it inched up on Friday to end the morning session at 14,433.99 points.

Money changers selling foreign currency to ordinary people said their supplies were running dry.

There is very little supply of dollars now, said one Karachi-based money changer. People have been coming and buying dollars as if theyre for free. 

Rupee tumbles 3.5pc


----------



## Neo

*Govt has ordered public spending cuts: Dar ​* 
Saturday, May 10, 2008

LONDON: Pakistans new coalition government has ordered a massive cut in budget expenditure across the board, including military spending, to cope with the rising cost of fuel and food subsidies, Federal Finance Minister Ishaq Dar, told the influential Financial Times.

In his interview with the daily, he said the country is also seeking to raise $3bn or more from international lenders and foreign investors to bolster its foreign exchange reserves, because of a sharp deterioration on the current account of its balance of payments.

Speaking on a day when the rupee dropped in value against the dollar to Rs67.15 in Karachi, close to its lowest-ever level of Rs68, Dar said, Pakistans current account deficit had ballooned to about $11.5bn, against a target of $7.9bn, after a $3.5bn rise in the cost of oil imports.

Dar said he had also held talks on further loans in Washington, at the annual meetings of the World Bank and the International Monetary Fund, and at this weeks meeting of the Asian Development Bank in Madrid. The target was to boost reserves to $13.5bn, or some four-and-a-half months import cover.

In the medium term, it was intent on redirecting investments to agriculture, to boost domestic production and curb net imports. 

The budget cuts had been ordered from the governments first day in office last month, he said, and included military spending, development expenditure and non-development spending. We are tightening our belt. Everybody is sharing happily the burden. It is the only way to survive, Dar told the newspaper.

Govt has ordered public spending cuts: Dar


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## Neo

*SCCI seeks Turkish investment ​* 
Saturday, May 10, 2008

PESHAWAR: Sarhad Chamber of Commerce and Industry (SCCI) President Muhammad Asif has invited Turkish investors to invest in the gems, jewellery, marble and hydel power generation sectors of the province.

Talking to a delegation of the Pak-Turkish Businessmen Association on Friday, he said the investors would be provided proper security besides offering ample business opportunities to invest in NWFP.

He apprised the delegation of his visit to Istanbul and meeting with Turkish investors at the Euro-Asia Investment Summit.

Meanwhile, the United States Aid for International Development (USAID) funded 21-day practical training to the students by Sri Lankan instructors at Gems and Gemmological Institute it was concluded here on Friday.

The certificates were awarded to the instructors at the concluding ceremony for outstanding performance and added that such initiatives would help produce high skilled workers.

SCCI seeks Turkish investment


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## Neo

*Reforms aim at improving export oriented sector​*
ISLAMABAD: Customs duty reduction and tax initiatives to be announced in the forthcoming budget 2008-09 would aim at competitiveness and efficiency improvement of the local export oriented industries enabling them to face the challenges of the World Trade Organisation. 

Negotiations at WTO, Geneva, are at advance stage and any breakthrough could lead to finalising Agreement on Agriculture (AOA) and Non-Agriculture Market Access (NAMA) aiming at lowering of tariffs and protection to these two crucial agriculture and industrial sectors for more liberalized trade. 

Export oriented industries located at Export Processing Zones or having declared as EPZ are likely to be allowed for the first time duty free import of raw materials as well as machinery, plants and other required accessories and spares. 

At present the government is maintaining minimum duty slab of 5 percent on import of machinery and raw materials, which would be eliminated in the budget, official sources told Daily Times on Friday. 

New elected government has already announced manufacturing and agriculture its main basis of economic growth instead of services in the forthcoming budget 2008-09. In this regard, the economic managers are finalising recommendations for the final review at the highest level. 

Competitiveness and Efficiency Improvement Exercise for the Budget 2008-09, which has been carried out by the conveners of the sectoral committees have submitted a set of proposals to the Federal Board of Revenue and Ministry of Commerce for incorporation in the Budget and Trade Policy 2008-09, the official informed. 

Guiding principles of the exercise which have been taken due care during this exercise were to rationalize tariff structure vis-à-vis raw materials, intermediary and finished goods, in the wake of World Trade Organization (WTO), as the tariffs are expected to be gradually phased down in future. 

In near future, if Non-Agriculture Market Access accord is signed at WTO for liberalising trade of industrial goods, there would be sifting of emphasis to high value added products rather normal products. This would require reducing the input cost for each industry through proposing lower tariff on its raw materials. 

Another guiding principle has been set to increase competitiveness and capacity expansion of export oriented industries by lowering undue and protective tariffs and eliminating procedural bottlenecks. 

The government aims at encouraging competition among local industries without compromising on reasonable effective protection to the industries.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Argentina shows interest in Basha Dam project​*
ISLAMABAD: Pakistan has asked Argentina to submit formal written proposal to provide financing and technical expertise for carrying out the construction of Bhasha Dam project, sources told Daily Times Friday. 

Ambassador of Argentina to Pakistan, Rodolfo Martin Saravia who called on Federal Minister for Water and Power and Tourism, Raja Pervez Ashraf here Friday and offered to invest in the Basha Dam and to provide technical expertise for the project. 

Ambassador informed minister that Argentina could contribute some portion of investment in the construction of Bhasha Dam project. The minister welcomed the offer to invest in Bhasha Dam and asked to submit formal written proposal regarding the investment and technical expertise so that Pakistan could evaluate the proposal to accept the offer. 

Minister said that after the submission of written proposal all the required information would be provided and assured to extend full cooperation in this regard. Pakistan needs $8.5 billion investment for construction of Bhasha Dam project that would generate 4,500 MW electricity. 

The Ambassador informed the minister that his country had great experience in hydel and thermal power generation, particularly in construction of dams. He said that the Argentinean investors are also keen to invest in power projects in Chitral and NWFP. The envoy said that they are also looking possibilities of investment in the areas near Basha dam for tourism purpose. 

The developed area with all facilities near the dam will attract the tourist from all over the world. The envoy invited the Minister to visit Argentina to meet the investors and discuss with them the avenues for investment. 

The minister said that the new political government of Pakistan is fully determined to facilitate the foreign investors and remove all bottlenecks to promote investment in the water and power sector. He said that today Pakistan is facing great challenges, especially in power sector and need about 4,000 to 6,000 MW additional power per day to meet the growing demand of electricity. He said that the country is now focusing on hydel and coal power generation and run of river projects.

The power sector in Pakistan has great potential and the investment in this sector will be welcomed. While discussing the tourism sector, he said that the government is planning to take effective measures to promote tourism in the country and there is proposal to set up budgeted hotels and motels in the potential sites for the tourists. He said that joint ventures projects to promote tourism would also be welcomed.

Daily Times - Leading News Resource of Pakistan


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## sohailbutt

*Pakistan to hire 1200MW of electricity*

ISLAMABAD: Pakistan will hire 1200 megawatt of electricity from the local and foreign organizations, as Pepco would soon be floating tender, which is being formulated.

Senior reporter, Hanif Khalid here said that the local and foreign organizations would supply electricity on rental basis by installing thermal power stations on trucks/ trailers. *Pakistans electricity consumption is rising by 1200MW annually and the shortage of electricity during peak hours hits at 3000/4000MW.* Hydel power production in the country has also gone down by 20 percent, while thermal power production remained at 5800MW. National grid will begin receiving 315MW of electricity by December 2008. 

Pakistan to hire 1200MW of electricity - GEO.tv


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## sohailbutt

*Rupee value decreased due to last years emergency: SBP governor*

KARACHI: Governor State Bank of Pakistan Dr Shamshad Akhtar said decrease in the rupee value is mainly due to uncertain political situation. This includes the declaration of emergency in the country on November 3 and then the recent elections. 

She expressed the hope that the decrease in the value of the rupee would soon be controlled and there will be no adverse effects on the economy of the country. 

Talking to Kamran Khan in Aaj Kamran Khan Kay Saath on the Geo News, Dr Shamshad Akhtar said fluctuations in the foreign exchange rate were something usual and said that exchange rates kept changing in countries the world over. 

Dr Shamshad Akhtar said the State Bank was closely monitoring the decrease in the rupee value and was in a position to take appropriate steps. It is a general tendency that people get panicky over such decrease and start purchasing dollars whenever there is any decrease in the rupee value. 

Actually, it is necessary that we should deeply assess the reasons behind this situation. The decrease in the rupee value is mainly due to uncertain political situation. This includes the declaration of emergency in the country on November 3 and then the recent elections. 

Another factor that adversely affected our economy was the hike in the prices of oil. Yet another reason is the unexpected expenditure of $2.6 billion we incurred on the import of food items. 

She pointed out that the foreign exchange companies were involved in an irresponsible manner. She said the State Bank had pumped $250,000 into the market so that there was no shortage of dollars in the open market, but the exchange companies had started transferring amounts out of the country, which was against the currency rules and regulations. She said the State Bank did not see the situation as hopeless, and apprehending the situation in advance, held the foreign exchange reserves to meet any untoward situation.

Rupee value decreased due to last years emergency: SBP governor - GEO.tv


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## sohailbutt

*PKR strengthens: exchange companies asked to close down Nostro accounts *

KARACHI (May 10 2008): Pak rupee strengthened by 20 paisas against the dollar due to intervention by the State Bank of Pakistan on the interbank market and stopping the exchange companies from sending cash abroad in pound sterling, euro and UAE Dirham on Friday. The SBP also withdrew the facility of Nostro accounts with foreign banks.

At the opening PKR 68.45 was fetching one US dollar. Soon after the rupee started strengthening to Rs 68.15 per dollar. However, aggressive import booking reversed the trend to weaken Pak rupee as low as 69.70/69.80 to a dollar.

After bank heads returned from a meeting with the SBP Governor, nearly all banks became dollar sellers with very few buyers. As a result the rupee gained to PKR 69.50 to dollar. But then heavy intervention by SBP through National Bank of Pakistan and Citibank strengthened the rupee further and a deal was reported at PKR 66 to a dollar.

At the end of the day (Monday value) trades were conducted at PKR 68.25 to one US dollar. On Friday six months forward cover premium rose from Rs 1.83 to Rs 2.05 with rumours that SBP may temporarily disallow forward bookings in order to curb excessive import booking.

Further, the knowledgeable experts say that inflow and outflows based on SBP 'M' Forms for settlement do not take into account the forward bookings which are off-book transactions in banks and reflected in their Nostros. Exchange companies which were on sideline, on Friday, due to the sudden withdrawal of cash exports were awaiting instructions from SBP regarding disposal of disallowed export currency.

The State Bank of Pakistan, amending Exchange Companies Rules & Regulations, said that earlier on July 8, 2006 through FE Circular No 8, exchange companies were required that all permissible inflows/outflows should be routed through either their Nostro Accounts with banks abroad or their FCY Accounts maintained with commercial banks in Pakistan.

The SBP on Friday withdrew the facility of Nostro Account with banks abroad and instructed the exchange companies that all permissible inflows/outflows of the exchange companies are to be routed only through FCY Accounts maintained with commercial banks in Pakistan.

"All exchange companies are, therefore, required to close all their existing Nostro Accounts with banks abroad, and bring back the balances held in those accounts into their FCY Accounts in Pakistan, latest by May 31, 2008," the SBP said.

All exchange companies are required to report compliance of the above instructions to Exchange Policy Department along with documentary evidence, the SBP added. The central bank also revised the procedure for export of FCYs other than US dollars was prescribed. Henceforth exchange companies are not allowed to export cash in pound, euro and UAE dirham.

Further, with a view to focus exchange companies on their primary function of promoting home remittances, it has been decided that with immediate effect an exchange company will be allowed to effect outwards remittances on behalf of bonafide customers for permissible transactions only to the extent of 75 percent of the home remittances mobilised by the company during the preceding month.

In this respect, all exchange companies are required to report the above on the enclosed format by 5th day of every month to the SBP. The central bank said that failure to comply with the above instructions would attract severe regulatory action under related rules & regulations.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Inflation swells to 25.38 percent *

ISLAMABAD (May 10 2008): The inflation measured through SPI has swelled up to 25.38 percent in the week ending May 8 over the same period of last year, owing to increase in the prices of 24 essential commodities. The data on SPI released by the FBS on Saturday also negated the Information minister Sherry Rehman stance that Cabinet meeting was told about stability in the prices of essential commodities.

The provision of accurate inflation figures could help the government in framing policies required to bring it down. Moreover, it is not clear what yardstick was used to measure inflation as prices of commodities enlisted by the FBS varies from the prices of these commodities in markets. They might have not taken prices from the open market.

The inflation has jumped by 1.53 percent during the first week of May whereas it surged from 23.93 percent on April 30 to 25.38 percent on May 8. The government seems to have flatly failed to chalk out any strategy to curtail rising prices of essential commodities that are now out of common man's reach.

The SPI has gone up from 12.16 percent in February 28 to 25.38 percent on May 8, hitting hard the low income group as there has been a relentless increase in the prices of essential commodities. Weekly data showed that dearness has gone up to 28.57 percent for families earning Rs 3000 per month, 27.94 percent for Rs 3001 to Rs 5000 income group, 25.85 percent for Rs 5001 to Rs 12000 and 22.63 percent for families earning above Rs 12000 monthly income.

The SPI bulletin is based on data of 53 items collected from 17 urban centres. It showed that prices of 24 essential commodities increased during the week while only 6 declined from the list of 53 essential commodities used to measure weekly inflation. The prices of 23 items remained stable but were higher over last year.

According to FBS, during the week under review, the per kilogram price of gram onion increased from Rs 12.14 to Rs 15.03 during the week under review, potatoes per kg from Rs 13.66 to Rs 15.04, rice irri-6 from 40.66 to Rs 44.50, bananas from Rs 38.44 to Rs 42, diesel from Rs 47.28 to Rs 50.26, massor pulse washed from Rs 93.78 to Rs 99.17, sugar from Rs 25.67 to Rs 27.11, rice basmati broken per kg from Rs 47.16 to Rs 49.73, petrol per liter from Rs 66.03 to Rs 69.07, gur from Rs 29.07 to Rs 30.13, wheat average quality from Rs 18.12 to Rs 18.78, gram pulse washed per kg from Rs 57.37 to Rs 59.41, wheat flour average quality from Rs 21.84 to Rs 22.33, fresh milk from Rs 32.15 to Rs 32.67,mustard oil from Rs 142.99 to Rs 143.18

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Starr operators illegally issued billions of rupees refunds* 

ISLAMABAD (May 10 2008): An investigation by the Federal Board of Revenue (FBR) has confirmed that the tax officials operating Sales Tax Automated Refund Repository Computer System (Starr) in Islamabad and Lahore had tampered with the record to issue illegal refunds of billions of rupees to the exporters.

Sources told Business Recorder on Friday that the Starr managers were primarily responsible for diverting the system merely to issue huge amounts of illegal refunds. The seriousness of the issue is evident from the fact that the next board-in-council meeting would finalise action against the sales tax officials, who were operating the Starr system.

An FBR report on Starr frauds has disclosed some astonishing facts about the modus operandi of the sales tax officials to by-pass the checks in the system.

The investigation was being conducted to check the involvement of Starr officials in mega-refund scams, particularly in 37 tax fraud cases referred by the National Accountability Bureau (NAB) to the FBR.

According to sources, a large chunk of money was fraudulently withdrawn as sales tax refund at the time when the Starr was fully operational. In most of the cases, the fraud was committed in connivance with the Starr managers in Lahore and the FBR staff. The modus operandi was to flash incorrect particulars of the suppliers on the Starr window at the time of refund sanctioning. This technique was used to show that the supplies had actually taken place even in non-existent cases. The refunds were generated on the basis of wrong data of suppliers using the Starr system.

The report clearly pointed towards discretionary powers, delegated to the sales tax officials, who altered the system on their own. It also reflected that nobody was keeping any supervisory checks on the officials using the system. It has been categorically declared that the blessings of the Starr operators actually resulted in biggest tax fraud scams in Pakistan.

It seemed that the technical working of the Starr was known to a selected sales tax officials, who widely misused the system. Moreover, absence of constant check on the Starr further empowered the officials to continue to issue illegal sales tax refunds to the so-called exporters.

Sources said that the board had now decided to conduct thorough inquiry of all these cases, including the Starr managers, who remained posted at the FBR and Lahore during the tenure when scams came to light. If inquiry confirms involvement of senior sales tax officials, who used the Starr to bypass the system, the responsibility for issuance of sales tax refunds would be solely remained with the Starr operators.

Tax officials have always blamed the exporters for misusing the Starr and submitting wrong documents for obtaining bogus refunds. It was also alleged that the unscrupulous exporters file claims without making actual exports. It was claimed that the exporters fraudulently claimed sales tax refund on forged documents.

Contrary to this, the departmental inquiry has directly blamed the Starr operators for widely misusing the system for issuance of refunds. It has been recommended to conduct thorough inquiry of the officials, who used to operate and supervise the Starr during 2003-2005 (period of frauds).

In two cases, sales tax refund of Rs 217.43 million was issued in Karachi a few years ago and the Directorate General Inspection had referred the cases to the Regional Tax Office (RTO), Karachi. Six cases, involving over Rs 1.2 billion, are in the process of adjudication. In total, a huge amount of over Rs 2.2 billion was claimed as illegal sales tax refund on the fake documents by 37 companies of Karachi during the period of fraud.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*SBP won't devalue, revalue exchange rate *

KARACHI (May 10 2008): Governor State Bank of Pakistan, Dr Shamshad Akhtar has said that central bank will not devalue or revalue the exchange rate and the market alone will determine its real value. In interviews with various TV channels, she said that "SBP's job is to supervise the market and SBP is doing its job in a right way to stabilise the exchange rate, which is over fluctuated".

She also said that it is not "necessary" that the rupee attains its previous level of 60 against dollar. She said that the rupee had been stable over the last four to five years and was between 59 and 61 to dollar, however some shocks including imposition of emergency and political noise have caused negative pressures on the exchange rate.

The increasing macro imbalances such as rising imports and declining exports have also disturbed the exchange rate, giving an opportunity to speculators to take advantage of the situation, Akhtar added.

She said the SBP is taking measures to stabiles the over fluctuating exchange rate. But, she added SBP does not have any reversal policy and will not impose any restriction on the exchange rate. She said that SBP policy is not to devalue the exchange rate, therefore the central bank wants that market fundamentals should determine the real exchange rate.

"When we check the market it reveals that exchange companies are involve in irregularities and transferring huge foreign exchange abroad, therefore central bank stopped the export of pound sterling, euro and UAE dirham through exchange companies, Governor said. However, she made it clear that it is not a ban or reversal of any policy and said that it was SBP's prerogative to allow or disallow export.

In addition, the exchange rate on the interbank market is also over depreciate. Therefore, she added bank have been asked to correct negative sentiment in the market. "We are in a floating exchange rate regime, not in a fixed exchange rate regime. Therefore the market should determine the exchange rate," she said.

She made it clear that central bank will not tolerate any irregularity regarding exchange rate, but will continue to supervise the market. She said that exchange companies were found involved in speculation, therefore some restrictions have been imposed on them. She blamed exporters for delaying inward export receipts, while importers are covering their needs ahead of time.

She said that SBP have all reports of inflows and outflows and added that it is not a crisis situation that the central bank is facing for the first time in the history of the country. "Some 200 million-dollar inflows of earthquake victims have been received and we are expecting huge inflows from Asian Development Bank, World Bank and other resources, which would help improve the exchange rate," she said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Provinces shares static at 35 percent for over seven years: report ​* 
LAHORE (May 10 2008): The share of total transfers to provincial governments in the Federal revenues (tax plus non-tax) has remained virtually static at 35 percent over the last seven years. In addition, it is expected that revenue transfers from the divisible pool and grants-in-aid will constitute 50 percent of the revenues in the divisible pool by 2010-11.

This was stated in a report titled "State of the economy: challenges and opportunities," launched by the Institute of Public Policy (IPP) of the Beaconhouse National University. The report was prepared by a team of eminent economists - Sartaj Aziz, Shahid Javed Burki, Dr Hafeez A. Pasha, Dr Parvez Hasan, Dr Akmal Hussain and Dr Aisha Ghaus Pasha.

The report says: "The fiscal federalism" plays an essential role in addressing the issue of regional disparities. There is a need to ensure the pattern of inter-governmental fiscal relations evolved in such a way that the greater need for support to the more backward provinces is recognised."

It says the National Finance Commission (NFC) is expected to make an award every five years to resolve the problems, first, of vertical imbalance in resources between the Federal government and the four provincial governments combined and, second, the horizontal imbalance among the provincial governments. "However, the NFC has failed over the last six years since 2002 to arrive at a consensus on a new award to replace the 1997 award.

"Consequently, the President of Pakistan has promulgated an interim arrangement for transfers with effect from 2006-07. The changes with respect to the 1997 award are, firstly, the share of provinces in the divisible pool of revenues has been increased from 37.5 percent to 41.5 percent in 2006-07, rising to 46.25 percent by 2010-11; secondly, in 1997 NFC award grants-in-aid were only given to NFWP and Balochistan, which has now been extended to all four provinces on the basis of pre-determined shares.

"Overall, it is expected that revenue transfers from the divisible pool and grants-in-aid will constitute 50 percent of the revenues in the divisible pool by 2010-11. The sharing of revenues in the divisible pool, based on population and the coverage of straight transfers, remains unchanged," the report said.

The report also says the basic issue is whether over the last seven years fiscal transfers have been adequate and if the goal of fiscal equalisation has been achieved whereby the two smaller and less developed provinces, NWFP and Balochistan, have received higher transfers on a per capita basis.

Incidentally, in the Pakistani context, straight transfers have also been performing historically an equalisation function. NWFP has access to hydro-electricity profits and Balochistan to revenues from natural gas, which raise per capita transfers significantly.

A look at the four provincial budgets reveals that transfers have probably been adequate to support an increase in their combined share of public expenditure.

But a more in-depth analysis reveals that provincial expenditures have risen because of greater resort to borrowings, which are now financing as much as two-thirds of development expenditure.

In addition, the share of total transfers to provincial governments in the Federal revenues (tax plus non-tax) has remained virtually static at 35 percent over the last seven years. The reports adds the overall growth in per capita transfers of all types to the provinces from 2000-01 to 2006-07 has been 144 percent for Sindh, 106 percent for NWFP, 103 percent for Punjab and 75 percent for Balochistan.

It appears that the process of fiscal equalisation has largely broken down with the highest growth in transfers to the most developed province, Sindh, and the lowest growth in transfers to the least developed province, Balochistan.

Today, the level of transfers per capita to Sindh is higher than NWFP, while Balochistan is unable to meet even its current expenditure obligations, the report says.

Overall, the report adds, a review of the process of inter-governmental relations over the last seven years reveals the emergence of serious imbalances. This has been one factor, contributing to faster growth of the economies of Sindh and Punjab as compared to Balochistan and NWFP during the current decade.

Clearly, there are strong reasons for dissatisfaction of the smaller provinces with the workings of the federation during the tenure of the last government.

Now, the report says, the elected coalition governments are in place in Islamabad and the provincial capitals with the common element of one party, PPP, there is need for urgent reconvening of the NFC to arrive at an early consensus award which ensures the following:

-Further expansion in transfers from the divisible pool to cover the emerging sizeable deficits of the provinces with the understanding that they will, henceforth, face a "harder" budget constraint, with only limited access to borrowings. Provision will also have to be made for higher transfers to cover the costs of taking on Concurrent List functions by the provinces.

-Adoption of multiple criteria for determination of transfers from the divisible pool, including, in particular, backwardness, to ensure more fiscal equalisation. The collection criteria could also be given some, albeit small, weight. Punjab should now have less objection to this as research at IPP shows that the share in collection from the province of apportionable taxes (all taxes, excluding taxes on imports) has approached its population share.

-Higher grants-in-aid are restricted largely to NWFP and Balochistan.

-Review of the formula for determination of hydro-electricity profits to NWFP, a long-standing demand of the province. There is no doubt that the transition from an ad hoc award by the President to a consensus based NFC award will be a major step forward in strengthening the federation and be a key indicator of success of the newly elected governments.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Public debt up by Rs 270 billion in last 40 days ​* 
ISLAMABAD (May 10 2008): Downslide in Pak rupee value has added Rs 270 billion (roughly $4 billion) in Pakistan's public debt in the last 40 days, besides making the oil imports more costly and, if this trend of currency depreciation continued, the damage to the economy might be unmanageable.

Sources said that the economic team of the government remained busy in Islamabad for hours on Friday to find out some solution to the ongoing money crisis as a result of the nosedive of Pak rupee against US dollar, but by the end of the day-long consultation result was zero.

A senior official who was the part of Friday's series of meetings held in Finance Ministry, said: "We have spent the whole day in finding out a solution to dollar-rupee exchange rate that is showing disturbing trend over the last couple of weeks, but there seemed no quick end to what can be seen as a major devaluation in the currency in the recent years. The devaluation of Pak rupee is a failure of the fiscal policy."

Even the government's economic managers looked confused over the role of the State Bank of Pakistan (SBP) in managing the rupee-dollar exchange rate. They were of the view that SBP did not act timely, and wisely, to seize the downslide of rupee.

Pak rupee exchange rate vis-a-vis US dollar has reduced by Rs 5 plus during the last 40 days. Dollar strengthened its position against rupee between April 1 and May 9. One percent dip in rupee value vis-à-vis dollar adds Rs 60 billion in Pakistan public debt.

US dollar-Pak rupee exchange rate was ranging between 1:61 and 1: 62 by the end of March, but in April the rupee started to weaken. However, devaluation was not so massive, and its impact on imports and other things was not felt so badly.

However, from the third week of April to May 9, the dollar showed massive gain against rupee, creating a crisis-like situation both in the interbank market and the open money market. SBP took strict measures to seize downward trend in rupee but it seemed too late.

The downward slide also created panic among importers who were making every possible efforts for early opening of the LCs for their orders. Contrary to importers' approach, exporters were not willing to bring their money back into Pakistan. This was widening demand and supply of the currency in the money market.

Devaluation of rupee has cost Pakistan very dearly. Now, for each barrel of oil, Pakistan's exchange rate will be 125 multiplied by Rs 68 against Rs 62 of last month. The increase done by the government in oil prices has gone in vain due to the massive devaluation of Pak rupee.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*$750 million uplift plans for NWFP, Fata, AJK and Balochistan: Tracy ​*
PESHAWAR (May 10 2008): Peshawar based Principal Officer American Consulate Miss Lyn Tracy Thursday informed that her government has started 750 million US dollar programme for executing uplift schemes in NWFP, Fata, AJK, Balochistan and areas close to Pak Afghan border.

She stated this during her meeting with District Nazim Himayatullah Khan Mayar at his office in Mardan on Thursday. Vice Consular Justin Kolbak and other officials of the US Consulate were present on the occasion.

She said, a high level delegation of US which is currently touring Pakistan held meetings with officials of Commerce Ministry in Islamabad and industrialists and traders in Peshawar the other day to devise a strategy for the development of industrial sector of the NWFP. District Nazim Himayatullah Khan Mayar, DCO Syed Mubashir Hussain Shah, DPO Tahir Khan and ACO Syed Fayaz Ali Shah briefed the US diplomats about the performance of the district government, LG system, law and order and ongoing uplift projects in Mardan district.

Education and health sectors topped the priority list of the district government, he said adding the district government in order to provide better facilities in these sectors has introduced sixteen new taxes with the approval of the district council and provincial government. The new taxation enhanced revenue generation of the district by Rs 30 million, he added. The District Nazim complained that his district was ignored in the uplift schemes on political grounds in the past.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*KCCI preparing five-year export roadmap for Pakistan ​* 
KARACHI (May 10 2008): The Karachi Chamber of Commerce and Industry (KCCI) is formulating five-year export roadmap for Pakistan. KCCI Export Sub-committee Chairman Shariq Vohra has initiated work on the five-year export roadmap. The roadmap will transform the export policy into new dimension and the diversification of exportable items.

After formulating the long-term export roadmap, it would be forwarded to Trade Development Authority of Pakistan (TDAP) for consideration and onward submission to the government for approval. Karachi chamber is the first trade organisation in the country, which has initiated the formulation of long-term export roadmap.

The chamber will collect information of goods produced, raw material available and required to produce export surplus, demand of goods in various countries, information about new markets where goods can be exported, production cost of goods as compared to its competitors in world market, prepare essential statistical data for the Pakistan export market, infrastructure requirements, information about demands of non traditional items in world market and propose amendments in export policy order etc.

Pakistan's export trade is largely dependent on imported raw materials and components. The surging trade deficit is also directly or indirectly related to imported raw materials consumed in almost all the export products of Pakistan. The roadmap would suggest that besides export policy, import policy should be framed in such a manner that it is not detrimental to exports.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Trade deficit swells to $16.8 billion ​* 
Sunday, May 11, 2008

ISLAMABAD: Pakistans trade deficit zoomed to an all-time high in July-April 2007-08, with the gap between what it sells abroad and what it imports rising to a massive $16.8 billion, prompting the coalition government to consider new laws to rein in the runaway deficit and form a healthy trade blueprint for future.

The latest snapshot of trade activity, reported by the Federal Bureau of Statistics (FBS) on Saturday, showed that the countrys trade gap during these 10 months saw a 50.78 per cent leap compared to the corresponding period of the last fiscal ($11.14 billion).

Pakistans economy during July-April 2007-08 pulled in imports worth $32.06 billion while its exports stood only at $15.25 billion. During the same period of the last fiscal, imports stood at $24.99 billion and exports at $13.84 billion. This depicts a 28.28 per cent growth in imports while only 10.17 per cent in exports.

It indicates that the country is once again marching towards another huge trade deficit, which would further jack up the current account deficit.

The figure confounded predictions that the deficit would come down with the weakening of the rupee. Instead, the trade gap has created increased pressure on the rupee to drop even further.

It is worth mentioning that the countrys burgeoning trade deficit also maligns donors advice to the government since 2004, for depreciating the rupee so as to increase exports and bridge trade gap. 

Despite that, the Pakistani rupee value declined against the major currencies, yet the countrys economy got no respite in increasing its exports and controlling its imports.

It is important to note that previously, in its trade policy for the fiscal 2007-08, the government targeted imports at $29.6 billion and exports at $19 billion with a trade deficit of $10.6 billion. 

During these 10 months, the country achieved 80 per cent of exports and surpassed the imports target by 8.31 per cent or $2.46 billion and in the remaining two months imports would further increase above the estimated target.

Private economists believe that the huge import pressure and low exports growth envisages that by the end of this fiscal, trade deficit would reach more than $20 billion.

This has also confronted the government with the dilemma of balancing its financial accounts. The depreciating Pakistani rupee and record high inflation are the other two big monsters that have badly confused the governments economic policymakers.

In April, the countrys trade gap widened to $2.29 billion, up by 12.5 per cent from a trade shortfall of $2.03 billion recorded in March 2008. During the month under review, imports were up by 7.24 per cent to $4.1 billion while exports increased by only 1.24 per cent to $1.81 billion over the previous month. Likewise, imports during April 2008 were up by 59.32 per cent and exports by 23.09 per cent.

Trade deficit swells to $16.8 billion


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## Neo

*Freight charges hit Pakistani cement exports to India ​* 
Sunday, May 11, 2008

NEW DELHI: Pakistans cement exports to India have slowed down because of rising freight charges and non-availability of railway wagons despite increasing orders, exporters said.

Cement manufacturing companies in Pakistan officials told Indo Asian News Service IANS that freight charges to India on cement had been increased by almost 200 per cent in the last two months and they face difficulty in getting wagons to export it by train.

The freight charge from Karachi port to an Indian port was just $3per tonne about two months back, now it is $9, Saifuddin Khan, general manager marketing of Lucky Cement told IANS.

He said there was no particular reason for massive increase. When shipping lines realised they can get business from Pakistan to India, they increased price.

Khan said his company received more orders from India. Our cement is cheaper than Indian and quality is much better.

Tasneem Ilyas, operation manager of SGS (Society General Surveillance), which inspects most of cement consignments sent from Pakistan to India, admitted cement export has slowed down but said he was not aware of the reason.

She said most consignments were tested by her company for quality and cement being exported to India is of higher quality than standards set and required by Indians.

According to our reports, not a single consignment has been found below standards. She said they were in touch with Indian Minerals & Metals Trading Corp.

With cement export, trade between two countries has taken significant step forward. At least five Pakistani companies approved by Bureau of Indian Standards (BIS) started to export cement to India while five more manufacturers applied for certification.

Cement goes to India by sea route or train. Traders want both governments to allow road transport as well. According to the two governments, only a truck of 10 tonnes can cross the border. This is not viable in case of cement.

Pakistan produces about 100,000 tonnes of cement, of which 40,000 tonnes is more than what is consumed locally and surplus exported to several countries.

According to manufacturers, capacity of Pakistani cement industry will touch 40 million tonnes by end of year and could reach 44 million tonnes in another year.

We believe there is great demand for cement in India and importers continue to prefer Pakistani cement, being close to their country and due to competitive rates, Khan said.

Cement export from Pakistan was proposed in meeting between Indian Prime Minister Manmohan Singh and Pakistans former premier Shaukat in 2006.

Pakistani exporters were encouraged by Indian governments steps to abolish countervailing duty and additional customs duty, making imports viable.

Freight charges hit Pakistani cement exports to India


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## Neo

*Services sector performs poorly in July-March 2008 ​*
KARACHI: The services trade deficit widened by 39.36 percent to $4.839 billion in first nine months (July-March) of current financial year over $3.473 billion in the corresponding period last year. According to latest data released by Federal Bureau of Statistics (FBS) on Saturday, services trade deficit, also swelled by 30.02 percent in month of March to $603.246 million compared to $463.976 million in the same month of last year. Furthermore, it also widened phenomenally by 123.53 percent against preceding month of February when it totaled $269.872 million. During July-March 2007-08, services export declined by 13.51 percent to $2.398 billion against $2.772 billion previous year whereas imports surged by 15.89 percent to $7.238 billion over $6.246 billion in the last year. 

The export in month of March alone, however depicted healthy gains of almost 25 percent to $292.778 million over $234.426 million in the previous year. While imports were also up by almost 28.30 percent during March to $896.024 million against $698.402 million in the last fiscal. Analysts said export performance of the sector was less impressive compared its preceding months, which caused a huge deficit in services trade besides put further pressure on the balance of payment position of the country. Analysts said government needed to resolve a number of issues confronting this sector like quality, acceptance of professional credentials, visa problems and the most importantly the image problem, which has marred to exploit the major potential in this sector.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Car sales continue to slump, decline by 8%​*
KARACHI: The sale of cars declined by 8 percent during the first 10 months of the current financial year, figures released by the assemblers association show. 

The local car assemblers managed to sell only 120,859 units in July-April period of this fiscal year compared to 131,962 units sold in the same period of last financial year. 

The sale of cars declined to 13,597 in April from 13,871 units in March. 

This decline in April is primarily due to product price increase by almost all local auto assemblers. The prices have been revised upward to pass on the impact of rising costs to the end consumers, claim the assemblers. 

Even the extension of 2.5 percent withholding tax (WHT) exemption till Jun 30, 2008 was not able to support the declining sales, said Bilal Hameed, an analyst at JS Research. 

The sale of cars and light commercial vehicles, combined fell by 5 percent to 153,846 units from 162,462 units. Their sale in April dropped to 17,259 units from 17,532 in March. 

The share break up for cars and LCVs in auto sales is 79 percent and 21 percent, respectively. 

The sale of cars and LCVs have been on a declining course, although the government had restricted the import of cars to units not older than three years in the budget announced for 2007-08. In the beginning of this fiscal year, when the sale of automobiles started falling, the assemblers had blamed it on the imposition of 2.5 percent withholding tax on purchase of new cars. Although the government suspended the collection of levy in February for two months and then extended the suspension till June 30, the sales continues to decline. 

Moreover, the question arises why should a tax on purchase of cars be suspended at all. Is it a basic necessity of life? Definitely not! Instead of suspending taxes on purchase of such luxurious items, the government should remove duties on those items which are essential for survival. 

Besides, keeping in view the condition of our roads, which are perennially clogged, from morning to late evening, is it a prudent policy to continue to allow factories to churn out cars in tens of thousands every month?

Daily Times - Leading News Resource of Pakistan


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## Neo

*One million jobs are at stake in the apparel sector​*
KARACHI: Apparel sector will face a huge labour cut and shut down of units across the country due to worsening situation caused by anti-export policies of the government, Pakistan Apparel Forum (PAF) said on Saturday.

Chairman PAF, Naqi Bari said, a total of 700 units of this sector have been closed down all over Pakistan. 

If the apparel sector is not given due importance by the government, the rest of the operational units, totalling around 2,000, in Karachi, Lahore, Faisalabad, Sialkot, Multan, Islamabad etc would be forced to shut down, rendering entire labour force employed by this sector, he warned.

He demanded separate EOU rules for apparel industry, making it part with EPZ with mechanism for smooth sailing of EOU programme, reduction in multiple taxes, restoration of export finance rate as on 2002 without participation of commercial banks, matching gas tariffs as allowed to fertilizer industry be given to apparel industry.

Besides, EU, USA and Japan may be approached for zero rated tariffs entry of Pakistani apparel in these markets and a suitable percentages of last years exports as travel or marketing allowance.

Bari, said that apparel industry is one of the five top foreign exchange earners of Pakistan with 23 percent share in total exports and employs about 40 percent of labour force. He listed higher cost of doing business, duty free access to competitors, uneven playing field, burden of multiple taxes are some of the major issues impeding the growth of the apparel sector.

He reacted to the State Bank of Pakistan (SBP) Governors statement of misuse of R and D funds by the textile sector.

He said it would be appropriate if SBP points out any specific case of malpractice or misuse of R and D support by apparel manufactures enabling the sector to investigate the matter jointly with central bank.

He demanded it should be extended for more years with the increase in rate and expanded its scope to other markets.

PAF is comprised of four associations, Pakistan Hosiery Manufacturers Association (PHMA), Pakistan Cotton Fashion Apparel Manufacturers Association, Pakistan Readymade Garments, Manufacturers and Exporters Association (PRGMEA) and Pakistan Knitwear and Sweaters Exporters Association.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Govt to use IT for bringing efficiency​* 
KARACHI: The Federal IT Minister has said that present government desires to use IT to bring about greater efficiency and transparency within the government, streamline the functioning of the government and at the same time facilitate the citizens by providing them services at their doorsteps.

Qamar Zaman Kaira expressed these remarks during his visit to Electronic Government Directorate (EGD) of the Ministry of Information Technology. 

Raza Abbas Shah, Executive Director EGD, briefed minister about the organisational structure of EGD, its growth since inception and major accomplishments to date. The Federal Minister was informed that EGD is executing 40 different IT projects for various Federal Government organisations.

The Minister appreciated the efforts of EGD, which he stated is doing a remarkable effort in automating various processes of the Federal Government and assisting it in making their services available online to citizens.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan transit fee bottleneck for IPI​*
** Pakistan de-links transit fee from gas price: Indian officials​*
NEW DELHI: The gas transit fee to be charged by Pakistan remains the bottleneck to finalising the trilateral Iran-Pakistan-India (IPI) gas pipeline project, according to Indian officials. 

India is asking Pakistan to lower the transit fee, offering to pay 15 cents per million British thermal unit (mmBtu). Pakistan demands 42 cents mmBtu. 

Sources said that during the recent visit of Indian Petroleum Minister Murli Deora to Islamabad, Pakistan had demanded a transit fee of 42 cents per mmBtu and a flat payment of $200 million a year. 

A large part of the money will go to providing security and maintenance of the pipeline. India argues that because Pakistan is also using this gas, it should take responsibility for maintaining the pipeline without passing the burden to India. 

De-link: Indian officials, however, are happy that Pakistan has agreed to de-link the transit fee from the price of gas. Both countries have decided to settle the final tariff after floating international tenders for work contracts. They are confident that both countries would soon be able to conclude an agreement on the transit fee, transportation charges and project structure.

As India had agreed to pay 15 cents, it has asked the Pakistani authorities to further reduce the fee and make it nominal, considering that Pakistan would also be using gas for 80 per cent of the pipeline length, said an official.

India has also renewed its offer to set up a consortium and a role for its state-owned gas transmission company, GAIL, in the construction of the pipeline. 

This would not only allow cost effectiveness and enhanced accountability, but would also help as a confidence-building measure and in pipeline security. Pakistani authorities have an open mind on this issue and will respond shortly, say officials.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Government borrowing from SBP hits new peak of Rs 485 billion ​* 
KARACHI (May 11 2008): Government borrowing for budgetary support from the State Bank hit new peak of Rs 485 billion during the first 10 months of the current fiscal year mainly due to below the target revenue collection, slow inflows and high subsidies on commodities.

"The central bank already had asked the previous government to minimise its borrowing from SBP, or else the central bank would use its powers to control the borrowing," economists said. But, due to the internal and external shocks government borrowing is continuously on rise," they added.

They said that rising government expenditure, subsidies on commodities (petroleum products and wheat) and slow inflows are chief factors behind excessive borrowing. "Although the government has raised petroleum products' prices, which helped reduce subsidies to greater extent, however during last few months billions of rupees subsidies were given," economists added.

In addition, the government is importing wheat on high rates to meet the local demand, besides providing the commodity to flourmills on subsidised rates to keep its prices stable in the domestic market. These fundamentals have badly hurt the government budgetary target and compelled it to explore other avenues for budgetary support, they said.

The SBP statistics depict that during July to April 26, 2008 net government borrowing for budgetary support grew by Rs 163.884 billion as compared to last fiscal year. After the current upsurge net government borrowing from banking system including the SBP and other banks reached Rs 334.871 billion during July to April 26 of current fiscal year against Rs 170.987 billion during corresponding period of last fiscal year.

The SBP statistics show that the government budgetary borrowing stocks as on June 30, 2007 stood at Rs 810.053 billion and after the current fiscal upsurge of Rs 334.871 billion, the overall government budgetary borrowing stocks reached some Rs 1,144 billion on April 26, 2008.

Major upsurge was witnessed in the borrowing from SBP, which rose by Rs 484.950 billion during the current fiscal year as compared to the upsurge of Rs 3.051 billion during same period of last fiscal year, registering an increase of Rs 140 billion during first 10 months of FY08.

The government sector budgetary borrowing from banks declined by Rs 150 billion during July-April 26, 2008 period, while during corresponding period of last fiscal year it went up by around Rs 168 billion. Economists said that rising budgetary borrowing would increase inflationary pressure on the economy, however, the expected huge inflows would help the government to reduce its borrowings.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Energy conservation: Cabinet to consider Enercon plan shortly ​* 
ISLAMABAD (May 11 2008): The Cabinet will shortly consider energy conservation plan put forward by the Enercon, it has been reliably learnt. Sources told Business Recorder that recently Enercon presented a proposal recommending conserving energy. Therefore, a meeting of all stakeholders and concerned departments has been called to discuss the issue.

Sources said that as per the recommendations, the Ministry of Industries will introduce energy efficient water heaters/geysers by June 30; there shall be complete ban on import of more than 5 years old boilers; Since the steel industry presently consuming 700 kWh/ton energy as compared to 250 kWh/ton internationally, therefore, incentivised promotion of high efficiency electric arc furnaces with minimum 50 tons capacity shall be launched.

About 100 textile units will be made energy-efficient, within 100 days of newly elected government, through capacity building of engineers/technician; the Minfal and provincial departments may be directed to undertake mandatory energy audit of tubewells and water pumping stations through consultancy services by Enercon.

Pepco will reduce line losses by 1 percent for achieving 100MW savings; line losses in gas transmission and distribution system will be reduced by 0.5 percent for nearly a billion rupees saving. The Ministry of Petroleum and Natural Resources will finally launch the project for replacing inefficient domestic burners in 10 major cities, benefiting over 3 million middle and lower middle class consumers.

The Federal Board of Revenue may allow import of only energy-efficient and duly labelled appliances as per approved standards; the Ministry of Industries will instruct chambers to encourage use of "Time of Use (TOU)" meters for maximum utilisation of off-peak hours.

The government may grant one-time exemption on import duty for 10 million energy savers for free distribution through Discos of 2 million bulbs to charity institutions and low income segment of society and the rest on credit with recovery through utility bills in instalments.

Five years tax holiday may be allowed for domestic industry on energy savers local manufacture, tariff facilitation may be provided by the FBR for import of needed inputs eg insulation, HVAC and other materials/appliances.

Five-day working week may be introduced in government offices for achieving saving of 828MW of electricity in addition to huge savings in gas and fuel bills in transport, as the public and private sectors have shown overwhelming support to this step.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*France to set up FDA to boost economic ties: envoy ​* 
KARACHI (May 11 2008): France has decided to set French Development Agency (FDA) in Pakistan to boost existing strong bilateral economic and trade relations between the two countries mainly in energy, education and health sectors and to help in infrastructure development.

This was stated by the French Ambassador to Pakistan Regis de Belenet while speaking at a meeting of the English Speaking Union of Pakistan at a hotel here on Saturday.

He said that many French companies were already doing business in Pakistan in telecom and other sectors. Pakistan was also getting funds from France for infrastructure development and water supply improvement projects in different parts of the country.

The bilateral trade volume between the two countries has touched $1.2 billion mark, however presently it is in the favour of France.

The present trade volume is likely to increase in futures. Regarding export of French cars to Pakistan, he said that very high tariff was an issue in this regard. He also referred to French-Pakistani co-operation in the defence sector.

He said that terrorism has nothing to do with religion and it will be a big mistake to link terrorism with Islam. He said that Pakistan government's talks with the militants in tribal areas may be useful if the militants also responded with same spirit and gave up arms.

He asserted French government's policy against scarf was not discriminatory. He said that over 5 million Muslims are living in France and there is no restriction on their religious activities. There are so many mosques in France, he said. He pointed out that the unrest in Paris was not driven by religion and according to him, it was due to economic and other reasons.

He said that it was not for him to comment on the status of President Musharraf. "President Musharraf's future will depend on his decision and the will of the people Pakistan," he said.

The President English Speaking Union Naveed A. Khan and Bahram D. Avari also spoke on this occasion. The Consulate Generals of different countries including the United States, France, Germany, Poland and other countries were also present on this occasion, while a number of members of the ESU attended the event.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*ADB mission to review reform proposals ​* 
LAHORE (May 11 2008): A mission of Asian Development Bank (ADB) on Saturday held a meeting with the Secretary of Commerce and Investment Department (C&I), Tahir Raza Naqvi to review reform proposals for the Sub-Programme-II of the Punjab Government Efficiency Improvement Programme Public Resource Management Reforms II.

An official said Naqvi told the mission about the performance of his department, especially, developed a project portfolio focusing on public private partnerships and private sector development. He said projects like the Establishment of Industrial Estates Management and Development Companies were clear examples of public private partnerships where private sector entrepreneurs led board of directors. He said his government was backing it in terms of access to land and credit lines.

"The C&I Department is working on many public private partnerships investment proposals such as the Fairmont Hotel [Prince Waleed bin Talal, the UAE], livestock, real estate, SEZ projects with Aatris, JV Real Estate Development Project with Emaar Group, OPE SEZ and MAKRO and there are certain projects which are in pipeline at POI level inducing Feed Mill/Breeder Farm by CP Group Thailand," he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan April trade gap widens to $2.29 bln​*
ISLAMABAD, May 10 - Pakistan's trade deficit widened to $2.29 billion in April, compared with $1.1 billion in April last year, Statistic Bureau said on Saturday.

Exports stood at $1.8 billion in April this year, as against $1.47 billion in the same period last year.

Imports were worth $4.1 billion compared with $2.57 billion last year.

"The increase in imports was mainly on account of higher oil prices and that of other commodities and there was a fairly decent growth in exports," said Asif Qureshi, head of research at Invisor Securities Ltd.

"Pakistan needs to find a solution to developing domestic energy sources," he added.

The deficit in April also widened 12.5 percent from the $2.04 billion defict posted in March.

The cumulative deficit for the 10 months July-April stood at $16.8 billion, widening nearly 51 percent from the $11.14 billion posted in the same period a year ago.

Exports for the 10 months totalled $15.25 billion, compared with $13.85 billion in the year ago period.

Imports for the 10 months totalled $32.06 billion, up more than 28 percent from the $24.99 billion deficit notched in the year ago period.

Pakistan April trade gap widens to &#36;2.29 bln - Yahoo! Malaysia News


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## Bushroda

Although this has nothing to do with Pak economy but showcases the success of expat Pakistanis.



> *Khalid Hussain's vision and hard work drives Pak Supermarket success*
> by Tom Fleming
> Birmingham Post, UK
> May 10 2008
> 
> _*Tom Fleming *meets Khalid Hussain, who has gone from shelf stacker to the boss of the biggest chain of Asian supermarkets in the country whilst sticking close to his ethnic roots_.
> 
> 
> When Khalid Hussain collected his young entrepreneur award at the Institute of Asian Businesses gala dinner last November the joke at the ICC was that this was the first night in memory that PAK Supermarket had closed.
> 
> If not strictly true it reflects an approach that has seen this 36-year-old businessman rise from stacking the shelves of a small corner shop grocery store to boss of a chain of supermarkets that has just opened a new £8 million superstore.
> 
> Like many before him Khalid arrived from Pakistan in the 1970s with little more than the hope of a better future. After initially working on the track at Land Rover, his father together with an uncle opened a small butchers and grocery shop on the Lozells Road.
> 
> It went well but the first faltering steps towards expansion could hardly have been less auspicious as Khalid explained: "They brought a bigger shop a few doors away and that was the real start of PAK Supermarket but it was in a terrible state and was almost burned down in the first Lozells riots.
> 
> "It was a terrible time when no one could do business in the area because people were too scared even to come into the shop."
> 
> But persistence and a refusal to be driven out paid dividends and the family started opening other small stores, including one in 1998 in Alum Road that until a few weeks ago was the national headquarters for PAK Supermarket.
> 
> 
> The growth also included an expansion out of the groups West Midlands heartland into South Yorkshire, where a store was opened in the autumn of last year, by which time the business was providing direct employment to about 100 people in the most deprived parts of the region.
> 
> By this time, Khalid had long since become the head of the family business. Whilst at school he worked in the stores on Saturdays and during holidays and began working for PAK immediately after finishing his education, initially on the shop floor.
> 
> All this changed at just 19 when his father returned to Pakistan for a number of years leaving his son at the head of things: "It was a huge responsibility and there was plenty to learn and more than a few mistakes along the way, but I was always ambitious and had a vision."
> 
> As is often the case with people who have 'not had the benefit of an education Khalid wants the best opportunities for his son who is now aged 11.
> 
> "I want him to go to a good school and to do his best. If he decides to follow me into the family business then that will be good, but it has to be his choice," he said.
> 
> 
> But he has no personal regrets about going directly from school to work for PAK Supermarket: "It has been very good for me and I have been very lucky. Had I worked for someone else I could never have enjoyed the lifestyle, opportunities or got the job satisfaction that this gives me."
> 
> Khalid knows that although the minority ethnic community has a relatively high proportion of people who are self employed, he knows that for many of them life is a struggle for survival.
> 
> "There are many good Asian family businesses but often they start small and stay small without ever fulfilling their full potential. People work very hard but that in itself is not enough, there needs to be a desire to make something bigger and recognition that standing still and surviving is not enough."
> 
> He thinks it is no accident that Government statistics show that whilst there are a vast number of small businesses the majority of them never get beyond the survival or subsistence stage.
> 
> "There are people who go into business because they see no other option and it is a way to survival. If this is the motivation then it is hardly a surprise that they get no further," he said.
> 
> Khalid was always keen that PAK Supermarket should break out and move to a new level. "Although our shops were doing well they were all characterised by being relatively small with limited shelf space, no car parking and it was clear to me that we had to think bigger."
> 
> He had to make a step change and that opportunity first presented itself when the site of the derelict former bus depot in Washwood Heath came onto the market three years ago. It was the start of a difficult journey with plenty of pitfalls along the way.
> 
> "I immediately recognised the potential of the site. It was in the right place and gave me the space I needed, but there were big challenges not least of which was that there were other interested buyers that were looked upon more favourably.
> 
> "In the end I bought the land without planning permission, which was a big gamble, but we finally got consent for the supermarket in June 2006."
> 
> Construction started five months later but even then things did not run smoothly as problems with the building works had to be solved. An original plan to open on Pakistan Independence Day in August last year came and went, as did other scheduled opening dates.
> 
> As is usually the way with these things the final cost of £8 million has turned out higher than was planned, but eventually the target of opening on April 1 was agreed.
> 
> The store did welcome its first customers, but gremlins with the IT system stepped in and after just a few hours it was necessary to close in order to sort things out so the proper opening happened two days behind schedule.
> 
> "It is to be expected that there will be teething troubles in any major project, but customers do not expect problems and after so much hard work the glitch was very disappointing," he says.
> 
> So after a long and far from easy pregnancy it was a difficult birth but now the baby is looking fit and well.
> 
> "I am having to learn a new way or working. In the past I have been very much the boss and have done everything but this project has required appointing a management team including a finance director, buyer and someone to head up human resources and IT.
> 
> "We have taken great trouble to try to select good people but it is hard to delegate when you have been used to making all the big decisions yourself. Heading a family business is not like working for someone else because it is very personal and letting go is very hard. I still spend a lot of time on the sales floor and if there is a problem with a display or something I will fix it myself.
> 
> "The team look after key aspects of the business and in recent months all my attention has been on the new supermarket which means I have much less involvement in the running of our other stores that remain very important to the business."
> 
> For 30 years the key customers for PAK Supermarket have been people from the Pakistani community and a key objective is to diversify and broaden the customer base beyond its traditional core.
> 
> "Ninety per cent of our customers have been from the Pakistani community. They will always be very important to us because these are the people that have given us everything we have and so we must make sure that we continue to give them the service at the same level and even better than we have in the past.
> 
> "But to grow the business it is essential to broaden our appeal and we intend this new store to become the place to come for quality ingredients for food from all ethnic traditions including Indian, Bangladeshi, African-Caribbean, the Middle East, Arabia and Africa. There is also a growing demand for the foods of Eastern Europe and we are going to cater for that need as well.
> 
> "People are much more adventurous with cuisine these days with travel all over the world and so people want to be cosmopolitan with their food and cook the meals at home that they enjoyed on holiday and this presents us with a great opportunity. We already have people coming to shop with us from as far away as Leicester and I want PAK to have a regional reputation for supplying top quality authentic ingredients for ethnic food from all over the world.
> 
> "However, it is not just ethnic food that we sell. All of the best-known consumer brands are on our shelves. The store also includes its own bakery, there is a customer restaurant and another first for PAK is that we are selling a range of non- food household goods."
> 
> Khalid Hussain rejects a suggestion that the worst economic outlook for at least 15 years is not a very good time to launch the new supermarket. Plans for further expansion and other bigger stores are in the pipeline.
> 
> "Our core product is good food at a good price and people will always need to look after their stomachs no matter how bad the economy gets. If we were retailing luxury or higher end consumables where there is discretionary spend I would be worried but we are providing the staples of life.
> 
> "There are exciting plans for the future with bigger stores, expansion into other parts of the country and a refurbishment programme for some of our smaller shops. But for the time being the priority is to consolidate, iron out any wrinkles and make sure the new supermarket is a success. Our new store is eight times bigger than any of our other outlets and so the scale is very different and we need to absorb the lessons."
> 
> Another reflection of scale is the number of employees with nearly 100 new direct jobs created at the new supermarket, almost doubling the size of the PAK payroll.
> 
> "One of the things I am very proud of is our contribution to regeneration in one of the poorest parts of Birmingham. When we were recruiting Jobcentre had a special open day for us and that was great.
> 
> "In addition to the direct jobs we are working closely with local suppliers like East End Foods and KTC which boosts the local economy. The construction of the shop took eight months and that resulted in spending locally by the building workers. We are attracting people into Washwood Heath from other parts of the West Midlands and this is bringing money into the local community. It is not just PAK that will benefit from what we have done.
> 
> "This is practical regeneration from the grass roots, not a grand strategic plan on some civil servant's desk. We have done all of this without a penny from the public purse," he says.
> 
> Still only in his mid-30s Khalid has come a long way in a short time and is not going to rest on his laurels.
> 
> "There is no great secret to our success. You need a vision, ambition, hard work and perseverance through the hard times, combined with a reasonable share of luck.
> 
> "If the West Midlands is to prosper as a region we have to unlock the latent potential of many more entrepreneurs from the minority ethnic community and part of that is getting people to believe that because you start small you do not have to stay small.
> 
> "When they look at what we have achieved in moving PAK Supermarket from a small corner shop Asian grocery store to a national chain with ambitious plans for the future I hope they get a glimpse of what is possible."


----------



## sohailbutt

*Maintaining foreign exchange reserves around $15 billion level biggest challenge* 

The biggest challenge for management of short-term balance of payments is to maintain foreign exchange reserves to a level of around US $15 billion over the next few months while financing the substantial uncovered gap in financing. More adequate reserves are necessary to ward off the speculators in the liberal global framework in which Pakistan is operating.

This was stated in a report titled "State of the Economy: Challenges and Opportunities" launched by the Institute of Public Policy (IPP) of the Beaconhouse National University. The report was prepared by a team of eminent economists-Sartaj Aziz, Shahid Javed Burki, Dr Hafiz A. Pasha, Dr Parvez Hasan, Dr Akmal Hussian and Dr Aisha Ghaus-Pasha.

The authors of the report support the Finance Minister's plans to shore up reserves by US $2.5 billion, presumably, at least partially, with support from friendly countries. With recent downward moves in the value of the rupee, the report says Pakistan's exchange rate does not need any significant once-and-for-all realignment. However, it is important to lay down the policy that the real effective exchange rate will not be allowed to appreciate in the near future.

In others words, the much higher rate of inflation in Pakistan than in its competitors will be allowed to be reflected in the change in the nominal rate against a basket of currencies. Otherwise, the competitiveness of our exports would suffer and import growth will be artificially stimulated. The approximately 6-percent appreciation of the rupee between 2004-05 and 2006-07 may be one factor explaining the slow down in exports and continued rapid growth of imports, the report adds.

Regarding balance of payment adjustments, the report says the current account deficit is so large and the need for curtailing it as well as curbing speculative pressures on the exchange rate is so urgent, that fiscal and monetary policies would have to be strongly supported by trade, exchange rate and foreign exchange policies and confidence building measures such as adopting a strong export orientation and clearly articulate external finance strategy.

According to the report, the current account balance of payments deficit in the 2007-08 is likely to be around 7.5-percent of GDP. The authors of the report believe that this should be reduced to 5-percent of GDP in 2008-09 and 4-percent in 2009-10.

In their view, Pakistan can safely run current account balance of payments deficits of this latter magnitude provided export growth recovers to at least 10-percent per annum, private transfers remain strong and supply of concessionary assistance remains ample. Equally important, limiting the deficit to 4-percent of GDP would bring the saving-investment gap (a measure of self-reliance) to 15-20-percent range from a record 33-percent imbalance likely to be recorded this year.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Multinational companies responsible for price hike*

Despite the official claims that country's economic situation is much better than before and the government's reluctance to get further loans from the International Monetary Fund (IMF), the condition of poor people is going from bad to worse day by day due to uncontrolled and sky-rocketing price hike.

According to a report foreign investment is a major source of ongoing price hike as a large number of multinational companies, especially the mobile companies, are responsible for extra burden on poverty-hit people.

The daily advertisements by these multinational companies through electronic as well as print media have made imperative for every citizen to buy expensive mobile sets, which caused a major dissatisfaction among the masses.

In such circumstances, the chances of development of a country are impossible. As every coming government tries its level best to increase foreign investment thinking that investment would help eliminate poverty but instead of that the country plunged into turmoil and such extra burden brought more difficulties and miseries for the masses.

To tackle the situation, an austerity drive by the government could pull the country out of such crisis as internal resources are more credible than foreign investment.

All the developed countries of the world have followed such drives by using their own resources instead of foreign investments and encouraged own industries instead of such foreign investments.

For example Japan had established heavy industries and sold these industries to rich business families of the country, which helped it in getting rid of foreign loans and at present Japan is an economically strong country. Pakistan has such resources but the rulers always depend on foreign investment instead of sincere efforts and doors remained open always for foreign investment.

Pakistan has become a lucrative country for these multinational companies as they are not bound to get permission from the government regarding increase in the prices and durability of their products. There was a trend in the country that due to the investment by these companies, the living condition of the people is going to improve day by day but the situation is quite different on the ground. There will be no way-out for Pakistani government if these multinational companies closed down their business from the country.

All the multinational companies working in the country have never bothered about the price hike as they are not answerable to the government. It is pertinent to mention here that these companies are not free in their countries of origin to increase the prices of their products on their own.

The beverage companies have also increased prices manifold in the last three years. These multinational companies have also increased the prices of medicines. The government of Pakistan has always discouraged the savings schemes and banks were restricted to give only 2 to 3 per cent interest despite the fact that the Pakistan government has fixed Euro Bond price at about 6 percent in the international market. Savings are always discouraged and the country remains always dependent on foreign loans.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Devaluation trend discouraging foreign investment*

Traders Chamber Chief Khawaja Muhammad Shafiq said the present devaluation trend of the Pakistani rupee is creating panic among trade and industry quarters in the country and it must be stopped.

In a statement here Sunday he said that this trend must be arrested immediately otherwise it will be disastrous for the national economy, and asserted that the State Bank of Pakistan is not playing its due role to control the situation.

He said the ramifications of devaluation would negatively impact the industry as well as discourage foreign investment in the country's stock exchange. Petroleum prices will escalate further, while prices of imported edible oil will be increased and overall exports will be affected due to higher cost of production in the wake of increased utility rates, he said.

Devaluation will discourage foreign investment in the industrial sector owing to reduction in profits in dollar terms, he said, adding that the prices of importable manufacturing raw material will also increase, which will also affect our export-oriented industry.

He said that foreign national debt would also increase in rupee terms, while the overall inflationary pressure could even affect the law and order situation, he cautioned. Khawaja suggested that trade deficit must be narrowed in order to arrest the current devaluation, adding that the coalition government should increase the rate of import duty on foreign assembled vehicles, which is the largest single source of current huge trade deficit, he added.

He also advised that more non-traditional goods like pharmaceutical drugs/medicines should be promoted for export, as this segment has not been properly tapped. Compared to India we are far behind in this sector, while our pharmaceutical products are equally good in price, economy and efficacy, he maintained.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*THE RUPEE: chaos makes vulnerable*

Hovering anxiety over the political and economic fronts pushed the rupee into the minus column during the week ended on May 10, 2008. Earlie, the rupee had started shedding its losses versus dollar following the cautious moves by the State Bank of Pakistan (SBP) to take the rupee to a certain level.

In the interbank market, the rupee shed 70 paisa in terms of dollar for buying to Rs 66.50 and by 115 paisa for selling at 67.00. In the open market, the rupee dropped 125 paisa against dollar for buying and selling at 67.90 and 68.00, respectively.

The rupee also lost 210 versus euro for buying and selling at Rs 104.80 and Rs 104.90, respectively. Highly volatile sessions were observed in the currency market as the rupee was not able to stand with its counterparts despite the repeated warnings by the State Bank of Pakistan (SBP) Governor to the heads of the money exchange companies to ward off speculative buying of the US currency and adopt preventive steps, which could help in recovery versus dollar.

The SBP Governor Dr Shamshad Akhter also asked them to avoid irregularities and also take measures to bring stability in the rupee value versus major currencies.

Meanwhile, during the last couple of sessions, the rupee started recovering versus dollar following the remarks by the governor of the central bank, in which she said that inflows of 3.5 billion dollars were expected in the country, likely to bring stability in the value of the rupee in the coming days.

In a meeting with the heads of the exchange companies, the SBP governor warned it may impose severe administrative control over foreign exchange market "if the market fails to discipline itself".

The country is facing a lot of complications on both political and economic fronts due to lack of strong leadership. Majority in this country consists of poor and they do not know the smoke is going out of their kitchens.

The changes in governments and their policies should now be switched over for betterment of 85 percent people of Pakistan, who are waiting for relief. The authorities should make use of the constitution, which had been, unfortunately offered to people quite late. It begins in the name of Almighty Allah.

INTER-BANK MARKET: On Monday, the rupee lost 68 paisa against the US currency for buying at 65.80 and 70 paisa for selling at 65.85.

On Tuesday, the rupee did not show major change against the dollar for buying at 65.80 while it shed five paisa for selling at 65.90.

On Wednesday, the rupee lost 80 paisa for buying and selling at 66.60 and 66.70.

On Thursday, the ruee fell 50 paisa against dollar for buying at 67.10 and 45 paisa for selling at 67.15. On Friday, the rupee lost 150 paisa against dollar to Rs 68.60 and 1.75 for selling at 68.90.

On Saturday, the rupee recovered 210 paisa versus dollar for buying at Rs 66.50 and 190 paisa for selling at 67.00.

GLOBAL DOLLAR SCENARIO: In the first session of the week, the dollar gave up its last week's gains partly on better-than-expected US job figures, drifting lower against the euro and yen, dealers said.

In morning trades, the dollar changed hands at 105.29 yen from 105.39 yen late Friday. Volumes were light with the Tokyo markets closed Monday and Tuesday for holidays.

The euro was at 1.5447 dollars, up from 1.5422 on Friday in late US trades. During the second session, the US dollar was broadly weaker as doubts resurfaced about the health of the US economy while record oil prices lifted commodity currencies such as the Canadian dollar.

Even the Australian dollar rose as a tentative pick up in risk appetite boosted high-yielders but it retreated after the Reserve Bank of Australia kept its cash rate steady and said aggregate demand in the economy was significantly lower.

The dollar edged up during the third session of the week after a Federal Reserve official said that interest rates will eventually need to be raised, highlighting that the Fed may be done relaxing policy after its aggressive run of rate slashes.

Kansas City Fed President Thomas Hoenig said late on Tuesday that rates will need to be raised in a timely way as the central bank grapples with a serious threat of inflation, helping the dollar against the euro. In third session, the dollar inched up versus the major currencies. During the fourth session, the euro extended its losses in relation the dollar.

In the fifth round of trading session in the Asia, the euro recovered and held its firmness against the dollar after rebounding from a two-month low on reduced expectations for European Central Bank (ECB) rate cuts. ECB President Jean-Claude Trichet said last Thursday that inflation remained his top concern, suggesting the bank won't cut interest rates any time soon.

The euro had fallen to a two-month trough below 1.53 dollars as some investors expected Trichet to temper his tough talk on inflation and focus on signs of slowing euro zone growth. According to an analysis, the dollar could gain modestly next week provided April US retail sales don't fall more than expected when data is released on Tuesday, and as investors focus on any more signs of slowing growth in the euro zone.

Analysts said market perceptions that the euro's rally since September was running out of steam should also support the dollar in a week loaded with economic data from both the United States and Europe. "As far as the US data goes, retail sales are going to be important because they are going to show just how much of a toxic effect gas prices have had on consumer behaviour," said Boris Schlossberg, senior currency strategist at DailyFX.com in New York.

OPEN MARKET RATES: On May 5, the rupee fell by 85 paisa against dollar for buying at 66.65 and selling at 66.75. The rupee shed 30 paisa against euro for at Rs 102.70 and 102.80. On May 6, the rupee lost 30 paisa in relation to dollar for buying and selling at 66.95 and 67.05, dealers said.

The rupee also failed to resist erosion in its value versus the euro, losing 80 paia for buying and selling at Rs 103.50 and Rs 103.60, they said.

On May 7, the rupee did not show any change in relation to dollar for buying and selling at 66.95 and 67.05, while it extended its overnight slide versus euro, losing further 20 paia for buying and selling at Rs 103.70 and Rs 103.80.

On May 8, the rupee lost 75 paisa against dollar for buying and selling at 67.70 and 67.80, respectively, while it gained 47 paisa versus the euro for buying and selling at Rs 103.23 and Rs 103.33. On May 9, the rupee lost 50 paisa versus the dollar for buying and selling at 68.20 and 68.30. The rupee shed 137 paisa versus euro to Rs 104.60 and Rs 104.70.

On May 10, the rupee recovered 70 paisa versus dollar for buying and selling at 66.50 and 67.00, while it shed 20 paisa in terms of 20 paisa versus euro for buying and selling at Rs 104.80 and 104.90, respectively.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Fish farming has become profitable industry*

Proactive involvement of private sector, high fish production and soft loans to the farmers has made fish farming a profitable industry in the province. This was stated by Director General Fisheries Punjab Dr Muhammad Ayub while addressing a departmental meeting at Fisheries Research and Training Institute (FRTI).

He observed that due to aquatic pollution, fish production had diminished to a large extent in natural water of the province, however, this shortfall could be bridged through fish farming. Dr Ayub further said that untreated toxic effluents of factories and industrial units thrown into the rivers and canals were hampering fish production in natural waters.

He said besides 14 hatcheries being operated by the Department, 29 nursery units were supplying fish seed to the farmers. More than 70 hatcheries were also functioning in the private sector, he concluded.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Agriculture scientists urged to develop hybrid, bio-technological new varieties*

The goal of self-sufficiency and food security can not be achieved without introducing high yielding varieties of agricultural products. It is the moral duty of breeders and agricultural scientists to develop hybrid and bio-technological new verities in order to obtain maximum foreign exchange.

This was stated by Vice Chancellor Professor Iqrar Ahmad Khan while addressing the 33rd meeting of university senate here on Saturday. He urged the scientists to initiate animal genome mechanism for the development of various milking animal's breeds. Dr Iqrar stressed the need for expansion of infrastructure of the university so that community development activities can be flourished. He hoped that by introducing 100 major courses and after completion of mega development project, UAF would be placed at No one university of the country.

Dr Iqrar expressed his concerns over declining trend of agricultural system and said that India has enhanced its cotton production from 10 million bales to 30 million bales within a few years but we were lagging behind with 12 million bales to 10 million bales which, off course, is challenge for agricultural scientists. He proposed that an agricultural council should be established like other organisation, ie Pakistan Engineering Council, and Pakistan Medical Council at national level so that an agricultural scientist could get due recognition.

Highlighting the mega project, Dr Iqrar told that there would be a student service centre at campus to cater more than 500 students at a time at cafeteria. He stressed the need for bridging the gap between agricultural scientists and other stakeholders. He revealed that university would introduce a new cotton verity having great yield potential and resistance against various dangerous pests.

Earlier, while presenting the university budget for the year 2007-08 treasurer Abdul Ghafoor Khan said that the total budget estimate for non-development and development was Rs 1370.692 million. He said that HEC and ministry of Science and Technology will provide 466.155 million for development.

He said that by introducing financial and budgetary reforms, university has reduced the budget deficit and increased its income by utilising own resources. Two members of the university senate Professor Dr Abdul Salam of PBG department and Professor Munir Ahmad Sheikh of Chemistry department were elected unopposed for university syndicate for the period of three years. Chaudhry Muhammad Hussain Registrar acted as secretary senate.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Incentives for manufacturing​*
A zero-rated import duty on raw materials has been proposed by the Planning Commission as part of the budget 2008-09 to improve the performance of the faltering manufacturing sectors.

The commission is believed to have forwarded its recommendations to the federal government, aimed at providing incentives to manufacturing sectors which have not performed satisfactorily or at the expected level during the last few years.

Five major sectors -- automobiles, pharmaceuticals, transport, communication and construction  have been identified for the proposed concessions in import duty as well as other incentives.

In the first place, we have proposed zero-rated import duty on all raw materials and expect the government would approve it in the next budget, said Dr Shaukat Hameed Khan, Member, Manufacturing in the Planning Commission.

He, however, told Dawn that minor duty might be retained on a couple of raw materials. The current maximum 25 per cent import duty on raw materials, he said, was expected to be brought down to zero to five per cent in the new budget.

The economies of scale in industry particularly in China and India pose a threat to Pakistans export-oriented manufacturing by producing cheap products. This, he added, should be an eye- opener for the policy makers, the public and private manufacturing sectors.

Currently, Pakistans export earnings are at less than 50 per cent of the imports. As compared to nearly $28 billion worth of imports during July-March fiscal 2008, exports were lower than half at $13.5 billion. There has been generally sluggish growth in exports of traditional items like textiles.

The Planning Commission has stressed the need to focus on value addition to make local products globally competitive.

While import duty concessions may help for a while, independent analysts said, these incentives along with depreciation of the rupee, will sustain industrial inefficiencies. Local products can be made internationally competitive by improving work culture including human skills and improved management practices, to raise productivity. Unfortunately, short-term incentives provided to industries in distress often turn into permanent crutches.

Over the past few years, the level of foreign investment picked up fast but most of it has gone into import-oriented industries like automobiles and telecommunication. Analysts said there is need to encourage investment in export-oriented manufacturing and in modernising agriculture.

Despite problems, Mr Khan was optimistic that the manufacturing sector would continue to grow by 5-6 per cent. The GDP was not all that disappointing and only needed a push and encouragement from the government.

Chinas manufacturing sector was growing at 9-10 per cent. And if we achieve and maintain 6-7 per cent growth rate in the manufacturing sector, it will be good. Hopefully, the new budget will provide some support to this sector to grow further, the Planning Commission official said.

Responding to a question, Mr Khan said if duty on imported raw material used in the tyre and tube industry was brought down from 25 per cent to zero to five per cent, it would encourage local manufacturing of the products. The main consumption centres of the product, he said, were Karachi, Lahore, Faisalabad, Peshawar and Islamabad which could have better quality of local tyres and tubes after the reduction in their import duty.

This is how the government can also discourage smuggling of tyres and tubes via Afghan Transit Trade. He regretted that goods imported for Afghanistan were sent back to Pakistan.

The General Tyres Company was producing 1.7 million tyres every year which included one million for cars, and if import duty on raw materials was drastically cut as was proposed, the production of tyres could be enhanced and people would get tyres and tubes at cheaper rates.

Similarly, he said, the annual production of tyres for buses, which at present is 1,50,000 units, could be enhanced to 400,000 units if import duty was reduced from 25 per cent to five percent or set at zero rate in the next budget.

The Planning Commission official warned that the industrialised nations including Japan were making India the hub of major trade and industrial activities and it should not go unnoticed by the policy makers.

He said the Suzuki Car Company of Japan had set up its $3 billion new plant in India and was asking Pakistan to import zero-duty engines from there. But we have opposed this move, he said adding that Japan was hesitating in setting up Suzuki cars engine and transmission plant in Pakistan.

If Pakistan accepts Suzuki companys offer of importing zero-rate engines, no doubt it will bring down prices of cars in the country, but the net beneficiary will be India and our car industry will be a loser. That is why we have asked the Suzuki car manufacturers to provide engines for their assembling in Pakistan.

Replying to a question, he said four sub-groups had been set up to promote local pharmaceutical industry which would also be eligible for zero-rated import duty on its raw materials. Similarly, he said, concessions for transport, communication and constructions sectors had also been recommended to be offered in the budget.

Mr Khan said that raising productivity was necessary for economic growth and to remain competitive in the world economy. Pakistans manufacturing and industrial sectors were suffering from various structural problems resulting in slow growth rate of output and exports, low levels of investment, high concentration of manufacturing industries, technical inefficiencies in allocations, poor quality of products and low levels of research and development (R&D) activities. All these factors result in slow growth rates of productivity making products uncompetitive in the world market.

The traditional industries such as food and textiles still accounted for an overwhelming share of the manufacturing output. Food industries accounted for 13.8 per cent and textile industries for 24.0 per cent of the total manufacturing value- added, he said.

Mr Khan referred to Vision 2030 of the Planning Commission which says that Pakistan has to make important strategic choices to ensure sustainable growth in the manufacturing sector in a rapidly changing international competitive environment. This requires massive structural changes rather than a marginal changeto a shift in the production paradigm to technology and knowledge based industrialisation, with a focus on the quantitative and qualitative growth of an integrated and competitive industry in the private sector. The inefficiencies of import substitution must give way to an export-led strategy, and to diversification from traditional industries and services.

Incentives for manufacturing -DAWN - Business; May 12, 2008


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## Neo

*How to make power cost affordable?​*
The industry is angry over abrupt and arbitrary decision of the privatised Karachi Electric Supply Company (KESC) for increasing the Fuel Adjustment Surcharge (FAS) by almost 100 per cent from March. Its representatives say that they are approaching the Competition Commission (CC) to look into this unethical trade practice.

The general perception in local business is that it is not only the rising world oil prices that is impacting on production cost but also the governments growing appetite for revenue that has made imported oil one of the convenient source of taxes. The industry is therefore trying to make a case for reducing taxation on fuel.

Pakistan Hosiery Manufacturers Association (PHMA) has taken the initiative to seek immediate intervention of the Competition Commission to waive these exorbitant charges and stop KESC from such unethical trade practice in the future.

During peak hours, the KESC has increased B-3 tariff on those having a sanctioned load of 11,000 volts to Rs1.29 per unit from Rs0.66 per unit. The manufacturing units with sanctioned load of 400 volts are now paying Rs1.42 per units instead of 0.71 per unit.

During off peak hours, the KESC is asking for Rs1.04 for a unit from industries with sanctioned load of 400 volts as against Rs0.53 per unit. For industries with sanctioned load of 11,000 volts, the KESC is levying Rs0.91 per unit FAS as against Rs 0.40.

PHMA wants that while reviewing electricity tariff, the National Electric and Power Regulatory Authority (NEPRA) should give industry and business an opportunity to present their point of view.  The rise in electric power tariff needs to be discussed in context of the governments taxation on import and commissions being given to oil marketing companies and petrol pumps, a representative of the SITE Association of Industry asserted.

Our dependence on furnace oil is increasing because of reduction in gas supply the Chief Executive Officer of KESC (retired) General S.M. Amjad had informed this correspondent last month while trying to explain the mounting operational cost and cash flow problems.

Countrywide, 30 per cent of national power generation is based on furnace oil while 48.5 per cent depends on gas-run generators. While Wapda has a mix of power generation sources including about 38 per cent from hydro sources, the power generation cost is much less than that of KESC where bulk of electric power is being generated by furnace oil-fired projects. Fuel cost is pass through and consumers have to bear the impact of rising cost of furnace oil. A senior executive of Hubco disclosed that furnace oil price has gone up by more than ten times since 1997 when the project was commissioned. The furnace oil cost was Rs2,250 a ton in 1997 and is now Rs45,000 a ton. The high cost has impacted upon the cash flow position of Wapda which is not paying Hubcos bill for supply of power. The Hubco and other IPPs suffered on account of Wapdas default and failed to pay furnace oil bill of Pakistan State Oil (PSO). In retaliation, the PSO stopped oil supply to Hubco and eventually the federal government had to intervene to restore oil supply to Hubco and other IPPs.

The federal government is paying subsidies of about Rs275 billion to Wapda, KESC and IPPs to reduce the impact of rising oil prices. But businessmen wonder as to why the government should pay such a huge subsidy and also collect 15 per cent sales tax plus development surcharge, excise and other levies. The convenient way would be to reduce or rationalise tax on oil. The impact of 15 per cent sales tax on oil, when international price was $60 a barrel and now when it is $120 a barrel, is much different and more significant. Similarly, the impact of 15 per cent tax and margins for oil marketing companies and for petrol pumps increases sharply as international oil prices soar. The business now wants a rationalisation of tax on oil.

As Wapda and KESC suffer from power shortages, the textile sector has come forward to offer its surplus power from the captive power plants installed in factory premises. A dormant capacity of approximately 325 megawatt can be brought on line immediately a leader of All Pakistan Textile Mills Association (APTMA) disclosed. In Punjab, agreements for supply of about 75 megawatt power from oil run captive power plants have been reached with Wapda.

In Karachi, the KESCs chief executive is being blamed by the textile industry for putting one condition after the other rather than going for a quick increase in power supply, though in smaller quantity, from captive power plants. There have been a few round of negotiations between KESC and the representatives of APTMA and SITE Association. This team has been talking to Hyderabad Electric Supply and Distribution Company (HESCO) which is said to be far more responsive and accommodative than KESC.

The operators of captive power plants now want the same level of subsidy from government as is given to Wapda, KESC and IPPs. The captive power operators are purchasing furnace oil at fast escalating prices that is rendering them uncompetitive and driving them to bankruptcy, an APTMA leader remarked.

While the local industry seeks support from government to generate and supply electricity to KESC and Wapda systems, there is a rising demand for exploring alternate sources of energy. On Wednesday, a delegation of All Pakistan Hosiery Manufacturers Association met Sindh Environmental and Alternate Energy Minister Mr Askari Taqvi to explore governments co-operation in installing wind or solar energy units in their factories.

The installation of wind and solar energy units involve heavy capital investment but recurring cost is insignificant and is free of any environmental hazards. For the last several decades, the government has been exploring possibilities of alternate energy. Now that the world oil prices are over $120 per barrel and rising, the cost of alternative energy is becoming competitive. The need for alternative energy is also being felt now more than ever before.

How to make power cost affordable? -DAWN - Business; May 12, 2008


----------



## Neo

*Stagnant crop yield​*
FOR the last over four years, the country has not been able to add even an acre to its existing cultivable land area, and the entire agricultural activities remain limited to 55.5 million acres.

The limiting factor is the shortage of water which restricts the country to bring more land under cultivation.

Since the commissioning of Tarbella Dam some 30 years ago, there has been no increase in water storage capacity. According to a survey of dams, the country instead has lost 28 per cent capacity (around four million acre feet) of existing dams.

According to the post-Tarbella planning, the country should have increased reservoir capacity at seven per cent per year, or around one million acre feet a year. An additional reservoir capacity of around 30maf should have been built in the country, whereas, it has lost 4maf of its original capacity  a loss of 34maf in a country where the total availability is 80maf to 110maf only, depending on the hydrological conditions.

The water supply situation can affect the final yield of any crop up to 50 per cent. And the yield of almost every crop, except a few, is on the decline. For example, the production of wheat per hectare was 2,667kg in 1999-00, which, in 2007 dropped to 2,500kg. With the increasing population at a rate of around 3.5 million per annum, the causes of present food crunch is not difficult to decipher.

The staple food picture becomes grimmer when taken in the context of experts view on the potential of the current seed variety (Inqalab-91) and the yield our farmers are getting from it. Experts say that Inqalab-91 has the potential to yield 70 maunds per acre, despite being 17-year-old and prone to diseases and losing vitality. Our common farmer is getting 25 maunds and a progressive farmer, who may be next door neighbour, around 45 maunds per acre. The difference between the potential yield, yields procured by a common farmer and a progressive farmer also explains the food crisis.

Similar is the case with rice production. The super variety of rice has a potential to produce 45 maunds per acre. The common farmer gets only 25 maunds whereas the progressive farmer gets up to 35 maunds. The other cash crop, cotton, suffers from the same malady; the seed yield potential is 45 maunds against common farmers production of 17 maunds and progressive farmers output of 23 maunds.

If the existing gap between the lowest and the highest yield is bridged, Pakistan would not only come out of food crisis, but also have surplus for export.

Take the case of wheat, if the current national average of wheat can be increased by five maunds per acre, the total production (from current sowing on 20 million acres) would go up by almost two million tons, which, at the current price factor, would add Rs65 billion  or $1 billion to the economy. Similarly, if rice production goes up by five maunds per acre, the national and rural economies would get a benefit of around 30 billion from its currently crop sown on six million acres. A similar increase in cotton can pump Rs35 billion in the economy.

One can imagine the effect of $2 billion being added to the economy with a minimal effort on three crops only.

Agriculture experts reckon that it is achievable within next eight to 10 years provided the government makes a concerted effort in this direction. Simply what is needed is formulation of a sound policy with regard to provision of water, fertiliser, insecticides, certified seeds and technical and professional training to the farmers.

According to them, water plays 50 per cent role in agriculture, fertiliser 35 per cent, seed 25 per cent, and insecticide 25 per cent and cultural practices contribute 25 per cent. If the policy-makers can ensure that farmer gets required water, applies balanced fertiliser, uses certified seeds, applies weedicide and pesticides properly and timely and his cultural practices are in tune with the times, Pakistan would come out of the current food crisis.

Two areas are the most crucial to realise the goal of food autarky --. research and extension wings of the government. Research alone can make a lot of difference in the final yield through developing new high-yielding varieties of seeds and improving cultural practices. The agriculture planners will have to redefine their concept of research; it also includes management practices with developing new seeds. Research can also play a decisive role in increasing the yield and solving food shortage.

The extension service, which is supposed to take results of research to a common farmer, can also make over 60 per cent difference in yield by educating farmers on balanced use of fertiliser, weedicide and pesticides.

The government on its part should develop water resources so that farmers get water on time. No private sector would ever invest in the farm infrastructure without ensuring windfall profits, which Pakistans agriculture can hardly afford. Similar is the case of research. There is also need to re-energise extension services to educate, train and keep farmers informed about the latest technologies and practices.

The future of the farm economy depends on how we respond to the situation; take it as a doomsday scenario or an opportunity to rise to the occasion.

Stagnant crop yield -DAWN - Business; May 12, 2008


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## Neo

*Small dams, big gains​*
PRIME Minister Yousaf Raza Gilani has committed, as part of his short-term national agenda of March 29, to build more small water storage dams countrywide on a fast track basis.The Central Development Working Party (CDWP) on April 30 approved construction of three such dams in Balochistan at Gwadar, Pasni and Shadi Kaur at an estimated cost of Rs2.63 billion.

Though a water-rich country, Pakistan is currently amongst the most water-stressed nations of the world, as its huge water resources remain under-developed. It is estimated that half of the countrys irrigation water is wasted due to poorly managed irrigation system and inadequate water infrastructure. In this context, construction of small storage dams can play a key role in promotion of agriculture, placing maximum area under cultivation, and thus bringing in a green revolution within a short span of time.

Developing small dams had never been the priority of successive governments. Since 1996, there had been no significant addition to small dams though a number of schemes were planned. The successive governments failed to focus on small dams construction, in spite of much scope in all the provinces. Though considerable experience in planning, design and construction of small dams is available locally since the 60s, it has not been utilised effectively. In every province, Small Dams Organisation continues to function, with supporting technical staff as an arm of irrigation department.

But the planners focus has always been on developing large and mega water projects, which are too costly and require long lead-time, bear negative impacts on large-scale population dislocation, other social and environmental concerns and have political dimensions too. These projects, costing multi-million dollars and requiring at least 10 to 12 years for completion, often run into snags and are delayed. The cost of two options may be visualised from the fact that 12 small dams in the Potohar region were completed in 1996 at a cost of $35.4 million, whereas Diamer-Basha dam is estimated to cost $8.5 billion.

Construction of large dams, which is feasible only in far-flung and isolated areas, faces communication and logistic problems and limitations of availability of labour. The development of infrastructure for large dams is consequently an expensive proposition, besides being totally dependent on foreign sources for dam construction.

Thus, local community-based small dams provide a simple, cheaper, reliable and manageable solution to water storage issues. Typical examples are cited of four small dams, Rawal, Simli, Misriot and Tanaza, which meet effectively water requirements of Rawalpindi, Islamabad and surrounding areas.

Nevertheless, small dams are not an alternative to large dams and mega multi-purpose water projects and can be considered of supplementary or complimentary nature. However, small dams are equally important to store and conserve water for increasing irrigation and drinking water sources and improving socio-economic conditions of the area. Also, small dams may not result in sustainable development of agriculture, in contrast to large dams, but its impact on groundwater development is positive.

Pakistan has constructed in all 58 small dams so far. According to reliable estimates, it has the potential to build another 750 small dams to meet water requirements of growing local and regional population. The trend in favour of small dams is being pursued in the developing countries. Sri Lanka has constructed some 12,000 small dams and Nepal more than 2,000. In India, which is considered a leading dam builder, 19,134 small dams have been developed and 52 small dams would shortly be constructed on Chenab and other rivers originating from Kashmir.

Punjab has constructed 32 small dams and the NWFP 15 small dams. Feasibility studies for constructing a large number of small dams in the country have confirmed economic viability, whereas studies are being undertaken for many others. Hundreds of potential sites for developing small dams countrywide include 20 small dams in the NWFP.

Plans are under way to construct another 20 small dams in Balochistan where many other potential sites have been identified. But no physical work has been initiated on any of these schemes as yet. Similarly, schemes for constructing another six small dams in the capital territory, for which economic viability was confirmed, have been shelved recently by the Capital Development Authority.

A special feature of small dams, where reasonable water head is available, is the generation of hydroelectric power, almost as a by-product. Small power stations can be established at such locations, based on proven technology, to generate electricity at the least cost and with low operation and maintenance charges. In present times, most of the dams are hydropower dams. These power stations will cater to the electrification of remote areas without any requirement to be connected with national grid.

Such small power stations of cumulative capacity of 242 MW are already in operation countrywide. Water and Power Development Authority (Wapda) operates eight small hydropower plants at Dargai, Jabban, Rasul, Chichoki Mallian, Shadiwal, Nandipur, Kurram Garhi and Renala. There are about 300 small hydropower stations in the Northern Areas generating 94 MW, providing electricity to the isolated network. There are another 11 small power stations in the NWFP generating five MW, which are operated in public and private sectors. Likewise, the government of the Azad Jammu and Kashmir successfully operates numerous hydropower stations including Jagran of 30 MW, Kundal Shahi, Leepa and Kathai, all of two MW capacity each.

According to studies conducted, potential exists to generate additional 2,166 MW hydroelectric power utilising proposed small dams. These schemes, which are power projects of capacity varying widely from 0.014 MW (14 KW) to 40 MW, can contribute effectively to the future power needs. Punjab plans to develop small low head projects on canals/barrages and streams/rivers. It has identified 306 sites on various canals and barrages, which can generate hydropower of cumulative capacity of 350 MW. However, no headway has been reported so far on its plans to set up small hydro-power plants under the Punjab Power Generation Policy announced about five years ago.

Likewise, five potential sites with low and medium head at canals in Sindh have the potential to generate 98 MW additionally. In the NWFP, 85 schemes of small hydro-power have been prepared of 570 MW cumulative capacities. Studies on 27 sites in the AJK verify potential of 230 MW power through small hydro-power projects. Northern Area, known for its rich water resources, has the potential of producing 885 MW at 139 identified sites for small dams.

Indeed, serious initiatives need to be taken by the government to implement small dams development programme, without further delay, utilising its own financial resources or seeking funds from the international donor agencies. The World Bank and the Asian Development Bank have already shown interest to finance small dams, as they did in the past.

(The contributor is currently on the Board of Directors of NESPAK)

Small dams, big gains -DAWN - Business; May 12, 2008


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## Neo

*Is it a good option?​*
Pakistan water sector is going through a crisis. Like energy, water demand is growing far more than available supply. Past efforts have focused more on enhancing supply through engineering solutions such as Indus basin development and other large scale investments.

To follow the same policy options in developing viable large projects seems to be the casualty of political impasse, high cost of developing additional cubic meter of water and may be due to much debated negative externality of not allocating enough water for preserving downstream environment.

Water demand management is still low on the agenda, as trade offs have not been studied well enough in spite of large planned investment. The medium to long- term policy options to enhance supply are being worked out with a bias towards small dams. Is it a good option? I would like to share international experience by highlighting briefly two examples from countries where water scarcity is worst than Pakistan.

Yemen is one country where large scale investment in small dams has taken place. In a recent document, Managing Water for Development Towards a Joint Vision for Water Resources and Agriculture, Dr Gerhard Lichtenthäler, reports that farmers in a rural community pinned great hope in small dams, but when project was completed after two years, their access to water was not enhanced to the extent hoped for and only notable beneficiaries were few well owners from other villages indicating that a drop in groundwater levels has slowed.

Farmers in the dam vicinity still depend on their wells for reliable supply of water. The most notable aspect is its economics. Following the 2006 summer rainy season, the dam (measuring 120 x 60 x 3 meters deep) contained approximately 20,000 cubic meters. In comparison to this volume of water a single pump in the same basin can pump approximately three times as much groundwater per year, or approximately 60,000 cubic meters (based on facts that well yield of six litres per second, pumping 12 hours a day and a total of 240 days per year during growing seasons). With estimated irrigation efficiency of 30 per cent or more, according to report, the same amount of water that was stored in the dam could be saved annually by a single pump, which usually irrigates up to five hectares of land. A total of 1,500 wells in plain and 2,600 wells in the basins catchment exist in the region where small dam was constructed. It reveals that the cost of modern irrigation pump is estimated at approximately $7,000-10,000, the dam cost YR 89.5 million, or nearly half a million dollars, thus saving 50 times the amount of water the dam had stored.

There are lessons for Pakistan as it has huge inventory of wells but lacks the modern technology at farm levels to enhance water productivity and save water. However, some spadework needs to be done, based on identifying water management zones where modern technology (water harvesting, canal lining, and pressurised irrigation ) results in real water saving instead of so-called paper water saving), meaning, my gain can be someone else loss.

Oman, with condition similar to Balochistan also carry good experience on developing small dams. A very recent study by FAO also provided interesting policy options. The ministry of environments and water resources (MEWR) estimated the cost trade-offs of developing water or saving (paisa/cm) with policy options of supply enhancement (re-charge dams and storage dams) versus demand management (water pricing and more crop per drop and more jobs per drop ).

The study indicated that the cost for the first option ranged from 275 to 300 paisas per cm (1000 paisa equal one OR and .384 OR equal one dollar) and for later range from less than 10 paisa for improving surface irrigation, to over 100 phases for progressive domestic tariff. Clearly, demand management options are more cost effective. With rising cost of developing new supplies here and elsewhere, the demand management option needs to be explored based on sound policy studies, which in my view, are lacking in our decision-making process.

Two aspects in the future water policy cannot be ignored in managing water resource development. First, in the medium to long-term agriculture has to produce more with less water (more crops per drop) and second the available water will also compete for preserving environment.

Under this changing policy scenario, one must be sure that planned investment in small dams yields attractive returns as it may crowd out funds for other feasible options. Small dams option be based on rigorous analysis that investment is technically feasible, economically viable, socially acceptable and environmentally sound.

Pakistan has huge groundwater reserves (can be termed as dams provided by nature) which need to be managed with prudent demand management policies like sustainable resources use, adopting modern water saving technologies, reallocating water to high value crops and complimenting it with promoting conservation agriculture. If groundwater is properly managed, it can be also be one of the best hedge against drought management, and also of great importance to the agricultural economy.

Is it a good option? -DAWN - Business; May 12, 2008


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## Neo

*Thermal power plant contract​*
On April 16, a local engineering company was awarded the EPC (engineering, procurement and construction) contract  the first-ever to a Pakistani company  of an IPP (independent power producer) thermal power plant.

The 225-MW capacity gas- and oil-based dual-fired power plant is being constructed at Bhikki in Punjab. The local company will be responsible for engineering, procurement and construction activities related to the project, which has been sponsored by an overseas investor based in the UK. The initiative taken by the investor will go a long way in promoting domestic engineering industry in power sector. This will result in achieving self-reliance, technology transfer and import substitution in this field.

At a same time, local investors are not even prepared to procure indigenous machinery for power plant projects. Almost a dozen thermal power projects of varied capacity have achieved financial close recently for which all the EPC contracts have been finalised by the Pakistani sponsors with foreign companies.

Local industry is ignored to the extent that not a single item of machinery is being procured locally for these projects, in spite of existing capacity, capability and references for the same. These leading businessmen have even obtained duty concessions and exemptions to import the machinery items that otherwise are being produced locally as notified by the Federal Board of Revenue.

The Economic Coordination Committee (ECC) of the Cabinet has allowed on April 13 these IPPs to import heat-recovery steam generators (boilers), feed water pumps and cooling towers etc at five per cent custom duty. Otherwise, as per rules and regulations in vogue, 20 per cent statutory duty is applicable on import of these items that are manufactured locally, of comparable quality and at lower price.

Thermal power plant contract -DAWN - Business; May 12, 2008


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## Neo

*Dubai's Abraaj interested in Pakistan agriculture​*
DUBAI, May 12 - Dubai-based private equity firm Abraaj Capital said it is looking at investing in agriculture in Pakistan, but declined to comment on a London Financial Times report that it had bought farmland for the United Arab Emirates.

The FT reported on Monday that Abraaj, whose Chief Executive Officer Arif Naqvi is a Pakistani national, is working with the UAE government on agribusiness investments in Pakistan to increase food security and damp domestic inflation.. The UAE government in Abu Dhabi has been holding talks with Islamabad about a framework for investment in its agricultural sector as it seeks to secure cheaper, long-term supplies of staples such as wheat and rice, the FT reported.

"No comment on that article, but it is a sector we are looking at," Abraaj Managing Director Mustafa Abdelwadood told Reuters on Monday.

In March, Abraaj said it bought into Pakistani energy firm Bosicor to tap growing demand for petroleum products in the world's sixth most-populous nation.

Dubai's Abraaj interested in Pakistan agriculture - Yahoo! Singapore News


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## Neo

*4,000 corporate entities show Rs0.1m income only ​* 
Tuesday, May 13, 2008

ISLAMABAD: Tax authorities have found that 4,000 corporate sector returns showed an income of only Rs100,000 during the current fiscal year, indicating massive tax evasion with the tax facilitation exercise being carried out by the FBR for the last few years.

This startling fact was shared with business tycoons by FBRs Member Fiscal Research Dr Aather Maqsood during his presentation at a pre-budget seminar jointly organised by the FBR and Federation of Pakistan Chambers of Commerce and Industry here on Monday.

In his analysis on corporate sector returns during tax years 2006 and 2007, Dr Maqsood said out of total received returns of the corporate sector, 23 per cent in 2006 and 17.5 per cent in 2007 declared their income around Rs100,000.

There were 25 per cent return filers in 2006 and 29.6 per cent in 2007 who declared their income in the range of Rs100,000 to Rs500,000, he added. Total registered corporate sector giants were 37,188, he said, out of which the FBR received over 16,000 returns in tax year 2006 and the compliance rate came to 44.2 per cent.

Out of total received returns in 2006, he said only 34pc showed their business as earning profits, 24pc showed losses and 42pc showed zero income. In tax year 2007, out of total received returns, 26.7pc showed their business as earning profits against 34pc in 2006, a 7pc decrease in companies which were making profits. 

There were 16pc returns which showed losses and 58pc showed no income. Further analysis done by Dr Aather Maqsood revealed that there were only 299 companies in 2007, which had made losses in 2006, earned profits in the next year (2007). There were 860 companies, which had shown income in 2006, showed nil income in tax year 2007.

Sharing the future vision of the FBR, he said the government had envisaged a rise in the tax-to-GDP ratio of 5 per cent in the next 10 years as the existing level is just over 10pc and the FBR wants to raise it up to 15pc.

He asked the incumbent regime to show political will for bringing agriculture income, services sector, transportation and communications under the tax net in order to achieve an increase in the tax-to-GDP ratio.

He criticised the existing National Finance Commission (NFC) mechanism for distributing financial resources among the federating units, saying the provinces were used to get easy money without making any efforts to enhance their capacity for generating revenues and there was a need to discourage the trend. He also proposed the government to do away with the existing tax exemptions in the next budget.

Maqsood said the net 80pc revenue collection generated from indirect taxes originated from 18 commodities. He said people recommended unviable options to the government by asking to waive taxes on petroleum products and they did not know that about 50pc tax collection was generated from five major sectors including petroleum, telecoms, automobile and others.

The major contributors to direct taxes were oil and gas, telecommunications and banking sectors, he added. The business tycoons, while giving their input on the budget proposals for 2008-09, severely criticised the rampant increase in smuggling, under-invoicing, over-invoicing and serious flaws in CARE (customs administrative reforms) system. 

A businessman pointed out that petroleum-related chemicals were cleared at the Karachi port at the rate of $600 but these were continuously being cleared at $100 at Quetta. Despite the introduction of CARE system at Karachi, the businessman alleged, corrupt practices were still going on and by getting Rs50,000 per container, customs authorities were clearing the containers.

4,000 corporate entities show Rs0.1m income only


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## Neo

*Wheat import target raised to 2.5m tonnes ​* 
Tuesday, May 13, 2008

ISLAMABAD: Pakistan has raised its wheat import target to 2.5 million tonnes this year from 1.5 million tonnes to build strategic reserves, the prime ministers office said in a statement on Monday.

Pakistan expects wheat output of 21.8 million tonnes this year, below a target of 24 million tonnes, and 1 million tones less than domestic requirements. Last month, the government said it will import 1.5 million tonnes of wheat to meet the needs.

Prime Minister Yusuf Raza Gilani asked the Ministry of Food and Agriculture to import 2.5 million tonnes of wheat, including the 1.5 million tonnes already approved ... to build strategic reserves, the office said in a statement.

Prime Minister Yusuf Raza also directed provincial governments and law enforcement agencies to take measures against smuggling and hoarding of wheat besides cracking down on profiteers.

High food prices lifted Pakistans consumer price inflation to 17.2 per cent year-on-year in April. Regarding a 5 million tonne domestic wheat procurement target set by the government last month, a senior Food and Agriculture Ministry official, Qadir Bukhsh Baloch, said that 3 million tonnes of wheat had been bought from farmers.

Procurement would continue next month, he said. In March, the government raised the price it pays to farmers for wheat by nearly 23 per cent after failing to tempt producers to sell the grain for strategic stocks. The UN World Food Programme has said nearly half of Pakistans 160 million people risk going short of food because of a surge in prices. 

Wheat import target raised to 2.5m tonnes


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## Neo

*How economy will perform as PML-N quits coalition ​* 
Tuesday, May 13, 2008

KARACHI: The decision of Pakistan Muslim League-Nawaz (PML-N) to opt out of the government has left independent economists and analysts thinking what would support an already dwindling economy.

Break-up of the coalition government, led by the Pakistan Peoples Party (PPP), has come at a time when the country needed rulers with strong political will to take some tough decisions. With PML-Ns exit, a number of important portfolios will be vacant. Among them the finance ministry led by Ishaq Dar, commerce ministry headed by Shahid Khaqan Abbasi and petroleum ministry commanded by Khwaja Asif will be the worst sufferers.

In the next three days, the government is supposed to announce petroleum product prices for the next fortnight. The level of subsidies on oil has already mounted to the point where the national exchequer can bear no more burden. If passed on to the consumers like last month, who will be blamed? 

If not more, the economy is important as the judicial issue for the common people, said Kaiser Bengali, a well-known economist. Government cannot afford to lose even a day, he said referring to macro-economic imbalances, which have assumed alarming proportions.

A trade deficit of more than $16 billion, power shortfall that has increased to 4,000 megawatts, inflation which is at 13-year high and investor sentiment battered by terrorist attacks are some of the pending issues needing immediate attention.

According to Saad bin Ahmed, a research analyst, in the short term the PPP will face administrative hitches as most of the important ministries like finance were held by PML-N leaders. But I dont see any major shift in policies, which have already been established like that for continuing privatisation.

A number of working professionals, who spoke to The News, regretted the decision of PML-N. They said the problems facing a layman were too severe than the issue of reinstating judges. Moreover, in less than two months time, a new budget has to be prepared. Estimations for subsidies on oil, food and power have to be finalised. Sources for funding the fiscal deficit, which is expected to be huge, are to be arranged. New avenue for raising taxes were to be decided.

But now with PML-N out of cabinet, how far the existing government will go in taking the difficult decision of taxing the rich remains to be seen. One time meal is more important for a daily wager than any judicial issue, said Sabeen Khan, a banker. Improvement in economy could help address social ills automatically. With increase in income, people wont commit suicide and young man wont resort to crime. That is where the immediate focus should be. SH

How economy will perform as PML-N quits coalition


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## Neo

*Economy is strong, has potential to grow: Dhedhi​*
** AKD chairman says government should handle situation positively 
* Capital market has potential to grow further​*
LAHORE: The state of the economy is very strong and the government should go for investor friendly measures rather than issuing negative statements, said AKD Securities Chairman, Aqeel Karim Dhedhi, while talking to Daily Times.

There is a great potential in Pakistans economy and it has the quality to grow rapidly in the coming years, he said adding, the capital market would remain positive if Pakistan Muslim League-Nawaz (PML-N) separates itself from the cabinet.

He said, the Prime Minister and the Finance Minister should be from the same party. It happened in recent past that the Prime Minister gave a statement and the finance minister contradicted it, Dhedhi said. Pakistans capital market is still attractive and cheaper than other markets, he added.

Only optimistic attitude, positive approach and encouraging statements are the need of the hour, Dhedhi said. He was of the view the government should consult with the capital market stakeholders before imposing capital gain tax. He said that there is a huge potential in oil, gas, steel, energy and textile sector and the investors should go for it.

The government should facilitate the poor on petroleum products. 

To a question, he said that imposition of Capital Gain Tax would affect the capital markets and disturb the flow of FDI in the real estate sector. If the government and Federal Board of Revenue think that they will collect Rs 3 to 4 billion from capital gain tax then they should do it, he said adding that it would not be possible in an any way. 

Currently, there is zero capital gain tax while the government has been receiving almost Rs 4 billion from Capital Value Tax (CVT) only from capital market. Zero rate capital gain tax will expire by June 2008. 

Dhedhi said that there was around $40 billion valuation in Pakistani capital market and rather to impose the capital gain tax the government should focus on the proper marketing options to increase the foreign investment in Pakistani capital market. He said that there were many areas where billion of dollars foreign investment could be brought. Around US $4 billion can be obtained through Global Depository Receipts (GDRs) and launching global road show, Dhedhi said adding that the US dollar rate would come down in the coming days but, however, the government minister should refrain from giving negative statements. These statements do not help the economy rather it creates negative impacts and impressions of the country, he said.

Taking on the value addition and dividend, he said that unfortunately, some companies of capital market are not going for value addition in their product and also not paying dividend to their shareholders and just making inter company investment, which should be discouraged. 

He said that the oil import bill in the coming days would be lowered, as huge reserves of oil and gas have been explored in the country. He said that the power, fertilizer, telecom and E&P sectors were rapidly growing and would further grow in the near future so the government and investors should focus for the development of these sectors. 

He was of the view that at least 150,000 direct employment would be generated from the mineral sector while it also serves the energy demand of the country. Responding to a question, he rejected that the growth of agriculture and industry had declined. He argued that the cotton, wheat and rice production had been increased during the last few years. He further said that the demand of fertilizer had been increasing, telecom and auto sectors are expanding. The economy have witnessed a dip due to rapid increase in world crude oil prices he said adding that all the world economies had been paying huge subsidy to their people in food items. Despite the judiciary crisis, operations in Wana and Waziristan the economy have grown with 6 per cent growth rate which is not a disappointing trend, he opined.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Orascom posts strong set of Q1 results​*
KARACHI: Orascom Telecom has posted Q1 results sustaining its business growth in the Asia region due to sustainable performance by Mobilink in a challenging business environment. 

According to a press release on Monday, The Egyptian telecom company, a leading player in the Middle East, Africa, Pakistan and Bangladesh regions, posted a strong set of Q1 results with its top line growing 22 percent reaching $1,295 million. At the EBITDA level, the Orascom growth was even more positive with margins reaching 45.1 percent. 

Zouhair A Khaliq, president and CEO, Mobilink while appreciating the commitment of Orascom Telecom to Pakistan Telecommunication sector said, Our uninterrupted growth, a strong business revenue model and market sustainability, coupled with ongoing investment in excess of $2.5 billion in technology and infrastructure has catapulted us to the 9th position in Asia-Pacific.

Orascom Telecom is one of the most dynamic and fastest growing conglomerates in the world, the company has shown impressive results throughout the year; and the Q1 result of a strong and impressive growth is attributable to the leadership and foresightedness of Naguib Sawiris, chairman of Orascom Telecom.

Daily Times - Leading News Resource of Pakistan


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## Neo

*State of the economy: challenges and opportunities : Pakistans economy at critical juncture again: report​*
ISLAMABAD: The Institute of Public Policy of the Beaconhouse National University Monday launched its First Annual Report titled State of the economy: Challenges and opportunities. 

A team of eminent economists including former finance minister Sartaj Azia, Chairman of the Institute of Public Policy Shahid Javed Burki, Dr Hafiz A Pasha, Dr Parvez Hassan, Dr Akmal Hussain and Dr Aisha Ghaus-Pasha prepared the report. According to the report, Pakistans economy is once again at a critical juncture. After a period of strong economic expansion, relative macroeconomic stability, and increased foreign investor confidence, over the years 2003-2006, the country is now facing very serious economic strains and social challenge across a broad front. 

The report says macroeconomic balances have deteriorated very sharply. Inflation has touched record levels this year on the back of three previous years of high single-digit inflation. The burden of high prices, especially of basic food items, has become intolerable for poor households. Poverty is consequently on the rise again and whatever decline was achieved in poverty appears to have been wiped out. Also, structural problems impeding growth have come dramatically to the forefront with major power shortfall and load shedding. On top of this, the report says the erosion of competitiveness of the countrys main exports, textile and clothing, and an upsurge in imports, especially due to high oil prices have led to a large increase in the trade imbalance. This has led to a continuing decline in the level of foreign exchange reserves and in the value of rupee. 

In attempting to ***** the present position, the Report analyses the short term causes of economic unravelling as well as underlying longer term factors that continue to impede our economic and social progress. 

The main objective of the Report is to outline a comprehensive economic and governance strategy that will facilitate the tackling of the above-mentioned challenges that require the urgent attention of the new leadership. The main message of the Report is that growth, equity, and financial soundness must be pursued simultaneously. 

The report recommended that a radical macroeconomic adjustment must be made through a sharp cutback and restructuring of public spending that has grown sharply during the last five years. A determined effort should be made to mobilize tax revenue from segments of society whose contribution to tax revenues has come down sharply and those who escape the tax net and incentives should be given for savings.

Expanding the safety net for the poor by allocating at least Rs 50 billion to minimise the impact of rise in food prices. The report also recommended of making expansion and diversification of exports a central plan of growth revival strategy with special focus on agriculture and promising labour-intensive manufactured exports, based on geographical comparative advantage. 

The report stressed that required macroeconomic adjustments must fully safeguard the livelihood of low-income families. 

Finance Minister, Ishaque Dar was chief gust on the occasion. Addressing the participants he said that it was the first time the private sector had created an institution to do policy research and analysis, thus enabling government to receive independent and objective advice on public policy in critical areas. 

The policymaking circles in the country would look forward to the publication of such report since they would highlight contemporary issues of public policy, he added 

He regretted that inflation had spiralled and macro economic imbalances had reached unsustainable levels. The current account deficit has skyrocketed to 7.5 percent of the GDP while the fiscal deficit is projected at 9.5 percent of GDP. This was the consequence not only of policy inaction but also of wrong policies of the previous government. 

In the last few weeks, the minister said the government had taken concrete measures to stabilize the situation.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Budget likely to be delayed​*
KARACHI, May 12: The timely presentation of federal and provincial budgets is now in serious doubts after a formal announcement by the Pakistan Muslim League (N) to quit the coalition government.

Finance Minister Ishaq Dar of the PML-N is tendering his resignation with his other party colleagues on Tuesday to the prime minister.

June is the month when budgets are announced. It begins with the presentation of the federal budget, normally in the first or second week, followed in quick succession by the four provincial budgets.

But before the federal and provincial finance ministers present their respective budgets, there is a pre-budget drill.

The annual development plans for federal and provincial governments are discussed and debated in the Annual Plan Coordination Committee, and are finally approved by the National Economic Council.

Just a day before the federal budget, the federal finance ministry releases economic survey of the outgoing year.

But much before all these budget and pre-budget exercises begin, the stocktaking of available resources (domestic and foreign) is done, which are lined up, and there is a hectic consultation with all stakeholders to discuss the strategy of the next fiscal years budget.

It is not only the presentation of the budget in June, but there are two other events in July which are of vital economic importance: trade policy for the current year and half-yearly monetary policy which is supposed to be in close coordination with the fiscal policy which is spelt out in the budget.

In fact, the monetary policy is a credit plan for implementation of development programme, and it stipulates monetary expansion, credit allocation for various sectors and most important projects inflationary expansion that is to be in line with overall national growth in the economy.

Soon after taking over as finance minister, Mr Dar found many discrepancies and distortions in 2007-08 which in terms of hard cash had an impact of more than Rs500 billion.

He found budget deficit close to nine per cent, which he promised to bring down to six per cent by June when he presents the next years budget.

As part of an effort to narrow down 2007-08 budget, a senior officer in the finance ministry is reported to have invited a few top bankers to give an informal advice.

According to a senior banker, the officer, who is now no more in the finance ministry, asked the bankers to pick up deficit of about half a dozen public sector enterprises.

The amount was roughly Rs100 billion deficit, the banker recalled and said the officer wanted them to extend this facility without any formal government guarantee.

It is a typical financial engineering done by intelligent accountants the world over to window dress the balance-sheets of losing concerns, he said.

The only bad part of the ploy was transferring deficits of government-run concerns to monetary system of the country.

Ishaq Dar is reported to have lined up $3.3 billion resources in Madrid, on the basis of which State Bank of Pakistan Governor Dr Shamshad Akhtar recently took measures to check falling exchange parity value of the rupee with the dollar.

In 2008-09, we are behind schedule of all these calendar dates, said a senior and seasoned banker now engaged in teaching.

He wondered how the budget-makers would go ahead with their task when for the first time the budget deficit is almost equal to total revenue collection.

The government recently brought down revenue projection for 2007-08 to Rs990 billion from Rs1,025 billion announced in the budget. But there is doubt the revenue would be even Rs900 billion by the end of next month.

The budget deficit is also more or less equal to this amount.

Expectations are high, but resources are limited and in fact, diminishing, warned a banker-turned-businessman who wondered as to why politicians are not able to settle quickly the constitutional and legal issues so that enough attention is given to real, hard economic problems.

Pakistan is likely to face the consequences of rising international prices scenario, the impact of previous follies and growing expectation from the population to test capabilities of the new government, Sheikh Amjad Rasheed, a global food businessman and chairman of Federation of Pakistan Chambers of Commerce and Industrys Standing Committee on Banking Credit and Finance, wrote in a detailed presentation to the prime minister.

Amjad Rasheed proposed setting up of a task force, to be headed by the prime minister, on essential commodities.

It can have four sub-committees for assessment of domestic resources, monitoring and coordination with provincial governments, periodical forecast for each commodity, an year-wise plan for the next five years.

He proposed establishment of a food surety fund to support a minimum food inventory.

He wants the government to seek commodity grants and financial assistance from international agencies.

Assistance should also be sought from the well-to-do to help the disadvantaged and poor sections of population.

Proposals and suggestions are said to have been given by trade bodies and other individual businessmen, but the government as represented by politicians and bureaucrats has not sit across with business leaders to discuss and work out a strategy for the next budget.

A private TV channel quoted PPP leader Asif Zardari as having said to keep the ministry slots vacant after the PML-N leaders quit the federal cabinet. But there are speculations that either Mr Naveed Qamar who is serving as the minister of privatisation or Shah Mahmood Qureshi who holds the charge of planning and development with foreign affairs may be asked to look after the finance ministry for some time.

Businessmen and bankers say that the job to take such hard decisions would have been relatively easy for a coalition government, particularly when it would have come from a PML-N minister who represents the mercantile community of central Punjab.

The PPP is considered to be a representative of rural gentry that is shy to tax big agriculturists.

Any proposal that would bring in tax net stock exchange brokers, real estate dealers and captains of services sector while ignoring rich and mighty landlords, will not only be opposed but resisted in the cities.

It will not be an easy sailing for the PPP though it may be having a majority support in the National Assembly, a business leader said.

The only ray of hope is that the PPP leaders announce to continue their dialogue with PML-N.

The PML-N promises to continue to support the government on issue to issue basis and it will not sit in the opposition at least till May 20.

Budget likely to be delayed -DAWN - Business; May 13, 2008


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## Neo

*Dollars to start pouring in soon: Pacts with donors​*
KARACHI, May 12: Agreements with multilateral donors will start pouring dollars in a few weeks that will settle the supply-demand dynamics in the market, said the State Bank of Pakistan on Monday.

SBP Governor Dr Shamshad Akhtar issued a statement which carries central banks efforts to stabilise exchange rate, explaining its position in the highly destabilised exchange rate scenario and blaming the speculative forces for a steep fall of the rupee against the US dollar.

The governor stressed that we need fully to understand what is really happening behind the volatility in exchange.

The inter-bank and kerb markets behaviour has not been in line with market fundamentals but reflects distortions created by trading and speculative practices which often do creep in under circumstances like this, said the SBP governor. In discussions with multilateral agencies and other sources, there is a broad agreement for their support which should be able to bring in quick disbursement of foreign exchange inflows, said the SBP.

The government is looking at other options to attract foreign inflows.

We are optimistic that these inflows will start pouring in the next few weeks which should settle the supply and demand dynamics more sustainability in the markets, the central bank said.

Pakistan is committed to exchange rate stability, said the SBP, adding there is no doubt that demand pressures have been high in the economy as manifested by the high fiscal and external current account deficits.

Since Pakistan has a managed floating exchange rate regime, the demand and supply of foreign currency sets the market exchange rate, explained the SBP.

Over the last few weeks, there has been a slowdown in inflows relative to outflows. Central bank has been supporting the oil payments and other obligations of the government as well as providing necessary support to the market as and when required. The central bank is not in businesses of distorting markets by setting one level of exchange rate, said the SBP, adding its interventions have to be calibrated in line with the level of volatility.

The SBP came under severe criticism by the newly-elected government and especially by the new high-ups in the ministry of finance holding the central bank responsible for the current destabilisation of exchange rate which eroded the rupee value against the greenback.

In just four months, rupee lost over 13 per cent value against the dollar, making it more difficult for the country to borrow from international market or purchase from the local market.

The country, which depends over 90 per cent on imported oil for its energy resources, has been facing double negative impact of the oil price-hike which reached $126 per barrel on Monday.

While the oil import bill soared to record high, the dollar itself became an all time high against Pakistani rupee, thus forcing Pakistan to borrow dollars, face record trade deficit and watch helplessly the melting reserves of foreign exchange.

The SBP said it has been working closely with the government to set in place a macroeconomic framework to ensure its sustainability.

In addition, we are taking concrete steps to ensure effective supply of foreign inflows.

We have been and are ready to supply the necessary liquidity and lubrication to the markets through calibrated intervention, said the SBP.

We have enhanced our vigilance of the inter-bank and kerb markets. This vigilance is unearthing some issues which are being addressed, it added.

Dollars to start pouring in soon: Pacts with donors -DAWN - Business; May 13, 2008


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## Neo

*Four million families to get income supplement grant: Dar ​*
ISLAMABAD (May 13 2008): The government has decided to give an income supplement cash grant to four million poor families and the finance ministry has been tasked to make all necessary arrangements for collecting/ascertaining the required data from all the districts.

This was stated by Finance Minister Ishaq Dar while speaking at the launching ceremony of first-ever annual report of Institute of Public Policy of Beaconhouse National University, which was launched here on Monday.

The minister said that the government might reintroduce wealth tax possibly in a revised form in the next budget to have a space for providing subsidy to poor. He said that the government was likely to review the levy of general sales tax on fertilisers and pesticides.

"I think it is a wrong policy because agriculture is an important sector and the policy must be done away with," he stated. The number of poor families to be benefited from the income grant could be extended further with the passage of time.

The minister asked the international donors to help the government construct $8.5 billion Basha dam. Basha is viable and important project. The initial cost must be high, but the project has the capacity to return the investment, he stated. The Asian Development Bank, the World Bank and other donor organisations should come forward and invest in Pakistan's infrastructure sector, said the minister.

The minister said the government could not afford to subsidise petroleum products, as the total subsidy on oil would touch more than Rs 153 billion at close of the current financial year. He warned that if the current rising trend in oil prices continued next year, the developing countries would be facing serious trouble. To provide subsidy on essential food items to poor, the government would continue to pass on the benefit of price differential to consumers, he said.

He asked the developed countries to take action against the manipulators who are involved in hedge marketing of oil products. The Opec, according to him, is not the beneficiary of record surge in oil prices, the beneficiaries are actually a few companies, which are operating from the developed world.

Responding to a question, he said that the government would have to cut down the expenditures, the development budget and sensitive expenditure. The minister gave a detailed account as to how the government would tackle various challenges including the widening current account deficit, trade deficit and fiscal deficit.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Many US investors soon to visit Karachi: Kamal ​* 
KARACHI (May 13 2008): Investors from the United States would visit Karachi in a few weeks to make investment in public-private-partnership in different sectors, like energy, information technology, Karachi Mass Transit System, desalination plants, etc.

This was stated by City Nazim Mustafa Kamal while briefing mediapersons in the Civic Centre on Monday on homecoming from a two-week visit to the United States. "I told them (his hosts in US) that we do not believe in seeking help or loan at all... We want partnership on public-private basis... n areas where we have a competitive edge and attraction for foreign investors," he said.

The Nazim said that Karachi and Houston, both port cities, were declared as sister-cities after signing a memorandum of understanding (MoU), and a delegation from Houston would soon arrive in Karachi for making investment in the metropolis, which is economic and intellectual hub of the country.

Kamal said that, on his invitation, the visit of the businessmen from Houston would be followed by Houston Mayor Bill White's visit. The city nazim said that Karachi and Washington DC would soon sign an MoU on giving the two cities sisters status. He said the proposal came from the Mayor of Washington DC although US administration signs such MoUs with capital cities.

Kamal said his visit to the US was on reciprocal basis during which he motivated the American investors to be engaged in the metropolis as a result of which a delegation of US investors would soon visit Karachi.

Terming recent visit of top American officials to his office and the invitation from the State Department as an honour for Karachiites, the nazim said that developments indicated that the international community had recognised the importance of Karachi as a developing and strategically important city.

The city nazim met with top US officials including Assistant Secretary of State Richard Boucher, US Ambassador to the United Nations Zalmay Khalilzad, congressmen, US think-tanks, mayors and deputy mayors of Houston and Washington DC and other prominent personalities, and termed his visit as successful. Kamal said he had also met the Mayor of Chicago and agreed to promote mutual cooperation in the field of technology transfer and economic development.

To a query that whether the country's political environment was favourable for foreign investment the nazim said: "We are living in a challenging world, facing many hardships, but this should not stop the process of development."

When asked for commenting on the city government's power tussle with Sindh government the city nazim refused to comment and said: "I will repeat my conversation with the Prime Minister that the country is transiting through critical period and we can not afford new experiences any further... we are ready to work with all." Attaching a unique regional and international status to Karachi, Kamal said the Americans were very impressed with infrastructure development, carried out by the city government in Karachi.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Investment in power sector: minister for encouraging private sector ​*
ISLAMABAD (May 13 2008): Federal Minister for Water and Power Raja Pervez Ashraf on Monday said that the private sector will be encouraged and their proposals will be considered in order to attract investment in the power sector. He said this during his visit to the under-construction 165-MW Attock General Limited (AGL) power plant, being set up by the Attock Group of Companies at Morgah.

Managing Director PPIB, Fayyaz Elahi and other senior officials were also accompanied him, says a press release. The Minister said that the role of public sector would be minimised and the private sector will be given maximum possible incentives to magnetise their investment in the power sector. He said that all the bottlenecks and hindrances will be removed both for domestic and foreign investors to promote investment in the power sector.

All their suggestions will be properly considered and incorporated before taking any policy decision in this regard. Pakistan is facing energy shortage and the new power plant on fast track basis will help bridge the gap between demand and supply, he said.

Earlier, the Minister was briefed by the CEO of the AGL, Adil Khattak and said that the project will be completed in October 2008, three months before completion. He informed that there would be no foreign exchange expenses involved in the import of fuel because the fuel will be supplied from Attock Refinery. The Minister welcomed the new proposal of the company to further invest in the power sector and said that the domestic investors will also be given all the facilities.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*The outlook for Pakistan's trade deficit ​*
ARTICLE (May 13 2008): The excess of imports over export, or trade deficit, has received considerable attention from policy makers. Increasing trade deficit is a natural consequence of fiscal imbalances. As recorded by SBP trade deficit recorded a sharp 32.3 percent expansion during July-November FY08 and reached US $7.2 billion. Trade deficit for the same year during July-February FYO8 recorded a sharp US $3.5 billion increase.

Trade deficit has reached highest ever during the last five years as compared to 3 billion in the year 2003-04. Stunning increase in trade deficit during the five-year period will transfer domestic wealth abroad.

The deficit during the six months of current fiscal year indicates that it will be further enhanced in the current fiscal year. Soaring import is the main reason for imbalance in the Pakistan economy and rapidly increasing trade deficit as well.

Falling export and staggering trade deficit of the country has reached alarming levels. Even with complicated conditions in domestic and global fronts, export oriented industries have succeeded to maintain export target at a growth rate of 4 percent. However, the rate of growth in import was much higher - 14 percent- as compared to the four percent growth in exports. If the current surge in trade deficit is not capped, it may hurt the country's economic growth. Inadequate electricity supply given to industrial sector, too, has hampered production, requiring high maintenance cost, which in turn has eroded product competitiveness.

Although, there exists a surplus labour force in Pakistan, the quality of such a labour is relatively poor in terms of productivity. A good quality labour with technological, innovatory and managerial capabilities and organisational competencies is considered to be significant in improving the competitiveness of countries for inward FDI. But there appears to be a lack of such qualities and skills in labour force in Pakistan.

Low return on capital, low productivity of labour and high rate of bank interest, increased wastage of inputs are the other factors which have made Pakistani products more expensive than those from neighbouring countries. The higher trade deficit leads to outflow of capital resources from the country on one hand and indicates the economic dependency on the other hand.

'Import substitutions' and 'export growth' are the two alternative strategies to curtail the trade deficit. The history of trade policies in Pakistan shows that both the measures have been experimented in different political regimes. However, in the era of globalisation and free trade regime, it is not possible for the developing countries to adopt 'import substitution policy'. We cannot stop the import of machinery, high tech instruments, medicines, and oil and food items not being produced in Pakistan.

To control the budget deficit, we will have improve the competitiveness of the domestic industry. This strategy will not only improve the exportability of the industry but also provide substitution of the imported products, as it was observed that a large part of imported products belong to the luxury items.

As the current trend indicates, it seems difficult to post a balance of payment surplus during this fiscal year without borrowing from abroad. Pakistan's trade deficit can be easily controlled but what is needed is concrete planning and remedial measures to enhance exports to control the trade imbalances which are a serious threat to the economy. Investment should be encouraged in the industrial sector where there is lot of opportunities to improve our export. Pakistan is a state with abundance of natural resources, the northern parts of which are covered with lush green valleys. God has blessesd the country with natural sceneries, world's second top most peak which has a natural attraction for visitors.

But it is a matter of great concern that despite the enormous potential and attractive business opportunities in Pakistan, the potential investors did not come out with money at the desired level due to various reasons, especially the unpredictable policies and law and order situation in the country. As the trade rule says, "Investment in any business, any area and any country calls for careful judgement and conducive environment. Recently, the size of the Foreign Direct Investment (FDI) decreased drastically to 2.1 billion (July to January) as compared to the previous couple of years.

Sources in business circles are attaching great importance to the current scenario of economic activity including Chinese investment in the deep-sea Gwadar port, power generating units at Lakhra and hopefully Thar coal fields, and political stability in neighbouring Afghanistan as these two factors have every potential to create infinite economic activity not only for Pakistan but in the entire region.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*100-Index gains 256 points​*
KARACHI: Fresh buying in Karachi Stock Exchange pushed the benchmark KSE-100 Index by 256 points to 14542.

The market opened in the green territory and the positive trend continued throughout the day.

The market went inoperative near 12 noon remained so for one and a half hour due to some technical malfunctioning during which all the open orders were cancelled. The trading was extended for 30 minutes to cover the lapse and the market closed at 3:45 PM instead of 2:15 as per normal routine.

The trade volume stood at 130 million shares  lower by 55 million shares compared to yesterdays trading.

KSE-30 Index climbed by 458 points to finish at 17,367.

100-Index gains 256 points - GEO.tv


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## Neo

*Prime land gifted by KPT to DHA in a murky deal ​* 
*Area leased at throwaway rates as only solution to stop reclamation​*
Wednesday, May 14, 2008

KARACHI: Prime sea-front land in Karachi has been given at throw-away rates by the Karachi Port Trust to the Defence Housing Authority in a deal that has raised many eye-brows, The News has learnt. The deal was sealed in 2007 by the current chairman, Admiral (retd) Ahmad Hayat, despite the fact that other KPT chiefs prior to Hayat refused to endorse it as it went against the Trusts interests. 

The News has learnt that nine successive KPT chairmen, both from civil and military backgrounds, refused to endorse the deal on grounds of its questionable clauses. Owing to what KPT saw as its position in the matter, the issue of the reclaimed land has been a bone of contention between the KPT and the DHA for several years. KPT officials claim that the DHA had encroached on 881 acres of KPT land in 1975-76. Several heads of the KPT did not give up their claim on the land but the present KPT administration has finally settled the matter.

The matter was finally settled in 2007 with the KPT leasing the land to the DHA for 99 years at a very minimal rate of Rs2.50 per square meter. It was also agreed that 3 per cent of the leased land would be given to the KPT. 

Private valuation puts the cost of the land in billions of rupees. KPT officials privately told The News that the deal is a strange one in which the KPT has given away its rightful property at a very low cost and done away with all the legal work it had painstakingly worked on to reclaim its land. 

The case saw some action in 1985, when the KPT filed a Civil Suit (No 240/85) against the DHA over the land in question. But the DHA did not pay heed to this and continued to encroach on this land. 

In 1999, the DHA agreed to lease 682 acres of KPT land and gave a written assurance for halting further reclamation work. In this regard a MoU was signed between the DHA and the KPT. Even after the MoU, the DHA continued its reclamation work and in this regard in 2002 the KPT filed an application before the Sindh High court and pleaded it to stop unauthorised reclamation /allotment of KPT land by the DHA. 

The issue was pending for many years and several KPT high-ups did not agree on leasing the reclaimed land to the DHA as it could create great problems for the port area. In this matter in 1998, the DG Ports and Shipping took a serious view of the situation and served notice to the DHA stating that serious problems would erupt in dredging due to silting and reclamation activities of the DHA as this would increase the cost of dredging. However, the complaint was ignored and the DHA continued its dredging work. 

The DHA has now said that the land in Phase 8, where the reclamation work was done, is not available so the KPT will be given land in DHA-II, off Super Highway, for the 3 per cent of land the DHA had committed to the KPT. This would be in the shape of residential plots for KPT officers and the KPT agreed to accept the allotment at DHA II Phase 9 without approval of the board and authentication under the KPT Act, official sources added.

The problem does not end there. The allotment of 3 per cent land was meant for permanent employees of the KPT and for those who had completed five years of service according to the KPT rules. KPT officials privately say that the allotment list submitted to the DHA includes a number of officers who are ineligible under the rules and four plots have been doled out to the high-ups in the Federal Ministry of Ports and Shipping. 

According to KPT rules, those who are on deputation, on contract, on probation, or who have not completed five years in service as well as the chairman and trustees are not eligible for the allotment of plots. 

However, the allotment lists contains the name of those officials who are not permanent and those who have not been in service for a minimum of five years. The list includes those armed forces officials who are on contract, or on deputation or even not have been in the service of the KPT for five years.

After approval from the Ministry of Ports and Shipping on July 7, 2007, the KPT administration prepared a list of its officers for allotment of plots in the DHA Housing Scheme, ignoring the date of government approval or board resolution and formulated its own criteria without considering the length of service of officers and their service record. As a result of these irregularities, some KPT board trustees resigned as they felt the leasing out the land is not a feasible decision. The trustees who resigned were Wajid Javed, Ali Raza, Wajahat Hussain, and Farooq Rahimtoola.

Pervez Younasi, General Manager Estate and Civil Works of the KPT, when contacted by The News said that it is an achievement on the KPTs part to resolve the issue which had been pending for the last three decades and the land is on lease for 99 years and the KPT still is the owner and a conflict between two government organisations has been resolved.

He said that the DHA has been reclaiming the KPT limits and the KPT took the issue to court but the DHA continued its plan. However, in the current deal the DHA has agreed that no further reclamation will be done by it and it will give 3 per cent of the leased land to the KPT in the form of residential plots for KPT officers. 

Younasi added that the DHA later said that there are no plots available in such quantity on the lease land, so now the DHA is giving the plots at DHA II which is in Super Highway. He, however, said that the KPT did not raised objection on this and accepted the offer.

Regarding the value of the plots of offered land, he said that when government entities reach any agreement, they do not look into the market value of any property as they are not involved in any sort of commercial deal. 

On the allotment issue, he said that the cut-off date wasMay 1, 2007 which was approved by the KPT management and all those who were working from the above date are eligible for the allotment of plots. The KPT official said that any body working for the KPT is entitled to all facilities irrespective whether the person is on deputation or on contract or already has been allotted plots from his or her parent organisation. However the working duration to be eligible should be five years and those who have not completed five years have signed an affidavit that they will work for five years and that is when they become entitled to the plot, he added. No board or government sanction has been secured for relaxation of the rules under the Act, The News has learnt.

Younasi said that at present only registration has been done and the list was taken from the computer department of the KPT. He said that proper assessment of all officers had been done and it has gone through the proper channel and finalised so there is no irregularity or mismanagement in the deal.

He said that all the rules and regulations have been followed and it has been approved by the board, management and the government. He agreed that usually the KPT leases land out only for 25 years and this practice is still continuing, however, in this deal the KPT has agreed for a 99-year lease.

About the effects of the reclamation, the KPT official told The News that the KPT has done all sorts of testing and in this case, we have also done model testing and a UK-based company also did the model testing for the KPT. 

He agreed that reclamation is not good for the harbour and for marine life but the KPT agreed to the deal as this was the only solution to stop further reclamation. 

When contacted, an official of the DHA confirmed that land would be given to the KPT at DHA II as there is no developed land available at the reclaimed area and the KPT wanted a developed land so the allotments will be given at DHA II. 

This will, however, take time as DHA II is in the process of development and there are some issues which need to be settled, he added.

Prime land gifted by KPT to DHA in a murky deal


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## Neo

*PIA to induct 10 aircraft in 2 years ​* 
*MD says no employee will be laid off​*
Wednesday, May 14, 2008

KARACHI: Pakistan International Airlines (PIA) would induct 10 aircraft in the next two years to enhance revenue and ward off the need to retrench employees for saving runaway costs, new Managing Director Aijaz Haroon said on Tuesday.

He also announced rescinding the decision of the previous management to ground eight B-747 aircraft due to excessive cost incurred on the particular model, saying the airline could not afford to lose capacity at present.

We know they are fuel guzzlers, he said referring to the grounded aircraft. But we have to use whatever available capacity at hand. There is no other choice.

Speaking at a press conference here at the PIA head office, he said it had not yet been decided which aircraft were to be inducted and neither could elaborate on the sources for funding the purchase or lease at a time when the airline was faced with accumulated losses of Rs42 billion.

These aircraft are in addition to seven A320-200 aircraft, which the PIA will start receiving from next year in order to replace the aging fleet of Boeing 737-300. A letter of intent to this effect has already been signed for the lease of the aircraft with Aviation Lease and Finance Company (ALAFCO) of Kuwait.

Despite having no previous experience of heading an organisation unlike his experienced predecessors, Haroon, who is a B-777 pilot, was confident he would be able to steer PIA out of financial crisis.

I have served this airline for too long, he said, recalling his own success at the central control and airport services departments. Three managing directors have failed and I dont want to fail.

He criticised the people who were suggesting the PIA to stop serving meals on domestic routes to cut costs, saying they had no aviation background. He, however, did not offer any alternative.

But Haroon minced no word in saying that the national flag carrier would not be privatised and none from common employees would be retrenched.

The PIA, suffering from annual losses exceeding Rs13 billion, sank deeper into the quagmire of financial losses during the past 15 months as the top slot of managing director saw three changes and rising fuel prices exacerbated the operational cost. With B-747 included, the airline now has a fleet of 42 aircraft. 

PIA to induct 10 aircraft in 2 years


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## Neo

*Balochistan seeks Sindhs help: Revenue generation​*
KARACHI, May 13: The Balochistan government has sought the assistance of Sindh to increase its tax revenue which currently stood at Rs500 million compared to Sindhs revenue of Rs9,500 million.

The assistance was sought by Balochistans Excise Minister Rustam Jamali during his meeting with his counterpart Mukesh Kumar Chawla in Karachi recently.

Rustum Jamali mentioned the infrastructure cess charged by the Sindh government on imports at the rate of 0.5 per cent.

He said his province had sizeable quantities of imports made through the dry port, airport and through border trade with Afghanistan and Iran.

He said his province was considering levying infrastructure cess on the pattern of Sindh to increase its revenue.

Mr Mukesh offered every possible assistance to his counterpart in generating more revenue.

Director-General Excise and Taxation Asif Marghoob Siddiqui told the Balochistan minister that the Sindh excise department had set up a linkage with the Customs through Pral to collect infrastructure cess at the import stage.

He advised the minister to enact the levy on import and contact the FBR for cess collection. However, the province would also have to make collection arrangements with the Customs posted at the borders.

Rustam Jamali also requested the Sindh minister to allow collection of motor vehicle tax on vehicles registered in Karachi.

The DG Sindh excise explained that under the MVR law, vehicle tax should be paid in the province where it had been registered.

The Balochistan excise department should request the owners of such vehicles to register their cars in the province after the expiry of one year.

The Sindh minister requested Rustam Jamali to bring the rate of excise duty on liquor at par with Sindh so that instances of smuggling could be discouraged.

The Balohcistan minister also expressed the desire to link his motor registration with the Sindh MVR to check fake or double registration.

Mr Mukesh informed his counterpart that the MVR was linked with the central customs computer network which collects data of all vehicles registered at Karachi. The data is already shared with the MVR in Lahore and Islamabad. He advised the Balochistan minister to discuss the issue with the FBR.

The meeting was also attended by Sindhs excise secretary Naseer Jamali and director-general excise, Quetta, Raza Khan.

Balochistan seeks Sindhs help: Revenue generation -DAWN - Business; May 14, 2008


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## Neo

*Industry revival plan urged in next budget​*
LAHORE, May 13: The Lahore Chamber of Commerce and Industry has urged the government to announce a plan in the federal budget for the revival of industry crippled by the unprecedented energy crisis and increase in cost of doing business.

Releasing the budget proposals submitted to the federal government at a press conference here on Tuesday LCCI President Muhammad Ali Mian and Pakistan Industrial Associations Front chairman Mian Abuzar Shad said that the revival plan should include measures to ensure uninterrupted gas and power supply to thousands of industrial units, which have closed down due to shortage of the same.

They said that the government should also allow the industry to import its raw materials free of duty for one year. More than 250,000 industrial daily-wagers had been laid off in the provincial metropolis alone.

They said that that the government should also ensure that rate of customs duty on import of raw material is considerably lower than the rate of duty on finished products.

The industry is experiencing difficulty in marketing its products due to low rate of duty on import of finished products, they added.

The trade deficit had exceeded $16.8 billion because of flooding of markets by imported products. A large number of toys, shoes, plastic and household goods manufacturing units have closed down.

The duty-free import of raw materials could make the products of such unit competitive and help in their revival, they added.

They pointed out that the government should allow duty-free import of power generation equipment and start immediate construction of Kalabagh Dam and 35 small dams in Punjab for generating cheap hydel power.

They also stressed the need for increasing the income tax exemption limit from Rs100,000 to Rs200,000 in view of unprecedented inflation and measures to increase the number of taxpayers from the existing two million (including 63,000 sales tax payers) for increasing revenue generation.

They suggested that the revenue should be boosted by increasing the number of taxpayers through reduction of tax rates instead of recovering more tax from the existing assessees.

The plan for bringing the industrial and commercial units paying over Rs.600,000 in the form of electricity bills in a year into the tax net should be implemented.

Sales Tax rate should be reduced from 15 per cent to 10 per cent without any discrimination between the corporate and non-corporate sector assessees.

They said that 0.02 per cent withholding tax on withdrawal of more than Rs25,000 from banks should be abolished in view of growing risk in carrying cash on account of the law and order situation.

Customs valuation system should be improved to control the menace of mis-declaration and under invoicing, which was causing revenue losses of Rs40 billion per annum on imports from China alone.

Fifteen per cent sales tax levied on computer monitors and printers in 2005 should be withdrawn as it had resulted in increase ian smuggling and was impeding the growth of the indigenous IT industry.

They said that the government should take notice of large scale smuggling of grease. Only one unit was manufacturing 2,000 to 3,000 metric tons of grease annually and the rest was being smuggled from Iran and other countries. Its import should be exempted from excise duty and customs duty.

Three to four per cent value-addition formula prescribed for five sectors, including tyres and tubes, motorcycles, electric appliances, sanitary ware and steel products, adopted on the recommendation of LCCI three years back and withdrawn later, should be restored.

Duty on import of other categories of tyres should be reduced to 5 per cent and withholding tax to 2 per cent. Marble and granite should be cleared on 25 per cent prescribed customs duty rate instead of higher rates as was being done by the customs authorities at present.

Industry revival plan urged in next budget -DAWN - Business; May 14, 2008


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## Neo

*Malaysia, Romania to invest in Pakistan​*
ISLAMABAD, May 13: Business delegations from Romania and Malaysia have expressed their interest to invest in Pakistan, particularly in infrastructure sector.

A team of Romanian investors headed by Mr Marciel Popa during a meeting with Infrastructure Project Development Facility (IPDF) Chief Executive Aijaz Ahmad here on Tuesday evinced its interest in participating in the energy and construction projects.

Mr Popa, who is also Pakistans Honorary Consul General to Romania, said that his country also wanted to evaluate potential for bolstering bilateral trade opportunities in local manufacturing.

Briefing the delegation, Mr Aijaz outlined the government policy on public-private partnerships and the opportunities available in the infrastructure development projects.

Separately, a Malaysian delegation led by Wan Mohamed Yaacob Bin Dato Wan Salaidin, Executive Director, Dwitasik SDN BHD, was briefed by the IPDF chief executive on the investment opportunities in Pakistan at a presentation held at the Board of Investment.

The delegation was briefed on the opportunities in the infrastructure sector especially in the housing industry under the public-private partnership model.

The delegation expressed keen interest in the public-private partnership programme and the opportunities available for the Malaysian investors in Pakistan.

Malaysia, Romania to invest in Pakistan -DAWN - Business; May 14, 2008


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## Neo

*Tajikistan offers to export power and import cement​*
ISLAMABAD: Tajikistan can help Pakistan to meet energy shortfall and we are considering import of cement from Pakistan, Ambassador of Tajikistan to Pakistan, Saidov Saidbeg Boykhonovich, said Tuesday. 

During his meeting with President Islamabad Chamber of Industry, Mohammad Ijaz Abbasi, the ambassador said, electricity price in Tajikistan was very cheap as it is about three cents per kilowatt. The ambassador informed that 21 hydel-projects were under construction in Tajikistan, including three big high power stations, which would generate great amount of electricity and Tajikistan would export electricity to neighbouring countries. He said Tajikistan had potential to export 1000MW of electricity to Pakistan. 

International organisations like IMF, World Bank, Asian Development Bank, Islamic Development Bank, European Bank of Reconstruction and Development, European Commission and UNDP were working on energy transmission line project via Phule-Khumri and Kabul areas to Pakistan, he maintained. 

Saidbeg said Pakistan was given proposal for cooperation in high power station projects, but Pakistan did not responded. He said that Tajikistan was also working on liking Tajikistan with Central Asian states and Pakistan for robust economic activity. 

The envoy said there is a lot of construction work in Tajikistan and it requires cement from Pakistan, but right now there were illegal exports from Pakistan which needed to be checked and should be channelised in a proper manner. He said that Tajikistan has the potential to export Alluminium to Pakistan . He expressed the desire that both the countries should join hands in promoting agriculture sector as well. 

The ambassador said that there is difficulty in getting business visas for Tajik businessmen and Pakistan should relax its visa policy. 

Speaking on the occasion the ICCI chief, Ijaz Abbasi, said the trade volume between Pakistan and Tajikistan was extremely low, around $3 million that needs to be increased. 

He said Tajikistan was the nearest Central Asian Estate to Pakistan but the trade between the two countries was not up to the mark. Both the government had exchanged high level official visits and signed various agreements to boost trade between the two countries. 

Abbasi said that since Tajikistan is a landlocked country so it should take advantage of Pakistani ports to increasing its exports. The ICCI president said that Pakistan was short of electricity and Tajikistan could help Pakistan in energy sector to overcome the energy crises.

Daily Times - Leading News Resource of Pakistan


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## Neo

*3.1 million metric tonnes wheat procured​*
LAHORE: The government agencies have procured around 3.1 million metric tonnes of wheat so far and hope to achieve the target, the officials said Tuesday. Three government departments including Pakistan Agricultural Storage and Supplies Corporation (PASSCO), Punjab and Sindh Food Departments were given tasks to procure wheat. The PASSCO has procured around 650,000 tonnes of wheat, Punjab accumulated 2 million tonnes and Sindh has purchased 450,000 tonnes. The government has set target of six hundred thousand tonnes for Sindh Food department, 3 million tonnes for Punjab and PASSCO was assigned 1.4 million tonnes of wheat. PASSCO sets around 300 centres in 14 districts including Gojra, Karorpaka, Hafizabad, Gojra, Toba Tek Singh, Okara, Pakpattan, Vehari, Khanewal, Lodhran, Bahawalnagar, Rahim Yar Khan, Muzaffargarh and Layyah for procuring wheat. Out of 1.4 million tonnes of wheat, 60,000 tonnes will be procured from Sindh, 1.33 million from Punjab and 10,000 from Balochistan. 

The procurement rate set at Rs 625 per maund. The wheat procurement started in Punjab on April 15th while in Sindh on March 15th. Punjab Food department established 345 procurement centres in the province including the above mentioned districts. Punjab Food Director, Waseem Mukhtar said that the department is hoping to achieve the target, as the response from the wheat growers is positive. Ministry of Food and Agriculture (MINFAL) Development Commissioner for Crops, Qadir Buksh Baloch said, the ministry is hoping to achieve wheat procurement target and so far the wheat procurement is good. He said that this year more wheat has been procured as compare to same period in last year. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Economic advisory council planned ​* 
ISLAMABAD (May 14 2008): The government is likely to form an Economic Advisory Council (EAC) for consultation on the economic policy issues, besides taking experts' views on the matters to be presented before the Economic Coordination Committee (ECC) for approval.

Sources said EAC will also serve as a consultative body for the Prime Minister on the key issues of the economy. It will prepare guidelines on different key sectors of the economy such as industrial and agriculture which were not performing up to the government expectations. Sources said the government is considering different names having lifelong experience in different economic fields to appoint as EAC members.

One member of the federal cabinet told Business Recorder on Tuesday that a proposal for setting-up EAC was under consideration, but technical issues like its size will be decided after its formal approval by the competent authority. He said EAC formation will help the government make its working on economic side more transparent and result-oriented.

The PPP government had formed EAC in its first tenure spanning from 1988 to 1990. It was headed by Feroz Qaiser. It used to vet the summaries of different ministries/ divisions before presenting them to ECC. The government deems EAC a useful forum for taking the experienced hands on board for input on key economic issues. This forum is also in place in the United States to provide guidelines to the American administration on the economic issues.

A team of retired bureaucrats is already working for PPP co-chairman, Asif Ali Zardari. It provides him input on technical and financial issues. It's believed that numbers of his team will be inducted in EAC to provide a legal cover to its working. PPP considers EAC forum of extraordinary importance due to its valuable contribution in policy-making on economic issues in its pervious regime ,besides vetting the ECC agenda to make sure that the economic issues get due consideration before a final decision.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*SCCI asked to participate in Foreign Trade Bridge-II ​*
ISLAMABAD (May 14 2008): A delegation of PakTurk Businessmen Association (PTBA) called on President Saarc Chamber of Commerce and Industry (SCCI) Tariq Sayeed and discussed prospects of business promotion between Saarc member countries and Turkey by increasing private sector engagements.

The delegation comprised A Cuneyt Zumrutpinar, President PTBA and Mehmet Necmettin Durmus, Managing Director of PTBA, said a SCCI press release here on Tuesday. Tariq Sayeed enlightened the top management of the PTBA about SCCI objectives and activities in the region to promote regional economic cooperation.

The delegation members invited the SCCI President to lead a delegation to the Turkey-Asia-Pacific Foreign Trade Bridge-II, which is scheduled for June 17-18 this year in Istanbul. They further elaborated that previously the Asia Pacific Summit in 2007 proved to be successful beyond expectations, resulting in some very productive work by bringing business communities of Turkey and Asia/Pacific together.

Last year, 12 ministries, 40 bureaucrats, 30 journalists and more than 250 businessmen from 14 Asia/Pacific countries came to Istanbul. These entrepreneurs met Turkish businessmen at bilateral meetings and laid foundations for a long-term trade volume of 2 billion dollars.

Zumrutpinar said that success and fruitfulness of the first event has encouraged the Confederation of Businessmen and Industrialists of Turkey to organise another such event under the co-ordination of the Prime Ministry's Under-secretariat for Foreign Trade of Republic of Turkey.

This time the event is being organised on a much bigger scale and the number of the participating countries and foreign businessmen increased from 14 to 22 and from 250 to 450 respectively, he said.

The major countries going to take part in the trade bridge include Afghanistan, Australia, Bangladesh, Cambodia, India, Indonesia, Japan, Korea, Laos, Malaysia, Maldives, Myanmar, Nepal, New Zealand, Pakistan, Papua New Guinea, Philippines Singapore, Sri Lanka, Thailand, Vietnam and Brunei.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Narrowing trade deficit ​* 
ARTICLE (May 14 2008): Our trade deficit for the ten months of the current fiscal has crossed $16 billion, and, it is feared, may hit $20 billion by the end of June 2008. The factors causing such undesirable state of affairs are known to all and sundry. What is lacking is a will to rectify the situation speedily.

Industrial production is hampered by the power shortages, and not likely to improve much in the near future because the power generation is not going to be enhanced any time soon. That leaves the agricultural and service sectors to fill the gap.

*I. AGRICULTURAL SECTOR:* From an export point of view, very little attention has been paid to the potential of Middle East markets for products (other than rice) for prime, semi-processed or fully processed farm products. Just consider a few items as an example:

A) *LIVESTOCK:* 

i) Meat - Live animals; slaughtered and chilled; frozen; cooked and packed.

ii) Dairy products

iii) Hides & skins, leather goods, garments, footwear, sports goods, gloves, etc.

iv) Blood serum, bone meals etc.

v) Organic fertilisers

vi) Wool and woolen textiles etc.

vii) Handicrafts, like camel skin products etc.

viii) Stud farms and pedigree animal breeding (like race horses, camels, cats and dogs, and exotic animals, like deer, stags, ostriches etc).

ix) Fowls, Poultry, eggs etc.

x) Rare birds bred in captivity, like pigeons, partridges, quails, bustards, chikor, pheasants, peacocks, parrots and the like;

xi) Fodder and animal feed etc.

xii) Fish and sea food.

B) *FRUITS AND VEGETABLES:* 

i) Fresh, frozen, dried, canned and processed

ii) Ready to use (washed, cut and chilled or frozen in small consumer packs) vegetables air-flown to super markets daily

iii) Cut and dried vegetables for off-season use (in consumer packs)

C) *PLANTS AND CUT FLOWERS: *

1) Ornamental and exotic tropical plants and flowers

2) Cut flowers and bouquets

3) Potted plants

4) Wrappings, packing materials, ribbons, strings, foliage, etc. These are just a few examples for potential markets.

*FOLLOWING POINTS MUST BE NOTED: *

1. Health, Quarantine and Phyto-Sanitary Certificates, conforming to International Standards are a MUST. Proper facilities, cold storage, warehouses and quarantine premises must be arranged at all key places and exit points as soon as possible.

2. Beef, Mutton (sheep) Veal (Lambs) and Venison are a huge import item in Iran and the Gulf countries. Cumulative estimates speak of an annual $10 billion market for meat products, and many times more for live sheep (around Hajj time mainly).

3. Goat meat is not favoured in Iran.

4. Cheese is a favourite food item in the Gulf region, but production in Pakistan and its marketing needs special attention.

5. Cut flowers have a worldwide demand if properly handled.

6. Potential exports from Pakistan, if properly organised, could yield between $8 and 10 billion annually, on above items alone, as our share of the bonanza.

*II SERVICE SECTOR:* With the wealth of computer science talent at our disposal, the existing opportunities for "out-sourcing" have not been fully exploited. With proper efforts, there is no reason why Pakistan should lag behind India, for instance, in this field. Goals must be set to achieve an annual target of $50 billion, in as short a time as possible. Besides earning foreign exchange, the vistas for gainful employment of talented youth are limitless.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*R&D issue to be resolved before budget: secretary textile ​* 
Thursday, May 15, 2008

KARACHI: Secretary Ministry of Textile Industries Abdul Rauf Chaudhry has assured textile exporters that the research and development (R&D) support issue will be resolved before budget presentation for next fiscal year in the National Assembly.

No date for the federal budget presentation for 2008-09 has been announced yet, but it is usually unveiled in the first or second week of June every year.

Chaudhry was responding to the queries made by members of Pakistan Readymade Garments Manufacturers & Exporters Association (PRGMEA) at a meeting held here on Wednesday. Textile Commissioner Muhammad Idrees Ahmed was also present in the meeting.

Secretary Textile, who took over the charge a week ago, added that the summary on R&D support, which was earlier sent to the textile ministry by industry stakeholders, was lying with him.

The summary demanded the government extend R&D support for another five years at the rate of nine per cent instead of current six per cent provided to the textile industry.

I will hand over this summary to Secretary Finance in a meeting instead of sending it to him by mail service. I will also brief other government officials in the concerned ministries ie commerce on this issue. I will also discuss this issue with the members of Economic Coordination Committee (ECC) and federal cabinet. And I personally think that this R&D support be continued to the industry despite dismal garment exports, he said.

The research and development support, a six per cent return of total amount of garments exports, is being provided to the textile exporters. This incentive would automatically come to an end with the end of current fiscal year on June 30.

Governor SBP Dr Shamshad Akhtar is of the view that R&D support is being misused by some industry players and should not be provided any more. 

Government had provided around Rs40 billion to the textile industry in R&D support till April 15 in the current fiscal year. Despite this massive support, the garment exports of the county declined by over three per cent to $7.765 billion in the first nine months of the current financial year against $8.017 billion exports recorded in the same period last year, Dr Akhtar earlier briefed the ECC according to media reports.

Chaudhry said that he was surprised by the SBP Governors statement on R&D support. He was of the view that Dr Akhtar was not told the truth and needed briefing by some industry players.

Bilal Mulla, Chairman PRGMEA, claimed that R&D was not being misused. If anyone from this industry is committing such crime, the Governor SBP should disclose his name and he should be penalised for that bad practice, he demanded.

Citing official reports, Shahzad Salim, Chairman PRGMEA (South Zone), underlined that garment exports were increasing in countries where R&D support was available. Export proceeds to these countries rose to $3.2 billion in 2007 from $2.4 billion in 2005.

While exports to those countries, which were not given R&D support, declined to $0.17 billion in 2007 from $0.3 billion in 2005, he added.

Salim demanded of the government either to provide subsidies or provide level playing field in the world markets. Our competitors i.e. India, China and Bangladesh are exempted from paying duties in major markets, he added.

Readymade garment exporters also demanded increasing R&D support to 74 countries, as availed by fabric and home textiles players, from currently available only in 32 countries. 

R&D issue to be resolved before budget: secretary textile


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## Neo

*Corrective measures needed: economists ​* 
Thursday, May 15, 2008

LAHORE: The government should not expect a miracle to steer the country out of the current food crisis that is getting out of hand with every passing day as the policy-makers have not been able to come up with a viable policy to control the prices of staples.

Economists have warned that the situation could go out of control if corrective administrative measures are not immediately taken at both federal and provincial levels. They say the government should stop complaining about high international food prices. Most of the worlds hungry people do not use international food markets and most of those who use these markets are not hungry. The fact is that the international food markets, like the markets for everything else, are used primarily by the rich, not the poor.

In the worlds corn markets, the biggest importer by far is Japan, followed by the European Union. Next comes South Korea. Surely, citizens in these countries are not underfed. In the poor countries of Asia, rice is the most important staple, yet most countries of the continent import very little rice. Hunger is caused in these countries not by high international food prices, but by local conditions, especially rural poverty linked to low productivity in farming.

The planners in Pakistan must realise that the country has never been self-sufficient in food even in years when it exported wheat because 20 per cent of its under-nourished population had not the resources to buy it, which created wheat export surplus in those years. The economists say the under-nourished population is expected to double during current conditions as majority of the people could not afford to buy expensive food.

The food scarcity in Pakistan is so high that the Asian Development Bank, in its recent report, assessed that the country would need to import 1.117 million tons of food in 2008 against 1.9 million tons food import requirements of five times larger India.

They point out that the food basket carries a considerable weight in consumer expenditures averaging over 42 per cent of total expenses. Food inflation has been averaging over 20 per cent for the last four weeks. The economists point out that except for edible oil that has been impacted by the decline in rupee value there is no justification for increase in prices of other commodities that are produced in the country.

Targeted interventions might not work this time. There is a need to ensure stable supplies of all food items grown in Pakistan. They allege that the increase in rice prices was manipulated by local suppliers, however the government should have restricted rice exports to last years level when it was known that there was global food crisis. Pakistan currently accounts for 11 per cent of global rice exports, the same level as from India. 

Similarly, they say, there is no rationale for increase in sugar prices that were already 50 per cent higher than world sugar rates. The government should not have promised to lift excess stocks of the sugar industry that triggered the price hike.

The economists say the increase in gram pulse rates was also irrational. The hoarders benefited from the leniency of the government to increase the prices beyond Rs50 per kg. Milk prices reached historic highs because the excessive milk available in remote villages could not be brought to cities in the absence of cold supply chains as established in India.

The Punjab government, they say, has until now succeeded in checking the hoarding and smuggling of wheat. It can now be expected that wheat produced in Pakistan would be used within the country if the present exercise continued till the end of harvesting.

The government should now strive for procuring 6.5 million tons of wheat as was done by the Punjab government. This would ensure sustained wheat supplies.

Corrective measures needed: economists


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## Neo

*Comprehensive plan for power conservation.​*
*Clocks to be advanced by an hour, markets to close at 9pm from June 1​*
ISLAMABAD, May 14: The federal cabinet has decided that all markets in the country will close by 9pm and clocks will be moved forward by an hour (GMT+6) from June 1 till the end of August to save energy during the peak summer season.

After the adjustment in the Pakistan Standard Time, sunrise in Islamabad will be at about 6am instead of 5am and sunset at about 8pm.

Similar moves to introduce daylight saving time in the country have failed twice in the past.

In a special meeting on the energy crisis held here on Wednesday, the cabinet decided that international bids would be invited for generating 1,200 megawatts (MW) of electricity on a fast-track basis.

The industrial zones will observe scattered off days (on a rotation basis) and air-conditioners in all government offices will be switched off from 8am to 11am. Half of the streetlights will remain off during the three months.

The government will import 10 million energy-saving bulbs.

The country would face a shortage of 4,000MW during the summer, a far worse situation than it experienced last year, as a result of a 50 per cent (2,500MW) reduction in hydroelectric power generation because of less water in rivers and slower melting of snow, Water and Power Minister Raja Pervez Ashraf told journalists after the meeting.

He said that international bids for power generation would be offered at the current rates of the National Electric Power Regulatory Authority (Nepra) to attract investment. The offer will be closed as soon as the government achieves the target of 1,200MW.

The minister said the tendering and production process for power generation normally took at least three years but the government had decided to accomplish the task within a year and a half.

If this energy generation and conservation plan is accomplished we will be able to get rid of loadshedding by the end of 2009, he said.

He said a barge-based power plant would be imported to meet the need of Karachi and 1,200MW being used by the metropolis would be provided to other cities.

We need to take tough decisions for power conservation, Mr Ashraf said.

In reply to a question, the minister said the government would make efforts for the recovery of Rs207 billion various government departments and institutions owed to Wapda. He said an economically healthy Wapda will be able to function more efficiently.

Comprehensive plan for power conservation: Clocks to be advanced by an hour, markets to close at 9pm from June 1 -DAWN - Top Stories; May 15, 2008


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## Neo

*Industrial output grows by 4.84pc: Annual target may not be achieved​*
ISLAMABAD, May 14: Industrial production grew by a paltry 4.84 per cent in the first nine months of the current fiscal year, and it is feared that the annual industrial growth target of 10.5 per cent may not be achieved.

The slump in manufacturing production was witnessed in March 2007 when it grew by a meagre 3.23 per cent, the lowest growth recorded in any month of the past recorded history, Federal Bureau of Statistics (FBS) data revealed on Wednesday.

The figures for the past five months since November 2007 showed this downturn in the industrial growth due to the worst energy crisis, high cost of doing business, reduced working days on the back of strikes.

Analysts said this situation has dampened chances of any reversal in industrial growth in the next three months. This will also affect contribution of industrial sector in the GDP.

The growth in industrial production had been steadily on the decline for the last three years as it declined to 8.8

per cent in the year 2006-07 from 19.9 per cent in the year 2004-05 owing to capacity constraints and closure of many units as a result of high cost of doing business in the country.

Analysts said as there is no industrial policy in the country, the new government will have to consider a broader policy for encouraging industrialisation in the country. And also there is no effective policy or facilities for encouraging small industries to diversify the narrow industrial base of the country, they added.

With this slump in the industrial growth, the export of commodities, particularly textile products, has also affected to a greater extent, which recorded a marginal growth of six per cent during the period under review.

According to the figures, the production of cigarettes increased by 5.11 per cent, while cotton yarn grew by 3.32 per cent and cotton cloth production 4.89 per cent during the first nine months this year over last year.

In the food sector, the vegetable ghee production declined by 2.83 per cent. However, cooking oil production was up by 1.11 per cent, wheat 1.26 per cent, starch and its products 6.39 per cent, beverages 30.46 per cent during the period under review over last year.

Among the electrical production, refrigerators recorded a growth of 10.70 per cent, air-conditioners 0.29 per cent, TV sets production 19.29 per cent, electric fans 18.26 per cent, switch gear 30.49 per cent, bicycles 1.70 per cent, electric tubes 0.01 per cent and electric bulbs 3.21 per cent during the period under review over the last year.

However, production of deep-freezers dipped by 11.19 per cent, electric motors 15.98 per cent, electric meters 44.94 per cent and electric transformers 36.15 per cent during the period under review over last year.

The production of paper and board has also dropped by 5.59 per cent, but petroleum products were up by 6.03 per cent and cement 17.95 per cent during the first nine months of the current fiscal year over last year.

The production of glass sheet declined by 3.11 per cent, steel products 39 per cent, billets 17.12 per cent, coke 13.93 per cent and HR sheets 10.03 per cent during the period under review over last year.

However, production of pig iron was up by 2.29 per cent, soda-ash 13.51 per cent, caustic soda 1.44 per cent, nitrogen fertilisers 1.09 per cent.

However, phosphate fertiliser production came down by 23.99 per cent during the period under review.

Industrial output grows by 4.84pc: Annual target may not be achieved -DAWN - Business; May 15, 2008


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## Neo

*Industrial production experiences sluggish growth​*
KARACHI: The countrys industrial production slowed down further as they grew by a paltry 4.84 percent in first nine months (July-March) of current financial year. 

The growth was even more dismal in March 2008, when it fell by 3.23 percent over the corresponding month of previous year, the latest official statistics on industrial output indicated Wednesday.

The declining trend in the industrial output, in fact began from December last year because of a range of issues especially the political turmoil and other issues related to infrastructure and shortage of electricity and other utilities, economist Dr Asad Sayeed said while citing the reasons for this slow down.

The falling trend in the industrial output also raised concerns about achieving the 10.5 percent growth target set for the current financial year. Analysts particularly expressed concern about the negative industrial growth in March this year because it was after many years that such a big decline was seen in the manufacturing sector. 

The growth in manufacturing sector had been steadily declining for the last three years as it fell to 8.8 percent in 2006-07 from 19.9 percent in 2004-05 because of capacity constraints and shut down of many industrial units, especially in textile due to high cost of doing business. 

Apart from infrastructure and capacity constraints issues, manufacturing sector would further slow down in the days to come because of fast depreciating value of rupee against dollar, which would make the imported raw materials more costly, Dr Asad Saeed opined.

Pointing out absence of industrial policy, he said, the narrow based of the industrial sector as well as the sliding share of our textile sector abroad are the prime reasons behind this slump. 

The falling growth in the manufacturing sector will also adversely affect the countrys GDP and if the trend persisted, it would be hard to achieve they targeted GDP, which in the recent years stayed over seven percent on the back of strong performance of manufacturing sector.

According to the figures, in petroleum sector, production of jet fuel declined by 12.11 percent in July-March 2007-08, diesel oil by 2.80, lubricating oil 0.33 percent, LPG by 2.02 percent, whereas production of kerosene oil was up by 4.58 percent, motor spirits 10.79 percent, high speed diesel 12 percent furnace oil 8.84 percent. 

In the food sector, the vegetable ghee production declined by 2.83 percent. However, cooking oil production was up by 1.1 percent, wheat 1.26 percent, starch and its products 6.39 percent, beverages 30.46 percent during the period under review. 

In electrical goods, refrigerators recorded a growth of 10.70 percent, TV sets production 19.29 percent, electric fans 18.26 percent, switch gear 30.49 percent, bicycles 1.70 percent and electric bulbs 3.21 percent during the period under review.

However, production of deep-freezers dipped by 11.19 percent, electric motors 15.98 per cent, electric meters 44.94 percent and electric transformers 36.15 percent during the period under review.

The production of paper and board dropped by 5.59 percent. The production of glass sheet declined by 3.11 percent, steel products 39 percent, billets 17.12 percent and HR sheets 10.03 percent, coke production 13.93 percent.

Pig iron was up 2.29 percent, soda ash 13.51 percent, caustic soda 1.44 percent, nitrogen fertilisers 1.09 percent during the period under review. Cement production was up by almost 18 percent during this period.

Daily Times - Leading News Resource of Pakistan


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## Neo

*British firms seek investment avenues ​*
ISLAMABAD: Senior Country Manager, South Asia for UK Trade and Investment (UKTI), Peter Courtney and CEO Asia House, Charlottee Pinder Wednesday said they were in Pakistan to know the potential for investment by more British companies. 

According to a press release Wednesday, meeting with Islamabad Chamber of Commerce and Industry (ICCI) president, they said it was a perception that there was security problem in Pakistan, which compels them to invest here though there were great investment opportunities in Pakistan as compared to India. 

They said there was some political instability in the country, which was also a matter of concern for the British companies and hoped that this situation would be settled soon that would help attract foreign companies to invest in Pakistan. 

Pakistan could not have a clear strategy for the production of electricity in the country and should make plans for energy generation, which was necessary for economic development, they added.

They said the government was also not coming forward with clear policies, which also discourage the foreign companies to come in Pakistan. The delegation said that inflation was also hurting the low class segment because the salary structure was low but Pakistan had more investment opportunities than India but it was not being property projected by Pakistan abroad. 

President ICCI, Muhammad Ijaz Abbasi said UK always provided assistance to Pakistan in many sectors and urged for support in promoting technical education in Pakistan. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Fiscal deficit to be cut to five percent: Senate informed ​* 
ISLAMABAD (May 15 2008): The government on Wednesday said it would bring down fiscal deficit to 5 percent by end of the year from existing 8.5 percent and increase wages of the government employees to provide them some compensation for the rising prices of essential commodities.

"It is the previous government which is responsible for inflation. The huge borrowing by previous government for budget has also contributed greatly to inflation by increasing money supply in the market", Ports and Shipping Minister Naveed Qamar responded to the criticism while winding up debate on price-hike in the Senate.

Shedding light on fiscal situation, he said the budget has completely been distorted and was being supported by borrowing hugely from the SBP. He said Rs 250 billion is being spent by the government on subsidies that could not be sustained for a long period.

"We are taking measures to control budget deficit and are committed to bringing down it as close to 5 percent of the GDP," Qamar said. For the purpose, he said, it was decided to cut down the expenses of all the government departments and review the development projects, not yet completed despite provision of substantial allocations.

Despite these challenges, the minister assured the house that the government is committed to addressing the problem of price-hike of essential commodities and would bring them to the reach of common man.

The minister said the present government that has come into power with a mandate to resolve the problems of the people is committed to fulfilling the promise it had made with the masses. "We will devise short, medium and long-term policies to overcome price-hike of essential commodities", he added.

Qamar said it is not the time for blame game but the difficult situation required some hard measures to focus agriculture sector. He said the government would take measures to ensure timely supply of inputs to the growers and would also announce timely support price of the commodities. This would encourage the growers to produce more.

"Stringent measures would be taken to curb hoarding and smuggling of wheat and flour", he said, adding the inter-provincial ban would be removed once the borders are secured against smuggling.

Naveed Qamar said the government has also taken notice of the rice price-hike and it has been decided to fix minimum export price of the commodity to ensure its supply in the local market at reasonable prices. He said the government employees, who are facing greater hardships due to unprecedented price-hike, would be duly compensated in the next budget by giving them substantial financial relief.

He said a special scheme would also be launched in the next budget for the poor people to give them relief so that they could meet the challenge of price-hike. The minister said that speculation along rising oil and food prices have been responsible for depreciation of Pak rupee against US dollar with assuring "the government is fully cognisant to the situation and will take measures to address the problem". Qamar sought suggestions from the members to control price-hike.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*National Highway: Sindh government to set up two new industrial zones: minister​* 
KARACHI (May 15 2008): The Sindh government is planing to establish two new industrial zones, to be located at National Highway, particularly for foreign investors and overseas Pakistanis, aimed at bringing foreign investment into the country, and creating new job opportunities.

Addressing the groundbreaking ceremony of the 'Induction Furnace' project of Tuwairqi Steel Mills Limited, the provincial minister for commerce, Abdul Rauf Siddiqui, said that the government is taking several measures to boost foreign investment in the country. The ground breaking ceremony was performed by a worker of Tuwairqi Steel Mills Limited, Muhammad Nadeem, who got the award of 'Best of Best Employee'.

Following this, the government has planned two different industrial zones of 5000 acre each, at Dhabijee and on the National Highway, the minister said. "We are also working on a one-window project, where from the investors would get permission for new industries within a few hours," he added.

The ministry of commerce also has decided to send recommendations to the federal government for duty-free import of power generation plants for the industries, he said. He said that a especial complaint cell was also being established to remove the hurdles faced by local as well foreign investors and industrialists.

"We have a lot of opportunities for the industrial growth in the country. However, bureaucratic behaviour is the major hurdle in the growth," Siddiqui said. Al Tuwairqi Group of Companies Vice Chairman and Chief Executive Muhammad Tariq Barlas said that presently the world steel trades stands at $1.5 trillion. However, Pakistan's share in this trade is only 0.4 percent. He said that during the last nine years Al Tuwairqi had presented tremendous growth and its steel trade size has reached $5 billion from $25 million.

He said: "This project of Al Tuwairqi would open new avenues of investment in similar plants and downstream industries and in the context of human resources development, Tuwairqi Steel will provide job opportunities to 1000 persons directly and to 3500 persons indirectly."

He said that it would come into existence as a pool of expertise in steel technology and trained manpower through specified technical training centres to be opened in Karachi and Lahore. Tuwairqi Steel will be environment-friendly as it will be having 'Midrex' process, which uses clean gas, with minimum emission of hazardous gases, he said.

Al Tuwairqi Group of Companies is one of the leading business and industrial concerns of Saudi Arabia with an annual turnover of 2.00 billion Saudi riyals, he said. AL Tuwairqi Project director Zaigham Adil Rizvi said that 'Induction Furnace' project would produce 0.3 million tons steel per annum.

He said that 'Induction Furnace' project is an intermediary phase, which includes installation of a power plant around 60 MW capacity as well for the furnace. "The intermediary phase will be completed close to completion of DRI plant at an estimated cost of $80 million, having capacity of 1.28 million tons per year. It is under completion and is targeted to be completed in the first quarter of 2009, at an estimated cost of $265 million", he added.

The Phase-II of the project consists of an 'Electric Arc Furnace' of 150 tons capacity and a continuous caster to produce 1.28 million tons high quality billets, he added. On the occasion, Abul Kalam, Vice-Chancellor NED University, Director Project Midrex Paul Max Love, and Director-General, BOI, Reaz-ul Haq also spoke.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Lucky Cement enters into MoU with Kuwait's Noor Invest ​* 
KARACHI (May 15 2008): The Lucky Cement Limited, the largest manufacturer and exporter of cement in Pakistan, has entered into a memorandum of understanding (MoU) with the Noor Financial Investment Company (Noor) for supply of 500,000 tonnes clinker per annum for a period of 5 years with additional option of 150,000 tonnes each year.

The Noor Financial Investment Company is a Kuwaiti investment company and the financial arm of the National Industries Group (NIG), which is one of the largest and best performing industrial conglomerate in Middle East and one of its subsidiaries the National Industries Company (NIC) specialises in manufacturing and marketing building materials and infrastructure products. NIC has the largest industrial complex for construction materials in the Middle East with the largest market share of building materials in Kuwait.

According to a notice sent to the Karachi Stock Exchange (KSE), Middle East is at present undergoing a construction boom and countries like UAE, Kuwait, Iraq and Qatar are severely facing shortfall of cement. Pakistan with its growing cement industry has an excellent opportunity for export of cement/clinker to these countries due to its close proximity to the region. The Lucky Cement is ideally placed due to location of its southern plant close to Karachi Port from where most of the exports take place.

This MoU will allow the Lucky Cement to increase its growing exports to the Middle East under a guaranteed off-take arrangement, which will further strengthen its dominant position of exports from the country. The Lucky is the only cement exporter in Pakistan with infrastructure facilities at Karachi port for the storage, handling and loading of loose cement.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan Foreign Currency Rating Lowered to B by S&P ​*
By Khalid Qayum and Farhan Sharif

May 15 (Bloomberg) -- Pakistan's foreign currency rating was cut one level to B by Standard & Poor's, citing government spending that's growing faster than revenue collection and political instability. The outlook is negative, S&P said. 

"The downgrade reflects rising pressures from the combination of expanding fiscal and external imbalances, against a volatile and uncertain political setting," according to a release from New York-based S&P today. This is the first time S&P has cut Pakistan's rating since President Pervez Musharraf seized power in a 1999 coup. 

The rating cut comes two days after nine ministers including Finance Minister Ishaq Dar quit as Pakistan's six-week old coalition government split over a dispute on the reinstatement of judges sacked by Musharraf. Prime Minister Yousuf Raza Gilani hasn't appointed a new finance minister yet. 

``It's negative news, and will have a negative impact on foreign investors,'' said Farhan Rizvi, an economist at JS Global Capital Ltd. in Karachi. ``Ratings by these institutions are closely watched by overseas investors.'' 

Overseas investment in Pakistan, which reached a record $6.5 billion in the year ended June 30, 2007, has since fallen 21 percent, according to central bank data. Foreign direct investment declined to $3.03 billion in the nine months ended March 31 from $3.85 billion a year ago. 

Overseas Investors 

The rating cut may further deter overseas investors who have already retreated from the South Asian nation, selling a net $53 million of Pakistani stocks in the nine months ended March 31, compared with purchases of $1.69 billion a year ago. 

The benchmark Karachi Stock Exchange 100 index, which has risen 2.9 percent this year, declined 113.57 points, or 0.8 percent, at the 2:15 p.m. local-time close today. 

The fiscal deficit in the first eight months of this year widened to 4.7 percent of the $146 billion gross domestic product, exceeding the full-year target of 4.5 percent. 

The Pakistan Peoples party, headed by Asif Ali Zardari, and former prime minister Nawaz Sharif's Pakistan Muslim League, had formed the coalition government in March with the help of two smaller groups, ending Musharraf's eight-year military rule. The president sacked 60 judges in November before the Supreme Court was about to rule on Musharraf's re-election for a second term. 

The PPP-led government is constrained by the highest inflation in 25 years and economic growth that is slowing to 6 percent of gross domestic product this fiscal year ending June 30, from 7 percent last year. Almost half the population of Pakistan, the world's seventh-most-populous nation, faces difficulty gaining access to affordable food because of the soaring cost of cereals, according to the United Nations World Food Programme. 

Security Risks 

Political and security risks are an additional constraint on Pakistan's rating as the split in the coalition government ``foreshadows a period of political stability,'' S&P said. 

Pakistani militants accused the U.S. of carrying out a missile attack yesterday that killed as many as 20 people in the country's tribal region bordering Afghanistan, GEO television reported. Pakistan, which is fighting Taliban and al-Qaeda supporters in its tribal regions, has supported the U.S.-led campaign against terrorism since 2001. 

S&P also lowered the South Asian country's local currency rating to BB- from B. 

``The decision is a little late since the rupee has already been through a decline and everyone has priced it in,'' said Nasim Beg, chief executive of Arif Habib Investments Ltd. in Karachi, who manages 24 billion rupees ($350 million) in stocks and bonds. ``There will be no major impact at this stage.'' 

Pakistan's rupee, which has declined 13 percent this year, fell to 69.70 on May 9, the lowest level since at least 1998. The currency has weakened as the current account deficit widened to $9.86 billion in the nine months ended March 31 from $6.17 billion a year earlier. 

Bloomberg.com: Asia


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## Neo

*Pakistan's forex reserves fall to $12.207 bln​*
KARACHI, May 15 - Pakistan's foreign reserves fell by $49 million to $12.207 billion in the week that ended on May 10, the central bank said on Thursday.

Reserves held by the State Bank of Pakistan fell to $9.874 billion from $9.926 billion a week earlier, while those held by commercial banks rose marginally to $2.360 billion from $2.330 billion.

Pakistan's foreign exchange reserves hit an all-time high of $16.486 billion on Oct. 31, 2007, but have fallen since then, partly because of outflows from the stock market after President Pervez Musharraf imposed emergency rule on Nov. 3.

The emergency was lifted on Dec. 15, but foreign investors remained cautious after the assassination of former prime minister Benazir Bhutto on Dec. 27.

The central bank's Governor Shamshad Akhtar last week said foreign inflows of up to $3.5 billion were expected in the short to medium term, mainly in the form of loans from multilateral lenders and friendly governments.

On Thursday, the rupee closed at 68.70/69.25 to the dollar, nearing the record closing low of 69.40/60 struck on May 9.

Pakistan's forex reserves fall to &#36;12.207 bln - Yahoo! Malaysia News


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## ejaz007

*Pakistan, Iran talks on pipeline on May 26*

* ADB, GAIL and IGCL expected to form consortium for project

Staff Report 

ISLAMABAD: Pakistan and Iran are going to hold another round of talks over $7 billion Iran-Pakistan-India (IPI) gas pipeline deal in Tehran on May 26, a senior official in Petroleum Ministry told Daily Times Thursday. 

He said two sides have proposed to hold talks on IPI so that the final arrangements could be made on signing of Gas Sales Purchase Agreement (GSPA). 

However, he added, signing of GSPA on gas pipeline deal could be delayed due to political uncertainty followed by the resignation of Petroleum Minister, Khawaja Asif of Pakistan Muslim League (N). He was of the view that the process of proposed agreement on IPI gas deal could be affected due to absence of the petroleum minister. 

He said the Pakistan and Iran were supposed to sign the GSAP on IPI without making any other round of talks, and during the Iranian President visit to Pakistan on April 28, two sides also agreed to sign deal within 45 days. He said that these talks could be for making arrangements for signing the GSPA on IPI that would be signed by petroleum secretaries, ministers and heads of states of two countries. 

He said that Pakistan and Iran have finalised the GSPA on IPI during the caretaker governments tenure and Economic Coordination Committee (ECC) of the cabinet approved the draft of the GSPA. 

He said that energy requirements in Pakistan are increasing day by day and gas demand in Pakistan is expected to be 26 Million Metric Standard Cubic Meter per day (MMSCMD) in 2011-12 and 77 MMSCMD in 2015. 

He said that the energy supply mix in Pakistan stood at 48.6 percent gas and 30 percent oil in 2006-07. Power sector of Pakistan consumes the largest portion of gas at 35.5 percent. 

Consortium for carrying out the project: Official said that Asian Development Bank (ADB), gas transmission and marketing company in India, GAIL, and Pakistani company Interstate Gas Company Limited (IGCL) could work in a joint venture to materialise the project.

He said that Indian Petroleum Minister, Murli Derua, during his talks on transit fee on IPI had conveyed that Indian company GAIL was interested in this project. 

Official said that ECC has authorised IGCL to sign the agreement with Iran and Pakistani government and is going to convert IGCL into a corporation in this regard. He said that Asian Bank country director has also conveyed Pakistan that it is ready to finance the project.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Remittances rise to $5.31bn in 10 months ​* 
Friday, May 16, 2008

KARACHI: Remittances sent home by overseas Pakistanis continued to show a rising trend as $5,319.08 million were received in the first 10 months (July-April) of fiscal year 2007-08 compared to $4,450.12 million in the same period last year, showing an increase of $868.96 million or 19.53 per cent.

According to the State Bank of Pakistan (SBP), the amount of $5,319.08 million includes $2.20 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

The monthly average of remittances for the period July-April 2007-08 comes to $531.91 million as compared to $445.01 million during the corresponding period of the last fiscal year, registering an increase of 19.53 per cent.

The inflow of remittances in the July-April 2007-08 period from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $1,463.73 million, $1,001.71 million, $907.52 million, $795.18 million, $379.03 million and $147.65 million, respectively as compared to $1,176.12 million, $827.60 million, $673.51 million, $609.88 million, $354.60 million and $123.08 million, respectively in the July-April 2006-07 period.

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the first 10 months of the current fiscal year amounted to $622.06 million as against $683.09 million in the same period last year.

During the last month (April 2008), Pakistani workers remitted an amount of $590.71 million, up $77.36 million or 15.07 per cent when compared to $513.35 million sent home in April 2007.

The inflow of remittances into Pakistan from almost all countries of the world increased last month as compared to April 2007. According to the break-up, remittances from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $151.39 million, $119.76 million, $113.90 million, $90.91 million, $44.18 million and $16.52 million, respectively as compared to the corresponding receipts from the respective countries during April 2007, ie $141.43 million, $94.12 million, $77.53 million, $71.59 million, $35.35 million and $12.70 million.

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during April 2008 amounted to $54 million as compared to $80.29 million during April 2007.

Remittances rise to $5.31bn in 10 months


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## Neo

*British investors ready to multiply investments ​* 
Friday, May 16, 2008

LAHORE: Senior Country Manager South Asia, for UK Trade and Investment, Peter Courtney has said that Britain, being the largest investor in Pakistan, is ready to multiply its investment in Pakistan and is taking all necessary steps in this regard and urged Pakistani businessmen to come forward for joint ventures.

He expressed these views while speaking at the Lahore Chamber of Commerce and Industry (LCCI) on Thursday. 

He said that a number of projects were in the pipeline as the consistent economic policies of the present government had impressed the potential British investors who had shown their desire to shift their operations to Pakistan which is not only a corridor to Central Asian States but also fast getting the status of regional economic leader.

He said that the British government would continue to facilitate Pakistani businessmen for the promotion of trade between the two countries.

Speaking on the occasion, the LCCI President Mohammad Ali Mian said energy deficient Pakistan has a huge potential for British investors. He said during the last five years, the business environment in Pakistan has improved considerably. Its economy has been growing at the rate of 6 per cent on average over the last three years. Hence, the investment cycle is gaining momentum.

He said doing business in Pakistan is comparatively easy to other South Asian nations. It ranks at number two in the South Asian nations after Maldives, in terms of doing business. 

He said the potential sectors of interest for the British investors could be infrastructure projects such as hydro-electric power generations, fruits, vegetables, livestock, dairy development, fisheries, horticulture, storage facilities for agricultural products textiles, garments, leather & leather products, chemicals, electrical and electronic appliances, oil and gas, IT, ports & ports handling etc. 

We are particularly keen on British investment that could provide transfer of technology to Pakistan, he informed.

Pakistans major exports to UK include textile yarn & fabrics, articles of apparel & cloth, sports goods, cane molasses, rice, footwear, etc.

British investors ready to multiply investments


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## Neo

*IT sector receiving highest FDI: minister ​* 
Friday, May 16, 2008

KARACHI: Sindh Minister of Information Technology Muhammad Raza Haroon has said that the IT industry is the most lucrative and secure sector of the economy, witnessing US$8 billion in investments over a period of four years.

He further said that there are imports worth $147 million into the IT sector every year, marking it amongst the industries that receive the highest foreign direct investments (FDI), following which there are plans to construct a media city in the country.

The IT minister and Chairman of Pakistan Telecommunication Authority (PTA), Shahzada Alam Malik inaugurated Connect Pakistan 2008, the third international information technology exhibition being held at the Karachi Expo Centre from May 15 to 18.

Haroon cited an example of China Mobiles investment in the form of Zong cellular service providers, which is the largest investment to date in the IT sector. Haroon explained that to be a developed country, it is essential to progress in the IT sector.

He further informed that there are about 15 projects at various stages of planning in the IT sector. These include on going discussions with City Nazim Mustafa Kamal for a vision to construct town-wise call centers, which would specialise in providing information to each of the 18 towns of Karachi.

He articulated that the government is trying to create a friendly environment to avail the investment opportunities from all over the world, adding that they are also working on various projects to promote IT awareness throughout Pakistan. He stated that his vision was to have at least one IT educated person per home across the country. For this reason, he was hoping to establish a university that would specialise in the various fields of information technology.

Raza admitted to Pakistans IT sector being far behind than most countries and blamed the poor education system for it. This Urdu/English medium system has not only created a disparity in our society, but has also led to a greater part of the population being prevented from becoming well versed in the IT sector, he commented.

PTA chairman, Malik said that last year, investments worth $2 billion were made and there are six more foreign mobile service provider companies, which have applied for licenses and are waiting for approval. 

Alam also appreciated the technology display showcased at the exhibition, stating that the said exhibition will provide an opportunity to interact, connect, and to leverage each others capacity.

CIO Leadership Conference: Along with the exhibition of Connect 2008, The CIO Leadership Conference was also held at a local hotel on Thursday. The topic of the conference was Trends and Developments in the use of Communications and Information Technology.

Addressing the conference, the chief guest, PTA chairman, Shahzada Alam Malik highlighted that the year 2004 is marked as an important year for Pakistan since the privatisation of the government institutions began, which opened the way for future development.

He informed that at present, over 90 per cent people have access to the mobile phones, and over 2 million connections are sold every month. 

He added that in the future, PTA is planning to announce mobile banking, which will enable users to transfer funds through their cellular phones.

He further stated that on PTAs instructions, mobile operators are now providing Mobile Number Portability (MNP) facility to its users, which is going to create healthy service competition amongst them.

IT sector receiving highest FDI: minister


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## Neo

*Incentives for agriculture, industry, exports sought ​* 
Friday, May 16, 2008

KARACHI: The Overseas Investors Chamber of Commerce and Industry (OICCI) has said that the upcoming budget should focus on agriculture, manufacturing and export sectors, which must be given the right incentives to grow.

In its budget proposals OICCI said tax base must be broadened so that there is a significant increase in the tax to GDP ratio and the emphasis should be on controlling imports and increasing exports.

OICCI highlighted that corporate taxes are very high in Pakistan as compared to other developing and developed markets in the region. Corporate Tax is charged at a rate of 35 per cent in Pakistan as compared to 28 per cent in Malaysia, 29.7 per cent in Korea, 30 per cent in Indonesia, 33 per cent in China and 33.6 per cent in India. The Chamber has recommended that that the corporate tax rate should be capped at 30 per cent for all companies. 

The manufacturing sector in Pakistan faces - in addition to conventional taxation - taxes on account of Workers Profit Participation Fund (WPFF) and Workers Welfare Fund (WWF). 

The OICCI proposed elimination of WPFF in its entirety as the intent of levying taxes on these two accounts discourages existing manufacturing concerns from expanding their businesses and also discourages foreign investors from setting up manufacturing operations. 

Similarly, it has been proposed that companies should be provided an option of Presumptive Tax Regime (PTR) or NTR for their manufacturing/import/contract execution business.

OICCI has proposed the withdrawal of withholding tax on stock exchange transactions, as it will eliminate the chances of misuse by various individuals and financers. 

Likewise, it is recommended that marginal tax relief should be introduced by the government against preset criteria for the salaried class in order to avoid extra burden of tax due to nominal increase in remuneration. 

The OICCI has also proposed that the third schedule of the Sales Tax Act should be deleted, as it obliges companies to suffer the sales tax on sales price, which does not pertain to the company, thereby eroding the true concept of sales tax law.

Incentives for agriculture, industry, exports sought


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## Neo

*140 milk cooling plants to be installed in Punjab ​* 
Friday, May 16, 2008

LAHORE: Livestock Dairy Development Board (LDDB) will install 140 milk cooling plants across Punjab in order to increase the shelf life of milk and to ensure the supply of pure milk to the consumers.

Under this project, the LDDB has installed 34 milk cooling plants in the different areas of Punjab including Kasur, Nowshera Virkan and Mandi Bahauddin. The number of plants operating in each area are; 14 in Kasur, 12 in Nowshera Virkan and 8 in Mandi Bahauddin.

According to a statement issued here on Thursday, Deputy Project Director of the LDDB milk cooling plants, Dr Naveed Niazi, stated that the board had spent over Rs20 million on this project and the plants were provided to the small farmers free of cost.

Dr Niazi said that in the province, 51 milk producer groups had been formed which were using these plants. 

Every group consists of 10 to 12 small farmers he said, adding that these framers brought there produce at a selected place where the plants were installed.

He said that one local person has hired to operate each plant. The board provided them with proper training to handle the plants and to vaccinate animals. The plant operator not only operates the milk cooling plant but also helps educate the farmers so they can increase the milk production by using better feed and medicines.

Dr Niazi said after the installation of the milk cooling plants, farmers were receiving an average of Rs4 to Rs5 per litre for the milk.

140 milk cooling plants to be installed in Punjab


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## Neo

*Govt to increase budget allocation for mega dams in PSDP​*
ISLAMABAD: Government has decided to enhance budget allocation for five mega dams including Basha, Kalabagh and Akori in the next Public Sector Development Programme (PSDP) 2008-09, a senior official in Planning Commission told Daily Times Thursday. 

He said allocation amount of Rs 2.6 billion in the current year PSDP 2007-08 has been lapsed. However, he said if the North West Frontier Province (NWFP) government demanded money, federal government would arrange from commercial banks for land acquisition of Basha dam.

He said allocation of Rs 2.6 billion was made for the initial work on all dams including Kalabagh, Akori, however, now it would be converted to invest on Basha dam construction. German Company, Lehmar will issue the final detailed engineering design soon. 

For Kalabagh dam project, he said allocation would not be made for specific dam. The allocation would be for all five big dams announced by President, Pervez Musharraf, he said.

He said Water and Power Development Authority (WAPDA) would also generate Rs 35 billion from different sources. He said government would focus on the construction of Basha dam. 

Official said work on Karakuram Highway to link Bhasha dam was underway and federal government has released Rs 2 billion for Karakuram Highway during current year. Karakuram Highway to link Bhasha dam link would be upgraded at a cost of Rs 11.578 billion. 

Official said the funds would be generated from international donors. Two main donors Asian Development Bank (ADB) and China Development Bank have agreed to provide financing for carrying out 4500 megawatt Diamer Bhasha Dam project. 

China Bank has agreed following the request of Pakistani authorities during President, Pervez Musharraf recent visit to China, another official added.

These two international financers have asked Government of Pakistan to forward the final detailed engineering design of the Bhasha Dam Project so that they could determine the volume of financing required for project. 

He said after the indication from these financers, chairman WAPDA, Shakil Durani has asked Lemhyer to issue final detailed engineering design of Bhasha Diamer Dam Project before the end of next month. Under the initial draft, cost of the project stands at $8.5 billion against projected cost of $6.5 billion in year 2005.

China Development Bank could make a joint venture with ADB to provide financing to Pakistan. The construction of the project is said to commence in the year 2009. Due to delay in the implementation of the project, there is further increase by 10 percent.

Bhasha consultant, Lemhyer in its initial draft of the dam has recommended the government to set up four hydropower stations of 1150 Megawatt under Bhasha Diamer Dam Project for the royalty to North West Frontier Province (NWFP) and Northern Areas. 

The company has also indicated 27,000 families would be affected by the construction of the Bhasha dam. The company has recommended setting up nine model villages near Gilgat to accommodate these affected families.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Mangla Dam raising project: WAPDA directed to arrange Rs 20bn​*
ISLAMABAD: The Water And Power Development Authority (WAPDA) has been directed to arrange Rs 20 billion for Mangla Raising Dam Project for 6 to 7 years instead of 6 to 7 months, officials sources told Daily Times Thursday. 

In a high level meeting WAPDA failed to satisfy the participants over the mode of repayment Rs 20 billion at 10 percent rate of interest for a period of 6 to 7 months. The participants were of the view that it would be difficult for WAPDA to repay the said amount in such a short period. 

After detail discussion during the meeting held a few days ago, the participants directed WAPDA to seek Rs 20 billion loan for a period of at least 6 to 7 years, officials sources added. 

Mangla Dam Project, constructed on river Jhelum in year 1967 as a part of Indus Basin Development Plan, was the first major multipurpose project of Pakistan. The main components of the project include main dam, intake embankment, three auxiliary dams, main spillway, emergency spillway and a powerhouse. The reservoir was first impounded in February 1967 and since then it has undergone more than 30 cycles of operation. The operation of the reservoir is guided by rule curves developed on the basis of historic flows, forecast of inflows, irrigation demand and at times accommodation of additional minor releases for power generation. The original design live storage was 5.88 MAF, which has been reduced to 4.28 MAF due to siltation. In order to increase its capacity up to 7.16 MAF, WAPDA initiated measures to raise the Mangla Dam by 40 ft (from 1234 to 1274 ft). 

On the basis of feasibility study carried out by WAPDA a PC-I was approved by the ECNEC in 2003, at a capital cost of Rs 62.552 billion including foreign exchange component (FEC) of Rs 9.678 billion for six years implementation period. The project however, could not be completed within approved cost and time frame due to contractual problems and price escalation. Accordingly, WAPDA has revised the PC-I at an enhanced cost of Rs 101.384 billion. 

Main objective of the project is to raise Mangla Reservoir by 40 ft so as to regain the lost storage capacity by 2.9 MAF, increase power generation by 772MW and to mitigate flood losses by reducing flood intensity.

Daily Times - Leading News Resource of Pakistan


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## Neo

*EU wants to enhance trade ties with Pakistan​*
ISLAMABAD: European Union (EU) is interested to help and implement cooperation activities between Pakistan and the EU. 

Counsellor head of section-Political Economic and Trade Matters EU, Peter Berz Thursday said the EU delegation was seeking to enhance trade relation with Pakistan. 

During a meeting with SAARC Chamber of Commerce and Industry, he said the delegation could play a central role in promoting the chief policy objective of the EU in Pakistan.

He said EU aim was to strengthening relations between EU and Pakistan through enhanced mutual understanding and in particular by cooperating with Pakistan in its development objectives through development co-operation programme.

He said promoting EU-Pakistan trade and investment through EU trade policy and economic co-operation activities is also on the list. 

He said purpose behind their support for South Asian Free Trade Association (SAFTA) was to strengthen regional trade and to enhance the economic cooperation among the SAARC member countries. 

The delegation showed their keen interest in implementing SAFTA to get maximum worth of primary objectives of its creation.

President SCCI, Tariq Sayeed briefed the delegation about activities of SCCI and said main focused areas involving Regional Economic Cooperation (Custom and Standards Harmonization), SAFTA, trade facilitation, transport and infrastructure development, tourism, women entrepreneurs and SMEs. He said SCCI had keen interest to get benefit of Europe experiences on areas such as Free Trade and Economic Union and SCCI would like to focus on long term business partnership to improve EU-SAARC intra-regional trade and EU investments in South Asia. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Mango exports likely to fall amid crop destruction​*
KARACHI: During the current year, Pakistans mango exports are likely to fall by more than 40 percent compared to previous year, mainly in the wake of devastation of its crop in Sindh and Punjab.

In 2007, export of countrys one of the most demanding fruit of the summer season stood at 1,20,000 tonnes which was far better compared to the year 2006 when it fell sharply to the level of 88,000 tones, spelling financial gloom and despondency for overwhelming number of farmers and growers. 

The expected sharp decline in Mango export would not only deprive the country from earning invaluable foreign exchange but also pose serious hardship for exporters to ensure their presence in the most competitive markets of the globe. 

One of the major reason of devastation of unripe mango crop spread over large areas of both the provinces was unexpected blowing of strong winds in Hala and Matiari and prolonged chilling weather conditions and hailstorm during the months of January and February in Rahim Yar khan and Multan areas which played havoc with on the produce.

Annual yield of mango usually ranges between 2 million to 2.5 million tonnes in the country, out of which 5 to 7 percent are exported. 

The traditional growing areas of Mango include Rahimyar Khan and Multan, famous globally for their chonsa variety while in Sindh Hala, Matiari, Kotri, Tandoallayar and Chanbar areas are renowned worldwide for Sindhri, which is always in high demand in European, Gulf and Far Eastern markets. 

However, the situation has developed into a nightmare for exporters as due to the devastation of mango crops, the expected yield is likely to remain between 7 to 8 lac tones resulting in steep rise in its price.

The country may loose its traditional export markets to India, Australia and other countries that are selling their fruits at comparatively lower rates. 

Abdul Wahid, Chairman All Pakistan Fruit and Vegetable Exporters Association, replying to a question said, this year, overall export costs are also likely to surge sharply in the wake of historical oil prices in the international market. 

All major freight airlines have already announced enhancement of their tariff by 25 to 30 percent to cope with rising petroleum prices. 

In addition, local transportation charges have also gone up by more than 30 percent on the pretext of high oil prices, while labour force involved in fruit packing and lifting have also demanded a rise in wages, citing excuse of rampant inflation in the country.

He feared all these additional expenditures, when added to the export cost of the Mango, would render their prices beyond the range of European and Gulf region importers, resulting in sharp decline in its demand during the current season.

Suggesting measures to control the alarming situation regarding high export prices of Mango, he urged the government to offer 30 percent air and sea freight subsidy to exporters enabling them to stay in the global competition. If this is not done then the country would have to bear irreparable losses in terms of foreign exchange and lost of markets, Wahid warned.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan's foreign exchange reserves fall by $487 million ​*
KARACHI (May 16 2008): The country's liquid foreign exchange reserves have declined by 487 million dollars during the last week. The State Bank of Pakistan statistics show that total liquid forex reserves held by the country stood at 12.2071 billion dollars on May 10, 2008, as compared to 12.2558 billion dollars at the week ended on May 3, 2008.

Major decline was witnessed in the reserves held by the SBP, down by 788 million dollars to 9.8474 billion dollars during the last week as compared to 9.9262 billion dollars a week earlier. While the reserves held by banks increased by 301 million dollars to 2.3597 billion dollars from 2.3296 billion dollars.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Switzerland wants to expand trade relations with Pakistan ​*
KARACHI (May 16 2008): The Consul General (CG) of Switzerland, Martin Bienz has said that Switzerland would like to expand its trade relations with Pakistan and offer facilities to Pakistani businessmen.

Speaking in a meeting of Korangi Association of Trade and Industry (Kati) on Thursday, he said that his country had a strong economy and Pakistan could benefit from its experience.

Bienz said that the Swiss businessmen are exploring possibilities of Business Avenue in Pakistan. At present, he said, the Swiss investors' top the list of investors in Pakistan. 'We have Pak-Swiss friendship and the Swiss business consul forums are functioning for promoting business in Pakistan', he added.

To a question he said that his country was willing to invest heavily in Pakistan in Banking and Finance Sector besides Energy Sector. The total Swiss export for January-December 2007, were 206,008.8 million Swiss Franc arid export to Pakistan was to the tune of 330.04 million Swiss Franc in the same period, he added.

On another query he said his office intended to give full support for visas to businessmen recommended by the Kati. The Swiss Consul General also appreciated the efforts of the Pakistan government for its efforts to curb terrorist activities.

The Chairman, Kati, Shaikh Fazl-e-Jalil said in his welcome speech said that Korangi Industrial Area was one of the largest industrial zones of Pakistan, it was spread over an area of 8,500 acres of land and houses more than 4500 industrial, commercial and service units. As per fair estimates, it contributes around Rs 270-million per day (USD-4.4 million) revenue to the national exchequer.

The majority of industries located in the KIA were export oriented and hence earn a great deal of foreign exchange besides providing jobs to hundreds of thousands workforce in industries like oil refineries, lubricating oil blending plants, tanneries, leather and leather garment factories, textiles, garments, silk and towel factories etc. There are more than 370 textile industries in KIA and its adjacent areas and they contribute seven percent of the total textile exports from Pakistan.

Further, he said that Pakistan had a great potential for investments in energy sector therefore Swiss businessmen should come forward and invest in the sector. The Kati Chairman further said 'Pakistan is an agro-based country and our agro-products like rice, wheat. vegetables, fruits, tobacco and raw cotton would be very attractive for Swiss markets'.

There should be a long lasting trade-tie between both the governments in order to improve the bilateral trade, he suggested. Further, Jalil recommended that bilateral track visas should be given to businessmen on the recommendation of Kati for improved business relations. The Chairman Standing Committee, Kati for Diplomats Affairs, Shaikh Muhammad Yousuf also addressed the occasion.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Interior Sindh to get industrial zones' ​*
KARACHI (May 15 2008): Provincial Minister for Trade and Industry, Rauf Siddiqui has said that in order to attract the foreign investors, the industrial infrastructure and the law and order situation should be improved, says a press release.

Addressing the business and industry trade convention, the minister apprised that two industrial zones would be established in interior Sindh, while Nawabshah and Sukkar would become tax free zones, the release said.

He said that plots in Small Industrial Zones would be provided on half payment aimed at facilitating the small industrialists. In case any industrialist failed to establish industrial unit within two years of allotment, the plot would be taken back from him, he added.

Rauf stressed the need for development of cottage and small industries saying that these industries are directly linked to the development of other industries. The minister further said that to reduce the manufacturing cost of products, electricity generators would be exempted from import duty.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Construction of major dams: government decides to formally launch campaign​*
ISLAMABAD (May 16 2008): The government has decided to formally launch a campaign for constructing major dams as the concerned authorities have agreed to go slow on "controversial" Kalabagh dam, sources told Business Recorder on Thursday.

"The formal launch of the campaign will help the government in procuring foreign and local funding for the dams, whose construction is must to save the country from becoming water-scarce country," the sources said.

The construction of the dams has already been announced by the previous government, but the proposals are in very rough form and the government finds it difficult to attract international donors to provide funding, sources said.

Pakistan wants to build Diamer Basha, Kalabagh, Akhori, Munda and Kurram Tangi dams by 2016. This was a plan that was prepared by the previous government. But very little has been done on implementing these projects and most of the allocation made in the PSDPs in the last two years or so remained unspent.

"The present government, which is facing severe problems in meeting the power demands, will take up all these projects with donors after formal launch, which is likely to be announced sometime this month," the sources said.

The delay on construction of Basha Dam project is escalating the project cost, as federal government has not utilised any money. The government had allocated Rs 2.6 billion for the land acquisition of Basha dam under current financial year's Public Sector Development Programme (PSDP).

Official said that Diamer Bhasha consultants have estimated tentative project cost of $8.505 billion at present against the earlier projected cost of $6.5 billion in 2005. This cost may further escalate due to delay in land acquisition of dam.

Government also allocated as many as Rs 10 billion in PSDP 2007-08 for the land acquisition of five big dams including Kalabagh, Munda, Krum Tungi dams. But the spending remained negligible, the sources said.

The government, according to the sources, would form dam companies for each project to generate funds for their construction, sources said. The donors are not coming forward to fund these projects for there are still issues of concerns, which need to be removed before seeking of funds. According to the sources, the differences of the provinces on Kalabagh dam are known to all.

There are some reservations of the NWFP on Akhori dam. But, these reservations can easily be removed if the government showed commitment, the sources said. There is almost a complete consensus on construction of Basha dam and the government has already asked the donors to support the government in constructing the project.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*The soaring trade deficit ​*
EDITORIAL (May 16 2008): The situation in the external sector of the national economy is certainly getting from bad to worse with the passage of every month. Latest official figures released by the Federal Bureau of Statistics (FBS) reveal that Pakistan's trade deficit has risen to an all time high of dollar 16.08 billion in the first ten months (July - April) of FY08, indicating a huge increase of 50.78 percent over the deficit of dollar 11.17 billion recorded in the corresponding period of last year.

The import bill increased by 28.28 percent to dollar 32.06 billion in July-April, 2007-08 as against dollar 24.99 billion last year, while exports grew by only 10.17 percent to dollar 15.26 billion from dollar 13.85 billion during the first ten months of 2006-07. The relevant data indicate that increasing crude oil prices as well as higher imports of luxury items like mobile phones and cars and sluggish growth in exports have combined to push up the trade deficit to a record level.

The import of wheat, edible oils and fertilisers, has also witnessed the highest-ever increase. The purchase of a jet for PIA last month also put an unusual burden on the import bill. On the export side, rising oil and energy costs together with other inefficiencies are believed to have rendered Pakistani exportable goods less competitive in the world markets.

The more worrying aspect is that authorities of the country seem to be largely indifferent to the evolving situation in the external sector which continues to be highly discouraging. With imports showing an alarming increase of 59.32 percent, the trade gap reached as high as dollar 2.29 billion in April, 2008.

It is not difficult to visualise the impact of such a deteriorating situation in the external sector. If the present trend continues, and there is no obvious reason to assume otherwise, the trade deficit during 2007-08 could reach the highest-ever level of nearly dollar 21 billion in the country's history as compared with the deficit of dollar 13 billion last year.

Such an outcome would be much worse than the expectations of a dollar 10 billion-11 billion deficit, in the beginning of the year which would have been manageable only if other items in the current account of the balance of payments would have recorded surpluses to an extent so as to neutralise the impact of growing trade deficit.

Since this has not happened as indicated by the equally worsening trend in the current account, the government is going to face an uphill task to overcome the challenge of bringing back the country to a sustainable position in the external sector.

Obviously, exports have to be increased rapidly by overcoming various constraints like energy shortages and imports must be curtailed to ensure that the trade gap remains within reasonable limits and may be easily financed through normal inflows under other heads like home remittances and foreign investment.

Ishaq Dar has talked about foreign inflows to the tune of dollar 3-3.5 billion to bridge the gap in the external sector this year but such sources of funding are either debt creating or temporary in nature and cannot be relied upon as a reliable/permanent source of funding for the country. The need of the hour is to strive hard and make concerted efforts to arrest the worsening trend in the trade deficit by putting in place a policy framework, binding the country to live within its own means which would necessitate a balance between foreign exchange receipts and payments of the country.

The basic thrust of the new strategy should be to contain domestic demand by implementing appropriate fiscal and monetary policies. There is no doubt that lax fiscal policy in the recent past has not only spurred price pressures in the economy but has also increased import demand in the country to a great extent.

An effective policy shift must be complemented by reducing the level of less essential imports drastically through administrative measures like outright ban or imposition of high regulatory duty. The country is obliged to import necessities like basic foodstuffs but can live without the import of mobile phones and cars for some time.

At the same time, the powers that be must involve themselves more in highly burning issues like the one we are talking about now and concentrate less on non-economic matters for the larger interest of the country. The State Bank and other relevant authorities would find it much more difficult to narrow the gap in the external sector, stop the flight of capital, counter the onslaught on the rupee in the foreign exchange market and maintain the existing level of reserves etc if political uncertainty in the country is allowed to persist.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Stocks plunge by 247 points at weekend​*
Karachi: Bears grew further strong on Friday, taking away 247 points from the benchmark KSE-100 Index which finished the day at 14,232.

The downgrading of Pakistan&#8217;s foreign currency&#8217;s rating by Standard & Poors shook confidence of the investors who opted for off loading their holdings.

The trade volume was registered at 160 million shares &#8211; down by 10 million compared to yesterday&#8217;s trading.

Pak Premier Fund emerged top volume leader which shed 10 paisas to close at Rs13.10. 

KSE-30 Index declined by 373 points to 16,882.

Market analysts forecast short recovery in the coming week.

Stocks plunge by 247 points at weekend - GEO.tv


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## sohailbutt

*Dubai Ports World building Rs 10 billion container terminal at PQ *​
KARACHI (May 17 2008): The Dubai Ports (DP) World is constructing a new container terminal with a draft capacity to accommodate mother ships at Port Qasim at an estimated cost of 10 billion rupees. A portion of the terminal would be financed by a banking syndicate under the Islamic finance facility.

According to sources, the international port developer was building the "QICT-II" next to Qasim International Container Terminal (QICT) under an agreement it had signed with the Port Qasim Authority in 2006.

On May 15, a tripartite banking syndicate comprising National Bank of Pakistan, Dubai Islamic Bank Pakistan Limited and Standard Chartered Bank Pakistan Limited inked a deal with the QICT, a company of DP World, for Rs 5 billion Musharika finance facility to expand its infrastructure.

DP World has started work on the project, which would be completed in three phases with the first phase to be completed by 2010, a QICT official told Business Recorder on Friday. He said the new terminal, which would be made operational by the end of the first phase in 2010, would have a capacity to handle around 0.3 million TEUs.

Currently, the cargo handling capacity of the QICT stands at 0.8 million TEUs, while total number of containers handled in the country stands at 1.8 million TEUs.

The official said the terminal would be developed on built-operate-and-transfer (BOT) basis with a 21-year transfer period adding that the second phase of construction would be completed by 2013.

The QICT official said the terminal would have a 13.5-meters draft and would have the capability to accommodate the mother vessels. However, a PQA official confirming visit of mother vessels to the new terminal, said the draft issue would be decided by the authority after undertaking capital dredging.

He recalled that a five-member delegation had visited Dubai sometimes in the second quarter of 2006 to negotiate the Rs 10 billion project with DP World. The two sides after discussing all modalities had singed an agreement in August 2006 in Islamabad.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Non-availability of kerosene oil: over 150 paint units close down​*
KARACHI (May 17 2008): Over 150 paint factories have closed down their operation due to non-availability of kerosene oil for the last 16 days. The supply of kerosene oil has been stopped by the oil marketing companies 9MCs) due to the non-payment of billions of rupees subsidy by the government and not increasing the price of this commodity.

"Kerosene oil is the basic raw material of paint industry. Therefore, paint industry is the major sufferer on account of non-supply of the commodity, and the paint companies are compelled to shut down their operation due to unavailability of kerosene oil," said Farhan-ud-Din, owner of 'Next Paints'. He said that kerosene dealers in the last week of April had reduced the supply, and later, from May 1, 2008 they have completely stopped it.

"Some 150 paint companies were operational in Karachi and were supplying their products across the country. However, due to unavailability of kerosene oil they have completely shut down their operation," he said. These factories located in North Karachi, Korangi, Nazimabad, and Orangi Town, were working as cottage industries, each having 10-25 employees.

"Our requirement is over 0.2 million tons and we have only 2 to 3 days' stock, which already has finished before one week and presently we are completely dry", he said. Some 5,000 workers of paint industry also have been directly hit by this shutdown and it is expected that they would not get their salaries of this month, he added.

"We are also facing millions of rupee losses on account of operational losses and cancellation of orders, while sale of paint products has also declined due to unavailability of kerosene", he said.

About the branded paints he said that leading paint factories have got stocks of over one month. However, some of them also have started using alternative raw material of MPT--a by-product of kerosene. However, he said, MPT is more expensive than kerosene as it is priced at Rs 75 per litre against Rs 41.22 of kerosene. "Therefore, it is not feasible for us to use it."

"Besides paint industry, some other industries, including varnish, resin, and insecticides also have been hurt with this action of oil marketing companies," said a kerosene dealer. Despite the no change in the petroleum product prices the oil marketing companies had not restored the supply of kerosene oil, he said. Therefore, dealers have decided to contact federal government including Prime Minister, President, Petroleum Minister and other officials for the restoration of supply, he added.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Action against rupee deflation manipulators underway​*
KARACHI: Federal finance ministry in collaboration with the State Bank of Pakistan (SBP) was planning measures against those elements maneuvering rupee devaluation, which would end them losers. 

Finance ministry sources told Geo News that the ministry and the SBP was planning measures for stabilizing the value of rupee and bringing the dollar exchange rate back to Rs65. National Bank of Pakistan has been especially advised for buying Euro and Pound in this regard besides the finance ministry, if required, would take actions against those elements engaged in manipulating the rupee value down. 

Action against rupee deflation manipulators underway - GEO.tv


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## sohailbutt

*Malaysia to open trade office in Karachi ​*
KARACHI (May 17 2008): Malaysia has decided to open its trade office in Karachi, Consul General of Malaysia, Mohammed Khalid Abdul Razaq informed business community on Friday. Speaking at a meeting of Karachi Chamber of Commerce and Industry (KCCI), he said that the initial arraignments had been made to open trade office and hoped it would start functioning by the end of next month.

He said trade office would facilitate business community in getting necessary trade information and doing trade with Malaysian counterparts. He informed that Malaysia was hosting a trade conference, which was going to be held in November and invited Pakistan to participate in this conference. He emphasised the need of frequent exchange of trade delegations to boost two-way trade.

The delegation must explore markets and assess requirements so that trade can be increased. Welcoming the guests, Senior Vice President of KCCI, Iftikhar Ahmed Shaikh said that the chamber was planning to send a trade delegation to Malaysia in near future.

He noted that balance of trade was in favour of Malaysia. Business communities of both countries should make efforts to boost two-way trade and bridge the trade gap. He said that Pakistan offered best investment opportunities in the region and advised Malaysian investors to assess Pakistan investment climate for establishing units in joint venture. Trade Commissioner of Malaysian for Asia posted in India, Zan-ul-Abdeen Abdul Jalil was also present in the meeting.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*FDI in telecom sector drops to $156.6 million in third quarter*​
ISLAMABAD (May 17 2008): The foreign direct investment (FDI) in telecom sector has declined during the first nine months of the current fiscal with dismal investment figures, suggesting it may hardly go beyond half of the total investment made during last year, sources told Business Recorder on Friday.

Pakistan telecom sector had received 1.824 billion dollars FDI during 2006-07. But this year, the FDI is very low mainly because it declined sharply during the third quarter of current fiscal from 290.4 million dollars in the second quarter to 156.6 million dollars in the third quarter and stood at 810 million dollars for the nine month of current fiscal.

The latest FDI figures, released by the Pakistan Telecommunication Authority (PTA), show a declining trend during the current fiscal year going down from 363.9 million dollars in the first quarter of July-September to 290.4 million dollars in the second quarter of October-December and to 156.6 million dollars during the third quarter of January-March, 2008.

The telecom sector was contributing a major chunk to the total FDI being pumped into the Pakistan economy. It contributed 37.71 per cent to the total FDI in the first quarter, 27.6 per cent in the second and 15.9 per cent in the third quarter, showing a declining trend.

However, the decline in FDI is surprising as a foreign cellular company, according to the PTA, had pumped 700 million dollars in Pakistan telecom sector for its network expansion in rural areas since taking over of Paktel. The PTA claimed that telecom sector had been contributing a major chunk to the total FDI, which they said contributed 37.71 per cent during the first quarter's 962.5 million dollars.

During the second quarter, the contribution by the telecom sector was 27.6 per cent, which is 10.65 per cent less as compared to previous quarter, to the total FDI of 1,052.1 million dollars. The contribution by the telecom sector further declined in the third quarter and was hardly 15.6 per cent in the total FDI of 982.5 million dollars for the period.

It said that during 2005-06, the telecom sector received over 1.824 billion-dollar FDI and emerged as the main sector of the economy with 35.60 percent share in the total FDI.

Telecom sector was the largest FDI recipient in Pakistan during the last few years following the liberalisation of the sector, which made it attractive for many global telecom giants to invest in Pakistan. The more investment, analysts said, was expected rather than the decline as operators had to rollout to the rural areas where a large market was yet to be exploited.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Ufone signs pact with Teradata ​*
KARACHI (May 17 2008): Pakistan's leading GSM service provider, Ufone, has signed an agreement with Teradata to expand its current Data Warehouse with state-of-the-art 5550H nodes from Teradata. Ufone is the one of the leading telecommunications service provider in Pakistan with the most sophisticated data solutions on offer with the widest coverage area.

The expansion of the data warehouse system will enable Ufone to have even more comprehensive set of analytic, which will go a long way in their quest to provide high quality services and offer additional value added services and packages catering to the needs of it customers.

Speaking on the occasion, Abdul Aziz, President & CEO Ufone said, "This agreement is yet another attestation of our commitment to provide state of the art solutions. We continue upgrading our systems in order to keep up with our promise of giving the best possible service to our valued customers." Aziz also added that being the leading telecom player, Ufone will keep investing more and more to bring to this market innovative blends of technology that support our vision of focusing on an efficient and more effective infrastructure of tomorrow.-PR

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Trafco Tracking, IBM sign accord​*
LAHORE (May 17 2008): The Trafco Tracking and IBM Pakistan on Friday inked an accord to ensure quality service, enabling the Trafco Tracking to adopt a software called Smart Blade Centre Solution. Country Sales Head of IBM Shoaib Khan and Chief Executive Officer Trafco Tracking Tahir Malik signed the accord on behalf of their respective organisations.

Acting Principal Officer of the US Consulate, Antone Gruebal, and FPCCI Vice President Azhar Saeed Butt were also present on the occasion. Gruebal said Pakistan's economy was well on the way because of business-friendly policies of the government but now the increasing oil prices are affecting it.

He said the agreement proved that Pakistani businesses were going hi-fi and fast introducing new and modern technologies. Malik said Pakistan was an investment friendly destination and have vast potential due to which foreign investors are now coming to Pakistan to cash in on. He also said the agreement would revolutionise the whole trekking industry.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*External liabilities swell to $45.82bn ​* 
Saturday, May 17, 2008

KARACHI: Total external liabilities of the country surged to $45.822 billion by the end of March 2008, compared to $42.882 billion on December 31, 2007.

Although former prime minister Shaukat Aziz and his team of ministers claimed that their government had broken the begging bowl, figures of the State Bank of Pakistan (SBP) showed a different picture. Five years ago on June 30, 2003, total external liabilities of the country stood at $35.439 billion.

The break-up of figures shows that public and publicly-guaranteed debt increased to $40.479 billion by March 31, 2008, which was $37.836 billion on December 31, 2007.

The burden of public debt, including medium and long-term loans for a period of more than one year, came to $39.865 billion, of which the debt of Paris Club was $14.527 billion, multilateral agencies $2.378 billion, other bilateral debts $1.113 billion, military debt $48 million, commercial loans/credits $120 million, debt received through Euro/Sukuk and global bonds $2.650 billion and local currency bonds (T-bills & Pakistan Investment Bonds) $29 million. Moreover, total short-term public debt, which is of less than one year, stood at $614 million.

However, the volume of publicly-guaranteed debt slightly fell to $213 million, which was recorded at $215 million on December 31, 2007. Out of publicly-guaranteed debt, multilateral debt was $142 million, loans obtained through other bilateral sources $64 million, commercial loans $4 million and Sandak Metal Bonds $3 million.

In addition, the total private non-guaranteed debt for a period of more than one year swelled to $2.215 billion from $2.122 billion, whereas the amount obtained through private non-guaranteed bonds increased to $275 million from $250 million. In this category and the amount payable to IMF witnessed a reduction to $1.310 million from $1.332 million.

Foreign exchange liabilities, including special US dollar bonds, foreign currency bond (NHA/NC), National Debt Retirement Programme, central bank deposits, other liabilities (swap) excluding FEBCs/FCBCs & DBCs from 30/06/99, were $1.330bn, which was earlier recorded at $1.332bn.

External liabilities swell to $45.82bn


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## Neo

*Cement exports may rise as shortage persists in region ​* 
Saturday, May 17, 2008

KARACHI: Cement exports from the country are still lucrative due to the commoditys high demand and shortage in the region, especially in India and the UAE, placing Pakistan in a favourable position to further increase its exports, a report says.

According to latest data, cement sales increased by 24 per cent in 10 months (July-April) of fiscal year 2008. This growth has been primarily due to a 142 per cent jump in exports during the period.

At present, neighboring India and the United Arab Emirates are the key export markets for Pakistani cement because of an unprecedented increase in their construction activities, brokerage house JS Research reported on Friday.

Indian authorities have been desperately trying to reduce local cement prices to ease rising inflation. For this purpose, they have in the past six months imported around 300,000 tons of cement from Pakistan and are planning to double it to 600,000 tons by June. Currently, India is facing a shortage of around 5 to 6 million tons per annum.

In an effort to increase cement imports, the Indian government is working to remove infrastructural and procedural constraints. It is trying to increase railway rakes from Pakistan to four from the current one, which will help boost cement supply through railway by three fold. Moreover, officials are discussing to allow cement trucks to travel to Amritsar instead of unloading at the border to smoothen supplies.

Furthermore, talks are also going on to install a conveyor belt at the border on which cement can be loaded from Pakistans side and reach India. These measures will bode well for Pakistans cement companies as freight charges through sea have jumped up from $3 per tonne to $9 per tonne.

Cement demand in the UAE is likely to stay higher with an expected 23.5 per cent growth in construction activities this year. Moreover, with cement shortage of around 2.5 to 3.5 million tons in the UAE and export ban in major exporting countries like Egypt and India, Pakistan is poised to reap the benefits of regional shortages. Besides, the shortage of limestone in the Middle East is expected to keep cement production under pressure in the region.

Along with cement, clinker demand is rising in the UAE. As clinker price free on board (fob) from Pakistan is low at $64 to $66 per ton, it is quite cheap for the UAE importers.

Cement prices in India have slightly come down after the government imposed a ban on exports. Prices, which averaged 243 to 247 Indian rupees per bag (Pak Rs374-380 per bag), have now eased by 3 to 7 Indian rupees (Pak Rs5-10) to Rs238 per bag (Pak Rs367 per bag).

Similarly, in order to cut down construction costs, cement producers in the UAE have agreed to reduce the price cap from 17 UAE dirham per bag (Pak Rs302 per bag) to 16 dirham per bag (Pak Rs284). However, the export of cement from Pakistan is still attractive at fob price of $70 per tonne (UAE dirham 12.4 per bag, Rs242 per bag). Adding average freight cost of $5-10 per ton it will take landed price of Pakistani cement to around $75-77 per ton (UAE dirham 14 per bag, Pak Rs260 per bag). So, Pakistans cement is still competitive for exports to India and the UAE.

Cement exports may rise as shortage persists in region


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## Neo

*Pakistan informs investors about inflation ​* 
Saturday, May 17, 2008

ISLAMABAD: Pakistan has informed international investors that the global food and fuel prices have impacted the country heavily, resulting in a massive surge in inflation in general, and food inflation in particular.

The overall CPI-based inflation registered a sharp rise in April to 17.2 per cent year-on-year basis, making it the highest increase in the last several decades.

Rising food prices continue to be the largest contributor to headline inflation, with year-on-year price increases in this sector hitting 25.4 per cent in April, compared with 20.6 per cent in March and 9.4 per cent in April 2007, stated the finance ministry in its communication to investors around the globe. 

The investors took keen interest in Pakistans economy because of their investments in bonds launched by Islamabad in the last few years.

The headline inflation was 17.2 per cent in April 2008, as against 14.1 per cent in March 2008 and 6.9 per cent in the corresponding month of last year (April 2007). Inflation for the current fiscal year was targeted at 6.5 per cent. Higher food prices, expansionary fiscal policies, extra ordinary increase in government borrowing from the central bank, upward revision in local energy and wheat prices and an unanticipated increase in international commodity prices, are all responsible for the sharp surge in prices in Pakistan.

Food inflation in Pakistan has been fuelled by a combination of domestic demand driven factors (rising per capita income), local supply shortages and global trends in prices of essential commodities. Higher prices in edible oil (palm oil and soya bean) and dependency on their imports transmitted higher international prices to domestic prices. Similarly, the domestic prices of wheat and rice also followed the global trend and witnessed sharp increases. There are only seven essential food items such as wheat, flour, rice, pulses, meat, milk, ghee/cooking oil and vegetable and fruits, contributing significantly to the sharp pick up in food inflation in the country.

Pakistan informs investors about inflation


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## Neo

*PCICL invests Rs12bn ​* 
Saturday, May 17, 2008

KARACHI: Vice Chairman and Managing Director of Pak China Investment Company Limited (PCICL), Chen Jainbo informed that PCICL has invested Rs12.14 billion as its initial authorised capital, making it the largest joint venture investment company in Pakistan.

Speaking to the President of SAARC Chamber of Commerce and Industry, Tariq Sayeed and other dignitaries, Jainbo further informed that PCICL is being jointly sponsored by the government of Pakistan through Ministry of Finance, and the government of China through China Development Bank (CDB) and is the first joint venture of its type by CDB outside China.

He shared that the primary objective of the five year development programme is to steer and promote rapid, stable and orderly development of bilateral trade and economic cooperation, to broaden the scope to achieve mutually beneficial results and for comprehensive socio economic development in both countries. Jainbo added that the bilateral trade is targeted to reach $15 billion by 2012.

PCICL invests Rs12bn


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## Neo

*PTA chairman stresses ICT development ​* 
Saturday, May 17, 2008

KARACHI: In connection with World Telecom Day, Chairman Pakistan Telecommunication Authority, Major General (R) Shahzada Alam Malik in a press release stated that in an emerging era of Convergence and Information, Communication Technologies are becoming a critical foundation of virtually every aspect of our lives. It is likely that many aspects of Commerce, Education, Government, Entertainment, or any other factor of our daily life will be affected by this exceedingly rapid change. Therefore, it has become exceedingly important for any country to disseminate information and provide access to its public for the latest ICT technologies, so that it may progress in line with the global trends.

The theme for this Years World Telecom & Information Society Day is Connecting Persons with Disabilities: ICT Opportunities for All. Realising the importance of ICT in overall Human Resource Development and economic progress of Pakistan, PTAs dedicated ICT Cell is overseeing and analysing comprehensive studies on the ICT sector of the country, with an aim to join hands with the Ministry of IT & Telecom to device an effective mechanism for implementation of emerging Information & Communication technologies. This would be done in order to promote the ICT industry in Pakistan.

Decreasing the cost of Internet access for businesses, educational institutions and households, ensuring the availability of ICT infrastructure to remote and rural areas of Pakistan, Capacity building of ICT and providing training at the workplaces, accelerating e-Government Project, implementation of national e-strategies, providing online services to public, as well as facilitating outsourcing and exports of IT and software services in the country, are some of the priority areas of action in this regard.

With an estimated one million people of our population having some kind of mental or physical disability, the importance of access to ICT facilities in a universal and equitable manner becomes even more. Such, that vulnerable and marginalised groups of our society may not lag behind, and get equal opportunities to play their due role towards national development.

In this regard, the Authoritys role has also been instrumental in ensuring a number of incentives to the telecom players, attracting operators to unfold future investment plans, particularly in previously unserved areas of the country, while bringing down the tariff rates. We also believe that a lot of potential exists in terms of establishing the much needed upgraded telecom infrastructure in the country, He added.

PTA chairman stresses ICT development


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* IMF mission briefed on economic situation ​* 
Saturday, May 17, 2008

ISLAMABAD: A visiting International Monetary Fund mission held talks with the economic team of the government here on Friday in order to get first-hand knowledge about the existing situation of the countrys economy.

It was just a routine meeting with the IMF high-ups as Pakistan is not under the Funds programme, Finance Minister Naveed Qamar told The News.

However, sources said the governments economic team, headed by the finance minister, apprised the IMF delegation about the existing situation of the economy and future plan of the incumbent regime to put things on the right track by prioritising its policies in the next budget for 2008-09.

The IMF, the sources said, asked the authorities to take all corrective measures, ensuring macroeconomic stability and controlling twin deficits in the fiscal and external accounts in order to achieve the desired results.

They also asked Islamabad to take concrete measures for mobilising revenue generation by expanding the tax net on agriculture and services because the narrow tax base could not resolve problems being faced by the economy.

There is also a need to increase investment and savings in order to improve the fiscal side, a source quoted the IMF delegation as saying. MH

IMF mission briefed on economic situation


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*Environment friendly cars: Auto industry demands duty free import ​*
ISLAMABAD: The auto industry will submit proposals to the Federal Board of Revenue (FBR) for allowing duty free import of Euro-II compliant parts of the cars in the budget 2008-09, an official informed Daily Times Friday.

The local car manufacturers are aiming at introducing environment friendly Euro emission standards compliant cars in the country and the local tractor manufacturing industry also plans to introduce Euro-II compliant engines in their tractors. 

Both the manufacturers have demanded the government to allow zero rated duty import on imported parts in the budget 2008-09, in order to encourage the manufacturers to voluntarily move towards the adoption of the emission standards, and help auto manufacturers not the increase the prices of cars while graduating to Euro compliant models. 

&#8220;Government of Pakistan, being signatory of many international conventions and agreements for protecting environment and improving environmental conditions, is expected to give weight and would consider these demands on priority,&#8221; said an official. 

Pakistan faces increased traffic congestion, and heavy smoke emitting vehicles are adding to our environmental pollution. There is already no duty on CNG kits for cars. Duty on CNG dispensers has also been reduced to 10 percent. 

Pak Suzuki, Honda, Dewan Motors have forwarded a list of parts to be allowed for import on zero rate of duty. According to the cars manufacturers this list of parts is critical for improving emission from engines to be compliant to the proposed standards. Car manufacturers are of the view that allowing zero-rated import of these parts would encourage the manufacturers to voluntarily move to adoption of the emission standards. 

Upon the receipt of the list of the parts to be allowed on zero rate of duty, a committee was constituted to examine the issue of import of EURO-II compliant parts. The committee, headed by former senior custom official, has been asked to examine the possibility of import of such parts from India also and rationalisation of duties on sub-assemblies under SRO 655 (i) 2005. 

Tractor manufacturers have submitted to the sectoral committee of the Engineering Development Board (EDB) to allow import of EURO-II compliant engine components falling in the localised list, which is the part of SRO 693 (i) 2006 at exempted rate of duty for local development. Tractor industry wants government to modify the list of engines components so that new components are included in new list. 

According to the consensus reached, the committee would keep in view four important aspects in this regard i.e. there would be no roll-back to indigenisation, existing CKD rates to be checked, value of the parts to be examined, replacement of the existing parts if found necessary and model wise parts distribution.

Daily Times - Leading News Resource of Pakistan


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*Pakistans agriculture sector vital in reducing poverty: WB​*
ISLAMABAD: Sector Manager World Bank, Adolfo Brizzi, termed Friday the higher food prices as blessing for farmers and let the rural economy towards prosperity by investing more in agriculture sector. 

Talking to Daily Times, he said the prices of petroleum products reached maximum level and are still rising. 

He expressed these views after launching the World Development Report 2008; Agriculture for development here on Friday at a local hotel. Brizzi further said if the government wanted to provide some relief to common people, it has to provide some subsidy in the form of food net only for targeted people. But at the same time, he said the farmers should be encourage to produce more instead of discouraging higher food prices. 

Despite the fact that the agriculture sector can play enormous roles in spurring economic growth and employment, and in reducing poverty, over the past 20 years it suffered from neglect and underinvestment around the world.

He stressed for relevance of the report for Pakistan. During the last 12 months Pakistan has witnessed unprecedented increases in the price of key food commodities, which have profound effects on poor and vulnerable people. There is an urgent need for increased agricultural productivity, and effective safety net programs to overcome these problems.

The report says the need for greater investment in agriculture in emerging economies like Pakistan, is vital to the welfare of 600 million rural poor living in those countries, mostly situated in Asia.

The report warns that the Millennium Development Goal of halving extreme poverty and hunger by 2015 will not be met unless the governments in developing countries and the international community reverse the trend of underinvestment in the agriculture and rural sectors.

A dynamic agriculture for development agenda can benefit the estimated 900 million rural people in the developing world who live on less than $1 a day, most of whom are engaged in agriculture, said Robert B Zoellick, World Bank Group President. We need to give agriculture more prominence across the board. At the global level, countries must deliver on vital reforms such as cutting distorting subsidies and opening markets, while civil society groups, especially farmer organisations, need more say in setting the agricultural agenda.

In emerging countries such as Pakistan, India, China, and Morocco, agriculture contributed an average 7 percent to growth in GDP between 1995 and 2005, though the sector accounts for about 13 percent of the economy and employs just over half the labor force. In many countries, slow growth in agriculture sector coupled with a rapidly growing non-agriculture sector has widened rural-urban income gaps creating social and economic tensions. On the other hand, rapid growth of urban incomes and demand for higher-value products also provide significant opportunities for faster agricultural growth and poverty reduction in these countries.

According to the report, the growth originating in agriculture is four times more effective in reducing poverty than the growth coming from non-agriculture sectors. The report recommends that in the emerging countries, the agricultural agenda should focus on reducing the disparity between rural and urban incomes and raising the incomes of the rural poor.

As pointed out by Derek Byerlee, the principal co-author of the report, low agricultural productivity, unequal distribution of land and access to water, inadequate infrastructure, and poor public service delivery are among the key constraints hampering more rapid growth of agricultural sector in Pakistan. Increasing water scarcity, which is expected to worsen with climate change in the face of increasing demand for water is another major concern.

The Report says agriculture can be an important source of growth, even in emerging economies like Pakistan, provided we improve the asset position of the rural poor, make smallholder farming more productive, competitive and sustainable, diversify income sources toward the labour market and the rural non-farm economy, and facilitate rural-urban migration with desirable developmental outcomes.

The emerging countries have the largest concentration of the worlds poor, so the direct support through well-designed and well-governed employment schemes in rural areas, and well-targeted effective safety nets can reduce poverty, improve rural investment climate, and restore degraded natural resources.

Yusupha Crookes, World Banks Country Director for Pakistan, stressed the relevance of the report for Pakistan. During the last 12 months Pakistan has witnessed unprecedented increases in the price of key food commodities, which have profound effects on poor and vulnerable people. There is an urgent need for increased agricultural productivity, and effective safety net programs to overcome these problems. 

For its part, the World Bank is committed to increasing its support for agriculture and rural development, following a decline in lending in the 1980s and 1990s. In financial year 2007 commitments reached $3.1 billion to all borrowing countries, marking an increase for the fourth straight year. 

The report also warns that global food supplies are under pressure from increased demand for food, feed, and biofuels, rising price of energy, increasing land and water scarcity as well as climate change, which in turn contribute to sharp increases in food prices and put millions of people at risk of falling into poverty. 

In April this year the Bank proposed a New Deal on Global Food Policy, which 150 countries endorsed. The New Deal embraces short, medium and long-term responses, including safety nets such as school feeding, food for work, and conditional cash transfers. It also calls for increased agricultural production; a better understanding of the impact of biofuels; and action on the trade front to reduce distorting subsidies and trade barriers.

Daily Times - Leading News Resource of Pakistan


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*Software piracy rate drops by 2% to 84%: International study​*
ISLAMABAD: The software piracy rate has dropped in Pakistan from 86 percent to 84 percent, after remaining unchanged over the past two years, which would benefit the country in many ways, said a latest international study.

The Fifth Annual Global Software Piracy Study, released by Business Software Alliance (BSA) Friday noted that the piracy related losses have gone down to $125 million in Pakistan against $143 million in 2006.

This report depicts the government is serious in reducing software piracy to benefit its economy, IT industry, businesses and computer users, commented Aly Harakeh, a

spokesman of BSA, an organization representing the global software industry and its hardware partners. The study conducted by International Data Corporation (IDC), a leading information technology industrys global market research and forecasting firm. Of the 108 countries studied, the piracy rate dropped in 67 countries and increased in only eight countries, while it remained unchanged in 33 countries. The report noted that businesses and consumers will spend nearly $400 billion on software over the next four years across the world and assuming piracy rates do not change during this period, more than $225 billion worth of computer programmes will be pirated. 

The worldwide piracy rate has gone up from 35 percent to 38 percent despite the fact that about two-third of the countries in the study saw piracy drop, because the personal computer (PC) market grew much faster in most of the higher piracy countries and regions, he explained.

In 2007, 150 million people came onto the Internet for the first time and from 2008 through 2012, another 700 million computer users would enter cyberspace, 76 percent of them would be located in the emerging markets, the study foresaw. Coupled with lost tax revenues and slower job growth than a larger legitimate market would provide, software piracy also has clear negative consequences for local economies, it added. 

Daily Times - Leading News Resource of Pakistan


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*Cement exports to India likely to reach 600,000T ​*
KARACHI: Pakistans cement exports to India are likely to reach at 600,000 tonnes by the end of fiscal year amid the rising demand of construction activities in the neighboring country.

According to report prepared by JS Global Research, Indian authorities have been desperately eyeing to reduce local cement prices to curb rising inflation. For this purpose India has in the past 6 months, imported around 300,000 tonnes of cement from Pakistan and are planning to double it by June 2008. 

The cement exports to India have reached to 450,000 tonnes since it begun and owing to high quantity orders placed by Indian importers, exporters believe that its exports to India will surge sharply in the next one and half months. There is great demand for cement in India and importers continue to prefer Pakistani cement, being close to their country and due to competitive rates,  Bilal Hameed, an analyst of the cement sector said.

At least five Pakistani companies approved by Bureau of Indian Standards (BIS) started to export cement to India while five more manufacturers applied for certification, it is learnt. Indian Minerals and Metals Trading Corporation, in its reports, remarked that most consignments were tested by company for quality and cement being exported to India is of higher quality than standards set and required by Indians.

Cement goes to India by sea route or train. Traders want both governments to allow road transport as well. According to the two governments, only a truck of 10 tonnes can cross the border. The Indian government is working with Pakistan for removing all infrastructural and procedural constraints. They are trying to increase railway tracks from Pakistan in order to enhance cement supply three-fold through trains, the report said.

Pakistani exporters were encouraged by Indian governments steps to abolish countervailing duty and additional customs duty, making imports viable, it is learnt.

Moreover, officials are working on cement trucks to be allowed to travel till Amritsar instead of unloading at the border to smoothen supplies. Furthermore, talks are also on to put conveyor belt at the border, on which cement can be loaded from Pakistans side and reach India. These measures will bode well for Pakistan cement companies as freight charges through sea have jumped up from $3 per tonne to $9 per tonne.

However, export cement prices from Pakistan are still attractive at FOB price of $70/tonne (AED12.4/bag, Rs 242 per bag). Adding average freight cost of $5 to $10/tonne will lead the landed price of Pakistani cement to be around $75 to $77/tonne (AED14/bag, Rs 260/bag). Thus, Pakistan cement is still competitive for export to India and UAE. Cement sales have shown an increase of 24 percent in 10 months (Jul-Apr) of financial year 2008. This growth has been primarily due to 142 percent rise in exports during the period. At present, the neighboring India and UAE, because of unprecedented increase in their construction activities, remain the key export markets for Pakistan cement companies. 

Daily Times - Leading News Resource of Pakistan


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*SPI rises by 26 percent​*
KARACHI: Weekly inflation, measured through Sensitive Price Index (SPI), rose sharply by 26.25 percent during the week ended May 15 over the corresponding period of previous year.

SPI also increased by 0.78 percent during the week under review compared to preceding week, Federal Bureau of Statistics (FBS) reported Friday.

The big jump in the weekly inflation was triggered by sharp increase in the prices of kitchen items. 

This steep rise in inflation hits poor segments of the society, with low-income group being the most vulnerable.

The households in the two lower income brackets of Rs 3,000 and Rs 3,001 to Rs 5,000 felt the pinch of this weekly inflation surge, as it shot up by 29.89 and 29.16 percent respectively.

SPI increased by 26.88 for the households in the income group of Rs 5,001-12,000 and was up by 23.22 percent for above Rs 12,000 income group. 

The SPI basket consists of 53 essential items for all income groups in 17 urban centres of the country.

During the week, prices of 32 items increased and only five items prices registered decline whereas as the prices of 16 items remained unchanged over the previous week. 

The prices of banana went up by 11.12 percent to Rs 46.67 per dozen as against Rs 42.00, Rice IRRI-6 up by 8.58 percent to Rs 48.32 from Rs 44.50, rice basmati (broken) up by 5.61 percent to Rs 52.52 against Rs 49.73.

Price of masroor pulse increased by 3.82 percent, potatoes by 3.79 percent, vegetable ghee (loose) by 3.19 percent, wheat by 3.14 percent, cooked dal plate by 2.55 percent, sugar by 2.51 percent and onion by 2.33 percent.

Daily Times - Leading News Resource of Pakistan


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*Industry-driven education: UK, Pakistani institutions sign MoU ​*
ISLAMABAD: Four UK and four Pakistani institutions on Friday signed a Memorandum of Understanding (MoU) for technical and vocational education and training (TVET) to counter unemployment.

Two more institutions on both sides will join the partnerships in the coming weeks. The National Vocational and Technical Education Commission (NAVTEC) will co-ordinate with the partner institutions. 

Under the MoU, Bradford College has been linked with Hazara University to work in hospitality and tourism sector; Newcastle College with the Government College of Technology (GCT) Rasul to focus on construction; Hasting College of Arts and Technology with GCT Nowshera to work in the field of engineering and City College Brighton and Hove with GCT Multan to extend co-operation in the field of engineering. 

Llandrillo College and Pakistan Institute of Tourism and Hotel Management will become partners, concentrating on hospitability and tourism. Bradford College and Government Polytechnic Institute for Women will join hands in the field of textile and fashion.

The partnership will help draw an industry-based curriculum. Speaking on the occasion of signing of the MoU, NAVTEC Executive Director (ED) Ather Tahir said, The commission (NAVTEC) is mandated to facilitate, regulate, and provide policy direction for technical education and vocational training to meet national and international demand for skilled manpower. 

Tahir said the MoU marked the beginning of relationship that had the potential to create closer links between industry and education.

British Council Acting Country Director Nasir Kazmi said the UK delegation worked closely with its counterparts from the Pakistani institutes in developing joint work plans. 

Daily Times - Leading News Resource of Pakistan


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*Poverty Reduction: policymakers more accessible to citizens after devolution: World Bank ​* 
FAISALABAD (May 17 2008): The accessibility of policymakers to citizens in Pakistan is unequivocally greater after devolution, and the local government elections are, with some notable exceptions, as competitive as national and provincial elections. This has been observed in a study of South Asia Region by World Bank's Poverty Reduction Economic Management Department.

In the report titled 'Devolution, Accountability, and Service Delivery (Some insights from Pakistan)', WB experts have said that the local government sector priorities are heavily tilted toward the provision of physical infrastructure--specifically, roads, water and sanitation, and rural electrification--at the expense of education and health.

This sector prioritisation is, in part, a dutiful response to the relatively greater citizen demands for physical infrastructure; in part a reflection of the local government electoral structure that gives primacy to village and neighbourhood-specific issues, and in part a reaction to provincial initiatives in education and health that have taken the political space away from local governments in the social sectors, thereby encouraging them to focus more toward physical infrastructure, the study said.

This study also reviews the relationship between devolution, accountability, and service delivery in Pakistan. It examines the degree of accessibility of local policymakers and the level of competition in local elections, the expenditure patterns of local governments to gauge their sector priorities, and the extent to which local governments are focused on patronage or the provision of targeted benefits to a few as opposed to providing public goods.

According to the study, improving service delivery through increased accountability has been a significant implicit motivation behind the trend towards decentralisation in the developing countries. The standard theoretical argument for the transfer of responsibilities to lower tiers of government is that the closer proximity of local policymakers to citizens increases the flow of information and better enables the public to monitor, and to hold to account, government officials. Conversely, elected local policymakers, responding to this greater citizen vigilance, focus on improving service delivery in order to get re-elected.

Ambitious devolution reforms were introduced by the government in Pakistan in 2001. While decentralisation had a variety of motivations, the most important of which arguably was to create political allies of the regime at the local level to counter opponents at the national and provincial levels, the service delivery imperative cannot be ignored.

The study seeks some insights into this relationship between devolution, accountability, and service delivery in Pakistan by examining, first the degree of accessibility of local policymakers and level of competition in local elections and, second, the expenditure patterns of local governments to gauge their sectoral priorities, and the extent to which they are focused on patronage, or providing targeted benefits to a few, as opposed to providing public good.

According to the study, local governments in Pakistan do not exist in isolation, and any discussion of local government accountability must take into consideration the inter-governmental framework and the actions by higher tiers of government, particularly the provincial government, in sectors that are formally devolved.

As a large literature shows, given that local governments generally have limited tax bases and must rely on inter-governmental transfers for most of their resources, this framework has important bearing on local incentives. Therefore, the relationship between devolution, accountability, and service delivery in Pakistan can only be analysed in the context of a given inter-governmental framework and a given set of provincial interventions.

Three conclusions are drawn from the analysis of the study. First, the accessibility of policymakers to citizens in Pakistan is unequivocally greater after devolution, and local government elections are, with some notable exceptions, as competitive as national and provincial elections.

Second, local government sectoral priorities are heavily tilted towards the provision of physical infrastructure--specifically, roads, water and sanitation, and rural electrification--at the expense of education and health. Within these sectors, particularly in water and sanitation and rural electrification, the focus is on small neighbourhood and even household specific schemes, which can be characterised as the provision of targeted, private goods.

Third, this sectoral prioritisation is in part a dutiful response to the relatively greater citizen demands for physical infrastructure; in part a reflection of the local government structure whereby the district political leadership is accountable to an electoral college of directly elected union councillors whose constituency is the village and neighbourhood; and in part, as elaborated in detail, a reaction to provincial initiatives in education and health that have taken the political space away from local governments in the social sectors thereby encouraging them to focus more towards physical infrastructure.

Business Recorder [Pakistan's First Financial Daily]


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*Foreign direct investment dips by 16.7 per cent ​* 
Sunday, May 18, 2008

ISLAMABAD: Due to political turbulence and prevailing judicial crisis, Foreign Direct Investment (FDI) in Pakistan during July-April 2007-08 dipped by 16.7 per cent year-on-year to $3.48 billion and portfolio investment by 93.3 per cent to $119.4 million as compared to the corresponding period of the previous fiscal year.

Economic pundits believe that Pakistan was a destination for good investments where the profit ratio was very high compared to other countries of the region.

However, free judiciary is key to attracting investment and at present investment is declining. However, it can be increased if the government manages to reinstate the deposed judges and give way to a free judiciary. As a result, foreign investment inflows may accelerate to a reasonable level.

An official of the Board of Investment (BoI) told The News that at present, various countries and business tycoons are keen to invest in Pakistan but they are hesitant because of the political turbulence and prevailing judicial crisis.

According to the State Bank of Pakistan (SBP) figures, during July-April 2007-08, private FDI (with privatisation) in absolute terns dipped by $699 million and portfolio investment by $998.4 million over the corresponding period of the last fiscal, when these stood at $4.18 billion and $1.09 billion respectively.

Foreign public portfolio investment also declined by 96.9 per cent to $20.5 million against $671.4 million recorded in the corresponding period of the last fiscal.

On balance, total foreign investment (private and public) in 10 months down by 39.5 per cent to $3.60 billion from $5.95 billion in the corresponding period of the last fiscal.

According to the investment break-up by the region developed countries investment in Pakistan declined by 29.4 per cent to $2.46 billion (including FDI $2.13 billion and portfolio investment of $331.8 million). Developing economies investment declined by 42.8 per cent to $834 million (FDI $1.07 billion while it withdrew $239 million portfolio investment).

Among developed countries, Western Europe made a total investment (FDI and portfolio) of $631.6 million and European Union, $414.7 million while in the corresponding period of the last fiscal, western unit invested $2 billion and EU $1.91 billion. 

Besides, under unspecified head (investment by IFIs and other NSEs) declined by 14.7 per cent to $283.5 million.

Among developing economies, Caribbean Islands investment declined by 83.2 per cent to $3.1 million against $18.3 million recorded in the correspondent period. However, Africa, including Libya, Egypt, Mauritius, South Africa and other African countries investment was up by 67.9 per cent to $137.4 million.

Asian countries (West Asia, South, East and South East Asia) investment in Pakistan was down by 45.7 per cent to $736.6 million against $1.35 billion in the correspondent period of the last fiscal.

Foreign direct investment dips by 16.7 per cent


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*Malaysia eyes coal-power generation ​* 
Sunday, May 18, 2008

ISLAMABAD: Pakistan and Malaysia could join hands in sharing the latters expertise in palm oil production and processing by developing infrastructure, focusing on local consumption and exports, Finance Minister Naveed Qamar said on Saturday.

A Malaysian investment delegation, headed by Prince Raja Ashman Shah Bin Raja Azlan Shah, called on Naveed Qamar here on Saturday.

The delegation comprised chief executives of companies developing major infrastructure projects in Malaysia and overseas. Earlier, the visiting group was given a presentation at the Board of Investment on various economic development and industry-specific issues in Pakistan, highlighting the governments economic policies for investment and trade.

The delegation showed keen interest in coal-fired power generation projects due to huge quantity of coal reserves in Pakistan.

The finance minister briefed the delegation about the governments economic priorities in building broad-based industrial infrastructure. With the restoration of democracy and with public good as the governments primary policy option, all stakeholders in the public and private sectors are now set to launch various portfolio-based investment projects that would ensure rapid development of economic activities in the country, the minister added. 

Foreign investment is being welcomed to match the pace of industrial development in other Asian countries, the minister said.

Malaysia eyes coal-power generation


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* PM leaves for Egypt to attend WEF ​* 
Sunday, May 18, 2008

ISLAMABAD: Prime Minister Syed Yousuf Raza Gilani on Saturday said he will be seeking more foreign investment and discuss economic and bilateral ties when he meets world leaders and top executives at the World Economic Forum (WEF) for the Middle East.

Talking to reporters at Islamabad International Airport prior to his departure for a four-day foreign visit, the Prime Minister said he will be meeting several world leaders and discuss his governments economic priorities.

Gilani who would be representing Pakistan at the World Economic Forum said his government wants to provide relief to the poorest of the poor and will discuss the future economic strategy with the chief executive officers.

About his meeting with world leaders including President George W Bush of the United States, Prime Minister Gilani said he will discuss Pak-US bilateral ties and their cooperation in the economic, social, defense, science and technology sectors, as well as US assistance, global food crisis, extremism and terrorism.

He said the heads of the state and the governments and several chief executive officers, will be attending the event, providing an opportunity to discuss Pakistans budgetary priorities and seek investment in all the sectors.

When asked whether he will take up the recent attack along the Pak-Afghan border, the Prime Minister said Pakistan had expressed its concern and pointed that he too had already protested the incident.

The Prime Minister besides addressing a special session on: Global leader in the spotlight, is expected to meet President Bush on Sunday on the sidelines of the forum.

The World Economic Forum is an independent international organisation committed to improving the state of the world by engaging leaders in partnerships to shape global, regional and industry agendas. 

PM leaves for Egypt to attend WEF


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*FDI rising despite negative indicators​*
KARACHI, May 17: Despite discouraging economic and political indicators, *foreign direct investment (FDI) improved substantially in April to take the total close to $3.5 billion in 10 months* of the current fiscal year.

*The country, with a high risk profile, record trade deficit and trapped by domestic record fiscal deficits, is still attractive for foreign investors to make profits out of this situation.*

The State Bank on Saturday reported that foreign direct investment (other than investment in stock market) *reached $3.481 billion in 10 months of 2007-08. This was 16 per cent lower than last year.*

However, analysts believe that uncertainty on political front and record food inflation are the real factors behind negative situation.

Analyst Abid Saleem was of the view that these two major reasons paint a bleak picture of economy, that is against reality.

*A couple of days ago, the State Bank reported that remittances sent by overseas Pakistanis increased by 19 per cent in 10 months compared to corresponding period of last year, reflecting the intact confidence of overseas workers.*

*The SBP data showed that the highest FDI in 10 months came from the US. The FDI of US increased by 70 per cent to $1.161 billion in the last 10 months.* During the same period last year, FDI from the US was $682 million.

Analysts said foreign investment would help the country improve its strength against the over-loaded trade deficit and support the weakening local currency.

The purchasing power of the local currency sharply dropped in the wake of very high inflation of over 17 per cent and day-to-day devaluation of rupee against the US dollar.

However, market experts felt that the inflow of FDI was limited to a few sectors and mostly to services sector. Inflows were highest in telecommunications, financial sector and oil and gas exploration.

The FDI was helping the government cut the load of current account deficits, but not helping economy to diversify itself, said a senior banker.

He said that the services sector captured largest space in the GDP while it reached 53 per cent of the GDP last year.

*The services sector dominated by foreign investment could be dangerous for the country as it can be easily withdrawn,* he said, adding outflow of profits and dividends are the negative side of this investment.

Analysts estimate that at the end of the current fiscal, outflow of foreign exchange in the form of dividends and profits could reach up to $1 billion.

The policy-makers have failed to attract FDI in manufacturing and production which could be long-lasting and export-oriented.

*The FDI trend in Pakistan is different from India and China where FDI landed in various sectors, including manufacturing and production sectors, which helped these countries keep their growth rate much higher than all other countries.*

Pakistan set an initial GDP target of 7.2 per cent for 2007-08, but most analysts see the growth rate much below the target. Some say six per cent growth would be a welcome situation.

FDI rising despite negative indicators -DAWN - Business; May 18, 2008


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*Income tax posts 62 percent growth​*
KARACHI: The contribution of salary class in the countrys revenues has surged significantly, as income tax has posted 62 percent growth in ten months of the fiscal. According to the data made available to Daily Times, the regional tax department has collected Rs 1176.71 million income taxes during July to April from its registered taxpayers as compared to Rs 725.859 million taxes during the correspondent period of last fiscal year. 

Majority of the tax collection has been received from corporate sectors as the number of taxpayers is increasing in Karachi. There are around 524,000 taxpayers registered with RTO Karachi. Official said that monitoring and enforcement of tax machineries had made it possible to enhance tax generation during the period. Besides, there is a growth in salaries and employment too. They pointed out that the tax generation in the banking, telecom, and insurance industry has improved significantly. Besides, the media organisations are also contributing in the revenues. 

Daily Times - Leading News Resource of Pakistan


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*More funds for Balochistan in budget​*
ISLAMABAD: Minister for Population Welfare, Mir Hamayun Aziz Kurd here on Saturday hosted a reception in the honour of Privatization and Finance Minister Naveed Qamar and Chief Minister of Balochistan Nawab Aslam Raesani here at a local hotel.

During the reception, they discussed matters of mutual interest with special reference to enhance allocations for the province in the forthcoming budget 2008-09, says a statement issued here today.

The representatives of Balochistan were assured that in the National Budget 2008-09 more allocations be made to the province budget with special focus on its development for the welfare of the people.

The Provincial Finance Minister Asim Kurd and Secretary Finance of the Province Mehfooz Ali Khan were also present on the occasion who appraised the Federal Finance Minister of their proposal and suggestions with regard to the budget. 

Daily Times - Leading News Resource of Pakistan


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*Disabled persons to be included in development process: PM​*
ISLAMABAD: Prime Minister Syed Yousaf Raza Gilani said Saturday that the government has committed to include disabled persons in the development process and empower them through skill development and capacity building. 

The government will take more steps for the welfare of persons with disabilities and through little efforts, these persons could be made a productive part of the society, PM said. He was addressing a seminar on World Telecom Day. Prime Minister formally inaugurated the new service PTCL Smart and distributed awards to the winners of essay competition organised by Wateen Telecom.

According to PM, Information and Communication Technologies (ICT) sector was considered as an engine for overall socio-economic development all over the world. 

However, the benefits of the advancement in this sector were yet to trickle down. It was therefore, responsibility of the government to ensure that the ICT are used to empower all segments of society. 

We are fully committed to extend the fruits of these advancements to our entire population, irrespective of their social status and geographical location, the PM maintained. 

This Day is significant because of the thought provoking theme, Connecting Persons with Disabilities: ICT Opportunities for All. The theme was even more relevant to Pakistan in perspective of the October 8, 2005 earthquake, which resulted in increase of Persons With Disabilities (PWDs). 

He said special education institutions needed to develop special tools, software and training programmes for Persons With Disabilities. 

Such programme would not only improve their lives but also allow them to get due share of employment opportunities. 

The prime minister said access to global information resource centers through information and communication technologies had increased the productivity of human resources. These Technologies could also serve the cause of taking the persons with disabilities into the mainstream human resources. They must be helped to explore and employ these technologies for self-reliance. Capacity building measures with specialized training could transform the lives, especially for persons with disabilities. The information society had great potential of home-based job and e-business opportunities that need little mobility of human resource. 

I am optimistic the initiatives of ITU and the Government of Pakistan will mark the beginning of a new era, an era of ICT opportunities for all and empowerment of every citizen with information and knowledge, the prime minister added. 

Gilani appreciated the ministry for initiating a consultation process in collaboration with ministry of social welfare and special education, ERRA and NGOs.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan yet to reap IT benefits: Gilani ​* 
ISLAMABAD (May 18 2008): Prime Minister Yousuf Raza Gilani on Saturday said Pakistan is yet to reap the benefits of Information Technology that has played an important role in the socio-economic development of the world.

The Prime Minister, who came to address the World Telecommunication Day, here on the theme of "Connecting Persons with Disabilities: ICT Opportunities for All", was greeted by protesting employees of the two leading telecom operators against what they said unjust practices of the employers.

The employees of one telecom company were protesting against cancellation of their franchises by their operators, who recently took over Paktel whereas staffers of main fixed line operator were protesting for not being given basic pay scale with their protest entering 13th day, a number that reminds of "Chicago tragedy" with reference to workers.

The ceremony was organised by the Pakistan Telecommunication Company Limited (PTCL) in collaboration with the Ufone and the Warid Telecom. Addressing the ceremony, Gillani said special persons must be helped to explore and employ these technologies for self-reliance, and urged all stakeholders to make a difference in the lives of special people, urging the industry to be pro-active to fully exploit the resources for persons with disabilities and introduce equipment that caters to the needs of such people.

The ICT sector is considered the engine of socio-economic development all over the world and its benefits should be within the access of marginalised segments of the society, including physically-handicapped people, he said.

The theme of International Telecommunication Union, he said, was more relevant to Pakistan in the perspective of massive earthquake of 2005 that left a great number of people disabled. To get these people into the mainstream, there was a need to introduce special projects for them and enable them through ICT equipment to become a productive force, he added.

"Today, the world is full of opportunities with ICT playing an important role in increasing the productivity of human resources. These technologies can also serve the cause of taking the persons with disabilities into the mainstream human resource pool", he said.

These persons should be enabled to harness the advancements of ICT industry and must be helped to explore and employ these technologies for self-reliance, he added. Information Technology Minister Qamar Zaman Kaira said there are approximately 88 million fixed, wireless and cellular mobile telephone connections while about a large number of users were benefiting from over 3.5 million internet connections with broadband connectivity speed.

He said his ministry initiated consultation with the Ministry of Social Welfare and Special Education and NGOs for the formulation of special initiatives to empower the persons with disabilities through ICT gadgets. Later, the Prime Minister formally inaugurated the new service 'PTCL Smart' and distributed awards to the winners of an essay competition organised by the Wateen Telecom.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*US investors interested in Karachi development projects: Kamal ​* 
KARACHI (May 18 2008): City Nazim Mustafa Kamal has said that American investors have shown interest in city development projects and a number of delegations are likely to visit Karachi soon to discuss, assess and make investment plans.

Talking to newsmen at a dinner hosted by Honorary Consul-General of Mozambique, Khalid Tawab, on Friday, he said that bedsides the delegations visits in the near future a few delegations have already visited Karachi and discussed modalities of investment in various projects.

He said that during his recent visit to the United State he made efforts to dispel their fears about the law and order situation and apprised them about existing investor-friendly atmosphere and existing opportunities of making investment in various projects.

Kamal said that the city government has planned 'elevated expressway' besides railway track. However, the project needs federal government approval for initiating the project.

He said that Secretary, Ministry of Railway would soon visit Karachi to see the project and give go ahead signal. However, if permission is not granted then the expressway would be built beside the Shara-e-Faisal, he added. He said that the city government has already awarded contract for construction and revamping the road from Saddar to Saforan Goth. The contractor has started initial work on this project, he added.

He said that the city government is trying to resolve the issue of compensation to those 53 owners of houses whose houses would come in the way of construction of road from Shara-e-Faisal to Korangi industrial area. However, if the issue remained unresolved the houses would be demolished, he threatened.

Referring to travel advisory, Khalid Tawab said that Karachi is the most peaceful city in the region where foreigners, consuls-general, ambassadors etc moved freely and feel no security problems. Tawab urged the government to take measures on war footing to redress economic issues to accelerate economic activities in the country.

Referring to three months of the present government and judiciary issue, he said this issue was adversely diverting government attention from real issues of increasing prices of essential items, food inflation, oil prices, power crisis, flying capital, decreasing rupee value against dollar etc. He said that a Pakistani trade delegation would soon visit Mozambique to boost two-way trade and assess having industrial units in joint venture.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Need for local manufacturing of textile machinery ​*
ARTICLE (May 18 2008): Textile, as the single largest industry in Pakistan, represents one of the vital sectors of economy. Yet the industry is totally dependant on imported sources to meet its requirements of machinery, equipment, accessories and spares.

The indigenous facilities for manufacturing of textile machinery items are practically non-existent, though world-wide the sector has been harbinger to the development of capital goods industry.

Efforts were made in 1973 to create an engineering base in the public sector for the local manufacturing of textile machinery. Consequently, Textile Machinery Company was set up at Korangi, Karachi to produce manual and automatic cone winding machines. Spinning Machinery Company was set up at Kot Lakhpat, Lahore to produce ring spinning frames/machines. A nationalised company, Pakistan Engineering Company Ltd (PECO), at Lahore was already manufacturing and marketing power looms.

By early 1990s production of all these textile machinery items came to a halt. Textile Machinery Co was privatised and remains closed after transfer of ownership to the private sector. The production of ring spinning frames at Spinning Machinery Co had to discontinue. Power Loom works at PECO was closed down in the wake of on-going privatisation that has not yet been finalised.

Textile Machinery Co was established in 1975 with an installed capacity to manufacture 50 winding machines annually. Gilbos of Belgium had provided technical know-how under a licensing agreement. Having commenced production in 1978, the company remained grossly under-utilised from its nascent days.

PECO produced automatic shuttle looms, in collaboration with Iwama of Japan. Starting from producing 250 looms of a variety of sizes the company had progressively reached an annual production of 600 looms. Negotiations were also in advanced stage with the global leaders for assembly-cum-manufacturing of modern shuttle-less looms under license. This however did not materialise due to on-going privatisation process of PECO.

Spinning Machinery Co was set up in 1977 to produce ring spinning frames under license from Schubert and Salzer of Germany. It went into commercial production in June 1982 but could not achieve full capacity of producing 250 frames of 476 spindles annually in any given year.

The capacity utilisation remained around 20% maximally as total sales until June 1989, when its production was discontinued, was that of 231 frames valuing Rs 155 million. Obviously, the company lacked economy of scale, suffered higher production cost and thus incurred huge financial losses.

In fact, the textile industry, for the reasons of its vested interest, had never liked to promote domestic engineering industry. As a result of lobbying by the powerful textile industry the government policies too remained non-supportive and inconsistent to engineering industry.

Resultantly, local manufacturing of textile machinery had inadequate tariff protection, and continuous unrestricted import of these equipment was allowed either at nil or at concessional import duties.

This was in spite of comparable quality and selling price of indigenous products versus imported units. Resultantly, the companies failed to capture the market for the respective products. The Chinese and the Japanese manufacturers of textile machinery, with whom the holding corporation State Engineering Corporation was negotiating licensing agreements for future production of machinery in line with the market demand, backed out due to the prevailing environments.

After the closure of operations at Spinning Machinery Co, another public enterprise Pakistan Machine Tool Factory at Karachi ventured into producing ring spinning frames under license from Jingwei Textile Machinery Co of the People's Republic of China. The selected brand/model, having major population of installed units, was already popular in domestic market. It was planned to manufacture 300 frames annually in the final phase, achieving 60% deletion over a period of five years.

The Chinese had transferred almost complete technical know-how for the local manufacturing. But the initial plans faced serious problems, again due to negative attitude adopted by the textile industry and unfavourable tariff structure. Finally, the company launched the product in December 1998. But there has been lack of response from textile industry and the production/sales projections could not be attained, as investors continually preferred to import these units.

Private sector has been hesitant to invest in the engineering sector in a big way. Still, significant contribution has been made by the private sector in recent years towards manufacturing of parts, accessories and some items of textile machinery. Nonetheless, these SMEs in non-organised sector have been unable to achieve sizeable quantum of production.

The long list of locally produced items includes power looms, warping machines, twisting machines, dobbies, winders, washing machines, calendering machines, sizing machines, scouring machines, textile spindles, spinning and twisting rings, fluted rollers, textile shuttles, metallic card clothing, textile inspection machines and air-conditioning and humidification equipment for textile industry.

Local manufacturing of textile machinery remained on the agenda of successive governments, as efforts continued to be made by the public sector engineering industry to diversify their product range to include textile machinery, but without results. ECC of the Cabinet had considered in 1989 a summary on the domestic manufacturing of textile machinery, approving a number of measures to be adopted by the government in this direction, but nothing concrete worked out.

A National Commission on Textiles was created in 1999 that was mandated also to promote indigenous manufacturing of textile machinery. Again, textile industry prevailed and related proposals remained on drawing board only.

Today textile industry has total spinning capacity of 1,550-million kg of yarn, weaving and finishing capacity of 4,368-million sq. meter of fabric, production capacity of 670-million unit of garments, 400-million unit of knitwear and 53-million kg of towels.

The industry is currently facing numerous challenges and its growth has declined considerably. Despite investment to the extent of over $4 billion during last few years under the Textile Vision 2005, the sector may not meet its export target of $13 billion for the year ending 30th June 2008. Still, the industry has great potential for expansion in future, as a result of increasing demand of textiles and made-ups, domestically and globally.

Significant revamping and modernisation of the industry is therefore expected, given the political and economic stability in the country. International suppliers of machinery participating in textile machinery exposition held at Karachi have booked orders for a large number of units. MEGATEX 2008, one of the biggest textile exhibitions, was held during April 15-18, and 160 companies from 22 nations had exhibited their products.

The situation highlights the potential of domestic textile industry that has imported machinery worth $281 million during July 2007-February 2008 under adverse conditions. The City District Government of Karachi has recently allocated land for developing 5 industrial zones exclusively for setting up textile units.

No capital goods industry in a developing country can bring out its products in a short time comparable in quality of similar products of multinational manufacturers having extensive experience gained over decades of research and development.

This equally applies to the manufacturing of textile machinery. Therefore joint venture agreements with renowned international technology partners need to be finalised. The modalities may include having equity participation or licensing arrangement or joint manufacturing under technology transfer agreements.

Besides setting up new industrial units, the existing facilities at various engineering industrial units can be gainfully utilised for undertaking progressive manufacturing of a large variety of equipment required by textile sector, under any of the above arrangements.

These items may include ring spinning frames, automatic winder, blow room equipment, carding machinery, draw frames, shuttle-less/air-jet/water-jet looms, dyeing and sizing machines, bleaching and finishing machines, etc.

In view of the persistent widening trade deficit it becomes of paramount importance for the government to evolve a strategy to progressively reduce dependence on imported textile machinery and encourage indigenous efforts through policy framework to re-create strong foundation for manufacturing of basic textile machinery of a wide range.

The programme should be targeted to achieve implementation within a short span of time not only catering to the needs of national textile industry but also for export marketing.

(The write is former Chairman of State Engineering Corporation of the Ministry of Industries and Production, Government of Pakistan).

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Saudi ambassador for expanding trade ties​*
SIALKOT, May 17: Saudi Arabian Ambassador to Pakistan Ali Awadh Asseri has said that his country will prefer importing surgical instruments and sports goods from Sialkot instead of United States or other European countries as these imports will be comparatively cheaper and reliable.

Addressing local businessmen at the Sialkot Chamber of Commerce and Industry (SCCI) here on Saturday, Ambassador Asseri said that his country would ensure direct and easy access of Pakistani businessmen to Saudi markets.

The Saudi envoy said that his country was seeking more skilled manpower from Pakistan, as this would further boost economic ties between the two brotherly countries.

The Saudi government was trying to increase trade volume in favour of Pakistan, he said and added that it was high time to further develop and strengthen these mutual ties.

He said this would also go in a long way to explore and capture new world markets as both the countries have potential to grab Gulf and Asian markets.

SCCI president Dr. Khurram Anwar Khawaja said that exchange of trade delegations and holding of joint trade exhibitions would also help in promoting bilateral trade between these two countries.

Earlier, Ambassador Asseri visited leading industrial units in Sialkot and hailed the export culture of Sialkot. Talking to local industrialists, the Saudi envoy said that there were bright opportunities of setting up joint ventures between the business communities of both Pakistan and Saudi Arabia.

Saudi ambassador for expanding trade ties -DAWN - National; May 18, 2008


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## sohailbutt

*EU to finance capacity building projects ​*
KARACHI (May 18 2008): European Union has come up with a fund of 13.5 million Euros to finance the capacity building and manpower development projects of various institutions including trade bodies in Pakistan.

Karachi Chamber of Commerce and Industry (KCCI) and some educational institutions from Karachi have been picked up as candidate institutions for this fund, told European Commission (EC) delegation during a meeting with President of KCCI, Shamim Ahmed Shamsi in his office here on Saturday.

The EC mission consisted of EU Senior Expert, Murray G Smith and Dr Arthur E Appleton, who were facilitate by Pakistan Business Council's Director Research, Samir S Amir.

They invited the President KCCI to attend a meeting will be holding on May 26 in Islamabad wherein representatives of various institutions/organisations would be given presentations on this EU program and on the criteria of the capacity building projects to qualify for getting European Union financing.

Government of Pakistan and European Commission will host the meeting. Around forty people from various institutions including trade bodies were expected to participate, said Samir S Amir. Murray G Smith and Shamsi deliberated upon the issues relating to modern technologies and identified the areas for transfer of the technology in Pakistan.

Moreover, Shamsi suggested that European Union should put minimum duties on Pakistani goods for the benefit of Pakistan. Dr Arthur underlined the need for more efforts by Pakistan institutions in public and private sectors including business organisations for their capacity building and modernisation.

Samir Amir said EU wants information from private sector on 14 FTAs to be signed with various countries by Pakistan. 'We have experience that government officials lack information on trade and investment,' he said. Shariq Vohra, the Chairman of KCCI committee on exports informed that KCCI had developed a database that would be best for EU consumption. KCCI has also compiled a detailed report on the pros and cons of Pak-China FTA, Mr vohra said.

President KCCI, Shamim Ahmed Shamsi informed the EC team that the Chamber had already initiated various projects on capacity building which included computerisation of its operations and setting up a data-base.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Economic policies will remain unchanged: PM​*
SHARM-EL-SHEIKH, May 18: Prime Minister Syed Yousuf Raza Gilani assured the international business community on Sunday that there would be no change in Pakistans economic policies.

There will be no paradigm shift in our economic policies, which will continue uninterrupted, he said in a speech at a special session of the World Economic Forum on the Middle East  Global Leader in the Spotlight.

He urged the international community to support his newly elected government. After its transition to democracy, Pakistan is ready for business. My people are awaiting dividends of democracy and we can deliver them with the help of friends abroad.

He said his government viewed the economy and the fight against terrorism as priority areas. Prime Minister Gilani said the government would make fundamental changes in the agriculture sector, which was the backbone of economy, in order to overcome food shortages.

He said he would be unveiling a new energy policy which would be aimed at overcoming electricity shortage. He urged businessmen from the Middle East to invest in Pakistans energy sector.

Mr Gilani said the European Union and Nato had emerged as major partners of Pakistan in the field of development and security. While Pakistan provided critical support to Nato in Afghanistan and was working to counter terrorism, we seek greater support from the European Union for our economic development.

He said Pakistans relations with the United States had matured into a long-term and broad-based strategic partnership which covered collaboration in political, security, defence, economic, commercial and technical spheres. This relationship is critical for stability in our region and international peace and security. He said Pakistan was keen to intensify its relations with the US by seeking greater access to markets and technology.

Referring to his governments 100-day programme, he said: Despite enormity of the challenges before us, Pakistan has the capability to press ahead to achieve the goal of peace and prosperity. Pakistan has a strategic location and is fast emerging as a bridge for cooperation among countries of the region, especially in energy, trade, transportation and tourism.

Economic policies will remain unchanged: PM -DAWN - Top Stories; May 19, 2008


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## Neo

*US concerns over IPI plan conveyed to govt​*
WASHINGTON, May 18: The US government continues to oppose the proposed Iran-Pakistan-India gas pipeline while US experts argue that the project is infeasible in the foreseeable future.

We have longstanding points on doing business with Iran. Our stance is that we are concerned about the project, said a US State Department official when asked to explain Washingtons position on the pipeline.

Christian Faire, a South Asia expert working for the Rand Corporation, believed that financial, political, legal and security circumstances did not allow the pipeline to be built in the near future.

The State Department official said the US was not only concerned about the project but also had conveyed its concerns to the Indian and Pakistan governments.

We have made the point that countries should not be conducting business as usual with Iran right now, he said.

A US law, made soon after the Islamic revolution in Iran, forbids any major international investment in an Iranian project.

The State Department official said that Washington still had a lot of stuff with Iran and Irans refusal to sign the nuclear non-proliferation treaty and accept UN restrictions on its nuclear programme further complicated the situation.

We are giving the same message to the Indians and Pakistanis, he said.

Ms Faire argued that none of the three countries involved in the project had the resources to fund the pipeline. Serious security problems, particularly in Balochistan, also discouraged international investors, she said.

Virtually no public or private consortiums would want to build it because there is now also the issue of Irans nuclear quest, she added.

Ms Faire, however, acknowledged that India wanted the deal now because it wanted to lock in the prices before they went out of control.

She believed that while the US had no direct interest in the pipeline, it is the symbolism of it all that rankles the US. She said the US administration and Congress expect India to be sensitive to US concerns about Irans nuclear ambitions.Other experts, also quoted on the US National Public Radio, predicted that eventually Iran itself might stall the pipeline project.

Robert Johnston of the Eurasia Group said the deal between Iran and India might not happen for at least a decade or two given the rising domestic demand in Iran. He said Iran would also have to take a strategic decision on how it wanted to expand its gas production and which projects brought in most money.

Ultimately Iran will find better projects for its gas. Two other options which are most attractive are either developing pipelines to Western Europe via Turkey or developing the LNG (liquefied natural gas) market in Asia, Mr Johnston said.

Mike Green of the Centre for Strategic and International Studies urged the US to use quiet diplomacy to stall the pipeline project. If we are going to be too loud about it, we would risk giving the opponent of close US-India ties a nice weapon to beat up the (Indian) government.

US concerns over IPI plan conveyed to govt -DAWN - Top Stories; May 19, 2008


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## Neo

*Policies ready for horticulture and agri-business​*
ISLAMABAD, May 18: Separate drafts of horticulture and agri-business policies for the four provinces, AJK, Fata and Fana have been prepared under the Rs4 billion Asian Development Bank-sponsored Agri-business Development and Diversification project.

The draft policies are likely to be sent to provincial governments and administrations of the Federally Administered Tribal Areas (Fata), Federally Administered Northern Areas (Fana) and Azad Jammu Kashmir (AJK) in a week for possible changes and proposals, officials told Dawn.

Under the project, separate horticulture and agri-business policies are being proposed for each province and other areas which seek some drastic changes in the existing legislation to introduce various mechanisms at the grass-roots level to help Pakistani fruit and vegetables to gain a foothold in worlds leading markets by following certain standards.

The draft policy for Fata seeks extension of the Seed Act to tribal areas where some regions like the violence-hit Wana have considerable potential for fruit and vegetables.

So far, the Seed Act has no access to Fata, and farmers there are deprived of certified good quality seeds.

The reason behind separate horticulture and agri-business policies is said to be weather patterns, crop seasons and legal structure of the different regions.

Project Director Akram Khalid told Dawn that every area needed a different approach because of nature of problems and potentials.

He said a national task force would be set up after the provincial policies were finalised to introduce a national agri-business and horticulture policy at the central level.

He said under the project about 25,000 small farmers would be trained in value addition and good agriculture practices.

He said the project would also help farmers to have easy access to markets.

The Asian share in the worlds agricultural exports has expanded over the past decade with China, Malaysia, Thailand and India taking the lead.

Pakistans share, on the contrary, has declined because of little or low value addition compared to other regional producers which have improved product technology and focused on value addition.

Agricultural exports from Pakistan have registered a decline or stagnated even in fresh fruits, due to its inability to meet the quality demand of the international market set by the World Trade Organisation (WTO), particularly in packing, marketing and production techniques.

Pakistan is the fourth largest exporter of dates. However, it exports only 13 per cent of its production.

It is the sixth largest exporter of mangoes, but exports only 2.2 per cent of production.

Some high-value vegetables are produced in the country throughout the year.

However, vegetable export from Pakistan is not in sync with its production capabilities.

The country is the fifth largest producer of milk, but only a little over three per cent of milk is processed in the country.

There is a huge demand for Pakistani meat in countries with large Muslim population, but the country is unable to meet the demand of even its own population.

There is definitely high growth potential in value addition in all these products, Mr Khalid said.

Under the project, six banks have been identified which will provide loan to farmers.

Policies ready for horticulture and agri-business -DAWN - Top Stories; May 19, 2008


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## Neo

*Business-friendly policies to be introduced: Zardari​*
ISLAMABAD, May 18: Pakistan Peoples Party (PPP) is determined to steer the country out of its current economic problems with business-friendly and pro-growth economic policies, co-chairman of the party Asif Ali Zardari said in a statement issued here on Sunday.

Growth has to come from all sectors of the economy - agriculture, capital market or services or manufacturing, he said, adding that the PPP accorded importance to all these sectors so that the engine of the economy could move forward.

The PPP co-chairman said the economic growth had been hijacked by terrorism, militancy and extremism, and pledged that the new government would focus on the resolution of the problems being faced by the country.

Economic progress will be achieved through progressive and proactive policies and in consultation with key stakeholders, Mr Zardari said, and urged the business community to play its role in this regard.

Meanwhile, the PPP co-chairman condemned bomb blast in Mardan Sunday evening that resulted in death of 13 people, including four security personnel.

Killing of innocent people in the name of religion was the most abominable act that must be condemned in the strongest term of words, Mr Zardari said.

No religion preached violence and those who carried out bombings and killed innocent people in the name of religion were doing a great disservice to the religion itself, he added.

Mr Zardari condoled with the bereaved families and vowed to bring the guilty to justice.

Business-friendly policies to be introduced: Zardari -DAWN - Top Stories; May 19, 2008


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## Neo

*Why farmers are reluctant to sell wheat to govt​*
WHEAT availability is a vital component of food security. To take care of the shortage, the government has decided to import 2.5 million tons of wheat this year as the domestic production is lower than the national consumption. Out of 120 districts, only 48 produce surplus and the remaining suffer from deficits. In terms of availability, some regions like NWFP, Northern Areas and AJK etc., are prone to food insecurity.

In the given situation, the supply of wheat to food deficit areas is essential to overcome food insecurity. The government has to play its role to procure wheat from districts which are surplus and to distribute it in those districts which are deficient. Every year, the government procures wheat to build strategic reserves.

This year also, the government has directed its agencies to gear up procurement effort to acquire sufficient wheat stocks to avert any future crisis. So far, 1.8 million metric tons of wheat has been procured in Punjab, says Punjab Food Minister Malik Nadeem Kamran. To add to this, the food departments claim of having achieved half of the wheat procurement targets. In spite of all these tall claims, the overall situation looks to be grim in the wake of farmers reluctance to sell the commodity to the government.

Farmers reluctance is because of known reasons. The continuing floor crisis, enhanced by smuggling and resulting in inflated prices has made the farmers reluctant to bring their crop to the food department. The private sector is instigating the growers about future wheat price hype. So, every grower, who has the means, has the intentions to store at least half of the saleable produce to fetch good price in the future. Hoarding of wheat has become a norm for the past few years. The growers are told not to sell the yield at one time but in three to four installments to get maximum benefit.

Initially, there were hopes of better yield but untimely rain near the harvesting stage badly affected the wheat yield. A majority of the growers are harvesting between 30 and 40 maunds per acre. A lesser number of the growers has succeeded to get wheat yield of 40 to 50 maunds per acre. Last but not the least, the growers are alarmed at the wheat crisis of the previous year, and are building their own strategic reserves at micro-levels.

Therefore, there is no hustle and bustle at the official wheat procurement centres which used to normally receive heaps of the produce during this time of the season. But the government has also speeded its efforts to coerce farmers and millers to sell their excessive stocks to food department. For instance, the Punjab government has launched much essential anti-holding campaign in the southern districts. The campaign is to be run through patwaris, lambardars and tehsildars. However, the stakeholders have not welcomed the anti-holding campaign. Former federal minister Awais Ahmed Lehgari criticised the governments policy and said that farmers were already under stress and such campaigns might create unrest among the rural community.

The government has to build wheat reserves to cater to the domestic needs. There is a need to curb wheat smuggling with iron hand. All routes of wheat smuggling should be plugged by deploying effective forces. It is wheat smuggling that dries up supplies to local markets and pushes wheat and flour prices up. The government should take the hoarders/speculators to task and compel them to stop hoarding. Hoarding also creates artificial shortages of wheat.

At the end, the government should gradually raise wheat prices to the international level because the growers pay international prices for inputs and get bank loans at much higher rates than available in the global financial market. For example, DAP has gone up to Rs4,000 and urea to Rs1,000 per bag, not to speak of rising pesticides and energy prices. The government has to focus on increasing crop yield.. The small farmers would be big losers if their rising cost of production is not compensated by hike in their crop prices.

Why farmers are reluctant to sell wheat to govt -DAWN - Business; May 19, 2008


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## Neo

*Updating poverty estimates​*
The Centre for Poverty Reduction and Social Policy Development (CPRSPD), an affiliate of the Planning Commission of Pakistan, is processing the economic and other relevant data for the fiscal 2006 for an estimation of the incidence of poverty during that year.

The Federal Bureau of Statistics (FBS) has provided the CPRSPD the relevant data for estimating poverty incidence. The centre is processing the data and we expect to finalise the poverty estimates for fiscal 2006 in another month or so, a senior Planning Commission of Pakistan official tells Dawn.

The last time the government had estimated incidence of poverty was in 2005, a year when the Gross Domestic Product (GDP) had peaked to above nine per cent and the country had harvested record food and other crops.

The results produced by the centre showed a reduction in overall poverty by 10.6 to 23.94 per cent in 2005 from 34.94 per cent in 2001. In urban areas, the poverty incidence was claimed to have declined to 14.94 per cent during the same period. it dropped to 28.1 per cent to 28.1 in the financial year 2005 from 39.26 per cent in 2001.

The new poverty estimates were however immediately challenged by the World Bank for using Consumer Price Index (CPI) for inflating 2001 poverty line instead of using the survey-based prices index, Tornqvist - TPI. On the basis of that the World Bank said poverty had dropped by 5.2 per cent between the year 2001 and 2005.

The decline in poverty in 2005 afforded the previous government an opportunity to show off the success of its economic and growth policies.

The fiscal 2006 too was not a bad year with regard to overall economic growth and food prices, the Planning Commission official says, implying that the results for the year would not be much different from 2005.

He acknowledges that the poverty incidence needed to be estimated immediately after the end of a fiscal year in order to adjust the governments socio-economic policies and priorities accordingly.

But, he argues, the FBS did not have enough funds to make poverty estimation a regular annual feature. The exercise is carried out only when the FBS has money for this purpose, he says.

Another official admits that the gains made during the period 2001 and 2005 on the front of poverty alleviation have largely been wiped out in the first 10 months of this financial year due to huge increase in food and commodity prices.

Poverty is extremely sensitive to food and energy price fluctuations and general economic conditions. The incidence of poverty changes each year, depending upon the economic conditions prevalent in a given year, he says

Some 35 to 40 per cent people of the total population are estimated to be living slightly below or above the poverty line. This segment immediately gets affected even by the slightest change in the economic conditions, particularly food and energy prices and performance of the agriculture sector.

Poverty is sensitive to year-to-year economic conditions. That is why the incidence of poverty during a given year differs from another year. If and when the prices go up and agriculture underperforms, the number of people below the poverty line rises. Similarly, if and when the prices fall and agriculture performs well, we see a reduction in the number of the poor, says an economist, who also asked not to be named because is working for the Planning Commission as a consultant.

The exorbitant spike in the food and energy prices in the last several months means a hefty increase in the number of people living below the poverty line.

The rule of thumb is that one per cent increase in the food prices means a half per cent rise in poverty, says the federal government consultant.

But, he says, the poverty estimates could not be built upon the rise or fall in the food and energy prices or the performance or lack of it of the agriculture sector alone.

The increase or decrease in poverty is also dependent on several other factors like the overall economic growth or lack of it, quantum of overseas remittances, government expenditure (on development and other projects), etc.

These factors always have a discouraging impact on poverty. If the economy is growing and the size of remittances rising and the government is spending more on development, it means that these factors would offset the impact of higher food and energy prices or drop in crop output. That is why we cannot calculate the net effect of the food and energy price spike on the incidence of poverty without analysing the economic data for the entire year, he says.

Yet, he adds quickly, it is safe to assume that poverty has gone up during the last six to nine months due to the poorer performance of the national economy as compared to the last financial year.

He says the soaring food prices during this fiscal must have affected the urban poor more than the rural poor.

In the rural areas, we have evidence to suggest that a good number of landless farmers - who get affected by the consumer price inflation more than the rest of the rural population, have diversified into livestock and other agriculture sectors in the recent years. Thus, they are economically more stable than they were in the past years. Look at the milk prices, which have risen to Rs48 per litre from Rs44 just 15 days back. This increase in milk prices should have helped transfer some income to this segment of the rural population. The sharp increase in the wheat prices should also have made similar, positive impact on those who have land and (grain) surplus to sell in the market. These developments could be said to have impacted positively on the lives of those living on a subsistence level, he argues.

However, he says, the increase in rural income also brings up the issue of its equitable distribution. The rise in commodity prices does not affect everyone in the rural economy equally.

When the commodity prices soar, only those who have larger landholdings and can produce for the market benefit. Since an overwhelming majority of the rural population - 93 per cent, according to some estimates - comprises landless tenants or small landholders, increase in commodity prices results in skewed, inequitable income distribution in the rural areas in favour of the bigger landholders, the economist says.

The increasing incidence of poverty has also generated a debate as to the effectiveness of huge indirect subsidies allowed to protect the poor from the price shocks.

Most economists argue that the mechanism of giving indirect, cross subsidies to mitigate the impact of the rising food and energy prices on the poor is not effective.

A larger part of these subsidies - such as the one on domestic oil and power prices, is pocketed by those who do not need them or who are not the target group of these subsidies.

The better way, these economic experts insist, would be to withdraw all the indirect subsidies and supplant them with direct cash subsidies to the targeted segments - 15 per cent chronic poor at the bottom.

However, an economist teaching at a private university, maintains that a middle way consisting of a mix of cash and food subsidies needs to be found out.

There is no perfect mechanism to ensure that the subsidies actually reach targeted groups without any leakages. If the present mechanism of indirect, price subsidies is fraught with leakages, who can say that the cash subsidy would have no leakage and reach those for whom it is intended? Every intervention on behalf of the poor has leakages, he says.

He says different kinds of interventions are needed to be implemented for different target groups - urban and rural poor.

All such interventions should be well planned and involve minimum leakages, he says. But that would require authentic poverty surveys showing the near exact depth and severity of the problem. Unless this can be achieved, there is little hope for any pro poor intervention to succeed.

Updating poverty estimates -DAWN - Business; May 19, 2008


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## Neo

*Fall in foreign exchange reserves drains off Rs 190 billion liquidity ​* 
KARACHI (May 19 2008): The interbank foreign exchange market witnessed another volatile week in the absence of major inflows. Whereas trading range remained wide due to continued demand for dollar.

Last week, the rupee lost its gains made on the central bank's intervention, but got some respite on the last day of the week (Friday) on expectation of the Lucky Cement inflow of $109 million, which is due between May 14 and 19. During the week, the rupee traded in a 67.50 - 69.40 band. The demand for the dollar persists on the interbank market. Aware of the mounting pressure due to surging global oil and commodity prices and record trade deficit, importers reappear on dips to take advantage of cheap dollar.

Recent measures taken by the State Bank of Pakistan (SBP) to plug loopholes have started reaping positive results, but the inflow of foreign currency in the banking system is not very encouraging. Estimates are that flow from the kerb market into the interbank forex market could be around $15 million against expectations of $75-85 million on weekly basis.

There are inflows expected by the end of the fiscal year. The MayBank and the Barclays are expected to contribute $780 million, but the continued rising oil and commodity prices are distorting all the calculations.

With persistent political uncertainty and deteriorating economic conditions, the slashing of Pakistan's sovereign rating by the Standard & Poor's (S&P) has eroded investors' confidence in the economy. Fundamentals such as trade and current account deficits, inflation and fiscal deficits determine the forex flows inward or outward.

A treasury head of a foreign bank said: "Restricting second session trade or providing 100 percent forex for oil payment from the SBP reserves is not the solution. The central bank cannot manage the oil and commodity payments from its reserves. It purchases most of the dollars from the interbank market. If both the amounts are included then almost 40 percent of the country's trade is managed by the SBP.

The biggest customer on the interbank market is the central bank itself. In case dollar liquidity is not drained out of the system, our interbank foreign exchange market will become extremely volatile, wayward and will collapse. The real problem is that in the current fiscal year (FY08), the receivables are not even half of what they were in the last fiscal year (FY07). Last year, the current account deficit was manageable. In the current year, Current Account Deficit and Balance of Payment has ballooned to a disturbing level.

The State Bank cannot be blamed for the fall in forex reserves. It is a direct consequence of fiscal slippage. Remittances, through the banking channel, are higher than ever before.

However, the central bank has not been using monetary tools more effectively. Inflation has skyrocketed, and is constantly up on weekly basis. There are food and energy crises in the country. Food prices have almost doubled in a year's time. Rentals are at an all-time high due to high food and oil cost and the weakening of the rupee. The SBP needs to jack up the Cash Reserve Requirement (CRR) and Discount Rate to check inflation. It needs to do it sooner rather than later or else be prepared to pump in $2 billion to temporarily stabilise the interbank forex market or wait and pray for $5 billion injection from the friendly countries. "We need to bite the bullet before the bullet hits us."

Meanwhile, the interbank money market overnight rate is hovering around 9 to 9 1/2 percent, with occasional tightening currency leading banks to call on SBP discounting window. But the fall in foreign exchange reserves by $4.279 billion from all-time October 2007 highs of $16.486 billion has badly squeezed commercial banks and investment banks in securities. The fall in forex reserves means the rupee liquidity equivalent of Rs 285 billion has been drained out of system. But if one takes into account SBP's May 16 data of Int'l Reserves & Foreign Currency Reserves position of negative 1.445 billion, this translates into liquidity injection of Rs 97 billion. Therefore, by netting out the overall liquidity that has drained out from the banking system would be around Rs 190 billion.

Based on the last SBP update of November 12 2007, since the SBP is consistent in updating its data regularly, the Total Deposits and Advances of scheduled banks are of Rs 3.451 trillion and Rs 2.482 trillion respectively. This signals that the Advance Deposit Ratio (ADR) is close to 75 percent, which also means that some of the banks and financial institutions must have received central bank's warning letter due to higher advances.

Therefore, as we are approaching fiscal year end and the declining forex reserves, the pressure for deposits will mount and banks will be rushing to get deposit. At present, call overnight (O/N) borrowing is trading around 11 percent to 13 percent, with demand for 3-month between 11.5 percent to 12 percent depending on the banks credit rating.

Bond market dealers reacted negatively on S&P's downgrading news. Most active bond, 10-year PIB yield jumped to 12.10 percent after the S&P's announcement and currently bond sellers are looking for buyers at 12.10 percent. Last cut-off yield was 11.4339 percent on March 31, 2008 auction.

In the interbank foreign exchange market, rupee's strength will heavily depend on inflows. On Saturday, the rupee after trading the lows of 68.20 closed at 68.70.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Government to approach Saudi Arabia for oil on deferred payments ​* 
ISLAMABAD (May 19 2008): Pakistan has decided to approach Saudi Arabia for a 1998-like special treatment to import oil on deferred payments to offset pressures on its economy.

A Ministry of Foreign Affairs letter, dated March 27, 2008, addressed to the Ministry of Finance (MoF), Ministry of Petroleum and Economic Affairs Division (EAD), indicated that Pakistan is going to take up the matter with Saudi Arabia during an upcoming visit for securing a special arrangement for oil import on deferred payments in the near future.

Through the letter, the Ministry of Foreign Affairs has informed the Ministry of Petroleum and Ministry of Finance that the matter of import of oil from Saudi Arabia on deferred payments is likely to be taken up during a high official visit in the near future.

The visit is indicative of Prime Minister Yusuf Raza Gilani's visit to Saudi Arabia. The Prime Minister was supposed to visit Saudi Arabia for performing umra soon after assuming the office of the Chief Executive of the country, but political uncertainty forced him to stay most of the time in the country. However, he is expected to visit Saudi Arabia to perform umra and hold bilateral talks, including oil import with Saudi rulers.

The Foreign Affairs Ministry's letter also has the details of oil Pakistan got from Saudi Arabia under a special arrangement of deferred payments from July 1998 to December 2004. This was the period when Pakistan was facing hard time on economic front due to the economic sanctions imposed by the US and other major trade partners depriving Islamabad of any kind of grants or soft loans.

Pakistan then had approached to Saudi Arabia for providing it oil against deferred payments in June 1998.It positively responded to Pakistan's call and provided it oil worth $3.3676 billion from July 1998 to December 2004.

The details showed that Saudi Arabia provided 30 million barrels oil of $375 million in 1998-1999, 33 million barrels of $785 million in 1999-2000, 25 million barrels costing 682 million in 2000-2001, 26 million barrels of $577 million in 2001-2002 , 24 million barrels of $644 million in 2003-04 and 10.77 million barrels costing 302 million in 2003-04.

Pakistan is again facing hard time and is looking desperately for financial support from friendly countries. China had already provided it $500 million on soft terms and conditions. Saudi Arabia had provided Pakistan $300 million for budgetary support in March this year. However, it's is looking forward for support from Saudi Arabia in terms of oil import against deferred payments.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Water project: Japanese team review KWSB master plan ​*
KARACHI (May 19 2008): A high-level seven-member delegation of Japan International Cooperation Agency (JICA) led by Sawara, reviewed the Karachi Water and Sewerage Board master plan for water supply. The KWSB Master plan envisages modernisation of water supply networks, said a statement issued by Municipal Administration Liaquatabad Town here Sunday.

Under this project, the water supply system will be upgraded through the Distribution Network System (DNI), in three towns in the metropolis including Liaquatabad.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Bush offers cooperation on economic, food crisis ​*
ISLAMABAD (May 19 2008): Prime Minister Syed Yousuf Raza Gilani on Sunday reiterated that the new coalition government stands by the country's pledge to fight terrorism, "the biggest threat to the world."

"Our government is committed to fight terrorism and extremism; it is against the humanity and it's against the world," said Gilani as he and US President George W Bush jointly addressed reporters at the Egyptian resort of Sharm el-Sheikh.

The two leaders held their first meeting Sunday morning on the sidelines of the World Economic Forum on the Middle East. Bush and Gilani discussed the security situation on both sides of the Pakistan-Afghanistan border, which remains a flashpoint between the allies because of the infiltration of Taliban and al Qaeda fighters who have sanctuaries in the rugged tribal region.

Bush said they talked about the "common desire to protect ourselves and others from those who would do harm."

Acknowledging Pakistan's economic, energy and food crises that could hamper its role in the war on terrorism, the US president offered cooperation on economic matters to make the "strong and vibrant" relations between Washington and Islamabad more productive.

"The truth of the matter is a population that has got hope as a result of being able to find work is a population that is going to make it harder for the extremists and terrorists to find safe havens," he said.

Describing terrorism and extremism as "the biggest threat to the world" Gilani recalled that his own party leader, Benazir Bhutto, has been killed in an attack in December. Pakistan, he said, was committed to fight terrorism and extremism but he also reminded the US president that his government had been democratically elected and "there's a change for the system."

"And I've been unanimously elected as the prime minister of Pakistan; that's the first time in the history of Pakistan." Washington has been concerned by the change in policy since the Pakistani coalition government was formed six weeks ago and began talks with the Taliban, whom US and Nato troops are fighting in neighbouring Afghanistan.

The Taliban, driven from power by a US invasion in 2001, is also active on the border tribal zone which also operates as a rear base for the conflict in Afghanistan and where the Pakistani army has fought the hard-line Islamists.

Bush only indirectly raised US unease saying that he and Gilani held a "very candid discussion" and that he had suggested that Washington and Islamabad could productively cooperate on economic matters.

On Wednesday, at least 15 suspected militants were killed when two missiles fired by US drones hit the house of a local Taliban commander in Damadola village in Pakistan's Bajaur tribal district. The US came in for a lot of flak from Pakistan, and the governor of the North-West Frontier Province that adjoins the conflict-hit region described the incident as "an attack on Pakistan's sovereignty."

Some 80,000 Pakistani soldiers have been deployed along the porous frontier to clamp down on militants' movements, but calls have been made in the United States to undertake direct military strikes on Taliban and al Qaeda targets inside Pakistan.

http://www.brecorder.com/index.php?id=741085&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*Creation of over 0.4 million new jobs: government likely to invest Rs 435 billion in various sectors ​* 
KARACHI (May 19 2008): The federal government is likely to invest some Rs 435 billion in agriculture, small and medium enterprises, housing and construction, information and communication technology and export sectors in coming fiscal year aimed at generating over 400,000 new jobs across the country.

Official sources told Business Recorder on Saturday that Islamabad was seriously considering to invest large amount in said sectors, aimed to create new job opportunities across country, which was almost 60 percent higher than the allocation made in the preceding years.

"These sectors have potential for a fairly diversified employment generation through direct and indirect ways and hopefully they would be identified as 'labour incentive sectors' for workers", they hoped.

They said that around 4.94 million additional work opportunities would be created in coming years intended to reduce the upward trend in unemployment rate, which skyrocketed during last few years.

Although unemployment rate has declined and presently stood at 6.2 percent, government is sketching out more strategies to reduce unemployment rate further in next FY, they added.

Officials said that Medium Term Development Framework (MTDF) 2005-10 and Poverty Reduction Strategy Paper (PRSP) had been prepared in line with these developments, which would create a sustainable economic system besides reducing poverty across the country. They hoped that these strategies would achieve the Millennium Development Goals (MDGs) till 2015.

They further said that it would help enhance competitiveness in these sectors besides maximising the knowledge and skills of workers, which would have direct effect on the Total Factor Productivity (TFP).

When asked who were participating more as labour force gender-wise they dispelled the general perception and said that due to an increasing participation females could make possible to scale down ratio of unemployment, which was very significant for economic growth. Hence the Labour Force Participation Rate (LFPR) was being increased in both genders at urban and rural areas, respectively.

Despite the fact that females are helping their families out from poverty-circle and stabilising them economically, community is still discouraging this weak segment of the society to earn bread for their families. They said that LFPR in females were phenomenal in last few years, which was about one fourth in rural areas while one tenth ratio was witnessed in urban areas, they informed. It may be cited that unemployment rate of overall population was 33 percent whereas around 45 million people are living below poverty line because of unemployment, however, 70 percent of them was young blood and living in rural areas, sources revealed as per independent survey report.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Pakistan has huge business potential​*
LAHORE (May 20 2008): The Asia House, UK, Chief Executive Officer, Chariotee Pinder has said that Pakistan has huge investment potential for the British business community. She was talking to the Small and Medium Enterprises Development Authority (Smeda), Chief Executive Officer, Shahid Rashid in a meeting held here on Monday.

Chariotee is on her first-ever trip to Pakistan along with Peter Courtney, Senior Country Manager, South Asia for UK Trade and Investment Section of the British High Commission.

Contrary to the Pakistan's negative perception in Europe, both business and cultural environments are encouraging for the British investors. "This is a wonderful country having a lot of opportunities for international businessmen and I shall apprise the UK businessmen about the business potential of Pakistan," she added.

Peter Courtney was also of the same opinion about the business prospects available in Pakistan. There is a vast scope of joint ventures between UK and Pakistan in various fields of industrial and commercial sectors, he said. He stressed the need of identifying potential sectors for investment to enhance business cooperation between the two countries. Earlier, Smeda Chief briefed the UK delegation about his organisation's role for the development of SME sector in Pakistan.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*5.94 million tons of cement exported in July-April ​*
ISLAMABAD (May 20 2008): Pakistan's cement export has registered a phenomenal growth during the first 10 months of the current fiscal year, which stood at 5.94 million tonnes for July-April, Business Recorder learnt.

"Last year, 2006-07, Pakistan cement export posted 3.2 million tonnes but figures for the first 10 months of the current fiscal year are encouraging", source in the industries ministry told this scribe. "We are expecting the export figures to further swell by close of the year with two more months in hands", he said, regretting Indian response was not encouraging.

Pakistan exports cement to Afghanistan, India, Middle East and African countries with maximum about 50 percent to Afghanistan. So far, 10 months cement production was about 23.5 million tonnes with 18.5 million tonnes local consumption and 5.94 million tonnes export. Pakistan total cement export was 2.3 million tonnes last year with 20.3 million tonnes consumption for the year.

The total production of 29 cement units is likely to remain below 30 million tonnes for the whole year of total 37 million tonnes capacity. So far, sources said the statistics showed 82.8 percent capacity utilisation of these units which is quite better when compared to last year's total 75.2 percent capacity utilisation for the whole year.

Giving details, they said total production was about 24 million tonnes last year of the total capacity of 35 million tonnes with 20.3 million tonnes for domestic consumption and 3.2 million tonnes were exported.

This year, they said, so far with two months still in hands, over 24 million tonnes production is already achieved of total 37 million tonnes capacity with 18.62 million tonnes consumption at home while 5.94 million tonnes were exported. This year, they said, annual capacity of 29 units was 37 million tonnes rather than 35 as some of them have done capacity expansion.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Pakistan equity roundtable held in London ​*
ISLAMABAD (May 20 2008): The Securities and Exchange Commission of Pakistan (SECP) in collaboration with the FTSE Group recently arranged a 'Pakistan equity roundtable' in London, highlighting reforms in the country's stock exchanges and demutualisation process.

A spokesperson on Monday said that the purpose of the roundtable was to create awareness amongst the international community about developments in the Pakistani capital market and investment opportunities, says a press release.

He said the FTSE Group announced the result of its annual country classification review, whereby Pakistan was to be removed from the FTSE Global Equity Index Series (GEIS) in June 2008. However, following high-level consultations, dialogues and efforts by the SECP, FTSE Group deferred its decision to remove Pakistan from the GEIS.

During the course of dialogues with the FTSE Index Review committee, it transpired that the FTSE Group was not aware of the wide ranging capital market reforms that had been introduced by the SECP over the past few years. The FTSE Group also suggested to the SECP to hold roundtables and conferences globally especially in the United Kingdom, United Sates of America, Hong Kong, Singapore, etc, to acquaint capital market institutions, asset managers and index providers with the capital market reforms introduced by SECP.

The spokesperson said that the Pakistan capital market has evolved over the last couple of years into a very transparent and equitable market place. It is essential to disseminate this well kept secret to the international investor base.

The SECP has planned to launch a global awareness campaign in order to acquaint the international community with capital market developments and investment prospects in Pakistan. The London roundtable being the first in the series of awareness programmes attracted a large group of people from the UK financial sector.

The Pakistani delegates delivered comprehensive presentations highlighting the regulatory framework, recent capital market reforms in Pakistani market and trading and settlement procedures. Such roundtables and seminars will greatly assist in refurbishing the image of Pakistani capital market in the international community, the spokesperson added.

He said that the roundtable was followed by a number of high-level meetings with the London Stock Exchange, the Futures and Options Association, Pakistan Britain Trade and Investment Forum and leading fund managers. The SECP explored various opportunities with the London Stock Exchange in developing new products and systems for the Pakistani capital market. The fund managers expressed their interest in the Pakistani capital market and a very positive response was received from them based on the reforms introduced by the SECP. The move towards corporatisation and demutualisation of the Pakistani stock exchanges was also appreciated.

The Pakistani delegation to UK other than the SECP comprised representatives of Karachi Stock Exchange, Central Depository Company, National Clearing Company, custodial banks and leading brokerage houses, he added.-PR

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Setting up dyeing, processing units: Sialkot garment industry demands five-year tax holiday​*
KARACHI (May 20 2008): The Sialkot-based manufacturers-cum-exporters have demanded tax holiday for five years to establish dyeing, weaving and processing units to increase value-added exports to $500 million from $250 million annually. They said on Monday that the government should include their proposals in the coming budget and the trade policy regarding development of garments industry in Sialkot.

The value-added garment industry is the fourth largest exporting sector with $250 million shares out of $900 million total exports made from the city annually, they claimed.

"Garments sector annual exports amount to one-third of exports made from Sialkot. We demand of the government to provide the investors with five years' tax relief to set up dyeing, weaving and processing units in the city to scale down additional expenses of transportation and labour," said Ijaz Khokhar, a former chairman of Pakistan Readymade Garments Manufacturers and Exporters Association (Prgmea).

He demanded of the government to set up vocational institutions for men and women in the city to overcome the dearth of manpower, which is presently at threatening low level. Sialkot is the only city in Asia that alone competes with China in the world market with its martial arts kits, he added. "Some 20 percent martial arts kits of total world demand is produced at Sialkot. Pakistan has direct competition with China, while the manufacturing city is faced with shortage of labour and basic infrastructure," he said.

Japan, he said, has almost diverted to China for meeting its martial art kits demand. Pakistan can earn more for national exchequer by offering incentives like tax concessions to its local investors, he added.

He said that local investors demand a similar tax holiday as the government has provided to investors for establishing industrial units in Gwadar. He added that the ministry of textile can play a vital role and it should evolve policies for the development of industries.

The increasing dependency of Sialkot textile garment industry on other cities for dyeing, weaving and processing their products not only increases cost of production but also brings about delays in exports, he said.

He pointed out that several exporters had lost their deals with foreign buyers for not meeting their export deadlines. About research and development (R&D) assistance, he said that it has played an important role in boosting exports of garments, and demanded of the government to continue it.

"Particularly, R&D assistance helps the exporters bear huge travelling expenses," he said, adding that under the R&D facility, manufacturers have inducted new machinery and carried out successful marketing in the world markets.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Over Rs 157 billion disbursed to agriculture sector in 10 months ​*
KARACHI (May 20 2008): Disbursement of credit to agriculture sector by commercial and specialised banks has shown an impressive growth of 34.88 percent, to Rs 157 billion during ten months (July-April) of the current 2007-08 fiscal year (2007-08).

The State Bank of Pakistan (SBP) said on Monday that overall the banks have disbursed total Rs 157.566 billion to the agriculture sector during July-April period against Rs 116.816 billion in the same period of last year, showing an increase of Rs 40.75 billion.

Disbursement by five major commercial banks--Allied Bank (ABL), Habib Bank (HBL), MCB Bank, National Bank (NBP) and United Bank (UBL)--totalled Rs 74.327 billion during the period under review, compared with Rs 54.597 billion during the corresponding period of last year, depicting an increase of Rs 19.73 billion, or 36.14 percent.

Zarai Taraqiati Bank (ZTBL) disbursed Rs 45.773 billion against Rs 38.843 billion of last year, and Punjab Provincial Co-operative Bank (PPCBL) disbursed Rs 3.983 billion against Rs 5.464 billion of last year. Besides, 14 domestic private banks lent Rs 33.482 billion, up 87 percent as compared with Rs 17.912 billion of last year.

The State Bank of Pakistan has set a target of Rs 200 billion for the current fiscal year, up from Rs 160 billion of last fiscal year, showing an increase of Rs 40 billion. During last fiscal year, commercial and specialised banks had disbursed Rs 168.83 billion to the agriculture sector.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Gilani seeks foreign investment in Pakistan's energy sector ​*
SHARM EL-SHEIKH (May 20 2008): Prime Minister Syed Yousuf Raza Gilani seeking investment in energy sector on Monday assured the investors that the new democratic government will fully facilitate the foreign investors.

"I can assure you that the government will provide all facilities to investors, as we have to come in a big way to tackle the energy crisis," he said while addressing a special session "Eye on Pakistan" of the World Economic Forum on the Middle East.

The Prime Minister said it was the PPP's government, led by Shaheed Benazir Bhutto, which brought in the Independent Power Producers (IPPs) in the country and added 4000 to 5000 MW of electricity in the national grid.

He said the country's future prospects can be gauged from its political, economic, security and social fundamentals. On political front Pakistan has successfully endured the struggle for democracy and is on the path of political stability.

On economic front, the Prime Minister said despite critical challenges most of the economic fundamentals have remained on track. Soon the political stability will have visible impact on further improving economic fundamentals, he added. On security, he said Pakistan believes in pursuing peaceful co-existence policy. Domestically Pakistan has some challenges which the government is addressing through dialogue including eradication of the menace of terrorism.

The Prime Minister said despite political and security challenges, economic fundamentals have been strong. "There is a sound economic foundation for the development of country and other financial indicators support this fact."

"Our foreign exchange reserves have increased, stock exchange has shown ten fold increase and 1.5 million Pakistanis have been brought out of the poverty line and public debt has halved. Pakistan's position in terms of rich-poor disparity has improved", he added.

The Prime Minister said Pakistan is a very attractive market for foreign investors. Around 700 foreign companies are operating in Pakistan while foreign direct investment during last year stood at 8.4 billion dollars. He said our manufacturing sector has shown sterling growth, agriculture sector has bounced back and telecommunication and IT sectors have taken a big leap.

State Bank Governor Dr Shamshad Akhtar in her presentation said the quality of economic management in Pakistan has improved. She said along with rest of Asia, the country withstood lot of domestic and external challenges.

She said Pakistan has withstood the domestic democratic transition, disruptions that it faced in one year and there will be a 6 percent GDP growth this year. She said the government is preparing a medium term economic programme which is going to lay out five years of economic frame-work. It will be an attempt to consolidate the fiscal deficit and to manage the external account deficit. She said financial sector in Pakistan has been the best performer, adding, "today the non-performing loans are below three percent."

GILANI MEETS MUBARAK Prime Minister Syed Yousuf Raza Gilani discussed ways and means to further strengthen bilateral relations and co-operation in various fields with Egyptian President Hosni Mubarak.

The two leaders who met on the sidelines of the World Economic Forum on the Middle East discussed issues of mutual interest as well as the prospects of enhanced co-operation in various fields including defence, trade and investment, science and technology, agriculture and tourism. They also discussed the Palestine issue and expressed support for an independent Palestinian state.

President Hosni Mubarak appreciated Pakistan's support for Palestine and said he wants to see a strong Pakistan, that is the source of strength for the entire Muslim world. Prime Minister Gilani said Pakistan was keen to expand its relations with Egypt in all areas.

He said the existing level of economic relationship between the two countries was not commensurate with the level of political co-operation and there was a need to focus on promoting interaction in infrastructure, IT, science and technology, health, tourism, real estate development and food processing sectors.

He said that the vast potential of Pakistan in the tourism sector remains untapped and the government was making co-ordinated and concerted efforts to promote this industry.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Pakistan, Jordan agree to sign FTA​*
SHARM EL SHEIKH: Pakistan and Jordan agreed on Monday to sign Free Trade Agreement (FTA) and also to set up a business council to create more space for cooperation between the two countries in trade and commercial fields.

This was decided at a meeting between Prime Minister, Syed Yousuf Raza Gilani and his Jordanian counterpart Nader el Dahabi in Sharm El Sheikh on the sidelines of the World Economic Forum. 

The Jordanian prime minister showed interest to benefit from Pakistans civil nuclear industry and said his country would seek help in this area for energy sector, officials said. 

The two leaders also decided to look into the possibility of resuming air flights between Pakistan and Jordan besides cooperating in tourism sector.

PM Gilani said Pakistan was in a position to provide Jordan the requisite expertise and technical know-how to help develop Jordans textile sector and welcome Jordans interest in Pakistans defence manufacturing and research facilities.

He said there was need to tap the available opportunities for promoting trade and investment between the two countries. 

He said there was a vast scope to enhance bilateral cooperation in diplomatic, economic, defence, security and science and technology and to activate the existing mechanisms to achieve the desired level of interaction between the investors and traders.

He invited the Jordanian prime minister to visit Pakistan. The Jordanian prime minister said his country was keen to expand cooperation and the doors were open for this purpose.

PM Gilani expressed the hope the ninth session of the Joint Economic Commission due to be held soon would help boost commercial ties between the two countries.

He said, necessary mechanisms in the shape of MoUs and agreements, which already existed, on trade, tourism, maritime trade, avoiding double taxation need to be implemented and energised.

Daily Times - Leading News Resource of Pakistan


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## sohailbutt

*KSE 100-Index down 18 points to close at 13,903 ​*
KARACHI: Karachi Stock Exchange benchmark index closed down 18 points on Tuesday at 13,903.

The day's trade started on gains as investors covered short positions from the previous sentiment. However, negative sentiments created by concerns over the state of the economy once again played on stakeholders' nerves. 

100-index lost 18 points to close at 13,903 points.

The broader market was almost square too. Of 339 active scrips, 115 ended on gains, while 201 declined and 23 remained unchanged. 

Volumes improved slightly to 167 million shares, from 125 million shares traded yesterday. 

KSE 100-Index down 18 points to close at 13,903 - GEO.tv


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## niaz

I hate to be harbinger of bad news but economic outlook for Pakistan looks bad. Energy is the lubricant which keeps the economy moving ahead. As of this morning crude oil has crossed $130 per bbl in the Far East markets and fuel oil is up $20 per metric ton. Pakistan imports approx 250 thousand tons of fuel oil per month (called furnace oil), another 250 thousand tons per month gas oil ( diesel) and approx 150 thousand barrels per day of crude oil.

on a very rough estimate, unless crude oil prices drop substantially (highly unlikely); oil import bill alone will exceed $10-billion!!. This is two thirds of our total export earnings. This implies a recession in Pakistan, may be globally as well.


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## Neo

*Cost of construction rises by 25pc in a year ​* Tuesday, May 20, 2008 

KARACHI: The housing and construction industry is facing a mismatch between the annual need of 670,000 housing units and the construction of only 300,000 units per year. Sources and real estate agents claim that a major cause of mounting pressure on housing in urban areas is the rural-urban migration. 

The demand for construction raw materials is increasing while international steel and cement prices continue to soar, which a common man is finding difficult to afford. A source explained that the cost of constructing a house now is at least 25 percent more than what it was a year ago. Billets are one of the most significant raw materials for steel products which had cost less than $200 per tonne a year ago and now have hiked to $1,100 per tonne.

Similarly cement companies are demanding to sell 50kg bag for Rs300, which is unaffordable for the common man, the source added. According to the FPCCI standing committee on housing and construction, World Bank statistics had reported a backlog of 7.0 million housing units against the backlog of 4.27 million in 1998. 

Pakistan may face further housing backlog of 10 million units in the next 20 years beside the backlog of 7.0 million, if the construction industry is neglected continuously, the research further predicted.

Some projections in the report state that Karachis population will grow to 20.6 million and Lahore to 10.8 million in the next few years. It has been estimated that more than half of all housing units in Pakistan consist only of one room, shared by an average family at 6.5 people.

On the other hand, a related phenomenon is the mushrooming of slums (kutchi abadis) whose number rose from 471 in 1984 to 1,482 in June 2005. In all major cities, other problems include an increase in the crime rate and the large-scale power and water theft in slums through illegal connections. 

Former senior chairman of FPCCI standing committee on housing and construction, Muneer Sultan informed that the government had taken some initiatives in the concerned sector which unfortunately failed with no results. 

He informed that the National Housing Policy 2001 was announced but never implemented. He added that the potential to generate employment in this sector has not been taken seriously in the past, nor ever decided to revitalize it as a vehicle for economic revival. 

Sultan further added that the last government had been sincere to develop the industry but bureaucracy prevented the growth of construction sector that would have directly benefited 72 allied industries.

All over the world, the housing and construction sector contributes greatly to national GDP but in Pakistan, the government fails to recognize the sectors importance which would eventually have dire consequences in the future, he concluded.

http://www.thenews.com.pk/arc_news.asp?id=3


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## Neo

*EAC to identify priority areas for reviving economy ​* Tuesday, May 20, 2008 

ISLAMABAD: The Economic Advisory Council in its maiden session on Monday decided to identify seven to eight priority sectors on which they would give advice to the incumbent regime for reviving the derailed national economy.

We will be able to identify seven to eight priority areas in next three to four days for meeting the enormous challenges being faced by the national economy, Shaukat Tareen, Convener of the Economic Advisory Council (EAC) told The News on Monday night.

Earlier, Federal Minister for Finance, Naveed Qamar said that the government would focus on poverty alleviation in the next budget and give due attention to agriculture sector for achieving higher growth.

The economic challenges are enormous and we will do our best to address economic woes in the budget, Finance Minister said talking to reporters after the Economic Advisory Council (EAC) meeting held here on Monday. 

Shaukat Tareen, who is also convener of the EAC said that the committee was deliberating upon options to provide relief to the masses stricken by POL, electricity and commodities prices.

Economic Advisory Council convened its first meeting with Finance Minister Syed Naveed Qamar in chair at the Finance Division, Islamabad. The Minister stated that the Council has to deliberate upon the solutions to the macro economic problems faced by the country. There is a need to focus on food security, energy crisis and other budgetary issues affecting the common man. 

He expressed the hope that the committee will be able to advise short term and medium term measures to improve and invigorate the economy as well as ensure that the common man can be provided relief against current economic pressures. 

The terms of reference of Economic Advisory Council are to provide independent advice to the Prime Minister and the government on the formulation and implementation of economic policies and reforms agenda. 

Economic Advisory Council (EAC) comprising 11 members includes the Finance Minister, Deputy Chairman Planning Commission, Special Assistant to Prime Minister on Economic Affairs and Finance Secretary from the government sector. The private sector members who today deliberated on the economic issues were Bashir Ali Muhammad, Tariq Saigol, Saqib Sherani, Farooq Rahmatullah, Salim Raza and Shaukat Tarin.

Tarin is the Convener of the committee and leads the deliberations as per TORs assigned to the EAC. He assured that the EAC would try to identify measures to address the current economic situation and would also deliberate upon medium and long term initiatives for improving the economic structure of the country. The Deputy Chairman Planning Commission expressed the view that the EAC should address the immediate problems of the common man.

Finance Secretary gave a presentation on the overall economic situation and forthcoming budget being prepared by the Finance Division. The meetings of the EAC would continue during the current week. 

http://www.thenews.com.pk/arc_news.asp?id=3


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## Neo

*Shaheens UK flight succumbs to high cost ​* Tuesday, May 20, 2008 

KARACHI: Private airline Shaheen Air has decided to suspend its flights to England from next month after becoming the latest casualty of soaring fuel costs, industry officials told The News on Monday.

The three weekly flights to Bradford from Islamabad have been discontinued from June 1 only after three months since the service was first launched amid much fanfare. With oil prices at record highs, the very survival of airlines is at stake, said Haider Jalal, Chief Operating Officer (COO) of Gerrys, one of the largest travel agencies of the country. It is time to take some drastic cost-cutting steps.

At least one Pakistani airline has already resorted to measures adopted by other international airlines to control costs and remain competitive in a tight market. Airblue has reconfigured its fleet of six aircraft to all-economy class models in order to accommodate more passengers and avoid sending flights with empty business-class seats.

By the conversion Airblue, which has given a run to PIA and Shaheen for market share when it was launched in 2004, will enhance seat capacity by 23 per cent. Airblue is also mulling over a proposal to stop serving meals on its aircraft as part of cost-cutting measures to ease some burden of escalating fuel prices, its Managing Director Syed Nasir Ali had told The News in an interview last month.

The idea of removing meals from flights is difficult to implement because Pakistani people will not welcome the move, he had said. But with oil prices going up continuously, this will have to be done.

While Shaheen has been cautious about giving an official version on the suspension of flights to England, industry officials say the revenue from the flight was not enough to meet the high cost impact of a leased A310 aircraft and fuel.

Shaheen was using a wet-leased A310 aircraft, which must be costing at least $4,500 per hour, industry officials said. Now add to that the soaring fuel cost and you can figure out the reason for suspending the flights.

One of the officials said it was naive on the part of Shaheens management to launch a long-route operation on fuel-guzzling aircraft that too on wet-lease, a type of lease only allowed for a maximum period of four months.

Jalal of Gerrys said Airblue is on the right track in bringing down the auxiliary costs associated with the airline business. Luxuries and frills have to be stopped, he said, adding: Stopping meals on flights would create uproar in the start but this unpopular decision is inevitable. He suggested serving some type of low-cost snacks instead of meals.

Meanwhile, national flag carrier Pakistan International Airlines (PIA) is also working on a plan to contain its expenditure and enhance revenue. However, Aijaz Haroon, the new Managing Director, refused to go into details saying they will be released shortly. But he did confirm one thing: There is no plan to stop serving meals.

http://www.thenews.com.pk/arc_news.asp?id=3


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## Neo

*EC asked to consider permanent market access for Pakistan ​* Tuesday, May 20, 2008 

ISLAMABAD: Pakistan has asked a visiting delegation of the European Commission (EC) to examine permanent market access for Islamabad under the GSP-plus scheme for a win-win situation for both sides.

In the third meeting of the EC with Pakistans sub-trade group, Islamabad urged the Commission to consider its request for neutralising the adverse impact of the market access provided to the countries of South Asia such as Bangladesh and Sri Lanka, revealed agreed minutes of the meeting, held in Islamabad recently, available with The News.

Pakistan also informed the delegation that it has signed 27 conventions relating to human rights, good governance and sustainable development while three are under the process of ratification and implementation. Pakistan said its exports to the EU region were less than one per cent, which qualified it for the GSP-plus scheme.

Taking note of Pakistans concerns, the EC team asked it to file an application for the GSP-plus scheme for examination before the date of entry for the new GSP regulation in Jan 2009.

Pakistan also expressed concern that the proposed softening of ECs preferential Rules of Origin for textile and garments may encourage shifting of the value-added industry to Least Developed Countries (LDCs), due to their duty-free access to the EU market.

Regarding anti-dumping duty on bed-linen import, Pakistan requested for suspension or withdrawal of the duty and assurance that it would not be re-imposed. The EC notified that they would follow all WTO obligations.

To comply with EC standards, the commission made it clear that the re-listing of Pakistani seafood exporters will be initiated if corrective measures as per the EC guidelines are taken, and that the commissions inspection is a must for Pakistans re-entry into the EU market.

Briefing on rice and its registration as geographical indication (GI) under TMO, 2001, Pakistani officials requested the visiting delegates for correcting the list of Basmati varieties mentioned in the EU regulation as the commercial property of Pakistan only.

About export tax on raw hides and skins and wet blue, Pakistani officials told the EC that the duty has been imposed to ensure adequate supply of raw material to the value-added domestic industry. The domestic industry is demanding a complete ban on the export of raw skins and hides as it is not helpful in discouraging exports.

The EC team informed their Pakistani counterparts that they are studying to assess the impact of trade policies on Pakistans preferential access to the EU market and it is expected to be completed in the autumn of 2008.

The EC also requested Pakistan to co-sponsor the joint EC-US-Sri Lanka Non-Tariff Barrier (NTB) proposal on textile labeling, address the issue of export taxes and emphasised the importance of protecting GIs.

Shahid Bashir, Senior Joint Secretary of Ministry of Commerce headed the Pakistani side, whereas Jan De Kok, head of EC delegates, Islamabad, represented the EU side at the two-day negotiations.

http://www.thenews.com.pk/arc_news.asp?id=3


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## Neo

*Pakistan-Jordan to sign FTA, set up JBC ​* Tuesday, May 20, 2008 

SHARM-EL-SHEIKH: Pakistan and Jordan on Monday decided to rapidly move towards signing a Free Trade Agreement (FTA) and setting up of Joint Business Council (JBC) to promote trade and investment between the two countries.

Talking to Prime Minister of Jordan Nader-al-Dahbi here on the sidelines of the World Economic Forum for Middle East, Syed Yousuf Raza Gilani said there was vast scope of bilateral cooperation in areas of diplomacy, economy, defence and security, tourism, energy and science and technology.

The two leaders held discussions on issues of mutual interest in bilateral, regional and international spheres. The two leaders who have earlier served as ministers of tourism in their respective countries discussed prospects of increased cooperation in this field.

Prime Minister Gilani said Pakistan and Jordan enjoy close brotherly ties and there was a need to tap the excellent available opportunities for promoting trade and investment between the two countries.

He said the two sides need to activate the existing mechanism to achieve the desired level of interaction between investors and traders belonging to the two countries. Prime Minister Gilani expressed the hope that the ninth session of the Joint Economic Cooperation, due to be held soon will help strengthen commercial ties between the two countries. He said the memorandum of understanding on the strategic dialogue signed between Pakistan and Jordan will be pursued vigorously to institutionalise the existing relations. 

http://www.thenews.com.pk/arc_news.asp?id=3


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## Neo

*Call to tap engineering sectors potential ​* Tuesday, May 20, 2008 

LAHORE: Member National Assembly and Pakistan Muslim League (N) leader, Ahsan Iqbal has said that the engineering sector has huge potential, which needs to be tapped. However, only those businesses would be able to advance that would be knowledge-based.

Ahsan Iqbal was speaking at a ceremony held in connection with the first anniversary of Etimaad Engineering Plc here the other day. He stated that the world has now become a global village and the level of competition is galloping fast with every passing moment. Therefore, the success of every nation lies in how they transfer their individual excellence into a collective one.

He stated that we have to work for enhancing exports especially in the field of engineering as it has a lot of potential, and work for the promotion of a quality culture in the country. Speaking on the occasion President & CEO of Etimaad Engineering, Mazharudin Ansari said we are already playing our humble role in overcoming the power shortage through our involvement as construction contractor of 160MW Attock Gen Limited in Rawalpindi and 220MW Orient Power plant at Balloki.

He said that their company offers total commitment to play its part in overcoming the current power shortage in the country. Thereby, acting as an engineering, construction and a project management company owned and managed by experienced professionals should.

He noted that his company is working on collaborations with reputable international companies to utilise expertise and verify design parameters. His company also offers in-house engineering, procurement and construction (EPC) capabilities to offer fast track solutions to meet Pakistans power in a cost effective way and to put up fast track power projects.

http://www.thenews.com.pk/arc_news.asp?id=3


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## Neo

*Credit flow to farm sector rises by 35pc​*
KARACHI, May 19: Credit flows to agriculture witnessed a tremendous rise of 35 per cent during in the first 10 months (July-April) of the current fiscal year, but the sector is yet to improve its performance.

The State Bank of Pakistan said on Monday that credit disbursement to the sector went up by Rs40.75 billion to Rs157 billion in the July-April period.

The credit flows increased during the last five years, mainly because of the involvement of commercial banks, but the country is still facing shortage of wheat, pulses and other green products.

Total credit disbursement to the sector in the financial year 2003 was just Rs27.5 billion which multiplied each year as commercial banks have now greater share of credit disbursement than specialised banks, like Zarai Taraqiati Bank.

Overall credit disbursement by major commercial banks, including Allied Bank Limited, Habib Bank Limited, MCB Bank, National Bank of Pakistan and United Bank Limited, stood at Rs74.327 billion during the first 10 months of the current fiscal year compared with Rs54.597 billion during the corresponding period last year, depicting an increase of Rs19.73 billion or 36.14 per cent in absolute terms.

The Zarai Taraqiati Bank, the largest specialised bank, disbursed Rs45.773 billion during the July-April period compared with Rs38.843 billion last year, while disbursement by the Punjab Provincial Co-operative Bank Limited stood at Rs3.983 billion, compared with Rs5.464 billion last year.

Fourteen domestic private banks also loaned a combined Rs33.482 billion during the July-April period, up 87 per cent when compared with Rs17.912 billion disbursed last year.It is surprising that despite high credit growth, the nation is still facing a shortage of agriculture products and the country is compelled to import even wheat and pulses.

However, the central bank in its last annual report had indicted that loan disbursement was limited to a few large borrowers while small farmers were deprived of credit. This was the reason that yields of important crops did not increase significantly.

It should be noted that in contrast to the increasing agriculture credit disbursement, the number of borrowers witnessed a decline for the second consecutive year in FY07, said the SBP annual report for financial year 2007.

This meant that the average size of agriculture loan increased and suggests that small farmers did not avail the financing facilities at the same pace as in previous years, said the SBP.

A senior banker said that higher credit to agriculture sector also reflects rising cost of inputs, like fertiliser, pesticides and other ingredients.

The central bank has set an indicative target of Rs200 billion for the current fiscal year, up from Rs160 billion in the last fiscal year.

Credit flow to farm sector rises by 35pc -DAWN - Business; May 20, 2008


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## Neo

*ADB interested in manufacturing sector​*
ISLAMABAD: A six-member delegation of Asian Development Bank (ADB) on Monday showed special interest in development of manufacturing sector in Pakistan. 

The delegation met with senior officers of the Engineering Development Board (EDB) today. They were briefed about the salient features of industrial, tariff, taxation and fiscal policies of Pakistan. The ADBs delegation informed the meeting about details of their various programmes and inquired requirements of the country so that the specific needs could be met. 

The delegation was also informed about new role of the EDB as facilitator to the engineering industry rather than regulator. It was emphasised that the Board had introduced the concept of consultation with stakeholders in policy making. In this regard, the example of Auto Industry Development Programme (AIDP) was given which could be followed in other sectors. Details of the trucking policy formed by the Board were also provided to the delegation in response to their query about National Trade Corridor Programme. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan likely to miss revised GDP growth target of 6pc​*
** Initial estimates suggest GDP growth at 5.5pc 
* Growth in agriculture at 1.7pc against target of 4.8pc 
* Large-scale manufacturing in industrial sector at 4.8pc against 12.5pc​*
ISLAMABAD: Pakistan is likely to miss the downwards-revised growth target of gross domestic product (GDP), with estimates suggesting that the GDP growth will remain less than 6 percent in the current fiscal year 2007-08, official sources told Daily Times on Monday. 

The National Accounts Committee, which met to finalise the growth estimates for the current fiscal year, was informed about the performance of various economic sectors, said an official privy to the meeting.

After a detailed review of the performance of the each economic sector during the period from July to March, the committee estimated the GDP growth at 5.5 percent. 

However, the meeting decided that the latest performance figures of services sector provided by the State Bank of Pakistan would be also be included in the review.

Keeping in view the central banks request, GDP estimates for the current fiscal year would be finalised on Tuesday (today), which are expected to be around 5.7-5.9 percent, the official added. Actual GDP growth target for the current fiscal year was 7.2 percent, which was lowered to 6 percent because of the poor performance of agricultural and industrial sectors.

Agricultural growth: The agricultural sector has registered an overall growth of 1.7 percent against the target set at 4.8 percent. Major crops registered a negative growth of 1.7 percent, while minor crops made a negative growth of 2.4 percent in the outgoing fiscal year. 

Industrial growth: Industrial production also showed less than the projected growth. Large-scale manufacturing (LSM) grew at a meagre rate of 4.8 percent against the annual growth target of 12.5 percent. Foreign direct investment also witnessed a negative trend of over 30 percent during the current fiscal year, the official said. 

Commodity producing sectors were also not able to maintain their growth momentum and recorded a 3.7 percent growth rate against the annual target of 7.4 percent. 

However, the services sector again projected a growth of 7.4 percent against the target of 7.1 percent  mainly because of the good performance of the banking, insurance and telecommunication services sectors, the official added. 

The official said that growth in services sector suited to mature economies, but not the emerging economies like Pakistan. Although the growth in services sector during the last few years helped the government to show handsome growth, it also resulted in increasing demands and high inflation because of negative trend in commodity sectors, he added.

The official said that an emerging economy like Pakistan could only sustain itself through continuous growth in the agricultural and manufacturing sectors, which ensure food security and help the country enhance its exports for foreign exchange earnings.

He believed that the government would not be able to project a higher GDP growth target for the next fiscal year 2008-09 because of low GDP growth this year.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Wind energy does miracle in Sindh villages ​* 
*Locally-manufactured wind turbines costing Rs0.16m each lit up four small villages​*
Wednesday, May 21, 2008

KARACHI: Given the fact that Pakistan is facing a power shortfall of 4,000MW, it is heartening to see that the Sindh Rural Support Programme (SRSP), a Hyderabad-based non-governmental organisation (NGO) has illuminated four small villages in Jati in the Thatta district, some 150 kms from Karachi, through installing wind turbines, giving a cue that it is time to tap alternative sources of energy.

The villages include Raj Sheikh Bachal, Mian Abdul Karim Jat, Abdullah Jat and Mohammad Umar Thahmein and have average 26 houses each.

Each wind turbine cost us Rs160,000 and was acquired from a Karachi-based private firm, Dr Yameen Memon, Trustee of SRSP told The News.

The inhabitants of these villages, comprising poor farmers and fisherfolk, had never dreamt of getting electricity and are extremely happy.

We dont face load-shedding, said Ahmed Ajeeb, 33, hailing from Abdullah Jat village. Now our children can study, do their homework and can play even during the night and our women can continue embroidery work, he said. 

Each household saves Rs75 every month that is deposited in a bank to meet any exigency. The villagers sow rice, wheat, sugarcane and oilseeds and farmlands are dotted with mango, neem, conocorpus and eucalyptus trees. There is also abundance of devi bushes in the area.

However, since Jati happens to be at the tail end of River Indus, there is acute shortage of freshwater.

We dont know when we will get water. But when it comes, we practice agriculture. I own eight acres of land but cultivate only two acres because of scarcity of water, said Gul Mohammad, 25, an inhabitant of Abdullah Jat village.

Last year I cultivated rice on my land but most of it is lying barren this year because there is no water, he said.

But people have not lost hope. Some of our requirement will be fulfilled by Almighty through rains while the rest will come through the canal, said Mammon Lodho, 60, a farmer in Mammon Lodho village.

We received water a month ago. Now we are being told that it will come on May 20 but we are not sure, he said.

Thanks to wind turbines even the streetlights in the villages have started functioning. 

There are lots of snakes in our area and would frequently bite villagers but after we got electricity, we are relatively safe. Even stray dogs dont bark now because they recognize us, said Nisar Ahmed, 30, who lives in Umer Thahiem village.

We feel as if we are living in cities, he said. Every village that has been illuminated has an average population of 150 people. The wind velocity here is 6-9 meter per second (MPS) and we have made sure that the wind turbines that are being used are locally-manufactured, said Dr. Memon. 

Given the fact that Pakistan has a 1700-km long coastal belt and pretty good wind velocity, perhaps the experiment could be replicated in vast areas of the country. 

I have discovered a wind corridor between Gharo and Keti Bundar that is 80km wide and 150km in depth and it can generate 4MW energy at every kilometer at a cost that is cheaper than coal, said Brigadier (Rtd.) Dr. Naseem A. Khan, Vice Chancellor, Hamdard University and former secretary, Alternate Energy Development Board.

He said Pakistan should learn from India that is generating 1800MW from wind energy, equivalent to energy produced by Mangla Dam. 

But he conceded that gas lobby was very strong in Pakistan and it discouraged tapping alternate sources of energy.

Wind energy does miracle in Sindh villages


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## Neo

*GDP growth expected at 5.78pc ​* 
Wednesday, May 21, 2008

ISLAMABAD: Pakistans economic growth is likely to slip below a revised target of 6 per cent for the 2007/08 fiscal year, mainly because of lower manufacturing growth and farm output, a government official said on Tuesday.

Gross domestic product is expected to grow by 5.78 per cent, said a Finance Ministry official who declined to be identified as he is not authorised to talk to the media.

The projected GDP growth rate, calculated at a meeting of the National Accounts Committee on Monday, is based on data for the first nine months of the fiscal year to March and estimated figures for the remaining three months.

Pakistan had set a 7.2 per cent growth target for gross domestic product (GDP) at the beginning of the July-June fiscal year but revised that to 6 per cent this year, citing weakness in manufacturing and farm-sector growth.

The fiscal year ends on June 30 and the government is expected to announce its budget for 2008/09 early next month.

Agriculture grew by merely 1.49 per cent against an original target of 4.8 per cent, mainly due to less-than-expected growth in major crops, wheat and cotton, the official said.

Pakistans wheat output this year is expected to be 21.8 million tonnes against a target of 24 million. Early this year the government cut the target for cotton output to 11.6 million bales from a revised 12.8 million and an original target of 14.14 million.

Growth in large-scale manufacturing is estimated to drop to 4.84 per cent, compared with a target of 12.5 per cent.

The service sector was likely to post 8.16 per cent growth thanks to a robust 17 per cent expansion in the banking and insurance sector, the official said.

The government is due to give official growth figures and targets for next year later this month.

The economy, which has averaged annual growth of 7 per cent over the past four years, is under pressure from expanding fiscal and trade deficits, a weakening rupee and inflation, which touched a 30-year high of 17.21 per cent in April.

A coalition government that assumed power nearly two months ago after February elections blames the previous administration for mismanaging the economy.

GDP growth expected at 5.78pc


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## Neo

*FPCCI angst over grim economic scenario ​* 
Wednesday, May 21, 2008

KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has expressed deep concern over the current economic situation and emphasised on the need for an effective trade policy to check the abrupt inflationary trend, alarming condition of trade deficit, severe food and energy shortages in the country.

In a press statement, FPCCI said that Pakistans trade deficit has reached an all time high of $14.5 billion in the first nine month of current year as compared to $10 billion in the corresponding period last year, showing deterioration of 44 per cent.

It further added that inflation was 14.1 per cent in March 2008 compared to 11.2 per cent in February 2008 and 7.6 per cent in March of last year. During the first nine months (July-March 08), the average CPI-based inflation stood at 9.5 per cent as compared to 8 per cent last year.

Acting president of FPCCI, Raja Ahsan Fareed recommended long term planning adding that the forth coming trade policy should be designed such that it covers future scenario to avoid the possible impact of expected crises.

FPCCI angst over grim economic scenario


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## Neo

*Punjab sets 11m cotton bales target ​* 
Wednesday, May 21, 2008

LAHORE: The Punjab government has fixed a production target of 11 million cotton bales for this season, The News has learnt.

According to the Cotton Strategy for Productivity Enhancement and Work Plan 2008-09, the production target of core cotton growing area is 9,817.91 million bales.

The core area consists of 5,379.14 acres. The target set for non-core area is 1,084.46 million bales. This area comprises of 456.57 acres. The production target set for marginal area is 97.62 million bales. This area comprises of 91.46 acres. The study has been prepared by the Agriculture department.

The department has divided its course of action into four categories, targets of cotton production, production technology, education to farmers and work plan.

The department has asked the farmers of the core area to start sowing the crop from May 1 and that the process should be completed before June 7, to get the best produce. Core cotton growing areas are Multan, Khanewal, Vehari, Lodhran, Bahawalnagar, Bahawalpur, Dera Ghazi Khan, Rajanpur, Muzaffargarh, Layyah and Rahimyar Khan.

The non-core cotton growing area is Faisalabad, Jhang, Toba Take Singh, Sahiwal, Okara and Pakpattan. The department has told the farmers of the area that the sowing of the crop, which started from April 16, could not be continued after May 31.

For the marginal area constituting of the rest of the districts of Punjab, the department recommended sowing from April 16 to May 16.

However, agriculturists of the department have forbidden cotton sowing in the virus-hit areas including Vehari, Pakpattan, Sahiwal and Khanewal, before May 15.

The department has asked the farmers of the cotton growing area to discourage cultivation of okra, tomato, brinjal and other alternate plants, which can host viruses, including mealy bug and others.

For pest management of the crop, the department has asked the farmers to protect the crop from the mealy bug attack by ensuring complete cleanliness of ornamental and fruit plant nurseries. The farmers should also carry out pest scouting twice a week especially in the area that was affected by the pest attack last year, to protect the crop from the mealy bug attack.

Experts of the Agriculture department have asked cotton growers to destroy weeds from the fields and watercourses and suggested that the farmers should also destroy infested plants at an early stage, which usually causes mealy bug attacks on the fields.

Moreover, the Agricultural department has completed the training of its staff in ensuring quality control of pesticides and fertilisers. Besides, a task force has been constituted for strict implementation of the pesticide ordinance. The task force will check adulteration of pesticide and fertilisers and ensure labeling according to registration, quality emulsifiers and solvents in them.

To educate the farmers on technical details of the crop, the Agriculture department will arrange village-level training for the farmers in six phases. In the first phase, a special campaign will be launched to combat the attack of pink bollworm, American bollworm, white fly and cotton mealy bug. In the second phase, literature will be distributed among the farmers and print media will be used for awareness.

In this phase, an agriculture helpline, an agriculture website and special TV and radio programmes will also be used. The helpline will be a toll free number, 0800-15000, where problems of the farmers will be recorded from 8am to 2pm daily, followed by replies to the queries from 2pm to 4pm.

In other phases of the training, the farmers will be educated on cotton pests and diseases, pest management, pest scouting, their control and cotton contamination.

In case of emergencies, the agriculture department has also chalked out a plan to combat the pest attack, which includes a special emergency cell and a request for people to hold a special prayer session.

The emergency team will have technical experts of the Research Wing, and vehicles will be acquired from Adaptive Research, AARI and Agriculture Engineering and Water Management. Funds in this connection will be provided by the provincial government. To protect the cotton crop from the white fly attack, the farmers have been asked to use treated seed, avoid planting host plants near the cotton fields, eradicate weeds, and apply IGRs and soft pesticides at the early stages of attack and also to apply effective insecticides.

For the jassid attack, they have been asked to cultivate resistance varieties and spray insecticides at the ETL level. For aphid, the farmers have been advised to destroy host plants and avoid spraying insecticides if beneficial insects are present.

For thrips, spraying water on the crop at an early stage is suggested, other than the use of treated seed, destruction of alternate host plants, eradication of weeds and application of effective insecticides. For mites, in case of the early attack of this pest, spraying water on the crop has been suggested. JR

Punjab sets 11m cotton bales target


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## Neo

*EC, SMEDA discuss technical education project ​* 
Wednesday, May 21, 2008

LAHORE: A delegation of the European (EC) Commission held a meeting with the experts of Small and Medium Enterprise Development Authority (SMEDA) to discuss a project for the development of technical and vocational education and training (TVET) sector in Pakistan.

According to a statement issued here on Tuesday, Chief Executive Officer Shahid Rashid headed the SMEDA team, while the EC team, comprising of representatives from DFID, ILO and GTZ, was led by Dirksellens.

The leader of the EC delegation informed that his team was busy in a meeting with the government and the private sectors institutions, to develop the TVET sector with a view to contributing towards poverty alleviation and sustained social and economic development. We have come to Pakistan to refine the findings of the Identification Mission that visited Pakistan in March, he added.

Shahid Rashid gave a briefing to the visiting delegation on SMEDAs contribution to develop the SME sector. He said that SMEDA was developing sectoral development strategies to curb poverty by generating employment opportunities and ensuring sustainable social and economic development in Pakistan.

EC, SMEDA discuss technical education project


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## Neo

*Federal Budget 2008-09: Pro-poor, growth oriented budget on June 7: Naveed​*
** Govt to provide adequate funding to PSDP for agriculture​*
ISLAMABAD: The Federal Budget for 2008-09 will be presented in the National Assembly on June 7, 2008, with emphasis on development of infrastructure, agriculture and will be a pro-poor and growth oriented budget, Syed Naveed Qamar, Federal Minister for Finance and Revenue said.

He was addressing a corporate dinner hosted in honour of leading businessmen and entrepreneurs of Pakistan.

He said that that re-shuffle in the bureaucracy would be completed after the budget announcement, hinting the sidelining of the bureaucrats associated with the previous governments economic regime.

Those policies of the previous government which were not harmful for the economy will not be changed and would be further improved for achieving higher growth and reducing poverty, he added. 

The minister was confident that current economic imbalance and difficulties would be resolved with the cooperation and help of the private sector. Private sector would remain engine of growth and the government would act as facilitator, he said. 

He said that Pakistan is an agricultural country and the government will allocate a hefty amount in the Public Sector Development Programme for the promotion of this sector. This would not only help achieve food security and reducing rural poverty but would also help diversify exports. He further informed that Oil and gas exploration, utilisation of national coal reserves and industrialisation would be promoted during the tenure of the present government. 

He was confident that by discretionary policies and regulations Pakistan would be able to grow faster and with the help of business community all the economic targets would be achieved. 

He dispelled the impressions that neither the government is going for another re-scheduling of foreign debt nor it has come across with any problems regarding foreign payment obligations. 

He assured the corporate leaders that by the end of next year load shedding would be totally eliminated in the country. Elaborating on the power policy approved by the Federal Cabinet recently, the minister said that against the immediate requirements of 1,200MW power of the country, foreign as well local investors have expressed their interest in power generation up to 5,000MW. This shows the confidence of the local as well as foreign investors in the new elected government and its policies, the minister added. 

The event from private sector was attended by CEO Telenor Tore Johnsen, CEO CM PAK Clan Li, MD Nestle Pakistan Trevor Clayton, MD Sanofl Avemtos, MD PCJCU Chen Jianbo, MD KASWEJ Limited Farid Masood, MD Barclavs Mohsin Nathani, GM OMV George Wacantel, MD Sileli Pakistan Zaiviji Ismail MD Metro Cash and Cary Giovanni Soranmo, Member Board of Directors Engro Group Khalid Subhani, CEO Indus Motor Parvez Ghais, CEO ICI Waqar Malik and Country Manager P& G Qaiser Shareef.

Daily Times - Leading News Resource of Pakistan


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## Neo

niaz said:


> I hate to be harbinger of bad news but economic outlook for Pakistan looks bad. Energy is the lubricant which keeps the economy moving ahead. As of this morning crude oil has crossed $130 per bbl in the Far East markets and fuel oil is up $20 per metric ton. Pakistan imports approx 250 thousand tons of fuel oil per month (called furnace oil), another 250 thousand tons per month gas oil ( diesel) and approx 150 thousand barrels per day of crude oil.
> 
> on a very rough estimate, unless crude oil prices drop substantially (highly unlikely); oil import bill alone will exceed $10-billion!!. This is two thirds of our total export earnings. This implies a recession in Pakistan, may be globally as well.



I agree. 



> *Pakistan needs 1,500MW to achieve GDP growth target​*
> ISLAMABAD: There is no overnight solution to the power crisis and Pakistan needs to add 1,200MW to 1,500MW additional power per annum to achieve GDP growth target of 7 to 8 percent, said Rune Stroem, head energy operations Infrastructure Division Central and West Asia Department.
> 
> He said this after signing ceremony between government of Pakistan and ADB for a loan agreement of $220 million here under Multi-Tranche Financing Facility (MFF). The first tranche of the programme of $236 million was signed on January 16, 2007. The acting secretary Economic Affairs Division, Junaid Iqbal and Country Director ADB, Peter L Fedon signed the agreement.
> 
> He said government of Pakistan would have to take short-term and long-term measures to improve the chain of power flow, and more money is needed in power sector to achieve the growth of 7 to 8 percent of GDP. He said that Pakistan needs skill management, technical solutions and financial strength to control transmission losses of power distribution companies.
> 
> Fedon said that the discussion on the $1 billion loan with Pakistan was under way and ADB would provide loan for power sector including renewable energy and hydel projects including Bhasha Dam project. He said that ADB had provided $1.9 billion during the year 2007-08 and we are looking at $1 billion lending to Pakistan in 2009.
> 
> He said that the economic indicators of Pakistan are not healthy due to high oil and food prices along with the huge trade and fiscal deficits.
> 
> In order to have policy coordination, there is a need to develop better communications between Finance Ministry and State Bank of Pakistan.
> 
> We are committed to provide financing for energy efficiency, renewable energy and hydel projects, he said adding that the agreed loan of $220 million would help Pakistan to improve its current power system.
> 
> Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistani rupee closes at record low ​*
KARACHI: The Pakistani rupee fell to a record closing low against the dollar Tuesday due to buying by importers. 

The dollar sold for Rs 69.90 in the interbank market, higher by 60 paisas from the previous days closing value. 

Strangely, the rupees value was higher in the kerb market than in the interbank market. Usually, the rupee is weaker in the open currency market. The dollar stood at Rs 69.60 for buying and Rs 70 for selling Tuesday evening, according to a major foreign exchange company. 

Payments of costly oil imports have been one of the major reasons of rupees slide. 

The dollar has surged Rs 10 since the beginning of the fiscal year as the economy feels the brunt of rising oil prices, large trade and current account deficits and falling investment flows. 

The central bank has been intervening in the market to support the rupee, but it has caused depletion in foreign exchange reserves and has also failed to keep the rupee protected. So the central bank is now relying on statements to calm the market. State Bank governor, Dr Shamshad Akhter recently told bankers that $3.5 billion inflows are expected, but even this has had little impact, and the rupees freefall continues. However, the changes in rules and regulations governing the business of exchange companies have brought about stability in the rupees value at their counters.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Oil import bill grows by 47.04 percent in July-April ​*
KARACHI: Countrys oil import bill swelled to $8.67 billion during the first ten months (July-April) of the current fiscal year, reflecting 47.04 percent growth, figures released by Federal Bureau of Statistics show. 

The oil import stood at over $5.896 billion during the same period last year. The import of manufactured petroleum products registered 53.60 percent growth to $4.650 billion during the period under review against $3.027 billion in the corresponding period of previous year. 

Crude petroleum oil import soared to $4.019 billion during July-April period of the current fiscal year, up by 40.11 percent against $2.868 billion during the same period of last year. 

During the month of April this fiscal year, oil imports grew phenomenally by over 102.53 percent to $1.253 billion compared to $619.057 million same month last year. 

This growth is attributed to the increase in import of manufactured petroleum products, which grew by over 93.46 percent and an increase of 113.69 percent in crude oil import. 

However, oil imports increased by almost 16.48 percent during the month of April over month of March when $1.076 billion worth of oil products were imported.

According to analysts, increase in the oil import bill has been caused by skyrocketing prices of petroleum products in international market, which at the moment are not showing any signs of tapering off and analysts forecast further increase in imports of oil products in the coming months. International oil prices are flirting with $129 per barrel mark Tuesday and during the month of April prices remained well above $100 per barrel in the international market. If the prices stayed at the same level during the remaining part of this fiscal year, oil import bill will balloon further, they added. 

Apart from value effect, the volume effect of oil imports has also been contributing in swelling of the import bill, as during the period under review, quantity of oil products showed substantial growth because of growing needs domestically, especially for power producing companies and electricity generating. 

Last year, oil import bill crossed $7 billion, and analysts predict that it would be settling around $10 billion, if the prices in the international market did not fall in near future. 

Machinery is the second largest component in the import bill after petroleum, as its import stood at $5.898 billion in July-April of this fiscal year, up by 7.68 percent from $5.477 billion last year.

This growth in the import bill of machinery was due to over 38.18 percent growth in the import of power generation machinery, 33.07 percent growth in construction and mining machinery, 14.31 percent growth in electrical machinery and apparatus and 9.93 percent in other machinery. Import of textile machinery dropped by 16.01 percent, office machinery by 7.35 percent while import of agriculture machinery and implements declined by14.37.

The import bill of agriculture and other chemicals was up 35.59 percent to $4.761 billion in July-April of current fiscal year compared to $3.511 billion in the corresponding period of last year. In this group, over 193.12 percent growth was recorded in fertilizers, over 12.30 percent in plastic material and over 21.63 percent in medical products. 

The import of food items surged to $3.523 billion in the first ten months of current fiscal year as against $2.371 billion during the same period of last year, showing a growth of over 48.5 percent. This growth was mainly due to import of wheat, soyabean and palm oil.

The import bill of transport was down by 7.68 percent to $1.919 billion during the said period from $2.075 billion in the same period of previous year.

The total import bill reached to $32.061 billion during the first ten months of current financial year, reflecting a growth of over 28.28 percent as compared to $24.99 billion in the corresponding period of last year.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Textile export declines by 2.54 percent​*
KARACHI: The declining trend in the exports of textile products continues and they decreased by 2.54 percent in July-April of the current financial as compared to the same period last year. 

The data released by Federal Bureau of Statistics Tuesday showed that total textile exports were $8.649 billion in July-April period of 2007-08 compared to $8.875 billion in the same period of previous year. Almost all the products in the category of textile exports, particularly in value-added sector, performed disappointingly during the period under review, which turned the overall export of textile products to negative. In month of April, the export of textile products improved modestly by 1.65 percent to $872.103 million over $857.967 million the same month of last year, however, it declined by over 5.59 percent in the preceding month of March of this fiscal year, when 923.730 million worth of textile products were exported. 

The break-up shows that exports of bedwear, tents, canvas and tarpaulin registered negative growth of 4.27 and 1.66 respectively during July-April of the current fiscal year. Export of cotton cloth, cotton carded and yarn other than cotton declined by 9, 8.44, and 3.22 percent, respectively during the period under review. The exports of knitwear and raw cotton have seen modest growth by 1.65 and 28.45 percent respectively. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Warid Telecom to invest additional $1bn by end of 2009​*
KARACHI: Warid Telecom, an Abu Dhabi base mobile phone operator in Pakistan, will invest another $1 billion by the end of 2009 to expand its network, said Marwan Zawaydeh, its chief executive officer (CEO).

In an exclusive interview with Daily Times here on Tuesday, the CEO said, Investments of Warid Telecom will reach $1.5 billion by end of this year and $2.5 billion by end of 2009. We are all geared up to achieve 2nd largest operator slot in Pakistan. 

Recently, Warid Telecom has awarded a $300 million contract to Swedens Ericsson to expand its network in Pakistan. The GSM network extension in Pakistan will give additional capacity for five million subscribers and coverage of additional 100 cities before the end of 2008.

Additionally, he said, Warid Telecom is signing two contracts with Huawei. The two agreements cover purchase and installation of 422 cell sites. These agreements will add 137 cities and 27 roads to Warid Telecoms coverage network before end 2008, he added.

Replying to a question that Warid and Telenor started their operations together but now Telenor is leading in terms of subscribers Marwan said, the wonderful response we got after our commercial launch forced us to further strengthen our existing network. 

For a limited time our attention was diverted from adding new locations and we had to work on our existing network enhancement due to a large number of subscribers joining us. However, this has been taken care of and the market dynamics will see a change in the near future. As for the subscribers, let me say here that we are enjoying the largest active post-paid subscribers base.

In a few years, we want to become the leading player in Pakistan in terms of subscriber base while we are still maintaining best slot for the network coverage, voice clarity and innovations. We have now made our commitments to become a credible challenger to the market-leader through excellent services and rapidly expanding coverage commitments. Once we have our cell sites in place throughout Pakistan, we will focus on the largest operator slot.

We have recently added a number of cities to our network and this marks the beginning of one of the largest network expansions in Pakistan. 

After this latest addition, the number of destinations in the Warid Telecom network is now 250. As per company policy, Warid Telecoms cities are only included as a coverage destination after the provision of cell sites along with a fully functional sales and service centre, Franchise or retail outlets.

Talking on over all industry Marwan said, some key challenges for the industry are low average revenue per unit (ARPU) and low usage of data services due to lack of exposure and insufficient knowledgeable customer base. Todays consumers need the most comprehensive portfolio from value added products to brand loyalties. On the other hand, our consumers need to be educated about the utilisation of new products and services offered.

Another challenge for the mobile industry in Pakistan is the shortage of commercial power in many cities and villages. This makes it even more difficult and challenging for the operators as it slows down the network rollout and also increases operational costs.

In reply to Poor connectivity and frequent dropping of calls he said, Warid Telecom has deployed state of art mobile phone network for their subscribers. This results in premium connectivity, optimal voice clarity and a very transparent billing system, our subscribers are enjoying since the time of our launch. We are very confident in claiming that today Warid Telecom is enjoying the best quality network in Pakistan. Warid Telecom is the fastest growing GSM mobile company in Pakistan with 15 million subscribers and a network of over 250 cities/ 5000 destinations all over Pakistan. Warid Telecom is providing premium mobile phone connectivity with best value-added services and the optimal experience to its subscribers. 

We have achieved our target of 15 million subscribers on our third year anniversary in May 2008. Furthermore, we have achieved highest number of post-paid subscribers with strong reputation for the best quality network and right on track by deploying latest technology in the GSM network. More than 75 indoor building solutions have been completed, providing a very good signal strength and high quality of service to airports, hotels and other commercial buildings.

Currently we have a nationwide network of 25 state-of-the-art sales and customer services centres, 3,00 franchise and more than 8,400 retain outlets to serve our subscribers.

Warid Telecom is also providing one of the largest and continuously growing international roaming network in over 129 destinations with roaming partnerships with 200 global operators. This results in premium connectivity and the optimal experience for our loyal users.

Warid Telecom Pakistan has entered in a strategic alliance with Singapore Telecom SingTel, they have acquired 30 percent equity stake in Warid Telecom Pakistan. This strategic partnership was formed to support Warid Telecoms continued growth, enhance its market position in Pakistans telecom market and also to potentially provide Warid Telecom International with access to territories where Singapore Telecom has its presence. 

Warid Telecom International has become one of the successful regional GSM operators by launching three more new GSM networks in Bangladesh, Uganda and Congo within a short span of 3 years.

Our Chairman, His Highness Sheikh Nahayan Mabarak Al Nahayan, has always placed a very heavy importance on quality and human resource development. This means for Warid to increase investment in expanding our GSM network using latest technology and on development of our human resource.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Thar Coal project to generate 5,000MW, says Gilani​*
** PM says country facing power shortage of 3,000MW 
* Says govt will install 2,200MW power generation units this year​*
KARACHI: The government has chalked out a plan to generate 5,000 megawatts (MW) of electricity under the Thar Coal Power Generation Project, Prime Minister Syed Yousuf Raza Gilani said on Tuesday. 

In his message on the second anniversary of the magazine Energy Update, Gilani said that the projects power generation capacity would be enhanced to 20,000MW in the future. 

The prime minister said the country was facing a serious power crisis with power shortages of 3,000MW and that the shortage was likely to go up to 4,000MW next year. 

He said that the biggest-ever investment in the history of power sector of Pakistan was made during the government of the Pakistan Peoples Party. 

He said that the Power Policy of 1994 led to an additional 3,078MW of electricity production, which in return led to $3.5 billion investment. 

The prime minister said that the government had devised and was implementing a plan to meet the energy needs of the country. 

Power generation: During this year, we shall install 2,200MW power generation units, the prime minister announced. 

He said the government was giving equal attention to the energy saving drive. We plan to save 500MW through special load management campaigns, thereby scaling down load shedding, he said.

He added that the Pakistan Electric Power Company (PEPCO) had been ordered to ensure the provision of 10 million energy saving bulbs at subsidised prices to consumers. 

He praised the magazine for projecting various aspects of the energy sector and for highlighting the energy potential in Pakistan and other countries.

The prime minister hoped that the national media, including the Energy Update magazine, would support the governments energy saving campaign to achieve energy security, which he said was vital for the sustainable growth of the national economy. 

He congratulated the management and the editorial staff of the magazine on its second anniversary. 

Meanwhile, Sindh Governor Dr Ishratul Ebad Khan said in his message that the government while taking all steps to improve the power supply to the industry, business and households, was also pushing for energy conservation. 

He praised the magazine for highlighting the importance of energy in the countrys economic development through its analyses and reporting. 

It is heartening to note that the magazine is also trying to persuade the government by publishing foreign and local technical and research reports on the use and benefits of alternate sources of energy like wind and solar power, the governor said. app

Daily Times - Leading News Resource of Pakistan


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## Neo

*Power transmission line enhancement: ADB to lend $200 million ​*
ISLAMABAD (May 21 2008): Asian Development Bank (ADB) will provide 200 million-dollar loan for power transmission line enhancement throughout the country. Pakistan and the Asian Development Bank here signed an agreement on Tuesday. ADB Country Director Peter L. Fedon and acting Secretary of Economic Affairs Division Junaid Iqbal Chaudhry signed the agreement on behalf of the government of Pakistan.

The project was an integral part of the 800 million-dollar investment programme for power transmission line enhancement throughout Pakistan. General Manager of NTDC Munawar Malik and senior officials of the bank and EAD also witnessed the agreement. The project aims at augmentation, rehabilitation and expansion of the primary power transmission system and to remove power transmission bottlenecks. The impact of the project will be an adequate and reliable power supply to a greater number of industrial, commercial and residential consumers.

*THE PROJECT COMPRISES THE FOLLOWING 10 SUB-PROJECTS: *

-- New 220kv Okara grid station with transmission line.

-- New 220kv Toba Tek Singh grid station with transmission line.

-- Static Var System (SVS) at Quetta.

-- Transformer extension at Ghazi Brotha 500kv.

-- New 500kv D.G.Khan grid station with transmission line.

-- New 220 KV Lora Lai grid station.

-- New 220kv Rohri grid Station and line bay extension at Shikarpur with transmission line (ENGRO/FFC IPPs power dispersal arrangement).

-- Jarwar-Sadiqabad 132 KV transmission line with line bay extension at Sadiqabad (power dispersal arrangement for Jarwar).

-- Augmentation at Ravi 220 KV.

-- Tools and construction/testing equipment.

Specifically, the project will expand and augment transmission capacity, and evacuate power from existing power stations.

The sub-projects will result in (i) an increase of approximately 5,800 mega-volt-amperes (MVA) of transformer capacity; (ii) increased security of supply to customers as compliance with security standards for planning and operation is strengthened and (iii) a more reliable primary transmission system.

This is a multi-tranche financing facility (MFF). The first tranche of the programme of 236 million dollars was signed on January 16, 2007. The ADB has recently introduced this MFF scheme, some of its benefits are as follows:

-- The MFF provides financial and operational flexibility to clients and ADB, and encourages the financing of operations only when these fall due and are ready for execution.

-- The use of the MFF binds clients to the delivery of specific warranties and representations covering safeguards, governance, capacity, sector policies and economic, social, financial, legal and technical aspects.

-- Under this scheme, the ADB provides finance over a longer-term period, covering key slices of investment programmes, and in this manner increase efficiency, productivity, critical mass, and in particular continuity to a given sector.

-- The MFF enables ADB and its clients to focus more on implementation issues and less on repeat processing tasks or actions.

-- Although the MFF precludes commitment charges on amounts that are not subject to executed loan agreements, the most important advantage to the clients is the positive impact on the balance sheet. Only financing required, in a given period is converted into assets and liabilities through a loan agreement.

-- The MFF allows both the parties to enter into a more constructive dialogue over policies, capacity issues and governance and the ADB to offer a continued presence in a sector.

Speaking on the occasion, Junaid Iqbal Chaudhry thanked the ADB for extending the loan for improvement and augmentation of power transmission lines to improve the supply of electricity in the country.

In his remarks, Perter Fedon said the ADB is committed to providing loan assistant to Pakistan in improving its power transmission and distribution system throughout Pakistan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Frauds by freight forwarders: $50 million export cargoes stuck at US ports ​* 
KARACHI (May 21 2008): Textile exporters said on Tuesday that their export consignments of some $50 million were stuck up at Canadian and US ports due to fraudulent freight forwarders and shipping companies.

Several exporters informed the Director of Federal Investigation Agency (FIA), Zubair Mehmood, at a meeting held at Pakistan Hosiery Manufacturers Association (PHMA) on Tuesday about the frauds committed by the shipping companies and freight forwarding companies.

Some six exporters have registered complaints for retrieval of their consignments with FIA. On these complaints, the agency has initiated inquiry into two cases and soon after the process is completed, it will lodge an FIR against the involved companies, Zubair told the exporters.

However, he said that the affected exporters should address the Director FIA in applications for getting the inquiries initiated, which is the formal procedure. He pointed out that many exporters do not know the procedure how to get the agency initiate a probe.

He apprised them that the agency had retrieved $0.3 million of exporters whose consignments had stuck up abroad. He said that he personally would pursue these cases, and assured them that every possible effort would be made in this regard. Urging the exporters, Zubair said that they should clearly study the agreement signed with shipping companies and freight forwarders so that they could pre-emptively act to foil such bids of frauds in future.

In reply to a question, he said that the agency has no powers to make laws; rather it just implements them. However, he said that exporters could play a role to help the government make laws to minimise fraud cases.

Earlier, PHMA Chairman Javed Bilwani and Rafiq Godil briefed the FIA Director about the issues faced by textile exporters. They said that the shipping companies register the names of freight forwarding companies on exporting consignments and instead exporters are provided with fake export documents.

Export consignments of some $50 million of over 100 exporters have stuck up at Canada and US only due to fraudulent freight forwarding and shipping companies. They said that State Bank of Pakistan has asked the exporters to pay back the money. Naqi Bari, Muhammad Shaffiq, Kamran Chandna and Younus Bin Ayub also attended the meeting.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*PBIF proposals for budget 2008-09: call to develop new industrial zones in Sindh​* 
KARACHI (May 21 2008): Pakistan Businessmen and Intellectual Forum (PBIF) President Mian Zahid Hussain has suggested that the government should develop new industrial zones in Sindh. In PBIF budget proposals for the fiscal year 2008-09, he also suggested that the government should allot land on discounted rates to boost industrialisation in the province.

He proposed that industrial land prices should be collected in 15 years equal instalments. For construction of industrial building, he proposed that finance for this purpose be provided on 6 percent mark-up rates. Zahid Hussain suggested that the government should provide 30 percent subsidy on water, gas and power bills of industrial units.

Regarding development of small and cottage industry, he noted that this sector need special attention of the government and suggested that this sector should be provided finance on small instalments and on discounted mark-up rates. He also suggested that the government should direct all banks in private and government sector to provide financial assistance to small and cottage industry on priority basis and at discounted mark-up.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Power generation projects must to boost industrial growth' ​* 
ISLAMABAD (May 21 2008): The measures announced by the government to overcome the power shortage will help in saving electricity for essential uses, but the government should seriously think of establishing small and large electricity generation projects, which are extremely essential for the industrial growth, running other allied business and daily life.

This was stated by President of Islamabad Chamber of Commerce and Industry (ICCI) in a meeting here on Tuesday. He said that energy conservation steps would help in saving energy on temporary basis, but there was a great need to look for permanent solutions for the electricity generation, because in the years to come, more electricity would be required to meet the increase in demand.

The ICCI President said that at present industrial production was badly hampered due to shortage of electricity; as a result exports were also affected adversely. He said that for increase in exports, Pakistan had to seriously think for the power generation by launching small and big energy generation projects.

Abbasi said that the foreign investors showed great concern as far as the energy crisis in Pakistan was concerned and now they looked for other countries to make investment. "If Pakistan keeps on adopting policy of shortcuts and temporary solutions and ignores long-term planning, then our country has to face more difficult situation in future," he observed.

He said that business community would support the measures announced by the government for energy conservation, and assured the government of markets cooperation. "It is now the responsibility of the every Pakistani to take measures at its own for saving energy and avoid operating electric appliance unnecessarily," he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*July-April oil import bill crosses $8 billion ​* 
KARACHI (May 21 2008): The country's oil import bill has amounted to $8.7 billion during ten months (July-April) of the current fiscal year due to the soaring crude oil prices in international market. Crude prices on Tuesday hit record $129 per barrel due to increasing demand across the world.

The Saudi Arabia has announced that it will boost its oil output aimed to control the rising prices of commodity. However, this announcement did not have any positive impact on the world market and indicators are still on upward side.

The soaring oil prices have badly disturbed the country's import bill. As per official statistics, the petroleum group import bill has gone up by 47.04 percent during the July-April period of the current fiscal year. There has been an increase of $2.78 billion during this period from last year's $5.89 billion.

This the first time that oil import bill has gone beyond $8 billion as during last fiscal oil imports amounted to $7.339 billion. Thus the oil import bill during July-April is also some 1.34 billion dollars above the oil imports of last fiscal year.

The import of petroleum products has mounted by 53.60 percent to 4.65 billion dollars against 3.02 billion dollars during corresponding period of last fiscal year.

While the import of crude oil has gone up by some 40.11 percent to 4.019 billion dollars during the July-April 2008 over the 2.86 billion dollars during corresponding period of last fiscal year.

Oil import bill month on month has increased by 102.53 percent to 1.25 billion dollar during April 2008 over the import of some 619.057 million-dollar during April 2007. In addition import during April 2008 as compared to March 2008 depicting an increased of 16.48 percent, as during February 2008 oil imports stood at 1.076 billion dollar. "The rising oil import bill already has created difficulties for the government's policy makers on different fronts including import bill and exchange rate," analysts said.

The rising import bill not only a challenge for the newly constituted political government, but it is also expected that oil import bill would cross 10 billion-dollar by the end June 2008 on the back of high international prices, they added.

"Slow foreign inflows compelled government to utilise its foreign exchange reserves for oil payment ,and over 4 billion dollars decline has been witnessed in the country's forex reserves during current fiscal year", they said.

Due to the huge payment from the foreign reserves the Pak rupee is being devalued some Rs 8 to the dollar and presently exchange rate has reached Rs 69.90 to the dollar from Rs 61 to the dollar few months back.

Although the oil prices in the local market have been raised by four times during the last two months, last week Prime Minister Yousuf Raza Gilani did not allow Oil and Gas Regularity Authority (Ogra) to further raise the POL price aimed to give relief to the masses.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Agriculture to get priority in upcoming budget: Naveed ​*
ISLAMABAD (May 21 2008): Federal Minister for Finance, Syed Naveed Qamar said that agriculture would be given priority in the upcoming fiscal budget with an aim to promote the sector for ensuring food sufficiency in the country. "Keeping in view the worldwide food situation, agriculture sector would be given top priority in budget 2008-09," finance minister said while talking to journalists after dinner reception here on Monday night.

The Board of Investment had arranged dinner reception in the honour of business community and investors here on Tuesday night with an aim to apprise them about the investment opportunities in the country. The federal minister said that agriculture was the backbone of country's economy, however, unfortunately it was not given proper attention and neglected in past years.

Besides, the federal minister said that special attention would be given towards infrastructure development to lead the country towards economic prosperity. Promotion of agriculture and manufacturing sectors will be given priority for sustainable economic growth, the minister added.

Speaking at the reception, Syed Naveed Qamar said that there has across-the-board consensus on economic polices of the government adding that continuation of investment-friendly policies was the reflective of government commitment to facilitate investors in the country.

He said that investment and privatisation policies have continuity to take the country forward towards progress and economic prosperity, however, added that country was facing great challenges on economic front, which have aggravated following the surging oil and food prices. He, however, expressed the hope that with the positive support of business community and investors, the government would overcome all these crisis successfully.

He said that government has been giving special attention towards energy generation adding the serious efforts were being made to overcome the power crisis. He expressed the hope that load-shedding problems would be overcome within a year. He said that coal sector would be given priority in power generation.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Foreign investment in the energy sector ​*
EDITORIAL (May 21 2008): Prime Minister Yousuf Raza Gilani assured investors that he met on the sidelines of the World Economic Forum held in Sharm-el-Sheikh, Egypt, that the new government in Islamabad will fully support foreign investors, especially in the energy sector.

The Prime Minister reminded the gathering that it was Benazir Bhutto's government that had actively sought the Independent Power Producers (IPP) to invest in the country and was thereby responsible for providing an additional 4000 to 5000 MW of electricity to the national grid. Nothing has been added since or such has been the PPP refrain.

There is little doubt that the severe energy shortage in the country is seriously impacting on the productivity of the country. It is, therefore imperative for the government to come up with both short and long term measures to meet the ongoing energy crisis.

On an emergency basis the government has already announced a number of measures that would be required, for example, allowing the private sector to enter the field of generation, a continuation of the policy of the past eight years. The other measures, namely, switching off all air-conditioners in the PM house for three hours a day in the morning, using energy saving bulbs as well as forcing shops to close at 9:00 in the evening would prove effective only in so far as there is compliance. In the private sector, it is difficult if not impossible to enforce such measures. Be that as it may, a good start has been made and it is a matter of time when the results would start to kick in, in terms of reduced load shedding and increased productivity.

In the long run, however, the government would have to take other decisions to facilitate energy supply. There is much talk of building dams that would have the capacity to meet our energy needs at minimum cost, but at this stage it would be an extremely unpopular decision to support the building of dams with long gestation periods while not looking at importing energy from energy surplus countries around us. Iran does come to mind, as does energy surplus Central Asian. However there are issues in accessing both possible sources - issues that are related to the United States and its foreign policy goals as well as security concerns associated with Afghanistan and Russia's desire to maintain its regional dominance.

There is little doubt in the world today that ensuring an uninterrupted energy supply at affordable prices is not only critical for the economy of a country but also for the political survival of any government. One has only to look at the two most recent wars that the United States has been involved with in recent times to know the value it places on an uninterrupted cheap supply of energy.

While US adventures in Iraq are attributed by a global public to its focus on ensuring that there is no supply disruption which would negatively impact on the price of oil in the United States; yet some argue, perhaps unfairly, that Afghanistan provides a critical link between the energy surplus Central Asian Republics and the energy deficient South Asia - the raison d'etre of US military intervention in the country.

The fact that the US has been unable to guarantee the supply chain between the Central Asian Republics contiguous to Afghanistan and energy deficient South Asian countries is mainly because of (i) Russia's Gazprom deal to purchase all surplus energy to ensure its regional supremacy over the United States and (ii) the continuing security issues associated with laying any pipeline or transmission line linking Central Asia with South Asia.

This is not to say that the US is not exerting considerable pressure on Pakistani and Indian governments not to purchase energy from Iran - a project that has few hitches other than the price of oil demanded by Iran in the early stages of the proposed project. This bottleneck has been practically resolved in recent weeks and President Musharraf has indicated that he will travel to Iran to finalise the deal. It is to be hoped that the deal does follow through, for it would form the basis of our medium term energy policy as the proposed project would be completed in two to three years time.

President Bush voiced serious concerns over the proposed Iranian pipeline deal to Prime Minister Gilani which implies that Pakistan would have to carefully consider the pros and cons of the deal, especially considering US annoyance against another decision of the newly elected government to hold parleys with the militants in the border areas with Afghanistan. Those who may encourage the government towards an independent foreign policy must remember that US economic and military support for Pakistan is considerable and that multilateral donors can be swayed not to extend loans to a country if powerful donor countries vote against any project.

Business Recorder [Pakistan's First Financial Daily]


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*S&P downgrading of Pakistan's credit rating ​*
EDITORIAL (May 20 2008): The sad news, though shocking, was expected for some time. Standard and Poor's Rating Services on 15th May lowered its long-term foreign currency debt rating on Pakistan to 'B' from 'B+' and its long-term local currency rating to 'BB-' from 'BB'.

"The outlook is negative. In tandem with the lowering of sovereign credit rating, we are also lowering the Transfer and Convertibility Assessment rating on Pakistan to 'BB-' from 'BB'," added the S&P. According to a statement by Agost Benard, a credit analyst of S&P, the negative outlook reflects the assessment that Pakistan's vulnerabilities may be accentuated further, given that the emergence of a stable, cohesive and effective physical environment needed to tackle mounting macro-economic imbalances does not seem to be at hand.

"Following a year of turbulence accompanying Pakistan's transition to democratic rule, macro-economic management and policy formulation remains significantly constrained by the precedence of political imperatives in the context of coalition and historical rivalry between the two main partners," Benard pointed out.

The downgrading of rating by S&P was backed by a proper analysis of the current situation. Its report observed that in a sharp reversal of years of consolidation, the general government fiscal deficit (excluding grants) was set to reach about eight percent of the GDP in fiscal 2008, well above the four percent of fiscal target and the average 3.7 percent for the past five years.

Significant expenditure overruns due to rising subsidies and interest costs, defence and capital spending were exacerbated by the apparent atrophy of an already weak revenue effort. If the current trend persists throughout the year, Pakistan's revenue to GDP ratio could decline to about 14 percent from 15.3 percent in FY07.

Fiscal shortfall of this magnitude, in conjunction with adverse changes in the financing mix towards short-term higher-cost domestic borrowing and commercial external borrowing, would jeopardise Pakistan's favourable debt dynamics and its debt-to-revenue ratio could rise to about 400 percent against the median 171 percent for similarly rated countries.

In the external sector, a rapid rise in the oil import bill and stagnant exports are yielding record current account deficits, projected to reach 7.3 percent of GDP for fiscal 2008. "With the underlying negative political setting partly causing as well as prolonging the fiscal and external deterioration, an improvement in the rating on outlook is not envisaged unless a fundamental shift occurs".

From the above analysis, it is more than obvious that there is no ulterior motive of any party or some kind of conspiracy of silence involved and downgrading of Pakistan's credit rating is based on a fundamental shift in some of the major indicators of the economy and continuous political instability in the country. The outlook perhaps would have been more negative if the S&P had taken into account the most recent political events in the country which point towards a likely confrontation between the two main political parties and further deterioration in the external sector accounts.

The fact of the matter is that nuclear-armed Pakistan has been through a tumultuous 14 months since President Pervez Musharraf tried to dismiss the top judge in March last year. The crisis was followed by emergency rule, general elections in February, 2008, formulation of a four-party coalition government at the centre and then quitting of the second biggest party from the government.

The lawyers' community continues to be in revolt and the country is now standing at a juncture where nobody can even predict with some degree of confidence the course of events in the next few months. Economic woes of the country are also multiplying.

Inflation rate is high and increasing, current account deficit has widened to unsustainable level, government spending has caused the budget deficit to balloon and the rupee continues to be under tremendous pressure despite State Bank's occasional intervention in the foreign exchange market. The worst part is that political imperatives are dominating the scene while the economy continues to drift. The outgoing Finance Minister had indicated that the country would try to attract inflows of about 3-3.5 billion dollars to tide over the situation but the plans of the new Finance Minister are still unknown.

There is no ambiguity about the undesirable consequences arising from downgrading of Pakistan's credit rating. Both foreign and domestic investors would become jittery and try to avoid the country. In fact, foreign investment is already down by a sizeable margin. This would adversely affect the growth rate of the economy, increase unemployment and may drive the rupee to new lows.

The negative outlook would also hurt the government's ability to raise foreign debt, especially at a time when the country is facing a huge current account deficit and experiencing a consistent decline in its foreign exchange reserves. Venturing into the international debt market would become more difficult and expensive and the proposed issues of sovereign bonds may have to be put on hold.

In our view, there could be no two opinions about the urgent need to revert to the path of economic emancipation and political stability which is basic to the improvement of credit rating and a positive change in the country's perception.

The restoration of investors' confidence is of utmost importance, at least till the time the country is dependent on foreign resources for a respectable level of investment. The leaders of the country could send a positive signal in this regard by avoiding a confrontational attitude and giving democracy a chance to flourish.

Business Recorder [Pakistan's First Financial Daily]


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*Pakistan's per capita income rises to USD 1,027​*
Islamabad, May 21 : Pakistan's per capita income has risen to $1,027 in fiscal 2007-08 against $878 in the last financial year.

The total *size of Pakistan's economy went up to $170.8 billion* in the fiscal that ends June 30 against $143.9 billion in the previous fiscal to register a growth of $26.9 billion, says a paper forwarded by the National Accounts Committee (NAC) to the Annual Plan Coordination Committee (APCC).

*During the last financial year, the provisional per capita estimate claimed by the then government of prime minister Shaukat Aziz was $925 but was reduced to $878 in accordance with the finalised per capita income related figures. *

*Inflation is projected at 10.5 percent in the current fiscal.*

Quoting from the NAC paper, The News said Wednesday that production of major crops fell one percent due to lower than expected output of wheat and cotton.

Production of minor crops also fell 2.97 percent.

This meant overall farm produce grew a mere 1.49 percent in 2007-08. 

Wheat production is estimated at 21.7 million tonnes in the current fiscal against 23.3 million in the previous financial year.

Keeping this in mind the government of Prime Minister Yousaf Raza Gillani has decided to import 2.5 million tonnes of wheat in addition to the 1.7 million tonnes that have already been imported at an estimated cost of Pakistani Rs.60 billion.

Rice production stands at 5.5 million tonnes against the envisaged target of 5.7 million tonnes, while cotton production is estimated at 5.9 million tonnes against 6.5 million tonnes in the previous fiscal. 

The production of sugarcane registered an increase to 63 million tonnes in fiscal 2007-08 against 54 million tonnes in the previous year. 

--- IANS

Pakistan's per capita income rises to USD 1,027 @ NewKerala.Com News, India


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*Moody's downgrades Pakistan on economy, politics​*
HONG KONG, May 21 - Moody's Investors Service lowered Pakistan's sovereign ratings on Wednesday due to concerns over its economy at a time of political uncertainty, becoming the second rating agency to downgrade the country this month.

Moody's cut its government bond ratings to B2 from B1, or five levels below investment-grade, citing its concerns over the country's fiscal position and economic policies in a volatile political environment.

That brought Moody's ratings on Pakistan in line with rival Standard & Poor's Ratings Services, which last week downgraded it by one notch to a B rating in a move that analysts saw as reflecting the economic and political turmoil in the country.

But unlike S&P, Moody's opted to raise its outlook on Pakistan to stable from negative -- indicating there was no further downside to the rating in the immediate future -- on the prospect the country could receive external financial support from multilateral organisations or creditors.

"Substantial fiscal loosening and poor tax collection had led to a sharp erosion of the fiscal position in the run-up to the February elections which have not been adequately corrected," Moody's analyst Aninda Mitra said in a statement.

"Furthermore, Pakistan's difficulties were compounded by a haphazard policy response to sharp supply-side shocks, amidst a prolonged period of intense turmoil that accompanied a difficult post-election political transition."

Pakistan has been through a rough 14 months since President Pervez Musharraf tried to dismiss the country's top judge in March last year. That sparked a crisis that was followed by emergency rule and then general elections in February.

But the newly formed four-party coalition government is facing the possibility of breaking up after former prime minister Nawaz Sharif, who heads the second biggest party in the group, said last Monday his members were quitting.

The worsening political backdrop comes amid a deteriorating economic and fiscal situation.

Annual inflation is at its highest in more than than three decades at 17 percent, while the country's current account gap has widened and government spending has caused the budget deficit to balloon.

Moody's said Pakistan's fiscal and current account deficits could surpass 7 percent of gross domestic product this year, constraining the central bank's resources and increasing inflationary pressures.

Meanwhile, the instability of the coalition is undermining the policy response needed to stabilise these imbalances, Moody's said in its statement on Wednesday.

But Moody's still raised its outlook on the country to stable, saying external assistance could give a short-term boost to Pakistan's fiscal situation.

Moody's downgrades Pakistan on economy, politics - Yahoo! Malaysia News


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*One million tons of wheat to be imported before Ramazan: TCP told to cancel flawed tender ​* 
ISLAMABAD (May 22 2008): The Trading Corporation of Pakistan (TCP) will cancel, in the next two days, the tender issued for import of 0.25 million tons wheat, sources told Business Recorder here on Wednesday. "The Food Ministry has issued instructions to TCP to cancel its tender for import of wheat published in the newspapers a few days back (May18)", sources said.

They said that the terms used in the tender were not in unison with wheat specifications finalised by Minfal. "TCP used the terms like 'White Wheat' and 'Red Wheat' despite the fact that it is against the specifications of the government. So, it will have to cancel the tender for importing wheat", sources added.

On the other hand, sources acknowledged that to overcome shortage of wheat in domestic market, the government has directed the TCP to import one million tons of the commodity as quickly as possible. "The tender notice that will be issued by TCP to import one million tons wheat will have to be in accordance with the specifications of the government", sources said.

This decision was taken in the recently held 'Secretaries' Committee meeting. "TCP will have to ensure that this quantity of wheat should reach the country before the start of Ramazan", sources added. They said, "Last year, in Ramazan, the local market was witnessing acute shortage of wheat. It had become very difficult for a common man to provide meals to his family. That is our main staple food".

The government has already decided to take action against wheat stockists and to seal the Pak-Afghan border to ensure availability of sufficient wheat in the country. Even the flour millers have been prohibited to have stocks of wheat in their mills beyond their quota.

Wheat prices in the domestic market are increasing by each passing day. Even in the most neglected provinces of NWFP and Balochistan the prices have sky-rocketed as this essential commodity is being sold in the local market at Rs 800-815 per 20 kg while in Punjab and Sindh, the prices are around Rs 750 per 20 kg bag.

Business Recorder [Pakistan's First Financial Daily]


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*Current account deficit swells to about 7.3 percent of GDP ​* 
KARACHI (May 22 2008): The country's current account deficit soared to about 7.3 percent of GDP during ten months of the current fiscal year mainly due to slow growth in exports, increase in imports and sluggish foreign money inflows. The current account deficit for July-April period has widened by 74.8 percent to all time high level of $11.58 billion.

The government had fixed the current account deficit target at 5 percent of GDP for the 2007-08 fiscal year. However, current account deficit has reached about 7.3 percent of GDP for the first time in the history of the country.

According to economists, trade, services and income deficit, and huge payments of interest and dividends during the current fiscal year have contributed to the widening current account deficit.

They said that the government failed to achieve the export growth target while there had been huge imports, including soaring oil bills. Official statistics on Wednesday showed that the current account deficit has gone up by 74.80 percent, or 4.958 billion dollars, to a new peak of 11.586 billion dollars as compared to 6.628 billion dollars of the corresponding period of last fiscal year.

"Goods trade deficit, services deficit and income deficit are the chief factors behind the rising current account deficit," analysts said. The deficit including trade, services and income stood at 21.372 billion dollars during July-April of 2008 against 15.074 billion dollars during the same period of fiscal year 2007, depicting an increase of 6.298 billion dollars.

According to the State Bank, overall current account transfers stood at 9.899 billion dollars as against the deficits of 21.372 billion dollars. Although current account transfers rose by 1.397 billion dollars, its growth has been much lower than the increasing deficits. Goods trade deficit witnessed an upsurge of 53.36 percent to 12.74 billion dollars, services deficit went up by 44 percent to 5.575 billion dollars and income deficit rose by 15.4 percent to 3.057 billion dollars.

During this period altogether income from abroad stood at 1.385 billion dollars as compared to 4.442 billion dollars payments of income, while services sector trade payments reached 8.243 billion dollars as against the receipt of 2.668 billion dollars.

Goods exports stood at 16.167 billion dollars as compared to imports worth $28.907 billion. The statistics depict that due to the massive international payment the foreign exchange reserves held by State Bank of Pakistan (SBP) also declined by some 1.865 billion dollars, as SBP reserves presently stand at 10.451 billion dollars as compared to 12.316 billion dollars by April 2007.

The current account deficit without official transfers climbed to 12.071 billion dollars as compared to 6.888 billion dollars in 2007, depicting an increased of 75.24 percent or 5.183 billion dollars.

Business Recorder [Pakistan's First Financial Daily]


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*Coal mining agreement: firms offering power below 1000 megawatts won't be considered ​* 
KARACHI (May 22 2008): The Sindh government has decided not to sign further agreements for coal mining and establishing power plants at Thar coalfield with companies offering power generation below 1000 MW. Official sources told Business Recorder on Wednesday that the proposal was forwarded by Sindh Mines and Minerals Department to the provincial government in a recent meeting held at Chief Minister House.

Sources said that the decision in principle has been taken in this regard as CM Qaim Ali Shah, who was chairing the meeting, endorsed the proposal by the department. However, public announcement of this decision has not been made for some reasons, sources added.

The decision, they said, has been taken in view of the estimated cost of coal-based power plants and expenditure needed for their smooth functioning. "Setting up a coal-based power plant is not only very costly but a huge amount would also be needed to keep it running, and it would only be possible for financially strong companies to invest in the project," said sources.

The construction cost of a 1000 MW coal-based power plant at Thar is estimated at around Rs 120 billion, which a small and medium enterprises/investor could not afford, they added.

The meeting was briefed that the payback period of coal-based power plants of less generation capacity would be long, and hence the investors would either seek government help or would demand high upfront tariff, which the government had experienced in the past, they said.

Moreover, sources said, the decision has been taken also keeping in view the ongoing power crisis in the country, as small power plants would not be helpful in overcoming the electricity shortage and generate less instead of large consumption of resources in terms of land, budget and time.

The decision, however, would not harm the companies which have already inked MoUs with the previous government for coal mining and setting up power plants of less than 1000 MW generating capacity at Thar coal field and are already carrying out their activities at the site, sources added. The past government had signed more than a dozen MoUs for coal exploration and power generation at Thar, which except two all are of less than 1000 MW capacity power plants.

However, sources said that the meeting had also kept a door open for granting exception to companies having strong financial or coal-based power generation background, and has authorised the concerned department to decide such cases on merit.

Business Recorder [Pakistan's First Financial Daily]


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*New budget will unveil relief package for poor: Gilani ​*
ONBOARD PRIME MINISTER'S AIRCRAFT (May 22 2008): Prime Minister Syed Yousuf Raza Gilani reiterating the government's commitment to improve the lot of common man has stated that the new budget will unveil a relief package for people, with focus on poorest of the poor.

"Our fiscal policies are aimed at improving the economic indicators and our focus in the new budget will be to provide relief to poorest of the poor," he told newsmen onboard his plane on way back home after attending the World Economic Forum on Middle East.

When asked as to what was his greatest worry at this point of time, the Prime Minister said, "my highest worry is to give relief to my people." About his meeting with US President George W Bush on the sidelines of the World Economic Forum, the Prime Minister said he discussed with him issues of mutual interest, trade and investment, market access, terrorism and extremism as well as matters relating to regional and international situation.

He said the discussion focused on the challenges of food and energy crises faced by Pakistan as well as the cooperation in combating terrorism. The Prime Minister said he discussed with President Bush the close cooperation, which is being provided by Pakistan, in the war against terror.

"I told President Bush that we have paid a heavy price in this international war against terrorism and even lost our leader Benazir Bhutto," he said. Prime Minister said there was a convergence of views on issues of intelligence sharing and cooperation between the security agencies to eliminate terrorism.

To a question about meeting with President Bush, Gilani said, it was not a planned meeting, as the US President and he had come to Sherm El Sheikh to attend the World Economic Forum.

He, however, added, "we want to strengthen bilateral relations with the United States in various fields including defence and energy cooperation." Similarly, the Prime Minister said, the two sides also discussed cooperation in other areas such as education, health, social sector and market access for our products in the US. Gilani, who was looking very confident at the end of his first overseas visit and meeting with President Bush and other leaders after assuming the office, said: "The US President was in full mood to assist Pakistan in the areas of energy, defence and market access."

The Prime Minister said during his meeting with the US President, Pakistan's relations with neighbouring countries including India also came under discussion. The Prime Minister said he asked President Bush that US should play a role in resolving Kashmir dispute, as it was making efforts for peace in the Middle East. The Prime Minister said he told the US President that unless the core issue of Kashmir is resolved there cannot be good and sustainable relations between Pakistan and India.

About his bilateral meetings with other leaders including Egyptian President Hosni Mubarak, and Prime Ministers of Egypt and Jordan and the Commerce Minister of Saudi Arabia, the Prime Minister said they wanted to strengthen cooperation with Pakistan in various sectors and were keen to invest in our energy, agriculture and real estate sectors.

Business Recorder [Pakistan's First Financial Daily]


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*Foreign firms investing in energy sector assured of government help ​*
KARACHI (May 22 2008): City Naib Nazim, Nasreen Jalil on Wednesday inaugurated the 6th Pakistan Oil, Gas and Energy Exhibition (Pogee) and the 4th International Fire & Security Exhibition Pakistan at Karachi Expo Center.

Speaking at the opening ceremony, Nasreen Jalil said that Pakistan's energy sector is playing a vital role in the progress and development of the country. She assured full support to foreign companies investing in oil, gas and energy sector of Pakistan.

The Naib Nazim highlighted the efforts of the government in providing fire fighting equipment and facilities at the Union Council level. She said that the City District Government Karachi aims to establish a rescue center with a fire tender and an ambulance at each UC.

Earlier, Professor Dr Engineer Galal Osman, Senior Vice President of World Wind Energy Association, Egypt appreciated the organising team for their efforts towards the industrial development of Pakistan. He termed Pogee an important event to showcase latest technologies relating to oil, gas and energy sectors in Pakistan as well as in the region.

Pogee is also a platform to promote investment in various sectors of the country's economy, he added. Aasim A Siddiqui, Chairman and Managing Director Pegasus Consultancy, in his address of welcome thanked all the local and foreign exhibitors for their participation and lauded the efforts of the government and ministries for supporting Pogee and Fire & Security exhibitions.

He said around 300 companies from 32 countries including Germany, France, Singapore, Sweden, Switzerland, Turkey, UAE and UK as well as a country pavilion from China are attending the exhibitions, which will continue until May 24. The opening ceremony was attended by the Mayor of Peshawar as well as foreign dignitaries, exhibitors and high-profile visitors.

Business Recorder [Pakistan's First Financial Daily]


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*Foreign investment ​*
EDITORIAL (May 22 2008): Prime Minister Yousuf Raza Gilani, while addressing a huge gathering at Multan, vowed to bring foreign investment and prosperity to the country, which should give the nation hope that the economy will at long last start moving in the right direction.

Citing terrorism and sectarianism as major impediments to attracting foreign investment, he pledged to restore the 1973 Constitution, restore judiciary and other institutions and ensure press freedom. He has rightly claimed that the PPP is a symbol of federalism. He also said that his government had inherited problems like price hike, etc, which the PPP will address. These are brave words indeed, becoming of a prime minister determined to set things right, and bring the country out of the economic doldrums.

However, some leading economists do not entertain such hopes. As the present is a continuum of the past, we cannot avoid analysing the pluses and minuses of economic policies of the past nine years, in order to put things in proper perspective. As a leading analyst has said, keeping the structure of the economy unchanged was the biggest disappointment, as a result of which the problems that had plagued the economy in October 1999 continue to bedevil it, despite some occasional attempts to bring about structural changes.

Secondly, conspicuous consumption by some, the mushrooming of palatial "white houses" and flaunting of expensive cars was seen as a proof that some people had indeed grown very rich, and though the "trickle-down" effect was also there, it did not reflect true health of the economy. The new government will, therefore, have to tackle multiple economic crises in the months and years ahead, foremost among them will be the high rate of inflation as well the twin deficits of fiscal and trade accounts.

As we have often pointed out in this space, the credibility of economic data during the preceding regime was at times called into question by some economists, and the charge of figure-fudging was often levelled against the economic managers, though how far the accusations were correct was not known. This was done to portray the health of economy that was at variance with the ground reality. A leading economist has categorised these problems at three levels: near-term crises relating to the twin deficits of in fiscal and trade accounts.

Secondly, there are the medium-term crises relating to the chronically low domestic savings rates, an undiversified source of foreign direct investment, which largely consists of money sent by expatriates, and a perennially narrow income tax base. And finally, there are the long-term crises connected to mounting income inequalities, a high poverty rate, and a rate of population growth that is counted among the highest in the world. According to a prediction made by a leading analyst, the budgetary deficit is likely to touch higher than six percent during the current fiscal year - 50 percent higher than the limit deemed safe by the lending institutions.

It can provide a credible measure of the state of the economy that during the first nine months of the current fiscal, the trade deficit was expected to mount to $19 billion, up by 44 percent over the corresponding period of last year. The hefty deficit has been largely driven by mounting imports of consumer goods, none of which can contribute towards increasing the productive capacity of the economy. Even more worrisome is the State Bank's prediction that inflation might reach nine percent during the fiscal year ending in June, which will be almost 33 percent higher than the target of 6.5 percent.

A stable law and order situation is the foremost prerequisite for attracting foreign investment. The government should therefore start putting greater emphasis on the carrot than the stick, which anyway has not so far achieved significant success. The Prime Minister's remarks that he is determined to root out terrorism and sectarianism should send a clear message to the forces of divisiveness to work for sectarian harmony, which will not only help attract greater foreign investment, but will also revitalise our economy. We wish Gilani Godspeed.

Business Recorder [Pakistan's First Financial Daily]


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*Electronics complex in Lahore, Karachi planned ​* 
Thursday, May 22, 2008

LAHORE: The Technology Upgradation and Skill Development Company (TUSDEC) is planning to set up Common Facility Centres (CFCs) in Lahore and Karachi to develop and promote the electronics industry in a bid to quickly reduce billions of dollars worth of imports of electronics and telecom gadgets and boost exports.

Electronics is considered the worlds largest industrial sector and the most lucrative market. Unfortunately, Pakistan since independence has not developed a significant place in the electronics world which has an annual turnover of US$1.2 trillion.

Though electronics goods burden the import bill by 10 per cent, regrettably they earn less than 1 per cent through exports. Pakistan is currently importing more than $1 billion worth of mobile phones annually to meet increasing demand commensurate with growing tele-density.

According to a TUSDEC spokesman, the Lahore Electronics Complex being set up at a cost of Rs2.7 billion would focus on the mobile phone and telecom sectors while the Karachi Electronics Complex costing Rs3 billion would cater to the needs of consumers and home appliance industry including LCD (liquid crystal display) TV, computer monitors and multimedia products.

The two centres are designed to support and help grow the local industry through economies of scale supply of sub-assemblies and kits at competitive prices compared to those being imported from China and nearby countries. The economies of scale supply will contribute significantly to lowering the cost of electronics products in Pakistan compared to other players in the international market.

The local electronics sector basically focuses on consumer electronics, with activities confined to the assembly of conventional TV sets, radio, cassette recorders and other allied consumer electronics products using completely knocked down (CKD) or semi-knocked down (SKD) kits, imported mostly from China.

The share of electronics in the countrys manufacturing sector is merely 3 per cent. In the light of need assessment surveys carried out by the TUSDEC, the CFCs would provide the industry with much-needed help in the supply of competitively-priced and readily available parts, component kits, SKD and sub-assemblies including complete printed circuit solutions as well as expert services for product design and prototyping. This will facilitate the industry in the production of internationally competitive gadgets in terms of price and quality.

The TUSDEC spokesman said these centres would house modern electronics design and quality assurance labs and would be equipped with hi-tech SMT machines for assembly of Printed Circuit Boards (PCBs) as well as high-volume automated assembly.

The centres, the spokesman said, would handle all requirements of an electronic companys printed circuit or mother boards for use in the final product.

To ensure that local electronics products penetrate the world markets and cross new non-tariff barriers, compliance with various standards is required. The Federal Institute of Materials and Homologation (FIMH), being set up in Gujranwala, would carry out testing and homologation of these electronics products to allow their export to Europe, the US and other advanced countries bringing revenues for Pakistan, the spokesman concluded.

Electronics complex in Lahore, Karachi planned


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*USC directed to expand network in Balochistan ​* 
Thursday, May 22, 2008

ISLAMABAD: Adviser to Prime Minister on Industries and Production, Mian Manzoor Ahmad Wattoo, has directed officials of the Utility Stores Corporation (USC) to expand its existing network of stores in Balochistan so that people in all parts of the province can get essential commodities at subsidised rates.

Special arrangements may be made for opening more utility stores in Balochistan, said Wattoo adding special treatment may be given to Balochistan in this regard. He said this while chairing a briefing on the performance of USC here on Wednesday.

Wattoo further said that there was a need to open more utility stores in urban areas because the poor people in these areas are more adversely affected by the rise in the prices of essential commodities, especially flour.

Earlier, MD USC gave a detailed briefing about the structure and working of the USC. He told Mian Manzoor Ahmad Wattoo that 4,500 utility stores are operating through out the country and USC was working on a no profit, no loss basis and during the last two years, a relief of Rs15 million had been extended to the people through the utility stores. Wattoo observed that the role of USC as a relief mechanism needed to be enhanced further, so that people in parts of the country can benefit from the relief provided by the govt.

USC directed to expand network in Balochistan


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*Removal of 15pc GST on IT industry urged ​* 
Thursday, May 22, 2008

ISLAMABAD: Manawar Iqbal, president of the Pakistan Computer Association (PCA), has said the information technology industry was under pressure due to imposition of 15 per4 cent GST in the previous budget and appealed to the government to remove the tax for the promotion of industry in the country.

He was speaking at the specially convened executive body meeting of the association here on Wednesday. The growth of the industry has already shown tremendous and unprecedented decline which is a bad omen for the future of the industry and economy of the country as well, he said.

The meeting unanimously urged the Federal Minister for Finance, Syed Navid Qamar, to look into the affair and gravity of the situation.

Iqbal said the price of computer and its accessories had been increased almost 30 per cent.

He said as a result of the unfavourable business conditions, 20 per cent players of the industry had left the business and the rest were struggling while hoping for positive steps form the new government. 

Removal of 15pc GST on IT industry urged


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## Neo

*EC, ILO to spend Rs535m to combat child labour ​* 
Thursday, May 22, 2008

ISLAMABAD: The European Commission (EC), and the International Labour Organisation (ILO) join together to support Pakistans efforts in combating abusive child labour in line with its National Policy and the Medium-term Plan on Combating Worst Forms of Child Labour (2008-16).

In this regard, a sum of Rs545 million (Euro 5,197,900) is pledged to finance a 5-year long project that focuses on children working in hazardous occupations under the most intolerable conditions ranging from exposure to chemicals and other harmful substances to long tedious working hours. The project will cover all hazardous sectors and occupations identified. The project will initially be implemented in selected districts of NWFP and Sindh.

The Project Combating Abusive Child Labour II is aimed at (i) promoting and replicating the District Model that has proven successful under on-going child labour projects in the target districts and beyond; (ii) institutional strengthening at the district, provincial and federal level through the enhancement of capacity of respective child labour units and the establishment of a child labour monitoring and referral system; and (iii) enhancing the child labour knowledge base through the conduct of a second National Child Labour Survey and related research studies, and the promotion, development and adoption of pro-child policies and legislative framework.

A Contribution Agreement was signed on Wednesday between the European Commission and the ILO in the presence of Syed Khursheed Ahmed Shah, Minister for Labour, Manpower and Overseas Pakistanis and Malik Asif Hayat Secretary Labour. Ambassador of the European Commission Delegation to Pakistan Jan de Kok and Country Director, ILO-Islamabad Donglin Li signed the agreement.

This has been signed to implement the Financing Agreement between the European Community and the Islamic Republic of Pakistan, signed in December 2006 and later amended in February 2008.

EC, ILO to spend Rs535m to combat child labour


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*USAID marks closing of $11.3m PISDAC​*
ISLAMABAD, May 21: The United States Agency for International Development (USAID) on Wednesday marked the closing of its four-year $11.3 million Pakistan Initiative for Strategic Development and Competitiveness project (PISDAC) after registering what it called significant achievements.

To mark this event, USAID-PISDAC organised a daylong conference on Sharing best practices and lessons learnt for creating value together.

Dr Warren Weinstein, chief of Party, JE Austin, Kevin Murphy, president and CEO JE Austin and acting director USAID Edward Birgells also spoke on the occasion.

The ceremony was attended by manufacturers, exporters, academics, and others that had participated in the project.

Strategy working groups focused on sectors, including gems and jewellery, marble and granite, dairy, furniture, surgical instruments and medical devices, and horticulture.

Kevin Murphy, on the occasion, provided an overview of a framework for building national competitiveness, which represents the latest thinking, followed by how PISDAC projects fit into this overall framework. Speaking on the occasion Edward Birgells said that providing economic opportunities for all Pakistanis was fundamental in building a solid and sustainable foundation for continued economic growth, prosperity, and peace.

Business leaders working through the USAID-PISDAC programme have already made significant achievements by working with each other to improve their products, increase their exports, and develop a more qualified workforce, he remarked.

USAID marks closing of $11.3m PISDAC -DAWN - Business; May 22, 2008


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*Govt likely to set 7% GDP growth target for 2008-09​*
ISLAMABAD: The growth target of Gross Domestic Product (GDP) is likely to be set at around 7 percent for the forthcoming fiscal year 2008-09, a senior official at ministry of finance told Daily Times Wednesday. 

Low base of GDP in the outgoing fiscal year 2007-08 would help government achieve around 7 percent GDP growth target easily in the next fiscal 2008-09 and it could be surpassed by improving growth in agriculture and manufacturing along with already growing services sector, explained the official. 

The GDP has witnessed growth of 5.7 percent against target of 7.2 percent during the current fiscal year, mainly due to significant decline in agriculture, manufacturing sectors and other deteriorating economic indicators like exports, foreign direct investment, portfolio investment, federal tax collection, and electricity, gas shortages. 

According to the official, the government has decided to make agriculture and manufacturing sector as basis of economic growth to achieve higher GDP growth. 

Keeping in view this decision, the government is aiming at fixing agriculture growth target at 5 percent for the next fiscal year 2008-09 as compared to the actual growth of 1.7 percent realised, missing annual target of 4.8 percent for the current fiscal year 2007-08, the official disclosed. 

Manufacturing and large scale manufacturing targets would also be set at higher side for next fiscal year 2008-09, informed the sources. 

Explaining agriculture and manufacturing sectors as main engine for realising higher GDP growth of 7 percent in the next fiscal year 2008-09, the official said that increased agriculture out put especially of wheat, cotton and rice would not only help meet local populations and industrial demand but will also help boost exports. 

In the agriculture sector, improved cotton production would help ensure availability of raw cotton on reasonable rates for the ginning industry as well as for the textile industry to increase production and ensure enhanced exports of textile products, explained the official. 

Increased wheat, rice and sugarcane production would help related industries to increase production of wheat flour for local consumption as well as for exports. 

To enable agriculture sector contribute as per requirement in the GDP, the federal government is set to announce higher allocations for the development of agriculture sector and other fiscal incentives like tax and duty free import of agriculture machinery, implements in the budget 2007-08. 

The manufacturing sector would be facilitated in the budget 2008-09 to contribute more in the GDP by allowing duty free import of machinery, plants, other capital goods for setting up of export oriented industries in Export Processing Zones of the country. 

According to the official, incentives for agriculture and manufacturing sectors would not only help higher GDP growth rate but would also create job opportunities in rural as well as industrial cities of the country. It would have positive impact on efforts to reduce rural and urban poverty in years to come, said the official. Services sector, which is greatly helping achieve reasonable growth in the last five years, would also be facilitated to continue its contribution in the GDP.

Daily Times - Leading News Resource of Pakistan


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*TUSDEC to promote electronics industry​*
LAHORE: Technology Upgradation and Skill Development Company (TUSDEC) is planning to set up Common Facility Centres (CFCs) in Lahore and Karachi to develop and promote countrys electronics industry.

According to spokesman of TUSDEC Wednesday, it aims to quickly reduce the multi-billion dollar imports of electronic and telecom gadgets and boost exports.

Pakistan is currently importing more than $1 billion worth of mobile phones annually to meet increasing demand for these gadgets commensurate with the growing tele-density in this part of the world.

Lahore Electronics Complex at a cost of Rs 2.7 billion would focus on the mobile phone and telecom sectors while Karachi Electronics Complex at a cost of Rs 3 billion would cater to the needs of Consumer and Home Appliance Industry including LCD (Liquid Crystal Display) TV, Computer Monitors and Multimedia Products. 

The two centres are designed to support and help grow the local industry through economy of scale supply of sub-assemblies and kits at competitive prices to those being otherwise imported from China and nearby countries. 

The economy of scale supply will contribute significantly to lowering of cost of electronics products in Pakistan vis-a-vis other players in the international market.

Pakistans electronics sector basically focuses on consumer electronics, with activities confined to assembly of conventional TV sets, Radio, Cassette Recorders and other allied consumer electronics products using CKD or SKD component kits, imported mostly from China. 

The share of electronics in countrys manufacturing sector is merely 3 percent. CFCs would provide industry with the much-needed help in supply of competitively priced and readily available parts, component kits, SKD and sub-assemblies including complete printed circuit solutions as well as expert services for product design and prototyping. 

This will facilitate industry in the production of internationally competitive gadgets in terms of price and quality. 

These centres will house modern electronics design and quality assurance labs besides equipped with hi-tech SMT machines for assembly of Printed Circuit Boards (PCBs) as well as high-volume through-hole automated assembly. 

The major objective of the facilities would be to promote economic SMT in Pakistan by making it available as a common facility by providing contract assembly and a one-stop solution for local and export industry.

The centres would handle all the requirements of an electronics companys printed circuit or motherboards for use in their final product. It would provide services such as PCB design, layout, fabrication and SMT assembly, he added, emphasizing that this would allow the clients to compete head-on with imported products in the domestic market. The availability of Made in Pakistan products of the famous brands at competitive prices would substantially reduce the import bill.

Daily Times - Leading News Resource of Pakistan


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*Govt likely to allocate Rs 119bn for Water & Power in PSDP​*
ISLAMABAD: The government is likely to allocate over Rs 119 billion for the development of dams and increasing of power generation capacity to over come the existing power crises and ensuring water availability for agriculture in next fiscal year 2008-09, official sources confirmed. 

However, the Annual Plan Coordination Committee (APCC), scheduled to meet on Friday (May 23), can change these allocation for further improvement. These are national importance projects and it is expected that the government might ensure maximum allocation for water and power related development programmes. As the country is facing severe load shedding and the new government is also claiming to over come the power short fall on emergency basis, it is expected that the APCC in its meeting might ensure provision of more funds for these schemes. Senior officials claimed that the APCC might provide extra funds about Rs 20 to Rs 30 billion from above the proposed Rs 119 billion for these projects. 

The officials told Daily Times that Water and Power Division has demanded Rs 103.867 billion for new and ongoing various projects including dams. However, the priorities committee has recommended an amount of Rs 51.949 billion for the development of water sector in the next fiscal year. Similarly for power sector, the ministry demanded Rs 105.333 billion for meeting the ongoing severe power crises in the country. But the priorities committees in its meeting recommended Rs 67.056 billion for the improvement and development of power sector in the next fiscal year 2008-09. 

In water sector, the expected total allocation for 64 on-going projects is Rs 51.949 billion while the ministry demanded Rs 93.550 billion in the Public Sector Development Programme for the year 2008-09. Maximum allocation has been made in these 64 projects for the construction of different major dams. Important projects among these are; Raising of Mangla Dam with allocation Rs 18 billion, Mirani Dam Rs 300 million, Resettlement Action Plan  Mirani Dam Rs 50 million, Sabakzai Dam Rs 120 million, Kurram Tangi Dam Rs 500 million, Satpara Multipurpose Dam Rs 100 million, Gomal Zam Dam Rs 2 billion, Greater Thal Canal (Phase-I) Rs 1.5 billion, Kachhi Canal (Phasep-I) Rs 8.5 billion, Rainee Canal (Phase-I) Rs 3 billion, Lower Indus Right Bank Irrigation and Drainage, Sindh Rs 2.5 billion, Balochistan Effluent Disposal in to RBOD (RBOD-III) Rs 1.2 billion, Revamping/rehabilitation of irrigation and drainage system of Sindh Rs 2 billion, and many others. 

The federal allocation proposed by the priorities committee meets only the funding requirement of the ongoing projects, therefore, there is no allocation for 20 new projects of the power sector. 

For power sector, the priorities committee has recommended Rs 67.049 billion for 40 on-going projects, and these are mainly related to power generation in the country. Some important major projects among these are; Khan-Khawar Hydro Power project, Shangla, Beshan, NWFP Rs 1.175 billion, Allai Khawar Hydro Power Project, Batagram, Besham NWFP Rs 2.535 billion, Dubir Khawar Hydro Power Project, Kohistan NWFP Rs 3.5 billion, Neelum Jhelum Hydropower Project AJK Rs 7.5 billion, 800MW Guddu Steam Power Project Rs 500 billion, 330MW Combined Cycle Dadu Power Rs 7.5 billion, 500MW Combined Cycle Power Plant at Chich Ki Malian Rs 5 billion, 425MW Combined Cycle Nandipur Power Plant Rs 5 billion, Muzaffargarh-Gatti 500 KV T/Line Rs 1 billion and many others.

Daily Times - Leading News Resource of Pakistan


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*Rs 490 billion PSDP expected amid financial constraints​*
ISLAMABAD: Keeping in view the financial constraints amidst unprecedented budget deficit, the government is set to propose Rs 490 billion Public Sector Development Programme for the fiscal year 2008-09, a senior official at Planning Commission confirmed Daily Times here Wednesday. 

The proposed PSDP would include Rs 340 billion as federal development programme and Rs 150 billion as annual development programme of all the four provinces for the next fiscal year. 

The former government had announced federal PSDP allocation of Rs 335 billion for the year 2007-08. However, due to the financial constraints the actual spending on federal development programme was recorded at Rs 194 billion during July-March of current fiscal year. The projections prepared by the Planning Commission suggest that the total federal PSDP spending would be around Rs 270 or Rs 275 billion by June 30 2008. 

Official said the Priorities Committee proposed PSDP would be enhanced so as to finance governments priority programme. For this purpose, the official said the Annual Plan Coordination Committee (APCC) meeting, to be held on 23rd and 24th of this month, would consider Rs 490 billion as over all size of the PSDP for the year 2008-09. 

Among the total proposed PSDP of Rs 437 billion the federal component is Rs 340 billion for the year 2008-09. This is higher from current year utilised PSDP of Rs275 billion for the year 2007-08 by Rs65 billion showing 23.63 percent increase. 

Priorities: A major emphasis in the proposed 2008-09 development programme is on the Infrastructure Development Sectors with an allocation of Rs 111.4 billion (38.8 percent of the total federal programme) while last year it was Rs 166.5 billion, Water Resources Development Rs 51.9 billion (18.1 percent) while last year it was Rs 63.5 billion, Transport and Communications Rs 43.5 billion (15 percent), Energy Rs 16 billion (6 percent) while last year it was Rs 34.1 billion. 

Similarly the proposed allocation for social sectors and poverty related expenditure with an allocation of Rs 151.6 billion (52 percent) while last year it was Rs 156.2 billion. The allocation for strategic support to the Production Sectors including Agriculture, Industry and Mineral is Rs 24 billion (8.4 percent) while last year the allocation for this sector was 12.3 billion. 

The Priorities Committee proposed PSDP is Rs 437 billion and its sub-components are:

All federal ministries and division Rs 188.9 billion, allocation for Special Areas (FATA, FANA, AJK, NA etc) is Rs 23.2 billion, allocation for any Special Programme by the federal government is Rs 26.5 billion, allocation for all Corporation including (Public Sector Enterprises) is Rs 48.4 billion and provinces PSDP is Rs 150 billion. 

The senior official further said that the federal allocation proposed by the Priorities Committee meet only the funding requirement of the ongoing projects. To maintain the momentum of development and peoples expectation, the size of the PSDP would be enhanced to a reasonable level to make available fiscal space for new projects in line with governments priorities, they maintained.

Daily Times - Leading News Resource of Pakistan


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*Pakistan hikes interest rates to 12 pct​*Thursday May 22, 2008

*Pakistan hikes interest rates to 12 percent in bid to counter inflation​*
KARACHI, Pakistan (AP) -- Pakistan's central bank governor says the bank will raise interest rates by 1.5 percentage points to 12 percent to counter rising inflation and the falling value of the country's currency.
The spiraling cost of oil and other imported commodities is contributing to Pakistan's economic woes, which include large and growing fiscal and trade deficits.

State Bank of Pakistan governor Shamshad Akhtar said Thursday that inflation could cross the 11 percent mark by the end of the fiscal year on June 30.

She says it is "imperative to increase the real interest rate" now.

She says the rate hike will go into effect Friday.

The government's upcoming budget is expected to include unpopular cuts in spending as well as efforts to raise taxes.

Pakistan hikes interest rates to 12 pct: Financial News - Yahoo! Finance


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*ILO To Help Pakistan Tackle Abusive Child Labour​*Friday, 23 May 2008
Press Release: United Nations 

UN agency pledges to help Pakistan tackle abusive child labour practices
22 May 2008 - The United Nations International Labour Organization (ILO) has partnered with the European Commission (EC) for a five-year project to help Pakistan curb abusive child labour and take 10,000 children out of hazardous workplaces.

The 545 million Pakistani rupee, or 5.2 million Euro, scheme will focus on children working in conditions ranging from exposure to chemicals and other harmful substances to long, tedious working hours. 

The "Combating Abusive Child Labour II" programme will be implemented by ILO, in cooperation with the Ministry of Labour and Manpower, provincial labour departments, employers and workers organizations, local governments, non-governmental organizations (NGOs), research institutions and the media, among others.

Donglin Li, the Director of ILO's Pakistan office, underscored his agency's commitment to curbing the worst forms of child labour by 2016 within the framework of the ILO Decent Work Agenda.

Scoop: ILO To Help Pakistan Tackle Abusive Child Labour


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*Pakistan's forex reserves fall to $11.885 bln​*
KARACHI, May 22 - Pakistan's foreign reserves fell by $322 million to $11.885 billion in the week that ended on May 17, the central bank said on Thursday.

Reserves held by the State Bank of Pakistan fell to $9.500 billion from $9.847 billion a week earlier, while those held by commercial banks rose marginally to $2.385 billion from $2.360 billion.

Pakistan's foreign exchange reserves hit an all-time high of $16.486 billion on Oct. 31, 2007, but have fallen since then, partly because of outflows from the stock market after President Pervez Musharraf imposed emergency rule on Nov. 3.

The emergency was lifted on Dec. 15, but foreign investors remained cautious after the assassination of former prime minister Benazir Bhutto on Dec. 27.

The central bank on Thursday increased in its key discount rate to 12.0 percent from 10.5 percent, effective on May 23, to counter accelerating inflation and widening fiscal and current account deficits.

The central bank's Governor Shamshad Akhtar said this month foreign inflows of up to $3.5 billion were expected in the short- to medium-term, most of it in the form of loans from multilateral lenders and friendly governments.

On Thursday, the rupee closed at 69.25/45 to the dollar, near a record closing low of 69.60/90 set on May 19.

Pakistan's forex reserves fall to &#36;11.885 bln - Yahoo! Malaysia News


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*Pakistan and India come together over energy ​*22/ 05/ 2008 

MOSCOW. (RIA Novosti political commentator Pyotr Goncharov) - The recent talks in Pakistan between Indian External Affairs Minister Pranab Mukherjee and his Pakistani counterpart Shah Mahmood Qureshi were more of a time-check for New Delhi and Islamabad than a full-scale attempt to normalize relations. 

The topics announced by New Delhi for the talks were in the context of normalization, adjusted for the half a year break in dialogue caused by political instability, and indeed a complete change of government, in Pakistan. 

The resumption of dialogue between the two neighbors several years ago suggested a mutual sounding out of positions on the most sensitive issues, such as measures to achieve peace, security, and trust; the disputed territories of Jammu and Kashmir; the fight against terrorism and drug trafficking; the free movement of people across borders, and development of economic and trade cooperation. 

As the Indian financial paper the Economic Times admitted on the eve of the minister's visit to Pakistan, he also had to find out who determines Pakistani policy today. This is a far from academic question for India, considering that individual leaders have always exerted a major influence on bilateral relations. 

It is clear that territorial disputes are the worst problem, and that they will not be resolved without compromise. Experience shows that those concessions do not necessarily have to be territorial, however. There are other options - it is possible to conduct referendums on a disputed territory, or give it a special status. In any event, the sides should look for new approaches to this problem, which at the moment are sadly lacking, except for rare initiatives from Islamabad. 

India and Pakistan are trying to meet each other halfway. Terrorism, drug smuggling and porous borders are equally dangerous for social stability and security on both sides, and cooperation in resolving these problems is only natural. But they could do more, for instance by setting up joint commissions to deal with border control and exchange intelligence on terrorists and drugs. 

Today, participation in three- and four-sided gas pipeline projects is a priority in bilateral relations. This applies to the Iran-Pakistan-India (IPI) project, and to the trans-Afghan Turkmenistan-Afghanistan-Pakistan-Indian pipeline. 

The IPI project will cost an estimated $7.5 billion dollars and is scheduled to go into operation in 2013. The agreement to build it was reached only relatively recently - during Iranian President Mahmoud Ahmadinejad's whirlwind tour of Pakistan, Sri Lanka, and India in the end of April. The pipeline's rated capacity is 150 million cubic meters of gas per day; of these India will receive 90 million cubic meters, and Pakistan 60 million. 

About the same time, Turkmenistan, Pakistan, Afghanistan and India signed a framework agreement to build the trans-Afghan gas pipeline. Construction on this 7.6 billion dollar project will get underway in 2010, and the first gas will be supplied in 2015. 

Both Pakistan and India face serious energy shortages. That should encourage them to cooperate on both projects - and they will need to. IPI will be laid in Baluchistan, where permanent tensions and separatist sentiments could wreck the project. The project also faces intense opposition from the United States, which would like to see Iran in the grip of economic sanctions. 

But American pressure to abandon the project could be neutralized by Russia's gas monopoly, Gazprom, which is equally determined to divert Iranian gas from the western market. It is no accident that Pakistani experts are increasingly talking about Russian-Pakistani regional cooperation in the oil-and-gas industry. They believe that Gazprom's participation will be good for the project.

On paper, the route of the trans-Afghan pipeline on Afghan territory is ideal, starting from the Turgundi terminal on the Turkmen-Afghan border, and following the Herat-Kandahar highway to Spin-Boldak, a terminal point at the Afghan-Pakistani border. But it is ideal only in peacetime. It is possible that by 2015 the United States, NATO, Afghanistan, and Pakistan could guarantee security of the pipeline. But at the moment they are in no position to do so. 

RIA Novosti - Opinion & analysis - Pakistan and India come together over energy


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*DFID to double its investment in NWFP ​* 
PESHAWAR (May 23 2008): The Department of International Development (DFID), a Britain based donor agency has announced to double its investment in Pakistan in the areas of health, education and administration. The head of the DFID in Pakistan, Eric Hawthorn said this during a meeting a with the Chief Minister (CM), NWFP, Ameer Haider Khan Hoti at the Chief Minister's Secretariat on Thursday.

He also assured the NWFP government of extending support in arranging a proposed donor conference scheduled in October this year. Besides the governance advisors and programme officers of DFID, the provincial chief secretary and chief economist were also present in the meeting.

Speaking on the occasion, Hoti said that provincial government was focusing on achieving a lasting peace in the entire province, which he termed a big hurdle in the way of ensuring good governance and resolving the problems of the people. Further, the CM maintained that bringing prudent reforms into health, education and other social sectors was the top priority of the incumbent provincial government.

Moreover, he thanked the DFID for its ongoing projects in the province saying that his government will extend its full co-operation to the officials of the DFID in this regard.

'Our people suffered huge losses in shape of damaged infrastructure of social and services sectors. Therefore the international donor agencies and other non-government organisations should come forward and help us rebuilt the damages', Hoti said.

The provincial government was committed to resolve the people's problems through best and judicious utilisation of the available resources, he added 'Sufficient funds will be given to raise the literacy ratio, promotion of quality education and upgradation of the hospitals in all the districts of the NWFP', Hoti declared and hailed the DFID for its future development plans in the province.

Business Recorder [Pakistan's First Financial Daily]


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*Govt approves 2,200MW power generation projects​*
LAHORE: Federal Government has approved several projects of power generation for execution on fast track basis to generate additional 2200 megawatts electricity to the national grid within one year.

In order to bridge the gap between generation and consumption, all resources are being tapped with a view to enhance power generation capacity in the country, managing director of Pakistan Electric Power Company (PEPCO), Fazal Ahmed Khan said Thursday.

Addressing the 3rd Senior Management Course delegation of the National Management College, he apprised that the contracts for setting up of 425 MW Nandipur and 525 MW Chichoki Mallian thermal power projects have already been signed. 

The two projects, being executed in public sector, are expected to be completed in 2010 and 2011 respectively. Besides, 1800 MW electricity would also be added to the national grid through private sector in 2008-10, he said.

Mr Khan said the system losses of PEPCO were reduced to 20.6 percent till the end of April during the current fiscal year. He said the number of PEPCO consumers were likely to reach 18 million by the end of June 2008. 

He said WAPDA/PEPCO receivables have swelled to Rs 187.753 billion including a sum of Rs 72.060 billion owed by FATA and Rs 38.775 billion by KESC.

WAPDA general manager (Technical Services) Dr Izhar-ul-Haq briefed the delegation about the hydropower and water sectors. He said Pakistan has the potential of generating more than 54000 MW low-cost hydropower. 

The delegation was told that per capita water availability in Pakistan has reduced to an alarming figure of 1070 cubic meter in 2007. It was further told that the country has already lost the storage capacity equivalent to 5.13 MAF due to silting in the reservoirs of Tarbela, Mangla and Chashma. 

To cope with the increasing needs in water as well as power sector, the construction of large dams has become all the more inevitable, he concluded.

WAPDA Member (Finance) Chaudhry Abdul Qadeer and the senior officers of WAPDA and PEPCO were also present on the occasion.

Daily Times - Leading News Resource of Pakistan


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*Federal ministries demandRs 604bn in upcoming PSDP​*
ISLAMABAD: The Federal ministries and divisions have placed a demand of Rs 604.661 billion in PSDP for ongoing as well as new development projects for the fiscal year 2008-09, however, due to the fiscal constraints an allocation of Rs 340 billion is likely to be approved during Annual Plan Coordination Committee (APCC) meeting Friday (today). 

Savings to the tune of Rs 160 billion from current fiscal years PSDP would help the present government to allocate Rs 340 billion for the next years federal PSDP. Projects which were unable to start till December 2007 were grounded by the then government and no further allocation was made for such projects during January-May period of current fiscal year 2007-08. 

APCC would propose its final recommendations for the development projects of the federal ministries and divisions to the National Economic Council (NEC) that would start deliberations here in a two days meeting to be chaired by Salman Farooqi, Federal Minister for Planning and Development and Deputy Chairman Planning Commission. 

New elected government, which is faced with a huge economic imbalance due to unprecedented budget deficit of Rs 957 billion in the current fiscal year 2007-08, is trying to keep the development process intact within available financial resources, said an official at Planning Commission. 

According to official estimates available with Daily Times, federal ministries have demanded the government to provide Rs 50 billion for launching four special programmes for the poor, however, the priorities committee for the next fiscal has recommended an allocation of Rs 26.745 billion. Special programmes include, Khushal Pakistan Programme (KPP-1) Rs 4.420 billion, Khushal Pakistan Programme (KPP-2) Rs 17 billion, Rs 5 billion for creation of Khushal Pakistan Fund and Rs 325 million for establishment of Competitive Support Fund. 

Ministry of Water and Power has sought Rs 103.867 billion for water sector development and Rs 105.333 billion for the development of power sector for the next fiscal year. Priorities Committee has recommend the APCC to allocate Rs 51.949 billion for water sector and Rs 67.058 billion for Power sector development in 2008-09. Pakistan Atomic Energy Commission has sought Rs 22.251 billion, however, the Priorities Committee has recommended provision of Rs 15.301 billion. 

Defence Division has placed a demand of Rs 17.415 billion for the next fiscal, however, priorities committee has recommended Rs 2.616 billion for ongoing projects and asked the APCC to decide the fate of 17 projects for the next fiscal. 

Ministry of Food, Agriculture and Livestock has demanded the government Rs 28.708 billion, however, priorities committee has recommended Rs 19.192 billion for ongoing programmes and asked APCC to decide the fate of agriculture related 21 new projects. 

Communication Division has placed a demand of Rs 38.385 billion, however, the Priorities Committee has recommended a sum of Rs 32.791 billion for the next fiscal year. Railways division has demanded Rs 26.930 billion and the priorities committee has proposed an allocation of Rs 11.058 billion for this division. 

Education division has sought Rs 9.256 billion and against this demand priorities committee has recommended Rs 5.689 billion. Higher Education Commission has demanded Rs 22.6 billion for new and ongoing projects, however, the priorities committee has only recommended Rs 18 billion for ongoing projects and left for APCC to decide new projects. 

Health division asked to allocate Rs 26.053 billion and the priorities committee has recommended Rs 18.153 billion for ongoing programmes and left the decision with APCC on new health initiatives. 

Interior Division has sought Rs 9.481 billion for the next fiscal and the priorities committee has recommended Rs 5.6 billion for ongoing projects and left the decision on 69 new projects with APCC.

Daily Times - Leading News Resource of Pakistan


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*KSE nosedives 615 points on interest rate hike ​* 
Saturday, May 24, 2008

KARACHI: Karachi bourse crashed down by massive 4.5 per cent on Friday with more than five dozen stocks closing at their lower locks.

Benchmark KSE 100-share Index nosedived 4.5 per cent or 615 points in a single day-session to close at 13,012 points - the eight-month lowest level.

The free-float market capitalisation based KSE 30-Index tumbled down by 808 points or five per cent to end at 15,275 points.

The day plunge is the result of significant rise in key discount rate to 12 per cent from 10.5 per cent and the State Bank of Pakistan directive that all banks must pay minimum five per cent profits on Saving and PLS Saving products, analysts said.

The worsening situation can be gauged from the evidence that out of total 344 active counters on board, 293 stocks declined in red against mere 34 stocks advanced. Remaining 17 scrips closed unchanged.

The day turnover remained sluggish at 154.7 million shares while overall market capitalisation dropped by another Rs187 billion to stand Rs4.004 trillion.

The day slump is the third biggest historical fall and first of this calendar year in 100-Index. The biggest crash of 696 points was recorded on Dec 31, 2007, following martyrdom of Benazir Bhutto on Dec 27, 2007. The second worst historical fall of 636 points was registered on Nov 06, 2007, following the imposing of emergency in country on Nov 03, 2007, by the then Gen. Musharraf.

Chief brunt of SBPs decisions to curtail the inflation and narrow down the twin deficits (current account and trade) was felt strongly on banking counters, said Khurram Shahzad at InvestCap.

Other leveraging sectors including cement and textile also shared this burden of SBP corrective measures for economy, as they were availing long term financing on floating mark up rates for their business expansions, he added.

The increase in minimum profit rates to five per cent on saving deposits would increase the cost of funds for larger commercial banks. Banks rates of return on these deposits are on a very lower side. Few larger commercial banks are paying only 2-3 per cent return. Therefore, impact would be higher for larger commercial banks, said M. Imran Khan at First Capital Equity.

Besides closing at their lower circuit breakers, National Bank, Habib Bank, MCB Bank and United Bank included their huge share in negative in 100-Index. They respectively contributed 31 points, 32 points, 39 points and 23 points.

Some other second and third tier stocks also closed at or near their lower locks.

Almost all the giant energy, telecom, fertilizer and cement stocks hit lower locks and include significant points in minus in the chief 100-Index.

The biggest contribution of 104 points in negative was received from Oil and Gas Development Company in the index, followed by Pak Petroleum, Pak Oilfields and Pakistan State Oil in double digits.

Pakistan Telecommunication Company, Engro Chemical, Fauji Fertilizer Bin Qasim, DG Khan Cement, Lucky Cement and many more; all closed at the lower restricted levels while most of blue chips shed huge points in total making of indices-points.

The energy stocks have potential to recover market from dark red zone, as international oil prices are hovering at their peak levels and are feared to move further up owing to massive speculations. But psychological sell-off stocks and fears regarding imposing of Capital Gains Tax in capital markets the market would take long to recover the losing confidence, analysts added.

Highest volumes were witnessed in TRG Pakistan at 12.2 million closing at Rs6.31 with a loss of 99 paisa, followed by Hub Power at 12 million closing at Rs30.65 with a gain of Rs1.54, OGDC at 9.8 million closing at Rs126.35 with a loss of Rs6.65, PTCL at 7.6 million closing at Rs41.24 with a loss of Rs2.17 and PPL at 6.8 million closing at Rs253.65 with a loss of Rs13.35.

KSE nosedives 615 points on interest rate hike


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*Economic targets do not match ground realities: ministry ​* 
Saturday, May 24, 2008

ISLAMABAD: Ministry of Finance high-ups have raised objections over the growth target of 6.5 per cent envisaged by the PPP-led government for the next fiscal year 2008-09, saying that these economic targets did not match the ground realities.

However, officials in the Planning Commission are of the view that owing to low-base GDP estimate of 5.78 per cent for the outgoing fiscal year, the growth rate target of 6.5pc for the next fiscal is achievable and cannot be termed over-ambitious.

An official in the Finance Ministry told The News on the condition of anonymity that the central bank increased its discount rates and took many other steps to control inflationary pressure.

In these extraordinary circumstances, how is the government supposed to achieve higher growth in the agriculture and manufacturing sectors to achieve its desired target of 6.5pc by the next fiscal, he questioned.

On the agriculture sector, another official of the Ministry of Food, Agriculture and Livestock said that this sector could achieve a bumper wheat crop in the range of 24 million tonnes by the next fiscal year if the government ensured the availability of fertilisers within the range of Rs1500 per bag, which means another Rs1,000 to Rs1,500 subsidy on each bag of fertiliser.

He said that the rice and cotton production would also be increased provided the government increased its subsidy. Citing an example of India, he said that New Delhis government is providing a subsidy of Rs836 billion on various heads of agriculture but in Pakistan there was not much focus on the agriculture sector.

The target to contain inflation at 8 per cent seems to be unrealistic as the increase in POL prices; electricity and gas prices and food prices would take the inflation into double digits in the next fiscal year.

The same base would not be available to the local industries, agriculture and other sectors due to the factor that State bank of Pakistan (SBP) has raised the interest rates, utility prices ie electricity prices and gas prices are likely to be adjusted upwards, and oil prices would also be re-adjusted upwards to pass on the impact of higher import cost in the next fiscal year.

Depreciation of the rupee against the dollar, the official said, would also negatively impact imports and would make it difficult for the local industries to achieve a growth rate of 9 per cent in the next fiscal year.

Economic targets do not match ground realities: ministry


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## Neo

*Sindh to establish industrial zones: CM ​* 
Saturday, May 24, 2008

KARACHI: Chief Minster of Sindh, Syed Qaim Ali Shah informed that five thousand acres of land have been allocated by the government of Sindh for the establishment of three new industrial zones.

Speaking at a dinner ceremony held in his honour by the Karachi Chamber of Commerce and Industry (KCCI) on Thursday, Shah further informed that proposals to make Nawabshah and Sukkur tax-free industrial zones for the next 10 years have been sent to the Prime Minster.

He said that the new government is making extensive efforts to establish industrial zones all over Sindh, as it is the most ideal province for investments, while at the same time encouraging industrialists to expand their businesses without any fear of obstacles.

The CM stated that Karachi is struggling to get its law and order situation under control and it would take sometime before stability can completely materialise. Meanwhile, he further added, businessmen should work towards regaining all the markets they have lost to their competitors and should bring them back into the country.

Shah said that businessmen would be supported by the government in their endeavors and they would not be asked to give any accountability over their transactions. 

He further shared the governments aim to build a new power plant, which would address power crises and aid traders in conducting their businesses better. He observed that despite the fact that Sindh is rich in resources, it continues to remain poor. He noted that the Thar coal power plant would be employing 150,000 people once it beings its operations completely.

Shah added that work on the federal budget is progressing and they are trying to make it as public friendly as possible, while further commenting that they are also trying to revise the NFC award to represent Sindh better before announcing the budget.

Sindh to establish industrial zones: CM


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## Neo

*PR incurring nearly Rs35bn annual loss ​* 
Saturday, May 24, 2008

LAHORE: Pakistan Railways (PR), is facing an annual loss of nearly Rs35 billion and is making a sustained effort to cut down on these figures, said chairman, Pakistan Railways, Muhammad Kashif Murtaza here on Friday while speaking to mediamen at the Railways Headquarters on the occasion of signing agreement for the construction of Prem Nagar Dry Port situated about 48km off Lahore in cooperation with two private firms.

The GM Railways Asad Saeed on the occasion said that there were multiple reasons for PR losses; but railways had to bear the worst of its losses after the assassination of Benazir Bhutto. About other causes contributing to PR losses, he said spiralling crude oil prices and acute power shortages were the other two main factors to blame for PR losses.

He also said that train fares had not been enhanced in consonance with rapid rise in oil prices in the international markets.

Load shedding badly disrupted the railways system and PR had to seek alternate recourse to keep going on.

Earlier, Pakistan Railways General Manager Asad Saeed signed the agreement with M/s Qasim International Container Terminal, Karachi (QICT) and M/s Premier Mercantile Services, Karachi (PMS) to establish a dry port at Prem Nagar Railway Station at a cost of Rs1729 million.

The agreement was signed on Built-Operate-Transfer (BOT) basis.

According to the agreement, the QICT will contribute Rs575 million, PMS Rs660 million and PR will contribute Rs494 million for the dry port.

The project will be completed by June 30, 2009 and generate revenues of nearly Rs911 million during the first year of operations.

PR incurring nearly Rs35bn annual loss


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## Neo

*Planning Commission, MoF disagree over growth targets​*
ISLAMABAD: The Ministry of Finance and the Planning Commission have conflicting views on growth targets proposed in the macroeconomic framework for the next fiscal year 2008-09 with one contending that targets would not be achievable and the other saying otherwise. 

A senior official at Ministry of Finance informed on the condition of anonymity, that economic targets proposed in the macroeconomic framework for the next fiscal year are not based on ground realities and it would be difficult for the economic managers to achieve them. 

The Officials at Planning Commission are of the view that due to the low growth and low base in the outgoing fiscal year 2007-08 the GDP growth target of 6.5 percent is achievable. 

The finance ministry officials are of the view that the theory of low base growth could work when the ground realities and other factors remain the same at the level of the outgoing fiscal year. 

Target to contain inflation at 8 percent seems to be unrealistic as the increase in POL prices; electricity and gas prices and food prices would take the inflation to double digits in the next fiscal year. Due to these factors, the same base would not be available to the local industries, agriculture and other sectors in the next fiscal year.

State bank of Pakistan has raised the interest rates, utility prices are likely to be adjusted upwards, and oil prices would also be re-adjusted upwards. 

Depreciation of rupee against the US Dollar will make it hard for the industries to achieve growth rate of 9 percent in the next fiscal year. Agriculture growth rate is also fixed at the higher side, which would require huge resource for the development of this vital sector to achieve this ambitious growth target. Water shortages, high prices of agriculture inputs like pesticides, fertilizers, diesel prices and transportation charges would have negative impact on agriculture growth, they explained. 

Macro economic framework for the 2008-09 proposes GDP growth at 6.5 percent, while last year it was targeted as 7.2 percent, and actual growth has been estimated at 5.78 percent. 

The proposed 6.5 percent GDP growth in fiscal year 2008-09 is based on contribution of three major sectors with growth rates of agriculture 4 percent, manufacturing 8.5 percent, and that of services sector 6.7 percent in the next fiscal year. The contribution in agriculture sector of major crops is 4.5 percent, and of minor crops is 2.5 percent, livestock 4 percent, fishery 4 percent and forestry by 1.5 percent. 

Manufacturing sector is projected to achieve a growth rate of 8.5 percent with large-scale manufacturing at 9 percent and small-scale manufacturing by 8 percent with major contributions from cement 23.7 percent, motor tyres 16 percent, trucks 28.5 percent, air conditioners 26 percent, and petroleum products 10.4 percent and motor tubes 11.4 percent. 

The services sector as a whole is projected to grow by 6.7 percent with main contributors of value addition in this sector are transport, storage and communication 5 percent, wholesale and retail trade 6.5 percent, finance and insurance 12 percent, ownership of dwellings 3.5 percent, public administration and defence 4 percent and social, community and personal services 8 percent. 

To attain the projected growth target, total investment is projected to increase by 19.66 percent to Rs 2702.7 billion in 2008-09 against Rs 2258.2 billion estimated for 2007-08. As a percent of GDP, total investment is expected to rise from 21.6 percent in 2007-08 to 22.4 percent in 2008-09. 

The inflation rate, based on CPI for 2008-09 has been projected at 8 percent while the last year target was 6.7 percent. Fiscal Policy aims to keep the fiscal deficit within a sustainable limit by furthering reforms in the tax system, broadening the tax base, improving the tax compliance and minimising tax evasion. The monetary expansion for the year 2008-09 will be in line with the projected GDP growth of 6.5 percent and CPI Inflation of 8 percent. 

Trade Account for 2008-09 seeks exports to grow by 15 percent to $21.6 billion against $18.8 billion estimated for 2007-08. Imports during 2008-09 are anticipated to increase by 12 percent to $37.6 billion due to higher volume of import of food items, POL, edible oil and fertilizers. As a result, the trade account is projected to be in deficit by $15.9 billion in 2008-09 or 8.3 percent of the GDP. 

With a deficit of $15.9 billion on the trade account and a surplus of $3.4 billion on the invisible account, the current account deficit is targeted at around $12.5 billion (6.5 percent of the DGP) in 2008-09 against a deficit of $13 billion (7.6 percent of GDP) in 2007-08.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Punjab budget to be pro-poor with emphasis on development​*
ISLAMABAD: Forthcoming budget for the Province of Punjab would be based on three priorities including taxing the rich, providing relief to the poor and massive reduction in non-development expenditures of the province. 

Explaining the budget priorities for the next fiscal year 2008-09, Tanvir Ashraf Kaira, Finance Minister Punjab informed Daily Times at the sidelines of the Annual Plan Coordination Committee (APCC) here Friday. 

He disclosed that APCC has reduced the allocation for irrigation projects for the province and, we have asked the Planning Commission to increase such allocations to enable the province to grow more agriculture products for the country. 

He said that taxes on rich are to be imposed to generate sufficient revenues to undertake relief programmes for the poor, in this regard, proposals from the different provincial departments are being sought. 

He further said that corporate governance would be promoted in the province of Punjab so that an outcome based mechanism is ensured for services delivery and benefit of the general public.

He informed that the income from agriculture is already taxed through land-based mechanism; however, he was of the view that agri-income tax needs some modification for revenue generation. We would look into different proposals regarding agricultural taxation or take other steps. 

Government of Punjab would develop its capacities for tax collection and once this is achieved the province would ask the federal government to transfer the sales tax collection rights to the province.In order to enable the province to enhance its capacity of tax collection special efforts would be put in place during the next few years. 

Giving details of the Annual Development Plan of the province for the fiscal year 2008-09, he said the ADP would be much more than actual utilisation in the current fiscal year. He said that last year the previous government had announced Rs 150 billion ADP, which was subsequently reduced to Rs 121 billion during the caretaker governments tenure. Over 80 percent of the ADP was utilised during the first half of the current fiscal year 2007-08 by the last government against the normal practice to gain political motives. 

He said that no ongoing project would be deleted from the provincial ADP and new schemes for construction of small dams, irrigation development and social services would be introduced. 

ADP of the province for the next fiscal would aim at promotion of education, heath facilities and infrastructure development for sustainable growth of provincial economy. 

He said that provincial government would provide state owned agriculture land to to help increase agriculture produce for food security.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Expedite oil and gas exploration ​*
ISLAMABAD: The Federal Minister for Petroleum and Natural Resources Shah Mehmood Qureshi has directed the ministry to evolve a proactive approach and expedite oil and gas exploration in the country to meet the challenges of soaring international oil prices and reduction of oil import bill. The minister expressed these views on Friday while taking a briefing from the senior official of the Ministry of Petroleum. 

Secretary Petroleum and Natural Resources Zafer Mehmood briefed the minister about the organisation, functions and on-going projects of the ministry. Mr Qureshi was pleased to know that the ministry was making vigorous efforts with regard to oil and gas exploration. He also took note of the huge potential of development of mineral wealth like coal and copper. He took special interest in all the projects aimed at developing minerals in the country. 

Daily Times - Leading News Resource of Pakistan


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## vish

Neo said:


> *PR incurring nearly Rs35bn annual loss ​*
> Saturday, May 24, 2008
> 
> LAHORE: Pakistan Railways (PR), is facing an annual loss of nearly Rs35 billion and is making a sustained effort to cut down on these figures, said chairman, Pakistan Railways, Muhammad Kashif Murtaza here on Friday while speaking to mediamen at the Railways Headquarters on the occasion of signing agreement for the construction of Prem Nagar Dry Port situated about 48km off Lahore in cooperation with two private firms.
> 
> The GM Railways Asad Saeed on the occasion said that there were multiple reasons for PR losses; but railways had to bear the worst of its losses after the assassination of Benazir Bhutto. About other causes contributing to PR losses, he said spiralling crude oil prices and acute power shortages were the other two main factors to blame for PR losses.
> 
> He also said that train fares had not been enhanced in consonance with rapid rise in oil prices in the international markets.
> 
> Load shedding badly disrupted the railways system and PR had to seek alternate recourse to keep going on.
> 
> Earlier, Pakistan Railways General Manager Asad Saeed signed the agreement with M/s Qasim International Container Terminal, Karachi (QICT) and M/s Premier Mercantile Services, Karachi (PMS) to establish a dry port at Prem Nagar Railway Station at a cost of Rs1729 million.
> 
> The agreement was signed on Built-Operate-Transfer (BOT) basis.
> 
> According to the agreement, the QICT will contribute Rs575 million, PMS Rs660 million and PR will contribute Rs494 million for the dry port.
> 
> The project will be completed by June 30, 2009 and generate revenues of nearly Rs911 million during the first year of operations.
> 
> PR incurring nearly Rs35bn annual loss



May be Lalu would help?


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## Neo

vish said:


> May be Lalu would help?



Send him over.


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## Neo

*Trade deficit projected at $15.9 billion ​* 
ISLAMABAD (May 24 2008): Pakistan's trade deficit has been projected at $15.9 billion in 2008-09 with estimated exports growing by 15 percent to $21.6 billion while imports by 12 percent to $37.6 billion. The export estimates in 2007-08 stand at $18.8 billion. These projections were presented to the Annual Plan Coordination Committee, which met here on Friday.

The final estimates will be prepared by the commerce ministry in the coming Trade Policy. Imports will be increased by 12 percent in the next fiscal year due to higher volume of food items, oil, edible oil and fertilisers. As a result, the trade account is projected to be in deficit by $15.9 billion in 2008-09 or 8.3 percent of GDP.

Invisible account: Prospects for the invisible balance will continue to be governed mainly by the behaviour of the worker's remittances. For 2008-09, remittances have been projected at $6.9 billion against $6.5 billion estimated for 2007-08. Allowing for other invisible receipts and payments, the surplus on invisible account is anticipated at $3.4 billion against a surplus of $1.7 billion estimated for 2007-08.

Current account balance: With a deficit of $15.9 billion on the trade account and a surplus of $3.4 billion on the invisible account, the current account deficit is targeted at around $12.5 billion (6.5 percent of GDP) in 2008-09 against a deficit of $13.0 billion (7.6 percent of GDP) in 2007-08.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*6.5 percent GDP growth seen in 2008-09 ​* 
ISLAMABAD (May 24 2008): Pakistan's GDP growth rate has been projected at 6.5 percent in 2008-09, which is 0.7 percent less than the original target of 7.2 percent for current fiscal year. The next fiscal year's targeted growth will be contributed by 4 percent agriculture, 8.5 percent manufacturing and 6.7 percent services sector.

These projections were made at the Annual Plan Coordination Committee meeting on Friday. The meeting will also continue today (Saturday). The APCC projections will come up for the consideration of National Economic Council (NEC) in its meeting later this month or early next month.

According to the working paper presented at the meeting, agriculture sector has been projected to grow by 4 percent in the next fiscal year with contribution of 4.5 percent growth in major crops, 2.5 percent in minor crops, 4 percent each in livestock and fishery and 1.5 percent in forestry.

The manufacturing sector is projected to achieve a growth rate of 8.5 percent during 2008-09. But this target is set with an anticipation that energy shortages will subside to a certain extent and export competitiveness improves through appropriate policy measures.

Large scale manufacturing has been projected to grow by 9 percent, small scale manufacturing at 8 percent. The major boost to industrial growth will come from cement with 23.7 percent, motor tyres 16 percent, trucks 28.5 percent, air conditioners 26 percent, petroleum products 10.4 percent and motor tubes 11.4 percent.

The services sector would continue to be the main contributor towards the increase in economic growth during the next fiscal year. The main contributors of value addition in this sector are transport, storage and communication with projected growth of 5 percent, wholesale and retail trade with 6.5 percent, finance and insurance with 12 percent, ownership and dwellings with 3.5 percent, public administration and defence 4 percent and social; community and personal services 8 percent.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Inflation target for 2008-09 projected at eight percent ​* 
ISLAMABAD (May 24 2008): Inflation target for 2008-09 has been projected at 8 percent, which is well above the original target 6.5 percent for the current fiscal year. The target is, however, less than CPI based inflation of 10.3 percent recorded during the first 10 months of the current fiscal year.

Reduction in the rate of inflation in next fiscal year as compared to estimate for this fiscal year will be achieved by ensuring fiscal stringency, tight monetary policy and adequate supply of essential items, according to working paper for the APCC meeting.

The monetary expansion for 2008-09 will be in line with the projected GDP growth and inflation targets. To keep M2 growth in the targeted level and to encourage private sector credit, it will be imperative that government borrowings should be limited to a safe level. This will also help in bringing down the CPI inflation and strengthening the growth prospects of the economy.

The main thrust of fiscal policy during the next fiscal year would be to keep the fiscal deficit within a sustainable limit by furthering reforms in the tax system, broadening tax base and improving tax compliance and minimising tax evasion. The main objective of the policy would be to allocate adequate resources for development activities particularly for pro-poor expenditure in conformity with Fiscal Responsibility and Debt Limitation Act, 2005.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*PSDP size may be increased to Rs 470 billion ​* 
ISLAMABAD (May 24 2008): Public Sector Development Programme (PSDP) size of Rs 437 billion proposed by the Finance Ministry Priorities Committee might be increased to Rs 490 billion as the Planning Commission (PC) is seeking the increase in order to ensure the timely availability of resources for ongoing and some important new development projects.

However, the proposed PSDP allocation, which is being distributed among the federal and provincial ministries, stands at Rs 437 billion. In Annual Plan Co-ordination Committee meeting, the PC has sought authorisation from the federal government to make the adjustments in the detailed programme while maintaining sectoral priorities.

The proposed allocation for federal ministries is Rs 188.9 billion in 2008-09, which is 17.8 percent less than 229.8 billion allocation under the same head in the current fiscal. Special areas like Fata, Northern Areas, and AJK, will get Rs 23.2 billion or 9.4 percent more than this fiscal allocation of Rs 21.2 billion.

Rs 26 billion will be allocated for special programmes in the next fiscal or 23 percent less than this fiscal allocation of 34.4 billion in the current fiscal. Corporations will get an allocation of Rs 48.4 billion in 2008-09 or 2.4 percent less than this fiscal allocation of Rs 49.6 billion.

The proposed allocation for provinces is Rs 150 billion, which remained unchanged if compared with the allocation of the current fiscal. The proposed allocations will be approved by the National Economic Council, which will further scrutinise them.

According to details given to the APCC, major emphasis in the proposed 2008-09 development programme is on the infrastructure development sectors with an allocation of Rs 111.4 billion or 38.8 percent of the PSDP. The government will spend Rs 51.9 billion on water resources development, Rs 43.5 billion on transport and communication, and Rs 16 billion on energy.

Social sectors and poverty related expenditure has been proposed at Rs 151.6 billion or 52.8 percent of the PSDP. The allocation for strategic support to the production sectors like agriculture, industry and mineral has been proposed at Rs 24 billion which is 8.4 percent of the total federal programme, which will come to Rs 340 billion if increase of Rs 53 billion demanded by the PC was approved by the National Economic Council (NEC).

The federal allocation proposed by the Priorities Committee, according to the PC, meets only the funding requirement of the ongoing projects. To maintain the momentum of development projects expectations, the size of the PSDP should be enhanced to a reasonable level to make available fiscal space for new projects in line with the government's priorities.

The water and power ministry will be given Rs 51.9 billion for the development of water resources in the next fiscal. The allocation for the same ministry for power sector has been proposed at Rs 15.8 billion.

The ministry's total estimated cost of land acquisition for hydel projects (five big dams) is Rs 158 billion. The proposed allocation for this purpose in 2008-09 is Rs 1.75 billion.

Pakistan Atomic Energy Commission will get Rs 15.8 billion in the next fiscal. Pakistan Nuclear Regulatory Authority will get Rs 0.47 billion, petroleum and natural resources ministry Rs 0.22 billion, communication division Rs 32.79 billion, ports and shipping Rs 0.33 billion and Railway ministry will get Rs 11.05 billion in the next fiscal.

Food and agriculture will get Rs 19.19 billion, interior Rs 5.6 billion, industries Rs 4.58 billion, defence Rs 2.61 billion, housing and works Rs 1.25 billion, law, justice division Rs 2.38 billion, Revenue division 2 billion, defence production division will get Rs 1.3 billion in 2008-09.

Finance division will get Rs 11.77 billion, education division Rs 5.69 billion, Higher Education Commission, Rs 18 billion, health division Rs 18.15 billion, information technology and telecommunication Rs 1.76 billion, science and technology Rs 2.73 billion Kashmir Affairs and Northern Areas division Rs 15.08 billion, states and frontier regions division Rs 8.16 billion, environment division Rs 2.1 billion.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*SBP measures would have negative impact on economy: ICCI ​* 
ISLAMABAD (May 24 2008): Muhammad Ijaz Abbasi, President Islamabad Chamber of Commerce & Industry has criticised the measures taken by State Bank of Pakistan (SBP) including increasing discount rate and imposition of 35 percent Letter of Credit (L/C) margin on imports.

Addressing a meeting here at ICCI, Abbasi said that enhancement of key discount rate to 12 percent from 10 percent is totally unjustified, which will have a negative impact on the already under strain economy of Pakistan.

ICCI chief said that State Bank has increased the discount rate by 50 percent just a month ago, which could not produced the desired results. He said that imposition of 35 percent L/C margin would dent exports to a great extent.

Muhammad Ijaz Abbasi said that inflation in the country is rising day by day, which should be controlled by adopting some other measure rather than putting extra pressures on the businesses. He urged the government to take measures for growth of businesses rather than adopting discouraging policies.

He said that raise in oil and gas prices negatively impacted the industrial production and the recent measures of SBP will further make our business more uncompetitive in the international market.

President said that exports of Pakistan are not showing upward trend because of increase in the cost of doing business. He said that a summary has been submitted to Ogra for 30 percent increase in the gas prices, which has created a great panic among the business community and the general public. He said that gas rates should not be increased, because Pakistani products will become more expensive and uncompetitive.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Warid's investment to reach $1.5 billion by year-end ​* 
LAHORE (May 22 2008): The Warid Telecom's total investment in Pakistan will touch $1.5 billion by the end of this year while the company will further increase its investment in the telecom sector by $1 billion by the end of 2009.

Warid Telecom Chief Executive Officer (CEO), Marwan Zawaydeh, disclosed this while addressing a news conference organised here Wednesday to share the company's achievements, recognitions and future plans after completing three years of successful operations in Pakistan. Warid Telecom Chief Commercial Officer Thomas Yeo also spoke on the occasion.

He said the company, during its three year operation, has achieved all the targets including loyal and satisfied subscriber base and gaining the strong reputation for the best quality network by deploying latest technology in the GSM network.

'Under the leadership of our Chairman His Highness Sheikh Nahayan Mabarak Al Nahayan and guidance of Bashir A Tahir- Chief Executive Officer Abu Dhabi Group we are focusing the full power of our assets to become the best mobile phone operator and the primary choice of Pakistani subscriber, fulfilling the consumer's communication needs,' he added.

Moreover, he maintained that the company has started investing heavily to double its network capacity and coverage and plan to take over installed cell sites to more than 5,000 by the end of this year.

This will enhance our existing state-of-the-art network and also result in connecting the remote areas while maintaining best network coverage, voice clarity and innovations.

Marwan Zawaydeh also unveiled the new logo of the company and said the company's new logo has a more approachable image and will strengthen the Warid identity while keeping the customers in focus and encompass the expanding reach of Warid not just in Pakistan- but in an international footprint.

Warid Telecom's Chief Commercial Officer (CCO), Thomas Yeo announced the re-launch of the company towards a new dimension and shared the latest innovation offered through Warid's products and services to its subscribers as part of Warid's Third Anniversary celebration.

With the re-launch, we have lined up an entire suite of innovative services and delightful experiences to welcome new users to our network as well as to ensure our existing customers continue to feel pampered, he added.

'With Warid, being a new family member of SingTel Group, we are certain that the experience sharing in product innovation and customer service excellence among the Group will enhance Warid's speed to market some of the most interesting and great value offering to our customers in Pakistan,' Thomas Yeo said.

He said the Warid Telecom entered into a strategic alliance with SingTel. Subsequent to this transaction, telecom giant SingTel has acquired 30 per cent equity stake in Warid Telecom for an estimated $758 million.

Warid Telecom is one of the fastest growing GSM mobile companies in Pakistan. Since its launch on May 23, 2005 Warid has more than 15 million subscribers and cover over 5,000 destinations all over Pakistan. 'Warid Telecom is also providing one of the largest and continuously growing International Roaming network in over 129 countries with roaming partnerships with 200 global operators,' he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Per capita water availability reduces to alarming figure' ​* 
LAHORE (May 24 2008): Per capita water availability in Pakistan reduced to an alarming figure of 1070 cubic meter in 2007 while the country has lost the storage capacity equivalent to 5.13 MAF due to silting in the reservoirs of Tarbela, Mangla and Chashma.

This was revealed by General Manager (Technical Services),Wapda, Dr Izhar-ul-Haq while talking to the 3rd Senior Management Course delegation of the National Management College, here on Thursday. Izhar-ul-Haq briefed the delegation about the hydropower and water sectors and said that Pakistan has the potential of generating more than 54,000 MW low-cost hydropower electricity.

To cope with the increasing needs in water as well as power sector, the constructions of large dams have become all the more inevitable, he added. Water and Power Development Authority (Wapda), member power, Fazal Ahmed Khan told the delegation that Wapda's receivables have swelled to Rs 187.753 billion including a sum of Rs 72.060 owed by Fata and Rs 38.775 billion by KESC.

Moreover, he said that the system losses were reduced to 20.6 per cent till the end of April during the current fiscal year and the numbers of consumers are likely to reach 18 million by the end of June 2008.

In order to bridge the gap between generation and consumption, the Federal government, had approved several projects of power generation to be executed on fast track basis and additional 2,200 MW electricity would be made available to the national grid within one year.

He said that all resources are being tapped with a view to enhance power generation capacity in the country. Dilating upon the various measures, he apprised the delegation that the contracts for setting up of 425 MW Nandipur and 525 MW Chichoki Mallian thermal power projects have already been signed.

The two projects, being executed in public sector, are expected to be completed in 2010 and 2011 respectively. Besides, 1,800 MW electricity will also be added to the national grid through private sector in 2008-10, he further said. Wapda Member (Finance) Chaudhry Abdul Qadeer and the senior officers of Wapda were also present on the occasion.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Rain, rivers inflow improve water situation ​* 
LAHORE (May 24 2008): Though the country still faces about 40 percent shortage of water for sowing the two main foreign exchange earning crops, cotton and rice, the water situation slightly improved on Thursday with scattered rains in the Central Punjab and rising inflow in the rivers.

The combined inflow of water in rivers Indus, Kabul, Jhelum and Chenab has reached 0.25 million cusecs mark. The position of the river inflows/outflows at Tarbela, Mangla and Chashma along with the reservoirs levels and the barrages on Thursday was as under:

Rivers: Indus at Tarbela-Inflows 111,100 cusecs and Outflows 100,000 cusecs, Kabul at Nowshera: Inflows 48,900 cusecs and Outflows 48,900 cusecs, Indus at Chashma-Inflows 146,700 cusecs and Outflows 125,000 cusecs, Jhelum at Mangla-Inflows 56,600 cusecs and Outflows 44,000 cusecs, Chenab at Marala-Inflows 35,900 cusecs and Outflows 18,900 cusecs.

Barrages: Jinnah-Inflows 156,100 cusecs and Outflows 150,400 cusecs, Chashma -Inflows 146,700 cusecs and Outflows 125,000 cusecs, Taunsa-Inflows 98,400 cusecs and Outflows 79,900 cusecs, Guddu-Inflows 53,200 cusecs and Outflows 50,300 cusecs, Sukkur-Inflows 42,700 cusecs and Outflows 11,400 cusecs, Kotri-Inflows 5,365 cusecs and Outflows nil.

Reservoirs Level and Storage: Tarbela-level 1380.75 feet, live storage 0.149 Million Acre Feet (MAF) and dead level 1369.00 feet, Manala-level 1110.70 feet, live storage 0.799 MAF and dead level 1040 feet, Chashma - level 643.00 feet, live storage 0,105 MAF and dead level 637 feet.

A Met office report said that during the past 24hours, Sargodha received 26 mm of rains, shorkot=25 mm, Johabad=22 mm, Noorpur Thal=20 mm, Sahiwal=20 mm, Okara=16, Jhang=10, Mianwali=09, D.I Khan=08, and Dir=08 mm.

The report said that westerly weather system is likely to approach upper parts of the country between 22nd to 25th May 2008. Under the influence of this system, rains/thunderstorm associated with strong gusty winds is likely to occur over Upper Punjab, Upper NWFP, Northeast Balochistan, Kashmir, and Northern Areas during the above-mentioned period. Hailstorm may also occur at few places.

Whereas in the other parts of the country that includes South Punjab, Sindh and South NWFP may experience Dust-Thunderstorm at scattered places. This weather is likely to bring some relief to present severe heat wave conditions in the country.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Growth estimates for fiscal year 2008 ​*
EDITORIAL (May 23 2008): The news about the growth rate of the economy for the current financial year, though not yet officially announced, are not encouraging. According to reliable sources, the National Accounts Committee, which compiles the growth figures, has estimated that the gross domestic product (GDP) of the country grew only by 5.78 percent during 2007-08 as against the revised target of 6.5 percent, owing to low agricultural and industrial output during the year.

The original target, it may be mentioned, was envisaged at 7.2 percent which was revised downwards later on because of continuous political turmoil as well as load shedding in the country. The major victim was the agriculture sector which witnessed a steep decline, achieving only 1.49 percent growth during 2007-08 as against the envisaged target of over four percent.

The overall industrial growth was also down to 4.63 percent as against over eight percent achieved in the previous year mainly due to severe energy shortages. Within the industrial sector, the large scale manufacturing (LSM) witnessed a massive decline and achieved only 4.84 percent growth as against 8.8 percent in the previous year. The small scale manufacturing showed a respectable growth rate of 7.51 percent but it was still lower than the 7.7 percent recorded last year.

The transport and communication sector was estimated to grow by 4.42 percent as against 5.8 percent during 2006-07. The growth rates of construction sector, wholesale and retail trade and financial and insurance sectors were also lower than last year. However, the services sector was estimated to have achieved a higher growth rate of 8.16 percent compared to 7.96 percent last year. The growth rate of public administration and defence was also higher at 10.8 percent as compared to 6.9 percent during 2006-07. Social sectors also showed a respectable growth rate of 9.4 percent as against 8.5 percent last year.

The latest estimates on growth during 2007-08 are not only disappointing but suggest very clearly that the claims of the previous government that it had put the economy on a higher growth trajectory with marked resilience were not very well founded. The FY07 was the fourth successive year of sustained high growth in the economy, with the average annual growth accelerating to 7.0 percent during FY03-07 period and it was on this basis that policy planners had projected a growth rate of 7.2 percent during 2007-08.

The actual developments during the year, however, indicate that their optimism was largely misplaced. Also worrying is the fact that commodity producing sectors like agriculture and industry which generally contribute to higher level of employment, reduce the poverty level as well and drive forward the activities in other sectors of the economy, have performed very poorly this year.

A lower growth rate also explains the difficulties in other areas of the economy. Of course, price pressures are bound to intensify, trade deficit is going to widen and the revenues of the government are likely to be lower if growth rate turns out to be lower than the target. This is exactly what has happened in Pakistan with all the major indicators having nose-dived. Non-achievement of the growth target also indicates the need to be more objective and level-headed while projecting the future.

It is true that some of the exogenous factors like abnormal increase in international oil prices have contributed to the slowdown in growth rate but some of the indigenous constraints, including a very low level of investment, have always been there to hamper the realization of a higher growth rate on a consistent basis. Some of the independent analysts, including this newspaper, have always been trying to point out the fact that long-term prospects for growth in Pakistan would always be dim unless and until investment rate is enhanced to around 25 percent of GDP, political stability is restored and energy shortages are successfully overcome.

In the absence of these favourable factors, it would not be possible for the economy to yield high growth rates on a consistent basis which is essential to improve the standards of living of the people in the country. While on the subject, we would also like to advise the powers that be to instruct the bureaucracy to be as realistic as possible in estimating the growth of various components of GDP in order to avoid the bitter experience of the past. Bloating of figures for the sake of expediency induces complacency and usually leads to poor policy responses.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Fighting inflation ​*
EDITORIAL (May 24 2008): These are difficult times for central banks of oil importing countries. Faced with the unusual phenomenon of skyrocketing oil and food prices impacting adversely their economies in a number of ways, they are forced to adopt highly restrictive measures to perform their primary function of ensuring price stability.

The State Bank of Pakistan (SBP) on 22nd May, 2008, responded to the deteriorating situation by announcing a series of monetary tightening measures and explaining their rationale and background in order to pre-empt unnecessary criticism on its move. The policy measures announced by the SBP were wide-ranging and encompassed almost all areas and instruments of credit and monetary control at its disposal.

The policy discount rate was increased by 150 basis points to 12 percent, Statutory Liquidity Ratio (SLR) and Cash Reserve Requirement (CRR) for deposits up to one year maturity were hiked by 100 basis points to 19 and nine percent respectively, and all banks were required to pay a minimum profit rate of five percent on saving/PLS products. The L/C margin of 35 percent was imposed on all imports except for oil and selective food items. These strong measures were meant to tame inflationary pressures in the economy by increasing the cost of credit, encouraging savings and draining off excess liquidity from the system as well as reducing import demand with a view to improving the balance of payments of the country and countering the weakening of the Pak Rupee.

The State Bank this time has not stopped at prescribing these stringent measures but has also advised the government to sterilise the expected foreign inflows by using them to settle its obligations to SBP, retire its MRTBs to help reduce the reserve money growth, and amend the Fiscal Responsibility Debt Limitation (FRDL) Act of 2005 for incorporating appropriate provisions to restrict debt magnetisation.
 
The reasons given by the SBP for adopting this highly restrictive approach are quite convincing. A considerable deviation of Pakistan's macro-economic outcome for FY08 from the original projections, according to the State Bank, has necessitated re-examination of the monetary policy framework that was based on different assumptions related to fiscal and external account deficits as well as output growth and inflation. "The slippages in the twin deficits and borrowings of the government from the SBP have grown persistently every month. Equally concerning is steady rise, but now a sharp spike in year-on-year indicator of food inflation.

These trends have reached a proportion that are now unsustainable and without corrective actions carry risk of creating more macro-economic complications". The immediate monetary policy tightening was necessitated by some unprecedented pressures on the economy.

External current account deficit has increased at a pace that is difficult to sustain given the slowdown in financial inflows, complications in financing of external current account deficit coupled with speculative positions in the domestic foreign exchange market, which have put enormous pressure on the exchange rate; budget deficit is projected to be significantly higher relative to the original budgetary estimates for FY08, private sector credit has grown consistently and has outpaced last year's growth despite monetary tightening in January and the combination of these developments has raised the headline inflation to an alarming level, doubling in just four months from December, 2007 to April, 2008.

More disturbing was the trend of food inflation, which has also doubled, spiking to 25.5 percent from 12.2 percent during the same period. There is absolutely no doubt that, like most other central banks, this is testing time for the State Bank and it has to take unusually tough decisions to counter high inflationary pressures in the economy and protect the solvency of the country.

Most of the oil importing countries are now registering a slowdown in their economic growth and witnessing exceptional rise in inflation which is emerging as the biggest challenge and Pakistan is no exception to these developments. In fact, while record oil and food prices in the international market are a source of great stress for almost all the countries, Pakistan's problems have been exacerbated by political uncertainty, lower foreign investment, and the unwillingness of the government to adapt its fiscal strategy to the unfolding events.

Based on current trends, the average headline inflation for the entire FY08 is forecast to be over 11 percent - almost double the target of 6.5 percent - and the situation has the potential to explode in hyper inflation if the State Bank does not watch the situation carefully and take highly pro-active measures to manage domestic demand pressures to avoid further and steeper rise in inflation.

In our view, the measures announced by the State Bank including increase in the discount rate, SLR and CRR would raise the cost of credit, reduce the credit creating capacity of the banks and be very helpful in containing the growth of liquidity in the economy. The rise in deposit rates almost across the board would encourage saving habit and shift a part of currency holding by the public to their deposit accounts.

All of this will reduce demand pressures in the economy and tame the emerging inflationary pressures; though in a volatile and uncertain situation the country is facing at present, it is difficult to quantify the net positive impact of the measures announced by the SBP. The reduced import demand coupled with higher L/C margins and relatively better return on rupee deposit accounts will also be helpful in improving the current account of the country.

However, government and businessmen are expected to be critical of the State Bank's measures for obvious reasons. We feel that the State Bank has done well to point out openly the inevitability of the measures in the current economic situation and by reminding that the real lending rates in Pakistan would still be one of the lowest in the world.

It needs to be highlighted, however, that the success of monetary tightening measures would depend critically on the fiscal strategy of the government. In its statements and documents, the State Bank has all along been urging upon the government to reduce the budget deficit to sustainable levels and finance it from sources other than the State Bank in order to soften its inflationary impact.

Upward revision in NSF rates, enhancing the attractiveness of prize bonds scheme and holding a series of PIB auctions to tap corporate savings need to be focused on to retire the T-bills holding of SBP. So far, the government has not listened to State Bank's advice and complemented its tight policy by adopting the necessary contractionary measures with the result that monetary policy is becoming increasingly hostage to the expansionary fiscal strategy of the government.

It is apparent that the government has to seek a waiver from the parliament for missing the fiscal conditionalities under FRDL Act, 2005 during 2007-08 because of much higher level of fiscal deficit than the prescribed target. While the need for fiscal prudence and a close coordination between monetary and fiscal policies to achieve the desired results is obvious, it is not clear why the State Bank has advised the government to amend the FRDL Act.

If excessive borrowings from the SBP are to be discouraged, the purpose could be served by invoking Article 9A of the State Bank Act which states that its Central Board could "determine and enforce, in addition to the overall expansion of liquidity, the limit of credit to be extended by the Bank to the Federal Government, Provincial Governments and other agencies of the Federal and Provincial Government for all purposes..." Even otherwise, we would advise the State Bank to be a little cautious in its approach and remember that its hard-won autonomy could be rolled back through a revision in its Act by a Parliament that does not like its posture and is wary of its interference in managing government accounts.

Business Recorder [Pakistan's First Financial Daily]


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## UnitedPak

*Karachi Fish Harbour to be modernised*


ISLAMABAD, May 23: The Centre and the Sindh government have agreed, in principle, to evaluate a suggestion by the Competitiveness Support Fund for bringing in an internationally renowned fish harbour management through a competitive bidding process to upgrade the Karachi Fish Harbour.

The CSF -- a joint initiative of the United States Agency for International Development (USAID) and the Ministry of Finance -- would provide technical assistance to the Ministry of Food, Agriculture and Livestock and the Sindh Fisheries Department for a better management of the harbour.The harbour has faced problems regarding fish quality and maintenance of sanitary and hygienic standards.

Last year, the CSF had conducted an analysis of various stakeholders&#8217; needs and management options and it was agreed that the cost of interventions would be split between the Centre and the province.

As part of its assistance to Balochistan, the CSF is also preparing a brief for the fisheries department concerned on development of fish exporting and processing industries, particularly in Gwadar and Pasni regions.

The support for CSF is part of the $1.5 billion in aid that the US is providing through USAID to Pakistan over five years to improve economic growth, education, health, governance and for earthquake reconstruction.

Pakistan has a fish and seafood industry worth approximately $1.2 billion and exports alone were worth nearly $200 million while more than 800,000 people rely on the industry for their livelihoods.

The industry, however, is suffering from over-fishing that is reducing the resource base and yields, and from poor quality control that is reducing the catch value.

Karachi Fish Harbour to be modernised -DAWN - Business; May 24, 2008


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## Bushroda

Neo said:


> Send him over.



Only on one condition

Once accepted, cannot be returned


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## Neo

*Budget 2008-09: FBR intends to offer concessions to local industry ​* 
ISLAMABAD (May 25 2008): The Federal Board of Revenue is making comprehensive changes in the SRO.565 (I)/2006 to exempt customs duty on the import of raw materials, sub-components, components and assemblies (not manufactured locally) to facilitate the local industry in the budget 2008-09.

Sources told Business Recorder that the board intends to offer concessions to different local sectors on the recommendations of the Engineering Development Board. The on-going budget exercise is contemplating massive changes in SRO.565 (I)/2006 to put in place a concessionary regime for the local manufacturers. There is possibility that either new items would be incorporated in the notification or scope of existing exemptions would be extended to other industries specified in the SRO.

Sources said that the SRO.565 relates to the exemption of customs duty on the import of raw materials, equipment and apparatus used in the manufacture of specific goods by the local industry. The notification covers a wide-range of local sectors, availing concessionary rate of customs duty on the import of inputs used in the finished products.

However, concessions would not be extended to items "not manufactured locally" under this notification. These are goods, which are not included in the list of locally manufactured goods, specified in the relevant Customs General Order (CGO) or declared as such by the FBR or EDB.

The FBR is consistently following a policy to encourage the development of indigenous dusting. Presently, 116 industrial sectors and sub-sectors are enjoying either total exemption or reduced rate of customs duty on their inputs, sources added.

In last budget, exemption regime was extended to sectors like air-conditioners, deep freezers, refrigerators, evaporators and condensers, alkyd resins, CNG dispensers, wire and cables, diesel generating sets, disposable syringes, disposable infusion sets, dyes stuff and chemicals, electric meters, paper and paper board, printing ink, telephone sets, viscose staple fiber and gypsum board.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Black economy has no future': proposals to put in place documented regime under study ​* 
ISLAMABAD (May 25 2008): The government is examining budget proposals to convert black economy into formal documented regime for discouraging undocumented business and transactions from next fiscal year. Talking to a select group of reporters on the conclusion of Annual Plan Co-ordination Committee (APCC) meeting on Saturday.

Revenue Division Secretary General M Abdullah Yusuf said that the upcoming budget might have some proposals to convert underground economy into formal economy, as the black economy has no future. The sectors in the informal economy should voluntarily come forward as they can develop and grow more when they are part of the formal economy.

The department is making serious efforts to formalise informal economy and encourage existing sectors as well as the informal sectors to come forward and disclose their incomes under Universal Self Assessment Scheme (USAS). He said there is a possibility that some proposals might surface for the annual budget to convert black economy into formal economy and the government might consider such points for growth in economic activity.

He said undocumented economy is the main reason behind the growth of black and under ground economy, some decision are needed to convert cash-based economy into documented economy to provide level playing filed to every one. The FBR chairman said the system and procedures have been streamlined and facilitation measures are in place for conversion of informal sector into the formal sectors.

Responding to a question, he said that there is around 20 percent annual growth in increase in tax base and the board is making efforts to maintain this momentum. It is necessary to increase revenues according to the increase in tax base.

Replying to a question on making no change in income tax and sales rates in the budget 2008-09, he said that it is a budget related issue, which would be made public when final decision would be taken after final review. A number of proposals are under consideration, but it is premature to say that which proposal would be made part of the budget.

The economy is facing pressure due to POL prices, which would impact electricity and gas prices besides increasing the cost of doing business. We need to examine the correlation among all these issues while increasing the tax base and tax revenues in the next fiscal year.

However, the government would try to reduce the cost of doing business. The country needs financial resources for the development and the required growth in revenues is a must. However, while aiming at growth in revenues, we should also keep rising inflation on mind, Yusuf added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Zong to invest $7 million in Pakistan ​* 
LAHORE (May 25 2008): Zong, a Chinese mobile company, Chief Executive Officer Qian Li has said that the Chinese mobile company has invested $721 million in telecom sector in Pakistan during 2007 and it would further invest $7 million in Pakistan this year.

He disclosed this at meeting with Punjab Governor Salmaan Taseer here on Saturday, says an official. Zong Chief Operating Officer Zafar Usmani besides telecommunication experts Li Ludang, Babar Ali Sayed and Nasir Khan were also present on this occasion. The head of the delegation Qian Li informed the Governor that 2000 transmission towers of China mobile are already working in Pakistan whereas 350 new transmission towers of China mobile will be installed in Pakistan this year.

Welcoming the Chinese investment in telecom sector, the Governor said at present 61 million people in Pakistan are taking benefit from mobile technology of telecommunication. He also said Peoples Republic of China is one of our best friends and promotion of relationship in every walk of life with this neighbouring country is an important feature of foreign policy of Pakistan. "We wanted to further expand the scope of technology transfer between China and Pakistan," he added.

The Governor expressed the hope that the huge investment in Pakistan by China mobile will leave positive impact on Pakistan's economy. He termed it a good omen that this firm wanted to establish regular service center for telecom network coverage at Punjab University. "A suitable site will be provided in Punjab University for this purpose," he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Interest rate rise to hit economic growth: Saifullah ​* 
PESHAWAR (May 25 2008): Senator Salim Saifullah Khan has criticised the increase in the rate of interest by the State Bank of Pakistan, saying that it would further plummet the growth of national economy. Talking to journalists here on Saturday, he said that unwise measure of increase in bank rate has been taken at a time when global and national economy is faced with financial crises.

The developed countries have lowered the rate of interest to avoid the emerging recession in the global economy. He said that United States has reduced the rate of interest, whereas Japan has brought it down to 0.50 percent to achieve high rate of economic growth.

But, on the other hand, the bank rate in Pakistan has been kept at a high level of 12 percent and now an increase of 1.5 percent would badly affect the productivity in the major sectors of economy.

"The interest rate of 14 percent will enormously increase the cost of production and bring a substantial rise in the prices of essential commodities," he argued. He said that enhancement of bank rate would wipe out the already declining margin of profit in small business and discourage trade and industry, resulting in unemployment in the country.

Salim said that Islam forbids interest on loans and it would be appropriate that only service charges of 2.5 percent are levied on bank loans. Disagreeing with the stance that increase in interest rate was necessary to curb the unfavourable trend in the stock market, he said that the problem could be tackled to some extent by imposing tax on stockbrokers, who are earning billions of rupees--for nothing.

He said that raising interest rate for stabilising the stock market was an imprudent monitory policy, which was bound to affect both foreign and domestic investment. It would intensify depreciation of local currency against dollar and other major currencies and accentuate the flight of capital, he added.

He said that the quantum of foreign debt would go up and rise in the import bill on account of import of machinery and petroleum would render the foreign trade gap unmanageable. He said that the government had thrice increased the prices of POL products, which had aggravated the inflationary pressure and the pursuit of imprudent monetary policy would exacerbate the hardships of common man, who is hard hit by the skyrocketing prices of essential consumer goods.

He proposed the formation of a crisis management team under the direct supervision of Prime Minister to constantly monitor the prevailing economic situation in the country. He said that the rate of economic growth was 7 percent last year, but the available economic indicators suggest that it would come down to 6 percent during the current year.

He asked the leadership of political parties to take cognisance of the increase in the interest rate and educate the public opinion about its harmful effects on the poor masses. He urged the government to withdraw the increase in the bank rate, in national interest.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Pakistan should attract investors to leather sector' ​* 
LAHORE (May 25 2008): Persistent economic growth peaked by rising wages in China has forced some global brand shoemakers to consider switching their business possibly to India. In this emerging situation, Pakistan government needs to wakeup with steps to attract these potential investors into Pakistan.

Pakistan produces best quality of leather exports its major chunk to fetch foreign exchange just below US $1 billion. The amount could be increased manifold, if special focus is given to the exports of leather products like shoe, bags, suitcase, lady hand purse and belts.

Industry sources informed Business Recorder that some renowned American and European shoe makers including Bali of Italy, Luis Vatuan of Spain, Gucci of France may wrap their manufacturing units from China. Keeping in view the superb quality of indigenous leather and low wages rate in Pakistan, foreign shoe manufacturers could join the local leather sector by setting up joint ventures with the local shoemakers.

However, the law and order situation always remained a matter of concern for the foreign businessmen and the government should handle the situation on a priority basis, the sources added.

Export of leather and leather products from Pakistan remained encouraging during the three quarters of the financial year 2007-08, has potential to fetch substantial foreign exchange to the country provided, some genuine demands of the industry are met by the government in the forthcoming budget.

Moreover, Pakistani leather sector has so far performed well amidst strong competitors like China, India, Bangladesh and Italy and registered an increase of 26.17 percent during the period of July-March 2007-08 to US $892,185 million as compared to $707.678 million dollars of the corresponding period of 2006-07, the sources added.

The sources further said India is emerging as big importer of Pakistani leather gradually increasing its export volume. Presently, there are only 14 units who had achieved ISO-14001 while only two combined treatment plants are working in Sialkot and Karachi whereas only one tannery has set up secondary treatment plant to comply with the NEQS.

Further, the sources urged the government to help the industry out of the Export Development Fund for setting up of treatment plants. 'The government should provide financial support for research and development to get the latest technical assistance by the tanning industry because of new trends in international markets', they added.

Furthermore, tanners are unable to compete with the world market because of high costs and need the government's support imperatively to arrange professional expertise for upgrading the leather industry. Support can be in kind instead of cash subsidy, the industry sources added.

Infrastructure facilities like undisturbed supply of gas, electricity, water, proper security arrangements, better roads, clean environment, facility for dispatch of export goods are needed for uplifting the tanning industry. This will also attract foreign investment in Pakistan specially in view of shifting of industries from Europe.

The finished leather exporters have been contributing a lot towards Export Development Fund. The government should at least spent a little amount on infrastructure development that was collected from the leather sector.

It should also provide financial assistance to the individual tanneries needing in-house effluent treatment plants to meet the demand of foreign buyers on international standard as well as to meet NEQS and ISO Certification criteria. However, they rejected the government's policy of providing mark-up cost of loan for the said plants up to six percent out of EDF.

Moreover, they pointed out the deteriorating condition of the National Institute of Leather Technology (NILT), Korangi Industrial Area, Karachi stressed the government should provide regular funding to help carrying out human resource development by providing qualified faculty and laboratory of international standard.

Huge funds for running of this institute are needed imperatively that ultimately will help industry to improve, to hire personnel to help increase the production, efficiency and quality of products enabling the sector to use our resources and raw material in a better way, the sources said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Call for benefiting from Australian expertise in agriculture sector ​* 
LAHORE (May 25 2008): Punjab Agriculture Secretary Javed Iqbal stressed need to tailor Australian expertise/assistance by providing citrus germplasm according to field requirements in the province. He made this observation while speaking at a meeting about increasing citrus production through improved orchard management techniques with Australian assistance under Agricultural Sector Linkage Programme.

Dr Mubarak Ali, Chief Executive Punjab Agriculture Research Board; Director Orange Research Institute Sargodha, Naseem Ahmad Malik, Director Crop Reporting Service, Rafiq Akhtar, Director Agricultural Information Punjab, Natiq Hussain Chief (Planning and Evaluation) and Australian experts working under Agricultural Sector Linkage Programme in Pakistan attended the meeting.

The Australian experts briefed about objectives / targets of the project meant to improve nursery production practices and to introduce germplasm for extending marketing season of citrus fruits. The Director Orange Research Institute Sargodha told the meeting that 23 citrus varieties and eight root-stocks have been provided by Australia, out of which three root-stocks are new for Pakistan.

The meeting was briefed about raising of containerised nurseries of citrus in screen house at University of Agriculture, Faisalabad. The secretary underlined that special focus should be to produce disease free and containerised nursery production techniques along with enhancing citrus production capacity of Pakistan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Seafarers' job losses cause $25 million fall in remittances per year ​*
Capt. Anwar Shah 

ARTICLE (May 25 2008): Pakistan's economy is sagging due to the turmoil of 14 months, causing instability, rising commodity prices and trade deficit which may go up to 14 billion USD. The EAC is striving to overcome the financial crisis. We pray for its success and most importantly implementation of its recommendations, as it has become a culture to avoid implementation on one pretext or the other.

Rice export has stopped due to various restrictions. It is the third largest export earning commodity after remittances of expats and cotton products. Cement exports have done well and may touch 7 mill tons mark by the end of the fiscal year. We have gained access to the Indian market by exporting 6 lakh tons of cement.

The financial managers don't have many avenues except to look for loans/grants/deferred payments and increase in expats remittances. The flow of FDI is nominal, on the contrary money is fleeing out due to harsh statements. The only avenue open is to increase the export of young Pakistani human resource to bridge the gap to some extent.

I know about maritime sector world-wide which is facing serious shortage of trained officers and we must fill the vacuum before India,. China and Philippines seize the opportunity. Indian seafarers remit 1 billion USD, whilst Philippine seafarers are remitting 4/5 billion US dollars. Pakistan is situated in an area, which has been famous for supplying hardworking, competent and efficient seafarers since over 150 years.

It can be said with great pride that our seafarers not only from the coastal belt of Karachi but also from Northern areas had been manning foreign flag ships of reputable companies of various nationalities since long. At present we have around 20,000 registered seafarers.

*ADVANTAGES OF EMPLOYING PAKISTANI SEAFARERS* Our seafarers meet all the requirements related to qualification and skills. For example, Pakistan is listed in the IMO's 'White List' since the inception of this list. This essentially means that Pakistan has given full and complete effect to the International Convention on Standards of Training, Certification and Watch keeping for Seafarers, 1978, as amended (commonly known as STCW -95).

Pakistan has a well-established system of training, examination and certification of seafarers. There are several training institutes, both in public and private sector, which run government approved training courses. The examination system for the issuance of certificate of competency (CoC) to our officers is in place since the early 1960s.

Pakistani CoC is considered equivalent to those issued by many Commonwealth and other developed western countries. For example, UK issues their Certificate of Equivalence to holders of Pakistani CoCs. Accordingly, holders of Pakistani CoC are in great demand and enjoy considerable respect in the international maritime employment market. We are very proud that our officers hold an upper end market niche in this very competitive market.

Pakistani seafarers also hold a computerised seafarers identity documents, issued to meet the requirements of International Labour Organisation's Convention C-185. Most of our seafarers also hold computerised Seaman Service Book. Pakistani seafarers are also issued with a computerised and machine-readable passport.

All these robust identity documents ensure that the identity of seafarers can be verified and traced without any hassle. Another advantage, which all Pakistani seafarers enjoy, is their ability to communicate in English. Since the last many years English language has become the lingua franca of the shipping industry.

*HURDLES IN THE EMPLOYMENT OF PAKISTANI SEAFARERS* Despite all the advantages listed above, Pakistani seafarers are gradually losing their share in the international employment market. An estimated 7300 Pakistani seafarers were employed at one time on board during the year 2001.

In 2005, this figure was reduced to about 5900. This loss of employment can be easily translated to about US $25 million annually. The data so far available for 2007 is also not encouraging. This is a bad situation and needs to be arrested urgently.

One of the major factors in losing our due share in the international employment market is the difficulty and delays in the issuance of visas to our seafarers, particularly after 9/11.This is no doubt due to negative image problem that unfortunately, all Pakistanis are facing nowadays due to adverse international propaganda.

*CURRENT INTERNATIONAL EMPLOYMENT SCENARIO* There is a requirement of around 1.2 million seafarers to operate the international fleet, which forms the backbone of international trade.

As per the latest available information, there is a current shortage of around 10, 000 officers internationally. The irony is that we are losing our employment share in a growing market: a very serious issue in terms of marketing.

On the other hand the share of Philippines and India currently stands at around 300, 000 and 60, 000 respectively and this number is still on the rise.

*STEPS NEEDED TO INCREASE THE EMPLOYMENT SHARE OF OUR SEAFARERS: *It is imperative that the issue of difficulties and delays in the issuance of visas to our seafarers is taken up by MoFA with foreign missions in Pakistan and a viable solution is found as soon as possible. For example, pre-screening and pre-scrutinising of our seafarers, by major foreign missions in Pakistan, which should not be difficult at all.

Marketing efforts need to be made by our missions abroad, particularly in major seafarers' employment centers, such as Greece, Cyprus and Singapore etc. It may also be a sound strategy to send delegations consisting of Pakistani manning companies under the patronage of GoP to visit these places for the marketing of our seafarers.

*CONCLUSION* It is suggested that the Ministry of Ports and Shipping may pursue the employment of Pakistani seafarers on board Greek flag ships as well as ships owned by Greek and Cypriot ship owners but registered under other flags, of which there is considerable number, with Greece Maritime Authority.

It may be emphasised to Greece Maritime Authorities that Pakistani seafarers, besides the advantages listed above, are also very cost competitive and there had not been a single maritime security incident onboard a ship where any Pakistani seafarer was found involved.

The Government must give a target to the ministry to double the present employment within twelve months, so that remittances on this account may double up to 140 mill dollars with continued efforts to target min 0.5 billion USD. This employment avenue is still wide open and we must take our slice by seizing the opportunity. We will be creating employment and at the same time helping our exchequer.

(The writer is Ex. Additional Secretary & Director General Ports & Shipping, Ex. Chairman Gwadar Port, Member Board Port Qasim Authority, Governor World Maritime University Malmao (Sweden), Member IMO Secretary General's Panel of Experts, London.)

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Balochistan seeks Rs41bn budgetary allocation ​* 
Sunday, May 25, 2008

ISLAMABAD: The Balochistan government has protested over reduction in the proposed budgetary allocation from the Centre for development schemes to Rs22 billion in the budget for 2008-09 from Rs37 billion in outgoing fiscal 2007-08 during the Annual Plan Coordination Committee (APCC) meeting held here on Saturday.

A representative from Balochistan stated that the sense of deprivation would be aggravated in the least developed federating unit of the country with the existing state of affairs.

Balochistans coalition government, led by the PPP, has demanded a share of Rs41 billion from the federal government under the Public Sector Development Programme for the 2008-09 budget.

The government had envisaged a budgetary allocation of Rs37 billion for the outgoing financial year 2007-08, compared to the proposed allocation of Rs22 billion this year, indicating a decline of Rs15 billion in Balochistans share.

However, Deputy Chairman Planning Commission Salman Farooqi assured the Balochistan government that the government would jack up its share in the PSDP after getting the approval from Prime Minister Syed Yousuf Raza Gilani during the upcoming NEC meeting, scheduled to be held on May 30.

Balochistan is among the priority areas for development and its financial needs will be met, Salman Farooqi told reporters after the two-day APCC meeting ended here on Saturday.

Earlier, Balochistans Finance Minister Mir Aasim Kurd told reporters outside the venue of the APCC meeting that that there were 186 ongoing development schemes with a total cost of Rs240 billion in the province. The government has spent only Rs91 billion on the development schemes of Balochistan and if they add Rs22 billion, the total spending would touch Rs113 billion by the end of the next financial year.

He said the remaining amount in the shape of carry-forward, to the tune of Rs187 billion, out of Rs240 billion, would result in escalating the cost and delays in the completion of ongoing projects.

He also said the federal government did not fulfill its commitment to provide Rs8 billion to the flood victims in Balochistan. We have raised this issue during the APCC meeting, he added.

He further said that the federal government provided over Rs100 billion to the earthquake-affected areas in the AJK and NWFP, but it remained unmoved in the case of eliminating the miseries of Balochistans flood affected.

However, sources said that the ongoing development schemes in Balochistan with the existing pace of the allocation of resources required the next 10 years for completing the ongoing work. 

Provided, that the provincial government does not initiate a new scheme during this period.

Balochistans Chief Minister, the sources said, is likely to raise the scarcity issue of the proposed resource allocation during the next NEC meeting, which will meet with Prime Minister Yousuf Raza Gilani in the chair.

Balochistan seeks Rs41bn budgetary allocation


----------



## Neo

*KSE sees record fall of 1,221 points in a week ​* 
Sunday, May 25, 2008

KARACHI: The rise in policy discount rate by the State Bank of Pakistan played havoc on Karachi bourse, as KSE 100-share Index tumbled 1,221 points or 8.6 per cent sinking to eight months low at 13,012 points during the week ended on May 23.

This is the largest fall in a single week for 100-Index in KSE history. Historical slump of this scale, but lower than the current one, were either recorded in March 2005 and March 2006 crises.

The free-float market capitalisation based 30-Index sank by enormous 1,608 points or 9.5 per cent on week on week basis and ended at 15,275 points on the weekend.

In line with the overall negative performance of the market, the overall market capitalisation was poured down by about Rs370 billion and stands at Rs4.004 trillion.

The average week turnover in the ready market also shrank to 163 million shares as compared to 184 million shares last week.

Bilal Hameed at JS Research said that weak economic numbers, 150bps discount rate increase and mounting political uncertainty with rifts between the presidency and the government, caused the KSE-100 index to dive down. Moreover, further development on the capital gain tax issue implying its imposition in Budget FY09 also dented market sentiments in the outgoing week, he added.

Foreign capital flies: The countrys current account deficit soared to about 7.3 per cent of GDP during 10 months (Jul-Apr) of fiscal year 2008. In addition, the Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI) numbers showed a decline of 17 per cent and 32 per cent, during the same period, respectively. These economic imbalances and political unrest resulted in S&P and Moodys downgrading Pakistans sovereign ratings spoiling investors confidence. In addition, media reports on Friday regarding rifts between PPP and the government added to the negative sentiments on KSE, Hameed commented. 

During the week, FBR chairman suggested imposing capital gain tax on shares transactions. Moreover, SECP has also proposed to implement this tax on investments held for less than 12 months this further dampened sentiments for investing in the equity market, he added.

Banks lead losers: The imposing of a minimum deposit rates on PLS accounts bodes negative for large banks since they have low cost saving accounts in their books. 

This caused major sell off in the banking sector and its market cap decline by 12 per cent on week-on-week basis.

Otherwise, all the sectors in limelight including energy, telecom, fertilizer, cement and textile fell straightaway down.

Those leveraging sectors, which are availing long term financing for their business expansions like cement, fertilizer, automobile and textile also took the brunt of aggressive rise in key discount rate by SBP to 12 per cent from 10.5 per cent with effect from May 23.

The energy stocks are having potential to drive market out from crisis, as hovering of international oil prices near and around peak levels can revive the positive sentiment. But, if psychological sell-off of shares continue in the next week then market has a room for further correction.

CFS rate goes high: With the roll over week starting on coming Monday, the open interest to be settled currently stands at Rs23 billion. CFS investment has fallen to Rs44.5 billion with CFS rate jumping to 17.8 per cent.

Weekly Movement in Blue Chips

Symbols Open (Rs.) Close (Rs.) Difference 

on Monday on Friday (Rs.)

DGKC 93.98 80.28 -13.7
ENGRO 316 288.8 -27.2
FFBL 38 34.22 -3.78
HBL 249 220.21 -28.79
LUCK 126.5 110.44 -16.06
MCB 370 320.85 -49.15
NBP 210.1 182.22 -27.88
OGDCL 129.3 126.35 -2.95
POL 418 393.59 -24.41
PPL 265.7 253.65 -12.05
PSO 502 467.89 -34.11
PTCL 43.9 41.27 -2.63

KSE sees record fall of 1,221 points in a week


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## Neo

*DI dawdling in telecom sector ​*
KARACHI: The foreign direct investment in the telecom sector will not be able to match even half of the total investment in the previous fiscal year figures. 

According to the data released by Pakistan Telecommunication Authority (PTA) the FDI in telecom sector has declined during the first nine months of the current fiscal year.

Statistics shows that Pakistan telecom sector has received $1824.3 million FDI during 2006-07.

While this year, in the first nine months, the figures are not impressive at all as in the first quarter of the current fiscal year it was $363.9 million and in second quarter it came down to $290.4 million followed by a further decline in the third quarter with only $156.6 million. 

Since 2003-04 the telecom sector is one of the major contributor in brining foreign direct investment in the country. In 2003-04 telecom sector contribute 21.13 percent of the total FDI that further grew in 2004-05 with 32.44 percent. 

While in 2005-06 the telecom sector out numbered all other sectors by contributing 54.11 percent in total FDI as the two telecom giants, Telenor and Warid entered the market. In 2006-07 the contribution came down to 37.71 percent and it seems that it would further come down by the end year.

At present there are six cellular operators in Pakistan and all of them are now expanding their business in the far flung areas of the country as all of them have already invested in their basic infrastructure. 

Although all of them are still investing in Pakistan but the current investment could not be matched with their initial basic investment, said an analyst. 

Currently all six cellular companies have over 85 million subscribers and are aggressively working to expand their network to grab the market share.

Daily Times - Leading News Resource of Pakistan


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## z9-ec

* Pakistan-Jordan to sign Free trade agreement: Jawarneh * 

ISLAMABAD, May 25 (APP): Pakistan and Jordan will soon sign a &#8220;Free Trade Agreement&#8221; (FTA) to enhance their economic and trade ties, meeting the common aspirations of their people. This was stated by the ambassador of Jordan Dr. Saleh Ahmed Al Jawarneh on the occasion of the 62nd Independence Day of his country being celebrated on May 25.

The Kingdom of Jordan attaches great importance to its ties with Pakistan, deepening bilateral cooperation in all sectors of common interest, he said adding &#8220;We welcome the Pakistani side to seek profitable business and investment opportunities in Jordan&#8221;.

He extended heartiest congratulations to the people, the new Government and the politicians of Pakistan on their having held free, fair and transparent elections earlier this year which resulted in a peaceful transfer of power giving voice to the democratic aspirations of the nation. 

The Government of Jordan looks forward to joining hands with this newly-formed Government of Pakistan to enhance an appreciable working relationship with the aim of meeting shared objectives and towards strengthening the favourable, bilateral relations which currently exist between the two countries, he added.

It is most fortunate for the countries that such conditions exist and continue to be strengthened as the two nations maintain their historical friendship and association, a testament to the superb leadership of His Majesty King Abdullah II Ibn Al-Hussein and his Pakistani leaders, President Pervez Musharraf and Prime Minister Syed Yousuf Raza Gilani.

The occasion of Independence Day of Jordan, he said reminded the warm, brotherly ties between two countries, existing since the inception of both our nations and which have flourished in all of the years since. These ever-growing, bilateral relations touch every facet of a nation&#8217;s existence -political, economic and social. 

Dr. Saleh Ahmed Al-Jawarneh said the relationship is so warm that in the hour of need both Pakistan and Jordan can unconditionally depend upon each other. It reflects from the fact that the Queen of Jordan Her Majesty Rania Al Abdullah, immediately came to Pakistan to offer aid and moral support to the victims of the devastating earthquake that hit it in 2005, he added.

There have always been excellent diplomatic ties between our two nations as there have been numerous visits exchanged in the recent past such as the visit to Jordan made by President Musharraf in January, 2007 and former Prime Minister Shaukat Aziz in May, 2007 which were very successful as well as that made by several high-level officials from Pakistan and by the Government and the Royal Family of Jordan that have opened new dimensions of cooperation in different walks of life.

Furthermore, only last week the newly-elected Prime Minister of Pakistan, Syed Yousuf Raza Gilani and Prime Minister, Engineer Nader Dahabi had a very fruitful meeting while they were both participating in the &#8220;World Economic Forum (W.E.F.) on Middle East&#8221; held in Egypt.

It is in this way that the communication between the two leaderships is always there for the benefit of the peoples of our two countries and the last visit of King Abdullah II Ibn Al-Hussein to Pakistan, which occurred on November 1, 2007, is highly significant for the symbolic relationship between the two leaders and the two brotherly countries.

Recalling his close personal attachment with Pakistan, Dr. Saleh Ahmed Al - Jawarneh had the distinction, completing his Graduation and Master&#8217;s Degree qualifications from Karachi University. Then from 1987 to 1992, he had the honour to serve as a Junior Diplomat and Deputy Head of Mission (DHM) of the Hashemite Kingdom of Jordan in Islamabad. 

Associated Press of Pakistan.


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## Neo

*Musharraf seeks Pakistans access to US markets​*
ISLAMABAD, May 25: Highlighting the significance of a broad-based and long-term Pakistan-US relationship, President Pervez Musharraf on Sunday underlined the importance of enhanced access for Pakistan to the US market to help build the relationship on sound economic footings and a sustainable basis.

The president was talking to US Senators Carl Levin and Robert Casey who had called on him in Rawalpindi.

Pakistan-US relations and matters related to war on terrorism were discussed in the meeting.

The president also underscored the need for accelerated progress on initiatives like reconstruction opportunity zones (ROZs), Frontier Corps (FC) and the Fata development plan.

The US senators said they supported efforts for close relations between Pakistan and the United States and exchanged views on steps to be taken to build the relationship on a forward-looking and long-term basis.

President Musharraf stressed the importance of a multi-pronged counter-terrorism strategy combining political, socio-economic development and security tracks.

Senator Carl Levin heads the Senate Armed Services Committee. Senator Casey is a member of the Senate Foreign Relations Committee.APP

Musharraf seeks Pakistans access to US markets -DAWN - Top Stories; May 26, 2008


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## Neo

*Support policies for a turnaround​*
THE business confidence of the textile industry was somewhat renewed after two top textile tycoons, Bashir Ali Mohammad and Tariq Say eed Saigol were included in the Economic Advisory Council. They were expected to play a meaningful role in the continuation of the existing support policies and a possible restructuring of the existing textile sectors debt.

But the State Banks decision to further tighten the monetary policythe increase in the policy rate from 10.5 to 12 per cent --- has once again upset the textile industrialists.

The industry is seeking to retain all financial incentives and concessions in lending rates for at least next two fiscal years, to enable it to work for a turn around. Its representatives pin their hope on some stability in international economic situation, stable oil prices, stable political and social conditions within the country and a better South-Asian region within next two years, says a top garment manufacturer/exporter.

Earlier, there ere some speculations that top government officials were seriously considering to withdraw research and development rebate given to exporters of readymade garments and home textiles that cost the national exchequer about Rs32.5 billion since 2005-06 to March 2008. But now it is generally believed that three per cent R & D allowed for fabric exports may be withdrawn.

Earlier this month, the State Bank governor informed the people that textile sector was given Rs897.5 billion export refinance at 7.5 per cent since July 2003 to December 2007. In last nine months, of the Rs273 billion export refinance, 65 per cent went to textiles.

Textile sector has always been one of the major beneficiaries of the incentives provided by the SBP under various schemes. These are export refinance scheme, long-term financing for export-oriented business (LTF-EOP) and long-term finance facility (LTFF), the SBP governor reminded in her statement.

But the export is down by 2.54 per cent in last ten months to $8.65 billion from $8.87 billion in the same period last year, she said. The textile industry leaders issued angry rebuttals on this statement.

Following recessionary conditions in US our exports have suffered somewhat, Iqbal Ibrahim, Chairman of the All Pakistan Textile Mills Association (APTMA), explained. It is true that government support has helped us to remain afloat in the market, he said and argued that what hurt the industry was the rise in interest rate and the rising utility and transportation charges.

The benefit of rupee devaluation against dollar has been totally eroded by the rising cost of imported ingredients for our products, Mr Aziz Memon, a leading readymade garment exporter, said.

Garments and knitwear is a $3 billion plus export business that is gradually making deep inroads in the EU and US markets, Mr Bilal Mullah, Chairman of the Pakistan Readymade Garment Exporters and Manufacturers Association, said and added that these sectors were labour intensive and big foreign exchange earners.

He lamented that in last three years more than 800 small units have been closed down because of rising production cost. Increasing labour charges, utility cost and rising prices of fabrics and accessories have rendered our products uncompetitive in the market.

Right now there are about 50 top readymade garment and knitwear manufacturers who are operating under manufacturing licence for leading store chains of Europe and America he said.

We sell our product say at one dollar, they put it on their counter for sale at $3.50 by just putting their label and without any real value addition, another garment dealer explained. He said the leading foreign stores were now passing on their expenses to their suppliers from Pakistan.

We are asked to keep an inventory of shelf-ready products for three months at a given time; that, he said, meant additional cost for them. Many garment and knitwear manufacturers preferred to do the job with their own money rather than depend on banks which charges high rate of interest and then levy heavy penalties.

At least 50 per cent of our production cost is on fabrics which are mostly imported on buyers choice, said the garment exporter to point out his cost of production. He said the share of labour cost, utility charges and other incidentals were almost 30 per cent while 20 per cent was spent on mostly imported accessories.

We have very little option in controlling and containing our production cost because either it is import-oriented or flows from government policies.

Why should anybody grudge six per cent R and D rebate on readymade garments, five per cent on home textiles and three per cent on export of dyed and processed fabrics, argues Aziz Memon. He justified the rebate on the grounds that Pakistans competitors like India, Bangladesh, China and Indonesia were giving hidden and not so hidden support to their exporters.

In the last three years, the readymade garment exporters got about Rs22 billion rebate while the fabrics and home textiles secured a little over Rs10 billion since 2006-07.

Mainly because of these rebates, the readymade garment and knitwear exports have increased from $2.58 billion in 2004 to $3.25 billion in 2007. The target for the current fiscal year is $3.2 billion.

Garment manufacturers are keen to set up big factories to achieve economies of scale to bring down production cost.

Women are considered good dress makers world over, a garment manufacturer said but regretted that not many women were in this field because of our cultural values and social conditions.

Heavy bank borrowing was a major issue with spinners. But for most of the value-added sectors, the bank loan was a problem but not of much significance. Mainly it is a problem of spinners, a leader of value-added sector said.

Spinning units are capital intensive and many of them undertook balancing, and modernisation or expansion in 2001 and 2002 when interest rates were at their lowest in 30 years. Now the interest rates have gone up beyond 13 per cent, the bank loan and debt servicing have become an unbearable liability. Value-added sector wants a fresh look at the interest rate policy but the spinners want an outright moratorium for two or three years.

The industrys debt problem would worsen with the State Banks decision to raise the discount rate from 10.5 per cent to 12 per cent on Friday last. The lending rate will go up further.

The domestic cotton prices have touched Rs4,000 per bale which many textile industrialists believe would be back breaking for the industry. There is a need to consider some pre-emptive measures, they said.

We expect domestic demands for cloth and apparel generating from rural areas in next few years with increase of prices in agricultural products, Bilal Mullah said. He said many small and medium sized units did cater to local market needs of shalwar kameez.

By the time prosperity will come to rural areas in next few years, the demands of upcoming young men and women would be different. We will try to catch up with these demands, he said.

But the government will have to stop the flooding of our domestic markets from apparels and clothing from China, India, Indonesia and other countries that are smuggled and under-invoiced, a textile unit-owner said.

Support policies for a turnaround -DAWN - Business; May 26, 2008


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## Neo

*Stuck in rough waters​*
It is getting ugly out there. The private sector says they find business pages of newspapers pretty depressing. The government needs to generate positive economic news to nurture positive sentiments among key economic players. If law and order and the rising cost of living have driven masses up the wall, the hike in the cost of doing business and political uncertainty are dampening prospects of much-needed investment in agriculture and manufacturing sectors.

Use your connections to get oil facility, charm overseas investors to invest in infrastructure, sell the new image of a democratic Pakistan to European Union and get as much support as possible to bridge social sector deficit. Tell multilateral donors if they want to improve their image, they must support the democratic government by doing what they are best at for Pakistan today. The World Bank and IMF are perceived to be ardent supporters of military dictators in Pakistan as it is during their tenures that they lend most liberally, said a businessman who sees light at the end of the tunnel if cards are played intelligently by the government.

No one is interested in knowing what is wrong with the economy. However, if someone can elaborate how a turnaround will be engineered that would be captivating for businessmen, said another business leader. Unfortunately, nine out of ten people like to be anonymous. The message that came loud and clear from the private sector was that the wait for political stability is becoming tedious. Political impasse must not be allowed to paralyse the economy.

The government could create a core economic lead team for the next five years that would stay in office to deliver on economic front, irrespective of the shape and design of the federal and provincial governments. Extraordinary situation begs for extraordinary response, commented a textile tycoon.

But political analysts believe that institution building, good governance and political stability can only be ensured by solving constitutional issues including judicial crisis.

The fragile macroeconomic indicators: price hike, fiscal and external deficits, lean performance of agriculture and industry coupled with sliding rupee, tumbling stock market and falling international credit ratings clearly indicate the direction in which the economy is heading.

Madam Governor Dr Shamshad Akhtar finally made a move on Thursday last when she mandated commercial banks to raise the return on savings to the minimum of five per cent and raised the discount rate by one and a half to 12 per cent in an effort to apply break to the upward drive of inflation.

This was too much in a go and too late, said a corporate bigwig criticising the governor who allowed free hand to banks to exploit depositors all through her tenure and is punishing investors for the folly of financially irresponsible government and banks by increasing the cost of credit. Dr Shamshads three year contract will expire in November 2008.

So far all that the elected government has been able to do is to scare investors. They have signalled that more taxes will be introduced on capital gains and property transactions. They are telling people that government is bankrupt so the size of PSDP would actually be reduced which means no improvement of physical infrastructure. They have announced that subsidies will be reduced or withdrawn which would increase the costs, said a businessman from Lahore.

It does not take a rocket science to get the sense of direction the economy is heading towards, said a businessman on condition of anonymity.

The situation is still retrievable, said a businessman from Islamabad. All you need is will. Where there is will there is a way.

Believe me, in Islamabad, in the ministries I visited, there is absolutely no sense of urgency. It is frustratingly calm. Officers are found with files to get approval of the relevant minister for scholarships before the fund lapse in June. It is life as usual, said a Karachiite visiting Islamabad.

Life is certainly not as usual in the economic ministries. We are working hard to meet the deadlines of economic documents expected early next month, Khawaja Shahab, federal secretary industries told Dawn over telephone from Islamabad. The federal secretary finance Farrukh Qayum and the minister Naveed Qamar cannot be reached because of their busy schedule.

The business community is in touch with the government discussing different proposals acceptable to both sides. They cannot dodge issues any longer. They will have to improve governance and refrain from opting for easy way out, said Iqbal Ibrahim from Lahore. Ibrahim heads All Pakistan Textile Mills Association.

He was critical of the recent increase in gas rates and interest rates. What does Sui gas has to do with international oil price hike. If the SBP failed to control inflation why should the private sector be penalised by increasing credit cost, he retorted.

Democracy will take time to grow roots and stabilise in the security state of Pakistan. The economy on a slippery slope cannot hold on. The government will have to sideline the vested interest and revitalise the agriculture to feed the growing demand of food and raw material. Till the time, the private sector regains confidence, the government should start some public sector projects to cover infrastructure deficit and absorb manpower in gainful economic activity, said a senior analyst.

 The tariff rates should be increased to discourage imports of non-essential items. It would not be easy as importers lobby and commission agents rule the roost, said the head of an industrial house.

The recent incidents in which mob lynched and torched bandits were horrifying. More than anything else, they also reflected the level of frustration and desperation amongst the common people. It would be naïve to consider them one off incidents un less the rule of law prevails in the country. These incident are also indicative of the havoc that could be played out across the country if economic pressure continue to mount and economic activity fails to pick up pace.

It sends shivers down my spine as I see a strong possibility of mobs invading food godowns and God forbid, in the end marching towards well off localities to loot private property to vent their anger over economic injustice, said a worried manager at an influential business house planning to move to West with family for the time being.

Stuck in rough waters -DAWN - Business; May 26, 2008


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## Neo

*Wheat: where has the trading surplus gone?​*
THE biggest question mark lurking before the Punjab food planners these days is where the over two million tons of tradable surplus of wheat has gone.

Administrative measures involving law-enforcing agencies, policy reversals, increased commodity financing and direct raids on farmers and middlemens stocks have failed to deliver the desired results so far, going by the pace and volume of official wheat procurement drive in the province.

The government has, as usual, rushed to order imports ignoring the domestic factors responsible for the fiasco and letting the guilty go scot-free. While import of wheat is necessary, digging out the internal root-cause of the problem is equally important.

Target: The Punjab Food Department has so far procured only 2.1 million tons against its target of 4.3 million tons that includes procurement of around three million tons for Punjab, one million tons on behalf of the NWFP government and 300,000 for Balochistan. The Punjab Food Department was once talking about procuring over 4.5 million tons for the province alone. But, its procurement drive has nose dived; arrivals at its procurement centres have dropped to less than 50,000 tons (a paltry quantity during the peak procurement period) after touching over 100,000 tons for a few days.

The federal procurement agency, the Pakistan Agriculture Storage and Services Corporation (Passco), has been able to procure around 0.7 million tons against its target of 1.5 million tons, despite increasing price twice by Rs10 per 40 kg to attract the farmers but failed.

Estimates: For the last 60 years, Pakistan has been calculating its wheat requirements and tradable surplus by two formulae: one is population-based and the other is based on market mechanism. This year, private market and official procurement situations defy these 60-year old tested formulae. Some two to four million tons of wheat somehow is still lying outside these formulae.

The country has adopted internationally accepted population-based formula, which says that every individual consumes around 124 kilograms of wheat annually. If we deduct the wheat required for the rural population based on this formula, the rest of it should come to the city markets for trading.

The current situation does not fit the frame. According to the Punjab Agriculture Department, the province has produced 16.3 million tons of wheat against the target of 18.5 million tons. To begin with, it concedes a crop reduction of around 2.2 million tons.

If 16.3 million tons production is taken as a baseline and the Punjab population at 100 million, the rural segment at the most comes around 700 million people who should not have kept more than 8.68 million tons of wheat. If seed requirements scientifically calculated at around 850,000 tons are also deducted, the figure comes to around 9.5 million tons. That means 6.8 million tons of wheat should have been in the market for trading. But the federal and provincial agencies have been successful in procuring only 2.8 million tons so far.

The other formula, based on historical market trends and calculations, becomes equally irrelevant when given a reality check. According to this formula, wheat growers keep around 70 per cent of the total production for feed and seed and the rest 30 per cent is traded in the market. That means out of 16.3 million tons, around 4.89 million tons of wheat should have become tradable surplus.

Confusion: Interesting theories are being cooked up by officials explaining the missing wheat stock. According to the Punjab Food Department officials, the farmers are hoarding the produce. But a majority of the farmers do no have holding capacity, which, in the past, has regularly led to price crash during harvesting season.

How can these poor farmers build such a holding capacity and that too beyond the sight of official agencies, which had been raiding every possible place for recovery of stock? Even individual buyers, who wanted to purchase wheat for domestic consumption, have not been able to do so for the fear of confiscation.

The millers think the investors have paid the farmers for their crop and asked them to keep the wheat within the confines of their homes as no agency would break in to check domestic storage. Now a question arises, can farmers hoard two to four million tons in their homes? The figure, interestingly, is more than the total indoor stocking capacity of the government agencies put together.

Unable to trace the hoarded wheat, the government has resorted to an easy solution: import the deficit amount. Even if over 2.5 million tons of wheat is imported to meet domestic food requirements, it is equally important to look into factors that affected wheat production this year.

Who delayed announcing the procurement price, and how much this delay affected the final yield. It should also look into the factors that caused 50 per cent drop in the use of phosphate fertiliser  its usage came down by 9.8 million bags in a single year. How the country missed the target for area under sowing by more than a staggering 1.2 million acres. The past mistakes and blunders identified should be avoided in future.

The Punjab government threw private sector out of procurement with every conceivable means  legal, administrative and financial. But the crisis has only worsened. Instead of being reactive to crisis on yearly basis, the government should find long-term solutions to such problems.

Wheat: where has the trading surplus gone? -DAWN - Business; May 26, 2008


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## Neo

*Saudis eying investment in farming​*
A 3-day international conference of the World Economic Forum (WEF) held from May 18-20 at Sharm El Sheikh, Egypt, provided an opportunity to the world leaders and investors to discuss, on the sidelines, issues of bilateral trade and investment..

Prime Minister Syed Yousuf Raza Gilani held a number of bilateral meetings with President Bush, President Hosni Mubarak, Prime Minister of Jordan and agriculture minister of Saudi Arabia.

Mr Gilanis meeting with Saudi agriculture minister was considered significant in the context of attracting Arab investors in the development of agriculture in Pakistan. Saudi minister indicated his countrys interest in substantial investment in the agriculture sector. He sought land on lease with the prime ministers assurances to oblige.

Prime Ministers Special Assistant on Finance and Economic Affairs Hina Rabbani Khar, who also attended the WEF, when contacted said that Saudi co-operation extended in the field of agriculture would help Pakistan to become a net exporter of wheat.

Analysts believe that Saudi investment would be export-oriented to cater to the agricultural needs of Saudi Arabia. Saudi Arabia suffers from food insecurity

Pakistan itself suffers from food insecurity and is making a serious attempt to attract Arab investment in agriculture. Federal Minister for Investment Naveed Qamar told the Middle East-Pakistan Forum in Dubai last month that his government would facilitate investments in agriculture and also remove snags if any. Arab investment can help realise the tremendous potential that agriculture offers to meet domestic needs and to cater to the needs of food deficit Middle East. The UAE is reported to have acquired some agricultural land in Pakistan recently.

Pakistan has received significant amount of Arab investment particularly for development of Islamic banking and insurance and setting up of investment companies. All Sharia compliant loans are linked to commercial transactions  purchase of goods and services -- and cannot be diverted towards speculative trading as is the practice in borrowings from convention banks.

Analysts say that joint ventures can be set up for development of modern agro-based industries whose products can be exported to the Middle East.

While returning from Cairo, the prime minister informed the reporters on board his special plane that he planned to set up a Land Bank to offer loans to individuals and companies to help build low-cost houses. The government wants to build immediately one million such houses for the middle and lower-middle income groups.

Ms Hina Rabbani Khar said that Free Trade Agreement (FTA) would be signed with Jordan for which both sides were working out modalities. Both sides had also agreed to set up a business council to improve their trade and economic relations. Similarly, she said, strategic relations would be established with Egypt to forge greater cooperation in energy and infrastructure sectors.

Mr Arthur Bayhan, Vice-President of The Competitiveness Institute (TCI), which is working in collaboration with the WEF, when approached said that the WEF conference, held for the first time in the Middle East, would boost economies of the countries in the region.

He said that the Sharm El Sheikh WEF conference would help promote competitiveness and require action at the regional, states, provincial and district levels. Competitiveness would also require a change in mindsets. Industry would need to focus more on its customers and less on the government for the basis of its competitiveness. The government would need to listen to the private sector and remove impediments that raise the cost of doing business, Mr Bayhan added.

Saudis eying investment in farming -DAWN - Business; May 26, 2008


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## Neo

*The lure of the international market​*
Pakistans rice merchants may find it luring to export a much larger quantity of basmati this season because of some favourable turns in the global market. Similarly, more wheat imports may ultimately be the Hobsons choice as lower production, inefficient handling of the supply and distribution is encouraging smuggling and hoarding on a large scale, keeping the prices unsettled. And, for Islamabad, it is easier to blame the local chaos on the worldwide phenomenon of shortages and higher food prices.

Last week, India imposed an export duty of Rs8,000 a tonne on basmati rice with a view to discourage its exports and bolster domestic stocks to meet any eventuality. This, says a top Indian industry official, is likely to benefit farmers in Pakistan in a big way. It is estimated, according to him, the export duty would ultimately transfer Rs 3,000-crore worth of Indian farm income to Pakistani farmers. This appears to be an exaggerated estimate mixed up with an expression of anger over the huge export duty but also indicates the losses Indian trade may suffer.

New Delhi has also lowered the minimum export price (MEP) on basmati from $1,200 to $1,000 a tonne. Lowering MEP does not make fiscal sense as Pakistan MEP on basmati ($1,300) would help them gain the Gulf market, says Anil Mittal, chairman of KRBL which sells basmati under the India Gate brand. But how far Pakistan, the fifth biggest exporter, can benefit from the situation and rush to occupy the space being vacated by its neighbours is difficult to predict. .

These are extraordinary times of scarcities and every rice-growing country is building up reserves to meet local needs first and for this purpose has placed ban or curbs on exports. Pakistans current rice production is estimated at 5.5million tonnes, of which two million tonnes can at best be exported but exporters are already determined to make a kill by selling at least 2.8 million tonnes.

India exports over 80 per cent of the basmati rice it produces apart from a larger quantity of non-basmati variety. But now its export demand has already come down by 31 per cent and may decline by 38 per cent in 2009 as an outcome of the government policies and market changes in the last six months. Indians had spent millions of dollars and worked hard to win a big market for their basmati in particular at the direct expense of Pakistan  the other country which produces the rare and precious variety  and after facing numerous WTO disputes. That the Indians can give up their gains so easily is difficult to swallow. These economy measures at the most must be a temporary phenomenon and would go away once the current wave of shortages and high food prices begins subsiding.

But this wave, American officials say, is likely to linger for two to three years. The World Bank also puts it at three years. The prices will continue to stay high but would not escalate at the same rate as they did last year. Americans, however, insist on continuing production of ethanol which is widely seen as a major contributor to the current crisis, saying it is responsible for only three per cent of the overall increase in global food prices, while American Farm Bureau Federation says it accounts for up to 30 per cent of the surge.

Meanwhile, rice prices fell by 13 per cent on the Chicago Board of Trade, a leading market for global agricultural commodities, on May 16 on a report quoting Mohammad Azhar Akhtar, chairman of Rice Exporters Association of Pakistan that his government has permitted shipments of one million metric tons because local needs have been met. This development, coupled with Japans move to export its imported rice, helped ease concerns that a global food shortage was worsening, according to Bloomsberg.

A month before, prices in the world market had surged above the $1,000-a-tonne level for the first time as importers desperately looked for rice because most of the rice-producing countries have stopped exporting the vital staple commodity. The jump in price came about when the Philippines, the largest rice importer, failed for the fourth time to secure as much rice as it wanted. However, the prices came down by 11 per cent in the global market when the US agreed not to stop Japan from reselling 1.2 million tonnes rice imported from it. Japan is obliged to import American rice and cannot re-export it without US permission.

Meanwhile, Malaysia has given a new dimension to global rice diplomacy by saying it is prepared to offer palm oil in exchange for rice to any rice-exporting country. Such barter deals are a better way to build up rice stockpile. The proposal could lead to swaps with countries such as India because the latter is one of the worlds largest palm oil importers and was also the third-largest rice exporter until it imposed restrictions on overseas sales.

Pakistan can gain much from entering this kind of swap arrangement with Malaysia, a friendly country, particularly when it has placed no curbs on rice export and is also a major importer of palm oil. At the moment, only Thailand, Pakistan and the United States, among leading exporters, are exporting rice without any constraints. World rice trade is forecast to drop about by seven per cent to 28.8 million tons in 2008, mostly due to export curbs.

Why Pakistan is experiencing a continuing rise in prices of various rice varieties is difficult to understand at a time when it is in excess. Last week, the price of Sela type basmati increased by Rs3,000 per bag of 100 kg to Rs10,000, the highest-ever price so far. This shows that fixation of minimum export price by the government at $1,500, $1,350 and $750 per tonne for different varieties has failed to check speculative trading and had, in fact, further worsened the supply situation.

There is a strong reason to believe that the commodity trade is now largely managed by hoarders and speculators who have enormous funds at their disposal and have also the means to clandestinely store the stocks to create artificial shortages and keep the prices high. These price hikes have no relevance to the normal supply and demand factors.

It is amazing to note that wheat prices continue to increase during the harvesting of the crop. Maybe, a significant quantity of wheat finds its way across the border at a much higher rate, although 50,000 tonnes is already scheduled to go to Afghanistan. Meanwhile, reports that Pakistan is to import 2.5 million tonnes, including the 1.5 million tonnes earlier planned, have raised the prices in the international market. The wheat which was available at $350 per tonne rose to $400 over the announcement and by the time Pakistani importers would place orders, the price is likely to shoot up to $450. So, the imported wheat will also be sold at higher prices when it lands in local market, unless subsidised.

How far Pakistanis are going to respond to World Banks recommendation for greater investment in agriculture is hard to predict, but a Dubai firm is looking at investing in agriculture in Pakistan. The firm whose CEO is a Pakistani, has bought agricultural land for the United Arab Emirates.

The firm, Abraj Capital, is working with the UAE government on agribusiness investments. The UAE has been holding talks with Islamabad about a framework for investment in its agricultural sector as it seeks to secure cheaper, long-term supplies of staples such as wheat and rice, the Financial Times reported.

The lure of the international market -DAWN - Business; May 26, 2008


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## Neo

*Returns of shares: India withholds payment of billions of rupees to Pakistanis  ​*
NEW DELHI (May 26 2008): The Indian government has denied payment of billions of rupees to 18,560 Pakistanis, accumulated on returns of shares they had bought in Indian firms before 1965. India had seized such shares, bought by Pakistanis in 558 Indian companies, after the 1965 war.

Now, these shares are lying with the Office of Custodian of Enemy Properties under the Indian Ministry of Home Affairs following a notification issued by Indian government in 1968.

The Indian government is undecided about the fate of these shares of Pakistanis. Media reports, citing the record of the department, said that the capitalised amount of five shareholders in Indian companies is about Rs 109.6 billion. These companies are the high-profile Indian entities--Wipro, Cipla, five companies of Tata group, ACC and three companies of the DCM group.

Similarly, according to the data, two Pakistani stakeholders have 10 million shares of Wipro, the world's largest independent R&D services provider, valuing about Rs 50.4 billion. Thirty-four Pakistanis have shares in pharmaceutical major, Cipla, worth Rs 48.2 billion. In four companies of Tata Motors--Tata Power, Tata Steel, Tata Chemicals and Tata Coffee--Pakistanis have shares worth Rs 48 million.

Pakistanis invested in Indian companies, including Hindustan Unilever, ITC DLF, Bajaj Electricals, CSCE, Reliance Energies, EIH, Aditya Birla, Nuvo, India Cement, Dalmia Cement and Ballarpur Industries before 1965.

According to the assessment of the Custodian office, the value of the shares owned by Pakistanis in the listed 45 Indian companies is Rs 18 billion.

The Hindi edition of India's paper 'The Economic Times', while contesting the figures of the Custodian department, said that Pakistanis have far more shares in the companies than revealed by the Custodians.

The custodians have recorded 1.66 million Pakistani shares in Wipro. But, company sources say there are 10 million Pakistani shares. Similarly, there are 23 million shares of Pakistanis in Cipla, but the custodian has recorded just 1.1 million, the paper added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*July-April EU investment falls to $414.7 million ​* 
KARACHI (May 26 2008): European Union (EU) countries' investment in Pakistan has declined by 78 percent during the current fiscal year due mainly to the poor law and order situation and political unsuitability in the country. The country is continuously facing a political turmoil for the last one year and despite the establishment of political government the country is still facing some political problems.

The political parties are still locking horns over the judges issue and two leading parties, Pakistan People's Party (PPP) and Pakistan Muslim League-Nawaz (PML-N) coalition is also at stake on the deposed chief justice issue, which has badly hurt the foreign investment.

The central bank statistics shows investment by the EU countries have been gradually decreasing in the country and during July-April of last fiscal year, the EU countries' share in overall investment stood at $ 1.9 billion against the overall investment of $ 5.9 billion.

However, during the current fiscal year, the investment by the EU states witnessed a decline due to the uncertainty on the political front. Overall investment by the European Union has declined by some 78.3 percent to $ 414.7 million during the first 10 months of the current fiscal year against the investment of $ 1.911 billion during the same period last fiscal year, depicting a dip of $ 1.497 billion.

The foreign direct investment (FDI) by the EU countries has dipped by 68.4 percent to $ 476.9 million in July-April of the current fiscal year over the investment of $ 1.511 billion during the same period last year.

In addition, the portfolio investment by the European Union has declined by 115.5 percent to a negative position of $ 62.2 million. The investment by the three major European countries, including UK, Sweden, and Netherlands have declined, while the investment by the Luxembourg, Denmark, France and Germany have increased during the period, however, these countries have a minimum share in overall investment.

The UK is the leading country of the European countries, which overall investment has slashed by 85.5 percent to $ 165.4 million during the first 10 months of the current fiscal year as compared to $ 1.101 billion in the corresponding period last year.

The FDI by the UK depicting a decline of 57.8 percent to $ 303.1 million from $ 718.8 million while the portfolio investment has declined by 136 percent to negative position of $ 137.6 million as compared to an investment of $ 382.2 million.

The investment by Sweden has dipped by 85 percent to $ 165.4 million while Netherlands' investment dropped to $ 3 million during the first 10 months over the investment of $ 3.1 million in the same period last year.

However the investment by the Luxembourg has up by some 53 percent to $ 19.5 million and the Denmark's investment from $ 0.8 million to $ 17.7 million during the current fiscal year.

In addition, France and Germany's investments have gone up by 520 percent to $ 7.1 million and 66 percent to $ 61.2 million, respectively. On the other hand, in the foreign investor countries USA is on the first position with $ 1.682 billion investment while UAE with $ 553.2 million investment on the second number during the current fiscal year.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*New power and agriculture policies to be announced soon, says Gilani ​* 
LAHORE (May 26 2008): The government would shortly announce new energy and agriculture policies to overcome the existing shortfall of power and prevailing food crisis. Prime Minister Yousuf Raza Gilani said this while talking to newspaper editors at the State Guest House here on Sunday.

Under the proposed power policy, he said, necessary measures would be adopted for energy conservation, construction of small dams, installation of power plants besides other possible steps to overcome the problem of shortage of electricity.

"We are taking steps to resolve the energy crisis in the shortest possible time, and the government would require perhaps one or two years to completely resolve the power shortage problem," he said.

Recalling PPP's past agreements with the IPPs, he said that the PPP government had faced harsh criticism despite the fact that such agreements helped the country to meet its electricity demand. He said that small power generation units would be installed at appropriate locations in the hilly areas, including Kashmir. The provinces would also be allowed and encouraged to tap their potential in this regard, he added.

Giving details of the new agriculture policy he said, revolutionary steps would be taken for the promotion of livestock in the country and to overcome the shortage of food items. He pointed out that the government had allowed import of 2.5 million tons wheat against the demand of shortfall of just one million; thus there was no possibility of wheat crisis now.

The PM extolled the efforts of Punjab government to control the movement of wheat through administrative measures. He said that raise in POL prices and shortage of food items were the two major challenges the whole world was faced with presently, but Pakistan because of its agriculture economy would be in a better position to focus on increasing its agriculture output.

The Prime Minister admitted that Passco had failed to meet wheat procurement target, but pointed out that other departments had achieved 80 percent of their procurement targets.

He said that PPP was fully committed to restore judges as its sacrifices were much more than any other political party's for this cause. "I myself, along with other party workers and lawyers, remained imprisoned for the cause of the judiciary; so nobody had the right to doubt sincerity and commitment of his party for this purpose."

He said that he did not think that there were any differences between the coalition partners on the restoration of judiciary. However, they had their own views about the modalities.

"Our party wants to resolve all such issues on the floor of the parliament as we believe the parliament is supreme institution and backed by people of Pakistan and is capable to counter challenges to the democracy," he said.

About PML-Q, the Prime Minister said people had rejected its manifesto and supported PPP in the Feb 18 general elections. He said his party would implement its manifesto in letter and spirit and meet its commitment to restore the true form of parliamentary democracy in Pakistan. "Independent media, strong and stable institutions and accountable government are the key features of PPP's manifesto." he remarked.

In response to a question about his working relationship with the Presidency and the provincial governments he said he was following the policy guidelines of his party to have good working relationship with the President, all chief ministers, governors and the AJK prime minister.

About Balochistan, he said that it should be resolved through dialogue as he believed that force alone was not the solution to all problems. He said that PPP Co-chairman Asif Ali Zardari would convene an all parties conference (APC) soon over the issue of Balochistan. Earlier, the Prime Minister held a meeting with the members of Peoples Youth Organisation (PYO) at the State Guest House.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Pakistan and Italy to further boost ties: envoy ​*
RAWALPINDI (May 27 2008): Pakistan and Italy have reiterated their desire to further promote and intensify bilateral cooperation in the areas of trade, economy and *particularly defence*. This was discussed at a meeting between Federal Minister for Defence, Chaudary Ahmad Mukhtar, and the Ambassador of Italy to Pakistan, Vincenzo Prati, who called on him here Monday.

The minister told the envoy that Pakistan and Italy enjoyed excellent relations which needed to be further broadened and expanded for the mutual benefits of the two countries. The meeting noted that there was room for promoting security understanding between the two countries.

The ambassador said it was essential to promote people-to-people and military-to-military contacts, which would help in promoting greater understanding between the two sides. *The meeting emphasised the need to enhance cooperation in the field of defence collaboration as well as exchange of delegations at political and military levels*.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Creekside sales fast gaining momentum​*
KARACHI (May 27 2008): Creekside - Karachi's new waterfront lifestyle and business icon - is a joint venture project by Abu Dhabi-based Injaz Mena Investment Company PSC and UK-based Global Haly Investment Limited. The joint venture project was officially announced under the key sponsorship and patronage of His Highness Dr Sheikh Sultan Bin Khalifa Bin Zayed Nayhan, says a press release.

An exclusive shopping mall and office complex, Creekside is inspired by some of the world's most prestigious developments, built to the highest international standards. The project worth $750-plus million is being developed in Phase VIII, Defence. Designed by the leading Australian retail architects, Saunders Global Creekside features sublime architectural style, premium retail and office space, prime waterfront location, first class security and ample covered parking. The planned project will provide a shopping mall and office space, spread on an area of 5.3 acres in a Prime Location of Defence Phase VIII.

Global Haly Development (Pvt) Ltd Chairman and CEO Mubarak bin Fahad expressed his views: "Creekside is a uniquely designed mixed use facility which we firmly believe will bring a new level of luxury and enhancement to the standards of shopping expected today.

The development boasts a design that gracefully maximises sea views whilst maintaining optimal functionality and locality." Creekside site office located in Defence, Phase VIII is accepting bookings, and is facing an unprecedented demand in sales for its retail, office and restaurant spaces.-PR

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Minister for establishment of more industrial units ​*
KARACHI (May 27 2008): Provincial Minister for Industry and Commerce Rauf Siddiqui has urged business community to make investment in the country and establish new industrial units so that more employment opportunities could be generated.

Speaking at a meeting of Citizens Social Forum, he noted that nations face many challenges and up and downs but the should have meet the challenges bravely and courageously for better future of their coming generations. Referring to nuclear test of Pakistan in 1998 he said at that time many countries imposed sanctions on Pakistan and foreign accounts were frozen.

But the nation faced these challenges bravely and now all the sanctions lifted, he added. He said that Pakistan is now a front line country in war against terrorism. Expressing concerns over the reports of outflow capital from Pakistan, the minister said, "this is our country and we must face challenges bravely and work for improving conditions rather than running way".

Life member of SAARC Chamber of Commerce and FPCCI, Sheikh Manzar Alam expressed concerns over increase of mark-up rates by State Bank of Pakistan (SBP) and said that it would adversely affect industries and trade. He said that the trade gap is swelling and exports are declining, adding these issues need quick attention of the government.

He emphasised on the need of preparing long term policies for boosting economic activities in the country. Former President FPCCI S.M.Munir said that the country facing a number of serious problems besides restoration of judges. He said that the forthcoming budget should be tax free.

President PIPF Khalid Tawab said that the country is facing very serious challenges. Although budget has yet to be announced the prices of almost all products are on the rise. He urged the government to announce a relief package for low and middle-income peoples in the budget.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Budget on June 7: steps taken to limit budgetary deficit to 6.5 percent, says Naveed ​* 
KARACHI (May 27 2008): Finance Minister Naved Qamar said here on Monday that the government has taken measures to tighten the budgetary deficit to maximum 6.5 percent by the end of the current fiscal year, aiming to scale down inflation. He said that next fiscal budgetary deficit would further shrunken from the proposed 6.5 percent.

He said that the budget for the next fiscal year would be announced on June 7. He hinted at increase in taxes, and cut in non-developmental expenditure, excepting salaries, in the coming budget, to clip the budgetary deficit.

He termed the widening of tax base as pivotal for economic development. He added that in the coming budget the government would also announce taxation measures. The Minister informed the newsmen at a press conference held at Overseas Investors Chamber of Commerce and Industry (OICCI) that an inflow of $3 billion was expected by the end of the current fiscal year to support the weakening rupee.

He said that the government also plans to minimise its borrowings for fulfilling the budgetary deficit. He pointed out that the government would adopt a new strategy to utilise the stocks exchange to float bonds in international markets.

The government will launch bonds in the world markets next year, he said, adding that rates on national savings scheme should also be increased to get more money from the private sector, instead of borrowing from the central bank.

About exemption or extension of capital gain tax (CGT) Qamar said it would be announced in 2009 budget. "The government will not take surprise decisions on the stock market," he said. "The Government is aware of the fact that stock market is undergoing regression, and its investors and brokers are facing difficulties. The Government will try to overcome the liquidity crunch to ease the market," he said.

Regarding energy generation, he said that the government has already floated online tenders demanding 1,000 MW electricity generation, while the interested companies have offered about 5000 MW electricity generation. "Numerous power generation companies have applied in this regard while the deadline is July 15 this year," he added. He said that the country would be able to get rid of electricity load shedding by the end of next year. He said that steps were being taken for electricity conservation and energy savers in a huge scale will be inducted. He hoped that with the daylight saving the energy crisis will end.

When asked to what extent President Musharraf's abrupt resignation would affect the state of economy, he said that such issues would be dealt with at the time they arose. About the short-term measure to provide relief to common man, he said that the government would also take the affluent stratum of the society on board to arrest food inflation. He said that the government would also provide relief to masses in the face of food inflation and soaring prices of petroleum products worldwide.

Answering another question, Qamar said that the government also plans to improve the state of communication with world rating companies as Pakistan is presently lowering at their lists. He said that he discussed several issues with the overseas investors, which will be resolved at the earliest. Earlier, he had a meeting with the overseas investors at OICCI to discuss issues of business with foreign investors. During the press conference, President of OICCI, Waqar A Malik was also present.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*No plan to start Kalabagh dam project: Ashraf ​*
LAHORE (May 27 2008): Federal Water and Power Minister Raja Pervez Ashraf has said that Kalabagh is a controversial dam and the government does not intend to start this project. "At the end of this year, Wapda will overcome the power crisis, since the government has started 2,200 MW power generation projects on the fast track basis and will be accomplished by the year-end," he told a press conference on Monday at the Wapda House.

The minister said former rulers had not generated even single unit electricity and the present government has to take the power shortfalls as a challenge. He said the Water and Power Development Authority (Wapda) would enhance the power generation capacity of the existing grid stations. "These grids are not operating in full capacity and Wapda will get approximately 1,000 MW additional power, which will help overcome the prevailing power shortfall", he added.

He said the water reservoir position was improving and Wapda would get 500 MW additional electricity after snow melting on the hills. On the pragmatic measures taken by the government for the energy conservation, he said all the commercial markets would be closed at 9 pm for three months - from June to August.

He said Wapda would not provide power connection to big advertising billboards on main roads in cities. He said there would be a complete ban on air-condition from 8 am to 11am in all the provincial and federal government departments.

"To take more advantage of the daylight clocks will be advanced one hour," he added. Raja Ashraf said the government had earnest desire to solve the power crisis issue that was why Rs 120 billion had been allocated for the development of the power projects.

Tenders for the Basha dam would be launched next year and Nundi Pure 4500 MW, Chichoo ki Malian 500 MW, Dawddo Power Project 500 MW and Faisalabad 400 MW power projects would be accomplished in the next two years.

The minister said the Pakistan Electric Power Company (Pepco) would continue its functioning separately but he bluntly rejected an impression of merger of Pepco into Wapda. He said the government would use all possible rescues for the alternative energy purpose. "The authority concerned is working on the idea of solar and wind energies," he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Measures under way to contain budget deficit at 6.5 per cent ​* 
*Finance minister says budget will be announced on June 7, which will be pro-poor​*
Tuesday, May 27, 2008


KARACHI: Federal Finance Minister Naveed Qamar has assured that measures are afoot to arrest the budget deficit at or below 6.5 per cent by the end of June 2008.

He was speaking at a press briefing held at Overseas Investors Chamber of Commerce & Industry (OICCI) after holding a comprehensive meeting with OICCI members here on Monday.

He told mediamen that when his government came into power in March, the budget deficit was hovering somewhere between 9 and 9.5 per cent. However, he did not reveal the current percentage of budget deficit at the conference.

In the next financial year (ie 2008-09) budget deficit would be further lowered from 6.5 per cent to very thin level, he said. For that purpose, the government has chalked out a two-pronged strategy for cutting government expenditures and increasing tax revenues, he explained.

The finance minister would present next years budget in the National Assembly on June 7, 2008, which he said would be pro-poor. The government is considering levying new taxes on potential economic sectors so that the poor could survive, he underlined.

Government is expecting inflow of some $3 billion by the end of June that would help stabilise the rupee and foreign exchange reserves, he believed. The food and oil inflation is a global phenomenon and not an indigenous problem, he said, adding, we have to face these challenges without losing courage.

The government would aggressively cut its next year borrowing from the central bank to a rational level. And to get the budgetary support, it would go to the private sector, which would launch bonds in the international market next year, he said.

I think the rates on National Saving Schemes (NSS) should also be increased so that we could be able to get more money directly from the private sector rather than SBP. The government would also use stock exchanges to float bonds in the national and international markets. This would be one of the new strategies of the government, he said.

Borrowing from the central bank directly affect people, especially poor, he agreed and announced, poor would be compensated with cash and in kind in the budget. As far as the Capital Gas Tax (CGT) exemption or its extension is concerned on securities transactions it would only be announced in budget.

We would make no surprises and no bomb-shell would be thrown on investment community and industry in the budget, he assured adding, Economic Advisory Committee (EAC) was taking inputs from stakeholders. Their suggestions are under government considerations.

Therefore, Finance Ministry would recommend State Bank and other relevant official departments to remove the liquidity crunch in the local stocks markets, if any, he added. NFC Award: In the forthcoming budget, Naveed Qamar would also announce the formation of a committee, which would take input from all four provinces for the next National Financial Commission Award (NFC Award). The distribution of resources for the next fiscal year would be made after budget. This would be done under the new NFC formula, Qamar said.

Energy: The government is aggressively working to enhance energy availability in the county. First, the government has acquired generators on rent to make energy available immediately as its short-term measures. Secondly, the government is encouraging Independent Power Projects (IPPs) in the country.

Government has demanded for 1000MW projects and it has received applications for upto 5000MW setting up projects. More applications are expected, as the last date for that is July 15, minister said.

OICCI meeting: Earlier, minister was given presentation by President-OICCI, Waqar Malik. In his presentation, he suggested the minister to aggressively cut its non-development expenditure.

Malik said that tax rates in Pakistan were amongst the highest in the region and were a disincentive to business and investment. He emphasized that the forthcoming budget should focus on agriculture, manufacturing and export sectors, which must be given the right incentives to grow. The emphasis should be on controlling imports and increasing exports, he added.

Measures under way to contain budget deficit at 6.5 per cent


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## sohailbutt

*Faisalabad and Dadu will each have 500 megawatts power plant ​*
ISLAMABAD (May 27 2008): The Water and Power Minister, Pervez Ashraf, has said that the government will be in a better position to end load-shedding next year. He urged the general public and business community to help the government in its efforts for energy conservation of around 1000 MW.

He was talking to media persons here on Monday after the opening bid ceremony of around $1 billion thermal power projects to be established in Faisalabad and Dadu for generating 1000 MW power. He said that Pakistan is fully committed to eliminate the power crisis prevailing in the country and all-out efforts were underway to cope with the menace of load shedding in the country by adopting rational mechanism to generate more electricity with the active participation of private sector.

The present government is also pursuing liberal policy to rebuild the investors' confidence and all possible support will be provided to facilitate them in this respect, he said.

The ceremony was held at the Private Power and Infrastructure Board (PPIB) and was attended by PPIB Managing Director Fayyaz Elahi, all Directors of PPIB, and other senior government officials of Finance, Nepra and Ministry of Water and Power. The independent power producers will generate 1000 MW electricity from the two projects. The bids were opened by the 'Bid Evaluation Committee' in the presence of representatives of the bidding parties and the media.

The Minister said that the energy crisis was a great challenge for the government which would be tackled prudently with the cooperation of all stakeholders. He said that the government believes in processing all projects with transparency, and observed that there would be no compromise on transparency. He said that the government would welcome the investors with open arms and would facilitate them for development of the projects and they wouild not face any undue hindrances, "as right now time is of the essence and we need power projects to be commissioned as soon as possible to meet the future requirement of power in the country".

He said that bids for another 1200 MW power projects have been invited and would also be opened in the presence of media on June 30. He expressed hope that due to the measures being taken by the government, load shedding would be eliminated from the country by August 14, 2009.

He stressed the need to adopt measures to conserve energy, as announced by the government, to avert the burden of load management. The Bid Evaluation Committee said that the bids would be evaluated in accordance with the requirements of the Request for Proposals (RFPs) within the prescribed time.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Bids for two 500MW power projects opened ​* 
Tuesday, May 27, 2008

ISLAMABAD: Minister for Water and Power Raja Pervez Ashraf on Monday said that the government is committed to eliminating power shortages and all-out efforts are underway in this regard.

The minister said this while speaking at the bid opening ceremony for two 500 MW capacity Independent Power Projects for Faisalabad and Dadu. He said the government is adopting concrete steps to generate additional electricity through the cooperation of the private sector, and is also pursuing a policy to rebuild investor confidence for which all possible support is to be provided.

He said that the present government believes in processing all projects transparently adding that there would be no compromise on this. He said that it is for the first time in the countrys history that bids for nearly $1 billion worth of projects were opened publicly in the presence of representatives of bidders and the media.

He further said that bids for another 1200 MW power projects have been invited and are to be opened publicly on June 30.He expressed the hope that due to steps being taken by the government, load shedding will be eliminated from the country by August 14, 2009. He also stressed on the need of energy conservation to avert further load management. The ceremony was held at the Private Power and Infrastructure Board office (PPIB). 

Bids for two 500MW power projects opened


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## sohailbutt

*Diesel, petrol consumption in power generation up ​*
LAHORE (May 27 2008): The use of diesel and petrol in the electric generation has been increased up to five and two percent respectively of the total consumption. The additional use of diesel and petrol for the electricity generation is also pushing the import bill, while the power so produced will cost three times more to the users as compared to that of Water and Power Development Authority (Wapda).

The increasing import bill was not only aggravating the trade deficit, but was also adding the cost of production, said Pakistan Industrial and Traders Front Association Chairman Mian Abuzar Shad while talking to Business Recorder here on Monday.

He said the country was presently facing worst ever electricity load shedding in the urban and rural areas because of widening gap between the demand and supply that forced the domestic consumers, shopkeepers, medical shop owners, and industrialists, having installed electric generators of different capacity. "The use of generators in the industrial units is also making them economically enviable due to increase in cost of production," he added.

The industrial units, which could produce in batches, could afford load shedding, but the textile, paper, plastic, chemical and other units, which needed uninterrupted supply of electricity, were constrained to install electric generators, he said.

Similarly, the farmers were also converting their tube-wells from electricity to diesel pumps to ensure continuous flow of water for the irrigation, he said, adding that when a farmer switched on the electricity to run his tube-well, the electricity went off soon after an hour because of the load shedding and the required water could not reach his farm.

He said such an irritating situation was forcing the farmers' community to go for diesel pumps for irrigation, which would eventually add the input cost of the agriculture produce. He said the use of generators was not only pushing the oil consumption up, but was also augmenting the generators import to further increase burden on the national economy as well as the country's foreign exchange reserves.

He urged the government to allow duty-free import of the machinery for the erection of small hydropower stations to induce private entrepreneurs and the Wapda should be legally bound to purchase electricity from them.

He said that because of increasing trade deficit, the local currency was facing depreciation. The government, to deal with the situation, should direct the electricity distribution companies to manage electricity load in consultation with the industry people, he said.

He also demanded of the government to declare alternate weekly holiday for different cities and areas. Apart from this, there must be continuous supply of electricity for six-seven hours in the rural areas, enabling the farmers to properly irrigate their fields, he proposed.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Economists back Pakistans rate rise, shares tumble​*
KARACHI: Investors fled Pakistans stock market Monday after last weeks sharp increase in interest rates, but economists praised the central banks decisive action to counter inflation. 

The State Bank of Pakistan (SBP) raised its discount rate to 12 percent from 10.5 percent on Thursday to help control ballooning fiscal and current account deficits and rein in inflation, which hit 17.2 percent in April, a level last seen in the mid-1970s. 

It has lost nearly 8 percent in the two trading sessions since the rate hike was announced. 

Sentiment was weak already on economic and political uncertainty, said Shuja Rizvi, director broking operations at Capital One Equities Ltd. The moves by the central bank, though necessary, made weak holders offload their holdings and the rest remained sidelined, he added. 

A research analyst, Matthew Wilson at Morgan Stanley said, It is one of the few central banks in the region prepared to actively confront head-on the current macroeconomic issues of inflation and excessive aggregate demand, 

The rupee has depreciated 10 percent against the dollar since the start of the year, much of it this month, due to booming import demand. 

It eased slightly on Monday to close at $67.90/68.20, compared with Saturdays close of $67.80/68.00. The currency has clawed back 2.4 percent from last Tuesdays closing low of 69.60/90. On Monday the Karachi Stock Exchanges (KSE) benchmark 100-share index ended at 12,584.75 points, down from a close of 13,011.74 on Friday. 

Analysts said monetary tightening will certainly have a negative effect on corporate sector earnings, and banks will be hit by the imposition of a minimum 5 percent deposit rate to be paid to customers with interest-bearing checking accounts. The KSE index is now 20 percent below an all-time high of 15,700.48 hit in mid April, having already been weakened by fear of political instability after a coalition partner withdrew its ministers from Prime Minister Yousaf Raza Gilanis cabinet two weeks ago. 

Seeking fiscal responsibility: The central bank used whatever it could in its domain, said Asif Qureshi, head of research at Invisor Securities Ltd. What is needed now is fiscal responsibility. The government took office in late March amid high hopes that the alliance between Pakistans two major political parties would bring stability following the defeat of President Pervez Musharrafs political allies in general election in February. The Pakistan Peoples Party, leading the coalition, wants to go through the lengthy process of a constitutional amendment to strip Musharraf of powers and reduce him to a figurehead.

PPP leader Asif Ali Zardari said Saturday that he hoped to create a situation whereby the president quit on his own accord.

Nawaz Sharif, the leader of the second largest party in the alliance and the prime minister Musharraf overthrew, wants to immediately reinstate judges dismissed by Musharraf, in the hope that they would help drive him from office. The minister overseeing the finance portfolio since Sharif withdrew his ministers, including finance minister Ishaq Dar, from the cabinet earlier this month. The annual budget would be presented on June 7. Privatisation Minister Naveed Qamar told a news conference that the government was considering providing direct relief for the poor to help them cope with high food and fuel prices. 

Pakistan has been hit by soaring global oil and commodity prices, and a shortage of basic foodstuffs added to the problems. 

Pakistans responses to these challenges have been hampered by political uncertainties going back to early 2007. Failure to trim food and fuel subsidies has exacerbated spending overshoots, while revenue collection has lagged. reuters

Daily Times - Leading News Resource of Pakistan


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## sohailbutt

*THE RUPEE: rates move both ways ​*
KARACHI (May 27 2008): The rupee moved both ways against dollar on the currency market on Monday, dealers said. In the interbank market, the rupee lost 10 paisa in relation to the US currency for buying and selling at 68.00 and 68.10, they said. The dollar was in demand by the importers as supply was not enough to meet the demand due to international market closure, they said.

In the first session of the week, dollar steadied near one-month lows against a basket of major currencies after falling late last week on concerns that surging oil prices could further slow the US economy and add to inflation pressures. The New Zealand dollar held firm against its US counterpart, underpinned by its high yield despite worse-than-expected trade data that dented the kiwi briefly earlier in the session.

OPEN MARKET RATES: By the official closing, the rupee, however, rose by 30 paisa against the dollar, for buying and selling at 69.00 and 69.10, they said. The rupee also gained 80 paisa against euro for buying and selling at Rs 108.25 and Rs 108.35, they said.

================================
Open Buying Rs 69.00
Open Selling Rs 69.10
================================

Interbank Closing Rates: Interbank Closing Rates For Dollar On Monday.

==============================
Buying Rs 68.00
Selling Rs 68.10
==============================
=================================================================
Repo Rates (Yield p a)
-----------------------------------------------------------------
Tenor Low Bid High Bid Low Offer High Offer Average
=================================================================
Overnight 11.25 11.95 11.50 11.95 11.66
1-Week 11.50 11.90 11.75 11.95 11.78
2-Weeks 11.40 11.75 11.60 11.80 11.64
1-Month 11.10 11.50 11.40 11.60 11.40
2-Months 11.00 11.50 11.40 11.60 11.38
3-Months 11.00 11.50 11.40 11.65 11.39
4-Months 11.00 11.50 11.40 11.65 11.39
5-Months 11.10 11.50 11.40 11.70 11.43
6-Months 11.25 11.50 11.50 11.75 11.50
9-Months 11.25 11.50 11.50 11.75 11.50
1-Year 11.25 11.50 11.60 11.80 11.54
=================================================================
Call Rates (Yield p a)
-----------------------------------------------------------------
Tenor Low Bid High Bid Low Offer High Offer Average
=================================================================
Overnight 15.00 22.00 16.00 23.00 19.00
1-Week 15.50 17.00 16.50 17.50 16.63
2-Weeks 15.00 16.00 16.50 17.00 16.13
1-Month 14.00 15.00 15.00 16.00 15.00
2-Months 13.50 14.50 14.00 15.00 14.25
3-Months 13.75 14.50 14.00 15.00 14.31
4-Months 13.75 14.50 14.25 15.00 14.38
5-Months 13.75 14.50 14.25 15.00 14.38
6-Months 14.00 14.50 14.50 15.00 14.50
9-Months 14.00 14.50 14.50 15.00 14.50
1-Year 14.25 14.75 14.75 15.25 14.75
=================================================================
RUPEE IN LAHORE: The dollar began trading on Monday at Lahore currency market Rs 68.80 and Rs 69.10 and kept moving up throughout the day. At the end of trading, the dollar closed at Rs 69.00 and Rs 69.30 against Saturday's Rs 68.00 and Rs 69.00 on buying and selling sides.

The rupee has continued going up against pound and was traded at Rs 136.00 and Rs 136.50 against the previous closing of Rs 136.60 and Rs 137.50 on the buying and selling counters.

RUPEE IN ISLAMABAD AND RAWALPINDI: The rupee was up by 10 paisa against dollar at the currency markets of Islamabad and Rawalpindi on Monday. The dollar opened at Rs 68.80 (buying) and Rs 68.90 (selling) against last rate of Rs 68.90 (buying) and Rs 69.10 (selling).

It did not witness further fluctuation by the end of second session and closed at Rs 68.80 (buying) and Rs 68.90 (selling). Pound sterling opened at Rs 136 (buying) and Rs 136.25 (selling) against last rate of Rs 136.50 (buying) and Rs 137 (selling). It did not observe further change in the evening session and closed at Rs 136 (buying) and Rs 136.25 (selling).

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*PTA busts another illegal gateway exchange ​*
ISLAMABAD (May 27 2008): Grappling with the issue of grey traffic resulting in financial losses of over Rs 3 billion annually, the Pakistan Telecommunication Authority (PTA) has busted another illegal gateway exchange operating in Karachi. According to details, the illegally set-up exchange was detected through the Technical Facility recently installed by the PTA to monitor the illegal business of telecom throughout the country.

It is the first illegal operation detected through this state-of-the-art facility made operational on May 1 this year. Upon investigation and confirmation, a successful raid was conducted at a residential bungalow in Defence Housing Authority, Karachi, and an operational international gateway exchange was seized.

The set-up was using 130 Mbps bandwidth for international connectivity while hundreds of GSM SIMs were being used for local call termination. The confiscated equipment includes 06 Quantim Voice Over Internet Protocol (VoIP) gateways (with 24 ports each) and a rack of cellular devices along with other accessories. It is estimated that the set-up has caused a revenue loss of Rs 25 million in last 10 months of operations. Further investigations are underway by FIA, and it is expected that allied set-ups would also be unearthed shortly.

Grey telephony is a term referred to the illegal telecom traffic in which calls from foreign countries are brought in the country as local calls while using illegal means, which is an offence under Telecom Reorganisation Act, 1996. The PTA had evolved some regulatory and technical measures to curb this menace, such as establishment of vigilance cell in PTA in July 2005, reduction in accounting settlement rates (ASR).

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Rs 20m released for development projects in Swat ​*
PESHAWAR: Cheques worth Rs 20 million were distributed on Monday in various areas of Swat district of NWFP where development projects are in progress. These projects are part of the nation building initiatives of the government and are taking place under the supervision of security forces in Swat. According to an official statement, ceremonies were arranged in Uchraisar, Sherplum, Chaprial, Shoure, Matta, Barthana and other areas of the district to hand over cheques to the development agencies. These projects include construction and maintenance of roads, provision of potable water and other necessary facilities. On the occasion Pakistan Army troops along with Frontier Corps and police were lauded for their efforts for development in the area. staff report

Daily Times - Leading News Resource of Pakistan


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## sohailbutt

*KSE bounces back as 100-Index recovers 237 points ​*
KARACHI: Karachi Stock Exchange Tuesday bounced back as KSE benchmark 100-Index crossed 12800 level. 

The equity prices finally recovered today as investors took relief from the central bank measures aimed at boosting liquidity in the market.

And although trade was quite volatile until midday, the bulls finally snapped a rally -- led by heavy buying in undervalued stocks.

KSE 100-Index gained 237 points to close at 12822 level. 

Volumes improved to 260 million shares, 100 million shares more than the previous day. 

KSE bounces back as 100-Index recovers 237 points - GEO.tv


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## Neo

*100,000 tons of clinker exported to UAE​*
KARACHI, May 26: Pakistan has for the first time entered export market of clinker by exporting around 100,000 tons to the United Arab Emirates (UAE) where construction boom has created a strong demand for cement.

The UAE had been importing cement from Pakistan and other sources, but surge in demand has compelled developers and builders to import clinker which could be converted into cement by further processing.

There is a strong demand for Pakistani cement in the Middle East, Africa, Far East and Indian market.

During the current month, around 340,000 tons of cement has, so far, been exported which is the highest in a single month. Around 30,000 tons was exported to India through sea and another around 58,000 tons by rail, official figures disclosed.

However, the biggest impediment in export of cement and clinker is a sudden surge in freight rates which have increased by more than three-fold.

A leading cement exporter Amjad Rafi told Dawn that up to April 15, freight for a 20 feet box to Jabal Ali port was $250, but on April 25 it jumped to $800 per container, leaving exporters in a quandary.

This means, he said, when freight charges were $250 per container of 25 tons capacity, freight charges used to be around $10 per ton but after the increase the per ton freight charges have gone up to $32 whereas the average quoted price of cement to the UAE is $70 per ton f.o.b. Karachi.

He further stated that in the past cement exporters used to book shipments even a month earlier but ever since freight charges are being frequently increased exporters enter into export contracts only week prior to shipping schedule to avoid extra freight cost in case there was any change.

Amjad Rafi said frequent changes in freight charges had forced us to turn down many export inquiries.

On an average, he said, roughly 150,000 to 200,000 tons of export inquiries were being received per month but mostly they were refused owing to highly volatile freight charges.

An official of a leading cement manufacturing group, requesting anonymity, said that since last year we had an exportable surplus of cement and by chance for the first time India also ran into shortage which gave our country a golden opportunity to meet their demand and also improve our balance of trade which had always been in their favour in the ratio of 70:30.

Unfortunately, he said ever since cement exports began about a year back there had been unlimited problems starting with non-tariff barriers from Indian side and acute logistic problems through land and rail, he added. However, during this entire period no government ministry or department came forward to sort out these irritants, he maintained.

He further stated that cement and clinker exports fall under the category of non-traditional items for which the Trade Development Authority of Pakistan (TDAP) is committed to give freight subsidy.

As per TDAP rules, export of goods to non-traditional markets also qualify for getting freight subsidy.

Therefore, he said in both cases cement qualifies for freight subsidy but so far the TDAP has remained indifferent to all issues and problems faced by cement exporters for the last one year.

At a time when the country needs to explore all avenues to increase exports, he said the TDAP high-ups were least concerned about such opportunities which fall in their way.

Responding to a question, another cement exporter Rauf Merchant said clinker which is one step short of cement had been exported to the UAE at an average price of $58 per ton and still there was a great demand as many inquiries are being received. He, however, said that high freight charges have forced many African and Middle East importers to revert back to their traditional suppliers.

100,000 tons of clinker exported to UAE -DAWN - Business; May 27, 2008


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## Neo

*12,000 tons of petrol exported​*
KARACHI, May 26: While the local petrol price has jumped four times, since March from Rs53 to Rs68.81 per litre, the country exported 12,008 tons of petrol to Afghanistan, Albania and the United Arab Emirates (UAE), fetching Rs662 million during July-Feb 2007-08.

Out of total exports, the UAE was the main buyer of petrol with 6,000 tons, resulting in foreign exchange income of Rs376 million, followed by Afghanistan with an intake of 5,968 tons worth Rs283 million and Albania paying Rs2.4 million for a paltry shipment of 40 tons. In 2006-07, the country exported 38,654 tons of petrol worth Rs1.6 billion with the UAE share of 30,644 tons (Rs1.2 billion), Kabul 8,007 tons (Rs372 million) and the United Kingdom three tons

(Rs129,000).

Figures obtained from the Federal Bureau of Statistics (FBS) revealed that in July-June 2005-06 Afghanistan was the only buyer of local petrol with 3,940 tons valuing at Rs160 million.

According to figures compiled by Oil Companies Advisory Committee (OCAC), the country also exported 7,500 tons of petrol in March and 10,500 tons in April this year but it did not mention the destinations and the resultant foreign exchange earnings.

According to FBS, the country imported 58,419 tons of petrol from five countries at a cost of Rs5.85 billion in July-Feb 2007-08. Out of these the highest imports were recorded from Sudan at 35,289 tons (Rs1.96 billion), followed by 19,148 tons (Rs3.6 billion) from UAE), 1,975 tons (Rs111 million) from the Netherlands, 1,426 tons (Rs64 million) from Singapore and 581 tons (Rs23 million) from Kuwait.

There is big disparity in the figures of export and import provided by the FBS and OCAC. For example, the OCAC has been quoting import figures on its website on monthly basis since July 2004.

Accordingly, the petrol was imported in October (22,041 tons), November (39,287 tons) and December (51,697 tons) in 2007, showing a total of 113,025 tons.

While the FBS figures mentioned petrol import of 58,419 tons in July-Feb 2007-08, while as per FBS figures, there have been no petrol imports in 2006-07 and 2005-06.

If petrol export figures of FBS and OCAC are compared then exports from July-June 2005-06 till July-Feb 2007-08 stood at 54,602 tons as per OCAC figures. However, according to FBS statistics it stood at 93,286 tons in the same period. An official in the OCAC, who asked not to be named, said that the committees figures were authentic as these were based on the feedback given by the oil marketing companies (OMCs) and the refineries. He said Pak Arab Refinery Limited (Parco) exports petrol, while the Pakistan State Oil (PSO) imports through global tenders. These imports are also shared by the Shell Pakistan Limited (SPL) and Caltex Pakistan. The FBS official said that the bureau obtained figures from the Customs.

Parco had exported 300,000 tons of petrol in 2001-02 and earned $75 million at a price then ranging between $235 and $260 per ton.

The government is pocketing Rs8.98 per litre as sales tax and 80 paisa per litre as petroleum development levy (PDL).

The average export price of petrol during July-Feb 2007-08 comes to Rs41 per litre or Rs55,129 per ton, compared to Rs42,233 per ton or Rs31.28 per litre in July-June 2006-07.

In July-June 2005-06, the average export price was Rs40,616 per ton or Rs30 per litre.

12,000 tons of petrol exported -DAWN - Business; May 27, 2008


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## Neo

*Services sector deficit up by 44pc ​* 
Wednesday, May 28, 2008

ISLAMABAD: The services trade deficit during July-April 2007-08 went up by 43.9 per cent to $5.57 billion as against $3.87 billion recorded in the corresponding period of the last fiscal.

During these 10 months, services imports (outflow) were $8.24 billion, while exports (inflow) stood at only $2.67 billion. Last year during the same period, imports were recorded at $6.93 billion and exports at $3.6 billion.

It was revealed that during the period under review, services exports went down by 12.77 per cent, while imports went up by 19 per cent over the corresponding period of the last fiscal year, the State Bank of Pakistan (SBP) reported on Monday.

The rising service trade deficit, resulting of mismatch of supply and demand in the countrys underdeveloped service sector and its opening-up to the outside world, is set to pose a daunting challenge to the government. Given a comparatively backward service industry, it is impossible for Pakistan to reverse the trend and would not break-even in service trade in the short term.

The service trade, which covers major tertiary sectors such as transport, tourism, telecommunications, construction, insurance, financial services and royalties and licences fees, were all in deficit during this period under review.

The entire service sector in the country has been experiencing sluggish development and is thus, less competitive than the developed countries. The service sectors long-standing trade deficit may continue for many years, because the fledgling sector will lag behind overseas counterparts for that long, trade experts have predicted.

Pakistans soaring need for foreign transport, insurance and consultancy services, as well as increased expenditure on financial services would also contribute to the expected hike in the deficit. Besides, other factors responsible for huge services deficit included higher outflows on account of travel, insurance, construction services, computer and information services, royalties and licence fees. The countrys fast-expanding general trade deficit, resulting from a robust growth in merchandises imports over the past decade, is also alarming for the governments trade experts.

The SBP figures show that Pakistan had to spend $2.99 billion on transportation account (i.e. charter of ships and aircrafts with crew, freight on commodity imports through sea and air, 8 per cent freight on cash import), whereas its earning under this head was only $854 million. Thus, the net deficit in the service account due to chartering of vessels for imports, exports shipment was $2.136 billion.

Another factor responsible for the big services account deficit was a net outflow of $1.11 billion on account of overseas traveling. Pakistan had to spend $1.337 billion to finance personal and business-related traveling abroad of individuals and groups, whereas it earned only $226 million under this account. The same applies to spending on insurance, royalties and licence fees paid to international organisations and their employees operating in Pakistan.

During July-April 2007-08, inflows under construction services were $29 million, insurance $35.6 million, financial services $36.9 million, royalties and licences fees $45.24 million, while outflows under these heads were $42.1 million, $128 million, $147.4 million and $107.8 million respectively.

However, under the communication, computer and information services, the scenario was a little encouraging. Under the communication sector, outflows were $89.5 million and inflows $102.35m. Computer and information services inflows were recorded at $118.89 million and outflows at $109m during the period under review.

Services sector deficit up by 44pc


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## Neo

*LCCI asks govt to review decision on Kalabagh dam​*
Wednesday, May 28, 2008

LAHORE: Federal Water and Power Minister Raja Pervaiz Ashraf has said the shortage of energy is one of the biggest challenges the nation is facing at the moment.

He said the menace of loadshedding would be controlled by the end of August as a contingency plan to cope with the situation had been put in place.

He made the remarks during a visit to the Lahore Chamber of Commerce and Industry on Tuesday. During the talks, LCCI President Mohammad Ali Mian raised the issue of Kalabagh dam. LCCI Vice President Shafqat Saeed Piracha and former president Bashir A Baksh were also present.

The minister said the government alone could not solve the issue of energy shortage and for that purpose it was in dire need of the private sector, which should come forward to ensure the success of govts energy conservation programme.

He said the government had decided to put on hold the controversial Kalabagh dam project as controversy over the issue had reached an alarming level that was threatening the unity of the Federation.

The minister hoped that water level would improve in reservoirs, which would produce additional 500 megawatts of power. The next three months, he said, would be crucial to solve the power crisis and the nation should bear with the govt during the current crisis.

Blaming the previous government for the ongoing energy crisis, the minister said no roadmap was given in that regard, adding however the government would ensure implementation of its decision of closing down all major commercial centres and shopping plazas at 9pm from June 1 to help overcome the power problem.

These steps were being taken to save power for at least 90 days, he said, adding 1,000MW of electricity would be added to the national grid by way of improvement in generation capacity of existing power houses.

He said the construction of Basha dam would start next year besides the completion of Mangla raising project. The government is taking steps by adopting a rational mechanism to generate more electricity through the private sector. The government is also pursuing a liberal policy to rebuild investors confidence and all possible support will be provided to facilitate them in this respect, he said.

Lahore Chamber of Commerce and Industry President Mohammad Ali Mian, on the occasion, demanded the federal government review its decision on Kalabagh dam as it was not the issue of Punjab alone rather it was connected with the whole country. The acute shortage of water and power, he said, had put the very survival of the country at stake.

Throwing his full weight behind the governments energy conservation programme, Mohammad Ali said the energy to be conserved through this programme should be utilised to keep the industrial wheel moving as it was the biggest victim of power shortage.

He urged the minister to focus on containing line losses as it would help the government bridge the demand and supply gap. Citing the example of China where more than 70 per cent of electricity was being generated through coal and hydel means, he stressed the need of expediting work on alternative energy resources including coal, wind and solar.

Friday off rejected: The traders community, during talks with the power minister at the LCCI, refused to close markets on Friday.

Anjuman-e-Tijran President Muhammad Ashraf Bhatti, who is also executive committee member of LCCI, rejected the plan of Friday off and said it was not viable for them. Before Ashraf Bhatti could give further explanation, LCCI President Mohammad Ali Mian intervened and snubbed him. After that, no one discussed the issue with the minister.

Govt seeks private sectors help to combat power crisis


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## sohailbutt

*1000 megawatts of power to be added to national grid​*
LAHORE (May 28 2008): Federal Minister for Water and Power Raja Pervaiz Ashraf has said 1,000MW of electricity will be added to the national grid by way of improvement in generation capacity of the existing power stations. The government will ensure implementation of the decision to close down all major commercial centres and shopping plazas at 9.00 pm from June 1 to overcome power crisis.

He said that these steps were being taken to save power for at least 90 days, and added the menace of load shedding would be bridled by end of August as a contingency plan to cope with the situation had been put in place.

Talking to the office-bearers of the Lahore Chamber of Commerce and Industry (LCCI) during his visit on Tuesday, Raja Pervaiz Ashraf hoped that water level would be improved in the reservoirs, which would add 500 MW in addition. He said that next three months would be crucial to resolve power crisis and the nation should bear with the government over the ongoing power crisis.

The minister, blaming the previous government for the ongoing energy crisis, said no roadmap was given in this regard. The construction of Bhasha Dam would start next year, besides the completion of Mangla raising project, he added.

He termed the shortage of energy one of the biggest challenges the nation at the moment was facing, and said the government alone could not solve the issue of energy shortage and for this purpose, it was in dire need of private sector and the private sector should come forward to ensure the success of government's energy conservation programme. He said the government had decided to put on hold the Kalabagh Dam project for the time being till the development of consensus among the provinces.

He also said the government was taking steps by adopting rationale mechanism to generate more electricity through private sector. He said the government was also pursuing liberal policy to rebuild the investors' confidence and all possible support would be provided to facilitate them.

LCCI President Mohammad Ali Mian demanded of the Federal government to review its decision on Kalabagh Dam as it was not the issue of Punjab alone rather it belonged to the whole country and its people. The acute shortage of water and power had put the very survival of the country at stake. "Shelving it with one stroke of pen is against the national interests", he added.

LCCI Vice-President Shafqat Saeed Piracha, former president Bashir A Baksh and former senior vice president Sohail Lashari were also present on the occasion. Throwing his full weight behind the government's energy conservation programme, Mian said that the energy to be conserved through this programme should be utilised to keep the industrial wheel on the run as the industrial sector was the biggest victim of power shortage.

He urged the Federal Minister to divert its attention towards line losses, as it would help the government bridge demand-supply gap. Citing the example of China where more than 70 per cent of electricity was being generated through coal and hydro means, he stressed on the Federal Minister to expedite work on alternate energy resources, including coal, wind and solar.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*4.5 percent increase projected in 2008-09 major crops output ​*
ISLAMABAD (May 28 2008): The government has projected 4.5 percent increase in value-addition of major crops for 2008-09 from Rs 388.9 billion in 2007-08 to Rs 406.4 billion. Business Recorder has learnt that the agriculture sector is being projected to grow by 4.0 percent, for which contribution of major crops would be 4.5 percent, minor crops 2.5 percent, livestock 4.0 percent, fisheries 4.0 percent, and forestry 1.5 percent.

Cotton production is projected to increase by 21.1percent to 14.1 million bales, while sugarcane production is estimated at 56.6 million tons for 2008-09, compared with 63.9 million tons during 2007-08, showing a decline of about 11.6 percent.

Wheat production target for 2008-09 is being projected at 24 million tons--higher by 10.4 percent against current year. Rice and maize production have been estimated at 5.7 million tons and 3.3 million tons, respectively.

The value-addition, as far as minor crops are concerned, will be 2.5 percent to Rs 134.2 billion, against Rs 131 billion of current year. The livestock sector is targeted to grow by 4 percent to Rs 632.2 billion against Rs 599.2 billion. The fishery and forestry sectors have been projected to grow by 4 percent and 1.5 perecnt respectively for 2008-09.

The overall performance of the agriculture sector in 2007-08 can not be appreciated at all, as it grew by 1.5 percent against the targeted growth of 4.8 percent. The main cause of this decline may be contributed to low production of major crops--wheat and cotton.

According to the latest estimates, output of wheat is estimated to be 21.8 million tons, considered to be 6.3 percent lower as compared to current year's production of 23.3 million tons. On account of late start of sugarcane crushing and delay in picking of cotton, the area under wheat cultivation declined by 2 percent against the target. Similarly, cotton production in 2007-08 was estimated at 11.7 million bales that is 9.3 percent less than previous year's production.

Rice output, though increased by 2.3 percent to 5.6 million tons against the last year estimates of 5.4 million tons, is still lower than the target fixed for 2007-08 that was 5.7 million tons. The minor crops registered a growth rate of 4.9 percent against the target of 2.3 percent. Within the minor crops, the production of pulses--mainly mash, masoor and mung--has increased by 8.8 percent, 13.8 percent and 28.4 percent, respectively.

Livestock sector has registered a growth of just 3.8 percent against the targeted growth of 5.7 percent. The output of milk has registered an increase of 3.2 percent as compared to the last year. The fishing sub-sector is estimated to grow by 11 percent while the value addition to forestry decreased by 8.5 percent against the targeted increase of 3.5 percent.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*14.11 million bales cotton production likely this year ​*
MULTAN (May 28 2008): It is hoped that 14.11 million bales of cotton will be produced this year while the sowing area target has been fixed at 3.2 million hectares (7.904 million acres). The target has been set by the Crop Assessment Committee in its recent meeting, said Director, Central Cotton Research Institute (CCRI), Muhammad Arshad, while talking to APP.

He said that cotton sowing "is at its peak currently", and cultivation would continue till the first week of June. The province-wise sowing targets are: Punjab 2.52 million hectares (6.224 million acres); Sindh 0.63 million hectares (1.556 million acres), NWFP 0.01 million hectares (0.024 million acres), and Balochistan 0.04 million hectares (0.98 million acres).

The province-wise production target has been set as follows: Punjab 11 million bales, Sindh 3 million bales, NWFP 0.01 million bales and Balochistan 0.1 million bales. Experts observed that cotton sown two weeks ago or more would not be affected by rains, but the recently sown fields would have to be re-sown because the cotton seed cannot germinate and grow in the rain-wet fields.

Last year, the government had to downward revise the cotton output target twice due to water shortage and massive attack of mealy bug and at some places the attack of virus. According to Multan Chamber of Commerce and Industry (MCCI) president Jalaluddin Roomi, the country's approximately 400 textile mills consume about 16 million bales cotton per annum. The shortfall has to be met by importing cotton by spending huge amounts of forex.

About cultivation of Bt cotton, CCRI Director said that two institutes--Nuclear Institute of Biotechnology and Genetic Engineering (Nibge) Faisalabad, and Centre of Excellence of Microbiology (Cemb) Lahore--are working to develop local Bt cotton. "Farmers are utilising the imported cotton seed but it is not sure whether it is Bt seed or not. If the crop is attacked by American bollworm, spotted bollworm or pink bollworm, then it means the seed is not of Bt variety."

He said that even Bt seed is not immune from the onslaught of mealy bug, which disappointed the cotton growers and many of them are now compelled to divert to other crops, such as vegetables, paddy, maize, sugarcane, etc.

President of Farmers Organisation for Progress (FOP), Mushtaq Ahmed, and general secretary Mahtab Hussain called for steps to save the cotton crop from mealy bug devastation, which adversely hits the produce and the textiles of the country.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*KSE witness yet another black day ​*
KARACHI: Karachi Stock Exchange (KSE) yesterdays fight back, perhaps proved too exhaustive sapping all of its energy that brought KSE-100 index today falling flat by 567 points and down below 12,200 marks.

The market opened downbeat and soon went through severe bouts of depression, except a brief moment, when the index was seen gaining by 100 points, but that proved elusive, as there was nothing to cheer about at the national political scene, while the rulers appeared bent on carrying out their one-point agenda, which had all the negative bearings for the sagging economy. All blue chips on the bourses board showing red signs were seen locked at their lower levels, while the bookies and punters kept beating their chests and tears rolling down from their eyes. 

KSE-100 index at the end of the trading session melting away 567 points wrapped up at 12254. Turnover today aggregated to 180 million shares, which as compared yesterday was less by 100 million shares. Volume leader NIB Bank losing Rs1 closed at Rs12. KSE-30 index evaporating 749 closed at 14395 points. 

KSE witness yet another black day - GEO.tv


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## sohailbutt

*Rupee at the onset of open market stays stable ​*
KARACHI: Rupee value as against dollar at the onset of open market today was seen stable, as dollar sold at Rs69 in the ready market and telegraphic transfer. Exchange rates of rupee against other currencies: British Pound at Rs136.20, Euro at Rs108.50, Japan Yen at Rs0.663. Emirates Dirham at Rs19.85, Saudi Riyal at Rs18.44, while Canadian dollar was sold at Rs69.20. 

Rupee at the onset of open market stays stable - GEO.tv


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## Neo

*Govt uncertain about PSDP size ​* 
Wednesday, May 28, 2008

ISLAMABAD: The PPP government is finding it quite hard to finalise the exact size of the development programme for 2008-09 and a crucial meeting will be held on Wednesday with the Prime Minister in the chair for a final decision.

Although the Annual Plan Coordination Committee (APCC) had concluded its two-day meeting last Saturday, the Planning Commission has so far been unable to prepare a summary for the upcoming National Economic Council (NEC). The NEC will meet with Prime Minister Syed Yousuf Raza Gilani in the chair on May 30, for approving the exact size of the Public Sector Development Programme (PSDP) for 2008-09.

Yes, the Prime Minister is going to chair a meeting on Wednesday to finalise the size of the PSDP. Then a summary will be forwarded to the NEC for final approval, a source in the Ministry of Finance told The News here on Tuesday.

M Salman Faruqui, Deputy Chairman Planning Commission, who has been granted the status of Federal Minister and MP-I scale recently by the incumbent regime, chaired a number of meetings in the last three days after the APCC meeting, but was unable to finalise the size of the PSDP for the next budget.

The sources said that the fiscal position will remain under severe strain in the next financial year owing to expected higher POL and commodities prices, making it difficult for the budget-makers to meet the expectations of the poor people.

Against budgetary allocation of Rs485 billion for PSDP in the outgoing fiscal year 2007-08, the APCC recommended an increase of a meager amount of only Rs5 billion in the size of the development outlay in the next financial year 2008-09, by jacking up the amount to Rs490 billion. According to indications given by official sources, the PSDP size will be around Rs460 to Rs480 billion in the next budget, which would be short by the recommended amount of the APCC. Owing to the tight fiscal position, the government is thinking on various aspects for finding out more fiscal space to jack up the development amount closer to Rs500 billion for 2008-09.

The APCC considered major emphasis on the infrastructure development sector with an allocation of Rs111.4 billion (38.8 per cent), water resource development Rs51.9 billion (18.1pc), transport and communication Rs43.5 billion (15pc), and energy Rs16 billion (6pc) followed by social sectors and poverty expenditures with an allocation of Rs151.6 billion (52.8pc). The allocation for strategic support to production sectors i.e. agriculture, industry and mineral is Rs24 billion (8.4 per cent of the total federal programme).

According to PSDP for 2008-9 allocations considered by the APCC, the federal ministries/divisions allocation was proposed at Rs188.9 billion for the development side in the next budget, against the allocation of Rs229.8 billion for the ongoing fiscal year, proposing a decrease by 17.8 per cent. For special areas, the priorities committee recommended an allocation of Rs23.2 billion in the next PSDP, against the existing allocation of Rs21.2 billion for the outgoing fiscal year, proposing an increase of 9.4 per cent.

Govt uncertain about PSDP size


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## Neo

*South Africa shows interest in coal mining ​* 
Wednesday, May 28, 2008

ISLAMABAD: A visiting South African delegation of entrepreneurs on Tuesday evinced keen interest in coal mining areas of Thar. They expressed their desire to exchange know-how and expertise for development of such areas, aimed at benefiting both countries.

The delegation, led by Paul Main and comprising a group of entrepreneurs engaged in mining of diamond and coal in South Africa, called on Syed Naveed Qamar, Finance Minister here, says a news statement. They discussed with the Minister, their existing development-specific attainments in South Africa in the discipline of geological and mineral related discoveries.

Paul Main is the Chief Executive of Arcadia Energy and Mining Limited, headquartered in London. The South African Group has over twenty mining related projects all over the world, having simultaneous expertise in oil exploration. The Group operates from London and discussed with the Minister, its institutional concepts and planning to offer investment in Pakistans mining resources located in Punjab and Sindh.

Syed Naveed Qamar lauded the investment-based entrepreneurial interest of the South African delegates and assured to take up the matter with concerned government stakeholders, to institutionalise their investment potential. He appreciated the technical know-how and expertise of the visiting South African Arcadia Energy and Mining Limited, and its mining-based investment potential in Pakistan.

South Africa shows interest in coal mining


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## Neo

* Metrics adopted in Pakistan ​* 
Wednesday, May 28, 2008

KARACHI: New Horizons Pakistan has now become the only learning centre in Pakistan that has adopted MTM or Metrics that Matter, an international evaluation system.

In the MTM system, the participants can evaluate the course, the trainer and the training facility by accessing the Internet based evaluation format. It results in a comprehensive evaluation report that also includes a trainer and training facility profile, based on the evaluation filled by the respective participants, spokesperson said.

Metrics that Matter technology is an independent evaluation service that helps our client organisations continuously measure the satisfaction, effectiveness, impact, business results & ROI on learning investments, said by Enam-Ur-Rehman, PMP & Director of New Horizons Pakistan. 

He added that the MTM global technology is based on independent, credible and industry accepted measurement methodologies which have been adopted by numerous industry leaders and is recognised as a standard in corporate, public sector, and commercial human capital practices like Roosevelt University, Harvard University, British Telecom, Caterpillar, P&G, US Air force, US Army & New Horizons to name a few.

Metrics adopted in Pakistan


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## Neo

*Realistic pricing mechanism needed: WB​*
ISLAMABAD: World Bank (WB) stressed for resource mobilization, revenue generation and adopting realistic pricing mechanism to overcome economic difficulties faced by the country, official sources told Daily Times Tuesday. 

Vice president, WB South Asian Region, Praful C Patel, along with his team members called on Syed Naveed Qamar, Finance Minister Tuesday. 

He discussed with Finance Minister, matters relating to current global and region specific economic issues. Finance Minister briefed WB team on latest economic issues confronting Government of Pakistan against the backdrop of pre-budget preparations during FY 2008-09. GoPs economic priorities and broad policy framework were impressed upon WB vice president. 

Patel presented a detailed overview of global economic conditions focusing South Asian Region against emerging world economic realities. Discussion also focused on GoPs economic reforms agenda that primarily takes into account common mans economic concerns who ultimately is the recipient of the impact of GoPs multi-sectoral fiscal measures.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Abandoning Kalabagh Dam against national interest, says Elahi​*
LAHORE: Former Punjab chief minister Chaudhry Pervaiz Elahi on Tuesday criticised the government for announcing the abandonment of the Kalabagh Dam (KBD) project without having any public mandate in this regard. Talking to journalists, he termed the initiative totally against the national interest as it wiped out all the previous governments efforts to develop a countrywide consensus on the controversial issue.

He said the government had made the announcement only to divert masses attention from the basic problems of price-hike, unemployment and deteriorating law and order situation in the country. 

Elahi said, On the pretext of disagreement by some politicians of small provinces, the champions of democracy have abandoned the important national project without tabling it on the floor of the National Assembly for debate. With the abandoning of the KBD, millions of acres of barren lands in NWFP and Sindh would not be irrigated and the country would also be deprived of the opportunity to generate 4,500 megawatts of low-cost electricity, he said. The decision by the government has not only rejected the experts opinion on the water reservoir but also wasted billions of rupees spent on feasibility reports and the KBD site, he asserted.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Gwadar port cant be operational before 2011​*
KARACHI: Gwadar port cannot be made operational before 2011 as it lacks required infrastructure, communication network and utilities, Minister for Ports and Shipping Qamaruzzaman Kaira said on Tuesday. 

I am shocked to learn that the port has no proper road linkages. No rail network. Even electricity is not there, he told reporters after inaugurating an overpass on MA Jinnah Road. 

He said many cases of embezzlement, corruption and misuse of authority were reported in the Gwadar port, and other allied projects. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Editorial: Goodbye, Kalabagh Dam!​*
The Federal Water and Power Minister, Raja Pervez Ashraf, has finally said what most governments in the past were unwilling to utter. On Monday he told the press that the government had dropped the Kalabagh Dam project forever, as it is a controversial issue among the provinces. The old line was: we will build it when all the provinces agree. It was actually three versus one because only Punjab wants it. The other three provinces have provincial assembly resolutions against its construction.

Given the political situation in 2008, the fate of Kalabagh Dam was sealed anyway. The ruling PPP has its base in Sindh where opposition to the dam is a part of Sindhi nationalism. It is in coalition with ANP in Islamabad and Peshawar, and ANP says it will, if necessary, physically oppose the construction of the dam. The PPP is also determined to smoke the peace pipe in Balochistan which supports the NWFP and Sindh on the issue. Presumably, it would have been impolitic to assert the old line  we will build it when the provinces agree  as it would have raised the level of bad faith all around.

No one in the past with the best of opportunities and convenient political allies in the recalcitrant provinces could make anyone agree to the dam. President Pervez Musharraf was the best man to try because of his support within the MQM and a very pliant Sindh chief minister in the person of Arab Ghulam Raheem, but both shied away from the topic as they thought they could not survive politically after agreeing to it. Similarly, the MMA clerical government in Peshawar was secretly willing to have the dam but was most reluctant to risk offending the Pakhtun majority in the province.

Punjab is still interested in the Kalabagh Dam, and experts inside Pakistan and at the World Bank support it when it says that the fears of the other provinces are not founded in fact. But the opponents dont want to hear any expert view. The Sindhi leader Rasul Baksh Paleejo brings his cartload of research material to prove that the dam is harmful whenever he is invited to a TV programme to discuss the subject. Also, the world outside is increasingly wary of large dams because of the ecological damage they do to the environment and the suffering they impose on communities they displace. In India, for example, where big dams are planned, civil society movements are afoot to oppose them.

The verdict is that dams, while they produce cheap electricity and store water for irrigation, tend to silt up and become useless with the passage of time. Today all the big dams in Pakistan including Tarbela and Mangla are silted up by 30 percent, and the Mangla wall is to be raised to make it useful for a few more years. The Kalabagh Dam was proposed to be built on the Indus 15 miles north of Kalabagh in Punjab with a height of 260 feet and a length of 11,000 feet with a storage capacity of 6.1 MAF. It was to generate 11,750 kilowatt-hours of cheap electricity and irrigate 2.4 million additional acres. Its cost in 2000 was $10 billion. It was to take 10 to 15 years in construction.

Pakistan is externally under embargo for building nuclear power plants because it didnt sign the NPT; now it is under a worse internal embargo on the building of dams. Last week, the nationalist Jiay Sindh party demonstrated in Sindh saying it would oppose even the Basha Dam which is not rejected by ANP so far. Basha is a long way off and will take much longer than the gas coming through in the Iran-Pakistan-India pipeline. But one cant blame people who support the Kalabagh Dam because Pakistan really has no way out of its energy crunch.

The political well-being of the federation stands in the way of any agreement on distribution of our waters. The Indus Basin Treaty between India and Pakistan of 1960 was possible only after Pakistan recognised that an absence of treaty would favour the upper riparian India. As separate states, Sindh and Punjab  like India and Pakistan  would have to have a waters treaty, inclusive of upriver dams, or Sindh would go dry. The NWFP would be forced to go into a treaty with Punjab because of the sheer inequality of power, like India and upper riparian Nepal. But as a federation, Pakistan must pay heed to the increasingly hostile anti-dam sentiment among the federating units.

Pakistan can build the Basha Dam, but in view of the energy emergency it can devolve its policy and focus on smaller local dams. There is no doubt that after the abandonment of the Kalabagh Dam, the Iranian gas pipeline project has assumed a crucial make-or-break significance for Pakistan. But this requires a smoother equation with India and more strenuous diplomacy in Tehran and Washington. The needs are all urgent in the short term today; the feasibilities for big dams can be go on but there is a need to go for dams that can be completed in five years. *

Daily Times - Leading News Resource of Pakistan


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## Neo

*IMF suggests government to bring fiscal deficit down to 6.5 percent ​* 
ISLAMABAD (May 28 2008): The International Monetary Fund (IMF) has suggested Pakistan to bring fiscal deficit down to 6.5 percent by June 30, besides broadening the base for substantial increase in revenue by taxing the new areas in the upcoming budget.

Sources said the fund also recommended to the policymakers to make a shift to do away with the policy of relying on borrowing for expenditure and instead generate more revenue to help the economy bear shock of the globally high oil prices. A mission of the fund gave the recipe to the policy-makers in Islamabad for overcoming the financial woes after a detailed review of the economy.

The mission is in Islamabad for the last 10 days for a review of Pakistan's economy and gave its suggestions to the policymakers to overcome the weaknesses. The mission held a number of meetings with the government economic managers during its stay. It suggested a complete overhauling of the privatisation programme to off-load public sector entities and get out of businesses as early as possible and leave the job for the private sector.

The government economic team apprised the mission about the measures being taken to reduce the impact of the rising oil prices and a global economic crisis on the economy. The mission was informed that Pakistan's economy was doing good despite some setbacks such as high oil prices and some untoward incidents in the second half of 2007.

The mission was also told that the government was following a conscious approach to achieve the target of fiscal deficit without allowing inflation to increase to hurt the pro poor section of the society.

The sector wise presentations given to the mission indicated that Pakistan's economy was not doing bad in the given international scenario when the oil prices were all time high and making difficult for the weak economies to absorb the shock. They also showed that Pakistan was comfortable enough on the balance of payments issues as its inflows were showing healthy trend against the outflows till the end of the current fiscal year.

Other factors which will help Pakistan make good at the end of the current fiscal year on economic front were good inflow of remittances and income from non-traditional sources such as bonds and global depository receipts (GDRs) floated by major Pakistani concerns in 2007-08.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Rs 365 million Swiss grant for NWFP ​* 
PESHAWAR (May 28 2008): The NWFP government, Swiss Development Cooperation (SDC) and Inter-Cooperation (IC) has signed a memorandum of understanding (MoU) to forge partnership for implementation of livelihood programme, aimed at improving the living standard of the people in five rain-fed districts of the province and Kurram Agency.

Swiss Ambassador to Pakistan Markus Peter, NWFP Senior Minister for Planning and Development Rahimdad Khan, Minister for Population Welfare Salim Khan, Additional Chief Secretary Javed Iqbal and administrative heads of various government departments attended the signing ceremony at a local here. Planning and Development (P&D) Department Secretary Mohammad Ikram Khan, SDC Country Director Pius Rohner and Esther Haldimann of Inter-Cooperation signed the MoU.

The P&D Department and Inter-Cooperation will jointly implement the programme, spanning over six years. As per the MoU, the Swiss government will provide a grant of Rs 365 millions for phase-1 of the programme extended over three years.

Speaking on the occasion, Senior NWFP Minister Rahimdad Khan said that the Frontier province was faced with huge challenges because of its geographical location, repercussions of situation on its western border, militancy and extremism, low investment in human capital and a weak private sector that contributed to make it the poorest province of Pakistan.

He said that poverty in NWFP was widespread as 37 percent population in the rural areas was living below the poverty line. The devastating quake of October 8, 2005, he said, caused tremendous losses both in the shape of life and property in five districts of the province where the government had initiated rebuilding the damaged schools, hospitals and other infrastructure facilities that was putting additional burden on the resources of the province.

He expressed the hope that they would accomplish this task with the help of Almighty Allah and support from the friendly countries like the Swiss government. He further said that Frontier province had been richly endowed with sincere manpower, diverse climate, natural resources and scenic beauty that, if utilised properly, could help in bringing prosperity to the province and its people.

He said that development of Frontier province was vital for the stability of the region due to its strategic location. He said the livelihoods programme would improve the quality of life and reduce vulnerability of marginalised communities in the districts of Chital, Buner, Karak, Swat, DI Khan and Kurram Agency. He said besides promotion of social sectors, the sector of agriculture too was at the top of the provincial government's development programme, as this would help the province achieve the goal of self-sufficiency in food.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Mishandled' Gwadar Port project to be investigated: Kaira ​* 
KARACHI (May 28 2008): Federal Minister for Port and Shipping Qamaruzzaman Kaira on Tuesday said that the government would probe into, what he said mishandled Gwadar Port project. "Deplorably, Gwadar Port is a mishandled issue as it is still lacking the connectivity network...there is no electricity there, rail route, roads nothing," Kaira told mediapersons at the inaugural ceremony of Rs 150 million KPT Overpass here at Karachi Port on Tuesday.

"Transparency is lacking in the Gwadar Port project and proper probe would be carried out," he added. To a question regarding dispute over land between the Karachi Port Trust (KPT) and Sindh government the new federal minister said he had discussed the matter with Chief Minister Qaim Ali Shah and a meeting would be held within next few days to resolve the issue.

On withdrawal of army officers from KPT, he said the prime minister and the army chief had issued directives and the pullout process would be completed gradually. When asked if the PPP-led government would let the foreign forces to conduct a search operation inside Pakistan, Kaira said such news had no authenticity adding, "this has been our stand that no foreign forces would ever be allowed in Pakistan."

Earlier, addressing the inauguration ceremony, which was attended by secretary ports and shipping, chairmen Port Qasim Authority (PQA) and Gwadar Port Authority, government officials and a large number of representatives from shipping circles, Kaira lauded the KPT and its chairman for developing Karachi into economic hub. But despite all these developments, he said, we have to move forward as we still have the capacity to do a lot.

Hailing the KPT for fulfilling its social responsibilities like construction of KPT Overpass, the minister urged the Trust to allocate some budget for the development of poor fishermen. "The areas, where they live, need development in terms of infrastructure and skill development... educate their children and equip them with technical skills," said Kaira amid rousing applause from the workers section of the hall.

He said that government's target would be the betterment of labour and common man but the latter would also have to do hard work and show responsible behaviour. Earlier, the KPT chairman briefing the gathering on different pioneering said inauguration of the KPT Overpass had marked the completion of KPT project Development and Rehabilitation of M. A Jinnah Road (from Jinnah Bridge to Keamari Boat Basin).

The chairman said the KPT had given preference to the logistic network, which was a prerequisite for the ports to handle transhipment cargo for the landlocked Central Asian countries bordering Pakistan. The 700-meters long Overpass, Hayat said, would provide direct linkage to heavy traffic entering the port area and trailers would no more form queues and block traffic movement on M A Jinnah Road.

He said trailers from Timber Pond area would ascend the Overpass, which has a designed life span of 50 years, and enter the port area. Earlier, the federal minister visited the KPT Head Office and was briefed by the chairmen KPT, PQA, Gwadar Port Authority and Pakistan National Shipping Corporation. Later, the minister and Chairman KPT unveiled the plaque to formally open the overpass for traffic.

APP adds: Minister for Ports and Shipping, Qamar-uz-zaman Kaira has said Gwadar Port cannot be operational before the year 2011 as it lacks required infrastructure and communication network and utilities.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*India dragging its feet on IPI project: Qureshi ​*
ISLAMABAD (May 28 2008): Pakistan believes that India is "dragging its feet" on the Iran-Pakistan-India (IPI) gas pipeline, and has told External Affairs Minister Pranab Mukherjee that if New Delhi continues to hesitate, Islamabad will soon go ahead and sign a deal with Iran.

In an exclusive interview in Islamabad, the first to an Indian newspaper after the formation of the newly elected government in Pakistan, Foreign Minister Makhdoom Shah Mahmood Qureshi said he hoped to get a reply on this issue when he visits New Delhi in June. Qureshi also said Pakistan was ready and willing to "incorporate India's concerns" on Siachen and that he had given a package proposal on this issue to Pranab Mukherjee during his last week's visit to Islamabad.

With the newly elected government-led by the Pakistan People's Party, Qureshi said the time was ripe for new opportunities. That was why Prime Minister Manmohan Singh should visit Pakistan this year, he added. "If he (the Prime Minister) wants to leave his name in history, he must come. If he misses this opportunity, it will be sad for all of us," Qureshi said.

On the Siachen issue, he said: "I personally feel the Indian political leadership understands the significance of what I am saying. I am told it is the Indian Army that is a bit reluctant on the Siachen issue." The dark hint, that there are grave differences between the Indian political leadership and the army on the Siachen issue, is lost on no one in Pakistan. Pakistani leaders have often said, off the record, that the Indian Army is preventing a deal on Siachen by invoking fears of a Pakistani reoccupation of the heights once the Indian troops come down.

But, for the first time in recent years, a senior Pakistani leader has come on record and stated the unspoken. Time and again during the interview, Qureshi pointed out that a buoyant economic relationship could significantly help improve the political atmosphere, and vice versa, and that the resolution of the Siachen issue was one such matter.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Musharraf seeks WB support ​* 
Thursday, May 29, 2008

RAWALPINDI: Underscoring the need for hydro-power projects and storage dams in the country, President Pervez Musharraf on Wednesday looked forward to the support from World Bank to help Pakistan achieve its priorities of overcoming energy, water and food shortages.

The President was talking to Praful C Patel, Vice President, World Bank who called on him here at Presidential Camp Office. Syed Naveed Qamar, Minister for Finance and Economic Affairs was also present in the meeting.

He also highlighted the need for developing infrastructure links between China, Pakistan and Central Asian Republics. The President reiterated that one of the major causes for South Asia not being able to exploit the benefits of regional cooperation is the non-resolution of the Kashmir issue.

President Musharraf appreciated the role of World Bank in Pakistans socio-economic development and its support to help invest in infrastructure and social sectors, particularly, health and education. He lauded the role of Patel, in particular, during his five year tenure as Vice President for South Asia.

The Vice President World Bank congratulated the President for the economic progress achieved by Pakistan under his leadership. He applauded the impressive growth of 7.5 per cent maintained by Pakistan on average during the past 5 years under a difficult international scenario. He appreciated the commitment of the present economic team and was optimistic that the economy will once again continue its upward path.

Patel thanked the President for continued support and dialogue with the World Bank during his tenure. He expressed his confidence in the economic fundamentals of Pakistan, whereby the current dip could be followed by the required growth after taking corrective measures towards the macro economic condition.

Patel affirmed that the World Bank would continue to be a partner in the development of Pakistan and would provide necessary assistance in key areas like water and power, infrastructure, education and other social sectors and poverty alleviation.

WB team meets Zardari: Pakistan Peoples Party Co-Chairman Asif Ali Zardari said on Wednesday that his party will continue to work with multilateral institutions to introduce economic reforms in the country, but all such steps have to be people-friendly.

He was talking to a delegation of World Bank that called on him here. The delegation was led by the Banks Vice President Praful C Patel, comprised Yusuopha Crookes, Country Director Pakistan, Said Habsy, Operation Advisor for Pakistan and Robert Floyd, Country Coordinator for Pakistan.

Asif Zardari urged the World Bank officials to consider increased funding for Pakistan for investment into projects like canal lining that can be helpful for water conservation and small dams, so that irrigation can be introduced for larger areas of the country. He stressed that the benefits of such projects should reach wider rural segments of the society.

Musharraf seeks WB support


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## Neo

*LPG attracts $200m investment since 2000 ​* 
ISLAMABAD: Liquefied Petroleum Gas (LPG) has shown a tremendous growth as the increasing number of producers, importers, marketing companies and distributors and shows and has so far attracted an investment of $200 million since 2000 in the country. 

More investments are expected to continue in future, official sources in the Ministry of Petroleum and Natural Resources said on Wednesday.

LPG is a clean, efficient and environmentally-friendly fuel with a wide range of applications in commercial, industries and households as a substitute for natural gas.

The widespread use of LPG in the auto sector will soften the rude impact of rising prices of petroleum products. 

The ministry is also looking forward to additional investments in setting up of dedicated LPG auto gas stations and LPG production plants.

LPG availability is confined to urban centres, despite the governments clear objectives and directives to supply mandatory quota to the northern hilly areas, AJK, interior Sindh, Balochistan and FATA. 

The local production of LPG can be increased by another 900 metric tonne per day if the development of the dormant fields is fast tracked by the relevant exploration and production companies.

According to an estimate, about 50 per cent urban households are using LPG in neighbouring India. 

In Pakistan, it has become a fuel of choice but it contribute less than one per cent to total energy supplies.

The indigenous production of LPG is about 1,700 metric tonnes per day and there is potential to produce additional 900 metric tonnes per day. The number of distributors has reached to 7,000 across the country.

LPG attracts $200m investment since 2000


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## Neo

*Iran sees gas pipeline deal by mid-year​*
NEW DELHI, May 28: Irans ambassador to New Delhi said Tehran hopes to finalise a gas pipeline deal with India and Pakistan by mid-year, in an interview released on Wednesday.

The 7.5-billion-dollar project which aims to transport natural gas from Iranian oilfields to Pakistan and India was discussed during a visit to India last month Iranian by President Mahmoud Ahmadinejad.

It is hoped the trilateral agreement will be signed by the middle of summer this year, Irans ambassador to India Sayed Mahdi Nabizadeh was quoted as saying in an interview in the latest issue of Indias Hardnews magazine.

The project was first mooted in 1994 but has been stalled by a series of disputes over prices and transit fees.

After the presidents recent visits (in April) to India and Pakistan, we have witnessed positive progress regarding implementation, the envoy said.

Indian and Pakistani energy ministers met in Islamabad last month and said they had made significant progress in discussions on transit fees and were hopeful work could start next year.

Also last month, Iran and Pakistan said they had ironed out hurdles delaying the 2,600-km scheme.

India has been under pressure from the United States not to do business with Iran, viewed in Washington as a state sponsor of terrorism and seen as bent on acquiring nuclear weapons.

But India, which imports more than 70 per cent of its energy needs, has been trawling for new supplies of oil and gas while ramping up domestic production to sustain its booming economy.

This project will be the biggest economic project based on energy in the Asian region and these three important countries (India, Pakistan and Iran) will be united with each other and their economic interests will be tied up with each other, the Iranian envoy said.

Earlier this year New Delhi told the US not to interfere in its dealings with Iran after a State Department spokesman said Washington would like India to put pressure on Tehran over its nuclear programme.AFP

Iran sees gas pipeline deal by mid-year -DAWN - Business; May 29, 2008


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## Neo

*14 telecom firms get licences for AJK, NAs​*
ISLAMABAD, May 28: For the first time in the history of Pakistan, the government has opened the telecom market for fair competition in Azad Jammu and Kashmir and the Northern Areas.

In a landmark decision on Wednesday, the Pakistan Telecommunication Authority awarded licences at a price of Rs214 million to 14 private companies to operate in AJK and NA.

Licences were awarded for Long Distance International (LDI), Fixed Local Loop (FLL), Wireless Local Loop (WLL), and Class Value Added Services (CVAS) ending more than 30 years of monopoly of the state-owned special communication organisation that had been operating in AJK and NA since 1976.

Speaking at the ceremony, PTA Chairman Shahzada Alam Malik said that now fixed line licences were being awarded to private operators.

The licence fees have been kept low deliberately as the objective is not to make money, but to bring AJK and NA at par with other developed areas of the country.

The PTA chairman said that five licences for mobile phone services were already given for AJK and NAs and now mobile services are available in these areas.

Expressing his pleasure over efforts to open up telecom market for fair competition, Minister for Information Technology and KANA Qamar-uz-Zaman Kaira pledged private operators complete cooperation to ensure that people in AJK and NAs had access to telecom services at the earliest.

Elaborating on other developments in the sector, the minister said that the government was mulling over linking Pakistan with China, India, Afghanistan and Iran through fibre optic link. He was in favour of extending the deadline for SIMs registration.

Efforts were being made to introduce the e-government in the country and by next three years, at least 45 ministries, would be linked to e-government, he said.

This would help bring in efficiency, transparency, and better functioning. It would also facilitate the media as information would be available on internet, he said.

The PPP government is also looking into the issue of PTCL employees and the decision would be taken in interest of

the employees, the minister said.

Mr. Kaira expressed his pleasure that the country was opening up its space for communication purposes and more foreign direct investment was coming in.

He said the government would use the fund of the industry to provide subsidy to the people in suburbs and far-flung areas to ensure maximum coverage in the rural areas.

Later, the minister distributed 24 licences to 13 companies that included Link Direct, Wateen, Telenor, PTCL, World Call, InterWorld, Sky Telecom, Great Bear, WOL, DaleelTeq, BTC, Cybernet, and Mobilink.

The PTA would get around $1,70, 000 against the issue of these licences as initial amount. It had already paid Rs1.2 billion to AJK and NAs for 5 cellular companies licences, which were awarded to Mobilink, Telenor, Warid Telecom, Ufone in June 2006, while CMPak was awarded a licence in August 2007.

Out of the total amount, the AJK Council had got Rs927.6 million, while the NAs chief secretary was paid Rs277.1 million against the licences awarded to cell companies.

14 telecom firms get licences for AJK, NAs -DAWN - Business; May 29, 2008


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## Neo

*PC changes growth targets of LSM, services sector​*
** Services sectors enhanced growth would mean no increase in physical output​*
ISLAMABAD: In a surprising move, top bosses in the Planning Commission have changed two important growth projections of the macroeconomic framework for the next fiscal year 2008-09. 

Planning Commission has lowered the large scale manufacturing (LSM) growth target from 9 percent to 6.5 percent and increased the growth target of services sector from 6.7 percent to 7.3 percent for the next fiscal year 2008-09, a senior official told Daily Times Wednesday. 

National Economic Council (NEC), headed by Prime Minister, Syed Yousaf Raza Gilani, is scheduled to meet on June 2, 2008 and would approve Macroeconomic Framework for the next fiscal year 2008-09. 

Elaborating the impact of the increase in growth target of the services sector, the official informed that services sectors enhanced growth would mean no increase in physical out put in the country and only increase in wages and profitability in this sector. 

No increase in physical out put would also result in miss match in demand and supply and this would result in higher than projected inflation of 8 percent for the next fiscal year 2008-09. 

The official was of the view that the growth in services sector suits the mature economies and not the emerging economies like Pakistan. Although the growth in services sector in last few years helped the government to show handsome growth but also resulted in growth in demand and high inflation due to negative growth in commodity sectors. 

Emerging economy like Pakistan can only sustain its growth through continuous growth in agriculture and manufacturing sectors. These sectors not only ensure food security through availability of essential food items on affordable prices but also create job opportunities and help the country enhance its exports for foreign exchange earnings. 

The official said that lowering LSM growth would mean that real sectors like agriculture and manufacturing sectors would not grow substantially and there would be no chance of economic revival in the next fiscal year. 

Reduced LSM target also projects that current energy shortages would continue and there would be no major increase in the power availability leading to lower growth in large-scale manufacturing, he added. 

Low out put in the LSM would also impact negatively the export sector and it would not be able to perform well as it is totally dependant on availability of exportable surplus in manufacturing sector. Low production in LSM would also result in keeping trade deficit at un-sustainable level. 

Earlier, the Planning Commission had proposed to the Annual Plan Coordination Committee (APCC) meeting held on May 23-24, 2008 manufacturing sector to grow by 8.5 percent. Within the Manufacturing sector its was projected that the large-scale manufacturing to grow by 9 percent and small-scale manufacturing by 8 percent. These assumptions were based on growth in cement 23.7 percent, motor tyres 16 percent, trucks 28.5 percent, air conditioners 26 percent, petroleum products 10.4 percent and motor tubes 11.4 percent. These projections were based on an expectation that energy shortages will subside to a certain extent and export competitiveness will improve through appropriate incentives and policy measures, said the official. 

Under the macro-economic framework 2008-09 the Gross Domestic Product (GDP) growth has been targeted at 6.5 percent, while last year it was targeted as 7.2 percent and actual growth has been estimated at 5.78 percent. The proposed 6.5 percent GDP growth in fiscal year 2008-09 will be achieved by the contribution of three major sectors with growth rates of agriculture 4 percent, manufacturing 8.5 percent, and that of services sector 7.3 percent in the next fiscal year.

Daily Times - Leading News Resource of Pakistan


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## Neo

*UK-Pakistan trade relations getting stronger​*
LONDON: The outgoing Pakistan High Commissioner to the United Kingdom, Dr Maleeha Lodhi has said trade relations between the two countries were strong and strengthening day by day.

Britain and Pakistan have always enjoyed good trade relations and UK is currently its third largest trading partner, she said at a farewell reception hosted in her honour by the Pakistan-Britain Trade and Investment Forum at Asia House Tuesday evening.

She said UK enjoys 8.7 per cent share of the Pakistani market in terms of manufacturing goods exported to her country and Britain is also listed as the fourth largest investor.

Dr Lodhi reiterated that Pakistan, despite the challenges it was facing, remains ideal country for investment opportunities. She noted that presently 80 UK companies were doing business in Pakistan and Britain was her countrys largest trading partner within the European Union.

She said the government is seeking to increase investment in infrastructure and with a population of 160 million consumers, it offers ideal market for the overseas entrepreneurs.

However, Dr Lodhi said like the rest of the world, Pakistan was confronted with issues relating to finance, food and the rising cost of fuel which is impacting the national economy while enumerating both the challenges Pakistan faced as well as the opportunities it was leveraging to effect what she called a strategic turnaround.

Pakistans envoy said that sustaining poverty reduction and economic growth over the long run will be tough but it can be done. 

Dr Lodhi said Pakistans greatest economic challenge is to distribute the gains of high growth equitably to people and deprived regions through poverty alleviation, employment generation and development of human capital.

She complimented the role played by BPTIF in strengthening trade and commercial ties between the two countries and said its part had been crucial. However, she urged the forum to engage more closely with the UK-based Pakistan business community especially the small and medium enterprises. She also stressed on attracting the third generation British-Pakistanis who have excelled in the field of IT and financial services and said there exists extraordinary talent of such persons.

The outgoing envoy praised the role of the Asia House in projecting Pakistan and mentioned a number of events organised at the centre spotlighting the South Asian country. app

Daily Times - Leading News Resource of Pakistan


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## Neo

*Sindh may allocate Rs 2.5bn to improve mining practices​*
KARACHI: Sindh government has proposed to allocate Rs 2.5 billion for introducing advanced mining practices in the province, a top official told Daily Times.

Official source in the Sindh Mines and Miners Department told that the department has designed a strategy to streamline all coal-based power projects including the mining of other minerals in the province to utilise the reserves efficiently. 

The major issues related to mining operations are regularization, environmental management, financial arrangements and taxation, technical assistance for mine development, training needs, occupational health and safety. 

In order to formulate and implement policy guidelines for such operations, strong partnerships between all stakeholders namely government, private sector, host communities and non-governmental organisations are essential, official opined. 

Such partnerships would be an effective tool in looking at small scale mining operations where economic returns are far greater than the adverse effects with a balance between environment management and exploitation of non-renewable resources, official further explained.

He told that the department has suggested provincial cabinet to allocate Rs 300 million in the upcoming fiscal budget to initiate this project at the earliest in the province.

Sindh Mines and Mineral Department has also proposed cabinet to establish a training institute, specifically in the field of mechanizing, mining and coal-based power generation in collaboration with foreign institutions.

In this regard, department has designed various schemes and sought allocation of Rs 600 million for this project aimed at generating high skilled manpower for mining of minerals and coal-based power projects.

There is a need of skilled workforce for coal based power generating projects in various fields and the required professionals do not exist in Sindh as well as other provinces of the country, he pointed out.

He added that the country should rely on self-sufficiency in human capital and provide job opportunities to the citizen in specialised fields rather than hiring foreing professionals in coal and mining field. 

According to official, the department has proposed Rs 200 million for the establishment of training institution in the next budget. 

All the proposed projects have planned to accomplish the target in next three to five years and would provide meaningful support to the governments strategies for the development of its coal reserves in the future, he told and added that these training schemes will be supervised through Directorate General Mines and Minerals Department after formally approved by the cabinet. 

The department also seeks approval of the government to provide in-house training programmes for fresh graduates of the province in order to meet the shortage of qualified professionals and sought Rs 100 million under this project.

Daily Times - Leading News Resource of Pakistan


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## Neo

*PIA incurring Rs 1.5bn losses a month​*
** Defence secretary says privatisation of national airline can relieve burden on exchequer​*
ISLAMABAD: Pakistan International Airlines (PIA) is suffering from Rs 1.5 billion losses per month, Defence Secretary Kamran Rasool said on Wednesday.

Briefing the Senate Standing Committee on Defence and Defence Production at Parliament House, he said the government was still not considering privatising PIA, despite massive losses to the national exchequer. He stressed that privatisation was a viable option to deal with the PIA situation. Senator Nisar Memon chaired the meeting, which was attended by senators Kamran Murtaza, Naeem Hussain Chattha, Saadia Abbasi and Asif Jatoi.

In response to Rasools concerns, PIA Managing Director (MD) Ijaz Haroon told the committee that a business plan was being prepared that would allow the national airline to break even by 2010. He said the number of directors had been reduced from 12 to eight, while the number of general managers had been brought down to 47 from 63. Contract employees hired by the previous administration have also been sacked, he added.

Senator Memon ordered the PIA administration to formulate a written plan to regenerate PIAs finances by June 30, saying they should present the same to the committee during a meeting scheduled for the end of July. He also asked the PIA MD to present a report on the salaries and perks of former PIA chairmen. 

Senator Jatoi, meanwhile, raised several technical issues dealing with PIAs service quality. Haroon assured him that PIA was working hard to provide quality service to its customer, and said PIA had requested the Information Ministry to allow them to broadcast Indian songs and movies during flights to accommodate customers.

During proceedings the PIA MD informed the committee that airfares for Haj and Umra would be increased due to a boost in fuel prices. He said a comparative study of Haj and Umra fares from India, Bangladesh and Malaysia had been conducted, adding that Pakistans fares would be lower than theirs.

Haroon also told the committee that the Fokker aircraft crash in Multan in 2006 was caused by a technical fault in one of the engines, which had caught fire. He said the crewmembers had forgotten to raise the landing gear while trying to put out the fire. 

The two factors had resulted in the disaster. He said the families of the victims of the crash had been compensated with Rs 2 million each, adding that four had refused to take compensation and had taken the case to court. The proceedings were ongoing, he added.

Senator Memon, as chairman, took strong exception to the absence of the Defence minister and PIA Chairman Chaudhry Ahmad Mukhtar, who had promised to appear before the committee and had demanded the postponement of the meeting schedule in April. 

He said that the minister, who is also an ex-officio member of the committee, should explain in writing why he did not attend the proceedings, APP reported.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Stocks 4.4 percent down on rumour that Musharraf has quit ​*
KARACHI (May 29 2008): Rumours about President Musharraf's "resignation" and some brokers' inability to address margin calls on Wednesday led to cause aggressive selling on Karachi Stock Exchange where KSE-100 index witnessed a heavy decline of 567.27 points, closing at 12,254.98 points level from Tuesday's 12,822.25 points.

The KSE-30 index lost 749.35 points and settled at 14,395.11 points level. The market witnessed some buying in the initial hours and the index did make a visit to the positive territory to hit 12,926.26 points intra-day high level, up by 104 points. However, it could not continue this positive trend due to panic selling, which pushed the index into negative zone to reach 12,231.53 points intra-day low level, down by 590.72 points.

Trading remained thin and the ready market volume declined to 187.807 million shares as compared to 263.767 million shares traded a day earlier. The futures market turnover decreased to 56.187 million shares against 83.882 million shares of Tuesday.

The overall market capitalisation declined by Rs 170 billion to Rs 3.783 trillion. Trading took place in 359 scrips, out of which 292 scrips closed in negative and only 56 scrips closed positive while the value of 11 scrips remained unchanged. NIB Bank was the overall volume leader of the day with 10.021 million shares however lost Rs 1.00 to close at Rs 12.00. Bank Al Falah and NBP declined by Rs 2.37 and Rs 8.48 to close at Rs 45.13 and Rs 161.27 respectively.

TRG Pakistan decreased by Rs 0.80 to close at Rs 6.65. OGDC lost Rs 6.48 to close at Rs 123.27. Fauji Fertiliser Bin Qasim declined by Rs 1.70 to close at Rs 32.43. Arif Habib Sec closed at Rs 156.28, down by Rs 8.22. Pak Reinsurance lost Rs 4.52 to close at Rs 85.92. Bosicor Pakistan decreased by Rs 0.93 to close at Rs 13.05. Fauji Cement declined by Rs 0.99 to close at Rs 10.20.

Hinopak Motor and Al Ghazi Tractor were the highest gainers and gained Rs 8.00 and Rs 7.51 to close at Rs 548.00 and Rs 255.00 respectively while AKD Capital Limited and Nestle Pakistan were the highest losers and lost Rs 53.34 and Rs 50.00 to close at Rs 1013.65 to close at Rs 1350.00 respectively.

Hasnain Asghar Ali at Aziz Fidahusein Securities said that the value buying did emerge initially and the index made a visit to the positive territory. However, the recent statements by US senators admitting some mistakes certainly gave birth to rumours about President Musharraf's resignation.

Such rumours certainly invited aggressive selling. Intensity increased following rumours that inability of some brokers to address to the margin calls either by their brokers or bankers led to forced selling by the respective financers.

The hefty selling forced the buyers to pull back their buying limits. Absence of buyers in no time forced massive erosion. Liquidity crunch forced the leverage players to stay on sidelines and at on time, from there, almost all main board stocks hit the bottom lock.

With the government's stance still unclear on capital gain tax adding to the misery were the conflicting statements on the issues hardly related to the economic and social health of the citizens. This left the participants with no option but to wait. Low local confidence was shattered after the rupee left its ground and the reserves started depleting.

But even after all these hue and cry the authorities still have other issues on priority. "Technically, although index continues to stay in an oversold region, we desperately need something quite concrete to trigger short covering in order to allow index to stage a come back and determine a bottom", he added.

Reuters add: Shares fell nearly 4.5 percent to close at a nine-month low on Wednesday as investors nervous about the political and economic outlook sold their holdings, dealers said. The KSE-index has lost 13 percent since the beginning of the year and is 22 percent lower than a life high set on April 21.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Defence secretary hints at privatisation of PIA ​* 
ISLAMABAD (May 29 2008): The government has no immediate plans to privatise loss-making Pakistan International Airline (PIA), but it can happen if the trend continues, a top official says, triggering more doubts about the future of the national flag carrier.

"There is no such thing on the agenda right now, but the bottom line is that all options are open," Defence Secretary Kamran Rasool told a Senate panel here on Wednesday. "The PIA is making heavy losses. They are huge. I am not sure how long the government can support it," said the top boss of the Defence Ministry that also controls the airline.

The statement came after the new PIA management told the committee that its accumulative losses had so far surged to Rs 42 billion. PIA Managing Director Captain Muhammad Ijaz Haroon said the PIA had been making Rs 1.5 billion loss a month during the ongoing financial year.

Rasool said the sell-off of the PIA had been discussed in some high level meetings, including that of the Economic Coordination Committee (ECC) of the cabinet during the previous regime. He did not, however, explain why the plan could not get through these decision-making bodies at the time when the PIA losses were rising unbridled.

Ijaz Haroon did admit that transforming the airline into a profitable entity was an uphill task, but hoped the measures the new management had taken recently would help reduce losses to at least half of the current level.

These steps, he explained, included cutting jobs at senior level positions, making such changes in flight schedules that they helped save fuel and some other actions. But, the top manager said, he and his team became helpless when it came to high international oil price that accounted for close to half of the airline expenditures.

PREFERENCE TO PIA The PIA Managing Director complained that an official body, tasked to control the flow of traffic at airports, did not prefer the national flag carrier and instead give foreign airlines, especially from the Gulf opportunities to steal much of the business.

Such favours, he said, were given to Gulf and Emirates airlines in the form of letting them land at airports in all major cities at the time best suited to them. The PIA was often denied landing at airports most of the time, Haroon added.

Then committee decided to summon the Civil Aviation Authority (CAA) authorities for the next meeting to review the policy. The panel also recommended to the government to review the policy of selecting members for PIA board of directors and include parliamentarians and experts in it. Earlier, the meeting regretted the absence of Defence Minister Ahmed Mukhtar, and asked him to explain the reason in writing.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Budget size to be increased by 15 percent: projections presented to prime minister ​* 
ISLAMABAD (May 29 2008): In the first high level meeting on Wednesday, the government economic managers presented to Prime Minister, Syed Yusuf Raza Gilani, firm-up budgetary projections showing 15 percent increase in budget size and revenue collection to take them to Rs 2.25 trillion from Rs 1.874 trillion and Rs 1.12 trillion against revised target of Rs 990 billion respectively for 2008-09.

The meeting was informed that fiscal deficit target for the next year would be 4.9 percent against 6.5 percent of 2007-08. Sources said the budget makers gave the Prime Minister a detailed presentation on next year's budget to apprise him of the work done so far and take his advice in finalising them for the National Economic Council (NEC) for approval. Before taking the budgetary projections to the Prime Minister, the Economic Advisory Council (EAD) gave its view-point on it in a meeting chaired by finance minister, Syed Naveed Qamar.

The EAC proposed that the federal government should make some structural changes to make the provinces active in generating revenue from potential areas, besides focusing on tapping the agriculture sector potential to generate more revenue in 2008-09 to make more funds available for the developmental projects.

It also suggested to remove deemed duty with a fixed profit margin for the refineries to project the interest of all petroleum sector stakeholders.

The council suggested the government to bring real estate business in the tax net by imposing 4 to 5 times tax on enhanced value. It was also for imposing capital gain tax on share trading.

This is for the first time that the issue of taxing real estate and share trading is being given due consideration. It's objective would be to broaden tax base and help the FBR get ambitious projected revenue collection target.

The IMF and World Bank had in separate meetings with the government officials held in Islamabad during the last one week or so asked to bring the real estate business and share trading into tax net to generate more revenue and cut down fiscal deficit down to meet the target. These two international donors want Pakistan to bring fiscal deficit down to 4.2 or 4.3 percent by the end of 2008-09.

The Public Sector Development Programme (PSDP) size could not be finalised due to controversial views of the Ministry of Finance (MoF) and Planning Commission. These two key government departments were told that the controversy over PSDP size will now be sorted out by the Prime Minister probably in a couple of days and they will be informed accordingly.

The Prime Minister asked the budget makers to provide relief to the poorest of the poor who are facing back breaking hardship due to high food inflation and shortage of power and other essential goods is the real objective of the elected government. He said that the government is committed to making a sizeable allocation in the budget for direct income support to the poorest and vulnerable groups.

The government is likely to link availability of research and development (R&D) funds with value addition to make this facility available for practically active parties.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Siemens offers to improve infrastructure in Sindh ​*
KARACHI (May 29 2008): Siemens Pakistan Engineering has offered to work closely with Sindh government for betterment of infrastructure. The offer was made by Siemens Pakistan Managing Director Sohail Wajahat Siddiqui during a visit by Sindh Industries Minister Rauf Siddiqui.

A statement on Wednesday said that the Minister was given a briefing on the capabilities of Siemens. Later, Rauf went round the industrial complex of Siemens Pakistan. The Minister said that he was impressed by the capabilities and solutions Siemens has to offer. He further said that the government would make full use of these for the betterment of the people.

Sohail said that Siemens was offering answers in the fields of healthcare, energy and industry with special emphasis on providing one-window solutions for mega cities. He said that Siemens has been in the subcontinent since 1860 and is well aware of the requirements in this part of the world. He also offered to work closely with the government for the betterment of the infrastructure of the province.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Australia pledges $8.5 million for WFP in Fata and Balochistan ​* 
PESHAWAR (May 29 2008): The government of Australia will provide US $8.5 million to World Food Programme (WFP) in support of its programme in Federally-Administered Tribal Area (Fata) of NWFP and Balochistan. In this connection, a memorandum of understanding (MoU) was signed between the Australian High Commission and WFP Country Representative here on Wednesday in a ceremony at 6the Governor's House.

NWFP Governor Owais Ahmad Ghani chaired the ceremony. Australian High Commissioner Ms Zorica McCarthy and WFP Representative Wolfgang Herbinger signed the memorandum. Fata Additional Chief Secretary Habibullah Khan, Secretary to Governor Arbab Muhammad Arif and Director Projects Fata Dr Fakhr-e-Alam also attended the ceremony besides WFP officials.

Speaking on the occasion, the governor appreciated the generous support and help from the Australian government for the WFP programs in Fata, saying that it would directly benefit the children and poor families in tribal areas. "The situation in tribal area is such that needs a lot of support from the global community and we are very appreciative of this support", he added.

The governor particularly thanked the Australian government for its participation in the WFP program in Fata and assured that Pakistan will continue its role in improving the security environment in the region and the globe.

Australian envoy Ms Zorica McCarthy said that the Australian government accords high priority to both meeting humanitarian needs and supporting the Government of Pakistan, and is pleased to respond to an urgent request from the World Food Programme and the Government of Pakistan. The border areas, she said, have suffered from years of insecurity and lack of development opportunities.

"Enhancing economic development opportunities and improving access to quality health and education services is crucial to reversing this situation," said Ms McCarthy. WFP Pakistan Country Director Wolfgang Herbinger thanked the government of Australia for the generous support to the programmes in Fata and Balochistan. "With this contribution of Australia, the WFP will be able to purchase over 5,000 tonnes of nutritious food for poor people living in these areas," said the representative of the WFP.

Balochistan and Fata are amongst the most impoverished and food-insecured regions of Pakistan. The decline in rainfall over the past decade has reduced agricultural income and employment opportunities. This contribution will help address severe food shortages and improve access to health and education services and livelihood opportunities in these areas. The WFP has started its two-year programme in Fata and parts of Balochistan.

The project will assist tens of thousands of poor parents through provision of a can of edible oil for each month their children attend primary school. Food incentives will also be used to encourage participation in pre-natal and primary health care activities while infants and nursing mothers from food insecure households will be provided with nutritious blended foods.

Australia will provide an estimated Aus. $25 million in development assistance to Pakistan in 2007-08 and plans to significantly increase its aid program in future years. WFP's operations in Fata and Balochistan have also received generous donations from the Government of Canada in cash and the Government of Pakistan in kind.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*LPG price up by Rs15 to 20 per cylinder​*
KARACHI: Liquefied Petroleum Gas (LPG) prices have registered an increase of Rs15 to Rs20 per cylinder. 

Chairman LPG Distributors Association, Hadi Khan told Geo News on Thursday that the new per kilogram price of LPG will go up by Rs1.50 to Rs20.

He said the LPG producers had withdrawn Rs3000 to Rs4000 per tonne rebate they allowed to the marketing companies. 

LPG price up by Rs15 to 20 per cylinder - GEO.tv


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## sohailbutt

*Foreign exchange reserves down by $373.4 million ​*
KARACHI: The declining trend of foreign exchange reserves continued during the last week with reserves registering a decrease of 373.4 million dollars.

The foreign exchange reserves stood at 11.51 billion dollars after the above decline, according to State Bank of Pakistan.

SBP holds 9.61 billion dollars while commercial banks 2.45 billion dollars.

The countrys foreign reserves are witnessing decrease because of soaring international oil prices, said economic experts. 

Foreign exchange reserves down by $373.4 million - GEO.tv


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## sohailbutt

*KSE Board of directors meet Zardari​*
KARACHI: A delegation of members of the Karachi Stock Exchanges Board of directors had held a meeting with Pakistan Peoples Party co-chairman Asif Ali Zardari here.

During the meeting, measures were discussed so as to contain the bearish trend of KSE, increase investors confidence and tax regulations. 

KSE Board of directors meet Zardari - GEO.tv


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## Neo

*Mismanagement cause of power crisis ​* 
*Ex-WAPDA chief says IPPs producing below capacity​*
Friday, May 30, 2008

LAHORE: Gross mismanagement of WAPDA affairs has caused power shortage as is evident from current electricity production of 11,000 megawatts against installed generation capacity of 18,000MW and the demand for 15,000MW.

Former WAPDA chairman Lt-Gen (Retd) Zulfiqar Khan stated this during a panel interview with The News and Daily Jang.

He said independent power producers had an installed electricity generation capacity of 6,500MW while they were supplying 4,000-5,000MW to the Water and Power Development Authority (WAPDA).

Similarly, he added WAPDAs thermal units with an installed capacity of 5,000MW produced only 2,500-2,700MW of electricity daily. He mentioned that when he was WAPDA chairman the production from its thermal units was more than 3,700MW.

He said the hydro-electric generation capacity was 6,500MW, out of which only 4,000MW were being generated, but added lower hydropower production was understandable as it was linked to water released from reservoirs.

He claimed the IPPs were not producing electricity to their full capacity as they were not being paid to cover even the cost of fuel they required for their generators.

WAPDAs financial woes, he said, were due to its inability to recover dues from influential quarters. WAPDA dues have exceeded Rs130 billion, he said and claimed when he left WAPDA it had a positive balance of Rs13 billion. The only way to recover dues was to cut power supply to defaulters, he suggested.

He said the cost of electricity production had increased because the country was dependent on imported furnace oil whose prices had skyrocketed. 

About the potential of Thar coal, he said it had not been exploited during the last five years, adding coal-based power projects or hydro-electric projects were the only viable solution to the ever-increasing energy needs of the country.

He deplored that all projects launched under Water Vision 2000 had been unduly delayed. Had those projects been completed on time, they would have added 1,200MW of cheap hydro power to the system.

There is a need to correct the hydro-electric and thermal generation mix. He said the cost of power generation from Mangla and Tarbela came to 10-11 paisa per unit and that of Ghazi Barotha project was Rs2.60 per unit while the fuel cost of furnace oil-fired generators was 11 US cents per unit plus other expenses of 6 to 7 cents.

Gen Zulfiqar deplored the decision to put the Kalabagh dam project on the back burner and said the country just needed $1 billion in foreign exchange to cover the cost of consultants and electric generators. 

The balance amount of $5 billion, he added, could have been arranged locally as it related mainly to cement, concrete and steel.

He said the cost of the project could be recovered in five years, adding the genuine grievances of provinces, which opposed the project, should have been addressed to pave the way for the construction of the project.

He was of the view that Karachi Electric Supply Cos privatisation needed to be reversed, particularly after the buyer failed to make promised investment of $450 million for upgrading its systems.

Separation of the Pakistan Electric Power Co (PEPCO) from WAPDA was a wrong step as most of the WAPDA activities were placed under the chairmanship of water and power secretary, he said.

Mismanagement cause of power crisis


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## Neo

*WB assures support to Thar coal power plant​*
KARACHI, May 29: The World Bank has assured support both financial and technical for the proposed 1,000MW power plant based on Thar coal to be set up as public private joint venture.

The assurance was given by World Bank Vice President Praful C Patel at a recent meeting with the Sindh Chief Minister. He said that the power generation through cheaper resources other than oil and water was the main priority of the banks development agenda. He said that the WB would help in arranging financing from the IFC for the project.

The Sindh mines and minerals department has already invited expressions of interest (EoIs) from both the local and international investors for the joint venture to be set up on the basis of 75:25 equity.

The Sindh government would provide 50 per cent of the equity.

The last date for submitting EoIs is June 15 after which a committee would scrutinise offers and submit its recommendation to the government.

Sources at the department said that encouraging enquiries had been received and China, Indonesia, and some Gulf countries have shown interest in the proposed joint venture with technical assistance from Australia and Germany.

The department made a presentation to the WB vice president, which indicated that in Pakistan share of coal in power generation is just 0.1 per cent against 40 per cent in the world. Poland and South Africa are on top in coal power generation with 93 per cent followed by Australia 80 per cent, China 78 per cent, India 69 per cent Kazakhstan 70 per cent and Morocco 69 per cent.

Sindh has 175 billion metric tons coal deposits in Thar, which are enough to produce electricity for three centuries.

The WB was informed that two bankable feasibility studies had been carried out by Shenhua Group of China in 2003 for Thar Block 11 and by RWE of Germany. The Chinese study suggested a tariff of 5.75 cents with production based on open cast mining. The second study suggested a tariff of 7.18 cents.

The WB was informed that the vital infrastructure, including roads, electricity, communications and water supply, was in place up to the coalfields in Thar and Nagarparker granite areas.

Construction of an air strip is at designing stage while construction of Thar Lodges was under way to provide modern accommodation to the investors and engineers.

It was further informed that so far six blocks of cola in Thar and three blocks in Sonda have been explored at a cost of Rs500 million.

The proposed joint venture project has been envisaged on debt equity ratio of 75:25. The eligible parties would be required to invest at least $200 million. The size of mining operation for the coal-based power project will be six million tons per year.

WB assures support to Thar coal power plant -DAWN - Business; May 30, 2008


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## Neo

*Number of cell phone users jumps to 85m​*
ISLAMABAD, May 29: The number of mobile phone users in Pakistan has increased phenomenally and this figure is expanding by almost one million every month.

The tele-density in the country has increased to 58 per cent of the population, which is the highest in South Asia with the total number of fixed and mobile subscribers touching 85 million in 2008 against only 8 million in 2003 with major contribution coming from the mobile sector.

This information was provided to Prime Minister Yousuf Raza Gilani by a delegation of the GSM Association and CEOs of mobile phone companies in Pakistan headed by Robert Conway, which called on him at the PM House on Thursday.

He was told that Pakistan continued to be one of the fastest growing telecom markets in the world where only last year the mobile industry invested close to $3 billion of total foreign direct investment coming into the country.

The delegation assured the prime minister that the mobile industry would continue to work with the government for swift provision of state-of-the- art information and communication services in Pakistan with a heightened focus on empowering rural communities.

The delegation informed the prime minister that Group Special Mobile Association (GSMA) is a global trade association founded in 1987 and represent more than 700 GSM mobile phone operators across 217 territories and countries the world over.

He was further briefed that more than 180 manufacturers and suppliers support the associations initiatives as associate members.

Number of cell phone users jumps to 85m -DAWN - Business; May 30, 2008


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## Neo

*External debt at peak level of $44.59 billion ​* 
KARACHI (May 30 2008): The country's external debt witnessed a rise of over 5.5 billion dollars to hit a new peak of some 44.59 billion dollars during the current fiscal year mainly due to rising current account deficit. As per Fiscal Responsibility and Debt Limitation Act, 2005, the government has to reduce its foreign debt by 2.5 percent every year and current year it should be 24.5 percent of GDP from 27 percent.

However, during the current fiscal year it is difficult for the government to meet this target due to rising current account deficit and it is expected that by the end of June it would remain at 27 percent of GDP. Economists said that the government has borrowed some 5.58 billion dollars foreign debts during the first three quarters of the current fiscal year to meet its over 10 billion dollars current account deficit.

They said slow foreign inflows coupled with declining foreign investment and sluggish privatisation process compelled the government to use the tool of borrowing to fulfil its foreign payment requirements. The central bank statistics revealed on Thursday that the country's foreign debt has witnessed an upsurge of 14.32 percent or 5.58 billion dollars during the first nine months of current fiscal year.

After the current upsurge, first time in the history of the country, overall foreign debt that earlier stood at 39.008 billion dollars on June 30, 2007, rose to historic level of 44.596 billion dollars by the end of March 2008. The rise during July-March 2008 is much higher than the overall foreign borrowing of FY07, as during the last fiscal year foreign debt increased by 8.43 percent or 3.034 billion dollars to 39.008 billion dollars from 35.97 billion dollars.

The statistics show that major surge has been witnessed during the third quarter (January-March) of FY08, in which foreign debt rose by 7.35 percent or 3.056 billion dollars from 41.54 billion dollars to 44.59 billion dollars. Meanwhile, the overall external debt and liabilities mounted to new peak level of 46 billion dollars during FY08.

External debt and liabilities showed an increase of 13.45 percent to 45.926 billion dollars till March 2008. It previously stood at 40.481 billion dollars on June 30, 2007.

Economist said that during the first three quarters of FY08, the country faced 9.85 billion dollars current account deficit because of high goods and services trade deficit as compared to some 6.16 billion dollars deficit during the same period of last fiscal year, which forced the government to use foreign exchange reserves and borrow from international financial institutions.

During the current fiscal year, the government utilised some 3 billion dollars from foreign exchange reserves and some 3 billion dollars of foreign investment to meet current account deficit, while remaining gap was bridged through new foreign loans.

Business Recorder [Pakistan's First Financial Daily]


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*Prime Minister urges US to increase economic, defence aid ​*
NEW YORK (May 30 2008): Prime Minister Yousuf Raza Gilani has urged the US to increase its economic and defence assistance to help strengthen his newly elected democratic government. In an interview with The Wall Street Journal, he also said he is willing to work with President Pervez Musharraf, but he would let his party decide whether to try to force the president from office.

"I have no problem working with him (Musharraf), but will go by the party's decision," the prime minister added. Gilani said further US assistance "will help deliver a democracy dividend to the people" after Pakistan held landmark elections for a new parliament in February.

Further aid, he added, is needed to help provide political and economic stability as the nation seeks to fight terrorism, but did not specify the amount. He made his case for further aid during a recent meeting in the Middle East with President George W Bush, according to the newspaper.

Gilani said the use of military means alone to try to stamp out militancy from Pakistan's hinterlands would never bring peace. "We need to review our strategy to deal with the situation in the tribal region," he said. The new government has taken a different tack in the battle against terrorism than that followed by Musharraf, The Wall Street Journal noted, referring to government's negotiations with militants and exchanging prisoners.

Gilani said the government is talking only to the tribesmen who renounce violence and surrender their weapons. Pakistani forces would remain deployed along the border, he said, while emphasising the need to increase the strength of Afghan troops on the Afghan side of the border, saying there is an inadequate force to protect against border crossings.

Business Recorder [Pakistan's First Financial Daily]


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*KESC to wait for 1,000 MW from K-2 by 2015​*
KARACHI: The Karachi Electric Supply Company (KESC) has repeatedly made claims that there will be no load shedding after 2015 and that at least 2,000 MW will be added to the system. What it has not specified, however, is how that will happen.

With good reason too. According to sources, KESC doesnt plan on putting in any more money towards the 2,000 MW. That is why it has not made public actual details of plans to increase power generation. The 2,000 MW will reportedly come from someone else. 

Eight years ago, the government planned to set up two nuclear power plants in the vicinity of the Karachi Nuclear Power Plant, K-1. These plants were to be called K-2 and K-3 and would have a capacity of 1,000 MW each. Land has already been demarcated and the seismic and geological surveys completed. Final work will begin this year, sources said.

Thus, sources said, KESC was planning on buying that electricity, not necessarily generating it on its own.

The Pakistan Nuclear Regulatory Authority has upgraded K-1 and the International Atomic Energy Agency has approved its physical life extension for 12 more years.

Presently, the power demand of the city is 2,769 MW, but is expected to increase to 5,166 MW by 2015. 

Sources also said that KESC has planned to sell 50 percent of its shares to a new partner, for which the present owners needed to gather as much revenue as possible. This is why the utilitys Defence Zone has started a recovery drive, to discourage people from using unauthorized electricity.

KESCs Executive Director Syed Tanzeem Hussain Naqvi has directed the department concerned to carry out a full-fledged campaign for the recovery of outstanding dues against defaulters and unauthorized consumers. 

The KESC Service Assurances General Manager Asad Hussain Zubairi, with area managers and staff, has started the work. During the campaign, the Service Assurances department has disconnected 116 residential and commercial connections for non-payment in bills worth Rs 14.71 million.

Daily Times - Leading News Resource of Pakistan


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*Forex reserves decline to $11.51 billion​*
KARACHI: The foreign exchange reserves fell by $374 million to $11.511 billion in the week ended May 24, according to the figures released by the State Bank of Pakistan Thursday. 

Of the total reserves $9.060 billion was held by the SBP and $2.451 billion by other banks. 

The reserves continue to deplete, as there is very high demand for the greenback in the interbank market against a limited supply and the central bank has to support the domestic currency by many ways. The SBP supplies dollars to the market for meeting oil importers' demand. It is responsible for supply of dollars for 70 percent of oil imports. In addition, it has to inject dollar in the market through some banks when there is sharp fall in the rupee's value. The country's foreign exchange reserves have now fallen by $4.823 billion or 41.89 percent if compared to the highest ever level of $16.334 billion achieved in October last year. 

When the reserves had started building up in the wake of 9/11 incidents thanks to rescheduling of debts of the country, inflow of grants and loans, and tighter controls placed by governments in the developed world over transfer of money, the Shaukat-Aziz led team of economic managers appointed by General (now retired), Pervez Musharraf had tried to take credit for it. But the critics of the government had argued that the build up was not due to any improvement in the country's economic situation but a result of changed geopolitical situation. However, Shaukat Aziz and his team would not agree. The situation now shows that the critics of the previous regime were correct when they said that the improvement in economic indicators was not sustainable. In the absence of export growth, there can be no sustainable growth in foreign exchange reserves. Foreign exchange earnings, not loans and grants, boost reserves. 

Daily Times - Leading News Resource of Pakistan


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*Government to establish IT network in rural areas: Kaira ​*
ISLAMABAD (May 30 2008): The Development of Information Technology (IT) network in rural areas is the top priority of government for ensuring easy access to scientific research and information for the growers, said the Minister for Information Technology and Telecom, Qamar uz Zaman.

He said, 'The government would develop telecome network and establish PCO in undeserved areas to bring these areas at par with developed ones', Kaira said. He was addressing the concluding session of the one-day training workshop on 'Agriculture Decision Supports System (ADSS)' the indigenously created Data Mining tool. The workshop was organised by the Fast National University to apply emerging scientific system in agri-sector to enhance crop production with use of minimum output.

The Data Mining of different sectors of national economy including education, health, and infrastructure and agricultural was vital for developing vibrant future strategies and for uplifting living standard. The 26-month ADSS project funded by the National ICT R&D, which was attended by a number of research scientists and agri-experts of different ministries, division and private sector.

The objective of the workshop was to facilitate the participants with hands-on training in ADSS data mining applications including clustering and extraction and Analysis. The Minister said that database network development was vital and need of modern era for proper planing to bring the country out of prevailing crises and meet the future challenges.

Further, Kaira assured ministry's continues support to the projects of national importance that were being executed at Fast National University. He told that the e-government system would be introduced soon and at least 45 ministries will be linked to bring efficiency, transparency and better functioning.

Kaira acknowledged the importance of the application of IT in agriculture through ADSS having the potential to bring about the second 'Green Revolution', leading to reduction in poverty.

The Rector, Fast, Dr Amir Muhammed said in his address that currently there were 50 post-graduates students pursuing their PhD, a multi-campus institution specialising in studies of Computers and Emerging Sciences, having additional campuses in Karachi, Lahore and Peshawar.

Principal Investigator, ADSS, Dr Ahsan Abdullah, said this system was based on the input of researchers and scientists from more than 12 organisations. Currently, the ADSS Project was running with a team of more than 30 professionals and was financially supported with approximately Rs 30 million by the National ICT R&D Fund.

It has successfully identified the susceptible cotton varieties and pesticide groups as related to the mealy bug pest and discovered the correlation between years of education, ICT and crop yield. Dr Abdullah also maintained that this system was ready to be implemented for the study of other diverse crops and fruits. Later, the IT minister distributed certificates among the participants.

Business Recorder [Pakistan's First Financial Daily]


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*Pakistan Revises This Fiscal Year Inflation Rate To 13.4% From 6.5%​*
KARACHI -(Dow Jones)- Pakistan's annual headline inflation rate, as measured by the consumer price index, is expected to be 13.4% in the current fiscal year ending June 30, according to a finance ministry document.

The expectation marks an upward revision to an earlier target of 6.5%.

The document, seen by Dow Jones Newswires Friday, was presented to the National Economic Council.

The Federal Bureau of Statistics said earlier this month that the headline annual inflation rate had accelerated to 17.21% in April from 14.12% in March. 

Pakistan Revises This Fiscal Year Inflation Rate To 13.4% From 6.5%


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*IMF and World Bank urge Pakistan to do away with subsidies​*
30 May 2008 

ISLAMABAD  Pakistan's new elected government has regretted to accept the joint proposal of the World Bank and the IMF to withdraw oil subsidy in the next budget. Official sources said that the Prime Minister Syed Yousuf Raza Gilani believed that the nation cannot withstand the "shock" of eliminating subsidies on oil, wheat and fertilizer at this stage.

The prime minister stated at a high-level meeting held yesterday on budgetary matters that the process of withdrawing subsidies can only be gradual and when the government succeeds in mobilising new resources by overhauling the weak taxation system. 

New resources were required to provide "certain respite" to the poor and the lower middle-income groups in the society, the prime minister said. The visiting IMF director for South Asia and Middle East Mohsin Khan and the World Bank Vice-President for South Asia Pruful Patal had proposed to the new government to "immediately do away with all subsidies" on oil, wheat and fertilizer etc. to arrest the fast declining economic situation in the country. 

Sources said that the prime minister was told that Indonesia and Sri Lanka have removed subsidies recently and that Pakistan should also swallow the "hard pill" in order to achieve the much needed macroeconomic discipline in the country. "Off course macroeconomic fundamentals need to be set right but it does not mean that we should further burden our people by removing various subsidies," a source said who attended the meeting. He said that the meeting agreed to "restrict further bleeding" in the economy by re-prioritising every thing so as to achieve economic stability. 

"The situation is extremely challenging as the budget making process has been constrained due to lack of funds", the source said. He said balancing act will have to be maintained in the new budget to collect resources including from the international donor agencies and to offer some relief package to the people. It will also have increase in the salaries of the government employees. Sources said that the meeting decided to restrict Public Sector Development Programme (PSDP) in the vicinity of about Rs400-425 billion during 2008-09. In fact, they said, there will be over 10 per cent reduction in the funds being allocated for the new PSDP compared to existing development programme of 2007-08. 

A senior government official when approached said that the situation was pretty difficult but not "unmanageable" and the prime minister was informed that there was no need to be panicky as the government would not accept undue demands of the donor agencies particularly with respect to eliminating subsidies. He said that the meeting decided to achieve 6.5 per cent GDP growth rate and bring down the fiscal deficit from 9.5 per cent to sustainable limit of around 5-6 per cent by further reforming the country's spineless taxation system. Responding to a question, the official said that IMF has a very "conservative view" of achieving financial discipline by doing away with all subsidies. 

"We cannot accept Fund's proposal as its role is now that of a advisory body but we have to take into account WB advice which is our regular donor," he said adding that Bank's will be convinced that Pakistan at this stage cannot afford to remove all subsidies and that it may take some time to start implementing their proposal, the official said. 

According to an official handout about the meeting, the prime minister said that providing tangible and concrete relief with specific financial allocations to the people especially those in the lowest income groups should be the topmost priority of his government in the forthcoming budget. le explaining government's priorities for the forthcoming budget, the he directed all the concerned officials involved in the budget making to incorporate objectives which could provide relief to the lowest income groups, boost agriculture and manufacturing growth, help in overcoming energy and water shortages, developing human resource and avoiding wastage of tax payers' money. 

The prime minister said that providing relief to the poorest of the poor who are facing back breaking hardship due to high food inflation and shortage of power and other essential goods is the real objective of the elected government. He said that the government is committed to making a sizable allocation in the budget for direct income support to the poorest and vulnerable groups. 

Gilani said that government will soon start rural employment generating projects to generate employment for at least 100 days per family especially in the poor and backward districts. He said that skills development programmes for both rural and urban areas will also be initiated so that employability and productivity can be increased. He said that social protection measures including health care and nutrition support for children especially girls, will also be put in place besides allocating resources for provision of safe drinking water. 

The prime minister said that government will also provide relief to government employees to compensate for rising inflation especially the low paid employees. 

He directed that budget should also incorporate both fiscal and development support measures to boost growth in agriculture and manufacturing sectors which would include increasing incentives to enhance profitability, output and productivity in agriculture by suitable adjustment in subsidies and timely support prices. 

This he said would boost agriculture production, improve income of farming community and eliminate the possibility of food shortage in the country. 

He said that fiscal and development support for manufacturing in terms of tax incentives, encouraging industrial clusters, support for technology transfer and facilitation of import of power generating small units are some of the areas to be given priority in the budget. 

Khaleej Times Online - IMF and World Bank urge Pakistan to do away with subsidies


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*Rising oil, food prices hurting Pakistan's poor: World Bank ​*
ISLAMABAD (May 31 2008): Praful Patel, World Bank Vice President, ended the five-day farewell visit to Pakistan on Friday, noting that tough, yet essential, reforms can ensure that high international prices for petroleum and food commodities would not derail the country's poverty reduction and economic development.

"International oil and food prices have continued to rise since then, and we are working closely on their programme to address the cost to Pakistan of high prices, and to ensure the poorest are protected," he remarked.

A statement issued by the World Bank here on Friday said that Patel had met with Prime Minister Yusuf Raza Gilani and government economic team led by Federal Minister for Finance Naveed Qamar, and discussed the economy and safety nets to protect the poor, as domestic prices are adjusted.

In this regard Patel offered World Bank support to build upon international best practices in responding to the current situation. In meetings with President Pervez Musharraf, Pakistan People's Party Co-Chairman Asif Zardari, and President of Pakistan Muslim League-N Shahbaz Sharif, Patel thanked them for the warm reception and hospitality shown to him throughout his tenure as the regional Vice President of the World Bank.

Patel is retiring from the World Bank after 35 years' service. He expressed hope that Pakistan's development partnership, with the World Bank, would continue to grow from strength to strength. During his visit, Patel once again reconfirmed the World Bank's ongoing commitment to Pakistan.

He noted that despite uncertainty in the recent months the World Bank's programmes in Pakistan would remain on track. He said that World Bank's technical assistance with targeting exercises on the social safety nets, capacity and institution-building for water management, and electricity generation and distribution efforts would help Pakistan in meeting its development priorities.

In Sindh, Patel met with Chief Minister Qaim Ali Shah and his economic team to learn of the new government's priorities and to get an update on the ongoing World Bank assisted development initiatives in the province. Patel made a good-bye visit to Keti Bunder, a community that he has come to know over the years through Bank assisted Pakistan Poverty Alleviation Fund (PPAF) project in Thatta.

The Keti Bunder community is benefiting from social mobilisation, small infrastructure projects of drinking water and street pavements, and income generation activities under the project. "Over the last five years, I have visited Pakistan very often, and have always gone back impressed with the resilience of its people," said Patel.

"Persisting and new challenges notwithstanding, I am sure that with the right policies and strong support from its development partners, Pakistan can maintain its poverty reduction path. I take very fond memories with me and wish Pakistan well."

Business Recorder [Pakistan's First Financial Daily]


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*Needy families may get Rs 1000 per month subsidy ​* 
ISLAMABAD (May 31 2008): Finance Minister Naveed Qarmar on Friday chaired inter-ministerial committee meeting to devise strategy for immediate relief to the needy families. The ECC of the Cabinet in its meeting on May 6 had constituted the ministerial committee comprising Ministers for Finance and Revenue, Industries and. Production and Social Welfare and Special Education and organisations of Bait-ul-Maal and Nadra.

It was tasked to devise strategy for immediate relief to the needy families and also to finalise scheme for the grant of targeted subsidy on essential food items to them. The committee will submit its recommendations to ECC within two weeks. Relevant ministers would monitor and oversee the implementation of scheme to be launched by the government.

The meeting deliberated on a scheme for provision of targeted subsidy on essential food items for the needy families. The committee had earlier recommended that Nadra should carry out detailed sample analysis of the data about unemployed, illiterate and widows for assessing the number of deserving persons and needy household families, besides using existing data available with provincial education department which could also be availed for identification of eligible beneficiaries.

According to Nadra estimates, the targeted population warranting relief to needy eligible households comes to 3.75 million. The Bait-ul-Maal data confirmed the needy household around 2 million warranting GoP relief support.

The Finance Minister affirmed that the government would do its best to reach the bulk of needy population on the basis of transparently available data-based criteria with Nadra, Bait-ul-Maal and other allied agencies.

The committee noted that the criteria to support eligible needy people should be based on the CNIC-supported national data. Once the data-based modalities are finalised, a cash subsidy of Rs 1000 per month may be disbursed on quarterly basis to an agreed list of eligible needy households nation-wide through the forum of union councils.

The committee decided to consult banks and post offices to lend support in financial disbursement of the government for relief package to needy households through devising a credible mechanism once the disbursement proposals are finalised by the stakeholders. The government will create fiscal space in the national budget and put it up to the government for approval.

Business Recorder [Pakistan's First Financial Daily]


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*'Rs 500 million to be allocated for rural uplift in Sindh budget' ​*
KARACHI (May 31 2008): Sindh Minister for Rural Development Zubair Ahmed Khan has said that Rs 500 million are being allocated for rural development in coming budget of the province. This he said in a meeting with Additional Chief Secretary Development Nazar Hussain Mahar at his office on Friday.

He said that Sindh government wants to provide all basic amenities to people of rural areas of Sindh besides bringing changes in living standard at village level. The minister said that soaring prices of wheat, rice, oil and energy have increased the woes of lower and middle classes, while income per capita is on decline and local economy is almost ruined. He said that improving living standard of poor and eradicating unemployment is responsibility of the government.

He stressed the need to pay more attention to agriculture sector in supporting economy as 600 million people of the world living in rural areas depend for their livelihood on agriculture. Zubair Ahmed vowed that a mega rural development project would be initiated in collaboration with Asian Development Bank in the province.

He called to follow Indian and Bangladeshi models for rural development in Pakistan, particularly in Sindh. He said that a comprehensive strategy is being chalked out for rural development as per aspirations of the masses. He disclosed that Hallmark, Metro and Macro like super departmental stores would be set up at villages of Sindh to facilitate villagers.

Business Recorder [Pakistan's First Financial Daily]


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*WB may provide $3bn to build 3 dams ​* 
Saturday, May 31, 2008

ISLAMABAD: The World Bank has assured water and power authorities that it will invest $3 billion for the construction of three reservoirs, it is reliably learnt.

The bank is the main funding partner along with others for the construction of reservoirs, which are estimated to generate 3,000 megawatts of electricity, a source privy to the meeting with a senior official of the World Bank told this correspondent.

The proposed dams are Tarbela-IV, Munda Dam and Kohala and the water & power officials assured the visiting bank team for taping indigenous resources like water and coal, the same official said quoting one of the high ups of the meeting.

The visiting WB team was also told that the construction of said dams would also reduce dependency on imported oil and also improve the basket rate of electricity. 

The World Bank has also expressed strong reservations about any possible merging of Pakistan Electric Power Company (PEPCO) and any such move could affect the future lending to Pakistan for power sector, another official told this correspondent.

He said that World Bank could provide lending only to Pakistan for power sector if it maintained the PEPCO status as an independent entity. Government is currently negotiating with World Bank for different power sector projects including mega dams projects. 

After its separation from WAPDA, PEPCO was practically made functional in October 2007 as an independent entity to deal with matters related to the power generation. PEPCO is an independent entity and all matters relating to the electricity went to the company while WAPDA was left with only operational command of dams and hydropower houses.

PEPCO was established in 1998 as an independent body with a mandate to restructure the power sector, corporatise and commercialise restructured entities, and to bring about reforms through competition, enhancement of efficiencies and best financial and prudent utility practices. PEPCO initiated restructuring and reform process in 1998 with limited success. 

The official said that PEPCO mandate to restructure the power sector would be badly affected if its merging with Water and Power Development Authority (WAPDA) was materialized. He said that PEPCO is an independent body that deals with electricity distributions. 

According to official, though the government was eager to merge the PEPCO into WAPDA but the main donor, the World Bank has shown concern any such move that unbundling of electric distribution companies, the DISCOs (distribution companies) was part of the conditionality for loans given to Pakistan earlier in this decade under an agreement inked in 1998. He said that PEPCO is also part of the privatisation and World Bank would also support fully to its privatisation.

Though the unbundling and financial autonomy of all the Discos were accomplished but privatisation process was not initiated. He said that World Bank believed in the privatisation of all power distribution companies. Official believed that if the merging of PEPCO with WAPDA was done it would be a u-turn on power reforms policy. He said that World Bank that is the main financer in the power sector is pushing the government for not only unbundling and giving financial autonomy of said entities from WAPDA followed by phase wise privatisation. 

Apart from an obvious aspiration of WAPDA, the merger was also demanded by the Independent Power Producers (IPPs), who produce almost 40 per cent of the total electricity in the country and owes billion of rupees on account of selling electricity to PEPCO. 

WB may provide $3bn to build 3 dams


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*USAID provided assistance of nearly $2.4 billion to Pakistan ​*ISLAMABAD (May 31 2008): The United States government re-opened the Agency for International Development (USAID) mission here in 2002 and from 2002 through 2007, the agency provided nearly 2.4 billion dollar to Pakistan.

This assistance included Emergency Economic Assistance to address needs in education, health, economic growth and good governance, as well as assistance for reconstruction in areas devastated by the October 2005 earthquake, USAID sources said. According to the sources, the goal of US assistance to Pakistan is to support peace and stability in the South Asia over the long-term.

Continued broad-based economic progress is essential to maintain and enhance Pakistan's political and economic stability, they remarked. The sources further said that the USAID's education programmes cover the entire spectrum, including early childhood instruction, education policy reform, literacy and scholarships for higher education.

In the remote and undeserved areas of Balochistan and Sindh, USAID helped teachers, school administrators, and parents formed over 3,000 committees to improve their government schools, they remarked.

In the Federally Administered Tribal Areas (Fata), USAID is rebuilding 65 schools. USAID is giving 500 students Fulbright scholarships to study in the United States and need-based scholarships to 906 students to study in Pakistan since 2004, they remarked.

In the Health sector, they said USAID is upgrading 31 hospitals and trains 3,000 health staff to improve care for pregnant women and new-borns. It increased the availability of quality reproductive health products, so families can space births.

"USAID helps to eradicate polio, reach communities vulnerable to HIV/AIDS and decrease the incidence of tuberculosis," they remarked. Regarding the Creating Economic Growth Opportunities, the sources said that Pakistan's future depends on its ability to create jobs and promote investment sine 2001.

"USAID helps the poor directly by providing small loans and financial services in parts of the country that lack banks or other lending programmes," they remarked. They added that a nation-wide USAID-supported programme changed banking practices to reach the large market of small businesses too big for micro-credit but too small for conventional loans.

In Balochistan, USAID teaches techniques to increase agricultural production. USAID help small-and medium-sized enterprises in industries like dairy, marble and granite, gems and jewellery, horticulture, furniture and surgical instruments to become competitive and to create more and better jobs.

They further said that accountable governance involving citizens' input can strengthen development and make it more effective. They said that USAID, helps strengthen Pakistan's national and provincial assemblies with technical assistance, training and resource centres. The USAID also supports the devolution of responsibility and budgeting to local governments by strengthening their ability to deliver better public service. In addition, "USAID helps Pakistan's Election Commission oversee and carry out free and credible national elections."

They added that the October 2005 earthquake caused a massive loss of life and damage in NWFP and Azad Jammu and Kashmir. Following its relief efforts, USAID has now transitioned to a recovery and reconstruction programme. The programme rebuilds schools and health facilities, strengthens system and capacities of public health workers and district government education officials, and restores and improves livelihoods.

They further said that the US government's Emergency Economic Assistance (EEA) Agreements provided balance of payments, budget and policy reform support to the Government of Pakistan during a time of economic hardship and political strain associated with Pakistan's participation in the Global War on Terror. In 2008, the Emergency Economic Assistance will be put into USAID-managed development programmes that directly improve the health, education and economic opportunities of Pakistan, they added.

Business Recorder [Pakistan's First Financial Daily]


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*Turkmenistan to supply gas at market price ​* 
Saturday, May 31, 2008

ASHGABAT: Turkmenistan said on Friday it would charge Afghanistan, Pakistan and India market prices for natural gas that would go through a planned pipeline across the four countries, state media reported on Friday.

The idea of building the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline has been little more than a dream for years because of the turmoil in Afghanistan, but the countries are now determined to complete the project.

Representatives of the four states and the Asian Development Bank that promotes the project gathered in Turkmen capital Ashgabat on Friday to discuss the details of the plan.

Noting that Turkmen gas is in high demand... the participants of the session have agreed that the price of the fuel must be set in accordance with the global energy market conditions, state-owned Turkmen Khabarlary news agency reported. The four countries have said earlier construction work on the pipeline could start as early as 2010.

http://www.thenews.com.pk/daily_detail.asp?id=115725


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*Constructing small dams ​*
Engineer Hussain Ahmad Siddiqui 

ARTICLE (May 31 2008): Prime Minister Yousaf Raza Gilani has committed, as part of his short-term national agenda of March 29, to build more small water storage dams countrywide on a fast track basis.

Pursuant to this decision, the Central Development Working Party (CDWP) has approved, in its meeting held on April 30, construction of three small storage dams in Balochistan namely Gwadar, Pasni and Shadi Kaur dams at an estimated cost of Rs 2.63 billion, along with various other irrigation schemes, in the first phase.

Pakistan, though a water-rich country, is currently amongst the most water-stressed nations of the world, as its huge water resources remain under-developed since long. It is estimated that half of the country's irrigation water is wasted as a result of its poorly managed irrigation system and inadequate water infrastructure. In this context, construction of new small storage dams can play a key role in promotion of agriculture, placing maximum area under cultivation, and thus bringing in a "green revolution".

Somehow, developing small dams has never been the governments' priority. Since 1996 there has been no significant addition to small dams in any part of the country, though a number of schemes were planned. The successive governments have failed to concentrate on small dams' construction in an adequate manner, in spite of much scope for its network development in all the provinces.

Also, considerable experience in planning, design and construction of small dams is available locally since the 60s, which is not being utilised effectively. It is also worth mentioning that in each province, Small Dams Organisation continues to function, with supporting technical staff, as an arm of the irrigation department.

But the planners' focus has always been on developing large and mega water projects, which are too costly, require long lead-time, bear negative impacts of large-scale population dislocation, other social and environmental concerns and have political dimensions too.

These projects, costing multi-million dollars and requiring at least ten to twelve years to complete, often run into snags and are delayed. The cost of two options may be visualised from the fact that 12 small dams in the Potohar region were completed in 1996 at a total cost of $35.4 million, whereas Diamer-Basha dam is estimated to cost $8.5 billion.

Construction of large dams, which is feasible only in far-flung and isolated areas, faces communication and logistic problems and limitations of availability of labour. The development of infrastructure for large dams is consequently an expensive proposition, besides being totally dependent on foreign sources for dam construction.

Thus, local community-based small dams provide a simple, cheaper, reliable and manageable solution to water storage issues. typical examples are cited of four small dams, namely Rawal, Simli, Misriot and Tanaza, which meet effectively the water requirements of Rawalpindi, Islamabad and surrounding areas.

Nevertheless, small dams are not an alternative to large dams and mega multi-purpose water projects and can be considered of supplementary or complimentary nature. However, small dams are equally important to store and conserve water for increasing irrigation and drinking water sources and improving socio-economic conditions of the area.

Also, the small dams may not result in sustainable development of agriculture, in contrast to the large dams, but its impact on groundwater development is very positive.

Pakistan has constructed in all 58 small dams so far. According to reliable estimates, it has the potential to build another 750 small dams to meet water requirements of growing local and regional population.

The trend in favour of small dams is being pursued in the developing countries. Sri Lanka has constructed some 12,000 small dams and Nepal more than 2,000. In India, which is considered a leading dam builder, there are 19,134 small dams developed and 52 small dams will shortly be constructed on Chenab and other rivers originating from Kashmir.

Punjab has constructed 32 small dams and the NWFP 15 small dams. Feasibility studies for constructing a large number of small dams in the country have confirmed economic viability, whereas studies are being undertaken for many others. Hundreds of potential sites for developing small dams countrywide include 20 small dams in the NWFP.

Plans are underway to construct another 20 small dams in Balochistan where many other potential sites have been identified. But no physical work has been initiated on any of these schemes as yet. Similarly, schemes for constructing another 6 small dams in the capital territory, for which economic viability was confirmed, have been shelved recently by the Capital Development Authority.

A special feature of small dams, where reasonable water head is available, is the generation of hydroelectric power, almost as a by-product. Small power stations can be established at such locations, based on proven technology, to generate electricity at the least cost and with low operation and maintenance charges.

In present times, most of the dams are hydropower dams. These power stations will cater to the electrification of remote areas without any requirement to be connected with national grid.

Such small power stations, of cumulative capacity of 242 MW are already in operation countrywide. Water and Power Development Authority (WAPDA) operates 8 small hydropower plants at Dargai, Jabban, Rasul, Chichoki Mallian, Shadiwal, Nandipur, Kurram Garhi and Renala.

There are about 300 small hydropower stations in the Northern Areas generating 94 MW, providing electricity to the isolated network. There are another 11 small power stations in the NWFP, generating total 5 MW electricity, which are operated in public and private sectors.

Likewise, the government of the Azad Jammu and Kashmir successfully operates numerous hydropower stations including Jagran of 30 MW, Kundal Shahi, Leepa and Kathai, all of 2 MW capacity each.

According to studies conducted, potential exists to generate additional 2,166 MW hydroelectric power utilising proposed small dams. These schemes, which are power projects of capacity varying widely from 0.014 MW (14 kW) to 40 MW, can contribute effectively to the future power needs. Punjab plans to develop small low head projects on canals/barrages and streams/rivers.

It has identified 306 sites on various canals and barrages, which can generate hydropower of cumulative capacity of 350 MW. However, no headway has been reported so far on its plans to set up small hydel power plants under the Punjab Power Generation Policy announced about five years ago.

Likewise, five potential sites with low and medium head at canals in Sindh have the potential to generate 98 MW electricity additionally. In the NWFP, 85 schemes of small hydropower have been prepared of 570 MW cumulative capacity. Studies on 27 sites in the AJK verify potential of 230 MW power generation through small hydropower projects. Northern Areas, known for its rich water resources, has the potential of producing 885 MW at 139 identified sites for small dams.

Indeed, serious initiatives need to be taken by the government to implement small dams' development programme, without further delay, utilising its own financial resources or seeking funds from the international donor agencies. The World Bank and the Asian Development Bank have already shown interest to finance small dams in Pakistan, as they did in the past.

(The writer is former Chairman of the State Engineering Corporation, is currently on the Board of Directors of National Engineering Services Pakistan Pvt Ltd--NESPAK)

Business Recorder [Pakistan's First Financial Daily]


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*Textile ministry to prepare plan to boost cotton output​*
ISLAMABAD: The prime minister, Syed Yousuf Raza Gilani has tasked the ministry of textile to prepare a comprehensive plan in consultation with the private sector to improve production of cotton in order to meet its growing domestic requirements and export demand. 

The prime minister expressed these views in a meeting to discuss a Strategy for Enhancing Textile Exports Friday.

Textile industry was the backbone of our industrial sector and improvement in the quality and quantity of cotton would strengthen the competitiveness of the textile industry and facilitate the export of textile products. 

Gilani asked the ministry of textile to focus on areas and regions in the country through which optimum yield of cotton could be procured. 

He said the textile industry has to be made more efficient to make it cost effective and profitable since it is a valuable asset of the country.

Secretary textile in his presentation briefed the meeting about the status of textile industry and proposed measures being taken by the ministry to enhance textile exports. 

Federal Minister for Defence, Commerce and Textile Industry, Ahmad Mukhtar, special assistance to the PM on Economic Affairs, Hina Rabbani Khar, Deputy Chairman Planning Commission, Secretary Textile, Secretary Commerce, and Secretary Finance attended the meeting.

Daily Times - Leading News Resource of Pakistan


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*Turkish investment in windmill energy project hailed ​*
KARACHI (May 31 2008): Pakistan-Turkey Business Council (PTBC) of Federation of Pakistan Chamber of Commerce and Industries (FPCCI) Chairman Amjad Rafi has welcomed Zorlu Group from Turkey, which has made investment in Pakistan in windmill energy project at Jhampir, Sindh.

The project is estimated to cost around 300 millions dollars and on completion will produce substantial energy for Sindh. Chairman Amjad Rafi and FPCCI Board of Directors, PTBC, have congratulated Zorlu Group for undertaking the groundbreaking ceremony of the project.

The Turkish investment in energy sector was at a right time and would also encourage other foreign investors to investment in various sectors particularly in energy sector, said PTBC chairman.-PR

Business Recorder [Pakistan's First Financial Daily]


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*Pakistans WEF rating is important​*
LAHORE: The rating of Pakistans economy, which is carried each year by the World Economic Forum (WEF), is an important tool for us to rank our economy on a global level, said Rehmatullah Javed, chairman Competitiveness Committee of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Friday. Speaking at a programme arranged by Competitiveness Support Fund (CSF), he said all these rankings provide us with the strengths and weakness of our economy and provide us with a road map for improving economic situation. While appreciating the report of CSF, Javed said CSF has carried out a very valuable exercise for Pakistan and its business community. All of our stakeholders need to realize the importance of this exercise and play their individual role to move Pakistan to a respectable level among the world community, he said. 

Daily Times - Leading News Resource of Pakistan


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*Power shortfall discouraging foreign investors: ICCI​*
ISLAMABAD: The business community Friday said international investors are closely watching energy crises, which discourage them to invest in Pakistan. The foreign companies could not achieve desired result from the investment in Pakistan; therefore, they were making their investment in other countries. 

President ICCI Mohammad, Ijaz Abbasi addressing a meeting suggested the government to show some flexibility about shopkeepers to close their markets either on Friday or Sunday as per the requirements of the markets, because at some places inflow of customer was totally zero on Sundays, which would leave a bad impact on the business activity. 

The business community was ready to support the government initiative for conservation of energy through adopting a number of measures, but at the same time, the government should also consider the problems of the business community, which was already under great pressure. The change of time from the next month would help the government save electricity, but at the same time it has adverse affects over the business activity because as per new timing arrangement, all markets would actually close at 8 pm, he maintained. 

The labour force working in the markets would face problems because with less timings they would not be able to earn enough for their livelihood. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*WB wants tough yet essential reforms​*
ISLAMABAD, May 30: World Bank Vice President Praful Patel said on Friday that tough, yet essential, reforms can ensure that high international food and oil prices do not derail Pakistans poverty reduction and economic development.

During my last trip to Pakistan two months ago, I noted that the economic challenges did not constitute a crisis, but the economic picture for Pakistan was very serious, said the World Bank vice president after interactions with various stakeholders at the conclusion of five-day visit.

Senior officials of the bank visited Islamabad to review the economic situation inherited by the PPP-led coalition government and suggest measures to steer the country out of economic crisis.

Mr Patels visit is the latest in a series by world leaders, particularly US senators, who have been here to pursue their agendas. The senior officials of the donor agencies also seem to be keen to ensure their say in the new economic policies of the government.

According to an announcement of the Islamabad-based office of the World Bank, international oil and food prices have continued to rise since then, and we are working closely on their programme to address the cost to Pakistan of the high prices, and to ensure the poorest are protected.

A source in the finance ministry told Dawn that due to the cash flow problems to finance the soaring balance of payments, Pakistan would need assistance from the international financial institutions (IFIs). He said the World Bank is attaching its loans with a string of conditionalities, including removal of all subsidies, including oil by making it very difficult for new government to go for it.

The source said as Pakistan has no formal arrangement with the IMF, so the World Bank is also monitoring the fiscal and monetary policy of Pakistan as well.

During his stay in Pakistan, Patel met Prime Minister Yousuf Raza Gilani and the governments economic team led by Federal Minister for Finance Syed Naveed Qamar to discuss the economy and safety nets to protect the poor as domestic prices are adjusted.

In this regard Mr. Patel offered World Bank support to build upon international best practice in responding to the current situation.

In meetings with President Parvez Musharraf, Pakistan Peoples Party Co-chairman Asif Zardari and PML-N Shahbaz Sharif, Mr Patel thanked them for the warm reception and hospitality shown to him throughout his tenure as the regional vice-president of the World Bank.

During his visit, Mr Patel once again reconfirmed the World Banks ongoing commitment to Pakistan. He noted that despite uncertainty in the recent months, the banks programmes in Pakistan remain on track.

He said that banks technical assistance with targeting exercises on the social safety nets, capacity and institution building for water management, and electricity generation and distribution efforts would help Pakistan in meeting its development priorities.

Over the last five years, I have visited Pakistan very often and have always gone back impressed with the resilience of its people, Mr Patel said and added: Persisting and new challenges notwithstanding, I am sure that with the right policies and strong support from its development partners, Pakistan can maintain its poverty reduction path. I take very fond memories with me and wish Pakistan well.

WB wants tough yet essential reforms -DAWN - Business; May 31, 2008


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*Pakistan economic growth slowest in 5 years, central bank says​*
ISLAMABAD, Pakistan - Pakistan's economy will expand by less than 6 percent for the first time in five years amid double-digit inflation and ballooning budget and trade deficits, the central bank said Saturday.

Economic problems are adding to the pressure on Pakistan's new civilian government as it struggles for power with President Pervez Musharraf and tries to tackle Islamic extremism.

In a quarterly report released Saturday, the State Bank of Pakistan said the economy was showing "increasing signs of stress" as a result of both homegrown and international factors.

A disappointing wheat harvest will likely hold back the key agriculture sector, while chronic energy shortages _ both households and businesses face regular power cuts _ have hampered industries including steel and textiles, it said.

As a result, the central bank expects economic growth will come in between 5.5 percent and 6 percent in fiscal 2008, which ends June 30, down from 7 percent the previous year.

Pakistan is struggling to deal with the rise in prices of international commodities such as crude oil and foodstuffs.

The central bank forecast that inflation would reach between 11 percent and 12 percent this year, up from 7.8 percent in fiscal 2007. Inflation reached an annualized 17.2 percent in April _ the highest level in 13 years.

Prices are rising fast partly because the government is reducing costly subsidies on fuel and foodstuffs.

The subsidies have contributed to the government's rising budget deficit, which the central bank said would reach 6.5 percent to 7 percent. The deficit was just 4.3 percent in fiscal 2007.

The government is expected to present a budget in Parliament next month including unpopular tax hikes and spending cuts.

With imports rising faster than exports, the central bank said Pakistan's current account deficit will rise between 7.3 percent and 7.8 percent _ a record high.

Pakistan economic growth slowest in 5 years, central bank says - Yahoo! Malaysia News


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*GDP is expected to drop below six percent for the first time in five years ​* 
KARACHI (June 01 2008): All key macroeconomic indicators have presented a poor performance during the current fiscal year, mainly due to a combination of adverse domestic and international developments and low output of commodity producing sectors.

*ADVERSE DOMESTIC, WORLD EVENTS BADLY HURT KEY ECONOMIC TARGETS:* SBP. The State Bank of Pakistan (SBP) on Saturday also said that the country has to miss its chief economic targets including GDP growth, exports, imports, fiscal deficit, inflation, monetary growth and current account deficit due to local and international imbalances.

"Real GDP growth is expected to drop below 6 percent for the first time in five years, while annual inflation is poised to return to double digits of 11-12 percent against the target of 6.5 percent by the end of current fiscal year," the SBP said in its third quarterly report on economy for 2007-08, issued on Saturday.

In addition, fiscal deficit is forecast to rise substantially and the annual current account deficit, as a percentage of GDP, is projected to be at an all-time high of 7.8 percent against the target of 5 percent. The SBP said that slowdown in economy during FY08 is principally in the commodity producing sectors, while adverse domestic and international developments have also badly hurt economy.

However, the central bank said that despite deterioration, it is also important to note that as a result of structural reforms and liberalisation measures over the last 15 years, the economy has fundamentally shown resilience.

This suggests that a policy focus on regaining macroeconomic stability through further reforms, and corrective measures could quickly reinvigorate the growth momentum of the economy. The central bank said that during July-March of current fiscal year, Large Scale Manufacturing (LSM) growth declined by some 50 percent to 4.8 percent as compared to 9 percent during the same period of FY07.

Growth in tax revenue is also lower than the last fiscal year. It stood at 16.3 percent during the first 10 months of current fiscal over the growth of 20 percent in the corresponding period of FY07. The fiscal deficit, trade deficit and current account deficit are also much higher than those of the last fiscal year, which have put pressure on the economy and foreign exchange reserves.

During the first 10 months, trade deficit reached 16.8 billion dollars or 10.7 percent of GDP from 7.8 percent and current account deficit touched a new peak of 7 percent of GDP while it previously stood at 4.6 percent of GDP. Fiscal deficit data is available only for the first half, which shows a deficit of 3.6 percent of GDP.

The central bank has also projected that the budgetary deficit would be 6-7 percent of GDP against the target of 4 percent. The net foreign direct investment stood at 3.6 billion dollars in July-April as compared to 5.9 billion dollars during the same period of last fiscal year mainly due to the political uncertainty in the country.

The central bank said that wheat production in FY08 may also turn out to be substantially below the target and a weak performance by major crops would drag the annual growth substantially below the annual target. The SBP has projected that the services sector is poised to achieve the annual targeted growth and main contributors to this performance are wholesale & retail trade, transport storage & communication as well as public administration & defence sub-sectors.

The impact of strong global inflationary pressures on domestic inflation has also been compounded by the adjustments of administered prices of key fuels and wheat. All price indices have moved up significantly so far in current fiscal year and are significantly higher than the annual averages for the preceding five years.

Inflation is already a serious policy concern for Pakistan with CPI inflation at 17.2 percent YoY for April 2008, the highest level in a month since April, 1995, contributed by both food and non-food sub-groups. In particular, CPI food inflation reached 25.5 percent in April, 2008.

However, the inflows of home remittance have surged to 5.3 billion dollars in 10 months over the remittances of 4.5 billion dollars in same period of FY07. The central bank has also indicated that major key economic target would not be achieved by the end of FY08.

The government had set a target of 7.2 percent for the GDP growth, however it is expected that it would be 5.5-6 percent during the current fiscal year, while inflation would grow by 11-12 percent against the target of 6.5 percent.

The central bank has adopted a tight monetary policy to curb inflation and for this fiscal year SBP fixed the monetary assets growth target of 13.7 percent, however the current projection is indicating that it would be 17-19 percent. The export and import targets would also not be achieved and these would be 18.3 billion dollars and 39 billion dollars, respectively, against the target of 19.2 billion dollars and 32.3 billion dollars.

The SBP said that it is needed that all the more important that monetary policy be calibrated to squelch demand-led inflationary pressures in the economy. Over the last 6 months, expansionary fiscal policy has overshadowed and substantially weakened the impact of sustained monetary tightening by SBP.

This impact of the heavy government borrowings has been particularly evident in FY08, with the borrowings rising to a record Rs 551.0 billion by May 10, 2008 (compared to only Rs 45.7 billion in the corresponding period of FY07), almost doubling the total outstanding stock of borrowings to Rs 940.6 billion. This trend cannot be sustained without risking a substantial further acceleration in inflation.

Over time, the removal of the excessive fiscal stimulus, the increase in administered energy prices, the recent exchange rate adjustments and continued tight monetary stance are also expected to help correct the substantial increase in the country's trade deficit, the report said. Moreover, it is likely that the country will need to raise imports to strengthen its infrastructure, particularly of power generation.

Business Recorder [Pakistan's First Financial Daily]


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*Import coverage: reserves' adequacy eroded from 30.6 to 18.1 weeks ​* 
KARACHI (June 01 2008): A depletion in foreign exchange reserves' by $4.8 billion has eroded the reserves adequacy from 30.6 to 18.1 weeks of import coverage. Since food and petroleum imports constitute more than half of the rise in imports, there is a limited scope for import compression in the short run, says the State Bank of Pakistan.

The Third Quarterly Report for FY08, issued on Saturday, by SBP, says: "it is likely that the country would need to raise imports to strengthen the infrastructure, particularly of power generation. Thus, policy focus needs to remain on addressing structural impediments to export growth in medium to long term."

The report points out: "Subsidies do not incentives efficiency, raise fiscal costs and often lead to "gaming" to maximise rent seeking rather than increase productivity. Therefore, policies must instead focus on structural reforms to reduce cost of doing business, ensure efficient, provision of key inputs (water, power etc) improvements of logistic chains, etc."

Besides structural reforms, says SBP, significant gains in foreign exchange earnings may be achieved by boosting services exports such as IT services and tourism and focusing on increasing remittances by benefiting from labour market opportunities in East Asian economies and the Middle East. Productivity gains to be accrued from skilled labour will have spillover effects in attracting FDI, enhancing workers' remittances as well as increasing of goods and services, the report added.

EXCHANGE RATE: After remaining stable for more than four years, Pak rupee lost significant value against the dollar depreciating 13.4 percent during July 21st and May 2008. Most of the depreciation was post November 2007 due to capital flight on account of political unrest, trade related outflows and speculative activities, said SBP.

As against, the dollar, says SBP, rupee also depreciated against other major currencies. It lost 25.4 percent against the yen, 24 percent against the euro and 10.4 percent against the British pound.

Despite consistent rise in inflationary pressures as evident in 8 percent rise in relative price index (RPI), real effective exchange rate index depreciated by 3.2 percent during July-end March 2008. In nominal terms, the depreciation is 10.3 percent against major competing currencies during the period.

The SBP analysis shows that unlike previous years (FY03-FY06) when extraordinary import growth was mainly driven by demand pressures emanating from capacity expansion, the import growth in the current year was contributed by both high prices and demand factors, with former having a more greater role. The price rise in petroleum group imports was 70.3 percent while in food imports it was 86.2 percent. Adjusting for rise in these two groups, the current account deficit shows a sizeable decline during the period under review.

The widening trade deficit suggests a need for import curtailment, however, given more than 50 percent rise in imports is originating from food and petroleum imports, this strategy clearly has its limitations, leaving little option but to address structural problems to boost export earnings, emphasises the SBP.

Business Recorder [Pakistan's First Financial Daily]


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*Foreign investors consolidating business ​* 
KARACHI (June 01 2008): Due to lower corporate profits there has been a slowdown in repatriation of profit and dividends by foreign investors during the current year, says the State Bank of Pakistan's third quarterly report for 2007-08. While the increase in profit and dividends by oil and gas exploration and thermal power generation companies is visibly higher, financial and telecommunication sector.

Which together account for more than one half of total foreign direct investment, specifically repatriated lower amount of profit and dividend during July-April 2008 says the Central Bank. Encouragingly, says SBP, the amount of reinvested earnings has been on the increase over the last four years in most of the sectors, indicating that foreign investors are consolidating their business in Pakistan.

*FOREIGN DIRECT INVESTMENT:* After recording average growth of 100.2 percent in last three years (FY05-07), the foreign direct investment declined by 16.7 percent during July-April FY08. A part of decline is attributed to high base set last year and a part to increased country risk.

A sector wise analysis reveals that investment in telecommunication, power, petroleum refining and financial business declined whereas cement, oil & gas exploration and trade recorded increases. Major companies which received foreign inflows include: Pakistan Cement Company Limited (Chakwal Cement), Warid Telecom, Telenor, Lasmo Oil Pakistan Ltd, Saudi Pak Bank and Metro Cash & Carry.

Moreover, almost entire decline in overall foreign direct investment during July-April FY08 resulted from a decline in cash investment, as reinvested earnings grew by considerable rate of 12.0 percent during the period under review.

*MAJOR SECTORS WHICH REGISTERED INCREASE IN REINVESTED EARNING DURING JULY-MARCH FY08 INCLUDE:*Financial business, oil & gas exploration, cement and trade. Higher reinvested earnings mainly reflect profitability of these sectors and investor's confidence in Pakistan economy in the long run.

It may be pointed out that during the last few years a substantive part of foreign direct investment was concentrated in a few sectors: financial business, oil & gas, power and telecommunications. As these sectors mature the scope for further FDI in these sectors would decline, therefore it is important to create conducive environment to attract FDI in other sectors of the economy.

The major impediments to FDI in other sectors are a lack of skilled labour, inadequate infrastructure and poor law and order situation. The foreign portfolio investment declined to US $118 million during July-April FY08 from US $1758 million in the same period last year.

*NET FOREIGN INVESTMENT:* Overall, net foreign investment declined by 39.2 percent during July-April FY08 as compared to 47.0 percent growth in the corresponding period previous year. This was mainly due to fall in foreign direct investment and portfolio investment. However, with 9.6 percent YoY growth during July-January FY08, fall in FDI entirely occurred in the last three months (February-April FY08).

============================================================================
Sector wise Foreign Direct Investment (July-April) million US dollar
============================================================================
FY07 FY08
Reinvested Total Cash Reinvested Total
Cash Earnings Earnings
============================================================================
Chemical -10 41 31 29 37 66
Petroleum refining 17 98 115 11 56 67
Oil & gas exploration 346 106 452 326 178 504
Cement -2 18 16 59 35 94
Trade 103 17 120 123 40 163
Cars 3 31 34 14 53 67
Power 49 88 136 45 6 51
Telecommunication 1,303 57 1,360 959 73 1,033
Financial business 687 191 877 471 269 740
Other 913 103 1,016 607 90 697
Total 3,407 751 4,158 2,645 837 3,482
============================================================================

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Economic growth to hit five-year low ​* 
*Fiscal deficit at 7pc to further fuel inflation if govt does not stop borrowing from central bank; high oil import bill nullified export growth; targeted subsidy through ration cards suggested​*
Sunday, June 01, 2008

KARACHI: Pakistans economic growth will slow down to a five-year low in the outgoing fiscal year, dragged down by a poor wheat harvest and slump in manufacturing output, the State Bank of Pakistan (SBP) has forecast.

Real GDP growth in fiscal 2007-08 has been estimated lower between 5.5 and 6 per cent against the budgeted target of 7.2 per cent while an all-time high current account deficit of 7.3-7.8 per cent is projected in the quarterly report for January-March period released on Saturday.

Food inflation, which leaves a disproportionately high impact on poor, has remained in double digits during the third quarter and future outlook is dismal in view of the increase in food transportation cost after upward revision in fuel prices. 

There is a need to take necessary administrative measures to protect low-income households by providing targeted subsidy to them through ration cards, utility stores or through students of public schools, the central bank said.

Full year fiscal deficit at a high of 6.5 - 7 percent threatens to further fuel inflation if government did not divert its borrowing sources away from central bank, SBP has again cautioned. 

Though exports grew by 10.2 percent during July-April 2007-08, countrys trade deficit has swelled to record $16.8 billion due to huge import bill. 

Most of the export growth came during the third quarter on back of non-textile products as Pakistani rice and sugar fetched higher values from international markets. 

Massive imports led by high petroleum product cost nullified export growth and further strained the current account. The financial and current account surplus also declined during nine months as foreign portfolio investment plunged to $118 million from $1.76 billion in corresponding period of previous year. 

Unlike slow performing agriculture and large scale manufacturing sectors, services sector is poised to achieve the annual targeted growth, SBP says. The main contributors to this performance are wholesale and retail trade, transport and storage and communication as well as public administration and defence sub-sectors.

About improvement in agricultural output, the bank has proposed that government ensures a farmer get benefits of increase in food prices. Moreover, there is need for enhancing investment in agriculture-sector infrastructure like farm-to-market roads, it added. 

The manufacturing sector suffered at hands of a severe energy crises and political unrest, which gripped the country after assassination of former Prime Minister Benazir Bhutto. 

SBP says that conduct of monetary policy has become challenging as inflationary pressures fed by unprecedented hike in global food and energy prices persist and government continues to rely on it for meeting the budgetary deficit. 

Maintaining a tight monetary policy is imperative to control the expected continuation of high inflation, it suggested and called for governments support in shape of fiscal prudence. 

Nevertheless, credit demand is strong despite a slowdown in growth to consumers mainly because of rise in working capital requirements due to higher input costs and payments to oil companies and IPPs under the head of price differential claims. 

Economic growth to hit five-year low


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## Neo

*Investors may seek exit from Balochistan after attacks on industrialists ​*
Sunday, June 01, 2008

KARACHI: The rise in attacks on businessmen and industrialists in Lasbela district of Balochistan has raised fears about the future of investment in the province, a survey by The News has revealed. 

Local and multinational companies in the Hub Industrial and Trading Estate (HITE) are rethinking about their plans to expand or continue operations here after innocent lives were lost in attacks that took place in past month.

Companies like Proctor & Gamble (P&G), which had bold plans for expansion have temporarily shut their operations, say local chamber officials.

In the recent weeks attacks were carried out on P&G, Attock Cement, and the Pakistan Ship Breakers Association Chairman Azam Malik was killed.

Although HITE offers some of the best infrastructure facilities in the region, the targeted killings are now forcing many to re-consider investment plans here.

The biggest loser of this change of heart will be the people of the area who have not only found employment but also have benefited from the corporate social work of some of the larger companies operating here. 

The industrial development in Balochistan could come to a halt if the trend of killing and threatening of businessmen and investors is not stopped.

The industrialists in Hub say that the over all situation of the area is very well there is no issue or any problem as far as the business and development of the industries is concern. 

The local people have always been cooperative in the development of the area as the industrialization has opened avenues of opportunities for them and their lives have improved, said Ismail Suttar Senior Vice President of Lasbela Chamber of Commerce and Industry.

He said that it has always been the safest area as far as law and order is concern and it is still safe. Suttar said that until recently there have never been such unpleasant incidents in the area. 

We cannot be specific about the security situation only in Lasbela District or Hub; law and order is the concern of the whole country and any thing can happen with any one in any part of the country, he said.

Suttar said street crime in the area is zero percent, extortion from industrialists (Bhata Culture) unloike Karachi is not prevailing here. The recent killings and attacks on industrial units should be investigated and the government must find out the main culprits behind all this.

If the Baloch insurgents are behind the recent attacks as per government claims than it should initiate dialogue with them and should seriously resolve their issues, Suttar said.

Managing Director Lasbela Industrial Estates Development Authority Hub said that Lasbella District is currently the most attractive area for industrialization. There are more than 150 industries, 80 sick units are under revival, 26 operative units in marble city and around 40 units are under construction and 50 more factories are expected to be completed and start operations this year.

He said land is much cheaper as compared to other industrial areas of the country and power, water and sewerage system is available that has attracted many industries here. 

But the recent attacks on the local and multinationals have raised security issues. The law enforcement agencies have increased the patrolling and security of the area but unfortunately they are also the targets of the insurgents so this needs to be addressed sincerely, he said.

Ship breakers are very upset on the murder of their chairman. Most disturbing was the attitude of the government, they said. The Sindh government said we should have done something for our security and the Balochistan government even didnt bother to condole the death of the Chairman of Ship Breakers Association of Pakistan and contact the business community about these incidents.

They said, we have been doing business in the area since long and never any such incidents or anybody from the business community was attacked but the recent attack signifies that the situation has turned very severe and government should seriously do something about this issue.

They said that the previously LEA officials were attacked to attract attention of the authorities but it seems that the authorities are not concerned so they diverted the targets towards the businessmen just to get the attention of the government to resolve the issue of Balochistan.

The current government should rectify the mistakes of the past and should solve the Balochistans problems on priority basis in order to develop the province.

Sardar Akhtar Mengal Former Chief Minister of Balochistan and President of Balochistan National Party said that we condemn any killing of precious human lives in anywhere in the country.

Mengal said, once the Balochistans right over their resources is accepted and given; all the issues will be resolved and the people of Balochistan will themselves safeguard development projects whether gas pipelines or industries or investments. 

Investors may seek exit from Balochistan after attacks on industrialists


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*Pakistans cotton output seen at 9.375m bales ​* 
Sunday, June 01, 2008

WASHINGTON: Cotton output in Pakistan during 2008/09 is forecast to rise to 9.375 million (480 lb) bales from 8.750 million bales in the prior crop year, a US Agriculture Department attache in Islamabad said on Friday.

The increase in production is due partly to better technology and management practices by cotton growers. Overall, demand from Pakistans textile industry is expected at 12.175 million bales of cotton compared with 12.335 million bales in 2007/08. The crop year begins in August.

The government of Pakistan and Monsanto have signed a Letter of Intent to initiate collaboration in biotechnology, a favourable development for future commercialization of transgenic technology in Pakistan. Reduced availability of irrigation water, high fuel prices and daily power shortages are taking a toll on this years cotton production and trade.

Progressive textile mills are focused on producing better-quality products, particularly for the export market.

Consequently, Pakistan is a major cotton importer, especially for US upland and Pima cotton. In the face of dwindling local supplies, rising prices and continued contamination problems, local mills are finding the importation of upland cotton increasingly attractive.

Pakistans cotton output seen at 9.375m bales


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*Overview of SBPs Q3 report for FY08 ​* 
Sunday, June 01, 2008
KARACHI: The State Bank of Pakistan on Saturday released third quarterly report for FY08. Following is the economic outlook and executive summary of the report.

*Economic Outlook*

Pakistans economy is showing increasing signs of stress by April 2008. A combination of adverse domestic and international developments is driving a broad deterioration in key macroeconomic indicators (see Table 1.1). Real GDP growth in FY08 is expected to drop below the 6 percent level for the first time in five years, annual inflation is poised to return to double digits, the fiscal deficit is forecast to rise substantially, and the annual current account deficit, as a percentage of GDP, is projected to be at an all-time high (see Table 1.2). The weakness in the external account is also reflected in weakening foreign exchange reserves (and a 7.3 percent YTD depreciation of the rupee by the first week of May 2008).

However, despite the deterioration, it is also important to note that as a result of structural reforms and liberalization measures over the last fifteen years, the economy has fundamentally gained resilience. This suggests that a policy focus on regaining macroeconomic stability through further reforms, and corrective measures could quickly reinvigorate the growth momentum of the economy.

The most recent data clearly indicates that the slowdown in the economy during FY08 is principally in the commodity producing sectors. For example, the disappointing performance of important major crops contributed significantly to slowdown in agricultural growth during FY08. This sector is globally vulnerable to weather conditions, but in Pakistan farmers also suffer from policy risk in the pricing of agri-produce, insufficient regulation on quality of inputs (pesticides, seeds, etc) and poor infrastructure (for water management, storage and processing facilities as well as lack of farm-to-market roads, etc). Similarly, facilitation of institutional credit, as well as risk mitigation for farmers through active futures market and crop insurance, can allow a substantial increase in value-addition. Policy focus on the above areas can thus yield relatively quick returns in the form of higher productivity and lower post-production losses. Moreover, given that Pakistan is already a low-cost producer of many agri-commodities, and that international commodity prices seem likely to remain strong for years to come, agri-reforms offer broad-based gains in terms of income generation (and poverty reduction), support for lowering inflation, and higher exports. Interestingly, strategies to increase yield in agriculture also offer benefits for industry, raising hopes of low price inputs, and creating room for downstream value-added investment. This would also help diversify the countrys manufacturing and export base, thus reducing output volatility.

Productivity improvements can also be important in containing domestic inflation. Inflation is already a serious policy concern for Pakistan, with CPI inflation at 17.2 percent Year-on-Year for April 2008, the highest level in a month since April, 1995. At least a part of this is driven by domestic supply-shocks that have compounded the impact of strong aggregate demand, and high international commodity prices. The latter, in particular have continued to rise, and the pass-through to the domestic consumers is increasing; administered prices are increasing, wages are facing upward pressure, and imported inflation is on an uptrend. This clearly indicates that restoring price stability in the short-run may prove challenging. Even fiscal measures (tariff cuts and subsidies), aiming to at least partially protect the broad populace from rising food and energy commodity prices, are likely to prove unsustainable, given the already large fiscal deficit. Any such measures need to be carefully targeted at only the very poor and vulnerable.

In this environment, it becomes all the more important that monetary policy be calibrated to squelch demand-led inflationary pressures in the economy. Over the last 6 months, expansionary fiscal policy has overshadowed and substantially weakened the impact of sustained monetary tightening by SBP. This impact of the heavy government borrowings has been particularly evident in FY08, with the borrowings rising to a record Rs551.0 billion by 10th May, 2008 (compared to only Rs45.7 billion in the corresponding period of FY07), almost doubling the total outstanding stock of borrowings to Rs940.6 billion. This trend cannot be sustained without risking a substantial further acceleration in inflation.

In other words, the government has to urgently address the growth of the fiscal deficit as well as to diversify its financing away from the central bank. While information on fiscal developments is only available for H1-FY08, SBP assessment indicates that the Jul-Mar FY08 fiscal deficit (as a ratio of GDP) is likely to be greater than the FY07 annual figure. The new government has indicated an intention to broaden the tax base and rein-in expenditure growth in support of macroeconomic stability. It has also indicated an intention to diversify the financing of the deficit and reduce dependence on the central bank borrowings. For the economy to retain its high growth momentum, it is important that these goals are achieved.

Over time, the removal of the excessive fiscal stimulus, the increase in administered energy prices, the recent exchange rate adjustments and continued tight monetary stance1 are also expected to help correct the substantial increase in the countrys trade deficit. This correction is overdue. With food and petroleum imports constituting more than half of the rise in imports, there is a limited scope for import compression in the short-run. Moreover, it is likely that the country will need to raise imports to strengthen its infrastructure, particularly of power generation. Thus, policy focus needs to remain on addressing structural impediments to export growth in medium to long term. Typically subsidies do not incentivize efficiency, raise fiscal costs, and often lead to gaming to maximize rent seeking rather than increased productivity. Therefore, policies must instead focus on structural reforms to reduce cost of doing business, ensure efficient provision of key inputs (water, power etc), improvement of logistics chains, etc.

In addition significant gains in foreign exchange earnings may be achieved by boosting services exports such as IT services, tourism etc, and focusing on increasing remittances by benefitting from labor market opportunities in East Asian economies and the Middle East. Productivity gains likely to be accrued from skilled labor will have spillover effects in attracting FDI, enhancing workers remittances as well as increasing exports of goods and services.

As of end-April 2008, the trade deficit recorded in the balance of payments has reached US$12.7 billion, contributing directly to the record current account deficit. The stress on the economy as a result of this has been compounded by the continuing problems in the international financial markets. While the country has largely been unaffected by the direct impact of these disruptions, investors are increasingly risk averse, with a reduction in liquidity flows to emerging economies. This makes financing the deficits more challenging.

In absence of hefty foreign investment inflows (both direct and portfolio) as evident in FY07, rising current account imbalance and weak performance of exports resulted in a depletion of foreign exchange reserves. A natural outcome of these developments is weakening of rupee against major currencies, which was further augmented due to appreciation of the US dollar in recent week.

*Executive Summary

Real Sector Agriculture*

Recent information points to an increased risk of a decline in aggregate value-addition by important major crops in FY08 relative to the previous year. It was hoped that a wheat harvest close to the annual target would offset much of the drag from the disappointing aggregate performance of the FY08 kharif harvest. But some reports suggest that wheat production in FY08 may also turn out to be substantially below the target. If these concerns prove correct then a weak performance by major crops would drag the annual growth substantially below the annual target.

Given that commodity prices are likely to remain strong, it is imperative that policies be framed to support farmers ability to raise productivity substantially in the years ahead. Key areas requiring policy intervention remain the transmission of price gains (establishment of futures markets), risk mitigation (crop insurance, storage facilities), increasing investment in agri-sector infrastructure (water management, electricity, farm-to-market roads, etc) and in value-addition chains (eg through processing).

The agriculture credit disbursement continued apace with its positive trends. The total agri disbursements amounting to Rs157.6 billion during Jul-Apr FY08 - an increase of 34.9 percent YoY. The water shortage seen in rabi FY08 are likely to continue in first phase of kharif FY09, while improved water availability is anticipated from better monsoon rains during the second phase of kharif FY09 (June-September). Fertilizers off-take increased by 9.2 percent during July-March FY08.

*Large Scale Manufacturing*

Initial prospects of achieving a reasonable growth in LSM sector during FY08 were clouded by aggravating energy crisis coupled with high international commodity prices and political unrest through most of the year. As a result, the LSM sector posted a dismal growth of 4.8 percent in the first nine months of FY08 compared with 9.0 percent in the same period of FY07.

It appears that energy shortages had a broad-based impact on manufacturing activities. The impact was more pronounced on metal sub-sector which also faced a steep increase in international steel prices. Activities in textiles and chemicals (especially caustic soda) industries were also affected by frequent energy disruptions as well as rising input cost.

Although a large number of industries (10 out of 15) delivered a weak performance; for some industries this was largely an outcome of short-term developments including poor FY08 cotton harvest (hurting textile and allied industries), political unrest through most of period (especially the economic losses in the aftermath of 27th December 2007), temporary closures of certain industrial units for maintenance and/or up-gradation (eg, polyester fiber, paper and fertilizer), as well as power shortages (eg, metal industries and manufacturers of caustic soda, among others).

*Services*

Information for the first nine months of FY08 suggests that the services sector is poised to achieve the annual targeted growth. The main contributors to this performance are wholesale & retail trade, transport storage & communication as well as public administration & defence sub-sectors. In addition, social & personal services seem well placed to contribute positively towards upbeat annual growth in services sector. However, growth in finance & insurance sub-sector appears to slow due to weaker profitability of the commercial banks, nonetheless remain strong in FY08.

*Prices*

The impact of strong global inflationary pressures on domestic inflation has also been compounded by the adjustments of administered prices of key fuels and wheat. All price indices have moved up significantly so far in FY08 and are significantly higher than the annual averages for the preceding five years. Consumer Price Index (CPI) inflation accelerated to 17.2 percent YoY during April, 2008 contributed by both food and non-food sub-groups. In particular, CPI food inflation reached to 25.5 percent in April, 2008.

The desired impact of tight monetary stance of SBP has been neutralized by huge government borrowings. Core inflation, measured by 20 percent trimmed mean, accelerated to double digits (14.1 percent - record high level) in April 2008. Persistence of inflationary pressures is also evident from non-food non-energy (NFNE) based core inflation that increased to 10.8 percent in April 2008.

*Money and Banking*

The conduct of monetary policy has become increasingly challenging for SBP as the fiscal year has progressed, and inflationary pressures are gaining further strength.

The inflationary pressures have gained momentum, due to a number of factors, including supply shocks and continuing strong demand. The former include a sustained increase in global commodity prices (including unprecedented hikes in food and energy prices). The demand pressures, on the other hand, were mostly reflected in a sharp rise in the fiscal deficit that was largely monetized through a record increase in government borrowings from the central bank.

The pass through of high global commodity prices to domestic inflation is significant, and has increased in recent years as (a) the economy has become more open in recent years, and (b) the government began to gradually pass-on the rise in cost of key fuel (petrol and diesel), which was earlier frozen, to the domestic consumers.

Since the current higher prices in international markets are forecast to persist well above their historical averages in the foreseeable future, it is anticipated that the resulting inflationary expectations will be more lasting. There is also evidence that the erosion in purchasing power and squeeze in profit margins due to sustained increase in food and commodity prices is contributing to second round of inflationary pressures. Without continued monetary tightening, the inflationary pressures may turn into a wage-price spiral.

At the same time, the already high fiscal deficit is not only limiting the scope for containing the pass through of global inflation through subsidies and tariff reduction, challenges for monetary policy have been compounded as the government is relying more on borrowings from the central bank, which is the most inflationary source of financing. Moreover, the liquidity injections from unpredictable government borrowings have weakened the transmission of policy interest rates to retail rates. In order to meet the above challenges, SBP is maintaining a tight monetary policy stance. However, this stance needs to be supported by fiscal prudence.

The overall credit demand is also strong despite a significant slowdown in credit growth to consumers, energy shortages and operational bottlenecks in major industries. This was mainly attributed to (1) rise in working capital requirements due to higher input costs; (2) the need for bridge financing to settle price differential claims of OMCs and IPPs; as well as (3) the higher fixed investment (visible in a few sectors, eg textile, refineries and power) in the month of March 2008.

*Fiscal Developments*

Although official statistics on public finance for July-Mar FY08 are not yet available, SBP forecast suggests that the budget deficit for Jul-Mar FY08 (as a percentage of the estimated FY08 GDP) is likely to be significantly higher than the full-year FY07 figure.

The growth in government revenues in Q3-FY08 is expected to recover from the low of 1.8 percent seen during H1-FY08 as: (1) FBR tax receipts, which contribute the bulk of government revenues, have increased by 31.3 percent in Q3-FY08 compared to 6.0 percent during H1-FY08, and (2) non-tax revenues have been bolstered with the disbursement of budgetary support grants of US$281.7 million and US$300 million from USA and Saudi Arabia respectively.

Government domestic borrowing during July-Mar FY08 grew strongly, reflecting a strong year-on-year increase in the deficit, and little change in external financing from FY07. 

Thus, with net retirements of borrowings from commercial banks and only Rs1.7 billion in privatization proceeds (against Rs75 billion budgeted for FY08), the government borrowings from the central bank continued to rise sharply. Indeed, incremental government borrowings from SBP as of May 10, 2008 have reached Rs551.0 billion, pushing the outstanding stock of treasury bills with SBP to Rs940.6 billion. This development has significantly augmented inflationary pressures in the economy, and raised risks to macroeconomic stability.

After a sharp rise of 6.4 percent in second quarter, the growth in the domestic debt moderated to 5.5 percent in Q3-FY08. Although, government availed substantial financing from SBP in this quarter, growth in floating debt decelerated due to significant retirements by the commercial banks, resulting in a moderation in debt growth during Q3-FY08.

*External Sector*

*Balance of Payments*

The deterioration in Pakistans overall balance of payment accelerated during Jul-Apr FY08. On the one hand, the current account deficit continued to expand while on the other, financial and capital account surplus shrank. Consequently, the countrys foreign exchange reserves fell to US$11.5 billion and the rupee depreciated by 13.4 percent against US dollar by 22nd May, 2008.

A large part of the deterioration in current account deficit emanated Nov 2007 onwards on account of substantial increase in import bill. The rise in import bill, in turn, was driven by both high prices and demand factors, with former having the greater role. The rise in import bill was accompanied with rising freight charges which together overshadowed improvement in export growth and impressive increase in current transfers in the period under review.

The financial & capital account surplus declined during Jul-Apr FY08, mainly due to substantial fall in foreign portfolio investment2, which resulted due to: (a) outflow from stock market, and (b) due to delay in floatation of Global Depository Receipts (GDRs) and (c) delay in issuance of euro bonds.

*Trade Account*

Pakistans merchandise trade deficit widened to a record high of US$16.8 billion during Jul-Apr FY08, which is 37.8 percent higher than the annual trade deficit target. The deficit was fueled by a very strong surge in imports as well as below - target export growth.

While the 10.2 percent YoY export growth during the Jul-Apr FY08 was an improvement over the previous year, it was nonetheless significantly lower than the 12.4 percent growth targeted for the period3. The surge in imports was caused by both higher aggregate demand and rising international commodity prices. Growth in exports on the other hand was led by non textiles, while textile exports registered a fall in the period under review.

1. Effective from May 23, 2008, SBP increased its policy discount rate by 150bps and reserve requirements by 100bps. At the same time, SBP imposed a cash margin requirement of 35 percent on selected imports. Furthermore, effective from June 1, 2008, banks are required to pay a minimum profit of 5 percent on PLS/Savings Accounts.

2. The foreign portfolio investment declined to US$118 million during Jul-Apr FY08 from US$1758 million in the same period of last year.

3. The FY08 annual growth target for exports for was set at 13.1 percent in the trade policy.

Overview of SBPs Q3 report for FY08


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## Neo

*'Pakistan market not ready for 3G mobile' ​* 
KARACHI (May 31 2008): Marwan Zawaydeh Chief Executive Officer (CEO) of Warid Telecom has said that presently Pakistani market is not ready for 3G mobile services because the cost of a mobile phone for this service is over Rs 50,000.

In an interview with Business Recorder on Friday, he said that a 3G mobile set is out of buying reach of common men due to which market does not show potential for service providers to make huge investments prematurely.

"3G service is a commodity for very few people. The feasibility of 3G services in Pakistan will depend very much on the license fee as well as network rollout cost," he maintained. He said "therefore, the mobile phone operators ask the government to consider 3G not as a licensing opportunity, rather an allocation of additional spectrum linked with rollout obligations."

However, he said that mobile operators use GPRS and Edge technology, which requires minimum investment and most of the available handsets support it can offer broadband connectivity and high-speed data services.

He pointed out that a lot of geographical locations in Pakistan are currently without basic voice services. However, cellular service providers are investing for providing phone connectivity for remote areas.

Warid Telecom has invested 1.3 billion dollar in Pakistan during the last three years. Its total investments and commitments will reach 1.5 billion dollar by the end of 2008. It will invest additional one billion dollar by the end of 2009, Marwan pointed out.

About the company's expansion plan, he said that Warid started pouring money heavily to double our network capacity and coverage to take our installed cell sites to more than 5,000 by the end of this year. "The latest addition has taken the number to 5000 destinations in Pakistan," he added.

Warid Telecom has signed two contracts with Huawei. They cover purchase and installation of 422 cell sites and will add 137 cities and 27 roads to the Warid Telecom's coverage network before the end of 2008, he said.

"These network expansion plans would be mainly, focusing the rural and the far-flung areas of the country," he added.

Recently, Warid Telecom has awarded a 300 million dollar contract to Sweden's Ericsson to expand its network in Pakistan. The GSM network extension will give additional capacity for five million subscribers and coverage of additional 100 cities before the end of current year, he said.

Warid Telecom has always brought innovations and convenience for its subscribers. Some of them have been launched while many of them are in the process considering the new innovations as an ongoing activity, CEO Warid Telecom said. It has recently revised post-paid tariffs with many new features. Similarly, it is the first operator providing scratch-card payment facility for post-paid subscriber, he said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Govts receipts on oil, gas decrease by Rs 35.128bn​*
ISLAMABAD: Federal governments receipts from surcharges and royalty from oil and gas sector have witnessed a decrease of Rs 35.128 billion during July-March period of current fiscal year 2007-08 as compared to the same period last year. 

Receipts from surcharges and royalty from oil and gas sector amounted to Rs 57.877 billion during first nine months of current fiscal year as compared to Rs 93.005 billion in same period of last year. 

Development surcharge on gas decreased from Rs 29.668 billion to Rs 16.878 billion. Similarly, development surcharge on petroleum decreased from Rs 34.888 billion to Rs 12.578 billion in the July-March period of last fiscal year. Royalty on oil and gas also decreased from Rs 28.449 billion to Rs 24.421 billion in July-March period of current fiscal year. Even though the government earned Rs 4 billion from discount retained on crude oil, the overall receipts remained less than the same period of last fiscal year. 

The budget deficit of the country has reached at 5 percent of the GDP during July-March period of current fiscal year 2007-08 against the claim of the last government of containing it to just 4 percent of GDP in full fiscal year. 

Authorities at the Ministry of Finance are trying to contain budget deficit at 6 percent of the GDP by end of this fiscal year; however, their efforts may fell short due to further increase in oil prices in the international market. 

The federal government has suffered a budget deficit of Rs 494.958 billion during first half July-March period of current fiscal year 2007-08 against the annual target of Rs 399 billion during July-June period. The main reason behind the sudden jump in budget deficit has been due to breach of fiscal discipline and expenditures of Rs 522 billion over and above of the budget due to allowing subsidies on POL prices and power tariff along with other non-development expenditures, a senior official told. 

The federal government has transferred Rs 297.560 billion during first nine months of this fiscal against Rs 290.304 billion in the same period of last fiscal to the four federating units Punjab, Sindh, NWFP and Balochistan as provincial share in federal revenues under interim National Finance Commission (NFC) Award announced by the President of Pakistan. 

Total revenues of the government stood at Rs 974.276 billion and the total expenditures amounted to Rs 1.468 trillion during first nine months. The defence expenditures were Rs 196.162 billion during first nine months against annual allocation of Rs 275 billion. According to the official figures of Ministry of Finance, federal revenues during the first nine months were Rs 974.276 billion which include Rs 711.156 billion from tax revenue and non-tax revenues stood at Rs 263.120 billion. 

According to the details of the expenditures during July-March period of current fiscal year, the government has spent a total sum of Rs 1.468 trillion that include, Rs 1.142 trillion were the non-development expenditures. The government paid Rs 354.236 billion as interest on local and foreign loans. Total defence expenditures were Rs 196.162 billion, the development expenditure and net lending during the first nine months stood at Rs 329.775 billion. 

The budget deficit during the first half July-March stood at Rs 494.958 billion that was financed through borrowing from external resources of Rs 103.714 billion and Rs 390.744 billion were borrowed locally. The federal government has spent Rs 41.428 billion on servicing of foreign debt and Rs 312.808 billion were spent on servicing of domestic debt.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan and India experts to inspect Baglihar, Neelum-Jhelum projects ​* 
LAHORE (June 01 2008): Pakistan and India have allowed each other's technical experts to inspect the Baglihar dam and Neelum-Jhelum project sites. The decision was taken in the meeting of the Indo-Pak Indus Water Commission held here on Saturday. India has assured Pakistan that Baglihar dam is being constructed in accordance with the suggestions of WB neutral expert.

The Pakistani delegation of technical experts will visit India to inspect the Baglihar dam in September this year. On the conclusion of first day's talks, Indian Commissioner Aranga Nathan and Pakistan Commissioner Jamaat Ali Shah briefed media persons about the day's proceedings.

Shah said that Pakistan was ready to remove Indian concerns about Neelum-Jhelum project. Aranga Nathan said both sides agreed to exchange information on monsoon season and flood forecast. He said that one-year performance report of Indus Water Commission had been endorsed by the two countries and it would be presented to the respective governments on June 1. The three-day talks will conclude on Monday, June 2.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*PSDP 2008-09: NEC likely to approve Rs 127.53bn for dam projects​*
ISLAMABAD: For ensuring water availability and to over come power crises the government is likely to allocate in the Public Sector Development Programme, over Rs 127.53 billion for the development of dams and increasing power generation capacity in next fiscal year 2008-09. 

The National Economic Council (NEC), schedule to meet on June 2. The NEC can change these allocations for further improvement. These are projects of national importance and it is expected that the government might ensure maximum allocation for them. 

As the country is facing severe load shedding and the new government is also claiming to over come the power short fall on emergency basis, it is expected that the NEC in its meeting might ensure provision of more funds for these schemes. 

The senior officials of the Planning Commission told Daily Times here Saturday that Water and Power Division has demanded Rs 103.867 billion for new and ongoing water sector various projects including dams. However, the priorities committee and later the Annual Plan Coordination Committee have proposed an amount of Rs62.019 billion for the development of water sector in the next fiscal year 2008-09. 

Similarly for power sector, the ministry demanded Rs 105.333 billion for meeting the ongoing severe power crises in the country. 

In water sector, total expected allocation for 66 projects is Rs62.019 billion in the Public Sector Development Programme for the year 2008-09. Maximum allocation has been made for these national importance projects for the construction of different major dams. 

Some major projects are: Raising of Mangla Dam with allocation Rs 18 billion, Mirani Dam Rs300 million, Resettlement Action Plan  Mirani Dam Rs 50 million, Sabakzai Dam Rs 120 million, Kurram Tangi Dam Rs 500 million, Satpara Multipurpose Dam Rs 100 million, Gomal Zam Dam Rs 2 billion, Greater Thal Canal (Phase-I) Rs 1.5 billion, Kachhi Canal (Phasep-I) Rs 8.5 billion, Rainee Canal (Phase-I) Rs 3 billion, Lower Indus Right Bank Irrigation and Drainage, Sindh Rs 2.5 billion, Balochistan Effluent Disposal in to RBOD (RBOD-III) Rs 1.2 billion, Revamping/rehabilitation of irrigation and drainage system of Sindh Rs 2 billion, and many others. 

For power sector, the APCC proposed Rs 65.514 billion for 45 projects and these are mainly related to power generation in the country. Some important major projects among these are; Khan-Khawar Hydro Power project, Shangla, Beshan, NWFP Rs 1.175 billion, Allai Khawar Hydro Power Project, Batagram, Besham NWFP Rs 2.535 billion, Dubir Khawar Hydro Power Project, Kohistan NWFP Rs 3.5 billion, Neelum Jhelum Hydropower Project AJK Rs 7.5 billion, 800MW Guddu Steam Power Project Rs 500 billion, 330MW Combined Cycle Dadu Power Rs 7.5 billion, 500MW Combined Cycle Power Plant at Chich Ki Malian Rs 5 billion, 425MW Combined Cycle Nandipur Power Plant Rs 5 billion, Muzaffargarh-Gatti 500KV T/Line Rs 1 billion and many others. ijaz kakakhel

Daily Times - Leading News Resource of Pakistan


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## Neo

*SBP stresses need for policies to increase agriculture productivity ​* 
KARACHI (June 01 2008): The State Bank of Pakistan (SBP) in its third quarterly report on Saturday said that increased production of agriculture commodities would help reduce the current account deficit.

*THE DISAPPOINTING HARVESTS OF KEY CASH CROPS ARE PARTICULARLY TROUBLING FOR PAKISTAN:* "The raise in the commodity production would not only raise farm incomes and help reduce poverty but would also help narrow the country's current account deficit through import substitution and higher exports, as well as help contain domestic inflation," the report said.

The SBP said that commodity prices were likely to remain strong. It is imperative that policies are framed to support farmers' ability to raise productivity substantially in the years ahead. Key areas requiring policy intervention remain the transmission of price gains by establishment of future markets, risk mitigation by crop insurance, storage facilities, increasing investment in agri-sector infrastructure, especially in water management, electricity, farm-to-market roads and in value-addition chains through processing.

The report said that earlier it was expected that wheat production would be near about the target and would help to boost the performance of Kharif crop. However it was lower than the target, disappointing the Kharif crop.

The disappointing harvests of key cash crops are particularly troubling for Pakistan. What is worrisome is the fact that domestic producers can not take advantage of the incentive offered by record international prices for many agri-commodities, such as rice and wheat, the SBP said.

Pakistan is a low-cost producer of many such commodities, and could, therefore, have benefited substantially if productivity growth and output had remained strong, the SBP report added.

The report said that delayed announcement of procurement price for wheat, along with rising prices of fertilisers and late sugarcane crushing and extended cotton picking caused reduction in the area under wheat crop. Additionally, anticipated decline in water availability at the time of sowing discouraged farmers to bring more area under wheat cultivation.

The water shortage seen in Rabi FY08 is likely to continue in Kharif FY09, as the carryover water balance for Kharif 2008 from the ending Rabi season was a negligible--0.013 MAF at Tarbela, Mangla and Chashma as on April 1, 2008.

Carryover water balance was 1.5 MAF during the beginning of the corresponding Kharif period. The water shortage is likely to impede sowing of the two major Kharif crops--rice and cotton. On the other hand, agriculture credit disbursement continued apace with its positive trend. The total agri disbursements, amounting to Rs 157.6 billion, were achieved during July-April FY08, depicting an increase of 34.9 percent.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*LSM posts dismal growth, declines by 4.2%: SBP ​*
KARACHI: The Large Scale Manufacturing (LSM) sector posted a dismal growth of 4.8 percent in the first nine months of financial year 2008 compared with 9 percent in the same period last year, depicting 4.2 percent decline according to State Bank of Pakistans third quarterly report revealed Saturday. Initial prospects of achieving a reasonable growth in LSM sector during financial year 2008 were clouded by aggravating energy crisis coupled with high international commodity prices and political unrest through most of the year, the report commented. 

It pointed out the operational constraints caused by energy shortages had a broad-based impact on manufacturing activities. However the impact was pronounced on metal sub-sector which also remained under the brunt of high international steel prices. Activities in textiles and chemicals (especially caustic soda) sub-sectors were also affected by frequent energy disruptions as well as rising input cost. An important contribution to the July-Mar financial year 2008 growth is from the sharp rise in sugar production (though decelerated relative to Jul-Jan financial year 2008). Excluding this sub-sector, Sugar industry registered a phenomenal growth despite financial problems and stalemate with government and farmers (on start of crushing season and price of sugarcane). The record high growth in sugar production is primarily owed to record bumper crop during financial year 2008. It is important to mention here that the LSM showed some recovery in January 2008, after incurring huge economic losses in December 2007. However, the recovery proved short-lived for a number of reasons: Availability of cotton remained constrained in the domestic market with high average prices during the period.

More importantly, slowdown in US and Euro area would put further pressures on the performance of textile sector. The activities in edible oil/ghee industry could not gather pace during Feb-Mar financial year 2008 reflecting ease in demand for the products due to rising prices. In addition, anecdotal evidence suggests that substitution of formal sector products with the informal sector products, particularly by small commercial users is a major contributory factor for slowdown in oil/ghee industry. Temporary suspension of palm oil supply from Karachi to the upcountry due to a row between ghee industry and truck owners for more than a week in April 2008, also hit the industry. Similarly, the production of fertilizers remained weak during Feb-Mar due to the closure of DAP plant for BMR up-gradation. 

Furthermore, the recovery in remaining months of financial year 2008 also appears remote. High key commodity prices and steady depreciation of Rupee March 2008 onwards, further increased manufacturing. The LSM sector grew by 7.8 percent compared with 5.4 percent and 4.2 percent in Jan 2007 and Jan 2006 respectively. The quantum import of raw cotton during Feb-Mar financial year 2008 registered a growth of 76.4 percent over same period last year. In Feb-Mar financial year 2008, average cotton prices were 25.9 percent higher than same period last year and 6.9 percent higher than second quarter 2008. Unfortunately, the crisis-like situation in domestic energy sector as well as in international commodity market does not appear to be settling down in the near future. Thus, the LSM sector is likely to remain under pressure in the short-term. 

However, the relative easing of a few commodity prices in international market (especially industrial metal including aluminum, copper, zinc, lead, etc) April 2008 onwards, if continued, may ease cost pressures from domestic manufacturers. Furthermore, presence of a still-strong demand in the economy may trigger a recovery in LSM. Specifically, aggregate demand has not yet weakened very substantially as: The worsening fiscal and current account deficits throughout the first nine months of financial year 2008 are reflective of a strong (though moderated) domestic demand. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Economy showing increasing signs of stress ​*
ARTICLE (June 01 2008): Recent information points to an increased risk of a decline in aggregate value-addition by important major crops in FY08 relative to the previous year. It was hoped that a wheat harvest close to the annual target would offset much of the drag from the disappointing aggregate performance of the FY08 kharif harvest.

But some reports suggest that wheat production in FY08 may also turn out to be substantially below the target. If these concerns prove correct then a weak performance by major crops would drag the annual growth substantially below the annual target.

*ALONGSIDE IS THE EXECUTIVE SUMMARY OF STATE BANK OF PAKISTAN'S THIRD QUARTERLY REPORT FOR 2007-08, ISSUED ON SATURDAY. REAL SECTOR AGRICULTURE:* Given that commodity prices are likely to remain strong, it is imperative that policies be framed to support farmers' ability to raise productivity substantially in the years ahead.

Key areas requiring policy intervention remain the transmission of price gains (establishment of futures markets), risk mitigation (crop insurance, storage facilities), increasing investment in agri-sector infrastructure (water management, electricity, farm-to-market roads, etc) and in value-addition chains (eg through processing).

The agriculture credit disbursement continued apace with its positive trends. The total agri disbursements amounting to Rs 157.6 billion during July-April FY08 - an increase of 34.9 percent YoY. The water shortage seen in rabi FY08 are likely to continue in first phase of kha rif FY09, while improved water availability is anticipated from better monsoon rains during the second phase of kharif FY09 (June-September). Fertilisers off-take increased by 9.2 percent during July-March FY08.

*LARGE SCALE MANUFACTURING* Initial prospects of achieving a reasonable growth in LSM sector during FY08 were clouded by aggravating energy crisis coupled with high international commodity prices and political unrest through most of the year. As a result, the LSM sector posted a dismal growth of 4.8 percent in the first nine months of FY08 compared with 9.0 percent in the same period of FY07.

It appears that energy shortages had a broad-based impact on manufacturing activities. The impact was more pronounced on metal sub-sector which also faced a steep increase in international steel prices. Activities in textiles and chemicals (especially caustic soda) industries were also affected by frequent energy disruptions as well as rising input cost.

Although a large number of industries (10 out of 15) delivered a weak performance; for some industries this was largely an outcome of sort-term developments including poor FY08 cotton harvest (hurting textile and allied industries), political unrest through most of period (especially the economic losses in the aftermath of 27th December 2007), temporary closures of certain industrial units for maintenance and/or up-gradation (eg, polyester fiber, paper and fertiliser), as well as power shortages (eg, metal industries and manufacturers of caustic soda, among others).

*SERVICES: *Information for the first nine months of FY08 suggests that the services sector is poised to achieve the annual targeted growth. The main contributors to this performance are wholesale & retail trade, transport storage and communication as well as public administration and defence sub-sectors.

In addition, social & personal services seem well placed to contribute positively towards upbeat annual growth in services sector. However, growth in finance & insurance sub-sector appears to slow due to weaker profitability of the commercial banks, nonetheless remain strong in FY08.

*PRICES* The impact of strong global inflationary pressures on domestic inflation has also been compounded by the adjustments of administered prices of key fuels and wheat.

All price indices have moved up significantly so far in FY08 and are significantly higher than the annual averages for the preceding five years. Consumer Price Index (CPI) inflation accelerated to 17.2 percent YoY during April, 2008 contributed by both food and non-food sub-groups. In particular, CPI food inflation reached to 25.5 percent in April, 2008.

The desired impact of tight monetary stance of SBP has been neutralised by huge government borrowings. Core inflation, measured by 20 percent trimmed mean, accelerated to double digits (14.1 percent - record high level) in April 2008. Persistence of inflationary pressures is also evident from non-food non-energy (NFNE) based core inflation that increased to 10.8 percent in April 2008.

*MONEY AND BANKING* The conduct of monetary policy has become increasingly challenging for SBP as the fiscal year has progressed, and inflationary pressures are gaining further strength.

The inflationary pressures have gained momentum, due to a number of factors, including supply shocks and continuing strong demand. The former include a sustained increase in global commodity prices (including unprecedented hikes in food and energy prices). The demand pressures, on the other hand, were mostly reflected in a sharp rise in the fiscal deficit that was largely monazite through a record increase in government borrowings from the central bank.

The pass through of high global commodity prices to domestic inflation is significant, and has increased in recent years as (a) the economy has become more open in recent years, and (b) the government began to gradually pass-on the rise in cost of key fuel (petrol and diesel), which was earlier frozen, to the domestic consumers.

Since the current higher prices in international markets are forecast to persist well above their historical averages in the foreseeable future, it is anticipated that the resulting inflationary expectations will be more lasting. There is also evidence that the erosion in purchasing power and squeeze in profit margins due to sustained increase in food and commodity prices is contributing to second round of inflationary pressures. Without continued monetary tightening, the inflationary pressures may turn into a wage-price spiral.

At the same time, the already high fiscal deficit is not only limiting the scope for containing the pass through of global inflation through subsidies and tariff reduction, challenges for monetary policy have been compounded as the government is relying more on borrowings from the central bank which is the most inflationary source of financing. Moreover, the liquidity injections from unpredictable government borrowings have weakened the transmission of policy interest rates to retail rates. In order to meet the above challenges, SBP is maintaining a tight monetary policy stance. However, this stance needs to be supported by fiscal prudence.

The overall credit demand is also strong despite a significant slowdown in credit growth to consumers, energy shortages and operational bottlenecks in major industries. This was mainly attributed to (1) rise in working capital requirements due to higher input costs; (2) the need for bridge financing to settle price differential claims of OMCs and IPPs; as well as (3) the higher fixed investment (visible in a few sectors, eg textile, refineries and power) in the month of March 2008.

*FISCAL DEVELOPMENTS:* Although official statistics on public finance for July-March FY08 are not yet available, SBP forecast suggests that the budget deficit for July-March FY08 (as a percentage of the estimated FY08 GDP) is likely to be significantly higher than the full-year FY07 figure.

The growth in government revenues in Q3-FY08 is expected to recover from the low of 1.8 percent seen during H1-FY08 as: (1) FBR tax receipts, which contribute the bulk of government revenues, have increased by 31 .3 percent in Q3-FY08 compared to 6.0 percent during H1-FY08, and (2) non-tax revenues have been bolstered with the disbursement of budgetary support grants of US $281.7 million and US $300 million from USA and Saudi Arabia respectively.

Government domestic borrowing during July-March FY08 grew strongly, reflecting a strong year-on-year increase in the deficit, and little change in external financing from FY07. Thus, with net retirements of borrowings from commercial banks and only Rs 1.7 billion in privatisation proceeds (against Rs 75 billion budgeted for FY08), the government borrowings from the central bank continued to rise sharply.

Indeed, incremental government borrowings from SBP as of May 10, 2008 have reached Rs 551.0 billion, pushing the outstanding stock of treasury bills with SBP to Rs 940.6 billion. This development has significantly augmented inflationary pressures in the economy, and raised risks to macroeconomic stability.

After a sharp rise of 6.4 percent in second quarter, the growth in the domestic debt moderated to 5.5 percent in Q3-FY08. Although, government availed substantial financing from SBP in this quarter, growth in floating debt decelerated due to significant retirements by the commercial banks, resulting in a moderation in debt growth during Q3-FY08.

*EXTERNAL SECTOR BALANCE OF PAYMENTS *The deterioration in Pakistan's overall balance of payment accelerated during Jul-April FY08. On the one hand, the current account deficit continued to expand while on the other, financial and capital account surplus shrank. Consequently, the country's foreign exchange reserves fell to US $11.5 billion and the rupee depreciated by 13.4 percent against US dollar by 22nd May 2008.

A large part of the deterioration in current account deficit emanated November 2007 onwards on account of substantial increase in import bill. The rise in import bill, in turn, was driven by both high prices and demand factors, with former having the greater role. The rise in import bill was accompanied with rising freight charges which together overshadowed improvement in export growth and impressive increase in current transfers in the period under review.

The financial and capital account surplus declined during July-April FY08, mainly due to substantial fall in foreign portfolio investment, which resulted due to: (a) outflow from stock market, and (b) due to delay in floatation of Global Depository Receipts (GDRs) and (c) delay in issuance of euro bonds.

*TRADE ACCOUNT* Pakistan's merchandise trade deficit widened to a record high of US $16.8 billion during July-April FY08, which is 37.8 percent higher than the annual trade deficit target. The deficit was fuelled by a very strong surge in imports as well as below -target export growth.

While the 10.2 percent YoY export growth during the July-April FY08 was an improvement over the previous year, it was nonetheless significantly lower than the 12.4 percent growth targeted for the period. The surge in imports was caused by both higher aggregate demand and rising international commodity prices. Growth in exports on the other hand was led by non-textiles, while textile exports registered a fall in the period under review.

Business Recorder [Pakistan's First Financial Daily]


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*'150 megawatts power plant to be operational by September' ​* 
FAISALABAD (May 31 2008): A 150 megawatts private power plant at Samundri Road, which has been hired by Fesco, will become operational by September or October 2008, said Ahmad Saeed Akhtar Chief Executive, Faisalabad Electric Supply Company (Fesco).

Addressing members of Faisalabad Chamber of Commerce and Industry (FCCI) during a meeting here at Fesco Headquarter, he said that the utility was taking elaborated measures to provide maximum relief to consumers besides resolving their electricity-related problems.

FESCO is purchasing transformer-mounted trolleys to meet any emergency in the summer, he said and added that these trolleys would help in immediate replacement of brunt or defective transformer. He said Load Management Schedule had been prepared in consultation with business, trade and industrial communities and would be implemented soon.

FCCI Vice President Muzammal Sultan, Chairman Fesco Standing Committee Niaz Ahmad Sheikh, Vice Chairman Shahid Ahmad Sheikh, members Waheed Khaliq Ramey, Mian Shabbir Ahmad and others were also present on the occasion.

Business Recorder [Pakistan's First Financial Daily]


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*ADB gives $75 million loan for Potohar irrigation water project ​* 
FAISALABAD (June 01 2008): Water availability during the second phase of Kharif FY09 (June-September) would largely depend on monsoon rains in the catchment areas and conducive high temperatures in the glacial belt, enough to precipitate the melting process, official sources said.

At present, water shortage for the full kharif season has been estimated at 3.7 percent relative to normal requirements for the season, and 1.6 percent lower compared with water availability during the preceding kharif season, they said.

The Indus River System Authority (Irsa) has estimated 7 percent shortage for the first phase of Kharif FY09, with the minimum daily average of only 5,100 cusecs available for Punjab and 3,500 cusecs for Sindh. Water shortages at the sowing time may lead to delay in sowing and shortfall in area under cultivation relative to target. Sources said that delayed sowing results in lower yield.

The water shortage seen in Rabi FY08 is likely to continue in Kharif FY09. The carryover water balance for Kharif 2008 from the ending Rabi season was a negligible 0.013 MAF at Tarbela, Mangla and Chashma as on April 1, 2008. Carryover water balance was 1.5 MAF during the beginning of the corresponding Kharif period. The water shortage is likely to impede sowing of the two major Kharif crops--rice and cotton.

In contrast to predictable water availability in a canal-fed area, water availability in barani areas is entirely dependent on rains. Therefore, yields of various crops are also based on the volume and timings of the rains in these areas.

Meanwhile, farmers are expected to bring more area under kharif crops, implement quality inputs in appropriate quantity with extra efforts to reap the benefits of prevailing higher prices of most of the agri produce. In addition, improved nominal farm income during FY08 will also help boost the confidence and optimism of the farmers. Importantly, area under cotton crop, which has almost stagnated over a decade, is expected to increase amid rising cotton prices.

While water shortages are estimated to continue during kharif FY09, rains during April would have also likely to support the optimism among the farmers. In addition, availability of certified seed, certified Bt cotton seeds, and effective pesticides are crucial factors to improve yield. Similarly, production of other two major kharif crops sugarcane and rice will also largely depend on sufficient monsoon rains, availability of irrigation water as well as efficient use of inputs. Meanwhile, Asian Development Bank (ADB) has extended a loan to improve irrigation and drinking water facilities across the Potohar Plateau, near Islamabad.

Under this project, which will be launched within the next month, Pakistan is to build multipurpose dams, irrigation canals, and drinking water supplies across the Potohar Plateau with $75 million loan provided by the Asian Development Bank (ADB).

The project will improve the livelihood of about 22,000 farming households by bringing irrigation to 11,500 hectares of agricultural land that used to rely on irregular and unpredictable rainfall, and improving the existing irrigation networks across another 10,000 hectares. The project will also increase supplies of water for domestic use to rural communities and small towns in districts of Attock, Rawalpindi, Jhelum, and Chakwal.

ADB rural development specialists believe that without secure water sources farming in rain-fed 'barani' areas usually have low productivity and carry high risk because crops often fail when there is drought. Farming is the traditional source of livelihood across Potohar, but crop yields in the 'barani' areas have been typically less than half of those in areas with river-fed irrigation. The traditional crops in barani areas are wheat and gram in winter and sorghum, millet, groundnuts or maize in summer when rainfall is sufficient.

This project will give farmers a reliable water supply, which will increase crop and livestock productivity and therefore increase people's incomes. At the same time, it will increase households' access to cleaner water, therefore reducing sickness and mortality rates caused by waterborne diseases. The construction of dams across the Potohar Plateau started as early as the 1960s.

But they were not as beneficial as had been hoped because local communities rarely participated in their development, farmers did not get the financial and technical support necessary to switch from rainfed agriculture to irrigated farming, and there was no watershed management resulting in a high reservoir sedimentation rate.

In this new project, a more holistic approach is being used that is simultaneously looking at upstream watershed management and downstream irrigated area development. It will also involve local communities to ensure that the project is demand-driven. Out of the total loan package, $20 million will be concessional and will carry low interest rates, while the balance of $55 million will be provided from ordinary capital resources under ADB's London interbank offered rate-based lending facility.

Business Recorder [Pakistan's First Financial Daily]


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*Karachi-Europe direct container service launched ​* 
KARACHI (June 02 2008): The United Marine Agencies (UMA) on Saturday launched a new direct container service with cooperation of 'Hamburg Sud' between Karachi Port and Europe to cater to the ever-increasing demand of the growing trade volume between the two destinations. This was stated by Sohail Shams, Chief Executive Officer (CEO) of UMA at the launch ceremony of the service at a local hotel on Saturday evening.

KPT Chairman Vice Admiral Ahmad Hayat attended the ceremony as his last program as KPT chief before handing over the charge to Vice Admiral Asad Qureshi, Director-General, Ports and Shipping, from June 1, 2008. Other participants beside Vice Admiral Asad Qureshi, were Consul-General of Germany in Karachi Hans-Joachim Kiderien, guest of honour, Deputy Director Mediterranean Services Annelie Schulmeister and representatives of social and business circles.

Shams said that UMA had taken the step after realising the growing need of a direct and fast container service to and from Karachi Port and Europe and to fulfil a decade-long demand of the traders from the two trading partners. The re-structured service of HS from Pakistan International Container Terminal (PICT) would not only facilitate the Pak-Europe trade but would also provide an opportunity to boost cost-effective sea transportation from Pakistan, he said.

He said the new EPIC services would provide direct maritime connection between Karachi and Europe, link northern Europe and Mediterranean with Karachi Port in the shortest transit time, link all key ports of western and eastern Mediterranean via the central hub, Gioia Tauro, and provide a wider route to larger vessels of 4,200-TEUs capacity in Europe.

On the route the shipping line would move in, the CEO UMA said, would be Hamburg-Tilbury-Amtwerp-Gioia Tauro-Jabl-e-Ali-Karachi-Mundra-Nhava Sheva-Gioia Tauro and Hamburg.

Terming Europe a highly potential market for Pakistan's value-added goods like textiles, garments, hosiery, towels, bed sheets, fabrics, etc, Shams said that timely delivery of goods to the European destinations was of vital significance.

The new EPIC service, which would ensure direct shipping of commodities within the shortest possible transit time to European markets, would not only be advantageous to the European customers but would also enhance efficiency of Pakistan's exporters in terms of timely deliveries, he added.

KPT Chairman Ahmed Hayat lauded Sohail Shams for pushing the KPT to make arrangements for accommodating deep draught vessels by conducting dredging at of the port within a short span of time.

Underlining various in and outside port developmental projects Hayat said that construction of Karachi deep water container port would give boost to exports from Pakistan. "The number of vessels bringing cargo in our country now will be taking cargo from Pakistan," he said.

He praised the Karachi International Container Terminal (KICT), the PICT, the stevedoring companies and all other port users for their concerted efforts for making the Karachi Port user-friendly. "I compliment all port users for giving us new challenges," he said. He assured HS of full support from KPT. "We would extend each and every facility we can to facilitate you," Hayat told the shipping line.

German Consul-General y in Karachi, Hans-Joachim Kiderien, and Deputy Director Mediterranean Services Annelie Schulmeister hailed KPT for an impressive infrastructure development at Karachi Port.

Business Recorder [Pakistan's First Financial Daily]


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*NEC approves Rs541bn PSDP for FY 08-09 ​* 
ISLAMABAD: June 02, 2008: The National Economic Council (NEC) which met here Monday under the chairmanship of Prime Minister Syed Yousuf Raza Gilani approved Rs541 billion for the Public Sector Development Programme 2008-09 more than 11 percent of the last fiscal year and also set a GDP growth target of 5.5 percent for the financial year 2008-09.

Later, Deputy Chairman Planning Commission, Salman Faruqi briefed the newsmen at a press conference, about the decisions of the NEC, the country's highest financial forum, which approves the economic outlay and reviews the macro-economic performance of the country.

He said that the total size of the PSDP for the financial year 2008-09 is Rs541 billion in which the share of federal PSDP is Rs371 billion, which is 11.5 percent of the PSDP. The provincial PSDP is Rs170 billion while the allocation for the Earthquake Reconstruction and Rehabilitation Authority (ERRA) is Rs27 billion which is over and above the PSDP 2008-09 of Rs541 billion.

Secretary Information Akram Shahedi, Principal Information Officer (PIO) Ghulam Huzur Bajwa were also present in the meeting.

Salman Faruqi said that the NEC was attended among others by provincial governors, chief ministers, federal and provincial ministers, federal and provincial secretaries and governor State Bank of Pakistan.

He added that the NEC has set a GDP target of 5.5 percent which is realistic and achievable and it could be even grow higher depending upon the economic situation of the country. 

He regretted that in the past including the outgoing financial year the Public Sector Development Programs were not properly implemented against the allocations announced in the budgets but also did not release them.

"We fear the prices specially the prices of oil and food are increasing worldwide while an international economist has termed it as a 'Silent Tsunami' while another economist has written it as 'Inflation is back.' 

He further said that this increase in the prices can also impact our economy badly and added that government is providing Rs380 billion annually only in terms of subsidy for our people. 

Faruqi said that it means that government is providing subsidy of Rs150 million on daily basis due to increase in the prices of food and oil.

NEC approves Rs541bn PSDP for FY 08-09 : Business Recorder | LATEST NEWS


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*NEC may approve 20 percent raise in government employees salaries: revenue collection target to be set at Rs 1.25 trillion ​* 
ISLAMABAD (June 02 2008): The National Economic Council (NEC) is going to approve 20 percent increase in the government employees' salaries, besides setting an ambitious revenue collection target of Rs 1.25 trillion for 2008-09, against revised figure of Rs 990 billion for the Federal Bureau of Revenue (FBR) in its meeting scheduled here for Monday(today).

Prime Minister Syed Yusuf Raza Gilani will chair the meeting. The Finance Ministry has suggested 15 percent increase in salaries for all grades of the government employees. However, this percentage was raised to 20 percent in a meeting held at the Prime Minister Secretariat on Saturday last. The retired government employees will also get 10 percent increase in pension in the next budget.

The meeting also firmed up revenue figures for the next fiscal year, showing 20 percent increase over 2007-08. The budget-makers are of the view that substantial increase in revenue target was necessary to cope with the issue of rising budgetary deficit in 2008-09.

This will also take the overall size of the next budget to slightly over 2.2 trillion against Rs 1.874 trillion of 2007-08. The Rs 540 billion Public Sector Development Programme (PSDP) inclusive of Rs 370 billion of the federal and Rs 170 billion provinces' share would be presented before the NEC. It also includes Rs 55 billion of the corporations in total PSDP.

The budget-makers will inform the NEC that the government would introduce the new concept of the public-private partnership to finance a number of important projects out of the programme to supplement the government efforts for sustainable economic growth.

An official part of the government team told Business Recorder on Sunday that a number of projects relating to infrastructure, water reservoirs, mass transit system in major cities and construction of housing colonies for low income group will be left out of PSDP for financing through public-private partnership.

He said the budget 2008-09 was given final shape for NEC clearance at a meeting held at the Prime Minister Secretariat on Saturday.

The government had allocated Rs 520 billion for PSDP in 2007-08, but it did not work as over 450 schemes some of them very important for development were dropped in the second half of the outgoing fiscal year for sparing allocated funds for subsidies on wheat, oil and fertilisers.

Since the fiscal crunch is yet taking the new shape and the government may not be able to finance even some of important projects from the next year PSDP. This forced the budget-makers to introduce the public-private partnership concept.

Business Recorder [Pakistan's First Financial Daily]


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*Tumbling growth, surging inflation​*
Signals emanating from the economy lend weightage to cries from some quarters that the country has already arrived in a worrisome and difficult zone called stagflation by the economists. It is a state when the economic growth becomes stagnant and high inflation more stubborn.

While the economic growth has declined from the targeted 7.2 per cent to close to 5.8 per cent, the unabated double-digit inflation continues to haunt the policy makers. Critics say that the tightening of the monetary policy may not tame inflation in the short-term but may retard economic growth.

The business sentiments about investment prospects seem to be creating a negative effect in the economy. The high cost of doing business and depressed demand in export markets are not Pakistan-specific. However, Asian economies including those of China and India driven by better growth models have so far not shown signs of any major dent in their growth momentum.

Over the last five years, the economy despite all its severe problems like weak institutional and physical infrastructure and growing imbalances has also been posting six to seven per cent growth. The share of agriculture in GDP has declined and manufacturing growth has been slower as compared to the expansion in the services sector.

There are two questions that need to be asked before moving on towards a strategy to break out of this situation of slowing economic growth and high inflation. One: what has exactly changed for the engine of growth that has been services sector? Two: is the business sentiment all-pervasive or limited to big business, multinationals or big mercantile groups?

Nothing worth mentioning has changed for the services sector. The situation has become more challenging for the manufacturing amidst growing uncertainty and rising costs Khawaja Shahab, federal secretary ministry of industries told Dawn over phone from Islamabad. The secretary agreed that the political government should consider out of box options to deal with the challenges on the economic front.

In my view, the suggestion to evolve a business-led team comprising the nominees of coalition partners for full five-year term should be considered seriously. This is very much possible and could lend stability and revive investors confidence in the economy. All you need is a political will to address the challenges without politicising the economic decision-making process, he said.

An analyst, however, saw nervousness engineered by principal beneficiaries of the last regime who have yet to develop dependable links in the new set-up. Everyone knows that the government needs to generate more resources. They are creating noises to pressurise the government to design the budget in a way that does not hurt them in any way, he said on promise of anonymity.

Big business is weary of expanding scope of military enterprise but because of its dominant positioning it co-opted in a working relationship with it. The announcement by the government that it is considering to increase duties on certain luxury items has infuriated the trading lobby that might not be able to sell same volumes of imports at increased rates in the domestic market when the level of value of disposable income is shrinking, he said.

A report on the economy produced by reputable economists, many of them with a World Bank background, did not get the attention it deserved.

The report-a publication of the Institute of Public Policy- State of economy: challenges and opportunities, in a systematic manner reflects in the words of its chairman Shahid Javed Burki, all three sets of issues: sustainability and inclusiveness of growth; institutional development; decentralisation; short-run macroeconomic adjustment to bring down inflation; and the twin budget and current account deficits.

The main contributors of the report include; Sartaj Aziz, Shahid Javed Burki, Aisha Ghaus Pasha, Pervez Hasan, Akmal Hussain and Hafiz Pasha.

Things are still in the making, Farrukh Qayum, federal secretary finance told Dawn when his opinion about the reason of the government weak response to the economic challenge was solicited.

He hoped that the growth rate will be six per cent for the current year despite the problems that the country confronted over the last one year. We are hoping to settle all outstanding liabilities and start the next fiscal afresh, he told Dawn.

The finance secretary further observed: The flow of remittances is good. There are favourable symptoms of fresh flow of foreign direct investment in a number of sectors. So the situation is not as bad as some rent seeking elements made it out to be. Let the stability return and private investor will hopefully step in to capitalise on huge business opportunities.

All said, the biggest challenge is to divert the liquidity towards productive avenues so as to fight recessionary and inflationary trends.

Tumbling growth, surging inflation -DAWN - Business; June 02, 2008


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*Combined water/power projects to be prioritised ​* 
ISLAMABAD (June 02 2008): The government has decided to prioritise the development projects which would simultaneously store water and generate power, and the Prime Minister has directed the Planning Commission (PC) to do the necessary ground work in this regard, sources told Business Recorder on Sunday.

The PC is likely to inform the Prime Minister about the strategy to this end in the National Economic Council (NEC) meeting on Monday, June 2. The meeting is also likely to give approval to the overall Public Sector Development Programme (PSDP), which has been proposed at Rs 541 billion by the PC, with operational shortfall of Rs 45 billion.

The proposed allocation has been made for morale boosting, as the actual allocation will remain Rs 496 billion. The Finance Ministry has been pressing for total allocation of Rs 437 billion for 2008-09 PSDP. Sources said that final decision on all economic indicators would be taken by the NEC. The projected targets, proposed by the Annual Plan Coordination Committee (APCC), will come up for the consideration of the NEC.

The PC, according to sources, will inform the Prime Minister about the possible small and medium size dams which could be taken up under the PSDP in the next fiscal year. In the past eight years, or so, the Water and Power Development Authority (Wapda) had failed to take any practical steps for the construction of multi-purpose water projects, due to which the power generation capacity, especially hydel power generation, remained almost the same.

Sources said that in the past Wapda unilaterally scrapped the provisions of power generation in some development projects like Mirani dam. The same was being done with the Sabakzai dam.

In the PC-1 of Mirani dam, the provision of hydel power was there, but Wapda scrapped this provision, without taking other stakeholders, including PC, into confidence. Wapda also failed to initiate several projects in upper NWFP that could have the potential of storing water and generate electricity.

Sources said that Wapda should pick up speed in construction of Sheikh Haider project, Draban dam, Tank Zam and some other proposed sites for multipurpose projects. They said that detailed engineering study of Tank Zam dam has recently been submitted to the federal government. The work on Munda dam detailed feasibility study is also very slow. This is a very good project for the benefit of the people.

Sources said that the government must give clear instructions to Wapda that its unilateral decision to scrap the provision of hydel power generation being given in the PC-I would not be acceptable. This is the only solution to take the country out of its current energy crisis. They said that around Rs 12 billion is being allocated for multi-purpose water and power projects. The provinces have already submitted details about the potential sites for small and medium size dams to the federal government.

Business Recorder [Pakistan's First Financial Daily]


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*Package for industrial revival​*
On the eve of the federal budget 2009, the business and industry have appraised the government about its the various problems and submitted suggestions to minimise the emerging threats to the industry. It is time for the new government to enable it to play its due role in the growth of national economy.

The government needs to announce a package for the industrial revival and for businesses which are under tremendous pressure owing to multiple reasons including high oil prices, inflation and energy shortage. The cost of doing business is increasing with every passing day as a result of the depreciating rupee and the high energy cost including electricity, gas and petrol. Under the circumstances, the limit of minimum exemption of Rs100,000 for income tax requires upward revision.The minimum exemption limit for individuals in business needs to be increased to Rs200, 000.

And the issues related to general sales tax also demand a careful review. The industry has suggested recently that the tax refund policy should be revised. Presently, only cash invoice exceeding Rs25,000 is eligible for claiming Input Tax Refund, which is too low and must be enhanced to at least Rs.100,000 per cash invoice.

A retailer whose value of supplies or turnover in any period during last 12 months preceding the fiscal year exceeds Rs5 million, an importer, a wholesaler including dealer or distributor are also subject to compulsory registration under the Sales Tax Act. This threshold should be raised to Rs10 million. On late submission of monthly/quarterly sales tax return, a heavy penalty of Rs25000 is imposed. It is harsh and demands a rational revision. A fairly sufficient period say 45 days should be allowed for submission of returns.

The industry faces tiresome procedures in filing tax returns which result in wastage of precious time, energy and resources. One such case is the submission of NIL Return where statement of sales/purchase is required to be submitted along with it. This condition is unjustified and to ad salt to injury, even late or non-submission of such a statement is subject to penalty of Rs25000. Such a penalty should be withdrawn. When NIL return is submitted, there is no use of submitting nil purchase/sales statement.

Industry representatives have suggested that penalties on account of various delinquencies or defaults should be in line with the Income Tax Law. Also the Sales Tax Return is too complicated and lengthy. A common trader/ person finds it difficult to fill the return.

To be eligible to get refund of Input Tax, it is necessary that the seller should also report the sale to the department and its record should be available in the sales tax computer duly registered. The problem gets aggravated when due to any reason, e.g. the data is not available, the seller is not registered under the Sales Tax Act or transaction has not been recorded by the department, no refund /adjustment of Input Tax is admissible. The industry has proposed that the submission of purchase invoice should be considered sufficient proof of Sales Input Tax paid by the purchaser for input adjustment.

In case of dispute, appeals are made to the Custom and Sales Tax Tribunals, which make the process too lengthy. To facilitate the industry, all the appeals relating to sales tax disputes should be dealt by the RTOs /Income Tax Tribunals only. Moreover, since there is lot of delay at the Appellate Tribunal level, taxpayers are facing serious problems of recovery on the basis of order-in-original/order-in-appeal. Hence, the issue should be resolved amicably by correcting the flaws in this regard.

The government needs to ponder over the ratio of sales tax on various industries as well as its rationality. It should curtail the rate of sales tax from the existing 15 to 10 per cent, as it had already been proved through experience that a cut in tax rate gets more revenues for the government. The exemption of sales tax for specified period would also be a great help to those industries that need to encouraged. As the budget for the year 2008-09 would impact on industry as well as national economy, the government needs to apply an out-of-box, approach to ensure a better economic future. To quicken the industrial growth, government should also consider allowing all raw materials not produced domestically at zero duty, while the duties on finished products should be enhanced to protect the local industries.

The industry needs a favorable environment to grow. It is industry that provides employment and self-reliance.

The writer is senior vice-president of Islamabad Chamber of Commerce & Industry (ICCI).

Package for industrial revival -DAWN - Business; June 02, 2008


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*Strategy evolved to set up SME industrial estates ​* 
SIALKOT (June 02 2008): Punjab government has evolved a strategy for the establishment of SME industrial estates in Punjab. Business Recorder learnt through reliable sources here Sunday that under the plan SME industrial estates would be set up in major industrial towns including Sialkot and work on the plan would be executed in near future.

The step was being taken to redress the problems being confronted by the SME sector that is the backbone of the national economy. All basic facilities would be ensured to the SMEs in these proposed SME estates sources added.

Special attention was also being accorded on the development of industrial sector on modern and scientific lines aimed at tracking it on modern production lines aimed at enhancing export volume and to bring industrial revolution through setting up large-scale industries including agro- industries in the Province.

Under the programme government has introduced certain schemes for the development of small and medium industry besides loan facilities was being extended to the small and medium businessmen enabling them to upgrade their industrial units and for setting up new industrial projects in the Punjab.

More than Rs one billion had been set aside to overcome the financial problems being faced by the businessmen engaged with small and medium industries as well as for removing the hitches which were hindering the process of setting up of new industrial projects.

Apart from this, government was also providing loan facilities for the advancement and expansion of agro-based industries and dairy development, engineering and information technology in the Punjab.

The prime aim of setting up of large-scale industries was to ensure strong industrial base and to keep the economic wheel into gear in the Punjab. The maximum establishment of industries will not only help in doubling the export volume but also create wide job opportunities for the jobless educated, skilled and unskilled labour sources added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Raising rice nursery for better yield​*
By Hafeez ur Rehman and Dr M. Farooq

RICE is an important cash crop grown with its coarse and fine cultivars in kharif. Although resources such as gravitational canal system for irrigation and environmental conditions etc., favour paddy production, the average per acre yields is 25 maunds per acre which is two to three times less than the yield in other rice producing countries. The reasons are poor practices adopted by farmers.

The rice crop is mostly transplanted by hand under puddle and non-puddle conditions. In some areas, resourceful farmers also practice dry and wet seeding, along with system of rice intensification (SRI) which is getting popular.

However, the best yield is achieved when the crop is sown at optimum time with management practices of weeds, diseases, and predators. Under such conditions, growth and yield depend upon the year-to-year seasonal patterns of solar radiation and temperature.

In the traditional system, it is very important to raise rice nursery and transplant it at an appropriate time to get optimum yield. It is recommended to raise rice nursery before May end as nursery seedlings raised before or after this period and then their early or late transplantation is prone to more bacterial blight and bakanea disease and increased attack by insect pests. Besids, high temperature at the stage of grain filling may produce empty spikelets. Because of the delay the kernel produced gets broken during threshing of harvested paddy. The delayed nursery transplanted seedlings produce low and weak tillering reducing final yield.

Nursery raising methods: The main reason for raising a nursery is to provide seedlings without weeds. Transplantation of healthy, vigorous nursery seedlings without insect pests gives better yield. Method for raising nursery depends on local cultural practices, soil type and water availability, however, each method is harvested with uniform yield provided the healthy seedlings are transplanted. Nursery in Punjab is cultivated by three methods wet, dry and recently developed method using primed seeds.

Wet method is practiced in clayey and clay loam soils where standing water conditions can be created. This method is popular in traditional areas of rice cultivation. In this method, the selected field is filled with water 25-30 days before sowing nursery. However, it is better to plow the field twice in dry or watery conditions to break the soil clods in order to create better puddle conditions. After watering, the field is plowed twice followed by planking. The same practice is repeated after 7-10 days and this whole operation is practiced depending on the water availability.

After planking, the field is left for the weeds to grow and destroyed. After seed bed preparation, the field is divided into two plots by making bunds in the mid field and then sub-water channels are prepared in each half and three ridges are made at perpendicular to each channel dividing it into eight sub-plots, it will facilitate seed broadcast, irrigation and drainage practices. Then sprouted seeds are broadcasted in these plots. This method seems to be difficult and costly but allows less weed growth and seedlings raised thus are healthy and vigorous and become ready for transplanting within 25-30 days.

For this nursery method, if farmers use their own seed stored at farm then it is better to use clean seed. Clean seed is placed between the water soaked layers of gunny bags for 24 hours under shade and also covered with gunny bags. To avoid damage by heat caused by suffocation, seed is turned with hands for proper aeration there times a day. After about 36-48 hours the sprouted seed is ready for sowing.

Then in puddle plots for nursery sowing, broadcast the 1 kg per marla sprouted seeds of coarse rice cultivars IR-6 and KSK-282 while for fine (Basmati) rice cultivars use 0.5 -0.75 kg seeds for raising nursery. At broadcast the water depth should be maintained at 1-1, 1/2 inch and dont drain out water at that day. Next day, drain out the water in the evening and irrigate in the morning and continue this practice for one week in hot sunny days. Gradually, check water drainage and increase the water level not more than three inches with the increasing seedling age.

If nursery seedlings are week, apply ½ kg ammonium sulphate or urea ¼ kg per marla after 15-20 days of nursery sowing, if fertiliser applied to nursery is delayed death of seedling at the transplantation stage may take place. If more area is to be cultivated, it is better to use 30 days old seedlings to complete transplantation within a week.

The dry bed method is practiced in dry soil conditions and fields are prepared under dry conditions. Seeds beds of convenient dimensions are prepared by raising the soil to a height of about 5-10 cm. a thin layer of farmyard manure or half burnt paddy husk could be spread on the nursery bed mainly to facilitate uprooting. In this method, soaked seed are spread over the seedbed and then irrigated. Rab method is also practiced in some areas of Punjab.

Another improved method is by using primed seeds with CaCl2 and KCl salts solutions. It is being practiced by farmers in Sialkot and Faisalabad districts. Nursery seedlings raised thus are healthy, vigorous and ready for transplantation within 25-30 days. Such nursery transplanted seedlings result in better growth and yield better kernel quality at harvest and is also resistant to diseases. However, there is need of more research in this area and seeks extension services to transfer this technology to poor farmers.

While farmers practicing system of rice intensification should plant eight to 12 days old seedlings, so that root system may grow well and give 30 to 50 tillers and result in high yields. For nursery raising healthy seeds at the rate of two kg/ac should be used. The pre-sprouted seeds should be sown on raised nursery bed. A layer of FYM can also be applied and sprouted seeds are sparsely spread on it and then again covered with another layer of manure. Nursery is properly and carefully irrigated and after 10-12 days seedlings are uprooted and transported to the field carefully.

Seed Dressing: To control seed-born diseases such as bakanea and brown leaf spot an easy and economical way is treatment of seed with proper fungicide. Seed treatment method depends on nursery raising method. Two methods used for seed treatment i.e. slurry and wet/solution method. In case of slurry method, fungicide is applied two weeks before sowing nursery. While in case of wet method seed is dripped in water.

Nursery pest management: The nursery is also affected by different insects including stem borers, rice leaf folder and hispa, grasshopper and white backed plant hopper. Each insect attacks nursery at particular stage of it lifecycle to a threshold level. There is need of integrated approach to control these before their threshold level. Nursery raising using improved method is not a difficult task; however, it necessitates and depends on constant supervision.

Since transplanted rice requires high water input, labour and also more nutrient losses occurs under flooded conditions. Under the acute water shortage in the country due to increased urbanisation, competition from non-agricultural sources and even non-availability of farm labour at critical times, there is need to focus towards water saving technologies in rice like direct seeded rice, alternate wetting and drying (AWD), system of rice intensification and transplanted rice under aerobic soil conditions to get benefit the resource poor farmers.

There is need of collaborative research to undertake, disseminate these rice resource saving technologies to the farmers at their field, which are the ultimate users of any technology.

Raising rice nursery for better yield -DAWN - Business; June 02, 2008


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## Neo

*'Government determined to develop business-friendly atmosphere' ​* 
LAHORE (June 02 2008): Punjab Food Minister Malik Nadeem Kamran has said that government is determined to develop and strengthen business-friendly atmosphere in the country and in this context a number of measures are being taken. He said that our predecessors especially in the economic field has discriminatory rewarded their corrupt nears and dears which weaken the economy of the country.

Present regime has adopted a number of revolutionary measures to augment the economic situation of the country, he added. He expressed these views during a meeting with a delegation of business community of Sahiwal at his residence.

Briefing the delegation, the Minister said that government is making all out efforts for strengthening industrial sector and for this purpose a Trade City is being set up at River Ravi. He disclosed that a project of a Mini Industrial Estate has been initiated where 70 thousand skilled workers will be employed. Mini Industrial Cities also being set up at district level, he added. The Minister said that government has also launched the project of setting up a business city and business centres for women to provide them equal opportunities of marketing their products.

Kamran said that provision of justice to the common man through good governance is the top priority of the government. Members of the delegation lauded the steps of the government to provide conducive atmosphere for the business activities and assured their wholehearted cooperation.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Updating the national aviation policy​*
The forthcoming National Aviation Policy (NAP), awaiting cabinet approval, will open new doors to airlines operators besides promoting national tourism and aviation sectors.

Special tax exemptions/holidays and other attractions have been recommended by the Pakistan Civil Aviation Authority (CAA) in the policy for the entire aviation sector including hot balloon sports organisers. It is designed to attract not only new airlines but also open new markets.

The policy is aligned with national trade corridor encompassing the governments vision to route international trade, tourism and passenger traffic through Pakistan. Special incentives to be given to domestic and international air careers and ground handlers. .

According to the draft policy, duly approved by the CAA board, the CAA has recommended that the current policy of zero per cent duties, surcharges and taxes on import of aircraft of all weight categories, engines and spares by Pakistani operators, the CAA and the maintenance companies, should be extended to accommodate manufacturers, equipment required for manufacturing and raw material imported for aircraft.

The same concession may be extended to the CAA and private operators for import of communication, navigation & surveillance (CNS), air traffic management (ATM) systems, life-saving equipment like ballistic recovery system (BRS), emergency medical kits, emergency locator transmitter (ELT), fire-fighting vehicles and equipment including training equipment like all types of simulators, technical publications/manuals imported by the CAA as well as operators and maintenance companies. The new policy maintains that tax holiday shall be granted to aircraft manufacturers, maintenance companies, flying training schools and ground training schools for 10 years.

The CAA has also recommended that the government should exempt all taxes and duties on air ticket for secondary destinations. The same privileges may be extended to operators of small aircraft and helicopters.

The new policy has also touched a very important aspect of market access. It says, restricted market access raises prices, creates monopoly and suppresses aviation growth. Liberal air services agreements remove limitations on airlines freedom to increase service, lower fares and promote economic growth. All international airports are to be developed as business and tourists hubs. Since Pakistan is strategically located on the international route, liberal arrangements with our bilateral partners, in addition to providing direct and convenient connections to the local traffic from these airports, will also facilitate to route the flow of international traffic from the East to Europe and North America through Pakistan.

To achieve the required results it was decided that Pakistan will liberalise bilateral arrangements on reciprocal basis with its bilateral partners to provide service from/to Karachi, Lahore and Islamabad (of course after completion of the new airport) to destinations in Western Europe, North America and Africa and to destinations towards the East. Furthermore, there would be no mandatory commercial agreements as part of bilateral agreements. However, airlines will be free to enter into such co-operative marketing arrangements as are mutually agreeable, which will be outside air services agreements.

For the last many months, the CAA concentrated on bringing changes in its cargo set up at each airport in general and top five airports (Karachi, Lahore, Islamabad, Faisalabad and Peshawar) in particular. Planes have been chalked out for cargo complexes/villages at major airports with all kinds of international standard facilities. Now special focus will be on cargo facilities in the new policy in which single-window clearing mechanism will be introduced which willl boost the cargo service at airports. Top clearing agents, including officials of Sialkot airport say that problems faced by clearing agents will be curtailed. An efficient transit, a single-window clearing mechanism comprising airlines, freight forwarders, customs house agents, customs, regulatory agencies and airline ground handling agents, insurance and banks facilities, etc willl be made available under one roof.

Furthermore, infrastructure of a cargo village will include multi-modal transport, cargo terminals, cold storage centres, automatic storage and retrieval systems, mechanized transport cargo, dedicated express cargo terminals with airside and city side openings, computerization and automation. It was reiterated that Pakistan will continue to follow open skies policy for cargo operations based on 3rd, 4th & 5th freedom of traffic rights.

It was also decided that Karachi and Gwadar will be promoted as trans-shipment hubs where cargo villages will be established on the basis of public-private partnership to be linked with the national trade corridor (NTC).

Since Mr Farooq Rahmatullah took over as the DG, CAA, stress has been placed on promoting/attracting the private sector for the development and promotion of aviation activities. Studies were conducted and expert opinions were sought from leading private companies for the promotion of the aviation sector.

The CAA is following a restructuring programme which separates the regulatory, air traffic services and commercial functions to achieve the highest safety standards, to encourage the development of merchant airports, e.g., Sialkot International Airport and to efficiently absorb investment in the aviation sector. The process is in advanced stages and after completion will make the CAA more efficient, responsive and, above all, capable of ensuring international standards of safety, experts say.

The construction of new commercial airports as per the NAP will be permitted to meet the growth in air traffic. It was decided that the private sector will be given a free hand to construct and operate new/existing airports/airstrips/helipads/ heliports including cargo complexes on build-and-operate (BO), build-operate-and-transfer (BOT) or any other arrangement and to raise non- aeronautical revenues from these premises. Furthermore, it was also decided that privatisation of airports will be pursued to make them more efficient and productive.

The new policy provides fair and equal opportunities to public and private sector airports to market them within its framework and bilateral air services agreements. The private sector will be encouraged to develop additional revenue streams, i.e., passenger charges, cargo levies and commercial activities. However, the CAA will have the responsibility of economic oversight of all airports.

The writer is the Regional Legal Officer of the Civil Aviation Authority.

Updating the national aviation policy -DAWN - Business; June 02, 2008


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## Neo

*16 power projects underway in Balochistan ​*
QUETTA (June 02 2008): As many as 91 projects in water sector were being implemented while 16 electricity supply schemes were underway in various parts of Balochistan, official sources told APP here on Sunday.

These projects aimed at providing clean drinking water and electricity supply facilities to the people in the province, the sources said, adding that the government would construct 54 more small dams in different districts aimed at resolving water scarcity problems in the province.

They said: "The federal government will soon start work on electricity supply project for Dalbandin town of Chaghi district and its surrounding areas in collaboration with Saudi Arabia government. Saudi Arabia government will spend Rs320 million while the federal government will spend Rs500 million on the electricity supply project".

The completion of the project will not only revolutionise agriculture and mineral sectors, but also end unemployment in the district. Besides, it will also bring revolutionary social change in life-style of the people and improve their socio-economic standards in the areas, they said. The government is devising a comprehensive plan to provide electricity and construct more dams in all nook and corner of the province, the sources added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*The option for solar power​*
For Pakistan, 2008 will prove to be a long and hot summer. In April, some of the major cities were being put through six hours of load shedding every day. In May, power interruptions had increased to seven hours a day. Another hour may be added in June. Some relief may come in July as the reservoirs begin to be filled up by the monsoon rains but once the dry season arrives, the duration of load shedding will begin to increase again.

The government estimates the supply-demand gap at 4000 MW. This is not likely to be cut down since no new generation capacity is in the works for at least another one to two years. In the meantime, the price of oil continues to increase. New records are being set almost every day. This will increase the cost of generating electricity since a significant amount of power is generated by oil-fired stations. How to deal with this problem?

The question has some urgency as there are serious economic and social costs for letting the energy shortage go unaddressed. For some inexplicable reasons Pakistan never treated the energy sector as deserving of serious attention by the policymakers. The sector was an area of residual concern even when the country treated economic planning and strategising on economic issues as high priorities area for the policymakers. Power houses at Mangla and Tarbela were the byproducts of the Indus Water Treaty with India. The decision to invite the private sector to invest in energy generation was taken in the early 1990s when the country was faced with a growing supply-demand gap. In other words, the policymakers have turned to the sector of energy only when opportunities have arisen as a result of other developments or when there is a serious crisis. There is a crisis at this time. How will Islamabad react?

This may be a good time to develop a comprehensive approach towards the sector, factoring in policies aimed at affecting demand, supply and environmental concerns. In looking at supply, the country should seriously examine alternative sources for generating electricity than those that have been tried in the past. In this context is solar energy a serious option for Pakistan? Have the recent technological advances achieved by the industrial world made the sun a viable source of energy for a sun-drenched country such as Pakistan? If the technology that converts solar energy into electric power still more expensive than other sources of energy could subsidies be provided to attract private investment into this sector?

Some recent developments in converting solar power into electricity have begun to provide some answers to these questions. Surprisingly the answers come from the work being done in Germany. It is useful to look at the German experience to draw some lessons for Pakistan. Although Germany is wreathed in clouds and is therefore an unlikely candidate for becoming a pioneer in this field, it has become a leader because of the design of public policy to encourage the use of the sun as a source for generating electricity.

In 2007, Q-Cells, a German company surpassed Sharp, a Japanese company, to become the worlds largest manufacturer of photovoltaic solar cells. Thanks to the work done by Q-Cells, Germany has by far the largest market for photovoltaic systems which convert sunlight into electricity. It has about one-half of the worlds total installations. It is the third-largest producer of solar cells and modules, after China and Japan. Once the United States and Japan were the rising solar stars where the private sector was taking advantage of government subsidies. But these became less enticing as the governments interest in developing the industry waned.

According to Mark Landler writing for The New York Times, the debate over solar subsidies is a test of how an environmentally minded country can move from nurturing a promising alternative energy sector to creating a mass-market industry that can compete with conventional energy sources on its own footing. [But] it is a tricky transition, even with a sympathetic population. Thanks to a policy that encouraged the development of solar energy, more than 40,000 people now work in the photovoltaic industry in Germany. Investors have come in from many countries including those from Canada, Norway and the United States. Many investors have come from the places that had developed the needed technology but where the governments were less supportive than the one in Germany.

All the heart of the debate in Germany is the Renewable Energy Sources Act which requires power companies to buy all the energy produced by alternative systems, not only solar but also wind and ocean waves at a fixed, above-market price for 20 years. This has proved to be powerful incentive for investors including those working with solar panels. The Act locked in the customer base for the electricity produced by alternative systems. They can earn reliable returns on their investment. The amount of electricity generated by these systems rose 60 per cent in 2007 compared with 2006. Most of the increase has come from wind systems, which now provide 6.4 per cent for the total electricity produced in Germany.

The share of solar energy is still very small  only 0.6 percent of the total. The small share of solar is understandable. The country gets only 1,528 hours of sunshine a year, less than a third of the total daylight hours. London has about the same exposure to the sun, but it has one third fewer sunshine hours than in the cities in Europe along the Mediterranean and one-half of the cities in western United States. Most cities in Pakistan receive between 2,200 and 2,500 hours of sun, 60 to 70 per cent more than that of Germany.

Germany is a good example of how public policy can overcome natural disadvantages. The Renewable Energy Sources Act has contributed to the countrys far lower dependence on hydrocarbons for generating electricity. In 2007, it derived 14.2 per cent of its electricity from renewable sources, ahead of the 12.5 percentage adopted by the European Union as a target.

The German Act, while mandating the utilities to buy the electricity generated by alternative systems, allows them to pass on the additional cost to the consumers. There is no limit on how much electricity can (or should) be purchased by the utilities from the alternative systems. This has caused utility bills to increase but for the time being by modest amounts for an average domestic consumer. The additional cost was only $1.70 a month in 2007. This will double by 2014. By that time the solar industry will scale up to $185 billion in terms of public support. This is about the same amount being provided to the superannuated coal industry.

The debate about the cost of solar and other renewable sources of energy has created pressures on the government to make the current law less generous. There are proposals to cut down the period over which subsidies would be provided, from the current 20 to 15 years. There is also as effort to sharply reduce the above-market price allowed to the producers. Fears that such proposals would be enacted into law, are forcing some Germany companies to move to other countries. Signet is building its next factory in Chennai, India; Q-Cells is building one in Malaysia.

What are the lessons for Pakistan in the German experience and the work being done in other industrial countries? One, Pakistan needs a structure of incentives to get power generated from such renewable sources as the sun. A purchase price guaranteed for a fairly long period that ensures good returns to the private sector would help. Two, this may be a good time to encourage the development of domestic industry that would produce the needed equipment for developing generating electricity from renewable sources. The technologies are still in their infancy and there is an opportunity for newcomers in the area to create niches for themselves. Some work is going to replace silicon in photovoltaic cells with plastics.

At this time, the efficiency of plastic photovoltaic cells is only five per cent while that of conventional silicon cells is 15 to 18 per cent. Even countries such as Pakistan could invest in the industries needed to develop alternative sources for generating electric power. Three, it may be an appropriate time to fix some targets for encouraging the use of renewable sources for generating power. The EU is working on a target of 12.5 per cent. In the United States, the two candidates for the Democratic ticket want renewable energy to generate 25 per cent of electricity by 2030.

This is the time for action by the government and it should look at all possible avenues for solving the current crisis.

The option for solar power -DAWN - Business; June 02, 2008


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## Neo

*Pakistan IT sector on verge of taking off: Microsoft ​*
ISLAMABAD (June 02 2008): The country is on the verge of taking off in the information technology (IT) field, following the telecom revolution, says Microsoft Pakistan Country Manager Kamal Ahmed. "I am very hopeful that the explosion in the IT sector will be just like the one we have seen in the country's telecom sector," he told a TV news channel.

He said that it had been observed in many countries that the telecom sector developed ahead of the IT sector. The telecom sector provides the bandwidth, which is the backbone for the IT sector to flourish, he added. He said that software, hardware and technologies are also getting cheaper day by day. So, people are buying more and more personal computers (PCs).

Citing another reason for the expected speedier IT growth, he said that today the businesses are competing against the global forces. To remain competitive, the country's businesses must adopt latest technologies, which provide quality controls and operational efficiencies, he said.

Kamal said he was hopeful that the new government would chalk out a sensible course for the growth of IT in Pakistan. He said that the government could increase its tax revenues and socio-economic growth by checking software piracy and promoting the sale of legal software.

He said that Microsoft is very much active in the corporate social responsibility area. The company has set up an 'IT academy' in cooperation with the 'Zindagi Trust'--an organisation being run by pop singer Shehzad Roy--where the undeserved school children are taught IT to enable them realise their full potential.

In his message to the youth, Kamal said, "Our young generation should make best use of the time it has at its disposal and study very hard." Secondly, they should never compromise on ethics, he said, and stressed: "Focus on becoming a better human being first and then a better professional."

Osman Maqbool, 'Small & Mid Market Solutions & Partners' Manager, Microsoft Pakistan, said, "Pakistan is one of the key emerging markets and offers a great potential." Over the last two years, he said, Microsoft has focused on developing its partners in Pakistan to serve its consumers and the businesses.

Microsoft has also focused quite extensively on utilisation of legal software and its benefits. "We have seen there is a great response against such awareness campaigns," he added.

Salma Nisar, Technical Account Manager, Microsoft Pakistan, highlighted the enterprise services and support offered by the global software leader. She spoke about how Microsoft Enterprise Services enables customers to realise the true value of their investment in Microsoft Platform through various infrastructure optimisation initiatives. Afzaal Mirza, Citizenship Lead, talked about the Microsoft Citizenship Initiative, which supports education, innovations, corporate social responsibility, Internet security and privacy, as well as community investment.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Timeframe suggested for resolving Kishan-Ganga issue​*
LAHORE, June 1: Pakistan has formally proposed a timeframe of three months to resolve issues related to the Kishan-Ganga project, according to Indus Commissioner Syed Jammat Ali Shah.

Indus Commissioners of India and Pakistan held an eight-hour meeting of the Permanent Indus Commission on Sunday to address Pakistans objections to the project. The meeting was inconclusive as both sides maintained their stated positions. The Indian side, however, promised to respond to the timeframe proposal on Monday.

Mr Shah said both sides were trying to solve problems at the commissioners level so that other provisions of conflict resolution could be avoided. Both sides have shown a remarkable cooperative spirit but it was a matter of rights and cannot be allowed to linger on for an unreasonable period of time.

Pakistan had raised six objections to the revised design of the dam. Of these, four  free board of the dam, quantum of storage, silt outlet and diversion of water  came under discussion on Sunday. Both sides could not resolve the four out of the six questions as the Indian side maintained its previous position. Both sides were exchanging data and trying to remove confusion.

Pakistan understands that it was a time consuming exercise but they can be resolved within a timeframe. Pakistan was pressing for a deadline because such talks could not go on forever, he said.

Pakistan side had first raised objections to the project in 2004 and the Indian side revised the design of the dam in a bid to remove the objections. The Pakistani side, however, raised fresh objections to the revised design, which came under discussion on Sunday.

The problem between the two countries arose when India decided to build a dam on the Kishan Ganga River that originates in occupied Kashmir. The proposed site for dam is near Kanzalwan  a town from where the river enters Azad Kashmir.

The Indian plans include storing water and then tunnelling it to the Wuller lake, where it is constructing a 800MW power house.

Pakistan maintains that India, under the treaty, can store water but it cannot divert it to any other side because the Indus Basin Water Treaty charges it with releasing as much water downstream as it stores.

Thus, any diversion would violate the provisions of the treaty. It would also badly affect hydro power development plans (especially the Neelum-Jehlum hydro-power project) and agriculture in Azad Kashmir.

The Indian side is of the view that Pakistan is not developing its hydel resources anyway and should not get so serious about its objections.

In addition to raising treaty issues, Pakistan also objected to the design of the dam and asked India to address its concerns before proceeding further.

Timeframe suggested for resolving Kishan-Ganga issue -DAWN - Top Stories; June 02, 2008


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## ejaz007

*SME bankprivatisation attracts 19 EoIs*
Staff Report 

ISLAMABAD: The Privatisation Commission (PC) has received an overwhelming response in the shape of 19 Expressions of Interest (EoIs) from reputed Pakistani and International parties who have expressed their interest in entering the process towards acquiring 93.88 percent strategic shareholding in SME Bank Limited along with transfer of management control. The last date for receiving EoIs was May 31, 2008.

BMA Capital Management is the Financial Advisor for the transaction. 

SME Banks privatisation represents an attractive investment opportunity for investors interested in entering into the commercial banking market of Pakistan. SME Bank has an unrestricted commercial banking license covering banking activities in Pakistan.

SME Bank is a public limited company, which was incorporated in Pakistan on October 30, 2001. At present, SME Bank has employee strength of approximately 630 permanent and contractual individuals and is operating through a diverse network of 27 branches, which include 13 active commercial branches. According to JCR-VIS Credit Rating, SME Bank was rated BBB for long-term and A-2 for short-term credits. SME Bank also holds a 73 percent share in SME Leasing Limited, listed on the Lahore Stock Exchange which was incorporated as a wholly owned subsidiary of SME Bank. 

The potential buyer will have to retain the name SME Bank Ltd for one-year post privatization and the charter of Bank is to be maintained for three years post privatisation. GOP will keep the right to appoint at least one director on the board of directors of SME Bank post privatisation. 

The parties which have submitted their EOIs include: Pak Kuwait Investment Company, Orascom Telecom Holding SAE, Citigroup Venture Capital International Investment G.P, Commercial Bank of Kuwait, Global Investment House K.S.C, Gulf Cap FZC, KASB Bank Limited, Kohinoor Textile Mills and Mechantbridge Holdings S.A. Luxembourg, Al Nakeel Investment LLC on behalf of Emirates Investment Group, Hashwani Hotels Limited, Pakistan Services Limited, and The International Investor, Kuwait, Security Investment Bank Limited, Pak Libya Holding Company, Pak Brunei Investment Company, Associated Group, Pak Steel, Invest Bank, Oracap Holdings, Noor Financials and IGI Investment Bank.

Daily Times - Leading News Resource of Pakistan


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## ejaz007

*Italy to support Pakistan for accessto EU markets: prime minister*

ISLAMABAD: Pakistan has asked Italy to support Pakistan in European Union (EU) for improved market access for Pakistani products in EU countries as well as its bilateral trade with Italy. The Prime Minister, Syed Yousuf Raza Gilani talking to a Italian delegation Monday has said Pakistan and Italy enjoy close friendly relations covering diplomatic, political, economic, security and agriculture sectors. The Italian team headed by Giuseppe Vegas, Minister of State for Economic and Finance met PM. Ambassador of Italy to Pakistan was also present. Gilani said Pakistan accords priority to its close relationship with Italy and is keen to further expand these relations in other sectors as well. He said his government was focusing on improving the agriculture sector to overcome the food shortage and also seeks Italian cooperation to develop a mechanized agriculture in the country. In order to enhance people to people contact between the two countries, the PM called upon the need for exchange of visits of parliamentary delegations besides further strengthening the cooperation on the cultural side and to preserve heritage of old cities. He said Pakistan was facing energy shortage and desired Italy to invest more in the power sector to supplement government efforts to overcome the shortage.

Daily Times - Leading News Resource of Pakistan


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## ejaz007

*314 small dams development plan approved *
FIDA HUSSAIN 

ISLAMABAD (June 03 2008): The National Economic Council, which met here on Monday, approved the national programme of small dams, under which the government will construct 314 dams across the country. Total cost of the programme has been estimated at Rs 54 billion.

The PSDP allocation for next fiscal is Rs 10 billion. These dams will be constructed over a period of 4 years. According to the document of NEC, 23 small dams will be constructed in NWFP, 43 in Punjab, 23 in Sindh, 215 in Balochistan and 10 in Federal Area. The hydro potential will also be harnessed.

The programme will help in storing water and contribute to power generation. The NEC identified the areas which needed government attention in the Annual Development Plan 2008-09. These are Thar coalfield, Gwadar port, Keti Bundar, mechanised farming, water conservation, etc.

*THAR COAL FIELD:* Thar coalfield is one of the biggest coalfields of the world, having 175 billion tons (95 percent) of 185 billion tons of total coal resources of Pakistan. In spite of the huge coal reserves, presently coal constitutes only 7.0 percent of primary energy supplies and less than 1 percent share in power generation. As against this, the world coal average share is 26 percent (Primary Energy) and 40 percent (Power Generation). Further, the coal share in the electricity generation of the countries are: China (79 percent), India (68 percent), USA (51 percent), and Germany (51 percent).

The coal exploitation had totally been ignored in the past, and no serious efforts had been made for the development of coal, especially mechanised coal mining techniques for large scale coal mining. Now the efforts are being made to develop the Thar coalfield on fast track basis and the work to formulate National Coal Policy is underway which is expected to be completed by end-2008.

The Thar Coal Infrastructure Development Project has already been completed with a financial package of Rs 1.57 billion, having Federal Government financing to Rs 1.10 billion. Six blocks have been appraised in detail, of which four by Geological Survey of Pakistan (GSP), at estimated cost of Rs 337.893 million, and two by Government of Sindh. The Government of Sindh has awarded five blocks to private sector to generate initially 2500 MW.

Feasibility Study on Gasification on Thar Coal to ascertain techno-economic viability of Thar Coal for gasification is being undertaken at an estimated cost of Rs 104.01 million. The present government is now setting up an integrated Thar Coal Development Board, to be headed by Sindh Chief Minister, and including Federal representatives. An institutional roundtable on Thar coal is planned to be held in Washington in July 2008, to be followed by road shows before mining and power generation contracts are awarded through public bidding.

*PLACEMENT BUREAU:* The Prime Minister announced establishment of Employment Commission and National Employment Scheme. The objective of the Employment Commission is to provide employment to one person from each poor family of 50 percent of the districts of the country. The work on launching various employment schemes is under process. For effective implementation of the Prime Minister's announcement, Placement Bureaus are being established throughout the country. Placement Bureau will also identify the poor and deserving families and will provide jobs for sustainable livelihood.

'Adara Hunarmand Pakistan' is being revamped and assigned new role to match the supply with demand in the labour market and for effective implementation of Employment Schemes. For this purpose, an allocation of Rs 2.0 billion will be provided for Vocational Training and Skill Development in PSDP 2008-09.

*DEVELOPMENT OF GWADAR PORT:* Phase-II of the project will be implemented on BOO (Build Own and Operate) or BOT (Built Own and Transfer) basis. Phase-II envisages construction of 10 more berths eastward of 4,200 m long coast in phases under private sector as and when the utilisation on the existing berths under Phase-I reaches maximisation (ie 70 percent).

The port will be provided with road and rail link with the national network. Port of Singapore Authority International (PSAI) has been assigned the job of port development under Phase-II in the Concession Agreement for 40 years. Salient features of Concession Agreement are as follow:

*RAIL LINK:* Alignment of railway track including location of railway station has been finalised and process of land acquisition was underway.

*JOINT DEFENCE COMPLEX:* Award for acquisition of 9,278 acres land over and above CAA land for Joint Defence Complex has been announced and 80 percent payment has been made. Within 3 weeks, total land area, free of any encumbrance, will be handed over to Ministry of Defence.

Oil City, being an industrial hub including chemicals/petrochemicals industries and petroleum refineries for storage of oil, was needed at Gwadar to meet the future requirements. The proposed hub would act as more like an industrial park and different Ministries/Line Agencies would be involved. GDA has prepared a PC-1 for approval of CDWP/Ecnec.

*FREE TRADE ZONE (FTZ):* A free zone will be developed at Gwadar. Cost of land for the FTZ at Dhore Ghatti was proposed by the Ports and Shipping amounting to Rs 6.67 billion, which is too high. Efforts to re-locate FTZ at a place where land is available at comparatively cheaper rates, in the north east of Koh-e-Mehdi with sea access close to proposed container terminals area. An allocation of Rs 5 billion for FTZ has been made in the next PSDP 2008-09.

*HIGHWAY CONNECTIVITY:* Pakistan's road sector accounts for 91 percent of passenger traffic and 95 percent of freight traffic. Total length of roads in Pakistan is about 260,000 km with 63 percent paved road network. The roads in Pakistan are broadly classified into five main categories: National Highways, Motorways, Strategic Routes, District and Urban Roads.

*MASS TRANSIT SYSTEMS IN KARACHI AND LAHORE:* In Karachi, six mass transit corridors have been identified. Corridor-I of these (Merewether Tower to Sohrab Goth 17.5 km) is the priority corridor. An allocation of Rs 10.0 million has been earmarked in the Federal PSDP 2008-09 for the project for carrying out the feasibility study in the first phase.

In Lahore, First Priority line (measuring 27.5 kilometres - 17 km elevated and 10.5 km underground) of the Lahore Rapid Mass Transit System (LRMTS) from Hamza Town and terminating at Shahdra is being constructed with the Asian Development Bank's financing. For the next phase, an allocation of Rs 10.0 million has been earmarked in the Federal PSDP 2008-09 for carrying out the feasibility study.

*DEVELOPMENT OF KETI BUNDER:* Pakistan's two major ports - Karachi, with an annual handling capacity of 16.1 million tonnes, and Port Qasim, with a capacity of 6.2 million tons are 45 km (28 miles) apart and rely on dredged channels that limit the size of vessels that can use them.

The present government has planned to build a deep-water port at Keti Bunder to meet its own growing needs and eventually serve landlocked Afghanistan and Central Asia. The need has been felt for a third port to meet the challenge of Pakistan's external sea borne trade especially with Japan, Europe, the Middle East and the United States, which has increased significantly in recent years. As a start-up, an allocation of Rs 10.0 million has been earmarked in the Federal PSD 2008-09 to carry out feasibility study for the port.

*HOUSING FOR ALL*: Currently, around 300,000 housing units are being constructed against an annual demand of 650,000 units, with the backlog of 6.5 million houses continuing to increase. A much larger shelter construction is envisaged to start reducing the backlog both financially and environmentally. The public sector will assume the role of a facilitator for implementing of housing programmes rather than being the developer.

'Land Banks' will be established, whereby federal and provincial state lands would be transferred to the proposed banks. The availability of the land in the land banks would be increased by purchasing cheap lands in small and medium towns, and in the proposed development corridor with determined growth potentials.

The housing schemes will initially be started in big cities; Islamabad, Karachi, Lahore, Quetta and Peshawar. Government of Pakistan has earmarked Rs 10 billion as revolving fund in the plan out of which Rs 2 billion have been allocated for current year's expenditure.

*EXPANSION AND UPGRADATION OF BHUs*: Presently there are over 5000 Basic Health Units (BHUs) all over the country but they are not functioning properly. In order to provide better healthcare, particularly maternal and child health facilities, all the basic health units will be upgraded with backup support of supply of equipment, medicines, training of doctors and other health personnel and better pay and package. Rs 500 million has been allocated to the programme in the next financial year.

*MECHANIZED FARMING: *It is possible to conserve resources and increase farm productivity by mechanising various farm operations. Proper placement of fertiliser through fertiliser band placement drill can save fertiliser and will result in high crop output. In view of recent hike in phosphatic fertiliser prices, an attempt to increase fertiliser use efficiency is the need of the hour. Although tractors are being extensively used in farming,, use of deep tillage implements is limited. With laser land leveller it is possible to save nearly 25 percent water. For effective weed control, it is essential to use appropriate sprayers.

To encourage the use of fertiliser band placement drills, laser land levellers, rotavators, ridgers, weedicide sprayers and wheat straw choppers, it is proposed to launch a 5-year project, costing Rs 2.0 billion, whereby subsidy will be given to farmers/village organisations to enable them to purchase and use the machinery which will conserve resources and increase productivity.

*LIVESTOCK SECTOR PROJECTS: WHITE REVOLUTION:* Livestock sub-sector accounts for about 50 percent of agriculture sector GDP and is the main tool for alleviation of poverty in the rural areas. Over the last decade, livestock number has increased by nearly 30 percent. However, the milk and meat productivity remains low. This is primarily due to low quality of the animal breed, inadequate health cover and nutritional deficiencies. To overcome these deficiencies, several projects, at a cost of Rs 5.8 billion with the 2008-9 allocation of Rs 1.6 billion, have been initiated.

*WATER CONSERVATION:* Due to increase in cropped area over time, Pakistan is experiencing irrigation water scarcity. The government has launched a number of initiatives to conserve water and to increase its use efficiency.

*EXPORT PROCESSING ZONE (EPZ) BALOCHISTAN:* The Government of Pakistan has planned to set up Export Processing Zone (EPZ) in Balochistan. An allocation of Rs 5.0 billion has been made in the PSDP 2008-09. The aim of this project would be to exploit the export potential of the country using the strategic location of Balochistan, especially the Gwadar port. It will help in poverty alleviation by providing employment opportunities to the people of Balochistan.

The proposed EPZ will provide fully developed facilities of the international standard such as roads, water, sewerage, telephone and effluent treatment plant etc as per Standard Incentives Act of EZP. The electricity needs of the EZP would be met on sustainable lines by setting up power plants. Common Facility Centre (CFC) and training centres would also be established in the EPZ to cater for the human resource development and training needs of industries.

Tax incentives on the lines of Jabel Ali EPZ, Abu Dhabi and Shenzen EPZ China would be provided to attract foreign investors. The Gwadar port may provide the required port facilities. One-window facility will be provided to assist and facilitate the prospective investors.

*PAPERLESS GOVERNANCE:* 'Paperless Governance' lies on the highest priority agenda of the Government to provide relief to common man. To provide quick and efficient service delivery to the citizens and provide them the much-desired relief, automation of Ministries and Government Departments is a prerequisite. The project will not only enhance efficiency, transparency but will also improve accountability.

*PUBLIC-PRIVATE PARTNERSHIP:* Pakistan has great potential for developing infrastructure projects on public-private partnership basis. Pakistan's public sector investment in infrastructure has declined as percentage of GDP over the years, resulting in huge backlog in the provision of infrastructure. Currently, the public sector can only accommodate about half of the annual infrastructure requirements of $3.5 - 4.0 billion per year. The gap can only be offset by involving private sector in infrastructure development.

*ESTABLISHMENT OF COOL CHAIN SYSTEM: *Within Pakistan's agriculture, horticulture occupies a significant position owing to high value cash crops, source of subsistence living, enormous scope for value addition, good source of foreign exchange earning etc. However, fresh horticulture products are perishable and thus warrant adequate care during post-harvest handling for efficient distribution.

Therefore, a good supply chain management system has to be in place for domestic and export marketing, which is a weak area in Pakistan. As a result, produce losses are colossal, ranging from 20 percent to 40 percent, and even more. Losses in financial terms run into billions of rupees. Above all, the sustenance of exports is dependent on efficient supply chain.

It is proposed to launch a 'Cool Chain System' project, costing Rs 7.6 billion, with 2008-09 allocation of Rs 93 million. The activities to be undertaken include: pack houses, cold storages, reefer yards and testing labs. The project shall be implemented under public-private partnership with arrangement by Pakistan Horticulture Development and Export Board (PHDEB) under the guidance of Ministry of Commerce and Minfal.

Business Recorder [Pakistan's First Financial Daily]


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## ejaz007

*Black money: amnesty scheme likely in budget *
RECORDER REPORT 

ISLAMABAD (June 03 2008): The proposed amnesty scheme to be announced in budget (2008-2009) may legalise black economy on payment of 2.5-3 percent of the value of un-declared assets. Sources told Business Recorder on Monday that the proposed amnesty scheme would make it mandatory for the new taxpayers to file income tax returns for at least five years.

This might be done to ensure that a person should not escape on whitening of un-declared assets. A specific period would be announced for all such persons availing amnesty scheme to regularly file returns. The filing of returns might be compulsory irrespective the taxpayer is earning or not. The scheme would be offered to be new taxpayers to legalise their all kinds of assets including property, cash etc on payment of the said amount.

The FBR has examined the tax model of Egypt, where an amnesty scheme was to legalise assets on payment of 2.5 or 3 percent. The scheme would help in documentation of the economy and attracting maximum investment. The amnesty scheme is also a part of government strategy to broaden the tax-base and bring maximum number of persons into the tax net.

Business Recorder [Pakistan's First Financial Daily]


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## ejaz007

*'OGDC partnering with BP on offshore project' *

ISLAMABAD (June 03 2008): The Oil and Gas Development Company (OGDC) is Pakistan's leading exploration and production (E&P) company. It prides itself on a competent and dedicated workforce engaged in providing energy security to Pakistan.

In an exclusive interview with Business Recorder's Islamabad Resident Editor Anjum Ibrahim and Senior Economic Reporter Arif Rana, OGDC Chairman and Chief Executive Officer, Arshad Nasar, emphasises the critical role played by the OGDC in Pakistan's development and asserted that OGDC is the only organisation in Pakistan that can be transformed into a multinational entity.

*THE FOLLOWING ARE EXCERPTS FROM THE INTERVIEW: *

BR: To what extent has OGDC been successful in achieving its drilling targets?

Arshad Nasar: OGDC's target two years ago was 15 wells per annum. Last year the target was revised upward to 41 plus 9 - the latter 9 being exclusively in Balochistan and therefore requiring security clearance. This clearance is still pending, but it is expected that work will commence soon.

BR: What is OGDC's success ratio in relation to drilled wells?

Arshad Nasar: The International success ratio is 1:8 to 10 wells while in Pakistan we are the leaders, our success ratio is very high, less than three wells.

BR: Is there any possibility of OGDC entering into the world exploration market?

Arshad Nasar: OGDC is the only entity in Pakistan that has the ability to become a multinational. However its overriding objective is to bring additional oil and gas resources to assist Pakistan meet its requirements. OGDC is currently involved in bidding for contracts outside the country and talks are under way with a number of possible joint ventures in this regard including Yemen, Egypt, Turkey, China and Libya.

BR: What is OGDC's global depository receipt (GDR) performance on the London Stock Exchange?

Arshad Nasar: OGDC made a presentation to international investors prior to listing on the London Stock Exchange. The presentation was very successful and generated $813 million. This reflects international investor confidence in OGDC. In contrast, response to the Indian CNGC was poor.

BR: Is the cost of drilling on the rise?

Arshad Nasar: Yes and naturally so. With the cost of oil rising, more and more countries are engaging themselves in drilling activities. This has implied a rise in the cost of drilling worldwide.

BR: Will OGDC support the government for another GDR?

Arshad Nasar: It is the government's prerogative to decide that. At present there is no such plan.

BR: Is OGDC planning to go for an offshore project in the near future?

Arshad Nasar: OGDC is partnering with British Petroleum on an offshore project in Pakistan's territorial waters. A survey and other technical work are in progress.

BR: Is petroleum policy 2008 facilitating upstream industry for exploration and production activities?

Arshad Nasar: The new petroleum policy is instrumental in bringing more investment in Pakistan for exploration and production activities. It provides a level playing field to all stakeholders for a win-win situation.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Budget deficit at 5pc in first 9 months ​* 
Tuesday, June 03, 2008

KARACHI: Pakistans budget deficit for the first nine months of the 2007/08 fiscal year was 5 per cent of gross domestic product (GDP), according to official data.

That compared with a budget deficit of 3.1 per cent in the year ago (July-March) period, according to data posted on the Finance Ministrys Web site. Total expenditure was 1,468.7 billion rupees while total revenue was 974.2 billion rupees.

However, the trend in the deficit improved in the third quarter (January-March), falling to 1.4 per cent from 2 per cent in September-December quarter and 1.6 per cent in the July to September quarter.

One analyst partly put the third quarter improvement down to an increase in inflows from the United States to reimburse the Pakistan military for counter-terrorism expenditure.

Compared with the previous two quarters, receipts from budgetary support and logistical support from the United States has improved the fiscal deficit number for the third quarter, said Asif Qureshi, head of research at Invisor Securities Ltd.

There has also been cuts on the expenditure side. The government initially set a full-year budget deficit target of 4 per cent of GDP, however the central bank issued a report at the weekend saying the full-year deficit would be between 6.5 and 7 per cent. 

Budget deficit at 5pc in first 9 months


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## Neo

*Cable TV sector employing 30,000 people: report​*
KARACHI: The cable television sector alone is employing some 30,000 people in the country, reveals the Information & Computer Technology (ICT) Report.

The report is conducted by statistics division of the government of Pakistan.

According to the report Pakistan Television (PTV) is employing 6,000, Radio Pakistan has the manpower of 3,000 whereas fast expanding private electronic media has provided 16,000 jobs. The private radio stations/companies have generated 1,000 jobs whereas satellite TV generated direct employment for 4,000 people.

The report also pointed out huge increase in the advertising revenue of national television networks, which jumped to Rs 25 billion by the end of last financial year from Rs 12 billion in the financial year 2003-04. These earnings reflect upward trend while boosting the countrys economy, it adds.

In the national electronic media domain, the cable television remained the fastest growing field with the number of subscribers across Pakistan has increased sharply from 1.50 million in 2004-05 to 3.27 million by the end of last fiscal year.

Punjab leads with 1.27 million subscribers followed by Sindh 1.01 million, NWFP 0.50 million and Balochistan 0.04 million. Islamabad has six times more TV subscribers at 0.22 million as compared to Balochistan.

Province of Punjab also tops in number of cable TV licensees with 353 network operators followed by Sinhd 313, Balochistan 70, NWFP 52 whereas the number for Islamabad is 118. Quoting Gallop Media Report, it put the homes having TV sets at 12,280,000.

ICT report, pointing out slightest increase in the radio sets possession in households, mentioned that Pakistans radio penetration is slightly higher than India and Bangladesh.

Daily Times - Leading News Resource of Pakistan


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## Neo

*POL consumption rises by 8.4pc in 10 months ​* 
Tuesday, June 03, 2008

KARACHI: The consumption of petroleum products (POL) has recorded an increase of 8.4 per cent to 15.31 million tonnes during July 2007 to April 2008 compared with 14.12 million tonnes in the corresponding period of last year mainly due to increasing demand for power, industrial consumption and the transport sector.

According to a report, the major rise was seen in the consumption of high speed diesel and gasoline, which grew by 14.5 per cent and 30.2 per cent, respectively. The company-wise break-up shows that the total POL sales of the Pakistan State Oil (PSO) stood at 10.47 million tonnes during the period under review as compared with 9.17 million tonnes in the corresponding period of last year, depicting an increase of 14.2 per cent. Increase was witnessed in all three major product categories, ie, HSD (20.3pc), furnace oil (10.1pc) and motor gasoline (38.5pc).

Similarly, Shell Pakistan Limited also showed a growth of 9.2 per cent in its POL sales volume, which stood at 2.07 million tones during the said period. Overall market share of the company was 13.5 per cent during the period under review as against 13.4 per cent in 10 months of 2007. Attock Petroleum Limited (APL) also depicted a nominal growth of 1.9 per cent in its total POL sales, which stood at 0.93 million tones in 10 months of 2008 as compared with 0.91 million tonnes in the same period of last year. 

The total market share of APL fell to 6.1 per cent during the said period as compared with 6.5 percent in the corresponding period of last year due to a fall in sales of furnace oil, showing a decline of 8.9 per cent to 0.43 million tonnes from 0.47 million tonnes last year. 

http://www.thenews.com.pk/daily_detail.asp?id=116255


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## Neo

*Pakistan-Italy sign soft loan for development of SME​*
** Interest-free loan payable in 39 years​*
ISLAMABAD: A financial agreement to the tune of euro 7.75 million soft loan was signed between SME Bank and Artigiancassa Bank Monday.

Small and Medium Enterprises (SME) Bank, as borrower on behalf of government of Pakistan and Italian Bank as lender on behalf of government of Italy inked the agreement.

The agreement provides for implementation of a credit facility offered by government of Italy for provision of soft loan of euro for small and medium enterprises (SMEs) development in Pakistan. 

The loan carries zero percent interest rate, payable in 39 years. SME Bank would lend this loan to SMEs at a maximum markup of 4 percent on loan in euro and 8 percent on loan in Pak rupee.

The credit facility shall be available only to private enterprises or enterprises with a public participation upto 20 percent. Research Centers and Universities may also have access to the soft loan in order to set up pilot projects or demonstration centers in the field of technology innovation and environment protection. Each individual project, even if split into more than one contract, shall not exceed the amount of euro 550,000 and shall not be lower than euro 30,000.

The credit line is proposed to disburse through a SMEDA-UNIDO IPU (Small and Medium Enterprise Development Authority, United Nations Industrial Development Organization Investment Promotion Unit. This IPU would be set up within SMEDA premises, through an Italian grant of euro 1,418,200 (already released in favour of UNIDO). Financial and technical feasibility of each project loan is to be undertaken by the IPU and loans shall be managed through the network of SME Bank. 

Syed Naveed Qamar, Federal Minister for Finance, Privatisation and Investment and Guiseppe Vegas, Italian Minister of State for Economic and Finance witnessed the signing ceremony.

R A Chughtai, chairman SME Bank and Stefano Gatti, head of Revolving Fund Management Unit, Artigiancassa Banking Group of Italy signed the accord.

Earlier Guiseppe Vegas called on Syed Naveed Qamar and they discussed general guidelines of the financial agreement between the two governments. They also discussed for fostering collaboration in other sectors. Both the sides exchanged views on establishing a Technical Support Unit in Economic Affairs Division of Ministry of Finance that would underpin all similar Italian-Funded Projects in Pakistan in various development sectors.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan keen to strengthen economic ties with Italy: PM ​* 
Tuesday, June 03, 2008

ISLAMABAD: Prime Minister Syed Yousuf Raza Gilani on Monday said Pakistan and Italy enjoy close friendly relations on diplomatic, political, economic and security fronts, and hoped the ties would strengthen in the future.

Talking to an Italian delegation headed by Giuseppe Vegas, Minister of State for Economic and Finance, the PM said that Pakistan accords priority to its close relationship with Italy.

The PM discussed the issue of better market access for Pakistani products to Italy and asked the Italian Minister to support Pakistan in the European Union. He said his government was focusing on improving the agriculture sector to overcome the food shortage, and sought Italys cooperation to develop a mechanised agriculture in the country.

On strengthening people-to-people contact, the PM stressed for exchange of parliamentary delegations besides promoting cultural cooperation. He said Pakistan was facing energy shortage and asked Italy to invest in the power sector to supplement the governments efforts in overcoming the power shortage. He lauded the role of the Italian government for providing valuable assistance to rehabilitate the quake-affected areas.

Giuseppe Vega expressed confidence that bilateral relations between the two countries would strengthen as both the countries had a common vision on important international issues. He said Italy considers that Pakistan was playing an important role in regional stability. He also extended an invitation to the PM to visit Italy at his convenience. Ambassador of Italy, Vincenzo Prati, and Minister for Finance Syed Naveed Qamar, were also present during the meeting.

Pakistan keen to strengthen economic ties with Italy: PM


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## Neo

*NEC lowers proposed GDP growth target​*
** Approves Rs 541 billion Public Sector Development Programme for 2008-09 
* Rejects federal demand to reduce budget of PSDP​*
By Ijaz Kakakhel and Sajid Chaudhry

ISLAMABAD: Following intervention by the Finance Department and the State Bank of Pakistan, the National Economic Council (NEC) on Monday revised the Planning Commissions proposed Gross Domestic Product (GDP) growth target from 6.5 percent to 5.5 percent for the fiscal year 2008-09.

The Planning Commission has also been directed to revise projections of the Macro-Economic Framework for the forthcoming fiscal year.

Major contributions of services, agriculture and manufacturing in GDP in the next fiscal year would also be re-determined in line with the revised GDP growth.

PSDP: The council also approved the costliest ever Rs 541 billion Public Sector Development Programme (PSDP) for 2008-09, with an 11.54 percent increase compared to last years Rs 485 billion programme. 

Prime Minister Syed Yousuf Raza Gilani chaired the meeting. Provincial governors, chief ministers, federal and provincial ministers, federal and provincial secretaries and the State Bank governor also attended. 

The council, due to opposition from all four provinces, turned down the demand of the federal ministers for Foreign Affairs and Finance to reduce the scope of the Public PDSP for 2008-09.

According to official sources, the NEC set aside the request of Foreign Affairs Minister Shah Mehmood Qureshi and Finance Minister Syed Naveed Qamar and approved allocation of Rs 541 billion, including Rs 170 billion for the provinces, as proposed by the Planning Commission for the fiscal year 2008-09.

However, Finance and Planning ministers representing their respective provinces strongly opposed any cut to the proposed PSDP. The provincial ministers claimed that an increase in the PSDP was essential for the revival of economic growth in the next fiscal year.

The approved PSDP allocates Rs 371 billion to the federal development programme and Rs 170 billion to the Annual Development Programme (ADP) for the provinces. 

About 20 percent of the federal programme funds  Rs 75 billion  have been allocated to infrastructure development. Of the sum, Rs 10 billion have been allocated to hydel projects, Rs 9.8 billion to the National Programme to improve water courses, Rs 14 billion to canals and Rs 2.2 billion to canal lining.

The NEC had approved a block allocation of Rs 27 billion for the Earthquake Reconstruction and Rehabilitation Authority (ERRA). 

Planning Commission Deputy Chairman Salman Farooqi told reporters that the revised GDP growth target was realistic and achievable and could increase depending upon the economic situation. 

He said that PSDP had never been implemented in line with budgetary allocations in the past, including the outgoing fiscal year.

The NEC also authorised the Planning Commission to substitute development projects according to the demands of the province, sources said.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistanis fail to exploit available resources ​* 
Country among top producers of ghee, rice, wheat, sugarcane, milk, onions,chickpeas, cotton, date palm, mango and oranges

Tuesday, June 03, 2008
By Mansoor Ahmad

LAHORE: Economists point out that Pakistanis somehow fail to exploit available resources in the country.

They said Pakistan is the largest producer of ghee in the world. The country stands second in chickpeas production, fourth in production of cotton, apricot and sugarcane, fifth in milk and onions, sixth in date palm, seventh in mango, eighth in tangerines, mandarin orange and rice, ninth in wheat and tenth in oranges. 

Yet they said the country at one time or the other faces shortages, as the bureaucracy has no hold over hoarders, black marketers or smugglers.

They said the dairy potential of the country remains unexploited as the planners promote higher growth by increasing the milch animals instead of making efforts to increase the productivity of livestock at par with developed countries. They said the mindset of the government to increase agriculture output by four per cent every year would provide no relief to the consumers.

This productivity they added is naturally achieved every year subject to favourable weather. The government makes no contingency plans to take measures that could minimize the any adverse impact of the weather. Moreover they added the added in view of huge unexploited agricultural potential the productivity should be increased by 20 per cent annually for next five years in order to take advantage of high global commodity rates.

They said the performance in the industrial production is equally pathetic. They said Pakistan is the fourth largest producer and third largest consumer of cotton in the world. They said Pakistani textile industry consumes 16 million bales of cotton every year, out of which 85 per cent is exported. Thus only 4 million cotton bales are consumed for local needs while 12 million are used for exports.

Without taking into account the size of India itself, the volume of its economy, its polity and the age of Indian industry, the said economists went on to compare Pakistan with India.

They said India consumes 22 million cotton bales every year out of which only 50 per cent is exported and 50 per cent consumed locally. This implies that Indians consume 11 million cotton bales for exports and 11 million for local use.

The Indians earn over $18 billion from textile exports against $10 billion textile exports from Pakistan. If Pakistan textile industry matches the value addition attained by India our textile exports should have been over $20 billion. The textile industry alone is not responsible for this stalemate the protection provided to PTA plant also retarded blending textile products with manmade fibres. 

They said the growth in automobile sector has also been lopsided. The car production in Pakistan, they added increased six times from 33,000 in 1999 to 200,000 units now. 

The deletion of auto-components they added has remained almost stagnant. The foreign exchange saving they said is only 30 per cent even in vehicles where the localization of parts has reached 70 per cent.

They said 30 per cent imported parts of the vehicle add 70 per cent cost to the car. They said for low deletion models the imported component is 80-85 per cent. This they added explains one of the reasons for high import bill.

The previous government proudly claims that the import of raw material, parts and machinery has increased substantially during past eight years. These raw materials, parts and machinery added very little to exports but ballooned local consumption beyond reasonable limits. It looks strange that the government is providing undue protection to such industries at the expense of the consumers. They should be asked to either export certain percentage of production and part away from protection.

Despite high sugarcane production Pakistani consumers pay higher than the global sugar rates. The payments to the farmers are withheld due to lack of government writ. The cement industry has always operated on low capacity utilization to maintain high cement rates. Currently this sector is manipulating local cement rates on the strength of high export rates they are fetching from India and Middle East.

Pakistanis fail to exploit available resources


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## Neo

*Italy loans 7.8m euros for SME development ​* 
Tuesday, June 03, 2008
By Mehtab Haider

ISLAMABAD: Italy has signed an agreement for providing a credit line of 7.75 million euros for the development of small and medium enterprise (SME) in Pakistan.

A financial agreement between SME Bank (as borrower on behalf of the Government of Pakistan) and Artigiancassa Bank (as lender on behalf of the Government of Italy) was signed here on Monday.

The agreement provides for implementation of a credit facility offered by Italy for the provision of a soft loan worth 7.75 million euros for small and medium enterprise (SME) development in Pakistan.

The loan carries zero per cent interest rate, payable in 39 years. SME Bank would lend this loan to SMEs at a maximum markup of 4 per cent on loan in euro and 8 per cent on loan in Pak rupees.

The credit facility shall be available only to private enterprises or enterprises with a public participation of up to 20 per cent. Research centres and Universities may also have access to the Soft Loan in order to set up pilot projects or demonstration centres in the field of technology innovation and environment protection. Each individual project, even if split into more than one contract, shall not exceed the amount of Euro 550,000 and shall not be lower than Euro 30,000.

The credit line is proposed to be disbursed through a SMEDA-UNIDO IPU (Small and Medium Enterprise Development AuthorityñUnited Nations Industrial Development Organisation Investment Promotion Unit). This IPU would be set up within SMEDA premises, through an Italian grant of Euro 1,418,200 (already released in favour of UNIDO). Financial and technical feasibility of each project loan is to be undertaken by the IPU and loans shall be managed through the network of SME Bank.

The signing ceremony was witnessed by Syed Naveed Qamar, Pakistans Finance Minister, and Italian Minister of State for Economic and Finance, Guiseppe Vegas. R A Chughtai, Chairman SME Bank signed the agreement on behalf of the Government of Pakistan and Stefano Gatti, Head of Revolving Fund Management Unit, Artigiancassa Banking Group of Italy signed on behalf of the Italian Government.

Earlier, Italian Minister of State for Economic and Finance, Guiseppe Vegas called on Finance Minister, Syed Naveed Qamar in Finance Division Islamabad. Both the Ministers discussed general guidelines of the financial agreement between the Governments of Italy and Pakistan that would help promote small and medium enterprises development in Pakistan, besides fostering collaboration in other sectors.

Both the sides exchanged views on establishing a Technical Support Unit in Economic Affairs Division of the Ministry of Finance that would underpin all similar Italian-Funded Projects in Pakistan in various development sectors. 

Subsequent monitoring and evaluation of all such projects would pave the way for maximum benefits to the people of Pakistan, simultaneously enriching Italian entrepreneurs with experience in projects handling world over.

In the end, Guiseppe Vegas ivited Pakistans Finance Minister to visit Italy at his convenience in times to come. Such a visit would certainly strengthen bilateral relations between the people and governments of both the countries, Syed Naveed Qamar concluded.

Italy loans 7.8m euros for SME development


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## Neo

*Chinese firm interested in bus making​*
ISLAMABAD, June 2: A three-member Chinese delegation from King Long Automotive Industry (KLAI) visited investment Division and Board of Investment (ID&BoI) here on Monday to explore ways for Completely Knock-Down (CKD) bus manufacturing in the country.

The delegation comprised Richard Zhang, Assistant to President and Overseas Business General Manager, Andrew Chen, Project Manager and Xu Chang Hua, Manager, said a BoI press statement.

King Long Automotive of China is involved in the production of buses of international standards and has recently entered the European market and has further strengthened its global presence, the press statement added.

The delegation members held detailed meeting with the BoI officials. The meeting was chaired by BoI Director General Riaz-ul-Haq, who gave a presentation and discussed economic profile of Pakistan, various reforms and their implications on investment, liberal investment policy, while foreign direct investment trends from China were highlighted in particular.

The delegation was informed that currently over 60 Chinese companies were successfully operating in key economic sectors of Pakistan, the major ones being, China Mobile in Telecommunications, Pak-China Investment Company in Financial Services, Huawei Technologies Company Limited in Information Technology, China National Machinery Import & Export Corporation in mining and explorations and China State Construction Engineering Company in construction of 7-star hotel in Pakistan.

During the discussion delegation was also informed about the China-specific economic zones and the incentives it offers to the investors, including a 5-year tax holiday and 100 per cent depreciation allowance.APP

Chinese firm interested in bus making -DAWN - Business; June 03, 2008


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## Neo

*Economic fundamentals still strong, says Musharraf ​*
ISLAMABAD (June 03 2008): President Pervez Musharraf on Monday said the country's economic fundamentals were strong and hoped the government would address the current downtrend. The President was addressing the participants at the National Defence University following the presentation of a National Strategy Paper on Governance of Specially Administered Areas (Fata and NAs), and their impact on national security.

The event was attended by NWFP Governor Owais Ghani, Chairman Joint Chiefs of Staff Committee General Tariq Majeed, Chief of the Army Staff General Ashfaq Parvez Kayani and Air Chief Marshal Tanveer Mahmood.

To a question about the prevailing economic situation, President Musharraf said it was certainly recoverable. "I hope the government moves forward politically for the salvation and putting back on track the derailed situation. It is doable and achievable," the President added. The President said the issues of economy and terrorism must not be politicised as these might harm the national interests.

About the country's economic fundamentals, the President said: "Alhamdolillah, these are right and have been endorsed by international institutions." "We have to solve the problem and Pakistan has to move forward. We must make sure that this nation rises," the President said.

He pointed at the recent slump of stock exchange where billions were lost and the exchange rate after staying stagnant for the past eight years to around Rs 60, touched Rs 70 per dollar. The country loses Rs 28 billion with the increase of single rupee, he added.

He expressed the confidence that "if correct and bold measures are taken then all issues that confront us, are solvable - whether political or in economic field and all the issues of energy, water and food." The President said the three-pronged strategy of addressing military, political and socio-economic aspects was the way forward for addressing the situation in Pakistan's tribal areas.

"Military is certainly and is never the solution, as it only creates an environment, the solution is always through political measures," the President added. He said apart from the peace deal done two years back, the current deals had been done from a position of strength, particularly in Swat and South Waziristan.

He said an important aspect would be to ensure that there was no linkage with al Qaeda or foreign elements and there must not be cross border activity. The President said it was important that the vast majority of the moderate people are weaned away from the extremists. He said there should be no politics involved while dealing with terrorism and the region be brought to mainstream by providing socio-economic development to the area.

Similarly, he said, there was a need to integrate the Northern Areas both within and with the rest of the country, through roads and communications. The President said the recent measures taken to bring more development and improvement to the area will have a deep impact and the people will have a greater sense of contentment.

To a question, the President said Pakistan's relations with the United States were extremely important. He said ties between the two countries need to be broadbased and not focused merely on extremism and terrorism. The relations, he said, need to encompass social, economic and other ties.

The President said he would not agree that the problems facing Afghanistan could be resolved with the pulling back of coalition forces from Afghanistan. "I don't think so," the President said, adding it could destabilise Afghanistan and also Pakistan.

He said Afghanistan is a tribal society and can end up fighting each other as it did with the withdrawal of the Soviet forces. He said it was important that other issues like Iraq and Palestine are resolved as they do have an impact on the situation in Afghanistan and need to be addressed. The President when asked about the need for long term water management said it was vital to have large water reservoirs to ensure water and energy security for the country.

He said politicising developmental issues of the country could impact economic growth. The President stressed pursuing all projects to generate electricity and preserve water to meet the growing irrigation needs. To a question he said Pakistan was pursuing a long-term strategy to address poverty, unemployment, extremism through rationalisation of education system across the country.

About the food crisis, the President favoured giving higher prices to farmers, to match the international prices to curb smuggling. He said it will also bring prosperity to the rural areas, however, he said that the poor segments of the society need to be protected.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Trade deficit may cross $20 billion this year ​* 
KARACHI (June 03 2008): The country's trade deficit is likely to cross $20 billion mark, for the first time in Pakistan's history, this fiscal year, mainly due to sharp rise in imports low exports. Although the State Bank took some bold steps to bring down the increasing imports, analysts believe that these steps had been announced very late, when the imports and trade deficit had already breached all barriers.

The State Bank of Pakistan imposed 35 percent margin on all import Letters of Credit (L/Cs), except oil and some food items from May 23, aimed to bring down imports and the rising trade deficit. Earlier, there was no percent margin on LC opening, and importers were importing goods over and above the requirement, putting extra burden on the national exchequer.

Analysts said that during the remaining two months of current fiscal uear no positive impact of this step may be witnessed, as importers had already has placed huge import orders. However, they believed that in FY09 imports would definitely decline due to the 35 percent margin.

The previous government has set the import target of $32.3 billion. However, the soaring oil prices in the world market and unexpected imports of wheat and other commodities for local consumption badly hurt the target. Imports during ten months have already reached near the target, as the July-April imports stood at $32.06 billion, 28 percent higher than last year's imports of $24.9 billion.

Economists have predicted that this year trade deficit would cross $20 billion, or about 49 percent, with about $37.5-38.5 billion imports and $18-18.5 billion exports. The targeted trade deficit for the current year was $13.1 billion, with $19.2 billion exports and $32.3 billion exports. The country's trade deficit has already reached at all-time high level of 16.08 billion dollars in the first 10 months of current fiscal year as imports stood at 32 billion dollars and exports at 15.25 billion dollars.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*$100 million ethanol plant in the doldrums ​* 
KARACHI (June 03 2008): A private firm's $100 million plan of setting up maize-based ethanol generation plant near Port Qasim Karachi has been not been implemented so far. Sources in Sindh government told Business Recorder on Monday that poor law and order and political instability in the country had put the project in doldrums, as the foreign investor company is reluctant to invest here in such circumstances.

Without naming the investor firm, sources said that the company had shown interest in developing energy by alternative resources about a year back. On its request, the government had asked the Alternative Energy Development Board (AEDB) to see the possibility of setting up the plant near Port Qasim.

The firm was also in close contact with the Board of Investment (BoI) and Planning Commission (PC) to remove financial and legal hitches in implementing the proposed project. The AEDB had started work on the feasibility of the project in collaboration with the Swiss firm, but later the work had been ceased due to unknown reasons, sources said.

They said that the project had been stopped, as the firm was reluctant to invest in view of the political uncertainty and deteriorating law and order. The firm also intended to invest, on a large scale, in several projects of oil and gas sector. They were also put on hold by the firm's stance to remain apart from investing in Pakistan, sources added.

Sources were of the view that the present law and order situation and political instability of the country is putting barriers in the way of foreign investments. It may be pointed out that Sindh Alternative Energy department had also proclaimed to set up a $110 million ethanol plant, but the project was still on paper, owing to indifference of the concerned officials.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*1,000 megawatts more power to national grid from June 10: action plan approved ​* 
ISLAMABAD (June 03 2008): A plan for generating around 1000 MW additional electricity from the existing private and public sector plants has been approved here on Monday. The additional electricity will be available to the national grid from June 10.

A high-level inter-ministerial meeting, presided over by Federal Minister for Water and Power Raja Pervez Ashraf, approved the plan that will reduce the quantum of load management by about two hours daily. Speaking on the occasion, the minister said that co-ordinated efforts of all concerned were required to cope with the prevailing power crisis and to generate additional electricity.

The meeting discussed ways and means to maximise power generation in the country, particularly in the summer, and approved a three-month action plan. Secretary and Advisor on Water and Power, additional secretaries, finance and petroleum, Managing Director of Pakistan Electric Power Company (Pepco), managing directors of Private Power Infrastructure Board (PPIB), Sui Gas Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Company (SSGC), chief executives officers (CEOs) of all generation companies (Gencos) and senior officials of the ministry attended the meeting.

The minister directed the Pepco MD to take immediate measures to meet the target to generate additional power of 1000 MW from the Gencos, and the IPPs from the current month.

He also asked the Gencos to keep their plants in order on maximum capacity and no shut down on minor faults would be allowed. He was of the view that today the country was facing shortage of about 4000 MW electricity, which had affected the economy and all segments of society.

It was decided in the meeting that all the concerned ministries would extend cooperation with each other to generate maximum electricity from the Gencos and IPPs to reduce the gap between demand and supply. The representative of Finance assured the meeting to provide enough financial resources to the Pepco within a week time to reduce its financial burden and payments to fuel supply companies.

The Petroleum Ministry would supply the maximum gas to all Gencos and ensured timely supply of furnace oil to the public and private power projects to enable them to generate additional power of 1000 MW during the summer season.

The Pepco MD assured the meeting of generating 1000 MW from the existing plants of the Gencos and IPPs from June 10, after receiving funds and required gas supply to the power plants.

Earlier, the representatives of Finance and Petroleum and Gencos CEOs gave a detailed briefing to the Minister on the financial matter related to cash resources and immediate release of sufficient funds, supply of fuel and gas, and generation capability during peak and off-peak hours, respectively.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Planet Energy, Goldwind Technology sign MoU ​*
KARACHI (June 03 2008): Planet Energy (Pvt) Ltd Pakistan signed a memorandum of understanding with China's largest and one of the world's top ten wind turbine manufacture's for purchase of turbines for its planned 50MW wind farm with the option to increasing it to 150MW. The MoU was signed in Urumqui, China.

On this occasion Planet Energy was represented by its Chairman Tariq Sayeed whereas Goldwind Science and Technology was represented by its Vice President Wang Xiangming. With this agreement Planet Energy becomes one of the few companies in Pakistan to be able to secure wind turbines at a time when demand of quality turbines is sky rocketing and waiting periods are estimated at 4-5 years.

Tariq Sayeed has assured that further turbines will be made available to other companies interested in developing Pakistan's wind energy market, so that the current energy crises can be curtailed through cleaner technologies thus reducing country's dependence on imported fuel which is a major contributor to its import bill.

Business Recorder [Pakistan's First Financial Daily]


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## ejaz007

*Iran to mediate to end IPI gas pipeline transit fee deadlock*
* 4-member committee formed by Iranian president to resolve matter within 45 days 
* Pakistan rejects Indian demand of fixed rates
By Zafar Bhutta

ISLAMABAD: Iran is to mediate between Pakistan and India to end the deadlock on the issue of transit fees over the billion dollar Iran-Pakistan-India (IPI) gas pipeline deal, sources in the Petroleum Ministry told Daily Times on Tuesday.

The sources said that Iranian President Mahmoud Ahmadinejad has constituted a 4-member committee comprising of respective ministries officials to hold talks with Pakistan and India on the transit fee issue, and that the Iranian president has given a 45-day time frame to the committee to settle the issue of gas transit fee between Pakistan and India, and submit a report to him.

They said that Pakistan and Iran were set to sign a gas sales purchase agreement (GSPA) on the IPI gas pipeline deal by May 31, 2008, but Pakistan and Iran would now sign GSPA after the 45-day deadline.

He said that Pakistan and India could also sign the gas transit fee agreement when GSPA would be signed between Iran and Pakistan.

Then Pakistani Petroleum Minister Khawaja Muhammad Asif and Indian Petroleum Minister Murli Durao had announced on April 26 in a joint press conference that the gas transit fee on IPI gas pipeline project would be addressed within next 10 days but no progress on the fee issue has been made as yet.

The sources claimed that India had offered a gas transit fee of 15 cents per million British thermal units (MMBTU) whereas Pakistan had demanded 60 cents per MMBTU as per international standards during bilateral dialogue between Pakistan and India on April 25 over the issue.

They said that India had agreed during the discussion to pay 30 cents per MMBTU as a transit fee.

They said that the Indian delegation had assured the Pakistani authorities to seek approval from its competent authority and convey the decision to Pakistan in a weeks time, but Pakistan has not received a response from the India so far. The committee formed by the Iranian president will resolve the issue now, sources added.

Fix transit fee: The sources said that India also wants Pakistan to charge a fixed transit fee for the project for lifetime. However, Pakistan has turned down the demand, and is of the view that determination of the transit fee mechanism should be based on gas sales price revision, as international standards require.

They also noted that transportation charges would be determined after the finalisation of the feasibility report on the gas pipeline in Pakistan and a company would be set up to implement the project, as well as arrange the security according to the mutually agreed framework. Pakistan and Iran have finalised the draft of GSPA, which contains the revision of gas price, and therefore Pakistan believes that gas transit fee should be based on gas price revision, sources added.

Daily Times - Leading News Resource of Pakistan


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## Neo

*USC may suffer Rs2bn loss in rice deal with REAP ​* 
*Prices soften ahead of fresh crop; Utility Stores authorities reject Super Basmati supply on quality issue​*
Wednesday, June 04, 2008

KARACHI: The Utility Stores Corporation (USC) is likely to suffer a loss of Rs2 billion in the rice supply deal signed recently with the Rice Exporters Association of Pakistan (REAP).

According to the agreement REAP was to provide 200,000 tonnes of rice to USC at fixed rates till October 2008.

The local and global rice prices have dropped by almost 10 per cent ahead of the arrival of fresh crop of coarse quality rice in August, fine quality rice in September and news of bumper crops in Vietnam and Thailand along with allaying of rice crisis fears in India as it has indicated lifting of ban on rice exports.

The current scenario leaves the USC and the REAP seeking loopholes in the contract to prevent losses and secure better profits respectively, sources said.

It was learnt that USC was only taking basmati broken from the REAP and had refused to receive Super Basmati shipments. An industry source revealed that the samples of Super Basmati were rejected, as they did not match the agreed sample.

Masood Alam Niazi Regional Manager South Zone USCP said that REAP so far has only supplied broken rice to south zone and that too not according to the agreed quantity.

As far as Super Basmati is concerned they have not yet supplied any consignment because we have rejected what REAP was passing on as Super Basmati rice, Niazi said.

REAP seems inclined upon supplying sub-standard rice which does not meet the quality which was agreed upon when the deal was inked, he said.

Another issue is that rice prices have dropped almost 10 per cent bellow the rate at which USCP agreed to buy rice from REAP. The price differential is likely to cause USCP a loss of Rs2 billion. 

It was learnt from the market that prices have dropped at least Rs10,000 per tonne for Super Sella Basmati, Super Basmati white, PAK-386, Irri-9 and Irri-6.

Irri-6 rates have fell from Rs47,000 per tonne to Rs35,000 per tonne, PAK-386 down from Rs85,000 per tonne to Rs65,000 per tonne, Super Basmati superior grade of average grain length (AGL) 7.25mm to 7.5mm which had touched peak of Rs105,000 per tonne to Rs90,000 per tonne while its short grain of AGL 6mm to 7mm was being traded at Rs63,000 per tonne. 

According to details, USCP had purchased 80,000 metric tons of Super Basmati Crop 2007-08 of AGL 6mm to 7mm at Rs73 per kg, 20,000 metric tonnes of Super Sella (Par-boiled) Basmati Crop 2007-08 of AGL 6mm to 7mm at Rs80 per kg and 100,000 metric tonnes of Basmati Broken rice of Crop 2007-08 at Rs43 per kg as per samples provided by REAP. 

According to the deal, USCP was to receive initial consignment of 13,800 metric tonnes in May 2008.

Another leading exporter revealed on the condition of the anonymity that if Federal Government lifts stocks of 300,000 metric tonnes of rice kept at rice exporters warehouses as strategic reserves, it will cost additional loss of Rs3 billion if todays market prices are calculated. 

It is important to mention that the deal is the biggest deal of rice purchase amounting to Rs50.44 billion that the USCP has made so far with local vendors of rice at fixed rates valid till October 31, 2008.

USCP authorities inked the contract despite knowing the fact that new crop of IRRI 6 would be available in August and P-386 and Irri-9 in September, which always lower market prices. 

The rice exporter said, contracted specification and mutually agreed prices depict error of omission and commission as minimum length grain of Super Basmati rice is 7.25mm to 7.5mm while agreement between these two parties shows average grain length (AGL) of 6mm to 7mm for Super Basmati white and Super Sella (Par-boiled) Basmati rice. But it is clear from agreed grain length that short grain of inferior grade would be supplied to USCP under label of Super Basmati rice, he said. 

A mixing formula was verbally advised by the negotiating team of this deal that rice to be supplied, consists of 38 percent purity of short grain of Sindh Super Basmati blended with balanced varieties of Irri-9, Pak-386 and DR or KS282, he added. 

The rice exporter revealed that the prices were artificially jacked up around the time agreement was being negotiated with the USCP.

Within a period of three weeks Super Basmati rates had jumped by Rs40,000 per tonne to justify that the deal fair and beneficial in the national interest.

However, the rice supply vows were short lived. The farsighted entrepreneurs knew that Thailand and Vietnam were expecting bumper crops, a news available to all rice stakeholders. Once they made USCP authorities realize that a colossal rice shortage crisis was at hand the USCP agreed to buy the staple grain at higher rates. USCP was soon to realise that the rates would fizzle out once new crops land in the local and global markets.

Rice exports told that further price decline is expected as Thailand and Vietnam new bumper crop has arrived. India is also considering allowing rice exports of varieties during this month which were banned earlier. 

USC may suffer Rs2bn loss in rice deal with REAP


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## Neo

*Japan to increase ODA to Pakistan ​* 
Wednesday, June 04, 2008

ISLAMABAD: The Japanese government on Tuesday assured to increase the volume of its Official Development Assistance (ODA) to Pakistan, with particular emphasis on infrastructure development, including focusing on highways, communication and alike.

It is worth mentioning that in April 2005, after a seven-year suspension, the then Japanese Prime Minister Junichiro Koizumis visit to Pakistan announced resumption of yen loan it suspended after Islamabad May 28, 1998 nuclear explosions.

Current level of Japanese assistance to Pakistan is around $500 million per annum and now Tokyo has green signaled to positively review the size of Japanese economic assistance to Islamabad.

Japanese Ambassador to Pakistan, Seiji Kojima called on Syed Naveed Qamar Federal Minister for Finance, Privatisation & Investment here on Tuesday. It was bilaterally discussed that both the countries need to address the current upward spiral in international market oil prices that is impacting the developing countries growth.

Seiji Kojima informed that the Japanese government was currently in the process of discussion with Pakistans Economic Affairs Division on forthcoming programme-based financial support to Pakistan, through bilateral consultations, which was based on the principle of need analysis leading to subsequent financial assistance.

Naveed Qamar apprised the Japanese Ambassador about the governments concept clearance on Pre-Budget preparations, along with other development related economic initiatives. Both the sides discussed the institutional economic framework of their respective countries.

Qamar said that Pakistan was currently passing through the most challenging time since the democratic government took over and special measures are underway to reform the national economy. Pakistan would continue to be a priority in the Japanese govts global economic preferences, he added.

It is worth mentioning that two months back, Japan and Pakistan held in-depth deliberations to increase bilateral cooperation, especially Japanese financial assistance to Pakistan. They discussed ways and means for encouraging Japanese investment in the country.

Japan to increase ODA to Pakistan


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## Neo

*HEC up for grabs through acquisition of 90pc shares ​* 
Wednesday, June 04, 2008

ISLAMABAD: A pre-bid meeting of pre-qualified bidders for the privatisation of Heavy Electrical Complex (HEC) through the acquisition of minimum 90 per cent shares, together with management control on as is, where is basis, was held here on Tuesday under the chairmanship of Ahmed Jawad, Secretary Privatisation Commission.

Most of the participating pre-qualified parties in the pre-bid moot have already completed the important phase of due diligence of the transaction in the data room. So far three parties have completed the due diligence while two parties are in the process.

The five pre-qualified parties include ABB (Pvt) Limited, Switzerland; Areva T&D Holdings Ltd, SA France; Pak Elektron Limited (PEL); Siemens (Pakistan) Engineering Company Limited, Karachi and Iljin Heavy Industries Company Limited, Korea. During the pre-bid moot, the potential bidders were briefed about the bidding process and the queries made by them were responded accordingly.

HEC is one of the industrial units of State Engineering Corporation (SEC) engaged in the manufacturing of power transformers of different types (total annual capacity 3000 MVA) with a primary voltage rating of 66 and 132 KV. In addition, the HEC undertakes repair and refurbishment of old and damaged power transformers up to 500 KV.

The Purchaser shall continue to operate the companys manufacturing facility and shall not in any way abandon, cease to operate or otherwise shutdown the existing Company manufacturing facility. The Purchaser will not in any form or manner dispose off, alienate transfer any or all land in the name of the Company without prior consent of the Privatisation Commission (PC).

The cost of Golden Hand Shake Scheme (GHS) for permanent workers and Voluntary Separation Scheme (VSS) for the executives will be shared equally between the new buyer and the PC. The bidder shall bid on the basis of audited accounts of June 2006 and may also factor the latest un-audited accounts available prior to the bidding. The loan from the Government of Pakistan amounting to Rs1.002 billion will be written back in the books of HEC and the tax impact after adjustment brought forward losses of Rs376.708 million shall be borne by the PC.

HEC up for grabs through acquisition of 90pc shares


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## Neo

*Technology institute to produce wind energy ​* 
Wednesday, June 04, 2008

KARACHI: Shaheed Zulfiqar Ali Bhutto Institute of Science and Technology (SZABIST) has planned to produce 100MW of wind energy for commercial purpose at its Gharo Campus, an appropriate site for generating power through wind.

The project report will be completed in the next one month. This was approved in the Board of Governors (BoG) meeting of SZABIST on Saturday, whereas BoG appreciated the efforts by SZABIST for generating energy through wind and solar sources.

The BoG also approved the expansion plan of the construction of its purpose built campus in Clifton, Karachi, where construction will be completed within 15 months. In addition to the Karachi Campus, expansion plans for Larkana and Dubai Campuses were also approved, along with the relocation to its new premises in Sector H-8.

Dr Javed Laghari, President of SZABIST said that they are determined to stand steadfast to carry on the vision of SZABIST for quality education and to make it an institution worthy of carrying forward the great names of Shaheed Zulfikar Ali Bhutto and Shaheed Mohtarma Benazir Bhutto.

Dr Azra Fazal, Chancellor SZABIST, Dr Javed Laghari, President SZABIST, Aftab Shahban Mirani, Barrister Kamal Azfar and others attended the Board of Governors meeting.

Technology institute to produce wind energy


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## Neo

*Body to review Rs30bn package for textile​*
ISLAMABAD, June 3: Faced with a soaring budget deficit, the government on Tuesday constituted a high- level committee to review the economic implications of the proposed Rs30 billion cash subsidy package for the textile exporters, Dawn has learnt.

The package is designed to subsidise consumer prices of textile and clothing products for their sale in the markets of rich countries.

The government has already doled out more than Rs32 billion to the textile exporters during the last over two years under the head of six per cent research and development (R&D) subsidy, which is expected to reach Rs50 billion by end of the current year.

Sources told Dawn that the committee was constituted following the serious reservations from some ministers, who objected the continuation of cash subsidy for the next fiscal year saying the dolling out of subsidies did not help in increasing the exports from the sector.

The package recommended by the ministry of textile was discussed at length at the Economic Coordination Committee (ECC) meeting headed by Prime Minister Yousuf Raza Gilani on Tuesday, which led to the formulation of the committee.

The committee includes representatives of textile, commerce, and Federal Board of Revenue and governor State Bank of Pakistan.

The sources said that after claiming huge cash subsidy, concessions on bank loan rates and also on export refinance in last few years, the pace of growth in textile exports did not accelerate, which remained stagnant at four per cent between April 2005 and Jan 31, 2008. However, the exports witnessed a negative growth since February last.

The sources said that the government was facing problem of financial accumulation to increase the share of provinces in the divisible pool in the next budget, while the textile exporters were demanding this hefty package at a time when government is desperate for arranging subsidy for curtailing the rising prices of essential food items.

Under the proposed package, the textile industry has proposed 3 per cent rebate on exports of garments worth above $25 million, 2.5 per cent for home textile, while it will go up to 9 per cent in case of exports worth $200 million.

The sources said that textile industry had just changed the concept from the 6 per cent R&D cash subsidy to the special duty drawback rates in a way to avoid criticism from people, who are raising concerns for diverting taxpayers money for financing the rich countries consumer purchasing power.

The sources said that not a single unit was added to the existing strength of textile mills, and instead a large amount of subsidies was allegedly diverted to set up industries in other sectors i.e. cement, sugar and power generation. Similarly, import of textile machinery is also on the decline for the last couple of years.

Analysts said the new government should revisit the policy of subsidies, which should be result-oriented and be linked with increase in export proceeds. It should also be linked with enhancement of competitiveness of products and introduction of new products.

Body to review Rs30bn package for textile -DAWN - Business; June 04, 2008


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## Neo

*Extra 1500 megawatts generation: Rs 15 billion to be spent every month ​* 
ISLAMABAD (June 04 2008): The government will spend about Rs 15 billion per month for generating additional electricity of 1500 MW to ensure provision of electricity to industrial and agriculture units from June 15. "We need Rs 15 billion a month to generate the much needed electricity," said minister for water and power Raja Pervez Ashraf while talking to Business Recorder here on Tuesday.

The minister also confirmed that federal budget for next fiscal year would be announced on June 10 as the Prime Minister is due to leave for Saudi Arabia on an official visit. The PPP parliamentary party meeting, which was held prior to National Assembly session, discussed the upcoming budget for providing relief to poor against dearness.

He said that parliamentary party had given some suggestions for the next budget. While some members expressing concern over inflation wanted the government to take strict measures to control dearness, it was learnt. Pervez Ashraf disclosed that the Prime Minister had agreed to water and power ministry's proposal of generating more electricity from the existing plants. "Bulk of additional electricity will be provided to industrial and agriculture sectors so that their output could be enhanced," he said. The national grid will have around 1000 MW additional electricity from the existing plants both in public and private sectors, he claimed.

A high-level inter-ministerial meeting held here the other day, approved the plan of reducing the quantum of load management by about two hours daily. The meeting approved the 1000 MW additional electricity generation from June 10.

The water and power ministry has directed the Independent Power Producers (IPPs) and public sector power plants and MD, Pakistan Electric Power Company (Pepco) to take immediate measures to meet the target to generate additional 1000 MW from Gencos and IPPs.

The minister said that the power generation companies (Gencos) had already been directed to keep their plants in order on maximum capacity and no shutdown on minor faults will be allowed. He was of the view that today the country was facing shortage of about 4000 MW electricity which has affected the economy and all segments of society.

He said that the country would have no power shortage next year as the government has started working on multi-pronged strategy that includes installation of rental power plants, minimising line losses, conservation of energy, and generating more power from existing power plants.

Pervez Ashraf said that next budget would be people as well as business-friendly. "The government will take measures to provide maximum possible relief to the common man while living within affordable fiscal space," he added. "We have inherited most of the ills including power shortage, budget overrun, and inflation from the previous government, but efforts are afoot to improve the situation," he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Energy saving: most of Enercon proposals turned down by Cabinet ​* 
ISLAMABAD (June 04 2008): Most of the proposals floated by National Energy Conservation Centre (Enercon) to save energy have been rejected by the Cabinet, sources told Business Recorder, here on Tuesday. Sources said that Enercon presented about 35 proposals to the Cabinet on May 7, 2008.

But the conservation plan to reduce loadshedding announced by the Cabinet on May 15 did not include any of them. "Out of 35 proposals our emphasis was mainly on the introduction of five-day working week in government offices to save 828MW of electricity in addition to huge cut in gas and transport bills, but it was rejected," sources maintained.

Source opined that the government doesn't give any satisfactory or a logical answer to Enercon queries. For five working days the government officials said that it would be 'politically expensive' for the government. Beside this five working days a week would give an impression of having 'fun' by announcing more holidays.

Sources said that as per the recommendations, the Ministry of Industries would introduce energy efficient water heaters/geysers by June 30; there shall be complete ban on import of more than 5 years old boilers; since the steel industry is presently consuming 700 kWh/ton energy as compared to 250 kWh/ton internationally, therefore, incentivised promotion of high efficiency electric 'arc furnaces' with minimum 50 tons capacity shall be launched.

About 100 textile units would be made energy-efficient, within 100 days of newly-elected government, through capacity building of engineers/technicians; the Minfal and provincial departments may be directed to undertake mandatory energy audit of tubewells and water pumping stations through consultancy services by Enercon.

Pepco will reduce line losses by 1 percent for achieving 100MW savings; line losses in gas transmission and distribution system will be reduced by 0.5 percent for nearly a billion rupees saving. The Ministry of Petroleum and Natural Resources will finally launch the project for replacing inefficient domestic burners in 10 major cities, benefiting over 3 million middle and lower middle class consumers.

The Federal Board of Revenue may allow import of only energy-efficient and duly labelled appliances as per approved standards; the Ministry of Industries will instruct chambers to encourage use of 'Time of Use (TOU)' meters for maximum utilisation of off-peak hours.

The government may grant one-time exemption on import duty for 10 million energy savers for free distribution through Discos of 2 million bulbs to charity institutions and low income segment of society and the rest on credit with recovery through utility bills on instalments.

Five-year tax holiday may be granted for domestic industry on energy savers local manufacture, tariff facilitation may be provided by the FBR for import of needed inputs eg insulation, HVAC and other materials/appliances.

Sources further said that even nothing yet has been done under Prime Minister's 100 days plan of action for energy conservation. According to the plan 10 million energy saver light bulbs would be purchased by the government and installed throughout the country but no worth mentioning progress has been seen as yet, sources said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*It's going to be Rs 2.25 trillion budget ​* 
ISLAMABAD (June 04 2008): The federal cabinet is being presented Rs 2.25 trillion federal budget 2008-09, for overview in its meeting scheduled for Wednesday, June 4. Prime Minister Syed Yusuf Raza Gilani will chair the meeting. Sources said the cabinet will be given a detailed presentation on upcoming budget, being unveiled on June 10.

The budget makers will brief the cabinet on economic growth in the current fiscal year and projections and expectations for 2008-09. They will brief the cabinet about performance of key sectors of the economy in 2007-08. It would include results of trade with global partners, remittances, revenue collection, GDP growth, individual outcome of agriculture, manufacturing and other key sectors of the economy. The budget makers will also inform the cabinet about the challenges the economy was facing due to high oil prices and the ongoing global food crisis.

The cabinet will also be informed about the strategy to be followed for quick adjustments in different sectors of the economy for better performance in 2008-09.

The budget makers have already set a Public Sector Development Programme (PSDP) at Rs 541 billion for the next fiscal year, besides fixing an ambitious revenue target of Rs 1.25 trillion for the Federal Board of Revenue (FBR).

The cabinet will also be briefed on Pakistan's exports in the last fiscal year. The government is facing huge trade deficit due to poor performance on export front and its one of the factors posing serious threat to Pakistan's economy. FBR chairman Abdullah Yusuf will brief the cabinet on revenue collection figures. FBR is on target to meet downward revised target of Rs 990 billion but the government would like better performance to achieve comparatively tough target of Rs 1.25 trillion in 2008-09.

The meeting will also be informed of the decisions taken to protect the poor from unprecedented price hike. It will be briefed on the possible increase in the government employees' salaries and pensions as a part of the relief package. The government is likely to raise the government employees' salaries by 20 percent in the budget.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Japan wants to invest Rs 191 billion in Karachi sewerage treatment plan ​* 
KARACHI (June 04 2008): Japan has shown interest to invest Rs 191 billion in Karachi Sewerage Master Plan (KSMP), which would treat 555 million gallons per day (mgd) sewage water before discarding into the sea.

With a view to eliminate environmental hazards and make pollution-free sea belt, the Sindh government has invited representatives of Japan International Corporation Agency (Jica) to provide professional expertise in this regards, with financial assistance.

Sources told Business Recorder on Tuesday that the Jica was handed over the proposal to invest in water sector at a meeting with the officials of Sindh government. They said that Japan is very keen to invest in this sector for improving sewerage system with sufficient treatment capacity. After conducting analytical survey, Jica has chalked out a comprehensive strategy to improve the sewerage water capacity, which at present is 42.6 mgd, sources said and expressed hope that after its effective implementation the treatment capacity would be increased to 555 mgd, which is expected to be the demand of Karachiities by 2025.

Sources expressed fears about seafood business situation, saying that it would only improve when disposal of sewage water controlled. They termed it as the chief cause of the recurrent ban imposed by European countries on seafood exports. The bulk of sewerage water being discarded into sea without proper treatment is creating hazards for marine life and causing huge losses to national exchequer besides, they said.

For this purpose, Jica has proposed to construct new sewer on an area of 4140 hectares and cover three towns to minimise the losses. Sources said that Jica representatives have stressed the need of replacing present sewerage water mains to improve water treatment capacity with new ones, and added that Jica has planned to construct new branch sewer, trunk and sub-main sewer, and place 320 km of new sewerage pipes.

They said that no environmental impact could be expected; rather the project would improve overall environmental conditions of the city's beaches, and urged the industry sector to play their role in making pollution-free seaside, besides paving the way to comply WTO, EU, USA, ISO and EPA standards in this regard.

They said that due to lack of Karachi Water and Sewerage Board (KW&SB) autonomy in the day to day operations, it had failed to facilitate its consumers at maximum. They said that Karachi has three sewerage water treating plants including, TP-I, TP-II, TP-III from 150 mgd water, owing to inadequate sewerage mains and only 90 mgd water was being treated out of total sewerage water. Therefore, it has been proposed to enhance the capacity of treatment plants from 150 mgd sewerage water to 300 mgd soon, and upgradation work for treatment plants would be expected to commence shortly, they said.

"This project will also help to eliminate obstacles, which fishery units are facing due to contaminated and untreated sewerage water", they said. It is also planned to process all Karachi sewerage water through these treatment plants and use treated water for horticulture and agriculture purposes, they added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Energy conservation, clean water initiatives: US to provide $330 million aid ​* 
ISLAMABAD (June 04 2008): The US will be providing 330 million dollars assistance for various projects in the country. While 30 million-dollar assistance will be for energy efficiency and energy conservation, 300 million dollars for technical assistance and clean water initiatives in Pakistan.

US Ambassador Anne W. Patterson announced this at a high level meeting held here on Tuesday chaired by Federal Minister for Environment Hameedullah Jan Afridi. Addressing the participants, who included high officials of Ministry of Environment, National Energy Conservation Centre (Enercon) and US Embassy, Afridi said that the regulatory and enforcement mechanism had been put in place for tackling the environmental issues at Federal and provincial level.

He said that under Islamabad Green City Programme, launched by the ministry, there was plan to relocate the industries of I-9 sectors to some other suitable location. The minister said that the reason behind relocating the I-9 sector was that this industrial area housed eight steel furnaces, which emitted more than one ton of particulate matter each day, which, no doubt, was affecting the health of the residents badly.

Afridi maintained that the signing of memorandum of understanding (MoU) with the US government would help formulate comprehensive plans and programme to tackle industrial, air and marine pollution in Pakistan.

He said that the ministry would declare the 2009 as the national year of environment on the special event of World Environment Day. The minister told the US Ambassador that Enercon was established with the financial assistance of the US government. He appreciated the US assistance in the areas of energy conservation and forestry sector development, particularly during 1960 and 1990.

It was also emphasised that the recent report of the World Bank estimates that annual cost of environmental degradation is Rs 365 billion per year or a billion per day, which amounts to six percent of the gross domestic product (GDP).

The US Ambassador told participants that the US experts on die-safety and bio-security would be visiting Pakistan soon to interact with the Ministry of Environment to seek further cooperation in the areas of environment. She said that she would expedite the progress on the MoU as per understanding reached in the previous meetings.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Ministry of Science, Technology to get over Rs three billion: 146 projects proposed for 2008-09 ​* 
ISLAMABAD (June 04 2008): The Ministry of Science and Technology would get about Rs 3, 015 million allocation for 146 projects proposed for 2008-09 against the previous allocation of Rs 3, 600.693 million. This was informed to the Senate Standing Committee on Science and Technology at a presentation given by the ministry at a committee meeting held with its chairman Rozina Alam Khan in the chair here on Tuesday.

According to the presentation, Rs 14, 338.286 million of the previous budgetary allocation was spent till April and the expected expenditure up to end of the June 2008 would be Rs 24, 10.592 million.

The Chairperson, Senator Razina Alam Khan and members of the Committee observed that the funds utilisation capacity of the Ministry and organisations under its administrative control must be increased. They said their linkages with the industrial and agricultural sectors along with the respective Chambers of Commerce are absolutely vital for overall economic development.

The Committee opined that the nation is pinning great hopes on the Ministry of Science and Technology, adding that it has the potential to change the fate of an average Pakistani by helping in areas vital to our survival like energy and agriculture.

The Committee stressed the need for development of indigenous technologies and asked the ministry not to sign any agreement in future without ensuring transfer of technology. It also called for greater co-ordination among research institutes, which should try to generate funds on their own. It urged an integrated approach and broader futuristic vision to hasten our transition to economic prosperity.

Among others, the meeting was attended by Senators Professor Muhammad Ibrahim Khan, Dr Muhammad Said and Rehana Yahya Baloch besides senior officials of the Ministry of Science & Technology.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Rs 500m allocated for Thar coal development in PSDP​*
ISLAMABAD: Current power crisis has forced the government to switch to coal based power generation, and Rs 500 million is allocated in the Public Sector Development Programme 2008-09 for Thar Coal Infrastructure Development. 

Government would develop infrastructure, including road network to access the Thar coal reserves. This is the new project that government would launch during the coming financial year and the decision has been taken to generate electricity from Thar coal reserves, which is not only cheap but will also help overcoming power shortfall. 

This is a huge allocation in the Petroleum and Natural Resources Division, as the government allocated Rs 850 million for 19 development projects. Out of total allocation, Rs 500 million has been allocated for this project. 

The total cost of the project has been estimated at Rs 1 billion and government would generate money from its own resources. Government has also allocated Rs 22.696 million for the ongoing project of National Coal Policy. The total estimated cost of the project is Rs 23 million. Government has also allocated Rs 35 million for the ongoing project of Feasibility Study Gasification of Thar Coal. The total cost of the project has been estimated at Rs 126.649 million. 

Government has also decided to explore the coal reserves in Balochistan province and has allocated Rs 10 million for exploration and evaluation of coal fields of chamalang dhaka, bahlol and parts of ghazi coal basin in Balochistan. The total cost of the project has been estimated at Rs 30 million. Government is also set to start the exploration of coal reserves in Azad Kashmir and has allocated Rs 4.022 million for the exploration for coal in kotli. The total cost of the project has been estimated at Rs 20 million. 

Other ongoing projects include: feasiblity study for development and exploration of Chichali Iron Ore and comissioning of steel mill at Kalabagh, Rs 5 million, geo-hydrological exploration for development of underground water in Hamun-e-Mushkil, Chaghi District Balochistan Rs 15 million, Establishment of Project Management Unit for PHRD Rs 5 million, Strengthening and Capacity Building of Mineral Wing Rs 10 million, Capacity Building for Hydrocarbon Research and Development Islamabad Rs 26.320 million.

Daily Times - Leading News Resource of Pakistan


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## Neo

*ESSAR Group interested in energy, steel, shipping sectors​*
ISLAMABAD: ESSAR Group, one of the largest corporate houses of India with an enterprise value of $15 billion, has expressed its interest to invest in Pakistans energy, steel and shipping sectors. 

The Prime Minister, Syed Yousuf Raza Gilani while talking to a delegation of the ESSAR Group headed by Shashi Ruia and Ravi Ruia, said Pakistan was open to business and Foreign Direct Investment (FDI), which was fully protected under the laws of the country. 

Almost all sectors of our economy allow FDI and there is no discrimination between foreign and local investment as no government sanction is required in either case, the Prime Minister added. 

He said Pakistan offers a liberal and attractive package of incentives as 100 percent foreign equity is allowed and there is no restriction on remittances of royalty, technical and franchise fee, capital, profits and dividends. 

Gilani said since Pakistan is deficient in electricity, it would welcome investment in power generation especially in developing the Thar Coal reserves. He said other attractive areas of investment include telecom, steel, real-estate construction and electronics. 

He said Pakistan is surplus in cement production and would like to export it to its neighbouring countries. 

PM said he would soon announce the governments power policy, which would contain incentives to attract foreign investment.

Daily Times - Leading News Resource of Pakistan


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## Neo

*High PSDP to boost cement sectors earnings​* 
Thursday, June 05, 2008

KARACHI: Cement sector profitability is expected to grow by 11 per cent in fiscal year 2008-09 with record Public Sector Development Programme (PSDP) of Rs541 billion for fiscal year 2008-09, up four per cent from current years Rs520 billion, and rising exports, the JS Research report says. 

The research house expects cement sales to increase by 25 per cent to 30-30.5 million tonnes. Going forward FY09, sales would increase by 10 per cent to reach 33.0-33.1 million tonnes. The construction growth will continue to surpass targets of FY08 and FY09, JS said. 

Shortage of cement in India, Afghanistan, South Africa, Sri Lanka and Middle East will keep the export market strong.

Cement sector saw massive export sales growth in 2007-08. However, profitability of the cement sector fell 69 per cent in 9-months Jul-Mar FY08. Price war caused revenues to decline, negatively impacting net profits, JS said.

Similar to Budget FY 07-08, it is expected that government would announce a number of infrastructure development projects like extending of existing dams and building of new ones.

NEC has already allocated Rs166 billion for the infrastructure sector and Rs10 billion has been allocated for the national program to develop 314 small dams across the country. The program is estimated to take over four years to complete and its total cost to stand around Rs54 billion.

A slight cut in allocation of funds for infrastructure development programmes will not hamper cement sales since demand is mainly generated by private sector projects and exports. On the other hand, further fund allocation for much needed dams can boost cement sales in the long run, JS said.

High PSDP to boost cement sectors earnings


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## Neo

*KSE jumps 610 points on CGT exemption extension ​* 
Thursday, June 05, 2008

KARACHI: The Karachi stocks market overwhelmingly welcomed the government decision of extending the exemption of Capital Gain Tax (CGT) on securities transaction for another two years.

It is well reflected with the opening of the market with 400 points plus and closing of the session with more than 600 points plus. Moreover, more than six-dozen stocks closed on their upper lock of five per cent or Re1 - which ever is the highest.

KSE 100-share Index recovered another 610 points or 4.9 per cent in a single session and closed at 13,89.50 points on Wednesday.

The free-float market capitalisation based 30-Index posted a massive increase of 723 points of almost five percent and concluded at 15,362 points.

As a matter of record, the day gain of 610 points is the second highest historical rise following 696 points jump was witnessed on December 27, 2007.

Therefore, this was the third consecutive bull-run session. The cumulative gains of these three sessions together stand at 960 points or almost eight per cent.

Owing to the CGT issue the market had so far lost 3,545 points or 22.6 per cent falling to 12,130 points on Friday (May 30) from 15,676 points all time high closing level of April 18, 2008. 

Besides closing of almost 76 stocks at or near their upper circuit breakers, the blue chips of energy, banking, telecom and fertilizer sectors included their big share of points in double digits in 100-Index. The cement giant scrips also settled at their upper locks, but failed to include their points in double digits. Ready market turnover surged to 205.3 million shares against 158.6 million shares a day earlier. Market capitalisation surged Rs185 billion to Rs4.037 trillion.

The plus signs heavily dominated on board with increased number of actives at 402 stocks. Out of that the value of 349 stocks advanced, 39 stocks declined and 14 closed on pre-opening levels.

Ahsan Mehanti at Shazad Chamdia Securities said that aggressive accumulations were seen in almost all the favourite due to extension in capital gain tax exemption up to June 30, 2010.

He added that investors took fresh positions in almost all sectors on government surety that new budget shall be investor friendly.

High cement prices, record PSDP allocations, record fertilizer off take international oil prices, oversold banking sector were a few reasons for market recovery, Metanti added.

Hasnain Asghar Ali at Aziz Fidahusein said that growth oriented economic policies invited foreign funds looking for avenues abroad. Stability of rupee will be a catalyst for foreign inflow once the local bourses start creating turnover, he added.

Technically over sold and fundamentally under valued market opened with maximum points and sustained the numbers through out the day thus disallowing short covering to come into play, Ali added.

Highest volumes were witnessed in TRG Pakistan at 20.6 million closing at Rs8 with a gain of Re1, followed by Norrie Textile at 11.9 million closing at Rs2.74 with a gain of 54 paisa, IGI Investment Bank at 10.6 million closing at Rs10.17 with a gain of Re1, OGDC at 9.1 million closing at Rs130.72 with a gain of Rs6.22 and NIB Bank at 7.4 million closing at Rs13.57 with a gain of Re1.

KSE jumps 610 points on CGT exemption extension


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## Neo

*Rs 107 billion to be spent on construction of six new highways, expressways: National Assembly informed ​* 
ISLAMABAD (June 05 2008): The National Assembly was informed on Wednesday that the federal government has planned to construct six new highways/expressways in addition to conversion of Karachi-Hyderabad Super Highway into motorway costing Rs 107 billion till 2013.

Through a written answer provided by the Ministry of Communication in reply to a question by MNA Mohammad Afzal Khokhar, it said that the new highways/expressways would be completed till 2013.

Faisalabad-Khanewal, E-4 will be completed at a cost of Rs 33.10 billion, Wazirabad-Pindi Bhattian, E-3 Rs 15 billion, Khanewal-Lodhran E-5 Rs 15, Peshawar-Turkham Rs 13 billion, Karachi-Hyderabad highway at Rs 8 billion, Hassanabadal-Havelian Rs 10 billion and Havelian-Mansehra highway Rs 12 billion.

Besides, the Ministry of Communication also informed the House that Rs 1000 million were allocated in PSDP 2007-08 for Indus Highway project and Rs 700 million released to NHA of which Rs 161.750 million has been incurred so far.

To a question of PPP lawmaker Yasmin Rehman, the in-charge minister for Petroleum and Natural Resources told the House that the annual requirement of petrol during 2007-08 is estimated at 1,450,000 tons, diesel 8,000,000 tons and Hi-Octane 10,000 million tons. During 2007-08, the annual domestic production of petrol is estimated at 1,328,00 tons, diesel 3,010,00 tons and Hi-Octane 10,000 tons.

The total quantity of imported petrol and diesel during 2007-08 is 122,000 tons and 490,000 tons, respectively. The Minister of Petroleum also informed the House that the provincial government of Sindh has developed six blocks in the Thar coalfield, which has the potential to cater to the coal requirement of 1000MW power plant.

To a question, the ministry opined that the total coal deposits of Pakistan are about 185 billion tons including 175.5 billion tons in Thar coalfield, Sindh. To a written question, the Ministry of Local Government and Rural Development informed the House that during 2006-08, almost Rs 3,801.464 million were allocated for 5,637 development projects under Khushhal Pakistan Programme-I scheme.

The News International - No. 1 English Newspaper from Pakistan - Saturday, December 30, 1899


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## Neo

*Gas transit fee: Iran to mediate between India and Pakistan ​*
ISLAMABAD (June 05 2008): Iran will mediate between India and Pakistan to end a deadlock on the issue of transit fees to be paid by New Delhi for gas transported through a 7.5-billion dollar pipeline to be built by the three countries. Iranian President Mahmoud Ahmadinejad has constituted a four-member committee of officials to hold talks with Pakistan and India on the transit fee issue, Zee TV reported.

He has given the panel 45 days to settle the issue between the two countries and submit a report to him. Pakistan and Iran were set to sign a bilateral gas sale purchase agreement (GSPA) for the Iran-Pakistan-India gas pipeline project by May 31 but would now sign the pact after the Iranian committee resolves the transit fee issue between Pakistan and India. Pakistan and India too could sign a gas transit fee agreement when the GSPA is signed by Iran and Pakistan.

Former Petroleum Minister Khwaja Asif and his Indian counterpart Murli Deora had announced after talks on April 25 that the gas transit fee issue would be addressed within a short period of time but no progress has been made as yet in the matter.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*S. Arabia to give $300m to offset deficit​*
RAWALPINDI, June 4: Saudi Arabia is expected to provide Pakistan with a grant of $300 million to offset the burden on countrys economy in the wake of rising fuel prices.

This indication was given by the Saudi Ambassador in Pakistan Ali S. Awadh Asseri, while speaking to newsmen in Rawalpindi on Wednesday. He said Saudi Arabia fully realised the difficulties being faced by Pakistan following rising fuel prices and food crisis, and during the upcoming visit of Prime Minister Yousuf Raza Gilani to the kingdom, several matters will be discussed to further improve economic relations between the two brotherly countries.

Ambassador Asseri said the Saudi Embassy in Islamabad and its consulate was issuing work visas to approximately 1,200 Pakistanis every day, which reflects kingdoms close relationship with Pakistan.

Earlier addressing the members of Rawalpindi Chamber of Commerce and Industry (RCCI), the Saudi envoy called for greater partnership between private sectors of the two countries. There is enormous scope for expanding trade and economic relations.

Given political and investment security, Pakistan remains a good place for investment, he added. Saudi investors have made huge investments in countries that ensure political and investment security, he said.

At the same time, Pakistani businessmen should also take steps to invest in Saudi Arabia where unprecedented liberalisation of policies has contributed to facilitate foreign investment.

S. Arabia to give $300m to offset deficit -DAWN - Business; June 05, 2008


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## Neo

*Agricultural and industrial growth focus of budget: Dar ​*
ISLAMABAD (June 05 2008): Former minister for finance Ishaq Dar said the government will focus on growth of agriculture and industrial sector to strengthen the fundamentals of the economy. Talking to private news channel, he said mismanagement and external economic pressures were the major causes of the economic crises.

He said it was unfortunate that the previous government had not started work on any reservoir during last eight years. He said the proposals to end subsidy on petroleum products would create problems for the masses. He said the oil prices rose from 60 to 132 dollars per barrel in the international market during the last few months.

Before the elections this year the previous government made decisions on expediency ignoring economic issues, he added. He said the tax collection of the country during the current fiscal year is expected to be around Rs one trillion, which is less than the projections.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Traders demand additional 200MW for Karachi​*
KARACHI: Sindh government will approach the federal authorities to seek additional 200MW electricity supply for Karachi to overcome the power shortage in the metropolis.

Also, the government would be asked to consider the proposal of traders of Karachi to extend the closure of shops by one hour from 9:00 pm to 10:00 pm to facilitate the small traders of the city.

According to sources, this along with other issues was discussed in a meeting between Sindh Home Minister, Zulfiqar Mirza and representatives of small traders at Karachi Chamber of Commerce & Industry (KCCI) Thursday. This was the follow-up meeting held couple of days back, which took up the issues of power crisis and closures of shops by 9:00 pm.

A participant of the meeting told Daily Times that provincial home minister would proceed to Islamabad to discuss these issues and proposals at the top level of the government. Additional power supply from WAPDA would be most important issue in his meeting with higher authorities in federal government.

The meeting, which was also attended by representative of Karachi Electric Supply Corporation (KESC) held extensive deliberations on the issue of power shortage and decided to take up the issue at the highest level. Currently WAPDA is supplying 500MW electricity and if the additional 200MW is added the power system of the city, the power woes could be alleviated, traders told the minister.

Sources said that it was also decided during the meeting that there would not be any loadshedding in the residential areas from 12:00 in night to 8:00 in the morning whereas during these hours, loadshedding would be done in industrial areas, which have been divided in two groups.

Sources said that minister was informed that Karachi is paying Rs 600 billion in national kitty whereas rest of the countrys share is Rs 400 billion, but it is getting expensive electricity. The hydel power is far cheaper compared to thermal and Karachi should also be given its share in this cheap electricity by providing more supply from WAPDA, sources quoting the participants views said.

Daily Times - Leading News Resource of Pakistan


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## Neo

*PSDP 2008-09: Industrial infrastructure to get Rs 11.218 billion​*
ISLAMABAD: The federal government has earmarked Rs 11.218 billion in Public Sector Development Programme (PSDP) 2008-09 for the development of industrial infrastructure. 

It will also to facilitate the country to meet local demand for various goods and create surplus.

Such huge spending would help the government to increase production besides to stimulate country's export. It would also help in improving efficiency and competitiveness of the local industrial sectors. 

Out of the total allocation, Rs10.448 billion be given to the projects related to the ministry of industry, production and special initiatives for 19 ongoing projects with allocation Rs.4.503 billion, 15 new development schemes with Rs.5.945 billion and Rs769.578 million for textile related on-going six projects. 

The new projects would greatly helps in improving industrial production of the country. These development schemes and there allocation in the PSDP 2008-09 are: 'Sialkot Business and Commerce Center (CBCC) worth Rs.161 million', 'China-Pak: Economic Zone Hattar, NWFP worth Rs.75 million', 'Establishment of Industrial Estate Khushhal Ghar, NWFP worth Rs.10 million', 'Area Development and EPZ in Balochistan worth Rs.5 billion', 'Improving, re-habilitation and modernisation of industrial estates, NWFP worth Rs.75 million'. 

Other new projects are: Chromite benefication plant muslim bagh worth Rs 8.380 million', 'Women business development centre, Peshawar worth Rs 18 million', 'Revivial of Hyderabad leather foot wear centre, Hyderabad worth Rs 11.620 million', 'SME sub contracting exchange in Gujranwala worth Rs 16 million', 'Washing and impressing unit, Mutta Mughal Kheal, Charsadda NWFP worth Rs 2.380 million', 'Women business development centre Karachi worth Rs 17.680 million', 'Policy and project implementation, monitoring and evaluation unit (PPIMEU) worth Rs 19 million', 'Energy efficiency for textile centre in Pakistan worth Rs 20.010 million', 'Prime Minister's special initiative for village product specialisation worth Rs 500 million', and 'Construction of boundary wall site office for Gwadar EPZ worth Rs 11.251 million'. 

Allocations in the PSDP 2008-09 for textile related six developmental schemes are: 'Lahore garment city project, Punjab worth Rs 147.640 million', 'Faisalabad garment city project, Punjab worth Rs 367.682 million', 'Providing and laying dedicated 48 inch diameter mild steel water main for textile city Karachi worth Rs 218 million', 'Export development plan implementation unit worth Rs 18.200 million', 'Up-gradation of EDF funded textile institutes worth Rs 16.856 million', and 'Holding of conferences and seminars worth Rs 1.200 million'. 

The government hopes that spending in textile related projects would definitely help in improving textile products and it would ultimately lead increase in country's exports. Textile is major source of foreign exchange earning for the country.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Govt allocates Rs 803.224m for 5 new agri projects​*
ISLAMABAD: In order to ensure food security and increase agriculture production, the government has initiated five new agriculture related projects and allocated Rs 803.224 million for them in the PSDP 2008-09. 

Total cost of these five projects is Rs 1.233 billion and the above allocation has been made only for the year 2008-09. 

These projects are: 'biological control of major cotton pests in Pakistan with emphasis on mealy bug worth Rs 418.224 million', 'national pesticides residues monitoring system worth Rs 50 million', 'construction of office building central cotton committee at Karachi worth Rs 250 million', 'Prime Minister's sepcial initiative for white revolution worth Rs 500 million', and 'development of research facility for olive model farm, Sungh Bhatti worth Rs 15 million'. 

For the year 2008-09 the government has allocated Rs 803.224 million in Public Sector Development Programme for these five important projects. Among these projects, 'biological control of major cotton pests in Pakistan with emphasis on mealy bug' is very important because it would help in increasing cotton production. 

Last year 2007-08, the mealy bug affected cotton crop by 17 percent and total production was realised 11.66 million bales against the target of 14.10 million bales. The mealy bug virus has affected the standing cotton crop over an area of 150,000 acres out of total 8,000,000 acres in the cotton producing areas of Punjab and Sindh provinces last year.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Profit repatriation rises by 12.2%, $735m sent abroad​*
KARACHI: Repatriation of profits from the country rose by 12.2 percent during the first ten months of the current financial year, putting further pressure on an already weakened Rupee. 

Companies operating in the country with foreign shareholding sent $735 million abroad from July 2007 to April 2008, up from $654.9 million repatriated in the corresponding period last year. 

The local currency has weakened from around Rs 60 per dollar in the beginning of the current financial year to Rs 67 per dollar now. 

This huge outflow of foreign exchange from the country gives strength to those who criticise the policy of allowing 100 percent repatriation of profits. They say the foreign companies must be made to invest a substantial part of their earnings locally. This will not only help contain the outflow of foreign currency from the country, but will also create employment opportunities and spur further growth locally. 

Experts say that FDI is not beneficial for developing countries in the long run. In the short run FDI is needed to provide a spurt in the growth rate, but analysis shows that developing countries that receive a high level of FDI for sometime are worse off later due to repatriation of profits and outflow of capital. Initially when FDI flows into the country, governments are able to sustain high borrowing but FDI flows fall in the long run leaves the developing countries in a debt crisis, they say. 

Some economists have concluded after research that significant effects that FDI inflows may cause to the deterioration of the balance of payments in the long run due to profit remittance should be taken into account when policy makers decide to implement policies to attract foreign investors. 

Thermal power generation companies sent $151.27 million, the highest amount by any sector of economy. This was 27.9 percent higher than $118.32 million sent last year. 

It was followed by the telecommunications sector, which sent $92.06 million during July-April period. It was 14.3 percent lower than $107.42 million sent last year. 

The oil and gas exploration companies sent $64.56 million, up by 83.9 percent from $35.1 million last year.

Petroleum refining sector repatriated $51.7 million compared to $48.69 million sent abroad last year. 

Repatriation of profits by companies making pharmaceuticals & OTC products declined from $48.22 million to $26.31 million. Tobacco and cigarettes sector sent abroad $27.28 million as compared to $17.6 million last year. 

Chemicals-making companies' profit repatriation declined from $42.74 million to $39.4 million. The repatriation of profit by financial businesses fell from $92.12 million to $90.64 million.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Reverse remittances rise 12pc to $735m ​*
Friday, June 06, 2008

KARACHI: Repatriation of profit from Pakistan rose by 12.2 percent during first ten months of current fiscal year. 

Foreign companies sent back $735 million in terms of profit and dividend during July-April 2007-08 against $654.9 million in the same period of last fiscal year.

The independent power producing companies (IPPs) were the major contributors to this outflow, as they repatriated $151.27 million as compared to $118.32 million in the same period of fiscal 2006-07. Followed by communication sector including IT and telecommunication companies besides of financial business companies respectively. 

IT and telecommunication companies sent back $96.75 million while banks repatriated $90.64 million. 

Oil & gas exploration companies sent abroad $64.56 million companies working in chemical sector dispatched $39.40 million as profit/ dividend during first ten months of current fiscal year.

Repatriation of profit of tobacco & cigarettes companies rose to $27.28 million from $17.60 million in the corresponding period of last fiscal. 

Companies making pharmaceutical and OTC products sent $26.31 million against $48.22 million in the same period of last fiscal year. 

Food companies repatriated profit $32.92 million as compared to $31.83 million beverages companies profit soar to $10.78 million from $7.30 million of last fiscal year. 

Petroleum refining companies profit rose by 6.2 percent to $51.70 million from $48.69 million in the similar period of last fiscal. 

Foreign companies working in transport equipment (automobile) sent back $25.51 million against $18.92 million of last fiscal year, which is 35 percent higher than last year.

Car assemblers repatriated $15.06 million against $9.80 million of last fiscal year and companies assembling buses and trucks sent $10.45 million against$ 9.12 million of last fiscal. 

Profit of construction companies rose to $27.41 million from $26.34 million of last year whereas, other sectors profit jumped to $39.787 million, which was recorded $26.95 million during July-April 2006-07. 

Reverse remittances rise 12pc to $735m


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## Neo

*Wheat yield in Punjab far lower than East Punjab ​* 
Friday, June 06, 2008

PESHAWAR: Wheat yield per hectare in Pakistans Punjab province is far less than that in Indian Punjab due to a host of reasons, a seminar was told here the other day.

Among those reasons was the difference between wheat production systems of India and Pakistan, evident from wheat sowing and marketing.

The Soil Science Society of Pakistan organised a special seminar at the National Agriculture Research Centre (NARC), with Prof Dr Riaz A Khattak in the chair. It discussed wheat production in Punjab provinces of the two countries.

According to a press release, a joint group of Pakistani and Indian scientists conducted a comparative study, analysing the wheat production systems in both parts of Punjab.

One of the members of the study group, Dr Tariq Sultan, senior scientific officer of NARC, presented a review of the two systems. Wheat yield per hectare is almost double in Indian Punjab as compared to Pakistans. The main reason the data suggested for the high yield in Indian Punjab was the provision of subsidy on fertilisers, tube-wells and machinery.

It said the indigenous production of tractors, combiners and other farm implements led to high production in India. The data showed that sowing by drill method, availability of certified seeds, a farmer-friendly efficient and effective market system and a stable pricing system contributed to high production in India.

Total cultivated area in Indian Punjab is estimated at 4,224 million hectares and total number of farms is 1,093 while in Pakistan the cultivated area is 15,960 million hectares and farms are 3,864.

The study also showed a contrast in yields, which was 4,179-4,696 kg per hectare in Indian Punjab compared to 2,392-2,775 kg per hectare in Pakistani Punjab.

In India, DAP (di-ammonium phosphate) fertiliser is priced at Rs475 per bag and urea costs Rs250 per bag while in Pakistan they cost Rs3,200 and Rs630 per bag respectively, which are quite high.

Indian Punjab gives Rs350 per month subsidy on tube-wells while Pakistan offers no such facility. Similarly, methods of sowing in both countries also point towards differences between them. Two methods, drill and broadcast, are applied to sowing in Indian Punjab. Of these, 98 per cent sowing is done through drill method and one to two per cent through broadcast method.

Compared to that, in Pakistan only 20 to 30 per cent sowing is done through drill method and the remaining through broadcast method.

India manufactures its own tractors and provides certified seeds while in Pakistan tractors are imported and farmers use their own seeds.

Wheat yield in Punjab far lower than East Punjab


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## Neo

*Riyadh hints at resuming oil facility ​* 
ISLAMABAD (June 06 2008): On the request of the Gilani-led coalition government, Saudi Arabia has hinted at resuming oil supply to Pakistan against deferred payments to help it come out of the ongoing financial crisis, it is learnt. Diplomatic sources said a formal announcement by the Saudi government to this effect would be made during Prime Minister Syed Yusuf Raza Gilani's 2-day official visit to Riyadh.

Gilani is scheduled to fly to Saudi Arabia for an official visit on Friday. The Prime Minister will perform Umra, besides holding talks with top Saudi leadership on bilateral issues. These will include bilateral trade, oil import, war on terror and other issues of mutual interest. The Prime Minister will also invite Saudi investors to invest in promising sectors.

Pakistan's economy is under severe pressure due to rising oil pries in the world market. For the first time in its history Pakistan's oil import bill is gone over 10 billion this year. Since some major sectors are not performing well, Pakistan is feeling difficulty in absorbing ever highest import bill. Among other options to offset the impact of high oil prices on the economy Pakistan wants crude oil supply from Saudi Arabia against deferred payments.

On the government direction, Foreign Office has approached Saudi Arabia to seek 1998-like facility for oil import for offsetting rising pressure of high petroleum products' prices on the economy. Foreign Office got details of the oil supplied by Saudi Arabia against deferred payment after nuclear tests in May 1998.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Musharraf outlines parameters of development ​* 
ISLAMABAD (June 06 2008): Economic stability, strong defence and skilled human resource are parameters to measure the development of a country, said President Pervez Musharraf here on Thursday. Lack of management skills and any weakness of the leadership may weaken the country, Musharraf said while addressing the second convocation of the National Defence University (NDU).

Musharraf is Chancellor of the NDU. Talking on the role of governments, the President said the governments in general need to ensure strong defence, welfare and security to meet internal and external threats. He said stability and economic growth were vital to ensure progress and development of a state. He said if the economy was not stable or rising, it could not achieve the desired development objectives.

Recalling his memories in National Defence College, President Musharraf said over the years the institution has carved its place for in national and international institutions. He said the presence of a large number of students from different countries was a testimony to the fact and said the venue provided an opportunity for interaction and understanding of different environments in which they live.

He expressed the hope that the foreign students would also understand Pakistan's environment and the compulsions under which it exists. The President also conferred degrees of Masters of Science in Defence and Strategic Studies, and War Studies and Defence Management and BS (Honours).

Earlier, in his address of welcome, NDU President Lieutenant General Mohammad Hamid Khan said the institution's mission was to prepare future leadership from public and private sectors of Pakistan and other friendly countries through multi-disciplinary educational and research programmes.

He said the focus was on security, defence and strategic studies. He said that the institution has run seven workshops on national security issues apart from its normal courses and a total of 405 participants have qualified. The convocation was attended by General Tariq Majid, Chairman Joint Chiefs of Staff Committee, foreign diplomats and senior civil and military officials.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Sugarcane output may drop 35-50 percent in fiscal year 2009 ​* 
ISLAMABAD (June 06 2008): The sugarcane production for 2008-09 may decrease to 35-50 percent as compared to 2007-08. This year, sugar millers have not made payments to the farmers, who were forced to sell the crop at Rs 28.00 per maund against the fixed support price of Rs 58.00, sources told Business Recorder here on Thursday.

The sugar mills' mafia has been discouraging the small farmer for the last five years and the mill owners make payments to the big farmers, but those who own only 6-7 acres of land are not being paid in time.

The sugar mills produced approximately 4.3 million tonnes of sugar while the consumption of the commodity is 3.9 million tonnes. Also the federal government purchased 0.2 million tonnes sugar from the mills' old stocks through the Trading Corporation of Pakistan (TCP), but the sugar millers are still not willing to make payments to the growers.

"Most of the sugar millers are paying us of the last year's crop this year. What is more tragic is that the payments of the poor growers are still pending as the sugar millers pretend that due to high crop production, the less rates of sugar in the domestic market are forcing them to delay the payments", the sources said.

The irony is that the government is not paying any attention to this issue. "The government has become a silent spectator and the sugar mills are using the unfair tactics to exploit the growers. Sources said this year due to the production of a surplus crop of sugarcane, most of the mills refused to buy the crop and the farmers ultimately had to sell it as fuel to brick kilns.

"We sold our crop at Rs 28 per maund. Our cost of production per acre is about Rs 20,000 and Rs 60 per maund is the cost of production while the transporters charge double/triple fares because of waiting for weighting for over 30-36 hours at the mills gate. So, one can imagine how much loss the growers had to face in this regard", sources added. The growers who used to sow wheat on their lands after harvesting sugarcane could not do so due to the late start of crushing and hence they lost wheat crop.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Government provides equal opportunities to foreign, local investors: Prime Minister ​* 
ISLAMABAD (June 06 2008): Ravi Ruia vice chairman and Shahi Ruia of Essar Global Limited called on Prime Minister Syed Yusuf Raza Gilani here on Thursday. Saarc Chamber of Commerce and Industry President Tariq Sayeed and Vice President Iftikhar Ali Malik and Nazir Paracha were also present.

Essar Global Limited has enterprise value of 50 billion dollar. It provides expertise in steel and power sectors. Talking to the delegation, Prime Minister Syed Yusuf Raza Gilani said the government of Pakistan was offering lucrative facilities to attract foreign investment in a number of areas. He in particular mentioned opportunities for foreign investors in energy and coal mining, infrastructure related projects.

He said the government provides equal opportunities and facilities to foreign and local investors and hopes that they will take their full advantage by preferring Pakistan over other countries of the region to invest their money. He said investors who have already invested in Pakistan were getting good return on their investment. A Saarc Chamber's press release issued here on Thursday said.

Syed Yusuf Raza Gilani appreciated the role of Saarc in promoting the cause of the member countries for seeking investment in their key areas of the economy. He assured the delegation that Pakistan will provide all possible supports and help to Saarc to play even more vibrant role in enhancing investment in member countries besides taking steps to liberalise their trade for benefit of all the players.

Business Recorder [Pakistan's First Financial Daily]


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## Bushroda

Neo said:


> *ESSAR Group interested in energy, steel, shipping sectors​*
> ISLAMABAD: ESSAR Group, one of the largest corporate houses of India with an enterprise value of $15 billion, has expressed its interest to invest in Pakistan&#8217;s energy, steel and shipping sectors.
> 
> Daily Times - Leading News Resource of Pakistan



This could be indeed a good news for Pakistan. Shashi Ruia is seriously disgruntled because of GoI's biased favoring of Reliance Industries.

India's loss could be Pakistan's gain.


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## Neo

Bushroda said:


> This could be indeed a good news for Pakistan. Shashi Ruia is seriously disgruntled because of GoI's biased favoring of Reliance Industries.
> 
> India's loss could be Pakistan's gain.



Amen to that!


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## Bushroda

Neo said:


> Amen to that!



Essar & Reliance started their business together. Inorder to avoid competition, Reliance ventured into Petroleum & Essar went into shipping industry. Even today, Essar shipping is amongst the 10 largest shipping industries in the world. But, the trouble between Ambanis & Ruias started with Ruias deciding to get into Petroleum business. Ambanis through their government influence got the work halted on Essar refinery in Jamnagar, Gujrat.


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## Neo

In this case I hope the rivallery expands past borders, let them both come to Pakistan.


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## Bushroda

Neo said:


> In this case I hope the rivallery expands past borders, let them both come to Pakistan.



Reliance would follow diktat from the Indian Government. I doubt if Pak would like that. Shashi Ruia OTOH has resigned from PM's economic advisory committee because of the differences. So, he is a safer bet.


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## Neo

Bushroda said:


> Reliance would follow diktat from the Indian Government. I doubt if Pak would like that. Shashi Ruia OTOH has resigned from PM's economic advisory committee because of the differences. So, he is a safer bet.



As long as the industrial output, GDP and employment grow GoP has no problems with FDI from India. 
We have local laws to protect FDI and local Industry and there's severe shortage of Steel and Ferrum based industries aswell as Petrochemical products. It wouldn't be wise for GoI to spoil the opportunity to do good business in worlds second most lucrative market in terms of returns.


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## Bushroda

Neo said:


> As long as the industrial output, GDP and employment grow GoP has no problems with FDI from India.
> We have local laws to protect FDI and local Industry and there's severe shortage of Steel and Ferrum based industries aswell as Petrochemical products. It wouldn't be wise for GoI to spoil the opportunity to do good business in worlds second most lucrative market in terms of returns.



I've always favored dehyphenation of business from politics. China & US apart from all their political differences have a strong business relations. I don't see why India-Pak cannot do so. Time is good. There is some goodwill between the two nations after all the cricket diplomacy & easing of Visa restrictions. Hostilities won't die down easily but that shouldn't stop the two nations from developing atleast business relations. Indian construction industry needs huge amount of cement. Pakistan can step in to fill the void to some extent. Similarly, steel import from Brazil would cost Pakistan a huge amount of surcharge. It can very well be reduced by exporting from India. Maybe, if only we can set aside our differences for next 20 years and concentrate on betterment of our own people, we might approach our differences with a better understanding & hopefully some solution could follow.


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## Neo

Well said mate!


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## Neo

*Pakistan short of 7.6 mn houses ​*Fri, Jun 2008

Islamabad, June 6 (IANS) Pakistan is short of 7.6 million houses. But it is only partly addressing the problem by seeking Rs.10 million to build one million houses for low-income government employees and others.

Housing and Works Minister Rehmatullah Kakar said he had sought Rs.10 million for fiscal 2008-09 for building one million houses for government employees and poor people.

'Housing schemes will be initiated in separate phases. Some projects will be government-funded and others will be joint ventures of developers, bankers and the ministry,' Dawn newspaper Friday quoted him as saying.

Housing Secretary Samiul Haq Khilji said the shortfall in dwelling units would be addressed through a number of projects to be launched under the Prime Minister's Housing Programme.

Without giving any numbers, he said these houses would be provided on easy instalments.

According to Sher Afzal, estate officer of Islamabad's Capital Development Authority, hundreds of former government employees continue to illegally occupy government houses.

These employees had either retired, gone abroad or died, but they or their families were not ready to vacate the government accommodation, he added.

'A plan (is ready) to end such illegal occupation. The former employees and their families have not been paying any rent, causing an annual loss of millions of rupees to the exchequer,' Afzal said.

Pakistan short of 7.6 mn houses - Yahoo! India News


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## Neo

*China-based Pakistani company to invest in CNG bus manufacturing​* 
KARACHI, June 06, 2008: A Pakistani company established in China has shown interest to manufacture CNG buses in Karachi with an investment of 5 million dollars.

A 3-member delegation of Pakistani Company Commerce and Sourcing House (CASH) and China's King Long United Automobile Industry, internationally famous for manufacturing CNG buses, met Sindh Transport Minister Akhtar Hussain Jadoon at his office here Friday.

They informed about their plan for manufacturing CNG buses having capacity to carry 45 seat and 30 standing passengers and discussed plan to ply these buses on six-month experimental basis in Karachi and interior of Sindh.

The investment of 5 million US dollars will be provided by Commerce and Sourcing House while technology will be provided by King Long United Automobiles Industry.

The delegation led by Jamshedullah, President CASH included King Long's Project Manager Andrew Chen and Manager Chang Hua.

Secretary Transport Rasheed Alam and Director Investment Board, Nasrin Ali were also present on the occasion.

The delegation informed the Minister that on six-month experimental buses two CNG buses will be plied in Karachi and interior of Sindh in the year 2009. These buses would be manufactured keeping the weather conditions of Karachi and interior of Sindh in view and could run through earth, sand and even 3-feet water and will have a 10 year life span.

Akhtar Jadoon was further informed that in the second phase the buses would be manufactured locally after one year for whcih the company would require 10 acres of land for setting up its plant.

They said that spare parts for these buses would be available on very cheap rates for which parts centres will be setup.

The Transport Minister assured the delegation of Sindh government's complete cooperation and said that Pakistan fully revere the friendship, love and sincerity of China.

The delegation presented the models of Chinese buses to the Minister.

China-based Pakistani company to invest in CNG bus manufacturing : Business Recorder | LATEST NEWS


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## Neo

*Russia lifts ban on Pakistani rice and fruits import​* 
ISLAMABAD (June 07 2008): Russia has decided to lift the ban on rice import from Pakistan, sources told Business Recorder here on Friday. They said that a Russian delegation met here with the representatives of the Ministry of Commerce and Food Ministry and agreed to lift the import ban imposed on Pakistan's rice.

Russia used to import about 0.5 million tons rice per year from Pakistan. In 2007 from November 21 to December 26, a Russian delegation visited Pakistan to review the sanitary and phyto-sanitary conditions regarding the packing and processing of the citrus fruit and mangoes to lift the ban on import of these fruits imposed by it two years ago and finally the ban has been lifted.

Similarly, the officials of Russian Federal Veterinary and Phytosanitary Surveillance Services (VPSS) recently visited Pakistan on April 23 to discuss plant protection and Phytosanitary issues with Rice Exporters Association of Pakistan (Reap).

"During that visit by the Russian delegation, Reap representatives told the members of the delegation that Pakistan's rice is now free of 'Khapra' beetle and asked them to conduct a survey of the processing factories to ensure that the country has observed the sanitary and phyto-sanitary conditions and the import of any commodity from Pakistan does not involve any risk at all", sources explained.

In the meeting held here on Friday, June 6, the ban imposed on the import of the other fruits and vegetables has also been removed by Russia. "Now the country will start exporting fruits, vegetables and rice again to Russia that will indeed result in earning heavy foreign exchange", sources added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*IMF says Pakistan needs to cut oil subsidies ​* 
Saturday, June 07, 2008

ISLAMABAD: Pakistan has to focus on decreasing its oil subsidies in the coming 2008/09 fiscal year to cut its fiscal and current account deficits, Henri Lorie, a senior representative at the IMF mission in Pakistan, said on Friday.

A new government, sworn in at the end of March, is due to present its first budget on June 11.

Lorie said it should take investor friendly steps to help drive growth, but he feared a turbulent political climate had stalled policy makers.

What seems to (have) happened is that political uncertainty and political debate probably has made it more difficult for the authorities to react quickly to the economic policy front, Lorie told Reuters in an interview.

There is intense speculation that President Pervez Musharraf, who came to power as a general in a coup in 1999, will quit in the next few weeks or months, and leave the new civilian leadership to run the countrys affairs.

Our hope is there is... a greater focus on economic reform and also macro-economic adjustment policies, Lorie said.

He said one of the most pressing requirements, because of high global commodity prices, was to reduce domestic demand for oil so as to bring down the countrys large current account deficit.

Government figures released in May showed that Pakistans current account deficit in the first 10 months of the fiscal year (July/June) ballooned to $11.586 billion from $6.628 billion in the same period last year.

The figure is equivalent to about 7.3 per cent of Pakistans GDP.

Lorie said lowering subsidies will encourage users to reduce oil and energy use, which will in turn reduce imports.

While the higher consumer prices would increase inflation in the short term, the reduction in subsidies would reduce long term inflationary pressures by reducing government borrowing, one of the main drivers in monetary growth.

Coming to inflation, the lower deficit, budget deficit, will also mean less need for financing, said Lorie.

Analysts say Pakistan suffered from a paralysis in decision making during the last months of the previous government, and during a caretaker administration that held the reins until the new government was formed after an election in February.

Their failure to trim food and fuel subsidies exacerbated spending overshoots, while revenue collection has lagged and after averaging 3.7 per cent of GDP for the previous five years, the fiscal deficit ran out of control in 2007/08.

The fiscal deficit is on course to stand at around 9 to 9.5 per cent of GDP in 2007/08, but the government is hoping loans from foreign lenders in the next few weeks will drag the deficit down to 6.5 percent, still well above a target of 4 per cent.

The current account deficit is expected to come in somewhere between 7.3 and 7.8 per cent of GDP for the year, compared with a target of 4.8 per cent.

Inflation was at 17.2 percent year-on-year in April, a level not seen since the 1970s.

Government expenditure: Lorie said the government also needs to trim its expenditure in the upcoming budget.

The government expenditure has increased very rapidly over the past few years, and there is some question about implementation and effectiveness so I think there is room for pause in the growth of government expenditure, said Lorie.

Pakistan is allocating 541 billion rupees ($8.01 billion) to the Public Sector Development Programme in the 2008/09 fiscal year, a government official said earlier this week.

This compared with 520 billion rupees allocated for current fiscal year ending June 30.

Lorie said the government needed to put more focus on addressing Pakistans energy crisis.

Aside from becoming increasingly dependent on imported oil and gas due to dwindling domestic production, Pakistan is also suffering from acute power shortages and electricity cuts several times a day are a feature of life in Pakistani cities. High priority is energy, investment in trying to solve the energy problem, Lorie said.

IMF says Pakistan needs to cut oil subsidies


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## Neo

*Pakistan's foreign exchange reserves slide ​*
KARACHI (June 07 2008): The country's foreign exchange reserves fell by $334 million to $11.178 billion in the week that ended on May 31, said the central bank. Reserves held by the State Bank of Pakistan fell to $8.684 billion from $9.061 billion a week earlier, while those held by commercial banks rose to $2.494 billion from $2.451 billion.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Inflation under control, minister says presenting FY61 budget ​* 
Saturday, June 07, 2008

KARACHI: Muhammad Shoaib, the then Finance Minister of Pakistan had presented the budget of 1960-61 of Rs1.7138 billion on June 30, 1960 with the message that inflation had been controlled and a plea that country need a consolidated spirit of long struggle for progress.

There were no new direct taxes in the budget; however there were an increase in rate of sales tax, excise and custom duty in the budget. Government expected that new tax rates would generate additional Rs90.9 million. 

The countrys trade deficit remained Rs139.4 million whereas the allocated amount for defence budget was Rs1.120 billion. 

In the budget of 1960-61, an amount of Rs45 million had been allocated additionally if compared to the year of 1959-60 for the development of agriculture, education and health.

For the development of new capital of the country, Islamabad, Rs200 million funds would be use over a period of 5 years time. 

Inflation under control, minister says presenting FY61 budget


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## Neo

*Industry to get land on easy terms: minister ​* 
Saturday, June 07, 2008

KARACHI: The Government of Sindh will provide land to industrialists on 10-year easy instalments in Sukkur and Nawabshah and would ensure that the land is not sold before constructing a proper factory on it, said Rauf Siddiqui, Sindh Minister for Commerce and Industry.

The minister was speaking to media after inaugurating My Karachi exhibition at the Karachi Expo Centre on Friday.

He said that the government would equally facilitate local and foreign industrialists regardless of the size of industry.

He stressed that the problems the industry was presently facing could be termed difficulties and these difficulties do not tantamount to crisis.

Shehla Raza, Deputy Speaker Sindh Assembly, said that people of Pakistan know that the upcoming budget would not solve their problems as the government is only four-month-old and budget-making needs a minimum six months.

Siddiqui added that exhibitors from 12 countries were participating in the My Karachi expo. He said trade exhibitions were very productive for the business and trade. 

There was low participation of general public in the event despite the fact that there were number of foreign businessmen present under the roof of Karachi Expo Centre.

Industry to get land on easy terms: minister


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## Neo

*PIA facing loss of Rs 40 billion, National Assembly told ​* 
ISLAMABAD (June 07 2008): Defence Minister Chaudhry Ahmed Mukhtar on Friday told the National Assembly that the Pakistan International Airlines (PIA) is presently facing a loss of Rs 40 billion and the government would soon come up with a an effective strategy to bring the national flag-holder out of the financial lapse.

Responding to a calling attention notice moved by lawmakers from Pakistan Muslim League-N, Anusha Rehman Khan, Ayaz Amir, Khuram Dastighir Khan and Anjum Aqeel on the accumulated losses of Rs 40 billion of PIA for 2007-08, the Minister said that this government has taken the charge of the PIA just two months back and efforts are being made to make the institution self-reliant financially.

He also said that overstaffing in the PIA was also a problem and some senior staff will be sent home and the foreign stations would also be reduced to control the financial burden. Till 2010, the Minister hoped, they would be able to run the unit without taking loans from the government. He said PIA is paying a huge amount of interests and the government has been requested to make new arrangements for softer loans and retiring the expensive ones to reduce losses.

He added the employees hired on huge perks and privileges would also be retrenched for this purpose. To a question about the proposal of privatisation of the Roosevelt Hotel in New York, he said that the proposal has been dropped on the ground that the Hotel is earning $15 million per year.

Nabeel Ghabol of PPP held the former PIA chairman Tariq Kirmani responsible for pushing the PIA into financial losses, asking the government to bring him to justice by putting his name in the ECL.

LOCAL GOVERNMENT: Lawmakers in the National Assembly from the treasury benches, particularly PML-N expressed their concerns over the irregularities existing in Local Government (LG) system, suggesting conducting an audit along with reforms in the system. The PML-N members voiced against the system terming it a 'adda' of corruption and irregularities.

However, PML-Q and MQM strongly defended the system terming it a best tool to address the basic issues of a common man. They also emphasised the need to strengthen the system to empower the people at the gross roots level. The PML-N members said that the local government system was designed by the previous government for protection of their own interests.

They were of the view that the system needs drastic changes. They alleged that the audit of district government expenditure was not carried out. MQM MNA Sajid Ahmed said that that the district government system has proved to be development-oriented and made significant development works in Karachi. However, if there was any flaws in the system these should be removed to make it more viable.

Chaudhry Abdul Ghafoor of PML-N said there is a need of wide range of reforms in the system and the administrative authority should be withdrawn from the system and handed over to the civil servants. Attiya Inayatuallah of PML-Q defended the system terming it public oriented, recommending that it should be further strengthened. "It was an effort to hand over the power to the elected representatives to address the masses problems at their door steps," she argued.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan fund eyes growth ​* 
Saturday, June 07, 2008

LONDON: Political uncertainty, occasional bomb blasts and border militant insurgency do not stop Pakistan being a good investment destination, one of the first funds to target the country says, comparing the economy to a smaller India.

The Melchior Selected Trust Pakistan Opportunities Fund, launching this month and aimed at ultimately reaching some $200 million in Pakistani equities, says the country has been poorly portrayed and its economic fundamentals remain appealing.

We believe Pakistan has been treated unfairly by the international media, David Graham, partner of fund manager Dalton Strategic Partnership. 

Pakistans immediate political future remains uncertain after parties supporting President Pervez Musharraf were defeated in an election while Al Qaeda this week claimed responsibility for Mondays suicide car bomb attack on the Danish Embassy in Islamabad that killed six people.

In looking at the Pakistan market, we see many similarities with India, Graham said, noting Pakistan had been described as India at half the price.

Along with China, India has attracted vast fund volumes from emerging investors in recent years. 

Despite political problems including the assassination of former prime minister Benazir Bhutto late last year, Graham said the economy continued to grow at 7 per cent year-on-year fuelled both by its own domestic demand as well as inflows from the Middle East, which has itself benefited from record oil prices.

Graham said 3 million Pakistanis worked in the Gulf economies, sending money home and further fuelling the economy.

He said the country was in some ways a safer and more established bet than some other frontier markets, which have benefited this year from investors seeking to move beyond more conventional emerging destinations.

The Karachi stock exchange is down 6.7 per cent so far this year, but the fund said it expected to see good prolonged growth.

Notwithstanding the strong rise in the market over the past six years, the Karachi stock market is poised to benefit from the continued growth in the economy, said Naz Khan, chief executive officer of KASB Funds in Karachi which is advising Dalton. We like the energy and banking sectors and fertiliser, chemicals and cement should all do well.

He said Pakistan already produced some 30 per cent of its own energy requirements and this was set to grow with new exploration. 

The young population of 160 million was increasing their personal debt from a low base, boosting spending power and increasing demand for mobile phones, cars and other goods.

Karachi Stock Exchange was one of the worlds least correlated with markets in the United States, he said, providing good diversification from any Western economic downturn.

Khan said there was no reason to be particularly concerned by ongoing tensions along the border with Afghanistan, where Pakistan had fought intermittent battles against the Pakistani Taliban fighters.

We have locked horns with India many times along the border with them in the last few decades, he said. This is just a different border and it shouldnt affect the overall economy.

Pakistan fund eyes growth


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## Neo

*Fiscal Year 2008-09: Services sector to be backbone of GDP growth​*
ISLAMABAD: The Gross Domestic Product (GDP) growth pattern set for the upcoming fiscal year 2008-09 mainly relies on growth in services sector by 6.1 percent along with industrial growth of 6 percent and agriculture growth at 3.5 percent, official sources informed Daily Times Friday. 

The financial and insurance sector, wholesale and retail trade, transport, storage and communication sector would support the services sector as the major contributor in GDP for the fiscal year 2008-09, the official added. 

Due to the lowering of GDP growth rate from 6.5 percent to 5.5 percent, the growth rates for the services sector and commodity producing sectors have also been lowered. 

According to the downward revised growth targets in the services sector for the next fiscal year, services sectors growth target has been lowered from 6.7 percent to 6.1 percent in next fiscal year as compared to the 8.2 percent actual growth realized in the outgoing fiscal year 2007-08. The target for the services sectors growth was fixed at 7.1 percent for the outgoing fiscal year, however, the growth surpassed the target and stood at 8.2 percent in the said fiscal year. 

The growth target for the financial and insurance sector, which was earlier, fixed at 12 percent has been retained at 12 percent for the next fiscal year due to good performance of the banking and insurance sector. 

Transport, storage and communication sectors growth target, which was earlier set at 5 percent, is now projected to grow by 4.5 percent in the next fiscal year 2008-09. This sector has achieved a growth of 4.4 percent against the target of 5.9 percent set for the outgoing fiscal year 2007-08. 

Wholesale and retail trade sectors growth target has been increased from 5 percent to 5.4 percent for the next fiscal year 2008-09. This sector has missed its growth target of 7.8 percent set for the outgoing fiscal year 2007-08 and its growth has been estimated at 6.4 percent. 

Growth target for ownership and dwellings sector, public administration and defence would remain at 3.5 percent and 4 percent respectively in the upcoming fiscal year 2008-09. However, growth target for social, community and personal services have also been lowered from 8 percent to 7 percent for the upcoming fiscal year. 

The growth rates for the commodity producing sectors have also been lowered. Growth target for the mining and quarrying sector has been set at 5 percent, Construction at 8 percent and electricity, gas, and water supply growth target has been set at 3 percent. 

According to the downwards-revised projections, agriculture growth rate has been reduced from 4 percent to 3.5 percent, within agriculture growth target of major crops to remain at 4.5 percent, minor crops growth target reduced from 2.5 percent to 2 percent, livestock growth target reduced from 4 percent to 3.2 percent, fisherys growth target slashed from 4 percent to 3.4 percent and forestrys growth target kept at the same level of 1.5 percent for 2008-09.

Manufacturing sectors overall growth target has been reduced from 8 percent to 6.1 percent, large scale manufacturing (LSM) growth target reduced from 9 percent to 5.5 percent, growth targets for the small scale manufacturing are being kept at the same level of 8 percent and others at 5.2 percent.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Punjab to cut next ADP to Rs130bn​*
LAHORE, June 6: The Punjab government plans to rationalise its annual development plan (ADP) for the next fiscal year by cutting it down to around Rs130 billion from the original estimate of Rs150 billion for the outgoing year, provincial finance minister Tanvir Ashraf Kaira told Dawn.

I wont say that we are decreasing the size of the provincial ADP for the next year from Rs150 billion. I say we are increasing it from what  almost Rs122 billion  the province spent this year on development, he said, adding the original estimate of the provincial development plan for the outgoing year was unrealistic.

The previous government inflated the revenue estimates as well as development spending for the outgoing year for gaining political mileage, he said. We shall be more realistic while making allocations and spend every rupee we budget for development in the province. We will avoid revision of the size of the development programme because it affects the process of development.

Mr Kaira said the provincial government would finance its development programme by cutting non-development spending and improving its own tax revenue.

The minister said the coalition government of the Pakistan Muslim League-Nawaz and Pakistan Peoples Party had also decided to review the two mega projects  the Lahore Mass Transit System and the Lahore-Sialkot Motorway  initiated by the previous provincial government.

We dont want money-making projects. If these projects are in the larger interest of the people and found helpful in overcoming traffic problems, we shall continue with them, he argued.

He said the provincial government was not facing any problem in preparing its budget for the next fiscal year in spite of lower federal transfers on account of shortfall in tax revenue collection by the Federal Board of Revenue due to political turmoil and slowing economy during the current financial year.

Punjab has received seven to Rs8 billion fewer than Rs226 billion it had estimated to get from the federal government. We will adjust our expenditure according to the drop in the federal transfers, he said.

However, Mr Kaira said, the provincial government was considering a number of proposals to increase provincial own tax revenue through expanding the scope of sales tax on services, rationalising the existing provincial taxes and plugging leakages. The provincial government has already facing a 30 per cent shortfall in its targeted tax revenue collection for the present fiscal year.

The minister said the province would have to look toward multilateral donors for budgetary support if it had improved its tax resource. Also it could provide better services to the citizens. He said the tax revenue target for the next year would also be kept realistic and achievable. But he refused to say if it would be greater or lesser than the original tax revenue target for the outgoing year. It would be realistic and definitely higher than what we have achieved this year. He said the province needed to develop tax culture so that people did not avoid paying taxes. To a question regarding agriculture income tax, he said it could easily be doubled from its current level of Rs800 million just by facilitating the taxpayers.

Mr Kaira said the provincial government would enhance funding for the core social sector  education, health, water supply, etc  and try to involve public in the management of the programmes and spending on them. He said the new government was determined to providing better facilities to the people and preventing leakage of funds.

Punjab to cut next ADP to Rs130bn -DAWN - Business; June 07, 2008


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## Neo

*Savings schemes mobilise Rs 73.969 billion ​*
KARACHI: National Savings Schemes mobilised Rs 73.969 billion during the first ten months of the current fiscal year, which is higher by 9.39 percent than Rs 67.651 billion mobilised during the full 2006-07 year. 

The government received Rs 2.768 billion through Defence Savings Certificate, Rs 311.9 million through Regular Income Certificates, Rs 13.244 billion through Special Savings Certificates (Reg), Rs 9.508 billion through prize bonds, and Rs 48.135 billion through other instruments. 

The federal government had revised upwards the rates of return on national saving schemes on June 23, 2007. The rates on Defence Savings Certificates were enhanced from 10 percent to 10.15 percent, on Special Savings Certificates/ Account from 9.17 percent to 9.25 percent, on Regular Income Certificates from 9.24 percent to 9.54 percent, on Pensioners Benefit Account & Bahbood Savings Certificates from 11.52 percent to 11.64 percent and on Savings Account from 6 percent to 6.50 percent.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistani economy adrift with nobody in full charge: Burki​*
** Economist says policy makers have no serious priorities, common man sees no sign of relief
* Says period of high growth in Pakistan is over
* Says government should not be held responsible for current wheat shortage
Warns government against subsidising energy​*
WASHINGTON: No one is in full charge of Pakistans economy, while the political elite is preoccupied with the judges issue and power-sharing arrangements, according to Pakistani economist and financial planner Shahid Javed Burki.
Burki, a former World Bank vice president and finance minister in the Moeen Qureshi caretaker government, told a meeting at the Woodrow Wilson Centre, at which he is a senior scholar, that there is a disconnect between the poor, whose prime concern is their next meal, and the elite. The establishment and the citizen are not on the same page, which is making the common man increasingly angry as he sees no sign of any serious attention being paid to his precarious situation. Burki said if the present situation continues, there would be social and political turmoil. He said he found during several months of stay in Pakistan that the policymakers have no serious priorities.
Burki said looking back over the last 60 years, Pakistan has not done badly economywise, having maintained an annual growth average of 4 percent. The countrys economy has grown 18 times since independence. There has also been a significant decline in poverty, which was 65 percent in 1947 but which has fallen to 33 percent today. Only 20 percent of Pakistans income is derived from agriculture, while 53 percent comes from the service sector. 

*Period of high growth is over:*

The worrying aspect of Pakistans economy is that it is dependent on external capital, not domestic resources. Neither has Pakistan invested in the development of its vast human resources. Investing in education should be the top priority from now on, Burki stressed. He also warned that the period of high growth for Pakistan is over. Poverty is going to increase and income disparities are set to worsen. Pakistan is also burdened with a huge fiscal deficit, which stands at 7.5 percent to 9 percent of GDP, with trade and balance of payments representing a good part of it. Pakistan, he explained, can only tolerate a deficit of 4.5 percent to 5 percent. He advised the government to cut down public spending but without slowing growth. He pointed out that the Musharraf government had failed to enhance even by one kilowatt Pakistans power-generating capacity, which was why the country had been hit today by such severe shortages. He said the rich are protected against power shortages as they have their own generators but the vast majority is in dire straits and it is angry and restless.

*Wheat shortage:*

Burki said that the government should not be held responsible for the current wheat shortage. He pointed out that the terms of trade worldwide are in favour of agriculture and Pakistans policymakers must take advantage of that because Pakistan has a lot of potential, given the right set of public policies. He regretted that Pakistani policymakers know very little about the global economy and as a result, the country is not well integrated into the global economic system. Burki said it is absolutely necessary to have a high rate of savings and investment, while the market should be allowed to determine the allocation of resources, but the private sector should not be hand-held, as in the past. 

*Energy subsidies:*

He also warned against providing energy subsidies, nor should the government become the employer of last resort. There should be no open-ended protection to the textile industry and no price controls to cut inflation. Public servants must not be underpaid. Punjab, he predicted, could become the engine of growth for the rest of the country, but it must reduce the burden it places on the federal government. 

*Shaukat Aziz: *

He described former prime minister Shaukat Azizs economic policies as misguided and a result of his failure to understand the strategy of economic planning. He said what Aziz had given Pakistan what could only be described as casino economics. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Russia lifts ban on Pakistani rice and fruits import ​* 
ISLAMABAD (June 07 2008): Russia has decided to lift the ban on rice import from Pakistan, sources told Business Recorder here on Friday. They said that a Russian delegation met here with the representatives of the Ministry of Commerce and Food Ministry and agreed to lift the import ban imposed on Pakistan's rice.

Russia used to import about 0.5 million tons rice per year from Pakistan. In 2007 from November 21 to December 26, a Russian delegation visited Pakistan to review the sanitary and phyto-sanitary conditions regarding the packing and processing of the citrus fruit and mangoes to lift the ban on import of these fruits imposed by it two years ago and finally the ban has been lifted.

Similarly, the officials of Russian Federal Veterinary and Phytosanitary Surveillance Services (VPSS) recently visited Pakistan on April 23 to discuss plant protection and Phytosanitary issues with Rice Exporters Association of Pakistan (Reap).

"During that visit by the Russian delegation, Reap representatives told the members of the delegation that Pakistan's rice is now free of 'Khapra' beetle and asked them to conduct a survey of the processing factories to ensure that the country has observed the sanitary and phyto-sanitary conditions and the import of any commodity from Pakistan does not involve any risk at all", sources explained.

In the meeting held here on Friday, June 6, the ban imposed on the import of the other fruits and vegetables has also been removed by Russia. "Now the country will start exporting fruits, vegetables and rice again to Russia that will indeed result in earning heavy foreign exchange", sources added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*KSE recovers 1,004 points as govt extends CGT exemption ​* 
Sunday, June 08, 2008

KARACHI: After losing nearly 15 per cent in the last two consecutive weeks, the Karachi stocks market recovered half of these losses after getting another two-year extension in the exemption of Capital Gain Tax (CGT) on securities transactions.

KSE 100-share Index posted a handsome recovery of 1,004 points or 8.3 per cent on week on week basis and concluded at 13,135 points.

The free float market capitalisation based the 30-Index regained 1,352 points or 9.6 per cent and finished at 15,450 points.

The average turnover of the week declined to 175.8 million shares from 202.8 million share of last week. However, the overall market capitalisation surged by Rs300 billion to stand at Rs4.046 trillion.

Liquid investors accumulated fundamentally strong stocks at the historical low prices on Monday and pushed market further up on follow up buying on Tuesday as well.

Prior to the start of this week, market had lost 22.6 per cent or 3,546 points to 12,130 points - the nine month lowest level - from 15,676 points all time high closing level of April 18, 2008.

On wow basis, the market had lost nearly 15 per cent or 2,102 points in the last two consecutive weeks, as the third last week in series had closed on positive note.

Market took a nosedive after expiry of CGT on June 30, 2008. According to the sources, the inflectional brokers, financial institutions and big individual investors were pushing market down in artificial manners to get further relief in CGT from the government.

As a matter of record, the capital markets are exempted from CGT since 1974. Following the news of CGT exemption till June 30, 2010, the KSE 100-shares Index gained 610 points in a single session on Wednesday.

The rest of two-sessions of this week invited consolidation above 13,000 points level. Investors that had suffered losses in speculatively managed stocks market - opted to book profits at the available margins.

Investors again came under pressure on Friday when FBR Chairman, Abdullah Yousufs stated that government was yet to finalize the CGT issue and final decision would be in coming budget. Later on the same day (i.e. Friday), FBR Chairman himself contradicted his statement on CGT thus attracting some fresh funds in the market.

Insurance leads: Insurance sector attracted the major portion of funds and gained 16.5 per cent on weekly basis. This sector was the chief beneficiary of CGT, as a major share of insurance earnings is derived from investment income. Oil Marketing Companies (OMCs) gained 10.7 per cent on weekly basis, on the back of robust earning expectation in fourth quarter of fiscal year 2008. Moreover, banking sector recovered 8.6 per cent, according to JS Research.

The cement sector gains were linked to new development projects to be started in the next fiscal year.

The fertilizer and telecom sectors also witnessed notable buying and ended the week on positive note.

Overseas investors: The Foreign Portfolio Investors (FPIs) also booked profits this week. The figures available at NCCPL website regarding FPIs funds explained that they sold their holding in rising market and repurchased shares in declining market. They uploaded stocks in the fist two sessions of the week and offloaded their holding in the last three sessions. On net, they withdrew another Rs813 million this week.

During the week, CFS investment stood at Rs32.3 billion, up by 3.2 per cent. On the contrary, CFS rate dropped to 15.8 per cent versus 17.9 per cent last week. 

Weekly Movement in Blue Chips

Symbols Open on Close on Difference 

Monday (Rs.) Friday (Rs.) (Rs.)

Adamjee Ins. 254 305 51
DGKC 72.6 79.8 7.2
EFU Gen. Ins. 329.50 412.04 82.54
ENGRO 279.01 299.01 20
FFBL 33.9 35.5 1.6
HBL 199.89 213.02 13.13
LUCK 108.45 113.35 4.9
MCB 274.41 305.5 31.09
NBP 157.9 175 17.1
OGDCL 123.7 131 7.3
POL 368 394 26
PPL 249 267.5 18.5
PSO 440 483 43
PTCL 39.81 43.4 3.59
UBL 101.75 111.11 9.36

KSE recovers 1,004 points as govt extends CGT exemption


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## Neo

*Sugar production reaches 4.73m tonnes ​* 
Sunday, June 08, 2008

ISLAMABAD: Pakistan has produced about 4.73 million tonnes of sugar to fulfill its domestic consumption for the year 2008-09.

An official in the Ministry of Food, Agriculture and Livestock (MINFAL) told APP here on Saturday that about 4.2 million tonnes of sugar was consumed per annum as against the total production of 4.73 million tonnes of sugar.

Surplus stock of about 0.52 million tonnes of the said commodity is available for domestic consumption, as its demand showed an upward trend during the hot season because of habitual use of cold drinks and other cold and sweet beverages products, he said.

Beside this, the official said that the government has always kept an average of two month sugar stock as a food security measure to tackle any unwanted situation in the country.

Government has set the target to cultivate sugarcane crop over 1.39 million hectares of land during 2008-09 to further increase sugar production for domestic consumption, as well as to export, he added.

In Punjab 0.7 million hectares of land was set to produce sugarcane, while in Sindh 0.230 million and NWFP 1.09 million hectares land was set to be put under sugarcane cultivation respectively, he said.

He said that targeted area under sugarcane was decreased as the total area under sugarcane cultivation in 2007-08 was 1.241 million hectares.

He said sugar mills were fully functional and crushing cane as according to official fixed rates of crop, adding that the provincial governments were observing the situation and trying to facilitate all the stakeholders.

Sugar production reaches 4.73m tonnes


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## Neo

*Rs56bn relief for poor suggested​*
KARACHI, June 7: To protect the vulnerable groups from pains of adjustments aimed to achieve stability and threat of starvation Rs56 billion should be allocated to provide relief to the poor. The current monthly food support amount of Rs200 per month should be revised to Rs1,000 for four million households.

The Social Policy Development Centre recommends pro-poor allocation of about one fifth the size of the proposed PSDP and five-fold increase in food support programme in its report Fiscal policy choices in budget 2008-09 launched by Dr Hafiz Pasha here early this week.

Based on the estimation of monthly expenditures on food items by the lowest income quintile in Household Income Estimation Survey 2005-06, the support amount is recommended at Rs1,000 per month per household, says the report.

The report assessed the efficiency of different administrative set ups targeting to provide relief to the poor and found Pakistan Bait-ul-Maal (PB M) to be most effective when evaluated on a set of criteria developed for the purpose.

PBM has developed a management information system to record basic information on programme beneficiaries -- which makes targeting more effective and monitoring of progress easier. Its overall administration costs are four per cent of total resources, says the report.

The report does not favour extension of general food subsidy offered through Utility Stores Corporation of Pakistan because it scored low on six criteria, including targeting efficiency, low coverage, and high share of programme expenditure scores high in three criteria, degree of ease of access, absence of negative incentive effects and degree of freedom from private transfers.

The report analysed two livelihood programmes, national employment guarantee scheme for poor and graduate employment scheme but advocated to implement them only after successful piloting.

The report concludes on the note: Given the characteristics of the people need to be cushioned from the adjustment burden, a combination of cash transfers and livelihood schemes have to be implemented concurrently.

Of course, the magnitude of financial allocation earmarked for the purpose in the budget 2008-09 will be the ultimate testimony of the governments commitment and seriousness to the cause of the poor. On the basis of the estimated fiscal costs we recommend that a total allocation of Rs56 billion be made in the budget for providing relief to the poor in 2008-09.

Rs56bn relief for poor suggested -DAWN - Business; June 08, 2008


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## Neo

*Government sets revised PSDP of Rs 523 billion​*
** Federal Development Programme allotted Rs 373 billion 
* Budget deficit all time high at Rs 957 billion​*
ISLAMABAD: The government has decreased the size of the Public Sector Development Programme (PSDP) 2008-09 allowance by Rs 18 billion to Rs 523 billion during the meeting of National Economic Council (NEC), a senior official told Daily Times on Saturday. 

The revised Public Sector Development Programme fund of Rs 523 billion against an earlier proposed allocation of Rs 541 billion is 8% higher than last years PSDP allowance of Rs 485 billion. The official said the decrease in the developmental programmes was due to the weak financial position of the country.

The Annual Plan Co-ordination Committee (APCC) in its meeting held on May 23-24 proposed Rs 541 billion PSDP 2008-09 for the NEC. Prime Minister Syed Yousuf Raza Gilani who chaired the National Economic Council meeting held on June 2 had also recommended Rs 541 billion to be allotted to PSDP for the year 2008-09. However, a reduction in PSDP fund by Rs 18 billion was taken later by economic managers, the official maintained. 

FDP: The revised PSDP fund of Rs 523 billion allocates Rs 373 billion to the Federal Development Programme (FDP) and Rs 150 billion to Annual Development Programme (ADP) of all four provinces. 

The federal component of the PSDP is sub-divided to allot federal ministries Rs 233 billion, Special Areas (AJK, FATA, Northern Areas) Rs 26 billion, Special Programmes (KPP plus others) of Rs 63 billion and corporations (WAPDA, NHA) Rs 51 billion. The operational shortfall of federal PSDP is set at Rs 50 billion, previously set at Rs 25 billion.

The government has also recommended an allocation of Rs 27 billion for Earthquake Reconstruction and Rehabilitation Authority (ERRA) to carry out its operation in earthquake-affected areas in NWFP and Azad Jammu Kashmir in the next fiscal year 2008-09, but has not included this in the size of PSDP fund.

The broad sectoral distribution of federal PSDP allows Rs 166 billion or 45% for the infrastructure development, the social sector has been given highest priority with an allocation of Rs 188 billion, or 51% of the fund, while other departments (Agriculture, Industry, Minerals) have been allocated Rs 17 billion. 

Budget deficit: The total budget deficit is projected to rise to an all time high of Rs 957 billion during the current fiscal year as compared to the budget deficits actual projection of Rs 400 billion.

Extra expenditures of Rs 522 billion not budgeted by the previous government is the main reason for the unprecedented increase in budget deficit for the outgoing fiscal year 2007-08. The present government is taking various steps to bring down the budget deficit from Rs 957 billion to Rs 600 billion by reducing its expenditure.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan seeks $2 billion Saudi oil bail-out: Financial Times ​* 
KARACHI (June 08 2008): A leading international financial daily on Saturday said that Pakistan is to ask Saudi Arabia if it can defer payment for $2billion worth of oil imports as it grapples with a deteriorating economic situation undermined by global oil prices.

Quoting a government official, Financial Times said that prime minister Yusuf Raza Gilani is expected to push Pakistan's request in meetings with Saudi leaders including King Abdullah.

According to the newspaper, Western economists have said that Pakistan may have to raise domestic oil prices significantly if it wants to qualify for a crucial World Bank loan on $500million, currently under discussion. The newspaper also claimed that the World Bank is urging Pakistan to withdraw subsidies to oil consumers. "Independent economists say that while the World Bank's loan would be relatively modest, it would allow Pakistan to seek commercial loans from other sources," the newspaper said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*14.11 million cotton bales target for fiscal year 2009 unlikely to be met ​* 
ISLAMABAD (June 08 2008): Non-availability of water for cotton especially in Punjab, risk of the furious attacks of mealy bug and cotton leaf curl virus (CLCV) and the shortage of pesticides in the domestic market has discouraged the farmers and the country may miss the production target of 14.11 million bales of cotton set for the next fiscal year by 10-15 percent, well-placed sources told Business recorder here on Saturday.

The government has set the target of 14.11 million bales on 3.20 million hectares for the coming fiscal year. In Punjab, 11 million bales, in Sindh 3 million bales and in NWFP and Balochistan the production of 0.1 million bales is expected.

The cotton production is decreasing every year as in 2006-07; it was 13 million bales whereas in 2007-08, it has been recorded 11.6 million bales. Sources said the damage caused by CLCV contributed in 2007-08 is about 60-67 percent while mealy bug 30-35 percent to the total loss.

While according to an estimate, the water shortage may increase further to 22 percent during 2008 as compared to the last year. It has been figured out that the cultivable land of around 22 million acres remains uncultivable due to water crisis.

"If the situation remains the same regarding non-availability of water and the absence of any resistible variety of cotton against mealy bug and CLCV, the production may be reduced by 10-15 percent", the sources said.

They said the private sector is involved in smuggling of substandard Bt cotton seeds from India and most of the farmers in Southern Punjab are making use of about 35-50 percent seeds and ultimately the production decreased. Due to increase in prices of sunflower oil in international market, the cotton growers are thinking to switchover from cotton cultivation to sunflower cultivation.

For the next fiscal year, the total consumption of cotton across the country is estimated to be 15.1 million bales. So, it is really indicative of the fact that the country will have to import around 1 million bales for 2008-09.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Government working on broad-based industrial policy ​* 
KARACHI (June 08 2008): Federal industries and production ministry has been chalking out a broad-based industrial policy to address problems faced in the growth of industrial development, which contains short-, medium-, and long-term measures to explore import substitution to boost export and bridge the gap of trade deficit.

About problems in the small and medium enterprises (SMEs), there is a lack of infrastructure in the way of SMEs development. For this, the ministry has held meetings with the international donor, ie the Asian Development Bank (ADB) for the establishment of internationally recognised accredited microbiology testing lab, accredited chemical testing lab and accredited footwear-testing labs.

The ministry provided recommendations to the Federal Board of Revenue (FBR) on customs duty relating to the industrial sectors ie other than food, textile and leather. The rationalisation of tariff structure for the competitive production of goods by the local industry is undertaken through budget exercise in the Engineering Development Board (EDB).

The exercise involves 17 to 18 committees on various sectors under the private sector stakeholders. The proposals emerging from these sectors are then analysed in the meeting of convene. The minister identified problems faced by industries in Pakistan as follows:

(i) Relatively narrow industrial base, (ii) low technology base, (iii) predominately low tech goods produced (around 90 percent), (iv) low value addition (textile and leather contribute 12 percent towards GDP), (v) inadequate infrastructure, (vi) multiplicity of procedures, taxes and regulations, (vii) absence of linkages between industry and academia/research institutes, and (viii) security and governance issues.

The ministry identified existing potential areas for investment includes engineering goods industry and services, machine tool, energy equipment, telecommunication, basic industries of forging, castings and foundry work, automobiles, marble, ceramic and stones development, plastic and chemicals, paper and paper board, glass and basic metals offer high potential for industrial development.

The strategies/recommendations of the ministry to address these problems includes (i) reforms in fiscal regime through tariff relaxation/rationalisation, (ii) growth of large scale and hi-tech anchor/main industries, (iii) high incentives for project requiring higher capital investment, long gestation periods, and higher level of technology, (iv) expansion of macro, small and medium enterprises, encourage projects that result in transfer of technology,(v) implement intellectual property rights laws, (vi) develop and implement strategies for rural industrialisation. (vii) reduction in cost of doing business, (viii) establishment of industrial parts/clusters, (ix) quality human resources, (x) development linkages between industry, academia and research institutions, (xi) mandatory certification and accreditation, and (xii) introduction of productivity enhancing reforms.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Wapda focusing on hydel power: Raghib ​* 
LAHORE (June 08 2008): Member Water and Power Development Authority (Wapda) Syed Raghib Abbas Shah has said that Wapda is focusing on hydel power which is environmentally clean and our country has the potential to generate power of more than 50,000 MW and we have utilised only 6,484 MW up till now.

He said this while addressing a seminar on World Environment Day with the theme of "Kick the habit, towards a low carbon economy." organised by Pakistan Engineering Congress here on Saturday. He also said Wapda is building Allahi Khawar, Khan Khawar, Duber Khawar, Jinnah and Satpara Hydel Power Projects, which would produce 434 MW of carbon free hydel power.

He further said that studies are going on for producing 20,000 MW of hydel power project and next year starting the 4,500 MW Diamir Bhasa hydel power project and after this a series of run off hydro power projects would be built.

He also said carbon dioxide contributes about 55 percent to global warming produced from human activities and we have to produce energy from alternative sources such as solar energy. Pakistan has blessed with abundant sunshine so we have to develop solar energy and some villages in Balochistan and Swat have been electrified as power projects.

He said that the engineers have to design the machinery and devise mechanism which produces minimum carbon. Preservation of environment, sustainable growth poverty eradication is our responsibility.

Earlier, President Engineering Congress Engineer Hussain Ahmed in his well come address said that Pakistan needs to develop its own national goals and plans to reduce green house gas emissions. It was encouraging that the government had already taken initial steps in this regard and we hoped that new government will show more commitment to this cause. The seminar was also addressed by Manager Technical Enercon and ECF Asif Masood and Chief Engineer (WRPO) Wapda Dr Allah Buksh Sufi.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Saudi Arabia to help improve oil reserves: Zardari ​*
JEDDAH (June 09 2008): PPP Co-Chairman Asif Ali Zardari Sunday said the country's security, economy and democracy were the top priorities of PPP government and it was working on an incentives package for under-privileged section of the society. The PPP Co-Chairman, in an informal chat with the newsmen here, blamed mismanagement and bad policies of the last decade as main reasons leading to the current economic crisis.

Zardari, who is accompanying Prime Minister Syed Yousuf Raza Gilani in his visit to Saudi Arabia, said Saudi Arabian leaders have always been generous to Pakistan and they always think for protecting the interests of Pakistan.

He said the visit of Prime Minister Gilani to Saudi Arabia will help give new dimensions to our ties with the Kingdom in long way, adding, Saudi Arabia would help Pakistan for improving its strategic oil reserves to make them permanent.

Zardari said the consumer financing brought a negative impact on the society. It also resulted in increased street crimes.

He questioned that when country is facing challenges on its border then how the law and order situation could be improved within minimum time.

Zardari said, "In Pakistan's environment, we have to see many things, but it does not mean that we have any fear from anyone or in any matter. We are only concerned about 160 million people, who are leading a hard life."

The PPP Co-Chairman said the government would provide relief ranging from Rs 1000 to Rs 1500 to the poorest of poor in the forthcoming budget to improve their buying power and assured that it would be doubled within one year.

Turning to the political situation of the country Zardari said the PPP does not acknowledge Pervez Musharraf as a constitutional President, adding, but as by default or circumstance he (Musharraf) occupies a certain position, the government was working with him.

"Since we have to run the affairs of the state, we have a working relationship with the President", he added. He said, "We have put aside our personal likes and dislikes, as we neither give advantage nor disadvantage to anyone" Zardari said the PPP has never supported any dictator, "neither in the past nor it will do so in future."

He said PPP had never sought support of the dictators to come into power and has always worked for real democracy. He said his party does not believe in having relations with personalities but working for the improvement of collective political system and strengthen institutions.

Regarding budget deficit the Co-Chairman PPP said the government will take stringent measures to overcome this deficit and would never indulge in the blame game. Regarding the strategy of the government on improving trade balance, he said all options would be utilised in this regard. He said the government would make all out efforts to capture 1.2 billion dollars Indian market for this purpose. He said Pakistani leadership including himself will visit India in the near future to achieve this goal.

Zardari said Pakistan is an Agrarian society but unfortunately all the governments except PPP governments had neglected this sector and negative impact of this negligence are now coming out.

He expressed the confidence that the PPP-led coalition government would again give top priority to the development of the agriculture sector to overcome the food crisis.

On the judges issue, he said there are some differences between the coalition partners on the modalities of restoration of judges to resolve the issue, adding, but the PPP believes in the independence of judiciary and empowerment of Parliament. Asif Ali Zardari has extended his stay in Saudi Arabia for further talks with the Saudi leadership.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*1000-megawatt power from Wapda can end Karachi load shedding ​*Monday, June 09, 2008 

KARACHI: Karachi Electric Supply Company (KESC) has not been warned by the ministry of water and power for improvement of power supply in the city, an official said. 

The power load shedding in the metropolis could be ended with 1000-megawatt power supply from Wapda, KESC official said.

According to sources, Federal Minister for Water & Power Raja Pervez Ashraf had issued a written warning to KESC yesterday to improve its performance. 

The utility was provided several concessions and more time for payment of arrears but the power supply in Karachi could not be improved. 

Managing Director KESC Amjad Hussain talking to Geo News said the company has not received any notice from the ministry adding that the federal government was aware about the power generation problems of KESC.

Six units of Bin Qasim Power Plant have completed their period, while SITE and Korangi thermal power stations are not generating substantial power, he said. 

The load shedding can be completely brought to an end in the city with 1000-megawatt power supply from Wapda, he added. 

According to Wapda Spokesman Basharat Cheema, Wapda was supplying 600-megawatts power to KESC instead of the decided 500-megawatts. 

1000-megawatt power from Wapda can end Karachi load shedding


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## Neo

*Raise in workers' minimum wage and pension: five labour laws to be amended in budget ​* 
ISLAMABAD (June 09 2008): The government would issue Labour Laws (Amendment Bill 2008) in Budget 2008-09 to increase the minimum wage of the workers from Rs 4,600 to Rs 6,000 per month; minimum pension raise from Rs 1,500 to Rs 2,000; reduction in contribution payable by employers from 6 to 5 percent of the wages and withdrawal of exemption to the banks and banking companies vis-à-vis employers old-age benefits contributions.

Sources told Business Recorder on Sunday that the Finance Bill, 2008-09 would amend five labour laws in the upcoming budget. It included Provincial Employees' Social Security Ordinance, 1965; West Pakistan Industrial and Commercial (Standing Orders) Ordinance, 1968; Minimum Wages for Unskilled Workers Ordinance, 1969; Workers' Welfare Fund Ordinance, 1971, and Employees' Old-age Benefits Act, 1976.

Sources said the amendment to the minimum wages for Unskilled Workers Ordinance is required to increase the minimum wages of the workers to Rs 6,000 per month. Moreover, enhancement in minimum wage of the workers also requires amendments to the Provincial Employees' Social Security Ordinance (PESS Ordinance). Under the PESS Ordinance, workers employed on wages exceeding Rs 5,000 per mensem are exempted. With the increase in the minimum wages of the worker to Rs 6,000 per mensem, all workers will go out of the social security scheme and practically the whole scheme will become redundant.

The draft amendment Bill titled "Labour Laws (Amendment) Bill, 2008", containing amendments in laws was placed before the Cabinet on May 21, 2008. The cabinet constituted a committee comprising ministers for labour, defence, law and justice, PM's Adviser on Interior and Special Assistant to the Prime Minister to examine the amendments proposed in the Provincial Employees' Social Security Ordinance, 1965 along with other social security laws and formulate recommendations for incorporation in the Finance Bill.

The Committee deliberated in detail and took following decisions:

(1) Amendment in the Minimum Wages for Unskilled Workers Ordinance, 1969: The Cabinet has already approved the amendment to be introduced in the Minimum Wages for Unskilled Workers Ordinance, 1969 on May 21, 2008 to enhance the minimum wages of the workers from Rs 4,600 per month to Rs 6,000 per month as announced by the Prime Minister.

(2) W.P. Industrial and Commercial Employment (Standing Orders) Ordinance, 1968: The Committee approved the amendment required to be introduced in the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 to pay an amount equal to the wages of the workers during the period of suspension.

(3) Workers Welfare Fund Ordinance, 1971: The Committee agreeing with the proposal to include workers of commercial and services sector in the ambit of scheme, approved the amendment required to be introduced in the Workers Welfare Fund Ordinance, 1971.

(4) Employees' Old-Age Benefits Act, 1976: The Committee approved the following amendments:

(i) Enhancement of minimum pension from Rs 1,500 per month to Rs 2,000 per month, (ii) Computation of rate of pension, monthly wages will be calculated on the basis of wages on which contributions were paid during last twelve months, (iii) Reduction in insurable employment given in sub-section (2) of section 22 will not be allowed to the insured persons of the establishments registered on or after July 1, 2008, (iv) Reduction in rate of contributions payable by the employer from 6 percent to 5 percent of the wages, (v) Extension of application of the Employees' Old-age Benefits Act to all such establishments, which have five or more employees, and (vi) Withdrawal of exemption to the banks and banking companies.

(5) Provincial Employees Social Security Ordinance, 1965: The Committee approved enhancement of the wage limit from Rs 5,000 to Rs 10,000 per month for applicability of the Ordinance to the secured workers and computation of the contributions.

The Committee also approved reduction in the rate of contributions from 7 percent to 6 percent of the wages under the Employee' Social Security Ordinance, 1965.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*5.5 percent GDP growth for 2008-09 not realistic ​* 
ISLAMABAD (June 09 2008): The National Economic Council (NEC) has fixed exaggerated GDP growth target at 5.5 percent for 2008-09, basically for boosting the nation's moral up in the ongoing political turmoil and imminent economic slowdown.

Sources said that NEC, which met here on June 2, with Prime Minister Syed Yusuf Raza Gilani in the chair, held threadbare discussion on GDP growth rate achieved in 2007-08, and projected for the next fiscal year.

They said State Bank of Pakistan (SBP) Governor Dr Shamshad Akhtar was highly critical to what she declared 'Unrealistic approach' towards GDP growth. The National Economic Council had scaled GDP growth rate down to 5.8 percent for the current fiscal year, besides setting 5.5 percent target for 2008-09.

The SBP governor contested the GDP growth rate for the current fiscal year as well as the next one. She claimed that achieved GDP growth rate in 2007-08 was less than 5.8 percent. She demanded that instead deceiving the nation by setting exaggerated target the government should come up with a realistic and accurate GDP growth rate for the next fiscal year.

The SBP governor said: "Setting of incorrect GDP growth target when all the economic indicators were showing negative growth would not serve any purpose."

Dr Shamshad Akhtar's viewpoint was seconded by many others in the meeting. Those who supported her on the issue also demanded realistic and achievable GDP growth target for 2008-09, besides announcing actually achieved for the outgoing fiscal year.

The government had initially set GDP growth target for the current fiscal year at over 7 percent. However, after dismal performance of major sectors of the economy in the first half of the current fiscal year the target was reduced to 6.5 percent. The NEC further reduced it to 5.8 percent for the current fiscal year.

The World Bank and the International Monetary Fund (IMF) also have been questioning the official GDP growth rate. The officials of both international donor agencies, who visited Islamabad just a few days before the NEC meeting, doubted that Pakistan was doing good enough to help it achieve even over 5 percent GDP growth rate in 2008-09. An IMF fact-finding mission, which visited Pakistan from June 17 to 28 sharply disagreed with the government officials on the GDP growth rate. Its mission claimed that Pakistan's growth rate was even less than 5 percent this year.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Economic survey on June 10 ​* 
KARACHI (June 09 2008): Federal Minister for Finance Syed Naveed Qamar on Sunday said that economic survey will be released on June 10 and post budget conference will be held on June 12, a private TV channel reported.

Finance minister said that textile policy would be announced separately. Talking about the privatisation policy finance minister said that privatisation policy would be implemented vigorously. Syed Naveed Qamar said that government is taking steps to reduce budget deficit, the channel added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*World Bank and IMF predict 3.5 percent growth in fiscal year 2009 ​* 
ISLAMABAD (June 10 2008): The World Bank and the International Monetary Fund have forecast a growth rate of 3.5 percent in 2008-09, while the Planning Commission has projected a 6.5 percent growth, well-placed sources told Business Recorder here on Monday.

"Pakistan should not see the world through the eyes of the Planning Commission," sources quoted the IMF mission as saying during recent meetings with the officials of the Finance Ministry.

"The WB and the IMF are not expecting more than 3 or 3.5 percent GDP growth next fiscal year, however, the government does not agree with this assessment," the sources added. The WB and the IMF missions were in Islamabad for almost a month in May to analyse the performance of the Pakistan economy; and based their assessment to determine the conditionalities that would be imposed on lending from the international financial institutions.

The sources said that the IMF had set an impossible conditionality for the government ie to bring the deficit down to 4.3 percent which would then allow the World Bank to release the loan of $500 million for balance of payment support. Another conditionality, reportedly, was for the government to desist from subsidising domestic fuel prices.

"These agencies are pressurising the government to adopt a formula for automatic fuel adjustment from July onwards, and increase electricity tariffs substantially," the sources maintained. The WB and the IMF missions pointed out that since furnace oil prices have reached Rs 45,000 per ton and per unit electricity generation cost has reached Rs 9 kWh, the government must minimise the subsidy. These agencies also urged the government to ensure food security and finalise a policy in this regard.

The sources said that the government has been asked to take measures for fiscal adjustments so that current account deficit could be brought to an acceptable level. Allocations for the Public Sector Development Programme (PSDP) was also one of the areas of concern for both the missions as according to them some of the allocations were unaffordable, the sources added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*External debt, liabilities reach $46bn ​* 
Tuesday, June 10, 2008

KARACHI: Countrys total external debt and liabilities have swelled to $45.926 billion till end of March 2008 as compared to $42.931 billion in the same period of year 2007.

Total foreign debt grew to $44.596 billion while total foreign exchange liabilities slightly went down to $1.33 billion which was recorded $1.342 billion on March 31, 2007. 

Public and publicly guaranteed debt rose to $40.692 billion against $37.836 billion in the corresponding period of last year. Public debt increased to $40.479 billion including medium and long term debt for more than one year surged to $39.865 billion in which Paris Club grew to $14.527 billion which was witnessed at $13.430 billion on March 31, 2007.

Debt of multilateral agencies augmented to $21.378 billion from $19.768 billion in the same period of last fscal, while other bilateral debt increased to $1.113 billion from $999 million and military debt remained stagnant at $48 million whereas commercial loans and credits also stayed pegged at previous years $120 million. Debt acquired through euro/sukuk/global bonds remained unchanged at$2.650 billion. 

Countrys short-term loans for the period of less than one year also rose to $614 million from $601 million of last year. Short term publicly guaranteed debt slightly came down to $213 million from $215 million.

In short term borrowing country has to return $142 million to multilateral agencies besides of $64 million to other bilateral countries, and $4 million as commercial loans and $3 million for Sandak Metal Bonds.

As of March 31, 2008 the private non-guaranteed debts for more than one year stood at $2.215 million, which was $2.122 million on corresponding period of last year. Private non-guaranteed bonds surged to $275 million from $250 million and loans obtained from IMF increased to $1.414 million against $1.381 million in the same period of pervious year.

Foreign exchange liabilities including payments to be made against specialUS dollar bonds, foreign currency bonds (NHA/NC), National Debt Retirement Program, Central bank Deposits, NBP/BOC deposits and other liabilities (SWAP) FEBCs/FCBCs/DBCs increased to $1.330 billion.

External debt, liabilities reach $46bn


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## Neo

*5.8 percent GDP growth in 2008 ​* 
ISLAMABAD (June 10 2008): The Finance Ministry has projected 5.8 percent growth in GDP in 2007-08, with 5.4 percent in manufacturing, 4.8 percent in large scale manufacturing (LSM), and only 1.5 percent in the agriculture sector.

*ECONOMIC SURVEY HIGHLIGHTS: *

-- Debt burden rises to 56 percent;

-- Agri growth declines to 1.5 percent;

-- Budget deficit to be 4.7 percent of GDP;

-- Inflation at 10.5 percent;

-- External inflows decline to 82.2 percent;

-- Subsidy on fuel to cost Rs 175 billion;

-- Per capita income shows a rise of 18.4 percent;

-- Finance and insurance show 17 percent growth;

-- Investment decreases to 21.6 percent of GDP;

-- National savings rate declines to 13.9 percent;

-- Forex reserves show depletion of $4.1 billion;

-- Assets of banking system registers net expansion of Rs 203.1b, to Rs 5155 billion;

-- There has been reduction in poverty headcount;

-- Credit to private sector grows while portfolio investment shows deceleration.

According to the 'Economic Survey 2007-08', to be unveiled on Tuesday by Finance Minister Naveed Qamar, along with Special Secretary, Finance, Dr Ashfaque Hasan Khan, in 'P' Block auditorium of Pak Secretariat, public debt burden increased from 55.2 percent of GDP to 56 percent during 2007-08 due to huge burden of deficits.

In addition, public debt, as percentage of GDP, rose for the first time in 10 years as borrowing requirements for the budget deficit rose to Rs 683.4 billion during the outgoing financial year.

At the end of the current fiscal year, budget deficit is expected to be 4.7 percent of GDP, whereas average inflation has been projected at 10.5 percent. The country's budget deficit is expected to be Rs 683.4 billion, or 6.5 percent of the GDP--highest in the past 10 years.

Actual interest payments were Rs 503.2 billion for the outgoing fiscal year, against the budgeted figure of Rs 375 billion. Pakistan, which according to the previous government was considered one of the fast growing Asian economies, is now showing 13.3 percent increase in its debt, totalling $45.9 billion--by the end of March, 2008.

The figures released by the Economic Survey are not for the entire fiscal year, but up to March this year. According to the Survey, during the outgoing fiscal year M2 growth was entirely attributable to government borrowing for budgetary support, and Net Domestic Assets (NDAs) of banking system increased by Rs 656 billion due to borrowing for deficit financing. Net Foreign Assets (NFAs) of banking systems contracted by Rs 289 billion for 2007-08.

The Survey further shows that external inflows were adversely affected during the year, declining to Rs 119.4 billion, an overall 82.2 percent, or Rs 564 billion, of the budget deficit financing came from domestic sources, like banks and other financial institutions.

Subsidy on fuel will cost Rs 175 billion to the national exchequer despite recent increases in the prices of oil products by the present government. A massive slippage of Rs 324 billion has been recorded under other expenditures, and the Public Sector Development Program (PSDP) has been slashed by Rs 100 billion to rein in the deficit.

In the agriculture sector, sugarcane crop registered the highest ever production, of 63.9 million tons, while rice production showed a modest growth of 2.3 percent, to 5.6 million tons.

Cotton crop production has been estimated at 11.7 million bales against 12.9 million bales of 2006-07, and wheat crop production is estimated at 21.7 million tons against 23.3 million tons in the preceding year. The wheat figure remains controversial.

Per capita income showed a rise of 18.4 percent, from $925 to $1085, and real private consumption expenditure rose by 8.5 percent. Finance and insurance sector have registered a stellar growth of 17 percent, whereas external inflows were adversely affected, declining to Rs 119.4 billion.

Growth of small scale manufacturing sector has been recorded at 7.5 percent. The Survey further shows that investment decreased to 21.6 percent of GDP in 2007-08, from 22.9 percent in 2006-07. National savings rate declined to 13.9 percent from 17.8 percent of last year.

Pakistan's forex reserves have shown a significant depletion, of $4.1 billion, during three quarters of the outgoing fiscal year and, at the same time, assets of the banking system registered net expansion of Rs 203.1 billion, to Rs 5155 billion.

The Survey has shown that domestic debt increased by 15.7 percent--till end-March 2008--and current account deficit rose due to large trade deficit and outflow from services and income accounts of last year.

There has been reduction in poverty headcount, from 23.94 percent in 2004-05 to 22.32 percent in 2005-06. Pakistan's total population was estimated at 160.9 million.

Total labour force (ten years and above) was estimated at 111.39 million; national average of labour force participation rates total were estimated at 45.2 percent. Pakistan's population has been forecast to double by 2045, if it continues to grow at the current rate of 1.8 percent.

Credit to private sector grew by 14.9 percent due to bridge financing requirements to settle claims of oil marketing companies (OMCs) and independent power producers (IPPs). Portfolio investment shows large deceleration, whereas mutual fund industry grew from Rs 25 billion to Rs 313 billion.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*No power cut for textile industry from 10th ​* 
Tuesday, June 10, 2008

LAHORE: The government has announced a special relief package for the industry and tube-wells under which a major chunk of the export-oriented industry will be exempted from loadshedding from June 10. 

The Water and Power Development Authority would also increase electricity supply to other sectors. This has been arranged through system optimisation, which would result in additional generation of 1,500 megawatts 

The relief package was unveiled in a meeting presided over by Federal Water and Power secretary at the WAPDA House here on Monday. Pakistan Electric Power Company managing director and other senior officials, representatives of the industry as well as agriculture attended the meeting.

As per details of the package, the textile industry, fed through independent or grouped 11KV feeders, will now be provided electricity throughout the day against earlier closure of six hours every day during peak hours.

Power-looms will be provided power for 18 hours a day, with at least two continuous spells of power supply for six hours each against earlier outage of up to 10 hours in certain parts of the country.

Flour and ghee mills will be provided electricity for 18 hours daily with two spells of 8 hours each against earlier shutdown for 6 to 10 hours daily. All types of processing industries will be supplied electricity continuously throughout the day. However, they will reduce their running loads during peak hours from 1800 to 2200 hours.

Pre-dominantly industrial feeders will be provided electricity for 18 hours, preferably with closures between 1800 and 2400 hours daily, against earlier cut of 6 to 10 hours. Small and medium enterprises (SMEs) will specifically benefit from this measure. Agriculture tube-wells will be provided continuous power supply at night to get special rebate tariffs against earlier continuous supply for only 6 to 8 hours.

No power cut for textile industry from 10th


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## Neo

*Wapda announces package for agriculture and industrial sectors ​* 
LAHORE (June 10 2008): Export-oriented textile, spinning and flour industries and the agriculture sector have been declared exempted from power cut on June 10, 2008, while electricity supply will also be increased for other sectors, including agriculture tube-wells.

This has been arranged through system optimisation, which would result in additional generation of 1,500 mw. Federal Secretary for Water and Power, Ismail Qureshi, announced on Monday a special relief package for the textile industry and tube-wells through which a major chunk of export-oriented industries will be exempted from the power cut beginning on June 10.

The package was unveiled in a meeting by Ismail Qureshi with Akbar Sheikh, Chairman, All Pakistan Textile Mills Association, Punjab Zone, here on Monday. Shafqat Elahi, Chairman, Aptma Energy Committee Punjab zone, Shahid Mazhar Senior vice chairman Aptma Punjab Zone Managing Director Pepco Fazal Ahmad Khan Tahir Basharat Cheema, DG Energy Conservation were also present in the meeting.

As per details of the package, textile industry, fed through independent or grouped 11-kV feeders will now be provided electricity throughout the day for 24 hours against the earlier closure of 6 hours each day during peak hours. Power looms will be provided supply for 18 hours every day, with at least two continuous spells of power supply for 6 hours each against the earlier closure of up to 10 hours in certain parts of the country.

Flour and ghee mills will be provided electricity for 18 hours daily with provision of two spells of 8 hours each against the earlier closure of 6 to 10 hours daily. All types of continuous process industries will be provided continuous supply throughout the day. However, they will reduce their running in the peak hours--from 1800 to 2200 hours.

Predominantly industrial feeders will be provided electricity for 18 hours, preferably with closures between 1800 and 2400 hours daily, against the earlier closure of 6 to 10 hours. Small and medium enterprises (SMEs) will specifically benefit from this measure.

Agriculture tube-wells will be provided continuous power supply during night-time daily to avail of special rebated tariffs against the earlier continuous supply period of only 6 to 8 hours.

Akbar and Shafqat, talking to Business Recorder, praised the decision, saying that uninterrupted supply of power to the industrial sector would boost the production and industrialists would conveniently achieve the export target of $10 billion. Akbar said the government was moving in the right direction of action and giving top priority to the agriculture and commodity producing sector which is need of the hours.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Export-related industry to get more electricity​*
LAHORE, June 9: The government on Monday announced a special package under which major export-related industries would be exempted from loadshedding with effect from Tuesday.

Power supply will also be increased to tube-wells used in irrigation.

The package was unveiled at a meeting presided over by the federal secretary for water and power at the Wapda House.

Pepco managing director and representatives of industry and agriculture attended the meeting. The meeting decided to arrange an additional supply of 1,500 MW through system of optimisation.

Under the package, textile industry will get uninterrupted 24-hour power supply and the six-hour loadshedding during peak consumption hours will be stopped.

Power looms will get supply for 18 hours a day, with at least two continuous spells of supply for six hours.

Flour and ghee mills will get electricity for 18 hours a day with two uninterrupted spells of eight hours.

The process industries will be provided continuous supply throughout the day, but will be required to reduce their running load during peak hours.

Export-related industry to get more electricity -DAWN - Top Stories; June 10, 2008


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## Neo

*Consortium plans steel mill at Kalabagh ​* 
*Four mills join hands to use indigenous iron ore for steel production​*
Tuesday, June 10, 2008

ISLAMABAD: A consortium of four steel mills will establish an integrated steel mill at Kalabagh, The News has learnt. The planned steel mill would have annual capacity of producing one million tonnes of steel using indigenous iron ore excavated from Kalabagh and Chiniot.

Kalabagh and Chiniot have known deposits of iron ore that have not yet been excavated and utilised by the local steel industry, as importing iron ore, iron and steel scrap was cheaper than mining local ore a capital-intensive venture.

With global steel and iron ore prices skyrocketing the steel makers have finally decided to excavate and exploit local reserves. Pakistan Steel Mills is already using ore from Caghi, Balochistan. 

The consortium comprising four companies include Mughal Steel, Star Cotton Corporation, Pak Steel and Ittehad Steel Mills. They have already incorporated a company under the name of Indus Consortium Mining & Steel Industry (Pvt) Ltd with Securities and Exchange Commission of Pakistan (SECP), sources in the ministry of Industry & Production (MOIP) told this correspondent.

The company has also submitted an application to the DG (Mineral), Punjab for the grant of lease for 2000 acres at Kalabagh and 1000 acres at Chinot, they added.

Pakistan Steel Mills (PSM) is the only integrated mill in the county with a capacity of 1.1 million tonnes per annum. PSM was making steel prtoducts from 100 per cent imported ore and coke India, Iran and Australia. However, in last few years it has started using ore from Chaghi and imports ore only to meet the shortfall in local supply.

The steel industry of Pakistan consists of steel smelters, re-rollers, PSM, foundries, ship breakers and line pipe industry.

Increase in the international prices of iron ore, coking coal, metallurgical coke forced policymakers to either reduce import tariff or explore new venues to meet steel demand said an official of the Engineering De elopement Board (EDB).

A policy institute for the development of engineering sector in the country EDB is also encouraging and facilitating the PSM to increase the use of local iron ore and coal in the blend for manufacturing steel, the same official added.

Giving the details of the agreement for increasing steel production, the official said that a private firm AMCO Minerals would supply 15,000 tonnes of iron ore from Chaghi. It is already supplying 5,000 tonnes to the PSM. Similarly, another iron ore supplier from Chaghi is in negotiations with PSM administration for supplying ore.

The PSM has signed an agreement for the supply of 60,000 tonnes of iron ore concentrate with Saindak Metals and a similar supply agreement of 65,000 tonnes of Sharigh coal has also been signed, the official added.

The smelting capacity in the country is around four million tonnes of ingots and billets. The total number of re-rollers is 276 with an estimated capacity of 4 million tonnes whereas the ship breaking industry supplies around 600,000 to 900,000 tonnes of ship plates to the re-rolling industry. 

Consortium plans steel mill at Kalabagh


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## Neo

* 1000MW supply from WAPDA can end loadshedding ​* 
Tuesday, June 10, 2008

ISLAMABAD: Managing Director Karachi Electric Supply Company (KESC) Amjad Hussain has said that 1000 megawatt power supply from Water and Power Development Authority (WAPDA) to Karachi can end load shedding in the city, local media reported.

The power load shedding in the metropolis can be ended with 1000 megawatts of power supply from WAPDA, KESC MD said. He said the Federal government was well aware of the problems being faced by the KESC with regard to power generation. Six units of Bin Qasim Power Plant have completed their period, while SITE and Korangi thermal power stations are not generating substantial power, he said. Recently, the Federal government has decided to increase the electricity supply to KESC by WAPDA from 500 megawatts to 1000 megawatts. Presently, WAPDA was supplying 600 megawatts of power to KESC. 

1000MW supply from WAPDA can end loadshedding


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## Neo

*Government to freeze defence allocation: Gilani ​* 
ISLAMABAD (June 10 2008): Prime Minister Yousuf Raza Gilani on Monday announced in the National Assembly that the government has decided to freeze the defence budget for coming fiscal year and would present its specific details in the parliament. Delivering a policy speech in the lower house 2 days ahead of the budget.

Gilani said that keeping defence allocations at last year's level would actually mean reduction in it if factors like price hike and rupee depreciation against the dollar were considered. "As a measure of our tangible display to seek peace with our neighbours, we have decided to freeze, actually reduce, the defence budget when seen in the context of inflation and the rupee-dollar parity," he said.

Gilani said Pakistan stood for regional peace and its defence was based on the strategy of minimum essential credible deterrence. The country would never enter any arms race, the Prime Minister added. He said Pakistan would like to see a similar gesture by its neighbour for peace and stability in South Asia. "We hope to see a reciprocal gesture from our neighbour for the sake of peace and prosperity in the region," he added.

The Prime Minister also announced that the government has decided to present the defence budget estimates in a format reflecting the estimated expenditure under major 'heads' in the parliament for the first time in the country's history. Gilani told the house that both the defence ministry and the chief of the army staff have backed the idea of presenting some details of the budget to the parliament.

"I am pleased to inform you that the Ministry of Defence and Chief of Army Staff have fully endorsed the revised format of the defence services budget estimates," he added. Presently, the budget of the three services, ordnance factories and others is presented as a one-line allocation.

It is not approved separately but in a consolidated form for all defence services. After approval of the budget, the Ministry of Defence distributes the allocation to the three services and other defence organisations. Gilani said the government would never compromise on issues relating to the country's defence and vowed to maintain a minimum deterrence.

"Pakistan is located in a geo-strategically important but a turbulent region. We live and operate in a volatile environment. We can not, therefore, afford to remain oblivious to our defence needs," he maintained. "We shall continue to strive for it without compromising on our national interest," Gilani added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Trade deficit at record high of $18.7bn​*
ISLAMABAD, June 9: Pakistans trade deficit swelled to an unprecedented $18.756 billion in the first 11 months of the current fiscal year, up 52 per cent from $12.311 billion for the same period last year.

The extraordinary increase in trade deficit is the outcome of the spending on import of oil, foodstuff and consumer items like mobile phones.

On import of wheat alone, Pakistan spent $770 million to overcome its shortage during the outgoing fiscal year.

The oil import bill may swell to over $11 billion by the end of the current fiscal year, against over $7 billion last year, an increase of 40 per cent.

Analysts said the trade deficit this year might reach $21 billion. Last year, the deficit for the whole year was $13 billion.

Fall in agricultural yields also pushed the government to spend foreign exchange reserves during the current fiscal year, while bill for importing industrial raw materials and machinery declined during the period under review. The period also saw industrial output declining by four per cent.

Official figures obtained by Dawn on Monday showed that the import bill had increased by 29.56 per cent to $35.943 billion in July-May 2007-08, against $27.743 billion last year. It increased by 3.883 per cent in May 2008 when it stood at $3.883 billion, against $2.750 billion in the same month last year.

Unexpectedly, exports grew by 11.37 per cent to $17.186 billion in July-May 2007-08, against $15.432 billion last year. The export growth recorded an increase of 22.61 per cent in May 2008 when it stood at $1.946 billion, against $1.58 billion last year.

The government has projected a $19.2 billion export target for 2007-08 on the assurance of the textile industry to edge up its exports to over $11 billion. The textile exports has witnessed a negative growth over the past few months and it may not cross even the $10-billion mark this year.

A commerce ministry official said that the export target was likely to be achieved by end-June. The rupee depreciation and robust growth in non-textile exports would help in achieving the target, the official added.

Official statistics showed that Pakistans current account deficit surged to between 7.3 and 7.8 per cent of GDP. The fiscal deficit has spiralled to close to nine per cent but the government expects to bring it down to 6.5 per cent.

Trade deficit at record high of $18.7bn -DAWN - Top Stories; June 10, 2008


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## Neo

*Gems, jewellery training centre established ​* 
Tuesday, June 10, 2008

KARACHI: Pakistan Gems and Jewellery Development Company (PGJDC) has established the countrys first Gems and Jewellery Training and Manufacturing Centre (GJTMC) in Saddar town, Karachi.

The centre is going to facilitate the gems and jewellery industry in technology upgrading, skill development of miners, gems processing and jewellery manufacturing through training and provision of required equipments and facilities.

Such centres are also being established in Lahore, Gilgit and Quetta. The basic idea for introducing CAD/CAM (computer-aided designing and manufacturing) technology by PGJDC is to facilitate the local industry and manufacturers with highly mechanised manufacturing. It will enable the manufacturers to be competitive locally and internationally by producing high-quality jewellery with maximum output in minimum time.

The GJTMC would be used to provide training in gems and jewellery designing and manufacturing with dual exposure to traditional and state-of-the-art machines like CAD/CAM technology. All these trainings would be provided free of cost to facilitate the industry.

Gems, jewellery training centre established


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## Neo

*Dalton first to provide Pakistan-focused fund: release set for June 19 ​*
LONDON (June 10 2008): Dalton Strategic Partnership (DSP) has become first UK fund manager to offer focused retail access to Pakistan's equities, with the launch of its 'Melchior Selected Trust: Pakistan Opportunities Fund'. The fund, whose investment date was delayed to avoid a sharp correction in Karachi Stock Exchange in May, is slated for release on June 19.

Portfolio management has been outsourced to Karachi-based KASB Funds, which was founded in 1952 and its 5 percent is owned by BlackRock since early 1990s. KASB chief executive and chief investment officer Faisal Potrik will run a selection of 35-45 stocks--80 percent of which will be drawn from 30 largest companies listed on KSE. Remaining 20 percent will be non-benchmark positions.

Starting overweights are in oil exploration, chemicals, agriculture and cement sectors. David Graham, partner at DSP, said that average price/earnings multiple of 11 times for KSE stocks did not price in the country's prospects, which were reminiscent of India's five years ago.

He said: "Pakistan is extraordinarily well positioned between oil-rich Middle East and oil-deficient China and India. All sorts of pipelines are coming across Pakistan, and Pakistan itself is growing as energy producer with aggressive exploration programme. With wealth creation going on in Middle East, a significant amount of money is going into Pakistan."

While he acknowledged inherent degree of political risk in the region, he insisted that underlying fundamentals, with growing consumer spending and a population of 160 million, would drive the country's equity market for foreseeable future. He added: "What people don't realise is Pakistan is pretty broad in the number of stocks it offers.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Shortage of skilled workers, no solution in sight yet ​* 
Tuesday, June 10, 2008

KARACHI: Like every new government the present government has also pledged to start a major programme for the training of human resource, a capital resource that Pakistan has failed to exploit. 

The industry has seen phenomenal growth in last 15 years with heavy investments in BMR (balancing, modernising and replacement). The industrialists have installed new machineries using computer-aided manufacturing (CAM) operating on computer-aided design (CAD) but there is a dearth of persons to run the CAD CAMs. 

Beside CAD CAMs there is an overall shortage of skilled workers to operate modern machinery in almost every sector from engineering to textiles. In Pakistan the vocational training programmes are being provided by a number of federal and provincial agencies. The Government Vocational Institutes (GVIs) are under the administration of Provincial Education Department, and the Technical Training Centres (TTCs), Vocational Training Centres (VTCs), Government Vocational Institutes (GVIs) and Apprenticeship Training Centres (ATCs) are under the administration of the Provincial Labour Departments.

A senior trainer from Karachi requesting anonymity told The News that the teachers and trainers in government training centres are not accustomed to latest technologies.

The young workers coming out from these centres are of no use to the present day industry as they lack the training to use latest machinery, he said adding that the government training institutes mostly have obsolete machines.

The Sindh Labour Minister Amir Nawab said in a recent meeting with industrialists of SITE industrial area that the government would not only improve the present training facilities but also open new centres to train 0.1 million skilled labour annually. 

A senior industrialist told the meeting that Japanese labour output is 3.5 times more to our labour so the problem is not only training but also the low literacy rate of the country. 

Zubair Motiwala, Managing Director of Diamond Textiles Pvt Ltd said, we are running in-house training centres for labour for our convenience to train eligible persons, but this facility is not for everyone.

However, he said, government needs to differentiate between unskilled and skilled labour. The Rs6,000 minimum wage set for labour is very high for unskilled labour because if this would be the case then which unskilled worker will go for training? 

He added that skilled workers are already getting around Rs8,000 to Rs12,000 depending on their skills but paying Rs6,000 to unskilled worker will add up to our cost of production.

Muhammad Idrees Gigi, Chairman Federal B Area of Trade and Industry said labour output is one third of Chinese labour, in china minimum wage is $130 equal to Pak Rs9,000, however, our labour output is not even equal to Rs3,000 then how would we pay them Rs6,000? He said this without taking into account the social and economic set of China before comparing it with Pakistan. 

He said industry is ready to pay Rs6,000 per month even more, as this is not sufficient considering todays inflation but when the employer pays desired salary he would demand desired output from labour, which is not possible until government comes up with a comprehensive labour training program. 

Industrialists may train limited educated labour to work on some machines but to train uneducated labour is an uphill task, he said. A whole generation has been lost in last 50 years and our present efforts of educating labour will bring results some 15 years later so educating every citizen is the real task, he appealed to the government.

Another industrialist from Karachi told The News on phone that private training institutions in the country are running appropriately but their performance in public sector is not only defective but unfortunately they do not know their real objectives. 

He said industry has always been ready to support students of training institutes but this will not work until proper Public Private Partnership (PPP) projects do not surface to cater the growing demand of skilled manpower. The old machines at technical training centres are not catering the demands of new technology use in industry.

Nisar Shekhani, Chairman SITE Association of Industry said our technical institutions are using machines of 1960s and such obsolete technologies are good for nothing in the fast changing technological world except in some cases where basic theory is unchanged. 

He anticipates that if technical training centres induct latest technologies of different fields then private sector would also show interest and cooperate in producing trained labour.

Shortage of skilled workers, no solution in sight yet


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## Neo

*RCCI for big dams construction in fiscal year 2009 ​* 
ISLAMABAD (June 10 2008): The Rawalpindi Chamber of Commerce and Industry (RCCI) has called upon the federal government to make sure the sufficient allocations for construction of big dams in next fiscal to address the water and energy shortage.

"The present energy and water shortage has hampered economic activities badly and if measures were not taken for quick construction of dams the country will face drought and economic slowdown", said RCCI President Abdul Rauf Chaudhry while addressing a pre-budget meeting of the Chamber executives and members.

Chaudhry said that Pakistan has an agro-based economy and it needs huge water for growth in agriculture sector. "Water shortage is directly affecting the crops, which led to food shortage and in coming days revolutionary steps are imperative to avoid further food shortage and inflation", he added. He said that Pakistan is losing huge water because there are no big reservoirs to save this water and use it for agriculture. Besides providing water for agriculture sector these dams will produce electricity for domestic and industrial sectors.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Major economic indicators perform negatively in 2007-08​*
ISLAMABAD: All major economic indicators, Foreign Direct Investment (FDI), exports, Large Scale Manufacturing (LSM), saving and investment and tax collections witnessed negative growth in the outgoing fiscal year 2007-08. 

Poor performance of agriculture and industry impacted the GDP growth negatively, however, the services sector rescued it to some extent. 

The government will release Tuesday (today) major economic indicators performance for the year 2007-08 in the Economic Survey of Pakistan. After launching the survey report, the Federal Finance Minister, Syed Naveed Qamar, would brief journalists. 

Foreign Direct Investment: According to the State Bank of Pakistan data, the net foreign private investment during July-March 2007-08 has declined by 46.3 percent over the corresponding period last year. Total foreign private investment has been recorded at $2.985 billion (FDI $3.038 billion and Portfolio $ (-) 53 million. The countries making major contribution to FDI are: USA $1.139 billion, UK $.279 billion, UAE $0.320 billion, Switzerland $0.127 billion and Netherlands $89 million. 

Agriculture: For the outgoing year, the agriculture growth target declined to 1.5 percent against the target of 4 percent, the Industrial target observed 4.6 percent against the target of 9.4 percent. However, the services sector grew by 8.2 percent against the target of 7.1 percent. 

Major agriculture crops growth remained (negative) 3 percent against the target of 4.5 percent, livestock growth witnessed 3.8 percent against the target of 5.7 percent and forestry growth during the year 2007-08 remained negative 8.5 percent against the target of 3.5 percent. The major factor responsible for the decline in agriculture output is lower production level both in wheat and cotton. According to the provisional estimates, output of wheat is estimated to be 21.8 million tons, which is 6.3 percent lower compared with last year level of 23.3 million tons. 

Industry: Industry sector was targeted to grow by 10.9 percent with Large Scale Manufacturing (LSM) and Small Scale Manufacturing (SSM) growth with 12.5 percent and 7.5 percent respectively. For the year 2007-08, manufacturing sector is estimated to grow at 5.4 percent. The lower than the target growth is because of poor performance in LSM sector, partly on account of power shortages and partly to loss of export competitiveness. The LSM has shown a growth of 4.8 percent against the target of 12.5 percent. 

Saving and Investment: The saving target was also missed during the year 2007-08 and remained 13.9 percent against the target of 18.8 percent. The Investment remained as 13.9 percent against the target of 23.8 percent.

Balance of Payment: The balance of payment position during 2007-08 remained under pressure as reflected in the worsening of the trade deficit. The main cause for the rise in the trade deficit is higher imports mainly due to sharp increases in prices of oil and food commodities and low growth of traditional manufactured exports resulting in worsening current account position. Impact of the widening current account deficit on the overall balance was compounded by decline in certain flows in capital accounts especially Foreign Private Investment. Depletion in the foreign exchange reserves essentially reflects the sharp increase in current account deficit. 

Services Sector: However, services sector is the only part that contributes to the GDP growth. During the year 2007-08, as against the target of 7.1 percent, the services sector has increased by 8.2 percent contributed by transport and storage & communications (4.4 percent), wholesale and retail trade (6.4 percent), finance and insurance (17 percent), ownership of dwelling (3.5 percent), public administration and defence (10.9 percent) and social, community & personal services (9.4 percent).

Daily Times - Leading News Resource of Pakistan


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## Neo

*Energy sector experiences negative growth of 14.7%​*
ISLAMABAD: The dismal performance of the energy sector, in the outgoing fiscal year 2007-08, is reflected by the fact that the gas, electricity and water supply in the country experienced negative growth of 14.7 percent, according to the official data available to Daily Times. 

The negative growth in electricity, gas and water supply during the current financial year also remained the major cause of negative growth in other sectors. 

Due to this decline the government has been forced to set the target of electricity, gas and water supply to grow by 3 percent during the coming financial year. 

This would not be enough to meet the energy requirements. Tepid growth in the coming financial year in the said sectors could also affect the over all Gross Domestic Products (GDP), an official said. 

Due to negative growth in electricity and water supply, the country is undergoing a worst power shortages crisis. The over all production of electricity during the current financial year 2007-08 remained 10,000MW to 12,000MW per day against the demand of 15,000MW per day. 

The main causes of the negative electricity growth were the water shortages that resulted in around 2500 MW per day hydel power generation shortfall during the current financial year. The total power generation remained 3000 MW to 3500 MW per day. The negative growth in the thermal power generation by Independent Power Producers (IPPs) was also another factor that resulted in decline in electricity growth rate. 

The electricity produced by IPPs remained between 3,500MW to 4,500MW per day whereas the demand stood over 5,300MW per day during the last financial year causing a series of load shedding in the country. The circular debt, followed by oil prices hike, jumped up to billion of rupees also remained the major cause of decline in thermal power generation. 

Water reserves at three major reservoirs of the country including Tarbela, Mangla and Chashma had fallen to the lowest level from 9.554 million-acre feet (MAF) to 1.421 MAF, showing a decline of 8.13 MAF in the month of February that posed a negative impact on the Rabbi crops. The country also witnessed some 25 percent less snowfall during last winter that caused reduced water supply. The provinces faced 24 percent less water supply for the crops during the Rabbi season that also affected the wheat crop. The country also failed to achieve the target of 24 million tonnes wheat as initial estimates reveal that the country would have 21.8 million tonnes wheat.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Zero duty proposed for IT related items ​* 
ISLAMABAD (June 09 2008): The Ministry of Information Technology has proposed zero customs tariff rates, in the 2008-09 budget to expand IT industry, making e-governance efficient and cost-effective, sources told Business Recorder here on Saturday.

They said that several devices are used by the IT companies for research and development (R & D), and cut in duty rates will encourage these companies in new products development.

Moreover, many universities and other organisations keep their educational, promotional and training material in digital format. Reduction in tariff would encourage paperless environment, and help encourage automation, sources added.

The CRT monitors are more power consuming and hazardous, radiation-emitting devices. On the contrary, LCD and plasma displays are power-efficient and environment-friendly devices, and are widely used by all segments of IT industry, and other sectors of the economy and general public. The present energy crisis calls for exemption of customs levy on these items, sources said.

Following are the items for which current (2007-08) rates of customs duty are given, while proposed rate for 2008-09 for all items is zero percent.

Machines which perform two or more functions of printing, copying or facsimile transmission, capable of connecting to an automatic data processing machine or to a network, rate of customs duty 2007-08 is 5 percent; battery chargers 10 percent; modems 5 percent; ISDN System 5percent; ISDN terminal adapters 5 percent; subscriber end equipment 5percent; set top boxes for gaining access to internet 5percent; attachments for telephones 5 percent; apparatus operated by coins, bank notes, bank cards, tokens or by other means of payment 20 percent; discs for laser reading systems for reproducing phenomena other than sound or image 5percent; multimedia memory cards (MMC), SD cards, 5 percent; other multimedia storage devices capable of connecting to an automatic data processing machine, 5 percent; SIM cards, 5 percent; other, for reproducing representations of instructions, data sound and image, recorded in a machine readable binary form, and capable of being manipulated or providing interactivity to a user, by means of an automatic data processing machine, 5 percent; blue tooth whether or not capable of connecting to an automatic data processing machine, 5 percent; VSAT terminals, 10 percent; other satellite communication equipment, 10 percent; other (used monitors other than CRT), 25 percent; other (used LCDs), 25 percent; and multimedia projector 5 percent.

In the IT Ministry proposals it has also been suggested that additional call centre/BPO equipment/machinery should be included for decrease in duty.

The Federal Board of Revenue (FBR) in response invited the ministry to provide FBR a list of additional call centre/BPO machinery and equipment, ie, data storage devices; digital loop carrier system (digital sender); part (voice cards); other (digital call recorders) and VAST terminals.

The inclusion of proposed machinery and equipment used by the call centre/BPO industry will enlarge the scope of total exemption from sales tax and chargeable to reduce rate of 5 percent customs duty and thus help grow this promising segment of IT industry, create job opportunities and enhance ITeS exports from Pakistan, attracting foreign investment.

After the proposed change the additional machinery and equipment used by call centre/BPO industry would become totally exempt from sales tax and chargeable to reduced rate of 5 percent customs duty.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Rs 250bn likely in electricity and oil subsidies in 2008-09​*
** Rs 80bn-100bn subsidy for electricity consumers, Rs 150bn for oil sector
* DISCOs seeking 35 percent increase in power tariffs​*
ISLAMABAD: The government is likely to allocate around Rs 250 billion in subsidies to electricity and oil consumers in the upcoming 2008-09 budget, sources told Daily Times on Monday.

Sources in the Petroleum Ministry said that the government had decided on the subsidy after considering the available financial resources. However, they added that the government still owed billions of rupees to the power and oil sectors and as such it would be difficult for the government to arrange such a large sum.

Target: The government has targeted Rs 80 billion - Rs 100 billion subsidy for electricity consumers in the upcoming 2008-09 budget and a further Rs 150 billion for the oil sector to facilitate the consumers, they added.

The sources said that following the current hike in oil prices, the subsidy in the power sector would increase by Rs 130 - Rs 140 billion during the forthcoming fiscal year. 

Increase: They said that Power Distribution Companies (DISCOs) have filed a petition with the National Electric Power Regulatory Authority seeking an increase of 35 percent in the power tariff due to the hike in oil prices. The increase sought by the DISCOs would be implemented by July 1, 2008, they added.

In the 2007-08 budget, the government had notified a 10 percent increase in the power tariff. The government is expected to pass on a similar increase this year, while bearing the remaining amount in the form of subsidy. 

The Petroleum Ministry sources said that the government had paid Rs 150 billion price differential claims to Oil Marketing Companies (OMCs), adding that pending claims would likely increase to Rs 100 billion by June 15. They claimed that the government was attempting to reduce the margin of OMCs and general sales tax on petroleum products to stabilise oil prices.

The sources said that the government was also considering another option to reduce the burden of subsidy on the exchequer by abolishing the subsidy on diesel products by the end of 2008. They said that the government could also maintain a reasonable subsidy on petrol and diesel by reducing the subsidy on petrol and kerosene oil.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Saudi Arabia agrees to provide oil on soft terms ​* 
ISLAMABAD (June 11 2008): The Saudi government has finally agreed to provide Pakistan crude oil worth $4.82 billion on soft terms, it has been learnt. According to highly placed sources in the Ministry of Petroleum, PPP co-chairman Asif Ali Zardari, who is scheduled to return from Saudi Arabia on Wednesday morning, has successfully managed to obtain for the country a highly crucial Saudi oil facility of 110,000 barrels a day on two years credit.

"Mr Zardari has been able to restore special oil facility known as SOF that Pakistan had enjoyed from the days of last Nawaz Sharif-led government till the three first years of this decade," sources told Business Recorder, requesting anonymity.

Besides, various Saudi companies have agreed to invest billions of dollars in Pakistan's infrastructure provided the government effectively works towards restoring political stability and improving law and order.

Sources said that Saudi Arabia had been providing 80,000 barrels per day on deferred payment or special oil facility (SOF) soon after imposition of sanctions on the country following a nuclear test by Pakistan in 1998.

It was in 2003 that then prime minister Mir Zafarullah Jamali demanded of the Saudi government to either enhance existing oil facility or increase the number of Hajis from Pakistan by 50,000. Although, Saudi government allowed Pakistan an increase in the number of Hajis, it withdrew special oil facility (SOF) to Pakistan.

At present, the sources said, Saudi Arabia and UAE have been providing Pakistan crude oil on deferred payments for 30 days. According to experts, Pakistan has to import 82 percent of its yearly consumption. The country imports around 250,000 barrels per day from Saudi Arabia, 150,000 from Abu Dhabi, 18,000 from Qatar and 15,000 from Iran.

Experts told Business Recorder that the refining capacity of Pakistan is limited and the country has to import its requirements of diesel, kerosene and furnace oil from different sources in the Middle East. Sources said Mr Zardari, who has held talks with all top Saudi leaders, including King Abdullah and Prince Faisal, is expected to hold a press conference on Wednesday to give media details of his successful visit to Saudi Arabia.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Agriculture growth target missed by 69 percent ​* 
ISLAMABAD (June 11 2008): Agriculture sector that contributes 21 percent of GDP has failed to perform well in 2007-08 with a growth of 1.5 percent against the target of 4.8 percent which is 69 percent less than that of the set target and 59 percent less than the 3.7 percent growth achieved last year.

The Economic Survey 2007-08 revealed that the growth performance of agriculture over the last six years has been of a volatile nature, ranging from 1.5 percent to 6.5 percent. Agriculture performed poorly in 2007-08 growing at 1.5 percent against 4.8 percent targeted growth.

Major crops and forestry registered a negative growth of 3 percent and 8.5 percent respectively. Major crops, accounting for 34 percent of agriculture and 7.1 percent of GDP suffered on account of poor showing of wheat and cotton and less than satisfactory performance of rice.

The cotton crop suffered for a variety of reasons including heavy rainfall in May 2007 causing poor germination in Punjab, high temperature in August and September 2007. The crop was sown on the area of 3,054 thousand hectares, 0.6 percent less than the last year. Consequently the production declined to 11.7 million bales this year from 12.9 million bales last year indicating a negative growth of 9.3 percent.

The wheat crop was adversely affected by the shortage of irrigation water by 23.3 percent over normal supplies during Rabi and inordinate spike in prices of DAP fertiliser. Wheat was cultivated on an area of 8,414 thousand hectares showing 1.9 percent decrease over the last year's area of 8,578 thousand hectares. Accordingly, the production declined to 21.7 million tons from 23.3 million tons last year, thus indicating a downward trend of 6.6 percent.

During the last 12 years, per capita availability of wheat was less than 124 kg in eight years and only four years that it remained above the required level.

The two other major crops performed better with sugarcane recording highest ever production level of 63.9 million tons that is 16.8 percent higher than the last year while the production of rice witnessed a modest growth of 2.3 percent and stood at 5.6 million tons.

Minor crops accounting for 12 percent in agriculture value added posted a growth of 4.9 percent against the negative growth of 1.3 percent last year. The production of all the crops increased except potato, which declined by 3.8 percent. The production of all the pulses ie mung, masoor and mash increased by 28.4 percent, 13.8 percent and 8.8 percent respectively. The performance of livestock accounting for 52.2 percent of agricultural value added, was satisfactory at 3.8 percent.

The performance of fisheries has been impressive as it grew by 11 percent because inland fish catch has increased by 11.1 percent while the output of marine fishing grew by 11.5 percent. The total availability of edible oils in 2006-07 was 2,796 million tons. Local production stood at 0.857 million tons which accounts for 28 percent of total availability. The remaining 72 percent was made available through imports.

The government allocated Rs 200 billion for agriculture credit disbursements for 2007-08, which is 25 percent higher than the allocation of the preceding year ie Rs 160 billion.

Out of the total credit target of Rs 200 billion, Rs 96.5 billion were allocated to commercial banks, Rs 60 billion to ZTBL, Rs 8 billion to Punjab Provincial Cooperative Bank, and Rs 35.5 billion to domestic private commercial banks. Agriculture loans amounting to Rs 138.6 billion were disbursed during July-March 2007-08 as against Rs 111.2 billion during the corresponding period of the last year, thereby registering an increase of 24.6 percent.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*FDI falls by 32.2 percent during 10 months ​* 
ISLAMABAD (June 11 2008): Pakistan's foreign direct investment (FDI) has declined by 32.2 percent during the first 10 months of the current fiscal year over the corresponding of the last year. Total foreign private investment has been recorded at 3580.5 million dollar (FDI $3481.6 million and portfolio $98.9 million).

The major contribution to FDI was made by the USA, UK, UAE and Switzerland and Netherlands in financial, business, telecommunications, oil and gas, trade power, petroleum refining and construction sectors.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Large scale mergers, acquisitions witnessed ​* 
ISLAMABAD (June 11 2008): Economic Survey (2007-2008) revealed that outgoing fiscal has witnessed large-scale mergers, take-overs and acquisition activities among top companies in Pakistan. Several key take-overs have taken place in Pakistan's corporate sector.

It included acquisition of 30 percent stake in Warid Telecom by SingTel; acquisition of 65 percent strategic stake and management control in WorldCall Telecom by OmanTel; 18 percent strategic stake in Uch Power by Creative Energy Resources Corporation, a Saudi company; sell-off of 68 percent shares in Saudi-Pak Commercial Bank to an international consortium, consisting of Bank Muscat, IFC and Nomura European Investment Limited, for 163 million dollars; acquisition of 43 percent equity stake in Shakarganj Food Products Limited by KASB Capital Limited; acquisition of JS Finance Ltd & Sigma Leasing by BankIslami (BIPL); acquisition of an immediate 15 percent strategic stake in Muslim Commercial Bank (MCB) by Malaysia's largest financial institution, Maybank, with a right to increase its stake to 20 percent after one year; acquisition of 95 percent shares of ABN Amro Bank worldwide by the Royal Bank of Scotland (RBS).

Other activities included implementation agreement between Pakistan and Abu Dhabi's International Petroleum Investment Company for setting up a five billion dollars Khalifa Coastal Refinery at Gwadar which would double the refining capacity of the country.

The Bank of Punjab (BoP) is currently in a process of doing due diligence of Punjab Provincial Cooperative Bank (PPCB) and expects to complete the process by June 2008. This acquisition will add 159 branches to the existing network of 271 branches. This merging and acquisition (M&A) activity, which has taken place at very attractive valuations has provided support to valuation in the stock market.

Peer group companies' stock prices have also reacted as a result of these acquisitions. The Initial Public Offerings (IPO's) of Habib Bank Limited (HBL) and Arif Habib Bank Limited both came in 1.5x and 5.8x oversubscribed, which is an encouraging development.

Although no large privatisation has taken place in the fiscal year 2007-08, a privately held cement company, Lucky Cement, has raised 109.3 million dollars through selling its 15 million GDR to finance its expansion of 2.5 million tons per annum in the company's southern plant, the survey added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Saudi government likely to set up DAP plant in Pakistan ​* 
ISLAMABAD (June 11 2008): The Saudi government is likely to set up DAP manufacturing plant in Pakistan as the imported fertiliser is too costly and beyond the purchasing power of small growers. This was announced by Federal Minister for Food, Agriculture and Livestock (Minfal) Nazar Mohammad Gondal on Tuesday.

Talking to media, Gondal revealed that during his visit to Saudi Arabia, the Saudi government promised to purchase about one million tons Basmati rice from Pakistan. The Saudi government would provide better price of the commodity.

The minister emphasised that the government of Pakistan is interested in exporting token rice to Saudi government and would supply rest of the quantity when the new rice crops would arrive in the market after 90 days.

"The Saudi government has expressed willingness to make investment to boost Pakistan's agriculture. They would help Pakistan in enhancing agriculture productivity and also promised to consider the establishment of the DAP plant. It would greatly help Pakistan to produce DAP locally, which would be provided to growers at reduced prices," the minister stated.

The Saudi government is interested in investing in the development of dairy products, olive oil production and fisheries. All these agreements would be signed on the basis of joint ventures. "Pakistan has not agreed to the Saudi demand for purchasing land for enhancing production of different agriculture related products," Gondal told the media.

The government has directed sugar mills to make payments to cane growers till June 30th, otherwise, a strict legal action will be taken against those mills that are defaulter of Rs 4 billion.

The minister said that the government is ready to take strict action against the defaulter sugar mills across the country. He said that through the government intervention, Rs 44.6 billion had been provided to cane growers from millers. However, there were some millers who still have to pay an amount of Rs 4 billion to growers.

The minister said that there were 19 defaulter sugar mills in three provinces, namely Sindh 7, Punjab 9 and NWFP 3. "If they failed to clear growers dues till end of this month, names of these defaulter sugar mills would be made public," he warned. About new proposal for the upcoming budget 2008-09, Gondal said the food ministry should formulate a comprehensive policy so as to ensure fair prices for growers.

"We have asked the finance ministry to arrange import of different agriculture related machinery at zero duty." The ministry also forwarded the proposal of reduction in interest rate that was currently 9 percent on agriculture loan. "We also plan to expand the project namely 'crops maximisation project' to 5000 villages, which is currently covering only 1200 villages." The Minfal also wanted to initiate insurance scheme for farmers in the new budget.

Under a new initiative, the minister said the government planned to introduce 'Benazir Cards' or 'Aurat Bachat Cards' scheme for poor people in the new budget. Under this scheme, he said, a person would be provided Rs 1000 to Rs 1500 per month for purchase of only food items at subsidised rates.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Highest in a decade 2007-08 external debts grew by 13.3 percent ​* 
KARACHI (June 11 2008): Pakistan's external debt and foreign exchange liabilities (EDL) in the nine months (July-March) of current fiscal year grew by 13.3 percent, which was highest in the past almost one decade. As percentage of GDP, it is likely to rise further by end-June 2008 and reach last year's level of 28 percent.

According to 'Economic Survey 2007-08', total stock of external debt and foreign exchange liabilities (EDL) declined from 51.7 percent of GDP at end-June 2000 to 28.1 percent by end-June 2007, and had further declined to 26.9 percent of GDP by end-March 2008.

However, the EDL growth during the current fiscal year has been the highest in almost one decade to new peak level of $45.9 billion by the end of March, 2008. This represents an increase of $5.4 billion in fiscal year 2008, which earlier stood at $40.5 billion on June 30, 2007.

Borrowing from multilateral and bilateral lenders accounted for 80 percent of outstanding debt, and were mostly in the form of medium and long-term debts. The share of short-term debt was extremely low, at 1.3 percent. Pakistan took advantage of an earlier Paris Club rescheduling to re-profile its debt at a more favourable term.

"It is important to note that from policy perspective, a critical appraisal of the external debt and liabilities should not be entirely focused on the variation in the absolute stock but, instead, it should focus on the incidence of the debt burden", Economic Survey said.

The debt management efforts during 2001-07 were supported by a rise in foreign exchange earnings. Similarly, the EDL were 297.2 percent of foreign exchange earnings but declined to 127.1 percent during the same period.

The EDL were 19.3 times of foreign exchange reserves at the end of FY2000 but declined to 3.4 times by end March 2008. Interest payments on external debt were 11.9 percent of current account receipts but declined to 2.5 percent during the same period.

The maturity profile also showed an improvement over past eight years as short-term debt was 3.2 percent of EDL but declined to 1.3 percent during the period under review.

Notwithstanding this improvement, the current fiscal year remained the most difficult year for external debt management. This year witnessed a sharp deceleration in non-debt creating inflows to finance the highest ever current account deficit in recent economic history.

Therefore, the recourse to debt creating inflows, or drawdown, on foreign exchange reserves were the only viable options. This rise in the external debt burden reinforced the need for prudent debt management.

Following a credible strategy of debt reduction based upon principle of sound debt management over the last several years, Pakistan succeeded in reducing the country's debt burden by ensuring that the growth in EDL should remain far less than the nominal GDP growth.

Pakistan's external debt and liabilities (EDL) comprise all Government debt denominated in foreign currency, loans contracted by enterprises with Government ownership of more than 50 percent, as well as the external debt of the private sector, which is registered with the State Bank of Pakistan (SBP) and finally benefits from a foreign exchange convertibility guarantee from the SBP.

Pakistan's total stock of external debt and foreign exchange liabilities grew at a compound average rate of just 1.2 percent per annum during 2001-07--rising from $37.2 billion in 2001 to $40.5 billion by end June 2007.

The EDL grew by 5.0 percent in 2005-06, 7.7 percent in 2006-07 and 13.3 percent during July-March FY08. Since end-June 1999, the EDL stood at $38.9 billion, but the stock in absolute terms started declining until 2003-04. EDL as percentage of GDP declined from 51.7 percent in FY00 to 28.1 percent in FY07 and further to 26.9 percent of the GDP by end-March 2008.

However, EDL as percentage of GDP is likely to rise further by end-June 2008 and expected to be at last year's level. The single largest increase in the stock of debt was seen from multilateral donors with a change in stock of 4.8 billion dollars, or 13.1 percent.

While the foreign exchange liabilities showed a decline of 200 million dollars, this was more than compensated by fresh borrowing from the multilateral lenders as well as on account of the valuation effect at the back of a depreciating dollar vis-à-vis major currencies. Interest payments on EDLs were 1.6 billion dollars and the amortisation payments stood at 946 million dollars.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Economy grew at 5.8 percent in 2007-08 ​* 
ISLAMABAD (June 11 2008): Pakistan's economy has absorbed internal and external shocks and grew at 5.8 percent in 2007-08, as against 6.8 percent last year and this year's target of 7.2 percent. According to economic survey, the Commodity Producing Sector (CPS) registered a growth of 3.2 percent in 2007-08 as against 6.0 percent last year owing mainly to below the mark performance of agriculture and manufacturing sector.

Agriculture grew by 1.5 percent, manufacturing sector posted a modest growth of 5.4 percent in 2007-08. The large scale manufacturing (LSM) sector grew at 4.8 percent, down from 8.6 percent last year.

The manufacturing sector has been hard hit by political instability, frequent eruptions of incidents detrimental to law and order situation and the acute energy shortages. In unison with increasing prices for fuel and energy, all these factors have caused slower growth in LSM.

The growth in the small scale manufacturing sub-sector slowed to 7.5 percent in 2007-08 from 8.1 percent during 2006-07. The services sector has surpassed the growth target of 7.1 percent and grew by 8.2 percent in 2007-08 as against the actual achievement of 7.6 percent last year. The finance and insurance sector displayed a stellar growth performance of 17.0 percent during 2007-08 as against 15 percent last year.

Value added in the wholesale and retail trade sector grew at 6.4 percent as compared to 5.4 percent last year and the target of 7.8 percent this year. The Transport, Storage and Communication sub-sector saw a deceleration in growth to 4.4 percent in 2007-08 as compared to 6.5 percent of the last year.

The contribution of CPS to GDP growth has declined to 26.6 percent from 42.4 percent last year. Agriculture sector contributed only 0.3 percentage points or 5.6 percent to GDP growth in 2007-08 as against 0.8 percentage points or 12 percent contribution last year. The manufacturing sector contributed 1.0 percentage point or 17.7 percent to GDP growth as against 1.5 percentage points or 22.2 percent last year. Industry contributed 1.2 percentage points or 20.9 percent to this year's real GDP growth.

The Services sector contributed 4.2 percentage points or 73.4 percent to overall growth this year. The contribution made by wholesale and retail trade has been 18.7 percent or 1.1 percentage points to GDP growth in 2007-08. Finance and insurance has also contributed 18.7 percent or 1.0 percentage point to this year's growth.

Per capita income has grown at an average rate of above 13.0 percent per annum during the last five years, rising from $586 in 2002-03 to $925 in 2006-07 and further to $1085 in 2007-08, depicting an increase of 18.4 percent, over last year.

INVESTMENT: Total investment has increased from 16.9 percent of GDP in 2002-03 to 21.6 percent of GDP in 2007-08 showing an increase of 5.7 percent of GDP in five years. Fixed investment grew by 3.4 percent in real terms and 12.5 percent in nominal terms. Private investment grew by 16.3 percent per annum in real terms and 30.7 percent per annum in nominal terms during the period (2004-07).

However, its growth declined substantially to 0.9 percent in real terms and 9.7 percent in nominal terms. Major nominal growth in private sector investment was witnessed in mining & quarrying (15.3 percent), electricity & gas (11.0 percent), financial business (11.4 percent) and wholesale and retail trade (18.4 percent).

National Savings stood at 13.9 percent of GDP in 2007-08 down from last year's level of 17.8 percent. Domestic savings has declined to 11.7 percent of GDP from 16.0 percent of GDP in 2006- 07.

Public sector investment has also increased by 30.0 percent per annum during the last three years and 20.2 percent during the current fiscal year in nominal terms. Overall foreign investment during the first ten months (July-April) of the current fiscal year has declined by 32.2 percent and stood at $3.6 billion as against $5.3 billion in the comparable period of last year, mainly because of the fact that the political economy encountered many headwinds at continuous intervals.

Foreign direct investment (private) has shown more resilience and stood at $3481.6 million during the first ten months (July-April) of the current fiscal year as against $4180.8 million in the same period last year thereby showing a decline of 16.7 percent. Private portfolio investment on the other hand witnessed a massive decline of 91 percent by recording an inflow of $98.9 million as against $1097.3 million in the comparable period of last year.

Public foreign investment depicted a modest inflow of only $20.5 million as against an outflow of $66.6 million in the comparable period of last year. Almost 57 percent of FDI has come from three countries, namely, the UAE, US, and UK. US investors, with 33.4 percent investment, contributed the most during the first ten months (July-April) of 2007-08.

Norway (4.4 percent or $154.8 million), Switzerland (4.1 percent or $141.3 million), Hong Kong (3.5% percent or $121.3 million), Netherlands (2.9 percent or $101.0 million) and Japan (2.9 percent or $100.3 million) were the other contributors to FDI inflows. Three groups, namely; communication, financial business and oil & gas exploration, accounted for almost 67 percent of FDI inflows in the country.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*700 megawatts power projects under implementation in NWFP ​*
PESHAWAR (June 11 2008): Hydel power projects with the capacity of generating about 700 megawatts electricity are under implementation in the North-West Frontier Province (NWFP), while more sites, having the potential of 6000 mw power, have also been identified by Sarhad Hydel Development Organisation (Shydo).

This was stated in a presentation given to NWFP Minister Rahimdad Khan by officials of the Shydo here on Tuesday. The minister for power said that Allah Almighty has bestowed the province with great hydel potential, which would be utilised fully to generate income for the province and to overcome the energy crisis.

He said that the country was blessed with the hydel potential of approximately 40,000 mw, out of which 70 percent is located in NWFP, and the government was trying to set up mega hydro power projects to meet the energy requirements of the country.

The minister highly eulogised the good performance of Shydo for completing the Malakand-III hydro power project in the shortest possible time and connecting it to the national grid that would generate 81 mw electricity and a revenue of Rs 1.6 billion annually for the province as well. Earlier, Shydo MD Ishtiaq Hussein Shah and Irrigation and Power Secretary Khalid Hussein Gillani, giving presentation, informed the minister that the total installed capacity of hydropower stations in the country was about 6595 mw, out of which 3767 mw was in NWFP.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Inflation will determine growth: the lesson for Zardari ​*
According to a Business Recorder report, the Planning Commission has projected growth at 6.5 percent for the next year, while the two multilateral agencies, ie, International Monetary Fund and the World Bank have assessed it at around 3.5 percent.

The National Economic Council chaired by the Prime Minister, on the other hand, has estimated 5.8 percent GDP growth for financial year 2008-09. According to an earlier report in this newspaper, the Planning Commission projection at the NEC, was slashed due to the intervention by the State Bank Governor, Dr Shamshad Akhtar, on the ground that the Planning Commission assessment was unrealistic as it did not take into account the prevailing macroeconomic conditions.

Why are the assessments from three different sources at such a variance? The Planning Commission's optimistic assessment is based on traditional cum historical methodology. In the recent past, the base of the national income accounts was changed by the Federal Bureau of Statistics, from 1980-81 to 1999-2000 resulting in the nominal GDP increasing significantly from the year 1999-2000 onwards.

As a result, all the variables (tax to GDP, non-tax to GDP, social sector spending, developing expenditure etc) post 1999-2000 show substantive reduction. On the other hand, the revised basing provided fiscal space to the government to borrow from within and outside, in absolute terms and also show a reduction as of fiscal and current account deficits as a percentage of GDP.

Without disputing the statistics of FBS (for the real sector) the SBP's assessment appears to be based on the constraints emerging from falling reserves due to the continuous rise in trade deficit. Import bill increased 30 percent in FY08 over FY07. In this period, POL imports have gone up by 33 percent and non-oil imports are also up by 28.6 percent over and above the FY07 level.

Assuming zero growth and no change in POL imports, and incorporating crude oil at $150 per barrel, as proposed by the Economic Advisory Council to the budget makers, oil imports in FY09 would be nearly $20 billion. With exports projected at $25/26 billion for next year, policy makers would have to pursue sharper import compression. Therefore, Planning Commission's estimate of import growth has to be slashed drastically by more than half to 6.5 percent. Compression in imports is possible by raising tariff walls, as well as maintaining the 35 percent margin on import letters of credit for non-essential goods to conserve foreign exchange.

Higher cost of raw material along with electricity shortages taking a toll on manufacturing output and higher cost of inputs in agriculture such as DAP and diesel would reduce the overall growth closer to 5 percent of GDP instead of the projected 5.8 percent. Even a 5 percent level of growth would be acceptable. However, SBP would need to be given a free hand in maintaining its tight monetary stance. Islamabad, on the other hand, needs to cut back on non-productive expenditure and take effective administrative steps for tackling distribution and supply side obstacles in the food supply chain.

Planning Commission's projection of 11 percent inflation in FY09 also appears to be unrealistic. It would be closer to 14/15 percent, as estimated by SBP, due to higher cost of imported raw material and taking into account the impact of tariff rise on energy inputs, in both industrial and agriculture sectors. Further, the expected announcement of a hike in wages all around as well and a number of other populist measures expected in the budget, coupled with subsidies for wheat, fertiliser and funding of loss making PSEs such as; PIA, Railways, Wapda, KESC, etc, are the danger points which may force higher governmental borrowing.

If GDP growth is at 5 percent and inflation is at 15 percent, then SBP's traditional formula for broad money supply will be 20 percent. The increase in money supply by 20 percent will further compound inflationary pressures in the economy.

In FY08, the initial shock of food prices may have come from supply side, but excessive government borrowing from SBP definitely diminished the impact of SBP's monetary tightening. Those advocating slashing of interest rates and pumping up liquidity have conveniently forgotten that the present economic mess is primarily the result of inaction by fiscal managers. Even the monetary tightening impact got diluted due to excessive government borrowing.

Last month, the Fund and the World Bank conducted interaction with the present political set-up. Their prescription is for further monetary tightening and fast track adjustments in POL prices as well as power and gas tariffs. There is a price to pay for this prescription.

Political and social cost of overnight adjustments of POL prices, rise in power tariff coupled with slashing of subsidies are major challenges facing the government. Fund/Bank's tight demand management prescription will reduce the growth to 3.5 percent of GDP for FY09. It is therefore critical for policy makers to make the right choices in order to reduce the present exceptional rise in inflation.

The key to stop the haemorrhage in the economy is put a tightly shut lid on government borrowing from SBP in Budget FY09. This requires a cut in the non-development expenditure by at least Rs 100 billion, keeping the PSDP close to Rs 450 billion and raising resources to keep the fiscal deficit below 4.0 percent. Furthermore, we need to stimulate the textile sector to achieve scale and cost efficiency and obtain export diversification. And, above all it must reduce the imbalances to reverse the outflow of foreign exchange.

This newspaper understands the political fallout from persevering the tight demand agenda. PPP Co-Chairman Asif Ali Zardari needs to provide the political strength to the government and the central bank to cut down inflation. The longer inflation is allowed to climb, the greater will be the danger to future economic growth.

This nation between 1999 and 2002 was made to 'bite the bullet' and underwent pain to achieve macroeconomic stability. Unfortunately, the then prime minister Shaukat Aziz placed the economic reform process on the back burner after June 2006 to help elect President Musharraf and PML (Q) in the forthcoming elections.

Failure to curtail the aggregate demand resulted in power blackouts and wheat flour shortages and routed his party in the elections. There is a lesson for Zardari and the PPP to learn from this. One year of economic indiscipline washed away years of macroeconomic stability. FDI shooting up from one to eight billion dollars a year was not because of the 'shinning' stock market. It was due to macroeconomic stability and keeping the fiscal deficit on a downward path.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Economic Survey 2007-08: A spoiled broth ​*
EDITORIAL (June 11 2008): The Economic Survey for the year 2007-08 has been released, a requirement prior to the announcement of the budget for the forthcoming fiscal year. It is an assessment of the economy by the Economic Advisor's Wing, Finance Division, and, because of its authorship is considered to have an inbuilt bias in favour of the economic performance of a sitting government.

The ability to present a bias in a plausible manner is limited this year as finance ministry has been run by four ministers Shaukat Aziz, Salman Shah, Ishaq Dar and now Naveed Qamar.

However, in the Survey for 2007-08 the Economic Advisor's Wing has added a new category and euphemistically called it 'Quick Estimates' for the ongoing year, as the estimates have changed from minister to minister, each making adding his own input in the broth. The newly elected government cannot conceivably be held responsible for the economic performance of the current fiscal year.

Within this context it is in the interest of the government to present as accurate a picture as possible about the poor performance of the economy in 2007-08. It is little wonder that the statistics contained in the Economic Survey reflect a rather abysmal picture of the economy:

Overall fiscal deficit is likely to be 6.5 percent of GDP against the target of 4 percent, government borrowing from the State Bank reached an unprecedented level of Rs 544 billion until May 2008 with stocks of borrowing reaching Rs 946 billion or 9 percent of GDP - double that of 2006-07, national savings declined to 13.9 percent against a target of 18.3 percent, and investment declined to 21.6 percent from 22.9 percent in the preceding year which, in turn, would have a multiplier effect on GDP growth, further dampening it.

In addition, the revenue deficit is forecast at 2.7 percent of GDP, a violation of the Fiscal Responsibility and Debt Limitation Act that was passed by the Musharraf government, and the exchange rate has come under severe pressure resulting in a significant depletion of foreign exchange reserves.

The current account deficit rose by 75 percent during the first ten months of the current year and the trade deficit rose sharply to $17 billion compared to $11 billion in the preceding year. And Pakistan's tax to GDP ratio continued to perform poorly at 9.5 percent 'as compared to an average of 18 percent for other developing countries,' as per the Survey.

The factors responsible for this dismal performance can be attributed to an amalgam of external factors - unprecedented international oil price rise and the subprime mortgage crisis that manifested itself through liquidity issues in the global banking system owing to foreclosures which started in the US in 2006 and triggered a global financial crisis during 2007 and 2008.

Major banks' and other financial institutions around the world have reported losses of approximately US $379 billion as of May 21, 2008; and internal factors that include support for 'election year economics' marked by increasing subsidies as well as flawed policies particularly related to the energy sector and farm support prices.

The Economic Survey gives a provisional budget deficit of 6.5 percent of GDP till May 23, 2008. On 6 June 2008, the deficit had risen to 7 percent, and is likely to rise further till the end of the current fiscal year with 20 odd days remaining for the end of the current fiscal year. It maybe recalled that the former Federal Finance Minister, Ishaq Dar, had provided a figure of 9.5 percent which he expected to pare off to 7.5 percent through a drastic reduction in the Public Sector Development Programme by the end of June 2008.

While analysts had criticised Dar for what was termed as indulging in a 'blame game' that was eroding the confidence of the public at a fast clip, yet this figure was, by and large, considered to be off at the most by plus/minus one percentage point. The Economic Survey has trimmed the deficit figure by only 0.5 percentage points.

The general public, however, is focused on two major indicators: inflation and unemployment. Inflation is projected to rise by 10.5 percent. Can this be the rate given the reliance expected on deficit financing for the forthcoming fiscal year in case other external sources of financing dry up as they are expected to?

Highly unlikely! And would this rate be achievable given that the government is intending to raise salaries significantly as well as introduce Benazir Cards for those below the poverty line, estimated at over 5.5 million people?

Doubtful, as wage push inflation will negate all efforts in terms of tightening monetary policy that the State Bank may have been considering to combat inflation. The fact that the Prime Minister's whirlwind tour of Saudi Arabia a few days prior to the budget announcement failed to secure as much assistance as was sought, goes to show that the revenue targets are far from being met. In this eventuality the deficit would remain a serious issue that would flame inflationary pressures in the country for the year to come.

The Survey has traditionally been unable to assess some economic indicators notable amongst which is unemployment levels in the country. Thus between 2001-02 and 2003-04 unemployment rose from 3.46 percent to 3.5 percent while it declined to 3.1 percent in 2005-06 as indicated in the Economic Survey for fiscal year 2006-07. Few believe that this statistic is realistic. And fewer still would believe that unemployment fell to 2.68 percent in 2006-07.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Survey highlights flaws in agriculture system ​* 
Wednesday, June 11, 2008

LAHORE: The Economic Survey 2007-08, released on Tuesday, highlighted flaws in the agriculture distribution system as except for wheat, the production of all food crops increased while masses faced shortages and high prices.

The survey rightly pointed out that overall increase in agricultural production in the country was pathetically low at 1.5 per cent. The big decline in production among major crops was in cotton where output fell by 9.3 per cent. Wheat was the only major food crop that recorded a decline of 6.6 per cent. In 2006-07, the crop recorded a 9.5 per cent increase which was consumed in 2007-08.

The production of other edible agricultural items that increased in 2007-08 include meat that rose by 4.1 per cent, milk 3 per cent, rice 2.3 per cent, sugarcane 16.8 per cent and maize 7.3 per cent and minor crops all consumed as food recorded an increase of 4.8 per cent.

These statistics at least belie normal perception that the shortfall in production caused the food price hike. Progressive farmer Hamid Malhi said that the performance of agriculture was not good last year from the farmers point of view, but as far as consumers are concerned, the farmers produced enough to provide food security to the country.

He said farmers suffered because of bad cotton crop, exploitation by sugar mills on payments for sugarcane and low wheat support price fixed by the government this year. As far as distribution of food crops is concerned, he said, the farmers have no control over it.

Another agriculturist and leader of Punjab Water Council Farooq Bajwa said that the farmers in fact are facing double exploitation that has reduced their capabilities to increase production. He said according to the Economic Survey 2007-08 15 per cent of the milk produced in the country is wasted during transportation.

He said the government has failed to upgrade farm-to-road network and establish cool chains that could save billions of rupees lost due to these drawbacks. He said Pakistan produces 4.2 billion litres of milk per year, out of which 600 million litres worth over Rs12 billion is destroyed (at a low rate of Rs20 per litre that most farmers get). Similarly, he said, the loss of 15-20 per cent fruits that rot due to inadequate facilities, is also borne by the farmers.

A farmer from wheat-rich Okara region, Mian Obaidullah, said the government this year could not procure even 5 million tonnes of wheat due to low support price. He said the government would spend more on the import of 2.5 million tonnes than the price of 5 million tonnes of domestic wheat at government support price.

He said another addition of Rs100 to the support price would have provided the government an additional 2.5 million tonnes of wheat and there would have been no need for imports as the country has produced enough food to last the whole year. He said the losses of the government would have been less had wheat for food security been arranged from domestic stocks.

Survey highlights flaws in agriculture system


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## Neo

*Economic Survey projects $20.5bn trade deficit ​* 
Wednesday, June 11, 2008

ISLAMABAD: The economic survey on Tuesday projects a trade deficit of $20.5 billion for the whole year keeping the existing trend of both exports and imports and it would be 12.3 per cent of the GDP.

During the first ten months of the fiscal year 2007-08, the trade deficit touched a record level of $17 billion as compared to $11 billion in the same period of the last year, the survey added.

The survey highlighted that the reasons for the decline in exports are purely serious structural issues, which need to be addressed primarily by the industry itself, with the government playing the role of a facilitator.

The exports recorded a growth of 10.2 per cent during July-April of the current fiscal year against a growth of 3.6 per cent in the same period of last year. Broad categories of exports suggest that with the exception of textile manufactures, all other categories of exports registered stellar growth, said the survey. Pakistan exports lack the exports of high technological products and software and also do not rely heavily on primary commodities for foreign exchange earnings and exports are also highly concentrated in a few items and few countries, the survey suggests more diversification for enhancing the exports.

The survey also highlighted that the bottlenecks in dwindling exports are low value addition and poor quality, obsolete use of machinery and technology, higher wastage of inputs adding to the cost of production, low labour productivity, little spending on research and development, export houses lacking capacity to meet bulk orders, inability to meet the requirement of consumers, non-adherence to contracted quality and delivery schedule and lack of marketing techniques.

About the surge of nearly 28.3 per cent in imports, the survey would touch $32.06 billion, mainly an increase in petroleum, food groups and raw materials, it said.

Deterioration in the trade balance seems to be worsening the current account deficit and it would be $11.6 billion during the fist ten months of the fiscal year, showing an increase of 75.6 per cent.

Economic Survey projects $20.5bn trade deficit


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## Neo

*Manufacturing posts growth of 5.4pc ​* 
Wednesday, June 11, 2008

ISLAMABAD: Heightened political tension, deteriorating law and order situation, growing power shortages, the cumulative impact of momentary tightening and rising cost of doing business are the reasons responsible for the poor showing of manufacturing in the first nine months of 2007-08, says an economic survey released on Tuesday.

Overall manufacturing posted a growth of 5.4 per cent during the period under review against the target of 10.9 per cent and 8.1 per cent of last year whereas, large scale manufacturing accounting for 70 per cent of overall manufacturing, registered a growth of 4.8 per cent against the target of 12.5 per cent and last years achievement of 8.6 per cent, it added.

The main contributors to this growth of 4.8 per cent are pharmaceutical 30.7 per cent, wood products 21.9 per cent, engineering products 19.5 per cent, food & beverages 11.1 per cent, petroleum products 6 per cent and chemical 3.1 per cent, it said.

The individual items that displayed a positive growth include cotton cloth 4.8 per cent and cotton yarn 3.3 per cent in textile sectors, cooking oil 1.1 per cent, sugar 33.9 per cent and cigarettes 5.1 per cent in food, beverages and tobacco groups, cement 17.9 per cent in the non-metallic minerals products group and buses 32 per cent, LCVs 16.4 per cent and motorcycles 28.1 per cent in the automobile group, the survey said.

A few items that showed a decline in production include fertilisers 16.9 per cent, electronic 4.6 per cent, paper & paper board 5.5 per cent and iron & steel products 7.6 per cent. The individual items that exhibited negative growth include cars & jeeps 3.9 per cent, phosphatic fertiliser 24 per cent and billets 20.6 per cent, it added.

About Pakistan Steel Mills, the survey said that it registered a growth both in production value and net sales but its pre-tax profit showed a decline of nearly 35 per cent.

The government through its privatisation program earned Rs27 billion by the privation of assets like 3.2 per cent GDR of UBL, 7.5 per cent IPO of HBL, PTCLs third installment and other proceeds, it said.

Manufacturing posts growth of 5.4pc


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## Neo

*National grid has 1,500MW additional power, says Ashraf​*
** Minister says 400MW being saved through conservation programmes​*
ISLAMABAD: The government has added 1,500 megawatts (MW) of additional power to the national grid and there will be no load shedding for the major industrial and agricultural sectors, Federal Water and Power Minister Raja Pervez Ashraf said on Tuesday.

He told reporters after the inaugural session of the 2nd Japan-SAARC Symposium Energy and Connectivity that load shedding for domestic consumers would also be reduced due to improvements in hydroelectric power generation and would be completely eliminated from next year.

Ashraf said 1,500MW had been added to the system by upgrading and enhancing the existing generation capacity of independent power producers and generation companies. He said the government was fully committed to eliminating the menace of load shedding by adopting a rational policy and setting up new power plants on a fast track basis to minimise miseries faced by the population.

Conservation: He said infrastructure was being developed to import 1,000MW from Iran. To questioning, he said that 400MW was being received through conservation. He also urged traders to implement the conservation plan approved by the government as a national service. Earlier, the minister informed the participants of the symposium that the governments strategy for the power sector depended on the implementation of its action plan, which included harnessing indigenous hydroelectric and coal resources and implementing wide-ranging power sector reforms.

Ashraf said short-term measures (from 2008-2011) should add generation capacity of 7,067MW. The medium term plan (2011-2020) focuses on maximising coal-based and mega-hydroelectric (15,000MW) power generation projects. He said the government was moving ahead with power import projects of around 1,000MW each from Iran and Tajikistan for long-term projects. The government is also planning to provide resources for producing more nuclear power generation in co-operation with China to achieve a medium-term target of 3,000MW, he added.

The minister said that being a member of the South Asian Association for Regional Co-operation, Economic Co-operation Organisation and the Shanghai Co-operation Organisation, Pakistan was fully committed to cross-border energy co-operation. The country would take immediate strategic measures to enhance energy security in the region, he added. 

Also present at the symposium, former Petroleum minister Usman Aminuddin said that the Iran-Pakistan-India (IPI) gas pipeline project could not become a reality without building trust between India and Pakistan. He said India could benefit with $60 billion from the IPI gas pipeline project. 

However, he added, the project was being delayed due to American pressure on India. He also hinted that the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline deal could not be completed until Turkmenistan presented an evaluation report about its gas reserves.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Per capita income tops US$1,000 for first time ​*
** Govt releases Economic Survey 2007-08 
* Growth down to 5.8pc 
* Agriculture output grows 1.5pc, manufacturing 5.4pc 
* Inflation in 10 months stood at 10.3pc​*
ISLAMABAD: Strong growth in service industries and consumer spending increased Pakistans per capita income to more than $1,000 for the first time, and prevented a sharper slowdown in the 2007-08 fiscal year, according to the Pakistan Economic Survey released on Tuesday.

But an un-sustained growth pattern was not able to save the economy from political and economic shocks, and Pakistans economy missed the 7.2 percent growth target fixed for fiscal year 2007-08. Rescued by the services sector, the Gross Domestic Product (GDP) growth stood at 5.8 percent  even lower than the revised downwards target of 6.8 percent because of the rising oil and food prices, continued political uncertainty and law and order problems.

Agriculture output: Giving details on the economy, Finance Minister Syed Naveed Qamar said agriculture output grew only 1.5 percent in the current fiscal year because of poor results from Pakistans main wheat and cotton crops.

Manufacturing: Manufacturing grew by 5.4 percent, hampered by capacity problems, power shortages and law and order disturbances. The services sector grew by a higher-than-expected 8.2 percent against the target 7.1 percent, being the main driver of GDP growth, the survey said. 

Inflation: Inflation in the first ten months of the fiscal year was 10.3 percent, driven by rising oil and food prices but also by a sharp increase in government borrowing from the central bank. 

Qamar said public debt was 53.5 percent of the GDP at the end of this fiscal year, compared with 55.2 percent in June 2007. 

External debt liabilities rose from $40.5 billion to $45.9 billion due to a rise in the oil prices and higher prices and increased import of food. Tax collection by the end of June is likely to be at Rs 1 trillion, missing the target of Rs 1.025 trillion. Exports grew by 10.2 percent between July 2007 and April 2008 but the overall export target is likely to be missed. Imports increased by 28.3 percent between July and April. sajid chaudhry/agencies

Daily Times - Leading News Resource of Pakistan


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## Neo

*Budget for 2008-09 Fiscal Year to be presented today: Salaries, pensions likely to be increased​*
** Outlay likely to be around Rs 2.8 trillion 
* Revenue target estimated to be around Rs 1.2 trillion 
* Debate on budget to continue from June 14-30​*
ISLAMABAD: Salaries and pensions are likely to increase in the Rs 2.8 trillion federal budget for the 2008-09 fiscal year the Pakistan Peoples Party (PPP) led coalition government will table in the National Assembly today (Wednesday). 

Salaries of government employees belonging to grades 1 through 16 are likely to increase by 20 percent, and of those belonging to grade 17 through 22 by 15 percent through a dearness allowance, official sources told Daily Times. The Online news agency said a 10 percent increment was also likely in pension of retired government officials. 

Finance Minister Syed Naveed Qamar will present the budget in the Lower House at about 6:30pm and his speech will be aired live on television and radio. 

The government aims at lowering the budget deficit to around Rs 560 billion or 4.6 percent of the Gross Domestic Product (GDP) in 2008-09, after the highest-ever Rs 737.8 billion deficit this fiscal year (2007-08). 

The sources said the new government had decided to increase the defence budget by 7.2 percent to Rs 295.5 billion against the Defence Ministrys Rs 330 billion demand. Considering 10 percent inflation and the rising prices of oil, which accounts for major part of the defence spending, the increase is negligible, they added.

Following protest by the provinces, the government has decided to increase the allocation to the Public Sector Development Programme (PSDP) for 2008-09 to Rs 541 billion  4.4 percent of the GDP  compared with Rs 523 billion last year. It will finance the PSDP with foreign loans worth Rs 67 billion. 

Revenue target: The tax collection target is likely to be fixed at around Rs 1.2 trillion with an emphasis on increasing taxes and duties on luxury goods and including several un-taxed sectors in the tax net, with a possible amnesty for legalising undisclosed assets by paying taxes ranging from 2 percent to 10 percent.

The coming fiscal year has been termed the year of fiscal consolidation, and the government has set an economic growth target of 5.5 percent of the GDP. Economic growth remained 5.8 percent this fiscal year. 

Citing official sources, Online said Rs 523 billion would be allocated to the Annual Development Programme in the budget  Rs 373 billion for the federation and Rs 150 billion for the provinces. 

It said the government would allocate Rs 34 billion to subsidise essentials for the poor under a Benazir Card scheme. The current account deficit target is likely to be set at 5 percent, it added. 

Official sources also told Daily Times the government will set up a Rs 50 billion pro-poor fund to provide cash grants to the poor to meet inflationary pressures and challenges. 

Debate: Debate on the budget will begin on June 14 and the session will continue until June 30. The National Assembly proceedings will begin at 10am and end at 8:30pm every day during the budget session. 

According to the state-run APP news agency, The budget will focus on infrastructure, human capital and social sector development, poverty reduction, promotion of investments and exports, agriculture sector development and provision of relief to the common man.

The government is keen to provide relief to the people in the next budget for which concrete measures are being considered.

main points

* Benazir Card scheme to provide Rs 34 billion subsidy on essentials 

* Defence budget to increase by 7.2 percent to Rs 295.5 billion, against a Rs 330 billion demand

* Salaries of government employees belonging to grades 1 through 16 likely to increase by 20 percent, and grades 17 through 22 by 15 percent

* Pensions to increase by 10 percent

* Emphasis on increasing taxes and duties on luxury goods

* Amnesty for legalising undisclosed assets by paying taxes ranging from 2 percent to 10 percent

* Budget deficit likely to be Rs 560 billion or 4.6 percent of GDP

* Rs 541 billion to be allocated to the Public Sector Development Programme (PSDP)

* Rs 523 billion to be allocated to the Annual Development Programme 

* Economic growth target set at 5.5 percent of GDP

Daily Times - Leading News Resource of Pakistan


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## Neo

*Telecom sector generates Rs100bn​*
ISLAMABAD, June 10: Telecom sector remains a major source of revenue generation for the government as Rs100.5 billion were collected in the form of taxes, duties and regulatory charges during the previous year, the Economic Survey 2007-08 said.

Service sector continued to maintain a solid pace of expansion at 8.2 per cent compared to 7.6 per cent in 2006-07 as over three-fourth (75 per cent) contribution to this year's growth came alone from the service sector, Finance Minister Naveed Qamar said here on Tuesday while releasing the Economic Survey 2007-08.

Therefore, this year's growth is services sector-led-growth, the minister observed.

Referring to the contribution to government revenues, the survey recorded that a total of Rs36.6 billion as general sales tax or central excise duty was collected by the government. It is expected, the survey projected, the collection would grow exponentially in the coming years.

During 2006-07, the government also collected Rs17.6 billion as activation tax on new mobile connections at the rate of Rs500.

A foreign direct investment (FDI) inflow of $811.6 million also came in the telecom sector during 2007-08 (July-March), which is almost one-third of the total FDI in the country during the period. This trend has continued and during July 07 to Dec 07, $653.4 million FDI inflows came in the telecom sector.

The telecommunications sector liberalization also created huge employment opportunities (direct and indirect) and it is estimated that 1.36 million jobs were created in 2006-07 as compared to 705,368 in 2004-05.

According to the survey, Pakistan has become one of the fastest growing mobile markets among emerging telecom markets.

This year the sector grew by 80 per cent whereas average growth rate in last four years is more than 100 per cent.

Total cellular subscriber base today stands at 82.5 million (March 2008) whereas it was 34.5 million in 2006 and 12.7 million in 2005. The tremendous growth is attributed to many internal and external factors starting from deregulation down to implementation of mobile number portability.

Almost 90 per cent of total population in Pakistan is covered with mobile networks in addition to availability of fixed and Wireless Local Loop services.

Till December 2007, more than 7,011 cities, towns and villages have mobile networks by one or all operators.

But growth in the broadband market is slow despite the fact that services have been available since almost five years.

Currently there are a total of 12,689 broadband subscribers which provide a dismal picture when compared with other similar economies.

Telecom sector generates Rs100bn -DAWN - Business; June 11, 2008


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## Neo

*PSDP allocation increased by 20pc ​* Thursday, June 12, 2008 

ISLAMABAD: The government on Wednesday announced Rs549.7 billion for the Public Sector Development Programme (PSDP) for FY2008-09, with a special allocation of Rs34 billion for pro-poor income support programme, Rs28.42 billion for the Peoples Works Programme and Rs10 billion for the construction of dams (large and small) to overcome the energy crisis.

The PSDP, unfolded by Finance Minister Syed Naveed Qamar in the National Assembly on Wednesday, revealed an increase of 20 per cent against the revised estimates of FY2007-08 of Rs458 billion.

Out of the total PSDP, which is 4.5 per cent of GDP, the federal governments share, including ERRAs, is at Rs400 billion for 2008-09 which is 30 per cent higher than the revised estimates of 2007-08 of Rs308 billion. The provincial programme for 2008-09 has been estimated at Rs150 billion.

The Earthquake Rehabilitation and Reconstruction Authority (ERRA) has been allocated Rs27 billion for the budget estimates 2008-09. The share of federal ministries/divisions in the 2008-09 PSDP is Rs234 billion showing a rise of 19 per cent over revised estimates of FY2007-08.

The corporations PSDP for 2008-09 have been placed at Rs51 billion indicating an increase of 19 per cent over revised estimates of FY2007-08.

Special programmes have been allocated a sum of Rs62 billion in the PSDP 2008-09 which include Rs34 billion for income support fund and Rs28 billion for the Peoples Works Programme.

An amount of Rs26 billion has been provided in the budget for the FY2008-09 for the development of special areas, ie, AJ&K, NA and FATA which is higher by 25 per cent as compared with the revised FY2007-08.

It is the first time that the largest-ever allocation of Rs197.56 billion (53.25 per cent of the federal PSDP) has been made for social sector development. For the development of physical infrastructure, Rs141.69 billion (or 38.19 per cent) has been allocated while for other sectors Rs31.74 billion or 8.55 per cent of the total federal share has been earmarked.

Among the governments special areas of programmes, the Peoples Works Programme-I would get Rs4.42 billion and the Peoples Works Programme-II Rs24 billion.

In the social sector, the allocation for the Health Division has been increased to Rs19 billion for FY2008-09 from Rs14.27 billion allocated for the outgoing fiscal, KA and NA Divisions allocations increased to Rs17.61 billion from Rs13.72 billion; State and Frontier Region Divisions allocation increased to Rs8.66 billion from Rs7.5 billion; Environment Divisions Rs2.25 billion from Rs1.62 billion; Culture Divisions Rs413 million from Rs378 million, Finance Divisions Rs50.75 billion from Rs16.96 billion; Women Development Divisions Rs334 million from Rs163 million; Social Welfare and Special Education Divisions Rs509 million from Rs428 million; Cabinet Divisions Rs2.88 billion from Rs494 million; Housing and Works Divisions Rs4.07 billion from Rs1.2 billion; Narcotics Control Divisions Rs768 million from Rs277 million; Defence Production Divisions Rs1.45 million from Rs527 million, and for the National Reconstruction Bureaus (NRB) allocations has been increased to Rs76.7 million from Rs50 million allocated in the outgoing fiscal year.

The areas where allocations for the FY2008-09 have been reduced as against the outgoing fiscal year are special programmes whose allocation has been reduced to Rs24.42 billion for the next fiscal from Rs34.42 billion in the outgoing fiscal; Education Divisions allocation is down to Rs6.27 billion from Rs6.51 billion, Information Technology and Telecommunication Divisions is down to Rs1.976 billion from Rs3.21 billion; Science and Technology Research Divisions down to Rs3.015 billion from Rs3.6 billion; Labour and Manpower Divisions Rs123.8 million from Rs198.4 million; Local Government and Rural Development Divisions to Rs108 million from Rs127.9 million; Sports Divisions Rs350.4 million from Rs522.8 million; Youth Affairs Divisions Rs34 million from Rs152 million and Tourism Divisions allocation has been reduced to Rs19 million against the previous last fiscal years Rs167.4 million.

Besides, allocation for the Planning and Development Division for FY2008-09 have been reduced to Rs11.11 billion from Rs14.44 billion; the Interior Divisions to Rs6.94 billion from Rs9.5 billion; Defence Divisions to Rs4.94 billion from Rs5.13 billion; Commerce Divisions to Rs463 million from Rs1.58 billion; Ministry of Foreign Affairs to Rs407 million from Rs579 million; Information and Broadcasting Division to Rs1.04 billion from Rs1.54 billion; Establishment Division to Rs293 million from Rs503 million; Law, Justice and Human Rights Division to Rs2.38 million from Rs4.02 billion and Revenue Divisions allocation for the FY2008-09 has been reduced to Rs2.37 billion from Rs2.53 billion in the outgoing fiscal.

For the Pakistan Atomic Energy Commission Rs15.33 billion has been earmarked; Rs457.5 million for the Pakistan Nuclear Regulatory Authority, Rs850 million for the Petroleum and Natural Resource Division, Rs36.8 billion for the Communication Division (including the NHA), Rs372 million for the Sorts and Shipping Division and Rs11.28 billion for the Railways Division.

The infrastructure sector, which includes water, power and roads projects, has been given the second largest share of the total federal PSDP allocation.

In infrastructure, a huge chunk of Rs76.57 billion would go to the water and power sectors to implement ongoing and new projects. This includes Rs62.42 billion for water sector and Rs14.16 billion for the power sector.

The government has also earmarked Rs10 billion for the construction of new small and large dams at various locations of the country.

Besides for the ongoing programmes, Rs8.5 billion have been earmarked for the Kachi Canal (phase-I), Rs3 billion for the Rainee Canal (phase-I), Rs1.8 billion for the raising of the Mangla Dam, Rs2 billion for the Gomal Zam Dam, Rs2.5 billion for the lower Indus right bank irrigation and drainage Sindh, Rs1.2 billion for the Balochistan effluent disposal into RBOD (RBOD-III), Rs1.5 million for the Greater Thal Canal phase-I and Rs500 million for the Kurram Tangi Dam have been allocated.

Among the ongoing power sector projects, the Neelum Jehlum hydropower project has been allocated Rs7.5 billion, Bhasha Diamer Dam Project Rs417 million, Golan Gol Hydro power project, Chitral Rs700 million, Khan-kwarhydro power project, NWFP Rs1.175 billion, Allai Khawar hydro power project, NWFP Rs2.53 billion, Dubir Khawar hydro power project NWFP Rs3.5 billion.

For all 8 electric power distribution companies, Rs14.48 billion have been allocated for various projects. These include the 6th secondary transmission and grids project (Rs9.1 billion), for their distribution and system augmentation programme Rs2.62 billion and another Rs2.76 billion were allocated for these distribution companies rehabilitation, distribution, renovation and augmentation projects.

Among the ongoing health projects, Rs5.50 billion have been allocated for the national programme for family planning and family health care; Rs6 billion for the expanded programme for immunisation (EPI), Control of Diarrheal Disease (CDD); Rs2.16 billion for the national maternal, neonatal and child health programme. Among new projects, Rs500 million have been allocated for the Prime Ministers special initiative for expansion and upgradation of BHUs.

For food, agriculture and livestock development, Rs20.52 billion have been allocated. Among the ongoing projects, Rs9.5 billion have been allocated for the national programme for the improvement of watercourses in the country, Rs1.35 billion for the land and water resources development project for poverty reduction, Rs1 billion for water conservation and productivity enhancement through high efficiency irrigation system, Rs750 million for the agribusiness development, Rs316.7 million for livestock production and development of meat production, Rs600 million for research of agriculture development programme and Rs1.6 billion for the special programme for food security and productivity enhancement of small farmers in 1,012 villages crop maximisation project-II.

Among new projects, Rs500 million have earmarked for the PMs special initiative for white revolution and Rs500 million for the wheat production maximisation programme.

Rs10.46 billion have been earmarked for industries, production and special initiatives. Under this sector, among the ongoing projects, Rs2 billion were earmarked for clean drinking water for all, Rs600 million for the expansion of Utility Stores Corporations network, Rs510.3 million for Gujranwala Tools, Dies and Moulds Centre, Rs400 million for gems and jewelleries development, Rs400 million for marble and granite sectors development.

For the textile sector, the government allocated only Rs769.6 million. Among the ongoing projects, Rs367.68 million have been allocated for the Faisalabad garment city project and Rs147.6 million for the Lahore garment city project.

http://www.thenews.com.pk/arc_news.asp?id=3


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## Neo

*IPPs termed risky approach ​* Thursday, June 12, 2008 

KARACHI: Finance Minister Naveed Qamar on Wednesday finally cleared the ambiguity surrounding the countrys power policy, when he declared in his budget speech the revival of private sector-centric Power Policy of 1994, just months after the caretaker government firmed up contracts to generate more than 1,000 megawatts in the public sector.

The minister blamed the last government for the current power situation, vowing to attract private investment to overcome the energy crisis mainly arising due to more than 4,000MW power shortfall.

It was the Pakistan Peoples Party (PPP), which added the much-needed electricity to the national grid, he said while presenting the budget for fiscal 2008-09. We have allocated Rs66 billion for generation, distribution and alternative energy.

In 1994, the then PPP government led by the late Benazir Bhutto introduced a power policy, which helped increase the countrys power generation capacity by offering incentives to the private sector. Prior to that, a self-imposed ban restricted governments from investing resources for power production.

However, contrary to the largely held belief, some experts point out that the 1994 power policy had not succeeded, considering its economic outcome and harassment of private investors by subsequent governments. It will not work, said Sibte Ahmed Jafri, President of Institute of Electronic and Electrical Engineers Pakistan, referring to failure of the last government to attract investors during its eight-year rule. That proposition is very expensive.

He said the 1994 power policy offered much higher tariff to power plants, something which led to subsequent prosecution of some government officials and investors. The government needs not to involve private sector when it comes to utilities, he said, adding that International financial institutions will lend money to the government to undertake projects. Earlier this year, Pakistan secured financing for a 450 megawatt Nandipur power plant in Lahore, which marked the first power plant in the public sector after seventeen years. The project will cost $329 million including foreign financing component by French bank BNP Paribas and local component by Bank of Punjab.

Success in securing finances from private banks was a major achievement on part of the government and reflected its independence since the shift in power policy, which favored private power projects, was pressured by development institutions like World Bank. The then Managing Director of Pakistan Electric Power Company (PEPCO) Munwar Baseer told The News that the initiative was taken after the private sector failed to come forward.

That project was followed by another 550MW power plant being set up in Chichuki Malian in the public sector. Both projects, a senior WAPDA official requesting anonymity confirmed, are in implementation stages and wont be scrapped. The public policy is to promote the private sector, he added. But that is going to be expensive in the long run. 

http://www.thenews.com.pk/arc_news.asp?id=3


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## Neo

*Text of Finance Bill 2008 ​*
Thursday, June 12, 2008 

ISLAMABAD: Finance Minister Naveed Qamar on Wednesday presented the Finance Bill to give effect to the financial proposals of the federal government for the year beginning on the first day of July, 2008, and to amend certain laws. Following is the text of the bill.

WHEREAS it is expedient to make provisions to give effect to the financial proposals of the Federal Government for the year beginning on the first day of July, 2008, and to amend certain laws for the purposes hereinafter appearing; 

It is hereby enacted as follows:- 

1. Short title, extent and commencement.- (1) This Act may be called the Finance Act, 2008. 

(2) It extends to the whole of Pakistan. 

(3) It shall, unless otherwise provided, come into force on the first day of July, 2008. 

2. Amendment of Act XLV of 1860. In the Pakistan Penal Code, 1860 (Act XLV of 1860), after section 489F, the following new section shall be inserted, namely: 

489G. Counterfeiting or using documents resembling national prize bonds or unauthorized sale thereof. Whosoever counterfeits or causes to counterfeit, or performs any act to use for any purpose whatsoever or delivers to any person, any document purporting to be, or in any manner resembling to the national prize bonds or the serial number of national prize bonds, or promotes the sale of national prize bonds or serial number of national prize bonds, in contravention of the rules made for that purpose, shall be punishable with the imprisonment for a term which may extend to five years, or with fine not exceeding one hundred thousand rupees, or with both.. 

3. Amendment of Schedule II, Act V of 1898. In the Code of Criminal Procedure, 1898 (Act V of 1898), in Schedule II, after the entries relating to section 489F, the following new entries shall be inserted, namely:- 

489G Counterfeiting or using documents resembling national prize bonds or unauthorized sale thereof would (attract) imprisonment of either description for five years or fine of 100,000 rupees or both (through) Court of Sessions or Magistrate of the first class 

4. Amendment of Act VII of 1947. In the Foreign Exchange Regulation Act, 1947 (VII of 1947), after section 23J the following new section shall be inserted, namely:- 

23 K Powers to impose penalty, etc.-

(1) Without prejudice to provisions of sections 3AA, 23 or 23B if any person, in the opinion of State Bank, contravenes any provision of this Act, or any order, rule, regulation or direction issued there under the State Bank may, impose penalty which may extend to one million rupees for each contravention and where the contravention is a continuous one with a further penalty which may extend to twenty thousand rupees for each day during which such contravention continues. 

(2) Where the person guilty of such contravention is a company or other body corporate, every director, manager, secretary or other officer or agent thereof shall also be deemed guilty of such contravention if the contravention was committed with his knowledge or consent or if he did not exercise due diligence to prevent the commission of the offence. 

(3) If any person, fails to pay any penalty imposed on him or it, within the time stipulated in the order imposing the penalty, the State Bank may, without any notice to such person, recover the amount of such penalty from any account, or assets, monetary or otherwise, of the defaulter held with State Bank or any bank or a financial institution. 

(4) If any bank or financial institution to which notice has been sent under sub-section (3) fails to debit the amount of penalty under the said sub-section, it shall itself be liable to pay such amount to the State Bank, as if it had itself committed the contravention under sub-section (1). 

5. Amendment of Ordinance XXV of 1961.- In the Petroleum Products (Development Surcharge) Ordinance, 1961 (XXV of 1961), the following further amendments shall be made, namely:- 

(1) in section 2, -

(a) after sub-section (4B), the following new sub-section shall be inserted, namely:- 

(4C) licensee means the licensee defined under the Compressed Natural Gas (CNG) (Production and Marketing) Rules, 1992, or the Liquefied Petroleum Gas (Production and Distribution) Rules, 2001, as the case may be, and as specified by rules made under section 6;; and 

(b) in sub-section (5), after the words First Schedule, the words and includes Compressed Natural Gas and Liquefied Petroleum Gas shall be inserted; and 

(2) in section 3, after sub-section (1), the following new sub-section shall be added, namely:- 

(1A) Every licensee shall pay to the Federal Government a development surcharge that may be prescribed by the rules made under section 6.. 

6. Amendment of Ordinance X of 1965.- In the Provincial Employees Social Security Ordinance, 1965 (W.P. Ordinance No. X of 1965), the following further amendments shall be made, namely. -

(1) In section 2, - 

(a) in clause (8), in sub-clause (f), for the word five, occurring twice, the word ten shall be substituted; and

(b) in clause (25a), for the words two hundred ten, the words three hundred and sixty shall be substituted; 

(2) in section 20, - 

(a) in sub-section (1), after the word rate the words not more than six per cent shall be inserted; and 

(b) in the proviso, for the word two, the word four and for the word five, the word ten shall respectively be substituted; and 

(3) in section 20A, in sub-section (1), for the words two hundred ten, the words three hundred and sixty shall be substituted. 

7. Amendment of Ordinance VI of 1968.- In the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 (W.P. Ordinance No. VI of 1968), the following further amendments shall be made, namely: - 

(1) in section 1, in sub-section (1), the words West Pakistan shall be omitted; and 

(2) in the Schedule, in standing order 15, in paragraph (5), the words, full stop and comma subsistence allowance of not less than fifty percentum of wages. If the workman is found not guilty, he shall be deemed to have been on duty during the period of suspension and shall be entitled shall be omitted. 

8. Amendments of Act IV of 1969. - In the Customs Act, 1969 (IV of 1969), the following further amendments shall be made, namely:- 

(1) after section 3D, the following new section shall be inserted, namely;

3DD. Directorate General of Post Clearance Audit (PCA). - The Directorate General of Post Clearance Audit (PCA) shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors, Assistant Directors and such other officers as the Board may, by notification in the official Gazette, appoint.; 

(2) in section 21, clause (ab) shall be omitted; 

(3) in section 155F, in sub-section (1), for the full stop at the end, a colon shall be substituted and thereafter the following proviso shall be added, namely:- 

Provided that the Collector of Customs may, in exceptional circumstances, after recording reasons in writing, suspend the use of unique user identifier of any person forthwith on receipt of any complaint or information about violation of the Customs Act, 1969 (IV of 1969).; 

(4) in section 156, in sub-section (1), in the Table, in column (1), against serial number 43, in column (3), after the word owner occurring for the first time, the words or any other such person having custody of the aforesaid goods shall be inserted; 

(5) in section 179, in sub-section (3), for the word ninety, occurring for the first time, the words one hundred and twenty shall be substituted; 

(6) in section 194-C, in sub-section (4), in clause (c), for the word five the word ten shall be substituted;6 

(7) in section 195-C, after sub-section (4), following new sub-section (4A) shall be inserted, namely;- 

(4A) Notwithstanding anything contained in sub-section (4), the Chairman may, on the application of an aggrieved person for reasons to be recorded in writing and on being satisfied that there is an error in the order or decision, pass such order as he deems just and equitable.; and 

(8) the amendments set out in the Schedule to this Act shall be made in the First Schedule to the Customs Act, 1969 (IV of 1969). 

9. Amendment of Ordinance XVII of 1969.- The following further amendments shall be made in the Securities and Exchange Ordinance, 1969 (XVII of 1969), namely:- 

(1) in section 2, in sub-section (1), in clause (cd), after the word delivery occurring for the first time, the words or settlement shall be inserted; 

(2) for sections 15A and 15B, the following shall be substituted, namely:- 

15A. Prohibition of insider trading.-

(1) No person shall indulge in insider trading. 

(2) Insider trading shall include, - 

(a) an insider person transacting any deal, directly or indirectly, using inside information involving listed securities to which the inside information pertains, or using others to transact such deals; 

(b) any other person to whom inside information has been passed or disclosed by an insider person transacting any deal, directly or indirectly, using inside information involving listed securities to which the inside information pertains, or using others to transact such deals; 

(c) transaction by any person as specified in clauses (a) and (b), or any other person who knows, or ought to have known under normal and reasonable circumstances, that the information possessed and used for transacting any deal is inside information; 

(d) an insider person suggesting or recommending to another person to engage in dealing in any listed securities to which the inside information possessed by the insider person pertains, without the inside information being disclosed to the person who has dealt in such securities. 

(3) The following shall not be deemed as insider trading, - 

(a) any transaction performed under an agreement that was concluded before the time of gaining access to inside information; or 

(b) the disclosure of inside information by an insider person as required under law. 

(4) No contract shall be void or unenforceable by reason only of an offence under this section. 

15B. Inside information.-

1) Inside information means, 

(a) information which has not been made public, relating, directly or indirectly to listed securities or one or more issuers and which, if it were made public, would be likely to have an effect on the prices of those listed securities or on the price of related securities; 

(b) in relation to derivatives on commodities, information which has not been made public, relating, directly or indirectly, to one or more such derivatives and which are traded in accordance with accepted market practices on those markets; or 

(c) in relation to persons responsible for the execution of orders concerning listed securities, information which is conveyed by a client to such person and related to the clients pending orders. 

15C. Insiders.-

(1) Insiders shall include, - 

(a) sponsors, executive officers and directors of an issuer; 

(b) sponsors, executive officers, directors and partners of a legal person or unincorporated business association, in which the issuer holds shares or voting rights, directly or indirectly, of twenty per cent or more; 

(c) sponsors, executive officers, directors and partners of a legal person or unincorporated business association who holds, directly or indirectly, shares or voting rights of ten per cent or more in an issuer; 

(d) sponsors, executive officers and directors of an organization, that has been engaged in the placement of listed securities or the public offer of securities or the issuing and marketing of such securities, who has had access to insider information during his employment till a period of one year after leaving employment; 

(e) any natural person holding, directly or indirectly, ten per cent or more shares of an issuer; 

(f) sponsors, executive officers and directors of credit institutions in which the issuer has an account; 

(g) any person obtaining inside information as part of his employment or when discharging his usual duties in an official capacity, or in any other way relating to work performed under contract of employment or otherwise; 

(h) any person obtaining inside information through unlawful means; and 

(i) a spouse, lineal ascendant or descendant, partner or nominee of a person referred to in clauses (a) to (h). 

15D. Listed companies responsibilities to disclose inside information.- 

(1) Listed companies shall inform the public, in the manner specified by the Commission, as soon as possible of inside information which directly concerns the listed securities. 

(2) Listed companies may delay the public disclosure of inside information, as referred to in sub-section (1) in order not to prejudice their legitimate interests, provided that such delay will not mislead the public and provided that the company is able to ensure the confidentiality of the information. The company shall inform the Commission of the decision to delay the public disclosure of inside information forthwith. 

(3) Whenever a listed company or a person acting on its behalf, discloses any inside information to any third party in the normal exercise of employment, profession or duties, complete and effective public disclosure of that information must be made simultaneously in the manner specified by the Commission: 

Provided that the provisions shall not apply if the person receiving the information owes a duty of confidentiality, regardless of whether such duty is based on a law, regulations, articles of association or contract. 

(4) Listed companies or persons acting on its behalf, must maintain and regularly update a list of persons employed, under contract or otherwise in the manner specified by the Commission, who have access to inside information, and provide such list to the Commission whenever the Commission requests it. 

(5) Persons discharging managerial responsibilities within a listed company and, where applicable, persons closely associated with them, shall notify the Commission of transactions conducted on their own account relating to the securities of such listed company in the manner specified by the Commission. 

(6) The Exchanges shall adopt structural provisions, operating procedures and surveillance techniques to detect and prevent insider trading and market abuse practices, within such time as may be specified by the Commission and according to the regulations made hereunder. 

15E. Liability for contravention.- 

(1) Any person who contravenes the provisions of sub-section (1) of section 15A shall be liable to fine, to be imposed by the Commission, of rupees ten million or three times the amount of gain made or loss avoided by such person, or loss suffered by another person, whichever amount is higher. 

(2) In addition to the fine imposed under sub-section (1), such person,- 

(a) may be directed by the Commission, - 

(i) to surrender to the Commission, an amount equivalent to the gain made or loss avoided by him; or 

(ii) to pay any other person who has suffered a loss, an amount equivalent to the loss so suffered by such person; and 

(b) may, where such person is an executive officer, director, auditor, advisor, consultant of a listed company, be removed from such office by an order of the Commission and debarred from auditing any listed company for a period of upto three years; or 

(c) may, where such person is registered as a broker or agent, be liable to cancellation of registration. 

(3) Where an insider person discloses inside information to any other person who is not required to possess such information for any reason, the insider person shall be liable to fine, to be imposed by the Commission, which may extend to rupees thirty million. 

15F. Power to make Regulations.- The Commission may make regulations to regulate persons who produce or disseminate research concerning listed securities or issuers of listed securities and persons who produce or disseminate other information recommending or suggesting investment strategy, intended for distribution channels or for the general public. ; 

(3) in section 21, - 

(a) in sub-section (1), in clause (b), after the word any occurring for the second time, the words person or shall be inserted; 

(b) in sub-section (2), - 

(i) after the word Exchange, occurring for the first time, the words or any other person shall be inserted; and 

(ii) after the word such, occurring for the first time, the words person or shall be inserted; 

(4) in section 32E, after sub-section (1), the following new sub-section (1A) shall be inserted, namely:- 

(1A) Without prejudice to the generality of the foregoing power and sub-section (2) of section 33, the rules made in pursuance of this section may inter alia provide for- 

(a) the matters to be included in any scheme of demutualization and corporatization and the manner of its approval by the members of the stock exchange; 

(b) the power of the Commission to approve any scheme of demutualization and corporatization including the power to impose any conditions; 

(c) the process and procedure to be followed for purposes of demutualization and corporatization; 

(d) matters regarding appointment of directors and chairman of the board of a stock exchange after demutualization, including but not limited to restrictions, if any, on such appointments; 

(e) restriction of rights, if any, attached to the shares issued pursuant to corporatization; 

(f) matters including restrictions, if any, on disinvestment, further issue and sale and purchase of shares of a stock exchange after demutualization; 

(g) matters regarding limits or restriction on holding of shares by different categories of shareholders of a stock exchange, and the requirement for divestment of shares by shareholders in particular circumstances; and 

(h) matters regarding trading rights on a stock exchange and restrictions if any in this regard.. 

10. Amendment of Ordinance, XX of 1969. - In the Minimum Wages for Unskilled Workers Ordinance, 1969 (W.P. Ordinance No. XX of 1969), in the Schedule, in column (2), for the figure 4600, occurring thrice, the figure 6000 shall be substituted. 

11. Amendments of Ordinance No. XXXVI of 1971. - In the Workers Welfare Fund Ordinance, 1971 (XXXVI of 1971), the following further amendments shall be made, namely: - 

(1) in section 2, in clause (f) after sub-clause (iv), the following new sub-clause shall be added, namely.- 

(iva) any establishment, to which the West Pakistan Shops and Establishment Ordinance, 1969 (W.P. Ordinance No.VIII of 1969), for the time being applies;; 

(2) in section 4, 

(a) in sub-section (1), the words of so much and as is assessable under the Ordinance shall be omitted; 

(b) in sub-section (4) the words and comma At the time of making an assessment under the Ordinance, or as soon thereafter as may be the and on the basis of the income so assessed shall be omitted; and 

(c) in sub-section (5) for the word assessed the word total shall be substituted and the words subsequent to the assessment made under the Ordinance shall be omitted; and 

(3) in section 11-B, in sub-section (3) after the word sanction at the end the words with the previous approval of the Governing Body shall be added. 

12. Amendments of Act XIV of 1976. - In the Employees Old-age Benefits Act, 1976 (XIV of 1976), the following further amendments shall be made, namely: - 

(1) in section 1, in sub-section (4), - 

(a) in clause (i), - 

(i) for the word ten, occurring twice, the word five shall be substituted; and 

(ii) for the colon at the end, a full stop shall be substituted and thereafter the proviso shall be omitted; and 

(b) in clause (ia) for the word twenty, the word five shall be substituted; 

(2) in section 9, in sub-section (1), for the word six the word five shall be substituted; 

(3) in section 22, in sub-section (2), in clause (ii), for the full stop at the end, a colon shall be substituted and thereafter the following proviso shall be added, namely: - 

Provided that nothing in this section shall apply to an employee insured under the provisions of this Act on or after 1st day of July, 2008.; 

(4) in section 47, clause (e) shall be omitted; and 

(5) In the Schedule, - 

(a) for paragraph (2), the following shall be substituted, namely: - 

(2) The monthly wages of an insured person, referred to in paragraph (1), shall be calculated on the basis of wages on which contributions were paid in respect of the twelve calendar months immediately preceding the date on which insured person fulfils the conditions for entitlement to any benefits under this Act: 

Provided that the old-age pension or invalidity pension payable to an insured person and survivors pension payable to the survivors of the deceased insured person shall not be less than two thousand rupees per month for pension commencing on or after 1st day of July, 2008.; and 

(b) in paragraph (3) for the figure 2007 the figure 2008 shall be substituted. 

13. Amendment of Ordinance XXXI of 1980.- In the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980 (XXXI of 1980), the following further amendments shall be made, namely: - 

(1) after section 18, the following new section shall be inserted, namely: - 

18A. Power to issue directions.-(1) Notwithstanding anything contained in any other provision of this Ordinance, where the Registrar is satisfied that it is necessary and expedient so to do, - 

(a) in the public interest; or 

(b) to prevent the affairs of any modaraba from being conducted in a manner detrimental to the interest of holders of Modaraba Certificates; or 

(c) to secure the proper management of any modaraba generally, he may issue such directions to a modaraba company or the modaraba companies generally, as he may deem fit, and the modaraba company and its management shall be bound to comply with such directions. 

(2) The Registrar may, on a representation made to him or on his own motion, modify or withdraw any direction issued under sub-section (1) and in so modifying or cancelling any direction may impose such conditions as he thinks fit.; 

(2) after section 41, the following new sections shall be inserted, namely: - 

41A. Power to make regulations.- (1) The Commission may, by notification in official Gazette, make such regulations as are necessary to carry out the purposes of this Ordinance: 

Provided that the power to make regulations conferred by this section shall be subject to the condition of previous publication and before making any regulations the draft thereof shall be published in the manner considered most appropriate by the Commission for eliciting public opinion thereon within a period of not less than fourteen days from the date of publication.

(2) Any regulation made under sub-section (1) may provide that a contravention thereof shall be punishable with a fine which may extend to one hundred thousand rupees and where the contravention is a continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which such contravention continues. 

41B. Power to issue directives, circulars, codes, guidelines, etc.- The Commission may issue such directives, circulars, codes, guidelines or notifications as are necessary to carry out the purposes of this Ordinance and the rules and regulations made under this Ordinance.

14. Amendment of Ordinance XLVII of 1984. The following further amendments shall be made in the Companies Ordinance, 1984 (XLVII of 1984), namely:-

(1) in section 158, 

(a) in sub-section (1), for the word three the word four shall be substituted; and

(b) in sub-section (4), 

(i) in clause (a), for the word twenty, the word fifty shall be substituted, and for the word fifty the words five hundred shall be substituted; and

(ii) in clause (b), for the word ten, the words one hundred shall be substituted;

(2) in section 187, 

(a) in clause (h), in sub-clause (iv), after the semicolon the word and shall be omitted;

(b) in clause (j), the words member of a Stock Exchange shall be omitted and for the words member, occurring for the second time the words and comma person or is a sponsor, director or officer of a corporate brokerage house shall be inserted; and

(c) after the proviso, the following new proviso shall be added, namely:-

Provided further that the prohibition contained in clause (j) shall not apply where the company is a stock exchange.;

(3) in section 206, in sub-section (2), 

(a) in clause (b), the word and, at the end, shall be omitted; and

(b) in clause (c) for the full stop, at the end, a semicolon shall be substituted and thereafter the following new clauses shall be inserted, namely:-

(d) an agreement or contract with an NBFC licensed to undertake asset management services in relation to an investment company registered with the Commission; and

(e) an agreement or contract with an NBFC licensed as a venture capital company in relation to a fund registered with the Commission.;

(4) in section 208, in sub-section (2A), in clause (b), after the word to the words such class of shall be omitted;

(5) in section 233, 

(a) in sub-section (1),for the word three the word four shall be substituted;

(b) in sub-section (4), 

(i) after the word shall, occurring for the first time, the words in the form and manner specified by the Commission shall be inserted; and

(ii) the words the registered address of shall be omitted;

(6) in section 251, in sub-section (1), for the words forty-five days of the declaration in the case of a listed company and within thirty days in the case of any other company, the words such time as specified by the Commission shall be substituted;

(7) in section 282G, in sub-section (2), after the word rules, wherever occurring, the words or regulations shall be inserted;

(8) in section 282J, in sub-section (2), after the word rules the words or regulations shall be inserted;

(9) in section 282K, in sub-section (1), after the word rules the words or regulations shall be inserted; and

(10) in section 282M, in sub-section (1), after the word rules the words or regulations shall be inserted.

15. Amendments of Finance Act 1989 (V of 1989). The following further amendment shall be made in Finance Act 1989 (V of 1989), namely: 

(1) In section 7, 

(a) in sub-section (1), for the full stop, at the end, a colon shall be substituted and thereafter the following proviso shall be added, namely:-

Provided that in case of a bank, the capital value tax shall be paid when general power of attorney is used to enforce the mortgage of property offered as collateral for obtaining loan.;

(b) for clause (e) the following shall be substituted, namely: 

(e) urban area means area falling within the limits of 

(i) the Islamabad Capital Territory;

(ii) a Cantonment Board;

(iii) the rating areas as defined under the Urban Immovable Property Act, 1958 (W.P V of 1958) as in force in Punjab, NWFP, Sindh and Balochistan except where the rate under section 117 of the respective Provincial Local Government Ordinance, 2001 is zero;

(iv) in addition to (iii) up to forty kilometres from the outer limits of the Cantonment Boards in Karachi and up to forty kilometres from the notified rated areas of Karachi City District;

(v) in addition to (iii) up to thirty kilometres from the outer limits of the Cantonment Boards in Lahore and Faisalabad and up to thirty kilometres from the notified rated areas of Lahore and Faisalabad City District;

(vi) in addition to (iii) in all cases other than Karachi, Lahore and Faisalabad up to ten kilometres from the outer limits of the Cantonment Boards and up to ten kilometres from the notified rated areas; and

(vii) such areas the Federal Board of Revenue may, from time to time, by notification in the official Gazette, specify.

16. Amendments of the Sales Tax Act, 1990. In the Sales Tax Act, 1990, the following further amendments shall be made, namely:-

(1) in section 2, 

(i) for sub-section (2A), the following shall be substituted, namely:-

(2A) arrears, in relation to a person, means, on any day, the sales tax due and payable by the person under this Act before that day but which has not yet been paid,; and

(ii) for clause (3), the following shall be substituted, namely: 

(3) associates (associated persons) means, 

(i) subject to sub-clause (ii), where two persons associate and the relationship between the two is such that one may reasonably be expected to act in accordance with the intentions of the other, or both persons may reasonably be expected to act in accordance with the intentions of a third person;

(ii) two persons shall not be associates solely by reason of the fact that one person is an employee of the other or both persons are employees of a third person;

(iii) without limiting the generality of sub-clause (i) and subject to sub-clause (iv), the following shall be treated as associates, namely: 

(a) an individual and a relative of the individual;

(b) members of an association of persons;

(c) a member of an association of persons and the association, where the member, either alone or together with an associate or associates under another application of this section, controls fifty per cent or more of the rights to income or capital of the association;

(d) a trust and any person who benefits or may benefit under the trust;

(e) a shareholder in a company and the company, where the shareholder, either alone or together with an associate or associates under another application of this section, controls either directly or through one or more interposed persons 

(i) fifty per cent or more of the voting power in the company;

(ii) fifty per cent or more of the rights to dividends; or

(iii) fifty per cent or more of the rights to capital; and

(f) two companies, where a person, either alone or together with an associate or associates under another application of this section, controls either directly or through one or more interposed persons 

(i) fifty per cent or more of the voting power in both companies;

(ii) fifty per cent or more of the rights to dividends in both companies; or

(iii) fifty per cent or more of the rights to capital in both companies.

(iv) two persons shall not be associates under clause (a) or (b) of sub-clause (iii) where the Collector is satisfied that neither person may reasonably be expected to act in accordance with the intentions of the other.

(v) In this clause, relative in relation to an individual, means 

(a) an ancestor, a descendant of any of the grandparents, or an adopted child, of the individual, or of a spouse of the individual; or

(b) a spouse of the individual or of any person specified in clause (a).;

(iii) clause (3A) shall be renumbered as clause (3AA) and before clause (3AA), renumbered as aforesaid, the following shall be inserted, namely:-

(3A) association of persons includes a firm, a Hindu undivided family, any artificial juridical person and any body of persons formed under a foreign law, but does not include a company;;

(iv) for clause (4), the following shall be substituted, namely: 

(4) Board means the Federal Board of Revenue established under section 3 of the Federal Board of Revenue Act, 2007;;

(v) clause (5AA) shall be renumbered as (5AAA) and before clause (5AAA), renumbered as aforesaid, the following shall be inserted, namely:-

(5AA) company means-

(a) a company as defined in the Companies Ordinance, 1984 (XL VII of 1984);

(b) a body corporate formed by or under any law in force in Pakistan;

(c) a modaraba;

(d) a body incorporated by or under the law of a country outside Pakistan relating to incorporation of companies;

(e) a trust, a co-operative society or a finance society or any other society established or constituted by or under any law for the time being in force; or

(f) a foreign association, whether incorporated or not, which the Board has, by general or special order, declared to be a company for the purposes of the Income Tax Ordinance 2001 (XLIX of 2001);

(vi) for clause (6B), the following shall be substituted, namely:-

(6B) default surcharge means the default surcharge levied under section 34;;

(vii) in clause (9), for the words, Federal Government, the word Board, shall be substituted;

(viii) after clause (11), the following new clause shall be inserted, namely:-

(11A) firm means the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all;;

(ix) in clause (13) the word lawfully shall be omitted;

(x) for clause (14), the following shall be substituted, namely: 

(14) input tax, in relation to a registered person, means-

(a) tax levied under this Act on supply of goods to the person;

(b) tax levied under this Act on the import of goods by the person;

(c) in relation to goods or services acquired by the person, tax levied under the Federal Excise Act, 2005 in sales tax mode as a duty of excise on the manufacture or production of the goods, or the rendering or providing of the services; and

(d) Provincial sales tax levied on services rendered or provided to the person;

(xi) for clause (20), the following shall be substituted, namely: 

(20) output tax, in relation to a registered person, means-

(a) tax levied under this Act on a supply of goods, made by the person;

(b) tax levied under the Federal Excise Act, 2005 in sales tax mode as a duty of excise on the manufacture or production of the goods, or the rendering or providing of the services, by the person;

(c) Provincial sales tax levied on services rendered or provided by the person;

(xii) for clause (21), the following shall be substituted, namely: 

(21) person means, 

(a) an individual;

(b) a company or association of persons incorporated, formed, organized or established in Pakistan or elsewhere;

(c) the Federal Government;

(d) a Provincial Government;

(e) a local authority in Pakistan; or

(f) a foreign government, a political subdivision of a foreign government, or public international organization;;

(xiii) after clause (22), the following new clause shall be added, namely:-

(22A) Provincial sales tax means tax levied under.-

(a) the Balochistan Sales Tax Ordinance, 2000 (I of 2000);

(b) Islamabad Capital Territory (Tax on Services) Ordinance, 2001 (XLII of 2001);

(c) the Punjab Sales Tax Ordinance, 2000 (Pb. Ord. II of 2000);

(d) the North West Frontier Province Sales Tax Ordinance, 2000 (III of 2000); and

(e) the Sindh Sales Tax Ordinance, 2000 (VIII of 2000);;

(xiv) clause (28A) shall be omitted;

(xv) clause (29A) shall be renumbered as (29AA) and before clause (29AA), renumbered as aforesaid, the following shall be inserted, namely:-

(29A) sales tax means-

(a) the tax, additional tax, or default surcharge levied under this Act;

(b) a fine, penalty or fee imposed or charged under this Act; and

(c) any other sum payable under the provisions of this Act or the rules made there under;;

(xvi) in clause (31), for the word resemble, the word resembles shall be substituted;

(xvii) for clause (33), the following shall be substituted, namely: 

(33) supply, means a sale or other transfer of the right to dispose of goods as owner, including such sale or transfer under a hire purchase agreement: Provided that the Federal Government, may by notification in the official Gazette, specify such other transactions which shall or shall not constitute supply:;

(xviii) for clause (34), the following shall be substituted, namely: 

(34) tax, unless the context requires otherwise, means sales tax;;

(xix) for clause (35), the following shall be substituted, namely: 

(35) taxable activity, means any economic activity carried on by a person whether or not for profit, and includes-

(a) an activity carried on in the form of a business, trade or manufacture;

(b) an activity that involves the supply of goods, the rendering or providing of services or both to another person;

(c) a one-off adventure or concern in the nature of a trade; and

(d) anything done or undertaken during the commencement or termination of the economic activity, but does not include-

(a) the activities of an employee providing services in that capacity to an employer;

(b) an activity carried on by an individual as a private recreational pursuit or hobby; and

(c) an activity carried on by a person other than an individual which, if carried on by an individual, would fall within clause (b).;

(xx) in clause (43), for semi colon, occurring first time, a comma shall be substituted;

(xxi) for clause (44), the following shall be substituted, namely: 

(44) time of supply, in relation to, 

(a) a supply of goods, other than under hire purchase agreement, means the time at which the goods are delivered or made available to the recipient of the supply;

(b) a supply of goods under a hire purchase agreement, means the time at which the agreement is entered into; and

(c) services, means the time at which the services are rendered or provided;;

(44A) trust, means an obligation annexed to the ownership of property and arising out of the confidence reposed in and accepted by the owner, or declared and accepted by the owner for the benefit of another, or of another and the owner, and includes a unit trust;

(44AA) unit trust, means any trust under which beneficial interests are divided into units such that the entitlements of the beneficiaries to income or capital are determined by the number of units held; and

(xxii) in clause (47), the comma and the words, and a person who in addition to making retail supplies is engaged in wholesale business shall be omitted.

(2) in section 3,-

(a) for the word fifteen, wherever occurring, the word sixteen shall be substituted; and

(b) sub-section (4) shall be omitted;

(3) section 3AA shall be omitted;

(4) in section 7, in sub-section (1), for the proviso, the following shall be substituted, namely:-

Provided that where a registered person did not deduct input tax within the relevant period, he may claim such tax in the return for any of the six succeeding tax periods.;

(5) in section 8, in sub-section (1), in clauses (a), (b) and (ca) after the word goods the words or services shall be inserted;

(6) in section 8B, in sub-section (1), in the first proviso, the words after the start of production of a new unit, shall be omitted;

(7) in section 10, in sub-section (1), for the first proviso, the following shall be substituted, namely:-

Provided that in case of excess input tax against supplies other than zero-rated or exports, such excess input tax may be carried forward to the next tax period and shall be treated as input tax for that period and the Board may, subject to such conditions and restrictions as it may impose, by notification in the official Gazette, prescribe the procedure for refund of such excess input tax;;

(8) in section 11, in sub-section (4),

(a) after the word given, the words within five years shall be inserted; and

(b) in the proviso, for the word ninety, occurring twice, the words, one hundred and twenty, shall be substituted;

(9) in section 13, in sub-section (2), in clause (a), after the word or occurring for the first time, the words import or supply of shall be inserted;

(10) in section 25, in sub-section (2), in the proviso, for the full stop at the end, a colon shall be substituted and thereafter the following new proviso shall be inserted, namely:-

Provided further that nothing in this sub-section shall bar the sales tax officer from conducting audit of the records of the registered person if the same were earlier audited by the office of the Auditor-General of Pakistan;

(11) in section 26, in sub-section (3), for the word ninety, the words one hundred and twenty, shall be substituted;

(12) section 26AA shall be omitted;

(13) in section 30, after clause (f), the following new clause shall be inserted, namely:-

(ff) a Senior Auditor of Sales Tax;;

(14) section 32AA shall be omitted;

(15) in section 33, 

(a) the brackets and figure (1), appearing for the first time, shall be omitted; and

(b) in the TABLE, in column (1), serial number 20 and the entries relating thereto in columns (2) and (3) shall be omitted;

(16) in section 34, in sub-section (1), 

(a) in clause (a), 

(i) the words and comma for the first six months of default, shall be omitted; and

(ii) after the word one, the words and half shall be inserted;

(c) after semi colon at the end, the word and shall be added; and

(ii) clause (b) shall be omitted;

(17) in section 36, in sub-section (3), in the proviso, for the word ninety, occurring twice, the words, one hundred and twenty, shall be substituted;

(18) in section 45A, in sub-section (2), for the words, brackets and figure sub-section (1), the words this section, shall be substituted;

(19) in section 45-B, in sub-section (2), in the first and second provisos, for the word, ninety, occurring twice, the words, one hundred and twenty, shall be substituted;

(20) in section 46, 

(a) for sub-section (1), the following shall be substituted, namely:-

(1) Any person including an officer of Sales Tax not below the rank of an Additional Collector, aggrieved by any order passed by 

(a) the Collector of Sales Tax (Appeals) under section 45B,

(b) the Collector of Sales Tax through adjudication or under any of the provisions of this Act or rules made there under,

(c) the Board under section 45A, may, within sixty days of the receipt of such decision or order, prefer appeal to the Appellate Tribunal.;

(b) in sub-section (7), for the words, six, the word, eight, shall be substituted;

(c) in sub-section (9), 

(i) in clause (a), for the words fifteen hundred thousand, the words ten million shall be substituted; and

(ii) in clause (b), for the words fifteen hundred thousand, the words ten million shall be substituted;

(21) in section 47A, after sub-section (4), the following new sub-section shall be inserted, namely: 

(4A) Notwithstanding anything contained in sub-section (4), the Chairman may on the application of an aggrieved person, for reasons to be recorded in writing, and on being satisfied that there is an error in order or decision may pass such order as he deems just and equitable.;

(22) section 50 shall be numbered as sub-section (1) of that section and after sub-section (1), renumbered as aforesaid, the following new sub-section shall be added, namely:-

(2) All rules made under sub-section (1) or any other provisions of this Act, shall be collected, arranged and published along with general orders and departmental instructions and rulings, etc, if any, at appropriat e intervals and sold to the public at reasonable price;

(23) after section 58, the following shall be inserted, namely:-

58A. Representatives. (1) For the purpose of this Act and subject to sub-sections (2) and (3), representative in respect of a registered person, means 

(a) where the person is an individual under a legal disability, the guardian or manager who receives or is entitled to receive income on behalf, or for the benefit of the individual;

(b) where the person is a company (other than a trust, a Provincial Government, or local authority in Pakistan), a director or a manager or secretary or agent or accountant or any similar officer of the company;

(c) where the person is a trust declared by a duly executed instrument in writing whether testamentary or otherwise, any trustee of the trust;

(d) where the person is a Provincial Government, or local authority in Pakistan, any individual responsible for accounting for the receipt and payment of money or funds on behalf of the Provincial Government or local authority;

(e) where the person is an association of persons, a director or a manager or secretary or agent or accountant or any similar officer of the association or, in the case of a firm, any partner in the firm;

(f) where the person is the Federal Government, any individual responsible for accounting for the receipt and payment of moneys or funds on behalf of the Federal Government; or

(g) where the person is a public international organization, or a foreign government or political sub-division of a foreign government, any individual responsible for accounting for the receipt and payment of moneys or funds in Pakistan on behalf of the organization, government, or political sub-division of the government.

(2) Where the Court of Wards, the Administrator General, the Official Trustee, or any receiver or manager appointed by, or under, any order of a Court receives or is entitled to receive income on behalf, or for the benefit of any person, such Court of Wards, Administrator General, Official Trustee, receiver, or manager shall be the representative of the person for the purposes of this Act.

(3) Subject to sub-section (4), where a person is a non-resident person, the representative of the persons for the purpose of this Act for a tax year shall be any person in Pakistan: 

(a) who is employed by, or on behalf of, the non-resident person;

(b) who has any business connection with the non-resident person;

(c) from or through whom the non-resident person is in receipt of any income, whether directly or indirectly;

(d) who holds, or controls the receipt or disposal of any money belonging to the non-resident person;

(e) who is the trustee of the non-resident person; or

(f) who is declared by the Collector by an order in writing to be the representative of the non-resident person.

(4) No person shall be declared as the representative of a non-resident person unless the person has been given an opportunity by the Collector of being heard.

58B. Liability and obligations of representatives. (1) Every representative of a person shall be responsible for performing any duties or obligations imposed by or under this Act on the person, including the payment of tax.

(2) Subject to section 58 and sub-section (5) of this section, any tax that, by virtue of sub-section (1), is payable by a representative of a registered person shall be recoverable from the representative only to the extent of any assets of the registered person that are in the possession or under the control of the representative.

(3) Every representative of a registered person who pays any tax owing by the registered person shall be entitled to recover the amount so paid from the registered person or to retain the amount so paid out of any moneys of the registered person that are in the representatives possession or under the representatives control.

(4) Any representative, or any person who apprehends that he may be assessed as a representative, may retain out of any money payable by him to the person on whose behalf he is liable to pay tax (hereinafter in this section referred to as the principal), a sum equal to his estimated liability under this Act, and in the event of disagreement between the principal and such a representative or a person as to the amount to be so retained, such representative or person may obtain from the Collector a certificate stating the amount to be so retained pending final determination of the tax liability, and the certificate so obtained shall be his authority for retaining that amount.

(5) Every representative shall be personally liable for the payment of any tax due by the representative in a representative capacity if, while the amount remains unpaid, the representative 

(a) alienates, charges or disposes of any moneys received or accrued in respect of which the tax is payable; or

(b) disposes of or parts with any moneys or funds belonging to the registered person that is in the possession of the representative or which comes to the representative after the tax is payable, if such tax could legally have been paid from or out of such moneys or funds.

(6) Nothing in this section shall relieve any person from performing any duties imposed by or under this Act on the person which the representative of the person has failed to perform.

http://www.thenews.com.pk/arc_news.asp?id=3


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## Neo

*Budget termed agri-friendly, hike in GST criticised ​*
Thursday, June 12, 2008 

KARACHI: The Federal Budget 2008-09 has received a mixed response from the business community and industrialists, who have termed it a pro-agriculture budget with very little being offered to the trading and industrial sectors.

Prominent businessmen of Karachi considered the budget to be most appropriate looking at the present economic conditions but were highly critical of the one per cent hike in General Sales Tax (GST) which they claimed would lead to further increase in the cost of doing business.

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and Karachi Chamber of Commerce and Industry (KCCI) had made special arrangements for viewing the budget speech at their respective headquarters where most of the important businessmen were present on Wednesday.

President of FPCCI, Tanveer Ahmed Sheikh said that the business sector had been ignored whereas all the concentration had been paid to the agricultural sector. He stated that no special incentives were granted in the budget for the trade and industries sector and this had disappointed him.

He welcomed imposing of duties on luxury items as it would reduce imports of ostentatious products which created an imbalance in the Balance of Trade. He also welcomed minimum wage announcement and the Benazir Income Support Program. 

President of KCCI, Shamim Ahmed Shamsi was of the view that this was the best possible budget that could have been announced under the circumstances where inflation is creating a record of sorts and has led to higher poverty levels.

He said, looking at the budget as a Pakistani, I think it is agreeable as our first priority should be to control the soaring food inflation and that is what the budget has tried to do. There are no incentives for the industry as it has turned out to be an agricultural based budget.

My only concern is that though revenue collection for the government would increase following 16 percent GST, the cost of doing business is also going to rise significantly which is once again going to be a challenge since we would remain impotent to provide the best products at best prices to the consumers and would also continue to remain uncompetitive in exports, Shamsi continued.

He added that another of his concern was the promise of uninterrupted electricity that is going to be offered to the textile sector, which seems unattainable to him as there is an extreme shortage of power supply in the country.

Leader of business community, Siraj Kassam Teli said a few days were needed to get a clearer picture of the budget and to witness its impact, as it was essential to see where the exact raise in duties and taxes had been made before commenting on the situation.

He expressed that the business community may accept the rise in GST, keeping in mind the current economic situation but it would lead to dire consequences in the long run and hence, he said, it was advised to the government to recall their decision and instead reduce the GST to 10-12 percent.

Teli added that one positive move was the promise of 2200mw electric supply in nine months, which he personally doubted would ever materialize, but nevertheless welcomed the move.

Former president of KCCI, Zubair Motiwala criticized the little attention that had been paid to the textile sector in the budget, no major steps were taken to uplift the sector and instead far fetched claims have been made which are practically not implemental.

He lauded the government for cut in assembly and senate budgets and the promise it has made to provide an additional thousand rupees to the salary of the poor people.

He said, as an industrialist, I say that the government should not look at us or investors and should only concentrate on the poor people and the rising food inflation. Long term planning is extremely important and the government should further subsidize the agricultural sector and therefore we welcome this budget.

Preisdent of Alliance of Market Association, Atiq Mir voiced that the budget seemed to be aimed towards the army, feudal and investors and the cottage industries and small and medium traders were the most badly ignored sectors in the budget.

He commented that this years budget was like previous ones, it is taking more from us in form of higher taxes and duties and giving nothing in return. He added that though the budget promised easier loan policies for small traders, it was only on paper and the reality remained that obtaining loans were the most tedious tasks for them.

Mir lauded the Benazir Income Support Program and said that this was the only positive step of the government that would be highly beneficial for the poorest of the poor.

http://www.thenews.com.pk/arc_news.asp?id=3


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## Neo

*Budget widely acknowledged as pro-poor ​*
Thursday, June 12, 2008 

LAHORE: Industrialists have welcomed the federal budget, terming it as pro poor and poor friendly with focus on agriculture sector, which is crucial for sustainable economic development of the country.

In Lahore, industrialists as per their traditional practice, gathered at Lahore Chamber of Commerce and Industry (LCCI) and soon after the budget speech of the federal minister for finance Syed Naveed Qamar, appreciated it, adding that in such an economic scenario, the government had presented the best budget.

During the budget speech, they also thumped the desks on various decisions, especially in the announcements of increase in pensions, Benazir Income Support Programme, abolishing 15 per cent duty from CNG buses, and steps taken for energy sector and others.

Later, after the budget speech, the president of LCCI, Muhammad Ali Mian discussed the different features of the federal budget on the feedback of the chamber members.

However, the unanimous demand of the business community is to withdraw the 35 per cent cash margin on LC. We are expecting that the government will revise the 35 per cent cash margin on LC, but its remains at a stand still, Muhammad Ali said.

About the imposition of import duty on cellular and telephone devices, he said the government has discriminated on the imposition formula. He noted that the government has fixed import duty of Rs500 per device, which would badly affect the low cost mobile devices.

Talking about the energy saver lamps, he said that it is a good omen that the government has withdrawn all the duties from it, which showed that the government was committed to its energy saving programme. However, a comprehensive policy is needed to bail out the country from its energy deficient state, as both industry and agriculture have been facing an acute shortage of energy, he mentioned. Muhammad Ali said that the government should also zero rate the imported raw material for packaging industry. He mentioned that the government had not shed light on generators. For Rs1250 billion revenue generation, the government needs political stability, improved law & order situation and to reduce the electricity shortage, he said, adding that otherwise the government would not be able to achieve its revenue generation targets. The industrialists also appreciated the governments effort for cutting down its non development expenditures, but strongly criticized the increase in central excise duty on cement. The business community appreciated the governments decision to impose tax on real estate sector, saying that it has great potential for tax.

Chairman PIAF, Mian Abuzar Shad said that the government had not focused on business courts, as there were over 1.5 million cases pending. He noted that the government had not pointed out the allocation of funds for Kalabagh dam, which showed the apathy of the government towards KBD.

http://www.thenews.com.pk/arc_news.asp?id=3


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## Neo

*'Resource-starved' Rs 2.01 trillion Budget slashes subsidies, raises salaries ​* 
ISLAMABAD (June 12 2008): Finance Minister Syed Naveed Qamar, on Wednesday unveiled a Rs 2.01 trillion taxes-laden federal budget for 2008,09, with some relief for the poor and the salaried class people. In his budget speech in the National Assembly, the minister presented the details of budgetary measures to be taken in next fiscal year for a quick recovery of the ailing economy.

-- Additional tax impact of Rs 84 billion

-- 5% FED on motor cars

-- FED in VAT mode 16%

-- Excise on telecom services raised to 21%

-- FED on cement up by Rs 150/tonne

-- 10% custom duty hike on non-essential imports

-- I/Tax exemption limit raised from Rs 150 to 180 K for salaried men.

For women exemption raised to Rs 240K

-- 0.5% minimum tax on turnover withdrawn

-- No change in tax regime on listed shares

-- 20% rise in pay & pension

-- 2% hike in NSS rates

-- 10% advance tax on electricity bills

-- CNG buses exempted from duty;

-- 18 drugs for cancer/heart treatment made duty-free.

The increased target for FBR set at 1.25 trillion against Rs 990 billion revised estimates of 2007-08. Duty on import of 300 items has been increased by 5 percent. Imported and locally made cars, travelling, mobile phones communication services will cost more.

GDP growth target set at 5.5 percent against 5.8 percent of the outgoing fiscal. Inflation rate at 12 percent. Fiscal deficit and current account deficit projected at 4.7 percent and 6 percent of GDP, respectively.

The government employees and pensioners will get 20 percent increase in their basic salaries and pensions. Minimum pension has been increased from Rs 300 to Rs 2000. Adhoc government employees up to grade 15 to be regularised. Travel allowance for 1-19 BPS increased by 100 percent. Medical allowance for grade 1 to 16 is increased to Rs 500 per month.

The poor will be issued Benazir cards for special relief of Rs 1000 per month. NADRA's record will be used to identify the poor for the relief. Working women will get incentive in their income tax limit. One million small houses will be constructed for the government employees in 2008-09.

The minister announced a cut in subsidies to curtail borrowing from commercial banks at a manageable level. Non-development expenditure except salaries has been frozen. Public Sector Development Programme (PSDP) increased to Rs 549.7 billion. Defence budget increased by Rs 25 billion to offset inflationary affect.

Tax on houses and property deals has been increased. A substantial increase in social sector allocation has also been announced. Education sector allocation remained at the last year's level. The minister added that reduction in fiscal deficit, rationalisation of subsidies, build-up up of forex reserves and removal of bottlenecks for economic growth were among the government's top priorities for the next fiscal year.

He said textile industry will get round the clock power supply whereas other key industries and tubewells will have electricity for more hours. He said wheat support price to be enhanced in August-September for wooing the growers for better output and a cold chain to be established for produce and better value and return to the growers.

The Minister added that subsidy on DAP has been doubled to help the growers get more farm productivity. The Finance Minister said NFC award will be reconstituted as soon as nominations from the provinces are received.

Business Recorder [Pakistan's First Financial Daily]


----------



## Interceptor

Neo said:


> *National grid has 1,500MW additional power, says Ashraf​*
> ** Minister says 400MW being saved through conservation programmes​*
> ISLAMABAD: The government has added 1,500 megawatts (MW) of additional power to the national grid and there will be no load shedding for the major industrial and agricultural sectors, Federal Water and Power Minister Raja Pervez Ashraf said on Tuesday.
> 
> He told reporters after the inaugural session of the 2nd Japan-SAARC Symposium Energy and Connectivity that load shedding for domestic consumers would also be reduced due to improvements in hydroelectric power generation and would be completely eliminated from next year.
> 
> Ashraf said 1,500MW had been added to the system by upgrading and enhancing the existing generation capacity of independent power producers and generation companies. He said the government was fully committed to eliminating the menace of load shedding by adopting a rational policy and setting up new power plants on a fast track basis to minimise miseries faced by the population.
> 
> Conservation: He said infrastructure was being developed to import 1,000MW from Iran. To questioning, he said that 400MW was being received through conservation. He also urged traders to implement the conservation plan approved by the government as a national service. Earlier, the minister informed the participants of the symposium that the governments strategy for the power sector depended on the implementation of its action plan, which included harnessing indigenous hydroelectric and coal resources and implementing wide-ranging power sector reforms.
> 
> Ashraf said short-term measures (from 2008-2011) should add generation capacity of 7,067MW. The medium term plan (2011-2020) focuses on maximising coal-based and mega-hydroelectric (15,000MW) power generation projects. He said the government was moving ahead with power import projects of around 1,000MW each from Iran and Tajikistan for long-term projects. The government is also planning to provide resources for producing more nuclear power generation in co-operation with China to achieve a medium-term target of 3,000MW, he added.
> 
> The minister said that being a member of the South Asian Association for Regional Co-operation, Economic Co-operation Organisation and the Shanghai Co-operation Organisation, Pakistan was fully committed to cross-border energy co-operation. The country would take immediate strategic measures to enhance energy security in the region, he added.
> 
> Also present at the symposium, former Petroleum minister Usman Aminuddin said that the Iran-Pakistan-India (IPI) gas pipeline project could not become a reality without building trust between India and Pakistan. He said India could benefit with $60 billion from the IPI gas pipeline project.
> 
> However, he added, the project was being delayed due to American pressure on India. He also hinted that the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline deal could not be completed until Turkmenistan presented an evaluation report about its gas reserves.
> 
> Daily Times - Leading News Resource of Pakistan



Woooohooooo yeah  Come on Webby, this is probably the best news I heard yet. This has to be a sticky.


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## Neo

*Rs 549.7 billion set aside for PSDP ​* 
ISLAMABAD (June 12 2008): The budget for fiscal year 2008-09 envisages an allocation for Public Sector Development Programme (PSDP) which is higher than that proposed in the Annual Development Plan as prepared by the Planning Commission. This dichotomy is unprecedented and is surprising given the severe resource constraints that the country is operating within.

A total of Rs 549.7 billion is earmarked for Public Sector Development Programme (PSDP) 2008-09 compared to the originally proposed Rs 520 billion PSDP in the current fiscal year, as announced by Finance Minister Naveed Qamar in his budget speech.

The ADP envisages a total development outlay of 755.7 billion if injections to the following public sector corporations such as Wapda, CAA, KPT, gas companies and others are included.

Interestingly, the PSDP size as given in the Annual Development Plan (ADP) 2008-09 is Rs 541 billion if calculated without the allocation of Rs 26.7 billion for Earthquake Rehabilitation and Reconstruction Authority (Erra) in the next fiscal year compared to Rs 35 billion in the current fiscal year. There is confusion whether the development expenditure figure 549.7 billion revealed by the finance minister in his speech included the allocation of Erra.

According to ADP, the allocation for federal development programmes is Rs 371 billion in the next fiscal year against Rs 335 billion for the same in the current fiscal year. The allocation for provincial development programmes is Rs 170 billion in next fiscal year against Rs 150 billion in the current fiscal year.

The ADP worked out the operational shortfall at Rs 25 billion in the federal programmes and Rs 20 billion in the provincial programmes for next fiscal year. If the operational shortfall of 25 billion is deducted from federal programmes, the actual allocation comes to Rs 346 billion. Similarly, the operational shortfall of Rs 20 billion if deducted from provincial programmes, the actual allocation would come to Rs 150 billion.

The Planning Commission estimates suggest that PSDP size is at 4.4 percent of GDP with an increase of 11 percent over 2007-08. The Commission also estimated that net amount available during 2007-08 after accounting for the operational shortfall is Rs 300 billion.

Out of the net available amount, Rs 250-260 billion are expected to be spent during the current fiscal year. The Commission is of the view that provinces are likely to perform better and their expenditure may exceed Rs 150 billion.

Under the sectoral distribution of the PSDP 2008-09, an amount of Rs 165 billion or 44 percent of the total PSDP has been made for infrastructure, Rs 188 billion or 50 percent for social sector, Rs 18 billion or 4.8 percent for agriculture and industry.

The allocation for water resources in the next fiscal year is Rs 62.42 billion compared to Rs 63.5 billion in the current fiscal year. The power sector will get Rs 14.15 billion in the next fiscal year compared to Rs 20.6 billion in the current fiscal year.

Pakistan Atomic Energy Commission (Paec) will get Rs 15.3 billion in the next fiscal year compared to Rs 12.21 billion in the current fiscal year. Communication Division including NHA will get Rs 36.82 billion in 2008-09 compared to Rs 29.61 billion in the current fiscal year. Railways division will get Rs 11.28 billion in next fiscal against Rs 11.64 billion in the current fiscal year.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Rs 1.251 trillion revenue target set for fiscal year 2009 ​* 
ISLAMABAD (June 12 2008): The federal government has fixed Rs 1.251 trillion revenue target for financial year 2008-09, which is Rs 35 billion higher as compared to the revised target of Rs 990 billion target of outgoing fiscal year. The Federal Board of Revenue (FBR) is expected to reach Rs 1 trillion mark by the end of current financial year.

Taxation measures on the sales tax and income tax side would enable the FBR to meet the target of Rs 1.251 trillion in the fiscal 2008-09. According to the break-up of target, direct taxes receipts have been projected at Rs 496 billion against revised target of Rs 388 billion, higher by Rs 108 billion for the on-going fiscal year. The original target of direct taxes was Rs 408 billion, which was brought down to Rs 388 billion during 2007-08.

The share of indirect taxes has been projected at Rs 755 billion that shows Rs 138 billion increase compared to the previous year's figures of Rs 617 billion. The original target of indirect taxes was Rs 622 billion during outgoing fiscal year, which was scaled down to Rs 617 billion.

The government has estimated income tax collection at Rs 477 billion during 2008-09 against the revised target of Rs 367 billion giving tax managers the task of generating Rs 110 billion to bridge the gap.

Further break-up shows that customs duty was projected at Rs 170 billion, as compared to Rs 148 billion revised estimates for the year 2007-08. On the basis of massive tariff rationalisation, the customs authorities have been assigned to generate Rs 22 billion more in upcoming fiscal year.

The sales tax target has been enhanced to Rs 472 billion from Rs 375 billion as per revised estimates of 2007-08. This indicates that the sales tax wing will have to collect Rs 97 billion more in the new fiscal year.

The share of the federal excise duty (FED) has been fixed at Rs 112 billion against the revised target of Rs 92 billion for the outgoing fiscal year. The board has to collect Rs 20 billion more in fiscal 2008-09 from excisable commodities/services.

Out of total direct taxes target of Rs 496 billion, the target of capital value tax (CVT) has been projected at Rs 6,500 million against last year's estimates of Rs 5,700 million. The CVT target showed a substantial increase of Rs 800 million from different areas liable to the levy.

The estimate of Worker's Welfare Tax (WWT) has been projected at Rs 3,500 million against last year's revised projection of Rs 2,400 million, depicting an increase of Rs 1,100 million. The target of Worker's Participation Tax (WPT) has been fixed at Rs 9,000 million as compared to the revised target of Rs 9,600 million.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Inflation at all-time high of 19%​*
KARACHI: Inflation reached all-time high of 19.27 percent in May, mainly because of growing prices of food items.

The coalition government has already hinted at missing of inflation target of 6.5 percent in the Economic Survey released Tuesday and believed the average inflation settling over 11 percent by the end of financial year 2007-08. 

Analysts, however predict the average inflation will be closing at 12 percent or slightly above that in the fiscal year, which will end June 30, 2008.

Data released by the Federal Bureau of Statistics Wednesday showed that food inflation, measured through the Consumer Price Index (CPI), swelled to record 28.48 percent in May, highest in over three decades. 

In the food basket, price of non-perishable food items witnessed an increase of 33.13 percent and perishable items 1.09 percent in the month under review. 

The food items including rice, onions, potatoes, besan, pulse gram, pulse masoor, maida, sugar, gur, wheat flour, pulse moong, beverages, gram whole, fresh fruits, cereals, wheat, readymade food, spices, mustard oil, sweetmeat and nimco, milk fresh, vegetable ghee, pulse mash, milk products, milk powder etc saw major increase in their prices during the month under review. 

The figures shows CPI inflation surged by 11.11 percent during July-May period of current financial over the corresponding period whereas on month on month basis, it also increased by 2.69 percent in May over the preceding month of April.

The economic survey cited the high global prices of food, fuel and other commodities driven by a weaker rupee, import costs and gradual removal of fuel, food and power subsidies and monetary overhang on account of excessive borrowing from the SBP to finance the fiscal deficit have been major factors in pushing the prices to new highest during the current fiscal. 

These factors will continue to exert pressure on overall prices in the next two to three years. The longer the high inflationary pressure persists, the greater is the chance for wage-price spiral to gain firm hold, it added. 

The other components of CPI basket also posted substantial increase in the month of May. House rent surged by 12.05 percent, transport and communication by 19.14 percent, medicare by 14.06 percent etc. 

Sensitive Price Index (SPI) also increased to 29.92 percent in May 2008 whereas the Whole Price Index (WPI) surged to 28.24 percent in the month under review. 

This year's inflation started with 6.4 percent in July 2007, but kept increasing by reaching the all time high of 19.27 percent in May 2008. Similarly, food inflation, having 40 percent weightage in CPI basket also began the year at 8.5 percent but it also shoot up unprecedently to 28.48 percent, which was highest increase since 1974-75 when it touched 27.8 percent.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Defence allocation hiked to Rs 296 billion ​* 
ISLAMABAD (June 12 2008): Pakistan on Wednesday hiked defence spending by close to seven percent to Rs 296 billion for the fiscal starting next month. The estimated allocation for 2008-09 budget compares to Rs 277 billion actual expenditure for the ongoing financial year ending on June 30. An amount of Rs 275 billion was originally earmarked for defence for the fiscal 2007-08.

Presenting the budget to the parliament, Finance Minister Naveed Qamar said Pakistan could not be oblivion to its defence and wanted to maintain a minimum deterrence. The increase is still not enough to counterbalance the impact of inflation during the year that has cruised to double digit.

The defence budget was raised by more than nine percent last year, a figure slightly above the rate of increase in prices. Prime Minister Yousuf Raza Gilani on Monday told the National Assembly that Pakistan new civilian government would freeze defence spending and called for a similar response from India.

INDIAN DEFENCE BUDGET: But India forthrightly rejected the appeal, saying the country's defence budget - with an annual allocation of less than two percent of the GDP - is amongst the "lowest" in the world, an Indian daily reported on Tuesday.

"Despite our economic boom, our defence expenditure is less than 2 percent of the GDP. Our neighbours spend about 3 percent of their GDP (on defence)," Indian Defence Minister A K Antony said, while speaking to media persons in New Delhi.

The Indian government in February raised the defence expenditure for fiscal 2008-09 by 10 percent of what it was the previous year to (Indian) Rs 1, 056 billion ($26.5 billion) and promised even more funds if required. Financial year in India starts from April 1.

Pakistan and India are engaged since early 2004 in what both sides called composite dialogue process to remove differences on burning disputes including the core one of Kashmir. They have fought four wars since the partition of Indian Sub-Continent into two states. Despite thaw in relations, the nuclear-armed South Asian neighbours continued to focus on military build-up.

REVISED FORMAT: Some specific details of defence budget were presented to the parliament for the first time in Pakistan's history. The budget document gave some classified information on the overall expenditure under major heads.

Previously, respective governments used to present defence budget to the parliament as one liner, giving total allocation and its comparison to last year. According to a break-up, of the total allocation a major chunk (Rs 294 billion) will go for military defence and a nominal (Rs 1.17 billion) has been earmarked for defence administration.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Speed up work on gas pipeline projects: experts​*
ISLAMABAD: The Japan-SAARC Symposium on Energy and Connectivity was held at the Institute of Strategic Studies, Islamabad (ISSI) Wednesday under the joint auspices of the Government of Japan and the ISSI.

Energy experts and government officials from Bangladesh, India, Maldives, Nepal, Pakistan, Sri Lanka, Japan and SAARC Energy Centre, as well as audiences invited from various sectors in Islamabad attended the symposium.

During the two day symposium, various aspects of the energy issues in the region were discussed in the sessions titled "Global Energy Trends: Addressing Energy Shortages in South Asia", "Energy Policy of South Asian Countries and Environmental Issues", and "Energy Infrastructure Development in South Asia and Promotion of Connectivity", which included the current situation, possible policy options and cooperation within the SAARC as well as in the Japan-SAARC framework.

Experts urged the parties engaged in the current projects for constructions of gas pipelines connecting one or more SAARC countries to external energy sources in the region should urgently address outstanding issues related to such projects. 

SAARC Member States for this purpose should continue to make use of the technical assistance from bilateral and multilateral sources for capacity building, technology transfer, energy efficiency and specific project formulation. SAARC member states should mutually share information on their own progress, technical know-how, identify their needs, barriers and possible solutions. 

Japan and SAARC member states continue dialogue for possible means and cooperate where appropriate to improve regional connectivity in energy sector in the SAARC region through expansion of energy infrastructure, development of both conventional and non-conventional energy resources and technologies. Efforts should be made for fostering private and public partnership, R&D, and cooperation with academics, civil society and the media. To this end, the consideration must be made on economic and social cost-benefit analysis keeping in mind the specificities of each State.

Priority areas of energy cooperation in the SAARC region may include: energy infrastructure development, regional trade of energy, sharing of hydroelectric resources and demand side management including sharing and promoting efficient and cleaner energy technologies, promotion of renewable sources of energy and human resources development.

Programs and activities of SAARC Energy Centre for advancing energy cooperation in the SAARC region should be strongly supported through provision of human, financial, infrastructural, technical and material resources.

Concluding the Japan-SAARC Symposium on Energy and Connectivity, Ismail Qureshi, Secretary Water and Power, Government of Pakistan, said that energy sources of SAARC region and its neighbours are huge, unevenly distributed and undeveloped. Cross border investments in energy and promotion of regional energy trade are essential for achieving economic growth of the SAARC countries. The factors curtailing such regional cooperation are political tension, poor infrastructure and poor operational efficiency. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Increase in salary income to be taxed at 20-50pc​*
ISLAMABAD, June 11: The government has introduced a concept of marginal tax relief for the salaried persons to cater for the negative impact of taxation under the present flat tax rate system.

Finance Ordinance 2008 proposed that under the new system the marginal increase in salary income is proposed to be taxed at the rates not exceeding 20 per cent to 50 per cent allowing sufficient relief in tax payable.

The value of accommodation provided to the salaried persons in small cities is proposed to be taken at 30 per cent instead of 45 per cent of the minimum time scale of the employees for the purpose of taxation.

The pensioners, senior citizens and widows, who are exempt from withholding tax in respect of profit from pensioners benefit scheme and Behbood Fund, would now be charged to tax at a rate not exceeding 10 per cent of such profit.

The rates of advance tax, collected at the time of renewal of registration of private motor cars, are proposed to be rationalised by making about 30 per cent to 40 per cent increase in withholding tax rates.

From the next financial year, withholding tax on purchase of locally manufactured motor car or jeep is proposed to be collected by a motor vehicle registration authority at fixed rates depending on the engine capacity.

In the case of a small company, if turnover exceeds Rs250 million, the income attributable to the turnover exceeding the said limit, is proposed to be charged to tax at progressive slab rate of 25 pc, 30pc and 35pc, so that the company is able to progress still retaining its status of a small company.

Minimum tax payable on the declared turnover at the rate of 0.5 per cent is being proposed to be withdrawn.

Association of persons and individuals having annual turnover of Rs50 million, respectively, are proposed to be made withholding tax agents for the purpose of tax deduction on payments relating to sale of goods, services rendered and execution of contracts.

Profit transferred by a branch of foreign company out of Pakistan are proposed to be treated as dividend and chargeable to tax at the rate of 10 per cent as final tax, the limit of donations eligible for tax credit in the case of individual/association of persons and companies presently admissible at the rate of 30 pc and 15 pc, respectively, are proposed to be reduced to 10 pc of the taxable income.

It has been proposed that reinsurance premium paid to overseas insurance companies may be subjected to withholding tax at the rate of 5 per cent as final tax, withholding tax on cash withdrawal from banks presently collected enhanced to 0.3 pc from 0.2 pc with no change in limit of withdrawal.

The facility of reduced tax rate to a cooperative society or a finance society is proposed to be withdrawn and would be treated at par with the company for the purpose of taxation.

Exemptions from income tax available under the other statutes are proposed to be withdrawn.

Any payment made through a foreign currency account and exchange companies proposed to be included in the payments requiring deduction of withholding tax unless the commissioner of income tax has allowed otherwise as provided under section 152 of Income Tax Ordinance, 2001.

Thin capitalisation rule is proposed to be made applicable to branches of foreign companies operating in Pakistan. The tax collected from the members of stock exchange on sale as well as purchase of shares in lieu of commission income and trading of share is proposed to be made a minimum tax on income of such members/ brokers.

In future instead of tax holidays, First Year Allowance in the shape of accelerated depreciation at the rate of 90 per cent is proposed to be allowed to the industrial undertakings established in the specified rural and undeveloped areas.

At present inter corporate dividend in respect of companies entitled to group relief under section 59AA is exempt from tax. The facility is proposed to be extended to the companies eligible for group taxation under section 59B. And the exemption on capital gains on share extended to June 30, 2008.

To encourage amalgamation of banking companies, modarabas and insurance companies the facility of carry forward of accumulated loss is proposed to be allowed for a period of six years in the case of amalgamated or amalgamating companies.

Rice Exporters Association of Pakistan (Reap) is proposed to be allowed the facility of reduced withholding tax rate of 1 per cent instead of 1.5 per cent in respect of payments payable for supply of rice to Utility Stores Corporation.

Income derived by a project approved by Designated National Authority (DNA) from transfer/sale of CDM emissions credit i.e. Certified Emissions Reduction etc is being proposed to be exempt from income tax.

In the case of banks no CVT is proposed to be charged on General Power of Attorney unless it is used into force the mortgage of property offered as collateral against a loan, income shown as unrealised gains in the case of non-life insurance companies would be excluded from the taxable income and not charged to tax.

Proportionate relief is proposed to be allowed in the amount of penalty imposed in tax evasion cases where the appellate authorities reduce the quantum of concealed income and tax charged thereon and a scheme for waiver of additional tax and penalty etc. is proposed to be introduced where the taxpayer is able to pay the principal amount of tax within a certain period.

Increase in salary income to be taxed at 20-50pc -DAWN - Business; June 12, 2008


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## Neo

*Rs 24.6 billion allocated for education ​* 
ISLAMABAD (June 12 2008): The government has allocated Rs 24.6 billion for education. In the budget 2008-09, for the on-going and new projects of Higher Education Commission (HEC) an amount of Rs 18 billion has been allocated while an amount of just Rs 6.2 billion has been allocated for primary and secondary education.

The budgetary allocation for HEC has always been higher than that for the primary and secondary education, which is depicting an increase of 66 percent against the last year.

The government has announced to allocate Rs 6308.3 million for 2008-09 for Basic and College Education projects that is four percent more than the total amount of Rs 6546.9 million allocated in 2007-08.

For the coming fiscal, Rs 62, 629.6 million have been allocated for projects of Ministry of Education, Rs 23.2 million for projects of school /college education in cantonments and Garrisons under Ministry of Defence and Rs 15.2 million under Cabinet division for Center of Excellence for Urdu Informatics and production of reading material in national language.

An allocation of Rs 1,275 million has been allocated for Education Reforms Sector (ERS) specific programs, which include education for all (EFA), adult literacy program, revamping of science education at secondary level and establishment of polytechnic institutes at district level.

An allocation of Rs 416.6 million has been made under Canadian debt swap for capacity building of teacher training institutes and training of elementary school teachers all over the country.

For 2008-09 an amount of Rs $259.2 million has been allocated for Science and Technology sector. Out of which Rs 3015.4 million for Ministry of Science and Technology, Rs 137.2 million for Pakistan Metrology Department, Rs 625.2 million for Pakistan Atomic Energy Commission and Rs 481.4 million for SUPARCO.

During 2007-08 Rs 4829 million was allocated to Science and Technology sector, including Rs 3600 million for Ministry of science and Technology (MoST), Rs 580 million for Pakistan Atomic Energy Commission (PAEC), Rs 627 million for SUPARCO and Rs 21 million for Pakistan Meteorology Department.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Rs1.5bn cant bring white revolution​*
KARACHI, June 11: The allocation of Rs1.5 billion to bring white revolution through promotion of livestock sector in the budget 2008-09 is very insufficient keeping in view $300 million (about Rs20 billion) of foreign exchange being spent on importing powdered milk annually to meet the demand of the urban areas.

Finance Minister Syed Naveed Qamar in his budget speech told the National Assembly on Wednesday that Rs350 million had been set aside for milk collection/processing and dairy production and development programme.

According to the minister Pakistan is the fifth largest milk producer in the world, but its dairy sector has been neglected by the successive governments. The country is surplus in milk production despite having lowest per cattle yield in the world.

Talking to Dawn Sindh Abadgar Board Chairman Majid Nizamani said that due to lack of proper planning, collection and distribution facilities, a major portion of the total milk production was consumed by the producers in the far-flung areas.

He said the countrys tremendous potential to increase its milk production had so far remained unexplored due to the inactivity of the departments concerned.

The milk production, despite its lowest yield in the world, is even far ahead of the major cash crops of wheat, cotton, rice and sugarcane.

In Pakistan only 3 to 4 per cent of the total milk is processed and marketed through formal channels whereas the remaining reaches consumers through an extensive, multi-layered distribution system of middlemen.

The unprocessed milk passes through the middle persons before it reaches the urban retailer. The price of milk increases by one rupee per litre at every stage of sale.

Pakistan can successfully harness to its advantage if due attention is paid to this sector as there is huge demand of both powdered and packed milk in Iran, the UAE, Saudi Arabia, Malaysia, and Philippines.

It is estimated that presently only about 22 per cent of milk production is processed in Pakistan, about 57.5 per cent is supplied to urban areas in raw form in most unhygienic conditions causing real health hazards. Rest is consumed by the farmers especially in the far-flung areas for lack of proper facilities to take it to deficient areas.

About 75 per cent of the total production of raw milk is produced in Punjab, 14pc in Sindh 10pc in the NWFP and only one per cent in Balochistan. In Punjab there are more buffalos than cows in about 60-40 ratio, in Sindh it is 50-50, in the NWFP 20pc buffalos and 80pc cows. In Balochistan there are mostly cows.

Rs1.5bn cant bring white revolution -DAWN - Business; June 12, 2008


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## Neo

*POL products, electricity and food items: Subsidies reduced to 2.4pc of GDP​*
ISLAMABAD: The government has allocated a subsidy of Rs 295.204 billion on petroleum products, electricity and food commodities in the 2008-09 budget to facilitate consumers.

According to a federal budget document made available to Daily Times, the government has reduced the total subsidy to 2.4 percent of the gross domestic product (GDP) in the budget estimates of the 2008-09 financial year, as compared to 3.9 percent of the GDP in the current 2007-08 financial year.

The previous government had estimated that a subsidy of Rs 113.92 billion would be required for petroleum products, power tariffs, wheat, fertiliser and other items in 2007-08. However, the allocation reached Rs 407.485 billion due to increased subsidy payments to oil marketing companies price differential claims, imported wheat, electricity and fertilisers.

For electricity consumers, the new government has allocated Rs 88.412 billion subsidy in the 2008-09 financial year due to higher prices of oil used for thermal power generation. The government has also allocated Rs 74.612 billion subsidy for the Water and Power Development Authority (WAPDA), against 2007-08s allocation of Rs 52.893 billion. It has also reduced the subsidy on WAPDA general sales tax payment of consumers to Rs 3.018 billion, against the Rs 24.893 billion allocation for 2007-08.

However, in the 2008-09 budget, the government has reduced the allocation for the Karachi Electric Supply Company (KESC) to Rs 13.8 billion against the 2008-09 allocation of Rs 19.596 billion. This has been reduced because of a projected reduced tariff differential payment in 2008-09 to Rs 12 billion, against the Rs 15.796 billion that was paid in the current financial year 2007-08.

Similarly, to control food inflation, the government has increased the subsidy to Rs 26.6 billion for the Trading Corporation of Pakistan (TCP). The government has also allocated Rs 6.3 billion subsidy for sugar imports in 2008-09, against Rs 7.5 billion in 2007-08. Rs 2.7 billion subsidy has also been allocated for the Utility Stores Corporation in 2008-09, against the Rs 1.8 billion that was allocated in 2007-08, to provide ghee, pulses and flour at subsidised rates.

The incoming budget also provides subsidy of Rs 672 million to the Pakistan Agriculture Storage and Service Corporation for miscellaneous expenses and the export of wheat; Rs 81 million for the Pakistan Dairy Development Company; Rs 195 million for the sale of wheat in FATA; and Rs 606 million for the sale of wheat, salt and sugar in Gilgit Agency.

Rs1.5bn cant bring white revolution -DAWN - Business; June 12, 2008


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## Khalsa

Foreign currency reserves depleting fast

Friday, June 13, 2008
By Mehtab Haider

ISLAMABAD: Pakistans precious foreign currency reserves are depleting and have touched $10.953 billion. Owing to increasing prices of petroleum products and failure of the incumbent regime to generate the additional envisaged resources of $3 billion during the outgoing financial year.

The foreign currency reserves stood at $11.178 million on May 31, 2008, which fell to $10.953 billion on June 7, 2008 as the reserves depleted by around $225 million in just a one week period.

The countrys reserves are rapidly depleting because of growing imports, especially the surge in oil prices, and dwindled to $10.953 billion, according to data released by the State Bank of Pakistan (SBP) on Thursday.

Out of the total $10.953 billion reserves, foreign reserves held by SBP stand at $8.386 billion, while net foreign reserves held by banks other than SBP are $2.566 billion. This is an alarming situation because forward liabilities are also rising, so the real foreign reserves position is not comfortable, said sources.

Official sources confided to The News that on one side the external debt was increasing and touched a new peak of $45.9 billion, while on the other hand the hard-earned foreign reserves showed a huge drop in recent months, making the national economy extremely vulnerable.

According to the Economic Survey 2007-09, the government has projected reserves position standing at over $12 billion in April 2008, which has now reduced to $10.953 billion on June 7, 2008, registering a decrease of over one billion dollars in the last two months.

The foreign investment attracted by Pakistan in the last fiscal year was over $8 billion, which included privatisation proceeds. But the investors would go out of the country with almost doubled dividends against their invested money. Thus, the investment also creates liabilities in one sense and there is a need to ensure an increase in foreign reserves for meeting future liabilities.

Pakistans foreign debt also swelled up by around $10.5 billion in the last six years, as it now climbed up to $45.9 billion at a time when the reserves are also depleting fast.

According to the SBP, the foreign currency reserves stood at $14.08 billion on Feb 15, 2008. The reserves position was much better a few months back as it stood at around $16.4 billion during October 2007. This shows that the reserves declined by around $6 billion in the last few months.

Sources also raised questions over the alleged flawed policy being continued by the central bank for managing the precious reserves. According to them, Pakistan has parked a certain portion of its reserves, around $2.5 to $3 billion in international banks, on which the country is charging approximately 0.5 per cent interest rates.

While on the Eurobond and other papers launched by Pakistan in recent years, the country is paying 6 to 7 per cent interest rates to its subscribers. There is no economic justification for this policy, said the sources and added that Pakistan is a net loser of millions of dollars in the forex market.

Pakistans current account deficit widened in the outgoing fiscal year, resulting into growing pressure on foreign currency reserves. Official circles believe that there is an expectation of some inflows pouring into Pakistan before June 30, 2008, which will help improve the reserves position during the outgoing fiscal year.


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* PS capacity to increase to 3mT by 2012 ​* 
Friday, June 13, 2008

ISLAMABAD: Pakistan Steel Mills (PSM) production capacity would inch up to 1.3 million tonnes per year by the end of this fiscal from the current level of one million tonnes.

In the second phase of its expansion plan, by the end of 2010, the capacity will increase to 1.5 million tonnes. After the completion of third phase in 2012, the total capacity of PSM will reach 3 million tonnes.

This was told by PSM officials in a detailed briefing to Mian Manzoor Ahmad Wattoo, Adviser to Prime Minister for Industries and Production.

Wattoo said that expansion in capacity is required to make Pakistan Steel Mills (PSM) more economic and financially viable and to meet the increasing demand of steel in the country.

While chairing a meeting on PSM here on Thursday, he directed the PSM management to work out a comprehensive expansion plan and to generate its own resources to fund this expansion plan. The meeting was also attended by Secretary Industries and Production Shahab Khawaja and Chairman Pakistan Steel Mills Moeen Aftab Sheikh.

He instructed the management of PSM to increase its dependence on the local raw material in its expansion plans and other routine operations. There were many iron ore and coal reserves in different parts of the country which should be utilised to save the foreign exchange and decrease dependence on imported raw material.

Mian Manzoor Ahmad Wattoo also chaired a briefing on PASDEC (Pakistan Stone Development Company). Ehsanullah Khan Chairman PASDEC gave a detailed briefing about the various projects of PASDEC. He noted that PASDEC is working on 43 different projects which include the development of marble cities, model quarries, upgradation of existing quarries, Common Facility and Training Centres (CFTC), etc. He informed that one model quarry established by PASDEC, has started working in Khuzdar (Balochistan) and two marble cities, one in Risalpur (NWFP) and the other in FATA are ready for ground breaking. The Chairman further stated that 120,000 direct and 500,000 indirect employment opportunities will be generated under various Projects of PASDEC. He also revealed that due to the efforts of PASDEC, marble export from Pakistan increased from $14 million in the last year to $23 million in the current year, which is an increase of 43pc.

Wattoo observed that Pakistan is rich in natural resources and marble and granite is abundant in different areas of the country. We need to do more to exploit these resources to the maximum, said Wattoo adding that there was a large scope for development of mines in Balochistan. He also directed the PASDEC and officials of the MOI&P to work out the possibility of Italian investment in Pakistans marble and granite sector.

PS capacity to increase to 3mT by 2012


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## Neo

*'No question protection' for remittances from foreign exchange accounts withdrawn: step aimed at curbing under-invoicing menace ​* 
KARACHI (June 13 2008): In order to check the menace of under invoicing of imported goods, all those sending remittances from foreign currency accounts will be required to file an 'M' Form with the State Bank of Pakistan certifying the reason for the remittance being undertaken. This change is meant to check rampant under-invoicing of imported goods.

It is said that importers of goods, specially from China, remit the under invoiced amount through letter of credit opened by a bank and the balance amount is remitted through forex accounts, after purchase of foreign exchange from a money changer or an exchange company and depositing the same in individual forex accounts.

FBR in consultation with SBP has devised a mechanism that seeks to disallow non-deduction of withholding tax on foreign exchange paid to non-residents for import of goods, unless a certificate from tax department, is obtained whenever the title of goods, passes outside Pakistan. To obtain the exemption certificate filing of supporting import documents will now be mandatory.

This will ensure proper utilisation of foreign currency for import of goods, says FBR. Further, it will check misuse of foreign currency purchased from open market and its remittances abroad under the garb of imports or otherwise.

Payments to non-residents including remittance from foreign currency account and exchange companies applicable to such transactions would also need to provide on explanation for the remittance.

In order to overcome operational difficulties for enforcement against misuse of telegraphic transfers for under invoicing of imports, the overriding clause of Protection of Economic Reform Act (PERA) 1992 over Foreign Exchange Regulation Act (FERA) 1947 to this extent is being deleted from the purview of section 3 of PERA 1992.

The Finance Bill also empowers SBP to impose penalties on banks and exchange companies for violation. Hitherto, SBP could only suspend or cancel the licence. SBP would announce the penalty tariff against various violations in due course.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Iran to help Pakistan combat energy shortage ​* 
Friday, June 13, 2008

ISLAMABAD: Pakistan and Iran have identified certain areas for cooperation including electricity as Tehran has agreed to extend its all-out assistance for overcoming energy deficiency being faced by Islamabad.

Maashallah Shakri, the Iranian Ambassador in Pakistan, called on Finance Minister Syed Naveed Qamar here on Thursday.

The finance minister apprised the Iranian ambassador about the governments pre-budget preparations and post-budget legislative debate in parliament along with other development-related economic initiatives. Both sides discussed the institutional economic framework of their respective countries.

The finance minister stated that Pakistan is currently passing through the most challenging time since the democratic government took over and special measures are under way to reform the national economy. Pakistan would continue to be a priority in the Iranian governments regional and global economic preferences, he said.

Earlier, the Iranian ambassador said Iran and Pakistan need to work closely on all fronts, especially in the field of economic cooperation.

Pakistan and Iran could foster their ties through working together via Joint Ministerial Commission in all fields of bilateral interest, both sides agreed. The Iranian ambassador identified more than 50 areas for joint project-based cooperation focusing on railways, communications, roads, shipping, trade, infrastructure, etc.

The forthcoming visit of Pakistans finance minister to Iran was also discussed in terms of agenda and development-related prospects beneficial to both countries.

Additional power generation and meeting Pakistans rising electricity demand is another sector identified for mutual cooperation.

In the end, the finance minister hoped that Iran and Pakistan are two brotherly Muslim countries sharing each others concern in all sectors of national and regional development and would continue to work to further strengthen bilateral relations.

Iran to help Pakistan combat energy shortage


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## Neo

*Warid plans $1bn investment to improve services​* 
*Chief technical officer says Pakistan not ready for 3G services​*
Friday, June 13, 2008

KARACHI: The tele-density in Pakistan is said to be more than 50 per cent but it is actually around 40 per cent, Warid Telecom International Group Chief Technical Officer Marwan Zawaydeh said in an interview with The News.

Tele-density is calculated on the basis of sales data that can be misleading as active connections are much less than the sales figure, Marwan said.

He said there is room for further growth in the telecom industry and it could further contribute to the GDP of the country. Though Warid and Telenor entered the market almost together, it is true that our competitor has acquired more market share because Telenor captured the market in under-served rural areas whereas we focused more on urban centres. We were left behind in market share but not in quality of service.

He said Warid has recently re-launched itself and has come up with value-added services. Its focus is on untapped areas.

This month, Warid will launch Blackberry and in the near future many more services are likely to come. The company plans to invest $1 billion in the next three years.

At present, he said, the company has no plan to get listed on the Karachi Stock Exchange. The business environment in Pakistan is very good as there is a lot of room for the telecom business to grow since customers are interested in new technologies, new services, etc. The main drivers of business in Pakistan are the youth.

Warid is cooperating with the government in fulfilling the requirement of registering sales of SIM cards and verifying customer details with the NADRA. We are following the instruction of the government and cooperating with it, but this is an uphill task and will take time. We have asked the government to give us some time to update the customers record. Otherwise, by and large, there is no such issue which hinders business in Pakistan, he said.

He said Pakistan is a low profit market and generates very low revenue per customer. Besides, the tariffs are already low and the industry cannot afford to further reduce them.

To compete in the market, he added, Warid has to come up with some different qualities as rates of all competitors are low.

Our top priority is provision of quality service besides uncompromising attitude on quality, he said. Its a challenge for cellular companies to survive in an environment where Average Revenue Per User (ARPU) is very low. 

That is why Warid has re-launched and has come up with an aggressive marketing strategy to capture untapped areas. To stay in the market we have to differ in quality service besides an improved network. We also need to offer more new packages and services.

He said Warid is also in the process of infrastructure sharing with all cellular companies like Mobilink, Telenor, China Mobile and Ufone.

He said there are already five active operators and there is no room for other cellular operators. He said Pakistan is not yet ready for 3G technology since it is too early for this country to go for 3G technology. He said the EDGE technology is required more but people have not yet fully grasped it.

The 3G at present is very expensive, first because the licence fee is very high, the 3G compatible handsets are very expensive and there is not high demand for it as yet in the market. May be the situation will change in the coming years, he said.

He said mobile handset rates are lowest in Pakistan because there is no taxation on it while the operators pay activation tax. He said there should be tax on the import of the mobile phone handsets and the supplier should share the burden of the tax; and that will help in manufacturing handsets locally. 

Pakistan has an excellent skilled manpower and all of the team of the Warid working here are Pakistani. The young people of Pakistan are well educated, motivated and hard working.



Marwan Zawaydeh has been associated with Warid Telecom International since June 2004 as Group Chief Technical Officer and Executive Committee Member of the Board.

Marwan is an electronics engineer with more than 28 years of experience in telecommunications, including fixed network, GSM and 3G mobile networks.

Marwan has held senior positions in UAE-based telecom operator Etisalat including the office of Senior Executive Vice President of Engineering Department from 1996 to 2004. Marwans contributions at Warid Telecom include the launch of Warids GSM network in Pakistan, Bangladesh, Congo and Uganda.

Warid plans $1bn investment to improve services


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## Neo

*Pakistan's foreign exchange reserves fall by $224.8 million ​* 
KARACHI (June 13 2008): The total liquid foreign exchange reserves declined by $224.8 million to $10,953.5 million in the week ending June 12, 2008 as compared to $11,178.3 billion recorded on June 5, 2008, the State Bank of Pakistan (SBP) said on Thursday.

Reserves held by the SBP declined by $.297.7 million to $8,386.9 million from $8,684.6 million a week earlier, while those held by commercial banks rose by $72.7 million to $2,566.6 million from $2,493.7 million.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Hybrid Bt cotton project launched​*
ISLAMABAD, June 12: After achieving phenomenal acclaim from the developing world in Basmati rice variety, a local business group has now launched a research project involving Pakistani and Chinese scientists to evolve a hybrid Bt cotton variety, claimed a company executive.

Shehzad Ali Malik, director (marketing), Guard Group producing agricultural as well as auto-related products, said the company plans to establish 1,200 such facilities at CNG stations in three years, a TV channel reported on Thursday.

Shehzad Malik promised to carry out demand-based research on cotton to evolve varieties that meet the requirements of the textile industry.

He said this sector still imports seed with qualities like long staple, etc, while hybrid Bt cotton being developed by the company will meet all requirements and will be CLVC-resistant to solve the problem affecting cotton growers for decades.

He said that rice was being exported to 38 countries and had earned $700 million per annum.APP

Hybrid Bt cotton project launched -DAWN - Business; June 13, 2008


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## Neo

*Italian investors offered to invest in power sector ​*
ISLAMABAD (June 12 2008): Minister for Water and Power, Raja Pervaiz Ashraf has offered Italian investors to start investment in coal and hydel power generation projects in Pakistan.

Talking to the Italian delegation, headed by Italian Ambassador, Vincenzo Prati who called on him here, the minister said power sector in Pakistan has great potential and the foreign investment in the coal and hydel power generation will help to meet the country's future requirements.

He informed the envoy that the government has liberal policies to attract foreign investment as the procedural requirements have been simplified and now there are no issues of tariff fixations, he added.

He said that Pakistan was facing severe power crisis and the government was taking all short, medium and long-term measures to combat the menace of the load-shedding and various projects are being offered to the investors, consortium through open bidding.

He said that hydel and coal is now the main focus of the government to generate cheaper electricity. He added an international conference on coal is being organised in Washington next month, where investors from all over the world will be invited to seek their investment in Thar coal for power generation.

Earlier, the Ambassador said that the Italian companies are interested in the power sector and transfer of technology projects in Pakistan. He said that the Italy is also keen to generate power through solid waste and some proposals will be submitted in this regard. He said that investment potential in the hydel and coal power generation will be considered and project details will be submitted to the investors.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Chashma Nuclear Power Project 2008-09: 2 new power plants worth Rs 129.374bn​*
ISLAMABAD: Pakistan has decided to launch two new nuclear power projects at Chashma worth Rs 129.374 billion that would generate 640 MW power to induct into national grid.

These plants include Chashma Nuclear Power Project (c3) and Chashma Nuclear Power Plant (c4) and government has allocated Rs 100 million for these nuclear power projects in the Public Sector Development Programme (PSDP) 2008-09.

Sources said that each nuclear power plant would have the power generation capacity of 320 MW and each project would cost Rs 64.687 billion. Government would arrange Rs 80.36 billion from international donors' institutions and countries.

They further added that these new nuclear power projects are the part of the government's 2030 vision strategy under which over 8,000 MW power by nuclear projects would be generated by 2030.

Pakistan had planned to set up four new nuclear power plants in its strategy for financial year 2008-09 of 1,280 MW power and however two nuclear power projects would be launched in the coming financial year 2008-09. These nuclear power projects are the phase 3 and phase 4 of Chashma Nuclear Power Plants.

The first phase project of Chashma Nuclear Plant was commissioned in September 2000. A Chinese Company is already working on the second phase of Chashma Nuclear Power Plant and in May 2004, Pakistan and China signed a contract to jointly build the second phase project of Chashma Nuclear Power Plant.

Sources said that Pakistan has sought financial and technical help from China for setting up of these two power nuclear power plants of 320 MW each and submitted feasible studies of these projects to China. They said that China has agreed to provide financing and technical assistance for these nuclear power projects.

Sources said that Pakistan would also seek help from other countries and however, major chunk of the financing would come for these power plants would come from China. They said that Chinese companies are already working on mega power projects in Pakistan.

The government had also planned to set up two nuclear power plants at Karachi but the plan had not been shelved due to financing problems for the said projects. They said that the Finance Ministry is also working to seek financing from other countries besides China and would also evolve a strategy to engage the countries in a joint venture to provide financing for the said projects.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Editorial: A budget for agriculture​*
A budget of Rs 2.1 trillion has been presented at the end of a fiscal year in which most targets were missed, particularly in the sector of agriculture where shortfalls forced the government to import food and contend with problems in the distribution system. The new emphasis will be on the agricultural sector where the farmers will be incentivised to grow the crops that meet the food deficit in the country and even provide surplus for exports. The effort is to enable the economy to resume export led growth as in the past, only this time the agri-sector is expected to do the job.

The protest factor was foretold. Angry rejection of the budget is a permanent fixture in third world economies, but in the case of Pakistan the protest is being heard from sectors affected by the drastic changes in the global economy and a measure of neglect by the managers of the national economy in the past. The industrial sector remains under pressure and its export side will remain under pressure because of the cost factors. Most of the export sector was increasingly non-competitive even when the increase in the global prices of their inputs were not passed on. It will come under more pressure now when these prices are passed on to decrease the fiscal deficit.

The industrial sector has been assured a steady supply of electricity. But the government will be sorely tested on this since the sector is concentrated in Karachi and the Karachi power supply is not under the WAPDA system. If this pledge alone is fulfilled the sector should consider itself lucky. The problem of cost will remain the one big problem and the sector is expected to suffer as the government fails to offer it subsidised loans and raw material. What it can do is lower duties, but it might not help the exporters in coming out of their uncompetitive trough. The industrial sector says it was not consulted on the budget, which is understandable given the political situation in the country after the February 18 elections.

The State Bank has already tightened the economy through its monetary policy. This contraction will have to be sustained. The trade gap, the largest in the countrys history, will have to be managed through stinginess and discouragement of certain imports that are considered luxury items. High duty on such imports will give the economy the income to offset the gap, but the demand by some industrial quarters that this income be used to subsidise certain raw materials will be problematic. Duties can be lowered on crucial raw materials but subsidies will simply deepen the gap.

The lagging industrial sector may actually cause more unemployment in the cities as investments become difficult under high rates of credit and the rough global market for exporters. But the crisis experienced in the past few months has concentrated the Pakistani mind on agriculture. The economy also hopes to benefit from the higher official prices set for crops in the coming seasons. The subsidy part of the budget will be focused on fertilisers and insecticides which were allowed to float in the past, taking the farmers inputs out of his reach. The challenge will now be of two kinds: the first will come from nature and shortage of water and the second will come from the governments ability to keep domestic prices low for the farmers and prevent the output from being exported through smuggling and kept out of the market through hoarding.

The challenges will be enormous. The poverty package offered through cash handouts to five million households is good but it will be followed by the removal of subsidy on electricity and oil which will offset the poors gain. The hardship will increase and the TV channels will paint a dismal picture of the Pakistani street saying that this government too is neglectful and incompetent and that it is doing more for the army than for the people. The increase in the military budget is a belt-tightening one given the new cost of mobilisation on petrol that Pakistan can hardly afford at over $130 a barrel. No matter how good the concessional package finalised by Saudi Arabia, the army will be under pressure in these times of emergency, and Pakistan will have to remain a part of the global war on terror in order to finance the current levels of spending on troops mobilisation.

Unfortunately, national politics is not suited to the kind of emergency we are facing. Many problems unrelated to the economy and in some cases harmful to the sentiment that helps investment have cropped up. There is an increasing level of disagreement on issues that could be amicably solved, and that goes against the national effort at economic recovery. These movements when considered together with the Taliban movement will make the governments task more difficult than it looks now. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*PGCL to set up mega complex at Islamabad​*
ISLAMABAD: Pak Gulf Construction (Pvt) Ltd has deposited Rs 336 million with the Capital Development Authority as its scheduled installment against the plot in Islamabad where the company is constructing a mega complex The Centaurus. 

According to the spokesman of the company, the plot situated between the two main avenues - Jinnah and Faisal - was purchased with biggest bid ever in March 2005 and PGCL was paying all installments according to schedule. 

Aiming to be the most futuristic and iconic development of the country, PGCL has brought together the best of the bests to join hands in making this dream a reality. Reiterating their commitment to combining the best people in the business for the Centaurus, the spokesman said already leading strength to PGCL on other fronts are: Atkins, the design team of the Centaurus, most well known for the design of the Burj-ul-Arab, China State Construction Engineering Corporation; the main contractors for the Centaurus who have completed over 3,000 projects in over a 100 different countries and regions and CONRAD; the luxury brand of Hilton International for the seven star hotel in the Centaurus and Projacs International of Kuwait as project management partners is in continuation to our efforts of combining the best. 

The Centaurus project has the requisite resources in place and it will be completed on schedule. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan risks losing investor confidence ​* 
Saturday, June 14, 2008

ISLAMABAD: Moodys Investors Service said in a report on Pakistan on Friday that weak governance, political tensions and flaws in the legal system will undermine institutions and policy-makers, and heighten risks of sudden shifts in private investor confidence.

The credit rating agency, however, went on to justify maintaining a stable outlook on Pakistans rating as the structure of government debt largely consists of long-term credits from official bilateral and multilateral lenders, which adds stability and reduces rollover risks.

Last month, Moodys and Standard & Poors both cut Pakistans credit ratings to five levels below investment-grade. S&P, however, opted for a negative outlook.

There is concern over the size of the fiscal and current account deficits, under pressure from soaring import costs, and worry that the political uncertainty hanging over Pakistans 2- month old coalition government could undermine policy making and implementation.

Moodys said renewed political discord is unlikely to provide the stable and orthodox policy framework necessary for quickly limiting these macroeconomic imbalances.

The statement came two days after the government announced budget proposals for 2008/09 (July/June), setting a target to cut the fiscal deficit to 4.7 per cent of gross domestic product and the current account deficit to 6 per cent.

The government said the fiscal deficit is expected to be 7 for fiscal year of 2007/08, and the central bank has forecast the current account deficit at between 7.3 and 7.8 per cent for the year ending June 30.

The government announced in the budget they would gradually withdraw food and oil subsidies from the current 405 billion rupees to 293 billion rupees.

Slashing subsidies would further increase inflation and data released earlier this week showed consumer prices rose 19.27 per cent year-on-year in May, the highest in over three decades.

The government has set a 12 per cent target for inflation in 2008/09. Analysts say it will be almost impossible to achieve if subsidies on oil and food are withdrawn.

A day earlier, ratings agency Standard & Poors said the budget would have no impact on ratings and was in line with expectations, adding the rating would be lowered if fiscal and current account deficits do not improve.

Analysts were unsurprised by the rating agencies stance.

This was more or less expected, said Asif Qureshi, head of research at Invisor Securities Ltd.

The government needs to take actions immediately to build its credibility among multilateral and rating agencies.

The countrys stock market and the rupee remained largely unaffected by the statements released by the ratings agencies as dealers said this came as no surprise and foreign interest has been lacking since last month due to mounting political and economic uncertainty.

The Karachi Stock Exchange (KSE) is down 8.1 per cent since the start of the year, while the rupee has depreciated 8 per cent.

Pakistan risks losing investor confidence


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## Neo

*Budget deficit estimated at Rs 661 billion​*
By Sajid Chaudhry 

ISLAMABAD: Budget deficit of the federal government has been estimated at Rs 661 billion while Rs 79 billion surplus of provinces would help bring consolidated budget deficit down to Rs 582.3 billion in the upcoming fiscal year 2008-09. 

The government has plans to borrow Rs 557.6 billion from internal and external sources to finance the budget deficit in the upcoming fiscal year 2008-09, a senior official at Ministry of Finance told Daily Times Thursday. 

The government would borrow Rs 165.2 billion from external sources, non-bank borrowing of the federal government would be Rs 242.9 billion and Rs 149.5 billion is to be borrowed from banking sector, explained the official. 

Apart from the internal and external borrowing options, privatisation proceeds to the tune of Rs 25 billion would also help bridge the income expenditure gap and meet the overall consolidated budget deficit of Rs 582.3 billion. 

Federal tax collection target has been set at Rs 1.250 trillion and non-tax revenue receipts have been estimated at Rs 427 billion in the upcoming fiscal year 2008-09. 

All these projections are based on assumptions that revenue generation efforts of the government in the next fiscal year would yield the required results. In case the tax revenue and non-tax revenue generation efforts lag behind the projected required limits the budget deficit would definitely go up. 

In this scenario, any increase in budget deficit would require the government to increase its borrowing from internal resources i.e. bank borrowing and non-bank borrowing. 

According to the official, the government would try to contain its budget deficit to Rs 582.3 billion against the budget deficit estimates of Rs 737.8 billion in outgoing fiscal year through passing on to the consumers the impact of increase in oil prices and electricity tariff. 

The government has already reduced the size of the subsidies from Rs 407.485 billion in outgoing fiscal year 2007-08 to Rs 295.204 billion in 2008-09 to keep its budget deficit in sustainable limits.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Agriculture growth dips to 1.5pc in spite of Rs 39.5bn subsidy​*
ISLAMABAD: A Subsidy of Rs 39.5 billion from national kitty on providing cheap fertilizers to the farming community have been drained, as the agriculture sector's growth dipped from 5 percent in 2006-07 to just 1.5 percent of the Gross Domestic Product (GDP) during outgoing fiscal year 2007-08. 

Dr Ashfaque Hassan Khan, Special Secretary Finance and author of the Economic Survey 2007-08, has raised a question in his survey report that the extra-ordinary increase in the import of fertilizer was surprising at a time when the prices of fertilizers in international market were up by almost 50 percent. 

As against the import of 1 million tonne fertilizer in the 2006-07, the country imported almost 2 million tonnes fertilizer in first ten months (July-April) period of outgoing fiscal year 2007-08, registering a growth of 97 percent. Why such large quantities of fertilizer was imported when its off-take within the country did not grew compared to last year, is not clear, Dr Khan added in the report. 

Economic Survey 2007-08 highlights that the country spent $823.3 million on the import of fertilizers during July-April period of 2007-08 as compared to $280.9 million in the last fiscal year 2006-07, projecting an increase in import value of $542.3 million. 

Nevertheless, the country had to pay an additional amount of $542.4 million (Rs 33.62 billion) in import of fertilizer which can not be explained by looking at the performance of outgoing fiscal year's agriculture crops, the Author of the Economic Survey pointed out. 

On the other hand, the government has a subsidy to the tune of 29.5 billion on fertilizers to provide relief to the farming community against the rising prices of fertilizers within the country as well as in the international market. 

The government has provided subsidy to the tune of Rs 20 billion on the import of phosphatic and pottasic fertilizers, Rs 5.5 billion subsidies on DAP fertilizer and Rs 4 billion subsidy on import of urea fertilizer in the outgoing fiscal year 2007-08. In the last fiscal year 2006-7, the volume of subsidies on fertilizers was Rs 13.5 billion. 

For the outgoing year, the agriculture growth declined to 1.5 percent against the target of 4.8 percent. Major agriculture crops growth remained negative 3 percent against the target of 4.5 percent, livestock growth witnessed 3.8 percent against the target of 5.7 percent and forestry growth during the year 2007-08 remained negative 8.5 percent against the target of 3.5 percent. The major factor responsible for the decline in agriculture output is lower production level both in wheat and cotton. According to the provisional estimates, output of wheat is estimated to be 21.8 million tonnes, which is 6.3 percent lower compared with last year level of 23.3 million tonnes. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Attractive opportunities for investment in oil marketing: PM ​*
ISLAMABAD: Prime Minister, Syed Yousuf Raza Gilani Friday said Pakistan offers attractive opportunities for establishment of new oil marketing in view of its growing market for petroleum products. 

"In order to attract investment the import of fuel oil has already been deregulated and import of high speed diesel has been outsourced to oil marketing companies to attract investment in oil sector," he said.

Talking to Martin McCarthy, the chief executive officer, Total-Parco Pakistan Limited, who called on him at the PM House, Gilani said the government would soon bring about further reforms in the downstream oil sector with a thrust on privatisation, liberalisation and complete deregulation of oil the industry.

He appreciated the efforts of Total-Parco in making the oil marketing business in Pakistan and said, "We expect it to expand its business especially in rural areas of the country." McCarthy informed the Prime Minister that Total-Parco has so far invested over $22 million in the oil marketing business in Pakistan. "We will continue our investment programme in Pakistan as Total-Parco has an excellent experience of working in Pakistan which we see as a very good market," he added. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Microsoft trains govt school teachers ​* 
Saturday, June 14, 2008

KARACHI: A certificate distribution ceremony for the first batch of government school teachers, who successfully completed their training at the Microsoft IT Academy, was held at SMB Fatima Jinnah School, Karachi, stated a press release.

The Microsoft IT Academy was established by Microsoft and Zindagi Trust at SMB Fatima Jinnah School in March this year.

The event was attended by Sindh Education Secretary Rizwan Mammon, who supports the vision of Microsoft and Zindagi Trust for the development of IT education in Pakistan.

Microsoft is committed to helping Pakistan realise its potential by working with the Education Departments of the federal and provincial governments. It aims to collaborate with local organisations like Zindagi Trust to develop, improve and enhance the standard of IT education in the country.

It is a great pleasure that the first batch of teachers has successfully completed its training in latest Microsoft technologies and is being awarded Microsoft training certificates, said Microsoft Pakistan Country Manager Kamal Ahmed.

Microsoft trains govt school teachers


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## Neo

*Thermal power plants unable to run at full capacity: Pepco ​* 
ISLAMABAD (June 14 2008): The Pakistan Electric Power Company (Pepco) has conveyed to the federal government that Kot Adu (Kapco) and Guddu thermal power plants can not be operated on full utilisation until the required quantity of fuel is made available to them, sources in Petroleum Ministry told Business Recorder.

They said total present generation capacity of Genco-III power plants is 1530 mw, which they are not contributing to their role in Pepco's generation system due to lack of fuel.

With regard to TPS Muzaffargarh, sources said that average daily gas requirement of the 130 mw plant was 200 mmcfd but SNGPL was supplying 150 mmcfd gas round the year to the power station in 2003-04 which has decreased gradually and at present only 15 mmcfd gas was being supplied by the gas company.

All the 6 units of the power station could operate on dual fuel ie gas and furnace oil but due to very nominal gas supplies by SNGPL coupled with financial constraints faced by Pepco, furnace oil stocks at the power station were low and at times were almost completely depleted.

Presently, 2 out of 6 units were under forced shutdown due to non-availability of fuel. Maximum generation from the power station remained only 675 mw and the management was left with 9000 metric tons furnace oil stocks as of June, 2008.

Average daily furnace oil requirement of the power station is 6000 metric tons. In the present circumstances, neither of the oil marketing companies (OMCs) could supply the requisite quantities to the power station nor can the said quantities be handled (decanted) due to limitations of fuel decantation station, sources added.

For complete restoration of power generation capacity of the power station, 100 mmcfd gas would therefore essentially be required, sources said. They said that machines of GTPS Faisalabad were gas-based. Hence, furnace oil could be used. Units of SPS Faisalabad are on dual fuel ie gas and furnace oil. As per Gas Sale Agreement (GSA), gas allocation for GTPS and SFS Faisalabad was 26 mmcfd and 5 mmcfd respectively.

However, SNGPL was not delivering the committed volumes. Machines of GTPS Faisalabad having generation capacity of 210 MW remain mostly idle due to non-supply of gas by SNGPL. On the other hand, machines of SPS Faisalabad were operated on costlier furnace oil, burning of which also results in increased maintenance of boilers and allied equipment.

They said that 60 mmcfd gas for GTPS Faisalabad machines and 25 mmcfd gas for mixed FO and gas firing in the boilers of SPS Faisalabad machines was necessarily required so that the power station may operate at maximum load. Total gas requirement of the power station is 85 mmcfd.

They said that present generation capacity of NGPS Multan was 60 MW. The machines of NGPS Multan could be operated on dual fuel. As per terms and conditions of the GSA, SNGPL has to supply 17 mmcfd gas to the power plant. However, 2 -3 mmcfd average gas was being supplied by the gas company in the current fiscal year.

Resultantly, machines were operated on expensive furnace oil which has also increased maintenance of the power plant. The power plant needs to be supplied average quantity of 10 mmcfd gas.

Four machines of GTPS Shahdara are open cycle gas turbines with present generation capacity of 30 mw. These units are gas based. Due to non-availability of gas by SNGPL, the power plant has mostly remained inoperative in the current fiscal year. At least 5 mmcfd gas is required to keep the machines in generation circuit.

For Kapco complex, costly imported LSFO was being consumed for generation. Besides, two units--3 and 4--can run only on gas or alternatively on HSD which is very expensive fuel. Hence, SNGPL should use its best endeavours to supply maximum gas to the power complex. However, minimum 70 mmcfd is essentially required for Kapco. Sources said that the gas company has been asked to provide gas to the power generating units on priority basis.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*PKR likely to depreciate to 78 against US$ in two years ​* 
KARACHI (June 14 2008): Moody's Investors Service has forecast that Pakistan currency is strongly expected to depreciate to Rs 78 against one US dollar over the next two years. According to the rating agency's analytical report released on Friday, the parity gap between the two countries is expected to widen to Rs 75.4/1$ in FY2009-10 from Rs 70/1$ in FY2008-09.

The Pak currency may be as low as Rs 78 against one US dollar by FY2010-11. The rating agency believes that Pakistan's overall balance of payments position will remain weak for he foreseeable future. Pressure on foreign currency reserves and PKR will remain high.

"Emergency assistance from key external allies (such as in the form of Saudi oil concessions), and possibly, accelerated disbursements of multilateral assistance may provide some financing respite, and stabilise sentiment, by bringing in $2billion to $3billion," the Moody's says and adds: "Nonetheless much stronger demand-management policies by monetary and fiscal authorities backed by institutional rules to limit (if not reverse) deficit magnetisation maybe needed to restrain domestic demand and reduce import growth."

While expressing optimism over country's overall external financial needs which, according to it, are still manageable, the rating agency notes that Pakistan's external credit fundamentals benefit from a debt composition that is predominantly long tenor and owed to bilateral and multilateral creditors on concessional terms.

As a result, the Moody's says, overall amortisations coming due amount to only $2billion to $3billion and are manageable in size even amidst the growing strains on the country's external liquidity profile.

"In the event of substantial PKR depreciation, debt ratios will undoubtedly worsen. But, even then, the marginally higher debt service payments are not expected to lead to unmanageable pressures on Pakistan's foreign exchange reserves. As a result, we are comfortable with a 'stable' outlook on the B2rating," the Moody's says.

Moody's believes that the key risk to the outlook is a failure of demand-management policies and exchange rate adjustments to rein in the size of Pakistan's external deficits. The rating agency has warned that if such adverse trends to be accompanied by further supply-side shocks or a worsening of fiscal credibility, the pressures on Pakistan's external liquidity and debt servicing ability could intensify much more than currently projected.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Duty-free import of $50 million new plant machinery allowed ​* 
ISLAMABAD (June 14 2008): The Federal Board of Revenue (FBR) has allowed investors to import duty-free plant, machinery, equipment and capital goods, whether locally manufactured or not, (worth $50 million) for setting up of new industrial projects.

Through SRO 554(I)/2008, any machinery and equipment worth $50 million or more being imported for new industrial project has been de-linked from the local manufacturing condition. This will help in curtailing the discretionary powers of the administrative authorities for providing hassle-free investment environment.

According to SRO.554, there is a condition to claim concessionary rate of customs duty that the imported goods are not listed in the locally manufactured items, notified through a Customs General Order from time to time or, as the case may be, certified by the Engineering Development Board (EDB).

This condition shall, however, not be applicable on such machinery, equipment and other capital goods imported as plant for setting up of a new industrial units, provided the import is made against a valid contract or an irrevocable letter of credit for a minimum cost and freight (C&F) value of $50 million.

Details show that the existing tariff regime allows an industrial undertaking to import plant and machinery at a reduced rate of 5 percent customs duty provided that is not manufactured locally. Items being manufactured locally are determined by EDB and subsequently notified by the FBR.

The list so notified is neither exhaustive nor free of disputes. Complete plants obviously consist of numerous machines, components, accessories etc, which are mostly not imported in one go. Partial shipments of plants and machinery therefore remain vulnerable to administrative and classification hiccups with reference to their local manufacture or otherwise.

These types of petty issues discourage the investments. The FBR proposes that any plant, machinery, equipment and capital goods which is worth $50 million (C&F) or more and being imported for setting up of new industrial project may be de-linked from the local manufacturing clause.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Investment avenues in agriculture sector: Saudi Arabia in talks with Pakistan ​* 
ISLAMABAD (June 14 2008): A delegation of Saudi Ministry of Agriculture is likely to visit Pakistan some time next week to explore investment opportunities in agriculture sector, it is learnt. The Saudi delegation would hold talks with their Pakistani counterparts to finalise modalities about land and other issues.

Minister for Food, Agriculture and Livestock had held talks with Saudi counterpart during the recent visit of Prime Minister Yousuf Raza Gillani to Saudi Arabia. The Saudi delegation's visit to Pakistan is follow-up of the discussion with Pakistani delegation in Saudi Arabia to increase cooperation in agriculture sector.

Sources said that Pakistan has offered Saudi Arabia to make investment in corporate farming for which it could be leased out 45 farms across the county for enhancing agriculture output. The Saudi investment in Pakistan agriculture sector could be export-oriented that would also help Saudi Arabia meet its agricultural needs.

The potential areas for investment, sources said, could be dairy sector, large scale cattle, fisheries, fertiliser and also different crops as Saudi Arabia is keen to import about a million tons rice from Pakistan. The main thrust of Prime Minister's visit to Saudi Arabia was to build on long-term strategic relationship between the two countries to enhance bilateral trade and evolving a joint strategy against global food crisis, sources said.

"We want Saudi Arabia to invest for corporate farming in 45 big farms" the Saudi Arabia delegation said, and added that it could also help Pakistan in meeting export standard, particularly fruits, to Unites Sates and European countries.

"They could help us by setting up food irradiation plants to meet quality standard for export of orange, citrus and mangoes to the US" sources said, and added that Saudi Arabia is keen to import rice from Pakistan and might also invest in fertiliser sector.

They said that Prime Minister had also held meeting with Saudi agriculture minister on the sideline of World Economic Forum (WEF) at Sharm El Sheikh where Saudi minister had indicated his country's interest to invest in Pakistan agriculture sector.

Apart from agriculture, prospect areas of cooperation between the two counties are oil and gas sector, manpower and bilateral trade. The sources pointed out that it was only on last Wednesday that finance minister Syed Naveed Qamar in his budget speech formally announced that foreign investment will be encouraged to increase country's productivity and develop cultivable areas.

The minister also announced that large tracts of land will be made available to foreign investors to induct capital and technology in our local farming sector. Meanwhile, a leading financial daily claimed on Friday that the kingdom is in talks with five countries and Pakistan is one of them. According to the newspaper, Saudi Arabia has revealed that Riyadh is in discussions with Ukraine, Pakistan, Sudan, Turkey and Egypt.

"Abdullah al-Obaid, the deputy agriculture minister, told the Financial Times the government was planning to set up projects of at least 100,000 hectares in several countries to grow crops such as wheat, corn, rice, soyabeans and alfalfa, a feed for livestock," the Financial Times says.

The move which, according to the newspaper, is also aimed at building up strategic reserves, comes as food prices have doubled over the past two years and a series of trade restrictions by exporting countries have limited the oil-rich kingdom's ability to secure supplies.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Commonwealth games projects: Delhi state wants to use Pakistani cement for construction ​*
NEW DELHI (June 14 2008): The government of Delhi state has planned to construct all projects related to Commonwealth Games 2010 using Pakistani cement. Chief Minister of Delhi state Sheila Dikshit said on Friday that her government had written a letter to the Centre for permission to import cheap cement from Pakistan for construction of Commonwealth Games projects as prices of local cement have risen.

Pakistani cement is of similar quality as being presently used in the projects and her government is waiting for approval from the Union government. There is cost escalation of projects due to rise in prices of local construction material and projects relating to the games are delayed.

Media reports said state government is finding difficulty in constructing infra-structural projects such as flyovers, stadium and low cost houses for the games being held here in 2010.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Oil import bill can touch $22 billion' ​*
KARACHI (June 15 2008): Country representative, Hatton National Bank, AB Shahid has cautioned that Pakistan's oil import bill could reach $22 billion in 2008-09 if international crude price touches $150 a barrel. He was delivering his speech on "the impact of budget on banking sector," at a "budget breakfast forum," organised by the Institute of Bankers Pakistan (IBP) here on Saturday.

He said that this year, the economy suffered because oil import nearing $11 billion. What would be the consequences when it touches $22 billion and doubles the trade deficit as a result thereof, he questioned. It implies cutting oil consumption and consciously desisting from imports of peripheral economic value to contain the trade and current account deficits and the weakening of the Pak rupee.

"There is no alternative, and bankers could play the key role in achieving this aim. Conversely, we all stand to lose far more than what we have lost thus far," he observed.

He pointed out that in the context of resource mobilisation, the notable developments are the 2 percent rise in profit rates paid on National Saving Certificates, quarterly revision of these rates to continually align them with market rates, flotation of short-tenor commercial paper for investment by the public, and shifting the deposits of government offices and state-owned enterprises to the State Bank of Pakistan to limit public sector borrowings up to the net resource shortfall. He said that rise in NSS rates and proposal to float short-term commercial paper could attract banks' short as well long-term depositors.

"Banks therefore must revisit their lending ratios and hasten the process or developing innovative deposit products to hold on to their deposit base," he suggested. Shahid noted that banks won't be able to avail the benefit of extension in the Capital Gains Tax till 2010. Banks will continue to pay CGT at 35 percent on shares sold within 12 months of their purchase and at 10 percent on those sold after 12 months of their acquisition.

He was of the opinion that this restriction limits the chances of increasing bank profit from share-trading activities requiring banks to rethink their business strategies. Another area, in which banks will have to be more careful is their foreign exchange trading activities. As per new rules, besides cancellation of operating licenses of banking companies on their violation of the Foreign Exchange Regulations Act, the SBP is now being empowered to levy sizeable monetary penalties.

As one of the key tax collecting agents of the state, the bank shave to collect increased higher taxes on the services they offer to their customers. This will increase their customers' cost of doing business. On the other hand, the budget proposals also offer banks much needed relief. The beneficiaries are amalgamated banks, foreign banks and banks dealing in mortgage financing.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan to pass on oil price rises automatically ​* 
Sunday, June 15, 2008

ISLAMABAD: Pakistan will automatically pass on any increase in world oil prices to domestic consumers from next month, and phase out subsidies entirely by the end of 2008, a senior official told Reuters on Saturday.

The government overshot a budget allocation of 15 billion rupees for subsidies by a whopping 160 billion rupees ($2.4 billion) in the past year because it failed to pass on any increases when oil prices doubled during the period.

The government official said that because of the subsidies consumers were paying the equivalent of $70 for a barrel of crude, almost half the prevailing international market price.

Starting by July 1, 2008, consumer fuel prices will be increased periodically over and above the international price increases, to reach a parity between domestic and international prices by end-December 2008, the official said, requesting anonymity.

Pakistan is currently paying the following oil subsidies based on per litre average international prices for petroleum products in May; 44.11 rupees (66 US cents) on kerosene, 37.07 rupees on high speed diesel, 33.65 rupees on light diesel oil, 7.15 rupees on motor spirit, and 4.37 rupees on high octane blending component.

The government is also aiming at slashing electricity subsidies given to the Water and Power Development Authority (WAPDA) to 3 billion rupees in fiscal year of 2008/09 from the current 21.3 billion rupees.

Pakistan to pass on oil price rises automatically


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## Neo

*Impact of GST hike estimated at Rs75bn ​*
Sunday, June 15, 2008

KARACHI: Business community leader Siraj Kassam Teli has estimated that the overall impact of 1 per cent increase in sales tax will be Rs75 billion and has urged the government to withdraw it along with 35 per cent letter of credit margin.

He said the increase in sales tax from 15 to 16 per cent would have a negative impact on the cost of production, leading to a rise in prices of all items and absorbing 20 per cent increase in salaries of government employees.

Most of the business leaders belonging to the Karachi Chamber are disappointed, frustrated and even angry over being heaped on with unbearable burden of taxes and levies and hike in GST rate from 15 to 16 per cent, which will push the production cost up and put consumers under more stress, he pointed out.

Then there is fear of retaining 35 per cent margin on imports and possible discontinuation of research and development (R&D) subsidy on textile exports as the budget is silent on these issues.

Adding salt to injury is the fact that real money-minting sources like stock exchange, real estate and agriculture have been kept out of the tax net or if there are some levies these are mere eyewash and cosmetic, Teli stated.

According to him, overall the budget carried nothing to attract investment, boost industrial production, increase exports and reduce cost of doing business. He said the industrial sector of the country was losing its competitive edge in the world market due to high cost of doing business.

Teli noted that a new return for sales tax had been prescribed which demanded information about unregistered buyers, adding in the past too that kind of exercise was undertaken but could not be implemented.

He was of the opinion that at this point in time where we are faced with severe economic crisis and the government has set a lower target than last year for the growth of the industry, this kind of action can prove to be a backlash and, therefore, it should be deferred for a better time.

Teli further noted that the value-added textile sector used to get research and development (R&D) support and yet in the budget there was no indication whether the support would continue during fiscal year 2008-09 or not. Likewise, there was nothing about export refinance scheme. He urged the government to continue the scheme in 2008-09.

He also criticised the imposition of 10 per cent withholding tax on industrial electricity consumption bills, saying that would have a negative impact on industrial production. He demanded all incomes from trade, business and agriculture to be taxed and all transactions documented.

He said there was no incentive available for establishing new industrial units in the country, adding 90 per cent of the incentives were given only to those investors who had established units in rural areas.

However, he appreciated enhancement in duty on 300 luxury items, removal of 5 per cent duty on crop insurance, increase in basic pay and pension of government employees, Benazir income generation programme, zero-rated duty on energy savers, etc.

Teli said the budgetary targets were unrealistic and might not be achieved and saw several minibudgets coming in near future.

Impact of GST hike estimated at Rs75bn


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## Neo

*Wheat sought from US to ease shortage​*
WASHINGTON, June 14: Pakistan is close to getting $500 million from the World Bank and is also seeking 500,000 tons of wheat from the United States to deal with the food and energy crisis threatening to cripple its economy.

The wheat will be provided under PL-480, a US food assistance programme set up for the worlds poorest states unable to feed their people.

Pakistans effort to seek financial and food assistance from the World Bank and the United States was revealed by US Assistant Secretary of State Richard Boucher who assured Islamabad of Washingtons continued support to its efforts for dealing with the economic crisis.

Theyre talking to the World Bank about the loans and help and were involved in that as well, a transcript released by the State Department during the weekend quoted Mr Boucher as saying.

Mr Boucher, who looks after South Asian affairs at the State Department, also expressed a strong US desire to help the democratic process in Pakistan.

Were looking in the longer term at how we take advantage of the democratic opportunity to offer broader and deeper support to Pakistan generally, he said.

But theyre also dealing with some immediate problems, and we are taking what steps we can to help them with that. And were looking at things like food problems and financial problems and seeing what we can do.

Sources in the World Bank told Dawn that a World Bank and IMF delegation visited Islamabad last month for talks on a $500 million one tranche, development-support credit. Negotiations completed in early June.

The proposal now awaits a final approval from the banks board of directors, which is expected to give its approval by the end of this month or early July.

Pakistan also appealed for food assistance from the US earlier this month when M. B. Abbasi, a special envoy of the prime minister, visited Washington.

He brought a letter from Asif Ali Zardari for Senator Tom Harkin, who chairs the US Senate Agriculture Committee, requesting 500,000 tons of wheat to handle the food crisis.

Later, Pakistan submitted a formal request for food assistance under the PL-480 US food programme. Pakistan received a lot of assistance under this programme in the 1960s but opted out of it, claiming that it produces enough grains to feed its people.In 2001, when faced with a famine, Pakistan received a one-time assistance of $70 million under PL-480.

Under this programme, the wheat has to be purchased in the United States and shipped to the recipient.

Wheat sought from US to ease shortage -DAWN - Top Stories; June 15, 2008


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## Neo

*Sindh budget size tipped at Rs280 billion​*
KARACHI, June 14: The size of Sindh budget for 2008-09, being presented in the Sindh Assembly on Monday, is being tipped at Rs270 to Rs280 billion.

Earlier, a pre-budget meeting of the Sindh Cabinet would give formal approval to the budget proposals on Monday morning.

Official sources indicate that there would be a 10 per cent rise in revenue expenditure in the budget to about Rs200 billion from Rs181 billion in 2007-08.

The development outlay is being increased by almost 24 per cent to Rs65 to Rs70 billion as against Rs50 billion in the current fiscal year.

Like other provinces, the Sindh budget too depends on funds from Islamabad to the extent of 80 per cent.

The federal budget documents for 2008-09 show flow of about Rs169 billion funds from Islamabad to Sindh as against Rs141.59 billion in the current fiscal year.

The increase in the share of funds from Islamabad is because of two reasons: the expected rise in the collection of taxes in 2008-09 to Rs1.25 trillion from hardly Rs1,000 billion in the current fiscal year; and increase in overall share of provinces in the federal divisible pool to 43.75 per cent in 2008-09 from 42.50 per cent in 2007-08.

After the sixth National Finance Commission (NFC), headed by former prime minister Shaukat Aziz, failed to reach a consensus in 2005 and a seventh NFC was constituted which never held any formal meeting, President Musharraf gave his formula in 2006.Under his interim order in July 2006, the provinces were given share of funds on the basis of their respective population, but the overall vertical distribution between provinces and the federation was changed.

For 2006-07, the presidents interim order set a share of 41.50 per cent in federal divisible pool for provinces, raised to 42.50 per cent in 2007-08 which would be 43.75 per cent in the next fiscal year.

If the reconstituted NFC fails to give any award, the provinces are indicated to get 45 per cent in 2009-10 and then onwards 46.25 per cent.

For the current fiscal year, the federal budget documents indicate an initial share of Rs102.09 billion, which, however, was brought down to Rs99.29 billion in the revised estimates, showing that the federal government was unable to recover projected taxes of Rs1.025 trillion.

Sindhs share in the divisible pool is expected to increase to Rs126.12 billion in 2008-09 depending entirely on how efficiently the Federal Board of Revenue collects projected amount of Rs1.25 trillion. But a visible cut in the share of direct transfers is more than visible which has led to exchange of communication between Karachi and Islamabad. Under direct transfers, the provinces, including Sindh, gets share in royalty on crude oil, natural gas, gas development surcharge, excise duty on gas and share in provincial GST.

Initially, the federal budget showed Rs42.05 billion as direct transfer to Sindh in 2007-08. In revised estimates, it was increased somewhat to Rs42.29 billion, but for 2008-09, the federal budget shows Sindhs share in direct transfers at Rs40.79 billion which is less than Rs42.29 billion shown in the revised estimates for 2007-08. This cut in share, particularly of development surcharge, has come as a surprise to officials in Karachi as CNG is being brought under development surcharge levy which should increase Sindhs share as a large number of CNG stations and number of gas-run vehicles is highest in this city.

Wages of almost half a million employees in Sindh government is the single largest expenditure component of the budget that eats up more than Rs60 billion.

A rise in salary and promised employment to 40,000 more persons would push wage bill to Rs72 to Rs73 billion. The pensions are also being increased. Analysts estimate about Rs80 billion on wages and pensions only.

A constant increase in development outlay in every budget has become a prestige issue with every government. Analysts criticize planners for overlooking linkages between the development and current expenditure budget.

Construction of a school building under development programme puts a demand on expenditure budget in the following years to provide furniture, basic facilities and employ teachers, said an analyst.

Sindh Education Minister Pir Mazharul Haq says that there are 7,500 school buildings vacant because of no provision for employing teachers and other facilities. There are vacant dispensaries and basic heath unit buildings.

Sindh budget size tipped at Rs280 billion -DAWN - Business; June 15, 2008


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## Neo

*Trade policy to aim at improving textile exports​*
** Policy to include 10 major initiatives for textile sector​*
ISLAMABAD: Trade Policy 2008-09 would include ten major initiatives for enhancing textile exports from the country. 

Federal Minister for Textile Industry and Commerce, Chaudhry Ahmed Mukhtar in a written reply submitted to the National Assembly informed that in order to enhance the textile exports, many initiatives were under consideration for inclusion in Trade Policy 2008-09. 

He said all stakeholders were being consulted for formulation of trade policy, Trade Policy 2008-09 would include 10 major initiatives i.e. opening initiatives for minimisation of contamination in cotton.

Major new initiatives to include, hiring of technologists from abroad, like Society of Dyers and Coloration London. Payment for services of local and foreigner fashion designers, support for opening of export offices abroad by renowned textile manufacturers. 

It included technology up gradation support for import of machinery and equipments and support for undertaking benchmarking studies of Pakistani textile manufacturing units. Training of middle management in textile sector, financial support for establishment of retail outlets abroad with own brands. 

Trade Development Authority of Pakistan (TDAP) would formulate delegations of textile sector for United States, United Kingdom, Germany, France, Belgium, Canada, Ukraine and Italy. TDAP would also organize participation in international textile fairs.

He also informed Textile Industry Ministry was also taking initiatives to improve textile exports, including the launching of a well-organised Human Resource Development Programme (HRDP). This would involve hiring international consultants to fill the shortage of textile graduates at all sector levels  from ginning to garments.

To fill the shortage of textile trained shop floor manpower in the textile chain especially skill development plan. To establish world-class training institutes and up grade existing ones to develop know how for synthetic spinning, weaving, processing, dying and finishing. 

Encourage production of organic cotton and ensure cultivation of BT cotton and removal of impediments in this regard. 

Attract investment in common energy generation, distribution, facilities and augmentation of energy conservation programme.

To attain economies of scale in textile sector, provide incentives to weaving sector and encourage becoming formal one to enhance its productivity by introducing and installation of modern machinery. 

To establish world class accredited labs to check colours and final products. To provide market and product diversification especially in garment exports and support to this sector for making it cost effective. 

To establish brand names abroad by encouraging local textile entrepreneurs to establish cotton where houses in Pakistan. 

Initiatives are also underway to establish integrated supply chain and warehouses besides availability of skill manpower by establishing labor technical training facilities. Development of chemicals, trims and accessories industry on international standards, helping industry by devising ways and means to check wastage in the mills and factories, so that the losses may be controlled. 

Strengthening of cotton and synthetic research institutions in the country, interaction with international companies and establishments of joint ventures. 

Technology up-gradation right from ginning to garment sector to make them most productive and cost effective by introducing modern and latest machinery and techniques. To enhance coordination among federal, provincial and donor agencies and stakeholders for infrastructure development and human resource development and supply of good quality raw materials. 

The house was also informed, in written reply, that MINTEX is also establishing garment cities at Faisalabad, Lahore and Karachi and one at Multan which are at advance stage.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Govt plans to generate extra 2,200MW in 2008-09​*
ISLAMABAD: To meet energy shortfall, the government has planned to increase power generation capacity to 22,297 MW in 2008-09 from 20,097 MW in 2007-08 with net addition of 2,200 MW.

The expected increase in power generation includes 1,297 MW of rental plants, 615 MW of IPPs to be added in the WAPDA/PEPCO system, whereas 205 MW of Korangi Thermal Power Station (KTPS) and 200 MW of IPP are expected to be added in the KESC system. 

In addition to already operating 300 MW Chashma Nuclear Power Plant (C-1) since 2001 and under construction unit C-2 of same capacity, two more units (C-3 and C-4) of 300 MW each are planned at Chashma and are expected to be commissioned by 2014 and 2015 respectively. Furthermore, 1,000 MW unit at Karachi has already been conceptually cleared. 

The detailed engineering and design of Diamer Bash Dam project has been completed and was under final review by WAPDA. Tenders for construction of the dame are expecting to be floated in the press soon, whereas construction of the dam was expected to be start in the middle of the year 2009. 

For enhancing power generation capacity, the government has allocated Rs 76.2 billion including Rs 16.320 billion as foreign aid in the annual Budget 2008-09. 

To overcome the power shortage and reduce the extent of load shedding, a total of 1,500 MW thermal power projects at Dadu, Guddu and Faisalabad have also been envisaged during 2008-09 with average capacity of 500 MW each. 

Two hydropower projects of Northern Areas include Naltar-III (16 MW) and Naltar-V (14 MW) have also been envisaged in 2008-09. In respect of AJK, two hydropower projects namely, Battar (3.2 MW) and Dhannan (1.7 MW) are also under active consideration by the government. To cater the growing demand of power in the country, to increase the efficiency of system network and to reduce power congestion in the power system, multiple projects for construction of transmission lines and grid station, extension of feeder lines and installation of capacitors are under consideration by the respective DISCOs.

Daily Times - Leading News Resource of Pakistan


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## Vinod2070

> The wheat will be provided under *PL-480*, a US food assistance programme set up for the world&#8217;s poorest states unable to feed their people.



I remember reading about how India was also dependent on this PL-480 in the early 60s and it was a ship to mouth existence.

Thank God those days are behind us.

India was considered a basket case in the west those days.


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## Neo

*Pakistan attractive destination for investment: Musharraf ​*
RAWALPINDI (June 15 2008): President Pervez Musharraf said on Saturday that the economic reforms of the country are creating an enabling environment for the private sector to become the engine of growth, and added that Pakistan has become one of the attractive destinations for investment due to its liberal and investment-friendly policies.

He made these remarks while talking to Dr Detley Rose, Chairman of Polysius AG Germany, who called on him. Talking about the attractions Pakistan offers to investors the President said that there are tremendous opportunities that would benefit not only Pakistan but also the investors because of the location of the country between Central Asia-South Asia, Western China-Afghanistan and India.

The Polysius Chairman said: "We are investing in Pakistan because of the economic buildup in the country, which we have witnessed in the past seven years. We continue to look for venture partners and long-term partnership for investment in Pakistan." Pakistan has many major advantages some of which are its important geo-strategic location, good lucrative market of 160 million people and the huge incentives the country offers for investment in sectors like energy, cement, telecommunication, mining and construction, he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*11-month government borrowing from SBP reach Rs 562 billion ​*
KARACHI (June 16 2008): The government's borrowing from the State Bank of Pakistan (SBP) has reached new peak of Rs 562 billion during the current fiscal year. According to SBP data, during July-May period government borrowing from banking system for budgetary support has gone up by 172 percent.

After the current upsurge net government budgetary borrowing from banking system has mounted to Rs 361.221 billion mark during the July to May 31, 2008 as against Rs 132.810 billion during July to June of 2007. The central bank statistics depict that major up surge was witnessed in the borrowing from State Bank which amounted to Rs 562.569 billion during July-May (2007-08) which previously stood at a negative position of Rs 26.464 billion during same period of last fiscal year.

The government sector budgetary borrowing from banks stood at a negative position of Rs 201.348 billion during this period as compared to 159.274 billion in corresponding period of last fiscal year. Overall government budgetary borrowing on June 30, 2007 stood at Rs 810.053 billion and after the current year's borrowing of Rs 361.221 billion, the overall government budgetary borrowing balances has reached new peak of some Rs 1171.274 billion.

"Below the target tax collection, subsidies on commodities including oil and wheat, increasing government's expenditure are the chief reason behind this huge budgetary borrowing," said an economist.

The extraordinary rise in oil prices in the world market and no increase in the oil prices in the local market compelled the government to pay billions of rupees subsidy on petroleum products.

Due to sudden crisis of wheat the government had to import wheat to meet local demand, and wheat was also being distributed to flourmills at subsidised rates.

The Federal Minister for Finance, Naveed Qamar, has announced a number of measures to address this matter. A new borrowing instrument, to be called Government Commercial Paper, has been designed and will be launched shortly, which will be available on tap from all authorised commercial banks for maturities of 3 months and 6 months and 1 year.

In addition, the government has announced that new products of shorter maturities will also be introduced in the National Saving Schemes and pricing on all government borrowing instruments will be made attractive and competitive with market rates. The federal government believes that with these changes, dependence on central bank borrowing would decline considerably.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Fictitious' charges at ports: $147 million draining out annually on imports alone ​*
KARACHI (June 16 2008): An enormous amount of $147 million is draining out of the country annually on imports alone (leave aside the exports) due to "fictitious" on-port recoveries by the shipping lines, agents and terminal operators.

According to sources the traders, both importers and exporters, were being charged under different "fictitious" heads in violation of the applicable rules and international best practices.

They said the terminal operators and shipping agents were charging a levy from the traders in the name of Terminal Handling Charge (THC) and "delivery" or "R&D" which were not specified in Schedule 9 of a federal government backed Implementation Agreement.

Sources said under THC the Karachi International Container Terminal (KICT), Pakistan International Container Terminal (PICT) and Qasim International Container Terminal (QICT) were charging US $45 per twenty-foot container as "delivery" or "R&D".

Terming recoveries other than specified for specific performance in Schedule 9 as "unjustified" and "unlawful", it is said the Schedule had no such provision which could justify collections in the name of "delivery", "R&D" charge and a specific amount like US $45.

They said that according to an estimate at least 800,000 twenty-foot equivalent units (TEUs) were being landed and shipped annually through the said terminals where Rs 8,500 were being charged by the shipping lines/agents and Rs 3,500 by the terminal operators. Thus, taking the drained amount to Rs 9,600 million or US $147m on import alone, leave aside the exports, sources added.

They said the terminals and shipping agents were even ignoring calculation of the charges which are recovered under what they said fictitious heads.

They said while the terminals were charging the end users for "no service" other port operators like the Karachi Port Thrust (KPT) was also collecting the THC in the name of "wharfage for handling".

Such unjustified levies, they said, were not only making end users of the ports pay more and suffer in silence but also jeopardising an already fragile economy of the country by making the exports uncompetitive.

In this regard, sources said a meeting was also held on May 5, 2008 here at Custom House to address the traders' complaints against shipping lines, agents and terminal operators.

Justifying the levies the Pakistan Shipping Agents Association (PSAA) had told the meeting that the shipping agents were recovering the charges as a part of international tariff which was ultimately to be paid to the terminal operators.

On the other hand, the three terminal operators had pleaded that they were charging for "other services" being provided by them at terminals and their action was in line with international practices, they said.

The house, sources said, had formed a committee consisting of representatives from Pakistan Customs, Karachi Chamber of Commerce & Industry (KCCI), Karachi Custom Agent Group (KCAG), PSAA and Terminal Operators to study the issue.

They said it was decided that the committee would visit, which would be funded by the three terminals and KCCI, some ports of developing countries like Mumbai, Chittagong and Colombo within a month time.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*No likelihood of ban or duty: 'rice export to cross $2bn next year' ​*
KARACHI (June 16 2008): The country's rice export is expected to cross the level of $2 billion in the next fiscal year. Previously, Pakistan became billion-dollar club member in FY06 when rice export amounted to $1.2 billion for the first time.

"The next fiscal year will be the golden year for the country's rice export, as after increase in the rice cultivation area, production of paddy will increase by 30 percent in next season", Azhar Akhtar, Chairman, Rice Exporters Association of Pakistan (REAP), and Abdul Rahim Janoo, a former chairman, said while talking to Business Recorder on Sunday.

They said that now rice export has become a major source of earning substantial amount of foreign exchange and there is no threat of ban on rice export or imposition of duty on it.

"The higher authorities realise that any step against rice export will deprive the country of a huge amount of foreign exchange", they said. Speaking at a function hosted by Mehboob Ahmed, member managing committee of REAP, Azhar said that there would be shortage of over 8 million tons rice as total production was being forecast at 441 million tons against the total expected consumption of 449 million tons in the world.

He said that the potential global markets are available to buy Pakistani rice, which is unique in its quality and taste. "We can earn better prices of our rice by adopting a balanced trade policy", he said.

He advised the rice exporters to avoid aggressive selling and asked them to adopt balanced selling practices. "The aggressive sale of rice normally gets less price of this commodity while on the other hand, it creates shortage in stock in the second half of the year", he added.

He briefed the REAP members about meetings with government officials during the last two months and said that REAP will always fight for the interests of all stakeholders of rice and for the trade of this commodity to earn more foreign exchange for national exchequer.

He said that the country could get more foreign exchange through value-addition of this commodity. "We can also get very attractive prices with branding." However, he added that branding was a very difficult task. He appreciated the services of Vice Chairman REAP Abdul Baseer for collecting figures and compiling data of exports of all verities of rice.

Janoo said that REAP is one of the nine trade bodies, which has got trade body licence. He said that the rice trade will increase tremendously in future and the government will get huge amount of foreign exchange through export of this commodity.

He invited the younger, active and educated members to come forward to submit their nominations for the elections of member REAP managing committee. "We took charge of REAP in a very difficult time, but with long efforts and cooperation of our members now the rice trade has become the second biggest resource for earning foreign exchange", he added. He said that the REAP is now the second largest trade body in the country.

Abdul Baseer said that the Rice Advisory Board has become re-active. The board held a meeting of all stakeholders of rice trade and discussed various issues. "We are working for development of new rice varieties and the growers will have new seeds soon having better yield", he said and added that the new seed of basmati 515 variety has been approved and will be available for cultivation soon. New seeds of some other varieties including "Shahkar" will be approved soon, he said.

Mehboob said that the main objective of the gathering was to discuss issues of rice trade. He announced to award trophies to rice exporters, who had contributed a lot for rice trade.

A former chairmen of REAP, Abdul Majeed, and Abdul Aziz Maniya and other REAP members including Rafiq Salman, Shamsul Islam, Anees Majeed, Usman Shaikh, Javed Tarmohammad, Rauf Chapal, Shahid Ghori and others also spoke on this occasion.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*16 power projects underway in Balochistan ​*
QUETTA (June 16 2008): As many as 16 electricity supply schemes are underway while 91 projects in water supply sector were being implemented in various parts of Balochistan, official sources told APP here Sunday. The government would construct 54 more small dams in different districts aimed at resolving water scarcity problems in the province.

They said Prime Minister Yousuf Raza Gilani has approved Rs 640 million for launching electricity projects for Chaghi and Dalbandin towns.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*5000 megawatts power generation plant to be set up in Multan ​*
MULTAN (June 16 2008): The Director General (DG), Wapda, Tahir Basharat Cheema has said that government, using coal as fuel, is planning to set up 5000 MW power generation plant within the next few years. He said this while speaking at a ceremony arranged by Multan Chamber of Commerce and Industry.

He said that the country's survival largely depends on proper use of its coal reserves. '184 billion tonnes of coal reserves were available in Thar area alone', Cheema said. He expressed concern over the fact that Pakistan was generating only 0.1 percent electricity from coal.

Referring to the performances of neighbouring countries, he said China generates 74 percent electricity from coal and India generates 55 percent.

Further, Wapda DG said that three rental powerhouses would start generating 1067 MW of electricity by the end of this year. The fourth rental powerhouse would start generating 192 MW power from December 2008 at Piran Gaib power station, Multan. The station would have another 350 MW electricity through a power plant, he added. The Muzaffargarh Thermal powerhouse was not generating energy up to its capacity of 1350 MW. In fact it was generating only 1000 MW of electricity at the moment which would be increased by overhauling its turbines, Cheema stated.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Computer industry not happy with budget ​*
ISLAMABAD (June 13 2008): The local computer industry has expressed serious concern over the budgetary measures announced for fiscal year 2008-09, terming it a continuity of the previous regimes' ill-conceived policies for industries.

Pakistan Computer Association President Munawar Iqbal told Business Recorder on Thursday that the budget has not provided any relief to save vital and much-needed computer industry. The major demand to withdraw sales tax on computer has not been accepted, maintaining serious implications for the industry.

He said that the decision made by previous regime to levy 15 percent GST on computer industry badly hampered its growth, which is significant and prerequisite for all other sectors of the economy. The industry was expecting a better approach from the new government, but the budget has failed to translate this claim into reality. It has offered no relief for the industry, which is being considered as backbone of the economy in other countries of the region and enjoys a highly privileged status.

He said that the efforts to retain the 15 percent sales tax has escalated the computer hardware prices and the implementation is dampening the imports every year. As a result of increasing prices of PC and computer equipment, students all over the country are reluctant to opt for computer subject. Under these circumstances, investment in this sector is squeezing by each passing day and we have provided all the data in this regard so that the new government may be able to understand the gravity of the situation.

He said for the last two year our association appealing for waiver of 15 percent GST on the import of computers and all other related equipment at least for next few years so that the industry could get out of present fragile situation. The association also pleaded that the imposition of GST has nothing to do with the revenue but it would hurt the booming IT industry of Pakistan. Moreover, software export has also suffered due to this decision. Iqbal urged the government to reconsider the stance towards computer industry and evaluate the implications of GST on realistic grounds.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Agriculture-sector to be modernised in Sialkot ​*
SIALKOT (June 16 2008): The district government, Sialkot has initiated a well-designed plan to modernise the agriculture sector scientifically to attain maximum output of crops in Sialkot, Daska, Pasrur and Sambrial tehsils of the district.

Official sources told Business Recorder on Sunday that district government was making adequate efforts for introducing new agricultural technologies under its programme to increase per acre yield of crops in Sialkot district.

'The government is paying especial attention to effective agricultural research, improvement of irrigation system, and ensuring sufficient availability of quality seeds in the district', they said.

Green houses would be set up in Sialkot, Daska, Pasrur and Sambrial tehsils while at least 67 watercourses would be created. Out of 67, 50 watercourses would be excavated in canal areas and 17 in Barani areas. Further, Rs30 lakh were spent on setting up of agriculture laboratory while Rs70 lakh were being used for establishment of veterinary centres in the district. The work on ongoing livestock schemes costing Rs 58.70 lakh is full swing and more funds amounting to Rs 31.67 lakh were being provided for the completion of the schemes sources added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Oil price rise and implications for Pakistan ​*
ARTICLE (June 16 2008): Pakistanis have been particularly vociferous in holding the government accountable for the oil price rise in recent months. Not surprisingly, the politicians have been embroiled in a blame game made all the more credible because of the fact that the country has been subjected to three different administrations during the past eight to ten months.

Throw in a general election considered to be largely fair and free, and one has all the ingredients necessary to make accusations stick. The budget for the fiscal year 2006-07, prepared by the Shaukat Aiz government, failed to take any account of the possibility of a rise in the international price of oil. In today's world of hedge fund managers such failure cannot be explained away by blaming external factors, as Musharraf and his band of dwindling cohorts would have us believe.

And the people of this country are paying the price of this failure which was compounded by three decisions forced onto the newly elected government: (i) because of the impending elections the caretaker government took the decision to continue to subsidise oil prices in the domestic market, which, in turn, put pressure on the government to (ii) slash expenditure with, as usual the Public Sector Development Programme (PSDP) being the casualty; and as this was not adequate, (iii) heavier reliance was placed on deficit financing or borrowing from the banking sector - a highly inflationary policy. Thus even though the oil prices were artificially stabilised, the inflationary pressures increased mainly because of a higher deficit.

This accounted for a 9.5 percent estimate of budget deficit according to the PML (N)'s short term Finance Minister, Ishaq Dar - scaled down to 7.5 percent on the assumption that the proposed reduction in PSDP would take place. Actual figure released by the Economic Survey was 7 percent.

There is no question about the fact that the ability of a large number of Pakistani households to make ends meet is being eroded due to inflationary pressures. However, the question that comes to mind is the policy of subsidy is something that is sustainable? Classic economic theory gives subsidies as a policy option an overwhelming thumbs' down: an across the board subsidy implies a distortion of the market which will have to be paid for by the government.

In the case of Pakistan's oil subsidy the government has had to pay out huge sums of money from its scarce resources, leading to high budget deficit. If the subsidy is targeted then the issue of abuse in a country like Pakistan where governance remains a challenge crops up almost immediately.

That words do change in meaning over time is a study in itself. However, as an example, the word sophisticated is rooted in the word sophistry which, in times of yore, meant false. Today the word sophisticated has no negative connotations. A look back at history reveals that the word 'subsidy' was originally envisaged as a progressive tax, a precursor to the modern day income tax, and was first levied by Thomas Wolsey in 1513 with the objective of raising money to pay for Henry VIII's war with France.

Today subsidy is defined as state support for its poor, or state support targeted to certain industries/farmers/interest groups belonging to segments that are not poor by any stretch of the imagination. An example that comes to mind is the textile sector, another the rich absentee landlords sitting in our national and provincial assemblies; even our armed forces have received many an economic incentive in its non-defence related production activities.

With the rise in the international oil price its impact, therefore, is not limited to Pakistani consumers. Strikes and protests are becoming widespread in Western countries, from the UK to France to other European Union countries. And the 27 EU countries are at odds over what is the best way to deal with the crisis. Acting sanctimoniously they have rejected demands for a subsidy - this is after all against classical economic theory. However such economic considerations do not apply to the EU's farm policy that heavily subsidises the farm sector - a subsidy whose benefits are not passed onto the EU consumer. Politics, as always, plays a bigger role than economics.

The Iranian President Ahmedinejad has stated that oil prices have been artificially inflated by 'capitalists' and that crude oil remains plentiful: "while the growth of consumption is lower than that of production and the market is full of oil, prices are constantly on the rise and this situation is completely artificial and imposed...Powerful and international capitalists (are working) mendaciously to pursue their political and economic aims." Critics disagree.

They cite the latest figures from US government agencies and trading data that indicate that hedge fund managers and speculators have reduced bets on higher oil prices by 80 percent since July last year when prices began to rise sharply and crude futures rose to record highs. So if it's not the hedge fund managers and the speculators, then who is responsible for the oil price hike?

Could it be the massive liquidity in the financial markets that accounts for oil price rise? Mr Ito, senior analyst at UBS Securities Japan, agrees: "Oil prices are surging not because of a supply shortage, but because of massive liquidity," he maintained referring to the influx of financial funds into markets, helped by low interest rates.

Or could it be the oil companies that are responsible for the oil price hike? Democrat Senators in the US want to levy a windfall profits tax against the five largest U.S. oil companies and rescind $17 billion in tax breaks the companies expect to enjoy over the next decade. "The oil companies need to know that there is a limit on how much profit they can take in this economy," said Sen. Richard Durbin of Illinois, the Senate's No 2 Democrat, warning that if energy prices are not reined in "we're going to find ourselves in a deep recession." But the Democrats are going to have to overcome staunch Republican opposition to any new taxes on the oil industry. The five largest US oil companies earned $36 billion during the first three months of the year.

Given the problem the question is: what is the best solution? French President Nicolas Sarkozy has called for an EU-wide cap on value-added taxes on fuel. VAT accounts for some 70% of prices at the pump in much of Europe and according to Sarkozy, the French government is earning an additional 150-170 million in VAT receipts every three months as a result of the explosion in oil prices. This money could be used to offset the worst impact of the fuel price rises, he said. His proposals have already been met with widespread skepticism from the Commission and other European governments.

Amelia Torres, a spokeswoman for Joaquin Almunia, the EU commissioner for monetary affairs, said that tax cuts would send the wrong signal to oil-producing countries that European states were willing to absorb rising gas prices. But at the G-8 summit in Amori, Japan, plus 3 (including the three major oil guzzlers of the world namely China, India and South Korea) it was decided to focus on the consumer nations: technology, conservation and diversification. This has raised other concerns: technology may be at odds.

It is not yet clear what action the EU will take: reduce taxes or hope that the price of oil will eventually come down. But it is clear what Pakistan will do: Seek a Special Oil Facility which will defer payment for imports by one year at least. And what will happen a year from now, critics may ask? Who knows what tomorrow will bring is a refrain that will, in all probability, gather momentum as helplessness may well overtake the average consumer burdened under inflationary pressures. Surprisingly it is not even clear what action the government of Pakistan will take in spite of the fact that the budget has been announced.

According to the budget documents subsidies related to oil and electricity sector are as follows: (i) WAPDA to receive a subsidy of 74,612 million rupees (lower than the revised estimated for 2007-08 of 113,658 million rupees) with the major share to be allocated to inter-Disco tariff differential estimated at 65,000 million rupees for 2008-09 as opposed to 87,000 million rupees for the revised estimates for this year. (ii) KESC is to receive 13,800 million rupees with 12,000 million rupees to be allocated to KESC on account of tariff differential in contrast to last year's revised estimates of 19,596 million rupees and 15,796 million rupees respectively. (iii) The budget document states that 15 billion rupees was budgeted last year to be paid on account of price differential claims of POL products, however a total of 175 billion rupees only was paid due to political constraints - this figure will be reduced to 140 billion rupees in the forthcoming fiscal year.

It is not clear what this figure reflects in terms of whether the government believes it will receive the Saudi Oil Facility or the rupee-dollar parity which would determine the extent or limit of the subsidy. In short there is confusion and the people will have to wait for what the next year will bring in terms of cost of oil and products as well as the cost of electricity.

Business Recorder [Pakistan's First Financial Daily]


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## niaz

A poignant comment on the new budget.


Another opportunity goes waste

By Shahid Javed Burki


PAKISTAN in 1947 was a stunningly different place from the country we know now, so different that most of todays young people would have trouble imagining it. The size, structure and potential of the economy are much different than was the case at the time of the countrys birth.

Pakistans economy, looked at in terms of its performance over the 61-year period since the countrys birth, has done well. Its GDP has increased at the annual average rate of 4.4 per cent with the result that the economy now is 18 times larger than what it was in 1947, and income per head of the population is four and half times higher. In 1947, what is Pakistan today had a population of 30 million. With the current size of population estimated at 162.5 million, there are now five and half times as many people living in the country as was the case at the time of birth.

However, economic progress was not even during this period. Pakistan has had as many periods of rapid economic growth as of sluggish performance. The economy grew rapidly over a period of 27 years, from 1960 to 1969, from 1977 to 1988 and, more recently, from 2002 to 2007. The average rate of growth during these periods was 6.3 per cent. For the remaining 34 years, the economy performed less well, growing at a rate of 3.8 per cent. The roller-coaster ride the economy followed was in large measure due to the availability of foreign capital flows.

Pakistan relied on external savings to augment the low rate of domestic savings. External savings were large whenever the United States needed Pakistan for strategic reasons. This was the case in 1960-69 when the country joined the US effort to stop the spread of communism; in the 1980s, when Pakistan joined the US in forcing the Soviet Union out of Afghanistan; and again in 2001-07 when Pakistan became the frontline state in Washingtons war on terror.

In the case of Pakistan rapid economic growth was not a part of a paradigm shift as was the case with neighbouring India. In the mid-1980s, India began to reform its economy, dismantling the licensing raj in favour of a more open economy. One important consequence was that India, after 1986, was able to climb out of the Hindu rate of growth and move on to a higher growth trajectory. It has remained on that trajectory for the last 20 years whereas Pakistans seems poised to take another plunge, continuing with the roller-coaster ride of the past six decades.

Having seen its economy grow at seven per cent a year in the five-year period between 2002 and 2007, the country is likely to see a two to 2.5 percentage point decline in the rate of growth in 2007-08 and for a couple of years beyond.

This will happen for a number of reasons, including a possible decline in the quantum of external flows.

But even more important, weighing on the economy are serious macroeconomic imbalances: both fiscal and balance of payments deficits have increased to unsustainable levels. These have produced inflationary pressures, further exacerbated by the increase in world commodity prices.

There is need for an adjustment in the approach to economic management. What should be the direction of economic policies as new administrations at both the federal and provincial levels settle down?

There are basically two options: the government could do what it has always done in periods of crises in the past or it could attempt to restructure the economy to ensure progress along a trajectory that would ensure high rates of growth with significant impact on the incidence of poverty and distribution of income. On previous occasions, the governments usually focused on short-term measures rather than on long-term structural change.

This may be a good time to alter the stance and attempt to bring about a fundamental change in the structure of the economy.

It should be noted that the current economic downturn is different from some of the previous ones in that it has not been caused by a sudden and sharp decline in foreign flows that brought about previous reductions in growth. This time the crisis is largely the cause of internal dynamics reinforced by some developments in the worlds commodity prices. The present crisis is the result of the failure of the previous set of Islamabad-based policymakers to foresee the consequences for the economy of the model of development they had adopted.

That model placed the economy under the control of an unconstrained private sector with the state withdrawing so much to the sidelines that it failed to do what it must to maintain equilibrium.

The suspension in the legitimate role of the state has meant that the country was left with a number of serious problems. Among them are a tax system that yields resources for the government well short of the public sectors need for investment thus continuing the economys dependence on external flows. There is a public educational system that does not educate and adequately train a very large number of young people. The system of public health does not provide adequate health care for the poor.

Ours is an economic system that does not produce enough jobs for a rapidly increasing work force. Our cities do not provide some of the basic needs of the citizenry.

Ours is an agriculture sector that, in spite of its size and endowments, is unable to feed a growing population. Our economic structure does not mesh with the structure of the global economy; and severe power shortages that have produced great suffering for the poor and dislocations for many parts of the economy.

Given the state of economic affairs, the government has to do three things simultaneously. It has to adopt policies of adjustment in order to restore macroeconomic stability; it has to reignite the process of growth so that it can be sustained over time; and it has to not only provide for the poor but also work to reduce their number and reduce income inequalities.

The government, in other words, has to work on both the immediate and the medium to long-term. Short-term measures and long-term strategic policy must support each other and take the country in the same direction. The budget for the financial year 2008-09 presented an opportunity for the new policymakers to set the country on a new track. But unfortunately it was not taken. Why I believe that another opportunity was lost is a question I will take up next week.


DAWN - Editorial; June 17, 2008


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## Moin91

*Sindh ADP outlay exceeds Rs89 billion*


Rs9bn allocated for transport and communications including light rail, bridges and roads

Tuesday, June 17, 2008
By Salman Siddiqui

KARACHI: Setting aside the financial constraints amid an estimated budget deficit of Rs14 billion for 2008-09 fiscal year, the Sindh province has allocated historical high funds of Rs89.3 billion for Annual Development Program (ADP) in the province.

While presenting provincial budget in the assembly on Monday, Chief Minister Sindh Syed Qaim Ali Shah announced allocating Rs89.3 billion for the next years development programme, which is 23 per cent higher than Rs72.3 billion revised ADP of current fiscal year progressing fast towards its end on Jun 30. Sindhs own - including its districts development portfolio - share in ADP is allocated at Rs67 billion, which is 34 per cent higher than Rs50 billion the province pooled last year.

The rest of Rs22.3 billion (i.e. 20 per cent) of total Rs89.3 billion ADP allocation, the province would be received through Federal Development Portfolio (i.e. at Rs12.7 billion); Foreign Project Assistance (i.e. at Rs9.09 billion) and DERA (i.e. at Rs0.51 billion).

The biggest share of 16 per cent (i.e. of nine billion rupees) of total ADP was allocated for transport and communication sector development, as Sindh government gave this sector the utmost priority among its other development projects. Therefore, the significant amount put for transport and communicated would be used for the construction of roads linking farms to the markets, Chief Minister said in his budget speech.

Through this allocation, 586 schemes covering a road network of 12,00 km, improvement in 500 km and 10 bridges are being taken up, 45 of these schemes are expected to be completed in the next financial year.

In terms of strategic arteries and bridges, the Khairpu-Larkana bridge over Indus is being implemented by NHA and another bridge on Indus from Sakrand to Sehwan has also been included in Federal PSDP, said CM.

Moreover, the existing Mega City Development Program is being up-scaled and this would now specifically attend to transport sector. Under this, province strategy is to go for Mass Transit such as Light Rail that can provide solutions to traffic congestions for next few decades. Shah expects to scale it (Mass Transit) up from existing $800 million to the tune of $1.5 to $2 billion.

Province has provided Rs2 billion package for various priority schemes for Karachi, whereas ongoing and new schemes in water, sewerage, transport have been provided funding. The province will allocate Rs200 million for Lyari Expressway Resettlement Project.

Larkana City: Among the other top priorities of government of Sindh, it has especially allocated Rs2 billion package for Larkna - the city of PPP martyr chairperson Benazir Bhutto. This especial package is allocated besides Rs5 billion committed by Federal Government.

There are allocations for town development of Bhit Shah, Swean, Shahbaz Qalander Shrine and other places which remained ignored earlier. Ghorakh Hill Development will be undertaken and Sindh will seek public private partnership for this resort. Water supply to Baba Bhit; Shamspir and Salehabad in Manro will be expedited through an allocation of Rs100 million.

As an urgent requirement of Rs329 million has been provided for Fire Fighting and Solid Waste Management Machinery for major Towns. The provincial kitty would spend Rs500 million on Clean Drinking Water for All project from provincial kitty in addition to Federal Government allocation.

Agriculture sector: The current year development budget has a hefty allocation of Rs4.87 billion for agriculture sector including livestock and fisheries compared to Rs3.5 billion in 2007-08 - representing an increase of 36 per cent.

The construction of dams including Nai Baran Dam on a fast track basis over an area of 30,000 to 40,000 acres; promotion of flower and fruit nurseries; establishment of Agro Export Processing Zone at Karachi; training women in cotton picking; up-gradation of hospitals and rehabilitation of health training institutions; strengthening and developing social sectors and youth development programs are also under the ADP.


Sindh ADP outlay exceeds Rs89 billion


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## Moin91

*Rs360m for preparing feasibility to develop coal*

Tuesday, June 17, 2008
KARACHI: The Sindh government has allocated Rs360 million for preparing the feasibility for developing coal reserves in Thar and Sonda. 

Announcing the budget for 2008-09 in Sindh Assembly, Chief Minister Syed Qaim Ali Shah said the provincial government has already invited proposals for a joint venture on Thar coal. Based on initial contacts, we expect an enthusiastic response from several reputed private sector groups, he added. He said the government has planned to establish training institute in mechanised mining in collaboration with some foreign institute at a cost of Rs600 million.

Qaim said Thar coal provides an excellent opportunity for establishing coal-based power projects. It is unfortunate that the previous government failed to announce an appropriate up-front tariff and refused to allow meagre tariff of 5.7 cent per kilowatt (kWh) to a major Chinese company, which offered to establish 600 megawatts power plant with Thar coal. WAPDA is paying approximately 15 cents per kWh to existing power projects while the tariff for new projects based on the current fuel prices, will be over 18 cents, he noted.

Chief Minister said based on the estimates, Pakistan is expected to pay additional opportunity cost of around $1 billion per year due to the delay in developing Thar coal. Referring to energy sector, he pointed out that Sindh government has already provided land to private sector for the establishment of wind power projects. 

Rs360m for preparing feasibility to develop coal


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## Neo

*KSE crashes 497 points as investors lose confidence ​* 
Tuesday, June 17, 2008

KARACHI: The equity market on Monday witnessed intense selling pressure throughout the session as the benchmark KSE 100-share index slumped 497.43 points to close at 12,444.13.

Investors offloaded their positions in absence of any positive news and persistent political jitters.

The KSE 30-index closed at 14,552.29 points with a loss of 687.26 points. All shares index closed at 8,931.88 with a loss of 338.94 points. Market capitalisation stood at Rs3.83 trillion as compared to Rs3.98 trillion at the weekend.

The market could not digest weekend developments. Moodys has reported that Pakistan is losing investors confidence, the rupee-dollar parity will further widen with the rupee depreciating by 15 per cent to reach Rs75 per dollar from the current level of around Rs67 per dollar. The news that five banks were near collapse further dampened market sentiments.

Saad bin Ahmed, Head of Research Capital One Equities, said investors were concerned over falling SCRA balances and rumours regarding banking sector. He said that in the long run it is expected that the State Bank will further increase the discount rate, which will have a negative impact on the market.

The local bourse continues to seek consolidation said Hasnain Asghar Ali of Aziz Fidahusein. Persons having access to international avenues for investments are not likely to think twice while the local investors from middle-income group are likely to shift to NSS and commercial papers, he said. Ali said if this adjustment continues on a natural course the consequences might be unbelievable. 

Without taking any responsibility Hasnain Asghar Ali said it is therefore recommended to hold on only to the stocks that are likely to sail smooth despite all the odds and having a sound cash flow, besides them offloading in others can be opted for till of course the authorities decide to take up the economic and social issues seriously.

Ready market volume stood at 107.52 million shares as compared to last trading session 104 million. Future market volume stood at 40.186 million shares as compared to last trading session 34.597 million. 

Highest volumes were witnessed in NIB with 5.663 million shares closed at Rs12.40 with a loss of 60 paisa followed by Adamjee Insurance at 4.709 million shares closed at Rs276.40 with a gain of Rs5.15 and DGKC at 4.573 million shares closed at Rs70.68 with a loss of Rs3.72, National Bank with 4.449 million shares closed at Rs164.35 with loss of Rs8.65, Oil & Gas Dev.XD with 4.041 million shares closed at Rs125 with loss of Rs4.95, Arif Habib Securities with 3.666 million shares closed at Rs162.5 with loss of Rs8.55, Fauji Fert Bin with 3.194 million shares closed at Rs36.75 with loss of Rs1.2, Azgard Nine with 3.15 million shares closed at Rs62.7 with loss of Rs.3.3, Pak Petroleum with 3.102 million shares closed at Rs257.5 with loss of Rs.11.5 and Nishat Mills with 3.054 million shares closed at Rs93.58 with loss of Rs4.92.

KSE crashes 497 points as investors lose confidence


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## Neo

*Remittances rise 18pc to $5.9bn in 11 months ​* 
Tuesday, June 17, 2008

KARACHI: Remittances sent home by overseas Pakistanis continued to show a rising trend as $5,903.83 million were received in the first 11 months (July 2007-May 2008) of the current fiscal year, showing an increase of $915.73 million or 18.36 per cent over the same period of the last fiscal year.

The amount of $5,903.83 million includes $2.36 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

The monthly average of remittances for the period July-May 2007-08 comes to $536.71 million as compared to $453.46 million during the same period of the last fiscal year, registering an increase of 18.36 per cent, the State Bank said on Monday.

The inflow of remittances in the July-May 2007-08 period from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $1,618.46 million, $1,127.65 million, $1,002.01 million, $892.41 million, $420.79 million and $162.66 million, respectively as compared to $1,319.47 million, $927.09 million, $771.10 million, $689.17 million, $392.59 million and $136.53 million, respectively in the July-May 2006-07 period Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the first 11 months of the current fiscal year amounted to $677.49 million as against $749.58 million in the same period last year.

During last month (May 2008), Pakistani workers remitted $584.75 million, up $46.77 million or 8.69 per cent when compared with $537.98 million sent home in May 2007.

The inflow of remittances into Pakistan from most of the countries of the world increased last month as compared to May 2007. According to the break-up, remittances from USA, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UAE, UK and EU countries amounted to $154.73 million, $125.94 million, $97.23 million, $94.49 million, $41.76 million and $15.01 million, respectively as compared to the corresponding receipts from the respective countries during May 2007, that is $143.35 million, $99.49 million, $79.29 million, $97.59 million, $37.99 million and $13.45 million. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during May 2008 amounted to $55.43 million as compared to $66.49 million during May 2007.

Remittances rise 18pc to $5.9bn in 11 months


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## Neo

*Punjab sets record Rs160bn ADP​*
LAHORE, June 16: The Punjab government has set aside a record sum of Rs160 billion for the Annual Development Plan (ADP) for 2008-09 which would mainly be financed through surpluses accruing from revenue and capital accounts of the provincial government.The current ADP is 6.67 per cent higher than the previous years Rs150 billion.

According to budget documents tabled in the Punjab Assembly here on Monday, the current ADP includes Rs132.947 billion net revenue account surplus, Rs13.593 billion net capital account surplus and Rs1.221 billion net public account surplus, besides Rs1.226 billion federal grants and Rs11 billion foreign project assistance.

The ADP has been designed under the medium-term framework, with emphasis on social sectors (49.3 per cent) and rural areas (64.5 per cent), focus on infrastructural investment (34.3 per cent) and allocation to pro-poor sectors (82 per cent).

Sixty per cent of the funding has been allocated for ongoing projects to seek their completion while 40 per cent has gone to new projects. Fifty-eight per cent of 2,957 schemes are likely to be completed during the year.

Social sectors i.e. education, health, water supply and sanitation will see 24 per cent increase in funding over last year, infrastructural investments 25.7 per cent, production sectors 189.7 per cent, services sectors 61.4 per cent and special programme 23.3 per cent.

The allocation for education is over Rs30 billion, which is 40.3 per cent higher than the last financial year. It includes Rs5 billion World Bank-assisted Punjab Education Sector Reforms Programme.

A model programme of upgrading two best colleges in each district launched last year for turning them into high quality institution with autonomous status will continue this year too. Two of the weakest colleges will be picked for a complete overhaul. Declaring cut in maternal and infant mortality rate, strengthening primary, secondary and tertiary healthcare as primary objectives of the government in the health sector in partnership with the private sector, the province has allocated Rs9 billion which is 38.4 per cent higher than the previous year. Around 140 rural health centres and 160 basic health units will be provided health facilities.

A feasibility study for health insurance would be undertaken, leading initially to a pilot project for health coverage for the poor. Feasibility studies would also be conducted for establishing a children hospital in Faisalabad, a cancer hospital, a liver institute and a neuro-sciences institute in Lahore.

The allocation for water supply and sanitation has been enhanced by 23 per cent over the previous year and Rs8 billion have been allocated, with priority to barani and brackish areas for provision of facilities, introducing concepts of water metering in rural areas and waste water treatment.

Most of the schemes being initiated belong to southern Punjab and Potohar areas.

For welfare of destitute women, elderly persons, orphans, widows and abandoned babies, an allocation of Rs700 million has been made. These funds would also be used for construction of women barracks in jails and their shelter homes (Darul Aman), as well as imparting them skills to make them economically independent.

To eliminate regional disparities, a sum of Rs2.4 billion has been proposed for launching Phase-II of Barani Village Development Project, southern Punjab poorer districts development programme and provision of necessary social and physical infrastructure, like roads, water supply and electricity in Cholistan.

The local government and community development department has been allocated Rs8.41 billion, 20 per cent higher than the last years ADP.

A sum of Rs2 billion would go to provide basic infrastructure in katchi abadis and Rs3 billion for Punjab Development Programme focusing generation of economic activity and employment through local level small schemes.

Road sectors total outlay in the ADP is Rs17.5 billion, up 22 per cent than the last fiscal and accounting for almost 15 percent of the core development programme for 2008-09. About 500-km length of existing roads would be widened from the present 12 feet to 24 feet, while 150-km new roads or missing links would be constructed.

New schemes of elevated expressway  one each in Lahore and Rawalpindi  and dualisation of Gujranwala-Sialkot road would also be undertaken.

Irrigation sectors total outlay for the year 2008-09 is Rs11.3 billion, constituting about 11.2 per cent of the core ADP.

Out of total 103 schemes included in the ADP, 60 have been targeted for completion by allocating 73 per cent of the outlay to the ongoing and 27 per cent to new projects.

The main targets are lining of 350km water channels, rehabilitation and modernisation of Taunsa Barrage, construction of five small dams, improving drainage and flood protection for 105 square mile area in Gujranwala, Sialkot, Sheikhupura, Narowal, Sargodha and Kasur districts.

A 3.2 MW Khokhara hydropower project will also be completed besides preparation of five additional hydel power projects of 24.8 MW combined.

An amount of Rs6.768 billion has been allocated for urban development sector which is 44 per cent higher than last years.

The allocation includes Rs900 billion for projects to replace outlived water supply lines causing gastroenteritis threats.

A provision of Rs30 million has been made for identification, master planning and development of intermediate cities in the province.

The Punjab Large Cities Development Policy Loan is being negotiated with the World Bank to make large cities engines of economic growth.

The proposed $300 million loan is aimed at improving land use planning, property tax reforms, revenue generation, collection and effective urban services delivery.

Of production sectors, a sum of Rs3 billion has been apportioned to agriculture sector, Rs1.9 billion to livestock and Rs2.3 billion for TEVTA.

In the services sectors, Rs1.5 billion have been given to information technology, Rs2.5 billion to emergency service and Rs100 million to tourism sector.

Planning and development department would get Rs3.15 billion and the environment Rs1 billion.

Three major projects have been identified in the special infrastructure sector with an allocation of Rs29 billion for them. These are Lahore Ring Road, Sialkot-Lahore Motorway and Lahore Rapid Mass Transit System project.

Punjab sets record Rs160bn ADP -DAWN - Business; June 17, 2008


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## Neo

*Parallel economy a threat to welfare plans​*
ISLAMABAD, June 16: The countrys black economy is estimated to have grown to be half as big as the formal economy, which yields a GDP of $166 billion.

Sources told Dawn on Monday that the problem had reached such proportions as could upset public welfare plans.

The parallel black economy of $83 billion could yield the national exchequer eight billion dollars if taxed even at a rate of 10 per cent.

These are very conservative estimates. The fact of the matter is that black economy could be much bigger, said an official dealing with economic affairs.

Pakistans economy is largely undocumented, providing space to the informal sector to grow and thrive. Under-invoicing has gone on for years and at a huge scale, he said.

Most recently hoarders and black marketeers earned billions in wheat and flour trading, but no record was available to pin them down, the official said.

This approach is no different from that adopted by former economic managers, headed by Mr Shaukat Aziz, who first launched documentation of the economy in 2000-01, but abandoned it on the same excuse in the name of being business-friendly, the sources said.

They said that a strategy was being finalised to bring the informal sector into the formal one in order to achieve new resource mobilisation, particularly by encouraging the development of cottage industry.

Officials in the economic ministries have been directed to give an implementation mechanism to substantially raise revenues by providing incentives to the informal sector to merge into the formal sector.

The Federal Bureau of Revenue chairman said that there were different estimates about the size of the black economy.

But I believe black economy is 30 to 40 per cent of our total economy and this is quite disturbing, he said

Parallel economy a threat to welfare plans -DAWN - Top Stories; June 17, 2008


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## Neo

*14 percent decline in FDI ​* 
KARACHI (June 18 2008): Foreign direct investment (FDI) during the current fiscal year declined by 14 percent mainly due to uncertainty on political front and continued demonstrations in the country.

Despite the fact that a political government has been set up in the country, the confidence of foreign investors in Pakistan's economy has not revived and they are still reluctant to invest in Pakistan due to continued demonstrations, especially by lawyers, across the country and political battle, analysts said. They said that although the investors want to invest in Pakistan, they believe that the change in the political set up would hurt their investment

State Bank of Pakistan (SBP) data on Tuesday showed that net foreign investment (including FDI and portfolio investment) declined by 37.2 percent, to $3.943 billion during eleven months of current fiscal year in slow portfolio inflows due to political uncertainty in the country.

Net foreign investment during the July-May of last fiscal year 2006-07 was $6.28 billion. Out of net foreign investment, FDI declined by 14.1 percent, or $639 million during July-May of 2007-08. After current decline, overall FDI stood at $3.881 billion against $4.520 billion in same period of last fiscal year.

Analysts said that besides FDI, portfolio investment also declined by 96.5 percent, to $62.2 million against $1.760 billion of corresponding period of last fiscal year. "Although overall FDI depict some declined during the current fiscal year, the present statistics are very encouraging and despite the political battle foreign investors are investing in the Pakistan," said an economist.

He said that portfolio investment is also recovering, and current statistics are proof that the country's economic fundamentals are strong and have ability to attract foreign investors despite last one year's uncertainty. "It is clear that during the current fiscal year the country's net foreign investment would be less than last year. However, we are expecting that in the next fiscal year investment would boost," he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'16 trade pacts signed with different countries since 2003' ​*
ISLAMABAD (June 18 2008): Pakistan has signed sixteen bilateral and regional trade agreements for propelling its exports since 2003, official sources said. Bilateral and Regional Trade Agreements commonly referred to as Free Trade Agreements (FTAs), Preferential Trade Agreements (PTAs) or Regional Trade Agreements (RTAs) are contributing to the development of global trade and take members to one step nearer to the multilateral regime, the sources said.

The Ministry of Commerce has initiated market access negotiations with various trading partners for two fundamental reasons ie seeking maximum market share for Pakistani exports in foreign markets and ensuring level playing fields for Pakistani exporters vis a vis other competing exporters who have bilateral or regional arrangements FTA or PTA trade rights in these markets, sources added.

Pakistan and Indonesia have also signed a comprehensive Economic Partnership Agreement in November 2005 to promote trade ties between the two countries. Five out of ten Member States signed the ECO Trade Agreement (ECOTA) in July 2003. The signatory members are Pakistan, Iran, Turkey, Afghanistan and Tajikistan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Multi-national corporations: reinvestment of 25 percent profit in country sought ​* 
ISLAMABAD (June 18 2008): The Senate Standing Committee on Finance has recommended the government to ensure that multi-national corporations operating in Pakistan should re-invest at least 25pc of their net profit in the country.

The committee in its recommendations for amendments in the Finance Bill 2008-09 asked that multi-national corporations operating in Pakistan should re-invest at least 25 percent of their net profit in the country.

The committee urged that the interest free loans should be promoted to finance particularly development in agriculture and SME's, which would result in poverty reduction.

In all such cases the financial institutions should be obligated not to charge anything more than actual service charges, it emphasised. The State Bank of Pakistan (SBP) should accelerate its efforts towards promotion of Islamic banking and finance in the country.

The Federal Bureau of Statistics should be made an autonomous institution so as to ensure high degree of professional integrity and greater credibility and privatisation must be reviewed and rationalised to ensure complete parliamentary oversight and protection of strategic interests of the country, the committee urged.

The SME model estates should be established in all the provinces and in the Fata and Northern Areas and promotion of SME's given priority all over the country. Tax on sale of property and real estate should not be levied on small plots.

Plots up to 5 Marlas must be exempted while others charged progressively keeping in view the size and locality of the plot, Income Tax/Corporate Tax on profit of banking sector should be increased from 38 to 41 percent, security Scheme for children, widows, elderly and the physically disabled should be devised in a manner that income support should be targeted for these four categories while all other financial support plans should be in a manner that bring gainful employment to poverty stricken people or other productive activities and do not make them depended permanently on doles.

The committee also recommended that in distress cases immediate steps be taken to resort to write off small loans of up to Rs 100, 000. This may be done in both in the agricultural and industrial sectors and House building Finance Corporation.

The government should also ensure that total for education is raised to 3 percent of the GDP in Fiscal Year 2008-09 and 4 percent of the GDP in the Fiscal Year 2009-10. The committee recommends to the National Assembly that recommendations made by the Parliamentary Committee on Balochistan should be implemented immediately and for the development projects of Balochistan, special and adequate allocations be made for execution and implementation of these projects on fast track basis.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Turkish businessmen invited to invest in Pakistan ​*
KARACHI (June 17 2008): A ten member delegation of Karachi Chamber of Commerce and Industry (KCCI) was warmly welcomed by the MUSIAD, the Independent Industrialists and Businessmen's Association of Turkey, Istanbul Chamber of Commerce and Istanbul Chamber of Industry on Monday at Turkey.

During meeting with Musiad, it was discussed that how business from Organisation of Islamic Conference (OIC) member countries can collaborate with Musiad to invest in the emerging Turkish market and leverage its experience and networks to expand into the European or Central Asian markets. They also agreed to visit Pakistan to seek the investment opportunities there.

The delegation also exchanged the information of 5th International "My Karachi-Oasis of Harmony" exhibition and reciprocally 12th International Trade Fair scheduled to be held between October 22-26, 2008, in Istanbul. In conjunction with that occasion, Musiad will also host the 12th International Business Forum (IBF) congress, which will be held between October 22-25, in Istanbul.

President of Istanbul Chamber of Commerce in a separate meeting stated that a delegation from Istanbul Chamber of Commerce will visit Karachi by the end of this year. The same enthusiasm was also shown by Istanbul Chamber of Industry and they agreed on transfer of technology in different rising sectors of industries.

The KCCI high-powered delegation led by Iftikhar Ahmed Sheikh, Senior Vice President of KCCI is nowadays in Turkey. The delegation was invited by the Istanbul Minerals and Metals Exporters Association who are organising an international buying mission in conjunction with 4th Beauty Eurasia 2008 Int'l Exhibition. The delegation will return on June 18.-PR

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Despite bumper crop, farmers get low rates for sunflower ​* 
*Growers deprived of justified price for their produce as sunflower cooking oil rates soar​*
Wednesday, June 18, 2008

ISLAMABAD: Oil solvent extractors in collaboration with middlemen are purchasing sunflower much below the announced price of Rs1,600 per 40 kg after the harvest of a bumper crop.

Sunflower growers have no option but to sell their produce at throwaway prices as the solvent extractors have put themselves away from the business while the middlemen are not only purchasing the produce at much lower price but also getting 5-8 kg extra, complained one of the progressive farmers from Multan.

The farmers are getting Rs1,100 to Rs1,200 per 40 kg of sunflower while the PASSCO and MINFAL announced the other day that the commodity would be procured at Rs1,600 per 40 kg which is contrary to reality, the same farmer said.

Growers opted to sow sunflower instead of wheat hoping it would turn their fate after the federal government failed to announce support price of wheat on time but the change did not work well.

Sunflower sowing was up 15 per cent during 2007-08 compared to previous year. Sunflower seed production was expected to be around 1.2 million tonnes, 0.4 million tonnes from Sindh and rest from Punjab.

The sunflower traders are getting 5-8 kg extra on every maund or 40 kg purchase of sunflower and they are also paying Rs300-400 less per maund, Rashid Jamil, another farmer from Muzaffar Garh told this correspondent on telephone on the issue.

The policymakers and officials of Ministry of Food Agriculture and Livestock (MINFAL) are always lauded for producing more grain or other commodities, yet no one ensures availability of a justified price for the produce. He pointed out the issue of sugarcane when the farmers suffered colossal losses after sugar mill owners refused to pay the agreed price.

Prime Minister, Syed Yousuf Raza in his opening address emphasized increasing the production of sunflower and other oil crops for less dependency on their imports, but it seems that market players are pushing the farmer community to raise a bumper crop and then slash price due to abundant supply.

Agriculture Development Commissioner at MINFAL Dr Qadir Bux Baloch when asked to comment on the issue said, all of the solvent extractors would ensure payment of Rs1600 per 40 kg of sunflower with only 2 kg extra sunflower and 8-10 per cent moisture at mills gate. Reports of low prices and extra 5-8 kg sunflower for purchasing the commodity are not correct.

When asked about still lower prices of sunflower against the international prices of Rs2,200 per 40 kg, Baloch said that procurement price of sunflower was Rs850 per 40 kg last year and this year farmers are getting Rs1,500 per 40 kg which is reasonable.

During the year 2006-07, the import bill of edible oil and oilseeds was $1.366 billion while this year it would be around $3.194 billion. The international prices of the palm oil have been rising since last year shooting up from $467 per tonne in 2006 to $962 per tonne in December 2007.

Despite bumper crop, farmers get low rates for sunflower


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## Neo

*Power generation to be raised to 22,297 megawatts ​* 
MULTAN (June 17 2008): The Director-General, Energy Management Cell of Wapda, Tahir Bashir Cheema, has said that to meet the energy shortfall, the government has planned to increase power generation capacity to 22,297 mw in 2008-09 from 20,097 mw in 2007-08, with net addition of 2,200 mw.

Briefing a meeting of the executive committee members of Multan Chamber of Commerce and Industry (MCCI), chaired by Jalaluddin Roomi, he aid that the expected increase in power generation would include 1,067 mw of rental plants and 615 mw of IPPs to be added in the Wapda/Pepco system, and 205 mw of Korangi Thermal Power Station (KTPS) and 200 mw of IPP are expected to be added in the KESC system.

In addition to the already operating 300 mw Chashma Nuclear Power Plant (C-1) since 2001 and under-construction unit C-2 of same capacity, two more units (C-3 and C-4) of 300 mw each are planned at Chashma and are expected to be commissioned by 2014 and 2015, respectively. Further, 1,000 mw unit at Karachi has already been conceptually cleared. He said that Wapda was facing shortage of water in reservoirs. There was only 30 percent supply of natural gas and there has been increase in the prices of furnace oil. A number of power generation plants had completed their technical life during last decade.

He said that KESC , FATA, federal and provincial governments are defaulters of Rs 134 billion. He said that recovery in Punjab is 100 percent, 70 percent in Sindh, 60 percent in Balochistan and NWFP, and zero percent in FATA.

Tahir said that it was a pity that non-professional were appointed as chairman of Wapda who destroyed the organisation ruthlessly. Citing KESC, he said that there was no agreement, no rules and regulation signed between the government and the buyers who are now selling the assets of KESC to meet the salaries of the staff. They did not spend even a single penny for improvement of the system. Instead, they are defaulters and they were blackmailing the government by shutting down electricity whenever they desired.

He said that detailed engineering and design of Diamer Bhasha dam project had been completed and was under final review by Wapda. Tenders for construction of the dam are expected to be floated soon, whereas construction of the dam was expected to be started in the middle of 2009.

He said that for enhancing power generation capacity, the government has allocated Rs 76.2 billion, including Rs 16.320 billion as foreign aid in the annual Budget 2008-09. To overcome power shortage and to reduce the extent of load shedding, 1,500 mw thermal power projects at Dadu, Guddu and Faisalabad have also been envisaged during 2008-09 with average capacity of 500 mw each. Two hydropower projects of Northern Areas, including Naltar-III (16 mw) and Naltar-V (14 mw) have also been envisaged in 2008-09.

In respect of AJK, two hydropower projects, namely Battar (3.2 mw) and Dhannan (1.7 mw) are also under active consideration by the government. To cater the growing demand of power in the country, to increase the efficiency of system network and to reduce power congestion in the power system, multiple projects for construction of transmission lines and grid station, extension of feeder lines and installation of capacitors are under consideration by the respective Discos.

The meeting was also addressed by CEO of Mepco, Muhammad Amin Sahi, Chief Executive Officer Genco III Muhammad Rafiq Butt, Muhammad Azhar Iqbal, and Dr Muhammad Tariq, President of Bahawalpur Chamber of Commerce & Industry.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Moody's report on Pakistan investment clime ​*
ARTICLE (June 17 2008): Moody's Report on Friday, June 13, on Pakistan's chances to attract or retain foreign investments being dim, comes as no surprise. The conditions here hardly evoke confidence in the government's ability to control events that are externally generated, by themselves. All countries on earth, including the oil producers, are feeling the pinch of oil price surge, mounting inflation, weakening US dollar, and looming recession.

It will be foolish to expect Pakistan to remain immune to these external conflagrations, leave aside the domestic problems. How outsiders feel about it is probably more subdued than the outbursts on the domestic fronts, and no wonder. For more than six months now, these columns have carried dire warnings, as well as precepts to absorb the shocks. Regrettably, the leadership's agenda does not seem to be geared to address the looming disasters. Rather, they are more interested in non-issues or personal vendettas. Furthermore, the media too seems to be pre-occupied with events that do not interest the common men, engrossed with problems for the daily bread to the exclusion of every thing else.

How long can the present leadership ignore these basic concerns of the people at large, and pursue their personal agenda, is a moot question, but the larger national interests demand a quick solution to all matters of public interest. Then only can we hope for a relatively settled and calm atmosphere in the country and its business environment, attractive enough for foreign investors. Right now the position is just the reverse - frightful for even those who are already here and justifiably wish to pull out.

A look at the dwindling forex reserves and the negative FDI figures will prove our contention. Moody's have made a fair assessment and fudging figures to disprove them (as reportedly done in the past) is not going to help.

A candid and forthright admission of the problems and a sincere unflagging effort to overcome them with courage and determination will carry the true stamp of great leadership.

The question arises - are there any solutions? Yes, there are, but they require thinking out of the box, and quite different from the hackneyed bureaucratic approach. A people's government in a democratic set-up should not kow-tow to the civil servants. The latter should be made to realise what they are:- servants of the people and not rulers over them.

If such a leadership emerges and asserts itself, it can win the hearts and minds of the common people - body and soul - and overcome seemingly insurmountable difficulties. Then only can we raise our head and challenge the world to come and see themselves a conducive climate for investment in Pakistan, and make Moody's eat their words.

Business Recorder [Pakistan's First Financial Daily]


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## Introvert

*China Mobile to further invest $ 800 mln in Pakistan *

BEIJING, June 19 (APP):China Mobile, the world largest telecommunication organization will make further investment amounting to $ 800 million in Pakistan. This was stated by President of China Mobile Wang Gian Zhuo during a meeting with Foreign Secretary Salman Bashir here on Thursday. 

China Mobile has already made an investment of $ 800 million in Pakistan. 

Wang said that besides making further $ 800 million investment, he would also pursue many internationally acclaimed telecommunication organizations like Sony-Erricson to take part in the development of telecommunication in Pakistan. 

He said the Pakistan has great deal of opportunities for Foreign Investors as it offers equal level playing fields for both foreign and domestic investors. 

The President of China Mobile said that he had recently held very fruitful meeting with the Pakistani leadership and was impressed about the incentive Pakistan is offering for the Foreign Investors, particularly for Chinese Investors. 

Wang also informed Foreign Secretary that China Mobile will also contribute in the socio-economic uplift of the people of Pakistan. 

In this connection, he pointed out that his organization will provide free text books to the young students so that they could carry out their studies in a smooth way. 

The Foreign Secretary on the occasion thanked Wang Gian Zhou for his complements and said that his country would provide all possible assistance to the Chinese investors in Pakistan. 

Associated Press Of Pakistan - China Mobile to further invest $ 800 mln in Pakistan


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## Neo

*None of MINFAL depts headed by technical experts ​* 
Thursday, June 19, 2008

ISLAMABAD: None of the MINFAL attached departments are headed by technical experts in the field.

Retired bureaucrats are heading the attached departments of the Ministry of Food Agriculture and Livestock (MINFAL) a few top slots are lying vacant or being run on ad hoc appointment.

This apathy in the affairs of the MINFAL reveals why its growth dropped while some of the sectors like crops showed a negative growth during the outgoing fiscal, a MINFAL official requesting not to be named told The News on Wednesday.

Out of the total nine attached departments of the MINFAL none is headed by purely technical person. Instead they are either vacant or seated by retired bureaucrats on additional or current charge basis, the official added.

A professional banker having no experience of serving in Pakistan is heading the Pakistan Agricultural Research Council (PARC) the main engine for the growth of both crops and livestock sector. PARC chairman is near the completion of his contract has left the whole affairs of ailing research entity untouched and unresolved.

A retired (district management group) DMG officer head the Department of Plant Protection (DPP) housed in Karachi it is the main watchdog for animal and plant imports and exports. Retired army personnel head the Department of Fisheries.

Another retired bureaucrat is heading the Soil Survey of Pakistan depriving technical experts having sound professional skills in the field of this right.

National Animal and Plant Health Inspection Service (NAPHIS), a newly built organization, will mainly take several initiatives to meet agriculture exports under WTO regime for meeting international standards, is also headed by former bureaucrat and not having experience of relevant field but a friend of the then secretary, Ismail Qureshi.

Officials of the ministry are looking after some of the attached departments of MINFAL. ADC, Dr Qadir Bux Baloch, is looking after Agriculture Policy Institute (API) mainly responsible for making policies and fixing support prices of various commodities. Qadir Bux Baloch is also looking after the affairs of Pakistan Oil Development Board (PODB) whose post of MD is lying vacant after its Managing Director Nayyer Agha was elevated to the post of Secretary.

Similarly Federal Seed Certification & Registration Department is also headed on ad hoc basis after the retirement of his DG, Dr Ikhlaq and now a junior officer is currently seeing the affairs of the department on current charge basis.

Within the ministry the cotton commissioner, a technical post, has been assigned a joint secretary belonging from secretariat group again having no experience of related subject.

Another post of commissioner special crops is vacant as federal public services commission has been requested to fill the post from the last six years but it has failed to recruit a suitable one and it is run on ad hoc basis.

The charge of wheat commissioner has been assigned to a commissioner who has no relevant experience in wheat. During Sikandar Bosan tenure as federal minister, his main job was to write speeches for the minister and he is still doing the same job and does little contribution in wheat.

None of MINFAL depts headed by technical experts


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## Neo

*Robust growth forecast for telecom sector ​* 
Thursday, June 19, 2008

LAHORE: Mobile companies in many regions of the world have not enjoyed the phenomenal subscriber growth witnessed in Pakistan propelling the telecom sector to the stature of a powerhouse in a short span of time.

With mobile penetration at 52 per cent, there is still great potential to be capitalised upon in this market. It must be noted that the overall environment has changed significantly in the last five years where aggressive competition within the industry has translated into benefits for the overall consumer and economy of Pakistan.

An analysis of the telecom industry of Pakistan showed that telecom companies in Pakistan had effectively used a mix of strategic marketing and technological advancement to push their growth and become one of the fastest growing telecom markets in the region.

Until 2001, a few telecom players were providing basic services to a small elite customer base, however, after subsequent deregulation and investor-friendly policies of the government, we are now witnessing a highly competitive market, where telecom services are accessible to all.

With six cellular operators working in Pakistan providing network coverage of almost 90 per cent, significant advantages are being passed on to the end consumers.

Coupled with the positive financial contributions that the industry is making towards the economy as a whole, no doubt we have come a long way in connecting the people of Pakistan. With over 80 million people connected to date and tele-density at 52 per cent Pakistan stands well above other regional telecom players.

A total of Rs235,613 million in revenue was generated by the telecom industry in 2007 which had a major impact on the economy of Pakistan. The sector is also currently contributing 2 per cent out of the 7 per cent of GDP and in 2006-07, more than $1,824 million were invested in Pakistan into the telecom industry through FDI, making it a major driver of economic growth.

This remains the sole sector within the economy to have received such a substantial investment, making it 35 per cent of the overall FDI in the country.

The telecom industry has become a significant player for the economic growth and social well-being.

Setting aside this sectors significant contribution towards government coffers through taxes, and the provision of a necessary service which connects the four corners of Pakistan, it must be noted that thousands of jobs have been created through this industry.

According to figures quoted in PTAs 2007 Industry Analysis Report, so far more that 212,000 jobs have been created nationwide, due directly to mobile operators, with many more as a result of indirect and induced employment, for example support service providers, hand set retailers, tower engineers, laborers etc.

An evolving, yet important area that must be addressed by corporations is Corporate Social Responsibility (CSR). Corporations are increasingly recognizing the need to give back to the community within which they operate. It is encouraging to note that the telecommunications sector of Pakistan is spear heading this initiative as most of the telecom operators in Pakistan are liaising with a cross-section of NGOs and other well-known social and charitable organizations, such as The Citizen Foundation, The Kidney Center, Edhi Trust and The SOS Villages to name a few, to launch short and long terms plans to give back to the community and nation at large. On the national level, lagging fronts like the media, sports and entertainment industry of Pakistan have also received a great boost due to the support of the various telecom giants.

Robust growth forecast for telecom sector


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*World Bank asks government to carry out reforms, quick adjustments ​*
ISLAMABAD (June 19 2008): The World Bank has advised Pakistan to carry out economic reforms and make quick adjustments to steer clear of economic crisis. According to the bank sources, the new government should watch its steps on way to economic stability. The WB further advised the new government to carry out economic reforms and make quick adjustments to steer clear of an economic crisis.

The reminder to keep in view the economic aspect while making policies came from Praful Patel, WB vice president, at the end of his three-day visit to Pakistan. Patel's word of caution reflects his concern that Pakistan is likely to miss targets of fiscal deficit, current account deficit, inflation, and foreign exchange reserves.

Patel has observed that there is no crisis at the moment but he believes that "economic indicators of Pakistan are not a good omen for future economic picture of the country." According to Patel, the economic growth Pakistan had seen over the past few years, in addition to foreign direct investment and remittances, could be maintained only if the government adjusted to the global prices of oil and wheat.

Patel's saying that since re-adjustments in the economy would be painful "there must be an appropriate safety net for the poor" should be heeded to. This is not the first that IFIs have painted a bleak picture of Pakistan's economy in terms of achieving its economic goals.

According to thweWB and Asian Development Bank's projections, Pakistan's economy will not be able to meet its target of 7.2 percent GDP growth rate this year. The growth rate is predicted to linger around 6.5 percent in the current fiscal year owing to a number of factors.

While keeping in view the advice of the WB, the government will have to dispel the impression that Pakistan's economy mostly runs in accordance with the dictates of the WB and International Monetary Fund (IMF), resulting in an increased level of poverty.

For a start, the task before the economic policy makers at the moment is to restore investors' confidence. A smooth political process and the availability of maximum energy input to the industrial sector will give the ailing economy the required impetus.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*$256.85 million loan to boost power supply ​*
WASHINGTON (June 19 2008): The World Bank has approved $256.85 million credit and loan for Pakistan, designed to improve reliability and efficiency of power supply through a comprehensive project. The Electricity Distribution and Transmission Improvement Project aims to improve distribution and transmission networks to meet increasing electricity demand and to strengthen institutional capacity of electricity distribution companies.

The project components include: (a) physical strengthening of distribution networks operated by distribution companies located in Hyderabad, Islamabad, Lahore and Multan; (b) removing bottlenecks in the transmission grid operated by the national transmission company. Through the construction of a sub-station at Kassowal and associated lines; (c) technical assistance for capacity building, specialised studies, energy efficiency, and sector reform activities; and (d) a pilot energy efficiency programme, involving installation of energy saving equipment at the customer level.

The US $173.6 million loan from the International Bank for Reconstruction and Development (IBRD) has 30 years maturity, including a five-year grace period. The US $83.1 million credit is provided by the International Development Association (IDA), the World Bank trade's concessionary lending arm and has 35 years to maturity and a 10-year grace period.

Pakistan is facing electricity shortages. While electricity sales have risen by 40 percent in the past five years, generation capacity remained practically stagnant. It is estimated that the system lacks about 2000 MW to cover peak demand with acceptable reliability.

"Pakistan has added about one million new, mainly household, electricity connections each year, about a quarter of its population still has no access to electricity, and the quality of service to those who are connected has been deteriorating sharply," said Yusupha Crookes, World Bank Country Director for Pakistan.

"The project supports investments in the distribution and transmission networks, which are essential to meet the growth in electricity demand more efficiently, and with improved quality of service," said Rashid Aziz, World Bank Senior Energy Specialist and project team leader.

"The project also aims to help the companies reduce technical and commercial losses and help strengthen various corporate functions and governance. It also includes a component to support energy efficiency and conservation activities to urgently respond to the critical shortages that the country is facing right now."

Business Recorder [Pakistan's First Financial Daily]


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*Pakistani consumer confidence lowest in six months: report ​* 
Thursday, June 19, 2008

KARACHI: Seventy-three per cent of Pakistani consumers think their country is currently in recession and consumer confidence worldwide has fallen to its lowest level in several years, according to the Nielsen Global Consumer Confidence Index, which measures consumer confidence, major concerns and spending habits in 51 countries.

In a report issued by the organisation, the latest Nielsen Consumer Confidence Index dropped to 88, down six points in the last six months, the largest single drop the index has recorded in the last three years.

The report stated that no country has been spared the domino effect of the US sub-prime and credit crisis and hence, Pakistanis too joined ranks with their regional and global brethren in facing and combating the same universal economic concerns.

The report listed the concerns as increased oil and commodity prices, increasing inflation, failing local industrial production, persistent unemployment along with political crisis, leaving consumers not only with a dwindling budget per month, but also dwindling confidence in the economy too.

Pakistan managed a top position when consumers were asked about their concerns for migration. With only UK and Italy in the lead, Pakistan came in third, with 12 per cent of respondents saying immigration was their top concern, the publication stated.

Another major consumer concern of Pakistan was the lack of political stability, which earned Pakistan 4th place after Turkey, Venezuela and Thailand securing the top positions. 11 per cent of Pakistani respondents felt that political stability was their chief concern.

However, this small group (11pc) turned into an astonishing faction (50pc), who felt that political stability will be the main culprit if the economy sees a turndown.

The report further noted that concerns for immigration, political stability and terrorism did not deter the spirit of emerging shopper-tainment culture, as 5 per cent of Pakistani respondents placed Pakistan at the 5th position when asked how they felt about acquiring goods they need over the next year.

Even if the country is not officially in recession and has not recorded two quarters of negative growth, the snowball effect of the credit crunch and rising inflation has taken its toll. And officially or otherwise, they certainly feel like theyre in recession, the report stated.

Pakistani consumer confidence lowest in six months: report


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*S Korea to share power technology ​* 
Thursday, June 19, 2008

LAHORE: South Korean ambassador, while admitting that the Koreans have learnt a lot from Pakistan in the agriculture sector in the 60s, has expressed the resolve to contribute to Pakistans economy by sharing technology to overcome the acute power shortage.

Korean Ambassador Shin Un was talking to Lahore Chamber of Commerce and Industry President Mohammad Ali Mian at the LCCI on Wednesday.

Terming technological advancement the only way to become a global player in terms of trade and business, the envoy expressed the optimism that Pakistan would gain that advantage with the assistance of Korea. He said the volume of trade between Pakistan and South Korea was bound to increase as both governments were making sector-specific moves to get desired results. He said the non-availability of required trade-related information was the biggest hurdle in the way of South Korean investment in Pakistan and admitted Korean investment in Pakistan was very little when compared with the rest of the world.

Identifying a number of areas for mutual cooperation, the diplomat said there was a need for technology transfer as both countries had a lot to learn from each other. There was a big potential in fruit business and Pakistani business community could avail opportunities in the sector, he pointed out.

Speaking on the occasion, LCCI President Mohammad Ali Mian suggested creation of a win-win situation for both countries. Koreans need to increase their imports of cotton, raw hides & skins, fish, medical apparatus, toys & games, leather products, articles of apparels and textile from Pakistan.

Most of the Korean demand for these commodities is being met from sources other than Pakistan and only a small quantity is being imported from Pakistan. A little attention by the Korean government and businessmen could increase Pakistans exports considerably, he added.

S Korea to share power technology


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*250 megawatts project feasibility study: PPIB reluctant to extend deadline ​* 
ISLAMABAD (June 19 2008): The Private Power Infrastructure Board (PPIB) has accused China National Machinery Import and Export Corporation (CMC) of exerting undue pressure to seek extension in a feasibility study deadline for 250 mw coal-based project to be set up in Sonda Jherruk (Sindh), sources told Business Recorder.

They said that CMC Vice Chairman Ms Qin Ruijuan had written a letter on May 28 to the PPIB wherein she had reportedly asked for 4-6 months extension in feasibility study, without payment of penalty, but Islamabad is reluctant to extend the deadline.

"Such extensions have been sought by CMC in the past through its representatives," sources said. They said that CMC had neither submitted any formal report nor document, much to the chagrin of PPIB. The CMC had obtained licence from Sindh government for 56.7 square kilometre area at Sonda-Jherruk, in Thatta District, to set up a power plant of 250 mw.

As such, PPIB, as indicated in its letter on May 12, 2008 was not legally bound to entertain or respond to any of the company's correspondence, sources quoted PPIB as saying in its letter recently addressed to Ms Ruijuan. The company was conducting a project feasibility for coal power plant for which it has still to submit to the PPIB for tariff approval.

In another feasibility report, the CMC had estimated the coal mining capacity of deposits at Sonda-Jherruk at around 1.2 million tons per year, which is considered adequate for setting up a power plant. "If the feasibility study is not completed on time, then PPIB, without any financial or legal obligation on its part, may review the contract," sources quoted PPIB Managing Director as saying in the letter. The CMC is a state-owned company with sound technical expertise in producing electricity from coal-based power plants.

Sources said that relations between PPIB and CMC have worsened after a letter written by the company threatening that any decision to terminate the contract by PPIB would harm friendly ties between Pakistan and China. "We would like to advise you to refrain from commenting on issues which are the prerogative of the foreign office and instead concentrate on preparing a feasibility study," sources quoted PPIB as saying in the letter to the company.

Business Recorder [Pakistan's First Financial Daily]


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*Budget a step towards equitable Pakistan: ACCA ​* 
Thursday, June 19, 2008

LAHORE: ACCA Pakistan has termed the budget a positive step towards a more equitable Pakistan. It has commended the increase in minimum wage from Rs4,600 to Rs6,000 per month and 15 per cent increase in the amount of pension.

The increase in the exemption of tax of salaried persons, who earn Rs150,000 to Rs180,000 per annum and in the case of women from Rs200,000 to Rs240,000 per annum, will give relief to salaried individuals, as now an individual earning Rs15,000 per month (in the case of women Rs20,000) will be exempted from tax. The introduction of marginal tax relief will not only give relief to salaried individuals, but is also a step towards fairness in the taxation system.

The progressive slab rate offered to small companies whose turnover exceeds Rs250 million is a step to encourage local investment. The application of withholding tax rate of 2 per cent instead of 5 per cent charged to commercial importers respectively will the lower cost of doing business.

Abolishing minimum tax on declared turnover at 0.5 per cent is another step towards fairness of taxation system as compared to the earlier system, where companies incurring losses or with low profits had to pay turnover tax. The introduction of a taxing system to tax builders at Rs50 per sq ft of covered area and developers of open plots at Rs100 per square yard of the plot will widen the tax base.

First Year Allowance (FYA) offer at 90 per cent of the cost of plant, machinery and equipment for industrial setup in rural and underdeveloped areas will result in economic development of down trodden areas.

It is felt that treatment of after tax profit transferred by a branch of foreign company out of Pakistan as dividend and chargeable to tax at 10 per cent will increase tax revenue, but may have a negative effect on foreign direct investment as earlier this profit was sent free of tax. Similarly, the decision to exempt capital markets from capital gains tax will result in the continuity of speculative trading and relieving a profitable sector of economy from taxation.

Tax credit on donation has been reduced from 30 per cent and 15 per cent (for individuals and companies respectively) to 10 per cent. 

This proposed amendment will deprive the poor from generous donations previously given by donors.

With regards to Sales Tax zero rating of molasses for the manufacturing of acetic acid, which is used in the textile sector, will lower the cost of production. Similarly exemption of energy saver lamps will result in optimal use of limited energy resources.

The rate of Sales Tax has been proposed to increase from 15 per cent to 16 per cent. This increase will further escalate the inflationary pressures on the economy.

Budget a step towards equitable Pakistan: ACCA


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*July-April services deficit crosses $5.574 billion ​* 
ISLAMABAD (June 19 2008): Pakistan services deficit has crossed 5.574 billion dollars during the first 10 months of the current fiscal (July-April), according to Federal Bureau of Statistics. The deficit in trade services during the first 10 months grew by 44.15 per cent as compared to the same period of last year.

The deficit during the first 10 months of last fiscal was only 3.867 billion dollars as compared to 5.574 billion dollars for the same period of this year - July-April 2007-08.

With monthly deficit of 731.764 million dollars in April 2008, Pakistan services exports declined by 7.78 per cent during the month under review over previous month. It declined from 292.815 million dollars in March to 270.028 million dollars in April whereas imports increased from 899.077 million dollars to 1,001.792 million dollars during the same period.

This difference has widened the gap by 20.70 per cent with imports exceeding exports as Pakistan received 270.028 million dollars against payments of 1,001.792 dollars.

According to the FBS, Pakistan has paid Rs 8.234 billion for import of different services during the first 10 months, but received merely 2.668 billion dollars on account of services she rendered to other countries. Pakistan has been paying a lot on transportation, communication, finance and computer services.

The current fiscal has been tough for trade in services, as exports of services have declined from 3.059 billion dollars in 2007-08 to 2.668 billion dollars in 2007-08 whereas import of services have gone up from 6.926 billion dollars to 8.243 billion dollars during the period under review with 19.01 per cent increase.

Further analysis of the statistics showed that there has been a deficit of 85.68 per cent April this fiscal over last April with deficit galloping from 394.100 million dollars to 731.764 million dollars during the same period.

The exports of services have declined from 286.307 million dollars in April 2007 to 270.028 million dollars in April 2008, while imports have gone up from 680 million dollars from last April to one billion dollars this April. The deficit in both the trade and services has been really a big concern for the government with current account being under pressure.

Business Recorder [Pakistan's First Financial Daily]


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*Pakistan to help establish Chinese economic zone, says Gilani ​*
ISLAMABAD (June 19 2008): Prime Minister Syed Yousuf Raza Gilani on Wednesday said Pakistan will extend all possible help to establish the first-ever Chinese overseas economic zone in the country, which will be yet another landmark in the all-weather friendship between the two countries.

The prime minister was talking to Lu Keng, Chairman of the Haier Group and Haji Koch Muhammad, Chairman Ruba Group who called on him here at his chamber in Parliament House on Wednesday. Chinese Ambassador to Pakistan, Luo Zhao Hui was also present on the occasion.

The Prime Minister said Pakistan welcomes the Haier Ruba joint venture and the government would encourage more joint ventures to promote economic cooperation between the two countries. Joint ventures between the private sectors are the best way to promote trade and investment between our two countries, he added.

The prime minister said that foreign investment is fully protected in Pakistan and all economic sectors are open to Foreign Direct Investment (FDI). Pakistan makes no distinction between local and foreign investors, as 100 percent foreign equity, remittance of royalty, profits and dividends is allowed under Pakistani laws, he said.

The Chairman of the Haier Group informed the Prime Minister that Chinese entrepreneurs are keen to invest in Pakistan and the establishment of the Special Economic Zone (SEZ) would go a long way in facilitating Chinese investment in Pakistan.

He said that the Haier Ruba has already brought in initial investment of $35 million. He also gave an overview of the SEZ to the Prime Minister, which he said would comprise industrial park, science and Technology Park, supply chain industry, skill development centre and research and development centre.

It may be mentioned that the Special Economic Zone is being established under the Free Trade Agreement (FTA) between Pakistan and China and all goods manufactured in this zone have tariff-free entry into Chinese market which would boost the country's exports. The meeting was also attended by Ms Hina Rabbani Khar, Special Assistant to PM, Principal Secretary to PM, Secretary Board of Investment and Secretary Industries.

Business Recorder [Pakistan's First Financial Daily]


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*Pak-Qatar launches individual family Takaful products ​*
KARACHI: Pak-Qatar Family Takaful Limited has launched its first individual family Takaful products in the country, starting with their Share & Care  Savings Takaful and ABC  Education Takaful plans. 

These plans are the first of their kind to be launched in Pakistan, this was announced by CEO of Pak-Qatar Family Takaful Limited P. Ahmed at a Press Conference on Thursday. 

Share & Care  Savings Takaful is an ideal plan for families who would like to save smaller amounts of money and accumulate them into large investments for particular future needs like buying a house or providing financial support in old age. Together with the benefit of saving, this plan also offers a financial protection to the family, if their bread-winner should be unable to provide for them in the future due to unfortunate events. 

The ABC  Education Takaful Plan was particularly designed for families who want to ensure the continuity of the childs ongoing education even if the sponsor parent wouldnt be around. It helps to multiply savings for the ever-increasing educational expenses in future. On completion of the membership-term, the investment value of the plan will be paid either as a lump sum or in regular installments to be utilized for the payment of college/university fee. 

These two plans are unique and competitive as they are affordable for the general public on one hand but dont compromise on ethical and religious values on the other. By saving just Rs 1,250 per month one can become the member of Pak-Qatar Waqf pool and avail various benefits. 

Daily Times - Leading News Resource of Pakistan


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*Forex reserves decline to $10.9 billion ​*
KARACHI: The foreign exchange reserves of the country fell by $44 million to $10.909 billion during the week ended on June 14, reflecting the widening current account and trade deficits. The foreign reserves held by the State Bank stood at $8.267 billion while those with other banks stood at $2.642 billion. An extraordinarily large trade deficit, which created a huge current account deficit, has also weakened the rupee from Rs 60 against a dollar at the beginning of the current year to around Rs 68 now. 

Daily Times - Leading News Resource of Pakistan


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*NWFP takes lead in placing development budget on Pifra system ​*
PESHAWAR (June 19 2008): The NWFP creates history while presenting the development budget for the financial year 2008-09 on the new format prescribed by the Auditor General under Project to Improve Financial Reporting and Auditing (Pifra) system. It is worth mentioning that the current budget is already being prepared on the Pifra based systems.

The official sources here told APP that Pifra is a major development project to reform the financial management systems in the federal and provincial governments. NWFP had volunteered to be the pilot province for implementation of Pifra reforms, he maintained.

The on line system based developmental budget will facilitate the Accountant General's organisation in maintaining proper and detailed accounting records of all the development projects executed by various government agencies.

It will also enable the provincial and district governments to trace and trail the expenditure on development projects and programmes. It is expected to provide transparency in expenditure, accountability of the spending agencies and accurate and timely reporting. It has been learnt that the project teams have been striving hard for the past four years in persuading the authorities in the Finance Department to prepare the development budget on the new format.

Much to the resistance of some low level officials of the Finance Department, this year the Pifra project succeeded in persuading the high ups in the Planning and Development Department and Finance Department to prepare the budget on new format and systems.

The other three provinces have yet to implement province-wide online Integrated Financial Management Information System (Ifmis), the source concluded. Pifra is a joint venture of the Government and World Bank and its executing agencies are Department of Auditor General of Pakistan, Controller General of Accounts, Federal Finance Division and provincial finance departments.

The prime objectives of the Pifra are to establish effective financial management system consistent with international best practices, to strengthen internal controls and to modernise government audit procedures and adopt internationally accepted auditing standards.

The Pifra components included Financial Accounting and Budgeting System (Fabs), capacity building of the offices of the Auditor General, Controller General of Accounts and project management. The first pilot site of Pifra was established in District Accounts Office Abbotabad in July 2003. Followed by second pilot site at Accountant General Office NWFP October 2003, AGPR sub office Peshawar January 2004, District Accounts Office Swat April 2004, Finance Department NWFP July 2004 and Agency Accounts Office Mohmand Agency October 2004.

The Pifra system has now been fully operative in all the 24 districts of the frontier province giving online data about the payroll of all federal, provincial and district governments' employees, disbursement of payroll and GPF deductions, balance sheets and generation of pension of payment order.

Business Recorder [Pakistan's First Financial Daily]


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*Strong economic fundamentals have made private sector engine of growth: President ​*
RAWALPINDI (June 19 2008): President Pervez Musharraf said on Wednesday that the strong economic fundamentals of country "have created an enabling environment" for the private sector to become the engine of growth and as a result of this as well as due to its liberal and investment-friendly policies Pakistan has become one of the attractive destinations for investment.

The President made these remarks while talking to Jean Jacques Gauthier, Head of Corporate Finance and Member of Central Executive Committee of Lafarge, the world's largest cement and building materials company based in France, who called on him here.

Gauthier said that due to the stewardship of President Pervez Musharraf Pakistan has become an investment-friendly country and they were investing in Pakistan because of the economic buildup in the country which they have witnessed in the last seven years.

He said that the Lafarge group has invested in the cement sector by setting up cement factories and has also purchased a sick unit and transformed it into a profit earning entity. Gauthier said that the construction industry has enormous potential in Pakistan as a result of the economic boom, which the country has achieved during the last seven years.

He said that several new markets have emerged in Pakistan and the demand of the country has risen from 11 million tons to 37 million tons. He said that he was delighted to be here and looked forward to new ventures and ideas in the country.

The President emphasised that Pakistan, owing its geo-strategic location, was the hub between Middle East, Iran, Afghanistan, Central Asia and South Asia. Industrial and manufacturing units would have outstanding and excellent opportunities to not only benefit from Pakistan's requirements but would also be able to supply their products throughout Pakistan and in the region, he added.

The President said that Pakistan itself is a large market as it has ambitious public sector development plans, which include dams, hydro-power projects, canals, highways and construction activity in the private sector.

Business Recorder [Pakistan's First Financial Daily]


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*World Bank for financing National Trade Corridor Improvement Plan ​* 
KARACHI (June 19 2008): The World Bank (WB) is planning a financial support program for Pakistan to develop its ports, roads and railways under the National Trade Corridor Improvement Program (NTCIP), Business Recorder learnt on Wednesday.

"The Bank is planning a program of financial support for roads, railways, and ports and technical assistance for implementation, monitoring, and evaluation of the National Trade Corridor Program over the next five to six years," sources quoted WB Transport Business Strategy for 2008-2012 as saying.

Under NTCIP, approved by the former Prime Minister Shaukat Aziz government, it had been decided to take a number of policy measures to reduce the cost of trade and transport logistics and bring the quality of services to international standards to reduce the cost of doing business in Pakistan and ultimately enhance exports competitiveness and accelerate industrialisation. Sources said that one of the steps under NTCIP was termination of Karachi Dock Labour Board (KDLB) and de-registering the dockers.

In February 2008, Caretaker Federal Minister for Ports and Shipping, Dr Fahim-ud-Din Ansari, had told Business Recorder that the Bank was giving a $600 million loan-cum-grant to Karachi Port Trust (KPT) at a nominal interest rate to either "privatise" or wind up the Board.

A WB Project Information Document, issued on 'Appraisal Stage' in April 2007 said that the International Bank for Reconstruction and Development (WB) would lend $79 million to KPT for management and implementation of the 'Karachi Dock Labour Project'.

It is worth mentioning here that the Collective Bargaining Agent (CBA), representative body of KDLB, terming the WB as its anti has warned of strong resistance if the government went on with termination or privatisation of the Board.

"We do not know about any such planning and would fully resist if the government did that... the World Bank has never been our well-wisher," said Mohammad Hilal, Senior Vice President of CBA.

According to sources, Islamabad has been seeking financial support from WB to ensure swift availability of funds and process with abolition of the KDLB Scheme in a short period of time. Abolition of the Scheme, they said, would minimise the overall cost for the economy to increase productivity of the Karachi Port.

Key upshots of the Program, the Bank's Transport Business Strategy was eyeing, included reducing the cost of domestic transport and non-factor services in the total value of commodities and the transport and transit costs and times for goods overall, increasing the satisfaction of Corridor users and rail share of long-distance transport of freight, reducing the operating deficit of railways with objectively determined and targeted subsidies, enhancing the safety and reliability of transport operations and improving the governance and accountability of entities participating in the Program, sources said.

In 2005, the government had launched major initiatives around the Corridor to reduce the cost of trade by improving transport logistics infrastructure and services. According to an estimate inadequate performance of transport sector costs the country's economy 4 to 6 percent of GDP each year.

The proposed Corridor, which spreads over north-south backbone route from Karachi via Lahore to Rawalpindi with onward links to Afghanistan, contains two ports, which handle 95 percent of country's external trade, said the Strategy.

The WB strategy, source said, acknowledged that Pakistan had adopted a holistic and integrated approach encompassing the public and private sectors, services and infrastructure, reforms and investments and various sectors that were responsible for performance of the approved Corridor (highways, road transport, ports and shipping, civil aviation, railways, and customs and trade logistics). The NTCIP would be implemented by different governmental agencies including the ministry of ports and shipping, ministry of defence, ministry of railways, ministry of communications/National Highways Authority, Planning Commission and the Central Revenue Board, they said.

Business Recorder [Pakistan's First Financial Daily]


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*Rs 846 million to be spent on 46 Fata projects ​* 
PESHAWAR (June 19 2008): Fata Development Authority (FDA) is likely to spend Rs 846 million, during financial year 2008-09, on 46 projects in six different sectors, including small dams, minerals, skill development and industries. The Authority is giving final shape to the annual development program for the coming financial year.

In this connection the NWFP Governor Owais Ahmed Ghani was given a detailed presentation on Wednesday on the proposed allocations under ADP of FDA at the Governor House. Those who attended the presentation were Additional Chief Secretary FATA Habibullah Khan, Chief Executive FDA Muhammad Shahzad Arbab and other officials of FATA Secretariat and FATA Development Authority. The meeting discussed funds allocation for different projects besides the targets and impact of development program on the overall socio-economic uplift of tribal areas.

Giving the presentation, General Manager, FDA Planning, Saleem Khan Mohmand said that the total outlay for the new financial year was 10 percent of the total FATA ADP and 18 percent more than the current year's allocations. Rs 280 million has been allocated for 21 new development schemes whereas funds allocation for 25 ongoing schemes is Rs 566 million, which is 33 percent and 67percent of total development budget, respectively. The highest allocation is Rs 356 million for small dams, followed by Rs 200 million for minerals, Rs 124 million for skill development, and Rs 80 million for industries.

Two projects in the Tourism Development Sector have also been added to the program, including Khyber Steam Safari revival project. Other new projects include provision of safety and other equipment for scientific coal mining, feasibility study, design and establishment of coal fired power generation unit in FATA, feasibility study for use of solar energy in FATA and economic and social feasibility study for townships in FATA.

The Governor said that law and order situation in FATA was returning to normalcy and was very much conducive for execution of development project. He urged the officials of the Authority to fully focus their attention on carrying development process with full vigour and for the entire benefit of the people of FATA. He appreciated the inclusion of coal-fired power generation and solar energy projects in the development program.

He particularly mentioned the projects like Reconstruction Opportunity Zones, Small Dams and Mineral development initiatives, describing these of great importance in the efforts for socio-economic uplift of FATA, which would initiate a new era of progress and prosperity in the tribal areas.

Business Recorder [Pakistan's First Financial Daily]


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*Vietnam, Pakistan outdo India in US, EU textile mkts​*
20 Jun, 2008, ET Bureau

NEW DELHI: Smaller countries like Vietnam, Bangladesh and Pakistan are outdoing India in textile and clothing exports to the US and EU in the post-quota (2005-2007) period, confirmed a FICCI study. 

Vietnams share in EU25s imports of textile and clothing has increased from 0.8% in 1995 to 1.6% in 2007. India has only been able to keep its rank intact in EU market at number three, while Bangladesh has impoved from sixth position in 2002 to fourth 2007. Similarly, in the US, Vietnam seems to be fast catching up with Indias exports. 

It may be noted that the appreciation of rupee till a few weeks ago had been hitting Indias textile exports. Of late, there are signs of a turnaround. Back home, textile companies are investing heavily thanks to the technology upgradation fund scheme. 

Some firms are also trying to expand their manufacturing bases to other countries through either acquisitions of greenfield plants or by taking over firms in low cost economies. 

According to the Ficci study, Indias prices of textiles and clothing which witnessed a declining trend in the quota period, hardended in the post-quota period in the EU market. As a result, Indias share in the EU textile imports from the world declined from 7.9% to 7.5% between 1995 and 2007. 

In the US market, even though Indias average price for textile exports declined in the post-quota period they were still higher than Chinas and Pakistans prices, according to the study. But here also, Indias share did not increase significantly. 

Indias share in the US global imports of textiles and clothing increased by merely 1.6% between 1995 and 2007, whereas that of Vietnam increased from 0.04% to 4.7% and that of China went up from 11% to 33.5% in the same period. Even Bangladesh seems to be catching up fast in both EU and the US market via a vis Indian prices. 

India was the third largest exporter of textiles and clothing in the US market. However, in value terms, the countrys exports were just 1/6th of China which was the largest supplier in US market. 

Also, FICCI study noted that in terms of volume, Pakistan was the second largest exporter of textiles abd clothing to the US in 2007 and India was the fourth largest supplier. Vietnam, which exported only $17 million worth of clothing to the US in 1995, exported $4.35 billion of clothing in 2007 as compared to $3.2 billion exported by India to US. 

In EU, India was the third biggest supplier in the EU25 market and its share was 7.5% in 2007. Indias average growth rate higher in post-quota period than the pre-quota period, i.e. 15.4% in 2005-07 and 4.4% in 1996-2004. 

However, FICCI observed that there has been a declining trend in growth of our exports to the EU since 2005. Indias growth rate of exports to the EU was 18.6% in 2005 which declined to 14.9% in 2006 and 12.6% in 2007. 

Indias share has remained almost constant in EU25 for the last 13 years and its average growth rate (1996-2007) has been lower than EU imports from the world, for the same period. 

Whereas, average growth rates of China, Bangladesh and Vietnam were not onlygreater than India, but also greater than the EU25s average growth rate of global imports for the period 1996-2007. 

Vietnam, Pakistan outdo India in US, EU textile mkts- Foreign Trade-Economy-News-The Economic Times


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*KANUPP resumes 70 megawatts power supply to KESC ​*
KARACHI (June 19 2008): The Karachi Nuclear Power Plant (KANUPP) resumed 70 MW power supply to Karachi Electric Supply Company (KESC) on Wednesday. KANUPP was shutdown on May 19, 2008 due to loss of KESC grid.

According to KANUPP spokesman, after the shutdown, extensive maintenance activities including inspection of Fuel Channels (Grayloc Seal Area), replacement of Primary Heat Transport System Pump Motor etc were carried out. These were essential safety requirements by the regulator before plant start-up.

Business Recorder [Pakistan's First Financial Daily]


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*Pakistan Signals China To partake In Iran-Pakistan-India Gas Pipeline​*
(RTTNews) - Pakistan has signaled China asking it to participate in the $7.5 billion Iran-Pakistan-India or IPI gas pipeline project, in the event of India backing out of the venture, the media reported.

The progress on the project came to standstill after the discussions took place between India and Pakistan in Islamabad in April. Besides, the Indian Government is yet to resolve the issue of transit fee to be paid to Pakistan for Iranian gas transported across its territory.

Based on the request of President Pervez Musharraf during his recent visit to China, the Chinese Government has submitted a preliminary report to the Pakistani Government and sought more information on the project. Pakistan has also asked the Chinese Government to conduct a feasibility study for the pipeline project, the release stated.

Foreign Minister, Shah Mahmood Qureshi, who also holds the petroleum portfolio, is likely visit India on June 27 to initiate further discussions on the project. He added that if India pulls out of the project, the additional gas volume of 1.05 billion cubic feet a day would either be consumed by Pakistan or sold to China. Iran has no objection to China joining the pipeline project, the release said.

The Chinese technical experts had earlier expressed reservations over the execution of the project, as the border between Pakistan and China is more than 15,000 feet above sea level. This could, however, be reconsidered by conducting a detailed feasibility study, the minister reportedly said.

The minister understood to have stated further that China might import gas via Gilgit and Pakistan's Northern Areas would stand to benefit. The Karakoram Highway would be widened, if China's involvement in the project were confirmed.

Pakistan has already proposed the construction of a corridor that would link China and Pakistan by rail, road and fibre-optic cables, the report stated.

Pakistan Signals China To partake In Iran-Pakistan-India Gas Pipeline


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*Pak share in world trade drops 9.5pc ​* 
Friday, June 20, 2008

LAHORE: The high economic growth in Pakistan has not improved its trade performance as its share in world trade has declined by 9.5 per cent in 2007, while its competing economies China and India recorded an increase of 11.3 per cent and 9.3 per cent respectively.

In fact, the world trade indicators released by the World Bank point out that Pakistans weak trade performance clearly dragged down the entire South Asia, which contains only a few, mostly large, countries.

According to the report, Pakistan also has a low trade integration ratio of 41.9 per cent (trade as percentage of GDP) when compared with Indias 45.2 per cent and Bangladeshs 47.5 per cent. The real trade growth in Pakistan was 0.9 per cent while in China, it was 21.7 per cent.

The report points out that the slowest trade growth rates were for Pakistan and Sri Lanka (less than 1 per cent and 6 per cent respectively). Rising food prices in Pakistan, related to developments in international markets and shortages in domestic supplies, led the government to restrict exports of wheat and rice. This had a significant impact on Pakistans trade performance, it added.

Economists point out that the decline in trade share of Pakistan at a time when world trade grew by over seven per cent should be an eye opener for economic planners. They said that time has come when the thrust of growth should be diverted towards productive sectors instead of promoting growth in the services sector. Unlike India or China, the services sector in Pakistan remained confined to the domestic market only. It created fewer jobs as well.

On average, South Asian states have some of the worst business environments across all regions. None of its countries is in the top 50 in the ease of doing business rankings, and only two are in the top 100, Maldives (ranked 60th) being the regions best performer and Pakistan (76th).

Despite a relatively better business environment in the region, Pakistans trade performance was much below others with a low ranking. For some of the smaller countries in the region like Nepal, Bhutan and Sri Lanka, political instability continues to be a problem, especially for foreign direct investment, new business development and growth in the important tourism sector.

Policy and institutional performance varies greatly among the countries in the region. Sri Lanka is still doing much better than its Continued from page 15

neighbours in all trade policy indicators and also has less protectionism than in the late 1990s.

World Bank points out that countries that have the best policies and institutions overall, also tend to have a stronger and more consistent trade performance. This point should be taken seriously by the economic managers of the country as institutional performance in Pakistan is still on the decline.

According to the report, percentage decline in tariff in South Asian States is the largest, as it still had the highest tariff levels, averaging 26 per cent. However, average tariffs do not reveal the whole pattern of protection. High-income countries have higher non-tariff barriers, greater tariff escalation and dispersion, and much higher maximum tariffs than low-income countries; ie, they protect certain sectors much more than others. Many of these protected sectors and goods are of special interest to developing-country exporters.

Besides flawed government policies, the decline in Pakistans trade share is also due to the fact that the garment exporters in developing countries face restrictions on their exports on average that are more than double those faced by the rest of the developing world. Garments and textiles account for more than 60 per cent of Pakistans exports. Garment and textiles exporters also face higher tariffs than the rest of the world.

Pak share in world trade drops 9.5pc


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*KPT registers 25pc growth in cargo handling ​* 
Friday, June 20, 2008

KARACHI: The Karachi Port Trust has said that this year cargo handling at the KPT registered a growth of 25 per cent. KPT is handling over 101,000 tonnes of cargo daily and has crossed the figures of 37 million tonnes, a press release said.

KPT has deepened its channels to 12 metres for handling larger vessels. By the end of the current fiscal year, KPT projects are to handle 61 per cent of the total container volume of 1.97 million TEU (Twenty fee Equivalent Units) handled by the two ports, KPT and Port Qasim.

The total seaborne trade handled by the two ports during the last 11 months comes to 58.10 million tonnes, of which the share of dry cargo exports at KPT remained 65.39 per cent.

Liquid cargo has shown recovery and is growing by 14 per cent at Karachi port. Liquid cargo exports, which mainly comprises Molasses, Naphtha, Ethanol and other chemicals, has crossed the 2 million benchmark by registering 2.02 million tonnes this year.

Dry cargo coal handling in Karachi Port has reached 3.5 million tonnes. In exports, the cement handling through bulk or bags has crossed the 2 million tonnes mark. It is for the first time in history that Pakistan is exporting cement as a bulk commodity.

Four silos are being constructed at the port which when completed, would further increase the cement exports. 

KPT has also handled 0.9 million tonnes of clinker exports during the last 11 months, which is another record achieved by the port.

The containers handling at KPT have remained on the rise throughout the year. So far, it has registered 11 per cent growth by recording 1.149 million TEU handling till 12th June 2008. Previously in the year 2005-06, KPT recorded handling of 1.144 million TEU containers.

The container terminals, both KICT and PICT, have shown progress. Presently PICT is handling 39 per cent, while KICT handles 50 per cent of the total container volume. The remaining 11 per cent were handled at other berths of KPT.

This year up to 12th June, KPT has handled 2024 ships. This commendable performance is despite the fact that eight berths at East Wharf were not utilised due to their reconstruction.

Construction of a 16 metres deep quay wall is already underway by a Korean company Ssang Yong at East Wharf. KICT has installed two Super Post Panamax Gantry Cranes to handle large ships carrying 5000 TEU containers. Recently the KICT has handled 4500 TEU containers from a Post Panamax ship Hundai Admiral at its berth.

KPT registers 25pc growth in cargo handling


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*Pakistan to take part in Indian fair ​*  
Friday, June 20, 2008

KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) will organise Pakistans participation in the India International Trade Fair (IITF) to be held from 14th to 27th November at Pragati Medan, New Delhi, India. FPCCI has especially invited manufacturers to participate in the event.

The SAARC countries will be given a special gesture by the Fair Authority, considering their participation on a national level. Pakistans participation in IITF provides opportunities to Pakistani companies to make in-roads in Indian markets.

FPCCI has tentatively reserved space of 1000sq meters for Pakistan Pavilion and invited applications from the interested companies through its member bodies all over Pakistan by 10th July 2008.

Spot sale is allowed in the fair and the exhibits profile includes textile, general engineering, automobiles, consumer goods, pharmaceuticals and surgical instruments, cosmetics and toiletries, IT and electronic goods, gems and jewellery and education and fashion.

Pakistan to take part in Indian fair


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*15 percent shares of MCB Bank: Maybank makes $666 million payment ​*
LAHORE (June 20 2008): Malayan Banking Berhad (Maybank) on Thursday remitted $666 million (Rs 44 billion) to Pakistan (on Monday value) as payment for 15 percent shares of MCB Bank Limited. Maybank had signed an agreement for the purchase of upto 20 percent ordinary shares of Nishat Group on May 3rd, 2006.

The purchase price was reportedly Rs 470 per share for 15 percent share with a put option for 5 percent further sale within one year with Nishat Group. On Thursday, MCB Bank's shares closed at Rs 263.63 per share. It took nearly six weeks for the deal to obtain necessary approvals from the regulators in both the countries.

SBP reportedly gave its final approval on June 17, 2008 after the deal was approved by Bank Negara (BNM) Malaysia. Sources in MCB expressed their appreciation of the help given by SBP and the Ministry of Finance in final conclusion of the deal.

The remittance advise from Maybank puts to rest the anxiety and fears expressed about its unravelling due to the steep fall in share prices in Pakistan during the last six weeks due to political uncertainty amid growing economic difficulties.

Malaysia's largest financial institution has taken a long-term view as the MCB fundamental strength continues to be unaffected. With time deposits of only 10 percent compared (to 25-30 percent in the industry) and 90 percent of current and saving deposit - MCB continues to outperform its peers with low cost deposits.

Having a Reform of Assets (ROA) of four percent; Return on Equity (ROE) of 30 percent; and the lowest administrative cost among large banks, the Maybank deal will further boost the deposits of MCB and place it in an advantageous position in tight liquidity environment. The purchase price of Rs 470 per share represents 5.4 times MCB book value.

Business Recorder [Pakistan's First Financial Daily]


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*Govt expects to earn Rs82bn in FY09 dividend​*
KARACHI, June 19: The government expects to earn dividend of Rs82 billion for the financial year 2008-09, from its investment in the stock market. Holder of almost half of the market, the government supplemented its income through dividend earnings of Rs78.7 billion in 2007-08.

The budget documents for 2008-09 projected 4 per cent higher earnings in returns from the governments investment in the stock market listed companies, over what it made in the year to end on June 30, 2008. Given the bottomless pit to which the equity market is currently heading, many analysts are taking a conservative view over the governments expectations on corporate earnings growth and therefore their propensity to pay higher dividends.

Analyst Syed Abid Ali at Taurus Securities has worked out the per share dividend of listed companies budgeted for 2008-09 (in which the government holds considerable stake).

OGDC is expected to provide dividend per share at Rs10.94, which would give a yield of 8.65 per cent; followed by SNGPL with dividend at Rs3.04 and yield at 6.44 per cent; PSO dividend at Rs22.85 and yield at 5.35 per cent; FFL per share dividend at Rs12; yield at 4.54 per cent; SSGC per share dividend at Rs1.13; yield at 4.26pc; NBP dividend at Rs6.51, yield at 3.95 per cent; PTCL per share dividend at Rs1.32; yield at 3.22pc; ABL dividend Rs1.99; yield 2.51pc; PNSC dividend Rs1.70 per share; yield 2.30pc and Mari Gas per share dividend for the upcoming year has been projected by the government at Rs3.13, which would provide a yield at 1.06pc.

Taurus Securities thought that the budgeted numbers for FY09 were reasonable and achievable, as they were quite in line with the past trend. But many other analysts expect a dip in corporate profitability. They feel that the calculations were made by the government in better times.

The stock market has lost nearly a quarter of its value in two months, says a stock strategist. With no end to the gloom and doom scenario and the worrisome government deficit numbers, all listed companies including those in which the state holds controlling stake, would be hard pressed to keep up their earnings growth for the FY08-09.

Govt expects to earn Rs82bn in FY09 dividend -DAWN - Business; June 20, 2008


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*Govt plans to carry out major mining projects​*
RAWALPINDI, June 19: Although there is uncertainty and law and order situation in certain areas of the NWFP and Balochistan, the government plans to carry out major mining projects during the next fiscal year for exploration of minerals, official sources told Dawn.

Under the annual plan for 2008-09, an allocation of Rs221.9 million has been made for mineral sector, and major projects to be carried out include feasibility study of gasification of Thar coal, national coal policy, exploration and evaluation of coal fields of Chamiang-Bala Dhaka, Bahlol and parts of Ghazi Basin in Balochistan and establishment of a project monitoring and evaluation cell.

Statistics show that only 37 per cent of the country is geologically mapped to a scale of 1:50,000 while geophysical surveys of gravity and magnetic have even less coverage at 21 per cent of the total area. Adequate institutional, human, research and development and other relevant infrastructure exists but remains under-utilised.

Despite the fact that Pakistan is blessed with rich and diversified mineral potential, the government was still nurturing environment to build the mineral sector as a potent factor in the national economy.

Considering that its development is inadequate and slow because of the nature of mineral industry being extra-ordinary complex and complicated and other technical, financial and organisational problems, necessary steps would be taken for their resolution and rectification.

However, the national mineral policy announced in 1995 has become outdated after more than a decade and there is a need for bringing improvements with a view to making it more investment friendly.

The government has already declared development of mining industry as priority sector but progress so far remains slow in monitoring and implementation.

In the meantime, a mega project near Saindak, namely Reko Dik copper-gold project in Balochistan, would be launched by the worlds largest copper and gold producing company with an investment of one billion dollars by 2010 to produce 0.3 million tons of copper annually, thus bringing Pakistan for the first time on the world map as a major copper producing country.

In the same vein, Duddar lead-zinc deposits in Balochistan are being developed and are expected to come in production by the end of 2008 to produce 100,000 tons of zinc concentrates and 33,000 tons of lead concentrates for export.

Similarly, development of Thar Coal field in Sindh containing 175 billion tons, one of the largest good quality lignite deposits in the world, on completion would be used for power generation and gasification.

Govt plans to carry out major mining projects -DAWN - Business; June 20, 2008


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*Pakistan to get Rs 300 billion loans, grants during fiscal year 2009 ​* 
KARACHI (June 20 2008): Pakistan will get some Rs 300 billion (around four billion dollars) foreign assistance in the shape of loans and grants for the next fiscal year from international financial institutions and different countries to run its development and non-development programmes smoothly.

The Finance Division has estimated overall Rs 300.169 billion loans and grants from external sources during fiscal year 2008-09, which is some 16.1 percent or Rs 41.636 billion higher than the budget estimates of current fiscal year 2007-08.

For the current fiscal year the ministry had estimated some Rs 258.533 billion worth revenue from external resources up by 3.10 percent compared to FY07, however in the revised budget estimates of the finance ministry, it surged to Rs 275.406 billion.

The external loan estimates including project loans, programme loans, earthquake loans rose by 24 percent to Rs 283.776 billion for next fiscal year as compared to Rs 229.685 billion estimates in FY08. While revenue estimates through external grants depict a decline of 43 percent to Rs 16.393 billion in 2009 as against Rs 28.848 billion in fiscal year 2008.

Foreign project loans at Rs 70.055 billion for federal government and provinces, while programme loans have been estimated at Rs 145.625 billion for FY09. Some Rs 46.417 billion project loans have been estimated for federal government projects comprising Rs 23.019 billion for the ministries and divisions and Rs 23.398 billion for provinces.

Finance department has estimated Rs 23.638 billion loans for provinces and Rs 5.596 billion for earthquake loans. Loans through Eurobonds have been estimated at Rs 31.075 billion in the current fiscal year, however due to the internal and external shocks bonds could not be issued and therefore the government has again set a revenue target of Rs 31.250 billion through bonds in FY09.

In addition, external grants in FY09 stand at Rs 163.93 billion comprising project grants of Rs 6.739 billion, federal grants Rs 4.874 billion, provinces Rs 1.865 billion, budget support grants Rs 5.419 billion and earthquake grants Rs 4.235 billion.

Business Recorder [Pakistan's First Financial Daily]


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*Budget 2008-09: Rs 3.29 trillion charged expenditure presented before National Assembly for debate ​* 
ISLAMBAD (June 20 2008): The government has presented Rs 3.290 trillion charged expenditure including demands for grants and appropriation for 2008-2009 before the National Assembly for debate. The National Assembly is not in a position to approve or disallow such charged expenditure.

However, such expenditures could be tabled before the house for discussion under clause 1 of Article 82 of the Constitution of Pakistan. Some of the MNAs strongly criticised that why the demands for grants have been placed before the house, as no changes could be proposed under the Constitution. There are certain grey areas where appropriate steps are needed to remedy the situation.

The major chunk of Rs 3.290 trillion charged expenditure included around Rs 2.557 trillion amount pertaining to repayment of domestic debt, which is increasing rapidly with the depreciation in Pak rupee.

Break-up of charged expenditure showed that the amount related to superannuation allowance and pensions; grants-in-Aid and miscellaneous adjustments between the federal and provincial governments; other expenditure of foreign affairs division; civil works; national assembly/senate; Pakistan Railways; external development loans and advances; staff, household and allowances of the President; servicing of foreign debt; foreign loan repayment; repayment of short term foreign credits; audit; servicing of domestic debt; foreign loans repayment; repayment of short-term foreign credits; supreme court; Islamabad high court; election; Wafaqi Mohtasib and Federal Tax Ombudsman.

The National Assembly has also approved 179 heads of expenditures of different government departments and development expenditure of various divisions through voting.

During the voting of different government expenditures, the Speaker had to do counting of members to get approval of the expenditure of Rs 4,788,052,000 for defence division. 119 MNAs were in favour and 25 opposed the allocation.

Expenditure, particularly of Presidency came under heavy criticism and Ahsan Iqbal of PML-N said that the allocation of Rs 35 crore for the Presidency is totally unjustified. It seems a joke that the President of a poor nation whose debt servicing and balance of payment gap is increasing with each passing day is spending so lavishly on staff, household expenses etc he said.

During the last regime of former president Rafiq Tarar, the expenditure of the Presidency was brought down to Rs 16 crore, which has now again revised upward to Rs 35 crore for 2008-2009. Syed Hamid Saeed was of the view that if the Parliamentarians were not in a position to revise the charged expenditure, there is no need of discussion in the house.

Sher Baloch said that the external debt is one of the major problems being faced by the country as it is increasing with each passing day and the performance of our textile sector which is major revenue spinner is deteriorating putting more pressure on national economy. Dr Abdul Qadir said that inflation and price hike are key issues, which should be addressed by the government on top priority basis. Abdul Ghufur Chaudhary stated that the constitution should be amended to permit changes in the charged expenditure of the above mentioned government departments. Another MNA proposed reduction in total number of army, navy and air force personnel in all cadres of the armed forces.

Business Recorder [Pakistan's First Financial Daily]


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*Pakistan and Turkey bilateral trade can be doubled: SVP KCCI ​* 
KARACHI (June 20 2008): Senior Vice President, Karachi Chamber of Commerce and Industry (KCCI) Iftikhar Ahmed Sheikh has said that trade between Pakistan and Turkey can be doubled in just one year with little efforts and frequent exchange of trade delegations. Addressing a press conference on return of ten members trade delegation of KCCI from Turkey, he said that at present two ways trade is just 750 million dollars.

While Turkey's total imports from world over is around 170 billion dollars. Pakistan's share in imports is almost negligible. He pointed out that biggest hindrance in development of two-way trade is unawareness of existing trade potential in each other countries.

The senior vice president KCCI informed that during stay in Turkey the delegation has signed an agreement with Musiad, Istanbul Chamber of Commerce to disseminate information related trade, investment, products and joint ventures on regular bases.

He pointed out that Turkey was importing rice from India and other countries on double of prices on which Pakistan exporting its rice to other countries. Rice has been in good demand in Turkey and Pakistan can easily capture this market with little persuasion of rice exporters. Iftikhar Ahmed Sheikh pointed out that Turkey was importing surgical goods from Germany. Likewise, Turkey was importing mangoes from UK. "They are unaware that these are quality products of Pakistan".

Replying to a question, he said that Turkey is interested to import vegetables, rice, surgical goods, pharmaceutical products, construction material, raw hides and skins, and having joint venture in different fields. The delegation has discussed in detail about possibilities of export of these products with relevant corners, he added.

He said that Turkey also wants to cooperate with Pakistan in education, banking, insurance, health sectors, etc. The senior vice president KCCI said that two Turkish trade delegations would visit Pakistan by the end of this year as follow-up of KCCI delegation.

He prays the services of Pakistani Consul General and criticised services of Pakistani Ambassador. "The ambassador has no knowledge of trade and even he didn't know how to develop it further".

He noted that KCCI had signed MoU with Musiad, Istanbul Chamber of Commerce and Istanbul Chamber of Industry but since last six years there was no progress on these MoUs. The visit of Turkey is to activate both sides to act and boost two way trades.

Business Recorder [Pakistan's First Financial Daily]


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*Balochistan asked to find new income sources ​*
Saturday, June 21, 2008

KARACHI: The Balochistan Economic Forum has issued an economic advice, emphasising that the Balochistan government must find new and dependable sources of income to reduce its dependence on the federal government for financial needs.

In a press statement, the forum said severe financial problems in Balochistan should be an eye-opener for the new political leadership and economic planners of the province and they should draw a comprehensive economic and governance strategy that would facilitate tackling of challenges and also consider seriously to prepare a strong economic foundation to get rid of total dependence on the federal divisible pool.

The Balochistan government should widen its revenue base by encouraging foreign direct investment and seeking support of international aid agencies and multilateral institutions in the socio-economic development of the province with the cooperation of the federal government, the forum advised.

It further said the political leadership should also make efforts to remove economic disparity in Balochistan as foreign investments in the industrial and mining sectors might open new avenues of development and prosperity.

The government should mobilise all its energies and resources to speed up the industrialisation process in the province in order to successfully manage existing economic problems, the forum said.

The investment scenario in the province is now bright because of foreign investors interest in exploitation of abundant resources in the mineral, fisheries, agriculture and livestock sectors and the province could develop into a major trading and business centre, as the potential of Balochistan is now widely understood.

Balochistan received more attention with the establishment of Economic Cooperation Organisation (ECO) as the province provided a gateway to all ECO member countries, the forum added.

Balochistan asked to find new income sources


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* SMEs play vital role in economic growth ​* 
Saturday, June 21, 2008

KARACHI: Karachi Chamber of Commerce and Industry Senior Vice President Iftikhar Ahmed Sheikh has said the small and medium enterprises play a vial role in the rapid growth of economies through innovations, productive employment and optimum utilisation of scarce resources.

He said this while welcoming the participants of a certification ceremony for Small and Medium Enterprise Development Authoritys Accounting Package at the chamber.

Sheikh said the SMEs contributed around 30 per cent to the GDP, employing 78 per cent of the labour force in the non-agricultural sector whereas their share in manufacturing sector exports was 25pc and contribution to industrial value addition was 35pc.

He said the Karachi Chamber of Commerce and Industry was playing an active role in developing the SMEs, which would generate a strong middle class in the society to play a vital role for the betterment of economy.

SMEDA Provincial Chief Muslim Raza briefly described the role of SMEDA Sindh in the development of SMEs.

He spoke about SMEDA Accounting Package programme designed to provide SMEs with systems as a lack of business documentation was the biggest hurdle in the way of SMEs access to credit, resulting in their suboptimal growth.

SMEs play vital role in economic growth


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*Current account deficitshoots up to $12.95 billion ​*
KARACHI: The current account deficit of the country increased by 81.19 percent to $12.957 billion during the first eleven months of the current financial year from $7.151 billion during the same period of the last year. 

Trade deficit during this period stood at $13.840 billion, higher by 55.36 percent than $8.908 billion last year. Deficit on trade of goods and services combined shot up to $19.938 billion, up by 51.52 percent from $13.158 billion last year. 

The deficit on the income side stood at $3.583 billion, up by 6.10 percent from $ 3.377 billion last year. 

Current transfers, including workers remittances of $5.904 billion, during this period stood at $10.688 billion, helping to reduce the current account deficit, which could have been much higher otherwise. Seeing this trend it can be safely predicted that the country will suffer a current account deficit of over $14 billion in the whole year. 

It has been extremely difficult for the new government to cover this deficit, as the inflow of investment from abroad, which helped the previous government meet country's foreign exchange demand in the recent years, has declined this year. 

The previous government relied on foreign direct investment and investment in stocks from abroad to meet its foreign exchange requirements. 

This year both portfolio and foreign direct investment have declined. Net foreign investment dropped by 37.2 percent to $3.943 billion in July-May 2007-08 from $6.280 billion in July-May 2006-07. 

Foreign direct investment fell by 14.1 percent to $3.881 billion this year from $4.520 billion last year. Portfolio investment was a mere $62.2 million compared to $1.760 billion last year. 

The poor law and order situation and the shortage of energy supplies have hampered flow of investment into the country, particularly in the manufacturing sector. Even when the previous government "attracted record foreign direct investment" hardly anything was invested in the manufacturing sector. 

While the political government, which has recently taken over, is trying to improve the law and order through negotiations, it has admitted it would not be able to overcome the energy crisis for a long time. This inability of the government is likely to act as a barrier for foreign as well as local investment.

Daily Times - Leading News Resource of Pakistan


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*Oil refineries production up 8 percent​*
KARACHI: The production of various oil products by local refineries have registered growth by 0.3 million tonnes or eight percent to reach at 7.9 million tonnes in ten months of the current fiscal year as compared to same period last year.

According to the latest figures released by Oil Companies Advisory Committee (OCAC) recently, the non-energy products of refineries grew by eight percent during July to April versus production of corresponding period last year that was 7.3 million tonnes. Increase in production was seen in both the black (up 10 percent) and white oil products (up 6 percent) despite some maintenance shut downs witnessed in the current fiscal year.

Analysts attributed this healthy production growth to lower base effect and better fuel refinery margins. Besides this, improved refinery yields also contributed to the production growth, thanks to major plant overhauling in last year by Pakistan Refinery Limited (PRL) and Pak Arab Refinery (PARCO). The production from PARCO and PRL was impressive as it grew by 12 percent and 17 percent in last ten months.

The production of High Speed Diesel (HSD) and Furnace Oil (FO) during July to April of financial year 2008 was up by 11 percent and 10 percent to 2.9 million tonnes and 2.8 million tonnes on year-on-year basis. Local production of these products meets only 43 percent and 44 percent of the demand for HSD and FO, respectively. Hence, increase in their domestic demand cannot have any impact on production. 

Daily Times - Leading News Resource of Pakistan


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*WB loan to finance upgrading of Pakistans power network​*
WASHINGTON: The World Bank has approved a $256.85 million loan for the improvement of Pakistans electricity distribution and transmission network. The project will help strengthen the capacity of the distribution and transmission networks to meet increasing electricity demand in selected areas more efficiently and with better reliability and quality. It will also strengthen the institutional capacity of the selected distribution companies and support power sector reform. The main components of the project are: physical strengthening of distribution networks operated by four distribution companies (HESCO, IESCO, LESCO, and MEPCO); removing some bottlenecks in the transmission grid, operated by NTDC; technical assistance for capacity building, specialised studies, energy efficiency, and sector reform; and a pilot energy efficiency programme involving installation of energy saving equipment at the customer level. This is the first World Bank loan approved for Pakistan since the new government took office. 

Daily Times - Leading News Resource of Pakistan


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*Oil import bill hits new peak of $10 billion ​*
KARACHI (June 21 2008): Soaring crude oil prices on the international front pushed the country's oil import bill up to historic level of 10 billion dollars during July-May of the current fiscal year. Crude oil prices remained continuously on rise in the world market and during last week hit record highs of some 140 dollars per barrel in the face of increasing oil demand across the world amid low supply, analysts said.

The country's local oil production only fulfils 15-20 percent demand, therefore, the country is relying on the imported oil, they added. Recently the government approached Saudi Arabia for resumption of oil supply on subsidised rates and according to unofficial sources, the neighbour country has agreed to fulfil Pakistan's request, therefore it is expected that supply of oil on subsidised rates would help reduce the rising oil import bill, they added. As per official statistics, the petroleum group import bill grew by 52.21 percent during July-May of FY08 as compared to same period of FY07.

The overall petroleum import bill hit new peak of 10.094 billion dollars during July-May of FY08 as compared to oil import bill of 6.631 billion dollars during the same period of FY07, depicting an increase of 3.463 billion dollars during the period.

First time in the history of Pakistan, oil import bill touched 10 billion dollars due to rising oil prices in the world market and it is likely that by the end of current fiscal year, it would be around 11.50 billion dollars. The oil import during the first months is also overall import of last fiscal year, as during FY07 overall imports stood at peak level of 7.339 billion dollars.

Oil import bill - month on month - increased by 94 percent to 1.423 billion dollars during May 2008 over the import of some 735 million dollars during May 2007. In addition, import during May 2008 as compared to April 2008 also depicted an increase of 14 percent, as during April 2008 oil imports stood at 1.253 billion dollars.

The import of petroleum products surged by 60 percent to 5.486 billion dollars during July-May FY08 against the imports of some 3.43 billion dollars over the samme period of last fiscal year The import of crude oil surged by some 44 percent to 4.60 billion dollars during July-May of 2008 over 3.201 billion dollars in the corresponding period of FY07. The rising oil bill is also hurting the trade deficit, which has reached new peak level of 13.84 billion dollars during the first 11 months of FY08.

Business Recorder [Pakistan's First Financial Daily]


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*Engineering designs of hydropower projects at advance stage: Wapda ​*
ISLAMABAD (June 21 2008): Water and Power Development Authority (Wapda) Chairman Shakil Durrani has said that detailed engineering designs of various hydropower projects with accumulative generation capacity of 25,000MW are presently at the advance stages.

Talking to PTV, he said that Wapda was also working on small dams that would generate 516MW power, adding that Wapda, in its short-term plan, had also 400 to 500MW rental power projects that would be completed during the next six months. The Wapda chairman said the project of Neelum-Jhelum Hydroelectric would be completed in seven years with a total cost of Rs 130 billion and would contribute more than five billion units of electricity annually to the national grid.

He said the project would help improve the ratio of hydel electricity in the total generation system of the country. Per unit electricity, generated by the project, would cost only Rs 1.92, which was about three times less than that of the thermal generation, he added.

He said the construction work on the 4,500MW Diamer-Basha Dam would commence in June next year, likewise, Kohala Hydropower Project (1,200 MW) and Bunji Hydropower Project (5,400 MW) were expected to start in 2010 and 2011 respectively. Durrani said the problems that emerged during the projects' implementation should be resolved at the earliest to provide swift relief to the people. The Lower House was informed that the government planned to construct five major dams to overcome electricity shortage.

The Wapda chairman appreciated the progress in the pace of work on the Mangla Dam Raising Project, and the construction of Kurram Tangi Dam, Gomal Zam Dam and the Greater Thal Canal.

He said, "We may face power shortage of 650MW by the year 2016. However, by harnessing the potential to generate 40,000 MW, this shortage could easily be overcome." He said during the last 20 years, the share of hydropower in total generation had reduced from 60 percent to 20 percent.

Wapda has been given the go-ahead to undertake detailed engineering and feasibility studies for Basha Dam and the Greater Thal Canal, as well as for Kachi Canal in Balochistan, the Chashma Right Bank Canal in NWFP, the Thal reservoir project in Punjab, and three projects in Sindh: Riverne Area Development, Thar Canal and Sehwan Barrage. He said the need to complete the projects swiftly had become more important in view of the country's increasing need for water and electricity.

In water sector, total expected allocation for 66 projects is Rs 62.019 billion in the Public Sector Development Programme for the year 2008-09. Maximum allocation has been made for these national importance projects for the construction of different major dams.

He said there were some places including Bhasha Dam, Karam Tangi, Munda Dam where from 20- 25,000MW electricity could be obtained while power could also be produced by constructing more dams at upper or lower level of Mangla and Tarbela Dams.

He expressed satisfaction over the work and said construction work on Gomal Zam Dam was running accurately and timely. "We are specially providing additional packages to the textile, industries, tube-wells and flourmills. We equitably distribute electric for all masses, "he added.

Business Recorder [Pakistan's First Financial Daily]


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*Inbox to provide technology infrastructure products to ZTBL ​* 
Sunday, June 22, 2008

Islamabad: Inbox Business Technologies and Zarai Taraqiati Bank Limited (ZTBL) have inked an agreement according to which Inbox will provide technology infrastructure products to the bank.

Ghias Khan CEO Inbox, Kamal Ahmed Country Manager Microsoft, and Mansur Khan President ZTBL were present on the occasion along with their key associates, a press release said.

According to the agreement, Inbox Business Technologies will provide complete deployment of systems as well as bundled software at ZTBLs Islamabad head office, zonal and branch offices. ZTBL is a public limited bank funded by Asian Development Bank with 343 branches and over half a million customers. It is the premier financial institute geared towards the development of the agriculture sector through provision of financial services and technical know-how. 

According to the agreement signed between the two; Inbox will deliver and deploy 1250 Inbox desktops complete with Windows OEM Licensed version.

Inbox as the only local manufacturer of PCs in Pakistan, with its swift deployment capabilities, won this project over various multinational companies. Inbox operates a dedicated 10,000 sq ft Assembly Plant with the capacity to assemble 8500 units a month for its indigenous brand of desktops. This enables Inbox to ensure prompt delivery of systems to its clients.

Inbox is an end-to-end solution provider offering Technology Infrastructure, Systems Integration, and Outsourcing Solutions with focus on medium and large enterprise, financial sector, education, government and armed forces.

Inbox to provide technology infrastructure products to ZTBL


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*Private sector credit disbursement remained 'strong': Dr Shamshad ​*
KARACHI (June 22 2008): State Bank of Pakistan (SBP) Governor Dr Shamshad Akhtar has said that private sector credit disbursement during the current fiscal year (up to May 31, 2008) has remained 'strong' despite a "challenging economic year" because of several internal and external shocks that the economy had faced.

Chairing the third meeting of the Private Sector Credit Advisory Council (PSCAC) on Saturday she told the members that, overall, private sector credit recorded a higher growth of around 16 percent in fiscal year 2008 (FY08), with Rs 384 billion, compared with Rs 287 billion in FY07.

On annualised basis, growth in private sector credit was 19 percent in FY08, which is higher than 17 percent of last year, she added. "Distribution of credit has been broad-based as almost all sectors of the economy have availed the credit," she said, and added that major chunk of the credit ie 59 percent, was availed by the manufacturing sector, including textile.

She said there has been a massive increase in working capital loans that rose to Rs 311 billion during July-April in FY08, compared with Rs 152 billion in the same period of FY07. "Inflationary pressure and higher cost of inputs were the main reasons for higher credit flow for working capital needs in the current fiscal year," she added.

The SBP Governor pointed out that private domestic banks were playing "a key role" in meeting private sector credit demand as these banks had improved their share in overall credit disbursement to 84 percent from 72 percent, while public sector and foreign banks lost their shares, coming down to 14 percent and 1 percent, respectively, from 22 percent and 5 percent of last year.

Dr Akhtar pointed out that credit disbursement to the agriculture sector in the first 11 months of the fiscal year had shown a growth of 30 percent. Banks disbursed a combined total of Rs 185 billion to the agriculture sector as compared to Rs 142 billion in the same period of last year, showing an increase of Rs 43 billion. "Judging by the current trend, agricultural credit is likely to meet the current year's indicative target of Rs 200 billion," she added.

She briefed the participants that in addition to PSCAC, focused working groups and task forces had also been formulated, including Agricultural Credit Advisory Committee, SME Credit Advisory Committee, Task Force on infrastructure & housing, etc, with specific focus on improving access to development finance.

A detailed presentation was also made by representatives of FPCCI, highlighting growth of various sub-sectors of the industry, issues that are impeding further growth and their remedial measures. FPCCI appreciated the initiatives of the State Bank and other banks in facilitating the flow of credit to all sectors of the economy. SBP Governor stressed upon FPCCI to formulate a code of corporate governance for its members to further improve the governance structure and transparency.

Commenting on FPCCI's assertion on interest rate disadvantage as compared to its regional competitors, Dr Akhtar said with empirical evidence that the country has the lowest real interest rate in the region. Therefore, the industry should evaluate its business propositions keeping in view the real interest rate for sustainable growth and to ensure competitiveness. She stressed upon banks that while making project appraisals the banks should have 'sensitive analysis' whether the project can sustain in case of change in real interest rate.

The representatives of farming community and federal and provincial agriculture secretaries appreciated the increase in flow of credit to agriculture. However, they emphasised on banks to develop more innovative products to meet the growing credit requirements of small farmers. SBP Governor emphasised on integrated efforts between federal and provincial agricultural ministries, planning departments, farming communities, banks and SBP to introduce specific projects like corporate farming or other mechanics of bulk lending by banks for onward lending to small farmers and also monitor the impact of increased credit flow vis-à-vis productivity.

While discussing financing to the SMEs, Dr Akhtar emphasised on banks that the role of SMEs was vital for employment generation in the private sector and as such banks should focus increasing credit flow to SMEs. Representatives of banks explained that as far as medium enterprises were concerned, the credit flow had increased significantly.

However, due to non-disclosure and lack of information on cash flows, financing to small enterprises is the biggest challenge. The setting up of SME Credit Guarantee Scheme is expected to resolve this issue to a great extent. The meeting was attended, among others, by heads of commercial banks, federal and provincial secretaries, representatives of trade chambers/associations and senior officials of the State Bank.

Business Recorder [Pakistan's First Financial Daily]


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*Pakistan's per capita income rises from $926 to $1085 ​*
ISLAMABAD (June 22 2008): Pakistan's per capita income in dollar terms rose from $926 in financial year 2006-07 to $1085 in the outgoing financial year 2007-08 showing an increase of 18.4 percent, official sources said.

"Per capita income, defined as Gross National Products (GNP) at current market price in dollar terms divided by the country's population, has grown at an average rate of above 13 percent per annum during the last five years rising from $586 in 2002-03 to $926 and further to $1085 in 2007-08", they added.

They said that per capita income is treated as one of the foremost indicators of the depth of growth and general well-being of any country. They also said that despite the a ray of recent and more sophisticated tools to measure growth , development and economic advancement, none match the historical importance and simplicity of per capita income as a measure of the average level of prosperity of any country.

The sources further said that real per capita income in rupee terms has also increased by 4.7 percent on average for the last five years adding real per capita income grew by 4.2 percent as compared to 4.8 percent of last fiscal year.

Business Recorder [Pakistan's First Financial Daily]


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*Giga Group to build 29-storey 'Goldcrest Executive' tower ​* 
KARACHI (June 22 2008): The 'Giga Group' has announced the pre-launch of 39-storey commercial tower project 'Goldcrest Executive' at Karachi, at a cost of Rs 8 billion, set to be one of the hottest real estate projects for corporate and commercial buyers.

Talking about the salient features of the project at a briefing held at the project site on Saturday, Muhammad Ali Qureshi, CEO, Giga Group, said that the project was first and only 39-storey commercial tower of its kind in Pakistan's financial capital, Karachi.

He said that project would be constructed on 27,000 square feet plot and would comprise of three shopping floors, with the world-class amenities such as helipad, indoor car parking for 1971 cars, 26-floor commercial office space, high speed elevators, round-the-clock CCTV, centralised air-conditioning, roof top restaurant, swimming pools, etc.

He told the gathering, "This is the only commercial tower project on the shores of Arabian Sea that would offer highest standards of innovative and distinctive real estate development. I assure you all that Goldcrest Executive will evolve a new way of doing business and will unfold a new lifestyle."

Highlighting the achievements of the Giga Group in Pakistan, he said that it has decided to lead real estate development in Pakistan, and proved it through a number of landmark projects at Islamabad, Lahore and Karachi. He said: "We have a clear vision and a fair mission, which would ensure a bright future for all of our stakeholders and customers through the construction of even more innovative projects." A large number of people belonging to almost all walks of life attended the ceremony.

Business Recorder [Pakistan's First Financial Daily]


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*New tax measures to fetch Rs80bn​*
ISLAMABAD, June 22: The National Assembly on Sunday approved the Finance Bill envisaging a string of new taxation measures to mobilise more than Rs80 billion in revenue to meet rising expenditure and sustain a steady economic growth.

The tax machinery has been assigned an ambitious target of Rs1.25 trillion for the year despite current economic difficulties and a phase of slow growth. The revenue collection for 2007-8 is expected to reach Rs1 trillion against a projected target of Rs1.025 trillion.

No major amendments were introduced in the part of the budget speech pertaining to taxes during the past nine days of discussion in the National Assembly and Senate.

The major decisions include increasing the rate of general sales tax by one per cent to raise more than Rs26 billion, withdrawing 35 income tax exemptions, imposing additional duty on luxury items and revising the tax rates on property rent.

The Federal Board of Revenue (FBR) released the details of the amendments to the media after the approval of the Finance Bill. Of the 76 amendments proposed by the Senate, 51 have been accepted. The remaining proposals will be considered during the course of the year.

Major amendments made in the bill concerning sales tax and federal excise duty pertain to the definition of cottage industry. Those manufacturers shall fall within the purview of cottage industry, whose annual utility bill is below Rs700,000 and annual turnover is below Rs5 million.

New tax measures to fetch Rs80bn -DAWN - Top Stories; June 23, 2008


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*A shift in Punjabs economic policy​*
Punjabs budget for the next financial year beginning from July 1  the first by the PML(N)-PPP coalition in the province  indicates a shift in some key economic and fiscal policies pursued by the previous PML(Q) government since 2003.

The most critical aspect of the budget  for the low-income and poor segments of the population  is the announcement of a relief package of Rs17 billion as part of the Rs390 billion revenue budget.

Unlike outgoing years so-called pro-poor relief package of Rs25 billion  almost half of which was actually eaten up by the raise in the pays and pensions of the serving and retired government employees and much of the remainder was either misused for political gains or spent without making any difference in the lives of those who were meant to benefit from it , the new government has earmarked Rs10 billion for supporting the purchasing capacity of the poor by providing them wheat flour, ghee and pulses at subsidised rates from franchise shops and Rs3 billion for health insurance for healthcare of the marginalised.

The province has decided against giving cash handouts to the poor because the federal government has already announced such a programme. Since the centre has already set aside substantial funds for cash handouts for the marginalised, and almost 50 per cent of that amount is expected to be disbursed in Punjab, we have decided to provide price subsidy to hedge the poorer families against the rising food prices, the provincial finance minister Tanvir Ashraf Kaira explained at the post-budget press conference last week.

Another factor that has ostensibly led the government to decide against cash handouts is the failure of a similar scheme  a sum of Rs4 billion was set aside for providing cash subsidy to the 642,000 poorest of the poor families  given in the current years budget. The scheme was blatantly used by the previous government as a means to create its goodwill among the voters ahead of the general elections.

The rest of the funds (amounting to Rs4 billion) from the relief package for the next year have been set aside for subsidising public transport in six major cities, tractors for small farmers under the Green Tractor Scheme and electricity bills of agricultural tube-wells, and the write-off of housing and agricultural loans of poor widows, and establishment of dialysis centres for poor kidney patients.

Apart from this, the government also proposes as part of its pro-poor expenditure to start a free, air-conditioned bus service in seven major cities for facilitating the needy students, launch a low-cost housing scheme for the poor with a sum of Rs1 billion, and lease 60000 acres of state land to the landless, educated farmers on lease for increasing production of vegetables and bringing down their prices. Besides, a sum of Rs2 billion has been set aside to improve the living conditions in the katchi abadis.

One significant decision made by the PMLN-PPP coalition pertains to reducing the provinces reliance on foreign loans  even if these came at a low cost  obtained from the multilateral donors for budgetary support. The provincial government has estimated to receive just below Rs24 billion in budgetary support next year from the multilateral institutions, down by Rs15.771 billion from the budgeted amount of Rs39.747 billion and Rs29.5 billion from actual receipts for the current year. In addition, the provincial government would also get Rs11 billion in project-based foreign assistance, up by just above Rs3 billion from the budgetary estimates and by Rs2.583 billion from actual receipts for the outgoing year.

The decision to cut the size of foreign assistance has been taken in order to control the rising debt stock of the province and increase mobilization of our own tax and non-tax resources, a senior provincial finance department official told Dawn. It is important to judge when to take loans and when to refuse them to keep the debt stock at a sustainable level, he said.

Both the budgetary support assistance and project-based loans  obtained at discounted, low rates  are used to retire expensive federal cash development loans (CDL) and finance development. As a consequence of the liberal policy adopted by the previous government to obtain both budgetary support and project-based assistance, the foreign exchange debt stock has grown to over Rs253 billion (exchange rate $1=Rs62.50). This compares with domestic, rupee debt of just above Rs51 billion.

The official defended the previous governments liberal policy of taking loans from the multilateral agencies, saying a large part of the foreign assistance was either used to prematurely retire the expensive federal loans or support development in the province. Today we have reached a point where it is economically more prudent to refuse the foreign loans and raise our own resources for supporting our current and development expenditure.

A provincial planning and development department official said most foreign assistance came to support the governance reforms in the province. Some may argue that we did not need to obtain foreign assistance to fund our development or bring down our expensive federal debt stock. But we pursued the policy of getting foreign assistance not just because we needed cheaper funds. We got loans from multilateral donors because their collaboration was necessary for sustaining the governance reforms carried out over the last five years. Had we not formed a partnership with the Asian Development Bank (ADB) and the World Bank or the DFID of the UK, it would not have been possible to carry on the reforms in the province due to opposition from the politicians as well as civil bureaucracy both, he maintained.

However, what is intriguing many is the governments decision to enhance the size of the development spending for the next year to Rs160 billion, up by 6.6 per cent from the budgetary estimates of Rs150 billion and by over 31 per cent from the revised estimates of just above Rs122 billion for the outgoing year.

Though the government has enhanced funding for its core development programme  social sector, infrastructure development, production sector, services sector and others  to Rs119 billion, up by almost 24 per cent from the current years original estimates of Rs96 billion and 34.5 per cent from the revised estimates in accordance with the provincial Medium Term Development Framework (MTDF), it has not increased the share of the district/TMA development programme from the outgoing years Rs12 billion. The district/TMA share has actually gone down by Rs2 billion or around 14 per cent from the revised and actual transfers of Rs14 billion to them.

Special infrastructure programme  Lahore Ring Road (Rs20 billion), Sialkot-Lahore Motorway (Rs2 billion) and Lahore Rapid Mass Transit System (Rs7 billion)  has been allocated Rs29 billion, down by Rs11 billion from the original estimates of Rs40 billion and up by Rs7.775 billion from the revised estimates of Rs21.250 billion for the outgoing year. The motorway and rapid mass transit system projects have been allocated Rs9 billion and clear cut targets for the two schemes have been outlined in the development programme in spite of the fact that the minister has stated that the government intended to review them.

Interestingly, the provincial government will finance the increased development spending from the revenue surplus of just below Rs133 billion and savings from the foreign budgetary support loans (or the capital account surplus) of Rs13.593 billion and foreign project-based loans of Rs11 billion. It is surprising to note that a government, which is working to reduce the burden of foreign exchange loans is actually financing over 15 per cent of its annual development programme from that money. Or is it not?

A shift in Punjabs economic policy -DAWN - Business; June 23, 2008


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*50,000 tons of wheat to be exported to Kabul ​* 
ISLAMABAD (June 23 2008): Pakistan has to export 50,000 tons wheat to Afghanistan at subsidised rates despite tense relations between the two countries, sources in Foreign Office told Business Recorder.

The deal would be on official level between Islamabad and Kabul as the former has already prohibited flour export to Afghanistan by private sector, on the recommendations of the Federal Food Committee (FFC). However, wheat was still being smuggled to Afghanistan through different routes, which are not properly monitored by the law enforcing agencies.

Sources said that both countries have re-invented the mechanism to facilitate export to Afghanistan after high level contacts.

They said that the Ministry of Foreign Affairs has sought bids from different private sector parties to dispatch 50,000 tons wheat to Kabul from the stock of Passco in Bahawalnagar and Hafizabad (near Gujranwala).

However, an official commented on this development that "on one hand we are giving wheat to the Afghans at subsidised rates and, on the other, Hamid Karzai is abusing us with the backing of Americans". Earlier, the government was determined to sell wheat or flour to Afghanistan on international rates but at a later stage the decision was changed, with the involvement of top officials.

Sources said that Commerce Ministry had directed the Trading Corporation of Pakistan (TCP) to re-write the new terms and conditions for flour export to Kabul, adding that efforts should be made that officials of any of the country, having knowledge of the export indents, should not misuse the mechanism for personal gains.

Officials believe that possibility of manoeuvering by the negotiating officials of both countries could not be ruled out, but maximum efforts have been made to ensure transparency in the deals. The Economic Coordination Committee (ECC) of the Cabinet has already decided to continue ban on export of wheat and wheat products, at least for the current year, because of crisis at local level.

TCP has also been directed to ensure import of one million tons wheat before August 31 as the government has achieved 97 percent procurement target.

Business Recorder [Pakistan's First Financial Daily]


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*Budget 2008-09 : doing more to boost agriculture​*
THE budget speech by Finance Minister Syed Naveed Qamar recognises the importance of agriculture as the backbone of the economy.

The budget 200809 envisages a growth of 5.5 per cent of GDP and four per cent in the agriculture sector against 1.5 per cent recorded in the previous year.

While financial allocations for agriculture have been indicated for some of the proposed programmes, the overall allocation to the sector is missing in the speech. It would, therefore, be difficult to compare it with the allocations made in the previous year(s). In the past only about two per cent of GDP and around four per cent of the total public sector development programme had been allocated to agriculture sector.

The finance minister says the present government increased the support price of wheat from Rs510 per 40 kg to Rs625. In reality it was not the support but it was the procurement price as support price is always announced a few weeks before the sowing of a crop.

The new support price will be announced in August or September, after reviewing the domestic and international situation. This will help the farmers in taking decision in time, allowing them enough time to plan their sowing of the crop keeping in view the cost of various inputs, its economics vis-à-vis other competing crops, and other similar factors.

To determine the support price is a quite a complex exercise. A number of factors, like the cost of production of an average farmer, import and export parity prices, its impact on the growing of competing crops, and so many other factors, have to be considered. It cannot be done on ad hoc basis.

In the past, such an exercise was done by the autonomous Agriculture Prices Commission, which had qualified, experienced and professional staff. Recently its name has been changed to Agriculture Policy Institute which is an attached department of the ministry of food, agriculture and livestock (Minfal). There is no full-fledged head of this organisation but additional charge has been given to a senior Minfal official. Its staff has got depleted overtime. There does not seem to be any good economist/agriculture economist in the Minfal who could fill the vacuum. This is happening in spite of the governments decision to strengthen the organisations and develop human resources.

I wrote to the prime minister on the issue. No action seems to have been taken to improve the situation.

The farmers are confused about official policy on the support price of the agricultural commodities. Whether it would apply to wheat only or would be extended to other crops, if so, which ones? Or would there be free market system as advocated by the international agencies and accepted by the previous government. This does not seem to have worked under our local conditions.

It is vital for agriculture, the economy and for the reduction of poverty that farmers get a price which at least meets their production cost and some profit to induce them to produce more. If the farmers have money, they can send their children to schools, pay for medical expenses, etc., and feed their families properly.

The budget recognises the use of fertilisers, particularly phosphatic (DAP). The subsidy on fertilisers is proposed to be increased from Rs25 billion to Rs30 billion. In the case of DAP, the subsidy will be raised from Rs470 to Rs1000 per bag. In the use of urea and DAP, it is very essential for the efficient use of these inputs that their ratio is maintained at least at 2:1 if not 1:1. In the past this ratio has been 3.5:1 or so.

The government would have to monitor the prices of both urea and DAP to see if this ratio is not much distorted. The levy of 15 per cent GST on DAP was a wrong step from economic point of view taken under the advice of the international organizations. It has been abolished by a bold step of the present government.

Another important input for agriculture development is water. The existing dams, viz Tarbela and Mangla are gradually being silted up. It is estimated that these have lost their live capacity by one third. The new dams like Bhasha will take 8-10 years before it is commissioned. The Kalabagh dam, for which feasibility report has already been prepared, has fallen prey to the differences of politicians.

The only alternatives left at present are: efficient use of the available surface water, and to build small dams; the later will provide irrigation water but no electricity.

The provincial governments should carry out intensive campaigns for educating the farmers as how to save water and make efficient use of what is available. The farmers have to be told that instead of flow irrigation, they should resort to furrow irrigation and leveling of land where economically possible through the use of lasers, adoption of drip and sprinkle irrigation.

The government should provide all possible facilities and financial resources to the farmers to enable them to adopt these new techniques which are costly. The farmers should be encouraged to grow less-water requirement crops. Research efforts to evolve drought resistant varieties should be given priority.

Availability of approved and certified seed is quite important input for raising productivity. At present, public sector provides only 33 per cent of the replaceable wheat seed (once in four years), 54 per cent of cotton and corn, and about four per cent of potato seed. The production of such seeds should be encouraged and supplied to farmers.

It is a welcome proposal that agricultural tube-wells will have continuous supply for 10 hours at stretch every night to avail rebated tariff. However, most (about 75 to 80 per cent) of the tube-wells, due to extensive mining of water, have started giving saline water. The farmers dilute such water with fresh water, but over time, it would be very injurious to the soil and thus the crops.

Balochistan has great potential for water and agriculture development, but has not received priority it deserves. The arrangement for the import of bulldozers through foreign collaboration to increase and improve cultivable area will greatly help the development of agriculture particularly in Balochistan.

Setting up of cold storages to facilitate export of perishable commodities like fruits and vegetables is a good decision. The government should also ensure that small farmers also get benefit from this facility for which some institutional arrangements should be made.

There is a need for increasing storage facilities both in terms of quality and quantity. At present, storage capacity of a little over five million tons is available in the public sector, which over time has gone down from 5.65 to 5.24 million tons. It would help meet a variety of requirements. However, their quality has to be considerably improved as some of the stores are in a very bad state of affairs. Former prime minister Shaukat Aziz told a gathering in the US that he allowed the export of wheat in 2006 because the country had a bumper crop and if he had not allowed export, the rats would have eaten the crop if stored.

An impression has been given to construct silos. Before taking any practical step, it would be worthwhile to see the operation of the four or five existing silos. Whatever I had seen in Quetta and Karachi, it was a failure.

To increase the production of cotton, the B.T. varieties should be grown only after carrying out trial production under our local conditions. The growing of B.T. cotton has its advantages and disadvantages and should be viewed very carefully before taking a decision.

At present there is no system to produce B.T. seeds. What is happening is that seed of B.T. varieties is being smuggled from India and some other countries that have developed their own varieties, or made arrangements with international institutions from whom they have to import seed every year and at their determined prices. But the quality of seed that is being smuggled is not known.

B.T. varieties are hybrid ones and their seed have to be produced every year. Moreover, it is said that hybrid varieties are resistant to only one pest or disease, mainly the bollworm. Our cotton is being attacked by a variety of insects and diseases for which spraying becomes a must, which is a costly affair.

The National Institute of Biotechnology and Genetic Engineering (NIBGE) is said to be in the process of evolving B.T. varieties suited to our local conditions. This work should be encouraged.

The five per cent federal excise duty on premium of crop insurance has been waived. But what is important is first to see if this scheme is functioning properly at all in the interest of the affected farmers. Many raise serious doubts about its working. In many countries such a programme did not find success.

Increase in the credit by Rs30 billion will help farmers to meet their needs for input purchases. Again there is a need to evaluate the programme whether it is benefiting the small farmers also, if not, what are the problems facing them so that these could be rectified.

There is a need for consolidation of holding to help improve the efficiency of inputs, like fertilisers, water, tillage, etc. Instead of stressing on land distribution under land reforms, other important issues, like the tenure system, cooperative marketing, supply of inputs through cooperatives and so on need to be considered.

The sale of agriculture land around cities has been going on unabated for house building or for industrial purposes. This has decreased the fertile cultivated area to the detriment of agriculture. Such sales should be banned. This would help increase vegetable production.

Livestock is quite important for our economy as it gives 54 per cent to the value in the agriculture sector, which is even better than the value of crops. Serious efforts have to be made to raise their productivity and production of especially meat and milk.

The budget should have given importance to collection of agricultural data. Not only the local experts question the correctness of data, but the international organizations have also shown their serious doubts. For this, a committee of experts under the aegis of Federal Board of Statistics should be set up to evaluate the present system and make suggestions to improve it. It is on the bases of such data that policies are formed.

There is no clear policy of agriculture and even the budget speech has failed to spell out the basis on which the agriculture friendly policy should be formulated, for which a committee of experts needs to be set up.

The budget speech has tried to indicate some programmes which could help farmers to raise productivity and production, but it has failed to do full justice to this sector.

Former Advisor to the Chief Executive of Pakistan on Food & Agriculture; and Founder Chairman, Agriculture Prices Commission (APCom).

Budget 2008-09 : doing more to boost agriculture -DAWN - Business; June 23, 2008


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*July-May food import bill up $3.86 billion ​*
KARACHI (June 23 2008): Country's food import bill has surged to new peak level of around four billion dollars due to the shortfall in the crops and rising world commodities prices.

Despite the fact that Pakistan is an agricultural country, the food and other crops' production is on the decline in the country, as during the current fiscal year the country also has missed its wheat production target by 1.5-2 million tonnes. Therefore, the country is compelled to spend more foreign exchange on the import of food commodities and the food import bill has surged by 51 percent during the first 11 months of the current fiscal year.

After the current upsurge, the food items import bill has reached new peak level of 3.86 billion dollars during July-May of 2008 as compared to 2.55 billion dollars in the same period last year.

The food items import comprised milk, cream, milk food for infants, wheat, dry fruits, and nuts, tea, spices, soyabean oil, palm oil, sugar, pulses, and other items.

Wheat and palm oil imports are chief contributor to the rising food import bill, which share in the overall food import stood at 58 percent. The combine imports of wheat and palm oil have gone up 158 percent during the July-May period of the current fiscal year.

The import of wheat and palm oil surged to 2.244 billion dollars during the first 11 months in the current fiscal year against the imports of 868 million dollars in the corresponding period last fiscal year, depicting an increase of 1.376 billion dollars.

Experts believed that the import bill of food group in the future would further raise due to the continuous import of commodities, including wheat, sugar, palm oil, pulses, dry fruits, tea, etc.

They said the government should focus on the agricultural growth by using new technologies to meet the local demand for wheat, pulses and other food items.

While the prices of food commodities also on the rise in the international front due to the shortfall in the crops and increasing demand.

The food import bill during May 2008 went up by 85 percent to 342.21 million dollars over the 184.67 million dollars in the same period last year. However, the imports during May 2008 were less than April 2008, as during April 2008 food import stood at 486.8 million dollars.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Chemical agriculture​*
PAKISTAN has been swamped by inferiority complex of its policy makers, a majority of whom were never leaders but were followers. You might put the same question to me and I would plead guilty for not trying hard enough and for not being persuasive enough to force my point of view. I have always believed in probabilities and possibilities and not on scientific certainty.

A human failing that brought me in conflict with pseudo scientists. The pseudo scientists that I have been talking about are either obsolete or simply technologist and they have been suitably brainwashed by the West. What little is left of conviction is made up by the juggernaut work of the multinationals corporations [MNC] who do not want the locals to apply their mind for that would cut into their profits and they are the shylocks looking for every pound of flesh irrespective whether the blood flows from the wound or not.

It was since 1987 that I have been advocating that chemical fertilisers especially DAP is harmful and injurious to our soils. That nitrogen is not balanced with either phosphate or potassium. The MNCs are a difficult power bloc and they can steam roll any one. If you do not believe me then you have to either see Tim Sebastians hard talk in which Naomi Klein authoress of No Logo talks of the helplessness of the developed countries what to speak of the developing countries, which live in a soft state all the time vis a vis these MNCs. When chemical agriculture came in 1960 there were food shortages and Borlaug cashed in on the state of shortages.

Chemical agriculture was supposed to be the miracle that would ward of hunger and poverty forever. It did so for a while but the unintended consequences of the continuous use of chemicals led to alkaline soils development and we know that within a certain framework that was counterproductive so far as agriculture productivity was concerned. This is now an albatross round the neck of the farmers and the country. If everything remains as they were the year before then each year the farmer has to use 10 per cent more of the chemical fertilisers.

The fact is that with prices going as they are cartelisation of the producers of fertiliser has been used by developed countries to force the hand of the developing countries. The industry headquarters is in Atlanta USA where all this price fixing goes on. Neo liberal polices are not used when it comes to cartelisation of this kind. This is subtle imperialism of the West and is of a more sinister form as policy makers of developing countries are unable to understand the implication for countries like Pakistan. The price fixation is due to capital cost that is based on monopoly pricing for machinery and the royalty that is charged in perpetuity.

To overcome this, Sartaj Aziz as the minister devised an equalisation formula for the inefficient Fauji fertiliser by equalising the price of the most efficient producers and the least efficient and dividing that by the number of players. The negotiated price of machinery for the new manufacturing unit as doctored and was much more than the given international price. Despite the lopsided benefits to Fauji fertiliser Sartaj Azizs formula was a pragmatic solution to a problem that our policy makers had used for the setting up of an expensive fertiliser industry.

When such an industry comes in to play then the manufacturers make sure that it is priced such that it can, in the foreseeable future ensure, that the commodities produced by the use of these fertilisers are not able to compete in world markets. The same thing happened with the Fauji bin Qasim for its DAP plant with one exception that they also started manoeuvring for subsidies which they got thanks to the then commerce minister. He gained rich dividends for his act of misplaced generosity to the few and polices against the many. In return, he was a major player in some of the most lucrative projects that the government gave to him without due process.

If not chemical agriculture what then? The advantages of organic agriculture have not been understood by our policy makers who are in the habit of taking short-term measures. In an arid agriculture economy it is necessary to understand the advantages of organic agriculture. There are methods available for the conversion of organic waste in short time, a method that was devised by the Japanese and upon which we came to by accident. The decomposed humus is a source of 90 to 95 per cent soil nitrogen including that which is cycled through microorganisms.

When organic matter makes up more than two per cent of the soils it can be a major source of available phosphorous. At the moment our soils are either completely devoid of organic matter or very insignificant amount given our use of chemical fertiliser.

It is a major source of the strengthening necessary to create strong soil structures with a higher proportion of larger pores that improves water holding capacity and water and air movement in the soils. A requirement that is essential on the Pakistani scene because of shortage of water.

As a result of chemical fertilisers our soils have become sieves with much reduced water holding capacities. It is also true that such organically developed soils provides 30 to 70 per cent of the negatively charged sites that hold nutrient cations plants can use [unheard of by Pakistani farmers-large or small]. The electrical property this gives to the organic matter leads to the ability of the soil to act as a buffering agent, moderating the tendency to change ph when alkaline or acid substances are added to the soil.

Organic matter also works as a Chelate, that is, it forms compounds with metal nutrients (sually iron, zinc, copper, or manganese) increasing their solubility and availability to plants. Besides it supplies carbon for energy to many soil micro-organisms that perform beneficial functions such as nitrogen fixation.

I have given a few of the benefits of organic agriculture. The main problem seems to be in handling and spreading of the organic matter in a systematic manner. Conveniences can now be built in to the system thanks to the work of Dr Tahir, formerly dean of soil sciences, University of Faisalabad (now working with his own NGO). A person who is given to convictions and courage despite being ridiculed by all those that were touts to the chemical industry. He has now been able to bag the organic material with various formations in which he has used sugar mill sludge, poultry manure, and has also mineralised the organic material by reinforcing it with gypsum and thus making the organic matter work as chelate and fixing the phosphorous in a soluble manner for the uptake by the plants.

Organic agriculture with its concomitants is such that our soils are improved; the cost of production reduced and the farmers rehabilitation made possible. Research elsewhere has shown that the previous held notion that there will be a ten per cent reduction in productivity is now proved to be wrong. In any case what have you got from chemical agriculture in the last five years with all these shortages? The small farmer especially will be a gainer for a bag of fertiliser of these kind cost only Rs300. They have taken away ten years of farmers welfare as a result. How unfortunate such crimes go undetected?

Chemical agriculture -DAWN - Business; June 23, 2008


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## Neo

*Iraq to award oil contracts to foreign companies, including Pakistan ​*
BAGHDAD (June 23 2008): Iraq will award contracts to 41 foreign oil firms in a bid to ramp up production that gives multinationals a potentially lucrative foothold in the nation's huge oil fields, an official said on Sunday.

"We chose 35 companies of international standard, according to their finances, environment and experience, and we granted them permission to extract oil," Asim Jihad, spokesman for Iraq's oil ministry, told AFP.

Six other state-owned oil firms from Turkey, Vietnam, Pakistan, Thailand, Angola and Algeria will also be awarded extraction deals, said Jihad. The agreements, to be signed on June 30, are expected to be short-term arrangements although the ministry has yet to provide a timeframe.

The deal paves the way for global energy giants to return to Iraq 36 years after late dictator Saddam Hussein chased them out, a first step to access to the earth's third largest proven reserves.

"They will have the first right to develop the fields," said Jihad, adding that competitive bidding would come at a later date once the nation's long-delayed hydrocarbon law is passed by the parliament. Companies will be focused on fields in the north and the south where wells and perforations already exist, thus requiring minimal additional investment.

These agreements will be announced alongside Technical Support Agreements (TSAs) with five foreign oil majors. They cover Kirkuk field (Shell), Rumaila (BP), Al-Zubair (ExxonMobil), West Qurna Phase I (Chevron and Total), Missan province development (Shell and BHP Billiton) and the Subba and Luhais fields (Anadarko, Vitol and the UAE's Dome), according to a previous report.

The TSAs are a bridging contract designed to fast-track foreign oil involvement in Iraq.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*The sluggish agricultural growth​*
What was disappointing about the performance of the economy in 2007-08 was not so much of its modest or low performance, as much as the vast gap between the very high target set and the reality.

As a result, instead of the growth target of 7.2 per cent, the GDP grew by only 5.8 per cent. This achievement is not too low compared to the last years high growth. What is more striking is that all the major targets have been missed. All that has led to inflation to build up to 11 per cent and the food inflation if calculated modestly, to rise up to 15 per cent. That was bound to happen as agriculture made the smallest contribution to growth-- 1.5 percent-- against the target of 4.8 per cent . This is too large a gap. The large wheat crop of 22.5 million tones proved to be rather an exaggeration, judging by the volatility of the market and the hardship of the poor.

The major crops recorded a negative growth of three per cent. Livestock, in view of the high price of meat saved the situation by recording a growth of 3.8 per cent . But that did nor benefit the poor who had to pay a very high price for the wheat flour. Wheat flour price shot to Rs30 a kilo but the small grower was not the beneficiary as he had sold the wheat at a low price. The real gainers by the high price were the big farmers with their large stocks, and the ruthless hoarders and stockists who exploited the situation..

The government has announced the withdrawal of sales tax on fertilisers. This step should have been taken earlier.

Shaukat Aziz as prime minister had glibly announced that if the Indian economy can achieve nine per cent growth, Pakistan can as well. And it can build the momentum year after year to reach 11 per cent as done by China. However, it was not possible to achieve high growth in agriculture or other sectors with frequent electricity breakdowns and regular load shedding. Apart from inadequate and irregular power supply, production has also suffered from high prices of fertilisers, pesticides and diesel.

Adequate protective measures should have been taken to shield agriculture from such external shocks , which were not taken.

In the livestock area, consistent high price calls for greater input by farmers for developing modern cattle and dairy farming. The World Bank has called for an end to food subsidy but it can only be phased out gradually.

Farm loans are not available to small growers, regularly and adequately . And that is one of the results of the tight monetary policy of the government to restrict bank loans. But the State Bank wants other banks to be liberal in granting farm loans to small farmers. This is an area where the government needs to focus. Of course, the overall credit flow to agriculture has picked up pretty fast in recent years.

Unless there is a radically new approach to agriculture, inclusive of land reforms, liberal loan facilities, and cheaper inputs, agri production cannot increase. And with a population of 160 million people increasing at two per cent annually, the country cannot depend on food imports. In fact, agriculture needs new attention and devotion to save it from the rut it has got into.

The sluggish agricultural growth -DAWN - Business; June 23, 2008


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## Neo

*Balochistan government to fill 10,000 vacancies: minister ​*
QUETTA (June 23 2008): Balochistan Finance Minister Asim Kurd Gailu on Sunday said that the government would fill 10,000 vacancies, including 2400 newly created posts and 7500 already lying vacant posts, during the financial year 2008-09 aimed at reducing unemployment in the province.

Addressing post-budget press conference here at the Officers Club, the Finance Minister, who was accompanied with the provincial Finance Secretary Mehfooz Ali Khan, said that the government was increasing its resources through exploration of natural resources which would also generate employment opportunities in the private sector in the province.

He said that the government had prepared the 2008-09 budget facing financial crisis and constraints, and sincere efforts were underway to overcome the financial constraints in the province. Referring to the Rs 19 billion loan of State Bank of Pakistan (SBP), he said that the provincial government would take up the matter of overdraft of Rs 19 billion with SBP Governor for waiving off the loan, or converting it into soft loan, which would improve the financial condition of the province.

He expressed hope that the province would get more resources after the announcement of new NFC award, which would also help to overcome financial difficulties. Asim said the government had not included new development schemes in the budget as it was committed to complete the ongoing development projects within the stipulated time. Completion of these schemes would benefit the people in the province.

He, however, said that the government had set aside Rs 3.25 billion for launching new development schemes. The amount would be spent on new schemes, in consultation with coalition partners in the government and identifying new schemes by MPAs. Each assembly members is authorised to launch new schemes worth Rs 15 million in his/her respective constituency which should be completed within two to three years.

Finance Secretary Mehfooz Ali said the allocation of funds for development projects had been increased from Rs 35 billion to Rs 55 billion due to increase in material prices in the province. He added that the government had not included any new scheme in PSDP as it wanted to ensure timely completion of the ongoing development projects in the province.

He said the government would make functional all district hospitals and schools with the aim of providing maximum health and education facilities in the province. The government will provide more funds for this purpose, he said.

The finance secretary said that the government would provide scholarships to 24,000 students, while free books would be provided to all students up to matriculation in the province.

He said that the government had also put aside handsome amount for coping with natural disasters. "That is why the current expenditure shows higher amount in the budget than the outgoing year budget.

He said the government had got revenue Rs 30 million from Chamalang coal field. Besides the coal reserves, the field had provided job opportunities to 10,000 people.

Mehfooz said the revenue of the government had increased from Rs 30 million to Rs 260 million from Saindak gold project, and added that the revenue of government was Rs one billion four years ago and now it had increased to Rs 3 billion. He said that the federal government would not only consider the population in the coming NFC award, but it would also regard the scattered population and other issues of other provinces.

He expressed hope that the financial constraints and problems of the province would be resolved after announcement of the new NFC award, and said that the Balochistan government had nominated Dr Gul Faraz Khan as its technical member for the coming NFC award meeting.

He said that the government had called Frontier Corps personnel from other province for maintaining law and order in the province. The provincial government had spent Rs 300 million for the purpose. Now, some wings of the FC had been sent back.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Options in agriculture​*
Given the paradigm shift in agricultural prices in recent months, what are the options available to Pakistans policy makers? They need to proceed simultaneously on two tracks. They need to use the significant changes in agricultures terms of trade to provide appropriate incentives to the farming community to produce more and they need to provide additional incomes to the poor, particularly those in the urban areas, to deal with the rise in food prices. For the poor, expenditure on food is by far the largest component of their budget.

Output can be increased in two different ways  by increasing the area under cultivation and by increasing the productivity of the land that is under the plough. As emphasszed by the government of Punjabs Punjab Economic Report, 2007, Pakistan has reached the limit of expanding the area under cultivation. Land is still available but the country has run out of water.

In fact, agriculture has to compete with other demands for water  by an increasing population living in urban areas and by industry  while the supply is likely to diminish as a consequence of the change in climate. Pakistan is among the countries likely to be severely impacted by global warming. It has to opt for productivity increase and here there are enormous opportunities.

The last time Pakistan saw a significant increase in agricultural productivity was during the period of the green revolution a term coined to describe what happened to the sector of agriculture in many developing countries, including Pakistan. But the enormous success of the green revolution in producing large output increases resulted in complacency. This manifested itself in several different ways, especially in terms of the neglect by public policy makers on agriculture. What suffered in particular was agricultural research.

Pakistan, in keeping with the unfortunate tradition of neglecting education and research, paid little attention to creating the infrastructure required to increase farm productivity. A number of agricultural scientists in Islamabad as well as Lahore, told me that the country had lagged behind not only East Asia but also India. In crop research we are possibly 10 to 15 years behind India, said a scientist working in the Islamabad based National Agricultural Research Council, (NARC).

Pakistani scientists speak of two problems in particular about agricultural research. Most agricultural research in developing countries is financed by governments but the Pakistani state did not invest a sufficient amount of resources in this activity. The second problem is the way research is structured. The federal government through the Pakistan Agricultural Research, (PARC), and its component, the NARC, has a significant presence in agricultural research. This is surprising since, under the constitution, agriculture is a provincial subject.

Also, Islamabad is physically distant from the heartland of agriculture with the consequence that the research findings from Islamabad do not get readily disseminated to the farming community. In the provinces, in particular in the Punjab, agricultural research lacks institutional focus. It is disbursed over a number of departments with insufficient coordination among them.

The previous Punjab government took a number of steps to remedy the situation. It created an institutional mechanism for co-ordinating research done by the various agencies and it opted for an institutional model that has succeeded in China. The previous administration in Lahore took the deliberate decision to focus research activities in a number of crop and product based institutions located in the areas where these crops and products are important. The management of the intuitions has been entrusted to autonomous boards of directors that have the representation not only of agricultural scientists and government departments but also of the private sector. This is a different institutional model from the one pursued earlier in which research was located in teaching institutions. India followed that practice  Ludhiana University in the state of Punjab has been at the forefront of that countrys impressive performance in agricultural research. The United States also follows the same model. We looked at both models and opted for the Chinese practice of entrusting research resources to specialised institutions, said the former secretary of Punjabs agriculture department in a conversation.

It is likely that the amount of resources being committed to agricultural research will increase in the next few years. There is a growing recognition in the political and bureaucratic establishments that the state must spend additional money to promote this important activity. However, even with increased attention, results will be slow to materialise.

According to Bob Zeigler of the International Rice Research Institute (IRRI) the time lag between researching a new idea (dreaming up a new seed) and commercialising it is ten to 15 years. In the meantime, while domestic research efforts are being activated, Pakistan will have to borrow from the world outside as it did during the green revolution when high yielding seed varieties were imported from Mexico (in the case of wheat) and the Philippines (in the case of rice).

However, even when new seeds are obtained from abroad, they have to be properly tended to maintain their yield. When IRRI-8 rice variety was introduced in 1966, it produced almost ten tons per hectare. The yield has declined to seven tons. According to IRRI, between the 1960s and 1980s, yields of the main cereal crops increased by 3-6 per cent a year. Now annual growth is down to one to two per cent a year, way below the increase in demand. The world, including Pakistan, needs a new green revolution.

Growing crops on the field is one part  the beginning part  of a long chain that stretches from the farmer to the final consumer. There are a number of steps on the way especially when the focus moves to higher value added crops. The private sector has a larger role to play in developing these intermediate steps and in increasing their productivity through research. Supermarkets can be effective in this area. It is encouraging that some of the well-endowed European supermarkets such as Macro and Metro are establishing in Pakistan.

These stores need uniform quality, minimum large quantities, high standards of hygiene and, increasingly, produce that does not add to environmental problems. Once established, they reach out to the farming community to obtain the supplies they need. In the countries that have allowed international supermarkets to get established, half or more of food sales can be accounted by them.

The success of the Green Revolution in increasing productivity and output in the developing world also led to a decline in lending for agricultural development by international development institutions. According to the OECD, the World Bank and other donors cut the share of agricultural lending in development assistance to less than three per cent by 2005, down from 18 per cent in 1979. The sharp increase in food prices in 2007-08 have shocked the donor community back into action. On the eve of the recently concluded international conference on food security organised by the FAO and held between June 3-6, in Rome, the World Bank unveiled a $1.2 billion fast track facility to help combat the impact of rising food prices.

At the start of the meeting, senior UN officials urged nations to eliminate trade barriers, expand research into biotechnology and boost food production with an annual investment of $20-$30 billions Nothing is more degrading than hunger especially when main-made, Secretary General Ban ki-moon told the conference. Hungary people are angry people, warned the Secretary General but his words did not have much effect on rich nations. The Rome Conference did not break new ground, essentially leaving individual countries to cope with a very difficult situation.

Options in agriculture -DAWN - Business; June 23, 2008


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## Neo

*Investment under CFS down 9.86 percent ​* 
KARACHI (June 23 2008): Investment under continuous funding system (CFS) at Karachi share market declined by 9.86 percent (Rs 3.33 billion), ending the week at Rs 30.39 billion from Rs 33.72 billion of previous week.

"The CFS investment declined by 9.86 percent as the investor sentiment remained in the negative zone with decrease interest", Khurram Schehzad, senior analyst at Invest Capital & Securities, said.

The CFS rate for the week rose by 181bps to 16.74 percent due to higher rates observed in the T-bills auction. The CFS touched 17 percent post-auction on Thursday on closing basis. The top-5 scrips by CFS investments were NBP, POL, AHSL, DGKC and PPL which cumulatively accounted for 47 percent of the total CFS investment during the week.

Open interest at the futures counter rose slightly by 39bps on weekly basis to close at Rs 15.89 billion. Conversely, futures spread declined by 317bps on weekly basis ending the week at 3.25 percent. The top-5 scrips by futures investment remained JSCL, MCB, Engro, AHSL and ANL cumulatively accounted for 46 percent of the total outstanding open interest.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*PTDC to set up office in China ​*
BEIJING (June 23 2008): The Managing Director of Pakistan Tourism Development Corporation (PTDC), Brigadier (Rtd) Aman Ullah said here, on Sunday that to attract the maximum number of Chinese outbound tourists, the PTDC intended to establish its office in China.

"The setting up of Tourism Office here would help the Chinese tour operators to easily interact with us in sending tourists to our country", he told newsmen after conclusion of the 3-day Beijing International Tourism Expo (BITE).

He however, appreciated the Press and Culture Counsellor at Pakistan Embassy who is at present facilitating in big way to send tourists to Pakistan. During BITE, I met with several tour operators and was delighted to know that most of them had extensive knowledge about our tourist resorts", he noted.

He said that he considered a bright feature in cooperation between the tourist sectors of the two countries.

Brigadier Amman said that Pakistan would celebrate the "Gandhara Week" in the month of November, in which PTDC would invite a large number of Chinese writers, scholars, tour operators and other tourism related officials so that they could see themselves the potential Pakistan offers for them.

The Managing Director PTDC further said that he also intended that Chinese businessmen associated with tourist related business to visit Pakistan, construct hotels and motels and run the same as per their need.

He said that during his meetings, he had given some proposals to tour operators including that if a group of 50 tourists visits Pakistan, we would like to offer them rebated air tickets, rebate in hotels and transport, and if they have any apprehension with regard to law and order that would also be addressed by ensuring foolproof security cover. "We have a large number of world class Buddha sites for the Chinese interested in visiting these religious sites", he noted.

He said that being very close to China, there are number of plus points for Chinese tourists to visit our country as they would pay lesser amounts on buying air tickets or even they can come by road.

Brigadier Aman said that over seventy countries took part in BITE and he was delighted that Pakistan's pavilion got first prize of best organised stall.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Petronas, Eni make Pakistan gas discovery​*
MILAN, June 23 - A consortium that includes Italian oil company Eni SpA and Malaysia's Petroliam Nasional Bhd [PETR.UL] have made an onshore gas discovery in Pakistan, Eni said on Monday.

The discovery was at the Saqib 1A well in the Mubarak exploration block, Sindh province, Eni <ENI.MI> said in a statement.

The block's operator is Petronas Carigali Pakistan Ltd., with a 57 percent stake. Eni has a 38 percent holding and Government Holding Private Ltd. 5 percent.

The well was successfully tested and flowed at 25 million standard cubic feet of gas per day with 60 barrels of condensate per day.

"Eni and its partners are now evaluating the potential of the discovery in order to identify the most suitable development plan," the statement said.

Petronas, Eni make Pakistan gas discovery - Yahoo! Singapore News


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## Neo

*Pakistani team meets Tata power plant managing director ​*
MUMBAI (June 23 2008): A six-member delegation headed by the Deputy Chairman Planning Commission Salman Farooqui met Managing Director of Tata Power plant here Sunday and shared mutual experiences in the field of power generation.

Later, the delegation visited Tat coal-based power plant. The delegation during its week long visit to India would attend various briefings at different sites of energy, oil and gas, and alternate energy resources besides visiting projects of poverty alleviation.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pro-Gas to set up LPG-run power plant at Port Qasim ​*
ISLAMABAD (June 22 2008): The Pro-Gas Company will set up an LPG-run maiden power plant of 500 MW capacity in the country. Pro-Gas Company Managing Director Abbas Bilgrami told a private TV channel that PPIB has given the approval for generating electricity fuelled by LPG and this plant costing about $500 million would be installed at Port Qasim here.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*IT department to introduce integrated network at district level ​* 
LAHORE (June 23 2008): Punjab Information Technology Department has started establishing networking at district level which would create coordination between provincial and district governments to introduce an integrated system in working of public sector.

IT Department, on the directions of Chief Minister Punjab and Chief Secretary, took keen interest and Secretary IT himself visited Kasur, Narowal and Gujranwala districts to review problems and resolved them with the coordination of local district governments.

Information Technology officials have evolved a comprehensive strategy to complete ongoing projects as well as start new plans. It has also been reported that meetings would be held in all districts and DCOs and EDOs were being consulted to form latest networking.

Similarly, keeping in view the firm commitment of the Chief Minister, I T Department is now engaging latest and skilful expertise. Spokesman said that induction of computerised system would enhance government's efficiency and help in confirming "good governance" and also save time of the people. Moreover, projects of Punjab portal and Lahore van are also being implemented.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'IBM committed to deliver best market-oriented services' ​*
ISLAMABAD (June 21 2008): The IMB, a company in IT sector, is committed to deliver its market-oriented services to its customers who have already acknowledged it. "Thanks to the best services and innovative solutions to the problems and challenges within the society, the IBM's image within the company and beyond was rapidly improving", IBM Sales Manager North Pakistan Adnan Siddiqui said this at a seminar on "Paint Your IT Green" organised by the IBM here.

He said the IBM, which was providing services worldwide in every sector, was taking concrete steps to effectively tackle the country's pressing challenges including energy conservation through its need-based services. He said the IBM recognised that the time had come for a broad, integrated, smart systems approach to tackling energy, environment confronting the society, badly.

He said over the past 50 years in developing energy efficient system, the IBM believed that green initiatives could help the business grow successfully through utilisation of its services. System Technology Group Sales System Architect, IBM Middle East, Alistair Innes said on Thursday that IBM was offering effective solutions to challenges and problems in the current era of information technology.

He said IBM's initiatives helped business to improve their operational efficiencies, while striking a more optimal balance between what technology could do and what people. He said the positive link often resulted in greater productivity internally besides enhancing business services for customers. System Technology Group Manager, IBM Pakistan, Ghazanfar Ali gave brief introduction about IBM System Technology Group.

He said IBM established its operation in Pakistan in 1952 and had been successfully upholding its good image through its effective and suitable solutions to challenges especially in economic sector of the country.

"We are dedicated to helping our customers pursue new market opportunities and become more productive through perfect transformation of their business models and innovative application of e-business technology", he observed. He said IBM was the world's leading IT innovator and business solutions provider and capable of integrating industry and technology expertise with research and development to meet their urgent energy, environment challenges.

Later, the speakers fielded different questions posed by the participants regarding IBM New Power Equation-Enterprise Datacentre and IBM Green initiatives followed by virtualisation and server consolidation solutions designed for Efficient Datacentres. IBM Power Systems Sales Manager, Pakistan Muhammad Faisal also spoke on the occasion.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Rs 2155 million being spent on small dams' construction ​* 
LAHORE (June 23 2008): The Provincial Irrigation & Power Department (I&P) is spending an amount of Rs 2155 million on the construction of small dams in district Potohar including Jhelum, Chakwal, Rawalpindi and Attock. These schemes besides providing water for the irrigation purposes will also supply clean drinking water to the people of these areas.

Punjab Senior Minister Raja Riaz averred this while meeting a delegation of farmers and political workers of Potohar here on Sunday.

The minister maintained that continuous supply of water for irrigation purposes remained the main focal point. Elaborating further he dilated that a sum of Rs1056 million had already been spent during the current fiscal year while another amount of Rs 1099 million had been earmarked in the next financial budget of 2008-09, he added.

Punjab Senior Minister said that I&P Department was spending Rs 157.198 million for Haji Shah Dam at Hazro, Rs 267 million for small dams in Gujar Khan tehsils, Rs 435 million for Dhurabi and Minwal Dams in Chakwal, Rs 404 million for Phase two of construction of small dams namely Kot Fateh Khan, Shahbazpur, Tatiabara and Sadrial Dam in District Attock, Rs 476 million for Ugham Dam Project at Gujjar Khan, Rs 804 million for Phase two of Dhoke Hum, Mandee, Dhok Jehan and Uthwall/Lakhwal Dam Project in Chakwal and Rs 57 million for Fatehpur Dam at Pind Dadan Khan, Jhelum.

The minister added that a total of 26085 acres of agricultural land would be brought under active cultivation due to these projects. He said the department besides arranging inspection huts would also develop suitable number of irrigation channels, outlet structures and Cofferdams. He impressed upon the farmers to apply progressive methods of cultivation for boosting up agriculture of the region.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Water management ​*
EDITORIAL (June 22 2008): According to a Recorder Report, human development statistics in Pakistan show that only about 65 percent of the people have access to safe drinking water, whereas the government is committed, as a signatory to the UN Millennium Development Goals, to cover 93 percent of the population by 2015.

Meanwhile, the country's per capita water availability has been decreasing at an alarming rate, says the report, due to increase in population and diminishing water resources. Rising groundwater utilisation for domestic and agricultural purposes, has adversely affected groundwater quality, especially in irrigated areas where about 70 percent of the water is supplied by tube wells, and is rendered unfit for drinking.

Adding to the problem are the irrigation demands in the backdrop of extended periods of droughts as well as the rising requirements of the industrial sector. What we will need in another three years' time will be an additional 48 billion m3 of water to meet the growing demands of our economy.

In short, Pakistan is in the company of high water stress countries, and needs to undertake urgent measures to ease the current stress, and also to ensure longer-term water security. Availability of water, especially for drinking, is an underrated issue in this country.

The need for providing easy access to all to this life sustaining natural resource is recognised, but what is not so well recognised is the fact that rapid urbanisation and industrial activity have increased the pressure on the underground aquifers. At the same time, much of the river water needed for irrigation, domestic and industrial uses, goes to waste due to outdated irrigation techniques and lack of awareness about conservation.

True, the government has made some admirable efforts to prevent seepage, through lining of canals and watercourses. But it is yet to popularise modern watering methods such as drip irrigation to prevent wastage that accompanies flood irrigation prevalent in our farms and fields. To make matters worse, for long successive governments at the Centre remained stuck on their insistence to build mega dam projects which, in the case of Kalabagh dam, was met with fierce resistance from smaller members of the federation, leading to a general standstill.

Creditably for it, the new government has decided to construct smaller dams, which is also in accord with the concerns of environmentalists who oppose big dams because of their harmful effects on flora and fauna as well as consequent forced population displacements.

Since we receive ample rain, it would be worthwhile also to benefit from the experience of certain other countries and think about harvesting rainwater. And, of course, there is dire need to create awareness among the domestic users to avoid wastage in their daily routines. Indeed, conservation, on both macro and micro level, is the best answer to the water stress that we face now and expect in the days to come.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Dream of a prosperous Pakistan ​* 
ARTICLE (June 21 2008): Pessimists are having a field day predicting a bleak future for Pakistan, considering the facts, as they are. Their prognosis may be correct to some extent, but to write off Pakistan totally will be a travesty. We all want to see Pakistan flourishing as a prosperous country, its people at peace, and its coffers full.

The question is whether it is possible, and in the realm of reality? The answer is a resounding 'yes', but how? It all boils down to a resolute, aware and astute leadership, not travelling the oft-beaten track, but hacking out new paths for survival. These new ways exist and have been propounded many a time, in these columns, as well as by others. It requires courage, determination and selfless devotion to the task at hand, and the success can be ours.

These are not mere idle exhortations. History is full of success stories of nations who have pulled themselves up by their own boot-strings, and risen to the top of the economic world. Two nations - defeated and devastated in the Second World War (Germany and Japan) - are prime examples.

True, they were provided material aid, but their success owes to their indigenous labour and creative genius, not the greenbacks showered on them. Other nations too received huge amounts of aid and support, but their names do not stand anywhere in the same league as Germany and Japan. The so-called 'Asian Tigers' are another example of success born of grim toil and fortitude.

So for Pakistan, it is not a lonely journey. Others have set worthy examples before us. The lesson to be learnt is self-reliance and not depending on others to do our work for us. Once this grit and determination is exhibited in sincerity, Pakistanis can begin to see the light at the end of the tunnel.

We have to set our priorities right and move the way Chinese have done, or Malaysia, or others, for that matter. We must give up, once and for all, the idea that only the West can deliver. This is the century of the South and the East. Our destiny calls. Are we ready to answer?

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'New cane varieties to increase sugar production' ​*
FAISALABAD (June 22 2008): The scientists of Ayub Agricultural Research Institute (AARI), Faisalabad, have developed sugarcane varieties which have contributed significantly to increase in sugar production in the country.

This was stated by Dr Arshad Ali Chattha, Director, Sugarcane Research Institute (SRI), Faisalabad, while addressing an awareness seminar on control of viral diseases of sugarcane, arranged in co-operation with Pakistan Agriculture Research Centre (PARC), Islamabad, here on Saturday. He said that the country has not only become self-sufficient in sugar production but is also exporting it to other countries, like Sri Lanka, Yemen and Bangladesh.

He said that scientists have developed technological package for sugarcane production which, if adopted properly, could double sugarcane production in the country. He said that some sugarcane varieties, evolved by AARI scientists, are in the pipeline which are far superior to the existing varieties, and would revolutionise sugarcane production, after proper approval. Dr Chattha said that AARI scientists have also developed a method of sugarcane sowing which increases sugarcane production, besides saving irrigation water.

Scientists delivered lectures on various aspects of sugarcane production technology and explained the methods for controlling sugarcane diseases and attacks of insects and pests. Agriculture scientists, farmers, representatives of sugar industry, Dr Tahira Jasmine from PARC, Dr Muneer Nayyar from Madina Sugar Mills, and Dr Muhammad Javaid from Ramzan Sugar Mills also attended the seminar.

Business Recorder [Pakistan's First Financial Daily]


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## Bushroda

Neo said:


> *Dream of a prosperous Pakistan ​*
> ARTICLE (June 21 2008): Pessimists are having a field day predicting a bleak future for Pakistan, considering the facts, as they are. Their prognosis may be correct to some extent, but to write off Pakistan totally will be a travesty. We all want to see Pakistan flourishing as a prosperous country, its people at peace, and its coffers full.
> 
> The question is whether it is possible, and in the realm of reality? The answer is a resounding 'yes', but how? It all boils down to a resolute, aware and astute leadership, not travelling the oft-beaten track, but hacking out new paths for survival. These new ways exist and have been propounded many a time, in these columns, as well as by others. It requires courage, determination and selfless devotion to the task at hand, and the success can be ours.
> 
> These are not mere idle exhortations. History is full of success stories of nations who have pulled themselves up by their own boot-strings, and risen to the top of the economic world. Two nations - defeated and devastated in the Second World War (Germany and Japan) - are prime examples.
> 
> True, they were provided material aid, but their success owes to their indigenous labour and creative genius, not the greenbacks showered on them. Other nations too received huge amounts of aid and support, but their names do not stand anywhere in the same league as Germany and Japan. The so-called 'Asian Tigers' are another example of success born of grim toil and fortitude.
> 
> So for Pakistan, it is not a lonely journey. Others have set worthy examples before us. The lesson to be learnt is self-reliance and not depending on others to do our work for us. Once this grit and determination is exhibited in sincerity, Pakistanis can begin to see the light at the end of the tunnel.
> 
> We have to set our priorities right and move the way Chinese have done, or Malaysia, or others, for that matter. We must give up, once and for all, the idea that only the West can deliver. This is the century of the South and the East. Our destiny calls. Are we ready to answer?
> 
> Business Recorder [Pakistan's First Financial Daily]



Good to read an article with a +ve outlook. There is no dearth of pessimist doomsday painter. But being +ve is a way forward. 

Neo, Now you might now why I avoid posting negative news.


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## ejaz007

*Deep Water Container Port : KPT to award two contracts by August *
By Moonis Ahmed

KARACHI: The Karachi Port Trust would award contracts for Marine Protections Works and Quay Wall Construction of Pakistan Deep Water Container Port in August, official sources told Daily Times. 

Sources said detail design of the project has been completed and contract has been awarded for the dredging and reclamation works. The dredging volume shall be 21 million cubic meters and its channel shall be deepened to 16 meters. Approximate cost of this part of the project is $200-250 million. 

The total cost of the deep water container port is $1.6 billion. The port is being built at Keemari Groyne. 

Initially 16-meter draft will be built which could later be further deepened to 21-meters. The port will be the first transshipment hub of the region where post panamax containers, having a draft of more than 16-meters will be handled. 

A total of ten berths will be completed in the in three phases. Four berths will be built in first phase while two and four berths will be built in second and third phases, respectively. 

The project shall be carried out in phases and on public private partnerships. In phase I four berths terminal would be made with 1500 meter quay, 16 meter deep at a cost of $550 million with KPT contributing $345 million, sources said.

The terminal will built in two stages. The first terminal shall comprise of 4 berths 1.5 kilometer long and 18 meters deep. KPT sources said that expected investment is $191 million. The berths are being offered on BOT basis and for a concession period of 25 years. The projects completion is expected by June 2010.
Daily Times - Leading News Resource of Pakistan


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## ejaz007

*Australian company to invest $1bn in mining*
By Ijaz Kakakhel

ISALAMABAD: The worlds largest copper and gold producing Australian company, with an investment of $1 billion, will launch a mega project Reko Dik Copper-gold near Saindak in Balochistan by 2010.

The project would help the government to produce 0.3 million tonnes of copper annually, thus bringing the country for the first time on the list of major copper producing countries of the world. Senior officials told Daily Times here Monday that in the same vein, Duddar lead-zinc deposits in Balochistan are being developed and expected to commence production by end 2008. The expected production from these deposits is 100,000 tonnes of zinc concentrates and 33,000 tonnes of lead concentrates, the export of which will bring precious foreign exchange. 

Officials in the Ministry of Petroleum and Natural resources further informed that development of Thar coal field in Sindh, containing 175 billion tonnes of coal, which are of best quality lignite deposits in the world, on completion would be used for power generation and gasification. Similarly all the non-glamorous minerals, having immense socio-economic benefits would be fully utilised. The abundantly available gypsum deposits would be utilised for producing gypsum plaster to partially replace cement in housing sector. Reclamation of saline-sodic soils and treatment of low quality tube wells water through the application of gypsum would bring socio-economic impacts in rural areas, generate gainful employment and improve crop yield. 

Phosphate rocks of NWFP would be exploited to set up Phosphatic fertilizer industries, dimension stones, precious and semi precious stones industries along with the establishment of other mineral based industries to meet the increasing demand of various sectors of the economy. 

In the annual budget 2008-09, the federal government has earmarked Rs 221.9 million for minerals (non-fuel) sector. Major projects to be carried out during 2008-09 include: feasibility study gasification of Thar coal worth Rs 104 million, national coal policy worth Rs 22.7 million, exploration and evaluation of coal fields of Chamlang-Bala Dhaka, Bahlol and parts of Ghazi Basin in Balochistan worth Rs 10.9 million and establishment of project monitoring and evaluation cell worth Rs 18 million. 

Pakistan is blessed with rich and diversified mineral potential due to favourable geological environment. The government has been and is still nurturing environment to build the mineral sector as a potent factor in the national economy. The officials further said that potential of the country in this sector is widely recognised but the sector is not developed. The government made the development of the mining industry as priority sector in various five years plans, but none of these efforts were materialised. Adequate institutional, human, research and development and other relevant infrastructure have been established for improvement of this sector but they remain under-utilised.

Daily Times - Leading News Resource of Pakistan


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## ejaz007

*HUBCO to set up 225MW power plant *
Staff Report 

KARACHI: Hub Power Company Limited (HUBCO) will set a combined cycle power plant based on reciprocating engines technology with an investment of $300 million having ISO installed capacity of 225MW.

The company has received the government of Pakistans formal approval for setting up of this plant, HUBCO announced Monday.

Tariff structure for this new plant has recently been agreed with National Electric Power Regulatory Authority (NEPRA) and the letter of support has been received from the Private Power Infrastructure Board with finalization of all equipment supply and construction contracts. 

This plant is being set up in district Narowal Punjab and will start supplying electricity to national grid from end March 2010, thereby helping in reducing the acute power shortage in the country.

Javed Mahmood, Chief Executive Officer HUBCO said that the new investment by the company reflected the desire to be a part of the solution to the burgeoning energy crisis in Pakistan. We are fully committed to Pakistans development and progress and will continue to look at power projects even beyond this second plant in years to come, he added. 

At present, Hub Power plant consists of four generating units each giving 323Mega Watt gross output.

Daily Times - Leading News Resource of Pakistan


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## ejaz007

*Chichoki Mallian project: BNP Paribas, HSBC awarded contract *
*MUSHTAQ GHUMMAN *

ISLAMABAD (June 24 2008): The federal government has awarded financing mandate of 525 MW Chichoki Mallian thermal power project to a consortium of BNP Paribas and HSBC but arrangement for the rupee component was yet to be firmed, sources in PPIB told Business Recorder.

The contract to set up the 525 MW thermal power plant with an investment of $450 million at Chichoki Mallian (Sheikhupura) was awarded to Chinese company, Dongfang Electric Corporation (DEC) by the newly elected government on 30 March this year.

In view of the downgrading of Pakistan's credit risk and the fact that the second lowest bidder namely M/s Fortis Bank was not agreeable to meet the terms, the government has awarded the mandate to M/s BNP Paribas and HSBC on the following terms;

1) Coface component at fixed CIRR for 14.5 years

2) Sinosure component, preferably at Libor plus 87.5bp but with flexibility to accept 90bp above Libor as fall back position.

Sources said that Pakistan Electric Power Company (Pepco), currently headed by Fazal Ahmad Khan after the sacking of Munawar Baseer Ahmad, was in doubt if the Bank of Punjab was in a position to provide the rupee funds for the project. Some independent experts were of the view that the project cost agreed by the GoP could have been negotiated better. The DEC was already in the process of setting up thermal power plant of 450-500 MW at Nandipur (Gujranwala).

Former Prime Minister Shaukat Aziz had signed a memorandum of understanding (MoU) with the Qatar Investment Authority (QIA) and Alsthom-Marubeni to set up 450-500 MW thermal power plant at Chichoki Mallian, but it was terminated when the sponsors did not come up with the tariff petition.

The ECC, in its meeting on October 31, 2007, had directed the Ministry of Water and Power to issue a notice to the proposed sponsors, including Alsthom-Marubeni and the QIA, to come up with a deadline as to when they intend to file an application to the National Electric Power Regulatory Authority (Nepra) for tariff fixation and project completion to avoid any further delay.

The government of Pakistan had sent several letters to QIA for this purpose, but received no response despite the fact that gas allocation deadline of November 30, 2007, had passed.

The sources said that Marubeni had approached the Minister for Water and Power Raja Pervez Ashraf seeking his help to restore the agreement, but to no avail. An official told this scribe that the Chinese company would complete the project within the estimated cost of $330 million.

Business Recorder [Pakistan's First Financial Daily]


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## ejaz007

*India all set to sign IPI deal within weeks *

NEW DELHI (June 24 2008): India is all set to sign an agreement on a 7.5-billion-dollar gas pipeline with Iran and Pakistan in the coming weeks, as there are no signs of progress on its nuclear deal with the United States owing to domestic political opposition, media reports said on Monday.

In an interview with the NDTV network, India's Petroleum Minister Murli Deora said an agreement on the Iran-Pakistan-India (IPI) gas pipeline was likely within the next four to five weeks.

"There were some minor problems, which have been sorted out. Very soon, we should be able to sign the agreement with Iran and Pakistan," he told the news channel on the margins of the meeting of the world energy ministers in Jeddah. Deora, who held talks with his Iranian counterpart Gholam Hosein Nozari at the summit, said "some issues" on the pipeline with Pakistan were resolved.

The IPI project was first conceptualised by officials from India and Iran in 1989. The talks began in 1994, but were delayed by tensions between nuclear-armed neighbours India and Pakistan and later disagreements over the cost of gas.

The development comes against the backdrop of India's ruling United Progressive Alliance (UPA) coming under increasing pressure from its left-wing partners, who have warned of withdrawing support to the government if it went ahead with the civilian nuclear deal with the US.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Services trade deficit balloons by 43.48pc ​*
Tuesday, June 24, 2008

ISLAMABAD: Services trade deficit of the Pakistani economy during July-May 2007-08 stood at $6.098 billion depicting an increase of 43.48 per cent over the corresponding period of the last fiscal ($4.25 billion). 

During these 11 months, services imports (outflow) stood at $9.025 billion while its exports (inflow) were only $2.927 billion. Last year during the same period, imports were recorded at $7.583 billion and exports at $3.33 billion. 

Services exports during the period under review collapsed by 12.18 per cent and imports moved up by 19.02 per cent over the corresponding period of the last fiscal, the State Bank of Pakistan (SBP) reported. 

Due to mismatch of supply and demand in the countrys underdeveloped service sector and its opening-up to the outside world, the rising services deficit is set to pose a daunting challenge to the government. Given a comparatively backward service industry, it is impossible for Pakistan to reverse the trend and would not break even in service trade in the short term. The service trade, which covers major tertiary sectors such as transport, tourism, telecommunications, construction, insurance, financial services and royalties and licence fees all, were in deficit during this period under review. 

Trade experts have predicted that the service sector long-standing trade deficit may continue for the coming many years because the fledgling sector will lag behind overseas counterparts for that long. 

Pakistans soaring need for foreign transport, insurance and consultancy services as well as increased expenditure on financial services would also contribute to the expected hike in the deficit. Besides, other factors responsible huge services deficit included higher outflows on account of travel, insurance, construction services, computer and information services, royalties and licence fees. Besides, the countrys fast-expanding general trade deficit resulting from a robust growth in merchandises imports over the past decade, also disturbing for the governments trade experts. 

During the period under review, the country had to spend $3.324 billion on transportation account (i.e. charter of ships and aircrafts with crew, freight on commodity imports through sea and air, 8 per cent freight on cash import) whereas its earning under this head was only $961 million. Thus, the net deficit in the service account due to chartering of vessels for imports, exports shipment was $2.36 billion. 

Another factor responsible for big services account deficit was a net outflow of $1.205 billion on account of overseas traveling. 

The country had to spend $1.451 billion to finance personal and business-related traveling abroad of individuals and groups whereas it earned only $246 million under this account. The same applies on spending on insurance and royalties and licence fees paid to international organizations and their employees operating in Pakistan. 

During July-May 2007-08, inflows under construction services were $34 million, insurance $42 million, financial services $40 million, royalties and licences fees $46 million while outflows under these heads were $47 million, $135 million, $172 million and $111 million respectively. 

However, under the communication, computer and information services the scenario was a little encouraging. 

Under communication sector, outflows were $99 million and inflows $106 million; computer and information services inflows were recorded at $138 million and outflows at $119 million during the period under review. 

Services trade deficit balloons by 43.48pc


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## Neo

*Pak cement in high demand in South India ​* 
Tuesday, June 24, 2008

NEW DELHI: Low-priced and quality Pakistani cement is making way into South Indian markets where its demand is rising.

Media reports quoting an official of the Kerala Cement Dealers Association said a 50-kg Pakistani cement bag is available in Kochi at Rs250 as compared with local cement at Rs260 a bag. The quality of Pakistani cement is very good but the supplies are limited.

A few months back, about 1,000 tonnes of imported cement landed at Ernakulam at a price of Rs220 per bag when the domestic cement was costing around Rs250.

Ramaprasad, an importer in Chennai, said around 1,000 containers of cement were shipped to Chennai two months back and around 1,500 containers landed in Tuticorin. Each container had a capacity for 500 bags of cement weighing 50kg each. Ramaprasad further said the quality of Pakistani cement is very good but supply is limited. 

Pak cement in high demand in South India


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## Neo

*WTO success to boost Pakistans agribusiness ​* 
Tuesday, June 24, 2008

KARACHI: A breakthrough in World Trade Organisation (WTO) talks will help Pakistan increase agricultural output as investment diverts from subsidised to competitive farm economies, Mujeeb Ahmed Khan, the Countrys Head of WTO Cell told The News on Monday.

WTO negotiations on free trade have not moved forward as the United States is reluctant to reduce huge subsidies it gives to farmers and the European Union delays measures to open up their markets.

When these subsidies go down, farmers and investors will rush to competitive countries like Pakistan, he said, explaining that food shortages in rich countries have already made them conscious.

He said member nations of the Gulf Cooperation Council (GCC) have realised that they cannot rely on food imports from the US and Australia. Now they know they have to rely on developing countries.

Saudi Arabia, the UAE, Qatar and Bahrain have already started securing large tracts of arable land in other countries including Pakistan. A few weeks back during a visit to Saudi Arabia, Prime Minister Yousuf Raza Gilani has reported to have pledged land to investors.

Despite historically being an agricultural economy, Pakistans production of food staples has not increased and the country often imports grain.However, while the oil-rich governments only intend to feed their own people, there is a market of millions of hungry people here, which provides opportunity to big food companies to make quick money as world food prices soar.

Some progressive farmers also view entry of large corporations into agriculture as good for the countrys food output. Yields are stagnant because there is no capital in the rural economy, Hamid Malhi, a director at Farmers Associates of Pakistan (FAP) had told The News in an interview in May. Right now a farmer is growing to meet his own needs. If he has money, he will create surplus.

He said after terrorist attack on United States, there was a lot of optimism that Gulf money will find its way into Pakistani agriculture. But nothing happened because there was no one to push forward that idea.Now, he said, the global food crisis has made investment in agriculture so attractive that it will do even without any policy. SH

WTO success to boost Pakistans agribusiness


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## Neo

*Rice exports rise by 32.96pc in May ​* 
Tuesday, June 24, 2008

ISLAMABAD: Rice exports from Pakistan in May witnessed an upward trend as the quantity increased by 32.96 per cent when compared with the exports in April. 

Pakistan exported 627.107 metric tonnes of rice costing $299.9 million in May as compared with exports of 471.631 metric tonnes costing $ 228.8 millions during April of the current financial year, according to the Federal Bureau of Statistics.

The rice exports during the month under review witnessed an increase of 131.33 per cent when compared with the same month of the previous financial year, which were recorded at 271,084 metric tonnes costing $103.8 million.

Rice exports include 209,064 metric tonnes of basmati costing $145.3 million. The basmati exports witnessed a 45.88 per cent increase when compared with the export quantity of 143,311 metric tonnes during the month of April.

As compared with the same month of the financial year 2006-07, the basmati exports witnessed an increase of 163.36 per cent increase by growing up from 79,382 metric tonnes in May 2007 to 209,064 during the month under review.

The export of other varieties of rice increased from 328,302 metric tonnes in April to 418,040 metric tones in the month under review. When compared with the same month of the last financial year, the exports of other rice varieties increased by 194 per cent. 

Rice exports rise by 32.96pc in May


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## Neo

*PM hints at documenting black economy​*
ISLAMABAD, June 23: Prime Minister Yousuf Raza Gilani will launch a massive scheme to document black economy by appealing to the nation for voluntarily declaring untaxed assets.

The move, likely to come at the concluding budget session of the National Assembly, is aimed at documenting the black economy and will be part of an investment tax scheme that allows taxpayers to disclose their undeclared businesses, capital and assets by paying just two per cent of their market value.

A well-placed source told Dawn on Monday that the prime minister would urge parliamentarians to persuade voters to make the scheme a success for widening the narrow tax base.

Under the scheme, people who declare their assets would not have any fear of investigation into their tax affairs for the past provided they declare their assets at a nominal tax rate of two per cent and file their income tax returns for that year and three consecutive years.

Only 2.2 million taxpayers in a population of 160 million represents the lowest ratio in the region and tax-to-GDP ratio has remained static at about 11 per cent for the past many years, added the source.

A tax arrears settlement incentive scheme (TASIS) has also been introduced for tax defaulters to broaden the tax net. Tax defaulters will be allowed to pay the principal amount of due tax.

The additional tax, which can be 100pc of the principal amount, would not be charged and penalties levied for non-payment would be withdrawn. An amnesty scheme has been introduced where unregistered manufacturers and retailers have been offered amnesty from paying past liabilities if they voluntarily register between June 11 to July 31.

According to amendments made in the finance bill by National Assembly, sales tax exemption has been granted to hospitals owned by federal or provincial governments, hospitals of statutory teaching universities having 200 or more beds and charitable hospitals having 50 or more beds.

The services of property developers and promoters have been subjected to federal excise duty. The development of plots shall be subject to excise duty at Rs100 per square yard and construction of residential and commercial units shall be subject to excise duty at the rate of Rs50 per square foot of the covered area.

Amendments pertaining to customs include the reduction of import duty on sulphonic acid from 15pc to 10pc. Earlier, fixed tax was imposed on builders and developers. Now this tax has been withdrawn as income tax and the federal excise duty on services of property developers and builders has been levied.

Under income tax, through an amendment the urban area for the purpose of capital value tax has been restricted to rating areas only and the prescribed limits for its calculation have been withdrawn.

PM hints at documenting black economy -DAWN - Top Stories; June 24, 2008


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## Neo

*Pakistans exports face greater barriers: WB​*
ISLAMABAD, June 23: Pakistans exports face much greater barriers than other South Asian economies because of a less favourable governance environment and a weak control on corruption, says the World Bank.

In its latest report World Trade Indicators 2008, the bank also said that although Pakistan began liberalising its trade regime as part of the Comprehensive Economic Revival Programme launched in 1999 and its tariff rates have fallen dramatically since then, the latest Trade and Tariff Restrictiveness Index (TTRI) suggests that the trade regime remains relatively protectionist as is common for most South Asian countries.

The 2007 MFN-applied simple average tariff (14.1 per cent) is comparable to the regional average (14.4 per cent), but the import weighted (15.3 per cent) tariff average is higher than the regional mean (12.9 per cent), with both indicators above the low income country group averages.

Moreover, only 2.5 per cent of Pakistani imports in 2000-05 were MFN duty free, much less than regional and income group comparators.

Unlike most other South Asian countries, almost all (98.7 per cent) of Pakistans tariffs were bound. A number of Pakistans service industries, including the financial and telecommunications services, have been successfully liberalised. However, its low overall GATS commitment index suggests an ample room for greater multilateral commitment to services liberalisation.

Market Access TTRI (including preferences) ranked near the worst at 117th (out of 125). Its MFN duty-free exports accounted for about 14 per cent of all exports in 2006, lower than the South Asian average of 26.4 per cent, but almost twice its own 2000-04 average.

Pakistan is a Generalised System of Preferences (GSP) beneficiary with a number of industrialised countries and a signatory to the Trade and Investment Framework Agreement (TIFA) with the United States. Its utilisation rate of EU and US preferences is a moderately high 74 per cent, but the value of such preferences is a very low: one per cent of bilateral exports.

Regionally, Pakistan is member of the Economic Cooperation Organisation (ECO), the South Asian Association for Regional Cooperation, and the South Asian Preferential Trade Arrangement (SAPTA), although the countrys difficult political relationship with India undermines their bilateral trade.

After an appreciation of 3.2 per cent in 2005-06, Pakistans currency with the rupee depreciated only slightly by 1.1 per cent in 2007 on a real trade weighted basis.

The bank also said that Pakistans Doing Business rank is a relatively high 76th (out of 178), despite a low rank on the subcategory Enforcing Contracts (154th).

Surpassing the regional and low-income group averages on nearly all aspects of trade facilitation, it ranked 68th (out of 150) on the 2006 Logistics Performance Index. Here its weakest indicators were quality of transport and information technology (IT) infrastructures and efficiency of customs and other border procedures.

With relatively short processing times and low per container export costs, the country is ranked also 94th (out of 178) on the Doing Business Trading Across Borders subcategory, a worse standing from the previous years rank of 81, partially attributable to an increase in average import costs by $165 per container.

Pakistans estimated real growth in trade was a low 0.9 per cent in 2007. This follows high growth rates of 18.5 per cent in 2005-06, and moderately high rate of 6.9 per cent in the early 2000s.

The impressive growth rates in 2005-06 were mostly driven by expanding imports, which grew by 29.6 per cent. Even with this substantial increase in total trade in recent years, Pakistans trade share in the GDP which was about 42 per cent in 2007 is lower than the regional and about half the low-income group mean integration ratio. The services share in total exports is a low 17.2 per cent, with transport being the most important service export.

Pakistans main merchandise exports were textiles products, such as linen, cotton and various fabrics. Its export concentration is lower than the average South Asian or low- income country. Its main destination markets are the US, the United Arab Emirates, Afghanistan, the United Kingdom, and China.

Its imports, which include petroleum, machinery, plastics and transportation equipment, are obtained from a wide range of countries, including China, Saudi Arabia, United Arab Emirates, Japan and the United States. Foreign direct investment (FDI) inflows as a share of the GDP were relatively high (3.4 per cent) in 2007, attracted in part by privatisation of some key state-owned industries.

Pakistans exports face greater barriers: WB -DAWN - Business; June 24, 2008


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## Neo

*Chichoki Mallian project: BNP Paribas, HSBC awarded contract ​* 
ISLAMABAD (June 24 2008): The federal government has awarded financing mandate of 525 MW Chichoki Mallian thermal power project to a consortium of BNP Paribas and HSBC but arrangement for the rupee component was yet to be firmed, sources in PPIB told Business Recorder.

The contract to set up the 525 MW thermal power plant with an investment of $450 million at Chichoki Mallian (Sheikhupura) was awarded to Chinese company, Dongfang Electric Corporation (DEC) by the newly elected government on 30 March this year.

In view of the downgrading of Pakistan's credit risk and the fact that the second lowest bidder namely M/s Fortis Bank was not agreeable to meet the terms, the government has awarded the mandate to M/s BNP Paribas and HSBC on the following terms;

1) Coface component at fixed CIRR for 14.5 years

2) Sinosure component, preferably at Libor plus 87.5bp but with flexibility to accept 90bp above Libor as fall back position.

Sources said that Pakistan Electric Power Company (Pepco), currently headed by Fazal Ahmad Khan after the sacking of Munawar Baseer Ahmad, was in doubt if the Bank of Punjab was in a position to provide the rupee funds for the project. Some independent experts were of the view that the project cost agreed by the GoP could have been negotiated better. The DEC was already in the process of setting up thermal power plant of 450-500 MW at Nandipur (Gujranwala).

Former Prime Minister Shaukat Aziz had signed a memorandum of understanding (MoU) with the Qatar Investment Authority (QIA) and Alsthom-Marubeni to set up 450-500 MW thermal power plant at Chichoki Mallian, but it was terminated when the sponsors did not come up with the tariff petition.

The ECC, in its meeting on October 31, 2007, had directed the Ministry of Water and Power to issue a notice to the proposed sponsors, including Alsthom-Marubeni and the QIA, to come up with a deadline as to when they intend to file an application to the National Electric Power Regulatory Authority (Nepra) for tariff fixation and project completion to avoid any further delay.

The government of Pakistan had sent several letters to QIA for this purpose, but received no response despite the fact that gas allocation deadline of November 30, 2007, had passed.

The sources said that Marubeni had approached the Minister for Water and Power Raja Pervez Ashraf seeking his help to restore the agreement, but to no avail. An official told this scribe that the Chinese company would complete the project within the estimated cost of $330 million.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Seedless kinnows export : Pakistan trying to meet European countries demand ​*
KARACHI: Pakistani exporters are working on a plan to export seedless kinnow to European countries to meet their demand by 2011, said chairman Fruit and Vegetable Processors and Exporters Association (FVPEA) Monday.

Pakistan is looking forward to produce citrus having 4-6 seeds each as compared to 20 to 25 seeds, which is the main Europeans demand.

Europeans say seeds cause stomach disorder, Pakistani exporters said. "Every seed of kinnow has a specific chemical material that some times disturb stomach," said Mateen Siddiqui, chairman FVPEA.

The production of seedless kinnows was the result of the public-private partnership by Nuclear Institute for Agriculture and Biology (NIAB), Citrus Research Institute of Government of Punjab and Sunder Agricultural and Fruit Farm.

He said Pakistani kinnow was not given much importance in European countries due to containing around 20 to 25 seeds each piece.

Mr Siddiqui said this seedless kinnow would be able to compete in the international market.

He said these kinnows would not be hazardous for the human health in any way as the methods used for its production include natural selection as well as the genetic manipulation. 

The European countries mostly import citrus from USA, New Zealand and some of Arab states besides Spain and Morocco. 

He said, "If we move professionally and meet quarantine requirements, we can grab the market volumes as we are already meeting the Iranian Plant Protection Organisation requirements of conforming the installation of data loggers in the cold storages. 

He said there was need for conducting joint experiments to test fruit flies sterilization at 50C for 14 consecutive days in order to get certified by Department of Plant Protection, Ministry of Food, Agriculture and Livestock.

An official of Ministry of Food, Agriculture and Livestock (MINFAL) said Pakistan produces 95 percent of total world kinnow production. It is the sixth largest producer of Kinnow (mandarin) and oranges in the world, with 2.3 million tonnes. It is being estimated that the country may have a record export of 250,000 tonnes of kinnows this year. 

The plants of seedless kinnows are produced through tissue culture and the government has sold 110,000 million saplings to the growers so far. Almost 400-450 saplings of seedless kinnows were being sold every day to the growers. 

He said a plant of seedless kinnow costs Rs 100 against Rs 20 for the one with seed, he added.

World citrus exports are valued $2.125 billion in which Pakistan's share was $31 million that was around 2.5 percent. This is due to export of citrus to low priced countries.

Secretary Agriculture Marketing, Punjab, stakeholders of Sargodha region Malik Imtiaz Ahmed, Shamoon Sadiq, chief executive officer and Muhammad Iqbal, chief operating officer, PHDEB and Haji Muhammad Azam, president, Kinnow Processors and Exporters Association Bhalwal expressed hope that country would succeed in increasing kinnow export by virtue of seedless fruit.

Daily Times - Leading News Resource of Pakistan


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## Neo

Tuesday, June 24, 2008 

*Progress on FTA with Pakistan has been fast​*
BEIJING: Noting the Free Trade Area (FTA) is an agreement between nations to eliminate or reduce tariffs and quotas on most goods traded between them, the Chinese media said that the progress on the FTA with Pakistan has been fast.

In April 2005, when Premier Wen Jiabao visited Pakistan, the two sides said they would start FTA negotiations. A little over a year later, the China-Pakistan commodity trade agreement was signed, the English language China Daily reported Monday.

China is now involved in more than 10 FTA negotiations with 29 countries and regions from around the world, including the Asia-Pacific region, Latin America, Europe, Africa and Oceania. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Australian company to invest $1bn in mining​*
ISALAMABAD: The worlds largest copper and gold producing Australian company, with an investment of $1 billion, will launch a mega project Reko Dik Copper-gold near Saindak in Balochistan by 2010.

The project would help the government to produce 0.3 million tonnes of copper annually, thus bringing the country for the first time on the list of major copper producing countries of the world. Senior officials told Daily Times here Monday that in the same vein, Duddar lead-zinc deposits in Balochistan are being developed and expected to commence production by end 2008. The expected production from these deposits is 100,000 tonnes of zinc concentrates and 33,000 tonnes of lead concentrates, the export of which will bring precious foreign exchange. 

Officials in the Ministry of Petroleum and Natural resources further informed that development of Thar coal field in Sindh, containing 175 billion tonnes of coal, which are of best quality lignite deposits in the world, on completion would be used for power generation and gasification. Similarly all the non-glamorous minerals, having immense socio-economic benefits would be fully utilised. The abundantly available gypsum deposits would be utilised for producing gypsum plaster to partially replace cement in housing sector. Reclamation of saline-sodic soils and treatment of low quality tube wells water through the application of gypsum would bring socio-economic impacts in rural areas, generate gainful employment and improve crop yield. 

Phosphate rocks of NWFP would be exploited to set up Phosphatic fertilizer industries, dimension stones, precious and semi precious stones industries along with the establishment of other mineral based industries to meet the increasing demand of various sectors of the economy. 

In the annual budget 2008-09, the federal government has earmarked Rs 221.9 million for minerals (non-fuel) sector. Major projects to be carried out during 2008-09 include: feasibility study gasification of Thar coal worth Rs 104 million, national coal policy worth Rs 22.7 million, exploration and evaluation of coal fields of Chamlang-Bala Dhaka, Bahlol and parts of Ghazi Basin in Balochistan worth Rs 10.9 million and establishment of project monitoring and evaluation cell worth Rs 18 million. 

Pakistan is blessed with rich and diversified mineral potential due to favourable geological environment. The government has been and is still nurturing environment to build the mineral sector as a potent factor in the national economy. The officials further said that potential of the country in this sector is widely recognised but the sector is not developed. The government made the development of the mining industry as priority sector in various five years plans, but none of these efforts were materialised. Adequate institutional, human, research and development and other relevant infrastructure have been established for improvement of this sector but they remain under-utilised.

Daily Times - Leading News Resource of Pakistan


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## ejaz007

*Makro Cash and Carry to invest $300m in Pakistan*

ISLAMABAD: A team of leading local and international investors held separate meetings with the Prime Minister, Syed Yousaf Raza Gillani and showed keen interest in furthering their investments in Pakistan.

Makro Cash and Carry would invest $300 million for setting up of 30 more retail outlets in Pakistan. Mr Farhad Zulfiqar, Executive Chairman, Makro Habib Pakistan told the Prime Minister that Makro Cash and Carry has 172 stores worldwide in five countries of Asia and four countries of South America and has an annual turnover exceeding four billion Euros. staff report

Daily Times - Leading News Resource of Pakistan


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## ejaz007

*All subsidies to be scrapped by years end: Ahmed Mukhtar*

ISLAMABAD: All the subsidies provided by the government on various items would be scrapped by the end of the year, Minister for Commerce, Chaudhry Ahmed Mukhtar, informed the National Assembly Tuesday.

Speaking on a Calling Attention Notice in the National Assembly, he said, subsidies on gas and electricity are gradually being removed and the people will have to learn to live without subsidies. and added, government does not have surplus funds for the energy sector. 

He expressed concern over import of raw material in the country and said over one billion dollars were spent on the import of cotton. He said reduction in the import of food items which are available in the country, will have a positive impact on the economy. He said that the imposition of 35 percent margin on Letter of Credit (LC) for raw materials is to curb or make difficult the import of food items readily available in Pakistan, as the government cannot completely ban them under the WTO regime. staff report 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Governance has deteriorated in Pakistan: World Bank report ​* 
Wednesday, June 25, 2008

LAHORE: The rhetoric of the previous regime about good governance has been exposed by the World Bank report Governance Matters VII that states that governance in Pakistan deteriorated to the lowest ebb in 2007 than a decade ago.

Latest governance indicators, evaluated by the World Bank for all its member countries, include voice and accountability, political stability and absence of violence/terrorism, government effectiveness, regulatory quality, rule of law and control of corruption. On almost all counts, the governance was better in 1998 than in 2007. In fact, Pakistans governance level was much lower than India and China and in some cases even below Bangladesh.

It has been separately proved by a World Bank research that better governance ensures better economic growth. Each of these governance indicators is evaluated on a scale of plus and minus 2.5. Positive 2.5 indicates highest level of governance and negative 2.5 represents lowest level of governance.

Pakistan falls in the negative zone in all the above governance indicators that call for massive reforms in all spheres of life. However, in 1998 its score was -1.33 that increased to the extreme of -2.44 in 2007. In the African state of Rwanda, the governance level improved from -2.15 in 1998 to -0.19 in 2007. Even in China that is accused of human rights violations, the score was -1.70 while India with a score of -0.38 and Bangladesh -0.63 performed much better.

The voice and accountability indicator measures the extent to which a countrys citizens are able to participate in selecting their government, as well as freedom of expression, freedom of association and free media. This freedom was never ideal in Pakistan. The voice and accountability score was relatively better at -0.74 in 1998 but it deteriorated to -1.05 in 2007.

India with a score of -0.38 is the best in the region while China with -1.70 is the worst. Bangladeshs score on this count was -0.63 that is 40 per cent better than Pakistan.

Pakistan scored the worst on the political stability and absence of violence indicator that measures perceptions of the likelihood that the government will be destabilised or overthrown by unconstitutional or violent means, including politically-motivated violence and terrorism. The political stability in Pakistan has never been ideal. In 1998, its score was -1.33 that increased to -2.44 in 2007. Even a country like Rwanda has improved its standing on this count from -2.15 in 1998 to -0.19 in 2007. China with a score of 0.33 is the most politically stable country in the region followed by India with -1.01 and Bangladesh -1.44.

The government effectiveness indicator measures perceptions of the quality of public services, the quality of civil service and the degree of its independence from political pressures, the quality of policy formulation and implementation and the credibility of the governments commitment to such policies. Pakistans score improved marginally on this count from -0.66 to -0.62 in 2007.

India with -0.03 was the best and Bangladesh with -0.81 is the worst country on this count. Chinas score of -0.15 is good from the regional perspective.

On regulatory quality, which measures perceptions of the ability of the government to formulate and implement sound policies and regulations that permit and promote private sector development, Pakistans performance deteriorated from -0.47 in 1998 to -0.56 in 2007. India, China and Bangladesh scored -0.22, -0.24 and -0.86 respectively.

Rule of law is the indicator that measures perceptions of the extent to which agents have confidence in and abide by the rules of society, and in particular the quality of contract enforcement, property rights, the police, and the courts, as well as the likelihood of crime and violence. Pakistans performance worsened from a score of -0.79 in 1998 to -0.96 in 2007. India has a far better score of -0.10, while China -0.45 and Bangladesh -0.81 have better governance in this regard.

The control of corruption indicator measures perceptions of the extent to which public power is exercised for private gain, including both petty and grand forms of corruption, as well as capture of the state by the elite and private interests. Bangladesh scored -1.05, China -0.66, India -0.39 and Pakistan -0.83, a slight improvement from -0.89 in 1998.

Governance has deteriorated in Pakistan: World Bank report


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## Neo

*KSE breaks all previous records in one day​*
** Stocks gain historic high on revision in lower, upper limits and ban on short-selling​*
KARACHI: Karachi stock market has broken all its previous records of single day gain when benchmark KSE-100 index rallied by 960 points Tuesday.

After losing 4,500 points in two months due to number of issues, KSE-100 index bounced back strongly on the back of what the market players and analysts pointed out the ban on short selling and revision in lower and upper circuits measures taken Monday by apex regulator. The KSE-100 index closed on 12,122 points level compared to 11,162 points level in the last session, registering 8.60 percent increase.

The previous single day gain was witnessed on January 3, 2008 when 100 index moved by 643 points following crash of the market in the aftermath of Benazir Bhutto assassination on December 27 last year. Though the recovery of the market and highest single day gain is termed a positive development following strong negative sentiment in the last two months, however eyebrows have been raised on the way the market reacted to this latest regulator.

The buying euphoria doesnt seem to be genuine one. The way market recovered appears to be manipulated, analysts believed.

They pointed out that stock market players were referring the decline in the market to political uncertainty and deteriorating economic scenario. The situation on these fronts is same and has even worsened with the disqualification of Nawaz Sharif for election by the court, they noted adding that it seems there is something suspicious behind all this game.

It is now distorted market where there is no concept of free trading. It has been regulated through revision of lower and upper circuit breakers thus making it a buying market and leaving little option for selling, one analyst said adding that such things are not practiced in those markets, which move on fundamentals. He said latest measures were seemed to be taken to pull the big funds and big investors out from the trap they have fallen in the last crash.

However, Dawood Jan Mohammad, director Karachi Stock Exchange (KSE) strongly contended the argument that there was any kind of manipulation to take the stocks to new heights. If the people were talking about enhancing the upper circuit limit, he pointed out then there was no bar to exit the market. 

He also attributed the strong buying across the board to ban on short selling which caused heavy damage to the market in the recent times and predicted further improvement in the coming sessions.

Analysts said it remained to be seen whether market could sustain this bullish trend in the present scenario of growing political instability and deepening economic woes. 

They cautioned retail investors should be careful to enter the market at this particular time and wait for some time to see whether this buying trend was genuine or manipulated for the advantage of few bigwigs.

They said trading volumes were not matching with the massive buying in Tuesdays session which improved not heavily as it stood at 183 million shares compared to 154 million shares in the last session.

Daily Times - Leading News Resource of Pakistan


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## Neo

*$150m democracy dividend for Pakistan​*
** Amount will be in addition to allocations Pakistan will receive under budget for 2009​*
WASHINGTON: Pakistan was cleared by the United States House of Representatives on Tuesday to receive a democracy dividend of $150 million from the war supplemental budget for 2008-2009.

This amount will be in addition to allocations Pakistan is to receive under the regular budget for 2009 for which a total of $901 million has been requested by the administration.

The measure has already been approved by the Senate and it only now remains to send it for the presidents signatures. 

Both Senator Joseph Biden and Senator Richard Lugar had proposed that Pakistan be given a democracy dividend to mark its return to civilian rule. As part of the war supplemental budget, the House also approved $455 million for Afghanistan to help the country reinstate its economic infrastructure.

Daily Times - Leading News Resource of Pakistan


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## Neo

*US releases $523m in aid​*
WASHINGTON, June 24: The United States has released and approved more than $523 million to Pakistan over the past two days, doing away with the impression that Washington may bring financial restrictions on Islamabad to spur it to do more in the war against terror.

The US House of Representatives approved $150 million of economic assistance to Pakistan on Tuesday, which is additional to the aid Pakistan gets under a $3 billion package signed during President Pervez Musharrafs visit to Camp David in 2003.On Monday, the United States transferred $373.841 million to Pakistan from the coalition support fund. The fund is used for reimbursing Pakistan for the expenses it incurs during anti-terrorism operations along the Afghan border.

We are still looking forward to a long-term commitment from the United States, manifested in a democracy dividend of at least $1.5 billion a year as proposed by two of the wisest senators of the US, Biden and Lugar, said Ambassador Husain Haqqani while commenting on the release of US funds to Pakistan.

All disagreements between Pakistan and the US will be resolved. And we will not let anything come between our visions of a strategic partnership between the two democracies, he said.

The release of $373 million from the coalition support fund clears dues up to November 2007. Pakistan is still to be reimbursed for November 2007 to March 2008 while Islamabad has not yet submitted bills for the March-May period.

Pakistan receives between $80 to 90 million a month from the coalition support fund. But recently, the reimbursements faced severe criticism from US lawmakers who claimed that Pakistan was using this money to buy weapons that can only be used in a conventional war against India and not for fighting insurgents.

Islamabad countered the argument by saying that reimbursement is not aid and Pakistan is free to use this money for whatever it wants to purchase.

The US administration initially accepted Pakistans argument but later tightened the reimbursement procedure following claims in the US Congress that Islamabad was inflating its expenses.

The US administration remains divided on this issue.

US releases $523m in aid -DAWN - Top Stories; June 25, 2008


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## Neo

*PC says privatisation to yield Rs122bn ​* 
Wednesday, June 25, 2008

ISLAMABAD: The Privatisation Commission on Tuesday categorically rejected the notion of cutting privatisation proceeds in the next fiscal year and claimed that in the year 2008-09, most of the entities would be privatised, which is expected to realise sale proceeds of about Rs122 billion.

There is no plan to cut privatisation proceeds in the year 2008-09, a Privatisation Commission spokesman said while referring to a news item which stated that privatisation proceeds target has been cut by 98 per cent.

The preparatory work done during the current financial year will help the Privatisation Commission to privatise most of the entities during the next fiscal year (2008-09), which is expected to realise sale proceeds of Rs122 billion approximately.

The PC spokesman said that for FY 2007-08, privatisation proceeds target of Rs75 billion was envisaged considering the privatisation of HBL GDR, OGDCL GDR, KAPCO GDR, PTCL half yearly installments, strategic sale of PSO, SME Bank, Coal & Salt Mines projects and some other industrial units. Against this target, the Privatisation Commission has been able to achieve privatisation proceeds amounting to Rs27 billion so far, he stated.

He pointed out that the estimates of proceeds on account of privatisation are subject to favourable geopolitical and enabling environment, market appetite and investors interests. While the Privatisation Commission has been actively working on all of the above-mentioned transactions, major transactions could not be finalised due to national and international factors, he said.

In case of entities directly owned by the Federal government, the sale proceeds realised by the PC are transferred to the Ministry of Finance, while certain proceeds are transferred to other entities whose shares are sold and who are entitled to such proceeds, he added. The proceeds received by such entities are subsequently transferred to the Government of Pakistan in the shape of dividends/profits, the spokesman concluded.

PC says privatisation to yield Rs122bn


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## Neo

*Power plant import: long-term financing allowed ​* 
KARACHI (June 25 2008): The State Bank of Pakistan (SBP) has allowed import of power plant and machinery under 'Long Term Financing Facility (LTFF). This step has been taken on the request of exporters and industrialists to meet their power requirements due to continuing power shortage across the country.

The SBP, with reference to LTFF Scheme MFD Circular No 07 dated December 31, 2007, has advised that from July 1, 2008 financing for import of generators and captive power plants, to be used in the eligible sectors and sub-sectors as per list given in Schedule 1 of LTFF Scheme, will also be admissible under the Scheme.

This move of SBP would help industrialists and exporters to get their own power plants and machinery under soft loan scheme, as presently country is facing huge shortage of power.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Government considering pledging Tarbela machinery ​* 
ISLAMABAD (June 25 2008): The government is considering pledging Tarbela dam's machinery to generate approximately $8.25 billion for Diamir-Bhasha dam as finances from external sources, particularly from international financial institutions, do not seem to be forthcoming for the purpose, official sources told Business Recorder here on Tuesday.

Representatives from Pakistan and India, sitting on the Board of Directors of the World Bank and Asian Development Bank (ADB), have dealt with interventions in the disputed territory of indian held Kashmir by expressing strong reservations about extending any assistance to this area. The exception was in 2004 when ADB Board of Directors approved two loans-one for the Indian held Kashmir and the other in AJK.

Sources said that despite promises by ADB Director General in 2006 that assistance would be considered for five dams proposed by Pakistan government, including Diamer-Bhasha, no assistance is expected.

The World Bank and ADB had declined to extend financing for 969 mw Neelum-Jhehlum hydropower project, being set up in Azad Kashmir. However, the government successfully raised $1.2 billion from different sources, including 10-paisa project-specific tariff increase.

"As the WB and ADB did not agree to finance Diamir-Basha Dam, we are considering hedging turbines of Tarbela Dam to arrange funds from other international financial institutions," sources said. They said that detailed engineering design and tender documents of the project would be ready within a couple of weeks after which it would be ready for international tendering.

The Cabinet in April took a decision that fresh approval for small and large dams must be sought from the Prime Minister, which has not been taken so far. They said that the issue of compensation for the displaced population of Diamir-Bhasha dam was creating some misunderstanding among the possible donors as they have expressed reservations about financing the project.

Sources said that if all things went as planned, construction work on the 4,500 mw Diamer-Bhasha Dam would commence in June next year. Likewise, Kohala Hydropower Project (1,200 mw) and Bunji Hydropower Project (5,400 mw) are expected to start in 2010 and 2011, respectively.

The cost of Diamer-Bhahsa dam with storage capacity of 6.34 million acre-feet (MAF) with power generation capacity of 4,500 mw, has increased from $6.5 billion to $8.52 billion because of the revision of seismic design, displacement of axis by one kilometre required for the foundation of the dam, and strengthening of the weathered rock of the dam.

Another official said that 35 MAF water is wasted every year, equivalent to the capacity of six Bhasha dams, despite the fact that the country is currently facing a 9 MAF shortage which would grow to 15-20 MAF by 2020. It is pertinent to mention here that the present government has scrapped one of the most controversial dams of all times, namely Kala Bagh dam.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Zong continues its rapid network expansion ​*
ISLAMABAD (June 25 2008): Zong, the first international brand of China Mobile continued its rapid network expansion in the country by launching its services covering the cities of Gilgit, Hunza, Skardu, Besharn and Sust. The expansion is part of the company's chalked out plans to have the largest network coverage in the country.

Mir Ghazanfar Ali Khan, Chief Executive Northern Areas Legislative Assembly was the chief guest at the launching ceremony held in Gilgit. Also present on the occasion were senior Zong management officials, members of the media and the civil society.

Zong is rapidly expanding its coverage in Pakistan, with an aim to offer seamless connectivity throughout the country. It has added over 2000 sites since its launch and the network cell sites have grown from about 900 to over 3000 today. By the end of 2009, just two years from the start, the cell sites are targeted to grow to over 10,000.

"We believe Zong will have a clear edge over the competition in the Northern Areas especially, as China Mobile has huge experience of network operation in similar high mountainous areas in China itself," stated Zafar Usmani, the COO of CMPak Ltd. The region now being covered by Zong borders with China, with the Karakoram Highway (old Silk Route) playing a vital role in freight transportation. ZONG is also working towards ensuring the Highway's coverage.

Salman Wassay, the Marketing Director of CMPak Ltd stated that Zong is offering several promotions, services and packages to cater to different needs of a varied customer base. He said, "We have done considerable research In to customer needs and the Zong packages announced on Tuesday are based on these needs. For the first time users will get what they want, rather than being made offers that suit operational needs more than user needs."-PR

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*KSE rebounds with curbs on short selling ​*
EDITORIAL (June 25 2008): The Securities and Exchange Commission of Pakistan and the Karachi Stock Exchange, on Monday, took some emergency measures to avert the systemic risk in the wake of persistent fall in the market. Plus-minus five percent circuit breakers were changed to one and 10 percent for lower and upper single day movement in a share.

Short selling in deliverable futures has been banned. And, bank guarantees from 'A' rated banks have been allowed as margin in place of cash and securities. The SECP Chairman said these temporary measures are aimed to stabilise the market while protecting the existing risk management system of the exchange.

The acceptance of bank guarantees as margins, fulfils a long pending demand from the market players. It not only reduces the cost of doing business, but also enhances the liquidity (which is tight at the moment) and potential of participants to undertake more business.

Deliverable Futures Contract is a derivative product. It is a tool for arbitrageurs, hedgers and speculators. Prohibiting short selling in futures contract takes away a basic feature of the product. Therefore, this ban at best can operate only for a few days.

The cash as well as index futures systems are yet to take off. Is this due to supply side shortage on account of a ban on institutional participation? Or is it due to the opportunity for earning easy money through CFS, by institutions, the real reason for their failure? SECP and the Mutual Funds Association need to address this issue.

The SECP has restricted guarantees issuance to 'A' and higher rated banks. This may be in consonance with the eligibility of banks for participation in CFS Mark II system (beginning next month). The scope needs to be enlarged to include all scheduled banks.

After all, since the State Bank of Pakistan stands behind these institutions as the lender of last resort. Removal of this restriction would provide market participants greater opportunity and also escape monopoly of big brokerage houses and big banks.

Market players used to complain that the lock mechanism was not providing them an opportunity to exit. Well, they had an opportunity to do so on Tuesday. Where did all the sellers vanish? Why was every one a buyer yesterday? How come, no one availed of the exit opportunity? Something, indeed is not right!

Big brokers and KSE Directors had promised that the KSE Index would go back to the 15,000 level if the present capital gains tax free regime is extended for two more years. The PPP co-chairman, Asif Ali Zardari, despite opposition from both Finance Minister Syed Naveed Qamar and the Economic Advisory Council led by Shaukat Tarin, obliged the directors. But then the index after recovering for a day or two continued to drop.

Obviously, the ongoing political turmoil, the tightening of monetary policy, the persistent macro-economic imbalances and governance issues to check an economic down-slide weighed on the market. The fall of regional markets due to the food and oil (upward) price pressures showed KSE's fall was not exceptional.

But lately the value of a number of blue chip stocks on KSE dipped to low levels. There was no apparent logical reason for institutional investors, mutual funds or overseas fund managers to remain on the sidelines and not buy on such attractive prices.

Tuesday's market behaviour only reinforces the belief that these savvy investors were apprehending manipulation to push the market down. Who was doing it and for whose benefit needs to be probed. The decision to allow bank guarantees as margin will help in generating liquidity for the market.

Let us hope that this additional liquidity stays in the country and does not flow out for more real estate investment in UAE. Political stability and growing economic opportunities will bring the money back. If it happened after 9/11, it can happen again. But conditions to absorb this inflow must be there.

The SECP needs to lower the financial limit for Real Estate Investment Trust (REIT). The affection, respect and love the rich Pakistanis receive within the country are not available anywhere else, not even across the Gulf.

The opportunity provided in the budget to bring assets from grey to the tax economy by paying 2 percent tax is not a sufficient inducement. The return earned on investment in agriculture, industry and infrastructure projects needs to be more than the existing return potential provided in the tax evaded sector.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Poor governance and corruption ​*
EDITORIAL (June 25 2008): The World Bank report titled World Bank Indicators 2008 states that Pakistani exports face a much greater challenge than those of other South Asian countries mainly because of less favourable governance environment and weak control on corruption.

There is little doubt that in spite of tall claims made by the Musharraf government during the last eight years, which were supported by the annual reports of the National Accountability Bureau, the perception that accountability was restricted to members of the political opposition was never dispelled.

And ironically this limited accountability was further compromised when President Musharraf passed his National Reconciliation Ordinance seen by many as a whitewash of the corruption of former opposition leaders and their henchmen.

Thus the pronouncements by the World Bank are not surprising. What is surprising, however, is the fact that the World Bank has been engaged in several interventions in Pakistan over the past decade, interventions geared towards governance reforms; and the Bank's own report now acknowledges the failure of these interventions albeit indirectly.

Given the claim of the World Bank that it is "uniquely positioned to share international best practice and provide world class analytical and research services to our clients," there is a need for the management of the World Bank to revisit some of the government claims and re-evaluate the success and failure of its governance programmes in general and in Pakistan in particular in an effort to ensure that targeted interventions are more successful than they obviously are.

However the ultimate responsibility for poor governance and corruption rests with the government. While it is certainly accurate to maintain, as has been done repeatedly by the PPP Co-Chairman, Asif Ali Zardari, that the government has been in place for a little more than sixty days and the inherited economic and political problems are so acute that more time is required to deal with them adequately; however some effort needs to be made to dispel the impression that the government has still not paid attention to a major shortcoming of the previous government.

The Prime Minister announced that the National Accountability Bureau would be abolished, the same court that had sent him to prison on February 11, 2001 on charges of misuse of his authority while he was a Speaker of the National Assembly. However Law Minister Farook Naek clarified later that this would not be possible without the support of President Musharraf.

This is being seen by the public at large as a status quo on issues related to poor governance and corruption which directly impact on the well being of the general public - a fact which may account for the focus of the entire nation on the issue of the judges' restoration - reflected by the rising personal popularity of Nawaz Sharif who has linked the issue with his party members' return to the Cabinet. The government would be well advised to take cognisance of this and take appropriate measures.

The World Bank report also highlighted a few other factors that are barriers to exports in this country in comparison to other South Asian countries: transport, information technology, poor infrastructure and efficiency of customs as well as weak border procedures. These constraints are hardly likely to be dealt with in the short term; however, it is hoped that the government would keep them in mind when formulating a trade policy.

Business Recorder [Pakistan's First Financial Daily]


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## ejaz007

*Dubai-based group to set up cement manufacturing plant*
* Project construction scheduled to begin in July, expected to the completed by 2009
By Moonis Ahmed 

KARACHI: A Dubai-based business group will set up a cement manufacturing plant named Galadari Cement (Gulf) Limited, near Karachi, its CEO Badaruddin Fakhari told Daily Times on Wednesday. 

He said that the project was planned seven to eight years ago but work on it was halted due to some reasons. Now the project has been started again and the construction of plant would start by next month and would complete by the end of November 2009, he added. 

The CEO said that the business group would initially invest Rs 3 billion and is likely to invest another Rs 17 million after its completion. He said that company would also sell shares in the market in early 2009. 

Badaruddin Fakhri further said that besides providing employment the cement plant would also increase government revenue by up to Rs 1 billion. He said that French machinery would be installed for cement production, which would produce 3300 metric tonnes on daily basis. The company would also export cement, he added. 

Bilal Hameed, an analyst of cement sector, said that the overall production of the company would be 990,000 tonnes annually that would increase the cement supply locally as well as at international level. The high prices in the local market are also expected to come down after this plant is set up, he added. 

Muhammad Shahid Farooqui of Karachi Cement Dealers Association said that as cement production is already low in Pakistan, the new companys 3300 tonnes production on daily basis would not be able to help meet the countrys requirement. If the company initially does not export the cement, it might boost supply in the country.

Although Pakistan produces around 90,000 tonnes cement per day, but because local manufacturers export cement in large volumes and do not sell their product in local market, a shortage of cement in the local market persists, he said. 

The government does not have any control on local manufacturers, as they have created a fake cement shortage in the local market, otherwise we have a surplus of cement production, he added.

Daily Times - Leading News Resource of Pakistan


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## Neo

*OMCs may soon get PDC worth Rs70bn ​* 
Thursday, June 26, 2008

ISLAMABAD: The government is arranging two tranches of Rs35 billion each for the payment of price differential claims (PDC) to oil marketing companies (OMCs) and refineries, said a government official on Wednesday.

The ministry of finance has conveyed to the ministry of petroleum that it will very soon release two tranches of Rs35 billion each to the oil marketing companies and refineries under the head of price differential claims, Ministry of Petroleum Secretary Zafar Mehmud told The News.

The PDC is a subsidy on POL products not passed on to consumers in fortnightly price revisions, but borne by the government to offset the effects of soaring petroleum prices. The PDC claims stood at Rs72 billion before the announcement of the federal budget earlier this month.

The payment of PDC to the OMCs and refineries will be made either this week or in the first week of July, Zafar said.

After clearing three tanches of PDC totalling Rs55 billion to the OMCs and refineries the remaining Rs17 billion would also be cleared at appropriate time, as the government is aware of the financial position of the OMCs and refineries, secretary petroleum said.

The government released Rs20 billion under the head of PDCs to the OMCs and refineries last week, Zafar further hoped that the federal government would clear all outstanding amounts of the said OMCs and refineries before the start of new fiscal year. 

For the outgoing fiscal year of 2007-08, the federal government has allocated Rs15 billion for PDC (subsidies on POL) that reached to Rs175 billion because of all time high POL prices in the international market crossing the level of $135 per barrel. For the fiscal year 2008-09, the government has allocated Rs140 billion to shield its masses from affects of high POL prices.

The release of said PDC to Shell Pakistan Limited (SPL) will definitely help the company improve its operation, spokesman of the company Abid Ibrahim told The News.

Last week the government released Rs20 billion, he said adding that the company now has Rs11 billion outstanding against Government of Pakistan under the head of PDC and it is expecting release of Rs3 billion next week.

Currently, the government is giving a subsidy of Rs7.15 on petrol, Rs4.37 on HOBC, Rs44.11 on kerosene and Rs33.65 on light diesel oil and has capped the prices of the POL till June 30 to off set the affects of the soaring POL prices to its consumers.

The PPP led government has made commitment with international donors like the World Bank and International Monitory Fund (IMF) to cease the subsidies on POL products, electricity and gas before December 2008 to control its swelling budgetary deficit.

OMCs may soon get PDC worth Rs70bn


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## Neo

*WB to provide $25m for Balochistan irrigation project ​* 
Thursday, June 26, 2008

ISLAMABAD: Pakistan has entered into an agreement with the World Bank for providing a credit of $25 million for the Balochistan Small Scale Irrigation Project.

The accord was signed by Economic Affairs Division Acting Secretary Junaid Iqbal on behalf of the Government of Pakistan, Balochistan Additional Chief Secretary Ahmed Bakhsh Lehri and World Banks Yousapha B Crookes here on Wednesday.

The government will repay the credit, being provided under the International Development Assistance (IDA), in 35 years including 10 years of grace period. The credit is interest-free, however service charges at the rate of 0.75 per cent per annum and commitment charges of 0.50 per cent on undisbursed balance will apply.

The Balochistan Small Scale Irrigation Project will support efforts by the provincial government to improve the management of scarce water resources in Pishin Lora Basin.

Project activities are designed to recognise the importance of direct participation of water users and other stakeholders. Key indicators include increased surface water availability and reduced groundwater depletion; increased water productivity through a combination of engineering, management and agricultural measures; and expanded local capacity and participation of farmers to implement similar schemes and formulate plans for sustainable water resources development and watershed management.

The project will focus on Pishin Lora Basin in the northern part of Balochistan and will have three components including partial restoration of water storage capacity in Bund Khushdil Khan, development of small-scale irrigation schemes in Pishin Lora Basin; and institutional strengthening and capacity-building of the Irrigation and Power Department (IPD), water management institutions and farmer and community organisations and further studies and preparation activities for the next phase. 

WB to provide $25m for Balochistan irrigation project


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## Neo

*Communications top FDI list, bag $1.28bn ​* 
Thursday, June 26, 2008

ISLAMABAD: During July-May 2007-08, the communication sector topped the list by attracting foreign direct investment (FDI) worth $1.28 billion. However, 17.8 per cent less than what it recorded in the corresponding period of the last fiscal year ($1.55 billion).

It is worth mentioning that total FDI to Pakistan during these 11 months have dipped by 14.1 per cent year-on-year to $3.88 billion and portfolio investment by 96.5 per cent to $62.2 million, as compared to the corresponding period of the last fiscal year 2006-07. In corresponding period of the fiscal year 2006-07, it stood at $4.52 billion and portfolio investment at $1.76 billion.

Break-up of investment by sectors further reveal that under the communication head, the telecommunication sector attracted $1.13 billion, information technology $146 million and postal and courier services inflows were worth $4.9 million.

The notable encouraging point in IT sector was that during the period, software and hardware development fetched $12.4 million and $6.4 million respectively, which was far more than the corresponding period last fiscal year, when each fetched $4.3 million. Financial Business is next with total FDI of $883.3 million compared to $898.7 million, showing a decline of 1.7 per cent.

Oil and gas exploration sector during July-May 2007-08 also attracted $550 million, which was 14 per cent higher than $482.7 million in corresponding period last fiscal. Trade sector attracted $150.7 million against $149.8 million.

It is to be noted that the inflow of direct investment in cement sector compared to corresponding period last year was very high. During the period under review it attracted $99 million against only $18.1 million last fiscal, depicting a growth of 447 per cent.

FDI inflow in transport equipments (automobiles) during 11 months of the outgoing fiscal stood at $88.4 million up 91.3 per cent over $46.2 million recorded in the corresponding period of the last fiscal. In construction sector, inflow declined by 45 per cent to $81.7 million against $148.2 million in last fiscal.

Transport sector also fetched 185 per cent more investment to $71 million against $25 million in the previous year.

The petroleum refining sector attracted $68.5 million, Petro chemical $27 million and mining and quarrying absorbed $32.7 million foreign investment during the period under review.

Power sector (thermal and hydel) has also received total FDI of $66.3 million, however 60.6 per cent less than in the same period of the last fiscal ($168 million). 

It is pertinent to note that in thermal power sector, inflows went down by 64.7 per cent to $58.7 million from $166.1 million, while FDI in hydel sector went up by 299 per cent to $7.6 million from $1.9 million recorded in corresponding period of the last fiscal.

FDI inflow during the period under review went up by 110 per cent to $77.8 million in chemical sector, 132 per cent in foods ($39.2 million), food packing 535 per cent ($6.4 million), pharmaceutical and OTC products 30 per cent ($43 million), metal products 116 per cent ($14.7 million), machinery other than electrical 48 per cent ($5.6 million) and inflows in electronics went up by 59 per cent to $26.5 million. FDI inflow in electrical machinery during these 11 months stood at $6.4 million.

It is also worth mentioning that FDI inflow in tobacco and cigarettes down by 98 per cent to $$8.4 million from $389 million. Sugar sector also depicted a decline of 42.4 per cent to $9.3 million and investment in storage facilities are also down by 97 per cent to 0.57 million from $18.3 million. Tourism sector also fetched 66 per cent less FDI during the period under review by receiving $6.3 million against $18.6 million.

Experts believe that it was the political turbulence and prevailing judicial crises that brought foreign investment in the country to earth.

Communications top FDI list, bag $1.28bn


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## Neo

*IT drive inaugurated to promote SMEs ​* 
Thursday, June 26, 2008

KARACHI: The Karachi Chamber of Commerce and Industry (KCCI) in collaboration with Intel Pakistan Corporation, has launched an information technology drive showcasing the importance of technology, PC and internet utilisation.

Programme Manager for Intel Pakistan, Uzair Khurshid inaugurated this drive which is aimed towards Small and Medium Business (SMB) segment. President of KCCI, Shamim Ahmad Shamsi said that information technology has now become a key ingredient for growth of any business of any size in the global economy.

He further added that productivity is a mandatory factor for the growth of Small and Medium Enterprise (SMEs). Moreover, update of IT resources would give leverage to these industries to compete better at the international level and keep them apace with the technology, he added.

Shamsi also said businesses today face a wide variety of challenges and one of KCCIs aims is to facilitate the growth of our members businesses, their profitability, reduce business and manufacturing process complexity, and gain better business by staying competitive.

Business/Retail Marketing Manager, Intel Pakistan Corporation, Asma Aziz said that The Small and Medium Business sector is the backbone of our economy in Pakistan and we are proud to facilitate their digital empowerment, which would not only boost their productivity and efficiency, but also impact the economy on a macro level.

She added that Intel has been working closely with the SMB segment and various chamber bodies as well as Small Medium Enterprise Development Authority (SMEDA) from a technology advisor standpoint. 

It has conducted various technology awareness seminars and workshops, and is also aligning the software community to bring a complete solution to businesses as per their needs.

This two day workshop will be attended by members of the KCCI as well as other business entrepreneurs from almost all leading organisations. 

The event is set to display latest hardware technology solutions, software solutions providers and business management softwares. SMEDA is also participating in this event by offering their help desk services to facilitate small and medium businesses.

IT drive inaugurated to promote SMEs


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## Neo

*Pak-Qatar Takaful introduces savings products ​* 
Thursday, June 26, 2008

ISLAMABAD: Pak-Qatar Family Takaful Ltd, with Rs525 million paid-up capital, has launched its first individual family takaful savings products in the country, starting with their Share & Care Savings Takaful and ABC Education Takaful plans. By saving just Rs1,250 per month one can become the member of Pak-Qatar Waqf pool and avail various benefits, announced Pak-Qatar Family Takaful CEO P Ahmed at a press conference here on Tuesday. 

Ahmed said Share & Care Savings Takaful is a plan for families who would like to save smaller amounts of money and accumulate them into large investments for particular future needs like buying a house or providing financial support in old age. 

The plan also offers the financial protection to the family, if its bread-winner is unable to provide in the future due to unfortunate events. He elaborated the ABC Education Takaful Plan was particularly designed for families who want to ensure the continuity of their childs ongoing education even if the sponsor parent wouldnt be around. It helps to multiply savings for the ever-increasing educational expenses in future. On completion of the membership term the investment value of the plan will be paid either as a lump-sum or in regular installments to be utilised for the payment of college/university fee. 

Hamad bin Ali Al Hinzab, Ambassador of Qatar in Pakistan, said Pak-Qatar is the result of first 100 per cent direct investment initiative by the state of Qatar in Pakistan. 

He said the country offers tremendous returns on investment and Qatar is keenly looking for further investment opportunities in different sectors of economy. 

Pak-Qatar Takaful introduces savings products


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## Neo

*300 items to boost trade with Iran identified​*
LAHORE, June 25: About 300 items have been identified for trade between Pakistan and Iran which would help increase volume of bilateral trade by one billion dollars.

Speaking to businessmen and industrialists at the Lahore Chamber of Commerce and Industry on Wednesday, Iraj Hassan Poar, President, Commerce Organisation of Sistan and Iranian Baluchistan province, said that Pakistan and Iran needed to have the highest level of bilateral trade as both the nations wanted to face the challenges of globalisation.

Pakistani businessmen should join hands with their Iranian counterparts for getting both the countries a respectable place in the highly globalised market, he said.

He said Iran was in a position to transit Pakistani goods to all the neighbouring countries.

Pakistani businessmen should avail the opportunity for mutual benefit, he said, adding, lack of information was coming in the way of expansion of bilateral trade between Pakistan and Iran.

The problem can be solved by frequent exchange of trade delegations and holding joint trade exhibitions.

He asked the LCCI president to arrange a trade delegation to Iran so that Pakistani businessmen could have an assessment of business opportunities there.

Zahidan Chamber of Commerce and Industry and Mines President Abdul Hakim Reigi said that Pakistan could import homeopathic medicines, dates and a number of other products from Iran.

He said Iran wanted to import quality food products from Pakistan. He said that Pakistan could establish units for producing value-added dates in collaboration with Iran for re-export.

He said Pakistan government should allow concessions on export of rice, potato and kinno to Iran.

He also invited the LCCI to hold single-country exhibition of Pakistani products in Zahidan.

LCCI Vice President Shafqat Saeed Piracha said there was a need to raise the level of trade between the two countries to one billion dollars.

The trade was confined to a limited number of products. Pakistans exports to Iran mainly comprise rice, wheat, cotton, leather products, textile yarn, etc., and imports comprised petroleum and petroleum products, spices, tea, pistachio nuts, woollen carpets, fruits and vegetables.

He said lack of information about business opportunities was the major bottleneck in promotion of trade between the two countries.

The issue can be taken care of through the active engagement of the chambers of both the countries. The chambers could act as resource base for information on trade and investment opportunities.

300 items to boost trade with Iran identified -DAWN - Business; June 26, 2008


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## Neo

*Cabinet proposes a revisit of Gwadar Port contract ​* 
ISLAMABAD (June 26 2008): The federal cabinet has proposed a revisit of the contract signed between a consortium of Singapore Port Authority (SPA)/AKD Securities and Shaukat Aziz-led government on Gwadar Port, well-placed sources told Business Recorder.

The cabinet had considered 'Gwadar Port Authority's revised bill for carving a new corporate structure of the port' in its meeting on June 4 but did not clear the bill due to several reservations. "The GPA affairs as well as the contract signed with the foreign operator called for a thorough review in consultation with the Balochistan government," sources quoted Prime Minister Syed Yousuf Raza Gilani as saying.

The cabinet was informed that the previous cabinet, on 27 June, 2007, had approved the draft bill for the establishment of GPA, subject to certain conditions including provisions relating to appointment of chairman and members of the board and their term of office, etc.

The Master Plan and business strategy of Gwadar Port envisaged that the chairman and members of the board shall be non-executive. The responsibility for management of all affairs of the authority would rest with the Chief Executive Officer who would act as the co-opted board member and would report to the non-executive chairman and the board on all matters including those delegated by him to his subordinate officers.

The Ministry of Law and Justice has vetted the draft bill titled 'Gwadar Port Authority Act, 2008' prepared by the Ministry of Ports and Shipping. However, the cabinet observed that the draft bill is flawed and contains self-contradictory provisions. Moreover, the proposed corporate structure was not in line with best international practices.

The cabinet after detailed discussion over the controversial draft bill has decided that it should be first examined by a committee comprising Ministers of Port and Shipping, Finance, Law and the Deputy Chairman of Planning Commission. It has also been decided that one Minister from Balochistan should also be co-opted.

It is not yet clear whether the committee has submitted its report to the Prime Minister for consideration. According to sources, phase-II of the project will be implemented on BOO (Build-Own-Operate) or BOT (Built-Own-Transfer) basis. Phase-II envisages construction of 10 more berths eastward of 4,200m long coast in phases under private sector as and when the utilisation on the existing berths under Phase-I reaches maximisation (ie 70 percent).

The port would be provided road and rail link with the national network. Port of Singapore Authority International (PSAI) has been assigned the job of port development under Phase-II in the concession agreement for 40 years. Gwadar Port is expected to contribute $42.2 billion, in terms of investment, revenues and income received from its entire operations to the exchequer, over a period of 40 years.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*$2 billion US aid to Pakistan questioned ​*
WASHINGTON (June 26 2008): The United States has paid more than $5 billion to reimburse Pakistan for counter-terrorism expenses that have often been exaggerated, if not fabricated, according to a government audit released on Tuesday that blasts Pentagon for poor management of the programme.

The report concluded Pentagon could not properly account for as much as $2 billion in payments to Pakistan over three-year period from 2004 to 2007. A report in Los Angeles Times on Wednesday said auditors uncovered array of questionable costs, including $45 million for roads, bunkers; $200 million for operation of air defence systems even though al Qaeda has no known aircraft; overcharges for meals, vehicles used by Pakistani troops.

The Government Accountability Office (GAO) says the defence department had routinely covered costs without verifying that they "were valid, actually incurred, or correctly calculated." Pentagon paid about $5.6 billion to Pakistan in counter-terrorism reimbursement funds in nearly seven years since September 11 terrorist attacks, by far largest sum paid as part of the programme to a counter-terrorism ally.

The audit acknowledges Pentagon recently taken steps to improve its scrutiny of expense reports submitted by Pakistan. "Up until that point in time we would say that there was not sufficient oversight," said Charles Michael Johnson Jr., director of counter-terrorism issues at GAO and principal author of report. Even now, he said, "We still point out concerns and areas where we think there should be further enhancements" of Pentagon's oversight of the programme.

He pointed to Pentagon's practice of reimbursing Pakistan without taking into account favourable fluctuations in exchange rate. It is latest of studies to criticise Bush administration's management of Coalition Support Funds programme, created in aftermath of September 11 attacks and doled out billions of dollars to 27 nations.

The report was focus of hearing Tuesday by House sub-committee on National Security & Foreign Affairs. "The more I learn about Coalition Support Funds to Pakistan, more I am troubled," said Rep. John F. Tierney (D-Mass.), chairman of sub-committee. He questioned whether the programme should be discontinued or overhauled, saying it has "failed to beat back Taliban threat to our troops in Afghanistan or threat of al Qaeda."
 
It says the defence department paid Islamabad $200 million for radar expenses from January 2004 to February 2007, for example, even though US military officials in Pakistan urged Pentagon to reject charges because "terrorists in Fata did not have air attack capability." Fata is Federally Administered Tribal Areas along border with Afghanistan.

Pentagon reimbursed Pakistan $45 million for road and bunker construction. But accompanying documentation "did not provide sufficient support that all claimed costs were based on actual activity or expenses," GAO report said. Pentagon subsequently declined to cover similar charges until Pakistan provides co-ordinates of roads and bunkers it claims to have built. So far, "Pakistan has not provided this additional information," report said.

The Government Accountability Office says during one period, the defence department was paying the Pakistan Navy more than $3.7 million per year in repair, maintenance charges on "a fleet of fewer than 20 passenger vehicles" that was never used in combat. The charges amounted to more than $19,000 per month for each vehicle. In response to such criticism, Pentagon has given US military officials in Pakistan a larger role in scrutinising that country's counter-terrorism expenses had begun rejecting more requests.

Bobby Wilkes, deputy assistant secretary of Defence for Central Asia, acknowledged breakdowns in oversight but defended programme, saying Pakistan could not afford to deploy and maintain 100,000 troops and paramilitary forces in tribal areas without reimbursements it receives from United States. The support funds are "critical to our eventual success in Afghanistan and war on terror," Wilkes said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Country to miss textile exports target ​* 
KARACHI (June 26 2008): The country will miss the current year's textile export target of $12 billion due to power shortage, increase in cost of production, political instability and stiff competition in world market. Textile exporters have shown poor performance during the current fiscal year, despite getting huge subsidies on account of research and development (R&D) support from the government since 2005.

Industry sources said that unannounced power load shedding, besides political battle, had badly hurt the industrial activities in the country, while due to poor law and order situation foreign importers refused to visit Pakistan. These have been chief reasons of decline in textile exports.

They said that killing of Benazir Bhutto and riots following it presented a negative picture of Pakistan and once again country's image on international front has been damaged. Official statistics show that textile exports declined by 2.5 percent during eleven months of current fiscal year against 6 percent growth in corresponding period of last fiscal year.

Keeping in view the pace of current textile exports, experts reckon that the country would fall short of the textile exports target this year despite getting billions of rupees as R&D subsidy. The government has been paying 3 percent R&D support on fabrics, 5 percent on bedwear and knitwear and 6 percent on garments.

From May 2005 to March 2008 the government has paid about s 31 billion to textile exporters to continue R&D support. Textile exports stood at $9.59 billion in eleven months of current fiscal year against the annual target of $12.21 billion. This is about $246 million less than $9.83 billion of same period of last fiscal year. Industry sources believe that this year totl textile exports would not be more then $10.5 billion against the target of $12.21 billion.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Iranians identify 300 items to boost trade by $1 billion ​* 
LAHORE (June 26 2008): The Commerce Organisation, Sistan of the Iranian province Balochistan, has identified a list of 300 tradable items between Pakistan and Iran to enhance trade volume between the two countries by one billion dollars. Commerce Organisation President Iraj Hassan Poor stated this during a meeting with the office-bearers of the Lahore Chamber of Commerce and Industry (LCCI) here on Wednesday.

While stressing the need for expediting work on the list of tradable items, he said Iran was in a position to transit Pakistani goods to all the neighbouring countries and the Pakistani businessmen should avail the opportunity for the mutual benefit of the people in both the brotherly Islamic countries.

Iraj Hassan said Pakistan and Iran need to have the highest level of bilateral business if both the nations want to face the fast emerging global challenges and it is high time that Pakistani business community should join hands with their Iranian counterparts as this would help both the countries get a respectable place in the global market which is highly competitive at the moment.

He said the lack of information was also coming in the way of bilateral trade between Pakistan and Iran and this goal could be achieved with frequent exchange of trade delegation and holding of joint trade exhibitions. He urged the Lahore Chamber of Commerce and Industry (LCCI) to arrange a trade delegation to Iran so that Pakistani businessmen could have an assessment of the business opportunities existing in Iran.

Speaking at a meeting, Zahidan Chamber of Commerce and Industry and Mines (ZCCI&M) President Abdul Hakim Reigi said that Pakistan could import homeopathic medicines, dates and a number of other products from Iran.

Regarding quality of products, he said that Iran wanted to import high quality food products from Pakistan. About joint venture, he said that Pakistan could establish units for producing value-added dates in collaboration with Iran for re-exporting to other countries.

He urged the government of Pakistan to allow some concession on export of rice, potato and kinno from Pakistan to Iran. He invited the LCCI to hold single country exhibition of Pak products in Zahidan.

Speaking on the occasion, LCCI Vice-President Shafqat Saeed Piracha said that at the moment the trade between the two countries was confined to a limited number of products. Pakistan's exports to Iran mainly comprise rice, wheat, cotton, leather products, textile, yarn, etc and imports from Iran consist of petroleum and petroleum products, spices, tea, pistachio nuts, woolen carpets, fruits and vegetables.

He said that food and fruit processing, dairy and poultry products, petroleum refinery, oil and gas exploration, infrastructure, transport vehicles, electric and non-electric appliances, cement, chemicals, information technology are possible areas for joint ventures between the two countries.

Lack of timely information on trade and business opportunities in both the countries is one of the major bottlenecks in trade enhancement and the frequent which can be removed through frequent and active engagements between the two-side chambers, he said, adding the chambers of two countries can be a resource-base for providing information on trade and investment opportunities. Shafqat Saeed Piracha, former LCCI president Mohsin Raza Bukhari, former LCCI vice-president Shahzad Ali Malik were also present on the occasion.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*$300 million cash subsidy a year: PTA enjoying unprecedented support of Finance for four years ​* 
LAHORE (June 26 2008): The Ministry of Finance, for the fourth consecutive year, is all set to pay an unprecedented cash subsidy of 300 million dollars to Pakistan PTA Limited, the producer of purified terrapthallic acid (PTA). PTA is a major ingredient for the production of polyester staple fibre, polyester filament yarn and pet bottle chip.

Textile sources told Business Recorder here on Wednesday that the government would further pay 51 million dollars in the 2008-09 fiscal year to the Pakistan PTA Limited as subsidy. It may be mentioned that the PTA was a company previously owned by ICI PLC of England and now owned by Akzo Nobel of Holland.

The sources said during the last three years, the excuse was that the government of Pakistan had provided the company with a sovereign guarantee of 15 percent protection for a period of 10 years since its inception. During the last three years, the sources claimed that the government of Pakistan ensured the payment of 15 percent of its sales price without any ceiling. Thus, hundreds of million dollars were paid as a direct subsidy to the organisation.

The so-called sovereign guarantee was extended to the company till June 30, 2008, but the Ministry of Finance has again provided the company with a protection of 7.5 percent at current rate of 1,200 dollars per ton of PPTA production 500,000 tons per annum (PTA) tantamount to 45 million dollars, the sources said. With the price of crude oil envisaged to increase, therefore, the price of PTA was deemed to rise further, thus increasing the amount of subsidy, they said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'IT has become vital to business growth' ​*
KARACHI (June 26 2008): The Karachi Chamber of Commerce and Industry (KCCI) President, Shamim Ahmed Shamsi has said that information technology has now become a key ingredient for growth of any business of any size in the global economy, says a press release.

While inaugurating an SME information technology awareness drive workshop, organised by Intel Pakistan Corporation in collaboration with KCCI, he said that productivity is a mandatory factor for the growth of SMEs. Moreover, updating of IT resource would give leverage to these industries to compete better at international level and keep them with the pace of technology.

He said businesses today, face a variety of challenges and the KCCI's aim is to facilitate the growth of its member businesses and reduce their business and manufacturing process complexity. Business Retail Marketing Manager, Intel Pakistan Corporation, Asma Aziz said that "the small and medium business sector is the backbone of our economy and we are to facilitate their digital empowerment, which would not only boost their productivity and efficiency but also impact the economy on a macro level."-PR

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Improvement of Balochistan water resources: $25 million IDA credit agreement inked ​* 
ISLAMABAD (June 26 2008): To efficiently manage scarce water resources in Balochistan, the government here on Wednesday inked an agreement with the World Bank for provision of International Development Association (IDA) credit of SDR 15.8 million ($25 million). The Balochistan small scale irrigation project will mainly focus on Pishin Lora Basin in the northern parts of the province.

It will encompass three components to irrigate the water-starved land, which includes: (1) partial restoration of water storage capacity in the Bund Khushdil Khan (BKK); (2) development of small scale irrigation schemes in the Pishin Lora Basin; and (3) institutional strengthening and capacity building of the Irrigation and Power Department (IPD), water management institutions, and farmers and community organisations and further studies and preparation activities for the next phase.

Improved watershed and rangeland management and on-farm water management, including introduction of high efficiency irrigation systems, will be integral components of the project. Balochistan Small Scale Irrigation Project (BSSIP) will support efforts to improve management of the scarce water resources in the Pishin Lora Basin.

Project activities are designed to recognise the importance of direct participation of water users and other stakeholders. Key indicators include: (i) increased surface water availability and reduced groundwater depletion; (ii) increased water productivity through a combination of engineering, management, and agricultural measures; and (iii) expanded local capacity and participation of farmers to implement similar schemes and formulate plans for sustainable water resources development and watershed management.

The agreement was signed by Junaid Iqbal, Acting Secretary, Economic Affairs Division, on behalf of the Government of Pakistan, Ahmed Bakhsh Lehri, Additional Chief Secretary, Government of Balochistan, on behalf of Government of Balochistan, and Yousapha B Crookes on behalf of the World Bank.

The Government of Pakistan will repay the credit in 35 years including 10 years of grace period. The credit is interest-free. However, service charges @ 0.75 percent per annum, and commitment charges of 0.5 percent per annum on undisbursed balance will apply.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan Steel achieves record sale ​*
KARACHI (June 26 2008): Pakistan Steel achieved a record sale of Rs 39 billion during the fiscal 2007-08. This was announced by a spokesman of Pakistan Steel here on Wednesday. He said the previous record of the sale of products was set with Rs 36 billion in the fiscal 2006-07 and the Mills had also earned a profit to the tune of Rs 4.2 billion.

Now with just five days before the conclusion of the fiscal 2007-08, Pakistan Steel has broken the previous years' record by achieving a sale of its products worth Rs 39 billion. The spokesman also pointed out that there has been no increase in rate of products of Pakistan Steel for the past two months.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*US plans to triple non-security aid to Pakistan in new strategy​*
by P. Parameswaran 
Thu Jun 26, 2008

WASHINGTON (AFP) - The United States is considering a new aid strategy for Pakistan that will triple unconditional non-security aid to 1.5 billion dollars annually but tie security funding to counterrorism performance, lawmakers said. 

In coming weeks, bipartisan legislation will be introduced in the US Senate laying the foundation for the new approach, senior Democratic Senator Joseph Biden said Wednesday.

Biden, who chaired a hearing of the Senate Foreign Relations Committee on the new strategy, proposed that the central elements of the new plan include tripling non-security aid to 1.5 billion dollars annually over a 10-year period.

"A significant increase in non-security aid, guaranteed for a long period, would help persuade the Pakistani populace that America is not a fair-weather friend but an all-weather friend; it would also help persuade Pakistan's leaders that America is a reliable ally," he said.

But Biden, in a controversial move, also wanted US security aid -- around one billion dollars annually at present -- to be tied to results.

This, he said, would "push the Pakistani military to finally crush" the Al-Qaeda and Taliban militant groups believed based along the Pakistan-Afghanistan border.

"It's not clear we're getting our money's worth. We should be willing to spend more if we get better returns -- and less if we don't," he said.

Biden said that the US-Pakistan relationship was in "desperate need of a serious overhaul" and that the status quo is "unsustainable."

The United States provided Pakistan more than 10.5 billion dollars for military, economic, and development activities in the 2002-2007 period.

Ranking Republican Senator Richard Lugar said Biden's proposal for dramatic adjustments to US foreign assistance to Pakistan had given the committee "an important model for discussion.

"We should carefully reconsider both the amounts that we are providing and the goals we are hoping to achieve in Pakistan," Lugar said.

President George W. Bush's administration has given general support to the plan.

"While we do not agree on every point in the current version of the proposed legislation, we welcome this initiative and feel strongly that a new, bipartisan commitment to partnership with Pakistan is crucial," said Assistant Secretary of State Richard Boucher.

"We look forward to working closely with this committee to see this initiative through," he said.

The elements of Biden's plan "are vital but they may be reconfigured in the final legislation," one congressional aide said.

The Pentagon cautioned that any strategy change in military aid should not come at the expense of Pakistan's legitimate defense needs, opposing any "conditional language" on security assistance.

"Doing so undermines the trust relationship with Pakistan at a time when it is most critical," cautioned Mitchell Shivers, the principal deputy assistant secretary of defense.

But Biden said the performance of the Pakistan military has been mixed. 

"We've caught more terrorists in Pakistan than in any other country but Pakistan remains the central base of Al-Qaeda operations." 

The Government Accountability Office (GAO), an independent US government watchdog, had called for a coherent plan to stem any terrorist threat coming from Pakistan. 

It particularly referred to the vast, impoverished, mountainous and unpoliced Federally Administered Tribal Areas (FATA), seen as a key sanctuary for top terrorists who masterminded the Sept 11, 2001 attacks. 

Wendy Chamberlin, president of the Washington-based Middle East Institute, said any legislation tying security aid to performance would not be easy. 

"Historically, Pakistan viewed conditioned aid as a colonial practice that belittles the recipient," she said.

US plans to triple non-security aid to Pakistan in new strategy - Yahoo! News


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## Neo

*PC board approves privatisation programme 2008-09 ​* 
*Workers of state-owned entities to get 10pc share: minister​*
Friday, June 27, 2008

ISLAMABAD: In order to make the Privatisation Policy pro-workers, the workers of public sector entities will be given 10 per cent shares of their respective entities.

Syed Naveed Qamar Federal Minister for Privatisation, Investment, Finance, Revenues & Economic Affairs announced while chairing a meeting of the Board of Privatisation Commission on Thursday.

Syed Naveed Qamar who is also chairman of the Privatisation Commission (PC) directed the PC that this decision should be implemented as soon as possible. He also formed a Committee to workout the modalities for the transfer of shares to the workers of State Owned Entities (SOEs).

The Minister further stated that the government was in the process to make the privatisation process as pro-worker and pro-people as possible and to transfer the benefits of privatisation to them in a transparent manner.

The employees and the respective stakeholders of the SOEs would be taken on board before initiating the process of privatisation of units already approved by the Council of Common Interests (CCI), he added.

The PC Board was briefed regarding the present status of various ongoing transactions and was informed that a Financial Advisor has been appointed for the divestment of Kot Addu Power Company (KAPCO) shares in the international market through Global Depository Receipts (GDR).

The Board was further informed that a pre-qualification committee was finalizing its recommendations, for the pre-qualification of parties interested in acquiring SME Bank, which would be discussed in the next board meeting. The bid documents for the acquisition of Pakistan Tourism Development Corporation (PTDC)s 26 Motels / Restaurants through a competitive bidding process are being given final shape. The PC received Expressions of Interest (EOIs) from 36 investor(s), Consortium of Investors for PTDCs Motels / Restaurants, which have been offered to promote tourism, improve the quality of services and foster competition.

The PC board was informed that pre-qualification of the parties interested in acquiring National Power Construction Company (NPCC) was at an advanced stage and the due diligence of Heavy Electrical Complex (HEC) by the prospective bidders was in progress.

The PC Board approved the Privatisation Program 2008-09, which includes Hazara Phosphate & Fertilizers Ltd, Heavy Electrical Complex (90 per cent shares), Jamshoro Power Company (51 per cent), Faisalabad Electric Supply Co. Ltd. (56 per cent shares), Printing Corporation of Pakistan (Assets), Pakistan Machine Tool Factory (90 per cent shares), Morafco Industries Limited (Assets), Sind Engineering Limited (assets), Lakhra Coal Mines Project, Khewra Salt Mines, Pakistan Steel Mills (10 per cent shares) through IPO, and the Services International Hotel.

The Privatisation Program already approved by the Council of Common Interests (CCI) will also be reviewed in due course of time in order to prepare a final list for future privatisation.

The PC Board also formulated its recommendations for the Cabinet Committee on Privatisation (CCOP) in order to reprioritise the Privatisation Program. 

The PC Board members senior representatives of the respective ministries/ departments and PC officials attended the meeting.

PC board approves privatisation programme 2008-09


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## Neo

*NBP expands its network in Afghanistan ​* 
Friday, June 27, 2008

PESHAWAR: National Bank of Pakistan (NBP) has expanded its network by opening the third branch in Afghanistan in Herat Province. The branch was inaugurated by Governor Herat, Syed Hussain Anwari, while Senior President and Coordinator NBP Afghan Operation, Mohammad Hanif Khan was also present on the occasion.

Speaking on the occasion, Governor Herat Syed Hussain Anwari welcomed the opening of NBP in Herat and viewed that it would not only contribute to the reconstruction efforts of the Afghan economy, but would also greatly help in the strengthening of brotherly ties between the two neighboring countries.

The Governor especially thanked the NBP Management for starting its operations in the province. 

He hoped that it would prove to be a corner stone in the relations of the two countries, which have strong bonds of religion, culture and brotherhood.

President and Coordinator NBP Afghan Operation Mohammad Hanif Khan on the occasion said that the NBP is the first ever foreign commercial bank that launched its operations in Afghanistan by opening its first branch at Kabul in October 2003, followed by its second branch at Jalalabad in May 2004.

He said that the opening of NBP branch in Herat province would facilitate and support the rebuilding of Afghan economy besides generating enhanced economic activities for the uplift of Afghan masses and the strengthening of Afghan banking sector. 

NBP expands its network in Afghanistan


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## Neo

*Pakistan seeks $125m Saudi credit for fertiliser ​* 
Friday, June 27, 2008

ISLAMABAD: Pakistan government is negotiating with Saudi authorities for reviving another credit facility of $125 million for fertiliser import, The News has learnt.

A team of the Economic Affairs Division (EAD) is working out a strategy for the revival of Saudi credit facility for the import of nitrogenous fertiliser (urea), official sources of the EAD told this correspondent.

Pakistan nearly availed the existing Saudi credit facility of $133 million, which the kingdom pledged after the devastating earthquake in 2005 and Pakistan imported urea fertiliser as the country faced urea deficit in the last couple of years.

Prime Minister Syed Yousuf Raza Gilani in a meeting with the King of Saudi Arabia in the first week of June discussed economic cooperation between the two brotherly countries. 

The Economic Affairs Division is devising modalities for operationalising the facility for at least two years because two urea fertiliser plants, one each of Fatima Group and Engro Chemicals, would be commissioned in 2010 and the country would be self-sufficient in the commodity, an official well aware of the development said.

The government is also importing 350,000 tonnes of urea for the ongoing Kharif season to meet the shortfall and the TCP has placed tenders for the import of the commodity.

Out of the total consumption basket of 7 million tonnes of fertilisers, 5.4 million tonnes are urea fertilisers while the remaining 1.6 million tonnes are phosphorous and potassic fertilisers.

For urea fertilisers, the country bristles with local production of 4.8 million tonnes and 0.6 million tonnes shortage is met through imports.

Pakistan seeks $125m Saudi credit for fertiliser


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## Neo

*Forex reserves rise by $300m ​* 
Friday, June 27, 2008

ISLAMABAD: Foreign currency reserves of the country have started showing an improvement as they surge by nearly $300 million to $11.285 billion in a week.

The rise in reserves came after around $300 million in inflows, mainly from the US, Barclays Bank and others. Total liquid foreign reserves held by the country stood at $11.285bn on June 21.

Foreign reserves held by the State Bank of Pakistan (SBP) stand at $8,655.6 million while net reserves held by banks were $2,630.3 million.

Pakistan has received inflows from the US which helped to improve its reserves position. Besides, the Barclays bank installment received by the country, stood at $100 million, said an official source while talking to The News here on Thursday.

Pakistans reserves stood at $10.909 billion on June 14, which increased up to $11.285 billion on June 21. The countrys reserves have been depleting rapidly because of growing imports, especially that of oil, whose prices have doubled in a year, causing vulnerabilities on the external front.

Official sources said the rapid fall in reserves was quite disturbing for the economic managers as on one hand the external debt surged and touched $46 billion, while on the other hand the precious reserves declined from $16 billion to just over $10 billion in recent weeks. Pakistans foreign debt swelled by around $10.5 billion in the last six years up to $45.9 billion, at a time when reserves also fell with more speed.

According to SBP, the foreign currency reserves stood at $14.08 billion on Feb 15, 2008. The reserves position was much better a few months back as it stood at around $16.4 billion during October 2007. It showed that the reserves declined by around $6 billion in the last few months.

The sources also raised questions over the alleged flawed policy being continued by the central bank for managing the precious reserves.

Pakistans current account deficit widened in the outgoing fiscal year, resulting in growing pressure on foreign currency reserves. 

The official circles believe that there is an expectation of some inflows pouring into Pakistan before June 30, 2008 which will help improve the reserves position during the outgoing fiscal year.

Forex reserves rise by $300m


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## Neo

*Italian auto giant to manufacture bikes in Pakistan ​* 
Friday, June 27, 2008

LAHORE: A leading European company has signed a deal with a local entrepreneur to produce 125cc Euro-II motorcycles in the country, challenging the monopoly of Japanese and Chinese bike manufacturers.

Italian auto giant Piaggio has decided to introduce European automobile technology in Pakistan, said the companys Senior Vice President Ricardo Mastronardi after signing of a memorandum of understanding between Piaggio and HKF Engineering at the Lahore Chamber of Commerce & Industry.

Ricardo said Piaggio is one of the leading motorcycle manufacturers in the world and the first two-wheeler scooter in the world Vespa is its masterpiece.

He said Piaggios comeback to Pakistan and joining hands with a leading local motorcycle manufacturing company HKF Engineering showed the Europeans had faith in Pakistans economy.

The phenomenal growth of motorcycle production in Pakistan had impressed European automobile circles, he said, adding they now realise that growth potential of this country is much higher.

He hoped bike-lovers in Pakistan would appreciate the difference between the technology being introduced by Piaggio and the existing one.

Speaking on the occasion, LCCI President Mohammad Ali Mian said the auto industry was one of the important sectors as it was not only providing direct jobs to more than 500,000 people but also contributing to the national exchequer in a big way. He said Pakistani entrepreneurs would learn a lot from latest European technology in the wake of the MoU between the two big organisations.

Under the agreement, HKF Engineering will launch its first joint product Ravi Piaggio 125cc motorcycle, the first Euro-II motorcycle in Pakistan, followed by many future products. HKF Engineering Chief Executive Officer Haroon Arshad said the motorcycle industry had been registering a 25 per cent growth for the last five years. He said the first European technology-based motorcycle would be launched on August 14 this year.

Italian auto giant to manufacture bikes in Pakistan


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## Neo

*Pak IT industry making progress at 50pc annually ​* 
Friday, June 27, 2008

KARACHI: Pakistans information technology industry is progressing rapidly at more than 50 per cent annually for the last four years, with many companies winning huge contracts from domestic as well as international market, an official of the Pakistan Software Export Board (PSEB) said in a statement issued on Thursday.

Quoting the figures released by the State Bank of Pakistan (SBP) last year, a quantum annual increase of 61.18 per cent to $116 million has been registered in IT exports against the previous years US$72 million.

Many companies have been successful in obtaining huge domestic as well as international business contracts and venture capital funds from foreign investors. The official disclosed that Vopium, a Pakistani IT company, has recently gained a venture capital fund worth US$6.75 million from Enex Group SA, Luxembourg. The companys software allows savings of 40-90 per cent when making international calls or sending SMS from mobile phones.

Another recent example of two leading US-based Venture Capital (VC) firms, ePlanet Ventures and Draper Fisher Jurvetson (DFJ), providing funds to Naseeb Networks, speaks volumes of the trust placed in the potential of Pakistans IT industry by foreign investors, he added.

The PSEB official further said that there is a lot of potential in Pakistans IT industry. NetSol, a local leading IT company listed at NASDAQ, has recently been dual-listed for trading on the Dubai International Financial Exchange (DIFX). The presence of Pakistani IT companies on international stock exchanges is a positive sign for the foreign investments in the Pakistani IT industry.

Regarding domestic requirements, the official said that Pakistani IT companies are also fulfilling the needs of local industry and many leading telecom companies are utilising the services of Pakistani IT companies to automate and enhance their operations. Mobilink, for example, has recently signed LMKR, a leading IT company of Pakistan and a global provider of Geo technology and information technology services, to automate its Warehouse processes. Similarly, Ufone signed Teradata to expand its Data Warehouse with state-of-the-art 5550H nodes and to enhance its customer support services.

Pak IT industry making progress at 50pc annually


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## Neo

*Pakistan seeks Australian cooperation in social sectors ​* 
Friday, June 27, 2008

ISLAMABAD: Pakistan and Australia have agreed to work out details for increasing cooperation, to improve the social sector like health and education as well as communications, utilisation of arid land, water scarcity and agri development.

This was discussed during a meeting between Australian High Commissioner Zorica McCarthy and Finance Minister Syed Naveed Qamar here on Thursday.

Australia and Pakistan share global perceptions on a variety of political and economic issues and would like to continue to strengthen their relationship for the benefit of people of both countries in times to come, it was agreed.

Zorica McCarthy presented her overview of the global economic scenario and briefed the Finance Minister on Australias economic issues with regard to inflation, banking industrys interest rate, exports and other development subjects.

The finance minister stressed on enhanced cooperation between the two countries in the field of agriculture, land utilisation and learning from each others expertise and new techniques in agro-based development projects.

Australian High Commissioner identified development projects in less developed areas of Pakistan, wherein Australia could offer support to Pakistan. 

It was agreed that experts from both sides could work out details of any possible cooperation between the two friendly countries, focusing on health, education, communication, utilisation of arid land, water scarcity and agri development.

In the end, the finance minister briefed the Australian High Commissioner on development features of Benazir Income Support Programme designed to help uplift the poor sections of the society against price hike. Pakistan would identify investment specific opportunity zones to encourage foreign investment in the country in order to maximise economic development, finance minister concluded.

Pakistan seeks Australian cooperation in social sectors


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## Neo

*Maybank acquires 15pc MCB Bank shares: $667m remitted​*
KARACHI, June 26: Maybank of Malaysia has finally acquired 15 per cent MCB Bank shares and remitted a total of $667 million to Pakistan.

The confirmation of acquisition of 15 per cent MCB shares was sent to Karachi Stock Exchange. The deal was finalised on May 5.

According to State Bank of Pakistan, the deal amount worth $667 million was remitted to Pakistan on June 23.

As per agreement, the Maybank would also purchase another five per cent shares of MCB Bank after a year. In terms of deal price, it was the largest deal any bank in Pakistan has ever made to sell its 15 per cent shares.

Maybank bought the MCB stake at 5.1 times book value and 15 times Karachi-based banks earnings in 2008. The booming banking industry attracted a number of large foreign banks to enter Pakistan which resulted into sale of several small and medium-sized Pakistani banks.

However, the deal was different as it was the first Malaysian investment in the financial sector of Pakistan.

The transaction of $667 million represents the largest Foreign Direct Investment into Pakistan in 2008 and the largest-ever private sector cross-border transaction in the country.

With the transaction of MCB sale money, the countrys reserves improved significantly after facing a continuous decline for the last 10 months.

The said amount was not remitted to State Bank, but kept with banks which improved reserves to $2.63 billion while the countrys total reserves reached $11.286 billion on Thursday.

The government has also planned to sell shares of public sector companies in the international market for attracting foreign investment.

Plan for launching Global Depository Receipts (GDRs) is also in the pipeline but the instable political and economic image of the country is the real hurdle.

After acquiring 15 per cent shares, the Maybank would have the right to appoint two directors to represent its interests on the Board of MCB and would participate in some of the key management committees.

According to the details, Maybank has signed SPAs (Share Purchase Agreements) with five separate parties, namely 1) Mian Umer Mansha, Mian Hassan Mansha, Mohammad Saleem (collectively referred as individual sellers); 2) MCB Bank Employees Provident Fund; 3) MCB Bank Provident Fund; 4) Nishat Mills Limited (NML) Employee Provident Fund Trust; and 5) Adamjee Insurance (AICL) for acquisition of 94.2m shares (15 per cent of issued share capital) of MCB bank at per share price of Rs470. This is 5.3 times its Dec 31, 2007, book value of Rs88 per share.

After completion of the SPAs, the Maybank and the MCB would also enter into a business cooperation agreement, which includes Islamic banking, retail banking, credit cards and small and medium enterprise banking as key partnership areas.

Maybank is the largest bank of Malaysia and is expanding its foreign operations to exploit the opportunities the way other giant banks, like Standard Chartered, ABN Amro, NIB Bank others are doing.

Maybank acquires 15pc MCB Bank shares: $667m remitted -DAWN - Business; June 27, 2008


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## Neo

*Pakistan seeks market access to G-12 states: Industrial goods​*
ISLAMABAD, June 26: Pakistan has joined the G-12, comprising the US, EU, Japan, China, Australia, Canada, Brazil, India, Mexico, and South Africa, in a bid to seek maximum market access for industrial goods, particularly textile and clothing, under the current Doha Development Round.

Pakistans inclusion in the group is very significant, said a senior official in the Commerce Ministry on Thursday, adding after making a progress in the negotiations on non-agriculture market access by the group, World Trade Organisation director-general has announced the holding of seventh ministerial meeting on July 21 in Geneva.

The official said while substantial progress has been made on several issues, many issues are yet to be settled.

Without having a clear understanding on those issues, it is not clear if the ministerial meeting is going to succeed, he added.

A final deadline of end July 2008 has been established for completion of modalities -- the way tariff cuts and other decisions are to be applied -- on agriculture and industrial goods, the official added.

According to the official, Pakistans key interest in the Doha Round is to get tariffs on its exports to the US and EU reduced substantially.

If talks are successful, tariff rates which could be as high as 32 per cent on many clothing items in the US market could come down to less than five per cent, he said and adding, it would also reduce disadvantages to Pakistan as compared to its competitors, many of whom enjoy duty-free access to the US market.

Analysts said despite being a partner on war on terror and also having been a close ally of the US, Pakistan was never allowed any trade concessions in the US market.

The EU had allowed duty-free access in the wake of Afghan war but those concessions were withdrawn at the end of 2004. This created serious difficulties for Pakistani exporters and its textiles and clothing industry.

Compared to Pakistan, many other countries which never supported any US or EU policies are enjoying duty-free access, they said. The official said to overcome these difficulties, exporters were allowed six per cent Research and Development subsidy. However, as in the past, such subsidy resulted in further lowering of prices of Pakistans products and the government had to pay over Rs30 billion.

He said much of these government funds were passed on by exporters to EU governments as anti-dumping duty on Pakistans exports. The All Pakistan Textile Mills Association (Aptma) has been seeking a fresh package of over Rs50 billion.

Considering that they get loans on preferential rates, their subsidies are much higher than any other industry.

Currently the US and EU collect maximum duties on Pakistani exports. On average, they are more than 10 per cent whereas their (EU and US) average tariff rates are less than three per cent.

The official said while the new political government finds itself in difficulty because it has no fiscal space to pay subsidies, at the same time subsidies for one sector discourage development and export of other products. As a result, he said almost two-thirds of Pakistans exports consist of low quality textiles and clothing.

Since Pakistan has failed to diversify, it has to face worsening trade deficit. Recent budgetary measures to curb imports are likely to further adversely affect Pakistans exports, he added.

Analysts said if the Doha Round is successful, it is time for Pakistan to rethink its trade policy. It needs to move on to encourage export of other dynamic products and make use of opening of new markets.

Pakistan seeks market access to G-12 states: Industrial goods -DAWN - Business; June 27, 2008


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## Neo

*Services trade deficit crosses $6 billion ​*
KARACHI (June 27 2008): Pakistan's services trade deficit has crossed 6 billion dollars mark for the first time in the history of the country, up by 43 percent during the current fiscal year as compared to same period of last fiscal year mainly due to rising imports and decline in the export of services.

Despite the government efforts, services exports are rapidly declining, while the imports are increasing constantly during the current fiscal year and it is expected that services deficit would reach nearly seven billion dollars in FY08.

The State Bank of Pakistan statistics show that overall service sector exports stood at 2.926 billion dollars against imports of some 9.025 billion dollars during July-May of FY08, depicting a deficit of 6.098 billion dollars during the first 11 months.

The deficit also shows an increase of 1.84 billion dollars against the same period of FY07, as during July-May of FY07 overall services deficit stood at 4.25 billion dollars. Heavy payments on account of transportation (followed by raise in the tariff of shipping lines), travel services, insurance, technical fees and royalties are major contributors in the services trade deficit, economists said.

They said that rising imports and declining exports have also played a major role in widening the services sector deficit, as during the first 11 months of current fiscal year overall exports of services sector declined by 12 percent, while imports increased by 19 percent.

Pakistan has only one flag carrier ie Pakistan National Shipping Corporation (PNSC), therefor exporters and importers are compelled to hire and pay to the international shipping lines, economists said. Overall services sector exports stood at 2.926 billion dollars during July-May of FY08 as compared to 3.33 billion dollars during corresponding period of FY07.

The imports of services sector rose by 1.44 billion dollars to 9.02 billion dollars during the period against 7.58 billion dollars during the first 11 months of 2007.

The country earned some 960 million dollars on account of transportation against payments of 3.32 billion dollars; 245 million dollars earned from travel sector as against the payments of 1.45 billion dollars. Communication sector exports stood at 106 million dollars against imports of 98 million dollars.

Construction sector earned 33.8 million dollars, insurance sector 41.5 million dollars and 39.6 million dollars from financial sector during July-May of FY08 against payments of 47 million dollars, 135 million dollars and 172.2 million dollars, respectively. On month-on-month basis during May 2008 services sector deficit stood at 383 million dollars with 274 million dollars exports and 656 million dollars imports.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*World Bank promises to help develop FTIP project ​*
ISLAMABAD (June 27 2008): A six-member World Bank Institute-Poverty Reduction mission visited Foreign Trade Institute of Pakistan (FTIP), here from June 18 to 26 in the context of the World Bank-financed Pakistan public sector capacity building project.

According to a statement of FTIP, the objective of the mission was to help the Institute, assess its capacity building needs and prepare a medium-term capacity building strategy and implementation plan, including training, research capacity building, and outreach/policy dissemination/knowledge management, in line with the World Bank-financed Pakistan Public Sector Capacity Building Project and the government of Pakistan's trade policies.

The mission had several meetings with the FTIP, which is the intended technical agency of the Ministry of Commerce for capacity building, policy research, and training needs in trade-related issues. The mission appreciated the fact that the FTIP was being restricted to revamp the institution's training programme, build its research capacity and expand its outreach/policy dissemination/knowledge management strategy.

FTIP Director General Dr Safdar A.Sohail presented the mission with a comprehensive analysis of existing constraints and proposed plan to revamp its training and research capabilities.

The mission also met various stakeholders from the Ministry of Commerce to representatives of the Rawalpindi Chambers of Commerce and Industry (RCCI), the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), and the Trade Development Authority of Pakistan (TDAP). They confirmed the existence of real demand of services (training, research, and outreach) that could be met by a revamped and revitalised FTIP.

Based on the discussion, it was agreed that urgent training, research, and outreach activities would be implemented through short-term plan of action whereas a medium-term programme of actions (Phase II) would be implemented in the medium-term (about three years) within or out of the PSCB.

It is hoped that collaboration between WBI and FTIP will enhance the development and delivery of collaborative trade, research and training programme at the national as well as regional level. The World Bank mission comprised Salomon Samen (mission leader), Ravi Yatawara (WBIPR), Shabana Khawar, Anjum Ahmad, Shamsuddin Ahmed and Imtiaz Ahmad Sheikh (SASFP, Islamabad).

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*World Bank lends $38m for water resources ​* 
Saturday, June 28, 2008

ISLAMABAD: The World Bank has approved technical assistance worth $38 million for Pakistan in order to support the management and development of water resources in the Indus River Basin.

It will be the last approval of credit line for outgoing fiscal year 2007-08, ending on June 30, a source told The News here on Friday.

Owing to slow implementation of the reform process, WB lending slowed down compared to earlier commitments. Annual assistance of the WB remained over $1 billion in recent years, but it could only approve $500 to $600 million in the outgoing financial year.

The credit from the International Development Association (IDA), the World Banks concessionary lending arm, carries a 0.75 per cent service fee, a 10-year grace period and a maturity of 35 years.

The Indus Basin Irrigation System is the largest contiguous irrigation system in the world and Pakistan relies on it to provide both basic food security and supply water for all sectors of the economy. However, this massive infrastructure network is deteriorating and needs to be rehabilitated. Equally important will be the reforms to improve the allocation of water and its efficient use.

The objective of the Water Sector Capacity Building and Advisory Services Project for Pakistan is to improve the management and investment planning of water resources in the Indus River Basin.

There are three components to the project. The first component is capacity building of and support to federal institutions in water resources planning and management. The component includes, among other things, support for building human resources and institutional capacity in the federal institutions and support for developing studies, strategies and plans for improving water resources planning and management.

The second component of the project is improvement in water resources management and development. 

This component will include inter-alia: (i) upgrading of existing tools, databases, models and management systems; (ii) sediment management studies for the Indus system and the possibility of flushing sediments through the Tarbela reservoir and its impact basin wide; (iii) preparation of a power investment plan with focus on hydropower development in the upper Indus and conjunctive operation of dams and infrastructure; and (iv) feasibility studies and preparation of designs for quickly/easily implementable hydropower plants suitable for financing by international financial institutions.

The third and the final component is project management coordination, additional studies, training. This component will support the government, in particular the ministry of water and power (MoWP) with project management, including coordination of all project related activities and monitoring and evaluation of project impacts and technical and financial audits. This will also support institutional strengthening and training of the staff involved in water resources management.

Water sector issues are enormous and complex and addressing them will require a series of investments and long-term commitment, said Yusupha Crookes, World Bank Country Director for Pakistan. 

We hope this project will build the foundation for the renewal and sustainability of the water sector, which in turn will lead to better water services and improved irrigation and hydropower development.

The project aims to strengthen the Indus systems institutional and regulatory framework, bolster the technical capacity of the MoWP, the Indus River System Authority (IRSA), the Water and Power Development Authority (WAPDA) and the Planning Commission and to support the development of public-private partnerships in order to mobilise hydropower investments.

The development and management of the Indus Basin is a huge challenge, requiring very high levels of administrative, engineering and scientific capability, said Masood Ahmad, World Bank Lead Water Resources Specialist and project team leader.

This project will support water management and distribution, benefit sharing mechanisms, and financing strategies to help mobilise crucially needed investments in the water and hydropower sectors.

The Bank has a long history of partnership and collaboration with Pakistan in the water sector. It has supported more than 48 operations in irrigation, drainage, water resources development, and the power sector.

World Bank lends $38m for water resources


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## Neo

*US Congress approves new $150 million assistance ​*
WASHINGTON (June 28 2008): The US Congress on Friday endorsed new American $150 million assistance for Pakistan's socio-economic development as Senate also adopted the supplemental budget measure following its approval in the House of Representative.

The new assistance is over and above the continuing aid programs for the South Asian country and would be projected toward socio-economic development in the next financial year beginning October 1, 2008.

Top Democratic Senator Joseph Biden called the tranche of assistance as down-payment of $1 billion democracy dividend, pledged to help the new democratic government focus on well being of the Pakistani people. The US administration has already requested a total of $901 million for Pakistan in the year 2009.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Inflation up by 26.79 percent ​* 
ISLAMABAD (June 28 2008): The inflation measured through SPI was up by 26.79 percent in week ending on June 26 against same period of last year due to surging prices of vegetable, flour and milk. The SPI data released by the Federal Bureau of Statistics on Friday showed that prices of 16 essential commodities, including vegetables, wheat flour, eggs, milk, and pulses had increased during the week.

The price of one kg tomatoes increased from Rs 13.86 to Rs 15.84, potatoes Rs 19.42 to Rs 20.37, dozen eggs hen Rs 48.75 to Rs 50.67, LPG 11 kg cylinder Rs 687 to Rs 708.82, litre of kerosene increased from Rs 55.02 to Rs 55.57. Similarly, the prices per kg gram pulse washed increased from Rs 58.72 to Rs 59.15, wheat flour average quality Rs 22.52 to Rs 22.67, gur Rs 31.7 to Rs 31.93, firewood 40 kg Rs 238 to Rs 239.17 and kg masoor pulse washed Rs 111.88 to Rs 112.10. The prices of fresh milk and garlic also increased during the week.

With the increase in prices of essential commodities, the dearness for the low income group of Rs 3000 was recorded 29.74 percent more compared to last year. The increase was recorded 28.91 percent for families falling between Rs 3001 and Rs 5000 income group, 26.72 percent for families of Rs 5001 to Rs 12000, and 23.36 percent for families having monthly income of Rs 12000 and above. This led to an increase of 0.13 percent inflation during the week.

The trend of weekly SPI during last 10 weeks as compared to the previous as well as corresponding week of last year showed a continuing increase, escalating the difference from 23.71 percent on April 24 to 26.03 percent on June 26. The SPI bulletin, based on data of 53 items collected from 17 urban centres, showed increase in prices of 21 essential commodities, decline in 10, and prices of 20 commodities remained stable but dearer compared to last year.

Further analysis of the data showed that prices of 11 commodities declined during the week that included red chillies, onion, rice irri, chicken farm, rice basmati sugar, bananas, vegetable ghee loose and mustard oil. According to the FBS, the prices of 26 essential commodities remained stable during the week but prices of majority of them were up in double digits when compared to same period of last year.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan ready to boost trade ties with India: Faruqui ​* 
Saturday, June 28, 2008

NEW DELHI: Planning Commission Deputy Chairman Salman Faruqui, has said Pakistan is prepared to enhance economic relations with India on a reciprocal basis.

Addressing an Interactive Business Meeting, hosted by Federation of Indian Chambers of Commerce and Industry (FICCI) here, in honour of the Pakistani delegation led by him, he said over the last few years, trade between Pakistan and India has experienced a significant growth.

From 2001 to 2007, trade has grown from $236 million to $1.6 billion and it is projected to touch $2 billion in 2007-08.

Commerce Secretary Syed Asif Shah, Secretary Water and Power Ismail Qureshi, Pakistan High Commissioner Shahid Malik, Member National Assembly Azeem Daultana, Nazim City Government of Karachi Syed Mustafa Kamal, Planning Commission Chief Economist Dr Rashid Amjad, Alternate Energy Development Board Chief Executive Arif Alauddin attended the meeting.

The Deputy Chairman underlined that while bilateral trade has increased the trade imbalance is conspicuously in favour of India. Redressing this imbalance by increasing exports to India is a major part of our export drive. For making the economic relations mutually beneficial, he said that both the countries need to work out modalities to ensure that trade is carried out on a level playing field, especially by addressing para-tariff and non-tariff barriers being faced by Pakistani exports to India.

Referring to the area of investment, he said Pakistan is prepared to look at such requests, on a case-to-case basis, keeping in view our national interest and of course subject to India reciprocating in the same manner.

Noting that Pakistan has taken positive steps to increase interaction between business communities of both countries, the Deputy Chairman stated that Pakistan is already following a liberal visa policy for Indian businessmen and both the countries are presently discussing a more liberalised visa policy which will help businessmen on both sides.

Stressing the need to open bank branches by each country on a fast track, Faruqui said a Pakistani bank has already applied to open a branch in India and is awaiting approval.

He said that Pakistan would facilitate such an application from the Indian side when it is received. Syed Asif Shah, Secretary Commerce, stated that during the last four years, concrete steps have been put in place for increasing trade, including cross border movement of trucks at Wagah-Attari and signing of the Shipping and Protocol Agreement.

Pakistan has already upgraded trade facilities on Wagah-Attari border while India is also in the process of upgrading trade handling facilities on their side. Secretary, Commerce indicated that Pakistan plans to organize a single country exhibition at New Delhi in February 2009.

Pakistan will also welcome participation of Indian businessmen in Expo 2008, being held at Karachi, in October 2008.Ismail Qureshi, Secretary, Water and Power said that Pakistan and India are deficient in energy; Pakistan would be ready to consider cooperation in the field on a reciprocal basis.

Responding to an observation regarding the visa regime, Shahid Malik, High Commissioner of Pakistan, stated that the High Commission was already following a liberal visa policy for Indian businessmen and honours the recommendations made in this behalf by the recognized trade bodies of both the countries.

He further said that visas were being issued within 48-hours on receipt of applications. Earlier welcoming the Pakistani delegation Mr. K K Modi, past President of FICCI, stated that both India and Pakistan had experienced significant economic development in the recent past and there was enormous potential to enhance economic relations between the two countries to the mutual advantage of both.

Pakistan ready to boost trade ties with India: Faruqui


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*1,000MW power import accord with CARs in July ​* 
Saturday, June 28, 2008

ISLAMABAD: Pakistan will sign an agreement for the import of 1,000MW electricity from Central Asian Republics (CARs) during a meeting of the Inter-Governmental Council (IGC) to be held here next month, Minister for Water and Power, Raja Pervez Ashraf said while talking to the Ambassador of Kyrgyzstan, Nurlan Aitmurzaev who called on him here on Friday.

The Minister said that the agreements will be signed among Pakistan, Tajikistan, Kyrgyzstan, Afghanistan and the International Financial Institutions for the import of 1000MW and to further develop electricity trading arrangements between the Central and South Asian regions during the four day meeting of the IGC in the last week of July.

He said that Pakistan is facing energy crisis and all measures are being taken by the government to bridge the gap between demand and supply. The establishment of this electricity link between CARs and South Asia will strengthen the economic ties and enhance the bilateral relations among the countries, he added. He also stressed the need to explore possibilities for cooperation in other sectors particularly in tourism. He said that both the countries should exchange delegations to promote tourism between the two countries.

The Ambassador discussed other matters of mutual interest especially investment possibilities in water, power, transport and trade sectors. He said that Kyrgyzstan has great electricity potential with surplus power and will provide every possible assistance and technical cooperation in this regard.

During the meeting both underlined the need to expedite the actions on the decision signed in the last meeting of the Kyrgyzstan-Pakistan Joint Economic Commission.

1,000MW power import accord with CARs in July


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*High GDP growth in last five years raised living standard in Pakistan ​* 
ISLAMABAD (June 28 2008): High GDP growth over the last five years has reduced income-poverty ratio in a significant manner and raised the average living standards in Pakistan, but the country continues to grapple with issues that are fundamental to improve its abysmal human development levels.

After a period of low growth throughout the 1990s, the annual growth figure for Pakistan has been hovering around the 7 percent level since 2003-04. The current growth momentum of Pakistan's economy is largely the result of greater financial and trade integration and the good performance of the services and manufacturing sectors, said Mahbub-ul-Haq Human Development Centre annual report on 'Human Development in South Asia 2007'.

Although the growth in GDP has received strong support from foreign direct investment, the overall saving and investment levels in Pakistan continue to be unsatisfactory. The share of agriculture in GDP has declined, implying that Pakistan's economy is undergoing significant structural change.

The headcount index of poverty, which had increased from 25.8 percent in 1996-97 to 34.5 percent in 2000-01, saw a decline of more than 10 percentage points over the following four years. However, the gap between rural and urban poverty incidence has not seen any reduction, with the headcount index for rural areas roughly twice that of urban Pakistan.

Rising inequalities-income and non-income-have led to a weaker link between economic growth and poverty reduction in Pakistan. There has been a gradual erosion of the consumption share of the lowest 20 per cent and the consequent widening of the rich-poor gap.

Two-thirds of the rural households in Pakistan are landless and an almost similar proportion lacks access to tap water. In short, the seemingly high GDP growth in Pakistan is yet to be directed in an adequate manner towards the betterment of the deprived and the marginalised.

Agriculture sector still accounts for more than 43 percent of total employment, but labour absorption in the non-agriculture sector has been relatively sluggish. Low labour force participation rate, underemployment, high incidence of child labour, falling real wages for unskilled labour, growing proportion of educated unemployed and the flourishing informal economy are critical issues plaguing the labour market in Pakistan.

In terms of human development, the progress has been unsatisfactory. The average life expectancy has been stagnant between 1995 and 2005, while there has been a modest decline in infant mortality. The adult literacy rate is still very low, at 50 percent.

Pakistan is the most illiterate country within South Asia as it has not changed much in 10 years (1997-2007). The first South Asia Human Development Report in 1997 commented that while South Asia is the most illiterate in the world, Pakistan is among the most illiterate countries within South Asia. Ten years on, the picture has not improved much for Pakistan, said the report.

It was observed that it still has half of its population illiterate; has the highest number of out-of-school children in the world. It suffers from huge gender disparity at all levels of education.

The government is the largest provider of education, but the low quality of public sector education is the main issue behind most Pakistan's education failures. Pakistan is far behind in achieving education-related Millennium Development Goals (MGDs) set by the United Nations (UN).

Business Recorder [Pakistan's First Financial Daily]


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*Govt urged to restore confidence of investors ​* 
Saturday, June 28, 2008

LAHORE: Pakistan Industrial and Traders Associations Front (PIAF) Chairman Mian Abuzar has urged the coalition govt to come up with a strategy to restore the confidence of local and foreign investors.

At a press conference, the PIAF chairman said that the government should take cue from India where successive coalition governments have acted in unison to ensure progress of Indian economy. 

He said after a decade of cohesive policies India today is a force to reckon with in the global economy.

Abuzar said that former Prime Minister and his economic managers always showed a very pleasant picture to the people and now the nation is suffering due to their baseless statements. He said that the former rulers kept on lying for eight years and did nothing to build a single unit to produce electricity.

He also said had they taken an initiative for production of power in the country, economic situation would have been much better. 

But now due to power shortage, trade deficit and inflation are touching peaks and export targets have just become impossible to meet.

However, the chairman added that the government has also disappointed the electorate and industry. 

He said the country presently needs a prudent economic policy and better governance.

The intra-coalition disputes he added have adversely impacted both the governance and economy.

He said the February 18 elections and formation of the government had sent a positive signal abroad but due to differences between the two main parties, the economy could not make a jumpstart. 

He said India or Iran might grab the position that Pakistan currently enjoys as the easiest and cheapest corridor to the central Asian markets.

Govt urged to restore confidence of investors


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*Pak-Japan trade to grow more: Ayukawa ​*
KARACHI (June 28 2008): Every effort will be made to tap enormous potential to boost Pakistan-Japan trade, said the outgoing Managing Director of Pak-Suzuki Motor Company Kenichi Ayukawa. He was addressing a farewell dinner given by the Board of Directors of Pakistan Japan Business Forum (PJBF) on June 25, 2008 at Karachi.

Ayukawa said that he enjoyed every minute of his stay in Pakistan. In order to speed up the trade, he would visit Pakistan from Japan once or twice a year, he added. Earlier, PJBF member of Board of Director Sohail P Ahmed in his address of welcome paid glowing tributes to Ayukawa for promoting Pak-Japan trade and hailed that under his leadership Pak Suzuki Motor Company became the first automotive company. Senior Vice Chairman of PJBF, Masaharu Domichi, also appreciated the efforts of Ayukawa.

Business Recorder [Pakistan's First Financial Daily]


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*Gold exploration project to transform Balochistan: PM ​* 
Saturday, June 28, 2008

ISLAMABAD: Prime Minister Syed Yousuf Raza Gilani on Friday said the mega project for the exploration of gold, copper and other allied minerals in Chaghi, launched jointly by Antofagasta of Chile, Barrick Gold of Canada and the government of Balochistan, will bring about transformation in Balochistan. He said this while talking to a delegation headed by Jean Paul Luksic, Chairman Antofagasta, a Chilean joint venture company, which called on him here. The prime minister assured that the government will extend all necessary assistance for the timely completion of the project. 

Gilani asked the delegation to ensure that maximum jobs would be given to the people of Balochistan and arrangements would be made for imparting requisite skills training to them so that they can avail job opportunities. 

He said Pakistan will consider the signing of a Free Trade Agreement with Chile. He said that a government delegation will soon visit Chile to explore new avenues of cooperation and collaboration. 

Luksic informed the premier that the project involves an investment of US$1-1.5 billion which is likely to eventually reach US$5 billion. He said the annual copper export would be over $1 billion. The meeting was also attended by Secretary Petroleum and senior government officials.

Gold exploration project to transform Balochistan: PM


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*Balochistan facing resource constraints​*
KARACHI, June 27: With a mega-size cabinet of more than four dozen members, the Balochistan government is facing political pressures, resource constraints and physical and social infrastructure demands.

The province is almost half of Pakistan, with a tiny population that is widely scattered, and is in need of capital-intensive development schemes for logistics, education, health, business operations and what not.

For the next fiscal year 2008-09, beginning from July, the Balochistan government is taking up implementation of Rs15.74 billion development plan which has a built-in deficit of Rs8.30 billion.

Prime Minister Syed Yousuf Raza Gilani has promised a Rs3 billion special grant, but it remains a tentative possibility and hence has not been shown in the provincial budget as an income.

Balochistan Finance Minister Mir Asim Kurd, however, in his budget speech on June 21 said that release of this amount would reduce budget deficit from Rs8.30 billion to Rs5.30 billion.

The planners in Balochistan government want to complete 300 plus development schemes in the next fiscal year so that they could bring down the development budget from the existing Rs34 billion to a level which is manageable for them.

Completion of schemes in larger durations has its own consequences, said Ahmed Baksh Lehri, Additional Chief Secretary and boss of planning in Balochistan, adding, planning and development in Balochistan is not an enviable task where resource constraints are an unending problem and there is no end to mounting political pressures from a coalition.

Groaning under an overdraft of Rs19 billion from the State Bank of Pakistan, for which it was made to pay penalty at the rate of four per cent every year till it was converted into a soft loan last year, Balochistan started the year 2007-08 in a very difficult condition.

It announced a development outlay of Rs13 billion with Rs10 billion deficit, but it ended up spending Rs10.8 billion and completed 226 development schemes. The throw forward was brought down from Rs37 billion to Rs34 billion.

Balochistan carries a huge backlog of development task. It emerged as a province in 1970 on Pakistan map. Before getting a provincial status, Balochistan was an administrative unit controlled by the executive.

For those who were given task to control Balochistan from 1947 to 1970, their focus was Quetta.

Sui gas was discovered in early 50s and that sustained Pakistans economy, but Balochistan remained out of the agenda of planners of the federal government when it operated from Karachi or from Islamabad.

After getting status as a province in 1970, Balochistan started with a development budget which was less than Jinnah Hospital, Karachi, Lehri informed with a sarcastic smile.

As he recalled, the first-ever university of the province was established in 1971 in a college building. Few more colleges were added, primary school buildings were established but the donor driven ideas caused serious gaps in the educational system.

There was no end to woes and troubles for Balochistan after it emerged as a province. The four-year bloody war from 1973 to 1977 left deep scars on Balochistans economy and social conditions.

Rolling of Soviet tanks in Kabul sometimes in 1979 or so launched the big game in the region. There was an unending influx of Afghans. It changed the socio-economic and even moral fabric of traditional Baloch secularism and chivalry.

Balochistan emerged as a hub of drug trade and gun-running on international highway. How the planners in the federal government were looking at Balochistan when all these troubles were taking place.

In 1970, the federal government provided only Rs90 million for development budget to Balochistan. This was reduced to Rs62 million in 1971-72. It was Rs120.50 million in 1972-73. It was only Rs344 million in 1977-78. It was in 1985-86 that Balochistan got Rs938 million and Rs1.17 billion in 1986-87.

In 1991-92 when provinces were given for the first time right on their natural resources, Balochistan development budget soared to Rs4.40 billion but were scaled down for four years.

In last 37 years, total development investment in Balochistan had been only Rs150 billion, Mehfooz Ali Khan, the Balochistan Finance Secretary, revealed.

Not only that bureaucrats and politicians are unhappy on federal governments attitude towards Balochistan, but the businessmen are also critical of Islamabads indifferent approach.

Logistics is the key issue for expansion of business in this province, Khalifa Tahir, a former president of Balochistan Chamber of Commerce and Industry, said.

He blamed the federal government for applying a criterion worked out for densely populated Punjab and NWFP on Balochistan.

A stretch of a mile road in the Punjab or NWFP may service about 10,000 persons, Khalifa Tahir argued who said perhaps a 100-mile stretch of road in Balochistan may connect two villages with about 20 to 40 houses.

We dont have an I. I. Chundrigar Road where we can provide jobs to thousands in Balochistan in a small cluster, Mehfooz Ali Khan, the Finance Secretary, said. Here, he said the government would have to invest many times more than in Sindh, Punjab or NWFP.

Balochistan facing resource constraints -DAWN - Business; June 28, 2008


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*Pakistan and India settle IPI gas pipeline fee issue ​*
NEW DELHI (June 28 2008): India and Pakistan have resolved commercial differences holding up a proposed multi-billion-dollar gas pipeline from Iran, oil ministers of both nations said on Friday. The project, which aims to transport gas from Iran to Pakistan and India, was first mooted in 1994 but has been stalled by a series of disputes over prices and transit fees.

Qureshi also said that Pakistan would "provide foolproof security" for the planned 2,600-km pipeline, expected to pass through Balochistan region: "I am happy to report that as far as Pakistan and India are concerned, we have resolved all bilateral issues. There is no issue whatsoever that needs to be addressed now," Pakistan's Oil Minister Shah Mehmood Qureshi was quoted as saying by Press Trust of India (PTI) news agency.

Qureshi, who also holds Foreign Affairs portfolio, is here on a three-day visit, and made the announcement after talks with Indian Oil Minister Murli Deora. "We have reached an agreement on the principles of charging transit fee. India remains fully committed to the project," the Indian minister was also quoted as saying by PTI. Qureshi also said that Pakistan would "provide foolproof security" for the planned 2,600-km (1,615 miles) pipeline, expected to pass through Balochistan region.

APP adds: Pakistan and India have decided to hold foreign secretary levels talks here on July 21 to launch the fifth round of their more than four-year old composite dialogue. The decision came at the meeting between Foreign Minister Shah Mahmood Qureshi and Indian External Affairs Minister Pranab Mukherjee here on Friday.

Addressing a joint press conference, Pranab Mukherjee announced that Pakistan chapter of Pakistan-India judicial committee would visit Indian jails next month. Shah Mahmood Qureshi said the environment was conducive to resolving outstanding issues and the people of both the countries supported the peace process.

All political players in Pakistan and India were also supportive of the peace process, he said. The Foreign Minister said the secretary level talks would discuss Kashmir and other issues. The issues of Siachen and Sir Creek were resolvable, he said.

"We should seize the opportunity to resolve all outstanding issues," Shah Mahmood Qureshi emphasised. People of both the countries wanted peace and stability, which was necessary for economic development of South Asia, he said. The two ministers expressed the common resolve to take the peace process forward.

Shah Mahmood Qureshi said Pakistan wanted India to join IPI gas project, as it was beneficial for both energy-starved countries. Describing the project as doable, he said both the countries were paying huge subsidies on account of energy. To a question on the issue of death row prisoner Sarabjit Singh, he said his case was under consideration.

Referring to the ceasefire and confidence buildings measures, Qureshi said Pakistan wanted maintenance of ceasefire on the Line of Control (LoC) besides more confidence building measures. The working groups of both the countries would review the implementation status of such CBMs. When asked about security in Peshawar, he said the northwestern provincial capital was absolutely secure.

He Pakistan has adopted three-pronged strategy to counter terrorism including dialogue with those who are against terrorism, economic and social development of the area and use of force as the last resort.

Referring to the issue of prisoners, he said it had been brought to our notice that there was mishandling of prisoners and these cases had been published in Pakistani press. "It is an humanitarian issue and recommendations of the Judicial Committee should be implemented in letter and in spirit," he said.

The Foreign Minister, in his opening remarks at the press conference, said he had come to India with positive mind and realistic agenda. He urged that serious thought should be given to resolving outstanding issues.

"I have come as a representative of democratic government and coalition partners. The region has huge potential which can be exploited if peace, and stability is there," he added. He said Pakistan wanted liberal visa regime, people-to-people contacts and economic cooperation.

Earlier, Pranab Mukherjee said although this was the first visit of Shah Mahmood Qureshi to India as Foreign Minister, he was no stranger to India and had visited many times in the past. He said the composite dialogue process had substantial achievements to its credit. This process had proved to be a useful instrument for developing and enhancing bilateral relations.

"It is our expectation that the fifth round of this process, to be launched in July, will be even more fruitful than the earlier rounds," he said. Mukherjee said Pakistan's Deputy Chairman of Planning Commission held discussions. Issues of energy, security, food security, poverty alleviation, amongst others, were challenges, which confronted both the countries, he said.

He noted that certain ideas for cooperation were emerging in the areas of wind and thermal energy. The joint anti-terror mechanism also met in Islamabad recently and the discussions in that meeting were constructive, Mukherjee said.

He said India was committed to peace, friendship and good neighbourly relations with Pakistan and to develop these relations in an atmosphere free from violence or the threat to use violence. "Such an atmosphere has to be positively promoted," he said.

"I believe we both have certain ideas on the table for detailed technical follow up in the composite dialogue once the fifth round begins at the secretaries level," he said. The resurgence of democracy and popular participation in Pakistan was a positive factor for bilateral relationship and indeed for the whole region, Mukherjee said.

The scope for cooperation was immense and covered all fields, he said, adding India hoped that in the fifth round of the composite dialogue, concrete achievements would continue and pave the way for a qualitative transformation of bilateral relations.

Business Recorder [Pakistan's First Financial Daily]


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*Gwadar Port to refund $2 million: PSA default​*
KARACHI, June 27: The Gwadar Port Authority (GPA) in its board meeting has decided to refund $2 million performance bond to the operator Port of Singapore Authority (PSA) despite the fact that the latter defaulted on its agreed business plan.

Sources privy to GPA board meeting held on June 22, at a local hotel, told Dawn that some members raised objections over the decision to refund the performance bond to the port operator, who did not only fail to perform but also defaulted on its business plan.

They said that as per the business plan the PSA was bound to use the ports operational capacity up to 50 per cent in the year 2007 and 100 per cent capacity this year.On the contrary the PSA failed to bring in even a single vessel to the port during last 18 months and installed 22-year old refurbished two gantry cranes, which are yet to be tested by an independent surveyor.

Meanwhile, port and shipping experts say that the PSA has totally defaulted on agreed concession terms and conditions and was dragging its feet without making any investment in marine services (tug, pilot and mooring boats), port operation and cargo handling.

The PSA has two local partners  AKD securities and NLC  who are primarily involved in the development of a free economic zone and logistics. Therefore, they have little role in bringing the port operational.

These experts said that during 18 months period only one vessel chartered by the state-owned Trading Corporation of Pakistan (TCP) loaded with 72,000 tons of wheat was given berth after lighterage.

Therefore, the performance of the PSA could well be judged from the fact that for any port operator the primary responsibility is to induce shipping lines so that a port becomes operational but in the case of Gwadar any shipping line has yet to show interest.

The shipping circles are flabbergasted over the GPA decision to refund the performance bond of $2 million to PSA at a time when the federal cabinet has proposed a revisit of the contract signed between a consortium of Singapore Port Authority/AKD Securities.

The cabinet also considered the GPAs revised bill for carving a new corporate structure of the Gwadar Port, which could be based on professionals and qualified people in maritime affairs.

The maritime experts said that had the GPA or for that matter the ministry of ports and shipping monitored the PSA performance during the last 18 months, the situation would not have been so bad.

These experts have suggested that not only the PSA contract should be revisited but the entire bidding procedure for the Gwadar Port should be investigated in which other bidders  West Port Malaysia, and Globe Marine (Saudi Arabia and Pakistan International Container Terminal were not allowed sufficient time to prepare their tender documents for getting the concession.

Gwadar Port to refund $2 million: PSA default -DAWN - Business; June 28, 2008


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*KSE share volume plunges to 7-year low at 30m​*
KARACHI, June 27: Trading volume on the Karachi Stock Exchange on Friday fell to a seven-year low at 30m shares as investors kept to the sidelines owing to political uncertainty and the absence of leading brokers who remained busy with the formalities of the rollover week after the expiry of the matured June settlements.

The KSE 100-share index was off by 99 points at 12,353.19.

However, it was not the lowest total as an all-time single-session low was recorded at 15.141m shares on Sept 3, 2001 after the full implementation of T+3 trading system. The second lowest figure was hit at 16.565m shares on Oct 8, 2001 after the US attacked Afghanistan and the highest so far at 1.122 billion shares on April 16, 2004 owing to heavy buying in OGDC, PTCL at the time of their debut.

Some analysts also attributed the steep fall in the volume figure to the rollover week as the matured June settlements were rung off the board and the July contracts assumed the role of ruling deliveries. Clearing problem faced by some of the brokers was another aiding negative factor, they added.

The share business appears to be in a real trouble as investors are not inclined to put fresh money in stocks owing to an uncertain future outlook, brokers said.

The shares market suffered fresh pruning as a section of investors indulged in profit-selling on a number of counters at the inflated levels amid light trading but there were not many willing buyers.

Analysts said it was the extension of Thursdays late selling as investors were not inclined to hold onto their long positions even on the blue chip counters due to law and order situation in the tribal areas and negative US comments on the prevailing conditions in the border areas.

The KSE 100-share index finished with a fall of 98.89 points at 12,353.19 as compared to 12,452.08 a day earlier, reflecting the weakness of the leading base shares. Its junior partner the 30-share index was marked down by 134.16 points at 14,459.14.

Minus signs held a strong lead over the plus ones under the lead of United Sugar and Siemens Pakistan, off Rs16.67 and Rs14.20. Other ended modestly lower under the lead of EFU General, JS & Co, Attock Petroleum, PSO, Shell Pakistan and Pakistan Services, which fell by Rs4.13 to Rs5.40.

Bata Pakistan and Ferozsons Lab managed to finish higher by Rs75 and Rs14.04, respectively, followed by Haseeb Waqas Sugar, Shahtaj Sugar, Agriautos, Indus Motors, Chaudhry Textiles and EFU General, up by Rs5 to Rs9.09.

Trading volume fell to a new low at 30m shares as compared to 146m shares a day earlier as losers maintained a strong lead over the gainers at 190 to 66, with 28 shares holding on to the last levels.

KESC came in for modest support and was marked up by 19 paisa at Rs5.24 on 3m shares followed by MCB Bank, off Rs3.33 at Rs329.67 also on 3m shares and EFU General, higher by Rs9.09 at Rs364.50 on 2m shares.

Bankislami lower by 10 paisa at Rs14.94 also on 2m shares, Arif Habib Securities, easy by Rs1.64 at Rs163.11 on 1m shares, OGDC, lower by Rs1.26 at Rs125.61 also on 1m shares and NIB Bank, easy by 11 paisa at Rs11.48 on 1m shares.

Other actives included JS & Co, off by Rs5.40 at Rs535.50 on 1m shares, Dominion Stocks, lower by six paisa at Rs6.07 on1m shares and D.G. Khan Cement lower by 68 paisa at Rs67.81 on 0.853m shares.

FORWARD COUNTER: Engro Polymer came in for stray selling and fell by 41 paisa at Rs29.55 on 4m shares, Habib Bank, lower by Rs2.17 at Rs215.54 on 3m shares and PTCL, easy by 39 paisa at Rs39.21 on 2m shares.

MCB Bank followed them, off by Rs3.31 at Rs331 on 1m shares and JS & Co, off Rs5.51 at Rs545.59 on 0.888m shares.

DEFAULTER COMPANIES: Trading activity on this counter was slow in sympathy with the ready section as investors most of the time kept to the sidelines. Price changes and volume figures in most of the shares were modest.

Barring a deal of 0.105m shares in Zeal Pak Cement, which ended lower by two paisa at Rs2.76, other actives were neglected, which showed fractional either-way changes.


KSE share volume plunges to 7-year low at 30m -DAWN - Business; June 28, 2008


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*'PTA deposits over Rs 50 billion and $291 million in exchequer' ​* 
ISLAMABAD (June 28 2008): Pakistan Telecommunication Authority (PTA) has deposited more than Rs 50 billion in exchequer besides 291 million dollars as license fees while mobile phone companies are depositing more than Rs 101 million annually as direct taxes, said Senator Talha Mehmood, Chairman Senate Standing Committee on Interior here on Friday.

While addressing a press conference, he said that besides huge investment and revenue generation, mobile companies have provided more than one million jobs to unemployed youths in Pakistan.

Talha Mehmood praised the performance of the PTA saying that the authority has deposited direct revenue of Rs 44.9 billion, which it collected from mobile companies till this date, while Rs four billion were paid to Ministry of Science and Technology for Universal Services. He said that Rs 2.4 billion were paid to Ministry of Information Technology for Research and Development.

The PTA has collected 291 million dollars as license fees from mobile companies and deposited it in national exchequer, he said, adding that the mobile companies are depositing more than Rs 101 billion in national exchequer in the head of direct taxes, including GST, income tax and other taxes.

He said that two weeks time was given to PTA to provide the data regarding the remaining 2.1 million unauthorised and unregistered SIMs. Talking on the issue of blockage of unauthorised and unregistered SIMs, he said that the PTA has provided him CD regarding the blockage of more than 5.4 million unauthorised and unregistered SIMs and he has constituted a committee to check the data.

The committee will submit its report in two weeks, he added. He said that the deadline for blocking the unregistered SIMs was extended till July 31st and after August 1, massive crackdown will be launched. Besides blocking SIMs, people having unauthorised SIMs will be arrested. "I have asked the PTA to issue notices to cell-phone companies regarding the operation after August 1", he added.

He said that mobile phone service in Pakistan is cheapest in the world but it was exploited and misused as rules and regulations were not followed. "My sole target and objective is to bring complete transparency in this sector", he added.

These companies have been directed to issue SIM only after verification from Nadra, Talha said and added that they had raised the issue of incapability of Nadra to check 100,000 SIMs daily.

"I visited Nadra office on Friday and met with its chairman who briefed that Nadra is capable to verify more than 100,000 SIMs a day", he said, adding that Nadra is upgrading its whole system with the cost of 3.8 million dollars which will make process more easy.

Business Recorder [Pakistan's First Financial Daily]


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*Pakistans IT sector progressing rapidly ​*Thursday June 26, 2008 

ISLAMABAD:--Pakistans IT industry is progressing rapidly at more than 50 per cent annually for each last four years, with many local IT companies winning huge contracts from domestic as well as international market, an official of PSEB (Pakistan Software Export Board) said in a statement issued here. 
Quoting the figures released by SBP (State Bank of Pakistan) last year, a quantum annual increase of 61.18 per cent has been registered with IT exports of US $116 million against the previous years US$72 million. 

Many companies are successful in obtaining huge domestic as well as international businesses contracts and venture capital funds from foreign investors. The official disclosed that Vopium, a Pakistani IT company, has recently gained venture capital fund worth USD 6.75 million from Enex Group SA, Luxembourg. The companys software allows saving of 40-90 per cent when making international calls or sending SMSs from mobile phones. 

Another recent example of two leading US based Venture Capital (VC) firms, ePlanet Ventures and Draper Fisher Jurvetson (DFJ), providing funds to Naseeb Networks, speaks volumes of the trust placed in the potential of the Pakistans IT industry by foreign investors, he added. 

The PSEB official further said that there is a lot of potential in Pakistans IT industry. NetSol, a local leading IT company listed at NASDAQ and has recently been dual-listed for trading on the Dubai International Financial Exchange (DIFX). The presence of Pakistani IT companies on international stock exchanges is a positive sign for the foreign investments in Pakistan IT industry. 

Regarding domestic requirements, the official said that Pakistani IT companies are also fulfilling the needs of local industry and many leading telecom companies are utilizing the services of Pakistani IT companies to automate and enhance their operations. Mobilink, for example, has recently singed LMKR, a leading IT company of Pakistan and global provider of Geo technology and information technology services, to automate its Warehouse processes. Similarly, Ufone signed Teradata to expand its Data Warehouse with state-of-the-art 5550H nodes and to enhance its customer support services. 

Financial enterprise solutions, developed by various Pakistani IT companies, have been successfully deployed worldwide. To name a few are TPS, MIXIT, Autosoft Dynamics and Systems Limited. The solutions developed by these companies have been successfully deployed in leading banks and financial institutions around the globe, he added. 

PSEB is a Government agency mandated to promote Pakistans IT Industry, including software, IT Enabled Services, hardware and call centers locally and globally. PSEB has been facilitating the IT Industry through its programs in Human Capital, Office Space, Marketing, Company Capability Development, Telecom Bandwidth, Industry Finance, Public Policy, Strategy & Research, and Facilitation. Government has already introduced a package of incentives including tax exemptions for the IT sector until 2016, 100% foreign equity and earnings repatriation and low-rent facilities for IT companies. 

Pakistan News Service - PakTribune


----------



## opinion786

1. Pakistan economy was the 3rd fastest growing economy after China & India in 2006.

2. Pakistan in 1999 was an economy of $75 billion and now in 2006 it is a $160 billion economy. [Source].

3. Under Musharraf&#8217;s vision: 9 world class Engineering universities being developed. [Source. Project halted due to Political uncertainty]

4. Private sector institutions have increased from 36,096 (in 1999) to become 81,103 (in 2006). (Source)

5. Pakistan is the 3rd best in world Banking profitability. [Source].

6. Pakistan software now values around $2 billion, including $1 billion exports. [Source].

7. Around 80,000 direct jobs & 500,000 indirect jobs have been created by the Telecom sector alone. [Source].

8. Industrial Parks are being setup throughout the country for the very first time. [Source & this & this].

9. Major Mega projects like the Saindak, Rekodiq, Marble production, Coal production and Mining & Quarrying are being pursued. [Source].

10. GDP growth is now 6&#37;. Earlier it was 3.5%.

11. Foreign Reserves from $1 billion to $17 billion.

12. Karachi stock market: rose from 700 points to 13,000 points. [Source].

13. Literacy rate has improved by 11%. [Source].

14. Poverty levels have decreased by 10%. [Source].

15. 3 dams have been constructed: Mirani, Subakzai, Gomalzam dams. [See this, this, and this. (Kurram Tangi Dam)].

16. 6 Motorways completed or under construction: M1, M3, M8, M9, M10, M11. [Source].

17. Six major highways under construction. [Source].

18. GWADAR advance Mega Sea port developed under Musharraf&#8217;s vision. [Source].

19. Historic 100% increase in Tax collection of $11 billion. [Source & this].

20. Large scale manufacturing is 30 year high. [Source].

21. Construction activity is 17 years high.

22. Newly found World class copper- gold deposits in Chagai will fetch around $600 million per year.

23. A new Oil refinery with UAE will fetch $5 billion & will process 300,000 oil barrels a day. [Source].

24. CNG sector has attracted over $70 billion investment in last 5 years. [Source].

25. Industrial sector registered 26% growth. [Source].

Our leader - Musharraf (for sources)


----------



## opinion786

For Pro-Musharraf web-site and Economic information:

Our Leader - Musharraf

Our leader - Musharraf


----------



## bhangra12345

opinion786 said:


> 1. Pakistan economy was the 3rd fastest growing economy after China & India in 2006.


The statistics of 2006 for Pakistan has been told by the govt as fudged.
I wouldnt put my bet on this number also. Aziz govt overspent Rs558bn, fudged figures: Dar



> 2. Pakistan in 1999 was an economy of $75 billion and now in 2006 it is a $160 billion economy. [Source].



For growing from 75 to 160 in 7 years, i.e. a growth of 113&#37; in 7 years, which is more than 15% growth per year. Go figure


> 3. Under Musharraf&#8217;s vision: 9 world class Engineering universities being developed. [Source. Project halted due to Political uncertainty]





> _establishing five engineering and 3 technology varsities of international standards and it was likely that a couple of varsities would go functional in two or three years time._


from the source dated jan 2006, he was in power from that time to dec 2008, i.e. 2 years, how many univs came up or was this an "election promise" as we say.



> 4. Private sector institutions have increased from 36,096 (in 1999) to become 81,103 (in 2006). (Source)


The private sector institutions include private schools and madrassas. So what is the break up?


> 5. Pakistan is the 3rd best in world Banking profitability. [Source].





> _The rise in earning and profitability indicators was particularly noteworthy, partly reflecting the high spread between deposit and lending rates (700 basis points). _



This high spread indicates that there is not much competition in the market and it is a sort of virtual monopoly.


> 6. Pakistan software now values around $2 billion, including $1 billion exports. [Source].



from a post just two posts above
"Quoting the figures released by SBP (State Bank of Pakistan) last year, a quantum annual increase of 61.18 per cent has been registered with IT exports of US $116 million against the previous year&#8217;s US$72 million."

whom should I believe? Note in the source it was given as IT sector. Or some "difference" in meaning of IT?

etc. etc, so may I ask you, what has Musharaff done for Pakistan?
Next time please cross check your sources.


----------



## Vinod2070

bhangra12345 said:


> For growing from 75 to 160 in 7 years, i.e. a growth of 113% in 7 years, which is more than 15% growth per year. Go figure



Much of this growth was not real growth but the effects of inflation/currency fluctuation.

The economist PM of Pakistan failed to mention this while claiming to double the economy in 5-6 years flat.


----------



## bhangra12345

Vinod2070 said:


> Much of this growth was not real growth but the effects of inflation/currency fluctuation.
> 
> The economist PM of Pakistan failed to mention this while claiming to double the economy in 5-6 years flat.



Actually, it is a result of "number management" + inflation.

Sometime around 2002, Pakistan changed its way of measuring GDP, so these two numbers are not comparable.



> I questioned the sagacity behind the repeated comments by the senior leaders claiming that the economy had doubled in size in the six year period since 2001 implying that it had grown by 12 per cent a year. It was again repeated at the Lahore seminar by the senior officials that the GDP had increased from $70 billion to $140 billion in half a dozen years.This rate of increase would be plausible only if it was in nominal terms and factored in also the large (20 per cent or so) increase produced by the rebasing of the national income accounts to 2000-01.
> 
> In other words, a 12 per cent rate of increase was partly the result of inflation and partly the consequence of the accounting change in the estimation of national income accounts. No serious economic analyst uses nominal increases in GDP or GNP as a measure of the growth of the economy. If the rate of inflation jumped, say, to 100 per cent a year would the economic managers celebrate the fact that the size of the economy had more than doubled in one year?



DAWN - Opinion; May 08, 2007


----------



## Neo

*Interim regulatory changes cause temporary recovery on KSE ​* 
Sunday, June 29, 2008

KARACHI: Karachi stocks market made the best and also the worst records during the week ending June 27.

The benchmark KSE-100 share Index recorded highest intra-day increase of 960 points (or 8.6 per cent) in a single session on Tuesday, and generated six-year low turnover of 29.7 million shares on Friday.

These two extremes were due to overnight changes in regulations that the SECP made in capital markets for an interim period of 30 days, affective from Tuesday, June 24. 

On week-on week basis the KSE 100-share Index gained 698 points or six per cent and closed at 12,353 points.

The parallel running junior 30-Index also posted a recovery of 1,095 points or 8.2 per cent on weekly basis and concluded at 14,459 points.

On an average, market generated a turnover of 149.5 million shares this week with Rs203 billion funds to overall market capitalisation rose to Rs3.795 trillion.

The Securities and Exchange Commission of Pakistan (SECP) temporarily amended on Monday that no one share can dip beyond one per cent in a day against five per cent was earlier and similarly any share can go as high as to 10 per cent maximum in a day against five per cent. It also banned short-selling completely in market.

The Commission also relaxed investors by giving them a 15 days exemption of submitting zero per cent receivables to the Exchange against the credit that they borrow for buying shares. The apex regulator also announced accepting guarantees of banks having A (Single A) rating as collateral against the margins that borrowers are supposed to submit for the leverages for more than 15 days.

Prior to these amendments the KSE had lost more than 4,500 points (or almost 29 per cent) from the all time high of 15,676 points closing on April 18, 2008, to 11,162 points by the Monday, June 23. Only on Monday, chief 100-Index lost 493 points or 4.23 per cent.

The amendments invited huge, but artificial buying that helped market scoring 960 points or 8.6 per cent only on Tuesday. The KSE-100 Index also rose by another 308 points or 2.54 per cent on Wednesday, and finally up by 22 points or 0.18 per cent on Thursday.

The regulators controlled market turned to its ugly face on weekend when more than dozen stocks hit lower circuit of one per cent on across the board amid generating six year low turnover at 29.7 million shares. The condition of limiting single day fall maximum to one per cent only, however, restricted Friday losses on 100-Index to 0.79 per cent or 99 points.

Analysts observed that the Tuesday buying was an ignorant response of a section of investors, who realized later that they had committed a blunder. They (investors) tried to withdraw the funds they had injected during rest of week sessions, and that is why market fell negative on weekend, they added.

A section of analysts was of the opinion that the temporary changes in regulation would frustrate short-term investors, as new regulations allow investors entering into the market, but there is no exit.

As far as the long term scenario is viewed then it does not depict positive picture. If, which is looked more likely, the central banks raises key policy rates by another 50 to 100 basis points in its Monetary Policy (MP) to be announced shortly then the question of liquidity crunch would become more complex.

The raise of 150bps (1.5 per cent) discount rate by SBP in its interim MP statement announced on May 23, has already draught excessive money from the market. Another increase of discount rates would affect market very badly, said analysts.

Low interest rates and free flow of money run capital markets in upward direction, but corrective measure that the high officials were taking to fix the local economy might keep the stocks market depressed.

Fundamentals have turned weaker and sentiments too, but an influx of positive news e.g. announcement of June corporate results in line with market expectations could save the market from the worst.

Therefore, speculative buying in fundamentally weak financial stocks and volatile energy stocks placed market in positive territory this week. But the short to medium term scenario is yet uncertain. 

Stocks fundamentals are yet to be changed to positive and issues on economic and political fronts are needed immediate attention of government officials.

The resolution of oil and food inflations on economic front; war like situation in federally administrated tribal areas on law & order front; and lawyers movement amid President Musharraf impeachment issue resolution on political front could only improve stocks fundamentals on long term basis.

Weekly Movement in Blue Chips
Symbols Open on Close on Difference

Monday (Rs.) Friday (Rs.) (Rs.)

Adamjee Insu. 271.25 237.45 -33.8
Attock Refin. 262 252.4 -9.6
GGKC 59.58 67.81 8.23
EFU Gen.Insu. 427 364.5 -62.5
ENGRO 261.78 280.81 19.03
FFBL 34.01 35.97 1.96
HBL 190 210.37 20.37
LUCK 93 98.91 5.91
MCB 269 329.67 60.67
NBP 141.48 148.98 7.5
OGDCL 122.5 125.61 3.11
Pak Reinsu. 104.2 87.68 -16.52
POL 361.5 368.52 7.02
PPL 251.5 248.47 -3.03
PSO 402.1 421.45 19.35
PTCL 38 39.03 1.03


----------



## Neo

*US govt asked to meet Kabuls wheat needs: Smuggling continues​*
KARACHI, June 28: The US government has endorsed Pakistan governments assessment of wheat smuggling to Afghanistan and has estimated it at around 1.8 million tons during the last season. It continues this season also.

We have asked US administration to meet Afghanistans wheat demand this season, a senior officer of the federal food ministry in Islamabad informed Dawn by telephone on Saturday.

For years together, we were providing a few hundred thousand tons of wheat to Afghanistan every year, the officer said. Last season, however, the wheat flow to Afghanistan jumped to unusual high level. The only explanation is that a large number of Afghan refugees, who went back from Peshawar and Quetta to their homes, got addicted to Pakistans hard white wheat and hence the unending demand for it in Kabul and Kandhar.

As wheat smuggling to Afghanistan shows no respite so far, the Punjab governments prescription is to stop wheat supply, since the beginning of harvesting, to two border provinces, the NWFP and Balochistan. This has caused a protest and unending outcry in the two provinces against Punjab.

Imagine if we stop gas supply to Punjab, a senior bureaucrat in Quetta quipped when his attention was drawn towards reports of scarcity of wheat flour in many parts of Balochistan. Flour mills industry leaders in Quetta are also bitter on Punjab governments decision to stop wheat supply and provide wheat flour only on permit.

A consensus view of the NWFP and Balochistan millers is that Punjab wants to protect and promote its flour milling industry at the cost of two provinces, which is causing unemployment and hardships to the

consumers.

It is the responsibility of security forces under federal government to guard and seal international borders, a businessman remarked and he explained that provincial governments were not responsible to check and monitor movements on international borders.

Why flour mills and consumers in NWFP and Balochistan are suffering if the security forces are not able to seal the borders, Naeem Butt, the president of All Pakistan Flour Mills Association in Peshawar said.

The flour mill industry leaders of NWFP and Balochistan call this inter- provincial restriction on wheat movement from Punjab as illegal and unconstitutional. Punjab government is providing 8,500 tons of wheat and wheat flour to Peshawar every month, a food ministry official informed.

The official conceded that the Punjab governments decision to restrict inter- district and inter-provincial wheat movement has caused lot of heart burning and bitterness in NWFP and Balochistan and that it was illegal and unconstitutional.

In virtually every meeting of Economic Coordination Committee (ECC) of the cabinet or of the Minfal we tried to convince the Punjab government of serious political and economic implications of its decision to restrict wheat movement, he said adding there have been some relaxations in these restrictions.

Naeem Butt, however, contests this assertion of the food ministry official and said wheat flour is being supplied against permits that it is very difficult to get into Punjab. Flour importers in NWFP have to go all the way to Lahore to get permits and finally to district authorities in some border districts. There are hassles and some money involved to get a permit for a few tons of wheat flour, he alleged.

The NWFP milling industry leaders have already filed a constitutional petition in the Supreme Court against the Punjab governments decision to restrict wheat movement. Naeem Butt said that the petition will come up for hearing on July 4 next. The millers had filed a similar petition against the Punjab governments restrictions in 2003, which was decided in favour of industry leaders.

Prices of wheat, wheat flour and bread are high in NWFP and Balochistan mainly because of the Punjab governments restrictions. Prices of wheat and wheat flour in Karachi, too, are showing no signs of respite. Karachi now gets wheat from only three districts of the province on permits.

More than 60 per cent of 78 mills in Karachi are closed because of wheat scarcity, a leader of flour mills industry said.

Wheat prices touched Rs2,300 and 2,350 for a 100 kg bag in Karachi as very little quantity is trickling in from three districts, from other districts and from Punjab at a very high price. Wheat flour is now being sold at Rs27 to Rs32 a kg in Karachi.

Our job is to make wheat available in the market which we have done, Mir Nadir Magsi, the Sindh food minister said on telephone. Prices of wheat and wheat flour, he said, are the responsibility of city government.

With the holy month of Ramazan hardly 12 weeks away, prices of all essential items -- wheat flour, sugar, pulses, milk, curded, vegetables, edible oil has started showing a rising trend. Market analysts say that prices fixation and monitoring may be the responsibility of the city government but an effective mechanism to ensure steady supply and stable prices can only be ensured if a joint strategy is worked at all the three tiersfederal, provincial and district.

The government is giving final touches to a grand Ramazan package, the food ministry official said from Islamabad.

US govt asked to meet Kabuls wheat needs: Smuggling continues -DAWN - Business; June 29, 2008


----------



## Neo

*Textile sector likely to get Rs 30bn despite gloomy exports​*
** Govt mimicking approach of previous regime
* Move described as political rather than economic​*
ISLAMABAD: Despite dismal exports performance in the outgoing Fiscal Year 2007-08, the textile sector is likely to grab a Rs 30 billion Research and Development (R&D) support for the next Fiscal Year 2008-09, a high placed government official informed Daily Times Saturday. 

The Economic Co-ordination Committee (ECC) of the Cabinet which is scheduled to meet on July 1, 2008 at Karachi, in the chairmanship of the Prime Minister Syed Yousuf Raza Gilani, is likely to allocate the amount for R&D support for the textile sector, the official added. 

The textile sector, which has already enjoyed a huge sum of Rs 19 billion subsidies as R&D support during the outgoing Fiscal Year 2007-08, has failed to produce results and over all sector sectors exports have witnessed a decline of 2.5 percent. The textile exports during July-May period of outgoing Fiscal Year 2007-08 have managed to reach at $9.591 billion as against the $9.837 billion in the same period of previous Fiscal Year 2006-07. 

After availing subsidy equal to $320 million in the last two years, the textile sector has failed to increase the textile export to the same level. Textile exports have witnessed a decline of $246 million in July-May period of outgoing Fiscal Year 2007-08 as compared to the same period in the previous fiscal year. The authorities concerned feel that R&D support should not be allowed, as this is making local textile industry more un-competitive and it is relying on subsidies rather than competition. 

This textile subsidy is to be provided out of the budget estimates for the 2008-09 and it would be an additional burden on national exchequer. The present government, which has been criticising the previous government for allowing out of the budget R&D support to the textile sector, is going to repeat the same practice in the next fiscal year. 

The previous government had not allocated a single rupee under the head of R&D in the budget for the Fiscal Year 2007-08; however, it approved and provided out of the budget R&D support to the tune of Rs 19 billion. However, the next ECC meeting is likely to approve a huge sum of Rs 30 billion as R&D for the textile sector without taking in to account the performance of the sector. 

The authorities are of the view that R&D support was actually meant for product development and research for improvement in designs and export competition. According to the reports the R&D support is being misused to a large extent and authorities concerned have already decided to conduct audit of the textile units availing such subsidy. 

At this point of time when the country is under pressure due to projected heavy budget deficit of Rs 737 billion in the outgoing Fiscal Year 2007-08, allocation of a huge amount as textile subsidy is being viewed as political decision rather than an economic one. 

Budget deficit of the country has been estimated at Rs 661 billion and after ensuring saving of Rs 79 billion cash balance surplus of provinces, the consolidated budget deficit of the country is set to come down to Rs 582.3 billion in the upcoming Fiscal Year 2008-09. 

Government has plans to borrow Rs 557.6 billion from internal and external resources to finance the budget deficit in the upcoming Fiscal Year 2008-09. According to the governments strategy to finance the budget through opting different borrowing options in the next Fiscal Year , the government would borrow Rs 165.2 billion from external sources, non-bank borrowing of the federal government will be Rs 242.9 billion and Rs 149.5 billion are to be borrowed from banking sector. Apart from the internal and external borrowing options, privatisation proceeds to the tune of Rs 25 billion would also help bridge the income expenditure gap and meet the overall consolidated budget deficit of Rs 582.3 billion.

Daily Times - Leading News Resource of Pakistan


----------



## Neo

*Rice, kinnow and potato export to Iran expected to increase​*
KARACHI: Pakistan exports of rice, kinnow and potatoes are likely to increase as Iran has abolished import duty on these items, traders told Daily Times Saturday. 

There was an import duty of up to 150 percent on rice, potato and kinnow in Iran, which has now been removed.

The president of Zahidan Chamber of Commerce and Industry and Mines (ZCCI&M), Abdul Hakim Reigi, told the business community recently that Iran has made the import of rice, kinnow and potato zero-rated. The local exporters now have decided to increase their export to Iran and were willing to export local rice and other items to Iran and other countries via Iran. 

Ijaz Ahmed Choudhary, a rice exporter, told Daily Times that the decision of cutting the import duty by Iran would definitely boost Pakistani rice export. Pakistani exporters would be able to export rice in large volumes because of good quality of local rice. 

He said last year Pakistan could not export large quantity of rice to Iran because the last rice crop was not as good as it was expected to be. Besides, the huge import duty on rice by Iran was a big hurdle for Pakistani exporters although Iran remained a big market for the export of Pakistani items. 

Abdul Wahid, chairman Fruit and Vegetable Association, said although no notification has been issued by the government of Iran, but we think that this cut of import duty will definitely increase Pakistans export of fruit to Iran.

He said local market supplies would not be hurt by increased export of fruit to Iran because Pakistan has a surplus of fruit and vegetables. Traders were of the view that the government of Pakistan should allow some concession on export of rice, potato and kinnow from Pakistan to Iran so that the exporters could generate more foreign exchange for the country.

Daily Times - Leading News Resource of Pakistan


----------



## Neo

*KPT unveils rail, port connectivity plans​*
KARACHI: Karachi Port Trust (KPT) unveiled plans regarding rail connectivity with the port and cargo yards Saturday. 

Chairperson KPT, Nasreen Haque said as a first step the railway track dismantled connecting TPX and Groyne Yard would be restored. 

Meeting with the General Manager Operations Pakistan Railways, Asad Saeed she said railway line would also be extended to the coal stacking area near Groyne Yard for direct loading from there. 

This would ensure prompt movement of import and export cargo from and to the port presently hampered, as it has to pass through the heavily congested metropolis facing acute traffic problems, she added. 

Chairperson emphasized the importance of advance planning by railways in line with the KPT plans for development of their infrastructure and rolling stock enabling proper logistics to cater for the present and future traffic.

Daily Times - Leading News Resource of Pakistan


----------



## Neo

*Emaar Pakistan ushering in new lifestyle concept​*
islamabad: Emaar Pakistan, the country subsidiary of Emaar Properties is recreating the same successful Dubai model in Pakistan with its master planned communities, highlands and Canyon Views in Islamabad and Crescent Bay in Karachi. 

According to a press release Saturday these projects are part of a $2.4 billion investment in the country by Emaar. 

Managing director Emaar Pakistan, Steve McCartt said the world over preferences of community living was changing. 

Today, driven by high purchasing power and the need for luxury living, youngsters seek convenient lifestyle options. This can be provided only through integrated lifestyle environments, which is a core competency of Emaar, he added.

Emaars expansion to Pakistan is in line with its Vision 2010 to become one of the most valuable companies in the world through geographic expansion and business segmentation. 

It is in this context that the master-planned communities introduced by Emaar Pakistan assume significance. 

Emaars designer communities offer all these advantages to residents. This approach of Emaar to create a new lifestyle has been one of the catalysts of the property boom in Dubai, the companys home market. 

Emaars focus on quality and in creating a new lifestyle choice has earned the trust and interest of customers. 

The new standards of living rolled out by Emaar are now a benchmark in residential developments in Pakistan. 

Emaar Pakistans path-breaking initiative of ushering in a distinctive lifestyle to the country is now a benchmark for modern community living. 

From a modern familys perspective, an urban lifestyle environment must feature educational institutions for the children, healthcare facilities for all, leisure and retail choices, entertainment options, fitness facilities and a sense of community living with a vibrant community centre. 

Daily Times - Leading News Resource of Pakistan


----------



## Neo

*Iran-Pakistan-Cooperation ​*
Caretaker of Economic and Finance Ministry Hossein Samsami on Sunday held talks with Pakistani Minister of Finance, Revenue, Economic Affairs and Statistics Syed Naveed Qamar on broadening Tehran-Islamabad economic cooperation. 

In a meeting with his Pakistani counterpart who is currently on a visit to Tehran to attend the 17th session of Iran-Pakistan Joint Economic Commission, Samsami expressed hope that mutual trade and economic cooperation would further expand. 

He said that Iranian economy is experiencing a boom thanks to the privatization drive adding that Iran is willing to share experience with Pakistan to usher in the same process in Pakistan too. 

"Iran is interested in bilateral cooperation with Pakistan in water, power and railway fields." 
Referring to Tehran-Islamabad considerable potentials and common interests, Pakistani finance minister, for his part, said that his country is quite ready for boosting cooperation with Iran. 

Syed Qamar expressed hope that the country would widen banking relations with Iran.

Iran, Pakistan keen on boosting economic cooperation - Irna


----------



## Neo

*Long-term financing for power plant import ​*
EDITORIAL (June 29 2008): Coming at the heels of National Electric Power Regulatory Authority's proposal to the Karachi Chamber of Commerce and Industry (KCCI) to set-up its power generating units so as to meet the power shortage in the city, understandable should become the decision of the State Bank of Pakistan to allow import of power plants and machinery under 'Long Term Financing Facility (LTFF)', pointing out that the initiative was prompted by requests from the exporters and industrialists to meet their power requirements amid a continuing power shortage across the country.

It was only a day earlier when speaking at the third meeting of the KCCI's Public Sector Utilities, Power and Gas Sub-Committee, Member (Privatisation) of Nepra Maqbool Ahmed Khwaja had observed that the country was facing a serious power shortage, leading to long hours of load shedding which hampered industrial production in no small a way. Quoting a precedent, in this context, he made ready reference to Wapda's load shedding in Islamabad for around six to eight hours.

To address this predicament, as he pointed out, the government allowed the long ailing utility giant to establish 50MW power units without the Nepra's permission. It will, however, be noted that Khwaja also sought the KCCI's help to reduce power theft. But justifying the rise in power tariff, he said that tremendous increase in the world oil prices had compelled the Nepra to revise power tariff upward.

In so far as the rather belated gesture of SBP is concerned, with reference to LTFF Scheme of 2007, it advised that from July 1, 2008 financing for import of generators and captive power plants, meant for use in the eligible sectors and sub-sectors as per list given in Schedule 1 of LTFF Scheme, will also be admissible under the Scheme.

Needless to point out, this long due initiative can go a long way to help industrialists and exporters have their own power plants and machinery under soft loan scheme, at a time when the country stands threatened by the worst ever shortage of power.

However, this is not to say that all segments of power consumers, including traders, industrialists and households, had remained silent spectators of the poorly managed outages, and did nothing, on their own to brave its calamitous consequences.

So to believe will be simply naïve to say the least. For every category of power consumers across the country who could afford it did contribute to the needed effort, if not uselessly to help the Wapda and the KESC overcome their troubles, but from their own sense of enlightened self-interest.

This should leave little to doubt from the increasingly massive sale of generators of various descriptions, besides resort to UPS on an ever widening scale year after year. The same can be said about the people's urge for conservation of energy too, much earlier than the rulers' bid to acquaint them with the advantages of saver bulbs.

Add to this the offer of wind and solar power generation systems in Pakistan by Emerging Energy Systems (EES), a firm that claims to be operating in the Middle East and North America, and Korea's Hyundai Corporation's earlier move to introduce its Packaged Power Station (PPS) as a prompt solution to the prevailing power crisis, and one would have a fair idea of the immense support the country can mobilize to end its power woes from different enabling thrusts.

Business Recorder [Pakistan's First Financial Daily]


----------



## opinion786

> =bhangra12345;169987]The statistics of 2006 for Pakistan has been told by the govt as fudged.
> I wouldnt put my bet on this number also. Aziz govt overspent Rs558bn, fudged figures: Dar



You believe Darr? Himself a manipulator? 

Dar's criticism termed 'financial engineering' 
Business Recorder [Pakistan's First Financial Daily]




> For growing from 75 to 160 in 7 years, i.e. a growth of 113&#37; in 7 years, which is more than 15% growth per year. Go figure



Yes, actual growth is around this much. Real GDP is around 7%. Rest is inflation adjusted. Just becuz we adjust inflation later doesn't mean the economy hasn't boomed. Go figure.



> from the source dated jan 2006, he was in power from that time to dec 2008, i.e. 2 years, how many univs came up or was this an "election promise" as we say.



Get complete information before you judge. He started HEC in 2001-02.

a) Air University (established 2002)

b) Institute of Space technology, ISB (established 2002)

c) Sardar Bahadur Khan Women University, Quetta (established 2004)

d) University of Science & Technology, Bannu (established 2005)

e) University of Hazara (founded 2002)

f) Malakand university, Chakdara (established 2002)

g) Karakurum International university, Gilgit (established 2002)

h) University of Gujrat (established 2004)

i) Virtual University of Pak, Lahore (established 2002)

j) Sarhad University of IT, Peshawar (established 2001)

k) National Law University, ISB (2007)

l) Media University, ISB (2007)

m) University of Education, Lahore (2002)

n) Lasbella University of Marine Sciences, Baluchistan (2005)

o) Baluchistan University of IT & Management, Quetta (2002), etc.




> The private sector institutions include private schools and madrassas. So what is the break up?



Both are meant for education purposes. If you had known, that Madressahs are NOW registered institutions and governed by Education board and they follow a specific syllabus with includes Science subjects.

Leave aside private schools and you'll see MAJORITY % are PUBLIC schools!

Punjab - schools 66,770 (58 percent) were public schools 
Sindh - schools 46,738 (about 79 percent) were public schools
NWFP - schools 29,430 (72 percent) were public schools
Balochistan - schools 9,742 (about 85 percent) were public schools




> from a post just two posts above
> "Quoting the figures released by SBP (State Bank of Pakistan) last year, a quantum annual increase of 61.18 per cent has been registered with IT exports of US $116 million against the previous year&#8217;s US$72 million." whom should I believe? Note in the source it was given as IT sector. Or some "difference" in meaning of IT?



Yes, if you would have just tried to know in detail...

State Bank of Pakistan adopted BPM 5 Reporting system to report the IT exports revenue, which restricted the export figures to US$116 million only in 2006-07. 

In India, the Reserve Bank of India follows the BPM 6 (also called MSITS) Reporting System, which raises its exports to billions of US dollars. BPM 6 includes sales to multinationals, earning of overseas offices & salaries of non-immigrant overseas workers to export revenue. 

Using the MSITS Reporting System, Pakistan IT Industry exports are estimated at US$ 1.4billion while the industry size is estimated at US$ 2.8 billion. It is significant to note that Pakistan IT exports growth in each of the last few years has been more than 50%.

State Bank Reporting Earnings - $116 million

Estimated Total IT Industry Export Revenue - $ 1.4 billion

Estimated Total IT Industry Size - $ 2.8 billion

Pakistan Software Export Board - Industry Overview (Official State govt site)




> etc. etc, so may I ask you, what has Musharaff done for Pakistan?
> Next time please cross check your sources.



Now this I call ignorance or bias against Musharraf. Pakistan is 100% more better than since 1999.

There may be two three ways of recording and presenting in a report. 
1- Annual comparison.
2- Monthly comparison corresponding to last year.
3- Comparison from 2000

So if State Bank says something, it is never wrong - we just need to check in more details to show what it means to say and compare. Next time pls confirm before you judge.


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## opinion786

> Bhangra12345;170047]Actually, it is a result of "number management" + inflation. Sometime around 2002, Pakistan changed its way of measuring GDP, so these two numbers are not comparable.[/CODE]



See this again is lack of information. If its number management, why hasn't the new PPP government challeneged it? See the latest "Economic Survey" of Pakistan report issued by PPP and they have acknowledges all the past figures.

One e.g: Per Capita Income 2008 - $1000
Daily Times - Leading News Resource of Pakistan 

Pakistan rebased in Nawaz sharif era 1998; so the figures of 1999 and 2008 are comparable.


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## opinion786

*The Pak Economy: Bigger than We Think​*
By: Dr. Nayyer Ali

25 June 2004: The Finance Ministry of Pakistan came out with the Annual Economic Survey last week, and it offered both a huge surprise, and an explanation for an economic mystery that had developed over the last seven years. *The mystery was how did Indias economy, measured on a per person (commonly called per capita) basis, become so much larger than Pakistans? *

After the first 45 years of growth, Pakistan had enjoyed a faster rate of growth resulting in a higher per capita GDP (gross domestic product) than India. Since 1991, India has grown faster than Pakistan, but it started from far behind. However, about 1998, Indias statistics surged past Pakistan, and widened their lead through the next several years. By 2003, India had a GDP per capita of 500 dollars, while Pakistan, depending on the source, was about 450. Measured using an alternative technique that takes into account the lower costs of services and labor in poor countries (i.e. a haircut in Pakistan does not cost 15 dollars) to more accurately reflect purchasing power, India was listed as being way ahead at 2800 dollars versus only 1900 for Pakistan.


This was an obvious statistical paradox as any visitor even today to Karachi and Mumbai can tell. How can Indians have a statistical standard of living that is 50% higher than Pakistanis, but on the ground there is no Pakistani equal to the miserable poverty of large segments of the Indian population? World Bank data on poverty shows that even today the proportion of the Indian population living on less than two dollars per day in purchasing power is much higher than in Pakistan. *Consumption statistics on such mundane items like electricity and food show Pakistan as equal or better than India. And statistics on underweight and malnourished children favor Pakistan.*

*Calculating the size of the economy (the GDP) is in fact a very complex and difficult task. And then to calculate the growth from one year to the next is even more difficult.* Throw into that such factors as inflation and technological changes and the picture can get very murky. Imagine a chess game that you photograph, and then someone tells you what each player does for the next 50 moves. If the information is totally accurate, 50 moves later will you be able to replicate the actual situation on the chessboard. But if the information is not accurate, if there are new pieces being introduced, and if you dont understand some of the moves, you will quickly end up with a chessboard that does not resemble what has really happened. The best thing to do is to go back to the actual game, and take a new picture.


The economy is like that chess board but even more complicated. For example, lets say that in a certain year 10 million tons of wheat are grown and sold at 200 dollars per ton. The next year 11 million tons of wheat are grown, but sold at 180 dollars per ton. Did the economy grow, or not? In dollar terms there was a 1% decline, but actual wheat production jumped ten percent. If a new car comes with air bags but costs the same in dollars as last years car that did not, is that growth? Measuring the economy is in fact quite complex. 


The first step in measuring an economy is establishing a profile of the GDP. This is done by creating a base year. But as the economy changes and adds new products and services that never existed before, the base year must be updated to accommodate that. In many countries, the rebasing is done every five years, and no less than every 10 years. For a variety of reasons, this has not happened in Pakistan. *Pakistan has only rebased twice, in 1969 to the 1960 base year, and in 1988 to the 1980 base year.* Up till this year, the economic statistics were using the 1980 profile of the economy, a hopelessly out of date profile. *In 1997, the Nawaz Sharif government began the technocratic process of rebasing. This process, which involved IMF representatives, was completed this year, and the economy was rebased to 1999 data. *


The effect of rebasing was dramatic. *In Indias case, they rebased in 1998 to 1994 as the new base year, and that is why comparative statistics show a huge leap forward for India in 1998. For Pakistan, the rebasing showed that the economy is actually a full 20% larger than previous statistics had shown. *In fact, Pakistans economy is 95 billion dollars in size, *with a per capita income of 650 dollars, which is about 15% above Indias.* The purchasing power figures have not been generated yet, but should show Pakistan somewhat ahead.


In addition to the economy being larger, this statistical change means that other figures, like the amount of debt to the size of the economy, are better. The debt to GDP ratio is now 75%. And government spending (both education and military) and taxes are a smaller fraction of the economy than previously thought.


This rebasing doesnt give a poor person a better job or send an illiterate girl to school. It does not bring credit to any single government, who should be judged more on the rate of growth than the size of the economy. But it does suggest that Pakistan, far from being a failed state, is much more successful at development than many realized or have given credit for.
Welcome to Pakistan Link

*This article was written in 2004 - therefore Pakistan has progressed much ahead!*


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## Vinod2070

But the per capita income as per the IMF, WB and CIA sources (available at List of countries by GDP & - Wikipedia, the free encyclopedia) still don't say that Pakistan is ahead. IN fact they claim that India is slightly ahead.

And it is only because the IMF (or was it WB) recently changed the PPP calculation for India and China reducing their GDP in PPP terms by ~ 40%. I am not sure if such a recalculation was done for Pakistan or it was not thought to be required?

Even the nominal GDP per capita for Pakistan is bit lower than India as per all three sources.

Pakistan is also lower on the HDI index, so it suggests that while both countries are wretchedly poor but India is not worse off than Pakistan overall in human development.

Not that India compares itself to Pakistan in economic matters!


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## opinion786

> bhangra12345;169987]This high spread indicates that there is not much competition in the market and it is a sort of virtual monopoly.



This you observed for Banking sector. That there is not much competition in market?

*Banks State & Private*

1.	State Bank of Pakistan
2.	First Women Bank Limited 
3.	National Bank of Pakistan 
4.	Allied Bank of Pakistan, Karachi 
5.	Arif Habib Bank Limited, Karachi  
6.	Askari Bank, Rawalpindi 
7.	Atlas Bank, Karachi 
8.	Bank AL Habib, Karachi 
9.	Bank Alfalah, Karachi 
10.	BankIslami Pakistan Limited, Karachi 
11.	Crescent Commercial Bank, Karachi 
12.	Faysal Bank, Karachi 
13.	Habib Bank, Karachi 
14.	Habib Metropolitan Bank, Karachi 
15.	JS Bank 
16.	KASB Bank, Karachi 
17.	Muslim Commercial Bank (MCB), Islamabad 
18.	Mybank Limited, Karachi 
19.	NIB Bank, Karachi 
20.	PICIC Commercial Bank, Karachi 
21.	Saudi Pak Non-Commercial Bank, Karachi 
22.	Soneri Bank, Karachi 
23.	United Bank, Karachi 
24.	Bank Of Punjab, Lahore 

*Foreign banks*

1.	Abn Amro Bank, limited Pakistan 
2.	Albaraka Islamic Bank BSC(EC), Lahore 
3.	American Express Bank Limited, Karachi 
4.	Mitsubishi Limited, Karachi 
5.	Citibank, Karachi 
6.	Deutsche Bank AG, Karachi 
7.	Habib Bank AG Zurich, Karachi 
8.	Hongkong and Shanghai Banking Corporation, Karachi 
9.	Oman International Bank SOAG, Karachi 
10.	Standard Chartered Bank Limited, Karachi 
11.	Barclay Bank, Karachi 


*Development financial institutions*

1.	Pakistan Industrial Credit and Investment Corp Limited, Karachi 
2.	Pak Kuwait Investment Company Limited, Karachi 
3.	Pak Libya Holding Company Limited, Karachi 
4.	Pak-Oman Investment Company Limited, Karachi 
5.	Saudi Pak Industrial and Agricultural Investment Company (Pvt) Limited, Islamabad 
6.	House Building Finance Corporation, Karachi 
7.	Investment Corporation of Pakistan, Karachi 
8.	National Development Finance Corporation, Karachi 

*Specialized banks*

1.	Industrial Development Bank 
2.	Punjab Provincial Cooperative Bank 
3.	SME Bank 
4.	Zarai Taraqiati Bank

*Investment banks*

1.	Al-Towfeek Investment Bank Limited 
2.	Asset Investment Bank Limited 
3.	Atlas Investment Bank Limited 
4.	Crescent Investment Bank Limited 
5.	Escorts Investment Bank Limited 
6.	First International Investment Bank Limited 
7.	Fidelity Investment Bank Limited 
8.	Franklin Investment Bank Limited 
9.	Islamic Investment Bank Limited 
10.	Jahangir Siddiqui Investment Bank Limited 
11.	Orix Investment Bank (Pakistan) Limited 
12.	Prudential Investment Bank Limited 
13.	Trust Investment Bank Limited 

*Micro finance banks*

1.	The First Micro Finance Bank Limited 
2.	Khushali Bank 
3.	Karakuram Bank 
4.	Network Micro Finance Bank 
5.	Pak Oman Micro Finance Bank 
6.	Rozgar Micro Finance Bank, Karachi 
7.	Tameer Microfinance Bank Limited 

*Islamic banks*

1.	Dawood Islamic Bank Limited 
2.	Dubai Islamic Bank 
3.	Meezan Bank 
4.	AlBaraka Islamic Bank 
5.	BankIslami Pakistan Limited 
6.	Emirates Global Islamic Bank


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## opinion786

Vinod2070 said:


> But the per capita income as per the IMF, WB and CIA sources (available at List of countries by GDP & - Wikipedia, the free encyclopedia) still don't say that Pakistan is ahead. IN fact they claim that India is slightly ahead.
> 
> And it is only because the IMF (or was it WB) recently changed the PPP calculation for India and China reducing their GDP in PPP terms by ~ 40%. I am not sure if such a recalculation was done for Pakistan or it was not thought to be required?
> 
> Even the nominal GDP per capita for Pakistan is bit lower than India as per all three sources.
> 
> Pakistan is also lower on the HDI index, so it suggests that while both countries are wretchedly poor but India is not worse off than Pakistan overall in human development.
> 
> Not that India compares itself to Pakistan in economic matters!



Yes the article mentions this recording by these world institutions. 

India re-based in 1998 and hence the giant leap forward in recording.

Anyway, I do acknowledge Indian economy progress. But, it doesn not mean that we dis-credit our Pakistani leadership for what it has done, envisoned and achieved! We have progressed far much under Musharraf!


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## Vinod2070

opinion786 said:


> Yes the article mentions this recording by these world institutions.
> 
> India re-based in 1998 and hence the giant leap forward in recording.
> 
> Anyway, I do acknowledge Indian economy progress. But, it doesn not mean that we dis-credit our Pakistani leadership for what it has done, envisoned and achieved! We have progressed far much under Musharraf!



There is no doubting that Pakistan's economy did well over the last few years.

The revised GDP calculation that I talked about came in 2007, so it was not mentioned in the 2004 article given by you.

Some links are:

The great fall of China - Los Angeles Times

IMF Survey: Global Growth Estimates Trimmed After PPP Revisions

This recalculation took 40 % of the GDP away from China and India and better reflect their actual economy size.

Not sure if a similar recalculation happened for Pakistan and if so what was it's impact.


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## opinion786

Vinod,

i think Pakistan has not gone under such re-valuation. Such re-valuation may not necessarily reduce the PPP (purchasing power parity) of the country, it may increase it as well. 

Pakistan's PPP has increased. In Shaukat Aziz era it was $475 billion.... and now it has INCREASED to become $504.3 billion Economy of Pakistan - Wikipedia, the free encyclopedia

I checked both these sites you shared. They are primarily talking about Purchasing Power Parity, which is also called GDP PPP. The GDP economy itself has not decreased nor shrinked. But the effect of the economy's boom has not effected the large majority (maybe due to inflation) and hence Purchasing Power parity has been re-valued. To calculate how much population actually benefitted from this economic boom & hence global contribution.

Puchasing power parity (PPP) (local) is the capacity of the economy (nation) to buy & purchase. Though PPP has increased in PAkistan and India both, but yes, maybe not as much in our villages. 

The _ITALICS_ I quote form the articles you shared.

_The *revisions to PPP rates* resulted in a substantial *reduction in the PPP-based GDP* of some large fast-growing economies and consequently *reduced their estimated contribution to global growth*._

You see, They are talking about reduction in PPP (power purchasing parity) above. They mean to show the economy's contribution towards welfare & buying power of their own country and hence global growth.


_The idea is that a country's GDP adjusted for purchasing-power parity provides a more realistic measure of relative economic strength and *of living standards* than the unadjusted GDP numbers._ The great fall of China - Los Angeles Times

As India and China are very big countries, hence this more accurate measuring - gave a better picture of Living standards of country itself. This international NEW re-valuation has varied from the country's own estimated Living Standard & Measurement. 

In Pakistan, we measure it through PLSM (Pak Living & standard measurement).


_New and *innovative data validation tools were implemented to improve the quality of the data*, which were drawn from regional surveys of prices for more than 1,000 goods and services in countries._

Now they have covered more areas & regions in India and China & included above than 1000 goods. Modernized their valuation methods. 

Pakistan is slightly larger than U.P (India) - maybe our PPP would not be as effected - incase re-valued. 

But, inflation has effected the country's ability to take direct benefit of this economic boom - Pkaistan of 6-7&#37; and in India's case 9%.


_India also had a sizable downward GDP adjustment in PPP terms._ IMF Survey: Global Growth Estimates Trimmed After PPP Revisions

So you see, they're only talking about the purchasing power parity of the country, and not the economy as whole.


The article I gave, talks of re-basing the whole economy's measurement & its worth, not just Purchasing power (PPP).

Even if you would see in Wikipedia; they record the economy's various aspects - Pakistan: Economy of Pakistan - Wikipedia, the free encyclopedia
GDP at PPP $504.3 billion (2008) 
GDP per capita $3320.12 (2008) 
GDP real growth rate (at PPP) 6.9% (2008)
GDP growth rate 6.6% (2008 est 

But, the worth of Pakistan's economy is $160 billion.
www.pndpunjab.gov.pk/user_files/File/17th to 23rd December.pdf 

Daily Times - Leading News Resource of Pakistan 

This above was to best of my knowledge. Regards!


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## Neo

*Pakistan, Iran likely to conclude $7b IPI gas pipeline deal in July​*
30 June 2008 

DUBAI  Iran will host a trilateral meeting in Teheran next month to finalise the proposed multi-billion dollar Iran-Pakistan-India gas pipeline project.

"Iran would soon invite the Petroleum Ministers of India and Pakistan to conclude a deal on $7 billion gas pipeline project in July," a top Pakistani official told Khaleej Times yesterday. 

In a recent series of meeting, Pakistan's Minister for Finance and Economic Affairs Syed Naveed Qamar met Iran's Minister for Petroleum Gholam Hossein Nozari on Saturday and discussed the proposed pipeline project.

The ministers also exchanged views to further boost cooperation in petroleum sector of the two countries.

Naveed Qamar was in Teheran to head a high level delegation to attend the 17th session of Pak-Iran Joint Economic Commission, which concluded yesterday.

The two sides already agreed that the experts had covered all aspects of the project and that Gas Sales and Purchase Agreement (GSPA) between Iran and Pakistan was now finalised and that it was time to move ahead.

India and Pakistan need natural gas from Iran to overcome energy shortages in order to maintain their economic growth. Both countries are resisting US pressure to end talks on multi-billion dollar pipeline project, which they want to build by December 2012.

The proposed pipeline would run 2,615 kilometres from Iran to India through Pakistan and initially carry 2,120 million cubic feet of gas a day.

"Pakistan is keen to move ahead and I want to see whether India is ready to engage with us fully or it would like to spend some more time thinking about it, Qureshi said.

According to an official handout, Pakistan's Finance Minister Naveed Qamar and Iran's Minister for Petroleum Gholam Hossein Nozari also discussed matters relating to the promotion of bilateral cooperation between the two countries.

The Iranian Minister for Petroleum said that the visit of the Federal Minister for Finance of Pakistan would go a long way in promoting bilateral cooperation between the two countries in the fields of commerce, trade and energy.

Naveed Qamar praised bilateral relations between the two countries, which were rooted in common history, culture and religion.

Ambassador of Pakistan, Shafkat Saeed, and senior officials from Iran and Pakistan were also present during the meeting.

Khaleej Times Online - Pakistan, Iran likely to conclude $7b IPI gas pipeline deal in July


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## Neo

*Improving public debt management​*
The government plans to improve its management of the public debt. Thatis good news, but the vague strategy emerging from media reports isnt. Initially, it was reported that the federal government may shift the accounts of its ministries and public sector non-financial corporations (PSNFC) to the SBP to facilitate netting of surplus and overdrawn bank balances to limit its borrowing to the net shortfall. Later, the government denied this strategy.

The strategy seemed logical because, instead of borrowing more, credit balances in some accounts of the state could be utilised to fund shortfalls in others. But, going about achieving that objective requires visualising the consequences it may entail. A sudden move could damage the financial system that, fairly or unfairly, is benefiting from cheap surpluses in bank accounts of the state offices.

The issue requiring examination is the possible reduction in public borrowing the move could lead to. According to the Analytical Accounts of Scheduled Banks posted on the SBP website, at the end of April 2008 the position was as shown in the table.

If these statistics are correct, they indicate a net overall surplus of nearly Rs436 billion in the accounts of federal ministries and PSNFCs, though not every federal ministry or PSNFCs had a surplus. Many of them were net borrowers; this is reflected in the overall bank borrowing (Rs378 billion) of the federation and PSNFCs, proving that banks were not only benefiting from state funds but were also funding the states borrowing needs.

Funds lying in saving, current, call and other deposit accounts represent liquidity that state entities consider appropriate for making their routine payments. In some, cases these balances may have been excessive but it is undeniable that the state and the entities it guarantees (conventionally assigned zero risk) cant afford to fail in their payment commitments and therefore must carry requisite liquidity.

Of the total deposits (nearly Rs714 billion), fixed deposits of the PSNFCs amounted to Rs149.4 billion. A similar break-up of the federal government deposits has not been provided but, surely, a part of the total were fixed deposits. Given the huge federal debt, keeping funds in fixed deposits seems odd. But in that respect too the tenor of the deposits is of essence.

Based on their experience of delays in acquiring back the unutilised funds temporarily surrendered to the ministry of finance may have induced some ministries and PSNFCs to retain these funds in fixed deposits rather than surrender them. Funds placed for periods of up to three months may therefore represent their profitable investment until the funds are spent.

However, keeping surpluses in longer-term deposits was inadvisable because temporarily surrendering such funds to the ministry of finance could help contain governments short-term borrowing  seemingly, a lapse on the part of the Debt Management Office. However, in the absence of an explanation thereof, the conclusion may be unfair, though reasons behind such deposits need looking into.

Although reducing federal debt to the extent of governments net funding need is valid, the process of going about achieving this aim calls for a practically implement-able policy on shifting balances from one state office account to another, establishment of an authority to effect such fund transfers, and a reliable communication system that ensures timely transfers, to protect state offices against dishonour of their payment commitments.

While the government may shift the accounts of its ministries to the SBP, shifting PSNFC accounts to SBP will not be viable, firstly because, to stay connected to the markets they serve, these entities require banking services that SBP cannot provide and, secondly, many of them are net borrowers. Even while shifting ministries accounts to the SBP the impact thereof in terms of the demands it will create on SBP, and the convenience of the entities inter-acting with the ministries, must also be taken into account.

In the context of reducing its borrowing from the SBP, federal government moves to mobilise resources (two per cent hike in profit rates on National Saving Certificates, quarterly revision of these rates to continually align them with market rates, and flotation of short-term commercial paper for investment by the public), are significant for banks because unless they devise competing deposit products, they could lose a significant part of their deposit base to the government.

These developments have serious implications because banks that hold federal government and PSNFC deposits have used them to sustain liquidity (and credit flow) in Pakistans financial markets. Even if implemented partially, shifting of state accounts to SBP could substantially reduce market liquidity and credit availability to the private sector. This could also push up mark-up rates very significantly.

This impact must not be overlooked because sustained market liquidity (to meet legitimate borrowing needs of the private sector) is essential for achieving the targeted 5.8 per cent GDP growth. High mark-up rates could fuel inflation domestically, and price the export sector out of the markets it has so far held on to, with considerable difficulty. This development could escalate rather than contain trade and current account deficits.

Simultaneously, banks must re-visit their lending ratios (imprudently high in some cases) and hasten the development of innovative deposit products (not taken seriously) to hold on to their deposits. More importantly, banks that hold government deposits must jointly work on a strategy to assure the government about quick movement of funds in its various accounts to visibly reduce its borrowing, with minimum shifting of accounts to the SBP.

Finally, it wasnt wise on the part of banks to rely for cheap liquidity on lapses in public debt management. It was unethical to use this liquidity to increase bank earnings and unwise too because it induced banks to pay scant attention to developing need-based deposit products to inculcate a saving rather than a consumption culture which is now the countrys biggest weakness.

The responsible course was to voluntarily advise the state to reduce its debt by utilising surpluses available in its bank accounts; such conduct would have manifested a high sense of social responsibility that, unfortunately, the banks did not realise.

Improving public debt management -DAWN - Business; June 30, 2008


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## Neo

*Will cotton sowing target be met?​*
Pakistans cotton economy  a major source of export revenues and jobs  is in a mess. This is obvious from the failure to meet the national cotton sowing targets for the past few years now and the expanding gap between the domestic industrial demand for the silver fibre and the stagnating crop output.

The country is set to miss the cotton sowing target of 7.9 million acres by 15-20 per cent this year if unofficial estimate of sowing in Punjab and Sindh is to be believed.

In Punjab which produces more than three-fourths of the national seed cotton output, only five to 5.3 million acres have so far been brought under cultivation against the target of 6.2 million acres for the next crop. That shows just below 17 per cent gap between the cotton sowing target and the actual achievement, the AgriForum Pakistan chairman, Mr Ibrahim Mughal told Dawn. Similar reports have been received from Sindh, he added.

Cotton sowing in Punjab, particularly late sowing southern districts, have faced numerous difficulties - canal water shortages until a month ago, spiking cost of tube-well water for irrigation due to higher power tariffs and rising price of diesel, and long power cuts, says the Punjab Agriculture Extension Director General, Mr Mohammad Anjum Ali.

But he is confident that the cotton sowing target would not be missed significantly in Punjab. We have already achieved above 88 per cent of the sowing target. We will definitely surpass the 5.99 million acres covered last year, even if we dont meet this years target, he said.

But official estimates of cotton sowing proved wrong last year and there is no guarantee that they wouldnt this year. Farmers have no other choice but to sow cotton. Canal water shortages and cost of running power and diesel tube-wells has prevented them from switching to rice and sugar cane this year, Mr Ali said.

The cotton situation changed every 15 days. It is heavily dependent on weather, which has been favourable so far. Thus it is not possible to exactly forecast crops future at this point of time, he added.

Mr Mughal points out that the governments failure to announce an intervention price had kept many farmers from sowing cotton in Punjab and Sindh. Besides, growers could not obtain sufficient quantities of proper seed for sowing. Unlike Mr Ali, he holds that growers in the cotton growing areas had switched to rice this year.

The shortfall in the cotton sowing area means that the country would again miss the production target of 14.11 million bales (each weighing 155kg) - 11 million bales from Punjab and three million from Sindh for this season like the previous year. Balochistan and the NWFP together are expected to contribute 0.110 million bales.

The total cotton crop output was 20 per cent lower to 11.655 million bales than the target of 14.2 million bales last season. Because of the substantial drop in the domestic cotton production against the industrys need of 15.5 to 16 million bales, the textile mills spent over $1.2 billion to import 4.2 million bales cotton (of 170kg each) in the first 11 months of the current year to May to meet their consumption requirements.

The dollar value of cotton imported this fiscal is 122 per cent higher from the previous years $562 million. In terms of quantity too the cotton imports have more than doubled from the last financial year.

That is a huge burden on the industry as well as on the countrys depleting foreign exchange reserves, said a spinner in Lahore. He said the dip in the cotton output meant a spike in its prices. While early arrivals of seed cotton from Punjab are being traded at around Rs2100-2200 per maund, the lint is available at above record high rates of Rs4100 per maund (37.23kg).

This is simple madness. The market has gone crazy over the last one year. But it was expected due to short crop and because the commodities remain strong around the globe. That said, the raw material price, which is almost 70 per cent of our total production expense, is sending our overall cost of doing business through the roof. With the domestic production likely to remain below the target this year too, there is little chance of cotton price to come down, the spinner said.

The hiking cost of doing business on account of rising energy and credit price and other factors, and weakened demand and financial crunch in the global markets has caused 2.5 per cent drop in the textile exports to $9.59 billion from the previous year in the total textile exports during this fiscal to May. Also the share of textile exports has dropped nine per cent to 56 per cent in the total export revenue. The trade policy for the outgoing year had estimated the textile share to be around 63 per cent. Investment in textile machinery has fallen to $406 million this year from above $900 million in 2005.

Our export sector is in a crisis and we have failed to take advantage of rising global commodity prices and our trade gap is ballooning. If we want to push our exports and narrow the trade gap we shall have to focus on the textile sector for early results. But you cannot expect the textile industry to grow without developing your cotton crop both in quality and quantity by raising per acre yield from the current level of about 22 maund per acre the spinner said. India did it and has become a net raw cotton exporter. He said huge contamination in domestic cotton meant an average price discount of 10 per cent for the buyers.

As long as we remain cotton deficient textile industry we will not be able to reduce our raw material cost, expand production and enhance exports substantially, the yarn exporter said.

Will cotton sowing target be met? -DAWN - Business; June 30, 2008


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## Neo

*Balochistan on foreign investors radar screen​*
As the world prices of all minerals, metals, industrial raw materials and commodities go on rising, Balochistan has emerged as a bright spot on the international investors radar screen. We are not poor but the richest province in terms of resources, a beaming Mehfooz Ali Khan, the provincial finance secretary, told a post- budget conference on June 22.

The provincial government should have its own petroleum and gas policy with a high level technical board to manage this area (mineral exploitation and investment) of vital interest, he said.

The price of chrome from local mine in Muslim Bagh was Rs3,500 a ton in 1998. It is now quoted at Rs38,000 a ton, Ghulam Sabir Khan, President of the Balochistan Miners Association said. He said the prices of almost all minerals were on the rise and mining was attracting huge investment the world over.

The 1995 Mineral Policy is outdated, Mr Tahir, a coal miner in Macch, said pleading for a new mining policy at the federal and provincial levels. Miners in Balochistan argue that provincial governments will have to play a key role in developing necessary facilities and enabling environment to attract investment for mineral exploitation.

While the Balochistan government was presenting its Rs71 billion budget for the year 2008-09 with a big deficit of Rs8.30 billion, it was also playing host to eight top diplomats from Europe and Asia eyeing investment potential in their province.

The diplomats were apparently lured by investment potential but their key question was about, Balochistan governments jurisdiction on decision- making on investment, business operations, pricing, infrastructure and other allied matters.

Their question was valid and relevant, Ahmad Buksh Lehri, the Additional Chief Secretary Development and Planning of Balochistan remarked at a meeting. He recalled an unfortunate incident in which a German investor who landed at Gwadar airport sometimes ago to make some initial enquiries, was forced to leave.

The German was hauled up at the airport and the security officers wanted to know from him whether he had obtained a prior permission from the relevant authorities to visit Gwadar. The German said he was given a visa to visit all parts of Pakistan. His reply did not convince security officials and he was deported back to Karachi from where he flew back home. His company abandoned plans to take up any project.

While meeting with politicians and officials of the Balochistan government, one can notice a bitter feeling about their helplessness in taking vital decisions on economic progress of their province.

Because of excessive intervention from Islamabad, even at the micro level, Saindak project took more than 30 years to make a beginning. The much talked about fifth biggest copper deposit Rekodiq project took more than 15 years and has yet to take off.

Saindak and Rekodiq projects and their products-- copper, gold and silver-- will introduce Pakistan for the first time in the international metal market.
 
We have a 25 per cent equity share in Rekodiq and in addition we will get two per cent royalty, the Finance Secretary informed. He expects about $1 billion income from the project out of which the provincial governments annual share will be around Rs18-19 billion.

Enquiries revealed that the remaining 75 per cent shares of Rekodiq are with two companies--a Chilean company, Antoflagasto and a Canadian company, Barrings. Many are not happy over the arrangements which make their provinces share 25 per cent in investment of developing huge infrastructure for laying down of about 300-400 miles road for connecting the plant site in Chagai to Gwadur or may be to Pasni, construction of about 100 megawatt electric power plant, developing logistics for supplying fuel to electric generation plant and a host of ancillary facilities that would be needed for making this copper-gold plant work.

Quite a few politicians feel convinced that Balochistan will be made to share 25 per cent of big investment required for developing the infrastructure and ancillary facilities and the province will get pea nuts in return, while the two investor companies--Chilean and Canadian-will make big money. After 19 years of operation, the Rekodiq will be left with empty holes as all copper and gold will be extracted.

The previous government promised on three occasions to provide detailed information about Rekodiq project to the assembly but never did it Mr Aslam Bhotani, Speaker of Balochistan Assembly said. He was speaker in the last assembly also.

In November 2007, the federal government constituted a 14-member steering committee headed by federal minister for natural resources. The committee included four members from Balochistan but it never met. None of the Baloch politician or bureaucrat was ever taken into confidence on vital mineral projects at a time when there is a growing feeling among people of Balochistan that, we are the owners of provincial resources and we should take decisions about their use.

Ghulam Sabir Khan, President of Balochistan Miners Association in a telephonic conversation from Quetta on Thursday quoted a media report based on a reply given by government on the floor of the assembly. According to the government, 176 persons have been employed in Rekodiq of which 159 are from Chagai district where the project is located. There are seven employees from Sindh, six from Punjab and four from NWFP. But there is no information on number of Balochs who might have gained experience in mining engineering, geological surveys, plant operators and in various technical fields or in management positions.

A friendly co-ordination and exchange of information between federal government and provinces on vital matters is alright but intervention and that too to the extent it renders provincial authority redundant will be resisted, a senior bureaucrat remarked.

We have not been even paid land lease rent of all these projects for last several years, the Balochistan Finance Secretary disclosed. He is preparing a Rs1.8 billion claim on this account on the federal government. Many say that late Nawab Akbar Khan Bugtis tiff with the government centred around his demand for recovery of land lease rent and related issues. Eeventually he lost his life.

In the midst these controversies, the mineral sector offers a hope for Balochistans prosperity and progress.

The province has remained the biggest coal producer for the last more than a century. It still produces about two million tons of coal that is mostly used by kiln operators from Punjab and NWFP. Chamalong coal field has become operational and has provided 10,000 jobs, the provincial finance secretary said. It will increase coal production to about 4.5 million to half a million tons a year.

Saindak has been commissioned under the management of a Chinese company and it generates a revenue of Rs200 million. In the next few weeks, a lead-zince mine at Duddar will be commissioned. The province has 12.5 per cent equity in this project and will get a two per cent royalty.

Sui was commissioned way back in early fifties with a gas reserve of 8.6 trillion cubic feet. It is now fast depleting. Pakistan owes much of its industrial progress to Sui. Gas exploration work at Pir Koh, Loti, Uch and Dera Bugti are going on in full swing.

Unfortunately in the past, neither did we train our manpower nor did we lure potential investors, the finance secretary remarked. He also complained that the provinces rights were not safeguarded. But now the provincial governments, not only of Balochistan but others also want to have a greater role in development of mining, industry, agriculture and in the services sector.

Balochistan on foreign investors radar screen -DAWN - Business; June 30, 2008


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## Neo

*Opting for coal-fired fertiliser plants​*
THE demand for urea far exceeds the domestic production capacity and the country has to import the rest. The main buyers of urea are wheat growers, followed by cotton, rice and sugarcane cultivators.

Fertiliser production is one of the most energy intensive processes. Energy is consumed in the form of natural gas as feedstock and as fuel for generation of electricity and steam. An energy efficient plant takes around 24 MMBTU of natural gas to produce one ton of urea.

There are six urea manufacturers in the country. The Fauji Fertiliser is the largest in this sector with a 59 per cent market share, while Engro, as the second largest urea manufacturer, has about 20 per cent.

Ever since the first fertiliser plant was set up, the government provided subsidy to fertiliser manufacturers by selling feedstock gas, which is around 80 per cent of the raw material cost, at subsidised rate to increase indigenous production and ensure smooth and timely supply of fertiliser to farmers. However, domestic fertiliser production declined during the last fiscal year.

The government provides an indirect subsidy to fertiliser manufacturers by selling feedstock gas at rates ranging up to $1.36 against commercial rates of $4.28 per MMBTU which results in subsidy of around $459.98 million on 157.528 billion cubic feet (BCF) of natural gas consumed by the fertiliser sector.

Due to uneven geographic distribution and difficulties in transportation for long distances, natural gas prices vary across countries. Pakistan is negotiating with Iran for the purchase of natural gas that will cost around $7 per MMBTU.

A barrel of crude oil has a heat value of 5.8 million BTU. This means the crude oil at current price of $135 per barrel is worth roughly $23.5 per MMBTU. On the other side, Henry Hub spot market price of natural gas in New York Stock Market is currently around $12 per MMBTU.

In Pakistan, natural gas is being sold to the fertiliser industry at subsidised rate at a time when the demand for gas is quite competitive since it serves as a major input to electricity generation and provides the preferred fuel input to many other industrial processes.

Because of its importance as an alternative and relatively cheaper fuel, the share of gas in total energy is on the rise. During the last fiscal year, the consumption of gas in transport sector had increased by 27.8 per cent, while household consumption grew by 11.6 per cent followed by fertiliser with 3.5 per cent.

Due to non-availability of natural gas most of dual-fire power plants are currently being run on costly imported furnace oil. Despite present power crises, the government is not allowing any new power plant based on natural gas. The setting of gas power plant takes only one year.

The return on paid-up capital in the fertiliser industry is about 80-100 per cent per annum. Unfortunately, both leading local fertiliser manufacturers while enjoying subsidy on feedstock gas are diverting their profit to other sectors and the country has to import costly urea from international markets creating substantial burden on the national exchequer.

In the last five years the price of urea has grown at an average rate of 6.7 per cent. At present a 50kg bag of urea costs about Rs610 to the farmer. On the flip side, imported urea costs at least Rs1,200/bag. As a result, the farmers get the subsidy of $894 million on five million tons urea produced by local manufacturers, while the heavy burden of imported ureas cost is being borne by the government.

According to the national fertiliser policy 2001 natural gas subsidy was for five years. The government should bring the prices of natural gas sold to fertiliser units to international level of $7 per MMBTU which Pakistan will pay to Iran. The additional revenue generated can be used to subsidise the farmers by increasing the support prices of farm products.

The government can ensure that the fertiliser usages do not fall by providing the easy credit facilities to farmers and early announcing the support prices of agricultures products. Commercial and industrial natural gas consumers are also demanding removal of subsidy for fertiliser industry.

Removing the subsidy will also motivate the manufacturer to improve the energy efficiency. Most fertiliser units are second hand or old and less efficient, resulting more energy waste. Balancing, modernising and replacement carried out on the some of old plants have improved energy efficiency; still these plants are less energy efficient and environmentally harmful.

As a result, our fertiliser industry consumes more energy than the world average per unit of production. Unfortunately Fertiliser Policy 2001 has also allowed import of second hand plants for the manufacture of fertiliser. The industry can reduce energy consumption by employing advance process technology and catalysts, better stream sizes of urea plants and increased capacity utilisation.

About 77 per cent of ammonia production capacity world over is currently based on natural gas while five to 10 per cent on oil or coal where mostly partial oxidation is used.

In India, about 49 per cent of the total existing urea capacity is based on natural gas while naphtha fuel oil and others sources mainly coal account for 30 per cent, 10 per cent and 11 per cent respectively.

Pakistan can use locally available coal which is cheap for production of fertiliser and more economical through partial oxidation process. While the country continues to face mounting shortage of urea for the next couple of years, the government should encourage investment in fertiliser sector based on locally available coal as feedstock to lessen dependence on imported petroleum products and to increase share of coal in energy mix. Dual technology both for natural gas and coal are also available.

The indigenous coal with very high sulphur and ash contents can be used effectively for co-production of electricity and fertiliser through gasification technology. The local coal can be used more effectively if mining sector is re-organised and mining is developed in the Thar region.

Opting for coal-fired fertiliser plants -DAWN - Business; June 30, 2008


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## Neo

*Political economy of poverty reduction​*
Poverty reduction has been a major official development objective for most developing countries since the 1970s, when it dethroned growth from the high pedestal of development policy.

In Pakistan, the economic discourse on poverty did not receive serious attention until much later, although it entered the political discourse with the populist politics in the wake of the backlash against Ayub Khans growth-centred and elitist policies, which were partly responsible for Pakistans dismemberment in 1971. The PPPs roti, kapra, makan, echoing the gharibi hatao slogan of Indra Gandhi in India, brought poverty to the fore of the political agenda. However, the issue did not enter the academic and research mainstream until much later, save a few pioneering efforts to focus on a subject which  along with other issues of distributive justice  was largely considered a taboo to discourage distraction from more fundamental development issues, centred around the neoclassical shibboleth of economic efficiency.

The political discourse on poverty, however, remained confined largely to rhetoric and as a means for putting down political rivals in electoral politics  occasions for which were few and far between in the case of Pakistan. Politics remained dominated by powerful groups, including the large landlords, the emerging capitalists, the influential bureaucrats and, increasingly, the upper echelons of the military  none of whom had an intrinsic interest in the removal of poverty, except of those who were close to them in economic or social terms.

It was, therefore, even harder for poverty removal to be considered as a serious political issue than it was for it to be meriting attention as an economic and social objective. Its main access to the corridors of power and policy making was principally through the foreign donors  who, in the pursuit of their own global vision of development, found poverty reduction as a necessary sweetener for swallowing the bitter pill they had designed to cure under-development.

Once again, poverty reduction has been catapulted to the forefront of development policy through a confluence of domestic and global factors which have made it an urgent and non-deferrable item on the development agenda. External shocks have often caused massive increases in global poverty. The first oil shock of the 1970s, the debt crisis of the 1980s, the dismantling of the social security system in the former Soviet Union in the early 1990s and the East Asian financial crisis of the late 1990s were among the most cataclysmic episodes which caused enormous increase in poverty incidence in various parts of the globe.

The third oil shock, whose full force has yet to be unleashed, along with the steep rise in the price of food grains and other essential items consumed by the poor, is going to cause a much more severe increase in poverty, jeopardising the achievement of the already threatened defaults in the upbeat MDG programme aimed at halving poverty by 2015, launched at the beginning of the new century at the initiative of the Bush administration. The new US President will have a job on his hands if he wants to fulfil the promise of perhaps the only laudable global initiative of the outgoing administration.

Nearer home, the debate on poverty has been re-ignited with the return to democracy and the return to competitive populist politics in which each party (including the kings) claims to be doing more for poverty reduction than the rest. This has elevated the status of poverty research from a cottage industry in the past to that of rocket science (no fun intended) involving a bureaucratic ***-race in which numbers are constantly churned out to show which partys regime had performed better in terms of poverty alleviation. Since the political situation itself is fluid, the numbers are often used with a view to climbing the bureaucratic hierarchy through manipulating them in favour of those who are likely to be important in the ultimate contest for power.

A particularly eerie situation seems to have developed in the Planning Commission  which has been a rudderless ship with an inept crew at the helm for almost a decade and the recent changes are hardly uplifting  where earlier a Chief Economist was fired reportedly for producing poverty numbers which were too high to make the claim of strident growth in the economy less than credible. More recently, the author of the poverty chapter of the governments Economic Survey, published just before the new budget, was fired by the Planning Commission for reporting too low a poverty number, which the government has since disowned. In both cases, the abrupt administrative actions seem to have been the result of in-fighting about jobs and seniority, in which substantive or methodological issues have been used as a smoke screen.

However, there seems to be more than meets the eye and the events seem to be connected with a World Bank loan of $4.5 billion with substantial policy conditionalities which would become more palatable if poverty incidence was seen to be falling  which was the main conclusion of the poverty chapter in the Economic Survey. Such a conclusion, despite its usefulness attracting substantial foreign capital inflow, however, is in conflict with the ground reality of high inflation of essential food and fuel items, which is pushing millions of people below the poverty line. The new mandarins in the Planning Commission are not ready to lose their shirts so early in the game and have settled on making the author of the report a scapegoat.

These recent incidents need to be viewed in the context of the chequered history of the political arithmetic of poverty and its role in the economic discourse and management. The poverty incidence, along with growth performance, which in Pakistans case have tended to move in opposite directions, have often been juxtaposed with the dichotomous periods of civilian or military rule which the country has experienced in the last six decades. Admittedly, any such analysis is likely to be broad-brush in character and does not stand detailed scrutiny. Nonetheless, the temptation to use these numbers in a political debate will remain as long as the political environment is heavily charged.

The stylised facts about poverty reduction are generally well-documented and by now there is a high degree of consensus about the broad pattern along with sharp differences on details, even though there is discontinuity in the household data series, which makes inter-temporal comparisons problematic.

It is generally recognised that people living in the areas that now constitute Pakistan benefited a great deal from the partition in terms of rise in per capita incomes and decline in poverty incidence  more by default than by design  in the first two decades of a united Pakistan, although those living in areas which are now part of Bangladesh shared this experience to a much lesser extent.

Despite the absence of detailed studies on growth, income distribution and poverty incidence for the period before 1971, it is generally surmised that in areas which now form Pakistan poverty decreased quite rapidly in the 1950s, despite high population growth. It was in 1960s, when Ayub Khans aggressive industrialisation strategy, with substantial aid from the US, was carried out that problems of poverty and income distribution arose, both within West Pakistan, as well as between East and West Pakistan. Most narratives of poverty reduction in the 1970s and 1980s agree on a substantial reduction in poverty, although the causes and extent of such reduction differ.

The 1990s and 2000s are periods where the greatest controversies about poverty reduction are located. While space limitations do not permit a detailed evaluation, it needs to be pointed out that official sensitivity about the poverty numbers increased in this period as a result of two major factors.

First, despite strong official commitment to the goal of poverty reduction objective, there was an increasing realisation that its pursuit was inevitable for political survival and public perception of the achievement of this goal played an important part in gaining public approval and legitimacy.

Second, the foreign donors/lenders, while espousing the cause of poverty reduction, were much more sanguine about carrying out their agenda of economic reforms and were often willing to sacrifice the former objective at the latters altar. This increased the temptation to interfere with the production and dissemination of poverty data and analysis. The World Bank, with its vast resources and experience in this area, continued parallel research on Pakistans poverty situation, whose results were often at variance with those of the government.

In an apparent attempt to meet the criticism against such official interference and to give some semblance of respectability and credibility to official figures, the government established, with the help of UNDP and other donors, a Centre for Research in Poverty and Income Distribution (CRPID) in the Planning Commission in 2002. However, the result has been almost the opposite and, in effect, it has nationalised the poverty research industry.

From the outset, the centre was turned into a handmaiden of the Planning Commissions officialdom, defeating the very purpose of conducting independent research for which it was created. Its first director was a retired Chief of the Nutrition and Health Section, with little expertise in poverty analysis. His successor, was a macroeconomist, with little familiarity of detailed analysis of statistical data.

The centre lacks enough resources and competent staff to do the kind of comprehensive research needed for understanding and remedying the complex problem of poverty reduction.. Much more than all this, the centre lacked the environment in which basic and independent research could be undertaken, such as a university or a research institute. It would have been much better if the centre had played a co-ordinating role to provide research facilities to various institutions engaged in poverty research and help them draw a comprehensive and continuing agenda of research, including periodic reporting on the current poverty situation.

It is unlikely, however, that such radical changes will take place unless the new government can put its act together in mapping out a comprehensive long-term strategy for economic and social development.

syed.naseem@aya.yale.edu

Political economy of poverty reduction -DAWN - Business; June 30, 2008


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## Neo

*Pakistan and Iran sign four agreements ​*
TEHRAN (June 30 2008): Pakistan and Iran signed four documents of co-operation at the 17th session of their Joint Economic Commission (JEC) which concluded here on Sunday. Federal Minister for Finance and Economic Affairs Syed Naveed Qamar led Pakistan's delegation in the meeting while Iranian side was led by Foreign Minister Manouchehr Mottaki.

The four documents included MoU of 17th session of JEC between Pakistan and Iran; MoU between Iran Chamber of Commerce, Industries and Mines and Federation of Pakistan Chambers of Commerce and Industry (FPCCI); agreement between two sides on international transport of passengers and goods; and an MoU between Pakistan Television Corporation (PTV), Pakistan Broadcasting Corporation (PBC) and Islamic Republic of Iran Broadcasting (IRIB).

The Federal Minister for Finance while speaking on the occasion said that Pakistan-Iran Joint Economic Commission is a useful institutional framework to regulate the economic relations and identify new areas of co-operation.

Referring to changing global economic trends, the Minister highlighted that Pakistan and Iran needed to take positive steps towards greater economic integration. Both countries also need to take initiatives in order to open up their economies and explore possibilities of enhancing trade, the Minister added.

He said, "we look forward to starting the bus service between the two countries by the middle of August which will facilitate travel of Zaireen and other visitors."

The Minister highlighted the investment friendly environment in Pakistan which had facilitated foreign direct investment of over $4 billion in the country during 2007-08. He appreciated Iran's co-operation in the power project sectors of Pakistan. Iranian Foreign Minister Manouchehr Mottaki in his speech commended the recent economic and industrial achievements of Pakistan and underlined that the potential of economic co-operation between the two countries was far more than the present volume of trade between them which is $500 million annually.

He said the leadership of the two countries is determined to increase the level of bilateral trade up to US dollar one billion in the near future.

The Iranian Foreign Minister said that the two countries were co-operating on the gas pipeline project and expressed hope that the peace pipeline will benefit not only the two countries but other countries in the region as well.

Naveed Qamar expressed the hope that the volume of bilateral trade between the two countries will be more than US dollar one billion by the next session of JEC.

He said the present democratic government in Pakistan was devising policies of good governance in accordance with the vision of Shaheed Mohtarma Benazir Bhutto who gave the ultimate sacrifice by laying her life for the cause of democracy and socio-economic development of the people of Pakistan.

The Iranian Minister expressed sympathies on behalf of the government and people of Iran on the assassination of Benazir Bhutto. The signing ceremony of the agreements and MoUs was attended by the Ambassador of Pakistan Shafkat Saeed and senior officials from both countries.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Islamabad may earn $15 billion through export of marbles: Pasdec chief ​*
ISLAMABAD (June 30 2008): Pakistan could earn $ 15 billion annually through export of world's best class marble, onyx and granite, found in Pakistan alone. Ihsanullah Khan, Chairman, Pakistan Stone Development Company (Pasdec) said this during an interview with Business Recorder.

Pakistan is fortunate in having a string of high mountains abundant with world's best quality marble. It is even better than Brazil, China or India. There is a huge demand for our marbles, he also said. He further said export quality marble must have good finish and gloss. His organisation Pasdec, a subsidiary of the industry ministry.

Ihsanullah Khan has invited the Prime Minister to see the new method of yanking slabs of marbles at Khuzdar mountain quarry. To achieve better result, his organisation, Pasdec, has imported state of art machinery from Italy to introduce economical and safe methods of removing marble slabs of marbles and granites from mountain ranges through blasting.

Later, Ihsanullah Khan planned to assemble similar kind of equipment and machinery at home with the help of Pakistani engineers. With the help of government support as well as from local industry and media he promised to turn around the trade deficit in favour of Pakistan, by exporting more and more of the stuff. 'We could earn more than $ 15 billion through export of granites, marbles, and onyx alone, Ihsanullah added.

THESE ARE THE FOLLOWING EXCERPTS OF THE INTERVIEW: 

BR: What are your plans to market marbles and stones? We are told that Pakistan's marble export could be raised by $ 2 billion annually to compete Brazil?

IK: Our mountains range in the north, at Lasbela in Balochistan, as well as Nagrarparkar in Sindh are full of the world's best quality of marbles and granite materials.

We could do better than Brazil, and earn much more than $ 15 billion through exports of this stuff. We got huge demand for our materials, when we displayed them at exhibitions.

BR: What was the main reason for this huge demand?

IK: Pakistan is promoting enterprise household models to support entrepreneurs to produce high value products of mosaics and handicraft craving. In foreign countries, for instance, China and the USA, we were told to sell all the exhibit materials we brought, and they asked for more because we had the best and the purest variety of marble.

BR: Tell us more about your marketing plans?

IK: we are also planning to promote works within the country, by training women entrepreneurs in handcraft carving, inlay and mosaics such as table tops of exquisite beauty and design.

We have established masonry and mosaic training workshops to develop entrepreneur skills in women to provide them self-employment. Through this method of capacity building we create value-added market for marble products. We also help women entrepreneurs to establish links with foreign agencies interested in importing finished marble products from Pakistan.

BR: Tell us more about this demonstration quarry at Khuzdar.

IK: We will demonstrate to the Prime Minister of Pakistan the scientific quarry practice of extracting square block. This method will have immense trickle down effect, and have tremendous impact on quarry workers who now employ century old method of blasting and thus damage mountain quarries.

Due to lack of technology, trained manpower and precise equipment the country is incurring losses to about 73 percent in cutting marbles and granites out of mountain ranges.

We intend to reduce the loss of our valuable natural resources. Pasdec will now embark on a number of sector development projects to do business based on international practice, and we will create a skilled work force of quarry masters, quarry technicians, machine operators and helpers.

Thus, Pasdec projects are aimed at creating a direct employment work force in rural areas by opening up 10-mountain quarry to show in extracting square blocks. We also intend to establish five Marble Cities.

BR: But isn't Khuzdar in tribal area, where is law and order situation problem? How do you get to work there?

IK: No we don't have kind of this problem. The tribes, who are all locals, they don't bother us. We are creating job opportunities for the local people who would get benefit from our projects, he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Argentina investors urged to invest in different sectors ​*
ISLAMABAD (June 30 2008): Pakistan is an attractive destination for foreign investors and Argentina investors should take advantage of this opportunity by investing in different sectors of Pakistan's economy, stated Muhammad Ijaz Abbasi, President, Islamabad Chamber of Commerce and Industry (ICCI) while exchanging views with Eduardo Bustamante, First Secretary, Argentine Embassy on Pak-Argentina trade and economic relations at ICCI.

He informed that in 2006-07, total trade between Pakistan and Argentina stood at 106.398 million dollars out of which Pakistan's exports were 42.07 million dollars and imports from Argentina were 64.328 million dollars showing a trade balance in favour of Argentina of 22.258 million dollars.

Muhammad Ijaz Abbasi said that more than 50 percent population of Pakistan is quite young which is emerging as a thriving middle class and is an attractive market for foreign investors. He said that Argentina has expertise in cooking oil, iron, steel, CNG & organic chemicals and Pakistan offer lot of investment potential in these sectors.

He said that Pakistan is the second largest user of CNG products in the world while government is focusing more on diverting its transportation system from oil to gas, which is more environment-friendly, and Argentina can reap rich benefits by investing in CNG sector of Pakistan.

President ICCI said that new government has shown its intentions to formulate business friendly and growth oriented policies and foreign investors should benefit from it by bringing in their capital and technology to Pakistan.

He said that Pakistan offers quite cheap manpower as compared to other countries and this can be a plus point for foreign investors.

He said that many foreign companies have invested in Pakistan's telecom, pharmaceutical, banking, construction and other industries and are earning high returns here with the contribution of our cheap, but highly talented manpower.

Muhammad Ijaz Abbasi emphasised for regular exchange of business delegations between the two countries to explore more business opportunities. He said Argentina should relax its visa processing system for Pakistani business community to enhance trade and economic ties with each other. He informed that ICCI is arranging exchange of business delegations with different countries while in near future ICCI would also plan to take a business delegation to Argentina and sought collaboration of Argentina Embassy to facilitate them.

Speaking on the occasion, Eduardo Bustamante, First Secretary of Argentine Embassy said that his country is keen to enhance its present trade volume with Pakistan. He said that there is a need to further enhance collaboration between ICCI and Argentina Embassy to facilitate the exchange of business delegations between the two countries. He said that Argentina companies are showing interest to invest in Pakistan's CNG and pharmaceutical sectors as Argentina is known for producing CNG kits and cylinders and in future, some of their companies would be looking to start cylinders manufacturing in Pakistan.

First Secretary of Argentina Embassy said that a pharmaceutical company BAGO is investing 5 million dollars in Pakistan for manufacturing of pharmaceutical products. He further informed that Argentina is also interested for collaboration with Pakistan in dairy sector and installing a milk processing plant in Pakistan.

He said that Argentina would also collaborate with Pakistan in agriculture sector and can supply agricultural equipment as per requirement of Pakistan.

He informed that trade delegation of Argentina is planning to visit Pakistan in 2009 to meet with Pakistani business communities at Lahore, Karachi and Islamabad. He said that on the visit, Argentina Embassy would like to arrange B-to-B meetings with the concerned counterparts. He further informed that Argentina Embassy would facilitate Pakistani businessmen in the grant of their business visas so that they could visit Argentina and said that on the recommendation of ICCI, early processing of visa applications shall be ensured.

Business Recorder [Pakistan's First Financial Daily]


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## ejaz007

*Work on Diamer-Bhasha Dam to start next year: WAPDA *

LAHORE: Detailed engineering design and tender documents of the multi-purpose Diamer-Bhasha Dam Project has been completed. The international panel of experts has reviewed all the studies and details, chairman Water and Power Development Authority (WAPDA), Shakil Durrani said Monday. Mr Durrani said the construction on the project would commence next year following international competitive biddings and every effort would be made to ensure that the high professional standard quality and safety were maintained. It will help increase the ratio of low-cost hydel power in National Grid, he added. During a presentation on Diamer-Bhasha Dam Project, attended by the project consultants, senior officers of the ministry of Water and Power and Planning Commission, former members (Water) and members of the Authority, he said, The Diamer-Bhasha is a project of immense importance, as it is the largest project ever executed in any sector in the country. He informed an amount of Rs 200 million has been allocated for the project in the federal budget 2008-09, while the pre-qualification process of the contractors has already been initiated. The consultants briefed the participants 272 metre high Diamer-Bhasha Dam would be highest Roller Compacted Concrete (RCC) dam in the world with more than 100 kilometers long reservoir. staff report

Daily Times - Leading News Resource of Pakistan


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## ejaz007

*Rs 990 billion revenue target achieved *
SOHAIL SARFRAZ 

ISLAMABAD (July 01 2008): The provisional revenue collection is likely to exceed Rs 1 trillion in 2007-08 against the revised target of Rs 990 billion, as the Federal Board of Revenue (FBR) touched the figure of nearly Rs 990 billion by the end of June, reflecting extraordinary performance during last year.

Sources told Business Recorder on Monday that the board had collected around Rs 971.3 billion till June 28. The provisional revenue collection figure for June 2008 has reached nearly Rs 144 billion against the required amount of Rs 140 billion, meeting the target of Rs 990 billion.

The board has estimated to collect an amount over and above Rs 24 billion on June 30, taking final collection to Rs 990 billion during 2007-08. Incorporating figures of June 29 and 30, tax managers were confident that the FBR might present the figure of nearly Rs 1 trillion before the meeting of Economic Co-ordination Committee (ECC) of the Cabinet.

Break-up of revised target of Rs 990 billion showed that direct taxes target was fixed at Rs 385 billion, whereas indirect taxes target was Rs 605 billion for 2007-08. Tax authorities have expressed hope that the board would meet both direct and indirect tax targets for the fiscal year. It is expected that the FBR would officially announce collection figures on July 3 to celebrate record collection in the year.

The revenue collection from National Bank of Pakistan (NBP) branches in far-flung areas would also be instrumental in improving revenue collection in the next one/two days. On the other hand, sales tax amnesty scheme for payment of principal amount for wavier of penalty and additional tax expired on June 30.

The amount collected from amnesty scheme would also be incorporated in the overall sales tax collection. The sales tax collection from imports and domestic consumption would be updated in the next one-two days.

The withholding tax collection, better monitoring, books adjustments and income tax collection from demands raised would also help in improving revenue collection. The compilation of final figures of collection made in June 29-30 would take the total to Rs 1 trillion.

Sources said that the FBR has broken all previous records of revenue collection, evident from the provisional collection in June. This is for the first time that the board is going to cross psychological barrier of Rs 1 trillion.

It is worth mentioning that the board had collected Rs 851.3 billion (net) during the first eleven months (July-May) of 2007-08 as compared to Rs 722.2 billion in the same period of last year thereby posting an increase of 18 percent. In May 2008, the FBR collected Rs 87.7 billion which is 33.5 percent more than the same period of last year, bolstered by strong growth of 42.1 percent for sales tax (domestic activity 80.6 percent) and 33.4 percent for customs duty.

Business Recorder [Pakistan's First Financial Daily]


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## ejaz007

*Government considering shifting KPT, PQA workload to Gwadar *
MUSHTAQ GHUMMAN 

ISLAMABAD (July 01 2008): The government is considering to shift 20 percent workload of Port Qasim and Karachi Port to Gwadar Port, on the recommendation of Balochistan government, official sources told Business Recorder. Gwadar Port is not yet fully operational.

Despite its outsourcing to Port of Singapore Authority, the element of inertia is evident, which requires similar government support as was earlier extended to Port Qasim at its initial stages through allocation of assured cargo, sources quoted Secretary, Ministry of Ports and Shipping Muhammad Saleem Khan, as saying in a proposal to the Prime Minister.

According to sources, the Ports and Shipping Ministry Secretary has expressed the view that Gwadar Port has already handled a wheat-carrying ship in March 2008, and the port operator has adequate arrangements for handling any fresh consignments. Balochistan government has also proposed that 2.5 million tons wheat, being imported by the federal government, should be handled at Gwadar Port to strengthen operational activity.

Besides, the Balochistan Governor has recommended that 20 percent of the workload of other ports should be shifted to Gwadar. Sources said that the Secretaries' committee, headed by Finance Minister, in its meeting on June 18 had recommended that the federal government should at least allow import of wheat destined to Balochistan through Gwadar Port.

Business Recorder [Pakistan's First Financial Daily]


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## Owais

*Pakistan in need of increased economic aid: Gilani tells Boucher*

ISLAMABAD (July 01 2008): Prime Minister Syed Yousaf Raza Gilani has said it is often not realised that one incident of terrorism in Pakistan leads to flight of foreign capital from the country besides discouraging the flow of foreign investment. Pakistan is in need of increased economic assistance not only to stabilise democracy but also to fulfil our promise of providing better life to the people, he further said.

He made these remarks while talking to Richard Boucher, US Assistant Secretary of State, who called on him at Prime Minister's House here on Monday morning. Gillani said that terrorism is a global phenomenon and a serious threat to humanity, ruining global peace and Pakistan is fighting extremism in its own national interest and not to serve the objectives of another country. Similarly, it was a terrorist act that claimed the life of Mohtarma Benazir Bhutto Shaheed.

He added, "Pakistan is convinced that there is a need to address the factors that encourage terrorism." With the inception of new political government, Pakistan has developed a three-pronged strategy to cement peace and security in the tribal areas in consultation with its coalition partners, which encompasses political, economic and security dimensions. The government has initiated dialogues with tribal elders, which is supported by the general public, he said.

On the other front, Gilani emphasised early setting up of the Reconstruction Opportunity Zones (ROZs) to accelerate economic activity in the troubled areas of NWFP and Balochistan so that more job opportunities could be created. He also stressed the need for providing assured access to US markets to goods produced in these ROZs.

On Saturday the government carried out operation against terrorists in the areas of Khyber Agency and destroyed the hideouts of militants, he told the delegation. In a statement, Prime Minister Syed Yousuf Raza Gilani has said that Pakistan greatly values its relationship with the US and is keen to strengthen it covering diplomatic, political, economic, defence and security fields.

"We are desirous of a broad-based and long-term relationship focussing especially on bilateral co-operation in trade, energy, investment, science & technology, educational and cultural fields with a view to bringing the people of the two countries closer to each other," he said.

Gilani said that he had no doubt that the victory of democratic and progressive forces in the country especially in the NWFP and Balochistan provinces and the formation of broad-based democratic governments at the Centre and in the provinces would further strengthen the close and co-operative relationship that existed between the two countries.

He said that there is a need for better monitoring of the borders from the Afghanistan side as our side has 900 check posts compared to about 100 such posts on the Afghanistan side, which is inadequate. The Prime Minister said Pakistan is keen to see a stable and strong Afghanistan in its neighbourhood which is equally good for both the countries and for regional peace and stability.

Pakistan is making utmost efforts to strengthen security along the Pakistan-Afghanistan border including the installation of biometric system on entry points. He said Pakistan has also offered to fence the border. Pakistan needs help all the more urgently in view of the steep rise in the global prices of oil and food commodities.

Boucher said that United States has great interest in the success of democratic government and economic well-being of the people of Pakistan. He said that US is ready to help resettle Afghan refugees in their country.

The meeting was also attended by US Ambassador to Pakistan Anne Patterson, Special Assistant to the US President Mark Webber, Advisor to Prime Minister on Interior, Rehman Malik, Advisor to Prime Minister on National Security, Mahmud Durrani, and Acting Secretary, Foreign Affairs. The Prime Minister recalled his useful meeting with President Bush at Sharm Al-Shaikh and said he looks forward to meeting the President in Washington next month.

US Assistant Secretary of State, Richard Boucher also called on Rehman A Malik and discussed with him the details of operation carried out in the tribal areas particularly in Khyber Agency. Malik said the situation in NWFP is under control and there is no law and order situation, however there are some miscreants who will be dealt with iron hand.

Later, Boucher also met Advisor to Prime Minister on National Security, Mehmud Durrani and discussed general security position in NWFP and Balochistan. Afterwards, talking to the US Congressional delegation led by Senator Cardin, the Prime Minister said, "We want the US to help Pakistan rebuild its economy."

Highlighting the importance Pakistan attaches to its relations with the United States, the Prime Minister underscored the desire to deepen bilateral co-operation in diverse fields, including defence, trade, economy, energy and social sectors. He told the delegation that the government's foremost priorities included fighting extremism and terrorism in Pakistan's own interest as well as rebuilding the economy.

The Prime Minister also apprised the members of Congress of the three-pronged counter-terrorism strategy. He further underlined the need for accelerating the ROZs initiative stressing that it would help expand economic opportunities and generate jobs.

The Prime Minister also underscored the vital interest Pakistan has in a stable Afghanistan. He apprised the delegation of the steps taken by Pakistan to strengthen security along the Pakistan-Afghanistan border and entertain 3 million Afghan refugees. The Prime Minister stressed the need for the international community to support these efforts.

The members of the congressional delegation highlighted the strategic importance of the US relations with Pakistan and reciprocated the desire to expand bilateral co-operation in various fields. They affirmed US readiness to support Pakistan in its efforts to address the security issues and to achieve economic progress over the long term.

They said that the US regards Pakistan as its important and strategic ally and is keen to closely work with the democratic government to help it overcome its economic problems. They said, "Pakistan is a linchpin in the region and we want to expand our bilateral co-operation in all areas including trade, investment and security matters."

The Congressional delegation included Senator Benjamin Cardin, Congressman Zach Wamp, Congressman Robert Aderholt, Congressman Mike McIntyre and Congresswoman Loretta Sanchez. The meeting was also attended by Advisor to Prime Minister on Interior, Rehman A Malik, Advisor to Prime Minister on National Security, Mahmud Durrani, and Acting Secretary, Foreign Affairs.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Engineering design of Diamer-Basha dam completed ​* 
Tuesday, July 01, 2008

LAHORE: A detailed engineering design as well as tender documents of the multi-purpose Diamer-Basha dam have been completed and all studies and details have also been reviewed by an international panel of experts.

Water and Power Development Authority Chairman Shakil Durrani stated this during a presentation on Diamer-Basha dam at the WAPDA House here on Monday. Project consultants, senior officers of the water and power ministry and Planning Commission, former members (water) and members of WAPDA attended the presentation. The WAPDA chairman said Diamer-Basha dam is a project of immense importance, which is the largest executed in any sector in the country.

He informed that Rs200 million had been allocated for the project in the federal budget for 2008-09, while the pre-qualification process of contractors had already been initiated. Construction work on the project, he said, would commence next year following international competitive biddings and every effort would be made to ensure that highest professional standards of quality and safety were maintained. The project will go a long way in coping with the increasing demand of water and electric power in the country. It will help increase the ratio of low-cost hydel power in the national grid, the WAPDA chairman added.

Later, the consultants briefed the participants of the presentation that the 272-metre-high Diamer-Basha dam would be the highest Roller Compacted Concrete (RCC) dam in the world with more than 100-km-long reservoir.

It was observed that the dams live storage capacity would be 6.4 million acre feet, while 4,500 megawatts of electricity would be generated by the project. Diamer-Basha dam would contribute more than 18,000 giga watt hours of electricity annually to the national grid.

Engineering design of Diamer-Basha dam completed


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## Neo

*Bhasha dams design and tender papers ready, says Wapda chief​*
LAHORE, June 30: The engineering design and tender documents of the multi-purpose Diamer-Bhasha Dam Project have been completed and related studies and details have been reviewed by an international panel of experts.

This was stated by Wapda chairman Shakil Durrani during a presentation on the project held at Wapda House on Monday. Project consultants and senior officers of Water and Power Ministry and Planning Commission attended the presentation.

Mr Durrani said that Diamer-Bhasha dam was a project of immense importance and it would be the largest project ever executed in any sector in the country.

He said that Rs200 million had been allocated for the project in the federal budget for 2008-09 and the pre-qualification process of contractors had already been initiated.

Mr Durrani said that construction work on the project would begin next year after international biddings and efforts would be made to ensure the highest standard of quality and safety.

He said the project would meet the increasing demand for water and electricity in the country.

The consultants said that the 272-meter-high Diamer-Bhasha dam would be the highest Roller Compacted Concrete (RCC) dam in the world with more than 100-kilometre-long reservoir. The live storage capacity of the dam will be 6.4maf and the project will generate 4,500MW of electricity.

Bhasha dams design and tender papers ready, says Wapda chief -DAWN - Top Stories; July 01, 2008


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## Neo

*KSE volume falls to all-time low​*
KARACHI, June 30: The single-session turnover figure on Monday on the Karachi stock market fell to an all-time low level so far of 11.485m shares owing to investor worries over the security forces operation in the tribal areas and fears of its negative fallout elsewhere in the country, analysts said.

The previous single-session trading volume was hit at 15.141m shares on Sept 3, 2001 after the implementation of T-3 trading system on the KSE.

The second lowest figure was hit at 16.565m shares on Oct 8, 2001 after the US attacked Afghanistan and the highest so far at 1.122 billion shares on April 16, 2004 owing to heavy buying in OGDC, PTCL at the time of their debut.

But the current terrible sluggishness reflects that the market is heading for a major crisis in the coming weeks if the law and order situation does not improve and investors sought other avenues of investment sans stocks.

Price changes were mostly fractional, barring a couple of leading shares, and were confined to mostly Rs2.25 to Rs4 as both bargain hunters and speculative traders just marked time and did not actively participate in the activity for obvious fears.

Stocks, therefore, ended the last session of the financial year on a subdue note as leading investors remained conspicuous by their absence owing to the presence of more than one psychological depressants with no positive news.

After opening unchanged at the weekend level, 12,353.19, the KSE 100-share index steadily declined to hit the sessions low of 12,256.37 but late covering purchases in some of the leading base shares, including MCB Bank, OGDC, allowed it to finish improved around 12,289.03, off 64.16 points.

Although investors kept to the sidelines most of the time for obvious reasons but there was no panic selling from any quarter, analyst Ahsan Mehanti said, adding: Everyone is awaiting some good news, which is not around in backdrop of more negative news.

It was in this background that the KASB Securities made a firm provisional debut at Rs77.17 (face value Rs10 at a premium of Rs57.50 per share), but ended lower at the sessions low of Rs73.32 on 0.277m shares on late selling owing to prevailing uncertain conditions. In the backdrop of ongoing operation in the tribal areas, tight money supply position, and a weak rupee investors think twice to go for fresh stocks, analyst Hasnain Asghar Ali said.

He said the lowering of low cap to one per cent seems to protect the market from a total collapse in the unfolding geo-political scenario and the absence of financial support.

If all goes well on the political and national security fronts, the market could rebound from the current low on the strength of higher corporate announcements for the financial year ended June 30, another leading analyst Ashraf Zakaria predicts. But for the time being the market lacks even normal support as investors are out to get out of it instead of making fresh commitments even at the current lower levels, he added.

Most of covering purchases were confined to low-priced shares where the risk of further fall and gain was low.

Leading gainers, included Nestle Pakistan and Colgate Pakistan, up by Rs120 and Rs27.57, followed by American Insurance, United Brands, Dawood Bank, Chaudhry Textiles, Crescent Textiles, Dawood Hercules, Shell Pakistan and Diamond Industries, which rose by Rs4.05 to Rs7.64.

JS & Co and Attock Petroleum led the list of losers, off by Rs5.35 and 4.36. MCB Bank, Pakistan Oilfields, EFU General, PSO, Ferozsons Lab were others among the losers, off by Rs3.12 to 3.64. Trading volume fell to a new low as losers maintained a strong lead over the gainers at 157 to 53, with 23 shares holding on to the last levels.

Among the actives, Bank of Khyber was leading, steady 21 paisa at Rs14.20 on 1m shares, KESC, firm by 23 paisa at Rs5.47 also on 1m shares, MCB, off by Rs3.29 at Rs326.38 on 0.989m shares, OGDC, lower by Rs1.25 at Rs124.36 on 0.747m shares, Hub-Power, easy by 28 paisa at Rs28.60 on 0.524m shares, and JS & Co, off Rs5.35 at Rs530.15 on 0.415m shares.

Other actives were led by Azgard Nine, unchanged at Rs61.56 on 0.801m shares, D. S. Industries, lower by 51 paisa at Rs50.71 on 0.352m shares, JS Value Fund, easy by 19 paisa at Rs19.33 on 0.324m shares and Suraj Cotton, steady by four paisa at Rs53.50 on 0.276m shares.

FORWARD COUNTER: Engro Polymer led the list of actives on this counter, easy by Rs1.47 at Rs28.08 on 1m shares followed by Habib Bank, lower by Rs2.15 at Rs213.39 on 0.977m shares, NIB Bank, lower by 11 paisa at Rs11.57 on 0.52m shares and Pakistan Petroleum, off 2.52 at Rs249.87 also on 0.52m shares.

DEFAULTER COS: Owing to the prevailing sluggishness on the ready counter, trading in this sector was terribly slow as investors were not inclined to make fresh commitments. Both the price changes and turnover figure was low and there was no big deal in any of the current actives.

DIVIDEND: Mari GAS, second interim cash at the rate of 10 per cent, first interim of 22.38 per cent already paid.

KSE volume falls to all-time low -DAWN - Business; July 01, 2008


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## Neo

*IT exports reach $175m​*
ISLAMABAD, June 30: Pakistans IT exports reached $175 million during 2007-08, about $13 million more than the $162 million target set for the year.

We are satisfied with the pace of progress of the local IT sector. It has registered a remarkable growth during the last five years, said Pakistan Software Export Board (PSEB) Managing Director Talib Baloch here on Monday.

Pakistans IT exports of $116 million for the FY06-07 were also in excess to the set target of $108 million, he disclosed. The sector has consecutively registered 50 per cent annual growth in exports for the last five years showing its tremendous potential, he said, adding, if nurtured fully, the industry can yield voluminous economic and commercial benefits.

He said that the IT-related exports could have been over $220 million had there been no power crisis in the country.

Longer load-shedding hours have adversely affected the productivity of many ICT companies. However, despite these odds, PSEB is hopeful to exceed the targeted volume of exports in the forthcoming years, he added.

The IT industry has emerged as most promising sector in Pakistan. It was brining in substantial revenues and creating job opportunities, he said.

Information technology, he said, had been instrumental in the growth of various other industrial verticals, facilitating them with the technical capability and automating their processes, thus increasing their operating margins, the PSEB MD said.

The IT industry was progressing rapidly at more than 50 per cent for the last four years, with many local IT companies winning huge contracts from domestic and international markets, he said.

He said that Vopium, a Pakistani IT company, had recently gained venture capital fund worth $6.75 million from Enex Group SA, Luxembourg. The companys software allowed saving of 40-90 per cent when making international calls or sending SMS from mobile phones.

IT exports reach $175m -DAWN - Business; July 01, 2008


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## Neo

*Rs 990 billion revenue target achieved ​* 
ISLAMABAD (July 01 2008): The provisional revenue collection is likely to exceed Rs 1 trillion in 2007-08 against the revised target of Rs 990 billion, as the Federal Board of Revenue (FBR) touched the figure of nearly Rs 990 billion by the end of June, reflecting extraordinary performance during last year.

Sources told Business Recorder on Monday that the board had collected around Rs 971.3 billion till June 28. The provisional revenue collection figure for June 2008 has reached nearly Rs 144 billion against the required amount of Rs 140 billion, meeting the target of Rs 990 billion.

The board has estimated to collect an amount over and above Rs 24 billion on June 30, taking final collection to Rs 990 billion during 2007-08. Incorporating figures of June 29 and 30, tax managers were confident that the FBR might present the figure of nearly Rs 1 trillion before the meeting of Economic Co-ordination Committee (ECC) of the Cabinet.

Break-up of revised target of Rs 990 billion showed that direct taxes target was fixed at Rs 385 billion, whereas indirect taxes target was Rs 605 billion for 2007-08. Tax authorities have expressed hope that the board would meet both direct and indirect tax targets for the fiscal year. It is expected that the FBR would officially announce collection figures on July 3 to celebrate record collection in the year.

The revenue collection from National Bank of Pakistan (NBP) branches in far-flung areas would also be instrumental in improving revenue collection in the next one/two days. On the other hand, sales tax amnesty scheme for payment of principal amount for wavier of penalty and additional tax expired on June 30.

The amount collected from amnesty scheme would also be incorporated in the overall sales tax collection. The sales tax collection from imports and domestic consumption would be updated in the next one-two days.

The withholding tax collection, better monitoring, books adjustments and income tax collection from demands raised would also help in improving revenue collection. The compilation of final figures of collection made in June 29-30 would take the total to Rs 1 trillion.

Sources said that the FBR has broken all previous records of revenue collection, evident from the provisional collection in June. This is for the first time that the board is going to cross psychological barrier of Rs 1 trillion.

It is worth mentioning that the board had collected Rs 851.3 billion (net) during the first eleven months (July-May) of 2007-08 as compared to Rs 722.2 billion in the same period of last year thereby posting an increase of 18 percent. In May 2008, the FBR collected Rs 87.7 billion which is 33.5 percent more than the same period of last year, bolstered by strong growth of 42.1 percent for sales tax (domestic activity 80.6 percent) and 33.4 percent for customs duty.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*President stresses market access for Pakistani products in US ​*
ISLAMABAD (July 01 2008): A US congressional delegation on Monday discussed bilateral relations, Pakistan-US counter-terrorism co-operation and regional situation with President Pervez Musharraf in Rawalpindi. President Musharraf underlined the importance Pakistan attached to its relations with the US.

He reiterated Pakistan's firm resolve to fighting terrorism and extremism. In this regard, the President highlighted government's comprehensive, multi-pronged strategy combining political, military and socio-economic development measures.

The President appreciated congressional support for Pakistan's counter-terrorism initiatives, namely Fata Development Plan, Reconstruction Opportunity Zones (ROZs) and capacity building of the Frontier Corps (FC). He emphasised the need for market access for Pakistani products in the US.

The congressmen conveyed their support for the strategic relationship between Pakistan and the United States. They appreciated Pakistan's commitment to combating extremism, and reaffirmed their support for Pakistan's counter-terrorism efforts and social development goals, and called for strengthening the strategically important relationship.

The bipartisan delegation led by Senator Benjamin Cardin (Democrat-Maryland) includes congressmen Zach Wamp (Republican-Tennessee), Robert Aderholt (Republican-Alabama), Mike McIntyre (Democrat-North Carolina) and congresswoman Loretta Sanchez (Democrat-California).

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan scales down fuel, food subsidies to reduce deficit: PM​*
KARACHI (AFP) - Pakistan Prime Minister Yousuf Raza Gilani said Tuesday that his government had scaled down subsidies on food and fuel in a bid to reduce the country's budget deficit. 

Amid spiralling global oil prices, the government this week raised natural gas prices by 31 percent and petrol prices by up to 20 percent, further hitting consumers already reeling from record food prices.

"We have scaled down subsidies to remain within the budget deficit of 4.7 percent," Gilani told a ceremony in Karachi to mark the 60th anniversary of the central bank.

Low-income people would however continue to get targeted subsidies, he said.

The government would continue to "provide targeted subsidies to the poor, despite the fact that over 40 percent of our fiscal deficit is on account of the subsidies," he said.

Gilani said that in the federal budget for the fiscal year 2008-2009 the government had taken measures to reduce the deficit from around 7.0 percent to 4.7 percent of gross domestic product (GDP).

Pakistan last month announced a national budget of over 30 billion dollars for the year beginning on July 1, with a deficit of 8.47 billion dollars.

Gilani said that the government wanted to sustain growth momentum in the range of six to seven percent in the next five years.

"Economic liberalization, deregulation and privatization in a transparent manner will be the core principles of our economic reform agenda," he said.

Petroleum minister Shah Mehmood Qureshi announced a hike in gas prices on Monday but said it would not affect 91 percent of domestic consumers who used 50-100 cubic feet of gas monthly.

According to finance ministry documents the government paid 37.5 billion rupees (550 million dollars) a month and 1.25 billion rupees per day in oil subsidies so as not to pass on increases in global prices to consumers.

Besides rising fuel prices, Pakistan is also facing a wheat flour shortage and record food inflation of up to 11 percent between July 2007 to May 2008, according to the federal bureau of statistics.

Pakistan scales down fuel, food subsidies to reduce deficit: PM - Yahoo! News


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## Neo

*Govt determined to bring about economic turnaround: Gilani ​* 
Wednesday, July 02, 2008

KARACHI: Prime Minister, Syed Yousuf Raza Gilani on Tuesday reiterated the governments commitment to ensure financial stability, reduction in inflation and economic growth to rectify macro-economic imbalance.

The Prime Minister was speaking at the inaugural session of the Development Finance Conference Expanding Frontiers of Financial Access in Pakistan organised by State Bank of Pakistan (SBP) to mark its 60th anniversary, at SBP Headquarters. Governor SBP, Dr Shamshad Akhtar, Sindh Governor Dr Ishrat-ul-Ebad Khan, Sindh Chief Minister Syed Qaim Ali Shah, and other government officials were present at the occasion.

The Prime Minister said that the present government, led by Pakistan Peoples Party Parliamentarians (PPP-P), was facing four major challenges that include inflation especially in the food sector, widening trade imbalance, current account deficit, diminishing economic growth and macro-economic imbalance. He said that the budget for the year 2008-09 mainly focused on providing maximum relief to the common man and strengthening the development sector, especially the infrastructure, with maximum participation of the private sector, which is the engine for economic growth.

The Prime Minister said it was the governments strong resolve to maintain the GDP at least at 47 per cent in the country.

Prime Minister Gilani expressed the governments strong desire for a strong micro-financing sector with major focus on loans for agriculture and SMEs sector. He referred to the micro financing initiative of the government under which Rs200 billion have been allocated for small borrowers. Rs1.5 billion reserved for the development of livestock and one billion rupees for the development of fisheries. Besides, he said, the Government would be focusing on strengthening services and energy sectors too. He also underlined the need for fair distribution of tax burden on all sections of the society.

He went on to appreciate the important role of SBP in regulating the countrys economic system. It is a matter of great pride for us that the sapling planted by Quaid-e-Azam Mohammad Ali Jinnah sixty years ago has grown into a sturdy tree, he said.

He quoted Quaids address at the opening of the State Bank: I need hardly dilate on the important role that the State Bank will have to play in regulating the economic life of our country. The monetary policy of the Bank will have a direct bearing on our trade and commerce, both inside Pakistan as well as the outside world, and it is only to be desired that your policy should encourage maximum production and a free flow of trade.

Gilani said, Our government fully respects the autonomy of the Bank. We value its advice on the global and domestic economy. He said during the financial year 2007-08, many external and internal shocks along with policy inactions during most of the year, severely impacted the national economy. The high growth in macro economic imbalances shows that the country was living beyond its financial affordability.

With the erosion of fiscal management, public expenditures far exceeded the resource availability. The Government excessively over-borrowed from the Central Bank, and the demands of the foreign exchange market took a toll on our reserves, he noted.

SBP Governor Shamshad Akhtar said the central bank plans to modernise the functioning of wholesale and retail markets. The SBP also plans several initiatives to support SMEs, financing of livestock, fisheries, etc. She said SBPs laws are old, which calls for comprehensive legal reforms for ensuring a strong financial regulation and supervision which would promote a strong market.

The SBP Chief informed that now $300 million would be the minimum requirement for issuing a license to a micro-financing institution. She said commercial banks should re-consider regulatory architecture. She sought the Finance Ministrys support in bringing more reforms in the financial sector to conform to international best financing practices.

She also requested the legislators to support SBP reforms and its 10-year future strategy for strengthening the financial sector in the country.

Govt determined to bring about economic turnaround: Gilani


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## Neo

*Businessmen seek access to US market ​* 
Wednesday, July 02, 2008

LAHORE: Lahore Chamber of Commerce and Industry (LCCI) President Mohammad Ali Mian has said that an economically strong Pakistan will help the US in combating the war against terrorism.

He stated this during talks between a six-member delegation of leading businessmen of the country and Deputy Secretary of State Richard Boucher, here at the residence of US Consulate Principal Officer Bryan D Hunt, who arranged the meeting.

The delegation also discussed issues of mutual interest with the US Deputy Secretary of state. US Presidents Special Assistant Mark Webber and Deputy Chief of the US mission in Islamabad Peter W Bodde were also present at the meeting.

The delegation comprised LCCI President Mohammad Ali Mian, SAARC Chamber Vice President Iftikhar Ali Malik, APTMA Chairman Akbar Sheikh, former federal commerce minister Razzak Dawood, and Chief Executive of Raffles Pakistan Ibrahim Qureshi, who discussed the challenges being faced by the economy of Pakistan.

Business community leaders urged Richard Boucher to ensure market access to Pakistans merchandise by treating it in line with least developed countries.

LCCI President Mohammad Ali Mian urged the US Deputy Secretary of State that the US should ensure market access to Pakistani merchandise as Pakistan had already suffered a lot on the economic front for being a frontline state with the US in its war against terrorism. He said that a little attention by the US could give a new lease of life to Pakistans industry.

SAARC Vice President Iftikhar Ali Malik suggested to Boucher that the Reconstruction Opportunity Zones established by the United States in NWFP, were not giving the desired results as a large number of businessmen were reluctant to put their money in that area and due to lack of infrastructure, human resource to the US should establish ROZs all over the Pakistan and for these ROZs, people from NWFP could be hired.

While stressing the need for bilateral investment, the business leaders said that all textile mills in Pakistan are in recession grip, and the United States should restore Pakistans textile quota and help Pakistani business community initiate joint ventures with their US counterparts. The business leaders said that Pakistani textile made-ups have no match as far as quality is concerned. If the right access to the US markets is ensured, the economic situation of Pakistan would be quite different.

They suggested that along side aid, to overcome the immediate problems.

Pakistan requires long term assistance for the development of its infrastructure, energy, water reservoirs, transfer of technology and development of agro-based industry.

They said that Pakistan has a strategic position and is ideally located. It is a gateway to the land-locked Central Asian States so the United States should treat it on priority basis to ensure it an economically strong and prosperous nation.

Businessmen seek access to US market


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## Neo

*Govt can take unpopular steps to stabilise economy: Gilani​*
KARACHI: Defending hefty increases in oil and gas prices to limit subsidies, Prime Minister Syed Yousaf Raza Gilani said on Tuesday that his government would not hesitate to enact unpopular measures needed to stabilise the economy. High growth in macroeconomic imbalances testifies that the country was living beyond its financial affordability, he told the inaugural session of the Development Finance Conference organised by the SBP to marks its 60th anniversary. 

He said Pakistan had to deal with slowing economic growth, rising inflation, exchange rate instability and widening current account and fiscal deficits. Our government is committed to restoring macroeconomic stability in a reasonable timeframe, he said, adding, Economic liberalisation, deregulation and privatisation in a transparent manner will be the core principles of our economic reform agenda. He said the countrys fiscal deficit would be brought down to 3-3.5 percent of the gross domestic product (GDP), adding that the government had targeted GDP growth at six to seven percent annually for the next five years.

Daily Times - Leading News Resource of Pakistan


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Continued from: http://www.defence.pk/forums/economy-development/1049-pakistan-economy-daily-update.html


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## Neo

To be continued here: http://www.defence.pk/forums/economy-development/12435-pakistan-economy-news-updates.html#post170922


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## Neo

*Pakistan has potential to capture more of $45 billion BPO market: managing director TRG ​*
KARACHI: Pakistan has the potential to capture more of the $45 billion Business Process Outsourcing (BPO) market since it is still a relatively new entrant with an ample supply of high caliber labour, whereas the Indian labour pool has now reached saturation.

This was stated by Nadeem Ilahi, Managing Director and Country Manager-Pakistan The Resource Group (TRG) in his presentation at a event organised by 21st Century Business & Economic Club at a hotel here on Thursday.

He said that a viable BPO industry in Pakistan is the best solution to employ the skilled youth and significantly enhance foreign exchange earnings of the country. The BPO industry in Pakistan faces numerous challenges, which TRG has successfully mitigated in order to become the market leader.

Besides problems in infrastructure, Pakistan is also perceived as a high-risk country in international markets. He said that TRG is a multinational KSE-listed company, providing Business Process Outsourcing services to high profile, Fortune-1000 and FTSE 100 companies in North America and Europe.

He said that TRG's services portfolio consists of Contact Centre Services, Software Development, Finance back-office and Data-Entry. TRG is amongst the largest software development concern in Pakistan.

TRG began operations in 2002 with only 60 employees, and today employs over 1,000 employees in Pakistan and over 5,000 worldwide. In addition to Pakistan, TRG has large-scale operations in the USA, Canada, Brazil, UK, Senegal and the Philippines, he said and added TRG is ranked amongst the world's largest offshore-based BPO companies.

"It is the industry pioneer in Pakistan and has made a concerted effort to introduce Pakistan into the global BPO market as a viable location for such services", he added. TRG serves a variety of customers in several industries such as Telecom, Financial services, Healthcare, Consumer Goods & Media. Commitment to deliver top quality service is what differentiates TRG from other companies in the industry.

Highly skilled manpower, world-class training, state-of-the-art technology and facilities, form the backbone of the organisation. With approximately Rs 9 billion in annual revenues, TRG is well on its way to realise its vision of becoming a global leader in the BPO sector as well as the largest employer in Pakistan. With the growth of the consumer market in Pakistan, TRG is also poised to become a leading provider of services to the local market.

About the BPO industry in Pakistan, he said that the industry provides a variety of outsourced services such as Customer Care, Payroll Processing and other Business Administration functions primarily to large-scale, service-based organisations such as financial institutions and telecom companies.

The worldwide BPO market is approximately $45 billion with India holding a dominant presence with 70 percent market-share. India's IT and BPO exports are over $30 billion per annum and it employs over 500,000 skilled workers. Syed S. Haider, Founder President of 21st Century Business & Economic Club also spoke on this occasion.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Move to contain flour prices: 3,000MW to be added to national grid​*
By Shamim-ur-Rehman & Parvaiz Ishfaq Rana

KARACHI, July 1: The Economic Coordination Committee (ECC) on Tuesday decided to release wheat to deficient areas and approved import by the private sector to bring parity in prices.

Prime Minister Syed Yousuf Raza Gilani, who presided over the ECC meeting at the Governors House here, directed the ministry of food to take immediate measures in consultation with the provincial governments to streamline flour prices, especially in the wheat-deficient areas.

The chairman of the Federal Board of Revenue informed the committee that the total tax collection had crossed the Rs1,000 billion mark by June 30.

The meeting was assured by the minister for water and power and the Planning Commissions deputy chairman that there would be no loadshedding after next year because the government had made arrangements to feed more than 3,000MW to the national grid.

Mr Gilani ordered the formation of a committee comprising the ministers for finance and water and power, the deputy chairman of the Planning Commission and the secretary for water and power to look into problems being faced by people.

The ECC was informed that the gap between imports and exports had narrowed down because of plugging of non-essential expenses and incentives.

It was told that skyrocketing prices of petroleum, edible oil and food items had shrunk fiscal space and led to inflationary trends.

The ECC approved the summary of an incentives package of the industries ministry for investment in petrochemical, naphtha cracker, polyethylene and polypropylene.

It was informed that there were sufficient stocks of sugar and pulses in the country.

According to sources, there were dissenting views among the ministers about a summary on duty drawback for textile exports, presented by Textile Industry Minister Ahmed Mukhtar, which was based on export volume and slabs.

On the intervention of the prime minister, a decision on the issue was deferred for 15 days.

Prime Minister Gilani sought a list of small and medium enterprises in the textile industry, which were believed to be about 98 per cent of the sector.

There was a proposal to extend research and development (R&D) support to textile exports for 90 days or till a decision was reached on the formula of duty drawback.

The value-added textile sector has opposed the slab-based formula for giving duty drawback on export volume, terming it discriminatory and saying that it would destroy small and medium manufacturers-cum-exporters.

The sources said the ECC also allowed R&D claims to be acceptable as per the commerce ministrys SRO of 2005, which gave the last date as June 30.

The State Bank had changed the date to June 25 through a circular, which had created resentment among textile exporters.

The ECC decided to constitute a new committee to formulate the duty drawback formula for textile exports, the sources said.

It approved, in principle, the import of wheat through Gwadar Port if the port authorities gave an assurance that facilities existed for handling a large quantity of imported wheat.

Move to contain flour prices: 3,000MW to be added to national grid -DAWN - Top Stories; July 02, 2008


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## Neo

*Thar coal conference in US next month​*
** Minister says people will start noticing improvement in power supply from August​*
KARACHI: A round-table international conference on Thar coal project will be held in the United States next month, Federal Water and Power Minister Raja Pervez Ashraf said on Tuesday.

The worlds top investors and experts in coal development and power generation have been invited to attend the conference, Ashraf told reporters after attending the cabinets Economic Co-ordination Committee (ECC) meeting at Governors House. He said Thar coal could help generate an unlimited amount of electricity.

Initially, we have planned to generate at least 6,000MW of electricity from the Thar power project in the next one year ... we have completed our planning in this regard and this conference will help attract not only foreign investment but also the latest technology in the coal-based power generation.

Improved power supply: The minister said there would be no load shedding in the country from 2009. This will be an historic achievement of this government ... we will eliminate load shedding from the country for good, he said.

He said people would start noticing improvement in power supply from August this year.

He said the ECC meeting had decided that Independent Power Producers (IPPs) and GENCOs [power generation companies] of WAPDA would get uninterrupted fuel supply round the year.

This will help them generate uninterrupted electricity round-the-clock. He said the meeting also decided that the duration of load shedding would not exceed six hours a day.

He said the government had taken a serious note of the unscheduled load shedding in Karachi by the Karachi Electric Supply Company (KESC).

He said the government had accepted all demands of the KESC management and the PEPCO was supplying 500MW to it then why they are resorting to more than one-and-a-half-hour load shedding? app

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan ranked 83 in Forbes best countries for business ​*
ISLAMABAD: Pakistan has been ranked 83 in a global list of the best countries to do business in, improving from rank 93 of last year. While Pakistan has climbed 10 places, India is down thirteen notches to 64. 

In the new Forbes study that compared business climate from various angles in 121 countries, Denmark tops the list, having displaced the US, last years leader, Ary ONE World TV reported. Ireland and Finland follow at No 2 and No 3 spots. The United States is at No 4 now, followed by United Kingdom. 

The Forbes report pointing out that Pakistan, an impoverished and underdeveloped country, has suffered from decades of internal political disputes, low levels of foreign investment, and a costly, ongoing confrontation with neighboring India. However, since 2001, IMF-approved reforms most notably, privatisation of the banking sector - bolstered by generous foreign assistance and renewed access to global markets, have generated macroeconomic recovery.

Pakistan has experienced GDP growth in the 6-8% range in 2004-07, spurred by gains in the industrial and service sectors. Poverty levels have decreased by 10% since 2001, and Islamabad has steadily raised development spending in recent years, including a 52% real increase in the budget allocation for development in FY07. 

In 2007 the fiscal deficit - a result of chronically low tax collection and increased spending - exceeded Islamabads target of 4% of GDP. Inflation remains the top concern among the public, jumping from 7.7% in 2007 to more than 11% during the first few months of 2008. app

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan and China pledge to take bilateral trade to $15 billion by 2011 ​*
BEIJING (July 02 2008): Pakistan and China on Tuesday pledged to take their bilateral trade to $15 billion by 2011, in their effort bringing economic ties at par with their strong political and strategic partnership. These views were expressed by Federal Minister for Housing and Works, Rehmat Ullah Kakar after his meeting with Secretary General of CPC Kashgar, Shi Dagang.

The meeting was held between the two leaders during the week-long fourt Kashgar Central and South Asia Trade Fair that started on June 28, the Commercial and Economic Counsellor of Pakistan Embassy Dr Naeem Khan told APP on return from Kashgar.

Shi expressed the hope that following implementation of Free Trade Agreement between Pakistan and China the bilateral trade would further improve. The meeting was also attended by Chinese Ambassador to Pakistan Lue Zhao Hui and Managing Director of Pakistan Housing Authority Raja Mohammad Abbas besides other members of Pakistan delegation. The Secretary General of CPC thanked the minister and his delegation for participating in the Fair in large number.

On the occasion, he also expressed his gratitude for the massive relief goods provided by the Pakistani government for the May 12 Sichuan devastated earthquake. Minister for Housing Rehmat Kakar called for greater co-ordination between the customs, immigration and Quarantine departments as well as among the Administrations of Xingjian and Northern Areas for smooth flow of bilateral trade. He also highlighted the importance of Pakistan and China Cross Boarder Economic Zones.

The minister said that Pakistan is keen to improve its communication and infrastructure network and in this connection he pointed out that the expansion of Karakarum Highway is already taken in hand at a cost of $500 million.

He further said that a feasibility study to lay a railway network between Havalian to Kashgar at a cost of Rs 144 million has also been carried out by the Government of Pakistan. He said that with improved communication network and integrated boarder management there will be much greater trade through the KKH.

The Housing Minister lauded the excellent arrangements made by the Chinese government for the Beijing Olympic and expressed the confidence that the August 8-24 sports gala would be the most successful ever staged in the history.

"The government and people of Pakistan fully support one China policy and strongly condemn those who elements who wanted to involve politics in the Games", he added. Out of 200 stalls established in the fair, 50 stalls have been set up by the Pakistani exhibitors while 28 by the business community of Northern Areas.

In the Pakistani pavilion, the business community has exhibited goods produced in the country showcasing the high quality products, which are attracting the visitors in the international fair of the economic importance. In the Northern Areas Stalls gem stones and local crafts have been displayed for the attraction of the visitors. The 4th Kashgar Central and South Asia Trade fair will conclude on July 2.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Sialkot traders invited to invest in Kyrgyzstan ​* 
SIALKOT (July 02 2008): The Ambassador of Kyrgyzstan, Nurlan Aitmurzaey, has said that there is good agreement base between Kyrgyzstan and Pakistan in the area of economic co-operation, and eight such agreements have strengthened the base for making business protection of investment in Kyrgyz Republic.

Addressing the members of Sialkot Chamber of Commerce and Industry (SCCI) here on Tuesday he said that Kyrgyzstan and Pakistan should use the advantage of being members of World Trade Organisation in trade operations. The Ambassador said that Kyrgyz Republic attaches great importance to develop economic cooperation with Pakistan, and added that "we are creating Kyrgyz-Pakistani Business Council in this regard". The establishment of brotherhood relations of capitals of both countries, Baishkek and Islamabad, is under process of negotiation, he said.

He said that in November 2007 four countries of the region, Afghanistan, Kyrgyzstan, Pakistan and Tajikistan, had signed the MOU for development of Central Asia -South Asia Regional Market (CASAAREM). The initial plan is to export a minimum of 1000 megawatts power from Kyrgyzstan and Tajikistan to Afghanistan and Pakistan, he added.

The Ambassador urged the members of SCCI to invest in Kyrgyzstan, and business proposals would be welcomed and full co-operation would be extended in this regard. The promotion of direct foreign investment is part of policy, and public and private sectors have joined forces to attract additional investors, he said. He said that main factors are the liberal trade regime, full protection of investment and unlimited repatriation of profits, currency exchange freedom, low business costs an educated workforce and direct access to state authorities.

In his address of welcome SCCI President Dr Khurram Anwar Khawaja said that the visit of the Kyrgyzstan Ambassador would have positive impact on trade relations between Kyrgyz Republic and Sialkot and it would open a new era in bilateral trade. He said that Kyrgyz Republic could greatly help Pakistan in overcoming the power crisis by providing electricity as it has tremendous capacity for producing electricity. The exchange of trade delegations and one-to-one meeting of businessmen of both sides are crucial for improving bilateral trade for which both sides must ensure simple visa policy enabling the businessmen get visa, he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*US urged to establish ROZs all over Pakistan ​* 
LAHORE (July 02 2008): The Reconstruction Opportunity Zones (ROZs), established by US in NWFP, are not producing desired results due to the lack of interest among businessmen who are reluctant to put their money in that area which is without infrastructure and human resource facility. Thus the US should establish ROZs in all over the country.

The Saarc Chamber of Commerce and Industry Vice President, Iftikhar Ali, said in a meeting of the six-member businessmen delegation with US Deputy Secretary of State Richard Boucher at the residence of Principal Officer, US Consulate, Bryan D Hunt here on Tuesday. The delegation also discussed issues of common interest with the US Deputy Secretary of State while Mark Webber, US President's Special Assistant, and Peter W Bodde, Deputy Chief of the US Mission in Islamabad, were also present.

The delegation urged the visiting US Deputy Secretary of State Richard Boucher to ensure market access to Pakistan's merchandise by treating it in line with least developed countries. While stressing the need for bilateral investment, the business leaders said that all textile mills in Pakistan are in the grip of recession and the United States should restore Pakistan's textile quota and help Pakistani business community to initiate joint ventures with their US counterparts.

The business leaders said that Pakistani textile made-ups have no match as far as quality is concerned. If the right of access to the US markets is ensured the economic situation of Pakistan would be quite different.

They suggested that alongside aid to overcome the immediate problems Pakistan requires long-term assistance for development of its infrastructure, energy, water reservoirs, transfer of technology and development of agro-based industry.

Lahore Chamber of Commerce and Industry President Mohammad Ali said that Pakistan would help the United States to combat terror, and urged the diplomats to ensure market access to Pakistani merchandise since Pakistan had already suffered a lot on the economic front for being frontline state with the US in its war on terror. He said a little attention by the United States could give new lease of life to the Pakistani industry.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan makes substantial progress in implementing IAFSP: ADB report ​* 
FAISALABAD (July 02 2008): Asian Development Bank (ADB) has agreed to provide 200 million dollars as second tranche to Pakistan keeping in view of the substantial progress made in the implementation of the Improving Access to Financial Services (Phase I) Programme (IAFSP).

In an update progress report, Team leader, N.P. Knoll, Financial Sector Specialist, Central and West Asia Department (CWAD) of ADB, said that there has been substantial progress in implementing the programme. First, the government adopted a national strategy for inclusive financial services and began its implementation.

This is the most important achievement of the programme and marks an important step in the development of Pakistan's financial sector. This is because building an inclusive financial system is an integral and core pillar of financial sector reforms. Second, the government took several actions with respect to KB, which are designed to improve its performance and contribution to the sector. The government also promoted fair competition between KB and other privately owned MFBs by relicensing KB under the same statute as the other MFBs.

Third, the government implemented measures to promote competition among MFBs and protect loan borrowers by requiring uniform disclosure of the full cost of lending. Fourth, the government took action to facilitate the introduction of new products and services by micro finance providers. These new products and services include Islamic banking products and mobile banking. All of these actions are expected to increase the number of micro finance clients served, although their impact will spread over time, he added.

N.P. Knoll said that the micro finance sector in Pakistan is vibrant and growing. The number of micro credit clients increased more than 40 percent between December 2006 and December 2007 to more than 1.5 million clients with a total loan portfolio of more than Rs 15 billion. However, outreach is low against given total estimated demand of 25 million-30 million clients. The small size and sustainability of many MFIs remains a concern, as the prevailing low interest rates charged by many MFIs are too low to sustain long-term growth and provide an adequate return on investment with respect to investor-owned MFIs.

The primary business of MFIs is lending, as most MFIs are not licensed to accept deposits. However, the sector has recently increased its focus on deposit mobilisation. From December 2006 to December 2007, the number of deposit accounts increased by 36 percent from 1.1 million to 1.5 million, while the aggregate volume of savings increased by 78 percent from Rs 2.2 billion to Rs 4.0 billion.

The Improving Access to Financial Services, Phase I (IAFSP) was designed to promote further diversification in the services and products offered by MFIs in order to enable the micro finance sector to continue to expand. While self-sustainability remains the ultimate goal, there is recognition that this will be a long-term process.

Micro finance in Pakistan is often regarded as a social service rather than a financial service. The government initially promoted micro finance through a subsidised, supply-led credit model. This model led to an unsustainable overdependence by the micro finance sector on donor funds. Under the earlier ADB micro finance programme, emphasis was placed on the establishment of Khushhali Bank (KB), a new institution created in 2000 by special statute, as a strategic way to launch the sector.

Although KB remains the largest micro finance bank (MFB) in Pakistan, it continues to rely on donor credit lines and has a limited product line, which does not include deposit services. Pakistan continues to lack strong, sustainable institutions that are able to reach the scale necessary to have significant impact.

To facilitate the growth of such institutions and ultimately increase the number of micro finance clients, the government is in the process of moving from the supply-driven model to a demand-driven and more market-oriented model, which includes greater private sector participation, he added.

Financial sector specialist of ADB said that the IAFSP is succeeding in accomplishing its objective of helping the government move to a more demand-driven, market-based micro finance sector. The programme has supported four interrelated reforms to facilitate this shift and address ongoing constraints to the growth of the sector: (i) developing an enabling policy, legal, and regulatory framework; (ii) improving capacity and strengthening institutions; (iii) promoting product diversification and innovation; and (iv) increasing basic and financial literacy.

In addition to reducing impediments to the development of demand-driven micro finance services, the IAFSP reform agenda reflects the government's continuing commitment to promote an inclusive financial sector that serves the entire population. The government's commitment is reflected in the goals set forth in its Medium-Term Development Framework 2005-2010 and Strategic Directions to Achieve Vision 2030, he added.

Financial specialist of ADB said that the programme includes 2-second tranche conditions and 3-monitorable actions to support product diversification and innovation. All of these actions have been completed. The SBP has issued regulations to support the provision by all licensed financial institutions of (i) Islamic micro finance services and products, and (ii) branchless banking services including mobile money transfers using cell phone-based technology.

To facilitate lost-cost, safe, and speedy transmission of remittances to Pakistan by overseas workers, a second tranche monitorable action requires commercial banks to establish and operate "Home Remittance Cells" and develop annual strategic plans to mobilise remittances. Most commercial banks have established home remittance cells. They have assigned dedicated professional personnel and sent related annual strategic plans to mobilise remittances to SBP. The government has fully complied with a related second tranche condition requiring enactment of a bill amending the Microfinance Institutions Ordinance, 2001, to allow MFBs to receive remittances directly from overseas workers.

Among the objectives of the programme is the establishment of partnerships between Pakistan Post and private sector financial institutions to expand the outreach of financial services. Pakistan Post issued a strategic partnership and model agreement to use the national post office infrastructure for expanded outreach and provision of sustainable financial services not offered by Pakistan Post. Pursuant to a second tranche monitorable action, Pakistan Post and The First Micro Finance Bank Limited (FMFB) entered into an agreement pursuant to which Pakistan Post would disburse micro finance loans and provide other related services for FMFB using Pakistan Post branches, he added.

N.P. Knoll said that the second tranche included one monitorable action regarding the programme's goal of supporting national literacy and education to improve access to financial services for poor and rural households. Programme support for this goal was to be provided by grants made using income from the endowment fund (the Fund) created by the programme. However, the fund has only recently become operational and has not yet made any grants. Therefore, the fund has not issued any quarterly reports, nor is any capacity building and training supported by fund income ongoing. However, SBP plans to begin making grants under the fund shortly and has assured ADB that it will start capacity building activities and the issuance of quarterly reports once it has approved grants, he disclosed.

Pointing out background, he said that the Improving Access to Financial Services (Phase I) Programme (IAFSP or the programme) for Pakistan was approved by the Asian Development Bank (ADB) on 14 December 2006. The program consists of a 300 million dollars loan from ADB's ordinary capital resources, a loan equivalent to 20 million dollars from ADB's Special Funds resources, and a 2 million dollars technical assistance (TA) grant.

The Japan Fund for Poverty Reduction financed an additional grant of 2 million dollars in support of the programme's objectives. The programme loan includes two tranches, each to be released after compliance with specified policy actions. The first tranche of 120 million dollars (comprising 100 million dollars from the ordinary capital resources loan and 20 million dollars from the Asian Development Fund loan) was disbursed on 12 January 2007, he explained.

N.P. Knoll said that the programme aims to reduce poverty, build a more inclusive, competitive, and efficient financial sector and promote sustainable economic growth. Its objective is to ensure access to sustainable institutional financial services at competitive prices for poor and low-income households and their micro-enterprises.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Oil and gas prices hike to push inflation to 20 percent: analysts ​* 
ISLAMABAD (July 01 2008): The increase in oil and gas prices, along with one percent hike in general sales tax (GST), will push inflation up to around 20 percent as the steps taken by the government have sent alarming signals for all sectors of economy. These harsh steps taken by a 'popular' government is a gift to the people, which will further snatch their purchasing power with the beginning of new fiscal year from Tuesday, July 1.

"The beginning of the new fiscal year is not a good omen, as across-the-board increase in energy prices including gas and petroleum products, and electricity tariff in the offing, is definitely likely to hit the poor hard. This would also render thousands of industrial workers jobless as many industries have reached the verge of collapse and further increase would force them to come to a complete shutdown," said independent economists and representatives of chambers of commerce and industry.

"The increase will hit the poor heavily in an indirect way. The government steps will increase the prices of all essential and other commodities," said Senator Khushid Ahmad. Instead of reviewing tax regime on petroleum products, the government went ahead with unbearable increase in petroleum products, he remarked and predicted that inflation could reach up to 20 percent if the current trend of increasing energy prices went ahead.

The CPI inflation surged by 11.11 percent during 11 months of 2007-08, according to statistics of the Federal Bureau of Statistics (FBS). It may exceed 12 percent, against the original target of 6.5 percent, when the FBS would release full-year (2007-08) figures.

Electricity prices are expected to cross Rs 10 per unit for all categories except those small consumers using up to 50 units per month. The increase in prices is part of the conditions attached to $500 million World Bank programme lending support the bank has extended to Pakistan for budgetary support.

According to some estimates, the oil consumers are paying 14 taxes and charges including wharfage, a tax charged from countries at war to cover risk, on each litre of petrol and diesel.

"The opposition in Senate demanded review of oil pricing formula. Unfortunately, the government did not listen to our demand," Khurshid said. He said that government functionaries, including high-ups, were not prepared to change their luxurious lifestyle.

"The government looks to be least interested to cut its expenditures. The ruling party sends big delegations to foreign countries--a practice that was also done by last government. We see no change in the policies of the present and previous governments," he added.

Dr Shehzad Arshad, chairman of textile committee Federation of Pakistan Chambers of Commerce and Industry (FPCCI), said that after increase in petroleum and gas prices, the industries have been left with very limited options for survival.

"In 2004, inflation was recorded at around 4 percent. In 2008, it has already exceeded 11 percent. In 2009, the inflation will definitely touch even higher figures. In such a situation, the industries will lose to the regional competitors in international market," he said.

He said that the government had imposed 10 percent withholding tax on electricity bill if the consumer's bill exceeds Rs 20,000. Increase in GST from 15 percent to 16 percent is another counterproductive step taken by the government. The textile sector, which accounts for 64 percent of the country exports, provides employment opportunity to 40 percent of the industrial labour and contributes 10 percent to the GDP, will further suffer in 2009.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan in need of increased economic aid: Gilani tells Boucher ​* 
ISLAMABAD (July 01 2008): Prime Minister Syed Yousaf Raza Gilani has said it is often not realised that one incident of terrorism in Pakistan leads to flight of foreign capital from the country besides discouraging the flow of foreign investment. Pakistan is in need of increased economic assistance not only to stabilise democracy but also to fulfil our promise of providing better life to the people, he further said.

He made these remarks while talking to Richard Boucher, US Assistant Secretary of State, who called on him at Prime Minister's House here on Monday morning. Gillani said that terrorism is a global phenomenon and a serious threat to humanity, ruining global peace and Pakistan is fighting extremism in its own national interest and not to serve the objectives of another country. Similarly, it was a terrorist act that claimed the life of Mohtarma Benazir Bhutto Shaheed.

He added, "Pakistan is convinced that there is a need to address the factors that encourage terrorism." With the inception of new political government, Pakistan has developed a three-pronged strategy to cement peace and security in the tribal areas in consultation with its coalition partners, which encompasses political, economic and security dimensions. The government has initiated dialogues with tribal elders, which is supported by the general public, he said.

On the other front, Gilani emphasised early setting up of the Reconstruction Opportunity Zones (ROZs) to accelerate economic activity in the troubled areas of NWFP and Balochistan so that more job opportunities could be created. He also stressed the need for providing assured access to US markets to goods produced in these ROZs.

On Saturday the government carried out operation against terrorists in the areas of Khyber Agency and destroyed the hideouts of militants, he told the delegation. In a statement, Prime Minister Syed Yousuf Raza Gilani has said that Pakistan greatly values its relationship with the US and is keen to strengthen it covering diplomatic, political, economic, defence and security fields.

"We are desirous of a broad-based and long-term relationship focussing especially on bilateral co-operation in trade, energy, investment, science & technology, educational and cultural fields with a view to bringing the people of the two countries closer to each other," he said.

Gilani said that he had no doubt that the victory of democratic and progressive forces in the country especially in the NWFP and Balochistan provinces and the formation of broad-based democratic governments at the Centre and in the provinces would further strengthen the close and co-operative relationship that existed between the two countries.

He said that there is a need for better monitoring of the borders from the Afghanistan side as our side has 900 check posts compared to about 100 such posts on the Afghanistan side, which is inadequate. The Prime Minister said Pakistan is keen to see a stable and strong Afghanistan in its neighbourhood which is equally good for both the countries and for regional peace and stability.

Pakistan is making utmost efforts to strengthen security along the Pakistan-Afghanistan border including the installation of biometric system on entry points. He said Pakistan has also offered to fence the border. Pakistan needs help all the more urgently in view of the steep rise in the global prices of oil and food commodities.

Boucher said that United States has great interest in the success of democratic government and economic well-being of the people of Pakistan. He said that US is ready to help resettle Afghan refugees in their country.

The meeting was also attended by US Ambassador to Pakistan Anne Patterson, Special Assistant to the US President Mark Webber, Advisor to Prime Minister on Interior, Rehman Malik, Advisor to Prime Minister on National Security, Mahmud Durrani, and Acting Secretary, Foreign Affairs. The Prime Minister recalled his useful meeting with President Bush at Sharm Al-Shaikh and said he looks forward to meeting the President in Washington next month.

US Assistant Secretary of State, Richard Boucher also called on Rehman A Malik and discussed with him the details of operation carried out in the tribal areas particularly in Khyber Agency. Malik said the situation in NWFP is under control and there is no law and order situation, however there are some miscreants who will be dealt with iron hand.

Later, Boucher also met Advisor to Prime Minister on National Security, Mehmud Durrani and discussed general security position in NWFP and Balochistan. Afterwards, talking to the US Congressional delegation led by Senator Cardin, the Prime Minister said, "We want the US to help Pakistan rebuild its economy."

Highlighting the importance Pakistan attaches to its relations with the United States, the Prime Minister underscored the desire to deepen bilateral co-operation in diverse fields, including defence, trade, economy, energy and social sectors. He told the delegation that the government's foremost priorities included fighting extremism and terrorism in Pakistan's own interest as well as rebuilding the economy.

The Prime Minister also apprised the members of Congress of the three-pronged counter-terrorism strategy. He further underlined the need for accelerating the ROZs initiative stressing that it would help expand economic opportunities and generate jobs.

The Prime Minister also underscored the vital interest Pakistan has in a stable Afghanistan. He apprised the delegation of the steps taken by Pakistan to strengthen security along the Pakistan-Afghanistan border and entertain 3 million Afghan refugees. The Prime Minister stressed the need for the international community to support these efforts.

The members of the congressional delegation highlighted the strategic importance of the US relations with Pakistan and reciprocated the desire to expand bilateral co-operation in various fields. They affirmed US readiness to support Pakistan in its efforts to address the security issues and to achieve economic progress over the long term.

They said that the US regards Pakistan as its important and strategic ally and is keen to closely work with the democratic government to help it overcome its economic problems. They said, "Pakistan is a linchpin in the region and we want to expand our bilateral co-operation in all areas including trade, investment and security matters."

The Congressional delegation included Senator Benjamin Cardin, Congressman Zach Wamp, Congressman Robert Aderholt, Congressman Mike McIntyre and Congresswoman Loretta Sanchez. The meeting was also attended by Advisor to Prime Minister on Interior, Rehman A Malik, Advisor to Prime Minister on National Security, Mahmud Durrani, and Acting Secretary, Foreign Affairs.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan Last Fiscal Year Tax Revenue PKR1 Trillion; Up 18.3% - Official​*
ISLAMABAD-(Dow Jones)- Pakistan's tax revenue rose 18.3% to PKR1 trillion in the fiscal year that ended June 30, the chairman of the Federal Board Of Revenue said Wednesday.

During the last financial year, the tax collection authority collected PKR385 billion in direct taxes, up 38.5%, and PKR375 billion in sales tax, up 37.5%, Abdullah Yusuf told reporters.

This financial year's "target is based on nominal growth of the gross domestic product calculated on last financial year's collection of PKR1 trillion, which comes up to PKR1.2 trillion, and another PKR86 billion would come from some new revenue measures," Yusuf said.

During the last fiscal year, the Federal Board of Revenue collected PKR91 billion in excise duty, up 9.1%, and PKR150 billion in import tax, up 15%, he added. 

Pakistan Last Fiscal Year Tax Revenue PKR1 Trillion; Up 18.3% - Official


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## blain2

If I am not mistaken, this number can be doubled if the black market economy is documented and taxed. There are means and resources within the country to bridge the fiscal gap in imports. What is needed is the will to do so.


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## Neo

blain2 said:


> If I am not mistaken, this number can be doubled if the black market economy is documented and taxed. There are means and resources within the country to bridge the fiscal gap in imports. What is needed is the will to do so.



Magar billi ki gardan mai ghanti kaun bandhay ga? 
Top industrialists, landlords and even politicians are involved in black market. 
I wonder if even true leadership can make a differnce, its the mentality that has to change.


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## Neo

*National Foods sales cross Rs4bn ​* 
Thursday, July 03, 2008

KARACHI: National Foods Limited (NFL) on Wednesday said its year-on-year growth in sales increased 28 per cent to over Rs4 billion during the financial year that ended on June 30.

The secret of our success is understanding consumer needs and building a dedicated team that can deliver products and services that meet these needs, a press release quoted Abrar Hasan, CEO of NFL as saying. Our sales growth is very much in line with the companys Vision 20/20 which targets sales of Rs50 billion by the year 2020.

The food company underlined the importance of its endeavour to come up with innovative products based on research and market needs. NFL has more than 250 different products in 12 food categories. Its products are sold in over 35 countries.

National Foods sales cross Rs4bn


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## Neo

*Pakistans water storage capacity very low: ICCI​*
ISLAMABAD: Islamabad Chamber of Commerce and Industry (ICCI) Wednesday said at present, the storage capacity of the country was only 13 percent of the annual water flows from rivers while US has developed a 497 percent storage capacity from the annual flow from rivers.

President ICCI, Mohammad Ijaz Abbasi said Pakistan would be a water deficient country by 2012 if the water storage capacity were not enhanced.

He said due to lack of proper water management, particularly in rural areas a big chunk of rural population was migrating to urban areas in search of better career prospects. 

Such migration was not only putting extra burden on already scarce urban amenities, but it was also creating several social problems and disturbing law and order situation, he added. He stressed upon the government to adopt modern water management techniques, particularly in rural areas to develop agriculture on modern lines and to enhance the productivity of agriculture products in the country. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Financial Year 2007-08: Money market witnessed capital exodus*​
** Portfolio investment turned negative standing at $251.022 million​*
KARACHI: Countrys capital market saw huge capital flight during the financial year 2007-08, triggered by political instability and worst law and order situation, which marred the past year.

The portfolio investment turned negative by standing at $251.022 million (Rs 17.069 billion) during July-June period of last financial year, the figures of National Clearing Company of Pakistan (NCCPL) indicate.

Financial year 2007-08 witnessed worst economic and law and order scenario, casting dark shadows on the stock market as well, which witnessed historical ups and downs by remaining volatile throughout the year.

Though, the financial year began amidst political instability caused by reference against Chief Justice with wide-spread agitation and massive protests against the then government, however the more scary scene for the investors emerged in the aftermath of the assassination of Benazir Bhutto on December 27, 2007.

The break-up of portfolio investment shows that its trend was not discouraging in the first half of the fiscal, but the second half (January to June 2007-08) was catastrophic as far as the investment in stock market is concerned with the outflow reaching to new heights.

The growth phase that started from 2001 to 2002 appears to be evaporating at the moment because of number of issues on political and economic sides, on which the new government is still directionless, analyst Faisal Shaji noted while not expecting rosy picture on this front in the immediate future.

Since the new democratic government miserably failed to come up with a sound economic policy, the investors sentiments were also badly hurt by the rumours and speculations about measures regarding the levying of capital gains tax before the budget.

Since April 18, when Karachi Stock Market (KSE) rose to historical heights, till the announcement of the budget, market was abound with rumours that were disastrous for the investors particularly foreign ones, who offloaded their stocks and kept themselves at bay from the stock market.

Analysts predicted that emerging economic situation is bound to impact the stock market, ultimately causing concerns among the foreign investors. In an era of high inflation, further interest rate hike could not be ruled out, which would certainly hit the economic growth as well as growth prospects of listed companies, Shaji pointed out.

People are now recalling the events that followed the nuclear blasts in 1998, when major exodus of foreign investment was witnessed. The current situation is no more different from that one, which pains a worrying picture for the much cautious foreign investors.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Portfolio investment turns negative in FY08​*
KARACHI, July 2: The fiscal year 2007-08 ending with net outflow from the portfolio investment left a big negative mark on the countrys vulnerable economic and political situation. It caused a total outflow of $4.6882 billion from the market.

The year-end final data released by the State Bank of Pakistan on Wednesday showed that the poor response of foreign portfolio investment added fuel to fire to the forex coffer of the country.

The June, the last month of the outgoing year, witnessed a net cumulative outflow of $146.6 million as the total inflows remained at $255 million while the outflows were at $402 million.

This negative situation prevailed throughout the fiscal year, which was contrary to the last fiscal year when the portfolio investment added about $1.9 billion to the total foreign private investment in the country.

The State Banks calculation reveals that during the year the total inflow reached $4.449 billion but the outflow exceeded it at $4.682 billion, thus the cumulative outflow was $233 million.

Analysts said the year just ended was the most instable period during the last five years and the entire year was full of incidents. They said each incident carried greater uncertainty damaging the image of the country abroad.

Unlike the fiscal 2006-07, the year 08 remained mostly under political uncertainty.

The political uncertainty was the real cause of concern, which started with emergency, heightened with the murder of Benazir Bhutto and continued with the results of general elections, said Abid Saleem, researcher at a brokerage house.He said despite formation of the new government, which presented its first budget, there was neither sign for change in the economic policies nor any indication of ending of war on the political front.

While the economy is plagued with the rising inflation, the political situation is still not settled, said the analyst adding that the next fiscal year would remain under the grip of same situation unless something happens to end this uncertainty.

Not only the portfolio but the foreign direct investment also declined substantially during the year as July-May figure showed that the FDI shrank by 14 per cent.

The booming banking and telecommunication sectors protected the falling trend in foreign investment during the fiscal year just-ended, said a senior banker. He said the banking sector had reached the saturation point due to the existing economic growth trend and would not provide much support in the coming days of the new fiscal year.

Analysts said the economic growth was the real key for attracting foreign as well as domestic investors. The uncontrolled hike in oil and gas prices with highly inflated commodity prices, it looks impossible for the country to achieve a reasonable 6 per cent economic growth, they said.

The recent action to support the share prices by imposing restriction that price of scrip can not slip more than one per cent but can move up to 10 per cent, also failed to attract foreign investment.

Most of the analysts, who are the real catalyst to bring foreign investors for portfolio investment, were of the view that no artificial step could attract the investors. They believe that the real economic growth was the only way to invite foreign investors.

Portfolio investment turns negative in FY08 -DAWN - Business; July 03, 2008


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## Neo

*FBR exceeds tax target, expected to collect Rs 1.005tr​*
ISLAMABAD: The Federal Board of Revenue (FBR) has crossed over the psychological barrio of Rs 1 trillion tax collection and the total collection is expected to reach over Rs 1.005 trillion against the provisional collection of Rs 1.002 trillion till June 30, 2008. 

Muhammad Abdullah Yusuf, Chairman Federal Board of Revenue, announced this at a press conference at the conclusion of financial year 2007-08 focusing tax collection performance and explanation of budgetary measures announced in the budget 2008-09. 

He said that during July-May period of last fiscal year 2007-08 the FBR has collected Rs 135 billion taxes and duty on POL products which includes sales tax at Rs 112 billion and customs duty of Rs 20 billion. 

He said that amendments in the Economic Reforms Act have not empowered the income tax authorities to probe the foreign currency accounts. He clarified that the scope of the Capital Value Tax on immoveable property has reduced actually as its applicability has been limited to the rated areas of newly established district governments. 

Investment Tax Schemes is a good opportunity for the existing as well as new taxpayers to legalise their hidden assets by paying 2 percent tax on fair market value of the assets. Now there is no excuse left for the new as well as existing tax payers to declare their hidden assets and get them legalised and be a part of formal economy. He said that no question about past years would be asked to those who would be availing facility of investment tax. He appealed that population having taxable income should come forward and contribute in the national development through their due contributions. 

He also informed that government is also negotiating to revise Pakistan Afghanistan Transit Agreement to tackle the issue of smuggling as well as issues relating border trade. He said that a tracking system is being introduced to track the movement of trucks and trailers carrying goods meant for Afghanistan. This system would help trace trucks and trailers not entering Afghanistan. He did not denied the possibility that goods in transit to Afghanistan for NATO may be coming back to Pakistan.

He also explained that defense services are paying all taxes and duties as applicable on salaries, imports and purchases. 

He said that for the current fiscal year 2008-09, the tax collection target is Rs 1.250 trillion with a required growth of 25 percent. This target has been set by assuming 17.3 percent nominal growth in the economy 5.5 percent GDP growth and 12 percent inflation making a total of 17.3 percent. Through this assumption the tax collection has been estimated at Rs 1164 billion. Some Rs 71.2 billion are expected to come through revenue measures announced in the budget which include Rs 26.7 billion in direct taxes side, Rs 38.2 billion from sales tax, and Rs 6.4 billion from customs duty, Rs 15 billion would be generated through efforts of the department with Rs 5 billion share in each tax i.e. income tax, sales tax and customs duty. 

He explained that tax collection target of Rs 1.250 trillion would require growth of 27.3 percent in direct taxes with target of Rs 490 billion, 28 percent growth in sales tax with annual target of Rs 480 billion, 26.4 percent growth in federal excise duty with annual target of Rs 115 billion and 10 percent growth with annual target of Rs 165 billion is required to meet the said target. 

Explaining the refund payment situation, he informed that FBR has paid Rs 68 billion as refund and rebates in 2007-08 as compared to Rs 82 billion in previous fiscal year 2006-07.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Sindh to focus on industrial infrastructure this year​*
KARACHI, July 2: The Sindh government will spend Rs1,129 million on industrial development in the province during 2008-09. The amount is Rs407 million more compared to Rs722 million allocated for the purpose last year.

The major focus of development this year will be on development of infrastructure in industrial estates in Karachi, Nooriabad, Hyderabad and Sukkur, etc.

A major scheme for which Rs200 million has been earmarked is laying of water pipeline from Keenjhar Lake to the Site Nooriabad, in addition to construction of a 5 MGD (million gallons per day) filter plant at Site Hyderabad at a cost of Rs10 million, and establishment of development and management companies in Site Sukkur and Kotri at a cost of Rs500 million.

Another scheme is to set up a small industrial estate for power-looms in Hyderabad on five acres at a cost of Rs10 million.

In the development plan for industries in 2008-09, Rs1,007 million will be spent on new schemes while Rs378 million have been allocated for 10 ongoing schemes.

Of the ongoing schemes, a major allocation of Rs158 million has been made for a small industrial estate at Northern Bypass in Karachi, extension of small industrial estates at Hyderabad at Rs15.5 million, a small industrial estate at Ghotki at Rs10.6 million, a Sindh handicraft display centre in Islamabad at Rs31.3 million and a small industrial estate at Naushahro Feroze at Rs15 million and upgradation of nine small industrial estates at Thatta, Sanghar, Dadu, Hala, Badin, Nawabshah, Rohri, Sehwan and Mirpurkhas at a cost of Rs17 million.

Among the on-going schemes being implemented by Site Ltd Rs71 million has been earmarked for improvement of infrastructure facilities in various estates at Karachi, Nooriabad, Kotri, Hyderabad and Sukkur.

Industries secretary Mohsin Haqqani told Dawn on Wednesday that under the new industry setup in which labour and transport departments have been separated, it would have more time to focus on industrial development.

He said that the ministry was preparing a plan for rapid industrialisation in the province, especially in the interior, to create job employment opportunities.

Marla Menorah, a former additional secretary and now consultant to the ministry, told Dawn that despite a policy of austerity and cuts in expenditures, the government has increased outlay for industrial development from Rs722 million to Rs1,129 million this year.

In a major move to expedite industrial development in the interior, the ministry lifted a decade-old ban on sugar mills and issued permission to set up six new mills in areas having abundance of sugarcane.

The ministry also released Rs250 million each this year for development of infrastructure at four industrial areas in Karachi, namely Korangi, Landhi, North Karachi and Federal B. Area.

Sindh to focus on industrial infrastructure this year -DAWN - Business; July 03, 2008


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## Neo

*WB, ADB, other donors halt work in restive areas ​*
LAHORE: International donor agencies have asked their personnel to stay out of the NWFP and Balochistan, Dawn News reported. The UN security advisory service has issued cautions to the World Bank, the Asian Development Bank and other agencies about the risks in the restive areas, the channel reported. The ADB communication officer confirmed the report. daily times monitor

Daily Times - Leading News Resource of Pakistan


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## Neo

*Healthy growth seen in cement export ​* 
KARACHI (July 03 2008): Pakistan's cement exports have witnessed a healthy growth of 142 percent to historical level of 7.712 million tonnes during the 2007-08 fiscal year in the wake of rising international demand, industry sources said. They said that at present, regional countries were facing huge shortage of cement, which had played a key role in achieving landmark cement exports during the last fiscal year.

"During the last fiscal year, strong external demands from the Gulf countries have continued pushing local companies to invest more in the cement sector, besides utilising their maximum capacity to meet international demand," they said.

Statistics, available from All Pakistan Cement Manufacturers Association (APCMA), show that cement export registered a robust increase of 4.528 million tonnes during the 2007-08 fiscal year (July-June) and it has touched a new mark of 7,716,620 tonnes as against 3,188,494 tonnes exports in the same period of 2006-07.

Pakistani companies are exporting cement at an average rate of 60-70 dollars per tonne and as per average price overall exports stood at some 500 million dollars in 2008 fiscal year.

Overall cement dispatches have also increased by 24.31 percent to an all time high level of 30,112,142 tonnes during the last fiscal year as compared to 24,222,775 tonnes during the 2006-07 fiscal year, depicting an increase of 5,889,367 tonnes during July-June of 2008 fiscal year. However, the local dispatches showed poor performance, as their growth witnessed a six percent fall during the 2008 fiscal year.

Local dispatches during the last fiscal year stood at 22,395,522 tonnes as compared to 21,034,282 million tonnes, depicting an increase of 6.10 percent during the last fiscal year. To meet international and local demand, the cement companies had used maximum capacity utilisation during the 2007-08 fiscal year 2006-07, which stood at about 80 percent, sources said.

Overall cement dispatches witnessed an increase of 24 percent in June 2008 to 2,771,210 tonnes as compared to 2,225,630 tonnes in June 2007. During the last month, cement export stood at 916,604 tonnes with an increase of 133 percent, while the local dispatches have gone up by 1.16 percent to 1,854,606 tonnes during June 2008.

Cement industry's installed capacity had more than doubled during the last five years, which helped the industry touch an all time high dispatches mark during the last fiscal year, industry sources said. "Low prices trend has helped to capture the regional cement market. However, they deserve a raise in the duty drawback", they added.

They said that the raise in the export had emerged after the government decisions regarding restoration of the duty drawback on cement exports, in which the Federal Board of Revenue (FBR) had allowed duty drawback at the rate of Rs 25.08 per tonne on cement export.

The duty drawback facility is effective since September 27, 2006. However, despite the increases in the dollar rate and other changes it still stood at Rs 25 per bag, which needs to be increased, they said.

They said that slow growth in the dispatches is compromised by increasing cost and high tax burden standing at Rs 90 per bag, some 30 percent of overall cement bag price. "Enhancement of production by local cement factories is the another prominent reason behind this huge increase of 142 percent in cement exports", they added.

However, they pointed out that 85 percent of the listed cement companies have registered huge losses from operations amounting to Rs 14 billion during the first nine months of the current fiscal.

These losses occurred mainly due to rising cost of doing business and an imbalance in supply-demand phenomenon, resulting in depressed market rates, they added. "The government should realise the impact of taxes imposed on the local sale of cement and give some relief to the cement sector", the demanded.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Britain gives Pakistan £1bn to fight extremism​*
Zahid Hussain in Islamabad 
From Times Online: July 3, 2008

Britain is doubling its aid to Pakistan to almost $1 billion, reflecting concern over rising Islamic militancy which threatens the battle against the Taleban in neighbouring Afghanistan. 

About a third of the money is expected to be spent in provinces abutting the porous western border, where the Taleban and other militant forces are increasingly challenging the authority of the government. 

Douglas Alexander, the International Development Secretary, today announced the £480 million package that will make Pakistan the second largest recipient of British aid by 2011. 

More than £250 million will be earmarked for education, with plans to get five million Pakistani children into school and to boost training opportunities for young people. 

Much of the extra money will on improving schools in the border areas, in an attempt to tackle poor levels of literacy, particularly among girls, which lag far behind Pakistans already low rate of about 50 per cent. There are hopes that such programmes will help the Pakistani government counter the influence of the radical madrassas which have become seedbeds of Islamic militancy. 

You cant have any real successful efforts to counter radicalism without education, said Robert Templer, director of the Asia Program at the International Crisis Group. Its desperately needed. If this area isnt dealt with, it's going to be a festering problem for decades to come. 

It is the first time that significant funding will be channelled towards Baluchistan and the Federally Administered Tribal Areas, with a big increase also going to North West Frontier Province, all areas which serve as a base for militants linked to the Taleban and al-Qaeda. Thousands of Pakistani troops are currently engaged in fighting the insurgents responsible for cross-border attacks on Nato forces. 

Development work in these areas, considered unsafe for Western aid workers, is likely to pose a significant challenge. Regional hostility to outsiders has increased since US missile attacks on the suspected militants inside Pakistani borders. Most of the money will be channelled through central and local government, DfiD said, while acknowledging that corruption would be a problem. 

We have been committed to helping Pakistans efforts in the fight against poverty for many years, Mr Alexander said. Our aim is to continue to help improve poor peoples lives in key areas, making sure they have access to better healthcare, schools and employment opportunities. 

In addition to the health and education programmes, Britain will provide £50 million to the State Bank of Pakistan to help make loans and bank accounts available to the poor. 

Funds will also be available for reconstruction work in Pakistani-controlled Kashmir. More than 80,000 people died in the earthquake which hit Pakistans northern areas in 2005. UK has previously provided £128 million in relief and reconstruction aid for the affected areas. 

Yesterday, Mr Alexander visited areas hit by the earthquake and promised: The reconstruction work of the British Government in areas affected by the Pakistan earthquake will go on. 

Britain gives Pakistan £1bn to fight extremism - Times Online


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## Neo

*Government keen to promote investment in housing, energy: Prime Minister ​* 
KARACHI (July 03 2008): Prime Minister Yousuf Raza Gilani has said that housing, agribusiness and energy are some of the areas in which the government is keen to promote domestic and foreign investment to generate and expedite economic activity in the country.

He stated this while talking to a delegation of bankers, who called on him here on Wednesday. Sindh Chief Minister Syed Qaim Ali Shah, Special Assistant to the PM on Economic Affairs Ms Hina Rabbani Khar, Special Assistant to the PM on Special Sector Ms Shahnaz Wazir Ali and Ms Fauzia Wahab, MNA, also attended the meeting.

Prime Minister Gilani said that foreign investment invariably follows domestic investment and the best way to promote it is through establishing joint ventures between Pakistani and foreign investors. He said joint ventures promote foreign investors' confidence in the country and that's why the government is encouraging them.

He said that his government is considering various proposals to promote foreign direct investment in the country, adding the government will provide a-level-playing-field to both local and foreign investors by allowing foreign investors to hold 100 percent equity without restriction on the movement of capital.

Talking about the priorities of his government, the prime minister said that the government is committed to providing housing to all segments of the population and has already announced construction of one million houses. He said that he would welcome suggestions from the private sector to help the government achieve this objective.

Prime Minister Gilani said that his government is also keen to promote agribusiness in the country especially dairy development as 75 percent of the population is connected to agriculture for its livelihood. He said that the government is taking several measures to modernise and promote agriculture, which is the mainstay of the economy.

The delegation gave several proposals for promoting FDI in Pakistan and for the strategic realignment and reprioritisation of resources to achieve this objective. The prime minister said that he has established Economic Advisory Council in which the private sector is fully represented. He said that he would direct the Council to consider the various proposals given by the bankers and associate with various professional groups to benefit from their advice and experience.

The bankers delegation comprised Khalid Amin, chief executive, New Project Duabi-9 Group; Zaigham Rizvi, consultant to World Bank Housing Expert; Athar Naseem Sheikh, senior partner, Arkan Capital Partners Dubai; Humayun Murad, head, Orix Leasing Pakistan and Middle East; Javed Callea of SECP Saudi Pak Investment Company and Wamiq Rizvi, secretary, Pak-Kuwait Investment Company.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan may seek Japanese assistance in energy, water sectors ​* 
ISLAMABAD (July 03 2008): Pakistan is likely to seek Japanese assistance in the development of energy, water resources and some other key sectors of the economy, as the two countries will hold the fourth round of high-level economic policy dialogue this month. Sources told Business Recorder on Tuesday that the fourth round will be held in Tokyo later this month.

The two sides will also look into the Japanese co-operation in social sectors, the sources added. They said that Economic Affairs Division (EAD) has informed different ministries including ministries of water and power and petroleum and natural resources to identify the areas where Pakistan and Japan could look into prospects of mutual co-operation for the benefit of both countries.

According to the sources, Pakistan desperately needs investment from local and foreign sources in power sector as it is confronting huge gap in electricity demand and supply. The electricity shortage has exceeded 5000 MW daily and the country's urban and rural areas face power outages for eight and six hours respectively every day.

The government has planned to construct a number of small and big dams and Pakistani delegation is expected to seek some assistance from the Japanese companies to invest in the non-controversial projects especially in small dams, the sources added.

The Japan-Pakistan High Level Economic Policy Dialogue was first agreed between the then Japanese Prime Minister Junichiro Koizumi and President Pervez Musharraf during the latter's visit to Japan in March 2002. The first round of dialogue was held in Islamabad in February 2004 while the second round was held in Tokyo in July 2005. The third round was held in July 2007.

Pakistan's exports to Japan are in a miserable situation. The amount has kept on decreasing since 1996, and in 2005 it became a quarter of the amount in 1995. Now, Japan's imports from Pakistan are of almost negligible amount. Pakistan is expected to seek some market access from Japan, the sources said. The exports of textiles and clothing occupy about 60 percent of the total Pakistani exports to Japan, but these are declining due to uncompetitiveness of the products.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*China invited to participate in low cost housing project ​*
BEIJING (July 03 2008): Pakistan has invited China to participate in the government's ambitious low cost housing project for low paid workers. Federal Minister for Housing and Works Rehmatullah Kakar extended the offer when he met Secretary General of CPC, Kashgar, Shi Dagang, a senior official of Pakistan Embassy said here on Wednesday.

The Federal Minister was in Kashgar to represent Pakistan at the week-long forth Kashgar Central and South Asia Trade Fair that started on June 28, Commercial and Economic Counsellor of Pakistan Embassy Dr Naeem Khan told newsmen on return from Kashgar.

Giving details of the project, the minister said that government planned to build one million housing units yearly for low paid workers and participation of China in this mega project would be welcomed. He invited the Chinese investors, contractors and builders to participate in this mega housing project.

The meeting was also attended by Chinese Ambassador to Pakistan Luo Zhao Hui, Managing Director of Pakistan Housing Authority Raja Mohammad Abbas besides other members of Pakistani delegation.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Work on most hydropower projects to start next year ​* 
Friday, July 04, 2008

LAHORE: The Water and Power Development Authority is striving for optimal exploitation of hydropower potential to cope with increasing demand of electricity in the country.

WAPDA Chairman Shakil Durrani stated this during a visit to project sites of Diamer-Basha dam, Dasu, Pattan and on-going three high-head hydropower projects namely Khan, Allai and Dubair Khwar on Thursday.

According to a statement issued here, the WAPDA chairman said nature had blessed Pakistan with the potential of generating more than 54,000 megawatts of hydel electricity.

With a view to injecting low-cost electricity into the national grid, WAPDA was working on feasibility studies and detailed engineering designs of a number of hydropower projects with accumulative capacity of about 25,000MW including Kohala (1,100MW), Bunji (5,400MW) and Dasu (4,000MW), he added.

Durrani revealed that feasibility study of Dasu hydropower project was expected to be completed in October this year, adding rest of the studies were also at advanced stages of completion and most of the projects would be available for construction by next year.

He said the multi-purpose Diamer-Basha dam and run-of-river Dasu hydropower project would contribute more than 18,000 and 19,000 gigawatt hours of electricity annually to the national grid.

On the occasion, the WAPDA chairman was briefed that three Khwar projects of 323MW would start power generation one by one from 2009 onwards.

Expressing satisfaction over the progress, the chairman directed project officials to expedite work on the projects and not compromise on laid down standards of quality and safety.

During the visit, Durrani also met local notables and the civil administration, assuring them of all possible help from WAPDA to resolve settlement problems.

Work on most hydropower projects to start next year


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## Neo

*SBP governor for expansion of microfinance industry ​* 
Friday, July 04, 2008

ISLAMABAD: Governor State Bank of Pakistan Dr Shamshad Akhtar said on Thursday that Pakistan like other countries of the world was facing the challenges of higher inflationary pressures owing to spike in POL and commodities prices.

We will have to put in place a demand management policy and fiscal restraint in order to lower down inflationary pressures, Governor SBP said while talking to reporters here on Thursday.

Quoting some multilateral creditors reports, she said the prices of food registered an increase of 180 per cent, whereas POL prices also surged, which are negatively affecting economies like Pakistan. She said the central bank would continue to further tighten its monetary policy in order to reduce inflationary pressures.

However, according to a press statement issued by the Pakistan Poverty Alleviation Fund (PPAF), Dr Shamshad Akhtar has said that the role of Pakistan Poverty Alleviation Fund (PPAF) in the growth of microfinance sector is unmatched and without any iota of doubt it (PPAF) is the father of micro credit sector in Pakistan.

The Governor of State Bank of Pakistan said this while inaugurating Pakistan Poverty Alleviation Funds flagship project Programme for Increasing Sustainable Microfinance (PRISM) for financial sustainability and expansion of microfinance organisations in the country on Thursday.

Ya Tian, Country Programme Manager for International Fund for Agricultural Development (IFAD), Kamal Hyat, CEO/MD, PPAF, and others were also present on this occasion.

Offering collaboration to PPAF, Dr Shamshad Akhtar said that the Apex organisation is the pioneer in microfinance industry and has also helped in developing infrastructure for poverty alleviation.

She said that before 2000, there were a few retailers and the whole venture has been made possible not because of the number of microfinance institutions, but due to PPAF interventions across the country. She said that the role of the central bank would be to facilitate the growth of microfinance institutions.

Lauding the role of PPAF in augmenting MFIs, Dr Shamshad Akhtar said that microfinance was in a great demand in the rural areas and microfinance institutions should target the poor living in these areas. Go to rural areas where micro credit is in high demand, she stressed, adding that we need to have 3 million microfinance clients by the end of 2009.

Kamal Hyat said that PPAF, since its inception, was following a holistic approach for service delivery and poverty alleviation. He said that they would like to seek guidance from the central bank to build synergies for providing technical assistance to PPAF partner organisations. He applauded the facilitating role of Federal Ministry of Finance and Economic Affairs Division (EAD) for taking up the PRISM.

Congratulating the Ministry of Finance and PPAF, Ya Tian said that IFAD recognises microfinance as an important tool for poverty alleviation and PPAF efforts on this front are unparalleled.

The US$45 million programme (supported by IFAD) is in direct response to the current environment for microfinance that focuses on microfinance organisations, which have or are approaching financial sustainability and are positioned to substantially expand their operations.

The anticipated outcomes of the programme would enable microfinance institutions (MFIs) to diversify their sources of funding by accessing funding from commercial sources. It would also help operate MFIs as financially sound, sustainable organisations and would further expand microfinance outreach to rural areas.

The core programme component seeks to develop a set of credit enhancement mechanisms targeted at sustainable MFIs and microfinance banks to become attractive potential clients for banks/commercial financial markets. It would also enable the most dynamic MFIs to access commercial financing to realise their growth potential and expansion to rural areas, besides facilitating the MFIs to strengthen their institutions and access commercial funding.

http://www.thenews.com.pk/daily_detail.asp?id=122049


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## Neo

*4,500 computers to be donated to govt schools ​* 
Friday, July 04, 2008

KARACHI: Intel Pakistan Corporation and the Ministry of Education (MOE) recently announced an ICT for Education initiative intended to support the countrys goal to help its citizens become more competitive in todays knowledge-based global economy. 

Put into effect by a Memorandum of Understanding (MoU) under Intels World Ahead programme, ICT for Education begins with Intel intending to donate 4,500 computers to government schools across the country over the next five years in a continued effort to enhance lives and bridge the digital divide by providing uncompromised access to technology. 

Intel Pakistan has already donated up to 750 PCs to government schools to date and plans are under way to donate 1,080 computers during 2008, stated a press release. 

We are pleased to be working with Intel on this initiative, particularly since it is an important step towards MOEs long-term goal of realising the 1:1 e-learning model, where each teacher and student has a computer, as the optimal model for integrating technology in the curriculum of basic education, said Jahangir Bashar, Secretary Ministry of Education. 

4,500 computers to be donated to govt schools


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## Neo

*Foreign firms, investors required to pay dual tax ​*
ISLAMABAD (July 04 2008): In addition to income tax, foreign companies and investors are now required to pay another 10 percent tax on transfer of profits by their subsidiaries or branches operating in Pakistan.

A senior taxation expert requesting anonymity told Business Recorder on Thursday that profits transferred from Pakistan by a branch of a foreign company would be treated as dividend chargeable to tax at the rate of 10 percent of gross amount under the Finance Act 2008.

Previously, foreign companies having their branches/subsidiaries in Pakistan were not liable to any tax on the transfer of profits to their head office or parent company. These foreign investors had been retaining some amount and transferring the remaining sum to their head offices without paying any taxes. The foreign companies, which have made investment in Pakistan, were liable to one tax. The income arising from Pakistan operations by foreign companies has been liable to tax.

Now, such companies have to pay two types of taxes, ie, income tax as well as 10 percent tax on transfer of profits to their parent companies. It remains to be seen whether or not this measure, which is said to be aimed at bringing foreign companies at par with local companies, will discourage foreign investment in the country, said another expert.

On the other hand, the FBR said a non-resident can form a Pakistani company for operating in Pakistan or conduct business activity through its branch in the country. After tax, profits in the case of a foreign controlled resident company are distributed through payment of dividend, which attracts 10 percent income tax whereas such profits in the case of a branch of a non-resident company are remitted outside Pakistan without payment of any tax. This has created disparity of taxation between the two said situations.

Therefore, profits transferred from Pakistan by a branch of a foreign company are treated as dividend chargeable to tax at the rate of 10 percent of gross amount. It will be in line with international best practices prevalent in some European countries, USA and Canada. It will also check outflow of foreign exchange and provide a level playing field to non-residents operating by incorporating a Pakistani company or through branch of a foreign company, the FBR added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*UK to raise its assistance to 480 million pounds by 2011 ​* 
ISLAMABAD (July 04 2008): The UK government will double its assistance for Pakistan up to 480 million pounds by 2011. The UK assistance will continue to focus on health, good governance and reconstruction of earthquake-hit areas. This was stated by British Secretary of State for International Development Douglas Alexander in a meeting with Finance Minister Syed Naveed Qamar here on Thursday.

Douglas and his team held bilateral discussions with Pakistani authorities on matters relating to fight against poverty in Pakistan and British government's overall Country Assistance Plan.

It was appreciated that the British Secretary of State announced outline of the Country Assistance Plan focusing GoP over the forthcoming five years. This would enable Pakistan to be the second largest recipient of UK aid programme by 2011.

There will be an additional emphasis on assistance for border areas as well as on education, with more than 250 million pounds being made available to bring five million children into schools and to increase training opportunities for young people.

The British Secretary said that the UK has long been a great friend of Pakistan. The two countries are united by a shared history and strong cultural and economic ties. Britain is committed to helping Pakistan's efforts in fight against poverty for many years. The UK's aim is to continue help to improve poor people's lives in key areas to ensure that they have access to better healthcare, schools and employment opportunities.

Naveed Qamar acknowledged DFID strategy, which is marked by a common approach of identifying short and medium term priorities to fight poverty in Pakistan and help achieve the target of the Millennium Development Goals (MDGs).

He added that Pakistan remembers UK's timely and generous assistance of 128 million pounds for the relief and reconstruction of the October 2005 earthquake affected areas. As part of its commitment, the UK government will also provide 50 million pounds to the State Bank of Pakistan to support a new drive to open up financial services to poor people - to encourage wealth and job creation by making available loans and access to bank accounts.

An MoU to this effect was signed on behalf of GoP by State Bank of Pakistan Governor Dr Shamshad Akhtar and British Secretary of State on behalf of DFID of the UK government.

In his opening statement on the occasion, the finance minister said that Pakistan and UK have now institutionalised the development co-operation in the form of a unique 10 years' Development Partnership Arrangements.

Through this partnership, the government of UK has doubled the quantum of its annual assistance up to 160 million pounds for 2008-09 and onwards, and the bilateral relations with the UK are marked with goodwill and mutual trust and expected to increase as UK and Pakistan go along.

Earlier during one-on-one meeting with UK Secretary of State, the finance minister said that the government currently is focusing on its privatisation portfolios, besides widening its domestic and foreign investment plans. Measures are under way to attain economic stability by providing impetus to agriculture and manufacturing sectors. The government's overall objective is to reduce poverty, encourage its citizenry towards self-development and finally attain economic targets, he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan's foreign exchange reserves dip by $1.4 million ​*
KARACHI (July 04 2008): Country's foreign exchange reserves declined by $1.4 million to $11.2845 billion from $11.2859 billion in last week. The State Bank of Pakistan (SBP) on Thursday issued latest statistics of the foreign reserves, which depict that the reserves held by SBP has declined by 30.2 million during the weeks ended on June 28, 2008.

After the current decline, the reserves held by SBP dipped to $8.6254 billion, which earlier stood at $8.6556 billion on June 21, 2008. However, the reserves held by banks show an increase of $28.8 million to $2.6591 billion from the previous $2.6303 billion.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*24 small dams planned in Pothohar belt of Punjab ​*
LAHORE (July 04 2008): Irrigation and Power Department (I&P) is conducting investigation and feasibility of 24 new small dam projects in Pothohar belt of Punjab comprising of Attock, Chakwal, Jhelum and Rawalpindi districts. An amount of Rs 90.84 million is being utilised for this purpose, said Minister for Irrigation and Power, Raja Riaz Ahmad at a meeting of Pothohar area farmers here on Thursday.

Raja Riaz said that I&P Department is conducting feasibility study and identifying potential sites for construction of small dams for utilising rain water for irrigation purposes in Barani areas. The farmers should also make it a point to cultivate crops needing less water. Geological investigations, topographic survey, hydrological studies and soil investigations is also under way, he added. The delegation praised the government for promoting small dams infrastructure in the Barani areas.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Government urged to initiate work on Kurram Tangi Dam project ​*
LAKKI MARWAT (July 04 2008): The Member, National Assembly from Lakki Marwat, Humayun Saifullah Khan has demanded of the federal government to initiate Kurram Tangi Dam project construction work at the earliest in view of its significance for the development of the southern districts of NWFP. He said this while talking to various delegations of Lakki Marwat on Thursday.

Khan showed great exception over the decrease in the allocation of funds for the Kurram Tangi Dam project in the Federal budget and demanded of the government to enhance allocation for the project.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*SBP's roadmap for financial sector development ​*
EDITORIAL (July 04 2008): After skipping the Golden Jubilee due to the nuclear test in 1998, the State Bank of Pakistan (SBP) decided to mark its sixtieth anniversary with a seminar, an exhibition and inauguration of its Real Time Gross Settlement system by the Prime Minister of Pakistan. On the occasion, the Governor of the State Bank, Dr Shamshad Akhtar, sought supportive legislation on a timely basis.

She emphasised that financial sector broadening and deepening is critical to ensuring profitability and sustainability of banks while ensuring that our citizens have access to development finance to change their lives. There can be no disagreement with the Governor on the need to have an effective regulatory regime for all kinds of deposit taking. There are, however, different models in vogue in developed economies.

In Pakistan, the Chinese wall that needs to be raised between the Board of Directors and management in companies does not exist. Presently five banks and one *** own shares in insurance companies, 12 banks have interest in asset management companies and mutual funds and many others are involved in other areas like leasing, financial advisory, brokerage services, modaraba management and foreign exchange.

The Governor has rightly alerted the financial sector to the danger of a bank becoming a cheap source of finance to other members of a group, without proper recognition and management of risks. Failures anywhere, can have a contagious effect. And, if a conglomerate group is involved in other non-financial activity such as industry and trade, it could piggy-back the bank for cheap funds - which has been a norm - and expose it to residual risk.

London competes with, in fact now leads New York as the world's financial capital. The supervisory model in the UK is regarded as the best. However, the Northern Rock fiasco has lately brought it under severe criticism. With the Bank of England as the lender of last resort and FSA as the regulator somehow, the alarm signals fell in cracks in between the two. And, the regulator (FSA) had to seek help from the Bank of England for arranging the bail out of sub-prime affected bank after a run on the bank.

There is merit in SBP's desire to bring all kinds of deposit taking under its wing. The question arises whether it has the wherewithal to take up the task. SBP on its own decided to hand over to SECP the supervision of leasing companies and other non-bank financial institutions, on the ground that SECP was their licence giver.

This newspaper had opposed the agreement between the then SBP Governor, Ishrat Husain, and SECP Chairman Khalid Mirza for transfer of regulatory authority from one to the other. It was surely the investigation of Cres Investment Bank which brought to light the need to have a single regulator for conglomerate groups. It is difficult, however, for SECP to properly trail transfer of funds from one associate company to another due to bank secrecy laws. Only a co-ordinated effort between the two regulators can make an effective case.

It must be conceded that SBP has more people and better trained staff for audit and inspection than SECP has, which needs to hire auditing firms to help in undertaking audit of a company under investigation. There is also a difference between inspection and audit. A continuous off-site and on-site inspection/monitoring can raise danger flags for corrective action, thus limiting the damage. Audit usually takes place after the damage is done to ascertain and verify. At the moment, SBP itself is not fully equipped and hasn't come up to international level of inspection. It needs more and better trained staff.

Secondly, the language used by its inspectors in their reports often lacks professionalism and sounds more like a police report. Its inspectors focus more on minor infringements, lack the capacity to grasp a macro-picture of the company being inspected and appreciate of legacy issues in the big banks.

Be that as it may, the Governor of the SBP took the opportunity provided by the conference to launch a ten-year financial sector strategy. Few can argue against the inherent advantages of this strategy with the noteworthy objectives of achieving higher and sustainable economic growth, developing a dynamic, robust and stronger system, mobilising domestic and foreign resources for private investment, and deepening financial penetration for poor and unserved regions.

The reform agenda that was initiated in the late 1990s would continue so as to achieve these objectives which would involve, according to the SBP Governor, (i) strengthening consumer protection and financial education, (ii) consolidating and strengthening the banking sector, (iii) strengthening prudential regulations and supervision, (iv) continuing the Basle II implementation which specifies the minimum capital adequacy requirements, (v) legislating a financial sector regulatory structure to deal with an increasing number of conglomerates, (vi) depositor protection scheme (vii) strengthening competition and efficiency and (viii) developing a financial inclusion programme considered necessary, given that only 17 percent of the population has bank accounts and less than 4 percent are borrowers.

The Governor, fully cognisant of the limitations under which SBP operates, hastened to add that the decision to follow the strategy would ultimately reside with the Prime Minister, as "an effective governance of the regulator can catalyse strong reforms in the economy and the agenda we have laid out for your consideration." She, however also highlighted the benefits that would accrue if the strategy was endorsed by the political leadership as it, "will pave the way outright for a vibrant, healthy and dynamic banking sector which is key to supporting the broadening and deepening of financial markets that will serve well our large population and lift the poor out of the poverty trap, as well as meet the growing requirements of the economy."

While her critics may consider such overarching objectives like lifting the poor out of the poverty trap beyond the terms of reference of the State Bank whose focus must be on monetary policy and its regulatory role in the financial sector, yet given the rising poverty levels, her intent may have been merely to support the government in attaining its objective of reducing poverty, rather than setting a parallel path. For Karachi to become a regional financial hub like Dubai, SBP would need to have a lighter regulatory touch.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan's OGDCL makes gas discovery​*
KARACHI, July 4 - State-owned Oil and Gas Development Co Ltd <OGDC.KA>, Pakistan's biggest listed firm, announced on Friday a gas discovery in central Punjab province, raising its output by 5.5 million cubic feet a day.

OGDCL, which is also listed in London <OGDCq.L>, has ramped up investment in an effort to reduce Pakistan's dependence on imported fuel at a time of record high prices.

"This is a small discovery for OGDCL with a per share impact of 0.04 rupees per share," said Faraz Farooq, an analyst at First Capital Equities Ltd.

The discovery was made in the company's wholly-owned Exploratory well Dhodhal Deep 01.

OGDCL reported a 4.7 percent rise in earnings for the first nine months of 2007/08 due to strong volumes and better prices.

The full-year earnings are due to be announced in the coming weeks.

OGDCL's oil production totalled 47,851 barrels per day and 1,094 million metric cubic feet a day in May, according to its website.

OGDCL shares were off 1 percent on Friday in a broader market <.KSE> that was down 0.65 percent at 11,956.59 points.

Pakistan's OGDCL makes gas discovery - Yahoo! Philippines News


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## Owais

*Pakistan proposes Saarc economic union*

ISLAMABAD (July 05 2008): Pakistan has floated the idea of following European Union as a model to form Saarc Economic Union for promoting trade, investment and monetary union among its member countries.

Pakistan's official delegation, headed by a senior official of Finance Ministry, in a 2-day Saarc technical meeting held in Katmandu, Nepal from July 1, floated the idea of forming 'Saarc Economic Union' on European Union pattern.

Sources said the Katmandu Saarc meeting also approved Pakistan's proposal of including Saarc teachers programme in Saarc Development Fund (SDF). As per proposal, Pakistan will train teachers for providing quality education in all Saarc countries. It will also submit a paper to Saarc Secretariat in a month on cross-border investment.

The technical meeting also approved India's proposal of including child-mother health programme in SDF in which India would also provide maternity healthcare training to provide child-mother healthcare services among member countries. Katmandu meeting also assigned different projects to member countries for making things happen to turn the idea of forming Saarc Economic Union into a reality within the shortest possible period.

Pakistan has also been given the task to prepare strategy paper on corporate governance in public sector. India will be responsible to prepare a paper for harmonising the trade and investment laws for removing bottlenecks in regional trade and investment.

Pakistan had put up the idea of forming Saarc Economic Union for promotion of trade investment and bring the member countries closer at Saarc summit held in 2005. Since then it has been working closely with member countries for turning the idea into a reality.

The Saarc countries, including India, are on board on the proposed formation of Saarc Economic Union. The policy makers in Islamabad are convinced that Pakistan's proposal for following European Union as model floated in Katmandu for promotion of trade and investment would work up to the expectations of the member countries.

However, since it is a delicate issue which involves a number of serious subjects like customs union, monetary union and formation of a taxation mechanism, the policy makers in Islamabad believe that a journey to turn the idea into a reality for Saarc Economic Council would require a reasonable time. They are convinced that once Saarc Economic Union comes into existence it will be the best forum for ensuring a win-win situation for all member countries.

Business Recorder [Pakistan's First Financial Daily]


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## Owais

*KCCI and DPRK chamber sign MoU to improve trade ties*

KARACHI (July 05 2008): Karachi Chamber of Commerce and Industry (KCCI) and the Democratic People's Republic of Korea Chamber of Commerce (DPRKCC) signed a memorandum of understanding (MoU) on Friday. KCCI President Shamin Ahmed Shamsi and DPRKCC President Ri Hak Gwon signed the MoU on behalf of their respective organisations.

Both the chambers desires to enhance the bilateral relationship between them, and intending to develop and intensify economic relations and commercial co-operation in conformity with their international obligation. The contracting partners will promote the expansion and diversification of mutually advantageous economic co-operation in various fields.

-- The contracting parties agreed that in view of the need to build a dependable, pragmatic, and advantageous relationship between the two the countries, to initiate steps to improve friendly and cordial relations between the two organisations through an increased co-operation mode among the industrialists, businessmen and entrepreneurs.

-- The contracting partners agreed that there should be an enhanced growth in interaction between them and that memorandum should be mutually favourable to both.

-- They agreed that co-ordinated efforts be made to promote joint ventures, initiate partnerships, provide technical expertise, introduce licensing possibilities in co-operation with the boards of investment of the two countries and their diplomatic entities.

-- The contracting partners agreed that this initiative is intended to be a trailblaser and they acknowledge the importance of mutual co-operation between the two organisations.

-- They agreed that strategic and concrete proposals, suggestions, an recommendations that are consequential and significant in the acceleration of bilateral relations of the two countries, need to be formulated in order to be more active like:

1) Image building to dispel negative perceptions.

2) Safeguards for investments and bilateral activities among the members of both the organisations and intensive efforts to remove bureaucratic bottlenecks.

3) To organise and maintain a database to identify and promote products and services.

4) To provide information on pool of human resources available in each organisation

5) Initiation of investment promotion, taxation and other treaties.

6) To prepare and disseminate information on markets.

7) To initiate measures to enhance mutual trust and transparency.

8) To promote joint promotions ventures. The contracting parties will hold a joint meeting once a year either in Korea or Pakistan.

Business Recorder [Pakistan's First Financial Daily]


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## Owais

*Sri Lanka proposes Saarc industrial zone*
ISLAMABAD (July 05 2008): Sri Lanka's Government has proposed establishment of Saarc industrial zone to promote trade and industrial activities in the South Asian region. According to a Saarc Chamber of Commerce and Industry (SCCI) press release issued on Friday.

The President SCCI, Tariq Sayeed said that proposal, conveyed through, the Vice President, Saarc CCI (Sri Lanka), Nawaz Rajabddin was given by the Minister of Export Development and International Trade, Sri Lanka, Professor G L Pieris.

It may be recalled that the SCCI President is visiting Sri Lanka to explore ways and opportunities for enhancing bilateral trade volume between the two Saarc countries. The idea of setting up of Industrial Zone is aimed at providing facilitation to the business community of the region for a stimulating regional economic co-operation, the press release said.

The industrial units will be installed in the proposed Zone with facilities similar to those provided in the Export Processing Zones. Responding to the proposal, the SCCI President appreciated the idea, saying that such initiatives would help promote intra-regional trade and industrial activities.

Further, he said that the other countries of the region should also establish similar Industrial Zones that would prompt commercial activities in the region and eventually help achieving objectives of Safta. 'Since the issue is of great significance, it would be discussed in the forthcoming meeting of SCCI Executive Committee', he added.

Sayeed also said that efforts would be made persistently to convince the respective Saarc governments to establish such Industrial Zones so that the perceived objectives of economic integration of Saarc are achieved.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Business sector sees high inflation, low growth ​* 
Saturday, July 05, 2008

ISLAMABAD: The business sector expects higher inflationary pressures and lower growth during fiscal year 2008-09.

According to the Business Barometer survey conducted by the Pakistan Institute of Development Economics (PIDE), a further decline in the growth level and rise in the rate of inflation are expected during the current half of the year.

It implies that high actual prices negate the inflationary pressure sought to be curbed by the authorities and high expected inflation highlights the need for bold decisions by the central bank to control it. The problems of declining expected growth and rising inflationary expectations require coordinated efforts by the State Bank of Pakistan (SBP) and the federal government.

The picture of the general price level, and the rate of inflation, is still alarming, stated the Business Barometer of the PIDE.

Most of the firms reported higher prices in the second half of 2007-08, and their expectation is that these would be even higher in the first half of 2008-09. The assessment seems to be uniform across all sectors.

The analysis reveals that both the financial and non-financial sectors neither experienced nor anticipated any fall in the general price level in the year 2007-08.

This edition of the PIDE Business Barometer is based on the views of selected 80 firms listed on the Karachi Stock Exchange (KSE) and broadly categorised as the financial and non-financial sector activities during the second half of the year 2007-08, and the expectations about the first six months of 2008-09.

The business sector perceived that the growth level of the economy during the second half of 2007 declined as compared to the growth level during the previous six months. However, there is a difference of assessment between the financial and non-financial sectors of the country. The financial sector perceived a stable growth, whereas the non-financial sector indicated a slower pace of growth.

The perception of the business sector about the pace of growth of the economy in the first six months of 2008 is rather pessimistic. The net balance remains negative as in the case of the previous assessment, as economic growth is expected to decline during the first half of 2008.

The financial sector, however, anticipates higher growth, whereas non-financial firms expect a lower level of growth. The analysis of expectations indicates the difference of forecasting about the level of growth during the remaining six months of the financial year.

In the case of business activities, the majority of the firms reported an increase in the actual and the expected levels of their production.

It is found that the business sectors activities in the domestic market increased whereas firms have been facing problems in the international market.

However, firms are optimistic about their activities in both domestic as well as international markets. 

Moreover there is an increase in input prices, output prices, rate of interest on deposits, and the interest rate on advances and wages.

This upward assessment of the business sector is in line with high inflationary expectations. The financial sector expects an increase in the rate of interest on deposits and the interest rate on advances and reserves, which is in line with the tight monetary policy adopted by the SBP. 

Their future expectations about their activities are also high. The business sector expects the level of investment to be higher in the current half of the year. Investment is expected to affect the employment level, as expected employment of both sectors is also high.

So far as the other macroeconomic variables are concerned, majority of the firms reported an increase in the production, investment, and sales, both in the domestic and international markets.

This is mainly driven by the higher expectations of the rise in the final product prices. At the same time, the firms expectations of an increase in the input prices and the wage pressure are leading to the piling up of the inventories. 

The employment levels are reported to be stable as the firms continue to operate below the full capacity level. The firms plans to maintain the stability in employment also reflect the inadequacy of skilled workforce, which is one of the major constraints reported by the firms. 

The leading constraints affecting firms production are the regulatory environment and the insufficient demand.

In sum, we can say that the growth has slowed down and inflation has risen during July-December 2007.

Business sector sees high inflation, low growth


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## Neo

* SAARC nations need to sign BIT ​* 
Saturday, July 05, 2008

ISLAMABAD: Pakistan and India should sign a Bilateral Investment Treaty (BIT) for encouraging investment and motivating other countries of the SAARC region to enhance their intra-regional investment ties for boosting their economies.

Intra-regional investment in South Asian Association for Regional Cooperation (SAARC) member countries cannot be flourished until and unless member nations sign BITs.

Enhancement of trade and investment is inevitable for economic integration of SAARC, where enormous potential already exists in the areas of trade, investment and services, which need to be tapped in their true perspective through pooling of resources and synergising efforts at government and public sector levels, Tariq Sayeed, President SAARC Chamber of Commerce and Industry said at a seminar on Trade and Investment Opportunities in SAARC at the Sri Lankan Economic Summit-2008.

Sayeed regarded investment as a tool to develop the trade and economy of the country, quoting an example of China where Foreign Direct Investment (FDI) played a crucial role in transforming the country into an economic giant. Revolutionary export growth from only $850 million in 1950 to over $1 trillion was the phenomenal outcome of FDI that flowed into China, a news statement issued here said.

He said that united, India had been the worlds leading region in terms of its contribution towards the Worlds GDP, which was 22.6 per cent of global GDP in the year 1700 as compared to 23.3 per cent of the entire Europe and one Indian Rupee at that time was equivalent to $3. But due to the misuse of resources and involvement in the non-productive issues, ie political mayhem, the share of the entire South Asian region, presently, accounted for only 1.5 per cent of the global GDP.

The potential of intra-regional trade can be tapped by implementing SAFTA in letter and spirit, which is the only available document that provides a tangible road map to achieve the objectives for which SAARC was created, said President SAARC CCI and added that that without removal of the irritants like TBTs, NBTs and Para-tariff barriers, trade would not grow and to mitigate such issues, the respective governments of all member nations were required to play their role as facilitator so as the commercial activities could be promoted effectively in the region.

Sayeed said that after the inclusion of services in SAFTA, the sphere of investment has been widened manifold and identified several sectors, having great potential for trade and investment through joint ventures which include textiles and apparel, information technology, tourism, banking and finance, value added products in food processing, infra-structure development, higher education, construction, light engineering, telecommunication, health, etc.

SAARC nations need to sign BIT


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## Neo

*HBL enters into accord with Bank of China ​* 
Saturday, July 05, 2008

BEIJING: Habib Bank Limited (HBL) has taken a leap forward by entering into an arrangement with Agricultural Bank of China. This will enable both inward and outward remittances between the two countries to be processed within 24 hours at a nominal cost.

In the past, Pakistani community and corporates in China faced difficulties and delay in sending or receiving remittances to and from China, said Chief Representative of HBL Mohammad Aslam here in an interview with APP on Thursday.

He pointed out, that it used to take at least five to seven days for the remittance to arrive. Additionally, the remittance was subject to numerous charges due to intermediaries. 

Not anymore, he remarked saying HBL & Agricultural Bank of China have entered into an arrangement that will enable both inward & outward remittances to be processed within 24 hours and at a nominal cost.

He explained that remitters to China would be able to use foreign exchange dealing branches of HBL anywhere in the world to transfer money.

HBL enters into accord with Bank of China


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## Neo

*Pakistan facing serious economic problems: Musharraf ​* 
KARACHI (July 05 2008): President Pervez Musharraf has said that the country is facing very serious economic, political, terrorism and Talibanisation problems, which need to be resolved with national consensus.

Speaking at an annual dinner reception hosted by business community here on Friday, the President said that the flight of capital from the country, fiscal and current account deficits and increasing prices of oil, wheat and other commodities were big challenges, which the present government has to overcome at economic front. He sought the help of business community to resolve these issues.

Referring to oil prices, the President said that no body knew that they would go beyond 120 dollars. Ahead of the general elections, it was predicted that oil prices would remain below $72, which was manageable at that time and it was decided that prices would be increased after the polls.

He appreciated the FBR chief performance and said that revenue collection had crossed Rs 1.02 trillion. While the target for the next five years is around Rs 4.5 trillion. To achieve this target we have to broaden tax net. Pakistan highly needs to stop flight of capital and increase its exports, he observed.

"We don't need India and Israel to disintegrate Pakistan if we fail to redress these challenges," said the President. The President said that the country had no option but to use force to overcome rising terrorism and extremism.

He said that a large number of foreigners and local Taliban were present in tribal areas, who were involved in terrorist activities in Pakistan and cross the border. Some nefarious elements had also started separation movement in Balochistan, who must be crushed with full force, he added.

Earlier, Khalid Tawab, Mian Zahid Hussain, Abdul Haseeb Khan, Majyd Aziz and other leaders of business community assured the President of their full support. Governor Sindh Dr Ishartul Ibad Khan and City Nazim Mustafa Kamal also addressed the gathering.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Demand for electronic goods down after GST hike ​*
KARACHI: The increase in GST on imported as well as locally-manufactured electronic items has increased the prices in the local market, Daily Times has learnt. 

An increase in the rate of general sales tax (GST) from 15 percent to 16 percent on all imported and locally-manufactured electronic products has raised inflationary pressure and would further burden the lower-income groups.

The government cut the general sales tax on fertilizers, but raised customs duty on 300 items, especially on electronic appliances, from 25 percent to 35 percent. 

The recent unbearable price hikes in daily commodities and other goods have reduced purchasing power of the consumers and it is keeping the consumers away from the markets. Dealers told Daily Times that buyers are now really in a fix because of the rising cost of living. They do not have cash enough to buy luxury items like air conditioners. The dealers say decreasing number of buyers in the market is worrying for them. 

Muhammad Ramzan, who runs a shop of electronic items in Saddar, said that about every electronic item has seen rise in price after the hike in general sales tax. He further said that most of the companies have increased prices, while others are expected to follow suit. 

The prices of Panasonic and Mitsubishi ACs have shot up by Rs 5,000 to Rs 7,000, while Dawlance and LG split ACs are now available at Rs 33,900 and Rs 36,900, respectively. A deep freezer of Dawlance is now available at Rs 23,900 as compared to Rs 18,900 previously, while Waves deep-freezer is available at Rs 21,000 as compared to Rs 17,500 before. The prices of washing machine and other electronic items have also surged by 5 to 7 percent at least.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Country may miss export orders for Christmas, New Year ​* 
KARACHI (July 05 2008): The country is likely to miss export orders for lucrative season of Christmas and New Year as textile exporters have stopped finalising fresh orders owing to rising cost of raw material and unclear stance of the government over raise in utility tariffs in the near future.

Exporters primarily focus on this season, as foreign buyers demand products in huge quantity from Pakistan, India and Bangladesh, with larger sales opportunities during Christmas and New Year events in the West, exporters said on Friday.

"Manufacturers and exporters cannot afford to lose this opportunity, which comes once in a year. Industrialists are trying to convince the government for either completely withdraw or effect a drastic cut in the fresh increase in gas tariffs for captive power plants in particular," they added.

They said that high gas tariffs are unbearable as increase in the prices of cotton, grey fabrics, yarn, packing material, chemicals and other raw materials has already pushed up the cost of production.

"The recent hike in different inputs has raised the industrial cost by 30-40 percent, while the government has not yet made any announcement about resumption of research and development (R&D) subsidy to industries. The R&D subsidy period has expired on June 30, 2008," they said.

The abolition of R&D subsidy, increase in gas tariff and rising input costs have compelled the manufacturers-cum-exporters to avoid booking new export orders until some relief is insight.

"We are receiving dozens of export order inquiries for the Christmas and New Year season, however at present are not able to quote prices for our products to international buyers because of the fluctuating gas and dollar rates," they said. The government should provide a level playing field to exporters by providing incentives, besides provision of utilities at reasonable rates. "Not only export orders but the country's exports will also receive severe blow," industry sources said. Foreign export orders are likely to be diverted to India and Bangladesh and in future it may become a constant problem for local exporters, they added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Business sector pessimistic about pace of growth ​* 
ISLAMABAD (July 05 2008): Economic growth is expected to decline during the first half of 2008 as about 80 of the main listed firms of Karachi Stock Exchange (KSE) interviewed by PIDE were of the view that the general price level and the rate of inflation is still alarming.

The perception of the business sector about the pace of growth of the economy in the first six months of 2008 is rather pessimistic, says a PIDE report here on Friday as the net balance remains negative. Keeping in view the previous assessment, as economic growth is expected to decline during the first half of 2008.

The financial sector, however, anticipates higher growth, whereas non-financial firms expect a lower level of growth. The analysis of expectations indicates the difference of forecasting about the level of growth during the remaining six months of the financial year.

The picture about the general price level and the rate of inflation is still alarming. Most of the firms reported higher prices in the second half of 2007, and they expect that these will be even higher in first half of 2008. The assessment seems to be uniform across all sectors.

The analysis reveals that both the financial and non-financial sectors neither experienced nor anticipated any fall in the general price level for the Year 2007-2008.

According to the report, the business sector perceived that the growth level of the economy during the second half of 2007 declined as compared to the growth level during the previous six months. However, there is a difference of assessment between the financial and non-financial sectors of the country. The financial sector perceived a stable growth, whereas the non-financial sector indicated a slower pace of growth.

These were the findings of the "Business Barometer" released by Pakistan Institute of Development Economics (PIDE) to biannually assess market perception of the economy in real terms, which is useful for policy makers. The survey mainly focuses on 80 firms listed with the Karachi Stock Exchange (KSE) dealing with large business.

Most of the respondents were in the financial sector, textile sector, sugar and allied industries, cement, oil and gas exploration, engineering, auto mobile assemblers, auto mobile parts and accessories, fertilisers, pharmaceuticals, chemicals, basmati and allied industries, fruit and personal care products and glass and ceramics.

Some 11% of the firms responded which gives a fairly good sample to assess the performance of these units. There were 15 respondents from financial sector, resulting in a separate financial sector assessment. Since the perceptions about future inflation and production investment are very vulnerable to any small political or policy shift, the survey uses a deviation factor to evaluate precision and accuracy of firm's future assessment of selected variables in the next 6 months.

In sum, we can say that growth has slowed down and inflation has risen from July-December 2007. Further decline in the growth level and a rise in the rate of inflation are expected during the current half of the year.

This implies that high actual prices negate the inflationary pressure sought to be curbed by the authorities, furthermore, high expected inflation highlights the need for bold decisions by the central bank to control it.

The problems of declining expected growth and rising inflationary expectations require co-ordinated efforts by the State Bank of Pakistan and the federal government.

In the case of business activities, the majority of the firms reported an increase in the actual and the expected levels of their production. It is found that the business sector's activities in the domestic market increased whereas firms have been facing problems in the international market.

However, firms are optimistic about their activities in both domestic as well as international markets. Moreover there is an increase in input and output prices, the rate of interest on deposits, and the interest rate on advances and wages. This upward assessment of the business sector is in line with high inflationary expectations.

The financial sector expects an increase in the rate of interest on deposits and the interest rate on advances and reserves, which is in line with the tight monetary policy adopted by the State Bank of Pakistan. Their future expectations about their activities are also high. The business sector expects the level of investment to be higher in the current half of the year. Investment is expected to affect the employment level, as expected employment of both sectors is also high.

So far as other macroeconomic variables are concerned, the majority of the firms reported an increase in their production, investment, and sales, both in the domestic and international markets. This is mainly driven by the higher expectations of the rise in the final product prices. At the same time, the firms' expectations of an increase in the input prices and the wage pressure is leading to the piling up of their inventories.

The employment levels are reported to be stable as the firms continue to operate below their full capacity level. The firms' plans to maintain the stability in employment also reflect the inadequacy of the skilled workforce, which is one of the major constraints reported by the firms. The leading constraints affecting firms' production are the regulatory environment and insufficient demand.

*DECLINING ECONOMIC GROWTH *The analysis shows that during the second half of the year 2007, economic growth declined as compared to in the first half of 2007. An analysis of the financial sector reveals that there are 50 percent, 35.7 percent, and 14.3 percent units indicating the same, lower, and higher levels of economic growth, respectively. But the non-financial firms see lower, the same, and higher growth (58.1 percent, 30.6 percent, and 11.3 percent) of firms, as compared to the previous period.

In terms of the perceptions of the business sector regarding economic growth during the first six months of 2008, 38.5 percent of firms reported that it would grow at the same pace. Also, 33.3 percent reported that it would grow at a slower rate, while only 28.2 percent expected that it would grow at a faster rate.

The analysis shows that the business sector expects variable levels of growth during the current six months of 2008. For this period, 54.5 percent saw slow economic growth, followed by 33.8 percent firms indicating the same level of growth. However, only 11.2 percent of the respondents indicated a faster growth in economy during the survey period.

The actual growth assessment of the financial and non-financial sectors is not different as the net balance of both sectors indicates a lower level of growth with different intensity as compared to the earlier six months.

Analysis of the financial sector reveals that there are 50 percent, 35.7 percent, and 14.3 percent units indicating the same, lower, and higher levels of economic growth, respectively. But the non-financial firms see lower, the same, and higher growth (58.1 percent, 30.6 percent, and 11.3 percent) of firms, as compared to the previous period.

A sector-by-sector analysis reveals the difference in the growth expectations of both the non-financial and financial firms. As can be seen from the net balance figures, the non-financial sector expects lowering of growth during the current period of the year, whereas the financial sector expects a positive trend.

In terms of their perception regarding the economic growth in the next six months, the percentage distribution of banks favouring higher, the same, and lower economic growth is 39.3, 25.0, and 35.7, respectively. In the case of non-banks, 25.4 percent, 41.3 percent, and 33.3 percent firms are expecting growth to be higher, the same, and lower than in the previous period, respectively. We may conclude that the financial sector is more optimistic about economic growth as compared to the non-financial sector.

*INFLATIONARY EXPECTATIONS REMAIN HIGH* The business sector feels that inflationary pressure was higher during the second half of the Year 2007 than during the first half of the year. About 96.2 percent of the respondents indicated that the general price level increased during the last six months of 2007, as compared to the first half of the year. Only 1.3 percent firms reported that it stayed at the same level, while 2.6 percent indicated that it declined.

*HIGH PRODUCTION WITH INCREASING EXPECTATIONS:* This shows that production has increased. The responses indicate that during July-December 2007, 42.2 percent of the firms had a higher level of production as compared to the first half of 2007. While 21.9 percent indicated no change in the volume of production, the rest of the firms (35.9 percent) indicated that their production was lower as compared to the first half of 2007.

Furthermore, the expectations of business firms for January-June, 2008 indicate that firms are optimistic about future production. In terms of the plans of the non-financial firms for the next six months, 57.1 percent expect their production to rise, 36.5 percent expect the same level, and 6.3 percent expect a fall in their production.

*SALES INCREASED WITH HIGH EXPECTATION:* The analysis shows that the non-financial sector is optimistic about sales in the domestic market as the majority of firms reported that domestic demand was expected to remain strong. The majority of the firms (43.8 percent) indicated that their sales in the domestic market during the second half of 2007 were higher than in the first half of 2007. 32.8 percent of firms recorded a decrease in their sales in contrast. However, there was no significant change in the sales of 23.4 percent firms.

The majority of firms (58.7 percent) expect that their sales in the domestic market would increase in the first half of 2008, 31.7 percent expect it to stay the same, while 9.5 percent expect a fall in their activity in the domestic market. The previous experience about realisation of expectations indicates that sales would be higher during the first half of 2008.

*UNDER-UTILIZED CAPACITY:* The evidence shows that the non-financial sector still has the potential to expand its production because most of the firms are working at less than the full capacity level. In response to the question about capacity utilisation, 21.3 percent firms reported that their capacity utilisation was 100 percent, while 75.4 percent of the business firms reported that their capacity utilisation was more than 50 percent, and the rest of the firms reported it at less than 50 percent.

Regarding the future course of capacity utilisation, 33.3 percent of firms expect to operate at full capacity during the first half of 2008, while 61.7 percent expect that their capacity utilisation will be more than 50 percent but less than full capacity. The rest expect to utilise less than 50 percent of their capacity.

*FIRMS ARE BUILDING UP INVENTORIES:* Inventories are building up, as most of the firms in the non-financial sector are reporting an increase in production. Most of the firms (56.5 percent) reported a rise in their inventories during the second half of 2007, 30.6 percent kept it at the same level, while 12.9 percent decreased their inventories in the second half as compared to the first half of 2007.

In the next six months, 41 percent of firms expect an increase in their inventory, 42.6 percent expect it to stay at the same level, while 16.4 percent expect a decline in their inventory. Furthermore, past experience about the expectations indicates that inventories would be even higher than what is expected, as the deviation in the respondents favouring higher inventories is 18 percent.

*RISING INPUT AND OUTPUT PRICES:* In the case of the prices of final goods, 52.4 percent of the respondents experienced an increase in the prices of their product during the second half of 2007. For 31.7 percent, it remained the same, while for 15.9 percent the prices fell from the first half of 2007.

The majority of the firms expect that the prices of their final products will increase during the first half of 2008. In the coming six months, 28.3 percent of firms expect that these will stay the same, 61.7 percent of firms expect that these are going to increase, while 10 percent expect a fall in the prices of their products.

Final product prices would be even higher than the expectations of the business firms, as deviation in the respondents favouring higher product price is 23 percent.

*WAGE PRESSURE IS ALSO BUILDING UP:* Wage pressure is also building up along with inflationary expectations. None of the firms experienced a wage decline in the second half of 2007, and 84.4 percent of the firms reported a rise in wages in the second half of 2007 over the first half of 2007, while 15.6 percent reported that the wage level remained the same during this period.

In the coming six months, 71.4 percent continue to expect wage inflation, 27 percent anticipate stable wages, and only 1.6 percent of them are expecting wages to decline in the coming six months.

*INVESTMENT AND EMPLOYMENT: 

HIGHER INVESTMENT WITH HIGHER EXPECTATIONS: *The investment behaviour of the firms indicates that their investment plans are firmly positive, as 49.2 percent have increased their investment in the second half of 2007 as compared to the first half of 2007; 47.6 percent firms reported that it stayed at the same level. Only 3.2 percent firms reported a decline in investment.

For the first half of 2008, 50.8 percent firms anticipate an increase in investment, 49.2 percent predict no change in investment behaviour, while none of the firms has plans to decrease investment. In general, the investment situation is encouraging for the economy.

*REGULATORY ENVIRONMENT-A MAJOR CONSTRAINT* We also enquired about the constraints faced by the non-financial sector of the economy. 56 percent of the firms reported that their production was constrained by a variety of factors. Out of the constrained firms, 46.7 percent of the firms think that improper regulatory environment is the hardest constraint, followed by insufficient skilled workforce (31.3 percent) and insufficient demand (30 percent).

While 25 percent of the firms think that insufficient capital and insufficient access to imports create hurdles for business growth, insufficient access to credit is felt by only 8.3 percent of the business firms.

*E-FINANCIAL SECTOR ACTIVITIES: *

*HIGH ACTUAL AND EXPECTED VOLUME OF DEPOSITS AND ADVANCES: *The financial sector is optimistic about its production. The responses indicate that during July-December, 2007, 67.9 percent of the financial institutions had a higher level of deposits and advances as compared to that of the first half of 2007.

While 25 percent indicated that there was no change in the volume of advances and deposits, a small number of financial institutions (7.1 percent) indicated that their production was lower.

In terms of the plans for the next six months, 100 percent expected that their volume of deposits and advances would rise. The analysis demonstrates that the financial sector is optimistic about its future growth.

*CREDIT INCREASED WITH HIGH EXPECTATIONS:* Most of the financial institutions expanded their activities during the second half of 2007. About 83.3 percent of the institutions indicated that their activities in the domestic market during the last six months of 2007 were higher.

Interestingly, none of the institutions recorded a decrease in its activities, while 16.7 percent reported the size of activity in the domestic market to stay at the same level during second half of the Year 2007. Furthermore, all institutions expect that their activities in the domestic market would increase in the first half of 2008.

*INCREASING ACTIVITIES IN THE INTERNATIONAL MARKET* Interestingly, 45.5 percent of the respondents reported an increase in their activities in the international market during July-December 2007, as compared to the first half of 2007. 54.5 percent reported no significant change.

Regarding the future activities, the evidence shows that financial institutions are confident about the international market as 66.7 percent of the institutions believe that their activity would increase and 33.3 percent expect that there will be no change in the size of their international market activity. None of institutions expects a decline in its activity.

*MAXIMUM CAPACITY UTILIZATION WITH LOW EXPECTED UTILIZATION* The evidence shows that the majority (65 percent) of financial institutions are working at their full capacity, while 35 percent could not utilise their full capacity in the second half of 2007. As for the future, only 33.3 percent institutions are expecting to utilise capacity at one hundred percent, while 66.7 expect to work at less than full capacity during the first half of 2008.

*HIGH EXPECTED RATE OF INTEREST ON DEPOSITS:* Looking at interest rates, 36 percent of the respondents experienced an increase in interest on deposits during the last six months of 2007. As many as 56 percent of the respondents report that interest on deposits remained the same, while only 8 percent reported that the interest was lower in the first half of 2007.

For the next six months, 66.7 percent reported that the interest rate on deposits would stay the same, 33.3 percent expected that the interest rate would increase, while none expected a fall in the rate of interest.

*HIGH ADVANCES RATE WITH STABLE EXPECTATIONS:* The financial sector is feeling pressure on the interest rate of advances due to an increase in the deposit rate, wages, and other expenditure, which is forcing them to raise the prices of their advances.

Only 8.7 percent of the respondents reported a decrease in the interest rate on advances, whereas 56.5 percent indicated that interest on advances increased during the second half of 2007 as compared to the first half of 2007.

The minority of the institutions (ie, 33.3 percent) were expecting a rise in the interest rate, while 66.7 percent expect the interest on advances will be the same. None of the institutions anticipates a fall in interest rate.

*HIGH ACTUAL AND EXPECTED RESERVES:* The analysis shows that financial institutions are optimistic about their assets, as the majority of the institutions expect to maintain high reserves. As many as 92.3 percent of the institutions indicated that their reserves were higher than in the first half of 2007, 7.7 percent report that there is no change in reserves.

None of the institution recorded a decrease in reserves in the evaluation and expectation period. The majority of institutions (95.5 percent) expect that their reserves would increase in the first half of 2008 while 4.5 percent expect that the reserves would stay at the same level.

*HIGH CURRENT AND EXPECTED EMPLOYMENT:* Most of the financial institutions (71.4 percent) reported an increase in the employment level during the second half of 2007 as compared to the first half of the Year 2007. Only 28.6 percent reported that it stayed at the same level.

Only 14.3 percent banks are expecting stability in employment in the first half of 2008. Analysis reveals that there will be employment creation in the financial sector. Overall, there would be some increase in financial sector employment; this is in line with the general higher expectation of activities in the financial sector.

*HIGHER ACTUAL AND EXPECTED LEVEL OF INVESTMENT:* Stable growth and increasing investment in the economy are sustained by the investment behaviour of the banks. The majority of the institutions (75 percent) reported an increase in their investment in the second half of 2007; 20 percent institutions reported that it stayed the same; only 5 percent reported a decline in investment.

For the first half of 2008, 81.8 percent anticipate an increase in investment, 18.2 percent plan to maintain it at the same level, but none of the institutions reports a possible decrease in its investment.

Business Recorder [Pakistan's First Financial Daily]


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## araz

I think the Governemnt is totally incapable of managing these difficult times. If things keep going down the way they have, Pakistan may soon see a new election.
Araz


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## Owais

*Rupee hits all-time low versus dollar*

KARACHI (July 06 2008): With international oil price on an upward path and lower than expected forex inflows in June, the Pak rupee on Saturday came under fresh pressure, touching an all time low of Rs 70.15 to one dollar to finally close at Rs 70.14 against the greenback.

On the contrary, there were plenty of dollars available with exchange companies and money changers at Rs 70 to dollar but strictly against cash, despite Rs 69.70 and Rs 69.60 rates for sell and buy against the dollar on display board.

With political uncertainty persisting and the financial capital's business community lamenting about the economy being on a downward slope before President Pervez Musharraf on late Friday night amid growing realisation that there is not much the President could do about it added to the existing jittery conditions. Pak rupee, like currencies of other oil deficit Asian countries, remains under pressure. This is despite the fact that banks have been able to square off their end of the day daily position with ease.

On Saturday, two major banks - NBP and HBL - were buying dollars for their customers. With SBP staying on the side line and no inflows from abroad due to New York 4th of July closure the Pak rupee is now expected to come under fresh pressure on Tuesday, at least on the kerb, after New York opening.

On the interbank parity should weaken the rupee to Rs 70.65 to a dollar (by 50 paisas) more than the inter - bank parity of Saturday. The forward cover premium for 12 months was Rs 7.75; reflecting the 11 percent interest differential between KIBOR and LIBOR. It may be mentioned have that Pakistan is importing POL worth $375,000 per day and most of this is funded from the forex interbank market while the residual balance is met through country's forex reserves.

Business Recorder [Pakistan's First Financial Daily]


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## Owais

*SBP chief briefs President on economy*

KARACHI (July 06 2008): President Pervez Musharraf on Saturday visited the State Bank of Pakistan, Karachi to seek a briefing on the state of Pakistan's economy from SBP Governor Dr Shamshad Akhtar. In her presentation, the SBP Governor covered the areas of economic growth, inflation, monetary policy, fiscal and external imbalances, exchange rate and macroeconomic stability.

She underscored that Pakistan like other countries is facing economic stress and challenging policy scenarios. International financial market turmoil, starting in the US, has now caused a global economic slowdown, which in turn is adversely impacting the growth prospects of most Asian and emerging market countries including Pakistan.

She said that the rising international fuel and commodity prices have considerably increased the pressures on balance of payments, fiscal accounts and inflation outlook. This is not only true for Pakistan but also for most of the emerging and developed economies.

The SBP governor explained that high inflation is economically and socially costly. It adversely affects investment and growth, creates uncertainty and erodes peoples' purchasing power, particularly of low-income group. In this context, she highlighted that Pakistan as well as a number of developing and developed countries are pursuing tight monetary policy to contain inflation and to mitigate its adverse impacts for long term growth prospects.

Referring to the key policy actions for restoring macroeconomic stability and sustaining growth, the SBP Governor stressed that the monetary tightening is essential to reduce demand pressures, which is to be supplemented by fiscal tightening.

Besides need for adherence to fiscal target for FY09, as enumerated in the budget, in coming years revenue deficit should be converted into a surplus, as laid down in the Fiscal Responsibility and Debt Limitation Act 2005. The Governor added that the key concerns of the SBP are high stress of the Government borrowings and drain on foreign exchange reserves due to confluence of domestic and international developments highlighted above.

Dr Akhtar complemented the Government for its decision to reduce the borrowings from SBP to net zero. She also valued the Government commitment to further work with SBP to reduce the existing stock of government borrowing from the central bank.

To finance the current account deficit, financing has to be secured through increase in domestic savings in order to reduce reliance on external financing, the Governor said. She also pointed out the importance of restoring investors' confidence with a view to encourage investment inflows and consistency and continuation of prudent policies.

President Musharraf discussed various issues related to food and oil price developments and appreciated the SBP's briefing. He also acknowledged the strengths of SBP as an institution, its policy advice and its continued support in overall economic development of the country. The presentation ceremony was attended, among others, by Sindh Governor Dr Ishratul Ibad and senior management of the State Bank of Pakistan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan at 84th position ​* 
Sunday, July 06, 2008

ISLAMABAD: Pakistan has been ranked 84th among 118 countries in the Global Enabling Trade Report 2008.

East Asian economies, Hong Kong and Singapore, occupy top two positions in the Enabling Trade Index, followed by Sweden and Norway, according to the Global Enabling Trade Report 2008 released by the World Economic Forum. Canada, Denmark, Finland, Germany, Switzerland and New Zealand complete the top 10 list.

Pakistan has been ranked 84th among 118 economies, whereas its neighbours secured slightly better positions, Sri Lanka 70th and India 71st as compared to Bangladesh 110th and Nepal 116th.

The results reflect Hong Kong and Singapores openness to international trade and investment as part of their successful economic development strategy. Both countries have put in place customs administrations that are highly efficient in getting goods over borders.

They are also endowed with well-developed transport and telecommunications infrastructure ensuring rapid transit to final destination. These attributes are further supported by the business environment that is conducive to the logistics and transport industry.

Published for the first time and covering 118 economies worldwide, the Global Enabling Trade Report 2008 aims to present a cross-country analysis of a large number of measures facilitating trade. The Enabling Trade Index captures free flow of goods over borders and to destinations.

The index, featured in the report, measures the factors, policies and services facilitating free flow of goods over borders and to destinations. The index breaks the enablers into four areas that are market access, border administration, transport and communications infrastructure and business environment.

Identifying key areas where Pakistan is lagging behind and has shown weaknesses in some of the crucial areas, Competitiveness Support Fund Chief Executive Officer Arthur Bayhan said Pakistan needs to put immediate attention to facilitating an environment conducive to trade and investment, including a transparent and efficient border administration, well-developed transport infrastructure and highly efficient services.

Bayhan added Pakistan showed its competitive advantage on indicators such as non-tariff barriers, time for import, transshipment connectivity index, which is the type of transshipment connections available to shippers from Pakistan on bilateral routes, quality of rail road infrastructure, road congestions, linear shipping connectivity and ease of hiring and firing labour.

The index will be particularly useful for policy-makers interested in benefiting from trade. By integrating and benchmarking the full range of factors that affect trade, both at and behind the border, it provides a meaningful guidance on what their priorities should be, said Professor Robert Z Lawrence, Albert L Williams Professor of Trade and Investment at the John F Kennedy School of Government at Harvard University. Professor Lawrence is also academic adviser and co-editor of the report.

Over the past year, the World Economic Forum has engaged key industry and thought leaders to carry out an in-depth analysis and assessment of the obstacles hindering trade in economies around the world. The goal is to construct a platform for multi-stakeholder dialogue in the interest of fostering international economic development, said Professor Klaus Schwab, World Economic Forum Executive Chairman.

The Enabling Trade Index uses a combination of data from publicly available sources, as well as the results of the Executive Opinion Survey, a comprehensive annual survey conducted by the World Economic Forum with its network of partner institutes (leading research institutes and business organisations) in the countries included in the report.

The CSF carried out the Executive Opinion Survey in Pakistan from January to May 2008. The survey provides unique data on many qualitative institutional and business environment issues and the perception of the private sector on various aspects of the economy.

Pakistan at 84th position


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## Neo

*Cheap Cotton: Pakistan to export lint to BD, Far East countries​*
KARACHI: Pakistan is likely to export around half a million cotton bales during this season on back of export ban by India and lowest price parity in international market, exporters said Saturday.

They said Pakistani lint was still cheaper by around 10 to 12 cents per pound in the international market. Director on Board of Karachi Cotton Association (KCA), exporter, importer and a ginner, Ghulam Rabbani said Bangladesh and Far East are eager for Pakistani produce for more than one reason In the international market, Pakistani cotton is getting more attraction due to higher quality from the traditional and non-traditional cotton importing countries, Rabbani said.

During April to June 2008, Pakistan registered an export of 100,000 bales to Bangladesh and Far East countries.

He said the news from India about a temporary ban on export of raw cotton was still facing stunning reactions and every one was inquiring countrys exporters.

He said, Bids on Pakistani raw cotton have increased from international markets and new inquiries are pouring in from Bangladesh and Far East. He said a leading Swiss international firm also agreed upon to make deal for Pakistani cotton due to higher quality and international price parity level. Mr Rabbani said shipment of lint from old and fresh crop would be ready after confirmation of orders, as exporters have already completed several shipments of the cotton season 2007-08 some weeks ago.

He said the international lint buyers rate Pakistani cotton as the best in quality, and it is available on competitive rates in the international market. He said our competitors, the Indian cotton merchants, are out from the race and field is declared open for Pakistani exporters to grab the market share.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Malaysia, China to invest in power generation ​*
KARACHI: The secretary general of Associated Chinese Chambers of Commerce & Industry of Malaysia (ACCCIM) has welcomed the proposals of Tanvir Ahmed Sheikh, President FPCCI, and assured him that the Malaysian-Chinese Investors will work on this potential sector and invest their capital in the Pakistani market to give boost the electric power generation using different sources of energy.

The FPCCI trade delegation is in Malaysia to explore the new avenues of trade, investment, joint ventures and services with the help of new technologies with the counterparts of Malaysia as well as with the D-8 States Representatives, under the leadership of president FPCCI. The FPCCI delegation met with the secretary general, Tan Sri Dato Soong Sew Hoong and the members executive council of the Associated Chinese Chambers of Commerce & Industry of Malaysia (ACCCIM) on Saturday. Mr Sheikh briefed them about the Pakistani market, the investment opportunities and possible collaboration especially in the areas of power generation with the help of coal reserves in large areas of Pakistan. 

He briefed them Pakistan is the suitable state for this kind of investment and the government of Pakistan has also urging for investment. He invited the Malaysian-Chinese investors to study the pre-feasibilities reports that are being done by the government of Pakistan in electric power generation projects for the suitable investments. Pakistan will focus to use coal as a main source for electric power generation. Before this meeting, the FPCCI Delegation also met with the High Commissioner of Pakistan and discussed the matters of mutual interest and Investment opportunities and possibilities with the Member Countries of D-8.

Daily Times - Leading News Resource of Pakistan


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## Neo

*MINFAL meets UNO, FAO, WFP: MINFAL seeks time to overcome food crisis, poverty ​*
** 70m people will be in poverty trap by 2012: report​*
ISLAMABAD: The Ministry of Food, Agriculture and Livestock (MINFAL) has asked United Nation Organizations (UNO) to give more time to develop consensus among the stakeholders for its offer to assist the matters related to the food security and poverty alleviation across the country.

Reviewing the governments strategy to overcome the food crises and poverty alleviation programme, the MINFAL officials held separate meetings with the representatives of International Fund for Agriculture Development (IFAD), Food and Agriculture Organisation (FAO) and World Food Programme (WFP).

The MINFAL officials said the UN affiliated organisations and other donors agencies wanted to help the government regarding food security, poverty alleviation and productivity enhancement. 

The official told Daily Times that the international organisations have proposed three types of measures including short, medium and long terms for increasing agriculture productivity and to help the government in poverty alleviation in rural areas. The short-term measures have already been completed and the discussion was under way for the remaining two types of measures. 

The officials said the short-term measures include Benazir Bachat Card Scheme and other arrangements for a period of one year. 

For the remaining two types of measures, discussions were in progress with the government high officials. The medium and long-term measures relate to the investment plan in agriculture sector, policy matters and implementation and monitoring of all such programmes, the officials added. 

However, the representatives of the UN organisations hope that the government would take appropriate measures for over coming food crises and would start a comprehensive strategy for poverty alleviation with the collaboration of the IFAD, FAO, and WFP. 

The UN organisation presented a presentation during the meeting regarding the small measures for enhancing income of rural population through various schemes. Officials of the UN organizations told this scribe that once targeted people identified through any mechanism, then helping them not difficult for the government. 

They admitted that identification of targeted poor section of the society was challenging job but not impossible. 

According to an estimate, if the government fails in poverty alleviation programmes, then by the year 2012, more than 70 million people would be living below the poverty line, they warned. 

The ministry demanded a week time so that they might complete internal work and plan future line of action and in later stage start cooperation with the organisations and other donor agencies.

The officials maintained that the international prices of basic food commodities have increased manifold for the last two years and more rapidly in recent months as compared to last year. Causes of such higher food prices are insufficient growth in cereal production, massive diversion of food grains for making bio-fuels, provision of land for bio-fuels, global warming, high population growth, changed eating habits, and manipulative role of international financial markets along with reduced role of national government.

Daily Times - Leading News Resource of Pakistan


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## Neo

*'Industrial estate to be set up for overseas Pakistanis' ​*
ISLAMABAD (July 06 2008): The Overseas Pakistanis Foundation (OPF) is working to set up an industrial estate for overseas Pakistanis at Motorway (M-II) Chakri Interchange Rawalpindi to provide investment opportunities to overseas investors. In this regard, the Foundation had already signed Memorandum of Understanding with the government of Punjab, official told here Saturday.

Giving briefing, he said that the Industrial Estate will spread over 2000 acres on Pakistan Motorway. The Punjab government will acquire land for the project while OPF will develop and provide complete infrastructure facilities, he added.

Official said that Federal government would guarantee the provision of all basic utilities for the scheme like water, gas, electricity and telephone and also ensure similar incentives for this industrial estate as allowed to Chinese specific zone in the country. This estate will be developed on the pattern of Sundar Industrial Estate, Lahore with complete infrastructure facilities, he added.

To a question, he said the allotment of commercial plots in the scheme will be preferable to overseas Pakistanis up to a specified period, mutually agreed to be determined at the final agreement stage. Besides, the Foundation would workout a plan to establish the medical, engineering and IT colleges in the country to meet the basic needs of overseas Pakistanis, who have desired to educate their children in Pakistan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Musharraf vows to take Pakistan out of turmoil ​*
KARACHI (July 06 2008): President Pervez Musharraf on Saturday vowed to take Pakistan out of various turmoil - the political turmoil, terrorism and extremism. "Pakistan has come to live and will, Inshallah, survive", he said while speaking as chief guest at the balloting of some 9,000 plots in Hawkesbay Scheme-42 of Lyari Development Authority (LDA) held at Governor's House here.

Sindh Governor Ishrat-ul-Ibad Khan, Provincial Ministers, Karachi Nazim Syed Mustafa Kamal, Naib Nazim Nasreen Jalil, besides LDA Director General Agha Maqsood Abbas were present on the occasion. The President said: "We have to pull the country out of turmoil and face the challenges of terrorism and extremism if Pakistan is to survive and keep moving forward.

"Pakistan has come to live and survive", he said, adding that Almighty Allah had created Pakistan for the Muslims of South Asia and it would live forever. Referring to balloting of plots, the President said the mission always before him had been to work for poorest of the poor and it was for the fourth time that he was performing the balloting of plots.

Besides the balloting of some 120,000 plots, the President announced that additional 100,000 plots would be provided in Taisar Town with the emphasis on small-size plots for the poor. He said there were people, who had been living in nullahs, slums and in dilapidated conditions and they have to have a place in the world to live.

The President said once he had the opportunity of flying over Lyari river and Lyari Expressway and saw people living in the riverbed with sewerage water around. He said these people were given land and money to construct their houses and now they had decent living conditions.

In a city like Karachi, he opined, it was more essentials to have more plots of small size - say 80 square yards on which well designed three-room houses could be constructed to meet the living requirements of poor. He appreciated the dynamism of Governor Dr Ishrat-ul-Ibad Khan and City Nazim Syed Mustafa Kamal for thinking on right lines, and said their efforts for providing shelter to the poor was commendable.

The President referred to speedy development in Karachi in various sectors like housing besides construction of bridges, flyovers, underpasses and quality roads, laying of improved sewerage system, water projects like K-III etc, and described the same as a good effort of the Sindh Governor and the City Nazim. On the recreational side also, he said, a lot had been done, and cited the examples of Bagh Ibn-e-Qasim, Quaid-e-Azam Park and Beach Park.

Commending the efforts of the Governor and the Nazim, the President told them to keep on doing this. Earlier, the President performed the balloting of 9000 plots - 5,000 of 240 square yards and 4,000 of 400 square yards in Hawkesbay Scheme-42 by pushing the computer button.

In his speech, Governor Dr Ishrat-ul-Ibad Khan said that providing shelter to the poor was envisioned by President Pervez Musharraf in the year 2000, which was being implemented. So far, he said, more than 100,000 plots had been given in Taiser Town housing scheme, which remained in pending for 30 years.

He pointed out that this balloting was to be done six months back, but it could not take place. The Governor spoke about harmonious relationship with Sindh Local Government Minister Agha Siraj Durrani in carrying out the mission of providing relief to the poor.

The coalition in Sindh, he said, had the understanding that "we have to maintain peace and harmony and work for the progress and prosperity of poor masses." He assured the President of continuing to work as per his vision for providing relief to the poor.

In his welcome address, City Nazim Syed Mustafa Kamal said these 9,000 plots were being provided in a scheme, which remained in abeyance for three decades. He said the scheme could see revival because of the personal interest taken by the Governor and today the dream of people, who applied for a plot in this scheme, had come true.

Mustafa Kamal said personal interest of the Governor for revival of this scheme could be judged from the fact that he visited the scheme several times and it was because of this that the area had roads and electricity, while sewerage and water supply facilities too would be provided soon.

He pointed out that over 31,000 applications had been received from people in various categories, including general public, civil servants, retired employees, widows/ orphans and overseas Pakistanis for 9,000 plots about nine month back and an error-free system of National Database Registration Authority (Nadra) adopted for allotment purposes - which is the system and culture we are cultivating to maintain transparency.

He said it was for the first time that "we are working hard to serve the people and credit for this goes to Mohajir Qaumi Movement (MQM) chief Altaf Hussain, who brought middle class to the fore. Mustafa Kamal said till to-date, the city government had given 125,000 plots for which credit went to the whole team and its leader.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Revival of industries and cosmetic measures ​* 
ARTICLE (July 06 2008): A recent report has shown that Pakistan's manufacturing sector recorded the weakest growth in a decade during the outgoing fiscal year 2007-08 due to several unfavorable conditions. The growth target had been lowered twice and overall manufacturing posted a growth of 5.4 percent during the first nine months of the fiscal year 2007-08 against the target of 10.9 percent and 8.1 percent of last year.

The report further said that the large-scale manufacturing, accounting for 69.5 percent of overall manufacturing, registered a growth of 4.8 percent in the current fiscal year 2007-08 against the target of 12.5 percent and last year's achievement of 8.6 percent.

Prior to budget announcement, some observers were expecting that the government would announce a comprehensive package for the revival of the industry and businesses which were under tremendous pressure owing to multiple reasons, including inflation and energy shortage and heightened political tension, deteriorating law and order situation as well.

It's true that the manufacturing sector in the country still revolves around the traditional low value added industries, whose share in world trade is continuously declining but there are other factors that are responsible for this decline.

However, the industry was expecting relief as the cost of doing business was increasing with every passing day as a result of the depreciating rupee against the dollar and high energy cost, including electricity, gas and petrol and cumulative impact of monetary tightening are responsible for poor showing of manufacturing in 2007-08.

We have witnessed that the investment in upgrading technology is low and diversifying into emerging markets, products and processes is either slow or nearly constant and an efficient international quality supply chain which is essential for local industry to flourish, is missing.

Here it should have been a point to ponder for the government that banking and financial sector should have been activated to rescue the ailing industrial sector but no such thing has happened and as the industries lacks the cash-flow they were still unable to revamp themselves. Hence they were not able to compete in international market in a tough WTO regime.

The private sector also needs to adjust with new realities but primarily it's the duty of government to sensitize the industry regarding emerging trends in global market. Moreover, government is also expected to provide enabling environment to its local industries, especially those sector that cannot survive without a certain level of protection from the government.

The share of knowledge and technology intensive engineering, electronics, pharmaceutical, chemical and non-metallic mineral products, should be strengthened and enabled through fiscal and tariff means as well as building of alliances with international partners.

Observers are of the opinion that the announcements made by the government in the federal budget 2008-09 can be ascribed as cosmetic measures. These circles say that the sectors and products with comparative advantage such as textiles, food and agro-processing should be fostered and the sectors like computer industry needed special care as the growth of the industry is vital for all economic sectors. Ironically government could not reach at a rational policy in this regard.

The government officials claim that the restructuring of the duty mechanism would benefit local industry. Duty rates on dairy products, fruit, chewing gum, chocolate, processed food, fruit juices, aerated waters, ceramic products, air-conditioners/refrigerators, electric fans, toasters, microwave ovens, televisions, including liquid crystal display, other, black and white or other monochrome, furniture and lighting equipment etc has been increased from 25 percent to 35 percent.

Yes, government may collect some extra revenue but the measure would not benefit local industry till its being enabled to get compatible both in terms of quality and price. As the industry is on the verge of collapse, it was being expected that the government would rationalize Sales Tax on various Industries.

Keeping in view the fact that industry is struggling for its very existence, the government should have curtailed the rate of sales tax from the existing 15 per cent to 10 per cent, as it had already been proved through various experiences that a cut in tax rate earns more revenue for the government.

Moreover, the industries that need to be encouraged and promoted yet, the exemption of sales tax for a particular time period would have been a great help to restore the confidence of both the industry and investor. On the contrary, the government has increased the sales tax instead of reducing it and this measure would result in more horrible consequences both for the consumers as well as the industry.

The government has claimed that due to revenue crunch, the rates of sales tax and FED have been increased but the industrial sector is not able to see any good resulting from this measure. Instead it would affect the revenue collection as it would prove another fatal blow for the industry.

(The writer is senior vice president of Islamabad Chamber of Commerce and Industry (ICCI) and the president of Pakistan Computer Association (PCA))

Business Recorder [Pakistan's First Financial Daily]


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## Neo

* Centre turns down Punjabs request for 2.5mT of wheat ​* 
Tuesday, July 08, 2008

ISLAMABAD: The federal government has rejected Punjabs request to the Ministry of Food, Agriculture and Livestock (MINFAL), to allocate 2.5 million tonnes of wheat from its stocks to carry out winter operations, foreseeing another flour crisis in the country, The News has learnt.

After MINFALs reluctance to entertain Punjabs request, the Punjab chief minister took up the issue with the prime minister in a meeting the other day at the Prime Minister House and was assured that Punjab would be supplied beyond its consumption of 3.2 million tonnes if its releases exceed the average releases of over 3 million tonnes, an official privy to the development told this correspondent.

The Punjab government has procured 2.5 million tonnes of wheat during the current season against the target of 3 million tonnes and average releases during the winter operation stand above 3 million tonnes.

However, the prime minister has assured the Punjab chief minister that the province would be allocated one million tonnes for coming winter operations and if its demand exceeded, then more allocations would be made from imported stocks, they said. The provinces are free to import on their own to meet demand but they have to bear the extra price and subsidies, said another official who declined to be named.

Centre turns down Punjabs request for 2.5mT of wheat


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## Neo

*Musharraf for accelerating industrialisation, job creation ​* 
Tuesday, July 08, 2008

KARACHI: President Pervez Musharraf has called on industrialists to help spur the process of industrialisation, investment and job creation in the country. He was talking to a delegation of leading industrialists and chairmen of industrial estates, which called on him at the Governor House here on Monday.

Sindh Governor Dr Ishratul Ebad Khan was also present on the occasion. Later, the Presidents spokesman Maj Gen (Retd) Rashid Qureshi informed the media that members of the delegation briefed the President about the countrys economy as well as the environment in which the businesses are being carried out and the problems faced by them. The members of the delegation also came up with the recommendations as to how the improvements could be brought about.

The President lauded the efforts of the industrialists towards improving the economy of the country, for the provision of employment opportunities which would lead to poverty alleviation and improving the income of the people. He said that the big industrialists should speed up their efforts in this very direction to help implement the governments plan for tackling the problem of poverty as well as the provision of job opportunities.

The President also assured the delegation that their recommendations towards improvements in the business environment, employment generation and industrial expansion, would be conveyed to the government. 

Musharraf for accelerating industrialisation, job creation


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## Neo

*Afghanistan diesel imports from Pakistan increase ​* 
Tuesday, July 08, 2008

SINGAPORE: Pakistan is exporting more diesel a month to Afghanistan to 100,000 tonnes from June to September versus the usual monthly volumes to help in reconstruction works, an industry source said on Monday.

Pakistan normally moves 50,000-70,000 tonnes of diesel each month to geographically challenging Afghanistan. During June to September last year, such cross-border flows were 60,000-70,000 tonnes a month, the source who is familiar with the flows said.

Afghanistan is importing more gas oil for construction works. The country is rebuilding, said the Karachi-based source, who asked not to be named. But Pakistan has suspended jet fuel exports to Afghanistan since June 25.

The suspension is indefinite. Afghanistan is drawing jet fuel supplies from Iran, he added. Pakistan used to send 10,000 tonnes of jet fuel to Afghanistan every month. Part of such diesel intake is for military consumption in Afghanistan, the source said.

The United States has some 32,000 troops in Afghanistan, around 14,000 in the NATO-led force and some 18,000 performing missions from counter-terrorism to training Afghan forces. Pakistan, itself short on gas oil, typically buys the fuel used for transportation and power, via tender apart from term supplies from Kuwait. Pakistan last bought at least 300,000 tonnes of gas oil for June to October delivery at premiums of $7.60 to $9.30 a barrel to Middle East. 

Afghanistan diesel imports from Pakistan increase


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## Neo

*Gwadar port to be linked with Iran by year-end​*
ISLAMABAD, July 7: A Senate committee was informed on Monday that Gwadar Port would be made fully operational and connected to Iran by the end of the year.

Federal Minister for Ports and Shipping Qamar Zaman Kaira informed the committee on ports and shipping that the government was taking measures to hold the next meeting of the Economic Coordination Committee (ECC) in Gwadar to take up all outstanding issues on the spot.

The committee which met under the chairpersonship of Senator Mrs Gulshan Saeed reviewed the ongoing projects of the National Highway Authority, Wapda, Civil Aviation Authority and Pakistan Railways and the plans being envisaged by the Ministry of Ports and Shipping to make the Gwadar Port fully operational.

Secretary Ministry of Ports and Shipping informed the committee that the port had been completed and was operational. He said that in order to boost the operational activities, it had been decided in the last ECC meeting that all wheat import for Balochistan would be routed through Gwadar. The committee was informed that the master plan of the port had not been finalised so far.

Regarding sweet drinking water, the committee was informed that a desalination plant of 100,000 gallon per day capacity would be operational in two months. It was suggested that efforts be made to get water from nearby dams, like Shadi Kol and Basole.

Gwadar port to be linked with Iran by year-end -DAWN - Top Stories; July 08, 2008


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## Neo

*Bio-diesel research begins in Pakistan​*
KARACHI, July 7: The Pakistan State Oil (PSO) has initiated research and development work on its bio-diesel project to meet governments deadline of blending five per cent bio-diesel with conventional diesel by 2015 and 10 per cent by 2025.

The Economic Coordination Committee (ECC) had taken a decision on the issue in its meeting on Feb 15 in Islamabad.

Bio-diesel would be extensively tested in the auto industry of Pakistan, and depending upon its favorable results, scope of its supply would be extended throughout the country as a standard practice.

At PSO, after the production of bio-diesel from Jatropha oil, an in-house testing has already begun on one vehicle. However, results would be known later.

A PSO official involved in the project told Dawn that it would take some time to produce bio-diesel in Pakistan on such a large scale because it needs mass cultivation of Jatropha and other non-edible seeds for which commitment/concerted efforts of the government is required.

He said a separate department, alternative energy and new projects, has been established within the company to identify and take initiatives in terms of cheaper renewable and alternative energy projects and to address the countrys energy crisis and lessen the fuel import bill which would result in saving of precious foreign exchange.

PSO has selected only non-edible plants/seeds species, such as castor (Arind), Pongame (Sukh Chain), Jojoba, Jatropa (Karanga), etc., for production of bio-diesel. However, the company is currently focusing on Jatropha plant/seed for its better qualities as a substitute of petroleum diesel.

The officials added that many countries in Europe, US, Brazil, Malaysia, and India are using Jatropha as well as other edible and non-edible plants/seeds for production of bio-diesel.

The official said that out of these plants, Jatropha can be grown on marginal land, thus its plantation would not compete directly with other food crops, such as wheat, corn, sugarcane, rice and cotton besides helping in poverty alleviation and improving land utilisation.

Pakistan consumes approximately eight million tons of diesel per annum; of which around three million tons is imported.

There will definitely be incentives for consumers with regards to bio-diesel pricing, its effect on the environment and the vehicle performance, he said.

The official said that spiraling effect of fossil fuel prices world over continues to adversely affect economies of many countries.

This has provided incentives to search for alternative fuels derived from vegetable and non-vegetable oils, i.e. bio diesel, which offers several distinct advantages as an alternative fuel for diesel engines.

Economically it reduces imports and would afford improved security of energy supplies.

Bio-diesel research begins in Pakistan -DAWN - Business; July 08, 2008


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## Neo

*Aid & Pakistans development​*
THERE is a belief among economists  a belief I happen to share  that the peaks and troughs one notices in the trajectory of growth followed by Pakistan since its birth in 1947 were induced by large flows of foreign assistance.

Up until recently, a significant share of the total amount of external capital that flowed into Pakistan came from the United States budget and from the institutions over which Washington had considerable influence.

The international financial institutions that supported Pakistans development  the World Bank and the Asian Development Bank  seemed to open their coffers to use by Pakistan during the periods when America was also being generous. The American generosity was linked with Pakistans willingness to advance Washingtons strategic interests in various parts of the world.

Thus in the early 1960s, when President Ayub Khan aligned Pakistan with the United States in order to help the latter contain the spread of communism in Asia, the Americans provided large amounts of military and economic assistance to Islamabad. The flow of assistance declined significantly after Pakistans war with India in September 1965 and also when the reins of power passed into the hands of Zulfikar Ali Bhutto who sought to detach Pakistan from America.

The Russian invasion of Afghanistan and its occupation of that country for a decade  during most of the 1980s  brought Pakistan into an alliance with the United States and Saudi Arabia. Pakistan was prepared to use its territory to train warriors to fight the Soviets in Afghanistan. In return it asked for and received both military and economic support from America and its western allies as well as from Saudi Arabia.

The third period of close American  Pakistani association began right after 9/11 when Islamabad responded to Washingtons pressure and became a partner in the war on terror. This partnership also came with support to the economy and the military. The latest estimate for the total amount of American support during the 2002-08 period is $12bn, or $2bn a year.

Each of these three periods of close donor association with Pakistan  the 1960s, the 1980s, and the early 2000s  profoundly affected the countrys economy. The most important impact was on the rate of GDP growth. Averaged over the three periods, the economy grew by more than six per cent a year, a rate of growth 50 per cent higher than the one Pakistan could have sustained on its own.

During the 1960s, this high rate of growth in GDP meant an increase of 3.5 per cent per annum in income per head of the population; in the 1980s, income per head increased at the rate of 3.8 per cent. The highest increase in per capita income occurred in the more recent period when the GDP growth averaged seven per cent and income per capita increased by 5.2 per cent a year, a record for the country.

The less apparent impact of the large amounts of donor money coming into Pakistan was to postpone some of the structural problems that have adversely affected the economy. The first was a persistent low domestic savings rate. With very low domestic savings, Pakistan could afford a rate of GDP growth not significantly higher than the rate of population increase. This meant that the problem of poverty could not be addressed.

Evidence compiled from the experience of high growth developing economies by development institutions such as the World Bank suggests that the rate of GDP growth has to be two to three times the rate of increase in population for a palpable difference to be made to poverty levels. To ensure such rates of growth overtime, Pakistan needed to increase domestic savings. Or it could rely on external flows. Since the latter often became available in large amounts, policy-makers set aside the difficult decisions they would have had to take to increase domestic savings. The most important of these was the restructuring of the tax and public expenditure systems.

The second structural problem, policy-makers have failed to address, concerns the development of the countrys large human resource. Since 1947, the year of the countrys birth, Pakistan has witnessed a profound demographic change. The size of the population has increased five-fold from 30 million in 1947 to an estimated 165 million in 2008. The number of people living in the urban areas has increased 12-fold, from five million to 60 million.

The median age of the population has declined continuously. Today it is only 17 years which means that nearly 83 million Pakistanis are below the age of 17 years. Such a population can either become a large burden for the country or it could become a major economic asset. What will make the difference is the interest the state takes in education and skill development and in providing basic health care.

The Pakistani state has done poorly in these three areas. Public sector expenditure on education in the early 2000s was less than 2.5 per cent of GDP. The expenditure for healthcare was even less than that. Even compared to the countries at its level of development, Pakistan spends a very small part of its GDP on research and development.

As the Indian experience has shown, a well educated and trained workforce can become not only a major asset for the economy. It can also bring about significant social changes that contribute to the modernisation of the economy and the society and their better integration into the fast changing global system. Pakistans large and very young population can move in either of the two directions: opt for a greater play in the development and modernisation of the economy or drift towards Islamic radicalism and isolationism.

The third structural change that did not happen was the integration of the economy in the rapidly evolving global system, particularly through increased exports. No developing country has developed without emphasising the development of the export sector. Pakistan, on the other hand, has allowed its share in global trade to decline. The World Banks latest World Development Indicators, shows that Pakistan had a share of 2.4 per cent in global population, 0.23 per cent in global output but only 0.15 per cent in global exports.

What lies in Pakistans future? Now that the United States is developing some misgivings about Pakistans contribution to the war on terrorism there is the possibility that American aid may decline once again. Should that happen, what would be the impact on the Pakistani economy?

DAWN - Editorial; July 08, 2008


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## Neo

*Edu sector to get $90m from USAID​*
** 79 percent of Pakistani children between the ages of 10 and 16 are out of school, while nearly half the adult population is illiterate with approximately 42 percent of Pakistani women unable to read
* Edu in Sindh lacks a backbone: Pir Mazhar​*
KARACHI: The Sindh Minister for Education and Literacy, Pir Mazharul Haq, said on Monday that Sindh lacks a backbone when it comes to education and half of the non-functioning schools in Pakistan are located here. 
He has said this while speaking at a Memorandum of Understanding (MoU) signing ceremony between USAID and the Sindh education department at a local hotel.

The United States Agency for International Development (USAID) and the Government of Sindh Department of Education and Literacy signed the MoU to expand USAIDs nationwide $90 million ED-LINKS program in Sindh, increasing the provinces share of aid to US$30 million. The US Consul-General in Karachi, Kay Anske, was also present on the occasion. 

Haq said that the people of Sindh, who have been ignored in the past, will welcome the USAIDs generous donation and benefit greatly from it. Education in Sindh has hit rock bottom and the PPP government wants to improve it with the help of friendly nations, he added.

This program promises great rewards for Sindh, USAID Pakistan Mission Director Anne Arnes said while speaking at the ceremony. ED-LINKS projects will improve the teaching skills of more than 30,000 teachers in the targeted districts, provide effective models for school management, and improve the learning environment for more than 500,000 students.

The ED-LINKS program will be implemented in 3,000 middle and secondary schools in Sukkur, Khairpur, Jacobabad, Kashmore, Dadu, Jamshoro, Tharparkar, Mirpur Khas, Sanghar, Nawabshah, and Shikarpur.

Provincial Director ED-Links Sindh Fawad Shams noted that approximately 79 percent of Pakistani children between the ages of 10 and 16 are out of school, while nearly half the adult population is illiterate with approximately 42 percent of Pakistani women unable to read.

Ppi/nni add: Earlier in the day, ED-LINKS launched its activities in Sindh with a 10-week leadership and management program for 125 head teachers of the Aga Khan University, while in Islamabad, USAID Pakistan Acting Deputy Director Robert Wuertz launched a 10-day workshop on standards in education. 

The workshop, being conducted under the auspices of the Federal Ministry of Education Curriculum Wing, brings together leading authors, textbook writers, subject specialists, and teacher trainers. They will work together to develop strategies to raise curriculum standards in schools across the nation. 
Since 2002, the U.S. Government has provided more than $2 billion to Pakistan to improve economic growth, education, health, governance and to reconstruct areas affected by the October 2005 earthquake.

Daily Times - Leading News Resource of Pakistan


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## Neo

*PKR loses 178 paisa against USD in one day: nearly 5.5 percent erosion of value since July 2 2008 ​* 
KARACHI (July 08 2008): On Monday, Pak rupee lost 178 paisa or nearly 2.5 percent against US dollar by the closing of day's second trading session on interbank foreign exchange market. Since July 02, the Pak rupee currency has lost 5.5 percent to hit a new all-time low of Rs 71.92 against one dollar. Last fiscal year's closing of rupee was Rs 68.3970 against one dollar.

The absence of State Bank of Pakistan from the interbank Foreign Exchange market clearly points towards a strong greenback demand with weak inflows. On the first day of the week, interbank opened at Rs 71.15 to a dollar on bleak political and economic outlook. By afternoon 13:30 hours, the rupee had weakened to Rs 70.95-71.00 buy/sell to a dollar.

Since the start of the month the central bank has injected $150 million in the market to satisfy pent-up demand for the greenback. The demand for dollar emerged soon after lifting of 35% cash reserve imposed on certain goods by the SBP through interim measures the central bank had taken in the last week of May 2008.

Rising oil prices in the international market, shortage of essential food items due to poor agriculture growth and low FDIs are some of the major factors putting immense pressure on exchange rate. Unfortunately, however, our exports numbers are not sufficient to provide the required support. The oil bill has already reached an alarming level and at current price, $1.6 billion are required to meet the monthly oil bill.

Monday's demand was mainly caused by oil payment, capital import payment by some telecom and gas distribution companies and remittance by corporates in power and fertiliser sector. Estimated amount ranges around $100-125 million.

Last week, Sate Bank of Pakistan invited Treasury heads of eight leading banks of the country. The central bank warned them against unnecessary interbank FX activity. Banks were told not to quote wide prices to arrest volatility, as a twenty-pip Rs/Dlr quote means that if the offered side was hit then the next quote is up by another twenty paisa, ie if the price is quoted 69.50-70, then next offered price would certainly be above 69.70, possibly 69.70-90, for a two-way quote.

Banks throughout the day were scurrying to cover the underlying import demand. Importers were ready to pay premium for forward purchases: 60 paisas for one month; Rs 1.25 per two months; Rs 2.05 for three months; Rs 2.80 for four months; Rs 3.43 for five months; Rs 4.00 for six months; and Rs 7.50 to 8.00 for 12 months to dollar.

As a result, banks were buying dollars on ready market and placing them in their NOSTRO account. The State Bank did intervene, but sensing strong demand from jittery importers soon pulled back and allowed the market value to prevail. As a result, in late afternoon, trading Pak rupee went on a steep downward slope to hit the low of Rs 71.95 to a dollar on tomorrow (Tuesday) value.

The SBP asked banks to utilise its Foreign Exchange Exposure Limit (FEEL), which is USD 320 Million. This means that 36 banks are authorised to expose itself by either carrying a long dollar positions or a short dollar position, with a market limit of USD 320 million. Historically, in Pakistan, banks never sit on short dollar positions as rupee has a long history of weaknesses due to current account deficit and negative balance of payment.

Between 1948 and 1954, one dollar could be obtained for Rs 3.3085. Until December 1971, one USD was equivalent to Rs 4.7679. In 1981, one dollar would fetch Rs 9.90. By the end of 1991, a dollar was worth Rs 24.20. On December 31, 1995 one dollar was equivalent to Rs 31.20, in 1998, a dollar was for Rs 46.10. In 2000, a dollar would fetch Rs 58 and in 2001 60.55.

In 2002, rupee gained some strength to close the year at 58.41 and it remained stable until December 2007 and during this 5-year period it lost only 5 percent of its value against the US dollar to close 61.21. On January 02, 2008 one USD was worth 61.85 and as of now rupee has lost 16 percent of its value against the US dollar to close at 71.92.

There were two views on the market with regard to SBP exchange rate policy. Some forex experts believe SBP should not allow the base rate to go up so sharply in one day. "Once an L/C is opened, it is then a customer's liability and also the bank as well as of SBP's.

Therefore, SBP can buy ready dollars from banks lying in then NOSTRO accounts, and then sell the same in forward back to the bank to smoothen the volatility prevailing on the interbank market," they emphasise.

While others feel that SBP should recognise the ground reality and put the brakes on non-essential imports, making them prohibitively expensive by allowing the overnight rates to shoot up. And also, raise interest rates substantially to attract rupee deposits in order to curb the outflows of dollar.

The sharp falling rupee has negative connotations on foreign portfolio investment. While local stocks have become very attractive at seven time multiples with dividend yields of 11 to 12 percent, the one percent lower lock has turned the KSE into a one-way street ie coming in with no easy exit. This is also making the foreign portfolio managers uneasy.

Meanwhile, exchange companies had closed shops Monday, awaiting a higher rate on Tuesday based on interbank Tuesday value. But one could remit through telegraphic transfers at, ie, lower than interbank rate Rs 71.50 to dollar. UAE dirham was available at Rs 19.00 in exchange companies and Rs 19.40/19.45 with Hundi/Hawala dealers.

The supply and demand for dollar is widening and it is becoming difficult for the central bank to control. SBP's own forex reserves are not so large to be effectively used to arrest the slide.

*SBP HAS TWO OPTIONS:* It could provide regular dollars to meet the daily needs, and it would require the injection of a billion dollar on weekly basis for a couple of weeks to stabilise the market. And, subsequently the injection of USD 600,000 for every week until the central bank reserves are sufficient to cover at least 12 weeks' imports.

The other option is to give a bitter pill to the nation by sharply hiking the CRR & SLR rates, and, simultaneously making the lending rates so high that rupee becomes more dearer, ie, the choice is either to go for more demand management measures and let the economic wheel move at a slower pace or to spend the reserves to keep growth at comparatively higher level and risk going into an IMF programme.

In the later course, the Fund itself would force much sharper rise in lending rates and force an even more deeper slide of rupee against the dollar. It would therefore be more prudent to allow SBP to balance its act not on the basis of any mathematical model but undertake its own value judgement. But this means giving SPB a free hand with full political and fiscal support.

*LAHORE:* The rupee lost 80 paisa against dollar on the buying at Rs 70.50 and Re 1 on the selling side at Rs 71.00 at Lahore currency market on Monday. The dollar kept moving up throughout the day's trading following persistent demand and moved up and closed higher at Rs 70.50 and Rs 71.00 against Rs 69.70 and Rs 70.00. Moneychangers accounted the dollar's increasing demand for its appreciation.

The rupee also faced pressure and significantly declined against pound sterling at Rs 137.10 and Rs 138.10 on the buying and selling counters as compared to the last week closing of Rs 136.50 and Rs 137.00.

*ISLAMABAD: *The dollar and showed an extraordinary increase of Rs 1.40 at the currency markets of Islamabad and Rawalpindi on Monday. The dollar resumed trading at Rs 71 (buying) and Rs 71.50 (selling) against last rate of Rs 69.60 (buying) and Rs 69.70 (selling). It did not observe further change in the evening session and closed at Rs 71 (buying) and Rs 71.50 (selling).

Pound sterling opened at Rs 148 (buying) and Rs 149 (selling) against last rate of Rs 136.25 (buying) and Rs 136.75 (selling). It did not observe further change in the second session and closed at Rs 148 (buying) and Rs 149 (selling).

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Gwadar port contract review: senate body kept in the dark about progress ​* 
ISLAMABAD (July 08 2008): The government has kept the Upper House committee in the dark about progress made so far regarding the review of contract signed between the previous government and a consortium of Port of Singapore Authority and AKD Securities.

However, next meeting of the ECC is being convened at Gwadar to sort out all outstanding issues and to take on the spot decisions in consultation with relevant federal and provincial authorities. The Senate committee on Ports and Shipping met on Monday with Senator Gulshan Saeed in the chair to discuss development work issues of the port.

When the chairperson of the committee was asked by Business Recorder whether the committee had been taken into confidence regarding the decision of the Federal Cabinet on June 4, she replied in the negative.

"We have been informed by the minister that a committee has been constituted by the Cabinet to review the Gwadar Port Authority's revised bill for new corporate structure of the port," Gulshan said. Asked why the committee had not been taken into confidence, she said that what the Incharge Minister Qamar Zaman Kaira had apprised the committee that when the committee would reach any conclusion, the committee would be properly informed.

"The Gwadar Port Authority affairs and the contract with the foreign operator called for a thorough review of the whole issue in consultation with the Balochistan government," sources quoted Prime Minister Yousaf Raza Gilani as saying.

The Cabinet had on June 27 last year in its meeting had approved the draft bill for establishment of GPA subject to certain conditions including provision related to appointment of chairman and members of the board and their term of office etc. When Kaira was told that the committee had discussed the issue of 'contract review', he said that it was a separate issue and would be discussed separately.

According to official documents available with this scribe, the revised bill is more or less the same as was approved by the Cabinet headed by Shaukat Aziz. However, Ministry of Law and Justice had made minor amendments in section 2 of the proposed bill.

"As regards corporate structure of Gwadar Port, it is pointed out that the same is already there in view of the provisions of sub-section (2) of sector 4 of the bill where it has been categorically stated that the authority shall be a corporate body, having perpetual succession and common seal, with power, subject to the provision of the Act, to acquire, hold and dispose of property both moveable and immoveable and shall by its name sue and be sued." The general direction and administration of the authority and its powers have been vested in the board of the authority.

It appears that all the authority is a jurist as all its powers shall be exercised by the board consisting of a non-executive chairman along with 15 non-executive members. The committee, however, in its meeting expressed concerns over the slow pace of work on Gwadar port project and on under-construction highways providing connectivity of this port to other cities of the country.

In reply to a question, the chairperson of the committee said that federal government needs more land to construct extended facilities for the port for which it would hold negotiations with provincial government of Balochistan and private land owners of the area.

She said the committee stressed the government to at least make the port operational to the extent that it can be used as transit port for big ships. The Federal Minister for Ports and Shipping assured the committee that the government was taking all steps to ensure that the Gwadar Port would be made operational by the end of this year.

The Committee also expressed serious concern over the grant of land to the Housing Societies despite the fact that the Federal Cabinet had decided that as a sizeable land was required for the port, it will not be given to any other party.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Sialkot exports $900 million goods annually ​* 
SIALKOT (July 07 2008): Sialkot district is in the north-east of the Punjab province and situated on the feet of the snow-covered peaks of Kashmir near river Chenab. The Sialkot district is spread over an area of 3,016 square kilometres and consists of four tehsils, ie Sialkot, Daska, Pasrur and Sambrial while its total population is 272,348 according to the census of 1998 and population density is 1160 per square km.

The old city has a fascinating muddle of narrow and congested bazaars. The shrine of Hazrat Imam Ali-ul-Haq situated in old city while several shrines of the Shuhada are located in the same complex.

Similarly, the shrine of Hazrat Pir Muradia is situated on historic Sialkot fort. The shrine of renowned scholar Mullah Abdul Hakim Sialkoti, who is known as Fazil Lahori in Middle East, is also situated in the city. Sialkot is an important economic centre and the only export-oriented city in Pakistan. Development of local cottage industries in Sialkot has assumed a model status for the developing world.

Thousands of small and medium enterprises situated in and around the city, are engaged in honouring their global commitments for export of value-added quality goods like sports goods, surgical instruments, leather products, martial art, sports wear and musical instruments. The industrial sector is totally export-oriented and products produced in Sialkot are exported globally and the city is earning 900 million dollars yearly.

Sports goods, surgical and musical instrument industries are more than century old industries of this export-oriented city and nucleus of cottage industry. It is the distinction of Sialkot that the hands stitched soccer balls are made and export it for world soccer cups, European Championships and other international events.

The best cricket and hockey players of the world prefer to use bats and hockey sticks "Made in Sialkot" which has made Sialkot a "Household Name" all over the world. About 85 percent of total production of soccer ball of the world comes from Sialkot while all international brands are sourcing their supply of footballs from this export-oriented city and nucleus of cottage industry of the country.

Pakistan enjoys a unique position in the global trade with reference to sports goods and its main forte is hand stitched inflatable balls and such masterpieces were being produced and exported for around 100 years now.

On the other hand, soccer ball manufacturers and exporters were facing shortage because of size of trained and highly skilled soccer ball stitchers is reducing day by day due to non availability of training institute for producing fresh skilled and semi-skilled stitchers.

The surgical industry is enjoying monopolistic position globally because no other country can produce surgical instruments in the price range and variety. The total export of surgical instruments is approximately 191 million dollars during 2006-07 while the industry is producing 100 million instrument per annum of which 60 percent disposable and 40 percent reusable instruments.

As many as 1200 small and medium surgical units are functioning in and close to Sialkot and over 150,000 workers are engaged with surgical industry. Almost 74 percent production of surgical instruments is sold to United State of America, Germany, United Kingdom, Italy, UAE, France, Republic of Korea, Japan, Mexico and Australia while remaining 26 percent was being sold to rest of the world.

The average price of an instrument is 1.24 dollars, which is lowest in the world whereas the average price of German made instrument is about US 18 dollar. Due to low cost of local made surgical instruments, the surgical industry in enjoying monopolistic position globally.

Apart from this Readymade Garment Industry was also playing its tremendous role in strengthening the national economy through its exports of quality products. The industry was fulfilling 30 percent world-wide consumption of martial art uniform and resultantly become key source of foreign exchange earner.

Similarly Daska is also legendary and had a special repute in producing the agricultural inputs with traditional techniques and without any support of the government catering the needs of farmers and cultivators. Some 90 small and big agri-tools manufacturing units are functioning successfully in and close to Daska out of this 58 units are producing complete machinery while remaining units were producing components of agriculture machinery.

Daska is pioneer in manufactured the wheat straw chopper and rice stubble chopper machines in the very beginning and with the passage of time the industry is now producing hi-tech machinery to facilitate grower community of the Punjab.

The business tycoons of the city are not only engaged with exports but they are also fulfilling the social responsibilities with missionary zeal and commitment. The Sialkot Chamber of Commerce and Industry (SCCI) in collaboration with other trade bodies of the area initiated a unique Sialkot City Package Programme under which main arteries of the city have been constructed and work on remaining roads is in progress.

The business community of Sialkot has set up a matchless precedent by constructing mega project of Sialkot International Airport totally on self-help basis.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan's diesel exports to Afghanistan up 50 percent ​*
SINGAPORE (July 08 2008): Pakistan is exporting about 50 percent more diesel a month to Afghanistan to 100,000 tonnes from June to September versus the usual monthly volumes to help in reconstruction works, an industry source said on Monday.

Pakistan normally moves 50,000-70,000 tonnes of diesel each month to geographically challenging Afghanistan. During June to September last year, such cross-border flows were 60,000-70,000 tonnes a month, the source that is familiar with the flows said.

"Afghanistan is importing more gas oil for construction works. The country is rebuilding," said the Karachi-based source, which asked not to be named. But Pakistan has suspended jet fuel exports to Afghanistan since June 25. "The suspension is indefinite. Afghanistan is drawing jet fuel supplies from Iran," he added.

Pakistan used to send 10,000 tonnes of jet fuel to Afghanistan every month. Part of such diesel intake was for military consumption in Afghanistan, the source said. The United States has some 32,000 troops in Afghanistan - around 14,000 in the Nato-led force and some 18,000 performing missions from counter-terrorism to training Afghan forces.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*World Bank to provide $54 million loan to Iesco ​*
ISLAMABAD (July 07 2008): World Bank will give $54 million as first instalment of loan to Islamabad Electric Supply Company (Iesco) for improvements in its electricity distribution and transmission system.

Chief Executive Iesco Raja Abdul Ghafoor talking to APP said on Sunday that the amount will be spent to increase efficiency and quality of electricity supply by supporting reductions in overall technical and commercial losses and increasing availability of electricity besides improving voltage.

The company will also receive an amount of $32 million from Asian Development Bank (ADB) to improve electricity supply chain in its region, Iesco chief said.

He added the company has planned a number of projects to strengthen its network included distribution, rehabilitation and energy loss reduction, distribution of power to new consumers and rural electrification.

Raja Abdul Ghafoor said the company has provided 97,725 electricity connections to various consumers during one year while by the end of July a target of 101,380 connections will be achieved. He said during the period out of total the company has provided 86,826 connections to domestic consumers, 10,059 connections to commercial consumers, 497 connections to industrial consumers, 294 tubewell connections and 40 streetlights.

He said during the period three grid stations have been upgraded from 26MVA to 40MVA included Satellite, DHA and Chakri while Talagang and Bisal grid stations have been upgraded from 66MVA to 132MVA. He said under its contingency plan, the company has provided sufficient material at its complaint centres at all divisions to properly address citizens' complaints. He expressed the hope that load shedding hours will be reduced as the ministry has taken sincere steps to generate more electricity in the country reducing the gap between demand and supply.

Raja Abdul Ghafoor said to give relief to its consumers, the company has requested the concerned authority to reduce load shedding share of Iesco. He added the company is also implementing the directions of Minister for Water and Power regarding energy conservation and appealed citizens to help company to save energy.

He said the company under its awareness drive published pamphlets and brouchers to educate people to consume energy as it also helps reduction in electricity bills.

The Iesco chief said citizens should use energy saver bulbs instead of tube lights and ordinary bulbs which will not only save energy overall in the country but due to this power customers will receive affordable bills. He appealed commercial consumers to close shops before 8pm and avoid using additional lights in wedding halls, shopping plazas and hotels to save energy.

He said the company is strictly following load shedding schedule in rural and urban areas of the region and there is no discrimination in this regard. Replying to a question, he said company's officials and workers have been directed to address public complaints in time and no negligence will be tolerated in this regard. He said efforts are being made to make Iesco diversified, transitional and integrated power supply company with a strong environment conscience, playing a national role in electricity supply and distribution.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Big decline in telecom FDI in 2007-08 ​* 
ISLAMABAD (July 08 2008): After an impressive growth for two successive years, the foreign direct investment (FDI) in Pakistan telecom sector substantially declined during the last fiscal year, it is learnt. Sources said that FDI in telecom sector amounted to only $810.9 million during first three quarters of 2007-08, showing declining trend in the successive quarters against $1.824 billion for 2006-07.

Apart other reasons, the telecom experts believe that the uncertain law and order situation and political conditions also contributed to the decline. The data showed that after 37 percent share, with $363.90 million in total FDI of $962.5 million for the first quarter of last fiscal year, the investment in telecom sector dipped to $290 million in the second quarter of October-December 2008.

From $290 million in the second quarter, it declined to $156.6 million in the third quarter (Jan-March) with hardly 15.9 percent contribution in $982.2 million total FDI. The telecom sector with $1.824 billion FDI in 2006 emerged as major contributor in terms of foreign inflow but during last fiscal year the inflow in telecom sector was very low. Analysts believe that the declining trend should have continued in the last quarter as well.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Minfal to start 10 new schemes to enhance crop output ​*
ISLAMABAD (July 08 2008): Government will spend Rs 1503.224 million on 10 new schemes in food agriculture and livestock sector to further boost production of the sector. An official in the Ministry of Food Agriculture and Livestock (Minfal) said here Monday that government has allocated a huge amount of about Rs 20515.876 million for the development of agriculture sector for the financial year 2008-09.

He said special attention would be paid in crop and livestock sector to enhance crop and livestock production by introducing modern techniques of cultivation and to give trend to cultivate hybrid seeds to increase per hectare crop production.

Rupees 18 million will be spent on establishment of 'Monitoring of crop through satellite technology' to provide latest information to the growers of far-flung areas of country and to save the crop from insect attack, he added. Every year, a lot of area, under cotton crop is attacked by a deadly insect called Mealy bug and destroy the crop, this year Rs 150.224 million will be spent for eradication of the insect, he added.

The official said that National Pesticide Residue Monitoring System will be set up at a cost of Rs 20 million to check the quality and standard of pesticide and other chemical used in agriculture sector.

Rupees 500 million will be spent in "Wheat maximisation programme" to increase wheat production to fulfil the domestic consumption of wheat as well as to export, the official further added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*A stagnant tax: GDP ratio ​*
EDITORIAL (July 07 2008): Despite reform initiatives mounted by FBR, the ratio of direct taxes to GDP in Pakistan has remained stagnant at 3 percent over the last many years, which is the lowest ratio among the countries of this region, says a Recorder Report, quoting the FBR Quarterly Review. As compared to Pakistan, direct taxes in the region have assumed greater importance by becoming a major source of revenue generation for regional governments.

For instance, in India the proportion of direct taxes to total tax collection increased from 30.2 percent in 1995-96 to 45.1 percent in 2005-06, going up further to 48.8 percent in 2006-07, while the ratio of direct tax-to-GDP was only 2.8 percent in 1995-96, which improved to 5.6 percent in 2006-07, and is budgeted at 5.7 percent for 2007-08. The system there has not only been simplified; it also provides more incentives for compliance.

In emerging economies like Singapore, Malaysia and Indonesia, the direct tax-to-GDP ratio ranges between 6 and 7 percent. In contrast to this, the position of direct taxes in Pakistan has remained at around 3 percent for the last many years. Pakistan's tax regime largely resembles the one practised in Latin American countries, where indirect taxes, particularly the sales tax, account for a relatively higher share within the overall tax revenue.

The indirect tax-to-GDP ratio stands at around 4 percent and less than 2 percent if the withholding taxes are excluded. The FBR Quarterly Review has highlighted major reform initiatives undertaken by the Indian tax authorities, which have helped improve the overall direct tax collection. The tax authorities in India have introduced the Permanent Account Number (PAN) for all taxpayers which has to be quoted on tax returns in all financial transactions. This has helped the tax authorities to keep track of taxable income.

The revenue target set by Pakistan for the current fiscal is expected to reach one trillion rupees. The broadening of tax base will ensure fair distribution of the tax burden among various sectors of the economy. The overall services sector, including wholesale and retail trade, as well as agriculture are potential candidates for increasing collection. The tax base has remained narrow due to a wide range of exemptions and concessions as well as large-scale tax evasion. Secondly, the tax rates have been pitched at high levels, which has created a vicious circle of widespread evasion.

The revenue loss to the national exchequer due to tax exemptions declined by 51.2 percent to Rs 89.52 billion in 2007-08 against Rs 183.69 billion over the previous year. While comparisons with other countries can throw up useful lessons for us, there is a need to understand the composition of tax-GDP ratio in Pakistan before undertaking any similar exercise. The tax-to-GDP ratio declined in 2005 due to the re-basing of GDP by the Finance Ministry. Enhancing the tax-to-GDP ratio is essentially a policy issue that calls for determination of the parameters of composition of GDP and identification gaps.

The major causes of a low tax-to-GDP ratio in Pakistan include a narrow tax base, poor compliance by taxpayers, too many exemptions (the most notable being agriculture), the presence of a huge underground economy, and a serious mismatch between sectoral contributions in the tax-to-GDP ratio. There is a need for FBR to further broaden the tax base by effectively plugging all loopholes in the tax collection system. A thorough revamp of the entire tax machinery is also called for to remove the flaws that have kept our tax-to-GDP ratio one of the lowest in the region. Secondly, the camouflage of indirect taxation should be removed to make the system more transparent.

Business Recorder [Pakistan's First Financial Daily]


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## Nafees

*Focus on Pakistan's educational sector
By Farhan Bokhari, Special to Gulf News
Published: July 09, 2008, 00:07*

Pakistan's annual budget last month has been an opportunity to reflect upon the many challenges faced by the country as it seeks to consolidate itself in a rapidly changing world. But the budget has also been an occasion to consider some of the key areas of promise and success as Pakistan has tried to overcome its many pitfalls. 

Education and the neglect of the government owned school system are indeed a recurring theme in the country. But the success of the past decade in beginning to revitalise higher education in Pakistani universities is a case in point that needs to be almost celebrated. 

After years of continuing and blatant neglect of the university system, President Pervez Musharraf's regime - after taking charge of the country in 1999 - began, for the first time in years, to revitalise university level education. The key objectives of this exercise was essentially to bring Pakistani university level education on par with global standards.

It would be wrong to say that Pakistan has succeeded in achieving all of its objectives with regards to higher education. But it would be right to note that the track record of the past decade is impressive at a minimum.

There are many past legacies which have begun to be reversed during this time. In a country where students aspiring for a higher degree outside Pakistan and were denied that opportunity in the past have had the government supporting their ventures to foreign lands in search of academic excellence.



Improved

At the same time, the government has significantly improved the salaries of foreign-based Pakistani faculty members, thereby laying the basis for the return of many of those who would otherwise never consider teaching at a university in the country. 

Other ventures have included new measures to help universities overcome their internal weaknesses. They range from ranging the provision of funds to support the creation of new infrastructure to aiding in the revamp of syllabus. Almost simultaneously, Pakistan has begun embarking on the creation of a network of new universities, reversing a long legacy of neglect to this vital sector.

This overall trend fits into a two pronged pattern. On the one hand, higher education as a fundamental pillar of government policy cannot be neglected. While it is important to concentrate on schools as a fundamental pillar of educational policy, it is also significant to recognise that without a successful turn around in higher education, finding educators of tomorrow would be impossible.

On the other hand, supporting universities overcome their inherent gaps is essential to aid in the overall progress of state and society. No country can hope to flourish unless it has the ability to also oversee the spread of centres of knowledge, excellence and above all discourse.

Pakistan's outlook has suffered badly owing to the failure to discuss and debate issues of national relevance. Pakistani universities at one time did provide a credible forum to undertake such discussions on key challenges facing the country.

But the neglect of almost 20 years has now begun to pay off. It would therefore be a tragic outcome if Pakistan's newly elected government scales down on the government's support to higher education. This word of caution is an essential must in a country where the new government is trying to undo what has been done by its predecessors.

In the politically charged environment of today, it is possible that in undoing the successes of the previous government, the new regime may well decide to target higher education. If so, that would not only be a tragic proclamation upon an area which should otherwise be the source of national pride.

At a time when Pakistani politics is becoming once again intensely charged up, it is vital to protect what has been gained for higher education, and to take the success forward. The best way to do this is to begin celebrating the record of the past decade as an attempt in sincerity to revitalise university level education, while seeking to improve upon this further without dragging the issue through controversy - political or otherwise.



Farhan Bokhari is a Pakistan-based commentator who writes on political and economic matters.


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## Owais

*SBP takes measures to arrest rupee slide: central bank to make 100 percent oil payments*

KARACHI (July 09 2008): The State Bank on Tuesday took tight measures to safeguard Pak rupee from further decline against US dollar. In line with the measures, the State Bank of Pakistan will now make 100 percent oil payments, and has suspended afternoon session for all types of foreign exchange transactions by authorised dealers with their customers and in the interbank market.

The SBP has also suspended Forward Cover Facility (FCF) against imports and advance payment against imports cut to 25 percent with immediate effect to rationalise the foreign exchange markets. The SBP has taken these measures after continuous depreciation of Pak rupee in interbank as well as open market. Amending Exchange Companies Rules and Regulations, the SBP has further strengthened monitoring mechanism of transactions made through exchange companies.

The SBP said that authorised dealers were previously allowed forward booking against imports through Letter of Credit (L/C) basis. However, at present it has been decided to temporarily suspend forward booking against all types of imports, therefore, authorised dealers have been directed not to sell foreign exchange on forward basis against imports.

However, the SBP has allowed dealers to honour their commitments already made in accordance with the terms of related contracts subject to compliance of related rules and regulations. In another step the central bank has reduced the limit of advance payment against the imports.

The SBP has now decided that the said facility will be available only to the extent of 25 percent of the FOB or CFR value of the goods to be imported. Earlier, importers were allowed to effect advance payment to the extent of 50 percent of the FOB or CFR value.

Changing the policy regarding payments against import of POL products, the central bank has now decided that it will provide foreign exchange to the authorised dealer for the import of all categories of furnace oil and also against the above mentioned Form 'M' approvals.

However, the SBP will also continue to provide foreign exchange to banks for the import of all other POL products including those specified in point No 1 and 2 (as per EPD Circular letter No 12/Policy-2004 dated November 01, 2004). Whereas previously all purchases of foreign currency related to the import of furnace oil were made by the authorised dealers from the interbank market.

To maintain Pak rupee on a sustainable level, the SBP has also reduced the time for all types of foreign exchange transactions by authorised dealers with their customers and in the interbank market up to 2:00pm Monday through Thursday and up to 1:00pm for Friday and Saturday. Authorised dealers are, however, allowed to transact foreign exchange swap transactions in the interbank market up to 4:30pm Monday through Friday and up to 1:00pm on Saturday.

Interbank swaps would include normal swap transactions involving two simultaneous transactions with the same authorised dealer and exclude any structured Foreign Exchange Swaps ie two outright transactions with different authorised dealers. Similarly, the SBP has said that henceforth exchange companies (including A and B category) will be required to take prior approval of SBP for all transactions of US dollar 50,000 or above (or equivalent in other foreign currencies) on account of outward remittances or sale of foreign currencies to the customers.

However, this requirement will not be applicable to sale of foreign currency to the banks and exchange companies, the SBP added. Accordingly, the central bank has advised exchange companies to forward their related requests to SBP along with complete details of the transaction including particulars of the customer such as name, address, CNIC, amount and purpose of the transaction. The SBP has made it clear that failure to comply with the above instructions will attract severe regulatory action under related rules and regulations.

Business Recorder [Pakistan's First Financial Daily]


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## Owais

*Power plant feasibility study deadline: Chinese investors turn to ministry against PPIB move*

ISLAMABAD (July 09 2008): Chinese investors have sought the foreign ministry's assistance against the Private Power Infrastructure Board decision not to further extend the date of submission of a feasibility study of 250MW coal-based power plant, sources in the PPIB told Business Recorder.

The sources said that China National Machinery Import and Export Corporation (CMC), which is currently working on Sonda-Jherruck coal mine and power project, wrote a letter to Foreign Affairs Secretary Salman Bashir, reminding him of his endeavours to attract foreign investment, an objective that has been compromised by the PPIB decision.

Bashir was Pakistan's ambassador to China before being promoted to Foreign Affairs Secretary. He enjoys good relations with the Chinese government and investors in his personal capacity.

"As the project is the first of its kind in Pakistan and also the first for the CMC on BOT basis, there are host of complex issues that need to be resolved between the company and relevant organisations both in China and Pakistan," the sources quoted the company's Vice President Qin Ruijuan as stating in the letter.

The firm had also written a letter to the PPIB Managing Director, in which it said that the board decision might harm bilateral relations between the two countries. The sources said that a senior diplomat in the Chinese embassy has met with Water and Power Secretary Ismail Qureshi and conveyed him the Chinese government's reservations about the PPIB decision.

Giving the background development engagements, CMC, in its letter clarified that it was working for long time with relevant government agencies in Pakistan to develop the integrated coal mine and power project at Sonda-Jherruck in Thatta (Sindh) on BOT basis.

According to the company, detailed coal geological investigation for the project had already been completed in 2007 whereas feasibility study for the coal mines was completed and based on that, the mining licence was granted by Sindh government and lease deed was signed with the provincial government in 2008.

After signing the lease deed, the company was in the process of undertaking further hydro-geological investigative work to determine whether the adequacy of water resources for the power plant as the river nearby was unable to cater to the needs during the dry season.

"We have to look forward and we are preparing the second draft of technical and commercial proposals for review by the PPIB and other government authorities concerned," the sources quoted the company as saying. The company had submitted the first draft a couple of months ago to the organisations concerned.

According to the letter, the company has claimed that it was also working on a financial model for tariff which would be submitted to the National Electric Power Regulatory Authority (Nepra) for their information and comments. However, the company has admitted that as foreign investors, they lack experience and to some extent underestimated the situation, which led to the delay in submission of the feasibility study.

"We are making every effort to expedite the process but some issues were new to CMC as well as the authorities concerned, and are beyond our control and expectation," the company added.

The company has assured the Foreign Secretary that it would not like to enter any argument with regard to the 'reasons for delay', as it would cause unnecessary unpleasantness. However, the company was serious in undertaking the project as it has already invested $10 million and is making every effort to finalise the feasibility study as soon as possible.

On the other hand, PPIB is unwilling to further extend the deadline maintaining that such promises were made by the CMC through its representatives during their visit to Islamabad in the past, promises that were never fulfilled. However, if the company submits a bankable feasibility study for the project, then the PPIB, without any financial or legal obligation on its part, may review the study.

Business Recorder [Pakistan's First Financial Daily]


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## Owais

*Thar Coal Authority formed*


ISLAMABAD (July 09 2008): The federal government on Tuesday formed Thar Coal Authority to attract investment for coal mining and coal gasification at Thar and other areas in the Sindh province for power generation. According to official sources a notification has been issued in this regard by the Cabinet Division under which Prime Minister Syed Yousuf Raza Gilani has approved constitution of Thar Coal Authority.

Sources said Chief Minister Sindh will be the Chairman of the authority while Vice Chairman will be the Federal Minister for Water and Power and Deputy Chairman Planning Commission will be its Deputy Chairman.

Other members of the authority included Secretary Ministry of Water and Power, Chief Secretary Sindh and one minister from Sindh cabinet while Managing Director/Secretary of the authority will be appointed later who will also act as member of the authority.

Sources said after formation of this authority the government has abolished Thar Coal Mining Company and Sindh Coal Authority. They added the head office of the authority will be in Karachi.

Sources said the authority will act as a one-stop organisation on behalf of all ministries, departments, and agencies of the federal government and those of government of Sindh in the matter relating to development, leasing/sub-leasing at Thar, mining, development of clean coal technologies, R&D activities and other allied matters including gasification, priquetting on Thar coal.

The authority will be responsible to attract investment for coal mining and or coal gasification at Thar and other areas in the Sindh province, to be used for power generation and other purposes, by creating a conducive environment through conducting bankable feasibility and other relevant studies, resolving issue of cooling and drinking water, improving infrastructure and law and order and carrying aggressive marketing.

Business Recorder [Pakistan's First Financial Daily]


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## Owais

*SECP and KSE to set up Rs 50 billion market support fund*

KARACHI (July 09 2008): The Securities and Exchange Commission of Pakistan (SECP) and Karachi Stock Exchange (KSE) board meeting held here on Tuesday ended with a note to form a market support fund worth Rs 50 billion with the help of the institutions.

Sources said that SECP will arrange and co-ordinate with the institutions and board of KSE will give a presentation. "If everything goes right then the fund will inject liquidity after the July 15, 2008 meeting of locks revision", they added.

Meanwhile the SECP has decided to convene a meeting of three stock exchanges on Friday, July 11. The meeting would review and assess the impact of various market stabilisation measures of temporary nature decided during a meeting held on June 23 between SECP and Board of Directors and Management of Karachi Stock Exchange.

The SECP, in its press release said that the decisions to be taken during the upcoming meeting would be disseminated to the market participants along with their date of implementation.
Business Recorder [Pakistan's First Financial Daily]


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## Owais

*ADB seen inking $810m loan to Pakistan*

ISLAMABAD (updated on: July 09, 2008, 13:04 PST): The Asian Development Bank (ADB) has negotiated a credit facility of $810 million dollars with Pakistan for power projects, and the inflows are expected to begin in September, an official said on Wednesday.

"The facility to be implemented over the next 10 years has been negotiated with power distribution companies and the formal approval by the bank is expected in August," said an official with knowledge of the transaction.

"The disbursement is likely to start from September or October," said the official, who declined to be identified.

brecorder.com


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## Neo

*Rupees plunge swells external debt by $5.4bn ​* 
Wednesday, July 09, 2008

ISLAMABAD: Pakistans economy has to bear a $5.4 billion increase in external debt as a result of rupees depreciation against worlds major currencies. This came due to mismanagement on the part of governments economic planners as they neither hedged the currency nor took risk management measures, The News has learnt.

Due to this huge rise in liabilities, the countrys external debt during July-March 2007-08 increased to $44.6 billion. Interestingly, this huge increase was not because of increased borrowing from external sources but was due to negligence of the economic policy-makers.

Ironically, the finance ministrys Debt Office, established for risk management associated with government borrowing, has not adequate experts. The risk management side of the Debt Office is manned by two financial analysts and both reportedly lack expertise in the subject or exposure to financial markets.

The irony is that the economy has to absorb a double blow in the shape of rupee depreciation against the US dollar and the greenback losing value against worlds major currencies like Japanese yen, euro and others which multiplied the burden.

Economic pundits believe that with one rupee appreciation in the US dollar, Pakistans external debt increases by Rs45 billion. It is interesting to note that during fiscal year 2007-08, the greenback appreciated against the rupee by more than seven rupees.

Dollar depreciation against major world currencies was also worsening the countrys debt position and piling up the stock of external debt in dollar terms.

Pakistans external debt is contracted and thus denominated in multiple currencies but for accounting purposes, it is reported in equivalent US dollars. Thus, shifts in cross exchange rates among various currencies, especially against the dollar, are translated into changes in the dollar value of the outstanding stock of external debt.

Though the government was experiencing a huge current account deficit and each month it was rising by more than a billion dollars and there was strong anticipation of rupee depreciation against major currencies, the government was unaware of its implications on the debt stock or made no efforts to manage it. During July-May 2007-08, the current account deficit stood at an all-time high of $13.38 billion (about 7.8 per cent of the GDP).

It is also interesting to note that the government was also noticing huge twin deficits (current and budget deficit) of the US economy and it was projected that the dollar would shed value against hard currencies like Japanese yen, euro, SDR and others.

On the other hand, economic managers of the government did not assess its impact on the local economy and especially on external payments and debt or had no experience to manage the hit on the economy.

In the inter-bank market, the rupee depreciated against the dollar by Rs7.69 or (12.67 per cent) for buying and selling at Rs68.40 and Rs68.45 as compared to the corresponding period last year when the dollar stood at Rs60.72 (buying) and Rs60.74 (selling).

In the open market, it depreciated by Rs7.65 (12.56 per cent) against the US dollar during the period under review at Rs68.55 and Rs68.70 against Rs60.90 and Rs60.99 in the last fiscal.

During July-March 2007-08, total disbursements amounted to $2.065 billion and repayment of principal was $878 million. The net impact of these two factors increased the stock of public and publicly guaranteed debt by $1.187 billion.

The rest of the net addition of $4.163 billion in the total addition in the external debt stock of $5.4 billion was the result of depreciation of the US dollar against hard currencies like Japanese yen, euro, SDR and others.

Pakistan benefited from the exchange rate fluctuations for many years in the past, particularly when major currencies were depreciating against the dollar. Unfortunately, in FY 2007-08, Pakistan was on the receiving end.

During these nine months, the US dollar depreciated against the Japanese yen, euro and SDR by 18.7 per cent, 14.9 per cent and 8.2 percent, respectively. Thus the exchange rate movements during the period have caused changes in the reported US dollar equivalent amount of $4.2 billion while net new disbursement impact was just $1.2 billion.

The outstanding stock in yen alone witnessed a rise of $2.2 billion because of massive appreciation of yen against the US dollar. The exchange rate variation in the euro cost an additional $915 million to the external debt.

Rupees plunge swells external debt by $5.4bn


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## Neo

*PEPCO capacity to rise to 20,000MW by end-2009 ​* 
Wednesday, July 09, 2008

LAHORE: Installed capacity of Pakistan Electric Power Companys system would increase from 17,834 megawatts to 20,085MW by the end of 2009, which along with conservation measures would help overcome power deficit in the country.

The PEPCO, in a press release, claimed that gradual improvement in its generation system had improved power supply in the country. Out of 17,834MW installed capacity, the PEPCO system has dependable power availability of only 15,926MW. 

This would increase to 16,327MW this year and would further rise to 20,085MW by December 2009. The capacity would then reach 24,812MW by 2012.

The PEPCO pointed out that demand side measures to conserve 1,500MW would also mitigate the problem of power outages.

It further said PEPCO and IPP generation was impacted during the past few months due to financial constraints. However, the situation is now improving and would add 100-1,500MW of energy to the system by the end of 2008.

The PEPCO praised its consumers for bearing the shortages and assured them that they would feel improvement in electricity supplies from now onwards.

PEPCO capacity to rise to 20,000MW by end-2009


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## Neo

*Pakistani rupee hits record low, crosses 73 per dollar​*
KARACHI: The Pakistani rupee was 2.9 percent weaker at a record low of 73.04 to the dollar on Tuesday because of worries about inflation, widening budget and current account deficits and security, dealers said. The rupee had closed at 71.00/05 on Monday.

The currency is also under pressure from a rise in demand for dollars from importers, particularly for oil payments. The whole macroeconomic picture is very bleak, with inflation at a three-decade high, widening twin deficits and depleting reserves, one currency dealer said. Dealers said that recent bombings, including a weekend suicide attack in the capital and six small blasts in Karachi on Monday, compounded the worries.

The rupee is now well below levels seen in late May, when a precipitous fall prompted the central bank to take steps, including raising the discount rate to 12 percent from 10.5 percent, to stabilise the currency and dampen speculation.

The rupee has fallen over 18 percent against the dollar this year as annual inflation accelerated to a three-decade high of 19.27 percent in May and fiscal and current account deficits have widened.

Traders said intervention by the central bank, which closely shepherds the exchange rate, would stabilise the rupee in the short run but the State Banks reserves were running low because of the weight of demand for dollars from importers.

According to official figures, $1.42 billion in foreign reserves was used to cover the oil import bill in May. The monthly average between February and May was $1.27 billion. With rising oil prices, the import bill was expected to increase and, with foreign reserves of $11.3 billion, analysts said the outlook was bleak.

They said reserves were sufficient to cover imports for nearly three months but, according to one widely used benchmark, a country should have enough cover for six months. Traders said the central bank would probably have to raise interest rates in a policy review later this month to try to bring prices under control. In a presentation to President Pervez Musharraf on Saturday, the governor of the State Bank said rising international fuel and commodity prices had considerably increased the pressure on the balance of payments, fiscal accounts and inflation.

In what analysts said could be a hint of further tightening, Governor Shamshad Akhtar said a number of developing and developed countries were pursuing tight monetary policies to contain inflation and to mitigate its impact on long-term growth.

Analysts fear political infighting is distracting government attention from restoring economic stability, although the budget announced last month set targets to bring down an unsustainable fiscal deficit, and the government is seeking loans from friendly governments and multilateral lenders. reuters

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan ranked lowest in shrimp hatching in the region​*
KARACHI: Despite conducive environment, adequate climate and availability of vast cultivable area for shrimp hatchery, Pakistan is currently ranked lowest compared to other countries of the region.

The speakers at the inauguration of Advanced Training Course on Shrimp Hatchery Management arranged by Sindh Fisheries Department in collaboration with Pakistan Fisheries Research Institute Tuesday attributed this owing to lack of commitment and political will by the successive governments.

Sindh Minister for Fisheries, Zahid Ali Bhugari, admitted that this sector was grossly overlooked by successive past governments failing to realize potential of the shrimp farming towards strengthening of the national economy.

He blamed private sector for its failure to come forward and play its due role in promoting shrimp hatchery in the country. Present government has resolved to promote aqua culture in the province and in this regard a summary regarding allocation of 20,000 hectares of land for promotion of fisheries sector was also sent to the Sindh Chief Minister for his approval.

According to him, he had recently attended a conference on Tuna Fish in Thailand where he was amazed to see its overwhelming demand among the participants.

This kind if fish is abundantly found in the country and compared to local price of Rs 60 to Rs 70 per kg, it is sold in US at stunning high rate of $41 per kg indicating a vast opportunity for the country to earn precious foreign exchange through its export he added. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Telecom firm, three banks join hands to launch mobile commerce​*
KARACHI: Mobilink launched Mobilink Genie on Tuesday in partnership with Inov8, CitiBank, KASB, Atlas Bank and Adamjee Insurance heralding the onset of mobile commerce in Pakistan.

Mobilink Genie is a mobile payment solution, enabling Mobilink customers to use their mobile phones to buy a combination of products of their choice and pay for a mix of utility and general services. The program is in compliance with regulatory guidelines and safe for transactions, said a press release issued here.

The Mobilink Genie includes instant service on all GPRS/Java supporting hand-held devices covering payment of utility bills including electricity, gas, telephone; payment of Indigo bill & loading or recharging any Jazz account.

In due course in time, options like booking airline tickets, confirming and paying for flights, groceries and home shopping, paying fees of schools, universities, clubs and retail payments of restaurants and fuel will also be available on Mobilink Genie.

With Mobilink, 92% un-banked Pakistani population can have the privilege of accessing financial services from their mobile phones.

Hasnain Sheikh, the CEO of Inov8, said, Everything from multiple bill/utility payments, credit card, mobile bill & insurance premium payments, prepaid airtime top-up, selling of new micro insurance products and a number of other services are available from your Mobilink phone, anytime and anywhere.

Naeem Siddiqui, the head of Cards Business Head of CitiBank, said, Mobilink Genie brings mobile-commerce and banking services right to the consumers doorstep and provides integrated services such as utility bill payments via customers credit card.

Muneer Kamal, the CEO of KASB, said, Genie represents the beginning of a new era of mobile commerce. Genie compliments both Mobilink and the member banks, while providing service excellence to both our customers.

Ghufran Atta Khan, the head of Retail & Consumer Banking of Atlas Bank, said, Our partnership with Mobilink for the launch of Genie, the next generation payments solution, will deliver an unparalleled, secure and convenient service that is the first step towards this commitment.

Yahya Hamid, the CIO and head of Product Development at Adamjee Insurance, said, Now all customers of Mobilink can access our range of new ... Adamjee Catch products and get insured instantly.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan can earn up to $500m by promoting Sikh tourism​*
** Indian editor says Sikhs should be permitted to land directly at Lahore Airport​*
LAHORE: Pakistan can earn up to $500 million per year by promoting Sikh tourism and allowing tourists to land directly at the Lahore airport, editor of daily Aj Di Awaaz and monthly Punjab Times Baljit Singh Brar told Daily Times on Tuesday.

Brar is in Pakistan to visit Sikh religious sites. He pointed out the merits and demerits of bilateral relations between Pakistan and India and gave several suggestions.

Lahore Airport: Brar said that Sikh tourists from across the world could boost Pakistans economy if they were given permission to land directly at the Lahore airport. He said the Lahore airport was better compared to the Amritsar airport. Brar said that it would be beneficial to Sikh traders, who otherwise had to land at Delhi airport, which is quite a distance from Amritsar. He added that less than 20,000 Sikh pilgrims visited Pakistan each year to participate in four major religious events.

Brar said that if the Lahore airport were opened for Sikhs, about half a million Sikhs would visit Pakistan every year. He said the Pakistan government was considering increasing the number of Sikh events in a year from four to nine. Brar said the decision would enable thousands of Sikhs to visit Pakistan every month.

Visa treaty: Brar said that Sikh tourism should be promoted in Pakistan. He said the Indo-Pak visa treaty, which restricts the issuance of tourist visas for travel between the countries, should be amended. He added that tourist visas should be given to applicants on a war footing basis in order to promote Sikh tourism in Pakistan. Brar added that the Pakistani embassy in India should issue more visas to pilgrims.

Brar said that exchange of delegations between both countries have decreased because Pakistan and India are not sincere in bringing Lahore and Amritsar closer. He said that malicious elements existed in both governments, who did not want to see peaceful relations between Delhi and Islamabad.

Brar rejected the Indian impression that if a citizen would visit Pakistan they would be refused visas for Western countries. Brar stressed that Sikh pilgrims should be allowed to come through the Wagha border. He said that only one joint checkpost should be set up at Wagha in order to facilitate visitors. He added that intelligence agencies from both sides should stop questioning pilgrims. Brar said that journalists should be allowed to move freely across the border. He added that they should not be bothered by intelligence agencies during their visit.

Brar compared the Pakistan Sikh Gurdwara Parbandhak Committee (PSGPC) and Shiromani Gurdwara Parbandhak Committee (SGPC) and praised the PSGPC. He said that the SGPC should take suggestions from the PSGPC in conducting its religious affairs. He said the PSGPC should set up a counter at the Pakistan embassy in Delhi to accommodate Sikh pilgrims.

Brar said that Gurdwara Kartarpur at Narowal was not fit and should be rehabilitated. He said that a lot of resources and manpower were needed for the restoration work.

Daily Times - Leading News Resource of Pakistan


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## Neo

*4,000 houses ready for Balakot quake victims​*
ISLAMABAD: Saudi Public Assistance for Pakistan Earthquake Victims (SPAPEV), a Saudi relief organisation, has completed 4,000 houses at the cost of $18.5 million to resettle the Balakot earthquake affected people.

Addressing a ceremony organised here to celebrate the completion of housing project, SPAPEV Regional Director Dr Khalid M Al-Othmani said keys of most of the houses had been handed over to the displaced families and the remaining would be handed over shortly.

He told media that after the devastating quake of October 8, 2005, international welfare organisations, government agencies and Pakistan Army rushed to the quake-ravaged areas and started rescue and relief operation on emergency basis. Othmani said a huge amount was required to revive the destroyed infrastructure in quake-stricken areas.

He said SPAVEC started working in quake-hit areas under the directives of Saudi King Abdullah Bin Abdul Aziz, supervision of Prince Naif Bin Abdul Aziz Al-Saud, Saudi Interior Minister and guidance of Dr Saed Al Harithy, advisor to interior minister who is also the SPAPEV chairman.

He said besides rescue and relief operation, SPAPEV started consultation with ERRA for rebuilding the areas affected by the earthquake. According to the talks with ERRA, SPAPEV decided to first rebuild the most affected areas of Pakistan, he added. Othmani said a project of $18.5 million for the construction of 4,000 houses comprising two bedrooms, kitchen, toilets, and a veranda was started in Balakot area. He said the project had been completed to accommodate 4,000 families in the houses.

Addressing the ceremony, the Saudi Arabia ambassador appreciated the tireless efforts of SPAPEV to complete the projects of assistance to the victims of the earthquake.

He reassured that the government and the people of Saudi Arabia would help in completing further relief projects in the shortest possible time.

Later, NWFP Governor Owais Ahmed Ghani thanked the Saudi Arabia and particularly SPAPEV, for their help.

Gen Farooq Ahmed, ERRA Deputy Chairman Lt General Sajjad Akram and SPAPEV Secretary General Fahad Al-Mubarak were also present on this occasion.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan fails to exploit CDM potential​*
ISLAMABAD: Pakistan has so far failed to exploit the huge Clean Development Mechanism (CDM) potential mainly due to bureaucratic inefficiency to mobilise investment in this sector, sources said.

Initially, the country can earn carbon credits worth $ 100 million per year that could be gradually increased to $ 1 billion per year in the coming years, but so far this potential remains untapped, they said.

CDM is an arrangement under the Kyoto Protocol allowing industrialised countries with a greenhouse gas reduction commitment to invest in projects that reduce emissions in developing countries as an alternative to more expensive emission reductions in their own countries.

The investment in CDM reduces CO2 emission, which is converted into carbon credits through a pre-determined formula. The carbon credits are saleable commodity and are mostly bought by rich western nations. Already the carbon credit market has become a multi billion-dollar market. The sources said after signing the Kyoto Protocol in 2005 the government immediately set up CDM Cell in the Ministry of Environment to promote investment in the CDM sector but it failed to generate momentum for investment.

The greatest potential is in the renewable energy sector, especially wind and bio gas followed by agriculture and textile, but we are not targeting these sectors for CDM technology, they said.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Naik orders audit of $350m AJP​*
ISLAMABAD: Federal Law Minister Farooq H Naik on Tuesday ordered an audit of the $350 million Access to Justice Programme (AJP) and the freezing of a $26 million balanced amount, sources said.

The balanced amount is what remained after expenses were incurred on the construction of court buildings in different parts of the country.

The sources said the audit was ordered following reports of misuse of AJP funds. The AJP was launched by the government in December 2001with the assistance of the Asian Development Bank (ADB). The Ministry of Law was the executing agency for the programme.

The AJP aimed at contributing to poverty alleviation through improved rule of law and transparent, legitimate and accountable governance. Dealing with a large number of federal and provincial institutions, it was a complex programme, designed to implement at least 64 key reforms supported by additional institutional and complementary actions. AJPs core rationale was vulnerability, which means, in effect, that providing quality justice to the vulnerable. masood rehman

Daily Times - Leading News Resource of Pakistan


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## Neo

*Plan to air-link Mirpur with rest of the world​*
MIRPUR (July 09 2008): AJK government is contemplating to air-link Azad Jammu Kashmir's fast expanding model city of Mirpur with rest of the world through the establishment of an international airport in order to provide direct air travelling facilities to the people of Mirpur, official sources said.

Prime Minister Sardar Attique-led AJK government has already decided to establish an airline of Azad Jammu and Kashmir with the name of Kashmir Airline besides the emergence of a full-fledge international airport in Mirpur with the major involvement of the private investment, the sources told APP here Tuesday.

The proposed Mirpur International airport would provide direct air travelling facilities to the overseas Kashmiris, including UK-based settlers hailing from the area, to their ancestral town of Mirpur. A bright potential is already available in the area to materialise the plan, which would indeed, prove to be the strong source of the local economy of AJK, the sources added.

Highlighting various other development projects proposed to be launched in Mirpur under a phased programme during the current fiscal year 2008-09, the sources said that a mega Industrial zone was also being established over an area of 15,000 kanals of land in Mirpur for the speedy industrialisation of AJK. It would also help to encourage the economy of self-reliance in the area.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Ufone to spend $200 million on network expansion this year​*
ISLAMABAD (July 09 2008): Ufone would spend 200 million dollars on its network expansion to ensure quality and affordable services to its around 17 million subscribers during the current financial year.

This nation-wide expansion was an ongoing process and the company would continue its practice of investing more to facilitate subscribers, said Ufone President and Chief Executive Officer Abdul Aziz while talking to a private television channel.

He said the expansion programme was being carried out technically in a way that the quality of network was not disturbed. He said "the quality of service is Ufone's motto and it would never compromise on it for which we were continuously conducting surveys to get feed back from our customers. I himself monitors the process of surveys to ensure better services."

He said the company also planned to attract more than six million new subscribers during this financial year. This programme also includes upgrading of existing infrastructure with strong focus on coverage and high network quality of service, massive expansion of cell cites nation-wide and enhancement of existing GPRS capacity and service.

About some complaints on quality of service in some areas including Islamabad, Ufone possesses a huge network and if there were any complaints, company's dedicated staff responds promptly to address the problem. "I think currently there was not any congestion in the network anywhere in the country," he added. Answering a question on new telecom policy, he said the policy formed in 2004 was a good and comprehensive document but we would propose some suggestions in the new policy, keeping in view our telecom sector experience.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Huawei to deploy WiMAX network in Pakistan​*
ISLAMABAD (July 07 2008): China's Huawei Technologies said on Wednesday it has been selected by Mobilink, the largest GSM operator in Pakistan and a subsidiary of Orascom Telecom, to deploy a commercial WiMAX 16e network.

Huawei said the network will cover central business districts and hot spots in Islamabad, Karachi, Sialkot, Lahore, Faisalabad and Rawalpindi, CNBC reported. Under the terms of the contract, Huawei will provide Mobilink with a WiMAX solution to help the company meet Pakistan's increasing broadband needs.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Private sector allowed to import wheat for re-export of atta to Kabul​*
ISLAMABAD (July 09 2008): The government has allowed the private sector to import wheat, convert it into flour, and re-export to Afghanistan on international prices, official sources told Business Recorder. This decision was taken by the Economic Co-ordination Committee (ECC) of the Cabinet in its recent meeting on a proposal of the Ministry of Food, Agriculture and Livestock (Minfal).

Sources said that some private sector importers had approached Minfal suggesting that they be allowed to import wheat on their own, convert it into flour, and re-export it to Afghanistan.

They said that Minfal backed the importers' proposal, in principle, with comments that if the government allowed them they would have to develop a foolproof mechanism to ensure re-export of imported wheat flour. The ECC approved the proposal, with the condition that the private sector would have to re-export flour to Afghanistan on international prices, and not on subsidised rates.

The Federal Board of Revenue (FBR) was already working with Commerce Ministry to review Afghan Transit Trade Agreement (ATTA) as this mechanism was said to be hurting local industry. Pakistan will be exporting 50,000 tons wheat to Afghanistan on subsidised rates, despite the fact that the two countries are not enjoying good diplomatic relations.

This deal would be at official level between Islamabad and Kabul as the former has already prohibited flour export to Afghanistan by private sector on the recommendations of the Federal Food Committee (FFC). However, wheat was still being smuggled to Afghanistan through different channels, which were not properly monitored by the law enforcing agencies. Sources said that the two countries have re-invented the mechanism to facilitate export to Afghanistan after high level contacts.

They said that the Ministry of Foreign Affairs had sought bids from different private sector parties to dispatch 50,000 tons wheat to Kabul from the depots of Passco situated in Bahawalnagar and Hafizabad (Gujranwala).

They said that Commerce Ministry had directed the Trading Corporation of Pakistan (TCP) to re-write new terms and conditions for flour export to Kabul, adding that efforts should be made that officials of any country, having knowledge of the export indents, should not misuse the mechanism for personal gains. Officials believe that the possibility of manoeuvring by the negotiating with officials of both countries could not be ruled out, but maximum efforts have been made to ensure transparency in the deals.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*This opportunity must not be wasted​*
By Faris Islam

ARTICLE (July 09 2008): With the tribal areas possibly full of resources, and our own economy starting to slow down, providing a secure climate in these mountainous areas could improve the country's investment prospects. As negotiations only give militants more time to rearm, the action must be continued if the government hopes to bring peace and prosperity to the nation.

This will buy the government the time it needs to develop the areas and use public diplomacy to win over the hearts and minds of the people. Additionally, mega-projects in the tribal areas - funded by a combination of foreign governments, our own government, NGOs and the private sector could provide the revitalisation needed to keep the Pakistani economy at large stable during this economic slowdown.

Though Reconstruction Opportunity Zones are already in the offing, time is of the essence in the race to build a viable economy in the region, before militants can build a formidable armoury.

The government must expedite work to explore the potential hydrocarbon reserves within the tribal areas but also improve the lives of the people tangibly. Experts at the University of Peshawar are already hopeful that FATA has huge hydrocarbon reserves and various companies including OGDCL, PPL and ENI Limited have already indicated their possible interest in investing in the region. This could be the fountain of wealth that drenches the tribal areas with investment and opportunities.

In addition to these long-term steps, quick results could also show the people of the tribal areas that the government is serious about helping them now. Building roads and houses, electrifying villages and providing micro-financing in the area will all have realistic effects on the lives of the people, and could also provide the engine for increased growth in our construction, electric and financial industries.

As foreign nations are at least as eager to give economic assistance to the tribal areas as they have been to the rest of the country, these soft loans and grants could contribute more towards efforts against terrorism and extremism than any missile strike.

With the enormous potential the region offers for so many industries, this opportunity is one that must not be wasted - with foreign government willing to donate more and more money, with industries eager to continue business and with a region desperate for development.

The final impetus lies in the simple logic of having the people reject terrorism and deal with it on their own. When the Pakistani government is no longer the force blocking roads and destroying houses, but rather the people re-carpeting the streets and providing housing, then the war on terror will be won.

While allowing time for the much-vaunted development of these areas to take place, the government must also refine and communicate its alternate vision to the people.

The people in the tribal areas can be the most effective tool against terrorism if the government can manage to harness them to work with the government and not against them. To do this, Pakistan must provide the people of FATA a vision of what we hope we can all become - a tolerant, developed and peaceful society - and allow this to compete with the Taliban's view of a society. The writer is as intern at Business Recorder and is currently studying Political Science and History at Tufts University in US.

Business Recorder [Pakistan's First Financial Daily]


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## Skywalker

Mounting trade deficit touches $20.7 billion




By Mubarak Zeb Khan

ISLAMABAD, July 9: With imports not keeping pace with export growth, the country&#8217;s trade deficit ballooned to an unprecedented $20.745 billion during the outgoing fiscal year (2007-08) &#8212; up by 52.95 per cent from $13.563 billion in the previous year.

High oil import costs continue to increase the deficit, and rising oil prices are making things tough for the government.

The trade deficit climbed to 12.3 per cent of GDP during 2007-08 from 9.4 per cent the previous year. In June, the import bill amounted to $4.025 billion and exports reached $2.053 billion, showing a deficit of $1.971 million.

After missing the target for two years running, exports touched an unexpected $19.22 billion during 2007-08, up by 13.23 per cent from $16.976 billion in the previous year. The target for the outgoing fiscal year was $19.2 billion, which was achieved on the back of rupee depreciation and unexpected growth in exports of non-textile products.

Figures released here on Wednesday by the Federal Bureau of Statistics (FBS) showed that the import bill jumped to an all-time high of $39.968 billion during 2007-08 against $30.539 billion a year earlier --- an increase of 30.87 per cent. For the first time, the government had not set any target for imports during 2007-08.

Analysts said the unprecedented increase in trade deficit was due to a rise in import prices of eight major commodities, inflating the import bill by $4.5 billion.

The import bill of petroleum products swelled by $1.623 billion, petroleum crude $1.150 billion, fertiliser $542.4 million, palm oil $480.8 million, plastic material $117.1 million, medicinal products $76 million, iron and steel $49.5 million and soybean oil by $59.9 million.

On the import of wheat alone, the country spent $800 million to overcome shortage.

Official statistics show the government spent more than Rs40 billion on importing cotton because a pest attack on the crop resulted in lower yields.

The oil import bill for the outgoing financial year is estimated to have swelled to $12 billion, from $7 billion in the previous year -- an increase of 71.4 per cent.

However, the import of industrial raw materials and machinery declined during 2007-08 which also saw industrial output declining by four per cent.

Textile exports have witnessed a negative growth over the past few months and it may not cross even the $10 billion mark this year. The performance of the textile industry was far from satisfactory during the outgoing fiscal year.

An official said that achievement of the export target was the only bright spot, mainly because of depreciation of the rupee and diversification of exports through trade diplomacy of the previous government.

Former commerce minister Humayun Akhtar Khan criticised the previous government&#8217;s policy for not depreciating the overvalued rupee against the dollar which, according to him, had affected exports.

He said the last government had focussed on increase in imports to generate maximum revenue and reduce debt-to-GDP ratio. This points to the fact that a natural diversification of exports is now under way -- moving away from conventional textile products to new items, including food and petroleum products. However, the pace of diversification has been slow.

Analysts say that the current food price hike at the international level has provided an opportunity to Pakistani farmers to bring more areas under cultivation.


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## Neo

*Big apparel export houses close, leaving thousands jobless ​* 
Thursday, July 10, 2008

LAHORE: Some renowned export companies in the apparel sector have closed down in recent months, rendering about 50,000 skilled workers jobless while the survival of remaining manufacturers hinges on continuation of research and development support.

The News has found that some big names like Needle Point, Style Textiles, Navina, Highnoon, Angora, Klaas, Ammar, Sarah and one unit of Irfan Textiles have been forced to shut down their operations. Each of these employed a minimum of 3,000 workers. In addition, scores of smaller units have also been closed down due to their inability to match the prices offered by exporters in competing economies.

Apparel exporters point out that the closure of so many big units came when the government was providing 6 per cent R&D grant. They say credit goes to surviving units which have accepted the challenge of competing suppliers as they have achieved maximum efficiency to remain in the business.

They say it was in fact the R&D support that helped the surviving exporters to cover their losses and achieve 3 to 4 per cent profit. However, these units would also succumb to the pressure without the R&D facility. Any reduction in the support would be equally devastating for them, they point out.

What puzzles the apparel exporters is that the National Assembly has approved Rs20 billion for this purpose in the Finance Bill. This is 15 per cent higher than the R&D grant provided by the government to the textile sector in 2007-08. The exporters are surprised over the reluctance of the government to announce a clear R&D policy. They are equally bewildered by the governments apparent tilt towards low-value fabric and printed fabric exporters.

One leading knitwear exporter, commenting on the situation, says he has five knitwear units established at a cost of Rs500 million, employing over 5,000 workers. He also owns a spinning mill established at a cost of Rs750 million but it employees only 500 workers. He says spinning and fabric are capital-intensive industries which need few workers and if a medium-sized apparel industry is closed down 2,000 to 3,000 workers would lose their jobs.

The apparel sector, he adds, has no problem if the government wants to reward any other sector with higher R&D facility. However, this should not be done at the expense of apparel exporters who are demanding continuation of the facility as granted to them in 2004-05.

According to statistics available with the Ministry of Textile, the government provided Rs5.754 billion R&D grant to the garment sector in 2004-05. Home textile sector was included in the R&D programme in 2006-07 when it was provided Rs4.618 billion while the garment industry got Rs9.305 billion. Cumulative support provided to the textile sector during the first nine months of the last fiscal amounted to Rs12.806 billion. Out of these, the garment sector got Rs6.774 billion and home textile Rs6.032 billion.

If the support for next three months is calculated on the basis of the average of first nine months, the entire support for 2007-08 would come to Rs17.074 billion.

The amount allocated for the R&D support this year is Rs20 billion. Textile experts say textile exports would grow by 3 per cent this year and the balance amount could be used to reward the companies with higher exports.

Big apparel export houses close, leaving thousands jobless


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## Neo

* Finance minister seeks bankers' inputs on economy ​* 
Thursday, July 10, 2008

KARACHI: Federal Finance Minister Naveed Qamar held an interactive session with presidents and chief executives of different commercial banks and sought their inputs on the overall economic condition of the country here on Wednesday.

Chairman Pakistan Banks Association (PBA) Aftab Manzoor told The News that it was a general meeting in which the bankers updated the minister about details of the pending taxation issue of banks, problems in recovery of consumer financing, besides steps taken by the Competition Commission of Pakistan (CCP) in which it penalised seven banks and Pakistan Banks Association (PBA) for their involvement in anti-competition practices.

He said that the bankers also apprised the minister of their apprehension with respect to recent off beam rumours regarding inclusion of the names of some bankers in the Exit Control List (ECL). The bankers emphasised that a mechanism should be evolved in consultation with the State Bank of Pakistan (SBP), the major regulator of banks, so that the bankers could work in a conducive environment.

He said that the finance minister asked bankers to support the current economic policies of the government and also sought their cooperation for SBPs current move in stabilising forex trade in the country. The bankers assured their full support for current measures taken by the SBP in order to cease the freefall of the rupee against the dollar. The meeting was of the unanimous view that countries like Pakistan could not afford import of mobile phones and luxury cars worth billions of dollars every year, particularly in the current economic conditions.

Finance minister seeks bankers' inputs on economy


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## Neo

*Pakistan could tighten monetary policy further to fight inflation ​* 
Thursday, July 10, 2008

KUALA LUMPUR: Pakistan is ready to tighten monetary policy further to fight inflation, a senior finance official said on Wednesday, stressing the authorities commitment to getting inflation down from a three-decade high above 19 per cent.

Some people argue that further monetary tightening may not be very useful, but the whole problem is that we are not willing to compromise on inflation, said Hina Rabbani Khar, special assistant to the prime minister on finance and economic affairs.

So if that requires more tightening, yes, she told Reuters in an interview in the Malaysian capital, Kuala Lumpur.

Many analysts believe an interest rate rise is imminent, but she declined to comment.

All I am saying is that there are certain things that you are committed to. And more than cheap money and cheap credit, we are more committed to holding on to inflation.

In May the Pakistani central bank increased its discount rate to 12 per cent from 10.5 per cent to counter inflation and widening fiscal and current account deficits.

It then announced an increase in the cash reserve requirement (CRR), the ratio of cash banks must keep in reserve with the central bank, to 9 per cent from 8 per cent of deposits up to one-year maturity.

Balance of payments: For the 2007/08 fiscal year that ended on June 30, the government expects its budget deficit to be 7 per cent of gross domestic product (GDP), while the current account deficit is likely to be between 7.3 and 7.8 per cent of GDP.

Reflecting this, the rupee is near an all-time low.

The rupees problem is a balance of payments problem more than anything else, Khar said.

We will try our very best to hold the slide, she said, mentioning a tightening of regulations on foreign exchange transactions announced by the State Bank of Pakistan on Tuesday.

The rupee firmed on Wednesday in response to the measures, which included a temporary suspension of forward booking of foreign exchange for imports. It rose 2 per cent to 71.40/60 per dollar.

Khar blamed the caretaker government that took charge temporarily before general elections in February for most of the trouble.

Within the caretaker set-up, within just three months, because of the huge oil price bill, the sliding down was immense, she said.

Whereas your current account deficit was looking OK, your budget deficit was within reach, everything just went haywire.

But she was hopeful that things would improve. I see this problem settling down within a year. This year would be a year of stabilisation for the Pakistani economy.

Pakistan could tighten monetary policy further to fight inflation


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## Neo

*Pakistan can compete in milk production ​* 
Thursday, July 10, 2008

ISLAMABAD: Pakistan has got potential to easily compete with New Zealand and United Kingdom in milk production, however it needs to improve its yield.

This was stated by Executive Director General, Investment Division and Board of Investment (ID&BoI) Major (R) Iqbal Ahmad while talking to UK Deputy High Commissioner Robert Gibson on Wednesday.

Gibson was accompanied by British High Commission Trade & Investment Officer Jason Mumtaz. Pakistan is the 5th largest milk producer, but its real potential remains far behind as its cows produce relatively less, he added.

He informed the delegates that Pakistan and Britain share a historical legacy which is deep-rooted between both the nations. Moreover, Pakistani expatriates who are working in the UK, not only contribute towards the national exchequer of Pakistan but also form a productive workforce of the country, he added.

Government lays a lot of emphasis on the manufacturing sector at present, and the current investment policies support the promotion of investment in manufacturing sector, he said. The financial and services sector after a stellar performance during the last few years has become very competitive for new investment; he said adding that growth opportunities are also available in manufacturing, agriculture and power sectors. Executive director general briefed the delegates about the opportunities that are currently available in large and small scale manufacturing sectors of the country. He said that UK has one of the best known standards in pharmaceutical sector. And Pakistan has tremendous potential to offer UK investors for producing life saving drugs for cancer and diabetic patients.

Pakistan can compete in milk production


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## Neo

*Japanese investment in Gwadar sought ​* 
Thursday, July 10, 2008

ISLAMABAD: Pakistan on Wednesday sought Japanese investment by presenting Gwadar port as an ideal location, where it can explore possibilities of investment in fields like petrochemicals, heavy engineering, food processing, metal works, steel products and other export-oriented industries.

Mian Manzoor Ahmad Wattoo, Adviser to the Prime Minister/Minister for Industries, Production and Special Initiatives in a meeting with the Ambassador of Japan Seiji Kojima, who called on him here, stated Pakistan was strategically located as a regional hub with abundant land and natural resources, strong human resources and large and growing domestic market, which offer tremendous investment opportunities to countries like Japan, says a news statement issued here.

Wattoo further said that Japan is one of the leading donor countries giving economic aid to Pakistan and it has played an important role in Pakistans development through economic and technical assistance, thereby promoting strong economic and political relations between the two countries. We want Japan to bring more investment in Pakistan, he said.

Export Processing Zone Authority (EPZA) of Pakistan offers attractive incentives/facilities for investment in EPZs. Investment from Japanese investors is welcome where they can set up their own exclusive country zone in Pakistan.

Wattoo also emphasised that as Pakistans economy is developing, we need more market access in Japan in the areas where Pakistan has the potential to collaborate in terms of technology tie-ups, co-manufacturing, co-financing and co-export.

The ambassador noted that Japan was already cooperating with SMEDA (Small and Medium Enterprises Development Authority), a subsidiary of the Ministry of Industries and Production on various SME projects.

He further said that Japan is concentrating on the development of infrastructure in Pakistan. The ambassador also informed that a Japanese company, YKK, is setting up two plastic mould centers, one in Karachi and one in Lahore.

Japanese investment in Gwadar sought


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## Neo

*Textile industry may get Rs4bn relief​*
ISLAMABAD, July 9: The government has decided in principle to provide Rs4 billion relief to the textile industry through reduction in recently announced gas price increase for industrial and captive power plants, it is learnt.

The government had recently increased gas rates for industrial consumers by 31 per cent and for captive power plants of textile units by 68 per cent.

The textile industry has since been protesting over the price increase on the ground that it was losing competition in the international market and had announced to go on strike from July 11.

In an effort to persuade the textile industry to call off planned strike, the ministry of petroleum and natural resources has been directed to increase gas rates for Liberty Power Plant to the extent of Rs4 billion that would reduce government revenue. As a result, textile-specific gas rates for industrial sector and captive power plants would reduce by more than 50 per cent.

Sources said the petroleum ministry had also been asked to look into other possible avenues so that tariff adjustments could be made through containing governments revenue in the form of gas development surcharge but without affecting gas rates already announced for other consumer categories.

A special ministerial committee on gas rates would consider recommendations of the petroleum ministry within this week and then take the textile industry into confidence about the decisions. The textile industry, the sources said, had assured the government that they would consider to review their strike call after the ministerial committee comes out with a decision. Until then, they would not go on strike as originally announced for July 11, the sources said.

About two dozen businessmen belonging to textile manufacturing chain and exports had a meeting with Federal Minister for Commerce Ahmed Mukhtar on Tuesday where different options were discussed to reduce gas rates without affecting overall revenue requirements of the gas utilities. But the process the government would lose about Rs4 billion in gas development surcharge. The gas development surcharge is shared by the provincial governments on the basis of their gas production.

The sources said the textile industry had been demanded complete withdrawal of recent increase in gas rates for industrial units and captive power plants but was told that such a step may not be possible because of governments economic constraints. The industrial sector is of the view that it was already paying highest gas rates to compensate cross-subsidies currently available to domestic and fertiliser sectors and hence these subsidies should be withdrawn to ensure equitable gas rates for all consumer categories.

The government, however, is unable to do away with subsidy for fertiliser and domestic sectors because of long-term binding gas supply agreements and political considerations, respectively.

Textile industry may get Rs4bn relief -DAWN - Business; July 10, 2008


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## Neo

*Pakistan to get $1.4bn WB loan, ADB to give $810m​*
** $1bn WB loan to have 17% interest 
* ADB funds for power projects​*
ISLAMABAD: The World Bank (WB) and the Asian Development Programme (ADP) will give Pakistan $1.4 billion and $810 million in loans, respectively. 

The WBs $1.4 billion lending programme will support development in various sectors during the current fiscal 2008-09 year, a senior official in the Economic Affairs Division told Daily Times on Wednesday. He said anonymously that the lending programme consisted of $1 billion loan under the International Bank for Reconstruction and Development (IBRD) and $400 million loan under the International Development Associations (IDA) country assistance programme.

Interest: He said the $1 billion IBRD loan would be provided on market rate, elaborating that market rate loans had an interest rate of 17 percent. He added that the $400 million IDA loan would be a soft loan, which is likely to have one percent interest rate, and would be for technical assistance.

Sources in the Finance Ministry say Pakistan is facing problems to return WB loans as there is a condition that they will be returned in any currency (dollor or euro), which has a higher value.

The official said there was no money for mega power projects, such as Basha and Munda dams, in the lending programme. 

A WB official said anonymously Pakistan was negotiating for mega power projects with the bank. The WB official said Pakistan had also asked the WB to finance three other reservoirs, including Tarbela-IV, Munda Dam and Kohala Dam, and that Pakistan would need $3 billion for these projects. The Water and Power Ministry held a meeting with a WB team in June in this regard. These projects will generate 3,000 megawatts of electricity daily.

He said that there was however an allocation for power distribution companies in the loan. He said the loan for power companies would bind Pakistan to end subsidy on electricity and that the WB had previously set December as the deadline to end electricity subsidy.

The official said the government was working to expand the Tarbela Dam under the name of Tarbela IV following WBs suggestion it could be operational earlier than other big power projects. 

The sources in the ministry said the visiting WB team was also informed that the construction of these new projects would reduce Pakistans dependency on oil imports. 

Power projects: The ADB loan will be for power projects, and the inflows are expected to begin in September, an official told Reuters anonymously. The facility to be implemented over the next 10 years has been negotiated with power distribution companies and the formal approval by the bank is expected in August, the official said, adding that disbursement is likely to start from September or October. zafar bhutta/reuters

Daily Times - Leading News Resource of Pakistan


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## Neo

*Power plant feasibility study deadline: Chinese investors turn to ministry against PPIB move ​* 
ISLAMABAD (July 09 2008): Chinese investors have sought the foreign ministry's assistance against the Private Power Infrastructure Board decision not to further extend the date of submission of a feasibility study of 250MW coal-based power plant, sources in the PPIB told Business Recorder.

The sources said that China National Machinery Import and Export Corporation (CMC), which is currently working on Sonda-Jherruck coal mine and power project, wrote a letter to Foreign Affairs Secretary Salman Bashir, reminding him of his endeavours to attract foreign investment, an objective that has been compromised by the PPIB decision.

Bashir was Pakistan's ambassador to China before being promoted to Foreign Affairs Secretary. He enjoys good relations with the Chinese government and investors in his personal capacity.

"As the project is the first of its kind in Pakistan and also the first for the CMC on BOT basis, there are host of complex issues that need to be resolved between the company and relevant organisations both in China and Pakistan," the sources quoted the company's Vice President Qin Ruijuan as stating in the letter.

The firm had also written a letter to the PPIB Managing Director, in which it said that the board decision might harm bilateral relations between the two countries. The sources said that a senior diplomat in the Chinese embassy has met with Water and Power Secretary Ismail Qureshi and conveyed him the Chinese government's reservations about the PPIB decision.

Giving the background development engagements, CMC, in its letter clarified that it was working for long time with relevant government agencies in Pakistan to develop the integrated coal mine and power project at Sonda-Jherruck in Thatta (Sindh) on BOT basis.

According to the company, detailed coal geological investigation for the project had already been completed in 2007 whereas feasibility study for the coal mines was completed and based on that, the mining licence was granted by Sindh government and lease deed was signed with the provincial government in 2008.

After signing the lease deed, the company was in the process of undertaking further hydro-geological investigative work to determine whether the adequacy of water resources for the power plant as the river nearby was unable to cater to the needs during the dry season.

"We have to look forward and we are preparing the second draft of technical and commercial proposals for review by the PPIB and other government authorities concerned," the sources quoted the company as saying. The company had submitted the first draft a couple of months ago to the organisations concerned.

According to the letter, the company has claimed that it was also working on a financial model for tariff which would be submitted to the National Electric Power Regulatory Authority (Nepra) for their information and comments. However, the company has admitted that as foreign investors, they lack experience and to some extent underestimated the situation, which led to the delay in submission of the feasibility study.

"We are making every effort to expedite the process but some issues were new to CMC as well as the authorities concerned, and are beyond our control and expectation," the company added.

The company has assured the Foreign Secretary that it would not like to enter any argument with regard to the 'reasons for delay', as it would cause unnecessary unpleasantness. However, the company was serious in undertaking the project as it has already invested $10 million and is making every effort to finalise the feasibility study as soon as possible.

On the other hand, PPIB is unwilling to further extend the deadline maintaining that such promises were made by the CMC through its representatives during their visit to Islamabad in the past, promises that were never fulfilled. However, if the company submits a bankable feasibility study for the project, then the PPIB, without any financial or legal obligation on its part, may review the study.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Japan offered opportunities for investments ​*
ISLAMABAD (July 10 2008): Pakistan is strategically located at a regional hub with abundant land and natural resources, strong human resources, large and growing domestic market, which offer tremendous investment opportunities to countries like Japan.

This was stated by Mian Manzoor Ahmad Wattoo, Adviser to Prime Minister for Industries, Production and Special Initiatives in a meeting with Ambassador of Japan Seiji Kojima who called on him here on Wednesday.

Wattoo further said that Japan was one of the leading donor countries giving economic aid to Pakistan and it had played an important role in Pakistan's development through economic and technical assistance thereby promoting strong economic and political relations between the two countries. "We want Japan to bring more investment in Pakistan", said Wattoo.

Wattoo said that Gwadar Port was an ideal location, where Japan could explore the possibility of investment in the fields of petrochemicals, heavy engineering, food processing, metal works, steel products and other export-oriented industries.

Export Processing Zone Authority (EPZA) of Pakistan offers attractive incentives/facilities for investment in EPZs. Investment from Japanese investors is welcome where they can set up their own exclusive country zone in Pakistan. Wattoo also emphasised that as Pakistan's economy was developing, we needed more market access in Japan in the areas where Pakistan had the potential to collaborate in terms of technology tie-ups, co-manufacturing, co-financing and co-export.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*FBR loses Rs13bn revenue due to energy crisis ​*Friday, July 11, 2008

ISLAMABAD: The Federal Board of Revenue (FBR) lost Rs13 billion in revenues during fiscal year 2007-08 due to unprecedented energy crisis that hit hard the manufacturing sector and dampened its growth.

Its sluggish growth resultantly deprived the Federal Board of Revenue (FBR) of Rs7 billion sales tax and Rs6 billion federal excise duty, which could have been collected had the situation been favourable and there had been no shortage of energy for the industrial units. 

The FBR official spokesperson and member FATE, Khawar Khurshid Butt while talking to journalists here on Thursday said the crisis worsened since January 2008, adding we expected that the energy shortage would affect the whole economy in monetary terms by Rs35 billion but due to appropriate measures losses were reduced to Rs23 billion.

Butt said the ongoing fiscal year 2008-09 was very tough for the FBR in collecting Rs1,250 billion target keeping in view higher oil prices and expected slow economic growth. However, he assured that the government was taking appropriate steps for meeting the revenue target.

He termed the amnesty scheme voluntary aimed at enhancing economic activities and fetching investment by bringing money in the market. The FBR through this scheme would be able to collect about Rs2 billion. So far, a good response has been witnessed even when the scheme was just in initial stages and claimed that appropriate steps have been taken so that no one may misuse this scheme. 

Member Fiscal Research and Statistics (FRS), Dr Athar Masood, Saeedullah Khan Chief Income Tax and other officials of the board accompanied him during the press conference. The FBR would conduct analytic audit of the corporate sector, with particular focus on banking, oil and gas sectors. To this effect the decision was taken during the Board-in Council meeting, which was held under the chairmanship of FBR Chairman M Abdullah Yusuf. He said 33 per cent of corporate business showed losses, 33 per cent showed no income while only 34 per cent declared income from the business. 

The FBR wanted to know reasons behind the losses and no income in business, he maintained. 

The analytic audit would particularly remain focused on banking, oil and gas sectors, Butt said adding that the aim was to come up with objective analysis of revenue potential and the revenue collection from these sectors. 

He said the board-in-council meeting also decided to soften section 177 of Income Tax Ordinance 2001 so that non-corporate taxpayers were not harassed, adding that the FBR would soon issue instructions to regional commissioners for implementation of the decision. 

He said during the meeting, the FBR chairman directed the members to prepare a comprehensive strategy to collect additional Rs15 billion through administrative measures. Five billion each would be collected from customs duty, direct taxes and sales tax. 

The meeting also lauded the improvement in 2007-08 revenue collection as the updated figures showed that the collection had reached to Rs1,004 billion against the provisional collection of Rs1,002 billion. 

He said the FBR meeting also expressed satisfaction over crossing the psychological mark of Rs1 trillion revenue collections against the revised target of Rs990 billion.

FBR loses Rs13bn revenue due to energy crisis


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## Neo

*Weak economy offers investment avenues ​* 
*Govt fails to capitalise on opportunities​*
Friday, July 11, 2008

LAHORE: Some economists and investors have expressed disappointment at the failure of the government to cash in on the opportunities provided by the sluggish economy for prudent investments in energy, telecoms and agriculture.

They say every economic crisis brings opportunities that could take the economy forward in depressing times. Sensible governments seek transparent solutions to the economic downturn instead of following conventional policies. In Pakistans case, they assert, the urgent need is to motivate investors to commit their resources in fields that would ensure them better returns while fulfilling immediate requirements of the nation.

Engineering expert Almas Hyder, commenting on the issue, says energy crisis is a challenge that should have been tackled in a rational way to convert it into an opportunity. He says the government is paying billions in subsidy on electricity while generating one megawatt of energy requires an average investment of a little over $1 million. He points out that energy savers could save the country 1,200-1,500 megawatts of electricity if they replace conventional bulbs and tube lights.

He says the government resorted to the conventional solution by withdrawing all duties on energy savers to motivate consumers to shift to the savers. A bolder and more prudent approach would have been to encourage the investors to establish energy saver plants in the country.

The government, he says, could offer free land and infrastructure to seven or eight investors for establishing energy saver units in different regions of the country. The replacement of conventional lights with energy savers would take decades with the present policy and only two to three years after establishment of local plants.

Similarly, he adds, the local industry has the capacity and capability to manufacture 50MW thermal power plants. Both Heavy Mechanical Complex and Millat Tractor could produce these plants at competitive rates. However, the government has allowed duty-free import of generators which would flood the country with diversified products. Solutions planned in haste have a very high cost overrun.

Dubai-based chartered accountant Faisal Qamar says Pakistan imports mobile phones worth $1-1.5 billion every year. The regulators should approve five or six specifications of mobile phones and facilitate the investors in manufacturing local brands.

Pakistan has many times more mobile users than Finland, Germany, Holland, Singapore and Taiwan, all of whom export mobile phones. He says with economies of scale available in the domestic market, a dedicated approach towards local production of quality mobiles could place Pakistan among cellphone exporters.

CNG dispenser and kits importer Group Captain Naeem A Khan deplores the government has neglected the fact that Pakistan is the second largest user of CNG vehicles and has not taken any initiative to establish at least a CNG kit manufacturing plant. Governments the world over grab such opportunities and facilitates the investors in establishing local plants and saves foreign exchange.

Textile exporter Adil Butt says Pakistans textile industry exports 85 per cent of its products and is hardly able to market remaining 15 per cent in the local market. In China and India, more than 75 per cent of their textile production is consumed domestically. He says policy flaws have encouraged consumption of imported textiles in Pakistan as local gents and children-wear market is in the hands of producers in the Far East and China while women fabric comes from China (both legally and smuggled) and from India through smuggling. Old clothing is another big source of imported textiles. He says a paradigm shift in textile policy is imperative to ensure sustainability of the local textile sector without much dependence on exports. The government should study how India, Bangladesh and even China manage to restrict foreign textiles in their markets. 

Weak economy offers investment avenues


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## Neo

* $4bn investment needed under ​* 
*PPP to develop infrastructure​*
Friday, July 11, 2008

ISLAMABAD: Pakistan needs US$3.5 billion to $4 billion per annum investment on infrastructure to maintain the healthy growth and for this purpose private public partnership (PPP) is the only viable option to meet this challenge, as available public funds are able to meet only half of the requirement.

The rest would be required from the private sector and for this the newly elected government is focusing more in public private partnership to execute the projects.

Gen (retd) Muhammad Zubair, member Infrastructure Management Unit came up with these views in a thought-provoking seminar on Public Private Partnership: Public Sector Role in Management held here on Thursday.

The prime purpose of organising this seminar was to sensitise senior Federal and provincial government officials about the concept of public private partnership.

Deputy Chairman, Planning Commission, senior officials from the Ministry of Finance, the Planning Commission and provincial governments attended the seminar.

Gen Zubair in his presentation on Integration and Streamlining PPP in Planning Process (InStePP) highlighted the importance of the private public partnership in developing the countrys world-class infrastructure.

He said that PPP has been recognised as an essential mode of infrastructure service delivery and this unique idea has been given a specific focus in the Medium Term Development Framework (MTDF) 200-10 with a view to establish a policy framework and coordinating the PPP programme across government agencies, establishing core center of expertise, reviewing and establishing legal framework, identifying prospective projects in line with market capacity and identifying funding mechanism.

He disclosed that the core center of expertise on PPP would be established in the Planning Commission and to this effect an American companys team is due some time in October, which will give training to Pakistani officers on PPP.

We will select some of them who will impart further training to the young officers in provincial and local government level on PPP, Zubair told the participants of the seminar.

As an in-charge of the project, Zubair visualises that in the future the PPP unit would be installed in the Planning Commission, which will examine every project with regard to assessing it as to whether it is viable under PPP or not. If viable under PPP, then the unit will recommend the project to IPDF (Infrastructure Project Development Facility) for arranging the financing.

Gen Zubair said in PPP units would be established in all the ministries, which would prepare the PC in keeping in view the PPP model. The government would initiate and execute only those projects, which are strategically important for the masses and the funding could not be arranged from private resources.

The participants also came up with suggestions with regard to making the future PPP cell in the Planning Commission more vibrant and efficient. 

They also raised the issue of sharing risks between public and private entities, while completing the projects and stressed for transparent law making to ensure a competitive environment for the private parties, which intend to participate in various projects.

Some participants also warned the government officials not to make the rules and regulations specifically for those private parities, who rub the shoulders of the people at the helm of affairs, to get the laws suited to them approved.

They stressed that the rules and regulations should be the same for all private parties for alluring investment in the projects based on PPP. It is also stressed that local investors need to be encouraged for investment in the projects based on PPP.

Secretary Planning Division emphasised on the need to encourage and motivate private sector participation through various measures in infrastructure development, as the government alone cannot deliver.

Deputy Chairman, Planning Commission Salman Faruqui earlier said public private partnerships can play a key role in increasing resources and improving efficiencies, by helping the country access not just finance, but also managerial expertise, new technologies, better project design and implementation and more efficient use of resources.

Infrastructure Management Unit (IMU), Planning Commission is currently implementing the project Infrastructure Institutional Capacity Building and Project Preparatory Facility through technical assistance from Asian Development Bank. 

The objective of the project is to assist the country in enhancing and enabling the environment for Infrastructure Investment by the private sector, developing public private partnership modalities and supporting institutional capacity building.

IMU conducted a diagnostic study in 2007 on Constraints to Private Sector Investment in Infrastructure to identify these constraints.

$4bn investment needed under


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## Neo

*Work on hydropower projects being accelerated ​* 
Friday, July 11, 2008

LAHORE: Member WAPDA (Water) Syed Raghib Abbas Shah has said full attention is being paid to accelerate the pace of work on hydropower projects as the country is in dire need of both water as well as hydropower.

Chairing a meeting on hydropower projects, he said bids for the construction of Winder Dam located in Balochistan had been called and would be opened on July 24.

He asked project directors to rehash implementation plans in coordination with construction firms and consultants and get the work done as envisaged in the schedule. Quantity, quality and financial control should be the key in execution of the projects, he added.

The meeting was told that the Mangla Dam raising project is nearing completion. 

Likewise, the second power house of Satpara Dam is expected to be commissioned in September this year, while the whole project is likely to be completed by the first quarter of 2009.

The meeting was briefed that detailed engineering designs and tender documents of Hingol and Naulang Dams would be finalised up to December this year. In addition, the detailed engineering design of Nai Gaj Dam would be completed in February 2009.

Work on hydropower projects being accelerated


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## Neo

*Energy sector, airline industry ​* 
*Pakistan seeks UAE cooperation​*
Friday, July 11, 2008

DUBAI: Pakistan has sought assistance from United Arab Emirates to overcome ongoing energy crisis in the country and for the development of airline industry. 

Prime Minister Syed Yousuf Raza Gilani who called on UAEs Vice President and Prime Minister Sheikh Mohammad bin Rashid Al-Maktoum, asked him for cooperation in various fields of infrastructure development. 

The PM said Pakistan also sought UAEs expertise in port sector, particularly for the functioning of Gwadar Port. Al-Maktoum assured all-out support and said the UAE would encourage its private sector to make further investments in Pakistan in various fields, particularly the energy and real estate sectors. 

The meeting also attended by PPP Co-chairman Asif Ali Zardari, Federal Ministers Sherry Rehman, Syed Khurshid Ahmad Shah and Qamar-uz-Zaman Kaira, also discussed Pakistans role in war against terrorism and the increased economic cooperation between Pakistan and the UAE. 

Gilani urged international community to extend support to Pakistan, which was playing the role of a frontline state in war against terrorism. He said the new democratic government in the country was following the three-pronged strategy to deal with the menace of terrorism and extremism. 

The strategy comprises dialogue with non-militants and those who lay down their arms, besides increased development activities with focus on the socio-economic uplift of the people of areas along the border, he added. 

The premier said the use of force would be the last option in case of violation of agreements from the other side. 

Gilani said a stable Afghanistan was in the interest of Pakistan as well as for the region and the world. He said the country needs increased trade and not aid from the world to help tackle issues of socio-economic development, poverty, and joblessness, which are root causes of terrorism and extremism. He also referred to presence of three million Afghan refugees on Pakistani soil and said it was also one of the causes of difficulties in checking illegal cross border movement along Pak-Afghan border. 

He invited Al-Maktoum to visit the country, which he accepted and said he considered Pakistan his second home. 

The UAE PM appreciated Pakistans role in war against terror and its credible intelligence sharing to curb terrorism and extremism posing a threat to the world peace. 

He also lauded the positive role of Pakistan expatriates in the socio-economic development of UAE. He apprised Gilani of his new charity project Dubai Care under which five million Muslim students from across the Ummah including Pakistan would get the free education.

Energy sector, airline industry


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## Neo

*OGDC plans aggressive exploration​*
ISLAMABAD, July 10: A Senate body was informed on Thursday that the Oil and Gas Development Company Limited (OGDCL) has chalked out an aggressive oil and gas exploration programme to meet the growing energy demands of the country.

OGDCL Chairman Arshad Nasir informed the Senate Standing Committee on Petroleum and Natural Resources that there would be a focus on replicating international best practices and innovative thinking.

He also gave a detailed overview of the contribution made by the OGDCL to the national exchequer and said that the company was able to contribute Rs82.87 billion in the year 2007-08 to the national kitty, which was higher than 2006-07.

The committee assured support to the OGDCL in removing hurdles in the way to expedite oil and gas exploration in the country, particularly in Balochistan.

The OGDCL chairman informed the committee about steps taken to improve the working and performance of the OGDCL and new discoveries of oil and gas made during last few years.

He said that all-out efforts were being made with a strong vision and passion to enhance the energy security of the country and go beyond geographical boundaries for exploration and production opportunities.

He said that agreements have been signed with international firms to further increase technical prowess in the on-shore exploration and production, as well as to a more challenging area of the offshore exploration.

He stated that OGDCL was contributing 42 per cent of the total production of gas from Balochistan.

He apprised the members of the committee of various reasons for halt in the exploration activities in Balochistan and said that due to non-clearance of security from the government of Balochistan, new activities could not be launched.

The senate body, which met at the OGDCL Head Office under the chairmanship of Senator Syed Dilawar Abbas, underlined the need for intensifying efforts to explore new reserves of oil and gas to meet the growing demand and to bridge the supply and demand gap to protect the common man from the impact of unprecedented hike in the prices of petroleum products.

It was pointed out that oil prices have far greater consequences for developing countries, like Pakistan, than the developed ones.

Members of the committee were of the view that there was a dire need of intensifying search for new reserves as the previous ones have been depleting at a fast pace.

They recommended that the OGDCL should also go for off-shore ventures as there was a huge potential in this area to meet the future demands of the country.

The committee noted that Balochistan has great potential for oil and gas reserves and called for making the environment conducive to carry out exploration activities in an appropriate manner and suggested that parliamentarians and tribal elders should play their due role in facilitating the OGDCL in exploration activities.

It also constituted a sub-committee which will comprise senators from Balochistan with a view to remove bottle-necks in the way and address security concerns.

OGDC plans aggressive exploration -DAWN - Business; July 11, 2008


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## Neo

*Credit Swiss comes to Pakistan​*
KARACHI, July 10: Credit Suisse Group, Switzerlands second-biggest bank, has announced to start equity research business in Pakistan. The group has planned to introduce broking services next year to benefit from a stock market that surged to a value of $46 billion from $5 billion in 2001.

Credit Swiss is hopeful to exploit the potential in Pakistan for economic growth.

Credit Swiss comes to Pakistan -DAWN - Business; July 11, 2008


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## Neo

*Gas pipeline from Iran: Senate committee urges govt to sign deal sans India ​*
** Warns of gas reserves depletion by 2012 
* Urges to impose discipline on gas marketing companies to control CNG, LPG prices​*
ISLAMABAD: Chairman Senate Standing Committee on Petroleum and Natural Resources, Senator Dilawar Abbas, Thursday criticised India for delaying Iran-Pakistan-India (IPI) gas pipeline mega project and urged government to sign the agreement even without India. 

He was talking to media persons after the meeting of the senate body on Petroleum that met in Oil and Gas Development Company Limited (OGDCL) office. The senate body also constituted 4-member sub-committee comprising Balochistan senators Saeed Hashmi, senator Naseer Mengal, Muhammad Khan Maree and Shahid Hussain Bugti. The said sub-committee would work for security clearance to initiate drilling activities in six sensitive areas of Balochistan. The meeting was held on the exploration activities of OGDCL and the next meeting would be held on the gas prices to inquire about Oil and Gas Regulatory Authoritys activities (OGRA). 

Chairman senate body warned that gas reserves in Pakistan would deplete by 2012 and there would be no gas in the country. India is delaying the IPI gas pipeline in one way or the other, he said, and added Pakistan should go ahead on the gas pipeline project even without India. He hoped the signing of the project during the current year. 

While hinting at the rising oil prices, he emphasised that current margin mechanism of the Oil Marketing Companies (OMCs) must be revised to stabilise prices in the country. He also said that senate body on the petroleum has also recommended rationalising the sales tax and margin of the OMCs. Government should find ways to provide relief to the consumers after the oil prices continue upward rally, he recommended. Replying to a question, he said that government should impose discipline on the marketing companies and dealers to control the Compressed Natural Gas (CNG) prices in the country. He alleged that the dealers were making windfall gains from the recent hike in CNG prices. 

After de-linking the prices of Liquefied Petroleum Gas (LPG) with international prices, government should take proper measures to control the prices and there should be no hike. Six areas including Dera Bugti, Maree area, Uch, DG Khan bordering areas and Ghal Mugasi had been identified where security problems existed, barring the exploration activities. There were threats from some groups in these areas to halt the exploration of oil and gas activities. He further said that sub committee would suggest security measures by involving security agencies and local representatives in Balochistan province. 

He informed that senators from Balochistan during the meeting had demanded to adjust around 200 trainees in OGDCL and the committee has recommended giving employment opportunities to these young people at the gas and oil exploration activities sites in Balochistan. He further said that the sub committee would work with provincial and federal government authorities to clear the security so that the exploration activities in Balochistan province could be initiated. He said that OGDCL has been directed to expand the drilling activities either individually or work in joint ventures to enhance the oil and gas production in the current scenario when their prices are sky rocketing day by day.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Bids for Winder Dam called: WAPDA​*
LAHORE: The Water and Power Development Authority (WAPDA) has called the bids for the construction of Winder Dam in Balochistan, which would be opened on July 24, 2008.

According to an official statement Thursday, WAPDA member (Water), Syed Raghib Abbas Shah while presiding over a meeting said special attention to be paid to enhance the pace of work on the projects as country was in dire need of more and more water as well as hydropower generation. 

He asked the Project Directors to rehash the implementation plans in league with the construction firms and consultants and get the work done as envisaged in the schedules. 

Quantity, quality and financial control should be the keys in execution of the projects, he added. 

Reviewing the progress, it was noted with satisfaction that a number of water and hydropower projects are presently at the advance stages of their completion. 

The meeting was informed that the Mangla Dam Raising Project is nearing completion, likewise, the second power house of Satpara Dam was expected to be commissioned in September this year, while the project, in totality, was likely to be completed by the first quarter of the year 2009. The meeting was briefed that the detailed engineering designs and tender documents of Hingol and Naulang dams would be finalised upto December this year. In addition, the detailed engineering design of Nai Gaj Dam would also be completed in February 2009. 

Daily Times - Leading News Resource of Pakistan


----------



## Owais

* Saudi Arabia defers $5.9bn payment for oil sales to Pakistan*


LONDON (updated on: July 12, 2008, 19:30 PST): Saudi Arabia has agreed in principle to defer payment for crude oil sales to Pakistan, expected to be worth about $5.9 billion at current rates, during July-June financial year 2008-09.

"There is an agreement in principle to defer oil payments. The modalities are being worked out," Finance Minister Naveed Qamar said. He did not discuss the time frame for deferred payments but a Petroleum Ministry official in Islamabad told the Financial Times that the agreement involved deferring the payment until at least June next year.

Saudi Arabia sells about 110,000 barrels of crude oil daily to Pakistan or about 40m barrels a year which at 147 dollars a barrel comes to about 5.88bn dollars. Pakistan imports a total of 202,000 b/d or approximately 73.7m barrels a year. Half of that comes from Saudi Arabia.

brecorder.com


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## Owais

*Only foreign companies to operate coal power projects*


KARACHI (July 12 2008): The Federal government has decided to sign agreements only with foreign-based companies to establish at least 1000MW coal-fired power plants at Thar coal field and other sites in the province, including Sondha Jherruk Thatta, Lakhra, Dadu, and Badin and has annulled all agreements made with local companies.

Sources told Business Recorder on Friday that this decision was take at a high level meeting chaired by the Federal Minister for Water and Power, Raja Parvez Ashraf. They said that the issue surfaced when a committee established for reviewing the progress found that the local companies, which had signed agreements with the government, have failed to give a feasibility report in this connection, owing to lack of financial resources.

They said the local companies were not be able to invest at least Rs 200 billion to establish 1000MW power generating plant in a short time of three to five years. Therefore, it was decided to sign agreements only with foreign-based companies, which are capable to make the project feasible by the deadline, they added.

To overcome the worsening power crisis in the country in general and Karachi in particular, the Federal government has planned to generate at least 6000MW within three to five years, and ultimately achieving the target of generating 20,000 MW through coal by 2030, the sources said.

They said that the existing capacity of power generation in the coal sector was only 160MW, which is expected to increase to around 20,000 MW by 2030. To a question, they said that foreign firms have expressed concern over the law and order situation in the country, "but we have assured them to provide full security arrangements in Pakistan."

They said the cheapest electricity would be produced from coal and termed it as the best option to overcome the energy crisis in Pakistan. They said that, "although 185 billion tons of coal reserves have been confirmed at Thar, no progress has been made by the private sector to convert this abundance for power generation.

When asked, they said the agreements would be signed with equal equity participation where power companies would invest to establish plants and the government would provide land and coal.

It may be mentioned here that a Chinese company M/s Sinocoal, International Engineering Group (SCIEG), which conducted the technical part of the feasibility study by M/s Shenhua on Thar coal, has recently expressed interest in designing the coal mines. The company suggested that Pakistan should review the whole policy on coal, including mining, production as well as its import and export.

Business Recorder [Pakistan's First Financial Daily]


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## Owais

*Textile exporters, industrialists go on strike: protest has left over one million workers jobless*

FAISALABAD (July 12 2008): Over one million industrial workers were rendered jobless, when hundreds of textile units including hosiery, printing, dying & processing factories and sizing industries in and around Faisalabad went on strike for an indefinite period on Friday.

These textile units are observing shutdown to protest gas & electricity tariff increase and discontinuation of Research and Development (R&D) Facility to exporters. Ten chambers of commerce and industry from Punjab, Sindh and the NWFP have endorsed the strike call given by the Joint Action Committee of industrialists and textile exporters. Addressing a press conference on behalf of the chambers, Lahore Chamber of Commerce and Industry President Muhammad Ali Mian said that the strike would be extended to the whole of the country in case the government refused to give any relief to business community as well as textile industry, which is the backbone of the country's economy.

He announced that LCCI, KCCI and other chambers would start protest by hoisting black flags on their buildings from Saturday, July 12. If the government failed to provide comprehensive relief package till July 15, all industrial units of Lahore would also join the strike from July 18, he added.

Khawaja Asem Khurshid, Chairman of Joint Action Committee, Mian Muhammad Idress, Mian Javed Iqbal, ex-presidents of FCCI, Muhammad Javed Aslam, Chairman, Pakistan Hosiery Manufacturers Association, North Zone and other leading businessmen addressed the meeting and rejected 31 percent gas price increase and demanded total withdrawal of this 31 percent hike and restoration of R&D facility at the earliest without discrimination.

After an emergency meeting, Pakistan Textile Exporters Association (PTEA) members have decided to reject the 31 percent gas price hike announced in the recent budget. A resolution passed in the meeting stated:

Textile exporters have rejected the 31 percent hike in gas prices. We cannot survive with 31 percent increase in gas rate. We also demand Research and Development Support Facility across the board without discrimination.

Members pointed out that R&D facility was not a subsidy but a compensation of duties and taxes paid by exporters and industry in the chain of production. There should be one rate of R&D without any discrimination. The meeting rejected volume-based R&D saying it will wipe out small and medium exporters and will create monopoly of a few exporters.

Regarding increase in gas price, the members were of the view that prices of Pakistani goods have escalated and we are being thrown out of international market for being uncompetitive with intermittent raises in rates of utilities such as gas, petroleum and electricity. The cost of doing business was increasing day by day and the foreign buyers finding the prices too high and were diverting their purchase orders to India, China and Bangladesh.

The members said that if remedial measures were not taken, the economy of the country would suffer badly. Textile sector is the biggest foreign exchange earner with 60 percent of total forex earnings and was contributing 9 percent to GDP. The closure of textile units would also cause huge losses to the exchequer, they said and added that the workforce rendered jobless would endanger industrial peace in the country.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Inflation surges by 21.53 per cent ​* 
Saturday, July 12, 2008

ISLAMABAD: Politically-sensitive spiralling food prices and weakening rupee pushed up inflation to an all-time high of 21.53 per cent in June 2008, after a 2.10 per cent rise in consumer prices over May 2008.

Last year in June, CPI inflation stood at 7 per cent. Twelve-month (July-June 2007-08) average inflation also went up to 12 per cent against 7.77 per cent recorded last fiscal, which is about 550 basis points above the set target of 6.5 per cent for fiscal year 2007-08.

According to data released by the Federal Bureau of Statistics (FBS), in June 2008, prices of food and beverages rose by 32.05 per cent; house rent 12.39 per cent; fuel and lighting 11.38 per cent; transport and communications 24.91 per cent; clearing laundry and personnel appearances 17.74 per cent; medicare 14.16 per cent and household furniture and equipment 10.43 per cent over June 2007.

During July-June 2007-08, average food inflation stood at 17.64 per cent and non-food at 7.89 per cent against 10.28 per cent and 6.01 per cent respectively in the previous fiscal year.

PPP-led coalition government like previous one has fully failed in controlling inflation especially food inflation. Inflationary pressure is also building up for another increase in fuel prices if crude oil prices head further. Besides, the present government gradually withdrawing subsidies on gas, electricity and petroleum till December 2008 could further push up inflation. Dwindling rupee value is also making imports costlier, another contributing factor for inflation.

For controlling rising inflation and its impact on the declining expected growth require coordinated efforts by the State Bank of Pakistan (SBP) and the federal government.

Mounting inflationary pressure on the economy has also scaled up prospect of the central bank raising discount rates. It is interesting to note that the imported inflation (as a result of escalating crude oil prices that kissing records) was also a source of cost push inflation, caused by substantial hike in the cost of important goods or services where no suitable alternative is available.

Economic experts say that a weakening rupee has contributed to a rise in the cost of living. Inflation dangers pose a headache for the SBP. Sensing sliding rupee impact on economy and general prices, the central bank few days back also took some decision to control the rupee form freefall and certainly it showed encouraging results.

For each one per cent increase in inflation, more and more people fall into poverty indicating that inflation was hitting poor consumers of the country harder than the more affluent ones. Specifically, the poor are highly sensitive to the price changes in food, particularly staple food items, economists believe. Concerns over rising food prices are surmounting because such increase can undermine the gains from poverty reduction and human development that the country has experienced for the last five years or so. Households struggling to meet the minimum standards of living might have no choice but to cut down their expenditures on health and childrens education, Rising inflation is also making it more difficult for pensioners and low income masses living on their very nominal income a month in. Up to now, the price inflation was the fun kind, as it went into stocks, bonds, housing - now inflation is showing up in the not fun category, namely food and stuff you have to buy just to stay alive, independent economist say. 

It is interesting to note that high inflation trend in food has been noticed since the start of the last fiscal 2006. 

Food inflation stood at double-digit, averaging more than 10 per cent during fiscal year 2006-07. As during July 2006, it stood at 7.44 per cent; August 11.08 per cent; September 11.26 per cent; October 10.54 per cent; November 8.07 per cent; December 12.71 per cent; January 2007, 8.70 per cent; February 9.99 per cent; March 10.74 per cent; April 9.41 per cent; May 11.31 per cent and during June 2007, it stood at 9.68 per cent. 

Likewise, at the start of the new financial year 2007-08, it kept the same trajectory and during July 2007, food inflation stood at 8.47 per cent; August 8.62 per cent; September 12.97 per cent; October 14.67 per cent; November 12.47 per cent; December 12.21 per cent; January, 2008 it stood at 18.25 per cent; February 16.05 per cent; March 20.61 per cent; April 25.5 per cent; May 28.48 per cent and now during the month under review (June 2008), it stood at 32.05 per cent. 

Despite their adverse impact on the low-income group, no effective steps are being taken by the government to reverse the trend. 

The government seems to be indifferent to the plight of the poor and the lower middle class who find it increasingly difficult to make both ends meet with soaring prices of foodstuff and medical expenses. 

While, main concern is that in the basket of Wholesale Price Index (WPI), fuel, lighting and lubricants expenses up by 48.56 per cent, building materials 38.24 per cent, food 30.16 per cent, raw materials 22.12 per cent and manufacturers price increased by 12.17 per cent in June 2008 over corresponding month of the last fiscal.

Inflation surges by 21.53 per cent


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## Neo

*SPI rises by record 28.9pc ​* 
Saturday, July 12, 2008

ISLAMABAD: The helpless masses have been caught between the devil and the deep sea as there was no relief from the governments side which could support them in minimising their financial and social problems caused by the spiralling inflation.

The Sensitive Price Index (SPI) inflation rose to an all-time high of 28.99 per cent during the week ended on July 10 over the same period last year, owing to the relentless surge in prices of 32 essential commodities.

The SPI data released by the Federal Bureau of Statistics on Friday showed that 32 essential commodities, majority of them kitchen items including vegetables, wheat flour, eggs, milk and pulses, were becoming costly with the passage of each day.

Price of tomato during the week under review increased by Rs5 per kg as it was being sold at Rs22.07 against Rs17.88 on July 3, onion increased from Rs15.26 last week to Rs17 this week, sugar from Rs29.94 to Rs31.79, farm eggs from Rs52.45 to Rs53.93 and kerosene from Rs61.42 to Rs62.87 per litre.

PULSES: With over Rs2 increase in a week, masoor pulse (washed) is being sold at Rs114.82 per kg against Rs112.63 last week. The price of gram pulse (washed) was recorded at Rs60.56 against Rs60.11 last week, moong (washed) at Rs55.13 from Rs53.49, maash pulse (washed) at Rs73.03 from Rs72.95.

RICE: Price of per kg basmati rice (broken) increased to Rs54.03 from Rs53.49, Irri rice to Rs48.46 from Rs48.12 while the price of per kg wheat went up from Rs20.47 to Rs20.78 and wheat flour to Rs23.90 from Rs23.76.

With this increase in the prices of essential commodities, the dearness for low-income group families earning Rs3,000 and Rs3,001 to Rs5,000 was recorded at 32.12 and 31.31 per cent respectively. The increase in dearness was recorded at 29.17 per cent for families bracketed in the category earning Rs5,001 to Rs12,000 and 26.71 per cent for families earning a monthly income of over Rs12,000 following a 0.70 per cent increase in inflation during the week under review.

The trend of weekly SPI during the last 10 weeks as compared to the previous as well as corresponding week of last year, showed a continuing increase, escalating the difference from 23.71 per cent on April 24 to 28.99 per cent on July 10.

The SPI bulletin, based on the data of 53 items collected from 17 urban centers showed an increase in prices of 32 essential commodities, decline in 3, while the prices of 18 commodities remained stable but dearer compared to last year.

SPI rises by record 28.9pc


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## Neo

*Govt borrowing increases broad money supply by 13pc ​* 
Saturday, July 12, 2008

KARACHI: Governments excessive reliance on borrowing from the State Bank of Pakistan (SBP) to meet its budgetary expenditures increased broad money supply, which grew by 13.29 per cent and continued to exert inflationary pressure on the economy.

Latest statistics of the SBP showed that from July 1, 2007 to June 28, 2008 money supply increased to Rs540.094 billion with a growth of 13.29 per cent against the target of 13.8 per cent for the fiscal year 2007-08. Compared to this, money supply was recorded at Rs658.250 billion with a growth of 19.32 per cent during July 1, 2006 to June 30, 2007, when total currency in circulation was Rs4.065 trillion.

An analyst said that this drop in M2 expansion was due to negative growth in net foreign assets of the banking system, due to a decline in net inflow of foreign investment which stood at minus Rs308.190 billion as compared to Rs274.551 billion during fiscal year 2006-07. At the same time a massive growth was witnessed in net domestic assets of the banking system which surged to Rs848.284 billion against Rs383.699 billion of last fiscal year, which was the major source behind the increase in money supply.

In the net term, the government borrowed Rs633.173 billion from the central bank in order to meet its budgetary expenditures. However, during this period it retired Rs171.893 billion of scheduled banks. For commodity operations, the government made use of Rs28.969 billion and it borrowed Rs597 million for other purposes.

However, during the aforesaid period, overall credit to non government sector increased to Rs470.683 billion against Rs385.705 billion of the last fiscal year, whereas credit to the private sector swelled to Rs414.643 billion from Rs365.718 billion last year. Credit to the public sector enterprises also augmented to Rs55.878 billion compared to Rs19.942 billion last year.

Govt borrowing increases broad money supply by 13pc


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## Neo

*Pakistan plans Investment conferences​*
ISLAMABAD, July 11: Pakistan is finalising arrangements to hold two international investment conferences in Jeddah and Riyadh soon to attract investment from Saudi Arabia.

Minister for Finance Syed Naveed Qamar told Saudi Ambassador to Pakistan Ali Awadh Asseri, who called on him on Friday, that Islamabads planned investment conferences in the kingdom were at an advanced stage, which would enable and apprise investors of privatisation and investment opportunities in Pakistan.

These conferences would also help identify areas of investment in the kingdom for Pakistani business groups.

The finance minister, who is also minister for privatisation and investment, said that the leadership on both sides were getting closer and our government intended to further strengthen and deepen our brotherly relations by accelerating the existing economic interaction by associating the Saudi investors in the privatisation programme of Pakistan.

Pakistan had strong bonds in every sphere of life with the Kingdom of Saudi Arabia, he added.

Saudi envoy Ali Awadh Asseri said that the kingdom and the people of Saudi Arabia believed that the united, prosperous and stable Pakistan was in the interest of the region.

He assured that all out efforts would be made to promote the existing links and translate them into strong economic relations to benefit both the people and the countries.

Pakistan has promising investment environment and the Saudi investors were keen to invest in Pakistan and to broaden the existing economic interaction, he said.

The envoy also discussed other matters of mutual interests and assured that the Kingdom of Saudi Arabia would continue to support Pakistan for economic stability.

In another meeting, Syed Naveed Qamar asked Auditor General of Pakistan Tanvir Ali Agha to further streamline the accounting procedures through public accounts committees (PACs) to bring in transparency, efficiency and effectiveness.

The finance minister said that the rules and regulations pertaining to the audit would be made more effective and the procedures of the PACs would be changed to this extent that the delays and backlogs could be overcome.

During the meeting, the departments and organisations identified for the purpose include National Accountability Bureau, Higher Education Commission, Privatisation Commission, Trading Corporation of Pakistan, various local governments and other departments.

Pakistan plans Investment conferences -DAWN - Business; July 12, 2008


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## Neo

*NCEL to launch Mini Gold, Palm Oil future contracts​*
KARACHI: The National Commodity Exchange Limited (NCEL) will launch mini gold future contracts and palm oil future contracts by mid August 2008, Asim Jang, managing director, NCEL said Friday.

Asim said the NCEL has completed marketing mechanism and appointment of brokers for future trading of 10 grams gold to facilitate retail customers.

He said the future contracts would be made under Rs 20,000 on weekly basis and the retailers could take part in the trade through their accounts opened with the brokers.

He informed the gold traded would be 24 karate standard and for this purpose NCEL has already made arrangements with a gold refinery in Switzerland.

Asim said the NCEL also made delivery arrangements for the retail customers to their points besides providing guarantee of purity of the product by marking specific serial numbers on each contract.

He said for the convenience of retailers of 10-gram mini gold future contracts, NCEL has made payments arrangements on a day or intra day basis for them.

He said kilo gold future contracts on three to four months basis are already steadily going on the NCEL floor.

Similarly the future contracts for palm oil would be of three months term. He said ghee mills and importers would be main beneficiaries. The future limit would be 25 metric tonne.

This will save the importers from financial loss as prices in the international market and landing cost usually differ before or after the maturity of import contract, he added.

He said NCEL has around 3,000 brokers out of which 40 are active brokers and taking part in these two future contracts.

He said the rules and regulations had been prepared by the exchange and sent to Securities and Exchange Commission of Pakistan (SECP) for regulatory approval. He said NCEL would hold seminars in different cities for the awareness of stakeholders, traders and customers in this regard.

The National Commodity Exchange Ltd was incorporated in April 2002 and authorised by the SECP in May 2002. Its paid-up capital is Rs 40 million (post ZBT) and its authorised capital is Rs 50 million.

The NCEL would be the first adequately integrated electronic exchange proficient of handling financial futures and the first to provide liquidity to growers, exporters, importers and intermediaries.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Committee formed to tackle economic issues​*
ISLAMABAD: In a move to accelerate the economy of the country, Prime Minister Syed Yousuf Raza Gilani Friday constituted an eight-member Economic Monitoring Committee to tackle the day-to-day issues of the national economy.

Finance Minister, Syed Naveed Qamar will head the committee, with deputy chairman Planning Commission, Salman Farooqui to be its vice chairman. Other members of the committee include special assistant to the Prime Minister on Economic Affairs, Hina Rabbani Khar and the secretaries Finance, Economic Affairs, Commerce, Water and Power and Petroleum and Natural Resources. The committee would monitor the economic pace and would also suggest the measures to improve the economic situation of the country.

Meanwhile, Prime Minister Gilani has said Pakistan offers attractive opportunities of investment in various sectors of economy, with incentive based policies and enabling environment.

Talking to a delegation of Credit Suisse, which was led by Kai Nargolwala, chief executive officer Asia Pacific, who called on him at the PM Secretariat, premier said the government was following pro-investor policies and its privatisation policy was favourable for investors. The Prime Minister congratulated the company for opening a subsidiary in Karachi and said that with the privatisation of public sector entities being actively pursued in Pakistan, the financial advisory of Credit Suisse would be welcomed. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Curbs likely on import of non-essential items​* 
ISLAMABAD (July 11 2008): The government is considering restricting import of non-essential items to control soaring trade gap which would contribute substantially to cross budget deficit over 4.7 percent of GDP. Independent economic analysts expect that current account deficit would exceed 8 percent of GDP ($13 billion in FY08) exceeding $1 billion a month mainly because of trade deficit which has crossed $20 billion in 2007-08.

-- This step is said to be aimed at controlling soaring trade gap

"The government had projected 6.5 percent growth in balance of payments which has crossed 40 percent due to massive increase in imports," analysts added. International Financial Institutions (IFIs) have also warned Pakistani authorities that next two to three months are very crucial for the country, taking into account forward liabilities, net reserves below $8 billion, which are less than three months' imports or six months' balance of payment support.

"Most crucial test for the authorities in the next two to three months would be the implementation of regular fuel price adjustment. Controlling the subsidy bill and runaway imports are absolutely crucial at this critical juncture," said Deutsche Bank in its report on Asian economies.

Official sources said that the government may impose regulatory duty to discourage import of unnecessary items especially mobile phones and vehicles as import of these two items takes away $2 billion annually.

The country's forex reserves remain under server pressure as imports demand is yet to taper off, while inflows are said not to be sufficient enough to prevent further depletion.

Official sources confirmed that the US defence-related grant inflows could well accelerate to $1 billion. Saudi Arabia is also expected to provide crucial balance of payment support through an oil credit facility which could be worth over $4 billion. World Bank budget support worth over $1 billion during the course of the year and another $1 billion was being expected from the Asian Development Bank.

The sources said that timing of these inflows was, however, not clear and the multilateral flows in particular would likely to be linked to steps to ensure fiscal sustainability, in particular hikes in fuel prices and energy tariff.

The sources said that the government has to further increase diesel prices by 40 percent and petrol prices 10 percent to keep the budget estimates as per plan. "If the government does not increase oil prices for one fortnight its impact on the budget is Rs 20 billion," the sources elaborated.

Unfortunately, political leadership remains distracted by intra-coalition tension and the security situation and may not be ready to implement some of the requisite measures.

Official sources said if political uncertainty prevailed, the government would be compelled to approach the IMF, which means the country would again be dictated by the US. Official sources said that the Federal Board of Revenue could not achieve 25 percent growth in revenue as was projected in the federal budget 2008-09 due to political uncertainty.

Official sources cited an example of Benazir Bhutto who in mid 90s in her capacity as Premier asked the then CBR Chairman Javeed Talat as to why revenue target was not being achieved. He said, Madam Prime Minister, you give me political stability, I will give you the target achieved."

The country was facing the same situation these days and FBR would not be able to meet the target if political uncertainty existed.

Official sources said the Planning Commission would have to review its development programme and should seek funds for only prioritised schemes rather than making irrational demands.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*US to provide food assistance: Patterson​* 
ISLAMABAD (July 11 2008): United States is sensitive to the existing wheat shortage in Pakistan and would provide necessary food assistance to meet her requirements, however, the quantity of soft white wheat would be discussed by the concerned authorities of both the countries, said US envoy to Pakistan Anne W Patterson in a meeting with the Finance Minister Syed Naveed Qamar here on Thursday.

Apart from discussing co-operation in food and agriculture sectors, the US envoy underlined its government steadfastness to provide security and economic assistance to Pakistan. The minister apprised the Ambassador of Pakistan's budget implementation plan in various social and economic sectors, which now is ready for execution through relevant government agencies.

Finance Minister stressed that the entire process of any possible wheat shipment from US to Pakistan has to be transparent. Its distribution in Pakistan is likely to focus the population in less developed areas of Balochistan and NWFP. Both the sides agreed to start economic dialogue during next month to strengthen bilateral economic co-operation in all possible fields of mutual interest that finally would form significant part of the agenda of Prime Minister's forthcoming visit to US.

Finance Minister said Pakistan's latest privatisation initiatives, which now are getting processed through Cabinet Committee on Privatisation for a fast track implementation focus on enhanced domestic and foreign investment in years to come.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan's Foreign exchange reserves down over $4 billion in fiscal year 2008​* 
KARACHI (July 11 2008): The country's foreign reserves have shown a sharp decline of over four billion dollars during the last fiscal year due to the rising imports and current account deficit. At the beginning of the last fiscal year, the country's foreign reserves were sufficient for six months, while at present they have been enough for less than four months.

During the first quarter (July-September) of the last fiscal year, the country's foreign reserves started increasing rapidly and reached the historical level of 16.38 billion dollars in the first week of November 2008.

However, the rising current account deficit and import bill, followed by the increasing oil prices in the world market, greatly impaired the country's foreign reserves. A more severe decline occurred after the imposition of the state emergency, in the first week of November 2007.

A rapid decline of about 5 billion dollars in the foreign reserves was witnessed after the imposition of the state of emergency, as it stood at 16.37 billion dollars on November 3, 2007 as compared to 11.28 billion dollars on June 28, 2008. Since the imposition of the emergency on November 3, 2007, huge outflows have been registered from the Special Convertible Rupee Account (SCRA), analysts said.

They said the rising import bill and current account deficit are some of the main reasons of the decline in the foreign reserves, besides insufficient increase in exports. The oil price in the world market has touched a new peak of 142 dollars per barrel, which led to spending of more amounts on the import of oil, they said.

"Pakistan has been compelled to pay huge amount on oil import, due to the soaring oil prices in the world market, and the government did not increase oil prices in the local market as a measure of relief for the masses," the analyst added.

The State Bank of Pakistan's (SBP) statistics show that overall foreign reserves have registered a 27 percent decrease during the last fiscal year. The country's overall foreign reserves stood at 11.2845 billion dollars as on June 28, 2008, down from 15.6137 billion dollars as on June 30, 2007, depicting a dip of 4.23292 billion dollars during the fiscal 2008.

The statistics revealed that huge depletion was witnessed in the SBP reserves, which have been calculated at 4.703 billion dollars to 8.625 billion dollars on June 28, 2008, they were at 13.328 billion dollars on June 30, 2008.

The reserves, however, held by the banks have shown a strong position and despite the decline in the SBP reserves the banks' foreign exchange reserves have gone up by 373.8 million dollars.

The reserves held by banks reached 2.6591 billion dollars during the week ended June 28, 2008, which previously stood at 2.2853 billion dollars on June 30, 2007. "After the imposition of emergency rule, foreign investors have withdrawn some 400 million dollars from the stock market," an economist said.

Overall, an outflow of 4.682 billion dollars had been witnessed in the portfolio investment against the inflows of 4.449 billion dollars during the fiscal 2008, he added.

Although huge inflows of remittances have been registered during the first half of the current fiscal year, yet not a single privatisation transaction has taken place during the current fiscal year. Increasing payments are leading to the decline of foreign reserves.

It may be mentioned here that during the fiscal 2006-07, the reserves had surged by 19 percent to 15.6137 billion dollars benchmark as compared to 13.1369 billion dollars during the fiscal 2005-06.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Textile exporters, industrialists go on strike: protest has left over one million workers jobless​* 
FAISALABAD (July 12 2008): Over one million industrial workers were rendered jobless, when hundreds of textile units including hosiery, printing, dying & processing factories and sizing industries in and around Faisalabad went on strike for an indefinite period on Friday.

These textile units are observing shutdown to protest gas & electricity tariff increase and discontinuation of Research and Development (R&D) Facility to exporters. Ten chambers of commerce and industry from Punjab, Sindh and the NWFP have endorsed the strike call given by the Joint Action Committee of industrialists and textile exporters. Addressing a press conference on behalf of the chambers, Lahore Chamber of Commerce and Industry President Muhammad Ali Mian said that the strike would be extended to the whole of the country in case the government refused to give any relief to business community as well as textile industry, which is the backbone of the country's economy.

He announced that LCCI, KCCI and other chambers would start protest by hoisting black flags on their buildings from Saturday, July 12. If the government failed to provide comprehensive relief package till July 15, all industrial units of Lahore would also join the strike from July 18, he added.

Khawaja Asem Khurshid, Chairman of Joint Action Committee, Mian Muhammad Idress, Mian Javed Iqbal, ex-presidents of FCCI, Muhammad Javed Aslam, Chairman, Pakistan Hosiery Manufacturers Association, North Zone and other leading businessmen addressed the meeting and rejected 31 percent gas price increase and demanded total withdrawal of this 31 percent hike and restoration of R&D facility at the earliest without discrimination.

After an emergency meeting, Pakistan Textile Exporters Association (PTEA) members have decided to reject the 31 percent gas price hike announced in the recent budget. A resolution passed in the meeting stated:

Textile exporters have rejected the 31 percent hike in gas prices. We cannot survive with 31 percent increase in gas rate. We also demand Research and Development Support Facility across the board without discrimination.

Members pointed out that R&D facility was not a subsidy but a compensation of duties and taxes paid by exporters and industry in the chain of production. There should be one rate of R&D without any discrimination. The meeting rejected volume-based R&D saying it will wipe out small and medium exporters and will create monopoly of a few exporters.

Regarding increase in gas price, the members were of the view that prices of Pakistani goods have escalated and we are being thrown out of international market for being uncompetitive with intermittent raises in rates of utilities such as gas, petroleum and electricity. The cost of doing business was increasing day by day and the foreign buyers finding the prices too high and were diverting their purchase orders to India, China and Bangladesh.

The members said that if remedial measures were not taken, the economy of the country would suffer badly. Textile sector is the biggest foreign exchange earner with 60 percent of total forex earnings and was contributing 9 percent to GDP. The closure of textile units would also cause huge losses to the exchequer, they said and added that the workforce rendered jobless would endanger industrial peace in the country.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan seeks UAE help to overcome energy crisis​*
DUBAI (July 11 2008): Pakistan has sought assistance from the United Arab Emirates (UAE) to overcome ongoing energy crisis in the country and for the development of airline industry. Prime Minister Syed Yusuf Raza Gilani, who called on the UAE's Vice-President and Prime Minister Sheikh Mohammad bin Rashid Al-Maktoum here on Wednesday night, asked him for co-operation in various fields of infrastructure development.

-- Sheikh Al-Maktoum assured all out support to Prime Minister Gilani

The Prime Minister said Pakistan also sought UAE's expertise in port sector, particularly for the functioning of Gwadar Port. Sheikh Al-Maktoum assured all out support to Prime Minister Gilani, and said the UAE would encourage its private sector to make further investments in Pakistan in various fields, particularly the energy and real estate sectors.

The meeting also attended by Pakistan Peoples Party Co-Chairman Asif Ali Zardari, Federal Ministers Sherry Rehman, Syed Khurshid Ahmad Shah and Qamar-uz-Zaman Kaira, also discussed Pakistan's role in war against terrorism and the increased economic co-operation between Pakistan and the UAE. Prime Minister Gilani urged the international community to extend support to Pakistan, which was playing the role of a frontline state in the war against terrorism.

He said the new democratic government in Pakistan was following the three-pronged strategy to deal with the menace of terrorism and extremism.

The strategy comprises dialogue with the non-militants and those who lay down their arms, besides increased development activities with focus on the socio-economic uplift of the people of areas along the border, he added.

The Prime Minister said the use of force would be the last option in case of violation of agreements from the other side. He said after his election as Prime Minister, his first meetings were with US President George W. Bush and Afghan President Hamid Karzai, who were major partners in this global war.

The Prime Minister said a stable Afghanistan was in the interest of Pakistan as well as for the region and the world.

Gilani said Pakistan needed increased trade and not aid from the world to help tackle issues of socio-economic development, poverty, and joblessness, which were root causes of terrorism and extremism. He also referred to the presence of three million Afghan refugees on Pakistani soil, and said it was also one of the causes of

Difficulties in checking illegal cross-border movement along Pak-Afghan border. The Prime Minister invited Sheikh Mohammad to visit Pakistan, which he accepted, and said he considered Pakistan his second home.

Sheikh Mohammad appreciated Pakistan's role in war against terror and its credible intelligence sharing to curb terrorism and extremism posing threat to the world peace. The UAE Prime Minister also lauded the positive role of Pakistan expatriates in the socio-economic development of UAE.

Sheikh Mohammad apprised Prime Minister Gilani of his new charity project, "Dubai Care," under which five million Muslim students from across the Ummah, including Pakistan would get free education.

Business Recorder [Pakistan's First Financial Daily]


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*'Skilled manpower to get employment in South Korea'​*
ISLAMABAD (July 12 2008): Minister for Labour, Manpower and Overseas Pakistani Syed Khurshid Ahmed Shah on Friday said the government is making efforts to send skilled manpower abroad for employment. Talking to Korean Ambassador Shin Un, who called on him here, the minister said over 3,500 workers have passed Korean Language Test to get employment in Korea, adding, the process to send them abroad is underway.

Secretary Ministry of Labour and Manpower Malik Asif Hayat and other officials of the Ministry were also present on the occasion. Khurshid Shah said the government is committed to alleviate poverty from the country and has planned to provide employment to maximum skilled and unskilled youth to Korea and other countries.

The Minister urged to enhance co-operation between both the countries in different fields like agriculture, fisheries and technical fields. The Korean Ambassador said that Pakistani labour force is very hard working and working honestly in Korea.

Korean government is providing equal benefits to the local and Pakistani labour, the ambassador added. He said that the stay of Pakistani workers has been enhanced from three year to five years and their economic conditions will further improve.

Official said that Korea is keen to import Pakistanis skilled workers as they (workers) are up to Korean standards and Korean Labour Ministry does not face problems from Pakistani labour as compared to labour from other countries like India and Sri Lanka.

Under a Memorandum of Understanding (MoU) inked between the governments of Pakistan and Republic of Korea, he said only Overseas Employment Corporation (OEC), a public sector organisation, had been authorised to recruit, train and send Pakistani workers to Korea on work visa.

In this regard, official said OEC has arranged a number of courses for Pakistani workers about Korean language and culture, adding the tests were conducted under the supervision of the Human Recourse Department, Ministry of Labour Korea, he added. He said OEC has received a number of complaints that some private test centres and agents are charging huge amounts for conducting Korean language training test on pretext of sending them to Korea for employment.

Official advised the people to avoid unauthorised technical trade test centres and private agents who are misleading the people for employment in Korea. Over 7.5 million overseas Pakistanis working in various countries including United States, Canada, Europe, Middle East and Far East.

Business Recorder [Pakistan's First Financial Daily]


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*Industrialists urged to sell goods on minimum profit​*
KARACHI (July 12 2008): Consumers Association of Pakistan (CAP) Chairman Kaukab Iqbal has said that consumers are suffering from ever increasing prices and to provide relief to them it has become mandatory that industrialist must sell their goods with bear minimum profit.

He was leading a delegation of CAP, which was called on Provincial Industries Minister Rauf Siddiqi, and discussed the rising cost of living and unabated price hike with him. During briefing the CAP Chairman said the Association was serving as a bridge between industries and consumers and making efforts to promote standard goods.

Drawing the attention of industrialist, the CAP Chairman emphasised they had to manufacture standard goods not only for local market but for export also, to meet World Trade Organisation (WTO) requirement.

He observed that many products being sold in market had no complete address on the packets, therefore consumers were facing hardship to make complaint if any, and requested that Department of Industries and Commerce should instruct them to display full address on the packets. He proposed to hold first Consumers Expo Discount Idea for Consumers during the Holy month of Ramazan with consumer goods sold at ex factory rate which, in turn, would help in arresting increasing prices.

Industries Minister expressed emphasis on protection of consumer's rights and assured of all possible assistance to CAP and to encourage holding the first Consumers Expo Discount Idea for Consumers during Ramazan and later at the towns level to provide consumers with some relief in terms of cost and quality.

He said steps must be taken to promote local industries to overcome the prevailing economic crises and make industries to sell quality goods and supply them on reasonable profit.

Business Recorder [Pakistan's First Financial Daily]


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*Hydro-power generation: 317 sites identified to set up plants​* 
LAHORE (July 12 2008): The Punjab Irrigation and Power Department has identified 317 suitable sites for setting up hydro-power generation plants in the province, developing additional energy resources, fetching 600 megawatts of additional electricity.

Punjab Irrigation and Power Secretary Babar Hassan Bharwana revealed when he briefed Punjab Senior Minister Raja Riaz Ahamd, Punjab Revenue and Punjab Sports and Youth Affairs Ministers Haji Muhammad Ishaq and Dr Tanveer-ul-Islam on Friday.

He apprised the ministers about the energy vision, emerging irrigation problems and steps to improve the canal infrastructure in the province. "The places identified to set up hydro-power generation plants include 10 river-sites, which could produce 246 megawatts of electricity," the secretary said.

Under Punjab power policy vision, he informed them that private sector, along with the public sector or independently, could set up power generation projects. "Under the Article 157(2)(C) of the Constitution of the Islamic Republic of Pakistan, provinces have been allowed to develop power houses up to 50 megawatt," he added.

The Punjab government has developed its own power generation policy and private sector is being encouraged to invest in energy sector. The government has issued letters of interest (LoI) to 10 different parties. The LoI has also been invited for setting up 4.8 MW power plant at Sahiwal.

According to rules, 67 months had been given for setting up a new power plant, which could be reduced, he said. He the I&P project of setting up five hydel power plants was ready to takeoff, for which PPMU had been set up. About setting up small dams in the Potohar region, the secretary said 46 small dams had already been developed, while 13 others were being developed.

"According to a detailed inventory conducted in 2006, total asset value of I&P infrastructure was 20 billion dollars, while 2.4 billion dollars were required to fully repair and rehabilitate the irrigation infrastructure in Punjab. "I&P dept is following holistic reforms to achieve reforms targets," he added.

Business Recorder [Pakistan's First Financial Daily]


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*Karachi atomic powerhouse starts supplying 80 megawatts electricity​*
ISLAMABAD (July 12 2008): Karachi atomic powerhouse has commenced providing 80 MW electricity to Karachi Electric Supply Corporation (KESC) after two months' suspension. KESC spokesman told a private television channel that the transmission line of KESC got tripped two months ago that left metropolitan short of 80 MW electricity.

He said that having repaired transmission lines 90 MW electricity would soon be provided to the city, adding that spontaneous power outage would be relieved by the resumption of fresh 80 MW electricity.

Business Recorder [Pakistan's First Financial Daily]


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*Textile tycoons say no to shutter-down strike ​* 
Sunday, July 13, 2008

KARACHI: Textile tycoons and representatives of various industry-related associations decided at the KCCI platform on Saturday that they would not go on shutter-down strike, but would engage public representatives to get the gas price hike and other issues resolved.

Zubair Motiwala and Iqbal Ebrahim made clear that the industry was not against the hike in gas price, but it was against the unprecedented and unbearable rise. Industry is not in a condition to absorb 68 per cent increase in gas price for Captive Power Plants (CPP) and 31 per cent increase in general tariff for textile units, they explained. There should be a formula to increase gas prices for the industry and demanded the government to remove cross-subsidy on gas, oil and electricity.

To make the government realise of anti-textile industry steps in the budget 2008-09 and then raising gas prices to unbearable height, they started off their journey from KCCI with protests.

Announcing their strategy on how to convince government on solving their problems, BusinessMen Group (BMG) Chairman Siraj Kasim Teli announced to launch media campaign.

We are going to advertise our four major issues in print and electronic media. In this we would also demand the government to solve our issues within 48 hours, Teli said. He also added, We believe in convincing them to end discriminatory behaviour with the textile industry and remove cross-subsidy system on utility tariffs.

The four main issues that would be advertised are included, (1) to reduce gas price to Jun 30 2008 level and to make a formula for determining current and future gas prices, (2) to make electricity tariffs rational, (3) to extend R&D support, and (4) withdraw withholding tax on small and medium textile units.

They would also demand the government to include industry representatives on export policy making board; in Oil and Gas Regulatory Authority (OGRA) and National Electric Power Regulatory Authority (NEPRA).

If the government does not accept the industrys specific demands then they would stage protests, long marches, hold processions in National Assembly and every option available.

Owing to massive rise in cost of doing business, the wet and process and other textile industry units have been completely closed down in Faisalabad. 

These units in Lahore were also being closed down gradually, and if situation remained gloomy then we have to close textile units in Karachi as well, they said.

The meeting concluded with forming a committee of five members headed by the KCCI president to hold talks with the government. The other four members are Zubair Motiwala, Nishar Shekhani, Billal Mulla and Muzammil Hussain.

These last four members of the main committee would further head the other four committees, respectively on gas, electricity, R&D and withholding tax as homework before meeting the high officials, meeting resolved.

The meeting resolved that the main committee would hold meetings with government officials on regular basis till they agree to resolve industry issues. Government officials and we are already in constant contact for the resolution of underlined issues and believe that they would be resolved very soon, said Ebrahim.

The meeting was chaired by Businessmen Group (BMG) Chairman Siraj Kasim Teli and attended by President KCCI Shamim Shamsi, KCCI Former Chairman Zubair Motiwala, APTMA Chairman Iqbal Ebrahim, Pakistan Apparel Forum Chairman Naqi Bari, PRGMEA Chairman Billal Mullah and SITE Association of Industry Chairman Nishar Shekhani.

Other participants include the representatives of Pakistan Woollen Mills Association, Shuttles Looms Industry Association, Pakistan Cotton Fashion Apparel Manufacturers & Exporters Association, Pakistan Hosiery Manufacturers Associations and All Pakistan Processing Mills Association.

Textile tycoons say no to shutter-down strike


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*Saudi confirms $125m credit facility for Pakistan ​* 
Sunday, July 13, 2008

ISLAMABAD: Saudi authorities on Saturday confirmed to Pakistan, that it can avail credit facility worth $125 million for the import of urea fertiliser to meet its shortage, a senior government official told The News.

The Ministry of Food, Agriculture & Livestock (MINFAL) and Economic Affairs Division (EAD) have finally concluded negotiations for Saudi credit, said Shahid Hussain Raja, Additional Secretary MINFAL on Saturday.

Pakistan had requested the Saudi government for reviving another credit facility of $125 million for the fertiliser, as it had nearly availed the existing Saudi credit facility of $133 million, which the kingdom pledged after the devastating earthquake of 2005 and Pakistan imported urea fertiliser as the country had been facing a severe shortage in the commodity since the last couple of years.

Pakistan is importing 300,000 tonnes of urea from Saudi Arabia under the credit facility offered by the kingdom and instead of distributing it to urea manufacturers, MINFAL would supply the commodity through National Fertiliser Corporations outlets, Raja said.

After the recent increase in gas prices, urea manufacturers have increased the prices of the commodity from Rs620 to Rs700 per 50kg bag. It is worth mentioning that the government did not increase gas tariff for feedstock, but they increased the prices. Last year, urea price stood at Rs540 per 50 kg.

Prime Minister Syed Yousuf Raza Gilani, in his meeting with the King of Saudi Arabia in the first week of June, discussed economic cooperation between the two countries and sought Saudi assistance.

Pakistan will only import urea fertiliser as the kingdom is self-sufficient in urea, whereas the country is deficient in the commodity and has to rely on imports, said Shahid Hussain Raja, additional secretary, MINFAL.

When asked about self sufficiency of urea domestically, Raja said that it could be achieved when Fatima Group and Engro urea plants commissioned in 2010 and till then, we would have to rely on imported urea, he added.

The government is also importing 350,000 tonnes of urea for this ongoing kharif season to meet the shortfall and TCP has placed tenders for the import of the commodity.

Out of the total consumption basket of 7 million tonnes of fertilisers, 5.4 million tonnes are urea fertilisers while the remaining 1.6 million tonnes are the phosphorous and potassic fertilisers. For the urea fertilisers, the country has local production of 4.8 million tonnes and 0.6 million tonnes of shortage, is met through imports.

Saudi confirms $125m credit facility for Pakistan


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*Pakistan fails to keep pace with regional economies ​* 
Sunday, July 13, 2008

LAHORE: Pakistan seems to have taken a flawed approach to the economy, which is manifested by the fact that it has failed to keep pace with major economies of South Asia which have also faced the same challenges of rising prices of food and crude oil.

The magnitude of the stress on the economies of Bangladesh and India is far less than that on Pakistan. Both countries are experiencing high inflation (8 per cent in India and 11.5 per cent in Bangladesh), but these are lower than inflation rate of over 20 per cent being currently faced by Pakistan.

Bank mark-up has gone so high that it has brought industrial borrowing to a halt and all finance being sought is for running capital.

Textile industries in Bangladesh and India are showing a robust growth while apparel industries in Pakistan are closing down. Textile is the mainstay of Pakistani and Bangladeshi economies. In India, textile accounts for over 25 per cent of exports.

Economists point out that spending beyond means and bad governance contributed to the present stalemate in Pakistans economy while the Indians and Bangladeshis adjusted their policies according to ground realities to minimise the adverse impact of the rise in food and oil prices.

Bangladesh and India are not facing the similar pressures as being endured by Pakistan because their macro-economic indicators are strong. Currencies of Bangladesh and India are stable while that of Pakistan is unstable and declining. The Indians, in fact, made efforts to bring their currency down to the present level of around Rs43 to a dollar from Rs39 a few months ago. Bangladeshi currency remains stable at 68.50 a dollar and perhaps for the first time in the history Pakistani rupee is weaker even than Bangladeshi taka.

Pakistani planners proudly proclaim that remittances from overseas workers have exceeded $6 billion. However, India is the largest recipient of foreign remittances exceeding $30 billion a year. Its remittances were at almost the same level with Pakistan in the early 80s.

Remittances for Bangladesh were much lower than Pakistan by the start of this century. Now its workers abroad send more than $8 billion.

Trade deficit has widened in India, Pakistan and Bangladesh mainly due to high crude oil prices. However, the deficit is manageable in India and Bangladesh due to higher inflows of remittances, foreign direct investment and other sources.

Foreign exchange reserves of India and Bangladesh have been increasing steadily for the last seven years. However, Pakistans reserves have been on the decline for the last two years. Presently, its reserves of around $10 billion are enough to finance over two and a half months of imports.

Bangladeshs foreign reserves of $6 billion are enough to finance four months of imports while Indias reserves of over $318 billion are sufficient to finance 15 months of imports. Only four years ago, Pakistans foreign reserves were sufficient to foot its one-year import bill.

Economists fear that time is not far when foreign banks would refuse to honour letters of credit from Pakistan if the increase in imports is not checked immediately with a substantial rise in exports.

Despite a high trade deficit of $5 billion, Bangladesh still has a positive current account balance. India has posted its first current account deficit of $17.5 billion which it could easily absorb due to high foreign exchange reserves.

Pakistan fails to keep pace with regional economies


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*Bio-gas project to be commissioned by month-end ​* 
Sunday, July 13, 2008

KARACHI: A pilot project costing $5 million to produce 486 meters cubic feet of bio-gas and 25 kilowatts of electricity per day from cow dung will be commissioned by the end of July. 

President National Engineering Corporation and Chief Executive of the project Syed Feroz Shah told the Sindh Environment and Alternative Energy Minister Askari Taqvi during the latters visit to the plant in Cattle Colony, Bin Qasim here on Friday. 

He said a British company, HIRAD Plc, has installed this plant as a pilot project to utilise cow dung and convert it into bio-gas and electricity, besides producing 2.25 tons of enriched natural manure (organic fertilizer). 

He said the cow dung will not be discharged into the sea as has been done at present and instead this waste will be used to generate bio-gas, electricity and manure. 

After the successful experiment, a large plant with a capacity of producing 30 megawatts of electricity, 0.430 million cubic meters of bio-gas and 1,500 tons of manure per day will be installed in cattle colony. The cost of the large plant is estimated in the range of $120 million and leading multinational companies besides Asian Development Bank (ADB) have already shown their keen interest to invest in this project, Shah told the minister. He said several such plants of alternate energy can be set up under the joint venture between the local and foreign companies. 

The minister gave assurances for all the possible support to the project and said that alternate energy has bright future in the wake of skyrocketing oil prices. 

Shaukat Mukhtar, joint secretary of Karachi Dairy Farmers Association and owner of cattle farm where the bio-gas plant in coming up, urged the minister to provide a smooth access to the plant by improving the dilapidated approach road. 

Bio-gas project to be commissioned by month-end


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*Pakistans telecom sector: a lost potential? ​* 
Sunday, July 13, 2008

The Hidden Hands of Government can play a critical role to spawn socioeconomic growth through ICT. This role has been played out successfully in many countries, including neighbouring China and India. Sadly, it still remains absent from every facet of government policy in Pakistan. 

In India, the Hidden Hands of Government has managed to generate and sustain annual increases in its GDP that are the envy of developing nations around the world. Through (1) procurement policy (percentage local development & production, relevant technology transfer, relevant knowledge transfer, local R&D),

(2) relevant policy on human resource development (relevant educational institutions, relevant education, relevant training, relevant research), (3) relevant policy on employment generation (local manufacturing to satisfy local demand, excess capacity for export, value added services), and (4) a policy of championing domestic companies through allocating domestic projects to generate relevant domestic experience before developing them into international stars (national-turned-international enterprises).

In the telecommunication sector, we all know how proud our outgoing government was of the way the tele-density, particularly the mobile density, increased in the country. Unfortunately, the primary impact has been to help Pakistan grow as a consumer market. The development of sophisticated indigenous capacity for manufacturing handsets and network equipment and the development of applications for value-added services have been completely ignored. Whereas in India, the public sector operators have enforced that 30 per cent value addition of equipment which they purchase takes place within India. As a result, Nokia set up its plant in India to produce two million phones per month. By January 2009, Motorola will start producing about 1.4 million phones per month. Samsung and LG are already setting up their plants while Sony Ericsson is also on the verge of finalising a deal.

Through this policy, indigenous production substitutes the import of telecom equipment and India progresses from being a consumer to becoming a manufacturer and exporter. The policy is enabling large Indian mobile service providers to target the rural market with aggressive tariffs and low-cost handsets and at the same time helping the Indian government deliver e-health, e-education, e-agriculture, e-government and e-commerce to rural areas. Thus, despite being years ahead of India in terms of attracting FDI in the telecommunication sector and achieving a higher tele-density, Pakistan remains a pure consumer market with zero local manufacturing of handsets and network equipment. One would like to know why not a single equipment manufacturer has established manufacturing facilities in Pakistan?

One would like to know why there is still no government policy to remedy the situation even when the market presents a perfect business case for attracting local manufacturing. According to the Pakistan Telecommunication Authoritys (PTA) 2007 Annual Report, Around 20 per cent of mobile users in Pakistan change their handset thrice a year which indicates that Pakistan is a lucrative market for manufacturers of mobile handsets and other telecom equipment. A similar percentage of mobile users change the mobile handset once a year and this could be a successful business model, and spent about $1.347 billion on import of cellular mobile handsets and other telecom apparatus in 2006-07. Attracting foreign companies to invest in this area of telecom equipment in the country would decrease the burden on foreign exchange, encourage technology and knowledge transfer and create further employment; the recent levy of Rs1,000 customs duty on mobile handsets will not even remotely address the issue.

While technology buzzwords like 3G, Wi-Fi and WiMAX continue to be whispered in the corridors of our Ministry for IT&T and most broadband and mobile network operators in Pakistan, Indias Telecom Factories, the in-house production units of BSNL have already begun manufacturing the latest generation Wi-Fi and WiMAX equipment under joint ventures with Original Equipment Manufacturers (OEMs). After meeting BSNL requirements at disruptive price points, the JV companies are free to sell these items in the open market or export. One would like to know why not a single broadband or telecom operator has established equipment manufacturing or latest next generation equipment facility in Pakistan?

The Internet kiosks at airports make Pakistan look very primitive. We need to exploit WiMAX technology to provide citywide seamless wireless connectivity in all major cities. Mobile Network Operators Universal Services Fund (USF) currently looks at providing services to under-served and un-served regions. Part of the USF should be better utilised to encourage the take-up of ICT by professional groups in cities (government, lawyers, doctors, engineers, teachers, etc)

Consortiums will offer up to, for example, 34 kbps of bandwidth free to subscribers and any additional consumption of bandwidth for higher use will be charged on a pay-per-use basis.

Part of the USF should be better utilised to encourage the take-up of IT by professional groups in cities (government, lawyers, doctors, engineers, teachers, etc).

Start with the airports, government, government institutions, five-start hotels, etc.

Our Ministry of IT&T is currently considering the auction of 3G licences. Whether they are 3G or 4G or technology neutral, new licences will generate very limited one-off revenue in the form of licence fees. However, a licence policy that mandates a request for proposal from all bidders that includes the socio-economic benefits in the form of local R&D facilities, percentage local manufacture/purchase of equipment, local development of value-added services, etc would deliver far greater socioeconomic benefit than licence fees alone. One would like to know why our IT&T policy is still not considering such incentives. One would like to know why our IT&T policy continues to focus on fees alone at the expense of more extensive and longer term socioeconomic benefits.

Telenor recently opened its regional R&I centre in Kuala Lumpur prior to auction of 3G licences by the Malaysian government. With the right policy and government intervention, such R&I centres could be easily attracted to Pakistani shores to conduct local development, local research, local innovation, to ensure knowledge & technology transfer, to generate meaningful employment and create network externalities.

Governments have the unique catalytic ability to push collaboration among public, private, academic, and foreign agencies. Pakistan can achieve these ends through a licensing and procurement policy that encourages local procurement. Our new IT& T policy must consider such incentives.

The implementation of government initiatives at different levels is urgently required in Pakistan. The alternative is to live with Pakistan as a consumer market and not a manufacturer and exporter unlike our neighbours India and China who enjoy the fruits in the form of double-digit contributions to GDP and a massive reduction in imports and burden of the foreign exchange.

The writer, an advocate, is a PML (N) MNA and ex-corporate legal counsel, Telenor.

Pakistans telecom sector: a lost potential?


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*FBR chief stresses modern technology ​* 
Sunday, July 13, 2008

ISLAMABAD: Federal Board of Revenue Chairman M Abdullah Yousuf has called for an efficient use of modern technology for more revenue generation in order to enhance the tax-to-GDP ratio and expand the tax base. 

He was addressing a workshop on Management Automation Projects held at the FBR headquarters here on Saturday. Among others, officers dealing with the automation work at field offices of the FBR attended the workshop. 

The FBR chairman stressed the need for officers to equip themselves with latest techniques and technologies. This organisation has a great potential. Once you are fully equipped with modern knowledge, techniques and technology, then it would not be difficult to achieve desired results, he added. 

He was of the opinion that as an institution, we have to go for a better change. No country or organisation can grow and progress if it remains stagnant. We have to change ourselves with this rapidly changing world to face the challenges of modern times. 

The chairman said: Although we were happy to cross the psychological barrier of Rs1 trillion in revenue collection in the last fiscal year (2007-08), but still there was a gap of Rs400 to Rs500 billion today. 

This gap cannot be bridged until and unless we enhance our tax-to-GDP ratio from existing 11 per cent to 15-16pc. Its not impossible provided we have the will, commitment and tools to do it. 

He, however, said despite all constraints, handicaps and non-availability of necessary tools the FBR has been able to expand the tax base in the last four years from one million to 2.2 million taxpayers at a growth rate of 20 per cent per annum. He said: Similarly, we have been able to enhance the revenue collection at an average of about 18 per cent per annum. This is good & fine but, we have to plug the existing gap. 

Commenting on the on-going automation projects, Yusuf said: We have to realize the dream of making FBR a totally paperless organization. 

He asked the relevant officers and officials to make all possible efforts to achieve this goal. On the occasion, he reminded FBR employees of their responsibilities towards making FBR the most progressive and efficient organization. 

Earlier, FBR Director (Projects) Muhammad Asghar Chaudhry said currently four pilot automation projects were in the process of development and implementation. They are; Human Resource Management Solution (HRMS), Electronic Correspondence Management System (e-Dox), Budget & Accounts/Inventory Management System- SAP and e-Archiving. All these projects are at different stages of implementation at FBR headquarters. After their completion, they will be replicated in the field offices of the Board, Chaudhry added. 

He said these systems will bring transparency and efficiency in the overall administration and management system of the board.

FBR chief stresses modern technology


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*S. Arabia to give oil worth $6bn on deferred payment​*
ISLAMABAD, July 12: Saudi Arabia has agreed to provide crude oil worth $5.8 billion to Pakistan on deferred payments for the current fiscal year to overcome its increasing financial difficulties.

Sources at the ministries of finance and petroleum have confirmed that Saudi Arabia will provide oil on deferred payments, as requested by Prime Minister Syed Yousuf Raza Gilani and PPP co-chairperson Asif Ali Zardari during their meeting with Saudi King Abdullah bin Abdulaziz last month.

Finance Minister Syed Naveed Qamar met Saudi Ambassador Ali Awadh Asseri on Thursday to discuss modalities regarding the oil facility.

The prime ministers adviser on economic affairs, Hina Rabbani Khar, told Dawn that there were positive indications about oil import on delayed payments from Saudi Arabia. However, she added, issues relating to mode of payments and size of oil facility had yet to be finalised.

Officials were reluctant to quantify the amount and said the modalities were being worked out.

They said Pakistan roughly imported 110,000 barrels of oil daily and 40,150000 barrels annually which, if calculated at the current price of $145 a barrel, amounted to about $5.8 billion. Of the total 202,000 bpd a year, half of crude oil is imported from Saudi Arabia.

Pakistan had first received the $1 billion Saudi oil facility in 1998 when it faced international sanctions for testing nuclear devices. It remained intact till 2003 when Pakistan received only $300 million of the facility.

Sources said that resumption of the Saudi oil facility was very important at a time when the countrys foreign exchange reserves had gone down to $11 billion from $16 billion in November last year. The $11 billion reserves include $2.9 billion held by banks.

Over $2 billion foreign exchange liability has been created by the State Bank which has to be met at their maturities. In a nutshell our reserves today stand at $6 billion, a source said.

The sources said Saudi Arabia had also promised to encourage investment in Pakistans privatisation programme which aimed to generate $2 billion during the current financial year.

Pakistan plans to hold two international conferences in Jeddah and Riyadh soon to attract foreign investment in oil and gas, agriculture, information technology, construction and real estate sectors.


S. Arabia to give oil worth $6bn on deferred payment -DAWN - Top Stories; July 13, 2008


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*$15m export loss likely as US firm files bankruptcy​*
KARACHI, July 12: A leading importer of readymade garments from Pakistan has filed chapter 11 in the US court for bankruptcy thereby threatening remittances of millions of dollars against shipments made by many exporters.

The importing company Steve & Barrys had been a leading buyer of garments from Pakistan. However, for some reason the company for last several months stopped remitting proceeds against shipments from Pakistani exporters.

According Rafiq Godil, the chairman of the action committee formed for the rescue of victims of Steve & Barry exports income over $15 million would be lost in case the company is declared bankrupt.

He said for the last several months exporters were not getting remittances against their shipments. However, on inquiry it was found that the importer had cleared the goods because the freight forwarders changed the consignee name in the master bill of lading in connivance with the shipping company.

As a result of this the importer managed to release consignments without realisation of documents in the bank.

Mr. Godil urged the ministry of commerce to intervene in the matter in order to ensure their foreign exchange payment and save the exporters from financial loss.

$15m export loss likely as US firm files bankruptcy -DAWN - Business; July 13, 2008


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*Pakistani sellers receive large number of orders in Tendence​*
KARACHI: Pakistan is likely to have fetched export orders worth $100 million in the worlds most famous lifestyle fairTendence 2008, which was recently organised in Frankfurt, Germany.

Trade Development Authority of Pakistan (TDAP) had organised the participation for the Pakistani exhibitors at the five-day fair.

The Pakistani exhibitors were mostly from non-traditional items such as marble, wall clock, handicrafts, furniture, woodcraft, cutlery and kitchen utensils, souvenir items, etc.

Saima Akhtar of Sana Traders, Karachi, said upon her return that the visitors extremely appreciated her items of handicrafts made of rock salt. Various items such as vases, table lamps, ash-trays and wall clocks were the main focus, Saima said, adding that if the orders were fianalised she may be able to sell entire production of her factory for next fiscal year. She said that she was coming to this fair for the last several years and running her family business successfully.

Tahir Rafique of Edge Maker Industries, Wazirabad, said that his company was facing cut-throat competition and due to a wave of price hike of food items, the demand for souvenirs and non-traditional items has fallen greatly. However, he said, his firm is surviving on quality and innovative designs. He hoped that his firm would definitely materialize orders of several million dollars.

Muhammad Javid, the partner of Ideal Furniture Company, Chiniot, commented that he was happy to negotiate orders despite his inability to compete prices quoted by Indian and Chinese manufacturers.

The price of seasoned wood has gone up to Rs 2,400 per square foot as compared to less than half price prevailing in India, Javid disclosed. In such a situation where a competitor has a massive edge of more than half in cost of production, no one can sell his products, he said.

Since cost of all inputs including electricity, gas and labour has gone out of proportion, it is no less than a miracle to get orders, he said. The Commercial Counselor of Pakistan, Dr Feroz Junejo, said that it was really a wonder that Pakistani exhibitors were negotiating orders at the exhibition despite global recession and vast gap in prices as compared to India and China.

Daily Times - Leading News Resource of Pakistan


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## Neo

*OGDCL expedites exploration to meet energy needs​*
ISLAMABAD: Oil and Gas Development Company Limited (OGDCL) has adopted a strategy of extensive exploratory and development drilling in order to make additions in oil and gas reserves and ensure sustained growth in its oil and gas production, an official of OGDCL said Saturday.

He said there would be a focus on replicating international best practices and innovative thinking for meeting growing energy demands of the country.

The company has contributed Rs 82.87 billion to the national kitty in the year 2007-08, which was higher than 78.08 billion in the year 2006-07.

The company has also chalked out extensive programme to make new discoveries and enhance production to promote petroleum exploration in the country.

The ongoing and future development projects of OGDCL are UCH-II development project, Qadirput Gas compression project, Qadipur additional Gas capacity enhancement project, Dakhni expansion project, Tando Allayar development, Sinjhoro development project, Sara West development project and Jhal Magsi Poroject

After carrying detailed study of UCH Gas Field, it envisaged that OGDCL is in position to commit 200-220 MMcfd for 14 to 16 year to a new power producer.

After the completion of the project, the gas sale from Uch Gasfield will be enhanced from 250 MMcfd to 450 MMcfd.

In order to maintain 650 MMcfd raw gas plateau, which will start depleting by the end of 2008. Gas compression facilities would be required to maintain the production plateau of 650 MMcfd raw gas up to 2014 and maintain gas supply up to 2017.

Daily Times - Leading News Resource of Pakistan


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## Neo

Neo said:


> *S. Arabia to give oil worth $6bn on deferred payment​*
> ISLAMABAD, July 12: Saudi Arabia has agreed to provide crude oil worth $5.8 billion to Pakistan on deferred payments for the current fiscal year to overcome its increasing financial difficulties.
> 
> Sources at the ministries of finance and petroleum have confirmed that Saudi Arabia will provide oil on deferred payments, as requested by Prime Minister Syed Yousuf Raza Gilani and PPP co-chairperson Asif Ali Zardari during their meeting with Saudi King Abdullah bin Abdulaziz last month.
> 
> Finance Minister Syed Naveed Qamar met Saudi Ambassador Ali Awadh Asseri on Thursday to discuss modalities regarding the oil facility.
> 
> The prime minister&#8217;s adviser on economic affairs, Hina Rabbani Khar, told Dawn that there were &#8220;positive indications&#8221; about oil import on delayed payments from Saudi Arabia. However, she added, issues relating to mode of payments and size of oil facility had yet to be finalised.
> 
> Officials were reluctant to quantify the amount and said the modalities were being worked out.
> 
> They said Pakistan roughly imported 110,000 barrels of oil daily and 40,150000 barrels annually which, if calculated at the current price of $145 a barrel, amounted to about $5.8 billion. Of the total 202,000 bpd a year, half of crude oil is imported from Saudi Arabia.
> 
> Pakistan had first received the $1 billion Saudi oil facility in 1998 when it faced international sanctions for testing nuclear devices. It remained intact till 2003 when Pakistan received only $300 million of the facility.
> 
> Sources said that resumption of the Saudi oil facility was very important at a time when the country&#8217;s foreign exchange reserves had gone down to $11 billion from $16 billion in November last year. The $11 billion reserves include $2.9 billion held by banks.
> 
> &#8220;Over $2 billion foreign exchange liability has been created by the State Bank which has to be met at their maturities. In a nutshell our reserves today stand at $6 billion,&#8221; a source said.
> 
> The sources said Saudi Arabia had also promised to encourage investment in Pakistan&#8217;s privatisation programme which aimed to generate $2 billion during the current financial year.
> 
> Pakistan plans to hold two international conferences in Jeddah and Riyadh soon to attract foreign investment in oil and gas, agriculture, information technology, construction and real estate sectors.
> 
> 
> S. Arabia to give oil worth $6bn on deferred payment -DAWN - Top Stories; July 13, 2008



*Saudis bail out Pakistan with $5.9bn oil facility​*
** Agreement to last until end of current fiscal year
* Saudi Arabia sells about 110,000 barrels of crude oil daily to Pakistan​*
JEDDAH: Saudi Arabia agreed in principle on Saturday to defer payments for crude oil sales to Pakistan expected to be worth about $5.9 billion during the 2008-09 financial year.

&#8220;There is an agreement ... to defer oil payments. The modalities are being worked out,&#8221; Finance Minister Naveed Qamar said in an interview with the Financial Times on Friday night.

While Qamar would not discuss the time-span for which payments on Saudi oil shipments would be deferred, a Petroleum Ministry official separately said that the agreement involved deferring payments until at least June 2009 when the financial year ended.

*It was not clear if the deferred payments would have to be paid back. The Saudis in 1998 began supplying crude oil under a deferred payment plan after Pakistan carried out its maiden nuclear tests and came under international sanctions.* In that previous case, after three years of deferred payments, the Saudis practically wrote off the payments. *Insiders expect that there may be a similar write-off in the future of the deferred payments now under discussion.*

Sources in Jeddah indicated to Daily Times that the Saudi economic package may contain a political element too, related to President Pervez Musharraf&#8217;s future. This bailout puts the Saudis in the driving seat, along with the Americans, as far as Pakistani internal and external politics is concerned, with both the Pakistan People&#8217;s Party and the Pakistan Muslim League-Nawaz (PML-N).

Apparently, the immediate impact will be on PML-N chief Nawaz Sharif&#8217;s politics of confrontation with Musharraf, which will have to be diluted significantly in line with ground realities. The Saudis, like the Americans, want a stable transition to civilian rule and no confrontation between the politicians and the military, including Musharraf.

*Crude oil: Saudi Arabia sells about 110,000 barrels of crude oil daily to Pakistan or about 40 million barrels a year, which at $147 a barrel comes to about $5.88 billion. Pakistan imports a total of 202,000 barrels per day or approximately 73.7 million barrels a year &#8211; half of that from Saudi Arabia. Pakistan consumes a total of 370,000 barrels a day or about 135 million barrels a year. The gap between oil imports and consumption is filled with locally produced oil.*

Daily Times - Leading News Resource of Pakistan


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## Neo

*Real GDP grew to Rs 5.492 trillion during 2007-08​* 
KARACHI (July 13 2008): Real Gross Domestic Product (GDP) volume reached new peak level of Rs 5.492 trillion during 2007-08 from Rs 5.192 trillion of previous year, up by Rs 300.383 billion, due to the robust performance of the services sector. The State Bank of Pakistan has released sector-wise data of real GDP growth, which showed that the country's economy grew by 5.78 percent during fiscal year 2007-08.

However, the increase in the GDP growth was about 2 percent less than the fiscal year 2007, as then it grew by about 6.8 percent, or Rs 332 billion. However, growth during 2007-08 was also lower than the annual growth target of Rs 374 billion, or 7.2 percent, fixed by the policy markers.

The services sector played a vital role in achieving 5.78 percent GDP growth, as growth in services sector was higher than commodity producing sector. Services sector presented a healthy growth of 8.6 percent during fiscal year 2008. Its volume increased to Rs 2.923 trillion by the end of June, 2008 as compared to Rs 2.702 trillion in fiscal year 2007, showing an increase of Rs 220.591 billion.

The growth of Commodity Producing Sector, comprising agriculture and industry, stood at 3.20 percent in fiscal year 2008. The volume of commodity producing sector reached Rs 2.569 trillion during 2008 over Rs 2.348 trillion of 2007, depicting a rise of Rs 79.747 billion in 2008.

"Internal and external shock, uncertainty on political front, short supply and poor law and order situation has wickedly hurt the GDP growth in last fiscal year", analysts said.

They said that energy shortage in the country, soaring oil prices, political battle and rising raw material prices hampered the economic growth during 2008. The manufacturing sector also presented feeble growth on the back of these internal and external shocks, besides the tight monetary policy. In commodity producing sector, the agricultural volume mounted to Rs 1.148 trillion with an upsurge of 1.48 percent, while the industry grew by 4.6 percent to Rs 1.420 trillion by the end of fiscal year 2008.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Tax-to-GDP ratio to be enhanced to 15-16 percent: Yusuf​* 
ISLAMABAD (July 13 2008): Federal Board of Revenue (FBR) Chairman M. Abdullah Yusuf has said that the tax-to-GDP ratio has to be enhanced from 11 to 15-16 percent for reducing gap of Rs 400 billion to Rs 500 billion in revenue collection. Addressing a workshop on 'Management Automation Projects' here on Saturday.

The FBR chief said although tax machinery is happy to cross the psychological barrier of Rs 1 trillion in revenue collection during 2007-2008, a gap of Rs 400 billion to Rs 500 billion still exists at present. This gap cannot be bridged until and unless tax-to-GDP ratio is being enhanced from existing 11 to 15-16 percent. It is not impossible provided we have the commitment and necessary tools to do it, he added.

He, however, said that despite all constraints, handicaps and non-availability of necessary tools, the board has been able to expand tax base in last four years from one million to 2.2 million taxpayers at the growth rate of 20 percent per annum.

Similarly, the board has successfully enhanced revenue collection at an average of about 18 percent per annum, pointing towards a need to plug existing gap. In next seven years, we have to achieve the target of 15-16 percent tax-to-GDP ratio with an annual growth of at least 0.5 percent, Abdullah Yusuf added.

He also called for efficient use of modern technology for more revenue generation, enhancing tax-to-GDP ratio and expanding the tax base. Abdullah Yusuf called upon the officers to equip themselves with latest techniques and technologies. He was of the opinion that as an institution or country, we have to go for a better change. We have to change ourselves with this rapid changing world to face the challenges of modern times, he opined.

Commenting on the ongoing automation projects, he said the FBR would become a totally paperless organization on completion of these projects. He asked the relevant officers and officials to make all possible efforts to achieve this goal.

Earlier, FBR Director (projects) Muhammad Asghar Chaudhry, in his welcome address, said, at present, four pilot automation projects were in the process of development and implementation. They are 'Human Resource Management Solution (HRMS)', 'Electronic Correspondence Management System (e-Dox), 'Budget and Accounts/Inventory Management System- SAP', and 'E-Archiving'.

All these projects are at different stages of implementation at FBR headquarters. After their completion, they will be replicated in the field offices of the board, Asghar Chaudhry added. He said that these systems would bring transparency and efficiency in the overall administration and management system of the board.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Wapda urged to generate 100 megawatt power from Thar coal​*
KARACHI (July 13 2008): The Sindh government has urged the Wapda to take steps to generate 100-megawatt electricity from Thar coal, annually, instead of proposed 30 megawatts to overcome power crisis. The demand was made at the 59th board meeting of Lakhra Coal Development Company (LCDC) held here on Saturday with Advisor to Sindh Chief Minister on Mines and Mineral Development, Dr Khatu Mall Jewan.

The meeting was started with a Fateha Khawani held for the departed soul of Shaheed Benazir Bhutto. The Board Chairman and Advisor introduced the members to the participants of the meeting. The meeting approved recommendations of previous meeting. It also announced a honorarium equal to two basic salaries for the employees of the Lakhra Coal Development Company in recognition to their hardworking.

Briefing the advisor, the company officials said that they would now supply coal to Wapda at market rate. The advisor urged Wapda officials to generate more electricity from coal resources so that people could get rid of load-shedding. Sindh Mines and Mineral Development Secretary, Mohammad Younus Dhaga, MD Pakistan Mineral Development Department, MD Lakhra Coal Development Company and representatives of Sindh government and Wapda.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Government advised to produce thermal energy by using coal​*
KARACHI (July 13 2008): Pakistan could have avoided the adverse effects of the high cost of petroleum products including petrol, diesel and furnace oil, if it had avoided over reliance on petroleum based products for generating thermal power and had instead given encouragement to use indigenously produced coal in power generation, reports UPP correspondent.

The conversion of the Pakistan Railways to diesel engines instead of coal engines resulted in growing use of diesel by the railways and the discarding of coal for running railway engines while in India nearly 50 percent of railway engines still run on coal.

The use of diesel in place of coal resulted in widespread use of petroleum products in the road transport. The government also established thermal power plants in which oil was used instead of coal.

As a result, the required growth of the coal mining industry in the country did not take place. The government at the federal and provincial level also neglected the promotion of the coal mining industry and its increase in annual production was also minimal.

Experts have pointed out that several warnings were given by the concerned officials against excessive usage of petroleum based products including diesel. As a result, the coal mining in Pakistan did not develop to the needed extent. In spite of various advances in removal of sulphur content from coalmines in Pakistan, large-scale employment of this technical facility for improving quality of coal was also not used by the authorities.

The development of the Thar coal deposits was also over delayed by the authorities in Pakistan. Details collected by UPP correspondent shows that various efforts by geologists in the country, including the stalwarts of the Geological Department of Pakistan to coax government into developing the Thar coal deposits as early as 1962 did not register. Government should go in for coal development in Pakistan on a larger scale and use it as the raw material for producing thermal energy.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*PCSIR to initiate projects worth Rs 1.2 billion​* 
PESHAWAR (July 13 2008): The Pakistan Council of Scientific and Industrial Research (PCSIR) would initiate seven research and development projects in the country, which would cost Rs 1.2 billion. This was told during a briefing on the occasion of the Governor NWFP Owais Ahmad Ghani visit to the NWFP branch of the PCSIR laboratories here on Saturday.

The Central Chairman, Engr Sheheryar Khan, Member Technical, Engr Qadar Hilal as well as the Director General of the Peshawar Chapter, Engr Muhammad Tariq, and other senior scientists and researchers of the laboratories were present on this occasion. The Governor was informed that almost 50 research projects in various development sectors are in progress in the laboratories, which also include field activities both in the province and Fata.

Mineral, food nutrition especially the fruits and vegetables processing and preservation, mechanical and engineering sectors are receiving due priorities wherein, apart from individual clients, institutions are also served both in the private and public sectors.

The laboratories, it was added, has developed its branches in Chitral and Skardu, wherein latest technologies, matching to the local needs have been introduced to ensure due return to the respective farming communities, particularly in the fruits and vegetable sector. The Governor was further informed that the laboratories have developed quality control system in the field of honey production, which is proving highly beneficial to enhance earnings especially in the shape of foreign exchange.

The scientists of the laboratories, the Governor was informed, have published 157 research papers and introduced 10 patent products over the year, apart from making upgradation and improvement of quality and standard of a number of products in various fields and providing chemical analysation services to clients.

Speaking on the occasion the NWFP Governor Owais Ahmed Ghani appreciated the achievements of the Pakistan Council of Scientific and Industrial Research (PCSIR) Laboratories in its research activities and also expected to develop more efficient, effective and result oriented liaison with industrialists and entrepreneurs to translate their findings into reality to the maximum extent and ensure timely transfer of benefits to the public.

Referring to working of the organisation, the Governor said, "today, highly enthusiastic and talented entrepreneurs are actively in almost every discipline of industrial sector, who not only have the thirst for making development of the country but also have due abilities to achieve the desired goals.

Meanwhile, the Governor went round various laboratories, installations, and workshops of the organisation and exchanged views with the researchers and scientists. He took keen interest in each and every aspect of the research activities and apprised him about their achievements as well as their future scope of work. Later on the Governor also inaugurated the newly established Pakistan Dimension Stones Centre at the premises of PCSIR Laboratories, Peshawar, which is the first institution of its nature in the province.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*2200 megawatts addition to national grid: government unlikely to meet promise by April 2009​*
ISLAMABAD (July 14 2008): The government is unlikely to meet its promise regarding the addition of 2200 MW to the transmission system by April 2009 in an effort to meet the energy crisis. This promise was repeatedly made by Prime Minister Syed Yousuf Raza Gilani and the water and power minister on the floor of the National Assembly.

Official documents obtained from PPIB reveal that some of the thermal power projects were behind schedule. "The target of 2200 MW programme runs the risk of delay due to several reasons," PPIB acknowledged in documents made available exclusively to Business Recorder.

According to these documents, a meeting was held on March 27 in the Prime Minister Secretariat with the Principal Secretary in the chair in which certain important decisions were taken targeted to ease the power shortage, including setting up thermal powers plants in the public and private sectors by April 2009.

The meeting also decided that the water and power secretary would be the focal person for co-ordination and resolution of problems related to the effective implementation of the decisions taken in the meeting. The government had assigned the PPIB to manage the awarding of projects of 615 MW capacity to the private sector.

The projects were Balloki (Orient) Power projects (simple cycle operation) with the capacity of 150 MW whose commissioning target was July 2008, followed by 150 MW Attock General Power Project by October 2008, 225 MW Atlas Power project by March 2009 and Balloki (Orient) Power project - combined cycle operation with 75MW capacity.

The PPIB has claimed that 225 MW combined cycle power project by Orient Power Company Limited (OPCL) had successfully signed all project-related agreements and achieved financial close. The ground-breaking of the project was held on November 29, 2005. Construction activities are underway, but some equipment is yet to arrive.

Following Prime Minister's decision, the PPIB had advised the sponsors of OPCL and Pepco to commission simple cycle phase 150 MW of the project by July 2008, but the parties have not yet signed the tolling agreement.

Another issue, which is delaying the project, is the non-availability of gas. OPCL was allocated 38 mmcfd from SNGPL on a 9 month basis up to 2011 based on a gas quota allocated to PPIB. The petroleum ministry was requested to ensure gas supply of 38 mmcfd to OPCL through SNGPL to start operation of the plant in simple cycle mode by July 2008.

The ministry conveyed its reservations on requisite gas supply for operation of the plant in simple cycle mode. In response, the PPIB clarified that its intent was not to provide gas for simple cycle operation of the OPCL's power plant by diverting gas from any of the existing power plants like Kapco; moreover, such arrangements would not result in any "capacity addition".

Further, the petroleum ministry was once again requested to arrange gas supply of 38 mmcfd to OPCL power project from gas quota of SNGPL placed at PPIB's disposal, without curtailing gas supply from any other power plant including Kapco.

The PPIB has clarified that timely provision of gas is imperative to start operation of the plant in simple cycle mode. However, the ministry has not yet responded to PPIB. Pepco recently informed the PPIB that simple cycle mode of OPCL project will only be possible (by end of August 2008) if timely supply of gas is made available to OPCL.

Regarding Attock General Power Project, the PPIB has clarified that the project has encountered hindrances in movement of engines since May 2008. The PPIB is in co-ordination with all the departments concerned to ensure smooth movement of engines. Due to its efforts, 3 out of 9 engines have reached the AGL project site since June 28, 2008.

Wartsila, the EPC contractor of AGL has lately communicated that the diversion made to Dhoc Pattan Bridge on Sawan River has been washed away due to recent rains and flooding, and consequently, six engines are stuck at Dhoc Pattan Bridge since June 12, 2008.

It has also been communicated that owing to the large volume of water flow and expected heavy monsoon rains, the re-construction of the diversion may take several months. Accordingly, Wartsila/AGL has sought permission from the Punjab government that they be allowed to use the new bridge of Dhoc Pattan with an undertaking for the repair costs against partial or whole damage caused to the bridge.

The PPIB has written a letter to the Punjab chief secretary that Warstila/AGL proposal may be considered favourably so as to amicably settle the issue. The PPIB is of the view that any delay in delivery of the engines may delay in the AGL Project commissioning, thus hampering the government efforts. The Atlas (Shirazi) Power Project is expected to be commissioned within schedule ie March 2009.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Soaring trade deficit and sliding rupee​*
For decades, Pakistans balance of trade remained negative, though not as high as now. In 1996-97, with the PPP in power, it touched $ 3.52 billion; today it is a staggering $20.75 billion. This deficit is based on imports of $39.97 billion and exports of $19.22 billion recorded by the Federal Bureau of Statistics (FBS) in 2007-08 but, as always, the export figure will be revised downward and the deficit could be six times of its 1996-97 size.

PPP is in power again and facing challenges that defy a solution to the economic predicament. Although this deficit is the legacy PPP knowingly inherited, its failure to devise a strategy to contain it until the economy attains a sustainable posture exhibits a lack of consciousness of its responsibility. This factor is escalating the psychological impact of the deficit i.e. eroding confidence in the economy.

The deficit is creating a directionless economy, which is the ideal environment for bounty hunters, as proved by the steady slide of the rupee (20 per cent) since January 2 reaching a climax on July 8. It forced SBP to take corrective actions yet again that central banks rarely take.

Trouble began when trade deficit more than doubled to $6.183 billion in 2004-05 over it 2003-04 level. The fact that it was met primarily by workers remittances was a red signal about consumption rising rapidly and becoming import-oriented. Containing imports called for supporting domestic producers of import substitutes to cut their costs and stay competitive with imports. Unfortunately, that wasnt done.

Instead, we went headlong for cheap imports not realizing that this addiction had lethal after-effects even on economies like the US. But by then Pakistan had entered the age of liberalization, deregulation and privatisation, courtesy its erstwhile Prime Minister. In 2005-06 the trade deficit doubled again to $12.011 billion, and in 2006-07 it rose further but was dubbed as the sure sign of growth. That growth has now pushed the deficit to $20.75 billion.

The figures show rising dependence on external sources to finance consumption as well as the waste that goes along with it. Except for workers remittances, no other source depicts any stability because all of them depend on political and economic stability. Tragically, the distortion escalated even during the tenor of the banker Prime Minister Shaukat Aziz.

According to the Governor SBP, imports during Jan-May 2008 were 51 per cent more than those of the corresponding period of 2007. Admittedly, the full-year 2007-08 imports include oil imports of $12 billion but the remaining $28billion is accounted for other imports, a huge component comprising consumer goods. In effect, we had been pumping a balloon that is now ready to burst.

After the downgrading of Pakistan risk by rating agencies it became clear that, except for workers remittances, other inflows would dry up and the rupee was in for a big slide. This view encouraged importing far more and quickly, which explains the meteoric rise in January-May imports. The strategy was to subsequently profit by selling everything on hugely inflated prices as the rupee depreciated.

Market players, who had earlier pumped that balloon, also dont want to risk the wealth they are earning. They therefore began stashing away their wealth to safe heavens. The 3.6 per cent slide in rupees value on July 7 and 8, which was reversed on the third day after imposition of SBPs punitive measures proves that the slide was not caused by import payments but by capital flight-driven speculation, that has stopped for now.

SBP has cut down exchange trading hours, banned forward exchange trading, cut the amount of advance payments for imports to 25 per cent, and told moneychangers to seek its permission before remitting abroad any amount exceeding $ 50,000 or its equivalent in other currencies. It is significant that SBP will now provide 100 per cent exchange cover for oil imports. It should remedy some fears, though not all.

The trade deficit is twice the size of the available exchange reserves. Given the load of external debt instalment payments, the reserves could fund oil imports for about six to seven months, nothing else. This is too optimistic because government imports of food grain must be covered by the reserves, and secondly, what do we do after the reserves are exhausted? That is the crux of the matter.

There is no option but to mobilise external sources. With its risk rating downgraded, Pakistan will find market borrowing expensive. Borrowing from the IMF would force government to cut subsidies more rapidly, which could further enrage businesses and the public. State enterprises could be privatised at this stage only on dismally low prices. Borrowing from friendly countries is the only option but it requires ingenuity and a convincing ability for governance in the coming years to raise domestic resources for repaying the debts.

Pakistans friends in the Middle East may be prepared to take a risk on Pakistan yet again but not without clear-cut plans to bolster internal resources through focused policy-making, fiscal discipline and tax collection, reviving domestic industry, and improving agricultural growth (for which these states see a potential). The last federal budget exhibited nothing of the sort.

The current economic state can, at best, be summed up as alarming. But, at the same time the sheer size of young workforce (a ticking bomb if it remains unskilled and unemployed), and the potential for benefiting from natures bounty, hold out enormous promises. What we must overcome is the lack of capacity for achieving what we can achieve from these resources.

What we need is a new team.. The team Mr Asif Zardari has put in place lacks the requisite credentials. This was hardly the style to adopt while inheriting an economy with record fiscal, trade and current account deficits.

Soaring trade deficit and sliding rupee -DAWN - Business; July 14, 2008


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## Neo

*G8s meaning for Pakistan​*
​
Why should Pakistans policymakers  or, for that matter, the countrys citizens  be interested in the meeting of the G 8 industrial countries held in a remote corner of Japan. The answer is simple. It is because of globalization, a process that began a couple of decades ago as most large economies lowered the barriers to the movements of commodities, goods and capital. The result is a world economy that is better integrated as never before. What happens in one large country affects the rest of the world.

It was the adverse consequences of a development some thirty years ago that first brought together the industrial countries. They met to formulate their response to the sudden increase in the price of oil in the mid to late 1970s. That increase in price was orchestrated by the Arab members of the cartel of oil producing and exporting countries, the OPEC, to show their displeasure at the Wests one-sided approach to the Israel  Palestinian conflict.

The first time the leaders of the industrial world met as a group, there were seven countries involved  Canada, France, Germany, Italy, Japan, the United Kingdom and the United States. Later, after the dissolution of the Soviet Union, the group added Russia to its ranks and the G-7 thus became the G- 8.

About a decade ago, the group also began to invite the leaders of some other major economies without having them become full members. Also in attendance are the President of the European Union and the heads of the IMF and the World Bank. The chairmanship of the G- 8 conclave rotates amongst its members along with the venue of the meetings. The presiding country has some role in determining the agenda and in issuing invitations to the non-G 8 countries to attend. It has become customary for the leaders of the BRIC nations  Brazil, Russia, India and China  to attend the meetings.

In 2007, when the G 8 leaders met in Germanys seaside resort of Heiligendamm, no one was even remotely aware of the havoc the collapse of the United States sub-prime housing market would visit on the global economy. No one was expecting that the price of a barrel of oil would increase from $ 65 to $ 140 or that the price of a ton of rice would more than triple, from $ 300 to $ 1000. Anxiety about the price rise of oil undermining the global economy was absent from the deliberations of the G 8 since its early days.

Also absent were concerns about feeding the worlds poor. The last time G 8 leaders discussed the subject of world food production was back in 1981 at the Ottawa summit when they emphasised in their communiqué the importance of accelerated food production in the developing world and of greater world security.

It seemed to the then leaders of the group that simple exhortation would keep the developing world on its toes. All that was needed was a gentle reminder that the sector of agriculture needed the continued attention of the world. Governments had become complacent because of the gains made after the spread of the green revolution in the 1970s.

At the 2008 meeting, the G 8 leaders chose to concentrate their attention on five areas: the state of the global economy; the sharp increase in the price of oil and its consequence for different parts of the world economy; the sharp rise in the price of food grains and its impact on the incidence of poverty; global warming and controls on carbon emissions and, finally, the situation in sub-Saharan Africa, particularly the crisis in Zimbabwe. Four of these five items are of direct concern for a country in Pakistans situation.

The Japanese hosts assembled two sets of leaders other than those from the G 8 countries to help their understanding of the items on the agenda. A group of African leaders were called in discuss the continents economic prospects and how the G 8 countries could help in the process of growth. The leaders reminded the developed world about its pledge to double economic assistance to the continent. The commitment was given at the G 8 summit in Gleneagles hosted by Tony Blair, then Britains prime minister.

On the question of carbon emissions, the G 8 leaders reached a weak compromise, making an unenforceable commitment to reduce by one-half the amount of carbon that was being thrown into the atmosphere and to achieve that target by the year 2050. The response from the NGO was fast and sharp; the coalition of groups working in the area of environment declared that such a pledge would not help reduce global warming. It would further deteriorate the situation in such water-stressed countries as Pakistan.

On agriculture, the G -8 pledged to increase their assistance for improving land productivity. Food production will need to increase by 50 per cent by 2030 in order to save the developing world from famines and to cater to the increase in demand in those countries that are growing rapidly. However, much of this production increase is likely to come from the large farms in developed countries. For it to become available for developing countries, their purchasing power must increase which is unlikely in the required amounts. The only way out is to provide government grants to the poor countries. However, the proportion of development assistance for agriculture has fallen to less than three per cent from 18 per cent in 1979. At the summit, the UN Secretary General referred to the need to invest up to $20 billion a year in agriculture, half of which needs to come from aid.

The performance of the G- 8 summiteers at their recently concluded meeting in Hokkaido, Japan seems to confirm the belief shared by a number of analysts that the group is no longer very relevant for addressing the concerns about the status of the global economy. The diminishing presence of the G 8 countries in the global economy is well illustrated in the IMF data presented in the accompanying table. While the G -8 countries still have a very significant share of global output  estimated at 63.5 per cent by the World Bank for 2005  some of the countries outside the group have more dynamism. The four BRIC countries accounted for 30 per cent of the addition to global product in 2007, compared to about a quarter for the G 8 nations.

In other words, the future belongs to the BRICs, other large developing countries and to the oil exporting countries and not just to the G 8. This would suggest that if a group of countries is to hold an economic summit every year to decide on approaches and actions concerning the global economy and the difficulties it faces, it has to be a group larger in size than eight countries that are seeing a reduction in their share in global output.

Could Pakistan gain admission into such a group? It could on the basis of the size of its population which is now the sixth largest is the world. It could also be admitted because of its geographical position in the heart of the more troubled areas in the world. But the country will have to manage its affairs, both economic and political, before any such claim would be taken seriously by the international community.

G8s meaning for Pakistan -DAWN - Business; July 14, 2008


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*Pakistan, WB sign accords for water capacity, power distribution ​* 
Tuesday, July 15, 2008

ISLAMABAD: The Government of Pakistan on Monday signed two agreements with the World Bank for electricity distribution and transmission improvement project worth US$256.7 million and water sector capacity building and advisory services project worth US$38 million.

The financing agreements for both projects were signed by Acting Secretary, Economic Affairs Division Junaid Iqbal Chaudhry on behalf of the Government of Pakistan and Yousapha B Crookes, Country Director on behalf of the World Bank. The project agreements for electricity distribution and transmission improvement project were signed by the representatives of NTDC, IESCO, LESCO, MEPCO and HESCO on behalf of the respective entities.

The Electricity Distribution and Transmission Improvement Project (EDTIP) will assist the distribution and transmission companies in strengthening the capacity of the distribution and transmission network to meet the increase in electricity demand more efficiently and with better reliability and quality. The project will also strengthen the institutional capacity of power distribution companies and support priority areas of power sector reform through components included investment in distribution networks, investment in transmission network, institutional strengthening and capacity building and energy efficiency.

The objective of the Water Sector Capacity Building and Advisory Services Project (WSCAS) is to improve the management and investment planning of water resources in the Indus River System through components included capacity building and support of federal institution in water resources planning and management, improvement in water resources management and development in WAPDA, project management and additional studies.

This process will run concurrently with the national plan to develop hydel storage and power infrastructure. Acting Secretary, Economic Affairs Division Junaid Iqbal Chaudhry told journalists that the soft IDA amount of US$52.6 million in EDTIP and US$38 million in WSCAS is interest free. However, service charges at the rate of 0.75 per cent and commitment charges at the rate of 0.5 per cent on undisbursed balance will apply. He said EDTIP also contains hard IDA for an amount of US$30.5 million on which an interest at the rate of 4.2 per cent per annum will be paid, in addition to the service and commitment charges.

He informed that the Government of Pakistan will repay both the IDA credits in 35 years including a grace period of 10 years. For the IBRD loan portion in EDTIP of US$173.6 million, a front-end fee will be paid at the rate of 0.25 per cent of the loan amount, and the interest will be paid at the rate equal to LIBOR for the Loan Currency plus the Fixed Spread. The IBRD portion will be repaid in 30 years including the grace period of five years.

World Bank Country Director Yousapha B Crookes said that the Bank remained involved in different development projects with the Government of Pakistan and was now involved in power distribution area, which is very import for revenue generation. He said development in this area is important for productivity in the country besides providing quality electricity service to the people.

Pakistan, WB sign accords for water capacity, power distribution


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*1.7mT mangoes produced ​* 
Tuesday, July 15, 2008

RAHIM YAR KHAN: The annual mango production in the country is estimated at 1.7 million metric tons, with Rahim Yar Khan district accounting for over 0.4 million metric ton of the fruit, almost a quarter of the total national produce.

Talking to APP at the 3-day Mango Show 2008, DO agriculture Imtiaz Ahmed disclosed that today Pakistan ranks at number five in the world for mango production, and stands at number seven in the export of fruit to world markets.

This export ranking, which was almost nil 10 years ago, has occurred with the introduction of proper fruit storage know-how, increased facilities, the use of latest post-harvest technology, greater grower trader liaison and positive marketing policies, he observed.

He lauded the fruit and vegetable development project and other similar programmes introduced by the government. With government support, our mango export ranking will rise to the top three positions, he added. The DO said that the Mango Show 2008 was a huge success, where stalls were set up to show the world varieties of delicious mangoes produced in this region and across the country. 

1.7mT mangoes produced


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*Cement companies to find alternatives to coal ​* 
Tuesday, July 15, 2008

KARACHI: Cement companies are trying to find out alternatives to coal, almost 90 per cent of the companies use coal for heating purpose in a bid to overcome effects of a huge increase in coal prices that are touching $180 in the international market, said Badruddin Fakhri, Managing Director of Galadari Cement.

The cement industry is trying to find out alternatives to coal and efforts are being made in this regard, and hopefully they will bring positive results in a few years, he told The News. The prices of coal in the international market are continuing to rise, increasing the input cost of the cement industry in the country. Most of the coal which is used in local cement companies is imported. He said coal is quoted at around $180 per tonne in the international market, which is an important ingredient of the cement industry.

To find out alternative solutions, a number of cement companies are working to use city waste, which would be processed and turned into cakes, which would be later used as a coal alternative in the industry. International coal prices are also affected by the huge coal demand in India and China. 

India and China are in dire need of coal as their consumption is mounting, but in future it is expected that these two countries would improve their local production and partly overcome this problem, said Fakhri. 

High prices of coal and depreciating Pak rupee are factors negatively impacting on the local cement industry, though cement exports from Pakistan continue to rise. Local cement prices have surged to Rs380, up by Rs100 in just last two months. 

As per the McCloskey Coal Price Index (Richards Bay), coal prices have breached US$200 (C&F) per tonne mark and are currently trading around US $210 per tonne. Primary reason for this rise is the huge demand for coal in India and China for their energy needs, JS Research reports. 

Cement companies in the country are presently importing coal at around US$160-180 (C&F) per tonne. Since majority of the local cement companies are using coal for heating purpose, this price hike will significantly edge up input costs. 

Rupee has depreciated around 13 per cent since the start of 2008 from Rs62 to Rs70 against dollar, further depreciation is expected in the future, coal costs in rupee terms are likely to increase substantially. In fiscal year 2008, cement dispatches increased to a record high level of 30 million tonnes depicting a growth of 25 per cent on year-on-year bases. However, this growth was mainly driven by 142 per cent rise in exports and an increase of 6 per cent in local dispatches.

Cement companies to find alternatives to coal


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*Karachi stocks shed a massive 518.51 pts on selling pressure​*
KARACHI: The Karachi stock market witnessed heavy selling pressure on the first day of the trading week Monday as small investors squared their positions by offloading their holdings, analysts said.

The Karachi Stock Exchange (KSE) 100-share index shed a massive 518.51 points as the market closed at 11,177.31 points as compared to 11,695.82 points of the previous session. The KSE-30 index shed 632.96 points to close at 12,772.39 points.

Analysts said the market opened negatively 302 points and during later part of the trading session, the decline continued unabatedly.

However, the only positive feature of the market was better trading activity as the ready market volume was recorded at 69.929 million shares.

The market turnover increased 230.43 percent to 69.92 million shares as compared to 21.16 million shares traded in the previous session. The overall market capitalisation declined 4.26 percent to Rs 3.479 trillion as compared to previous sessions Rs 3.634 trillion. Out of 256 companies, 25 closed in positive zone, 222 in negative while 9 remained unchanged. Farhan Mahmood, analyst at JS Global Securities said circuit breakers were reverted to the previous levels, but the index continued to decline and this time with an extended capacity.

Although attractive levels did offer resistance to the float mainly in oil and gas exploration and marketing stocks, negative sentiments never allowed the so called value buyers, except for some, (who were chanting slogans against the 1 percent lower lock) to come in.

Hasnain Asghar Ali, analyst at Aziz Fida Husein and Co said recent changes made in the circuit breaker mechanism was finally made public (during the recent meeting called by the KSE management on Friday), ensuring the smooth payments was the idea and undoubtedly it was achieved as no risk management issues were heard, tight monetary policy and liquidity crunch on the other hand were blamed for not allowing the innovative changes in the mechanism to bear fruit, but other issues such as a constant flow of negative developments on almost all the sensitive fronts contributed to it and leading the way was certainly decline in the rupee value.

Ahsan Mehanti, senior analyst at Shahzad Chamdia Sec citing reasons of negative index of the market attributed it owing to the selling pressure on account of poor law and order situation, foreign selling, current account deficit, political uncertainty, high discount rate, and falling equity markets globally affected investors sentiments negatively.

The futures market turnover went down to seven million shares as compared to 7.34 million shares traded in the previous session. 25 of the companies closed in the negative while five remained unchanged.

Daily Times - Leading News Resource of Pakistan


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*Trade policy envisions $21.7 billion exports​*
** Govt wants to reduce imports by 50%​*
ISLAMABAD: Government is expected to set an export target of $21.7 billion for the current fiscal year 2008-09 along with an emphasis on 50 percent reduction in imports.

Sources in commerce ministry told Daily Times that the Federal minister for Commerce, Chaurdhry Ahmed Mukhtar would announce Trade Policy 2008-09 on July 18.

Government had set the target of export at $19.2 billion for the last fiscal year, however due to host of reasons this target has not been achieved. The new target of $21.7 billion is regarded over ambitious due to persistent load shedding in the country and gas shortages for the industrial sector.

The power and gas shortage, increase in the prices of electricity, POL products, gas prices and overall double digit inflation in the country would not enable the industry to produce exportable surplus and compete in the world market.

Sources said government would take several measures to reduce the import by 50 percent in the current fiscal year through trade policy measures that also include reduction of $1 billion in cotton imports.
 
And the policy would also carry measures for cotton export by additional $2 billion in the current fiscal year, sources added.

Increase in trade with regional countries especially the neighbouring countries like India, Afghanistan, Iran and China would be the prime focus of the Trade Policy as this would help hike exports on competitive transportation charges.

The major export item is textile, which is the 60 percent of total export and government would give special incentive for the textile sector. It is also under consideration for this time to diversify the export items and go towards surgical and sports items.

Different trade and industry bodies of the country have demanded 25 percent reduction in utility charges for export industries, duty free import of raw materials, allowing imports of machinery and raw materials from India through road and rail routes to incorporate in new trade policy 2008-09.

Federation of Pakistan Chamber of Commerce and Industry (FPCCI) has suggested that import of all raw materials should be allowed on duty free basis while higher duties should be imposed on luxury items.

FPCCI demanded that ban should be imposed on the export of wet blue and split leather and 50 percent air freight subsidy be allowed on finished leather and leather garments and exports.

The government should not allow the export of wheat, rice and cotton and government should also take steps to fill the demand and supply gap in energy.

Daily Times - Leading News Resource of Pakistan


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*Government agrees to appease disgruntled elements: 10-15 percent share in Balochistan development schemes' allocations​* 
ISLAMABAD (July 15 2008): The government has agreed with a major demand of projects' executing authorities in Balochistan to include in the overall allocations of development schemes the money they spend on giving to the elements, which can create law and order and cause security problems in projects' execution, informed sources told Business Recorder on Monday.

Recently the federal government has agreed with contractors of projects being launched in the country's largest province to spend around 10 to 15 percent of the projects' allocations on the people who can use their influence for maintaining law and order and ensuring security to the projects' execution. The extra money, unlike the past, will be included in the total cost of the projects, the sources said.

Balochistan, FATA and some areas in the NWFP are those where the government has already conceded to the demand of the executing agencies to include security cost in the overall projects allocations being made through budgeted Public Sector Development Programme (PSDP).

Previously, the contractors and executing authorities were required to spend the amount for the same purpose, but that amount was to be spent from the contractors' own pocket. "That was not included in the overall cost of the projects," sources added.

"The step has been taken in bid a to implement development projects in Balochistan as the number of delayed or time overrun schemes has been increasing," the sources said. According to the sources, almost all the government agencies have reported that the development projects could not be timely executed as the security has become a major hurdle and they requested the federal government to do more for taking its development agenda in Balochistan forward.

Despite the fact, the government of Balochistan established a separate police and FC force for the purpose of providing security to the personnel of projects, the security arrangements were not up to the mark, the sources added. "This measure, which was taken last fiscal, caused 6 to 8 percent raise in the overall cost of the development schemes," the sources said.

The federal government has now included the extra money being given to law and order creating elements in the overall cost of the development schemes that will further escalate the projects allocation and could be another burden on the development budget.

Some analysts believe that this step will not work as the government writ in almost all areas is weakening day by day. The federal government must show its political commitment to take up all these issues with all political forces of the province. In a recent meeting of the Oil and Gas Development Company Limited (OGDCL) informed the Senate Committee on Petroleum and Natural Resources that it was facing serious troubles in carrying out oil and gas exploration activities in Marri, Bugti, Jhal Magsi areas.

Due to a lack of security, the OGDCL could not start drilling. In some areas, the company abandoned work on some projects after the security lapsed, the sources said.

Business Recorder [Pakistan's First Financial Daily]


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*Rs 52 billion to be generated through privatisation: Prime Minister​* 
LAHORE (July 15 2008): Prime Minister Syed Yousuf Raza Gilani has said that privatisation of 16 units, which will be made in consultation with the workers unions of the respective organisations, will generate a revenue amounting to Rs 52 billion while 10 percent shares would be reserved for the workers.

Addressing the Lahore Chamber Award Ceremony organised by the Lahore Chamber of Commerce and Industry on Monday evening, he said it is not the government's job to run industries but it is only for protecting them from crises and facilitating them. Punjab Governor, Salmaan Taseer and Punjab Senior Minister Raja Riaz Ahmad were also present on the occasion.

He said that many external and internal severe shocks including the deceleration of economic growth, rising inflation, particularly the food inflation, current account and trade deficits have badly hit the country's economy. However, the government is giving priority to expedite the industrialisation process to create job opportunities, he maintained.

The government is also working for the promotion of non-traditional sectors including gems and jewellery, granite, marble sectors to ensure fast track economy. Similarly efforts are being made to enhance country's exports, he added.

To address the energy crises, the government is exploiting all opportunities and zero-rated import has already been declared to induce investment in this sector. It is also awarding contracts to independent power producers so that energy issue could be resolved. Besides, one-window facility is also being provided at the Board of Investment, Gilani said.

The Prime Minister said the present government has also taken many steps for providing conducive environment, evolving business friendly policies, and concentrating on skill development so that 6-8 percent economic growth could be achieved.

He said the world class infrastructure facilities would be provided at different industrial parks like Korangi Industrial Estate on 250 acres of land, Bin Qasim Industrial Estate on 970 acres, and Auto Cluster Park Sheikhupura on 170 acres.

Responding to LCCI president demand for withdrawal of 10 percent Withholding Tax on electricity bills, he said that the Withholding Tax on electricity bills and cheques would not affect the businesses because these are to be adjusted in their tax returns at the end of year. However, it would help bringing non- documented economy into tax network.

About the textile sector, he said the Economic Co-ordination Committee in its upcoming meeting will review gas price for the textile sector and urged the Faisalabad Chamber of Commerce and Industry to call off its strike. All the issues confronted by the textile and other industrial sectors would be redressed in the industrial policy.

Appreciating the LCCI role in promoting trade and industry in the country, he said it is an effective platform to provide bridge between the government and the business community.

Speaking on the occasion, the LCCI President Muhammad Ali Mian said the government needs to take solid measures including relaxation of taxes on export oriented industry, setting up of skill development institutions, the provision of infrastructure, availability of resources for exploring new markets and help the growth of SMEs to enhance country's exports.

He stressed the need for facilitating and strengthening industrial sector and urged the government to chalk out business friendly environment to attract foreign investment. The government should also start short-term and long-term projects of electricity generation especially hydroelectric and wind energy projects.

He urged the government to stop the Oil and Gas Regulatory Authority (OGRA) from increasing the gas prices during the ongoing electricity shortage crisis. He asked the government to announce a relief package to save the textile industry that contributes 65 percent in exports and major source of employment. Pakistan cannot enhance exports unless it concentrates on non-traditional items, along with traditional export items.

The Trade Development Authority of Pakistan needs to take concrete measures for exploring new markets to introduce Pakistani products, he added. Later, Prime Minister Syed Yousuf Raza Gilani distributed Prime Minister Trophy, Businessmen Gold Medal, and awards among the winners.

Business Recorder [Pakistan's First Financial Daily]


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*Poverty in Pakistan: Causes and Cures​*
Poverty is a multi-dimensional phenomenon, which encompasses economic, political and social deprivations of the people in a country. The denial of basic and essential needs to the population gives rise to the concept of poverty.

The recent global trends of poverty suggest that rapid economic growth over a prolonged period is essential for its reduction. At the macro level, economic growth implies greater availability of public resources to improve the quantity and quality of education, health and other services. At the micro level, economic growth creates employment opportunities, increases the income of the people and therefore reduces poverty.

In Pakistan, Poverty Reduction Strategy was launched by the government in 2001 in response to the rising trend in poverty during 1990s. It consisted of the following five elements:-

(a) Accelerating economic growth and maintaining macroeconomic stability,

(b) Investing in human capital,

(c) Augmenting targeted interventions;

(d) Expanding social safety nets; and

(e) Improving governance.

The net outcome of interactions among these five elements would be the expected reduction in transitory and chronic poverty on a sustained basis. The reduction in poverty and improvement in social indicators and living conditions of the society are being monitored frequently through large- scale household surveys in order to gauge their progress in meeting the targets set by Pakistan for achieving the seven UN Millennium Development Goals (MDGs) by 2015. According to MDGs, Pakistan is required to reduce poverty by half by 2015 from the level of 1990. To assess the state of poverty, Planning Commission, has already notified an official poverty line based on caloric norm of 2,350 calories per adult equivalence per day. This poverty line is approximately equivalent to Rs 748.56 per month per adult equivalence. in 2000-2001 (Pakistan Econmic Survey 2004-05). According to Pakistan Economic Survey, the growth oriented government policies and foreign remittances have reduced poverty significantly. At the national level, headcount decreased from 34.46 percent in 2000-01 to 23.9 percent in 2004-05 showing a reduction of 10.5 percentage point over this period of time. Annual growth of 21 percent in pro-poor expenditures during the period of 2000-01 and 2004-05 contributed to approximately 13 million people moving out of poverty. Since FY 02, the economy created 10.62 million jobs, thereby reducing the open unemployment rate to 6.2 percent by FY 05-06. Income and consumption based measures reflects only one dimension of poverty; lack of opportunity due to poor information, education and health are some dimensions in which poverty manifest itself.

According to a UNDP report, 65.5 percent population of Pakistan earns less than two dollars per day. According to the Social Policy Development Centre (SPDC), 88 percent of Balochistans population, 51 percent of NWFP, 21 percent of Sindh and 25 percent of Punjabs population is prey to poverty and deprivation.

According to the ADB report, poverty is spreading in Pakistan due to the rising population, Pakistans internal situation, agriculture backwardness, unequal income distribution, defence expenditure, increase in utility charges and rise in unproductive activities.

Due to rapid growth of population, the number of dependents is increasing; earners have to carry the burden of the increasing number of dependents. This situation is leading to decrease in the per capita income of the people of the country.

The largest sector of the economy, the agri sector, is heading towards backwardness as 93 per cent of the farmers are concerned with small farms whose per capita land is less then 10 acres.

Some options for poverty alleviations are:

The poor in Pakistan cannot simply be seen (as much of the literature does) as free individuals suffering from merely adverse resource endowments, and making choices in more or less free markets. It is such a paradigm, which induces the government to think that all it needs to do to reduce poverty is to allocate more resources to the poor or to the local governments who are supposed to represent them.

Similarly some of the large NGOs operating in many different districts pursue poverty alleviation by trying to provide micro credit to the poor. Increased resources by the government or micro credit by NGOs may be a necessary but is not a sufficient condition for overcoming poverty. Thus the analysis and evidence within this new poverty paradigm suggest that the key to overcoming poverty is to empower the poor to get better access over markets, governance, and the institutions that provide public services such as health care, education and justice.

The new survey evidence shows that the poor lose as much as one-third of their income due to unequal access over input and output markets and extortions by the local administration. For example, as much as 51 percent of the extremely poor tenants borrow money from the landlord.

Focus should be given to boost agriculture (agro-industry, agri-business and live stocks) to reduce poverty. It is recommended that incentives and subsidies should be given to the farmers to produce more output. It promotes jobs, increases income of the farmers, creates domestic demand for goods and services, help for controlling food inflation and improve the life of vulnerable segments of the society.

The Construction industry is the driving force of an economy because it accommodates skilled, semiskilled, and unskilled work force and contributes through a higher multiplier effect with the forward and backward linkages in the economy. The construction industry through linkages effect, with about 40 building material industries, support investment and growth climate and help reducing poverty by generating income opportunity for poor household.

The role of microfinance should be strengthened. The poor use financial services not only for business purpose but also invest in health and education to manage household emergencies. The evidence shows that health is a major trigger that pushes people into poverty and the poor into deeper poverty. Due to the inadequacy of the governments health facilities, as many as 85 percent of the poor go to private allopathic medical practitioners for treatment.

The expenditures on such treatment are so high that poor households are obliged to borrow mostly from informal sources to finance the medical expenses of their families. Targeted poverty alleviation programmes, for instance direct transfers, such as Zakat, nutritional programs for children, employment generation through infrastructure development projects and credit based self employment program, are helpful to reduce poverty.

Many studies have shown that economic growth is a necessary, not sufficient condition to reduce poverty. A higher and sustained economic growth must be accompanied by other poverty alleviation measures such as investment in human capital like education, health and other human development activities, like safety net measures, are essential to reduce poverty. Education is considered a key to change and progress, therefore focus should be given to produce human capital that is best suited to the needs of society.

Daily Times - Leading News Resource of Pakistan


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*Government borrowings mount to Rs 1.271 trillion​* 
KARACHI (July 15 2008): Government's borrowing for budgetary support has mounted to Rs 1.271 trillion, widening by 57 percent during the last fiscal year mainly due to the slow foreign inflows and high subsidies on commodities. Although, in July 2008 the State Bank of Pakistan (SBP) Governor Dr Shamshad Akhtar had advised the government to minimise its borrowing from the central bank, else it (SBP) would use its tools to control the borrowing.

SBP statistics for last fiscal year (2008) depicted that despite SBP advice the federal government had continuously borrowed huge amounts to meet financial crunch. According to SBP statistics, government sector borrowing for budgetary support from banking sector has gone up by Rs 359.265 billion to Rs 461.280 billion up to June 28, 2008, due to the massive borrowing from the schedule banks as well as the central bank.

After the current upsurge, overall stock of borrowing for budgetary support had reached Rs 1.271 trillion on June 28 2008. Previously, it stood at Rs 810.053 billion on June 30, 2007, showing an increase of Rs 461 billion, or 57 percent.

The borrowing from central bank witnessed a prominent share in the overall budgetary borrowing, which stood at Rs 633.173 billion in fiscal year 2008, while during the fiscal year 2007 the government had retired Rs 58.575 billion.

With the upsurge of Rs 633.173 billion, overall budgetary borrowing stock of SBP reached new peak level of Rs 978.164 billion on June 28, 2008 from Rs 344.991 billion on June 30, 2007. On the other side the scheduled banks stock of budgetary borrowing declined by Rs 171.893 billion to Rs 293.168 billion in 2008 against the borrowing of Rs 160.590 billion in 2007.

"Shortfall in foreign inflows on the back of slow privatisation process, rising government expenditure and billions of rupee subsidies on commodities had motivated the government to take huge budgetary borrowing," economists said. However, real economic costs of central bank borrowings cause enormous inflationary pressures, whose burden falls on businesses, industry and public at large, they said.

They said that rising budgetary borrowing would further increase the inflationary pressure on the economy, which already is on upward trend during the last few month. Similarly, the government borrowed some Rs 28.969 billion for commodity operation and with current increased it has mounted to new peak level of Rs 127.521 billion by the end of June 28, 2008.

To reduce government borrowing two months ago taking interim monetary policy measures the central bank had also advised government to amend the Fiscal Responsibility and Debt Limitation Act, 2005 to incorporate appropriate provisions to restrict the debt monetisation. The SBP also believes that huge government borrowing has eroded the fiscal discipline and diluted the impact of the Fiscal Responsibility Act.

Business Recorder [Pakistan's First Financial Daily]


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*World Bank to finance $256.7 million power projects​* 
ISLAMABAD (July 15 2008): Pakistan on Monday signed two agreements with the World Bank for making improvement in electricity distribution and transmission infrastructure worth 256.7 million dollars and water sector capacity building and advisory services for its efficient management worth 38 million dollars.

The financing agreements for both projects were signed by acting Secretary of Economic Affairs Division Junaid Iqbal Chaudhry on behalf of the government of Pakistan and Country Director Yousapha B. Crookes on behalf of the World Bank.

Later, Junaid Iqbal Chaudhry told journalists that the soft International Development Agency (IDA) credits, amounting to 52.6 million dollars for Electricity Distribution and Transmission Improvement Project (EDTIP) and 38 million dollars for water sector capacity- building and advisory services (WSCAS) were interest free, however, the service charges at the rate of 0.75 percent and commitment charges at the rate of 0.5 percent on undisbursed balance would be payable.

He said the EDTIP also contained hard IDA for 30.5 million dollars on which interest at the rate of 4.2 percent per annum would be paid, in addition to the service charges and commitment charges. He said that the Government would repay both the IDA credits in 35 years, including a grace period of 10 years.

For the IBRD loan portion in EDTIP of 173.6 million dollars, a front-end fee would be paid at the rate of 0.25 percent of the loan amount, and the interest would be paid at the rate equal to Libor for the loan currency plus the fixed spread, he added. The IBRD portion would be repaid in 30 years, including the grace period of five years, he said.

The EDTIP would assist the distribution and transmission companies in strengthening the infrastructure to meet the increase in electricity demand more efficiently and with better reliability.

He said the major problem was the load management in our system as with the gradual increase in power demand, the transmission and distribution infrastructure was not expanded accordingly and now the load was over and above its capacity, which resulted in frequent breakdowns and added to over increasing problem of load shedding.

He expressed the hope the project would also strengthen the institutional capacity of power distribution companies and support reforms in priority areas of power sector through investment in distribution networks, investment in transmission network, institutional strengthening and capacity building and energy efficiency.

The objective of the water sector capacity building and advisory services project (WSCAS) is to improve the management and investment planning of water resources in the Indus river system through capacity building and support of Federal institution in water resource planning and management, improvement in water resources management and development in Water and Power Development Authority (Wapda), project management and additional studies. He said this process would run side by side with the national plan to develop hydel storage and power infrastructure.

World Bank Country Director Yousapha B. Crookes said that the bank remained involved in different development projects with the government of Pakistan and now taking part in power distribution and transmission, which was very important for revenue generation.

He said this was an important area for rapid growth of industrial sector, besides providing quality electricity service to the consumers. The project agreements for electricity distribution and transmission improvement were signed by the representatives of NTDC, IESCO, LESCO, MEPCO and HESCO on behalf of the respective entities.

Business Recorder [Pakistan's First Financial Daily]


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*Unido team discusses investment modalities with BoI​*
ISLAMABAD (July 15 2008): A delegate representing United Nation Industrial Development Organisation (Unido) called on Major Iqbal Ahmad (Retd), Executive Director General (EDG), Investment Division and Board of Investment (ID&BoI) and discussed various modalities of the Investment Promotion Unit (IPU) projects.

The delegation comprised Ayesha Khan, Chief Technical Advisor for the Community Based Livelihood Recovery Program (CBLRP), Amna Osman, international expert from the Investment Promotion Unit in Vienna and Rehan Sadiq, Investment Promotion Coordinator, CBLRP project.

The Unido's team is here in Pakistan on a fact-finding mission for the establishment of Investment Promotion Unit (IPU). This IPU project is supported and funded by the government of Italy and it requires collaboration with the Investment Promotion Agency of Pakistan.

The IPU project mainly focuses in the development of the SME sector and Unido being specialised agency of the United Nation which is dedicated to promote Sustainable Industrial Development is also collaborating. The team informed that before implementing this project in Pakistan they will assess three key issues, which include capacity building lack of ownership among the stakeholder and issues related to awareness among the masses about the soft loans.

Ahmad informed the delegation that SME policy 2007 was launched in fiscal year 2007-08, in which SME sector has been redefined in a way to ensure that all the stakeholder are given a broad framework for the promotion of SMEs by improving the regulatory, fiscal and business environment. He added that the importance of the SME sector cannot be overemphasised in the overall industrial development of any country.

He said "SMEs constitute nearly 90 percent of all the enterprises in Pakistan; they employ 80 percent of the non-agriculture labour force; and their share in the annual GDP is nearly 40 percent. In view of the importance of this project the EDG assured all the due support on part of ID&BoI in the successful implementation of this project.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*NWFP accepts Chinese firm's offer for city development​* 
PESHAWAR (July 15 2008): The government of NWFP has accepted the offer of a mega development plan for urban development by a Chinese firm for providing better facilities to the Peshawarites in social sectors including water and power supply as well as development and beautification of Peshawar City.

It was decided in a meeting chaired by the NWFP Senior Minister Bashir Ahmad Bilour at his office in Civil Secretariat on Monday. Those who attended were included Secretary P&D Muhammad Ikram Khan, Secretary LG&RD Hifzur Rehman and Director General CDMD Qazi Qaim Ali and representatives of the Chinese firm Beijing Urban Construction Engineering Company (BUCG) Iltifaat Ali Wasti and Azhar Jameel.

The plan included remodelling of Peshawar Bus Terminal, provision of filtered drinking water to Peshawar from Warsak and Spaira Dams, construction of Matani-Bara, Northern and Southern bypass highways and producing sufficient electricity from the local canals to end load shedding in Peshawar.

Speaking on the occasion, Senior Minister Bashir Ahmad Bilour invited local and foreign investment in NWFP in both social and economic sectors and assured that provincial government would ensure full guarantee and security of the investment on behalf of the federal and provincial governments.

He expressed satisfaction over the fact that the Chinese firm would finance all the five-mega projects and would never expect any funding from the provincial government.

However, he assured that provincial government would not levy any tax on the firm. He said that the government had inherited the acute problem of financial crunches like other big issues.

He said that the provision of drinking water to Peshawar from Warsak and Spaira dams would reduce burden on the tube-wells of the city besides saving Rs 130 million of electricity bills only in Town 1 area.

He said that the chief minister has given free hand for development and beautification of the provincial metropolis and provided basic amenities to the citizens adding that the lack of resources would not be made hurdle in this way. However, he complained about the step-motherly attitude of the federal government about provision of resources and rights to the province.

He said that NWFP and Peshawar were totally ignored despite playing the role of frontline province and city against Russian aggression on Afghanistan and ongoing war on terror. The senior minister said that a huge chunk of foreign aid would be spent over here.

Similarly, he said that neither the President and nor the Prime Minister has announced any development package for the Frontier province or Peshawar though such announcements are made for other parts of the country. He thanked the co-operation and offers of the friendly countries in this regard.

He said that a number of other organisations including Japanese firm JAICA have offered investment in NWFP, which was a good omen and showing trust in government and people of NWFP. He directed for auctioning of plots of hundreds of acres of land in phase-III of Hayatabad to make available maximum resources for uplift of the city.

He also directed for expediting work on expansion of three lanes of Ring Road, completion of the missing part of Ring road from Charsadda Road to Jamrud Road, development of phase-7 in Hayatabad and expansion of Peshawar Airport at a cost of Rs 5 billion, besides asking for close liaison with the concerned federal and provincial departments for this purpose.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*$5.9 billion relief over three years: Naveed to apprise ECC of Saudi Arab oil supply facility​* 
ISLAMABAD (July 15 2008): Finance Minister Naveed Qamar will inform the Economic Co-ordination Committee (ECC) of the Cabinet that the Saudi government has accepted Pakistan's request for oil facility against deferred payment--for three years.

The ECC is schedule to meet in Lahore on July 15 to take up among other matters the oil facility being provided to Pakistan by the Saudi government against deferred payment.

Saudi Arabia's financial support to Pakistan in the form of oil facility against deferred payment for three years is of extraordinary importance. It will ease pressure on its economy besides helping it keep forex reserves at an appropriate level. It can also compel the government to review its policy of quickly revising oil prices for domestic consumers.

Official sources said the Finance Minister would inform ECC that resumption of oil facility by the Saudi government would help Pakistan's economy coming out of the current crisis-like situation. After getting the oil facility against deferred payment from Saudi Arabia, Pakistan will be in a comfortable position to meet its financial liabilities.

Saudi Arabia provides 110,000 barrels oil per day to Pakistan. The Saudi oil facility will provide the Pakistan government a relief of $5.9 billion over the next three years. Qatar and Kuwait meet the rest of Pakistan's oil demand, whereas its indigenous oil output is at around 42,000 barrels a day, which is very small percentage of total consumption.

The Saudi government's fiscal support for Islamabad in the form of oil facility is a great relief for Pakistan, especially at a time when its economy is under severe pressure due to poor performance of most of its key economic sectors.

Rising oil import bill was making difficult for Pakistan to absorb this shock. Huge payment on oil import also is a basic reason of erosion of its forex reserves. Pakistan's oil import bill for the first time ever crossed $11 billion mark in 2007-08. Such a huge spending on oil import widened budgetary and current account deficit besides forcing the government to pass on major share of actual price on the consumers.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Oil products consumption up by nine percent in 2007-08​* 
KARACHI (July 15 2008): Oil consumption in the country posted a growth of 9.0 percent during FY08 as the volume of POL products rose to 18.7 million tons against 17.1 million tons in FY07. According to the figures released by OCAC, local refineries provided 9.60 million tons, 51 percent of total consumption, and 49 percent was met through imports.

The two white oil products, Mogas and HSD, fuelled volume (80 percent growth contribution) by recording 27 percent and 13 percent, respectively. The combined volume of the two recorded 9.54 million tons in FY08 (51 percent of total volume) against 8.30 million tons (49 percent of total) in FY07.

During FY08, refuelling demand amid reduced smuggling of Iranian products (especially Mogas as its demand stayed consistent at 25-32 percent range during most of FY08) and increased utilisation (HSD) in transportation and household power generators due to acute electricity shortage, Khurram Schehzad, senior analyst at Invest Capital Securities said.

Therefore, HSD demand also ranged consistently at 13-15 percent in the second half of FY08 despite local price pass-on in this period, he added. This led to white oil products growth of 13 percent with 10.8 million tons. Other than HSD and MS, White Oil products - HOBC, JP-8, JP-1 & Kero - witnessed volume growth of only 2.7 percent on yearly basis with 1.33 million tons.

Black Oil (FO and LDO), conversely, posted a growth of 3.6 percent with 7.81 million tons in FY08 against 7.54 million tons a year back. In volumetric terms, Black Oil added 18 percent to the total volume increase in FY08 whereas HSD's and Mogas contributions were 60 percent and 20 percent (80 percent combined). FO growth of 4 percent came amid Wapda and other IPPs' rising demand due to reduced gas supplies during most of FY08 (slow growth amid around 100 percent steep rise in FO price in Jul-Jun08).

During June, 2008, POL consumption posted growth of -0.92 percent on yearly basis mainly because of Black Oil's negative growth of 9.9 percent (FO 9.5 percent and LDO 27.6 percent) while support came from White Oil which grew by 6.2 percent on yearly basis - mainly driven by Mogas (8 percent), HSD (4 percent) and JP-1 and HOBC combined (125 percent on yearly basis). The rise in FO price (8 percent on month-on-month basis at over Rs 52,000) and sharp decline in LDO consumption owing to rising prices and low agricultural activities amid late harvest led to a slight fall in Jun-08 POL consumption, he added.

The GoP's price pass-on coupled with alternates (CNG/LPG) in Jun-08 impacted HSD and Mogas volumes declining by 7 percent and 4 percent on monthly basis, respectively. Kero also resulted in negative growth of 10.6 percent due to price rise.

PSO secured largest slice of 69.5 percent of the market share pie in FY08 improving by 186bps over FY07 by punching in volumetric growth of 10 percent on yearly basis. Shell stood with 13.9 percent on yearly basis - a 4bps improved share due to 7 percent volume growth while APL shared 4.9 percent of the market - a decline of 65 bps on yearly basis due to negative volume growth of 5.5 percent on yearly basis in FY08.

"Keeping current oil price in the international market spree and GoP's price pass-on reflecting in consumption numbers, we have assumed volume growth forecast of 7 to 9 percent as 4-year CAGR post FY08", Khurram Schehzad said adding that the major driver would be FO whereas HSD and Mogas's growth is expected to decline gradually.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*International consortium to set up IT park in Islamabad ​* 
Wednesday, July 16, 2008

KARACHI: The Pakistan Software Export Board (PSEB) has issued a letter of intent (LOI) to an international consortium comprising TelcoNet, Axor Group Inc Canada and Technopolis Plc Finland for establishing the first state-of-the-art national IT park at Chak Shahzad, Islamabad.

The IT park will be developed on build, operate and transfer (BOT) basis over 14.9 acres of land, stated a press release issued by the PSEB.

After successful negotiations with the consortium, construction work will commence in January 2009 and the project is expected to be completed by January 2011. With an expected development cost of more than Rs9 billion, the park will provide 1.5 million square feet of state-of-the-art office space to local and international information technology companies.

PSEB/Ministry of Information Technology (MoIT) has set a challenging mission of developing a network of IT parks across the country and this park is the first milestone in this mission. This is a landmark project for Pakistans IT industry which will house more than 10,000 employees. In addition to providing affordable and quality IT-enabled workspace for companies, this park will generate employment opportunities, bring in foreign investment, enhance IT exports and stimulate economic growth, PSEB Managing Director Talib Baloch said in a statement.

To sustain the current growth rate of the IT industry, he added, three more IT parks would be developed by the PSEB in Karachi, Lahore and Islamabad on BOT model, for which land at prime locations had already been acquired.

The PSEB intends to further extend this network to Peshawar, Quetta and other cities at some appropriate time in future.

IT and knowledge parks have been instrumental in promoting knowledge-based economies in developed and emerging economies and facilitate clustering of knowledge-based firms and stakeholders providing capital, research, innovation and other services.

Other benefits of these parks include promotion of business synergies and facilitation of access to capital, infrastructure, human capital and policy incentives. 

International consortium to set up IT park in Islamabad


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## Neo

* Loadshedding exasperates IT sector, students ​* 
Wednesday, July 16, 2008

KARACHI: The menace of load shedding has not only affected business activities, but has also created huge problems for the students, especially those who have to use computers frequently.

IT experts and professionals are facing the same messy situation and despite assurance from officials that the time of power cuts would be brought down gradually, power outages continue, which is badly hampering the computer industry and destroying the future of students. This concern was expressed here by the officials of Pakistan Computer Association during a special meeting, chaired by Munawar Iqbal, President of the PCA, stated a press release.

The meeting, which was attended by Ibrahim Qureshi, President PCA Lahore Chapter, Zaka-ur-Rehman, President PCA Peshawar and Feroz Ali, President PCA Karachi and other office-bearers expressed their disappointment over the grave situation and informed the participants that as a result of the unfavorable business conditions and menace of load shedding, 66 per cent of the computer industry has already been forced to close down its business and the rest is struggling for survival.

The PCA office-bearers said that a proper strategy should have been evolved to reduce the load shedding and to provide relief to students as well as industry, but unfortunately nothing has happened in this regard.

Participants of the PCA meeting said that a significant decline in the purchase of computers and related equipment has been recorded recently and load shedding of electricity is one of the key reasons for this unprecedented decline.

They urged the government to correct the affairs on priority basis and take immediate steps to reduce the time of load shedding.

Loadshedding exasperates IT sector, students


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## Neo

*Larkana Industrial Estate declared tax-free zone​*
ISLAMABAD, July 15: Prime Minister Syed Yousuf Raza Gilani has declared Larkana Industrial Estate as a tax-free zone for a period of 10 years.

Established in 1964-65 and spread over an area of 59 acres, Larkana Industrial Estate is yet to attract investment for establishing industries.

The premier has approved the duty free zone of Larkana in a bid to give support to businessmen of the city. The package is part of other projects approved for progress and development of Larkana city.

An income tax notification of SRO741 of 2008 has been issued to amend the Income Tax Ordinance 2001 for implementation of the decision.

According to the decision, profits and gains would be derived by a taxpayers from an industrial undertaking set up in Larkana Industrial Estate between July 1, 2008, and June 30, 2013 for a period of 10 years beginning with the month in which the industrial undertaking is set up or commercial production commenced, whichever is the later.

Exemption under this clause shall apply to an industrial undertaking which is owned and managed by a company registered under the Companies Ordinance 1984 (XLVII of 1984) and formed exclusively for operating the said undertaking, added the notification.

The duty-free facility is expected to make it an attractive place for domestic and international investors.

The zone already provides the provision of all basic utilities for the scheme, like water, gas, elect

Larkana Industrial Estate declared tax-free zone -DAWN - Business; July 16, 2008


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## Neo

*LSM growth remains 4.7pc​*
KARACHI, July 15: Large Scale Manufacturing (LSM) sector, backbone of the economy, could hardly achieve a growth half of what it achieved last year, reflecting growing dependence of the economy on services sector.

The latest data issued by the State Bank showed the growth of LSM as 4.7 per cent during July-April 2007-08, indicating the growth pattern of LSM for another two months.

Since data-processing of industrial production is time-consuming, the 10-month figures give an updated picture of the LSM growth.

The most disappointing is the growth of textile sector which has largest share of 24.49 in the LSM. The textile sector growth was just 2.5 per cent during this period.

The LSM growth remained a significant contributor to GDP growth during in 2006-07 with value-addition rising by 8.8 per cent, down from the 10.7 per cent growth in the preceding year.

The textile sector contributed almost a quarter of the increase in value-addition in LSM during the fiscal 2006-07.

However, this year the second heavyweight, food and beverages, with a total share of 14.35 per cent posted a growth of 10 per cent.

Within this sector, the sugar production growth rose by 28.9 per cent while beverages growth was 20.9 per cent.

The pharmaceutical sector, which has been making hue and cry to increase the prices of their products, posted the highest growth of 28.7 per cent. The sector has a share of 5.03 per cent in LSM.

The automobile sector which has been a key player in pushing the industrial growth higher witnessed a negative growth. Having a share of 3.95 per cent in LSM, the automobile sector recorded negative 0.1 per cent growth.

The major sector within this was cars and jeeps which posted a collective growth of minus five

LSM growth remains 4.7pc -DAWN - Business; July 16, 2008


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## Neo

*12 firms offer to generate 3,839MW​*
ISLAMABAD, July 15: Twelve power companies on Tuesday came up with offers to add 3,839MW of power generation capacity on fast-track basis before September 2009 against the governments demand of 1,500MW.

The technical bids were opened by the Private Power and Infrastructure Board (PPIB) in the presence of representatives of the bidders.

A bid evaluation committee comprising representatives of PPIB, ministry of finance, National Electric Power Regulatory Authority (Nepra) and Wapda would open financial bids on August 2 after their technical evaluation.

Besides the local investors, companies from the United States, Canada, the UAE, Turkey and Mauritius took part in the bidding.

Water and power secretary Ismail Qureshi, who presided over the open bidding, said the bids would be declared successful on the basis of minimum project implementation schedule and lowest tariff. He said the government wanted to set up 1,000MW of power generation plants by the independent power producers in 12 months and another 500MW of rental power projects in six months to overcome power shortage in the country.

Nine companies submitted their bids for thermal IPPs with a total generation capacity of 3,060 against governments requirement of 1,000MW while three companies offered to bring 779MW of rental power projects against a requirement of 500MW.

The technical evaluation committee would declare successful bidders on technical grounds by July 30, followed by opening of financial bids on August 2. On August 4, the government will announce final results of successful bidders on the basis of implementation schedule and lowest tariff. This will be followed by issuance of letters of acceptance for rental power projects to be commissioned in six months while letters of support would be issued to IPPs to set up their projects in12 months. This process will be completed by August 15, 2008, the water and power secretary said.

The companies that submitted their bids for IPPs included Creative Energy (170MW furnace oil-based at Chakwal), Ruba Energy (166MW furnace oil-based at Kalashah Kaku near Lahore), Pace Power (1,000MW diesel-based at Muzaffargarh), Fatima Power (200MW gas-based near Okara), Cavalier Energy (500MW LPG-based at Port Qasim), Saba Generation (500MW furnace oil-based at Arifwala in Punjab), Attock Oil (202MW furnace oil-based at Mandi Bahauddin), Progas Energy (345 MW LPG-based at Port Qasim) and Pak Electron (304MW furnace oil-based near Lahore).

The companies that offered to set up rental power projects included Walters Power (furnace oil-based 230MW near Korangi), Karakey (heavy fuel oil-based 249MW near in Karachi and Cavalier Energy (LPG-based 300 MW plant at Port Qasim).

The Request for Proposal (RFP) document for these projects was prepared by PPIB in consultation with all the relevant stakeholders including leading power plant equipment manufacturers, IPPs and Wapda.

The IPPs are expected to start their operation by August 2009 and rental projects are expected to start commercial operation by February 2009.

12 firms offer to generate 3,839MW -DAWN - Business; July 16, 2008


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## Neo

*Profit-taking drags Karachi stocks below 11,000 points​*
KARACHI: The Karachi stock mrket fell below the psychological barrier of 11,000 points as small investors opted for profit-taking to recover their losses, analysts said.

The Karachi Stock Exchange (KSE) 100-share index shed 217.44 points to close at 10,959.87 points as compared with 11,177.31 points of the previous session. The KSE 30-share index lost 355.69 points to close at 12,416.70 points.

Analysts said the market once again opened in the red zone with negative 255.71 points and at the end of the day closed at 10,959.87 points. At one stage short recovery was witnessed in the market but the news of deteriorating law and order situation at Pak- Afghan border pulled the market down to close negatively at the end of the trading session.

The market turnover increased 121.72 percent and traded 155.03 million shares as compared to 69.92 million shares traded in the previous session. The overall market capitalisation declined 1.92 percent to Rs 3.412 trillion as compared with previous sessions Rs 3.479 trillion. Out of 263 companies, 78 closed in positive zone, 169 in negative while 16 remained unchanged.

Hasnain Asghar Ali, analyst at Aziz Fida Husein and Co said the deep negative numbers initially were well capitalized on selective support by local institutions mainly in the E&P stocks. Following the trend, specific activity was also witnessed thereby allowing the main board stocks to finally start trading and the stuck ups finally got an exit.

Presence of buyers in the main stocks allowed the bulls to dare entrance, as they were after quite some time backed by positive developments.

News that economic assistance would be offered by Saudi Arabia in shape of oil supply with arrangement of deferred payment, agreement of government with executing authorities in Balochistan (will be beneficial in exploration activities), rise in cement prices and governments stance on privatisation as reiterated by the PM were the plus points which attracted investors towards the ring.

Ahsan Mehanti, senior analyst at Shahzad Chamdia Securities said selling pressure continued as high discount rate, rising current account deficit, political uncertainty, law and order situation in the country affected investors confidence negatively and falling SCRA balances to $39 million reflected foreign selling in the market.

The futures market turnover went up to 14.55 million shares as compared to 7.00 million shares traded in the previous session. Four of the companies closed in positive zone, twenty-five in negative while four remained unchanged.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan aid bill presented in US Senate​*
LAHORE: A bill for military and economic aid to Pakistan has been placed before the United States Senate, suggesting that conditions should be placed on any military aid to the country, as well as advocating a threefold increase in economic aid, reported Geo News.

Senator Joe Biden and Senator Logger presented the bill in the Senate, proposing an increase in Pakistans unconditional non-military aid to $15 billion in the next decade, or $1.5 billion annually, the channel reported.

According to the channel, the same bill also suggests putting conditions on military aid to Pakistan and binds the secretary of state to certify every year that the Pakistan Army is taking effective action against Al Qaeda and Taliban and not intervening in any form in the countrys judicial and political system.

Biden told media in Washington that the US wanted long-term relations with the people of Pakistan. According to the channel, he also said that the US should not dictate Pakistan on the latters policy in the Federally Administered Tribal Areas (FATA) and should give the new government a chance to govern the country without any external pressure.

According to Reuters, Western powers have been alarmed by mounting casualties among troops in Afghanistan and by intelligence assessments that Al Qaeda could organise strikes on Western soil having regrouped in Tribal Areas under Taliban protection.

Daily Times - Leading News Resource of Pakistan


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## Neo

*World Bank approves $500 million emergency package​* 
ISLAMABAD (July 16 2008): The World Bank has approved a $500 million emergency package for Pakistan to help it overcome economic crisis, it is learnt. The Bank mission conveyed the decision of accepting Pakistan's request for disbursement of $500 million emergency package during a meeting with Finance Minister Syed Naveed Qamar, held here on July 14.

The mission informed the minister that the World Bank will present the emergency package to its board in August and subject to the board approval release the fund by mid September.

Sources in the Finance Ministry told Business Recorder on Tuesday that a three-member WB delegation called on the Finance Minister on July 14 to review Pakistan's strategy for coping with severe economic crunch. Pakistan had requested the Bank for loan under emergency package to support its depleting forex reserves and reduce budget deficit.

The official claimed that the mission expressed satisfaction over the steps taken by the government for offsetting pressure on its economy such as cutting down subsidy on oil, gas and electricity rates. The mission expressed confidence that the government will strictly follow the existing policy of eliminating subsidy regime and introduce a market-based approach for all sectors of the economy.

The official said the World Bank's support of $500 million will restore other donors' confidence in Pakistan's economic policies and pave way for getting more funds from other donors for different development projects. It would also brighten the chances to secure much-needed $1.5 billion from the World Bank during next one year.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*$40 billion investment in energy sector: AJK plans to meet power needs of Pakistan​* 
KARACHI (July 16 2008): Azad Jammu & Kashmir (AJK), which has invited $40 billion of foreign investment in hydel energy sector as a part of its energy and investment-focused strategy during FY2008-09, has a plan to provide electricity to the power-hungry Pakistan which is facing 4,000MW shortage.

"Pakistan has a shortage of 4,000MW while Azad Kashmir has the potential to generate 17,000MW of electricity, for which we have invited $40 billion foreign investment in the energy sector," Prime Minister of Azad Jammu & Kashmir (AJK) Sardar Attique Ahmed Khan told Business Recorder in an exclusive interview.

The AJK premier said his government had formulated a policy based on energy and investment for fiscal year 2008-09 under which no sales tax would be collected for 10 years on foreign investment in different energy sectors like hydel, solar, wind mill, bio diesel, fuel cell etc.

"We have the intention not only to provide electricity to Pakistan but also sell out the surplus to other regional countries like India," he added. The AJK Prime Minister said the investors would get the 10-years sales tax exemption even on the bio-products. The investment-based policy, he said, would also create employment opportunities in AJK, which would ultimately help the government alleviate the menace of poverty in the region.

He said some foreign investors were showing interest in response to his government's incentives in the energy sector. A Donors' Conference, to be held next month in AJK, would also focus on this matter, he added. On the political front, the premier said he was trying hard to convince Islamabad for associating a representative from AJK in the Sindh government as, he said, 2.1 million displaced Kashmiris must have a representation in the province.

To a query on the hurdles in the implementation of United Nations' 1948 resolution on Indian occupied Kashmir (IoK) the AJK premier said: "Right now the difficulty lies in the presence of mistrust, sense of victory and defeat and the money being spent by Pakistan and India over this dispute."

He said successive governments in Pakistan and India had persistently been striving to resolve the longstanding dispute which, he said, has become more "complex" with the passage of time. Khan said a non-serious attitude of New Delhi in terms of fulfilling its pledges was another major setback to the long-awaited peaceful resolution of IoK issue.

Referring to other national and international issues, like Freedom Movement in the SubContinent from 1857 to 1947, Good Friday Agreement of Northern Ireland etc, the AJK prime minister said the Kashmir issue would, however, take some time to be resolved.

Urging a negotiated settlement of the Kashmir issue, he said despite the existence of UN observers around 0.8 million Indian occupation forces were still busy in committing a state-sponsored terrorism against the innocent and unarmed people of IoK. Demanding a nuclear-free zone status for Kashmir, the AJK premier urged Islamabad and New Delhi not to use nuclear weapons in the region.

To a query he said his government had no controversy with the Muttahida Qaumi Movement (MQM) which, he said, was a national level party and "would behave responsibly in all situations". When asked about MQM's protest on his arrival in Pakistan, the AJK premier said the protest was held by a few youth, who would soon be disowned by the "mature" leadership of the Movement.

Attique Khan was optimistic about the present Pakistan People's Party-led government's policy towards IoK, saying that the leadership of the party would follow in the footsteps of its founding leader Zulfiqar Ali Bhutto who was a strong supporter of Kashmiris.

He, however, claimed: "Now the Kashmir issue does not need the governments but the governments need to address it and if they don't they will have to answer their people." Rejecting the impression that political parties in Kashmir were lacking a central leadership, Khan said the All Parties Hurriyat Conference (APHC) was their real representative body.

While developing national consensus on all issues was difficult in the wake of unabated human rights violations in IoK "all the parties are unanimous that India should get out", he added. To a query on political stability of the AJK government, the prime minister said he could not claim perfection but some political figures like Barrister Sultan Mehmood were creating problems.

"He has a short history of politics in which he went to various parties... he held meetings with Amin Fahim and Chaudhry Shujaat and now he is talking to Nawaz League," he said.

When asked why infrastructure development in IoK was better than that of Azad Kashmir, the AJK PM claimed that road infrastructure in his state was even better than what it is in Pakistan. Citing the decades old Indian occupation as a major reason for underdevelopment in Kashmir, he said the October 8 earthquake had devastated 7,000 kilometres of roads in AJK.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Obama for tripling non-military aid to Pakistan​*
WASHINGTON (July 16 2008): Democratic presidential candidate Barack Obama on Tuesday called for tripling non-military aid to Pakistan and said he would co-sponsor a bill to do so. He also called for changes to US policy toward Pakistan, saying that President George W. Bush had offered a "blank cheque" to President Pervez Musharraf in the form of US military aid.

Obama said a 'single-minded' focus on Iraq was distracting the United States from other threats and he renewed his vow to end the war. "This war diminishes our security, our standing in the world, our military, our economy, and the resources that we need to confront the challenges of the 21st century," Obama said in excerpts of a speech to be delivered later on Tuesday.

"By any measure, our single-minded and open-ended focus on Iraq is not a sound strategy for keeping America safe," he said. Obama, who has been accused by his Republican rival John McCain of shifting positions on Iraq, is seeking to lay out his views on the war ahead of a planned trip to Afghanistan and Iraq soon.

Dates of the trip have not been disclosed for security reasons. "This war distracts us from every threat that we face and so many opportunities we could seize," the speech excerpts said. "Instead of being distracted from the most pressing threats that we face, I want to overcome them."

The future of Iraq promises to be a central issue in the November election battle for the White House between McCain, an Arizona senator, and Obama, an Illinois senator. McCain criticised Obama for delivering a speech on Iraq before travelling there.

Obama's visit to Iraq, where he has only been once, in 2006, and Afghanistan follows repeated criticism from McCain that he should visit the area and talk to commanders. Obama has highlighted the resurgence of the Taliban in Afghanistan as a threat that has been harder for the United States to tackle because of the distraction of the Iraq war.

"I have argued for years that we lack the resources to finish the job because of our commitment to Iraq," Obama said in the speech. "As president, I will make the fight against al Qaeda and the Taliban the top priority that it should be," Obama said.

Business Recorder [Pakistan's First Financial Daily]


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## Moin91

*First ship with 36,000T wheat arrives*


Thursday, July 17, 2008
KARACHI: A vessel, MV Ocean Trader, carrying 36,000 metric tonnes of wheat imported from Ukraine berthed at Port Qasim on Wednesday afternoon.

A source in the Trading Corporation of Pakistan (TCP) said here that the ship will start unloading the wheat as soon as possible.

He said another ship, MV Al-Abam Belle, loaded with 36,000 metric tonnes of imported wheat will arrive at Port Qasim on Aug 4. The TCP had so far awarded contracts for the supply of 656,000 metric tonnes of wheat to eight firms under two tenders.

The latest contracts were awarded to six bidders for the supply of 516,000 metric tonnes of wheat at the rate of $409.88 per tonne on July 3 while the first contract was awarded to two firms for the supply of 140,000 MT of wheat at the rate of $399.45 per tonne on June 18 for July shipment.

The government has tasked the TCP to import 2.5 million tonnes of wheat to meet the shortage for the prime staple food. The TCP has invited bids from pre-qualified foreign suppliers for the purchase of 250,000 metric tonnes of wheat of latest crop from international sources. The tender will be opened on July 26 at the corporations principal office.

First ship with 36,000T wheat arrives


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## Moin91

*SBP gets bids worth Rs52bn for T-bills*

Thursday, July 17, 2008
By Shahzad Anwar

KARACHI: The State Bank of Pakistan (SBP) raised the cut-off yield on three months and one-year market treasury bills by 5 to 22.91 basis points in an auction on Wednesday.

It was the second consecutive auction when the central bank did not receive a single offer for six-month T-bills as primary dealers preferred to invest in short-term government security papers prior to announcement of a new monetary policy for the first six months of ongoing fiscal year.

The SBP received total bids worth Rs54.402 billion, of which Rs49.185 billion offers were for three-month T-bills and Rs5.216 billion for 12-month papers. The SBP had fixed a pre-auction target of Rs60 billion.

However, the central bank accepted almost all bids for three-month treasury bills with upward revision in cut-off yield to 11.7825 per cent per annum from 11.5534 per cent in last auction. For 12-month papers, the SBP accepted worth Rs3.429 billion of offers with a cut-off yield of 11.8392 per cent per annum against 11.7891 per cent in previous auction.

Banks are giving priority to invest in one, two and three weeks apparently in a bid to engage minimum capital for shortest time on the anticipation that the SBP might raise its discount rate in coming monitory policy from 50 to 100 basis points, a treasury head at a local bank said.

Moreover, due to low charm for banks in 6 and 12 month T-bills only corporate clients were active in the auction of one year T-bills.


SBP gets bids worth Rs52bn for T-bills


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## Moin91

*EAC recommends adjustment in power tariff slabs*

Thursday, July 17, 2008
By Aftab Maken

ISLAMABAD: The Economic Advisory Council (EAC) has proposed reorganisation of electricity tariff slabs by enhancing the lifeline category from 50 to 100 units and adjusting the remaining slabs.

In budgetary recommendations, which the Federal government is implementing, the EAC proposed that the slab for lifeline users of 50 units, who are completely protected, should be enhanced to 100 units, while users of up to 300 units should be given an adequate subsidy.

For the last slab or users consuming more than 300 units, the EAC further suggests that they should be charged market rates or overcharged for cross-subsidisation, reveals an EAC document available with The News.

The Ministry of Water & Power on March 1, 2008 notified an increase of 10 per cent in electricity tariff for domestic users and 6 per cent each for commercial and industrial consumers, whereas lifeline electric power consumers, using up to 50 units per month, would be exempted from the hike in power tariff.

Nine power distribution companies (DISCOs) in petitions before Nepra have requested to allow them an increase of Rs0.78 to Rs1.5 per unit and the process is under-evaluation with Nepra.

Confirming the EAC proposals, Secretary Water & Power, Ismail Qureshi told The News that the proposals after thorough examination would be forwarded to the cabinet for approval.

Increased POL prices have pushed the IPPs to manage the balance sheet difficultly, thus ultimately leading the IPPs to generate below the capacity and low investment in the sector.

The announcement for new electricity tariff is expected during the month of July while the government can also delay the announcement as increasing electricity tariff is political one.

The estimated impact for rationalising the electricity slabs would be Rs39 billion and it will lead to fiscal consolidation, as the country is facing looming fiscal and external deficits, said the document.

Beyond the short run measures, the EAC further proposed an increase in power generation through activation of under utilised capacity in GENCOs and IPPs, and also improve the efficiency in existing plants of WAPDA and KESC through initially private sector management and then privatisation.

Review and restructuring of KESC ownership and operations is also recommended and to give institutional support to fast track solar/wind energy for providing power to households.


EAC recommends adjustment in power tariff slabs


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## Neo

*Overseas workers remit record $6.4bn ​* Thursday, July 17, 2008 


KARACHI: Pakistan received highest-ever workers remittances amounting to over $6.451 billion in the recently concluded 2007-08 fiscal year. It surpassed the previous record of $5.49 billion received in the preceding fiscal year 2006-07.

In FY08 workers remittances showed an increase of 17.43 per cent, or $957.59 million, when compared with the FY07.

The amount of $6.45 billion includes $2.40 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

The monthly average remittances in the period from July 2007 to June 2008 recorded $537.60 million as compared to $457.80 million during the same period of the last fiscal year, registering an increase of 17.43 per cent.

The inflow of remittances in the July 2007 to June 2008 period from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $1,762.03 million, $1,251.32 million, $1,090.30 million, $983.39 million, $458.87 million and $176.64 million respectively, as compared to $1,459.64 million, $1,023.56 million, $866.49 million, $757.33 million, $430.04 million and $149 million, respectively in the July 2006 to June 2007 period. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during FY08 amounted to $726.29 million as against $804.91 million in FY07.

During June 2008, Pakistani workers remitted an amount of $547.41 million, up $41.86 million or 8.28 per cent when compared with an amount of $505.55 million sent home in June 2007.

The inflow of remittances into Pakistan from most countries of the world increased last month as compared to June 2007. According to the break up, remittances from USA, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UAE, UK and EU countries amounted to $143.57 million, $123.67 million, $90.98 million, $88.29 million, $38.08 million and $13.98 million respectively, as compared to corresponding receipts from the respective countries during June 2007 i.e. $140.17 million, $96.47 million, $68.16 million, $95.39 million, $37.45 million and $12.47 million.

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during June 2008 amounted to $48.80 million as compared to $55.33 million during June 2007.

http://www.thenews.com.pk/arc_news.asp?id=3


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## Neo

*Trade Policy 2008-09 : Govt may impose duties on luxuries, electronic goods​*
ISLAMABAD: The government is likely to introduce higher duty regime in the new Trade Policy 2008-09 on import of luxury items including different electronic goods for the sole purpose to narrow the trade gap, officials in the Ministry of Commerce told Daily Times Wednesday.

In the last fiscal year 2007-08 the country spent $39.968 billion on imports of different items including oil and food items (30.87 percent increased over last year). However, the export of country stood at $19.223 billion (13.23 percent increase) resulting in to a trade deficit of $20.745 billion (52.95 percent increase over last year) by the end of last fiscal year 2007-08.

The Trade Policy for the current fiscal year 2008-09 would be announced on Friday with emphasis on discouraging imports and incentives for exports of traditional as well as non-traditional items to new markets. The Ministry of Commerce is likely to set an export target of $21.7 billion for the current fiscal year 2008-09 as compared to realized export figure of $19.222 billion in the last fiscal year 2007-08.

A proposal is under consideration to allow overseas Pakistanis to import up to 7-year old and used vehicles in Trade Policy 2008-09, under Transfer of Residence, Gift, and Personal Baggage Schemes.

Trade Policy is also likely to allow 25 percent export freight subsidy through land and sea routes for promotion of exports of cars and other vehicles manufactured in Pakistan.

The officials said it was impossible for the government to reduce spending on oil and food items imports as it leads to political disturbance in the country.

The officials were of the view that heavy duty on imports of electronics goods would save the government not more than $500 million while on other side smuggling of all such items would further get momentum.

The overall measures, the government would take place in the new Trade Policy would save the government about $2 billion, the official maintained. However, the rising tendency in oil prices at international market would further enhance the government spending for POL products imports and expecting that the overall import bill might further increased instead of declining in the fiscal year 2008-09.

This year the emphasis of the trade policy would be to cut the import volume by 50 percent so that macro-economic targets fixed for the current fiscal year 2008-09 are met. The new target of $21.7 billion is regarded over ambitious due to persistent energy crises including load shedding and gas shortages for the industrial sector across the country.

Sources said government would take several measures to reduce the import by 50 percent in the current fiscal year through trade policy measures that also include reduction of $1 billion in cotton imports.

And the policy would also carry measures for cotton export by additional $2 billion in the current fiscal year, sources added.

Increase in trade with regional countries especially the neighbouring countries like India, Afghanistan, Iran and China would be the prime focus of the Trade Policy as this would help hike exports on competitive transportation charges. The major export item is textile, which is the 60 percent of total export and government would give special incentive for the textile sector in the shape of Research and Development (R&D) Support, which is proposed at Rs 30 billion for the current fiscal year 2008-09.

Daily Times - Leading News Resource of Pakistan


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## Neo

*S Korea to give $25 million soft loans for GEPCO​*
ISLAMABAD: South Korea has pledged $25 million soft loan for the improvement of transmission and distribution system of Gujranwala Electric Power Company (GEPCO) and Pakistan and Korea are expected to sign an agreement within a week, sources in Water and Power Ministry told Daily Times Wednesday. Pakistan had placed a request of $1320.54 million soft loan from South Korea for extending network and sustaining financial losses of electric supply companies. Pakistan needs $2692.55 million to materialise different projects of power distribution companies. Sources said that Pakistan had placed a request before the Korean government for the project of GEPCOs 6th secondary transmission and grids.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistans apparels fetch lowest price​* 
ISLAMABAD, July 16: Pakistans textile and clothing sector export price has nosedived to the lowest level among the leading exporting countries preventing fresh investment in the sector necessary to improve competitiveness and productivity.

Sources told Dawn on Wednesday that the previous governments policies of subsidising the export price of textile and clothing sector resulted not only in lowering of consumer price of the products but it also painted Pakistan as the cheap supplier to the world market.

The import of textile machinery is on decline for the past few years. This shows that no body is re-investing in the sector, an industry source said.

Analysts said that before promising any further subsidies package for the sector the government should carry out audit of the biggest recipients of the research and development (R&D) to identify the impact of the subsidy on growth in export and reinvestment.

Statistics showed that the government dolled out more than Rs43 billion subsidies under R&D during the past three years for increasing export of the sector.

They said that the re-finance scheme for export is another big subsidy, which is also one of the sources for fuelling inflation in the country. The long-term financing facility is also a subsidy available to the sector.

Having low unit price of textile and clothing resulted into lower profits, which actually blocked fresh investments in the new technology, the source said adding the low unit price also resulted into low return on equity, low capital formation, and ultimately low quality products.

An official report said Pakistans share of high value-added products (apparel) is lower than low value-added products (non-apparel) in the 27-member bloc of European Union and the United States. While Pakistans competitors like China, India, Bangladesh and Vietnam are exporting high-value added goods more than lower value-added goods.

In the USA, Pakistan is fetching lowest Sme (square meter) price of its cotton products ($0.91) as compared to India ($1.9), Bangladesh ($2) Vietnam ($3) and China ($1.5).

This showed that unit price of Pakistan ($0.9) is half of the world unit price ($1.8) in USA. The same trend has been witnessed in the EU market negating the textile tycoons claims of competition in international market.

This shows that the high price is not the problem of Pakistan textile sector but the problem is the low price.

Pakistans export of textiles and clothing (T&C) to the EU and the USA accounts for 68 per cent of its total T&C exports.

Statistics showed that Pakistans share in world export of T&C amounted to 3.1 per cent and 1.2 per cent, respectively, in 2004. The position is almost the same after the dismantling of the quota regime.

This showed that Pakistans share in global export of T&C is neither commensurate with Pakistans status of cotton producer nor reflects its potential despite the fact that Pakistan is the fourth largest produce of cotton.

Traditionally, Pakistan is the supplier of low quality and low value-added products as compared to its competitors, which was further aggravated by subsidising the export price during the past few years.

Pakistans apparels fetch lowest price -DAWN - Business; July 17, 2008


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## Neo

*Record remittances received in fiscal year 2008​* 
KARACHI (July 17 2008): Pakistan received the highest-ever amount of over 6.451 billion dollar as workers' remittances in 2007-08 fiscal year (FY08). The workers remittances in FY 08 have also shown an increase of 17.43 percent or 957.59 million dollar, when compared with FY07. As 5.494 billion dollar received in the preceding 2006-07 fiscal year (FY07) on account of workers' remittances.

The amount of 6.451 billion dollar includes 2.40 million dollar received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs). The monthly average remittances from July 2007 to June 2008 come to 537.60 million dollar as compared to 457.80 million dollar during the corresponding period of the last fiscal year, registering an increase of 17.43 percent.

The inflow of remittances in the July 2007 to June 2008 period from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to 1,762.03 million dollar, 1,251.32 million dollar, 1,090.30 million dollar, 983.39 million dollar, 458.87 million dollar and 176.64 million dollar respectively, as compared to 1,459.64 million dollar, 1,023.56 million dollar, 866.49 million dollar, 757.33 million dollar, 430.04 million dollar and 149 million dollar, respectively in the July 2006 to June 2007 period.

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during FY08 amounted to 726.29 million dollar as against 804.91 million in FY07, depicting a decline of 11 percent in FY08. During the last month (June 2008), Pakistani workers remitted an amount of 547.41 million dollar, up 41.86 million dollar or 8.28 percent when compared with an amount of 505.55 million dollar received in June 2007.

The inflow of remittances into Pakistan from most of the countries of the world increased last month as compared to June, 2007. According to the break up, remittances from USA, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UAE, UK and EU countries amounted to 143.57 million dollar, 123.67 million dollar, 90.98 million dollar, 88.29 million dollar, 38.08 million dollar and 13.98 million dollar respectively, as compared to corresponding receipts from these countries during June 2007 ie 140.17 million dollar, 96.47 million dollar, 68.16 million dollar, 95.39 million dollar, 37.45 million dollar and 12.47 million dollar. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during June, 2008 amounted to 48.80 million dollar as compared to 55.33 million dollar during June, 2007.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'No curbs on UK nationals to travel to Pakistan'​* 
KARACHI (July 17 2008): British Deputy High Commissioner Robert Gibson has informed the business community that Britain has neither issued a travel advice nor imposed any restrictions on the British nationals travelling to Pakistan. Speaking at a meeting of Korangi Association of Trade and Industry (Kati) on Wednesday, he said Britain has only cautioned its nationals to prepare travel plans carefully.

Praising Pakistan's economic policies, he said that Karachi is a vibrant city and Pakistan is a vibrant country for investment. He said that Pakistan is a country with challenges and has the resilience to convert these challenges into opportunities of development.

The Deputy High Commissioner said that Britain enjoys the best trade and economic relations with Pakistan. More than 100 British companies are working successfully in the country, he added. He said that Britain wants to further increase two-way trade and investment in Pakistan.

Robert Gibson noted that during 2006-07 British companies invested around 5 billion dollars in telecom, banking, power, education, etc, in Pakistan. Welcoming the guests, Kati Chairman Fazl-e-Jalil emphasised the need for making efforts to further increase two-way trades. He said that Pakistan is producing a number of agriculture commodities, which could be exported to UK.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Gwadar Port operations: PSAI interested in handling captive cargo​* 
KARACHI (July 17 2008): While Islamabad has attached a transshipment based geo-strategic significance to Gwadar Port its foreign operator, Port of Singapore Authority International (PSAI), seems more interested in handling the captive cargo than becoming a regional trade hub.

"Considering the geo-economic imperative of the regional changes, the Ports' Master Plan studies consider an alternate to the Persian Gulf Ports to capture the transit trade of the Central Asian Republics (CARs) as well as the transshipment trade of the region," says a three-year Performance and Activities Report 2004-07 issued by the ministry of ports and shipping during the rule of Pakistan Muslim League-Q.

On the contrary, sources said, the management of Port of Singapore Authority International, the concessionaire operator of Gwadar Port, was following a plan mainly focused on handling the national cargo instead of transhipment business.

They said the inward approach surfaced when Khurram Abbas Country Manager of PSAI told participants of a seminar, held here under the auspices of Pakistan Institute of Maritime Affairs (PIMA) earlier this month, that the Authority would initially focus on national cargo in terms of handling.

Highlighting the salient features of a 30-year Master Plan for Gwadar Port, the PSAI chief had hinted that the Authority was in a competition with the two local ports in Karachi and would go for the transhipment side after undertaking development of the port, said the sources.

They said the PSAI had a commitment with Islamabad on prioritising regional trade at Gwadar Port and that was its (PSA's) international exposure in transhipment work due to which the government had selected it for port operations.

Sources claimed that because of this inward approach the PSAI was happy with the present government's decision to import new consignments of wheat through Gwadar Port. They said the PSAI chief was later badly taken on by other participants of the seminar who reminded the Authority of its past pledges to make the port a regional hub with an aim to capture transit trade of the Central Asian Republics (CARs) and other regional countries.

The speakers, mostly from the ports and shipping field, had strongly criticised the PSAI for not opting transhipment as a short-term possibility. They said some were of the view that the PSAI, in the near future, had no intention to attract transhipment business, which they said was considered to be hallmark of other Asian ports such as Dubai, Colombo, Sallalah, Singapore, and Hong Kong.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Oil output registers 4.6 percent increase​* 
KARACHI (July 17 2008): Pakistan's oil production has increased by 4.6 percent on year-on-year basis to 71,122bpd (barrels per day) in the first 11 months of the current fiscal year FY08 as compared to 67,967bpd in the same period a year back.

Gas production, on the other hand, increased by 2.9 percent on yearly basis to 4,045mmcfd (million cubic feet per day) in 11MFY08 as against 3,932mmcfd in the corresponding period last year, whereas LPG production fell by 0.8 percent to 1,529tpd (tons per day) in this period.

According to the latest monthly figures released by the PPIS, OGDC's production growth remained impressive as its oil output grew by 5.7 percent on yearly basis in 11MFY08. "The OGDC's production growth of oil and gas was mainly contributed by production increases in the fields of Bobi (100 percent stake), Chanda (72 percent), Dakhni (100 percent), Kunar (100 percent), Mela (56 percent), Adhi (50 percent) and Makori (28 percent). Apart from Adhi and Makori.

Gas production increase of 4.5 percent on yearly basis during 11MFY08 was mainly due to production hikes from the Qadirpur (75 percent stake) and Uch (100 percent) fields", Saad Arshad, an analyst at Invest Capital Securities said.

PPL's oil production growth of 47.8 percent on yearly basis in 11MFY08 was mainly on the back of production from Mela field (approximately 30 percent with PPL's stake of 26 percent). However, oil production from the Adhi (39 percent) and Makori (28 percent) fields also contributed to the rise.

Average gas production of the company remained stagnant at 1,007mmcfd during 11MFY08 which was mainly due to a steady decline in gas production from the company's major field in Sui. However, this decline was offset by an increase from the Adhi, Kandhkot, Qadirpur and Sawan fields. POL's oil and gas production fell by 12.3 percent and 2.7 percent on yearly basis, respectively during 11MFY08.

Oil production of the company was mainly affected by the fall in oil production from the Pindori field which averaged 2,240bpd in May-08. Apart from Balakassar and Khaur, all of POL's 9 operated fields suffered oil production falls with the largest 11MFY08 fall of 43 percent witnessed in Pindori. Average gas production of the company remained relatively stagnant at 46mmcfd during 11MFY08 as against 47mmcfd last year, down by 2.7 percent YoY.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Thar coal should not be given to federal government'​* 
HYDERABAD (July 17 2008): Members of the Sindh Democratic Forum (SDF) are upset that the federal government has issued a notification to set up the Thar Coal Authority, with the Sindh Chief Minister nominated as the leader. The SDF said that coal is a provincial subject on which the federal government has no jurisdiction, thus the action is unlawful and void.

The SDF members regretted that officials of the Federal Ministry of Water and Power and WAPDA tried to control the resources of the province. They added that they were motivated to do so by "greed and narrow self interest". They added that Sindh has been especially been victimised by these groups.

The SDF said that this ministry in 1997 scuttled a 4 billion dollar investment plan by Hong Kong based investor Gordon Wu. The investor planned to develop Thar Coal to produce 5000MW of electricity by the year 2000. They added that had this action not been taken by the Sharif government, Pakistan would not face load shedding today and would not have an oil import bill of US $9 billion.

They added that the first Benazir government needlessly gave away the Super Highway, which they saw as Sindh Government property, to the National Highway Authority. The members added that the Toll from the Super Highway was being used by the NHA to pay for the loss making Lahore Islamabad motorway. The forum felt that another PPP Government was making a similar mistake now. The Coal of Sindh, be it Thar, Dadu, Thatta or Badin is a tremendous wealth of the Sindhi people, the SDF said and under no circumstances should it be handed over to the federal government, as they claimed the Ministry of Water and Power and WAPDA are enemies of Sindh.

The SDF suggested that the Sindh Coal Authority be expanded to become the Sindh Coal and Energy Authority, tasked with exploit the coal resources of Sindh and generating electricity.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*An empty promise?​*
EDITORIAL (July 16 2008): The government seems to have leapt without thinking in promising earlier this year that it would deliver another 2200 MW electricity to the national transmission system by April 2009. According to a BR report, based on documentary evidence, the Private Power Infrastructure Board (PPIB) itself reckons that "the target of 2200 MW programme runs the risk of delay."

The programme's component thermal power projects are behind schedule. For example, the Orient Power Company Limited (OPCL) was to commission 150 MW simple cycle phase of a project in the current month, but there is no indication of that happening anytime soon. The concerned parties have not even fulfilled all the signing formalities. Aside from the management issues, also hindering progress is the non-availability of gas for these projects. In fact, gas shortages are a major problem.

The SNGPL was supposed to supply 38 mmcfd for the OPCL project, but failed to do so. It told the PPIB that it could accede to its demand only by diverting gas from an existing power plant such as Kapco, which it rightly explained, would not result in any "capacity addition."

The matter now rests with the petroleum ministry, which has been requested to arrange the requisite gas supply from PPIB's special quota. So far things are at a standstill. It is plain from the preceding details that the government had announced its plan to enhance power production without ensuring proper project support.

Apparently, impelled by the growing crisis it felt it had to do something and generate a certain amount of electricity from wherever possible, including 615 MW from thermal power projects. Hence it made the announcement without undertaking a proper feasibility exercise, as is plain from the record and the consequent delays. The same is also obvious from the water and power minister's seeming indifference when he admitted at a recent cabinet meeting that he was unaware of new deals concerning the setting up of rental power plants.

It is sad that this should be going on at a time power shortages are casting a dark shadow on the economy, which is already experiencing a slowdown on account of a poor law and order situation, political uncertainty and the resultant low investor interest. Surging energy prices together with power shortages are further aggravating things. Textile mills, the mainstay of our industrial and export sectors, are badly hit. So are a number of small and medium enterprises.

The export-oriented industries are finding it increasingly difficult to meet deadlines, and to remain competitive in foreign markets. Many face cancellation of orders because of having failed to fulfil their obligations in a timely manner. The situation being what it is, the government must grapple with the power crisis on a war footing, and do whatever it takes to generate more electricity to give a boost to economic activity.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan's forex reserves fall below $11 bln​*
KARACHI, July 17 - Pakistan's foreign reserves fell $292 million to $10.83 billion in the week that ended on July 12, due to heavy outgoings for import payments.

According to official data, the State Bank of Pakistan said its reserves fell $371 million to $7.953 billion, while those held by commercial banks rose $79 million to $2.877 billion from $2.798 billion.

Pakistan's foreign exchange reserves hit an all-time high of $16.486 billion on Oct. 31, 2007, but have fallen since then because of rising oil payments and foreign investor's pulling money out because of political uncertainty dogging the country 3 &#65533; months after a civilian coalition formed a new government.

The central bank last week took steps to help stablise the rupee. The main measure was a temporary suspension of forward booking of foreign currency for all imports.

An assurance was also given that the central bank would provide foreign exchange to authorised dealers for all imports of furnace oil used for power plants. See [IDn:SIN48565]

Analysts said the country's total reserves were barely enough to cover the import bill for the next 3 months.

The central bank in May increased its key discount rate to 12.0 percent from 10.5 percent, to counter accelerating inflation and widening fiscal and current account deficits. Analysts expect the central bank to raise rates again in the coming weeks.

The rupee has depreciated 16.9 percent against the dollar since the beginning of the year and dealers said the outlook remains bleak.

Pakistan's forex reserves fall below &#36;11 bln - Yahoo! Malaysia News


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## Neo

*U.S. aid bill seeks to boost Pakistan civilian ties​*
WASHINGTON (Reuters) - Two senior U.S. senators on Tuesday unveiled a $7.5 billion, 5-year aid bill for Pakistan aimed at boosting civilian ties in an alliance heavily skewed toward a military fight against Islamic militants.

The legislation introduced by Democratic Sen. Joseph Biden of Delaware and Republican Sen. Richard Lugar of Indiana directs aid to development projects such as schools, roads and clinics and aims to make Pakistan's military more accountable for the billions in U.S. support it has been receiving since the September 11 attacks.

The bipartisan legislative move comes amid increasing attacks in Afghanistan blamed on militants based in Pakistan's border tribal belt, which is believed to be the sanctuary of al Qaeda head Osama bin Laden and key Taliban leaders.

Biden, chairman of the Senate Foreign Relations Committee, said the bill was designed to correct an "unsteady balancing act in one of the ... most dangerous spots in the world" that breeds recriminations in Washington and Islamabad.

"In the minds of many Americans, we've not gotten much for the billions of dollars we spent," he told reporters.

"And from the Pakistani perspective, America is seen as an unreliable ally who will abandon Pakistan the moment it's convenient to do so," Biden said, adding that Pakistanis resent what they perceive as a U.S. bias toward military rulers.

*"GREAT INITIATIVE"*

Lugar, the senior Republican on the committee, said the bill will help the United States seize on opportunities arising from the election in February of a civilian government that ended nine years of military rule in Pakistan.

"While our bill envisions sustained cooperation with Pakistan for the long haul, it is not a blank check," Lugar told reporters.

"It calls for tangible progress in a number of areas, including an independent judiciary, greater accountability by the central government, respect for human rights, and civilian control of the levers of power, including the military and intelligence agencies," he said.

Unveiled days before new Pakistani Prime Minister Yousaf Raza Gillani is due to visit Washington, the bill was hailed by Pakistan's U.S. envoy as a "great initiative" that would correct past errors and ease long-standing fears in Islamabad.

"A long-term commitment to Pakistan's security and territorial integrity will reinforce the commitment of the Pakistani people to fighting terrorism," Ambassador Husain Haqqani told Reuters.

The bill would triple nonmilitary aid to Pakistan to $1.5 billion annually in the 2009-13 fiscal years, while making military aid conditional on certification that Pakistani security forces were working to prevent al Qaeda and its allies from operating in Pakistan or launching attacks into Afghanistan from Pakistan's territory.

It would also expand U.S.-Pakistan dialogue beyond military leaders to civilians and shift an agenda dominated by security issues to textile and farm trade, visas and other matters of concern to average Pakistanis, the senators said.

State Department spokesman Gonzo Gallegos said the Bush administration would work with Congress to "establish a new framework for economic and security assistance that can support Pakistan's democracy, counter its terrorism threats and strengthen its development."

U.S. aid bill seeks to boost Pakistan civilian ties - Yahoo! News


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## Owais

* Trade policy sets $22.1 billion exports target*

ISLAMABAD (updated on: July 19, 2008, 00:37 PST): The trade policy for the fiscal 2008-09 has set export target at US$ 22.10 billion enhancing 15&#37; growth over last year&#8217;s exports and emphasised the need of taking effective measures to arrest growing gap in trade deficit affecting the economy.

Federal Minister for Commerce Chaudhry Ahmed Mukhtar announcing the new trade policy for 2008-09 here this evening attributed a number of unavoidable factors which raised the deficit gap to $20.7 billion.

He said &#8220;We have inherited a very difficult economic situation where the public is facing more hardships than it has in recent history. This was due to external and internal factors of the past year&#8221;.

Moreover, Commerce Minister said, the doubling of international oil prices from around $ 68 per barrel to $ 145 per barrel during the year and increase in international prices of food items, Pakistan needed to import during the year, especially wheat and edible oil enhancing the import bill.

&#8220;The total imports during the year 2007-08 amounted to $ 39.97 billion raising the trade deficit of $ 20.7 billion&#8221;, he added.

Mukhtar said government has evolved an Export Strategy for 2008-09 to overcome the shortcomings of the prevailing economic situation and trade imbalance by concentrating on taking corrective measures to enhance exports and check the import bill.

He said emphasis would also be laid on intensification of market intelligence gathering by Ministry of Commerce and TDAP regarding market opportunities, consumer preferences, quality and other standards, best practices by other countries and disseminate this information to our stakeholders.

He said &#8220;constant political instability sparked by judicial crisis in March 2007, law and order situation also assumed dangerous proportions in the form of Lal Masjid affair, the increase in frequency and lethality of terrorist bomb blasts and of course the state of militancy and insurgency in FATA and the NWFP and martyrdom of Mohtarma Benazir Bhutto on 27th December 2007 cast a long and dark shadow on the economic and political health of the country&#8221;. 

Business Recorder [Pakistan's First Financial Daily]


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## Owais

* Trade with India to benefit Pakistan: Mukhtar*


ISLAMABAD (updated on: July 18, 2008, 23:05 PST): Federal Minister for Trade and Commerce Ahmed Mukhtar stressed the need for coming out of Indian phobia to reap maximum gains of bilateral trade between the two neighbouring countries.

&#8220;India is becoming important economic partner and trade with this country would be in the interests of Pakistan&#8221;, he said while addressing post trade policy 2008-09 press conference here at Prime Minister Secretariat.

The Federal Minister was of the view that trade with neighbouring countries including India would be very much cost effective as compared to trade with other countries.

The Commerce Minister said that there were certain trade barriers, hampering Pakistan to give India as the Most Favoured Nation (MFN) status while India has given the MMFN to Pakistan.

Mukhtar said that Pakistan has not changed its polices however added that everything is done through composite dialogue between India and Pakistan.

The Minister stressed the need for developing agriculture of the country, arguing that &#8220;Future is of the agriculture&#8221;.

Declaring China as most potential market for Pakistan&#8217;s exports, the Federal Minister called upon Pakistani exporters to explore the vast Chinese market for boosting country&#8217;s export.

He added that after the signing of the Free Tarde Agreement (FTA) with China the Pakistani exports have increased four times.

He said that the only way of stopping smuggling was to bring the commodities prices at the level of neighbouring countries, indicating that government would be increasing prices of diesel to check the smuggling of the item.

To a question, he said that Pakistani rice exports have increased to a considerable level as the exports of the commodity were recorded at US $ 1.9 billion during the last financial year.

He said that it was not easy to prepare trade policy in these hard times adding that financial situation was not favourable, however &#8220;we must not loose our heart and continue to make effort to overcome this challenge&#8221;.

Terming the export target of US $ 22.12 billion as realistic, he said that he was optimistic to achieve the target with ease.

To a question, he said that the Commerce Ministry never sets target for imports as prices in the international market remain unpredictable including that of oil.

Replying to another question regarding the provision of Research and Development Fund to textile sector, he said that he will be holding a meeting with the Prime Minister tomorrow to discuss the issue.

He assured the exporters of textile sector that efforts would be made to meet the demands of the sector for its promotion and benefit of the country.

Regarding the market access, he said that Pakistan has signed Free Trade Agreements (FTAs) and Preferential Trade Agreements (PTAs) with China, Malaysia, Iran Sri Lanka and Mauritius, while similar agreement would be signed with European Union the beginning of next year.

He added that initiation of Reconstruction Opportunity Zones (ROZ)s with USA would also facilitate the Pakistani exports to US markets.

The Commerce Minister said that last year Pakistan exported defence equipments worth US $ 63 million and expressed the hope that this year the country exports of the equipments would further increase after holding of the &#8220;Exhibition IDEA&#8221;.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Trade Policy: $22.1 bn export target set for 2008-09 ​*Friday, July 18, 2008 

ISLAMABAD: Government has set the export target for the fiscal year 2008-09 at 22.1 billion dollars, showing an increase of 15 percent.

Federal Minister for Commerce, Ahmed Mukhtar stated this while presenting trade policy for the fiscal year 2008-09 which he said aims at encouraging industrialists, investors and traders in the country.

The Federal Export Promotion Bureau will be reconstituted under the supervision of the Prime Minister with an aim of enhancing exports while necessary changes will be introduced in Trade Development Authority, he said.

Programmes will also be initiated to train the human resource for enhancing the productive capacity of industries.

In order the reduce the cost of doing business imports of plants, machinery and raw materials have been made duty free under Duty and Tax Remission for Exports scheme.

The Commerce Minister said export target was achieved last year despite uncertain political situation and fragile law and order. Slow down in US economy and decline in foreign capital markets also affected the exports of Pakistan.

Industrial zones will be established in different cities for industrial development and creation of employment opportunities.

He said Hilal Certification Board will be set up for promotion of hilal productss exports. 

Trade Policy: $22.1 bn export target set for 2008-09


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## Neo

*Forex reserves dip to $10.83bn ​* 
Friday, July 18, 2008

ISLAMABAD: Pakistans foreign currency reserves fell further to $10.83 billion against $11.12 billion the previous week, the central bank said on Thursday.

Reserves fell below $11 billion mark on July 12 and reached $10.83 billion compared to $11.12 billion the previous week. If the situation does not improve on the external front, there will be a possibility of approaching the IMF again during the current fiscal year.

Foreign exchange reserves held by the central bank stood at $7.95 billion compared to $8.32 billion in the previous week. The foreign exchange deposits held by banks were $2.88 billion compared to $2.80 billion the previous week.

Foreign currency deposits held by banks are included in the calculation of the countrys total reserves, which have fallen from a record $16.39 billion in early November 2007. It shows that the foreign reserves were depleting rapidly and had dropped by over $6 billion in the last eight months.

The reserves are depleting rapidly, ultimately putting pressure on Pak rupee, an official in the finance ministry told The News. The countrys reserves are decreasing owing to growing imports especially the surge in oil prices in the recent past, causing vulnerabilities on the external front of the national economy.

Official sources said that the rapid depletion of reserves was quite disturbing for the economic managers as on one side the external debt surged and touched $46 billion while on other side the precious reserves declined from $16 billion to just over $10 billion in recent weeks.

Pakistans foreign debt also swelled by $10.5 billion in the last six years and now stands at $45.9 billion at a time when the reserves are depleting more rapidly.

The foreign currency reserves stood at $14.08 billion on Feb 15, 2008. The reserves position was much better a few months back as they stood around $16.4 billion during Oct 2007. It showed that the reserves declined by around $6 billion in the last few months.

Forex reserves dip to $10.83bn


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## Neo

*Pakistan, WB in talks on funding package ​* 
Friday, July 18, 2008

WASHINGTON: The World Bank is in talks with Pakistan on a broad economic package that could include government-agreed reforms and financing by the bank to stabilise the economy, a bank official said on Wednesday.

Rob Floyd, the World Banks program manager for Pakistan, denied media reports that the development lender had approved a $500 million emergency loan for Pakistan, which like other developing countries faces budget constraints due to soaring fuel and food prices.

The World Bank has been in discussions with Pakistan on a stabilisation package that may include reforms from their side and financing from ours, but we have not come to closure on that, Floyd told Reuters.

He said discussions had been under way for several months.

Media reports said the $500 million was agreed in talks between the World Bank and Pakistans finance minister Naveed Qamar in Islamabad on July 14, and would be considered by the banks board in August. The loan would help restore confidence in Pakistan following months of political turmoil.

Pakistans new civilian government is under pressure to deal with slowing economic growth, inflation that is running at over 20 per cent, exchange rate instability, and dwindling currency reserves.

Faced with a dire situation, the new government, which took over after eight years of military rule under President Pervez Musharraf in March, is banking on budget support from foreign and multilateral lenders to help it cope.

Decision-making in Pakistan was paralysed during the last months of Musharrafs government, and during a caretaker administration that held the reins until the new civilian government was formed after an election in February.

Pakistani Prime Minister Yousuf Raza Gilani said on July 1 the government wouldnt flinch from unpopular measures to put the economy on sounder footing, including raising gas prices and phasing out subsidies entirely.

Pakistan, WB in talks on funding package


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## Neo

*Oil import bill surges by 55pc to $11.38 billion​*
ISLAMABAD, July 17: Pakistans oil import bill surged to $11.38 billion in 2007-08, up by more than 55 per cent over the $7.33 billion a year before, mainly due to higher international prices and increased consumption.

Official figures released by the Federal Bureau of Statistics for the year suggest that Pakistan had to pay $4 billion (Rs270 billion) more in financial year 2007-08 than in the previous year. The oil import bill was 55.14 per cent higher than in 2006-07 in value terms.

The import of petroleum products in 2007-08 cost $6.158 billion against $3.73 billion in 2006-07, showing an increase of 65 per cent, while crude imports surged to $5.22 billion, an increase of 45 per cent over the figure of $3.6 billion in 2006-07. The consumption of petroleum products was up about 19 per cent in 2007-08 and stood at 10 million tons compared with 8.6 million tons in 2006-07. Likewise, crude imports stood at 8.6 million tons compared with 8.2 million tons in 2006-07, showing a 5.2 per cent increase in consumption.

The government had estimated the oil imports to stay at $8.8 billion in the 2007-08 budget. But it had to pay about $2.6 billion (Rs170 billion) more than the budget estimates because the estimates had been based on an expected international crude price of $70 per barrel.

Petroleum emerged as the largest contributor to the countrys total import bill of $39.97 billion in fiscal year 2007-08.

This was followed by machinery group with imports at $7.4 billion, which was 10.32 per cent higher than the $6.7 billion machinery imports in 2006-07. This included $2.2 billion imports of telecom sector, including mobiles phones, and $1.18 billion of power generating machinery.

Agriculture sector imports stood at $5.83 billion in 2007-08, showing an increase of 32 per cent from the $4.4 billion in the previous year.

Fertiliser imports in the agriculture sub-sector were up by 98 per cent and stood at $890 million compared with $450 million a year ago while import of plastic materials stood at $1.3 billion, showing an increase of about 14 per cent.

The food sector stood fourth in 2007-08 as food imports increased by 53.5 per cent to $4.64 billion compared to $2.74 billion in 2006-07.

Palm oil imports stood at $1.6 billion in 2007-08, which was 76 per cent higher than $900 million in 2006-07.

Transport sectors imports in 2007-08 amounted to $2.25 billion, showing a decline of 6.04 per cent, compared with $2.4 billion in 2006-07.

The import of metals stood at $2.54 billion, compared with $2.34 billion of the previous year, showing an increase of 8.4 per cent. Textile imports stood at $2.35 billion in 2007-08 against $1.57 billion a year before, showing an increase of about 50 per cent.

Oil import bill surges by 55pc to $11.38 billion -DAWN - Top Stories; July 18, 2008


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## Neo

*Investors protest takes heavy toll of stock market ​* 
Friday, July 18, 2008

KARACHI: Apparently, not a single sign of recovery was seen at the Karachi stock market on Thursday, at the fifteenth consecutive bears-run session. Distraught small investors protest, however, compelled players of the market to buy shares on the day dips. 

KSE 100-share index lost another 279 points or 2.66 per cent to end at 10,213. Turnover in the ready market remained sluggish at 89.534 million shares amid wiping out another Rs79 billion from overall market capitalisation that fell to Rs3.192 trillion. 

Saad bin Ahmed, Head of Research at Capital One Equity, said the market closed just above the first support level of 10,200 points after touching 10,045 points intra-day low hit in the closing hours. 

One cannot confidently say whether the market would retain this level or not in the coming sessions. The movement at the local bourse depended on the decisions to be taken by the market regulators and their successful implementations, if small investors agree on the set terms and conditions, another analyst said. 

Ahmed, however, believes that if KSE officials fail to provide a safe exit to small investors then the situation may remain gloomy in coming days. 

The second support level in market, he calculated, might be found at 9,700 points level if the day (Thursday) closing level did not continue reverting back to a positive territory. As a matter of record, 100-index has lost approximately 35 per cent or 5,463 points to date from all-time high closing of 15,676 points of April 18. Therefore, the parallel running 30-index posted a fresh decline of 388 points or 3.28 per cent to 11,456 points. Some fourth stocks closed at their lower circuit breaker of five per cent or Re1 in 100-index while ten of them closed on the positive note. 

Pakistan State Oil and Pakistan Telecommunication Company were prominent among the positive closing stocks. However, Oil and Gas Development Company, Pak Petroleum, Pak Oilfields, MCB Bank, National Bank, Habib Bank, Standard Chartered Bank and JS Co remained the day big contributors of points in negative in the chief 100-index. Each of them shed in range of 10 to 30 points. 

Hasnain Asghar Ali at Aziz Fidahusein said that panicked by further decline in the rupee value, the market continued to melt, although institutional buying was witnessed in E&P sector, the support was certainly not expected to change the sentiment, as the participants have lost confidence in the authorities. 

The emergent meeting of the brokers was called after a dramatic (planned) protest and the proposal most debated and likely to be accepted will be freezing the lower lock at zero per cent. 

Post meeting efforts were made to pull the value stocks mainly in E&P. It is a common feeling that whatever proposals are being made or ignored are generally biased or not in the vested interest of some the bias has therefore pulled element of conviction out of the proposals, due to which things fail to materialize, Ali added. 

The negative sign continued to dominate on board, as 201 stocks fell in red against mere 42 stocks closed on positive note. The value of 23 stocks remained unchanged with total 266 active counters on board. Highest volumes were witnessed in NIB Bank at 11.377 million closing at Rs8.65 with a loss of five paisa, followed by Hub Power at 10.028 million closing at Rs14 with a loss 60 paisa, Oil and Gas Development Company at 4.377 million closing at Rs105.50 with a loss of Rs1.38, TRG Pakistan at 3.854 million closing at Rs4.68 with a loss of four paisa and Zeal Pak at 3.780 million closing at Rs1.52 with a loss of 19 paisa. 

Investors protest takes heavy toll of stock market


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## Neo

*Hydropower generation ​* 
*NEPRA develops mechanism to attract investment​*
Friday, July 18, 2008

ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) has developed a mechanism to attract private sector investment in the field of hydropower generation.

The private sector in the past has been reluctant to invest in hydropower projects in view of uncertainty of costs associated with geological surprises, environmental issues including resettlement problems and long gestation period.

In order to resolve these difficulties and promote hydropower projects, NEPRA has now assured the investors to provide them cost adjustments at engineering, procurement & construction stage.

According to NEPRA here on Thursday, it has also approved to determine the tariffs for hydropower projects on the basis of feasibility report approved by the Private Power Infrastructure Board (PPIB) and its panel of experts.

The new mechanism has been developed after comprehensive consultations with potential investors as well as relevant government agencies.

After the development of mechanism for tariff determination, an application for determination of tariff for 840MW power project (Suki Kinari Hydropower Project at Paras Village of the Kunhar River, District Mansehra, (NWFP) has already been submitted to NEPRA).

It is hoped that the new tariff mechanism will encourage other potential investors who also want to come for hydropower generation.

Hydropower generation


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## Neo

*Official claims big rise in arms exports​*
ISLAMABAD, July 17: Pakistans defence exports have tripled to around $300 million because of the quality of its ammunition, anti-tank guided missiles, rocket launchers and shoulder-fired surface-to-air missiles.

Our defence exports have been rising substantially because the arms and ammunition we manufacture meet international standards, Maj-Gen Mohammad Farooq, Director General of the Defence Export Promotion Organisation (Depo), told Dawn.

We even won a contract in the face of tough competition from developed countries to manufacture parts of Boeing aircraft, he said.

Although he wasnt precise about earnings from arms exports, he said: It has tripled and it is very good for Pakistan.

He said arms trade was a complex business and it had to be on a government-to-government basis. Pakistan was answerable to the international community in terms of ensuring that the arms did not fall into wrong hands.

He said exports to South Asian, Middle Eastern and African countries had increased significantly.

He said there was a time when the countrys defence industry exported only small arms and ammunition, but now their range had diversified and developed countries were also purchasing Pakistans military hardware.

He said optical instruments like night vision devices, laser range-finders and designators, laser threat censors, artillery armour mortars and ammunition, mine detectors, anti-tank rifles, missile boats, different types of tear gases, fuses of unarmed vehicles, security equipment and sporting and hunting guns were also being manufactured in Pakistan.

The fuses are being purchased by countries like Italy, France and Spain, he said.

He said army tents, uniform and other equipment were also being exported.

In reply to a question, Maj-Gen Farooq said Pakistan was manufacturing Al Khalid tank. Due to logistic reasons, we cannot export this tank but its parts are being exported.

He said the country was phasing out old T-59 tanks by upgrading them to Al Zarar or replacing them with Al Khalid tanks.

The Depo chief said Pakistan had entered into partnership and out-sourcing programmes with several countries.

There was collaboration with China for building an air-defence system and manufacturing of Karakoram-8 and JF-17 Thunder, a multi-role modern fighter aircraft, he said.

The Depo chief said there was a joint venture with South Koreas Poongsan company for manufacturing improved artillery ammunition. There was cooperation with Frances Nexter company to increase the range, accuracy and effectiveness of different weapons.

France is also helping us make JF-17 Thunder aircraft and Al Khalid tank more useful by equipping them with advanced avionics, he said.

He said Pakistan had built Agosta submarines and Puma and Ecureil helicopters with the help of France with transfer of technology.

He said collaboration with the United States had increased in manufacturing armoured personnel carriers with transfer of technology.

In reply to a question, he said, Pakistans military exports were higher than Indias. Indians started working on Arjun tank but, they are yet to induct it in their army, while Pakistan has built and handed over Al Khalid tank to the army, although it started the programme later, he said.

The News International - No. 1 English Newspaper from Pakistan - Saturday, December 30, 1899


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## Neo

*Cement exports set to touch $1bn​*
KARACHI: Pakistan cement exports after earning a historical level of $435 million foreign exchange during financial year 2007-08, is all set to touch one billion dollar mark by 2010, industry sources told Daily Times Thursday.

During fiscal year 2007-08, country exports stood at 7.712 million tones ($435 million) and Pakistan has already established its position as an exporter of cement and clinker in the region, sources added. Sources said the industry projections suggested that the cement industry exports would reach to $735 million by the end of 2008-09 and it would touch $1.043 billion by the end of 2009-10.

Pakistans cement industry started exporting cement in the year 2001 and it has increased its compatibility gradually, as significant improvement has been taking place with every passing day.

Cement industrys installed capacity had more than doubled during the last five years, which helped the industry to touch all time high dispatch mark during the last fiscal year, they said.

The cement industry in Pakistan has expanded capacity from 17.8 million metric tonnes in 2003 to 39 million metric tonnes in 2008 and is expected to rise further to 50 million metric tonnes in 2010. They said the cement manufacturers were enhancing their role among competitors and at present, regional countries were facing huge shortage of cement, which had played a key role in achieving landmark cement exports during the last fiscal year.

During the last fiscal year, strong external demands from the Gulf countries have continued pushing local companies to invest more in the cement sector, besides utilising their maximum capacity to meet international demand, they said.

Pakistan has been exporting cement to Middle East, India, Afghanistan, Central Asian States, South Africa, Switzerland, Sudan, Egypt and Iraq. Some more destinations are likely to add up in the next two years, thus helping the cement industry to touch the level of one billion dollars accordingly. The industry circles have pointed out that the industry has achieved this startling exports level single-handedly and no tangible policy support from the government has so far been extended to the cement exporters. According to them, the cement industry could boost the exports further in case government comes up with appropriate infrastructural measures.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Cement manufacturing, marketing cost spiked by 64.5 percent​*
KARACHI: The cost of manufacturing and then marketing the cement has risen by Rs 147 per bag, or 64.50 percent, since June 2007, the representatives of cement industry have told the high ups of Ministry of Industries in a recent meeting in a bid to justify their price increases.

In a recent presentation to the Ministry of Industries they said the cost has reached Rs 375.60 per bag in 2008 comparing with Rs 228.21 per bag in 2007. Industry sources told Daily Times that the industry representatives briefed the Ministry high-ups about the impact of unprecedented increase in cost of production, taxes, freight and other charges over the last one year. The cost to make and sell cement consists of two components: cost of production and taxes/freight/commission charges. 

While cost of production has risen by Rs 106.64 per bag, the cost under the heads of taxes/freight/commission charges has risen by Rs 40.77 per bag from June 2007 to June 2008, say the industry sources. The cost of production includes cost incurred on raw and packing material, fuel and power, stores & spares, salaries and wages, depreciation, financial charges, administration, selling charges and other operating expenses. The cost of raw and packing material has increased to Rs 27.79 per bag in June 2008 from Rs 18.27 per bag in June 2007. The cost of fuel and power has increased to Rs 152.28 per bag in June 2008 from Rs 65.70 per bag in June 2007. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Plan to attract investment in hydropower generation​*
ISLAMABAD, July 17: The National Electric Power Regulatory Authority has developed a mechanism to attract private sector investment in the field of hydropower generation.

The private sector in the past was reluctant to invest in the hydropower projects in view of uncertainty of costs associated with geological surprises, environmental issues, including resettlement problems and long gestation period.

The regulatory authority has now assured investors to provide them cost adjustments at engineering, procurement and construction stage.

The regulatory authority has also approved to determine tariffs for hydropower projects on the basis of feasibility report approved by the Private Power Infrastructure Board (PPIB) and its panel of experts.

After the development of mechanism for tariff determination, an application for determination of tariff for 840 MW power project (Suki Kinari Hydropower Project at Paras Village of Kunhar River, District Mansehra, (NWFP) has already been submitted to the authority.APP

Plan to attract investment in hydropower generation -DAWN - Business; July 18, 2008


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## Neo

*Non-textile exports up 40pc at $8.659bn​*
ISLAMABAD, July 17: Textile and clothing exports dipped by 2.5 per cent to $10.561 billion in 2007-08 from $10.787 billion over the same period last year, the Statistics Divisions data revealed on Thursday.

Despite the overall dismal performance of textile and clothing sector, the export target of $19.2 billion was achieved during the year under review on the back of unexpected growth in exports of non-textile products.

The non-textile products export edged up by 39.9 per cent to $8.659 billion from $6.189 billion of last year. The export proceeds of the year under review rose by $2.24 billion over the last year, which was actually the growth in non-textile products exports.

Of the non-textile products, export of rice went up 61.53 per cent, petroleum products 40.06 per cent, sports good up by 4.23 per cent, leather manufactures 24.05 per cent, footwear 8.21 per cent, engineering goods 42.54 per cent cement 181.69 per cent.This shows the natural diversification of exports base as now the share of textile and clothing in total exports declined to 55 per cent in the year under review from 64 per cent last year despite dolling out billions of rupees subsidies to the sector.

While the share of non-textile products soared to 45 per cent in 2007-08 from 36 per cent last year without having any financial support or package from the government.

Analysts said it shows that subsidies are not the real issue but there is a need to address the issue of structural weaknesses in the textile sector. This means that the production capacity of textile sector has also reached a saturation point, they said.

With the exception of raw cotton and other textile material, all other major components of textile manufactures registered negative growth in the year under review. This declined occurred despite the fact that rupee also depreciated more than 20 per cent during the year while the currencies of the competitors countries like India, China appreciated tremendously.

In addition, the deteriorating law and order situation also resulted in reported diversion of export orders to other countries.

Product-wise details showed that export of readymade garments declined by 3.16 per cent to $1.498 billion in the year 2007-08 from $1.547 billion last year, cotton yarn by 9.37 per cent to $1.294 billion from $1.428 billion, bedwear by 5.43 per cent to $1.887 billion from $1.995 billion and cotton cloth 4.64 per cent to $1.932 billion from $2.026 billion, respectively.

However, the export of knitwear was up marginally by 1.82 per cent to $1.831 billion from $1.789 billion, raw cotton 38.85 per cent to $69.737 million from $50.226 million, towels 0.77 per cent to $615.415 million from $610.712 million, art, silk and synthetic textile 16.74 per cent to $489.982 million from $419.724 million, made up articles 4.24 per cent to $536.114 million from $514.313 million and other textiles 12.25 per cent to $274.001 million from $244.100 million, respectively.

And export of cotton carded declined by 21.76 per cent to $12.320 million from $15.746 million and yarn other than cotton yarn 27.06 per cent to $49.162 million from $67.397 million during the year 2007-08 over the last year.

Non-textile exports up 40pc at $8.659bn -DAWN - Business; July 18, 2008


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## Neo

*KPT handles record cargo in 2007-08​*
KARACHI, July 17: The Karachi Port Trust (KPT) handled a record 1.213 million containers in 2007-08 which included 626,598 Teus of import and 587,146 boxes of export cargo, showing a growth of 11.9 and 10.6 per cent, respectively, over the previous year.

According to official figures bulk export cargo handled by the port registered a growth of 80.37 per cent at 4,243,608 tons over the previous year owing to bulk export of clinker and cement up by 191.43 and 213.25 per cent, respectively, over the previous year.

The port also handled other bulk export cargoes including rice 936,667 tons, sugar 13,036 tons and coke 8,300 tons.

The bulk import cargo handling also registered an increase of 24.6 per cent.

This includes 1,486,512 tons of fertilisers, 477,071 tons of rock phosphate, 160,854 tons of iron scrap, 2,500 tons of sulphur, 36,203 tons of seeds, 3,556,246 tons of cement, 10,700 tons of yellow peas, 144,746 tons of canola and 473,384 tons wheat.

The dry general cargo export was up by 43.8 per cent at 5.1 million tons in 2007-08 as against 3.5 million tons.

Similarly, dry general cargo imports stood at 9.6 million tons or 2.35 per cent more than the previous year.

Liquid bulk export cargo recorded 44 per cent growth at 2.2 million tons over the previous year.

The liquid bulk cargo imports handling increased by 7.9 per cent at 9.4 million tons.

The total import cargo handled crossed 25.5 million tons mark while export cargo handling increased by 55.3 per cent at 11.6 million tons.

The port handled 2,122 ships during 2007-08 compared to 1,870 ships the previous year. Of these 1,055 were containers, 406 bulk carriers, 223 general cargo vessels, and 438 oil tankers.

KPT handles record cargo in 2007-08 -DAWN - Business; July 18, 2008


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## Neo

*Textile sector growth declines by 2.10 percent during 2007-08 ​* 
ISLAMABAD (July 18 2008): Pakistan textile sector performance remained dismal during 2007-08 with negative growth of 2.10 percent over the same period of last year, said Federal Bureau of Statistics on Thursday.

The textile sector performed poorly even in June over last month with statistics showing that its exports declined from $936 million in May 2007-08 to $919.052 million in June on the back of poor performance by almost all the sectors, except few.

Monthly analysis of the data showed that only tents, canvas and tarpaulin, cotton yarn, cotton corded or combed and others showed positive growth in textile in June while all the remaining sectors recorded negative growth during the period under review.

The export of raw cotton decreased by 31.27 percent, cotton cloth by 3.23 per cent, yarn other than cotton yarn 13.18, towels by 5.44 per cent, ready made garments by 4.39 per cent, art silk and synthetic textile 0.77 per cent, made up articles and excellent towels by 4.14 per cent, other textile material by 9.33 per cent.

The export of raw cotton declined from $6.923 million in May to $4.758 million in June, cotton cloth from $155.73 million to $150.692 million, yarn other than cotton yarn from $2.929 million to $2.543 million.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Sustainable growth: Pakistan must concentrate on export-oriented industries ​* 
ISLAMABAD (July 18 2008): The prices of petrol and diesel are higher in Pakistan when compared with India in terms of their own currencies as on June 6, 2008, which is adding to the cost of production and giving the country tough time in global competition. The exchange rate of Indian Rupee was 39.74 viz-a-viz US dollar, whereas one dollar was equivalent to 71 Pak rupees in June, 2008.

Both the countries meet most of their demand of gasoline through imports and supply to the industrial and domestic consumers at subsidised rates in the face of regional competition. In India, the price of Petrol/litre is Rs 53.43 and Diesel/litre is Rs 36.80, whereas in Pakistan the per-litre prices are Rs 68.81 and Rs 49.05 respectively.

Pakistan and India both are developing economies but in Pakistan the pace of development has been hampered due to instability after 9/11 when it became the front line state in fight against terror. On the other hand, Indian economy grew unhindered and they are far ahead as compared to Pakistan in information technology and manufacturing.

For sustainable growth, Pakistan has to concentrate on the export-oriented industries and to stay in the global economy it has to diversify its exports. The main stay of Pakistan exports at present is textile industry, which contributes above 60 percent of the foreign exchange earnings. The textile industry is in desperate need of cheap energy mix as regional competitors like Bangladesh and India are giving tough time to the country in the global market.

Pakistan also needs to invest in the renewable energy sources to keep the wheel of its economy moving as with the sharp increase in petroleum products prices, it has become difficult to maintain cost of production at a reasonable level whether it is manufacturing or agriculture.

Both India and Pakistan are supplying subsidised diesel for the tube-wells to attract farmers to grow more to meet the increasing food demand with the increasing population.

The prices of food items are increasing world-wide and it is great opportunity for agrarian economies like Pakistan to take benefit of it and grow more for export after meeting domestic consumption.

Recent concern about gasoline prices underscores the link between energy and economy. Forecast of International Energy Agency (IEA) estimate that sustaining a 3.6 percent rate of annual growth in the global economy to 2030 will require 33 million barrels per day in global oil supplies ie an increase of 40 percent.

Economists like to say that it all boils down to supply and demand. But there are many factors affecting the tried-and-true laws of economics - and those factors have contributed to today's high-demand, tight-supply world energy market. For starters, demand is very strong, coming from mature economies like the United States and Europe plus the developing economies of countries like China and India and to some extent Pakistan. And as per capita income rises in those developing countries, the demand for energy is expected to continue growing.

Tight supplies have been aggravated by political instability, resource mismanagement and natural calamities. The Iraq insurgency, civil unrest in Nigeria and political uncertainty in Venezuela are among the examples. And hurricanes in the Gulf of Mexico have affected operations in both the United States and Mexico.

Finally, the decline in the value of the US dollar against other countries has put American consumers at a disadvantage. American consumers must now pay more for crude oil than countries with stronger currencies. The World demand oil has increased sharply in recent years rising from 77 million barrels per day in 2001 to 85 million barrels per day in 2007. The US energy information administration expects World oil consumption to grow by 1.2 million barrels a day in 2008 and by 1.3 million barrels a day in 2009.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*US to assist in meeting energy and food challenges ​*
WASHINGTON (July 18 2008): Pledging close relationship with Pakistan, Deputy Secretary of State John Negroponte has said Washington stands for Pakistan's success and is working to assist it in meeting energy and food challenges. "Pakistan is a key American partner. We are working closely with Pakistan's government and people to improve economic development, resolve food and energy problems, and counter violent extremists," he stated.

The US diplomat was addressing a Seeds of Peace reception held at the State Department for young people from Pakistan and India, who completed a three-week conflict resolution programme in Maine. "The 24 young people we celebrate today will bring the skills, perspectives, and experiences gained over the past three weeks back to their homes in India and Pakistan, two countries that are important friends and partners of the United States, and two countries we want to see succeed," he told.

The reception also attended by Pakistan's ambassador to the United States Hussain Haqqani and his Indian counterpart in Washington. US top official for South Asia, Richard Boucher also attended the event. Negroponte said educational exchanges are central to efforts to deepen ties between the American people and Indians and Pakistanis.

"I know you will continue your efforts to improve relations between your countries. I encourage you to seek out opportunities at home to support tolerance and understanding. Your dedication to religious and cultural tolerance, coexistence, and dialogue is important to achieving lasting peace."

Stressing the importance of holding on to ability to imagine a hopeful future, he remarked progress on the road top peace is often frustratingly slow, and worse, sometimes suffers major setbacks. "The challenge is to keep imagining a better future and to keep working to make what you imagine real. A principle of US foreign policy is that we have no permanent enemies. This principle challenges us to imagine that our enemies today can be our friends tomorrow and to work to make that vision a reality.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Agriculture growth target may not be achieved ​* 
ISLAMABAD (July 18 2008): Due to the increasing prices of agriculture inputs, the government might not be able to achieve 3.5 percent agriculture growth target for current fiscal, sources told Business Recorder on Thursday.

"Last year only 2.5 percent agriculture growth target was achieved against the set target of 4.5 percent. This year the target is 3.5 percent but considering the increase in the cost of production it is unlikely that the target would be achieved," sources said.

They said hike in input prices has increased the cost of production, which would result in decreased area under cultivation. "Although, in the budget 2008-09 the government has promised relief to the agriculture sector but unfortunately instead of providing relief to the farmers it added to their burden by increasing the prices of inputs such as electricity and diesel," sources maintained.

They further said total 0.6 million tractors and 0.8 million tube wells are being used in agriculture and approximately 2 billion litre of diesel is required to run them. But the substantial increase in the diesel prices is affecting their functioning, sources added. "Before the budget 2008-09 the price of diesel was Rs 38 per litre which has now reached Rs 56 per litre," sources said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Fesco saves Rs 24 billion through TRW project ​* 
FAISALABAD (July 18 2008): The Faisalabad Electric Supply Company (FESCO) Transformers Reclamation Workshop (FTRW) has saved Rs 24.973 million as the repair of these transformers in Lahore would have cost Rs 93.198 million. FESCO has also started the fabrication of completely overhauled transformers of 10, 15, 400 and 630- KVA capacity.

While the production of 25-KVA transformers will also be started in couple of months. A spokesman for FESCO said that FTRW repaired a total of 3,850 transformers during 2007-2008. Giving details of minor repairs, he said that 454 25-KVA transformers, 302 50-KVA, 408 100-KVA, 332 200-KVA and 50 transformers of other capacities were also repaired during this period.

Regarding major repair work, he said that 711 25-KVA transformers, 449 50-KVA, 517 100-KVA and 582 200-KVA transformers as well as 45 transformers of other capacities were also repaired during last financial year. This totals 1546 transformers with minor repairs and 2304 with major defects that were fixed. Continuing, he said that only Rs 68.225 million was spent on the repair of 2304 transformers.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Two megawatts powerhouse to be constructed at Khurkondo ​*
SKARDU (July 18 2008): Two megawatt hydel powerhouse would be constructed at Khurkondo in Ghangche district of Siachan area at a cost of Rs 220 million. This was disclosed by former Advisor of Northern Areas and sitting member of NAs Legislative Assembly (NALA) from Ghangche district Haji Mohammad Ismail said while talking to Radio Pakistan Skardu.

He said that a hydel powerhouse would also be constructed at Gongma village on the river. Haji Mohammad Ismail said that a scheme has been approved for carpeting the truck road between Dumsum and Gongma at a cost of Rs 70 million and work on the pproject will be started soon. He said that work on road project between Ghursay and Dumsum is under completion.

The member Nala said that road network is being expanded to maximum villages of the area. Several bridges have been constructed. Schools, power supply and dispensaries are available in every village. In CMH Gongma civilian people are getting free treatment. A high school is being run by Siachan brigade in Sait village of Saltoro range.

Haji Mohammed Ismail thanked the team of Radio Pakistan Skardu for visiting Saltoro Areas (Mashabroom sub-division of Ghangche distt.) to see the problems of the people and to highlight the developmental activities in these areas. He also paid rich tributes to the station director of Radio Pakistan Skardu and team members and all others for providing better facilities of entertainment, education and useful and fruitful information through its local Urdu/Balti news bulletins and to protect and promote Balti culture, traditions, history, language folklore, folktale, music and heritage of Baltistan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*$200 million exports loss due to political unrest​*
ISLAMABAD: The country faced export revenue loss of $200 million in the five days disturbances followed by martyrdom of Mohtarma Benazir Bhutto on December 27, 2007. Commerce Minster, Ahmed Mukhtar, said while announcing Trade Policy 2008-09 that tragic event had cast a long and dark shadow on the economic and political health of the country. 

He said that Pakistan Peoples Party (PPP) led government had inherited a very difficult economic situation. The country faced difficult issues on external front including the doubling of international oil prices from around $68 per barrel to $145 per barrel during the last financial year. The slow down in the US economy and turmoil in the international financial markets reduced external demand for exports and on the internal front the last year was of constant political instability sparked off by the judicial crisis in March 2007. 

The law and order situation also assumed dangerous proportions in the form of the Lal Masjid affair, the increase in frequency and lethality of terrorist bomb blasts and of course the state of militancy and insurgency in FATA and the NWFP. The saddest occurrence in this regard was the other challenges on the internal front that made it difficult for exporters to fulfill their export orders on time and at a competitive price during the year included. 

In this regard power shortages and resultant load shedding of electricity and natural gas, impact of monetary and exchange rate policies, plus supply side constraints, rising costs of salary bills and raw material, particularly raw cotton, increasing competition in export markets and travel advisories of foreign governments discouraged importers to continue sourcing from Pakistan. Long term structural issues such as labour skills deficiency and poor infrastructure was also the issue. As a result of these multiple negative factors economic growth rate dropped to 5.8 percent as compared to 6.8 percent last year and that slow down was particularly evident in the commodity producing sectors such as agriculture and manufacturing with serious implications for exports.

Agriculture grew by only 1.5 percent as against 3.7 percent last year and in the two major crops i.e. cotton and wheat there was a negative growth of 9.3 percent and 6.6 percent respectively. The manufacturing sector also saw the weakest growth in a decade, since overall it grew by 5.4 percent as compared to 8.1 percent last year. Large scale manufacturing was even more dismal since it registered a growth of only 4.8 percent as compared to 8.6 percent last year. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Fish exports cross $200 million​*
KARACHI, July 18: The fish export crossed the barrier of $200 million in 2007-08 for the first time in Pakistans history despite losing the European market of $55-60 million after a ban was imposed by the EU in April 2007.

According to figures of the Federal Bureau of Statistics (FBS), export of fishery products surged by 12 per cent and nine per cent in terms of value and quantity, respectively, to $212 million (134,657 tons) as compared to $188 million (123,588 tons) in 2006-07.

The ban is likely to stay till the end of this year as EUs relevant audits and inspection plan for July-December 2008 does not carry Pakistans name.

The programme includes visits by the EU team to various countries, including Bangladesh, Barbados, China, Faroe Islands, Ghana, India, Israel, Malaysia, New Zealand, Republic of Korea, South Africa, Taiwan, Thailand and the US, according to the food and veterinary programme of audits and inspection for July-December 2008, issued by the Directorate-General of Consumer Protection, European Commission.

The mission will carry out inspections of fish and its products, like bivalve molluscs, including aquaculture, in these countries.

The ban on Pakistans fishery products was imposed after an EU inspection mission in January 2007 found deficiencies about conditions at the processing plants, fish harbour and non-existence of any record on product traceability.

The EU team during inspection of various sites at harbour and processing units in January last had noticed grave systematic failures, particularly good governance in the Karachi Fish Harbour Authority (KFHA) and Fishermen Cooperative Society (FCS), precipitating port congestions, unhygienic conditions and compliance failures across the supply chain, from fish harvesting to handling onboard, at harbour landings, in auction halls and during transportation from boats to auction sites and fish processing establishment.

Akhlaq Hussain Abidi, an exporter, said that although the first half of 2007-2008 was really bad for exporters, the second half proved a boon, thus compensating the losses of the first half as exporters fetched more than the EU price in markets like the UAE, Indonesia, Thailand and China.

Even the average unit price improved during the last six months.

This is the solo effort of exporters in tapping new markets and the government has nothing to do with the increase in exports, he said, adding, even fishermen and boat-owners got good price of their efforts in the last six months.

He said since the imposition of ban in April 2007, no serious efforts had been made by the Pakistan government for resuming exports to European countries. All efforts of the Ministry of Food, Agriculture and Livestock, mainly focused in holding of meetings with the Sindh government, FCS and KFHA, rather than taking any practical measures. He also confirmed that there is no visit of any EU mission this year.

He, however, said that exporters have found new buyers and hopefully there would be no problem in the current fiscal year.

Fish exports cross $200 million -DAWN - Business; July 19, 2008


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## Neo

*Trade policy widens scope for imports from India: Export target set at $22.1bn EPB to be activated​*
ISLAMABAD, July 18: The trade policy for the fiscal year 2008-09 unveiled on Friday sets an ambitious export target of $22.10 billion, but avoids projecting an import target because of rising international oil and food prices.

The policy, announced by Commerce Minister Ahmad Mukhtar at a press conference, offered a number of incentives for traditional products. It envisages establishment of 11 new industrial clusters, reactivation of the Federal Export Promotion Board and review of the TDAP Ordinance to improve its working.

The horticulture sector has been declared an industry.

A proposed package of subsidies for the textile sector was not announced, but it is expected to be made public soon.

Import of more than 136 new items from India has been allowed. Of these, 72 tariff lines were added to the importable list for raw materials, chemicals and industrial inputs, nine tariff lines for pharmaceutical products and vaccines, two for fruit and vegetables, 19 for fertiliser, 32 for machinery and parts and two for POL and diesel.

With the inclusion of these items, the total list of tradable products with India has been increased to 1,938 tariff lines from earlier 1,837. The global import of these 136 tariff lines stood at $2.8 billion of which $2.2 billion was spent only on import of POL and diesel.

This means the government has diverted this import value of $2.8 billion to India which will increase its exports to over $3 billion from the current level of $1 billion and become the second largest trading partner of Pakistan after China.

After this increase in imports from India, the grant of MFN status to India would become meaningless, but commerce minister linked it with the removal of non-tariff measures by India.

A Halal Certification Board will be set up to devise a standard and certification mechanism for the export of Halal food products. Import of paddy harvesters and dryers from India will be allowed through Wagha by road.

The government will allow the import of used buses not more than 10 years old under the transfer of residence scheme for overseas Pakistanis and import of CNG buses from India.

If Indian manufacturers of CNG buses make a firm commitment to manufacture such buses in Pakistan, the ministry of commerce may provide special dispensation for import of 10 buses by road via Wagha from each possible investor as test consignments.

Duty and taxes have been withdrawn on plant, machinery and equipment imported to set up a unit under the Duty and Taxes Remission for Export (DTRE) scheme. Inputs in DTRE have been allowed to be imported from India, even if these are not included in the importable items from India, or manufactured locally.

The period of retention of raw material and components for export under temporary importation scheme (SRO 1065) has been increased from 12 months to 18 months -- at par with DTRE.

The duty drawback rate has been increased by one per cent of the FOB value for 14 traditional products, including tents, canvas and tarpaulin, electric machinery, carpets, rugs and mats, sports goods, footwear, surgical goods/medical instruments, cutlery, onyx printers, electric fans, furniture, autoparts, handicrafts, jewellery and pharmaceuticals.

A new scheme has been introduced under which a notified percentage of inputs may be allowed to be imported at zero duties against FOB value of exports with flexibility to import any product among the notified list in any quantity within the overall entitlement of the exporter.

The trade policy proposed to allow the temporary import of PET bottle scrap for manufacture and export of PSF in the DTRE scheme, subject to non-hazardous certification. It has been decided to support the setting up of new pharmaceutical plants by providing it with the incentive of having an accelerated depreciation allowance facility of 90 per cent in the first year on investment in plant machinery and equipment.

Imports of gold, silver, platinum, palladium, diamond and precious stones have been exempted from customs duties and sales tax to increase exports and encourage investments in the sector.

The import of machinery/equipment for mining/quarrying and grinding of minerals (along with spares) will be allowed from India to improve availability of good quality stones for further processing.

It has been decided that the subsidy given to exporters to comply with environmental standards from the Export Development Fund (EDF) will be increased to eight per cent or 50pc of the mark-up, whichever is lower.

The horticulture sector has been declared an industry to qualify it for industrial credit, relief in taxation, etc., thus facilitating much-needed modernisation and infrastructure development in the sector.

Under the import regime, it has been decided to allow the import of used cryogenic containers/cylinders and second-hand cement bulkers not more than 10 years old and increase the age limit of prime movers to five years.

Import of Job and Stock lots of raw material, which attracts duty up to five per cent, will now be allowed.

Import of stainless steel and cotton yarn by trucks through Wagha has been allowed. Import of used motorcycles or tri-wheeler vehicles, especially designed/made or altered for the handicapped, will be allowed, subject to a disability certification from the ministry of health.

Re-export of vehicles imported by overseas Pakistanis and import of academic, scientific and reference books from India have been allowed.

Trade policy widens scope for imports from India: Export target set at $22.1bn EPB to be activated -DAWN - Top Stories; July 19, 2008


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## Neo

*Mukhtar defends increased trade with New Delhi ​* 
ISLAMABAD (July 19 2008): Commerce Minister Chaudhry Ahmed Mukhtar on Friday defended measures of allowing imports of diesel and fuel oil and other items from India saying that Pakistan should come out of 'India-phobia' as the neighbouring country is becoming a very good trading partner of the country.

Addressing a hurriedly-called press conference after announcing Trade Policy 2008-09, he said that liberalised trade with India would gradually benefit Pakistan. However, the minister said the government could not grant MFN status to India due to some qualitative and quantitative barriers.

He said that India had given MFN status to Pakistan, but due to tariff and non-tariff barriers, Pakistan could not get any kind of benefit. Even without granting MFN status to India, Pakistan can enhance trading relations with the neighbouring country. He said that throughout the world trade between the neighbouring countries had always been beneficial for both.

He said that the ministry of commerce was initially thinking that export target for 2008-09 fiscal year should be fixed at $24 billion, but the poor performance of some key sectors, the target has been fixed at $22.1 billion.

Responding to a question, he said that Pakistani traders did not utilise the Free Trade Agreement Pakistan has already signed with China. "The FTA with China is not benefiting us in real terms," he added. The business community must come forward and take the maximum benefit of Pak-China FTA, the minister said.

He called for increasing the diesel price in the country so that its smuggling to Afghanistan, and even Iran could be stopped. He said the government was discussing market access with European countries and the US. He said we are also persuading the US to set up ROZs in militancy-hit Fata. We are keen that the US must move quickly on the proposal, Mukhtar added. He said that Trade Policy 2008-09 was industries as well as agriculture friendly and the two sectors are required to help the government in enhancing exports.

About R&D support to the textile industry, the minister said the textile ministry was vigorously pursuing the case with the Prime Minister. "I will shortly hold a meeting with the Prime Minister on the issue. About 90 percent of the demands of the textile ministry, if accepted, will be more than enough," he said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*$860 million wheat import in fiscal year 2008 due to ineffective government policies ​* 
KARACHI (July 19 2008): The ineffective policies of the previous government made the country spend $860 million in the fiscal year 2007-08 to import wheat to cope with the crisis, sources said on Friday. The previous government allowed wheat export in December 2006, when the harvesting season was going to start, and the final wheat production figurers had not been received.

Although, after wheat export decision only 0.5 million tons wheat was exported and the government had banned further export in May 2007, a huge buying of grains, which the exporters and traders had made earlier, finally created a panic in the market and raised its prices to an alarming level, they said.

Therefore, the negative impact of erroneous decision of wheat export is still being witnessed in the country, as it is continuously importing huge quantity of the commodity to meet local demand. Besides, it is paying millions of rupees subsidy on its import to ensure that the commodity is available at reasonable rates in the local markets.

Sources said that wheat import price had surged by 1969 percent during the last fiscal year to meet the local demand due to increased smuggling of the commodity to Afghanistan and its huge hoarding in the country. Official statistics show that the government has spent $860.001 million for wheat import in fiscal year 2008 as compared to $41.559 million in fiscal year 2007, depicting an increase of $818.441 million.

In terms of volume, wheat import during last fiscal year stood at 1.823 million tons against 0.135 million tons in the fiscal year 2007, witnessing a rise of 1241 percent in 2008. Interestingly, the country exported wheat at $220-250 per ton during February to May 2007, while it imported at $430-665 per ton during last fiscal year.

The import at high rates also compelled the government to pay billions of rupees subsidy to stabilise the prices of wheat and wheat flour in domestic market, sources said. The huge import of wheat at higher than previous prices also pushed the import bill to peak level of $20 billion in the fiscal year 2008.

Despite some initiatives to ensure the frequent supply of wheat and to bring down its prices, at present the prices of wheat and wheat flour are the ever highest in the country. Due to import of over 1.8 million tons wheat during last fiscal year the country is facing wheat crisis and wheat flour is being sold at the level of Rs 25-32 per kg. Recently, the federal government has also raised the wheat flour prices at utility stores by Rs 5 to Rs 20 per kg on the back of rising wheat prices in the local market.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan, U.S discuss economic, energy cooperation​*Islamabad, July 20, IRNA 

The U.S Under Secretary for Economic, Energy and Agricultural Affairs Reuben Jeffery and Pakistani Foreign Minister Shah Mahmood Qureshi on Saturday discussed bilateral relations with particular focus on economic cooperation, officials said.

The Foreign Minister emphasized the importance of a broad-based and long-term relationship between the two countries, going beyond counter-terrorism cooperation and extending to deeper trade and economic interaction as well as people-to-people contacts, a Foreign Ministry statement said.

The Foreign Minister particularly emphasized the need for enhanced market access for Pakistani products in the U.S., collaboration in the energy sector, and cooperation in the field of agriculture, it said.

Under Secretary Reuben Jeffery underlined the importance the U.S.

attached to its relationship with Pakistan and its support for strengthening bilateral trade and economic ties.

He also expressed support for closer bilateral cooperation in the energy and agriculture sector.

Matters relating to Reconstruction Opportunity Zones (ROZs) and Bilateral Investment Treaty (BIT) were also discussed.

Pakistan, U.S discuss economic, energy cooperation - Irna


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## Neo

*Pakistan new trade policy allows FDI from India ​*
Nirupama Subramanian

ISLAMABAD: In a significant shift of policy, Pakistan has for the first time put aside its deep-seated sentiments over Kashmir to invite foreign direct investment from India.

Announcing the governments trade policy for 2008-2009, Commerce Minister Ahmed Mukhtar said a decision had been taken that if Indian manufacturers of CNG buses made a firm commitment to establish manufacturing of such buses in Pakistan, his Ministry might allow the import of 10 buses by road via Wagah from each possible investor as test consignments.

The government has already made the import of CNG buses duty-free. The removal of the earlier 15 per cent duty was announced in the 2008-2009 budget.

No details are available yet on how much investment is being sought. Pakistan has a liberal investment policy, even allowing 100 per cent foreign ownership but officials said that in the case of India, the devil may be in the details.

Its not just for CNG buses that the Pakistan government is signalling its readiness to embrace Indian investment.

Official sources said the government had invited at least three Indian companies  Tata, Reliance and Essar  to a meeting of potential investors in the power sector to discuss the development of the Thar Coal Power Project. The meeting is to be held in late July or early August.

Besides investment, Pakistans new trade policy opens the door for more imports from India than before, in order to cut down on transport and manufacturing costs that in turn would make its own exports more competitive and help it narrow its trade deficit.

The Minister said Pakistan had allowed imports of fuel oil, diesel, machinery such as paddy harvesters, rice driers, and mining equipment. These items are included in the 136 additions to Pakistans positive list of imports from India. With this, the positive list has increased to 1,938 items. The full list has not yet been made public.

Indian officials, who had given a list of 484 items for inclusion in the positive list, expressed disappointment that only 136 had been accepted, but conceded that overall, the new trade policy contained many positive steps for improvement of trade relations with India.

In addition to the expanded list of permitted imports, Pakistan will also allow the import of raw materials and machinery not on this positive list for manufacturing units set up under its DTRE (Duty and Tax Remission for Export) schemes.

Also, cotton yarn and stainless steel will be allowed in by road, through the Wagah border, from India. Presently, these two items are sent only by train. Cheaper raw material sourced from India would make our exports more competitive in international market. We are [also] allowing import of diesel and fuel oil from India, because it will be cheaper due to the difference in transportation cost. This will also help us to address our global trade deficit.

He said Pakistan was in the process of gradually liberalising bilateral trade with India. The Composite Dialogue process, especially on economic and commercial cooperation, has been instrumental in addressing the bilateral issues, Mr. Mukhtar said, referring to the four-year-old peace process between the two countries.

India and Pakistan have a bilateral trade of $1 billion, but unofficial trade is estimated at double or treble the amount. The Dawn said on Saturday that by widening the scope for imports from India, this figure could go up to over $3 billion, making India Pakistans second biggest trading partner after China.

He made the grant of MFN status to India conditional to New Delhi removing certain non-tariff barriers on imports, but the newspaper commented that with the proposed increase in imports from India, that conditionality was meaningless.

Pakistans efforts at liberalisation of trade with India appear to be in line with the sentiments voiced by Pakistan Peoples Party chairman Asif Ali Zardari that the new PPP-led government wanted to improve economic relations and would not allow the differences on Kashmir to come in the way of this.

An indication that the new policy may not be welcomed by all was evident in some of the headlines in Saturdays newspapers: Indian imports to flood Pak markets, said the News, while the Nation, said Pakistan shows tilt towards India.

The Hindu : International : Pakistan new trade policy allows FDI from India


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## muse

*Aviation Policy 2008 to attract private sector*

By Sajid Chaudhry 

ISLAMABAD: National Aviation Policy 2008 aims at allowing private sector to construct and operate new and existing airports, to start private air taxi service through aircrafts, helicopters on chartered or non-chartered basis, 10-year tax holiday will also be offered to the companies intending manufacturing aircrafts in Pakistan. 

National Aviation Policy 2008 is likely to be presented before the federal cabinet in its next meeting for formal approval to facilitate national aviation sector surpass air traffic growth from 7% to over 8% per annum. 

*Market Access in Air Service*: Pakistan shall liberalise bilateral arrangements on reciprocal basis with our bilateral partners to provide service from/to Karachi, Lahore and Islamabad after completion of new airport to the destinations in Western Europe, North America and Africa and to destinations towards East. 

While finalising new Air Service Agreements (ASAs), multiple airlines designation clause and article on Code-Share shall be incorporated. There shall be no commercial agreements as part of bilateral agreements. However, airlines shall be free to enter into such co-operative marketing arrangements as are mutually agreeable, which would be outside of ASAs. 

*Market Access in Cargo Service:* Pakistan shall continue to follow open skies policy for cargo operations based on 3rd, 4th, 5th freedom traffic rights. Karachi and Gwadar international airports to shall be promoted as transshipment hub. Cargo villages shall be established on public private partnership at major international airports and linked with National Trade Corridor. 

*Paid up Capital and Fleet Registration:* Paid up capital for Regular Public Transport License shall be increased from Rs.100 million to Rs.500 million, which shall be reviewed periodically by CAA Board. Fleet registration in Pakistan shall be mandatory for all Pakistani aircraft operators except pure cargo aircrafts. Requirement of minimum fleet size for a Regular Public Transport (RPT) license holder shall be at least 3 airworthy aircrafts for domestic operations and at least 4 airworthy aircrafts for international operations. There shall be no permanent addition to capacity by inducting foreign registered aircraft on wet lease other than pure cargo aircraft. Temporary induction of foreign registered aircraft on wet lease may be permitted under extra ordinary circumstances for a short period subject to a maximum period of 90 days. For induction of aircraft, the criteria of minimum remaining operational cycles/hours shall be prescribed by the Director General CAA through Air Navigational Order (ANO). 

*Tax Holiday:* Some 10 year tax holiday would be granted to air craft manufacturers to encourage them invest in aircraft manufacturing units in Pakistan along with establishment of aircraft maintenance companies, flying training schools and ground training schools. Government would rationalize and reduce taxes chargeable to passengers on international and domestic routes. The government would also exempt all taxes and duties on air tickets on secondary destinations. The same privilege shall be extended to operators of small aircrafts and helicopters. 

*Security equipments and weapons imported by Airport Security Force, CAA, private airports and other operators shall also be exempted from all taxes and duties*. 

*Air Taxi Service:* New National Aviation Policy to introduce Air Taxi Service Concept in Pakistan. According to the draft policy document, about 64% of Pakistan population lives in rural areas, with little or no access to air travel even in emergency, for want of air strip, helicopter, helipads and suitable aircrafts to commute to/from remote areas. There are fairly large numbers of cities, which are developed to adopt the concept of air taxi and private owned aircraft for commuting. 

*In order to develop Air Taxi Service concept in Pakistan the procedure for acquisition and operation of aircrafts, including helicopter, micro-light ultra-light air crafts and hot air balloons shall be liberalized to encourage travel and sports activities*. 

Use of helicopters for tourism, emergency operations and adventure sports in private sector would be promoted and encouraged and no charges would be imposed for such operations. Liberalized guidelines would be formulated, in consultation with users, to promote and encourage private investment in flying clubs, air taxi service, private ownership of the aircraft, and aero-sports activities i.e. hang gliding, ballooning, heli-skiing and para-jumping. Flying clubs shall be facilitated to overcome shortage of pilots in the country i.e. to develop air strips out side control zones of major air ports fort exclusive use of training flights and to lease Civil Aviation facilities to flying clubs where available. 

*Charter Service:* Under the new policy domestic charter operations would be allowed to Pakistani Operators only using Pakistani registered aircraft including helicopters flown by Pakistani pilots. International charter originating from Pakistan would be allowed on all international routes irrespective of the scheduled operations. On routes 

*Commercialization of Airports*: Airport Cities shall be developed including hotels on public private partnership at all major airports. Vacant land at airports shall be evaluated and developed for construction of aviation facilities like cargo complexes and aircraft maintenance facilities. Land at remote and non-operational airports shall be utilized for non-aeronautical commercial and recreational purposes. CAA shall formulate land lease policy to make it commercially viable for private investors. 

*New Airports: *Construction of new commercial airports would be permitted to meet the air traffic. Private sector shall be free to construct and operate new as well as existing airports, airstrips, helipads, heliports including cargo complexes on BOO, BOT, or any other management arrangement and to raise non-aeronautical revenues from these premises. Privatization of airports shall be pursued to make them more efficient and productive. 

*Consumers Protection:* To protect the interests of the users, facilitation committee consisting representatives from government, passengers, travel and tour operators, aircraft operators, airport operators, exporters, importers, cargo handling agents, aero-sports and flying clubs would be set up at national regional and local levels.


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## Owais

*Country facing economic turmoil: Gilani*

ISLAMABAD (July 20 2008): Prime Minister Syed Yousuf Raza Gilani on Saturday said that international companies have offered $4 billion investment in energy sector in Pakistan and vowed that every effort would be made to bring the country out of prevailing, economic, energy, law and order crises.

-- Prime Minister says long years of dictatorship have plunged the country into crises

-- According to him, there's a flour shortage, load-shedding, terrorism and extremism, restoration of judges, economic and, above all, the inflation and unemployment which have their roots in the past

-- Believes high inflation is the result of running the country by printing money and heavy borrowing from the State Bank of Pakistan

-- Asks traders, industrialists and investors to make maximum investment in Pakistan

-- Seeks people's support and co-operation by saying that reduced consumption of fuel and edible oil can save billions of dollars in foreign exchange, reduce trade deficit but also gradually reduce the external debt

-- Assures farmers that government will significantly increase the minimum wheat support price before sowing of the next crop

-- Gives small growers good news that government will pay premium for them against crop loans

-- Declares that govt is working towards increasing milk production to bring about a White Revolution

-- Claims international companies are willing to invest $4bn in power sector.

"There would be minimum load shedding by next year after the measures taken by the government to address the situation," he assured the nation in his first televised address and held the previous government responsible for the prevailing crises, urging the nation to trust the coalition government.

In order to attract investment for Thar coal, he said a conference would be held in Washington on July 29, which would be chaired by him. He said that 2.5 million-ton wheat would be imported to curtail wheat crisis.

Prime Minister stated that Pakistan is facing the crisis of flour shortage, load-shedding, terrorism and extremism, and above all the inflation and unemployment which have their roots in the past.

In this situation, he said there were two options for the government; either to surrender to these problems or face them. I have chosen the second option to face the challenge.

Gilani said these problems were because of two reasons, external factors included rising oil and food prices in the international market while on domestic front during the last eight years, the government neither realised the challenge nor did any future planning. Thus the country was plunged into these crises.

He said it unfortunate that whenever PPP government came into power, the country was facing enormous problems with grave threats to the federation. He repeated that dictatorship remained at the helm of affairs in Pakistan most of the period in its history and every dictator made efforts to prolong his rule at the cost of country.

Gilani stated that the government was committed to resolve public issues. About judges' issue, he said that soon nation would hear good news. "We will take out this country from all the crises. We will give the people confidence and fulfil their dreams," he said.

Prime Minister maintained that after Quaid-e-Azam, Qauid-e-Awam Zulfiqar Ali Bhutto gave a new consciousness to the people of the country and said whatever pledges former Chairperson PPP Benazir Bhutto made to the nation, he would try to fulfil them.

He said February 18 has given a new hope to the nation with various parties came united on unified agenda to bring the country out of prevailing crisis. He assured the nation that he would sacrifice his life for the country.

He said that abundance of automobiles and mobile phones were not the growth yardsticks but unfortunately the previous government rather than setting up new industries relied on imports and created a consumption based economy. Agriculture was totally ignored and heavy borrowing from the State Bank was major reason of inflation in the country.

Outlining efforts of the government to counter these problems, he said first I would like to urge upon business community to keep their capital in Pakistan and they would be assured protection." He said that the government is importing 2.5 million ton wheat to ensure adequate supplies, and give agriculture loans Rs 30 billion for farmers.

Gilani said that the heads of allied parties would meet on July 23, in Islamabad to formulate a comprehensive strategy to eradicate terrorism and extremism. He said the country's nuclear assets are in safe hand and no one would be allowed to take action inside Pakistan.

APP ADDS: Prime Minister Syed Yousuf Raza Gilani pledged to the nation on Saturday to render every sacrifice to meet the challenges facing Pakistan and urged people to support the government in its efforts to steer the country out of the crises.

In his first address to the nation, after taking oath three months ago, the Prime Minister said, long years of dictatorship have plunged the country into crises.

"We will take out this country from all the crises. We will give the people confidence, we will give the nation not just their dream but its fulfilment,' he said in his address presented live on television and radio.

Prime Minister Gilani gave an overview of the problems the government had inherited and various steps that have been taken to stem the economic down slide and provide immediate relief to the common man. Gilani said Pakistan was facing the crisis of flour shortage, load-shedding, terrorism and extremism, restoration of judges, economic downslide and, above all, the inflation and unemployment which had their roots in the past.

"This situation sapped people's confidence and killed their hope," he said and added in this situation the government had only two ways; either to surrender to these problems or face them up front. "Like my political predecessors, I have chosen the second path (to fight against these challenges)."

Prime Minister Gilani attributed these problems to external factors, like rising oil and food prices in the international market. Secondly, he said during the last eight years, neither the gravity of international challenges were realised nor any future planning was made that created multiple problems and plunged the country into crises.

He described inflation as the biggest challenge and part of a global crisis, saying Pakistan today is faced with an economic turmoil. "Abundance of automobiles and mobile phones are not a yard-stick of progress," he said and added that the previous government instead of setting up new industries preferred imports and made Pakistan a consumer economy.

He said agriculture was totally ignored and inflation the country faced today, was the result of running the country by printing money and heavy borrowing from the State Bank of Pakistan.

Outlining efforts of the government to counter these problems, the Prime Minister said the government was trying to overcome inflation while avoiding past mistakes. Instead of cosmetic presentation of the economic situation, the priority of the government is to improve the situation in real terms, he added.

He said industrial and agriculture production would be increased to counter inflation and reduce financial deficits. Hoarding and profiteering will be done away with, he added. Prime Minister Gilani asked the traders, industrialists and investors to make maximum investment in Pakistan. "I appeal to my business community to keep their capital in Pakistan. We assure them every protection."

He also appealed to the nation to reduce consumption of those items, which were costing the country hugely in terms of foreign exchange. The Prime Minister said that reduced consumption of fuel and edible oil could save billions of dollars in foreign exchange, which will not only reduce trade deficit but also gradually reduce the external debt.

Being an agriculturist, Prime Minister said he was fully aware of the problems of the farming community. He regretted that an agrarian country like Pakistan was facing the problem of food shortage. The Prime Minister underlined steps the government has taken to overcome the problems.

The Wheat Support Price has been increased to Rs 625 per 40 kg from Rs 475 and the government will significantly increase the minimum support price before sowing of new crop. The government is importing 2.5 million tonnes of wheat to ensure adequate supplies, he added.

Agriculture loans for farmers have been increased by Rs 30 billion and an amount of over Rs 20.50 billion has been allocated for the agriculture development programme. He said the government has already announced a new policy for import of agriculture equipment and cheap tractors. Sizeable subsidy is being given on fertiliser besides abolishing sales tax on it, he added.

The insurance scheme for crop loans has been approved and he announced that the government would pay the premium for small growers. The Prime Minister said water reservoirs would be constructed on priority basis, as development of agriculture sector was impossible without adequate water supplies.

Prime Minister informed that the government was giving incentives to some 10,000 dairy farmers to increase milk production to bring about a White Revolution in the country.

Pakistan was facing the acute power shortage, which, the Prime Minister attributed to the neglect of the sector in the past eight years, which created an imbalance in supply and demand. The Prime Minister recalled that the country faced similar load shedding problem during the second government of Shaheed Benazir Bhutto.

At that time, he said, the private power producers were given incentives, adding today a large portion of the total energy production is obtained from projects set up by these companies.

"Just think what would have been the situation if the government of Pakistan People's Party (PPP) had not started these projects 14 years back," he posed a question. The Prime Minister said the government has taken a series of measures in a short span of time, which would help overcome load shedding significantly by next year.

Gilani said reposing confidence in the government's policies, international companies have offered to make $ 4 billion investment in power sector and work on the proposals is being undertaken at fast track. The government has taken practical steps to utilise the huge reserves of coal in Thar and for this purpose Thar Coal Authority has been set up.

The Prime Minister said he would chair a roundtable conference attended by international financial institutions on July 29 in Washington for investment in the sector. Moreover, special attention has been focused on alternative sources of energy including wind, solar and atomic energy, Gilani said.

Under the programme to conserve energy, besides various other steps, supply of energy saver bulbs would be ensured and due to these steps the future needs of energy would be fulfilled, he said.

The Prime Minister pointed out that no country could attract investment, or make progress, if the lives of ordinary citizens are insecure. "When we took over, hundreds of lives were lost in numerous suicide attacks in 2007, affecting thousands of people," he added.

He recalled that chairperson of Pakistan People's Party (PPP) Benazir Bhutto also became the target of dreadful wave of terrorism. The personnel of law enforcement institutions were also being targeted, he added. The Prime Minister informed that an extraordinary meeting of the heads of allied parties would be held on July 23, in Islamabad to formulate a comprehensive strategy to end terrorism and extremism.

Prime Minister Gilani said Pakistan was fighting the war against terrorism in its own interest and added that the country for its geographical location can play a central role for economic progress and peace in the region.

"This role of Pakistan is being acknowledged all over the world." He said good relations with neighbouring countries were the major planks of the country's foreign policy. It was with this spirit that Pakistan has agreed to hold fifth round of composite dialogue to improve ties with India and resolve all disputes, he added.

Referring to his first speech in the National Assembly, the Prime Minister said that he had clearly stated that resolution of Kashmir issue in line with the aspirations of Kashmiri people is essential for durable peace and prosperity of south Asian region. He said Pakistan wanted friendly ties with the entire world and vowed that sovereignty of Pakistan will never be compromised.

Gilani made it clear that no foreign power will be allowed to take action on Pakistan soil and added that any decision or action within its boundary will be taken by the country itself. The Prime Minister said the government is preparing a comprehensive strategy to improve and reflect true image of Pakistani nation in the world, particularly in the west.

This "can tell the world that we are the victim of terrorism and will leave no stone unturned to counter the menace." The Prime Minister reaffirmed that by the grace of Allah Almighty, Pakistan's defence is strong and "we are responsible nuclear power and our (nuclear) assets are in safe hands."

The whole nation has full trust in its armed forces and the government will utilise all resources to fulfil country's defence needs. The Prime Minister also announced a number of measures to provide relief to the common people.

The Prime Minister said under Benazir Income Support Programme, targeted support of Rs 1,000 each will be provided to the poor families to help them overcome poverty and inflation. He said initially, 3.4 million families would benefit from the scheme, which would be expanded later. For this scheme, he added, special Benazir Cards will be issued and the scheme will be formally launched on August 14.

The Prime Minister said that another scheme has already been launched for free issuance of national identity cards, which would benefit some 25 million people. He said Utility Stores would be established at every Union Council level to provide basic commodities of life including flour, ghee and pulses at cheaper rates.

Mobile Utility Stores in remote areas have already been started, while 1600 new Utility Stores are being set up soon. The Prime Minister said 20 percent increase in salaries and pension of government employees has been made, while minimum wages of labourers have been enhanced from Rs 4600 to Rs 6000 per month.

Yousuf Raza Gilani said a revolving fund of Rs 2 billion has been created under the Prime Minister's Housing Scheme and he would soon inaugurate its pilot projects at the federal as well as provincial capitals. Government employees and rural areas would be given special importance in this scheme, he added.

The Prime Minister said under the Green Transport Scheme the government has decided to run 8000 CNG buses in ten big cities. The scheme will cost around Rs 40 billion and its investors were being given special incentives, he added.

He said the Lady Health Workers programme introduced by Shaheed Mohtarma Benazir Bhutto in 1994 was appreciated and welcomed at the local and international level.

The government will add another 20,000 lady health workers this year in the existing number of 100,000, the Prime Minister said and added the quota of lady health workers for Balochistan had been doubled. The Prime Minister said a mother, child health-care programme had been initiated at a cost of Rs 20 billion, under which 20,000 community midwives would be recruited this year.

He said for the first time a new programme would be introduced for diagnosing diseases, which would specially help in preventing hepatitis and polio diseases. Besides, the Prime Minister said, a special programme for treatment and control of Hepatitis had been initiated, which was being supervised by him. He also appealed for co-operation from the local and international institutions in this regard.

He said a new Rs 5 billion school-feeding programme has been initiated in rural areas to provide food to boy and girl students in the primary schools. The Prime Minister said quota for women in government jobs has been doubled, while the legislation is underway for the protection of women and their rights.

He said government was focusing to make operational the Chinese Economic Zone, especially created for Chinese investors in Lahore. The Prime Minister said the restrictions on trade and student unions had been lifted and in this respect legislation work had been initiated. The measures were afoot to restore the government servants forced out of jobs on political grounds, he added.

He said the government had regularised the services of contract employees from Grade 1 to 15. The Prime Minister said the government believed in equal rights for minorities and would ensure protection of their religious sites as well as freedom of worship.

He said a bill had been tabled in the National Assembly for amendment in the PEMRA Ordinance to ensure freedom of media. The legislation work on the Freedom of Information Bill 2008 had been initiated, he added. The Prime Minister said a Journalist Victim Fund had been created to provide protection to journalists. Consultation process on Wage Board Award had started to support the working journalists, he added.

Business Recorder [Pakistan's First Financial Daily]


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## Owais

*US urged to allow enhanced market access*

ISLAMABAD (July 20 2008): Foreign Minister Shah Mahmood Qureshi on Saturday stressed the US to allow enhanced market access to Pakistani products in a meeting with Reuben Jeffery, US Under Secretary for Economic, Energy and Agricultural Affairs' here. Sources said investment particularly in energy sector also came under discussion.

To counter the extremism and terrorism in the tribal belt, development of infrastructure and industry was also discussed to provide the people better job opportunities, they added. Sources said that Reconstruction Opportunity Zones (ROZs) legislation is now before the Congress.

This legislation aims to promote economic growth in Fata by allowing companies, that set up operations there, export their products duty-free to the United States. Development of agriculture sector also came under discussion. The US has recently pledged wheat support to Pakistan to meet its growing food demand.

A statement issued by Foreign Office said: Foreign Minister Shah Mahmood Qureshi emphasised the importance of a broad-based and long-term relationship between the two countries, going beyond counter-terrorism cooperation and extending to deeper trade and economic interaction as well as people-to-people contacts. The Foreign Minister particularly emphasised the need for enhanced market access for Pakistani products in the US and collaboration in energy sector, and cooperation in the field of agriculture.

Under Secretary Reuben Jeffery underlined the importance the US attached to its relationship with Pakistan and support for strengthening bilateral trade and economic ties. He also offered support for closer bilateral cooperation in the energy and agriculture sector.

Matters relating to Reconstruction Opportunity Zones (ROZs) and Bilateral Investment Treaty (BIT) were also discussed. US Ambassador Anne W Patterson and Zafar Mahmood, Secretary Ministry of Petroleum and Natural Resources were also present.

Business Recorder [Pakistan's First Financial Daily]


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## Owais

*Pakistan invites Japanese investment in major projects*
Updated at: 2253 PST, Friday, July 18, 2008


Pakistan invites Japanese investment in major projects ISLAMABAD: Pakistan is to offer Japan, a number of projects for investments in diverse fields with emphasis on participation in energy related projects including construction of Bhasha Dam, Thar Coal, development of Gwadar Port and establishment of industries in ambitious Japan specific Special Economic Zone, a senior Official at Pakistan Embassy in Japan said Friday.

A 10-member Japanese Study group comprising prominent bussinessmen, industrialist and members of chamber and commerce from both the countries and led by Pakistan Japan business Forum will undertake a week-long visit to Pakistan from July 20 during which they will hold meetings with their counterparts in Karachi and Islamabad.

The Minister Economic at Pakistan Mission in Tokyo Iftikhar Babar giving details on Friday said that we are putting every effort to attract Japanese investors to set up industries in ambitious projects in a Special Economic Zone that will be established in an area of 2500 acres of land in Karachi.

Pakistan invites Japanese investment in major projects - GEO.tv


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## Owais

*USAID to assist in boosting fruit production in Sindh*
Updated at: 0400 PST, Saturday, July 19, 2008


USAID to assist in boosting fruit production in Sindh KARACHI: The USAID Competitiveness Support Fund will assist the Sindh Government in boosting production and exports of mangoes, bananas and dates in Sindh.

This was said by the officials of the Competitiveness Support Fund in a meeting with the delegation of the Sindh Abadgar Board here on Friday.

They told that presently plants are being established for processing of 6,663 tons of fruit in the country. Included in them are the plants for 1,944 tons of kino and oranges, 1,675 tons of mangoes, 622 tons of dates and 158 tons of bananas.

The fruit processing plants include 4,197 tons for Punjab, 983 tons for Balochistan, 945 tons for Sindh and 513 tons for NWFP.

The officials of the Sindh Abadgar Board suggested the Competitiveness Support Fund to establish processing plants for value addition of mangoes in Tando Allahyar.

USAID to assist in boosting fruit production in Sindh - GEO.tv


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## Neo

*Trade with India to benefit Pakistan: Mukhtar ​* 
Sunday, July 20, 2008

ISLAMABAD: Minister for Trade and Commerce Ahmed Mukhtar has stressed the need for coming out of Indian phobia to reap maximum gains of bilateral trade between the two countries.

India is becoming an important economic partner and trade with this country will be in the interests of Pakistan, he told journalists here on Saturday. The minister was of the view that trade with neighbouring countries including India would be very much cost effective as compared with trade with other countries.

He said there are certain trade barriers, hampering Pakistan to give India the status of most-favoured nation (MFN) status while India has given MMFN to Pakistan. Mukhtar said Pakistan has not changed its polices. He however added that everything is done through composite dialogue between India and Pakistan.

The minister stressed the need for developing agriculture of the country, arguing that future is of agriculture. Declaring China most potential market for Pakistans exports, the minister called upon Pakistani exporters to explore the vast Chinese market to boost the countrys exports. He added that after the signing of the Free Tarde Agreement (FTA) with China, Pakistani exports have increased four times.

He said the only way to stopping smuggling is to bring commodities prices at the level of neighbouring countries, indicating that the government would be increasing prices of diesel to check its smuggling.

Answering a question, he said Pakistani rice exports have increased to a considerable level as the exports of the commodity were recorded at $1.9 billion during the last financial year. He said it was not easy to prepare the trade policy in these hard times, adding that the financial situation was not favourable, however we must not loose our heart and continue to make effort to overcome this challenge.

Terming the export target of $22.12 billion realistic, he said he is optimistic to achieve the target with ease. Replying to a question, he said the Commerce Ministry never sets target for imports as prices in the international market remain unpredictable including that of oil.

Replying to another question regarding the provision of Research and Development Fund to the textile sector, he said he will be holding a meeting with the prime minister on Sunday to discuss the issue.

He assured the exporters of textile sector that efforts would be made to meet the demands of the sector for its promotion and benefit of the country. Regarding market access, he said Pakistan has signed Free Trade Agreements and Preferential Trade Agreements with China, Malaysia, Iran, Sri Lanka and Mauritius, while a similar agreement would be signed with the European Union in the beginning of the next year.

He added that initiation of Reconstruction Opportunity Zones with the USA would also facilitate Pakistani exports to US markets. The minister said last year Pakistan exported defence equipment worth $63 million and expressed the hope that this year the countrys exports of equipment would further increase. 

Trade with India to benefit Pakistan: Mukhtar


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## Neo

*BP to start offshore drilling in 2010 ​* 
Sunday, July 20, 2008

KARACHI: BP Pakistan Exploration and Production Company will start drilling in its offshore block in 2010, companys Vice President Mosouf Ahmed said on Friday night. 

A survey of the block, spread over an area of 34,000sq km in offshore region, has been completed and has shown positive results, he said here at a reception organized by JGC-Descon, which recently signed an agreement to provide British Petroleum engineering services in the country. 

Few years back our production from Badin was declining at rate of 30 per cent annually, he said, adding then it seemed the business had to be wind off in three years. But because of service providers that decline was brought down and now business will continue. Stressing the importance of relationship between exploration companies and engineering service providers, he said BP was in Pakistan for past 30 years and expected dedicated support on part of service providers. 

BP to start offshore drilling in 2010


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## Neo

*Aviation Policy 2008 to attract private sector​*
ISLAMABAD: National Aviation Policy 2008 aims at allowing private sector to construct and operate new and existing airports, to start private air taxi service through aircrafts, helicopters on chartered or non-chartered basis, 10-year tax holiday will also be offered to the companies intending manufacturing aircrafts in Pakistan.

National Aviation Policy 2008 is likely to be presented before the federal cabinet in its next meeting for formal approval to facilitate national aviation sector surpass air traffic growth from 7% to over 8% per annum.

Market Access in Air Service: Pakistan shall liberalise bilateral arrangements on reciprocal basis with our bilateral partners to provide service from/to Karachi, Lahore and Islamabad after completion of new airport to the destinations in Western Europe, North America and Africa and to destinations towards East.

While finalising new Air Service Agreements (ASAs), multiple airlines designation clause and article on Code-Share shall be incorporated. There shall be no commercial agreements as part of bilateral agreements. However, airlines shall be free to enter into such co-operative marketing arrangements as are mutually agreeable, which would be outside of ASAs.

Market Access in Cargo Service: Pakistan shall continue to follow open skies policy for cargo operations based on 3rd, 4th, 5th freedom traffic rights. Karachi and Gwadar international airports to shall be promoted as transshipment hub. Cargo villages shall be established on public private partnership at major international airports and linked with National Trade Corridor.

Paid up Capital and Fleet Registration: Paid up capital for Regular Public Transport License shall be increased from Rs.100 million to Rs.500 million, which shall be reviewed periodically by CAA Board. Fleet registration in Pakistan shall be mandatory for all Pakistani aircraft operators except pure cargo aircrafts. Requirement of minimum fleet size for a Regular Public Transport (RPT) license holder shall be at least 3 airworthy aircrafts for domestic operations and at least 4 airworthy aircrafts for international operations. There shall be no permanent addition to capacity by inducting foreign registered aircraft on wet lease other than pure cargo aircraft. Temporary induction of foreign registered aircraft on wet lease may be permitted under extra ordinary circumstances for a short period subject to a maximum period of 90 days. For induction of aircraft, the criteria of minimum remaining operational cycles/hours shall be prescribed by the Director General CAA through Air Navigational Order (ANO).

Tax Holiday: Some 10 year tax holiday would be granted to air craft manufacturers to encourage them invest in aircraft manufacturing units in Pakistan along with establishment of aircraft maintenance companies, flying training schools and ground training schools. Government would rationalize and reduce taxes chargeable to passengers on international and domestic routes. The government would also exempt all taxes and duties on air tickets on secondary destinations. The same privilege shall be extended to operators of small aircrafts and helicopters.

Security equipments and weapons imported by Airport Security Force, CAA, private airports and other operators shall also be exempted from all taxes and duties.

Air Taxi Service: New National Aviation Policy to introduce Air Taxi Service Concept in Pakistan. According to the draft policy document, about 64% of Pakistan population lives in rural areas, with little or no access to air travel even in emergency, for want of air strip, helicopter, helipads and suitable aircrafts to commute to/from remote areas. There are fairly large numbers of cities, which are developed to adopt the concept of air taxi and private owned aircraft for commuting.

In order to develop Air Taxi Service concept in Pakistan the procedure for acquisition and operation of aircrafts, including helicopter, micro-light ultra-light air crafts and hot air balloons shall be liberalized to encourage travel and sports activities.

Use of helicopters for tourism, emergency operations and adventure sports in private sector would be promoted and encouraged and no charges would be imposed for such operations. Liberalized guidelines would be formulated, in consultation with users, to promote and encourage private investment in flying clubs, air taxi service, private ownership of the aircraft, and aero-sports activities i.e. hang gliding, ballooning, heli-skiing and para-jumping. Flying clubs shall be facilitated to overcome shortage of pilots in the country i.e. to develop air strips out side control zones of major air ports fort exclusive use of training flights and to lease Civil Aviation facilities to flying clubs where available.

Charter Service: Under the new policy domestic charter operations would be allowed to Pakistani Operators only using Pakistani registered aircraft including helicopters flown by Pakistani pilots. International charter originating from Pakistan would be allowed on all international routes irrespective of the scheduled operations. On routes

Commercialization of Airports: Airport Cities shall be developed including hotels on public private partnership at all major airports. Vacant land at airports shall be evaluated and developed for construction of aviation facilities like cargo complexes and aircraft maintenance facilities. Land at remote and non-operational airports shall be utilized for non-aeronautical commercial and recreational purposes. CAA shall formulate land lease policy to make it commercially viable for private investors.

New Airports: Construction of new commercial airports would be permitted to meet the air traffic. Private sector shall be free to construct and operate new as well as existing airports, airstrips, helipads, heliports including cargo complexes on BOO, BOT, or any other management arrangement and to raise non-aeronautical revenues from these premises. Privatization of airports shall be pursued to make them more efficient and productive.

Consumers Protection: To protect the interests of the users, facilitation committee consisting representatives from government, passengers, travel and tour operators, aircraft operators, airport operators, exporters, importers, cargo handling agents, aero-sports and flying clubs would be set up at national regional and local levels.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Govt eyeing $12.4 billion investment in power sector​*
ISLAMABAD: Pakistan is eying $12.4 billion investment in the power sector to generate 13,335MW power by 2016, it is learnt.

Sources said that government is encouraging the private sector to make investment in the power sector and is hoping that the private sector would invest $12.4 billion by 2016 on the 51 power projects that are under process by Private Power Infrastructure Board (PPIB).

According to the document available with Daily Times, PPIB is planning 51 power projects that would generate 13,335MW power and would attract $12.4 billion investment by 2016.

According to the power projects under process in PPIB, the focus is being laid on the hydel power generation and as many as 20 hydel power projects would be operational that would generate 4,478MW power by 2016. In the said sector, first project would start generating hydel power of 84MW in the year 2011 and three additional power projects would be added to hydel power generation that would generate 332MW by 2012.

In the year 2013, two more hydel power projects of 251MW would be operational. Three hydel projects of 422MW would be operational in the year 2014 and as many as 8 hydel power projects would be operational by 2015 that would generate 2,047MW power. Three hydel power projects of 1,342MW would be operational in the year 2016.

PPIB is processing as many as 14 projects that would be running on oil to be operational by 2016 that would generate 2,919MW power. The electricity being generated by oil use would be dearer as compared to the power generation by other sources including hydel, coal and dedicated gas. Three projects of 575MW would be operational in the year 2009 and six projects of 1,429MW would be generating electricity by 2010.Three projects of 600MW would be operational in 2011 and one project of 150MW would be added by 2012.

The country would be having five power projects of 1050 MW electricity that would be run on dual fuel (oil and gas). One project of 225 MW would be operational in current calendar year whereas two other projects of 450 MW would be added to national power grid. The country would have two more power projects of 375 MW by 2010.

PPIB is processing six projects to add to the national power grid that would generate 1,338MW power and these projects are gas based. Two projects of 429MW would be operational by 2009 and one more project would be generating 205MW power in the year 2010. PPIB is processing three more projects out of which two power projects of 584MW would start generating power by 2011 whereas one project of 120MW would be added to the existing national power grid.

Government is encouraging the utilisation of coal based power plants and six coal based power projects of 3,550 MW would be operational by 2014.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Govt aims to enhance marble export to $500m by 2013​*
ISLAMABAD: The government has set marble and granite export target to $500 million by 2013 after establishment of model quarries and Marble Cities initiated by Pakistan Stone Development Company (PASDEC).

During 2007-08, the country earned around $35 million from the marble export while in 2006-07, the government earned $22 million from export to mainly USA, Italy, China, UK, Germany and others, officials in the Ministry of Industry, Production told Daily Times Saturday.

According to them, extraction of mines were usually carried out in outdated method of blasting that resulted wastage of mines about 85 percent. The international standard for wastage is only 30 percent to 35 percent.

The first of its kind project initiated in Khuzdar Balochistan namely Model Quarry Khuzdar and it would be fully operational within 6 months.

The government would be able to extract 50 to 60 thousands tonne of material through machineries.

On the other hand, the government get only 5,000 tonne per annum extraction of mines through blasting and other methods.

After completion of the Khuzdar project, the country would be able to generate $7 million per annum alone from the export of raw marble and granite. If the marble and granite further processed, then the government would be able to get $13 million from its exports.

The government has decided to establish model quarries and model marble cities in different parts of the country so as to develop this important sector. Citing the example of Turkey and Italy, the official said they had few marble factories but their marble/granite exports reached in billion of US dollars.

About 7,000 million tonne of quality marble ranging from super white, silky and grey varieties exist in Mohmand, Khyber and Bajaure agencies.

Currently, about one million tonne of marble are excavated from FATA annually. A marble city in Mohmand Agency on an area of 300 acres has also been planned in collaboration with the PASDEC.

In Ziarat FATA quality marble mines exist, and the government has started extraction from there.

According to the agreement Rs 2,000 per track was paid to the area tribes as Surface Rent. This amount is usually utilised for the welfare of these local tribes.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Continuous power, gas supply can make export target, achievable​*
ISLAMABAD: Business Community here on Saturday termed the Trade Policy for the financial year 2008-09 as liberal and open and said that export target of $22 billion could be within reach if government ensures continuous power supply and gas tariff incentives to the industrialists.

The country is passing through hard times and the steps taken by the government regarding the trade policy are need of the hour, President Islamabad Chamber of Commerce and Industry, Muhammad Ijaz Abbasi said here.

He was of the view that solid measures should be taken to enhance countrys exports and increase foreign exchange reserves. He said that the export target of $22 billion could be within reach if government ensures continuous power supply and gas tariff incentives to the industrialists, adding that adequate measures should also be taken to help the textile and other sectors of the economy.

Regarding the enhanced trade relations with India, the ICCI President said that doing business with neighboring countries was a good decision.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Extra-long grain rice hybrid evolved​*
LAHORE: The private sector, after two years successful trial based on seven years field research, evolved a new variety of extra long grain hybrid rice with better yield.

Dr Ghulam Mustafa Avesi told APP Saturday after successful trial, Pakistan Agriculture Research Council has cleared the latest variety named Guard LP3 Rice Hybrid for commercial cultivation, which was most suitable for better yield in Sindh, Balochistan and some parts of the Punjab. He said first time in history, Guard Agricultural Research and Services in collaboration with Chinese has established hybrid seed production in Pakistan.

Project director, Shahzad Ali Malik said by adopting hybrid rich technology, Pakistan could earn eight to $10 billions through rice export by 2012.

He said last year, rice crop through hybrid technology was cultivated on more than 150,000 acres of land and growers got double production. This year they plan to bring 300,000 acres of land under rice cultivation for surplus production.

He said that now it was high time for Pakistan to earn agro-dollars through research-oriented agriculture like Arab countries were earning Petro-dollars through petroleum products and Pakistan has the potential to capture the world market. The new variety seed has received tremendous response from growers and was being cultivated in lower Sindh on large scale under the supervision of Chinese scientists.

Three Chinese Tian Yongjiu, Liu Linhui and Yizhenhua are now engaged in rice seed cultivation in Badin district of Sindh. During two years trial, this variety is produced 90-100 maund rice per acre and with the adoption of rice hybrids in place of existing coarse rice varieties, the rice production can be doubled, he added. app

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan and Morocco sign trade agreement​*
KARACHI: Morocco and Pakistan signed an accord at the concluding session of Pak Morocco Joint Ministerial Commission (JMC) at Rabat to enhance the bilateral trade and investment. Advisor to Prime Minister on Industries and Production, Mian Manzoor Wattoo and Ahmad Chami, Minister for Industries and Commerce of Morocco signed the accord. Both the governments agreed to start negotiation for signing Preferential Trade Agreement (PTA) by Oct 08 followed by signing FTA. The accord would help to double the trade between the two countries, which was presently at a modest level of $20 million. Moroccan government is also considering a joint venture of DAP/ fertilizer in Pakistan. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*More trade with India is good​*
The commerce minister, Mr Ahmad Mukhtar, on Friday crossed one big psychological barrier when he announced Pakistans Trade Policy 2008-09: he set aside all the so-called reasons of the state of the past not to trade with India with new targets for increased trade with India. The directional change, welcomed by Lahores traditionally conservative Chamber of Commerce and Industry, will clearly go in favour of Indian imports into Pakistan, but it will substitute imports from other more expensive sources to the tune of $2.8 billion. The 136 items added to the tradable items brings the total to nearly 2000. When we began trading with India under General Zia-ul Haq, this list was just 40.

The rationale that did not appeal in the 1980s for political reasons is acceptable today for good political and economic reasons, and the PPP is to be credited for standing behind it: imports from India will undoubtedly cut the cost of raw material imports that go into many of our manufactures. In an economy which is trying to save itself from drowning in inflation owing to a hefty import bill and falling rupee, any margin gained in cost-cutting is welcome even though this logic did not permeate the planners in the past. Other imponderable changes for the better are expected to emanate from this opening. In a nutshell, the loosening of controls on the economy vis-à-vis India will lessen the hold of the Indian and Pakistani bureaucracies on political decision-making in the realm of economic relations in New Delhi and Islamabad.

The new approach to India in the trade policy is subtle and intellectually appealing. For instance, Wahga is going to be used more  it will have to be expanded in its capacity of clearance  for the import of CNG buses in the coming 12 months. The threshold has been lowered significantly. The number of interested importers will increase because the importable buses can be as old as ten years. And each importer will be allowed ten buses across the land border. But the rider added to this permission is even more significant: the Indian manufacturers of CNG buses will have to guarantee that they will begin manufacture of such buses in Pakistan!

In todays context, the new trade policy is foreshadowing a change of direction in regard to the permission of Indian investments in Pakistan. When Prime Minister Shaukat Aziz was at the helm of Pakistans economic affairs, he had drawn a line on this matter within the overall framework of Pak-India normalisation. Since the normalisation package contained resolution of old disputes, he was clearly interested in India making some concessions in domains other than trade and investment. The supposition was that Indias interest in prying open the Pakistani market over-rode its political concerns. That supposition was wrong. The fact was that Pakistan was flying in the face of the principle of free trade, denying itself the advantage of being next to a major producer of manufactures and raw materials, and allowing itself to be punished by the extra cost of importing the same items from distant sources. That Pakistans policy was unrealistic was shown by figures. Pakistan kept on adding raw materials to its list of tradable items and the bilateral balance kept on tilting in Indias favour. If Pakistan intended to punish India by withholding from it the Most Favoured Nation (MFN) status, it failed. Trade Minister Ahmad Mukhtar has actually given this status to India without saying so when he clearly said that Pakistan will benefit from the much larger Indian economy. The PPP government will no doubt try to enhance the advantage of being next to India by removing the trade hurdles that exist without quarrelling too much about Indias non-tariff barriers. The entire world is telling India to remove these barriers without embargoing trade with India. On the other hand, India is becoming aware of the disadvantage it has to suffer, because of its trade barriers, in the matter of attracting foreign capital at the same level as China. So it is only a matter of time before it will have to comply.

The PPP government is landed in the eye of Pakistans economic storm. But it has some factors going in its favour. The import bill of $40 billion includes the exogenous trigger of the biggest ever blow-up of oil prices. But the Saudi facility of deferred payments, the falling oil price, increase in the production of hydel power, and a World Bank facility to shore up its reserves, go in its favour. According to estimates, loadshedding will be halved in another two months, and there will be some money left over for allowing important subsidies to the export sector and payment of dues to the producers of electricity. The trade opening with India is a political strategy that will undermine the warlike narrative that India retains hostile designs against Pakistan. As opposed to that, the planned American aid of over a billion dollars annually to Pakistan is an economic strategy that will have political effect. The PPP government must recognise the pragmatic exigencies of the situation. Economic improvement will follow in the wake of decisions made in favour of the welfare of the common man. *

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan has no trade in 81pc of world products: Top 200 items account for 91pc of exports​*
ISLAMABAD, July 19: Pakistan does not figure in 81 per cent of products traded in the world as its top 200 export products account for 91 per cent of its total exports, but these products have only 19pc share in the international market, says a commerce ministry report.

In 2006, 5,085 products were traded worldwide; of which Pakistan only traded in 1,365 products.

It is, however, encouraging that markets in which Pakistan figures, it is ranked very high in world market shares.

For example, in cotton yarn and woven cotton fabrics, it is No. 1, while in cotton bed linen, toilet and kitchen linen and cotton knitted shirts, it is No. two, and in rice, it is No. 3 in terms of world market shares.

A good trend is the growth in non-traditional category of exports. Some of non-textile items whose exports increased in 2007-08 include petroleum group [$1.203 billion], cement [$411.055 m], chemicals and pharmaceuticals [$627.306m], jewelry [$202.742m], leather products [$687.481m], surgical and medical instruments [$255.497m].

In the category of others, the increase in exports during this period was $914.571 million.

Some of the items included in this category are marble, matches, plastic items, wood items, ceramics, tiles and sanitary fixtures and various household commodities.

Increase in this category is good evidence of progress in diversification and movement towards export of value-added items.

In terms of market diversification in 1998-99, the seven markets -- US, Germany, Japan, UK, Hong Kong, Dubai and Saudi Arabia -- accounted for 53.4 per cent of our exports, whereas in 2007-08 this share reduced to around 44.4 per cent.

The three regional groupings that are significant from Pakistans growth point of view are: Latin American countries, such as Brazil. Chile, Colombia, Mexico and Nicaragua, African countries, including South Africa, Kenya, Madagascar and Mozambique, non-traditional European markets, including those belonging to the former Soviet bloc, such as Scandinavian countries, Poland and Greece.

If one looks at the trend from 2003-04 to 2006-07, one sees that growth of exports during this period was around 114 pc in Latin America, 81pc in Africa and 60pc in the European group of countries.

This diversification trend is healthy and needs to be sustained, but in the immediate future, we cannot afford not to shift our focus from textile exports since they constitute around 57 per cent of our total exports.

It is, however, noteworthy that the share of textile and clothing exports in global trade is 4.5pc and Pakistans share in global exports of this sector is a mere 2.15 pc, said the report.

This indicates that Pakistan is facing fierce competition in this sector from a number of countries.

On the other hand, new opportunities are emerging since some of our competitors, like China, are losing their competitive edge due to higher input costs. Therefore, our textile producers need to exploit this opportunity by entering into joint ventures with Chinese companies and setting up of production facilities in the China Specific Industrial Zones being established in Pakistan.

If one looks at the trend since 2003-04, in the first two years, exports rose by around $2 billion each year while in 2006-07, exports rose by only around half a billion dollars.

Imports on the other hand increased by around $5 billion in 2004-05, by $8 billion in 2005-06 and then dipped to register an increase of only $2 billion in 2006-07.

The year 2006-07 saw a decrease of growth of both imports and exports, hence confirming a correlation between higher imports and exports. This year again imports compared to last year have increased by $9.428 billion in 2007-08 whereas exports have also increased by $ 2.246 billion.

Bed-wear a major item declined in the US market due to stiff competition from India and China, as well as preferential tariffs available to our other competitors under arrangements, such as NAFTA, CAFTA and AGOA etc.

In the European Union, bed-linen exports suffered due to an average anti-dumping duty of 5.7pc.

Moreover, our competitors, such as Bangladesh, Cambodia and Sri Lanka, have duty-free access whereas our textiles attract on average a duty of 17-23pc.

The happy news is that the anti-dumping duty will run its course by January-February 2009 and our bed linen exports should pick up after that.

Towel exports have decreased due to higher cotton and yarn prices, the marketing of our textiles is hampered by visa restrictions for our businessmen and travel advisories, preventing buyers coming to Pakistan.

Less emphasis on quality and compliance issues is also hurting our textile exports, says the report.

Pakistan has no trade in 81pc of world products: Top 200 items account for 91pc of exports -DAWN - Business; July 20, 2008


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## Neo

*Cement Makers earn huge profits: Export up 182pc in value, 162pc in quantity​*
KARACHI, July 19: While consumers suffered heavily by paying higher cement prices, the outgoing fiscal year proved cheerful for the cement producers, who made profits with 162 per cent increase in quantity and 182 per cent in value on the export front.

According to figures of Federal Bureau of Statistics (FBS), a total of 7.367 million tons ($411 million) of cement was exported during July-June 2007-08 as compared to 2.8 million tons ($146 million) in the same period last year.

An exporter said that the main export markets in the year under review were the Middle East, India and African countries where dispatches were made at a price ranging between $53-63 per ton.

In Afghanistan, the cement makers fetched price hovering from $38 per ton to $50 per ton.

Local cement prices had been under pressure for the last few months and currently Falcon Cement is selling at the highest price of Rs380-400 per 50 kg bag. Other brands are also costlier.

Dealers said that the government had not still taken any action against the cement makers for pushing up the rates to the peak level.

Due to failure of the Competition Commission of Pakistan (CCP) to check cartelisation, the cement markers enjoyed a free hand pushing the rates up unhindered.

A dealer said that the manufacturers had been creating artificial shortage by supplying very low quantities to the local market and exporting cement in huge quantities.

He said that there was no authority to check the monopoly of the manufacturers.

Construction activities in Karachi have been going on in full swing before the start of monsoon season in the third week of this month.

An analyst at a brokerage house said, Exports have been more profitable for the local industry then the sale of cement in the local markets.

He was of the view that the coal-fired and gas-based cement plants had been facing problems owing to rising price of coal in the world market. He claimed that the cement makers were working on very lower margin.

A leading cement maker and exporter, who asked not to be named, said that the price of cement bags of almost all the companies had surged by Rs40 per 50 kg bag after the budget.

He said that the maker of Falcon Cement had increased the ex-mill rate to Rs340 on Friday from Rs325 per 50 kg bag. Other producers had already enhanced the rate earlier this week. He added that the ex-mill price of almost all the producers had come to Rs340 per 50 kg bag.

He linked the price hike to increase in federal excise duty by Rs150 per ton, one per cent increase in general sales tax, coal price hike in global markets, and gas price hike for captive power plants.

The producer said that the Indonesian coal price has surged to $160 per ton (C&F Karachi) from $103 per ton six months back, while the South African coal price is now tagged at $200 per ton as compared to $151 per ton six months back.

He said that the price of cement in domestic market is likely to decline as construction activities will slow down in August owing to monsoon season. There might be a low demand of cement in Ramazan and Eid holidays in the first week of October.

Cement Makers earn huge profits: Export up 182pc in value, 162pc in quantity -DAWN - Business; July 20, 2008


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## Neo

*Japanese firm to invest $100m in IT​*
KARACHI, July 19: A reputed Japanese company has announced to invest $100 million in information technology in Pakistan which will have a potential of generating 3,000 jobs.

According to a press release, senior officials of the company in a meeting with Sindh Industries Minister Rauf Siddiqui said that the plan is to set up a global data centre and a call centre with 1,000 employees in Karachi.

Japanese firm to invest $100m in IT -DAWN - Business; July 20, 2008


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## Owais

*Share prices bounce back, KSE up 140 points*
Updated at: 1826 PST, Monday, July 21, 2008


KARACHI: The equities market witnessed a healthy trading today as investors took fresh positions, pushing the KSE-100 Index up by 140 to 10, 374.

The investors booked new positions ahead of a series of high level meetings due to be held this week.

These meetings are planned to resolve the recent state of mayhem at the stock market, where finance minister Naveed Qamar is expected at the bourse on Tuesday followed by a visit from SECP's chief Razi-ur-Rahman on Wednesday.

Meanwhile, State Bank Governor Shamshad Akhtar also met various brokers and fund managers at the end of today's trade.

Dealers say, these confidence building measures relaxed sentiments to offset sharp losses in early trade when investors had off-loaded their leveraged positions.

Dealers say rising local fuel prices also invited buying in energy sector, whereas institutions also took advantage of discount valuations in other sectors.

However, despite the rise, volumes stayed dismal at 94 million shares against last week's average of 116 million shares.

KSE-30 Index gains 152 points to close at 11,559.

Share prices bounce back, KSE up 140 points - GEO.tv


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## Owais

*Govt. to lend helping hand for bourses pick up: FM*
Updated at: 1421 PST, Monday, July 21, 2008


Govt. to lend helping hand for bourses pick up: FM KARACHI: Federal Finance Minister, Naveed Qamar has assured the stockbrokers that the government would extend all possible assistance to the stock markets for its recoup.

Karachi Stock Exchange (KSE) senior member, Arif Habib told Geo News that a KSE delegation tomorrow had called on FM Naveed Qamar yesterday in Islamabad, where the minister was briefed about the underway crisis in bourses, while Naveed Qamar in turn assured all possible help for the recovery of the markets.

Arif Habib said that FM Naveed Qamar on KSE request would be visiting KSE tomorrow, when some vital announcements would be made for the betterment of the market. 

Govt. to lend helping hand for bourses pick up: FM - GEO.tv


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## Owais

*Gas prices for textile sector to be reconsidered*
Updated at: 1727 PST, Sunday, July 20, 2008


Gas prices for textile sector to be reconsideredKARACHI: Government has assured to consider restoration of the research and development (R & D) fund and reduction of gas prices for textile sector.

This was told by president Chamber of Commerce & Industry Karachi Shamim Shamsi while talking with Geo News after the meeting between the government and trade organizations here on Friday.

He said that the government has agreed to restore R & D for textile sector for which an announcement would soon be made to allocate an amount.

This time, all departments of textile would be paid the amount of research and development and in this regard, trade organizations have been asked to determine a procedure.

Decision to withdraw the increase in gas prices for industries will be taken after reviewing the margin in the agreements with the exploration and distribution companies.

According to the president CC&I Karachi, the government has agreed to abolish 35 per cent LC margin on the remaining import items on the improvement in the position of foreign exchange reserves.

Geo TV Pakistan - Breaking News, World, Business, Sports, Entertainment, & Video News


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## Neo

*Foreign investment down by 38 per cent ​* 
Tuesday, July 22, 2008

KARACHI: Net inflow of foreign investment dropped by 38.4 per cent to $5.193 billion during the recently concluded fiscal year 2007-08, causing a gradual reduction in the countrys foreign exchange reserves and exerting immeasurable pressure on rupee-dollar parity. 

Foreign investors not only reduced fresh investment but also dragged out a massive amount from equity trade amid uncertain political situation and deteriorating economic condition due to spiraling oil prices and commodity prices.

Although most major economies of the world are also facing adverse impacts of oil prices the resource constrained countries like Pakistan are facing the brunt of rising oil prices causing widening of trade and fiscal deficits and consequently stimulating inflation.

During July-June 2007-08 total foreign investment declined to $5.193 billion which was recorded $8.428 billion during fiscal 2006-07. 

Latest statistics of State Bank of Pakistan (SBP) revealed that in FY08 foreign private investment stood at $5.172 billion against $6.960 billion in preceding fiscal year, whereas foreign direct investment was recorded at $5.153 billion against $5.140 billion of last year of which, privatisation proceeds were witnessed at $133.2 million as compared to $266.4 million of previous year.

During FY08 the massive outflow of 98.8 percent was recorded in portfolio investment which plunged to $19.3 million as compared to $1.824 billion in FY07. 

Through Global Depository Receipts (GDRs) of UBL Bank brought an inflow of $90.5 million into countrys financial system in FY08 against $559.7 million of last fiscal year. In addition an amount of $106.5 million was brought into country through GDRs of Lucky Cement. In FY08 foreign public investment, which was mainly in portfolio declined to $20.8 million against $1.468 billion recoded in the pervious year.

From developed countries including Western Europe, Luxembourg, Denmark, France, Germany, Netherlands, Sweden, UK, other Western Europe Norway, Switzerland, North America Canada, USA other developed countries including Australia, Japan and unspecified countries dropped by 38.1 percent to $2.913 billion against $4.702 billion of previous fiscal year. However, from developing economies including Caribbean Islands, Cayman Island, Bahamas, other Caribbean countries, Africa, Libya, Egypt, Mauritius, South Africa, and other African Countries investment increased by 3.6 percent to $1.898 billion, which was recorded 1.831 billion in FY07.

From Asia including West Asia, Oman, Iran, Kuwait, Bahrain, Qatar, Saudi Arabia, Turkey, UAE the net flow of foreign investment recorded a slight increase of 2.1 percent to $1.722 billion as compared to $1.687 billion of last fiscal year. Similarly South East Asia countries including Bangladesh, China, Hong Kong, Malaysia, Singapore, India, South Korea, unspecified South East and South Asia slight surged by 0.8 percent to $836.6 million from $829.9 million of FY07.

Foreign investment down by 38 per cent


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## Neo

*Current account deficit balloons to $14bn ​* 
Tuesday, July 22, 2008

KARACHI: The current account deficit ballooned to $14.016 billion during the recently concluded fiscal year 2008 against $6.878 billion of FY07, adding worries to the countrys economic managers, who were combating other challenges like highest ever trade deficit and inflation.

From July-June 2007-08, the current account balance without official transfers stood at $14.443 billion which was recorded at $7.403 billion in FY07. The deficit is equivalent to about 8.4 per cent of the gross domestic product (GDP), compared with a full-year target of 4.8 per cent. The State Bank of Pakistan (SBP) had estimated the deficit would be in the range of 7.3 to 7.8 per cent in 2007-08.

The break-of showed that during July-June 2007-08, goods worth $20.125 billion were dispatched outside the country against $17.278 billion of last fiscal year. In the meantime imports of the country swelled to $35.411 billion, which was the highest ever influx of foreign goods so far in the country during a single fiscal. The rising inflow of foreign goods widened the traded deficit to 15.286 billion in FY08, which witnessed $9.711 billion in FY07.

During the aforesaid period, the country witnessed inflow of $3.590 billion through exports of services sector. However, at the same time $9.892 billion drained out from the country in this head. In FY08, current transfers recorded were 11.619 billion, as compared to $10.658 billion of FY07, of which workers remittances stood at $6.451 billion against $5.494 billion of the previous year, whereas the country received $444 million from FCA residents.

Under the head of capital account, $69 million landed in the financial system of the country against $304 million in the previous fiscal year. In addition, $59 million were credited in the capital account of the country in the form of projects grants against $257 million of the year before.

Under the head of financial account, total flow of $8.709 billion was recorded against $10.145 billion of FY07, whereas direct investment abroad dropped to minus 75 million as compared to minus 114 million of fiscal 2006-07. The current account deficit is targeted at 6.0 per cent of the GDP in 2008-09.

Current account deficit balloons to $14bn


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## Neo

*IT industry growing 50pc annually ​* 
Tuesday, July 22, 2008

KARACHI: The countrys information technology & IT-enabled services industry stands at $2 billion annually with a 50 per cent annual growth rate. 

IT exports stand at $1 billion, according to a research study commissioned by the Pakistan Software Houses Association (PASHA). 

Pakistan Software Export Board estimates show a higher figure of $2.8 billion as the industry size and $1.8 billion exports. This was stated by Jehan Ara, President Pakistan Software Houses Association while talking to the media during a one-day Career Expo for IT students and professionals organized by the association on Sunday. 

Thousands of young IT professionals and fresh graduates visited the Career Expo to explore and apply for job openings posted by participating companies. They appeared in on-the-spot interviews, listened to eminent speakers and interacted with CEOs, CIOs and HR heads of ICT local and international companies regarding career opportunities. 

IT professionals and students learnt about the different career tracks in various segments of the ICT sector, participated in interactive workshops, listened to company presentations and attended career counseling sessions. 

Jehan Ara said Pakistan produces approximately 20,000 IT graduates annually, who need proper guidance in order to explore their true potential. Currently over 110,000 IT professionals are working in IT sector and there is a lot more potential for quality IT HR. The IT industry needs people with different skill sets, in addition to computer science graduates, they also require business analysts, domain specialists, project managers, senior management, marketing professionals, call centre professionals, animations, interface designers amongst others. 

IT industry growing 50pc annually


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## Neo

*Prohibitive investment cost in Karachi​*
THE total foreign direct investment during 2006--07 was estimated at aro-und $8.4 billion. Of this total, Sindh got something like $2.32 billion or 27 per cent, the Sindh Industries Minister, Mr Rauf Siddi-qui estimated recently.

Compare these figures with industrial investment in 2002-03, when Sindh's share was 57 per cent of Rs536 billion as Mr Tariq Ikram, former Chairman of Export Promotion Bureau, had informed members of the SITE Association of Industry.

Has Sindh lost appetite for the industrial investment over time? Yes, say many industrialists while attributing this trend to a host of factors. ``We are located in close proximity of two ports,'' Nisar Sheikhani, Chairman of SITE Association of Trade and Industry said and added but we are being denied the location advantages.

We should get imported items of strategic interests like oil and petroleum products at landed cost,'' he observed and wondered as to how the government would justify taxing Karachi business by keeping a uniform price on oil while it discriminates when it comes to sharing the benefit of hydroelectric power. Did not we pay from our taxes the costs of Tarbela, Mangla and Warsak dams and are we not contributing in many new water projects?'' he argued.

Sheikh Fazal Jalil, the Chairman of Korangi Association of Trade and Industry has one industrial unit in Lahore and one in Karachi. I pay electric bill in Lahore at Rs5.33 a unit and in Karachi I pay Rs9.10- Rs9.60 for a unit'' he informed.

Industry in Karachi grew at a fast pace in early days because of its close proximity to ports. It suffered a setback in the decade of eighties because of shifting of government's focus to the north. Some improvement in terms of utilisation of idle capacities and some investment was seen when interest rate came down in the year 2000, lasting hardly for a few years.

Business complains of growing lawlessness in Karachi and for that matter in the whole of province, rising utility costs and perpetual shortages of water, electricity and gas, crumbling infrastructure and the expensive bank loans. It seems that all these factors are slowing down pace of industrial investment in Karachi and other parts of Sindh.

More than 10,000 big and small industrial units in and around Karachi are hard pressed because of such problems. The Sindh government is yet to make a comprehensive survey of industries in the province to find out how many of these are working at optimum or partial capacities and about the demand for water, gas, electricity and other infrastructure facilities that can be taken up at the provincial and federal levels.

During these conversations and meetings with the industrialists and the Sindhs industries minister, two factors emerged conspicuously that have hampered the industrial growth in Karachi and other parts of the province.

Industrial land in Karachi and adjoining areas is hard to get and if it is available, it's price is prohibitively high. What is astonishing is the fact that the available land in second and third phases of SITE, North Karachi, Nooriabad is booked but most of it lies vacant for want of investment. The second factor is more than 100 per cent high cost of electricity is given by the KESC for industry in Karachi as compared to Wapda-fed areas.

The government knows that industrial estates have become hub of real estate activities,'' Mr Rauf Siddiqui, responded to the observations made by many industrialists during their meetings with him. ``Speculative booking of industrial plots and a shamefully low non-utilisation fee on such booked plots encourage speculators to hold on the property for unlimited period,'' the minister remarked. He did indicate that, ``something might be done'' but did not elaborate as to what could be done to tackle the problem.

Business people say that an acre of industrial plot in Korangi is now priced at Rs100 million, in SITE Manghopir Rs60 million and anywhere from Rs30-50 million in other industrial zones in and around Karachi.

A 500 square yards plot in Korangi is now worth Rs10 million'' Sheikh Fazal-e-Jalil, the Chairman of Korangi Association of Trade and Industry (KITE) informed.

Availability of industrial land at affordable price is the most important and deciding factor in investment'', Mr Siraj Kassim Teli, a former president of the Chamber of commerce and Industry said while recalling his suggestion he made at a businessmen convention organised by Mr Rauf Siddiqui in May in Karachi.

The previous government in Sindh enforced a law according to which the industrial land was to be given to prospective investors at 25 per cent of the market price with a condition that the project would be taken up and completed within a stipulated time frame. Those who failed to comply with timeframe would lose their plots and their money will not be refunded.

Siraj was one of the two private sector members taken in Scrutiny Committee of Land Utilisation. In the light of his two years experience in that committee, he observes that the need of the hour is to have a policy which does not have discretionary powers with any committee or government department'. Land allotment given by the Chief Minister's Investment Cell by the last government was scandalous. One of the beneficiaries who acquired a big piece of land to set up a `gold city' was arrested and now is in hiding.

Zubair Motiwala a former President of Karachi Chamber of Commerce and Industry and ex-Chairman of SITE Association of Trade and Industry too complains of the disparity in quality and cost of land available in Karachi as against that in Lahore and Multan.

The infrastructure facilities available to investors at Kot Lakhpat in Lahore, Multan, Sunder and Faisalabad are much better than in many places in Karachi and other places in the province.

With a virtual non-existent infrastructure, the cost of industrial land in Karachi is much higher. Even in the schemes that are to be launched, the price of land is higher and Zubair made a comparison of land cost at Rs25 million an acre in upcoming Textile City and only Rs4 million Sunder in Lahore.

In Karachi, the investors suffer high capital cost of project mainly because of prohibitively high land cost and the production cost mainly because of more than 100 per cent difference in electricity tariff of KESC and WAPDA.

The KESC was seeking a five year power purchase agreement with National Transmission and Distribution Company (NTDC) for a dedicated supply of 750 megawatt but apparently failed to get a positive response. Instead, the KESC is being given electric supply at marginal cost i.e Wapda gives KESC electric power from its most uneconomical plant and hence the difference in cost.

With reports that electric tariff is being revised in the coming days, the industrialists fear it may prove to be a proverbial last straw on the camel's back.

Prohibitive investment cost in Karachi -DAWN - Business; July 21, 2008


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## Neo

*Investing in livestock and dairy sector​*
The livestock provides essential items of food in the form of meat, milk and egg. Every farming house in the rural area has two to five animals. Some others rear bigger stock as their major source of income.

Livestock also provides useful items such as wool, hair, hide, bones and organic fertiliser. Pakistan has a variety of good milch species cattle. Production of milk has increased over the last several years but a gap between milk consumption and production still exists. Lack of processing and chilling plants and poor distribution system in hot weather keeps milk away from the market.

The production of milk is not picking up fast due to shortage of feed, fodder and increase of concentrate ingredient in animal diet. This is because of population explosion and fast urbanisation leading to shrinkage in area of cultivation leading to decrease in fodder production.

Non-descriptive crossing and lack of proper breeding system are also the factors behind reduction in per animal yield of milk. Traditional farming has been an impediment in achieving the desired production targets. Lack of trained manpower is also a handicap.

Buffalo is the main dairy animal.. It is basically of two types, swamp and riverine. Swamp buffalo is usually light gray in colour and smaller than the riverine breed. The riverine breed is darker in colour with better milk and carcass quality. There are two best breeds of buffaloes Nili-Ravi and Kundi. They are reared in canal-fed areas, where water is in abundance and fodder and crops in plenty.

During the summer, buffaloes need shade and shelter as they have fewer sweat glands. Pakistani buffaloes are adapted to both hot and cold climatic conditions. They are the best milch buffaloes in the world with considerable genetic variation. The gestation period of buffaloes is 312334 days (compared to cattle with 285 days) with the potential of giving over 4,500 liters milk per period of lactation through efficient breeding, good feeding, health care services and better management.

Milk and meat products are integral part of human diet and account for 70 per cent of animal protein intake. The availability of milk is relatively high here as compared to other regional countries. Presently Pakistan is fourth among milk-producing countries of the world with an estimated 33 billion litres of milk produced annually. Out of the total produce, 75 per cent is contributed by buffaloes and the rest by cows, sheep, goats and camels.

As a major contributor of milk, buffalo acquires an important position as the dairy animal. Lactation in buffaloes varies from two to 20 kg based on conditions, quality of feed and fodder and their genetic make up. Buffalo milk is richer than cows milk with an average butterfat content of over seven per cent. The SNF content is around 8.5-10.5 per cent. Buffalo milk is popular throughout the country and sells at higher price than cows milk.

Buffaloes and cattle are primarily kept for milk. The males are used in carriages and for ploughing fields. The adult animals are mostly slaughtered when they become un-economical and unfit for work.

Unlike the dairy sector, the meat industry is growing at a very low speed. With the adaptation of proper fattening practice of cattle and buffalo calves, meat production can be increased and the surplus exported.

After the development of Livestock and Dairy Development Board (L&DDB), recently a calf-fattening project has been started. The farmers are being supported technically and financially to attract them towards this business to meet the increasing demand of meat at home and abroad. In addition to the L&DDB, the Pakistan Dairy Development Company (PDDC) is also motivating farmers to invest in the dairy sector by providing them with technical and financial facilities.

Buffalo meat has little cholesterol as compared to cattle beef and its colour is slightly dark reddish. Buffalo is resistant to most of infectious diseases as compared to other cross-bred cattle and is immune to extreme weather conditions.

The by-products of livestock obtained from buffalo, such as hides are thick and are used in multiple products i.e. footwear, handbags etc., and tanned hides are used as clothing. Horns are used in different items like handles of spoons, knives and shoes and combs etc. Its dung is commonly used as fertiliser. The end products such as blood and offal are used in manufacturing poultry feeds, as they are rich source of proteins.

Processing of milk is very important as shelf-life of raw milk is about 2-4 hours. Presently about 95 per cent of milk is taken as fresh. So, a large quantity of milk can be processed and converted into powder form to avoid spoilage in liquid from. Investment in the processing and chilling plants is very important for saving milk from being spoiled.

There is also a need to exploit the genetic potential of the pure bred animals, through efficient management, quality fodder and concentrates supply and through adaptation of measures to control disease. As there is great variation in milk yield per animal, only high milk-producing animals should be kept.

Progeny-tested, disease-free and proven bulls should be used for insemination and service, non-descriptive crosses should be avoided. The Punjab government realising the importance has built four semen production units (SPU) to ensure supply of good quality semen through progeny testing and pedigree analysis.

Adulteration of milk and meat is a common and open practice. Laboratory tests for detection of residues should be adopted, and rules should be followed to avoid health hazards.

Majority of farmers are not linked to markets and are not aware of marketing potential of livestock and dairy products. The government has taken an important step toward marketing of livestock and dairy products and opened a new department of livestock marketing at the University of Veterinary and Animal Sciences, Lahore, to train the professional and technical people with current demands of livestock marketing. Moreover grading of milk and livestock products is very essential for maximum profitability in dairy business. Collaboration of livestock farmers with research institution is also important to make investment profitable, through use of advanced research.

Investment in livestock and dairy sector is required for training the farmers and livestock holders to deal with the disease outbreak, proper and timely vaccination programme, record maintaining and feed management.

As food is a never-ending need of human beings, quality food can only be obtained through investment in livestock and dairy research institutions, training of livestock farmers, pasteurisation of milk through UHT.

Upgradation of market infrastructure can only prevent the looming food crisis in developing countries. The best way to overcome the crisis and attain economic prosperity is possible through livestock business, white revolution and exporting livestock and diary products.

Investing in livestock and dairy sector -DAWN - Business; July 21, 2008


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## Neo

*An expanding informal economy​*
We have more of an informal economy than a formal one as is indicated by a low tax-to-GDP ratio, the size of the non-documented business activities and the under-served sectors by the banking system.

In other words, we have more of a cash economy .Normally small businesses do not avail of the services of the banking sector. The rural areas are under-served by the banks. These indicate aspects of under development of the economy.

A low literacy rate is also a hurdle in opening of bank accounts. To make matter worse, the massive capital and financial inflows particularly the $6 billion remittances has obviated the need for the banks to seek deposits.

This has not encouraged banking among the teeming millions. Banks are also shy of lending to small enterprises. Lending could help enterprises in the informal sector in documentation of their businesses.

Of course, businesses operating in the formal sector have succeeded in evading taxes because of the inefficiency and corruption among the officials of the tax collecting agencies. The farmers do not pay income tax although the share of agricultural sector is close to 21 per cent of the national income. If the withholding taxes are excluded, the direct taxes have remained constant at around 20 per cent of the GDP. The direct tax has not risen in proportion to the incomes generated by a recent 6-7 per cent economic growth.

Now the government has come out with a tax amnesty scheme under which the black money can be converted into white money/assets.

Since the people have not been paying income tax, the government continues to increase the rate of sales tax, raised to 16 per cent in this years budget. The result is massive evasion of sales tax by a strong section of the businessmen who also claim vast refunds offered in collusion with the taxation officers.

If the commercial transactions were rooted through the banks there are better chances of tax collection, but only a part of the commercial transaction takes place through banks.

Now to make cash transactions easy, we have Rs5000 notes, apart from the Rs1,000 notes.

When asked what per cent of the informal sector borrowed money from the banks, Mr Ashraf Junjua, a former deputy governor of the Bank of Pakistan told a Management Association seminar, not more than five per cent. Such loans are for short periods and do not entail detailed documentation which suits the semi- literate traders.

The liberal exchange rate policies have also created a pool of money that is used for cross-border transactions, resulting on inflow and outflow of funds, depending on the economic and political health of the country. Now there is so much speculation that billion of dollars have moved to Dubai by businessmen in search of greener pasture. Similarly, tax officials suspect that remittances include financial inflows made by some of those engaged in foreign trade.

An expanding informal economy -DAWN - Business; July 21, 2008


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## Neo

*Islamabad shifts $4.1bn global trade to Delhi​*
ISLAMABAD, July 21: Pakistan has diverted its global trade worth $4.132 billion towards India following inclusion of 438 new importable items in the positive list during the past 10 months, officials told Dawn on Monday.

The expansion in the tradable list came in the backdrop of the composite dialogue launched in 2004, the forum which India successfully used for the benefits of their businessmen, while no progress has been made on the thorny issues including Kashmir, water barrages etc.

Commerce and Defence Minister Ahmad Mukhtar said Pakistan was in the process of gradually liberalising trade with India. Composite dialogue process, especially on economic and commercial cooperation, has been instrumental in addressing the bilateral issues, he added.

Official figures available with Dawn showed that Pakistans tradable list with India had 591 items in 1997, but it has been enhanced to 1,938 items in 2008. The government added 302 items to the list in October 2007 and 136 items in July 2008.

This expansion has widened Pakistans trade deficit with India to $893 million in 2006-07 from $73.736 million in 1999-2000. With the substantial expansion in the tradable list, the deficit is likely to reach $1.5 billion in 2007-08, when the final figures are finalised.

The figures for July-March 2007-08 showed Pakistans trade deficit with India stood at $1.095 billion.

Pakistan exported $200 million worth commodities to India in the July-March period of 2007-08, while the value of imported goods reached $1,295 million during the period under review.

Pakistans exports to India are stagnated between $200 million to $400 million despite the fact that New Delhi has granted MFN status to Islamabad.

A diplomatic source said, India is satisfied with the constant expansion in the tradable items list. Whatever they want they get from Islamabad.

Indian side never stressed for the MFN status as they were aware of the fact that the expansion in the positive list would serve their interest.

MFN status has become just a political issue, which will lose its importance with the passage of time as Pakistan would keep on expanding the positive list to meet their demand, he said.

Indians did not challenge the issue at WTO because they knew that they would lose the case.

Meanwhile, in a significant shift of policy, Pakistan also unilaterally announced measures in the trade policy to encourage Indian investment in manufacturing of CNG buses.

The government had already withdrawn the 15 per cent duty on the import of CNG buses in the budget 2008-09.

An official in the Board of Investment on condition of anonymity told Dawn that there was no law, which could bar Indian investment in Pakistan.

Pakistan has a liberal investment policy, but the official said generally both countries discouraged bilateral investments. It is not just for CNG buses the Pakistan government is also signalling its readiness to embrace Indian investment in other sectors.

The government has invited at least three Indian companies -- Tata, Reliance and Essar -- to a meeting of potential investors in the power sector to discuss the development of the Thar Coal Power Project. The meeting is due to be held in late July or early August.

Pakistans efforts at liberalisation of trade with India appear to be in line with the sentiments voiced by PPP co-chairman Asif Ali Zardari that the new government wanted to improve economic relations and would not allow the differences on Kashmir to come in its way.

Islamabad shifts $4.1bn global trade to Delhi -DAWN - Business; July 22, 2008


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*Pakistan IT exports touch $1bn benchmark​*
KARACHI: The countrys Information Technology (IT) exports have marked one billion dollar benchmark in fiscal year 2007-08, a research commissioned by Pakistan Software Export Board reported Monday.

According to this research, the countrys IT and related industry has witnessed $2 billion increase in its worth, maintaining 50 percent handsome growth rate in 2007-08.

President Pakistan Software Houses Association (P@SHA), Jehan Ara said Pakistan produces approximately 20,000 IT graduates annually for pursuing their right fields of interest in the industry.

However, Jehan Ara said the size of the industry was much higher to attain $2.8 billion level with the exports $1.8 billion to various countries. Currently over 110,000 IT professionals are working in IT sector and there is a lot more potential for quality IT HR, she added. IT industry needs people with different skill sets, in addition to computer science graduates, also requires business analysts, domain specialists, project managers, senior management, marketing professionals, call center professionals, animations, interface designers etc.

Daily Times - Leading News Resource of Pakistan


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*Pakistans fruit exports surge by 27 percent​*
KARACHI: Pakistans fruit exports, during the fiscal year 2007-08, surged by 27 percent in terms of value and 20 percent in terms of volume despite multifarious irritants faced by the fruit exporters during the export process and non-cooperative attitude by foreign shipping lines operating their services between Pakistan and different destinations across the globe.

During the previous fiscal year of 2006-07, quantity of fruit export was 343.424 metric tonnes with a value of $113.635 million. During 2007-08 it grew to 413.726 metric tonnes with a net value of $144.676 million, depicting an increase of up to 27 percent during the period.

A leading fruit exporter, when approached by Daily Times to seek his point of view over substantial increase in fruit exports, credited the surge owing to collective efforts of members of the fruit exporter association.

An overwhelming number of exporters either in their individual capacity or collectively have frequently been visiting Gulf and Far Eastern countries besides European destinations for exploring markets, specially for mango and Kinnow he added.

In response to a query he also questioned the role of the Trade Development Authority of Pakistan (TDAP) towards promoting countrys fruit exports by facilitating exporters community through arranging their foreign visits and help explore new markets.

TDAPs role is limited only to facilitate few of its favorite exporters overlooking large number of them who often questions its lack of effectiveness in discharging its true role in promoting exports.

Mateen Siddiqui, former Chairman, All Pakistan Fruit Exporter Association, said that the government should acknowledge endeavors of fruit exporters who have managed to create new markets for Pakistani fruits resulting in their enhanced demand across the globe.

The surge in the exports are noteworthy in the sense that during the last few years, large the crops of mango and kinnow witnessed damage owing to inclement weather and number of other factors resulting reduction in the annual yield.

He, however, blamed foreign shipping companies for creating extreme hardship for Pakistani exporters which continue to be victim of their reckless attitude causing them massive financial losses amounting to millions of rupees.

In many instances depicting their reckless attitude, some leading shipping companies of the globe despite advance booking of fruit laden containers, destined for different countries, left the shipment at Karachi Port without offering any plausible justification of their move which cause irreparable financial damage to exporters. However, with no alternative available to exporters to dispatch their shipments across the globe in response to their international demand, as Pakistan has non-existing shipping lines, the exporters community is helpless to rely on same shipping lines for dispatching their orders.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan on the brink of massive economic crisis​*
** Dr Meekal review says SBP missed opportunity to act early​*
WASHINGTON: The Pakistani economy today faces the looming risk of a full-fledged balance of payments crisis, domestic and external fiscal imbalances that have reached alarming proportions and show no signs of self-correction or correction through policy action, according to an economic expert.

Dr Meekal Aziz Ahmed, who served senior advisor to the IMF executive director dealing with the region and as senior economist with the Pakistan Planning Commission, writes in a brief review of Pakistans economic plight that inflation has accelerated to levels never seen before in the countrys history and it is set to rise further, devastating the fixed income groups and the poor. There has been criminal negligence behind the power crisis, which has led to untold losses in domestic production and exports. Added to these disasters the country has a food crisis, an oil crisis, an emerging water crisis, not to mention a political crisis. There is agreement among economists, he notes, that Pakistans short-term prospects are grim. With economic policies likely to remain broadly unchanged, the economy will continue to slide downward until the country runs out of its foreign exchange reserves. At the point of reserve exhaustion, Pakistan will not be able to pay for its imports or meet its debt service obligations. The country, in short, will be bankrupt, Dr Ahmed predicts.

Dr Ahmed points out that Pakisans present predicament did not happen overnight, but is the direct consequence of the governments short-sighted and misguided policies in the recent past, characterised by its single-minded obsession with producing high growth GDP rates, without consideration to the quality or sources of growth which have a crucial bearing on sustainability. Such an economic strategy, largely consumption driven and fueled by cheap credit, rather than being driven by the more desirable route of investment and exports, was, sooner or later, bound to run into resource constraints. Eventually demand would outstrip available capacity, macroeconomic imbalances would widen and inflation will start to turn upwards. The view that todays economic problems are the lagged consequence of past policies is neither conspiratorial nor does it amount to playing the blame game. There have been long lags between policy actions and policy outcomes and what the Pakistani economy is witnessing today are the lagged consequences of policy actions taken earlier. The chickens have come home to roost, he adds.

Dr Ahmed writes that the State Banks recent actions to tighten monetary policy reflect a failure to gauge the strength of the inflationary pressures building up and the failure to act in time. Given the long lags in the monetary policy transmission mechanism, the monetary policy should have been tightened much earlier. The State Bank missed the opportunity to act early and responsibly and its belated actions are a classic illustration of too little, too late. Dr Ahmed says he is dispirited by what appears to be the State Bank forfeiting its hard-won autonomy. Despite possessing considerable statutory powers, the State Bank seemed to have waited for a nod of approval from government, rather than act in accordance with its mandate and tighten monetary policy immediately. Inflation, many observers believe, is now out-of control, which is troubling because Pakistan has little experience with high inflation and policy-makers may not know how to control it.

According to Dr Ahmed, the new government missed an excellent opportunity to demonstrate that it was taking charge of the rapidly worsening economic situation by failing to devise a bold fiscal strategy aimed at reducing aggregate demand pressures and starting the process of restoring macroeconomic stability. This could have been achieved through the implementation of a sound 2008-09 budget. A tight fiscal stance, desirable in its own right from a macroeconomic standpoint, would have reinforced the tight monetary policy stance. The awam dost budget that followed showed that the government was no aware of the crisis towards which the country was hurtling. The budget was a major disappointment, being loose, abounding in exemptions and concessions and amnesty schemes, despite bitter experience from the past.

The poorly thought out plans to help the poor are likely to be ill-targeted, costly, and only make matters worse. The tax revenue target is fanciful and completely out of line with what the Federal Board of Revenue (FBR) has been able to achieve in the past six decades. To add to that, the budget expenditures are seriously understated. All this boils down to a fiscal deficit outcome that is likely to be significantly higher than budget projections. Demand pressures will grow, and spill over into the external sector via enhanced imports, the last thing the economy needs. With limited autonomous or induced financing, there is not much left to sell by way of privatization.

Dr Ahmed predicts that the speculative stock market and real estate bubbles will pop, creating havoc in the financial sector and wiping out the lifetime savings of small investors. According to some economists, the economy could fall apart as early as December this year or March 2009 by the latest, even with the respite offered by the recent Saudi oil facility. What the economy needs is an immediate and drastic tightening of macroeconomic policies, to be achieved principally through deep and durable expenditure cuts. These cuts have to be real and not cosmetic. They can be implemented quickly. Similarly, quick-yielding revenue measures could also be considered. Pakistan needs to halt adverse trends and start the process of reversing them. Valuable time has already been lost, confidence is being rapidly eroded as reflected in the recent fall of the domestic currency and the stock market, which are symptoms of accelerated capital flight. The government will become unpopular because of the belt-tightening, but there are no other options. Getting inflation under control and back into low single digits will not be easy, he warns. There is no soft option, Dr Ahmed adds, no easy way out. He rejects the idea of donor conferences as being unrealistic. Any aid given will be conditional and attached to a programme, which is consistent, coherent and doable, with assured implementation. He suggests that Pakistan should give the IMF a programme which is strong and credible, with appropriate conditionality, and ask the IMF and donors to finance it.

Daily Times - Leading News Resource of Pakistan


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*'60 percent plasma, LCD TVs being smuggled into Pakistan'​* 
ISLAMABAD (July 22 2008): About 60 percent of plasma and LCD TVs are being smuggled into Pakistan annually, said Chief Operating Officer (COO) of Document World Pakistan (DWP) Rizwan Butt. He was addressing the media personals on the launching ceremony of new series of Samsung LCD TV' on Monday at Bhurban.

DWP Chief executive Farooq Naseem, Senior Manager of Samsung Electronics Company Limited Jin Gak, Marketing Manager Khurram Farooq, Product Manager Kaleem Khan, and Sales and Marketing of TV MEA Manager Hyun Joong Kim, were also present on the occasion.

He said that some of the manufacturers/assemblers of Plasma Display Panel (PDP) and Liquid Crystal Display Panel (LCDP) represented the government that they were facing tough competition because of smuggling of these items. "They claimed that smuggled TV sets are available at 28 percent to 41 percent cheaper than locally produced/assembled LCD/PDP. This price difference rendered the local assembling/manufacturing of LCD/PDP uncompetitive in the domestic market", he maintained.

"They proposed to abolish customs duty on the SKD of the LCD and Plasma TVs together with application of strict administrative measures", he added. He further said that to discourage smuggling, they brought drastic changes in the prices of the electronic products.

"Besides, there is a dire need to create warranty awareness among the masses", he added. He said that in the near future Samsung and DWP would invest 1.5 billion dollars and emphasis would be more on infrastructural development.

"We would continue to invest in Pakistan despite knowing the current political instability and weak financial position that no doubt is discouraging many investors", he said. Speaking on the occasion, Khurram Farooq said: "Samsung today marked the beginning of a new era in the evolution of entertainment with the launch of its new series of high-definition LCD TVs for the consumer Series 6, Series 5, Series 4 and Series 3.

"Combining elegant styling with a wide range of higher-end components ordinarily exclusive to premium sets, consumers can now experience superb picture quality, optimised digital performance, and ease-of-use in an HDTV that fits seamlessly into any home décor."

He further said: "HD market has unlimited potential in Pakistan and consumers' expectations are already running very high. Samsung's new HD solution presents unprecedented picture clarity, the widest colour expression and amazing sound, complemented by distinctive sleek style. These new models are set to make big impact on our lifestyle as the introduction of television did on the lives of our forefather. Samsung has a reputation for innovative and stylish products and our new range will have no exception," he added.

He further said that they were confident that people of all level would appreciate the addition of these stylish models. "This is very important step of Samsung, which is set to support our expansion in this competitive product sector," said Jin Gak Chung. "By raising technology to the level of art, these new series are great examples of Samsung's approach to LCD TVs," said Farooq Naseem. "Customers' care being the cornerstone of DWP's business philosophy, every LCD TV is backed by authorised Samsung-DWP Warranty. Customers get complete satisfaction after sale support through a countrywide network of authorised service centres.

Business Recorder [Pakistan's First Financial Daily]


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*ADB to provide $500 million for boosting economic transformation​* 
FAISALABAD (July 21 2008): The Asian Development Bank (ADB) will provide $500 million for 'Accelerating Economic Transformation Program (AETP) (Subprogram-1)', which will provide significant benefits in general, and targeted benefits for the poor in particular. First, it will help meet the immediate and massive fiscal needs of the Pakistan government.

According to a project report, prepared by Ramesh Subramaniam, Director, CWGF, the Asian Development Bank is considering to provide $280 million from OCR, and $220 million from Asian Development Fund for 'Accelerating Economic Transformation Program (Subprogram-1)'.

At a minimum, ADB report said, the agriculture and energy subsidies need to be met at a cost of upward of $3 billion, firstly. Secondly, the government needs to move away from the inefficient and untargeted subsidies to a targeted safety net program for the poor.

Beginning with about 2 million households, the program will help target up to about 5 million households, or roughly about one-fourth of the poor who are likely to be directly affected by the spiralling food inflation. Thirdly, the program will open the way for structural transformation. Fourthly, the program will help cut the transaction costs for businesses (reduction in red tape in tax payments) and improve investment climate.

Fifthly, the program will raise public confidence in the banking system arising from development of a financial sector safety net, including a depositor protection scheme, and stronger financial intermediaries that are better able to mobilise and allocate resources and risks, and promote financial sector stability.

Sixthly, the program framework will enable ADB to sustained policy dialogue on structural reform in sectors where ADB has been actively involved through investments. While Pakistan has achieved a real GDP growth rate of 6-7 percent in recent years, ADB sources said that this growth has generated large fiscal, trade, and investment deficits, and has occurred without any major structural changes. To sustain this rate of growth, Pakistani needs to transform in three directions.

First, it has to address the short-term distortions in the economy, particularly in the agriculture and energy sectors. The pricing and procurement system for wheat needs to be restructured, and subsidies better targeted to benefit the poor and vulnerable. The poorly targeted subsidies could cost the government upward of Rs 45 billion ($650 million) this year, not including the additional resource requirements--estimated upward of $2 billion at a minimum--to cushion the poor against the escalating prices.

Pakistan also needs to fix its subsidy system in the electricity sector. In the absence of an automatic adjustment mechanism, the government has not been able to settle the payments owed to distribution companies, which has resulted in a vicious circular debt problem and debt overhang in the sector. This problem needs to be addressed urgently to resolve the present energy crisis facing Pakistan. The immediate resource requirements are upwards of $2.5 billion.

Second, over the medium to long-term, the production and trade structure of the economy needs to be transformed to compete in the global economy. Specifically, Pakistan needs a deeper industrial base, a productive and efficient agricultural sector, greater value creation in the service sector, and far greater export sophistication.

TO ACHIEVE THIS, THE GOVERNMENT NEEDS TO: 

(i) address policy and institutional distortions in the short term,

(ii) identify a few sectors where it can compete effectively, and

(iii) attract private sector participation.

Third, Pakistan needs to strengthen its domestic financial intermediation to facilitate structural transformation. At a macro level, the government has relied heavily on the central bank for its fiscal requirements--a practice that has to be reversed. Sector regulation needs to be strengthened to promote consumer confidence, manage risks effectively, and deepen financial intermediation.

ADB has been involved in competitiveness reforms in Pakistan since mid-1990s. It helped implement Trade, Export Promotion and Industry Program over 1999-2004, and a Small and Medium Enterprise Program to support reforms at the smaller end of the industry segment. In parallel, ADB has been engaged in financial sector reforms. ADB has worked closely with other development partners on these reform programs.

Through AETP, the Government is committed to adopting a structural transformation strategy focusing on industrialisation and increasing its competitiveness in industry and other areas, and related reforms to promote a stronger financial sector. To help leverage these reforms and bridge deficits, Pakistan has requested budgetary support through the AETP.

The expected outputs of the program are: (i) removal of price, fiscal and structural distortions in the agriculture and energy sectors in the short term, with the objective of resolving the present food and energy crisis and averting future crises; (ii) accelerated value creation in industry, agriculture and services through structural reforms, including greater private sector participation; and (iii) sound financial intermediation.

Under this project, ADB sources said, the extensive consultations were conducted with the government [including Ministry of Finance (MOF); Ministry of Industries; Ministry of Commerce; Ministry of Food, Agriculture and Livestock; Ministry of Labour, Manpower and Overseas Pakistanis; State Bank of Pakistan (SBP); Planning Commission; Board of Investment; Privatisation Commission; Engineering Development Board)] private sector (including ABN/AMRO, KPMG, McKinsey) and other development partners (including IMG and World Bank).

ADB will monitor program implementation through regular reviews and progress reports throughout implementation. Based on these reviews, modifications and improvements will be considered. To facilitate such reviews, the government will assist ADB by providing relevant data and information in such details as ADB may reasonably request.

Business Recorder [Pakistan's First Financial Daily]


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*Gas becoming a major source of power generation: World Bank​* 
ISLAMABAD (July 22 2008): The World Bank report 'World Development Indicators 2008' reveals that Pakistan's dependence on water resources for power generation declined by 12 percent - from 44 percent to 32 percent - during 1990 to 2005 whereas reliance on gas increased by 11 percent - from 33 per cent to 44 percent.

The decline in reliance on hydel electricity can be attributed to the failure of the previous government to invest in construction of big projects such as Kalabagh Dam, Basha Dams etc. Statistics reveal a declining trend in hydropower generation in the region with the exception of Nepal, which was relying exclusively on water resources for power generation.

Further analysis of the data showed that Pakistan generates 20.6 percent of its electricity from oil, which is becoming dearer in the international market with each passing day and may not constitute an economically viable means of power production in future. There is need to exploit alternate sources of energy such as water, coal and nuclear, which are environment friendly.

A comparison of sources of power production in the region showed that Pakistan, India and Iran have been rapidly shifting to gas as the major source of power generation, which increases the need for early materialisation of Iran-Pakistan-India gas pipeline to meet their domestic demand for future consumption.

Pakistan's gas consumption as a percentage of its total power generation increased from 33 to 44 percent, India's from 3.4 to 8.9 percent while Iran's 52 percent to 73 percent during the period under review. India's reliance on Hydropower also declined from 24.8 to 14.3 percent during 1990 to 2005.

Similarly, Bangladesh has been mainly relying on use of gas for power generation and its consumption as a percentage of the total generation increased from 84.3 percent in 1990 to 86.6 percent in 2005 while Sri Lanka which in 1990, was mainly using water as a major source for power generation is now relying on oil to meet about 60 percent of its power production needs.

Data also showed that Pakistan in 2005 met 20 percent of its energy needs through imports with 3.7 percent average annual percentage growth of energy use from 1990 to 2005.

Business Recorder [Pakistan's First Financial Daily]


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*Thar coal-fired power plant: Sindh government barred from joint venture​* 
ISLAMABAD (July 21 2008): The Private Power Infrastructure Board (PPIB) has barred the Sindh government from entering into any joint venture with investors for a 1000 MW coal-fired power plant without prior consultation with the power purchaser, well-placed sources told Business Recorder.

The Sindh government had alleged in a letter to the federal government that a conspiracy was being hatched at the federal level against the much needed development of an integrated coalfield power plant project. The 'insensitive handling' of a Chinese company, the Shenhua Group, which led to its withdrawal from the process, was cited as the reason.

"We understand that before finalising the joint venture with the investors, the Sindh government must discuss major issues with the power purchaser so as to generate support from the power purchaser for the proposed joint venture," said PPIB Managing Director Fayyaz Elahi, in a letter to Mines and Mineral Development Secretary Younus Dagha.

The PPIB was informed that the Sindh government recently guaranteed coal supplies at a price higher than the three different pricing references.

In case of non-absorption of guaranteed coal supplies, the Sindh government would pay liquefied damages (LDs) of Rs 300 per ton, which is said to be a good incentive to attract investors.

The PPIB, however, is of the view that to avoid incurring LDs, the Sindh government and the PPIB would have to try synchronising the commissioning of power plant with the start of commercial mining, the sources added. The Sindh cabinet, a couple of months ago, had reviewed progress on all mega projects, including the Thar coal project, noting that despite best efforts of the government and completion of the corresponding infrastructure, the project had not moved forward.

"Agencies at the federal level have not been supportive, on the contrary, frivolous and fictional impediments are being created in allowing upfront tariff, which is the only way forward for integrated coal-fired power plants," the sources quoted the Sindh government as saying in the letter.

Pakistan has not been able to exploit its coal reservoirs for power generation, as World Development Indicator of the World Bank, 2008 reveals that coal share in power generation remained stagnant, 0.1 percent, from 1990 to 2005 whereas India has been heavily relying on coal for electrify production with 66.2 percent in 1990 that was enhanced to 68.7 percent in 2006.

Fayyaz Elahi also said that coal without guarantees for firm off-take would also be required four to six months earlier than the actual commissioning of the plant during the testing phase of the power plant.

The PPIB also believes that information memorandum prepared by the provincial government promised certain incentives which would have a direct impact on the power purchase agreement (PPA) and all the costs would be eventually passed onto the power purchaser.

"Coal pricing formula would have a direct bearing on the dispatch ability of the power plant, and the resultant ballpark figure for minimum take or pay," Fayyaz Elahi added.

Business Recorder [Pakistan's First Financial Daily]


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*Pakistan witnesses 41 percent increase in fertiliser consumption​* 
ISLAMABAD (July 22 2008): The fertiliser consumption in terms of 100 grams per hectare of arable land in Pakistan has shown an increase of 41 percent from 1990-92 to 2003-05, World Bank report revealed. Fertiliser consumption in India, during the same period, has shown an increase of 34 percent from 1990-92 to 2003-05 while Bangladesh has increased its use by 46 percent during the same period.

China has shown relatively slow progress with witnessing only 28 percent increase. According to the report, irrigated land in Pakistan has increased to 84.2 percent in 2003-05 from 78.5 percent in 1990-92 indicating an increase of 5.7 percent. From 1990-92 to 2003-05, irrigated land in Bangladesh increased by 38 percent of the crop area; during the same period China irrigated land showed a downward trend showing 4 percent reduction; while India witnessed 4.4 percent increase in irrigated land.

Irrigated agriculture is the major user of both, surface and groundwater resources in Pakistan. About 77.4 percent of the total irrigated area of Pakistan fall in Punjab, 2.8 percent in NWFP and 19.8 percent in Sindh/Balochistan.

The report indicates that the total agricultural land in Pakistan has increased to 35.2 in 2003-05 from 33.7 percent in 1990-92, showing an increase of 1.5 percent. While India and Bangladesh have shown a decrease 0.3 percent and 6 percent respectively in agricultural land during the same period. China has witnessed 2 percent increase in total agricultural land as compared to 1990-92.

Agricultural employment in Pakistan has decreased from 48.9 percent in 1990-92 to 42.7 percent in 2003-05, showing a reduction of 6.2 percent, the report said. Same is the case with Bangladesh where the agricultural employment has reduced to 21 percent during the same period. The report does not provide any data regarding agricultural employment in India and China.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Domestic debt surges to Rs520 billion ​* 
Wednesday, July 23, 2008

KARACHI: Total domestic debt of the country surged to Rs520.111 billion till May 2008, which was recorded at Rs300.112 billion in the corresponding period of fiscal year 2006-07.

Upsurge in domestic debt is a very negative sign for economy which is crippling due to huge outstanding amount of international lending agencies, said Dr Usman, head of economics department at a local university.

Foreign debt of the country has reached $45 billion mark, which leaves very narrow space for economic managers to allocate enough amounts for development of social sector besides health and education, he said.

Major allocation of fiscal budget is spent on debt servicing which was borrowed by successive governments.

From June-May 2007-08, the permanent debt including medium and long-term debt which was acquired through Pakistan Investment Bonds (PIBs) and prize bonds swelled to Rs54.030 billion compared to Rs41.804 billion in the same period of FY07.

Moreover, latest statistics of State Bank of Pakistan (SBP) revealed that countrys outstanding debt obtained by successive governments through auction of Pakistan Investment Bonds (PIBs) augmented to Rs57.467 billion compared to Rs39.298 billion of FY07 while the government acquired Rs8.509 billion through auction of prize bonds which was recorded at Rs6.770 billion in the corresponding period of previous fiscal year.

The break up shows that government borrowed highest amount in the form of floating debt which consists of short term borrowings in the form of treasury bills (T-bills). Till May 2008 the total amount of outstanding floating debt grew to Rs397.568 billion which was witnessed Rs208.901 billion in the matching period of fiscal year 2006-07.

However, under the head of unfunded debt which refers mostly to outstanding balances of various National Saving Schemes (NSS) also enhanced to Rs68.513 billion compared Rs49.407 billion in the same period of FY07. During last fiscal year 2007-08 the unfunded debt witnessed a massive growth through Special Saving Certificates (SSC) which expanded to Rs13.671 billion till May 2008 against Rs6.201 billion in corresponding period of pervious fiscal year. Government borrowed Rs38.523 billion through Bahbood Savings Certificates in above mentioned period as compared to Rs44.918 billion in this head during similar period of FY07.

Government borrowing through Special Saving Accounts declined to Rs4.157 billion which Rs5.202 billion on May 2007. government made use of Rs18.578 billion obtained through Pensioners Benefit Accounts against Rs10.860 billion of pervious fiscal year.

Domestic debt surges to Rs520 billion


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## Neo

*Fund worth Rs20bn launched to bail out stock market ​* 
Wednesday, July 23, 2008

KARACHI: Finance Minister Syed Naveed Qamar has announced to borrow zero rupees from the central bank during fiscal year 2009 and hoped that it would help the SBP keep its monetary policy stable instead of tightening it furthermore.

He stated this at a press briefing while visiting Karachi Stock Exchange (KSE) on Tuesday where he also announced to formally launch Equity Market Opportunity Fund (EMOF) worth Rs20 billion within this week. This fund would be injected in equity market in gloomy days. Razi-ur-Rehamn, SECP-Chairman and Adnan Afridi, KSE-MD flanked minister at briefing.

He said that when PPP-coalition took over government in March, the budget deficit was standing historically high at 9.5 per cent, but they reduced it to seven per cent and committed to slash it further to 4.7 per cent in running fiscal year.

For this purpose, government was gradually pulling back subsidies on POL products and also cutting down other unnecessary expenditures on government hands, minister added.

Our decision not to borrow from the central bank would help us controlling inflation and make the SBP monetary policy stable, he added.

Qamar further said that his government would go for utilizing other channels than the central bank for meeting the budgetary demand. If government has to borrow from SBP in this regard the size of borrowing would be nominal or within the legal limits, he added. 

Responding to query, he said that the initial size of EMOF would be Rs20 billion that may be enhanced in future. Earlier, the market regulators were talking to initiate this fund with at least Rs50 billion funds.

It is supposed to be a market support fund that would be injected in market in bad days. The money in this fund would be pooled in by government and semi government and other institutions and would be invested in KSE 100-Index and CFS MK-II eligible scrips only. National Investment Trust (NIT) would manage this fund, it was learnt.

Further details and modalities regarding EMOF would be announced in a day or two by the regulators.

Minister, who also holds Privatisation Portfolio, said that privatisation programme of his government was ready for current fiscal year, but waiting for cabinet approval so that it could be made public.

Qamar said that Saudi Arabia has finally agreed to provide oil on defer payments to Pakistan and it will unveil details in this regard very soon.

On the other hand, USA has announced to give $7.5 billion non-military aid to Pakistan over a period of fiver years.

We are using our foreign offices to make our economy improve. The availability of Saudi oil on deferred payments and USA aid would help government to fix its economy and set it on right direction, he opined. Responding to a query regarding conducting inquiry in current equity market crisis, he said that none of the ministries were responsible for that and this question should be asked to market regulators. 

We are also waiting for stability in market so that we could launch bonds through capital markets and could use them for borrowing purposes, he responded.

He asked regulators to introduce those procedures which could remove the element of manipulation and bring transparency in equity markets.

Fund worth Rs20bn launched to bail out stock market


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## Neo

*KSE up 410 points as investors garner confidence ​* 
Wednesday, July 23, 2008

KARACHI: Governments move to build confidence of the equity investors proved healthy for market, as Karachi bourse benchmark KSE 100-share Index reverted to well above 10,500 points mark on Tuesday.

The KSE 100 posted a significant increase of 410.51 points or almost four per cent to 10,784.81 points. The closing level of the session was just 10.22 points lower than the intra-day high of 10,795.03 points.

Market managed to keep going higher throughout the session. Investors accumulated stocks on strength. Energy, telecom, fertilizer, cement and the banking stocks led the rally.

Briefing by Governor-SBP to KSE-member that financial accounts of banks continue to soar and they were allowed to invest in stock markets changed negative perceptions about banks to positive, said analysts.

More than 40 leading stocks closed at their upper limit of five per cent or Re1- whichever is higher one from previous closing value. On the other hand, five scrips hit their lower lock as well.

Analysts said that market participants were expecting some positive and market-friendly news ahead of Finance Minister Syed Naveed Qamar visit to Karachi Stock Exchange (KSE) on Tuesday.

A day earlier, Governor State Bank, Dr. Shamshad Akhter also visited KSE and met the members and board of directors.

The meeting of Naveed Qamar and Dr. Akhter with KSE members and likely announcement of the size of Equity Market Opportunity Fund in rupees boosted confidence among the investors community, they added.

Market pundits were of the view that market was standing at very much attractive levels and whosoever having hard cash can run away with great financial benefits at current levels.

Investors were not short of money while the full-launch of Continuous Funding System Market-II (CFS MK-II) also ensured to provide unlimited money in the market. But investors had lost their confidence in market that has begun restoring following visits of Dr. Akhter and Naveed Qamar.

The positive thing of the day session was notable increase in market turnover that surged to 135.254 million shares in ready market. This is 44 per cent higher as compared to 93.853 million shares of a day earlier.

Accordingly, the overall market capitalisation massively surged by Rs122 billion to Rs3.366 trillion.

The future market turnover, however, marginally fell down to 15.354 million shares from 18.445 million shares in previous session.

The parallel running junior 30-Index soared by 537.29 points or 4.65 per cent to 12,096.87 points.

Oil and Gas Development Company, Pakistan State Oil, Pak Oilfields, Pak Petroleum, MCB Bank, National Bank, Habib Bank, United Bank, Pakistan Telecommunication Company, and JS Siddiqui Co. were a few notable gainers, which contributed their points in positive and in double digit in 100-Index. Each of them included their points in range of 10 points to 89 points.

The plus sing overpowered the minus one after quite a long time, as 227 companiesí stocks advanced against 67 scrips fell in red. The value of 12 scrips closed pegged at pre-opening levels with total 306 active counters on board.

Highest volumes were witnessed in NIB Bank at 11.821 million closing at Rs10.48 with a gain of Re1, followed by Bank of Punjab at 7.169 million closing at Rs22.50 with a loss of 54 paisa, Arif Habib Securities at 6.446 million closing at Rs136.71 with a gain of Rs6.51, Oil and Gas Development company at 4.694 million closing at Rs119.39 with a gain of Rs5.68 and MCB Bank at 4.008 million closing at Rs232.50 with a gain of Rs11.07.

KSE up 410 points as investors garner confidence


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## Neo

*Japan offers to install 500MW power plants ​* 
Thursday, July 24, 2008

ISLAMABAD: Japanese government on Wednesday offered Pakistan installation of two 500-megawatt power plants and showed interest in increasing investment in the automobile industry, while Islamabad assured Tokyo of establishment of Special Economic Zone (SEZ) for Japanese investors on priority basis, which would be equipped with basic infrastructure. 

Federal Minister for Finance, Privatisation & Investment Syed Naveed Qamar assured this in a meeting with a visiting 15-member Pak-Japan Business Forum delegation led by Makoto Kakebayashi held here on Wednesday. 

Qamar said in order to curtail the smuggling of diesel to the neighboring countries, the subsidies on certain petroleum products would be reduced gradually. 

Pakistani workers remittances have gone up to $6.5 billion as compared to the previous years figure of $5.5 billion, he informed. The minister also directed the Board of Investment (BOI) to work together with the Pak-Japan Business Forum in knuckling down to study to find out the impediments being faced by the investors in general and the Japanese investors, in particular. A workable report should also be prepared in the light of this study suggesting remedial measures to remove all sort of hindrances and bottlenecks and all-out efforts should be made to encourage the Japanese business sector to enhance operations and investment in the country, he added. 

Giving an overview of the countrys economy Syed Naveed Qamar said the pressure on current account was due to oil and food imports, which was being curtailed through effective measures. 

Efforts were underway to improve environment for the private sector and a list of the public sector entities being offered through strategic sales, out right sale for privatisation would be made public within next ten days, while inflows of FDI have been good, which reflected the governments facilitatedportfolio, based on investment planning and especially the tremendous interest by the investors in the power projects in consideration of existing power shortage in the country was encouraging, he stated. 

Kakebayashi expressed that the Japanese business and investment groups and the government were keen to modernize the basic infrastructure in Pakistan through Official Development Assistance (ODA) in health, education, water and communication sectors and projects of Khanki Barrage and Karachi circular railway were already under way. 

A report of the forum, joint study group, would be submitted to the government by the end of the year, he said. The Japanese study group comprises important heads of Japanese companies that focus on investment, business opportunities and bilateral trade between both the sides. 

The group aims to prepare a study report on scope, extent, problems and prospects of Japanese investment in the country. 

Japan offers to install 500MW power plants


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## Neo

*Punjab aims to enhance meat exports ​* 
Thursday, July 24, 2008

LAHORE: The Punjab government, realising the potential of livestock to narrow down trade deficit, has planned to boost processed meat exports to $200 million in the current fiscal year compared to $34 million last year.

The News has learnt that the Punjab government is hopeful that exports of processed livestock products would pick up substantially to reach $1 billion in the next fiscal as a result of facilitation the Punjab Livestock Department is providing both to farmers and exporters.

Sources say though export is a federal subject, Punjab rulers have decided to utilise their goodwill for getting a UAE ban on meat export lifted as most of the export industries are based in the province. Moreover, they add the ban by the UAE government is likely to trigger similar bans from other Muslim countries of the Middle East that account for 90 per cent of total meat and beef exports from Pakistan. The UAE alone accounts for 20 per cent of total meat exports from Pakistan.

The News has learnt that Punjab chief minister has arranged market access to meat markets of the UAE, which had been prohibited since June 2007. It was found that the main reason for the ban was non-compliance by slaughter houses with global standards dictated by HCCP certification.

The exporters were facilitated in making their slaughter houses fully compliant with international standards after which inspectors from the Municipality of Dubai examined four slaughter houses based in Lahore.

The inspectors after a thorough check declared three of them fully compliant with best global standards and on their report the general secretary of Dubai municipality lifted the ban. It has allowed two of them to export both mutton and beef to Dubai while one has been granted permission to export mutton only. The fourth exporter has been declared non-compliant.

Meat exports from Pakistan to the UAE had been increasing at a rapid pace during recent years. Exports increased from $1.25 million in 2003 to $3.41 million in 2006. The ban imposed in 2007 put a brake on the fast growing market where predominant Muslim population feels more comfortable with consuming Halal meat from Pakistan.

Beef exports to the UAE increased from mere $283,000 to $2.38 million in 2006. Exports rose three times from $0.80 million in 2005 to $2.36 million in 2006. The exporters had expected the volume to increase to over $10 million in 2007 when the ban was imposed.

Mutton and beef exporters told The News that the ban by the UAE also slowed down orders from other Middle Eastern countries. They said after the ban they realised that deviating from international standards could land them in trouble. Now even the minutest directives stated in HCCP certification are being followed, an exporter said.

The ban was imposed when UAE inspectors paid a surprise visit to exporters slaughter houses and found minor deviation from standard procedures, they claimed.

The Punjab government also facilitated a leading poultry breeder to obtain an order of $7 million for export of grand parent stocks to Saudi Arabia after the three-month ban on Pakistan due to bird flu scare was lifted in June this year.

The Punjab government is implementing globally accepted standards to maintain a minimum distance between two poultry farms in order to check the spread of any disease from one farm to another.

Punjab aims to enhance meat exports


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## Neo

* Panama offers investment opportunities to Pakistanis ​* 
Thursday, July 24, 2008

KARACHI: A two-member Panamanian delegation, which arrived in Pakistan this week, is trying to woo Pakistani businessmen to invest in the South American country. The delegation offers opportunities in the real estate sector and invites businessmen and investors to invest in their country to establish trade ties with them.

Adviser Government Affairs, Alejandro Moreno V and Advisor Real Estate Promotion, Government of Panama Rafael Sabonge V, talking to The News, said that they have travelled to Pakistan to understand the market and assess investment opportunities that are likely to benefit both countries.

This is more like an orientation trip from which we hope to learn about the customs and people of the country, while at the same time explore to assess what options are available and what would work out best for us, shared Moreno.

He said that they are staying in Karachi for a week during which period, the two diplomats would meet prospective investors and enlighten them on Panamanian business opportunities and the incentives offered alongside to facilitate them.

Interestingly, despite 60 years of Pakistans existence and even more so of Panama, there has never been any direct trade relations between the two nations and therefore the Latin American country is now looking forward to establishing direct trade routes for local goods such as textiles, marbles, surgical goods and certain eatables amongst others.

Panama has changed its immigration laws completely since February 2008 and has brought about several positive changes in it, informed Moreno. Prospective businessmen from nations such as Pakistan would initially have to find a sponsor for them, he added.

The advisor to government affairs continued that once a sponsor is available, then the applicant would have to prove with the help of supporting documents that he is going to invest into a business in Panama. 

Once the Panamanian immigration officials are satisfied that all the documents are complete and authentic the visa would be granted.

The Pakistani businessmen after acquiring Panamanian visa may start performing their trade, he further stated.

The two visiting diplomats also informed that the government offers certain incentives to persons ready to invest in their country. They commented that their local government offers tax exemptions on land, equipments etc. 

Citing an example, Moreno further added that immigration incentives include the benefit that if a certain investor is setting up a restaurant, he has the advantage of employing his hometown workers with no visa arrangement hassles.

However, Moreno was also quick to add that the Panamanian government keeps a regular check to ensure that the established business or investment is legal and running and its not a ghost organization on papers alone.

Rafael Sabonge informed that apart from tourism, real estate is the most lucrative sector in Panama where there are two types of investments. The first type is where people purchase personal homes as a summer house for the vacations where they come only in summers to enjoy the good weather, and the second is the commercial real estate market.

He explained that real estate opportunities include investments for renting purposes, for residential and commercial development, for tourism and logistics developments, revaluation amongst others.

Sabonge further elucidated that Panama is the largest growing economy in Latin America with a record 11.5 percent GDP growth in 2007 and with an unemployment rate as low as 4 percent, signifying that they are in need of foreign investors and workers to work along with them.

Panama has a stable political economy, low taxes and direct flights to and from 30 countries around the world apart from a favourable corporate structure and a small but established Pakistani community, he concluded.

Panama offers investment opportunities to Pakistanis


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## Neo

*Indonesia to boost bilateral trade ​* 
Thursday, July 24, 2008

KARACHI: Consul General of Indonesia Mustaqeem visited the Pakistan Commodities Importers and Traders Association (PCITA) to explore means to boost bilateral trade between Indonesia and Pakistan.

In his welcome address, PCITA Chairman Raees Tar Muhammad laid emphasis on a preferential trade agreement between the two brotherly countries to attract lost business from those countries which are already under the FTA of Malaysia, India and Sri Lanka.

He stressed particularly items such as spices, tea, palm oil and other agricultural products which form the biggest import from Indonesia. Muhammad gave a proposal to form Pakistan-Indonesia Business Council which will be a big tool for the facilitation of entrepreneurs of both countries and to assess business delegations.

In his reply, Mustaqeem appreciated the role played by the PCITA in getting the stuck-up cargo of betel nuts of Indonesian origin last year released which in turn opened the closed channels of betel nuts to the country. He agreed in principle for speedy visa for members of the PCITA on its recommendation.

Indonesia to boost bilateral trade


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## Neo

*Engro to post 54pc growth in profit​*
KARACHI, July 23: Engro Pakistan Limited is expected to post 54 per cent growth in after-tax profit at Rs1.712 billion, translating into earning per share (eps) at Rs8.32, the average of projected potential results for the first half of the year ended June 30, by four stock brokerage firms, AKD Securities, Arif Habib Limited, Capital One Equities and First Capital revealed.

The company would unveil the financial results following the meeting of the board at 5:30pm on Thursday.

The market is anxiously looking forward to the results of first major liquid company, following the depressing period between April and July. Overall corporate results this season are expected to show a robust growth.

Analysts at Capital One issued the most positive results preview for Engro of an eps of Rs9.17, up 61pc over the corresponding six months of the previous year. AHL visualised eps at Rs8.56 up 56pc; analysts at AKD offered eps at Rs7.77 with First Capital showing an equal eps at Rs7.79, representing growth of 50pc over the previous same period.

Interestingly, all brokerages were expecting the company to disburse first interim cash dividend in the range of Rs2 and Rs2.50.

Analysts said that the growth in bottom line was likely to be a result of higher urea off take, improved gross margins on urea volumes and decent dividend receipts from subsidiaries.

During the half year under review, urea and DAP prices had averaged to an all time at Rs614 per bag and Rs2,800 per bag respectively, analysts noted.

HBL and UBL would declare financial results on Friday, which would give an interesting insight into the performance of the banking sector.

Engro to post 54pc growth in profit -DAWN - Business; July 24, 2008


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## Neo

*Barclays Bank commences operation in Pakistan​*
KARACHI: Barclays Bank Plc., a prominent bank of the United Kingdom, has become a scheduled bank in Pakistan from July 23 by opening its four branches, said Shazi Ashraf, head of corporate affairs of the Bank.

The Bank has commenced its two-branches in Karachi, one in Lahore and one in Islamabad from Wednesday (July 23) and the people are joining bank by opening their accounts, she said. These branches are absolutely new and we have hired staff in every section of the bank, she said. Ms Shazi said, the bank is neither interested to acquire any Pakistani bank till now nor it is negotiating for any merger.

Barclays Bank Plc entered into Pakistan with an initial investment of $100 million aiming to open ten branches throughout the country. It has commenced four branches in Pakistan while other six branches would be started by the end of this year.

Through a notification, the State Bank of Pakistan (SBP) has declared Barclays Bank Plc. as a scheduled Bank with effect from July 23, 2008. Barclays Bank Plc, is the second largest global bank by assets size with regulatory capital of $68.138 billion and is a subsidiary company of Barclays Plc. Barclays Plc is listed in London, New York and Tokyo stock exchanges. Barclays Bank is a major global financial service provider engaged in retail and commercial banking, credit cards, investment banking, wealth management and investment management services. The bank operates in over 50 countries employing 123,000 people and has customer/client base of over 27 million. Barclays Bank and its companies operate 3,913 branches in over 50 countries.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Govt plans to utilise 6.30 million hectare salinity affected areas​*
** Project would be initially implemented in 11 selected districts​*
ISLAMABAD: The federal government has planned to initiate a project worth Rs 826 million for proper utilisation of about 6.30 million hectares salinity affected area for semi-agri business across the country, officials in the Ministry of Food, Agriculture and Livestock (MINFAL) told Daily times here Wednesday.

Life duration of this project would be 5 years and initially it would be implemented in 11 selected districts throughout the country where the land was of no use to the farmers.

These districts include in Punjab, Faisalabad, Lodhran, Bahawalnagar, Rahim Yar Khan, in Sindh, Thatha, Badin, Larkana, Sanghar, Tharparkar, in Balochistan Jafferabad and in NWFP Lucky Marwat. We are investing Rs 826 million on the project and are hopeful that the return would be Rs 8.5 billion, the officials maintained.

The plants that would be grown on this land would provide wood and animal fodder and MINFAL would help the growers in building up nurseries of these plants.

According to the available data, in Pakistan 1.89 million hectare was saline-affected area, 1.85 million hectare was permeable saline-sodic, 1.02 million hectare was impermeable saline-sodic and 0.028 million hectare was sodic in nature. It was estimated that out of 1.89 million hectares saline patches, 0.45 million hectares presented in Punjab, 0.94 million hectares in Sindh and 0.5 million hectares in NWFP.

The project is divided in two phases; in the first phase Atomic Energy Commission did research work in this regard for 5 years with the total cost of Rs 176 million sponsored by the food ministry, they explained. The officials informed, during our research work, we have made 25,000 acres salinity affected land already cultivable.

We have started working on the second phase of the project as we have already initiated work in Lodhran and Faisalabad with Rs 50 million, they added.

The location of Pakistan is in arid and semi-arid climatic zones. Generally high evapo-transpiration in semi-arid and arid zones is the basic cause for salt accumulation on the soil surface, the officials added. The average summer temperature is about 40OC and the minimum winter temperature remains between 2OC to 5OC. The annual rainfall varies between 100mm to 700mm throughout the country. The evaporation rate was generally very high and exceeded that of precipitation. Thus, the insufficient rainfall followed by high evaporative demand and shallow ground water depth, enhances the movement of salts towards soil surface.

Salinity is an important problem affecting irrigated agriculture of Pakistan. Improper irrigation practices and lack of drainage have generally led to accumulation of salts in the soil in concentrations, which were harmful to the crops, they added. There was a major imbalance in the amount of salt entering and leaving the soil in the country. Each year about 120 million tonnes of salts were added to the land in canal water and brackish under ground water. Only about 20 percent of this salt finds its ways to the sea. The remainder accumulates in the soil, which continued to decrease the growth and survival of crops.

Most saline soils need chemical amendments to restore their productivity. Many suitable amendments are available, gypsum, sulphur and sulphuric acid is the most common, but application of acid needs special care due to its corrosive action.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Japanese team shows interest in water, power sectors​*
ISLAMABAD: Japanese investors delegation Wednesday showed keen interest in making millions of dollars investment in water and power sectors in Pakistan. A 17-member delegation of Japanese investment companies under Pakistan-Japan Business Forum in a meeting with the federal minister for Water and Power, Raja Pervez Ashraf discussed the investment opportunities. It also assured technical and financial assistance in this regard to meet the future electricity demand and water requirements for irrigation. The ambassador of Japan to Pakistan, Seiji Kojima discussed bilateral relations and investment opportunity in the power sector and assured full support of government of Japan in the fulfillment of development agenda, particularly in the power sector. The minister said Pakistan was facing great challenges especially in power sector and foreign investment in the coal and hydel power generation would help to meet the countrys future requirements.

Daily Times - Leading News Resource of Pakistan


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## Neo

*$13.2 million rise in 2007-08 FDI​*
KARACHI (July 24 2008): Foreign direct investment (FDI) increased by a paltry 0.3 percent during last fiscal year (2007-08). As per State Bank of Pakistan statement, FDI stood at $5.153 billion at the end of fiscal year 2007-08 against $5.140 billion of 2006-07, depicting an increase of $13.2 million.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Rs 300 million to be spent on mines, minerals sector: minister​*
LAHORE (July 24 2008): Senior Punjab Minister Raja Riaz Ahmed has said that the government will spend Rs 300 million on the promotion of mines and minerals in the province. Addressing a workshop held at a local hotel on Wednesday, he said that Rs 216 million of the allocation is being spent on 13 ongoing schemes while Rs 83 million will be spent on seven new mining projects.

Funds amounting Rs 18 million have been allocated to explore coal reservoirs in the Kallar Kahar areas, with Rs 32 million marked for coal exploration at Khushab. He said work has also been initiated on the repair and maintenance of roads in the mining areas.

Funds amounting to Rs 50 million are being spent on electrification in these areas of Khushab, he said. Raja Riaz said that the 8km long Silanwali-Sargodha link road is being executed at a cost of Rs 69.76 million, while Rs 34 million has already been spent on the scheme.

The government is taking effective measures to provide health care facilities to mine workers, while their children are also being provided education with the collaboration of mine owners, the minister added. Representatives of mine owners and NGOs also addressed the function and presented various proposals for the development of the mines and minerals sector.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*IT industry size stands at $2 billion: President PASHA​*
KARACHI (July 23 2008): The size of Pakistan's Information Technology & IT-enabled Services industry stands at two billion dollar annually with a 50 per cent growth rate. IT Exports stand at one billion dollar according to a Research Study commissioned by Pakistan Software Houses Association (PASHA)

This was stated by Jehan Ara, President PASHA, while talking to the Media during a one-day Career Expo for IT students and professionals organised by PASHA in a local hotel. However, she said that, Pakistan Software Export Board (PSEB) claimed a higher figure with 2.8 billion dollar industry size and 1.8 billion-dollar exports.

IT professionals and students learnt about the different career tracks in various segments of the ICT sector, participated in Interactive workshops, listened to company presentations and attended Career counselling sessions.

President PASHA said that PASHA is creating a career experience for the young people so that they are more knowledgeable about the kind of challenging careers and remuneration that is available to them across the spectrum of ICT and are also aware of the growth and maturity of the sector they are either joining or are already a part of. Jehan Ara said that Pakistan produces approximately 20,000 IT graduates annually, who need proper guidance in order to explore their true potential. Currently over 110,000 IT professionals are working in IT sector and there is a lot more potential for quality IT HR.

The IT industry needs people with different skill sets - in addition to Computer Science graduates, they also require business analysts, domain specialists, project managers, senior management, marketing professionals, call centre professionals, animations, Interface Designers amongst others.-PR

Business Recorder [Pakistan's First Financial Daily]


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## ejaz007

*OGDC discovers oil and gas well in Sindh*

KARACHI: Pakistans largest oil and gas exploration company, Oil an & Gas Development Company limited (OGDCL) has discovered gas/ condensate in its Exploratory well Kunnar South 01, located in district Tando Allah Yar, Sindh. 

Kunnar South well number 01 structure was delineated in Tando Allah Yar E.L. license area, which is a joint venture between OGDCL (Operator) and GHPL having 95 percent and 5 percent working interests, respectively. 

According to the companys website, the well was drilled and tested using OGDCL in-house expertise to the target depth of 3,355 meters in the targeted energy rich area upon which 03 zones were selected for testing based on drilled and log data.

The reports said the product ion testing of Zone-1 (Massive-Sands) of lower Goru Sand started on July 21, 2008, which proved productive. As per initial results the quantity of Gas is 11 (MMSCFD) and quantity of Condensate 200 barrels per day whereas the specification of the Gas is 2125 WHFP (PSI). staff report

Daily Times - Leading News Resource of Pakistan


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## ejaz007

*IT industry job growth rate rises to 41 percent*
By Muhammad Yasir 

KARACHI: Pakistans employment growth rate in Information and Technology (IT) and its related sectors has increased by 41 percent in 2007-08 from 27 percent in 2006-07, a study commissioned by Pakistan Software Houses Association (P@SHA) reported.

According to the study entitled Annual Review of Pakistan Software/BPO Industry 2007, the number of full-time IT professionals has risen to12,232 by the end of 2007 as compared to the 4,619 employees registered in 2004.

P@SHA commisioned a study in the last quarter of 2007 which would serve as a State of the Industry Report for the Pakistan IT & ITES sector. The Consultants for this study, which was carried out over a 4-month period, were Technomics International - a UK based consulting firm.

The average employee per companies has increased to 214 in 2007 as against 81 in 2004. On the other hand, the average length of professional employment has risen to 2.9 years from 2.6 years during the period under review. 

The study said the number of IT Quality Assurance (QA) Professionals have doubled in the last three years with 20 percent foreign qualified professionals employed in the sector. 

105 national and multinational software companies participated in the report. P@SHAs current membership exceeds to 370 software houses from its beginning four companies in 1994, it said. 

President P@SHA, Jahan Ara, said the industry still has job opportunities in various related fields of IT industry despite its constant growth in employment rate. 

She recommended the government should finance to prepare a refresher diploma courses that aims at grooming unemployed IT graduates to enter in this professionals, adding, the industry has capability to accommodate a large number of unemployed people. 

She mentioned that scores of IT graduates and diploma holders are required to obtain advance studies in order to update their professional skills with respect to latest modules of the industry.

The study forecast the industry will exceed the $11 billion US mark within next 5 years keeping the same growth rate in this period. 

The study mentioned that most technology companies are growing in excess of 30 percent a year annually and the industry as a whole is doing over $2 billion a year in revenue, up from less than a billion dollars a few years ago.

About half of this growth is coming from foreign software and high end services projects. IBM, Cisco and Microsoft are expanding Pakistan operations aggressively while several startups are now backed by venture capitals such as ePlanet, Ventures, Motorola, Adobe and Innovacom1.

The Pakistan IT and ITES industry has started to appear on the radar of firms like Gartner and IDC and in reports by AT Kearny and the World Bank. It is a transformed industry growing exponentially and creating a stir, it also mentioned.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Rice output expected to be over 6m tonnes ​* 
Friday, July 25, 2008

ISLAMABAD: Pakistans rice output should rise at least 10 per cent to over 6 million tonnes in the 2008/09 fiscal year on a larger planted area, officials and growers said on Thursday, and exports could top 4 million tonnes.

A large rice harvest would add to the picture of growing supplies that has seen Asian benchmark prices come off 30 per cent from a record high reached in March.

Pakistan, the world fifth-largest rice exporter, produced 5.5 million tonnes of rice in the year to June and exported 3.33 million tonnes.

Fresh grain will start flowing to the market in late August, according to rice traders.

There is nearly a 10 per cent increase in the cultivation area and the production is likely between 6.2-6.4 million tonnes, said Ibrahim Mughal, chairman of the Agri-Forum, a farmers association.

Several farmers switched over to rice from cotton because of rising prices for the grain both in domestic as well as international markets. The government has set a production target of 5.7 million tonnes for the 2008/09 year, but Food Ministry officials were also hoping output will top 6 million tonnes. The rice crop was targeted to be grown in an area of 2.5 million hectares (6.177 million acres).

Rice exporters however expected a harvest of around 7 million tonnes from the new crop, thanks to early rains and farmers using better inputs to enhance yield. With this kind of output, we will be touching 5 million tonnes in rice exports in this financial year, said Azhar Akhtar, chairman of the private Rice Exporters Association of Pakistan, which handles the bulk of the countrys rice exports.

Pakistans eight-month-long rice season runs from April to November. Final estimates of the crop could be made in late December.

Rice accounts for about 8 per cent of Pakistani exports and 1.2 per cent of gross domestic product.

Annual domestic consumption of rice is about 2.3 million tonnes.

Domestic prices doubled this year despite a good crop, as exporters took advantage of a tight global market. Pakistan exported 3.33 million tonnes of rice in 2007/08, from 3.12 million tonnes the year before, with the value of exports up 61.53 per cent at $1.18 billion, according to official data.

Exports of basmati increased by over 40pc to 1.28m tonnes, while other varieties declined by 7pc to 2.06m tonnes.

Rice output expected to be over 6m tonnes


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## Neo

*WB to lend $5.5m for water reservoirs cell ​* 
Friday, July 25, 2008

ISLAMABAD: On the special directives of PPP Co-Chairman Asif Ali Zardari, the federal government has appointed PPPs former MNA Ghulam Murtaza Satti as head of Infrastructure Project Development Facility (IPDF).

Ijaz Ahmed Khan, CEO of IPDF would continue to perform on his existing slot and the new political appointment will also look after the affairs of IPDF.

Meanwhile, Ghulam Murtaza Satti was given a detailed briefing by senior officials of the IPDF about its significant role in public-private partnership projects and financial models of PPP projects in terms of their profitability, durability, reliability and legal aspects.

The briefing was given by officials including Senior Advisers Projects Ali Rehman and Arslan Salahuddin Wardag, Senior Adviser Legal Ikram-ul-Haq and Manager Finance Muhammad Fahim Akhtar.

The IPDF head was informed that the World Bank would provide $5.5 million as technical assistance to establish a multi-purpose water reservoirs financing cell. This cell would devise an enabling framework for the development of hydropower projects with private sectors participation.

This framework would pave the way for enhanced participation of the private sector in financing large proposed hydroelectric projects involving electricity generation from 3,000 to 6,000 MW.

He was also apprised that under the PPP modality the Ministry of Tourism would construct two tourism complexes each, in the federal capital and Sindh. Meanwhile, the IPDF head accompanied by Advisor Projects Qaiser Javed held a detailed meeting with Managing Director, Pakistan Tourism Development Corporation Brig (Retd) Emanullah and discussed various projects regarding the promotion of tourism in the country.

On the occasion, the PTDC MD disclosed that the Gorakh Hills in Sindh, which is a tourist place like Murree, would be named after Mohtarma Benazir Bhutto Shaheed.

WB to lend $5.5m for water reservoirs cell


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## Neo

*Rice exports rise to $1.82bn, sugar exports at $82.29m ​* 
Friday, July 25, 2008

ISLAMABAD: Pakistans textile exports fell by 2.1 per cent to $10.56 billion, while food items exports increased by 38.38 per cent to $2.79 billion and petroleum and coal exports increased by 40 per cent to $1.2 billion during fiscal year 2007-08.

Textile sector exports during the last fiscal year 2006-07, stood at $10.78 billion, food items at $2.02 billion and petroleum and coal exports were recorded at $859 million. During July-June 2007-08, gems, jewelry and furniture exports also showed a sizeable growth which have the potential to earn foreign exchange and help boost the volume of the economy.

According to the Federal Bureau of Statistics (FBS) figures, gems exports rose by 35.65 per cent to $7.46 million, jewelry by 38.2 per cent to $202.74 million and furniture by 6.38 per cent to $11.24 million as in the corresponding period, their exports were $5.50 million, $42 million and $10.56 million respectively.

According to the government planners assessments, northern Pakistan had enough amounts of gems and precious stones, that if exported, they could earn about $5 billion a year for the country. However, the mining, cutting and polishing techniques of the gems and precious stones, that could have made them more valuable, were not up to the international standard.

Jewelry exports also provided encouraging figures during the fiscal year under review, proving that there is immense potential in the sector. The lack of expertise, however, is a major constraint in its growth and development.

The textile sector exports are occupying a major share of about 55 per cent of the countrys total exports, which stood at $19.22 billion. During the period under review, total exports showed an increase of 13.23 per cent against $16.97 billion earned in July-June 2006-07.

A cursory look at the export data reveals that in the textile sector, a sizeable decline was registered in the exports of cotton yarn, cotton cloth, cotton carded or combed, yarn other than cotton yarn, bed wear, towels and readymade garments.

During the period under review, cotton cloth exports fell by 4.63 per cent to $1.93 billion against $2.03 billion the previous year, bed wear earned $1.89 billion against $1.99 billion the previous year, showing a decline of 5.43 per cent; yarn, other than cotton yarn, earned $49.16 million, which is 27 per cent less than the $67.39 million received in the corresponding period of the last fiscal. Cotton carded or combed revenues fell by 21.76 per cent to $12.32 million against $15.75 million in the last fiscal. Cotton yarn exports decreased by 9.37 per cent to $1.93 billion and readymade garments were down by 3.16 per cent to $1.498 billion during the period under review.

In contrast, knitwear earned $1.83 billion against $1.79 billion, depicting an increase of 1.82 per cent; art, silk and synthetic textile increased by 16.74 per cent to $489.98 million and made-up articles (excluding towels and bed wears) exports increased by 4.24 per cent to $536.11 million and raw cotton exports were up by 38.85 per cent to $69.73 million compared to what was earned in July-June 2006-07.

Food group also jacked up total exports, with the major contributors being rice, fruit, vegetables, meat, meat preparation, oil seeds, nuts and kernels.

Rice category, as a whole, posted about 61.53 per cent growth with an earning of $1.82 billion against $1.12 billion last year. Fruits earning was also up by 27.32 per cent to $144.67 million, meat and meat preparation by 20 per cent to $49.92 million, vegetables by 1.64 per cent to $55.44 million, oil seeds, nuts and kernels exports were up by 124 per cent to $39.71 million, spices by 11.2 per cent to $26.74 million, fish and fish preparations earned 12.71 per cent more during the fiscal year 2007-08 by earning $212.25 million foreign exchange. During the year under review, sugar worth $82.29 million was exported. Tobacco exports on the other hand, declined by 18.57 per cent to $7.31 million.

Other manufacturing group exports also increased to $3.75 billion during July-June 2007-08 as compared to $2.68 billion last year, showing an export growth of about 39.89 per cent.

Under this category, leather manufactures exports were up by 24 per cent to $687.48 million, chemical pharmaceutical products by 60.19 per cent to $627 million, leather tanned by 15.52 per cent to $412.3 million, sports goods by 4.23 per cent to $300.59 million, footwear by 8.21 per cent to $123.92 million, surgical goods and medical instruments earned $255.49 million against $190.79 million and posted a growth of about 33.92 per cent. Engineering goods exports also increased by 42.54 per cent to $338.50 million. While, handicraft exports fell by 30.63 per cent to $4.34 million and carpets, rugs and mats were down by 7.24 per cent to $216.44 million.

Rice exports rise to $1.82bn, sugar exports at $82.29m


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## Neo

* IT exports hit half a billion dollars ​* 
*It needs to be bankrolled for youth training​*
Friday, July 25, 2008

LAHORE: The government should focus on investments in information technology for training youth in order to ensure an IT Pakistan of Tomorrow as the country has a comparative demographic advantage compared to the rest of the world. 

Investment in IT will also be helpful in achieving a substantial increase in its export as this sector has less hurdles and no impact on the environment. 

This was revealed by NetSol Technologies Ltd Chairman & CEO Salim Ghauri while talking to The News in an interview in which he urged the government to focus on youth development. 

Ghauri was optimistic about the bright future of the countrys IT resources and said that IT export has reached half a billion dollar and the number of highly-skilled human resource is very impressive but it still needs the governments support to do more. 

He said the countrys 60 per cent population is almost under 25 years of age, which is an added advantage for this country to invest in them. Once the government realises this potential and is poised to invest in the technical training of youth, an IT revolution will start in the country, he said. 

Talking about the success of the company, he mentioned NetSol software LeaseSoft is being exported. He said LeaseSoft, a suite of end-to-end leasing and finance software solutions catering to the needs of retail and wholesale finance businesses, has touched the level of $20 million in a short span of time. We are foreseeing exports of LeaseSoft will hit $100 million in the next three years, he said. 

According to him, leading international business houses like Mercedes Benz, Yamaha Motors, Toyota Motors, Dongfeng Nissan, UMF, BMW and FIAT group in the Asia-Pacific region, besides a good number of leading brands in Europe and North America are successfully deploying LeaseSoft. 

Ghauri said the IT industry has already realised the potential and started putting infrastructure in place to have more and more human resource in the years to come. 

NetSol has recently come up with the concept of NetSol Technology Institute (NTI) and it has planned branching out all over the country to ensure short courses for the youth, he said, adding: We want to dispel the impression that IT belongs to the youth of elite class. 

The government can ensure a real economic revolution by providing IT training to youth on war footing basis on the one hand and automation of public sector organizations on the other, he expatiated. 

He was of the view that the majority of the countrys youth lives away from major cities, in rural areas, therefore, a strong network of IT training institutes was the only way of spreading IT education in the country. Ghauri said one quick way to come out of economic crisis is earliest start of automation of public sector that would double public sectors efficiency. 

He said the IT sector has registered 30 per cent growth in revenue in a very short period and this growth pattern can easily be doubled by simply reviewing the priority list. 

This growth in revenues has enabled the industry to hire high-skilled IT professionals and thus contributed to the national economy in a big way, he said, adding: More the trained human resource of the IT sector has, more the countrys economy will flourish and prosperity will sustain. The fundamentals of the sector are highly strong and recent appreciation in dollar value has boosted revenue of the sector. 

He said decline in the stock market is due to different reasons and it has nothing to do with the strong fundamentals of the sector. He said the IT sector stocks will shoot up once again the inflationary pressure on economy is away.

IT exports hit half a billion dollars


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## Neo

*US likely to grant non-stop flight rights to PIA​*
WASHINGTON, July 24: During Prime Minister Yousuf Raza Gilanis forthcoming visit to Washington, the United States and Pakistan will sign an agreement to grant non-stop flight rights to PIA, sources told Dawn.

The two countries are also expected to conclude an agreement on providing US food assistance to Pakistan to help it deal with the current food crisis, the sources said.

Pakistani lobbyists are also trying to persuade US senators to at least start formal hearing on a $15 billion aid package for Pakistan during the July 28-29 visit.

The agreement for flight rights will allow PIA to operate direct, non-stop flights to and from New York. Initially, PIA will operate one flight a week from New York to Lahore, but later it may be allowed to operate non-stop flights to Karachi as well.

In October 2002, PIA purchased eight Boeing 777 long- and extended-range aircraft after a period of 10 years of no new orders. The goal was to operate non-stop flights between Pakistani and North American cities with sizeable Pakistani populations.

PIA has already started non-stop flights from Toronto, but plans for similar flights to and from US cities could not materialise because the Department for Homeland Security refused to permit such flights.

Apparently, the Americans had no objection to direct flights from the US to Pakistan, but they refused to allow non-stop flights from Pakistan. They told Pakistani authorities that they believed Pakistan did not have adequate security arrangements at its airports to prevent terrorists from using such flights for their activities.

American officials insisted that flights originating from Pakistan must stop at an international airport for a thorough security check before proceeding to the United States.

The proposed agreement will remove this objection but before the flights begin Pakistan will have to update security arrangements at its airports.

Another agreement to be finalised during the prime ministers visit concerns Pakistans request last month for 500,000 tons of wheat from the United States to help them deal with the current food crisis. While the Americans have agreed in principle to help Pakistan, it is not yet clear how much wheat they are going to give.

It may range anywhere between 100,000 and 500,000 tons, said a source aware of the negotiations.

US likely to grant non-stop flight rights to PIA -DAWN - Top Stories; July 25, 2008


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## Neo

*Gas in Tando Allahyar​*
ISLAMABAD, July 24: The Oil and Gas Development Company Limited announced on Thursday discovery of hydrocarbon in Tando Allahyar district of Sindh.

The company said it had drilled the Kunnar South Well No-1 to a depth of 3,355 metres and selected three zones for testing.

Production testing at Zone-1 (Massive Sands) of Lower Goru Sand started on July 21. The well turned out to be productive.

Initial results showed the quantity of gas at 11 million standard cubic feet per day (MMSCFD) and condensate of 200 barrels per day. The gas flowed at a pressure of 2,125 PSI (pound per square inch).

The Kunnar South Well is located in the Tando Allahyar exploration licence area, which is a joint venture of OGDCL (95 per cent) and the Government Holdings Private Limited (five per cent).

Gas in Tando Allahyar -DAWN - Top Stories; July 25, 2008


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## Neo

*Trade policy called India-centric​*
ISLAMABAD, July 24: The Pakistan Muslim League (Q) on Thursday rejected the Trade Policy-2008-09 and announced that the opposition would take the business community into confidence to launch a countrywide strike as the policy was covertly aimed at granting India the status of a most favoured nation.

This trade policy is India-centric and a bid to appease the Indian government, while the PML thinks that all trade routes to India pass through Kashmir.

Talking to reporters at the Parliament House here, party MNAs Sheikh Waqas Akram and Marvi Memon said that the PML would not allow loot sale of its natural resources to Indian businessmen and all such bids would be resisted with the support of Pakistani business community.

The PML leaders claimed that the government had already awarded the contract of Thar coal project to Indias Reliance Group.

Sheikh Akram said: a conference will be held in America regarding Thar coal project during prime ministers visit while it has already been decided in Dubai to award this project to the Indian company.

The commerce minister has announced a policy which only encouraged imports from India while exports to that country have been ignored totally, the PML leaders said.

No country allows its adversary an open access to its natural resources, they said, adding India is active in efforts to destabilise Pakistan through its 13 consulates in Afghanistan.

He alleged that the government had unleashed a reign of terror against its own people by raising prices of petroleum products and other commodities.

The government of so-called well-wishers of the poor has raised petroleum prices from Rs57 per litre to Rs87 despite fall in oil prices in the international market from $147.5 per barrel to $125 per barrel, Sheikh Akram said.

He demanded an urgent session of parliament so that all such issues could be debated. He called the new set-up ineffective, dysfunctional and semi-exiled government.

Marvi Memon termed the trade policy ridiculous, saying that this would turn Pakistan into a dumping ground for Indian commodities.

She regretted that the policy should have economic targets, such as economic prosperity, employment, exports, better market access, and product diversification.

We demand that the government should immediately stop the violence of inflation against the nation as poorest of the poor are compelled to commit suicide, the PML leaders said.

Trade policy called India-centric -DAWN - Business; July 25, 2008


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## Neo

*KSE continues upward drive as index jumps 138.18 points​*
KARACHI: The Karachi stock market witnessed a firm trading session on Thursday as investors were active in the ring due to the result announcement session and the expectations that the Rs 20 billion fund would start investment in the market today (Friday), analysts said.

The Karachi Stock Exchange (KSE) 100-share index gained a substantial 138.18 points to close at 11,156.68 points as compared with 11,018.50 points of the previous session. The KSE 30-share index gained 199.74 points to close at 12,662.35 points.

Analysts said the KSE 100 index opened in the green zone with a positive 61.67 points and later touched 150 points but profit-taking halted the massive gain. Banking, cement and other individual index heavy weights came in for the rescue when the market witnessed profit-taking in oil and gas exploration stocks and the incoming float was digested at adjusted levels.

Rumours were that the window that is supposed to manage the grand fund that will be activated form Friday has already start shopping, they added. The market turnover declined 20.31 percent and traded 143.70 million shares as compared to 180.34 million shares of the previous session. The overall market capitalisation increased 1.19 percent to Rs 3.477 trillion as compared with previous sessions Rs 3.436 trillion. Out of 307 companies, 149 closed in the positive zone, 145 in negative, while 13 remained unchanged.

Husnain Asghar Ali, Analyst at Aziz Fida Hussein and Company said the bulls continued to dominate the market, as assurance offered by the Rs 20 billion seems to have energised the bulls. The official statistics reveal that foreign funds have been constant sellers with international oil prices on a declining trend offloading by the local as well as foreign counters led to wiping off of early gains of 150 points.

Aggressive buying towards the fag end supported accumulators (those who have been buying on dips throughout the session). Low turnover, however, continued to stay a point of concern as it depicts that only those who know the criteria of investment of the new fund are active or the market men. Ahsan Mehanti, Senior Analyst at Shahzad Chamdia Securities said the market was on a positive note due to improvement in SCRA balances to $113 million reflecting foreign interest in local market. Arif Habib Securities was the volume leader in the share market with 12.63 million shares as it closed at Rs 143.75 after opening at Rs 141.95 making a financial gain of Rs 1.80.

The futures market turnover went up to 32.87 million shares as compared to 30.11 million shares traded in the previous session. Forty-eight of the companies closed in the positive zone, 23 in negative while one remained unchanged. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*US wants to move two-thirds of aid to ageing F-16s​*
** $230m in US aid to be diverted from counter-terrorism funds
* NYT report says Pakistan needs jets for use against India​*
WASHINGTON: The United States said on Thursday it planned to divert $230 million in aid to Pakistan from counter-terrorism programmes to the upgrade of the countrys F-16 fighter jets.

The F-16s ... are used in counter-terrorism operations. We made them available to [Pakistan] and they need to be maintained, White House spokeswoman Dana Perino told reporters.

Modernisation of Pakistans fleet of ageing F-16s is estimated to cost around $891 million that was to be paid out of Pakistans national funds. Because of the current economic crunch, Islamabad had asked the Bush administration to divert $226 million from the overall military aid programme with Pakistan in finance year 2008 and $140 million in finance year 2009, making up the balance from its own resources.

The $226 million that Pakistan seeks will need to be diverted from the $297 million it is to receive from the Foreign Military Funds (FMF) and not from the Coalition Support Funds (CSF). The total F-16 package  from the days the first aircraft were acquired to the last ones Pakistan is purchasing  carries a cost of $3 billion.

The US has so far only allowed $108 million to be diverted out of the FMF and if the other two amounts that Pakistan seeks for 2008 and 2009 come through, the total amount divertible to the F-16 purchase account would come to $474 million.

Pakistans purchase of the jet fighter aircraft appeared to be going through smoothly so far. The Indian lobby on Capitol Hill may however have made its first move to muddy the waters for the F-16 deal.

Also on Thursday, the New York Times reported the Bush administrations plans to divert funds.

The angle of the report was that Pakistan should be denied this facility because it does not need F-16s to fight the insurgency in its tribal areas bordering Afghanistan. The newspaper linked the administrations request on Pakistans behalf as an attempt to make up for the death of 11 Pakistani soldiers killed in an American airstrike last month, considering the upcoming visit to Washington of Prime Minister Syed Yousuf Raza Gilani.

No need: The newspaper stresses that Pakistan does not need F-16s in the fight against insurgency, as it would amount to killing a fly with a sledgehammer. On the other hand, it needs them against India, and the request, therefore, should be denied by Congress.

The newspaper reports that in a two-page notification to Congress, the State Department said that upgrading the avionics, targeting and radar systems of Pakistans older F-16s would increase the survivability of the aircraft in a hostile environment and make the F-16s a more valuable counter-terrorism asset that operates safely during day and night operations.

The notification said the modernised systems would also increase the accuracy of the F-16s support of Pakistani ground troops, lessening the risks of civilian casualties.

In 2006, the newspaper notes, Pakistan was a major recipient of US arms sales, including the $1.4 billion purchase of up to 36 new F-16 C/D fighter aircraft and $640 million in missiles and bombs. The deal included a package for $891 million in upgrades for Pakistans older F-16s. At that time, the US agreed to use $108 million of its annual security aid to Pakistan to retrofit the older F-16s with equipment to make them comparable to the newer models that will be delivered in the next several years. But the administration promised Congress that the Pakistani government would pay for the rest of the upgrades with its own funds. With Pakistan now facing economic hardships, top Pakistani leaders appealed to senior State Department officials to help defray the costs of the ongoing upgrades. khalid hasan/afp

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan's foreign exchange reserves stand at $10.728 billion​*
KARACHI (July 25 2008): The country's total liquid foreign exchange reserves stand at 10.728 billion dollars, says a statement issued by State Bank of Pakistan here on Thursday. On 19th July 2008, the foreign exchange reserves held by SBP figured 7.777 billion dollars, whereas net reserves held by the banks other than SBP amounted to 2.950 billion dollars.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Construction activities in UAE: industry, exporters to benefit from raise in cement price​* 
KARACHI (July 25 2008): The United Arab Emirates (UAE) has recently raised the cement price by 15 percent due to its rising demand, mainly benefiting Pakistani cement industry, sources said on Thursday. Pakistan is the major cement exporter to the UAE, as it fulfils around 70 percent of the total demand of the product in the emirates.

After the rising cement prices in the face of huge demand in UAE, analysts see Pakistan as a primary beneficiary to flood the Arab markets with its product. It is likely to receive huge cement export orders shortly, they said.

With the current surge, the prices of cement have mounted to $98 a tonne, as was previously stood at $85 a tonne, depicting an increase of $13 a tonne. As a result, a 50-kg cement bag will be available at 19 dirham as compared to 17 dirham per bag previously, they added.

"We were expecting the UAE will re-fix the maximum cement price, as the product fell short in emirates markets at previous price of 17 dirham per bag," said a leading cement exporter. He said that UAE is facing a shortfall of some six to seven million tonnes, and its is expected to go up to eight million tonnes this year due to increased construction activities there.

During the last fiscal year, Pakistan exported over four million tonnes of cement to UAE at a FoB rate of $70 to 75 a tonne, an exporter said. "With, an increase of $13 per tonne, our export will ultimately increase and we are expecting a rise of $8 to10 per tonne in FoB price of cement," he said. According to him over two dozens Pakistani builders and construction companies are engaged in construction activities there preferring Pakistani cement.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*IT sector registers 30 percent growth in revenue​* 
LAHORE (July 25 2008): IT sector in Pakistan has registered 30 per cent growth in revenue in a very short span of time whereas the fundamentals of the sector are highly strong and the recent dollar's appreciation has significantly boosted the IT sector revenues.

While talking to Business Recorder here Thursday, the Chairman, NetSol Technologies Limited and Chief Executive Officer (CEO), Saleem Ghauri said the present growth pattern can be maintained and revenue can be doubled provided priorities are reviewed.

About the ongoing economic pressure, he said one immediate way to come out of economic crisis is the earliest start of automation of public sector that would double public sector's efficiency. He, however, said that the decline in stock market is due to different reasons and it has nothing to do with the strong fundamentals of IT sector. The IT sector stocks will shoot up again once the inflationary pressure on economy is away.

The growth in revenues has enabled the industry to hire high-skilled IT professionals and thus contributed to the national economy in a big way, he said. Adding that more the trained human resource the IT sector has, the more country's economy would flourish and prosperity could sustain on longer terms, he added.

Moreover, he said that the NetSol Technologies is doing miracles in the field of IT and exports of its flagship product LeaseSoft, a suite of end to end leasing and finance software solutions catering to the needs of retail and wholesale finance businesses, has touched to the level of $20 million in a short span of time.

"We are foreseeing exports of LeaseSoft will touch $100 million in the next three years," he said. According to him, leading international business houses like Mercedes Benz, Yamaha Motors, Toyota Motors, Dongfeng Nissan, UMF, BMW and FIAT group in Asia Pacific region, besides a good number of leading brands in Europe and North America are successfully using LeaseSoft.

He said that the IT industry has already realised the potential and started putting infrastructure in place to have more and more human resource in the years to come. "NetSol has recently come up with the concept of NetSol Technology Institute (NTI) and it has planned branching out all over Pakistan to ensure short courses for Pakistani youth. "We want to dispel the impression that IT belongs to the youth of elite class" he added.

According to him, the government can ensure a real economic revolution by providing IT training to youth on war footing basis on the one hand and automation of public sector organisations on the other.

"A strong leadership with a visionary approach towards IT sector is an urgent need of the hour," he said. When pointed out that senior employees' in public sector organisations are a major hurdle in automation drive, Ghauri said this is where a strong and clear-headed leadership is required.

Since majority of Pakistani youth lives away from major cities, ie in rural areas, therefore, a strong network of IT training institutes is the only way of spreading IT education in Pakistan," he said. Ghauri extended a wake-up call to the government for investment in IT training of youth, which would ensure IT Pakistan of tomorrow.

The country's exports in IT have reached to half a billion dollar and number of highly skilled human resource is very impressive in the sector but still it needs from the government to do more.

He said Pakistan, with a population of 170 million, 60 per cent of which consists of under-25 youngsters, is an ideal country where IT sector can spearhead the economy in the days to come. "Once the government realises this potential and ready to invest on technical training of Pakistan youth, IT revolution will start in the country," he said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan, India to discuss CNG bus manufacturing ​* 
Saturday, July 26, 2008

ISLAMABAD: Pakistans offer to arch-rival India to invest in CNG bus manufacturing would be taken up in upcoming composite dialogue between the two sides, a senior govt official said on Friday.

More deliberations on the issue in order to permit India to manufacture CNG buses will be held during composite dialogue between the two countries, Secretary Commerce Syed Asif Shah told The News.

Announcing the trade policy for 2008-09 last week, Commerce Minister Ahmed Mukhtar said a decision had been taken that if Indian manufacturers of CNG buses make a firm commitment to manufacture such buses in Pakistan, the ministry might allow import of 10 buses by road via Wagah from each potential investor as a test consignment.

The government has already made the import of CNG buses duty-free by removing 15 per cent duty in the budget for 2008-09.

There is no law in the country which could block Indian investment. Pakistan has a liberal investment policy, but generally both countries discouraged investment in each other, said an official of the Board of Investment who asked not to be named.

India has granted permission to the National Bank of Pakistan (NBP) to open a branch there. When asked why India-specific CNG buses were being imported, the secretary commerce said some CNG buses imported from the European Union did not suit the countrys roads while Indian buses more suited the conditions here.

Deputy Chairman Planning Commission Salman Farooqui, during his visit to India last month, invited some of the leading Indian companies to invest in Pakistan. He also asked the Indians to invest in the power sector for developing the Thar coal project, which had stuck for the last several years because of a tussle between the federal and provincial government, but the issue has now been resolved, another official of the Planning Commission told The News. Besides this, Indian investment for developing the mining sector, particularly Thar coal, was also sought.

The government, in association with the International Finance Corporation (IFC) and World Bank, is organising Investors Roundtable on Pakistans Power Sector in Washington DC on July 28 and 29.

The government as a goodwill gesture in the trade policy also allowed import of mineral extracting machinery from India. Pakistan has the largest coal reserves in the world but it does not have the expertise to develop the black gold for power generation.

Pakistan not only allowed investment from India in the trade policy but also increased the positive list from 1,802 tariff lines to 1,938.

Pakistan, India to discuss CNG bus manufacturing


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## Neo

*Experts stress need for pro-poor growth strategy ​* 
Saturday, July 26, 2008

LAHORE: Economists assert that Pakistan currently needs pro-poor growth strategy while the government continuing the development agenda of the previous regime is further widening inequalities and providing bailout opportunities to plunderers of national wealth.

They point out that growth that benefits the poor requires the state to provide an enabling policy environment. However, they deplore that this has not happened in Pakistan after the change of government.

The only way to reduce poverty is through all-inclusive growth, particularly in turbulent times like the one being faced by the country. Nations have rebuilt themselves from ashes by involving each segment of society in nation building.

Faisal Qamar, a Dubai-based chartered accountant, says despite extremely weak economic indicators all is not lost in Pakistan and the country can join the developed world by redesigning its policies according to national interest.

First and foremost thing is that the economic managers of the country must realise that the quality of institutions matters, he says, adding attempts to reform or build robust pro-growth institutions must first identify a narrow and specific set of growth-enhancing institutions and then support them.

Asif Ali Shahid, a Canada-based Certified Public Accountant, says Pakistan is currently plagued with weak accountability and poor capacity to deliver. 

This points toward the fact that the country is currently unwilling or unable to play the role of a developing state.

He says governance guru Kaufmann had collected evidence from 170 countries which shows that good governance supports wealth creation, but economic growth does not result in improved governance. Economist Naveed Anwar Khan deplores that every ruler in Pakistan is obsessed with enhancing growth and says analysis of a number of quantitative cross-country studies by World Bank reveals that political stability and the rule of law are associated with growth but not necessarily with poverty reduction. On the other hand, enhancing civil liberties and political freedom are linked with poverty reduction but not necessarily with growth. Poverty, he adds, should be the main concern of policymakers.

Another economist Yunus Kamran, an FCA, says according to the research done by Overseas Development Institute London in a developing state progressive taxes are collected, labour is regulated and chronically poor protected. There is a sense of nationhood, investment is attracted and national development goals are promoted.

He says it has a powerful, competent, autonomous and stable bureaucracy and its political loyalty is not tested. A developing state is relatively independent of special interests, although it is well linked with non-state actors who contribute to policy formation. 

Economic development is consistently prioritised by government policy, which promotes productive entrepreneurship.

He says tolerance, meritocracy, social mobility and high levels of education are valued and promoted. Leaders promote development (which may also benefit them) and corruption is limited. The planners in Pakistan would have to reform their growth model on these lines to ensure all-inclusive and pro-poor growth, he suggests.

Economists single out corruption, particularly the use of public resources for private gains, as the main cause of inequality. They say it not only affects the level and efficiency of private investment and public spending, with negative effects on economic growth and development, but also increases income inequality and poverty. It affects poor peoples daily lives. If corrupt officials demand bribes, it can mean even basic services are put beyond poor peoples reach and can make them feel voiceless and powerless. 

They say corruption cannot be eliminated altogether, however, corruption level of over 51 per cent can devastate growth, investment and poverty reduction as has happened in Pakistan.

Experts stress need for pro-poor growth strategy


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## Neo

*Electronics market biggest victim of inflation ​* 
Saturday, July 26, 2008

KARACHI: The once busy and overcrowded Saddar electronics market is sporting a deserted look as prices of electronics items and white goods soar out of reach. The once loyal customers are now mere bystanders and window shoppers, unable to afford anything within.

A short market survey led to the discovery that prices of white goods such as washing machines, refrigerators, air conditioners, and air coolers have all risen by at least eight to 10 percent, which translates to a hike of Rs1,300 to Rs3,000 and above per item.

Similarly, other items such as geysers, gas burners, ovens, and microwaves have witnessed a rise of 25 to 30 percent. In monetary terms, this amounts to Rs2,800 to Rs4,000 and more per item.

There are three reasons behind the exorbitant price hikes: the rising dollar value, the depreciating rupee, and the spiralling cost of iron. This rise in values of electronics products has been recorded within the span of two to three months. The sharpest spike has come in the last month. 

Dealers at the various electronics market around the city claim that inflation has hit them the hardest, as they deal with luxury items that people can choose to live without. They also say that while other businesses like restaurants and groceries continue to thrive with customers, electronics dealers are left hanging in balance with a stagnant market.

Nisar Ahmed, owner of Surmawala House, has 24 shops all over Karachi. He has been observing consumer-buying trend in the different localities of the city, and said: Consumers are opting to stay at home and concentrate on their bread and water, rather than buying electronics goods. According to him, even branches situated in posh localities of the city had reported low sales, while those in middle class localities were the hardest hit.

The only customers left to us are those who simply cannot do without electronics items. Sometimes we see parents come in and buy dowry items for their daughters, with this being the wedding season, he said. 

Ahmed, however, added that even in the case of dowries, the number of items purchased by parents has reduced. People now buy only the most essential items, such as cooking ranges and fridges, whereas just a year ago, they would also purchase microwaves and washing machines.

Another dealer, Kamran Hameed, explained that summer was usually a season time for electronics dealers, but this year, it was no different from any other time. He said that while both local and foreign brands continued to be sold, the thriving business they once had was no longer there. 

Consumers have no alternative. Ninety-five percent of the market has always preferred Chinese manufactured brands, and local names such as Dawlance, Waves and Haier have the biggest sales, but even they have increased their prices by several thousand rupees, he said.

Electronics market biggest victim of inflation


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## Neo

*Pakistan needs tighter fiscal, monetary policy: IMF ​* 
Saturday, July 26, 2008

KARACHI: Pakistan needs to tighten fiscal and monetary policy to contain inflation and reduce its current account deficit, according to the International Monetary Fund.

The warning, issued by an official in Washington on Thursday and subsequently posted on the IMF website, came days ahead of the central banks next policy meeting, when it is expected to raise interest rates.

Now a significant tightening of both fiscal and monetary policies to contain inflation and reduce the external current account deficit is needed in our view, said David Hawley from IMFs external relations department.

Pakistan is in talks with the World Bank on a broad economic package that could include financing by the development lender linked to government reforms.

In May, the central bank increased its key discount rate to 12 per cent from 10.5 per cent. Hawley noted the Pakistani central banks foreign currency reserves had fallen nearly $6.5 billion since the end of June 2007 to about $7.7 billion, while the rupee has depreciated by 20 per cent against the dollar since June 2007.

The drain on reserves is a consequence of burgeoning oil import bill and foreign investors retreating because of political uncertainty dogging the country four months after a civilian coalition formed a new government.

Prime Minister Yousuf Raza Gilani is due to leave for his first official visit to the United States on Saturday and is scheduled to meet US President George W Bush on Monday.

Last week, two US senators unveiled a bill to provide Pakistan with $7.5 billion over five years to help its transition to civilian-led democracy.

Pakistan needs tighter fiscal, monetary policy: IMF


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## Neo

* PS production capacity to be raised to 1.3mT ​* 
Saturday, July 26, 2008

ISLAMABAD: Adviser to Prime Minister/Minister for Industries, Production and Special Initiatives (MOIP&SI) Mian Manzoor Ahmad Wattoo said on Friday that production capacity of Pakistan Steel Mills (PS) needs to be increased to 1.3 million tons per year to make it more viable and meet increasing demand of steel in the country.

He said this while chairing a meeting on expansion plans of the PS. The meeting was also attended by Chairman PS Moeen Aftab Sheikh and senior officials of MOIP&SI.

He said that under the current expansion plan, by the end of current year, the production capacity would increase to 1.3 million tonnes per year from the current 1m tonnes.

Wattoo said that under the second phase of expansion, by the end of 2010, the capacity will increase to 1.5m tonnes. He further informed that total increase in production during the current year will be 1 lakh tonnes and capacity utilisation will increase to 91 per cent from current 82 per cent.

To implement the expansion plan effectively, it is necessary that the PS is removed from the privatisation list, Wattoo said, adding the mill is a national asset and it should not be privatised.

He assured the PS administration that he will recommend to the prime minister that the mill should be delisted from the privatisation list.

The meeting was told that the PS spent Rs25 million during the current year on the import of iron ore and coal and the cost could rise to Rs30 million in the next year owing to increasing prices in the world market and high freight charges.

Wattoo stressed that every effort should be made to utilise local raw material and the PS should ensure that at least 20 per cent of it is used.

It will help in reducing the cost of production besides giving employment to the poor and generate economic activity, he said, adding that incentives and technical training should be given to the owners of mines and local people so that extraction and processing can be done on a fast track. He instructed the PS administration to focus on Balochistan in this regard.

The members of the meeting were told that a meeting has already been held between PSM, MOIP&SI and Balochistan government in this regard and a similar meeting with NWFP government will be held in coming weeks, and with other provinces will follow shortly so that more local raw material can be utilised.

Wattoo assured that MOIP&SI will fully assist PSM in its expansion plans and the plan to utilise local raw material.

PS production capacity to be raised to 1.3mT


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## Neo

*Pakistans competitive rankings stagnating​*
ISLAMABAD, July 25: Pakistans competitive rankings are stagnating, rather than improving, and the new government faces new economic challenges which have far-reaching implications for poverty reduction, fiscal and trade balances, inflation and economic growth, says annual report of the Competitive Support Fund.

Pakistans business competitiveness index (BCI), which captures firm level strategy and operations, registered a decline of 15 positions from last year, from 64th to 79th position, says the 2008 CSF report released here on Friday.

The report says that Pakistan is among the lowest one-third countries in global competitive ranking as it ranked 92nd out of 131 countries in the latest Global Competitive Index (GCI).

In a globalised economy, competitiveness is the key to Pakistans future prosperity but its ranking shows that much work remains to be done to achieve this.

These performance rankings are mirrored by the struggles being faced by many of its key export industries, such as apparel and textile, sports goods and surgical instruments, the report said.

The report said Pakistans scores were quite low at 107th and 108th place on a scale and were influenced by very poor performance related to human resources: primary education, higher education and training and labour market efficiency. This indicates the need to focus priority attention on workforce development. This focus will have the benefit of boosting incomes for the average worker while better productivity will provide benefits to Pakistani industries.

It said there is a growing perception that business competitiveness at the firm level has been getting worse in Pakistan as showed by a sharp decline in scores for 2007-08. Pakistani companies are finding it increasingly difficult to compete as industries in other countries continue to improve their competitiveness. The same Pakistani companies facing stiffer economic competition may now be more aware of their true competitive position  affecting a more realistic self-scoring than in previous years.

And there may indeed have been a falling off in the underlying competitiveness as represented by loss of orders, market share and profitability. There was also a significant decline in good market efficiency scores, indicating that market force may not be fully at work.

The report said business environment still limited the performance of firms. The increasingly unreliable electricity supply, a weak judicial system and the lack of world-class commercial courts are among the areas highlighted in the report, saying improvements in the business environment were needed at the federal, provincial and local levels.

The report said that Pakistan was not competitive in cost, quality and product differentiation. Although improvements have been made in the service and financial industries and in areas of the government, the country has fared poorly compared with its neighbours in key areas, such as provision of health and education services, in the development of a modern infrastructure and in the cost of doing business.

Pakistans competitive rankings stagnating -DAWN - Business; July 26, 2008


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## Neo

*Indian buses to hurt local industry: Euro-II standards ignored​*
KARACHI, July 25: While the environment ministry is concerned over non-adoption of Euro standards in fuels and engines, the commerce ministry has allowed import of old CNG buses from India.

The Pakistan Automotive Manufacturers Association (PAMA) feels that the local industry would collapse with the arrival of old buses and it would render thousands of people jobless in assembly plants and vending industry.

The environment ministry is of the view that pollution in the cities has increased to an alarming level and there was a need to control it for our future generations.

The ministry has stressed the need for working jointly on a war footing to improve air quality, as other countries of the region have successfully accomplished their targets.

The environment ministry, in collaboration with the petroleum ministry, had set up a committee in 1994-1005 to develop a road- map for introduction of clean fuels which included introduction of unleaded gasoline, reduction of sulphur content from diesel and promotion of CNG.

The petroleum ministry introduced unleaded petrol in 2000, while sulphur content in diesel was reduced to 0.6 per cent from one per cent. The low sulphur diesel is highly essential for introducing Euro-II compliant vehicles. Pakistan is lagging behind and there is a need for adopting Euro standards.

To review the Euro-II compliant diesel situation, a meeting between the environment ministry officials and representatives of Pakistan Automotive Manufacturers Association (PAMA), Oil Companies Advisory Committee (OCAC), petroleum ministry officials and Pakistan Environmental Protection Agency (PEPA) was held last month.

The petroleum ministry officials informed the meeting that huge resources are required by refineries to de-sulpharise fuels, and local refineries have to chalk out a $700 million programme to improve their production and reduce sulphur content to 0.5 per cent.

The official mentioned that Pak-Arab Refinery Limited (Parco) would bring low sulphur fuel by June 2010 while other refineries would be in a position to provide it by 2011.

However, the official expected a rise in the price of diesel by Rs2 to 4 per litre if low sulphur diesel is produced, and proposed that this cost impact should be absorbed by refineries.

The PAMA representative stated that they had agreed with the time schedule. All imported petrol driven vehicles would comply with Euro-II standards from July 1, 2009, and all new models, locally manufactured gasoline vehicles would comply with Euro-II standards within a maximum period of three years. However, the representative indicated that a lead time of 18 months would be required by them after availability of low sulphur fuel to adopt Euro-II standards for diesel vehicles.

PAMA in a letter to Federal Commerce Minister Chaudhry Ahmed Mukhtar on July 22, 2008, stated that local bus and truck industry appears very disturbed after the announcement in Trade Policy 2008-2009.

The association recalled that the local industry had met a heavy setback by a similar policy of the previous government in 2005 to 2007 when taking advantage of relaxation provided in the gift, personal baggage and transfer of residence scheme, some 11,261 used trucks were imported against 7,432 trucks produced locally.

Similarly, 1,227 used buses were imported against the total of 1,563 buses produced locally during 20 months (from July 2005 to March 2007).

However, during the last one-and-a-half years, the local industry performed well after withdrawal of relaxation in import of used trucks and buses.

PAMA stated that one of the local assemblers of buses had introduced a CNG bus after making heavy investment and was looking for some support.

The local manufacturers are already facing problems of smuggling and influx of used trucks and buses, prime movers and dumpers under various garbs.

The relaxation in trade policy would open a floodgate of imported used vehicles and the country would become a junkyard of old heavy vehicles.

It would go against governments policy of modernising the trucking industry.

The PAMA urged the commerce minister to withdraw the announcement of relaxation in the age limit of five years in case of used buses because it would hurt the bus industry seriously. Heavy commercial vehicles are not baggage items and they should not be allowed under the baggage scheme. The local industry should be allowed to first meet the local demand of CNG buses and if the government needs investment in this field from India and elsewhere, such an investment should be allowed on a level-playing field.

Indian buses to hurt local industry: Euro-II standards ignored -DAWN - Business; July 26, 2008


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## Neo

*India offers diesel pipeline to Pakistan​*
NEW DELHI: Indian Punjab is ready to open a diesel pipeline to Pakistan through Bathinda in response to Pakistans announcement to import fuel from India. An oil refinery is being set up in Bathinda. Punjab is prepared to connect the refinery with Pakistan through a pipeline for the supply of diesel, Indian Punjab Chief Secretary Ramesh Inder Singh told visiting Pakistani journalists in Chandigarh on Friday. 

According to sources, the chief secretary said, Opening the land route will enable the two neighbours to become economically stronger. He said Indian Punjab was ready to trade different commodities with Pakistan, adding that a nodal officer had also been appointed to promote trade. He said other items, including tea, dry fruit and cement were also being traded between the two countries, adding, Cement is cheaper by around Rs 45 per bag in Pakistan as compared to India. He said India could export oranges, maize, guava, mangoes and litchis, and asked the government to increase the number of commodities in the trading list between India and Pakistan. 

http://www.defence.pk/forums/strate.../13001-eu-s-interest-pakistan.html#post177720


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## Neo

*US Congress closer to approving additional $75m for Pakistan​*
** State Department reiterates Pakistans status as key ally of US
* US administration moves to allocate $226-227m to upgrade Pakistans fleet of F-16 jets​*
WASHINGTON: As Prime Minister Yousuf Raza Gilani prepared to embark on his first trip to Washington, the Bush administration hailed Pakistan as a key ally while a powerful Congressional committee moved closer to approving another $75 million for its anti-terrorism efforts along the Afghan border.

Ahead of the visit -- the first by the elected leader since parliamentary elections early this year -- there have been strong expressions of support for Pakistans democratic government and sustained economic development of its people by both the US administration and Congress.

The $75 million in the pending 2009 Defence Department budget is set aside to help bolster the Pakistan Frontier Corp in its efforts to confront terrorism challenges along the Afghan border through a combination of economic, political and security measures.

The House Armed Services Committee has authorised the funding, and it now awaits approval from the House Appropriations Committee. Gilani is due to meet President George W Bush at the White House, Vice President Dick Cheney and top Congressional leaders during the three-day visit.

Key ally: At the State Department, a spokesman said: Pakistan is a key partner in the war on terror. It plays a critical role in our long-term efforts to build a stable and prosperous South Asia. In a sign of support for Islamabads security requirements, the US administration has also moved to allocate funds -- about $226 million -- to upgrade its existing fleet of F-16 jets.

Gonzalo Gallegos, acting State Department deputy spokesman, called the F-16 programme, a tangible symbol of the US-Pakistan relationship.

Pakistan is currently undergoing economic turmoil, including rising food and fuel prices, and this is a daunting challenge to the new civilian government, he said, strongly defending the administrations move to shift anti-terrorism funds to upgrade the fighter planes, which are also used in counter-terrorism efforts.

Upgrades: This $226-227 million funds is -- was already allocated for other updates on different airframes in Pakistan -- the bottom line here is that weve shifted money to help the democratically elected Government of Pakistan to fight a common foe, a common enemy that we have. We believe that these upgrades that had already been approved will help the Pakistanis help us fight this common foe, and that we believe that this is a positive way to help a friend.

Meanwhile, top Congressional leaders will meet Gilani on Capitol Hill, where they will reaffirm their support for democracy and long-term relationship with the Pakistani people. A key lawmaker said on Friday that the Congressional leaders looked forward to meeting the Pakistani prime minister and cited two recently introduced measures -- the Biden-Lugar legislation and the Reconstruction Opportunity Zones initiative -- as reflecting lawmakers support for democratic and economic development of the country.

Pakistans Ambassador to the United States Husain Haqqani has been meeting a number of senior administration officials and Congressional leaders to muster up support for the country ahead of the visit. app

Daily Times - Leading News Resource of Pakistan


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## Neo

*SBP may effect 50-100 basis points rise in policy rate: Merrill Lynch​* 
KARACHI (July 26 2008): The State Bank of Pakistan is likely to continue its previous stance of monetary tightening by increasing policy rate by 50-100 basis points, to curb inflation and liquidity for next six months, said Muzamil Aslam an economist at Merrill Lynch.

The State Bank has adopted tight monetary policy since July 2006 aimed at controlling liquidity and rising inflation, besides widening external account deficit.

He said that Pakistan's recent measures including domestic oil price rationing by 60-75 percent, monetary tightening discount rate (DR) by 1.5 basis points, Cash Reserve Requirement (CRR) by 1 percent, and Statutory Liquidity Requirement (SLR) by 1 percent, besides exchange rate deprecation by 17 percent, has put it at the top of the list among Asian peers on the tightening front.

However, economists believe inflation has not peaked yet, and will remain in the 20 percent range until December 2008. "At the July 29 monetary policy review, we are not ruling out either a 50-100 basis points hike in the policy rate or a 1 percent hike in the SLR, to counter a potentially pronounced second round of inflation," said Muzamil Aslam in "Monetary Policy Expectations" report issued by Merrill Lynch.

He said that a hike in the policy rate would help SBP keep real lending rates in the positive zone, in turn, offloading the stock of T-Bills. While, higher lending rates also reduce overall aggregate demand pressures, and hence, the external deficit. Therefore, we are not ruling out a 50-100bp hike in discount rate, Muzamil said.

In addition, higher lending rates have prompted a net retirement of loans since July 1, 2008, which brings the net advance-to-deposit ratio to 70 percent from 71.2 percent on June 30, 2008. Due to the current update it expected that SBP could go for another SLR hike, which would help drain excessive liquidity from the market and offload the T-Bills stock from SBP's book, he added.

However, he ruled out further hike in the CRR rate and said that huge Net Foreign Assets (NFA) outflows should keep liquidity in check, therefore no change is expected in CRR.

Aslam said: "We have asked 10 commercial banks and eight fund managers to list their expectations from the upcoming monetary policy and almost all bank treasuries see 1-1.5 percent hike in policy rate, while 60 percent expect a 1 percent hike in the CRR, and 50 percent see a 1 percent hike in the SLR."

Similarly, 50 percent of fund managers expect a 50bps-100bps policy rate hike, the other half does not see changes to the overall policy stance. Overall, the market has priced in 50bps-100bps hike in the DR. Hence, a hike to that extent would not be a surprise.

"We expect inflation to reduce only from forth quarter of fiscal year 2009 due to a high-base effect, as the recent oil price pass-through and second round impact have just begun to appear in headline inflation," Aslam said.

At present, investments in short-term papers (three- and six-month) are being recommended and wait for domestic inflation confirmation and announcement of the next monetary policy.

He said if oil prices remain range-bound at US $120-140/bbl over the next six months, we expect inflation to begin to ease-off from February 2009. Pakistan's long-term GDP growth trend is close to 5.0 percent, but the average GDP growth for the past five years is 7.0 percent, against 5.8 percent in FY08. Given the 5.5 percent GDP over 17 percent inflation is expected in FY09.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Broad money registered 15 percent growth in 2007-08​* 
KARACHI (July 26 2008): The broad money (M2) registered a growth of 15.35 percent in last fiscal year (2007-08) mainly due to government's massive reliance on borrowing for budgetary support and increase in credit to private sector. Analysts said that increasing government budgetary borrowing was the major component in the last fiscal growth of M2, while an increase in credit to private sector was the second chief reason of over 15 percent growth.

The growth in last fiscal year was less than the growth of 19.32 percent in fiscal year 2006-07 due to tight monetary policy measures by the State Bank during last two years. Reserve money (RM) registered a growth of 21.56 percent in 2007-08 as compared to 20.88 percent in 2006-07. However, they said that the declined in the Net Foreign Assets (NFA) played a vital role in curbing further increase in the M2 growth during last fiscal year.

During 2008, overall net NFA witnessed a record declined of Rs 316.378 billion to Rs 668.514 billion as against a surge of Rs 274.551 billion to Rs 984.892 billion in fiscal year 2007.

Central bank statistics depicted that overall government sector borrowing for budgetary support from banking sector had gone up by 63 percent during fiscal year 2008 due to the massive borrowing from scheduled banks as well as from the central bank.

After the current upsurge, overall stocks of borrowing reached Rs 1.51 trillion mark on June 30, 2008, which previously stood at Rs 926.53 billion on June 30, 2007, depicting an increase of Rs 583.564 billion in 2008. Out of net borrowing, overall budgetary borrowing surged by Rs 554.564 billion to Rs 1.364 trillion.

The budgetary borrowing from central bank witnessed a prominent share in the overall budgetary borrowing, which stood at Rs 688.724 billion in fiscal year 2008, while during the fiscal year 2007 government had retired some Rs 58.575 billion. With an upsurge of Rs 688 billion overall budgetary borrowing stocks of SBP has crossed one trillion mark and reached new peak level of Rs 1.033 trillion on June 30, 2008 from Rs 344.991 billion on June 30, 2007.

On the other side the scheduled banks stocks of budgetary borrowing has declined by Rs 134.160 billion to Rs 330.901 billion in 2008 against the borrowing of Rs 160.590 billion in 2007. The credit to private sector has grow by Rs 16 percent or Rs 408.427 billion in 2008 to Rs 2.888 trillion as against an increase of Rs 365.718 billion in 2007.

"The State Bank of Pakistan continually pressurised the government for retirement and less borrowing from central bank. However, it was compelled to resort to massive borrowing from central bank on the back of slow foreign inflows," analysts said. The central bank statistics for 2008 depict that despite SBP advice the federal government continuously borrowed huge amounts to meet financial crunch.

To minimise government borrowing the SBP also used its toll by raising the discount rate. However, government borrowing is still on the rise, they added. They said that real economic costs of central bank borrowings cause enormous inflationary pressures, which is at present above 20 percent from last few months and it is expected that rising budgetary borrowing would further increase the inflationary pressure on the economy.

Similarly, the government has borrowed some Rs 28.652 billion for commodity operation and with current increased it has mounted to new peak level of Rs 127.204 billion by the end of June 28, 2008.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pak-Iran trade up at $125 million in three months​*
KARACHI (July 26 2008): Pakistan-Iran bilateral trade has increased to $125 million in the first three months of current fiscal year after the launching of preferential trade agreement (PTA) between the two countries. This was stated by Commercial Attache at the Consulate-General of Iran, Ahmad Fasihi, while talking to APP at Iranian Pavilion at the ongoing Second ECO Trade Fair 2008.

He said Pakistan's exports to Iran were estimated at $66 million while its imports from Iran were $59 million. "Total trade volume will increase to $1 billion this year from last year's $420 million after the signing of PTA between the two brotherly countries", he hoped.

He pointed out that both countries have reduced customs duty to 20 percent on 648 tradable items which are included in the list under PTA. Pakistan has reduced customs duty on 338 items to 20 percent while Iran has slashed customs duty to 20 percent on 309 Pakistani items.

This has encouraged the businessmen of both sides to promote bilateral trade, he noted. Fasihi said Export Promotion Bank of Iran will open its branch in Karachi in the next few months to facilitate opening of letter of credit (L/C).

He said that currently, an eight-member delegation of Iran Chamber of Commerce is visiting Pakistan to participate in the Second ECO Trade Fair. The delegation will hold meetings with chambers of commerce and leading businessmen in Karachi to explore avenues to boost bilateral trade. These efforts will help in increasing the number of items in the bilateral trade, he opined.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Rs 51 billion Kachi Canal to bring green revolution in Balochistan​*
ISLAMABAD (July 26 2008): Kachi canal being built at a cost of Rs 51 billion would bring green revolution in Balochistan as it is set to irrigate 713000 acres of barren land in the province, Secretary Agriculture Balochistan Qayyum Nazar Changezi said Friday.

Talking to state-run TV channel he said initial cost of Kachi canal was Rs 31 billion. The gigantic project has the capacity to further irrigate 800000 acres barren land of four districts including 102000 acres land in Dera Bugti besides irrigating barren land of Naseerabad, Jhal Magsi and Bolan districts. The canal would increase the capacity of canal system of the province threefold. Presently around 400000 acres land was being irrigated through canal system.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Govt to launch $22bn hydroelectric projects ​* 
Sunday, July 27, 2008

ISLAMABAD: The federal government would develop new multipurpose water reservoirs worth US$22 billion on priority basis to cope with the increasing demand of water and electricity, Infrastructure Project Development Facility (IPDF) head, Ghulam Murtaza Satti said.

The government would also undertake various run-of-river projects to serve the Indus Basin Irrigation System, he told journalists here on Saturday. Talking about domestic power needs, he said, Pakistan urgently needs to exploit its hydropower potential estimated at 40,000MW, adding that currently only 15 per cent of this potential was being utilised.

He was of the view that the country was in dire need of significant investments in infrastructure, specifically in energy and water to sustain its recent economic growth in the future. These projects would put a substantial burden on the public sector alone and in consequence the government has decided to explore alternative financing options that include using private sector investments to ease the budgetary constraints, Murtaza Satti said.

The main objectives of these projects are to enhance water availability for irrigation, generate cheap electricity, optimise water resources, develop Indus Basin Irrigation System and overcome energy and water shortages.

He said that IPDF is also in the process of creating a Multi-purpose Water Reservoir Financing Cell to focus on the project structuring and financing of multi-purpose water reservoirs, and build an enabling framework for private sector participation in these projects.

Govt to launch $22bn hydroelectric projects


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## Neo

*Revival of positive sentiments help KSE gain 797 points ​* 
Sunday, July 27, 2008

KARACHI: The revival of positive sentiments set Karachi bourse back on rails on fast pace this week ended July 25. Investors from different sections accumulated stocks on upper levels, but overseas investors ones continued to exit from market this week too.

KSE 100-share Index posted a handsome recovery of 797 points or 7.8 per cent this week and closed at 11,032 points.

In the first four sessions of this week, market recovered over nine per cent or 922 points owing to some confidence building measure the financial managers took this week. However, smart recovery ahead of SBP monetary policy announcement on Tuesday, Jul 29, convinced investors to book profits on Friday - the last session of week.

The parallel running junior 30-Index also recovered 1,119 points or 9.8 per cent and concluded at 12,526 points on week-on-week basis.

The return of investors from different walk of life to market and their purchasing of stocks at the upper levels enhanced average turnover in ready market to 140.5 million shares from 115.6 million shares of last week.

Accordingly, the overall market capitalisation also improved by Rs243.6 billion to Rs3.439 trillion this week.

Buying was seen on across the board, but insurance sector closed under selling pressure. 

During the week, buyers remained active almost in all key sectors. Banking sector with a gain of 16 per cent on week-on-week basis remained the top performer followed by cement sector, which registered a gain of 8.7 per cent. On the other hand, strong buying was witnessed in the E&P sector during initial trading sessions, however, correction in international crude oil prices kept the sector under pressure in the later part of the week, Umer Ayaz at JS Research calculated.

Prior to the start of this week, market had shed over 17 per cent or 2,118 points in the last three consecutive weeks. The 10,000 points proved to be the strong resistance level and invited nominal buying (i.e. gained 22 points) on last weekend, July 18.

Thereafter, the visits by Governor State Bank Dr. Shahshad Akhter and Finance Minister Syed Naveed Qamar to Karachi Stock Exchange (KSE) on Monday and Tuesday, respectively, and announcement of establishing a Rs20 billion Equity Market Opportunity Fund (EMOF) by later restored investors confidence apparently.

The objective of EMOF is to provide stability and liquidity to market in times of stress, which was finally launched on Friday, it was learnt.

In fact, market had discounted nearly by 35 per cent or 5,500 points to more than attractive level by last Thursday, July 17, from 15,676 points all time high of April 18. 

The 10,000 points that has proved to be a strong resistance level and triggered buying, also received encouragement by visits of country financial managers to the Exchange, while market support fund restored full confidence among investors, who had lost hope in market, said a leading analyst.

Foreigners, however, remained net sellers in the market as depicted by NCCPL data. As per the data, net foreign selling during the week stood over Rs2 billion (or US$29.6 million). On year to date basis, cumulative selling in 2008 to date stands at US$301.9 million (as of Jul 24, 2008).

The announcement of monetary policy by the central bank on Tuesday, Jul 29, for the first half of just started fiscal year 2009, is said to be the crucial one for future course of market. SBP is likely to increases key discount rate in range of 50 basis points to 100bps to control inflation in country that had reached to a 30 years high level.

It was a rollover week that started with open interest at Rs7.2 billion. However, only Rs3.2 billion (44 per cent) was settled during the week with Rs4 billion (56 per cent) remaining unsettled. In the CFS market, investment during the week stood at Rs27 billion versus Rs27.2 billion last week depicting a meager decline of 0.7 per cent. Similarly, CFS rate declined to 14.5 per cent down 66bps on week-on-week basis.

Weekly Movement in Blue Chips
Symbols Open on Close on Difference
Monday (Rs.) Friday (Rs.) (Rs.)

Adamjee Insur. 207.64 230.1 22.46
Attock Refine. 181 220.5 39.5
DGKC 48.6 60.25 11.65
EFU Gen.Insur. 326.04 265.62 -60.42
ENGRO 211 217.52 6.52
FFBL 26.5 28.8 2.3
HBL 166.36 187.5 21.14
LUCK 75.5 87 11.5
MCB 233.08 269.13 36.05
NBP 109.99 133 23.01
OGDCL 108.3 115.75 7.45
Pak Reinsur. 63.28 56.03 -7.25
POL 271.02 313 41.98
PPL 205.27 228 22.73
PSO 386 405.03 19.03
PTCL 35.49 37.13 1.64

Revival of positive sentiments help KSE gain 797 points


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## Neo

*150MW power station for Balochistan soon: Wapda chairman​*
QUETTA, July 26: Wapda chairman Shakeel Ahmed Durrani said on Saturday that Quetta would soon have a 150MW rental powerhouse and work on the Dadu-Khuzdar, Kot Addo and Dera Ghazi Khan-Loralai transmission lines would start shortly.

Mr Durrani informed a high-level meeting which was presided over by Chief Minister Nawab Mohammad Aslam Raisani that the authority was trying its best to complete the project in the minimum possible time.

The meeting was informed that four small- and medium-sized dams would be constructed in Balochistan  Hingol and Winder dams in Lasbela, new long dam in Jhal Magsi and Iskalnji dam in the Bolan district.

The construction of the dams would cost between Rs23 million and Rs38 million. An additional 145,000 acres of land would be cultivated in the areas served by the dams and they would produce 4.3MW electricity.

The meeting was informed that first phase of the Kachhi canal project would be completed till end of 2009 and the government was making efforts to complete other phases of the project in minimum possible time. Around 500km long Kachhi canal would have around 713,000 acres command area.

It was decided that Wapda, provincial government and other departments concerned would evolve a joint strategy for removing hurdles in the construction of the project.

With the completion of Kachhi canal, Balochistan would have 6,000 cusecs additional water from Indus river that would bring a revolution in the agriculture sector of the province.

Wapda officials informed the meeting that Balochistan was presently receiving 650MW electricity and it needed 1,050MW more to fulfil the requirement. They said Wapda was covering the shortage of electricity through load-shedding.

The meeting decided that power load supplying to the tube wells would be jointly checked by Wapda and provincial government officials. Senior Minister Maulana Abdul Wasey, Chief Secretary Nasir Mehmood Khosa and senior officials of Wapda attended the meeting.

150MW power station for Balochistan soon: Wapda chairman -DAWN - National; July 27, 2008


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## Neo

*Govt to spend Rs 520bn on NTC by 2012​*
ISLAMABAD: The government will spend Rs 520 billion by 2012 to develop National Trade Corridor (NTC) in order to boost trade activities and exports. A source in the Ministry of Communications told APP Saturday that NTC would link upper parts of the country in the north with ports in the south to reduce travel time and fuel cost by improving existing road network and introducing new highways and motorways by 2012. The development of NTC would cause multifaceted benefits, reduce the losses and significantly contribute to the national exchequer, he added.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Molasses exports reach $54 million​*
KARACHI: Rising global demand of ethanol has fueled countrys molasses export, which registered an impressive 94 percent growth in the outgoing fiscal year 2007-08.

Pakistan has fetched around $54.63 million from molasses exports till the closing of last fiscal year as compared with $28.08 million 2006-07, figures released by the Federal Board of Statistics (FBS) show.

Industry people said the increased in exports values are due to its appreciating prices in global market coupled with significant surge in its export quantity.

They said that sugar production registered magnificent growth in the last Rabi season that yielded an increase of energy grain raw material (molasses) from sugar mills. The production of sugar was recorded at 4.9 million tonne in the last crop season.

According to FBS, the export quantity has also grown by 118 percent to 0.81 million tonne in 2007-08. The molasses exports ranked the fourth most growing sector followed by Jewellery and cement.

Furthermore, industry people said the prices of molasses have reached to $100 per tonne in international market which were at $70 per tonne during last year.

Former Central Chairman, Pakistan Sugar Miller Association (PSM), Chaudhry Zaka Ashraf told the demand of Pakistans molasses have increased manifold due to its high consumption in ethanol production by European countries.

He predicted that molasses exports would constantly surge as the number of orders had increased. Some US companies have offered lucrative deals to local firms for the manufacturing of ethanol, he added.

He also told the exports will also be increasing to European countries as they are consuming 10 percent ethanol blended gasoline all over the continent.

Pakistan has around 10 to 12 molasses exporters that deal with North American and European countries while some 80 sugar millers are also exporting molasses.

Ashraf said the installation of 16 distilleries has enhanced the quality of the molasses and he believes that it will be the primary reason behind attracting more foreign orders in the future.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Foreign investors withdraw another $29.593 million​* 
KARACHI (July 27 2008): Foreign investors continued their cautious stance due to prevailing political and economic situation in the country and withdrew another $29.593 million from the Pakistan's equity market during the outgoing week ended July 25, 2008.

The cumulative net outflow of the current month from July 1 to July 25 stood at $72.768 million while the cumulative figures of current calendar year (January 1, 2008 to July 18, 2008) were recorded at negative 314.204 million.

According to data released by the National Clearing Company of Pakistan (NCCPL) a net inflow was witnessed only on Monday as $404,757 million came in the country's equity market on the first day of the week, however, an outflow was seen during the remaining four trading sessions.

The data shows that an outflow of over $5.897 million was witnessed on Tuesday, over $9.902 million on Wednesday, $2.990 million on Thursday and over $11.207 million on Friday.

The prevailing geo-political situation and weakening economic indicators are the main reasons, which forced the foreign investors to offload their holdings, a leading analyst said, adding that various measures taken by the SECP and KSE board to support the local share market failed to revive the investor confidence during the outgoing week.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Country falls short of wheat output target​* 
ISLAMABAD (July 27 2008): The country is short of 2.4 million tons of wheat production target of 24 million tons fixed for 2007-08, and the country has barely achieved 21.6 million tons production, according to the third and final estimate for 2007-08 wheat production, sources told Business Recorder here on Saturday.

The average wheat yield in Pakistan has been stagnant for the last seven years while the population has increased significantly, widening the gap between demand and supply of this staple food. Flawed policies in the past led to wheat shortages in the domestic market in spite of a surplus crop. In 2006-07, the government announced a bumper crop of 23 million tons, which was in excess of domestic demand.

The government, therefore, decided to export 0.5 million tons of surplus wheat. At that time wheat prices in the domestic market were around Rs 430-435 per 40 kilograms, while in the international market it was being sold at RS. 415 per ton.

The price differential between the domestic and international market was too high and profiteers - the mill owners as well as government officials - entered the market. This led to the hoarding and smuggling of the commodity, the main reason for wheat shortage in the country.

According to a senior official of the Food Ministry, 0.8 million tons of wheat was exported, while 1.5 million tons was hoarded and around two million tons was smuggled out of the country. Throughout the government behaved like a silent spectator and when wheat prices reached Rs 780-800 per 40 kilogram in the market, the former government decided to import wheat.

The farmers did not gain anything out of this as they sold their wheat at the support price fixed by the government at Rs 425 per 40 kilograms, but the commodity was being sold at Rs 780-800 per 40 kilograms in the market.

Usually, the government fixes the wheat support price for the next crop in September to encourage the growers, but in spite of the fact that the Food Ministry sent the proposal for wheat support price three times (in September, October and November), yet at all times the proposed wheat support price of Rs 500 per 40 kilograms was rejected by the government. This became the main reason for two percent lower acreage under wheat cultivation in 2007-08.

The high prices of inputs also contributed to reduced production. The prices of DAP increased to Rs 3200 per 50 kilograms at the time of crop cultivation. That resulted in an unbalanced use of fertilisers by the growers. The government provided Rs 400 subsidy on fertilisers despite several recommendations to increase the subsidy to Rs 800-1000 per 50 kilograms, made by the National Assembly Standing Committee.

In March 2008, wheat support price was fixed by the caretaker government at Rs 510 per 40 kilograms that was lower than the cost of production per 40 kilograms of wheat. Soon after the formation of the new government, Prime Minister Syed Yousuf Raza Gilani announced wheat support price of Rs 625 per 40 kilograms from the previous price of Rs 510 per 40 kilograms.

At the time of wheat procurement, the government fixed the price at Rs 625 per 40 kilograms. But, according to the details of wheat procurement operations submitted to the Economic Co-ordination Committee (ECC) on July 15, the country was able to achieve just 78.4 percent wheat procurement target fixed for 2007-08 fiscal year.

The reason: high procurement price of Rs 650-655 per 40 kilograms paid by the private sector to the growers. By taking an overview of the situation, one can easily conclude that the flawed policies of the government have resulted in the possibility of wheat shortage in the new year also.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Services trade deficit hits new peak of $6 billion​* 
KARACHI (July 27 2008): The country's services trade deficit has widened by 50 percent to hit a new peak of six billion dollars in FY08 due to decline in exports and high import payments of transportation, construction, financial, computers services and royalties.

Statistics revealed on Saturday that overall services sector exports stood at 3.590 billion dollars against the imports of 9.892 billion dollars during FY08, depicting a deficit of 6.302 billion dollars. The deficit in 2008 is some 50 percent higher than FY07, as during this year it stood at 4.170 billion dollars against 6.302 billion dollars in 2008.

The service exports declined by 13 percent to 3.590 billion dollars in 2008 over the exports of 4.14 billion dollars in 2007. While on the other hand imports of service trade have surged by 19 percent to 9.892 billion dollars from 8.31 billion dollars.

Major contribution in services trade deficit was witnessed by transportation services, travel services and royalties, as only transportation sector has contributed around 45 percent share in the overall deficit. Two-sector transportation and travel services' deficit contributed 62 percent in overall deficit and mounted to 3.953 billion dollars in last fiscal year as compared to 3.423 billion dollars in FY07.

"Rising imports played a prominent role in the services sector deficit, while raise in the shipping lines tariff is also another leading factor," economists said. Transportation service exports stood at 1.050 billion dollars against the imports of 3.686 billion dollars. Travel imports amounted to 1.58 billion dollars over the exports of 263 million dollars, while communication sector exports stood at 117 million dollars against the imports of 107 million dollars.

Healthy increase has been witnessed in government service exports, which have contributed around 38 percent of total exports. The government sector shows a surplus income of 945 million dollars, as government services exports have reached 1.374 billion dollars against the imports of 429 million dollars.

In addition, the country has paid some 130 million dollars on account of royalties and licence fee against the earning of 51 million dollars. Month-on-month basis during June 2008, services trade has faced a deficit of 204 million dollars with 663 million dollars exports and some 867 million dollars imports.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Solar power plants must to overcome energy crisis'​* 
LAHORE (July 27 2008): Technical Enercon Manager Engr. Asif Masood has said Pakistan needs solar power plants to overcome its energy crisis because the sun energy reaching the earth in just 70 minutes is equivalent to annual global energy consumption and the potential for solar power is virtually unlimited.

He said the concentrating solar power capacity (CSP) expected to double every 16 months over the next five years and world-wide installed CSP capacity would reach 6,400 megawatts in 2012-14 times the current capacity.

"Pakistan is one of few countries in the world which are blessed with maximum solar radiation. Most areas in Pakistan receive ample amount of sunshine, averaging about 300 sunny days in a year," he told Business Recorder. He said the increases in the petroleum prices, escalating concerns about global climate change and fresh economic incentives were renewing interest in this technology world-wide.

Unlike solar photovoltaic, which use semi-conductors to convert sunlight directly into electricity, CSP plants generate electricity-using heat. Much like a magnifying glass, reflectors focus sunlight onto a fluid-filled vessel. The heat absorbed by the fluid is used to generate steam that drives a turbine to produce electricity.

Power generation after sunset is possible by storing excess heat in large, insulated tanks filled with molten salt. Since CSP plants require high levels of direct solar radiation to operate efficiently. Deserts are ideal locations for such power plants," he added. About advantages, Engr. Asif Masood said there were two big advantages of CSP over conventional power plants. "First, the electricity generation is clean and carbon-free and, since the sun is the energy source, there are no fuel costs. Secondly, energy storage in the form of heat is also significantly cheaper than battery storage of electricity, providing CSP with an economical means to overcome intermittence and deliver dispatch able power," he said.

He also said solar power plants were feasible in Pakistan although, adoption of solar energy had not taken place yet in Pakistan. "This is mainly because of the high cost of PV and thermal panels. Solar energy's use is also limited because of lots of practical issues, such as energy conversion and storage, mismatched supply and load profiles and maintenance costs. Moreover, an absence of a clear-cut policy and lack of fiscal support mechanisms for promoting local manufactures of low cost dispersed systems have also contributed to its limited use. Solar water pumps for drinking water, refrigeration systems for cooling buildings and for hot water for domestic use are the other applications of energy from sun.

He said the solar energy is much viable in Balochistan, desert of Punjab and Sindh, especially in villages, which are spread over large distances and do not have road connections. The transmission connections in such areas are also not economically viable due to higher cost," he added.

On the use of solar energy in the world, he said the United States and Spain were leading the world in developing solar thermal power with a combined total of over 5,600 megawatts of new capacity expected to come online by 2012.

Representing over 90 percent of the projected new capacity by 2012, the output from these plants would be enough to meet the electrical needs of more than 1.7 million homes. The reason for the renewed interest in CSP in the US was the economic and policy incentives, which include a 30-percent federal investment tax credit for solar plants which has good prospects for being extended, he added.

"In the US, the cost of electricity from CSP plants (including the federal ITC) is roughly 13 to 17 cents per kilowatt-hour, meaning that CSP with thermal storage is competitive today with simple-cycle natural gas-fired power plants," he added.

Engr. Asif Masood said these countries would be expected to generate 3,200 megawatts of CSP by 2020 because of the regulatory incentives in France, Greece, Italy, and Portugal. China anticipated building 1,000 megawatts by that time. Other countries developing CSP include Australia, Algeria, Egypt, Iran, Israel, Jordan, Mexico, Morocco, South Africa, and the United Arab Emirates. "Using CSP plants to power electric vehicles could further reduce carbon dioxide emissions and provide strategic advantages by relaxing dependence on oil," he added.

He also said solar energy was environment-friendly because local environmental and health impacts of fossil fuel powered electricity generation could be largely circumvented through clean renewable energy alternatives. "Power generation through solar energy carries several advantages like clean development mechanism, control on greenhouse gases and adherence to the Kyoto Protocol. The option of obtaining carbon credit can also be explored. These power plants will also help in reducing and increasing dependence on import of fuel oil," he said.

Engr. Asif Masood said Pakistan's present low per capita consumption of energy could be elevated through greater renewable energy use. "Issues relating to social equity such as equal rights and access for all citizens to modern energy supplies and poverty alleviation amongst deprived section of society can also be addressed significantly through widespread renewable energy deployment," he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Inflation is being made worse by PPP-led government: Rs 240 billion borrowed from SBP in 13 weeks​* 
KARACHI (July 28 2008): The present coalition government has printed more currency notes to finance its budgetary needs than the Shaukat Aziz-led government or the caretaker set-up headed by Mohammedmian Soomro.

A weekly breakdown of government borrowing from the State Bank and commercial banks shows that in 20 weeks - from July 1st to November 15, 2007 - Federal Government under Shaukat Aziz borrowed Rs 75 billion from the central bank and Rs 62 billion from commercial banks, totalling Rs 137 billion.

In 17 weeks - from November 15, 2007 to March 25, 2008 - the 'caretakers' borrowed Rs 289 billion from State Bank. However, during this period, they also retired Rs 111 billion of treasury bills from commercial banks. In effect, the total borrowing for the budget under Mohammadmian Soomro was higher than it was under Shaukat Aziz as it stood at Rs 178 billion.

The PPP-led government despite crying foul about the high note printing by the Shaukat Aziz-Salman Shah combination resulting in sky rocketing inflation of nearly 20 percent has, however, done the same. Contrary to tall claims of being highly conscientious in relation to its responsibility towards the economic situation and holding its predecessors responsible for the present economic woes PM Gilani's government not only has stayed the same course, it has, in fact, moved one step forward by getting more currency notes printed.

In 13 weeks, ie from March 25 to June 30, 2008, the Gilani government borrowed Rs 325 billion from SBP, while it retired Rs 85 billion borrowings from commercial banks. As a consequence, the net borrowing of the present set-up is the highest ever - Rs 240 billion - in a surprisingly shorter period of only 13 weeks as compared to that of 20 weeks of Shaukat Aziz and 17 weeks of Soomro.

The present government went on a borrowing spree from SBP in the closing week of the financial year as it was committing that it wouldn't borrow "in net terms" from SBP in the next financial year. On the very last day alone, government borrowed as much Rs 55 billion from the central bank.

For the entire 2007-08 fiscal year, the Federal Government borrowed Rs 689 billion from SBP while retiring Rs 134 billion from commercial banks. As a consequence, thereof Rs 555 billion of fresh stock of Treasury Bills or money creation was undertaken by SBP.

The government has made a firm commitment that it will not borrow on net basis from the SBP and the banking system and instead finance its fiscal gap from non-bank sources. Unfortunately, however, it was within the first three weeks of the current financial year - from July 1st to July 23rd - that the government borrowed as much as Rs 34.1 billion from SBP.

This amount is in addition to drawdown of deposits by provincial governments from their balances with the central bank, which had risen due to grants provided to the provinces by the Federal government.

The only relief the central bank has received is the placement of $500 million by Bank of China with SBP. Central bank, despite protest from the Ministry of Finance, has reduced Rs 37 billion of government borrowed stock against the placement.

The State Bank can effectively drain off excess liquidity by raising the Credit Reserve Ratio (CRR) as well as Statutory Liquidity Ratio (SLR) in one go. But with the tap on (all the time) with currency printing it is forced to mop up this excess inflow through frequent open market operations (OMOs). Because of this, the overnight borrowing rate instead of reflecting a tight monetary policy shows a yo-yo movement. In case government's expenditure remains out of control and the borrowing for the budget from the central bank does not stop, SBP may need to hold daily OMO auctions to drain the liquidity out in order to keep the overnight bank rate close to its own policy rate.

At the present T-bill yields even the banks are feeling shy in lending more money to the government. With the T-bill yields within 25 bps of SBP policy rate, SBP cannot offload its stock of T-bills onto the banks unless it further raises the discount rate. Banks have already taken this into account and raised KIBOR by 350 bps as against 150 bps rise in SBP in SBP policy rate on May 22nd, 2008.

SBP wants the government to retire Rs 21 billion of existing stock at the end of every quarter. By borrowing throughout the quarter and then retiring on the last day with the help of external loans or sudden bulky inflow does not help matters. Once SBP lends to the government and then creates the T-bills - then subsequently tries to offload them through OMO, the T-bill stock of banks rises which enables them to lend more. This defeats the very purpose of a tight monetary stance aimed at containing inflation.

The argument that raising the discount rate to check inflation being fuelled by external sources ie oil and food becomes meaningless. Oil consumption reduction would help in keeping price rises in check. Raising food productivity would also reduce the fuelling of CPI because of high weightage of food.

Even if oil drops to $80 a barrel and the rise in wheat and other items in CPI is arrested - inflation cannot be reversed unless the government reduces expenditure or raises resources and brings the fiscal deficit to 3.5 percent or lower in real terms.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Control of Thar coal will remain with Sindh government'​*
KARACHI (July 28 2008): The control of coal will remain with the provincial government. An announcement to this effect was made in an official statement issued here on Sunday.

It said that the Sindh government issued the statement to `clarify its position' with regard to certain news item that appeared in a section of press that are erroneous and not based on facts, relating to control of Thar coal by provincial government.

In the statement issued here Sunday, the Sindh government spokesman stated that both the federal government and the government of Sindh are totally committed to the principle of provincial autonomy as such there should be no ambiguity that coal and other mineral resources are within the domain and control of provincial government.

It said that a notification has been issued by the government of Sindh with regard to establishment of Thar Coal and Energy Board under the chairmanship of Chief Minister Sindh with six members from the province and four from the federal government.

The members from the federal government include Federal Minister for Water and Power, Minister for Law and that they have been included with a view to primarily get support from the federal government on matters such as tariff and other relating to power generation as development of coal depends on establishment of power projects which require federal support. This Coal Board, the spokesman added, is a facilitation Board and not an authority.

The fact that the notification has been issued by the government of Sindh, the spokesman said, clearly establishes that the control of coal will remain with the provincial government. He further said and clarified that Thar Coal Board is not being abolished.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Four more dams to be built in Balochistan​* 
LAHORE (July 28 2008): After the completion of Mirani and Sabakzai dams during the last couple of years, four other dams, including Winder, Hingol, Naulan and Sukleji would also be constructed in Balochistan. This was stated in a briefing given to the Balochistan Chief Minister Nawab Muhammad Aslam Raisani.

Wapda Chairman Shakil Durrani, Balochistan chief secretary, FC inspector general, FWO director general, and other senior officers concerned attended the meeting. Speaking on the occasion, Shakil Durrani said that a number of water as well as power projects are being executed in Balochistan and Wapda is gearing up its efforts for completion of these projects.

The meeting was briefed that the bids for construction of the Winder Dam Project would be opened on August 29, 2008. The detailed engineering design of the Naulang Dam Project is likely to be completed in December this year, while the investigations for Sukleji Dam are in progress.

It was decided in the meeting that the reservations of various stakeholders would be addressed before initiating construction work on the Hingol Dam Project.

The law and order situation in the project areas was also discussed in detail. Further improvement in security measures, especially in the construction areas of Kachhi Canal, was emphasised that the project could be completed in shortest possible time. It is pertinent to mention that the first phase of Kachhi Canal Project is in advanced stage of its completion. It was further told in the meeting that a Rs 5 billion contract for construction of 300-km-long 220 kV Dadu-Khuzdar Transmission Line has been awarded.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Foreign investors withdraw another​* $29.593 million

KARACHI (July 27 2008): Foreign investors continued their cautious stance due to prevailing political and economic situation in the country and withdrew another $29.593 million from the Pakistan's equity market during the outgoing week ended July 25, 2008.

The cumulative net outflow of the current month from July 1 to July 25 stood at $72.768 million while the cumulative figures of current calendar year (January 1, 2008 to July 18, 2008) were recorded at negative 314.204 million.

According to data released by the National Clearing Company of Pakistan (NCCPL) a net inflow was witnessed only on Monday as $404,757 million came in the country's equity market on the first day of the week, however, an outflow was seen during the remaining four trading sessions.

The data shows that an outflow of over $5.897 million was witnessed on Tuesday, over $9.902 million on Wednesday, $2.990 million on Thursday and over $11.207 million on Friday.

The prevailing geo-political situation and weakening economic indicators are the main reasons, which forced the foreign investors to offload their holdings, a leading analyst said, adding that various measures taken by the SECP and KSE board to support the local share market failed to revive the investor confidence during the outgoing week.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Foreign diplomats stress bilateral trade and investment​* 
MULTAN (July 28 2008): 'Best bilateral ties and mutual co-operation can enhance trade, investment and technological development among the countries,' said ambassadors of Italy, Mexico, Brazil, Afghanistan, Philippine and South Korea.

They stressed the need of strong economic ties, exchange of business and educationalist delegations, transfer of technology and interaction in different sectors like power, gas, housing, food and agriculture.

The diplomats shared their views during a dinner reception hosted in their honour by the Multan Chamber of Commerce and Industry (MCCI) on Saturday night.

The President, MCCI, Khawaja Muhammad Jalaluddin Roomi chaired the reception while former Speaker of National Assembly, Syed Fakhar Imam, President FPCCI, Mian Tanvir Ahmed Shaikh, City District Nazim, Mian Faisal Mukhtar and, President of Mango Growers Association, Syed Zaid Hussain Gardezi were present as chief guests.

Italian Ambassador, Vincenzo Prati said that his country had established different trade ties with Pakistan. 'We have declared Multan a twin city of Rome,' as it is the ancient city of the world.' He also said that Italy had recently supplied modern machinery worth of 7million Euros for fruit and vegetable processing plant of Multan while the embassy will organise a seminar on durable mango preservation.

The Deputy Head of Mission of Brazil, Gustavo Da Veiga Guimarass, said that his country had friendly and economic relations with Pakistan and assured to strengthen it further.

He said, 'We are co-operating in different sectors for the prosperity of Pakistan to increase the trade volume.' The South Korea Ambassador, Shin Un said that there were more than 1000 varieties of mangoes in the world and our mango season was not a short term and remains from January to September ( nine month) however, mangoes of Multan retains there sweetness.

Further, South Korea would continue its co-operation in training, provision of social and economic infrastructure, power sector, science and technology and transport. Shin also said that his country was supporting Pakistan to build a University of Science and Technology while the Prime Minister, Syed Yousaf Raza Gilani has asked to develop housing schemes for low-income people as well.

Philippine's Ambassador Jaime J Yambao said that it was great honour for him that he was invited to attend a mega event of Mango Festival in Multan. He said that Philippine itself was a big producer of Mango and its 'Manila' variety was popular in the world. He hoped that this festival would help in exchanging view and technology among the mango growers and transfer of technology. He also said that his country was enjoying good relations with Pakistan for the last six decades.

'However we should promote our business ties in future,' he added. Afghan Ambassador, Muhammad Anwar Anwarzai said that Multan is a city of spiritual saints and Sufis and he was highly impressed by the hospitality of Multanites. He further said that Afghanistan had cultural, political and trade- relations with the sub-continent for thousands of years. He said that entire world was facing the scarcity of energy, fuel and food.

'At this stage we should adopt a common strategy to meet these challenges,' he said. Mexican Ambassador, Arturo Hernandez Basave said to the gathering that Mexico was helping Pakistan in oil and gas exploration, agriculture and other sectors. He had given incentives to the investors in Mexico and a number of investors of Sialkot and Karachi were doing their business in his country.

Further, Basave said that Pakistan's President, Pervez Musharraf had visited Mexico and highly appreciated Mexico's co-operation in different sectors and an economic commission was formed for bilateral trade with Pakistan.

He informed the gentry that Mexico had trade relations with 44 countries of the world and his country stood fourth in Mango production and first in mango exports.

Roomi said in his welcome address, 'Multan is a city of shrines and mausoleums of spiritual saints and has been an important trade centre and gateway to the Central Asian States (CAS). This area is known as southern Punjab that produces 80 percent of total cotton produced in Pakistan.' Multan is blessed with ample manpower offer lucrative potential for industrialisation in joint venture in different spheres, Roomi said.

'We can collaborate successfully in the areas of power, gas, agriculture, footwear, leather products, minerals and automobiles to strengthen our co-operation and bilateral trade. Furthermore, the climate for foreign investment in Pakistan is very conducive with tremendous opportunities of foreign investment and this area has all the necessary ingredients desired by prospective investors, the MCCI President added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Bush urged to accord free market access to Pakistani traders​*
LAHORE (July 28 2008): The Federation of Pakistan Chambers of Commerce and Industry, with all its affiliated trade bodies and associations across the country on Sunday urged US President George Bush to announce, during the visit of Prime Minister Yousaf Raza Gilani, lifting of all economic sanctions and to provide direct free market access to Pakistan exporters, especially in textile and garment sectors.

FPCCI President Tanvir Ahmad, all Vice Presidents of FPCCI, President of LCCI Muhammad Ali and Iftikhar Ali said this in a statement issued on behalf of the business and traders' community of Pakistan. Tanvir said that Prime Minister Yousaf Raza Gilani had always attached great importance to further developing strong and durable cordial friendly relations with USA.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*ADB to provide $150 million for augmenting rural economy, water resources​* 
FAISALABAD (July 27 2008): Asian Development Bank will provide $150 million for Sindh Growth and Rural Revitalisation Programme (formerly Sindh Resource Management Programme) to promote private sector participation; improve public expenditure management and revitalise the rural economy.

According to an update project report, which was prepare by Xiaoqin Fan, Senior Public Sector Management Specialist Pakistan Resident Mission of ADB, about 50 percent of Sindh population resides in rural areas, and about 40 percent, or 7 million people live below the official poverty line. More than 70 percent of the rural population derive their livelihood from agriculture.

Agriculture (including livestock, fisheries, and forestry) contributes about 30 percent to provincial GDP. However, over the 1998/99 to 2004/05 period, the trend growth rate of real agricultural value-added was only 2.3 percent per year, and only 0.2 percent per year in per capita terms. In Sindh, the landless ratio is the highest (62 percent) among the four provinces, making non-farm income important for income generation.

The slow growth of the rural economy has led to a large and widening income gap between urban and rural Sindh. The rural urban divide is a serious concern not only for the welfare of the rural population, but also because it is potentially destabilising. Thus accelerating rural growth, and improving the income level of the rural poor, is urgently needed, Xiaoqin Fan added.

According to ADB project document, the some major factors were taken into account in determining the size of the loan: (i) the strength of the Program and its development impact, (ii) the financial, economic, and political costs associated with the implementation of the Program, and (iii) the overall development financing needs estimated by the Finance Department of the GoS.

The primary driver in the Government's decision to seek the ADB's policy reform and financing support is to reduce rural-urban inequality and enhance the pace of growth, particularly in the rural areas through a set of targeted reforms and increased investment.

The enhanced flow of funds to rural areas will enhance the productivity of agriculture, livestock, fisheries, rural infrastructure, rural health and education, and will be evidenced through their budgetary allocations.

Additional supportive measures to be undertaken include the creation of mechanisms to bridge the viability gaps in critical areas to encourage private sector participation in infrastructure service delivery in a transparent manner.

Meanwhile, ADB will provide $0.8 million for Sindh Province Water Resource Development (formerly Provincial Water Sector Development Strategies & Investment Plan).

Arnaud M Cauchois, Rural Development Specialist, CWAE explained that the project is envisaged to produce an ADB-financed investment program under the Multitranche Financing Facility (MFF) modality with a focus on water resources infrastructure, institutional strengthening and capacity development. It is anticipated that this project will improve the availability and productivity of water resources in Pakistan in 7 months.

Improved availability and productivity of water resources with an emphasis on irrigation infrastructure and water management. According to ADB project report, Investment program for water resources improved management and development in Sindh province to be financed under an ADB Multitranche Financing Facility.

Sector policy framework, a sector road map and a medium term investment program to guide ADB sector engagement consistent with MFF requirements. Criteria for selecting program projects. Feasibility level preparation of all canal command upgrading and rehabilitation project(s) to be financed under the MFF first tranche.

Detailed implementation arrangements and implementation plan. An assessment of small to medium dam technical and economic feasibility in Sindh province and recommendation for sub-sector strategy improvement and for financing under the second tranche investment programme.

Preparation of a program management facility (PMF) to support the MFF programme. Due diligence for financial management, procurement, and safeguards according to The ADB guidelines, including as required a resettlement framework and draft resettlement plans, environmental review procedures framework, initial environmental examinations and/or environmental impact assessments and indigenous peoples plans.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Green and skilled Kashmir': AJK government to implement plan rapidly​*
MIRPUR (July 27 2008): The AJK government's vision of "Green and Skilled Kashmir," primarily aimed at converting AJK into a model welfare state, is being implemented under a broad-based phased development programme across Azad Jammu and Kashmir, official sources said.

The sources told APP here on Saturday that the mass development programme will prove to be a milestone in redirecting the economy of the liberated territory with special focus to provide employment to the youth and to reform their economic future.

"Provision of technical training at least to two persons in every home in Azad Jammu and Kashmir forms the central part of this programme," the sources said. They said that the programme will not only help emerge and strengthen better home economy but would also involve the implementation of various mega projects. These giant public welfare projects will usher in the regime of welfare to fulfil my dream of an AJK as true welfare State.

The sources said that the government has paid special attention for the implementation of massive construction works in the earthquake zones of Azad Jammu and Kashmir with special focus to generate opportunities of employment for the youth.

The plan, the sources said, will increase economic graph of the citizens. They said that the AJK government had entered a phase from where societies take big take-off for economic fortune making.

Referring to the ideological priorities of the AJK government, the sources revealed that the government has fixed the priorities to promote the historic consciousness to link up the youth with the ideological assets and to fortify further State's relations with Pakistan.

The AJK government has also decided to promote working liaison with the Federal and Provincial governments and the authorities concerned for the settlement of the Mangla Dam affectees besides to promote co-ordination and consultation with the Kashmiri Diaspora, the sources said.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*PIP publishes 'Pakistan Energy Outlook'​*
KARACHI (July 28 2008): Petroleum Institute of Pakistan (PIP) has recently published 'Pakistan Energy Outlook (2007-08 to 2021-22)', an exhaustive and informative document which is the outcome of diligent endeavors by a team of industry professionals. This authentic guide addresses the growing demands of energy for sustainable development.

It highlights the current energy scenario and specifies guidelines for the future through giving the energy demand forecast for the next 15 years.

Pakistan's total energy consumption in 2006-07 was 60.2 million tons oil equivalent (mn TOE) and is expected to grow between 4.4 and 6.1 per cent per annum to reach in the range of 115 to 148 mn TOE by 202 1-22.

Pakistan faces a huge and growing energy deficit during this 15-year period, primarily because of the declining local natural gas reserves, which currently accounts for 49 per cent of the total consumption. This yawning gap between demand and supply may partly be offset by the planned hydel, coal and nuclear projects.

The Energy Outlook suggests gas imports through cross-border pipelines and in the form of LNG. To meet the coming challenges, prudent and stringent energy conservation measures are also recommended along with sustainable development of domestic energy resources including increased onshore/offshore oil & gas production and development of the Thar coal reserves.

Petroleum Institute of Pakistan (PIP) represents all segments of the petroleum industry of the country ie exploration & production, refining, marketing, pipeline and natural gas. It aims to assist and guide organisations and individuals associated with the industry.

To achieve this objective it carries out various activities to build a professional & informed group that enhances the quality of service, encourages high ethical standards and undertakes studies of policy and regulatory issues affecting the development of the petroleum industry in Pakistan.-PR

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Provincial inputs for setting energy prices: possible or not?​*
EDITORIAL (July 28 2008): It has been reported in a section of the Press that the provincial governments have protested against the federal government's decision to pass on the impact of rising international fuel prices on a monthly basis instead of the existing biannual system of automatic fuel adjustment mechanism.

The reason behind the federal government's decision to amend the system from biannual to monthly reassessment is evident: if the past year is anything to go in terms of the rise in the international price of oil a biannual system of adjustment may consist of a massive overnight rise every six months, a rise not acceptable to the public and therefore fraught with high political costs. However, a monthly rise would, by definition, be smaller and, therefore, politically more acceptable.

The shift from biannual to monthly was proposed by the present government at a time when the international price of oil rose unabated form almost a year. Any price reversal, and data reveals that the oil price has been declining in the global market for the second week running, would, one hopes, also translate into a lower price adjustment eventually.

The word 'eventually' is critical for those who may argue that the decline in global oil prices must raise the possibility of a decline in the price charged to Pakistani consumers next month for according to Naveed Qamar, the Finance Minister, the government continues to pay about one billion rupees a day as subsidy. Given the weak macroeconomic fundamentals till such a time as total subsidy to this sector reaches zero it is unlikely that the federal government would be able to match the oil price decline in fixing the domestic price.

And yet there is a strong rationale behind the provinces' demand to the federal government to consult them on the price of electricity: as energy is forming an ever rising component of the monthly budget of the people of the provinces - a factor that would have political implications for the provincial governments - therefore they argue it is critical for the federal government to take them on board.

The amount of subsidy affordable by the federal government on energy must determine how much price to charge the consumer for energy. If the element of subsidy was not a factor, then the mechanism for setting price of electricity is fairly simple. The regulator is requested by the power producers to raise tariffs in line with increasing input costs. The regulator holds a public hearing and based on the data available recommends a price.

This recommendation is then passed onto the government which determines the political cost of the price rise without subsidy; which assists the government in setting the subsidy levels. Unless the provincial government is prepared to pay part of the subsidy it is not logical to allow the provincial governments a role in decision making.

The foregoing does not imply that the input of the provinces must not be taken on board, an input that can also provide a forum for the federal government to insist that the various departments of the provincial governments pay up their dues to Wapda. The reduction of the circular debt as it has come to be known would reduce the pressure on Wapda's resources which can then be diverted to more development projects.

Provincial-federal parleys on the subject of electricity price can also be useful in terms of rewarding those provinces where the transmission and distribution costs (that include electricity theft) are lower than in other areas. In today's world where performance based allocations are critical to increasing accountability this in-built element of an incentive to cut our significant energy losses would assist in increasing supply from the existing generating capacity.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Annual trade policy: a relic of the past​*
Do we need an annual trade policy any longer? Many businessmen and academics dont really see any sense in it. They argue that the government should rather spell out its long-term trade, industrial and investment vision, identifying trade opportunities in various sectors for a period of at least five years.

It should give a clear roadmap as to how it plans to secure greater market access, attract domestic and foreign investment in industries it wishes to encourage, lower cost of industry and exporters and improve their capacity to compete in the global markets.

Trade policy is a relic of the past. Apart from Pakistan and a few other states, Im not familiar with many countries that issue any annual trade policy, says development economist Navaid Hamid, who teaches at the Lahore School of Economics.

It doesnt really make sense to have an annual trade policy. It was required when we (and other countries) could use high customs tariffs and duties as our main trade promotion tool as well as a major source of government revenues. Annual trade policy made a sense in those times, not now, he maintains.

Now you can make strategic changes whenever you want to. You dont need a trade policy for that. Having trade policy as annual feature means we are offering bureaucracy an opportunity to favour some and discourage others. It creates more confusion. We need a more transparent and honest process for encouraging (international) trade and look at long-term economic and trade growth, Navaid insists.

Leading businessman Akber Sheikh too wants the government to do away with trade policy as an annual feature. It was okay to have annual trade policy when the economy was mostly controlled by the state. Now we dont really want it because the nature of business has changed altogether and we have moved rapidly towards privatisation and a free market regime under the World Trade Organisation (WTO). Successive governments have pursued the same economic, industrial and trade policies over the last several years. We therefore dont really need trade policy every year. We should have a long-term policy detailing a vision and roadmap for enhancing our capacity to participate in the international trade, he says.

He says most changes in the trade regime  like liberalisation of import with India as announced in the latest trade policy  could actually be effected through SROs and did not require a lengthy trade policy. This is not my opinion alone. Most businessmen think in these terms. Also we attach too much hopes on trade policy and when we dont see any of those fulfilled we get disappointed, Akber says.

Years back former Commerce Minister Razzak Dawood had also stated that many people dont look at the annual trade policy favourably and want the government to discontinue this practice.

What is the use of a long speech by the minister and piles of papers if the so-called policy does not to contain anything substantial? wonders former Lahore Chamber of Commerce & Industry (LCCI) president Pervez Hanif. The previous government made a number of promises and announced numerous initiatives  such as establishment of garment cities, industrial clusters, branding and marketing of Pakistani products, helping exporters open up offices in major markets  to boost exports from Pakistan. None of these promises were fulfilled nor any initiatives have materialised so far, he laments. Same goes for the incumbent government, he says.

He maintains that no government has ever consulted private sector or exporters before formulating a trade policy. It is a document prepared by the babus of the commerce ministry without any input from the stakeholders, he says.

We just dont have any permanent mechanism for ensuring regular dialogue between the government  which is essential for policy predictability  and the private sector. It is because of this gap that no trade policy has ever been able to lay out a long-term vision or roadmap or any initiatives ever implemented or materialised. At the end of each year, we find only parts of the policy executed. Therefore we have new initiatives and promises at the start of every year without any link to the past, Pervez says.

The weak dialogue between the business community and the government means Pakistan continues to lag in export and market diversification.

The first trade policy of the incumbent coalition led by the Pakistan Peoples Party (PPP) for the year 2008-09 is also being seen and judged in this context  lacking in long-term vision, clear-cut roadmap for product and market diversification and a consultative process with the stakeholders.

The focus of the new trade policy  which sets export target of $22.1 billion for the current fiscal, up by 15 per cent from what was achieved last year  seems to be helping the industry, particularly export-oriented sectors cut their production costs through cheaper imports of industrial and other raw materials and capital goods from India and widening the scope of the DTRE and Temporary Importation schemes for duty- free import of materials for exports.

Besides liberalisation of imports from India and encouragement of Indian investment in CNG bus making, it gives certain fiscal, tax and other incentives to the domestic pharmaceutical industry to boost its exports and attract fresh investment in this sector, increases export rebate by one per cent for 14 small and medium industrial sectors like surgical instruments, carpets, fans, furniture, auto parts, cutlery, sports goods, etc and establish industrial clusters in various cities in Punjab, Sindh and the NWFP.

It promises to zero rate exports by refunding indirect taxes on input costs of exporters and subsidised loans for meeting international environmental standards. Other salient features of the policy include upgrading horticulture as an industry and announcement to support setting up of cool chain for facilitating horticulture exports, incentives for rice export.

There is no vision of future in the trade policy of the PPP. The measures announced in it  like an increase in rebate for some industries, liberalisation of import from India, developing clusters, etc  are not really the material that make up a vision, a policy, former caretaker finance minister Salman Shah argues.

The policy should have given the roadmap to increase exports to a certain level over a period of, say, five years, and decrease imports to narrow the trade deficit, which has grown to $21.5 billion last year. Also, we dont find any mention of the measures that would be taken to boost exports and in which sectors. The government has liberalised imports from India, which is a positive step, but it has not said a word if and how it plans to boost exports to the large Indian market. It says nothing on how do we intend to take advantage of our Free Trade Agreement with China. I seen nothing substantive or exciting in the trade policy, Salman says.

A Sialkot-based exporter, who does not want to be identified, says the new trade policy has borrowed most of its content as such from the previous governments trade policies without adding its own input to it. There is nothing new in it. All the measures are actually continuation of the previous policies except for liberalisation of imports from India, which is a good sign for peace and development in the region, he says.

LCCI president Mohammad Ali Mian says policy lacks concrete measures for curtailing imports.

It is a traditional, run-of-the-mill policy. It lacks cohesion with the overall economic objectives as laid down in the budget speech. No major steps have been announced to control the rising cost of doing business. It reflects the gap between the government and business and trade bodies.

He insists that the government should have given a package for major export industry  textiles and clothing, which still forms 57 per cent of the total exports  to lower its cost of doing business. It would have been much better if the government had announced certain concrete measures to boost investment, which is direly needed to boost industry and exports.

Former Pakistan Readymade Garments Manufacturers & Exporters Association chairman Ijaz Khokhar is dismayed at the absence of any clear-cut roadmap for boosting textile and clothing and other exports.

Annual trade policy: a relic of the past -DAWN - Business; July 28, 2008


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## Neo

*The what and how of agriculture?​*
THERE was not a single cabinet meeting where I was not told what should be done and what was required to be done. The what part is easy. My answer was always a counter question: How is it to be done? It is the manner of doing that is necessary for a positive outcome.

The fallacy about agriculture is that action can be taken quickly and that the problem can be solved at the macro level. Pakistan is precisely going through that kind of malaise at this juncture; a lot of activity but nothing concrete on the ground.

If everything were centralized, the current kind of malaise would come through. And what is required are decision makers and not lobbyists or apologists.

Agriculture as it stands now cannot and will not deliver. The interventions appear simple but become complex when taken to the ground level. The plethora of institutions involved is a source of delay. The critical element is momentum in implementation at the grass-root level when a problem comes up, some one has to take a decision that is in the best interest of agriculture.

The second fallacy is that Pakistan has agriculture scientists and that may not be true. A Ph D degree does not necessarily mean that you have scientists on board. The position is that Pakistan only takes genetic material from the international research centres, puts them in the national yield trials and then picks out the best material that has been tested all over the country.

Wheat and maize research institute in Mexico CIMMYT provides wheat and maize genetic material and IRRI in Manila provides the basis for rice production systems. This then is the story of our scientists. They are at the best the doers of other peoples research activity.

The third fallacy is that science alone plays a part. That may not be so for science has to be somehow coupled with art if the intervention has to go off the ground. I know of scores of people who have gone through 30 years of life in the civil services doing nothing but counting who did what wrong in public life. That is why Islamabad is known as Ilzamabad.

Let me give you some examples of what I mean when I say that any one who determines a new intervention can be scientist irrespective of whether he is a Ph D or not. In rice, the intervention by a priest in Mozambique has given a new twist to rice production in which 50 per cent water is saved and productivity doubled. None of our rice scientists were able to devise what this priest has done. In fact the entire intervention can now be changed in virtually every crop through the process of not accepting the present status quo and believing that a new world awaits agriculture.

Fertiliser that is going to be very expensive, also has a relatively much cheaper substitute. This would have been a roaring success but for the fact that in the very first meeting with regard to this process, the matter was put to rest by the intrigue of the relatives of one of our leading lawyers. That lawyer seemed to have a clout with the President. The disadvantage was converted in to an opportunity. Organic fertiliser would have been available at Rs250 per bag of 50 kg as against the current DAP price of Rs3,200 per bag of 50 kg.

The wisdom of the West can be put to rest that if you use organic fertilizer, the country would be in ruins and famine conditions would emerge. Nothing of this kind happens. For the first year, there will be a slight dip of between five and 10 per cent but the long-term advantages are many. Agriculture by this method is sustainable. We keep on hearing of alkaline soils but does one understand that this is due to DAP and the alkaline nature of the chemical fertilisers.

In the process of providing short-term benefits, the long-term equation is lost. Phosphate and nitrogenous fertilisers can be obtained naturally through the trees that fix these fertilisers in the soil. Some of these trees are indigenous to Pakistan while others are from Africa. The substitutes are available at virtually no cost. All required are organisational ability and, of course, the ability to fight the MNCs.

The moot question is why should other countries help you? Why should they not exploit Pakistan? That is exactly what they have done. The foreign hold on our assets is worse than the physical imperialism of yester years.

The courage to take actions lies with local workers and the liability for persuasion with the local administrator. I was a young civil servant when chemical fertiliser came into existence. The fertiliser was pushed for sale at the exorbitant price of Rs6 per bag. What the World Bank did to ensure that this would be a permanent feature was they asked that institutional arrangements be made for the permanency of the intervention.

So out came the fertiliser import department. Then to correct soils, the soil testing labs were introduced. Then these were taken to tehsil levels and then came the remedial measures that were themselves of a nature that did not enforce confidence.

What then is the solution? It lies with the persons who perceive matters in totality and then take stock as to how the intervention has to come about.

When this substitution in fertiliser takes place, new compulsions will arise. Where will they be able to sell their commodities for markets are few and far between? So one thing will snow ball into another and that is not a bad idea for this nation needs to get off its haunches. There is a certain relish in being independent and taking risky chances? Do it.

The what and how of agriculture? -DAWN - Business; July 28, 2008


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## Neo

*Privatisation of strategic assets​*
The Federal Minister for Privatisation and Investment, Syed Naveed Qamar, announced on June 6 the re-prioritised privatisation programme 2008-09.

The list of State Owned Enterprises (SOEs) includes prime engineering units such as Heavy Electrical Com-plex (HEC) at Hattar and Pakistan Machine Tool Factory (PMTF) at Karachi.

Earlier, the minister had assured that stakeholders including the employees would be taken on board before finalising the on-going privatisation process to make it pro-worker and pro-people. The SOEs on privatisation list, as already approved, are to be reviewed accordingly. This has not been done in real earnest. Engineering units like Pakistan Steel, Heavy Mechanical Complex (HMC), HEC and PMTF are of national strategic importance and should not be sold to the private sector.

PPP Co-Chairman Asif Ali Zardari had reportedly directed the Privatisation Commission (PC) in May, to drop strategic units from the sell-off programme. These are Pakistan Steel Mills, Pakistan State Oil (PSO), Oil and Gas Development Co (OGDC), Pakistan Petroleum Limited (PPL), Sui Southern Gas Co (SSGC) and Sui Northern Gas Pipelines Ltd (SNGPL). The PC has done this. On the same principle, the remaining units of strategic importance, namely HEC, PMTF and PECO, which all are at present managed by the State Engineering Corporation, should be taken off the privatisation list.

The previous government had de-listed Karachi Shipyard & Engineering Works (KSEW) and Heavy Mechanical Complex (HMC), the two heavy engineering units, from privatisation programme. Both the companies are profitable and viable.

The private sector has been allowed to invest, rather in a big way, in power generation sub-sector, while strengthening and development of transmission and distribution (T&D) sub-sector remains the sole responsibility of public sector. Plans are being implemented to almost double the present installed power generation capacity by the year 2015. To connect additional generation capacity a number of 500 kV and 220 kV transmission lines are planned for construction countrywide. This will create huge market demand for power transformers that are being produced by HEC. A rough estimate is of 580 . transformers required during next five years, costing about Rs15 billion.

HEC has an annual installed capacity of producing 148 power transformers of a wide range. It is a single-product single-customer manufacturing facility and as such not very attractive for the private sector in following the present production programme that has long payback period too.

The divestment of the Complex therefore may weaken the base created for high voltage electrical equipment, and, in such case, the government has to resort to import of power transformers, draining further on foreign exchange resources. Nonetheless, it is a matter of concern that the PC invited the Expressions of Interest (EOIs) for sale of 90 per cent shares of HEC along with its management in November 2006 but there has been no tangible progress on its transfer of ownership as yet. If the prevalent situation continues for some more time, the Complex could turn into a sick unit.

Similar is the case of PMTF for which the EOIs were invited from the prospective investors by December 26, 2007. The poor response forced the PC to extend last date for receiving the EOIs two times, to January 22, 2008 and then to February 7. It reflects on the lack of will on the part of private sector to continue to run the company operations in future, as required by the PC. PMTF is the only unit of its kind in the country and has contributed largely towards industrialisation. The facility was created for indigenous manufacturing of machine tools, under technical collaboration and technology transfer agreements with the world-reputed machine tool manufacturers. Subse-quently, its design and manufacturing capabilities were upgraded and modernised a number of times.

A well-developed machine-tools sub-sector is essential for reproducing technologies and adoption of advanced manufacturing processes. Unfortunately, the private sector has never come forward to invest in this area in formal sector. On this premise, it is likely that the prospective buyer would only be interested in acquisition of PMTFs real estate, which is spread over an area of 226 acres in prime location of Landhi, Karachi. The trend was witnessed in the sell-off of other engineering units in the past that ceased operations on take over by the private sector. The company also produces modern defence equipment that could come to a halt in case of its divestment.

During 1992-95 six industrial units of the State Engineering Corporation were sold, at a paltry sum of total Rs140 million. Most of these units have been closed down since change of ownership, resulting in loss of revenue, unemployment and economic regression. Privatisation of these engineering companies was counter-productive. Karachi Pipe Mills, Metropolitan Steel Corporation (MSC) and Quality Steel Works, all located in Karachi, were highly profitable entities, but were privatised since its not governments business to do business. On the other hand, assets of Pakistan Switchgear Limited (PSL), Lahore and Textile Machinery Co, Karachi were disposed of for the reason that these companies were incurring losses. All these SOEs were privatised without doing proper homework, and the vested interests played their role in divestment of its valuable assets at throwaway prices. Another unit, Pioneer Steel Mills, was returned to its owner of pre-nationalised days.

Engineering industry is termed as prime mover for the economic growth. To achieve import substitution and export promotion it is essential to strengthen the national engineering industry, which has stagnated over the last many years. This can best be done in public sector, given the conditions.

The writer is former Chairman of State Engineering Corporation of the Ministry of Industries, Production and Special Initiatives.

Privatisation of strategic assets -DAWN - Business; July 28, 2008


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## Neo

*Saudi oil facility or grant?​*
SAUDI oil on deferred payment  the Saudi Oil Facility  is expected to deliver another lifeline to Pakistan currently battling the worst of the budgetary woes.

The past experience shows that this deferred payment facility is assumed to be a grant from Saudi Arabia to cash-strapped Pakistan. The common perception is that it may not be different this time also. As reports go, Saudis will soon extend a $5.9 billion oil facility. The modalities are being worked out.

A Western diplomat familiar with Saudi ties to Pakistan was quoted as saying that the Saudis in 1998 began supplying crude oil under a deferred payment facility after Pakistan carried out its maiden nuclear tests and came under international economic sanctions.

After three years of deferred payments arrangements, the Saudis practically wrote off the payments. It would be interesting to see if there is going to be a write-off in future of the deferred payments now under discussion, the diplomat was quoted as saying.

The Saudis had extended this facility in the immediate aftermath of the nuclear tests, while the western world had imposed sanctions against Pakistan. Saudi Arabia and other Gulf friends helped Pakistan remain afloat, rescuing it from financial distress. Saudi Arabia extended the facility of deferred payment on its crude sales of 80,000 barrels per day. This facility continued for full two years but was reduced to half the quantity  40,000bpd  for another year.

Though the payment was technically deferred, Pakistan has practically not paid this amount to Saudi Arabia as yet. Many in Pakistan and in some western capitals felt this may have been converted into a grant. However, some analysts caution against this line of thinking advising that the payments still remain outstanding in books.

The recent past can be a guide to deferred payment. During the almost decade long IraqIran war (198088), the Gulf Arab states were siding with the regime in Baghdad under Saddam. In order to help Iraq overcome financial strain of the long war, oil-rich Gulf Arab states provided large assistance in both cash and kind to Iraq.

Once the war came to an end, things started to change somewhat. It was at this juncture that the reality dawned upon Saddam Hussain that the entire sum that was provided during the Iran-Iraq war by its Arab neighbours and which was then perceived as a grant by them was in fact a loan, repayable to the respective donors.

And thus when Kuwait asked the Iraqi government to pay back all that accrued to it, Iraqis simply refused, insisting it was a grant and not a loan. Saudi Arabia attempted reconciliation between the two sides but failed.

And even now, there is a lot US and Iraqi pressure on Saudi Arabia and other Gulf Arab States to write off the debts that were provided to Iraq under Saddam Hussain and which Baghdad had always perceived as grant.

However, the Saudis and other Gulf Arab states still seem reluctant to oblige. They have been weathering that the pressure, refusing to give in.

And it is only in recent weeks that the UAE government finally announced writing off the debts during the Saddam rule. Others are yet to follow.

Some analysts also believe that Opec members are committed to the international community not to provide oil on non-commercial terms. That, perhaps, explains the ambiguity on the deferred payment facility.

While Saudis may not press for repayments for whatever reasons, the deferred payment is no grant. The policy planners in Islamabad need to understand and comprehend fully its consequences too.

Saudi oil facility or grant? -DAWN - Business; July 28, 2008


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## Neo

*What is the real per capita income?​*
By Aftab Ahmad

As stated in the Pakis-tan Economic Survey, one of the redeeming features in fiscal year 2007-08 when the economy was faced with multiple challenges, was that the per capita income moved up from $926 to $1,085.

A study of the national income accounts, however, shows that the higher inflation rate of 10.3 per cent (as measured by the CPI) had played a significant role in pushing up both the GDP and the per capita income for 2007-08. To work out the per capita income for a particular year, the gross domestic product (GDP) is calculated at current market prices, which includes the element of annual inflation.

As a result high inflation in 2007-08, the GDP calculated at market prices showed an increase of 20 per cent over the previous year, while at constant prices (of 1999-2000), the GDP growth moved up only by 5.8 per cent. Similarly, the per capita income at current prices had gone up by 17.1 per cent to reach $1,085, whereas on the basis of constant prices of 1999-2000, the per capita income increased by only 4.4 per cent.

The per capita income appears impressive largely because of the higher inflation rate during the year 2007-08. Had the inflation rate been moderate, the increase in the per capita income would, also, have been modest, at best.

Second, the net factor income from abroad showed a robust growth in last fiscal. If the net factor income from abroad is positive, it adds to the gross national product (GNP) and vice-versa. The per capita income is arrived at by dividing the GNP over the countrys population. If the net factor income from abroad is positive , the per capita income works out to be higher. It helped in taking the per capita income from $926 in 2006-07 to 1,085 in 2007-08.

The marked increase in the net factor income is attributed to a surge in the income in home remittances which moved up to an all time record of nearly $6.5 billion in last fiscal.

Third, the per capita income had been arrived at by converting the figures in the rupee into the dollar, on the basis of an exchange rate of Rs61.30 to a dollar. The slide in the value of rupee vis-à-vis dollar started only about a couple of months ago and the exchange rate had remained stable during the major part of the year. The average exchange rate for 2007-08 worked out to be considerably better than the present exchange rate of Rs70-71 to a dollar. If the per capita income was calculated on the basis of the current exchange rate of the rupee vis-à-vis dollar, it would be considerably less.

The per capita income of $1,085 thus loses much of its charm, particularly when we know that the increase is largely inflation-related. The government should aim at bringing down the inflation rate by boosting the production/availability of both the agricultural and industrial products. Only a rapid and sustained growth of the commodities sector, whose performance was lacklustre last year, can help lower inflation.

In addition, while the increase in the income from home remittances is most welcome, we should not depend on a source not fully in our control. The government should, therefore, make all possible efforts to boost all other sources of national income.

Besides, the per capita income is calculated in terms of dollar. The World Bank reports the per capita incomes of various countries in its World Development reports in dollars to make them comparable with one another. If the exchange rate is stable, the per capita income keeps growing. However, if the exchange rate depreciates against the dollar, the increase in the GNP may be neutralised due to decline in the value of the national currency. As a result, the per capita income may remain stagnant or it may even show a decline, despite an increase in the GNP. In Pakistan, this has happened many times when the rupee had been on a decline. It would be vital for us to maintain our exchange rate stability.

Ironically, the rupee has depreciated against the dollar by about 15-20 per cent since the beginning of this year, while most of the other world currencies such as the euro, yen, Chinas yuan and even the Indian rupee had appreciated considerably in recent months against the dollar, due to the poor health of the US economy. The per capita incomes of all these countries would, therefore, gain from their currencys strength against the US dollar, while in case of Pakistan, the case would just be the reverse.

Although the per capita income has moved up to$1,085, our indebtedness has also grown alarmingly during the last few years. While the internal debt nearly doubled from Rs1,576 billion in FY 2000 to Rs3,012 billion in FY 2008, the external debts and liabilities had risen in just one year from $40.48 billion in FY 07 to $45.93 billion in FY 08.

What is the real per capita income? -DAWN - Business; July 28, 2008


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## Neo

*Bush offered $115 mln in food aid to Pakistan​*
WASHINGTON (Reuters) - U.S. President George W. Bush offered $115 million over two years in food aid to Pakistan, the White House said on Monday, after he met with Pakistani Prime Minister Yousaf Raza Gilani.

"The president offered $115 million over two years in food aid and $42.5 million of that will be available over the next six to nine months," White House spokeswoman Dana Perino told reporters.

Bush offered $115 mln in food aid to Pakistan - Yahoo! News


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## ejaz007

*Slow but definite start on tallest building*
By Jamil Khan

KARACHI: The City District Government Karachi (CDGK) has started work albeit at a slow pace on what will be the countrys tallest building, the 47-story IT Tower and Call Center. It will be featured near the city governments headquarters at Civic Center, Gulshan-e-Iqbal. 

City Nazim Syed Mustafa Kamal signed an agreement for the construction of the building on February 2008 in Kuala Lumpur but with the slow pace of work it is unlikely that the building will be completed in the stipulated time of two years. 

The construction is being carried out by Malaysian firm IM Technologies, Pakistan, a consortium of two foreign firms, IJM Investment JA Ltd and Malpak Ltd. Initially, a MoU (memorandum of understanding) was inked by the city nazim, IM Technologies and an Indian firm, Astra Netcom Ltd on July 18, 2006 but after reservations shown by different quarters, the Indian firm was sidelined from taking part in the 200-million-dollar project. 

Officials in the city governments Works and Services Department told Daily Times that presently, soil testing and excavation work has started and will be completed in the next couple of weeks. As this structure will be the tallest in the city, lengthy procedures such as soil testing have to be carried out for safety before the project kicks off on a major scale, he said. 

The contractors have erected iron curtains around the 3.05-acre proposed site by hanging huge panaflex posters, depicting the salient features of the project for the people passing by. 

Sources in the KBCA confirmed that the requirements of the 47-storey-building are in order and an NOC for its construction has been issued. The city government Project Director, Rauf Akhter Farooqi, told Daily Times that there were no hurdles in the way of the project and all formalities are over and done with. 

The tower will be the countrys first intelligent and environment friendly building. It will house its own power-generation facility of 18 MW, as well as have its own recyclable water supply. Besides the 10,000-seat call center, this tower will have all commercial facilities, including a shopping center, auditorium, food court, four multiplex cinemas, 260-room luxury hotel, health center, office space and three basement car parks for 2,100 vehicles. 

Sources in the Enterprises and Investment Promotion Department told Daily Times that after the completion of this fully commercial building, the city government will have a constant source of a handsome amount of revenue. 

As work on this project has started, different national and multi-national firms have approached the city government to reserve space in the call center, he said.

Daily Times - Leading News Resource of Pakistan


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## ejaz007

*Foreign trade up $11.70b*
By RAMZAN CHANDIO submitted 9 hours 44 minutes ago 

KARACHI - The countrys total foreign trade has reached $59.20 billion in the last financial year 2007-08 over $47.50 billion of corresponding period of the financial year 2006-07. In monetary terms the volume of the foreign trade increased by 11.675b dollars over the fiscal year 2006-07.

The official data of Federal Bureau of Statistics showed that the total exports of the country enlarged to $19.222 billion in outgoing FY08 depicting 13.23 percent growth over $16.976 billion dollars of corresponding fiscal 2006-07.

However, unprecedented increase of 30.87 percent was observed in the imports of the country as total imports amounted to 39.968 billion dollars in FY08 over $30.539 billion dollars of corresponding FY07.

In $39.968 billion dollars imports, the oil imports bill enlarged to $11.380b in last fiscal year 08 over $7.335 billion dollars of corresponding fiscal year 07 which showed 55.14 percent increase against corresponding fiscal.

Out of total $11.380 billion dollars import bill, country spent $6.158 billion dollars on petroleum products while $5.22 billion dollars were spent on the imports of petroleum crude.

Similarly, a huge increase of 53.51 percent has been recorded in the imports of food commodities as food sectors imports amounted to $4.209 billion dollars in outgoing fiscal year 2007-08 against $2.742 billion dollars of same period of last fiscal 2006-07.

In food group imports, country spent $860 million dollars in last fiscal against $415million dollars of previous FY07 which showed an unprecedented increase of almost 100 percent over corresponding period.

Meanwhile, the import of dry milk and milk food for infants decreased by 11.73 percent as its total import amounted to $74.344 million over $84.223 million of previous fiscal.

While nominal increase of 10.32pc recorded in the machinery group imports as its total imports reached to $7.376 billion in FY08 against $6.686b of corresponding FY07. The analysts said the continuous surge in oil prices in international market have given unprecedented boost to imports in last fiscal. They said that machinery, raw materials and semi-finished items imports have been depicting a substantial growth during the last couple of years which may also continue in next fiscal.

Meanwhile, nominal growth of 13.23 percent observed in the total exports of the country as total exports amounted to $19.222b in last FY08 against $16.976 billion of previous FY07.

Foreign trade up $11.70b | Pakistan | News | Newspaper | Daily | English | Online


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## ejaz007

*Siemens and Bosicor sign agreement*
Source: APP submitted 9 hours 48 minutes ago 

KARACHI - The Siemens Pakistan have entered in to an agreement with Bosicor Chemicals Pakistan Limited for the erection, refurbishment and installation of their Chemical Plant (Aromatic).

An announcement here on Monday said that the plant will be relocated from Italy and to be erected adjacent to the existing Bosicor Refinery at Mouza Kund, Hub (Baluchistan).

It said that the Aromatic Plant is expected to come on stream in the first quarter of 2010 producing Benzene, Cyclohexane, Toluene, Mixed Xylenes, MetaXylene, Ortho Xylene and Para-Xylene (BTX). Para-Xylene is a raw material for PTA which at present is being imported

Siemens and Bosicor sign agreement | Pakistan | News | Newspaper | Daily | English | Online


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## Neo

*Analysts see SBP raising rates by 50-150 bps ​*
Tuesday, July 29, 2008 

KARACHI: The State Bank of Pakistan is expected to raise its key discount rate on Tuesday in its battle to bring soaring inflation back under control.

A Reuters poll of seven analysts showed a range of expectations for the rate rise lay mainly between 0.5 and 1.0 percentage points. One analyst predicted a hefty 150 basis point move. Investors are expecting a rise of up to 150 basis points tomorrow in the monetary policy, said Sajid Bhanji, a dealer at brokers Arif Habib Ltd, as the Karachi Stock Exchanges main index fell more than 4 per cent in Monday morning trading.

One analyst hedged predictions, by offering an alternative forecast that the central bank would leave the discount rate unchanged and lift the statutory liquidity requirement by 100 basis points instead.

In May, the central bank raised its key discount rate to 12 per cent from 10.5 per cent and increased its cash reserve requirement by 100 basis points to 9 per cent for all deposits up to one year maturity. It also jacked up the statutory liquidity requirement by 100 basis points to 19 per cent of the total time and demand liabilities.

State Bank of Pakistans chief spokesman Syed Wasimuddin said the central bank would announce its policy decisions on Tuesday. Analysts said further tightening was necessary given the acceleration in inflation and widening current account and fiscal deficits.

Annual inflation climbed to 21.5 per cent in June, pushed to its highest levels since the 1970s by soaring world prices of crude oil and food commodities. To prevent the second round of inflation, monetary policy has to be tightened, said Muzzamil Aslam, economist at KASB Securities Ltd.

The target for inflation in the current fiscal year ending in June 2009 is 12 per cent, which analysts feel will be hard to achieve.The most likely trigger of better times would be a slowing in inflation but Im not confident in forecasting a slowdown this year, said ING economist Tim Condon.

http://www.thenews.com.pk/arc_news.asp?id=3


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## Neo

*Pakistan emerging market for US direct investment ​*
Tuesday, July 29, 2008 

LAHORE: Pakistan is an emerging market, rich with exciting opportunities for US direct investment. Commenting on the current visit of Prime Minister Syed Yousuf Raza Gilani to the United States, founder chairman Pak-US Joint Business Council and Vice President SAARC Chamber of Commerce and Industry (SCCI), Pakistan Chapter, Iftikhar Ali Malik on Monday said that Pakistan, with its investment friendly climate, is now open to the American business community.

He said there are significant opportunities for the US and other foreign suppliers to undertake investment in Pakistan. Pak government will fully ensure sustained and sound economic policies and strict implementation of Intellectual Property Rights, he said.

He hoped that Pakistan would achieve sustained growth in key sectors, including an increase in per capita income and improvement in its microeconomic indicators. He said Pakistan is ideally located geographically, with immediate access to the Central Asian Republics, and has a competitively affordable and expanding workforce of 36 million.

Malik said that Pakistans foreign investment policy is open and liberal, adding that US Pakistan Business Council helps the American corporate sector identify opportunities in Pakistans vast resource based industries, such as oil, gas and petrochemicals, a fast growing infrastructure sector, and other industries such as textiles, garments, software and automotive manufacture.

Pakistan is a country rich in history, culture and natural resources, he observed, and said he was confident that partnership between the United States and Pakistan, which began over 50 years ago, would reach a high point in the years to come.

Malik further noted that multinational companies and investors are visiting and investing in Pakistan, with several joint ventures and MoUs underway in various sectors, and observed that the balance of trade between USA and Pakistan, which is tilted in favour of USA, should be more balanced.

http://www.thenews.com.pk/arc_news.asp?id=3


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## Neo

*SMEs important part of economy: ICCI​*
ISLAMABAD: Promotion of Small and Medium Enterprises (SMEs) has helped in enhancement of the competitiveness of the economy and generation of employment opportunities. President Islamabad Chamber of Commerce and Industry (ICCI), Mohammad Ijaz Abbasi said economy comprised mainly of the SMEs and their role was clearly indicated by various statistics. Approximately 3.2 million business enterprises in Pakistan while enterprises employing up to 99 persons constitute over 95 percent of all private enterprises in the industrial sector and employ nearly 78 percent6 of the non-agriculture labour force.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Joint statement: US to provide $115.5 million in food aid​* 
WASHINSTON (July 29 2008): President George W. Bush welcomed Prime Minister Syed Yousaf Raza Gilani to Washington today for his first visit to the United States as the leader of Pakistan's democratically-elected civilian government.

The President and Prime Minister reaffirmed their commitment to the long-term Strategic Partnership between the United States and Pakistan, which is based on shared values and holds Immense potential for the enduring peace, security, stability, freedom, and prosperity of Pakistan and of the region. The President affirmed his support for Pakistan's sovereignty, independence, unity, and territorial integrity.

The two leaders agreed that the focus of the broad-based Pakistan-US relationship should remain on ensuring the well being of the people by assisting Pakistan to implement its national development agenda in a comprehensive manner. Pakistan and the US will work together to eliminate the threat of extremism, build strong democratic institutions, modernise education, and increase economic growth and opportunity.

President Bush and Prime Minister Gilani reaffirmed their condemnation of terrorism in all its forms and manifestations. They acknowledged that terrorism and violent extremism pose a common threat to Pakistan, the United States, and the international community.

The two leaders pledged to work together to address this threat and to deny any space to militants or terrorists through increased co-operation. The President recognised the sacrifices the people of Pakistan and the Pakistani security forces have made in the ongoing fight.

The President and Prime Minister reiterated that success in countering terrorism will require a comprehensive strategy, including increased security, improved governance, and opportunity for socio-economic development for the people especially in the less-developed regions of Pakistan.

The President and the Prime Minister expressed/deep sympathy for the families of those who have fallen victim to suicide and other terrorist attacks in Pakistan. The Prime Minister expressed appreciation for US efforts to promote peace and stability in the region. The United States is dedicated to providing Pakistan with the support and tools it needs to lead the fight against terrorism.

The two leaders also committed to increased bilateral economic co-operation to include expanded trade, an improved investment climate, promoting co-operation in the public and private sectors, and agreed to work together to ensure food and energy security as well as facilitate investment in infrastructure and social sectors in Pakistan.

In reaffirming the Strategic Partnership, President Bush and Prime Minister Gilani attached importance to the next round of the Strategic Dialogue, which will be co-chaired by the US Deputy Secretary of State and Pakistan's Foreign Minister, in September 2008 and regularly thereafter to review issues of mutual interest.

In addition, the two leaders committed both countries to undertake the following steps in development, counter-terrorism, economic, and regional co-operation: Focus on the needs of the Pakistani people:

-- Food, Health, Education, Energy, and Democratic Governance

-- The two leaders welcomed recent efforts in the US Congress to extend the United States' assistance commitment to Pakistan to help address Pakistan's most urgent needs, including education, agriculture, and energy. The President will continue to work with Congress to ensure the continued support of the United States to Pakistan over the long-term.

-- The two leaders agreed to institute a separate track for agricultural co-operation under the Strategic Dialogue.

-- The United States will provide $115.5 million in food security assistance to Pakistan, including $42.5 million over the next nine months.

-- The United States will assist with disease control activities in Pakistan to augment the Prime Minister's initiative to combat the spread of hepatitis and other infectious diseases.

-- The United States highlighted its $30 million Pakistan Energy Development program focused on improving power availability, affordability, and efficiency.

-- The United States and Pakistan will hold thc next round of the US-Pakistan Energy Dialogue this fall to help Pakistan meet its vast and growing energy needs.

-- The two leaders agreed to hold the next round of the US-Pakistan Education Dialogue later this year.

-- The two leaders agreed to continue and enhance robust collaboration in science and technology under the successful bilateral Science and Technology Framework Agreement.

-- The United States highlighted its support for democracy-building and improved governance through project funding.

*EXPAND BILATERAL TRADE AND IMPROVE THE BUSINESS CLIMATE: *

-- The two leaders renewed a joint commitment to pursue steps to establish Reconstruction Opportunity Zones that will expand trade opportunities in parts of Pakistan and Afghanistan.

-- The United States and Pakistan will work together toward a goal of establishing direct non-stop flights between the two countries before the end of 2008, expanding people-to-people ties and improving the investment climate to the benefit of the people of both countries.

-- The United States and Pakistan agree to convene officials promptly to review the status of bilateral investment treaty negotiations.

-- The two countries will reconvene the Joint Council under the Trade and Investment Framework Agreement in September 2008.

-- The US-Pakistan Economic Dialogue will be held on August 11 in Islamabad.

*EXPAND SECURITY AND COUNTER-TERRORISM COOPERATION: *

-- The two leaders agreed to strengthen the long-term security relationship with a view to enhancing Pakistan's defence capabilities, especially in the field of counter-terrorism, through training and equipment.

-- Reconvene the bilateral Defense Consultative Group this fall with a renewed focus on counterinsurgency and counter-terrorism.

-- Renew co-operative efforts to root out extremism along the Pakistan-Afghanistan border, including the Northwest Frontier Province, the Federally Administered Tribal Areas and Balochistan.

-- Expand co-operation between the US and the Pakistani Frontier Corps and other Pakistani security forces on the front lines in the fight against violent extremism.

-- Focus US security assistance on efforts to enhance the counter-terrorism capability of Pakistan's military forces.

*WORK TOGETHER TO ENHANCE REGIONAL PEACE, SECURITY, AND STABILITY:* 

-- Strengthen the Tripartite Commission between the International Security Assistance Force, Pakistan, and Afghanistan.

-- Support the efforts of Pakistan and Afghanistan to hold the next joint jirga this fall.

-- Hold the next Regional Economic Co-operation Conference in Islamabad this fall.

-- Encourage the Pakistan-India Composite Dialogue process to reduce tensions, build trust, and resolve all outstanding issues. Prime Minister Gilani thanked President Bush and the people of the United States for the hospitality accorded to him, Mrs Gilani, and the members of the Prime Ministerial delegation during their stay in the United States.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*US Senate body approves $15bn aid​*
WASHINGTON: The Senate Foreign Relations Committee has approved the Biden-Lugar bill that will provide $15 billion to Pakistan over a 10-year period for the countrys economic consolidation, which will enhance its ability to fight terrorism.

Daily Times - Leading News Resource of Pakistan


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## Neo

*LSM registers 4.62 percent growth during 11 months of fiscal year 2007-08​* 
ISLAMABAD (July 29 2008): The Large Scale Manufacturing (LSM) has showed a dismal growth of 4.62 per cent during the first 11 months of 2007-08 over the same period of previous year, revealed Federal Bureau of Statistics on Monday.

The LSM production was recorded 4.71 per cent in July-April 2007-08 over the same period of last but it declined to 4.62 per cent in July-May 2007-08, according to the FBS provisional statistics about Quantum Index Manufacturing (QIM).

With this declining trend, the production of industrial sector growth may remain even below five per cent for the year against the projected and revised target of 10.5 per cent and 7.5 per cent respectively. The declining trend in LSM growth has continued from last few years. The LSM growth went down from 19.9 per cent in 2004-05 to 8.8 per cent in 2006-07.

The dismal performance by the manufacturing sector, which is the second largest contributors to the economy with 19 per cent of GDP is not good omen for the economy.

The LSM index is based on latest production data of 100 items provided by Oil Companies Advisory Committee (OCAC), Ministry of Industries & Production and provincial Bureau of Statistics (BoS). The break-up of data shows 4.70 per cent growth OCAC index during the first eleven months of 2007-08, followed by 5.13 per cent in ministry of industries index and 3.77 per cent in provincial Bureau of Statistics (BoS) index. Analysis of the data showed a growth of 4.7 per cent in the petroleum production on the back of growth in kerosene oil, motor spirit, high speed diesel, jute batching oil, and solvent naphtha. The eleven-month growth in kerosene oil was 8.01 per cent over last year, 11.63 per cent and 11.82 per cent respectively in motor spirit and high-speed diesel and 8.98 per cent in Jute batching oil and 1.19 per cent in solvent naphtha.

A negative growth of 14 per cent in jet fuel oil, 7.34 per cent in diesel oil, 0.89 per cent in lubricant oil, 3.07 per cent in LPG and 9.89 per cent in petroleum products was recorded during the period under review. In food sector, vegetable ghee production declined by 4.19 per cent, the production of cooking oil increased by 0.72 per cent, tea blended 12.40 per cent, beverages 24.31 per cent, wheat and grain milling 1.61 per cent. Among electric items, production of deep freezer, bulbs, tubes, motors, meters and transformers declined substantially by 8.56 per cent, 4.97 per cent, 3.32 per cent, 15.62 per cent, 43.81 per cent and 33.67 per cent respectively during the period under review.

Production of paper and board, phosphates fertilisers, billets, ingots, cokes, coil, plates, tractors, jeep and cars also declined during first eleven months of 2007-08 over the same period of last year. LSM was projected to grow by 12.5 per cent in the fiscal 2007-08 against previous year's 8.8 per cent but was revised downward to 7.5 per cent for the year.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Inflation is being made worse by PPP-led government: Rs 240 billion borrowed from SBP in 13 weeks​* 
KARACHI (July 28 2008): The present coalition government has printed more currency notes to finance its budgetary needs than the Shaukat Aziz-led government or the caretaker set-up headed by Mohammedmian Soomro.

A weekly breakdown of government borrowing from the State Bank and commercial banks shows that in 20 weeks - from July 1st to November 15, 2007 - Federal Government under Shaukat Aziz borrowed Rs 75 billion from the central bank and Rs 62 billion from commercial banks, totalling Rs 137 billion.

In 17 weeks - from November 15, 2007 to March 25, 2008 - the 'caretakers' borrowed Rs 289 billion from State Bank. However, during this period, they also retired Rs 111 billion of treasury bills from commercial banks. In effect, the total borrowing for the budget under Mohammadmian Soomro was higher than it was under Shaukat Aziz as it stood at Rs 178 billion.

The PPP-led government despite crying foul about the high note printing by the Shaukat Aziz-Salman Shah combination resulting in sky rocketing inflation of nearly 20 percent has, however, done the same. Contrary to tall claims of being highly conscientious in relation to its responsibility towards the economic situation and holding its predecessors responsible for the present economic woes PM Gilani's government not only has stayed the same course, it has, in fact, moved one step forward by getting more currency notes printed.

In 13 weeks, ie from March 25 to June 30, 2008, the Gilani government borrowed Rs 325 billion from SBP, while it retired Rs 85 billion borrowings from commercial banks. As a consequence, the net borrowing of the present set-up is the highest ever - Rs 240 billion - in a surprisingly shorter period of only 13 weeks as compared to that of 20 weeks of Shaukat Aziz and 17 weeks of Soomro.

The present government went on a borrowing spree from SBP in the closing week of the financial year as it was committing that it wouldn't borrow "in net terms" from SBP in the next financial year. On the very last day alone, government borrowed as much Rs 55 billion from the central bank.

For the entire 2007-08 fiscal year, the Federal Government borrowed Rs 689 billion from SBP while retiring Rs 134 billion from commercial banks. As a consequence, thereof Rs 555 billion of fresh stock of Treasury Bills or money creation was undertaken by SBP.

The government has made a firm commitment that it will not borrow on net basis from the SBP and the banking system and instead finance its fiscal gap from non-bank sources. Unfortunately, however, it was within the first three weeks of the current financial year - from July 1st to July 23rd - that the government borrowed as much as Rs 34.1 billion from SBP.

This amount is in addition to drawdown of deposits by provincial governments from their balances with the central bank, which had risen due to grants provided to the provinces by the Federal government.

The only relief the central bank has received is the placement of $500 million by Bank of China with SBP. Central bank, despite protest from the Ministry of Finance, has reduced Rs 37 billion of government borrowed stock against the placement.

The State Bank can effectively drain off excess liquidity by raising the Credit Reserve Ratio (CRR) as well as Statutory Liquidity Ratio (SLR) in one go. But with the tap on (all the time) with currency printing it is forced to mop up this excess inflow through frequent open market operations (OMOs). Because of this, the overnight borrowing rate instead of reflecting a tight monetary policy shows a yo-yo movement. In case government's expenditure remains out of control and the borrowing for the budget from the central bank does not stop, SBP may need to hold daily OMO auctions to drain the liquidity out in order to keep the overnight bank rate close to its own policy rate.

At the present T-bill yields even the banks are feeling shy in lending more money to the government. With the T-bill yields within 25 bps of SBP policy rate, SBP cannot offload its stock of T-bills onto the banks unless it further raises the discount rate. Banks have already taken this into account and raised KIBOR by 350 bps as against 150 bps rise in SBP in SBP policy rate on May 22nd, 2008.

SBP wants the government to retire Rs 21 billion of existing stock at the end of every quarter. By borrowing throughout the quarter and then retiring on the last day with the help of external loans or sudden bulky inflow does not help matters. Once SBP lends to the government and then creates the T-bills - then subsequently tries to offload them through OMO, the T-bill stock of banks rises which enables them to lend more. This defeats the very purpose of a tight monetary stance aimed at containing inflation.

The argument that raising the discount rate to check inflation being fuelled by external sources ie oil and food becomes meaningless. Oil consumption reduction would help in keeping price rises in check. Raising food productivity would also reduce the fuelling of CPI because of high weightage of food.

Even if oil drops to $80 a barrel and the rise in wheat and other items in CPI is arrested - inflation cannot be reversed unless the government reduces expenditure or raises resources and brings the fiscal deficit to 3.5 percent or lower in real terms.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Energy sector roundtable in US today​* 
WASHINGTON (July 29 2008): Pakistan government has set an ambitious tagret of around $20 billion as foreign investment in the energy sector, for which it is actively interacting with top companies in the USA. Highlighting the salient features of the upcoming energy conference.

The Minister of Information, Sherry Rehman, told Business Recorder that the international energy roundtable would be instrumental in attracting maximum foreign investment in the energy sector through institutional and legal support to foreign investment.

Top power companies of the world would participate in the conference to explore possibilities for making investment in Pakistan. Besides coal and hydro power projects, the international energy roundtable would also discuss gas pipeline projects as well.

She said that the global increase in the prices of POL products was a major challenge for Pakistan along with other countries of the world. Globally, consumers' tariffs are being increased along with reduction in subsidies. This has substantially increased the importance of coal as an alternative soruce of energy in the country, she added.

As the previous regime was unable to provide a clear roadmap for investment in energy sector, the present government is committed to encourage investment in the energy sector, particularly coal sector. There was no framework or policy available for foreign investors to attract investment in energy sector.In view of the situation, the coming conference is being organised by the World Bank on July 29.

Besides institutional and legal support, an effective international dispute resolution mechanism is necessary to give legal protection to the foreign investors in the energy sector. She said that 21 countries are participating in the global energy conference which would give an opportunity to foreign investors to give suggestions on increasing investment in alternative sources of energy particularly coal. There is need for more aggressive policy for attracting investment in hydro power projects and coal as alternative sources of energy in future, she said.

In the past, around $6 billion foreign investment has been witnesed in the energy sector. However, the government is likely to attract foreign investment of nearly $20 billion in the energy sector by arranging such kind of international conferences.

Referring to a 1000 mega watts power project, she said that three times more bids have been received for this huge project, reflecting foreign investors' interest in Pakistan's projects. The government would also convene a US-Pak economic dialogue in August and a joint council under trade and investment framework would be held in September 2008.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Government borrowing 'totally unsustainable': SBP​* 
KARACHI (July 30 2008): The State Bank of Pakistan (SBP) has further tightened its monetary policy for another six months to curb the rising inflationary trend by increasing the key discount rate by 100 basis points (bps). The central bank has also instructed federal government to retire Rs 84 billion during the current fiscal year.

State Bank of Pakistan Governor Dr Shamshad Akhtar announced monetary policy for the July-December period at a press conference at SBP head office here on Tuesday.

-- Key discount rate raised by 100 basis points to 13 percent:

-- Fiscal deficit FY08 is Rs 865 billion or 8.3 percent of GDP

-- Fiscal excesses now visible more clearly Budget deficit target of FY09 of 4.7 percent of GDP is already coming under stress

The SBP raised its key discount rate by 100bps to 13 percent effective July 30, 2008, which is the fourth consecutive increase in last one year. Earlier, the central bank raised the rate by 50 bps from 9.5 percent to 10 percent in July 2007 and some 100bps in January 2008 from 10 percent to 10.50 percent.

In May 2008 the SBP suddenly took a tight monetary stance due to rising inflation and continuous depreciation of Pak rupee against the dollar and increased the discount rate by 150 bps to 12 percent.

Addressing the press conference, Dr Shamshad Akhtar said that considering the risk relating to rising external current account and fiscal deficits and worsening inflation outlook, the central bank has decided to raise its policy rate by 100 basis points to 13 percent effective July 30, 2008.

She stressed the government to improve the supply chain and said if the supply side issues are not addressed, the 'gap' could remain unchanged and the expected favourable impact on inflation will be diluted.

"These measures are necessary for ensuring price stability and long-term growth on sustainable basis and it is also expected that some demand pressures will recede in the current fiscal year," she added. She said that fiscal co-ordination with the monetary policy stance in particular commitment to scale down government borrowings from the central bank and to stop the import growth is critical to achieve the desired impact of monetary tightening.

"The banks have also refused to provide financing to federal government at present rate of 12 percent, therefore if the SBP did not raise the policy rate then it was likely that bank borrowing would also shift to the SBP," she added.

She said that considering the adverse impact of continued borrowing by the government from SBP on inflation, the SBP's Central Board of Directors has resolved that the government should retire Rs 21 billion in each quarter of FY09.

Dr Akhtar said in order to restore macroeconomic stability there was need for additional corrective policy actions, both at the government and central bank level. She said assuming the domestic demand continues to grow at last five-year average of 8.1 percent and the real GDP growth target of 5.5 percent for FY09 is achieved, the difference between domestic demand and supply is expected to widen further.

She pointed out that inflationary pressures in the economy are alarming as on an average, headline CPI inflation at 12.0 percent in FY08 was 5.5 percentage points above the target for the year and underlying this non-food inflation more than doubled to 13.8 percent since December 2007.

In June 2008, the headline CPI inflation (YoY) reached 30-year high of 21.5 percent, while food inflation rose to record high of 32 percent. Strong aggregate demand pressures combined with increased pass through of the persistent rise in imported oil prices contributed to high domestic inflation. On the domestic front, in addition to the demand pressures, a fall in the productive capacity of the economy is also contributing to rising inflation, she added.

"The trade-offs are not easy and global economic environment continues to be fraught with uncertainties though some trends are quite clear: global growth has slowed down, international liquidity squeeze remains and Pakistan sovereign rating prevents tapping international markets and uptrend in international commodity prices continues, in particular in oil," she observed.

Dr Akhtar underscored the need for a dynamic fiscal framework for FY09 that will incorporate necessary adjustments as economic developments evolve. She said early indications are that the budget deficit target for FY09 of 4.7 percent of GDP is already coming under stress.

Similarly, realising the estimated growth in tax revenue at 24 percent seems high given the average growth of only 12.8 percent during the last 5 years. "It must be kept in view that past few years benefited from the high and fairly robust GDP growth (7.0 percent on average); while for the coming year a growth of only 5.5 percent is being anticipated," she emphasised.

The SBP governor said the balance of payment scenario for FY09 has warranted further policy action as curtailing further import growth and raising the exports further is critical for narrowing the external current account deficit which is key to the macroeconomic sustainability.

She also stressed that additional efforts to mobilise financing to meet the external current account deficit is equally critical as the assumptions underlying balance of payment projections have changed with the rise in international oil prices and exchange rate. At the same time financing mobilisation will need to be calibrated to restore foreign exchange reserves to a more comfortable level, she added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Government asked to retire Rs 84 billion during fiscal year 2009​* 
KARACHI (July 30 2008): The State Bank of Pakistan on Tuesday asked the federal government to retire Rs 84 billion during the current fiscal year, as the borrowing has already reached historic level and rising borrowing is creating fiscal and macroeconomic imbalances.

In addition, the SBP once again demanded amendment in the Fiscal Responsibility and Debt Limitation Act, 2005. Addressing a press conference, State Bank Governor Dr Shamshad Akhtar said that considering the adverse impact of continued borrowing from SBP on inflation, the SBP Central Board of Directors has resolved that the government should retire Rs 21 billion in each quarter of FY09.

She said that very soon a delegation of the central bank would also meet government officials to convince them to retire Rs 84 billion during this fiscal year and amendment in the Fiscal Responsibility and Debt Limitation Act, 2005. She said that efforts should be made to raise additional resources for the government financing, otherwise, it will pose a risk to the monetary policy stance.

As is evident, during the first 25 days of current fiscal year, the government borrowed additional Rs 32.9 billion from the SBP and this pattern is not in line with SBP's recommendation to the government to retire Rs 21 billion during each quarter of FY09, she said.

The governor pointed out that the government's heavy reliance on SBP borrowings continues unabated with additional new borrowing of Rs 149.8 billion during May 25 to June 30, 2008. While, during the first month of current fiscal year the government borrowed some Rs 32.9 billion, which is a negative sign.

Budget for fiscal year 2008-09 estimates put it at 7 percent of GDP, while financing data available to the SBP for the full FY08 shows this could be around 8.3 percent of GDP, she added. Within two months of May and June 2008, trade and external current account deficits as percent of GDP widened further by 1.5 percentage points each and exchange rate remained under pressure.

In the same period, CPI inflation (YoY), on the back of high international commodity prices and high inflationary borrowing intensified by 4.3 percentage points. Above all, second round impact of high food inflation has embedded in the inflation expectations, she added.

Dr Akhtar said recognising this, the government and the central bank have taken pre-emptive policy actions together. Budget for FY09 has been rolled back to 4.7 percent of GDP and the government committed itself to achieve net zero borrowing during the course of the year, while enhancing its reliance on other non-bank sources.

The Central Board of Directors of SBP has recommended that the government should ensure net retirement of Rs 84 billion for FY09 with quarterly retirement of Rs 21 billion. She said these limits have been worked out keeping in view perspective need for consistency with a coherent macroeconomic framework. Support to these commitments and targets will be vital to arrest the drift in macroeconomic imbalances, she said.

"Imposing hard budgetary constraints further requires that the government amends the Fiscal Responsibility and Debt Limitation Act, 2005 to include provisions for recognising the need to phase out the government's dependence on SBP borrowings over a period," she added. This involves adherence to limits imposed on SBP borrowings henceforth, while lowering the stock of SBP borrowings," she stressed.

Dr Akhtar underscored the need for a dynamic fiscal framework for FY09 that will incorporate necessary adjustments as economic developments evolve. She said early indications are that the budget deficit target for FY09 of 4.7 percent of GDP is already coming under stress.

The governor stressed that these optimistic expenditure and revenue assumptions carry the risk of fiscal slippages beyond target again. "Even a one percentage point increase in fiscal deficit above the target level would require additional borrowings in the order of over Rs 100 billion," she observed.

"There are severe external and domestic constraints which make it difficult for raising the required financing on a timely basis for the projected fiscal deficit for FY09," she said. Generating the same amount domestically from sources other than the central bank would result in crowding out of credit availability to the private sector.

Replying to a question, she said the government has some other tools such as Pakistan Investment Bonds and national saving schemes to meet its financing needs and in the budget, the government also raised the profit on the national saving to attract investment.

She said that India and China's central banks are not providing financing to their governments therefore, inflation and discount rates are lower in these countries. Based on financing availed from SBP, it is estimated that fiscal deficit for FY08 is more than double the targeted level and even above the reported outcome in budget for FY09.

She said that consequently, the year has ended with the SBP's financing of Rs 689 billion, around 80 percent of the fiscal deficit. The stock of government debt to SBP - Market Related Treasury Bills (MRTBs) has now reached Rs 1053 billion, almost 10 percent of GDP.

Rise in fiscal deficit and inability of the government to tap non-bank and external resources over and above the projected levels resulted in excessive recourse to central bank's borrowings. During the course of H2-FY08, the government borrowed Rs 204.2 billion during January-March 2008 and Rs 283.9 billion during April-June 2008, of which Rs 55 billion alone were borrowed on the last day of this fiscal year.

Moreover, substantially large borrowing requirements have inhibited the government ability to meet the additional financing requirements from commercial banks and off-loading the existing stock of MRTBs in the market, she said.

Efforts to offload these borrowings are already exerting further pressure on Karachi Interbank Offered Rate and other market interest rates. In fact, the market has already raised its bid prices in T-bill auctions and consequently the 3 month cut-off rate has peaked to 11.8 percent reaching close to the SBP policy rate of 12 percent, she said.

Business Recorder [Pakistan's First Financial Daily]


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*Korean Consul General offers help to build low cost houses​* 
KARACHI (July 30 2008): The Consul-General of Korea, Choe Su Il, said here on Tuesday that Korea can help Pakistan in developing low-cost houses for middle and lower income groups people. He said this in a meeting with the chairman of housing committee of Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Munir Sultan.

He said that Korea is very advanced in construction sector and uses most modern technology for constructing houses.

Briefing about the meeting, Munir Sultan said that the consul-general had said that by using Korean modern construction technology around 10,000 low cost house could be constructed in just three months. He said that the consul general said that according to one estimate the overall production of housing units has to be increased to 500,000 housing units annually to address 8.8 million backlog of housing units in Pakistan and to meet the housing shortfall in next 20 years.

He assured the consul general that he would present a report to the government of Pakistan to suggest using Korean technology which could help producing around 10,000 house in just three months in Karachi, Lahore and Islamabad.

Business Recorder [Pakistan's First Financial Daily]


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*Pakistan to seek US help in nuclear energy production​* 
ISLAMABAD (July 29 2008): For its energy security, Pakistan will seek US help in production of nuclear energy under international safeguards in negotiations with the US administration, said Foreign Office spokesman, Mohammad Sadiq in reply to a question on Monday during weekly press briefing.

He said that all the bilateral relations ie political, economic, security and strategic dialogue to be discussed by Prime Minister Yousaf Raza Gilani, who is recently on a week-long visit to the US. Commenting on Pak-US Investment Treaty, he said that the Treaty is part of Pak-US talks agenda as Pakistan is in dire need of foreign investment.

Replying to a question about Indian involvement in terrorist activities in Pakistan, he said: "I have nothing to say at this stage without concrete information." As far as Indo-US nuclear deal is concerned, Pakistan's position is clear and well-known, national interest will be protected at all costs, Sadiq said.

Commenting on the firing incidents taking place across LoC, he said such incidents are taking place but are local in nature and could be resolved at local level. Good, progressing relations between Pakistan and India are in the interest of both the countries, he added.

Dr A Q Khan's case is closed therefore, his statements on nuclear safety issues carry no weight. Pakistan's N-programme is fully secured and we are having the best security apparatus in place, he opined. However, Sadiq showed his inability to comment on Wana attacks from Afghan side as he had no official verdict yet.

About the detention of Washington-based Pakistani journalist, he said: "I am not aware of the details, why he was nabbed, but I am in touch with the family and assisting them in his early release."

Modalities of Benazir Bhutto's murder probe under the auspices of the UN are being worked out, he said in reply to a question. Commenting on Pak-India peace process and fifth round of composite dialogue, the spokesman said the direction is positive and we need to move forward for bringing prosperity to this region.

There is still no evidence of any Pak lady in Bagram Jail, but we are in constant touch with Afghan and the US authorities, he added. In response to a question the spokesman said that Syed Khursheed Ahmed Shah, Minister for Labour, Manpower and Overseas Pakistanis will lead Pakistan's delegation to the 15th NAM ministerial meeting.

In his opening statement, the Foreign Office spokesman said, 15th Saarc summit will be held in Colombo, Sri Lanka from 2-3 August 2008. Heads of states or governments of Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka will attend the summit.

The summit will be preceded by the meetings of the Saarc Council of Ministers (July 31 to August 1), Standing Committee (July 29 to 30) and the Programming Committee (July 27 to 28). Foreign Minister, Makhdoom Shah Mahmood Qureshi will participate in the 30th Session of Saarc Council of Ministers and the Prime Minister will lead Pakistan's delegation in the summit. The occasion will also be utilised for bilateral meetings on the sidelines of the summit.

A number of Saarc documents including the Charter of Saarc Development Fund; Agreement on the Establishment of Saarc Regional Standards Organisation (Sarso); Saarc Convention on Mutual Assistance in Criminal Matters; and Protocol on the Accession of Afghanistan to Safta are expected to be signed during the summit.

Foreign Minister Shah Mahmood Qureshi will participate in the 30th Session of Saarc Council of Ministers. The council is second highest decision making forum of Saarc, next to Saarc summit. It is composed of the foreign ministers of the Saarc member states, and generally meets twice a year.

Business Recorder [Pakistan's First Financial Daily]


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*IT literacy planned for women councillors​*
ISLAMABAD (July 29 2008): The Ministry of Women Development (MoWD) has planned to make women councillors' computer literate through an Information Technology (IT) training programme. An official of the ministry told APP that the training would start soon throughout the country.

The ministry has already trained 3,100 women councillors giving them know-how about basic computer skills. About Rs 97 million was demanded for the five years programme by the ministry, he informed. The programme, he said, was mainly initiated to educate the women councillors of remote areas at Tehsil council and Union council level with computer education so that they can play their role in nation building.

It would help raise computer literacy among female elected representatives at the grassroots level, he said. Under the plan, basic IT training will be imparted to 11,500 women councillors in the next five years from July 2008 to July 2013.

For the training, the ministry has set matriculation, as the minimum education qualification required for female councillors from Punjab, urban Sindh and the NWFP, and middle (8th grade) for those coming from Balochistan, interior Sindh and distant areas of the NWFP.

The training will be undertaken in Punjab's 35 districts, Sindh's 23, the NWFP's 24, Balochistan's 29 and 22 districts of Azad Kashmir, Northern Areas, Tribal Areas and Islamabad.

The official also informed the press that Rs 400 TA/DA a day and Rs 2, 800 for participation in the seven-day training session will be paid to the women councillors. The amount of TA/DA will later be enhanced to 500 per day. The trainees will also be provided with reading material, he said.

Further, he said the by women ministry would formulate training modules while NGOs in the respective areas at provincial level would impart training in different districts. The computer centres with well-equipped laboratories would train women councillors by hiring skilful IT teachers.

Business Recorder [Pakistan's First Financial Daily]


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*PTA remains vigilant as cellular phone sector shows significant growth​*
ISLAMABAD (July 29 2008): Pakistan Telecommunication Authority (PTA) remained vigilant for all developments in the telecom sector during the current quarter as the cellular mobile phone sector showed immense growth and the cellular mobile phone operators remained aggressive for marketing and expansion of cellular network.

China Mobile (Zong) came up with increasing subscribers at a rapid pace while Telenor and Mobilink offered various value-added services at lowered rates to attract more customers.

The competition among cellular Mobile phone operators has become more intensive. With the shifting from seven digits to eight numbers, all switches in Pakistan Telecommunication Company Limited (PTCL) have been enabled for eight digits, which was a huge task for the PTA who took it bravely.

The verification of unauthorised Subscriber Identity Modules (SIMs) was another Herculean task, which was worked down tremendously from all aspects. The PTA, in collaboration with National Database and Registration Authority (NADRA) and mobile operators, has devised a comprehensive mechanism to very the SIMs.

The market share is considered an important tool to gauge the level of competition in any sector of the economy and helps determine a Significant Market Power Player (SMP) whose tariff needs to be regulated to safeguard the competition in any sector. During the current year, the market share of Mobilink declined from 44.3 percent in March 2007 to 38.5 percent in March 2008 despite the fact that the company added more than seven million subscribers.

Telenor improved its market share from 16.3 percent in March 2007 to 20.2 percent in March 2008 and also added 7.6 million subscribers during the period. The market share of Ufone remained did not increase during the last one year and remained at 20 percent while Zong became an emerging player in cellular mobile market of the country who added 1.14 percent share during the last year and its share reached upto 2.6 percent in March 2008.

Business Recorder [Pakistan's First Financial Daily]


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*Minister directs to expedite work on Gomal Zam Dam​* 
PESHAWAR (July 30 2008): NWFP Minister for Agriculture, Arbab Muhammad Ayub Jan has directed the concerned authorities to expedite the pace of work over the Gomal Zam Dam project so that a large portion of land could be prepared for the sowing of wheat in the southern districts of NWFP.

He issued these directives while presiding over a high level meeting regarding the re-initiation of Rod Kohi Irrigation system at Senior Member Board of Revenue (SMBR) office on Tuesday. Provincial Minister for Revenue Habibur Rehman Tanoli, SMBR, Ihsanullah Khan, MPA Israrullah Khan Gandapur, former provincial ministers Nawabzada Mohsin Ali Khan and Sanaullah Khan Mian khel were also present in the meeting.

The meeting had decided to constitute a high level committee under the chairmanship of NWFP minister for agriculture while minister for revenue, SMBR, DG small dams, secretaries of P&D and finance and concerned MPAs of the area would be the members of the committee.

The meeting also decided that 13 bulldozers would be provided immediately along with a mobile workshop facility to D.I. Khan and Tank districts for the repairing of existing and new Rod Kohi system. The meeting also ordered to repair the present Rod Kohi structure and warren kanal Tank as the chief minister taking keen interest in the project.

Israrullah Khan Gandapur pointed out the slow pace of work over the Gomal Zam project and asked the government bench to issue directives for expedition of work. Arbab Muhammad Ayub Jan has directed the officials to accelerate the construction work over the project and it should be completed within the specified period. He said with the completion of the project 0.6 million acres fertile land would get the irrigation water facilities and the land would be able to produce sufficient wheat to fulfil the requirements of the province.

He said that the chief minister himself was very much interested in the agriculture sector and wanted to see the province self-sufficient in the agriculture field and had already ordered to remove each and every hurdle to achieve the desired goal.

He asked the members of the constituted committee to come up with the positive proposals for the success of Rod Kohi projects and to submit the report to him for onward submission to the chief minister within few days. The meeting also reviewed the Head Zam Tank project in detail and decided to restart work on this valuable project.

Business Recorder [Pakistan's First Financial Daily]


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*The need for decentralisation​*
EDITORIAL (July 30 2008): The Punjab government has raised a very valid objection with regard to a practice under which our presidents and prime ministers have been routinely issuing directives, during periodic field tours, for the launching of development schemes on a 50-50 cost sharing basis between the federal and provincial governments.

This has been going on usually without any discussion with the cost's co-sharer. Punjab Chief Minister Shahbaz Sharif thinks it is an unfair practice, and has decided to take a stand on the issue. A Recorder report says the province has sent a letter to the Centre, saying that the federal government should fully fund all such projects.

It rightly points out that financing of such projects over and above the approved Medium Term Development Framework and Annual Development Programme distorts provincial priorities. All the more so when social sector projects related to provincial subjects such as education, healthcare, water supply, rural development, agriculture, livestock, food, fisheries, forestry, and small industries, are formulated and implemented without consultation with the province.

It is common for the two tiers of government to work in parallel, duplicating efforts. Their jobs overlap quite often, which causes difficulties. The letter mentions the examples of Tameer-e-Pakistan, Tameer-e-Punjab and the various rural electrification and gas supply projects, arguing that funding for all such projects should be provided to the provinces to plan, implement, monitor and manage them. This is necessary to prevent wastage of effort as well as resources.

The situation, of course, is not peculiar to Punjab. The other three provinces have even more serious complaints to make against the Centre. The problem is related to our rulers' penchant for centralisation in stark violation of the federating units' rights that call for fiscal federalism and greater provincial autonomy.

An unmistakable symptom of the malaise is an unending dispute over the National Finance Commission Award, which remains deadlocked over horizontal as well as vertical distribution of national resources. Direly needed is a new resource allocation criterion which corrects inter-provincial imbalances created by the existing population-based resource allocation formula favouring the federation's dominant member, Punjab.

It is equally important to amend the vertical distribution formula that presently hands the lion's share from the resources pie to the Centre, leaving the provinces to fight over a mere 43.6 percent leftover. There is a strong case for rationalising the ratio of centre to provinces in terms of distribution of resources, and towards that end, for the Federal government to reduce its expenditure.

A beginning could be made with the concurrent list. The centre must hand all subjects included in the Concurrent Legislative List to the provinces, as required by the Constitution. The measure will bring about a significant reduction in the Federal government's financial obligations. And of course, it will automatically address issues like the ones the Punjab government has raised in its communication to Islamabad.

Business Recorder [Pakistan's First Financial Daily]


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*Pakistan needs 16,000 MW to overcome power crisis: Minister ​* 
WASHINGTON: July 30, 2008

Pakistan requires 16,000 mega watt electricity generation to overcome the ongoing power crisis, for which 30 billion dollar will be required for relevant projects till year 2015, Minister for Water and Power Raja Pervaiz Ashraf said on Tuesday.

He was addressing a joint press conference with Sindh Chief Minister Qaim Ali Shah after attending the first day of Energy Roundtable Conference on Thar Coal Project organised in collaboration with World Bank here.

The Minister termed the conference in Washington as successful in which many international companies showed their interest to invest in the power sector of Pakistan.

He said selection of power companies would be done through international competitive bidding in a transparent manner, and the investors would undergo a one-go and hassle free process of registration.

He said it could take three to four years for the generation of electricity from the Thar Coal project.

He said the agreement with Kyrgyzstan and Tajikistan on import of electricity would be finalised on August 4.

The Minister said the country's first windmill would start functioning in Jampir, Thatta next month while 50 more windmills would be installed by August 14 which would produce 200 mega watt electricity.

The Sindh Chief Minister, who is also the Chairman of Thar Coal Authority said there are 185 billion metric ton coal reserves in Sindh which would be utilised to generate electricity for the province and the country.

Pakistan needs 16,000 MW to overcome power crisis: Minister : Business Recorder | LATEST NEWS


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*Discount rate hike to hurt industry: FPCCI ​* 
Thursday, July 31, 2008

KARACHI: Federation of Pakistan Chambers of Commerce and Industry President Tanveer Ahmed Sheikh has expressed serious concern over the State Banks monetary policy, saying the increase of 100 basis points in discount rate will adversely affect the industry.

In a press statement, he said the raise in interest rate would further push up the cost of production, which would definitely be transferred to consumers, adding to inflationary pressures.

He strongly reacted to the SBP governors claim that stakeholders had been consulted, saying the FPCCI was not consulted at all. He pointed out that this is the fourth increase in discount rate since July 31 last year.

The discount rate was 9.5 per cent at the end of July 2007 and the rate of inflation was 7.8 per cent. It was raised by 50 basis points (10 per cent) on July 31, 2007, whereas another 50 basis points were added on February 1, 2008 to make it 10.5 per cent while inflation also increased by 1 per cent and reached 8.8 per cent, he said.

On May 23, he added, the SBP raised the discount rate by 150 basis points (12 per cent) and the rate of inflation was 17.2 per cent and now again the SBP is trying to repeat its past practice, which is statistically unfavourable for reducing inflation.

Sheikh said it was also notable that the SBP had been applying a tight monetary policy to control inflation since last year but inflation had been rising continuously which showed that the central bank was preparing monetary policy without studying the nature of inflation.

In Pakistan, he pointed out, the inflation was not demand-push, which could be controlled through a tight monetary policy. Instead, the major causes of rising inflation in the country were hike in prices of oil, wheat and other food items. All these are inelastic products and the monetary policy cannot control their prices. 

We have to take such measures which can improve the supply of these goods and have to improve our inventory management.

Commenting on the SBP governors statement that banks balance sheets were under stress, he said that was due to consumer financing where default ratio was high and recovery rate low. We have been emphasising that the SBP should aim to provide industrial loans instead of consumer financing since industrial development can provide more employment.

He expressed dissatisfaction over steps taken by the SBP to reduce the Karachi Inter-bank Offered Rate, saying KIBOR depends on the ability of fund lending and liquidity position of banks and determines the inter-bank market by banks demand and supply of money.

The steps taken by the SBP in the monetary policy, he added, would negatively affect banks ability to lend and would further increase KIBOR.

Discount rate hike to hurt industry: FPCCI


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*Landhi bio-gas test plant to revolutionise energy production ​* 
Thursday, July 31, 2008

KARACHI: Deep inside a part of Landhi, where even a jeep struggles to cross, lies state-of-the-art technology which will use buffalo dung to change the economics and environment of the locality.

A bio gas test plant in Landhi Cattle Colony, which is one of the worlds biggest cattle farms with over 40,000 buffaloes, will start converting organic waste into fertiliser and natural gas within the next few days.

Nobody has ever thought of such a big project, said Robert D Orr, a director at Hirad, the English company which has set up the pilot project. We are talking about collecting 8,000 tonnes of manure daily and using it to make something productive.

After the project has been tested for a year, it is estimated it will produce 430,000 cubic metres of gas and 1,500 tonnes of fertiliser a day. Presently, the waste from nearly 2,000 farms scattered over the colony is channelled through open drains into the Arabian Sea, leading to massive environmental and heath-related hazards.

The project had remained on paper for the past 11 years, despite the estimated revenue from the sale of fertiliser and gas being enough for its feasibility. The idea of earning income from the sale of carbon credits attracted attention when Pakistan signed the Kyoto Protocol in 2005.

The Clean Development Mechanism (CDM) is a programme initiated by the United Nations Framework Convention on Climate Change (UNFCCC) to explore cost-effective options to mitigate the impact of climate change. It is slowly helping industries here to improve their economies, and even pushing some to adopt unconventional ways to better their businesses.

At least one company, Pakarab Fertiliser Limited, has already started generating saleable carbon-offset credits by undertaking a multi-million dollar project to reduce emissions of nitrous oxide, a highly potent greenhouse gas. Eight more projects are awaiting the approval of the UNFCCC.

Saadullah Ayaz, Head of the CDM Cell in Pakistan, said that many industries in the country can benefit from trading in carbon emission reduction (CER) or carbon credits. The CDM has potential wherever energy is being used. Textile units can use it to bring more efficient boilers and shift their power plants from CO2 intensive and expensive oil to gas.

Under the protocol of the first CDM commitment period, developed countries are bound to reduce carbon dioxide emissions by five per cent from the 1990 levels by 2012. However, Ayaz said that since most of these countries have failed to meet their targets, it was inevitable that the programme would extend up to 2017 and beyond.

The cost of decreasing emissions is often unfeasible in industrialised countries, leading them to buy carbon credits from developing nations as part of their commitment to reduce emissions that cause climate change.

In some businesses, the CDM is being viewed as a way of being more efficient as well as fulfilling corporate responsibility towards the environment.

Almoiz Bagasse Cogeneration Project, which will use the residue of sugarcane juice to generate 27 megawatts of power, has also applied for carbon credits.

The processes used in the sugar industry are inefficient, said Salman Shehryar, a business analyst at Almoiz. There were a lot of technological and financial barriers in projects. However, we have moved on and are in the middle of installing turbines for the internal supply and export of electricity.

Trading in carbon credits is also a way of stopping environmental damage in a developing country like Pakistan, which is suffering heavy financial losses arising from excessive pollution, said Naeem Qureshi, President National Forum for Environment and Health.

Every year, around 30,000 people die in Pakistan due to pollution. More than half a million fall victim to severe dieses, he said, adding that in terms of money, the country incurs a loss of Rs80 billion annually as exports are barred, seafood production declines, and worker productivity suffers.

There is a simple reason why Pakistan has not been able to capture a sizable part of the carbon credit market dominated by South Asian nations. Our industrialists are not proactive in improving their factories, said Omar Malik, a director at Carbon Services, a Lahore-based consultancy. The only mentionable response has come from the cement industry.

Landhi bio-gas test plant to revolutionise energy production


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*$900m sought from ADB to improve reserves​*
ISLAMABAD, July 30: Pakistan is desperately seeking $900 million from the Asian Development Bank by October this year to improve its fast depleting foreign exchange reserves.

Sources told Dawn that the bank, which had earlier disbursed $850 million, out of $1.9 billion lined up for calendar year 2008, has been requested to rescue the government by releasing preferably in one tranche the amount of $900 million by October this year. This funding is meant for improving energy sector and infrastructure development programme in the country.

The sources said that Islamabad told the bank that there had been $5.5 billion drawdown in reserves during the last few months due to higher oil and food imports that created lot of problems.

The sources said that Pakistan had been advised to achieve financial discipline to improve its deteriorating economy and qualifying for increased banks assistance in 2009.

The bank has also called for establishing more Independent Power Projects (IPPs) by the private sector to meet 7,000MW of electricity shortage. It asked the government to settle tariff-related issues to attract more IPPs in the country.

The government was told that the ADB had launched a new long-term 2020 strategy refocusing its operation in Asia and Pacific on three point development agenda that included growth, environmentally sustainable growth, and regional integration.

The strategy 2020 reshapes, redirects, and repositions ADB for a more innovative and effective development role in rapidly changing region and within the international aid architecture.

It sets ADBs new strategic course, emphasising that poverty reduction can only be sustained if more people are economically productive, economic growth takes place in a well-managed natural environment, and neighbouring economies work within larger and freer markets to achieve shared interests through cooperation.

Pakistan was told that by 2012, 80 per cent lending will be in five core operational areas identified as ADBs comparative strengths infrastructure, environment, regional cooperation and integration, finance sector development, and education.

By 2020, about 50 per cent of operations will be in private sector development and private sector operations, and 30 per cent in regional cooperation and integration.

$900m sought from ADB to improve reserves -DAWN - Business; July 31, 2008


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*Investment invited for Thar coal projects​*
WASHINGTON, July 30: Sindh Chief Minister Syed Qaim Ali Shah has invited the international companies to make investment in coal-fired power plants and other projects in the province assuring them of full support of his government.

I will extend warm welcome to all those interested in having a look at Sindhs coal resources, especially the desert of Thar and its coal reserves for establishing power generation plants or for other purposes.

As chief executive of the province, I extend my full support and assistance to prospective investors in coal resources of Sindh. We will also provide full access to all data and information available with provincial concerned departments, he said in his opening address at a roundtable conference at the office of the World Bank here on Tuesday.

The WB and International Finance Corporation had sponsored the conference, presided over by Syed Qaim Ali Shah.

The Thar coal lignite reserves were estimated to be around 175 billion tons spread over an area of 9,000 square kilometres. The total coal resources in Sindh are estimated to be over 185 billion tons, considered sixth largest in the world. Over 90 per cent of countrys coal reserves are in Sindh, he told the participants.

He further stated that the government had facilitated infrastructure development at Thar coalfield where road network, electricity, optical fibre line, water supply, etc., are available while airstrip is being built and laying of a railway track has been approved.

The mines department of Sindh has intensively explored an area of 455 sq km and further explorations are being undertaken to increase availability of blocks with complete data for potential investors, he said.

Syed Qaim Ali Shah informed the participants about the response from both local and foreign investors to an offer for public-private joint venture in Thar coal-mining.

They are enthusiastic and there are several investment proposals under consideration of the government. Some of the companies are participating in this conference.

We have now formed Thar Coal and Power Board to ensure that the investors do not run for paper work from one department or ministry to other, and provide one-window facility to them.

The large area of Thar coalfield cannot possibly be developed by a few companies. The existing energy gap and future demand makes it imperative upon the Sindh government to open up its coal resources for countrys needs.

Coal has to be exploited at a very large scale for meeting the energy demands of the country. This includes demand for electricity as well as for fuel through coal-to-liquid technology and by gasification to conserve the fast depleting reserves of natural gas of Pakistan, he said.

The Sindh Chief Minister said that development of Thar resources would provide certain degree of long-term energy security to Pakistan.

Over 36 companies from all over the world attended the conference also addressed by Foreign Minister Shah Mahmood Qureshi, who holds the charge of ministry of petroleum and natural resources.PPI

Investment invited for Thar coal projects -DAWN - Business; July 31, 2008


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*In the interest of economy​*
THE State Banks decision to hike its key policy rate by one per cent to 13 per cent  the highest since July 2001  was expected. It is in line with the global trend to fight off the adverse impact of elevated prices of oil, metal and food commodities through tight monetary policy. The bank has been tightening monetary policy over the last one year to mitigate the risk to the economy from rising inflationary pressures. Worsening macroeconomic imbalances during the last fiscal years second quarter increased risks to the economy. The bank raised the discount rate by 3.5 per cent in four consecutive hikes  including 1.5 per cent in May  in less than 11 months since July 2007. The business sector argues that the interest rate hike would make credit costlier. But it should understand that the impact of higher credit price on businesses would be minimal in comparison to extremely adverse effects of price instability and ballooning external current account and fiscal deficits. The headline inflation went up to 12 per cent and inflation in food prices doubled to 13 per cent last financial year. The external current account deficit has grown to 8.4 per cent of the GDP and the bank estimates fiscal deficit to be around 8.3 per cent rather than seven per cent as stated by the government.

Businessmen have a point when they say that tight monetary policy is slowing down investment and growth. But this is not to be attributed to the banks approach. It is a result of global price uncertainties and the failure of the previous government to pass on the increase in global oil and food prices to domestic consumers. Also the previous as well as incumbent governments relied heavily on central bank borrowings to cover fiscal deficit and, thus, diluted the banks tight monetary stance and contributed significantly to inflationary pressures in the economy. Government borrowings topped Rs689bn or 80 per cent of fiscal deficit last year. Political uncertainty, the growing oil and food import bill and crunch in the global financial markets have significantly reduced foreign inflows, resulting in a rapid depletion of the foreign exchange stock and devaluation of the rupee. The fiscal deficit target of 4.7 per cent for the current year is also under stress as government borrowings have risen to above Rs32bn in the first month of the current fiscal. Political pressures deter the government from withdrawing subsidies. The bank has asked the government to stick to its pledge to net zero borrowings from it and look for other funding resources as well as to retire Rs84bn from its debt during the current year.

That is where the catch lies. On the one hand the government needs to turn the sliding economy around, spurring growth and investment and containing inflation, and on the other it must provide relief to people. Long-term economic stability demands tough decisions.

DAWN - Editorial; July 31, 2008


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*Pakistan ahead of India in attracting investment​*
KARACHI: CFA Association of Pakistan (CFAAP) held a seminar on Whats Emerging in Emerging Marketsthe beauty contest, according to a press release Wednesday. CFA Emerging Markets specialist, Lawrence Speidell said Pakistan was ahead of India in the contest to attract foreign investment. Speidell is currently the founding partner and chief investment officer of Ondine Asset Management, sponsor of the Frontier Market Select Fund. He highlighted various factors, which work in favour of Pakistan, including better demographics with higher share of younger population, rising urbanisation, lesser income equality, availability of clean water, faster business set up time and freedom of speech. 

Daily Times - Leading News Resource of Pakistan


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*Rs 165 billion borrowing by previous government: Naveed asks SBP to clarify its position​* 
ISLAMABAD (July 31 2008): Finance Minister Naveed Qamar has said that the State Bank Governor Dr Shamshad Akhtar should also clarify about Rs 165 billion borrowing of the previous government, which was adjusted by the present government on June 30.

Responding to a question about SBP Governor's statement of huge borrowing by the present government, the Minister disputed SBP Governor's claim, saying that the previous government did not show Rs 165 billion of oil marketing companies in its book.

Transfer of this amount in the book of the present government on June 30 gave an impression that the amount was borrowed recently. In fact, he said, Rs 165 billion had been borrowed by the previous government and the SBP Governor must have clarified it.

The Minister claimed that the government was taking stringent measures to control its expenditure. "We are suffering due to the previous government's mismanagement, which heavily relied on borrowing to meet its expenditure."

He said the present government had taken over at a point when the fiscal deficit was already galloping and that government neither showed the money it owed to the oil marketing companies in its book nor passed it on to the consumers.

"I wish she should have said the same at the time when the previous government was borrowing from the SBP," he said, expressing hope that his government would be able to retire Rs 84 billion.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Bush backed $15 billion Pakistan aid bill: Gilani​* 
ISLAMABAD (July 31 2008): Prime Minister Yousuf Raza Gillani has said that President Bush has strongly supported $15 billion of non-military development assistance to Pakistan, as the U S Foreign Relations Committee unanimously approved the Biden-Lugar bill, committing foreign assistance of this huge amount during next ten years.

In an historical event during Gilani's visit to USA, the US Foreign Relations Committee approved the Biden-Lugar bill to provide assistance of $15 billion to Pakistan over the next one decade.

Addressing the think-tank event jointly organised by the council on Foreign Relations and the Middle East Institute in Washington on last day, the Prime Minister said that Inter-Services Intelligence (ISI), Intelligence Bureau (IB), and all other agencies are fully under the control of the civilian government and the US should also provide civilian nuclear technology to Pakistan for meeting the demands of energy in the country.

The PM said that all of Pakistan was heartened by the United States Senate Foreign Relations Committee unanimous passage of the Biden-Lugar bipartisan $15 billion plan for ten years non-military commitment by the US to the people of Pakistan. This legislation also has the support of President Bush, who is eager for democracy to succeed in Pakistan.

The $2 billion FATA plan, to which the US has contributed $750 million over a five-year period, would help accelerate social sector development in the tribal areas, contributing to the efforts to rescue the tribal people from the clutches of ignorance, extremism and foreign terrorist.

He said that this extraordinary recognition of the need to broaden and strengthen the bilateral relationship beyond merely military relations to a genuine economic and social partnership to building a prosperous, just and democratic Pakistan, has riveted the attention of the people of Pakistan.

The Biden-Lugar Plan, the Reconstruction Opportunity Zones program, and the FATA social development plan, taken together, are a clear and bold signal to the people of Pakistan that not only is Pakistan back in business, but the US is standing with it in a long-term mature partnership.

He said that there are abundant business and investment opportunities in Pakistan. "We have established special economic with special incentives for foreign companies to invest. In the last PPP government, Pakistan was cited by the World Bank (WB) as one of the top ten emerging markets in the world. Foreign investment in Pakistan quadrupled, but we want to recreate the economic incentives for foreign investment and trade that will re-establish our nation as a leader in the emerging global economy."

He said that one of the great tragedies of the modern era is that after achieving the liberation of Afghanistan, the world failed to reconstruct a post-war Afghanistan built on democratic principles of coalition, consensuses and compromise. "We failed to rebuild civil society and promote democratic institutions. The US thought short-term, but not long term, as far as reconstruction of a post-war Afghanistan is concerned."

Meanwhile, Pakistan's envoy to the United States, Husain Haqqani, said: "The government and the people of Pakistan are grateful to the members of the Senate Foreign Relations Committee for their unanimous, bipartisan and broad vote in support of Pakistani democracy".

He said: "Today's action by the Committee heralds a new day in the bilateral relationship between the United States and Pakistan, a relationship that will be founded on mutual interest and mutual values, an economic partnership that transcends political and military relations and directly impacts the life of the people of Pakistan.

"We are especially grateful to the leadership and vision of Senators Biden, Lugar, Kerry and Hagel. The $15 billion commitment to the long-term development of a prosperous and stable Pakistan is a dramatic expression of the confidence and support of the United States Congress in the future of democracy in Pakistan."

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Get rid of TDAP, redundant ministries, EAC tells government​* 
ISLAMABAD (July 31 2008): The Economic Advisory Committee (EAC) has recommended to the government to get rid of Trade Development Authority of Pakistan (TDAP) and all other redundant agencies/ministries and authorities to cut down non-development expenditure, besides rationalising development spending to achieve fiscal consolidation.

The EAC wanted the government to achieve 20 percent reduction in non-development expenditure in the current fiscal year to reduce its dependence on domestic borrowing. It suggested cut in number of ministries/divisions from exiting 45 to 18 to run the government affairs more prudently.

Sources said EAC, formed by the prime minister, submitted its detailed report on Pakistan's economy, its weaknesses and suggested a number of steps for quick fiscal consolidation. Most of the measures suggested by it have already been implemented by the government. Some of them were reduction in subsidy by passing on actual oil prices to the consumers, imposition of tax on property and 10 percent regulatory duty on all non-essential items.

Among other measures, restructuring of public sector corporations was of extraordinary importance. It said that the government should follow a clear strategy to eliminate their losses.

The EAC also wanted the government to reduce fleet of large cars/aircraft for VVIPs use. It also recommended reduction in travel expenditure of the government both foreign as well as local by promoting the use of video conferencing. Other than cutting down travel expenditure, the EAC also wanted drastic reduction in VVIPs protocol.

The EAC seemed concerned over the procedure followed in the past for development expenditure. It, in particular, wanted a qualitative change in the process of selection of development projects. It recommended a major change in the procedure for selection of projects for making development the people centric. It wanted that the government should align Public Sector Development Programme (PSDP) with overall development priorities to make them beneficial for the people.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Extra funds for projects: provinces seek PC help for evolving mechanism​* 
ISLAMABAD (July 31 2008): The provincial governments have approached the Planning Commission (PC) for help in formulating a mechanism to allocate more funds than actual cost to development projects due to escalation in prices of the inputs, sources told Business Recorder.

The PC has already set up a committee on the issue, but its progress is very slow due to lack of sharing of information from the Commission by different authorities executing schemes under provincial governments' development plan. The executing authorities of the ongoing schemes are trying to know how the escalated the prices of inputs, like cement, steel, labour, etc, should be accommodated as implementation of projects in actual cost is becoming more and more difficult.

Sindh government had raised the issue with the PC, but latter gave no response to repeated requests in this regard. According to sources, almost all ongoing development schemes are facing the same problem. Sources said the number of ongoing projects is around 1500. The contractors are in serious trouble to cope with the prices of inputs within the actual cost.

They have taken up the issue with the executing agencies (federal and provincial ministries) to include the raise in the total cost of the projects. According to normal procedure, the CDWP is the competent authority to revise the cost of the projects with cost of Rs 500 million. Beyond this limit, the task is done by the Executive Committee of the National Economic Council (Ecnec). If this procedure is followed, then the executing agencies will have to wait for the meetings of the two bodies.

Officials said that since the rise in the inputs' prices has become a big constraint, the government had constituted a committee to look into the issue in a different way in order to take development agenda ahead. But the provincial governments are still waiting for proper mechanism to tackle the problem, sources added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Investment in power sector: Prime Minister assures US entrepreneurs of full security​* 
WASHINGTON (July 31 2008): Prime Minister Yousaf Raza Gilani has assured full security to the investment being made in power and energy sectors by the US investors, leading power companies, foreign investors and businessmen in the United States. Addressing the American businessmen and chief executives at a breakfast meeting jointly organised by US-Pakistan Business Council and the US Chamber of Commerce.

The prime minister said the government is ready to give security to all sorts of investment being made by the US businessmen in power and energy sectors. The adequate power generation was the top priority of the government to ensure smooth functioning of industrial units, business centers, and trade establishments.

There is an urgent need for strengthening economic and trade ties with United States in various fields, including power, education, and defence sectors. Gilani highlighted the significance of bilateral relations between Pakistan and United States, which needed to be enhanced for the mutual benefit of two countries. He invited the US companies to invest in Pakistan and assured them of full security to be provided to their investment money.

He said Pakistan's economy was facing numerous challenges, including adjustment in fiscal revenue and oil prices, targeting the inflation trend, and improving better demand and supply management. Gilani said Pakistan's geographical location can help it emerge as a growing economy if proper economic measures were taken in time.

He said the government was making investor-friendly policies and providing incentives to the foreign businessmen to attract investment in the power sector from all over the world.

He referred to the Roundtable Energy Conference, organised by the World Bank in Washington aimed at attracting investment to Pakistan's Thar Coal Project for power generation, which, he said, received huge response by US power companies that would help the country overcome the crisis.

For the ongoing food and energy crisis, Gilani said the government was considering focusing on strengthening agricultural infrastructure to ensure self-sufficiency and exploit the country's coal reserves to meet energy requirements.

He said we were compelled to take some unpopular decisions in terms of increasing electricity and fuel tariffs, for the overall betterment of the country's economy.

Myron Brilliant, vice-president, Asia US Chamber of Commerce, in his address of welcome, said the focus of interaction with Prime Minister Gilani with businessmen was on strengthening economic relations between the two countries and seeking opportunities of trade in various fields.

Jay Collins, CEO, Public Sector Group Citi, said though Pakistan was facing difficult economic times, the interaction between the business communities of two countries would help it overcome such problems. David Chavern, executive vice-president and chief operating officer also spoke on improving trade ties between Pakistan and United States.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Forex reserves fall to $10.487bn ​* 
Friday, August 01, 2008

KARACHI: Pakistans foreign exchange reserves fell $241 million to $10.487 billion in the week that ended on July 26 due to outgoings for import payments, the central bank said on Thursday.

According to official data, the State Bank of Pakistan said its reserves fell $330 million to $7.448 billion, while those held by commercial banks rose $89 million to $3.039 billion from $2.95 billion.

Total reserves are now down to the equivalent of less than three months of imports, raising the prospect of a balance of payments crisis unless large multilateral loans arrive soon.

The government says it has obtained Saudi Arabias agreement to defer oil import payments for the 2008/09 fiscal year (July-June) and an announcement would be made soon by Saudi Arabia.

Pakistans foreign exchange reserves hit an all-time high of $16.486 billion on Oct 31, 2007, but have fallen since then because of rising oil payments and foreign investors pulling money out because of political uncertainty dogging the country after a civilian coalition formed a new government.

The central bank on Tuesday tightened the monetary policy by raising the discount rate to 13 per cent from 12 per cent to counter accelerating inflation and widening fiscal and current account deficits.

It also took steps to help stabilise the rupee earlier this month. The main measure was a temporary suspension of forward booking of foreign currency for all imports.

An assurance was also given that the central bank would provide foreign exchange to authorised dealers for all imports of furnace oil used for power plants.

Forex reserves fall to $10.487bn


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## Neo

*IPDF offers to complete 20 projects ​* 
Friday, August 01, 2008

ISLAMABAD: The Infrastructure Project Development Facility (IPDF) has suggested to the government to transfer over 20 infrastructure development projects worth Rs165 billion from PSDP allocations, as the IPDF would complete these projects by involving the private sector under the Public Private Partnerships (PPP) modality. 

We have sent a summary to the prime minister with a proposal to transfer over 20 projects in various sectors to IPDF as it would save a huge amount of Rs165 billion of the PSDP (Public Sector Development Programme) thus giving relief to the government, disclosed IPDF Head Ghulam Murtaza Satti, while chairing a meeting here. 

These projects include construction of IT parks in Islamabad and Karachi, upgradation of PIMS Hospital, Islamabad, construction of Rawalpindi Bypass, development of Leh Nullah Expressway, Faisalabad-Khanewal Expressway, Peshawar-Torkham Highway, JPMC Karachi Medical Tower. 

He said the proposal has been moved on the special directives of PPP Co-Chairman Asif Ali Zardari who is taking special interest in accelerating infrastructure development activities in the country. 

The government, which is presently facing a critical time mainly due to rising inflation and runaway prices of oil and other commodities, has allocated Rs165 billion for these projects, out of the total Rs540 billion the PSDP funds earmarked for the financial year 2008-09. 

However, if these projects are transferred to IPDF, it would provide a major relief to the government by involving private sectors financing, he remarked. 

He urged the governments economic managers to intensify cooperation and coordination with the IPDF as by executing these projects under the PPP framework they would not only fetch private sectors investments but also improve the living standards through increased economic activities in the country in addition to benefits to the agriculture sector. 

IPDF offers to complete 20 projects


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## Neo

*Is it dollarisation? : Forex reserves with banks cross $3bn​*
KARACHI: Foreign exchange reserves with banks crossed $3 billion mark last week mainly because more and more depositors are opting to keep their money in dollar to avoid losing their moneys worth at the hands of high inflation and falling value of rupee against dollar. 

According to a statement issued by the State Bank of Pakistan, the total foreign exchange reserves of the country stood at $10.487 billion at the end of last week, lower by $241 million from the previous weeks level. While central banks reserves fell by $330 million to $7.448 billion from $7.778 billion, the reserves with banks rose by $89 million to $3.039 billion from $2.950 billion. 

Certainly, this is dollarization, said a treasury official of a large local bank when asked if the trend could be called dollarization. People have been converting their money lying with banks into dollars as the rupee continue losing its value.

He said people who are choosing to keep their money in dollars would earn more from rupees depreciation than the interest they would have earned on rupee deposits. 

Another banker said people might have been investing in dollar since the stock market was not performing well and there was hardly any chance of earning money by trading in shares these days. 

The rise in banks reserves can only be attributed to peoples inclination to get their money converted into dollars or to investor interest in currency market, because there have been no major inflows, he said. 

A look at the foreign exchange reserves sheet posted by the State Bank on its website reveals that the foreign exchange reserves with banks have been rising since February this year while the reserves with the central bank continued to fall from their October 2007 peak of $16.486 billion. 

Banks had $2.107 billion at the end of February 2008; $2.152 billion at end-March; $2.293 billion at end-April; and $2.573 billion at end-May. The reserves rose to $2.659 billion by June 27; $2.798 billion by July 4 and $3.039 by July 26. 

The overall increase in banks reserves from February 2008 to July 26 comes out to $932 million. During the same periodfrom February 2008 to July 26the reserves with central bank declined from $11.923 billion to $7.748, a fall of $4.175 billion. 

The domestic currency has fallen by about 16 percent against the dollar during the last one year from around Rs 60 in July 2007 to Rs 70 to Rs 71 now. The demand for dollar has been much higher than its supply because the volume of exports was barely half the volume of imports during 2007-08. Moreover, inflows from abroad also dried up, creating severe shortage of dollar in the local currency market and necessitating central bank intervention on quite a few occasions. It resulted in the depletion of foreign exchange reserves held by the State Bank. 

But bankers also say that while some people might be choosing to get dollars for rupees, others would be hesitant to do this because they have had a bitter experience in 1998 when the Nawaz Sharif government froze their accounts. It is risky. People have gone through a bitter experience. They fear the government could freeze foreign currency accounts.

Daily Times - Leading News Resource of Pakistan


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## Neo

*New Steel Policy aims at 10m tonnes production by 2015​*
** Imported plant and machinery should have zero duty & sales tax n Establishment of a steel board also suggested​*
ISLAMABAD: The government on Thursday initiated the preparation of long term Steel Policy aimed at achieving the production target of 10 million tonnes by 2015 and 15 million tonnes by 2020 to cover the widening demand-supply gap. 

Draft of the policy would be completed by August 31 this year. 

In this regard the Engineering Development Board (EDB) held a meeting with the officials of Ministry of Industry, Minerals, FBR, representatives of different steel mills and other stakeholders. Three committees are established to develop the blue print with the recommendations of the industry. These committees have been assigned to finalise their reports by August 31 2008. In order to support and sustain this level of production, the policy also intends to address the issues of infrastructure and the development of mines for usage of local iron ore and coal for the production of steel in the country. The other main features of the blueprint are technology up-gradation and modernisation, availability of technical and skilled manpower, testing facilities, product certifications etc. 

Chief Executive Officer, EDB, Asad Elahi, in his address underlined the importance of the steel sector in countrys economy. He said it served as the backbone of any economy because of backward and forward linkages as it feeds the manufacturing and infrastructure sectors, construction and engineering industry along with providing the basic raw material to many sectors of the economy. 

At present the steel products are imported, exposing this sector to exogenous shocks, short supplies, high freight cost, and logistic problems. The proposed steel policy would help in increasing capacities of this sector, saving precious foreign exchange by utilising local untapped natural resources that would also help in generating more employment opportunities. 

The participants were of the view that efforts should be made to document the un-organised sectors of melting and re-rolling industry. They said that time line must be given in the supply of utilities to the foreign direct investors by the utilities companies for making proposals bankable and valid. They stressed for developing the downstream industry, and in this regard Pakistani steel products should be of international quality and prices should be at par with the international market. It was suggested that minimum duty should be levied on products not made by Pakistani steel mills or which could not be produced in the required quantity. Financing for capital investment of large-scale plants should be at minimum cost. 

It was also suggested that modern technology should be introduced for ore mining, billet production and scrap handling, big international investors should be encouraged to set up mini steel mills in the country, transfer of technology from neighbouring countries especially from India should be encouraged, they suggested. 

The members recommended that imported plant and machinery should have zero duty and zero sales tax. They also recommended 10-year tax holiday for the iron ore based units due to low return on investment in initial years and also for the acquisition of land at concessional rates. The government should also encourage development of iron ore based steel industry by awarding one time matching development grants if the investors undertake to develop infrastructure by themselves. 

The participants were informed that in Pakistan iron ore was found in number of places like Kalabagh, Chiniot, Dera Ghazi Khan, Langrial, Chitral, Nokkundi, Dilbund, FATA and host of the other small deposits. However, except for Kalabagh and Nokkundi, detailed feasibility reports and mining scheme were not available. They proposed that a strong team of geologists, geochemists, mining engineers or foreign firms should be assigned the duties to prepare feasibility report as soon as possible. 

The stakeholders claimed that the government is not supporting the industry as required. The cost of doing business was too high and recovery was a problem for investors. Citing the example of India, a participant said India has established a separate ministry for steel and the step proved to be very encouraging for the industry. Some participants also suggested for the establishment of a steel board, which will only deal with this important sector of the economy.

Daily Times - Leading News Resource of Pakistan


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## Neo

*0.46 million tons wheat to be imported from US: $115 million grant to overcome food crisis ​* 
ISLAMABAD (August 01 2008): The government has decided to import 0.46 million tons of wheat from the US on deferred payment of $100 million and another $115 million grant being given by the US to overcome food crisis, it has been reliably learnt.

Sources revealed that Prime Minister Yousuf Raza Gilani has sought a detailed briefing from the Ministry of Food, Agriculture and Livestock regarding specifications of wheat required by Pakistan. The government is also importing wheat from Ukraine and two of the shipments have already reached Karachi.

A US delegation led by the relevant embassy official also held meetings with the high-ups of Minfal prior to the Prime Minister's US visit for finalisation of the specifications. The US ambassador to Pakistan during her meeting with the Prime Minister a couple of days ago prior to his departure had assured him of US support to overcome food crisis in Pakistan.

Sources said that a meeting between the officials of the US embassy and the Minfal were held on Thursday at the Ministry to finalise consignment and inspection modalities of wheat imports. "The government is not ready to compromise on specifications and modalities of imported wheat. We have talked with the concerned US authorities and informed them that Pakistan would not compromise on specifications," sources elaborated.

They said that the US authorities have agreed that each consignment of wheat that would be exported to Pakistan would be checked and monitored at American ports by the representatives of the Minfal.

This decision has been taken by the government of Pakistan after the refusal of the US authorities to undertake a quality monitoring system for each consignment of wheat being sent to Pakistan.

Sources told Business Recorder that the finance minister who chaired the Economic Co-ordination Committee (ECC) meeting in the absence of the Prime Minister directed the concerned secretaries to ensure availability of flour and wheat during Ramazan.

He also directed that all the wheat imports must be completed by December-end. The government had decided to import 2.5 million tons of wheat because of a shortfall of over 2 million tons in production. The total production, according to final estimates, was 21.6 million tons against a target of 24 million tons for the year.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan's rank in corruption index improves by 42 points: NAB ​*
PESHAWAR (August 01 2008): Director General NAB (National Accountability Bureau) Air Vice Marshal Muhammad Jamshid Khan said here on Thursday that National Accountability Bureau has performed a pivotal role in rooting out corruption from the society and now the ranking of the country in corruption index has improved by 42 points.

Addressing a farewell reception function held in honour of outgoing officers of the NAB, he said the National Accountability Bureau has recovered billions of rupees from the corrupt elements during the past few years, says a handout. He said that Rs 117 billion have been recovered from the defaulters of bank loan and Rs 60 billion have been recovered from the people who have managed to reschedule their loans.

Likewise, Rs 25 billions were recovered under plea-bargain. The DG NAB said that Rs 200 billions of financial resources are being wasted through corrupt practices at higher level and Rs 67 billions are wasted because of corrupt practices at the lower level every year. "We have always accepted suggestion for reforms and the process of reforms will continue in this organisation," he added.

Enumerating the NAB achievements, he said that 85,000 comaplaints have been processed so far, 1,306 cases have been put in court and 2,965 persons involved in corruption cases have been convicted by the court of law. He told that the rate of conviction in NAB cases have remained 68 percent.

Highlighting the role of media in uncovering the corrupt practices, the director general NAB said that media should buttress the efforts of NAB by landing it support to purged the society for the menace of corruption. Later DG NAB gave away shields and commendation certificates to 16 outgoing officers of NAB.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Defence production: panel to ensure transparency of procurement process ​* 
ISLAMABAD (August 01 2008): The Senate Standing Committee on the Defence and Defence Production on Thursday formed a sub-committee to ensure transparency in the procurement of raw material for defence production. A meeting of the committee chaired by Senator Nisar A Memon was held in the Parliament House to review the defence production process.

Addressing a press conference in the Parliament House after the meeting, Senator Memon said the committee has constituted a four-member sub-committee led by Senator Dilawar Abbas to formulate recommendations and proposals regarding the procurement process of raw material defence production to make it more transparent and viable, saying that 99 percent of the defence procurement process at present is transparent and authentic.

He said the standing committee on the defence affairs would involve the Ministry of Foreign Affairs and the Finance Ministry to overcome the issues relating to the export of defence production with particular reference to the European countries.

For this purpose, recommendations and proposals would be formulated and sent to the concerned departments and the Prime Minister for implementations. Without disclosing the volume, Memon informed the media that the defence production exports 50 percent are higher than the previous year, whereas the sale of Pakistan Ordnance Factory (POF) has also increased by 23 percent to 30 percent.

Despite curtailing the defence budget, there is no significant reduction in the defence production, Memon added. He further said the price of the defence production in the Pakistan Aeronautical Complex is comparatively less as compared to other countries and there is need to formulate policies for import substitution to meet the domestic requirement.

Nisar said the Karachi Shipyard is meeting 30 percent of our requirement of Naval force whereas planning is underway to establish 2 more shipyards one each in Gwadar and Port Qasim. Production of 2000 Al-Khalid tanks in the POF would be completed by the next year, he added.

The meeting was attended by Senator Mushahid Hussain Sayed, Senator Dilawar Abbas, Senator Naeem Hussain Chattha, Senator Rukhsana Zuberi, Senator Amjad Abbas, Senator Sadia Abbasi and other senior officers of Pakistan Ordnance Factory.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*ADB cuts $350 million loan for KMCP: reason given is official apathy ​* 
KARACHI (August 01 2008): The Asian Development Bank (ADB) has cut $350 million loan for the Karachi Mega City Project (KMCP), owing to official indifferences. Well-placed sources told Business Recorder on Thursday that ADB, in collaboration with Government of Sindh (GoS) and the City District Government Karachi (CDGK), had chalked out a multi-sector program some four years back for Karachi, comprising physical investments and management in water, sewerage, urban transport and low income housing sectors.

The estimated cost of the project was $1.1billion and ADB had earlier agreed to grant $800 million, but owing to lack of official concern, ADB has decided to annul all agreements in this connection. They said that the ADB delegation expressed grave concern over the issue during several meetings with the GoS, CDGK and other relevant agencies and stopped all processing due to delay in PC-1 approval, which puts the KMCP at risk.

To overcome the situation, GoS has decided to go for urban transport sector only and has dropped water, sewerage and low housing projects aimed at regaining ADB loan, they said.

The team, comprising Nazar Hussain, Additional Chief Secretary, Planning and Development Department, Ghulam Ali Pasha, Additional Chief Secretary, Finance Department, Malik Islam, Project Director, KMCP and other officials have also been to ADB head office to convince them not to stop loans for the project.

These officials visited to Manila with their families, which made the tour rather a "honeymoon journey" than an official visit, sources revealed. They said that ADB officials had finally convinced the concerned agencies and agreed to sanction only $450 million loan for the project. To a question, they said that the loan has been cut owing to reallocations for other eligible projects because of late processing by the concerned departments and added that if the government would not commence the work on project, soon, the sanctioned amount could also be assigned to any other projects, whether in Pakistan or elsewhere.

They said that ADB officials gave assurance of their support in the development of the city, saying that, "ADB has committed to support Karachi programmes, but the government needs to consider the practical options and present their case to ADB in a practical way only then it would be reconsidered".

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Punjab government plans industrial estates in backward areas ​*
LAHORE (August 01 2008): Pakistan Muslim League-N led coalition government in Punjab has planned to develop industrial estates equipped with electricity, gas, telephone along the motorways for the convenience of domestic and overseas investors.

Sources inside of the PML-N told Business Recorder here on Thursday that Punjab chief minister Shahbaz Sharif considers that industrial growth is essentially linked with the development of infrastructure facilities.

The Punjab government has also decided to improve the transportation systems in major industrial zones and urban centres, the sources said, adding that chambers of commerce and industry will be encouraged to develop industrial zones in suitable location with access to as for electricity generation.

The sources said the provincial government is evolving a comprehensive strategy for the promotion of industrial activities in the province and a special cell is being set up in the Chief Minister's Secretariat for creating best working relationship among industry, agriculture, trade and chamber of commerce.

It may be mentioned that chief minister has sought a detailed report regarding difficulties and shortage of facilities in industrial estates of the province so that a comprehensive planning could be made for the promotion of industrial activities. The chief minister also directed to constitute a body for reviewing the affairs of industrialists, which will determine the role of tehsil municipal administration in industrial units.

The sources said the PML-N considers that no economy can prosper without fair and equitable treatment of its work force. PML-N will improve the quality of labour force through technical training and apprenticeship. Parks/community centres will be developed near labour colonies while incentives will be given to employers for offering scholarships for the talented children of workers, the sources said.

Moreover, PML-N Punjab leader Sajjad Hussain Chheena said the Punjab government under the dynamic leadership of Mian Shahbaz Sharif would introduce people-friendly policies instead of raising slogans or publicity campaigns. He said chief minister Shahbaz Sharif had declared promotion of education as one of the top priorities of his government and he had the honour of introducing "Universal Education Programme 2010'.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan Prov July Tax Revenue Up 29.7% At PKR66 Billion Government Executive​*
KARACHI -(Dow Jones)- Pakistan's provisional tax revenue collection rose 29.7% from a year earlier to PKR66 billion in the first month of the current fiscal year that started July 1, an official of the Federal Board of Revenue said Friday.

"Tax collection figures are provisional and they are expected to increase further when finalized in the next 15 days," the official, who asked not to be named, said.

General sales tax collection also witnessed a 20.2% growth with a total provisional collection of PKR31.5 billion, up from PKR26.2 billion a year earlier.

Direct taxes witnessed a growth of 22.7% during July and the total provisional collection amounted to PKR17.3 billion, up from PKR14.1 billion a year earlier.

The government collected in PKR6.7 billion in federal excise taxes and PKR10.5 billion in import tax, the official said.

"Tax collection depends on overall economic growth too, and the three main sectors of telecom, banking and oil and gas are contributing to better tax collection in the last one-and-a-half years," the official said.

Pakistan has raised its tax collection target to PKR1.25 trillion for the current fiscal year from PKR1 trillion in the last fiscal year.

Pakistan Prov July Tax Revenue Up 29.7% At PKR66 Billion Government Executive


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## Neo

*Cement sector owes record performance to exports ​* 
Saturday, August 02, 2008

KARACHI: The cement sector in Pakistan had a notable performance in fiscal year 2007-08 as prices surged from Rs270 per 50kg bag to a record Rs400.

A shortage of cement in India and the Middle East meant exports in particular were remarkably healthy throughout the year. The countrys cement companies have excess capacities, which were exported to the Middle East, Africa, Afghanistan and India at a premium price.

During the past six or seven years, cement companies in the country have been shifting from oil to coal or gas. Most cement companies now use coal as their basic fuel. The country has huge reserves of coal, but cement companies import it, as local coal has a high sulphur content.

At present, cement companies are buying coal at around US$180 per ton, up from $80 per ton last year. A few years ago, though, coal was quoted at $40 in the international market.

This rise in coal costs has been one of the biggest reasons behind the dampening of gross margins of cement companies during the previous fiscal year. Since the start of 2008, the rupee has depreciated around 13 per cent from Rs62 to Rs70 against the dollar. If it depreciates further, the cost of coal in term of rupees is likely to increase substantially.

In FY 2007-08, cement dispatches reached a record 30 million tons, depicting a growth of 25 per cent. This growth was driven mainly by a 142 per cent rise in exports and six per cent increase in local dispatches.

The dual impact of coal price rise and rupee depreciation may lead to further margin cuts in cement companies, but they continue to reap profits in exports. However, local companies must increase the share in exports of the total production to curb the impact of rising coal costs. In the cement industry, exports form only 24 per cent of total sales.

The biggest exporter in the industry is Lucky Cement, which exports 47 per cent of its produce. Lucky has fared better than other cement companies. The cement sectors profitability declined by 69 per cent during the first nine months of FY 2007-08, but Luckys profitability increased by 50 per cent

After witnessing exceptional earnings growth from 2003 to 2006, cement companies overall profits fell by 42 per cent in 2007. Although a massive volumetric sales growth of 32 per cent was observed, price war caused revenues and thus profits to decline. However, a two to three million tons shortage of cement in high-growth construction activity in the United Arab Emirates, coupled with India and Egypts ban on cement exports, allowed Pakistan to use the situation to its advantage.

Thanks to the expanding local demand and growing cement shortage in the region, cement sales depicted an increase of 24 per cent to stand at 24.5 million tons during the first 10 months of FY 2007-08. During the same period, export sales showed an increase of 142 per cent, while local dispatches saw a rise of eight per cent.

Cement sales in the third quarter of FY 2007-08 jumped up 10 per cent compared to the same time in the previous fiscal year.

Cement prices in the northern parts of the country saw a drop of Rs10-20 per bag in April, while average prices at ex-factory level reached Rs240-250 per bag.

Cement sales during March broke the previous monthly record of 2.56 million tons (November 2007) to reach 2.61 million tons by March 25. 

This has been on the back of record-breaking exports of 726,000 tons (previous record 645,000 tons in February) and 1.9 million tons in local sales.

Construction activities throughout the world led to a surge in the demand of cement, resulting in prices reaching record levels. In the UAE, they jumped up by over 40 per cent in 2008, forcing the UAE government to remove the five per cent customs duty on the import of cement, something which helped Pakistan export more cement to the UAE. Cement prices in the UAE first increased from AED16 per bag (Rs273 per bag, $87 per ton) to AED22 per bag (Rs376 per bag, $119 per ton), and then touched more than AED25 per bag (Rs427 per bag, $136 per ton).

After this, local cement companies slowly shifted their produce to exports. From July to February FY 2007-08, record cement exports were seen, rising by 140 per cent and amounting to around 4.3 million tons. During that time, sales demonstrated a healthy demand of 23 per cent with dispatches of 18.7 million tons.

In December 2007, total dispatches declined owing to the winter season and fewer working days.

Cement exports registered a growth of 34 per cent in first four months of FY 2007-08 to 9.48 million tonnes, as compared to the same period of FY 2006-07. 

In first quarter of FY 2007-08 cement prices in Pakistan had seen a decline due to less demand and more supply, creating an over supply situation and causing ex-factory cement prices to hit a low of Rs170-180 per bag (US$55-60 per ton). 

Some Pakistani cement companies had also received orders from Russia, where price of cement reached over US$280 per ton (Rs860 per bag). However, logistical problems made it impractical to export cement to Russia.

Cement sector owes record performance to exports


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## Neo

*Pakistan Steel to be excluded from privatisation list: Wattoo ​* 
Saturday, August 02, 2008

KARACHI: Pakistan Steel Mills (PS) is a profit-making organisation and the government will be recommended to exclude this organisation from the privatisation list, said Mian Manzoor Ahmed Wattoo, Adviser to Prime Minister on Industries and Production Affairs.

In an oath-taking ceremony of the CBA of Pakistan Steel, he said that with its expansion plan, the total production of PS would increase to 3 million tonnes, almost three times the present production.

He said that demands of CBA employees like regularisation of daily-wage and contractual employees, and pension schemes would all be presented before Prime Minister Yousuf Raza Gilani.

PS has achieved all-time high sales of Rs46 billion in a year and recorded Rs5 billion sales in a single month in July 2008.

APP adds: Adviser to the Prime Minister on Industries and Production Mian Manzoor Ahmed Wattoo on Friday announced two bonuses for the employees of Pakistan Steel Mills.

Pakistan Steel to be excluded from privatisation list: Wattoo


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## Neo

*Promotion of industry in FATA, PATA demanded ​* 
Saturday, August 02, 2008

PESHAWAR: Expressing concern over delay in the announcement of an incentive package for industrialisation in tribal areas, Tribal Chamber of Commerce & Industry (TCCI) President Muhammad Akbar Khan has demanded the government take effective measures for the promotion of industry in FATA and PATA (Provincially Administered Tribal Areas).

He made the demand while chairing an executive body meeting of the TCCI at its office. Akbar said the government had to take practical measures for the promotion of trade and industry so that employment opportunities were provided to the people, hit hard by price hike and unemployment.

He said people in tribal areas were facing great hardships due to backwardness and unemployment. The prevailing security environment in FATA and settled areas, he continued, had further complicated the situation.

Khan was of the view that the government should consult the TCCI for maintenance of peace in the tribal belt. The participants of the meeting held discussions on increased prices of electricity, gas and petroleum products and their impact on industrial production.

The meeting decided to approach Prime Minister Yusuf Raza Gilani from the platform of TCCI for apprising him of the plight of industries in FATA.

The TCCI executive body criticised the policy of the government on Reconstruction Opportunity Zones (RoZs) and said despite a passage of several years nothing was visible on the ground in that regard.

The meeting was attended by TCCI Senior Vice President Abdul Hakeem Shinwari, Peshawar District Nazim Ghulam Ali, Rahatullah, Zubair Ali, Shahid-ur-Rehman and Aurangzeb Mohmand.

Promotion of industry in FATA, PATA demanded


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## Neo

*RBS starts business in Pakistan​*
KARACHI, Aug 1: The Royal Bank of Scotland Group (RBS) has formally re-branded ABN AMRO Bank branches in Pakistan. Pakistan is among the first Asian markets to be re-branded to RBS.

Effective August 1, as approved by the State Bank of Pakistan, ABN AMRO Bank (Pakistan) Limited is now officially renamed as The Royal Bank of Scotland L imited.

This follows the successful global acquisition of ABN AMRO in October 2007 by the RBS-led consortium.

Today marks an important milestone for the integration of RBS and ABN AMROs businesses and we are thrilled that Pakistan is one of the very first countries to reach this milestone in Asia Pacific, said John McCormick, Chief Executive, Global Banking & Markets for Asia Pacific, RBS.

RBS will launch two new retail banking products - Royal Preferred Banking (previously known as Van Gogh Preferred Banking), and RBS Islamic Banking (previously known as ABN AMRO Islamic Banking) in Pakistan, making it the first Asian market to be introduced with these products.

Shehzad Naqvi, RBSs Chief Executive Officer in Pakistan, added, We are very excited and proud to be part of the RBS Group. RBS has entered Pakistan with a head start as one of the largest foreign banks in Pakistan enjoying sixty years of heritage and total assets of Rs117 billion across a network base of 79 branches spanning 24 cities.

RBS starts business in Pakistan -DAWN - Business; August 02, 2008


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## Neo

*Cut in oil duty: Refineries say they will face Rs 7 billion losses​*
ISLAMABAD: Four Refineries will face losses of over Rs 7 billion due to revision in the oil pricing formula, these concerns are raised by the refineries in a letter to the Prime Minister and have demanded that they revision be reconsidered. 

Chief Executives of all the four refineries were of the view that the said revision will jolt their operations. On the petrol alone the refineries will suffer an annual loss of over Rs 4 billion calculated on the basis of prevailing prices and further Rs 3 billion loss on account of reduction in customs duties on HSD from 10 percent to 7.5 percent. These losses will dent the balance sheets of the refineries and will also be an impediment for future investment.

M Adil Khattak Chief Executive Officer Attock Refinery Limited, Shoid Anwar Malik, CEO, National Refinery Limited, Ijaz Ali Khan CEO, Pakistan Refinery Limited and Wasi Khan, CEO Bosicor met in Islamabad on Friday to discuss the new pricing formula announced on July 30, 2008, and have addressed a letter to the Prime Minister of Pakistan voicing their serious concerns. 

It was highlighted in the letter that the refineries are strategic assets providing 11 million tones, out of the total 19 million tonnes, of petroleum product requirements of the country and ensure uninterrupted product availability for domestic and defense needs. 

In this hour of crisis, due to the unprecedented rise in international oil prices, the refineries, being responsible corporate citizens, recognise that the country is passing through a difficult phase and want to share the burden with the government of Pakistan, they maintained. Following this spirit, in their meetings with the Ministry of Petroleum officials, they had agreed to a review of the existing pricing formula, both for deemed duty on HSD as well as rationalisation of the pricing formula. The Refineries state that the proposals being considered, as per recent newspaper and media reports, are not in line with the understanding developed in the meetings. The pricing formula announced is very disturbing, as it causes the price of petrol produced by the Refineries to fall to 93 percent of naphtha, which is the raw material for producing the product, contrary to all economic logic. 

In view of the above facts, the refineries urge and appeal for an urgent review of the matter before the implementation of the revised pricing formula takes place so that the refineries operate on a sustainable basis and avoid any potential crisis in the oil and energy sector. This would ensure continued supplies of petroleum products to the domestic consumer including strategic supplies to defense agencies and power sector, support the local refining industry and save precious foreign exchange in case these products are imported in lieu of local supplies. A representative from refineries told Daily Times that the CEOs of the refineries are waiting wait for reply. In case the government does not respond to the concerns expressed by the refineries another meeting would be called and future course of action would be decided.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Govt hoping to get $500m from WB by Sept​*
LAHORE: The government is hoping to get the much-needed budgetary support of $500 million from the World Bank (WB) under the Pakistan Economic Stabilisation Support Operation (PESSO) by September this year, Dawn News reported on Friday.

The channel said that the Finance Ministry was expecting that the promised loan would partially ease the economic hardship facing the present government.

According to the channel, the WB had promised the loan after Pakistan requested the bank to extend immediate cash support at the World Bank-International Monetary Fund spring meeting in April this year. The channel said that the meeting last spring was attended by former finance minister Ishaq Dar who requested the bank for immediate budgetary support. daily times monitor

Daily Times - Leading News Resource of Pakistan


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## Neo

*Cotton imports reach $1 billion mark​*
KARACHI (August 02 2008): The shortfall in the cotton crop due to cultivation of low quality Bt seeds and mealy bug attack has pushed country's dependence on imports, which jumped by 100 percent to one billion dollars during the last fiscal year, traders said on Wednesday.

They said that in 2008, the government had fixed cotton production target at 14.1 million bales. However, the country failed to achieve the target due to dangerous pest attack on cotton crop and delay in the import of pesticides.

Therefore, crop estimation committee of ministry of food agricultural and livestock three times revised the production target and cut the target fixing at 11.6 million bales, which was also not achieved and the country's overall cotton production stood at 11.3 million bales.

The shortfall in cotton production and continued exports of cotton pushed the import of commodity to the level of over one billion dollars during last fiscal year, up by 100 percent, traders said. As a result, the country had to spend some $1.291 billion on cotton import against $646.568 million during fiscal year 2007, depicting an increased of $644 million.

In terms of quantity, about 5.39 million bales cotton was imported as against some 2.76 million bales in fiscal year 1007, depicting an increase of 97 percent. However, cotton import during June 2008 declined by 50 percent to 42.79 million dollars as compared to 82.38 million dollars in June 2007.

"Sowing of low quality and uncertified Bacillus thuringiensis (Bt) seed, besides poor irrigation system badly hurt the cotton crop during last fiscal year," said Ghulam Rabbani, a cotton trader.

He said that this year growers also have cultivated mealy bug-affected and uncertified seed, which may hurt the cotton crop. "Insufficient quality cotton and as well as delay in cotton crop are some other major factors behind the rising import of cotton," he said. Present scenario also reflect that cotton import would further increase in the near future, however it depends on the cotton production of the current fiscal 2009, he added.

He said that textile millers believe that in the near future the gap between demand and supply would further go up due to the short crop. Therefore, they are depending more on the imported cotton and placing new import order. The country's cotton consumption stands at 16-16.5 million bales, which is higher than cotton production of 11.3 million bales, while cotton export further has widened supply and demand gap.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*SPI up by 31.92 percent​* 
ISLAMABAD (August 02 2008): Weekly SPI inflation surged by 31.92 percent for the week ending on July 31 over the same period of last year on the back of increase in the prices of 23 essential commodities, according to Federal Bureau of Statistics (FBS). The data, released by the FBS on Friday, showed increase in the prices of 23 essential kitchen items with onion and tomatoes on the top.

The dearness for families bracketed in Rs 3,000 monthly income was recorded 33.57 percent following an increase of 0.31 per cent rise in inflation during the week. The SPI inflation has surged to 31.92 percent during the last 10 weeks from 25.93 percent following the successive increase in petroleum product prices.

An increase of 0.33 percent was noted in the prices of low income group of Rs 3,000 during the week from July 26 to 31, followed by 0.31 per cent for families bracketed in Rs 3,001 to Rs 12,000 monthly income. The increase in the prices of 0.29 per cent was noted for the families earning over Rs 12,000 per month.

With this increase in the prices during the week, dearness for Rs 3,000 income group surged by 33.57 percent over the same period of last year and 32.50 percent for Rs 3,001 to Rs 5,000 income group. Similarly, dearness has been increased by 32.07 percent for Rs 5,000 to Rs 12,000 per month. It increased by 31.77 per cent for over Rs 12,000 monthly earners.

The SPI bulletin, based on data of 53 items collected from 17 urban centres showed increase in the prices of 23 essential commodities, decrease in nine, while claimed of no change in the prices of 21 essential commodities during the week.

The price of per kilogram onion was increased to Rs 19.76 from Rs 17.79 on July 26 after 11.07 percent increase during the week; tomatoes to Rs 34.03 from Rs 30.91 per kilogram; garlic to Rs 38.72 from Rs 37.84 per kilogram; kerosene oil (per litre) Rs 71.72 from Rs 70.09; chicken (farm) per kilogram to Rs 99.80 from Rs 97.65; potatoes to Rs 24.20 from Rs 23.83 kilogram; L.P.G. (11-kilogram cylinder each) to Rs 797.82 from Rs 786.85; cooked dal (pulse) per plate to Rs 24.59 from Rs 24.30, washing soap nylon to Rs 12.13 from Rs 12.01.

Masoor pulse washed to RS. 121.51 from Rs 120.71 per kilogram; curd to Rs 41.39 from Rs 41.12 per kilogram; Moong pulse washed to Rs 56 from Rs 55.70 per kilogram; Mash pulse washed to Rs 74.10 from Rs 73.71 per kilogram; pulse washed to Rs 62.29 from Rs 61.97 per kilogram; Gur to Rs 33.55 from Rs 33.38 per kilogram; milk fresh per litre to Rs 34.84 from Rs 34.70; beef to Rs 134.33 from Rs 133.89 per kilogram; cooked beef plate each to Rs 37.19 from Rs 37.12; firewood 40 per kilogram to Rs 246.59 from Rs 246.30; mutton to Rs 250.34 from Rs 250.13 per kilogram; mustard oil per kilogram to Rs 150.79.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Trade cooperation between Japan and Pakistan growing'​* 
LAHORE (August 02 2008): Japanese Ambass-ador to Pakistan Seiji Kojima called on Punjab Chief Minister Mian Muhammad Shahbaz Sharif here on Friday. According to an official, in the meeting bilateral relations between Japan and Pakistan, trade and economic co-operation as well as matters of mutual interest were discussed.

Talking to Japanese Ambassador, Mian Muhammad Shahbaz Sharif said trade and economic co-operation between Japan and Pakistan is growing with the passage of time, which will further cement the ties between the two countries. The Chief Minister also apprised Japanese Ambassador of the priorities of his government regarding elimination of poverty, ignorance and backwardness as well as provision of basic amenities to the masses.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

* Highly interactive web-portal launched​*
ISLAMABAD (August 02 2008): A US-based company, LMKR, has launched a talent showcasing, innovative and highly interactive web-portal, the bc.com, here on Friday. Speaking at the launching ceremony, Chief Executive Officer (CEO) Salman Chaudury said that the portal was a successful convergence of the three inter-dependent technologies the information technology (IT), telecom and TV.

It would provide a clean medium to all individuals to promote and broadcast their talent world-wide, he said. He said that in the first phase, "we are focusing on South Asia and the Middle East, as these two regions have immense talent, but the opportunities to excel are very limited.

"We want to provide an opportunity to all to showcase their talent and get recognised," he added. He said that an innovative feature of the portal was that it allowed mobile phone users to load their profiles, photos, songs and videos. The portal made auditioning for TV contests, campaigns or competitions much simpler, cost effective and quick, he added. He said: "We are in the final stage of dealing with television channels, production companies, film studios and mobile companies world-wide."

Giving the presentation, he said: "To reach the facility, take your videos, snap your photos and record your songs and put it on the bc.com to get discovered." He said: "By just logging on the bc.com, you get a chance to get into films, fashion, television, commercial, theatre, singing, choreography, hair and makeup.

"The portal brings wealth of opportunities for the youngsters to fulfil their dreams to become models, singers, actors, dancers or any other top of the line professional. Producers and directors can search online for new talent vertically as well as horizontally," he added. He said that unlike other social networking websites, they had a cause to promote talent. Every individual had some unique talent in some specific field, which until now could not be showcased and cashed. "Our website is a platform for individual talent to broadcast its potential world-wide and get connected to the right people," he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Dell seeks tremendous prospects in SMBs in Pakistan​*
KARACHI (August 01 2008): Dell has unveiled its innovative products to cater the needs of Pakistan's fast-growing market of small and medium-sized businesses. The launch of Dell's product line having the latest features is a landmark development in Pakistan's small and medium-sized business (SMB) sector.

Director and Country Manager, Dell Pakistan, Ali Jaleel, while addressing the occasion said, "Growing businesses are quickly reaching breaking points where they need high performing and more sophisticated systems. Dell is rolling out its new product line to address the needs of small and medium-sized business customers in Pakistan by using cutting-edge technology.

Pakistan is a thriving market for Dell and we are very excited about the opportunities in SMBs.", said It is for the first time in Pakistan that Dell is offering a comprehensive suite of products, specially designed for SMBs promising to deliver an exceptional experience and improving return on their technology investments.

The SMB product unveiling include the Vostro line of Notebooks, PowerEdge T300 and R300 tower and rack servers, and PowerVault MD3000i network storage. Dell via its partner will also provide end-to-end support throughout planning, deployment and maintenance of customers' technology investments.

Meanwhile, Country Manager Intel Pakistan, Ashar Zaidi said, "The launch of Dell's most sophisticated product line will prove a turning point for the efficiency and output of small and medium-sized businesses (SMBs) in Pakistan and an ultimate experience for the customers. As customers want faster performing systems to run their computer networks, Intel is committed to providing state-of-the-art technology especially for SMBs."-PR

http://www.brecorder.com/index.php?id=780801&currPageNo=1&query=&search=&term=&supDate=


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## Neo

*FDI inflow into financial sector rises by 72.8pc ​* 
*In power sector down by 65pc; total FDI in 12 months up by only 0.3pc​*
Sunday, August 03, 2008
By Israr Khan

ISLAMABAD: Foreign direct investment inflow into Pakistans financial business sector during July-June 2007-08 increased by 72.8 per cent to $1.61 billion while in the communications sector, it dropped by 14.4 per cent to $1.62 billion. In the power sector, it went down by 65.6 per cent to only $70.3 million.

During the corresponding period July-June 2006-07, inflows into financial businesses stood at $930 million, communication sector $1.9 billion and in the power sector FDI inflow stood at $204.6 million.

In the power sector (thermal and hydel), it is pertinent to note that thermal sector inflows were down by 69.5 per cent to $61.5 million from $201.6 million in the last fiscal year, while FDI in hydel sector was up by 189 per cent to $8.8 million from $3 million recorded in the corresponding period of the last fiscal year.

Although during the fiscal year under review, communication sector topped the list by attracting a huge chunk, however, its inflows slowed down over the corresponding fiscal.

FDI data released by the State Bank of Pakistan (SBP) indicated that sectors having the capacity to generate employment and give a sizeable boost to the national economy had a weak inflow during fiscal year 2007-08.

It is worth mentioning that total FDI to Pakistan during these 12 months, has increased by only 0.3 per cent year-on-year to $5.15 billion and as compared to the corresponding period of the last fiscal 2006-07. In the corresponding period of the fiscal year 2006-07, it stood at $5.14 billion.

From the beverage sector, the foreign investors withdrew $1.7 million during the fiscal year 2007-08 against a total investment of $88.8 million that they invested in the sector during the last fiscal year, thus, depicting a decline of 102 per cent.

FDI inflow into tobacco and cigarettes was down by 98 per cent to only $9.8 million against $389.5 million, sugar by 42 per cent to $9.4 million against $16.2 million, textiles by 49 per cent to $30.1 million against $59.4 million, paper and pulps by 5.4 per cent to $1.1 million against $1.2 million, leather and leather products by 40 per cent to $1.8 million against $3 million and inflow in rubber and rubber products sector was down by 15 per cent to $3.7 million against the $4.3 million that it attracted in the last fiscal 2006-07.

Investment in the petroleum refining sector also dipped by 52 per cent to $74.5 million against $155.2 million in the last fiscal year. In the fertilizer sector, foreign investors made no investment during the fiscal year under review, against the $3.9 million that they made in the last fiscal year. In basic metals, investment declined by 81.7 per cent to only one million dollars against $5.3 million in last fiscal.

Break-up of investment by sectors further reveal that under the communication head, the telecommunication sector attracted $1.44 billion, information technology $180.7 million and postal and courier services inflows were $6 million.

The notable encouraging point in the IT sector was that during the period, software and hardware development fetched $13.7 million and $6.6 million respectively, more than that in the corresponding period of the last fiscal year.

Oil and gas exploration sector during July-June 2007-08 also attracted $634.8 million, which was 16.5 per cent higher than $545.1 million in the corresponding period of the last fiscal year. The trade sector attracted $175.5 million against $173.4 million during the last fiscal year.

It is to be noted that the inflow of direct investment in the cement sector compared to the corresponding period last year was very high. During the period under review, it attracted $102.2 million against only $33.7 million in the last fiscal year, depicting a growth of 204 per cent.

FDI inflow in transport equipments (automobiles) during the 12 months of fiscal year 2007-08 stood at $111.5 million with a growth of 121 per cent over $50.4 million recorded in the corresponding period of the last fiscal. In the construction sector, inflow declined by 43.7 per cent to $88.5 million against $157.1 million in the last fiscal year.

The transport sector also fetched 142 per cent more investment to $73 million against $30.2 million in the previous year.

The Petro chemical sector attracted $27.4 million and mining and quarrying absorbed $42.3 million foreign investment during the period under review. In the fiscal year 2006-07, investment in these sectors was $6.3 million and $23.7 million respectively.

FDI inflow during the period under review was up by 69 per cent to $78 million in the chemical sector; 18.4 per cent in foods ($43.2 million); food packing was up by 530 per cent ($6.4 million); pharmaceutical and OTC products 18.6 per cent ($45.6 million); metal products 96 per cent ($15.2 million); machinery other than electrical 47 per cent ($5.9 million), electrical machinery 442 per cent ($18.3 million) and inflows in electronics was up by 48 per cent to $27.6 million.

It is also worth mentioning that FDI inflow in storage facilities fell by 97 per cent to $0.58 million from $18.3 million recorded in the corresponding period of the last fiscal year. The tourism sector also fetched 65 per cent less FDI during the period under review by receiving $6.6 million against the $18.8 million during the previous year.

FDI inflow into financial sector rises by 72.8pc


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## Neo

*Nine firms submit tariff bids for power projects ​* 
Sunday, August 03, 2008

ISLAMNABAD: The country will retain over 2,600MW of power additional in the national grid by the end of next year.

This was stated by PPIB Managing Director Fayyaz Elahi speaking to media persons on the occasion of a ceremony held here on Saturday at Private Power and Infrastructure Board (PPIB) for opening of tariff bids, says a press release.

The PPIB MD who chaired the meeting on behalf of the Minister for Water and Power briefed that on due realization of the upcoming power shortages in the country, the government directed PPIB to invite investors for establishing power plants in the country on a fast track basis, consisting of two packages namely Package-A for IPP projects of 1,000MW cumulative power generation capacity and Package-B for Rental Power Projects including Barge Mounted plants near Karachi of upto 500MW cumulative power generation capacity.

The technical bids were earlier opened on July 15, 2008 in presence of the bidders and the media, a total of 9 bids (3,060 MW) were received for Package-A, whereas for Package-B rental projects, three bids (678 MW) were received. A bid evaluation committee, comprising the representatives of Ministry of Finance, NEPRA, WAPDA/PEPCO and PPIB processed these bids, and out of the twelve bids, nine bids were declared as qualified. Under PackageñA, Attock-Wartsilla Consortium came up with the Levelized tariff of 13.9893 cents per kilowatt-hour for 203MW powerhouse based on residual furnace oil (RFO). The project will be located at Mandi Bahauddin. For installing a 170MW power house based on RFO, the Creative Energy Resources turned up on the occasion with 11.7199 cents on kilowatt per hour (unit) for simple cycle tariff and for combined cycles the same company came with a levelized tariff of 13.3690 cents per unit. Cavalier Energy & Defence Systems Group which wants to establish 500MW power house at Port Qasim based on LPG submitted simple cycle tariff at 13.2418 cents per unit for first one year and levelized tariff of 11.5368 cents per unit. Progas Energy Ltd, which aspires to establish 345MW at Port Qasim based on LPG submitted 15.5964 cents per unit as simple cycle tariff first year and levelized tariff of 11.045 cents per unit for combined cycle. 

The RUBA Energy Pakistan (Pvt) Ltd that aspires to install 166MW at Kala Shah Kaku based on RFO submitted 14.4137 cents per as simple cycle tariff for first year, and levelized tariff of 14.9786 cents per unit for combined cycle. Saba Power Company (Pvt) Ltd for 171MW project at Arifwala based on RFO turned up with 16.9639 cents/kwh as simple cycle tariff for first year and levelized tariff of 16.2550 cents/kwh for combined cycle. Under the PackageñB in which the investors submitted their bids for rental projects Cavelier Energy & Defence System Group for 200MW project to be located at Port Qasim based on LPG submitted its tariff bid of 15.22 cents per unit average for 5 years. 

Karkey, Karadeniz Holdings, for 248MW to be located near Karachi based on RFO, came up with tariff 18.6288 cents per unit for five years. For 200MW project proposed at Korangi based on RFO, Walters Power International submitted its tariff of 17.43 cents per unit for five years. 

Elahi stated it is a very good response from the private sector, as for the Package-A where 1,000MW was required, we have 6 responsive bids for 1,555 MW, and for the Package-B where 500MW was required, responsive bids for 678MW are in place, all these bids will be evaluated by the evaluation committee strictly according to the criteria which have been approved by the ECC. The tariff given by the parties is not final and the evaluation committee will declare the final tariff. He said in four days the evaluation will be completed and recommendations will be submitted to the ECC in its next meeting for approval.

Nine firms submit tariff bids for power projects


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## Neo

*Moodys to review Pakistans credit rating​*
** Sovereign ratings were lowered in May 2008
* Government bond ratings were cut to B2 from B1​*
ISLAMABAD: Moodys International, a reputed international credit rating agency would review the strategy and policy direction of the new government, for addressing the current political as well as economic challenges, for possible change in the countrys credit rating, official sources told Daily Times on Saturday.

The government has good plan for economic consolidation, in its first year, however, political uncertainties and law and order situation are the issues that are out of control of the government till date, said the sources.

A high-level review mission of Moodys International would hold review of countrys economic and political situation during August 5 to August 6 for possible review and determination of the countrys credit rating afresh.

Delay in resolving the political issues is leading to uncertainties in the country and may have negative impact on future credit rating, the sources mentioned.

A review mission of Moodys International would hold discussions with Pakistans economic managers and high ups in the government to evaluate the challenges faced by the country and the strategy to resolve these issues, the official added.

The prevailing political uncertainties, law and order situation on Pakistans borders as well within the country along with economic difficulties are likely to have negative effects on fresh credit rating to be determined by the rating agency.

The review would focus on the strategy the new government has in hand to address the political as well as economic challenges and its possible outcome in near future. If the policy and strategy of the present government were found workable during the review than a positive rating can be expected.

Political uncertainties i.e. judges issue, rift in coalition partners on different important issues and law and order situation in Federally Administered Tribal Areas as well in Swat are now having effects on countrys economy. On the other hand growing domestic and external debt, falling foreign exchange reserves, exports, growing budget deficit, current account deficit and external balance of payments are the challenges that require governments attention.

According to the official sources, the review of the economic situation of the country will mainly focus on what steps the government has in hand to control growing budget deficit. Keeping the budget deficit at sustainable level is important for improvement in countrys credit rating. It will also be evaluated whether the efforts of the government for containing the budget deficit at 4.7 percent of the projected Gross Domestic Product (GDP) of the country are viable or not.

Moodys Investors Service had lowered Pakistans sovereign ratings in May 2008.

Moodys cut its government bond ratings to B2 from B1, or five levels below investment-grade, citing its concerns over the countrys fiscal position and economic policies in a volatile political environment.

Improvement in countrys credit rating could help regain investors confidence, especially the foreign investors, as the government has already delayed the launch of its sovereign bonds in the international financial markets.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Government borrowed Rs 690 billion from SBP in fiscal year 2008: It will take five years to retire Rs one trillion stock​* 
KARACHI (August 03 2008): The Federal Government will be informing the State Bank of Pakistan about how it plans to retire the existing stock of borrowed funds from the central bank. In a meeting with the Central Board of Directors of SBP, Federal Minister of Finance Syed Naveed Qamar raised the issue of Rs 690 billion borrowed from SBP for budgetary needs in FY08.

The Additional Secretary, Ministry of Finance, explained the reasons behind the 70 percent rise in Market Related Treasury Bills (MRTBs) stock in one year to one trillion rupees.

The SBP directors emphasised the need for evolving better information-sharing mechanisms between the Finance Ministry and SBP. However, the Finance Ministry regretted that it was extremely difficult for it to share information with SBP for the nature of problems in various spheres of its activity is often of a highly "sensitive" and "secretive" type.

There was disagreement between Finance and SBP with regard to the accounting treatment of Rs 165 billion borrowed during the 13 weeks of the last fiscal year. This amount was used to clear the outstanding dues the previous government left behind. A technical committee was formed to resolve the issue. The PPP government strongly feels that Rs 165 billion should be treated as part of the borrowing undertaken by the Caretaker government of Mohammadmian Soomro for the period from November 15, 2007 to February 24th, 2008.

SBP wants the ministry to work out a plan of how this huge monetary hangover stoking inflation is to be retired at the earliest, although it would take as many as five years for full and final retirement if it is retired at the rate of Rs 200 billion a year.

Another issue raised by the SBP Directors with the Minister was the need to amend the Fiscal Responsibility and Debt Limitation Act 2005 so as to incorporate borrowing from SBP as part of the limits fixed in the Act. At present, SBP is obliged to pay for the imbalances in the government account with the central bank.

Earlier, the Finance Minister also met the heads of five big network banks for targeted subsidies to the very poor under the "Benazir Card scheme". The bankers told the Minister that the government should develop the distribution process and that the banks will be happy to provide their networks for the distribution of funds aimed directly at helping poorer families.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*TDAP chief favours 'trade policy' for five years​* 
LAHORE (August 03 2008): Trade Development Authority of Pakistan (TDAP) Chief Executive Officer Syed Mohibullah Shah has said the one-year trade policy does not yield desired results thus it should be for a period of five years. Addressing the Lahore Chamber of Commerce and Industry (LCCI) here on Saturday.

He stressed the need for harnessing indigenous resources, enhancing investment and utilising new technology to bridge the fast widening trade gap. The indigenous resources were ignored in the past whereas industry relied on the imported raw materials due to which the entire nation has to suffer a lot, he added.

Mohibullah Shah said the country needs export surplus to give a boost to the country's exports, which could only be possible, by ensuring continuity in the economic policies. "I will expedite the process of consultation with the stakeholders, including the chambers of commerce and industry to identify the objectives to increase our exports", he added.

In future, special importance will be given to the Punjab, particularly to the LCCI for participation in trade delegations and exhibitions in foreign countries, he added. He said that 80 percent production of the energy is based on imported raw materials and stressed the need for development of local resources in this regard. He asked the LCCI office-bearers to extend its co-operation to the TDAP for bringing economic prosperity in the country.

Speaking on the occasion, LCCI President Mohammad Ali Mian said that concentrating on a few items and markets was the main reason of instability in export earnings. It can be evident from the last year export figures to North America, European Union, and the Middle East recorded a marginal increase during first eight months of last financial year.

The Trade Development Authority of Pakistan is responsible for the implementation of trade policy thus it should be more proactive in searching new markets. Pakistan needs to look beyond traditional market and should concentrate on new export destinations such as Japan, South Korea, Mexico, Brazil, African countries and OIC, he added.

The TDAP should focus on five regions namely Africa, South America, Central America, Eastern Europe, and central Asian states. Africa is the biggest continent and can become a major market for Pak exports. At the same time, trade liberalisation needs to be sped up as it leads to new investment, knowledge and technology essential for increasing productivity, high growth and low inflation. This is the new growth theory, which is placing more and more emphasis on variable like knowledge and innovation, which cannot be promoted in the absence of free trade, he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*ADB to provide $100 million for Punjab MDGs programme​* 
FAISALABAD (August 03 2008): Asian Development Bank (ADB) will provide 100 million dollars for Punjab Millennium Development Goals (MDGs) Programme (Subprogramme-1) to improve availability and quality of primary and secondary healthcare, better management of health service delivery and sustainable pro-poor healthcare financing.

According to an update project report of ADB, the programme's outcome will be to improve access, quality and equity of health services. The programme will assist the Punjab government in undertaking health sector reforms to improve availability and quality of primary and secondary health services, develop sustainable and pro-poor healthcare financing system and better-manage the health service delivery.

The programme will help provincial government to ensure the implementation of the minimum service delivery standards (MSDS) for primary and secondary healthcare, through incorporation of the MSDS in provincial and district health sector plans, and qualitative and quantitative improvements in human resources in the health sector. The programme will also help Punjab government in improving daily management of health service delivery by increasing timeliness of essential drug procurement, institutionalising contracting of health services to non-governmental organisations, and enhancing and streamlining existing performance monitoring and evaluation systems.

The programme will assist in substantially increasing healthcare budget and improving planning and management of the budget, introducing a targeted programme for reducing out-of-pocket health expenditure among the poor and developing a sustainable healthcare financing and provider payment system.

The ADB report disclosed that improved access and quality of primary and secondary healthcare services would save at least 11,000 women's lives, increase and improve efficiency of public healthcare financing, improve management of health services.

The loan proceeds will be used to finance the full foreign exchange costs (excluding local duties and taxes) of items produced and procured in ADB member countries, excluding the items specified in a negative list of ineligible items (and imports financed by other bilateral and multilateral sources).

The proceeds of the programme loan will be disbursed to Pakistan as the borrower. No supporting import documentation will be required, if during each year the loan proceeds are disbursed, the value of Pakistan's total imports minus imports from non-member countries, ineligible imports, and imports financed under other official development assistance is equal to or greater than the amount of the loan expected to be disbursed during that year.

The government of Pakistan will certify its compliance with this formula with each withdrawal request. Otherwise, import documentation under existing procedures will be required. Disbursements will be made under the simplified procedures for programme loans, ADB report concluded.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Bhasha dam construction to start soon: Shahbaz​* 
ISLAMABAD (August 03 2008): The government would start construction of Bhasha dam with 2500 megawatt hydro-power generation capacity, very soon to give the nation good news to get rid of load shedding, said Punjab Chief Minister Shahbaz Sharif here on Friday night while addressing the '21st Achievement Award Ceremony' of Rawalpindi Chamber of Commerce and Industry (RCCI).

"It was criminal negligence on the part of previous regime, which caused a big gap between demand and supply for not starting work on this important dam", he said. He said that construction of Bhasha dam would take 6 years, but if built on war footing, it would be completed in four years. He said that the country is facing a shortfall of more than 5000 megawatt electricity due to criminal negligence of previous regime and which has badly affected agriculture and industry sectors.

"We have planned to construct small power projects on different canals and rivers all over Punjab and you people come forward to identify sites and invest your money to earn profit besides giving cheaper electricity to masses", he said and assured full protection to the invested money.

Pakistan's economy is passing through a very difficult time, but it was not because of last four months rule of PPP and PML-N coalition, but was due to last eight years dictatorial rule of Musharraf and his allies, he said, adding that it would take some time to be on track.

He said the previous regime destroyed industrial and agricultural sectors of the country because of power shortage, and the worsening law and order situation and attack on judiciary had added to this. "Now it is responsibility of each and every person in or outside the government to play his role to bail out the country", he added.

"It is looking very pleasant to attend such a function after nine years and I deserve to join this gathering of business leaders to flex my muscles", the chief minister said, adding that "after assumption of the office of chief servant of Punjab I am moving to far-flung areas to know about problems the people are facing".

He said that he and his party were ready to pay any price for independence of judiciary and supremacy of law. "An independent judiciary can attract foreign and local investors to bring their money here", he added. He said people from Khyber to Karachi would be without justice if the deposed judges were not reinstated. Independence of judiciary is vital for survival of Pakistan, he cautioned.

"I am considering the industrialists and businessmen as my masters as you people are paying taxes and filling the national exchequer and I am at your service", he said. He said that the government was a facilitator, and running of industries and agriculture is not government's affair.

"It is the job of you people, and the government will provide all possible facilities and security to you in your endeavours", he said. He assured full support to RCCI in its projects, saying that RCCI identify land in Rakh Dhamial for construction of a most modern polytechnic college, and the government will provide it free of cost.

He asked Secretary Industries to sort out the matter of proposed Chakri Industrial Area of Overseas Pakistani Foundation (OPF) with RCCI officials and look at the possibility of provision of plots to local industrialists. He also announced government support for construction of RCCI building. RCCI President Abdul Rauf, Sr Vice President Sheikh Hafeez and Kashif Shabir addressed the gathering. Shahbaz distributed the achievement awards to industrialists and businessmen of Rawalpindi.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan to import 1000 MW electricity from Central Asian states​*
Pakistan will import 1,000 megawatts of electricity from the two Central Asian states Kyrgyzstan and Tajikistan through Afghanistan, the country's minister for water and power said on Sunday.

Energy ministers from Afghanistan, Pakistan, Tajikistan and Kyrgyzstan started a two-day meeting in Islamabad to sign a formal agreement about the project on Monday.

Raja Pervez Ashraf told the inaugural session of the 3rd international conference on Central Asia/South Asia Regional Electricity Market (CASAREM), the project will be completed by 2013.

According to sources, the Central Asia-South Asia (CASA) project is being facilitated and sponsored by a consortium of international lenders, comprising the World Bank, Asian Development Bank and Islamic Development Bank, for development of electricity sources in Tajikistan and Kyrgyzstan for export to Pakistan and Afghanistan.

The inter-governmental agreement will cover a host of contracts relating to commercial, legal, financial, power purchase and transmission arrangements, media reports said.

The project will ensure a supply of 5.5 billion units of electricity per year to Pakistan from different hydropower stations in the two Central Asian states and the electricity will be delivered to Peshawar through a 650-700km extra-high voltage transmission line.

Reports said that two routes have been identified for the project.

One route will run through Afghanistan's Kunduz province, Salang Pass and Jalalabad before reaching Peshawar and will cost 4.4 cents per unit.

The transmission line through this route will stretch 170km in Tajikistan, 430km in Afghanistan and 50km in Pakistan. The World Bank supports this route.

Pakistan supports a route via Wakhan and Chitral whose length is estimated at 700km and its per unit cost in Peshawar is estimated at 4.9 to 5 cents.

The line will run 360km in Tajikistan, 30km in Afghanistan (Wakhan) and 310km in Pakistan.

The World Bank has been trying to persuade Pakistan to import some 4,000MW of cheap electricity from Central Asian states, besides working on domestic sources to overcome electricity shortage.

The bank estimates that Pakistan's peak demand now exceeds some 14,000MW and the present installed capacity of 19,500MW has become inadequate on account of wide variations in water availability.

The demand is expected to exceed 20,000MW by 2010.

The World Bank says Pakistan should immediately start importing 1,000MW from Tajikistan and the Kyrgyz Republic and then increase imports to 4,000MW in the second phase.

Pakistan to import 1000 MW electricity from Central Asian states - Irna


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## Neo

*Pakistan saves US $ 100 million by winning case in London court ​*
ISLAMABAD, Aug 2 (APP): Pakistan has saved an amount of US $ 100 million including award of US $ 70 million and costs and interest by winning a case in the Queens Court of London against a Saudi company Dallah Real Estate and Tourism Holding Company of Al Baraka Group, a Religious Affairs Ministry official here said.

According to a judgment announced by the Queens Court London on August 1, the Court accepted the request of the Government of Pakistan by setting aside the exparte order issued by Mr. Justice Christopher Clarke earlier.

The Commercial Court of Queens Bench Division of the High Court of Justice, London, announced on 01 August a reserved judgment in the case of Dallah Real Estate and Tourism Holding Company, a Saudi Arabian company of the Al Baraka Group, and the Ministry of Religious Affairs, Government of Pakistan.

According to details given by a senior official of the Ministry of Religious Affairs, the matter was heard in London from July 8 to 10, 2008.

In a 58-page judgment, Mr. Justice Aikens of the High Court of Justice in London accepted the argument of the Government of Pakistan that it was not a party to the agreement and therefore no arbitration proceedings were maintainable against it.

The arbitral tribunal could not make an award against the Government

of Pakistan and the agreement between Awami Hajj Trust (AHT) and Dallah could not bindibg for the Government. The High Court allowed the application of the Government and set aside an exparte order of the High Court, which had allowed Dallah to enforce the award.

Vakeel Ahmed Khan, the then Secretary Religious Affairs and Agha Rafiq, Secretary of the ministry of Law and Justice engaged Mr. Toby Landau QC, Mr. Patrick Angenieux, solicitor, mr. Makhdoom Ali Khan, senior advocate of the Supreme Court of Pakistan and Barrister Mehmood Mandviwala to challenge the exparte award and order.

Dallah Real Estate and Tourism Holding Company was represented by Ms. Hilary Heilbron QC, Kearns & Co, solicitors and senior advocate of the Supreme Court of Pakistan Abdul Hafeez Pirzada.

The case was the result of a proposal made in 1995 by Mr. Shezi Naqvi, a director of one of the Al-Baraka companies to the Government that Dallah be permitted to provide a housing complex in Makkah/Medina on term lease for use of Pakistani Hajjis.

In July 1995, an agreement was executed whereby Dallah was to acquire land within Makkah for construction of housing facilities for Pakistanis to perform Hajj and Umra.

In January 1996, an Ordinance was promulgated to establish the Awami Hajj Trust (AHT). The AHT entered into an agreement with Dallah. When the Government of the day was dismissed by the then president Farooq Ahmed Khan Laghari, the Ordinance was not re-promulgated. As a result, Awami Hajj Trust ceased to exist.

The agreement between Dallah and Awami Hajj Trust had an ICC arbitration clause. Dallah commenced arbitration proceedings against the Government claiming US $ 70 million.

The case was heard by a three-member tribunal consisting of Dr. Ghalib Mahmasssani, Lord Mustill and former Chief Justice of Pakistan Justice Dr. Naseem Hassan Shah.

The Government did not appear before the Tribunal, which made an exparte award in favour of Dallah and also gave it interest and costs. Dallah approached the High Court of Justice in London to enforce the award. An exparte order was made by the High Court in favour of Dallah on 19 October 2006. 

Welcome to The Pakistani Newspaper


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## Neo

*Punjab for greater fiscal autonomy​*
The question of greater financial autonomy for the provinces is most likely to dominate the new National Finance Commission (NFC) deliberations, officials in the Punjab finance department tell Dawn.

We have long been pursuing with the federal government two issues that are critical for enhancing the provincial resource base of Punjab. First one concerns our share from the net hydro profits of the Ghazi Barotha Hydro Power Project and the other relates to the expansion in the scope of the provincial sales tax.

We are going to raise these and other issues, which are affecting pace of development in the province, again at the new NFC proceedings whenever these commence, a senior finance department official, who did not want to be identified, said.

The PPP-led coalition has already constituted the new NFC for the fresh determination of the vertical distribution of the tax resources between the federal and provincial governments as well as horizontal sharing of the provincial portion between the federating units. But its first meeting is yet to be scheduled.

As prime minister Yousuf Raza Gillani and some of his cabinet ministers have indicated their intention to change the population based formula for inter-provincial distribution of funds to also include other indicators like tax collection and economic backwardness in it. On the other hand, Punjab is likely to persist with its stance on the continuation of the population based distribution of funds.

The existing formula is a great equaliser, the official said. But, he hastened to add, if the inter-provincial resource distribution formula is modified Punjab will insist that it is given its share, including arrears, from the hydro profits of the GBHP project and complete transfer of the provincial sales tax to the provinces. Also we shall press for the expansion in the scope of provincial sales tax to services like telecommunications and financial services.

Punjab is being denied its share from the net hydro profits of the GBHP project on the pretext that the late provincial chief minister Arif Nakai had forgone the right in the early 1990s to facilitate its construction.

That was illegal and unconstitutional. No chief executive could do so in his personal capacity because it means compromising on the rights of the people of the province. They should get what the constitution guarantees them, the official said.

On the issue of provincial sales tax on services, the federal government has taken a position quite opposite to the stance of Punjab and Sindh, which want its complete transfer to the provinces. Islamabad says it is not possible to resolve the issues that may crop up if the provinces seek to tax the large, revenue generating inter-provincial services. The finance department official reminded that the provincial finance ministers who had met in June in Lahore ahead of the budget for the year 2008-09 had also agreed to this and called upon Islamabad for the transfer of collection this tax to the provinces and expansion of its net.

In addition, Punjab is also trying to persuade the federal government to allow provinces a greater say in the identification and implementation of development projects and schemes undertaken in the provinces under the Public Sector Development Programme (PSDP).

This is also another area where all the four federating units have developed a consensus, the official said.

A senior Punjab Planning and Development Department official, who also wanted not to be identified, said the proposal had been made to reduce overlapping of development schemes in the provinces.

Besides, the provinces are better equipped to know and prioritise the needs of their people. We want optimal use of federal and provincial funds for development and improvement of public service delivery. That goal requires a closer co-ordination between the federal and provincial governments, he said.

The official, who described the relations between Punjab and Islamabad as cordial and co-operative, said the letter written by Chief Minister Shahbaz Sharif to the federal government to fully fund the development schemes that may be announced by president or prime minister in future in the province should also be seen in this context.

It doesnt have any political connotations; it is motivated purely by the feelings that such schemes and projects put unnecessary burden on the provincial resources and we have to make adjustments and compromises on our priorities to fund these projects, he stated.

That is precisely why we want that such schemes should be totally funded from the federal funds.

The letter has reportedly expressed the provincial governments inability to provide funds from its resources for development projects that may be announced by president or prime minister.

Currently, both the federal and provincial governments equally share the cost of the schemes that are initiated on the presidential or prime ministerial directives.

This practice compromises provincial development priorities and distorts its development planning, the P&D official said. The new government is opposed to such practices because it erodes provincial autonomy in the sphere of development, and, of course, politics, the official said.

The officials reject that the provincial governments demand for greater financial autonomy could unleash a tussle between the federal government and Punjab.

It isnt correct to presume that these demands and suggestions are going to lead the federal and provincial governments to the path of confrontation. Our demands and suggestions for greater financial independence and improvement in co-ordination and co-operation between the federal and provincial agencies have been made in good faith and purely from the point of view of stopping waste of meagre resources for development and public service delivery.

There is no politics involved and there is no need to read too much. Moreover, most of the demands and suggestions are not new ones. If these didnt create any acrimony between Islamabad and Lahore in the past, why would they in future? the P&D official asked. That is why we have received very sympathetic response from the federal government on our issues and concerns, he said.

Punjab for greater fiscal autonomy -DAWN - Business; August 04, 2008


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## Neo

*Need for rural hydro-power units​*
A significant portion of the population, particularly those living in low density scattered settlements, are still without electricity. These people depend on traditional biomass and kerosene to meet their daily energy needs.

Fortunately a large number of thinly populated settlements in the Northern Areas have access to potential sites for small and micro-hydro schemes. Hydropowers development does not pollute environment. In addition, replacement of firewood with electricity helps control deforestation.

The market price of kerosene and LPG reaching these areas increase due to heavy transportation charges. In addition respiratory, eye and other pollution-related diseases are common due to excessive use of kerosene for lighting and wood for cooking and heating.

The present extensive use of firewood as a source of energy has led to depletion in natural resources and degraded local environment putting enormous pressure on forests in these areas. Indiscriminate cutting of trees, if allowed to continue at the current pace, will reduce further forests cover in the next few years. Deforestation results in increase in intensity of floods, droughts and other natural catastrophe.

In a typical small hydropower (SHP) unit, potential energy of water stream is used to rotate turbine. This rotational motion is converted into electrical energy through a generator. The electricity is then transmitted to a sub-station where transformers increase its voltage to allow transmission to houses. The amount of electricity, a hydropower installation produce, depends on the quantity of water passing through a turbine and height from which the water falls. The larger the flow and higher the fall, the more electricity is generated.

Rural electrification based on exploitation of local water resources plays a significant role in economic development and improvement of living standards. It has been observed that skilled workers, teachers, doctors and nurses prefer to live and work in rural areas to contribute towards improving human development indicators in rural areas well connected to nearby urban centres and where electricity and communication services are available. However they are reluctant to work in areas where there is no electricity.

Access to electricity provides women with an opportunity to improve their social and economic condition. The SHP projects benefit local environment by using a natural resource to generate the needed electricity without depleting the quantity or quality of the resource or harming aquatic fauna and flora. The monetary saving from kerosene to electricity is also considerable.

According to the World Bank, the worlds poor people spend more than 12 per cent of their total income on energy, more than four times what a middle-income family in the developed world spends.

There is no international consensus on the definition of small hydropower (SHP). In China, it can refer to capacities of up to 25 MW, in India up to 15 MW and in Sweden small means up to 1.5 MW. However, a capacity of up to 10 MW is accepted norm by the European Commission.

Within the range of small hydro-power, mini-hydro typically refers to schemes below one MW, micro-hydro below 100 kW and pico-hydro below five kW. Small hydropower is a mature technology, although innovations are continually occurring, especially in the field of electronics and controls.

Generally speaking, micro- and pico-hydro technologies are used to provide electricity to isolated communities where the electricity grid is not available, whereas mini-hydro tends to be grid connected. In most of the cases, no dam or reservoir storage is involved in pico-, micro- and mini-hydro schemes. The local resources utilised to operate the micro- and pico-hydro-power.

In fact some 300 micro and mini hydroelectric plants, installed by the private and public sector in the northern hilly areas, are supplying electricity to areas not connected with the grid. The turbines used in these plants are manufactured in local workshops. The unit cost of MHP in Pakistan was $1,000-$1,200 in 2005. The demand for all equipment components cannot be met locally. The costs of local manufacture can be reduced still further by developing local engineering capabilities and advisory services.

Once the plant is installed, the local community takes the responsibility of operation. Electricity is mainly used at night for lighting, watching TV, etc. During the day, power requirement is minimal for lighting. As a result day-time generation power help villagers in running small agro-processing plants for flour grinding, rice husking and to charge car-batteries which are mostly used for supply power for television sets for those who were not directly connected to the micro hydroelectricity supply.

The amount of electricity generated by pico-hydro unit is very small in magnitude. This allows only a small number of basic appliances to operate. The voltage in the supply line varies with the amount of flow in the channel. This creates seasonal as well as daily fluctuation in power supply, making it unsuitable for sophisticated devices. This can, however, be overcome through use of load controllers and standby batteries or generators.

A recent report by the US Agency for International Development (USAID), which makes a cost comparison of different technologies to harness green energy in south Asia, proves that hydro-energy is five to ten times cheaper than wind and solar energy respectively. Assuming an efficiency of 38 per cent for the conversion of oil into electricity, each 600 kWh of electricity generated with a hydro plant is equivalent to one barrel of oil.

Sustainability criteria demand that economic decisions incorporate environmental stewardship and social justice. For the areas remotely located at considerable distance from the national grid, SHP is the most attractive option of power generation.

Unfortunately, locally manufactured turbine has no design or quality control facilities. In order to accelerate the development and enhance the performance of small hydro power, it is imperative to benchmark the work of the SHP industry to identify and adapt the proven best practices of the world leaders in the industry. The government should also encourage private-public cooperation in the SHP sector.

The federal government should provide special loans on discount and technical support to union councils and town councils for the instillation of SHP projects. If cheap hydro-power generation through small, local power generation and supply systems, can be successfully realised it would help the government save money needed for linking remote areas with the national grid.

Need for rural hydro-power units -DAWN - Business; August 04, 2008


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## Neo

*Untapped hydropower potential of Punjab​*
By Engr Hussain Ahmad Siddiqui

​
As the nation faces the worse power crisis of recent times, the government is exploring possibilities of creating additional capacity for generating electricity optimally, on an emergent basis.

Punjabs irrigation system can be effectively utilised to generate, in first phase, about 400 MW cheap electricity that could be made available within a short span of time, provided harnessing of this potential of renewable energy is prioritised..

The Punjab Power Development Board was created as an arm of the Irrigation Department (now known as Irrigation and Power Department) for the promotion of hydropower generation in the province. As many as 591 potential sites at different river falls, canals and barrages, with medium and low head and high discharge, having a total capacity of more than 5,000 MW have been identified. Pre-feasibility studies for 35 raw-site projects of cumulative 350 MW capacity have been conducted. In addition, detailed feasibility reports of another 12 projects of about 50 MW total capacity are available since long. Yet, nothing physical has been done towards development of these small hydroelectric power projects .

In fact, there were no sincere and concerted efforts made by the successive governments to promote construction of these power projects, either in public or in private sector. During the period 1995-1997 the provincial government had issued letter of interest (LOIs) to the private sector for setting up power stations at 22 identified sites. Not a single project could materialise. For many years the government did not re-launch the programme. Sometime in September 2005 the government formulated a revised power policy. This was however formally approved and announced only on July 28, 2006, as Punjab Power Generation Policy 2006. Two years thereon, the implementation of policy did not make any progress

The scope of power policy covers development of projects of capacity up to 50 MW, through public sector, private sector or under public-private sector partnership. In view of lack of interest exhibited by the private sector in the past to develop these projects, it was decided by the government to set up a few projects in public sector to serve as model or pilot projects. Ten project sites with confirmed technical feasibility and economic viability were earmarked for the purpose.

The Irrigation and Power Department launched, in September 2006, the first project namely Khokhra hydropower project on Upper Jhelum Canal, for which detailed feasibility study was conducted in August 2005. International tenders for the 3.20-MW project, to be located near Mandi Bahauddin at a total cost of Rs260 million, were invited on turnkey basis. But no decision was taken on the bids received. After a lapse of almost a year, tenders were re-issued, this time only for turbines and other electromechanical equipment. Again, decision could not be made and tender has been scrapped.

Besides the projects to be developed by the government itself, there are four projects of cumulative capacity of 13 MW ready for take-off. These are 4.80 MW and 1.99 MW both on Lower Bari Doab Canal (Sahiwal district), 4.24 MW on Tail Mainline Upper Chenab Canal (Bambanwala-Sialkot) and 1.90 MW on Upper Gogera Branch (Mannawala- Sheikhupura). Bankable feasibility studies have been prepared for these projects. Private sector has to be invited to develop these solicited projects on build-own-operate-transfer (BOOT) basis, project allocation being on minimum levelised tariff received through competitive bidding, in accordance with the provisions of the policy.

However, pre-qualification for developing only one project has so far been invited by the Punjab Power Development Board. Pre-qualification documents from interested parties were received by October 31, 2007 for a 4.80 MW project on Lower Bari Doab Canal in district Sahiwal. There has been no further progress reported since then. According to project schedule specified in the policy, bids were to be invited from selected parties within 100 days after submission of pre-qualification documents.

In addition, there are 35 sites identified as potential projects to develop hydropower stations of 160 MW cumulative capacity, on various canals located in Lahore, Faisalabad, Multan, Sargodha, DG Khan and Bahawalpur zones. These are classified as raw sites as detailed feasibility studies have not yet been undertaken and are to be conducted by the respective sponsors. There are another 10 projects, of cumulative capacity of 125 MW, proposed on various barrages on Chenab, Jhelum, Ravi and Sutlej rivers.

Seven private companies were allowed to develop projects at 11 raw sites. For the purpose as many LOIs were issued to them during October-December 2007, requiring the investors to prepare detailed feasibility study for the respective project within 12 months. Till to-date there is no progress made by any of the sponsors to commence requisite investigations for preparation of feasibility report. It is obvious that preparation of the feasibility reports, and consequently construction of these projects, will be delayed inordinately, if at all the projects do materialise eventually.

The governments as well as sponsors are indifferent to the opportunity cost the nation has to pay heavily in case of long delays in implementation of these projects. It was in 1992 that Wapda assessed the potential of power generation on the Punjab canals and barrages and, subsequently, completed feasibility studies at various sites. During the year 2003-04, Wapda had received and evaluated bids from local contractors for construction and supply of machinery for a 3.30 MW Pakpattan hydropower project. Then the subject was transferred to the provincial government, putting spanner in the whole process.

To develop a hydropower project it is vitally important to conduct proper feasibility study. Realising the need for capacity building at Punjab Irrigation and Power Department to prepare feasibility studies, Asian Development Bank (ADB) had extended technical and financial support for the purpose in 2004. The 3-year capacity building project has completed last year. But it appears the project has failed to achieve its objectives, as feasibility studies of potential projects are not being undertaken departmentally. The department has recently asked for the expression of interest (EOIs) from consultants, as in the past, to prepare feasibility studies of another five projects proposed on canal falls, of cumulative capacity of over 34 MW. There has been no progress regarding appointment of consultants as yet, though the department received the EOIs in September 2007.

The development of hydropower is considered a key factor for future progress. Punjab government needs to take stock of the situation, executing the identified projects speedily to meet its political agenda of improving the socio-economic conditions.

Untapped hydropower potential of Punjab -DAWN - Business; August 04, 2008


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## Neo

*The growing informal economy​*
Pakistans black economy is believed to have grown to be more than half the formal economy which yields a GDP of $166 billion.

One report says that it has reached such proportions that it was upsetting public welfare plans. The report puts its size at $83 billion and that it could yield the national exchequer revenue of $8 billion if taxed even at 10 per cent.

But there is a belief that the countrys parallel economy has already touched $100 billion. To determine the size of the informal economy is problematic simply because there is nothing on paper. According to an assessment, the underground economy expanded at the rate of nine per cent in last 23 years1977 to 2000.

The informal economy helps its sections make easy profits since the cost of labour becomes much lower than fixed by law. Black economy grows along with corruption, speed money, consultancies, smuggling, narcotics, government contracts and tax evasion.

Only recently, hoarders and speculators of staple food commodities like rice and wheat were able to make a killing by their covert activities with the active connivance of government officials.

No government has shown nerves to tackle this problem. The present government had also initially taken a serious view of the situation but then decided to offer incentives to whiten the black money/assets. In 2000-01, Shaukat Aziz regime had launched a campaign for documentation of the economy but abandoned it in the face of resistance of unregistered traders and factory owners.

A study conducted by the Lahore University of Management Sciences in 2003 showed that out of Rs100, the government receives only Rs38 and Rs62 is pocketed by the tax payer, tax collector and tax practitioner. It means that Rs720 billion tax collection in 2005-06 was only 38 per cent of about Rs2 trillion which should have been collected by the Federal Board of Revenue.

According to an SPDC study, the black economy in Pakistan had reached its peak in the early 1960s, when the corporate income tax rate was 30 per cent and super tax 30 per cent, the aggregate being 60 per cent. This rate dropped to 40 per cent during the late 1980s.

Likewise, the maximum personal income tax rate was 75 per cent during the 1960-64 period, which was the reason for the black economy to remain well above 30 per cent of the GDP in that period. The black economy kept declining during the 1965-75 period, until this rate came down within the 60-70 per cent range. It was 56 per cent in 1980-1986 period, and 39 per cent in 1988 and subsequently 28 per cent in 1993.

The black economy declined by nine per cent during 1996 and 1997 after having remained relatively high, 26 per cent of the GDP, in the early 1990s. During that period, tax-to-GDP ratio was almost stagnant at 13 per cent and the rate of return on deposits was falling  a disincentive to withdraw from activities related to the black economy.

The size of the informal economy slightly increased from 2000 onwards. This is, perhaps, due to the reduction of rate of return on deposits, which declined by more than 30 per cent in 2000-2003 fiscal year. Despite the fact that the black economy as a percentage of the GDP decreased, its annual compound growth rate remained more than 11 per cent.

At disaggregated level, this growth remained at two per cent during the 1960s, 17 per cent during the 1970s, 15 per cent during the 1980s and 13 per cent during the 1990s and onwards. Similarly, tax evasion grew at the rate of 12 per cent. This growth remained at five per cent during the 1960s, 19 per cent during the 1970s, 16 per cent during the 1980s and 11 per cent during the 1990s and onwards.

The black economy is, of course, a global phenomenon. The Economist, London, for instance, estimated that in 1998 the worlds black economy accounted for a missing $9 trillion worth of output  a volume of output almost equivalent to that of the US. Later, a study by Friedrich Schneider, an Austrian economist, attempted to measure the size of the black economy in 76 developed and emerging economies, revealing that underground activity is equivalent to 15 per cent of officially reported GDP, on average, in rich economies, and about one-third of GDP in emerging ones.

In India, the black economy which was rampant in the 1970s, is back and booming, pushing up stock and property prices, causing inflation and even making the rupee unusually strong against the dollar. According to Arun Kumar, a university professor and author of Black Money in India, the informal economy has assumed huge proportions and it keeps growing. His estimates suggest it is worth a whopping $500 billion  almost half the size of the official economy  but some say it is even larger and could be as high as 70 per cent of the official economy, if parallel activities undertaken outside the country are considered.

While most of the underground economy elsewhere in the world revolves around criminal or illegal activities, the major contributors to the black economy in India are legal businesses and the government. According to Indian Council for Research on International Economic Relations, legal businesses controlled by the government, government expenditures and taxes have also been the major source of black-money creation. For instance, no real-estate deal in the country is done without the involvement of at least 40 per cent unaccounted-for money, and a large portion of the billions of dollars in foreign-exchange inflows that India sees every year is actually the returning black money that went out of the country in the high-tax regime before liberalisation began.

Americas fast-growing black economy is believed to be worth $970 billion, or nearly nine per cent of the real economy. It could soon pass $1 trillion. What is fuelling this economy is the countrys growing ranks of low-wage, illegal immigrants. The government puts this population at 8.5 million but another study puts it at 20 million.

In the OECD countries in 19992001, Greece and Italy had the largest black economies, at 30 per cent and 27 per cent of the GDP, respectively. In the middle group were the Scandinavian countries, and at the lower end were the United States and Austria, at 10 per cent of GDP, and Switzerland, at nine per cent.

The growing informal economy -DAWN - Business; August 04, 2008


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## Neo

*Rising home remittances​*
Remittances by 3-4 million of overseas residents continue to set new records, bringing many blessings. The remittances crossed over $6.451 billion in 2007-08 and were up by $957.59 million or 17.43 per cent as compared to fiscal year 2006- 07.The remittances have been rising rapidly since 2001.

The real kick start was given by the 9/11 tragedy. Since then hundi system has been under scrutiny by the US agencies and this along with banking reforms, have helped divert remittances from the informal to formal sector.

The remittances have come handy at a time when the dollar is in great demand on account of surge in imports and rupees value having depreciated to around 72 to 73 to a dollar. Currently, the remittances exceed direct foreign investment at $5.1 billion received last year or cash foreign loans which are lower than the foreign investment levels. Rising remittances provide strong balance of payments support and are stable source of foreign exchange inflows in a difficult economic situation.

Remittances also support families of non-residents and have contributed significantly to the construction boom.

The foreign exchange reserve which peaked at $16 billion last year has come down to about $10.5 billion. It would have been much lower but for the enhanced remittances.

Remittances while build foreign exchange reserves, are also a source of worry as they increase the money supply in a big way. The increase in money supply caused by the conversion of the remittances into rupees aggravates inflation, which in the case of food prices are up by 32 per cent. Also remittances have provided the banks with a lot of liquidity which has, along with huge external capital and financial inflows, resulted in low rates of returns on bank deposits.

Another issue agonising the ex-chairman of the Federal Board of Revenue is the real source of the remittances. He wanted to know how the hundi has been working in the reverse, that is how much money has been sent from here first abroad, and then brought back home as remittances, cleansed of all illegalities and immoral transactions. But he had not been allowed by Mr Shaukat Aziz and others to look in to the original source of the money. He was sure a large part of the remittances included tax evaded money which went out for a small fee and came back. The money that went out included booty from crime, narcotics trade, gun running, robberies and kidnappings. It also included massive bribes given to big officials, rewards of speculation in the stock market and a portion of export proceeds.

The fact is when the banking system was not being fully used, the remittances came down to below a billion dollars.

Since 9/11 the amount has risen to $6.451 billion. Neither have the number of workers abroad increased enormously nor have their wages increased excessively for the remittances to rise from under $1 billion to over $6 billion. Much of it is workers remittances but some of it is tainted money.

It is necessary that effective steps are taken to prevent illegal earnings being transferred abroad.

Rising home remittances -DAWN - Business; August 04, 2008


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## Neo

*An outlook on foreign portfolio investment​*
The government is expecting around $2 billion portfolio investment as a result of strict regulatory framework, recently introduced to enhance investors confidence and foster growth of a robust corporate culture.

There has been $300-350 million outflow of investment from the stock market since January this year but now we hope to shortly have a couple of billion dollars new portfolio investment, says SECP chairman Mr Razi-ur-Rahman Khan.

The SECP chairman recently met ten fund managers abroad who assured him of sizable portfolio investment following various reforms undertaken by the SECP, he told Dawn.

He said he has also received positive indications from many Middle Eastern investors who have surplus funds and were interested to invest in Pakistani bourses. Similarly, he said that a number of investors from the North America were approaching SECP to invest in Islamic financing.

One of the important step taken by the SECP was to ensure stabilisation of stock markets by finalising Rs20 billion Market Opportunity Fund--- just launched by the National Investment Trust (NIT).

Initially, Rs50 billion fund was proposed but eventually its size was reduced to Rs20 billion with a view to first achieve some degree of stability. Mr Khan said it was not designed to boost the market but to remove manipulation by encouraging the institutional investors specially banks and financial institutions to go for more buying and selling.

And now the bigger brokers have understood very well that it would not be easy to manipulate the market and make windfall gains, he said.

An agreement has been reached on all the modalities of the fund among the SECP, Karachi Stock Exchange (KSE) and the financial institutions. Firm commitments have been obtained from the financial institutions to participate in the new fund.

He claimed that an in-house system has been developed to effectively monitor the stock market. SECP has identified those who are working and investing in the stock market since 2006 and the list includes the sensitive information which will help us to restrict manipulation, Mr Khan said.

He did not believe that SECP would violate any code of conduct or ethic by having the precise information about the small and bigger market players. Far-reaching reforms have been introduced to ensure transparency in the stock market. However, political and economic events and the issues concerning inflation and fiscal deficit would continue to impact the market.

Khan said in next four months the stock exchanges will be demutualised. The SECP in consultation with the stock exchanges has developed the draft stock exchanges (corporation, demutalisation and integrated) ordinance 2007 which has been approved by the cabinet and will be promulgated once the president has approved it.

This step will certainly remove the control of the brokers on stock markets, Mr Khan said adding that the ordinance will curtail the limit and the strength of brokers at 40 per cent while 60 per cent directors will have to be taken from outside and then there will be no pressure by the management.

The SECP chairman said that pension funds would be invested in stock market for which the newly appointed Economic Advisory Council is preparing recommendations.

Last month SECP gave licences to four asset management companies to act as Pension Fund Managers and seven pension funds have been authorised.

Out of these seven, four are Islamic and three are conventional pension funds. Individuals contributing to the pension fund have the flexibility to choose between various investment options as well as between various fund managers.

Mr Khan said he does not know whether one dozen brokers sitting in Karachi and two dozens in Lahore were manipulating the market with the alleged support of some government functionaries.

One needs to have some proof to take any action against anyone who has done some wrong with the connivance of any government servant, he said.

However, he said with the launching of e-services by August 14, greater transparency and prudent practices in the capital market could be ensured. The SECP is setting up of Pakistan Institute of Capital Markets (PICM) which will conduct various examinations leading to certification for different segments of the capital market. Chartered Financial Analysts Association of Pakistan (CFAAP) has been engaged to develop an analyst association certification programme as a first step in this direction.

SECP is also in the process of developing a code of conduct for analysts, asset managers and brokerage houses in consultations with CFAAP. These codes are aimed at developing an ethical conduct outline for the relevant market professionals based on their ability to influence the decision making of an investor.

An outlook on foreign portfolio investment -DAWN - Business; August 04, 2008


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## Neo

*Foreign aid vs social policy​*
In the wake of stock market meltdown and falling value of the rupee, Pakistans economic managers are hoping for some external help to bail the economy out of trouble.

Pakistans economic situation, especially its external indebtedness, which has reached $46 billion or $10 billion more than it was a decade ago, is in dire straits and without immediate remedial measures, it may again fall into the debt trap which it found itself in at the end of the last decade.

This cyclical merry-go-round has been a feature of Pakistans economic history in the last five decades, as military regimes have alternated with civilian ones with distressing decadal regularity. The question is whether this circle will ever be broken or whether we will get deeper and deeper into the vortex of debt and despair after the end of each cycle.

There seems to be two schools of thought on how to tackle the problem. The first argues that we need to take advantage of our geopolitical situation and accept the economic aid being offered by the United States and Saudi Arabia to enable us to stabilise the economy and then bring about fundamental structural reforms in the economy. The second school seems to think that the circle can be broken through pursuing a more pro-active social policy in which foreign assistance need play only a minor and transitory role.

The former view, which has been the lynchpin of the development strategy during the three major episodes of military-led development of Ayub Khan, Ziaul Haque and Pervez Musharraf is being vigorously advocated by seizing the opportunity of a recent landmark bi-partisan legislation introduced in the US Congress, jointly by Senator Joseph Biden and Richard Lugar proposing non-military aid to Pakistan be tripled to $7.5 billion over five years, and linking security aid to performance.

Included in the same category, though with different underlying motivations, is the Saudi governments reported offer to defer oil payments worth $6 billion, although its details and terms have not yet been revealed.

The bipartisan US legislation authorises $1.5 billion annually for development purposes, such as building schools, roads and clinics, for five years and advocates a similar amount over a subsequent five-year period. The measure is being as peddled as a democracy dividend and being held out as a carrot to Pakistans democratic government to blindly follow the US lead in the war on terror, rather than devise a way of solving its internal problems through negotiations and solution of the economic and social problems, which have given rise to terrorism. It is clear the United States deems the solution of these problems primarily through military means.

The total economic assistance expenditures in Afghanistan are a tiny fraction of the military expenditure, which amounts to $100 million per day for the United States alone. The offer of economic aid to Pakistan does not represent a change in its strategy to fight terrorism in Afghanistan and Pakistan, but merely a ploy to ensure that Pakistan does not deviate significantly from the script signed by Musharraf making Pakistan an unquestioning ally of the US in the war on terror.

Along with the economic aid offer, the US is also luring Pakistan with offers of upgrading military hardware, such as the F-16s, which it wants Pakistan to use against the Taliban insurgency in Pakistan.

Mr Shahid Javed Burki, understandably eager to see Pakistan elevated to the ranks of middle-income economies, has proposed that the country should pitch for a higher foreign aid target to be mobilised in the next five years, amounting to $20 billion or almost thrice the amount proposed in the Biden-Hagel bill, provided Pakistan promises to meet an equal amount through domestic resource mobilisation.

Mr Burkis argument seems to favour a return to the supposedly halcyon days of Ayub Khans Planning Commission with experts imported from abroad or trained with the assistance of donor agencies. He would like the scope of such assistance to be extended to improving the quality of governance and the training of judges and parliamentarians. He is of the opinion that, Pakistan, at this critical time in its history, does not have the capacity to formulate an appropriate development strategy.

While Mr Burkis prognosis has some degree of substance, his prescription is hardly acceptable, as the economic and political environment facing Pakistan has undergone a sea change, both globally and domestically, in the four decades since Ayub Khans exit. What we need now is to seek the solutions to our economic problems in the light of the present challenges, which are located largely in the domestic economy and in our past neglect of social policy issues.

While the global economy does provide opportunities for increasing a countrys development prospects, they depend largely on its ability to take advantage of them. Only a few developing countries  mainly, in East Asia, which have exercised a degree of autonomy in policy-making have been successful in avoiding the harmful effects of globalisation during their development process.

This is well brought out by Alice Amsden in her latest book, Escape from Empire, which also highlights the changes in the US foreign aid policy to developing countries, showing that it has ceased to play a benign role since 1980s.

Similarly William Easterly has questioned the effectiveness of foreign aid in reducing poverty and promoting economic growth. The complex problems of poverty of low-income societies can be solved by the home-grown rise of political and economic institutions, rather than through influx of foreign aid.

Even if one were to ignore the political motivations of the US offer  and believe that the aid being offered by Saudi Arabia would be manna from heaven, would it solve the economic problems facing Pakistan and would it facilitate Pakistans return to the path of vigorous economic and social development?

If Pakistans past experience  which is an object lesson in the failure of aid to enhance development objectives  is any guide, this is most unlikely to be so. Our experience with the Ayub era of foreign aid-led and inequality-inducing growth, the military-aid led growth of Ziaul Haq and Musharraf eras and the failure of the structural adjustment packages in the 1990s, do not have to be repeated. One must turn to the second alternative of tackling the problem with the help of a pro-active social policy which would change the structure of our institutions in a way that would preclude the recurrence of political business cycles.

Many economists who subscribe to this view, look at the problem in terms of graduating Pakistan from the low-income to middle-income category of nations, but alleviating the poverty of more than a third  possibly up to a half after the current wave of fuel and food inflation  of the population.

Using a minimum income of Rs7000 per month and assuming a third of the population as officially poor or nearly poor, around 55 million persons would require employment-income support.

With one adult provider for another six household members, eight million men and women would need priority access to employment, requiring the guaranteed income annual provision is nearly Rs600 billion[$10 billion], which, in turn, would require an investment of Rs3000 billion[$50 billion] of assets would have to be vested in the poor, assuming a 20 per cent rate of return. (These calculations are based on an unpublished paper of Dr Aly Ercelan of PILER).

The financing of this large sum  which is in the same ball park as Mr Burkis foreign aid-driven growth strategy  will be dependent on greater domestic resource mobilisation and transfer of resources from the affluent classes and sectors, including defence.

It would require quite a different configuration of social policy initiatives, including education, human resource development, migration, regional and gender balance, labour, land and water reforms than those implicit in growth-through aid strategy, which is top-down and centred more on bureaucratic and governance reforms.

One of the major social issues that has defied solution and plagued Pakistani political scene is the question of land reforms  although its focus is often restricted to agrarian reforms  which has been put on a policy back-burner for almost three decades.

Without tackling it head on, it is difficult to see how the country can lay the basis for political stability and economic equity. However, as pointed out in a recent paper by Haris Gazdar, the question of land reforms is no longer restricted to the agrarian economy, but has become multi-dimensional and has to be viewed in varying regional contexts and historical evolution.

As he cogently argues, The arrangements for holding land are deeply embedded in the social, political and institutional fabric of the country and technocratic solutions, such as the computerisation of land records, cannot in themselves provide the solution to a complex problem, which needs to be researched and debated further.

Neither the foreign aid and nor the social policy approach can however deny the primacy of a democratic political process which needs to debate the economic and social alternatives thoroughly before taking a policy decision.

syed.naseem@aya.yale.edu

Foreign aid vs social policy -DAWN - Business; August 04, 2008


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## Neo

*1000 megawatts power to be imported from Tajikistan and Kyrgyzstan​* 
ISLAMABAD (August 04 2008): Pakistan will import 1000MW electricity from Tajikistan and Kyrgyzstan to overcome power shortage and increase trade and economic activities for building confidence among member countries of Central Asia/South Asia Regional Electricity Market (Casarem).

Federal Water and Power Minister Raja Pervez Asharaf sated this at the inaugural ceremony of 'Inter-Governmental Conference of Central Asia/South Asia Regional Electricity Market (Casarem)', here on Sunday.

Most of the technical, financial, and legal issues pertaining to Casa 1000 have been resolved with mutual consent in a series of meetings held from July 31 to August 2, he added. The minister said that Pakistan is facing severe power shortage due to insufficient investment in power generation and inadvertent postponement of planned hydroelectric projects in the country.

The project for import of 1000 MW from Tajikistan and Kyrgyzstan via Afghanistan is very vital for bringing confidence and comfort among the regional states along with boosting economic activities, he added.

The Government of Pakistan had expressed strong interest in importing 1000 MW of electricity from Tajikistan through a high-voltage transmission line to be built through Afghanistan, as the first phase of developing electricity trade with Central Asian Region, said Raja Ashraf.

He said there was equally strong Tajik government's interest in exporting electricity via Afghanistan to enable the transit as well as in importing some quantities for its own market.

Kyrgyz Republic stated its interest in adding its surplus power for export as well. All four countries also expressed strong desire to implement the project with the private sector participation.

The major donors are: the Asian Development Bank (ADB), the Islamic Development Bank (IDB), and the World Bank, who are providing valuable assistance to materialise Casa 1000. The project will ensure supply of electricity from both the exporting countries at 5.5 cents per unit.

The ongoing meeting will discuss the modalities about transmission losses along with political and security constraints that Casa will operate within - political due to Russian efforts to forestall any US brokered deal to make Central Asian surplus energy available to an energy deficient South Asia with the security concerns in Afghanistan requiring no elaboration.

As a way out the government of Pakistan is planning to establish an independent company that would purchase power and then sell it to the national grid. Besides this, the US and the IFIs are also keen to engage both Pakistan and India in a Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline which will provide an alternative to the US opposed Iran-Pakistan-India (IPI) gas pipeline.

This project was conceived by four Central/South Asian states namely Afghanistan, Tajikistan, Kyrgyz Republic, and Pakistan. Pakistan took an initiative and held first meeting for early implementation of the project in May 2006 at Islamabad, the second meeting was held in Dushanbe in October 2006, and the third in Kabul in November 2007.

A governing body was created with the name of Inter-Governmental Council (IGC) comprising representatives from the four countries at the ministerial level. The major objective of the Inter-Governmental Council is to explore the opportunities for benefit of Central/South Asian states with the mandate to develop a regional electricity market for cross border power trade.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Economy on downslide: President​*
KARACHI (August 04 2008): President Pervez Musharraf said on Sunday that the new elected government was striving to resolve the challenges confronting the country and he wants from the government to successfully complete its five-year tenure. He was speaking at a dinner hosted in his honour by the business community here.

The new government which, the President said, is elected by the people, is striving to resolve the issues confronted by Pakistan. President Pervez Musharraf said he will pray to Allah Almighty to grant success to the new government. If the country grows prosperous, "I will be the happiest man," he added.

Referring to his earlier address to the business community in the metropolis, he said he had expressed some views about the challenges for the country and in his opinion the country was still facing the same.

He said it was true that the economy of the country was on the downslide. About extremism and terrorism, he said "we cannot take it lightly because it has direct impact on the stability of the country.

He said he is aware of the uncertainty prevailing in the country as well as the reservation of the business community. He said the development of the country was linked to the success of the elected government. He called upon the elected government to face the challenges, handle them and take the country and the nation forward.

President Pervez Musharraf said that an elected government was in the office and it is trying to tackle the prevailing situation in the country. He said his support was always available to the government and he would pray for the success of the coalition government.

He said if "we want to place Pakistan among the developed countries, we need democracy and consolidate it in the country". President Pervez Musharraf said his role is constitutional and it will remain as such. "Within that role, I will always abide by the Constitution ".

He said this was the new government and we would have to give it some time to consolidate, to develop the country and get the results. He said "Pakistan comes first and it is the responsibility of all of us. We love this country and all of us are patriotic".

He said "we have to look into the current issues and find ways to deal with them". Referring to the economic situation that now prevails in the country, the President said "we have quite clearly stopped outflow of money and encouraged inflow of money.

He said the investors whether local or foreign, will take into consideration the political stability and consistency of policies being pursued in the country.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan, Afghanistan sign electricity import agreement with Central Asia states​*
Pakistan and Afghanistan will import 1,300 megawatts electricity from two Central Asian states Kyrgyzstan and Tajikistan under an agreement signed in Islamabad on Monday.

Under the Central Asia-South Asia (CASA-1000) agreement Pakistan will import 1,000 MW and Afghanistan 300 MW.

The transmission line will be 477 km long from Kyrgyz Republic to Tajikistan and 750 km between Tajikistan and Pakistan via Kabul.

The agreement was signed on conclusion of two-day
Inter-Governmental Council (IGC) meeting of Central Asia/South Asia Regional Electricity Market (CASAREM).

The agreement was signed by energy ministers from the four countries in the presence of representatives of the international financial institutions including the World Bank, Asian Development Bank and Islamic Development Bank.

Pakistan's Minister for Water and Power Raja Pervez Ashraf told a news conference that CASA 1000 Project is expected to be commissioned by year 2013.

"The project would go a long way in overcoming power shortages in Pakistan, as well Afghanistan".

The IGC Secretariat will be set up at Kabul and would become operational with immediate effect. Qazi Naeemuddin of Pakistan has been appointed first Executive Director of IGC Secretariat.

"The project is a landmark as it fosters regional electricity market and brings together countries of Central and South Asia and also opens new vistas of trade and energy among energy rich and energy deficit countries," Ashraf said.

Minister of Energy and Water of Afghanistan Alhaj Mohammad Ismail Khan said that the agreement will play a vital role in the strengthening of relations between members' states.

He added it will certainly be a great milestone for the economic development of the members' states.

Pakistan, Afghanistan sign electricity import agreement with Central Asia states - Irna


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## Neo

*Pakistan to generate 16,000MW of additional electricity by 2015​*
ISLAMABAD  Pakistan has decided to generate 16,000MW of additional electricity by 2015, a new plan that requires needs $30 billion investment, said Water and Power Minister Raja Pervez Ashraf.

Addressing a news conference here yesterday after the inaugural function of Intergovernmental Conference on Central Asia  South Asia Regional Electricity Market, the minister said the government would invest $10 billion for the additional capacity and generate another $20 billion through the private sector by providing enabling environment. He said the load shedding would come to an end by end of next year.

He said the government organised a roundtable conference with international investors recently in Washington that was attended by 30 leading global players of coal-based power generating companies. The government would soon hold international competitive bidding to set up coal-fired power plants in the country, he said.

Responding to a question he dispelled the impression that the World Bank had declined to finance Bhasha dam and added the construction work on the project would be initiated next year.

The minister said the import of 1000MW electricity from Tajikistan and Kyrgyzstan to Pakistna under the Central Asia  South Asia (CASA 1000) project would promote regional energy trade and lead to greater regional cooperation in economic and energy fields.

Responding to a question about security situation in Afghanistan and its impact on the import of electricity from central Asia, the minister said the project was in the economic interest of the neighbouring country and hence its people would ensure the project to become a reality. He said the law and order problem in Afghanistan would not hamper implementation of the project.

He said the import of 1000MW power to Pakistan form Central Asian states through Afghanistan will be a great milestone for the economic development of the member countries. The four nations are expected to sign on Monday an intergovernmental council agreement for import of electricity to Pakistan and Afghanistan from Tajikistan and Kyrgyzstan.

Afghan minister for economy, energy and water Dr. Jalil Shams, Kyrgyz minister for industry, energy and fuel resources Saparbek Balkibehiv and Tajik first deputy prime minister Asadullo Ghulamov are representing their respective governments to sign the regional electricity trade agreement.

The Inter-Governmental Council (IGC) for Central Asia/South Asia Regional Electricity Market is the first proposed cross-border electricity trade project among Central and South Asian states and is known as CASA-1000 that envisages import of 1000MW power to Pakistan.

The minister said the IGC forum would provide an opportunity to the regional countries to meet regularly and coordinate their technical and institutional modalities with the assistance of lenders and other stakeholders.

He said the power supplies have not been able to keep pace with rising demand, causing massive problems like load shedding that was hampering industrial, agricultural and commercial activities and affecting the national economy very badly.

He said the new government was working on addition of new projects on fast track basis as well as taking in hand long term projects based on indigenous resources besides initiating electricity import projects from regional countries.

He said the international institutions like Asian Development Bank, Islamic Development Bank and the World Bank were actively supporting the electricity import projects and hoped their support and cooperation would help overcome challenges associated with CASA-1000 project that should lead to development of regional electricity market.

Khaleej Times Online - Pakistan to generate 16,000MW of additional electricity by 2015


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## Neo

*Early approval of bill to triple non-military aid unlikely​*
WASHINGOTN, Aug 4: A bill proposing to triple non-military aid to Pakistan cannot be passed by the current Congress and may have to be reintroduced in the next Congress after the US presidential election on Nov 4.

But congressional sources told Dawn that the lawmakers may approve this week a request from the US administration to provide $78 million to Pakistan for upgrading F-16 aircraft.

Pakistan needs this fund for an immediate payment for upgrading its aging fleet of F-16 fighter jets purchased in the 1980s.

On July 24, the US State Department confirmed that the administration had decided to shift $230 million from counter-terrorism funds to allow Pakistan to upgrade the aircraft.

Pakistan has to pay a total of $300 million for the upgrading but informed Washington last month that it may not be able to do so because of financial constraints. It asked to be allowed to use money from counter-terrorism funds for this purpose.

While this request for meeting an immediate need is likely to be approved this week, congressional sources say that a larger legislation proposing $15 billion of US assistance to Pakistan in next 10 years cannot be approved by the current Congress.

The 110th Congress completes its current session this week and will reconvene in September, after a month long recess. The September session will be short, between two or three weeks, and is unlikely to take up a major legislative business during the so-called lame-duck session.

It disperses for the US presidential election after the September session and meets again in January for a brief session devoted to domestic issues.

Congressional sources noted that the first instalment of $1.5 billion of annual aid under this new measure is set for appropriation in the 2010 budget, which will be presented before Congress in February 2009.

The US Senate Committee on Foreign Relations approved the bill last week but it still has to go to a full Senate and to the House of Representatives.

Congressional observers noted that since the bill enjoys a bipartisan support, they believe it will ultimately be approved. The White House also has pledged to support the move.

The bills sponsors include Democratic presidential candidate Senator Barack Obama of Illinois as well as Senate Foreign Relations Committee Chairman Joe Biden of Delaware and its senior Republican member, Senator Richard Lugar of Indiana.

The US presidential candidates, Democrat Barack Obama and Republican John McCain, too have outlined plans to defeat terrorism in Afghanistan by making Pakistan the focus of the fight

The bill proposes tripling of non-military aid to Pakistan to $7.5 billion over five years, which can be extended for another period of five years. The proposal, however, links security aid of around $1 billion annually to counter-terrorism performance.

Our bill represents a genuine sea-change-one which will set the US-Pakistan policy on a safer and more successful course, said its authors Senators Biden and Lugar.

Early approval of bill to triple non-military aid unlikely -DAWN - Top Stories; August 05, 2008


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## Neo

*LSM growth declines to 4.6%​*
KARACHI: Large Scale Manufacturing (LSM) sector managed to achieve a meager growth of 4.6 percent during July-May 2007-08. The textile sector growth was just 2.3 percent during this period. In this sector the production of ginned cotton declined by 9.3 percent. 

However, this year the second heavyweight, food and beverages, with a total share of 14.35 per cent posted a growth of 9.1 percent. Within this sector, the sugar production growth rose by 34.2 percent while beverages growth was 24.3 percent. Production of cement sector, which has a weight of 4.14 per cent, grew 17.7 per cent.

Petroleum products recorded a growth of 4.7 percent. The pharmaceutical sector posted a growth of 26.8 percent. The sector has a share of 5.03 per cent in LSM. The automobile sector, which has been a key player in pushing the industrial growth higher in recent years, witnessed a negative growth. Having a share of 3.95 per cent in LSM, the automobile sector recorded negative 0.2 percent growth. Motorcycles production, however, grew by 28.2 percent and buses production grew by 23.5 percent.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Tax on telecom services in Pakistan highest in the region​*
ISLAMABAD: Pakistani mobile phone users are paying the highest taxes on the use of telecommunication services in the region, reveals a recently published report covering the SAARC countries. Pakistani consumers are paying 33 percent taxes whereas Indian consumers are paying 12.40 percent. 

According to the report, tax ratio is 15 percent in Bangladesh, 17.50 percent in Sri Lanka and 23 percent in Nepal. 

Local traders, Muhammad Ashraf, Abdul Qadeer, Waqas and Rehan told this scribe that 33 percent tax on a hundred rupees card is sheer injustice. 

Housewives Yasmeen, Zubaida and Zahida were of the opinion that they could not afford everyday increase in transport fare and were unable to meet relatives in the same city. In such situation, they said, mobile phones were the only means of regular communication but increase in government taxes has made it expensive for them. They have appealed to the Prime Minister Syed Yousuf Raza Gillani to reduce taxes in order to give the common man some relief. 

The increase in federal excise duty on telecommunication services from 15 percent to 21 percent has adversely impacted the usage of mobile phone services and it is feared that increase in duty will result in decrease in usage by 8 percent to 9 percent within the current fiscal year. 

Unfair taxation would lead to burdening the new potential rural consumers who do not have access to mobile phone facility, hampering the development of the rural economy. 

The growth in the telecommunication sector during last 4 years was recorded 100 percent due to its expanding consumer base. However, the burden of taxes and duties is going to reduce the usage by the consumers resulting in fewer revenues for the government and reduced operations by the companies. 

Increase in taxes and duties on telecommunication services in the budget for the current fiscal year 2008-09 would have negative impact in attracting fresh foreign direct investment in telecommunication sector and overall economic growth of the economy, says analyst. 

According to the mobile phone industry experts, the telecom sector, which has already tapped the urban market of the country, was planning to invest heavily in their infrastructure to expand their services in remote and far-flung areas. 

At present mobile phone companies have already sold 80 million connections to the consumers but the actual numbers of live consumers stands at 50 million. The companies were aiming at increasing their consumer base to at least 100 million by expanding their services in remote and far-flung areas of the country. 

But the sudden shift in fiscal policy for the telecommunication services has threatened the expansion plans of the mobile phone companies, they lamented. 

According to the telecom experts, the result of this additional tax, contrary to the aim of government, will result in reduced usage and expansion of the service resulting in lesser revenues. 

Growth in mobile phone sector have also provided good basis to the economy to grow in the last 4 to 5 years and this sector was required to continue growth pattern to serve the rural population. Other options like taxing stock market or direct taxation of rich should have been looked into as compared to burdening the existing taxpayers or consumers, they added.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Kamal seeks $800m from ADB for bus rapid transit ​*
KARACHI: City Nazim Mustafa Kamal stated Monday that 800 million dollars to be provided by the Asian Development Bank for mega projects, will now be spent on the Bus Rapid Transit system.

He said this to Arif Parvez, who heads the Pakistan Chapter of the Clinton Foundation, Monday. Kamal pointed out that the Mass Transit was a mega with having different sectors. However, its BRT system can be developed in a shorter time. In the beginning, the BRT system can be developed within 12 to 18 months as its entire study and survey have already been completed.

Separately, Kamal said that financial year 2008-09 was the year of the social sector and after health and education, greater attention is being paid to eliminating environmental pollution from the city and making it green and beautiful.

He said a system should be devised for the Parks department so it is unaffected by the postings or transfers of its officials. He said that from now on if anyone is found cutting a tree within the city government jurisdiction, an FIR be registered against then.

Also, University Road and Road-5000 will be inaugurated soon. However, prior to that these roads have to be made green.

Kamal also banned Monday the use of pipes and said that now the entire system will be like the one constructed at Teen Talwar, Clifton. A wide drain will be constructed along every road.

Addressing officials of the Municipal and Services department, Kamal said that the first experiment with a storm water drainage system in Clifton has proved a success during these rains and in future it will be replicated. The problem with pipes is that they get blocked with plastic bags.

They have stopped laying pipes at Nagan Chowrangi and now the area will have drains instead. There should be no need to declare emergencies or take emergency measures during rains in future. app

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistan short on construction expertise​*
KARACHI: There is immense potential for construction in Pakistan, but the construction industry has not developed, forcing the country to import technical expertise from the Gulf and other regions, said Sindh Revenue Minister Murad Ali Shah.

He stated this while addressing a two-day International Conference titled Construction and Developing Countries at a local hotel on Monday. The international conference is being organized by the NED University of Engineering and Technology in collaboration with USAID, National Academy of Sciences, the Higher Education Commission and the International University of Florida.

The minister said that the Sindh government has embarked upon a program of constructing low-cost housing schemes in the province, for which a sum of two billion rupees has been allocated. In this endeavor, he said, the government will welcome academicians, experts and ideas to complete the program and provide good-quality, low-cost houses to the poor. The Sindh government will subsidize the construction sector, he added.

Murad Ali Shah also referred to the problem of the lack of human resource, adding that universities and the private sector should help the government in establishing vocational training institutions where youth can be provided with training in the construction industry. We must have the expertise available to allow the Sindh government to construct small dams, he said.

He called upon the Civil Engineering Department of NED University and other departments concerned to help overcome this shortage of skilled personnel. We have immense opportunities for the youth, he reiterated.
Referring to the huge deposits of coal and pink granite in the Thar region, the minister said, We have the second-largest coal reserves in the world, but unfortunately, 17 years have gone by and we have still not been able to benefit from this resource, although eight blocks have been identified and each block can produce 1000 MGW of electricity. This is another area where the participation of the private sector will be helpful, he said.

Earlier, NED University Civil Engineering Department Chairman Prof Sarosh Lodhi and other speakers, including Dr Mahmood Ahmed and Dr Sahibzada F.A. Rafeeqi, said that the conference has been organized to boost education in the construction industry to sustain growth and develop Pakistans human resource.

They said that the NED Universitys Civil Engineering Department, in collaboration with the International University of Florida, has launched a program through the Pak-US Joint Research Science and Technology Programme titled Development of a strategic model for advancing and integrating construction, education, research and management practice in Pakistan. This three-year programme, to end by December 2008, has a funding of over 400,000 US dollars.

Delegates from Hong Kong, Lebanon, Malaysia, Kenya, Nigeria and USA are attending the conference. ppi

Daily Times - Leading News Resource of Pakistan


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## Neo

*Hubco to build first hydropower project ​* 
KARACHI (August 05 2008): Hub Power Company Limited (Hubco) has acquired 75 percent controlling interests in Laraib Energy Limited (Laraib) and will be setting up the first hydropower project in Pakistan by an Independent Power Producer (IPP).

Hubco, the country's leading IPP, in a notice sent to Karachi Stock Exchange (KSE) said that it is an 84MW project on the downstream run of the river hydropower generation complex being set up at about 8KM from Mangla Dam.

"Hubco has always believed in protecting the environment and its strong commitment is reflected by the continual improvement in the environmental management systems and procedures. Its existing 1,292MW power station conforms to the World Bank guidelines on environment and the plant has successfully been accredited under ISO 14001 standard for the last several years," Javed Mehmood, Chief Executive of Hubco said.

He said that the acquisition of the 84MW renewable energy project goes further to demonstrate Hubco's commitment to safer environment. The implementation of the project will also contribute towards Clean Development Mechanism under the Kyoto Protocol, he added.

The Laraib project has been under preparation for a long time and Hubco has now acquired its major share with the objective of doing everything necessary to ensure its timely completion. Hubco plans to commence construction activity before the end of the year. The electricity to be generated from this renewable energy project will be supplied to the National Transmission and Dispatch Company Limited (NTDC).

About Hubco's continuing investment in the energy sector, Javed Mahmood pointed out that Hubco was the first IPP to set up a thermal power plant at Hub and now it will be the first IPP to establish a hydel power project. This, he emphasised, clearly demonstrated Hubco's commitment to Pakistan.

He went on to say that for several years Hubco's motto was Partners in Progress and the company has fully lived to this by supplying, at times, up to 10 percent of the country's total electricity generation. Now the company's motto is growth through energy and this is reflected in Hubco contributing to the country's growth by enhancing its generation capacity through new projects.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Economic indicators worsening: expert ​* 
KARACHI (August 05 2008): Pakistan's economic indicators are worsening and remittances and loans would not support economy in the long term. This was stated by professor Dr Norbert Walter, the chief economist for Deutsche Bank group and CEO of Deutsche Bank research speaking on the "2008: Developed Countries Downswing- Emerging Markets Inflation Requires Restrictive Policies" at a local hotel here on Monday.

The speaker said that inflation is not the only problem in Pakistan and for the last fiscal it is continuously on rise across the world, while particularly in Pakistan it has surged due to the reduction in subsidies. However that cut in subsidies, he said is a positive measure taken by the government.

Walter said that the economic indicators of Pakistan's economy during the last fiscal year are not positive and showed a worsening trend, while current account deficit and fiscal deficit are at a higher level with limited foreign reserves. He also believed that remittances and loans would provide only short-term support to the economy, as these are insufficient to reduce the current account and fiscal deficit, he said.

"Pakistan should attract the high portfolio investment and boost the exports for the long term support to the economy, that also help to reduce the current account deficit," he added. He said that during 2008 inflation rates remained above the target across the world and most of countries' inflation stood at double digit.

"The inflation in Asia also remains on high side with China at some 7.11 percent, India 11.9 percent, Vietnam 26.8 percent, Thailand 8.9 percent, Indonesia 11.1 percent, Malaysia 7.7 percent and Philippine having 11.4 percent inflation," he informed.

While on the other side many Asian central banks rates are below the inflation rate, which is further creating problems, he added. He said that sharp price increases on energy and foodstuffs are linked with the major advances in development occurring in many emerging markets, which are the result of the increased use of household appliances.

Moreover, a lot more energy is also being consumed because of the rapid pace of infrastructure expansion. Professor Walter said that overall energy prices including electricity and gas are unlikely to come down in the fiscal year 2009 globally and will become more expensive in the future, while during the half of next decade the oil prices would surge to new peak of 200 dollar per barrel.

"Some decline in the oil price in the near future is expected, however despite some decline in oil prices, the prices of metal and commodities prices would not come down in view of the tremendous demand," he added.

Speaking about the sub-prime crisis he said that it has triggered the sharp slowdown in US economy, while the emerging and developing countries would also be hurt by the US financial market turmoil.

The sub-prime crisis has hit the housing industry declining the demand and prices of houses and real-estate sector causing recessions in several countries, he said. He said that current financial turmoil has also hit Asia and stocks and bonds markets are likely to suffer. However, a marked rise in interest rates in emerging markets the economic downturn may well intensify during current fiscal year.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Skill development programme: Italy gives 7 million euros to better marble sector ​* 
KARACHI (August 05 2008): Italy has provided over 7 million euro to start skill development programme to enhance the performance of the marble sector. This was stated in a meeting organised by Balochistan Economic Forum (BEF) on Monday.

Italian Ambassador Vincenzo Prati presided over the meeting along with Domenico Benincasa, Consul-General of Italy in Karachi, Marco Pintus, Trade Commissioner of Italy, Michele Bungaro, representative of Verona Exhibition Authority (VEA) and Renzo Vernier, VEA.

In his keynote address, the Italian envoy stressed the need of establishing strong business relationship between the two countries to compete in the international market and to be more helpful for local marble sector to understand the international market trends. He said that the Verona exhibition, which is to be organised next year, would provide an opportunity to meet the two countries' representatives, and expressed hope that several joint venture agreements would be made in this regard.

Earlier, Amin Hashwani, Akbar Hashwani and Shoukat A K Popalzai and other representatives from marble sector highlighted the challenges faced by the sector, saying that due to misperception about prevailing law and order situation in Pakistan, especially in Balochistan, foreign investors feared to invest in the sector. They assured the Italian investors that Balochistan is the safest place in the country, and invited them to invest in the sector, which has immense potential to compete international market.

They said that Italy has provided over seven million euro to initiate skill development program to improve production in the marble sector. They stressed the need of establishing socio-economic partnership between Pakistan and Italy and added that both countries should jointly work for development of local marble sector, besides exploring new mines.

They said that lack of skilled workers and advanced technology, the sector has been producing inadequate quantity of marble and huge quantity of marble is being wasted due to old extraction techniques, which needs considerable attention.

They strongly emphasised to improve the infrastructure, which has direct reflection on the performance of the sector. Shahid R Khan, Chairman of All Pakistan Marble Mining Processing Industry & Exporters Association (APMMPI&EA), Sanaullah, a former chairman, APMMPI&EA, Sikandar Hayat Jogezai, and other representatives from marble sector were present in the meeting.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Resolution inked: Casarem project no substitute for IPI gas plan, says minister ​* 
ISLAMABAD (August 05 2008): The ministers of four countries on Monday inked a resolution to proceed further with the Central Asia/South Asia Regional Electricity Market (Casarem) project envisaging transmission of 1,300 MW from Tajikistan and Kyrgyzstan to Afghanistan and Pakistan; but further commitment to the project will be linked to the availability of financing.

"It's a resolution not any agreement or Memorandum of Understanding," said one of the participants of an internal meeting. Most of the participants including Water and Power Secretary Ismail Qureshi were of the view that it was a difficult project and the concerned governments needed to proactively take it to the next stage.

The participating countries will have to negotiate commercial term sheets by the end of November as they have committed to go forward with the project subject to the bids received being consistent with the agreed cost estimates.

Though the writ of the Afghan government is reportedly limited to Kabul, yet the minister representing Afghanistan guaranteed security of the proposed transmission line, which continues to remain a serious cause of concern. The Central Asia-South Asia (Casa) 1,000 Project is anticipated to be commissioned by 2013. The project would go a long way in overcoming power shortages in Pakistan (1,000MW) as well as Afghanistan (300 MW).

The two-day Inter-Governmental Council (IGC) meeting of Casarem was held on 3-4 August 2008, in Islamabad, which was attended by ministers and delegates from Afghanistan, Kyrgyz Republic, Pakistan and Tajikistan along with the International Financial Institutions (IFIs), ie Asian Development Bank, Islamic Development Bank and World Bank, besides a project consultant.

The Inter-Governmental Agreement was extensively debated and after incorporating the changes/modifications agreed upon, it was signed by Water and Power Minister Raja Pervez Ashraf, from the Pakistan side, Alhaj Mohammad Ismail Khan, Minister for Energy and Water, Afghanistan, Saparbek Balkibekov, Minister for Industry, Energy and Fuel Resources, Kyrgyz Republic and Farrukh Hamraliev, Chairman, State Committee for Investments and State Property Management, Republic of Tajikistan.

Raja Pervez Ashraf dispelled the impression that Casarem was a substitute for the Iran-Pakistan-India (IPI) gas pipeline by categorically stating that talks on IPI were proceeding separately.

The Casa 1000 MW power transmission project comprises developing, designing, procuring, financing, constructing and operating electricity transmission lines and related facilities to enable the trade of electricity among the four countries.

"1300 MW of electricity will be imported from Kyrgyz Republic and Tajikistan of which 300 MW will be for Afghanistan and remaining 1000 MW for Pakistan," said the Water and Power Minister in reply to a question after the signing of agreed minutes.

The transmission line will consist of 477-km of 500 kV AC line from Kyrgyz Republic to Tajikistan and 750-km of 500 kV high voltages DC between Tajikistan and Pakistan via Kabul," said an official statement.

IGC Secretariat will be established at Kabul and hopefully would become operational with immediate effect. The meeting also approved the appointment of Qazi Naeemuddin of Pakistan as the first Executive Director of IGC Secretariat.

The success of the project is extremely important, as it will set a new era of mutual co-operation on electricity trade amongst Casa countries, Pervez Ashraf concluded.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistani tractors attract African countries ​* 
Wednesday, August 06, 2008

ISLAMABAD: South Africa and surrounding countries are interested in importing Pakistani tractors and their parts as the Pakistani Trade Office there is receiving several queries in this regard on a daily basis.

This was revealed in a meeting of the sub-committee on fiscal issuesñindigenisation formed under the Auto Industry Development Programme (AIDP) by the Engineering Development Board (EDB) which met here on Tuesday.

A representative of a major motorcycle manufacturing company in the country informed that they were about to make a breakthrough in the African market with the signing of an agreement regarding the exports of motorcycles. However, the committee felt that the progress on the export front was very slow and the industry should take remedial measures to increase it in order to offset the trade deficit, said a news statement issued here. It requested its sister committee on exports to thoroughly analyse the situation and recommend measures.

The auto industry expressed concern over the new tax measures introduced in the current budget and described them as detrimental to their growth. The industry is preparing a working paper on the adverse affects of the current budget, which will be submitted to the EDB shortly.

The industry will involve representatives of the Ministry of Industries and Production in its preparation. It was felt that the EDB needed to play an active role in reducing the communication gap between the industry and the government for effective policy implementation.

The committee also expressed its dissatisfaction on the speed of indigenisation in the industry and advised the EDB to collect data in order to judge whether or not the Tariff Based System (TBS) has given impetus to indigenisation programme. It also underlined the need of planning a substitute system which could replace TBS after 2012.

Pakistani tractors attract African countries


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## Neo

*World oil consumption: Pakistan ranks 38th​*
KARACHI, Aug 5: Pakistan ranked 38th in world oil consumption with 324,000 barrels per day while the United States held the number one position with a consumption of 20,730,000 bbl/day.

According to CIA World Factbook as of June 14, 2007, China, which came second after the US, consumes 6,534,000 bbl/day, while Japans consumption stood at 5,578,000 bbl/day.

One of the interesting facts is that that the US and Canada consume 28 per cent of world oil production, while their combined population is only five per cent of the world. Canadas oil consumption is 2,294,000 bbl/day.

China consumes one third the oil consumption of America, but its population is more than four times that country.

India consumes one-ninth the oil of US, but its population is nearly 3.5 times of the super power.

World oil consumption: Pakistan ranks 38th -DAWN - Business; August 06, 2008


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## Neo

*Rental power plants : Government fixes power generation requirement​*
** Plants producing power less than 40 percent of their capacity to be penalised​*
ISLAMABAD: The government has decided that power generation by rental power plants must be at least 40 percent of their capacity and the plants generating less than that would be penalised, sources in Ministry of Water and Power told Daily Times on Tuesday.

Sources said that under the plan government has set a target of generating 1200MW through rental power plants to end the power shortfall in the country.

Government received financial biddings from three parties for setting up 500MW rental power plants in Karachi. Cavelier Energy and Defence System Group located at Port Qasim has sought power tariff of 15.22cents/kwh, Karkey, Karadeniz Holdings located near Karachi sought 18.6288 cents /kwh for 200MW, and Walters Power International proposed at Korangi sought 200MW rental power plant at tariff of 17.43cents /kwh for five years each.

The sources said that contrary to the claim of the bidders these plants would be working only for three years. They said that these plants are old and would not be able to work for five years. These are medium term solutions that government is opting for to rid the country of load shedding, they maintained.

The tariff for rental power plants is higher than sought by Independent Power Plants (IPPs) because rental power plants consume more fuel.

The government will issue letter of awards to bidders on August 15 after approval by the Economic Coordination Committee (ECC) of the cabinet.

Besides rental power plants, the government has opened bids for 1000MW IPPs and will issue letter of support to these bidders on August 15 also. They said that Private Power Infrastructure Board (PPIB) is processing 51 power projects worth $12.4 billion that would be commissioned by 2016.

Government has planned to add 16,000MW power to the current national power grid through many resources including power import from Tajikistan and Iran that would cost $30 billion. They said that government attract private sector to make investment of $ 20 billion and public sector would arrange $ 10 billion for the said power addition programme.

Construction of Basha dam is also included in the said programme that would start next year. Government would need $8.4 billion to materialise the project, which will generate 4500MW per day. The financing would be arranged through Public-Private Partnership, sources added.

According to the power projects under process by PPIB, the focus is being laid on the hydel-power generation and as many as twenty hydel power projects would be operational generating 4478MW by 2016. PPIB is processing 14 oil based power projects, which would generate 2919MW power by 2016. The country will have five power projects generating 1050MW electricity. These projects would be operational on dual fuel (oil and gas). Government is encouraging the utilisation of coal-based power plants and six coal based power projects of 3550MW would be operational by 2014.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistans power potential stymied by political infighting​*
** CSIS analysis shows agricultural reform lags behind improvements in other sectors of economy in India, Pakistan
* Dissatisfaction with economy adding to govts unpopularity​*
WASHINGTON: Pakistan has substantial potential for hydroelectric power and irrigation, but inter-provincial disputes have prevented its exploitation, which is compounded by outdated farming methods, inefficient price distortions, and problems with water availability. According to an analysis by the Centre for Strategic and International Studies (CSIS), the growth of the declining agricultural sector in Pakistan will be far lower than the rest of the economy. The rising cost of fuel affects the cost of fertiliser and electricity and consequently shows up in the price of basic food, such as grains and wheat. Increases in food prices also reflect systemic problems in the agricultural sector. In both India and Pakistan, agricultural reform has sorely lagged behind improvements in other sectors of the economy, the study points out.

In India, lack of investment in new agricultural technology and irrigation projects has held down growth, and today, a meagre 40 percent of Indias farmland is irrigated. Additionally, price distortions and inadequate transport provisions are to be cited as reasons for lagging agricultural performance. Food price increases are felt heavily in the low-income sectors of India. In comparison, in the United States only 6 percent of the household budget goes to food.

In Pakistan, the recent surge in food prices has forced it back into the import column with purchases of about $800 million worth of wheat in 2008. Pakistans spending on food imports has grown by 25 percent in the past year. In the past year consumer prices rose at an annual rate of about 20 percent, with food prices rising by about 28 percent. Although this years monsoon came early to the major grain-producing areas in India and Pakistan, the monsoon season has been hugely disappointing overall. Recent data show that as of late July, rainfall has been 33 percent below normal. If the monsoon season ends badly, it will ensure that food prices remain high until the end of the fiscal year. However, even in the best-case scenario, both countries face increasing demand. This makes overall strengthening of the agricultural sector an essential part of the solution.

Unpopularity: The CSIS study says India and Pakistan have responded to the food crisis by banning certain food exports in the last few months. In Pakistan, economic discontent was a factor in the decisive rejection of the ruling party in the February 18 elections. Continued dissatisfaction with the economy is already adding to the unpopularity and fragility of the newly elected government. With the government distracted by political infighting and mitigating terrorism in the northwest, Karachi has been beset by transport strikes. Despite some cut in food and fuel subsidies, they still account for more than a third of the governments deficit.

Daily Times - Leading News Resource of Pakistan


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## Neo

*PTA critical of economic decisions taken by present government​* 
MULTAN (August 06 2008): The Pakistan Traders Alliance (PTA), Chairman Khawaja Muhammad Shafiq on Tuesday said that the month of July had become very hard for the people of Pakistan as pointless trade and monetary policies had brought the economy on the verge of collapse."Trade, commerce, industry and stock exchange as well as masses' conditions deteriorating owing to the questionable economic decisions of the present government," he said this while speaking at a meeting of local traders.

He said that the rupee's slide in July was worst in 19 years while demands for Pakistani products had also been declined considerably. "The forex stocks have also been receded to a record level low," he added.

Khawaja Shafiq said that the economic managers of the country took economic decisions while keeping personal interests and political considerations in mind and the result was that the whole nation was facing the turmoil." The government seems more interested in foreign tours and has made Dubai as unofficial capital. Our trade policy becomes India-centric while New Delhi is trying best to destabilise Pakistan," he added.

He said the future of textile industry has been put on stake by allowing cotton exports to India. This decision has been taken to support influential farmers and to please India. He said that the rupee saw it worst decline in the last eight years just on the next day of the monetary policy announcement. He said that Minister for Water and Power Raja Pervaiz Ashraf seems more interested in raising slogans while Karachi, the financial and industrial hub of country, plunged into darkness for about 12 hours daily.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Auto industry: PAMA suggests steps to encourage investment​* 
KARACHI (August 06 2008): Local and foreign stakeholders have expressed concern over the viability of further investment in local auto manufacturing sector following the announcement of additional levies and taxes in the 2008-09 federal budget. A spokesman of Pakistan Automotive Manufacturers Association (PAMA) told Business Recorder here on Tuesday that imposition of 5 percent federal excise duty (FED) on cars with engine capacity higher than 850 cc was a bad decision.

The situation further aggravated by the renewed implementation and shifting of the 2.5 percent withholding tax at the registration stage, which has led to an increase in car prices. These levies and taxes are likely to dampen the demand further.

The auto industry also believes that the provision of valid driving licence of the country of origin would help deter illegal imports of used cars under the Transfer of Residence (TOR) scheme.

Dilating on the challenges facing the auto industry in Pakistan, the spokesman said that Pakistan's local auto assembling sector accounts for 91 percent of total cars and light commercial vehicles (LCVs) sold in the country. Domestic production of passenger cars and LCVs has increased fourfold--from 49,000 units in 2001-02 to nearly 190,000 units by 2007-08. This has made Pakistan's auto industry one of the highest potential sectors of the country's economy.

However, he said, the growth of auto sector was hampered in the fiscal year ending June 2008 as a result of a combination of factors including political uncertainty, economic instability, deviations from the agreed auto policy, rising interest rates, foreign currency appreciation, increases in the prices of oil, steel and other inputs and the negative impact of used cars imports.

Demand also decreased due to the rising trend in inflation and food prices as well as lost work time due to power outages resulting from energy shortages in the country. All this contributed towards a decline in industry sales by eight percent in FY08--from 204,000 in 2006-07 to 187,000 in 2007-08.

The increase in discount rate, initiated by the State Bank of Pakistan, though commendable as a step to reduce inflation, spells trouble for the local Original Equipment Manufacturers (OEMs) as it would work to discourage auto financing. Financial institutions have played an integral role in the growth of Pakistan's auto sector by facilitating motorization through easy availability of car loans and debt servicing.

Auto financing has also faced a crunch due to falling demand and increasing bad debts, and SBP's latest decision is bound to cause uncertainty in the already unstable market. This would further add to OMEs' cost of doing business, as financial borrowing would become all the more expensive.

The PAMA spokesman further said that in the previous fiscal year, the Government of Pakistan had taken the initiative to provide momentum to the local industry in the shape of Auto Industry Development Plan (AIDP), officially sanctioned in November 2007, to promote development of the automobile sector. It provided the assemblers a structure to base their expansion plans and the much-needed stability in policies. However, many aspects of the AIDP have yet to be implemented. There has been, in fact, a deviation of policies during last year.

The impact is being felt on investment which, in the auto sector, has risen to Rs 98 billion and is expected to reach Rs 225 billion by 2012, according to AIDP. The industry contributed Rs 63 billion to the government exchequer, which is projected to reach Rs 190 billion by 2012. The auto industry, he said, currently provides employment in addition to investment in technology transfer, localisation of parts and human resource development in numbers, the direct impact of the auto industry on Pakistan's engineering industry business for 400 vendors and direct employment opportunities to about 192,000 people.

Although the Government of Pakistan has asserted its belief in the importance of its growth and development of auto industry as a key driver for economic growth, technology transfer and a creator of jobs, following steps are necessary at this crucial and highly volatile juncture to ensure survival and sustained growth of the auto sector.

-- Withdrawal of 5 percent FED imposed on cars with engine capacity higher than 850 cc.

-- Restrictions on used car imports as follows: reduction of depreciation limit from 2 percent per month to 1 percent per month subject to a maximum of 25 percent, reduction of imported used vehicle life from 3 years to 2 years, registration of used imported vehicle in the name of returning Pakistani for at least one year, and requirement of driving license for the TOR scheme.

-- Removal of royalty and technical fee at the rate of 10 percent of remittance.

-- Relaxation of SBP monetary measures to make interest rate and auto financing affordable.

-- Removal of 35 percent LC margins on imports.

-- Consultation of industry on free trade agreements/regional trade agreements.

-- Sales tax to be brought down to the earlier 15 percent.

-- The government announced auto-related tariff for the next five years in respect of cars/LCVs should be made a part of the Finance Act 2008 and a clear-cut action plan be developed for the implementation of various components of the AIDP.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*200 dams to be built in Balochistan​*
ISLAMABAD (August 06 2008): In Balochistan, two hundred small dams will be constructed to increase water supply and improve irrigation system on modern lines in the next ten years. The Balochistan government has decided to construct these dams at various places in the interior sites of the province, Radio Pakistan reported.

Work is in progress to level Merani dam command area for agriculture and gardening purposes. Five thousand and two hundred acres of land has so far been levelled, and is ready for cultivation.

Fifty water courses have been completed, out of one hundred ninety one. The project will be completed within one year period as the provincial government has decided to fund the project with one hundred fifty million rupees, report added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Reserves left only for 45 days import requirement ​* 
*Govt to float Workers Remittances Securitisation Bonds worth $800m*

Thursday, August 07, 2008

ISLAMABAD: Pakistans fast depleting foreign exchange reserves are left only for two and a half months import requirement, which is why, the economic managers of the country are seriously considering floating bonds amounting to $800 million in the international markets, a senior government official told The News.

When the new government took the charge, there was a proposal to float various bonds worth $2 billion including floating of GDRs (Global Depository Receipts) of some banks in the international market keeping in view the transparent, free and fair elections. But the government missed the bus as during that certain period of time the credit rating of Pakistan in the international market was quit reasonable.

According Finance Ministry sources, the government would soon float Workers Remittances Securitisation Bond worth $800 million to provide cushion to worsening foreign reverses situation. The government, however, with the improvement of credit rating of the country would also come up with new proposal for floating more bonds in the international market, said the sources in Finance Ministry

Pakistan reserves at present stand at $10.487 billion out of which Commercial Banks have $3 billion meaning by that State Bank of Pakistan has only $7 billion with forward liability of $1.2 billion. Foreign reserves are depleting by $250 million to $300 million a week, the official said.

The dismal foreign reserves situation has prompted the government to tow the line of previous regime of floating bonds in the international market to arrange financial support to maintain foreign reserves at reasonable level.

We are also going to introduce some duties on import of non-essential items to curtail import bill. The official said that some officials of Moodys -an international credit rating agency are currently visiting Pakistan. They are meeting with Pakistans new economic managers and giving some tips to ameliorate the economy.

The new government took some bold steps of passing on massive increases in oil prices in the wake of hike in international market to end consumers and shown its resolve to reduce subsidy on POL products by December this year. The government also took bold steps to reduce OMCs margin and dealers commission and deemed duty on petroleum products in a bid to provide reduce the budgetary deficit.

The official said that government is still extending Rs21 per litre subsidy on High Speed Diesel, which the government wants to erase completely.

The government is very much on way to taking economic corrective measures and has decided to expedite and finalize the sell-off process of some government entities in next two months that include Global Depository Receipts (GDR) of Kot Addu Power Company (KAPCO), privatisation of SME Bank, sale of 90% shares of Hazara Phosphate Fertilizers Limited (HPFL) and Heavy Electrical Complex (HEC).

Reserves left only for 45 days import requirement


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## Neo

*Ministry concerned over project delay ​* 
Thursday, August 07, 2008

ISLAMABAD: The Ministry of Industries on Wednesday expressed dissatisfaction over the slow pace of work on the delayed Clean Drinking Water for All (CDWA) project and directed its officials to implement the scheme sooner than latter. 

Adviser to Prime Minister on Industries and Production Mian Manzoor Ahmad Wattoo while chairing the fifth National Steering Committee of CDWA urged all stakeholders to work for implementation of the project as a mission as the project is for benefit of the general public. 

The project for provisioning of safe drinking water to people is a sub-programme of Kushhal Pakistan Programme under medium term development framework (MTDF 2005ñ10). 

It is worth-mentioning that previously the project implementation and executing rights were shipped from one to another ministry time and again and the project was procrastinated. Ministry of Environment prepared the CDWA project at a cost of Rs7.87 billion cleared by executive committee of the national economic council (ECNEC) on April 22, 2006. It was then transferred from Environment ministry to industrial ministry on October 12, 2006. Revised cost of the project had inflated to Rs16.66 billion more than double of its original cost. 

Besides, in the fiscal year 2008-09 the public sector development programme (PSDP0), the government has allocated about Rs2 billion but still the project completion looks a far cry. Wattoo however emphasized that no further delay will be accepted and all necessary measures will be taken for an early implementation of the project. 

Hindrance in reaching of inventory shipment to the provinces was the common complaint from all provinces which according to them delayed project implementation. 

In the meeting, it was decided that firms would ensure that their shipments reach well on time and reach the provinces as per the schedule. Payments to the firms will be linked with the physical delivery of inventories to the provinces. 

Project director Brig (Retd) Javed Sikander was asked to monitor the timely delivery of inventories to the provinces. It was also decided that MOIP will approach WAPDA to ensure that electricity connections are timely provided at filtration plants in the provinces. 

Wattoo expatiated he himself will start visiting the provinces during the current month and hold meetings with the chief ministers so that any impediments at the provincial level are removed. The federal government has already committed to bear the operation and maintenance cost of the filtration plants for three years besides total funding of the project is also being provided by it. 

It is therefore impetrative that provincial governments should extend all-out cooperation and support so that the benefit is given to the people as early as possible as the filtration plants will ultimately be owned and run by provincial governments. 

Secretary Industries and Production (MOIP) Shahab Khawaja, other senior officials of the ministry, officials of National Engineering Services of Pakistan (NESPAK), Ministry of Science and Technology and representatives of provincial governments also attended the meeting. 

Ministry concerned over project delay


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## Neo

*Economic thinking deficit​*
PAKISTANS economic managers and policy gurus realise the importance of the growing services sector in the country. Through trade policy announcements they have repeatedly extolled the virtues of promoting trade in services.

Last year the commerce minister observed: The services sector is important for our economy because it generates employment, contributes to  GDP and is a significant driver of economic growth. Trade in services accounts for over 20 per cent of world trade and is therefore of critical importance for us.

The services sector has indeed emerged as the main driver of economic growth in Pakistan  as also in the rest of the world. As noted by the Pakistan Economic Survey 2008, this sector has provided much-needed support for sustaining a relatively high economic growth rate. Exceptional performance of the financial sector has helped the economy remain close to a high growth trajectory.

The Survey proudly notes: The services sector surpassed the growth target of 7.1 per cent and grew by 8.2 per cent in 2007-08 as against actual achievement of 7.6 per cent in 2006-07. The services sector has made a contribution of 74 per cent to  GDP growth. The services sector has been an important contributor to Pakistans economic growth over the past five years growing at an average of 7.3 per cent annually since 2003-04. The continuing buoyant trend, even while growth in the Agriculture and Manufacturing Sectors [sic] has been slowing, implies that the services sector in Pakistan has remained relatively insulated from the challenges faced by the rest of the economy and has been better able to cope with them.

An important feature of the services sector is a notable rise in its share in foreign direct investment in recent years. In particular, liberalisation and privatisation policies helped the finance and communication sub-sectors fetch a major part of the rising foreign direct investment inflows in the country. According to the State Bank of Pakistan, the share of foreign direct investment in the services sector has exceeded that in non-service sectors consistently for the last three years. The contribution of the services sector to GDP growth has also exceeded that of agriculture and industry for the last three years.

However, despite the phenomenal growth of the services sector, the Pakistan Economic Survey indicates that the countrys current account deficit widened to $11.6bn during July-April FY08 against $6.6bn in the comparable period of FY07, showing an increase of 75.6 per cent. Even when compared to the size of the economy, the current account deficit was substantially higher at 6.9 per cent of GDP during July-April FY08 as against 4.6 per cent for the same period FY07.

The deterioration in the current account deficit mainly emanated from the sharply rising trade deficit along with increase in net outflows from the services and income account. The services account deficit widened by 44.2 per cent during July-April FY08 to reach US$5.6bn. Relatively high import growth and a decline in export of services contributed to this deterioration. However, the strong growth in current transfers on the back of impressive growth in remittances almost entirely offset the deficit in the services and income account thereby leaving the trade deficit as the fundamental source of expansion in the current account deficit.

An analysis of the result of development of trade in services in Pakistan through the perspective of various government agencies indicates an incongruity between the economic growth generated by the services sector and the foreign exchange decline caused by the services account deficit. This is symptomatic of the economic mismanagement prevalent in the country.

Pakistani economic managers remain primarily focused on foreign investment as an instrument of growth and, other than paying lip service to the process of indigenisation, have done little to spur the engine of domestic growth. Inasmuch as their policy regarding the development of the manufacturing sector was flawed, their policy in respect of the growth of the services sector is equally unsound.

The policy of privatisation, liberalisation and deregulation has been adopted and implemented mindlessly by the government at the behest of international financial institutions. The opening up of the financial sector through conditionalities imposed by international financial institutions is a case in point. By doing so, Pakistan has lost out on its ability to negotiate mutually advantageous trading terms and is now left to seek credit for its autonomous liberalisation.

International trade in services is sought to be promoted through the General Agreement on Trade in Services (GATS), which provides for progressive liberalisation and not just liberalisation. Members of the World Trade Organisation are required to enter into successive rounds of negotiations with a view to achieving a progressively higher level of liberalisation. The process of progressive liberalisation is required to be advanced in each such round through bilateral, plurilateral or multilateral negotiations directed towards increasing the general level of specific commitments undertaken by the members under GATS. There is flexibility for individual developing country members to open fewer sectors, liberalise fewer types of transactions and progressively extend market access in line with their development situation.

This is the strategy that should have been followed by Pakistan. But Pakistan chose to go through the process rapidly and that too in the more strategic sectors such as finance.

By not only liberalising and deregulating the financial sector but also privatising and selling major banks to foreign entities, the government has certainly achieved enhanced growth in the financial sector. The resulting conducive environment has enabled the foreign owners of banks and other financial institutions to recover their investments in Pakistan through huge spreads in interest rates and uncontrolled consumer financing to the detriment of local depositors and consumers.

A similar phenomenon exists in respect of the telecommunications sector with the ensuing detrimental effect on the foreign exchange reserves of Pakistan because of enormous dividend payouts. The stock exchanges have also been vying for and receiving their share of foreign portfolio investment despite the attendant risk of enhanced volatility in the countrys already unstable capital market.

According to the Statistics Division, the total export of services was $2,123,706 against the total import of services amounting to $6,347,072 at the start of this year. Despite the long-term vision (Vision 2030), a medium-term development programme, the annual budgetary process including periodic economic surveys, a plethora of policies framed by multiple finance, investment, trade and planning ministries as well as legislative recommendations and oversight, the economic managers have landed Pakistan in an economic mess.

Under the circumstances, one cannot but conclude that the services account deficit is not only an indication of the financial deficit but is also representative of the deficit in economic thinking in the country.

The writer, a former chairman of the Securities and Exchange Commission of Pakistan, is a lawyer based in Islamabad.

DAWN - Editorial; August 07, 2008


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## Neo

*Kazakhstan to sell oil, gas to Pakistan ​*
ISLAMABAD: Deputy head of mission/incharge d affairs, Kazakhstan embassy, Aidar Gundubayev Wednesday said Pakistan could import oil and gas products from Kazakhstan at cheaper rates. He said Kazakhstan was interested in importing rice, sugar and meat products, and equipment and technology from Pakistan. Talking to members of Islamabad Chamber of Commerce and Industry (ICCI), Gundubayev said National Bank of Pakistan has a branch in Almati (Kazakhstan), which showed the importance of close relations between the two countries. He said during 2007, mutual trade between the two countries was around $ 27 million, which was rising fast. 

Daily Times - Leading News Resource of Pakistan


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## Neo

*Islamabad yields to Sindh's pressure: notification on Thar Coal Authority Withdrawn ​* 
ISLAMABAD (August 07 2008): Federal government has withdrawn its notification for establishment of Thar Coal Authority (TCA), approved by Prime Minister Syed Yousuf Raza Gilani, due to continuous resistance of Sindh government, well-placed sources in PPIB told Business Recorder on Thursday.

The Cabinet Division on July 8 constituted a seven-member TCA with Sindh Chief Minister as its chairman until the appointment of a professional of eminence by the provincial assembly. The Minister for Water and Power was notified as Vice-Chairman of the TCA, while Deputy Chairman of Planning Commission, one provincial minister, to be nominated by the Chief Minister, Sindh Chief Secretary and TCA Managing Director as its members.

The much talked about TCA, the sources said, had been constituted after prior consultation with the provincial government. The authority came into being after the abolition of the Sindh Coal Authority (SCA) and Thar Coal Mining Company (TCMC), a joint venture of the Federal and provincial government.

The sources said that the main purpose of the government was to take Thar coal project back from the PPIB, which never supported it whole-heartedly. The Federal government notification had proposed that "all agencies, organisations, entities in whatever form or name, including the TCMC and SCA that are especially created for Thar development shall be abolished by the concerned authorities.

All other agencies, which are not Thar-specific but are also working on Thar coal development shall have their mandate truncated to the extent of Thar coal. They, shall, however, continue doing their other normal business." The sources said, abolition of SCA and TCMC was one of the major reasons, which irritated the provincial government.

After the issuance of notification by the Federal government, provincial leadership protested at the highest level over what they said the "most controversial notification," the sources continued. On July 22, the provincial government issued two notifications to establish Thar Coal and Energy Board (TCED) and enhance the strength of the board's members, setting aside the notification of the Federal government.

"We accept that coal exploration is the right of the respective province, but power generation is the Federal subject," said one of the officials of the Ministry of Water and Power. The ministry, which had earlier made its utmost effort to establish the authority's office in the PPIB, is of the view that principal seat of the board would be at Karachi. The Sindh government has included two provincial ministers and Asad Ali Shah, as nominee of Sindh government on the board.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Sindh eyes $12 billion foreign investment ​* 
KARACHI (August 07 2008): Sindh government is expecting $12 billion foreign investment from Germany, Poland, Australia and US in the Thar coal power project, the work on which would be started within the next 2-3 months.

Sindh Chief Minister Qaim Ali Shah stated this while addressing a press conference at Chief Minster House on Wednesday, flanked by Home Minister Dr Zulfiqar Mirza, Information Minister Shazia Marri, Revenue Minister Murad Ali Shah, Power and Irrigation Minister Saifullah Dharejo, Local Government Mazharul Haq, Member of Thar Coal and Energy Board (TCEB) Asad Ali Shah, Adviser on Mines and Minerals Khattu Mal Jewan, Nafees Siddiqui, Rashid Rabbani, Waqar Mehdi, Faisal Raza Abidi, Ali Nawaz Shah and other PPP leaders.

"Many companies from Germany, Poland, Australia and US have shown their willingness to invest in the Thar coal project. We expect around 10 to 12 billion dollars investment," he said.

Terming as historical the recent international roundtable in the US, jointly organised by the Government of Pakistan and World Bank, he said that unexpectedly 150 investors from 32 countries had participated in the two-day conference. He said some developed countries, like Germany, Poland and US, which are generating 50 percent electricity from coal, had also assured Pakistan of their full co-operation in the coal-based power sector.

The CM said that according to an estimate, within the next 10-12 years, 100,000 megawatt electricity could be generated from 175 billion tons coal reserves in Thar, which is spread over 9,000 square km area. "But this can not be done by a single company, as it requires billions of dollars investment," he added.

The project, he said, would not only help Pakistan overcome the power shortage but would also create direct and indirect employment opportunities for lakhs of people. Terming coal a cheaper and sustainable energy source, he said that road, electricity, water and other facilities had already been provided at the work sites in Thar. He said railway network and air route would also be established to the underdeveloped area, which would subsequently be linked with Keti Bandar.

He said his government had almost completed groundwork at six identified sites in Thar and was expecting to generate 1000MW of electricity from each of those sites. The chief minister reiterated that huge coal reserves in Thar belonged to the people of Sindh and no one could occupy or take the energy-rich natural resource away from it. "As per 1973 Constitution the federal cabinet had once-and-for-all decided that coal is a provincial subject," said the chief minister.

The federal government as a goodwill gesture had not only authorised the Sindh government to explore coal in Thar, but also to undertake power generation projects, which is basically a federal subject, in the province, he said. "The federal government would only support us and participate in all deals to be signed in this respect," he said.

He said the TCEB, which would provide one-window facility to investors, was also constituted by the Sindh government with majority of its members representing the province.

"Earlier, a notification had confused the people, but all misunderstandings should now be removed as it is my clear message to people of Pakistan that Sindh government is undertaking this project with the support of federal government," he said. When asked if he was supportive of the claims of his coalition partners in Sindh government on 'Talibanisation' of the province, the chief minister replied: "Our partners should be satisfied with Wednesday's press conference of the Home Minister, and if they have some proof they should share with us."

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Domestic debt increases by Rs608bn ​* 
Friday, August 08, 2008

ISLAMABAD: The countrys total outstanding domestic debt rose by a worrisome Rs608 billion or $9.5 billion during a year to Rs3.21 trillion (about $50 billion) by the end of June 2008 from Rs2.6 trillion ($41 billion) recorded at the end of fiscal year 2006-07, the State Bank of Pakistan (SBP) on Thursday reported. 

Interesting feature of the provisional data released by the bank was that the increase in domestic debt during 12 months (July-June 2007-08) was mostly due to a rise in the stocks of floating debt. 

The unfunded and permanent debts have also jacked up the total debt to a sizeable amount. During the fiscal year 2007-08, the floating debt went up by Rs482 billion, permanent debt by Rs55.3 billion and un-funded debt increased by Rs70.9 billion. The permanent domestic debt comprising medium and long-term market loans, federal government loans, special government loans, federal instruments and prize bonds, stands at Rs608.3 billion, which totalled Rs553 billion at the end of the fiscal year 2006-07. 

The floating domestic debt, mainly comprising short-term debt instruments and market treasury bills, maintained a rising trend and was recorded at Rs1.108 trillion at the end of June 2007. 

While during the following 12 months, it went up to Rs1.59 trillion. Un-funded domestic debt comprising National Saving Schemes (NSS) at the end of the last fiscal year stood at Rs1.01 trillion, which at the end of the fiscal 2007 was at Rs940 billion. Data reveals that net mobilization under all instruments of the NSS were on the rise during the period under review, against the corresponding period of the last fiscal year. 

The reason for this is the attractive interest rate extended by the government on these instruments. Saving instruments such as Bahbood Saving Certificates, Pensioners Benefit Accounts, Special Saving Accounts and Special Saving Certificates increased, while deposits in Defence Saving Certificates, Regular Income Certificates, Mahana Amadani Accounts and GP fund accounts declined.

Domestic debt increases by Rs608bn


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## Neo

*Forex reserves dip to $10.15bn ​* 
*SBPs reserves fall while those of commercial banks rise​*
Friday, August 08, 2008

ISLAMABAD: Pakistan has entered into a danger zone on the external economic front as its precious foreign currency reserves dwindled by $328 million during the last one week and reached $10.159 billion, it is learnt.

With existing level of foreign reserves, the country can pay import bill of just over one month. Economic managers are really worried over rapidly depleting reserves in the wake of rising petroleum and food commodities import bill.

Balance of payments vulnerabilities are increasing in the wake of falling foreign reserves, which is putting pressure on the rupee.

The State Bank of Pakistan has not given details of forward liabilities, which according to market sources have crossed $1.2 billion. So the real reserves, held by the central bank, have touched the lowest level in recent years.

The foreign currency reserves stood at $10.487 billion on July 26 and dropped to $10.159 billion in the week ended on Aug 2, recording a decrease of $328 million. According to Reuters, the State Bank said its reserves fell $48 million to $6.968 billion, while those held by commercial banks rose $151 million to $3.190 billion during the week.

There are no inflows coming into the kitty, leading to more pressure on the rupee, an official said here on Thursday.

Former minister of state of PML(Q) government Omar Ayub Khan told The News the current economic situation clearly indicated the rupee would further depreciate in coming weeks and if the existing situation persisted the currency would dip to Rs85 against the dollar from the present level of Rs73 in one and a half months.

Last fiscal, the government met its financing gap of $5.5 billion by utilising foreign currency reserves, which stood at $16 billion in November 2007. However, the reserves have now declined to $10.15 billion.

This year, total financing gap will be around $16.5 billion against envisaged inflows of around $10.5 to $11 billion. So the country cannot afford to use its foreign reserves anymore and economic managers will have to do something to avert the threat of default.

The possibility of Saudi oil facility worth $5 billion could provide some relief in the current economic and political crisis as uncertainty is triggering capital flight from the country.

Independent economic analysts believe if the Saudi facility is not received in the next few weeks, then Islamabad will have to think seriously about approaching the International Monetary Fund during the second half of the current fiscal year.

Forex reserves dip to $10.15bn


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## Neo

*Italy interested in marble industry ​* 
Friday, August 08, 2008

KARACHI: Ambassador of Italy to Pakistan, Vincenzo Prati said that in order to enhance trade and investment with the Pakistani business community, it is essential to promote trade and investment and to intensify cooperation and collaboration particularly in the field of stones and marble and its products. During a meeting with members of the Karachi Chamber of Commerce and Industry (KCCI), he also informed that Verona Exhibition Authority from Italy intends to hold a Marble Exhibition in Karachi in 2009.

The delegation representing the marble sector of Italy showed interest in the development of trade relations and requested the President of KCCI, Shamim Ahmed Shamsi, to send a delegation from the marble sector to interact with Italian investors and business community for elaborating and enhancing trade and investment.

Shamsi briefed the ambassador of Italy about the composition and role of the Karachi chamber towards the promotion of business and trade activities, locally and globally.

He spoke about the possibility of business and investment opportunities by saying that there are good prospects for undertaking joint ventures in Pakistan with the help of Italian technical know-how.

Italy interested in marble industry


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## Neo

*Move to reduce $11bn oil import bill​*
ISLAMABAD, Aug 7: The Economic Monitoring Committee (EMC) asked the ministry of petroleum on Thursday to prepare proposals for curtailing oil consumption in order to lower the oil import bill which has now reached $11 billion.

The EMC which met under Minister for Finance, Privatisation and Investment Syed Naveed Qamar also directed the ministry to make public the oil pricing structure in order to safeguard peoples interest.

It advised the ministry to specify governments guidelines in sync with the Oil and Gas Regulatory Authority (OGRA) on gas pricing mechanism to the benefit of public at large.

The issue of recent declines in oil prices was also discussed and some committee members are reported to have urged the government to look into the matter and offer some relief to the people.

The government may initially provide some relief to those who had been affected by the increase in diesel prices over the past few months, a source quoted the finance minister as saying.

The committee said a decision to grant a waiver by relaxing the framework for setting up more CNG stations in Balochistan would provide relief to the common man.

It reaffirmed earlier decisions not to apply ban on sugar export on LCs opened prior to the announcement of ban.

It advised Minfal that decision to import refined or raw sugar must be taken in conjunction with fixing prices.

The EMC had directed Minfal to finalise a decision on wheat release prices after meeting provincial food secretaries and taking into consideration their viewpoint.

The ministry of industries was advised to convene a meeting of the committee on fertilisers to formulate recommendations on subsidy mechanism and submit the report.

The Minfal briefed the EMC on the Pakistan Sugar Mills Associations existing and carry-forward stock position and said that stability in prices of foodgrains compared well with prices in regional countriesIndia, Iran, Afghanistan and Bangladesh.

It was observed that sugar prices in international market had been rising continuously from October 2007 to June this year.

But, in domestic market, sugar prices remained stable since the export ban.

The finance minister advised that fertiliser-related subsidy should remain focused to domestic consumers in terms of relief and benefit.

The Minfal also briefed the EMC on the outcome of its meeting with provincial food departments and said that the federal government might decide on wheat release prices.

The EMC directed the Minfal to work out the issue price in consultation with provinces, authorising them to decide the dates of release of wheat as per local circumstances which governed local cost calculations.

Minfal informed the EMC that the forthcoming shipment of 36,000 tons of wheat should arrive on August 10, followed by the second and third shipments on August 15 and 21 (40,000 and 36,000 tones respectively).

The fourth shipment of 40,000 tones of wheat will arrive on August 26 followed by further imports on voyage time basis of the ships engaged.

The Minfal, also informed EMC that Pakistans projected edible oil consumption was likely to be around 2.8 million tons.

Taking stock of declining international edible oil prices, domestic oil and ghee rates have registered a fall in the open market.

Move to reduce $11bn oil import bill -DAWN - Top Stories; August 08, 2008


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## Neo

*New plants may halve generators import​*
KARACHI, Aug 7: Dealers expect a decline in generators import by at least 50 per cent in case the government succeeds in realisation of various power and alternative energy projects.

Generators markets presently facing a slump in sales as the peak season ended after heavy buying over the last three months till July.

Pakistans import bill for generators in 2007-08 surged by 60 per cent to $1.2 billion as compared to $738 million in 2006-07 since the demand for power generating machines remained high owing to load-shedding of lengthy duration.

Karachi Machinery Merchants Group President Sikandar Shahzada told Dawn that the government had been claiming that the load- shedding will be over by next year depending on the recent offers made by foreign companies in new power projects and finding alternative power energy options. If various power projects start generating from the next year then it will definitely curtail generators import, he said.

He said that the markets currently had surplus stocks, which means that dealers/shopkeepers will have to carry the old stocks for the next six months in their shops as the new buying season will kick off from March next year.

Mr Sikandar said that the devaluation of rupee against the dollar in the last three months had made the imports costlier. For example, it had made an additional burden of Rs3,000 on the cost of import of a 2KVA generator. Some dealers have passed on the impact to consumers, while others have been trying to clear the stocks at old prices.

The substantial increase in diesel prices has plunged the sales of diesel generators of over 30KVA for industrial purpose by 50 per cent. The cost of running a diesel generator now comes to Rs16 per unit as compared to Rs11 per unit few months back.

However, the sale of petrol generators has not dropped very sharply as 95 per cent of them is immediately converted into gas generators soon after its purchase. He said that a petrol generator usually costs Rs86 per litre for one hour, while the cost comes to only Rs6 per hour on running it on gas.

He was of the view that rising food prices and other expenses are other factors that are not

favourable for a good sale of generators.

New plants may halve generators import -DAWN - Business; August 08, 2008


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## Neo

*Small dams project: Islamabad to give Rs nine billion to Sindh ​* 
KARACHI (August 08 2008): The federal government has agreed in principal to provide Rs 9 billion to Sindh government for the construction of 14 small dams in different parts of the province to overcome the water scarcity. It will be recalled that there was a longstanding disagreement between Islamabad and Sindh on their respective monetary share in the Rs 12 billion project of developing over 200 small dams across the water-thirsty province.

Pakistan Muslim League-Q led federal government wanted the government of Sindh to contribute 50 percent (Rs 6 billion) of the total amount, with the latter insisting more and more funding from the center.

"As a matter of principle the federal government has guaranteed to give us a sizeable share... Rs 9 billion after we prepare feasibility reports of the projects," Sindh Minister for Power and Irrigation Jam Saifullah Dharejo told Business Recorder on Thursday.

The minister said work was started on 11 sites identified for the construction of dams while feasibility reports of 5 to 6 dams, including two in Kohistan, were under preparation. He said dams to be built on the Nayabaran River would cost the government of Sindh around Rs 4 billion. Official sources in Sindh power and irrigation department, however, said the Sindh government has not sent PC-I of the small dams project to the federal government.

The feasibility work, they said, was in the last stages. The provincial government has a plan to construct at least five dams on Nayabaran River, said the sources, adding that the size of the dams would be determined after completion of the feasibility reports. They said Sindh government was also planning to develop small dams type reservoirs in Nangar Parkar.

According to the sources the previous government was thinking of providing the entire money to the Sindh government, "but the intentions of the present government are still not clear."

They said the project, which is aimed at recharging the underground water table, would be completed in different phases and Sindh government in the first phase would build at least 14 small dams in different parts of the province, including two, Cold Dam and Parekh Dam, in Karachi.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Government urged to attract investment in energy sector ​* 
LAHORE (August 08 2008): Speakers at a seminar have asked the government to announce incentives and tax rebates to attract investors in the energy sector, so that the power crisis hindering the country's economic development could be eliminated. They also asked the government to announce a national conservation campaign on saving energy, as Pakistan currently faces a shortfall of over 4000 MW of electricity.

The seminar on "Policy Framework and Incentives for New Technology In Energy Conversation and Demand Side Management", was organised by The Institution of Electrical and Electronics Engineers Pakistan (IEEEP) and held here on Thursday. Former Member Power at the Water and Power Development Authority (WAPDA), Engineer Javaid Akhtar said that engineers should focus on resolving the energy crisis being faced by the country.

He also urged political parties, the public and educational institutions to be a part of an awareness campaign on national energy conservation. Former MD Pakistan Electric Power Company (PEPCO) Munawar Baseer and Director General Energy Management and Conservation at PEPCO, Tahir Bisharat Cheema said energy conservation needs to be part of public policies and that the concept of public policy should be based on the concept of "public good".

Pakistan has the largest coal reserves of the world at Thar, they said, adding that its value was more then the oil reserves of Saudi Arabia. They lamented that Pakistan however is unable to develop these reserves. They said that it appears the government was not serious in developing these reserves and made five departments to develop the Thar Coal Field, without any liaison between these departments.

The experts also felt that the nation spent US $16 billion on the import of oil in 2007-2008 because it doesn't have alternate sources of energy. They said that our motto should be that a "unit saved is a unit produced." They also said that there should be a load limit of electricity for consumers and necessary legislation in this regard should be made.

President IEEEP, Engineer Anwar Khalid and honorary Secretary General IEEEP Saleem Arif called for the ending of load shedding by increasing capacity, reducing demand and increasing efficiency. The Head Faculty of the Engineering and Technology Lahore College for Women University Dr Zahir said that we need energy funding institutions and international collaboration to solve the energy crisis.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Inflationary pressure highest on lowest income group ​* 
Saturday, August 09, 2008

ISLAMABAD: The Federal Bureau of Statistics (FBS) on Friday reported that the weekly Sensitive Price Indicator (SPI) based year-on-year inflation of 53 daily use kitchen items, for the week ending on August 7, 2008, has increased by 31.72 per cent as compared to the corresponding week of the last fiscal.

Inflationary pressure was higher on the lowest income group, earning below Rs3,000 per month. For them, SPI registered an increase of 33.45 per cent. For the income group between Rs3,001 to Rs5,000, it stood at 32.34 per cent, for those between Rs5,000 to Rs12,000 it was at 31.89 per cent and for those between Rs12,000 and more, it stood at 31.59 per cent as compared to the same week of the last fiscal.

All the multinational donor agencies, financial institutions, the central bank and even the government itself, have voiced concern over the rising inflationary pressure, but the policy response from their side looks grim, as economists say that in Pakistan, high inflation is due to supply but the government is trying to rein in the high inflation by curtailing demand.

The State Bank of Pakistan (SBP) last month increased its discount rate by 100 basis points to 13 per cent, aimed at curtailing the demand pressure in the economy and ultimately capping inflation. SBP governor Dr Shamshad Akhtar said that the government was heavily borrowing from the central bank which was pushing up inflationary pressure in economy.

Independent economists have also blamed the government for its huge borrowings to bridge the gap between its revenue and expenditures, resulting in nothing other than a huge price hike and which has become an apparent threat to the countrys economic well being and has severely disturbed the social and economic life of the common man as well.

The weekly SPI based inflation, with base year 2000-2001 during the last 10 weeks as compared to their corresponding weeks of the last fiscal, shows a steep trend. The week ending on June 5, 2008 stood at 26.18 per cent, June 12 (26.16 per cent), June 19 (26.79 per cent), June 26 (26.3 per cent), July 3 (28.37 per cent), July 10 (28.3 per cent), July 17 (30.36 per cent), July 24 (32.22 per cent) and on July 31, 2008, it stood at 31.92 per cent.

According to the SPI bulletin, the year-on-year rise in the prices of some necessities and kitchen items was exorbitant. These items were onions, LPG, tomatoes, potatoes, chicken, gur, firewood, eggs, beef, fresh milk, rice, wheat flour, ghee, petrol, diesel and all type of pulses.

The bulletin on SPI, based on the data collected for about 53 items from 17 centers, showed that 27 items registered an increase, whereas eight items showed a decline, while prices of 18 items remained unchanged.

In a span of one week, prices of onions shot up by 10.83 per cent to Rs21.9 per kilogram, LPG by 6.39 per cent to Rs848.82 per 11kg cylinder, tomatoes by 6.11 per cent to Rs36.11 per kg, potatoes by 2.8 per cent to Rs24.88 per kg and chicken price was up by 2.6 per cent to Rs102.42 per kg over the previous week.

However, further analysis of the data revealed that on year-on-year basis, some items are dearer by double digits. These include; masoor pulse at 124 per cent, IRRI 6 113 per cent, kerosene 84 per cent, mustard oil 63 per cent, wheat flour 61 per cent, gram pulse 53 per cent, LPG (11 kg cylinder) 52 per cent, red chillies 49 per cent, potatoes 49 per cent, egg 47 per cent, onions 47 per cent, washing soap 40 per cent, chicken (farm) 30 per cent, firewood 23 per cent and fresh milk prices were up by 20 per cent over the corresponding week of the last fiscal year.

Prices of eight items decreased, compared to the prices of the corresponding week of the last year. Items which showed an increase in their prices were; basmati rice (broken) dearer by 72 per cent, wheat 71 per cent, vegetable ghee (loose) 54 per cent, cooking oil (tin) 51 per cent, vegetable ghee (tin) 50 per cent and bananas 26 per cent.

Though the price of 18 items remained unchanged, the prices of some items compared to the corresponding week of the last fiscal year are still dearer by double digits. 

These items include diesel which was up by 71 per cent, petrol 62 per cent, plain bread 36 per cent, bath soap 33 per cent, tea packet 28 per cent, match box 22 per cent and electricity charges, which were up by 16 per cent.

Inflationary pressure highest on lowest income group


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## Neo

*Pakistan seeks Polish investment in coal mining, power generation ​* 
Saturday, August 09, 2008

ISLAMABAD: Pakistan on Friday urged Poland to invest in the coal power generation and coal mining sector.

During a meeting with the Ambassador of Poland to Pakistan Dr Krzysztof Debnicki, Federal Minister for Water and Power Raja Pervez Ashraf has offered Poland to invest in the coal power generation and coal mining sector in Pakistan to benefit the country with the expertise of Polish technology.

The ambassador in the meeting discussed matters of mutual interest, especially power and mining sectors, to further strengthen the economic ties between the two countries.

The minister while welcoming the ambassador, informed him about the current energy situation faced by Pakistan. The minister said that the new political government of Pakistan is fully determined to facilitate the foreign investors and remove all hindrances and bottlenecks to promote investment in the power sector in Pakistan, which has great potential, attractive benefits and high returns for investors. 

He said that today Pakistan is facing great challenges especially in the power sector, as the shortage of energy has badly affected the countrys economy.

He expressed hope that his ministry would benefit from the expertise of the Polish business communities who have great experience and most modern technology to explore the mining sector. There are large coal reserves in Pakistan and the government wants to explore the indigenous resources for various purposes. He said that an independent energy board has also been established for the development of Thar Coal mining and clean coal technologies.

The Polish ambassador said that they were aware of the energy crises world over and informed the minister that his country had great experience in mining development. He also added that the Polish companies would be briefed on investment opportunities in Pakistan during the Ambassadors Conference to be held shortly in Poland.

The ambassador also discussed investment possibilities in other sectors in Pakistan. Matters of mutual interests, bilateral trade and the current political situation of Pakistan also came under discussion during the meeting.

Pakistan seeks Polish investment in coal mining, power generation


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## Neo

*Chile prepares feasibility study of copper in Pakistan ​* 
Saturday, August 09, 2008

SANTIAGO: Chiles Antofagasta Minerals, a London-listed copper miner, expects to complete a feasibility study of its Reko Diq copper property in Pakistan by May next year, company President Marcelo Awad said on Thursday. 

Awad said on the sidelines of a business conference in Santiago that the study contemplated mine output of 72,000 tonnes of mineral per day. He said the figure could be raised to as much as three times that, but there was no plan to do so at the moment. 

The Reko Diq property is jointly owned by Antofagasta with 37.5 per cent, Canadian miner Barrick Gold Corp also with 37.5 per cent, and the government of Pakistan. The partners could develop enough capacity to process up to 220,000 tonnes of mineral per day, at a cost of some $5 billion, but that option has been discarded for the moment. Under the smaller mine plan, Reko Diq would enter production in 2012, with output of some 150,000 tonnes of copper per year. 

We are analyzing the 72,000, Awad told journalists. There could be a rise but that will depend on what infrastructure is required. He did not say how much the project would cost. The Reko Diq project has a resource of some 4.5 billion tonnes of mineral, with the equivalent of 0.85 per cent copper including a gold credit. 

Awad also commented on the El Mauro tailings dam under construction in central Chile to serve its Los Pelambres copper mine high in the Andes mountains. The dam is being opposed in the courts by farmers and environmentalists, but Awad said the company is working through the legal problems.

Chile prepares feasibility study of copper in Pakistan


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## Neo

*Gas accord delay may cost govt Rs30 billion​*
ISLAMABAD, Aug 8: An inordinate delay by the government in renegotiating the gas purchase agreement with producers of the countrys second largest gas field may cost consumers an additional Rs6 for each unit of gas and cause a loss of around Rs30 billion to the national exchequer.

Under the gas sales and purchase agreement with partners of the Qadirpur gas field joint venture, the producer price was required to be renegotiated about three years ago to limit the adverse impact of increase in oil prices on national economy and the consumers.

That did not happen because of an institutional oversight until some of the producers claimed higher returns in accordance with the international oil market.

Background interviews with government officials and producers showed that the Ogra is fixing wellhead price for Qadirpur gas field under an interim executive order.

But this is a stop-gap arrangement without any legal cover, proper agreement with the joint venture partners or formal approval from any competent forum like the federal cabinet or the ECC. Sources said that at least one of the joint venture partners had threatened to move court of law if their profits were capped unilaterally.

Discovered in 1990, Qadirpur field is the countrys second largest after Sui, both in terms of reserves and daily production. With about 500 million cubic feet per day (MMCFD) gas supply to the national transmission system, Qadirpurs gas sales account for about Rs29 billion under the original agreement if taken on international furnace oil price of $200 per ton but goes beyond Rs59 billion when furnace oil rates rise to $400 per ton.

The original agreement required the government to renegotiate the wellhead price with the joint venture partners in case the furnace oil prices went beyond $200 per ton. About three years ago, the furnace oil prices increased to $400 per ton but the government failed to revise the wellhead/producer price.

The Oil and Gas Development Company Limited (OGDCL) is the operator of the field with 75pc share, while Premier-Kufpec, Pakistan Petroleum Limited and PKP Exploration hold on an average 8pc shareholding.

When contacted, a senior government official declined to comment on the issue saying the matter was under consideration of the government and price renegotiation process was in progress.

He, however, said the impact of higher international furnace oil prices had not been passed on to consumers and an interim order issued by the director-general of gas was sufficient for Ogra to maintain status quo.

Some other sources, however, said the interim arrangement lacked legal protection and depended on governments influence over the OGDCL, which could come under pressure from international lenders because of its listing on the London Stock Exchange.

The sources said the furnace oil prices had crossed $600 per ton that could increase Qadirpurs sales to Rs90 billion. The sale rate from Qadirpur is currently kept at Rs185 per MMBTU (million British Thermal Unit) by Ogra under the interim arrangement but the joint venture partners have submitted a fresh claim of Rs385 per MMBTU for the last six months.

Petroleum ministry sources said the joint venture partners of Qadirpur were persuaded to offer 65 per cent discount to the government, assuming the maximum furnace oil price of $300 per ton.

But this rate has to be further renegotiated to get more discounts given the fact that the international furnace oil prices have crossed $600 per ton. Unless a revised sale price is finalised under a fresh binding agreement, an additional burden on consumers and the national exchequer could not be ruled out.

Gas accord delay may cost govt Rs30 billion -DAWN - Top Stories; August 09, 2008


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## Neo

*Banks capital limit to be raised to $300m​*
KARACHI, Aug 8: The Minimum Capital Requirement (MCR) will be increased to $300 million for both conventional and Islamic banks, said banking sources.

Bankers said they had already been informed by the regulators that the capital requirement would be enhanced with other structural changes as part of the 10-year strategy of the State Bank of Pakistan.

Small banks fear that the implementation of new plan with the requirement of $300 million as minimum capital will ruin their business. They feared that it could be a part of the so called consolidation strategy of the SBP.

For the last five years the State Bank has been following a policy to reduce number of banks with a vision of consolidation of banking in the country.

No time-table has been provided for this $300 million capital requirement but we believe a time span of five to seven years may be given to banks to achieve the target, said a senior banker. He said the MCR will be increased after the end of current target for banks, which is $100 million till end of 2009.

A number of small banks failed to achieve the target of $100 million or they opted to remain far behind the target and their fates were sealed by selling them to big banks. Most of the small banks were sold to giant foreign banks, which increased their share in the banking industry of Pakistan.

Excluding five big banks and foreign banks, only few banks have potential to reach the new gigantic target of $300 million of capital requirement, said the senior banker.

However, the move will support the big banks as they would get larger chunk of the banking boom.

An analyst and banking expert said the presence of only few banks would reduce competition in the industry, which could be beneficial for few banks but not for the customers.

Banking spread is above 7 per cent and is the highest in the region. In the absence or low level of competition one should not hope for better returns to the depositors, said the banking expert.

At the same time, the quality of services will also suffer. He said the services provided by the small banks were much better than the bigger banks and their fee is comparatively less than the latter.

It was observed that even some big banks fear that the target of $300 million could also hurt them as the requirement is, too, big in the context of current banking industry growth and low performance of the economy.

If banks continue to grow as they have been performing since the last three years, then the target could be achieved in 6 to 7 years but any setback to economic growth could even hurt the efforts of the big banks to reach the target, said another banker.

He said any setback to local banks can be advantageous to the foreign banks, which have the capital more than the entire local banking industry.

In the presence of giants like Royal Bank of Scotland, Standard Chartered, and NIB Bank, local Pakistani banks can not compete in an unfavourable situation like sharp decline in the economic growth, he said.

Banks capital limit to be raised to $300m -DAWN - Business; August 09, 2008


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## Neo

*$3.811 million outflow recorded in equity market​* 
KARACHI (August 09 2008): The outflow of portfolio investment from the country's equity market continued and a net withdrawal of over $3.811 million was registered by the offshore investors during the week ended August 8, 2008. "The prevailing uncertainty on political front and weakening economic indicators forced the foreign investors to offload their holdings", an analyst said.

Out of total five trading sessions, only one day witnessed net buying by foreign investors, while outflow was witnessed by them on the remaining four days. The week started with the outflow of portfolio investment as a net selling of $2,513,113 was witnessed by the foreign investors on Monday and a total of $3,409,022 was withdrew by the offshore investors on Tuesday.

On Wednesday the net foreign investment remained positive and a net inflow of $4,923,583 was recorded due to healthy buying by the foreign investors. A net outflow of $1,932,130 was witnessed on Thursday while the foreign investors net selling was recorded at $880,609 on Friday.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Extension to China: IPI gas line project can be redesigned cheaply: report​* 
ISLAMABAD (August 09 2008): A feasibility study has established that Iran-Pakistan-India (IPI) gas pipeline project could be redesigned, after minor changes and very small extra expenditure, to divert gas pipeline to China.

Sources said that IFL, a reputed firm, conducted the feasibility study on Pakistan government's order to establish if it was possible or not to lay the pipeline to China, if India did not come up with a clear decision to join the proposed IPI gas lime project.

Sources in the Ministry of Petroleum and Natural Resources said that the consultant has submitted the feasibility report, indicating that IPI gas line could be routed to China from northern parts of Pakistan. They said that after studying all aspects of the feasibility report the document has been sent to China for consideration and views.

If Pakistan gets a positive response on the feasibility report then it will give a formal proposal to China to become a party to the project. Pakistan had offered China to become a party to the project when President Pervez Musharraf visited Beijing early this year.

Decision-makers in Islamabad believe that China can be the best alternative to India for the project. On offering the project by President Musharraf, China had immediately shown willingness to join it. However, before formally inviting China for joining the project, Pakistan decided to hire consultant for conducting the feasibility report to suggest the possible route for rerouting the project to China.

India had joined Pakistan for the project at a very early stage, which led to declare it as 'IPI' project some 14 years back. But developments, which took place in the region during the last five years, diluted India's interest in the project.

In particular, US-India agreement on civil nuclear energy transfer to help the latter meet energy demand gave a big shock to Pakistan. This development forced Pakistan to look for some other partner, as alternative to India, for the project. India has been giving mixed signals to Pakistan for staying in the project.

However, officials in Islamabad have developed a strong feeling that India's assurances to become party to the 'IPI' project were just waste of time and, instead of keeping on waiting for its final decision, Pakistan should join hands with China to make the project a reality.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Antofagasta to prepare Reko Diq feasibility study by May 2009​*
SANTIAGO (August 09 2008): Chile's Antofagasta Minerals, a London-listed copper miner, expects to complete a feasibility study of its Reko Diq copper property in Pakistan by May next year, company President Marcelo Awad said on Thursday. Awad said on the sidelines of a business conference in Santiago that the study contemplated mine output of 72,000 tonnes of mineral per day.

He said the figure could be raised to as much as three times that, but there was no plan to do so at the moment. The Reko Diq property is jointly owned by Antofagasta with 37.5 percent, Canadian miner Barrick Gold Corp also with 37.5 percent, and the government of Pakistan.

The partners could develop enough capacity to process up to 220,000 tonnes of mineral per day, at a cost of some $5 billion, but that option has been discarded for the moment. Under the smaller mine plan, Reko Diq would enter production in 2012, with output of some 150,000 tonnes of copper per year.

"We are analysing the 72,000," Awad told journalists. "There could be a rise but that will depend on what infrastructure is required." He did not say how much the project would cost.

The Reko Diq project has a resource of some 4.5 billion tonnes of mineral, with the equivalent of 0.85 percent copper including a gold credit. Awad also commented on the El Mauro tailings dam under construction in central Chile to serve its Los Pelambres copper mine high in the Andes mountains.

The dam is being opposed in the courts by farmers and environmentalists, but Awad said the company is working through the legal problems. He said construction of the dam, part of a $1 billion expansion of the Los Pelambres copper mine, continued and that it would be ready for use by the first quarter next year.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*OMV to explore oil in Kalat and Barkhan​*
VIENNA (August 09 2008): Austrian oil and gas giant, OMV, said on Friday it had acquired stakes in two licences to explore oil in Pakistan. OMV said in a statement it had agreed to acquire a 30 percent stake in the Kalat exploration licence and a 15 percent stake in the Barkhan licence, both in the province of Balochistan.

"The areas are under-explored but considered as highly prospective drilling areas," OMV said. Partners in the Kalat licence were Pakistan Petroleum and ENI Pakistan, while partners in the Barkhan licence were Pakistan Petroleum and MND Exploration and Production.

Kalat is a block of 2,842 square kilometres and Barkhan 2,105 square kilometres. "These new exploration licences acquire acreage with highly attractive exploration potential," said OMV board member Helmut Langanger. "It enables us to proceed with our plans for further growth in Pakistan were we are currently the biggest international gas producer," Langanger said.

In all, OMW holds exploration and production licences in 20 countries in central and eastern Europe, North Africa, north-western Europe, the Middle East, Australia and New Zealand, and Russia and the Caspian region. OMV's daily production volume is around 316,000 barrels per day and at the end of 2007, it had reserves of 1.22 billion barrels.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Rising budget deficit: government facing pressure to shelve uplift projects​* 
ISLAMABAD (August 09 2008): The present government is facing a mounting pressure regarding reducing the size of the PSDP by shelving a number of development projects as the budget deficit continues to widen.

"According to the international financial institutions, about 7 to 8 percent of GDP is required to be spent on infrastructure annually in developing states while currently Pakistan is spending 3 to 4 percent of the GDP," said Ghulam Murtaza Satti, leader of Infrastructure Project Development Facility (IPDF) on Friday.

He said that PPP co-chairman Asif Ali Zardari, who is fully cognisant of this situation and wants accelerated pace of development of infrastructural projects, has strictly instructed IPDF, the Planning Commission and ministries to strengthen their co-ordination through adopting a uniform strategy on the subject.

He said that Zardari directed all concerned departments to involve more and more private sector participation in development projects as being successfully done by the IPDF. "Zardari has also instructed the IPDF to ensure speedy completion of the infrastructural projects being executed under the Public Private Partnership so that further projects are initiated," said Satti.

He said that some corrupt elements in the relevant government departments are making efforts to escape IPDF because on this platform it is impossible for them to make corruption. The present government is fully aware of private partnership in development and the IPDF would play a leading role in this regard.

About the significance of Public Private Partnership, Ghulam Murtaza Satti said that its framework is a pre-requisite for rapid economic growth as it provides a strong base for taking the country on the path of rapid progress. He also revealed that India has planned $391 billion investment in infrastructural projects in the next five years out of which $209 billion is expected to be invested by the private sector.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Rs 7.5 billion allocated for completion of Southern Punjab uplift projects​* 
LAHORE (August 09 2008): An amount of Rs 7.5 billion has been allocated in the current fiscal year budget for the completion of developmental schemes in southern Punjab. A big project, with the cooperation of Asian Development Bank (ADB), is under way for the completion of water supply and drainage schemes, waste water treatment plant and link roads in these areas.

Provincial Minister for Population Welfare Neelam Jabbar Chaudhry said here on Friday that the provincial government was giving priority for the socio-economic development of the less-developed areas and funds were being provided for this purpose.

However, she said that rapid population growth was an unbearable burden on the economy, therefore, by striking a balance between the population and resources, "we can ensure solution to many socio-fiscal problems."

She said that population growth issues could be addressed through collective efforts by all segment of the society, including social workers, teachers, religious leaders and scholars.

She said that under the Prime Minister's initiatives in the five years programme, the number of population welfare centres, presently established for 10,000 population, it would be increased by setting up these centres for population of 7,000 and later 3,000 people.

The reproductive centres, presently established at the district headquarters level, would be set up down at tehsil level, and added the number of male mobilisers, presently working at population of 20,000 persons, would be increased by setting up these centres at population of 10,000 people and social mobilisers would be appointed in all tehsils of the country, under the programme.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Pakistan to import 300,000 tonnes of urea fertiliser from Saudi Arabia​*
10 August 2008

ISLAMABAD - Pakistan has decided to import 300,000 tonnes of urea from Saudi Arabia and provide maximum subsidy on fertiliser for maintaining prices at the current level aimed at avoiding the impact of fertiliser shortage on agricultural output.

Addressing a news conference, Adviser to the Prime Minister on Industries and Production Mian Manzoor Ahmad Watoo said on Saturday that about 150,000 tonnes of fertiliser from Saudi Arabia would arrive by end of this month. He said it was unfortunate that hoarders and black-marketers were hoarding fertiliser at a time the cotton and rice crops were maturing and international prices of fertiliser were going up.

Pakistan's total urea production is about 4.8 million tonnes against a demand of 5.4 million tonnes, leaving a shortfall of 600,000 tonnes. This provides an opportunity to the middlemen to earn higher profits through black marketing and hoarding because of much higher international prices.

He said due to supply and demand gap and higher price the farmers would use less fertiliser in rice and cottonne crops that would affect the country's agricultural production negatively. He said an inter-ministerial body in consultation with fertiliser manufacturers have decided to provide 50 per cent of total production to the dealers and sell 50 per cent at control rate of Rs625 per 50 kg bag at the warehouses of manufacturing plants.

He said the provinces have also been asked to take immediate steps to ensure supply of fertiliser to the farmers at control rates and take action against hoarders and black-marketers. The imported fertiliser would be flooded in the market to ensure sufficient availability of the product at control rates, he said and added the government was also considering distributing fertilisers through the Utility Stores Corporation and other similar facilities.

He deplored that the previous government under the decentralised system had abolished the magistracy system in the country that used to be an effective system of checking hoarding, black-marketing and illegal profiteering of various commodities but the new government would use district authorities and Tehsildars to take action against fertiliser hoarders.

Watoo said there were sufficient stocks of DAP and other phosphatic fertilisers for coming Rabi crops of Wheat and potato but its prices in the market have increased substantially because of monopoly of a few countries over phosphorus powder. He said the prices of DAP have increased from Rs900-1,000 to Rs2,800-3,100 in the market and the government was providing a subsidy of Rs470 per 50 kg bag. He said the landed cost of DAP could go beyond Rs5,000 per bag but the government has decided to provide maximum subsidy to ensure that DAP prices remain below Rs3,100 per bag.

Pakistan's total production of phosphatic fertilisers is about 700,000 tonnes against annual requirement of 1,300,000 tonnes, leaving a gap of 600,000 tonnes. The prices of phosphorus powder have been increased by countries like Morocco, Egypt and some other producers who were monopolising the phosphatic fertilisers.

Khaleej Times Online - Pakistan to import 300,000 tonnes of urea fertiliser from Saudi Arabia


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## Neo

* Trade deficit hits $1.64bn ​* 
Sunday, August 10, 2008

ISLAMABAD: Pakistans economy started the new fiscal year with a hefty $1.64 billion trade deficit during July 2008, which is 49.19 per cent (or $542.2 million) more than the corresponding month of last fiscal ($1.10 billion), the Federal Bureau of Statistics (FBS) reported on Saturday. 

During the same month of last fiscal 2007-08, imports stood at $2.57 billion and exports at $1.47 billion. This depicts a 37.92 per cent growth in imports and 29.48 per cent in exports. In July 2008, the countrys trade gap widened to $1.64 billion, down by 16.59 per cent from trade deficit of $1.97 billion recorded in June 2008. During the month under review, imports declined by 11.81 per cent to $3.55 billion and exports fell by 7.22 per cent to $1.91 billion over the previous month (June 2008). 

The governments trade policy for the current fiscal year (2008-09) announced last month has projected exports target of $22.1 billion. The policy although has not formally announced any import target however the commerce ministrys officials revealed that at $37 billion, indicating $15 billion trade deficit by end June 2009. 

It is also interesting to note that the government has decided not only to increase the countrys exports but also to bring negative growth in imports in order to bridge the trade gap, officials told the News. 

The State Bank of Pakistans running tight monetary policy and the federal governments preventing non-essential imports are instrumentals in achieving its desirable results of reigning in the burgeoning trade deficit. 

Trade deficit hits $1.64bn


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## Neo

* Govt brings down external debt by $129m ​* 
Sunday, August 10, 2008

ISLAMABAD: Although Pakistans external debt stock has increased by $5.46 billion to $44.47 billion during July-June 2007-08 the government in its first three months (April-June) retired some principal amount and interest resulting in $129 million decline in debt stock for the first time in last 10 years.

The rupee value of external debt and liabilities went up by Rs607 billion in one year, which is the highest increase in a single year mainly because of massive depreciation of rupee against the US dollar.

The government also benefited by appreciation of US dollar versus major currencies. The valuation impact amounted to $1.042 billion, which means the external debt declined by this amount in dollar terms because of appreciation of the US dollar versus major currencies.

The government is finding it hard to get disbursement of agreed loans from the World Bank and Asian Development Bank because they require a nod from the IMF regarding macroeconomic stability.

According to State Bank of Pakistan during the last six years external debt increased significantly. As on June 30, 2003, it stood at $32.46 billion, June 2004 ($32.93 billion), June 2005 ($34.04 billion), June 2006 ($35.97 billion) June 2007 ($39 billion) and now at the end of June 2008, it jumped to $44.47 billion.

Adding foreign exchange liabilities with external debt, the situation becomes more grim as during FY2007-08, Pakistans external liabilities, external debt plus foreign exchange liabilities, jacked up to $46.28 billion at the end of June 2008 from $40.48 billion by end June 2007 up by $5.8 billion in a year.

The external debt and liabilities as percentage of GDP have risen to 29.2 per cent from 28.1 per cent last year which means the debt burden went up by 1.1 percentage points. Similarly, the external debt and liabilities as percentage of foreign exchange earnings escalated to 131 per cent from 126 per cent in last year. These two indicators were frequently referred to as important indicators of debt burden in the past five years by the Debt Office of the Ministry of Finance.

While in the same time, official liquid reserves with the central bank substantially declined to $8.577 billion by end June 2008 down $4.77 billion over last fiscal.

Of the total liabilities, the external debt has surged by $5.46 billion to $44.47 billion at the end of June 2007-08, against $40.62 billion recorded at the end of June 2007. Foreign exchange liabilities also increased to $1.82 billion as compared to $1.47 billion recorded at the end June 2007.

On the other hand, independent economists say that floating of euro and dollar bonds were a source of building up countrys reserves. They say that floating of bonds at one hand increasing government liabilities and on the other hand the countrys reserves.

According to the banks data during the last five years, the countrys public and publicly guaranteed debt has been on the rise.

On June 30, 2003, it was $ 29.23 billion, June 2004 ($29.87 billion), June 2005 ($31.08 billion), June 2006 ($32.89 billion), June 2007 ($35.35 billion) and at the end of June 2008 it increased to $40.24 billion.

In public and publicly guaranteed debt, the medium and long-term debt (more than one year) during the period under review augmented by $4.25 billion to $ 39.33 billion as it was $35.08 billion at the end of June 2007.

According to the break-up of the medium and long-term debt, the multilateral debt by end-June 2008 grew by $2.92 billion to $21.45 billion and bilateral debt up by $198 million to $1.13 billion compared to June 2007 when these stood at $18.53 billion and $931 million respectively.

While, during the period under review the volume of military debt declined by $42 million to $41 million while Paris club debt up by $1.23 billion to $13.93 billion over the previous year.

The State Banks data also depict a decline of about $70 million in the International Monetary Fund (IMF) debt. At the end of June 2008, it declined to $1.34 billion as compared to $1.41 billion recorded at the end of June 2007.

The economy has to absorb double hit in the shape of Pakistani rupees depreciation against the US dollar and the greenback (US $) losing value against hard currencies like Japanese yen (JPY), Euro, SDR and others which multiplied the burden. 

Economic pundits believe that with each rupee appreciation in US dollar Pakistani external debt rise by Rs45 billion. In 2007-08 greenback appreciated by more than 12 rupees. Dollar depreciation against other major world currencies was also worsening the countrys debt position and just piling up the stock of external debt in dollar terms. 

It is also interesting to note that since other currencies of the world appreciating against dollar due to its falling value in the world market, only Pakistani rupee is being depreciated and touching record low against the greenback. 

The government was experiencing huge current account deficit (CAD) and each month it inched up by more than a billion dollar and there was a strong anticipation of rupee depreciation against major currencies, yet the government was unaware about its implications on debt stock or made no efforts to manage it. During July-June 2007-08, CAD without official transfer stood at all times high $14.44 billion (about 8 per cent of GDP).

It is also interesting to note that the government was also noticing the huge twin deficits (current and budget deficit) of the US economy and it was projected that the dollar would shed its value against hard currencies like Japanese yen (JPY), Euro, SDR and others.

While on the other hand, economic managers of the government had not assessed its impact on the local economy and especially on the external payments and debt or had no experience to manage the hit on the economy.

Govt brings down external debt by $129m


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## Neo

*FDI must also generate employment ​* 
Sunday, August 10, 2008

KARACHI: Communications is the largest recipient of foreign direct investment particularly in Sindh where it attracts 64 per cent of FDI yet provides only six per cent of employment whereas agriculture provides 43 per cent of jobs but receives nominal FDI, a research said.

The Sindh-focused research report also revealed that it is the kind of FDI and not the amount of FDI, which could have any difference on employment statistics.

The research was presented by Zia Abbas, Zia ul Qamar and Kamran Abbas in a one-day conference on Sindh Progress and Prospects, Competitiveness and Productivity organized by the Institute of Business Management (IoBM) in collaboration with the University of Sindh on Saturday at a local hotel. 

It is the general perception that more FDI means more employment which has been proved wrong, said Zia Abbas, who is doing M Phil from Applied Economics Research Centre, University of Karachi.

He said Pakistan should examine what kind of FDI is coming in the country and in which sector because its significance is more in some sectors where we need it crucially like agricultural.

Pakistan needs FDI in commodity producing that is manufacturing instead in stocks so that the flight of capital could not take place overnight. 

Dr Muhammad Irshad Khan, said now there are number of foreign standards like WRAP (Worldwide Responsible Apparel Production) and SA-8000 that are not being met by our exporters, which hampers our exports. 

He said we are exporting our seafood on very low price because we do not meet European standards. New standards would create more problems for our exporters like child labour, environment, forced labour etc, which our exporters would need to implement.

Abdul Rahim Janoo, MD of Haji Razzak Janoo Pvt Ltd and ex-chairman of Rice Exporters Association of Pakistan (REAP) said we are not doing enough research for better quality rice. Pakistan has great potential of producing good quality rice and with some training and awareness our rice producers can expand its cultivation and exports.

Speakers emphasized that private sector should arrange training programs for rice producers in foreign countries to inculcate latest techniques in rice cultivation.

The conference held six parallel sessions on information technology, communication and media, development of Sindhi as a business language, foreign investment and banking, education and human resource and demographics of health. The recommendations of the conference were Sindh should have a its own bank like Bank of Punjab and Bank of Khyber and State Bank of Pakistan should take practical steps for establishing more micro finance banks in the country.

FDI must also generate employment


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## Neo

*Debt servicing eats up half of reserves​*
KARACHI, Aug 9: The amount of debt servicing has increased to become the strongest contender for the dollar, the most precious item for Pakistan as rising oil bills already slashed the reserves to just half within ten months.

The State Bank reported on Saturday that the country paid $3.029 billion as the debt servicing for 2007-08, which is just half of the central banks foreign exchange reserves.

The huge outflow deprives the country by $350 to $400 million each week from its reserves pushing the country fast towards the old days when it was about to default during 1998-99.

The fast decline of reserves has already cast negative impact on value of the local currency against all foreign currencies. The rupee lost over 17 per cent against the dollar in last seven months.

The Pak rupee has the lowest value against the dollar in the region as both India and Bangladesh have succeeded to tackle the bullish oil bills and kept their currencies stronger than ours, said an analyst.

If the country has to pay $3 billion as debt servicing this year, then it will have no reserves to pay back for its oil bills, meet the trade and current account deficits, said the analyst.

Latest figures showed that the State Banks reserves, which are used to pay the foreign bills, fell to $6.968 billion till August 1, 2008.

Calculations made by research houses show that the country is bound to borrow to pay-off the debt servicing, which may increase this year.

The rescheduling period of Paris Club loans will be over next year, which means that the country will have to pay much bigger amount as part of the principals of the loans that may increase the return on debt by $1 billion, said the analyst.

The total loan of Paris Club is still $13.928 billion. The countrys total debt and liabilities have increased by $5.808 billion only last year making the total as $46.389 billion.

The Paris Club loans were rescheduled after the 9/11, which saved Pakistan from default. Then the country improved its foreign exchange reserves to $16.486 billion till October 2007.

However, the political instability slashed the inflows of foreign exchange in the country while the outflow through massive trade deficit, eroded the countrys reserves faster than ever to remain at $10.159 billion.

Over the 1980s, with the cold war in full swing, Pakistan had access to abundant foreign aid, which coupled with a large volume of remittances from expatriates, kept the growth of total debt in check.

The internal debt of the country has also been rising very fast as the government borrowed Rs689 billion from the State Bank alone during 2007-08.

Debt servicing eats up half of reserves -DAWN - Business; August 10, 2008


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## Neo

*President&#8217;s impeachment issue keeps KSE in the red​*
KARACHI: The Karachi stock market witnessed a bearish trading week as political uncertainty on news regarding President&#8217;s impeachment kept the market volatile throughout the week, analysts said on Saturday.

The market touched a 23-month low of 9,678 points during the week on August 6, 2008.

The Karachi Stock Exchange (KSE) 100 share index lost 261.94 points or 2.57 percent to close at 9,909.45 points as compared with previous week&#8217;s 10,171.39 points.

The weekly volume, however, witnessed an increase of 16.31 million shares or 22.39 percent to close the week at 89.14 million shares as against previous week&#8217;s close of 72.83 million shares.

On Tuesday, the market opened late and remained under pressure during the wee hours of trade. The KSE 100 index scaled lower to touch an intra-day low of 9,556 points. However, late buying by institutions supported the market to breach the 10,000 points.

Nonetheless, heavy selling was seen on Wednesday, which dragged the index to 9,679 points, a 23-month low level. The index also recorded low volumes of 77.9 million shares on Wednesday as against 131.2 million shares and 143.4 million shares traded on Monday and Tuesday respectively.

On the next day, the index remained highly volatile throughout the trading session. The index earlier slipped to an intra-day low of 9,469 points, however the sentiments turned bullish during mid-session and the index rose to the day&#8217;s high of 9,811 points. The index closed at 9,707 points by gaining 23 points.

On the last trading session, the index closed in the green zone by gaining 202 points to settle at 9,909 points. The trend is likely to remain volatile next week if the absence of political and macroeconomic development proceeds.

Moreover, economic indicators further weakened with continued rupee depreciation, while foreign exchange reserves fell by $328 million during the week. This aggravated foreigners&#8217; concern over the country&#8217;s economic stability, as they remained net sellers of $3.8 million.

Despite 4 percent decline in oil prices, MSCI EM Asia went down by 2 percent as financial sector concerns and worsening global growth outlook hurt investors&#8217; sentiments. China&#8217;s SSEA composite index was down 4 percent whereas Thailand, Malaysia stock indices were down 2 percent and 1 percent, respectively.

Open position in futures is at 38 months low as it was recorded at Rs 5.2 billion with a spread of 0.02 percent. Previous low of Rs 4.9 billion was recorded on June 7, 2005. Similarly, CFS investment stood at Rs 21.1 billion, its lowest level after 23-month and down by 18 percent. Average CFS rate in the week also took a dip of 67bps to stand at 13.74 percent. staff report

http://www.dailytimes.com.pk/default.asp?page=2008\08\10\story_10-8-2008_pg5_1


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## Neo

*China Mobile to invest another $800m in Pakistan​*
ISLAMABAD: China Mobile has announced that it would invest a further $800 million in Pakistan, according to an official statement issued here.

Prime Minister Syed Yousuf Raza Gilani held a series of meetings with Chinese corporate leaders, including Wang Jianzhou, Chairman of China Mobile, Jin Kening, President China National Chemical and Engineering Corporation (CNCEC) and Levin Zhu, Chairman China International Capital Corporation (CICC) during his visit to China.

Chairman China Mobile announced investment of a further $800 million in Pakistan during this year. The Prime Minister welcomed China Mobiles continuous interest in Pakistan and assured its chairman of his governments full support in expansion of the companys operations.

During the meeting with Chairman CNCEC, the Prime Minister appreciated China National Chemical and Engineering Corporations $900 million investment by way of operating 8 to 9 plants in fertilizer and PVC sectors in Pakistan. He urged the Chairman to expand his corporations operations in the country. He also apprised Chairman CNCEC about Pakistans large deposits of coal and urged him that his corporation should invest in the energy sector for electricity generation based on coal.

In his meeting with Chairman China International Capital Corporation (CICC), Levin Zhu, who is the son of former Chinese Premier Zhu Rongji, the Prime Minister commended the able leadership of the former Chinese Prime Minister for steering Chinas great progress and development in economic and social sectors. He also lauded former Premier Zhu Rongjis contributions in strengthening of Pakistan-China relations and in particular the role he played in launching the Gwadar Project. The Prime Minister stated that Pakistan will always remember former Premiers personal role and commitment in taking the bilateral ties to a higher plane. He briefed Levin Zhu on the priorities of his government in economic fields and urged his corporation to invest in Pakistans agriculture, energy and infrastructure sectors. He also emphasised the CICC should consider the possibility of collaboration in banking and financial sectors between the two countries for forming consortiums to invest in Pakistan. Levin Zhu assured him his corporations full cooperation in furthering the economic ties between the two countries and stated that he would coordinate his corporations future plans for investment in Pakistan with the Ambassador of Pakistan in China.

Prime Minister of Pakistans last engagement in Beijing was his meeting with the Chinese Youth delegation. While talking to the delegation, he noted with satisfaction that a 100-member Pakistan Youth delegation had recently visited China and the Chinese Youth delegation was now expected to undertake a similar visit to Pakistan. Underlining the importance of people-to-people contact between the two countries, he expressed his joy that the youth of Pakistan and China, who are the future leaders of their respective countries, were engaged in regular interaction. The Prime Minister was confident that in view of the regular exchanges between the two countries at every level, the Pakistan-China friendship would grow even stronger and deeper in the future.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Services trade deficit grew by 51% in 2007-08​*
KARACHI: The countrys services trade deficit registered a sharp growth of 51 percent during 2007-08 and reached $6.3 billion as compared with $4.1 billion in 2006-07, Federal Bureau of Statistics (FBS) reported.

According to the latest data, the import bill of services increased by 19.04 percent to $9.89 billion in the outgoing fiscal year as against $8.13 billion last fiscal.

In the same period, the export revenue though services has shown massive decline. It fell by 13.30 percent to $3.58 billion in FY08 as compared $4.14 billion in FY07.

Economists believed that imports of services have recorded exponential growth in the transportation and communication, telecommunication and insurance, financial and advisory services, construction and engineering and other sectors. On the other hand, they added, the exports of services have declined significantly in all the traditional sectors owing to lack of quality and high competition.

In June 2008, the services trade deficit registered a steep increase of 353 percent to touch $203.767 million as against $80.271 million in the same month of 2007.

The services import bill rose by 19.25 percent to $866.758 in June 2008 as compared to same month of 2007 that stood at $726.860 million. On the other hand, the exports revenue through services sectors has shown steep decline in June 2008. It plunged by 17.86 percent to $662.991 million as against $807.131 million in June 2007.

In month-on-month term, the trade deficit in June comparatively decreased by 62.95 percent from May that was $550 million.

Daily Times - Leading News Resource of Pakistan


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## Neo

*July trade deficit up by 49% year-on-year to $1.644bn​*
ISLAMABAD: The country has posted a trade deficit of $1.644 billion during the first month (July) of the current fiscal year 2008-09 as compared to $1.102 billion in July 2007, projecting an increase of 49.19 percent.

According to the official data released by the Federal Bureau of Statistics here on Saturday, the exports of the country registered a healthy growth of 29.48 percent and total exports amounted to $1.905 billion as compared to $1.471 billion in July 2007.

The government has targeted a growth of 16 percent in exports during current fiscal year 2008-09 under balance of payment projections. A growth in exports of 29.48 percent is seen as good sign, a government official informed.

On the other hand, the imports of the country also witnessed an increase of 37.92 percent in July 2008 with total imports at $3.549 billion as compared with $2.573 billion in July 2007.

The government has fixed exports target at $21.1 billion and expected imports, as per balance of payment projection, are $37.195 billion for the current fiscal year 2008-09.

The balance of payment projections of the country for the current fiscal year 2008-09 project that growth in imports to be curtailed to just 6.5 percent. However, growth in imports during the first month (July) of current fiscal year 2008-09 is way ahead of the projected growth, which would result in higher than expected imports and higher trade deficit, the official added.

Comparison of trade during July 2008 with the month of June 2008 shows dismal performance of the export sector as the exports decreased by 7 percent in July 2008 with a total volume of $1.905 billion as compared with $2.053 billion in June 2008. On the other hand imports in July 2008 also witnessed a decline of 11.81 percent with total volume of $3.549 billion as against the imports of $4.025 billion in June 2008. Trade deficit also decreased by 16.59 percent in July with a total of $1.644 billion as compared with deficit of $1.971 billion in June 2008.

The government has not formally approved the scope and size of the Research and Development (R&D) support for the textile sector. Textile exports constitutes major portion of the countrys exports and providing the sector with no incentives is the the main reason behind trade gap witnessed in July 2008, the official said.

Other issue like increase in the prices of electricity, gas, POL products and depreciation of local currency and LC margin imposed by the State Bank of Pakistan continue to hamper countrys export oriented industries ability to compete in the international markets. Huge subsidies offered by competitor countries is also limiting the ability of the local export oriented industries to market their products in the targeted markets. The governments policy of discouraging imports of luxury items and non-essential items by imposing 35 percent customs duty have not yielded required results. Customs clearance on lower than the actual price of imported products is also a major concern for the economic managers, which continues to undermine the governments efforts for curtailing imports.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Sustainable growth: Govt set to give new 5-year plan​*
ISLAMABAD: The government is set to give the country a new five-year plan to put the economy on a path of sustainable growth.

Prime Minister has appointed three new members at the Planning Commission in addition to the four newly appointed advisors.

Dr M E Tasneem, who is a former chairman of Pakistan Agriculture Research Council, has been appointed member Food and Agriculture. Parvez Butt, who is secretary Ministry of Science and Technology, has been appointed member Energy. Akram Malik, currently an executive director at Asian Development Bank, has been appointed member Infrastructure.

These appointments are part of the restructuring plan for the commission, which aims at making it a true planner and economic research and policy recommending institution for the government.

According to a statement, the Prime Minister, who is also chairman of the commission, is expected to visit the commission soon to share his vision. Fully cognisant of the urgent need for an integrated and coordinated approach in economic policy making and development planning, the Prime Minister has given the highest priority to building a team of high level professionals and specialists at the Commission to face the mounting economic challenges.

The new members combine rich international and national experience and bring with them excellent credentials and expertise of the highest level in the fields.

Members include Ejaz Rahim, member (Social Sectors), Sohail Safdar, member (Coordination) and secretary, Planning and Development Division, Dr Rashid Amjad, member (Vice-Chancellor PIDE) also performing the function of Chief Economist and Lt General (retd) Muhammad Zubair, member (Implementation, Monitoring and Evaluation) is former Engineer-in-Chief, Pakistan Army.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Pakistans foreign debt jumps above $46 billion​*
LAHORE: Pakistans total foreign debt and liabilities have risen above $46 billion, showing an increase of 14 percent, Geo News reported on Saturday. According to the figures released by the State Bank of Pakistan, the countrys foreign debt surged by $5.80 billion to $45.28 billion during the last fiscal year, the channel reported. According to the report, a rise of $3 billion was recorded in just the first three months of 2008. Experts say the government is increasing its dependence on the foreign debt to meet the fiscal deficit, according to the channel. daily times monitor

Daily Times - Leading News Resource of Pakistan


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## Neo

*China assures Bilawal of co-operation in improving economy​*
BEIJING (August 11 2008): China has given assurance to Chairman Pakistan People's Party Bilawal Bhutto Zardari of co-operation in improving Pakistan's economy with further investments, besides enhancing contacts at party-to-party level.

This assurances was given to Bilawal Bhutto Zardari at a banquet hosted in his honour and other members of the Pakistani delegation by the senior leader of the Central Committee of the Communist Party of China (CPC) Liu Hongcai here on Sunday.

The members of the delegation included Secretary General of PPP Jahangir Badar, Adviser to Prime Minister on Interior Rehman Malik, the Charged Affairs of Pakistan Embassy, Abdul Salik Khan and others.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*'Government facing many challenges to achieve Vision-2030 targets'​* 
LAHORE (August 10 2008): In the wake of high food inflation and continuous pressure on the country's economy, the government is facing multiple challenges in achieving the Vision-2030 targets that envisage socio-economic transformation of the country with a population growth rate of one percent, poverty alleviation and achieving 100 percent literacy rate.

Analysts consider that it is a gigantic task for the government to achieve the targets of 'Vision-2030'. New challenges are emerging keeping in view the socio-economic changes within the country and around the globe. While achieving the set targets of the vision the country has to face multiple challenges, they said.

Experts told Business Recorder that Pakistan would have the world's fifth largest population ranging between 230 and 260 million by the year 2030 while world population will rise from current 6.3 billion to at least 8.2 billion.

Achievement of 100 percent employment in the country by 2030 is a big challenge for the government. Employment generation and matching of skills in a changing workplace will be central to poverty elimination, economic growth, and social stability, they added. Pakistan is fast approaching the water stress regime, with a storage capacity of only 9 percent of average annual flows compared with a world average of 40 percent, they added.

Achieving 100 percent literacy rate by 2030 also looks very difficult to achieve due to many reasons. However, with committed efforts on the part of government and private sector, better results vis-à-vis implementation of targets of Vision 2030 could be achieved.

Moreover, the Punjab Population Welfare Minister, Neelam Jabbar, said here on Saturday that the government has decided to strengthen the Prime Minister's Basic Healthcare Programme initiated by Benazir Bhutto so that majority of the population would benefit from the programme.

She said that womenfolk would be empowered in all sections of the society and opportunities of employment will be provided to them in government, semi-government and private Organisations so that they can play their due role in the development of the country.

She further said that more than 300 new family welfare centres would be established in Punjab for the provision of basic maternal and child healthcare facilities to the majority of the masses at their doorsteps. She added that the government would provide opportunities of continuous medical education and training to LHWs and LHVs so that they could play vital role in health education of the rural folk.

Further, the sources said the National Program for Family Planning and Primary Health Care launched in 1994 is paying dividend. With well-regulated monitoring and evaluation mechanisms and prompt corrective measures to overcome bottlenecks, the programme is helping in mitigating the basic health problems of rural women and children. The programme was aimed at providing preventive, curative and rehabilitative services and also to expand family planning.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*OMV to explore oil in Kalat and Barkhan​*
VIENNA (August 09 2008): Austrian oil and gas giant, OMV, said on Friday it had acquired stakes in two licences to explore oil in Pakistan. OMV said in a statement it had agreed to acquire a 30 percent stake in the Kalat exploration licence and a 15 percent stake in the Barkhan licence, both in the province of Balochistan.

"The areas are under-explored but considered as highly prospective drilling areas," OMV said. Partners in the Kalat licence were Pakistan Petroleum and ENI Pakistan, while partners in the Barkhan licence were Pakistan Petroleum and MND Exploration and Production.

Kalat is a block of 2,842 square kilometres and Barkhan 2,105 square kilometres. "These new exploration licences acquire acreage with highly attractive exploration potential," said OMV board member Helmut Langanger. "It enables us to proceed with our plans for further growth in Pakistan were we are currently the biggest international gas producer," Langanger said.

In all, OMW holds exploration and production licences in 20 countries in central and eastern Europe, North Africa, north-western Europe, the Middle East, Australia and New Zealand, and Russia and the Caspian region. OMV's daily production volume is around 316,000 barrels per day and at the end of 2007, it had reserves of 1.22 billion barrels.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*SCGA to set up Rs 700 million power generation plant in Faisalabad​*
LAHORE (August 11 2008): The Sugarcane Growers Association (SCGA) will establish high-tech power plant having a capacity of 4 MW in Mamoo Kanjan district Faisalabad at a cost of Rs 700 million.

Talking to APP here on Sunday, SCGA Convenor Javed Malik said that 60,000 liters ethanol to be extracted from sugarcane juice daily will be the main product of the plant which would help meet the country's requirement while its excessive quantity would be exported to other countries.

He said the electricity will be its by-product. The Sugar Cane Growers have obtained No Objection Certificate (NOC) from the department concerned to establish power plant, and a proposal has been sent to the Provincial Co-operative Bank Limited (PCBL) for joint venture, he added.

Highlighting the salient features of the power plant, he said the high-tech plant will have the functional capacity to generate 1.5 kilowatt from 20-kg bagasse, while the existing sugar industries are generating only one kilowatt from 40 kg bagasse. Javed Malik also said that 2 MW electricity would be brought under utilisation of the plant while the rest of 2 MW would be provided to the nearby villages on subsidised rate. He said that about 10,000 to 15,000 local sugarcane growers will supply of their produce to the power plant on membership basis. In return, the plant management will facilitate the growers by providing them subsidy on fertiliser and electricity, besides quick payment of their produce.

He said the plant would help provide employment opportunity to 300-500 persons.

The multi-purpose power plant will help to produce feed for livestock, fertiliser, hard board and its related items from the leftover of sugarcane, he added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*How to expand trade with neighbours​*
During eight years of President Pervez Musharrafs rule, Pakistan did not develop a trade policy suited to its circumstances. If some initiatives were taken by the Ministry of Commerce  there were not all that many  they took the country in the wrong direction.

Much effort was devoted to concluding a free trade arrangement with the United States and increasing textile exports to America. Neither objective, even it was realised, would help Pakistan to bring about a bounce in its exports.

This is something the country needs to do with some urgency in order to deal with the problem posed by the widening trade deficit.

The current deficit has reached unsustainable levels. In the short run the only way to constrain it is to limit imports. This can be done with tariff increases and other charges on imports that feed consumption, not investment. This the government is already doing.

But a move towards a closed economy would take the country back by decades at a time when most of the rest of the world is taking advantage of the process of globalisation.

The only viable solution to the problem of growing trade and balance of payments deficits is to increase exports. This wont happen suddenly; it will take time and much greater involvement of the state in developing the export sector.

Trade policy, in other words, should be at the heart of the strategy needed to take care of the countrys ailing economy. What is it that the government should be doing to increase exports?

Pakistan needs to change in a dramatic way the direction and content of its exports. As the gravity model of trade suggests, Pakistan should be building stronger trade relations with the countries in its neighborhood and concentrating on the production of exportable surpluses that have markets in these places.

Continued emphasis on textiles does not belong to this strategy. Neither does the focus on gaining access to the markets in the United States. Pakistans exports to America are concentrated in the cotton group in which the country faces many competitors.

However, for Pakistan to adopt an entirely different approach to trade would mean that the countries that are its natural trading partners should be prepared to play ball with Islamabad.

For that to happen they must abide by the rules of international trade which has not always been the case. This is particularly the case with India which, if the gravity model has any validity, should be Pakistans largest trading partner.

India freely uses devices such as the dumping clause in the treaty that set up the World Trade Organization to keep out the goods in which its own industry is not very competitive. For it to play on a level field, it must come under international pressure and scrutiny.

This is why multilateral trade negotiations such as the Doha round acquire considerable importance and this is also why Pakistan should have played a much more active role in these talks than it did.

Now that Doha has collapsed, what are the options available to Pakistan and how should Islamabad reflect these options in its trade policy? What stance should the countrys industry owners adopt to move Islamabad towards formulating a trade policy that would work for them and for the country?

That the current approach to trade defies economic logic and is the consequence of public policy mistakes is well illustrated by some of the recent trends.

The cotton group remains the dominant player. Its share in total exports has declined a bit and some changes have taken place in the groups composition. Pakistan, once one of the major exporters of raw cotton, has become a net importer.

That said, there is still not enough diversification in the composition of exports to indicate that the country has positioned itself to take advantage of the enormous changes that have taken place in the structure of the global economy.

But there is one silver lining on the horizon. The fact that the share of miscellaneous manufactures has increased significantly  last year it increased at an impressive rate of 33 per cent  gives some hope.

There is sufficient diversification within this group and sufficient presence of the items in which Pakistan has some comparative advantage to indicate that an export oriented strategy could be put in place.

One example will help to illustrate this point. The leather group is one of the fastest growing lines of export products.

The country has moved away from exporting raw hides to selling processed leather and leather products. Since Pakistan has one of the largest animal populations in the world the leather group could become a major export item.

To move in that direction, leather products should replace processed leather as an item of growth. While Pakistan has missed out in developing large scale export oriented industry as was done by the countries in East Asia and while it has made very slow progress in making use of its abundant human resource to export services such as IT and health services as India has done, it can still develop some niches in the international markets. Leather products could constitute one such niche.

The other area in which work needs to be done is to follow the gravity model of trade and concentrate on the development of markets nearer home. The accompanying table illustrates two problems in the current structure of exports: concentration in a few markets and dependence on distant countries.

For the last ten years, six countries have accounted for nearly one-half of total exports. Within these, the United States has been by far the largest. China and India dont figure among major markets for the countrys exports although given their size, the rapid growth in their economies and their proximity to Pakistan, they should be the largest importers of Pakistans products.

Given the collapse in the Doha round, what public policy choices are available to Pakistan to change the composition of its exports. Islamabad should do a number of things differently. Among these three are especially important and all of them are directed at trade policy affecting India.

One it should allow the provincial governments much larger role in the making of trade policy. At this point they have been largely kept out of the policymaking process. The Punjab, being Indias neighbor, should be allowed to develop strong trading relations with that country.

Two, Pakistan should aggressively pursue the markets in India even if it means undertaking unilateral actions such as the grant of visas to the Indians wanting to visit the country in the hope that New Delhi would reciprocate such as gesture.

Three, it should use regional arrangements to tie down India to good behavior. In the past Islamabad chose not to pay much attention to the development of the South Asia Free Trade Area, the Safta. That was a mistake.

In so far as China is concerned, Pakistan already has a free trade arrangement but it is not working to produce much trade. The reason is the absence of items of production which would interest China.

One way of developing a China oriented export industry is to encourage investors in both sides of the border to invest in the industries and services of specific interest to China. The Indians are talking that route with good results.

How to expand trade with neighbours -DAWN - Business; August 11, 2008


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## Neo

*Return to the begging bowl​*
Since the restoration of the democratic government, and all the economic indicators, except inflation heading south from the beginning of 2008, a question on everybodys mind is: does this major milestone in our political history also mean the return of the begging bowl.

Its full-fledged second debut from governments kitchen in front of the philanthropic governments, development partners and multilateral agencies has already broken the perceived myth of sustainable growth and resilient economy created by the previous government. One also hopes that there is no ominous link and just a coincidence between the advent of democracy and the re-appearance of begging bowl.

Some may argue that in the current scenario, we just require temporary balance of payment support and it should not be likened to the debut of begging bowl. The economy will be up and running in six months time. But request for large grants indicates that government is in unsustainable debt and future liabilities and cannot assume more loans and its repayments.

Although a declining share of total foreign aid over the decades, grants have been a constant feature of the BoP support since independence. But, they cannot be strictly associated with begging when they were and are realised as transactions more dependent on the largess of the donors and gestures of philanthropic governments, sometimes in case of natural emergencies.

Similarly, deferred oil payments worth $5 billion a year that we are expecting from Saudi Arabia any day and food aid plus $15 billion over the next 10 years from USA are soft loans, but the urgency and purpose under/for which they were requested along with the magnitude is tantamount to begging. The democracy bonus of $500 million from China in response to our SOS for BoP support is nothing more than begging. Insistent private foreign direct investment at the highest international economic and non-economic forums as pseudo begging. In this globalised world and almost free flow of capital, investment would automatically flow where the return to it are the highest and where cost of doing business is the lowest. Who else would know better about these profitable niches than the investors themselves?

By drumming up the case for private foreign direct investment, we implicitly admit, we are ready to give concessions and tilt the level playing ground in favour of foreign investors in order to bolster our foreign reserves.

The begging bowl implies a loss, to an extent, of sovereignty; and type of implicit and/or explicit conditionalities attached to begging is more a function of the economic/political power of the benefactor and objectives the philanthropist wants to achieve through the grant.

Moreover conditionalities come in various forms and sizes. The speed at which the foreign reserves and Pakistani currency value is declining, some see IMF/World Bank rescue lending in a few months as a writing on the wall.

As bankers, they would require explicit conditionalities on quick stabilisation of the economy, but the implicit conditionalities of the members of the governing board of these institutions behind these innocuous (and usually half-heartedly implemented) economic conditionalities will be of political nature and may directly affect the sovereignty and security of the country.

In the light of the past experience with the commitment of long-term and stable flow of US aid, the recent announcements are means to front load the political/security conditionalities by dangling the long-term carrot in our hour of need. If the deferred oil facility by Saudi Arabia is restricted to just one year, it would be quite innocuous to our national interests, but if we keep requesting for extensions, one may have to comply occasionally with brotherly favours.

One hopes that the political and economic managers will not embarrass us going around with the bowl for long. However even the back of the envelope exercise suggests that we will be needing substantial amount of BOP support (or need to beg) in the near future.

Lets start with the medium term prospects of narrowing the trade balance. With commodity exports at $20 billion and imports touching $40 billion, the prospects of narrowing this gap by 50 per cent in a matter of one or two years are remote (unless the oil price again falls in the range of $60-70).

Historical trends in exports suggest periodic jumps accompanied by fluctuations around a plateau, i.e., jump from $10 to $15 billion and variations around that number for a few years and another quick jump from $15 to $20 billion and then again volatility around that number for the next few years.

However, historically imports have continued to securely climb by smaller or larger rate every year. Thus we are likely to experience a widening trade gap unless the exports quickly jump to $25 billion mark in the next year. Moving to current account gap, the saving grace is remittances, which fill the trade gap by 25 per cent.

They have reached over six billion mark and expected to grow 10-15 per cent a year thanks to booming economies of the Middle East and aging of western societies. That leaves a current account gap of about $8 billion.

At the fag end of the previous government rule and the last financial year, foreign direct investment of $5-6 billion more or less considerably bridged the gap. The simmering political uncertainties, law and order situation and macroeconomic instability has burst the FDI balloon.

Thus in a very optimistic scenario for the next two years, the country would need $5-6 billion or import compression of similar magnitude annually to square the BoP account. It seems the return of begging bowl is inevitable, unless we put our economic house in order on a war footing.

Return to the begging bowl -DAWN - Business; August 11, 2008


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## Neo

*Manufacturing small tractors and level playing field​*
The budget 2008-09 has been termed incentive oriented for development of agriculture. It has provided Rs20.30 billion for food, agriculture and livestock projects and fixed the farm credit target at Rs200 billion.

For this year, agriculture growth is targeted at 3.50 per cent, up from actual expansion of 2.50 per cent in 2007-08. Pakistan has total farm area of 22 million hectares, whereas area under cultivation is 20 million hectare, which is planned to be increased to 24.60 million hectares by the year 2010. These targets seem difficult to achieve, given the present conditions of high price increase in agricultural inputs including electricity and diesel.

Extensive farm mechanisation however can possibly bring in the desired results. Agricultural machinery-including tractors and farm equipment- is an important input contributing to higher production. Unfortunately, the use of agricultural tractors, while increasing manifold in the last two decades or so, remains limited.

In fact, tractor density, or penetration level, is very low compared to the world standards. According to the Agricultural Machinery Census, there were 157,310 tractors in 1984, 252,861 in 1994, 401,663 in 2004. Presently, there are an estimated 500,000 tractors.

The domestic tractor industry has shown a steady growth over the years, and has assembled and manufactured tractors of international quality meeting national demands. It has achieved over 80 per cent deletion level through a robust vendor industry. There are two industrial units- Al-Ghazi Tractors Ltd (FIAT/New Holland tractors) and Millat Tractors Ltd (MF/AGCO tractors)- producing a wide range of 55 HP to 85 HP tractors, with an annual installed capacity of 30,000 units at each plant.

Initially, five companies were licensed to undertake local assembly and progressive manufacturing. The other three companies, assembling Belarus, Ford and IMT tractors, could not finally establish manufacturing facilities.

Nonetheless, due to continuous surge in demand, the production capacity has become inadequate, and the two companies are unable to deliver tractors in required quantities. For example, during 2006-07, a total of 49,500 tractors were delivered against demand of 77,261 units; Al-Ghazi having delivered 26,364 and Millat another 23,136 tractors. Obviously, these companies are overbooked with orders that are finalised on their own terms and prices.

To bridge the demand-supply gap, the government had allowed last year the duty-free import of tractors, but, again, the two companies emerged as major importers too, thus earning windfall profits year-on-year, without implementing any plans for capacity expansion. Responding to the potential large market, only few investors showed interest in setting up assembly-cum-manufacturing plants but failed in seeking governments approval.

The revival of Green, or Awami Tractor Scheme is on cards, which will lead to higher demand of tractors in near future. The government of Punjab has already announced to provide 10,000 tractors to the farmers in a year, extending a subsidy of Rs2lakh on each unit. Understandably, small and medium farmers are main focus of the official efforts, since they hold 65 per cent of total cultivated area.

The tractors available in domestic market however are large, powerful and costly for small farmers with about 12-acre land holding, in particular. Thus there exists a potentially large market for affordable small tractors, of the size of 10,000-15,000 units per year.

Farmers world-over employ small agricultural tractors of 25-35 HP, and a large number of multinationals are engaged in manufacturing of the small-power tractor and its compatible accessories and attachments, in many countries including Japan, China and India. Two versions of these modern diesel engine operated tractors are available2-wheel drive and 4-wheel drive--with a wide gear range.

These are suitably employed for all farming operations, from mowing, grading, tilling and ploughing to loading, digging, lifting and transportation. In India, 51 per cent of total market is captured by tractors falling in the range of 31-40 HP, with a sales volume of 148,000 units recorded in 2006.

Likewise, tractors of 20-35 HP are very popular in China. In the early 1990s, Chinese were interested to introduce here the 20-HP tractor with plans to manufacture locally in collaboration with public sector, having prepared a sound marketing feasibility study. Tests and trials of demonstration models were carried out in Sindh province for some time and the then Agricultural Development Bank of Pakistan also consented to the proposal. This however did not materialise because the price of a 25-HP tractor in international market is 66 per cent of the 45-HP tractor, whereas operational cost is higher.

Though the governments declared policy was for undertaking the indigenous manufacturing of tractors in the range of 45-65 HP, the two tractor companies have developed over a period of years, a market for big tractors up to 85 HP.

Many of the big size models are being imported either as CBU or in SKD condition for local assembly. The manufacturers have simply remained indifferent to the demand of small farmers, whereas product range of their foreign collaborators includes models of 25-35 HP too. The current trade policy also allows duty-free import of tractors.

The government needs to seriously consider devising a prudent policy and preparing a medium-term plan for the rapid promotion of tractor industry, with focus on manufacturing of 25-35 HP standardised tractors, allowing new entrants in the sector a level-playing field.

Manufacturing small tractors and level playing field -DAWN - Business; August 11, 2008


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## Neo

*Energy security and foreign reliance​*
When President Bush and President Musharraf launch-ed the US-Pakistan Strategic Dialogue in March 2006, they agreed to undertake strategic steps in many areas including energy, economic growth and social sector development.

While it was clear from the very beginning that unlike India, access to nuclear energy would remain out of bound for Pakistan no substantial progress could be achieved in other energy fields so far to meet Pakistans growing energy needs and strengthen its energy security.

During the last month visit of Prime Minister Yousaf Raza Gilani to the United States, the two sides agreed to hold US-Pakistan Economic Dialogue in Islamabad on August 11, 2008. These consultations have been postponed immediately after Prime Minister Gilanis return and are now likely to be rescheduled sometime in September.

The $30 million Pakistan Energy Development Programme initiated by the United States focuses on improving power availability, affordability and efficiency. So far, the US support has been limited to provision of solar energy panels for small villages in troubled Federally Administered Tribal Areas (FATA). Funded by the USAID, more than 300 villages in the tribal region are expected to benefit from the solar energy.

The Bush administration had encouraged its companies to invest in Pakistans wind power but tangible progress could not be achieved because of their inexperienced Pakistani partners, bureaucratic wrangling and much higher than expected power production cost as the prices of wind turbines went up globally.

Meanwhile, Pakistans power production cost has increased more than ever before. The authorities have given the impression that continuing spate of load shedding is because of capacity shortages. The ground situation, however, is much different.

While a seasonal fluctuation with hydropower generation is understandable, the authorities have intentionally downplayed non-utilisation of over 2500MW of Wapdas thermal power generation capacity because of financial crunch.

Insiders suggest the power purchase cost from most of the thermal power plans has gone beyond Rs22 per unit and it is the hydropower that rescues the economy. Wapdas generation companies have not been able to run their own thermal stations to their optimum capacity because of their inability to finance expensive furnace oil and diesel.

Wapdas cumulative cash shortfall have gone beyond Rs150 billion and it has been struggling to make payments for fuel supplies, resulting a huge pile up of inter-corporate circular debt that has engulfed fuel suppliers like Pakistan State Oil and gas utilities.

Non-payment or underpayment of dues to independent power producers has also been resulting in less than contracted power supplies, leading to much higher capacity payments to the IPPs even without its full utilisation.

This situation has given birth to a new debate in the official quarters. The recent international competitive bidding for fast track development of 1500 MW of thermal power projects attracted reasonable response from the private sector but there is a strong feeling that Pakistan should not sign contracts for more than 1000MW because of affordability issues.

The tariffs offered by the bidders have ranged between 11-15 cents per unit (kWh) but critical examination showed that these tariffs practically translated into 15-20 cents per unit because of some hidden allocations, which have to be sorted out.

Also, the authorities believe that about 1500-1800MW of additional electricity would be come on line from October 2008 and December 2009. Since, most of these projects would provide electricity at an average 18 cents per unit, it may not be economically prudent to add further expensive thermal plants.

The major problem with thermal projects is that fuel and inflation are pass-through items, making it unaffordable with rise in international oil market. Already, the hydro-thermal ratio has declined from historic 30:70 to 25:75 in the recent years.

That means the new thermal projects which are in pipeline would tilt this ratio heavily in favour of expensive thermal sector to the extent of 15:85. That would mean the consumer tariff would not be less than Rs20 or so from the current rate of Rs5-6 per unit.

On the other hand, most of the initiatives planned by the previous government over the last eight years have not materialised and seem to be non-starters. For example, the Iran-Pakistan-India pipeline that would have fuelled Pakistans power generation over the next decade remains uncertain.

US opposition aside, the three nations have not been able to sign a formal agreement on the project and Tehran has backed out of gas price it had agreed with Islamabad. Import of gas from Turkmenistan and development of five dams in the country, too, seem out of sight at least for the time being.

Interestingly, the United States has been supportive of importing electricity and natural gas from energy-rich central Asian states as an alternative to import of gas from Iran as part of its strategy to economically isolate Tehran. While there still remain a number of unresolved issues with import of gas from Ashgabat, the future of electricity imports from Kyrgyz Republic and Tajikistan would hangs in balance because of security situation in Afghanistan. The only assurance that Afghan energy minister Alhaj Muhammad Ismail could offer last week was that your brothers and sisters in Afghanistan would ensure security to the (650 km) transmission line in Afghanistan.

The four nations  Pakistan, Afghanistan, Tajikistan and Kyrgyzstan  signed an inter-governmental agreement last week for the import of 1300 MW from central Asian states to Pakistan (1000MW) and Afghanistan (300MW), many crucial aspects including commercial, legal, security, tariff and technical did not even come under initial discussion and would be taken up later. This import could later be increased to 4,000MW subsequently. That would require a lot of time, energy and commitment.

The World Bank has long been advising Pakistan to start working on import of 4,000MW of cheap electricity from Central Asian states, besides working on domestic sources to overcome electricity shortage owing to a 43 per cent expected increase in demand to 20,000MW by 2010. The Bank estimates that Pakistans peak

demand now exceeds 14,000MW and the present installed capacity of 19,500MW has become inadequate on account of the wide variations in the water availability, which greatly reduces the firm capacity available.

Electricity demand at the generation level is forecast to grow at 7-8 per cent per year to about 20,000MW by fiscal year 2010 and 44,700MW by 2020.These imports, the World Bank believes, have two major advantages. First, the cost of supply from Sangtuda, Rogun, Talimardjan and Kambarata power stations in the CARs would range between 4 -6 cents per unit compared thermal power plants being contracted at 18 cents per unit.

Second, the attractive feature of the imports form CARs is that Pakistans peak demand occurs in summer, when the Central Asian power systems have large surpluses from their hydroelectric generation stations.

Successive governments have already lost a lot of precious time. The crisis is too serious and requires even serious approach. Apart from controversial big dams, Pakistan has over 25,000MW of hydropower potential based on run-of-the-river model.

Its tariff even at eight US cents per unit maintains declining trend as time passes unlike thermal which keeps on rising. Then there is huge coal deposit in Sindh. Pakistans coastal Sindh province alone can generate nearly 11,000MW of electricity from wind.

Solar energy, too, has excellent potential in Pakistan that receives high levels of more than 19 mega joules per square meter of solar radiation throughout the year.

About 70 per cent of rural population lives in some 50,000 villages could be electrified with solar power, leading to load reduction on national grid. Pakistan also has the potential of generating more than 20,000MW from waste energy plants in big cities like Karachi, Lahore, Faisalabad, Multan and Peshawar.

There is nothing wrong if all domestic avenues are exhausted before looking for help abroad. That needs national thinking.

Energy security and foreign reliance -DAWN - Business; August 11, 2008


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## Neo

*NWFPs focus on infrastructure​*
THE NWFP government has doubled the size of its investment for improving the industrial infrastructure this year amid worsening law and order situation and poor energy supply.

Under the Annual Develop-ment Programme (ADP), devised by the ANP-led coalition government, the allocation for infrastructure projects has been increased to Rs1.24 billion from Rs566.6 million last year.

A total of 60 projects will be financed which include 24 ongoing and 36 new. These projects will get a major portion of the ADP allocation. A big part of the funding will go to improve the industrial estates existing infrastructure (mainly roads) and expansion of small industrial estates in Peshawar and Nowshera, procurement of land for proposed China-Pakistan Economic Zone at Hattar and the Export Trade Centre at Peshawar.

Likewise, the setting up of combined effluent treatment plants at Hattar and the Peshawar industrial estates, feasibility studies for setting up of chemical-based industries in southern areas, trucking terminal at Peshawar and an industrial estate at Kohat are also part of the new programme.

The government is attaching high priority to the industrial sector this time, says an official at the Planning and Development Department (P&DD).

The official argues that the industrial sector has great potential for creating badly needed jobs. The poverty ratio in NWFP, according to the World Bank estimates, is 38.1 per cent, the highest among the four provinces. Likewise, 39.73 per cent of the total NWFP population is civilian labour force out of which 35.04 per cent is employed. On the other hand, at the national level, 46.01 per cent of the population is in civilian labour force, of which 43.16 per cent is employed.

The rate of unemployment in NWFP is 4.7 per cent as compared to 2.85 per cent at the national level.

The province can attract fresh investment, if its infrastructure is good enough, since it has different indigenous raw material that can help in setting up of new industries, opines an official.

But industrial stake holders are not impressed. For them, the worsening law and order situation in the aftermath of military action going on in different parts of the province, is the major worry.

A Peshawar-based industrialist was kidnapped some three months back, and the police are still clueless about his whereabouts. This has created a sense of insecurity among the business community.

Industrialists say the situation is going from bad to worse which will result in massive transfer of investments to other provinces.

Nauman Wazir, the IAP president, says that every industrialist in HIE is paying Rs20,000 to Rs50, 000 as monthly contribution to keep in place the security system.

Poor condition of electricity and gas supply is also a major concern for the industrialists, which, they say, has not been taken up into consideration so far in the formulation of the provincial ADP.

None of the 90 grid stations in the NWFP has surplus electricity that can be supplied to the existing industrial units, he says and adds that at least 12 industries at the HIE have applied for increase in electricity load, but the Peshawar Electric Supply Company (PESCO) does not have the capacity to meet their power demand.

Likewise, a number of industrial zones such as Bannu do not have proper infrastructure, which should have been focused instead of going for setting up new industrial areas.

Being at the tale-end of the gas distribution network of Sui Northern Gas Pipeline Limited (SNGPL), industries of the Frontier province are the most hit in winters, when public utility disrupts gas supply to balance the demand and supply gap.

To overcome this problem and ensure uninterrupted supply of gas from the nearby Shakardara and Gurguri gas fields, the provincial government had planned a separate pipeline to Peshawar some three years back. But, the project exists on papers only.

The government should have taken steps for the execution of this long-awaited project, says Mr Wazir.

NWFPs focus on infrastructure -DAWN - Business; August 11, 2008


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## Neo

*Pakistan inks pact with Iran to import 1000MW electricity​*
** Iran to finance completion of project
* NESPAK starts work on feasibility study of project​*
ISLAMABAD: Pakistan signed an agreement with Iran to import 1,000 megawatts of electricity to overcome the power shortage in the country and Iran would finance the projects completion, a senior official in the Water and Power Ministry told Daily Times on Sunday.

He said that the agreement was inked after negotiations during the 17th session of the Iran-Pakistan Joint Economic Commission (JEC) that was held on June 28-29 in Tehran.

He said that Pakistan also planned to import 100MW for the Gwadar Port and 1,000MW for other parts of the country. He said that Pakistan, the National Engineering Services Pakistan (NESPAK) and a consultant from Iran would hold a joint feasibility study of the project. Pakistan has provided Rs 50 million for the feasibility study and the remaining amount would be provided by Iran.

NESPAK: He said that the government had asked NESPAK to complete the feasibility study of the project, adding that it had already started working on it. The official added that Iran had assured the government of Pakistan regarding the financing for the laying of infrastructure including the transmission line. He said that the transmission line would be linked with Quetta to supply power there.

Pakistan was already importing 40MW electricity daily from Iran at 3.2 cents per unit for Balochistan. The sources claimed that the imported electricity was cheaper than the electricity produced by the Independent Power Producers (IPPs). However, Pakistan would need to develop its infrastructure to import more electricity from Iran.

He said that following the hike in fuel prices, the government was currently getting the electricity from the IPPs at 16 to 20 cents/kwh. He said that Pakistan would be receiving power from Iran in the next five years that would cost 10 cents/kwh. He said the power import from Iran and Tajikistan were medium-term solutions to overcome the power shortages in Pakistan that would widen following the pace of the growing economy in the future. Pakistan had signed an agreement with Tajikistan also to import 1,000MW that would be commissioned in 2013.

The official said that the construction of dams like Bhasha would take almost 10 years whereas power import from Iran and Tajikistan would help Pakistan meet its energy requirements more quickly. Pakistan is presently facing a power deficit of around 4,000MW. It would need to add 6,000MW to the national grid in a year to end the load shedding in the country.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Tarbela Dam can generate 960 MW more power ​* 
Monday, August 11, 2008

ISLAMABAD: Lack of political will and red tape have hindered the generation of more than 960 megawatt expected potential energy that could be retrieved from the Tarbela reservoir by carrying out a slight modification to the dam's structure and installing two more turbines to cope with the power crisis, well-placed officials told The News.

Talking to senior officials and senior engineers on a visit to Tarbela Dam, this correspondent found that possibility of increasing the dam's power generation capacity was still there. They said: "Since long, the government had planned to modify the water reservoir of Tarbela to pave the way for generating about 960MW electricity, but due to lack of political will and red tape, the projects is still in the doldrums."

There was a plan to install two more turbines at Tarbela Dam, but the said turbines would not be able to generate electricity for six to seven months. However, there was a need to introduce some modifications in the water reservoir (lake) with a view to ensuring sizeable head of water on the two proposed turbines for six to seven months to generate electricity. There is already room or provision in the original design of the water reservoir for proposed modifications and it would not affect the dam, sources in Ministry of Water and Power said.

On this particular issue, feasibility studies are being carried out for making some modifications to make the project of installing two turbines, having the capacity to generate 960MW electricity, economically viable. Earlier, there was a proposal that the Water and Power Development Authority (Wapda) would accomplish this project of strategic significance, but due to lack of adequate financing, the authorities concerned decided that private sector should come forward to complete this project despite the fact that Tarbela Dam is a sensitive and strategic asset.

Tarbela Dam can generate 960 MW more power


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## Neo

Already posted dude, #447.


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## Neo

*Low demand, high cost 150,000 lose job in troubled auto industry ​* 
Tuesday, August 12, 2008

LAHORE: Current turmoil in the automobile industry has claimed jobs of around 150,000 workers, mostly from auto-vending industries which are now operating at around 40 per cent of their installed capacity.

A survey of the auto-vending sector by The News reveals most of the vendors increased their capacity substantially in the wake of sustained growth of over 20 per cent in automobile production during 2001-2006. This capacity is now lying idle as instead of registering some growth the automobile production is on the decline. Most of the auto-vendors, which were running three shifts a day two years ago, are now meeting their orders by operating one shift only.

These small and medium industries, which have been forced to reduce their workforce, are in deep trouble as they earlier went for expansion on low-interest loans when the industry was moving on a sustainable growth path. Then the demand for automobiles started declining with increase in mark-up rates on car finance while vendors are now forced to service their loans on current interest rates as they had borrowed money at floating rates.

At the same time, the vendors allege the deletion policy of the government is in doldrums. Even in vehicles with a deletion level of 70 per cent, they point out, the cost of imported components is much higher than the price paid to vendors for local components. In fact, for 70 per cent local parts the auto-vendors get only 30 per cent of the total cost of vehicle parts while the foreign exchange component for 30 per cent imported parts comprises 70 per cent of the total cost.

The vendors also deeply regret losing their skilled workforce due to low production as these workers were provided in-house training at a substantial cost in various skills. The workers, they say, would divert to other fields as currently there is no work for them in the auto industry, adding they would have to retrain fresh workers when the automobile industry resumes its growth in future.

There are no chances of resumption of a growth cycle in automobile in the next two years, says Syed Mansoor Abbas, an auto vendor. By that time, most of the vending industries would go sick, he says, adding many vendors would soon default on their bank loans and might be liquidated by bankers.

He says the cost of production has increased enormously due to high steel and energy prices and auto assemblers are not prepared to increase the rates of parts corresponding to the rise in the cost of production.

Even operating vendors, he fears, will close down if prices of parts are not increased by the manufacturers in line with the increase they have made in their cars and tractors.

The News has found that motorcycle manufacturers are also in trouble. Prices of motorcycles are going down while cost of production is increasing. Some vendors say many assemblers of various Chinese brands are in deep trouble as those producing 400 to 500 motorcycles a month are operating much below the economies of scale and some might close down. The minimum survival level, according to industry experts, is production of 2,000 bikes per month or above.

However, some vendors are still operating comfortably despite a negative growth in the automobile industry. They are few in number and their survival depends on finding new markets other than local original equipment manufacturers.

Pakistan Association of Automotive Parts and Accessories Manufacturers former chairman Syed Nabeel Hashmi says many vendors have opted for exports, developing stable markets after years of hard work. Moreover, he says, many vendors have entered the local after-sales auto market that until now has been monopolised by Korean and Taiwanese auto part producers. He says local vendors have expertise to produce auto parts of international standards. They now produce parts for many foreign brands and models that are not assembled in Pakistan.

Low demand, high cost 150,000 lose job in troubled auto industry


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## Neo

*KSE gains 262 points on Pakistans rating news ​* 
Tuesday, August 12, 2008

KARACHI: Moodys hint to maintain Pakistans rating invited notable buying on Monday restoring the benchmark KSE 100-sahre Index above 10,000 points level.

KSE 100-share Index posted gained 262.41 points or 2.65 per cent to conclude at 10,171.86 points. The cumulative surge of last three successive sessions together stands at 493 points or over five per cent to date.

Prior to this, market had sunk to 23 months low to 9,679 points by Wednesday, August 06, with posting a massive loss of over 38 per cent or 6,000 points from 15,676 points closing of April 18.

Saad bin Ahmed at Capital One Equity said that the statement by an official of Moodys that his agency would maintain Pakistans rating at B2 despite the current political and economic mess in the country, kept the bulls in power for another day.

This was the second investment-friendly development for the equity market in a short while, as on last Friday, August 09, companies listed at the Karachi Sock Exchange (KSE) showed their interest to buy-back their own shares under the depressed stocks market situation, he said.

Amid across the board buying under the lead of blue chips a couple of front line stocks continued to close in red including Lucky Cement, Habib Bank and Bank of Punjab. Moreover, the insurance and refineries, which had remained under selling pressure throughout last week, also came out of depression and invited notable buying while some of them hit their upper breaker of five per cent or Re1.

The parallel running 30-Index also rose by another 365.52 points or 3.19 per cent to close at 11,518.56 points in this session. Market expectations that positive sentiments would continue to prevail under the current circumstances helped generating enhanced turnover at 121.972 million shares. This is over 36 per cent higher than 891.145 million shares on last Friday.

Future market turnover also rose to 17.382 million shares from 15.032 million shares on weekend. Also, the overall market capitalisation soared by Rs76 billion to Rs3.169 trillion. Overseas investors, however, remained net seller of $5.5 million from all three local bourses in this session too.

Hasnain Asghar Ali at Aziz Fidahusein said with the nation closely watching and waiting for yet another historic event, the bulls stayed busy arranging for an extended stay. No doubt the political suspense was at the highest level, but the perception that bright and sunny tracks are a couple of steps ahead.

With the stocks likely to get hit by economic downturn and slowdown have already adjusted accordingly while those likely to benefit from rupee weakening and rise in domestic interest rates continued to attract local and foreign players due to discounted valuations, he added.

The news that Moodys rating agency has maintained the stable outlook for Pakistan, thus assuring that the efforts made on monetary side would have a positive impact while political scene might start improving from here supported the cause and the index sustained the run-up and managed to close higher, Ali further said.

The plus signs remained changed with 199 stocks advanced against 71 stocks declined, the vale of 14 scrips remained unchanged with total 284 active counters. Highest volumes were witnessed in NIB Bank at 12.655 million closing at Rs9.12 with a gain of nine paisa, followed by DG Khan Cement at 8.908 million closing at Rs48.98 with a gain of 89 paisa, Oil and Gas Development Company at 7.990 million closing at Rs111.60 with a gain of Rs4.45, Arif Habib Securities at 7.816 million closing at Rs119.25 with a gain of 50 paisa and National Bank at 5.365 million closing at Rs114.10 with a gain of Rs5.43.

KSE gains 262 points on Pakistans rating news


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## Neo

*Moodys to keep Pakistans rating unchanged ​* 
Tuesday, August 12, 2008

KARACHI: Moodys will maintain its rating for Pakistan despite political and economic problems facing the nuclear-armed country, a senior analyst from the ratings agency said on Monday.

Moodys downgraded Pakistans rating to B2 from B1 in May because of growing economic imbalances and political difficulties that analysts say have plagued the government that came to power after the February elections.

B2 is a stable outlook and thats the way its going to stay for now, Aninda Mitra, a senior analyst with Moodys Sovereign Risk Unit, told Reuters. Mitra said the rating adequately captured the political risk the country was facing, and while dwindling forex reserves were a matter of concern, steps were being taken to address problems.

We are also mindful of a lot of corrective measures being put together such as the reduction of fuel subsidies, the increase in GST (general sales tax) and so on, and the State Bank of Pakistan has also tightened policy, Mitra said. 

Moodys to keep Pakistans rating unchanged


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## Neo

*China says political stability a must for investment ​* 
Tuesday, August 12, 2008

LAHORE: Chinese Ambassador to Pakistan Luo Zhaohui has said Pakistan and China have a huge potential to increase bilateral trade as existing volume of two-way trade of $7 billion between the two countries is very small.

Speaking at the Lahore Chamber of Commerce and Industry on Monday, he said China was a huge market that had a global trade volume of $2.2 trillion. Pakistani businessmen, he added, should explore the huge Chinese market for promoting their products besides buying industrial raw material at globally competitive prices.

He said political stability in any country was a prerequisite for foreign direct investment and bilateral trade. Pakistan was the first Asian country with which China had initiated a free trade agreement and that was enough to prove the point that Beijing gave top priority to Islamabad in terms of business and trade.

He cited the example of Pak-China Joint Investment Company, which was the first of its kind China had established with any country of the world. The ambassador said he had meetings with the Punjab governor and chief minister and found them very pragmatic, adding both men were very optimist about future trade relations between Pakistan and China.

Speaking on the occasion, LCCI President Mohammad Ali Mian invited Chinese businessmen to invest in Pakistan in priority sectors like oil and gas, mining, infrastructure, power (coal, hydel, gas), IT & telecom, chemicals (fertiliser), glass, PV & polymers, value added textile, engineering goods, textile machinery, electronics, automotives, agricultural and agro-based industry, pesticides, cool chains, food & fruit processing and packaging, livestock and dairy farming.

He said Pakistan because of its strategic location could be a more suitable destination for Chinese investments, adding the country was offering liberal investment policies allowing 100 per cent foreign equity and equal treatment to local and foreign investors. He said Pakistan had a network of Export Processing Zones and industrial estates ready to accommodate Chinese investors, especially in Punjab province. Mohammad Ali said the balance of trade between the two countries was heavily in favour of China, which required to be turned into a win-win situation for both.

China says political stability a must for investment


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## Neo

*Skilled manpower key to industrial development ​* 
Tuesday, August 12, 2008

ISLAMABAD: Trade and industry is experiencing a shortage of skilled and well trained manpower, which is proving to be a great hurdle in the promotion and growth of productivity of commercial organisations. President Islamabad Chamber of Commerce and Industry (ICCI), Muhammad Ijaz Abbasi stated this in a meeting with the Chairman, National Vocational and Technical Education Commission (NAVTEC) Adnan A Khawaja here on Monday.

Ijaz Abbasi said that NAVTEC initiatives concerning skills development in various sectors through the establishment of Vocational and Technical Education Institutes will play a positive role in providing trained and skilled manpower to public and private sector enterprises.

ICCI President said that Pakistan is blessed with very young human capital, but this huge manpower needs the latest training and skills development to convert this budding talent into a productive and valuable source of production for the country. He asked for establishing more vocational and technical education institutions and training centers to fulfill the emerging demand of skilled, trained manpower for the development of trade and industry in the country.

After getting vocational and technical education from these institutes, our youth could become a productive and value adding human resource for trade and industry, he added. Muhammad Ijaz Abbasi said foreign investors always prefer to invest in the countries that provide skilled and cheap labor. By developing the skills and knowledge of its human resource and equipping it with the latest and demand driven education, Pakistan can attract domestic and foreign investment in the country, he added.

ICCI President said that ICCI is establishing a vocational and technical training institute in Islamabad with its members cooperation to provide training in different professions to meet the HR needs of business and industry.

He said that ICCI is also constructing a seven storey Export Display Centre in Islamabad with its own resources for the display of exportable items by the trade and industry, and hoped that this centre would give a boost to our exports.

Speaking on the occasion, Chairman NAVTEC Adnan A Khawaja said that the Commission is currently focusing its efforts on four priority areas comprising construction, agriculture, hospitality, IT and telecommunication, which are facing a shortage of skilled and well trained manpower. 

Skilled manpower key to industrial development


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*IT exports set to grow by 50% in 2008-09​*
KARACHI: Pakistan software export are set to grow by 50 percent by the next fiscal year with the continuation of its policies for IT, Federal Secretary of IT and Telecom Ministry Hifzur Rehman said.

Talking exclusive to Daily Times in a three-day Information Technology conference and exhibition, ITCN Asia 2008, he said that the government has focused to develop sophisticated and most advanced IT parks in Karachi and Lahore.

Federal Secretary said the government has continued to implement its policies that boost growth in IT sector and create employment opportunities in the country.

Pakistan exports have touched $1.4 billion according to the World Trade Organisation formula and it has the potential to increase manifold within few years, he added. He said the government is expecting growth in foreign direct investment (FDI) this year.

On the occasion, Chairman Pakistan Telecom Authority (PTA), Dr Muhammad Yaseen urged ICT providers to ensure the best telecommunication services to their customers and enhance their service quality, as customers satisfaction is most important in this era of competition. Dr Yaseen said that PTA is planning to launch 3G by end of this year and he emphasised all telecom providers to educate their customers regarding new technologies. 

Chairman PTA said that there is friendly environment for foreign investors in telecom sector. The sector has witnessed encouraging investment that has made it possible to introduce latest technology.

He said that PTAs role in this regard is very clear and due to deregulation policy six cellular companies are operating in Pakistan making it possible to provide telecom facilities on very nominal rates. staff report

Daily Times - Leading News Resource of Pakistan


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*Pakistan and US for broad-based economic ties: joint communiqué issued ​* 
ISLAMABAD (August 12 2008): A joint communiqué, issued on Monday after third Pak-US economic dialogue, reaffirmed the two sides' commitment for deeper and broad-based bilateral co-operation in all sectors of the economy. The joint communiqué said the dialogue sought to deepen US-Pakistan economic partnership and further develop a long-term, broad-based economic relationship that mutually benefits the people of the two countries.

The two sides discussed a wide-ranging agenda, including macroeconomic policy, labour, intellectual property rights, energy, agricultural cooperation, eliminating terrorism finance network, reconstruction opportunity zones (ROZs), a GOP scholarship proposal, foreign assistance and Fata development, regional co-operation and transit trade, private sector co-operation and a Bilateral Investment Treaty (BIT).

Finance Minister Syed Naveed Qamar led Pakistan side. He was assisted by senior officials of the Ministries of Finance, Commerce, Foreign Affairs, Agriculture, Interior, Labour, Law and Justice, Water and Power, Education, the Board of Investment and the State Bank of Pakistan.

The US side was led by Assistant Secretary of State for Economic, Energy and Business Affairs, Daniel S Sullivan. Those who assisted him for the dialogue included the officials from the US Departments of State, Commerce, Treasury, the Office of the US Trade Representative, the US Agency for International Development and the US embassy.

The joint communiqué added that the two sides discussed Pakistan's macroeconomic policies, including fiscal and monetary reforms and social safety net measures the GOP has taken and plan to promote economic growth, provide protection to vulnerable groups and increase prosperity of all Pakistanis.

It said the United States and Pakistan agreed on the importance of GOP measures to stabilise the economy, to adhere to the announced macroeconomic policy and targets and to continue Pakistan's structural reforms, including monetary and fiscal policy adjustments.

It maintained that fruitful discussion was held on establishing reconstruction opportunity zones, which will facilitate job creation and economic development in the Federally Administered Tribal Areas, North West Frontier Province, the earthquake-affected areas of Azad Jammu and Kashmir and Balochistan within 100 miles of the Afghan border.

The Reconstruction Opportunity Zones will provide greater market access to exports from businesses in these areas and create employment opportunities for the border regions. The joint communiqué further said that trade liberalisation, protection of intellectual property rights and labour issues that are all aimed at fostering increased economic opportunities, were also discussed.

Useful discussions about the issues that remain in concluding a BIT, which would promote a more open, transparent, and predictable business climate, were discussed as well. Both sides agreed that the United States and Pakistan have a strong interest in resuming BIT negotiations and that their investment experts should meet as soon as possible to do so. Ways to increase the opportunity for Pakistani students to study at the US universities, including through expanding scholarship opportunities, were considered and both agreed to pursue the matter further.

Recognising rising world fuel and food prices, policy measures already taken by the GOP to cope with rising prices and ways in which bilateral co-operation in energy and agriculture could be strengthened, in particular increasing capacity and attracting greater US investment in these areas.

The two parties spoke of positive steps to better address matters relating to eliminating terrorism financing networks and strengthening Pakistan's Money Laundering Ordinance. There was also discussion about ways to strengthen GOP efforts for sustainable socio-economic development of the border areas. The two delegations agreed to meet again in 2009 in the United States.

Business Recorder [Pakistan's First Financial Daily]


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*BIT to provide new cooperation framework ​* 
ISLAMABAD (August 12 2008): The US Assistant Secretary of State for Statistic Energy and Business Affairs, Daniel S Sullivan on Monday said Bilateral Investment Treaty (BIT) is going to provide the US and Pakistan a new framework for long-term economic co-operation.

He listed agriculture, energy, bilateral trade and US investment in Pakistan among those areas, which can benefit right from the beginning of BIT singing between the two sides.

After third Pak-US dialogue held here, Daniel S Sullivan, who was accompanied by Robert Dohner, Deputy Assistant for Asia at US Treasury Department and other members of the delegation, said that two sides have shown willingness to make BIT conclusive as early as possible to enhance economic co-operation. He said BIT could also be a tool to bring the two sides closer to signing a Free Trade Agreement (FTA).

He said the two sides discussed at length the ways and means to provide Pakistan more access to the US market. He said setting up of Reconstruction Opportunity Zones (ROZs) and GSP would provide more opportunities to Pakistan to export a large number of surplus items without any duty. He said the two sides also stressed the need for greater co-operation between the State Bank of Pakistan (SBP) and US Treasury Department to eliminate terrorism financing network and strengthening Pakistan Monetary Laundering Ordinance.

He dispelled the impression that ROZs along with Pak-Afghan border will be affected by the military action in Federally Administered Tribal Areas (Fata). He said ROZs is a unique concept to keep the people away from negative activities and help them earn a better living.

In response to a question, Sullivan said Pak-US dialogue covered a wide range of issues for deepening economic co-operation between the two countries. However, it did not include the issue of civilian nuclear technology Pakistan is demanding since Washington singed an agreement with India. He was also not aware as if Prime Minister Syed Yusuf Raza Gilani took this issue with US President George Bush when they met in Washington last month.

Business Recorder [Pakistan's First Financial Daily]


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*Some export-related decisions yet to be implemented by FBR ​* 
ISLAMABAD (August 12 2008): The Federal Board of Revenue (FBR) has not implemented some exports-related decisions of the trade policy 2008-09 including launching of a new scheme for exporters, amendments in Duty and Tax Remission for Export (DTRE) scheme and enhancement in drawback rates by one percent of free on board (fob) value for 14 export sectors.

Sources told Business Recorder on Monday that the trade policy 2008-09 had announced some major changes in drawback/DTRE scheme for maximum facilitation of exporters. Some of the decisions have to be implemented by the FBR. But it seems that the board is not taking any initiative for implementation of these decisions.

In the trade policy, the government has announced a new scheme for further facilitation of exports. As per proposed scheme, a notified percentage of inputs may be allowed to importers at zero duties against fob value of exports with flexibility to import any product from among the notified list in any quantity within the overall entitlement of the exporter.

So far, the FBR has not conducted any kind of exercise for implementation of this new scheme. Even initial working has not been done by the board reasons not known. All these proposed incentives aimed at bringing major facilitation to exporters, but there is no clue of new schemes or changes in the existing DTRE scheme.

Another important decision of the government was to bring comprehensive changes in the DTRE scheme. It included exemption of duties and taxes on the import of plant, machinery and equipment to set up a unit in DTRE scheme. Inputs in DTRE will also be allowed to be imported items from India, even if these are not included in the importable items from India, or manufactured locally.

The period of retention of raw material and components for export under temporary importation scheme (SRO 1065) may be increased under the new scheme. According to sources, the board has not amended the DTRE scheme despite announcement of trade policy last month.

The government has also decided to increase the drawback rate by 1 percent of fob value on this account for 14 products ie tents, canvas, tarpaulin; electric machinery; carpets, rugs, mats; sports goods; footwear; surgical goods/medical instruments; cutlery; onyx manufactured; electric fans; furniture; auto parts; handicrafts; jewellery and pharmaceuticals. The incentive is being provided to encourage export of value-added products, particularly manufactured by small and medium enterprises. Sources said that this incentive has also not been implemented by the board.

Business Recorder [Pakistan's First Financial Daily]


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*Pakistan and China have huge potential to boost trade: envoy ​* 
LAHORE (August 12 2008): The Ambassador of China in Pakistan, Luo Zhaohui, has said that Pakistan and China have huge potential to enhance bilateral trade while the existing volume of $7 billion was very small against the Chinese total trade volume of $2.2 trillion with other countries.

He was talking with Lahore Chamber of Commerce and Industry (LCCI) President Muhammad Ali and other office-bearers here on Monday. He said that country is planning to open its commercial office in Lahore soon to facilitate the people in general and the business community in particular so that bilateral trade could further be enhanced. The Chinese embassy has decided to open an office in Lahore keeping in view the problems being faced by the people who want to visit China, he added.

Zhaohui said that political stability in any country was a prerequisite for direct foreign investment and to giving boost to the bilateral trade. Pakistan is the first Asian country with which China had initiated Free Trade Agreement and this was enough to make the point that China gives top priority to Pakistan in terms of business and trade, he said. The establishment of Pak-China Joint Investment Company was first of its kind that China had established in any country of the world, he added.

The Ambassador said that he had meetings with Punjab Governor and Chief Minister and found them very pragmatic. Both leaders were very optimistic about future trade relations between Pakistan and China, he said.

The LCCI President highlighted the prospectus of investment in different sectors. He invited the Chinese businessmen to invest in Pakistan in priority sectors including oil and gas, mining, infrastructure, power (coal, hydel, gas based), IT and telecom, chemicals (fertiliser (urea), glass, pv and polymers), value-added textile manufacturing, engineering goods, textile machinery, electronics, automotive, agricultural and agro based industry, pesticides, food and fruit processing and packaging, live stock and dairy farming.

Pakistan because of its strategic location could be a more suitable destination for Chinese investments and thus offering liberal investment policies allowing 100 percent foreign equity and equal treatment to local and foreign investors. Pakistan has a network of export processing zones and industrial estates ready to accommodate Chinese investors especially in Punjab province, he added.

Ali said the LCCI is shortly organising a special seminar on 'Pak China Investment Opportunities' for improving the five-year development programme on trade and economic co-operation between the two countries.

He said globalisation had provided Chinese investors a golden opportunity to relocate their large-scale industry to Pakistan to reap the benefits of its most conducive business policies as compared to other regional countries.

Business Recorder [Pakistan's First Financial Daily]


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*US, Pakistan agree to revive talks on BIT​*
ISLAMABAD, Aug 11: Pakistan and the United States on Monday decided to revive the stalled negotiations on Bilateral Investment Treaty (BIT) and further strengthen controls against terrorism financing.

These issues were discussed and decided under a new framework for deepening economic cooperation in a wide range of areas, including energy, investment and agriculture sectors.

The US side would help strengthen Pakistans money laundering ordinance by providing necessary support to the State Bank of Pakistan to ensure legal transfer of funds from abroad.

While new options were discussed to help reduce Pakistans energy problems, it was also decided to separately undertake dialogue for improving Pakistans agriculture sector, Mr Daniel S Sullivan, US Assistant Secretary, Bureau of Economic, Energy and Business Affairs, told a news conference after the completion of third Pakistan-US Economic Dialogue. He was heading a six-member US delegation, while Minister for Finance Syed Naveed Qamar represented Pakistan at the dialogue whose next round would be held soon in Washington.

He said since Pakistan was facing rising food prices, the $150 million food aid announced during Prime Minister Gilanis visit to the US last month was being expedited.

Pakistan, he pointed out, would be provided increased market access to its products in the US.

In this regard, he referred to a bill moved in both houses of the Congress which is expected to be approved soon to help Pakistan increase its thousands of duty-free export items to the US.

Moreover, he said under the Generalised System of Preference (GSP), Pakistan was being allowed to export a number of duty- free items to his country.

We are creating most beneficial opportunities for Pakistani goods into the US, he said, adding that this process would receive further impetus once Doha round of talks was completed.

He told a reporter that there had been problems in the finalisation of BIT due to which negotiations were stalled in 2007.

But now there is a breakthrough to restart these talks, he said, adding there was no plan to make BIT part of the Free Trade Agreement (FTA) which was also still to be concluded between the two countries.

Responding to a question, he said no discussion took place to offer India-like civilian nuclear energy cooperation to Pakistan.

This issue, he clarified, did not figure during talks between President Bush and Prime Minister Gilani during his visit to Washington.

There is no quick fix as we too are facing energy problem in the US.

He also said that the US delegation did not talk about the issue of impeaching President Musharraf by major political parties as it was Pakistans domestic issue.

We talked about improving investment climate but not internal dynamics of Pakistani politics, Mr Sullivan said.

In reply to a question, he said that Reconstruction Opportunity Zones (ROZs) would be established on border areas from where Pakistan could export its duty-free products into the US. He said Turkey had assured to invest in ROZs.

He told a reporter that there were security challenges in tribal areas, but they were not hampering promotion of economic activities there.

He said that a decision had been taken to provide necessary support to explore thermal/hydro mix to help remove Pakistans energy problems.

A joint communiqué was also issued at the end of US-Pakistan Economic Dialogue which sought to deepen economic partnership between the two countries and further develop a long-term, broad-based economic relationship.

The two sides discussed a wide-ranging agenda, including energy, agricultural cooperation, eliminating terrorism, finance networks, foreign assistance and Fata development, regional cooperation and transit trade, private sector cooperation.

The two delegations discussed Pakistans macroeconomic policies, including fiscal and monetary reforms and social safety net measures the Government of Pakistan has taken and plans to take to promote economic growth, provide protection to vulnerable groups, and increase prosperity of all Pakistanis.

The United States and Pakistan agreed on the importance of GOP measures to stabilise economy, to adhere to the announced macroeconomic policy and targets, and to continue Pakistans structural reforms, including monetary and fiscal policy adjustments.

A fruitful discussion was held on establishing Reconstruction Opportunity Zones, which would facilitate job creation and economic development in the Federally Administered Tribal Areas, North-West Frontier Province, the earthquake-affected areas of Azad Jammu and Kashmir, and Balochistan within 100 miles of the Afghan border.

The Reconstruction Opportunity Zones would provide greater market access to exports from businesses in these areas and create employment opportunities for the border regions.

Trade liberalisation, protection of intellectual property rights, and labour issues, all aimed at fostering increased economic opportunities were also discussed.

Useful discussions about the issues that remain in the conclusion of a BIT, which would promote a more open, transparent and predictable business climate, were discussed as well.

We agreed that the United States and Pakistan have a strong interest in resuming BIT negotiations and that our investment experts should meet as soon as possible to do so.

Ways to increase the opportunity for Pakistani students to study at US universities, including through expanding scholarship opportunities, were considered, and we agreed to pursue the matter further.

The two parties spoke of positive steps to better address matters relating to eliminating terrorism financing networks and strengthening Pakistans Money Laundering Ordinance.

There was also discussion about ways to strengthen GOP efforts for sustainable socio-economic development of the border areas.

The two delegations agreed to meet again in 2009 in the United States, the communiqué said.

US, Pakistan agree to revive talks on BIT -DAWN - Business; August 12, 2008


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*Inflation at all-time high of 24.33pc during July ​* 
Wednesday, August 13, 2008

ISLAMABAD: Fuelled by unprecedented 33.81 per cent food inflation, the Consumer Price Index (CPI) during July 2008 kissed an all-time record high 24.33 per cent, after 3.34 per cent raise in consumer prices on June 2008, last year in July CPI inflation stood at 6.37 per cent, the Federal Bureau of Statistics (FBS) reported on Tuesday. 

On the other hand, the dwindling value of Pakistani rupee touching lowest as a result of huge current account deficit, also deteriorating the situation and pushing prices of essential commodities up. This also makes imports costlier. 

At the moment the government seems helpless to rein in the spiraling inflation and save rupee from free fall. Households struggling to meet the minimum standards of living might have no choice but to cut down their expenditures on health and childrens education. 

Rising inflation is also making it more difficult for pensioners and low income masses living on their very nominal income a month in the country. CPI that covers the retail prices of 374 items in 35 major cities reflects roughly the changes in the cost of living of urban areas. 

According to it, in July 2008, transport and communication charges increased by 37.18 per cent, food and beverages 33.81 per cent, fuel and lighting 20.49 per cent, clearing laundry and personnel appearances 18.18 per cent, apparel textile and footwear 13.78 per cent, house rent 13.27 per cent, recreation and entertainment 11.50 per cent, household furniture and equipments 11.13 per cent, education 10.04 per cent and medical expenses 9.83 per cent over July 2007.

Under the food and beverages group, during July 2008, tomatoes prices increased by 104.51 per cent, potatoes 25.98 per cent, eggs 24.68 per cent, vegetables 16.03 per cent, condiments 15.61 per cent, onions 15.18 per cent, sugar 6.25 per cent, chicken farm 5.89 per cent, wheat 5.70 per cent, pulse masoor 4.98 per cent, gur 4.16 per cent and wheat flour price up 2.19 per cent over June 2008. 

According to the CPI, train fare increased by 33.40 per cent, diesel 17.08 per cent, petrol 14.58 per cent, transport fare/charges 10.40 per cent and CNG filling charges up 8.40 per cent. 

Footwear prices edged up by 11.95 per cent, cotton cloth 2.19 per cent, natural gas 19.55 per cent, kerosene 17.41 per cent and firewood 2.60 per cent over previous week. 

Wholesale Price Index (WPI) has also inched up to 34.02 per cent during the month under review as compared to 7.60 per cent in the corresponding month of the last fiscal. 

Over the previous month, it scaled up by 4.35 per cent, signaling toward more price hike in the coming months. 

In a bid to cope with the mounting inflationary pressure in the economy, the State Bank of Pakistan (SBP) last month raised its key discount rate by 100 basis points to 13 per cent effective July 30, 2008, which is the fourth consecutive hike in last one year. 

Earlier, the central bank raised the rate by 50 bps from 9.5 per cent to 10 per cent in July 2007 and some 100bps in January 2008 from 10 per cent to 10.50 per cent. In May 2008, the SBP suddenly took a tight monetary stance due to rising inflation and continuous depreciation of Pak rupee against the dollar and increased the discount rate by 150 bps to 12 per cent. 

It is interesting to note that the imported inflation (as a result of escalating crude oil prices that kissing records) was also a source of cost push inflation, caused by substantial increases in the cost of important goods or services where no suitable alternative is available. 

For each one per cent increase in inflation, more and more people fall into poverty indicating that inflation was hitting poor consumers harder than the more affluent ones. Specifically, the poor are highly sensitive to the price changes in food, particularly staple food items, economists believe. It is interesting to note that high inflation trend in food has been noticed since the start of the last fiscal (July 2007), food inflation stood at 8.47 per cent, August 8.62 per cent, September 12.97 per cent, October 14.67 per cent, November 12.47 per cent, December 12.21 per cent and January, 2008 it stood at 18.25 per cent, February 16.05 per cent, March 20.61 per cent, April 25.5 per cent, May 28.48 per cent, June 32.05 per cent and now during the month under review (July 2008), it stood at 33.81 per cent. Despite their adverse impact on the low-income group, no effective steps are being taken by the government to reverse the trend. 

The government seems to be indifferent to the plight of the poor and the lower middle class who find it increasingly difficult to make both ends meet with soaring prices of foodstuff and medical expenses. 

While, main concern is that in the basket of WPI, fuel, lighting and lubricants expenses up by 56.49 per cent, building materials 42.11 per cent, food 32.53 per cent, raw materials 20.74 per cent and manufacturers price up by 13.71 percent in July 2008 over corresponding month of the last fiscal. However, comparison of the WPI of July 2008 with the last month (June 2008), shows that during this one month prices of tomatoes rose by 60.05 per cent, potatoes 25.82 per cent, eggs 24.88 per cent, onions 11.31 per cent, vegetables 11.01 per cent, sugar refined 9.40 per cent, wheat flour 9.10 per cent, besan 6.32 per cent, masoor 6.10 per cent, wheat 5.71 per cent and powder milk 5.58 per cent. 

Raw materials (including Mustard/rapeseeds 9.68 per cent, cotton seeds 8.33 per cent, tobacco 4.50 per cent, pig iron 2.12 per cent and wool 1.76 per cent) increased by 1.76 per cent, fuel lighting and lubricants 7.88 per cent, building materials 4.93 per cent, food 3.51 per cent and manufacturers prices 1.80 per cent over the last month (June 2008).

Inflation at all-time high of 24.33pc during July


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* Workers remit $627m in July ​* 
Wednesday, August 13, 2008

KARACHI: Pakistanis working abroad remitted a record amount of $627.21 million in July 2008 against $495.69 million in the same month of the last fiscal year (July 2007), showing a jump of $131.52 million or 26.53 per cent.

According to the State Bank of Pakistan (SBP), the amount of $627.21 million includes $0.05 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs). The SBP said that the previous highest amount remitted in a single month by Pakistani workers was in March 2008, when $602.21 million was sent to the country.

The inflow of remittances into Pakistan from almost all countries of the world increased last month as compared to July 2007. According to the break up, remittances from USA, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UAE, UK and EU countries amounted to $168.39 million, $133.26 million, $105.31 million, $100.10 million, $42.04 million and $17.07 million respectively, as compared to the corresponding receipts from the respective countries during July 2007, ie $127.99 million, $106.55 million, $70.30 million, $77.35 million, $39.50 million and $14.81 million.

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during July 2008 amounted to $60.99 million as compared to $58.90 million during July 2007.

Workers remit $627m in July


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* Govt needs to establish steel cities ​* 
Wednesday, August 13, 2008

ISLAMABAD: The government needs to establish steel cities in different zones of the country with sufficient infrastructure and provide land to the steel industry on buyback basis.

Masood Gul, Patron-in-chief of the Pakistan Melters Association and its convener floated this idea in the first meeting of a committee, held here on the development of steel industry, formed by the Engineering Development Board (EDB) to firm up recommendations for the steel policy.

The meeting was told that installed melting capacity of existing units in the country is five million tonnes while utilisation is in the range of 2.5 to three million tonnes due to various reasons. The need for technology transfer was also stressed. In this regard, the experience of India was described as suitable for Pakistan.

Gul in his welcome remarks, assured that the stakeholders were to contribute substantially in formulation of the steel policy and called upon the members to concentrate on the development rather than tariff. He also mentioned other issues of the industry such as dearth of skilled labour, modernisation of existing mills and identification of processes of steel making. The meeting also underlined the need of value chain analysis of the industry and benchmarking in order to provide products at affordable price to the consumers.

The issues of energy conservation, capacity building and importance of high speed steel rolling mills also came under discussion. The representatives of PCSIR informed that 1000 millions tonnes of ore reserves were available in the country which needs a little up-gradation. He said that at laboratory scale they have been successful in steel making from Kalabagh iron-ore.

The committee also firmed up its Terms of Reference (TOR) which included availability of inputs and finished products, their standardisation and certification, mechanism to implement and monitor the quality of products, energy conversation, industry and academia linkages, availability of skilled manpower, establishment of factory schools etc.

Govt needs to establish steel cities


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*IT sector carries outsourcing potential ​* 
Wednesday, August 13, 2008

KARACHI: Admitting that Pakistan is far from catching up with the worlds outsourcing trend in overall businesses, Federal Secretary IT & Telecom Hifz-ur-Rehman, has however, said that the countrys IT market is an exception that has emerged with full potential to grab a substantial share in the international IT sector and enhance its exports.

He said this while addressing a conference on IT & Outsourcing and Information Security and e-banking, co-organised by the Pakistan Software Export Board (PSEB) on the second day of the ITCN Asia 2008 exhibition. The conference was attended by corporate executives and experts from leading IT companies, who were invited to interact and share their views on the latest trends that have taken place in the IT and banking sectors of Pakistan. Hifz-ur-Rehman was the chief guest for both sessions.

He further said that information technology is among the first sectors that realised the potential of outsourcing. Companies particularly in USA, Canada, Middle East, Malaysia and England have started outsourcing functions of their businesses to specialised firms, first in USA, and then anywhere they find it cost-effective.

The first session on IT & Outsourcing provided an opportunity for the attendees to learn about the latest trends and growth in the field of Outsourcing and Information Technology from foreign experts. During the session corporate executives and experts from IBM Pakistan, PTCL, PASHA, PIBAS, Green Packet Networks, Bahrain and TRG (Pvt) Ltd also collaborated views on the growth of this sector.

The first session was followed by a conference on Information Security and EñBanking which was chaired by Talib H Baloch, Managing Director PSEB. The session was attended by top executives from National Response Centre for Cyber Crimes, Teradata, Microsoft, Dubai Islamic Bank and MPAY Ltd, who shared their views on the latest trends and technology that have emerged in the field of Information Security and EñBanking.

During the session, Baloch informed the participants about how EñBanking has progressed over the years in Pakistan with the issues of information security that have emerged with technology. He said that Pakistan is undoubtedly better placed than many advanced countries when it comes to information security and electronic banking.

PSEB will continue patronising and encouraging the use of electronic banking and urge institutions to adopt the latest most advanced information security measures for all types of financial transactions.

IT sector carries outsourcing potential


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*Pakistan explores jewellery demand in India ​* 
Wednesday, August 13, 2008

KARACHI: A delegation of 68 people that visited the India International Jewellery Show 2008 (IIJS Mumbai, 2008) from 7th to 11th August, explored the potential for Pakistani gemstones, mineral specimen and traditional stone-studded jewellery in the Indian market.

The delegation was led by Pakistan Gems and Jewellery Development Company (PGJDC) which regularly sends delegations to different international gems and jewellery exhibitions including IIJS Mumbai and Goa.

Fawad H Khan, CEO PGDJC said, Attending IIJS Mumbai 2008 was a great opportunity for the Pakistani gems and jewellery industry to explore new horizons for trade and investment between the two countries. PGDJC has been attending international exhibitions and trade shows either as a participant and exhibitor or sends delegates regularly.

Pakistan explores jewellery demand in India


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*Budgetary, balance of payments support: US turns down Pakistan request ​* 
ISLAMABAD (August 13 2008): The United States of America (USA) has turned down Pakistan's request for budgetary and balance of payments support, sources in the government told Business Recorder. The budget for fiscal year 2008-09 has envisaged a deficit of 4.7 percent, which is unlikely to be met as the Finance Minister had remained vague about revenue sources identified in the budget.

At the same time, expenditure in general and subsidies in particular are unlikely to be curtailed, given the increase in the number of those living below poverty line due to rising inflationary pressures. Balance of payments position is also unlikely to improve if oil prices remain high in the international market. Therefore, any increase in exports, forecast at 15 percent for 2008-09 in the trade policy announced by Ahmed Mukhtar, is not expected to provide the necessary cushion to absorb the rise in the import bill.

Given the two deficits ie budget and trade deficit, the request by Pakistan government to the US team to extend assistance for budgetary support reflected its deep concerns over impending economic crisis. Sources said that Pakistan's request for further financial assistance had been placed before the US team, which was present in the Finance Ministry on Monday, for the third US-Pakistan economic dialogue, but the response was not encouraging.

"Pakistan's economy is in a serious condition, and the government has not prepared any contingency plan," sources quoted the leader of the US team, Assistant Secretary of State for Economic, Energy and Business Affairs, Daniel S Sullivan, as commenting.

The US team was also of the view that Pakistan is not aggressively seeking foreign and local investors, who are nervous due to the current state of political and economic affairs, sources said. "It was a very disappointing round of talks between the US and Pakistan as nothing was achieved in real terms," they added.

Business Recorder [Pakistan's First Financial Daily]


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*Bill seeks to amend fiscal responsibility law ​* 
ISLAMABAD (August 13 2008): The government has allowed the introduction of a bill further to amend Fiscal Responsibility and Debt Limitation Act, 2005, under which the government will be required to inform the Parliament before negotiating any loan with foreign governments or donor agencies.

The bill was introduced by the PML (Q) MNA Dr Donya Aziz in the National Assembly on Tuesday, which was private member day and most of the time, the house remained engaged with legislation. Finance Minister Naveed Qamar did not oppose the legislation entitled "The Fiscal Responsibility and Debt Limitation (Amendment) Bill, 2008".

"The amendment bill aims at empowering the Parliament to look into the loans being taken by the government from foreign governments and donor agencies," Dr Donya Aziz told Business Recorder on telephone. Previously, the government was not under any compulsion to inform the legislature about the loans they were getting as Fiscal Responsibility and Debt Limitation Act, 2005 is silent on taking the parliament into confidence on the issue, she said.

"Since the debt is retired through tax payers' money, therefore, the public representatives must be entitled to looking into the loans' deals the government is making," she explained. Under the amendment bill if passed by the Parliament, the government would be obliged to inform the supreme body 30 days prior to any loan agreement the government signs with a foreign country or any other lender, she added.

The government will have to consult Parliament even if it is to take a small amount exceeding one Pakistani rupee, she added. Meanwhile, a bill to make law for compulsory school attendance of every child was also introduced in the National Assembly.

The legislation titled as "Compulsory School Attendance Bill, 2008" was introduced by opposition MNA including Yasmeen Rehman, Mrs Samina Khalid Ghurki, Chaudhry Muhammad Barjees Tahir, Mrs Shakeela Khanam Rashid and Dr Donya Aziz as the government did not oppose the bill.

Over 20 legislative bills were introduced in the house as the government did not oppose bills mostly coming from the PML (Q) legislators. The only bill introduced by Marvi Memon regarding Northern Areas (NAs) was vehemently opposed by the government.

Minister for NAs Qamar uz Zaman Kaira told the house that the government has already sent a similar bill to the cabinet division. The cabinet division sent the bill back to us with some observations, he said. The ministry of Kashmir and Northern Areas (KANA) is working on the bill and this will be introduced in the house after removing some objections of the cabinet division.

Business Recorder [Pakistan's First Financial Daily]


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*Federal government focussing on development of Northern Areas ​* 
ISLAMABAD (August 13 2008): Federal Minister for Northern Areas (NAs) Qamar uz Zaman Kaira has said there were some obstacles internationally in granting NAs the status of a province. The Minister told the National Assembly on Tuesday that the federal government was giving appropriate attention to the development of NAs.

The government has already given constitutional and financial powers to NA Legislative Council, he added. He said that there were already Supreme Court and High Court operating in NAs on Azad Jammu and Kashmir pattern. Apart from this, the government has allocated Rs 5 billion for the development of the area, he added.

Business Recorder [Pakistan's First Financial Daily]


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*US-Pakistan economic dialogue ​*
EDITORIAL (August 13 2008): The ongoing visit of the US Assistant Secretary of State for Statistics, Energy and Business Affairs, Daniel S. Sullivan, must be seen in the context of a meaningful effort on the part of the US administration to remain engaged in Pakistan's development efforts.

The joint communiqué at the end of the wide ranging discussions where Pakistan was represented by none other than the Finance Minister were rather general and no concrete agreement was reached with respect to specific actions. There was mention of the dialogue, deepening US-Pakistan economic partnership and further developing a long-term broad based economic relationship that mutually benefits the people of these two countries.

That the agenda was truly broad based is reflected by the range of topics discussed: from macroeconomic policy to labour to intellectual property rights (a subject more dear to the US than Pakistan), energy, agricultural co-operation, eliminating terrorism finance networks, reconstruction opportunity zones, FATA development etc.

The scale of US efforts to usher in development and the reasons behind them were articulated by President George Bush during his visit to Pakistan in March of 2006: "part of the tangible evidence of our relationship is the half a billion dollars commitment to help (Pakistan) rebuild; it's the $66 million last year to help implement the President's education initiative; it is the idea of developing reconstruction zones - trade zones in remote areas so that goods manufactured in those zones can get duty-free access to the US, on the theory that economic vitality and economic prosperity for people in remote areas of Pakistan will help defeat the terrorists and their hateful ideology."

With reference to energy President Bush made clear that during the meeting with Musharraf there was a discussion on "a civilian nuclear programme and I explained that Pakistan and India are different countries with different needs and different histories." Thus while he was willing to send the Secretary Energy over to work with Pakistan to help meet our severe energy needs yet he was unwilling to either extend the same deal as to India or endorse the IPI gas pipeline.

The result more than 2 years down the line is evident to all: Pakistan's energy crisis has reached alarming proportions, the reconstruction zones have not been heard of, education levels remain low and the lot of the tribals also remains unchanged. This unfortunately is in spite of significant US monetary assistance during the last two years.

Richard A. Boucher, Assistant Secretary of State for South and Central Asian Affairs informed the Senate Committee on Foreign Relations Subcommittee on International Development, Foreign Economic Affairs and International Environmental Protection on December 6, 2007 that "since 2002 we have provided economic assistance totalling $2.4 billion.

These funds have supported education reform, including training teachers in modern teaching techniques, building schools in the Tribal Areas, providing scholarships and fostering science and technology co-operation between the US and Pakistan. We have also funded governance programmes designed to assist independent radio, reform political parties, train Parliament members in drafting laws, strengthen Pakistan's Election Commission, promote grass roots service delivery and reduce gender-based violence.

US-funded economic growth programmes have, among other things, worked to improve the competitiveness of Pakistani businesses, provided micro-finance and encouraged more effective agriculture techniques. We have also supported refugee programmes and funded rebuilding efforts following the October 2005 earthquake. Fighting terrorism is, of course, a pre-eminent goal of US policy in Pakistan. In support of that goal, since 2002 the United States has provided security assistance to Pakistan totalling $1.9 billion."

He added that the US had also begun to implement a five-year, $750 million development strategy for the frontier region that supports the Government of Pakistan's nine-year, $2 billion programme for the Tribal Areas' sustainable development. Given the scale and depth of US assistance the question does emerge as to why the US has such a poor image in the hearts and minds of the Pakistani people.

The answer is a range of US actions that include periodic attacks on our border areas with Afghanistan by the US-led coalition forces in Afghanistan and the resulting collateral damage, support for Musharraf which locally has nose-dived to less than 15 percent, and US refusal to give us the same energy deal as given to India.

Recently, of course, the Pakistani public has been exposed to such unsavoury acts by US spy agencies as tapping the telephones of our politicians with the explicit purpose of arm twisting them to ensure that US interests remain paramount in our policy making.

Ron Suskind's book includes excerpts of telephonic exchanges between Musharraf and Benazir Bhutto where Musharraf has been quoted as saying that her security "is based on the state of our relationship"; to Benazir Bhutto's call to her son Bilawal, purportedly informing him of the hidden accounts that are regarded in Pakistan as part of her 'unexplained' income.

It is critical for the US administration to understand that dealing with individual politicians and forcing them to undertake some actions that are seen as aligned with a US agenda as opposed to a Pakistan specific agenda has resulted in alienating the general public from the US.

The solution to win our hearts and minds remains simple: convince the people that friendship with the US is in our best economic interests which it is; and desist from undertaking unsavoury actions that have not done too much good to US image anywhere in the world.

Business Recorder [Pakistan's First Financial Daily]


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*Sugar mills can produce 2000MW​*
ISLAMABAD, Aug 13: Federal Minister for Water and Power Raja Pervez Ashraf has said that the sugar industry will be provided every facility to generate electricity from the indigenous resources to meet the power requirements in the country.

He made these remarks on Wednesday while talking to a delegation of Pakistan Sugar Mills Association (PSMA) led by its chairman Shunaid Qureshi. Secretary and adviser of the Ministry, managing director Private Power Infrastructure Board (PPIB) and other senior officials were also present.

The PSA chairman informed the minister that 77 sugar mills were producing 12 metric tons of baggase and were capable of generating over 2,000MW from co-generation power plants. He said that initially the industry can generate 1,000MW within two years.The minister appreciated the role of PSMA in initiating co-generation power projects and said that the government would provide maximum incentives and resolve all the pending issues in this regard.

He said that the government was determined to use all options to produce electricity at affordable prices and the co-generation project by the sugar industry is a major step towards achieving this goal. He said that the co-generation will also promote power generation through environmental-friendly manner.

He was of the view that many countries around the world were using co-generation technology to produce electricity from bye product of the sugar industry.

The minister expressed the hope that the joint efforts both by the government and the industry would help the country to overcome the energy crisis. He also directed the PPIB to process the proposals submitted by the sugar industry for co-generation projects on a fast track basis.

Sugar mills can produce 2000MW -DAWN - Business; August 14, 2008


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*Looking at brighter side of economy​*
KARACHI, Aug 13: Foreign remittances in the sum of $627 million poured into the country during July. That was the highest single month inflow in the history of the country. Given that the rupee had depreciated by 7 per cent during the month against the greenback, the confidence of the overseas workers in the country seems to be astounding. But is that misplaced?

Among the host of economists who habitually pronounce gloom and doom for the economy, it is difficult to find a few who look at the sunny side of the picture. Most are focused on the dwindling foreign exchange reserves; mounting trade and fiscal deficit; depreciation of the rupee and the soaring inflation.

The reason that the foreign remittances have soared, says an economist that looks at the sunny side of the countrys economy is that those sitting outside the country are looking at the country in the global context. Inflation is a worldwide phenomenon and so is the weakness of the currency and the stock market meltdown. South Korea has witnessed inflation at 26 per cent; Vietnam at 30 per cent and even India is experiencing double digit inflation.

Pakistans macro-economy numbers look dull due to the pass through of high oil prices. In the past four months, a staggering 71 per cent impact of the higher oil prices has been passed on to the consumers, says the economist. He is confident that from January 2009, the inflationary figure would dip down to single digit as the economy would have already borne the full brunt of the oil pass through and base of commodity and food prices would rise to international level.

Those given to pull long faces at largely deceptive macro-economic indicators also fail to look at the tax collection figures. They chuckled when the country projected a 25 per cent growth in tax revenues during the ongoing financial year, but all have since been silenced by the July tax collection numbers, which show a stunning growth of 30 per cent year-on-year. In spite of all the political turmoil there are evidences to prove foreigners confidence in the country and its future.

All five mobile companies operating in the country are of foreign origin; China Mobile has recently committed $800 million and Maybank invested another $950 million in acquisition of MCB Bank shares; Barclays the international banking giant has cited sound economic outlook for the country and overseas interest has been visibly expressed in the power sector, says Muzzammil Aslam, group economist at KASB/Merrill Lynch. Does that show that foreigners are shaking in their shoes at the mention of investment in Pakistan?

While Pakistani workers are sending in shiploads of dollars, the blame for the depreciation of the rupee falls squarely on the exporters, who, a money manager says have been stalling the receipts in greed of a higher exchange rate. But even the fall in currency value is not limited to the rupee; the all-too-mighty dollar has depreciated by 20 per cent against the euro and yen, while only last week the euro was beaten down by 7 per cent by the dollar.

And what of the stock market? The Karachi Stock Exchange has dropped 35 per cent from its index peak of 15,760 points in mid-April. Compared to that Chinese stocks have plunged by 50 per cent in spite of an 11 per cent economic growth and the Dalal Street in Mumbai is down 40 per cent. For all the hue and cry over the outflow of foreign investment from the equity markets, the fact remains that only $180 million were pulled out by the foreign investors in the difficult days of July-Aug, which is barely 4 per cent of the total foreign portfolio investment of no less than $4 billion in the Pakistans stock markets.

The country is in the adjustment phase, which would necessarily entail volatility in the value of the rupee and the capital markets. Muzzammil Aslam points out that Pakistans micro imbalances were driven by higher oil prices. But with the recent meltdown in crude and commodity prices, the dawn of 2009 should see trade deficit narrow as exports improve with currency adjustment and imports, which would be costlier would stand restrained, already evidenced in the 42 per cent drop in July auto sales numbers; reduction in import of oil, wheat and metals would cut down import bill the governments fiscal deficit would be reigned in as oil price pass through might be over. That would result in decreased borrowings from the central bank, while inflows of foreign exchange from privatisation, remittances, Eurobonds and higher tax collection numbers would have a soothing effect on the economy.

There are again talks of country picking up the begging bowl and knocking at the doors of IMF. Given a semblance of normalcy in home politics and continuation of liberalised macro-economic policies, those looking at the sunny side, hope that the country would step back on the road to a sustained growth number. If good days are so near as the dawn of next year, is it wise and respectable to ask IMF for a dole out? Economist Aslam says that a dollar fetched from foreign investment is much more productive as it employs more capital and increases economic activity than borrowings from international donor agencies, such as IMF, which touch their purse strings only after the country accepts harsh conditionalities.

Looking at brighter side of economy -DAWN - Business; August 14, 2008


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*Present 33.81 percent food inflation may rise in Ramazan: survey​* 
ISLAMABAD (August 14 2008): The present skyrocketing food inflation, estimated at 33.81 percent, has raised serious concerns about its likely rise during Ramazan, according to a survey conducted by Business Recorder. Ramazan, in recent years past, has been associated with high food prices through profiteering by the wholesalers as well as the retailers of food items associated with Iftari like samosas and pakoras.

The survey also said that consumers are extremely apprehensive about the likely rise in prices of kitchen items during Ramazan. The consensus was that inflation of food items may double during Ramazan.

Ninety percent of those asked stated that the increase in the prices of essential food commodities would result in a shortage of these items in the domestic market leading to an artificially widening gap between demand and supply.

Those polled by Business Recorder exhibited anger over what they termed was the lack of effectively of the government's efforts to control prices. Shopkeepers and vendors are looting us by selling food commodities at highly inflated prices, they lamented. Majority of those asked stated that the main reason behind the price-hike was a flaw in the price control mechanism of the government.

According to the Federal Bureau of Statistics, CPI inflation in July 2007 stood at 6.37 percent as compared to 24.33 percent in July this year. While taking a round of various markets at different locations in the capital it was ascertained that fruit prices rose from Rs 5 to Rs 15 per kg.

Apple was selling from Rs 60 to 80 per kg. Bananas ranged in price from Rs 35 to Rs 70 per dozen. Pomegranates were being sold at Rs 90 to Rs 130 per kg whereas grapes were selling from Rs 90 to Rs 120 per kg. The shopkeepers, when asked whether the price differential was due to the location of their stands, they denied it and alleged that it was due to quality differential.

A price differential was also evident with respect to different vegetables at various locations, for example potato was selling at Rs 35 to Rs 40 per kg, onion between Rs 20 to Rs 26 per kg, tomatoes from Rs 38 to Rs 40 per kg, garlic from Rs 55 to Rs 60 per kg, and ginger from Rs 75 to Rs 95 per kg.

Different varieties of gram pulse were being sold at Rs 70 - Rs 85 per kg while Dal Masoor was available in the market at Rs 100 to Rs 110 and lentils pulse was being sold at Rs 120 to Rs 140 per kg. The price of 20-kg of gram flour of various brands was between Rs 420 and Rs 450, while 10-kg flour bag was being sold at Rs 220 to Rs 250. On the other hand, 'A' category ghee 16-kg tin was sold at Rs 2,110, 'B' category 16-kg ghee tin was available at Rs 1,980.

Most of the vendors and shopkeepers said that the main reason behind the increase in the prices of food commodities is the supply and demand gap. For example, sugar prices are increasing in the domestic market with each passing day because of the increase in the demand for soft drinks in summer. They said that it is difficult to tell that whether in Ramazan the prices of food commodities would increase or decrease, as it will be based on their demand and supply in the domestic market.

Business Recorder [Pakistan's First Financial Daily]


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*'Food security a growing concern for Pakistan'​* 
FAISALABAD (August 14 2008): Food security has emerged as a burning issue in the country, as prices of essential food items have increased tremendously. According to Dr ME Tasneem, Chairman of the Pakistan Agricultural Research Council, the price of wheat flour is up 64 percent, basmati rice up by 104 percent and the price of grain is up by 60 percent.

While presiding over a meeting of the subcommittee of the Food Security Taskforce, the scientist also mentioned that Masoor prices have increased by 134 percent, potatoes cost 29 percent more, milk 18 percent and broiler live 29 percent while the price of vegetable oil has increased by 56 percent.

During the meeting, held at New Syndicate Hall, Tasneem pointed out that during the last year the international food price index rose by nearly 40 percent as compared with 9 percent for the year before that. Presenting the agenda and objectives of "Medium-term Research Agenda and Agricultural R&D", he said that the committee should suggest measures to increase food production.

This could be done through designing basic and applied research priorities, monitoring the extend of technology adoption, reforming institutional arrangements for input and service delivery and by suggesting areas of food policy research for research and development strategies.

Dr Tasneem informed the meeting that in the last four decades of the 20th century, Pakistan witnessed an unprecedented technological and economic transformation, enabling the country to achieve food self-sufficiency, triple agricultural exports, reduce poverty, increase income levels, and improve the quality of life of its populace.

Business Recorder [Pakistan's First Financial Daily]


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*WFP provides $214 million to help 16 states including Pakistan​*
UNITED NATIIONS (August 14 2008): The UN World Food Programme (WFP) has announced the roll-out of a 214 million dollars response to help millions in 16 countries, including Pakistan, hit hard by high food and fuel prices.

The funds would provide critical assistance by providing life-saving food rations to highly vulnerable groups, continuing to feed school-aged children even while school was out, and giving supplemental food to pregnant women and young children whose mental and physical development was at stake, the agency said.

WFP also aimed at expanding food aid to urban areas hardest hit by high food prices, including through cash and vouchers, and to support small farmers and markets in countries where the agency will purchase food assistance locally, through the initiative.

"With hunger on the rise, we are doing our best to stream incoming contributions to the people most in need in Africa, Asia and the Caribbean," said WFP Executive Director Josette Sheeran. "It is essential to launch a bold new set of responses to stem a full-blown hunger and nutritional crisis."

She noted that impoverished families that already spend more than 60 percent of their income on food were eating less, buying less nutritious foods, cutting out education and healthcare, and taking on more debt.

"Food prices are not abating, and the world's most vulnerable have exhausted their coping strategies," she said, adding: "Our action plan is targeted and customised to help the most vulnerable meet their urgent needs." The new funding will assist people in Pakistan, Djibouti, Ethiopia, Ghana, Guinea, Haiti, Liberia, Mauritania, Mozambique, Nepal, Senegal, Somalia, Tajikistan, Uganda, Yemen and the occupied Palestinian territory.

At the World Food Security conference in Rome in June, WFP announced a 1.2 billion dollars cash package for 62 countries hit by high food prices. As a result of the rise in food prices, WFP's budget to reach 90 million people world-wide in 2008 has risen from 3.1 billion dollars to nearly six billion dollars. So far, the voluntarily-funded agency has raised about half of its budget for this year, including through a historic 500 million dollars donation by the Saudi Government earlier this year.

Business Recorder [Pakistan's First Financial Daily]


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*Power generation: Soomro for enhancing co-operation with Russia​*
ISLAMABAD (August 14 2008): There is wide scope for further expansion and consolidation of business and trade relations between Pakistan and the Russian Federation, especially in the field of power generation to the mutual advantage of both the countries, observed Chairman Senate Mohammedmian Soomro.

He was talking to the Ambassador of the Russian Federation to Pakistan, Sergey N. Peskove, who made a farewell call on him at his residence here on Wednesday. The chairman said that promotion of economic relations between the two countries and greater co-operation between their private sectors would benefit both the countries. 'It is important to boost our trade and economic relations by inducting the respective private sectors, which are very keen to explore new avenues', he added.

The Ambassador, welcoming the idea, observed that Russia attaches great significance to its relations with Pakistan as both are neighbouring countries, having great potential to improve the quality of life of their people. He said that Russian businessmen and entrepreneurs are keen to expand business relations with their Pakistani counterparts.

He suggested frequent exchange of business delegations and closer interaction with the Federations of Commerce and Industry of the two neighbouring countries. He particularly mentioned that Russia can help Pakistan overcome its present energy and power crisis by undertaking construction of turbines for small power stations as well as building power stations.

The chairman said with the increase in population and development of industrial sector, the demand for electricity has increased manifold. Thus, Pakistan could be an attractive destination for all desirous of investing in the energy sector as it offers lucrative returns.

He said that joint ventures could be undertaken in this field since the demand for electricity and energy is expected to increase further in the years to come. He said the country continues to strive for more economic ways of power generation.

The chairman also emphasised the need for greater Parliamentary exchanges between the two countries. The Ambassador thanked the chairman and the government of Pakistan for the co-operation and hospitality extended to him during his tenure here and said he enjoyed his stay in Pakistan.

Business Recorder [Pakistan's First Financial Daily]


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*Multi-national oil & gas companies in Sindh: resolution adopted to ensure jobs for locals​*
KARACHI (August 13 2008): Sindh Assembly on Tuesday unanimously pass a resolution moved by MPAs Nadeem Ahmed Bhutto and Dr Sikandar Mahendro from treasury benches. Through the resolution, the Assembly resolved and recommended to the Government of Sindh to approach the federal government to ensure the appointment of local people of Sindh in multi-national oil and gas companies in accordance with the agreement executed in this regard.

Moving his resolution Nadeem Bhutto said that Sindh province contributes 69 percent of oil and gas explored but neither the oil and gas companies give jobs to locals nor carry out socio-economic activities for them.

He alleged that these companies are not implementing the agreements made with Oil and Gas Ministry. His resolution was fully supported by MPAs Saleem Khokhar, Humaira Alvani, Farheen Mughal, Dr Sikandar Mahendro, Heer Soho, Ali Ahmed Pattafi, Rafiq Bhambhan, Shamim Ara Panhwar, Najmuddin, Sharjeel Memon, Jam Saifulllah Dharejo and others. They all defended the points raised by Bhutto and demanded that gas should be supplied in all those UCs where gas has been found and the local people should be provided the socio-economic facilities of health, education, recreation etc.

Sindh Culture and Archaeological Department has written letters to Federal Government to hand over control of some 132 archaeological sites to Sindh Government for their maintenance. This was stated by Sindh Minister for Culture and Tourism, Sassui Palejo, while replying to a question of opposition Arif Mustafa Jatoi during question hour.

The 2-day Sindh Assembly session commenced today with Speaker Nisar Ahmed Khuhro in the chair. Since it was Tuesday, it was private members day. The House will take up and pass a resolution on Wednesday in relation to impeachment of the President.

Business Recorder [Pakistan's First Financial Daily]


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*Investment at KEPZ emphasised​*
KARACHI (August 13 2008): In order to elaborate the investment opportunities available to the Information Technology/Telecommunication Industry at the Karachi Export Processing Zone (KEPZ), the Export Processing Zone Authority (EPZA) is participating in the '8th ITCN International Exhibition & Conferences' at Expo Centre Karachi from August 11-13, 2008 at Hall No 3.

On the second day of the conference, Chairman EPZA Kamran Y Mirza chaired an exclusive session on 'IT & Business Outsourcing'. Country General Manager IBM, Humayun Bashir who is also on the board of directors of EPZA, delivered a presentation. The seminar was also addressed by representatives from Oracle, Microsoft, TRG and Systems Ltd.

At the 8th ITCN Exhibition, emphasis has been given on the investment opportunities available at the KEPZ, which is located adjacent to the Landhi Industrial Area. The zone is ideally located to reach the markets of Middle East, Far East, Africa, Europe, America and Central Asia. KEPZ consists of three phases including fully operational KEPZ Phase I with an area of 211 acres and KEPZ Phase-II with an area of 94 acres. KEPZ Phase-III has an area of 200 acres, which is right now in planning stage.

Business Recorder [Pakistan's First Financial Daily]


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*Wateen recognised as pioneer in telecommunications​*
KARACHI (August 14 2008): The world's largest business technology leadership magazine, CIO Pakistan's local edition recognised Wateen's CEO, Tariq Malik, for his leadership and vision in increasing broadband penetration and making IP-based communication accessible across country. The local edition of CIO was officially launched in country on 5th of August and acknowledged 16 pioneers from the local industry who have been making an impact in country.

Tariq Malik, CEO of Wateen said, "It is an honour for Wateen to be recognised. We are indeed a young company but the fact that we have established many milestones, the encouragement from the industry helps. We still have exciting plans and will continue to meet the standards that we have set." CIO Pakistan Editor-in Chief said, "Wateen has done great work as far as spreading the awareness of WiMAX and its other services. Their young team has allowed people to realise the potential of broadband in Pakistan again."

Business Recorder [Pakistan's First Financial Daily]


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*Foreign investment in local bourses drops 8.3pc in 6 months ​* 
Friday, August 15, 2008

KARACHI: The Foreign Portfolio Investments (FPIs) on Pakistani bourses has notably declined by 8.3 per cent in the last six months to $4.4 billion. At the end of February 2008 the net inflows in the countrys stock markets stood at $4.8 billion.

The importance of taking last six months period (March to date) statistics is that none of these consecutive months could fetch inflows in net and cumulative outflow in the said period stands nearly at $400 million or 8.3 per cent.

Prior to this, February 2008 was the last month that had attracted $123.4 million to the countrys bourses and had inflated the size of overseas investment to $4.8 billion here.

According to analysts February was the month of parliamentary election in the country - a month of hopes for investors community.

The coalition government, however, failed to deliver what the investors were expecting from them on economic front. Lawlessness and political instability propelled the country into an economic chaos, thus, paving the way for foreign investors exit, they added.

Sajid Bhanji, VC-Capital Market at Arif Habib Securities, said that the killing of Benazir Bhutto, former prime minister, in last December created a leadership and political vacuum in the country.

The changing circumstances of lawlessness increased the sense of insecurity and political instability made the people socially depressed. Subsequently, economy took brunt of this entire situation, he added.

Accordingly, all time high twin trade deficits mounted pressure on local currency and the loss of investors confidence in government to set the falling economy back on rails was last nail in the coffin. 

Since January 2008, the rupee has depreciated by over 17 per cent to Rs75.20 against one dollar to date. In the open currency market also briefly crossed Rs76 a dollar here on yesterday (Thursday), he mentioned.

Bhanji added that this imbalance in rupee-dollar parity in the region and moreover falling dollar in other major world currencies like Euro worked like two-sided sharp sword here in Pakistan.

The sub-prime mortgage crisis in USA last October and its impact on world economies and currency exchange rate turmoil at world convinced foreign investors not only in Pakistan but also in other countries including India to drain out their funds from developing countries, he added.

He recalled the early 90s era when country was facing the dollarisation phenomenon. He added in those time people were converting their liquidity into dollar or investing in countries like Dubai.

The same situation we are facing these days, as the hints of converting local currency into the dollar and investing abroad were echoing these days again, he said.

The emerging situation helps recall statement of Dr. Kaiser Bengali, economist, that the government would devalue currency to narrow down the widening twin trade deficits. His prediction came true, as rupee had depreciated by more than 17 per cent to date since January for whatever are the causes.

Majority of analysts have time and again said that an increase of 250 basis points in central banks discount rate to 13 per cent in the last two months and mounting pressure on rupee (besides political instability) were the two main causes of depleting foreign portfolio investment here in the country.

Under the review period, the local bourse - mainly the Karachi stocks market - remained extremely volatile for the same two reasons that convinced foreign investors to exit. 

Hopes pinned on newly installed government in late March had helped KSE benchmark KSE 100-share Index to reach all time high at 15,676 points on April 18. But since then, Karachi bourse has dropped 5,774 points or approximately 37 per cent to date. During the same period, a decline of near Rs1,700 billion from overall market capitalisation was also recoded that fell to Rs3.091 trillion at current.

Trends in Foreign Portfolio Investments

Net Buy/(Sell)

Month Gross Buy ((Rs) Gross Sell (Rs) In Pak Rupee In US Dollar

Mar-2008 23,391,705,335 -30,273,477,090 -6,881,771,755 -110,996,319

Apr-2008 26,796,819,009 -27,900,759,493 -1,103,940,484 -17,407,181

May-2008 23,347,096,666 -26,636,393,163 -3,289,296,497 -51,730,240

Jun-2008 13,997,836,446 -21,747,876,865 -7,750,040,419 -115,682,642

Jul-2008 7,727,761,171 -13,718,731,465 -5,990,970,294 -85,082,863

Aug-2008 3,189,304,776 -4,303,329,881 -1,114,025,105 -15,439,920

Source: NCCPL website. Value in dollar, mentioned in last column of this table, is based on that respective moth exchange rate.

Foreign investment in local bourses drops 8.3pc in 6 months


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*SBP playing key role in bolstering economy ​* 
Friday, August 15, 2008

KARACHI: The State Bank of Pakistan (SBP), since its inception, has been making all-out efforts with sincerity and honesty for the development of the countrys economy.

The banking industry has made a significant progress in recent years and the SBP has taken a number of measures ensuring that people at large reap the benefits of economic growth, sustainability of growth momentum and competitive environment.

This was stated by SBP Governor Dr Shamshad Akhtar while speaking at a flag-hoisting ceremony held at the SBP on Thursday marking the 61st Independence Day.

She said the Independence Day provides the nation with an opportunity to reiterate its commitment to the homeland. She highlighted various unique features and achievements of the country and said we all are proud to be Pakistanis.

Being a leader of a national institution, she admitted that there were still several impediments on the way to progress. Partly we are also responsible for that as we have not aligned ourselves with the requirements of the 21st century, she added.

We have yet to achieve self-reliance in all sectors, which is a hallmark of a sovereign and vibrant nation, she emphasised.

Paying rich tributes to forefathers of the nation, the SBP governor said this special day reminds the countrys people of elders, who under the dynamic leadership of Quaid-e-Azam Muhammad Ali Jinnah, scarified their lives and as a result of their unparalleled efforts, Pakistan came into being. She also paid tributes to the national heroes, who played a key role in the independence of the country.

The ceremony was attended by Mansur-ur-Rehman Khan and Yaseen Anwar, deputy governors, senior executives, directors, officers and staff of the bank besides families of employees.

SBP playing key role in bolstering economy


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*China to fully finance Diamer Bhasha dam in Pakistan​*​
Friday, 15 August 2008 

In a major development regarding the construction of Diamer Bhasha dam, China has agreed to completely finance the $8.5 billion project, sources in Water and Power Development Authority (WAPDA) told on Thursday.

German Company Lemhyer has issued final draft of the dam in which the company has projected the cost of dam at $8.5 billion against the earlier projected cost of $6.5 billion in the year 2005. Government wants to start the construction work on Bhasha dam in the year 2009, sources added.

Pakistan has turned to China regarding the financing of the project after World Bank refused to add the project in the $1.4 billion aid for current financial year 2008-09. They further said that World Bank lending rates are higher and China would provide loan on lower rates. Pakistan had submitted the draft of detailed engineering design of the dam and in response China has agreed to provide financing for the said project. Sources informed that China has also great expertise in the working on big dams and it has expert labour force and machinery for such purposes.

Chinese government has offered Pakistan to provide skilled labour for the construction of the Bhasha dam as it has 17,000 skilled labourers who have worked on three Gorges Dams in china, which are generating 30,000MW electricity. They said that China has also assured that it would hire a company to provide financing to Pakistan for the construction of the dam. Earlier, Pakistan was looking at Asian Development Bank (ADB) and World Bank.

Government has allocated Rs 200 million in Public Sector Development Programme (PSDP) 2008-09 for Bhasha dam.

The government has started work to develop infrastructure for communication link of Bhasha dam and in this regard the work on a Karakuram Highway to link Bhasha dam was also in progress. Karakuram Highway would be upgraded at cost of Rs 11.578 billion and government has released Rs 2 billion for the said project.

Final draft of Bhasha dam: German Company Lehmar has issued final draft of Diamer Bhasha dam which indicated that as many as 37,000 families would be affected following the construction of the dam. Lehmar has submitted final detailed engineering design to the Water and Power Development Authority (WAPDA) in which it has recommended the government to set up nine model villages near Gilgat to accommodate the affected families. The company has also recommended allotting five Marlas for residence per family and six canals to one family for agriculture purpose.

According to the design, dam would generate 4500MW power and its water storage capacity would stand at 7.5 million acre feet (MAF) whereas dam would have four turbines and two powerhouses.


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## Neo

*India keen to invest in gem, jewellery sector​*
KARACHI: Indians are keen in doing business with the gemstone sector and traditional stone studded jewellery of the country, Pakistan Gems and Jewellery Development Company (PGJDC) said Thursday.

Pakistani Gems and Jewellery sectors 68-member delegation visited India International Jewellery Show 2008 (IIJS Mumbai 2008), from August 7 to August 11 2008, has received a great demand for Pakistani gemstones, mineral specimen and traditional Pakistani stone studded jewellery in the Indian market. Member Board of Directors PGJDC, Ambarine Bukharey who was also the coordinator for the Pakistani delegation to IIJS, said, A great demand for Pakistani gemstones, mineral specimen and traditional Pakistani stone studded jewellery has been re-discovered in the IIJS this year.

She said having learnt about the great amount of efforts that PGJDC was putting in for the development of the gems and jewellery industry, especially in the areas of improving lapidary skills, mining and technology up-gradation of gemstones, Indians have planned to further their business with Pakistans gem and stone sector.

The provision of complete zero-rating taxation to the gems and jewellery sector would increase export of value added products by the Small and Medium Enterprises (SMEs), she added.

The sector is enjoying zero-rate customs duty and sale tax on imports of gold, silver, platinum, palladium, diamonds and gemstones. staff report


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## Neo

*FBR to seek Rs 188.81 million for 20 PSDP projects​* 
ISLAMABAD (August 15 2008): The Federal Board of Revenue (FBR) would approach the Planning Commission and the Finance Ministry for obtaining funding of Rs 188.818 million for 20 new projects under the Public Sector Development Program (PSDP) funding in 2008-09.

It is worth mentioning here that the FBR has utilised a meager amount on reforms under the Tax Administration Reform Project (Tarp) and the reform process might be completed in 2010 instead of December 2009 due to problems in infrastructure development of reformed units and information technology.

Sources told Business Recorder on Thursday that the FBR had approved 45 new projects in the second half of 2007-08 and a priority list was also compiled for these projects. The issue would be taken up with the Planning Commission and the Finance Ministry at the appropriate time to get sufficient funding for new projects out of the available PSDP resources of the Revenue Division in 2008-09.

Accordingly, a proposal for re-appropriation of funds shall be made by the FBR to the Planning Commission and the Finance Division. The FBR is making strenuous efforts to prepare five-year Infrastructure Development Plan and various schemes approved in the Departmental Development Working Party (DDWP).

Sources said the board has given top priority to the establishment of Tax Facilitation Centers (TFCs). It would make arrangements for location of new TFCs. It has been decided that land would be purchased for the TFCs keeping in view a number of stations required.

It shall also be decided whether to reduce the number of new TFCs keeping in view delay in purchasing lands by respective regional tax offices (RTOs) and the corresponding revenue collection at various stations.

It was decided that various issues related to the Capital Development Authority (CDA) like purchase of plot adjacent to Large Taxpayer Unit (LTU) building at Mauve Area Islamabad, allotment of car-parking spaces for RTO/LUT/MCC building at Islamabad, allotment of land at the back of FBR House for emergency exit, and relocation of covered car-parking space allotted to FBR HQ shall be pursued vigorously.

It was decided that the Monitoring Unit of Directorate of Project Monitoring, Implementation and Evaluation (DPMIE) shall visit the ongoing development schemes more frequently by the tax officials in future.

Sources said the release of funds was not allowed by the Finance Division in the fourth quarter of 2007-08 keeping in view the current financial crunch in the country. According to sources, availability of PSDP funds in 2007-08 was increased to Rs 1.006 billion; thereby crossing psychological barrier of Rs 1 billion mark.

The PSDP demand was transferred from the Ministry of Housing and Works to the Revenue Division and as such, the Revenue Division now appears as a separate entity in the Ministry of Finance.

Sources said that a comprehensive Management and Technical Capability was established in FBR HQ. The Project Monitoring and Evaluation Cell (PM&EC) was established to monitor the PSDP projects of FBR. The project section of FBR was reinforced by posting of Secretary (Projects), Second Secretary (Projects Finance) and Drawing/Disbursing Officer. The above sections were amalgamated into Directorate of Project Monitoring, Implementation and Evaluation (DPMIE).

Sources said the software in the name of "Project Monitoring and Evaluation System" (PMES) was obtained from the Planning Commission, which provides web-based provision of physical and financial progress of development schemes.

Other projects during 2007-08 included construction of additional block in FBR HQ was commenced after completing all its requisite formalities; 5.5 kanals of land adjacent to FBR HQ was purchased from the CDA for construction of additional car-parking. The Director Generals of RTOs were allowed to purchase land from private parties after completing the requisite codal formalities.


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## Neo

*SBP striving for economic growth: Dr Shamshad​*
KARACHI (August 15 2008): The State Bank of Pakistan (SBP), since its inception, has been making relentless efforts with sincerity and honesty for the development of the country's economy. The banking industry has made significant progress in recent years and the State Bank has taken a number of measures ensuring that people at large reap the benefits of economic growth, sustainability of growth momentum and competitive environment.

This was stated by SBP Governor Dr Shamshad Akhtar, while speaking at the flag-hoisting ceremony held at the State Bank of Pakistan, Karachi, on Thursday to mark the 61st Independence Day. She said the Independence Day provides the nation with an opportunity to reiterate our commitment with our homeland. Dr Akhtar said that despite several problems, Pakistan as a country has come a long way since achieving Independence in 1947. She highlighted various unique features and achievements of the country and said: "We all are proud to be Pakistanis."

The SBP governor said being a leader of a national institution, she must admit that still there are several impediments in our way to progress. "Partly, we are also responsible for that as we have not aligned ourselves with the requirements of the 21st century," she added.

"We have yet to achieve self-reliance in all sectors, which is a hallmark of a sovereign and vibrant nation," she emphasised. Paying rich tributes to forefathers of the nation, Dr Akhtar said that this Day reminds us of our elders, who under the dynamic leadership of Quaid-e-Azam Muhammad Ali Jinnah, sacrificed their lives and as a result of their unparalleled efforts, Pakistan was created.

The SBP governor paid glowing tributes to the national heroes and tens of thousands of unsung martyrs, who played a key role in the independence of the country. The ceremony was attended, among others, by SBP Deputy Governors Mansur-ur-Rehman Khan and Yaseen Anwar, senior executives, directors, officers and staff of the Bank besides families of the Bank employees.-PR


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## Neo

*Obstacles in the way of sustained growth​*
Akram Khatoon

Pakistan has been witnessing frequent upheavals and rather downturns in its economic path for the last thirty years, depriving it of sustained economic growth and giving poverty a stagnant status.

Apart from various economic and social inhibitions, resultant of its geopolitical position like a large poorly educated and fed population and their lack of access to new technologies and worsening law and order situation in the wake of increasing terrorism, both on the borders and within the country, it is mainly the poor institutional framework that is hampering sustained economic growth pattern and rule of law.

A good institutional framework aiming for removing severe inequalities needs to ensure enforcement of property rights for a broad section of population, ultimately resulting in access to economic opportunities for all. This presupposes elimination of bad practices like corruption, manipulation and expropriation of income and investment by powerful elites and even politicians adding to inequalities in all walks of life.

Legislative assemblies, both at federal and provincial level, need to bring reforms in agriculture sector on priority basis, thus ensuring property rights for the real cultivators on the farms they are toiling on. In view of the growing shortages of both food and cash crops, landless farmers need to be empowered by giving them proprietary rights of the farms, thus prompting them to put in their best to improve yields of the crops through the use of new technologies.

In this regard the recent announcement by the Chief Minister of Sindh, in his budget speech to allocate two lakhs acres of land for poor Haris with provision of all farm inputs to be provided at reasonable cost needs to be applauded. It is also heartening to note that at least Sindh government's policies are gender sensitised as a sizeable allocations of land are to go to women farmers.

Similar initiatives need to come from legislators of other provinces. There is urgent need to improve yield of all crops. Incidentally the present yield of wheat crop per hectare (16.8 tons) is now the lowest even among South Asian countries.

There is need to apply latest technologies regarding all farm inputs, which must be accessible to farmers through easy and cheap institutional credit. This must be free of all bottlenecks and infiltration by big landlords as happened in the seventies and early eighties that a viable supervised agriculture credit program met least success due to misappropriation of credit by big landlords, which in fact was extended to small farmers by big five state owned banks.

The culture still pervades in rural areas and despite presence of branches of Zarai Taraqiati Bank, various micro finance banks and commercial banks landless cultivators continue to remain at the mercy of big vaderas, who in fact are absentee owners of the land running big industrial projects in urban areas and abroad and are least interested in improving yield of the crops through the use of new technologies.

Apart from feudal culture the dictates of funding agencies like IMF and World Bank, who insist on removing subsidised crop price structure and also producing exportable surplus of both food and cash crops leads to uprooting and destruction of small farms, while big landlords having big farms are benefited by producing exportable surplus crop by applying all improved farm inputs, which can fetch them favourable price, while poor farmers cultivating the same crop expecting same price is hoodwinked by middlemen and seldom finds himself in a cost effective deal.

The government's decision to remove all subsidies, particularly from petroleum before the end of the current year is not a wise move. Sharp escalation in all fuel prices, almost 6 times in a period less than four months, and substantial increase in food prices due to higher prices offered to farmers are causing immense misery to common men.

Although arrangements are there for providing essential food items at subsidised prices, yet due to little control on monopolistic trend and cartelization on the part of suppliers, unbridled hoarding, smuggling and speculative trading is going on in major food items like wheat, rice, sugar and edible oils. This has already swelled inflation rate to 20%, thus bringing another big chunk of population below the poverty line.

The price spiral of all items may engulf the country in a worst inflationary situation by the end of the year unless strict measures are taken by the government to curb unlawful trading practices. In this regard there is need to make Monopoly Control Commission more effective to obstruct growing undesirable monopolistic and cartelization trends.

Compulsions from foreign funding agencies during the last two decades for undertaking structural adjustment programme in all aspects of economy in general and strengthening institutional framework of public sector entities for improving development prospects by improving fiscal, monetary and exchange rate policies, but lack of good governance and unnecessary or rather ill-planned intervention of establishment in the affairs of these organisations continue to impede smooth functioning of these entities.

Despite State Bank of Pakistan getting autonomous status was subjected to severe government influence for doing heavy deficit financing during the last and current fiscal years.

Disinvestment and privatisation of public sector corporations and financial institutions done at the behest of funding agencies remained lacking in transparency mechanism, thus not only depriving the country of just and fair price of entities, but also suffering of general public due to poor performance, particularly of utility services providing companies like KESC and PTCL etc under their new management.

It is due to weak institutional framework, devoid of rule of law that despite sizeable allocations for development of necessary infrastructure and particularly for social sector, development funds were not either utilised effectively or remained unutilised.

Resultantly, in the area of education, it has now been revealed from World Bank's recent Survey report that despite sizeable increase in enrolment rate for primary education hovering around 51%, net induction at primary level remains stagnant at 40% due to high dropout rate.

No doubt incentive of stipend scheme of Rs 200 per month in Punjab and Rs 1000 annually in Sindh announced by respective governments for girl students from low income families has arrested the growing trend of dropout among girls to some extent, but lack of monitoring and supervision by relevant education departments facility is not accessible to a large number of girls schools, both in rural and urban areas of these provinces.

It is also unfortunate that due to poor governance at all levels, a large number of schools, particularly in rural areas, though existing on record, were never established and not only sizeable funds were embezzled, but also a large number of children could not have access to education. In this scenario achieving MDG of primary education for all by 2015 will remain a dream.

Allocations for social safety nets like subsidised food items to poor through utility stores and monetary help through Baitul-Mal announced both by previous and the present governments, seldom reach the deserving poor families due to little care for accountability and transparency in the institutions. Consequently the country is likely to miss the MDG of halving poverty by 2015.

Controversy regarding construction of big dams and hydro-power projects for improving electricity and water supply position is going on for the last three decades and lack of commitment and seriousness of each successive governments prevented taking firm decisions to start and complete all viable projects. As such the people of this country cannot expect respite from loadshedding in the foreseeable future.

In order to remove economic and social imbalances the entire institutional framework of the country needs to have emphasis on accountability and transparency. This will ensure not only targeted sustained economic growth, but also fair distribution of growth benefits among individuals and groups of society according to their inputs in the economic process.

Institutions working for economic stability and regulating economic process like all tiers of Ministry of Finance, State Bank of Pakistan and Securities and Exchange Commission need to enforce monetary, fiscal and exchange rate policies in letter and in spirit with total transparency at all levels. Besides that independent judiciary, free press and corporate governance need to be strengthened in order to ensure the rule of law to prevail and to arrest the growing inequalities.

Since the country at present is subjected to enormous external and internal economic shocks due to sharp rise in oil and food prices internationally and scarcity of food items due to lack of check on hoarding, smuggling and cartelization in trading of food and other essential items leading to unbridled rise in food inflation and trade deficit as shortage of these items compelled the government to import to remedy the situation.

There is need to review macro economic policies in the areas of trade and fiscal issues. There is need to cut down use of oil and unnecessary import of luxury items by tightening the fiscal policy.

Recent announcement by the Prime Minister to cut down use of oil products and imported luxury items is the right step in this direction, but it is to be seen how the policy is implemented; whether by cutting down public sector expenditures or by levying more taxes on luxury items. In this regard macro economic policy must be geared to achieve the objective at the least possible cost and without causing social and political conflicts in the country.


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## Neo

*Businessmen turn against Musharraf​*
KARACHI, Aug 15: The Karachi Chamber of Commerce and Industry (KCCI) and its ruling Businessmen Group (BG), led by Siraj Kassam Teli, and the leader of the ruling group of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Tariq Sayeed, have sought resignation from the President Pervez Musharraf.

The KCCI has written a letter to the president to resign from the top post so that the country could come out from the lingering political and economic crisis.

Siraj Teli told Dawn on Friday that the president had definitely done some splendid work for the countrys economic stability but now the situation had changed.

He said that presently the political weakness had gripped the country thus crippling the economic activities. We have sought the presidents resignation in the larger interest of the country and to avert any further political and economic turmoil, he said.

Leader of the ruling group and former FPCCI president Tariq Sayeed said he had also sent a letter to the president on Friday seeking his resignation.

In the letter he said that being a ruling leader of FPCCI with 95 per cent support from the business community, he feels that the current economic scenario is in shambles and under these circumstances he would request you (Mr Musharraf) to kindly step down from the presidentship.

I hope you understand that impeachment is not a trial. It is the collective opinion of the legislators of the country in which all the provincial assemblies have given their verdict against you to resign.

Mr. Sayeed said the current situation was sending very wrong signals to the world that the democratically elected government and the President House cannot work together.

You (Mr. Musharraf) have played your innings and the businessmen strongly feel that the your stepping down will bring about political stability, which is very much required now, he said in the letter.

It will also send the message to the world that the president bows to the public opinion and I would like to quote your own word Pakistan first, the former FPCCI president said.

He said his views were shared by other businessmen and industrialists and the entire business leadership has the same view. It is first time in the last nine years that the business leaders are unanimous on this point of view.

It may be recalled here that on August 11, the KCCI and the Businessmen Group (BG) comprising Tahir Khaliq, Zubair Motiwala, Haroon Farooki and Anjum Nisar along with KCCIs office bearers Shamim Shamsi, President, Iftikhar Ahmad Shaikh, SVP and Haroon Agar VP had re-endorsed their policy of neutrality in national politics, and said, We always follow strictly the mandate given to us by our members and in compliance with defined parameters in memorandum of articles of association of KCCI.

At that time, Siraj had said we (the business and industrial community) are non-political entity collectively and are not affiliated with any political party as our job is to represent business community on economic issues with the government.

He said We at Karachi chamber represents over 80 per cent of the business community for the last 10 years and do understand individual affiliations of some businessmen and their political activities accordingly. This does not represent our view point nor of business community collectively.

When asked that the sudden change in the attitude of the business community over presidents future was due to some kind of pressure from the PPP governments higher ups, Siraj Teli said, There is virtually no pressure on us. We were and are still a neutral body and are doing this for the sake of economic stability, he added.

Teli said that other chambers of the upcountry have also written the same letters to the president. He claimed that Site Association of Industry (SAI) is with the KCCI while he cannot say about the FPCCI, Korangi Association of Trade and Industry, Landhi Association of Trade and Industry, North Karachi Association of Trade and Industry and FB Area Association of Trade and Industry.

Chairman Korangi Association of Trade and Industry Shaikh Fazl-e-Jalil said that President Musharraf should resign immediately as it will pave the way for political and economic harmony in the country.

This is not the businessmens voice but the voice of the entire nation that is why Kati fully supports the exit of the president.

Chairman F.B. Area Association of Trade and Industry Idris Gigi said his association was not in favour to seek ouster of the president at a time when the country is passing through a delicate phase like deteriorating law and order situation, falling confidence among investors, and flight of capital.

I am shocked to learn that KCCI has sought Musharrafs resignation, he said adding that the Businessmen Group led by Siraj Teli might have done this on some kind of a political pressure.


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## Neo

*Rupee continues downslide, hits another record low​*
KARACHI: The rupee took another sharp plunge on Friday against the dollar in the interbank market owing to lingering political uncertainty and high trade deficit. 

The greenback closed at Rs 76.30 to 76.50 on Friday compared with the close on Wednesday at Rs 76.15 to 76.20. At one stage, the dollar had crossed Rs 77 level. In the open currency market, the dollar closed at Rs 76.50 for buying and Rs 77 for selling. The rupee has lost more than 23 percent of its value against the dollar this year

The rupee last hit a record low of around 75.05 to the dollar on Wednesday. Markets were shut on Thursday for an Independence Day holiday. Usually the gap between interbak and open currency market rates is about 100 paisas, but the current gap is much lower because the dollar has been rising fast in the interbank while the SBPs strict regulation of the foreign exchange companies business has kept the dollars price relatively lower at their counters. 

Economic experts have already predicted that the dollar might rise to Rs 80. Some believe the central bank had kept the rupee overvalued for quite sometime before the current slide began. They say that, seeing the large trade and current account deficit, the rupee had to lose its value. The country had a trade deficit of over $20 billion during the last year and current account deficit of about $14 billion. The rupee has weakened very sharply since the ruling coalition of the country firmed its stance on impeachment of retired General Pervez Musharraf. 

Falling foreign direct investment and outflow of foreign investment from the stock markets are other factors that have weighed on rupee. 

The rupee has been losing its value against the dollar for more than one year, but the pace of decline has accelerated since May this year. It gains some stability every time the SBP takes some measures to support the domestic currency, but starts losing value soon afterwards. Bankers say the central bank, after supporting the rupee for many years, is now finding it difficult to cushion the domestic currency because the foreign exchange reserves have declined from over $16 billion in October last year to $10.159 billion in the week ending August 2. Still, the central bank is providing dollars to banks for their customers oil import payments. But it has been inactive otherwise, choosing not to intervene in the market.


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## Neo

*Forex reserves at $9.92bn​*
KARACHI: Pakistans total liquid foreign exchange reserves stood at $9.920 billion on August 9, 2008, as against $10.15 billion on August 2, 2008, State Bank of Pakistan said on Thursday. According to the break-up, foreign reserves held by SBP were $6.4 billion while net foreign reserves held by banks (other than SBP) were $3.27 billion.


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## Neo

*Pakistan, Korea explore options for FTA​*
ISLAMABAD: Pakistan and Republic of Korea agreed on Friday to explore the possibility of concluding Free Trade Agreement (FTA) for the promotion of bilateral trade, exchange of trade delegations and participate in exhibitions and trade fairs. The seventh round of bilateral policy consultations between Pakistan and the Republic of Korea was held in Islamabad. The Korean delegation was led by First Vice Minister for Foreign Affairs and Trade, Kwon Jong-rak, while Pakistans side was led by Acting Foreign Secretary, Khalid Aziz Babar.


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## Neo

*Qamar expects additional inflow of $3.5bn ​* 
Sunday, August 17, 2008

KARACHI: Finance Minister Syed Naveed Qamar has said that the country would receive $3.5 billion additional inflows into its forex reserves by the end of next month.

He was briefing the media at the end of a two hour long meeting held at the All Pakistan Textile Mills Association (APTMA) office with its members on Saturday. Members of APTMA from Lahore also participated in the meeting through video conferencing.

The minister said that the $3.5 billion inflow would be other than normal inflows that the country receives on a regular basis. Part of this expected additional inflow would be attracted through floating government bounds against remittances in international markets, while the rest would be received from the Asian Development Bank (ADB), World Bank and other sources, he added.

APTMA members urged the minister to fix the economy on war footing basis and resolve burning issues like the rupees fall to an all-time low against the dollar, energy crisis and inflation. They also stressed upon the minister to extend Research and Development (R&D) support to the entire textile sector for one more year, so that the country is able to meet the export target for the year.

The minister, therefore, assured APTMA members that the issue of R&D support would be resolved in the forthcoming Economic Coordination Committee (ECC) meeting. He added that the government was committed to providing six per cent R&D support to readymade garment exporters. But as far as other textile sectors were concerned, it would be decided after reviewing the governments fiscal space, he said.

He informed that he has received some recommendations from the members of the Association in the meeting, which would be given higher importance while formulating business policy, and added that his government would overcome outstanding issues on the economic front within three to four weeks.

He said that the nation would hear good news in the next few days, as the Saudi Arabian government was about to announce provision of oil to Pakistan on deferred payments. The reason for delay in making such an announcement by the Saudi government was that Saudi officials were on seasonal leave, but now they have resumed their duties, he added.

Qamar further said that his government was trying its best to end its dependence on central bank borrowing to fulfill the fiscal deficit. We are committed to reducing government borrowing from State Bank of Pakistan to zero per cent and cutting down government expenditures to address the all time high inflation issue in the country, he replied.

SBPs blame on the current government of borrowing record high amount during March to July was not true, he underlined and added, The Bank had mixed up borrowing by previous government from oil marketing companies with the borrowing by the current government and that is totally unfair.

He maintained that the oil marketing companies have mentioned this borrowing by the previous government in their balance sheets, but the central bank did not do the same and showed this borrowing in the account of the current government.

He blamed commercial banks of violating prudential regulations in the near past, which caused mounting pressure on rupee in parity with the dollar. He added that it was an area of State Bank and it should conduct an inquiry into the matter.

Minister said that the government would announce a Ramazan package in the next week and stated that whether the inclusion of subsidies in this package would be made part of it or not would also be announced in the package.

Replying to another query, he said that the decline in international oil prices from historical high of $147 to $114 per barrel would be passed on to the consumers only when the buying and selling prices of oil from international markets to local markets are equalized. He also promised to rationalise the import regime and to ease pressure on rupee by taking viable measures.

APTMA Chairman Iqbal Ebrahim also talked to the media and gave details of the meeting between the minister and members of Association. Members have asked the government to reschedule and restructure all outstanding term loans including long term financing loans, extend R&D support across the textile board, resolve energy crisis and to rationalise the taxation regime to bring out textile sector from crisis, he added.

Qamar expects additional inflow of $3.5bn


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## Neo

*$3bn of external debt, liabilities retired ​* 
Sunday, August 17, 2008

ISLAMABAD: The country retired $3.029 billion of external debt and liabilities during fiscal year 2007-08, which included $1.926 billion principal amount and $1.103 billion interest paid on loans taken from multilateral and bilateral sources. According to data released by the State Bank of Pakistan (SBP), during the first quarter July-September 2007, the government paid $809 million (including $550 million principal and $259 million interest), in October-December $737 million ($436 million principal, $301 million interest), Jan-March 2008 $655.9 million ($450.5 million principal, $205.4 million interest) and in the last quarter April-June 2008, the debt repayment stood at $827.6 million, including $489.6 million principal amount and $338 million interest. 

More importantly, during July-June 2007-08, the government also retired $173.3 million principal debt and $8.5 million in the shape of interest on the total debt of the International Monetary Fund (IMF). 

It is worth mentioning that during July-June 2007-08, the countrys external liabilitiesóexternal debt plus foreign exchange liabilitiesótotaled $46.28 billion. Of this the external debt amounted to $44.47 billion. 

According to the banks provisional data, the countrys public and publically guaranteed debt (comprising medium and long-term and short-term debt) has been on the rise for the last five years. And now during the period, the bank said the country has repaid $1.187 billion principal amount and $838.1 million interest on these liabilities and loans of multilateral and bilateral donors. 

Of this, on the medium and long-term debt (longer than one year), the government refunded $1.987 billion ($1.162 billion principal and $825.1 million interest). Of the multilateral debt, the government repaid $1.11 billion ($796.8 million principal and $317.3 million interest). It has also repaid $242.3 million principal amount and $384.1 million interest on the loan taken from Paris club. 

The government also made payment of two million dollars principal and $88 million interest on Euro bond and Sandik metal during July-June 2007-08. On other bilateral debt, $63 million principal amount and $21 million interest was repaid. On commercial loans/credit, $16 million were repaid as principal amount and $15 million as interest on it. On military debt, the government repaid $41 million principal amount and $3.7 million interest. According to the data, on short-term loans (less than one year) mostly taken from Islamic Development Bank (IDB), the government repaid $25 million principal and nine million dollars as interest. 

The government also paid $407.8 million principal and $188.1 million interest on private loans/credit non-guaranteed by the government. On central bank deposits, it paid $34.7 million interest. 

On NBP/BOC deposits, $116.5 million (including $100 million principal and $16.5 million principal) was repaid. On special dollar bonds, repayment stood at $41.1 million ($34.8 million principal, $6.3 million interest), on foreign currency loans bonds, $22 million was paid as principal and six million dollars as interest during FY2007-08. 

On foreign exchange bearer certificates, foreign currency bearer certificates and Dollar bearer certificates, $5.2 million interest was paid.


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## Neo

*Experts warn of declining production weighing on revenue ​* 
Sunday, August 17, 2008

LAHORE: Economic experts have warned the government not to be complacent about its ability to achieve revenue targets despite declining production, as tax collection from higher imports and weak rupee would be counter productive for the economy.

The News found that productivity in the country is on the decline, which is impacting the tax collection. Against average monthly sales of 15000 vehicles last year, car sales have dropped to 4400 units in July. This means that the tax collection from car production has declined substantially despite the fact that government increased sales tax by one per cent and imposed 5 per cent excise duty on car purchase.

Automobile industry circles are confident that car sales would pick up in the coming months, but they would still be lower than last years. The Japanese that dominate the local automobile market expect a decline of 30 per cent in car production this fiscal year. Similarly, the production of motorcycles, home appliances are also on the decline, which would also impact tax collection.

The tax collection in July however, surpassed the target set by CBR because imports increased by about $1 million in July and the dollar rate also increased from Rs62 to Rs70 in July, which is currently being traded at over Rs77. This means that even if the green back stabilises at the current rate and imports in the remaining 11 months are restricted to $40 billion, the government would get additional import levies on Rs600 billion. This would help the government in filling up the revenue gap created by lower productivity in the domestic industries.

Economic experts attribute the decline in purchasing power of the middle class as the reason for the decreased demand for goods. They point out that the middle class is the driving force of all economies. They said local consumption of automobiles and home appliances increased in the past years on the strength of disposable income available with the middle class. The low mark-up consumer financing also increased the demand for these goods.

Food inflation, high energy costs and very high mark-up have not left the middle income groups with much disposable income. The productive industries depending on local consumption are now feeling the heat. Economists said that the local manufacturers have never seriously explored the foreign markets, even in items in which they could compete globally. They said the mindset of the local manufacturers needs to be changed.

Tractor manufactures for instance are the only sub-sector in automobile that is showing growth. Experts said that green tractor scheme of the Punjab government also boosted the demand for tractors. The manufacturers, they added, are content with the available domestic market. Local tractors could easily be marketed in many African and Asian markets as their rates for the quality they produce are extremely attractive. However, manufacturers are in no mood to increase production and venture in to exports.

Experts warned the government that over dependence on imports would completely ruin the economy. They said the government should devise policies to increase local production and provide some incentives to those domestic manufacturers that export at least 10 per cent of their production. They said in tractors, where the manufacturers have competitive edge, manufacturers should be warned that if they fail to export a certain quantity of their production the government would withdraw duty concessions from the industry.

They said the decline in rupee value might get the government additional revenues, but would also add Rs630 billion in its $42 billion foreign debt that at dollar rate of Rs62 amounted to Rs2604 billion and at present dollar rates has increased to Rs3234bn.


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## Neo

*SBP aims to raise $261m in bond auction ​* 
Sunday, August 17, 2008

KARACHI: The central bank said on Saturday it wants to raise 20 billion rupees ($261 million) by selling long-term government bonds this month.

The State Bank of Pakistan said in a statement it will auction 3-, 5-, 7-, 10-, 15-, 20- and 30-year Pakistan Investment Bonds on August 29. The 3-, 5-, 7- and 10-year bonds will have annual coupons of 11.25 per cent, 11.5 per cent, 11.75 per cent and 12 per cent respectively.

The 15-, 20- and 30-year papers will have annual coupons of 12.5 per cent, 13 per cent and 13.75 per cent respectively.

Pakistan launched its first long-term PIBs in December 2000 to help attract investments from institutions and set a benchmark for corporate yields.

Pakistan wants to attract more investments from abroad to make up for the countrys falling reserves and widening trade and fiscal deficits, which have pushed the rupee to record lows against the dollar.


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## Neo

*Business community divided over Musharraf ​* 
Sunday, August 17, 2008

KARACHI: As national politics seeps into the interests of the business community, there seems to be fear of division between prominent businessmen owing to conflicting opinions regarding President Musharrafs impeachment.

Businessmen nationwide have passed out statements advising the troubled president to step down and resign rather than face the impeachment. However, there yet remains an equally strong group that prefers to remain neutral and away from the controversy.

Chairman of APTAMA, Iqbal Ebrahim refused to comment on the actions of the business community and the presidents status, adding that he preferred to concentrate on the textile sector and its issues than involve himself in national politics.

Similarly, Chairman of Federal B Area Association of Trade and Industry, Idris Gigi was also surprised with the sudden change of hearts of the businessmen against Musharraf and predicted political parties involvement, which had inclined choices.

Another prominent figure of the business community who requested to remain anonymous shared that there was a strong possibility that ANP senator Ilyas Ahmed Bilour had a hand in influencing the businessmens announcement.

Bilour is an important personality in the business community and has a strong following. He further informed that it was actually Businessmen Group leader, Siraj Kassam Teli who had made the announcement in both his name and the President of Karachi Chamber of Commerce and Industry and the latter initially had not even been aware of the circumstances.

He further criticised that KCCI should not have taken such a step and it was completely a paradigm shift which created suspicions of political interference. We, businessmen should stay away from politics and concentrate on recovering the losses that we have incurred so far, he added.

President of KCCI, Shamim Ahmed Shamsi defended his position by stating that collective decisions are made by the business community and everyone sticks to it. He explained that the move was not at all sudden and it had been announced following the rupees plunging at a record level against the dollar.

Shamim commented, We have just requested him (Musharraf) to step down and to respect his own belief of Pakistan first as if the current situation prevails economic crises are going to deepen and political instability would worsen.

He continued, Our members and other small traders are threatened not to increase prices and if they do the police takes them away. Therefore since the economy is dwindling at a rapid pace, this seems to be the only best action.

President of Islamabad Chamber of Commerce and Industry, Muhammad Ijaz Abbasi told The News that he had a meeting with his executive committee members where they had unanimously decided to ask President Musharraf to quit keeping the supreme national interest in mind.
 
He said that businessmen all over Islamabad and Rawalpindi were against the head of the state and wanted to see him removed from the position. 

A consensus has been developed by the nation that the resignation of the president will bring both economic and political stability and redirect foreign and domestic investors back into the country who are currently pulling out of here at a rapid pace, he further stressed.

Representative of the small traders, Siddiq Memon and Atiq Mir also elucidated that the SMEs wanted to see the president quit. They said that dual policies in the government had affected them the most and their businesses had come to a stand still which may improve along with the political stability.

However, sources in the business community stressed that conflicts in national politics may divide the business community and very soon there may be another group standing up against the Businessmen Group in support of either remaining neutral or with the president of Pakistan.


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## Neo

*ADB, IDB offer $1bn for improving forex reserves​*
ISLAMABAD, Aug 16: The Asian Development Bank and the Islamic Development Bank on Saturday agreed to offer $500 million each as emergency support within two weeks to help improve Pakistans foreign exchange reserves which have dropped to about $9 billion against $16 billion in October 2007.

Both the ADB and IDB have assured us to shore up our reserves by extending $1 billion emergency assistance before the end of this month, a senior official of the ministry of finance told Dawn on Saturday.

He said the IDB would be providing trade financing worth $500 million, adding that the World Bank would also be offering upfront funds out of its $1 billion annual assistance.

The ministry of finance, he said, had also prepared a plan to seek more local and foreign assistance to deal with financial difficulties.

On the internal front, the official said, short-term measures had been taken to arrange emergency funding from various sources.

In the first place, he said, the government had decided to restrict borrowing from the central bank by ensuring quarterly net zero borrowing which meant that after every three months government would get its borrowing from the State Bank adjusted so that it did not increase.

The central bank, he said, would introduce two new products, aimed at helping the government to manage short-term new funding line which would not be inflationary.

He said that a decision had been taken to seek non-bank borrowing and the government would obtain Rs150 billion from national savings to improve its weak kitty position during 2008-09.

The objective is to achieve 4.7 fiscal deficit target during the current financial year.

Then a programme has been finalised to launch government commercial papers, including Pakistan Investment Bond (PIB) and a new Sukuk to secure Rs25 billion on a short-term basis, the official said.

These papers, he said, would have the bench marking with the treasury bills. He said that new papers, PIB and Sukuk would be offered to public sector corporations and banks to manage required funding.


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## Neo

*Govt to cut borrowing, expenditures: minister​*
ISLAMABAD, Aug 16: The government is trying to deal with the serious problem of inflation by reducing government borrowing as well as development and non-development expenditures, according to Minister for Finance and Privatisation Syed Naveed Qamar.

Talking to Dawn, he said the government had decided to curtail borrowing from the central bank, which fuelled inflation.

Borrowings would now be made from other sources, including the national savings schemes.

Inflation calculated on a month-to-month basis was 24 per cent in July, he said. It would be brought down sufficiently so that the target of 12 per cent for the current financial year could be achieved.

However, he said, rising petroleum and food prices in the international markets had caused serious problems, due to which inflation had risen sharply.

But since oil prices had fallen from $146 a barrel to $112 per barrel lately, inflation was expected to come down in the current financial year. The minister said the fiscal deficit also needed to be curbed if the economy was to be stabilised. This would ensure financial discipline.

While non-development expenditures would be reduced, development expenditures too would have to be slashed, said Mr Qamar. He agreed with the contention that the development budget was usually the first casualty in the efforts to improve fiscal deficit.

I hope that by the end of the financial year, we would achieve our 7 per cent GDP fiscal deficit target, the minister remarked. He said there had been a 20 per cent increase in the Rs550 billion current PSDP which unfortunately would have to be cut down considerably.

Answering a question, Mr Qamar said that sizable foreign inflows would be secured by shoring up the privatisation programme. We will get over $2 billion through privatisation in 2008-09, he said, adding that the government was in touch with various international financial institutions (IFIs) in order to attract adequate financial support.

Therefore building up of foreign exchange reserves to a minimum of $12 billion in 2008-09 should not be a very difficult task for our government.

Both bilateral and international donors were being told that due to high prices in the international markets and the political crisis in the country they should help the government put the economy back on track.

Mr Qamar said agriculture was the backbone of the economy but it had been neglected in the last eight years. Numerous policies and measures were now being put in place to ensure provision of relief as well as incentives to the sector so that it might contribute its due share in the economy.

He pointed out that the support price for wheat, which had been increased from Rs510 to Rs625 per 40kg not long ago, had been enhanced further.

Answering a query, the minister said poverty had increased considerably in the last eight years and all claims to the contrary were false. But we are putting in place a serious plan to reduce poverty. Initially the Benazir income support programme is being introduced across the country.

He acknowledged the existence of cartels in the sugar, cement and other sectors that, he said, needed to be broken in order to bring down the prices.


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## Neo

*Strategy on inflation, rupee soon: Naveed: $3.5bn forex inflow expected​*
KARACHI, Aug 16: The government expects about $3.5 billion foreign exchange inflow by end of this month, while a strategy to tackle inflation and ease pressure on the rupee will be announced in the next few weeks, said Federal Minister for Finance Naveed Qamar on Saturday.

In reply to questions of the journalists at a press briefing after holding over two-hour long meeting with the members of All Pakistan Textile Mills Association (Aptma), the minister said that the government was floating a bond in international capital market against remittances.

There are expectations of $1 billion flow from the World Bank and other international financial institutions plus foreign funds are also expected from some other sources, the minister elaborated.

Responding to a question that textile mills had complained of getting stuck up in currency swapping of their loans under a State Bank of Pakistan policy directive, the minister said initial reports suggested quite a few banks might have violated prudential rules and the matter was being investigated.

Answering another question, the minister said that the next meeting of the Economic Coordination Committee (ECC) of the Cabinet would take up the issue of research and development subsidy support on textile products export.

The government has given an assurance to give 6 per cent subsidy support on export of garments and apparels and will consider offering assistance to other sectors, he added.

The textile industry leaders want the continuation of this subsidy support for bedwear, made-ups and processed fabrics and on local sale of polyester fibre but also want to extend it to spinning and weaving.

This will not only revive the ailing spinning and weaving industry but will also assist the value added sector to price their products more competitively in international market, argued an Aptma leader.

A journalist drew the ministers attention towards the State Bank of Pakistan Governors monetary policy statement in which the present government had been held responsible to have borrowed highest amount from banking system in 2007-08.

It was because, the previous government had concealed Rs100 billion borrowing from oil marketing companies, the minister said to explain that spike in government borrowing came from shifting of account entry from oil companies books to the government.

But he was confident of bringing down governments borrowing from banking system to a manageable level in the current fiscal year.

He however did not agree with a questioner that after the international prices have started coming down to $113 a barrel level, the government should consider passing on this price reduction to consumers.

Iran is an oil producing country where diesel from Pakistan is being smuggled, he tried to explain that subsidy driven reduction in oil prices encourages smuggling to Iran and Afghanistan.

Earlier an ugly scene was created when the journalists who were invited by Aptma to cover this meeting were rudely asked to leave the committee room. They were told a press release would be dispatched to their offices after the consultations were over with the minister.

There was strong protest and Aptma leaders and the minister were reminded that journalists have turned up in response to an invitation.

We will give you a briefing after the meeting, Aptma Chairman Iqbal Ibrahim promised on ministers behalf which was done accordingly.

The Aptma members in the meeting expressed their concerns about further worsening of inflation, more pressure on rupee exchange value and depletion in foreign exchange reserves in coming days.

They advised the minister that the government should curtail oil consumption by way of rationing or closing down of pumps besides drawing up a short-term strategy to tackle worst economic crisis.

It is a global recession that has hit us and we are ready to share with government the responsibility to tackle this crisis, the Aptma chairman informed waiting journalists.

Recently, the parity of US dollar against the rupee has gone up from Rs60 to Rs76, the Aptma leader informed the minister to convey that the situation was unmanageable as a lot of textile mills had been hurt seriously on account of this massive devaluation.

A large number of mills had kept their position open against import order under usance letters of credit for raw material and machinery and many have entered into cross currency swap under SBP Financial Derivatives Business Regulation.

Pleading their case, the Aptma members called upon the government to give textile mills a bail out from this situation.

While the Aptma leaders estimate $1 billion stake in this cross currency business, the minister said that the State Bank of Pakistan would be having accurate figures.

The Aptma chairman informed journalists that textile industry leaders had asked the government to give top priority to inflation and help the poor and needy people. We have suggested rationalisation of import duties on a number of items, he said.

Most of the proposals given by Aptma to Mr Naveed Qamar carries a heavy price tag as the suggestion is for two years moratorium on loan payment, restructuring of all outstanding loans, freezing of markup payable up to June 30, 2010, relief on interest payment to spinning, concession on rate of financing for procurement of raw material.


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## Neo

*Govt eying $13bn foreign financing​*
ISLAMABAD, Aug 16: The government is eying to receive more than $13 billion external financing in various sectors in the wake of its new multi-pronged strategy aiming to bolster over all economic scene in the fiscal year 2008-09.

The money will flow into the country as a result of Saudi oil facility, reinvigorated privatisation programme, expediting inflow of pending instalments from already privatised units, floating of workers remittances securitization bonds, injecting foreign investment in KESC, FDI in oil and power sectors and renegotiated credit facility from international financial institutes (IFIs).

A fact sheet issued here by the finance ministry on Saturday regarding policy measures taken so far by the PPP-led government to beef up foreign exchange reserves and economic stability at a time when the rupee is under pressure against greenback and up surge in prices.

The government currently is working on Saudi Oil Facility that aims to provide a substantial cushion of $5-6 billion followed by major privatisation programme worth $2-3 billion and ensuring a receipt of $136 million from PTCLs instalment receipt schedule after its privatisation.

According to the statement the government is also considering the floating of workers remittances securitisation bonds worth $800 million to provide additional cushion to the existing forex reserves. Foreign direct investment in oil and power sectors is promising, whereas foreign investors have expressed interest in investing $400 million in KESC.

The government expects to generate another $250300 million out of Pakistan Telecommunications Authoritys licensing of internet based projects to be issued to various companies during the fiscal year 2008-09.

Based on IMF Letter of Comfort, $500 millions World Bank credit facility is in the pipeline. Drastic cut on expenditure sides already put in place, which would also result into reducing budget deficit.

A US-supported democracy dividend of $1.5 billion per annum is likely to start from 2009 onwards. As a result of discussions held during recent Pak-US Economic Dialogue, Reconstruction Opportunity Zones (ROZ) will facilitate job creation and economic development in the Federally Administered Tribal Areas in NWFP, the earthquake-affected areas of Azad Jammu and Kashmir, and Balochistan within 100 miles of the Afghan border.

The ROZs will provide greater market access to exports from businesses in these areas and create employment opportunities for the border regions  thereby providing additional investment cushion to be injected into national economy. According to economic data recorded for July, the first month of the financial year 2008-09, the FBR has collected Rs71.5 billion as compared to Rs50.9 billion in the same month last year, posting healthy increase of 40.4 per cent.

The current fiscal year has started on an encouraging note as workers remittances amounted to $627.2 million in July 2008  the highest-ever in a single month, showing an increase of 26.5 per cent over the last years July of $495.6 million. The monthly average remittances during the last fiscal remained at $537.6 million.

The inflow of the workers remittances in 2007-08 breached the $6 billion mark for the first time in the history of the country, along with an increase of 17.4 per cent over the corresponding period of 2006-07. It has set a target of $7.5 billion for the current fiscal year. An increase of 26.5 per cent in the first month of the current fiscal year suggests that the remittances target is most likely to be achieved.


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## Neo

*PHDEB dates processing plants: Turbat plant to be completed by 2009​*
KARACHI: Pakistan Horticulture Development and Exports Board (PHDEB) has finally decided to start work on one of the three modern dates processing plants in collaboration with Small and Medium Enterprises Development Authority (SMEDA) Balochistan, an official said on Saturday.

Under the trade policy three dates processing plants were started by year-end one each in Sindh, Balochistan and North Western Frontier Province (NWFP) with a revised cost of Rs 148.6 million, said Shamoon Sadiq, Chief of PHDEB. He said due to projects cost escalation, dollar increase and back out of investors, PHDEB has decided to start construction on one of the plants in Turbat.

Around Rs 55 million will be incurred on each project as we have already provided land for these projects from respective provincial governments, Mr Sadiq said. He said due to high cost, the tenders for construction of two dates processing plants one each at Khairpur and Dera Ismail Khan at the cost of Rs 98.93 million were in the doldrums.

The work on Turbat plant was underway for up-to-the-mark plant, which would be established on public private partnership (PPP) basis he said. He said these plants were being built along with cold storage facilities. Pakistan with an estimated 723 thousand tonnes annual production ranks fourth in dates production and fifth in its exports around the world.

Under PPP, the Sindh government has provided two acres of land for this purpose. The Sindh government also released Rs 20.946 million from the Export Development Fund (EDF) and would take care of the cost of plant machinery, equipment, vehicles and other civil works. He said day-to-day operations would be entrusted to a team of professionals hired from the private sector, which would also contribute to the working capital of around Rs 4.167 million.

The board had set 2009 as a deadline for completion of the Turbat plant, which would produce an estimated 2,400 tonnes of processed dates during the 150 working days. 

The proposed plant would be based on multiple products including pitted and stuffed dates and would increase the level of value addition.

The project was financially feasible with no foreign exchange involved as the facility was mostly based on locally manufactured plant and machinery.

He said the foreign made equipment would be bought from the local market if needed, adding that the Internal Financial Rate of Return of the project was estimated at 21.80 percent, the IERR at 12.30 percent and the benefit cost ratio at 1.08 percent. Presently, the country has 54 dates processing units.

Pakistan is the top dates exporter in the world this year after exporting 90,500 metric tonnes of dates, he added. He said around 30 countries including China, India, Japan, USA, Canada, European Union were purchasing the countrys dates. 

Traders are also striving to produce by-products of dates in order to fetch more foreign exchange, he added. He said buyers from India, China, Saudi Arabia and Uzbekistan had shown great interest in making deals for dates. He said arrangements were also being made to export their products so that they reached other Muslim countries before Ramazan. razi syed


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## Spring Onion

*Pakistan does not need FY08/09 loan - IMF official *

Monetary Fund director for the Middle East and Central Asia, Mohsin Khan, is seen... Sun, Aug 17 11:41 AM

By Koh Gui Qing

KARACHI (Reuters) - Pakistan does not need to turn to the International Monetary Fund (IMF) for money in the next 10 months if the government cuts spending and gets other sources of funding to offset falling reserves, a senior IMF official said.

Mohsin Khan, IMF's director for the Middle East and Central Asia, said Pakistan had not asked the IMF for loans.

He said Pakistan would not need an IMF loan in the fiscal year to June if the government abolishes all fuel subsidies by December as planned, and stops borrowing from the central bank to pay for its budget deficit.

High oil prices have depleted Pakistan's foreign exchange reserves to levels worth less than three months of imports, sparking alarm among investors that Pakistan may need to take up loans from the IMF to pay for imports.

Khan said the government needs to stick to its privatisation plans to raise money, secure over $1 billion worth of loans from the World Bank and the Asian Development Bank, and get Saudi Arabia to defer an estimated $5.9 billion worth of oil payments.

"If things fall right for them in all these things that they are planning to do, I don't believe there will be any need for them to come to the IMF," Khan, who was in Pakistan this week, said in a phone interview.

"Unless there is a total collapse of foreign direct investments, they can ride this out," he said.

Pakistan, a repeat customer of the IMF, last took an IMF loan worth $1.3 billion in 2001 to help fight poverty and offset the effects of a regional war on the economy. Backing for the loan was helped by Pakistan's support for the U.S. war on terrorism.

Pakistan's economy is going through its toughest period after six years of healthy growth. It is wrestling widening trade and fiscal deficits, soaring inflation, and dwindling investor confidence battered by the country's political tensions.

There is mounting speculation President Pervez Musharraf would quit after the coalition government said last week it planned to impeach him.

The political turmoil has unnerved investors -- Pakistani stocks are near two-year lows, while the Pakistan rupee has lost nearly a quarter of its value this year.



ACCUMULATE RESERVES

Khan, who is from Pakistan and has been at the IMF for 36 years, said it is the responsibility of the State Bank of Pakistan (SBP), Pakistan's central bank, to boost reserves.

"You must build up your reserves back to where they were a year ago. Get back to that level, at the very least, and aim higher," he said.

Khan said the central bank should ensure any future loans Pakistan receives will add to reserves, and that it should ask commercial banks to raise deposit rates by at least 2 percent to attract more money from investors.

However, he said the central bank does not need to raise its key discount rate from the current 13 percent because markets will ensure that the yields for treasury bills sold by the SBP are above the discount rate.

Pakistan's foreign exchange reserves fell $797 million in July, the first month of fiscal year 2008/09. They have plummeted 40 percent from a record $16.5 billion in October last year.

Khan said the central bank was doing "exactly the right thing" by not selling dollars from its reserves to support the falling rupee.

"If the State Bank starts to lose reserves by defending a currency that is not defensible, then it will be ridiculous. They will really be shooting themselves in the foot for that," he said.

"Don't fight the market. So many countries have run into serious problems by trying to defend the exchange rate when the market is saying that's not the exchange rate we like."


Pakistan does not need FY08/09 loan - IMF official - Yahoo! India News


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## Neo

*Body formed to evaluate Thar coal reserves​*
KARACHI (August 18 2008): Sindh Chief Minister Syed Qaim Ali Shah on Sunday constituted a four-member committee for evaluation of reserves of coal in Thar area. He formed the body at the first meeting of the Sindh Coal and Energy Board (SCEB), chaired by him at the Chief Minister House here.

Federal Secretary for Water and Power, Muhammad Ismail Qureshi, member SCEB, Syed Asad Ali Shah, Managing Director SCEB, Aslam Sanjrani and Secretary Mines Sindh, Younis Dagha will be members of the recently formed body.

Besides Sindh CM, who is also the Chairman of Sindh Coal and Energy Board, the Federal Minister for Water and Power and Vice-Chairman Thar Coal Energy Board, Raja Pervez Ashraf and other members of the Board were also present.

After the meeting, Syed Qaim Ali Shah briefed the media about the details of the meeting. He said after the Washington Conference the interests of foreign investors have developed in the project for electricity generation from Thar Coal, which, he added, the meeting reviewed.

He said that another conference about investment is going to be held at Hong Kong for which the invitation has also been received. Syed Qaim Ali Shah said there is no law and order problem in Sindh while electricity and other infrastructure also exist. Air travelling facilities will also be provided at Thar and the work is going to start on the project without any delay, he added.

He said Jahangir Siddiqi & Company, Engro Group, Al-Tawariqi Group of Saudi Arabia, Lucky Group, Giga Group of UAE and Metal Investment Company of UAE have showed interests in carrying out evaluation of Thar coal.

Later, talking to media, the Federal Minister for Water and Power, Raja Pervez Ashraf, said total 16,000 mega watt electricity will be needed in Pakistan in the year 2016.

He said an emergency long-term and short-term policy has been devised to fulfil the energy needs of the country. Under the policy, the agreements are being signed to purchase 1100 MW electricity from Iran and the Middle East, he said. He said that a Turkish company will start generation of 6 to 50 MW electricity from the 'wind mill' within next six weeks.

Raja Pervez Ashraf said due to increase in petroleum prices the attention was being paid to other sources for power generation and coal and wind power generation were an important element in it.

He said it is our luck that the reserves of about 175 billion tonnes coal exist in Thar through which inexpensive electricity will be available to Pakistan. The Sindh chief minister said that Shaheed Mohtarma Benazir Bhutto had started work to utilise Thar coal in 1994, but after discontinuation of our party's government the work on Keti Bander and Thar coal was stopped.

He said the government intends to launch projects to generate 6,000 MW electricity in next three years. To a question, Raja Pervez Ashraf said after the recent rains, the situation of rivers in the country has improved and, therefore, the electricity generation will also be enhanced, which will help minimise load-shedding in the coming days.

He informed that the Karachi Electric Supply Corporation (KESC) was being given 500 to 700 MW electricity daily. In the coming days after a change in the KESC management the power load-shedding in metropolis will be reduced.

Earlier, the meeting was attended by Deputy Chairman, Planning Commission Pakistan, Salman Farooqi, members SCEB, Syed Murad Ali Shah, Jam Saifullah Dharejo, Asad Ali Shah, and others.


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## Neo

* 'Micro Finance' scheme for uplift of cottage industries soon​* 
SIALKOT (August 18 2008): The setting up of mini industrial estates in remote rural areas is on the card aiming at promoting non-traditional products being produced in these areas and generate employment opportunities for skilled and semi-skilled persons on their doorsteps in the Punjab.

Official sources on Sunday told Business Recorder that the government has accorded special attention on the promotion and development of cottage industries and for this purpose Rs 40 crore would be spent on accelerating the pace of exports and enhancing the productivity in Punjab.

The development of industrial sector was top on the government agenda and during current fiscal period Rs 1.30 billion were being spent on the development of industrial sector in the province. The government has already introduced business-friendly policies for ensuring maximum establishment of industries in private sector and to expand the radius of setting up industries to rural areas for bringing industrial revolution in of the Punjab.

In order to facilitate the SMEs the Punjab government would soon initiate a" Micro Finance" loaning scheme with an amount of Rs 1 billion during current fiscal period for the development of cottage industries and creating self-employment opportunities in the province.

The concept of introducing of this scheme was to extend loan facilities to the interested persons for setting up small scale and cottage industries in the Punjab.

Punjab government has evolved a strategy for developing "Business Friendly" environment and setting up cottage industries aimed at ensuring Direct Foreign Investment (***) in various fields of industrial sector in the province while exporters and manufacturers were being motivated to bring innovation and diversification in their products coping with global market more easily, sources added.


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## Neo

*SDPI seminar: public review of all past aids and loans sought​* 
ISLAMABAD (August 19 2008): The government must conduct an independent and comprehensive public review of all past aids and loans sought for development projects before applying for new ones. This was unanimous view of speakers at a seminar on 'Promoting Aid Effectiveness: enabling Participatory Democracy' organised by Action aid-Pakistan and Sustainable Development Policy Institute (SDPI) here on Monday.

Dr Aly Ercelan of Pakistan Institute of Labour Education and Research (Piler), Muhammad Ali Shah of Pakistan Fisher-Folk Forum (PFF), Aasim Sajjad Akhtar of People's Rights Movement (PRM), students and people from various concerned departments were present on the occasion.

The participants urged that the aid-borrowing process, conditionalities by donors and aid-utilisation must be made democratic, accountable, transparent and subject to parliamentary debate. Muhammad Ali Shah clarified that the aid is usually misperceived as grant. However, the fact is that all types of financial aid are basically loan, which involves heavy interest.

Sharing the experiences of mega development projects such as World Bank funded Left Bank Outfall Drain (LBOD) and ADB-funded Sindh Coastal Community Development Project, he said: "The aid is usually provided in the name of development but these projects have impacted negatively the livelihood of local communities especially poor and marginalised."

He further said that not only this but these projects have drastically affected the natural resources, agriculture, ecology causing heavy immigration and displacements.

He however, suggested resistance to exploitative culture in advancing foreign aid and demanded democratisation of all aids for the development projects. Aasim Sajjad Akhtar said that the political economy of 'aid' remains one of the most under specified issues in political and intellectual circles of post-colonial countries like Pakistan despite its overwhelming significance for working people. He further said if awareness and resentment of the role of the military arm of imperialism is high in Pakistan, an understanding of the international economic structures which imperial interventions seek to consolidate is limited.

"Indeed, aid doled out by the international financial institutions (IFIs) over the past few years has been extremely effective in strengthening military dictatorship in Pakistan and accelerating the processes of financial liberalisation and rollback of the state that are the hallmark of neo-liberalism world-wide" he observed. He noted that if understood as a distinctly political tool then, it becomes clear that international aid has served its purpose adding unfortunately aid is typically analysed as a political phenomenon and this is reinforced in debates that uncritically question 'aid effectiveness'.

Dr Aly Ercelan urged the need for democratisation of state structure, which would have to embrace a range of initiatives in law, policy, and public action. He said that these initiatives must reflect the principles of a federation, commencing with debate and discussion of all aid in the Senate, NFC, and Council of Common Interests.

"Provincial autonomy requires approval of federal finances, which will provide an opportunity for informed consent by citizens, and not just their once-upon-a-time-elected public representatives" he added

He said that the Accra High Level Forum in September is a challenge for political parties and government with claims to democratic roots urging Pakistan should reject all additional aid until a comprehensive public accounting is done for all past aid. An honest review will call for debt cancellation, and adequate compensation for massive human displacement and ecological destruction, he noted.

Dr Aly lamented that as aid currently offered, planned and implemented, external grants and loans generally fail to promote rights-based development. He said most projects and programs are irrelevant to poverty eradication, because they do significantly reduce economic, social, political and cultural exclusion and inequity adding that even when apparently relevant, aid projects are unnecessarily costly and place burdens much greater than benefits.

He said that a broader problem is the distortions created by the aid regime as these distortions dilute if not negate democratic structures and process adding that there are several reasons which are all associated with lack of democratic accountability in governance.

"Since indirect taxes and public borrowing, with regressive burdens on the poor, are the economic basis of government, all aid sustains old inequalities and produces new ones," he added. He said that conditions for privatisation of public utilities are especially distortion because it privileges inequitable market and undermines democratic public provisioning adding that universal rights naturally lose before discriminatory entitlements as the broader negative impact is of promoting the fragmenting ideology of individual enrichment against solidarity for collective action.

He said that foreign direct investment (FDI) is not a substitute with fewer problems and without serious progress in democratising all decisions of state finances aid can never be made more effective especially at a time when the state has promised huge additional aid.


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## Neo

*'It's time for better economic policies'​* 
KARACHI (August 19 2008): Prominent economists have termed the president resignation as positive sign for the improvement of the economy. They said that the end of political instability will help the government to focus more on the economic issues. They said that due to the political uncertainty and unclear economic policies, foreign investors had been reluctant to invest in Pakistan.

However, the situation will now become clearer for the implementation of economic policies. Since the last several months the country's economy had been facing huge difficulties and capital markets were witnessing a downward trend, they added.

The political battle has badly hurt the country's economy and Karachi stock markets' index came down to 10,000 level from 16,000 points during this period, while the rupee was also continuously depreciating against the dollar, they said.

"We believe that the after the resignation of Musharraf, the government now address the real economic issues to improve economic conditions," they added. They said that some positive indications were witnessed on Monday, as the KSE index increased by over 460 points, while the rupee also gained some Rs 1.20 against the dollar.

"The rupee appreciation and positive trend in stock market on Monday just after the resignation of president, indicating that in near future country's economic condition would be further improved," they added.

They said that after the resignation of president the government would not able to blame the president Musharraf for any economic sad back and the newly constituted government would be whole responsible for economic performance. "The political government would now be absolutely free to develop its own economic policies," they said.

Although, the economy was on right track till the December 2008, however the political uncertainty, after the assassination of Benazir Bhutto badly hurt the economy and reserves have also come down below the ten billion-dollar mark, they added. They also stressed the government to adopt new economic policies in the line with current economic condition, which attract the foreign investors as well as local investors.


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## Neo

*Export finance funds increased to Rs 358 billion​* 
KARACHI (August 20 2008): The Governor of State Bank of Pakistan, Dr Shamshad Akhtar, has decided to increase the quantum of export finance for banks under Export Finance Scheme, and now funds amounting to Rs 358 billion would be available for export of eligible products during FY09.

In order to ensure availability of adequate financing to the exporters under the Export Finance Scheme (EFS) and to assist them in achieving the exports target, the State Bank of Pakistan would allow limits of Rs 125 billion to the banks under the Scheme for the current year which are 25 percent higher than the amount outstanding as on June 30, 2008.

As loans under the Scheme are allowed for 180 days, around Rs 250 billion would be provided during the year as refinance from the State Bank at the rate of 7.5 percent. In addition to this, banks would also provide financing facilities to the exporters under the Scheme from their own sources to the extent of 30 percent, which comes out to Rs 108 billion, at the same rate of 7.5 percent. Commercial banks have been brought on board further on this sharing mechanism.

Furthermore, in order to ensure timely availability of financing to exporters, the State Bank has also advised the banks that in future, financing requests from exporters under EFS should not be turned down, which otherwise are meeting the requirements of EFS and lending criteria of the respective bank.

State Bank would regularly monitor the behaviour of banks in optimal utilisation of limits and if a bank is unable to fully utilise its allocated limit, its unutilised limit would be allocated to other banks.

It may be added here that the State Bank of Pakistan and commercial banks have provided export finance to the exporters during FY 08 at 7.5 percent which is substantially lower than ongoing 6-month KIBOR (at present around 13.5 percent). Further, SBP has also provided refinance amounting to Rs 6 billion under its Long Term Financing for Export Oriented Projects (LTF-EOP) Scheme to the exporters during FY08, at a fixed rate of mark up of 7percent for a period from 2 years to 7-1/2 years.

Moreover, during the period from January to June 2008, SBP and banks/DFIs have also provided an amount of Rs 1.134 billion under the Long Term Financing Facility (LTFF) to the exporters for a period of up to 10 years at concessional rate of mark-up. All the above measures taken by SBP are aimed at ensuring adequate supply of financing to exporters at concessional rates of mark up to enable them to compete in the international markets to boost exports from the country.


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## Neo

*FDI up by 76 percent in July despite uncertainty​* 
KARACHI (August 20 2008): Despite political turmoil, Pakistan has been continually attracting foreign investment, as the foreign direct investment (FDI) during the first month of the current fiscal year surged by 76 percent. Analysts said that although the political turmoil continues for the last eight months, foreign investors are still relying on Pakistan's economy and continue to make huge investments.

"We believe that the country will attract more foreign investment with political stability, which will be seen in the near future after the resignation of President Musharraf," they said. FDI statistics are encouraging and are expected to further go up in the near future despite political battle, they added.

They said that investment by foreign investors depicts the country's strong economic fundamentals with the ability to attract foreign investors. The State Bank of Pakistan (SBP) on Tuesday said that net foreign investment in the country had increased by 40 percent during July. The country attracted 220.5 million dollars foreign investment in July 2008 as compared to 157.5 million dollars in July 2007.

The foreign direct investment depicted an increase while portfolio investment showed decline in July 2008. FDI mounted by 76.1 percent to 340.7 million dollars in July 2008 as compared to 193.5 million dollars in July 2007.

Portfolio investment declined by 234 percent as outflow of 120.2 million dollars was witnessed in portfolio investment in July 2008 as compared to 36 million dollars of July 2007.

"Now the situation has almost become clear and there is a belief that with the President's resignation, foreign investors would once again invest in Pakistan's equity market," economists said. They said that confidence of foreign investors in Pakistan's economy had still been retained.


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## Neo

*Economic problems may take back seat: S&P​*
NEW YORK (August 20 2008): Pakistan's pressing economic problems could take a back seat as officials are caught up in the succession of President Pervez Musharraf, and this could have credit rating implications, a top Standard and Poor's executive said on Monday.

Musharraf's stepping down on Monday solved one dimension of the political crisis, but the country still had to grapple with a host of issues, including who will replace him, said David Beers, S&P's global head of sovereign ratings based in London.

"There are a lot of questions that remain unanswered about what happens with President Musharraf leaving office, which still, we're concerned, would keep the authorities totally preoccupied with these political issues and their eye continuing to be off the ball with these pressing fiscal and economic policy issues," he said.

Pakistan's escalating budget deficit and a large current account deficit in the balance of payments drove S&P in May to cut the country's credit rating to "B", with a negative outlook, which tells the market the rating could go lower.

Musharraf resigned to avoid impeachment charges, nearly nine years after taking power in a coup. He had been politically isolated since his allies lost parliamentary elections in February. The opposition coalition that took over the legislature seemed to have no unified economic policy.

"They have some very pressing economic policy issues to start dealing with," Beers said. "We don't have a sense that there is anything like a consensus within the government on how to get on top of this - that's a precarious situation to be in." The single B credit rating for Pakistan's sovereign debt is towards the low end of S&P's scale - deep into speculative-grade "junk" bond territory.

Pakistan shares its single B credit rating with countries like Argentina, which earned a black eye in foreign financial circles for its 2002-2005 default on $100 billion in debt. Moody's rates Pakistan at B2, one notch above Argentina. Lower credit ratings can raise a country's borrowing costs and hamper its efforts to tap international credit markets

Asked about the prospects for a rating change for Pakistan, Beers said: "We'll see whether the government in the coming weeks or months puts together a credible package of economic policies and that will tell us whether the rating is OK where it is or not." Prolonged jockeying and uncertainty over Musharraf's position has hurt financial markets in the nuclear-armed country of 165 million people.

The stock market rallied 4.5 percent on Monday but is still near two-year lows. Pakistan's rupee has slumped nearly a third since April, and the currency is near historic lows. "I think the pressure on the currency comes from both domestic and international sources," Beers said. The country was "hemorrhaging" foreign exchange, he said, and foreign investors were pulling out of its stock market.

"They have a very large current account payments deficit which they are having a problem financing," he said. "They (Pakistan) have not been borrowing as market conditions, obviously in line with our rating, have not been favorable."

The current account is a country's broadest measure of foreign transactions and a deficit can spell lower reserves if there are no offsetting capital inflows. S&P estimated the budget deficit in the just-ended fiscal year ballooned to 8 percent of the gross domestic product - double that budgeted by Musharraf, Beers said.

His resignation "solves one dimension of the political crisis which has been underway now for many months," he added. "But it doesn't necessarily signal in our view a dramatic change for the better in terms of the broader risks that we think are weighing on the credit rating.


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## Neo

*Punjab government to promote SMEs at grass-root level​* 
LAHORE (August 20 2008): After launching the food stamp scheme in Punjab, Pakistan Muslim League-N led coalition government in Punjab is planning to undertake a programme of vigorous industrialisation and small and medium enterprises (SMEs) in the urban and rural areas of the province to absorb unemployed labour.

Sources in the PML-N told Business Recorder here on Tuesday that the major aim of the socio-economic policies of the PML-N led government is to create employment opportunities in order to reduce poverty and at the same time to ensure a fuller utilisation of the country's human resources for productive purposes.

Poverty alleviation is one of the important objectives of the PML-N led coalition government and the food stamp scheme has been launched in a bid to help the have nots to tackle poverty. "The PML-N government is launching a series of dialogue with the stakeholders to devise a policy for promotion of SMEs at grass root level", the sources said.

PML-N Lahore Vice President Shahbaz Haider said that provision of better health and education facilities to masses is the foremost priority of Chief Minister Shahbaz Sharif who is working day and night to change the fate of the people.

Analysts say there is considerable poverty in the fast growing cities of Punjab. Poverty in the urban areas is growing faster than the rural areas due to high food inflation and escalating price hike.

Beggary in Pakistan is now an established profession which is getting stronger in urban areas, they added. Coercive child beggary is also on the rise, with the parents forcibly sending their children out on the streets to beg, they say. Punjab Minister for Population Welfare, Neelam Jabbar Chaudhry said that poverty alleviation is only possible with the provision of modern educational facilities to all segments of the society.

She said the Punjab government has introduced reforms in education, health and other social sectors in a bid to provide relief to the masses apart from improving their standard of living.

In order to achieve desired results of the reform agenda, she said a comprehensive and effective monitoring and evaluation system is being implemented at district and provincial levels. She said that Rs 58.64 billion would be spent on social sector development programme whereas, Rs 30 billion have been earmarked for educational development projects and Rs 26.10 billion would be spent for the provision of healthcare facilities to the masses in the current fiscal year.

Under the universal primary enrolment campaign, 1.7 million children would be enrolled in the schools however, 100 percent children would be ensured to admit in the schools.

Huge amount is being provided for the provision of computers to 4000 high schools whereas, model schools will also be established at tehsil headquarter level, in addition free air-conditioned bus service would also be provided for pick and drop facility to the matric level students of less developed areas in the province, she added. Reacting to resignation of Pervez Musharraf, Neelam Jabbar Chaudhry said that Pakistan got independence through a democratic struggle and with vote power.

She said that Pakistan came into existence in the month of August and dictator Pervez Musharraf also resigned in the month of August whereas, another era of dictatorship of General Zia-ul-Haq finished in the same month and it was proved that dictatorship cannot stand in front of people's power.

Neelam said that Shaheed Mohtarma Benazir Bhutto's statement "democracy is the best revenge" has been proved; however, now it was the responsibility of the democratic forces to solve the people's problems and overcome the economic crises. She said that parliament is the elected body of people of the country and also answerable before the people, therefore, coalition government would ensure the supremacy of the parliament.


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## Neo

*'Government gives top priority to Balochistan uplift'​*
ISLAMABAD (August 20 2008): Advisor to the Prime Minister on Industries and Production Mian Manzoor Ahmad Wattoo has said that the government is giving top priority to the development of Balochistan, and added various industry-related projects are being launched in the province. He said this during a meeting with Balochistan Chief Minister Sardar Aslam Raesani, who called on him here Tuesday.

Watto said the Ministry of Industries and Production was spending more than 50 percent of its PSDP allocations in Balochistan province. Of the total Rs 10.4 billion PSDP outlays for the Ministry, more than rupees five billion were being spent on various projects in Balochistan, he added.

Wattoo further told the Chief Minister that Pakistan Gems and Jewellery Development Company (PGJDC), a subsidiary of the Ministry of Industries and Production, was setting up a gems laboratory and a Gems Centre in Balochistan with a total cost of Rs 118 million.

He informed the Chief Minister that clean drinking water for all project (CDWA), a project working under the Ministry of Industries and Production, was setting up water filtration plants in all parts of the country and Balochistan was at top as far as implementation of the project was concerned.

Wattoo also discussed with the Chief Minister the possibility of using iron ore of Balochistan for Pakistan Steel Mills (PSM). He revealed that the PSM spent Rs 25 billion on import of raw material last year, added huge foreign exchange could be saved if indigenous raw material, especially from Balochistan, was used in steel production.-PR


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## Neo

*McCann Worldgroup joins hands with Masood Hashmi​*
KARACHI (August 20 2008): Advertising veteran, S. Masood Hashmi, the son of industry legend, the late S.H. Hashmi, has announced the launch of ORIENTm McCann Erickson, says a press release. Pakistan's newest Agency will have state-of-the-art offices located at Orient House and will offer clients the entire range of integrated marketing communications.

ORIENTm will be affiliated with McCann Worldgroup, one of the largest advertising networks in the world with offices in 166 cities in 130 countries. Masood Hashmi has over 25 years experience in building Pakistan's No 1 Agency and has been associated with memorable advertising campaigns that have made numerous brands become household names in the country.

In addition, Masood has played a significant role with his selfless contribution to the advertising and marketing landscape in Pakistan. He was the youngest president of the Marketing Association of Pakistan (MAP), a position he held for four terms, and is also the recipient of the most coveted Marketing Excellence Award.

During his tenure, Masood has held four Marketing Conferences (Marcon) as the head of MAP. He is currently the elected head of the Arts Council of Pakistan for the second consecutive term. He has held the position of president of the International Advertising Association (Pakistan Chapter) for two years and is an Executive Committee Member of the Management Association of Pakistan.

Sorab Mistry, Executive Vice President of Asia Pacific for McCann Worldgroup said: "We have been associated with Masood Hashmi for the last 15 years and have tremendous respect for his contributions to his Agency and his leadership role in the industry. Together we look forward to providing clients with unique and innovative marketing solutions as the industry evolves fundamentally towards the digital age with the advent of the internet. We have ambitious goals for the new Agency and look forward with every confidence as Masood leads us to the next stage of our history in Pakistan."-PR


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## Neo

*Oracle gaining importance in various sectors​*
KARACHI (August 20 2008): Leading organisations in Pakistan are giving importance to Oracle, a software programme, to effectively address the important business issues, including compliance to regulatory requirements; data security; enhanced business efficiencies, disaster recovery and business recovery.

"With our experience of having served Pakistani enterprises for more than 10 years, we have come to understand their main points," said General Manager, Technology Sales for Oracle South Asia Growth Economies West, Farhan Ibrahim,.

He said that various sectors, including government, manufacturing, financial services, utilities, telecommunications and healthcare are preferring to adopt this software to run their businesses, and following organisations are witnessed to adopt this software programme, including City District Government Karachi; Central Depository Company of Pakistan Limited (CDCPL); Cyber Internet Service Pvt Ltd; DP World; Karachi Electric Supply Corporation; Karachi Stock Exchange; National Clearing Company of Pakistan (NCCPL); Pakistan Telecom Mobile Ltd (Ufone); Telenor Pakistan Private Limited; United Bank Limited; Warid Telecom have chosen Oracle Database and Oracle Fusion Middleware to reduce IT complexity, increase business agility and lower the total cost of ownership.

In addition, he added that Oracle works closely with our partners to provide customers with highly available, scalable and secure Oracle technology, solutions and services to address their business issues.-PR


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## Neo

*Economy offers best opportunity for telecom sector: Gilani​*
ISLAMABAD (August 19 2008): Prime Minister Syed Yousuf Raza Gilani has said that Pakistan's economy offers best opportunity for the telecom sector as the government is committed to provide level playing field for their operations. He said this in a meeting with Ms Chua Sock Koong, President Group CEO SingTel, Singapore and Bashir A Tahir, CEO Abu Dhabi Group at the Prime Minister House this afternoon.

Prime Minister highlighted that Pakistan with population of 160 million has potential with growth rate of 2 percent per annum having high young/medium segment. Hence, Pakistan telecom market provides enough opportunities of investment in the sector, he added. He appreciated the confidence of the group by investing in the Banking and Telecom sectors in Pakistan.

Gilani also told the delegation that Pakistan also offers best investment opportunities in the agriculture and energy sectors. He ensured the delegation of his government's full support in this regard. He encouraged Abu Dhabi and SingTel Group to establish software centres and also business process outsourcing in Pakistan.

Abu Dhabi Group is one of the largest business groups of UAE and the largest foreign investor in Pakistan. Qamar-uz-Zaman Kaira, Federal Minister for Information Technology was also present in the meeting.-PR


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## Neo

*Government giving Rs one billion daily as subsidy on oil: Naveed​*
HYDERABAD (August 20 2008): Federal Minister of Finance, Economic Affairs, and Investment Syed Naveed Qamar has said that despite reduction of oil prices in the international market, the government is still giving subsidy and whenever the oil prices of sale and purchase come to equalise, the subsidy will be withdrawn and the relief will be passed on to consumers.

The minister stated this while responding the questions of newsmen after inaugurating the restoration of PIA Flights here at Hyderabad Airport on Tuesday afternoon.

The minister said that though the oil prices have been reduced to 112 Dollar per barrel, however, the government is still giving rupees one billion daily in respect of subsidy on oil, therefore, passing on the relief to consumers is still a difficult for the government.

Syed Naveed Qamar agreed with the review of petrol prices on every fifteen days, adding that the country is purchasing oil from international market, which remains fluctuate; therefore review of prices is necessary.

However, he said that in the past, the changes in oil prices were not notified, which not only results the deficit of the government, but the companies concerned also suffered increase in deficit.

The present government has taken some measures in control the losses, which included the cut in margin of refineries, marketing companies and petrol pump owners and whenever the subsidy withdrawn, the savings will be passed on to consumers.

Responding to a question of the enhancement of gas prices, the minister said that the jump in the gas price was the result of the increase in oil prices. The exploration companies, which engaged in the country have made contract on the basis on international prices, therefore the prices of gas are linked with the prices of international market, he said.

Replying to a question, the minister said that because of the policies of the present government, stability has been brought in the food inflation and within few months, it started declining.

Answering to another question regarding the resignation of General Pervez Musharraf (retired), the minister said that it was the longstanding demand of the people of the country, which now come to fulfil. The countrymen have already given their verdict in General Election 2008 on February 18 with clear message of "Go Musharraf Go", the minister said.


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## Neo

*Progress of IPI project, exploration in Balochistan reviewed​* 
ISLAMABAD (August 19 2008): Balochistan Chief Minister Nawab Aslam Raisani chaired a high-level meeting here in the Ministry of Petroleum and Natural Resources. Balochistan Finance Minister Aslam Kurd, Balochistan Chief Secretary Nasir Mohammad Khosa, Petroleum Acting Secretary G.A. Sabri, and other officials of the petroleum ministry attended the meeting.

The meeting reviewed the progress of IPI gas pipeline project as well as removing the bottlenecks in exploration of oil and gas in Balochistan.

A detailed presentation on both the issues was given by G.A. Sabri. He told the meeting that as per Prime Minister Syed Yusuf Raza Gilani, Balochistan will be fully taken on board on the IPI project.

After reviewing details of the security issues of the various exploration licenses in Balochistan, the chief minister informed that in most of the blocks, there was no law and order problem and that the Balochistan government will provide fool-proof security for undertaking the exploration activity by the companies.

The chief minister noted that Balochistan has huge untapped oil and gas potentials and directed to expedite the activity, which is in mutual economic interest of the provincial government.

He cleared a number of areas for starting the exploration work and advised the provincial chief secretary to hold a detailed meeting on August 22 with the operating companies in the areas to sort out their operational problems.

The petroleum acting secretary said the chief minister for his visit to the province and stated that as a result of keen interest being taken by him, the blocks, which had been lying dormant for many years will be opened as well as other companies will also be encouraged to participate in the exploration activities.


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## Neo

*Japan to extend technical help in agriculture sector: envoy​*
ISLAMABAD (August 20 2008): Federal Food, Agriculture and Livestock Minister Nazar Muhammad Gondal has said that Pakistan attaches great importance to its relations with Japan, and there is a tremendous potential of increasing co-operation in food, agriculture and livestock sectors between two countries. He stated this while talking to Ambassador of Japan Seiji Kojima, who called on him here in his office in Islamabad.

The minister said that Pakistan is an agricultural country and there is need for increasing technological and research sharing between the two countries in food, agriculture and livestock sectors and Japan can provide assistance to Pakistan in improving seed quality of vegetables, fruits and other crops. "Joint ventures in food processing and agriculture machinery could be started." he added.

Gondal said that Japan should lift ban on fruits and vegetables export from Pakistan, as we are ready to fulfil the standards set by Japan and especially the quality of mangoes are according to the world standards and there is a great trade potential between two countries in this sector.

He said that Pakistan also needs Japanese co-operation and technical assistance in Livestock and fisheries sector, which provides a great share of agriculture in Pakistan and development in this sector can give a great boost to our economy. The minister emphasised the need forincreasing co-operation between two countries in fields of science and technology, education, culture and tourism.

The Japanese envoy said that Pakistan is fast growing economy and the government of Japan would extend its technical and scientific assistance to Pakistan in agriculture sector. "There is a need to exploit the trade potential between the two countries to its fullest" he said. The meeting was also attended by Minfal Secretary Zia-ur-Rehman, and other senior officials.-PR


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## Neo

*Pakistan does not need IMF support​*
EDITORIAL (August 20 2008): Mohsin Khan, International Monetary Fund's (IMF) Director for the Middle East and Central Asia categorically denied that Pakistan had requested any loan from the IMF. He added that Pakistan would not require IMF assistance in the next 10 months, or till the end of the current fiscal year, with two provisos: the government must succeed in slashing expenditure, inclusive of subsidies on oil and products, and accesses other sources of funding to offset falling reserves.

This advice conforms to basic tenets of economic theory: a sustainable budget deficit and adequate foreign exchange reserves are critical to cauterising weak macroeconomic fundamentals, like a falling external rupee value, rising rate of inflation, and promoting investment, both foreign and domestic, in an effort to increase productivity and propel the Gross Domestic Product growth.

The question, however, is whether this is doable. Can the government, for example, slash expenditure and generate other sources of funding to strengthen its reserves position? Slashing expenditure, especially on subsidies, constitutes one of the most unpopular decisions that can be undertaken by an elected government, especially given the inflationary pressures that have forced many of our low income earners to a below subsistence level income. This, in turn, has led to a rise in the number of suicides as well as a rise in the number of parents leaving their children on the doorstep of charities etc.

Be that as it may, the government has reduced subsidies on oil and products and even though there is general anger against the decision of the government to continue to increase the price of oil and products in spite of the rather significant decline in the international price of oil, the fact remains that from the point of view of economic policy focused on reducing inflation this is a bitter pill that the people of this country will have to swallow for some time to come. To neutralise the effect of rising oil prices on the very poor the government has decided to extend subsidies to those living below the subsistence level through the issuance of Benazir cards and food stamps that would provide some support to them in their effort to make ends meet. Targeted subsidies are always to be supported over and above general subsidies like an across the board subsidy on the price of oil.

With respect to Mohsin Khan's statement about the need to access sources of funding that would offset falling foreign exchange reserves, the recent statement by Naveed Qamar, the Finance Minister, is significant. He stated that Pakistan was expecting around 3.5 billion dollars by the end of September out of which one billion dollars would be released by international financial institutions (IFIs), a fact reconfirmed by Mohsin Khan, and the remaining 2.5 billion dollars from remittances.

The State Bank of Pakistan reported that total remittances received (July-April) 2007 were $5.3 billion - an increase of $868.96 million over the corresponding period last year; and if this trend continued remittances would rise by $5.8 billion by the end of June 2008. However if the 2007-08 trend continues till the end of September 2008 then the remittance income would be around 1.4 billion dollars by the end of September and not the extremely optimistic figure quoted by the Finance Minister of 2.5 billion dollars. Nonetheless even the 2.45 billion dollars by end of September from the IFIs as well as remittance income will provide significant support to our foreign exchange reserves.

An eroding rupee has dramatically raised the government's foreign debt servicing payment and that of course will increase the pressure on expenditure. For Mohsin Khan to state that the rupee should be allowed to settle at its true market value maybe sound like an advice for a country that is in the throes of a downward business cycle rather than one which has weak macroeconomic fundamentals all around.

This is attributed to the rape of the economy because of heavy subsidies and corruption of the former government but also the National Reconciliation Ordinance that has resulted in the de-freezing of accounts with the departure of billions of dollars from the country's banking system. One would hope therefore that the Pakistan government would formulate its own prescriptions instead of relying on the standard normal ones proposed by IMF that have generated controversy in other countries. For this, it is required to think out of the box and a complete change of economic managers/advisors is required.


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## Neo

*Power co-generation​*
EDITORIAL (August 18 2008): According to a report in this newspaper, the Pakistan Sugar Mills Association (PSMA) is lobbying for an upfront tariff of 11 cents per unit instead of the existing indicative tariff of 7.8 cents for the co-generation projects it has offered to set up to bridge the power supply-demand gap in the country.

Nepra has however termed the tariff demanded by PSMA as too high. The Minister for Water and Power, Raja Pervaiz Ashraf, has assured PSMA that the government will provide maximum possible incentives, and resolve all pending issues relating to the planned power projects. The minister has also directed the PPIB Managing Director to process the proposals submitted by the sugar industry on a fast-track basis.

According to one estimate, the country's 77 sugar mills are producing 12 tonnes of baggase - a by-product - that can co-generate over 2,000 megawatts of additional electricity. It is said that the sugar industry can initially generate 1,000 megawatts of electricity within two years, which, incidentally, is rather a longish period, given the rapid rate of growth of power demand in the country.

The existing power supply-demand gap ranges from 4,000 to 5,000 megawatts while the country's total installed generation capacity from hydroelectric, thermal, IPPs and nuclear sources stands at 19,566 megawatts, which is almost two-thirds of the entire generation capacity. Power consumption in the country has meanwhile grown at an average rate of 9.5 percent per annum over the last four years.

A stagnant power supply but growing demand has created a deficit of 4,000 to 5,000 megawatt, while the demand for electricity is projected to grow at the rate of 8.7 percent per annum. Bagasse therefor offers an inexpensive and efficient way to generate electricity.

Experts believe that with a little improvement in technology, or by entering into joint ventures with Wapda, the sugar industry can acquire the high-pressure technology to increase its power co-generation capacity. According to one estimate, a sugar mill with a capacity of 4,000 TCD can produce around 40 megawatts of electricity from bagasse.

The country can thus benefit with the overall production of 3,000 to 4,000 megawatts of electricity, and Wapda can recover the invested amount within two years. Secondly, co-generation methodology can be pressed into service during the lean period ie from October to March when hydropower plants are at their lowest ebb due to shortage of water while the crushing season is in full swing.

By using this new technology based on high pressure, power boilers attached to extraction-condensing turbines can operate and produce electricity to fill the widening gap between power supply and its rising demand. Thirdly, the process is environment friendly as no greenhouse effect or ozone depletion takes place due to use of bagasse as fuel.

Fourthly, this mode of power generation would be based on a local raw material, as a result of which the electricity produced will be cheaper than that produced by IPPs by at least 20 to 30 percent. The methodology involves use of a power station to simultaneously generate both electricity and usable heat energy. Conventional power plants emit heat created as a by-product of electricity generation into the environment, while co-generation offers a simple way of increasing the overall efficiency of a power plant by utilising the waste heat in the exhaust gases rather than discharging them into the atmosphere while still warm.

Thus, fuel is used at a very high efficiency level, and the overall emissions of carbon dioxide are minimised. Experts maintain that in order to obtain heat at a useful temperature, it is normally necessary to raise the temperature of the exhaust gases, which in turn increases the overall efficiency. Thus, the overall efficiency for CHP ranges from 70 to 90 percent as compared to 35-55 percent for conventional power plants, which is a major plus point.

Use of co-generation is particularly appropriate in factories or on farms that operate drying processes. Yet another benefit is that co-generation plants are small as compared to conventional power stations, and are often sized to suit an industrial or commercial application that requires a fairly constant quantity of electricity and heat for its operations.

Although power tariff demanded by PSMA for co-generation projects is indeed on the higher side, the cost of power production is steadily increasing whether it is co-generation or conventional power generation. There is thus a need to rationalise power tariff for co-generation and other modes of electricity production.

However, a tariff of 11 cents per unit for all sugar mills will be rather too high in our socio-economic environment. As sugar industry will be using a cheap local raw material for power generation, the rate of tariff demanded by it needs to be negotiated.


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## Neo

*Business circles say Musharrafs resignation good omen​*
** Hope for political stability, economic revival to follow
* FPCCI chief says Musharraf chose the best option
* SCCI chief says govt should now focus on other issues
* Dhedhi expects stock market to perform well
* FBAATI chairman says Musharraf should be given credit for his *achievements

KARACHI: The business and trading community on Monday termed the resignation of President Pervez Musharraf as the best option that he chose in the prevailing situation and hoped for the much-needed political stability and economic revival to follow this latest development.

To avoid further confrontation, which county cannot afford, this is a wise decision on part of Mr Musharraf to step down and let the new democratic system to move on, leaders of countrys business community responded to the presidents resignation.

However, some people in business circles were not expecting the president to resign and contended that he should have faced the impeachment motion and defended himself against the charges the ruling coalition was leveling against him.

The business community however opined that now the onus lies on the ruling partners as to how they manage the countrys affairs, particularly in the economic arena, which has deteriorated massively in the recent months.

Though, Karachi Stock Exchange (KSE) gained massively as well as the Pak rupee appreciated against the dollar, they said that it is remains to be seen whether this trend would sustain or is a temporary euphoria.

FPCCI: It was the best available option that President Musharraf chose to save the country from further plunging into political instability, and will hopefully bring back normalcy in the country, Federation of Pakistan Chambers of Commerce & Industry (FPCCI) President Tanveer Ahmed Sheikh said.

He said that it is now up to the ruling coalition to deliver on various fronts, economy in particular, and added that the business community hopes that the present government functions smoothly for the economic prosperity and development of the country.

SAARC: Tariq Saeed, SAARC Chambers of Commerce & Industry (SCCI) President and leader of the ruling group in FPCCI welcoming the president s resignation said that the government should not opt to put Pervez Musharraf on trial as it would not bring an end to political instability.

Rather, he viewed that it should be focusing on pledges that it made with the people such as the restoration of pre-emergency judiciary, a consensus candidate for the president office, restoration of 1973 constitution in its original shape and foremost the economic revival of the country.

Saeed also argued against the presidents views during his address to the nation that Pakistan had no recognition before his take over. Pakistan enjoys recognition right from its birth and especially after the nuclear blast in 1998 after which Pakistan joined the ranks of a few nations, which possessed this capability... and that was a big achievement, he added.

Dhedhi: Stock broker Aqil Karim Dhedhi also viewed the resignation as a way forward to political stability and hoped that the economy would perform well in the coming days as the fundamentals are still strong and just need the governments attention.

The economic outlook, he added was not bad and the deterioration was caused by the high crude prices in the international market. As now the government has withdrawn the subsidy, the improvement in the macroeconomic indicator would hopefully be achieved, he said.

About the future outlook of the stock market, he said that response after the resignation has been positive and the market posted massive gains. He expected the stock market to perform well following the return of political instability in the country.

FBAATI: FB Area Association of Trade & Industry (FBAATI) Chairman Idris Gigi said he was a bit disappointed over the resignation, as the president should have countered the allegations. Though mistakes were committed by him, but it will be unfair not to give him credit for the achievements in his era, Gigi added.


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## Neo

*President Musharrafs resignation pushes KSE 460.91 points up​*
KARACHI: The Karachi stock market made great strides on the first trading of the week on Monday with ending of the ongoing political uncertainty in the country following announcement of resignation by President Pervez Musharraf during his address to the nation, analysts said.

The Karachi Stock Exchange (KSE) 100-share index gained a massive 460.91 points and closed at 10,719.62 points as compared with 10,258.71 points of the previous session. The KSE 30-share index gained 589.67 points to close at 12,279.90 points.

Massive buying activities were witnessed during the trading session owing to intense buying euphoria by the retail and institutional investors giving considerable boost to the market. Commenting over rejuvenation of the market, analysts said that the market opened in the green zone with an initial gain of 104.77 points and this positive stance remained dominant throughout the trading session. The market turnover increased 63.43 percent and traded 158.86 million shares as compared to 97.20 million shares traded in the previous session. The overall market capitalisation gained 4.28 percent to Rs 3.332 trillion as against previous sessions Rs 3.195 trillion. Out of 283 companies, 234 closed in positive zone, 36 in negative while 13 remained unchanged.

Hasnain Asghar Ali, Analyst at Aziz Fida Husein and Company citing reasons for positive index said, Bulls regained control as the political uncertainty ended, rupee recovered 1.6 percent, all eyes are on the new political setup and what they have to offer to put the economic train back on track.

The decision to accumulate by the seasoned market participants at times of uncertainty, when light was visible a few steps ahead, paid well. The session opened amid rumours of a major decision shortly, continued the positive run-up, although participation further reduced after the announcement of the Presidents address and support on dips in the main board stocks managed to maintain a positive stance throughout the session as volatility went at its peak when the decision was about to come. It was however welcomed by the local bourses.

Ahsan Mehanti, Senior Analyst at Shahzad Chamdia Securities in his comments citing reasons for positive index termed them owing to intense buying euphoria witnessed from retail and institutional investors as President Pervez Musharraf resigned and democracy won its battle and heavy buying was witnessed as political crises ended, expectations of reinstatement of judges still looms and the rupee strengthened with record Rs 1.2 per dollar.

The futures market turnover went up to 21.26 million shares as compared to 15.11 million shares traded in the previous session. Forty of the companies closed in the positive zone.


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## Neo

*Pakistans sovereign debt beset by concerns​*
HONG KONG: Pakistans sovereign bond spreads stayed high on Tuesday after the resignation of President Pervez Musharraf failed to clear doubts whether the government will now tackle its urgent political and economic problems.

Despite the rally in Pakistans stocks, credit analysts warned the country has yet to convincingly show it will deal with a host of economic problems, including its deteriorating fiscal position, slowing economic growth and double-digit inflation. The nuclear-armed country also faces continued political uncertainties such as who will replace Musharraf and how the coalition government, comprising historic rivals Pakistan Peoples Party and Pakistan Muslim League (N), will deal with a Taliban insurgency.

Pakistans five-year credit default swaps (CDS) were bid at 700 basis points, little changed following Musharrafs resignation on Monday.

Investors would thus need to pay $700,000 annually for protection against a default in $10 million of the countrys underlying debt.

We do not think the political issues are all resolved - the key question remains how well the two major coalition partners ... can cooperate without conflict, and focus on turning around the economy, said Lehman Brothers in a note to clients. We still see substantial risk of political turmoil dominating the more pressing economic issues. In addition, concerns over a potential deterioration in the security situation remain in place as well. Spreads on Pakistan sovereign bonds, which are not widely traded, have widened more than 2 percentage points this year as the political and economic turbulence has spurred ratings downgrades by Standard & Poors and Moodys.


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## Neo

*Inflation unlikely to ease in 2-3 years​*
ISLAMABAD: It is unlikely that inflationary pressure would ease, at least not in the next two to three years owing to the continuing increase in global food and fuel prices, the Investors Relation Service at the Ministry of Finance said on Tuesday.

Other factors that would prevent high inflation rate from easing are the second round effects of previous food/energy price shocks, a gradual removal of fuel and power subsidies, a weaker rupee, higher import prices and monetary overhang from the unprecedented government borrowing from the SBP for budgetary financing.

A very low base of last year as well as massive increases in both oil and commodity prices have augmented this extreme inflationary trend in Pakistan.

Inflation for the current fiscal year 2008-09 has been targeted at 11 percent. Global food and fuel crises have impacted Pakistan heavily, resulting in a massive surge in inflation in general and food inflation in particular.

The overall CPI-based inflation registered a sharp increase in July 2008 as against the corresponding month of last year. The overall inflation increased to 24.3 percent in July 2008 as against 6.4 percent in the corresponding month of last year (July 2007). When viewed in the long-term perspective, inflation in July 2008 was the highest since the decade of the 70s. The record breaking surge in the overall inflation of 24.3 percent in July 2008 is largely attributed to a sharp pick-up in both food and non-food inflation.

During 2007-08, the average inflation stood at 12 percent as compared to 7.7 percent in 2006-07.

Food inflation: It is a well-known fact that food inflation has emerged as a major source of concern for policy makers around the world, including Pakistan.

Food inflation surged to 33.8 percent in July 2008, an increase of 8.5 percent from July 2007.

Food inflation averaged 17.6 percent in 2007-08 as against 10.2 percent in 2006-07. It is clear that the last two years inflation was driven by higher food inflation.

Food inflation in Pakistan has been fuelled by a combination of domestic demand driven factors (rising per capita income), local supply shortage and global trends in the prices of essential commodities. Higher prices of edible oil (palm oil and soybean) and dependency on their imports transmitted higher international prices to domestic prices. Similarly, the domestic prices of wheat and rice also followed the global trend and witnessed sharp increases. To encourage farmers to grow more wheat and check cross-border smuggling the government has increased the procurement price of wheat from Rs 425/40kg to Rs 625/40kg  an increase of 47 percent. Livestock and dairy products (meat and milk) also registered sharp increases because of their rising domestic demand on the one hand and increase in the prices of feedstock on the other.

Non-food and non-energy inflation: Exhibiting the same increasing trend, non-food and non-energy inflation and stood at 16.8 percent in July 2008 against 13.8 percent in June 2008 and 5.2 percent in June 2007. Non-food and non-energy inflation averaged at 8.1 percent in 2007-08 as compared to 5.5 percent in 2006-07.

Non-food inflation: In July 2008, non-food inflation stood at 17.3 percent, an increase of 4.9 percent from July 2007.

It averaged 7.8 percent during 2007-08 against an average of 6 percent in 2006-07.

The sharp pick up in non-food inflation owes heavily to transport (37.1 percent), fuel and lighting (20.4 percent), cleaning/laundry (18.1 percent), education (14.1 percent), and house rent (13.5 percent) etc. Fuel and lighting and transport sub-indices have surged mainly on account of the pass through of higher international oil prices to domestic consumers and are likely to increase even more with the gradual removal of subsidies on these items.


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## Neo

*Rs 358bn for exporters under EFS during FY09: SBP​*
KARACHI: Funds amounting to Rs 358 billion would be available to exporters for the export of products eligible under the Export Finance Scheme (EFS) during 2008-09 as the Dr Shamshad Akhtar, Governor State Bank of Pakistan has decided to increase the overall quantum of export finance for banks under this scheme, reveals a circular issued by SBP on Tuesday.

In order to ensure availability of adequate financing to the exporters under the EFS and to assist them in achieving the exports target, the SBP would allow limits of Rs 125 billion to the banks under the scheme for the current year, which are 25 percent higher than the amount outstanding as on June 30, 2008. As loans under the scheme are allowed for 180 days, therefore, around Rs 250 billion would be provided during the year as refinance from the SBP at the rate of 7.5 percent. In addition to this, banks would also provide financing facilities to the exporters under the scheme from their own sources, to the extent of 30 percent, which comes out to Rs 108 billion, at the same rate of 7.5 percent. Commercial banks have been brought on board further on this sharing mechanism.

Furthermore, in order to ensure timely availability of financing to exporters, the SBP has also advised the banks that in future, financing requests from exporters under EFS should not be turned down, which otherwise are meeting the requirements of EFS and lending criteria of the respective bank. SBP would regularly monitor the behaviour of banks in optimal utilisation of limits and if a bank is unable to fully utilise its allocated limit, its unutilised limit would be allocated to other banks.


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## Neo

*Net foreign investment rises to $220 million​*
KARACHI: Net foreign investment inflow in the country rose by 40 percent to $220 million in July this year compared with $157.5 million in July last year.

Foreign direct investment was up by 76.1 percent to $340.7 million from $193.5 million. There was an outflow of $120.2 million in July this year compared with outflow of $36 million in July last year.

Investment of $214.5 million came from Singapore, $54.2 million from US, $23.3 million from UK, and $22 million from South Korea.

The country had received $5.192 billion during 2008-09.


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## Neo

*Pakistan and US amend development accords​*
ISLAMABAD: The US governments and Pakistan on Tuesday signed two amendments to their bilateral agreements on US development assistance to Pakistan.

The amendments establish the basis for the United States Agency for International Development (USAID) to provide $15.4 million more to projects that strengthen Pakistans agricultural production and that improve the health of Pakistani mothers and children.

Todays agreement is another sign of the Unites States commitment to Pakistan, said USAID Acting Mission Director Edward Birgells. This money will go to projects that directly reach and benefit the Pakistani people.


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## Neo

*Current account deficit widens to $1bn ​* 
Thursday, August 21, 2008

ISLAMABAD: Despite a sizeable build-up in Pakistans current transfers, the burgeoning trade deficit has pushed the current account deficit (CAD) to $1.01 billion during the first month of the fiscal year 2008-09, depicting an increase of 23.77 per cent over $816 million in the corresponding month of the last fiscal. 

It is worth-mentioning that CAD during last fiscal July-June 2007-08 widened to $14.016 billion compared with $6.878 billion a year earlier. The deficit was equivalent to about 8.4 per cent of gross domestic product (GDP), compared with a full-year target of 4.8 per cent. 

The State Bank of Pakistan (SBP) said on Wednesday that during July 2008-09, in spite of strong build-up in current transfers of about $968 million, $1.62 billion trade deficit in goods and services was instrumental in turning the current account into deficit. Net current transfers rose to $968 million during the month under review, from $911 million in corresponding month of the last fiscal. 

Current transfers went up as the country received $627 million in workers remittances or foreign exchange sent back home by overseas Pakistanis during the July 2008-09, up from $496 million a year-ago in same month. At the same time, the resident deposit holders also deposited $100 million in foreign currency accounts (FCA) compared to $33 million, they placed in these accounts during corresponding period of the last fiscal. 

Though inflows in these accounts proved as a cushion in moderating current account deficit, but still outflows due to trade deficit, interest payments and profits and dividends remitted by the foreign companies to their respective countries were so huge, that inflows were unable to keep away the CAD from falling in red zone. 

It is worth-mentioning that during July 2008-09, trade imbalance (in goods and services) up from $1.447 billion last year to $1.62 billion this year. 

Higher oil prices spiral since November 2007 might add to the woes on external front through widening trade imbalance. Factors responsible for this huge deficit included higher outflows on account of transportation, travel, insurance, construction services, royalties and licence fees. 

The country had to spend $306 million on transportation account whereas its earning under this head was only $89 million. Thus, the net deficit in the service account due to chartering of vessels for imports, exports shipment was $217 million. Another factor responsible for big services account deficit was a net outflow of $107 million on account of overseas traveling.

The country had to spend $127 million to finance personal and business-related traveling abroad of individuals and groups whereas it earned only $20 million under this account. Hence the services account deficit in July 2008-09. The same applies on spending on insurance and royalties and licence fees paid to international organizations and their employees operating in the country.


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## Neo

*Moodys may further downgrade Pak rating ​* 
Thursday, August 21, 2008

LONDON: Pakistan is in danger of a further downgrade of its B2 sovereign credit rating as its foreign exchange reserves are being rapidly depleted, Moodys Investors Service said on Wednesday.

The ratings agency said the success of structural reforms would be vital to assuage foreign investor concern, noting that the resignation of President Pervez Musharraf on Monday would help heal domestic political divisions.

If the government remains unable to govern effectively, then discordant policies and their weak implementation could further set back investor confidence, Moodys said in a statement. This would, in turn, damage Pakistans balance of payments stability as well as the governments fiscal financing prospects, it added.

Delays in the ability of its fiscal authorities to wean themselves away from central bank financing of the budget deficit also represent a formidable obstacle for improving inflationary expectations and reducing pressure on the Pakistani rupee.

Moodys cut Pakistans rating to B2 from B1 in May. If, in coming months, Moodys concludes that deterioration in Pakistans credit fundamentals is becoming irreversible, then negative rating actions may follow, Moodys said.


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## Neo

*KSE falls 393 points as political disputes linger ​* 
Thursday, August 21, 2008

KARACHI: The lingering on of some political disputes between leading coalition partners in government in post-Musharraf era and a little progress by them on fixing the disordered economy revived bearish sentiments at stocks market on Wednesday.

KSE 100-share Index plummeted 393 points or 3.60 per cent and finished at 10,526 points. The parallel running junior 30-Index lost 455 points or 3.61 per cent and concluded at 12,151 points.

The leading bank, energy and telecom stocks faced mounted selling pressure throughout session, while the fertilizer and cement stocks were also among those, which hit lower circuit breaker in this session. Over three dozen stocks closed at maximum possible low in a day.

Turnover in ready market fell by 45 per cent to 116.579 million shares as compared to 211.244 million shares changed hands a day earlier. Future market turnover also declined to 15.651 million shares against 23.704 million recorded yesterday.

Accordingly, the overall market capitalisation dropped by Rs118 billion to Rs3.268 trillion.

Analysts were of the view that the setting of modalities and prioritising the issues on government hand, as to which one should be addressed first made the sentimental investors worry about their investment on bourses and they indulged into profit-selling at the available margins.

The difference of opinion on political issues and widening differences between them (coalition partners) as to how and when the deposed judges should be reinstated; whether the trial of Musharraf should be held or indemnify him; and who would be the next president of Pakistan were some so disturbing issues. The lingering-on of these issues was again putting a big question mark on relationship between partners in government and growing uncertainty in markets too, said Farhan Rizvi at JS Research.

On the other hand the extremely disturbed economy needs immediate attention of the government that looks less available owing to their full time involvement in political issues, a leading analyst said.

The statement by a Standard and Poor&#8217;s rating agency official about Pakistan&#8217;s economy was also very important one, as he also underlined the unresolved issues on economic front and stressed upon addressing them on immediate basis. If government fails to prepare a comprehensive plan for fixing economy in crisis the stock market could go to new low levels of late 90&#8217;s, he replied and pointed out, the all time high twin deficits and inflation needed immediate attention.

After opening in red market saw no recovery to green throughout the session, according to KSE website. But the Exchange quoted figures indicated that it extended the day gains by another 12.21 points to 10,931.27 points intra-day high sometime during the session from pre-opening level of 10,919.06 points.

At a point of trading market had dipped to 10,484 points intra-day low - losing 435 points, but a little buying in the closing hours recovered market above 10,500 points level.

Losers outnumbered gainers 243 to 46 with 16 closing unchanged among 305 active stocks on board.

Highest volumes were witnessed in Oil and Gas Development Company at 9.125 million closing at Rs117.28 with a loss of Rs6.17, followed by Callmate Telips at 8.048 million closing at Rs1.90 with a loss of 47 paisa, NIB Bank at 7.177 million closing at Rs9.44 with a loss of Re1, Zeal Pak at 5.389 million closing at Rs1.47 with a loss of nine paisa and Engro Chemical at 4.824 million closing at Rs206.90 with a loss of Rs7.64.


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## Neo

*Delay in resolving crucial issues may cripple economy ​* 
Thursday, August 21, 2008

Time is money that our new economic managers have already wasted a lot. It is high time now for the economic gurus of the government to focus on the reserves building and pay heed to countrys appalling fiscal situation; otherwise it would be not less than a mission impossible to bail out Pakistan from the economic mess. 

After removal of General Pervez Musharraf from the scene, stock exchange showed bullish trend only for two days and countrys currency gained strength just because of the end of political chaos. 

It is an eye opener for democrats and for those who used to say once Mush gets the push, uncertainty would end that will prove beneficial for the economy. This notion was proven wrong, as even after the alleged stumbling block was removed the black clouds of chaos are still hovering over the country. This time around Mr. Musharraf is not responsible for the situation, rather the indecisiveness of coalition partners on judges issue is the main reason for chaos.

Just because of the delay in decision on judges issue, bullish trend in the capital market could not survive and it tumbled by 393 point down to 10525 points and rupee shed by 40 percent against dollar. Owing to the indecisiveness, the country is again exposed to the political instability.

New ifs and buts and new actors and factors have been included in the restoring of the judges issue, which was earlier twice agreed under Murree and Islamabad declarations. If this issue is not resolved within next 72 hours, the improving signs in the economy may turn into depressing ones.

It is pertinent to mention that that government has already succumbed before the International Monetary Funds tough conditions to qualify for the $1 billion loan from World Bank and Asian Development Bank. The conditions placed by the fund are that the government will not borrow from the central bank of Pakistan, instead adopt other tools to generate finances to meet the fiscal deficit by arranging credit lines from international market. The government would also arrange finances through Pakistan Investment Bonds, National Saving Schemes, and Treasury Bills.

The IMF asked the ministry of finance to bring down its fiscal deficit target to 4 percent of the GDP against the target of 4.7 percent fixed for 2008-09. This is really a very strict condition to comply with. 

The Fund too asked for change in the definition of fiscal deficit - currently based on revenue-expenditure formula - arguing that this formula has become irrelevant in view of the appalling economic situation of the country. 

Rather the IMF stressed for financing-based fiscal deficit meaning that the if the regime arranges the finances as per laid down conditions, the amount of the arranged finances would be considered fiscal deficit. And the borrowed finances should not be more than 4 percent of the GDP. The fund also asked the government to quicken and accelerate the privatisation programme, which factually cannot be materialized without the political stability. 

Under the IMF conditions the government also has to completely waive the Rs175 billion subsidy on oil prices by December this year and Rs89 billion on power tariffs including those of Distribution Companies (DISCOs) and the Karachi Electric Supply Company (KESC) by June 2009. Although the government has given the green signal to IMF to comply with all the conditions to qualify for the credit line of $1 billion from the WB and ADB, it seems a gigantic task keeping in view the impending political turmoil if the coalition partners fail to resolve the judges issue on time.

The victorious political barons need to realize the gravity of the situation and should forthwith take crucially needed decisions on political issues, as any further delay may cause irreparable damage to the countrys economy.


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## Neo

*Indus Motor unveils new Toyota Corolla​*
KARACHI, Aug 20: The Indus Motor Company (IMC) on Wednesday launched the new Toyota Corolla at the Expo Centre.

Akira Okabe, Senior Managing Director Toyota Motor Corporation, Japan, said that the Corolla sales in 2007 exceeded 35,000 units which was the second consecutive year that Pakistan had achieved the number one position for this car in Asia.

However, auto industry analysts said that the new model had been launched after a gap of six years. Not only this, the customers had seen the arrival of new Corolla in 2002 after a gap of eight years when the company had started its local assembly in 1994.

Analysts said that while taking a huge gap of years to introduce and make a complete change in the model, the IMC had only made cosmetic changes like introducing new crystal head lights and back lights, front grill etc., in order to fulfill a formality of introducing a new model every year.

It is not clear whether the Toyota Motor Corporation has any worldwide policy of taking a big gap of years to make a complete change in the model or it follows a policy, like in Pakistan, for making only cosmetic changes while launching a new model every year.

The IMC had been adopting the same lethargic attitude in its small car brands of Daihatsu Cuore and there had been no complete model change since its introduction in 2002.

Despite this, the sale and production of Toyota and Daihatsu brands for the year ended June 30, 2008 were 50,802 units and 48,222 units as compared to 50,557 and 47,821 units respectively in the last year.

Sales revenue increased to Rs41 billion during the year under review, up six per cent over Rs39 billion with the after-tax-profit of Rs2.3 billion as compared to Rs2.7 billion in the year ended June 30, 2007. Earnings per share decreased to Rs29.15 as compared to Rs34.93 in the previous year.

The companys board of directors has declared a final cash dividend of Rs6.5 per share making a total distribution of Rs10.5 per share in 2007-2008. The total dividend paid for the same period last year was Rs13 per share.


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## Neo

*Import bill spurts by 87%, touches $1.287 billion​*
KARACHI: Countrys oil import bill ballooned by 87 percent to $1.287 billion during the first month of current financial compared to $686.885 million in the same month of previous year.

Figures released by Federal Bureau of Statistics on Wednesday showed that import of manufactured petroleum products registered 135.62 percent growth to $752.618 million during the period under review against $319.417 million in the corresponding period of previous year.

Whereas crude petroleum oil import soared to $534.625 million during July of the current fiscal year, up by 45.50 percent against $367.438 million during the same period of last year.

Oil imports remained flat during the month of July over preceding month of June when $1.285 billion worth of oil products were imported.

According to analysts, major increase in the oil import has been caused by skyrocketing prices of petroleum products in international market. Oil prices declined in the recent days, but the impact of this decreasing trend could be seen in August oil imports.

International oil price plunged to $112 per barrel recently after touching $147 dollar per barrel mark during July. If the prices continue downward rally, the import bill may ease, they added.

Apart from the price factor, the quantity of oil imports has also contributed in swelling import bill. During the period under review, quantity of oil products showed substantial growth because of growing needs, especially for electricity generation. The import bill of agriculture and other chemicals was up 37.57 percent to $599.153 million in July of current fiscal compared to $435.514 million in the corresponding period of last year. Within this group, 127 percent growth was seen in fertilizers, over five percent in plastic material and over 8 percent in medical products.

Machinery is another major component in the import bill, as its import stood at $593.913 million in July of this fiscal, up by 11.10 percent from $534.567 million last year.

This growth in the import bill of machinery was due to over 48 percent growth in the import of power generation machinery, 55 percent growth in construction & mining machinery, 30 percent growth in electrical machinery & apparatus and 14 percent in other machinery. The import of office machinery was up by over two percent, however textile machinery down by 42 percent and the import of telecom and agriculture machinery down by 21 percent.

The import of food items surged to $239.088 million in the first month of current fiscal year as against $219.994 million during the same period of last year, showing a growth of over eight percent.

This growth was mainly due to import of wheat.

The import bill of transport was down by 9.95 percent to $106.206 million during the said period from $117.942 million in the same period of previous year.

The total import bill reached $3.549 billion during the first month of current financial year, reflecting a growth of over 37.92 percent to $2.573 billion in the corresponding period of last.


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## Neo

*Indus Motor sustains growth in 2007-08​*
KARACHI: The Board of Directors of Indus Motor Company Limited has announced financial results for the year ended 30 June 2008, following a meeting of the Board of review the Company's financial and operating performance for the year. The Company has announced positive results for year, sustaining growth despite a volatile local market and decreasing demand resulting from macroeconomic factors.

According to a press release, Sales and production of Indus Motor's Toyota and Daihatsu brands for the year ended June 30, 2008 were 50,802 units and 48,222 units respectively which is a new record compared to last year's figures of 50,557 units and 47,821 units respectively. The Company's sales revenue increased to Rs 41 billion, up 60% over Rs. 39 billion; with the after tax profit of Rs 2.3 billion, as compared to Rs. 2.7 billion achieved during the year ended June 30, 2007. Earnings per share decreased to Rs. 29.15, as compared to Rs. 34,93 in the previous year. IMC's Board of Directors have expressed appreciation of the Company's performance and declared a final cash dividend of Rs 6.5 per share, making for a total distribution of Rs 10.5 per share for FY 07-08. The total dividend paid for the same period last year was Rs 13 per share.

Growth in IMC's market share has been achieved at a point when sales of locally assembled passenger cars and light commercial vehicles (LCV) have declined by 8% to 187,412 units from 204,212 units sold in 2006-07, having previously recorded sustained growth over five years. Production within the industry has also declined to 187,644 units for the period ended 30 June 2008, down 5.7% over the 198,986 units produced last year.


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## Neo

*FDI in telecom sector dips by 21% in 2007-08​*
KARACHI: The Foreign Direct Investment (FDI) in Pakistans telecommunication sector witnessed slow pace in 2007-08 and decline by 21 percent as compare to last fiscal.

According to Pakistan Telecom Authority (PTA) statistics released on Wednesday, the FDI inflow declined by $385.7 million to reach $1438.60 million in 2007-08 as compared to $1824.3 million recorded in 2006-07.

Industry experts told that the major investors of the telecom sector have declined investments on network and technology infrastructure.

However, the FDI inflow will continue as the companies are now focusing to expand their business in small cities and villages, they added.

As per PTA figures, telecommunication sectors share in overall FDI of the country also fell by 7.6 percent to stand at 27.9 percent in 2007-08. However, the total FDI witnessed slight growth to reach $5152.80 million in the outgoing fiscal year. In 2006-07, the telecommunication sectors share was 35.60 percent in the overall FDI inflow of the country, which was also the second highest FDI recorded in this sector since 2001-02. The overall FDI inflow was recorded at $5124.9 million in 2006-07.

During the fiscal year 2007-08, UAE-based cellular operator pumped in $758 million in the telecom sector.

A biggest fixed lined company of the country invested by three US$ 126 million installments of its privatization process, Chinese cellular operator and others invested notable capital in the country.

Telecom analyst, Farhan Rizvi of JS Capital Research, remarked that the telecommunication companies have penetrated the active market of the country in past three years, and now they are expanding the consumer base with the existing infrastructure and networks.

He added that overall economy also witnessed slow down since December 2007 owing to political instability in the country, which also affected the pace of investment inflow in this sector.

However, he mentioned the sector has witnessed impressive investment inflow through the acquisitions deals of local telephony companies during the outgoing fiscal year.

He believed that FDI inflow might increase with the introduction of Third Generation (3G technology) by the cellular operators.

The telecom watchdog, PTA, has planned to conduct study on declining FDI in the sector. This sector contributed a massive share of 54 percent with $1905 million to overall FDI of the country in 2004-05.


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## Neo

*Infrastructure development vital for economic uplift​*
ISLAMABAD: Public-Private partnership is an essential option for infrastructure development to augment governments efforts and resources for the development of the country, Federal Minister for Finance, Syed Naveed Qamar said.

Pakistans structured programme in this regard will help private sector participation in development of infrastructure projects in the country. He made these remarks while chairing a meeting of the Board of Directors of the Infrastructure Project Development Facility (IPDF) in Islamabad on Wednesday.

Syed Naveed Qamar, stated that coordinated efforts being taken by the Planning Commission under the leadership of Salman Farooqi, Deputy Chairman, Planning Commission, Ministry of Finance and IPDF would result in the promotion and development of infrastructure in the country.

We are committed to the principles of value for money and affordability for delivery of more, better, affordable and faster services to the people of Pakistan, the minister said.

On the occasion, Ghulam Murtaza Satti, advisor on PPPs, said that a number of initiatives are already under way, including, environment friendly public transport (CNG Buses) service, Islamabad IT park, multipurpose water reservoirs, CBR automation project etc.

The GoP recognises the Public Private Partnership as an essential option for infrastructure development in the country, there is a need to identify projects which can be launched under the Public Private Partnership modality to relieve the burden on the public sector in the immediate term.

Public Private Partnership cannot be accomplished in a vacuum without the support of all the stakeholders including various government agencies, departments, private sector and most importantly the people of Pakistan. The meeting was attended by the Advisor on PPPs, Ghulam Murtaza Satti, Board Members: Dr Sania Nishtar, Salim Raza,. Suhail Safdar and Secretary Planning Commission Farrakh Qayuum. staff report


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## Neo

*Mirpur IT university on the cards​*
MIRPUR (AJK): In order to impart quality education in various disciplines of science and technology, the AJK government has formally approved establishment of Mirpur University of Science & Technology (MUST) with the coordination of Higher Education Commission (HEC), officials told APP on Wednesday.

The project is estimated to cost around Rs 4,000 billion. A formal ordinance for establishment of MUST has been issued by the AJK government, AJK University Vice Chancellor Prof Dr Habib-ur-Rehman said.

Rehman said that on special directives of AJK President Raja Zulqarnain Khan, who was also Chancellor of the AJK University, 4,000 kanal land had been acquired for the university.

He said the PC-II of MUST project had been inked and initial construction work will start next year.

He said the covered area of the varsity would be expanded to 5,000 kanals at a later stage. He said services of leading consultants had been hired to ink the PC-I of the project.

Prof Dr Rehman said that the state of art facilities would be available at MUST to ensure quality education. He said under the phased programme, the faculties of administrative sciences would also be introduced.

He said besides the students from across the country including the AJK, the children of overseas Pakistanis and Kashmiris would also be enrolled.

The vice chancellor said that the current fiscal year budget of Mirpur campuses of AJK University would be diverted to the establishment of the proposed Mirpur University of Science and Technology to kick off the project. app


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## Neo

*Resolution inked: Casarem project no substitute for IPI gas plan, says minister​* 
ISLAMABAD (August 05 2008): The ministers of four countries on Monday inked a resolution to proceed further with the Central Asia/South Asia Regional Electricity Market (Casarem) project envisaging transmission of 1,300 MW from Tajikistan and Kyrgyzstan to Afghanistan and Pakistan; but further commitment to the project will be linked to the availability of financing.

"It's a resolution not any agreement or Memorandum of Understanding," said one of the participants of an internal meeting. Most of the participants including Water and Power Secretary Ismail Qureshi were of the view that it was a difficult project and the concerned governments needed to proactively take it to the next stage.

The participating countries will have to negotiate commercial term sheets by the end of November as they have committed to go forward with the project subject to the bids received being consistent with the agreed cost estimates.

Though the writ of the Afghan government is reportedly limited to Kabul, yet the minister representing Afghanistan guaranteed security of the proposed transmission line, which continues to remain a serious cause of concern. The Central Asia-South Asia (Casa) 1,000 Project is anticipated to be commissioned by 2013. The project would go a long way in overcoming power shortages in Pakistan (1,000MW) as well as Afghanistan (300 MW).

The two-day Inter-Governmental Council (IGC) meeting of Casarem was held on 3-4 August 2008, in Islamabad, which was attended by ministers and delegates from Afghanistan, Kyrgyz Republic, Pakistan and Tajikistan along with the International Financial Institutions (IFIs), ie Asian Development Bank, Islamic Development Bank and World Bank, besides a project consultant.

The Inter-Governmental Agreement was extensively debated and after incorporating the changes/modifications agreed upon, it was signed by Water and Power Minister Raja Pervez Ashraf, from the Pakistan side, Alhaj Mohammad Ismail Khan, Minister for Energy and Water, Afghanistan, Saparbek Balkibekov, Minister for Industry, Energy and Fuel Resources, Kyrgyz Republic and Farrukh Hamraliev, Chairman, State Committee for Investments and State Property Management, Republic of Tajikistan.

Raja Pervez Ashraf dispelled the impression that Casarem was a substitute for the Iran-Pakistan-India (IPI) gas pipeline by categorically stating that talks on IPI were proceeding separately.

The Casa 1000 MW power transmission project comprises developing, designing, procuring, financing, constructing and operating electricity transmission lines and related facilities to enable the trade of electricity among the four countries.

"1300 MW of electricity will be imported from Kyrgyz Republic and Tajikistan of which 300 MW will be for Afghanistan and remaining 1000 MW for Pakistan," said the Water and Power Minister in reply to a question after the signing of agreed minutes.

The transmission line will consist of 477-km of 500 kV AC line from Kyrgyz Republic to Tajikistan and 750-km of 500 kV high voltages DC between Tajikistan and Pakistan via Kabul," said an official statement.

IGC Secretariat will be established at Kabul and hopefully would become operational with immediate effect. The meeting also approved the appointment of Qazi Naeemuddin of Pakistan as the first Executive Director of IGC Secretariat.

The success of the project is extremely important, as it will set a new era of mutual co-operation on electricity trade amongst Casa countries, Pervez Ashraf concluded.


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## Neo

*NFC award: PPP-led government gears up to remove apprehensions of federating units​* 
ISLAMABAD (August 06 2008): Lack of consensus on political and economic fronts has not hampered the resolve of the federating units to find out a workable formula for National Finance Commission (NFC) award as population-based distribution of resources from the Federal Divisible Pool down to provinces is not acceptable to the smaller provinces.

The distribution of resources through NFC had always been a source of tension among the federating units in the past, but the present coalition government, realising its importance, is geared up to implement award, removing all the apprehensions of federating units for bringing harmony, sources told Business Recorder on Tuesday.

They said the NFC award had always remained a source of tension among the provinces and between the federating units and Federation in past. But the present coalition government had realised that the provincial harmony could improve by implementing the award in true letter and in spirit and, threrefore, it had sought nominations from the provinces for the NFC award.

On the other hand, in a recent meeting in Karachi, the federating units have developed a broader consensus to bring down the share of the Federal government from present 62.5 per cent to 50 per cent.

Earlier, high government functionaries visited all the provinces to meet the Speakers and Chief Ministers of the respective provinces to resolve outstanding issues pending in Senate, especially related to NFC award. They met the Speakers and Chief Ministers of NWFP and Punjab and held discussions with them on the issue. Moreover, the Ministry of Finance has submitted a summary to the President for the composition of NFC award.

Sources said that the unelected government of President Pervez Musharraf and later on PML (Q) government developed consensus to reduce the Federal share to 50 percent, but it could not finalise the formula for distribution of resources among provinces.

"But the Centre is not willing to reduce its share from 62.5 percent to 50 percent because of accumulation of public debt and expenditure on defence," sources said.

Experts argue that minor changes in the present formula of resource distribution will definitely reduce the share of Punjab, which will not be acceptable to the province.

But the government will have to mend the population-based criterion for resource distribution among provinces under the National Finance Commission (NFC) award for creating harmony. Independent economists believe the government must broaden resource distribution base by encompassing disparities like human development index, inverse population density and revenue generation by a particular province in factors that determine how much money will go to a federating unit, enhancing the size of Federal Divisible Pool by injecting more money into it out of the Federal government's share in total revenue collection.

The Federal government must cut its non-development expenditures to ensure the availability of maximum funds for provinces. Sources said that the award had long been and was still based on population, predominantly, but all provinces, except for Punjab, wanted a different criterion.

Sindh had been calling the revenue generation to be the base for the award, NWFP used to cry for backwardness and Balochistan kept up demanding NFC with inverse population density, said the sources. The analysts believe that inter-province wrangling over the NFC formula have caused a four-year delay in the announcement of sixth NFC award. The decision that has to be taken in 2002 lingered on till 2006 when President Musharraf announced an interim arrangement.

Under the makeshift award, the provincial shares in the divisible pool were raised to 41.5 per cent in the 2006-07 fiscal and a gradual increase to 46.25 per cent in 2010-11 was envisaged. The provinces' demands were partially fulfilled by increasing subversions or grants-in-aid for them. A permanent award is, however, still awaited.

There have been seven NFC awards since 1951 and the eighth is under way. The 1974 NFC award was achieved by sharing fewer taxes, which, during the 1991 award were expanded with the inclusion of new taxes, especially excise duties on some commodities in the divisible pool. In 1997, it was further expanded by including the royalty and development surcharges.


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## Neo

*'Six pilot housing projects to be initiated in a week'​* 
ISLAMABAD: The government has asked Pakistan Housing Authority to launch mega housing projects to overcome the shortfall of residential accommodation in the country and six pilot housing projects in Islamabad, Lahore, Karachi, Quetta, Multan and Larkana will be initiated in a week, said Rehmatullah Khan Kakar, Federal Minister for Housing and Works here on Tuesday.

"These projects will help end shortage of housing units besides providing shelter to poor and needy," Kakar stated this while talking to a delegation from Malaysian NAMFATT Corporation headed by its Chief Executive David Chan, who is currently on a visit to Pakistan.

He said mega housing projects being launched by the government would offer unprecedented investment opportunities to the local and foreign construction companies besides generating tremendous socio-economic activities.

The minister said Malaysia has made tremendous socio-economic development in a short span of time and the government would welcome NAMFATT investment in the upcoming housing projects with a view to learning a lot from each other's experiences in the housing and construction fields. The Chief Executive of NAMFATT briefed the minister about his company's participation in mega housing projects in various countries including construction of 6,500 affordable apartments in Thailand.


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## Neo

*Economic indicators worsening: expert​* 
KARACHI: Pakistan's economic indicators are worsening and remittances and loans would not support economy in the long term. This was stated by professor Dr Norbert Walter, the chief economist for Deutsche Bank group and CEO of Deutsche Bank research speaking on the "2008: Developed Countries Downswing- Emerging Markets Inflation Requires Restrictive Policies" at a local hotel here on Monday.

The speaker said that inflation is not the only problem in Pakistan and for the last fiscal it is continuously on rise across the world, while particularly in Pakistan it has surged due to the reduction in subsidies. However that cut in subsidies, he said is a positive measure taken by the government.

Walter said that the economic indicators of Pakistan's economy during the last fiscal year are not positive and showed a worsening trend, while current account deficit and fiscal deficit are at a higher level with limited foreign reserves. He also believed that remittances and loans would provide only short-term support to the economy, as these are insufficient to reduce the current account and fiscal deficit, he said.

"Pakistan should attract the high portfolio investment and boost the exports for the long term support to the economy, that also help to reduce the current account deficit," he added. He said that during 2008 inflation rates remained above the target across the world and most of countries' inflation stood at double digit.

"The inflation in Asia also remains on high side with China at some 7.11 percent, India 11.9 percent, Vietnam 26.8 percent, Thailand 8.9 percent, Indonesia 11.1 percent, Malaysia 7.7 percent and Philippine having 11.4 percent inflation," he informed.

While on the other side many Asian central banks rates are below the inflation rate, which is further creating problems, he added. He said that sharp price increases on energy and foodstuffs are linked with the major advances in development occurring in many emerging markets, which are the result of the increased use of household appliances.

Moreover, a lot more energy is also being consumed because of the rapid pace of infrastructure expansion. Professor Walter said that overall energy prices including electricity and gas are unlikely to come down in the fiscal year 2009 globally and will become more expensive in the future, while during the half of next decade the oil prices would surge to new peak of 200 dollar per barrel.

"Some decline in the oil price in the near future is expected, however despite some decline in oil prices, the prices of metal and commodities prices would not come down in view of the tremendous demand," he added.

Speaking about the sub-prime crisis he said that it has triggered the sharp slowdown in US economy, while the emerging and developing countries would also be hurt by the US financial market turmoil.

The sub-prime crisis has hit the housing industry declining the demand and prices of houses and real-estate sector causing recessions in several countries, he said. He said that current financial turmoil has also hit Asia and stocks and bonds markets are likely to suffer. However, a marked rise in interest rates in emerging markets the economic downturn may well intensify during current fiscal year.


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## Neo

*July current account deficit up by 24 percent​* 
KARACHI (August 21 2008): Pakistan's current account deficit jumped up by 24 percent to 1.01 billion dollars during the first month of current fiscal year against 816 million dollars during the same period of last fiscal year, depicting an increased of 194 million dollars. This was due mainly to rising trade and income deficits, besides huge foreign payment and slow foreign inflows.

Economists said that imports growth was still higher than exports despite State Bank of Pakistan's (SBP) stern measures to curb imports and during this period imports grew by 38 percent while exports growth was 29 percent.

SBP statistics on Wednesday showed that current account contributed 1.195 billion dollars deficit, 428 million dollars services deficit and 340 million dollars income deficit. The combined deficit of income, trade and services amounted to 1.963 billion dollars as against the current account transfers of 968 million dollars in July last.

Goods deficit has gone up by 33 percent to 1.19 billion dollars in the first month of fiscal year 2008-09 as compared to 899 million dollars during corresponding period of last fiscal year.

Ihe income deficit increased by 25 percent to 340 million dollars, as country's altogether income from abroad stood at 65 million dollars compared to payments of 405 million dollar during July 2008. However, the services sector performed well and its deficit declined by 21 percent to 428 million dollars, with exports of 263 million dollars and imports of 691 million dollars.

Without official transfers the country's current account deficit stood at 1.01 billion dollars in July 2008 as compared to 841 million dollars in July 2007. Analysts said that during July the country also made some foreign payment, which put a negative impact on the current account deficit, while foreign inflows were already on slow track due to the persisting political uncertainty in the country.


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## Neo

*'Industrial, technical sectors linkage to be strengthened'​* 
LAHORE (August 21 2008): The Punjab Government will not only strengthen the linkage between technical institutions and industries but also make it more effective so that we could produce skilled labour force according to the requirements of local market.

This was stated by Chairman of Chief Minister's Task Force on Industrial Development, Small and Medium Enterprises (SMEs) Yawar Irfan Khan during a meeting with businessmen and entrepreneurs here at the head office of Punjab Small Industries Corporation (PSIC) on Wednesday.

Yawar said that small and medium enterprises are the backbone of economy and the Punjab government would prepare a comprehensive policy for the promotion of SMEs which would help generate job opportunities apart from checking poverty ratio in the province. He said that proposals and recommendations of industrialists, traders and business community would be included in the proposed policy and after giving final shape, the draft of policy would be presented to Chief Minister Punjab for final approval.

He said that duplication role of various departments would be further minimised and SMEs sector would be provided more incentives and facilities. He said that due attention would be paid on research work on SMEs sector. On this occasion, businessmen and traders also presented the proposals for the promotion of SMEs sector.


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## Neo

*Indus Motor plans to increase production​* 
KARACHI (August 21 2008): Indus Motor has planned to increase production capacity twofold to meet market demand besides introducing four more new models till 2015. This was stated by Parvez Ghias, CEO, Indus Motor Company Limited (IMCL) along with Muhammad Faisal, Chief Finance, IMCL, Shah Muhammad Saad Hussain, Director Planning and CR, IMCL, Raza Ansari, Director Sales and Marketing and Mustafa Hussain Lakhani, Manager Finance, IMCL at a press conference held at local hotel on Wednesday.

"Auto sector can not achieve sustainable development until the government takes positive measures for the sector," he said, demanding that five percent FED be withdrawn on the cars above 850cc and reduced recently increased sales tax rate.

He said that imports of reconditioned vehicles were only allowed to minimise gap between supply and demand and added that situation had completely changed and now industry was producing sufficient number of vehicles to meet market demand.

He, therefore, urged the government to evolve a policy to discourage the imports of reconditioned vehicles, which would definitely facilitate all stakeholders especially manufacturers and vendors at maximum.

He said that over 32 million Corollas had been sold in 140 countries for last 42 years, making it the most popular vehicle in the world. He informed that some 35,000 Corollas had been sold last year across the country and added that Pakistan had achieved first position for last two consecutive years in Corolla sales across Asia.

Parvez cited the features of new model, saying that Corolla had been reborn as a luxurious car, with advanced features and even more modern and stylish design while retaining the Toyota DNA of Quality, Reliability and Durability (QRD). He said that that Toyota had increased its share holding to 37.5 percent, which reflected its long-term commitment to the automotive industry in Pakistan.


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## Neo

*Underprivileged areas: Rs 3,516 million being spent on upgradation project, says minister​* 
LAHORE (August 20 2008): Senior Minister Punjab, Raja Riaz Ahmad, has said that government was spending an amount of Rs 3,516 million on the upgradation project of underprivileged areas of the province, which will provide all necessary amenities of life to the vulnerable at their door steps to improve quality of life of the people.

He was talking to the delegations of MPAs, social workers and political activists who called on him here on Tuesday. Raja Riaz told that this project would strengthen the role of union councils, help alleviate poverty in rural areas and improve literacy through skill training to the youth.

Further briefing the delegations about the different features of the project, the Senior Minister informed that this project is being carried out in the areas of Rawalpindi, Jhelum, Chakwal, Gujrat, Sialkot, Narowal, Khushab, Mianwali, Bhakkar, Layyah, Kotli Satiyan, Choa Sydan Shah, Isa Khail, Piplan, Pasrur, Sarai Alamgir, Kharian, Darya Khan, Mankera, Kaloor Kot, Karor and Chobara.

This project will be pivotal in improving socio-economic conditions of the people besides giving them necessary training to earn their livelihood and improve the standard of life, Raja Riaz maintained.


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## Neo

*July oil import bill swells to $1.287 billion​* 
ISLAMABAD (August 21 2008): The country's oil import bill swelled by 87.41 percent to $1.287 billion in July 2008, over the same period of last year ie $686 million. The detailed trade figure released by the Federal Bureau of Statistics (FBS) on Wednesday showed $1.287 billion oil imports in July 2008 as compared to $686.855 million in July 2007.

The oil import bill was closed at $11.30 billion in 2007-08 as 55.14 percent up by over $7.335 billion for 2006-07 owing to high oil prices in the international market. As a result, the inflated oil import bill was one of the major reasons for highest-ever trade deficit in Pakistan for the year closed in June. Pakistan faced $20.7 billion trade deficit in 2007-08, highest in the country's history.

The share of oil import stood at $1.287 billion to the total imports of $3.549 billion for the month with petroleum products $752 million and crude oil $534 million. The import of food, machinery agriculture and other chemical group also increased in July 2008, the FBS said.

Import of machinery for power generation, textile and construction was up by 11.10 percent in July over the same period of last fiscal year. The machinery import stood at $593 million in July 2008 against $534 million in July 2007. However, there was a decline of 24.62 percent in import of machinery in July over June 2008, from $787.911 million to $534 million.

Food import went up by 8.68 percent in July 2008 over the same month of last year. The import of palm oil stood at $107 million in July, followed by $30 million dry fruit, $25 million pulses and $33 million others.

The import of agriculture and other chemical groups also increased by 37.57 percent in July over the same period of last year on the back of more requirements of fertilisers and insecticide products.


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## Neo

*Technology for uninterrupted power supply introduced​*
ISLAMABAD (August 21 2008): Minister for Water and Power Pervaiz Ashraf has underlined the need for providing uninterrupted power supply to industry, trade and agriculture sectors to achieve the country's socio-economic development.

He said in his message read out in the inaugural ceremony of 'Power Boss Energy Saving Technology', introduced for the first time in Pakistan jointly by a British company, Somar International, and Suntechkays EnCon International Pakistan here on Wednesday.

The minister was to be chief guest on this occasion but could not turn up due to unavoidable reasons, for which he regretted. He said the introduction of Power Boss Energy Saving Technology would help to achieve this goal coupled with other allied benefits for these sectors.

In his message, he said the government was striving to overcome the prevailing energy crises. "We shall encourage all those who would help government to produce more energy and to conserve the existing source of electricity," he added. He appreciated Somar International, the manufacturers of Power boss Energy Saving product and Suntechkeys International Pakistan, introducers for their hectic efforts to introduce this revolutionary technology in Pakistan. A former Wapda chairman, Shamsul Mulk, on this occasion said that 21st century is more demanding and it is the dire need of the hour to have new water reservoirs.


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## Neo

*Concern voiced over India's commitment to joining IPI​* 
ISLAMABAD (August 21 2008): Pakistan's High Commission (HC) in India has expressed concerns over India's commitment to joining Iran-Pakistan-India (IPI) gas pipeline project in the near future. In its report to Foreign Office here Pakistan's High Commission said Indian politics and finalisation of US-India deal on nuclear technology will determine the time for New Delhi to become a part of IPI, an official said.

The report added that as long as US-India deal on nuclear technology transfer did not fully materialise, the New Delhi government may not be able to come up with a clear policy decision on the IPI.

Pakistan's High Commission in India quoted a number of statements of top Indian leadership and officials, which have appeared in the newspapers in the recent past. These statements urge the Indian government to stay away from IPI for the time being.

Another factor, which is impacting on the Indian decision to stay away from IPI is politics. The report quoted some media reports alleging that some political parties were provided financial support by at least one major Indian group involved in the gas business.

Pakistan is already doubtful about Indian participation in IPI and has time and again conveyed to Iran and India that it wants to complete the modalities for IPI as early as possible to avoid inordinate delay in the start of its work.

IPI gas pipeline has already been delayed for some years. The idea for this tri-nation project was conceived in 1994. Initially the delay was attributed to Iran's insistence on charging a price for gas that was not acceptable to the two user countries. That issue has now been resolved.

In spite of serious efforts, at least by Islamabad and Tehran, it could not be brought to an advanced stage for start of work after 14 years. It has been the worst victim of international politics. It was sometimes hit by US-Iran row and sometimes by Pak-India row.

The delay has taken its cost from an initial estimate of 2.5 billion dollar in 1998 to over 7.5 billion dollar in 2008. After 14 years, there is still no firm commitment to finalise the modalities and start practical work on the project in the near future.

An official said that a Pakistani delegation will shortly leave for Tehran to hold talks with the Iranian government for early materialisation of IPI project.


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## General Fujita

*Italians to invest in Sialkot airport project *​
Thursday, 21 August 2008 00:00 daily.pk 

Export-oriented industries to be set up with Chinese, Japanese collaboration
A group of Italian investors have announced to invest in the project of recently established Sialkot International Airport for providing the advanced and world class traveling and aviation facilities to the passengers.

Senior Vice Chairman Sialkot International Airport Limited (SIAL) Dr Sarfraz Bashir disclosed this while talking to the newsmen here Tuesday. General Manager Muhammad Nawaz Ch was also present on this occasion.

Dr Sarfraz Bashir said a group of Italian investors led by Dot would ink an MoU with the SIAL management for Italian investment in Sialkot airport project during a special ceremony scheduled to be held at Sialkot International Airport on today.

He said the Italian investors had shown keen interest in project of Sialkot International Airport recently established by trendy Sialkot business community on self-help basis. SIAL's senior vice chairman said that there was a vast scope of foreign investment in this airport project, as the investment was fully safe and secure here.

He added that the federal government had approved a special grant of Rs 180 million from Export Development Fund (EDF) for the early establishment of an international standard cargo terminal at the Sialkot International Airport, recently established by the trendy and opulent Sialkot business community on self help basis.

Dr Bashir said that the construction of this advanced cargo terminal would be started shortly. He added the SIAL management had also a decided to set up some new and modern export-oriented industries around the Sialkot airport in active collaboration with the businessmen of China and Japan for bringing boom in Sialkot's exports and socio-economic development in Pakistan's first ever "Golden Export Triangle" comprising Sialkot, Gujrat and Gujranwala districts.

Dr Bashir said the SIAL management was in touch with some leading businessmen of China and Japan, in this regard. He said there was a vast scope of establishing new export-oriented industries here.


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## General Fujita

*Microsoft signs MoU with Aga Khan Foundation *

Thursday, 21 August 2008 00:00 daily.pk 

Microsoft Corporation and the Aga Khan Foundation USA recently signed a Memorandum of Understanding (MoU) to collaborate in the development of innovative technology solutions and human resource capacity through education, health, civil society, financial services, rural livelihoods and economic development programmes in Africa, South and Central Asia.

The collaboration aims to expand social and economic opportunities of underserved communities, irrespective of race, religion, political persuasion or gender. Initially, the focus of the programme will be on education, with the establishment of a global information and communication technology (ICT) strategy for the network of 18 Aga Khan Academies.

Microsoft plans to provide technical assistance and advisory services to the academies and explore new ways that ICT can help enable quality education and teachers professional development, which may include Microsofts Partners in Learning programme and Microsofts Digital Literacy Curriculum.

On the occasion of the signing ceremony, to promote rural economic development, the two organisations plan to help expand access to information and technology through the Aga Khan Foundations existing Rural Support Programmes. Microsoft and the Aga Khan Foundation will also explore areas of joint research into new technologies relevant to rural populations, and ways to raise awareness about the needs of the underserved rural segment among software developers in universities and around the world.

Other areas of collaboration include the expansion of youth empowerment programmes and shared best practices in ICT skills along with quality healthcare initiatives and expansion of outreach and lower costs for financial services for the poor.

The MoU will expand upon the collaboration efforts between Microsoft and the Aga Khan Foundation to help empower more communities with the ICT access that can create new social and economic opportunities.


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## General Fujita

*Pakistan B2 rating faces forex reserves risk *

Friday, 22 August 2008 00:00 Pakistan Daily 

Pakistan is in danger of a further downgrade of its B2 sovereign credit rating as its foreign exchange reserves are being rapidly depleted, Moodys Investors Service said on Wednesday. The ratings agency said the success of structural reforms would be vital to allay foreign investors concern.

If the government remains unable to govern effectively, then discordant policies and their weak implementation could further set back investor confidence, Moodys said in a statement. This would, in turn, damage Pakistans balance of payments stability as well as the governments fiscal financing prospects, it added. 

Delays in the ability of its fiscal authorities to wean themselves away from central bank financing of the budget deficit also represent a formidable obstacle for improving inflationary expectations and reducing pressure on the Pakistani rupee. Moodys cut Pakistans rating to B2 from B1 in May. If, in coming months, Moodys concludes that a deterioration in Pakistans credit fundamentals is becoming irreversible, then negative rating actions may follow, Moodys said.


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## Neo

*Gwadar Port to get operational with wheat arrival ​* 
Friday, August 22, 2008

ISLAMABAD: The governments decision to receive imported wheat at the Gwadar Port is aimed at making the port operational and introducing it on international shipping and trade forums.

This will reduce dependency on existing two major ports, Port Qasim and Karachi Port, where larger vessels cannot be handled, and will also provide an alternative source for docking, an official requesting not to be named told The News on Thursday.

Tremendous economic activities will be generated when the vessel carrying 50,000-60,000 tonnes of cargo dock at the port and then about more than 2,000 trucks will be used to transport the imported commodity to upcountry, said the same official, adding that it would also reduce cost and freight charges of handling the imported commodity.

Offloading of ships carrying imported grain on Gwadar Port would spur the local business and trade including that of hotels and restaurants. Moreover, the local labour would get employment and if the trend continues, the shipping activities at Gwadar Port would help in defeating poverty and other miseries of the Baloch people, they hoped. 

To this effect, the government will allow one third of the imported wheat to be offloaded at Gwadar Port for curtailing the cost of importing the commodity, sources in the MINFAL confirmed to The News about berthing of ships at Gwadar port. 

The Economic Coordination Committee (ECC) of the cabinet in its meeting on next Tuesday (August 26) will deliberate on the issue as Balochistan Chief Minister, Nawab Aslam Raisani in a meeting with MINFAL requested it to offload some of ships carrying the imported grain at Gwadar Port for the betterment of the people of the province. 

The chief minister further asked the MINFAL that it should issue separate wheat import tenders particularly mentioning Gwadar Port as the port of destination, this would generate revenue for alleviating the miseries and economic woes of the people of the province. 

The ECC of the cabinet in its last meeting directed MINFAL to have reasonable quantity of the imported wheat shipped to Gwadar Port but the Trading Corporation of Pakistan (TCP) has so far accepted bids destined either for Port Qasim or Karachi Port. 

In last years wheat imports of 1.73 million tonnes, only one ship with 75,000 tonnes of commodity docked at Gwadar Port, but it was not properly handled and the cost of imported wheat increased manifold. 

We are recommending the ECC to allow one third of the total imported wheat to be offloaded at Gwadar port as it would help the importing agencies to cut cost and freight, said an official of the MINFAL. 

The TCP has so far booked 1.601 million tonnes of red wheat and four ships carrying 160,000 tonnes of wheat have unloaded the imported quantity either at Port Qasim or Karachi Port and the rest of the shipments too are booked for both ports but not for Gwadar Port. 

The TCP last year booked imported grain in haste and all the ships carrying imported wheat reached the ports one after the other resulting in non availability of berths at ports to unload the commodity. This caused ships to wait beyond their scheduled time resulting in demurrage claims that TCP paid from the national exchequer, sources in the shipping ministry told this correspondent. 

To avoid last years crowding at the port, the MINFAL is also recommending the ECC to divert one third of the ships carrying imported grain to be docked at Gwadar port, MINFAL official said. 

As the port located in wheat deficit area, so the imported grain could also be awarded to the province to meet its domestic requirement while the remaining would be transported through rail to the rest of the country, he added.


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## Neo

*Japan Special Zones to be set up to facilitate investors ​* 
Friday, August 22, 2008

ISLAMABAD: the country has assured the Japanese government that it would establish fully-equipped Japan Special Economic Zones (SEZs) where all state-of-the-art facilities and infrastructure would be provided at zero points to investors. Hajime Takeuchi, Director General and Kei Saito of Japan Bank for International Corporation (JBIC) called on Acting Secretary Investment Division & Board of Investment (ID&BOI) Maj (R) Iqbal Ahmad in his office.

The privatisation process was steadily moving ahead, performance of the stock exchange was likely to improve and rupee would be able to gain strength as soon as political and economic uncertainties were removed, Ahmad said.

Discussing special economic zones policy, the delegates were informed that the country was working on Japan SEZs proposal forwarded by Japan External Trade Organization (JETRO) and Pakistan Japan Business Forum (PJBF). 

This would result in the real boom in the economic activities, says a news statement issued here. The delegation was visiting Pakistan for exploring investment opportunities in different sectors. 

The delegation also visited State Bank of Pakistan and met other investors and bankers to explore opportunities in the financial business sector. The delegates were of the view that in reality Pakistan is far different from perception abroad. Ahmad highlighted Pakistans geo-strategic location and its importance and also discussed with the delegation about investment opportunities in power, agriculture, manufacturing, oil and gas and coal exploration sectors. 

He termed power generation the most important area for investments and said that the government is very keen to receive investments in this sector.

He said there are enormous opportunities in the agriculture sector including in dairy, livestock and fisheries, as the country is the 5th largest milk producer in the world. Pakistan has a population of 160 million people and has a very high consumer environment. 

Its investment policy is referred as one of the best in the region because it allows 100 per cent ownership. 

The country has a good quality skilled and semi-skilled labour force of over 45 million. For their training and professional acquaintances, there are numerous vocational training institutes at federal and provincial level. 

JBIC has a statutory mandate to undertake lending and other operations for the promotion of Japanese exports, imports and economic activities overseas; for the stability of international financial order; and for economic and social development as well as economic stability in the developing economies, thereby contributing to the sound development of the Japanese economy as well as international economy. 

It operates under the principle that it will not compete with financial institutions in the private sector.


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## Neo

*Japanese to invest $100m in IT​*
KARACHI, Aug 21: Japanese investors plan to put in $100 million in information technology projects in IT Park in Karachi. This fact emerged during a meeting of Japanese Ambassador Seiji Kojima with Sindh Industries Minister Rauf Siddiqui.

A press release on Thursday said that the Japanese envoy was accompanied by three other diplomats, who included Consul General Akinori Wada, deputy Consul General Tsuyoshi Hikita and Economic Adviser Takashi Miyata during the meeting with the Sindh minister.

The minister informed the Japanese ambassador that preparations were afoot to set up institutions to teach Japanese language to students. The Japanese have shown interest in setting up a massive database and a call centre with capacity of one thousand calls. Mr Siddiqui further informed the Japanese diplomats about investment opportunities in Sindh in automobile, textile, preservation of vegetable and fruits, including dates.

The Japanese envoy spoke of the success of automobile projects in Karachi in which his countrys investors are major partners.


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## Neo

*Forex reserves at $9.56 billion​*
KARACHI: Pakistans total liquid foreign exchange reserves stood at $9.568 billion on August 16, 2008, as against $9.920 billion on August 9, 2008, State Bank of Pakistan said on Thursday. According to the break-up, foreign reserves held by SBP were $6.262 billion while net foreign reserves held by banks (other than SBP) were $3.305 billion. staff report


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## Neo

*Majority favours DRI technologies for steel production​*
ISLAMABAD: A majority of members in long-term Steel Policy making process have favoured the introduction of the worlds most advanced Direct Reduced Iron (DRI) technology for making different steel products, as it is more efficient, productive and the best way to save energy.

This new technology uses natural gas to convert iron ore into DRI. The process uses both lump iron ore and iron pellets as raw material and recycles the used gas. The process lowers both energy consumption and environmental impact, making it an environmentally friendly process, experts told Daily Times here on Thursday.

The government is in process of making long-term steel policy for achieving the productive target of 10 million tonnes by 2015 million and 15 million tonnes by 2020. Main objective of the steel policy was to cover the widening demand and supply gap. The Engineering Development Board (EDB) with the consultation of stakeholders and steel mills across the country was engaged in making a draft of the steel policy by end of this month.

The officials said that the DRI technology is more efficient, productive and energy saving system. India and Russia already adopted this system for their steel sector and these countries achieved great success. A committee on Development of steel sector held a meeting in Lahore on Wednesday (August 20) and renowned steel experts attended it. During the meeting, the officials said they favoured the DRI technology for Pakistan under new steel policy.


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## Neo

*FTA, CEPA between Pakistan and Brunei soon​*
Friday, August 22, 2008 

ISLAMABAD: The study on Free Trade Agreement (FTA), Comprehensive Economic Partnership Agreement (CEPA) between Pakistan and Brunei Darussalam would be finalised soon to strengthen trade and economic relations and the recommendations would be submitted to the respective governments of both the countries for consideration.

According to an official statement issued here on Thursday the 3rd Joint Study Group Meeting for exploring the possibility of a FTA, CEPA between Pakistan and Brunei Darussalam was held in Islamabad.


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## Neo

*Saudi Arabia likely to give $500m grant to Pakistan​*
** Grant to improve foreign exchange reserves, reduce fiscal deficit
* Deferred payment mechanism would have provided foreign exchange cushion of $6bn​*
ISLAMABAD: Saudi Arabia is likely to give Pakistan $500 million in grant rather than an oil import facility on one-year deferred payment to offset oil prices shocks, sources in the Petroleum Ministry told Daily Times on Thursday.

The sources said the grant would help improve Pakistans foreign exchange reserves position and reduce its fiscal deficit. The hike in POL prices in recent months has strained countrys resources severely, they said. 

The Saudi move to award the grant comes in the wake of Prime Minister Yousuf Raza Gilanis visit to Saudi Arabia, the sources said. During the visit, it was discussed that Saudi Arabia could either provide grant to ease payments on oil import or grant oil credit facility on deferred payment.

In case the grant comes through, it would be the second such concession during the current financial year as the Saudi government had provided $300 million to Pakistan in March to control budgetary gaps. According to officials, the previous grant had come after former President Pervez Musharrafs visit to Saudi Arabia.

Deferred payment: Pakistan imports 110,000 barrels of oil per day and around 40 million barrels a year, the sources said, adding that if the two countries had agreed on an oil credit facility on one year deferred payment, Saudi Arabia would be providing Pakistan a foreign exchange cushion of $6 billion.

The government had hoped for either an extension in deferred payments period or oil supply without interest rates. At present, Pakistan imports oil from Saudi Arabia on 30 days credit facility.
 
The sources said Pakistan had also asked Saudi Arabia to restore the former special oil facility (SOF) under which Pakistan got oil after the 1998 nuclear tests. The SOF was later converted into the credit facility.

The sources said the government has projected budget deficit of Rs 753 billion for the year 2008-09 against previous years budget deficit of Rs 399 billion. They said the projected higher budget deficit is follows higher subsidies to the power and oil sector. The government paid Rs 165 billion differential claims to oil marketing companies that the government borrowed from domestic commercial banks.


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## Neo

*Pakistan and Indonesia negotiating to sign FTA ​* 
ISLAMABAD (August 22 2008): Indonesia and Pakistan are actively engaged in negotiations to sign Free Trade Agreement (FTA), which would help in raising the volume of bilateral trade up to one billion dollars mark.

On the occasion of 63rd anniversary of Independence Day of Indonesia here on Thursday, Ibnu Prispermana Charge d' Affaires of the Embassy of the Republic of Indonesia said that the bilateral trade between Indonesia and Pakistan stood at 919.46 million dollars during 2007, reflecting significant increase in import/export between the two countries.

He said that the governments of both the countries are committed to raise the bilateral trade volume up to one billion dollars. Both the countries have already singed the Comprehensive Economic Partnership (CEP) and now the negotiations are underway to sign a FTA, which will be a significant landmark.

He said that the trade figures between both countries have significantly increased mostly in favour of Indonesia. In 2007, trade volume between Indonesia and Pakistan reached 919.46 million dollars, whereas the export value of Indonesia to Pakistan was 846.62 million dollars. Similarly, Indonesia import from Pakistan was 72.84 million dollars.

Pakistan imports from Indonesia included vegetable fats and oils, coal coke and briquettes, paper and paper board, fruit and vegetables (betel nuts), synthetic textile, chemical material and products, chemical elements and compounds, machinery of all kinds, road vehicles and their parts, yarn and thread of synthetic fibres, iron and steel, tea and mate and crude rubber etc. He said that the Pakistan exports to Indonesia covers raw cotton, cotton yarn, cotton fabrics, wheat, muslin, fish and fish preparations, rice of all sorts, leather, synthetic fabrics including silk, flax and jute, fruits, vegetables, tarpaulins, sails etc.

Charge d' Affaires of Indonesian Embassy said that there is still lot of potentials that could be explored and exploited ie in industrial sector, technical now-how, banking and marine/air services. There is also a good prospect to enhance trade relations as Indonesia is big market of more than 225 million people, thus is keen to promote closer ties with Pakistan which is also a huge market with more than 160 million people.

The economic ties and bilateral co-operation between both countries have continued to strengthen over the years supported by the state visits of the respective governments and by various bilateral agreements. Indonesia and Pakistan can enhance co-operation in the framework of technical co-operation among developing countries (TCDC) in various fields by exchanging experiences, skills and information. Pakistan should explore the possibilities of entering into the Indonesian market and the businessmen of both the countries should have long-term vision to enhance economic prospects, Prispermana added.


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## Neo

*JSG advises to help boost Pak-Japan trade: Kojima ​* 
KARACHI (August 22 2008): Terming the current US $2 billion trade volume between Islamabad and Tokyo as "small", Japanese Ambassador to Pakistan Seiji Kojima expressed the hope that recommendations of the Joint Study Group (JSG) would help the two countries increase bilateral trade.

The outgoing Japanese envoy stated this at a dinner hosted by Chairman, Pakistan Japan Business Forum (PJBF) Abdul Kader Jaffer on Wednesday night at his residence to say "Phir Milenge" (see u again) to Kojima.

Others who attended the dinner included former Home Minister Irfanullah Marwat, former Senator Javed Jabbar, former ambassadors Mansoor Alam and Zafar Hilali, former Attorney General Qadir Saeed, Economic Advisor to Consulate General of Japan Takashi Miyata, Dr Mandip Sharma President Association of Women Entrepreneurs and Career Women (India), industrialist Mirza Ikhtiar Baig, Secretary General of PJBF Jamal Hussain, members of PJBF.

Kojima had arrived in Pakistan on June 26, 2006 as ambassador and would leave for Japan within the next few weeks. He thanked the government and people of Pakistan who, he said, are hospitable and nice. The Japanese envoy said he had tried his best to get more and more Official Development Assistance (ODA) for Pakistan from his government, which was investing a small amount of US $60 million annually in Pakistan.

"I tried to improve the situation and I hope that good recommendations of the Joint Study Group, by the end of this year, would give a boost to Pak-Japan trade," he added. Kojima's wife, Tami Kojima, in chaste Urdu, also expressed her deep gratitude to the people of Pakistan and wished long life to Pakistan-Japan friendship.

Earlier, PJBF Chairman Abdul Kader Jaffer, saying "Phir Milenge" to Kojima, called the envoy a great friend of Pakistan and Pakistanis, who had done a very good job for Pakistan. The PJBF chief said Kojima had multiplied the Japanese ODA to Pakistan for different infrastructure and human development projects, including construction of highways, tunnels and promoting education.

Jaffer, who is also Chief Executive Officer of the Forum, introducing Kojima to the Indian guest, Dr Mandip Sharma, urged him to ask his government for pressing upon their trading partners in New Delhi to strengthen friendly ties with Islamabad. Later, a memento was presented to the outgoing Japanese ambassador and his wife.


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## Neo

*PC restructuring to ensure sound strategies for key sectors of economy ​* 
ISLAMABAD (August 22 2008): The government has restructured the Planning Commission with induction of a tier of advisors to ensure sound strategies for key sectors to bring the country out of prevailing economic crisis, it was learnt.

Sources told Business Recorder on Thursday that the new government has re-organised the Planning Commission with induction of a tier of advisors, best in their respective fields, to evaluate each and every project submitted by the ministries for funding. The team of advisors included, Dr Ishrat Hussain, Dr Ishfaq, Shoaib Sultan, Shamsul Mulk and Dr Khadija Haq are working for Planning Commission without any salary and other perks.

The Planning Commission has also hired four consultants against special pay package and assigned them the job of preparing the strategies for key sectors of the economy. The Planning Commission's role in policy formulation is of extra ordinary nature and it definitely requires the services of the best available stuff of the professionals to deliver the good.

Some members of the commission hired by the pervious government have been replaced with the new ones, as the coalition government wants new policy making strategies including a workable solution to energy and food crises. The government also believes the whole focus, in the past few years, was on approval of projects without even considering their importance to the national economy.

This trend was required to be reverted and so is the role of the commission. The role of the Planning Commission in the new global economy driven by the market forces should have been to evaluate every project to make it value added.

With this vision, sources said the PC was re-organised to achieve sound economic decisions taking into consideration prevailing as well as future economic requirements to steer the country out of existing crisis. Unfortunately, they said, the country was facing problem because the decisions taken in the past were not in line with the requirements of the policy-making. Thus there was no planning for the future and the country landed into worst crisis.

They said that the PC was currently focusing on a two-year short-term plan, 2008-10, to address the issues on economic front with agriculture and energy top priority. The two-year plan is being designed not only to meet the next two years requirements but also could be easily fit with the next five year Medium Term Development Plan from 2010-15.


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## Neo

*Cellphone sector FDI declines to $1,438.6 million in fiscal year 2008 ​* 
ISLAMABAD (August 22 2008): Former president Musharraf's claim of phenomenal growth in the number of cellphone users as an indication of growing wealth in the economy does not imply a rise in foreign direct investment (FDI) in the sector, which has suffered a decline from a total of $1,824.3 million during 2006-07 to $1,438.60 million in 2007-08.

However, mobile phone companies contributed Rs 36.80 billion as sales tax/federal excise duty (FED) during 2007-08 against Rs 28.2 billion in the same period last fiscal year, reflecting an increase in the number of cellular phone subscribers. The cellular subscriber's growth rate in 2000 was 15.39 percent, which went up to 170.2 percent in 2006, but decreased to 39.8 in 2008 (mid-July).

The former president, in his farewell address to the nation, had claimed that the increase in the purchase of cellular phones by the poor and the middle class reflected greater liquidity of funds. It is unfortunate that it is this very liquidity that is responsible for the burgeoning inflationary spiral, according to economic analysts.

However cell phones are in use by other countries as a means to trace criminals. Unfortunately, in Pakistan the police do not have any mechanism to trace cell phones. The reason is expensive equipment that is not affordable by the Pakistan Telecommun-ication Authority. However, this equipment is currently being provided to intelligence agencies.

Officials stated that a way out is either for the intelligence agencies to assist/share the technology with the police or for the government to support this endeavour financially on behalf of the police.

According to a report, more than 150,000 people lost their cell phones in Karachi alone in 2007, while only 59,744 complaints were registered by the police stations across the city. In Rawalpindi almost 1,000 cases of mobile-phone snatching were reported last year.

The increased use of cellular phones without computerised national identity card numbers (CNIC) has resulted in increased street crime, inclusive of mobile phone snatching. Unregistered mobile phones are also used by terrorists, dacoits, carjackers and kidnappers. Efforts are underway to develop strong links between enforcement agencies and the mobile companies to check the misuse of SIMs by criminals.

It is estimated that over 16 million unregistered SIMs of mobile phones are active in unsafe hands out of a total of 80,301,327 SIMs (recorded statistic till February 2008) of various cellular phone companies in the country and are mostly in use by gangs. They have a number of unregistered SIMs and they use one connection once and after completing their task they destroy the SIM.

When Business Recorder contacted the representatives of various cell companies, it was learnt that almost all of them were aware of the issue and were taking initiatives to overcome this issue.

On the other hand, talking to Business Recorder the officials of Islamabad Traffic Police (ITP) said that with the increase in the use of cellular phones has also increased the ratio of road accidents. "Considering this the ITP has started a campaign in order to fine Rs 700 to those caught using cell phones while driving," officials added.


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## Neo

*Time on the economic front is running out ​*
(August 22 2008): A senior Standard and Poor's executive has stated that while Musharraf's resignation has solved one dimension of the political crisis, the government has to grapple with an entire range of other issues - on the political and economic fronts.

There is sufficient evidence to conclude that Musharraf's departure led to the subsequent strengthening of the stock market as well as the external value of the rupee. However, analysts, political as well as economic, are reluctant to accept these corrections as long term for two major reasons.

First, the stock market in this country is manipulated by a few big players and it is significant that the former President Musharraf occasionally used the performance of the stock market in the aftermath of any rumour to dislodge him from his office as proof positive that the market supported him.

Musharraf's final departure led to a strengthening of the stock market which, therefore may only partly reflect the relevance of political uncertainty as a key determining factor in the stock market's behaviour; for it is fairly evident to all that after the President's departure political instability may have been reduced but not completely eradicated as issues between Coalition partners associated with the restoration of the November 2 judiciary appear to have resurfaced.

Second the rupee value has strengthened in the open market vis-a-vis the dollar at a time when the dollar is also strengthening in value against all major currencies of the world; however the interbank rupee-dollar parity being less than in the open market, indicates that speculation against the Pak currency is rampant and SBP will be well advised to counter the tendency to hoard forex currencies to hedge against inflation.

What is, however, significant for the people of this country is that the domestic value of the rupee, or in other words the inflationary spiral unleashed by flawed economic policies of the previous regime, has not yet been reversed.

There is also a growing consensus that the present government appears to be drifting with respect to its economic policies - a stance that stands many a government in good stead if the macroeconomic fundamentals are good. However, today Pakistan's macroeconomic performance is close to abysmal with high rates of government borrowing, both from the internal and the external marketplace, failure to raise revenue in line with a rise in expenditure, and a rising budget deficit.

Add these figures with the two indicators that directly impact on the people, the voting base of the government, namely, inflation and unemployment and there must be cause for serious concern at the highest level of government.

This concern unfortunately is not visible. In contrast the general perception is that the government is complacent on the economic front, a condition that fails to reflect the ominous fact that time is running out for the Coalition. And with Musharraf no longer in the picture as well as with the lapse of sufficient time since the newly elected government was installed - nearly six months - people are now likely to lay the blame for their economic woes on the present government.

In addition the coming month of Ramazan, a month where retailers make windfall profits, is going to increase pressure on the government to maintain the prices of essential food items. It is to be hoped that the government understands that it does not have the luxury of tackling one issue at a time but needs to deal with a multiplicity of issues simultaneously.


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## General Fujita

*Argentina for boosting trade ties with Pakistan *

Saturday, 23 August 2008 00:00 Pakistan Daily 

Argentina was keen to further boost and strengthen its bilateral relations with Pakistan including trade for the mutual benefit of the people of the two countries. 

"The Economic and Commercial section of the embassy of the Argentine Republic is strongly committed to improving the level of bilateral trade and to find new business possibilities with Pakistan," Ambassador of Republic of Argentina to Pakistan, Rodolfo J. Martin Saravia told in an interview here Thursday. 

The ambassador said that Pakistani businessmen are always invited to visit Argentina to develop new trade contacts. Quality and competitive prices have turned these products into favorite of Argentine buyers, who value the "Made in Pakistan" imprint, he remarked.

He said Pakistan's sports good are also stand high on the list of products preferred by the people of Argentineans customers. "The presence of Pakistan exporters in the Argentine market has also made itself felt in the medical and odontology instruments," he added. The ambassador further said many Argentine companies have turned from German to Pakistan suppliers of the products. 

He said his country ranks first among CNG users in the world and it is the major producer and exporter of CNG cylinders, car kits, CNG station compressors and dispensers. He said the sales of Argentinean CNG equipments to Pakistan have risen to $2.34 million in the first trimester of 2008. 

The Ambassador Rodolfo J Martin Saravia said an Argentine company, Argentoil SA has decided to invest in Pakistan for the local production of the cylinders. 

He said the partner for this joint venture is Wah Industries Limited, the commercial branch of the largest and the most important industrial company of Pakistan. 

The new joint venture, he said, envisages the construction of a plant in the Wah area, the transfer of top of line technology and the local production of CNG cylinders for motors vehicles and filling stations. 

The ambassador said in the second semester of 2008 a pharmaceutical plant in Lahore at a cost of $10 million would be inaugurated to produce medicines to treat cancer and hepatitis. This project, he said, would be a product of joint venture between the Argentinean Pharmaceutical company 'LaboratorsiosBago' and Pakistan's 'Ferozesons Laboratories.' This Pak-Argentine Joint Venture would help people of Pakistan access to cheaper medicines as well as to reduce foreign imports of those essential products. 

He said Pakistan manufacturers are also keen user of Argentine laminated steel, seamed and seamless pipes for the hydrocarbons industry and his country is currently the main provider of these types of products.


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## General Fujita

*ZONG China Mobile new offer in Pakistan *

Saturday, 23 August 2008 00:00 Pakistan Daily 

ZONG, China Mobiles has stunned the Pakistani market once again with another revolutionary offer. ZONG now offers a 50 paisa per 30 second call to any one international number.

ZONG's 8-Anay users will now be blessed to call at any one international number covering UK, USA, Canada, China, Germany, Ireland and Spain at 50 paisa per 30 second only. The users will be charged only 40-paisa extra for the first minute. ZONG has yet again introduced a unique offer which is currently not being offered by any operator in the country.

Furthermore, customers can now be in touch with their close relatives, family and friends who are in far-off lands. Speaking to the media, Salman Wassay, Director Marketing stated, "China Mobile has always set new trends in the industry by introducing innovative and consumer-friendly offers. 

It will continue to innovate and improve its services in the days to come."


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## Neo

General Fujita, please support your posts with offcial link when quoting a news article.

Unsupported posts will be deleted.

Thanks.


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## Neo

*61pc hike in power tariff on the cards ​* 
Saturday, August 23, 2008

ISLAMABAD: Another inflation bomb is ready to hit poor masses as the National Electric Power Regulatory Authority (NEPRA) has hinted at a massive increase of 61 per cent in electricity tariff of power distribution companies and the government is considering fully passing on the said rise to end-consumers, a senior official at the Ministry of Finance told The News.

Since March 2008, there has been no increase in power tariff despite the massive increase in prices of fuel used in thermal houses in the country. Fuel cost has gone out of control and there is a need of a hefty increase in power tariff.

Right now the Pakistan Electric Power Company (PEPCO) has been trapped in a logjam of huge fiscal constraints, as it has no money to pay various Independent Power Producers, which are threatening to shut down their power plants.

The IPPs have also threatened to encash government guarantees against dues which PEPCO is liable to pay. IPPs are also facing the music, as they are running short of liquidity and are unable to pay oil marketing companies for the fuel they used to run their power plants.

The circular debt has reached unmanageable levels. So the massive increase in power tariff is inevitable to bail out PEPCO from its huge fiscal trap.

However, the official said that NEPRA is still busy in finalising its most frightening determination to this effect. NEPRA has hinted at a 61 per cent increase in power tariff to the Ministry of Finance in its preliminary calculations.

When contacted, a senior official at the Ministry of Water and Power said that by the end of the current month the ministry will receive much-awaited tariff determination. After consulting the top man at the Ministry of Finance, a formal notification for increase in power tariff would be issued.


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## Neo

* Falling rupee yet to get floor ​* 
Saturday, August 23, 2008

KARACHI: The Pakistani rupee weakened to a record low against the dollar on Friday as investors worried about the future of the countrys government and economy, adding pressure on authorities to move to rescue the falling currency.

Traders said the rupee hit a record low of about 77.15 against the dollar. By the end of trade, it had pared losses and was last traded at 76.10/20.

Analysts said Pakistans political tension and shaky economy will further pummel the rupee in coming weeks, and the government and the central bank needed to take steps such as getting financial aid from abroad, and cutting imports to halt the currencys dive.

They have very limited time available. They need to search for a helping hand from countries that can quickly give them a loan with low interest rates, said Haider Hussain, an economist at Elixir Securities. The long-term options are to increase investor confidence, boost exports, and cut imports, he said.

Inflation is soaring, high oil prices have depleted reserves, and the trade and fiscal deficits are widening.

Investors fear Pakistan cannot pay for its imports given that reserves have fallen to a level worth less than three months of imports, and this has dragged on the rupee.

Pakistan is in talks with Saudi Arabia to defer an estimated $5.9 billion worth of oil payments, and is also in discussions with the World Bank and the Asian Development Bank for over $1 billion worth of loans. But none of these loans are finalised.

Fridays decline effectively erased all gains the rupee made when it strengthened on Monday and Tuesday on investors hopes Musharrafs resignation will allow the government to focus on reviving the economy, and not be distracted by politics.

But that is unlikely. The coalition on Friday pushed back a deadline for the restoration of judges deposed by Musharraf last year, further delaying the resolution of a problem that threatens to split the alliance.

Panic: The rupees previous record low of 76.95 was struck on Aug 15. The currency, which sunk to record lows for five consecutive sessions last week, has lost nearly a quarter of its value this year.

Its just panic in the markets, said a currency trader who declined to be identified. The stock market is still falling, and there is talk of rating downgrades. We just dont see any good news, he said.


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## Neo

*Govt may slash development budget by Rs100bn ​* 
Saturday, August 23, 2008

ISLAMABAD: A major exercise is under way to reduce expenditures by scaling back development budget to the tune of Rs100 billion as well as saving Rs55 billion through other avenues in order to bring down the yawning fiscal deficit during the ongoing fiscal year, The News has learnt. 

It will be a unique move on the part of PPPs finance managers to revise its major budgetary estimates especially on expenditure side before the end of the first quarter (July-Sept) of the current fiscal year. 

The finance managers are also proposing to the government to curtail subsidies which would pave the way for saving Rs40 billion on POL products and power sector subsidies by passing on whole 61 per cent increase determination done by NEPRA and Rs10 to 15 billion through Benazir Income Support Programme (BISP) as so far the government remains failed to kick-start this initiative. 

The Planning Commission has sent official communication to all ministries/division and attached departments to rationalize their development schemes by prioritizing them and also identified those schemes which were meant for public private partnership (PPP). 

We have given a deadline to the ministries to furnish all relevant details by start of the next month (Sept 2008), which will enable us to work out the cash development plan for the second quarter (Oct-Dec) period of the current fiscal year, the Planning Commission Official Spokesman Asif Sheikh confirmed when The News asked him in this regard. 

However, sources in the Finance Ministry said that the government allocated Rs550 billion for development outlay with operational shortfall of Rs77 billion, so the envisaged allocation for Public Sector Development Programme (PSDP) touched Rs473 billion. 

We are asking the political leadership to reduce the PSDP outlay by Rs100 billion in order to cut down expenditures. If the incumbent regime decides to scale down PSDP by Rs100 billion then the development expenditures will be reduced to Rs373 billion, added the sources. 

It is relevant to mention here that the PC high-ups used term of rationalization rather than cutting down the development outlay as they argued that the government would not abandon those certain schemes and it would be put under the new initiative of public private partnership (PPP) through Infrastructure Project Development Facility (IPDF). 

Sources in the Finance Ministry said that the government allocated Rs140 billion for provision of POL related subsidy for the current fiscal year. It is commitment of the government to fully implement automatic price adjustment formula after December 2008. If prices in international market remain at the existing level of $120 per barrel, the government should not reduce POL prices in the domestic market. 

The government is providing major subsidy on diesel, which have come down from Rs31 per liter to Rs19 per liter owing to recent decrease in its prices in the international market. 

For petty political gains, the government should not reduce POL prices in the domestic market, added the official. On power sector, the government allocated Rs75 billion subsidy for the current fiscal year. If the government decides to pass on 61 per cent increase in power tariff determined by the NEPRA in one go or in two phases, it will help to save Rs10 billion. 

On imported wheat subsidy, the government is going to spend a huge amount which can be saved by curtailing smuggling. For fertilizers, the government allocated Rs40 billion for the current fiscal year by providing farmers a bag at the rate of $40 against international price of per bag at $71. 

The price differential between international and domestic market stood at 71 per cent the official said and added that there would be definitely slippages going on to Central Asian Republics (CARs) through Afghanistan. The government has allocated Rs34 billion for BISP, which would be started from Sept 1, 2008. This scheme would take some time for gaining its full momentum which will help to save Rs10 to 15 billion, said the official and added that if the government wanted to ensure transparency then it could not spend its whole allocated money of Rs34 billion. But if it wants to distribute money for political patronage then it could spend the whole amount.


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## Neo

*$400m Saudi credit facility sought for urea ​* 
Saturday, August 23, 2008

ISLAMABAD: Pakistan has approached Saudi authorities for another credit facility of $400 million for the provision of urea fertiliser, The News has learnt.

Finance Minister Syed Naveed Qamar telephoned Saudi Commerce Minister on the direction of Prime Minister Syed Yousuf Raza Gilani seeking another facility of $400 million for urea fertiliser, sources privy to the development told this correspondent.

The facility would be used for importing nearly 400,000 tonnes of urea fertiliser from the Kingdom of Saudi Arabia to meet local consumption, as the MINFAL reported to the prime minister that the country can face shortage of nearly 400,000 tonnes of urea fertiliser during the coming Rabi season, the same official said.

Saudi authorities finalised a credit facility of $125 million for importing urea fertiliser last month as it is deficit of the commodity for the next crop and from this facility, nearly 200,000 tonnes would land at the end of this month while the remaining would be shipped after this.

Before this credit facility of $125 million for fertiliser, Pakistan has nearly availed the existing Saudi credit facility of $133 million tonnes, which the Kingdom pledged during a devastating earthquake in 2005 and Pakistan imported the urea fertiliser, as the country is urea deficit for the last couple of years. 

Secretary MINFAL, Mohammad Zia-ur-Rehman is also leaving for Saudi Arabia to finalise the modalities for this credit facility and also expedite the shipment of 200,000 tonnes commodity to avert the shortage in the local market. 

The prices of the commodity in the local market are increasing due its shortage and farmers are complaining about scarcity of urea and overcharging by the dealers. The urea prices are being reported at Rs800-900 per 50 kg bag against its ex-factory price of Rs650 per 50 kg bag. 

Out of the total consumption basket of seven million tonnes of fertilisers, 5.4 million tonnes are urea fertilisers while the remaining 1.6 million tonnes are phosphorous and potash fertilisers. For the urea fertilisers, the country has local production of 4.8 million tonnes and 0.6 million tonnes shortage is met through imports.


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## Neo

* Karachis skyline finally taking shape ​* 
DHA Phase VIII projects foresee completion in 3 years

Saturday, August 23, 2008

KARACHI: Karachi is creating a new skyline along the coast of Arabian Sea in Defence Phase 8. Currently, four international projects are under construction in this area, on their way to establish the first creek enclave in Pakistan.

It may be recalled that the Defence Housing Authority (DHA), Karachi, announced its plan to develop Phase 8 in 1987 but it was only in 1994 that DHA began allotting plots to army officers and announced permission for construction in its first three belts.

All residential and commercial plots in DHA Phase 8 today are owned by the private sector and permission for construction has only been granted for a portion of the phase.

As a result of the Pakistan property boom that began in 2001, big names of the international real estate industry also sat up and took notice of the Karachi coastline. Crescent Bay by Emaar Pakistan, Creek Vista and Creek Marina by Meinhardt Singapore Pte Ltd and Creek Side by Abu Dhabi based Injaz Mena Investment Company PSC, joined with UK-based Global Haly Investment Ltd, are all multi billion dollar projects expected to be completed within the next three years.

Sysmax, a Malaysian firm, developed the DHA Golf Club in Phase VIII and is currently working on the soon-to-be-built Raffles International Club. According to further details, construction of new roads, new sewerage lines, water supply lines, water reservoirs and KESC lines is under way and will be completed within the three-year timeframe. The contractor for this project is the National Logistics Cell (NLC) and the cost of construction for the roads is estimated to be around Rs2.07 billion.

An industry analyst informed The News that the UAE based DAMAC developers were also in line to start a project. However, conflict with the government and the DHA led to their backing out of the deal. One important question that arises is with what price tags are these projects expected to bring for their properties. An official of one of the projects informed that their prices ranged between Rs15 and 25 million. He hesitated to reveal more since his companys polices do not allow the project to be discussed as yet.

A real estate agent, who specialises in DHA and Clifton properties, shared that all four projects were competing with each other and therefore, any information regarding their work was considered sensitive.

He said that one particular project was in fact being bad-mouthed by estate agents, since developers had refused to involve these agents in the project. On an average, all these apartments are roughly priced between Rs10 million to Rs25 million depending on the developer, the locality, the tower, etc. This is without adding the taxes and other additional charges, the source added.

General Manager of Sales and Marketing, Creek Marina, Shabbir Siraj, said that due to inflation and the increasing prices of cement, steel and other construction materials, they were compelled to add the rising cost of production to the bills of their potential new clients.

He informed that the new prices would be 15-20 per cent higher than their earlier quoted ones, before quickly adding that property prices did increase with time and it was therefore, keeping the local market price in mind, that the new evaluation was being done.

Clients who had booked apartments that were sold earlier during our first launch will remain on the earlier contract and pay their remaining instalments as was agreed in the initial project, he clarified.

A sales executive of another project who preferred to remain anonymous (also due to company policies) said that most of the buyers of these projects were overseas Pakistanis. If 60 per cent of all these projects have been sold collectively, then about 40 per cent are owned by those Pakistanis who have dual nationalities or have well-established businesses abroad and consider these complexes to be a part of their future investments.

He further reasoned that high level projects are introduced after thorough research is carried out regarding the market and its consumers. Obviously we do have buyers, thats why we can see these projects coming up. No business likes to play blindly and get established first and then wait for customers.


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## Neo

*Plan to slash PSDP by Rs100bn​*
ISLAMABAD, Aug 22: The government has decided to cut the federal Public Sector Development Programme (PSDP) by Rs100 billion to contain fiscal deficit at 4.7 per cent level and allow a hefty increase in electricity tariff to achieve macro-economic stability, says Minister for Finance and Privatisation Naveed Qamar.

One of the most serious issues is our depleting foreign exchange reserves, which have come down to about $10 billion because of exchange rate pressure, and, therefore, urgently needed to be enhanced through more privatisation and by attracting new foreign inflows, he said at a press conference in his parliament chambers here on Friday.

The government, he said, had decided to take a number of steps to contain the fiscal deficit target during 2007-08 and for this purpose we will have to slow down the economic activity.

He, however, said that oil prices, which had gone down to $112 a barrel after peaking $148 barrel in the international market and then again rose to nearly $120 a barrel, would not be brought down unless the government achieves an equalization.We will pass on the benefit of reduced oil prices when the government starts buying and selling oil at the same price.

He said all supplementary grants to the ministries and divisions had been stopped along with a directive to cut back on foreign tours and stop buying physical assets.

He said that funds would be withdrawn from development projects which do not have any economic impact.

Terming it unfortunate, he said that the government would have to slash its development budget from Rs550 billion to Rs450 billion to avoid piling up problems.

He said that the International Monetary Fund (IMF), which was insisting on keeping fiscal deficit pegged at 4.3 per cent target, had been told that it was not possible, but it had been assured that the deficit would not exceed 4.7 per cent target which had been fixed in the budget.

The National Electric Power Regulatory Authority (Nepra) is believed to have recommended a 61 per cent increase in electricity tariff, which the government was anxious to pass on to consumers.

Without hinting about the exact amount of the power tariff increase, the finance minister said: It will be a fairly hefty increase to help remove Wapdas growing financial difficulties.

He said that Wapda needed to make payments to Independent Power Producers (IPPs), which had threatened to shut down their plants because of non-payment.

He said the government could not offer sovereign guarantees to the IPPs but that they would be made their due payments by allowing Wapda to go for substantial power increases.

Pakistan has to survive as a normal country. It also favours the IPPs.

He said that all government subsidies, including on oil and electricity, would be eliminated by June 2009, and consumers would have to share the burden of increase in prices of all commodities.

Wapdas circular debt is increasing, which will have to be cut by allowing the increase in electricity charges.

The finance minister said that Wapda and Pepco had been ordered to eliminate line losses.

The minister said that the government had decided to control expenditure by reducing unnecessary borrowing from the State Bank, which had earlier tightened its monetary policy.

Instead, he said, the government would borrow from the National Savings Directorate and a target of Rs150 billion had been set which would be achieved by launching new schemes.

Mr Qamar also said that the government would impose more taxes on import of luxury goods and non-essential items, adding that the rate of duty on such items would be increased from 35 per cent shortly after the federal cabinets approval.

He said the government would launch a new commercial instrument to mop up Rs300 billion deposits of ministries and other public sector corporations, adding that they had been ordered to withdraw their funds from various savings accounts which would be used for launching the instrument.

Initially, he said, that Rs40 billion would be used for launching the instrument next month.

He said the cabinet was considering approving a five-day work week.

Referring to petroleum export, he said, the export of oil to Afghanistan would be controlled by imposing a regulatory duty on subsidised petroleum products.

Oil is being bought at a subsidised rate and then exported to Afghanistan and in the process, people are earning considerable profits. This practice will be discouraged by imposing a regulatory duty, he added.

He, however, clarified that the regulatory duty would only be applied on the subsidy for oil export.

The finance minister also said that the government had worked out a plan for privatisation which would be unveiled on Tuesday next and is aimed at achieving over $2 billion.

The government will raise Rs52 billion from the privatisation other than big ticketing items.

He said there would be more foreign inflows, including $26 million coming from privatisation of the PTCL and $750-800 million through the launching of a new bond scheme.

These new bonds will be securitised against workers remittances, the finance minister said.

He said that the CNG prices are expected to be fixed at Rs49 a kilogramme for which OGRA is finalising details.

In reply to a question, he said that the government was in touch with the government of Saudi Arabia to import 120,000 barrels of oil on deferred payment.

He, however, said that unless the issue was finalised, he could not reveal the cost in dollar terms.

He also disclosed that the US and Canada had offered to give wheat on deferred payment.

All subsequent wheat imports will be made on deferred payment and this will be in addition to the wheat to be received from the US under the PL-480 programme.

He said that the IMF had issued a letter of comfort on the basis of which the World Bank and the Asian Development Bank would soon start disbursing funds to Pakistan.

But he made it clear that the government did not seek any new IMF programme.


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## Neo

*Politico-economic issues keep KSE in red, index sheds 243 pts​*
KARACHI: Unabated cycle of political instability in the country coupled with declining value of the local currency against US dollar kept the Karachi stock market in red zone.

Karachi bourse remained in the negative zone Friday, as the benchmark KSE-100 shed 243 points on the last trading day of the weak besides falling below the psychological level of 10,000 points. Commenting over negative closure of the market, analysts said the market opened negatively with an initial loss of 165.93 points extending its losses further at the end of the trading session

The KSE-100 share index lost substantial 242.85 points and closed at 9,993.81 points compared to 10,236.66 points of the previous session. The KSE-30 index lost 400.57 points and closed at 11,355.09 points.

The market turnover went down to 13.98 percent and traded 103.35 million shares as compared to 120.15 million shares traded in the previous session.

The overall market capitalisation went down to 2.16 percent to Rs 3.116 trillion as compared to previous sessions Rs 3.185 trillion. Out of 284 companies, 78 closed in positive zone, 188 in negative while 18 remained unchanged.

Hasnain Asghar Ali, analyst at Aziz Fida Husein said atleast yet another deadline for resolution on judges issue would certainly keep the volatility and suspense on higher side, with economic, political, social, geo political and law and order issues slipping out of control.

He said nothing really was positive for the market men, the recent surge in international oil prices and further weakening of rupee continues to offer extra bucks for the oil and gas exploration stocks.

Ahsan Mehanti, senior analyst at Shahzad Chamdia said intense selling was continue as political uncertainty, reinstatement of judges issue affected market sentiment negatively and fall in rupee value, S&P/Moodys economic outlook, high interest rates, foreign selling and law & order situation in the country remained a concern.

Trading activity was worst as compared to the last trading session as the ready market volume stands at 103.350 million shares as compared to last trading session 120.150 million shares. Future market volume however decreased and stands at 14.827 million shares as compared to last trading session 19.161 million shares.

OGDC, for the third consecutive trading session was the volume leader, with 14.43 million shares as it closed at Rs 108.20 after opening at Rs 111.42 shedding Rs 3.22.

The futures market turnover went down to 14.82 million shares as compared to 19.16 million shares traded in the previous session. Four of the companies closed in positive zone, while thirty two in negative while one remained unchanged.


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## Neo

*No unnecessary money from SBP: government to borrow from savings schemes now, says Naveed​* 
ISLAMABAD (August 23 2008): The government has decided to control its expenditure by not unnecessarily borrowing from the central bank which had earlier announced a tight monetary policy. Instead, the government would borrow from the national savings schemes, which have an ambitious target of Rs 150 billion to be achieved by launching new saving schemes in the current fiscal year.

Speaking to a select gathering of newsmen here on Friday, Finance Minister Naveed Qamar said the government was enhancing its foreign exchange reserves by privatising state-owned assets estimated at over $2 billion next month and would be separately receiving more than $1 billion foreign inflows including $266 million from the privatisation of Pakistan Telecommunication Company Limited (PTCL).

The government has prepared a detailed privatisation programme, which will be unveiled next Tuesday aimed at achieving over $2 billion, he said, adding that the government would manage Rs 52 billion from the privatisation of other than big ticketing items. No time frame or the identities of the entities to be privatised was mentioned.

He said there will be more foreign inflows including $266 million coming from the privatisation of the PTCL and $750-800 million through the launching of new bond scheme.

"One of the serious issues is our depleting foreign exchange reserves which have come down to around $10 billion due to exchange rate pressure and there is an urgent need to enhance our forex reserves through more privatisation and new foreign inflows," he added.

"In fact we have decided to take a number of measures to achieve 4.7 percent fiscal deficit target in 2007-08 and for this purpose we have to slow down the pace of economic development, " he said. To another question, he said that the IMF has issued a "letter of comfort" due to which the World Bank and the Asian Development Bank would start disbursing their funds to Pakistan soon.

But he made it clear that the government has no plan whatsoever to seek any new IMF programme. However, he said that oil prices, which came down to $112 a barrel from earlier high of $145 per barrel in the international market, have again gone up to $120 a barrel due to the Russian and American stand-off in Georgia. This price rise would place further pressure on the government to achieve its budget deficit.

Giving details, Naveed said that all supplementary grants to the ministries and divisions have been stopped along with a directive to them that they must restrict their foreign tours and stop buying physical assets. He said funds will be withdrawn from those development projects which did not have any economic impact.

He said that it was unfortunate that the government would have to slash its development budget from Rs 550 billion to Rs 450 billion to avoid piling up of more problems. He said, IMF which was insisting on Pakistan brining down the deficit to 4.3 percent during the current financial year, was told that it was not possible and that 4.7 percent target fixed in the current budget would not be revised upward later.

Naveed said that a decision has been taken to impose tax on import of luxury goods and non-essential items. He said that there was already 35 percent duty on such items which will be further increased shortly after the approval of the federal Cabinet.

He said the government would launch new commercial paper by 'mopping up' Rs 300 billion deposits of the ministries and the state corporations. They have been directed to withdraw their funds from various savings accounts which will be used for launching the new commercial paper. Initially, he said, Rs 40 billion will be used out of Rs 300 billion deposits for launching this commercial paper next month.

He said a five-day week has been proposed to be approved by the Cabinet. On the petroleum side, he said a decision has been taken to control the export of oil to Afghanistan by imposing regulatory duty on the already subsidised petroleum products.

Naveed said that CNG prices were expected to be fixed at Rs 49 per kg for which Ogra was finalising the details, which will be made public shortly. In reply to a question, Naveed said the government was in touch with the Saudi government to import 120,000 barrels of oil on deferred payments. However, he said that unless the issue was finalised, he would not indulge in the cost in dollar terms.

The finance minister also disclosed that the United States and Canada have offered to export wheat to Pakistan on deferred payments. "Now all subsequent wheat imports will be made on deferred payment and this will be in addition to the wheat that will be received from the United States under PL 480 programme," he said.


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*Sequel to rupee nosedive: public debt up by Rs 630 billion in 45 days ​* 
ISLAMABAD (August 23 2008): Pakistan's public debt has gone up by Rs 630 billion due to depreciation of rupee against dollar in the past one-and-a-half months. Since Pakistan's public debt is all time high, depreciation of one rupee against dollar would add Rs 45 billion to it. Dollar-rupee parity was around 1:64 some one and half months back. Then unending rupee nosedive changed this ratio to 1:76.50 on August 22.

The difference of 14 rupees against dollar simply means addition of Rs 630 billion in public debt in 45 days or so, without getting loan of even a single dollar from any source. The Ministry of Finance (MoF) is in shock over this development, but it seems tied up in the shackles of autonomy granted to the State Bank of Pakistan (SBP) to govern the monetary market under its Act of 1956.

The dollar is gaining substantially vis-à-vis rupee for long and, on Friday, the last working day of the money market, it crossed the level of 76.50 in open market. It is the first time in Pakistan's history that the rupee is on such a sharp decline and no assurance seems working either of the federal government or the SBP about better performance of the local currency.

The rupee is so fragile against dollar that it is shedding value at a most alarming pace. It did show slight recovery for only two days during the last a couple of months--on August 18 and 19--on President Musharraf's resignation. After two days, the rupee again reverted to worse performance. Between August 20 and 22 it lost more than four rupees.

This has been a cause of concern for the economic team of the government, headed by Finance Minister Naveed Qamar. But they say that SBP is an autonomous body and any direction for correction would be against the rules of the game. But, will the federal government keep on sitting on the back seat, or wait for even worst, or it has some solution for SBP to suggest for correction?

Special Secretary Finance Dr Ashfaque Hasan Khan, who is also Director General of Debt Management Office, looks visibly disturbed over rupee depreciation. He is worried over the rising public debt due to rupee downfall. However, like other top level officials of MoF, he also has no direct answer to the question whether there could be some role for the federal government to ask SBP to take some corrective measures, or it would keep on watching the downfall of the rupee indefinitely.

Senior officials of MoF are of the view that since the SBP is enjoying full autonomy, it is the only authority to take corrective measures for checking any fluctuation in exchange rate. Talking to this correspondent one MoF official said: "Technically and legally speaking it's for the SBP to intervene in the money market. However, it's an issue which is of great concern for MoF." One can ask the policy makers whether other Asian countries also enjoy the same level of autonomy as SBP is enjoying under its Act 1956.


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## Neo

*Massive outflow of foreign investment witnessed​* 
KARACHI (August 23 2008): A massive outflow of over 25.035 million dollars of portfolio investment from the country's equity market was witnessed during the outgoing week ended August 22, 2008. The recent outflow of foreign investors portfolio investment from the country's equity market was mainly due to the offshore investors' concerns over the prevailing political uncertainty and depreciating local currency value, analysts said.

The cumulative outflow of foreign investment in the local share market has increased to 37.954 million dollars in the current month from August 01, 2008 to August 22, 2008 while the offshore investors have withdrawn over 347.907 million dollars in the current year from January 01, 2008 to August 22, 2008. According to data, released by National Clearing Company of Pakistan Limited (NCCPL), the net outflow of 2,627,552 dollars of portfolio investment was witnessed on Monday while the foreign investors withdrew another 2,655,687 dollars on Tuesday.

On Wednesday, an inflow of 1,251,427 dollars foreign investment was recorded, however, a massive outflow was witnessed on the remaining two days of the week, as the foreign investors withdrew 8,267,451 dollars on Thursday and 12,735,787 dollars on Friday.


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## Neo

*BMA extends financial, investment services to NWFP​* 
PESHAWAR (August 23 2008): BMA Capital has extended financial and investment services to NWFP with the objective of the facilitation and promotion of investment in the province. This was announced at a function held at a local hotel with NWFP Minister for Finance Mohammad Hamayun Khan as chief guest.

BMA Capital Chief Executive Officer Junaid Iqbal gave a detailed presentation on various modes of investment and particularly mutual funds. The BMA, he said, would provide facilitation in 20 different kinds of mutual funds.

The company, he said, would provide research on the mutual companies and offer investment and would help get a status of their products in the market. The company would also carry research on transaction, risk and rate of return and would provide it to the people.

BMA would encourage investments in mutual funds as it had less risk and handsome return, he said, adding that it would work as risk manager and review situation of stock market on daily basis.

The company would also hold functions in educational institutions, banks, chambers of commerce and other government institutes for encouraging people to investment in mutual funds. Speaking on the occasion, NWFP Minister for Finance Mohammad Hamayun Khan said the government was making efforts for bringing investment to arrest the growing problem of employment.

He said that the provincial government had constituted a committee, headed by the Chief Minister, to give incentives to private sector for promotion of private investment in the province.

The minister said that the provincial government was also making arrangements for the establishment of Reconstruction Opportunity Zones (ROZs), and added the US Congress was likely to give approval to the product by November. The provincial government, he said, started creating space for the project in the existing industrial estates.

He said that they were in close contact with the business community of the province through chambers of commerce and industry to encourage private sector to come and invest in the province. He also extended thanks to BMA for extension of services to the province.


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## Neo

*MDA launches mega uplift projects​*
MIRPUR (August 23 2008): Mirpur Development Authority (MDA) has launched about ten development projects of public welfare, recreation and entertainment worth over Rs 80 million in various parts of Mirpur Azad Kashmir, Dr Amin Chaudhry Chairman MDA said. He was addressing a reception given to a delegation of under-training officers of various groups from Civil Services Academy Lahore here on Friday.

Leader of the delegation of the trainee officers belonging to DMG, police, income tax, information, excise and taxation and other fields also spoke on this occasion and apprised the audience of the objective of the study visit of the members of his delegation to Azad Kashmir.

Dr Amin Chaudhry said that the development projects including three under construction parks including the giant Bhutto Park in Mirpur city on Mirpur-Mangla Road located at the picturesque periphery of Mangla lake is ready for inauguration in the near future.

The construction work on the project is swiftly underway and will be completed within the stipulated timeframe. Besides, the first ever solar-energy-based street lights project has also been launched in Mirpur city which will be completed in different phases, he added. Since MDA was emerged over three decades ago particularly for the rehabilitation of the affectees of Mangla Dam, the institution is going to perform more similar responsibilities in connection with the rehabilitation programme for housing the affectees of the ongoing gigantic Mangla dam raising project, the MDA chief said.

Dr Amin said that special attention is being focused to acquire land for the resettlement of the affected families falling displaced due to the upraising of the country's second biggest dam in Mirpur district. They told that the New City and four model towns comprising all latest amenities of life are already being constructed adjacent to existing Mirpur city and in Islamgarh, Siakh, Chakswari and Dadayal by Wapda with the co-ordination of the AJK government for housing the affectees of the Mangla dam upraising project.

Earlier, the delegation also met Commissioner Mirpur division Ehsan Khalid Kiyani, Commissioner Mangla Dam Affairs Amir Afzal and other officials of the divisional and district administration and gathered information about the pace of development, administrative matters and matters of general interest related to Mirpur division.


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## Neo

*'Diesel import from India to save $700 million'​* 
KARACHI (August 23 2008): President of SAARC chamber of Commerce and Industry, Tariq Saeed has said that efforts are being made under Safta to bring duties down to zero rate. Speaking at a dinner meeting at Manzar Alam residence on Friday, he said that under Safta India would import around 400 products from Bangladesh.

He said that Pakistan could consider giving permission to Indian investors to invest in the country. Referring to import of diesel from India, he said that Pakistan would save around 700 million dollars from import of diesel from India. He said that Pakistan is also mulling allowing India to manufacture CNG buses in Pakistan.


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## Neo

*Corporate agriculture farming: A step towards a greener Pakistan​*
ARTICLE (August 23 2008): Agriculture ministry failed in managing agriculture field and research staff and their activities for development of agriculture sector. Agriculture sector is the sustenance of our country's economy. It contributes around 21&#37; to the GDP, employees 44% of labour force and contributes 68% of foreign exchange earning through export of raw material, semi processed and processed agriculture products.

*HIGH LIGHTS *

1. Contributing 21% to GDP

2. Providing employment to 44%

3. Contributing to foreign exchange 68%

4. Having horizontal and vertical space for growth

5. And capable to increase 100% production within ten years.

6. Government neglecting this sector by providing insufficient financing. Not giving industrial status to corporate farming. SBP has not exercised its role for development of this sector. Further, it is not properly regulating and managing investment portfolio of financial institutions for sustainable and higher GDP growth.

Corporate agriculture farming encompasses the production of all crops as well as all other allied activities ie processing of seeds, business of pesticides / fertilisers, business of agriculture machinery/equipment used and related research activities.

*WE MAY CLASSIFY PRODUCTION AREA AS UNDER:* 

1 Production of major crops (wheat, cotton, sugarcane, rice, maize)

2 Production of minor crops (oil seed, pulses etc).

3 horticulture (fruits, vegetables, flowers ,medicinal herbs)

4 dairy and poultry

5 forestry

6 fisheries

The average growth rate in this sector over the last forty years was 4.3%, which reflects good performance. Population growth rate average over the last forty years remains around 3.00% which is slightly below the growth rate of agriculture sector.

Further, with the advancement in technology and awareness in emerging new global world, trend of food consumption is changing and increasing towards high nutrition and hygienic foods. That phenomenon is also widening the gap between demand and supply.

Food crisis is being seen now-a-days, also globally. In this scenario we need a higher growth rate of agriculture sector which can fulfil our domestic requirements and surplus could be exported to other countries to set off the increasing demands of our imports and reduce the foreign bills deficit.

The scope of horizontal expansion in agriculture production has become limited as after construction of Mangla and Tarbela dams no remarkable reservoir was constructed or initiated. To secure this nature's gift is likely to save our future generations. To have our right from neighbours and settle this crucial matter is the demand of this era. That matter has prime importance and it should be planned and settled on priority.

It is equally beneficial for agriculture growth and economical power generation. There is space for horizontal growth in agriculture but is limited due to scarcity of irrigation water. The major scope is now in vertical expansion through improving farm productivity levels.

This can be accelerated through implementation of idea about the corporate farming. The table of productivity/yield levels has been prepared from data of year 2006, given on UNO website FAO and web site of Federal Ministry of Agriculture of Pakistan. It depicts that our country has great potential to increase its productivity/yield as our progressive grower is obtaining almost more than double production than our national average yield.

Whereas the average national yield/production of developed countries is also more than double of our national average yield. It reveals that by applying the requisite resources/taking appropriate measures as mentioned in this article, we can double our agriculture production in coming ten years.

If it happens, then we will really enter a new age of prosperity and be able to place our nation and country on an upright status in the world. That milestone can be achieved through adaptation of futuristic/innovative policies, and revolutionary/proactive measures in the followings important areas, which can improve productivity levels significantly.

I Availability of quality seeds

II Availability of fertilisers at competitive cost

III Pest/weed management

IV Transfer of agriculture related technology in Pakistan

V Technical knowledge to farmers

VI Requisite funds availability for farmers

VII Well planned marketing mechanism

VIII Ensure water and other utility availability to farmers

All the above arrangements are not possible for our subsistent farmers under their prevalent financial conditions, technical awareness and marketing mechanism. In addition to continuation and improvement of facilitation to small growers, our government should formulate policies for initiation of corporate farming in our country on persuasive basis. For this purpose the following steps require to be taken:

1. Legislation giving status to corporate farming like industrial undertaking.

2. A task force to be established on corporate farming, comprising agriculture scientists, economists, farmers, investors, elected representatives and legal experts, who will explore all modalities, legalities and working mechanism along with suggestions for necessary clauses in corporate laws ie company law, income tax ordinance, sales tax law and other corporate statutes, determination of SECP, FBR, SBP and Ministry of Agriculture's role in the development and regulation of corporate farming. Task force report be submitted to National Assembly and Senate for their review.

3. Ensure credit/loan facility for inputs, tubewells and modern technologies from all financial institutions at subsidised rates for promotion of agriculture production and exports.

4. Ensure availability of electricity for tubewells at subsidised rates.

5. Availability of roads up to farms.

6. Financial assistance in construction of cemented khaals within farms.

7. Policies formulation for foreign investment with provision for to joint ventures and transfer of technology.

8. Income tax exemption for five-year period to local and foreign investors.

9. Amnesty on investment in corporate farming at 0% income tax.

10. Making arrangements for allied industries in vertical direction ie godowns, cold storages, international standard packaging, making of packed foods and drinks as per international standards and requirements.

11. Ensure documentation and accounting of their activity under prescribed laws like industrial undertaking.

12. Formulation and implementation of crop insurance policies.

13. Formulation of laws for environmental protection and socio-economic welfare of vicinity area population.

14. Ensure protection of small farmers and farm workers.

15. Formulation of policies for corporate farming workers like industrial workers ie social security, EOBI group insurance etc.

16. Mandatory induction of technical staff ie qualified agriculture experts/scientists for overall planning, monitoring and research work, management accountants for management of accounts and analysis of cost and incomes along with other documentation.

17. Agriculture research and extension department needs to be revamped and its policies and programmes need to be redesigned that they may play a vital role in bringing a revolution through corporate farming.

18. There is need for stringent laws in respect of adulteration of pesticide/fertilisers to enhance our crop yield and protect our farmers financially.

19. State Bank needs to formulate policies and programs for all commercial banks, financial institutions and NBFIs, in respect of their investment portfolio to industry, agriculture, service sector, construction, general consumer and capital market.

Investment portfolio of agriculture sector needs to be increased significantly ie 100% for every subsequent year and this practice be continued till the achievement of desired results. Credits to conventional farmers should also increase and monitored that it is consumed for the purpose it is obtained. SBP should entertain genuine and legitimate requests by corporate farming.

*SECTOR WISE CREDIT/LOAN PORTFOLIO OF OUR FINANCIAL INSTITUTIONS, INCLUSIVE OF SBP IS:* 

The above data highlight the fact that the sector which is contributing around 21% to our GDP is highly neglected by our financial institutions. There is dire need to make programmes/policies and necessary laws, as stated above, for development of this sector on war footing, that financial institutions can offer loan to this sector like industry.

In the context of implementation of WTO and our achievements in engineering, electronics and other industries, we are far behind from developed countries. I think we cannot achieve higher and sustainable economic growth unless we succeed to double our agriculture production in the coming ten years as we have vertical and horizontal space for that target.

For this purpose we have to make arrangements as stated in this article along with providing desired share of financing ie at least 20% to 25 % from credit/loan portfolio of all financial institutions. That is suggested to achieve the targets gradually within the next five years.

SBP needs to introduce such policies and a programme for financial institutions, which encourage banks to invest in productive sectors like agriculture and industry and discourage non-productive (consumer financing and capital market) loans.

Further government borrowing needs to be reduced drastically. Cut from these sectors be utilised for agriculture sector and it needs to be doubled every year till the attainment of targeted results ie 100% increase in agriculture production during 10-year period.

20 Above all, we need to have and promote honesty and justice in our country, wherein the concept of implementation, monitoring and accountability will have its impact, otherwise in this new era it will be difficult for us to live honourably.

*BENEFITS TO BE DERIVED THROUGH PROPOSED CORPORATE FARMING ARE:* 

A. Higher productivity/ yield.

B. Surplus production of all types of food, dairy products and horticulture items.

C. Increase in export items ie foods, dairy products and horticulture items.

D. Increase in national reserve on one side through reduction in imports of edible oils, tea and other food items and on the other side through increased export of surplus foods, dairy products and other horticulture items.

E. It will increase employment in rural areas.

F. It will train vicinity farmers and enhance awareness about advanced technology.

G. Mass production will reduce cost of production.

H. Higher production will entail lowering of price in domestic market.

I. It will improve living standard of our rural area people.

J. Investor will prefer to establish allied industry in rural areas.

K. It will retard significantly the shifting of people from villages to cities.

L. It will reduce and ultimately convert foreign trade deficit to foreign trade surplus.

M. Overall industrial growth will increase and specially related to agri products.

N. Per capita income will increase.

O. GDP growth rate will increase and ultimately it will accelerate economic activities in the country.

P. Our country credit rating will improve.

Q. Dependence on foreign and internal borrowing will decrease.

R. More funds will be available to government for education, health and other infrastructure projects.

S. Our nation will surely be saved from forthcoming global food crisis. Further we will be in a position to market of our agri products throughout the world.

T. Poverty in Pakistan is largely a rural phenomenon; development of agriculture will be an important vehicle for alleviating rural poverty.

U. It will facilitate Government to have reliable statistics of agriculture sector.

V. It will facilitate and promote documented economy and increases taxes with the passage of time.

*IT HAS ITS FLAWS AND LIMITATIONS, NARRATED HERE UNDER: *

1. Small farmers' fears of monopolistic environment.

2. Many farm workers may be relieved of their jobs on account of use of modern technologies.

3. Sense of insecurity due to small farms and scarcity of resources.

Its payback is more than its flaws. Therefore our government should take drastic steps for the development of corporate agriculture farming. Since independence, we are saying that agriculture is the backbone of our economy. In fact, it remains just a saying and no solemn efforts and plans were made for the development of this sector.

Presently, the whole world is anxious about the attainment of self-sufficiency in foods. We have potential of horizontal as well as vertical growth in our agriculture sector. We must exert all our abilities and available resources for the development of our agriculture. It will in return, really save the future of our next generations. No doubt corporate farming will be a step forward for a prosperous Pakistan.

=======================================================================
Products National Progressive National Average
Average Growers Yield Yield Developed
Yield Pakistan Pakistan countries
(Tons/H) (Tons/H) (Tons/H)
=======================================================================
WHEAT 2.51 5.5 7.20 (Germany)
4.00 (Australia)
2.82 (USA)
4.45 (China)
COTTON LINT 0.704 1.45 1.86 (Australia)
1.24 (china)
0.80 (USA)
SUGAR 49.22 110 91.97 (Australia)
73.82 (USA)
82.52 (China)
RICE PADDY 3.16 7.30 6.30 (Australia)
7.70 (USA)
6.26 (China)
POTATOES 13.34 25.00 34.41 (Australia)
43.66 (USA)
14.35 (China)
ONION DRY 13.82 N/A 42.88 (Australia)
51.18 (USA)
20.61 (China)
APPLES 3.12 N/A 13.82 (Australia)
29.80 (USA)
13.71 (China)
=======================================================================


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## Neo

*Increase in Export Finance​*
EDITORIAL (August 23 2008): Promotion of exports has become one of the major policy objectives of Pakistan due to balance of payments difficulties and dwindling foreign exchange reserves of the country. In order to play a greater role in this effort, the State Bank of Pakistan on 19th August, 2008 decided to increase the amount of export finance under its Export Finance Scheme (EFS) to Rs 358 billion for eligible export products during FY09.

In order to ensure availability of adequate financing to the exporters under the EFS and to assist them in achieving the export target, the State Bank itself would allow limits of Rs 125 billion to the banks under the scheme for the current year which are 25 percent higher than the amount outstanding as on June, 2008.

As loans under the scheme are provided for 180 days, around Rs 250 billion would thus be provided during the whole year as refinance at the rate of 7.5 percent per annum. In addition, banks would also provide financing facilities to the exporters under the scheme from their own sources to the extent of 30 percent or an amount of Rs 108 billion at the same rate of 7.5 percent.

Commercial banks were brought on board for sharing this mechanism. In order to ensure timely availability of financing to exporters, State Bank has also advised the banks that in future, financing requests from exporters under EFS should not be turned down which, otherwise, are meeting the requirements of the scheme and lending criteria of the respective banks.

Further, the central bank would regularly monitor the behaviour of various banks to ensure optimal utilisation of limits and if a bank is unable to fully utilize its allocated limit, its unutilised limit would be allocated to other banks.

We feel that the State Bank has taken a timely initiative to play its part in enhancing the level of exports and narrow the widening gap in the external sector of the country. The increase in the amount of export finance and its provision at only 7.5 percent, which is substantially lower than the ongoing six-month Kibor (at present around 13.5 percent), is bound to provide much needed relief to the exporters.

It may be mentioned that in addition to the amount extended under EFS, the State Bank also provides refinance under its long-term financing scheme for export oriented projects at a mark-up of seven percent for a period of two to 7-1/2 years and for a period of 10 years at a concessional rate of mark-up under another Long Term Financing Facility to the exporters.

All these measures taken by the SBP are aimed at ensuring adequate supply of financing to the exporters to enable them to compete in the international market to boost exports of the country. However, whether the State Bank measures would enable the country to achieve the intended objective is difficult to affirm.

For a start, the real increase announced under the EFS is not as great as would look outwardly due to erosion of punching power of the rupee on account of inflation during FY09 and as a proportion to the projected increase in exports during 2008-09.

Secondly, adequate and timely provision of export credit is only a one out of many export incentives. For instance, proper adjustment in exchange rate is the most potent instrument of export promotion and overvaluation of the currency could thwart all other efforts of gaining international market access.

Adequate provision of energy to the exporters, quality control, proper law and order situation, modern infrastructure and cheap and educated labour force are some of the other pre-requisites which could contribute immensely to the export promotion efforts. No less important are the technology know-how and the needed investment for the purpose.

Obviously, if all these factors do not simultaneously get the required importance and attention of the authorities, the State Bank's efforts alone are not likely to yield the desired results. In fact, the provision of higher credit to the exporters could sometime make the task of monetary management more difficult for the central banks. Since money is the most fungible commodity, its allocation and use cannot be usually restricted to the sector for which it is intended.

If the enhanced amount of export finance is channelised to non-productive sectors by the business community by some dubious devices or by relending at higher rates because of comparatively very low lending rate, it could further ignite inflationary pressures in the economy and add to the worries of the State Bank.

Notwithstanding all these limitations, we feel that the State Bank has taken a right step which needs to be complemented by all the other concerned authorities to improve the fast deteriorating situation in the external sector.


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## General Fujita

*Pakistan's IT sector registers 30 percent growth in revenue *

Saturday, 26 July 2008 00:00 Pakistan Daily 

IT sector in Pakistan has registered 30 per cent growth in revenue in a very short span of time whereas the fundamentals of the sector are highly strong and the recent dollar's appreciation has significantly boosted the IT sector revenues.

The Chairman, NetSol Technologies Limited and Chief Executive Officer (CEO), Saleem Ghauri said the present growth pattern can be maintained and revenue can be doubled provided priorities are reviewed.

About the ongoing economic pressure, he said one immediate way to come out of economic crisis is the earliest start of automation of public sector that would double public sector's efficiency. He, however, said that the decline in stock market is due to different reasons and it has nothing to do with the strong fundamentals of IT sector. The IT sector stocks will shoot up again once the inflationary pressure on economy is away.

The growth in revenues has enabled the industry to hire high-skilled IT professionals and thus contributed to the national economy in a big way, he said. Adding that more the trained human resource the IT sector has, the more country's economy would flourish and prosperity could sustain on longer terms, he added.

Moreover, he said that the NetSol Technologies is doing miracles in the field of IT and exports of its flagship product LeaseSoft, a suite of end to end leasing and finance software solutions catering to the needs of retail and wholesale finance businesses, has touched to the level of $20 million in a short span of time.

"We are foreseeing exports of LeaseSoft will touch $100 million in the next three years," he said. According to him, leading international business houses like Mercedes Benz, Yamaha Motors, Toyota Motors, Dongfeng Nissan, UMF, BMW and FIAT group in Asia Pacific region, besides a good number of leading brands in Europe and North America are successfully using LeaseSoft.

He said that the IT industry has already realised the potential and started putting infrastructure in place to have more and more human resource in the years to come. "NetSol has recently come up with the concept of NetSol Technology Institute (NTI) and it has planned branching out all over Pakistan to ensure short courses for Pakistani youth. "We want to dispel the impression that IT belongs to the youth of elite class" he added.

According to him, the government can ensure a real economic revolution by providing IT training to youth on war footing basis on the one hand and automation of public sector organisations on the other.

"A strong leadership with a visionary approach towards IT sector is an urgent need of the hour," he said. When pointed out that senior employees' in public sector organisations are a major hurdle in automation drive, Ghauri said this is where a strong and clear-headed leadership is required.

Since majority of Pakistani youth lives away from major cities, ie in rural areas, therefore, a strong network of IT training institutes is the only way of spreading IT education in Pakistan," he said. Ghauri extended a wake-up call to the government for investment in IT training of youth, which would ensure IT Pakistan of tomorrow.

The country's exports in IT have reached to half a billion dollar and number of highly skilled human resource is very impressive in the sector but still it needs from the government to do more.

He said Pakistan, with a population of 170 million, 60 per cent of which consists of under-25 youngsters, is an ideal country where IT sector can spearhead the economy in the days to come. "Once the government realises this potential and ready to invest on technical training of Pakistan youth, IT revolution will start in the country," he said.


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## Neo

*Pakistan food crisis unlikely to improve soon: WB meeting ​* 
Sunday, August 24, 2008

ISLAMABAD: Despite posting a bumper wheat harvest of 23.7 million tonnes in 2007, Pakistan faced rising prices as well as a shortage of flour, participants at a recent World Bank consultation meeting were told.

With prices rising, incentives were created to export, smuggle or withhold wheat stocks, said WB Senior Rural Development Specialist Kevin Crockford, who added that the situation is unlikely to get better in the short term.

Crockford said that world food prices increased rapidly in 2006 and from 2000 prices went up by 75 per cent. Some of the factors responsible for this included a change of diet in countries like China and India, while there was a reduced supply of stock owing to high fuel and fertiliser prices as well as usage in bio-fuels.

Crockford said that the food situation was particularly serious and in Pakistan alone wheat prices had risen over 25 per cent. Pakistans import bill has risen by 31pc in 2007-08, of which wheat import contributes 2.1pc and edible oil imports constitute 2.36pc, the meeting was told.

Participants were told that the rise in wheat prices in Pakistan were not primarily due to a production shortfall, but the strategic wheat reserve fund in addition to the ban on exports dampened the effect on domestic prices. But price shocks were mostly felt in urban areas with poor households spending over 70pc of their incomes on food. This in turn affects household spending on education and health with the result that Pakistan is facing deteriorating child malnutrition and increased child mortality.

The WB specialist said that the food price situation is unlikely to ease as wheat will be imported at higher international prices, while fuel and other inputs will push up domestic wheat prices. He said that while there will be continued demand from neighbouring countries, a silver lining would be that higher prices would be an incentive for farmers.

Response of the government to the crisis has been multi-pronged. It has started to import wheat and increase wheat supply to the poor through the Utility Stores Corporation. The government has also increased fertiliser import and banned export and inter-provincial movement of wheat. It has also launched the Benazir Income Support Programme.

UN agencies and the World Bank have responded by assistance to small farmers, nutrition and health interventions and relief intervention in most food insecure areas. The World Bank is also working on economic stability, social intervention and safety nets.

Senior Social Protection Specialist of the World Bank in Islamabad, Iftikhar Malik, talked of safety nets that have been introduced. This included the Benazir Income Support Programme, which will target 4.6 million families with Rs1000 per month and the Punjab Food Stamp Programme that targets an additional 1.7 million households with the same amount.

A participant, Ashiq Husain, of the Marvi Rural Development Organisation, pointed out that according to a basic estimate, every household with a family of six would be spending a minimum of Rs55,000 on food alone in a year. In this, the government proposes to help with Rs12,000 under the Benazir programme, which was simply not enough.

Dr Sonu Khangharani of the Thardeep Rural Development Programme pointed out that with a rise in food prices, suicide rates had gone up in rural areas like Tharparkar. The situation is alarming and this is an SOS, he said, adding that people were pulling their children out of school in many areas, as they could not afford to educate and feed them at the same time.

A participant, Ahmed Faraz stated that one of the reasons for high prices was that no action was being taken against cartels that had been formed. He said that was policy failure as well as an institutional breakdown.

Dr Abid Burki of the Lahore University of Management Sciences emphasised that the first step should be to identify who the poor are. He said that any strategy has to first identify who need to be helped.

Another participant said that in FATA, a 20 kg bag of flour costs Rs1,500 and supplies are erratic owing to the deteriorating law and order situation. He said more needs to be done to save the poor in vulnerable areas.

In his concluding remarks, Yusupha Crookes, Country Director of the World Bank said that not allowing international prices to flow through hits the poor the hardest. He said that somebody has to pay for the gap. The government meets this gap in a number of ways, which include taxation and borrowing which in turn pushes inflation.

Crookes said that the challenge before the international donor community is how to protect people whose budget is squeezed and the way they are coping is to reduce spending on health and education. He said that the first challenge is to identify these people. The second is to help them purchase services they would otherwise do without.

In a charitable society like Pakistan, there should be more analysis, said the WB country head, adding we do not know how much poverty has declined between 2006 and now.


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## Neo

*Govt likely to increase working hours ​* 
Sunday, August 24, 2008

ISLAMABAD: The government has decided to increase working hours till 5pm if it goes ahead with the proposal of two weekly holidays in the next federal cabinet meeting, it is learnt. 

The idea of five working days came under consideration at the highest level on several occasions but it failed to get through in the recent past. Those who were opposing two weekly holidays, used to cite an example that it would negatively affect Federal Board of Revenues efforts to collect due taxes in five working days. After increasing working hours till 5pm, it will not affect revenue collection, said a high-ranking official of the government while talking to The News here on Saturday. 

Now the government cannot ignore the much-needed energy conservation plan owing to an unprecedented surge in the oil import bill, which is estimated to cross $14.5 billion in fiscal year 2008-09. 

The next cabinet meeting will approve five working days in a week but working hours will be increased from 9am to 5pm. The government, sources said, would also approve closure of petrol pumps for one day in a week. 

Petrol pumps will be closed for one day within the five working days, said the sources and added it would not resolve any problem if the government decided to shut pumps on weekly holidays. Earlier, the government during the cabinet meeting held on May 15 rejected the proposal forwarded by the Ministry of Water and Power for granting two weekly holidays to conserve scarce energy resources. 

The WAPDA has estimated that two weekly holidays could help save 850 to 1,000 megawatts of electricity with the closure of all government offices from 9am to 5pm on Saturday. 

However, the sources said that the government has so far failed to come up with concrete measures related to conserve the electricity with clear-cut steps when the country is facing severe and torturous load-shedding, making life miserable. Now it seems the realization of severe situation felt at the highest level but the lip service will not help to overcome the situation and concrete steps are required to conserve energy. In the wake of soaring oil prices as well as severe electricity shortages, the government contemplated various options to ensure conservation of energy resources. The sources said the corporate sector was already doing five-day work and other private offices did not contribute a lot in terms of consuming the major chunk of the electricity by doing work on Saturday. 

When the sources was asked about the governments plan to import one million energy bulbs for saving electricity, they said that some people were estimating conservation of the electricity in the range of 500-600MW but according to WAPDAs estimates, they can save 225MW with the help of energy savers owing to diversity.


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## Neo

*Conference says technology key to growth ​* 
Sunday, August 24, 2008

LAHORE: Pakistan needs to focus on human capital as it is as important as financial and physical assets are. We should nurture and promote human capital if we want progress and prosperity.

This was the upshot of the speeches delivered at the International Human Resource Conference organised by the Lahore Chamber of Commerce and Industry here on Saturday.

Chief guest Syed Baber Ali, while stressing the need for bridging the science and technological gap in Pakistan, urged the government to divert its attention towards that particular area which had attained prime importance in the wake of fast changing global scenario. No value-addition in any sector is possible without bridging the science and technological gap.

He drew a comparative analysis with India regarding science and technology, saying that they while realising its importance focused on the subject a few years ago and now they are in a very comfortable position when it comes to dealing with other global players.

Indian HR expert Dr Sunil Gupta said Pakistan had no dearth of talent, it had all the resources and above all more than half of its population was less than 25 years of age, so a little well-directed effort could help bring a sea change.

Group Head of HR Department of a multinational bank, Bakhtiar Khawaja, said there was a need to make a paradigm shift in the operation of local enterprises. He said these enterprises should operate as learning companies that should reflect the prudent input of all employees, customers, shareholders and vendors. 

Speaking on the occasion, LCCI Acting President Mian Muzaffar Ali said the world was constantly changing. Companies, organisations, regions and indeed entire nations were locked in a struggle to gain competitive advantage over their counterparts. Thus, if the strategic plan is the vehicle for achieving such success, the HR function is the engine that drives the plan.

Our institutions of higher learning need to prepare professionals with required skills who can quickly add value to their professional or corporate organisation. These corporations in turn must continuously transform themselves into leading entities, those which are increasingly competitive on the basis of product innovation and differentiated service.


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## Neo

*Bumper rice crop of 6m tons likely this year​*
ISLAMABAD, Aug 23: The Ministry of Food, Agriculture and Livestock (Minfal) is hopeful of crossing 5.9 million tons rice production this year, about 9 per cent more than last year.

The government has fixed this years rice production target at 5.5 million tons, but data collected by Minfal from its field officers and provinces show that Pakistan will be able to reach close to 6 million tons after harvest that is about to start in Sindh this month and will commence in Punjab in October-November.

The increase in the rice production is expected not due to surge in per acre yield, but around 8 per cent increase in the sowing area than the last years 5.7 million hectares. Last year, the per-hectare yield was 2,211 kg.

The increase in the sowing area was mainly due to an unprecedented hike in the price of rice in the international market and better pay back to local farmers.

According to official data, Punjab is expected to produce around 3 million tons of rice, followed by Sindh with 2.5 million. Around 500,000 to 800,000 tons rice is expected from the NWFP and Balochistan.

Rice Commissioner Inayatullah Khan told Dawn that recent rains had not damaged the rice crop and that farmers interest in the crop had increased after getting better price last year.

In response to a question, the rice commissioner said normally 45 per cent of the Pakistani rice was of fine type (Basmati) and 55 per cent coarse (Irri).

Meanwhile, the Rice Exporters Association Pakistan (REAP) expects this years rice export to touch the five million tons, way over the 3.33 million tons last year.

From the last years rice export, the country earned around $1.818 billion compared to $1.125 billion in the previous year when the country exported 3.129 million tons. The skyrocketing increase in the international market had enabled the country to see over 61 per cent value addition in the price of rice last year over the previous year.

But, a bumper crop this year is not believed to resolve the issue of the highest ever domestic rice prices. Domestic prices of the commodity have already doubled this year despite a good crop last season, as exporters took advantage of a tight global market.

Exports of basmati rice had increased by over 40 per cent to 1.28 million tons last year, while other varieties declined by nearly 7 per cent to 2.06 million tons.

But, amidst expectations of a high crop, there are also reports of hoarding. There are reports of massive stocks of rice lying in private godowns in Karachi and other areas of the country. These stocks are not being released in the domestic market in order to ease prices.


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## Neo

*Non-textile exports up 84.6 per cent​*
ISLAMABAD, Aug 23: Countrys non-textile products exports edged up by 84.6 per cent during the first month of the current fiscal year over last year, Statistics Division data revealed on Saturday.

In absolute terms, the export value of these products increased to $999.504 million in July this year from $4.972 million last year, mainly due to a substantial increase in export of food commodities.

This shows that the new fiscal year started with an impressive growth in export of traditional products, mostly agriculture products, despite the fact that the input cost of such products witnessed a substantial increase.

However, textile and clothing exports dipped by 2.62pc to $905.912 million as against $930.32 million in the same month last year.

Despite dismal performance of textile and clothing sector, the overall export proceeds recorded an impressive growth of 29.48pc.

Export of food group inched up by 121.14pc. Export of rice went up by 226.43pc, fish products 65.45pc, fruit 13.14pc, oil seeds 330.39pc, sugar 100pc, meat 18.13pc and all other food items 8.53pc.

Export of petroleum products increased by 91.68pc, sports goods 22.41pc, leather products 11.68pc, footwear 24.43pc, surgical instruments 21.64pc, engineering goods 30.61pc, cement 103.52pc, molasses 217.31pc, jewelry 399.51pc, gur 5.61pc during July 2008 over the same month last year.

This shows a natural diversification of the export base, as share of textile and clothing in total exports declined to 47.5pc in the month from 63.22pc last year despite subsidies to the sector worth billions of rupees.

While the share of non-textile products soared to 52.44pc in July 2008 from 36.8pc last year, without any financial package from the government.

Analysts say that subsidies are not the real issue, but there is a need to address the structural weaknesses in the textile sector. This also means that the production capacity of the sector has reached a saturation point.

With the exception of raw cotton and cotton cloth, all other major components of textile manufactures registered a negative growth despite a major depreciation of rupee and an appreciable gain made by the currencies of the competitor countries, like India and China.

Product-wise details showed that export of readymade garments declined by 0.21pc in July 2008, cotton yarn by 17.49pc, knitwear 8.93pc, bed-wear 8.52pc, made-up articles 0.57pc, other textile material 32.25pc, over the same month last year.

However, export of raw cotton was up by 120.18pc, cotton cloth 3.73pc, cotton carded 51.46pc, yarn other cotton yarn 15.46pc, towels 51.46pc, tents 22.79pc and art-silk by 16.84pc.


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## Neo

*IMFs Letter of Comfort to provide cushion for economy​*
ISLAMABAD: Agreeing to Issue the Letter of Comfort by the International Monetary Fund (IMF) to Pakistan would help bring to a halt the downslide of Pakistani Rupee and will restore confidence of the local as well as foreign investors, a senior official at Ministry of Finance told daily Times on Saturday.

IMF authorities have agreed in principle to issue Letter of Comfort to Pakistan, its formal approval is to be given in its Executive Board meeting expected next week. This will remove the last hurdle in the releasing of around $1.5 billion lending, said the official.

Asian Development Bank (ADB) has committed $1 billion, and based on IMF Letter of Comfort, $500 millions World Bank Credit Facility will also be available. This will provide much-needed breathing space for the new government to steer the economy out of the woods.

Due to the political uncertainties and law and order situation, Pakistans economy has faced many challenges like depletion in foreign exchange reserves and due to it, rapid depreciation of Rupee, and growing imports and scarcity of financial resources at home to meet the current as well as development expenditures.

Pakistan Peoples Party led coalition government has already put in place a multi-pronged strategy aiming to bolster over all economic scene during FY 2008-09.

The steps aims to boost the vital economic sectors and checking devaluation of rupee, provision of Saudi oil facility on deferred payments, reinvigorated privatisation programme, expediting inflow of pending installments from already privatised units like PTCL, floating of workers remittances, injecting foreign investment in KESC, FDI in oil and power sectors and renegotiated credit facility from IFIs.

Political uncertainty before the resignation of the President General (R) Pervez Musharraf and widening differences between coalition partners along with declining foreign exchange reserves have led to the depreciation of Rupee from Rs 62 a dollar to Rs 77.10.

According to a senior government official, issuance of Letter of Comfort by the IMF authorities would help the authorities at IFIs to the speedy processing of lending arrangements.

GoP is currently working on Saudi Oil Facility that aims to provide a substantial cushion of US $5 to $6 billion followed by major privatiation programme worth $ 2 to $3 billion and ensuring a receipt of $136 million from PTCLs installment receipt schedule after its privatisation. The government is also considering the floating of workers remittances securitisation bonds worth $800 million to provide boost forex reserves. Foreign Direct Investment in oil and power sectors is promising and foreign investors have expressed interest in investing $400 million in KESC. Government expects to generate another $250 to $300 million out of Pakistan Telecommunications Authoritys licensing of internet based licensing projects to be issued to various companies. Besides this, a US supported democracy dividend of $1.5 billion per annum is likely to start from 2009 onwards.


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## Neo

*Industrial output target missed, grows by a paltry 3.76%​*
KARACHI: Countrys industrial output registered a meager 3.76 percent growth during the financial year 2007-08, missing the whole year target of 7.2 percent by a huge difference.

The state of industrial production was even more worrisome during June of last fiscal, when it posted a negative growth of 4.22 percent over the same month of previous year, Statistic Division reported on Saturday.

This slow down in the industrial output during the financial year 2007-08, marred by worst political and law & order situation, also caused decline in the GDP as well as poor performance of export sector. The textile sector, which is the major export oriented sector of the economy, witnessed poor export performance along with the other sectors.

The declining trend in the manufacturing sector began in 2005 due to inadequate level of investment and kept on worsening afterwards, economist Dr Asad Saeed noted. There has not been any investment in enhancing the capacity of the sector during the last fiscal year, he added.

The industrial growth has seen gradual decline in the last three years, as it plummeted to 8.8 percent in 2006-07 from 19.9 percent in 2004-05, in the wake of rising cost of production. This led to the closure of many industrial units, especially in textile sector, as well as impeding new investment.

Dr Asad pointed out that even the high growth in manufacturing sector was driven by few sectors auto and cement on the back of auto financing by the banks and huge public sector spending. Once these sector started drying up, the growth in the manufacturing sector also slowed down, he added.

He regretted that massive inflow of liquidity in the aftermath of 9/11 could not be diverted in the real sector, which could have huge benefits for the country in the shape of quantum jump in export and more job creation.

The break-up shows in petroleum sector, production of Jet fuel oil declined by 13.74 percent, diesel production 8.77 percent, lubricating oil 0.54 percent, LPG by 5.66 percent and other petroleum products by 13.06 percent during the previous financial year. The production of kerosene oil was up by 5.71 percent, motor spirits by 10.07 percent, high speed diesel by 10.11 percent, furnace oil by 3.02 percent, jute batching oil by 8.79 percent and solvant naptha by 1.87 percent.


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## Neo

*LSM registers six-year low growth in fiscal year 2008​* 
KARACHI (August 24 2008): The large scale manufacturing (LSM) presented poor performance and registered six-year low growth of 3.76 during fiscal year 2007-08 mainly due to political uncertainty, power shortage and deteriorating law and order condition. The LSM growth during last fiscal year not only missed its target of 12.5 percent but was also lower than 8.4 percent in 2006-07.

The government in economic survey had announced that LSM had posted a growth of 4.8 percent. However, on Saturday Federal Bureau of Statistics (FBS) gave final growth figures, which depicted that LSM growth was lower than the expectations. LSM also registered a negative growth of 4.22 percent during the last month of 2007-08 due to decline in production of diesel, LPG and other manufacturing.

Official provisional statistics of Quantum Index Numbers of Large Scale Manufacturing Industries (QIM) of FBS depicted that production of major industries had not been growing.

LSM is the one of the major indicators of the economy which shows industrial productivity of 100 items received from different sources ie Oil Companies Advisory Committee (OCAC), Ministry of Industries & Production and Provincial Bureaus of Statistics. OCAC supplied the data of 11 items, Ministry of Industries & Production supplied the data of 35 items and Provincial Bureaus of Statistics provided data for 54 items.

With 3.76 percent growth, overall QIM of 2008 reached 213.13 points from 205.40 points. Major share in this growth was contributed by industries which went up by 4.66 percent from 200.47 points to 209.82 points, while OCAC index grew by 3.41 percent to 171.09 points.

During June 2008, LSM witnessed a decline of 4.22 percent in growth, to 211.94 points as against 221.29 points during the same period of previous year. Economists said that decline in LSM growth would also affect the GDP growth rate, which was announced by 5.8 percent in the economic survey by the government in June 2008.

They said that poor law and order situation, high interest rates, shortage of power and other utilities were major causes of slow growth of LSM in 2008. Production of petroleum products increased by 3.41 percent during the year while it declined by 9.29 percent in June 2008.

Production of sugar, cigarettes, soda ash, motorcycle and buses registered growth of 34.20 percent, 1.92 percent, 10.37 percent, 26.04 percent and 15.41percent respectively in 2008. The production of phosphate fertiliser, coke, billet, tractors and jeeps/cars dipped by 5.44 percent, 10.83 percent, 21.86 percent, 1.84 percent and 7.26 percent respectively during the year.

Production of vegetable ghee declined by 5 percent, wheat and grain milling by 2.55 percent, cotton by 12.48 percent, electric transformer by 30.90 percent, power looms by 25.76 percent and production of deep freezers declined by 9.78 percent in FY08.


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## Neo

*'Power generation from Tarbela reaches 3,682 megawatts'​* 
LAHORE (August 24 2008): Shakil Durrani, Chairman, Water and Power Development Authority (Wapda) during his visit to Tarbela power station has said that electricity generation from Tarbela Hydel Power Station has touched the figure of 3682 MW, which is six percent more than its installed capacity because of heavy rains in the country resulting higher water level of the lake.

Now, Wapda is considering various options for installation of power turbines on tunnel four of Tarbela Dam in a bid to fully tap the potential of the reservoir. This extension project will add another 960 MW to the existing capacity of 3478 MW, he added.

While expressing satisfaction over the water availability, he said that the Tarbela Dam reservoir is filled to its maximum capacity ie 1550 feet above sea level, which is a positive sign for the irrigation and power generation and it would help to reduce unprecedental power load shedding in the country.

During his visit, the chairman was briefed about the salient features of the 4th Tarbela Extension Project. Earlier, the chairman visited the dam, spillways and powerhouse. He distributed shields and certificates among the officers and officials of the powerhouse for their good performance. He also visited the hatchery wherein 'Mahasher,' rare specie of fish, is being bred now-a-days. The chairman also planted a tree on the site of project.


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## Neo

*Pakistan for enhancing trade with Europe​*
LONDON (August 24 2008): The visiting Pakistan Commerce Secretary underscored the need of enhancing trade and investment in the South Asian country as a part of international support in the perspective of new era of democracy following the February 18 parliamentary elections. "Pakistan needs trade and not aid", Syed Asif Shah told a seminar, organised by the Asia House Corporate programme in Central London on Friday.

Introducing Pakistan as a investment-friendly country, the commerce secretary informed that with $160 billion GDP and Foreign Direct Investment of average $5-7 billion coupled together with ease of doing business, Pakistan can be counted as one of the friendliest investment country in the world.

Shah said that perception of Pakistan differs from the reality. The foreign investors and expatriates based in Pakistan have entirely different view about the country and its investment environment. He pointed out that multinational corporations working in telecommunications services are earning up to 120 prcent profits.

He told the British entrepreneurs that his country enjoys a significantly high-ranking in terms of investment-friendly policies and this potential must be utilised by investors from UK for enhancing trade and investments in Pakistan, for mutual benefits of both the countries.

Asia House Chief Executive MsCharlotte Pinder, in her opening remarks, introduced Pakistan as a country with remarkable economic growth having immense potential for investments in various sectors. Pakistan High Commissioner Wajid Shamsul Hasan appreciated the role of Asia House in introducing economic and trade potential of Pakistan to investors in UK.

He said that present government aspires confidence of people, but international support in the form of greater investments for strengthening economy were essential to build up this confidence. The high commissioner pointed out that existing gap between demand and supply in sectors such as energy offer huge potential and opportunity to foreign investors.


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## Neo

*FPCCI concerned over slow development of Gwadar port area​*
ISLAMABAD (August 24 2008): Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Tanvir A. Sheikh and the FPCCI Standing Committee on Research and Development on Saturday expressed concern on the under-development of Gwadar Port area.

According to the fact-finding report prepared by 6the FPCCI Standing Committee on R&D Gwadar Port said that there almost in tranquil glory lacking the required infrastructural facilities to make it functional and sans any significant operations.

Nearly 750-km-long coastal road from Karachi to Jiwani near the Iranian border has been in operation for some time. A 200-km branch road that would link the coastal road to the Indus Highway at Ratto-Dero is still not developed.

Tanvir A. Sheikh pointed out that there are no internal roads and services and water, gas, power and communication services for the new township and the industrial zones are non-existent. There are no warehouses or cold storages in the area. No significant progress has been made so far in respect to development of commercial and residential areas and buildings, and there are no labour-related amenities for accommodating thousands of workers to be employed on a functional sea port.

The Gwadar Port project was given to Singapore-based company with the hope that this company will develop the port and will bring the foreign investment for Gwadar. Tavir Sheikh said that Gwadar Port was still not contributing its due share in the economic development of the Pakistan. He demanded that a committee should be constituted with the representation of all stakeholders and the FPCCI.

The representation of the industry is indispensable because the industry will provide employment for the local population and generate revenue for the development activities in Gwadar. The Gwadar Port, the third port of Pakistan borders on Arabian Sea would be deeper than all other ports in the Persian Gulf, Arabian Sea, Indian Sea, Bay of Bengal, and Gulf region and huge cargo ships up to 0.25 million tons could anchor here.

The master plan prepared for the development of Gwadar, which was a fishermen's village had been approved in March 2004. The western portion, which is away from the port, has been reserved for development of residential areas while the eastern portion for establishment of industries and warehouses.

Several projects had been planned for provision of infrastructure, which includes 950-km railway and 900-km motorway to link with the railway and highway systems of the country. But all these expected benefits have so far eluded the locals because developmental works are still to take off.


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## Neo

*Trade Policy, 2008-09: need to capitalise on market access opportunities​* 
ARTICLE (August 24 2008): The trade policy, 2008-09 was announced by the government on July 18, 2008. A number of measures have been proposed in the trade policy to improve competitiveness and quality of products, and to develop small and medium sized sector to increase its share in total exports. Today Pakistan is faced with the most difficult economic situation, both on external as well as internal fronts.

*EXTERNAL FRONT On* the external front the most difficult issues include; The doubling of international oil prices from around $68 per barrel to $145 per barrel during the year. The increase in international prices of food items that Pakistan needed to import during the year, especially wheat and edible oil. The slowdown in the US economy and turmoil in the international financial markets thereby reducing external demand for our exports.

*INTERNAL FRONT* Challenges on the internal front that made it difficult for exporters to fulfil their export orders on time and at a competitive price during the year included:

-- Power shortages and resultant loadshedding of electricity and natural gas.

-- Impact of monetary and exchange rate policies, plus supply side constraints.

-- Rising costs of salary bills and raw material, particularly raw cotton.

-- Increasing competition in export markets,

-- Travel advisories of foreign governments discouraged importers to continue sourcing from Pakistan.

-- Long term structural issues such as labour skills deficiency and poor infrastructure.

*POOR STATE OF THE ECONOMY* As a result of multiple negative factors the economic growth rate dropped to 5.8% as compared to 6.8% last year. This slow down was particularly evident in the commodity producing sectors such as agriculture and manufacturing with serious implications for exports.

In fact agriculture overall grew by only 1.5% as against 3.7% last year and in the two major crops ie cotton and wheat there was a negative growth of 9.3% and 6.6% respectively. The manufacturing sector also saw the weakest growth in a decade, since overall it grew by 5.4% as compared to 8.1% last year. Large scale manufacturing was even more dismal since it registered a growth of only 4.8% as compared to 8.6% last year.

*PAKISTAN HAS NO TRADE IN 81% OF WORLD PRODUCTION *Pakistan does not figure in 81% of products traded in the world as its top 200 export products account for 91% of its total exports, but these products have only 19% share in the international market, says a commerce ministry report.

In terms of market diversification in 1998-99, the seven markets - US, Germany, Japan, UK, Hong Kong, Dubai and Saudi Arabia - accounted for 53.4% of our exports, whereas in 2007-08 this share was reduced to around 44.4%.

The three regional groupings that are significant from Pakistan's growth point of view are: Latin American countries, such as Brazil. Chile, Colombia, Mexico and Nicaragua, African countries, including South Africa, Kenya, Madagascar and Mozambique, non-traditional European markets, including those belonging to the former Soviet bloc, such as Scandinavian countries, Poland and Greece.

It is, however, noteworthy that the share of textile and clothing exports in global trade is 4.5% and Pakistan's share in global export of this sector is a mere 2.15%. On the other hand, new opportunities are emerging since some of our competitors, like China, are losing their competitive edge due to higher input costs. Therefore, our textile producers need to exploit this opportunity by entering into joint ventures with Chinese companies and setting up of production facilities in the China Specific Industrial Zones being established in Pakistan.

Imports on the other hand increased by around $5 billion in 2004-05, by $8 billion in 2005-06 and then dipped to register an increase of only $2 billion in 2006-07. Bedwear, a major item, declined in the US market due to stiff competition from India and China, as well as preferential tariffs available to our other competitors under arrangements, such as NAFTA, CAFTA and AGOA etc.

In the European Union, bed-linen exports suffered due to an average anti dumping duty of 5.7%. Moreover, our competitors, such as Bangladesh, Cambodia and Sri Lanka, have duty-free access whereas our textiles attract on average a duty of 17-23%.

Towel exports have decreased due to higher cotton and yarn prices, the marketing of our textiles is hampered by visa restrictions for our businessmen and travel advisories preventing buyers coming to Pakistan. Less emphasis on quality and compliance issues is also hurting our textile exports, says the report.

*STRUCTURAL CHALLENGES* The proposed export strategy needs to cope with the current challenges as well as work on minimising the longer term structural handicaps that Pakistan is faced with. Some of these structural challenges relating to both the demand and supply side are:-

a) Our low ranking on the competitiveness scale due to our internal inefficiencies thus making the cost of doing business in Pakistan relatively higher.

b) Poor governance coupled with excessive red tape results in extra costs for producers and exporters.

c) Power supplies are inadequate and a costly input for producers.

d) Infrastructure, especially relating to transportation, is substandard resulting in extra costs for exporters.

e) High cost of capital.

f) Low reliability of the legal dispute resolution system inhibiting investment and increase in commercial activity.

g) Low productivity of our human resource due to lack of education and skill deficiency.

h) Lack of emphasis on quality in production and service provision.

i) Lack of diversification of our export portfolio and over reliance on textiles.

*OBJECTIVES *

*THESE OBJECTIVES ARE*:Trade Policy should be people centric ie help in poverty alleviation. This is achieved by facilitating increased exports leading to increased production of exportable surpluses, thereby creating more employment. Focus should be on increased export earnings by encouraging and supporting exports of higher unit value products. This implies stress on better quality, value addition and compliance with international standards.

Emphasis should be on improving competitiveness via reduction in cost of doing business, and supporting appropriate capacity building and vertical integration. Assistance in marketing through trade promotion activities and increasing market access. Diversification of export products and markets.

*EXPORT STRATEGY* 

*THE EXPORT STRATEGY FOR 2008-09 HAS BEEN DESIGNED KEEPING IN VIEW THE AFOREMENTIONED OBJECTIVES AND ITS SALIENT FEATURES ARE:*Intensification of market intelligence gathering by Ministry of Commerce and TDAP regarding market opportunities, consumer preferences, quality and other standards, best practices by other countries; and disseminate this information to our stakeholders.

Trade promotion by TDAP through activities such as organising exhibitions, participation in trade fairs and trade delegations. Also supplemental efforts by Ministry of Commerce through trade diplomacy for additional market access opportunities, and to minimise any non tariff barriers facing our exporters in other countries.

We will also leverage the advantages currently available from the Free Trade Agreements signed with China, Malaysia and Sri Lanka etc. Enhancing competitiveness of our exports by helping reduce costs of doing business. Hence various measures are being proposed to simplify procedural requirements including relief through comprehensive zero rating of various export sectors.

Co-ordinating with other government departments to support and facilitate the private sector to achieve increased production of exportable surpluses. For this a high powered co-ordinating mechanism be reactivated since a number of problems facing exporters have to be remedied by other departments. Improvement of physical infrastructure through co-ordination with concerned government agencies since poor condition of the infrastructure imposes extra costs on our exporters.

Instead of providing cash incentives or subsidies to exporters, especially in view ofcurrent financial constraints, emphasis should be to support capacity building efforts of the exporters like productivity enhancement programmes, such as training facilities to upgrade human resource skills.

Diversification will be encouraged by proposals geared specifically to promote more trade in agricultural products. In the manufacturing sector this diversification policy will also facilitate SMEs. The advantage of this approach is that SMEs create more employment with less investment and they can pioneer the production of higher value added, innovative and knowledge based products.

Exporters would be encouraged to improve quality, cater to latest consumer preferences, comply with international standards and obtain the relevant certification in this regard. Past trade policy measures will continue as proving valuable for increasing exports.

*SIGNIFICANT FEATURES OF TRADE POLICY *

*I) 15% GROWTH IN EXPORTS* A 15% growth in export proceeds for 2008-09, has been projected. It will be mostly generated from traditional and conventional products in a bid to diversify the exports base.

*ii) CUSTOMS STATION AT PAKISTAN-AFGHAN BORDER* To facilitate exports to Afghan provinces Paktia (Gardez) and Khost, it has been decided that a customs station at Pakistan-Afghan border would be set up at an appropriate location which would reduce transportation cost and delivery time to this area from Pakistan.

*iii) HALAL CERTIFICATION BOARD* A Halal Certification Board would be established, under the Ministry of Science and Technology, to devise and enforce Halal Standards and certification mechanisms for export of Halal food products.

*iv) EXPORT DEVELOPMENT FUND (EDF) TO PICK UP THE FIRST EIGHT PERCENT OR 50PC OF THE MARK-UP WHICHEVER IS LESS* Currently, exporters setting up slaughter-houses are facilitated by the Export Development Fund (EDF) picking up the first six per cent of the mark-up on investment financing. It has now been decided to enhance this facility and the EDF will, therefore, pick up the first eight per cent or 50 pc of the mark-up whichever is less.

*v) INCREASE IN THE LIMIT TO $50,000 FROM $25,000 WORTH OF SAMPLES TO FOREIGN BUYERS* It has now been decided to increase the limit to $50,000 from $25,000 worth of samples to foreign buyers in the case of automobiles.

*vi) PAKISTAN'S PARTICIPATION IN RE-NEGOTIATIONS* In order to enlarge the ambit of our trade policy, it has been decided that Pakistan would participate in re-negotiations on the list of SAFTA and the Regional Agreement on Trade in Services among the SAARC countries.

*vii) TRADE DEVELOPMENT AUTHORITY ACT WOULD BE AMENDED* The TDAP Act would be amended to revisit the working and structure of the organisation to make it more responsive to exporter's needs. It has also been decided that the Trade Development Authority (TDAP) would open an office in the Northern Areas.

*viii) REFUND OF INDIRECT TAXES *A study will be conducted jointly by the FBR and the ministry of commerce to quantify the extent of refund of indirect taxes on input cost incurred on manufacturing of merchandise, which will become due on this account.

*ix) 50% COST OF REGISTRATION OF HERBAL MEDICINAL PRODUCTS SHALL BE PICKED UP BY THE GOVERNMENT* To promote export of herbal medicines, 50% cost of registration of herbal medicinal products abroad shall be picked up by the government, as done in case of export of pharmaceutical products.

*x) BIO-AVAILABILITY AND BIO-EQUIVALENCE LABORATORIES* It was announced that the health ministry would draw up a proposal for establishing bio-availability and bio-equivalence laboratories at the National Institute of Health.

*xi) EXPORT OF FREE SAMPLES UP TO 10% OF QUANTITY *Export of free samples up to 5% of quantity is allowed against exports in the preceding year to pharmaceutical exporters. It has also now been decided to allow exporting companies to send free samples to the extent of 10% of the commercial quantity exported in the preceding year.

This sector would also be allowed to retain 15 pc of their export proceeds.

*xii) PROPOSAL FOR GRANTING PIONEER INDUSTRY STATUS TO BIOTECH DRUGS* A committee, comprising ministries of commerce, health, finance and FBR, would work out a detailed proposal for granting pioneer industry status to biotech drugs, which is a high-tech value-added sub-sector of pharmaceuticals.

*xiii) CONSULTANCY SERVICES THROUGH FAO/INFOFISH FOR AQUACULTURE; PEELING SHED AT KARACHI FISH HARBOUR* It has been decided that consultancy services would be arranged through FAO INFOFISH for aquaculture; peeling shed at Karachi Fish Harbour would be set up in co-ordination with the TDAP and the Sindh government.

*xiv) TRAINING PROGRAMME FOR FISHERMEN* Funding will be arranged through the Public Sector Development Programme, training programme for fishermen in catching of fish would be arranged by the Sindh government.

*XV) PROGRAMME OF TRAINING FOR TRAINERS* An initial programme of training for trainers would be arranged in collaboration with the TDAP. These measures would help improve seafood exports.

*XVI) HIRING OF CONSULTANTS FOR BENCHMARKING STUDIES OF LEATHER GARMENTS EXPORTING UNITS* The initiative of hiring of consultants for benchmarking studies of leather garments exporting units would also be continued on a cost-sharing basis, ministry of industries would set up a wood seasoning plant and NAVTEC would set up a couple of vocational training centres on modern lines to meet deficiencies of wood seasoning plant and skilled labour.

*xvii) FLORICULTURAL EXPORTS *To promote floricultural exports, it has been decided that a Flora Common Facility Centre would be set up in collaboration with the Punjab Government near Lahore; depending on its success, the project would be replicated in other provinces. An irradiation facility based on the latest E-beam technology would also be set up in Karachi in collaboration with the Sindh government to facilitate export of horticultural products.

*xviii) EXISTING FACILITY OF PICKING UP THE FIRST SIX PER CENT MARKUP REVISED* TO 8% OR 50% OF THE PREVAILING MARK-UP RATE WHICHEVER IS LOWER It has also been decided that the existing facility of picking up the first six per cent markup rate on loans obtained for cool chain and cold storages for horticulture would be revised to 8% or 50% of the prevailing mark-up rate whichever is lower. The umbrella National Trade Corridor Programme is also making provision for development of a cool chain infrastructure.

*XIX) SUPER BASMATI RICE CULTIVATION *Area under rice cultivation is under pressure from other crops and the yield is decreasing as no high yielding basmati variety after "Super Basmati" has been introduced.

*THE CUMULATIVE EFFECT OF THESE TWO FACTORS COULD ERODE THE EXPORTABLE SURPLUS.* IT IS, THEREFORE, PROPOSED THAT: The ministry of Food and Agriculture (Minfal) may focus on evolving new varieties and increasing area under rice cultivation. Paddy harvesters and paddy dryers may be provided on matching grant basis in rice growing areas; Minfal will explore the possibility of using Agribusiness Support Fund for this purpose.

Initially for demonstration purposes, four dryers and harvesters would be provided from the EDF to Minfal. Furthermore, rice farm machinery, namely paddy harvesters and dryers would be importable from India through Wagha by road. Unhindered import of rice seeds increase disease risks, therefore, all such imports shall undergo strict quarantine measures. For this purpose, the "Seed Act" and other related laws will be amended accordingly.

In order to develop handicraft sector and make it a viable industry, it has been decided that consultants of international repute would be engaged to suggest improvements in the development of handicrafts with a view to achieving a quantum jump in their exports.

*XX) EXPOSURE OF MASTER CRAFTSMEN TO INTERNATIONAL DESIGNS AND TRENDS *Arrangements would be made to expose master craftsmen to international designs and trends.

*xxi) ESTABLISHMENT OF ELEVEN NEW INDUSTRIAL CLUSTERS *Eleven new industrial clusters would be established in various cities: For surgical instruments at Sialkot; gloves and personal protective equipment at Sialkot; sports-wear at Sialkot; leather and leather products at Sialkot and Charsadda; sports goods at Sialkot; weaving and textile processing sector at Faisalabad; light engineering sector at Gujranwala; auto parts at Lahore; ceramics at Multan and Hala; ajrak and bangles in Hyderabad / Hala and embroidery in Balochistan.

*xxii) SYSTEM OF VOLUNTARY PRE-SHIPMENT INSPECTION* It has been decided that a system of voluntary pre-shipment inspection and sampling of agro-products for exports would be introduced. In this regard, lists of concerned products, corresponding standards and accredited labs shall be notified by the commerce ministry after consulting Minfal and the ministry of science.

*xxiii) TRADE DISPUTE SETTLEMENT ORGANISATION* It has been decided that a Trade Dispute Settlement Organisation, under the administrative control of ministry of commerce, would be set up to deal with trade disputes arising from exports.

*xxiv) ROLE OF THE NATIONAL PRODUCTIVITY ORGANISATION (NPO)* It has now been decided to expand the outreach of the National Productivity Organisation (NPO) by funding "training of trainers" for auditors from EDF in production, energy and labour productivity audits.

*SHORTCOMINGS OF TRADE POLICY*, 2008-09 Press reports suggests that trade policy, 2008-09 was not well received by the business fraternity. Business community has serious observations about its success as nothing concrete has been done to improve the trade. Some of the observations are noted below:

*I) LACK OF EFFECTIVE MEASURES *Trade and industry leaders have expressed resentment over the Trade Policy 2008-09, which they say totally lacked measures and a proper roadmap badly needed to promote the export trade.

*ii) ABSENCE OF COST CONTROL MEASURES* The much-expected support for textile industry and the general demand of manufacturing sector to cut their cost of production were not addressed in the trade policy.

*iii) CRUEL JOKE WITH TRADE AND INDUSTRY* Commenting on the trade policy business leaders said that another 'cruel joke' had been made with the trade and industry. "We kept waiting for business friendly measures in the budget but were disappointed, thereafter some hopes were given by the government that the trade policy would give some relief but again we are being now asked to wait for the prime minister's speech to the nation in which a textile package may be announced".

*iv) EMPTY PROMISES WITHOUT DEEDS *Pakistan Hosiery Manufacturers Association chairman Javed Bilwani said the commerce minister made promises in the trade policy but did not announce measures, which could give confidence to the manufacturing-cum-export sector. The minister promised to improve No duty, No drawback scheme for exporters but again did not spell out its features and "this also seems to be another promise, which would never be fulfilled", he maintained.

*v) EXPANDING NEGATIVE LIST *Undoubtedly, Mr Bilwani said that by expanding negative list for allowing imports from India the industry might get some cheaper raw material, including fine count yarn and steel products. On the other hand no meaningful incentives have been given to expand exports to India.

*vi) TRADE POLICY AS A 'BOGUS' PIECE OF DOCUMENT* Towel Manufacturers Association chairman Syed Usman Ali said that trade policy was a 'bogus' piece of document. He said the commerce minister had informed that some of the chapters of the trade policy had been withheld and the prime minister would disclose them in his address to the nation.


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## General Fujita

*Nokia appoints Syntax Communications in Pakistan *

Monday, 25 August 2008 00:01 Pakistan Daily 

Nokia, global leader in mobility, announced the appointment of Syntax Communications as the Public Relations and Corporate Communications agency for the devices business in Pakistan. An announcement to this effect was made in a statement.


It said that commenting on the appointment, Pakistan Afghanistan and Iran Nokia Corporation Communications Manager Adeel Hashmi said: "Nokia is all about connecting with people in the right context and at the right time. With Syntax on board as our communication agency we would extend our communication efforts to a larger target audience." 


"It's indeed a moment of honour and achievement for the Syntax team. 

We are grateful to Nokia for their confidence in Syntax and assure our commitment to this relationship." said Faheem Ahmed, Director Operations Syntax Communications.


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## General Fujita

*Toni&Guy launches hair salon in Pakistani city Karachi *

Monday, 25 August 2008 00:00 Pakistan Daily 

Pakistans hair dressing industry got an unexpected boost with the opening of an international brand name salon in Karachi on Saturday, which promises to raise standards and introduce innovations in this neglected business.

UK franchise Toni&Guy launched their largest ever flagship salon in Karachi on Saturday. At the inaugural ceremony, Chief Executive Officer of Toni&Guy, Saeeda Mandviwalla stated that the salon brand is known amongst Pakistanis and would help raise local standards.

She said that the brand was for all those people who love to sport trendy hairstyles and who like to make fashion statements. She said that Pakistan has an ardent following of youngsters and the old alike and therefore there is no particular target market that they are aiming towards.

She further said that it was after several months of hard work that the project had finally materialised and a considerable amount of investment had been made into it. She hinted that additional branches of the salon may be on the cards in the near future in Lahore and other parts of Pakistan, but did not confirm it.

Saeeda further informed that all the salons stylists have been trained by her personally and are going to be regularly sent for training to continue to groom their skills.

Chief Guest of the occasion, British Deputy High Commissioner, Robert Gibson was pleased that a leading British brand has come to Pakistan and added that it was a time to celebrate entrepreneurship between Britain and Pakistan.

He expressed that the opening of the salon in Karachi was an aim towards providing equal advantages to everyone and the people here deserved to be treated to British styles and fashions, right at their doorsteps.

Brand Ambassadors, Supermodels Nadia Hussain and Arisha Bano were of the view that this way a more modern and improved image of Pakistan would be presented to the world. They said that Pakistan was in great need of international franchise businesses as it helped to bring in foreign names to the country through which the country was better recognised.

Bareerah, a student at IBA, however was skeptical of the salon when she said that their target market seemed to be very limited keeping in mind that a majority of the local residents were either living under the poverty line or were middle class.

However, at the same time, she agreed with the view that it helped to modernise Pakistans negative image associated with terrorism and extremism. She elucidated that more international brands entering the country would also eventually bring in more foreign investments.

Toni&Guys founder Chairman and CEO, Toni Mascolo and Global Creative Director, Sacha Mascolo-Tarbucks congratulated the local team through a recorded video and wished them the best.


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## Neo

*Dairy industry and private sector​*
PAKISTAN is stated to be the third largest milk producer in the world, yet milk production is the least commercialised enterprise in the agricultural sector. Livestock herd is distributed in small units with production fragmented across 55 million small farmers.

On the supply side, much of the traded milk is marketed unprocessed, and hardly three per cent is processed by the dairy industry. Hence no value addition is taking place.

As it appears, the demand for dairy products will continue to outpace supply. The industry today estimates that the current gap of 250 mio litres will balloon to a massive shortfall of 3.56 bio litres in less than seven years. The current non-commercialised scattered farm network is not geared to avert this looming crisis.

The second major challenge facing local dairy is quality. Milk marketing is dominated by the informal private sector, consisting of agents such as collectors, middlemen, and traders. Alarming rates of adulteration have been witnessed in the last few years especially in the central Punjab region.

There is no quality check at any stage along this chain. For example, those who handle milk right from the beginning till it reaches the final consumer are not conscious of hygiene. As a result, the average TPC  bacteria count - is at least 60 times higher than that in the Middle East, thereby making the issue of poor quality the biggest hurdle for dairy exports.

Pricing is the most serious challenge that organised dairy faces today. Despite a single digit processed milk market share, factory gate prices have increased by at least 20 per cent per annum since 2006. This situation is exacerbated by the fact that the government and industrys efforts to improve milk supply have been based on the questionable premise that annual milk production is at least 32 bio litres of which 40 per cent is wasted due to poor infrastructure.

Efforts to improve this dairy landscape and the entry of dairy players have partially contributed to severe upheavals, resulting in price increases, and major adulteration by the informal sector and short-term animal malpractices.

Each of the above challenges has a prescription. The milk industry today recognises that the barriers to sustainable dairy development impact milk supply, milk quality and price. On the supply side, the absence of infrastructure and utilities support in the milk shed areas is an urgent priority for the government. A recommended approach would be the prioritisation of milk shed areas for developmental investments in utilities access, tube welling and electrification programmes.

The encouragement of dairy breeding farms at the same time would offset animal malpractices such as increased culling trend predicted to erode our herd base in the near future. Finally, the government again would need to play a critical role of enforcing dairy financing targets set for financial institutions.

The challenge of improving milk quality requires a strategic change. It is in this initiative that dairy industry can play a pivotal role. While the industry strongly believes in participating in developmental programmes and in working in tandem with the government in the establishment of independent agencies, mandated to ameliorate poor breeding practices resulting in low yield animals, but the end results have not been encouraging.

The governments experience in making available attractive incentives to individual farmer for chiller infrastructure has not been encouraging. Remedies would include herd registration, the concentration on phenotype  local breeds having the capacity to improve yield -- in the selection criteria and making available bull stations nationwide. This would improve the breeding element, provide greater numbers of good animals and in the end result in improvement of milk volumes and quality.

An immediate ban on export and slaughter of female breeding stock is possible along with the release of government land for breeding farms. Similarly, a regulatory framework establishing a milk procurement standard is a quick remedy and supported by the industry. Regulation regarding the efficacy of animal health medicine can also be passed by our government in the short-term.

However, in the medium-term, the government would have to make concentrated efforts in upgrading dairy knowledge and technical skills. Despite the countrys high-ranking in milk production,, there is a real dearth in local knowledge and technical skill. Not only would dairy departments have to be incorporated in existing agricultural universities but also a dedicated effort would have to be made in updating curriculum and awarding recognition to the resulting certification. The industry today has proven the critical role expatriate trainers/experts can play in this regard.

The absence of private sector in dairy farming is a major hurdle to achieving economies of scale in dairy. It is here that the private enterprise today can play the real role of a change agent especially in the current scenario of the non-commercialised scattered farm networks inability to yield effective production increases.

By awarding agricultural industry status to the dairy sector, the government would effectively establish incentives and policies supporting dairy farming on a wider scale. The initiation of a Five-Year Plan setting targets and benchmarks for achievement will focus efforts in this sector.

The dairy industry strongly believes that active participation in this public/private enterprise is the most effective step to creating a successful road map for dairy leading to competitive, sustainable dairy exports.

Despite all the problems it faces, the dairy sector holds high promise as a dependable source of livelihood for the majority of the population. Pakistan needs to enhance their competitive economic advantage in dairy products, in terms of both quality and cost, and to enhance their acceptance in international markets.

The role of government should be to direct, co-ordinate and regulate the activities of various organisations engaged in dairy development, to establish and maintain a level playing field for all stakeholders and to create and maintain a congenial socio-economic, institutional and political environment.

Sarfaraz A. Rehman is the Chief Executive Officer of Engro Foods (Pvt.) Ltd.


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## Neo

*Modernising chromite mining​*
Chromite is the source of chromium used commercially and as an alloying element plays an important role in metallurgy. Balochistan is endowed with huge reserves of chromite. The first discovery was made at Muslim Bagh and Khanozai in district Kila Saifullah in 1901.

Chromite deposits have also been discovered in the Ras Koh Range in western Balochistan and Wad in Khuzdar district. Zhob deposits were first discovered by Vredenburg during the same period in the course of regional reconnaissance mapping of the province.

Presently, 300 to 500 tons of chromite are being produced at Muslim Bagh and Khanozai daily. It is taken in trucks to Karachi where it is crushed and packed in bags for export to foreign countries. The mineral is being sold between Rs30,000 to Rs45, 000 in the local market. Price depends on chrome content,, said Muhammad Hasan Kakar, a businessman associated with chromite mining in Khanozai area.

Kakar said that some nine years back the chromite was being sold between Rs1500-2500 a ton. Its price increased on Chinese demand. Today, China is a big market for the Balochistan chromite. Production activity in the sector directly depends upon the export market.

The 95 per cent of population in Khanozai is associated with agriculture, particularly fruit farms, said Kakar.

Chromite mining has not been systematic but random and totally disorganised. It is mined by both open pit and underground methods. In Muslimbagh, Ras Koh Range and Wad areas, chromite is mostly mined by open pit method. However, due to podiform nature of the chromite, underground mining is also done. Use of donkeys for hauling the ore from underground is still in practice. The haulage machinery is also used.

The local mine owners deem it cost-effective to use donkeys instead of machinery. Use of machinery costs nearly Rs500,000 while donkey is available at Rs10,000 to Rs20,000, Kakar added.

Many businessmen have lost up to Rs2 million in mining of chromite at Khanozai and Muslimbagh area, while others have earned quick millions by investing few thousands only. The reason behind this huge profit and loss is the accurate identification of potential site in the area, another local businessman said. Fresh geological studies and surveys need to be undertaken by the experts for identifying the potential mining sites.

The Provincial Inspectorate of Mines is responsible for regulating the mining operations. Presently, a few local companies are engaged at Muslim Bagh, sources in the department told this scribe. The sources added that during 1970s, Pakistan Chrom Mines (PCM) project was launched in Muslim Bagh area which was closed in 1989 due to financial constraints and lack of locally available technical staff.

The land for mining is allotted under the Mines Act 1923 by the Directorate of Minerals, Balochistan . The provincial government levies 10 per cent sales tax..

Local experts say that the government should take steps for boosting mining operations in an organised way in view of the rising prices of chromite in the world metal market. This would help the province to increase its revenue generation and the country would also earn foreign exchange.

A small quantity of chromite is consumed in producing chromite chemicals but the bulk of production is exported to foreign countries. China and Japan have been the major markets for Pakistans chromite.

There is a need to replace primitive mining methods by modern technologies. Experts stress the need for setting up chromite beneficiation plants, which enrich chromium content of ores making it suitable for marketing. Such plants should be set up close to the areas where mining operations are carried out. This will ensure availability of raw material at hand saving transportation costs.

In 2003, SMEDA (Balochistan) had worked on the feasibility of a beneficiation plant, capable of producing 15,000 tones of the concentrates. The process of beneficiation of chrome ore for high grade basic refractory involves the stages of crushing, sizing, conveyers belts, concentrating tables and drying.

Chromite sector has been a victim of official negligence. No serious effort was ever made to tap its potential. Even detailed exploration of the mineral for quantification of its reserves remained pending. Total estimated reserves of chromite in the province are not exactly known and the government should collect its maximum valid resource data by carrying out detailed explorations to quantify its reserves. Funds should also be allocated to categorise its deposits.

Chromite is an export-oriented sector. Since 1903, it is being exported to foreign countries. The export earnings from chromite during the period 1997-98 to 2001-02 have varied between Rs167 million to Rs404 million. Export earnings can be increased manifold by producing high-grade concentrates which are in great demand in the world metal market.

Pakistan still meets her domestic requirements by importing ferroalloys, basic refractory bricks and chromite chemicals. With the exception of producing small quantities of chromite chemicals, the entire requirements are met through imports. The development of value-added projects utilising indigenous ore can meet at least the domestic requirements of chromite.


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## Neo

*Using workers remittances for development​* 
The total remittances are now close to $6.5 billion and provide balance of payment support. These remittances are larger than the direct foreign investment (***) put at $5.1 billion for last fiscal and more than the multilateral assistance received by Pakistan.

But not much has been done to channelise the inflows into productive investment by overseas residents.

The overseas residents contribute to the social, political and economic development of the countries of their origin and remittances are considered as an important yardstick of overseas contribution. In China, overseas Chinese are an integral part of the current phase of Chinese economic development with over 70 per cent of Chinas foreign direct investment contributed by them.

The total population of Lebanon is 3.5 million, whereas its overseas population is 14 million. Due to steady and decisive flow of remittances, the Lebanese government did not face any major economic crisis even after having huge trade deficits for a prolonged period. Moreover, remittances as source of financial flows are found to be more stable than private capital flows and to be less volatile to changing economic cycles.

However, the decisive turning-point came after 9/11 in the increase of remittances sent by an estimated 3-4 million overseas Pakistanis. Incidentally, Pakistan is now the fifth largest recipient and is categorised as one of the developing countries with a major stake in remittances.

The remittances share in total foreign exchange reserves helps to hedge against the exchange rate fluctuations arising from surging the import bill. Remittances are the second biggest source of foreign exchange earnings after exports.

Whenever, Pakistan faced critical shortage of foreign exchange, remittances provided the much-needed breathing space for bringing about structural changes. The overseas Pakistanis bring home a variety of consumer goods and consumer durables like electronics helped by the government policies.

And most important, overseas Pakistanis contribute towards poverty alleviation. The recipients often depend on remittances for covering day-to-day living expenses. Remittances serve as a cushion against emergencies, or, in some cases, as funds for making small investments. However, overseas Pakistanis do not receive specific attention in the interim Poverty Reduction Strategy paper. There is no recognition of the vital role of migrants in the development of economy and society.

Even now the government can pay some special attention to the contribution of overseas Pakistanis. In this regard, the national and provincial governments may identify the needs for support and, on this basis, formulate and implement appropriate initiatives. For example, by facilitating sending of remittances, removing categorised regulations, provide training to support to returnees and/or their families and by providing information on local investment possibilities, especially at the time when foreign investment outlook is not so positive, mainly due to uncertainty on political front. In this respect, much can be learned from the experiences of other countries of the region.

Even the investment policy regime is mainly in favour of high skill/income overseas Pakistanis living abroad permanently, either in the industrialised or developed countries. There is little that is addressed to low skill, low income, temporary, mostly workers in the Middle East who provide a substantial amount of foreign exchange through transfer and re-enter the labour market in search of employment on their return. The government should announce an incentive package for such workers.

Along this, a more favourable scheme be devised treating overseas Pakistanis as a renter-savers or small-scale investors and devising reliable, investor-friendly mechanism and instruments which will allow them to invest in export processing zones, fixed income securities, industry (including sick industrial units) and trade or other types of enclave economic activities and in the capital market without exposure to high risk.

The government may also allow the overseas Pakistanis to establish their own housing society, urban or rural services and business, with supervision to ensure minimum standards. The self-help approach may be effective in reducing poverty. But again over the years, main concern of investors has been the security of their investment and assurance of policy consistency and the government should give them such security.


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## Neo

*Pakistans demographic challenge​*
All countries that have had high rates of fertility and, therefore, high rates of population growth now have very young populations. Pakistan along with almost all countries of the Muslim world falls into this category.

For several decades the rates of fertility  the number of children born per woman in the reproductive age  was more than five. It is only when the fertility rate falls to 2.1 that a population reaches the level of replacement. Below that rate the size of the population begins to decline as is happening in Japan and in most European countries.

A high rate of fertility combined with a high incidence of marriage as is the case in Pakistan has meant high birth rates. As death rates declined with better reach of health services and better availability of healthcare, the rate of population reached historic highs. In the 1960s and 1970s, population increased by slightly more than three per cent a year, one of the highest rates of increase in the world. At this rate of increase, the size of population doubles every 23 years which is what has actually happened.

Although some recent surveys suggest that the rate of fertility has declined in the last decade and the rate of population increase has dropped below two per cent  it is perhaps 1.8 per cent in 2008  the population still remains very young.

The data in the accompanying table shows how the drop in fertility has begun to affect the age distribution of population. There is a noticeable decline in the increase in number of children in the age of 0-15 compared to the next age group, the young between the ages of 15 and 30. For the first group, the number increased by 20 per cent in the ten year period between 1998 and 2008.

However, because of the higher fertility rate a couple of decades ago, the increase was more than 33 per cent for the 15-29 year old cohort. Experts call this phenomenon demographic inertia  even when the rate of fertility has declined, the consequence of past high rates linger on for a while. This is happening and poses real challenges for public policymakers. They will be able to meet them only by working closely with the private sector.

Pakistan today has the youngest population among all those countries that have more than 100 million people. In its case, the median age of the population is only 17 years which means that of the 162 million people in 2008, some 81 million are below the age of seventeen. The relative youth of the population is a real challenge. The young can become a tremendous economic resource, if they are properly educated and trained to participate productively in a growing and modernising economy. Properly trained and educated they can also fill the skill shortages that have appeared not in Japan, North America, Europe but also in the booming economies of the Middle East.

That this can be done has been amply demonstrated by some states in India that trained a vast army of engineers and computer scientists to take advantage of what Thomas Friedman called the flat earth in his best selling book published a couple of years ago. He gave this name to the emergence of an integrated work place that encompasses several parts of the evolving production system. In the case of India many back-office functions are provided by computer programmers working out of places such as Bangalore, Chennai, Mumbai, and Gurgoan near Delhi.

However, if the development of the human resource is neglected, as Pakistan has done, than the youth become economically and socially marginalised. Such people can become easy recruits for those who wish to disrupt the established order in favour of creating some promised but unrealisable utopia. This is happening, not only in the countrys tribal belt adjoining Afghanistan. There are also thousands of young men being educated and trained in the seminaries located in the Punjab, the countrys most rapidly growing provincial economy. They have begun to join the jihadists fighting against the forces of the government in the tribal areas and in some parts of the settled districts of the NWFP.

That, in spite of rapid economic progress, the Punjab has also become a recruiting ground for the pursuit of extremist causes is due to the lopsided way the economy has expanded in recent years. The 7- 8 per cent rate of growth over the last six yeas was led by the sectors that offered few productive jobs to the young. The result was that the respectable rate of economic growth did not create a sufficient number of jobs for young people.

In other words, even if the country makes an effort to provide training and education to its population it must ensure that the structure of the economy and the way it grows creates opportunities for them in the work place.

What is the role of the state to ensure that the young are appropriately employed and dont drift into the pursuit of activities that are damaging? The state must do a number of things; of these three are particularly important. The first is for the state to pick the winners in which the government can help the private sector to develop lines of product for which there is demand in both the international market place as well as in the domestic economy.

The products on which emphasis needs to be placed are those in which the country has a comparative advantage. High value agricultural products, leather and fashion goods, engineering products for use in automobiles and tractors are some of the items in which the country has developed some expertise and which can absorb a fairly large number of new workers.

The government also needs to involve itself in providing education and training to the young so that they can get productively employed in the changing economy. The private sector is active in this area but it is unable to cater to the demands of low income families. This is precisely the segment of the population that needs to be assisted.

The government could help by subsidising the tuition fees and other expenditures related to attending the institutions that are providing this kind of instruction. Some countries have used the banking system to provide loans and other type of financial assistance to the deserving families who cant afford to send their children to private, fee-charging institutions. Mexico ran this kind of scheme with the help of commercial banks who were responsible for identifying deserving students in need of assistance and for collecting repayments once the students were productively employed. The World Bank joined in this programme with a loan to the Mexican government.

The third area needing governments involvement is research and development. Here it would be helpful to study the Korean approach which involved the state partnering with the private sector to set up applied research institutions whose work was available to be purchased by private enterprises.

These institutions became major employers of the graduates who had acquired skills in various disciplines from technical institutions funded and managed by the private sector. These skills were needed to develop new lines of products and develop processes that could be used for their production.

Finding productive opportunities for employment for a large army of young people who are now working their way through the demographic pyramid has to be one of high priorities for the new government as it finds its feet now that it has managed to bring about a dramatic change in the political landscape.


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## General Fujita

*Pakistan looking forward to $10 Billion bailout by Saudia and China *

Monday, 25 August 2008 00:00 Pakistan Daily 

Negotiations with IMF which commenced last week for a US$10 billion bailout package for Islamabad are expected to remain inconclusive as Pakistan is set to seek direct help from Saudi Arabia and China.
The negotiations are being held by a couple of IMF officials who met Pakistani economic managers in a process of charting out an expression of interest for the bailout package.
China

We are making all out efforts to prevent a drift toward an IMF-assisted bailout that would obviously cause more difficulties as it would be governed by strings that are hard to fulfil, said a senior Pakistani official involved in the talks.

The crisis deepened last month as the foreign exchange reserves dwindled while rising import bill has become the most daunting for the public finance heads in Islamabad. 

In 2008 Pakistan happens to be the only country facing the threat of being downgraded by the international rating companies from the present B-1 status in its import-export balancing effort and making on-time payments due in foreign exchange to the international exporting companies.

A committee of experts currently working out a bailout package and keeping a tight lid on the actual situation is busy framing a strategy on war footing. It is reportedly framing up a suggestion to the federal policymakers to approach Saudi Arabia and China for a $10 billion package split by 6-4 respectively.

Pleading anonymity, sources revealed that next Monday would be the critical date fixed for meetings at the Federal Cabinets Committee overseeing the strategy formation in this respect. That is going to be the day when this country would have to decide as to how the two countries would be submitted with an agenda for the loan, and on what terms, said a senior official.

There is a consensus evolved in these meetings on averting a drift back to the IMF mechanizations. A week ago, some of the IMF officials did visit Islamabad to offer a package, and it was a soft-mark up deal. Its tranche-payment mechanism was attractive too, as the Fund seemed ready to release $500 million every month, which is close to what the actual requirement over the current financial years 12-month period would be. But the strings attached would be too harsh to meet, said the official.

When asked to provide details on these strings and the bailout package split between Saudi Arabia and China, he said: I am not supposed to handout half-cooked measures. But the main idea is that Saudi Arabia should be offering a deferred-payment scheme for the current fiscal year on provision of petroleum products imported from that country. It should be a 12-month scheme covered by assurances that the products would be used to keep the prices stable and no further loans would be acquired from other internal or external sources against the facility thus extended, which is not a harsh string.

From China, he said, a $4 billion offer is expected, and negotiations in this respect would be brisk, as the crunch has begun telling too adversely to sustain any further. This money would be available in tranches of $500 million each, once agreed upon.

Explaining the IMF strings, he said the Fund would like Islamabad to immediately stop subsidizing the oil, electricity, gas and food items. That would mean an immediate jump in the inflationary trend, which would directly be impacting the export-production lines, which is not acceptable to Pakistan.

Apart from this, IMF would also like to bind the tranche release to reappraisal of the reforms conducted in the economic-management structure of Pakistan over the past few years.

On their part, the committees members have been suffering from acute lack of orientation as far as identifying the actual nature and handling of the crisis is concerned. At one point the committee was about to churn out the formula for stopping imports of non-critical items, which are other wise a good source of revenues, prevent smuggling and, if banned, would help save only about $48 million in payments a month. This formula is expected to be rejected as wiser heads meet next Monday, the source added.


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## General Fujita

*AirBlue Pakistan begins Abu Dhabi to Lahore Flight *

Monday, 25 August 2008 00:40 Pakistan Daily 

Pakistan's private airline AirBlue on Sunday launched its commercial services to Abu Dhabi from Lahore. The airline will initially operate four flights a week on the route, according to senior executives.

A 145-seat Airbus A319 from Lahore touched down at Abu Dhabi International Airport at noon, making the UAE capital AirBlue's second destination in the UAE.

"For the next three weeks, we are offering a 90 per cent discount on the basic fare on the Lahore-Abu Dhabi route. 

"We intend to mainly cater to an estimated 300,000-strong Pakistani expatriate population living in Abu Dhabi," Sarosh Bhatti, AirBlue's general manager for marketing, told reporters. 


--------------------------------------------------------------------------------


--------------------------------------------------------------------------------

"In the next three months, the airline will start two to three flights a week from Al Ain to Pesh-awar and two daily flights from Abu Dhabi to Islamabad, Lahore and Pesha-war," Bhatti said.

Reacting to media reports that Airblue was denied access to Sharjah International Airport despite being given permission last month to use it as a base for 14 weekly flights, Bhatti said there were issues between Sharjah civil aviation and Pakistan civil aviation authorities, which, he expected, will be resolved soon. 

He didn't, however, elaborate on the issues.

Bhatti said he was hopeful that in the foreseeable future, AirBlue will be able operate flights from Pakistan to Sharjah.

Bhatti said AirBlue currently has a fleet of eight aircraft comprising two A319s, three A320s and three A321s - and by the end of next year the size of its fleet will increase to 22 aircraft.

He said AirBlue has placed orders for 14 new aircraft - all A320s - whose deliveries are slated to begin towards the end of this year. 

AirBlue, which started commercial operations in June 2004, currently operates flights to seven destinations in Pakistan. It has also been flying to Manchester and Dubai.

Bhatti said AirBlue plans to launch flights from Pakistan to Birmingham, Muscat, Kuwait and New Delhi later this year and to Oslo, Copenhagen and Malaysia next year.


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## General Fujita

*Pakistan rupee ends at record low on politics, economy*
By Koh Gui Qing
Business Feed Article | Business | guardian.co.uk
KARACHI, Aug 25 (Reuters) - The Pakistani rupee marked a record closing low on Monday on investor fears persistent political tension and a weak economic outlook would drag on the currency in coming weeks.
Two traders said the rupee closed at 76.60/70 and 76.65 against the dollar. The rupee's previous record-low closing of 76.60/65 was struck on Aug. 16, according to Reuters records. It hit an all-time intra-day low of 77.15 on Friday.
The rupee has lost 24 percent against the dollar this year, and pressure has mounted on the central bank to intervene to stop its dive.
But analysts said the cash-poor central bank is in a tight spot because it cannot afford to buy the rupee, and that key support for the currency will only come from an accumulation of foreign reserves, which to happen quickly would require foreign financial aid.
"We need to have foreign reserves and it is not the job of the central bank to go around borrowing money," said Asif Ali Qureshi, an analyst at Invisor Securities.
Pakistan is in talks with Saudi Arabia to defer an estimated $5.9 billion worth of oil payments, and seeks over $1 billion in loans from the World Bank and the Asian Development Bank.
After six years of healthy growth under former president Pervez Musharraf, who quit on Monday to avoid being impeached by the coalition government, Pakistan's economy began hitting tough times last year.
Inflation is soaring, high oil prices have depleted reserves, and trade and fiscal deficits are widening.
Pakistan's foreign reserves are now worth less than three months of imports, raising fears among investors the country cannot pay for its foreign purchases.
"The (economic) fundamentals are stuck against us. If the rupee closes at 77, we will see 80 very soon," said a trader who declined to be named.
Persistent wrangling among political leaders has also stirred fears among investors the government will be distracted from the pressing need to turn the economy around.
A decision may be imminent on whether to restore judges deposed by Musharraf last year, an issue that threatens to tear the governing coalition apart.
Former prime minister and the chief of the second-biggest party in the coalition, Nawaz Sharif, has threatened to quit the alliance if the judges are not reinstated. (Editing by Jerry Norton)


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## Neo

*Cutting down PSDP by Rs 100 billion: Planning Commission, finance at loggerheads​* 
ISLAMABAD (August 25 2008): The Planning Commission and the Finance Ministry are on a collision course over the announcement by the Finance Minister Naveed Qamar that the Public Sector Development Programme (PSDP) would be slashed by Rs 100 billion; the controversy is likely to continue.

Finance Minister Syed Naveed Qamar, while talking to a selected group of journalists, had stated that the slash was necessary to sustain the budget deficit of 4.7 percent as envisaged.

The same day, a senior official of the Planning Commission contradicted the finance minister and claimed categorically that there was no such proposal to cut down PSDP. He, however, said the PSDP funds utilisation was being made more effective to make sure that the funds are used in a judicious manner.

He said the project executing agencies from now onwards have been asked to submit cash plans in advance to secure funds for any development projects. The project executing agencies have been directed in writing to submit cash plan to the Planning Commission for each case for assessment, justifying prudent utilisation of the funds.

He said the new formula for release of funds under the PSDP is meant to ensure that each penny of the public money is used effectively and judiciously to achieve the end result.

He confirmed that over 1,000 cash plans had been submitted by the project executing agencies by mid-August, and it would ensure timely release of funds for selected projects.

He dispelled the impression that any downward revision has been done in the PSDP size, saying the overall volume of development programme will remain at Rs 541 billion. The National Economic Council (NEC) had approved the same size for this year's development programme on June 2.

The official said: "The impression of downward revision in the PSDP size is incorrect. The purpose of introducing the new formula based on cash plan is to seek a kind of guarantee from the executing agencies that they would utilise the funds judiciously."



The total size of the PSDP for ongoing fiscal is Rs 541 billion and this, according to Planning Commission sources, was not being reduced; only the funds release was linked with cash plans to ensure transparency and make the ministries and divisions more responsible.

Over 1,000 ongoing and 300 new development projects were approved under PSDP for 2009 an amount of Rs 541 billion earmarked to undertake these projects. An amount of Rs 24.6 billion was earmarked for projects for education sector, Rs 123.83 million for Ministry of Labour and Manpower, Rs 334.630 million for Women Ministry, Rs 20.515 billion for Agriculture and Livestock Division, Rs 28.79 billion for Cabinet Division, and Rs 850 million for Petroleum and Natural Resources Division.

Similarly, an amount of Rs 108.135 million was allocated under PSDP for Local Government and Rural Development, Rs 2.381 billion for Law, Justice and Human Rights Division, Rs 769.578 million for Textile Industry Division, Rs 4.070 billion for Housing and Works Division, Rs 11.114 billion for Planning and Development Division, Rs 2.370 billion for Revenue Division, Rs 5.0752 billion for Finance Division, and Rs 4.315 billion for Population Welfare Division.

The Information Division was allocated Rs 1.038 billion while Rs 1.045 billion was allocated for Industries, Rs 12 million for Economic Affairs Division, Rs 3.015 billion for Science and Technology, Rs 33.920 million for Youth Affairs Division. Railway was to get Rs 11.280 billion, Narcotics Control Division Rs 768.02 million, IT and telecommunication Rs 1.976 billion, and Communication Division Rs 36.821 billion.

Water and Power Sector was allocated Rs 67.679 billion, Atomic Energy Rs 15.330 billion, Finance Division Rs 50.752 billion, Health Rs 19.010 billion, Interior Rs 6.942 billion, and Cabinet and Defence divisions Rs 2.879 billion and Rs 4.939 billion, respectively.

The allocated amount in PSDP will be released to the ministries and divisions during 2008-09 in four equal instalments with 25 percent funds in each quarter.


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## Neo

*Government borrows Rs 90 billion from SBP in first seven weeks of fiscal year 2009​* 
KARACHI (August 25 2008): While government's plans to stop borrowing from the State Bank of Pakistan are yet to materialise, the central bank has provided it around Rs 90 billion for budgetary support in the first seven weeks of current financial year.

While SBP wants the government to retire Rs 21 billion from the borrowing up to June 30, 2008, the government is struggling to retire even fresh borrowing (after July 1st, 2008) from SBP. Around Rs 40 billion are expected to be raised through short-term commercial paper to be sold to public sector enterprises next month. A Rs 38 billion ($500m) loan is expected from Asian Development Bank. The Letter of Intent from the International Monetary Fund has been issued to clear the loan from ADB.

In the coming weeks, the government is expected to raise Rs 20 billion from the auction in Pakistan Investment Bonds. Cumulatively ie short term commercial paper, ADB loan and PIBs could be used to retire this fresh borrowing from SBP. However, to avoid further borrowing from SBP, the government would need to adjust electricity tariff and reduce the subsidy on oil. Any further delay in these adjustments would make the task of reducing borrowing from SBP to zero extremely difficult.

Borrowing from other sources to retire SBP stock of debt and expected inflow of forex loans would help avoid the international rating downgrade by Moody's at the end of first quarter of the FY09 financial year.

The monetary tightening of 350 bps in one year would take time to make an impact on inflation ie by the last quarter March-June 2009 provided full adjustment in oil prices and electricity tariff is effected in September. A delay on two crucial fronts could dilute the impact of monetary tightening, say monetary economists.

Average inflation of FY 09 is expected to be around 18 percent. It could decline to 12 percent by June 2009 provided government curtails its expenditure and achieves its revenue targets and avoids any fresh borrowing from the banking system and brings the fiscal deficit to below 4.5 percent.

The Saudi oil facility is crucial for Pakistan to keep its head above water. So far, Saudis have not commenced oil supplies under the new arrangement and it appears that they want the political dust to settle before the facility commences.

Pakistan's Central Bank forex reserves are believed to be around $6.5 billion with forward swaps of $1.7 billion - hence the real figure is close to $4 billion. Forex holding of banks of $3 billion is in addition. Thus total reserves are around $7 billion.


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## Neo

*Investment under CFS down 1.51 percent​* 
KARACHI (August 25 2008): Investment under CFS at Karachi stock market last week declined by 1.51 percent to Rs 23.9 billion, and the rates rose by 76 bps to 14.72 percent. "The rise in CFS rates could be attributed to the rising risk perception and slight rise in Kibor rates", Abdul Shakur, an analyst at Invest Capital & Securities, said.

The top 5 scrips by CFS investments were AHSL, NBP, OGDC, JSCL and POL whose combined investment accounted for 40 percent of total CFS investment. Open interest on the futures counter closed at Rs 6.89 billion, rising by 17.08 percent. The rise in futures investment was backed by healthy growth in average, which increased by 24.2 percent to 18.9 million shares.

Future spreads rose by 261 bps to close the week at 5.2 percent, suggesting a slight improvement in investor sentiment. The top 5 scrips by futures investment were JSCL, Engro, AHSL, ANL and ATRL, cumulatively contributing 38 percent of total futures investment.


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## Neo

*Cutting down PSDP by Rs 100 billion: Planning Commission, finance at loggerheads​* 
ISLAMABAD (August 25 2008): The Planning Commission and the Finance Ministry are on a collision course over the announcement by the Finance Minister Naveed Qamar that the Public Sector Development Programme (PSDP) would be slashed by Rs 100 billion; the controversy is likely to continue.

Finance Minister Syed Naveed Qamar, while talking to a selected group of journalists, had stated that the slash was necessary to sustain the budget deficit of 4.7 percent as envisaged.

The same day, a senior official of the Planning Commission contradicted the finance minister and claimed categorically that there was no such proposal to cut down PSDP. He, however, said the PSDP funds utilisation was being made more effective to make sure that the funds are used in a judicious manner.

He said the project executing agencies from now onwards have been asked to submit cash plans in advance to secure funds for any development projects. The project executing agencies have been directed in writing to submit cash plan to the Planning Commission for each case for assessment, justifying prudent utilisation of the funds.

He said the new formula for release of funds under the PSDP is meant to ensure that each penny of the public money is used effectively and judiciously to achieve the end result.

He confirmed that over 1,000 cash plans had been submitted by the project executing agencies by mid-August, and it would ensure timely release of funds for selected projects.

He dispelled the impression that any downward revision has been done in the PSDP size, saying the overall volume of development programme will remain at Rs 541 billion. The National Economic Council (NEC) had approved the same size for this year's development programme on June 2.

The official said: "The impression of downward revision in the PSDP size is incorrect. The purpose of introducing the new formula based on cash plan is to seek a kind of guarantee from the executing agencies that they would utilise the funds judiciously."



The total size of the PSDP for ongoing fiscal is Rs 541 billion and this, according to Planning Commission sources, was not being reduced; only the funds release was linked with cash plans to ensure transparency and make the ministries and divisions more responsible.

Over 1,000 ongoing and 300 new development projects were approved under PSDP for 2009 an amount of Rs 541 billion earmarked to undertake these projects. An amount of Rs 24.6 billion was earmarked for projects for education sector, Rs 123.83 million for Ministry of Labour and Manpower, Rs 334.630 million for Women Ministry, Rs 20.515 billion for Agriculture and Livestock Division, Rs 28.79 billion for Cabinet Division, and Rs 850 million for Petroleum and Natural Resources Division.

Similarly, an amount of Rs 108.135 million was allocated under PSDP for Local Government and Rural Development, Rs 2.381 billion for Law, Justice and Human Rights Division, Rs 769.578 million for Textile Industry Division, Rs 4.070 billion for Housing and Works Division, Rs 11.114 billion for Planning and Development Division, Rs 2.370 billion for Revenue Division, Rs 5.0752 billion for Finance Division, and Rs 4.315 billion for Population Welfare Division.

The Information Division was allocated Rs 1.038 billion while Rs 1.045 billion was allocated for Industries, Rs 12 million for Economic Affairs Division, Rs 3.015 billion for Science and Technology, Rs 33.920 million for Youth Affairs Division. Railway was to get Rs 11.280 billion, Narcotics Control Division Rs 768.02 million, IT and telecommunication Rs 1.976 billion, and Communication Division Rs 36.821 billion.

Water and Power Sector was allocated Rs 67.679 billion, Atomic Energy Rs 15.330 billion, Finance Division Rs 50.752 billion, Health Rs 19.010 billion, Interior Rs 6.942 billion, and Cabinet and Defence divisions Rs 2.879 billion and Rs 4.939 billion, respectively.

The allocated amount in PSDP will be released to the ministries and divisions during 2008-09 in four equal instalments with 25 percent funds in each quarter.


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## Neo

*Automobile industry poised to play vital role in economic growth​*
ISLAMABAD (August 25 2008): Automobile industry-one of the important sinews of the industrial sector is geared up to lend important contribution for country's economy making it further vibrant and buoyant.

Wide range of vehicles, indigenously manufactured by automobile industry to meet growing demand in this regard is reflective of growth and expansion of this sector at fast pace, sources at automobile sector observed.

Durability and reliability of the vehicles produced by the indigenous automobile companies will help woo the consumers besides saving huge chunk of foreign exchange spent on the imported cars, they added.

With dynamic economic strategy devised by the political dispensation, the automobile sector is bound to initiate important as well as giant leaps to inject its much-needed contribution to the country's economic growth, they opined.

The Toyota Motor Company- an important segment of automobile industry is well positioned to play its important role in the economic growth by generating more revenues to the national kitty.

Aman Mirza General Manager Toyota Islamabad Motors when contacted to comment on the policies of the present government towards automobile industry, he appreciated the investment friendly approach, which would help, improve the production capacity of the industry.

Aman Mirza claimed Toyota Corolla is the best seller in the South Asia and also on number one in Pakistan adding, it is available in nine different colours in the market and the new generation more luxurious in every aspect.


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## Neo

*World Bank pledges $5.52 million for carbon finance project​* 
FAISALABAD (August 25 2008): The World Bank will provide $5.524 million (of which $2.869 million long-term debt) to proposed Carbon Finance project "Lahore Composting" (Saif Group, Pakistan, the sole owner of Lahore Compost Ltd-LCL) to avoid generation of methane emission from biodegradable wastes and improve cultivated land by using compost as a natural soil conditioner.

In an Integrated Safeguards Datasheet of Lahore Composting, Project Task Team Leader and World Bank expert Mihaly Kopanyi said that the Carbon Finance project will provide additional support for achieving the following objectives and benefits, namely to reduce carbon emission in a financially sustainable way, to promote and provide organic conditioner for agriculture; to increase recycling of valuable materials; to reduce health hazard by overall reduction of waste disposed off in landfills; and reduce the demand for landfill capacity.

This carbon finance project will purchase Emergency Recovery Plants (ERs) from the composting plant located in Mehmood Booti area of Lahore city. The program shall be financed by Lahore Compost Ltd through both equity and long-term owners-loan provided by the Saif Group, the sole owner of LCL. The operational cost will be covered and borrowing will be repaid through sales revenues and future carbon finance payments.

The plant managed by LCL has been operating on a pilot basis since March 31, 2006. The experience has been very positive so far and the quality of the compost is high. The LCL follows standard operation procedures for an aerobic windrow type technology; the plant is technically sustainable and in compliance with the Pakistan national environmental quality standards. The plant is currently operating with a 300 ton per day (TPD) capacity, but plans to expand to 1,000 TPD by 2009. All these expansions can materialise within the present premises of LCL.

Mihaly Kopanyi said that the expansion of the composting capacity will require both civil works and purchasing additional equipment. Both local and imported technology will be used for the composting plant. Specific equipment eg turner, screener, sorters have been and will be imported from a reputable producer of composting machinery.

Commenting over the "Key Safeguard Policy Issues and their Management", Mihaly Kopanyi said that the project does not envisage any large scale, significant or irreversible environmental impacts. The environmental and social impacts of the project are primarily positive, since composting will substantially reduce the waste dumped to the landfill, cut down the green house gas emissions to the atmosphere, provide jobs for both skilled and unskilled workers with a better work environment than a landfill; and does not require displacing people.

The LCL has undertaken an environmental and social impact assessment in harmony with the Pakistan Environmental Protection Act, 1997, and World Bank's Safeguard policies, he added

An Environmental management Plan (EMP) prepared under the project Environmental and Social Impact Assessment (ESIA) will be implemented during the project construction/expansion and operation phases to ensure that there are no adverse environmental impacts; rather potential environmental benefits are enhanced, he said. Mihaly Kopanyi also mentioned that the communities in the project area are likely to benefit from the project with potential skilled and unskilled jobs with a better work environment than a landfill and potential health and environmental benefits due to reduction in the amount of waste dumped in the existing unsanitary landfill. The project will also contribute towards reducing greenhouse gas emissions, thereby supporting and contributing to the global efforts towards minimising climate changes.

In the absence of the project, Mihaly Kopanyi said the waste will be dumped in the unsanitary landfill site. The City District Government Lahore (CDGL) considered incineration as a potential alternative to the project but eventually rejected it due to its adverse environmental impacts and non-feasibility based on the characteristics of the solid waste.

Further, LCL has developed standard operating procedures based on the best available practices to ensure that there are no adverse environmental impacts; rather potential environmental benefits are enhanced, he added.


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## Neo

*'Food productivity enhancement plan to be expanded in Punjab'​* 
SIALKOT (August 25 2008): Food security and productivity enhancement programme of small farmers has been expanded in 1012 villages at a cost of Rs 100 million in Punjab. Official sources told Business Recorder here Sunday that the programme would jointly be carried out by federal, provincial and district governments in Punjab.

In Sialkot district, the programme would be carried out in 72 villages and under the programme each village would be provided funds amounting to Rs 1.95 crore for the implementation of the programme while initial work on the project has been initiated in area.

The objectives of the project are to supplement the country's on-going efforts to increase food product through crop productivity to ensure food security and alleviate poverty in rural areas through improving income of small farmers and build a mechanism for sustaining productivity enhancement and food security programme. Under the programme special attention would be focused on increasing productivity for improving food security and meet rapidly growing food demands as well as to reduce seasonal and year-to-year variability in production on economically and environmentally sustainable basis.

The main crops like wheat, rice will be covered while small crops like pulses, oilseeds, maize and fodder are also included the project for providing assistance to the farmers, sources added.

The completion of this project would be supportive in bringing boom in per acre yield of crops and help reduce poverty scale in these districts of the country, sources added.


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## Neo

*Govt to announce Rs1.5bn Ramazan Package ​* 
*ECC may approve Rs24 billion subsidy under research & development support fund for textile industry​*
Tuesday, August 26, 2008

ISLAMABAD: The government is to announce the Ramazan Package of Rs1.50 billion to ensure the provision of some kitchen items at subsidised rates in a bid to contain the traditional deadliest spate of inflation that always hits the poor masses in the holy month of Ramazan.

The Ramazan Package is to be unveiled by the government in the next meeting of Economic Coordination Committee (ECC) that would meet on August 26 with the Prime Minister in the chair.

The official said that if kept in view the inflation, the Rs1.50 billion relief package under which some kitchen items are to be provided at subsidized rates, would hardly make the difference. The relief package is a commendable effort at a time when the government is facing fiscal constraints.

The ECC meeting is also likely to approve Rs24 billion Research & Development (R&D) subsidy for the textile sector. The move to give Rs24 billion to textile people under the head of research and development support fund may face a lot of opposition from the other participants of the meeting.

The meeting may consider introduction of slabs for obtaining the R&D subsidy from the next fiscal 2008-09 under which the biggest exporters would get maximum benefits while the smaller exporters, who contributed major bulk in exports, were bound to face loss.

The existing subsidy rates stand at 3 per cent and 6 per cent. Now it has been proposed for introducing slabs for granting 3 per cent subsidy up to $25 million exports, 4.5 per cent subsidy for $25 to $50 million exports, 5 per cent subsidy up to $100 million exports and 8 per cent subsidy on exports over $100 million on the pretext that it would help mergers within the sector. The subsidy for smaller exporters will be less if the ECC accords approval to this proposal, said the sources.

The PPP government has not allocated any budgetary provision for textile sectors R&D subsidy in the recently announced budget 2008-09 but now they are going to again subsidize the sector, which failed to perform well despite getting Rs32 billion subsidy in the last financial year.

We provided Rs20 billion subsidy to the textile sector but it failed to reciprocate in the same manner. In dollar terms, the government provided around $300 million subsidy but the textile sector remained unable to fetch amount up to the level of $300 million in exports compared to the previous year, said the sources. The ECC meeting is also to give approval for renegotiate the Rs6.9 billion loan, which PIA has obtained from local banks.


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## Neo

*PSM to go for direct iron ore mining ​* 
Tuesday, August 26, 2008

ISLAMABAD: Pakistan Steel Mills (PSM) will go for direct mining of iron ore in different parts of the country to meet its demand, says a news statement issued by the Engineering Development Board (EDB) here on Monday.

Representatives of PSM briefed the committee on the exploration, mining, leasing and development for the preparation of National Steel Policy, formed by the EDB, which met here with Shakeel Ahmed, GM Mughal Steel in chair.

They briefed the committee regarding the steps taken by PSM for local iron ore in steel making. The committee felt the need to raise the level of coordination between various departments for solving the problems of miners, and examined various models existing in other countries of the world, especially India.

The meeting suggested that iron ore and coal deposits be mined for the production of steel by the private sector. Development of mechanised mining of raw materials used in steel making was also discussed.

It also firmed up its recommendations regarding the acquisition of technology for the beneficiation of low grade iron ores and coal. Strategy to open up investment opportunities in infrastructure development like rail roads, ports, etc, was also finalised.

Special and simplified procedures for leasing for steel manufacturers/concerned raw material producers were also recommended along with capacity building measures. Development of mechanism for enhancing the role of the geological survey of Pakistan, to conduct feasibility studies, was also on the agenda.


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## Neo

*Foreign investors keen to set up Islamic banks ​* 
Tuesday, August 26, 2008

LAHORE: Provincial Minister for Finance, Planning and Development, Tanvir Ashraf Kaira, on Monday, said that foreign investors of the Middle East, Far East and UK have shown keen interest in establishing Islamic finance banks in Pakistan.

Presently, the total assets of Islamic banks are worth Rs135 billion and there are 170 branches of six licensed full fledged Islamic banks, he said, adding that more than 13 commercial banks are working in Islamic banking.

He expressed these views while addressing the inaugural session of the 2nd International Conference and Exhibition on Islamic Banking and Finance at Aiwan-e-Iqbal Lahore here. Islamic banking and finance is a system based on strong economic, financial and social considerations, envisaging equitable distribution of rewards and risks among the stakeholders and it is the need of the hour to promote Islamic banking and financing in the country.


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## Neo

*Privatisation plan for 08-09 to be okayed today​*
** Privatisation status of big ticket items such as PSO, PPL, OGDCL, NITL to be announced n GDR launch will also be finalised​*
ISLAMABAD: The Privatisation Commission Board is scheduled to meet today (Tuesday) to approve the PPP-led governments aggressive privatisation programme for the current fiscal year 2008-09, a senior official at the Privatisation Commission told Daily Times on Monday.

Federal Minister for Finance, Revenue, Privatisation and Investment Syed Naveed Qamar would chair the meeting. The significance of the meeting is that the government would announce privatisation status of important public sector enterprises (big-ticket items) such as the Pakistan State Oil (PSO), Pakistan Petroleum Limited (PPL), Oil and Gas Development Company Limited (OGDCL), and the National Investment Trust Limited (NITL).

The enterprises that offer more attractive investment opportunity would be higher on the priority list for privatisation.

The status of the launch of Global Depository Receipt (GDR) under which shares of important public sector enterprises that would be offered for sale at international stock markets would also be finalised. Some Rs 52 billion privatisation proceeds are in the pipeline and inclusion of more important public sector entities in the privatisation schedule for the current fiscal year would help generate additional financial resources. 

Privatisation programme for September and October: The Privatisation Commission has already decided to complete the privatisation of SME Bank, Hazara Phosphate Fertilizers Limited, National Power Construction Company and Heavy Electrical Complex by September 2008 and completion of all necessary arrangements for Global Depository Receipts (GDR) of Kot Addu Power Company for its listing in October 2008. The government has already directed the concerned officials to expedite the privatisation process for the sale of 26 Pakistan Tourism Development Corporations motels and restaurants, which have received enthusiastic response from the reputed investors in the related field. 

According to the official sources the as an option privatisation big ticket items like the PSO, PPL, OGDCL, power generation and distribution companies and NITL would be considered in the Privatisation Commission Board meeting. Qadirpur gas fields privatisation is also on the card that would help generate much needed foreign exchange of $3.5 billion for the government which is facing foreign exchange crunch due to host of reasons. At present, some 57 public sector enterprises and corporations are included in the tentative list for privatisation. However, their final status would be determined in the meeting. According to the sector-wise break-up, the following are their names:

Banking, finance and insurance sectors: The NITL, First Women Bank, United Bank Limited, Habib Bank Limited, National Bank of Pakistan, National Insurance Corporation, Pakistan Insurance Corporation, State Life Insurance Corporation.

Oil, gas and energy sector: The OGDCL, Pak Arab Refinery Limited, Pakistan Petroleum Limited, Pakistan State Oil Company Limited, Sui Northern Gas Pipe Lines, Sui Southern Gas Pipe Lines, Peshawar Electric Supply Company, Faisalabad Electric Supply Company and Jamshoro Power Company Limited.

Fertilizer sector: The National Fertilizers Corporation, Hazara Phosphate and Fertilizers Limited.

Engineering sector: The State Engineering Corporation and its units, National Construction Limited, Pakistan Machine Toll Factory, Pakistan Steel Mills Corporation & its units, Pakistan Steel Fabricating Company Limited.

Mineral and Natural Resources: Pakistan Mineral Development Corporation and Lakhra Coal Mines.

Ghee Units: Ghee Corporation of Pakistan, Morafco Industries (machinery as is where is basis). 

Automobiles sector: The Pakistan Automobiles Corporation, Republic Motors Limited (assets), and the Sindh Engineering Limited.

Infrastructure sector: The Civil Aviation Authority, Port Qasim Authority, Karachi Port Trust, and the National Highway Authority.

Transport sector: The Pakistan International Airlines Corporation, Pakistan National Shipping Corporation, Pakistan Railways and its allied facilities, factories, workshops etc.

Tourism sector: The Pakistan Tourism Development Corporation, Services International Hotel Lahore, and PTDC Motels and Restaurants.

Other sectors: The other public sector enterprises to be privatised include the Printing Corporation of Pakistan, Tomato Paste Plant, Corporation and Others (status to be determined), State Cement Corporation of Pakistan, Sate Petroleum Refining and Petrochemicals Corporation, Pakistan Industries Development Corporation, Utility Store Corporation and its stores, Trading Corporation of Pakistan, Cotton Export Corporation of Pakistan, Rice Export Corporation of Pakistan, Export Processing Zone Authority, Pakistan Industrial and Technical Training Centre, Convention Centre, Islamabad and Pakistan Engineering Company.


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## Neo

*Oil and gas discovery in Tando Allahyar ​* 
KARACHI (August 26 2008): The Oil and Gas Development Company Limited (OGDCL) has announced an oil and gas discovery in Kunnar South-1 (Zone-2), in Tando Allah Yar block in Sindh. According to a notice at KSE, OGDCL owns 95 percent production stake in this block, the other 5 percent is owned by GHPL. According to initial tests, oil and gas flow from the well stood at 250 barrels per day of condensate and 14.7mmcfd of gas.

"The discovery would have an annualised earnings impact of Rs 0.16 per share on OGDCL's bottom line", Umer Ayaz, an analyst at JS Global Capital said. Production from the well is expected in the next 8 to 9 months.


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## Neo

*'Policy statement on economy soon' ​* 
ISLAMABAD (August 26 2008): Leader of the House in Senate Raza Rabbani has said that finance minister would shortly give a policy statement on economy in the house. Rabbani was responding to a point raised by Senator Waseem Sajjad. The PML (Q) Senator expressed concern over depreciation of rupee against the dollar.

Waseem Sajjad said that the government had failed to give its economic policy statement, which, according to him is must to steer the country out of the economic crisis. He asked the government to ensure political and economic stability, holding back the capital flight in order to put the country in a right direction on economic front. He said that today the Bangladesh and Indian are stronger against the US dollar.


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## Neo

*Over $350 million export consignments not dispatched yet ​* 
KARACHI (August 26 2008): The continued strike of goods transporters has badly affected the import and export activities, resulting in suspension of around $350 million export consignments during last seven days, exporters said on Monday. They said that for last seven days not a single export consignment has reached Karachi and Bin Qasim ports following transporters refusal to provide logistics.

"We are unable to dispatch the ready export consignments to ports presently lying in factories for their destinations due to the continued strike," exporters added. They said that transporters have parked over 10,000 trucks, container carriers and other vehicles outside ports and nearby areas. They are reportedly threatening private transporters of the factory owners.

At present exporters and industrialists are compelled to stop their export operation completely and have parked private vehicles in the industries and wait till the strike ends, they added. "It has been estimated that during the last seven days over $350 million export shipments could not reach ports due to the continued strike," said Zubair Motiwala, former president, Karachi Chamber of Commerce and Industry.

He said the country dispatches some $52 million export consignments every day. Karachi Port Trust and Port Qasim are the two major ports for exports, which have not received a single export cargo since last Tuesday. Textile exports have badly been affected by the goods transporters' strike, as over $200 million of consignments are laying in the factories waiting for transportation, he added.

"The goods transporters' strike has not only brought exports from Karachi to a standstill, but also caused suspension to exports from upcountry," Motiwala said. He said that this is more interesting that transporters of goods association on July 14 announced a raise in freights as result of rise in the diesel and spare parts prices which the industrialists are paying them. In case of further delay, buyers will demand shipments via airplane, which is nine times higher than the cost through vessels, he said.

The strike also brought the cement exports to a halt. Industry sources said that Pakistan is exporting some $20 million of cement every week but could not be made since the strike began. "Despite, cement exporters' own transports, the goods transporters have stopped them from travelling to ports,' they added. At present, one ship - 'C Princes' is berthed at Karachi port, waiting for cement loading. While two others are waiting for cement loading in the open sea, they added.


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## General Fujita

*Information Technology must for Pakistan's progress *

Wednesday, 27 August 2008 00:00 Pakistan Daily 

'Present era requires expertise in the field of Information Technology (IT),' The Acting Governor of Sindh, Nisar Ahmed Khuhro said this in the inauguration of the AR Saleh Mohammad Computer Learning Centre. The Centre at the AR Saleh Mohammad Government Model Primary/Secondary School in Lyari has been established by a social welfare project of the Kalia Group called Ko-Ordination Group (KRG).

Khuhro pointed out that late Benazir Bhutto had always stressed on the acquisition of computer education. Further, he said that Benazir dreamt Pakistan a developed country with educated people. The Acting Governor promised that her mission would be pursued and achieved.

He was optimistic that the county will make a rapid headway during the era of the government of Pakistan People's Party (PPP). Khuhro also emphasised the need of IT for the progress of the country so that it could ensure a respectable place in the world. He appreciated the Kalia Group for establishing the Computer Learning Centre.


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## General Fujita

*TeleCard embarks on aggressive plan to rollout Wimax service in Pakistan *

Wednesday, 27 August 2008 00:00 Pakistan Daily 

Pursuant to a decision of the TeleCard Board to actively participate in the fast growing Wireless Broadband market, the company is pleased to announce that it has chosen Augere as the principal contractor to rapidly design and build the network such as to position a great offering/value proposition for the growing and very quality sensitive internet user community in the country.

The equipment deployment for the initial phase has already commenced and the company expects the offering of Wimax service to be commercially ready by end of the year.


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## General Fujita

*Pakistan Telecommunication Authority to start automated blocking of illegal IPs*

Wednesday, 27 August 2008 00:00 Pakistan Daily 
Pakistan Telecommunication Authority (PTA) has decided to start automated blocking of Internet Protocol Addresses (IPs) involved in illegal termination of international traffic, in a bid to check grey traffic flowing into the country.

The facility would be operational within next few days, said PTA Chairman Dr Muhammad Yaseen in a meeting with CEOs of major Internet Service Providers (ISPs) of the country. He asked all ISPs to declare their IP addresses alongwith the antecedents of their customers so that illegal telecom traffic could be monitored. It was emphasized that operators should oversee their customers to make sure they were not involved in grey traffic termination. He also sought cooperation of operators against menace of grey telephony.


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## General Fujita

*Telenor plans to expand network in Pakistan *

Tuesday, 26 August 2008 00:00 Pakistan Daily 

Telenor has planned to expand itself only in the field of Telecommunication with special focus of Northern Areas, NWFP and FATA as the things will be little smooth there.

Peter Dindial, Chief Technical Officer told exclusively to The Post after the launching ceremony of Telenor Pakistan Ambassadors. Adding more he was of the view that Telenor Pakistan is committed foe its business expansion as there is a huge opportunity of broadband expansion. 


Dindial said although business circumstances here were not much satisfactory, still Telenor believed on its improvement as there was huge cellular market of 160 million Pakistanis here. When pointed about the introduction of Wateen Telecommunication's expected media line-ups, he said that Telenor will only expand itself in the field of Telecommunications but still we have choice of IP TV and broadband TV as well.


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## General Fujita

*Barclays Bank UK to operate with 10 branches in Pakistan *

Tuesday, 26 August 2008 00:00 Pakistan Daily 

Barclays Bank PLC, a major financial services provider would start its operation in Pakistan with branches in Karachi, Lahore and Islamabad by the end of 2008

Barclays Pakistan aims at operating 10 branches along with 10 sales centres across the country with more aggressive expansion plans for 2009. 

This was revealed in a press conference Monday here in Islamabad. Speaking on the occasion Ahmed Khizer Khan Chief Exective, GRCB emerging markets said the decision to establish Barclays in Pakistan was based on a long-term view of the country and the faith in the progressive economy of Pakistan.

He said Barclays had launched a range of consumers commercial and treasury products, these introductory products include current and saving accounts trade financing personal loans, mortgage, debit and ATM cards, covering the basic financial needs of consumers, while other products are including car financing, credit cards (VISA) small and medium enterprise financing, business financing, investment accounts and internet banking will be introduced in the coming months.


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## Neo

*Rs3,061bn required for MDGs in education, health & environment ​* 
Wednesday, August 27, 2008

ISLAMABAD: Pakistan requires Rs3,061 billion to achieve Millennium Development Goals (MDGs) related targets in education, health, environment, clean drinking water and sanitation during the next seven years till 2015, The News has learnt.

None of the governments have ever done this exercise to ascertain the exact financing requirements for achieving MDGs. Now this has been done by UN consultants to give the exact cost of achieving MDG targets envisaged by the UNO and agreed by Pakistan for improving basic necessities of life till 2015.

The much-awaited crucial document, Poverty Reduction and Strategy Paper (PRSP-II), on the basis of which Islamabad would get billions of dollars over the next three to five years would incorporate the MDG cost in its fold.

The MDGs, agreed by Pakistan under the aegis of UNO for scaling up provision of basic necessities of life, can only be achieved if the government spends a major chunk of its resources for achieving the targets in education, health and environment over the next seven years (2009-2015).

The total cost of Millennium Development Goals in sectors like education, health and environment would come to Rs3,061 billion till 2015, out of which the governments financing available to education would be Rs860 billion, health Rs850 billion, environment Rs550 billion and clean drinking water and sanitation Rs130 billion.

Total financing gap stands at Rs844 billion as the education sectors requirement is Rs350 billion, health Rs310 billion, drinking water and sanitation Rs43 billion and environment Rs141 billion, the cost estimated by the government and available with The News showed. Islamabad would have to approach multilateral and bilateral creditors in order to meet its financing requirements.

The total cost for achieving MDGs targets in education stood at Rs1210 billion, out of which Rs953 billion would be required for universal primary education, Rs209bn for promoting literacy and Rs48bn for early childhood education over the next seven years.

The cost for achieving health-related MDGs would require Rs1160 billion over the next seven years, out of which Rs5bn would be required for nutrition, Rs48bn for population welfare and Rs1107bn for mother and child healthcare.

The water and sanitation sector would require Rs173 billion, out of which Rs130bn would be for provision of clean drinking water and Rs43 billion for sanitation.

The cost of achieving environment related MDGs would be Rs691 billion, out of which Rs650 billion would be required for housing, Rs18bn for green environment and Rs23bn for brown environment in the next seven years.

According to an analysis done by former chief economist of Planning Commission, Dr Pervez Tahir, which he tabled during the recently held workshop titled Decentralisation - A Vehicle for Achieving MDGs, a copy of which is available with The News, states that out of a total of 34 indicators for achieving MDG targets, Pakistan is lagging behind on 25 indicators and is on track on six indicators, while it is ahead on three indicators.

Out of the three indicators related to eradicating extreme poverty and hunger, Pakistan is lagging behind on all of them. There are three indicators related to universal primary education, Pakistan is lagging behind on two indicators, while it is on track related to one indicator.

To promote gender equality and women empowerment, there are four indicators out of which Pakistan is lagging behind on one and is on track on two indicators, while it is ahead on one indicator.

There are six indicators on reducing child mortality and Pakistan is lagging behind on three indicators, is on track on two indicators, while ahead on one indicator. To improve maternal health, there are five indicators for achieving MDGs and Pakistan is lagging behind on all of them.

There are five indicators on combating HIV/AIDS, malaria and other diseases and Pakistan is lagging behind on all of them. To ensure environment sustainability, there are eight indicators for achieving MDGs, Pakistan is lagging behind on six indicators, is on track on one indicator while it is ahead on one indicator.

Public expenditure on social sector and food assistance as percentage of GDP are traditionally very nominal in Pakistan and the last eight years of Musharraf-Aziz regime worsened the situation.

The public expenditure on education as percentage of GDP stood at 1.34 per cent in 2000-2001, which went up to only 1.86 per cent by 2006-07. The public expenditures on health were 0.42 per cent of the GDP in fiscal year 2000-01 which increased to 0.61 per cent by 2006-07. On water supply and sanitation, public expenditures stood at 0.11 per cent of the GDP which increased to 0.19 per cent by 2006-07.

However, public expenditure on food subsidies and support declined during the Musharraf-Aziz rule as it stood at 0.25 per cent of the GDP by 2000-01, which declined to 0.10 per cent by 2006-07.


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## Neo

*US help sought in agriculture ​* 
Wednesday, August 27, 2008

ISLAMABAD: Federal Minister for Food, Agriculture and Livestock, Nazar Muhammad Gondal, has said that there is a great need to modernise agriculture with the effective use of science and technology, and Pakistan greatly needs help and cooperation from the US in this regard.

Gondal stated this while talking to the Adviser to US Secretary of State on Science & Technology Dr Nina Fedoroff. Food shortage is an international problem and it needs cooperation and collaboration, said the minister, adding that in spite of self-sufficiency in food items Pakistan is facing a shortage because of smuggling to the neighbouring food-deficient countries.

Gondal said that the government is working on the initiative of Green to Gene Revolution and needs scientific and technological support from the US especially in bio-technology, so that there is an increase in agricultural productivity and improvement in seed technology.

The minister said, We want technology transfer from the US through more scholarships to students and on-job training to our technical experts in the field of agriculture.


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## Neo

*Tough steps unlikely to kick-start economy ​* 
Wednesday, August 27, 2008

LAHORE: The PPP-led government must be repenting the mistake of neglecting the economy for over four months as it has now reached a stage where even the harshest measures would not be enough to give it a kick-start.

What has surprised most economists is that the present regime has penalised the electorate by increasing petrol, gas and electricity rates without having any proper economic roadmap. The rise in prices of these utilities was essential as their cost has surged but the electorate expects an improvement in economy which would offset the impact of this additional burden coupled with high food prices.

During the past four months, foreign exchange reserves have dipped to the lowest level in four years. The rupee is on a free fall and the capital markets performance reflects the apathy of regulators. It looks that the government has lost all financial controls. On the other side, banks are in the driving seat as they continue to offer marginal returns to depositors while charging over 16 per cent mark-up from borrowers. Hoarders of grains and vegetables are minting more money than they ever made in the past.

Even the decline in rupees value has not put a brake on imports which continue to grow at a higher pace than exports. It is true that the economic rot started much before the transfer of power to the present regime. However, what disturbs most economic analysts is that the downturn instead of slowing down has accelerated after the change of government.

Though the last speech by former president Musharraf was a bundle of lies but he had a point when he correctly stated that thermal power generation has gone down by 4,000 megawatts compared to what Water and Power Development Authority was generating during the same period last year. This is the main reason for the high loadshedding facing the country.

Many power generation experts point out that perhaps the government is deliberately keeping production low till another hike in electricity rates.

The trade and industry is worried as credentials of some of the ruling party members are dubious. Businessmen have doubts about the transparency of economic policies and PPP leaders would have to take up the challenge of bringing fairness and transparency in policies.

Economists point out that the economic scenario had drastically changed in the past decade. They say the globalisation process has reached all corners of the world and the slightest deviation from merit and transparency would have a devastating impact on the economies. Besides transparency, they suggest, the government would have to take prudent and quick decisions on economic policy.

An economist said postponing the decision on research and development support for textiles for instance had hurt exports. Similarly, the decision to apprehend hoarders, smugglers and tax under-filers could not be delayed any further as they were eating away the documented sector of the economy.


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## Neo

*Countrywide deficit surges to 4,500MW​*
LAHORE, Aug 26: The severe power shortage in the country surged to over 4,500 megawatts when saboteurs blew up gas pipelines, causing suspension of supplies from Zamzama and Pir Koh to some power plants and forcing Pakistan Electric Power Company (Pepco) to undertake unannounced loadshedding.

According to Pepco officials, the crisis hit the 1,326MW Muzaffargarh Power House, which on Tuesday was producing only 550MW  a loss of 776MW. Similarly, the 1,250MW Kot Addu Power Company was producing only 800MW, with a net loss of 450MW. The Faisalabad Gas Turbine Power Station, designed to produce 170MW, remained shut, and so was the 200MW rental power unit.

The company was getting only 50 per cent of its share of gas, according to Pepcos director-general Tahir Basharat Cheema. Pir Koh and Zamzama gas fields are offline, plunging the company in a real crunch.

He said the situation would improve in the first week of September after Mangla Dam got filled and the run of the river increased.

Currently, Mangla Dam is generating only 350MW compared to 1,050MW produced last year. The Indus River System Authority (Irsa) was releasing only 10,000 cusecs, saving almost the same amount of water. The lake level is three feet below its optimum level of 1,202 feet.

On Tuesday, hydel generation remained around 5,600MW against the maximum possible generation of 6,600MW.

The extent of the crisis could be gauged from the fact that the company did not have enough fuel to restart even a unit of the Muzaffargarh Power House, another company official said.

The situation at the companys own thermal units is also messy. On Tuesday, all of them contributed only 2,000MW against 2,800MW when the oil supply situation was better.

According to him, the company was facing a crisis in all three sources of generation  oil, water and gas. It does not have sufficient oil because of the price factor and liquidity crunch. It does not have enough gas as a result of sabotage and because water releases are below normal owing to preference for irrigation.

According to a Pepco press release, the pipeline supplying gas to the Sui Northern Gas Pipelines Limited (SNGPL) from the Zamzama gas field was blown up by saboteurs a couple of days ago, affecting gas supply to the Muzaffargarh Power House, Kot Addu Power Company and Faisalabad Gas Turbine Power Station.

There was an additional shortfall of about 1,000MW in the national grid because power houses were running below their capacity due to reduced gas supply.

Under these circumstances, Pepco has to resort to forced loadsheding in a few areas. Resultantly, consumers have been facing loadsheding of relatively long hours than normal load management schedules.

Necessary measures are being taken  to rectify the problem. It is expected that the situation will normalise by Wednesday.


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## Neo

*US firm to invest $10bn in housing​*
ISLAMABAD, Aug 26: A US-based firm will invest $10 billion in Prime Ministers Housing Programme, a mega project to construct one million residential units annually in the country.

The Ministry of Housing and Works and the International Oil Company of USA here on Tuesday signed a memorandum of understanding (MoU) in this regard.

Secretary Housing Sami ul Haq Khilji and Country President of IOC Fazal-e-Rahim signed the MoU. The ceremony was also attended by Minister for Housing and Works Rehmatullah Kakar, Managing Director Pakistan Housing Authority Raja Mohammad Abbas, Joint Secretary Ali Abid, chief engineering adviser and senior officials of the ministry.

The US firm will provide financial assistance to the government on turnkey basis and after construction, a specific quantity of housing units would be given to the US firm and it will sell them on its own terms and conditions, secretary housing told Dawn.

He said final agreement between the two sides would be signed after the release of half of the promised amount ($5 billion) by the US firm.

The housing minister had told National Assembly recently that the government was in the process of making deals with the firms from Malaysia, Spain, United States and a local company.

Regarding the prime ministers plan to build one million housing units, the minister informed the House that survey in this regard had been completed and evaluation was in progress, adding that the House would be informed about the progress shortly.

Under the MoU, the US company had agreed to invest $5 billion initially and later on the remaining $5 billion would be released for the PMs programme.

Speaking on the occasion, the housing minister said that the government would encourage and facilitate the foreign investors in the upcoming mega housing projects.

The government, he said, had chalked out an ambitious plan to construct one million houses annually for the poor, needy and shelterless and government servants under the PMs programme being implemented all over the country.

Participation of foreign companies in Pakistans housing projects would not only benefit the respective countries to share their experiences in the construction sector but also generate employment opportunities to a great extent, the minister said.


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## Neo

*Small dams, agriculture schemes on ADB agenda​*
** ADB delegations presentation to PC likely on September 2​*
ISLAMABAD: The Asian Development Bank (ADB) on Tuesday expressed willingness to invest more in the construction of small dams in the country instead of big dams.

A meeting held in the Economic Affairs Division (EAD), ADB officials and representatives of four provinces, relevant ministries, the Planning Commission and the Finance Division, discussed in detail the draft of the Country Partnership Strategy (CPS).

During the meeting, ADB officials sought comments from the concerned ministries/divisions experts over the CPS draft for its finalisation.

Government officials said ADB representatives expressed willingness to provide financial assistance for construction of small dams and most of the ADB assistance programmes related to the development of agriculture sector that would greatly help the government to resolve the food security problem.

The CPS programmes mainly include many agriculture and water resources projects. The prominent amongst them were: Sindh Water Resources Development, TFR-III Punjab Irrigated Agriculture and Barani Integrated Resources.

Officials further said that the ADB would give a presentation to the officials of the Planning Commission, most likely on Sept 2, regarding the technical assistance for the study of competitiveness and structural transformation in Pakistan.

In this regard, a team of ADB Manila comprising Principal Economist Jesus Felipe, Professor Ricardo from the Harvard University and others has already arrived in Pakistan on Aug 24 and they conducted meeting/presentations with four provinces.

Presentation: The same ADB delegation would give their presentation over the Pakistani economic indications since the beginning to date, loopholes, problems and their solutions. The officials said that the expected outcome of the presentation would be diagnostic analysis for providing assessment of the impediments to structural changes.

During the presentation, the officials said the ADB experts would also review the countrys overall exports, the problems in this regard and would forward suggestions for improvement. The ADB team would also forward a comprehensive plan for industrial development of the country.

The officials further informed that a number of developmental projects, particularly related for the improvement of agriculture sector and construction of small dams would be handed over to the ADB for financial support. The government had already imposed a cut of Rs 100 billion in Public Sector Development Program (PSDP) 2008-09. In this regard, the Planning Commission had sent reminders to all ministries/divisions to prioritise their projects and also forwarded proposals for running some of the projects through public-private partnership basis.


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## Neo

*KICT crowded by import containers: over $550 million export cargoes may not be shipped for three days​* 
KARACHI (August 27 2008): Over $550 million export consignments are unlikely to be shipped for the next 72 hours from Karachi International Containers Terminal (KICT) because the space is occupied by imported cargoes last eight days.

Sources told Business Recorder on Tuesday that a large number of imported goods containers has not been cleared because of transporters' strike, putting immense burden at KICT where there is no space for export cargo. They said that the around 5000 imported goods containers would take at least three more days to be taken out of KICT.

They said that the KICT management has decided to stop processing export consignments for over 72 hours. Sources in KICT said that the terminal has not stopped processing export consignments, and added that the management has asked exporters to send lesser number of consignments during the next three days.

"Although KICT has not enough space left for containers where around 10000 containers are lying for some eight days, the process to clear export consignments has not been stopped to facilitate the exporters". Meanwhile, Karachi Goods Carrier Association (KGCA) has called off the strike and has started transporting cargo from Tuesday evening.

Sources in KGCA told Business Recorder that the government had agreed to reduce 40 percent toll tax, which would be exercised from 2009. However, association members stressed the need of reducing diesel prices, and pressed Niazi to continue strike till its reduction.

Niazi was beaten up by them and was forcibly made to announce to continue the strike on Monday midnight, they added. They said that the law enforcement agencies and other concern authorities have taken up the issue and resolved it and added that transporters have finally resumed transportation activities from Tuesday evening.


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## Neo

*Oil against deferred payments: Pakistani team holds talks with Saudi authorities ​* 
ISLAMABAD (August 27 2008): A top-level official delegation, headed by Petroleum and Foreign Minister, Shah Mahmood Qureshi, has air-dashed to Saudi Arabia to negotiate modalities with the Saudi authorities for a 5 to 6 billion dollar oil facility against deferred payments. The facility would be available to Pakistan for three years.

Pakistan's delegation comprised, Shah Mahmood Qureshi, Secretary Finance Furrukh Qayyum, Acting Secretary Petroleum G.A Sabri, Additional Secretary Finance, Asif Bajwa. Pakistan ambassador to Saudi Arabia is also accompanying the delegation for talks with Saudi authorities.

The Pak delegation held the first round of talks on Tuesday and will be back in Islamabad on August 28 or 29. Pakistan considers the oil facility from Saudi Arabia as a special support to help pull its ailing economy out from a bad patch.

Sources said the Saudi authorities had invited Pakistani officials last week for finalising modalities for the oil facility. Saudi government had hinted at giving Pakistan the oil facility for three to four years against deferred payments during Prime Minister, Syed Yusuf Raza Gilani's visit to Saudi Arabia in June last.

He was also accompanied with PPP co-chairman, Asif Ali Zardari. Pakistan's leadership had informed Saudi King and other leadership that Pakistan badly needs support in the form of oil facility to release pressure on its economy due to rising prices of petroleum products Pakistan's oil import bill had crossed a all-time high level of $11 billion in 2007-08. It resulted in severe pressure on its economy besides widening trade and current account deficit. Poor performance of all key sector of the economy forced the government to seek financial support from trusted friendly countries including Saudi Arabia, UAE China and USA.

Although it got positive response from majority of the country it selected for seeking support. However, it wanted a major support from Saudi Arabia in the form of oil facility. Saudi Arabia provides Pakistan 110,000 barrel crude oil per day. It is one of the major oil suppliers to Pakistan. It had given a facility of oil for 5 years soon after nuclear device detonation in 1998 and helped Pakistan come out of huge pressure due to various sanctions.


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## Neo

*Pakistan now Asia's second worst performing market: research report ​* 
KARACHI (August 27 2008): Pakistan has become the second worst performing market in Asia, as after posting average annual gains of 28 percent during the last 10 years, it is down by 45 percent in US dollar terms in the current year from January 01, 2008 to date, analysts said.

"The slowdown in the overall economy, coupled with political uncertainty after the February election has affected investors' sentiments, Mohammed Sohail, senior analyst at JS Global Capital said in a research report and added that a decline of 19 percent in Pakistan currency to date has also eroded equity values in dollar terms.

The research report said that the global credit crunch and the turbulence in the currency markets have significantly shaken investors in the global equity markets. The emerging markets which were believed to be protracted with global credit crunch, spiralling inflation at the back of soaring oil and food prices, led these markets to drop significantly so far in the calendar year 2008. MSCI Asian Emerging Market Index is down 29 percent to date.

Analysing the performance of 13 Asian emerging countries, China 's Shanghai market ranks the worst performing market so far in 2008 with the index fell by 52 percent. This is followed by Pakistan and Vietnam which are down 45 percent and 44 percent in dollar terms, respectively.

China's Shanghai Index which had recorded a peak level of 5771 in the early 2008, is down due to rising concern over slowdown in economy and mounting inflation - or stagflation. Likewise, in Vietnam, recent ratings cut and record inflation have worsened market sentiments.

Pakistan, on the other hand, is affected both by the exogenous factors (higher international oil and food prices) and endogenous factors (political impasse). This has significantly weakened the local currency (down 19 percent so far in 2008) and forex reserves which are at 5-year low and covers less than 12 weeks of imports.

Moreover, Pak rupee is the world's fourth worst performer, behind the Zimbabwean dollar, Turkmenistan manat and Icelandic korona. Interestingly, two smaller markets Sri Lanka and Bangladesh have emerged as the best performing markets so far in 2008 with a decline of only 6 percent and 10 percent in dollar terms, the report said.


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## Neo

*JBIC ready to finance $750 million Port Bridge ​* 
KARACHI (August 27 2008): Japan Bank for International Co-operation (JBIC) has agreed to finance the $750 million Port Bridge, a cable stay bridge to be built by Karachi Port Trust (KPT) over its navigational channel at Karachi port.

According to KPT sources the Japanese bank has shown its satisfaction over the feasibility report of the bridge, which would connect the proposed Pakistan Deep Water Container Port (PDWCP) to the Cargo Village at western backwaters and onwards to the Northern Bypass and Lyari Expressway.

"Our plans for the bridge are vindicated by the fact that the JBIC concurs with our feasibility report and is ready to finance the Port Bridge," they added. KPT, the sources said, has envisaged the bridge to be higher than the San Francisco Golden Gate Bridge with a 68-meter air draft, 300 meter span and approximately six kilometres causeway length.

They said this would be for the first time that KPT, which is a profitable semi-governmental institution, and since long has not opted for any loan or grant for port development works, would try its hand at a foreign lending to materialise the mega project.

KPT had always used its revenues to develop its infrastructure and had embarked upon development of various projects from its own resources, they said. The proposed bridge would be the first of its kind in Pakistan and would be completed within four years, said the sources.

They said the bridge would have two causeways, the first to connect Manora to the Clifton's Defence area and Sandspit Road while the other would extend further to pass over western backwaters. According to the sources KPT has awarded engineering consultancy for the project to M/s Leonhardt Andra and Partners of Germany.


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## Neo

*France expects to expand trade ties with Pakistan ​*
KARACHI (August 27 2008): Commercial Consular of France, Francis Widmer has said that France would like to expand its trade and economic relations with Pakistan. Speaking at a meeting of Korangi Association of Trade and Industry (KATI), he said that French businessmen would like to have joint venture with Pakistani entrepreneur in different areas.

He said that Pakistan had vast market for French products and is a very attractive country to invest, however, he said emphasised on political stability for sustainable economic development.


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## Neo

*10-year tax holiday for industries in interior Sindh recommended​* 
KARACHI (August 26 2008): Sindh Minister for Industries and Commerce, Mohammed Abdul Rauf Siddiqui said on Monday that the provincial government has urged the federal government to announce ten-year tax holiday for industries in the interior of Sindh. Speaking at a meeting of Karachi Chamber of Commerce and Industry (KCCI), he said that allowing ten-year tax holiday would help boost industrialisation in the interior of Sindh.

He said that the government has also decided to establish more industrial zones in the province. Government wants to develop every area of the province and encourage investors to establish industrial units, he added. He said that the government has already allocated 300 acres of land in Hyderabad, 500 acres in Dhabije for new industrial zones.

More land will be allocated on Super Highway for industrial estates, he said. He said industrial plots would be allotted to all applicants. These plots will not be sold transferred to other person. Allottees have to establish units within a specified time, otherwise these plots would be taken back explained

He announced the formation of a seven of member ministerial consultative committee comprising Zubair Motiwala, Siraj Kassim Teli, Shamim Ahmed Shamsi, S. M. Munir, government officials and other representatives of trade bodies.

He said that the committee would prepare a comprehensive industrial and trade development plan and point out bottlenecks hindering the growth of this sector. He assured the business community that their trade, industrial and investment problems would be taken up with the concern federal ministers by next week.

President KCCI, Shamim Ahmed Shamsi said that there is severe energy crisis in Pakistan, as its production does not cope with the demand, which is increasing by 10-12 percent per annum.

To solve the problem the government is resorting to frequent increase the prices of POL products. This may risk losing government credibility if nothing is done to generate electricity at affordable rates. Rising inflation and burgeoning fiscal deficit have already constrained the government's ability to subsidies power production from imported oil.

It will not be out of place to mention here that India has reduced POL prices, and has issued oil bonds to the retailers to compensate them for losses they suffered in selling oil at below the market rate. Consumers in India are getting petrol at Rs 45.52 per liter, he added.


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## Neo

*Software piracy: 'Pakistan missing huge investment opportunity'​*
KARACHI (August 27 2008): Country Manager, Microsoft Kamal Ahmad, has said the foreign investors are not taking interest to commence research work in IT sector and Pakistan is missing huge investment opportunity because of software piracy. He was speaking in a workshop on "Countering Software Piracy as a Social and Economic Issue" held at local hotel on Tuesday.

He said software piracy is a big hurdle in the way of progress of our society in general and IT sector in specific and added that presently around 84 percent pirated software are being used in Pakistan. Kamal said that if it is cut down to 66 percent in the next four years, around 12,000 new jobs would be created in the IT sector and urged media professional to play their due role in this regard.

Ameena Saiyid, Managing Director of Oxford University Press, Salman Siddiqui, Genuine Software Manager, Microsoft Pakistan, Amar Naseer, Anti Counterfeit and Infringement Forum (ACIF) also spoke on the occasion.

They said that software piracy is a global problem, providing huge losses of over $40 billion annually. In Pakistan, the productive sector is bearing the brunt of massive use of pirated and untaxed software. A mere 10 percent decrease in piracy rate in the country can contribute $163 million to GDP and raise $23 million in additional income to the government.

They further said that increased use of legitimate software would also promote a better environment for foreign companies to invest in Pakistan besides inspiring entrepreneurship in IT sectors, resulting in higher software exports as well as a greater market share in the business process outsourcing industry.


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## Neo

*'Pakistan capable of meeting water scarcity challenges'​*
ISLAMABAD (August 27 2008): Pakistan can overcome impending water scarcity challenges by adopting proper and timely strategies besides enhancing its reservoirs and reducing water losses in the country, water experts said at a two-day conference which began here on Tuesday.

The national conference on Water Shortage and Future Agriculture Challenges and Opportunities has been organised by Agriculture Foundation of Pakistan in collaboration with Pakistan Science Foundation and Pakistan Agriculture Research Council. The rapid change in climatic components and water shortage was becoming a serious challenge to agriculture, they added.

The speakers were of the view that, being arid country, it has become imperative for country's scientists to develop strategies to cope with changing environment and reduce availability of irrigation water to produce enough food and cash crops for meeting the requirement of rapidly increasing population.

Speaking as chief guest, former Chief Minister, NWFP, and Former Chairman Wapda, Shams-ul-Mulk said the water issue has become so complicated which needs to be addressed instead of doing politics on it.

"Water is a matter of survival and no politics should be done on it as we are already late to do politics on the issue," he remarked and said that Kalabagh dam was more important for NWFP than any other province of the country.

He stressed the need for constructing dams, saying that currently there were two crisis at global level ie energy and food crisis and both have linkage with dams. Moreover, he also stressed the need for removing the seasonal imbalances in water distribution to have maximum utilisation of the resources.

In his detailed keynote address, Project Co-ordinator Asian Development Bank, Shahid Ahmed presented an optimistic view of water resources in the country however stressed the need for proper management to overcome challenges. He said that Pakistan was lagging far behind in storing water, which should be matter of concern and highlighted the need for improving the secondary canal system to decrease water losses.

He said that absence of conducive environment to introduce water efficient irrigation techniques, inadequate and ineffective participation of private sector, deteriorating institutional capacity of key water sector institutions were the problems which needed to be addressed for ensuring economic use of water. Speaking on the occasion, Director General NARC Dr Zahoor Ahmed said Pakistan did not manage water resources which lead to water scarcity in the country.

He said that the country was storing only 9 percent of water flow against 44 percent stored in other parts of the world, adding that innovative and modern techniques must be adopted to make country water secure. Chairman of the Organising Committee, Altaf Hussain Chaudhry, speaking on the occasion, said that the purpose of the seminar was to create interaction between farmers and agriculture researchers to share knowledge and expertise.


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## General Fujita

*Pakistan Oil and Gas Development Company Limited may be up for sale *

Thursday, 28 August 2008 00:00 Pakistan Daily 
Pakistan was yesterday mulling all options, including handing over management control to the buyer, to privatise Oil and Gas Development Company Limited, producing more than one-thirds of domestic crude oil. A meeting of the members of the Board of Privatisation Commission (PC) decided the Financial Adviser for Oil and Gas Development Company Limited (OGDCL) would be asked to work out all the options for the companys privatisation. 

These options will be sale of shares, strategic sale with management control and assets sale including Qadirpur Gas Field on fast track basis taking into account the observance of all steps strictly in accordance with the legal provisions. Qadirpur Gas Field has gas reserves of about 3.5 tcf, worth $3 billion to $5 billion, and is 75 per cent owned by the OGDCL.

Its a big decision that the government has taken today and would bring substantial foreign investment through one of the biggest deals of Pakistan, said one of the top officials of the PC on customary condition of anonymity. The government currently holds 85 per cent shares of the OGDCL. The official said the government opened all avenues in order to support depleting foreign exchange reserves.


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## Neo

*Luxury imports eating away at precious forex reserves ​* 
Thursday, August 28, 2008

KARACHI: The demand for imported goods continues to rise in Pakistan as items which were previously considered luxuries are now deemed to be necessities by those belonging to the affluent classes, complain economists.

Analysts are of the view that the post-9/11 return of many Pakistanis settled in the West is directly behind this, as these Pakistanis are more accustomed to a more pampered lifestyle. The trend has negative impact on the foreign exchange reserves and the local industry. The impact of importing luxury items was not felt as much in the past seven years, owing to notable foreign investments, the selling of government entities to foreigners in the private sector and the boom in the banking and telecom industries, which inflated economic numbers at macro level, say analysts.

However, now, the rising demand for imported goods, particularly items like luxury cars and mobile phones, is eating away a significant part of countrys forex reserves.According to the State Bank of Pakistans (SBP) quarterly report on Pakistans economy issued in the first week of June, depletion in foreign exchange reserves has also eroded the reserves adequacy of the country in terms of weeks of imports. Import coverage ratio declined to 18.1 weeks from 30.6 weeks in June of the fiscal year 2007.

Latest media reports say this import coverage ratio has further shrunk to 12 weeks. It is feared that the ongoing political tension may cause this figure to dip even further, said an analyst.

On August 16, the forex reserves reached a five-year low at $9.6 billion, registering a decline of 41.5 per cent, or $6.8 billion, in the last 10 months. The record high was $16.4 billion in October 2007.

Before Shaukat Aziz became prime minister, the import duty on vehicles ranged between 200 per cent and 300 per cent. Aziz reduced this to 90 per cent. M Muzammel Hussain, an economist at Alfalah Securities, said the current government has marginally raised this to 100 per cent.

Expatriates, higher-income families and professionals, who can afford a lavish lifestyle even during the current economic slump, claim that technologically-advanced mobile phones and the latest cars are a necessity for them.

The actual import of vehicles for personal use cannot be measured, as there is no category for personal vehicles in the monthly import data compiled by the Federal Bureau of Statistics (FBS) and SBP.

However, a rising number of expensive imported vehicles, such as the BMW, Hummer, Land Rover, Range Rover, Audi, Prado, Land Cruiser and Hi Lux Surf, have been witnessed on the roads, all of which are a burden on the economy. Heavy road vehicles are imported under the machinery and transport groups category.

FBS figures show the number in 2008 is lower than the previous year, but economists say the number of such vehicles has increased manifold since 9/11.Saqib Hussain, Vice-President, Noman Abid & Company Ltd, explained why it is difficult to curb the import of luxury items. We cannot stop importing cars, mobile phones and any of the other items, luxury or otherwise, because Pakistan has signed the Free Trade Agreement with many trading partner countries, he said.

According to the International Monetary Fund and World Bank, Pakistan cannot turn down locals demand for imported goods. Hussain suggested that to help the central bank maintain its reserves, the rate of margins could be enhanced to 100 per cent for luxury goods from the current 35 per cent at the time of opening the Letter of Credit.

The government has constituted a committee to formally differentiate between luxury goods and necessities so that the import policy can be amended accordingly, said Ahmad Waqar, Chairman, Federal Board of Revenue (FBR).

FBS, which maintains a list of nearly 6,500 documented imported items and publishes import and export statistics every month, does not so far differentiate between necessity items and luxury items at import level. Once separated, it could mean that unessential items, or luxury items, would have a high tax. If the import item list is cut short, the country can maintain comparatively high reserves and so expand the capacity of import for a longer duration.

In view of the depleting foreign exchange reserves, experts say the export of wheat, raw cotton and sugar should be discouraged. When these items are exported, there is a local shortage. The items which are already locally produced have to be imported. Already, large chunks of forex reserves are being used up with the rise in import of luxury goods, such as cars and mobile phones.

Data from the FBS shows an increase in the number of power generators being imported, owing to the acute shortage of electricity. In addition to this, the import of oil and food items, which utilised a major part of countrys reserves, also took a huge jump just as the fiscal year ended, although it would be unfair to blame oil and food for exhausting forex reserves, as these items are necessities. 

The situation can be also controlled if the duty is increased on the imported goods that are also locally produced.

Experts suggested that the dumping of Chinese goods, ranging from needles to cars, needs to be checked, and that there should be a heavy import duty on items such as tiles, marble, gems and jewellery, cigarettes, file covers, toys, shoes, home appliances, kitchen and bathroom items, etc. They added that only political stability can fix the economy.


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## Neo

* Rupee strengthens but outlook uncertain ​* 
Thursday, August 28, 2008

KARACHI: The rupee strengthened against the dollar on Wednesday as some export firms bought the currency to convert their dollar revenues, traders said.

The rupee ended trade at 76.00/76.10 against the dollar, strengthening 0.6 per cent from its previous close of 76.45/76.55.

Traders said export firms sold a larger-than-expected $30 million to $50 million of their dollar revenues, lifting investor sentiment. Market talk that the central bank intervened on Tuesday by buying rupees to ensure the currency did not fall beyond 77 to the dollar also boosted sentiment, they said.

Sentiment was more positive today (Wednesday). There was a little bit more supply of dollars, said one trader who declined to be identified. But traders said the long-term outlook of the currency was still uncertain. The rupee, which has lost about 23 per cent of its value against the dollar this year, hit a record low of 77.15 on Aug 22.

Uncertainty over the governments future and a shaky economy has dragged on the currency. The coalition government split on Monday after the alliances second biggest party pulled out. After six years of healthy economic growth, the economy started faltering last year as high oil prices started to bite. Inflation is soaring, trade and fiscal deficits are rising, and forex reserves have been depleted by high oil payments.


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## Neo

*Debt factoring a useful tool for Pakistan ​* 
Thursday, August 28, 2008

KARACHI: The nature of international buyers has considerably changed in the past few years and now buyers enjoy credit terms at their suppliers cost, which increases the risk of suppliers payments or receivables.

Factoring is a new concept in Pakistan, but it has been successful in many countries around the world, which provides a modern concept of facilitation to the buyer and seller so that both parties could enjoy a win-win situation.

DS-Concept Factoring is a multinational European company operating in Pakistan for the last three years and the concept of factoring could help Pakistan in achieving export targets, said Qaseem Jaffri, Head of Business Development, DS-Concept Factoring, at a press conference at the Karachi Press Club on Tuesday.

He said that we inform exporters what the financial position of a buyer is which helps exporters to adjust the quantity of order. Resultantly, this process saves exporters from bad debts. Interest rate for our services is as low as 8.5 per cent per year while local banks interest rates are around 12 to 14 per cent per year, he added. Factoring is selling your invoices with deferred payment terms to get your money immediately after shipment, instead of waiting for 30, 60 or 90 days.


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## Neo

*Pakistan, Poland stress strong business ties ​* 
Thursday, August 28, 2008

KARACHI: Consul General of Poland, Ireneusz Makles has said it is need of the hour to accelerate existing business and trade activities between Poland and Pakistan and explore further avenues of business and investment opportunities bilaterally. Makles visited the Karachi Chamber of Commerce and Industry (KCCI) recently and speaking on the occasion said both the countries are enjoying good business relations. He said the visit of trade delegation of KCCI to Poland would be more helpful in expanding trade and commercial ties and it will further enhance trade relations in the sectors of textile and leather, rice, surgical instrument, sports goods, oil & gas, mining, chemical, maritime, engineering, heavy machinery and IT. He also said exchange of reciprocal trade delegation would enable both the countries to learn from each other experiences for exploring new avenues of trade, business and investment. 

Makles also invited the business community to Poland for investment and development of agricultural farming and establishing industry. KCCI President Shamim Ahmed Shamsi stated the countrys business and trade community may join hands in the coal based power generation sector of Poland as Pakistan has rich source of coal at Thar and there are ample opportunities of joint venture and investment between the two countries.


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## Neo

*Rescheduling debt: ECC forms body to recover $500m from 6 companies​*
ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has decided to recover around $500 million from six defaulter private companies to enable the government service their rescheduled debt by the Paris Club creditors, official sources told Daily Times on Wednesday. 

The ECC meeting held on Tuesday has already formed a committee headed by Minister for Port and Shipping, Qamaruz Zaman Kaira to present a report to recover the foreign currency loans from the private sector. Other member of the committee is the Secretary Finance. Secretary, Economic Affairs Division and the State Bank of Pakistan has been asked to assist the committee.

According to the official sources, in December 2001, Paris Club creditors lengthened the maturity of about $8 billion in so-called concessional, or development-related loans, due within the next five years, to 38 years. They also gave Pakistan 15 years grace, which means the government has to pay interest but no principal. The weighted-average interest rate on the concessional debt is 2.3 percent, which was reduced to as little as 1.5 percent during bilateral debt rescheduling agreements. Payments on the remaining $4 billion of Paris Club debt were extended to 23 years, with five years grace period. 

According to the sources debt obtained by the private sector from Paris Club creditors was part of the rescheduling process and was also rescheduled in final agreement with the creditors. The government is still servicing this debt and the private companies number of which stands at six have defaulted in repayment of such loans.

The committee headed by Mr Kaira in consultation with Ministry of Finance, Economic Affairs Division and the State Bank of Pakistan would prepare a report relating to the outstanding debt and would submit it to the ECC. The ECC, based on the recommendations of the committee, would direct authorities concerned to initiate and ensure recovery from these private companies.

The countrys foreign exchange reserves are on the declining side and came down to $9.9 billion in August 2008 from $16.7 billion in June 2007. Foreign exchange reserves position of the country is in jeopardy and requires immediate attention at highest level to initiate each effort to generate foreign exchange. 

With the fall in foreign exchange reserves of the country during the last few months actual reserves that would be available for financing of imports now stand at $5.42 billion as against the overall gross foreign exchange reserves of $9.92 billion the country possesses. Explaining the reserves position of the country, the official explained that total available foreign exchange reserves of the country also include around $3 billion held in foreign currency account, the SBP has already forward booked $1.5 billion from the banks which would be returned when the sufficient foreign exchange would be available and some $5.42 billion are the actual reserves that are with the SBP to finance essential imports.


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## Neo

*CDWP to take up revised Munda, Tarbela extension projects​*
** The CDWP of Planning Commission is scheduled to meet on September 18, after a delay of almost two and a half months​*
ISLAMABAD: The first meeting of Central Development Working Party (CDWP), for the current fiscal year 2008-09, would consider approving a number of important projects including Revised Munda Dam Project PC-II, Tarbela Extension Project and many others. 

The CDWP of Planning Commission, which was to be convened by the end of July, is now rescheduled, with a lapse of almost two and half months, for September 18. 

An official of the Planning Commission told Daily Times here on Wednesday that at the beginning of every year financial year, the CDWP meeting is delayed. 

The Revised Munda Dam Project PC-II will cost the government Rs 651.862 million including foreign exchange component Rs 224.820 million. Its completion is expected in 24 months. 

The cost estimates have been prepared by studies conducted by WAPDA in February this year. 

The Munda Dam project is one of the multipurpose project which will help storing flood water that will be utilised for agriculture development of new areas. It will supplement shortages of lower Swat canal system. The project will also generate 740MW through hydropower. The water stored in the Dam would help in protecting lower valleys by lowering the magnitude of flooding.

With the availability of assured irrigation supply, annual cropping intensity of 180 percent can be achieved, which would result in increasing the agriculture production in the areas of Malakand and Mohmand Agencies of the region.

Existing annual cropping intensity, under rainfed conditions is 43 percent (2 percent in Kharif and 41 percent in Rabbi). 

The revision of already approved PC-II is inevitable due to increase in cost of works, increase in pay and allowances of staff and increase in consultancy cost. Under the PC-II, investigation and project studies will be carried out to prepare the detailed engineering designs and tender documents of this scheme. The surveys to be carried out are; topographic surveys, geological investigation, hydraulic model studies and main structures, hydrological data collection and civil works. 

Aim of the project irrigate 16940 acres, hydropower generation and flood control. 

The government is considering various options for installation of power turbines on tunnel 4 of Tarbela Dam in a bid to fully tap the potential of the reservoir. This extension will add 960MW to the existing capacity of 3478MW. The estimated annual energy as per inception report would be to the tune of 2000Gwh. The cheap energy generated from this scheme would be fed to national grid through 500KV transmission lines. It will cost the government Rs 388.05 million including Rs 216.72 million as foreign exchange component. 

According to the document of the projects, the local and foreign consultants will carry out the proposed studies. The studies would commence in October 2008 subject to selection of the consultants. WAPDA would second the technical personnel and provide the requisite administrative staff for smooth implementation of the project. 

The project document further revealed that field investigations proposed by the consultants would be carried out through WAPDA field formation for which sufficient trained staff is available. In carrying out the assignments, WAPDA will provide the assistance in collecting additional reports regarding field investigations. This project will be carried out in nine months time after selection and hiring of consultants. The study is proposed to start from October 2008 and will be completed by end June 2009, subject to timely approval and releases of funds. 

The PC-II of Tarbela Hydro Power Project is formulated for preparation of detailed engineering design, Tendered Documents and PC-I covers survey, geo-technical investigations, detailed engineering design, tender documents including in PC-I.


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## Neo

*Foreign funds net selling on stock market amounts to $396 million ​* 
KARACHI (August 28 2008): The offloading by foreign funds from the stock market remained the main cause of the recent fall in Pakistan equities as the net selling of offshore investors amounted to $396 million so far in calendar year 2008, analysts said. According to the NCCPL data, the foreign investors sold shares worth $2.7 billion and bought worth $2.3 billion, thus a net offloading of $396 million was recorded in this period.

However, majority of the foreign selling occurred in the last three months when the foreign investors sold shares valuing $233 million. "Though the quantum of selling was not huge, but due to low volumes and uncertain political and economic conditions it created a huge impact on share prices", Muhammad Sohail, an analyst at JS Global Capital, said and added that this trend of selling by offshore investors had been happening in all emerging markets. In fact, in a few countries, this sell-off had put pressure on currencies also, he said.

He said that in terms of net selling as percentage of market capitalisation, the selling in Pakistan was not substantial. However, limited free-float of Pakistan market (estimated at 25 percent), coupled with economic and political issues, had a drastic impact. "That is why Pakistan market (with 46 percent decline in dollar terms) was one of the worst performing markets in Asia, after China in 2008 to date".

According to figures available, heavy foreign selling was witnessed in other regional markets. South Korean market witnessed the highest outflow of $28,948 million, 3.8 percent of market capitalisation. Outflow of $24,422 million (0.6 percent) was from Japan, $9,026 million (1.4 percent) from Taiwan, $7,197 million (0.7 percent) from India, $3,014 million (2.0 percent) from Thailand, and $500 million (0.7 percent) from Philippines in this period. In Indonesia and Vietnam, net inflows of $458 million (0.3 percent) and $455 million (3.5 percent) were witnessed in this period.

According to SBP statistics, foreigners who brought money through SCRA still held shares valuing $2.6 billion as of August 16, 2008. This meant that so far in this year they had sold approximately 10 percent of their average holding, Sohail said.

The current holding is only 6.4 percent of market capitalisation. But in relation to free float it is at a decent 25 percent. Two years back, foreigners' holding was only 3.1 percent of capitalisation. But since then it has increased tremendously, he added.


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## Neo

*Saudi oil facility likely in next few days ​* 
KARACHI (August 28 2008): Saudi authorities have assured Pakistan delegation that Saudi oil facility against deferred payment will be started very soon, according to well-placed official sources. Saudi Foreign Minister Saud Al Faisal reportedly told his Pakistani counterpart Shah Mahmood Qureshi who also holds the portfolio of petroleum ministry that the Saudi government fully appreciated the position of Pakistan's economy, which is under immense pressure.

"We fully understand it's not a time of procrastination, it's time of action," the Saudi minister was quoted as saying during his talks with the Pakistani team members who met him on Wednesday. According to sources, the Saudi minister has assured the Pakistan team that oil facility will be started "as early as possible". The sources believed that the facility is likely to come into effect in the next few days.


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## Neo

*WHT exemption for manufacturers/exporters: FBR to provide lists to Wapda and KESC ​* 
ISLAMABAD (August 28 2008): The Federal Board of Revenue (FBR) will provide the list of manufacturers-cum-exporters of textiles, carpets, leather, artificial leather, footwear, surgical items and sports goods to Karachi Electricity Supply Corporation (KESC) and Water and Development Authority (Wapda) for exemption of 10 percent withholding tax on electricity bills exceeding Rs 20,000 per month.

Sources told Business Recorder on Wednesday that withholding tax exemption on electricity bills would be available to those manufacturers-cum-exporters in the said sectors where exports are 80 percent of total goods manufactured. In this connection, the board has issued instructions to the Directors-General, Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs).

According to FBR directive, the rate of collection of tax under section 235, read with Division IV of the Part-IV of the First Schedule of the Income Tax Ordinance 2001, where the amount of electricity bill exceeds Rs 20,000 per month, withholding tax at the rate of 10 percent of the bill amount is to be collected by the person preparing electricity bills.

The clause 66 of the Part-IV of the Second Schedule provides exemption from withholding tax of different classes of persons, who are manufacturers-cum-exporters of carpets, leather, artificial leather footwear, surgical items; sports goods and textile and articles thereof.

The FBR further clarified that for the purpose of this clause, the 'manufacturer-cum-exporter' would be the person whose export sales constitute 80 percent or more of the total goods manufactured in the preceding tax year.

The DGs in the field formations have been requested to compile lists of such cases from the tax assessment record and transmit the same to the concerned corporatised units of Wapda or KESC as the case may be with the request ie not to withhold tax under section 235 in such cases from the electricity bills payable for the month of July 2008 and onwards, and till further orders.

It is worth mentioning that the retailers and wholesalers constitute 19.2 percent of GDP but contribution of this sector towards income tax is not more than 2 percent which, reflecting under-taxation. To improve collection, withholding tax @ 10 percent of the bill amount exceeding Rs 20,000 per month would be collected from all commercial and industrial consumers. For bill amount up to Rs 20,000 per month the previous treatment has been continued in 2008-09.


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## Neo

*Economic team grilled by World Bank chief ​* 
ISLAMABAD (August 28 2008): World Bank President Robert B. Zoellick is said to have grilled Pakistan's economic team headed by the Prime Minister's Special Assistant on Economic Affairs, Hina Rabbani Khar, for presenting what he believed exaggerated statistics of the country's economy to seek project and programme loans, well-placed sources told Business Recorder.

Khar was part of the official delegation accompanying Prime Minister Syed Yousuf Raza Gilani during his visit to the United States last month. Economic team which met the World Bank President also comprised Secretary Finance Furrukh Qayyum and Pakistan Executive Director to the World Bank Jeved Talat.

Javed Talat, who is a former Secretary Finance has recently been appointed Executive Director of the World Bank after he was exonerated from corruption cases under the National Reconciliation Ordinance (NRO). "Zoellick was very harsh with Pakistan's delegation for reportedly presenting a picture of the economy which he believed was far from reality," the sources added.

"Please do not quote inaccurate statistics," the sources quoted the Bank's President as having advised the Pakistan's economic team. It is relevant to note that the World Bank as well as other multilateral financial institutions routinely assess and rate economies of their client countries, including Pakistan. Additionally, statistical data as well as analyses undertaken by the International Monetary Fund under Article IV are public information placed on their website.

Pakistani delegation looked perturbed after the meeting with the World Bank President, the sources continued. They claimed that no World Bank President had ever used such a harsh tone with any Pakistani delegation in the past and that the reported incident was unprecedented.

Javed Talat was Secretary Finance in 1996. Business Recorder sent him an email a couple of days ago to obtain his comments over the reported incident with the Pakistan delegation in the World Bank headquarters. No response was received till the filing of this story.

Isabel Guerrero, World Bank's Vice President for South Asia Region, who recently replaced Praful Patel, has reached Islamabad and would be holding meetings with the country's top economic managers.

It is pertinent to note that on August 21, according to Standard and Poor's (S&P), Pakistan's "B" rating was fully justified and reflected a negative outlook for the future. "It's already at a very low rating, a "B" rating and we certainly did not signal in any way that we are contemplating a ratings action," said Agost Bernard, a credit analyst at the S&P in Singapore.


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## Neo

*Investigation into mega tax frauds: high-powered body formed to monitor cases ​* 
ISLAMABAD (August 27 2008): The Federal Board of Revenue (FBR) has constituted a high-powered 'Integrity Management Steering Committee' (IMSC) to ensure speedy investigation of mega tax fraud cases through regularly monitoring of investigators engaged in probing such big scams, involving billions of rupees.

Sources told Business Recorder on Tuesday that the IMSC would not be directly involved in investigation of mega tax fraud cases but would strictly monitor the performance of officials investigating scams.

It has been observed that biggest tax fraud cases like Bawan Shah Group of Companies; Sheikh Noor-Uddin; sales tax refund frauds; payphone scam and fake exports to Afghanistan have never reached their logical conclusion. All these scams have caused massive loss to the national exchequer, but no final action has been witnessed against the culprits.

The IMSC has been empowered to seek regular reports from the investigators of mega tax fraud cases and provide necessary funding and support to them to ensure speedy processing of such cases. The IMSC would also bring transparency in the system being adopted for investigating of such cases.

The FBR has also given mandate to the IMSC for taking disciplinary action against the tax officials involved in mega tax fraud cases. According to sources, the FBR has recently convened a meeting to discuss the terms of reference of IMSC for devising a new integrity action plan with focus on anti-corruption strategy. One of the important mandates of the IMSC is to expedite investigation in big tax fraud cases.

The committee has given due importance to speedy investigation of such cases through proper monitoring mechanism. It would not intervene into the investigation, but constantly review the progress of the investigators. The IMSC comprising senior FBR members would take necessary action in cases where tax officials deliberately adopt delaying tactics in big cases of tax fraud.

In the next meeting of the IMSC, the FBR would exclusively discuss the mega tax fraud cases and review their progress. It is important to mention that the FBR has never completed investigation in biggest tax fraud cases. Secondly, no action has been taken against the officials involved in such big scams.

A few months back, Directorate-General of Intelligence and Investigation had provided a list of 60 corrupt tax officials to FBR for completion of disciplinary proceedings. These officials of customs, excise and income tax groups, who had indulged in corrupt practices, committed tax frauds, concealed property and issued illegal refunds in different cases.

The list also contains the names of income tax officials of Karachi who were part of the racket involved in issuance of bogus refunds in various scams. It is not yet clear whether the IMSC has the authority and courage to take action against these officials as recommended by the DG Intelligence.

An FBR internal investigation also confirmed that the tax officials operating 'Sales Tax Automated Refund Repository Computer System' (STARR) in Islamabad and Lahore had tampered the record to issue illegal refunds of billions to the exporters. Some STARR managers were primarily responsible for diverting the system merely to issue huge amounts of illegal refunds.

The internal inspection and audit had disclosed some astonishing facts about the modus operandi of the sales tax officials to bypass the checks in the system. The investigation was being conducted to check the involvement of STARR officials in mega-refund scams particularly in 37 tax fraud cases referred by the National Accountability Bureau (NAB) to the FBR.

A large chunk of money was fraudulently withdrawn as sales tax refund at the time when STARR was fully operational. The modus operandi was to flash incorrect particulars of the suppliers on STARR window at the time of refund sanctioning. This technique was used to show that the supplies had actually taken place even in non-existent cases. The refunds were generated on the basis of wrong data of suppliers using STARR system, it added.

The said report was finalised many months ago. It is hoped that the IMSC would take serious notice of such visible violations by the tax officials committed in the past or direct investigators to verify such loopholes in the systems, sources added.


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## Neo

*Contractors stop work on uplift projects in NWFP ​* 
PESHAWAR (August 28 2008): All Pakistan Contractors Association (APCA), NWFP chapter, on Wednesday announced stoppage of work on all developmental projects in the province and announced to boycott participating in all kind of biddings till acceptance of their demands by the government.

This was announced by Provincial APCA chief Ghulam Habib during a news conference while flanked by other members of the association. He said that despite our deadline to the government for the acceptance of other demands, the government had so far only agreed to review of the new rates through issuance of notification regarding Schedule 2008.

"Contractors had stopped construction work on all developmental works across the province and no one will participate in the bidding of tenders with the government unless the government fulfils our demands," Ghulam Habib declared.

The Association, he said, had presented 21 demands relating to their field works and hurdles faced by them in obtaining and continuation of work on the ongoing government development projects. The contractors of the province instead of 0.03 percent tender form fee had demanded its fixation at Rs 5,000 or Rs 10,000, making assurance of the availability of the 50 percent fund of the tender before its release.

Ghulam Habib said that on completion of the project the preparation of the PC-4 is the responsibility of the department; therefore, it should fulfil its own duty. He also called for guaranteeing the implementation of the contract agreement and abolish of the British era agreement to implement the PEC prepared agreement.

In case of the failure in implementation of the agreement, he called for increasing the time period of the contractor and payment of price variation with each bill and payment of ex-gratia in proportion to the price-hike on construction works. Similarly, he also called for taking action against all officers, who are creating hurdles in the completion of the development schemes.

The NWFP APCA chairman also demanded the payment of compensation to contractors in case of delay in the payment and abolition of corruption in t6he garb of the performance guarantee and bringing an end to the blackmailing in the name of pre-qualification even after the renewal of the contractors' licenses.

"The contractors carrying work in mountainous areas should be paid additional premium and their representative should also nominated on the price control and crime control committees," demanded Ghulam Habib saying that tender should be accepted or cancelled on passage of 30 days of the opening of the tenders. He demanded of the provincial government for immediate acceptance of their demands in order the contractors would restart construction work on all development schemes.


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## Neo

*Mega development projects being initiated in Punjab: chief minister ​* 
LAHORE (August 28 2008): Punjab Chief Minister, Mian Muhammad Shahbaz Sharif has said that a number of mega development projects were being initiated in Punjab for the rapid development of the province and provision of better transport facilities to the masses and these projects would be executed on priority basis in less developed areas.

He said that several developmental projects would commence in the provincial metropolis in the first week of September. He averred that foundation stone of Shalimar fly over would be laid on September 2 while construction work of express roads in Rawalpindi and Lahore would start in October 8.

He issued instructions for setting up of a task force to be headed by Khawaja Ahmad Hassan for the monitoring of development projects and co-ordination between concerned departments. He was addressing a high-level meeting held here on Wednesday regarding construction of different flyovers, express roads and other roads.

Khawaja Ahmad Hassan, Director General Lahore Development Authority (LDA), Director Frontier Works Organisation (FWO), Managing Director TEPA, Vice President Nespak and Mustafa Kamal were present on the occasion. Addressing the meeting, the Chief Minister said that FWO had executed a number of development projects in the provincial metropolis and despite passage of nine years no need had been felt for any repair.

He said that designs had been prepared for the construction of flyovers at Shalimar Chowk and Hussain Chowk in Gulberg, however, the construction work of Shalimar flyover would start first so as to solve transport and other problems of the people of the area as early as possible. He dilated that different projects including Shalimar Road, Multan Road, Circular Road, Shaukat Ali Road, Walton Road, Khurshid Alam Road and Jain Mandir Road would also commence in the first week of September.

He directed Nespak to complete the designing of express road from Lahore Bridge to Ravi Bridge in Lahore and Murree Chowk to Faizabad in Rawalpindi as early as possible so that construction work on these projects could also start in October. Shahbaz Sharif further said that uplift projects were executed round-the-clock in developed countries and this culture should also be promoted in Pakistan.

He said that construction work during night helps in early execution of the projects as well as save the people from traffic and other problems. He said that attention was also being paid to the implementation of development projects in Rawalpindi, Multan, Sialkot, Gujranwala, Sargodha, Bahawalpur and other cities and development activities would soon start in these areas.


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## Neo

*LCCI seeks early economic roadmap ​* 
LAHORE (August 28 2008): The Lahore Chamber of Commerce and Industry (LCCI) has urged the government to immediately announce economic roadmap as its failure to give a proper economic strategy in the last four months has virtually pushed the country to the wall. The situation is so pathetic that the industry has no money even to pay the salaries to its workers, said LCCI President Muhammad Ali Mian in a statement here on Wednesday.

He said if the situation remains the same for sometime, even the harshest measures would not be enough to give the economy a kick-start. It has now become very difficult for the industrialists and traders to even cover the cost of their businesses while the situation has reached the alarming stage, he added.

It seems the present rulers have no time to look at this matter of prime importance and days are fast approaching when no industry would be able to remain operational, he said.

The LCCI chief also said that during the past four months, foreign exchange reserves have dipped to the lowest level while rupee is on a free fall and the capital market's performance reflects the apathy of regulators. It looks that the government has lost all financial controls. On the other side, banks are in the driving seat as they continue to offer marginal returns to depositors while charging over 16 percent mark-up from borrowers, he added.


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## Neo

*Lower output of motorcycles feared ​* 
KARACHI (August 28 2008): Motorcycle assemblers fear around 15 to 20 percent decrease in the production of motorcycles in the country owing to the continuous increase in prices of components. Due to political and economic crises, as well as decline in the value of rupee against the dollar, prices of components used in manufacturing of motorcycles have gone up considerably.

They include imported steel, aluminium sheets, rubber, plastic and other components. In about eight years motorcycles production has gone up by 30 percent per annum. In 2007-8 the total production of motorcycles stood at 1054120. In 2006-07 it was at 839650 and in 2001-02 it was 100,000 units.

Chairman, Association of Pakistan Motorcycles Assemblers (APMA), Mohammed Sabir Sheikh, said they fear that this year motorcycle assemblers may not be able to maintain the pace of increased production due to high cost of production and low demand. He said that the production of motorcycles may be 15 to 20 percent lower this year.


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## Neo

*The laundry list of economic woes ​* 
ARTICLE (August 28 2008): Has the time come for the government to stun the nation by making an admission that it has expended all its energies towards "effecting a change in the political system" and that its focus on political issues is badly undermining its ability to deal with a rapidly worsening economy?

Will it also admit that it has not taken with much seriousness the recent international rating agencies' warnings that if a deterioration in Pakistan's credit fundamentals becomes irreversible in coming weeks and months, negative actions will follow as many of the credit stresses which led to the downgrading of country's sovereign credit ratings to B2 from B1 in May 2008 are still there?

That the central bank increased the key discount rates on two different occasions in less than six months, inflation is still alarmingly high as consumer price inflation already hit a 30-year high of 21.5% while food price inflation soared to 32% in June.

It has reached menacing proportions this month even when the government has not fully withdrawn subsidies on food and fuel with a view to reducing the growing fiscal deficit. It is widely believed that the government has contributed directly in the rise of inflation through its recourse to heavy borrowings from the State Bank of Pakistan despite firm commitments to the contrary.

A growing power deficit that has now widened to as much as 4,500mw notwithstanding, the circular debt that engulfs the entire oil and power sectors is a strong sign of an unmanageable energy crisis that is going to occur very soon in the shape of a massive decline in fuel supplies for the generation of electricity.

Again, it is the government which is said to have failed to tackle the circular debt in excess of Rs 200 billion, threatening not only the shutdown of IPPs but also badly affecting the ability of OMCs to make timely import of POL deficit products, particularly diesel and furnace oil possible.

Barring a two-day recovery following Pervez Musharraf's resignation on August 18, stocks have been losing their gloss for six consecutive sessions. The KSE-100 index has lost as much as 43 percent since April 21 this year, the day it hit a record high.

More and more foreign investors are shifting their funds to other destinations mainly because of political uncertainty while the incidence of flight of capital is also attributable to a significant increase in margin calls due to a global economic slowdown. Is the present stock market slump not a fatal haemorrhage?

That the serious economic fault lines were very much there even much before the present government came into office, the government has hardly done anything effective and meaningful to lessen those pressures that have been exacerbating the fiscal imbalances.

The absence of any meaningful policy-making has also caused a negative impact on foreign investment inflows, thereby seriously diminishing the prospects of improvement in the economic indicators even in the long term.

Although the US has announced a plan to provide US $115.5m in food aid to Pakistan while UK intends to double its aid to US $950m during the next three years, the present situation has given birth to serious doubts about the government's ability to successfully meet its objectives that it spelled out in the FY09 budget. Among other things, it remains to be seen whether or not the government will be meeting its fiscal deficit target.

The government's inability to promptly tackle the recent goods transporters protest is also a case in point. Not only has it led to the crowding of a large number of containers of imported items, the shipments of export cargoes worth millions of dollars are facing inordinate delays on account of the strike that ended very late and that too only partially.

The laundry list of economic woes is painfully very long. Although the foreign minister has made a sudden dash to Saudi Arabia to hold talks on oil facility against deferred payment, this seemingly priority plan seems to have run into snags on account of an inordinate delay owing to the government's lack of focus on this key economic issue.

Last, but not the least, the lack of focus on increasing the agri surplus to ease pressure on BoP and current account deficit also betrays the government's lack of interest in a sector which contributes around 25 percent to the country's GDP.

Wednesday was not much different from the past many days and weeks. The stocks further plunged with KSE-100 index nose-diving to below 9,000 points before ending at 9,020.50 points. The only consolation came on account of appreciation in the rupee against the US dollar. A badly battered and beleaguered rupee did make a slight recovery, the erosion of its value against the greenback over the past many weeks and months has been disappointing nevertheless.


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## Neo

* Is wedlock imminent between US war on terror and our economy? ​* 
ARTICLE (August 28 2008): The fiscal 2007-08 witnessed historical current account deficit of $14 billion. This was mainly because of unprecedented trade deficit as the imports were almost double of our exports. The current account deficit was partly financed by the workers' remittances exceeding $6 billion and partly from capital/foreign investment inflows. Thus, the overall balance of payments deficit amounted to $5.8 billion.

The situation does not seem to have taken any positive turn during the first month of the current fiscal FY-09 as the trade deficit amounted to $1.6 billion. The result is that there is heavy drawdown on foreign exchange reserves which have come down to 10.159 billion as on the 1st August, 2008. This table contains details about drawdown on reserves since the close of the fiscal FY-07:

It may be mentioned here that the reserves held with the commercial banks represent the amounts of foreign currency deposits collected by the banks from both the residents and non-residents. These funds cannot, therefore, be utilised for meeting country's foreign currency needs. It will be seen from the table that there has been a drawdown of $1.716 billion [from SBP reserves]during the quarter May-July,2008 ie $572 million per month.

At that speed, these reserves can keep us afloat at the most for one more year. What possible solutions are under the consideration of the government to tackle the alarming situation? Apparently-none. During 1980s/1990s, the foreign exchange deficits used to be around $1.5-2 billion and we used to cover them by borrowings through International Monetary Fund, World Bank, other multilaterals and floating foreign currency sovereign bonds etc.

Now that balance of payments deficit is $5.8 billion in FY-08 and may exceed that in FY-09. Will it be possible to borrow such huge funds internationally? The possibility is rather remote. When the present government took over in February,2008, there was a lot of talk about inflow of $3-3.5 billion from overseas. This also does not appear to have materialised as merely $500-600 million is reported to have been received from China.

About a decade back, there has been a lot of talk about the overseas holdings of the Pakistani feudals/corrupt bureaucrats and industrialists and the amount was put at $100 billion. During the last one decade, there has been a rampant corruption in all walks of life.

The earlier estimated amount may have at least doubled now. Can an appeal to these 'wealth grabbers' to transfer a part of their overseas wealth - say - up to $25-30 billion to Pakistan to let the country tide over the present difficult situation prove effective? This scribe is not the least hopeful. What could be the other alternatives: The following need to be considered immediately:

-- The repayments under some of the foreign loans rescheduled in the aftermath of 9/11 will also become due during FY-09 which will raise the foreign exchange payments liabilities still further. Therefore, there seems to no option but to once again go for rescheduling and/or debt forgiveness. This will save foreign exchange approximately to the extent of $3 billion in FY-09.

-- There has been lot of talk about import of crude oil from Saudi Arabia either on deferred payment basis or cost free. This, if materialised, could save another $5-6 billion in FY-09. The deferred payment to be sought should not be for one year alone; it should be for at least 2-3 years so that we may tide over our difficulties during that span.

-- The import of cars/cosmetics, mobile phones and other unnecessary items should be completely banned. The raise in import duty is not likely to serve the purpose as the 'wealth grabbers' have enough money to pay the higher costs. Simultaneously, the government will have to gear up its machinery to lay hands on the smugglers.

-- There is a strong need to develop mass transit system for big cities of the country with a view to saving the expenditure on fuel imports. The Sindh Governor had been endeavouring for the revival of Karachi Circular Railway but has not been successful because of stiff resistance from strong transport mafia.

As an initial stage of developing the mass transit in the city, the project needs to be promptly taken in hand. It is not only the northern areas where the government needs to establish its writ, it has also to do so over the strong mafia pockets which exist in the big cities.

-- The huge coal reserves in Thar (Sindh) are obviously not meant to be formed part of the history for the coming generations. They are for utilisation in the country and also for exports. It seems that the provincial government of Sindh and the federal government are currently busy in establishing their respective "writs" over these reserves even in the difficult time the country is passing through.

This entangle must end forthwith and the coal deposits should be exploited and used not only for generating electricity but also for exports so as to ease pressure on foreign exchange resources. The purpose will not be served unless the matter is tackled on "war footing".

It is unlikely that the debt rescheduling/ forgiveness and seeking of deferred payment facility from Saudi Arabia for oil imports will be possible without the help of USA. The acquisition of such assistance will obviously be attached with such conditionalities as may coerce us in a wedlock with USA in its war on terror.

This can be avoided if the Pakistani 'wealth grabbers' who are holding huge resources overseas, if they are patriot Pakistanis, instantly transfer to Pakistan a part of their overseas resources as hinted earlier in this write-up. A corollary to the current difficult foreign exchange situation is the exchange rate movement during the last two months or so.

It will be recalled that the banks authorised to deal in foreign exchange (Authorised Dealers-A.D.s) were - until November,2001, permitted to undertake purchase/sale of foreign currencies among themselves provided such purchases/sales were backed by the "permissible" transactions. This conditionality was withdrawn by the State Bank of Pakistan [SBP]vide F.E.Circular No 20 dated the 21st November,2001.

In other words, speculative purchases/sales between the A.D.s were allowed. We have recently witnessed the oil price bubble in the crude oil market at international level which is generally attributed to the speculators. Can we not, therefore, deem that the current exchange rate scenario in the country is also the [partial] result of speculative activities by the big market players in our banking industry.

Another aspect of the issue is that when rupee is falling against foreign currencies, the ADs stand to gain by building up foreign currencies stock. The SBP had abolished the limits given to the A.D.s for maintaining foreign currency balances. Currently, the control is being exercised by the SBP through the open position limits given to the ADs by it. The SBP,therefore, needs to exercise utmost vigilance to ensure that no A.D. is crossing its allotted exposure limits with a view to minting money.

(The writer is retired Additional Director, Foreign Exchange, SBP) 

====================================================
Foreign Exchange Reserves
[Figures in billion US$]
====================================================
Position as of With With Total
SBP banks [2+3]
1 2 3 4
====================================================
30-06-2007 13.328 2.283 15.611
08-05-2008 8.684 2.573 11.257
06-06-2008 8.386 2.566 10.952
04-07-2008 8.324 2.799 11.123
11-07-2004 7.953 2.877 10.830
18-07-2008 7.778 2.950 10.728
25-07-2008 7.448 3.039 10.487
01-08-2008 6.968 3.191 10.159
====================================================
SOURCE: SBP website.


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## Neo

*Indications of tough times ​*
EDITORIAL (August 28 2008): It is no secret that the Pakistan economy is under a lot of stress and appropriate responses are urgently needed to keep it on the right track. Finance Minister Naveed Qamar, worried by the rapidly deteriorating situation of the main economic indicators, outlined his strategy, in broad and general terms, to tackle some of the serious issues now confronting the economy.

Speaking to a select gathering of newsmen on 22nd August, he revealed that the government had decided to cut the federal Public Sector Development Programme (PSDP) by Rs 100 billion from Rs 550 billion to Rs 450 billion to contain fiscal deficit at 4.7 percent of GDP and allow a "hefty increase" in electricity tariff to achieve macroeconomic stability.

Oil prices, which had declined to about $120 a barrel after peaking at $148 a barrel in the international market, would not be brought down in the domestic market "unless the government achieves an equalisation". Funds would be withdrawn from development projects which do not have an immediate impact.

All government subsidies, including on oil and electricity, would be eliminated by June, 2009 and consumers would have to share the burden of increase in prices of all commodities. All supplementary grants to the ministries and divisions had been stopped along with a directive to cut back on foreign tours and the purchase of physical assets.

The government would borrow an amount of Rs 150 billion from the National Savings Directorate and reduce its dependence on the State Bank which had tightened its monetary policy. The IMF had been assured that the government would not exceed the budget deficit target of 4.7 percent. One of the most serious issues was the depleting foreign exchange reserves which had come down to about $10 billion.

The government would enhance the level of reserves through more privatisation and fresh foreign inflows. In order to restrict the import bill, the government would impose more taxes on the import of luxury goods and non-essential items. The US and Canada had offered wheat on deferred payment. The government was also in touch with the authorities of Saudi Arabia for the import of 120,000 barrels of oil on deferred payment basis.

Upward adjustment in power tariff rate, though inevitable, would be very painful. The National Electric Power Regulatory Authority (NEPRA) has proposed 61 percent increase in electricity tariff which the government was anxious to pass on to the consumers to remove Wapda's growing financial difficulties. Wapda needed huge amounts of money to make payments to the IPPs which had threatened to shut down their plants because of non-payment.

Circular debt has reached unmanageable levels. IPPs are running short of liquidity and are unable to pay to oil marketing companies (OMCs) for the fuel they use to run their plants. In short, the whole system is trapped in a logjam of huge financial constraints and if something is not done immediately, the collapse of the system is imminent.

What the Finance Minister has told the media actually makes a lot of sense. For obvious reasons and appallingly, the economy of the country has come under great pressure over the last year or so and main macroeconomic indicators are deteriorating rapidly. Budget deficit is growing, current account deficit is worsening, foreign exchange reserves of the country are depleting fast, exchange rate of the rupee has sunk to new lows and, worst of all, inflation rate has increased by nearly 25 percent over the last one year.

Food inflation is even higher and it is not difficult to visualise the sufferings of a common man. The situation in some of the key economic areas is not even sustainable in the short to medium term. For instance, current account deficit equivalent to 8.4 percent of GDP experienced during 2007-08 cannot be allowed to continue because foreign exchange reserves are low and resort to external borrowings cannot be limitless.

The profligacy at such a scale would certainly drive the country towards a default situation which would have highly negative consequences for the economy. Seen against the emerging scenario, therefore, most of the measures proposed by the Finance Minister are worthy of serious consideration. In the absence of any viable alternatives and given the imperatives of the economy, such measures seem inevitable to improve the fundamentals of the economy.

Nonetheless, the shift in policy strategy like huge increase in electricity tariff, slashing of development expenditures and elimination of subsidies on various items would further hit the ordinary people of the country and severely reduce their consumption levels. Of course, very tough times lie ahead for the citizens of this country due to past mismanagement of the economy and highly unfavourable external developments.

However, in our view, some of the problems could be mitigated and life of ordinary people can be made a bit easier by undertaking certain overdue and imaginative measures. For instance, a higher level of resources could be mobilised by bringing the untaxed sectors of the economy under the tax net and improving tax compliance. These resources could then be utilised to subsidise very essential commodities like wheat to avoid hunger on a mass scale.

Similarly, the proposed increase in electricity tariff could be reduced by forcing Discos and KESC to bring down their line losses at par with international standards. We apprehend that a steep rise in power tariff would further increase the pilferage of electricity and only punish the honest consumers.

In short, in abnormal times like this, the rich, irrespective of their sources of income, need to be heavily taxed while the corrupt and cheaters must be forced to mend their ways in order to provide some relief to the ordinary people and reduce their miseries. By all reckoning, the days of easy options, it seems, are over, at least for now.


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## Neo

*Pakistan extends daylight saving time through October ​*
Islamabad - Energy-strapped Pakistan on Wednesday decided to extend the daylight saving time till October end as prolonged power cuts triggered violent protests throughout the country.

Clocks were set forward by an hour on June 1 for three months to save electricity by benefiting from longer daylight. The move placed the local time six hours ahead of the Greenwich Mean Time (GMT).

"The federal cabinet has extended the daylight saving time on the suggestion of the Ministry of Water and Power that said the step proved beneficial," Information Minister Sherry Rehman told reporters in Islamabad.

Pakistan is facing an energy deficit of around 4,500 megawatts with low hydroelectric power generation, as the authorities focus on storing more water in reservoirs ahead of reduced inflows.

Irate consumers have taken to the streets in several cities, especially in eastern Punjab and southern Sindh provinces, to protest prolonged power cuts of as long 16 hours a day.

The demonstrators chanted slogans and burned tyres to block roads. There were also some reports that protesters pelted the offices of power generation and distribution companies with stones and ransacked property.

The ruling Pakistan People's Party alleged that not a single megawatt of energy was added to the national energy grid during more than eight years of rule by military strongman Pervez Musharraf, who resigned as president last week while facing impeachment.

Musharraf refuted the claim but conceded that power generation was not in proportion with consumption, which galloped in the wake of massive industrialization promoted by his government's economic policies.

Pakistan also switched to daylight saving time in 2002, but backtracked as the change was not followed by many people, particularly in rural areas. (dpa)


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## dr.umer

*Pakistani exhibitors get encouraging response at Textile exhibition in Shanghai *​
BEIJING, Aug 27 (APP)- Pakistan exhibitors who are participating in the annual exhibition of textile products in Shanghai started Tuesday, said they were getting good response from intending buyers. 

As many as 15 key entrepreneurs doing business in textile and related fields from Pakistan are taking part in the exhibition to showcase their products, the marketing manager of one of the exhibitors told APP from Shanghai. 

Pavilion from Pakistan return this year after its success in 2007, said organizer of the 3-day Intertextile Shanghai Home Textiles Exhibition-2008. 

We held a number of good business meetings with customers here during the last two days, said Abdul Ghaffar Gai Gai, Marketing Manager of Aziz Sons. 

This is an important opportunity for Pakistani exporters to display their quality products for obtaining new orders from customers attending the exhibition from across the world?, he said. 

The Consulate General of Pakistan has obtained a pavilion at a conspicuous place for the country?s exporters to display their goods in a better way. 

Spreading over 100,000 sqm of trade space, the fair is expected to surpass the previous visitor levels as more than 900 exhibitors are attending the exhibition. 

The show is one of the largest home textile trade events in Asia, with nine halls. The international halls will feature special zones for bedding, towelling, curtains and upholstery. 

Products were displayed by famous suppliers. Four country/region pavilions have been established for group suppliers. 

Pavilions from Pakistan and Portugal returned this year after their success in 2007; and for the first time at the show, stalls from Taiwan and Turkey will also be established, said the organizer. 

To strengthen co-operation and interaction between suppliers and buyers, a special buyer?s programme is also part of the exhibition, featuring customers from famous department stores, wholesalers and agents. 

Over 100 important buyers are attending the fair from across China and also Australia, Austria, Belgium, France, Germany, Italy, Korea, New Zealand, Russia, Singapore and Taiwan. 

Intertextile Shanghai Home Textiles is organized by Messe Frankfurt (HK) Ltd., the Sub-Council of Textile Industry, CCPIT and China Home Textile Association (CHTA).


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## Neo

*Cabinet body approves 1,000MW power projects ​* 
Friday, August 29, 2008

ISLAMABAD: A meeting of the Cabinet Committee on Fast Track Power Generation was held here on Thursday under the chairmanship of Federal Minister for Water and Power, Raja Pervez Ashraf.

The meeting was attended by Special Assistant to PM on Social Sector, Secretary and Adviser of Ministry of Water and Power, Secretaries M/O Petroleum & Natural Resources and Environment, Chairmen WAPDA & NEPRA, Additional Secretary, M/O Water & Power, MDs PPIB & PEPCO, Member PIC and senior officers of PPIB.

The minister apprised the participants that the government was fully committed to eliminating load-shedding by the end of 2009. In order to achieve this objective, fast track power generation projects have to be taken up on priority basis, he said.

The Committee meeting considered the proposals in depth in the light of the evaluation criteria, approved by the Cabinet and cleared three projects of 1,000 MW. Out of these, two projects of 775 MW are likely to be operational within one and a half year, while the third project of 230 MW (Barge Mounted) shall be operational in six months. The entire process of clearance from the date of the tender notice has been completed in about three months through transparent International Competitive Bidding (ICB) on fast track basis. The Minister appreciated the efforts of the committee members and hoped that the generation of 1000 MW electricity on fast track basis would help minimise load shedding in the country.


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## Neo

*Reserves fall to $9.38bn, rupee firms ​* 
Friday, August 29, 2008

KARACHI: Pakistans foreign reserves fell to $9.38 billion in the week that ended on Aug. 23, from $9.57 billion in the previous week, the central bank said on Thursday.

The State Bank of Pakistan, said its reserves fell to $6.01 billion from $6.26 billion previously, while those held by commercial banks rose to $3.37 billion from $3.30 billion. Pakistans foreign reserves hit a record high of $16.5 billion in October last year but have since been depleted by high payments for oil imports, and foreign investors withdrawing money because of the countrys political uncertainty.

The rupee closed firmer at 75.90/76.05 to the dollar on Thursday compared with Wednesdays close of 76.00/10, data from Reuters showed. But traders said the long-term outlook for the currency was still uncertain.


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## Neo

*Plan to raise $135m for areas hosting Afghans​*
ISLAMABAD, Aug 28: The United Nations High Commissioner for Refugees and Pakistan have launched a joint appeal to raise $135 million for rehabilitation and development of areas where Afghan refugees had lived for a long time.

Donations received in response to this appeal would be used for development of basic infrastructure in the NWFP and Balochistan, UNHCR spokesman told Dawn.

He said that basic services in health, education, water and sanitation would be upgraded in the affected areas.

The pilot project, Refugee affected and hosting areas, will be implemented as a joint programme in the two provinces.

An accord to launch the initiative was reached during a three-day visit by UNHCR chief Antonio Guterres who had arrived in Islamabad on Tuesday.

During his stay, Mr Guterres met Prime Minister Syed Yousaf Raza Gilani, Minister of States and Frontier Regions Najamuddin Khan and senior officials of the ministries of interior and foreign affairs.

He also met representatives of European Union and G-8 countries in Islamabad who pledged support for the appeal.

Under another agreement the UNHCR will revise the repatriation plan for Afghan refugees who will be allowed to stay in the country beyond 2009.Pakistan had earlier set the 2009 deadline for all registered Afghan nationals to return to their country and said that beyond the year their stay in Pakistan would be considered illegal.

The two sides agreed that improvement in the situation in Afghanistan was imperative for repatriation.

The high commissioner informed the government that an international conference on return and reintegration of Afghan refugees would be held in Kabul in November this year.

On the request of Pakistan, the high commissioner assured UNHCRs support for people displaced by the ongoing operation in Swat and Bajaur.


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## Neo

*Rs2bn project to build shrimp farms​*
QUETTA, Aug 28: The Federal government is implementing a project to construct 11 shrimp farms and two hatcheries in Balochistan and Sindh at a cost of about Rs2 billion.

Out of 11 eight model shrimp clusters eight would be constructed in coastal areas of Balochistan. Major portion of the fund allocated for the project would be spent in the province, sources in provincial Fisheries Department told Dawn.

Chief Executive Officer of Fisheries Development Board of the ministry of food, agriculture and livestock Dr. Nasim Akhtar held meetings with all concerned officials and apprised them about the federal governments project in detail.

Sources said that these model farms and hatcheries would be constructed on the basis of private-public partnership in both these provinces for developing this sector. Of the eight model shrimp farms, every one will comprise of up to 100 pond units of 1-2 acres each, 75 per cent of these ponds will be for private sector.

Under the plan a model fish market would also be constructed in coastal town of Gwadar. The Fisheries Development Board also plans to introduce intensive fish cage culture at Sabkzai and Meerani dams. The objective of the project is to develop the coastal areas and alleviate poverty in these areas of Balochistan, Secretary Fisheries Balochistan Ruhail Baloch told Dawn, adding that through this project employment opportunities and other allied economic activities would generate in the province.

The CEO of the Fisheries Development Board, Dr. Nasim Akhtar during his recent visit to Balochistan visited coastal areas and identified sites for shrimp farms and shrimp hatchery at Gadani, Dam Ormara, Pasni, Kalmat, Pishukan and Jiwani. The Provincial Secretary fisheries said that his department had moved a summary to the Balochistan government for the allotment of around 500 acres of land free of cost at each site identified for the project. Around 100 acres of land is required for the construction of proposed hatchery complex, he said.


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## Neo

*Production drops by 50pc in five estates: Power outages​*
KARACHI, Aug 28: Prolonged load-shedding in five major industrial estates is inflicting billions of rupees losses as the production activity has almost dropped to 50 per cent.

The frequent and unannounced power outages is not only causing production loss but also damaging costly industrial plants and equipments thereby sending the industry out of production for longer period.

The worst-affected are small and medium size industrial units, which could not afford self-generation and have to fully depend on the power utility, KESC, which is faced with a shortfall of around 700MW against a total demand of 2200MW.

The leaders of these estates  Site, Korangi, North Karachi, Landhi and Federal B Area -- criticised the power utility saying it is totally mismanaged and there is no one who could be approached for resolving their problems.

Sheikh Fazle Jalil, chairman Korangi Association of Trade and Industry said that his association had invited KESCs hierarchy, including the managing director and general managers on Monday to discuss energy problems being faced by the industrial units but nobody turned up except a few lower ranking staff.

Mr Jalil suspected a sort of conspiracy against the manufacturing sector because he felt presently, most of the policies were against the industry and this indicated that some forces want us to close down our units.

He raised a question that as to why the government was not paying outstanding dues to the tune of Rs11 billion to the independent power plants (IPPs) and bring them into full operation to generate power badly needed to sustain industrial production.

F B Area Association of Trade and Industry chairman Idrees Gigi said that the goods transporters strike for eight days crippled exports and created raw material shortages. Now prolonged power outages are causing production losses resulting in delays in shipment of export consignments.

Mr Gigi said the production had gone down up to 45 to 50 per cent owing to frequent and prolonged power outages.

North Karachi Association of Trade and Industry chairman Noor Ahmed Khan said that his estate was faced with the duel problem of power shortage as well as law and order. He said owing to prolonged power outages 50 per cent of industry went out of production.

He said it was becoming most difficult to run the industry under these circumstances where multiple problems remained unresolved.

He said the association members on Thursday held a meeting with the CCPO Wasim Ahmed to discuss law and order problem. He was accompanied with DIG Saleem Jaffri.

The police officials were informed that the theft cases were on the rise and industrialists did not feel safe while moving in and out of the industrial area.

He further said that the association had approached Sindh Minister for Industries Rauf Siddiqui and sought his help in sorting out power shortage problem. It has also contacted Federal Minister for Water and Power Raja Ashraf Parvez.

Site Association of Industry chairman Nisar Shaikhani said without giving due importance to the manufacturing sector countrys economic woes could not be overcome. If the country has to improve its foreign exchange reserves it has to increase exports, he added.


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## Neo

*Senate standing committe expresses concern: Rs 700 billion public money in private banks​*
** Government decides to utilise money by issuing commercial papers with better return​*
ISLAMABAD: The Senate Standing Committee of Finance and Revenues here on Thursday expressed its concerns over various public sector enterprises and corporations keeping their money in private banks instead of National Banks.

The committee and asked the Ministry of Finance for an immediate end to this practice and observed that banks should not thrive on public money. The total estimated amount of public money deposited in private banks is Rs 700 billion. 

The Senate Standing Committee on Finance, Economic Affairs & Revenue, which met at the parliament house under the chairmanship of Senator Ahmad Ali, was informed that at present public money of Rs 700 billion is deposited at private banks by the federal as well as provincial public sector enterprises and corporations. Out of this amount, Rs 400 billion belongs to federal public sector enterprises and corporations and Rs 300 billion the provincial public sector entities. 

The meeting was also informed that the federal government has decided to utilise this money for meeting its financial obligations by issuing government commercial papers to these public sector enterprises with better rate of return on such funds. This would help the government to minimise borrowing from State Bank of Pakistan, which fuels inflation.

In order to eliminate this practice, the federal government would open a special account in the National Bank of Pakistan where all the public money would be deposited. The public sector enterprises would draw money from this account as per requirements and no corporation or public sector entity would be released more than required funds. 

Besides this, the Committee discussed the situation and structure of tax collection.

Senator Haroon Khan was of the view that the tax collection has improved due to 24 percent inflation and 25 percent loss in value of the rupee. Professor Khurshid Ahmad stated that the tax to GDP ratio is yet to register any significant increase and it continues to be one of the lowest in the region. This is a cause of concern and the economic managers must address this issue by broadening the tax base to turn the economy around. Senator Safdar Abbasi observed that levying 16 percent sales tax is coercive and it burdens the general public the most. Senator Nisar A Memon suggested that professionals like doctors, engineers, lawyers, consultants etc be brought into the tax nets.

The Committee also praised the reforms introduced by the former Chairman FBR, and observed that the reforms have simplified procedures and made filing of returns easy. It, however, took exception to the manner in which the ex-Chairman was removed noting though the government has the right to remove him yet the manner in which this right was exercised is questionable. 

The meeting recognised and appreciated the efforts of the FBR in streamlining and enhancing tax collection on the whole. The meeting expressed concerns over the fact that the government borrowings are still very high and the Debt Limitation Act is not being adhered to. Senator Ishaq Dar termed this practice as scandalous. Some members of the Committee said that external debt has risen to unsustainable level and remedial measures must be taken in this regard. 

The meeting was attended, among others, by Senators Ms Pari Gul Agha, Muhammad Amin Dadabhoy, Haroon Khan, Nisar Ahmad Memon, Prof Khurshid Ahmad, Dr Safdar Ali Abbasi and Muhammad Ishaq Dar besides the Chairman, FBR and senior officials of the Ministry of Finance and FBR.


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## Neo

*Outages to render 100,000 NWFP industrial workers jobless​*
** Industrialists seek uniform electricity rates throughout the country * Say only 800 of 2,200 industrial units in operation​*
PESHAWAR: Industrialists in NWFP have said that more than 100,000 industrial workers would be rendered jobless if the unscheduled power outages continued. 

They also blamed the Water and Power Development Authority (WAPDA) for charging higher per unit power rates from NWFP-based industrialists as compared to other provinces and warned to take the matter to the court. 

Speaking at a joint press conference here on Thursday, Sarhad Chamber of Commerce and Industry (SCCI) President Haji Asif and Small Industries Kohat Road President Engineer Maqsood Anwar Pervez said only 800 of the total 2,200 industrial units in the province were operating. 

However, the long hours and unscheduled load-shedding would push the rest of industries towards closure which would render more than 100,000 industrial workers jobless, they added.

Anwar Pervez said the overall load-shedding hours reached 18 out of 24 hours which was a big loss for industrialists. 

The frequent power outages were not only increasing the production cost but also affecting the labourers who did not get jobs. 

In his tirade against WAPDA, Anwar Pervez said the NWFP-based small industrialists were paying 2.30 rupees for a single unit of electricity they consumed, which he said, was the highest throughout the country. 

Besides, he added, WAPDA was imposing tax if their monthly electricity bill exceeded 20,000 rupees. He said the industrial consumers of B-2, B-3 and B-4 categories in NWFP were paying higher electricity charges than those in Punjab. 

He asked the government and WAPDA to bring uniformity in rates of electricity for industries in Punjab and NWFP. The matter would be taken to the court if the government failed to implement uniform rates, he warned.

The industrialists said load-shedding was not only causing huge losses to the economy of the country, but also creating hurdles in the way to achieve the export targets. 

They asked the government to take practical steps to solve the problems of industrialists instead of blaming their predecessors for all ills.

They also raised the issue of lawlessness in the province and said the prevailing situation was blocking the industrial growth in the province. 

They said the kidnapping of industrialists was a serious cause of concern while the provincial government had so far failed to alley their fears by ensuring them safety of life and property.


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## Neo

*Progress in talks over Saudi oil for Pakistan​*
LAHORE: There has been progress in talks between Foreign Minister Shah Mehmood Qureshi and Saudi officials regarding oil supply to Pakistan, Geo News reported on Thursday. 

The channel quoted its sources as saying that the negotiations focused on supply of 110,000 barrel of oil to Pakistan. However, these were initial talks and the procedure for the oil supply was yet to be determined, the sources said, adding that the final decision in this regard would be made on the return of Saudi King Abdullah from Spain.

Sources in the Petroleum Ministry told Daily Times on Sunday that Pakistan was likely to get an additional oil credit facility from Kuwait for a further 30 days to import oil on deferred payments.

Pakistans oil reserves decreased during the previous financial year, 2007-08, due to non-payment of billions of rupees in differential claims to oil marketing companies.


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## Neo

*Foreign debt payments: Pakistan urged to seek IMF help to avoid default ​*
KARACHI (August 29 2008): US-based Citibank has advised Pakistan to secure help from the International Monetary Fund (IMF) to avoid default on its foreign debt repayments in the face of an ongoing political crisis.

In a report, "Pakistan: could the political chaos lead to sovereign default?" released in New York Wednesday, Citibank cited a rising chance of default over mounting political instability, dwindling foreign exchange reserves and the weakening Pakistani rupee. "Pakistan perhaps now needs an IMF stabilisation programme to manage the dire situation," it said.

The bank said if Pakistan opted to default, it would have to reschedule all of its debt, which amounted to 2.6 billion dollars in self-issued bonds and 13.9 billion dollars in bilateral debt. "Such a rescheduling would undermine the country's ability to attract foreign investment, which is desperately needed to support a ballooning trade deficit," the report said. Citibank also said it expected the rupee's fall to continue in the light of government inaction and this week's break up of the government coalition, warning that if the currency continued slipping, Pakistan would be forced to reschedule its debt payment of around 500 million dollars due in February.

The rupee has fallen more than 18 per cent in the past four months, taking an especially hard hit since the split of the country's two major political parties. Pakistan's benchmark stock index has also lost around 45 per cent of its value in six months.


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## Neo

*Additional actions needed to safeguard Pakistan's economy: World Bank ​* 
ISLAMABAD (August 29 2008): The newly-appointed World Bank Vice President South Asia Region, Isabel Guerrero, on her first visit to Pakistan after taking over from Praful Patel, who has retired, called on Prime Minister Yousuf Raza Gilani, Finance Minister Naveed Qamar, State Bank Governor Dr Shamshad Akhtar and PPP Co-Chairman Asif Ali Zardari, separately.

Ms Guerrero stated that additional actions are needed to safeguard the economy against further shocks in an effort to ensure that Pakistan will be able to meet the development challenges it is facing today. She denied media reports that $500 million loan for budgetary support was likely in the near future. Such programme lending is linked to prevailing macroeconomic conditions, which are just not right in Pakistan today. She added that the $500 million loan was never appraised.

Guerrero was in Pakistan on a two-day visit essentially as a prelude to her meetings with the Pakistani delegation during the World Bank annual meeting scheduled in October. "I wanted to meet counterparts in the government, especially the economic team, prior to welcoming them in Washington during the WB-IMF annual meetings later this year," said Guerrero. She noted that the government has taken a number of steps to support the country in the face of high oil and food prices in the international market.

A press release issued by the WB said that Guerrero met with the government's economic team led by Finance Minister Naveed Qamar to discuss the government reform plans and the WB programme. The Finance Minister briefed the delegation about the series of measures taken by the government to stabilise the economy. He reiterated the government commitment to stabilise the economy at the earliest and reaffirmed willingness to take additional measures.

He said the government is making efforts to protect the poor and deserving segments of the society from rising prices through 'Benazir Income Support Programme'. Promoting economic growth with emphasis on commodity producing sectors, job creation, poverty alleviation, restoring macroeconomic stability and building foreign exchange reserves top the agenda of the democratic government. He invited the development partners like the World Bank to play their role in assisting the government in achieving its objectives.

The Finance Minister also briefed the visiting delegation about the ongoing political developments in the country and informed that with the election of the President of Pakistan the country will achieve a stable political environment, which is essential for achieving the economic objectives of the government.

In a meeting with Prime Minister Yousuf Raza Gilani and Pakistan People's Party Co-Chairman Asif Ali Zardari, the WB team discussed power, infrastructure, water management, education, safety nets, public health and nutrition as priority areas for development support.

In addition to the planned loans and credits, Ms Guerrero offered World Bank technical and analytical support to ensure Pakistan has the best international expertise to address its development challenges. During her visit Ms Guerrero reconfirmed the WB's ongoing commitment to Pakistan, saying that the Bank's investment programmes in Pakistan are on track despite some political and security uncertainty over the past few month.


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## Neo

*50 percent market capitalisation wiped out ​* 
KARACHI (August 29 2008): The Karachi share market has lost half of its value during recent downfall in just four months as local bourse's capitalisation is down to $37.6 billion from a recent peak of $75.3 billion. In last four months, the benchmark KSE Index is down 42 percent (51 percent in dollar terms) from its peak of 15676.34 points on April 18, 2008.

"One thing that is badly missing in the country is investors' confidence and financial markets in Pakistan have been under pressure for last few months", said Muhammad Sohail, senior analyst at JS Global Capital.

Global financial crunch, rising commodity prices and local political situation has affected the macro-economic picture and that is reflected in the stock, money and currency markets, he added. Besides the equity market, the benchmark six-month T-Bill yield is up 240 bps while the rupee is down 16 percent in last 4 months.

He said that a similar trend was seen in 1998 after the nuclear testing. Market worth plummeted from $10 billion to $5 billion, a decline of 50 percent, between March and July 1998. Thus the recent decline is largest and equal to that of 1998, in terms of capitalisation, ever since the KSE-100 Index was launched in November 1991. It was at that time (early 1990s) when Pakistan market came under the limelight thanks to the financial sector liberalisation of the early 1990s.

In 1998, after the nuclear testing, the Index fell by 53 percent (55 percent in dollar terms) in a brief span of 4 months. The famous March 2005 crisis brought the Index down by 34 percent (34 percent in dollar terms) when leveraged bubble busted. A year later, in April 2006, index plunged 29 percent (29 percent in dollar terms) amid global market sell-off.

After this biggest fall, the KSE board of directors freezed share prices on the Cash and Derivatives market. That is share prices cannot go below August 27, 2008 closing while 5 percent upper and lower limit will work as normal. The Nigeria Stock Exchange did similar sort of freezing two months back.

He said that though the earnings growth projection has been adjusted downward, Pakistan is trading at forward looking PE of 6.9x. "We expect FY09 earnings to grow at 9 percent mainly due to 30 percent growth in heavy weight E&P firms", he said. In the post-nuclear scenario, market PE was 6x. This mean that Pakistan right now, on valuation multiples, is coming closer to what it was 10 years back.

Despite the fact that economic conditions are not as bad as it was 10 years ago after the economic sanctions. Moreover, compared to last 15-year average PE of 9.7x, valuations today are at 29 percent discount. "Thus, signalling that due to external and internal factors, confidence of investors is really missing", he added.


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## Neo

*Riyadh agrees to give oil facility on deferred payments ​* 
ISLAMABAD (August 29 2008): The official delegation is back on Thursday from Saudi Arabia after getting a categorical assurance that Riyadh will provide support to Pakistan partially in the form of oil facility against deferred payments and some cash for plugging the current account deficit.

Sources said Saudi authorities agreed during the talks with Pak official delegation, led by Petroleum and Foreign Minister Shah Mahmood Qureshi, that Riyadh will provide Pakistan support partially as oil facility against deferred payments and some in cash form for three years.

The official delegation had flown to Saudi Arabia on August 26 for negotiating a deal with Saudi authorities for the oil facility. It comprised National Reconstruction Bureau (NRB) Chairman Dr Asim, Finance Secretary Furrukh Qayyum, Petroleum Acting Secretary G.A. Sabri, and Additional Finance Secretary Asif Bajwa.

Pakistan had demanded of Saudi Arabia the supply of 110.000 barrel of crude oil per day for three years. Its total volume in monetary terms was estimated between $5 to $6 billion. Pakistan is likely to get oil from Saudi Arabia against deferred payments from next week. However, the two sides are yet to finalise modalities for an amount that Pakistan will get as cash from Saudi Arabia for offsetting economic woes.

In the recent past, Saudi Arabia had provided Pakistan $300 million for budgetary support. This was followed by an announcement by Chinese government for providing Pakistan a $500 million loan at soft-terms and conditions during former president Pervez Musharraf's visit to China a couple of months back.

The country is facing severe financial crisis and after poor performance of the key sectors of economy, the government is looking towards friendly countries for financial support. Much depends on the support of Saudi government. The oil supply against deferred payments could serve Pakistan's purpose of easing pressure on its economy. The officials of the delegation termed their visit to Saudi Arabia and meetings with Saudi authorities extremely positive which would bring good news for Pakistan shortly. They are hopeful of getting oil from Saudi Arabia under the agreed arrangement from next week that will help Pakistan stop quick erosion of its forex reserves.

Pakistan's forex reserves are depleting quickly. And oil import bill is one of the major factors, which are bringing forex reserves down to an alarming level.


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## Neo

*Infrastructure and energy sectors: consensus reached with US Chamber over boosting investment ​* 
ISLAMABAD (August 29 2008): US Chamber of Commerce and the Ministry of Finance have developed consensus on increased Pak-US commercial interaction for public and private sector development to progressively increase investment in infrastructure and energy sectors in Pakistan.

US Chamber of Commerce delegation led by Lieutenant General Daniel W Christman (Retd), Senior Vice President for International Affairs accompanied by Jay Collins, Chairman, US-Pakistan Business Council met Finance Minister Syed Naveed Qamar, here on Thursday.

The US delegation is in Pakistan to explore avenues for closer co-operation in commercial and trade sectors between the two countries. The US Chamber of Commerce represents US foreign business leaders whose efforts focus on development of leadership-to-leadership relationship on international issues affecting the business community.

The Finance Minister briefed the US delegation about latest economic and business development initiatives of government of Pakistan that not only focus strengthening of internal economy but also take stock of GoP's business and commercial relationship with regional states and the developed world.

US delegates discussed the possibility of adding to the frequency of business-commercial partnership between the two countries in the context of financial investors' perspective that would take the two allies further on way to expanded relationship.

The Finance Minister reciprocated the US delegation's viewpoint, adding that political scenario following post-September 2008 presidential elections in Pakistan would complete the democratic process and the country would attain substantial political stability that forms essential part of economic stability and progress. The GoP currently is geared to come out with a multi-pronged positive economic trends and policy framework - notwithstanding the ongoing global energy crisis - that would place the country at par with other stable developing countries' economies. Macroeconomic stability is primary agenda of the present government, the Finance Minister added.

The Finance Minister further informed the US delegates that during recent months GoP has taken certain hard fiscal decisions that potentially would impact attaining stable economic indicators down the road. Pakistan looks forward to working with the US in all economical fields in times to come, he stressed.

The delegation presented their country's financial community perspective on market economy, individual investors initiative for across the country investment which certainly take into account GoP's privatisation programme and other external investment portfolios being opened to the world.

The Finance Minister explained to the delegation Pakistan's financial instruments being put in place in all fiscal and economic sectors that take stock of all micro and macro issues prioritised on GoP agenda, which contains all market-based monetary incentives. He added that agriculture in Pakistan is an engine of economic growth and the government is fully committed to boosting it for achieving better crop yield, and Pakistan welcomes foreign investment in portfolio-based projects in all sectors of economy focusing energy, agriculture and infrastructural development.


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## Neo

*Indigenous oil, gas production: drilling at Sadiq-two in Shikarpur begins ​* 
ISLAMABAD (August 29 2008): In order to supplement the government efforts to increase indigenous production of oil and gas Petroleum Exploration (Pvt) Limited (PEL) has started drilling of Sadiq-2, a new development well, in Shikarpur District. The well Sadiq-2 was spud-in on August 26, 2008 and is expected to be completed by end of September 2008.

The Chinese drilling Rig SPA-3 is being used for drilling of this well. Petroleum Exploration (Pvt) Limited is the Operator of Block 2768-3 with Pakistan petroleum Limited (PPL) Government Holdings (Pvt) Ltd (GHPL) and Pyramid Energy International Inc (PEII) as Joint Venture Partners. This is the second well spud-in by petroleum Exploration (Pvt) Ltd within the span of a fortnight.

Earlier, on 16 August Petroleum Exploration (Pvt) Ltd carried our spudding-in-of the Kandra Well Deep-4 in District Khairpur, Sindh. For this purpose, a brand new Drilling Rig form Weatherford International Inc (WII) was mobilised from Houston, USA. Petroleum Exploration (Pvt) Ltd is the operator in this Mining Lease, with Frontier Holdings Limited (FHL) and government Holdings (Pvt) ltd (GHPL) as Joint Venture Partners. After drilling of Kandra, the Weatherford rig will continue drilling exploratory wells in other blocks operated by PEL.

It may also be recalled that PEL is a joint venture partner of Mari Gas Company Limited, (MGCL) which drilled the Koonj Well located in Shikarpur in Sukkur Block and where gas was discovered. Arrangements are in hand to bring Koonj Well in Production and it is expected that about 10 mmscfd of gas will be supplied to SNGPL from this field.

PEL is currently producing around 40 mmscfd per day. It is striving hard to achieve the objective of enhancing the indigenous production of oil and gas of Pakistan. PEL has already hired 2 drilling rig one form Weatherford International Inc (WII) and other from SPA China. PEL is in the process of hiring one more rig at an early date.


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## Neo

*ADB to provide $25 million for Sindh urban areas ​* 
FAISALABAD (August 29 2008): Asian Development Bank (ADB) will provide 25 million dollars for "Multitranche Financing Facility-Sindh Cities (Improvement Investment Programme)", which will be increased in per capita monthly income level by 2018 in interior Sindh.

FIRST TRANCHE FOCUS ON URBAN AREAS IN SIX TMAS: Sukkur, New Sukkur, Rohri, Larkana, Khairpur, and Shikarpur for reducing percentage of children under five years of age suffering from diarrhoea, which will be reduced from 19 percent in urban areas of Sindh (excluding Karachi and Hyderabad) in 2004-05 to 10 percent by 2018.

According to ADB's update project report, this project will be the first tranche of a programme to support infrastructure investments and institutional strengthening in three priority sectors over a 10 year period in selected clusters of secondary cities of Sindh. The programme will support establishment of effective system for urban service provision. A Multitranche Financing Facility (MFF) modality is proposed.

The programme will support urban planning institutional reforms, public-private partnerships and capacity development. Physical investment will include water supply, sewerage, drainage and wastewater treatment (wastewater), and solid waste management.

The programme will support a comprehensive programme of reform for improved urban service planning and management, including increased private sector participation, complemented by priority investments in water supply, wastewater and solid waste management improvements. The investment programme comprises four parts.

Part 'A' supports the establishment of professionalised urban service providers, urban planning capacity, and technical backstopping for programme implementation. Parts 'B' and 'C' will finance targeted infrastructure improvements in water supply and wastewater and in solid waste management, respectively. Part 'D' provides revenue shortfall support for the newly established urban services corporation.

According to ADB report, the impact of the investment programme will be the improved health, quality of life and economic competitiveness of participating secondary towns in Sindh. Outcomes of the investment programme will be enhanced quality, coverage, and reliability of water supply, wastewater and solid waste management services in participating cities.

Under this project, population of participating towns served by household water connections will be increased on average from approximately 37 percent in 2008 to 52 percent in 2013.

Average hours per day of water supply will also be increased from about three hours in 2008 to more than six hours in 2013 and over 20 hours for 18,000 households in DNI zones. Drainage and knock on water quality benefits for 100,000 households by 2013. Household access to solid waste management (SWM) services to be increased on an average to 80 percent byy 2013 in participating towns Over 27,500 households in Khairpur with improved sewage flow and wastewater stabilisation; 6,000 households in Rohri with improved water supply at intake.


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## General Fujita

*Pakistan gets encouraging response at Shanghai exhibition *

Friday, 29 August 2008 03:08 Pakistan Daily 
Pakistan exhibitors who are participating in the annual exhibition of textile products in Shanghai started Tuesday, said they were getting good response from intending buyers. 

As many as 15 key entrepreneurs doing business in textile and related fields from Pakistan are taking part in the exhibition to showcase their products, the marketing manager of one of the exhibitors said from Shanghai. 

Pavilion from Pakistan return this year after its success in 2007, said organizer of the 3-day Intertextile Shanghai Home Textiles Exhibition-2008. 

We held a number of good business meetings with customers here during the last two days, said Abdul Ghaffar Gai Gai, Marketing Manager of Aziz Sons. 

This is an important opportunity for Pakistani exporters to display their quality products for obtaining new orders from customers attending the exhibition from across the world?, he said. 

The Consulate General of Pakistan has obtained a pavilion at a conspicuous place for the country?s exporters to display their goods in a better way. 

Spreading over 100,000 sqm of trade space, the fair is expected to surpass the previous visitor levels as more than 900 exhibitors are attending the exhibition. 

The show is one of the largest home textile trade events in Asia, with nine halls. The international halls will feature special zones for bedding, towelling, curtains and upholstery. 

Products were displayed by famous suppliers. Four country/region pavilions have been established for group suppliers. 

Pavilions from Pakistan and Portugal returned this year after their success in 2007; and for the first time at the show, stalls from Taiwan and Turkey will also be established, said the organizer. 

To strengthen co-operation and interaction between suppliers and buyers, a special buyer?s programme is also part of the exhibition, featuring customers from famous department stores, wholesalers and agents. 

Over 100 important buyers are attending the fair from across China and also Australia, Austria, Belgium, France, Germany, Italy, Korea, New Zealand, Russia, Singapore and Taiwan. 

Intertextile Shanghai Home Textiles is organized by Messe Frankfurt (HK) Ltd., the Sub-Council of Textile Industry, CCPIT and China Home Textile Association (CHTA).


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## General Fujita

*Pakistan Telecommunication Authority ready for launch of 3G spectrum completed *

Friday, 29 August 2008 02:01 Pakistan Daily 
The Pakistan Telecommunication Authority has said that the country is ready for the introduction of 3G (third generation) spectrum for telecommunications. This was announced at an interactive one-day seminar titled Has the clock struck 3G here which discussed the future of 3G telecommunications in Pakistan on Thursday.

The seminar, hosted by the South Asia Forum, a private sector think-tank, highlighted key challenges in the advent of 3G and provided a platform for a candid discussion on the much-debated subject of whether the Pakistani market is mature enough for it.

The seminar was jointly sponsored by Telenor Pakistan and Nokia Siemens Networks with the PTA and Huawei Technologies co-sponsoring the event. The seminar was inaugurated and chaired by Chairman PTA Dr Mohammed Yaseen.

He assured, all present, of the PTAs cooperation and support for the introduction of new technology and said that the PTA would soon be inviting applications for the 3G spectrum. The Chairman praised the thriving telecom sector of the country and its growth of 40 per cent since last year.

Earlier the South Asia Forum Chairman Syed Jawaid Iqbal introduced the concept of the seminar and thanked the regulator and participating companies for coming forward to address this important issue faced by the telecom industry in the country.

The seminar on the future of mobile communication served to provide a common platform to discuss issues, suggest solutions, share strategies and request policy support. Telecom operators were of the view that the 3G auction should be carried out soon as possible to provide broadband to the masses without delay and cap the digital divide. The event ended on the note that the groundwork for the launch of the 3G spectrum is complete and that it would not be too long before the actual introduction of the new technology.


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## General Fujita

*Breast cancer screening facility planned at Pakistan Institute of Medical Sciences *

Friday, 29 August 2008 02:55 Pakistan Daily 
The Health Ministry plans creation of a modern facility at Pakistan Institute of Medical Sciences (PIMS) to screen women for breast cancer, whose fresh sufferers in the country total around 90,000 every year.

PIMS is among the countrys five leading hospitals where establishment of breast cancer screening centres have been planned, PIMS Executive Director Dr Abdul Majeed Rajput told participants of a one-day symposium on Early Cancer Detection Among Women at Mother and Child Health (MCH) training centre. The proposed centres are to be raised in Karachi, Lahore, Peshawar and Quetta besides Islamabad.

The PIMS Gynaecology Department organised the symposium in collaboration with United Nations Population Fund (UNFPA).

More than 200 health experts from all over the country showed up at the event, which was organised to create public awareness of early detection and prevention of cancer among women.

Dr Rajput said project concept (PC-1) of the breast screening centre was with the Health Ministry for approval. He said the hospital administration was in touch with the ministrys officials concerned for getting the needful done for early functioning of the centre that would ensure prevention and control of breast cancer among women.

He said the MCH centre had already launched a cervical breast cancer screening programme under which a dedicated room, having all modern facilities and equipment, had been opened. He said women of reproductive age group were screened for breast cancer at the room.

Parliamentary Secretary for Health Dr Mehreen Bhutto, who was the chief guest, declared womens cancers remained a global public health burden.

She said a progressive rise in breast cancer incidence had been recorded all over the world during the last 10 years. She said every year, more than 0.46 million new cases of breast cancer occurred and around 231,000 women died of these diseases. She said breast and cervical cancers were the leading cause of deaths from cancer among women worldwide.

Dr Bhutto said prevention and early detection of these deadly conditions was a great challenge for the developing countries. She said under a nationwide programme, the government had approved establishment of breast cancer screening centres in the countrys five major cities and launch of four mobile breast screening vans in far-off areas. She urged media to create public awareness of breast cancer screening.

The parliamentary secretary said cervical screening programme was meant for early detection of pre-cancer lesions, which led to full-blown cancer 10 to 20 years later.


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## dr.umer

*World Bank acknowledges Pakistans moves to support economy ​*
ISLAMABAD, Aug 29 (APP): World Bank commended Pakistans steps to support the economy in face of high international prices for petroleum and food commodities. Vice President of WB for the South Asia Region, Isabel Guerrero said at the end of his two-day visit to Pakistan. 

She emphasized that additional actions are needed to safeguard the 

economy against further shocks and allow an effective response to the development challenges facing Pakistan, said WB press release. 

I wanted to meet counterparts in the government, especially the economic team, prior to welcoming them in Washington during the WB-IMF Annual Meetings later in the year, said Guerrero. 

I will be visiting Pakistan regularly and look forward to working with Government and other stakeholders across this wonderful country. 

Ms. Guerrero met with the Governments economic team, led by the Finance Minister Naveed Qamar to discuss the Governments reform plans and the World Bank program. 

In meetings with Prime Minister Yousuf Raza Gilani and Pakistan Peoples Party Co-chairman Asif Zardari, the World Bank team discussed power, infrastructure, water management, education, safety nets, public health and nutrition as priority areas for development support. 

In addition to the planned loans and credits, Ms. Guerrero offered World Bank technical and analytical support to ensure Pakistan has the best international expertise to address its development challenges. 

During her visit Ms. Guerrero reconfirmed the World Banks ongoing commitment to Pakistan. She noted that the World Banks investment programs in Pakistan are on track despite some political and security uncertainty over the past few months. 

This was my introductory visit to Pakistan and I had excellent meetings with the Governments Economic team on the economic situation. 

Policies and administered prices now reflect a better correlation with high international prices, but to ensure that gains made in poverty reduction are not lost. 

Pakistan needs to build upon its good economic foundation taking additional bold measures to strengthen investor confidence, she said.


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## Neo

*Pakistan Fin Min: ADB To Give $500 Million To Support Budget Soon​*
ISLAMABAD -(Dow Jones)- The Asian Development Bank will give Pakistan$500 million in the next few days to support the budget, Finance Minister Syed Naved Qamar said Friday, adding that this amount could be doubled.

"Talks are underway with the Asian Development Bank to double their aid and also to double this budgetary support of $500 million," Qamar said.

The financial support will help reduce pressure on the local currency by adding to the forex reserves, he said.

He also said he was hopeful the country's macro economic stability would revive in a couple of months.

The finance minister had talks with officials of the ADB and the World Bank on enhancing their assistance to Pakistan.


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## Neo

*Pakistan Oil and Gas Markets Investment Opportunities, Analysis and Forecasts to 2020​*
*Summary*

This profile is the essential source for top-level energy industry data and information. The report provides an overview of each of the key sub-segments of the energy industry in Pakistan. It details the market structure, regulatory environment, infrastructure and provides historical and forecasted statistics relating to the supply/demand balance for each of the key sub-segments. It also provides information relating to the oil and gas assets (oil and gas fields, exploration blocks, refineries, pipelines, LNG terminals and storage terminals) in Pakistan. The report also analyses the fiscal regime relevant to the oil and gas assets in Pakistan and compares the investment environment in Pakistan with other countries in the region. The profiles of the major companies operating in the oil and gas sector in Pakistan together with the latest news and deals are also included in the report.

*Scope*

- Historic and forecast data relating to production, consumption, imports, exports and reserves are provided for each industry sub-segment for the period 1995-2020.

- Historical and forecast data and information for all the major exploration blocks, oil and gas fields, refineries, pipelines, LNG terminals and storage terminals in Pakistan for the period 1995-2020.

- Operator and equity details for major oil and gas assets in Pakistan

- Key information relating to market regulations, key energy assets and the key companies operating in the Pakistans energy industry.

- Detailed information on key fiscal terms (such as rents, bonuses, royalty, cost recovery, profit oil, petroleum and corporate taxes) pertaining the geography is also provided. A sample calculation detailing how fiscal terms apply to a typical asset in the regime is included.

- Information on the top companies in the Pakistan including business description, strategic analysis, and financial information.

- Product and brand updates, strategy changes, R&D projects, corporate expansions and contractions and regulatory changes.

- Key mergers and acquisitions, partnerships, private equity and venture capital investments, and IPOs

Key Topics Covered:
1 Table of contents
2 Introduction
3 Pakistan Energy Report
4 Pakistan Fiscal Regime
5 Pakistan Upstream Investment Environment Benchmarking
6 Pakistan Exploration and Production Sector
7 Pakistan Refining Sector
8 Pakistan Pipeline Sector
9 Oil & Gas Development Company Limited
10 British Petroleum Plc
11 PPL Corporation
12 Financial Deals Landscape
13 Recent Developments
14 Appendix
1.1 List of Tables
1.2 List of Figures
Companies Mentioned:
Oil & Gas Development Company Limited
British Petroleum Plc
PPL Corporation

For more information visit Pakistan Oil and Gas Markets Investment Opportunities, Analysis and Forecasts to 2020 - Market Research Reports - Research and Markets

Source: Global Markets Direct


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## Neo

*Pakistan Edges Closer to Awarding 3G Licenses​*
Speaking at a local conference, the Chairman of the Pakistan Telecommunication Authority (PTA), Dr. Muhammad Yaseen said that the regulator is working towards a tender process for awarding 3G licenses in the country.

He said that the spectacular rise of telecom industry in Pakistan and especially the mobile sector has been the focus of attention at the regulator, and that they have been watching developments of 3G networks in neighbouring countries closely.

Commenting on plans for 3G services in Pakistan he said, We have the spectrum earmarked, and all the ground work is completed. PTA will soon be inviting applications for 3G spectrum auction."

Telenor Pakistan recently said that it is likely to invest $2.5 billion more in the country if it gets a 3G license. "We have invested almost $1.8 billion out of our commitment of $2 billion by the end-2007 and would go for a further $2.5 billion depending on the situation if we get a 3G license," Jon Fredrik Baksaas, also the president of Telenor Group, told Dow Jones Newswires earlier this month.

The government, which has the final say on the matter is currently being consulted on the issue. The government recently raised taxes - already some of the highest in the world - on mobile phone services and lowered their termination rates, which is already starting to show up as lower usage by customers.

According to figures from the Mobile World database, the country ended the first quarter of this year with some 82.5 million subscribers - representing a population penetration level of 48%. In common with many developing nations, the vast majority of the subscribers are using PrePay tariffs.

On the web: The Mobile World - Pakistan Telecommunication Authority


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## Neo

*Pakistan to get $2bn aid package ​* 
Saturday, August 30, 2008

ISLAMABAD: Federal Finance Minister Syed Naveed Qamar has said Pakistan will soon receive a $2 billion aid package, from both the World Bank and Asian Development Bank.

Talking to journalists after inaugurating the e-Services project of the Securities and Exchange Commission of Pakistan (SECP) on Friday, the finance minister said that it is impossible for the government to slash petroleum products prices as it is already subsidising diesel by Rs18 per litre.

About the much talked about Saudi Oil Facility (SOF), Qamar said, We are waiting for the kingdoms response to the facility.

The government, after taking the office, took bitter decisions to meet the economic challenges and the donors and other agencies have appreciated its endeavours to keep the budget deficit within target.

According to a press statement, the minister said that the reforms introduced by the SECP have given confidence to the corporate sector, which would bring more transparency and efficiency in the system.

The statement further said that the purpose of introducing this system is clear; it aims to improve the efficiency and effectiveness of the business processes of the SECP, create a speedy and transparent paperless environment which will make it easier and clearer for companies and the business community to interact with and obtain information from the SECP electronically, in a very short time.

In his welcome address, SECP Chairman Razi-ur-Rahman Khan discussed in detail how eServices would facilitate the corporate sector and improve the efficiency of SECPs business processes. He said that through the eServices project, SECP provides a secure environment to the companies for the filing of returns, electronically. The use of digital signatures would help companies ensure the security and confidentiality of their data.

Earlier, ADB delegation led by Juan Miranda, Director General of the bank met Syed Naveed Qamar, Finance Minister at his office here today and discussed the over all macro economic policy environment in the South Asian region generally, and Pakistan more specifically, says an official statement issued here on Friday.

The Finance Minister stated that MOF and SBP are working in tandem to initiate and implement all difficult and urgently needed measures to attain the targeted economic and fiscal goals. 

Expenditure controls and rationalisation of monetary spending in the public sector is underway, the statement added.

Qamar appreciated ADBs role regarding its commitment for providing $500 million for accelerating the economic transformation that enables the new government to regroup recent economic initiatives. 

Both the sides also discussed GOPs commitments to structural reforms, which would contribute to the economic revival of the country.


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## Neo

*Govt to pay Rs20bn to IPPs in two days ​* 
Saturday, August 30, 2008

ISLAMABAD: The government is all set to release Rs15 billion to Rs20 billion within two days to some of the independent power producers (IPPs) in a bid to bail them out of fiscal constraints and ensure maximum thermal power generation. 

The release of the same amount will also be disbursed to the IPPs in next 7 to 10 days so that the power producers could pay the long-standing dues to oil companies to ensure the fuel supply chain for thermal power generation. 

The government is taking these steps to basically minimize the power outages during Ramazan and ensure no load-shedding during Iftar and Sehr. These much-awaited decisions came in a crucial meeting held here on Thursday with Federal Minister for Water and Power, Raja Pervez Ashraf, in the chair, a senior government official who attended the meeting told The News. 

Secretary and Adviser, Ministry of Water and Power, Managing Director PEPCO, Chief Executive Officers of all four DISCOs and senior officers of Ministry and PEPCO also attended the meeting. 

The decision to clear the dues of IPPs will help cope with the ongoing power crisis as because of the inter-circular debt, the maximum thermal plants are being run at not a full capacity. 

In the wake of inter-circular debt, the thermal power houses are not being run at the full capacity that is why the country is losing almost 1,500MW of electricity. 

It is pertinent to mention that two IPPs, which produce 1,786MW of electricity in the country two months back stunned the government by putting it on notice either to pay their arrears otherwise, they would switch off the plants. 

These two power plants had put the Pakistan Electric Power Company (Pepco) on one-month notice that they would switch off the plants if the arrears of the said companies amounting Rs66 billion were not paid. 

The governments decision to clear dues of the IPPs will help reduce the intensity of power crisis in the country that has adversely affected the common man life across the country. The minister directed PEPCO to reduce load-shedding in the holy month of Ramazan and that there should be no load-shedding during the Iftar and Sehr. 

He said all the necessary measures would be taken to improve the generation capacity and enhance the efficiencies in order to provide relief to the consumers in this regard. He also directed PEPCO and four power distribution companies including Multan Electric Power Company, Peshawar Electric Supply Company, Hyderabad Electric Supply Company and Quetta Electric Supply Company to expedite their recovery drive. 

The official sources said the four entities owe to recover about Rs40 billion. It is interesting to mention that the government departments owe to pay 50 per cent arrears out Rs40 billion. 

However, the minister asked the four companies to leave no stone unturned to make maximum recovery of current and outstanding amounts by end of Sept 2008. 

The meeting was told that water releases from Mangla reservoir would be increased in the first week of September that will help enhance the hydel generation by 800 to 900MW. It would provide relief to PEPCO in real terms. The officials of Ministry of Petroleum and Natural Resources informed the meeting participants that the Zamzama gas pipeline would be reconstructed by today (Friday) that would also help increase the power production by 1,000MW as the Kapco and Rouche power house would be able to add 1,000MW of electricity with the restoration of gas from Zamzama field which had been destroyed in a sabotage act.


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## Neo

*Outflow of $12.771 million : Breakup of coalition adds to the problems of struggling KSE ​*
KARACHI: Countrys capital market witnessed continuous outflow of the foreign investment, as an exodus of $12.771 million of foreign portfolio investment was registered during the week ended on Friday.

Due to worsening political situation, which is casting dark shadows on the economy too, the foreigners are adopting a cautious approach and are continuously pulling out their money from the countrys equity market. 

Foreign fund managers and investors continued their cautious stance due to prevailing political and economic situation in the country and break-up in the ruling coalition.

The cumulative net outflow during last month from August 01 to August 29 stood at $51.067 million while cumulative exodus of foreign portfolio investment during current calendar year (January 1, 2008 to August 29, 2008) was recorded at $401.079 million.

According to data released by the National Clearing Company of Pakistan (NCCPL), a net inflow of Rs 207.321 million was witnessed only on Monday against an outflow of Rs 614.758 million. On Tuesday Rs 380.762 came in the countrys equity market whereas Rs 584.655 million were pulled out. Wednesday saw buying of Rs 351.41 million and selling of Rs 665.136 million by foreign investors; Thursday witnessed buying of Rs 290.642 million and selling of Rs 594.484 million while on Friday, a gross buying of Rs 475.603 million was observed against gross selling of Rs 211.114 million.

The prevailing geo-political situation and weakening economic indicators are the main reasons, which forced the foreign investors to offload their holdings, analysts pointed out.

The collapse of only five-months old ruling coalition at the beginning of the week and the worst law and order situation in the tribal areas of the country have been hurting the investors sentiments adversely, forcing them to pack up and go to other destinations for their investment.

Karachi stock market, which shed by around 45 percent in the past four months, has failed to regain any momentum despite the floor set on Wednesdays stock valuations. The floor also failed to restore the foreign investors confidence.

Unless political situation normalises, the foreign investors are unlikely to come back, analysts said

Foreign selling has been at heart of recent fall in local equities. While the quantum is not huge, low volumes and prevailing political and economic uncertainties have magnified its impact, analyst Farhan Rizvi at JS Reserach said.

He added that political uncertainty resurfaced as PML-N left the ruling coalition on Monday unhappy with the delay in restoration of judges, which has negative implications for the economy.


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## Neo

*ADB asks government to ensure structural reforms​*
ISLAMABAD: Asian Development Bank (ADB), while assuring financing for important projects, has asked Government of Pakistan to ensure structural reforms and align its fiscal and monetary policies according to the guidelines and framework of the Bank, official sources told Daily Times on Friday. 

In this regard, economic management teams of Government of Pakistan (GOP) and Asian Development Bank (ADB) would work together on modalities of future cooperation that would lead to structured agreements in near future. However, ADBs future funding commitment would come according to the announcement of World Banks future assistance for Pakistan, the official added. 

This has been decided during a meeting between ADB delegation led by Juan Miranda, Director General of the bank and Syed Naveed Qamar, Finance Minister here on Friday. 

The meeting discussed over all macro economic policy environment in South Asian region generally and Pakistan more specifically. Finance Minister briefed the delegation about GOPs recent micro and macro economic policy steps aiming to restore stability in all domains of governance  socio-economic development, integrated functioning of state institutions and timely political decision making of the government in sectors that focus people of the country as primary stakeholders. 

The Finance Minister stated that MoF and SBP are working in tandem to initiate and implement all difficult and urgently needed measures to attain targeted economic and fiscal goals. Expenditure controls and rationalisation of monetary spending in public sector is underway, he added. 

The ADB team apprised the Finance Minister that they are working with all stakeholders to support the diverse financial requirements of the government. 

Finance Minister added that after taking over of new democratic government Pakistan is going through transformation in streamlining its economy and Pakistan expects substantative support from ADB to beef up its existing economic development projects. Both the sides also discussed GOPs commitments to structural reforms, which would contribute to economic revival in the country. 

The meeting concluded on the note that GOP and ADBs Economic Management Teams would work together on modalities of future cooperation that would lead to structured agreements in near future. Both the sides shared similar views on ADBs regional initiatives in the energy, transport and communication sectors, adding that ADB may finally emerge as a regional partner in South Asian Region.


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## Neo

*ADB to release $500m soon, says Qamar​*
ISLAMABAD: Federal Minister for Finance Syed Naveed Qamar said on Friday the Asian Development Bank (ADB) delegation has assured the government to release $500 million in the next few days and also expressed willingness to double this support keeping in view the ongoing reforms agenda of the government. Speaking to journalists after formally inaugurating the eService project of the SECP, the minister said the meeting with World Bank and ADB representatives was a part of routine meetings.


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## Neo

*Aisha steel mills to commence operations in 2009​*
KARACHI: Japans Metal One Corporation, a subsidiary of Mitsubishi Corporation, will have a 26 percent stake in the under construction Aisha Steel Mills (ASM), a joint venture firm being set up in Pakistan to meet the growing demand of steel, CEO Haseeb-Ur-Rehman told Daily times. 

Besides the Metal one corporation, Japan based Universal Metal Corporation, Arif Habib Ltd would have a 25 percent stake in the venture being established at Karachi with a cost of $100 million, Heseeb informed. The plant is expected to be completed in two years and it will have an initial capacity of 220,000 tonnes per annum, he added. 

Steel is a basic raw material used from nails to skyscrapers, bridges and in the large scale manufacturing industry. Steel usage is one of prime barometers of growth of an economy. 

Establishment of new steel mills will provide cheap raw material for the whole economy, which depends on its imports and suffered from the higher steel prices in the international market. Local automobile assemblers claim that higher steel prices are contributing to the rising cost of production.

After the set up of Aisha Steel Mills, the local auto assemblers would get a relief as the mills would especially produce steel to help local auto industry, Haseeb said. The steel mills will cater to the growing demand of cold-rolled coils (CRCs) in the country and will satisfy the demand of the automotive and engineering industries, as well the home appliances sector, he said.

Haseeb remarked that set up of the mills in Karachi would be the largest plant of its kind in the country in terms of producing value added cold rolled coils sheets.

The capacity of the mills will be later increased to 350,000 tonnes.

Annual demand for CRCs in Pakistan is about 450,000 tonnes, most of which is met through imports, analysts said. ASM would be the second Pakistani firm to manufacture CRCs after the state-run Pakistan Steel Mills. 

Experts say that Pakistan needs big projects to pursue the self-reliant policy in the steel making as our neighboring countries are doing in steel production. Our neighboring countries, excluding Afghanistan are taking into consideration the importance of steel production especially.

China has been the biggest steel producers of the world, and India is the on the fifth spot. Unfortunately, Pakistan is not even in the list of top 30 steel producers of the world.


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## Neo

*Manpower exports to South Korea on the rise​*
KARACHI: Pakistan manpower exports to South Korea continue to increase, as around 900 skilled labourers are in the process of immigration, during August 2008 only, by the Overseas Employment Corporation (OEC), official sources told Daily Times. Sources informed that the workers who successfully pass their interview and language test will be gradually offered job in the coming days. Since the beginning of this year the number of Pakistani citizens who are getting themselves listed for immigration to South Korea has been growing significantly.


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## Neo

*SPI rises by 30.90 percent​*
KARACHI: The Sensitive Price Index (SPI) based weekly inflation surged by 30.90 percent during the week ended August 28, 2008 over the corresponding period of previous year. However, after rising unabatedly for the past many months, it declined slightly by 0.11 percent during the week under review compared to the preceding week, official data indicated on Friday. The prices of various food items started receding during the week, which resulted in the overall decrease in the SPI, however the prices of various items were on higher side during the week when compared with the price level of last year.


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## Neo

*PSEB, Shaheen Foundation to set up IT Park​*
ISLAMABAD: Pakistan Software Export Board (PSEB) has joined hands with Shaheen Foundation for the establishment of a new state-of-the-art IT Park over 360,000 square feet in Lahore. Operational from November 2008, the facility will be one of the largest with redundant connectivity, power backups and top-of-the-line civic amenities. The park will be used for the international branding of Pakistans IT Industry and can house more than thirty medium-sized IT companies at affordable rents. The PTCL, being the strategic partner of PSEB will provide networking and communication infrastructure facilities for the park. Talib Baloch, MD PSEB and other senior officials.


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## Neo

*10MW before Eid from first wind energy project ​*
KARACHI: Before Eid, almost 10MW will be added to the energy pool of the Water and Power Development Authority (WAPDA) from a 50MW wind energy project that will be entirely completed in three years, said Alternative Energy Development Board (AEDB) Pakistan Chief Executive Officer Arif Alauddin while talking to Daily Times on the sidelines of a workshop on carbon credits Friday.

The new 50MW wind energy plant installed at Jhampeer would be ready in a year. Then at least six more plants are in the offing as orders would have been made and 300MW would be available by 2010, said Alauddin. He was one of the speakers at the two-day workshop and training programme on Carbon Credits Potential in the Wind Sector in Pakistan held at a local hotel.

As far as the ongoing power outage is concerned, 1,000MWs could be readily saved if 600,000 tube wells were switched to solar energy, he said. If this were undertaken on a fast track it would take a year and a half. The AEDB has set a target for at least 10,000 MW for the next ten years, he vowed.

Sindh Minister for Environment and Alternate Energy Askari Taqvi pressed for the acquisition of carbon credit control which investors had to learn about. He was disappointed to see that few people had turned up for the workshop. Investors do not take carbon credit potential into account and thus lose out on revenue, echoed Sindh Secretary for Energy Mir Hussein Ali while speaking to Daily Times. The government puts it down to a lack of know-how. But in future, it would be ensured that not a single project should miss out on the benefits.

The secretary said that the government was less interested in forcing investors into including carbon credits by law and believed that with the proper awareness they would be automatically attracted to them. 

AEDB CEO Arif Alauddin explained that for example, one carbon credit is worth about 21 Euros in the international market. Saving 1 ton of Methane would earn 21 credits and saving nitric oxide 2,000 credits. Saving FF6 (transformer Gas) gives 20,000 credits. 

Talking to Daily Times, Core CarbonX Solutions, India Director Niroj Kumar Mohanty said that Pakistan has vast potential for alternate energy but there is a lack of investment and above all alternate energy consultants are not available. It is an interesting thing that only the World Bank or Asian Development Bank are ready to allocate funds for power projects, especially alternate energy projects, he commented, but it is a misery that local banks do not come forward in this huge sector. Bank Senior Infrastructure Specialist Mihaly Kopanyi told Daily Times that the WB was ready to invest in every reasonable project irrespective of the extent of fund allocation. Answering a question, Kopanyi said that the WB mainly focuses on the establishment of projects while the transfer of technology is not a specific objective.

He felt that the ongoing power crisis is worsened by flaws in the distribution and transmission system, which should be rectified immediately to save time, money and power. UN Industrial Development Organization (UNIDO) National Expert (CDM) Muhammad Matloob Khan said that China and India were taking the lead in carbon credit potential. Presently, China has 245 projects with 113,346,790 CERs/Reductions while India has 355 projects with 31,068,449 CERs/Reductions.


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## Neo

*Pakistan needs more steps to save economy: WB​*
** World Bank official says additional steps are needed to safeguard countrys economy against further shocks 
* Guerrero offers WB technical, analytical support to meet Pakistans development challenges​*
ISLAMABAD: The steps taken by the Pakistan government to support its economy in the face of an increase in prices of oil and food commodities at international level are commendable, World Bank Vice President for the South Asian Region Isabel Guerrero said at the end of her two-day visit to Pakistan.

However, the World Bank official added that additional steps were needed to safeguard the countrys economy against further shocks.

She said, "I wanted to meet my counterparts in the government, especially the economic team, prior to welcoming them in Washington during the World Bank-International Monetary Fund annual meetings later this year."

Guerrero said, "I will be visiting Pakistan regularly and look forward to working with the Pakistan government and other stakeholders across this wonderful country."

Guerrero held a meeting with Finance Minister Naveed Qamar to discuss development projects of the Pakistan government and the World Bank in the country.

The World Bank official also held meetings with Prime Minister Yousuf Raza Gilani and Pakistan Peoples Party Co-chairman Asif Ali Zardari, in which such areas as power, infrastructure, water management, education, safety nets, public health and nutrition came under discussion.

Support: In addition to planned loans and credits, Guerrero offered World Bank technical and analytical support to ensure Pakistan had the best international expertise to address its development challenges.

Guerrero reconfirmed World Bank's commitment to Pakistan during her visit. She said that the World Bank's investment programmes in Pakistan were on the right track despite political uncertainty and law and order prevailing in the country for the last few months.

The World Bank official said, Policies and administered prices now reflect a better correlation with high international prices. But, to ensure that gains made in poverty reduction are not lost, Pakistan needs to build upon its good economic foundation by taking additional measures to strengthen investor confidence.


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## Neo

*Repatriation of profit by foreign investors up 14.57 percent in fiscal year 2008​* 
KARACHI (August 30 2008): Repatriation of profit and dividend by foreign investors has rapidly increased and during the last fiscal year they transferred some 921 million dollars abroad, the State Bank of Pakistan said. Repatriation of profit and dividend by foreign investors registered a growth of 14.57 percent during last fiscal year.

After the current upsurge, the overall repatriation reached 921.4 million dollars during FY08, as compared to 804.2 million dollars in FY07, depicting an increase of 117.2 million dollars. The major share of repatriation has been witnessed in the power sector, which is the most favourite sector for foreign investors and they already have made millions of dollars investment in the power sector due to power shortage in the country.

The central bank's latest statistics show that investors repatriated some 169.6 million dollars profit from power sector, which went up by 25 percent or 33.4 million dollars in last fiscal year.

The financial sector is the second leading sector, wherefrom some 142.5 million dollars were sent aboard against some 116.1 million dollars in FY07, showing an increase of 26.4 million dollars in FY08. In addition, communication sector is on the third place with a repatriation amount of 96.8 million dollars in FY08, however it is lower than FY07, in which a amount of 152.5 million dollars was sent abroad.

Foreign investors have sent back 82.6 million dollars from oil and gas exploration sector, 51.7 million dollars from petroleum refining sector, 43 million dollars from tobacco and cigarette sector and some 41.1 million dollars from the pharmaceutical sector during FY08.

Repatriation by foreign investors has shown an increase of 59 percent to 804.2 million dollars during FY07 as compared to 504 million dollars sent abroad during FY06. The government has allowed 100 percent transfer of profit/dividend to foreign investors aimed at boosting foreign investment in the country. Foreign investors are enjoying government's investment friendly policies and consistently sending their earnings to abroad, analysts said.


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## Neo

*Ramazan Package: 5 to 10 percent reduction on 1300 items ​* 
ISLAMABAD: August 30, 2008: The government Saturday announced the Ramazan Package under which one thousand three hundred items will be available at five to ten percent reduced rates at Utility Stores throughout the country.

Announcing the package at a news conference in Islamabad, Minister for Finance Syed Naveed Qamar said it would be effective from Monday next.

He said special emphasis is being given on several essential items.

The Utility Stores Corporation would sell wheat flour at 15 rupee a kilogram; ghee 110 rupee a kilogram, sugar 30.50 rupee per kilo; pulse gram 47 rupee, white gram 63 rupee, basin 59 rupee and tea at 376 rupee per kilogram.

The minister said all utility stores would remain open even on holidays during the holy month to provide items of daily use to the people at reduced rates.

Replying to a question he said the special Ramzan package would cost 1.75 billion rupees to the national exchequer. This subsidy will be in addition to the subsidy being provided by the government through budgetary mechanizm on essential commodities.

To another question he said the network of the Utility Stores corporation has been expanded to 5500 outlets and two hundred more stores would be established in Ramzan.

He said mobile utility store service would be provided to areas not covered by the network especially in Balochistan and some far flung areas of Sindh.

Responding to a question the Finance Minister said strict action would be taken against hoarders and profiteers and monitoring teams would check markets with a view to curbing such tactics.

The Managing Director of the Corporation Brigadier Muhammad Hafeez (retired) told newsmen that sufficient stocks of essential items are available and there would not be shortage of these things.

He said steps have been taken to ensure quality of the products being sold from the outlets of the Corporation.


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## Neo

* Government urged to initiate wind power projects to avoid crisis ​* 
KARACHI (August 30 2008): Experts on Friday urged the government to immediately initiate the wind energy projects to avoid irresolvable energy crisis in the country and warned that window of opportunity is gradually closing with each passing day.

Addressing a two-day workshop on "Carbon Credit Potential in Wind Power Sector in Pakistan," being organised at a local hotel, speakers said that despite Pakistan is far behind in the acquisition of energy through windfalls than developed world, still it has an opportunity to avoid energy crisis.

They said that this technology is available at an affordable cost with easy installation process. Germany is getting 20,952 MW electricity, Spain 12,500 MW, US, 12,376 MW, India 7,093 MW and Denmark 3,136 MW from wind energy set-ups, they pointed out.

They said that it is a ripe moment for the government to invest in this sector otherwise the country may face difficulties in power acquisition in years to come. They said that in Sindh, a trend of developing coal plants for energy generation is also a positive step. However, it requires a huge land where wind blow should be for whole year to keep the turbine moving for ceaseless generation. They apprised the participants that in the post Kyoto Protocol, the acquisition of carbon for energy will be more expensive world-wide.

They said that not only carbon, but also the demand of such technologies are increasing with a passage of every day across the world and the sooner it is installed the lower will be its cost.

They said that in Pakistan there are some 700 villages having wind potential, however, a windless period can deteriorate the generation. They said that Kyoto Protocol enables the developing countries to receive the latest technology and finances from the developed world. Those spoke including Parvaiz Naim Regional Director for Kfw Bank Germany, Mihaly Kopyani Senior Infrastructure Specialist for World Bank, Matloob Khan National CDM Expert Unido Pakistan and Niroj Kumar Mohanty Managing Director Core CarbonX (Pvt) Ltd, besides the chief guest, Askari Taqi Sindh Minister for Environment and Alternative Energy.


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## Neo

*Introducing latest telecom technology: PTA to invite application for 3G spectrum auction ​* 
ISLAMABAD (August 29 2008): Pakistan is ready to auction 3G spectrum to introduce state-of-the-art telecom technology in the country, said Dr Muhammad Yaseen, chairman, Pakistan Telecommunication Authority (PTA). He was addressing the participants of the seminar on the future of mobile communication in Pakistan titled, "Has the clock struck 3G' organised by South Asia Forum in association with the Telenor and the Pakistan Telecommunication Authority here on Thursday.

South Asia Forum Chairman Javed Iqbal, Telenor CEO Jon Eddy Abdullah; Telecom Ministry of Information Technology and Telecom Member Noor-ud-Din Baqai and Next Generation Mobility Manager Director Aadil Rauf were also present on the occasion.

Dr Yaseen said the Pakistan Telecommunication Authority (PTA) has the spectrum earmarked, and all the groundwork is complete and would soon invite applications for 3G spectrum auction. He said the availability of the 3G spectrum would help the operators increase their capacity and revenues by deploying state-of-the-art HSPA technology.

Due to this addition users would enjoy high quality mobile broadband services enabling them to avail facilities of video telephony, high speed internet, video streaming, high quality mobile TV and a number of value-added services.

The Pakistan Telecommunication Authority (PTA) chief said the 3G technologies like HSDPA and HSPA have been widely adopted. There are over 220 HSDPA and HSPA operators in more than 90 countries with 280 million subscribers, he added.

Dr Yaseen also said that over 381 million are increasing at annual growth rate of 88 percent and these 3G users would grow more with its introduction in China, India, and Pakistan.

He said that China has recently lunched 3G services whereas other small countries in our region like Sri Lanka and Nepal have also launched 3G services while India has announced guidelines on 3G licensing and would soon be auctioning the 3G spectrum technology.

He said the Visionary Policies of the government that targeted liberalisation of the telecom sector has exhibited a growth rate of around 40 percent last year almost crossing 90 million mark adding around two million subscribers each month, he added.

He said that the government has taken such initiatives, which compelled the investors to invest liberally resulting spectacular rise of telecom industry, especially the mobile sector. Experts and analysts from Information Technology, Pakistan Telecom Authority, Nokia, Siemens Network and Warid Telecom Pakistan shared and discuss issues, suggesting solutions, sharing strategies and requesting policy support.

Telecom operators were of the view that the 3G auction should be carried out as soon as possible to provide broadband to the masses without delay any gap in the digital divide, he added.


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## Neo

*Agriculture sector share in GDP reduces to 20 percent ​* 
LAHORE (August 30 2008): The agriculture sector share in the GDP has been reduced from 38 to 20 percent because of persistent decline in per acre yield which is a matter of major concern for the present government. The Punjab Minister for Revenue and Relief, Haji Muhammad Ishaq revealed this while addressing the inauguration of two-day kitchen garden promotion campaign at the Lahore Chamber of Commerce and Industry (LCCI) here on Friday.

He expressed his concern over the communication gap between the agriculture researchers and the farmers due to which the farmers are not benefiting from the latest research in the agriculture sector. Haji Muhammad Ishaq said that agriculture sector being backbone of the economy of the country has a huge potential and keeping in view this sector's importance, the present government is spending all its resources for its promotion and the LCCI has taken a very right step at a right time that definitely help supplement government efforts aimed at providing relief to masses. He said that the government was spending a huge amount for the promotion of mechanised farming in the country. He said the kitchen garden is not simply a concept but it is a way of life that not only ensures financial benefits but also help address environmental concerns.

Speaking on the occasion, the LCCI president Muhammad Ali Mian said that Kitchen Garden Promotion Campaign has been launched to overcome the food shortage and to address the issue of prices of daily-use items which are going up like anything. In advanced world this concept is in vogue since ages but now in Pakistan it has started gaining ground. He said that kitchen gardening could either be a principal component of subsistence farming or a beginning of commercial agriculture or horticulture.

The LCCI president said that government would have to take concrete measures for the promotion of agriculture sector as the future is with agro-dollar and not with the petro-dollar. He said that Pakistan despite being an agro-based country and abundant resources is not performing the way it should. Citing the example of Thailand, he said that Thailand is not a Muslim country but its share in 200 billion dollar export of Halal meat is five billion dollars while Pakistan's share is negligible so we all should think over it that why non-Muslim countries are taking lead over Muslim countries in Halal meat export.

Mian said agriculture continues to be the single largest sector, a dominant driving force for growth and the main source of livelihood for 66 percent of the Pakistan's population. It accounts for 20.9 percent of the GDP and implies 43.4 percent of the total work force. But the sector is facing two major problems: firstly, our productions per acre are lower than many countries. For instance our per hectare production of wheat is only 2.5 tons as compared to 4.5 tons in India and 6.2 tons in Egypt. Our sugarcane production per hectare is 45.1 tons as compared to 65.2 tons of India and 90.9 tons of Egypt. Our potato production is 17.2 tons per hectare as compared to 20 tons of India and 23.8 of Egypt, he added.

He said that secondly, around 40 percent of our production is lost as post-harvest losses due to lack of preservation. Pakistan is fifth largest producer of milk in the world but are unfortunately preserving a little amount of this heritage due to lack of the use of biotechnologies and the cool chain systems. The use of biotechnology can not only considerably enhance our productivity but also avoid post-harvest losses. He said that the genetically improved varieties should be available in the market. Genetically improved varieties of livestock are also being developed by the Livestock and Dairy Development Departments.

Now we are increasingly trying to use biotechnology techniques in tissue culture and cutting of floriculture. As a result we are now in a position to export these flowers to the developed world. We need to use genetically modified varieties of flowers for value addition and to maximise our income from the floriculture, he added.

Senior vice president Mian Muzaffar Ali, vice president Shafqat Saeed Piracha and Chairperson LCCI Standing Committee on Kitchen Gardening Ms Nilopher Sikandar and former provincial minister Mumtaz Khan Manias also spoke on the occasion.


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## Neo

*Tampering with the stock market ​*
EDITORIAL (August 29 2008): Pakistan's economy is facing extraordinary challenges. High inflation and depreciation of currency value are not due just to the weakening of economic fundamentals. The prevailing negative sentiment is primarily due to political turmoil and a common perception that there is no focused approach to lead the country out of the existing chaos.

The KSE index has lost 43 percent since hitting a record high of 15,739.28 points on April 21, 2008, but so have other regional markets. While the KSE fall in rupee terms is as per the regional average, to a foreign investor, however, the fall is much more in dollar terms due to the depreciating Pakistani currency. As a result, there is a persistent selling off by overseas investors.

And, in net terms, the off-loading amounts to $396 million within the calendar year. On Thursday, the Board of Directors of Karachi Stock Exchange adopted an extraordinary measure of setting a floor under individual stock prices, freezing the index on Wednesday's closing level of 9,144. This means scrips cannot be traded below the price prevailing at the close on August 27th, 2008 until normal market forces resume operating.

It is claimed by KSE that this step is not just for stabilising the market but also to prevent the financial system from collapse as a result of a domino impact. There may be some weight in their reasoning. However, this stop-gap arrangement is primarily meant to protect second and third tier brokers from a huge financial loss.

The KSE Board had earlier, in the day, sent this proposal to the Securities and Exchange Commission of Pakistan and the government for approval. Failing to get a nod from the apex regulator, the KSE Board rightly used the enabling provisions in KSE regulations and said that all stakeholders, ie other bourses, government, SECP and the Mutual Fund industry were consulted prior to the decision.

What is the fall-out from the KSE action? To a foreign investor, the freeze would reinforce his fear that the country is moving towards capital controls as its current account deficit is reaching an unmanageable level. The imposition of 100 percent cash margin and hiking of import duties by 50 percent on the same day, as the KSE came into force, would further aggravate foreign investors' looming fears and could expedite enactment the $2 billion of hasten portfolio investment in the country.

Suspending trading for 24 or 48 hours to provide breathing space for settlement, would have been viewed as a temporary measure. The KSE action amounts to tampering with the market. A secondary issue in the freeze is that it encourages side deals, outside the exchange, on the kerb. It is permissible usually as the norm for large lots of a scrip. Liquid scrips can be sold at a discount (on Wednesday's value) of five to 15 percent on the kerb even in small lots.

Compliance requirements generally do not allow foreign funds to undertake such side deals. But one cannot completely rule out a desperate foreign seller doing so when KSE effectively has shut down the market on them. The primary objective of the foreign funds at this stage is to sell and price is of secondary importance to the overseas investor.

It is the shortage of liquidity which is hampering the buyers from purchasing scrips at very attractive values. Shortage of liquidity is primarily due to tight monetary conditions and not exclusively due to SBP's policy rate or high monetary ratios. In fact, SBP is likely to maintain its current stance until the end of the year.

Tight liquidity is primarily due to our inability to pay from our inward forex proceeds for the oil imports. The large trade deficit has forced us to utilise our forex reserves to pay for oil imports. As a result, around Rs 90 billion every month, is sucked away from the banking system, forcing SBP to conduct OMO auctions to pump liquidity on temporary basis into the system.

The first call on excess liquidity in the system is of the government for its budgetary needs. Next, the banks utilise their funds to lend to trade and industry. Bourses are a secondary market. Players on this market have parked their savings and the profits earned over the last few years in real estate in Dubai and the residual amount in land in Pakistan.

This money needs to come back to the exchange to provide it liquidity. This will only happen once the right economic conditions and political stability prevail in the country. Recall the capital flight, after the 1999 military coup, followed by the accountability drive. All that money came back after 9/11. It not only helped in building up the forex reserves but also enabled businesses to expand with equity investment and not through loans.

This was done once and can be done again! But this requires the right set of economic policies along with restoration of confidence and faith in the country's leadership in the business class. The leader must not surround himself with yes men. His team needs to reflect competence and not be formed on cronyism.


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## Neo

*Two weekly holidays approved to save energy ​* 
*Federal govt wants to consult Punjab before issuing notification​*
Sunday, August 31, 2008

ISLAMABAD: The federal cabinet has approved, in principle, to grant two weekly holidays but decided to withhold formal notification in this regard to consult the Punjab government before making it public, it is learnt reliably.

A situation similar to the decade of 90s is emerging as PPP-led government holds the central government while PML-N is on the driving seat in Punjab the biggest province. There is growing feeling within the bureaucracy that the federal government feels itself squeezed to Islamabad only where it requires consent of Punjab for taking decisions and in this case the granting of two weekly holidays.

Where is the writ of the federal government, a federal secretary said while quoting the decision taken in the last federal cabinet meeting in which two weekly holidays were approved in principle but the government preferred not to make it public before seeking approval of Punjab.

The sources said that when the Information Minister, Sherry Rehman, was going to address the press conference after the last cabinet meeting, she was barred to make this decision public as the government wanted to consult with Punjab on it before announcing it.

This correspondent made several attempts to contact the Federal Information Minister for seeking her comments but there was no reply from her mobile phone. Some reports are suggesting that the Punjab government has shown its reluctance for granting two weekly holidays but the federal government has not yet received any formal decision from PML (N) led government of the province.

The sources said that there was no harm in consulting Punjab but it should have been done before taking approval of the federal cabinet. Once the cabinet has approved two weekly holidays, there is no justification to put formal notification on hold, added the sources.

The government has approved two holidays in week owing to balance of payment difficulties in the wake of growing import bill. Will the Punjab government look after the Balance of Payment (BoP) difficulties, the sources questioned?

Pakistans foreign currency reserves are depleting rapidly and touched $9.129 billion on Friday, resulting into growing vulnerabilities of Islamabad for meeting its requirements on import bill after every passing day.

Although, the government has taken several steps to reduce its import bill in shape of imposing regulatory duty in the range of 15 to 50 per cent as well as imposing restriction of cash margin on opening up Letter of Credit (L/C), which would help to reduce the import bill in the range of over $1 billion during the current fiscal year.

The major factor of growing import bill is unprecedented surge in prices of POL products in the international market. The government has estimated that the oil import bill is set to surge over $14.5 billion in the current fiscal year.

The WAPDA, the sources said, has estimated that two weekly holidays could help save 850 MW to 1000 MW electricity with the closure of all government offices from 9 am to 5 pm on Saturday.

The government is considering various options to ensure conservation of energy resources amid soaring oil prices and electricity shortages.The sources said that the corporate sector was already doing five-day work and other private offices did not contribute a lot in terms of consuming the major chunk of the electricity by working on Saturday.

When the source was asked about the governments plan to import one million energy bulbs for saving electricity, they said that some people were estimating conservation of the electricity in the range of 500-600 MW but according to WAPDA the energy saver bulbs can help save 225 MW.

The energy saving of 225 MW is great contribution. Installing new power generation for up to the same level requires investment of $500 million, the official said.According to WAPDA estimates, the sources said, the government could save 600 MW to 800 MW electricity by ensuring that all shops and bazaars close down by 8 pm every day. 

In the wake of lingering energy crisis, Pakistan can save up to $3 billion in its annual oil import bill by implementing an effective energy conservation plan. According to the official estimates prepared by the ministries concerned, the industrial, agriculture, transportation sectors, residential areas etc are wasting energy worth $3 billion per annum.


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## Neo

*Foreign investment surges 40pc in July ​* 
Sunday, August 31, 2008

KARACHI: Net inflow of foreign investment in the country augmented by 40 per cent during July 2008 as compared to the same period last year.

According to latest figures of the State Bank of Pakistan (SBP), total foreign investment in the country stood at $220.5 million during the first month of fiscal year 2008-09 compared to $157.5 million during July 2007. The quantum of Foreign Direct Investment witnessed a substantial increase of 76.1 per cent to $340.7 million during July 2008 as compared to $193.5 million in the same period of fiscal year 2007-08.

It is pertinent to note that during fiscal year 2007-08, total foreign investment declined to $5.193 billion which was recorded at $8.428 billion in financial year 2006-07. However, during last fiscal year the net inflow of FDI slightly improved to $5.153 billion as compared to $5.139 billion a year back.

In the first month of current fiscal year 2008-09 the flight in portfolio investment continued which has been declining since third quarter of fiscal year 2007-08. In July 2008 the foreign portfolio investment declined by 970.1 per cent and finally stood at minus $119.2 million that was recorded at $13.7 million in July 2007.

In fiscal 2007-08 portfolio investment shed to $19.3 million against $1.821 billion in year 2006-07. In July FY09, total foreign investment from developed countries including Western Europe, European Union, Luxembourg, Denmark, France, Netherlands, Sweden, UK, other Western Europe, Norway, Switzerland, Northern America, Canada, USA, Australia, Japan and unspecified developed countries dropped by 101.4 per cent to minus $2.4 million.

In the meantime, July FY09 foreign investment from developing economies including Caribbean Islands, Cayman Island, Bahamas, other Caribbean countries, Libya, Egypt, Mauritius, South Africa, Oman, Iran, Kuwait, Bahrain, Qatar, Saudi Arabia, Turkey, UAE, Bangladesh, China, Hong Kong, Malaysia, Singapore, India, South Korea, and unspecified developing counties increased by 700.4 per cent to $222.9 million against $27.8 million in July FY08.

According to SBP figures during first month of current fiscal year, FDI investment from developing economies recorded $220.9 million against $58.9 million in corresponding period of fiscal year 2007-08. The highest growth in inflow of foreign investment was recorded from Asia countries at $213 million.

The breakup showed that in July 2008 out of total foreign private direct investment, $2.7 million landed in food sector, $18.7 million in pertro chemical group, $4.2 million in chemicals, $6.3 million in petroleum refining, $37.1 million in oil & gas explorations, $3 million in pharmaceutical & OTC products, $4.4 million in cement, $6.4 million transport equipment (automobiles), $8.7 in power sectors, $3.6 million in construction, $11.6 million in trade, $159.6 million in communications, of which $147.7 million was attracted by telecommunication sector alone. In financial sector $43.4 million came in, while sectors like social and personal services attracted only $0.3 million and $9.5 million respectively.


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## Neo

*Regulatory crutches prevent KSE from falling below 9,000 level ​* 
Sunday, August 31, 2008

KARACHI: The break up of PPP and PML-N coalition caused equity values to ebb to 26-month low on Karachi bourse during the week ended August 29. 

This massive erosion of shares value convinced market representatives to cap the downward movement of the Index to Wednesday August 27 closing level. KSE 100-share Index fell 789 points or 7.86 per cent on weekly basis and concluded at 9,208 points on weekend due to panic selling.

The free float market capitalisation based 30-Index dropped 1,157 points or 10.19 per cent and finished at 10,198 points on week-on-week basis. The friction between PPP and PML-N over the reinstatement of deposed judges and then the end of this coalition on Monday when the latter decided to sit on opposition benches played havoc on the bourse.

The market had barely come out of the chaos caused due to recent tension between president and parliament and dismal economic numbers when the split in coalition sent the bourse in a nosedive as the hope of economic revival became bleak.

Moreover, it was the rollover week for August that forced investors and brokers to sell their holdings to clear their leveraged accounts. This unbearable selling pressure pushed market to new low of 26-month. The benchmark briefly fell bellow the 9,000 points level in middle of the week.

The shortage of hard cash in hands and inability of investors and brokers to pay mark-to-market and margins added pressure on selling counters furthermore.Therefore, none of the favourite sectors closed positive and majority of the actives feel deep in red. Prominent among those were the banking, energy, telecom, cement and fertilizer sectors.

Some analysts were of the opinion that market kept falling on the inability of government to inject funds from Equity Market Opportunity Fund (EMOF) and fund managing companies waiting for buying opportunity on further lower levels.

They complained that EMOF, which at its outset was introduced as a market support fund with a minimum size of Rs20 billion funds was reportedly short of Rs15 billion from its introduced volume.

In the backdrop of continuous heavy downfall in market since April, the Board of Directors of Karachi Stocks Exchange (KSE) fixed a floor on the bourse. They set the Wednesdays closing share price as the minimum maintainable level in the session to come till further order.

The directors decision stopped further erosion of share values losses in an artificial way, but failed to invite aggressive recovery evident with total 63.33 points gain in the last two sessions of Thursday and Friday.

Foreign investors withdrew another $12.8 million from local bourse. However, they were found injecting $3.5 million on Friday (adjusted in total outflow of this week).

Negative sentiments turned average turnover to 69.6 million shares against 142 million shares of last week. Accordingly, the overall market capitalisation fell below Rs3 trillion to Rs2.881 trillion with a decline of Rs234.6 billion funds this week.

CFS investment stood at 18.4 billion, down 13 per cent on weekly basis. However, CFS rate stood 16.6 per cent versus 14.5 per cent previously. Analysts are of the view that the political stability and economic revival can only help reset market back on rails. They think the election for presidential post on September six should bring calm on political front and invite government full attention towards fixing economy in crisis.


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## Neo

*Prudent exploitation of resources ​* 
*Trade deficit could be reduced by $12 billion​*
Sunday, August 31, 2008

LAHORE: Pakistan has an export surplus of over $2.5 billion in textiles and the country could generate another $5 billion surplus through agriculture within a year through prudent government facilitation.

The News found that Pakistan could reduce its trade deficit by $10-12 billion within a year if the economic planners make a sincere effort in exploiting available resources in the country. The notion that Pakistan does not have trade surplus is wrong. Pakistan has export surplus in textiles, carpets, leather and sports goods, but the exports in most of these sectors have declined in terms of quantity.

This in other words means that the production capacity in these sectors has not been utilised fully due to a decline in exports. The decline occurred as numerous bottlenecks faced by exporters were not addressed by the government.

With the devaluation of the rupee, problems relating to competitiveness have been resolved but the exports still need government facilitation for getting market access. In quantity terms, exports of textile goods from Pakistan declined by 20 per cent in 2007-08. The decline in value though, was only 3 per cent. Had the exports in quantity remained at the 2006-07 level, textiles would have fetched $2.2 billion more last year. Traditionally, textile exports increase at an average of 5-7 per cent at least in quantity terms.

Pakistan should fetch additional $2.5 billion from this sector in the current year, provided the government pays attention to the genuine problems faced by exporters. Sustained supply of gas and electricity is also one issue that needs government attention. The industry should be given priority in this regard. Unjustified high interest rates are yet another issue. Even the IMF representative has stated that a two per cent decline in interest rates in Pakistan would not impact inflation much. Lastly, the government needs to spell out its research and development grant to the sector clearly instead of prolonging the issue.

Agriculture is another sector with huge unexploited potential. A country that is currently footing $5 billion bill on food imports could in fact reduce it to $1.5 billion, plus export agricultural products of around $5 billion in one year if the government pays proper attention to this sector. The legal system relating to agricultural marketing is in favor of trade and industry that marginalizes the farmers. This is the reason that high commodity rates have not benefited farmers much. Productivity of most of the major crops of Pakistani farmers is much below the global best. In fact the productivity difference between two adjacent farms having same soil is very high. If one farm produces 60 maunds of wheat per acre the adjacent farm produces only 25 maunds.

This is because the provincial agriculture extension departments are almost non-functional. They are sitting on knowledge and information that they do not pass on to the farmers in time. In fact majority of the farmers have never come in contact with the officials of agricultural extension department through out their life. Farmers that use the right inputs and time their irrigation according to crops need get better yield while the next door farmer might use high cost inputs and more water at inappropriate time and loses productivity.

Creating awareness about proper use of inputs and timely spraying of pesticides and irrigation is the job of the extension department. Technology required to ensure water conservation, introduction of biotech seeds could in fact boost the agricultural production further.

Pakistan is currently facing a trade deficit of over $20 billion per year, which is likely to increase to 22-24 billion this fiscal year if the government continues to ignore the economy. The exploitation of agricultural potential would doubly improve the trade deficit. First higher agricultural productivity would reduce food imports and secondly it would boost exports. The utilisation of industrial export surplus coupled with agricultural exports is a doable option that would ease pressure on the economy and rupees value in shortest time.


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## Neo

*ADB to release $500m in Sept ​* 
Sunday, August 31, 2008

ISLAMABAD: The Asian Development Bank (ADB) is due to release $500 million to Pakistan next month as part of a $1.3 billion loan programme that can be used for budgetary support, a finance ministry official said on Saturday.

Its a financial sector reform package which will also help us as budgetary support, said the senior official who declined to be identified. We are aiming to get the first tranche of $500 million before September 30 and its a soft loan programme, he said but did not give more details.

Another government official said last month the ADB had negotiated a credit facility of $810 million with Pakistan for power projects and payments would begin in September. Fresh foreign inflows will help boost the countrys dwindling foreign exchange reserves, which the central bank said had fallen to $9.38 billion in the week ended on Aug 23, from $9.57 billion in the previous week.

Forex reserves hit a record high of $16.5 billion in October last year but have since been depleted by high payments for oil imports and foreign investors withdrawing money because of the countrys political uncertainty.


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## Neo

*Govt to prepare macro-economic framework​* 
Sunday, August 31, 2008

ISLAMABAD: The PPP-led government will prepare a macro-economic framework in a bid to meet the conditions of multilateral creditors like the World Bank and the Asian Development Bank and to pave the way for obtaining $10 billion. 

The macro-economic framework will envisage GDP growth rate, fiscal deficit, current account deficit and other major targets for economy in the next five years. The government will also give a clear strategy for achieving the macro-economic targets during its tenure from 2008-2012, an official told The News on Saturday. 

After the preparation of the macro-economic framework, the country will be able to get over $2 billion per annum from the WB and ADB, totalling $10 billion over the next five years. During recent visits of World Banks Vice President for South Asian Region Isabel M Guerrero and Asian Development Banks Director General Juan Miranda, Pakistans economic managers agreed to work out a macro-economic framework as soon as possible in order to give a clear message to the donors that the economy was the top priority of the PPP-led government. 

During official meetings with the countrys economic managers, the WB vice president asked Islamabad to bring its house in order by tackling major economic issues. Attention should be paid to economy and only economy, she said and added that Pakistan government had already wasted five critical months through inaction and indecisiveness. She also conveyed to the economic managers that there was no communications strategy devised by the government to address concerns of local and international investors. 

Even profit-making companies go into losses if the entire management pays no attention to the working of the company, she cited an example during the meetings and said the government had taken some bold and tough steps but it remained unable to convey effectively to its targeted audience. 

Going forward, the WBs vice president said there was a need to put in place a credible roadmap and if the banks assistance is required, it would give all-out support to Islamabad in that connection. 

She assured that if the country would devise a credible programme for the medium to long- term period then the bank would extend its financial support over the next three to five years. The WB also asked Pakistan to accelerate its stalled privatization programme in order to lure investments, she added. 

We are now working on preparing a macro-economic framework, which will be in place very soon, an official from the Finance Ministry said when this scribe asked him in this regard on Saturday. 

The government is taking practical measures to deal with the current economic situation, and ADB stands ready to support its efforts, said Miranda after the meeting with Prime Minister Yousuf Raza Gilani, Finance Minister Naveed Qamar and State Bank Governor Shamshad Akhtar here.

In a statement issued by the ADB here on Saturday, it noted the damage caused by unprecedented international fuel and food prices.Miranda said: The government has defined and is executing a credible action plan to deal with these external factors. It has taken actions to contain spending, it has raised interest rates, put in place measures to manage and shore up foreign reserves, and drastically cut down on borrowing from the central bank. 

Pakistan has also put together one of the regions largest social safety net programmes, necessary to cushion the poorest against these external shocks. In Pakistan, ADB supports the development of infrastructure, public utilities and economic reforms. 

As a major development partner, we will continue to work closely with the authorities to bring about economic transformation, prosperity and growth. We have full confidence in the governments ability to deal with current economic challenges. It will succeed, said ADB DG. MH


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## Neo

*Pakistan, Iran agree on steps to facilitate trade ​* 
Sunday, August 31, 2008

ISLAMABAD: Pakistan and Iran have agreed on a number of steps for the business community to facilitate trade between the two neighbouring countries, said an official announcement on Saturday.

Steps for the businessmen include multiple visas, exemption from medical tests, exemption from freight amount, insurance policy for vehicles, abolition of attestation of phyto-sanitary certificate and National Logistic Corps border terminal at Taftan, said the official release.

Pak-Iran joint committee on road transportation in its fifth meeting, held on August 5-7 at Quetta, hoped that all these steps would help reduce the cost of doing business and also curtail non-tariff barriers in the way of trade between the two sides.

It was agreed in the meeting that all the Iranian consulates and embassies will grant one year multiple visas, with each stay for up to 2 months, to genuine businessmen and Iran also promised to exempt Pakistani businessmen from under-going medical tests at the time of submitting applications for business visas. Iran has also agreed that no amount under the head of freight will be charged from Pakistani transporters. However, the Iranian government can charge a 1 per cent surcharge from Iranian importers at the time of collection of import duty and taxes.

As previously practiced, the Iranian government will levy one per cent surcharge of the value of goods or 10 per cent of the freight amount, if the imported goods are transported in foreign vehicles/conveyance. Pakistani transporters were paying Rs5000 ie 10 per cent of the Quetta-Zahidan freight amount, thus placing them at a disadvantage, vis--vis Iranian transporters.

Iran also agreed that Pakistani transporters would be at liberty to procure third party insurance for a longer period, ranging from 15 days to one year according to their requirement, which will minimise their cost.

During the meeting it was emphasised that the Iranian custom authorities had agreed earlier that they will accept all documents issued by Pakistani authorities and no further attestation will be required.

On the abolition of attestation of the phyto-sanitary certificate, Iran agreed to investigate the issue and come up with a positive response within one month. Pakistan was of the view that the attestation of phyto-sanitary should be done, as it is adding to the cost of business and acting as a non-tariff barrier.

The Iranian Consulate at Quetta charges Pakistani exporters Rs8,000 for the attestation of the phyto-sanitary certificate, in respect of each consignment.

The representative of the NLC informed the meeting that they have acquired land at Taftan and will begin working on the parking and other facilities along with the office building within 8 months.

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## Neo

*FDI inflows up by 76pc, telecom gets lion share​*
KARACHI, Aug 30: The foreign direct investment (FDI) inflows recorded an increase of 76 per cent at $340 million in the first month (July) of the current fiscal year over the corresponding month last year.

The State Bank of Pakistan on Saturday reported that the telecommunication sector proved to be the most popular sector for foreign investors as it received the lion share of $147.7 million in the month under review as against the $27.2 million in the same month last year.

The country had attracted highest foreign investment of $1.626 billion in the communication sector in 2007-08 while the telecom alone pocketed $1.440 billion of the total.

Despite imposition of duty on mobile phones in the current budget its import has not shown any decline.

A senior analyst predicts that the telecommunication will receive much higher foreign investment this year as the government wants to divest its stakes in the Pakistan Telecommunication Company Limited (PTCL). He said the government still possessed about 60 per cent of the company.

The financial sector, which attracted $1.608 billion in 2007-08, received $43.4 million in July 2008 against $28 million the same month last year.

Analysts said most of the inflows of foreign investment in the banking sector were because of the merger and acquisitions. NIB Bank and Barclays have entered the country with hope to find the potential for their growth.

They said more investment was expected as the banks would go for expansion. Bankers said more local banks could be sold out to foreign buyers which would boost the foreign investment in the financial sector.

The government is likely to launch Global Depository Receipts of UBL and HBL in the international market to fetch badly-needed foreign exchange.

Oil and gas exploration sector attracted $37 million in FDI in July 2008. It fetched $635 million in foreign direct investment in 2007-08.

The government has significantly increased the wellhead prices of oil refineries and gas fields which may woo more foreign investment.

The beginning is encouraging but the inflow of FDI depends on the policies of the government which currently busy at the political front paying little attention to the economy, said a senior analyst.


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## Neo

*Govt may set wheat output target at 23.5m tonnes​*
** Shortage of 0.5 million tonnes wheat seeds, 27 percent MAF water in the coming Rabi season​*
ISLAMABAD: The government is likely to set a wheat production target of 23.5 million tonnes despite a shortage of certified wheat seeds and about 27 percent million acre feet (MAF) water for the coming Rabi season, the Task Force on Food Security said in a meeting held on Saturday.

The task force was of the view that attractive wheat support prices would play a decisive role in achieving the wheat production target and agreed that it would be fixed before the sowing season.

The Ministry of Food, Agriculture and Livestock (MINFAL) additional secretary Shahid Hussain Raja informed the meeting that all arrangements have been finalised in regard to the wheat support price and expressed hope that it would be announced by September 15. The meeting was chaired by the task forces chairman former finance minister Sartaj Aziz and attended by high officials of MINFAL, representatives of four provinces, IRSA, Federal Seed Certification Department, Planning Commission on Food and Agriculture Member Dr Tusneem, Dr Kausar Abdullah and many others. 

Seeds: The meeting identified the issue of non-availability of certified seeds of wheat for the coming Rabi season 2008-09. The meeting was informed that 50 percent wheat seeds (0.5 million tonnes) were available but the country needed one million tonnes for the whole Rabi season.

Out of the total seed requirement in the country, the meeting was informed there was a need for about 0.2 million tonnes of certified seeds. The majority of the growers were using their own produce as seed. These growers were asked to consult the government certified seed institutions for learning about the proper quality of seeds. The meeting was informed that proper legislation was required for encouraging plant breeding, which would also attract for investors in certified seed production process. An official who attended the meeting told Daily Times that the meeting also discussed fertilizer availability in detail. It was told during the meeting that the total availability of fertilizer for the coming Rabi season was about one million tonnes while the requirement was 0.85 million tonnes.

However, due to higher demand for fertilizer during Rabi season, the country needed to immediately import about 0.6 million ton of the commodity and its release should be made possible in the early part of November, it was told during the meeting. 

The meeting was informed that despite urea shortage in the months of March and April this year, the import of the commodity could not be materialised soon enough and fertilizers prices increased considerably in the international market, creating a panic locally as well.

However, the MINFAL additional secretary said the record usage of urea this year for rice (paddy) crops has created a shortage of the commodity in the market. 

Water: The IRSA official informed the meeting that during the year 2007-08, about 23 percent MAF water shortage was recorded and about 27 percent MAF shortage was expected for the coming Rabi season. The water shortage was due to climate change, cleaning of dams and many other factors. 

The MINFAL additional secretary urged the participants to cover 8.5 million hectares are for wheat crop. The government would announce an attractive support price of wheat that would induce farmers to increase output. He also stressed the need for adopting best agriculture practices through involving growers in various sowing processes.

The growers would be informed that excess use of fertilizer is harmful for wheat crops and sufficient quantity must be applied.

Abudullah Kausar informed the participants that if the wheat support price mechanism were improved, then there would be no need for provision of any sort of subsidy either on wheat, fertilizer or other inputs.

Sartaj Aziz told the participants that it was the policy of the meeting to determine some principles and mechanism for setting the wheat support price and the task would be completed after making all the essential calculations keeping in view the higher cost inputs. 

Other speakers said that expansion in utility stores corporation at each union council level would help the government to ensure food security in the country. They suggested that MINFAL should be empowered to monitor and check the availability of food items and took appropriate steps in this regard.


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## Neo

*Balochistan revenue​*
The total revenues of the Balochistan government stood at Rs 51.552 billion and the total expenditures of the province remained at Rs 64.993 billion during 2007-08. The provincial government received a sum of Rs 30.008 billion as NFC Award share from the federal government and the provincial government spent Rs 22.045 billion on its development programme. The overall fiscal balance of the province remained at minus Rs 13.387 billion. *


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## Neo

*Purchase of urea: Saudi Arabia requested to give $300-400 million credit facility ​* 
ISLAMABAD (August 31 2008): Pakistan has requested Saudi Arabia to provide $300-400 million credit facility for purchasing urea, well-placed sources told Business Recorder here on Saturday. This is in addition to the request made by the government of Pakistan for a $5.9 billion oil facility.

Last month, the Saudi authorities provided a credit facility of $125 million for fertiliser. This amount is over and above the credit facility of $133 million that was provided for the same purpose one and a half month ago. Thus far the Saudis have extended $258 million for purchase of urea.

Ziaur Rehman, Secretary, Ministry of Food, Agriculture and Livestock (Minfal), has left for Saudi Arabia to negotiate with the concerned authorities the additional credit facility of $300-400 million, sources said. They contend that Pakistan government is seriously considering requesting Kuwait for a similar facility to purchase fertiliser.

Sources said that almost 85 percent of our domestic requirement of urea is met through local production, but due to increase in the cultivation of rice which requires plenty of urea, a shortage of the commodity in the local market has erupted. "The international price of rice is on the rise which accounts for a corresponding rise in the area under rice cultivation," sources added.

The price of urea in the international market is $800 per ton while in Pakistan growers are purchasing it at $200 per tons. This huge difference has created shortage of the commodity in the market.

Well-placed sources say that fertiliser is also being hoarded and smuggled. They maintained that the total stocks of DAP available with the government stands at 0.475 tons. They said that in local market, the price of urea has increased. "After an increase in gas prices, urea manufacturers have increased the price of the commodity from Rs 625-Rs 700 per 50-kg bag."

The government is also importing 350,000 tons urea for the ongoing Kharif season to meet the shortfall and the TCP has placed tenders for the import of the commodity. They said that the Ministry of Food is hopeful that 20,000 tons urea would be imported from Saudi Arabia in next 2-3 days. The total consumption of fertilisers in the local market is 7 million tons, of which 5.4 million tons is urea fertiliser while the remaining 1.6 million tons is phosphorous and potassic fertilisers.


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## Neo

*Social sector PSDP will not be slashed ​* 
ISLAMABAD (August 31 2008): The government will not slash Public Sector Development Programme (PSDP) 2008-09 pertaining to health and education sectors, whose allocation is already meagre as compared to other countries of the region keeping in view the size of population growing at the rate of 1.9 percent per annum.

To cater for the need of education and health sectors it is trying its level best to pump in maximum resources, depending on GDP growth, and would not resort to any cuts. This was stated by Planning Commission Deputy Chairman Salman Faruqui here on Saturday at a two-day meeting with concerned ministries to prioritise projects in the PSDP so that they can be adjusted to respond to the changing economic resource situation.

The amount of revised estimates of 2007-08 for education sector was Rs 4.38 billion which has been increased to Rs 6.27 billion in the current year's PSDP. Similar is the case with health where the revised estimate of 2007-08 was Rs 13.85 billion whereas it has gone up to Rs 19.010 billion in 2008-09 PSDP.

Faruqui, however, added that measures would be put in place to ensure that all funds are used effectively. In addition, funds for income support for the poor (Shaheed Benazir Card Scheme) would not only be fully protected but may be enhanced, he said.

The meeting also decided to transfer several projects to the private investment mode through joint ventures, outsourcing and franchising in order to keep up the momentum of the development projects.

He said that the flow of funds to priority projects would be resumed in an orderly manner so that the development effort is not impaired. In consultations with the Ministry of Finance and the concerned Ministry, the Planning Commission will authorise funds for projects in the first week of each quarter. In this context procedures have been agreed upon between the Ministry of Finance and Planning Commission, he added.

The announcement by the Deputy Chairman at the end of detailed consultations with line ministries ended the uncertainty which shrouded the implementation of the PSDP this year. The meeting was attended by Secretaries of Finance, Defence, Interior, Health, Food and Agriculture, Industries and Production and Population Welfare. In addition, members of the Planning Commission, Chief Economist and Chiefs of Sections also attended the meeting.


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## Neo

*FATA development schemes require Rs 28 billion ​* 
PESHAWAR (August 31 2008): The ongoing development schemes in FATA require almost Rs 28 billion and special efforts to arrange a big chunk of resources to complete them. This was stated in a meeting presiding over by NWFP Governor Owais Ahmad Ghani to review FATA annual development programme 2007-08 here at the Governor House on Saturday.

The meeting was attended by Additional Chief Secretary, FATA Habibullah Khan, Secretary to Governor Arbab Muhammad Arif, all administrative secretaries of FATA Secretariat, Regional Co-ordination Officers of Peshawar, Kohat and Bannu, Political Agents of tribal Agencies and District Co-ordination Officers responsible to govern the Frontier Regions and Additional Political Agents and Assistant political Agents of Frontier Regions.

The meeting was informed that out of total amount of Rs 6122 million, released under the annual development programme for the year 2007-08, Rs 6107 million was utilised on 1076 schemes, including 218 new ones, which reflected utilisation of 97 percent.

Out of the total amount, Rs 700 million was allocated for projects suggested by FATA Development Authority. Governor Ghani said that socio-economic uplift of FATA was the most important aspect of the government's strategies not only to resolve the FATA related issues and problems but also to ensure a prosperous future for the tribesmen on long term basis.

Appreciating the performance of the line departments, the Governor also referred to the newly created offices of Additional Political Agents in each tribal Agency and said that they should not only efficiently and regularly monitor the pace of work on the ongoing development projects but should also submit monthly progress reports to the quarters concerned.

The Governor also appreciated the services being rendered by FATA Monitoring Cell. He said, "Looking at the prevailing state of requirements, especially the level of interest of the respective people towards their future development, we have to do a lot to ensure their rapid socio-economic well being". To make this possible, he added, the government was sparing no effort to provide sufficient financial resources.

Referring to the working of Tesco, the Governor desired to have a detailed briefing on its activities in FATA shortly. "We have to look into the affairs of this organisation of vital importance with some more details not only to ensure proper implementation on development projects but also to make its working result oriented", he said. He also desired to have a project-wise review of the electrification development plans in FATA.


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## Neo

*Pakistan's debt is the riskiest in world ​*Bloomberg
Published: August 30, 2008, 23:47

London: Pakistan government debt is the world's riskiest as political and economic turmoil threatens the state's ability to repay lenders, according to traders of credit-default swaps.

The 'Chart of the Day' shows how the cost of default protection on Pakistan government bonds has overtaken Argentina's to be the most expensive after a political crisis led to the ouster of President Pervez Musharraf on August 18 and a breakup of the coalition government.

*Default risk*

"Default is a very real risk,'' said Sayem Ali, an economist at Standard Chartered in Karachi. 

"Credit-default swap prices send an ominous signal that there is no interest or confidence in our economy or government.''

Contracts on Pakistan bonds increased 255 basis points last week to a record 950, according to CMA Datavision prices at 11am in London. 

The cost of credit-default swaps soared from 655 basis points at the start of the month. Credit-default swaps on Argentina fell one basis point to 788 on Saturday. 

The contracts are trading at "distressed levels suggestive of a near-term credit event," according to a Royal Bank of Scotland Group report on August 26.

Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements. 

An increase indicates a deterioration in the perception of credit quality; a decline, the opposite. A basis point on a contract protecting $10 million of debt from default for five years is equivalent to $1,000 a year.


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## Neo

*Power prices in Pak to go up by 31 pc ​*
Islamabad, Aug 31 : last evening reportedly okayed the decision to increase power tariffs by 31 percent, giving rest to the fears of the common man (to some extent) that the power prices might shoot up by 50-60 percent.

This is said to be an unprecedented hike in power prices in the history of Pakistan.

The notification for the rise in power rates is expected to take place in a day or two. Earlier, it notification was to be issued on Friday.

According to The News, the PM modified the decision of the National Electric Power Regulatory Authority (NEPRA) to increase the power tariff by 50-60 per cent, and allowed the prices to go up by 31 percent only.

After a detailed review of the determination by NEPRA, the prime minister, in consultation with Finance Minister Syed Naveed Qamar and Minister for Water and Power Raja Pervaiz Ashraf, allowed a 31 per cent increase in power tariff, the paper quoted an official as saying on the condition of anonymity.

He added: It is for the first time in the recent history of the country that power tariff is being increased by 31 per cent.

The official disclosed that after the notification of the new tariff, unlike the past practice, a consumer would pay the price of electricity in accordance with the rate of the slab in which his power consumption would fall.

He said that if the consumption of power by a consumer fell in the third slab, he would be charged for the whole consumption at the rate of the third slab and would not be allowed to benefit from rates of lower slabs. There will be no increase in power tariff for consumers who consume only 50 units but those who consume more than 50 units will now have to pay huge bills," he added.

The official said that currently consumers were charged Rs 3.08 per unit for first 100 units, Rs 4 per unit for next 200 units and Rs 6.53 per unit above 300 units. But, after the notification of the new tariff and formula, a consumer who would consume more than 50 units of power would be charged the rate of the last slab for the whole consumption. (ANI)


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## Neo

*Country not facing default: Qamar​*
ISLAMABAD: Federal Minister for Finance and Revenue Syed Naveed Qamar said on Saturday that Pakistan is not facing any default-like situation and those involved in spreading such rumours could only be enemies of the country. 

Talking to reporters after the announcement of the Ramazan Package at the Ministry of Finance, Qamar said the country facing a default is out of the question, and our economy is undergoing a consolidation phase.

The measures put in place by the government would help provide solid base to the economy to grow at a much faster pace in the years to come, he added.

The minister said the International Monetary Fund (IMF) Executive Board in its next meeting would be issue a Letter of Comfort to Pakistan that would help pave the way for release of funding from the Asian Development Bank (ADB) and the World Bank (WB). 

He said some two months ago, Securities and Exchange Commission of Pakistan Chairman Razi-ur-Rehman Khan had submitted his resignation, however, he has been asked to continue his assignment till a suitable person is the available for this important position.

WB: Replying to a question on his recent meeting with the WB South Asia Region Vice-President, the minister said the WB side has not asked for any new measures as we are already putting each and every effort in place to consolidate the economy in the minimum time frame.

Measures such as rationalisation of oil, gas, electricity prices, cut in non-development expenditures, phasing out of subsidies and shifting of worth Rs 100 billion projects to public-private partnership are already in place, he said.

Qamar said no request has been put forward for funding for the Bhasha Dam, however, in near future this request would be placed before the WB authorities.

Due related issues: The minister also informed that required funds from the open market have been arranged to resolve the circular debt issue and on Monday (tomorrow), a meeting has been convened to settle all the dues-related issues of HUBCO, PSO and PEPCO. 

No reduction: The minister ruled out the possibility of reduction in oil prices despite a decline in the prices in the international market and added that government was still paying Rs 14 per litre subsidy on high-speed diesel (HSD) and its consumption was four times higher as compared to petrol consumption.

Responding to a questing about levying the petroleum development levy over Rs 20 per litre on petrol, he said that government was adjusting the collection of PDL to cross subsidise diesel. sajid chaudhry


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## Neo

*Rs 12 billion 'textile package' approved: ministry had demanded Rs 40 billion ​* 
ISLAMABAD (September 01 2008): The government has approved a package of Rs 12 billion for the textile and garments sectors instead of Rs 40 billion as demanded by the Ministry of Textile Industry, official sources told Business Recorder.

Approval of this package is complete negation of the 2008-09 budget as no subsidy had been envisaged for the textile sector. "We have approved a total package of Rs 12 billion as research and development (R&D) support for the textile and garment sectors. Now it is the responsibility of the Textile Ministry, in consultation with the stakeholders, to calculate percentage of R&D," said one official of Finance Ministry.

The rupee has devalued by 22 percent in one year's time, the ultimate advantage of which has gone to the exporters. Why are they talking of impact of rupee devaluation on their financial health?" sources asked.

Textile Ministry, in its proposal had demand of the State Bank of Pakistan (SBP) to condone delay in filling claims for the first six months, and allow reimbursement of 3 percent interest to textile beneficiaries (spinning) with the date extension beyond June 30, 2008, for which expenditure is estimated at Rs 570 million. It had been proposed that this facility should be extended till June 30, 2009.

Other proposals submitted by the ministry were as under: 

a) Disbursement of R&D support to textile and clothing exporters for shipments made up to June 30, 2008 covering claims filed within 90 days thereafter.

b) R&D support be converted into 'drawback', and extended for one year to units having at least in-house cutting and stitching facilities. Approximate expenditure on the scheme during 2008-09 had been calculated at Rs 20 billion.

c) Investment Support Fund(ISF) be introduced, under which 5 percent interest on loans obtained for textile machinery and equipment be reimbursed, effective from July 1, 2007, for five years by the government. Also tax credit facility at the rate of 20 percent be given on investment under ISF. d) Two years moratorium on principal and interest payment loans be allowed, for which SBP should direct the commercial banks to facilitate.

Sources said all these proposals had been placed before the Economic Co-ordination Committee (ECC) of the Cabinet in its last meeting, which not only expressed displeasure over the performance of the textile sector but also decided that the package should be discussed first by the EMC.


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## Neo

*Government claims on FDI rise not supported by facts ​* 
ISLAMABAD (September 01 2008): The tall claims of the government that foreign direct investment (FDI) had increased by 76.1 percent during July 2008 over the same month of last year is not supported by facts and figures as inflow from two major contributors ie USA and UK had actually decreased during this period.

The government claimed that FDI from USA and UK had increased by 15.9 percent and 6.8 percent, respectively, during July 2008, over the same period of last year.

But a survey conducted by Business Recorder showed on Saturday that the FDI has actually declined from both these countries during the period under review. The government claimed that the second largest contributor of FDI was US in July 2008, but the FDI by the US actually declined in July 2008 from $61.9 million in July 2007 to $54.2 million in July 2008. To cite this decline as an increase is as much of manipulating statistics as the present government has accused the Shaukat Aziz government.

The FDI from UK declined from $28.3 million in July 2007 to $23.3 million in July 2008. Moreover, the main reason attributed to the 76 percent increase claim in FDI during July 2008 over the same period of last year is $214.5 million investment by the Singapore Port Authority (SPA). This was touted as indicator of the PPP-led government economic credential, but the investigation/data analysis showed that $214.5 million FDI inflow was a natural outcome of a deal between SPA and the Gwadar Port Authority during Shaukat Aziz government.

The contract signed between the two in February 2007 explicitly provided $550 million investment by SPA in five years. It was in July of this year that almost half of that amount was invested. The SPA is on track in fulfilling its obligations--something that earned it reputation world-wide. But the present government, led by PPP, has claimed credit for this inflow.

Sources said that the PPP-led present government was trying to take credit of the investment deals actually signed by their predecessors. It is important to mention that agriculture, power, oil and gas exploration and manufacturing sectors have been defined as policy case sectors for attracting investment in the country.

Recently, a delegation of US Chamber of Commerce called on the Acting Secretary of ID & BOI. The delegation was led by Lieutenant General Daniel W Christman, Senior Vice President for International Affairs, US Chamber of Commerce, and comprised Jay Collins, Chairman, US-Pak Business Council/CEO, Public Sector Group. The Acting Secretary welcomed the guests and briefed them about the working and structure of the ID & BOI. The Acting Secretary while highlighting the geo-strategic location of Pakistan and other market dynamics, signified the upward trends of foreign direct investment over the years, and appreciated US investment into Pakistan being the highest ie $1.3 billion, during 2007-08.


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## Neo

*Foreign investors withdraw over $12.771 million in one week ​* 
KARACHI (September 01 2008): A massive outflow of portfolio investment from the country's equity market continued as the foreign investors withdrew over $12.771 million during the outgoing week while the cumulative outflow of $50 million was recorded in the current month of August 2008.

"Foreign selling has been at heart of recent fall in the local equities," Farhan Rizvi, an analyst at JS Global Capital said, adding that while the quantum is not huge, low volumes and prevailing political and economic uncertainties have magnified its impact. The offshore investors' concerns over the prevailing political situation in the country and weakening economic indicators forced them to offload their holdings.

The cumulative outflow of foreign portfolio investment from Pakistan's equity market increased to $354.672 million during the current year from January 1, 2008 to date. The outflow of foreign investment started from the beginning of the week as the offshore investors withdrew $5.476 million from the equity market on Monday. This trend continued and foreign investors withdrew another $2.689 million on Tuesday, $4.111 million on Wednesday and $3.987 million on Thursday.

However, an inflow of foreign investment in the equity market was witnessed on Friday as over $3.493 million were invested by foreign investors on attractive levels on the last trading day of the week.


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## Neo

*ADB to provide $100 million for Punjab MDGs schemes ​* 
FAISALABAD (September 01 2008): Asian Development Bank (ADB) will provide US $100 million for Punjab Millennium Development Goals Programme to improve access and quality of primary and secondary health care services which will save at least 11,000 women's lives.

In an update project report, Rie Hiraoka, Senior Social Sector Specialist (CWGF) of ADB said that this project would increase and improve efficiency of public health care financing. To improve management of health services and poverty reduction are other important objectives.

Rie Hiraoka said that the goal of the PMDGP is to help the GoPb attain MDGs in IMR and MMR. The Programme will assist the GoPb in undertaking health sector reforms to

(i) improve availability and quality of primary and secondary health services; (ii) develop sustainable and pro-poor health care financing system; and (iii) better management of health service delivery.

(i) Improved Availability and Quality of Primary and secondary health care:- The programme will help GoPb ensure the implementation of the minimum service delivery standards (MSDS), through its incorporation in provincial and district health sector plans, and qualitative and quantitative improvements in human resources in the health sector.

(ii) Better Management of Health Service Delivery:-The programme will also help GoPb in improving daily management of health service delivery by increasing timely procurement of essential drug, institutionalising contracting of health services to non-governmental organisations, enhancing and streamlining existing performance monitoring and evaluation systems.

(iii) Sustainable Pro-Poor Health Care Financing and Provider Payment System:- The programme will assist the GoPb in substantially increasing health care budget and improving planning and management of the budget, introducing a targeted programme for reducing out-of-pocket health expenditure among poor the poor, and developing a sustainable health care financing and provider payment system.

Rie Hiraoka said that the loan proceeds will be used to finance the full foreign exchange costs (excluding local duties and taxes) of items produced and procured in ADB member countries, excluding the items specified in a negative list of ineligible items (and imports financed by other bilateral and multilateral sources).

The proceeds of the programme loan will be disbursed to the Islamic Republic of Pakistan as the borrower. No supporting import documentation will be required if, during each year the loan proceeds are expected to be disbursed, the value of Pakistan's total imports minus imports from non-member countries, ineligible imports, and imports financed under other official development assistance is equal to or greater than the amount of the loan expected to be disbursed during that year. The Government of Pakistan will certify its compliance with this formula with each withdrawal request, otherwise import documentation under existing procedures will be required. Disbursements would be made under the simplified procedures for programme loans, Rie Hiraoka concluded.


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*IDA mulling $50 million loan for social protection project ​* 
FAISALABAD (September 01 2008): The International Development Association (IDA) is considering a loan proposal to provide $50 million to Pakistan for social protection project.

According to World Bank (WB), project study reports stated that the broad objectives of the National Social Protection Strategy were to reduce poverty and inequality, and promote human capital investments among poor families through provision of direct monetary transfers and incentives for investing in human capital. The World Bank assistance under the proposed project would aim to contribute to these ultimate objectives of poverty reduction and human capital development among poor families.

Within this broader context, the objective of the proposed project is to strengthen the ability of the Food Support Program (FSP) and Child Support Program (CSP) to play an effective role in the country's strategy to reduce poverty and inequality and to foster investments in human capital, as well as to assist the Pakistan Government in the development of a minimum package of social care services for the poor structured around these programs.

Specifically, phase-1 of the project would support the effective strengthening and implementation of the FSP and CSP programs and of a minimum package of social care services. 'Effectiveness' would be assessed in terms of (i) the targeting, coverage, and adequacy of the benefits/services; (ii) efficacy of the CSP conditionalities (co-responsibilities) to foster investment by beneficiary families in human capital; and (iii) the capacities of involved institutions (including ministries, program staff, service providers, and beneficiary groups) to manage these programs efficiently, to monitor results, and to (begin to) evaluate impacts.

Phase-2 of the project would consolidate and deepen the reforms, further perfecting the design of the programs based on experience under phase-1. Such 'second-generation reforms' might include measures to enable scaling up/down depending on country conditions, further strengthening of M&E, additional administrative efficiency gains, possible development of complementary social protection instruments/services for poor people who are highly vulnerable but do not have children (and thus are not eligible for the co-responsibility requirements of the CSP); and development of mechanisms to enhance prospects for self-sufficiency ('graduation') of poor families.

Meanwhile, World Bank experts have emphasised the need for improving Fiscal Sustainability and Financial Management in Pakistan. The fiscal sustainability of civil service schemes can be improved through parametric changes in the system--changes in the assessment base, accrual rates and retirement age. This will lower short term and the present value of future pension spending. Systemic changes in the system--shifting to defined contribution system--would take up front fiscal outlays, but would eventually lead to a much more sustainable civil service pension system, lowering the present value of fiscal expenditures on pensions, from 71 to 47 percent of GDP.

Options for improving the fiscal sustainability of EOBI will also need to be considered, including improvements in the financial management of reserves. Information on the management of other funds also needs to be improved, including strengthening independent oversight. Investment policy statements and processes will need to be defined and disclosure improved.

According to WB report, Monitoring Systems will need to be strengthened to avoid evasion, thus improving the financial position of funded schemes. Improvements in tracking of individual earnings for the pension department to make accurate payments will be needed for parametric reforms in the civil service scheme. For a defined contribution (DC) scheme, record keeping would have to be much more stringent. Improving enforcement mechanisms for late payments and reporting is needed. In all schemes, monitoring is weak and will need to be considerably strengthened.

Commenting over the 'Reducing program fragmentation', the WB study said that the administrative costs may be reduced through consolidation of certain activities in one institution (eg, cash transfers), as has often been proposed. Steps toward this include harmonisation of practices (reporting, accounting, audits, actuarial evaluations) and establishing a common, updated database. Simplifying the process for registration and collection for employers would also help compliance. In this regard, the current effort to consolidate legislation is a welcome first step, though processes for external oversight are needed.

According to the WB study, micro-finance and community-based groups are emerging as one way of expanding coverage to the informal sector. Their penetration is still low, and using these institutions to expand coverage would have a long gestation period. However, there might be scope for using community-based groups for providing insurance products in Pakistan as already happening with the rural support programs. These groups could 'plug into' a formal sector arrangement, for example a defined contribution pension cum insurance. Combined with civil service pension reforms, this could create a seamless system of pension coverage and other group insurance. It would allow easier movement between informal and formal, public and private sector work and lower administrative costs that would tend to be duplicated under parallel schemes. However, these schemes would have to be piloted and evaluated, and their fiscal costs assessed prior to any expansion.

Social pensions are another way to extend coverage to the elderly without access to a formal pension, but their costs and consistency with other safety net programs needs to be carefully considered. In many countries around the world and in the South Asia region, cash transfers to the elderly (or social pensions) are used to provide informal sector workers with income support in old age.

These pensions can be means-tested (India), or provided to all individuals over a particular age (Nepal).

Social pensions can be costly, with costs increasing with the aging of the population. Further, the advantages of providing separate benefits to the elderly need to be assessed against the poverty needs of other groups. The feasibility of using the existing cash transfer system to target the elderly also needs to be assessed prior to introducing social pensions.

In Pakistan, WB study said that the North-West Frontier Province (NWFP) is experimenting with social pensions in select districts, with expansion contingent on evaluation of pilot results and fiscal resources.

The WB study said that social protection is not a substitute for economic growth which, along with human capital development of individuals, will remain pivotal for poverty reduction in Pakistan.

Social protection can complement policies for creating growth and building human capital, and also help individuals cope with (and where possible exit) poverty and manage risk. Public social protection instruments should strive to add to the choices and options available to households, and where feasible explore potential synergies with informal and market-based risk management instruments used by households. Thus, public risk coping instruments need to be designed, keeping in mind the larger landscape of risk management strategies employed by households, markets, and society at large.


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## Neo

*SMEs need special package for increasing export volume ​* 
SIALKOT (September 01 2008): Sialkot has developed a remarkable export culture over the period and contributing more than 900 million dollars to the national exchequer annually. Still the exporters community is trying its utmost for doubling the export volume despite tough competition in the world market for fetching valuable foreign exchange for the country.

The Small and Medium Enterprises (SMEs) are also playing a significant role not only in strengthening the national exchequer but also providing employment to thousands workers in Sialkot.

In order to develop true and secure "Small and Medium Culture" of Sialkot the government should formulate a special package of incentives and concessions for SMEs of the area for increasing the export volume to many folds and to redress their problems.

The development of cottage industries in Sialkot has assumed a model status for the developing world. The city is sprinkled with thousands of small and medium enterprises, which are engaged in honouring their global commitment for export of valve-added quality goods such as sport goods, surgical instruments, leather goods, gloves, badges and musical instruments etc.

The city has developed industrial edge over other cities of the country especially in sports goods and surgical instruments. Over 1.20 lacs industrial workers are engaged with both the industries and are earning their livelihood in a respectable way.

Many researchers of different foreign universities are considering to conduct research on the unique export culture of Sialkot, which is a hub of cottage industries and export-oriented city of Pakistan.

The researchers would penetrate on ascertaining how Sialkoties are doing the export business successfully where every third person is an exporter. The business community of Sialkot is playing a tremendous role not only in bringing boom in exports but also fulfilling the social responsibilities and the uplift of the city on voluntarily basis. Over 85 percent of total production of soccer ball of the world comes from Sialkot while all international brands are sourcing their supply of footballs from this export-oriented city and hub of cottage industry of the country.

The soccer ball industry had totally been purged from the menace of child labour and Sialkot has set a role model for others to follow the same for the elimination of child labour.

The business community had managed to develop the culture of "Do it yourself " in Sialkot under which the business community was playing a pivotal role for the development of the city and welfare of the people. For the construction of city roads and drains, Sialkot Chamber of Commerce and Industry (SCCI) initiated Sialkot City package in collaboration of other trade bodies in the city. Under the programme exporters are voluntarily contributing 0.25 percent against their export invoices as a result of which many city roads and drains have been constructed. The mega project of Sialkot International Airport has become operational which has been constructed by the local business community on the basis of Build, Operate and Own (BOO) basis costing over Rs 2 billion.

It is expected that the cargo flights would be started from Sialkot international airport in near future. Sialkot International Airport is a unique project in private sector and first of its kind in not only in the country but also South-East Asia. Despite of extra-ordinary contribution of the local exporters, the city was being ignored in many respects and deserved for a very special status. Keeping in view the importance and contribution of Sialkot, the city should be treated, as city of cottage industry and both federal and Punjab governments should announce special concessions and incentives for this export-oriented city for the larger interest of the SMEs.


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## Neo

*Rs 550 million 'Tunnel Technology' plan evolved ​* 
SIALKOT (September 01 2008): Punjab government has evolved a plan costing Rs550 million for introducing 'Tunnel Technology' aiming to produce off-season crops in the Province soon. Official sources told Business Recorder on Sunday that the concept of introducing tunnel technology was to promote several off-season crops and to ensure their availability round the year in Punjab.

The proposed programme would also support to improve the economic condition of vegetable growers of the Province. Apart from this, the government has also set a side Rs560 million for the provision of subsidy to the farmers on agriculture tools in Punjab.


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## Neo

*Setting up of mini-industrial estates in rural areas on the cards ​* 
SIALKOT (August 31 2008): The setting up of mini-industrial estates in remote rural areas is on the cards with the aim of promoting non-traditional products being produced in these areas and generate employment opportunities for skilled and semi-skilled persons at their doorsteps in the Punjab.

Official sources on Saturday told Business Recorder that the government has accorded special attention to the promotion and development of cottage industries and for this purpose Rs 40 crore would be spent to accelerate the pace of exports and enhance the productivity of Punjab.

The development of industrial sector was on top of government agenda and during the current fiscal period Rs 1.30 billion were being spent on the development of industrial sector in the province.

The government has already introduced business-friendly policies to ensure establishment of maximum number of industries in private sector and to expand the scope of setting up industries in rural areas for bringing industrial revolution in the Punjab.

In order to facilitate the SMEs the Punjab government would soon initiate a "Micro-Finance" loaning scheme with an amount of Rs one billion during current fiscal for the development of cottage industries and creating self-employment opportunities in the province.

The concept of introducing this scheme was to extend loan facilities to the interested persons for setting up small scale and cottage industries in the Punjab. The Punjab government has evolved a strategy to develop business friendly environment to ensure Direct Foreign Investment (***) in various fields of industrial sector in the province.


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## Neo

*Circular debt, looming defaults​*
The fiscal crunch is taking a heavy toll on the corporate sector. The private sector energy companies are touching their borrowing limits, the public sector is defaulting in its payment commitments and the public at large is struggling to cope with more than seven hours of load shedding daily in addition to unannounced power breakdowns.

By August 20, the inter-corporate circular debt has crossed over Rs400 billion and widespread default is looming large in the energy sector. A number of companies have, in fact, started defaulting in their commitments technically and financially.

Oil firms have expressed their inability to ensure smooth supplies in the days ahead and independent power producers (IPPS) are running at less than their generating capacity because of financial crunch to purchase fuel.

Partially, because of previous governments dilly-dallying on major economic decisions and mainly because of current governments pre-occupation with political crisis, the administration finds it hard to take even day-to-day decisions in a prudent manner. The IPPs have threatened to declare force majeure and call governments sovereign guarantees.

The government has started eliminating subsidies. Electricity rates have been raised by 16 per cent last month by withdrawing of general sales tax and another 61 per cent increase would be made soon after the presidential elections to be held on September 6.

Natural gas rates have been increased twice by more than 40 per cent since the democratic government took over and oil prices have surged more than 50 per cent since February this year. Rise in utilities cost is resulting in escalation of all essential and not-so-essential commodities.

At the heart of problem is non-payment of arrears by public sector companies and government entities. The receivables of Pakistan Electric Power Company (Pepco) and its allied power companies have gone beyond Rs150 billion. Karachi Electric Supply Company (Kesc) has been holding over Rs56 billion payments to Pepco while arrears payable by Federally Administered Tribal Areas have gone beyond Rs75 billion as of July 31. The federal government, provinces, AJK and some public sector corporations together owe another Rs18 billion to electricity distribution companies.

In return, the Pepco and Kesc have accumulated payables of about Rs100 billion. Of this, Pepco has to pay about Rs64 billion to IPPs, limiting their capacity to purchase fuel oil and hence run on less than half of their capacity. The Pepco also has to pay about Rs10 billion and Rs8 billion each to oil and gas companies respectively. The problem is that unless the public sector clears electricity bills of distribution companies, they would not be able to release finances to the IPPs and oil and gas companies.

On top of that is the governments inability to clear over Rs84 billion dues to the oil companies and refineries on account of price differential claims.

The PDC amount might have been much higher but the burden has been replaced with even more expensive borrowing from the commercial banks. So far, the government has paid about Rs50 billion to the oil companies and refineries by arranging syndicated loans from the market. PSO has over Rs25 billion of receivables from Pepco and IPPs.

Since, the government has not been able to liquidate petroleum differential claims (PDCs), the oil marketing firms have also informed the government about their inability to make payments to the oil refineries. This is despite the fact that oil marketing companies have reported 20 per cent higher fuel consumption during the current month.

This is the re-emergence of the energy sector inter-corporate debt that we used to have in the early 1990s. The situation is even worse today, said a senior official in the ministry of finance dealing with the chronic problem.

The situation is such that the energy sector crisis could worsen in the short-run in the kind of disruption in oil supplies and much higher scale of load shedding at least for another year. In the longer run, the budget deficit may go beyond eight per cent of GDP by end of current year.

Pakistans currency has already slumped to a record low, development schemes are being curtailed, the cost to safeguard sovereign bonds from default has almost tripled since October last year and foreign exchange reserves have declined by almost $7 billion-- enough to cover only three months of imports.

Interestingly, the current spate of unprecedented power load shedding emerged primarily because of financial crisis and fuel shortage, and not due to capacity constraints as being portrayed by the government. The government has been attributing the load shedding to the previous governments failure to enhance generation capacity as the demand for power consumption increased.

However, the situation on ground is that that lack of capacity addition would cause power shortage to the extent of 5,500MW in 2010. The current shortfall in electricity demand and supply was because of the governments inability to make full payments to the oil supplier and power generation companies and forced closure of a few thermal power plants.

The generation from Pepcos own thermal power plants, according to official record, has shrunk to the lowest ebb because of Pepcos inability to purchase fuel oil from its suppliers. On August 20, the Wapdas thermal plants could produce a maximum of 1,900MW electricity against their capacity of 4,829MW because of their inability to purchase furnace oil and minor technical faults in gears, clutches and switches.

Likewise, the generation from IPPs stood at about 3,470MW on August 19 against their capacity of 6115MW, again because of their fiscal constraints. Similar has been the case all along for the last two months as total thermal power generation remained less than 6,000MW against total capacity of about 12,000MW.

As a result, Pakistan State Oil  the countrys largest and state-owned supplier  has refused to make payments to the refineries or lift fuel oil. As a result, refining capacity of some of the refineries has reduced by one-third due to storage constraints that could lead to shortage of petroleum products in the consumer market.

Facing short supplies from Attock Refinery, Kapco plant which could also run on natural gas, has not been able to produce electricity to its capacity when the gas utilities reduced their supplies to about 60MMCFD (million cubic feet per day) against usual supplies of 300MMCFD. The end electricity consumer had to suffer between August 23-28 as electricity load management became unmanageable.

Despite an available generation capacity of about 18,000MW, Pepco plants have not been able to produce more than 12,000MW in the last two months despite maximum generation by hydropower projects as river flows improved in the monsoon season. During the current month, the countrywide load shedding peaked at 4,810MW on August 25 and it was all because of financial and fuel supply constraints. That meant that generation capacity was available but the plants did not have fuel stocks to run their units.

In the Karachi Electric Supply Companys system, thermal plants in Karachi could not generate more than 1,300MW electricity against their capacity of about 1,800MW. This was more because of technical problems that fuel shortages.

Oil and gas companies are now demanding to make a law empowering the suppliers to discontinue supplies to power companies if they fail to make payments in time up to a certain limit. Some international lenders also feel that unless it was done, the continuous inter-corporate circular debt in the energy sector would keep various oil and gas companies in the financial turmoil and keep foreign investors at bay since some of these firms are either listed abroad or were multinationals.


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*Hydropower initiatives​*
The mountainous Northern Areas have also been struck by the regular load-shedding, adversely affecting normal life and trade in its main towns.

According to recent reports, trade activities at Sust, the busiest town and trade hub near Pak-China border, as well as various offices in the Gojal valley are facing power shortages and outages. Similar is the situation in Gilgit city, the headquarters of the Northern Areas.

One of the major issues facing the government is that of raising the quality of life of the people of the Northern Areas who are currently deprived of even the basic amenities like electricity. Shockingly, Pakistan is ranked one of the lowest, 152 among 208 countries of the world, in terms of per capita consumption of electricity. The latest global data of 2007 shows 453 kWh per capita annual consumption in Pakistan that is even lower than Bolivia and Mozambique. Compared to this figure, per capita yearly consumption of electricity in the Northern Areas is just 44 kWh, the lowest in any part of the country.

The federally administered Northern Areas, populated by about one million, are spread over 72,496-sq. km. There are about 650 towns and villages, widely scattered, with population density of 10 persons per sq. km.

Primarily, the electricity is used for lighting households, schools and dispensaries etc. Still, only 45 per cent of the population has access to electricity, which is not even available to some of the valleys at all. Nonetheless, the demand is increasing at a faster rate, as tourism, trade and the SMEs develop in major towns.

The national grid is at a distance of 350 km from Gilgit and its extension to the Northern Areas is neither practical nor justifiable. The electricity network here is therefore being operated in isolation, and in many remote areas even the transmission lines and grid stations do not exist.

Today, the total installed capacity for power generation in the Northern Areas is around 102 MW. Major source of power generation is hydroelectric, of cumulative capacity of 95 MW, whereas thermal power generation is to the level of over seven MW only.

These diesel generators were installed, mostly in Gilgit city, to meet the peak demand of power, and are of great help to reduce the present load-shedding in the surrounding areas. Due to logistic and financial factors involved in transportation of diesel however, further increase in thermal power generation capacity is not feasible.

The Northern Areas present enormous hydropower potential from River Indus and its various tributaries with steep gradients. A network of small, mini and micro hydropower stations, generally in the wide range of 50 kW to 4 MW, has been constructed. There are more than 400 mini and micro hydropower stations operating in remote localities. In addition, there are many small hydropower stations, up to a maximum capacity of about 11 MW installed in Gilgit.

Indeed, it is a tremendous job to provide electricity to the Northern Areas as it is a region of high mountains and narrow valleys where infrastructure is practically non-existent. Furthermore, the widely varying topography, geology and hydrology, coupled with extreme weather conditions, make the construction of power stations difficult. The reliability of power supply is also impacted in the wake of frequent floods and landslides. Thus the available power supply is optimal during summer, but the season covers three months only. During the remaining nine months of the year the net electric supply is reduced to almost half of the installed capacity due to non-availability of water for power generation.

Administratively, the Northern Areas consist of six districts namely Gilgit (including Hunza and Nagar valleys), Skardu (including Shigar and Khaplu valleys), Diamer (Chilas valley), Ghanche (Baltistan), Ghizer and Astore.

There are 35 hydroelectric power stations of cumulative installed capacity of 34.76 MW in Gilgit district. Thermal power generation is limited to 4.3 MW installed capacity. Power demand at is estimated to be net 30 MW, which would further increase to 54 MW by the year 2010. To narrow the gap in supply and demand, three hydro power stations, Naltar IV of 18 MW, Pari of 1 MW and Cane of 3 MW installed capacity, are under construction at present.

The projects under construction include a 1-MW hydropower station at Sermik (Skardu), a 2-MW station at Talu-Rondu (Baltistan) and a 1-MW station at Tolti (Shigar). Other approved projects, in various stages of implementation, are 1-MW power station at Shumayal (Skardu), 1-MW at Kindas (Ghanche), 2-MW at Thalley (Ghanche), 1-MW at Hassanabad (Ghanche), 2-MW at Gultari (Skardu), 1-MW at Kindrik (Skardu) and 2-MW capacity at Bordas (Balgher).

To cater for increasing demand of electricity, a broad-based plan for the development of small hydropower generation is being implemented. Many potential hydro sites, up to 50 MW capacity projects, have been identified and techno-economic feasibility studies prepared.

These include 18-MW project at Hanzel (Gilgit), 3-MW at Juglot-Sai (Gilgit), 2-MW at Misgar (Hunza), 2-MW at Pissan-Minapin (Nagar) and 1.3-MW project at Cane-Kargah. Other approved projects are 2-MW at Nolti, Bathrez (Ghizer), 4-MW at Pakora Gudai (Astore), 2-MW at Darmadar (Ghizer), whereas three projects are to be constructed in Diamer district, namely Darel-Chilas III of 1.5 MW, Khanbary of 2 MW and Botogah-Chilas of 1 MW capacity. The government has recently approved Naltar III and Naltar V hydropower projects of 16 MW and 14 MW capacity, respectively, to be installed near Gilgit city, for which financial resources to the tune of Rs3 billion have been committed.

Wapda is also actively involved in contributing towards addition of power generation capacity in the Northern Areas. It is constructing Satpara dam and hydropower station of 13 MW in Skardu, in three phases, whereas design and engineering is in hand for Basho project of 28 MW capacity, which will be connected to Skardu and other upstream valleys through 66 kV transmission line. Likewise, Harpo hydropower projects of phase I of 15 MW and phase II of 33 MW capacity are to be developed in Skardu district. Also, planning work is being done by the Wapda for developing a power station on Phunder Lake, Ghizer.

Development of hydropower projects in the Northern Areas will be accelerated if Pakistan can build the capacity to manufacture and install small power stations of above five MW. The same is lacking at present though various items of electrical and mechanical equipment and related materials are being produced locally, and the infrastructure for implementing small hydro schemes is available.

The requisite advanced technology is essentially required for achieving the purpose of creating indigenous capability for design, engineering and manufacturing of equipment for power plants. The government needs to take initiative in this direction, pursuant to its policies of developing far-flung areas and promotion of renewable energy.


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## Neo

*How free is the economy for sustainable growth?​*
Pakistans economy is 56.8 per cent free, according to 2008 Index of Economic Freedom compiled by The Heritage Foundation and The Wall Street Journal. The index covers 162 countries across ten specific factors of economic freedom.

Pakistans rank is 93rd. Which means it is more free than India which is placed at 115th position with an overall score of 54.2 per cent and also China which stands at 126th rank with an overall score of 52.8.

Pakistans overall score this year is 1.7 percentage points lower than last years, faring badly in six of the 10 economic freedoms. In Asia-Pacific region, Pakistan is ranked 16th out of 30 countries.

Under the Index, the global economic freedom score this year is 60.3 per cent, which is the same as last year. In the years since the Index began in 1995, world economic freedom has improved by 2.6 percentage points.

The countries are judged by the authors of the report from the perspective of the advanced countries of the West in terms of the facilities and incentives they get while investing in or trading with the non-Western world.

Hence, economic freedom is considered the key to creating an environment that allows a cycle of entrepreneurship, innovation and sustained economic growth.

Economies with higher levels of economic freedom, the authors claim, also enjoy higher living standards.

Hong Kong has the highest level of economic freedom. Singapore comes second in the world and Ireland the third.

Following are the top ten freest economies with their overall scores in the bracket: Honk Kong (90.25), Singapore (87.38), Ireland (82.35), Australia (82), United States (80.56), New Zealand (80.25), Canada (80.18), Chile (79.79), Switzerland (79.72) and United Kingdom (79.55).

A majority of the freest economies are in Europe, five are in the Asia-Pacific region, one country (Mauritius) is from the sub-Saharan Africa region, and one (Bahrain) is from the Middle East/North Africa region. Only 30 countries have economic freedom scores higher than 70 per cent. The bulk of countries  103 economies  have freedom scores of 5070 per cent. Of those, about half are moderately free  ((60-70 per cent), and half are mostly unfree. 

The erosion of economic freedom in Latin America reflects reversals of free-market policies and lack of perseverance in pursuing economic freedom in some countries. Asia-Pacific countries have the highest variance within their region, which means that there is a much wider gap between the heights of freedom in some economies and the lows in others that is nearly twice as variable as the norm.

Pakistan scores moderately well in fiscal freedom, business freedom, and labour freedom, but its only exceptionally high score is for limited government size. The corporate tax rate is high, but tax revenue and government spending are low relative to GDP.

Commercial registration and licensing are historically inefficient, but efforts to liberalise the business climate are producing results. The labour market is flexible, although sacking procedures are costly.

According to the Index, Pakistan has weak trade freedom, investment freedom, financial freedom and property rights. Imports are subject to a high average tariff rate and burdensome non-tariff barriers. The judicial system does not protect property rights effectively because of a serious case backlog, understaffed facilities, and poor security.

Serious corruption taints the judiciary and civil service, making Pakistan one of the most corrupt nations as rated by the Index.

Pakistans financial market, though advanced for the region, is constrained by regulation and bureaucracy.

Business freedom is rated at 70.8 per cent by the Index. The overall freedom to start, operate, and close a business is relatively well protected. Trade freedom is 65.2 per cent. Pakistans weighted average tariff rate was 12.4 per cent in 2005. Liberalisation has progressed, but import bans and restrictions, import taxes, inconsistent standards administration, non-transparent government procurement, export subsidies, weak enforcement of intellectual property rights, and corruption add to the cost of trade.

Fiscal freedom is rated at 79.1 per cent. Pakistan has implemented some tax cuts and the top income tax rate was reduced to 25 per cent. The top corporate tax rate is 37 per cent. In the most recent year, overall tax revenue as a percentage of GDP was 10 per cent and government spending equalled 18.2 per cent of GDP. Privatisation has advanced in recent years.

Relatively unstable prices explain most of the monetary freedom score which is 72.2 per cent. The government controls pharmaceutical and fuel prices, subsidises agriculture, and influences prices through state-owned enterprises and utilities, including electricity and water. An additional 10 percentage points is deducted from Pakistans monetary freedom score to account for policies that distort domestic prices.

Investment freedom is rated at 40 per cent. Foreign investors may own 100 per cent of most businesses, except in arms and munitions, high explosives, currency and mint operations, radioactive substances, etc.

Foreign ownership in agriculture is capped at 60 per cent. Total foreign equity control is permitted in the services sector. The government requires a minimum initial investment in agriculture, infrastructure, and social services and maintains local content requirements for 16 items in the automobile and motorcycle industries.

Deterrents include political violence, civil unrest, poor infrastructure, inconsistent and arbitrary regulation and enforcement, and a lack of co-ordination between the federal and provincial governments. Restrictions on foreign exchange accounts include the need for government approval in some cases.

Financial freedom is only 30 per cent. Pakistan was supposed to have converted to an Islamic (interest-free) financial system by 2001, but the Supreme Court is still considering a final judgment.

Five domestic banks account for over 80 per cent of assets. The government has a majority stake in the largest bank and controls several specialised banks. New foreign banks must establish subsidiaries under 49 per cent control rather than opening branches.

Insurance is underdeveloped, and a state-owned firm controls over three-quarters of the life insurance market. Foreign investors may not own more than 51 per cent of a life or general insurance company. Domestic insurance companies must meet their reinsurance needs in Pakistan.

Property Rights are 30 per cent. Pakistans judiciary, by law separate from the executive, remains hampered by ineffective implementation of the laws, poor security for judges and witnesses, sentencing delays, a huge backlog of cases, and corruption. The government closed down several pirate optical disc factories and beefed up enforcement of intellectual property rights in 2006.


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## Neo

*Billions withdrawn before Zakat deduction ​* 
Tuesday, September 02, 2008

KARACHI: Thousands of accountholders withdrew billions of rupees from their saving accounts during the last few days ahead of the deduction of Zakat, the fourth pillar of Islam and an obligatory annual money contribution by affluent Muslims (at 2.5 per cent of ones savings) for the needy people of the society.

A big number of accountholders rushed to their respective banks and ATM kiosks on Monday intending to draw their cash to avoid zakat deduction. The money market came under tremendous pressure in the wake of heavy withdrawals and faced liquidity crunch that forced banks to borrow Rs8.4 billion from discount window of State Bank of Pakistan (SBP) in order to maintain their mandatory cash reserves.

Though exact amount of withdrawal in a single day is yet to be ascertained, banking sources said that the volume of cash taken out by accountholders on Monday and last week of August was in billions.

Numerous accountholders, particularly corporate accountholders, also converted deposits of billions of rupees into Call Deposit Receipts (CDR) or pay orders, which would be deposited again into the original accounts soon after the deduction of Zakat on Tuesday after the Ramazan moon was sighted on Monday.

This year 2.5 percent Zakat is applicable (Nisab of Zakat) on Rs19,625 or above balance of saving accounts of the banks customers. The banking sources said that from 2nd Ramazan which is likely to fall on Wednesday most of the people would again deposit money, encashed or converted into Call Deposit Receipts. Bankers said that it would be very difficult to guess the actual amount of money, either withdrawn from bank or converted into CDRs however, they believed that could be in billions and might be around Rs15-20 billion.

The people against the deduction of Zakat on their saving account have to submit affidavit to their respective bank one month prior to start of Ramazan. However, some small and foreign banks accept affidavit few days or a day before deduction of zakat in order to facilitate their corporate and valuable individual accountholders. 

Since last couple of days large number of ATM machines were not doling out cash to banking customers and customers were very much annoyed by the Machine is out of order stickers labelled outside ATM Kiosks. The internal sources said that actually banks were facing liquidity shortage due to which they were not enough cash to place a substantial amount in ATM machines.

Moreover, heavy withdrawals caused immense pressure in money market, as large number of accountholders injected a big amount in forex trade in order to mint easy profit in short span of time. The fresh inflow in forex trade stirred the Rupee-dollar parity and the exchange rate of US dollar surged to Rs76.90 in interbank market, which was being traded at Rs76.40 early on Monday.


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## Neo

*S Arabia to provide $540m urea facility on deferred payments ​* 
Tuesday, September 02, 2008

ISLAMABAD: Saudi Arabia will extend urea facility amounting to $540 million on deferred payment and in the first phase the kingdom will provide $140 million urea to Pakistan.

Later on the country will be having urea facility of $400 million from Saudi Arabia, a senior government official told The News quoting the Secretary Ministry of Food Agriculture and Livestock as saying in the Economic Monitoring Committee held here on Monday with Syed Naveed Qamar Federal Minister for Finance, Privatisation & Investment in the chair.

MINFAL secretary informed the meeting participants that MINFAL and the commerce ministry has signed an agreement with the Saudi government for purchase of 135 thousand tonnes of urea.

Shipments will, to this effect, start arriving from tomorrow (September 3), followed by more shipments as per the agreed schedule. It added that urea availability in Punjab and Sindh, particularly in rice and cotton belts, has improved.

However, the press release issued says that EMC was informed that DAP price shall shortly be notified in consultation with stakeholders. MINFAL further informed that 22,000 tonnes of ureas first shipment is arriving in Karachi on 3rd September, 2008. EMC advised MINFAL to work out modalities for urea import from Kuwait and other friendly countries to meet Rabi seasons crops input demand of growers.

The finance minister also directed MINFAL to submit wheat import requirements according to the varying needs of different areas along with estimated foreign exchange requirements. EMC was informed that an agreement for 50,000 tonnes of wheat import from USA shall be finalised by 30th September 2008, followed by working out modalities for subsequent similar agreements to beef up domestic wheat stocks and demands.

EMC was told that pricing of other food grains is stable. It was added that sugar pricing at the moment is also stable, with adequate stocks available countrywide. Rice production has presently improved and substantial rice production is forecasted during the next year. It was added that the existing rice pricing in the country corresponds to that of last years pricing slabs.

Earlier, MINFAL briefed EMC that the issue of wheat imports of 0.5 million tonnes on deferred payments from Canada has been put to necessary homework and shall shortly be finalised. This would help augment domestic wheat stocks.

EMC directed Ministry of Petroleum to bring up proposals to cut down petroleum products consumption, in order to reduce the import bill, and also submit a viable strategy to regulate countrywide consumption of gas supply during the upcoming winter season.


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## Neo

*Karachiites undeterred by inflation ​* 
Tuesday, September 02, 2008

KARACHI: The people of Karachi are determined not to let inflation and politics affect their religious celebrations and are already preparing to celebrate the Eid-ul-Fitr with fervour which is still a month away.

The exhibition Womenza that was recently held at the Karachi Expo Centre from August 29 to 31 witnessed the multitude of visitors who grabbed the opportunity to shop around under one roof ahead of Ramazan and Eid-ul-Fitr. 

Afsheen Farooqi and her three sisters made most of their purchases for Eid at the exhibition as it saved them the hassle of traveling to various bazaars which is a time-consuming task she said since they do not own a car and they are seven members in her family, commuting in a taxi is an expensive option for them and therefore they make the most of these events that are held at the Expo Centre. 

Another visitor, Rani Iqbal made purchases for friends and relatives as she found jewellery items at bargain prices and therefore bought them in bulk. She also took the opportunity to purchase eidi for her maid and guard who are employed by her family. 

Sumaiya Ahmed also made purchases of various items like cloths, decorative pieces and cosmetics. She said that though inflation was indeed affecting the people of Pakistan, Eid was one occasion which held special emotions for Muslims all over the world and therefore people often made the effort to go out of their way to make it exceptional for themselves and their loved ones. 

She stated in the country Eid is observed joyously and it is a time when markets all over the country are lit up with festive lights and are open till late. Hence, she predicted this year it would not be different from the previous years and people would fork out as they always have, since the occasion has religious sentiments attached to it. 

However, Eid was not the only occasion in the visitors mind as they also made purchases for Ramazan. 

According to the exhibitors, they had received a good response because Expo had coincided with the forthcoming Ramazan and the purchases that the people had made were also related to the month. 

An exhibitor who was promoting his photography services informed that while his neighboring stalls had a large number of visitors, his booth was merely glanced towards before people moved on to the next stand. 

On the other hand, exhibitors dealing with cosmetic, clothes, household items and eatables and beverages said they were pleased with the response their stalls had received and they had made good business in the three days of the event. 

Sindh Minister for Information Shazia Marri, Speaker of National Assembly Dr Fehmida Mirza, Sindh Minister for Women Development Madam Tauqeer Fatima Bhutto and Qaim Ali Shah were some of the high profile personalities who visited the exhibition for its closing ceremony on Sunday evening.


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## Neo

*Govt to set up task forces for economic development​*
ISLAMABAD: A high level meeting chaired by Deputy Chairman Planning Commission here Monday decided that five task forces will be set up in for the different sectors of the economy i.e. Infrastructure, industry, Information Technology, health and education, a senior government official told Daily Times on Monday.

The Pakistan Peoples Party led coalition government is set to give the country a five year economic development plan (2008-13) aimed at taking the economy on the track of sustainable growth. 

The five-year plan will have short term and medium term goals, which will be achieved within 2.5 and 5 years to accelerate economic growth. 

The government has decided to take on board all the four provinces and Azad Jammu and Kashmir for the formulation of the plan. In this regard, nominations from all four provinces would be called for inclusion as members in the task forces, so that province specific needs and development potential is exploited. 

Task Force on Infrastructure will focus on construction of big water reservoirs, urban development, communication and transportation along with other infrastructure requirements of the country; task force on health will recommend the government for improvement in the area of health, population and social protection; task force on education will deliberate on literacy and promotion of education at all levels, which will not only meet the Millennium Development Goals but also improve health related infrastructure; task force on Industry will focus on meeting required infrastructure for rapid industrialisation in the country, which would ultimately help attract local as well as foreign investment. 

Keeping in view the importance of the Information Technology for economic progress and bright prospects of the local IT industry, task force on IT would be recommend the government ways and means enabling the country to reap maximum benefits emanating from IT revolution in the world.

All these Task Force wull work under the panel of Economists head by Dr Hafeez Pasha, a renowned economist. According to the official, top brains and policy makers are being selected as members of these five task forces so that local as well as foreign experience could be utilised for countrys economic development and rapid improvement in social conditions of the population. 

Conveners of the task forces would ensure consultation with all the relevant stakeholders so that no hurdle is created when the plan goes in to its implementation phase.

Planning Commission is undergoing restructuring phase and renowned advisors and new members are being added to make this important institution of the country viable and active. The recently added advisors are Dr Ishfaq Ahmad, former Chairman of the Pakistan Atomic Energy Commission, Dr Ishrat Hussain, former Governor SBP, Khadija Haq, Director of Mahbub ul Haq Centre for Human Development and Dr Shoaib Sultan Chairman National Rural Support Programme, Dr Pervez Butt former chairman of Pakistan Atomic Energy Commission and Secretary Science and Technology.


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## Neo

*PSDP allocation for agriculture sector cut by Rs 4 billion​*
** Total cuts in PSDP amount to Rs 100 billion​*
ISLAMABAD: Contrary to the tall claims of the present government of declaring agriculture as priority sector, an cut of Rs 4 billion (20 percent) has been recommended for different agriculture related development schemes for the year 2008-09, sources told Daily Times here on Monday. 

The officials of Planning Commission in its recent meeting with ministers/divisions concerned over Rationalisation of PSDP 2008-09 have recommended 30 percent cut over the PSDP. For a total of 65 different agriculture development projects, the government has allocated Rs 20.015 billion in the PSDP 2008-09. These are national importance projects and after completion, would greatly help in ensuring food security in the country. Some of the important projects among these are: Livestock production and development of meat production, Prime Ministers special initiatives for livestock, Milk collection/processing and dairy development programme, National integrated pest management, National programme for control and prevention to avian Influenza in Pakistan, Research for agriculture development programme, Aquaculture and shrimp farming, Commercialisation of tea production through public-private partnership, National commercial seed production programme, Research and development of Cotton programme, Agribusiness development and diversification project, Establishment of seed testing laboratories and rehabilitation of existing labs along with many others. 

Among the total 65 development projects, 24 were declared, by the Ministry of Food, Agriculture and Livestock (MINFAL), as high priority projects and total allocation for these in the PSDP was Rs 17.435 billion. However, a cut of Rs 2.904 billion is recommended and now allocation for these projects is Rs 14.531 billion. 

In category B, (medium priority projects) included 36 projects worth Rs 2.530 billion in the PSDP 2008-09. An amount of Rs 1.070 billion cut is recommended for these projects and now the total allocation for these projects is Rs 1.459 billion. 

In category C (low priority project) consist only one project, namely Improvement of Agriculture Livestock Market and Marketing System with initial total allocation of Rs 13.400 million. The official in rationalisation PSDP meeting has cut the allocation by Rs 8.400 million and now the amount for this project is Rs 5 million. The fourth category D included projects to be completed as early as possible or these would be wind up by December 2008. In this category there are four projects namely, Introduction of sugarbeet and enhancement of sugarcane productivity worth Rs 35 million, Operationalisation/Commissioning plant quarantine laboratory worth Rs 17.700 million, Improvement of water management of water management practices in Northern Areas worth Rs 37.783 million, and Exploitation and management of water resource for development of Peri-Urban Areas around ICT worth Rs 27.206 million. Total allocation for these four projects was Rs 36.196 million but an amount of Rs 20.196 million cut was recommended on these projects and now actual allocation for these projects stand at Rs 16 million. Overall, the government has decided to place a 30 percent cut in 2008-09 PSDP of all ministries except education and health, as they were the priority sectors for Pakistan Peoples Party-led government. The government has decided that no financing from the national exchequer would be available for projects that would face the cut. 

After Rs 100 billion cut in the PSDP, its overall size would come down to Rs 441 billion from Rs 541 billion. This measure would help the government to keep the budget deficit at levels of 4.7 percent of the projected GDP for 2008-09. A senior official told this scribe on Monday that cut decision was taken due to severe financial constraints confronting the government amid political and economic instability in the country.


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## Neo

*Saudi Arabia asks Pakistan to wait: Oil decision after presidential poll​*
** Oil import bill expected to rise over $14.5 billion​*
ISLAMABAD: Saudi Arabia has asked Pakistan to wait for its final response regarding the Saudi Oil Facility (SOF) till the election of the new president of Pakistan, sources in the Petroleum Ministry told Daily Times on Monday.

The sources said Saudi Arabia did not give a final response to a delegation led by Finance Minister Shah Mahmood Qureshi, who also holds the charge of the Petroleum Ministry. Saudi Arabia said it was observing the current situation in Pakistan and would give a final response on the oil facility after the presidential election, they said. 

The sources said that the Pakistani delegation placed two requests before the government of Saudi Arabia. One was to grant a one-year extension in the oil credit facility enabling Pakistan to import oil on deferred payments.

Import bill: The other request was for a grant to ease the financial burden on oil imports, as during the last financial year the import bill had exceeded $11 billion. Higher fuel consumption by electricity generators during power shortages had increased demand for oil. 

The government has estimated that the oil import bill will surge over $14.5 billion in the current fiscal year.

The sources said the government was under tremendous pressure regarding the soaring oil bill. Besides requesting different Islamic countries to grant extension in oil credit facility, the government is also taking energy conservation measures to curtail oil import. The measures include proposals for five working days in a week and the closure of petrol pumps one day a week. The conservation measures are expected to reduce oil consumption as well as the oil import bill.

They claimed that if Pakistan were denied extension in oil credit facility, it would get a $500 million grant from Saudi Arabia to ease the oil import burden on the budget. The Saudi government had already provided $300 million to Pakistan in the month of March to meet budgetary gaps and promote macro-economic stability in the country. 

Pakistan imports around 110,000 barrels of oil per day. If the two countries agree on the extension in the oil credit facility, Pakistan will receive around 40 million barrels of oil in one year from Saudi Arabia, providing foreign exchange cushion of $6 billion.

The sources claimed that the oil credit facility would benefit the government more than a loan to bridge the deficit created by the high oil import bill. They said that former governments had not spent the loans to resolve the oil crisis, and had spent them on non-development projects. 

Loan: They said the government had borrowed Rs 165 billion from local commercial banks to pay differential claims to oil marketing companies.

The sources said Pakistan is also negotiating with other countries including Kuwait, United Arab Emirates and Qatar to seek extension in oil credit facilities for importing oil on deferred payments.


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## Neo

*World Bank's concessional funding up by 43 percent; ADB's risen by 4.6 percent​* 
ISLAMABAD (September 02 2008): World Bank's concessional funding for Pakistan has been increased by 43 per cent for 2007-08, while Asian Development Bank's has risen by a paltry 4.6 per cent. The WB concessional funding, known as International Development Assistance (IDA), linked to performance-based indicators inclusive of governance, macroeconomic indicators etc, has increased from 700 million dollars to one billion dollars.

The ADB's concecessional funding, termed Asian Development Fund (ADF), linked to similar performance-based indicators as used by the World Bank. It has risen by 30 million dollars from 640 million dollars to 670 million dollars. The lending volume of both the development financial institutions is determined by how major donors to their pool of concessional funding view their performance with respect to results and internal reforms.

Recently, several important contributors to the ADF pool, for example UK, US and Australia, have expressed strong reservations because of the lack of internal transparency and accountability within the ADB. Moreover, both the organisations claim to harmonise their performance-based lending programme.

Surprisingly, the World Bank recently said that it was not offering a policy-based lending programme to Pakistan because of our weak macroeconomic indicators, while, in marked contrast, the ADB has approved a 500 million-dollar loan for budgetary support, which is expected by the end of the month. It is not clear why such obvious discrepancies are maintained in the lending programmes of the two institutions.

The ADF allocation for Pakistan in 2005-06 was 640 million dollars for two years, but the amount was not fully utilised and 170.5 million dollars has been carried over for the next two years. Such poor utilisation of concessional funding must be investigated and appropriate measures taken to ensure that concessional funding are utilised prior to borrowing at market OCR rates, said a senior economist, requesting anonymity. Pakistan is amongst the top 10 borrowers from the World Bank, whereas in the ADB it is the second largest borrower.


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## Neo

*Government mulling over developing special economic zones: BoI ​*
ISLAMABAD (September 02 2008): Pakistan has been focusing on the improvement of infrastructure and was engaged in framing a policy for the development of special economic zones (SEZs), official in the Investment Division and Board of Investment (ID&BoI) said.

Talking to a delegation of United States Chamber of Commerce here, ID and BOI Acting Secretary Major Iqbal Ahmad (Retd) said the Reconstruction Opportunity Zones (ROZs) would also be given the same preference and benefits as provided in case of SEZs.

The delegation led by Lieutenant General Daniel W. Christman (Retd), Senior Vice President for International Affairs, US Chamber of Commerce and Jay Collins, Chairman US Pak Business Council/CEO Public Sector Group called on the BoI Acting Secretary to discuss business opportunities in the country.

The Acting Secretary, while highlighting the geo-strategic location of Pakistan and other market dynamics, signified upon the upward trends of foreign direct investment (FDI) over the years and appreciated US investment into Pakistan being the highest ie 1.3 billion during 2007-08. Agriculture, Power, Oil and Gas exploration and manufacturing sectors have been defined as a policy case sectors of investment.

The delegates were also informed that Pakistan laid a lot of emphasis on bilateral investment treaty (BIT) with US as that would encourage more investment. Iqbal added that deliberations on BIT were in progress and the next round of dialogue is expected in near future. He said that still the existing laws of Pakistan were sound enough to give protection to foreign investment, this included existing laws for the enforcement of foreign courts and foreign arbitral awards.

Lieutenant General Christman (Retd) appreciated the information given by the Acting Secretary and showed concern on the issue of Westing House, which remained unsolved. Furthermore, he was interested to know about the methodology used by ID and BoI to market Pakistan's investment potential.

It was highlighted that ID and BoI projected Pakistan's potential through multiple advocacy tools and Pakistan's missions abroad also supported it to identify potential investors and thus providing them the information to have enough knowledge for the Pakistani Economy.

ID and BoI have appointed Honorary Investment Counsellor in different countries who are renowned businessman. In addition to that Road shows and conference in Pakistan as well as abroad play vital role to portray the positive image of Pakistan and provide a platform to understand business community to each other.

The delegation appreciated the hospitality and services extended by the ID and BoI and were impressed with the investment climate and potential in the country and assured full support from US Chamber of Commerce to bring investors into Pakistan to gain benefits. ID and BoI Acting Secretary appreciated their visit to Pakistan and assured full facilitation on the part of ID and BoI.


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## nitesh

Pakistan to provide land to Arab countries for farming

Pakistan to provide land to Arab countries for farming
Updated at: 1550 PST, Tuesday, September 02, 2008

ISLAMABAD: Pakistan will provide agricultural land to Arab countries for overcoming the crisis of food grains.

Federal Minister for Foreign Affairs, Shah Mahmood Quraishi talking to Gulf media told providing agricultural land to Saudi Arab and United Arab Emirates aimed at improving ties with the brotherly Muslim countries. 

Shah Mahmood Quraishi said that Arab countries have been offered agricultural land on large scale, so that they could build up big farms. The existing government was holding talks with the Saudi government for obtaining crude worth about $6 billion on deferred payments in a bid to overcome the international price-hikes in crude, while efforts were afoot for attracting the existing petro-dollars in the Arab world for direct investments in Pakistan, he told.


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## Neo

*Emaar Pakistan Signs Deal With Paragon​*
KARACHI - Emaar Pakistan, the country-subsidiary of global property developer Emaar Properties PJSC, has awarded the piling work contract for towers in plot 7 & 8 within Crescent Bay to Paragon Construction, a leading Pakistani company.

Crescent Bay is the pioneering master-planned community being developed by Emaar Pakistan and is part of a multi-billion dollar investment by the company in the countrys real estate sector. 

Saleem Butt, Chief Operating Officer, Emaar Pakistan, signed the agreement with Mr Aftab Siddique of Paragon Construction recently. As per the contract valued at over Rs2 billion, Paragon will undertake the piling work for Reef and Pearl Towers within Crescent Bay, with piling expected to be completed in six months. Work on the super structure and mechanical, electrical and plumbing (MEP) works will start thereafter. 

Butt said: Crescent Bay is energising Karachis property sector as the pioneering master-planned community that brings in world-class standards in engineering and construction. 


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## Neo

*US pushing Pakistan to accept draft of investment treaty ​* 
Wednesday, September 03, 2008

ISLAMABAD: The US administration is pushing Pakistan to accept newly placed draft of Bilateral Investment Treaty (BIT), which has been signed only by few backward African countries, The News has learnt.

If the conditions attached by the USA for inking BIT are the best in the world, why many developed and non-developed countries are reluctant to buy it, official sources questioned who are dealing with negotiation process in this regard.

Actually, by inking BIT agreement with Islamabad, USA wants to pursue China and India for signing the same document with the argument that without bilateral investment treaty, there will be no investment of US companies on those destinations, added the official sources.

With new draft of BIT, USA has so far signed this agreement with few countries such as Rwanda, Mozambique, Uruguay, El Salvador etc. 

The Bush Administration is pursuing China and India for inking BIT agreement and if Islamabad moves ahead, Washington can easily sell the deal to its other neighbours.

Talks on BIT had been stalled after the Bush visit to Islamabad during 2006. After the PPP led government assumed power the US administration has decided to resume talks on BIT but schedule for holding consultative meetings has not yet been finalised.

As US government exerts pressure on Pakistan to ink BIT under its own rules of game, Pakistan showed reluctance to accommodate demands placed by the USA during the negotiations process.

The Bush Administration, the sources said, asked Islamabad to accept its version on major issues including reinvestment, arbitration mechanism, intellectual property rights, and granting MFN status.

The US authorities gave a 200-page BIT document to Pakistani counterparts in the third round of parleys for finalizing BIT.

The US is putting more pressure on grounds of violation of intellectual property rights and the government is considering to accept it in such a way that only investing companies in Pakistan can raise the issues of IPRs, the sources added.

The BIT does not mean that Pakistan will start receiving substantial investment and the PPP government should move ahead carefully in this regard, a senior official said and added otherwise, it could endanger Pakistans interest in future. 

The sources said different countries want BIT with retrospective effect which means the government will provide protection to all those which were made in the past. 

The sources said there is need to bring changes in the definition of investment, retroactive application, MFN treatment, and arbitration mechanism for inking deals on BIT with different countries.

According to a World Bank economist, the US tries to convince other countries for multilateralism but in its own case tries to ink trade and investment deals bilaterally in accordance with its own rules of the game.

For dispute resolution, Pakistan in the past proposed to exhaust local options first available in Pakistan. If any investor is still not satisfied then the government is proposing to approach World Banks institution the International Centre for Settlement of Investors Dispute (ICSID), which was established in 1965 to resolve lingering issues.

Another option is UN Commission on International Trade Laws (UNCITRAL) for referring dispute settlement, the sources added. It seems that the government is more inclined towards ICSID because it is an institutional body with clear guidelines of charges of fee in this regard.

Pakistan has so far signed 46 bilateral investment treaties with different countries. The first BIT was signed with Germany in 1959. But most of the agreements in this regard were signed without well-thought out strategy and some times it creates difficulty for the government while confronting issues with other countries.

When official spokesman of US embassy in Islamabad was contacted to get exact number of countries with which the USA signed new draft of BIT agreement so far, he said that they would have to seek this information from Washington so he could not give information just right now. But he promised to give detailed response in this regard very soon.


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## Neo

*Will coal brighten up the future? ​* 
Wednesday, September 03, 2008

KARACHI: During the current acute power shortage and the exorbitant cost of imported oil, there remains an alternative for Pakistan to meet energy requirements using its most abundant, but little used, local resource: coal. Over 184 billion tonnes of coal reserves were discovered in the Tharparkar district in Sindh over 16 years ago, enough to fuel multiple power plants for years to come. However, the country imported more than $11 billion worth of oil during the last fiscal year. Meanwhile, the only coal power plant in Lakhra, already in a dilapidated condition but with a capacity of 150 megawatts (MW), was sold to a private party.

Neither the usual supply of gas nor oil is enough to meet the demand of power or industrial sectors, rendering it necessary to turn towards local coal to generate power. Despite the abundance of local coal, an American company has been allowed to construct an integrated terminal with a 1,200MW power plant project based on imported coal.

To utilise the coal deposits, the government of Pakistan Peoples Party (PPP) is inviting foreign investments in coal power plants. As part of its efforts, the PPP organised a conference in Washington, invited letters of intents from half a dozen business groups and set up the Thar Coal and Energy Board to work as a bridge between potential investors and government functionaries.

Similar attempts to make use of coal deposits were made by the previous government, but did not materialise. In the absence of an increase in the power generation capacity, the demand continued to exceed the supply. The power shortfall has now widened to 4,000MW.

Experts warn that the political crisis and the deteriorating security situation would result in an abnormally high power tariff. According to them, the government must stop depending on foreign investors.

Abdul Basit Mehta, who represented the German firm RWE in a feasibility report on Thar coal, says that mining coal and using it for power production is an economical proposition.

We have not been able to do anything up until now, because it was never a priority with the government, he said, recalling that previous leaders had seesawed between thermal and hydro options to generate power.

After conducting geological survey and hydrological tests to establish that underground aquifers were enough to meet water needs, RWE proved the mining feasibility of a piece of land in Thar measuring 30 square kilometres.

A senior official of the Sindh Coal Authority told The News that the Sindh government will shortly invite international firms to carry out a detailed study of the unexplored parts of the Thar field.

Up until now, studies have only been carried in an area of 500 square kilometres divided into six blocks, he said. Now, the government is looking to assess the complete reserves spread over an area of 9,000 square kilometres. However, such a study will only mean more area is available to be leased to investors. The real issues that have hindered investment in the coal sector have yet to be addressed.

Recently, the National Electric Power Regulatory Authority (NEPRA) issued a minimum upfront tariff of 7.8 cents per kWh earlier this year, but this proved to be insufficient. Farooq Hasan, Chairman of Hasan Associates, a local energy group, says he has hired consultants to prepare a bankable study seeking a fresh tariff for its proposed 1,200MW power plant. I am waiting for the renewal of the exploration license. The license had expired because Hasan Associates had waited too long for the upfront tariff.

The infrastructure of the water supply is another issue. A steady supply of water is necessary for all power plants. Studies show that there is water in the underground aquifers, but its amount has not been established. Associated Group, Pakistans largest liquefied petroleum gas producer, which now runs Lakhra Power Plant, had also ventured into Thar, but Fasih Ahmed, a director, said that there was not enough water in the aquifers. One solution is to build a canal all the way to where the mine is located, but this involves a lot of capital, he said.


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## Neo

*Pakistan seeks Chinas help to develop Thar coal project ​* 
Wednesday, September 03, 2008

ISLAMABAD: Pakistan has sought special cooperation from China in developing the Thar coal project keeping in view future energy challenges of the country.

Chinese Ambassador to Pakistan Luo Zhaohui called on M Salman Faruqui, Deputy Chairman Planning Commission (PC) on Tuesday at his office in the PC to discuss a wide range of economic and development issues.

During the meeting, Pakistan took up the vital Thar coal project, which if materialised, could rectify all energy ills. According to a press release, the ambassador assured he will consider bringing some other Chinese company for the completion of the project. Faruqui assured the Chinese side that the government would remove all impediments related to the execution of the projects by Chinese investors.

Faruqui apprised the ambassador that the government of Pakistan plans to come up with an integrated macro stability package in the near future. For this purpose, the government needs assistance in the next six months to bring about macro stability. To achieve this, the Chinese private contractors could offer great assistance by investing in and executing the public sector development projects announced in the fiscal year 2008-09 and beyond. The Ambassador assured that he would encourage the Chinese investors to come to Pakistan and invest in various projects.

He was informed that Pakistan has already shown some good signs of economic recovery by recording 20 per cent growth in revenue collection and 15 per cent rise in remittances. Moreover, the increase in duty on the import of luxury goods will further help stabilise the economy.

Presently, the most important sector for Pakistan is the energy sector. The Ambassador was informed about the investment conference recently held in Washington on energy. Faruqui also discussed the plan for the next proposed investment conference to be held in Hong Kong in October this year. In view of exceptionally good relationships with China, he invited the Chinese private sector to participate in the conference. He hoped to get ADB and Bank of China to sponsor the conference in Hong Kong.

Deputy Chairman expressed that the PC wanted to interact and work out an integrated relationship with its Chinese counterpart through joint seminars, mutual visits, and exchange of documents to the benefit of both the countries. He briefed the Ambassador on the reorganisation of the Planning Commission so that it can focus on strategic issues in the field of development. The basic purpose behind the reform is to develop a corporate working environment in the PC to serve as a think tank with a strategic focus and global perspective at conceptual and operational levels. The Chinese Ambassador assured his countrys cooperation in all on-going and future development projects in Pakistan.


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## Neo

*MoU signed for boosting milk production​* 
Wednesday, September 03, 2008

KARACHI: Livestock & Dairy Development Board (LDDB) and DeLaval Pakistan signed a memorandum of understanding to join hands for assisting and supporting dairy farmers in increasing milk production, both in terms of quality and quantity.

Dr Muhammad Afzal, Chief Executive Officer of LDDB, signed the agreement on behalf of the board while Haroon Lodhi inked the document from the DeLaval side.

Both parties agreed to jointly plan and execute practical demonstration of mechanized milking and other farm equipment at the LDDBs selected progressive dairy farms. Joint activities would include seminars, conferences, symposia, field days and farm visits to create awareness among the farmers on use of modern techniques in dairy farming for increasing milk production.

This MoU provides an excellent platform for both the organizations to create synergies by working together and using their influence on dairy farming industry and research bodies to cooperate in the development of dairy sectors by offering the best knowledge sharing opportunities.


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## Neo

*ADB recommends structural changes​*
ISLAMABAD, Sept 2: A delegation of the Asian Development Bank headed by Jesus Felipe gave a presentation at the Planning Commission on Competitiveness and Structural Transformation in Pakistan, here on Tuesday.

The objective of ADBs research programme was to understand Pakistans constraints to industrialise and to transform, upgrade and diversify its economy. The findings of this analysis would be incorporated into ADBs operations in Pakistan namely, lending and policy dialogue.

Felipe underscores that economic development requires diversification, not specialisation. He said that growth accelerations were associated with structural changes in the direction of manufacturing. For rapid growth, a large manufacturing sector is essential.

The presentation highlighted the importance of sophisticated goods and underlined that countries that export more sophisticated goods, grow faster.

It was noted that Pakistans exports were relatively unsophisticated.

It was pointed out that services sector was the largest contributor to output growth but Pakistan has an agricultural economy for the employment structure which has low level of labour productivity. Also it has low manufacturing share compared to successful economies. All this ends at low level of export sophistication.

In order to get the firms move from the poor parts to the rich parts of the world, a country needs to change to products that use similar capabilities. It was observed that Pakistan occupied textiles and garments cluster in the product space which is tightly connected to itself, but poorly connected to the rest of the space. Moreover in Pakistans case, the export dynamism lagged relative to comparators in the region.

For transformation, public-private cooperation was strongly recommended. Some policy initiatives like open architecture, self-organisation, co-financing and transparency were also proposed.

Deputy Chairman Planning Commission chaired the meeting, whereas representatives of various other ministries and officials of the Planning Commission attended the presentation.


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## Neo

*10,000 tractors for Punjab farmers​*
MULTAN, Sept 2: The Punjab government has launched a green tractor scheme with an objective to promote agriculture sector and in this regard invited applications from farmers in the province.

According to agriculture sources, the government will deliver tractors to small farmers at subsidised rates and for this purpose the government will offer Rs0.2 million subsidy per tractor.

The government will deliver 10,000 tractors to peasants under the scheme.

According to assistant director agriculture Ishaq Khan Lashari, the government has fixed quota for each tehsil across the province according to its cultivated capacity. He further disclosed that the application forms are available from DDO offices for Rs250 for each form.

Tractors will be given to farmers having piece of land ranging from five acre to 25 acres. However, the defaulters of Zarai Traqqiati Bank Limited will not be provided the facility. He further maintained that tractors will be distributed among the farmers through a ballot.APP


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## Neo

*China assures investment in projects​*
ISLAMABAD, Sept 2: Chinese Ambassador to Pakistan Luo Zhaohui called on Salman Farouqui, deputy chairman Planning Commission on Tuesday and discussed a wide- range of economic and development issues.

Farouqui apprised the ambassador of the governments plan to come up with an integrated macro-stability package in the near future. For this purpose, the government needs assistance in the next six months to bring about macro-stability, he added.

To achieve this objective the Chinese private contractors could be of great help by investing and executing the public sector development projects announced in the fiscal year 2008-09 and beyond.

The ambassador assured the official that he would encourage the Chinese investors to come to Pakistan and invest in various projects.

He was informed that Pakistan had already shown some signs of economic recovery by recording 20 per cent growth in revenue collection and 15 per cent rise in remittances. Moreover, the increase in duty on the import of luxury goods will further help stabilise the economy. Presently, the most important for Pakistan is energy sector, Mr Farouqui said. The ambassador was informed about the investment conference on energy recently held in Washington.

Mr. Farouqui also discussed the plan for the next proposed investment conference to be held in Hong Kong in October this year.

In view of exceptionally good relationships with China, he invited the Chinese private sector to participate in the conference. He hoped to get the Asian Development Bank and Bank of China to sponsor the conference in Hong Kong. The Thar coal project also came under discussion and the ambassador assured to consider bringing some other Chinese company for the completion of this project.

Mr Farouqui assured the Chinese side to remove all impediments in the way of execution of projects by the Chinese investors.

Deputy chairman Planning Commission expressed the desire to interact and work out an integrated relationship with his Chinese counterpart through joint seminars, mutual visits, and exchange of documents to the benefit of both the countries.

He briefed the ambassador on the reorganisation of the commission so that it can focus on strategic issues in the field of development.

The basic purpose behind the reforms is to develop a corporate working environment in the commission to serve as a think-tank with a strategic focus and global perspective at conceptual and operational levels.APP


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## Neo

*Honey worth $3.9m exported in 2007-08​*
KARACHI: The country exported around $3.9 million worth of honey during 2007-08, a spokesman for honey exporters association said Monday.

Pakistan has achieved self-sufficiency in honey production and was now able to export prime quality produce at competitive prices in the global market.

World Honey production is around 1.4 million tones while six countries concentrate 50 percent of total world production.

Senior member of the trading body, Jawed A Khan urged the government to provide help to the industry so that it could further invest in the latest technology. Pakistan produces around 50,000 tonnes honey annually, he added.

He said Argentina occupies the third place as honey producer worldwide, after China and the United States. Its production volume represents 70 percent of South American honey, 25 percent of American honey and 6 percent of total world production.

He said an increase in the average yield of honey per colony from 5 kg to 21.5 kg had been achieved by our farmers.

He said buyers from India, China, Saudi Arabia and Uzbekistan has shown great interest in making deals for honey.

He said according to record, more than 241,000 colonies of honeybee in all four provinces and Azad Kashmir were working with advanced technology.

He said the European bees were first introduced some 22 years ago and after consistent efforts now it has more than 154,000 colonies being managed by 11,500 beekeepers.

Virus cannot survive in the honey due to its quality to absorb water and a 100 grams of honey contains 303 calories, he said.

The best time for beekeeping is from October to November and the spring season, however, honey could be produced throughout the year by planting some special species of plants, he added.

He said development of new bee management techniques, production and distribution of genetically superior honeybee queens are vital to achieve significant progress.

An official of the Honeybee Research Institute said the institute provided training to people in beekeeping through different courses.

He said inexperienced labour in honeybee manufacturing could cause health hazards while the department was striving for the promotion of the use of honeybees for pollination of vegetables, seeds, fodder and fruit crops for higher yield and development of a low cost comb foundation locally to replace costly imported metal sheets used by farmers.


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## Neo

*Pakistan seeks Chinas assistance for PSDP projects​*
ISLAMABAD: To bring macro economic stability in near future, Pakistan seeks Chinese assistance to help Pakistan by investing and executing the Public Sector Development Projects 2008-09.

The Chinese Ambassador to Pakistan, Honorable Luo Zhaohui, assured of cooperation in a meeting with Deputy Chairman Planning Commission, M Salman Faruqui on Tuesday in the Planning Commission. Faruqui apprised the Ambassador that the government of Pakistan wanted to bring macro economic stability immediately in the country and for which the government needed some financial assistance.

Deputy Chairman said that the Chinese private contractors would provide assistance by investing and executing the public sector development projects announced in the fiscal year 2008-09. The Ambassador assured that he would encourage the Chinese investors to come to Pakistan and invest in various projects.

The ambassador was informed that Pakistan has already shown some good signs of economic recovery by recording 20 percent growth in revenue collection and 15 percent rise in remittances. Moreover, the increase in duty on the import of luxury goods would further help stabilise the economy.

The deputy chairman of Planning Commission also discussed the plan for the next proposed Investment Conference to be held in Hong Kong in October this year. In view of exceptionally good relationships with China, he invited the Chinese private sector to participate in the conference. He hoped to convince the ADB and Bank of China to sponsor the conference in Hong Kong.

The Thar Coal Project also came under discussion and the Ambassador assured to consider bringing some other Chinese company for the completion of this project.

Faruqui assured the Chinese side to remove all impediments related to the execution of projects by the Chinese investors. Deputy Chairman expressed that Planning Commission wanted to interact and work out an integrated relationship with its Chinese counterparts through joint seminars, mutual visits, and exchange of documents to the benefit of both the countries.

He briefed the Ambassador on the reorganisation of the Planning Commission so that it could focus on strategic issues in the field of development. The basic purpose behind the reform was to develop a corporate working environment in the Planning Commission to serve as a think tank with a strategic focus and global perspective at conceptual and operational levels. The Chinese Ambassador assured his countrys cooperation in all on-going and future development projects in Pakistan.

Meanwhile, a delegation of the Asian Development Bank (ADB) headed by Jesus Felipe gave a presentation at the Planning Commission on the competitiveness and structural transformation in Pakistan. The objective of the ADBs research programme was to understand Pakistans constraints to industrialise and to transform, upgrade and diversify its economy. The findings of this analysis would be incorporated into ADBs operations in Pakistan namely, lending and policy dialogue. Felipe underscored that economic development requires diversification, not specialisation. He said that growth accelerations were associated with structural changes in the direction of manufacturing and emphasized that for rapid growth, large manufacturing sectors were essential.

The presentation highlighted the importance of sophisticated goods and underlined that countries that export more sophisticated goods, grow faster. It was noted that Pakistans exports were relatively unsophisticated.

It was pointed out that services sector was the largest contributor to output growth but Pakistan is an agricultural economy for the employment structure, which has low level of labor productivity. Also it has low manufacturing share compared to successful economies. All this ends at low level of export sophistication.

In order to get the firms move from the poor parts to the rich parts of the world, a country needed to convert their energies towards more production. It was observed that Pakistan occupied textiles and garments cluster in the product space, which was tightly connected to it-self, but poorly connected to the rest of the space.

Moreover in Pakistans case, the export dynamism lagged relative to competitors in the region. For transformation, public-private cooperation was strongly recommended and some policy initiatives like open architecture, self-organisation, co-financing and transparency were also proposed.


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## Neo

*Rs 5.3bn Cherah Dam project: WASA agrees to give 50% water share to CDA​*
RAWALPINDI: Water and Sanitation Agency (WASA) has finally agreed to give 50 percent share of water to Capital Development Authority (CDA) to settle a dispute between the two civic bodies over construction of Rs 5.3 billion Cherah Dam in Islamabad, a senior official of WASA told Daily Times on Tuesday.

He said CDA had refused to give No Objection Certificate (NOC) to WASA for construction of the dam in its precincts. CDA raised several objections against the project and linked NOC with 50 percent water share to Islamabad from the proposed dam.

The proposed dam will be constructed on Soan River near Cherah village in the jurisdiction of Islamabad. The site is located northeast of Rawalpindi, about 25 km east of Rawalpindi-Lehtrar Road.

He said CDA made unnecessary objections that land cost of the project was very low and the project had many flaws. He said to settle the dispute WASA had decided in principle to give 50 percent share of water to CDA just to start the project and provide some additional water to residents of the city.

He said dam was necessary, as over-extraction of ground water had lowered water table alarmingly in Rawalpindi.

He said the proposed dam would produce only 15 million gallon water daily (MGD) and WASA and Rawalpindi Cantonment Board (RCB) would get only 3.5 MGD each and the CDA would get 7.5 MGD water. He said 3.5 MGD water for city would not be sufficient to meet the growing water requirements for future.

He said at present water demand of the city having a population of almost 1.5 million was 50 MGD. He said the city mainly relied on Rawal and Khanpur dams for water in addition to the ground water in the form of 220 tube wells. The total extraction from these two sources was 37 MGD (21 MGD from tube wells and 16 MGD from Rawal and Khanpur dams).

He said the present deficit of 13 MGD would increase to 41 MGD by the year 2025 if the civic bodies did not explore new water sources, as Rawal Dam had outlived its 42-year life out of 50-year design life and it cant supply more than 28 MGD water. In drought years, even this supply would not be available to meet the citys drinking water need.

He said due to depleting groundwater table and inadequacy of existing surface water sources, it was imperative to develop additional surface water sources for augmentation of the citys domestic water supply system.


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## Neo

*'PC planning to evolve integrated macro stability package' ​* 
ISLAMABAD (September 03 2008): Planning Commission Deputy Chairman Salman Faruqui has said that the government is planning to come up with an integrated macro stability package in near future. For this purpose, the government needs assistance, in the next six months, to bring about macro stability.

This he stated in a meeting with Chinese Ambassador in Pakistan Luo Zhaohui here on Tuesday. They discussed a wide range of economic and development issues. Salman said the Chinese private contractors could be of great assistance by investing in and executing the public sector development projects announced in the fiscal year 2008-09 and beyond.

The Ambassador said that he would encourage Chinese investors to come to Pakistan and invest in various projects. He was informed that Pakistan has already shown some good signs of economic recovery by recording 20 percent growth in revenue collection and 15 percent rise in remittances. Moreover, the increase in duty on import of luxury goods would further help to stabilise the economy.

Presently the most important sector for Pakistan is energy sector. The Ambassador was informed about the investment conference recently held in Washington on energy. Faruqui also discussed the plan for the next proposed investment conference to be held in Hong Kong in October this year.

In view of the exceptionally good relations with China, he invited the Chinese private sector to participate in the conference. He hoped to get ADB and Bank of China to sponsor the conference in Hong Kong. The Thar-coal project also came under discussion and the Ambassador assured to consider bringing some other Chinese company for completion of this project. Faruqui assured the Chinese side to remove all impediments related to the execution of projects by Chinese investors.

The Deputy Chairman said that the Planning Commission wanted to interact and work out an integrated relationship with its Chinese counterpart through joint seminars, mutual visits, and exchange of documents to the benefit of both the countries. He briefed the Ambassador on reorganisation of the Planning Commission so that it can focus on strategic issues in the field of development.

The basic purpose behind the reform is to develop a corporate working environment in the Planning Commission to serve as a think tank with a strategic focus and global perspective at conceptual and operational levels. The Chinese Ambassador assured his country's co-operation in all on-going and future development projects in Pakistan.


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## Neo

*Lack of refining facility for thick grade: two million barrels crude exported to China ​* 
ISLAMABAD (September 03 2008): A foreign oil company, engaged in production and exploration of oil in Pakistan, exported about 2 million barrels crude oil to China for refining, due to insufficient capacity of refineries in Pakistan to process it, sources told Business Recorder on Tuesday.

The company sent the samples to all refineries in Pakistan, but the refineries showed inability to process the crude due to high concentration of some chemicals, sources said. After working on available options, the company sought permission from the government for exporting the crude, and a ship 'Mare Atlantic', carrying 2 million barrels crude oil left Port Qasim for China on Tuesday, sources added.

It is strange to note that the country is paying more than one billion rupees per day as subsidy to oil companies for providing some relief to the consumers, but it has accumulated to such an extent that the government is now left with no option but to pass on the burden of subsidy to the consumers gradually. The government is in need of speedy investment to refining sector of the oil industry to save the precious foreign exchange, sources elaborated.

The crude at present being extracted from a site in Sindh is so thick that it is not possible to refine it in Pakistan, if the capacity of the refineries is not enhanced to the level where such crude could be processed easily, sources opined.

Oil and gas will remain major sources of energy in the world for the next 50 years, at least, or so, which calls for accelerating both off-and on-shore exploration along with improving refining capacity at the local level to save the precious foreign exchange, sources added.

Most energy analysts are of the opinion that sustaining modest economic growth will require massive new investments in the oil and gas sector, sources elaborated. Recent forecast by the International Energy Agency (IEA) estimate that sustaining a 3.6 percent rate of annual growth in global economy up till 2030 will require an expansion of 33 million barrels per day in global oil supplies, sources further explained.The steep rising trend in oil prices needs revisiting of our oil policy, so that whatever we produce locally could be consumed here, for which investment be injected whenever required.

If we had the desired level of refining capacity we could have contributed towards reducing the oil bill to some extent, sources said. There are also some prospects for exploring alternate sources of energy in Pakistan such as wind; solar etc, and the authorities are pumping in some of the investment for this purpose to have a cheap sustainable energy mix for the consumers in the country, sources said.


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## Neo

*300 megawatts wind power likely to be inducted by 2010: AEDB ​* 
ISLAMABAD (September 03 2008): Alternative Energy Development Board (AEDB) CEO Arif Salahuddin said on Tuesday that around 300 MW of wind power was expected to be inducted by 2010 and the first wind turbines being installed by a Turkish company are at an advanced stage and expected to be operational over next 2-3 months.

He said this while giving a detailed presentation to National Electric Power Regulator Authority (Nepra) about the current status of ongoing wind power projects and the issues impeding their early materialisation.

The representative of National Transmission and Dispatch Company (NTDC) and the Ministry of Water & Power also attended the meeting. During the presentation, some issues on grid connectivity for forthcoming wind projects highlighted by the AEDB were thoroughly discussed.

Nepra Chairman Khalid Saeed directed AEDB and NTDC to expedite the induction of upcoming wind power projects on national grid by resolving the inter-grid connection issues at the earliest. NTDC was also advised to examine various proposals for amending the Grid Code 11w wind power projects presented by investors. At present, Nepra has granted generation license to six wind farm developers with a total installed capacity of 500 MW. Moreover, tariff of four wind power plants with a combined capacity of 400 MW has also been determined by Nepra.


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## Neo

*Estimates of the problem of poverty​*
EDITORIAL (September 02 2008): In a recently released report on internationally comparable poverty estimates, the Asian Development Bank (ADB) has set a new Asian Poverty Line at 1.35 dollars a day income. It also says the previous one-dollar-a-day income standard remains an appropriate benchmark for estimating the incidence of extreme poverty in Asia that, it notes, has witnessed rapid economic growth.

And hence it might also be time to evaluate the incidence of poverty using a benchmark that reflects the region's dynamism. This method of measuring poverty on the basis of income may be relevant to Asia's fast growing economies such as those of China and India having acceptable inflation levels, it has little relevance to our economic situation which, at this point, is anything but dynamic while inflation has hit through the ceiling.

Measuring poverty generally is a dodgy business with some people preferring to use the daily caloric intake as a standard and others favouring consumer price index (CPI), or as recommended to us by the World Bank, the survey based Tornqvist Price Index. How different methods may yield different results is obvious from the previous government's claim, based on CPI, that poverty had retreated from 34.46 percent in 2001 to 23.94 percent in '05, while as per the WB findings the figure for poverty head count in '05 was around 29.2 percent.

The claim, though, may also have something to do with our economic managers' proclivity to fudge figures in order to hide unpleasant facts. Notably, at the time most people familiar with the issue were saying that over 30 percent people in this country lived below the poverty line, the government declared that the figure was around 24 percent, directing the statistics department to use the same in its official documents.

To justify the feat, it simply shifted its model of measuring poverty from CPI to caloric intake. Then there are discrepancies in the figures put out by the Federal Bureau of Statistics and the State Bank, which surely is not helpful for those responsible for addressing the issue, especially at the present time when the highest ever inflation has pushed a lot more people into poverty.

As per State Bank estimates, the overall CPI inflation in July of the current fiscal year reached 24.3 percent as against 6.4 percent in the corresponding month of the last year. And the food inflation rose from 8.5 percent from a year ago to a staggering 33.8 percent during the current period.

These CPI based statistics clearly indicate that transient poverty - caused by an unprecedented increase in international prices of oil as well as protracted political uncertainty at home - has reached a level where a much higher proportion than 24 percent of the population would find one dollar or 1.35 dollars a day income a lot less than sufficient to make ends meet. For those living in chronic poverty mere survival would be an even bigger struggle.

It goes without saying that the prevalence of poverty, both transient and chronic, needs to be determined and addressed on an urgent basis. Which requires change in past practice. It means that first of all the relevant statistics must be stated correctly. Secondly, there is need for use of a consistent method to define poverty. And thirdly, CPI together with survey based price index should be used to determine the incidence of poverty.


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## Neo

*UAE real estate sector booming at the expense of Pakistan ​* 
Thursday, September 04, 2008

KARACHI: The real estate sector in Pakistan is losing out heavily as investments worth almost $3 billion have been transferred to the United Arab Emirates (UAE) within a span of eight months, say observers. 

These investments can be made directly, or through middlemen. Locals wishing to invest directly can open foreign currency accounts in Pakistan and travel to the UAE to pay their real estate dealers themselves. 

The property cannot be transferred or sold until the down payment and an additional three installments have been paid by the investor, a rule which is strictly adhered to. The method of payment depends on the type of project, say realtors.

Indirect investments are made through the hawala system, where professional middlemen advise potential investors and help transfer funds according to the requirements of real estate opportunities in the UAE. These middlemen have opened up offices in Pakistan and are well-known in the real estate industry. 

K K Builders Chairman Munir Sultan said that the hawala system can be misleading. A property may be located far away from the main city of Dubai, but dealers may portray it to be right in the centre of the city, he said. 

He said the UAE continues to attract investors because it has a more reliable reputation than Pakistan in terms of freehold properties. The UAE has promised to complete all projects by 2010, but the same cannot be said for local projects. Furthermore, landlords in the UAE are likely to earn more through rent than landlords in Pakistan, said Sultan.

The reason for this is that the dirham is stronger and more stable than the rupee. 

Moreover, tenants in the UAE are less likely to breach property laws than those in Pakistan. Sultan explained the various crises in the country, along with the lack of facilities, are what propelled investors to shift to the UAE. 

In the UAE, investors do not have endless paperwork, nor do they to face legal hurdles, he said.

An advantage the UAE has that Pakistan lacks is that there are several laws protecting both developers and purchasers of properties. Real estate brokers operating in Dubai are registered, certified, and ranked in a database introduced by the Real Estate Regulatory Agency (RERA). The main objective of RERA is to establish a global foundation for the real estate sector in Dubai.

The introduction of the much-awaited escrow account law (also called the Trust Account law) in Dubai in 2007 has also played an important role in establishing the foundation of Dubais real estate sector. 

The initiation of escrow accounts has meant that issues related to real estate developments, including delays due to the lack of funds, will now be scrutinised by the authorities, RERA in particular.

Meanwhile, the Dubai housing sector is declining, owing to saturation in the property market. Foreign and local investors have already invested heavily. There does not seem to be any charm in investing further. 

By the middle of 2009, it has been estimated that 80,000 of the freehold apartments in what is known as new Dubai would be completed. This is expected to be followed by inter-city migration, with people moving towards these newly constructed properties, which in turn would lead to a decline in the rental value of existing residences in the other parts of the UAE. 

Foreign freehold property owners can set up their businesses in the UAE and apply for a license, which would allow them to obtain a visa, although when the freehold concept was introduced, foreign investors were enticed with the opportunity of becoming permanent residents with permanent visas upon the purchase of freehold properties. This clause has been retracted. Now, ordinary employment visa rules apply. 

Meanwhile, foreign freehold property owners living abroad would need to apply for a tourist visa to visit the country, which limits the stay to a maximum period of 30 days. 

The builders and developers seem to have foreseen the original clause would be retracted. Contracts signed with investors clearly state that builders and developers have the rights to withdrawing approval of the visa or making amendments to it. 

Contracts signed with investors clearly state that the former have complete rights to either withdrawing approval of visa or making amendments in it, and also state that developers have the right to demolish or reconstruct the building. Nevertheless, investors continue to flock to the UAE market, as it is viewed as politically and economically stable.


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## Neo

*S Korea interested in establishing power plant ​* 
Thursday, September 04, 2008

KARACHI: Koreas Chief of Mission for Karachi office, K Young Yong Kim has said that a Korean shipbuilding company, Hyundai Heavy Industries, was interested in investing to the country and setting up a 1.7MW unit to overcome electricity shortage.

He explained that this one unit can be easily set up on a container through which around 3,000 homes can be provided power supply. Kim said this during a meeting with Deputy Nazim Nasreen Jalil at the KMC building on Wednesday.

He further added that to overcome Sindhs electricity deficiency, another Korean company was collaborating with local representatives to install a 175MW plant worth $160 million, which is expected to be completed by next year.

He also said that Korea is interested in importing textile products from Pakistan but due to excessive load shedding this is not being made possible. He informed that there are about 200 Korean businessmen living in Pakistan and 25 companies operating here.

Nasreen Jalil informed the visiting diplomats that several hours of unannounced load shedding has caused havoc for both businesses and people. She said that if uninterrupted power supply is provided to Pakistan then there can be industry stabilisation and trading relations with other countries could improve.


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## Neo

*Tumbling rupee may lead country back to IMF ​* 
Thursday, September 04, 2008

KARACHI: Rupee traded at a record low of 77.45 to the dollar on Wednesday due to heavy oil payments and an economic situation so dire that bankers hope the 5-month-old civilian government will seek IMF support. 

The rupee steadied by the close, amid unconfirmed reports of central bank dollar sales, and ended little changed from Tuesday at 76.90/77.00. 

The rupee has lost more than 20 per cent against the dollar this year, and foreign currency reserves have fallen sharply due to a deteriorating balance of payments position. 

The slide has raised fears of a sovereign default in six months time, Citibank economist Mushtaq Khan said in a research note circulated on Tuesday that advocated Pakistan should turn to the International Monetary Fund. 

With a $500 million repayment of the 2009 Eurobond this February, markets are factoring in a significant risk of sovereign default, Khan said. He saw measures to stifle imports and the proposed deferral of Pakistani payments to Saudi Arabia for oil imports helping to stabilise the rupee, but investors needed more clarity on the strategy for handling the balance of payments deficit. 

Khan wrote: An IMF programme would bring additional funding policy consistency and discipline and political resistance to the IMF may be overcome as the economic slide continues. Pakistans economy is in tatters due to the impact of high oil and food prices, while investors have been frightened off by policy inaction stemming from a lengthy period of political instability stretching back to early 2007. 

They need to restore the confidence of the foreign investors. There is no short-term remedy for this, said Sayem Ali, an economist at Standered Chartered. 

But if they can get the letter of comfort from the IMF, that is the best thing that can happen right now. 

Inflation has soared to nearly 25 per cent, the trade and fiscal deficits are widening, and the central bank has pleaded with the government to cut its borrowing. In late July, the bank raised its key discount rate to 13 per cent from 12 per cent. 

To reduce the trade deficit, the central bank imposed a 100 per cent cash margin on the import of luxury and other non-essential products. The margin had been 35 per cent. 

Foreign reserves fell almost $200 million in the weekending on Aug 23 to $9.38 billion, representing less than three months import cover, having slid from a record high of $16.5 billion in October last year. 

The IMF could insist on more unpopular measures to put finances in order, though the government has already cut fuel subsidies. The IMF may bring up-front pain ... but it also includes a published macroeconomic framework, second-generation reforms, and policy coordination within Pakistan and with international donors/financiers, Citibanks Khan said. 

Pakistan is in talks with Saudi Arabia to defer an estimated $5.9 billion worth of oil payments, and is also in discussions with the World Bank and Asian Development Bank (ADB) for more than $1 billion in loans. 

The ADB is due to release $500 million to Pakistan this month as part of a $1.3 billion loan programme that can be used for budgetary support, a Finance Ministry official said last week.


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## Neo

*Pakistan ranks high on the vulnerability index: WB changes lending category to project loans​*
ISLAMABAD: Due to the high ranking in the vulnerability index, World Bank has changed its lending arrangements for Pakistan from programme loans to project loans resulting in releases of funds in periodical installments instead of release in one go, official sources told Daily Times on Wednesday. 

Programme loans are comprised of loans for reform programme that require funding in one go for entering in to implementation phase, however, project lending requires hectic work from documentation to implementation and lending for these types of loans comes in installments keeping in view the progress on the project. 

Some quarters in the government lamented that International Financial Institutions (IFIs) feel comfortable while working with non-elected governments and dictatorship. While on the other hand, IFIs always apply tough conditionalties while dealing with democratic governments. 

Delay in issuance of Letter of Comfort (LoC) by the International Monetary Fund (IMF) authorities is delaying disbursement of loans from the World Bank and Asian Development Bank to Pakistan. 

At present Pakistan desperately needs release of funds so that it could beef up its depleting foreign exchange reserves, stop further depreciation of Rupee as well as to meet enhanced imports requirements in the months to come. 

The International Monetary Fund (IMF) will decide whether Pakistans economic conditions are vulnerable or not and will issue certificate to the lending institutions. At present Pakistan is awaiting for start of lending by the World Bank and Asian Development Bank, an official informed. 

Vulnerability index is comprised of many factors like different economic indicators i.e. fiscal situation, economic growth, current account deficit, and inflation. The countries, whose economic indicators in negative zone face difficulties in obtaining new loans. 

The country is facing tough situation on all economic fronts as economic growth remained at 5.8 percent against the target of 7.2 percent in 2007-08, foreign exchange reserves are declining at a rapid speed, inflation is ranging in double digit and current account deficit is also likely to increase against the projected figure. 

During the last governments tenure, Pakistans economic indicators and fundamentals were very strong and IMF had no problem in issuance of LoC to lending institutions for starting a new loan programme. 

Although they have agreed to issue LoC to Pakistan, however, at present Pakistans economic fundamentals are not up to the mark and Fund authorities are delaying issuance of LoC till the board meeting. 

Although the present government has taken bold decisions and initiatives in its honeymoon period, it failed to please the high ups in the IFIs. PPP led coalition government has taken decisions like increase in gas tariff, POL price, and electricity prices.


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## Neo

*Boosting agriculture exports: Modern storage facilities the need of the hour​*
KARACHI: First of three Produce Marketing Organisations (PMOs), being supported by the Agribusiness Support Fund (ASF) to get their mango orchards GlobalGAP certified, went through external (final) audit.

Mateen Siddiqui, Chairman Fruit and Vegetable Processors and Exporters Association (FVPEA) and Sindh Director for Agribusiness Support Fund (ASF) Appraisal Committee said Wednesday that exports of agricultural produce was hampered by lack of modern storage facilities where produce could have consistent quality and conform to international standards. 

He said the ASF has extended a grant of around Rs 4 million to these three PMOs on 50-50 basis to upgrade their orchards, related facilities, develop a record-keeping system in their orchards right from plantation of a plant, production, packaging and grading of the produce, which is a prerequisite to fetch high value for the fruit in the European and other markets.

He said the European food retailers and the Euro-Retailer Produce Working Group (EUREP) represents leading European food retailers and aims to promote good production practices in the agricultural sector in order to ensure food safety. 

EUREP has developed a framework for Good Agricultural Practice, called EUREPGAP, and elaborated these into specific standards for the production of fruits and vegetables, combinable crops, livestock, feed and flowers.

GlobalGAP is an important international production standard for suppliers of agricultural products to the retail sector, for suppliers of the participating European supermarkets.

He said the exporters needed a full-fledged packaging house, ripening chambers, blast chillers and a big airport at Multan, which could entertain wide body cargo carriers to curtail the shipment time.

Around 50 members under PMOs are included mango, kinno and dates exporters being supported by the ASF are GlobalGAP certified.

Progressive mango growers having 720 acres of land and 3,000 tonnes of annual production are the first PMO to undergo the audit, which would enable them to have access to high value European markets, big super stores and chain stores across the world.

He said according to the reports, Ministry of Commerce in consultation with PHDEB, prepared proposals under National Trade Corridor Improvement Programme (NTCIP) for enhancing annual export of fruit and vegetables, and floriculture from existing $160 million to $500 million in the next five years. 

He said measures should also be introduced to help promote floriculture as a viable economic activity in Pakistan.

Pakistan, mostly a fresh flower market, is almost flooded with roses, a flower preferred in all types of ceremonies, as well as in perfume industry and in many Auravedic and Greek medicine preparations.

He said Pakistan is successfully involved in biotechnology, tissue culture, cutting of floriculture, and as a result we are now in a position to export flowers to the developed world.

Ahmad Ali Shah, Chief Monitoring Grants ASF said they had started this project last year for mango growers keeping in view the tough requirements laid down by the European and high valued markets so as enabling the growers to fetch maximum produce for their fruits. He said that three PMOs applied with the ASF for grants in this regard.

Mr Shah said this would enable us to have a good 3,000 tonnes of certified fruit available to tap the potential of European as well as non traditional markets such as Singapore. The members of PMOs have already toured Singapore and soon will be visiting UK to make room for their produce, he added.

Pakistan produced around 2.3 million tonnes of citrus fruit that was 5.5 percent of the global production. Its share in world citrus production would be around three percent this year.

World citrus exports are valued at $2.126 billion in which Pakistans share was $31 million that was around 2.6 percent. This is due to export of citrus to low priced countries.


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## Neo

*Marble city to be set up in Chitral​*
CHITRAL: A marble city as well as a marble-processing centre will be set up at Chitral, which has rich potential of standard quality of white marble, participants of a seminar on Development of Marble and Granite Quarries of Chitral were told during a presentation regarding cutting of marble stone with modern techniques.

The daylong seminar was held at Zilla Council Hall here under the aegis of Pakistan Stone Development Company (PASDEC). Haji Maghfirat Shah, District Nazim Chitral, was the chief guest on the occasion, while the ceremony was presided over by Sartaj Ahmad Khan, Tehsil Nazim Chitral. 

Giving presentation, Tahir Shahab and Taufeeq Ahmad of PASDEC said that China was the main marble producing country in the world with 15.78 million tons of marble production per annum, Iran was the second country having marble production of 13.50 million tons per year, Italy 10.35 million tons, India 9.47 million tons, Spain 8.20 million tons, Brazil 7,67 million tons, Turkey 7.07 million tons, Portugal 3.16 million tons. Pakistan production was only 0.50 million tons per annum, they said. 

They said, During blasting about 80 percent marble is wasted and only 20 percent is used. PASDEC wants to introduce new machineries with the collaboration of mines owners for maximum production and collection of marble in big size. 

They said Chitral had rich potential of standard quality of white marble, which had big demand in the world market. Our company will train 25 girls in gems cutting and polishing. The company will also spend Rs 90 million to promote marble sector in the country. 

Speaking on the occasion, Maulana Qadir Shah, Chitral Marble Owner Association president, Sartaj Ahmad Khan, Tehsil Nazim, and Haji Maghfirat Shah, District Nazim Chitral, said that Chitral had rich potential of marble but could not utilise it properly due to lack of expertise. 

They warned that no outsider would be allowed to get a hill on lease except local people.


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## Neo

*Rs 260m projects for Mardan​*
MARDAN: A total of Rs 260 million will be spent on construction of seven new roads in Mardan district within one year.

A meeting of a local Works and Services Department (WSD), held on Wednesday with District Nazim Himayatullah Mayar in the chair, took this decision. WSD Director Suhail Bin Qayum, Deputy Director Ijaz Khan, Deputy Director (Water Supply and Sanitation) Arif Khan and other relevant officials were also present on the occasion. app


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## Neo

*Plan to inject extra 1,500 megawatts in system hits snags ​* 
ISLAMABAD (September 04 2008): The government plan to inject an additional 1500 MW thermal power in Wapda and KESC systems on a fast track basis has hit snags as tariff offered by most of the companies is on the higher side, sources close to the PPIB Managing Director told Business Recorder here on Tuesday. Sources said a committee headed by Wapda Chairman Shakeel Durrani has negotiated tariff and commissioning period with the qualified companies.

Only a few companies agreed to reduce the tariff; the others remained reluctant. There were reports that the PPIB made efforts to finalise a 'deal' with unqualified companies with incomplete documents, but it failed to succeed due to the presence of other ministries' officials in the committee, the sources added.

Giving the background, the sources said that the federal cabinet on May 14, 2008 approved solicitation for fast-track power generation projects through International Competitive Bidding (ICB).

According to package-A 1000 MW has been proposed from IPPs within Pepco jurisdiction; whereas package-B is based on rental power plants. Initially it had been proposed that 200 MW should be arranged through rental and barge mounted plants near Karachi but later on it was increased to 500 MW. Subsequent to the cabinet meeting, the Minister for Water and Power held a meeting with the Minister for Petroleum, Secretaries of the Ministry of Water and Power, Petroleum, Environment, MD PPIB and discussed the strategy for implementation.

The sources said projects were advertised on May 17, 2008. Request for Proposals (RFP) issued to 42 interested parties (29 for Package-A and 13 for Package-B) by PPIB. The last date of bid submission was July 15, 2008. Technical proposals of 12 received bids (9 for Package-A and 3 for Package-B) were opened on the same day for 3,738 MW capacities.

The financial and tariff bids of responsive bids were opened publicly on August 2. In accordance with the GoP guidelines for determination of Tariff for IPPs, the competent authority constituted a bid evaluation committee comprising representatives from the PPIB, Wapda, Nepra and the Finance Ministry.

The report of bid evaluation committee was discussed in a meeting on August 23, 2008 chaired by the Minister for Water and Power in the presence of Wapda Chairman, Managing Director Pepco, Managing Director PPIB and General Manager WPPO and other PPIB officials.

A committee under the Wapda Chairman with Managing Director Pepco, Managing Director PPIB and General Manager WPPO was constituted to negotiate tariff rates, Rate Of Equity, Commercial Operating Date (COD), etc with short-listed bidders. The committee met on 25 and 26 August with the bidders requesting to review their tariff and commissioning date. The sources said a meeting of special cabinet sub-committee was thereafter held on August 28 to finalise the selection of these projects.

The committee was told that power dispersal from Karachi to the Pepco load centres from the proposed LPG power plants will not be possible in the initial two to three years due to transmission constraints and power from these lPPs may have to be absorbed by KESC during this period.

The offers of LPG-fired IPPs to be installed by Progas (305 MW) and Cavalier Energy (470 MW) under package (Package-A) in Karachi and one rental power project (Package-B) to be installed by Karkey (231.8 MW) at Karachi were agreed in principle.

However, the cabinet sub committee advised the Wapda Chairman along with a team of Secretary Petroleum, MD PPIB, MD Pepco and GM WPPO to further discuss the reduction of tariff and adjustment of commissioning date with the bidder for package-A and the higher bidder (Walters) for Package-B.

The sources said, in the meeting with Progas (Package-A) on August 29 the company offered reduction of 0.053 cents/kWh by lowering its tariff to 14.47 cents/kWh, which made it close to Cavalier Energy offer. During meetings with Creative Energy Resources and Attock-Wartsila Consortium for Package-A, it was evident that cost on RFO fuel when compared with the latest tariff determinations of Nepra for reciprocating engines of Liberty Tech at 12.5373 cents/kWh on RFO fuel was higher by 107 percent and 110 percent.

Both the companies were requested to rationalise their total tariff and match their completion schedule with commissioning date targets given in the documents. Creative Energy and Attock-Wartsila Consortium were not willing to improve their quoted tariff as well and were reluctant to meet the completion target date CODs according to RFP schedule.

Ruba Energy offered to reduce its tariff from 14.9786 cents/kWh to 14.7486 cents/kWh (reduction of around 0.23 cents/kWh) on RFO fuel, while its COD is within schedule. The tariff offered by Ruba is still very high and its acceptance will set a wrong precedent. The committee headed by Wapda Chairman has suggested that three bidders ie Attock-Wartsila, Creature Energy and Ruba Energy may be advised to approach Nepra for tariff determination outside the fast track approach as regular projects as decided in the meeting on August 29.

The committee has further recommended that rental tariff offered by Walters is 17.43 cents/kWh on RFO fuel is on the higher side. The company should match its total tariff with Karkey, otherwise the bid may not be considered.

Karkey has reduced its rental rate from 6.35 cents/kWh to 5.98 cents/kWh (ie 0.37 cents/kWh). The revised total tariff proposed by Karkey is 16.2123 cents/kWh on RFO fuel, which is slightly higher than the existing rental power contracts. However, the committee believes that keeping in view the power crisis in the country in general and KESC in particular, the offer of Karkey may be considered, as it is the lowest offer.


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## Neo

*$100 million plan for credit flow to SME sector: DFID and SBP sign document ​* 
KARACHI (September 04 2008): The United Kingdom Department for International Development (DFID) and State Bank of Pakistan (SBP) have signed a $100 million program aimed at increasing the flow of credit to the small and medium enterprises (SMEs) sector. Under DFID, a credit guarantee scheme would be established in addition to capacity-building program for banks to overcome the issues facing SMEs financing.

According to the minutes of the Private Sector Credit Advisory Council (PSCAC) meeting held here in June, SBP Director, SME Department, informed the meeting that there were approximately 3.2 million business enterprises, and the SMEs constitute almost 99 percent of them. SMEs sector, in terms of banks' exposure, is the second largest after corporate sector.

He said that overall growth within SMEs sector was encouraging which was evident from its outreach, which had increased from 67,520 to 184,000 borrowers during the period from December 2002 to December 2007. The market potential for SMEs finance is still, huge but due to many issues/impediments, banks are reluctant to get into SMEs lending in a big way.

Major constraints in lending include lack of collaterals to meet banks' requirements, absence of proper information about business, lack of awareness, lack of credit history, lack of innovative cash flow based products, high management cost, etc.

The CEO of Small & Medium Enterprise Authority (Smeda) told the meeting that in spite of SBP's initiatives, banks are still not meeting credit needs of SMEs due to lack of their capacity, non-availability of cash flow based financing products, and traditional mindset. He urged the banks to develop innovative and targeted products to meet the credit requirements of this segment especially the small enterprises.

Smeda, he said, has developed accounting manuals and also facilitates SMEs in preparation of loan proposals and feasibility report for obtaining loans from banks. SBP Governor asked him to provide the list of SMEs benefited from its services.

The representative of SME association, however complained that small enterprises were still unable to get credit from banks because of lengthy and cumbersome lending procedures, and collateral and financial requirements. He urged the banks to develop collateral-free/cash-flow-based lending products to meet the requirements of this large segment of SMEs.

Representatives of banks, present in the meeting, explained that as far as medium enterprises were concerned, the credit flow had increased significantly. However, due to non-disclosure and lack of information on cash flows and inadequate collaterals, financing of small enterprises was the biggest challenge. The setting up of SME credit guarantee scheme by SBP was expected to resolve the issue to a great extent.

They further said that financing to small enterprises was more challenging and costly. Therefore, program based techniques/products needed to be developed by banks.

On housing finance, the SBP Governor said that it was one of the emerging profitable avenues for banks as the country has been facing shortage of housing units like other developing countries. The recent housing data shows substantial growth, but still lacks behind the desired level.

Efforts are being made by SBP for the establishing 'mortgage refinance company' for development of schemes for rural and low cost housing. According to the latest statistics, the share of House Building Finance Corporation (HBFC) in housing finance was continuously declining as compared to commercial banks and it was expected that they would continue to maintain this trend in the future.

For the development of housing finance, SBP has constituted housing advisory group with representation from all stakeholders with the objective to review the existing regulatory and policy framework and prepare recommendations for the promotion and development of housing finance.

The group has made several recommendations relating to banks provincial and federal governments and the same are being examined by concerned quarters. In addition, for the capacity building of banks on mortgage lending, training programs in collaboration with IFC have also been arranged by SBP.

SBP Governor said that micro-finance sector has also made impressive progress in terms of enabling policy environment and out-reaches and the future growth is enormous with the estimated target market size of 30 to 40 million clients. SBP has developed a strategy for expansion of micro-finance outreach to three million borrowers by 2010 and to raise this number to 10 million borrowers in next five years.

In this regard, various initiatives including branchless banking, transformation of Khushhali Bank and NRSP, entry of international successful players in micro-finance sector, using post offices as delivery channel for micro-finance, trade union development plan, Islamic micro-finance products, and development of financial literacy plan are also being undertaken.

The growth in micro-finance could pick up significantly if commercial banks with extensive branch network and low cost of funds may develop micro-finance products or collaborate with micro-finance institutions for provision of the financial services to the poor.


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## Neo

*Listed companies likely to witness nominal growth in fiscal year 2009 ​* 
KARACHI (September 04 2008): After average annual earnings growth of 21 percent in last 6 years, the listed companies are expected to witness a meagre growth of 7 percent in FY09, analysts said. The earnings growth projection for FY10 is 14 percent.

"The coming years will not show similar performance as it was witnessed in last six years due to external and internal shocks to the economy coupled with the bearish trend in the local capital markets", Muhammad Sohail, senior analyst at JS Global Capital Limited said.

"With indications of slowdown in key industries in first two months (July and August) of FY09, we have revisited the earnings projection for coming years," he said. "We have used respective firm's actual year-end in our analysis," he added.

He said that the growth will be led by heavyweight exploration sector that is likely to post earnings growth of 33 percent next year, thanks to higher oil prices and weakening Pak rupee.

Statistics of different industrial and services sectors available so far show a dismal performance. Overall cement sales in July and August is down 2 percent with local sales declining 16 percent. Automobile sales have declined by 42 percent in July. Cell phone subscribers have declined by 48 percent in July 2008 compared to July 2007. Moreover, bank advances growth has declined by 2 percent since June 2008. July oil sales are up only 3 percent. Moreover, in case of fertiliser and oil & gas where Pakistan is a net importer, the numbers are not impressive. Fertiliser sales were down 38 percent in July while oil and gas production was down 1 percent.

Fertiliser companies' profits are likely to jump 26 percent next year on account of fertiliser shortage and rising prices. Banking sector, another heavyweight, will post a flat growth. Though spreads will not come down sharply, the lower advance growth and higher provisioning will be the main culprit. Oil marketing companies and refineries' profits are expected to decline by 34 percent and 47 percent, respectively, due to no huge inventory gains this year.


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## Neo

*Qureshi for greater market access of Pakistani products to EU ​* 
ISLAMABAD (September 04 2008): David Cameron, British Conservative Party leader called on Foreign Minister Shah Mehmood Qureshi and held talks on the Pak-UK bilateral relationship, here on Wednesday.

David Cameron is on a two-day visit to Pakistan, he expressed views regarding the existing momentum and direction of the multifaceted relationship especially in trade, development assistance and investment fields between the two countries.

The Foreign Minister briefed Cameron on developments taking place in Pakistan with the advent of the democratic government. He emphasised the need for greater market access of Pakistani products in the European Union to generate employment and to root out poverty and extremism. Cameron concurred with Pakistan's position and agreed to take up this issue within the European Union.

Regional and international issues including fight against terrorism and extremism, relations with India and Afghanistan and nuclear non-proliferation were discussed. The Foreign Minister said that the democratic government was determined to carry forward its fight against terrorism and extremism, particularly since the scourge was undermining Pakistan's own wellbeing. He highlighted measures aimed at promoting peace and stability in Afghanistan to prevent Pakistan's territory from being used for subversion in Afghanistan.

The Foreign Minister also apprised Cameron about the ongoing composite dialogue with India and endeavours to resolve all outstanding issues including Jammu & Kashmir dispute. Qureshi further underlined Pakistan's policy on nuclear non-proliferation and to bring about a just and non-discriminatory nuclear non-proliferation regime. Cameron appreciated Pakistan's position on these issues and assured the Foreign Minister of the support.


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## Neo

*Government firm to bring country out of economic crisis: Soomro ​*
ISLAMABAD (September 04 2008): Acting President Muhammadmian Soomro on Wednesday said the government is determined to bring the country out of economic crisis, and would provide relief to the business community and general masses.

Addressing at the ground breaking ceremony of Export Display Centre by Islamabad Chamber of Commerce and Industry (ICCI), Soomro termed entrepreneurs a "valuable asset" for the country, and said the government would provide them maximum opportunities to benefit from their potential.

Soomro expressed satisfaction over the establishment of Export Display Centre in Islamabad, which he said would prove a good show window for the export industry including international market. He said Pakistan was passing through a very critical situation and the government had to face a number of economic challenges due to rapid global changes. He mentioned the oil prices and energy crisis putting negative impact on the economy and stressed the need for devising a concrete strategy to cope with the challenges.

He urged the need for focusing on the principles of skill development, cost of business and setting up markets beyond the geographies, which also proved helpful in the formation of strong world economies.

Soomro asked the business community to encourage women entrepreneurs as well as make efforts to boost cottage industry for the uplift of national economy. He said the government would support entrepreneurs in carrying out their businesses smoothly by rationalising the tax rate.

On the demand of business community for a housing scheme, Soomro said he would take up the proposal with Capital Development Authority to prepare feasibility of the project and submit it to the government for consideration.

He also favoured for the promulgation of Rent Control Act in Islamabad like other cities to help resolve disputes between the owners and tenants. President Islamabad Chamber of Commerce and Industry Muhammad Ijaz Abbasi said the Export Display Centre to be constructed with the help of ICCI would provide an excellent opportunity to the buyers and sellers to transact business deals with minimum hassle under one roof.

He said ICCI was fully determined to provide support to the government for the acceleration of country's exports, which still had not touched the desired level.

He said ICCI had been constantly involved with the government in the formulation of the Budget and Trade Policy and expressed satisfaction that some of very important proposals had been accepted by the government. The ICCI President urged for early approval and promulgation of Rent Control Act in Islamabad by the parliament, which had already been approved by the Law Ministry. Senior Vice President ICCI Munawar Iqbal also spoke on the occasion.


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## Neo

*Our precarious fiscal position ​*
EDITORIAL (September 04 2008): The provisional figures on the fiscal outcome for the year 2007-08, released by the Ministry of Finance, confirm our worst fears that public finances of the country are in a state of crisis. According to the consolidated data on budgetary operations, the overall deficit of the country rose to a record Rs 777.2 billion or 7.4 percent of GDP as against the target of Rs 398 billion or 4.2 percent of GDP set by the previous government for 2007-08.

The deficit was also 106 percent higher than previous year's actual deficit of about Rs 377 billion or 4.3 percent of GDP. In order to finance this massive deficit, the government had to depend on highest-ever bank borrowings of Rs 625 billion against the budgetary target of only Rs 81 billion, showing an excessive recourse to bank borrowings of about 673 percent. During 2006-07, bank borrowings for deficit financing were much lower at Rs 178 billion.

The Federal Government had to restrict development spending under the Public Sector Development Programme (PSDP) to Rs 451 billion against the budgetary allocation of Rs 520 billion in an attempt to partially contain the deficit. A simple explanation of this dismal performance is that the government failed to mobilise adequate resources to meet its sharply rising expenditure requirements.

Although total revenues increased by almost Rs 200 billion to stand at Rs 1.499 trillion in 2007-08, the position was quite discouraging when compared in terms of movement in important relevant ratios.

The most depressing feature was a substantial decline in revenue receipts from 14.9 percent of GDP in 2006-07 to 14.3 percent during 2007-08 while tax revenues and non-tax revenues dropped by 0.2 percentage point and 0.4 percentage point to 10 percent and 4.3 percent of GDP respectively during the year. In contrast, total expenditures during 2007-08 increased substantially to 21.7 percent of GDP as compared with 19.2 percent a year before.

In absolute terms, total expenditures rose by more than Rs 600 billion or 36 percent. Current expenditures showed an increase of Rs 483 billion or 35 percent. Although defence expenditures increased to Rs 286 billion against an allocation of Rs 275 billion, these, however, declined as a percentage of GDP to 2.7 percent from 2.9 percent in 2006-07.

The government earned about Rs 89 billion on account of royalties on oil and gas, discount retained on domestic crude oil production and development surcharge on oil and gas, which included Rs 14.4 billion of petroleum development levy. From the above data, it could be easily concluded that fiscal performance during 2007-08 was probably at its worst.

Not only overall budget deficit at over Rs 777 billion was the highest-ever in the country's history, most of it was financed through bank borrowings, again touching a record level of Rs 625 billion. It was also sad to note that revenue/tax receipts as a percentage of GDP declined during the year which belies the claims of the FBR to have successfully implemented various structural and organisational reforms in order to increase tax revenues.

In fact, fall in tax to GDP ratio is an indicator that tax collectors are not even able to maintain the same level of effort and their efficiency has declined. On the other hand, current expenditures of the government are increasing sharply and development budget has to be axed to contain the overall fiscal deficit.

Another disappointing aspect was that fiscal discipline achieved so painstakingly over the last few years seems to have been frittered away during 2007-08. Overall budget deficit amounting to 7.7 percent of GDP during 1997-98 was brought down to 2.4 percent by 2003-04 but grew steadily to reach 4.3 percent of GDP by 2006-07.

The picture during 2007-08 has sharply aggravated an already negative trend. It also shows that the budget deficit target of 4.7 percent of GDP fixed for 2008-09 is almost impossible to achieve, particularly when no major revenue mobilisation efforts or expenditure cutting measures seem to be contemplated or are in place.

The consequences of this highly negative development are visible in the shape of high inflation rate estimated at about 25 percent, widening of current account deficit, fast depreciation of the rupee and loss of foreign exchange reserves. More distressing is the misery inflicted on the ordinary people due to erosion of the purchasing power of their savings and incomes.

Even basic necessities of life are now getting out of their reach. Monetary measures adopted by the State Bank to curb inflation are also not yielding the desired results due to highly expansionary fiscal strategy of the government.

If the fiscal trend witnessed during 2007-08 is not soon reversed, major macroeconomic indicators of the economy could deteriorate further and the life of ordinary people would become more difficult. In our view, it is time for the government in Islamabad to give serious consideration to the worsening fiscal balance because this is an area which has a pervasive and profound impact on all aspects of the economy.


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## nitesh

mods, I don't know if this is the right thread, but this should be allow to have a better relationship:



> Transport owners demand import of Indian CNG buses​http://thenews.jang.com.pk/daily_detail.asp?id=133731​http://thenews.jang.com.pk/daily_detail.asp?id=133731
> 
> Thursday, September 04, 2008
> By Atif Nadeem
> 
> LAHORE
> 
> WHILE keeping in mind cost-factor for importing new CNG buses, the transport owners have demanded the government import new CNG buses from India, which will be used for public transportation in Punjab.
> 
> The Punjab government has already announced import of at least 800 new buses to meet the needs of public transportation especially after a deadlock over the increase in fares in urban areas, which have caused a great financial crunch for the transport owners as they have almost failed to manage cost of oil and diesel.
> 
> While talking to The News, the office-bearers of Urban Transport Union said the provincial government had decided to import at least 800 new CNG buses for which the government would provide 25 per cent subsidy to the transport owners so that they could ply more new environment-friendly buses on urban routes, which would also help alleviate burden of increased fares on the commuters as CNG would cost the transport owners less than the oil and diesel.
> 
> The transport owners said though the provincial government had decided to provide subsidy yet the cost-factor would make the transport owners bankrupt in the near future if the provincial government would not provide loans to the transport owners so that they could purchase these buses.
> 
> They said the provincial government should ask the Indian government for CNG buses as it would reduce the cost to be incurred on the import of the buses from South Korea and Japan for the transport owners.
> 
> Urban Transport Union President Arshad Khan Niazi, while talking to The News, said the transport owners were worried about the cost of the new CNG buses to be imported as they had already taken loans from different banks and they were paying heavy instalments to the banks and, in this condition, it would be difficult for them to ask the banks for financial support in form of loans when they were already on the
> 
> brink of bankruptcy due to unprecedented hike in oil and diesel pries. He said the government had not provided them subsidy in the wake of rise in the oil-prices which had caused a great financial loss to all the transport owners, especially for the small transport owners. He said the government had not increased fares of the public transport as cost of per kilometre had tremendously increased for the transport owners.
> 
> The former government of PML-Q had provided them subsidy when oil prices had increased in 2005 but, later, the government had not paid even any subsidy to them which was highly unfortunate for the transport owners.
> 
> Talking about the new CNG buses, he said the government should take measures regarding provision of loans to the transport owners, as they would not be able to purchase new buses with their own capital on account of losses they had to bear in the last few months. He said the government should purchase buses and hand them over to the transport owners so that they could charge fares according to the wishes of the government and the public. The News has also learnt that many transport owners had contacted to the private-investors who provided the transport owners with capital for the sake of their interests on that money. The banks have almost denied the transport owners any loans for the CNG buses as the transport owners are already bankrupt and the government has pledged to provide 25 per cent subsidy to the transport owners on the purchase of new buses. The transport owners were of the view that the government should import CNG buses from India as it would not compel the transport owners to ask for more loans from the banks or the private-investors as it would be harmful for the new system.
> 
> They said a CNG bus from India would not cost them more than Rs 1.5 million while they had to pay at least Rs 4 million for a new bus which would be assembled in Pakistan but with Japanese or Koreans engines and gears. They said the transport owners would not have to take loans from the banks and they would also fix fares of public transport vehicles on the urban routes according to the wishes of the government. They said taking money from private-investors would be highly risky for the system, as they would seize their buses whenever they were short of their instalments along with the interest rates. They said the government should seriously think about this option, as it would help the government provide financial support to the transport owners. They were of the view that if the Indian films could be screened in the Pakistani cinemas then what would be the wrong with the Indian buses to be plied on the Pakistani roads.
> 
> They also said the government should not impose its will on the transport owners but, on the other hand, the transport owners should be consulted with in a friendly manner so that they could make public transport system without any impediment. They said the provincial government should not be reluctant to give subsidy to the transport owners by Rs 50 per litre so that they could charge Rs 10 from the commuter on the first stage of the fares on public routes.


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## Neo

*IMF team due on 12th to discuss economy bailout​* 
Friday, September 05, 2008

ISLAMABAD: In a crucial development, a most important technical mission of the International Monitory Fund with its jaws open to bring Pakistans beleaguered economy into its programme with ultra tough conditions will land in Islamabad on September 12. The delegation will stay in the liquidity crisis hit country up to September 24.

The delegation is to be headed by Mr Detata that put stringent conditions before the countrys economic managers for IMF programme that includes the squeezing of budget deficit to 4.2 per cent from 4.7 per cent announced in the Budget 2008-09.

Although Pakistan is not under the IMF programme right now, the Fund holds consultation process with all member states and a mission is likely to visit Islamabad to get first hand knowledge about the countrys economy under Article IV consultation.

According to a senior government official, the coming meetings with IMF would really be tough ones to bail out the country from financial crunch. The Fund mission may also ask the government not to go for more than 3.5 per cent GDP growth, keeping in view the challenges the country is abreast with.

The official said the Fund is also likely to force the government to bring more measures for further tightening of monetary policy with a view to reduce the inflation, which has actually sucked the amount from the pockets of the poor.

No doubt, the new regime took charge at the helm of affairs when it was supposed to take drastic measures to bring the economy on radar screen. But unfortunately the economic managers could not initiate concerted efforts in stopping the bleeding economy. Last time, the IMF had extended $1.2 billion under Poverty Reduction and Growth Facility.

Although the Finance Minister Naveed Qamar time and again has said that Pakistan will not go into IMF programme, but the worsening economic situation may force the government to seek help from the Fund.

The International Monetary Fund (IMF) was gaining its lost importance as Pakistan had said goodbye to the Fund after completion of its last programme, Poverty Reduction and Growth Facility (PRGF) a few years back.

The rampant depreciation of rupee against dollar and rapidly depleting foreign currency reserves are clear indication that the government desperately required dollar inflows to keep its reserves at a comfortable level. Otherwise, Islamabad will have to approach the IMF to remove its BoP woes. The rupee has touched Rs77 against dollar while reserves stand at $4billion in real terms.

In case dollar inflows do not come in one month period to rescue the dwindling reserves then there will be no other option but to approach the IMF for a bailout package, said sources. Pakistan is also striving hard to get Saudi Oil Facility (SOF) worth $5 billion as Islamabad estimates to import oil worth $14 billion during the current fiscal year.

The IMF team held extensive talks with high-ups of the newly elected government before the announcement of the budget 2008-09. 

IMF and WB projected the GDP growth target hovering around 3.5 per cent for fiscal year 2008-09 against Islamabads projected target of 5.5 per cent.


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## Neo

*SBP, govt to restore macroeconomic stability: Shamshad ​* 
*WB to support $1bn investment programme, Ijara Sukuk to be launched soon​*
Friday, September 05, 2008

KARACHI: State Bank of Pakistan Governor Dr Shamshad Akhtar has said that the federal government and the central bank are working in tandem to restore macroeconomic stability.

In a press statement issued on Thursday, she said that the government and the central bank were taking several measures to improve the macroeconomic situation which had been adversely affected as a consequence of various global events such as turbulence in the financial markets in the US and Europe and escalating commodity and fuel prices in international markets.

Referring to the financing plan for meeting the budget and external sector requirements of the federal government, she said the World Bank had reassured its support for a fast-track investment programme of close to $1 billion focused on high priority development projects.

The government has negotiated a $500 million programme with the Asian Development Bank for accelerated economic transformation that focuses on supporting financial sector reforms, among others.

Moreover, she said that the government was planning to selectively privatise some assets and had been in dialogue with international financial institutions to meet the financing gap.

The timing of these global developments could not have been worse. Not only was our economys business cycle maturing after a strong and resilient performance but the socio-political set-up was also undergoing a transitional phase, she said and added that a combination of these elements would put the resolve of any government to test and Pakistan is no exception.

Dr Akhtar said that there had been a 350-basis-point cumulative increase in interest rates since July 2007 which had been accompanied by appropriate market-led exchange rate adjustment in the wake of balance of payments challenges. The government has further assured of its resolve to curtail fiscal deficit, a critical element of the macroeconomic stabilisation programme, and to strive to ensure net zero central bank borrowing for each quarter. Fiscal tightening is being pursued through a combination of measures ranging from recurrent expenditure controls, removal of subsidies and rationalisation and prioritisation of development expenditures.

She added that the early indications were that revenue growth was above expectations for the current fiscal year. Dr Akhtar observed that continued resolve to deal with short and medium-term power sector constraints and the dialogue with overseas investors is likely to bear fruitful results in attracting more foreign investment in the sector.

SBP Governor said that in order to support the efforts to diversify the borrowings mix, the government and the State Bank are working to launch the first Government of Pakistan Ijara Sukuk in the first week of Ramazan. This will not only help deploy the liquidity available with Islamic banks but also help the government to diversify its debt, she said and added that given the growth in the Islamic banking industry, Shariah-compliant government securities are imperative to bring the Islamic banks parallel to their conventional counterparts in terms of instruments available for liquidity management.

Dr Akhtar said that eventual uniformity of regulatory reserves of Islamic banks with that conventional bank is also essential for ensuring the stability of the financial and banking system.

Banking system is also being incentivised through the introduction of minimum deposit rate (to better remunerate savers) and easing of reserve ratios to mobilise more aggressively long-term resources to be able to meet the growing and diverse requirements of the economy.

SBP Governor pointed out that the first quarter (January-March of CY 2008) statistics show that the banking system is on track in terms of solvency, asset quality, earnings and service to society. She said that the system also registered a growth though at a slack pace as compared with past trends for the first quarter. The asset base of the banking system since the last quarter of 2006 has grown by 22 per cent to Rs5.2 trillion that is well supported by 36 per cent growth in the equity and 21 per cent growth in deposits. The risk based capital adequacy ratio stands at 13.1 per cent, well-above the minimum required level of 8 per cent. It is this buffer that continues to provide resiliency to the banking system, she added.

She said although Non-performing loans (NPLs) in volume increased by Rs18 billion during the first quarter, the higher level of provisioning has ensured that the infections impact remain in check as evidenced from the Net-NPL-to-Net-Loans ratio which was 1.3 per cent in March 2008 as compared to 1.6 per cent in December 2006, signifying that the banks set aside more reserves out of their earnings to cover the increase in loans that had become non-performing. Accordingly, the NPL coverage ratio and capital impairment ratio have improved; NPL converge ratio stood at 84.1 per cent in March 2008 as compared to 78 per cent in December 2006, while capital impairment improved from 9.7 per cent in December 2006 to 6.8 per cent in March 2008. 

This improvement was also backed by the regulatory drive of SBP whereby the provisioning requirements were further strengthened in line with best international practices, she said and added that due to this change in regulatory requirement, banks had to provide additional provisioning expenses in 2007. 

The banks strong earning capacity enabled them to absorb this additional charge and post a pre-tax profit of Rs 28.1 billion in March 2008 quarter ñ which was slightly less than the Rs 33.1 billion profit of the corresponding quarter of March 2007, she added.


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## Neo

*Power projects of about 1,500MW ​* 
*to be completed within 18 months​*
Friday, September 05, 2008

ISLAMABAD: Federal Minister for Water & Power, Raja Pervez Ashraf on Thursday, said the government is fully committed to eliminating load-shedding by end of 2009. 

In order to achieve this objective, fast track power generation projects have to be taken up on priority basis. 

He said fast track power projects of about 1,500MW should be completed within the prescribed timeframe of 18 months. 

The minister said this while presiding over a meeting in the Ministry to review the progress of the projects, current power situation and one time solution of circular debt of Wapda, Pepco, IPPs and fuel supply companies. 

The meeting was attended by Secretary Water and Power, Adviser Water and Power, Chairman Wapda, MD Private Power Infrastructure Board (PPIB) and other senior officials of the Ministry, PPIB and Pepco. 

The minister reviewing the current power situation expressed his satisfaction over the improved power supply during Sehar and Iftar timings and directed all resources should be used to minimize the load-shedding in Ramazan and thereafter. 

He also warned the Pepco officials to avoid unscheduled load-shedding and any deviation from this direction would be viewed very seriously. 

He said there should be no shutdown on minor faults and the power plants should generate maximum electricity during peak hours to meet the demand. He also stressed the need for reduction in line losses and early recovery of outstanding dues. The meeting also discussed issues of circular debt in detail and considered various options to resolve it.


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## Neo

*Forex reserves fall to $9.13bn​*
KARACHI, Sept 4: Foreign reserves of the country fell to $9.13 billion in the week that ended on Aug 30, from $9.38 billion in the previous week, the central bank said on Thursday.

The State Bank of Pakistan said its reserves fell to $5.76 billion from $6.01 billion previously, while those held by commercial banks were flat at $3.37 billion.

Foreign reserves hit a record high of $16.5 billion in October last year but have since been depleted by high payments for oil imports, and foreign investors withdrawing money because of countrys political uncertainty.

The rupee closed at 76.85/95 to the dollar on Thursday recovering from a record low of 77.45 on Wednesday.Reuters


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## Neo

*Pakistan may avoid debt default with IMF support​*
HONG KONG, Sept 4: Pakistan will probably avoid the sovereign debt default that markets increasingly expect, even though the country faces more downgrades to its credit rating as it grapples with dwindling reserves and a sliding currency.

The stability of Pakistan, a key US ally in the war on terrorism, is so important a geopolitical factor that institutions such as the International Monetary Fund will eventually help it meet obligations to creditors, analysts said.

Is this going to get into a default scenario? No, said Dilip Shahani, Asia-Pacific research head at HSBC.

Negotiations with the likes of IMF will help stabilise the situation, he said.

Investors are not so sure. Pakistans credit default swaps--contracts investors use to insure debt -- have been widening since the departure last month of president Musharraf.

The five-year credit default swaps have jumped 200 basis points to 900/1,000 basis points since Musharraf quit on Aug 18. That means it now costs at least $900,000 to insure $10 million worth of debt against default, compared with around $700,000 at the end of the Musharraf era.

It is now cheaper to insure five-year bonds of Argentina, which has been in default since a 2001-02 economic crisis.

Argentinas 5-year credit default swaps are at 780-800 basis points.

Pakistans credit default swap numbers implied a significant risk of sovereign default in the run up to the maturity of Pakistans $500 million bond in February, Citigroup economist Mushtaq Khan said. He, too, did not think a default would occur. Investors do have reasons to be concerned.

*DECLINING RESERVES:* The political chaos has raised questions about whether the government will be able to tackle the countrys many economic problems. It seems the government is not getting its act together, making it difficult to actively address the decline in the forex reserves, said Yang-Myung Hong, sovereign rating analyst at Lehman Brothers.

Currency reserves have shrunk to $9.38 billion from a record high of $16.5 billion ten months ago, the current account deficit is at 8.4 per cent of gross domestic product and the rupee is at a record low, having lost over 20 per cent against the dollar this year.

Import costs have surged in the past year as the price of oil and most commodities hit record highs, driving up inflation to nearly 25 per cent. Economic growth is forecast to be the slowest in six years.

*NO DEFAULT:* A stock market, which rallied for six years, has slumped 41 per cent off a life high in April, and 34 per cent this year, making it the worst-performing market in Asia after China and Vietnam. A debt default will probably not be added to this list of woes.Reuters


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## Neo

*Agreement with S Arabia to import 150,000 tonnes of urea​*
ISLAMABAD: Realising the shortage of urea for upcoming Rabbi season 2008-09, the Ministry of Food, Agriculture and Livestock has signed another agreement with Saudi Arabia, according to which Pakistan would import 150,000 tonnes of urea from at the end of this month. 

The agreement was materialised during a recent meeting of MINFAL Secretary, Ziaur Rehman with Saudi Arabia officials. Before signing this agreement, Pakistan also signed another agreement according to which Saudi Arabia is to provide urea worth $133 million to Pakistan. The last consignment of this agreement had arrived at Karachi port and would be immediately distributed across the country. 

There was sufficient quantity of urea in the country but the prices of urea started rising in the international market and reached $800 per tonne but the price in Pakistan remained below $200 per tonne. This huge price difference triggered smuggling of the commodity coupled with hoarding by the local dealers. ijaz kakakhel

*ECC rejects linking LPG prices with Aramco formula*

ISLAMABAD: Economic Coordination Committee (ECC) of the cabinet has rejected the move of Economic Monitoring Committee to revive import parity pricing mechanism by linking Liquefied Petroleum Gas (LPG) prices with Saudi Aramco Contract Price formula, it is learnt. Economic Monitoring Committee (EMC) in its meeting held on August 21 had proposed to link LPG prices with Saudi Aramco Contract Price to curtail oil import bill while ensuring availability of LPG in the country. They said that the proposal was moved in the meeting of ECC of the cabinet held on August 26 and was rejected. zafar bhutta


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## Neo

*Cement exports grow by 33.66%​*
KARACHI: As the demand of the cement has unabatedly increased in the regional market, Pakistans cement export witnessed a growth of 36.66 percent and reached the mark of 786,497 tonnes in August 2008 as compared to 575,551 tonnes in the same period of the last year, sources told Daily Times.

Robust regional demand for cement, fueled by the boost in construction in UAE, Afghanistan and excess demand in India have encouraged the local companies to invest in plan expansion. The capacity utilisation has also improved to around an average of 80 percent. The Middle East, India and African countries have been the main market for the Pakistani cement export. The cement export in the first two months of the current fiscal year surged by 57 percent and crossed the mark of 1.5 million tonnes, statistics released by All Pakistan Cement Manufacturers Associations revealed. 

Cement industrys installed capacity had more than doubled during the last five years, which helped the industry achieve high export growth. Competitive rates of Pakistani cement has also helped in capturing the regional market, a leading cement exporter said.

Governments decision regarding restoration of the duty drawback has also raised the cement export and the reconstruction work in Afghanistan and faster pace of development work in Dubai have led to an increase in demand for cement, and Pakistani cement sector has been taking full advantage of this opportunity.

The growth in the cement sector has been slow during this period as compared to corresponding period of the last year because of the countrys uncertain political landscape, analysts remarked and added the transporters strike during the last days has also affected growth. Local cement supplies decreased by 21.27 percent, to 1.545 million tonnes in August 2008 as against 1.963 million tonnes in August 2007.


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## Neo

*Chinese team to visit Pakistan in October​*
ISLAMABAD: A 10-member Chinese delegation will visit Pakistan in October 2008 to explore business opportunities in the country. Yang Shouzheng, Head of Political Section and Mr Li Ming, Secretary to Ambassador, Embassy of China had expressed these views during a meeting with Islamabad Chamber of Commerce and Industry President, Mohammad Ijaz Abbasi. They assured that Chinese government would continue to encourage Chinese companies to enhance cooperation with Pakistani companies in areas including finance, telecom, energy and transportation.


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## Neo

*Load shedding to end by 2009​*
ISLAMABAD: Federal Minister for Water and Power, Raja Pervez Ashraf on Thursday said that the government is fully committed to eliminate load shedding by end of 2009. In order to achieve this objective, fast track power generation projects have to be taken up on priority basis. He directed that projects of about 1500MW should be completed within the prescribed time frame of 18 months. Sources said that Ministerial level meeting would be held here on Friday to finalise the tariff for the 1500MW thermal and rental power plants on fast track basis.


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## Neo

Neo said:


> *Pakistan may avoid debt default with IMF support​*
> HONG KONG, Sept 4: Pakistan will probably avoid the sovereign debt default that markets increasingly expect, even though the country faces more downgrades to its credit rating as it grapples with dwindling reserves and a sliding currency.
> 
> The stability of Pakistan, a key US ally in the war on terrorism, is so important a geopolitical factor that institutions such as the International Monetary Fund will eventually help it meet obligations to creditors, analysts said.
> 
> Is this going to get into a default scenario? No, said Dilip Shahani, Asia-Pacific research head at HSBC.
> 
> Negotiations with the likes of IMF will help stabilise the situation, he said.
> 
> Investors are not so sure. Pakistans credit default swaps--contracts investors use to insure debt -- have been widening since the departure last month of president Musharraf.
> 
> The five-year credit default swaps have jumped 200 basis points to 900/1,000 basis points since Musharraf quit on Aug 18. That means it now costs at least $900,000 to insure $10 million worth of debt against default, compared with around $700,000 at the end of the Musharraf era.
> 
> It is now cheaper to insure five-year bonds of Argentina, which has been in default since a 2001-02 economic crisis.
> 
> Argentinas 5-year credit default swaps are at 780-800 basis points.
> 
> Pakistans credit default swap numbers implied a significant risk of sovereign default in the run up to the maturity of Pakistans $500 million bond in February, Citigroup economist Mushtaq Khan said. He, too, did not think a default would occur. Investors do have reasons to be concerned.
> 
> *DECLINING RESERVES:* The political chaos has raised questions about whether the government will be able to tackle the countrys many economic problems. It seems the government is not getting its act together, making it difficult to actively address the decline in the forex reserves, said Yang-Myung Hong, sovereign rating analyst at Lehman Brothers.
> 
> Currency reserves have shrunk to $9.38 billion from a record high of $16.5 billion ten months ago, the current account deficit is at 8.4 per cent of gross domestic product and the rupee is at a record low, having lost over 20 per cent against the dollar this year.
> 
> Import costs have surged in the past year as the price of oil and most commodities hit record highs, driving up inflation to nearly 25 per cent. Economic growth is forecast to be the slowest in six years.
> 
> *NO DEFAULT:* A stock market, which rallied for six years, has slumped 41 per cent off a life high in April, and 34 per cent this year, making it the worst-performing market in Asia after China and Vietnam. A debt default will probably not be added to this list of woes.Reuters



*Pakistan will probably avoid debt default ​*
HONG KONG (September 05 2008): Pakistan will probably avoid the sovereign debt default that markets increasingly expect, even though the country faces more downgrades to its credit rating as it grapples with dwindling reserves and a sliding currency. The stability of Pakistan, a key US ally in the war on terrorism, is so important a geopolitical factor that institutions such as the International Monetary Fund will eventually help it meet obligations to creditors, analysts said.

"Is this going to get into a default scenario? No," said Dilip Shahani, Asia-Pacific research head at HSBC. "Negotiations with the likes of IMF will help stabilise the situation," he said. Investors are not so sure. Pakistan's credit default swaps - contracts investors use to insure debt - have been widening since the departure last month of President Pervez Musharraf.

The five-year credit default swaps have jumped 200 basis points to 900/1,000 basis points since Musharraf quit on August 18. That means it now costs at least $900,000 to insure $10 million worth of debt against default, compared with around $700,000 at the end of the Musharraf era.

It is now cheaper to insure five-year bonds of Argentina, which has been in default since a 2001-2002 economic crisis. Argentina's 5-year credit default swaps are at 780/800 basis points. Pakistan's credit default swap numbers implied a "a significant risk of sovereign default" in the runup to the maturity of Pakistan's $500 million bond in February, Citigroup economist Mushtaq Khan said. He too did not think a default would occur. Investors do have reason to be concerned.

*DECLINING RESERVES:* Musharraf, who came to power in a 1999 military coup, resigned to avoid impeachment, ending months of speculation and sometimes violent protests against his rule. But that kicked off a new phase of uncertainty, especially after the second-largest party in the ruling coalition withdrew support from the five-month-old civilian government.

The political chaos has raised questions about whether government will able to tackle the country's many economic problems. "It seems the government is not getting its act together, making it difficult to actively address the decline in the forex reserves," said Yang-Myung Hong, sovereign rating analyst at Lehman Brothers.

Currency reserves have shrunk to $9.38 billion from a record high of $16.5 billion ten months ago, the current account deficit is at 8.4 percent of gross domestic product and the rupee is at a record low, having lost over 20 percent against the dollar this year.

Analysts estimate its foreign exchange reserves can only pay for less than three months of imports, having sunk by around $800 million a month. Import costs have surged in the past year as the price of oil and most commodities hit record highs, driving up inflation to nearly 25 percent. Economic growth is forecast to be the slowest in six years.

*NO DEFAULT:* A stock market which rallied for six years has slumped 41 percent off a life high in April, and 34 percent this year, making it the worst-performing market in Asia after China and Vietnam.

A debt default will probably not be added to this list of woes. Pakistan's stability is a vital factor in the war against the resurgent Taliban in Afghanistan, where the death toll is rising among foreign forces. The party of slain former Prime Minister Benazir Bhutto enjoys the support of the United States and other Western nations.

Still the scramble for funds, is keeping markets on edge. Last month, an International Monetary Fund official said Pakistan does not need to turn to the IMF for money in the next 10 months if the government cuts spending and gets other sources of funding to offset falling reserves.

Islamabad is in talks with Saudi Arabia to defer an estimated $5.9 billion worth of oil payments, and is also in discussions with the World Bank and Asian Development Bank for more than $1 billion in loans. Central Bank Governor Shamshad Akhtar said the World Bank was seeking to speed up close to $1 billion in investments as he sought to calm jittery markets.

"If the facilities like the Saudi oil payment deferral don't come through, then Pakistan could start to face pressure in meeting its external obligations," said Lehman's Hong. The bond maturing in February 2009, a thinly traded security, was quoted at 93.50/97.50 cents to a dollar on Thursday. The more active benchmark - the 2017 bond - has dropped by 5 points to 63 cents to a dollar in the past week.

Even if it does not default on the 2009 bond, Pakistan's sovereign credit rating could be lowered a notch if Islamabad does not improve on its macroeconomic performance. That would make future borrowing more costly. In June, Standard & Poor's cut the country's rating to B from B-plus with a negative outlook, meaning another downgrade is on the cards.
 
Moody's Investors Service, which downgraded Pakistan to B2 from B1 in May this year, may also cut again if funding is delayed so much that "even some limited amount of assistance may not help Pakistan meet its external obligations," said Moody's analyst Aninda Mitra.


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## Neo

*Gwadar, China rail link not commercially viable: Senate told ​* 
ISLAMABAD (September 05 2008): The government has informed the Senate on Thursday that linking Gwadar with China through rail is not commercially viable and the work on the project could only be started if it is required by Pakistan and China for strategic purposes.

The Ministry of Railways informed the House in written replies that a pre-feasibility study for provision of rail link from Havelian to Khunjrab on Pak-China border has been completed in June 2008. A separate study has also been executed for linking Gwadar with Mastung. This link would integrate Gwadar with the rest of existing railway network in the country.

The execution of the two projects was necessary for linking Gwadar with China. The Railway Ministry said the project is not commercially viable. The ministry is of the view that project will be forwarded to the Planning Commission with a request that it might be approved for strategic purposes.

An official, when contacted, said that in this regard Pakistan will require the consent of the Chinese government. According to the official, the projects being launched for strategic purposes, require strong commitment from the two sides as such projects are left unattended if strategic purposes are achieved.

In reply to another question, the ministry admitted that 6.79 acres of land out of total 20.66 acres of railway land are in illegal occupation in Quetta. In Chaman, 60 acres are in illegal occupation out of 373.42 acres. The ministry informed the House that it could not spend Rs 1.43 billion allocated for 1000 High Capacity Wagons during 2007-08. The allocation was revised to Rs 162 million against which Rs 142.68 million was spent.

The ministry said that international tender for procurement/manufacturing of 500 high capacity wagons was re-advertised and it is under evaluation process. Besides this, the work on local manufacturing of 30 bogie brake vans has been started out of which 22 have been completed.

Meanwhile, the Interior Ministry informed that Karachi police have made significant breakthrough in reducing the street crimes. These have been reduced by 40 percent in May 2008 as compared to March 2008. There is 50 percent reduction in vehicle snatching, 25 percent reduction in mobile snatching and 18 percent reduction in cash snatching in 2008.


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## Neo

*Pakistan pioneer passenger car bites the dust ​* 
Saturday, September 06, 2008

KARACHI: The odds were seemingly stacked against Feroz Khan when he was born to homeless migrants from India, but the span of 59 years has changed matters. Khan grew up in Lalukhait, one of the lower income areas in Karachi, but has nonetheless travelled far and wide, working in Saudi Arabia, England, and the United States. 

After returning to Pakistan, he later became the Chairman and Chief Executive Officer of Adam Motor Company Ltd, maker of Pakistans car, the Revo. This plant was forced to close down, but adjacent to it stands another one of Khans factories: Omar Jibran (OJ) Engineering Services, the largest supplier of original car parts to Toyota, Honda and Suzuki in Pakistan.

OJ Engineering is the result of a lifelong struggle for Khan.

I had a very humble beginning, he says. One of six siblings, Khan studied at a government school. He earned a scholarship to DJ College, and then another to NED University, from where he graduated with a degree in mechanical engineering. After a bad job experience at Karachi Port Trust, Khan decided to move abroad. 

Borrowing $300 from a sister, in 1972, he began an arduous journey to Germany by bus. On the way, he paid a visit to shrines in Kabul, Herat, Mashhad, Tehran, Kirmanshah, and Baghdad in the hopes that it would get him a job. However, this was when members of Israels Olympic team were killed by Palestinian militants, causing Germany to stop issuing visas. Four months after being on the road and with only $100 in hand, Khan had to come back to Beirut. 

Eventually, his luck turned for the better. Without having anyone sponsor him, he managed to get a visa for Saudi Arabia, and got a well-paid job in Saudi Aramco. By the time he left Saudi Arabia in 1978, Khan has earned enough to buy 42.5 per cent shares of a company in England that made thread protectors for oil pipes. 

After two years in England, he moved to Houston, Texas and set up a company called Tubular Protection of America. He has not looked back since. He eventually returned to Pakistan, and in 1990, established OJ Engineering, which manufactured car parts for Pak Suzuki Motors. His reputation started to grow and soon, other car assemblers became his customers. 

Pakistans auto industry has come a long way, said Khan. There was a time when we used to make only tyres, car batteries, seats, and wiring harnesses. Now, we make everything except for the transmission and engine.

The auto industry, however, is facing a slowdown, and according to Khan, the government needs to bring political stability for it to make a turnaround. Had time remained on his side, he believes he would have taken the country a step further by making engines. 

I am not defeated, declared Feroz Khan. What does not break you makes you stronger. Three years ago, Pakistan launched its first car, the snub-nosed Revo manufactured by Adam Motor Company Ltd, but deteriorating law and order, inconsistent government policies, and a bad business decision forced the plant to close. 

Launched in 2005, the Revo had an edge over its competitors. With the exception of the engine and transmission system, all its parts were manufactured locally, rendering it the cheapest car in the market and the pride and joy of Feroz Khan.

The then finance minister Shaukat Aziz had inaugurated the plant in 2003. Even today, outside the closed factory gates of Adam Motors in Bin Qasim Industrial Estate, there is still a plaque carrying the announcement of the inauguration. Three months before the launch of the Revo in 2005, Shaukat Aziz, who had become Prime Minister by then, promised Khan that the car would be on list of the governments purchases. 

And since it would have been the cheapest, the government would have been able to buy 5,000 to 10,000 cars a year, recalled Khan ruefully. However, before even the first car was rolled out, the roads became crowded with more efficient imported vehicles. 

The Revo was not purchased by the government, and the plant where it was manufactured eventually had to close. 

One of Khans mistakes was that he did not arrange for a financier before the car was launched. He had believed that the word of the Prime Minister would be enough. I have learned my lesson. No one should ever trust a political appointee, said Khan in an interview with The News. 

With no investor and few orders in hand, Khan had little money available for aggressive marketing. Eventually, he found a Kuwaiti investor willing to help. However, this was when the ongoing political crisis in the country with suicide bombings and assassinations began. 

He waited for two years for situation to improve, said Khan of the investor. The same thing happened to another investor from Dubai. Why would anyone invest here when Pakistanis themselves are shifting their capital abroad? Today, Khan is still searching for someone who will buy the plant that closed down, but he has been able to come to terms with its closure. 

Looking back, I feel that to have a dream, to try it and fail is much better than to never have tried at all, he said.


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## Neo

*Govt may pull out $2bn investment in US ​* 
Saturday, September 06, 2008

ISLAMABAD: The appalling economic situation has forced the country to actively consider the option of withdrawing over $2 billion foreign currency reserves parked in US Treasury and its capital market, The News has learnt.

In the wake of mounting pressure on foreign exchange reserves, they dipped to its lowest in recent years and stood at around $4 billion, in real terms, keeping in view forward liabilities.

During the previous regime, the government hired fund managers for management of the reserves, who parked money in capital markets, bonds as well as US Treasury.

As total reserves held by the central bank now stand at $4 billion, which can fulfill requirements of one month of imports, the situation has put Pakistan in the danger zone regarding its external obligations. In case of non-availability of Saudi oil facility worth $5 to $6 billion, Pakistan may face the threat of default, leaving no other option but to seek the International Monetary Funds bailout package to address its balance of payments (BoP) woes.

Unskilled handling of foreign reserves is quite apparent as Pakistan is getting a meagre 1 to 1.5 per cent return on its parked money while on the other side it has floated eurobonds on which it is paying a much higher rate in the range of 7 to 10 per cent. Pakistan is a net loser in this forex game, an official commented.

At a time when reserves are depleting rapidly in the range of $250 to $330 million weekly, the finance ministry sources do not rule out the possibility of withdrawal of investment in the US Treasury and other areas.

When the State Bank of Pakistans spokesman Syed Wasimuddin was contacted on phone, he asked this correspondent to send questions to his email address and promised to give the central banks comments. After several hours, he was reminded regarding the queries but he refused to give any reply to these questions. No, these cannot be replied, he categorically said.

Among the questions, the SBP was asked how much foreign currency reserves were parked with the fund managers for the medium term or fixed term.

The second question was whether the SBP was considering any move to withdraw these reserves from the fund managers keeping in view the existing tight situation.

In the third question, the SBP was asked if not when will Islamabad under agreed terms and conditions be able to pull out these reserves after completion of the fixed period.

The handling of foreign currency reserves poses a big question mark, an official source said and conceded much could be done to better manage the reserves. However, sources explained that Pakistans risk rating was high, resulting in payment of high interest rates on its borrowings and getting less on its investments in destinations like the US where the risk was minimum.

Pakistan is getting less on its $2 billion investment because the fund managers were advised by relevant authorities to invest the amount in AAA rated countries. We have minimised our risks, which resulted in much less dividend, an official said.

In background discussions, the sources alleged that the finance ministry was never taken into confidence on the issue of forex reserves management by the high-ups of the State Bank despite repeated requests by the ministry in that regard in the last few years.

However, according to SBP data released on Thursday, total liquid foreign reserves held by the country stood at $9.129 billion on August 30.

The break-up shows that foreign reserves held by the State Bank stood at $5.759 billion while net reserves held by banks (other than SBP) amounted to $3.370 billion.


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## Neo

*Weekly inflation soars 31.55 per cent ​* 
Saturday, September 06, 2008

ISLAMABAD: The government has totally failed to control the skyrocketing inflation which is not only affecting millions of fixed and low-income households but also hurting the popularity of the present government.

High inflation (the mother of all economic ills) is disturbing the macro-economic indicators, while from the government side, the policy response looks grim. At the moment, Pakistan on the economic and political fronts is passing through a very critical situation, while political parties are engaged in power wrangling instead of adopting a unified line of action to cope with the challenge.

According to the Federal Bureau of Statistics (FBS) data released here on Friday, weekly inflation measured by the Sensitive Price Indicator (SPI) covering 53 daily-use kitchen items for the week ended on September 4 increased by 31.55 per cent compared to the corresponding week of the last fiscal.

The bulletin revealed that inflationary pressure during the week under review was higher on the lowest income group earning below Rs3,000 per month. For them, the SPI registered an increase of 33.18 per cent. For the income group of Rs3,001 to Rs5,000, it stood at 32.02 per cent, for the Rs5,000 to Rs12,000 income bracket it was at 31.65 per cent and for those earning more than Rs12,000, it stood at 31.54 per cent as compared to the same week of fiscal year 2007-08.

It is worth mentioning that the governments huge borrowing from the central bank to bridge the gap between its revenue and expenditures was instrumental in increasing aggregate demand and ultimately high inflation, which has become an apparent threat to the countrys economic health.

The State Bank of Pakistan (SBP) has recently also increased its discount rate by 100 basis points to 13 per cent aimed at curtailing demand pressure in the economy and ultimately capping inflation. The governor of the bank Dr Shamshad Akhtar at that occasion blamed the government for heavy borrowings from the SBP, which pushed up inflationary pressure in economy.

Trend of the weekly SPI based inflation with base year 2000-2001 during the last 12 weeks as compared to their corresponding weeks of the last fiscal shows a steep trend. As at the week ending on June 19, 2008 stood at 26.79 per cent, June 26 (26.03 per cent), July 03 (28.37 per cent), July 10 (28.30 per cent), July 17 (30.36 per cent), July 24 (32.22 per cent), July 31 (31.92 per cent), August 7 (31.72 per cent), August 13 (31.48 per cent), August 21 (31.69 per cent), August 28 (30.90 per cent) and on September 4, 2008, it stood at 31.55 per cent.

According to the SPI bulletin, year-on-year, the rise in the prices of some necessities and kitchen items was exorbitant. These items were bananas, onions, chicken, potatoes, LPG, tomatoes, gur, firewood, eggs, beef, fresh milk, rice, wheat flour, ghee, wheat, petrol, diesel and all types of pulses.

The bulletin on SPI, based on the data collected for about 53 items from 17 centers, showed that 16 items registered an increase, whereas, 14 items showed a decline while prices of 23 items remained unchanged.

In a span of one week, prices of bananas went up by 31.59 per cent to Rs 56.11 per dozen, onions 21.33 per cent to Rs31.97 per kilogram, chicken (farm) 3.52 per cent to Rs108.35 per kilogram, potatoes by 2.91 per cent to Rs26.86 per kilogram, LPG by 0.86pc to Rs952.76 per 11 kg cylinder over the previous week.

Further analysis of the data revealed that on year-on-year basis, some items are dearer by double digits. These include; masoor pulse 122 per cent, bananas 76 per cent, LPG 61 per cent, onions 55 per cent, potatoes 50 per cent, bath soap 39 per cent, firewood 24 per cent, curd 23 per cent, fresh milk 21 per cent, chicken 21 per cent and beef by 12pc over the corresponding week of the last fiscal.

Prices of 14 items decreased, yet compared to the prices of the corresponding week of last year, items which showed increase in their prices were; rice IRRI-6 dearer by 98 per cent, kerosene 83 per cent, rice basmati (broken) 67 per cent, wheat 64 per cent, mustard oil 61 per cent, gram pulse 57 per cent, tomatoes 56 per cent, wheat flour 54 per cent, vegetable ghee (loose) 49 per cent, red chillies 31 per cent, egg hen (farm) prices were up 29 per cent.

Though the prices of 23 items remained unchanged, the prices of some items as compared to the corresponding week of the last year are still dearer by double digits. These items include diesel which was costlier by 71 per cent, petrol 62 per cent, cooking oil (tin) 45 per cent, vegetable ghee (tin) 45 per cent, tea packet 45 per cent, washing soap 42 per cent, plain bread 35 per cent and electricity charges were up by 16 per cent over the corresponding week of the last fiscal.


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## Neo

*Pakistan needs substantial external financing: IMF ​* 
Saturday, September 06, 2008

KARACHI: Pakistan needs substantial external financing to stabilise its economy and rebuild fast-shrinking foreign currency reserves, a senior IMF official said. 

The economy has been hard hit by soaring world prices for oil and food, which have cut the reserves to a six-year low and pushed the rupee down a fifth against the dollar this year alone. 

IMF Director of the Middle East and Central Asia Department Mohsin Khan said Pakistans five-month-old government was preparing its own strategy to steer the economy away from the rocks and had not requested a fund programme. 

In an email reply to Reuters received on Friday, Khan said he had yet to see all the details of the Pakistani strategy, but it had outlined its plan to raise funds and put finances in order. 

They are looking at accelerating privatisation, obtaining donors support, and tapping the international markets by issuing GDRs (global depository receipts) and exchangeable bonds, he said. 

Khan said the strategy included letting interest rates rise if necessary, allowing greater exchange rate flexibility, reducing the fiscal deficit and cutting government borrowing. 

The government has said it will cut quarterly net borrowing from the central bank to zero, in order to help control inflation already running at close to 25 per cent. 

If the measures outlined in the comprehensive policy strategy are implemented, and sufficient financing is secured quickly, the Pakistani economic authorities could stabilise the economy this year and start to build up reserves, Khan said. 

Investors dislike so many ifs, and the international bond market has been pricing in the risk of Pakistan defaulting on its debt early next year. Currency reserves have been falling at a rate of around $800 million a month since peaking last October. 

Latest data released by the Finance Ministry showed reserves fell from $9.13 billion on Aug. 30 to $8.89 billion on Sept 3, the lowest level since 2002, of which the central banks reserves accounted for $5.5 billion. Some bankers have suggested that the civilian government should turn to the IMF for support. 

Because of Pakistans frontline role in fighting terrorism and backing for the NATO mission in Afghanistan, bankers anticipate international help to avert a default and a balance of payments crisis. 

Analysts, however, see Pakistan entering a fresh phase of political instability, highlighted on Wednesday by an apparent assassination attempt on Prime Minister Yousaf Raza Gilani. Gilani was not in his car that was stuck by bullets on a highway near Islamabad. 

The rupee hit an all-time low of 77.45 to the dollar the same day but steadied to close on Friday at 76.40/50, marking a drop of more than 19 per cent from the end of 2007. 

Central bank Governor Shamshad Akhtar issued a statement on Thursday saying the World Bank was seeking to speed up close to $1 billion in investments in Pakistan. 

A Finance Ministry official has said the Asian Development Bank (ADB) is also expected to $500 million from a $1.3 billion loan programme. Pakistan has also agreed in principle with Saudi Arabia to defer payments on oil imports estimated at $5.9 billion.


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## Neo

*Pakistan fails to lay electricity lines: Iran CG ​* 
Saturday, September 06, 2008

KARACHI: Consul General of Iran to Pakistan, Masud Mohammad Zamani has said that according to a pact signed between the two countries, Pakistan has failed to keep their part of the promise to lay down electricity transmission lines, and therefore Iran has also not been able to fulfill its agreement of supplying 1,100MW electricity to Pakistan.

During a meeting with Deputy City Nazim, Nasreen Jalil on Friday at the KMC building, he also informed that Iran has already provided 35MW of electricity to the province of Balochistan.

He added that regarding the trilateral gas pipeline project, Pakistan and Iran have already agreed on the project, nevertheless Tehran is still in discussions with India on the matter. He articulated that as soon as the rates of gas are decided between India and Iran, work on the project would begin in a few months.

Zamani also said that Pakistan and Iran have many opportunities to enhance their trade. He voiced that he has been in Pakistan for a year and witnessed beyond imagination progress in the countrys economic development.

He further stated that annual trade balance between Tehran and Pakistan stands at $600 million according to which Iran imports rice, textile products, fresh fruits, etc, from Pakistan, whereas Pakistan imports petrol and chemical products from Iran. Nasreen Jalil said that there are many unexplored territories where trade between the two countries can be improved. She suggested that there should be increased interaction between the citizens of Pakistan and Iran, and special concentration should be given towards augmented knowledge sharing of the culture and history of the two nations.


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## Neo

*Land acquired for IT park ​* 
Saturday, September 06, 2008

ISLAMABAD: Pakistan Software Export Board (PSEB) has acquired around 15 acres of land at prime location in the Federal Capital to construct IT park in order to nourish the rapidly growing sector.

The construction of this park will commence in January 2009 and is expected to be completed by January 2011, said an official at PSEB on Friday. The official also said a Letter of Intent (LoI) has already been issued to a consortium of international consultants, for the establishment of IT Park at Chak Shahzad, to be developed on Built Operate and Transfer (BOT) model.

He said with an expected development cost of more than Rs9 billion, the IT Park will provide 1.5 million sq ft of contemporary office space to the local and international ICT companies and service providers. PSEB is currently managing ten IT Parks across Pakistan and is in the process of constructing three new in major cities.

The purchase of land measuring six acres each, for the establishment of parks at Lahore and Karachi Airports is also in process of acquisition. He said PSEB has also joined hands with Shaheen Foundation to set-up a new state-of-the-art IT Park in Lahore. Operational from this November, the facility will be one of the largest IT Parks in the country with redundant connectivity, power backups and top-of-the-line civic amenities.

The park, measuring 360,000 square feet, will be used for the international branding of Pakistans IT industry and can house more than 30 medium-sized IT companies at affordable rents.


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## Neo

*US transfers $365m for Fata war support​*
WASHINGTON, Sept 5: The United States has transferred $365 million to Pakistan as reimbursement for the countrys efforts to fight terrorism in Fata.

The money comes from the Coalition Support Fund which provides assistance to US allies in the war against terror.

The money transferred covers the expenses incurred during the first quarter of the current year.

Pakistan maintains about 120,000 troops in Fata to combat Taliban and Al Qaeda militants.

Under the arrangement, Pakistan submits bills for expenses incurred during each quarter to the US Department of Defence which reimburses the bills after proper scrutiny.

Recent payments have been delayed because of US objections to some of the bills. The issue of reimbursement was also raised in the US Congress where lawmakers blamed Pakistan for exaggerating expenses.

Recently, PPP co-chairman Asif Ali Zardari also had claimed that money sent from the Coalition Support Fund was misappropriated by the Musharraf government but he later withdrew his allegation.

The US administration, however, accepted Pakistans claims with minor adjustments.


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## Neo

*$810m ADB assistance for power sector​*
ISLAMABAD, Sept 5: The Asian Development Bank will provide a $810 million financing facility to the countrys power sector.

The funds, to be released in several tranches over 10 years, would support the $5.2 billion Power Distribution Enhancement Investment Programme (2008-2017), said an ADB statement issued here on Friday.

The countrys national power sector is currently short of generation capacity and suffers from insufficiently-maintained transmission and distribution systems, resulting in supply interruptions. System losses of distribution companies range between 10 and 33 per cent above the international best practice.

The ADB funding will support the ongoing power sector reform programme designed to provide a safe and reliable supply of power, meet an annual eight per cent growth in GDP from 2005 to 2015 and expand power coverage to rural areas.

A secure and predictable electricity supply will lead to social and economic benefits and improve conditions for schools, hospitals and other social services, said Rune Stroem, principal energy specialist at the ADB Central and West Asia Regional Department.

The banks investment programme will focus on the distribution sector which is burdened with worn-out and overloaded infrastructure, power losses, capacity shortfalls and other constraints.

It will help distribution companies to provide an additional 12,000 gigawatt-hour (GWh) of electricity to meet an expected peak demand and give 30 million more people access to power from the national grid.

The programme will ensure timely subsidy payment by the government to distribution companies.

It will also improve financial management and corporate governance standards in distribution companies and help attract more private firms to invest in the sector.


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## Neo

*Reserves slip to $8.89bn​*
ISLAMABAD, Sept 5: The foreign exchange reserves fell to $8.89 billion as of Sept 3, down from $9.13 billion on Aug 30, the Finance Ministry said, as the rupee remained under pressure having lost almost 20 per cent against the dollar this year.

The central banks reserves fell to $5.5 billion from $5.76 billion, while those held by commercial banks rose slightly to $3.38 billion from $3.37 billion, the ministrys finance division said in a note to media received by Reuters on Friday.

Pakistans foreign reserves hit a record high of $16.5 billion in October last year but have since been depleted by high payments for oil imports, and foreign investors withdrawing money because of the countrys political uncertainty.Reuters


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## Neo

*Pakistani authorities have not requested an IMF programme​*
ISLAMABAD: International Monetary Fund (IMF), while endorsing the Policy Measures developed by Syed Naveed Qamar and his economic team in Pakistan, has said that if these are implemented and financing gap is secured this would go a long way towards addressing the countrys macroeconomic vulnerabilities. Masood Ahmed, Director External Relations Department, IMF said this during a media briefing held at Washington. I dont have any updated comments on Pakistans economy beyond the ones we have already made recently, except on specific point. The authorities have not requested a Fund programme, and what we have said is that in terms of the next year that the authorities have announced that, in principle, Saudi Arabia has agreed to provide an oil facility which would defer the payment of part of the oil import bill for Pakistan, and they have also announced a series of policy measures to correct the situation. We have said if these are implemented and the external financing to fill the financing gap is secured, then this would go a long way towards addressing the countrys macroeconomic Vulnerabilities, Masood Added. 

David Hawley, Senior Advisor, External Relations Department, IMF Washington, DC in another media briefing has had said that one of the important issues in Pakistan is that net international reserves have declined by about $6.5 billion since the end of June, 2007 to about $7.7 billion, and the Pakistani rupee has depreciated by 20 percent against the US dollar over the same period. Now a significant tightening of both fiscal and monetary policies to contain inflation and reduce the external current account deficit is needed in our view. In particular, fiscal consolidation should include the phasing out of energy subsidies, and moreover there is a need to stop central bank financing of the government, which has been large since October 2007. The Minister of Finance, I would note, has announced that, in principle, Saudi Arabia has agreed to provide an oil facility, deferring payment of part of Pakistans oil import bill. But the terms, I understand, are still under discussion.


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## Neo

*World Bank refuses to provide 'emergency package' ​* 
ISLAMABAD (September 06 2008): The World Bank has categorically refused to entertain a request of the government of Pakistan (GoP) for granting it a $500 million emergency package to bail it out of the worsening financial crisis, and has advised the policy-makers in Islamabad to approach International Monetary Fund (IMF) for any such support.

The World Bank has disconnected negotiations with the economic team of the government for the 500 million-dollar 'emergency package' with the comment that it was not its job to provide any 'emergency package' or 'support' to any country, and if Pakistan needed a special emergency financial support to get some breathing space on the economic front it could approach IMF whenever it wished.

The officials in Islamabad, who were the part of the negotiation team that held a series of talks with World Bank officials in and out of Pakistan for securing 500 million-dollar 'emergency package' during last three months have been found totally upset over the new development. The World Bank's 'no' to Pakistan for special financial support package has been a cause of serious concern to them.

The government economic team is confused as no other option is available with it to explore any other window for having any emergency financial support to offset the pressure on the ailing economy.

Pakistan had made a formal request to the World Bank some three months back for getting from it a $500 million emergency package when 'Finance Minister' Ishaq Dar led a delegation to visit Washington for talks with World Bank and IMF. This was followed by a number of meetings between government officials and World Bank authorities.

Interestingly, the World Bank had set a number of harsh conditionalities for Islamabad to qualify for $500 million special emergency package, and the government had taken a number of measures to meet most of them. These included deletion of subsidies the government was picking up on petroleum products and rising electricity rates out of any proportion for all consumers categories.

The PPP-led government felt level of urgency and wasted no time to pass on major portion of the oil subsidy to the consumers and at the same time revised power tariff more than one time during the last few months. These harsh decisions have brought severe criticism from all quarters of the society but they could not help the government to secure much- needed emergency package from the World Bank.


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## Neo

*Foreign portfolio investment outflow continues ​* 
KARACHI (September 06 2008): The outflow of foreign portfolio investment from the country's equity market continued as the offshore investors withdrew another $3.305 million during the week ended on September 5, 2008.

According to the data released by National Clearing Company of Pakistan Limited (NCCPL), the cumulative outflow of this mode of investment from the local equity market increased to $353.830 million during the current calendar year, from January 1, 2008 to date.

Analysts believe that the prevailing uncertainty on political front is the main reason, which forces the foreign investors to offload their holdings. Weakening economic indicators, depreciating local currency value and downgrading country's outlook also created negative sentiments, they said.

Although the start of the week was positive as an inflow of over $1.552 million was witnessed on Monday as the foreign investors took fresh positions on some select stocks. However, this trend could not continue and the foreign investors withdrew over $0.332 million on Tuesday.

A meagre inflow of $0.144 million of portfolio investment was recorded on Wednesday. However, the foreign investors remained cautious and withdrew $1.422 million on Thursday. This trend continued and an outflow of over $3.247 million was witnessed on Friday.


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## Neo

*13.1 percent growth recorded in Pakistan's commercial spending in 2007 ​*
KARACHI (September 06 2008): The annual commercial spending in Pakistan grew to an estimated $190,166 million in 2007, an increase of 13.1 percent from $168,131 million in 2006, according to data from the Commercial Consumption Expenditure (CCE) index released by Visa.

Annual commercial spending in Asia Pacific grew to an estimated $18.9 trillion in 2007, an increase of 13 percent from $16.8 trillion in 2006, according to data from the Commercial Consumption Expenditure (CCE) index released on Friday by Visa.

Global annual commercial spending grew to an estimated $77.3 trillion in 2007, representing an increase of 12.2 percent from $68.9 trillion in 2006. The top five Asia Pacific economies in size of total business and government spend were Japan ($5.2 trillion), China ($4.9 trillion), India ($2.3 trillion), South Korea ($2 trillion) and Australia ($1.2 trillion).-PR


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## Neo

*Focus on non-traditional exports: Senate body wants government to give more incentives to exporters ​* 
ISLAMABAD (September 06 2008): Senate Standing Committee on Commerce on Friday urged the government to focus on increasing non-traditional exports, calling for simplifying procedures and providing more incentives to exporters.

The committee met at the Parliament House under the Chairmanship of Senator Muhammad Amin Dadabhoy to discuss the contours of the export policy, like gems and precious stones, seafood, handicrafts, herbal health supplements, horticulture to promote floriculture exports, which have a big market in addition to pharmaceuticals, furniture, minerals etc, said a statement issued here on Friday.

It was observed that export diversification was necessary to achieve the country's export target. The committee expressed satisfaction that the country's exports increased from 17 billion dollars in 2006-07 to 19.22 billion dollars in 2007-08 registering a growth of 13.23 percent.

Some members of the committee observed that "on the one hand, we are keen to increase and expand exports, but on the other, the cost of doing business is increasing rapidly due to high interest rates and ever increasing prices of gas and electricity."

They urged the government to overcome this apparent dilemma by innovative policies. Earlier, the Commerce Secretary informed committee that Pakistan's export achieved a growth of 13.2 percent during 2007-08, crossing 19 billion dollars.

For the current year, a target of 22.1 billion dollars has been set, ie a growth of 15 percent despite unfavourable international economic situation, the government is confident to achieve the target by not only enhancing competitiveness and productivity, but also diversification of products and markets. He said that to reduce cost of manufacturing and to make our exports more competitive, it is proposed that plant, machinery and equipment, imported to set up a unit in DTRE scheme, would be exempt from duty and taxes.

This will reduce the cost of investment and encourage investment of exports and generate employment and inputs in DTRE would also be allowed to be imported from India, even if these were not included in the importable items form India, or manufactured locally.

The government, he said, was also committed to provide "zero rating" to exports by refunding of indirect taxes on input cost incurred on manufacturing of merchandise, which is exported and a study would be conducted jointly by the Federal Bureau of Revenue (FBR) and the Ministry of Commerce to quantify the extent of refund, which would become due on this account.

The Senators expressed the confidence that Pakistani businessmen and exporters had the potential to overcome the expectations of the people and the government, provided they were given the right kind of incentives, duly supported and governed by conducive policies.


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## Neo

*Pak-UAE bilateral relations progressing steadily: ICCI ​*
ISLAMABAD (September 06 2008): Pakistan was the first country to accord formal recognition to UAE on its achieving independence while bilateral relations and mutually beneficial co-operation, have progressed steadily ever since. This was stated by Muhammad Ijaz Abbasi, President of Islamabad Chamber of Commerce and Industry (ICCI).

While exchanging views with Hisham Al Shirawi, second Vice Chairman, Dubai Chamber of Commerce and Industry during his recent visit to Dubai at the head of an ICCI business delegation. He said Pakistan and the UAE enjoy close and fraternal relations, founded on deep-rooted cultural affinities, shared faith and traditions and geographic proximity and identity of interests.

He said these relations date back to the UAE's formation in 1971 and have since evolved into wide-ranging co-operation, particularly in economic field. The ICCI President said UAE is the one of the largest economic and trading partners of Pakistan and has been a major donor of economic assistance to Pakistan.

He said a large number of Pakistani expatriates are gainfully employed in UAE and they have contributed significantly to the promotion of bilateral understanding and to the economy of Pakistan through their home remittances. He said trade between the two countries is on the rise as trade volume, which was $1.4 billion in 1999-2000 increased to $2.8 billion in 2004-2005, depicting 20 per cent growth per year while it has crossed $5 billion in 2007. Abbasi highly appreciated the role of UAE investors in promoting Pakistan's economy.

He said UAE's leading corporate entities like Etisalat, Warid, Wateen, Bank Al Falah, Dubai Islamic Bank, Emirates Global Islamic Bank, Al-Ghurair Giga and Emaar have made billions of dollars investment in Pakistan's telecom, banking and construction and real estate industries respectively while Al-Ghuran another UAE based real estate giant that plans to invest Rs 45 billion in construction and real estate business Pakistan and other UAE investments in Pakistan are in the fields of airlines, financial business, hotels and tractors.

He also said these investors are not only earning high returns on their investments, they are also providing plenty of job opportunities to Pakistan's human resource talent. The ICCI President said many Pakistani investors have also invested in UAE, particularly in real estate and construction sectors that shows that business to business relations between the two countries are increasing between both countries.

He said to further promote these business relations, ICCI had proposed Dubai Chamber of Commerce for signing of MoU, which will be signed in near future and expressed his hope that it will further cement our economic relations. Abbasi further said Pakistan is an agricultural country and it offers vast investment opportunities in this field.

He invited UAE investors to bring their capital and latest agro-technology to Pakistan, where they have the potential to reap very high returns. He invited Dubai Chamber delegation to visit Pakistan to explore more business opportunities, especially in agriculture sector in Pakistan.

Speaking on the occasion Hisham Al Shirawl, the second Vice Chairman, Dubai Chamber of Commerce and Industry said that Pakistan is a growing market for investments creating a win-win situation, outlining greater investment opportunities for both the countries.


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## Neo

*Developing hydropower generation ​*
ENGINEER HUSSAIN AHMAD SIDDIQUI 

ARTICLE (September 06 2008): The share of hydroelectric power generation in the overall energy mix is persistently decreasing--from 57% in the 1980s to 42% in the 1990s to current 32%of the total installed capacity. In recent times, thermal power, primarily based on fossil fuels, has remained principal source for current electricity generation and expansion.

As a large number of thermal power plants are coming up and the addition of hydropower generation will be comparatively much lower, the present contribution of hydropower to total electricity generation will further decrease substantially by the year 2010. This is an alarming situation in the wake of high economic cost of thermal power generation.

Hydropower is globally recognised as renewable, cheap and reliable resource of energy. It generates electricity with zero emission and produces no waste. There is no requirement of fuel, operating cost is much lower and hydel power plants have longer economic lives than thermal power. Today, Pakistan has an installed capacity of 6,493 MW hydropower. There exists enormous potential to exploit this almost unlimited indigenous resource of energy. According to estimates, it is economically possible to generate some 34,000 MW additional hydropower and 150 sites for projects of cumulative capacity of 20,000 MW have already been investigated and identified.

At present, Pakistan has total installed power generation capacity of 20,456 MW. However, dependable or de-rated capacity is in the range of 16,000 to 17,000 MW during the year, due to a variety of factors. The demand is increasing at an average annual rate of about 8%. Resultantly, there is gross power shortage at national level, demand being projected at around 22,000 MW by the year 2010.

To meet the surging demand, an additional 4,000 MW generating capacity, all based on gas and oil, will be created by December 2010, in private as well as in public sector. In contrast, only 516 MW hydropower is expected to add to the existing system, besides another 325 MW nuclear power plant to be commissioned by then.

To resolve the power crisis in the long term and to sustain economic growth the optimal development of hydropower is needed. There are, however, a host of risks, constraints and specific issues linked to undertaking hydropower projects. These include geological risks, hydrological constraints, problems in water use, need for infrastructure, environmental issues and social problems. Thus the complexity and long lead-time inhibits private sector to invest in hydropower projects, in spite of various fiscal and non-fiscal incentives available under the government policies.

The fallout of these factors is reflected in the fact that not a single Independent Power Producer (IPPs) has started construction of hydel power project. Out of 41 Letters of Interest (LOIs) issued to the private sector under Hydel Power Policy 1995, only 13 Letters of Support (LOSs) for a total of 353 MW capacity could be obtained by the private sector. Among these, only one hydropower project, known as the New Bong Escape of 84 MW capacity downstream Mangla Dam, may materialise eventually, which has yet to achieve financial close though, even after more than a decade of its initiation.

Again, the government has approved another 15 hydropower projects of cumulative capacity of over 3,000 MW under Power Policy 2002. Feasibility studies of two projects have been carried out so far, whereas other project sponsors have asked for extensions in time period as they experienced problem of law and order and other issues to access the site, which all are located far from population centers, besides other reasons.

As a result of recent restructuring, Pakistan Water and Power Development Authority (WAPDA) now focuses on implementing multipurpose water projects, which is a positive advancement seen in the context of harnessing hydropower in a big way. These include medium and mega hydropower generation projects, either reservoir-based or run-of-the-river type.

In addition to expediting various on-going hydel power projects and rehabilitating/modernising the operational power stations, WAPDA has recently embarked upon a series of new hydel power projects. Hydropower projects of cumulative capacity of 419 MW are scheduled to go on stream during the period 2008-2010. These are Allai Khwar 121 MW, Khan Khwar 72 MW, Duber Khwar 130 MW, all located in Kohistan area, and Jinnah 96 MW to be located on Jinnah Barrage. In addition, Malakand III hydropower project, of 81 MW capacity, has been commissioned by the Government of the NWFP, which is expected to achieve commercial operation within a few weeks.

It is a long list of the new projects being implemented or to be launched by WAPDA. Contractors have already mobilised at site to commence construction of the strategic 969-MW Neelum-Jhelum hydropower project, whereas tenders for various works of Diamer Basha Dam project, which is designed for an installed power generation capacity of 4,500 MW, have been invited, while project design is in advanced stage.

Also, WAPDA has recently launched Golen Gol 106-MW hydropower project to be constructed in Chitral. Construction of Kurram Tangi Dam project (hydropower generation of 83 MW) is planned to re-commence soon. Construction of the Akhori Dam project is on cards, which will have a power generation capacity of 600 MW. Likewise, design and engineering work on Keyal Khwar project of 122 MW capacity has commenced.

Feasibility studies related to another 8 hydropower projects are in progress being conducted by the consultants appointed by WAPDA. These projects are expected to have an installed capacity of about 12,000 MW and would require $16.7 billion to construct. It may take two years to finalise comprehensive studies enabling WAPDA to launch the projects.

Kohala hydropower project on the Jhelum River in the AJ&K will have a capacity of 1,100 MW, whereas Bunji hydropower project (Gilgit) will generate 5,400 MW on its completion. Dasu of 3,700 MW capacity is a run-of-the-river scheme, 69-km downstream Diamer Basha Dam.

Lower Palas Valley of 621 MW and Lower Spat Gah hydropower project of 610 MW are proposed to be located at Patan, Kohistan. The remaining projects are Phander (Gilgit) 80 MW, Basho (Skardu) 28 MW and Lawi (Chitral) 70 MW. In addition, pre-feasibility or initial studies are being conducted for Thakot hydropower of 2,800 MW and Patan of 2,800 MW, both proposed on Indus River, and Harpo of 33 MW near Skardu.

In view of reluctance on the part of private sector to developing hydropower projects, the government may be well advised to allow WAPDA to implement all the hydropower projects, in the pipeline as well as proposed, which has the requisite experience, expertise and resources.

Developing hydropower projects in public sector will also curtail the import bill, improve ever-increasing trade deficit and reduce outflow of foreign exchange in terms of profit and dividend by the IPPs. During seven months of the current fiscal year (2007-08) the IPPs operating thermal power plants have repatriated an amount of US $102 million as profit and dividend, which is a record. Above all, the electricity could be made available to the consumers at an affordable tariff if hydropower generation share in total power generation increases in coming years.

If the new government would like to continue to pursue the policy of inducting private sector in hydropower sub-sector, this may be achieved through adopting a well-planned strategy. WAPDA may be asked to construct, operate and divest small and medium hydel power stations, in a phased manner. Sarhad Hydel Development Organisation (SHYDO) has recently followed the modality to privatise its small and mini hydel power stations in the NWFP after putting them into operation and the experience has been successful.

(The writer is former Chairman of State Engineering Corporation and is currently on the Board of Directors, National Engineering Services Pakistan Pvt Ltd, NESPAK.)


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## Neo

*Economics must take front seat with new President ​*
EDITORIAL (September 05 2008): There is a general consensus that the economic malaise that besets the country is assuming alarming proportions. There is also a consensus that the government so far has been unable to devote the attention that the economy needs.

Political factors have proved to be major irritants for the present government: the forming of the coalition of the major parties that won the elections - a coalition that represented divergent political ideologies resulting in its eventual demise, the subsequent ouster of Musharraf as president, the issue of the judiciary that continues to dog the political arena, and now the presidential election that appears to be very divisive even though the office of the president is supposed to reflect unity within the federating units.

Once the presidential election is over, however, it is hoped that the government would turn its full attention towards the economy. In the words of many an analyst, 'it's the economy, stupid' reflects an obvious fact, namely, that weak economic fundamentals negatively impact on the popularity of any government.

In several cities/localities in Pakistan people have already come out on the streets, less than six months after the newly elected government was installed, in protest against unscheduled load shedding as well as the rise in the inflationary pressures, estimated by the government at 31 percent for last week.

This must bring it home to the government that it does not have unlimited time to deal with the situation if it wants to sustain support from its constituency. It is fervently hoped that once the next president of the country has been elected the full focus of the government would be on the economy. That this is critical at the present moment in time cannot be challenged by none.

Economists are referring to what they term as weak macroeconomic fundamentals that include a whole range of disturbing indicators: from the free fall of the rupee; to a dramatic decline in the foreign exchange reserves; to a budget deficit target of 4.7 percent that increasingly appears unachievable given the budget document of 2008-09 wherein the expenditure trends have been allowed to continue while the ambitious revenue targets lack clarity, reflecting the interests of powerful pressure groups.

In addition, the reliance on domestic and foreign borrowing appears to be on the rise. Supporters of the government maintain, with a degree of credibility, that endogenous factors like the previous government's heavy subsidisation for political gains as well as exogenous factors like the rise in the international price of oil and food are responsible for the current state of affairs.

Be that as it may, there is evidence to suggest that the government needs to focus on providing greater clarity to its revenue generation capacity for the current fiscal year as well as attempts to reduce the expenditure priorities as envisaged in the budget, for example lower outlay for defence in an effort to sustain the amount allocated for the Public Sector Development Programme.

Sentiment in the Pakistani markets today, with the stock market bearish, militates against the inflow of any domestic and foreign investment. It is imperative for the government to turn the sentiment around - from the negative to the positive quadrant. Once local investors begin to see the possibilities in the economy foreign investors would automatically enter our markets.

But for this to happen there is a need for the government to undertake reforms with respect to its fiscal and monetary policies as well as with respect to providing infrastructure like energy that is the basic input for raising manufacturing output.


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## Neo

*World investors worried about Pak economic meltdown ​*
Saturday September 06, 2008

ISLAMABAD: International investors, who have purchased various Pakistani papers and bonds amounting to billions of dollars, are gravely concerned over the fast-depleting foreign reserves and unbridled inflation with no respite in sight. 
A senior government official told The News these global investors were also worried about the increasing political uncertainty that could even continue after the presidential election. The main world investors, who purchased Pakistani papers and bonds during the Shaukat Aziz government, keeping in view the then economic situation, are now worried about their investments and have urged authorities in Pakistan to take stringent measures to stabilise the economy. 

The Pakistani rupee has depreciated by 22 per cent since the new government has taken charge. The rupee is the world`s fourth-worst performer, behind the Zimbabwean dollar, Turkmenistan manta and Icelandic krona. 

One last option open to the government to stop the continuous flight of the capital from the country could be freezing the foreign currency accounts, as was done by the Nawaz Sharif government after the 1998 nuclear blasts. But this option will have far-reaching political consequences for the PPP government. According to an official source in the finance ministry, Templeton Asset Management Ltd and Aberdeen Asset Management Plc. doubt that Pakistan`s new leaders have the resolve to slash outlays or raise borrowing cost to check inflation in 30 years at a time when the economy is slowing. The risk of failure has prompted investors, stung by a global slump in stocks and debt markets, to shun developing economies from India to Chile that face similar dilemmas. 

The official quoted Mark Mobious, executive chairman of Templeton in Singapore, who has about $200 million invested in Pakistan, saying inflation could only be stopped by cutting the government spending. Templeton further said: "Stop spending. Stop wasting through corruption. We have been avoiding Pakistan for a while for investment because of the political uncertainty and we will probably continue to do so." 

The official quoted another world business tycoon Goh How Phuang, a Singapore-based portfolio manager at Schroeder Investment Management Ltd, which manages about $250 billion in funds globally, as saying: "Musharraf`s exit is unlikely to improve the political outlook in the near term, which in turn could exacerbate the deteriorating fiscal position and we have been negative on Pakistan post-elections." 

The official quoted Kevin Daly, a money manager in London at Aberdeen, Scotland`s largest independent money manager, with $5 billion in emerging market, as saying: "Pakistan rupee may weaken to 80 any time."


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## Neo

*Agri credit target set at Rs250bn ​* 
Sunday, September 07, 2008

KARACHI: Dr Shamshad Akhtar, Governor State Bank of Pakistan (SBP) on Saturday said that the central bank had set an indicative credit disbursement target of Rs250 billion for the agriculture sector for the current fiscal year (FY09), which can be further enhanced after having a detailed analysis of the rising input costs of the sector.

Chairing a meeting of the Agricultural Credit Advisory Committee (ACAC) held at the State Bank of Pakistan, Dr Akhtar commended the performance of banks that played a significant role in surpassing the target set for the last fiscal year.

Dr Akhtar informed the meeting that in 2007-08 banks had surpassed the agriculture credit target of Rs200 billion and disbursed Rs212 billion to the farming community, which is Rs43 billion or 25 per cent higher than last years disbursement of Rs169 billion.

She said that keeping in view the growing requirements of the sector, the State Bank has proposed an indicative target of Rs250 billion for 2008-09, which is Rs50 billion or 25 per cent higher than last years target and Rs38 billion or 15 per cent higher than the actual disbursements of FY08.

Dr Akhtar appreciated the fact that sector-wise agriculture credit disbursements during the last fiscal year showed diversification of the credit to non-farm sector as its share in the total credit disbursement increased to 25 per cent in FY08 from 17 per cent in FY07. She pointed out that recoveries of agriculture loans have shown significant improvement during FY08 and banks recovered 92 per cent of their recoverable amounts as against 83 per cent recovered during FY07.

While responding to questions posed by representatives of three less developed provinces on lower disbursement of agriculture loans to their respective provinces, the SBP Governor said that the banks are making efforts which have resulted in an increase in the disbursements during the last couple of years. Delegates pointed out that there are issues of credit absorption in these provinces because of low productivity, water salinity, lack of good farming practices by the farmers and other issues that need to be addressed by various provincial agriculture and extension services departments to create enabling environment for banks to increase their outreach.

Dr Akhtar urged the representatives of the three provincial governments to take the necessary steps to address these issues and improve the coordination between respective departments on fast-track basis to increase the flow of agriculture credit to the less developed areas of the country.

SBP governor also informed the meeting about the recently launched Crop Loan Insurance Scheme developed by SBP Task Force that would be implemented from coming Rabi crop. To facilitate the small farmers, the government has agreed to share the premium cost of subsistence farmers, she asked banks to adequately publicize the scheme for the benefit of the farmers. It is hoped that banks will also adjust their agriculture loan pricing following the introduction of Crop Loan Insurance Scheme, as it will mitigate their risk of losses due to natural calamity, she added.

Dr Akhtar briefed the committee about State Banks initiative of introducing guidelines on Islamic financing for agriculture. She urged all stakeholders to effectively publicize the scheme for creating awareness amongst the farming community.

The representatives of the farming community, while appreciating the efforts of State Bank and commercial banks in increasing the flow of credit to the farming community, highlighted the issues pertaining to low quality seeds, acute shortage of fertilisers, water scarcity and lack of marketing channels. They suggested to the committee to take up these issues with concerned Federal and provincial government departments so that the farming community can utilise the banks credit efficiently.

The Executive Director, State Bank of Pakistan, Jameel Ahmed informed the meeting that as per approved plan the banks will open six hundred branches during 2008, 20 per cent of which will be in the rural areas. Dr Shamshad Akhtar said that SBP will encourage the banks to open as many number of branches as they like in rural un-served areas in addition to approved plan.

The banks briefed the committee on their respective initiatives which inter alia include increase in number of agriculture lending branches, increase in agriculture credit officers, introduction of innovative lending products for farm and non-farm activities and number of awareness programmes conducted throughout the country.

While concluding the meeting, Dr Akhtar informed the committee about the introduction of a scheme under the DFID funded Financial Inclusion Programme, whereby the banks can provide wholesale credit to microfinance banks for onward disbursement to micro borrowers of rural areas against the credit enhancement guarantee scheme.


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## Neo

*Experts call for imported coal-based power projects ​* 
Sunday, September 07, 2008

LAHORE: Power sector experts have urged the government to immediately stop approving oil fired thermal power projects and approve imported coal based power generation projects that would produce electricity at half the rate.

They pointed out that electricity from the furnace oil based power plants would cost Rs20 a unit and would be a constant source of pressure on foreign exchange reserves. They said coal-fired electricity generation should be encouraged as it would consume 50 per cent less foreign exchange than furnace oil if the coal has to be imported at all.

They said Pakistan is sitting on the second largest reserves of coal in the world, and the mining potential of coal in Sindh has not been exploited due to the skewed approach of the government. They further said that the government should deal with the coal mining issue separately from power generation. The first priority they added should be to exploit the coal reserves available in Sindh. The electricity generation, they added would ensue once the coal mining starts.

The experts said the country should approach countries with experience in coal mining and electricity production from coal. They noted that Bosnia, Poland, Russia, China and the United States are major players in producing electricity from coal. In fact, they added that Poland produces 90 per cent of its electricity from coal. The experts said that the government should divide the Thar coal reserves in to 15 blocks and issue concessions to interested parties from these countries. They said the coal mined should be allowed to be used or exported on global rates so that the miners are not restricted to wait for local consumption.

The news found out that the main reason that is impeding the progress on the Thar Coal reservoir is the insistence of the federal government that the Sindh government has to get its approval for granting any mining concession in the region. There are vested interests sitting in the federal government that want their share of the cake while granting concessions.

Experts feel that the federal government should not meddle in the way the Sindh government wants to exploit its coal reserves. They said time is fast running out for Pakistan. Thar they added is a coal mine that could save Pakistan from the high cost of oil.

They fear that if the countries continued to award contracts for oil run thermal stations, it would ruin the economy. They said the oil bill would soar and the government would not be in a position to increase the electricity rates in accordance with the increase in cost of new thermal projects. They warned that the country would then regularly face the situation as was witnessed this year, when the thermal stations were operated below capacity to prevent high oil prices. They said load shedding would then become a routine. It does not appear, they added, that Pakistan will overcome its foreign exchange problems in the foreseeable future and boot the bill for added furnace oil imports. They said coal fired power generation plants could be established in the same time period that is taken by furnace oil run projects. They said if the thermal stations could be run on furnace oil then they could also be run on imported coal that would reduce the electricity cost by 50 per cent.


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## Neo

*Business leaders express confidence in new President ​* 
Sunday, September 07, 2008

KARACHI: Industrialists and businessmen congratulated Asif Ali Zardari on being elected the new President of Pakistan and expressed confidence in his abilities.

Tanvir Ahmed Sheikh, President, FPCCI said it is indeed a historic event in the history of country where major political parties have ultimately recognised that unity is the need of time. I am sure that all political forces have learnt the lesson from the past and that all will be ready to work for this country, he said.

He added that business community is confident that Asif Ali Zardari has all the capacity to deal with the current economic and political crisis of Pakistan. 

As he exhibit political maturity in last some months, the business community is right to believe in him that he will play a positive part in economy as well. He should prepare a comprehensive emergency road map for the socio-economic development of Pakistan, he said.

Nisar Sheikhani, Chairman SITE Association of Industry said that he welcomed Asif Ali Zardari as the newly elected president of Pakistan. We hope that the country will proper with this new leadership.

Korangi Association of Trade and Industry (KATI) has congratulated Asif Ali Zardari on becoming the 12 president of country and hoped that Pakistan will progress industrially under his leadership.

The office bearers of KATI in a press statement on Saturday said that Asif Ali Zardari would emerge as the symbol of federation and that he will deal with all the economical problems being faced by the country. 

The association hoped that Pakistan will experience development in all sectors under the leadership of Asif Ali Zardari and Yousuf Raza Ghilani.

Siraj Kassam Teli, former President of KCCI along with Tahir Khaliq, M. Zubair Motiwala, Haroon Farooki, Former Presidents, Anjum Nisar, Senior Member, Shamim Ahmed Shamsi, President of Karachi Chamber of Commerce & Industry, Iftikhar Ahmed Sheikh, Senior Vice President, Muhammad Haroon Agar, Vice President and Managing Committee Members, conveyed heartiest congratulation upon thumping majority win of the election of President of Pakistan and prayed for his success towards achieving the desired goal they said that the Business community is confident that the country under his able guidance will move in right direction.

They also said that it is indeed a matter of rejoice and satisfaction for the people of Islamic Republic of Pakistan particularly members of the business community that the electoral college with thumping majority has elected a dynamic personality as President of Islamic Republic of Pakistan which is indeed due recognition of his meritorious services to the democratic system in the county. As the policy of National Reconciliation is the need of the hour and PPP having representation in all the four provinces of the Federation supported and elected to the high Office of the President of the country would strengthen the federation, bring stability and remove political and economic uncertainties, which are pre-requisite for promotion of trade and industrial activities and socio-economic development of the country and ultimately in the interest of the poor masses.


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## Neo

* Ministries asked to help Chinese firms complete projects ​* 
Sunday, September 07, 2008

ISLAMABAD: Planning Commission Deputy Chairman Salman Faruqi on Saturday directed the ministries concerned to remove impediments faced by Chinese companies to ensure a speedy completion of their projects. 

Chairing an inter-ministerial meeting convened to discuss issues of Chinese companies working on various development projects in the country, Faruqi asked the ministries to extend maximum administrative, logistical and financial facilitation to these companies adding that Chinese investment in these projects would help bring about macro-economic stability in the country. 

Successful completion of the projects being carried out by Chinese companies will send a positive message that Pakistan is a preferred destination for foreign investment, Salman Faruqi added. 

On the occasion, the ministries and divisions concerned presented the reports on the progress made so far on various projects and explained the future course of action. 

Administrative and financial matters related to the Chinese projects were also deliberated in the meeting. 

Chairman Federal Board of Revenue and Secretaries of the Ministries of Industries, Information Technology, Board of Investment, Railways, Water and Power, Economic Affairs Division, Managing Director Private Power and Infrastructure Board, Director General Sindh Coal Authority, and Acting DG Civil Aviation Authority attended the meeting.


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## Neo

* Bush ready to work with Asif on terror war, economy​*
WASHINGTON, Sept 6: Welcoming Asif Zardaris election as president of Pakistan, the White House said on Saturday that President George Bush looked forward to working with him.

The statement, delivered by the national security spokesman Gordon Johndroe, came hours

after Mr Zardaris election and dismissed media speculations that the White House was not happy with the PPP co-chairmans sudden rise to power.

The United States congratulates Asif Ali Zardari on his election as president, said Mr Johndroe.

President Bush looks forward to working with him, Prime Minister Yousuf Raza Gilani and the government of Pakistan on issues important to both countries, including counterterrorism and making sure Pakistan has a stable and secure economy, he said.

Although brief, the message contained Americas two main concerns about Pakistan: its role in the war on terror and the fear that a weak economy could destabilise this important ally, jeopardising US strategy for combating extremists.

The US media, while reporting Mr Zardaris victory, noted that the presidential election in Pakistan was considered crucial to US foreign policy and to the war on terror.

The media noted that Mr Zardaris victory had pleased the Bush administration because it would once again allow the US to deal with a strong figure in Pakistan, as it did with former president Pervez Musharraf.

The elevation of Mr Zardari to the presidency, where he will have great powers, including the ability to dissolve parliament and name the head of the Pakistani Army, comes with the tacit approval of the United States, The New York Times said.

Mr Zardari has promised a tougher fight against the Taliban and Al Qaeda extremists ensconced in the nations tribal areas, the report added.

The Washington Post published an agency report from Islamabad which warned that despite Mr Zardaris easy win on Saturday, there are fears his rule will mark a new phase of instability in a nuclear-armed Muslim state rife with anti-Western sentiment.


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## Neo

*Pakistan to export 4m tonnes rice this year ​*
KARACHI: Due to the good harvesting of rice Pakistan will export its 21 percent surplus output in the current fiscal year, Chairman Rice Exporters Associations of Pakistan (REAP), Muhammad Azhar told Daily Times Saturday. 

Azhar said that because of good harvesting this year about 4 million tonnes of rice would be exported. He added that rice worth $250 million has already been exported during July-August this year, which is 300 percent more as compared to 2006-07. Rice, a high valued cash crop, accounts for about 8 percent of Pakistani exports and 1.2 percent of gross domestic product.

He said that 4 million tonnes of rice valued at $3 billion would be exported during the current fiscal year, which is 50 percent more when compared to the last year $2 billion. Replying a question he said that the local market wholesale price of rice has dropped down by 30 percent, but the retailers were not passing on the benefit to the people.

Chairman REAP said that reduced under invoicing has also increased the Pakistani rice export. He added due to the global food shortage the demand of Pakistani rice in the international market has increased, fuelling export of Pakistani rice. moonis ahmed


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## Neo

*Pakistan to seek Chinese investment ​*
ISLAMABAD: Pakistan would request China to undertake important projects in the field of energy, infrastructure, coal reserves development and export oriented industries, official sources told Daily Times on Saturday. Asif Ali Zardari would place this request before the Chinese leadership during his expected first official visit to China, after being elected as President of Pakistan with an overwhelming majority across the country, the official sources added. 

In an inter-ministerial meeting chaired by M Salman Faruqui, Deputy Chairman Planning Commission, issues of Chinese companies working on various development projects in Pakistan were discussed with the relevant ministries at the Planning Commission. Planning Commission, in this regard has directed the federal ministries and divisions to forward proposals relating to the new projects which could be initiated by the Chinese investors and on priority basis for the benefit of both sides. Some of the important projects from federal Public Sector Development Programme would also be offered to Chinese investors and take advantage of the benefits that are available to the foreign investors in Pakistan. sajid


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## Neo

*Work on three mega industrial uplift projects underway ​*
SIALKOT (September 08 2008): The construction work of Rs 1 billion for three mega industrial development projects was briskly underway at Sialkot for the development, modernisation and up-gradation of Sialkot's export-oriented sports goods industry, besides, enabling this industry to meet the global trade challenges under this WTO Regime.

The under completion projects of 'Sialkot Business and Commerce Centre' and 'Sports Industries Development Centre' at Sialkot would open the new vistas of socio-economic and industrial development in Sialkot region. Besides, providing opportunities for the local industrialists and exporters to struggle hard for strengthening the national economy and enhancing the national exports with full devotion and dedication.

Dr Sarfraz Bashir Former Senior Vice President of Sialkot Chamber of Commerce and Industry (SCCI) stated this while talking to the newsmen here Sunday. He said that the federal government has allocated a special development fund of $2 million for the development of Sialkot's export-oriented sports goods and leather goods industries on top priority basis.

He said that these three launched projects would be helpful in enhancing the pace of the trade activities, besides, helping a lot to modernise the export-oriented industries of Sialkot.

SMEDA would spend a chunk of Rs 34.67 million on the construction of an international standard Sialkot Business and Commerce Centre (SBCC), which would be an eight storey building with total covered area of 101,823 square feet, comprising the advanced facilities including Expo Halls, Display Centers, Convention Centre, Management Offices, restaurant & Residential Rooms and Business Facilitation Center, he added.

The federal government had released special funds of Rs 171.67 million through SMEDA to Sialkot Chamber of Commerce and Industry (SCCI), while the SCCI would contribute Rs 170 million for this project.

This project would be helpful in providing a shared display facility for whole of the Sialkot industry, besides, helping to promote and export of Products from Sialkot based Industries. He said that project would also enhance the Capacity Building of Exporters especially SMEs.

Dr Sarfraz Bashir Former Senior Vice President of Sialkot Chamber of Commerce and Industry (SCCI) said that this international standard project would also have an easy access to Sialkot Airport, Sialkot-Lahore Motorway and Sialkot-Swedish Engineering University.

SMEDA would also spend Rs 272.61 on the establishment of an international standard "Sports Industries Development Centre Sialkot", this mega project would enable Sialkot's sports goods sector to adopt new technology of mechanised soccer ball, which is threatening the current hand stitched soccer ball industry of Sialkot.

On this occasion, the SMEDA officials said that Sialkot is the main export oriented city in Pakistan. Sialkot is known internationally as a producer of quality products in sports goods, surgical instruments, leather garments, gloves & accessories, sportswear and musical instruments.

The local craftsmen produce immaculate products while export oriented entrepreneurs ensure that products reach international destinations. Around 400,000 people are engaged directly or indirectly with export activities. Annual export earnings of the city are around US $1 billion.

Former Sialkot Chamber of Commerce and Industry (SCCI) SVP Dr Sarfraz Bashir said that Sialkot city is under a process of development, the concept of displaying products is taking grounds and with increasing exposure to international markets, industry people are realising the utter need of new marketing and selling hubs. He said that there is increasing need of giving our products more exposure and making them reachable for the customer. Another important thing is that business visitors avoid hassle of visiting multiple locations so if they are provided with single place where they can find a full representation of the industry, a good response is expected out of them.


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## Neo

*'Local cottage industries assume a model status for developing world' ​*
SIALKOT (September 08 2008): President of Sialkot Chamber of Commerce and Industry (SCCI) Dr Khurram Anwar Khawaja has said that Sialkot is an important economic centre and the only export oriented city in Pakistan and the development of local cottage industries has assumed a model status for the developing world.

Talking to the newsmen, here on Sunday, he said that thousands of small and medium enterprises situated in and around the city are engaged in honouring their global commitments for export of value-added quality goods like gloves, musical instruments, martial arts uniforms, cutlery and military uniform badges.

He said that the entrepreneurs who always focus all their energies and attention in quest of the best in combination with the incomparable expertise and skill of the local workers are exporting the highest quality products to the entire global market.

The century-old history of sporting goods and surgical industry has seen the industries developed to the highest international standards mainly due to business wisdom and natural sense of the entrepreneurs towards export. Other industrial sectors of Sialkot are also following the same trend.

The products standards being of exceptional quality are meant for markets of developed economics not affordable even for domestic markets, which is under developed. It is unique for Sialkot that everything produced here is exported.

SCCI's president said that Sialkot's field hockey sticks and cricket bats are used in all international games including the Olympics and World Cups.

It is the distinction of Sialkot that the hand-stitched soccer balls made here are played in World Soccer Cups, European Championships and other cups as well.

The best cricket and hockey players of the world prefer to use cricket bats and hockey sticks made of Sialkot which has made Sialkot a household name all over the world. Most of the developed countries are importing surgical instruments from Sialkot for the export purpose under their own brand name.

In leather products and textiles sportswear Sialkot compete with other garments. Sialkot is winning the best export trophy award in this sector since 14 years.

Dr Khurram Anwar Khawaja said that the industrialists and exporters accepted the challenges of compliance to quality standard with extraordinary determination, which is proved by the fact that majority of ISO certified companies in Pakistan belongs to Sialkot.

For smoother operations in the products and exports, the exporters are ensuring compliance with environment and social standards and adopting security measures as required by the valued foreign customers' countries in quality and style.

Similar is the case with other items produced in Sialkot. The export oriented industrial sector of Sialkot is earning foreign exchange of one billion dollars annually, which is an exceptional achievement considering the small size and population of the city.

It is worth mentioning that because of the SMEs culture developed at Sialkot, per capita income of the people is much higher than any other part of Pakistan.

He said that the bank loan and tax default rate in Sialkot is practically zero percent which is clear proof of the prudence and responsible attitude of the businessmen in their business dealings, may it be with the foreign customers, the bank or revenue department.

SCCI's president said that the best export trophy awards in sporting goods, surgical and musical instruments have always gone to Sialkot based companies and due to extraordinary export performance in leather the exporters largely have succeeded in meeting the compliance standard of foreign buyers under WTO but need the support of developed countries to enter and operate in the WTO regime well prepared and in a more organised manner.

The business success of Sialkot is a self reliance phenomenon, which has been made possible due to selfless efforts, dedication and commitment of the exporters in Sialkot who travel all around the world to fetch business and supply products to the entire satisfaction of the foreign buyers, he said.

Besides, exceptional achievement in business, the corporate sector in Sialkot is fully vigilant to its role towards social sector and has played significant role in that regard on 'Do it Yourself' basis, which is now culture of Sialkot.

He said that it is due to this approach of self-reliance that the exporters of Sialkot have initiated and completed many city development and human welfare projects.

Every foreign buyer visiting Sialkot appreciates that the exporters through dedication and resolute efforts have enhanced the image of Pakistan in the international markets and have won laurels for the country and for them in business and social sector.

The Sialkot City development and human welfare projects initiated by the business community of Sialkot speak the volume of dedication of SCCI, in which this chamber has played a central role.

Sialkot Chamber of Commerce and Industry (SCCI) was established in 1982. At present, more than 5,000 members representing various industries are enlisted with the chamber.

Sialkot district having population of around 3.3 million has a dry port established by the private sector since 1984. This chamber initiated this project.

In a unique move, Sialkot City package programme was initiated by the Sialkot Chamber in collaboration with other trade bodies. Under the programme, the exporters of Sialkot voluntarily contributed 0.25 percent against their exports to change the face of the city. Main arteries of the city have been constructed and work on remaining road is in progress.

Pakistan's second export processing zone (EPZ) is set up in Sialkot. The zone offers exceptional incentives for the investors and thus is an excellent opportunity for both local and foreign investors.

The role of local business community for developing of the city and welfare of the people needs no introduction. The said projects along with Programme from Soccer Ball and Surgical Industry, Universal Primary Education Programme, Sialkot Tannery Zone etc, speak volumes of the socially responsible attitude of the business community, he further added.


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## Neo

*India proposes for opening LoC trade from October 1 ​*
NEW DELHI (September 07 2008): Reiterating its commitment to make the Line of Control (LoC) irrelevant, India has suggested Pakistan to open Srinagar-Muzafarabad route for trade from October 1 and expressed willingness to open new routes to give boost to the cross-border trade.

"Our proposal for opening the LoC trade from October 1 has been forwarded to Pakistan and we are awaiting their response. Other necessary steps will be followed up as soon as we receive their (Pakistan's) response", External Affairs Minister Pranab Mukherjee said in an interview with the All India Radio.

Asked whether the recent political upheaval (in Jammu and Kashmir) forced the government to immediately take up the issue of opening of the Srinagar-Muzafarabad route for trade purpose, Mukherjee said: "It had nothing to do with the contemporary events". Talks on this proposal have been going on for quite some time.

Without elaborating fresh proposal to open new routes, the minister said: "We are also thinking of the new routes" as a confidence building measure. The minister, who played an important role in ending the crisis with the Amarnath Sangrash Samiti on law row, claimed that composite dialogue between India and Pakistan had resumed.

The two countries have so far had four rounds of talks. The fifth round has begun with the foreign secretary's visit. "I do hope the fifth round of composite dialogue will also be concluded successfully." Referring to the political unrest in Pakistan, he said India wants peace, stability and development in "all our neighbouring countries, including Pakistan."

Mukherjee favoured resumption of talks with the Kashmiri separatist and Hurriyat leaders, but added it is for the governor and the home ministry to decide whom to invite.

Who will come and who will not come that I cannot decide. This is an area where home ministry is dealing with and it is essentially between the political parties of Jammu and Kashmir, besides governor." If they require the support from the central government, it will extend full assistance.

On holding of elections in Jammu and Kashmir, the minister said: "I would not make any value judgment because it is essentially the domain of the Election Commission. It has to make the assessment by talking to the people concerned whether there is a situation conducive to hold the election or not.

The Indian government has also proposed to Pakistan "triple entry permit" for members of the divided families of Jammu and Kashmir and joint projects in tourism, environment and forestry sectors in the two parts to give boost to the peace process and to ease people's problems caused by the divide.


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## Neo

*Need for a cohesive energy policy ​* 
ARTICLE (September 07 2008): There seems to be lack of co-ordination and/or cohesion in the various departments/ministries of the Government managing energy sectors in the country. In this regard a reference is made to the media report quoting Senator Dilawar Abbas, Head of the Senate Standing Committee on Petroleum and Natural Resources, urging the Government to "Remove Hurdles in IPI's ways" to accelerate work on this project.

Abbas has rightly pointed out that the gas fields are fast depleting and there is an urgency to accelerate work on the IPI Gas Pipeline to meet the growing demand for gas in the country. The demand for gas is expected to grow at a much higher rate than estimated before due to scheduled commissioning of gas fired power generation projects in the next 3 years as planned/approved by Private Power Infrastructure Board (PPIB).

The energy needs of the country are not overseen from any one focal point, but assessed by various sectors independently and making plans to meet the energy requirements of their sectors accordingly. To name a few these are the Planning Commission, Ministry of Petroleum and Natural Resources (MP&NR), Petroleum Institute of Pakistan (PIP), Oil Companies Advisory Committee (OCAC), Water and Power Development Authority (WAPDA), Pakistan Electric Power Company (PEPCO), Karachi Electric Supply Corporation (KESC), Private Power Infrastructure Board (PPIB).

Their plans are being developed rather independently as these are independent bodies and are not working in tandem to support any unified energy policy as we understand there is, none. One may recall that some two years back in the Oil and Gas Conference held in Islamabad, Government sponsored the announcement of a pilot project for import of Liquefied Natural Gas (LNG) by Sui Southern Gas Company Limited, then under Engineer Munawar Baseer.

The Project ambitiously was named "Mashaal" and entailed development of port facilities on fast track for import of LNG, de-gasification for Sui Southern Gas Company (SSGC) system mainly for use by the power generation companies as the estimated landed cost of LNG was viewed as unviable for domestic users. We understand highly reliable foreign partners were taken on board after due diligence and scrutiny.

This project has still not moved ahead from the 'Drawing Board' level as the foreign investors, partners in the project, are looking towards the Government for a 'Sovereign Guarantee' to protect their investment in this country against any eventuality of not finding the market for the gas imported through this project.

This guarantee is not forthcoming as such the project is not moving ahead or is moving at a snail's pace. The time and money spent so far on Mashaal Project may be lost and opportunity too as there will be hardly any source of supply of LNG available in the international market if the present partners move away from this project taking with them the committed source of supply wherefrom the product has been planned to be obtained.

Experts are of the view that as of today, there is hardly any source supply left uncommitted from where this product can be obtained. LNG is now a scarce commodity unless some new production facilities are added which takes 3 to 4 years in development. The Gas Pipeline Projects, both Iran-Pakistan-India Pipeline (IPI) and Turkimanistan-Afghansitan-Pakistan Pipeline (TAP) under the Ministry of Petroleum and Natural Resources managed through Inter-State Pipeline Company are still a far cry and their dates of commissioning are uncertain.

There is definitely an urgency to remove all the impediments in the way of IPI as urged by Senator Dilawar Abbas so that actual construction work on this project is undertaken at the earliest ensuring supply of gas to meet the demand. The increase in demand of gas in the domestic, commercial and in the power sectors in the Country is not matched by the limited increase in the local production.

Experts are concerned with the looming crisis and their concerns are increasing with every passing day. The gas shortages in winters even today are unmanageable and the increased demand in the future is likely to add to the woes of the consumers, both in terms of gas supplies as well as electricity shortages due to limited gas supplies.

The electrical energy requirement in the country on a conservative estimate is likely to grow by 12.5% per annum and to meet the demand/supply gap WAPDA, PEPCO and PPIB are working independently and one learns about approval of projects in the print and electronic media every now and then without any information as to when will the net outcome favourably affect the consumers as they presently continue to face the unprecedented electrical outages, making their life utterly miserable.

According to information posted on the website, PPIB has recently updated the list in July 2008 of approved power projects for more than 4500 mega watts based on Gas, Oil/Gas and Oil during the short term ie March 2009-June 2011 as detailed below:

All these projects have different commissioning dates. However, all are scheduled to be commissioned before June 2011, under the 'short term plan'. Apart from the above listed oil and gas based power projects there is a list of other hydel and coal based projects, including two 1200 MW imported coal based projects near Karachi, expected to be commissioned in 2013. This is good news for the Karchiites and something to look forward to.

It is apparent from the above list of the projects that most of the power projects are based either on gas, oil/gas or purely on Fuel Oil. We have discussed shortage of Gas earlier and it is imperative that LNG and natural gas must be imported as planned to meet the growing demand of gas in the country. Experts view the availability of fuel oil as questionable, both in terms of sourcing of supplies as well as port infrastructures limitation to handle import of such large volumes at the ports.

If all the listed purely oil based projects are commissioned as scheduled, estimated fuel oil required to meet the approved capacity works out to an additional 60,000 tons per month during 2009, 350,000 per month during 2010 and yet another 60,000 tons per month during 2011 after their commissioning dates. The additional requirement of fuel oil will have to be imported unless new refineries are commissioned in Pakistan.

On the supply side, fuel oil or furnace oil, as it is commonly known, has been viewed by the refiners as a loss making product as the selling price in the international market of this product has traditionally been lower than the price of crude oil. As such all refineries in the Middle East and elsewhere have commissioned highly capital intensive fuel oil cracking units to further process the available residue fuel oil (RFO) to produce value added products.

This has resulted in much reduced availability of fuel oil in the international market, pushing the prices upwards as well. The need to have a co-ordinating body cannot be more justified as implementation of the PPIB's ambitious short term plan may run into snags for want of fuel oil for generation of electricity from these projects.

At present, Oil Marketing Companies (OMCs) are importing fuel oil in addition to the availability from the local refineries to meet the requirement of power sector and general trade in the country. The total fuel oil import at present exceeds 4 million tons per annum (actual import 2007-08 was 4.8 million tons) and the available port facilities are being utilised to the maximum leaving hardly any room for accommodating additional imports.

The additional fuel oil required by the newly approved private power projects will be in excess of 2.5 to 4.0 million tons per annum. The problem is two-fold, firstly the availability of the product in the international market and secondly the infrastructure limitations at the ports which is likely to constraint the imports in excess of the present 5 million tons per annum.

Another factor that may crop up later could be the cost of the electricity generated from the "Thermal Power Projects," including the existing ones as we have seen that there was not any sizeable reduction in the prices of fuel oil in the international market due to limited availability of this product in spite of the downward movement in crude oil price in the recent past.

Moreover, the fuel cost, as we understand is a pass-through item in the pricing structure of the IPPs Tariff as approved by National Electricity and Power Regulatory Authority (NEPRA) and actual fuel cost will be passed on to the buyers of the electricity under the Power Purchase Agreement (PPA) in this case to WAPDA and KESC. The higher cost of fuel is likely to push up the per unit price and may not be affordable by the consumers.

The Mashaal Project which was supposed to be commissioned on fast track is still far from commissioning and needs to be addressed quickly as it may help in partly resolving the supply side issue of Independent Power Projects (IPPs) fuel requirements both in terms of port infrastructure constraints as well as fuel oil availability in the international market.

If the Mashaal Project is to be finally abandoned for reasons best known to the policy makers, in that case alternate sources of supplies have to be tied-up on long-term basis with matching port infrastructure development to support PPIB's ambitious target to generate 4,400 MW plus electricity to alleviate the sufferings of the common man in the next 3 years or so.

The element of high cost of fuel will continue to haunt the planners in PPIB until their prayers are answered through some miracle. We all pray for the same. There is an urgent need to have a cohesive energy policy and all stakeholders to work within the ambit of the well outlined policy contributing through their constructive role for a better and progressive Pakistan.

The Government may consider establishing a Ministry of Energy overseeing implementation of the energy policy by all the stakeholders and co-ordinating for achieving the common goal of providing the much need energy for the economic growth of the country and for the betterment of the people of Pakistan.

==================================================
(Figures in Mega Watts)
==================================================
TYPE OF FUEL 2009 2010 2011
Gas 227 - 584
Oil/Gas 450 1450 -
Oil 425 1015 400
==================================================
Like oil, speculators and water an uneasy mix

ROB TAYLOR On the cracked grey clay of an ancient lake bed on the edge of Australia's outback, Guy Kingwill is at the frontier of a global rush to commercialise water. Despite a long-running drought, Kingwill, who runs the vast Tandou farm, 142km southeast of the mining town of Broken Hill, has just sold his property's critical water on a national market rather than pump it into irrigated cereal crops.

"The return on the water is higher," Kingwill told Reuters. "Where we are it's broadacre cropping. But the market now is driving significantly more per megalitre from horticulture than you can get a profit margin out of wheat and barley," he says. Across the world, speculators are increasingly looking to water as a new profit engine as supplies dwindle, caught between booming populations demanding more access and climate warming threatening its very availability.

Australia, the most parched inhabited continent, has for 25 years had an internationally unique water market to better share supplies among farmers and reverse years of allocating more water than the country's rivers and dams could spare. That market last year traded $1.1 billion in permanent and seasonal water rights, according to Mark Siebentritt, the Operations Manager for national water broker Waterfind, who says business last year grew by 20 percent.

But Kingwill, whose corporatised farm lists on the Australian Stock Exchange, says prices are being pushed up by a metaphorical gold rush, luring bankers and speculators both at home and internationally to a new and waterlogged Elysian field.

With drought gripping some areas for a decade, prices for one megalitre of seasonal water - enough for an Olympic-size pool - are peaking at A$600 ($517), while permanent water entitlements are less volatile, but still pricey at up to A$2,500 a megalitre. "You've got from the biggest financial institutions down to aunty Jane buying 10 megalitres of water ... It's now an asset, just like a block of land, and people are buying on a daily basis," Kingwill says.

ARGUMENT FOREVER While Australia has the most mature water market, it is stunningly complex, drowning in around 10,000 rules and the regulation of four states spreading over the huge food bowl Murray-Darling river basin in the continent's southeast.

The country's consumer watchdog, the Australian Competition and Consumer Commission, or ACCC, has been asked by the centre-left Labour national government to develop new and uniform rules for how water should be charged and traded. State governments agreed in 1993 to establish a free market underpinned by a national register of water entitlements. Development has so far been hobbled by political rivalries and water over-allocation problems in some regions.

"What we want to do is to see water trading freed up so it can trade not only across regions, but also across state borders," says ACCC Chairman Graeme Samuel. But some farmers are wary of intervention by the nation's powerful regulator, fearing it will further push up prices when drought is already evaporating supplies and even major cities are enforcing tough water-saving measures like no car washing.

In July, national Water Minister Penny Wong extended the time for farmers to have a say in the coming reforms, with the ACCC to report back in December and again in June 2009. "By making it so investors can come in, there is concern the small guy on the block is not getting a fair shake. But then again, some argue that the more investors come in, they drive the value up. The arguments go on forever," says Kingwill.

PUBLIC RIGHT Waterfind's Siebentritt says his business has been tracking water trade for 20 years and has developed an electronic platform which automatically matches registered buyers and sellers, advising which areas are legally entitled to trade. Kingwill's Tandou, which has more land under water-saving subsurface drip irrigation than any other farm in Australia, is a client, with a sizeable ability to store water.

But Siebentritt does not see water making the transition anytime soon to a pure investment rather than a public right overseen by government and used 70 percent for agriculture. "There's some speculation, but people investing in water now are doing it as a way of investing in agriculture," he says.

"What drives the price is the value of the produce that can be grown with the application of that water, so really the price of commodities on international markets - whether it be food or rice or cotton - is having an impact on the value of water," Siebentritt says. Wendy Craik, in charge of managing food bowl water through the Murray-Darling Basin Commission, said there has been an "explosion" on the water market in recent years, with around 30 percent of all available water traded.

"We're seeing corporate groups getting together and purchasing water, and then having an arrangement with farmers where they provide the water to produce a crop," Craik says. "There are stories of some of the banks getting in there and buying water for agribusiness," she says.

ACCC involvement, Craik says, will streamline and regulate a water trade system that has evolved over a quarter century from a semi-informal dealing between farmers in separate river valleys, but given new urgency by scarcity, climate shift and drought. "Government will always have a pretty close eye on water, simply because water has become more critical," Craik says. "Currently buying a house has a lot of paperwork, but buying a piece of water has a lot more."


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## Neo

*ADB: Pakistan to get 810 million-dollar power sector loan​*
MANILA (AFP) - Pakistan will receive an 810 million-dollar loan to help address its growing electricity needs, the Asian Development Bank said Sunday. 

The loan is to be released in several instalments over 10 years to support Islamabad's 5.2 billion-dollar power distribution enhancement programme, the Manila-based lender said.

Pakistan's national power grid is short of generating capacity, and suffers from poorly maintained transmission and distribution systems that lead to supply disruptions, ADB said.

System losses from distribution companies range between 10 and 33 percent.

"A secure and predictable electricity supply will lead to social and economic benefits and improve conditions for schools, hospitals and other social services," said ADB energy specialist Rune Stroem.

The funding will focus on the distribution sector, which is burdened with worn out and overloaded infrastructure, power losses, capacity shortfalls and other constraints.


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## Neo

*New steps to reduce oil consumption: Two weekly off days, petrol pumps to close on Fridays​*
ISLAMABAD, Sept 7: Faced with the highest ever current account and fiscal deficits, the government is expected to announce two weekly off days and closure of petrol pumps for one day in a week to reduce oil consumption.

An announcement about five-day week and closure of petrol pumps for one day is expected this week, a senior government official told Dawn on Sunday.

The federal cabinet in a recent meeting decided to take steps to curtail consumption in transport and power sectors, but deferred the announcement till after the presidential election.

According to the decision, Saturday and Sunday will be off days while petroleum products will not be sold on Fridays.

The oil import bill, which surged to $11.38 billion or almost 30 per cent of total imports of about $40 billion in 2007-08, was more than 55 per cent higher than $7.33 billion a year ago, mainly because of higher international prices and increased consumption.

The Economy Monitoring Committee, headed by Finance Minister Syed Naveed Qamar, had directed the petroleum ministry to suggest ways of curtailing oil consumption. Among other things, the ministry proposed two steps -- five weekdays and closing petrol pumps for a day, which could reduce oil consumption by almost 20 per cent, the ministry said.

The last PPP government had also introduced two weekly holidays but the move was soon reversed because it resulted in higher than usual fuel consumption and government employees started taking three off days.

It was witnessed that people moved out of the cities and towns where they worked to enjoy longer weekends. Therefore, the concept of stopping petroleum sales on Fridays is being introduced to discourage the trend.

As a result of record international prices and higher consumption, the government had to pay $4 billion (Rs270 billion) more on oil imports in 2007-08 than in the previous year. The import of petroleum products showed a 65 per cent increase to $6.158 billion from $3.73 billion, while crude imports surged by 45 per cent to $5.22 billion from $3.6 billion in 2006-07.

The consumption of petroleum products went up by about 19 per cent to 10 million tons from 8.6 million tons, while crude imports surged by 5.2 per cent to 8.6 million tons from 8.2 million tons in 2006-07.

The fiscal deficit reached 7.7 per cent of GDP or Rs777 billion against the budgeted target of 4.2 per cent of Rs398 billion. The current account deficit, too, set a new record at almost $16 billion last year with no respite in the initial two months of the current fiscal year.

The government had estimated the oil import bill to stay at $8.8 billion in 2007-08, but it had to pay about $2.6 billion (Rs170 billion) more because the estimates had been based on an expected international crude price of $70 per barrel.

Petroleum emerged as the largest contributor to the total import of $39.97 billion in 2007-08, followed by machinery imports at $7.4 billion, which was 10.32 per cent higher than $6.7 billion of 2006-07.

The government increased duties on more than 250 items last month to discourage import of non-essential products. The opening of letters of credit is also subject to 100 per cent cash margin to discourage importers from unjustified flight of capital. The two measures are estimated to save about $1 billion.


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## Neo

*US should expedite economic assistance to Pakistan: expert​*
NEW YORK, Sept 7: In the wake of Asif Ali Zardaris election as the president of Pakistan and increase in militant attacks, an American scholar who recently visited Peshawar has asked the Bush administration to expedite economic aid to the country.

In an article in the International Herald Tribune, Anatol Lieven, a professor at Kings College London and a senior fellow of the New America Foundation in Washington, applauded Senator Joseph Bidens long-term plan for the United States to help Pakistan economically, thereby strengthening the state against extremism, but stressed that Pakistan may not be able to wait that long.

He said the United States should make these funds available to Pakistan immediately for this specific purpose.

Secondly, America should give emergency aid to the hundreds of thousands of people displaced by the Pakistani military offensives in Bajaur in the

Federally Administered Tribal Areas and Swat in the North-West Frontier Province. This should be treated with the same urgency that the United States approaches natural disasters like the Pakistani earthquake four years ago, Professor Lieven said.

America should also use its influence with the IMF to procure its assistance to Pakistan. It is essential, however, that this should not be made conditional on cuts in subsidies and social programmes that will further hurt Pakistans poor; such cuts would undermine the Pakistani government still further.

Limited American financial help can tide Pakistan over its immediate crisis. At the same time, the United States should urgently craft longer-term aid programmes intended to strengthen resistance to the spread of insurgency.


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## Neo

*Economy under severe stress​*
By Khaleeq Kiani

Pakistans economy is fast approaching an insolvency-like situation. Liquidity is drying up. The cost to protect $2.7 billion sovereign bonds in the international capital market from preventing default, is increasing.

The external debt and liabilities have increased in rupee value by more than Rs705 billon in less than six months just because of over 25 per cent or Rs15 per dollar decline in currency value. The countrys overall external debt stock has increased by almost $7 billion to $47 billion since June 2007.

At the same time, the stock market has fallen to a 28-month low by registering over 42 per cent decline since April 2008. In the process, the stock market capitalisation has almost halved to $39 billion from a peak in April because investors generally avoid markets where there is political instability.

The government plans to introduce two weekly holidays (Saturday-Sunday) soon after presidential elections and close down petrol pumps for the third day (perhaps on Friday) to reduce consumption of petroleum products. The federal cabinet has already approved the plan and announcement would be made sometime this week. These measures are estimated to save about $3 billion per annum in oil consumption.

In another step, the government has already imposed higher regulatory duties on import of non-essential items while letters of credit (LCs) for imports are opened on 100 per cent cash margin to discourage misuse of foreign exchange. These two measures are anticipated to save about $1 billion per year. But the most worrying thing for the finance managers is the interest repayments on the back of dried up pipeline of financial inflows.

The countrys total debt stock now hovers around Rs7 trillion, up by about Rs1.4 trillion from Rs5.6 trillion in March 2008.This includes about Rs3.4 trillion domestic loan and Rs3.6 trillion in foreign loan and liabilities. For many years in decades, Pakistans external debt in rupee value has surpassed the domestic debt.

The cost to protect sovereign bonds from default that stood at 788.8 basis points on August 22 has increased to 975 basis points, overtaking Argentinas number one position of being the riskiest investment paper. Foreign-exchange reserves have declined from their peak at $16.5 billion in October to just $8.89 billion, less than three months of imports, while trade and current account deficits are widening..

This is happening at a time, when foreign investors in the capital market are loosing confidence and flight of capital by Pakistanis mostly to the Middle East is gaining momentum. Despite remittances and exports on a mild growth path, the inflows are not catching up with the rising foreign currency requirements on the back of limited financial flows from multilaterals and bilateral sources. On top of that, the environment does not seem favourable enough to float major sovereign bonds or sell government entities because of political instability and overall security situation.

Meanwhile, the last years consolidated federal accounts showed that the budget deficit had increased to a record Rs777.2 billion or 7.4 per cent of GDP during 2007-08 that was met through the highest ever bank borrowing of Rs625 billion and over Rs75 billion cut in development expenditure. The most depressing feature was a massive reduction in revenue receipts that declined to 14.3 per cent of GDP compared with 14.9 per cent in 2006-07 despite higher revenues in absolute terms. In contrast, the total expenditure in 2007-08 increased substantially to 21.7 per cent compared with 19.2 per cent a year before.

The government is taking up with International Monetary Fund (IMF) at the top level to secure a letter of comfort that should help Pakistan persuade the World Bank and the Asian Development Bank to provide at least $1 billion in quick disbursement loans to overcome some of the immediate liquidity problems.

The senior level separate visits by the two bank officials last week have asked Pakistan to introduce tough decisions for macroeconomic stabilisation by allowing full pass-through in utility costs, removal of subsidies in petroleum products, reduced domestic borrowing and flexible exchange rate, so direly needed to reign in whopping fiscal deficit.

In this background, the IMF was expected to send its mission to Islamabad next week to take stock of economic situation on ground before issuing the required letter of comfort. Interestingly, both the ministry of finance and IMFs office in Islamabad were unaware of the scheduled visit. Knowledgeable quarters suggest the government was trying to convince the Fund through some powerful capitals to help secure financing from the WB and ADB without going through procedural requirements given its severe financial problems as a goodwill gesture to support democratic forces.

Simultaneously, the PPP-government sent a delegation last week to Saudi Arabia with a wish-list of about $17 billion multi-year bail-out package for oil imports and balance of payment support. Led by foreign affairs minister Shah Mahmood Qureshi and comprising secretaries of finance and petroleum, the delegation met the Saudi leadership and sought oil supplies on deferred payments and other facilitations for budgetary support to boost foreign exchange reserves.

The delegation wanted to have a soft term credit facility of about $2.5 billion from Saudi Arabia for essential commodities like fertiliser, another $7.3 billion oil imports on deferred payments or reduced rates and rescheduling or write off of about $5.8 billion amount it was required to pay to the brotherly state on account of oil it had imported on deferred payments during 1999-2004.

Likewise, Islamabad also wanted to have an arrangement with Kuwait on special terms for diesel imports of over $4 billion over a period of two years. Pakistan imports about one million tons of diesel from Kuwait for Pakistan State Oil under a long-term agreement. Relevant government agencies believed the United States reduced crude imports from Arab countries offered good chances for Saudi support to divert its surplus production.

The members of the delegation were hopeful of a positive response expected to come soon after the presidential elections on September 6. Although the arrangements for imports of crude from Saudi Arabia are yet to be worked out, any relief from the brotherly nation are seen as the best solution to economic problems. This could provide reasonable breathing space to the government till such time it comes out of the political crisis surrounding presidential elections and concentrate on economic revival.

Sooner the country returns to political stability, overcomes judicial crisis and puts in place an economic revival plan, better it will be for the restoration of investor confidence needed to attract direct investment and revive capital market. That requires seriousness of the political leadership in economic revival, poverty reduction and macroeconomic stability.


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## Neo

*Development goals: bridging the gaps​*
Total earnings of Rs7500, a little under $100 a month, from two jobs was not enough to make a living.

Mohammad Jaffar a young migrant working 14 hours a day in Karachi as a loader during the day with a contractor and a waiter at a small restaurant in the evening, was forced by demands of survival to vacate Rs3000( about $40 a month) rented house and shift to a hutment with his family.

Jaffar arrived in Karachi with his wife four years back. Despite being hardworking today he is deep into debt struggling to sustain his family of four children. One of the four, Azam is ill and dying for health care which is expensive and beyond means of his family.

But Jaffar still prefers to stay on in Karachi over going back to his home village in southern Punjab because he is still better off in the city. However, if this is better what the worse would be like?

For this family and their likes life is nothing but a painful journey into disappointments. Indeed, there is little to suggest that those in power really care.

The fate of poor in resource rich country is as dismal as it can get. Excluded from the gains of high growth during 2004-07, they are now being advised by the wise men of the government to endure more than their fair share of pain as the economy is under a difficult patch. For both internal and external reasons, Pakistan is currently grappling with high inflation and slower growth.

Today of 1000, some 79 infants die at birth, 99 more die before their fifth birthday. According to latest figures compiled by international economic monitoring agencies, Pakistan has the highest proportion of under nourished population in Asia Pacific region. The government might feel uncomfortable with such observations but would find it hard to challenge them because it is still busy collecting and processing data on social indicators for 2006.

Sadly this is where the country has reached riding the Asian tide-- what the ex-prime minister Shaukat Aziz used to call stellar growth ----when the sale of motorcycles multiplied from 90 thousand to 900 thousand.

Some press reports suggest that the elected President will lead Pakistans delegation to the UN General Assembly in New York later this month. A few high profile meetings are reported on the sidelines of the meeting. But nothing has so far been published about one of the main themes of the UN Sept 25 meeting that is to review the progress on Millennium Development Goals. One wonders, with so little to show in absence of the current background material, how productive the participation of the political leadership would be in a meeting of 188 nations that made a solemn pledge to the eight goals in 2000.

At the half way point to the target year of 2015, the world prepares to meet to take stock of the progress made towards these goals. The leaders in words of UN are to review progress, identify gaps and commit to concrete efforts, resources and mechanisms to bridge the gaps.

Pakistans participation is expected to be as embarrassing as its progress towards 38 targets that it set out for itself to achieve eight goals. These MDGs are: eradicate extreme poverty and hunger, achieve universal primary education, promote gender equality and empower women, reduce child mortality, improve maternal health, combat HIV/AIDS, malaria, and other diseases, ensure environment sustainability, develop a global partnership for development.

Pakistan committed to half the poverty rate to bring it down to 13 per cent by 2015.

The elected leadership is too preoccupied by other issues to spare a thought for MDGs or targets. The government functionaries have failed to deliver. No one expects any wonders from them but unfortunately, they have also not been able to bring out 2006 MDGs progress report in September 2008.

The report of the year 2006 should be ready over the next few months Dr Arshad Amjad, Chief Economist Planning Commission told Dawn from Islamabad.

Salman Farooqui, Deputy Chairman, Planning Commission, when contacted was unable to comment off hand on the issue. He, however, directed Dr Mohammad Aslam Khan, specialist on fiscal and monetary affairs, Planning Commission to respond to Dawns queries. The gentleman told Dawn that Pakistan is on track on many goals but was not able to justify the delay of the publication of the progress report that last appeared in March 2007 reviewing the performance for 2005.

Insiders told Dawn that the delay was because of the governments interference in functioning of the cell responsible for processing and analysing data. We are not allowed to work with numbers independently. All relevant numbers are audited by the government so that no number that the government perceives to be harmful to its political image is made public.

The government is very sensitive with poverty figures as they carry political weight. The last government forced us to suppress provincial poverty numbers as they reflected increasing intra provincial disparities, a senior economist privy to the monitoring process said.

Most worrying is the low level of public awareness on the eight goals or the 38 specific targets. There is absolutely no pressure on the government from local stakeholders to reshape its spending pattern or re-arrange its order of priorities to achieve targets leading to sustainable development.

Most leaders and people, who should be spearheading the process in achieving those goals, when contacted, were little or not informed at all on the subject. Many admitted that they were hearing the word MDGs for the first time. This unaware mass includes people from all strata of society including drivers, clerks, plumbers, teachers, salesmen, doctors, lawyers, traders, housewives, etc.

Except in the Punjab, the situation in rest of the three provinces is bleak. In NWFP, some spade work started in 2005 but the tide of extremism and related law and order challenges did not allow the provincial government to move beyond planning stage. The Sindh government was found to be too fragmented to focus on anything worthwhile. Balochistan is too volatile politically to plan or execute a programme for MDGs.

Even the private sector that is supposed to be the key driver of the economy has totally been kept out of the picture in formulation of targets or their implementation. Tanvir Sheikh, President FPCCI admitted his ignorance about the goals this week over telephone from Multan.

It appears that so far it has all been a closed door ministry level activity. Yes, the reference is made to the goals in official documents such as Medium Term Development Framework (MTDF), the State Bank annual reports and the Economic Survey. The two progress reports were prepared primarily for the consumption of World Bank, IMF, UNDP, etc.


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## Neo

*Multiple criteria for sharing resources?​*
The changing political ground realities are raising hopes among stakeholders that the criterion for resource distribution among the four provinces is likely to be changed by the recently constituted National Finance Commission (NFC). These indicate multiple criteria based formula for future revenue distribution.

An 11-member NFC headed by the federal finance minister Syed Naveed Qamar was notified on August 26. Its members include special assistant to prime minister on finance, Ms Hina Rabbani Khar, provincial chief ministers and one non-statutory representative from each of the four provinces. The federal finance secretary will act as member-secretary.

Earlier, there was a lingering fear that Punjab may not be ready to accept any criteria of resource distribution other than the existing one and hence prevent any consensus on NFC award.

But the results of February 18 elections and formation of coalitions at the federal level and in provinces in which Pakistan Peoples Party is a common factor has given rise to a possibility of a consensus. While the coalition in the centre has received a set back, the hope for a consensus in new NFC is still there.

Punjabs Chief Minister Shahbaz Sharif has expressed support to give due weight to poverty, inverse population density and other factors in resource distribution, a senior bureaucrat in Balochistan informed Dawn on telephone from Quetta. He recalled that Punjabs chief minister made this public announcement recently in Quetta.

Mr Kaiser Bengali, a well-known economist, who is a Sindh nominee on the NFC as a non-statutory member, was however somewhat sceptical, as according to him, the official position of Punjab government, based on documents of the last NFC proceedings, indicates no change in Lahores position. Nonetheless, he too appeared optimist as new emerging realities can force political parties to shift from their traditional stance.

An attempt was made to reach Mr Ishaq Dar of the PML (N) who was federal finance minister in the coalition government before he resigned in compliance of his leaders instructions. He did not respond on Tuesday evening but promised to answer NFC- related questions on the next day (Wednesday). However, he did not respond.

The two previous NFCs headed by Shaukat Aziz, the then finance and later the prime minister, failed to give any award. In 2006, ex-President Musharraf did not alter the population-based resource distribution formula.

Politicians and bureaucrats in Karachi and Quetta draw their optimism from a meeting of finance ministers of four provincial governments held in Lahore on June 6. In that meeting, the elected politicians urged the federal government to allow provincial governments supervision of federal-funded development programmes in their respective jurisdictions. Islamabad was asked to stop five per cent deduction at source of all taxes it collects and also on gas and oil related revenue. After the PML(N)s exit from the coalition, politicians in Karachi do not foresee any major shift in Punjab governments attitude. For the first time, there is a clear divide between Islamabad and Lahore, a Karachi activist of PML(N) explained who said that Lahore in now on the other side of fence. Second, we have entered a coalition age and Lahore-based PML(N) is looking for allies in Karachi, Quetta and Peshawar and hence a shift from traditional approach is likely.

An over-centralised and authoritarian administrative, political and financial set-up has stimulated strong anti-centre currents in all the provinces including Punjab. Never before in last 60 years, the political leadership of provinces, no matter to which party they belong, were so articulate over their provincial rights, as they are now.

One manifestation of this assertion of provincial rights is the demand that federal government should not deduct five per cent of total tax collections at source.

We plan to collect Rs1.25 trillion taxes in the current fiscal year, a bureaucrat in Quetta said to point out that the total of a five per cent deduction would come to Rs70 billion when the operational cost of Federal Bureau of Revenue (FBR) is hardly Rs9 billion.

Give the provinces Rs60 billion he demanded arguing that it may add to his provinces share Rs3-4 billion more in a year. For a cash- strap province like Balochistan, the additional amount of Rs4 billion revenue in a year means a big fortune though it may be insignificant for provinces like Punjab and Sindh, he said.

Politicians in Karachi and Quetta want a vertical distribution of funds on 50:50 basis between the federation and the provinces. We want all taxes and levies to be included in the divisible pool that should be divided straightaway on 50:50 basis between the federation and the provinces the senior official in Quetta asserted. His views are endorsed by politicians and officials in Karachi.

Now that the concurrent list is set to be taken out of the 1973 Constitution and the provinces are to be given more responsibilities, a local PPP leader argued that the increase in responsibilities means need for more funds. I tell you in final count, even the 50 per cent of federal pool of taxes will be insufficient for the provinces, he said. As he foresees, the provinces in due course of time will have to generate their own resources to meet rising needs.

The finance ministers from four provinces, in their June 6 meeting, wanted sales tax on services to be returned to the provinces. The Constitution authorises the federal government to collect sales tax on import, export, production and consumption of goods but explicitly excludes services, which comes under the provincial jurisdiction. There appears to be a consensus now in all the four provinces that the federal government has over-stretched itself and is doing many jobs that are not its responsibilities.

When provinces will start getting additional responsibilities in education, health care, rural development, roads, water supply, urban infrastructure, and many other areas, the demand for funds to maintain and repair the stock of infrastructures and to take up new projects will increase manifold, he argued to plead for increased share in revenue and representation in administration of federal government controlled institutions by the provinces. The MQM is on record demanding representation of Sindh province in port management. How far the new NFC headed by federal finance minister Syed Naveed Qamar will go ahead in responding to growing aspirations for fiscal devolution is yet to be seen. But officials in Balochistan Secretariat are busy in setting in place some sort of cell or committee of experts to look at the issue of resources distribution and capacity development in bureaucracy to cope with increased responsibilities. We seek experts from Balochistan but would have no hesitation to engage people from other provinces if they are ready to help us in our job, the official said.

Mr Gulfaraz, a non-statutory member on the NFC from Balochistan, is the only person who does not belong to the province. He is a retired army man, a former federal petroleum and natural resources secretary and an expert in gas economy.

Balochistan wants him to push its case for getting a just share in gas revenue. The federal government has recently increased well-head prices on a number of gas fields including Sui which, the officials say, largely addresses their years long complaint.

In Karachi, the first and preliminary session of Sindh NFC team was held on August 24.


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## Neo

*Bumper rice crop, market hiccups​*
THE nation may get some good news soon on the rice front. While there are still some 45 crucial days left when fresh crop would hit the market, indication of better crop are evident  area under cultivation has increased by around seven per cent and the rains have not only supplemented water but also washed away pests like leaf rollers.

Most of the farmers and traders hope that the final yield would be around six million tons as compared to 5.5 million tons last year. If that happens, marketing hiccups and price crash would become distinct possibilities, which must be pre-empted to protect its home cereal advantage.

Last year, the country gained both in quantity and value of rice export. Its exports rose by 20 per cent (1.8 million tons) and earned $1.8 billion as against $1.2 billion the previous year. There is a need to build on last years performance and for long-term official planning for production and marketing--- not reactive to the size of each years crop.

Any planning about rice marketing must include enhanced credit line for traders, ensuring on-time availability of fertiliser, pesticides etc at affordable price and water. The last one may test diplomatic and political skills of the government because of neutral experts decision on Baglihar Dam on Chenab. Unfortunately, the entire rice belt (basmati) fall on both sides of the River Chenab and its flows can be rigged by India. In fact, India tried to tamper with river inflows for three days before intense pressure from Pakistan to get the situation corrected.

Despite protest from farmers bodies, especially the Pakistan Basmati Growers Association  a directly affected by the decision  the government chose to keep quiet on the issue. Since Pakistan has no site to build dam on the Chenab, it would remain vulnerable to Indian tampering of water. It also does not have link canals to feed the Marala and Khanki Headworks (read rice belt) from the Mangla Dam in case of Indian tampering.

Thus, Pakistan must move on two-pronged policy of challenging the decision of Prof Raymond Lafitte (a Swiss national) on Baglihar, which gives India a leverage to tamper with river flow if not stop them altogether. Even tampering for a fortnight during the rice season could affect crop beyond redemption. On the second plank, Pakistan should move to build link canals to feed the area from alternative sources (Mangla Dam) in case of India playing with flow, as it did in the third week of August when the river fell to historic low of 20,000 cusecs.

Availability of fertiliser and pesticides at the crucial time has been a problem for farmers, and this year is no exception either. Rice crop needs only 12 million bags of urea this year, whereas the total Kharif production of urea stands around 35-40 million bags. But still, urea is not available at Rs1,000 per bag against officially declared price of Rs635. No wonder, the fertiliser manufacturers declared 79 per cent profits this year  all at the cost of hapless farmers, and ultimately the end-user.

The DAP fertiliser though available, was simply not within the reach of farmers, being sold at Rs3,500 per bag. The pesticides and weedcides prices have also jumped by almost 40 per cent  the calculation is that farmers would pay Rs28 billion for the same quantity of pesticides, which they bought for Rs15 billion last year. The rice crop suffers from stem borer and leaf roller pests besides weeds. The additional burden of Rs13 billion on account of pesticides would only increase domestic price further and affect exports.

Last year, the minimum export price (MEP) of $750 per ton for coarse varieties and $1,500 for basmati brought the export money home, instead of staying in foreign banks. This year, the MEP on coarse variety has been withdrawn quietly, without taking growers on board. The country exported 600,000 tons of such rice last year. This year, with the MEP gone, no one knows how much of this money would come back and how much would stay abroad. Pakistan has around three to 3.5 million tons of rice per annum to spare for export. This year, if the total yield remains around six million tons, after deducting 2.3 million tons of domestic consumption, there would be 3.7 million tons left for export.

The increase in acreage this year can be attributed to increase in price last year. There have been reports of sowing rice even in cotton belt. If the trend continues, the rice crop could be narrowing gap between itself and the biggest Kharif crop i.e. cotton. Farmers are even compromising on fodder crops for rice. This year a target of 6.4 million acres was fixed: 4.3 million acres for Punjab, 1.42 million acres for Sindh, 0.153 million acres for NWFP and 0.51 million acres for Balochistan. But, the federal government figures show that sowing has actually touched around seven million acres.

As far as yield targets were concerned, Punjab was given 3.288 million tons, Sindh 1.77 million tons, NWFP 0.129 million tons and Balochistan 0.525 million tons  a total of 5.72 million tons. The acreage shows that rice crop falls behind only cotton crop in Kharif season.

The government needs to sustain the momentum of the rice crop by removing marketing hiccups. Five factors  water, fertiliser, pesticides, marketing and pricing  are and would remain very crucial to the future prospects of the crop. The government must come up with a strategy to balance interest of all stakeholders. The rice export income, which may cross the robust figure of $2 billion this year, is too crucial for the foreign exchange-strapped Pakistan to be left to market forces alone.


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## Neo

*Corporate farming: a step towards food autarky​*
COORPORATE farming encompasses the production of all crops as well as allied activities including processing of seeds and businesses relating to pesticide, fertilizers, agricultural machinery/equipment used and related research activities.

The average agricultural growth rate over last 40 years was 4.3 per cent which reflects good performance. Population growth rate averaged around three per cent over the last 40 years three per cent which is slightly below the growth rate of agriculture sector.

With the advancement in technology and awareness, the trend of food consumption is changing towards high nutritional and hygienic foods. This is also widening gap between demand and supply. Food crisis is being observed now-a-days which is likely to persist in future.

In this scenario, a higher growth rate of agriculture sector is needed so that the domestic needs could be fulfilled and the surplus exported to reduce the trade deficit.

The scope of horizontal expansion in agriculture production has become limited. After the construction of Mangla and Tarbela dams neither any big reservoir has been built nor any initiative taken so far in this direction.

But there is space for horizontal growth but it is limited due to shortage of irrigation water. The major scope is now in vertical expansion through improving farm productivity levels. This can be accelerated through corporate farming.

The following table of productivity/yield levels has been prepared based on the year 2006 data given in the websites of the UN, FAO and the Federal Agricultural Ministry of Pakistan.

The table depicts that there is the potential to increase farm productivity/yield as progressive grower is already obtaining almost more than double production than our national average yield. The average national yield/production of developed countries is more than double of our national average yield. By applying requisite resources and taking appropriate measures, our agricultural production can be doubled in the next 10 years.

There is a need to make quality seeds and fertilisers available at competitive cost; improved pest/weed management; transfer of agriculture-related technology and providing technical knowledge to farmers together with the requisite funds needed by them and introducing well-planned marketing mechanism.

In addition to improving facilities given to small growers, the government should formulate policies for initiation of corporate farming on persuasive basis.

Agriculture research and extension department needs to be revamped and its policies and programmes re-designed so that they may play vital role in bringing a revolution through corporate farming.

There is a need to make stringent laws in respect of adulteration of pesticides/fertilisers to enhance crop yield and protect farmers financially.

Investment in agriculture sector needs to be increased significantly--- by. 100 per cent for every subsequent year--- and this practice should continue till the achievement of desired results. Credits to conventional farmers should also be increased and monitored to ensure that it is consumed for the purpose it has been sanctioned. The SBP should ensure that any genuine and legitimate request in respect to corporate farming is not turned down by any financial institution.

Agriculture which is contributing around 21 per cent to GDP is highly neglected by the financial institutions. There is a need to make programmes and policies and necessary laws for development of this sector on war footing so that financial institutions can offer loan to this sector like they offer to industry.

Higher and sustainable economic growth cannot be achieved unless we succeed in doubling our agriculture production in the next 10 years.

For this purpose, there is a need to make arrangements and provide desired share of financing i.e. at least 20-25 per cent from credit/loan portfolio of all financial institutions. That is suggested to be achieved gradually with in next five years.

The SBP needs encourage banks to invests in productive sectors like agriculture and industry and discourage to non-productive (consumer financing and capital market) loans.


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## Neo

*Providing relief to the poor​*
THE country is now facing high inflation particularly in essential food items mainly due to the State Banks lax monetary policy and inaccurate projections of wheat production by the previous government in conjunction with a sharp increase in world food prices.

According to the data by the Federal Bureau of Statistics, inflation rose rapidly in July, 2008 as the Consumer Price Index (CPI) and the Sensitive Price Index (SPI) increased by 24.3 per cent and 32.9 per cent, respectively, over the last years corresponding month. The rise in these indicators was mainly due to food inflation which rose substantially by 33.8 per cent during this period.

Since welfare of the population is determined in constant purchasing power term, any change in prices plays a critical role in determining the level of poverty in a country. Any rapid rise in prices may push the millions of vulnerable people below the poverty line. While absolute poverty at official level was estimated by the government at 24 per cent in 2004-05, the World Bank and the authors empirical work showed a higher poverty level at 29 per cent in the same period. Since the government has not revised its poverty figure so far as it is still using 24 per cent population below the poverty line, this paper also uses the official figure in estimating the level of assistance needed to provide relief to the poor.

Even if the official poverty estimates is used, the fact remains that 37 million people lived below the poverty line of Rs878 per person per month in 2004-05 defined as minimum food (2350 calorie intake per day) and non-food requirement for physical functioning. While poor spend about 70 per cent of their income on food items, they are likely to be affected disproportionately more than the rich. If income does not keep pace with food prices, the rising food prices would result in higher poverty level by pushing vulnerable groups below the poverty line. It is, therefore, important to protect the poor and vulnerable by subsidising food prices.

Utility stores: A general, untargeted subsidy is provided by food rations where the subsidised commodities are restricted in quantity but not in coverage. Under the existing arrangements, a general subsidy is the provision of some food items at subsidised prices at utility stores in urban areas. However, the main disadvantage of this kind of subsidy lies in its inefficiency, since all groups whether poor or non-poor benefit, not only those targeted by the government objectives.

Support programme: Currently, a cash support of Rs3,000 per year (or 250 per month) is provided to a beneficiary under the Food Support Programme through a transfer in their bank account. The government has allocated Rs4.38 billion to provide support to 1.46 million households in 2006-07. However, the main problem is that assistance is provided in the form of a cash subsidy and not as stamps or card or coupons for the purchase of basic food items or in terms of goods.

Due to disbursement of cash, it is tempting the non-poor to find ways of abusing the programme leading to miss-targeting. Second, the process of cash transfer also takes longer time. Thus, there is a need to replace such programme by providing food cards or items rather than cash transfer and merge it with the proposed targeted Food Card Programme which will also increase the coverage of the poor households.3

Targeted poor: Any form of targeting can reduce the overall costs of the programme, if the process does not lead to the exclusion of targeted groups for which the programme is meant. Since assistance to the poor is needed to be provided at the household level, there is a need to compute households below the official poverty line. The use of official poverty line of Rs878 per person per month, gives 19.1 per cent or 5.51 million households below the poverty line in 2004-05.

Subsidy amount: To calculate the amount of subsidy, there is a need to know the extent of the short fall of the consumption of the poor household from the official poverty line at household level. The average poverty gap for all poor households (5.51 million) was 18.69 per cent in 2004-05. In rupee term, the consumption expenditure of all poor households was below Rs1231.95 from the official poverty line of Rs5359 per month for an average household in 2004-05.

Updating the average household official poverty line by the CPI gives Rs6925 per month per household in 2008. The updated official poverty gap comes at Rs1592 per month per household in current prices as per official statistics in May 2008.

To bring the consumption of the poor household equal to the poverty line, we have used information of the number of poor and their poverty gap. A sum of Rs7,594 million per month was required in 2004-05 to subsidise the poor in order to bring their consumption at the poverty line which would alleviate the absolute poverty, if targeted accurately. The annual budgetary cost (excluding all other administrative costs) of subsidising the poor comes at Rs91.13 billion in 2004-05. For 2008, the annual budgetary cost comes at Rs118 billion.

Alternatively, the amount of subsidy can be reduced to Rs1,050 per household which is nearly two-thirds of the average household poverty gap of Rs1,592 in 2008. In this formulation, a subsidy of Rs1,050 per household per month can be given. If the government is willing to subsidise all 5.5 million poor households below the official poverty line in 2004-05, the annual cost would be of Rs69.3 billion in 2008.

A recent Inter Agency Assessment jointly conducted by FAO/UNDP/UNESCO/UNICEF/ WFP/WHO recommended a response action to over seven million severely food insecure households or 45 million people in Pakistan that are vulnerable to a price spiral and food shortage in the short-run. Accordingly, the annual cost for providing a subsidy of Rs1,050 per household to seven million food insecure and poor households would be of Rs88.2 billion in 2008.

Food card scheme: To provide subsidy, a targeted Food Card Scheme is, therefore, proposed to protect the poor and to increase their coverage significantly.

A food card or stamp will be issued to those households who live below the official poverty line. The scheme is aimed at providing free of cost wheat, pulses, sugar and edible oil; a monthly food card containing, on average, valuing at Rs1050 per month for a family of seven members or Rs150 per capita per month can be provided to the poor households by the government. An equivalent value of food items such as wheat or pulses or sugar and/or edible oil can be provided free of cost using this card.

The cost of buying 40 kg wheat, three kg pulses, four kg sugar and five kg edible oil at current market prices for a family of seven members comes at Rs2,120 per month. In this way, the government will subsidise about 50 per cent of poor households consumption expenditure on these food items.

The proposed food card can be used to buy subsidised food items from the utility stores and the identified retail shops of the private sectors in poor localities both in urban and rural areas.

In lieu of providing the subsidised food items to the beneficiaries, the owner of identified retail shops can get the reimbursement of the food card from the District Baitul Mall offices/or nominated bank branches in rural and urban localities.

Institutional set-up: To save the administrative cost, the Baitul Mall system already put in place will be responsible for the administration and implementation of the programme.

District offices of Baitul Mall will be responsible to distribute the food card to the poor households. These offices will also make an arrangement with banks branches in local areas for the reimbursement of the food card to retail shopkeepers.

The Pakistan Zakat Council will collaborate with the Baitul Mall for identification of the poor households as well as the retail shops through District/Tehsil/Mohallah/ Village Zakat Committees.

Identification: The Zakat committee at the Mohallah/village level in urban areas and village level in rural areas can essentially identify the poor and needy households which should be finalized by the District/Tehsil Zakat Committee.

The District Zakat Committees on the recommendations of Tehsil-/Mohallah/village Zakat Committees can prepare a list of beneficiaries along with their identity card number to distribute the food card to the entitled household. The district officers of the Baitul Mall can also distribute these food card. The production of the National Identity Card will be compulsory in order to get the food card.

Eligibility criteria: A household with minimum income of Rs6,000 per month is the minimum eligibility criterion on income basis. This criterion is derived from official poverty line which is at household level is Rs6925 per household per month in 2008 prices for the country as a whole. This criterion is also consistent with the minimum wage recently revised by the government.

The National Identity Card is the basic requirement to be eligible for the food card so as to overcome the problem of misrepresentation of the poor and misuse of quota allocated for the poor household in a particular location. Thus, food card can be issued by writing the identity card number which can only be used in the locality of the beneficiaries.


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## Neo

*Reviving Reko Diq copper mining project​*
The Reko Diq copper project in district Chagai, Baloch-istan is expected to commence production in next four years. Feasibility study of the project will be completed by next May.

The project is jointly sponsored by Chiles Antofagasta with stakes of 37.5 per cent, Canadian miner Barrick Gold Corp with 37.5 per cent, and the government of Balochistan with 25 per cent. It involves an initial investment of $1.5 billion.

There are an estimated two billion tons of copper deposits in the district. An output of some 150,000 tons of copper per year is targeted. The capacity may eventually be raised up to 220,000 tons per day, with an investment of some $5 billion, according to the Chilean company President Marcelo Awad. Many doubt the smooth execution of the project. Since the year 2000, the project has witnessed change of sponsorship among various stakeholder foreign firms.

The first contract was signed with the BHP Minerals International Exploration Inc in July 1993 with the companys stake at 75 per cent. The BHP had failed to make any significant progress in exploring the copper resources and the Tethyan Copper Co Ltd. (TCC) of Australia secured the right to all BHP interests.

The stand of the ministry of petroleum and natural resources on the issue of transfer of stakes of Reko Diq project has been that, the BHP Billiton as a matter of their international policy could transfer their smaller interests to other junior mining companies with a usual provision for a claw back right in case of a major find.

As per their joint venture agreement BHPM had first offered their 75 per cent share to the provincial government, which had no resources to take over the stakes. Balochistan agreed to waive off their right of first refusal and allowed BHP Billiton to look for any other company capable to invest in exploration.

The Australian TCC, which planned to start the Reko-Diq project in 2003 with an investment of $130 million, had a joint venture with government of Balochistan. A few years back, the Chilean firm agreed to a $133 million joint venture with the Australian TCC to explore and exploit copper and gold.

The agreement involved the purchase of a 19.95 per cent stake in Australias TCC for $20.5 million as well as an investment of $37.5 million for a 50 per cent equity stake in companys Pakistan mineral project. The agreement also involved a commitment to invest up to $75 million in exploration and development.

Chinese, British, Australians, Chileans and Canadians have so far acquired stakes in strategic copper and gold assets of Chagai on rising prices in the international market.

Chagai district is emerging as a hub for the mining industry in the province. Saindak and Reko Diq are the two mega copper mining projects currently under way. The Dasht-i-Gauran tenement in Chagai is located between Saindak and Reko Diq where significant porphyry copper-gold deposits have been discovered. The tenement covers a number of interpreted alteration zones identified from satellite images. One rock sample from reconnaissance geochemical sampling contained 1.06 g/t gold and 3.5 per cent copper.

The demand of copper will increase in future. The officials expect that annual production of 250,000 tons of copper from Reko Diq project would not only bring Pakistan on the world copper map but also help strengthen its economy.

While talking to a delegation of Antofagasta of Chile and Barrick Gold of Canada in June, Prime Minister Syed Yousuf Raza Gilani advised the team to ensure maximum number of jobs to the people of Balochistan; that arrangements be made to impart skills training to the locals so that they can avail job opportunities. The foreign firms reportedly sought adequate security cover and necessary infrastructure facilities in Chagai district to complete their projects.

Local experts believe that the production of copper is a lengthy and dangerous process. Smelting of copper ore at factories emits arsenic and carbon monoxide, which pollutes air and water near mines. Copper is heated at high temperatures for several times before metal is ready for export. For having no surface flow, the Chagai is faced with acute shortage of water. Like the Saindak project, the expected mining operations in Reko Diq will depend on sub-surface water. Exploration of underground water potential of the region is a pre-requisite for any mining project.


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## Neo

*Surging fiscal deficit​*
The persistent failure of successive governments to overcome budgetary deficit, remove fiscal imbalances and check the ever-increasing wasteful expenditure has put the very viability of the economy at stake.

Budget deficit rose to Rs777.2 billion (7.4 per cent of GDP) during fiscal year 2007-08. It was met through the highest-ever borrowing of Rs625 billion and over Rs75 billion cut in development expenditure. The deficit showed increase of 95 per cent over the budgetary target of Rs.398 billion; it was 106 per cent higher than previous years deficit of Rs377 billion or 4.3 per cent of GDP.

The most lamentable act on the part of economic managers was cutting of development spending under the Public Sector Development Programme to Rs451 billion against the budgetary allocation of Rs520 billion to contain the deficit partially.. They claimed that it became unavoidable in the wake of massive reduction in revenue receipts that declined to 14.3 per cent of GDP compared with 14.9 per cent in 2006-07. In absolute terms, however, the total revenue increased by almost Rs200 billion and stood at Rs1.499 trillion compared with Rs1.297 trillion in 2006-07.

Tax revenue declined to 10 from 10.2 per cent in 2006-07. Non-tax revenue dropped to 4.3 from 4.7 per cent in 2006-07. In contrast, the total expenditure in 2007-08 increased substantially to 21.7 per cent compared with 19.2 per cent a year before. In absolute terms, the total expenditure amounted to Rs2.276 trillion against Rs1.675 trillion in 2006-07, showing an increase of more than Rs600 billion or 36 per cent. Current expenditure amounted to Rs1.858 trillion against Rs1.375 trillion in 2006-07, showing an increase of Rs482 billion.

The total gap between current expenditure and tax collection is over Rs400 billion. We cannot overcome the budgetary gap unless rulers drastically cut non-developmental waste expenditure and increase tax collection. They will have to show political will in collecting taxes wherever due.

An unshakable determination is required to curb the 61-year-old habit of defying tax laws along with complete purge in tax machinery. Do the fiscal managers really know why our total revenues have fallen from 18 to 10 per cent of the GDP during the last 20 years?

Presently, the collection of taxes by Federal Board of Revenue (FBR) is mainly based on imports and export as well as extraordinary profits by banks (who claim they have profit sharing accounts yet deny due share to deposit-holders!). Importers, contractors, retailers and even service providers are, in fact, passing on the tax burden to consumers and clients, courtesy presumptive tax regime introduced in income tax in 1991-92 and widened manifold since then. This faulty taxation is at the expense of equity and poor people are the real victims of this fiscal highhandedness.

Despite resorting to high-handedness, illogical policies and unjust withholding taxes, FBR has failed to improve the tax-GDP ratio, hovering around at 10 per cent for the last five years. The burden of a number of presumptive taxes levied under the income tax law (which are nothing but crude forms of indirect taxes) has been shifted from income earners to consumers and clients. These presumptive taxes have not only distorted the whole tax system, destroyed economic growth and made the consumer/client ultimate sufferers but these short-term, myopic and figure-oriented measures have even failed to bridge the fiscal deficit, which soared to Rs777.2 billion in 2007-08.

Those in power say that 60 years of problems cannot be solved in a few months or even in a five-year term for which they have been elected. Their main problem is how to deal with powerful tax machinery, which is inefficient and corrupt. On the recommendation of tax bureaucracy, successive governments have been announcing unprecedented concessions for the tax-evaders in the form of tax amnesty schemes, the latest one being, the investment tax scheme which is the worst of all.

The rulers admit massive tax evasion through these schemes and no further proof is required of culpability of tax officials in the entire episode. If elected representatives are sincere in mending the situation, they should pass asset-seizure legislation and confiscate all the ill-gotten and untaxed assets for the benefit of have-nots. In the wake of such a bold step, resource mobilisation will not be a problem any more.

If the present government brings big absentee farmlords into the tax net, manages to get taxes from the influential ones and succeeds in imposing sales tax across the board (preferably with a low rate of two per cent at one single point), there will be no budget deficit.

This goal can only be achieved if the government simultaneously tackles issues related to tax evasion and corruption in the tax machinery by not just throwing them out of job but rather, making the system workable.

Pakistan is quite capable of substantially reducing or even eliminating its fiscal deficit provided that a comprehensive programme, a well-designed work plan, scientific approach and multi-dimensional strategy is adopted for tax reforms and resource mobilisation.


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## Neo

*Rupee slide, costlier investment​*
While the cost of doing business in Pakistan is stated to be high as compared to other regional countries, the rapid depreciation of the rupee would make matters worse for investors wanting to set up export-oriented industries based on imported technology.

The cost of investment may become prohibitive at a time when the $40 billion imports could offer opportunities for import substitution specially in areas where the country has domestic advantage for exports. Over the past half decade or more, there has been industrial consolidation and it is time to initiate expansion of manufacturing based on sophisticated technology. In new projects, the costs may have to be cut down by maximising the use of indigenous engineering and other production facilities.

It has been the normal practice to reduce imports and boost exports by not so much by increasing industrial productivity and efficiency, by innovations in technology or value-added products as by making imports costlier for domestic consumers and exports cheaper for foreign buyers. Devaluation brings short-term gains as costly imported industrial inputs make export goods costlier. Besides, the hike in interest rates is also raising financial charges.

The possible slowing down of new industrial investment will also coincide this year with slashing of the development spending by the government reportedly in the range of Rs100-110 billion. It may translate in slowing down of economic growth.

In the larger Pakistani market, with 160 million consumers, there are also problems for the traders and the industrialists. The cost of doing business here is higher than in India and China.

The cost of production is high, partly due to the shortage and failure in supply of electricity and irregular supply of water. These two are major deterrents to higher production in too many fields. The cost of transportation is also the highest in the region, according to the World Bank. The Karachi Port Trust is the most costly port in the region All these factors deter rapid development and industrial growth.

Labour is cheap but unskilled and is marked for its low productivity. Neither the government nor the industry has taken up this issue seriously. Red tape is a major issue. Provincial governments are not excited by some of the projects which the federal government wants to launch. Thus, some projects take a long time to mature.

Punjab government says that federal projects, initiated by the centre, distort provincial priorities for development.

Singapore tried to solve the problem of red tape by having an investment centre in the prime ministers office to expedite problems sponsored by foreigners. Any foreigner with a project can approach the prime ministers office and get the problem solved expeditiously. This approach has also been tried in Pakistan but lacked institutional approach.

We have an investment board with a senior officer but it does not have enough clout to untie the knots and solve the problems.

Judicial laxity is another issue. Cases take a long time to decide and once decided the judgment does not get implemented so easily.

The last government succeeded in attracting large foreign investment through a liberal free- for- all policy. It allowed a foreign investor to invest in any venture and make as much profit as possible and remit the money. But much of the investment came in telecom and financial sector through privatisation and sale of private enterprises to the foreigners. This policy failed to attract investment in export-oriented industries.

The policy is still valid and stands to attract foreign investors. In the last fiscal year, the foreign direct investment ( FDI) was over $5.1 billion , slightly higher than the previous year. With steep fall in rupee, foreigners with dollars will find it cheaper to invest in Pakistan. A window of opportunity is also to be opened up with sovereign guarantee in projects set up through public and private partnership.


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## Neo

*Islamic bond to fund fiscal deficit​*
Pakistan will make another leap in Islamic banking sometimes this month when it launches its first Islamic bond or sukuk in the domestic financial market to reduce borrowings from the State Bank of Pakistan which skyrocketed recently.

In the just-ended financial year, the government borrowed Rs625 billion from the central bank to finance its fiscal deficit which rose to 7.4 per cent of GDP, compared with 4.5 per cent in the preceding year.

The auction target for the sukuk, according to Dow Jones, is stated to be Rs15-20 billion. The coupon rate on these bonds will be close to six-month treasury bill cut off yields of 11.49 per cent. Standard Chartered Bank and Dubai Islamic Bank will assist in its sale. Market circles are optimistic about its success since there is ample appetite within the Islamic banking industry. If this sukuk goes well, Pakistan will launch several bond offers of this kind in the months ahead this fiscal year. By launching its first sukuk, the government wants to diversify its source of funding at a time when the Islamic finance industry is searching for more investment opportunities. Contrary to phenomenal progress made in the Middle East and some western countries, Islamic finance in Pakistan has little avenues to invest, and most of the time their funds remain idle. But compared to Indonesia where Islamic banks account for only 2.1 per cent of the total industry, Pakistani Islamic bankss share in total banking activity in the country is 4.1 per cent.

Indonesia said last week it has failed to raise what it had hoped from its maiden, rupiah-denominated, Islamic bond (sukuk) offerings. But analysts said the issuance was solid and has at least paved the way for a foreign currency sukuk later in the year. The offering is an important development for Indonesias Islamic finance sector, which lags behind that of neighbouring Malaysia which is much ahead.

Malaysia is, in fact, on its way to become a global leader in the Islamic finance industry which is believed to be worth one to two trillion dollars at the moment. It has the worlds largest sukuk market with $66 billion or 62.6 per cent of global outstanding sukuk issuance as at end-June this year. Its Islamic banking has 12 per cent market share in the country. It has decided to exempt taxes for three years on fees and profits earned from its foreign currency Islamic bonds outside the country with a view to boost the industry.

Islamic banks in Pakistan hold about Rs206 billion of assets, and have 2.6 per cent and 4.3 per cent market share in deposits and financing. The State Bank plans to raise market share of Islamic banking to 12 per cent by 2012 by evolving a regulatory framework, enhancing the spectrum of Islamic banking and strengthening Shariah compliance mechanism.

In 2003, the market share of Islamic banking in Pakistan was mere 0.5 per cent and there was only one Islamic bank. Now, the deposits of Islamic banks have reached Rs60 billion. Today, there are six Islamic banks with 230 branches and 12 conventional banks have 103 outlets for Islamic banking.

The Islamic finance has shown spectacular growth over the past ten years and is one of the fastest-growing in the world. It presents unique opportunities to both new entrants and existing players. There are now over 300 institutions offering Shariah-compliant banking, with an asset base of around $250-500 billion. Currently, Islamic finance activities are dominated by the GCC countries and Malaysia.

Although the roots of Islamic finance lie in Islamic principles since the days of the Holy Prophet, its development as an industry is relatively new. While conventional commercial banks provide financial intermediation services on the basis of interest (charged and paid), the basic premise of Islamic finance is the prohibition of interest. Islamic bankers have developed a number of instruments that perform financial intermediation functions without the involvement of interest. From a small banking experiment in rural Egypt during the 1960s, Islamic finance is currently expanding at a rate of 10-15 per cent per annum. It is now the preferred channel of banking for one fifth of humanity.

Meanwhile, Saudi utilities and corporates are emerging as major drivers of Islamic finance transactions with a spate of high-powered and, in some instances, pioneering structures coming to the market in the last few months. This augurs well for the Islamic finance sector, especially in Gulf Cooperation Council (GCC) countries, where governments play key role and actively participate in establishing Islamic financial institutions (IFIs) in an effort to take greater control of the sector which has been growing at an estimated 20 per cent growth rate per annum.

Islamic bankers would prefer more active involvement of Saudi and GCC private sector in view of the growing migration of capital into the Islamic finance sector. Although the rapid growth of this sector in the GCC is led by both private and government-owned entities but the latter is still playing an ever-increasing role as is evident from recent establishment of Alinma Bank in Saudi Arabia, Masraf Al-Rayan in Qatar; Al-Hilal Bank in Abu Dhabi; Ajman bank in Ajman and Noor Islamic Bank in Dubai.

In a recent report, Moodys Investors Service, the international credit rating agency, said that GCC governments may get more involved in the sector because they do not want to see the Islamic banking industry over-dominated by the private sector, and (for that purpose) want to keep the whole thing under control. The reason is that if governments have an increasing share of ownership in IFIs, the risk of consumers perceiving an IFI as insufficiently compliant with Shariah is somewhat mitigated.

The GCC governments are concerned that the fast-paced growth of the sector could lead to some lapses in corporate governance and Shariah compliance because their region is under-regulated. There is lack of adequate enforcement of policies and there is a litany of conflicts of interest including instances where ministers are allowed to serve on the board of IFIs.

Saudi Arabia is by far the biggest player in the Islamic finance market simply because the kingdom boasts the largest pool of funds in the sector. Bahrain may have several IFIs incorporated there but most of the shareholders equity comes from Saudi high net worth individuals and institutions.

The expansion of Islamic industry is largely centred on retail and consumer finance especially housing finance and current accounts and savings products; infrastructure and project finance; acquisition finance; and real estate development finance.


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## Neo

*Punjab: economic reforms on back burner​*
Multilateral lenders are becoming increasingly uneasy over the slowing pace of crucial, ongoing governance, fiscal and economic reforms undertaken by the Punjab government under its flagship Punjab Resource Manage-ment Programme (PRMP) due to what many officials term as visibly weakened ownership of the programme by the new political leadership of the province.

The donors are concerned whether or not the timelines for the current financial year agreed under the programme for various interventions to push the reforms agenda in the province forward would be met, a senior official of a donor agency, who did not want to give his name, told this scribe.

The Asian Development Bank (ADB) has already decided to halve the first tranche of $200 million for health related reforms in the province, he said.

The ADB had committed last year to disburse $400 million in two equal instalments over a period of three years for undertaking health related reforms in the province to achieve targets set in the Millennium Development Goals (MDGs).

The donors concerns mainly stem from lack of any progress in different reform areas during the last several months caused due to the official inaction and failure to fill the top vacancies at the PRMP. One of our main development partner - the Asian Development Bank (ADB) - has, for example, recently conveyed the highest decision-making authorities in the province that immediate appointment of a new Programme Director of the PRMP is crucial for moving the reforms agenda forward and to meet timelines agreed with the bank, a Punjab government official, who has remained involved in the implementation of the reforms programme during last couple years, said on the condition of anonymity.

A provincial finance department official, who also did not want to be identified, acknowledged that the delay in the appointment of a fulltime programme director and three deputy directors at the PRMP was a major factor that had slowed down decision-making on how to move forward with reforms significantly.

But it is not a PRMP-specific phenomenon alone. Officers - senior and junior both - are kind of scared, unsure, and are reluctant to take decisions. Nobody knows if the decisions he is supposed to take would be approved of by his seniors and political leadership or not. The wholesale transfers of officials since the inception of the Pakistan Muslim League-Nawazs government in the province has frightened many of us. You may be posted against a vacancy in the morning and moved to another place in the evening, the finance department official said.

Unless the political leadership, especially chief minister Shahbaz Sharif, starts taking policy decisions - rather than focusing only on the day-to-day populist measures like ordering arrest or sacking of one official or the other for alleged corruption or mismanagement or some other charge, there is little hope of things moving forward in any area, let alone governance reforms, he said.

The previous government had launched wide-ranging governance, fiscal and economic reforms initiative under the PRMP in 2003 with ADBs financial assistance of $500 million, spread over five years. A major chunk of the ADB loan proceeds under PRMP was utilised for retirement of high cost federal debt, capitalisation of pension and provident funds and spending on development in the province.

The main objective of the reforms agenda agreed between Punjab and the ADB was to strengthen the capacity of the provincial administration for efficient and sustainable delivery of public services in order to improve socioeconomic indicators as outlined in the provincial Poverty Reduction Strategy Paper (PRSP).

That objective was to be achieved through reforms in governance structures, systems, and processes to strengthen provincial finances, realign provincial institutions for pro-poor service delivery, and create opportunities for growth and income generation in the private sector.

On completion of the first PRMP in 2007, the Punjab government and the ADB agreed to undertake the next phase of reforms under the second PRMP. Under the next phase of reforms, the ADB had committed to provide $750 million in three equal tranches spread over five years to 2012.

The PRMP-II was to focus improvements in public fiscal and financial management, deepening of pension reforms, strengthening of efficient and effective civil service and facilitation of greater private sector participation in the economy and in the public service delivery.

The ADB released first tranche of the soft loan towards the end of last fiscal and the second is due to be released at the end of the current financial year after an appraisal of the reforms by the ADB team.

We can meet the reform timelines and qualify for the second tranche provided the political leadership decides to bring its focus back on the reforms agenda. The governance reforms are not only crucial for qualifying budgetary support from the donors but also to achieve sustainable economic growth, create jobs, reduce poverty, and improve public service delivery, the finance department official said. Not everything is lost. We should pursue the reforms for the betterment of our own people, he said.

He agreed with the suggestion that the pace of reforms in the past had been painfully slow and the previous government had failed to fully achieve the targets because of its own political agenda. Yet, he said, the kind of political ownership of the reform programme shown by the previous government endeared it to the donors who were prepared to give any amount of money to the province for budgetary support.

The present leadership will do itself a lot of good if it reverts its attention to the reforms agenda for improving the life of its citizens, said the official.


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## Neo

*Overseas investors interest in farming​*
London equities fell midway through last week, with fresh falls for leisure and retail stocks as the pace of growing concern about the outlook for the UK economy deepened.

The latest UK Services PMI index showed activity in Britains key services sector declined for the fourth successive month in August. And the news that Nationwide Building Societys consumer confidence index remained mired at a series low added further to the gloomy economic scenario.

The FTSE 100 fell 111 points, or two per cent, to 5,509.3. The FTSE 250 was 1.8 per cent lower at 9,412.2, losing 131 points. Both indices reacted to more corporate news of significantly low consumer activity bringing the share prices in companies depended on consumer spending under further pressure.

Sterling continued its sharp decline as currency markets reacted to the worsening outlook for the UK economy. The pound fell to a 12-year low against a basket of currencies of the UKs major trading partners. It also hit a renewed 2½-year low against the dollar at $1.7703.

The pounds woes were compounded on Thursday as figures showed UK house prices fell at their fastest pace since 1991 in August, while UK retail sales plunged to their lowest level in 25 years.

The pounds recent sharp fall is seen as good news for the future prospects of the UKs exporters. But it is not expected to prevent the Monetary Policy Committee of the Bank of England from having to cut interest rates aggressively in response to the deep downturn in the housing market and domestic economy.

The Capital Economics Limited, a London based research firm expects interest rates to start to fall before the end of this year  perhaps as soon as November - and to fall to 3.5 per cent or even less in 2009.

However, according to more conservative economists the prospect of lower interest rates to stimulate the economy appeared a more distant prospect with publication of the British Retail consortiums shop price deflator which showed prices rising a year-on-year rate of 3.8 per cent in August, even more rapidly than the level in July.

In another gloomy development UK employers indicated further job-shedding in August, with losses greatest in the hotels and restaurants sector. The employment index was 47.9, up slightly from 46.6 in July but below 50, indicating contraction.

Adding to the overall despondancy Alistair Darling, the Chancellor in an interview in Saturdays Guardian newspaper said that the UK economy was passing through its worst phase in 60 years while admitting at the same time that he had been taken by surprise by the credit crunch and warned that the economic downturn would be more profound and long-lasting than most people had feared.

And perhaps realising the enormity of the situation and to revive the housing market whose collapse is believed to have played the biggest part in pushing the economy into a serious bout of recession, Prime Minister Gordon Brown on Tuesday announced a new £1 billion housing package. He said the package would give first-time buyers a leg-up onto the housing ladder, help homeowners in difficulty and support the UKs housebuilding industry.

There will be a one-year stamp duty holiday for all properties sold for up to £175,000 - helping to restore market confidence and giving first-time buyers the extra help they need. And, alongside this, 10,000 more first-time buyers will benefit from a new £300 million shared equity scheme called, Homebuy Direct.

The PM also introduced a new £200 million mortgage rescue scheme to help thousands of vulnerable families threatened by repossession.

And to encourage social rented housing the PM brought forward £400 million of government spending to deliver up to 5500 new social rented homes over the next 18 months.

The annual increase in food prices jumped to 10 per cent in August, up from 9.5 in July and from 4.7 per cent in April. Non-food prices also rose in August, albeit at a slower pace. Paradoxically, with food prices showing a sustained rise for the first time in decades, the farming sector feels highly optimistic about its future.

Food price inflation in the UK is now around 14 per cent, according to government figures, reversing the trend of the last 50 years. In the 1960s, food made up nearly a quarter of the average household budget  by 2003, this had fallen to less than eight per cent.

But the rising trends in food prices are encouraging overseas investors, City buyers and even investment funds to buy agricultural land, sending its prices to record heights.The industry contributed £5.8 billion ($10.5billion, 7.1billion) to the UKs economy in 2007, and rising food prices mean this contribution would rise even further.

However, farmers are still not very certain about their margins as fuel, one of the biggest input is becoming dearer, and the rise in diesel prices has been unbearable. Fertiliser and pesticides have also soared in price. It used to cost about £70 to produce a tonne of wheat but now it is nearer £120 a tonne.

Many farmers are still dependent on subsidies. British farmers will receive about £3 billion from the Common Agricultural Policy (CAP) this year.

However, because of UKs subsidy reform, instead of receiving money for the quantity they produce, British farmers receive a payment based mainly on the amount of land they farm. Farmers are also said to be vulnerable because most make their money only a few times a year.


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## Neo

*A growth strategy centred on agriculture​*
One way for Pakistan to pull out of its present economic difficulties is to think differently about economic development, to give up on the old ways of promoting growth and adopt a strategy that is more in keeping with modern times.

If this approach were to be followed, agriculture will be the most affected sector.

It could also become the most dynamic part of the economy, helping to accelerate the rate of GDP growth, reduce the incidence of poverty and narrow the income and wealth inequalities among different segments of the population and different regions of the country.

Two significant changes have occurred in the sector of agriculture in the last few years and both present Pakistan with amazingly rich opportunities. The first is the paradigm shift in the prices of agriculture products.

For the first time since development economics came to be treated as a separate discipline, terms of trade have moved decisively in favour of agriculture. This is indicated in the accompanying table and graph that show the unrelenting increase in the index of food prices maintained by the Rome-based Food and Agriculture Organization, the FAO. The index has increased by nearly 60 per cent in the last 18 months.

The trade-off between manufactured products and the produce of land has moved in favour of the latter. Students of development economics will recall that in the early fifties, when the discipline was in its formative stage, several influential thinkers, in particular Raul Prebisch from Latin America, believed that the economic system of production dominated by the industrialised countries was tilted against the developing world.

It was organised in a way that the prices of the commodities produced by the developing countries would always remain low relative to the prices of manufactured products produced by rich countries. The only way to escape from this trap was for the low income countries to industrialise and reduce their dependence on the industrial countries.This thinking was at the heart of the earlier development plans that guided policymaking in many developing countries, including Pakistan. There were also political reasons why policymakers neglected the development of agriculture and concentrated their attention on industrialising the country. In the immediate post-independence period, policymaking was in the hands of the urban elite which showed an urban bias in managing economic development. India also forced Pakistan to industrialise quickly by halting all trade in 1949 thus depriving the struggling citizens of the new country of basic manufactures they needed.

Pakistan is now semi-industrialised, having pursued for decades an import substitution policy. This involved protecting what economists call infant industries. Tariffs on imports were kept high, taxes were relatively low, and the state stepped in whenever some parts of the industrial sector faced difficulties. This kind of coddling by the state did not produce an efficient industrial sector that could compete in the international market place. One consequence of this was very poor performance in exports.

The country is paying the price for this industrial policy as exports remain stagnant while imports continue to increase. One way out of this difficulty is to build agriculture as an export oriented sector.

The recent changes in the terms of trade have brought about a new set of opportunities for the developing world. This change will last for the simple reason that the structure of demand and the refashioning of the system of industrial production have moved in new directions so that a given quantity of agricultural produce will buy a larger quantity of industrial output. This puts at great advantage countries such has Pakistan that have not realised the full potential of the sector of agriculture.

The second major change affecting agriculture is taking place right in Pakistans neighbourhood. It is the product of the rapidly growing demand for agricultural products in the oil producing and exporting countries of the Middle East. The transfer of incomes to the oil exporting countries that has resulted because of the catapulting in the price of oil has changed the structure of domestic demand in these countries.

It has, in particular, increased the demand for high value added agricultural products  animal products, exotic fruits, vegetables, flowers and many types of processed foods. Some of these oil rich countries are looking for ways to ensure secure sources of supply of these important items for domestic consumption.

The problems they face are well illustrated by a recent analysis by two knowledgeable persons about the Middle East. Saudi Arabia has no permanent rivers and lakes. Rainfall is low and unreliable. Cereals can be cultivated only through expensive projects that deplete underground reservoirs. Dairy cattle must be cooled with fans and machines that spray them with water mists. This is not, in short, a nation that would normally be associated with large scale agriculture, write Javier Blas and Andrew England in the Financial Times.

The same description applies to Bahrain, Qatar, Oman and UAE. It is not surprising that these countries are looking to invest in countries that have the potential to export agricultural and livestock products.

Several Middle Eastern countries are interested in acquiring land which they can use for producing for their domestic markets. During a recent tour of Central Asia, Khalifa bin Zayed, the UAE president, underscored the need for his country to secure supplies for agricultural products. He had gone to the area, attracted by the regions empty land.

The UAE is looking at implementing some agricultural projects in Kazakhstan as part of its efforts to develop stable food supply sources for its needs, he said. Some countries have made tentative moves in Pakistan. Qatar is reported to be interested in setting up a large animal farm in the Punjab for importing meat and dairy products. But these are ad hoc developments which need to be channelised in a way that the countrys agricultural sector benefits broadly.

The Pakistani state needs to get formally involved to invite these kinds of investments. How could this be done and in what way Pakistan could take advantage of this opportunity as well as the changes in the terms of trade? One would suggest that the initiative should come from the provincial governments and should be directed at developing a partnership between the private capital and the state.

One approach would be to establish agriculture and livestock production and export corporations, one for each of the four provinces. Since, the four provinces are differently endowed they will specialise in the production of different products. These should be joint enterprises with the provincial governments and the Middle Eastern investors as the owners. They should be listed in the Pakistani as well as the Middle Eastern capital markets. They should be given some of the land the government owns as equity with capital for developing the land coming from the partners in the Middle East.

This type of approach would bring several benefits to Pakistan. It would bring in new form of foreign direct investment into the country. It will help to commercialise agriculture. It will increase exports by developing new lines of products. It will have multiplier effects by introducing other farmers to new technologies and markets. And, it will help to increase the countrys export earnings.

Pakistan has lost many opportunities in the past to develop its economy by encouraging exports. Consequen-tly, the country remains dependent on foreign capital to pay for the growing trade deficit. This is not a sustainable strategy. Now, that the increase in the price of commodities and the demand for agricultural and livestock products in the Middle East (also China, which is making investments in agriculture in the countries with potential in that sector) has presented the country with another opportunity to expand exports, it must move forward. This opportunity should not be lost.


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## Neo

*Chinese company to run mine project in November ​*
SHANGHAI (September 08 2008): China's top zinc producer, Hunan Non-ferrous Metals Corp Ltd, will start production at its partly owned lead and zinc mining project in Pakistan in November, a company executive said on Sunday. "The project will start production in mid-November," said Wang Jianjun, the import and export department head of Zhuzhou Smelter Group, a Shanghai-listed unit of Hunan Non-ferrous Metals.

"All of the lead and zinc concentrates from the Pakistan project will supply to the company," Wang told Reuters on the sidelines of an industry conference.

The Pakistan mine is designed to produce 100,000 tonnes of zinc in concentrate and 32,000 tonnes of lead in concentrate a year, Hunan Non-ferrous Metals has said.

Chinese smelters and steel mills are stepping up overseas projects in a hunger for resources following rapid production capacity expansion driven by the country's rapid economic growth.


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## Neo

*Work on three mega industrial uplift projects underway ​*
SIALKOT (September 08 2008): The construction work of Rs 1 billion for three mega industrial development projects was briskly underway at Sialkot for the development, modernisation and up-gradation of Sialkot's export-oriented sports goods industry, besides, enabling this industry to meet the global trade challenges under this WTO Regime.

The under completion projects of 'Sialkot Business and Commerce Centre' and 'Sports Industries Development Centre' at Sialkot would open the new vistas of socio-economic and industrial development in Sialkot region. Besides, providing opportunities for the local industrialists and exporters to struggle hard for strengthening the national economy and enhancing the national exports with full devotion and dedication.

Dr Sarfraz Bashir Former Senior Vice President of Sialkot Chamber of Commerce and Industry (SCCI) stated this while talking to the newsmen here Sunday. He said that the federal government has allocated a special development fund of $2 million for the development of Sialkot's export-oriented sports goods and leather goods industries on top priority basis.

He said that these three launched projects would be helpful in enhancing the pace of the trade activities, besides, helping a lot to modernise the export-oriented industries of Sialkot.

SMEDA would spend a chunk of Rs 34.67 million on the construction of an international standard Sialkot Business and Commerce Centre (SBCC), which would be an eight storey building with total covered area of 101,823 square feet, comprising the advanced facilities including Expo Halls, Display Centers, Convention Centre, Management Offices, restaurant & Residential Rooms and Business Facilitation Center, he added.

The federal government had released special funds of Rs 171.67 million through SMEDA to Sialkot Chamber of Commerce and Industry (SCCI), while the SCCI would contribute Rs 170 million for this project.

This project would be helpful in providing a shared display facility for whole of the Sialkot industry, besides, helping to promote and export of Products from Sialkot based Industries. He said that project would also enhance the Capacity Building of Exporters especially SMEs.

Dr Sarfraz Bashir Former Senior Vice President of Sialkot Chamber of Commerce and Industry (SCCI) said that this international standard project would also have an easy access to Sialkot Airport, Sialkot-Lahore Motorway and Sialkot-Swedish Engineering University.

SMEDA would also spend Rs 272.61 on the establishment of an international standard "Sports Industries Development Centre Sialkot", this mega project would enable Sialkot's sports goods sector to adopt new technology of mechanised soccer ball, which is threatening the current hand stitched soccer ball industry of Sialkot.

On this occasion, the SMEDA officials said that Sialkot is the main export oriented city in Pakistan. Sialkot is known internationally as a producer of quality products in sports goods, surgical instruments, leather garments, gloves & accessories, sportswear and musical instruments.

The local craftsmen produce immaculate products while export oriented entrepreneurs ensure that products reach international destinations. Around 400,000 people are engaged directly or indirectly with export activities. Annual export earnings of the city are around US $1 billion.

Former Sialkot Chamber of Commerce and Industry (SCCI) SVP Dr Sarfraz Bashir said that Sialkot city is under a process of development, the concept of displaying products is taking grounds and with increasing exposure to international markets, industry people are realising the utter need of new marketing and selling hubs. He said that there is increasing need of giving our products more exposure and making them reachable for the customer. Another important thing is that business visitors avoid hassle of visiting multiple locations so if they are provided with single place where they can find a full representation of the industry, a good response is expected out of them.


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## Neo

*TCP to be persuaded to import wheat via Gwadar ​* 
ISLAMABAD (September 08 2008): The government has constituted a three-member committee to convince the Trading Corporation of Pakistan (TCP) to import wheat through Gwadar Port, which is said to be uneconomical, official sources told Business Recorder.

The TCP had been directed by the Economic Co-ordination Committee (ECC) to import wheat through Gwadar Port at the request of Balochistan government, but the Corporation did not implement the decision.

"The TCP is in not importing wheat through Gwadar Port although ECC had decided that some wheat should be imported through Gwadar," the sources added. Responding to the accusations, the TCP chairman said that it was not feasible to import wheat through Gwadar as it would raise costs. There is a wide disparity between Gwadar and other ports, Port Qasim or Karachi Port, with respect to handling and transportation charges, the sources continued.

Sources said some of the ECC members at a recent meeting of the ECC took exception to the attitude of the TCP and insisted that Gwadar be made fully functional regardless of its higher handling and transportation charges.

In order to settle this issue, the ECC approved constitution of a committee under the chairmanship of the Ports and Shipping minister, Commerce secretary, and TCP chairman, which would deliberate on the matter and place their recommendations before the Daily Economic Monitoring Committee (Demc). When contacted an official of the commerce ministry stated that the ministry has finalised recommendations to submit to the committee.

According to sources, the ECC was also informed of the import profile of wheat and it was stated that out of 2.5 million tonnes, the Corporation had, as of August 18, purchased 1.53 million tonnes.

Sources said that the Cabinet, in its meeting in Karachi in July, had considered a proposal of the Ports and Shipping Ministry to shift 20 percent workload of Port Qasim and Karachi Port to Gwadar Port. Despite its outsourcing to Port of Singapore Authority, the element of inertia is evident, which requires similar government support as was earlier extended to the Port Qasim at its initial stages through allocation of assured cargo.

According to sources, the Ports and Shipping Ministry secretary had expressed the view that Gwadar Port has already handled a wheat-carrying ship in March 2008, and the port operator has adequate arrangements for handling any fresh consignments. Balochistan government has also proposed that 2.5 million tonnes of wheat, being imported by the federal government, should be handled at the Gwadar Port to strengthen operational activity.

Besides, the Balochistan governor had recommended that 20 percent of the workload of other ports should be shifted to Gwadar. Sources said that the secretaries committee, headed by the finance minister, in its meeting on June 18, had recommended that the federal government should at least allow import of wheat destined for Balochistan through Gwadar Port.


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## Neo

*'Rs 22 billion Food Stamp Scheme to eliminate poverty' ​* 
MULTAN (September 08 2008): Syed Nazim Hussain Shah, MPA Chairman of Task Force Punjab, said on Sunday that chief minister had given Rs 2 billion subsidy to provide essential items at affordable rates in the province. Under this project, the 20-kg flour bag was being sold for Rs 300 and a kilogram of ghee would be sold for Rs 118.

He said that flour prices increased in Punjab due to smuggling to other provinces and Afghanistan. He said that the smuggling had never been checked in the past.

The Punjab government has initiated Rs 22 billion Food Stamp Scheme (FSS) to eliminate poverty and uplift the standard of living of the society's low-income segment, Nazim Shah said. Syed Nazim Shah told the meeting that the provision of good quality edibles would be ensured at fixed rates in Gujranwala district during Ramazan.

Nazim Shah said that flourmill owners had started using 'negative tactics' and had threatened to go on strike but the Punjab government did not yield to their pressure tactics. He said that 500,000 families would benefit from the first phase of the Food Stamp Scheme while the second phase, starting from September 15, would provide relief to another 800,000 families. He said that a total of 1.2 million families would benefit from the programme, as they would be given Rs 1,000 every month. Nazim said that a transparent system would be evolved to help deserving families benefit from the scheme.


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## Neo

*Saudi Ittefaq to start 1.5 million tonnes iron plant in Karachi ​*
RIYADH (September 08 2008): Al-Ittefaq Steel Products Co, one of Saudi Arabia's three largest steel producers, hopes to sell a 30 percent stake in an initial public offering in the fourth quarter of 2008, its top financial executive said.

"We will float 30 percent stake ... We will decide after the valuations whether to go for a capital increase or sell only existing shares," Chief Financial Officer Shabir Rafiqi told Reuters in a telephone interview.

The firm has mandated Gulf International Bank as lead manager and financial adviser for the IPO. The bank holds a 2.3 percent stake in the company.

The Al-Tuwairqi family holds a stake of about 77 percent in Ittefaq through a holding company. The company had a turnover of 2.9 billion riyals ($773.3 million) in 2007 and its net margin stood at about 8-9 percent, Rafiqi said.

The IPO could take place in the fourth quarter, subject to regulatory approval, he added.

"We want to use proceeds of the IPO to help fund projects in the pipeline and our expansion plan in the years to end-2012. We have identified expansion projects worth approximately $2 billion," Rafiqi said. The projects consist mainly of melt shops, direct reduction plants and flat products plants, he said.

"We are also looking at iron ore mining in India and possibly Brazil and Australia," he said. "We want to have a complete integration and become a global player in steel industry".

The firm expects to start this year a rolling mill in the Red Sea city of Jeddah with an annual capacity of 1.2 million tonnes, he said. "Now we produce 2 million tonnes which will increase to 3 million tonnes with the Jeddah plant," he said.

It also hopes to start next year a 1.5 million tonnes direct reduction iron plant in Karachi, he added. Ittefaq competes with Hadeed, a unit of Saudi Basic Industries Corp (SABIC) and the kingdom's largest steel producer, as well as with al-Rajhi Steel Industries. Saudi Arabia has a production capacity of about 8.4 million tonnes.

Prices of steel have almost doubled over the past two years as demand has outpaced supply in Saudi Arabia, where the government and the private sector are spending billions of riyals on infrastructure and housing projects.

Rafiqi said demand had nearly doubled in four years. The rise in steel prices and increases in other input costs have raised fears over the viability of some projects.

Prices started to decline recently after a government ban on scrap metal exports and as spiralling costs hit demand growth. "Prices are now down by about 8 percent from their peaks of 2008 ... This is a simple adjustment in prices," Rafiqi said. "For the rest of the year, an 8-15 percent adjustment is possible, not more than that."


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## Neo

*Are we likely to be back on the IMF programme? ​* 
ARTICLE (September 08 2008): Analysts are unanimous in their assessment that Pakistan will have to go on the IMF sponsored programme unless drastic remedial measures are undertaken immediately - a programme marked by harsh conditions likely to quickly erode the popularity of an elected government.

PPP, at this point in time, can ill afford to alienate large parts of the populace because even though it is the largest party in the National Assembly, it does not command an overall majority.

The question is what is the basis of this assessment made by economic analysts? Is it a set of macroeconomic indicators that appear to be worsening with the passage of time? Is it reluctance on the part of the government to change the expenditure priorities as was amply evident in the budget for fiscal year 2008-09? Or is it due to concerns revolving around total revenue, with the present government's budget lacking clarity as to how it would meet the rather ambitious revenue targets it has set?

There is general unanimity that it's all of the above. Macro economic indicators have reached alarming levels. The foreign exchange reserves have plummeted to under 7 billion dollars, the rupee is in a free fall and periodic State Bank intervention to shore up its value appears to be too little and too late.

The State Bank would no doubt lay the blame on the federal government because of its failure to arrest the budget deficit and its continued reliance on borrowing from the State Bank as well as hectic lobbying in foreign capitals to import oil and food items on deferred payments as the solution to its resource constraints. To date only wheat imports will be forthcoming on deferred payment and no agreements have yet been inked with reference to our hefty oil bill.

Government sources have recently indicated, though, that no payment has been made to Saudi Arabia for oil imports for the past few months and there are indications from that country that eventually they would grant us the oil facility; if this is true and the government has yet to make payment for the oil it has imported in recent months then the current foreign exchange reserve position is even more worrisome.

More recently the government has indicated that it would withdraw subsidies further, expected to have a major negative impact on its popularity ratings, and commence privatisation as a means to generate revenue and contain the budget deficit. According to the IMF Director of Middle East and Central Asia Department, Pakistan needs substantial external financing to stabilise the economy. If these efforts on the part of the government bear fruit then perhaps the need for IMF assistance may not arise.

To add salt to the festering wound that is our economy is the fact that the sentiments in our markets are particularly grim at this time. The stock market is in turmoil, the local investors are hesitant to plow back profits into expanding their business and the public is suffering from a rate of inflation that disallows it from spending on too many goods outside what is considered kitchen items.

Thus with demand curtailed which would automatically reduce productivity and inflationary pressures are on the rise, it is a foregone conclusion that the growth rate would be considerably less than the one last year. It is relevant to note that as the growth rate declines, a negative multiplier comes into effect which would have a proportionately larger impact on the national income. In other words, there are dire forecasts about the GDP growth rate which, in turn, would impact on unemployment as well as the tax revenue.

As if this were not all, the energy shortfall has reached alarming proportions and while the public would understand if told that the problem lies with small generation capacity relative to demand, yet recent reports point to a much more disturbing picture: that of rising circular debt and how one government agency is unable to pay another resulting in the inability of the generation plants to make payment for purchasing their basic input, say, furnace oil. So far this problem does not seem to have been resolved as load shedding has gone up to unprecedented levels.

And then there is of course the problem of inadequate resources. Until and unless the government can dramatically raise its capacity to generate revenue and at the same time curtail its burgeoning expenditure, it will be difficult to enable the conclusion that the IMF programme is not a foregone conclusion, a programme that is expected to be even harsher on the general public than the periodic upgrade in utility rates and oil and food prices. As of 4 September 2008 the IMF, during a press conference, stated categorically that "the (Pakistan) authorities have not requested a Fund programme."

The last IMF Article IV Executive Board Consultation for Pakistan was on December 17, 2007. In a Press conference in July 2008, the IMF stated for the record: "One of the important issues in Pakistan is that net international reserves have declined by about 6.5 billion US dollars since the end of June, 2007 to about 7.7 US billion, and the Pakistan rupee has depreciated by 20 percent against the US dollar over the same period. Now a significant tightening of both fiscal and monetary policies to contain inflation and reduce the external current account deficit is needed in our view.

In particular, fiscal consolidation should include the phasing out of energy subsidies, and moreover there is a need to stop central bank financing of the government which has been large since October, 2007. The Minister of Finance, I would note, has announced that, in principle, Saudi Arabia has agreed to provide an oil facility, deferring payment of part of Pakistan 's oil import bill. But the terms, I understand, are still under discussion."

A look at what is happening in Pakistan clearly reveals that the government is following IMF advice almost to a T: energy subsidies are fast disappearing, monetary policy is being tightened and there are statements from the government that more reliance will be placed on borrowing from the National Savings Centre rather than from the SBP. And what the government is relying on, the decline in the international oil prices, would it is being fervently hoped in the PPP high command would automatically strengthen the foreign exchange reserves position.

So will Pakistan need to go on the IMF programme? Would all the above measures being taken by the government improve some of the macro economic fundamentals, notably the foreign exchange reserve position, as well as allow the budget deficit to be lower than would otherwise have been possible. However, two factors may well negate this: first and foremost the budget revenue targets lacked clarity and the international financial institutions have already intimated to the government that there is a need for greater clarity.

In other words, where is the tax money going to be collected from? And second, market sentiment is declining, due to continued political uncertainty, further fuelled by the law and order issues, including the lathi charge on the lawyers in Islamabad on Thursday. This will have a direct impact on investment. It will also impact on the country's GDP which would, in turn, impact on our major macro economic fundamentals that are seen as a percentage of GDP. Given these elements, it is highly likely that the government may be forced to go on the Fund programme before the end of the current calendar year.


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## Neo

*Pakistan could be next big IMF customer​*
** Citigroup calls weak rupee a legacy of flawed economic policies 
* Sees risk of debt default next year​*
LAHORE: A recent report by Citigroup suggests Pakistan as the International Monetary Funds (IMF) next big customer, according to a Newsweek report.

According to the magazine, the IMF had seemed on track to permanent downsizing earlier this year, because emerging-market growth had left it without a client base of economically poor nations. However, that might soon change. 

Default: The magazine quoted a recent report by Citigroup saying Pakistan could be the IMFs next big customer. According to the magazine, the bank sees a big risk of sovereign-debt default next year thanks to a weak rupee (a legacy of flawed economic policies) and higher energy prices. 

The balance-of-payment situation in energy-dependent countries like Pakistan has deteriorated, Newsweek quoted Citi economist Mushtaq Khan as saying. Oil has softened, but even if prices stay where they are, Pakistan will run a large deficit, Khan said.

According to the magazine, Khan noted that Pakistan needed IMF advice more than money. It said proposed loans from Saudi Arabia could stabilise the currency, but other investors would not bite until they see a plan for structural reform. 

Earlier, an IMF staff assessment of Pakistans macroeconomic situation had called it fragile and vulnerable to a crisis.

According to the IMF experts responsible for the assessment, the external current account deficit for 2008-09 will be $14 billion or 7.7 percent of the gross domestic product (GDP). With capital inflows of about $7 billion, the IMF estimated the external financing gap to be around $7 billion. 

Real GDP growth is expected to slow further to about 4.5 to 5 percent in 2008-09, while average inflation is projected to increase to 16-17 percent owing in part to the expected pass-through of higher international food and energy prices.

The IMF also recommended that a stronger effort is necessary to broaden the tax base by eliminating some tax exemptions. Interest rates should be allowed to rise as needed in order to lower inflation and ensure that the domestic financing of the deficit is covered entirely by commercial banks and non-bank sources. 

The IMF noted that Pakistan has requested an oil facility from Saudi Arabia to defer the payment of oil imports of 110,000 barrels per day, which at current oil prices would amount to $5 billion annually. The terms and conditions of the deferment were on hold till the presidential election.


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## Neo

*Country sinking into poverty, crisis ​* 
*Zardari faces Herculean task of reviving economy​*
Tuesday, September 09, 2008

ISLAMABAD: The Pakistan Economy Watch (PEW) has called on President Asif Ali Zardari to give top priority to economic revival and take right decisions without any further delay to steer the country out of the current political and economic mess, because the entire nation is sinking into poverty.

The situation is not very promising, the rupee has fallen almost 25 per cent against the dollar since the start of the year, inflation is 28 per cent and still on the rise, foreign currency reserves are diminishing and investment is non-existent. Gross Domestic Product (GDP) growth may slow down this year to 4.8 per cent from 6.4 per cent in 2007. The Karachi stock market has witnessed a fall of 36 per cent since April, Dr Murtaza Mughal, President of PEW said here on Sunday.

Pakistan fell 15 positions last year, to the 79th position from the 64th in business competitiveness. The World Economic Forums global competitive index ranks Pakistan 92nd out of 131 countries. The drop in the countrys competitive rankings will have far-reaching implications for reducing poverty, fiscal and trade balances, inflation and improving economic growth.

SOS messages have been sent to friendly countries that have strategic, economic and ideological interests in Pakistan. These calls are awaiting any meaningful response. The President has come to power with the help of a number of parties having divergent views on many issues. He is bound to come under pressure on many major decisions relating to militancy, extremism and economy, he said.

Asif Ali Zardari has become a central figure in the war against terror at a time when anti-American sentiment is on the rise. There would be limits on his willingness or ability to cooperate with the demanding US agenda. Nevertheless, he will have to make some tough decisions irrespective of the reservations of his allies to avoid a crashing economy.

Murtaza Mughal said that the main stock exchange gained 40 per cent last year despite 60 suicide bombings. This proves that the economy should be the top priority and other issues must take a backseat. Musharrafs tenure as president saw high economic growth and unprecedented privatisation as foreign investment flowed into the country supported by as much as $10 billion in US aid.

For his successor, US support will be important in the face of a stagnant economy. In addition, he will have to prove that he is a better choice. The decline will continue until the investors feel a bit confident. Investors will not return to Pakistan until political uncertainty is completely reversed.


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## Neo

*US wants to pressurise Pakistan through IMF, WB ​* 
Tuesday, September 09, 2008

ISLAMABAD: Bretton Woods Institutions in which United States is the major shareholder, have withheld their funding for development projects indicating that Washington is once again indirectly ensnaring Islamabad to do more as directed in war against terror. These may include harsher and more painful conditionalties, which could not be in the best interest of Pakistan, the News has reliably learnt.

Bretton Woods Institutions comprising of International Monetary Fund (IMF) and World Bank are dillydallying in releasing funds. Pakistan at the moment is passing through a very severe situation. An official told the news that they may want to keep the current political set up to keep under pressure as to have their demands fulfilled. 

It is worth mentioning that the WB has also said no to the Pakistani request for providing about $0.50 billion emergency package while advising the government for approaching International Monetary Fund (IMF). This indicates that the World Bank is once again pushing Pakistan towards IMF and to face its hard conditions.

These institutions want Pakistan to abolish subsidies on petroleum, electricity and other agricultural inputs. Obeying their demand, the government has already gradually started abolishing subsidies on these products, which according to the governments economic planers would further spur inflationary pressure in economy. It is worth mentioning that high inflation has broken record of last three decades. During July 2008, CPI inflation stood at 24.33 per cent as against 6.37 per cent recorded in corresponding month of the last fiscal.

Pakistan these days is confronted with the worst political, and law and order situation, which is affecting its economy. Although Pakistan is a major U.S ally in war on terror, donor agencies are wavering in releasing funds for development projects. Despite the fact, that it was Pakistans involvement in the war on terror that has pushed the economy to the brink of collapse and made foreign investors reluctant to invest in Pakistan. Most of the international rating agencies have down graded the economy that further adds salt to the wounds. 

In such circumstances, when Pakistan is in dire need of financial help, the donors are unhelpful and reluctant to assist Pakistani economy. Soon after the 9/11 incident, Pakistan became the U.S ally on war against terror without any conditions but at the moment the International Security Assistance Force (ISAF) led by US forces have frequently violated Pakistani territory by firing missile that killed dozen of innocent Pakistani citizens. It is also worth mentioning that the other day, ISAF forces landed on Pakistani land (in Waziristan) and killed 20 innocent and unarmed citizens. 

The Asian Development Bank, in which China is on of the major stakeholders, is however a little helpful in financing Pakistan. Some of the government officials believe that President Asif Ali Zardaris visit to China would help achieve financial support for the Pakistani economy.


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## Neo

*LCCI for developing consensus on Kalabagh dam ​* 
Tuesday, September 09, 2008

LAHORE: The Lahore Chamber of Commerce and Industry (LCCI), while congratulating the new President, Asif Ali Zardari, urged to help develop consensus for early construction of Kalabagh Dam.

LCCI President Mohammad Ali Mian emphasised the need for constructing the dam while talking to economic journalists at a function at the LCCI on Monday. Senior Vice President, Mian Muzaffar Ali, Vice President Shafqat Saeed Piracha and a large number of LCCI executive committee members were also present on the occasion.

Mian said that all the four provinces have shown confidence in Zardari and he has emerged as the most powerful man in the country who can convince all the federating units over the issue of Kalabagh Dam. This dam, he added, is the solution to 70 per cent of the economic problems which are due to shortage of energy in the country.

Mian also said that the country has not built a large dam in the past three decades and is currently facing a shortage of nine million acre feet of water and more than 5000MW of electricity. This shortage will enormously compound in the coming years and only the construction of big dams like Kalabagh can help us cope with the situation. His name would be written in golden words, if Zardari wins a consensus on the dam he added. Mian also said that the law and order situation is another challenge that needs to be tackled by the government on priority basis.


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## Neo

*Zardari to seek Chinas investment in energy​*
KARACHI, Sept 8: President-elect Asif Ali Zardari is expected to visit China next week, after oath-taking on Tuesday, to seek its greater involvement in Pakistans energy sector.

Qadirpur gas field privatisation, Thar coal-based electric power project, hydel power projects, and a few others are on the agenda, a well-placed source disclosed to Dawn on Monday from Islamabad.

Mr Zardaris visit to China is a part of a multi-pronged strategy to seek assistance from close friends to take out Pakistan from the current deep economic crisis. We need immediately a few billion dollars to meet foreign payment obligations and our friends help to build up our fast depleting foreign exchange reserves, Ikhtiar Baig, a leading denim manufacturer and exporter and member of thee PPPs Policy Planning Cell said.

Mr Baig disclosed that a delegation from Poland was in Islamabad recently to discuss coal exploration prospects in Thar and other areas of Sindh and setting up of power projects. A power project based on coal mining in Thar and electric power project with involvement of Chinese and Polish investors cannot be ruled out, Baig indicated.

In Poland electric power generation is based almost entirely on coal mining and she is considered to be a leading country of the world in coal based power generation technology. A Chinese company was involved in coal mining and power project and had invested considerably but was literally chased out of Pakistan by short sighted bureaucrats in Islamabad secretariat and in Wapda on tariff issue.

Acute foreign exchange crunch is forcing the government to move ahead with privatisation on a fast track. Mr Zardari is expected to seek greater involvement of Chinese investors in disinvestment of Qadirpur gas field and a few other enterprises.

Very recently, the governor State Bank of Pakistan issued a statement on fast deteriorating foreign exchange position and had hinted at commencement of privatisation. For the last few weeks, well-placed sources in Islamabad and Karachi are indicating that the Privatisation Commission is being given a target to mop up at least $3 to 4 billion from disinvestment of public sector projects.

President Zardari is also expected to explore further strengthening of relations with China in financial sector. Pakistans two way trade volume with China has grown to more than 100 per cent from $3 billion in 2004 to $6.86 billion in 2007. This fast growth in trade is now luring Pakistani banks to offer their services.

Two Pakistani banks  National Bank of Pakistan and Habib Bank Ltd  are operating in China with representative offices. There is a strong desire to open full-fledged branches in China. But Chinese rules warrant a minimum asset limit of $20 billion for opening a branch in their country.

With all indications that the two-way trade volume between Pakistan and China is set to touch $15 billion by 2011, the two Pakistani banks want to get business share. Officials in NBP say that they have assets worth over $10 billion and seek permission to open a wholly or jointly own subsidiary in China.

Also on the NBPs agenda is a joint venture with Industrial and Commercial Bank of China (ICBC) with 30 per cent stakes. The ICBC is the second biggest bank in the world with $1.11 trillion worth assets and 18,000 branches around the world.

Early this year, Indian media reported that China was actively exploring to offer relaxation in its stringent conditions to give a major Pakistan specific concession that would facilitate opening of branches by Pakistani banks. Bankers and businessmen hope that the issue of strengthening of financial relations may figure in the discussions between two countries.

China has responded instantly and positively early this year, when ex- president Musharraf sought immediate financial relief. Despite a major earthquake that caused widespread loss and damage, the Chinese government provided $500 million relief to Pakistan. Pakistan now again needs badly urgent relief and this issue is also expected to be discussed in next few days with Chinese leaders.

Mr Zardari has chosen to be Pakistans salesman to attract investment for privatisation and for new projects, a senior business leader in Karachi remarked, who recalled that Mr Zardari was given the responsibility of investment ministry in 1995 by late Benazir Bhutto in her cabinet. In that capacity he had managed to attract considerable investment for independent power projects.


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## Neo

*Exports grow 40.5% in Jul-Aug​*
ISLAMABAD: Exports from Pakistan during July-August period of current fiscal year 2008-09, in rupee terms, have witnessed a growth of 40.5 percent as compared with the same period of last fiscal year, official sources told Daily Times on Monday.

According to official details that would be considered at the Economic Coordination Committee of (ECC) of the Cabinet suggest that exports from the country have registered a handsome growth. The Federal Board of Revenue (FBR) has provided this trade data to the Ministry of Finance that has been compiled by Pakistan Revenue Automation Limited. 

Despite 23 percent depreciation in the rupee, the textile sector has failed to take advantage of this and textile exports declined by 2.5 percent in July 2008. Textile Industry Ministry, fully backed by the Ministry of Commerce, had proposed to the government R&D package ranging between Rs 25 billion to Rs 30 billion for the current fiscal year 2008-09. However, keeping in view the bad performance of the textile sector and weak financial situation of the government this proposed package has been reduced to just Rs 12 billion in Economic Monitoring Committee (EMC) headed by Federal Minister for Finance. 

Explaining the details of the export trends, the official further informed that during first month July 2008 the non-textile exports amounted to $999.5 million in July 2008 as compared to $930 million in July 2007, projecting an increase of 84.6 percent. As against this the textile exports have declined by 5.6 percent in July 2008 with total exports at 905.9 million as compared to exports of $930 in July 2007.


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## Neo

*UAE investors to invest in Pakistans agri sector​*
ISLAMABAD: The Islamabad Chamber of Commerce and Industry chief on Monday said the UAE investors expressed willingness to invest in the untapped potential of Pakistans agriculture sector. The ICCI President, Mohammad Ijaz Abbasi said that the UAE investors expressed these views during his recent visit to the UAE. He said it would not only enhance agriculture production, but would help in creating jobs and reducing unemployment and poverty in the country. Addressing a meeting today, he said the country is confronted with deep economic problems and stressed on the government to take appropriate steps for the development of agriculture sector.


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## Neo

*IHK trade team to visit Pakistan: Mirwaiz ​*
ISLAMABAD (September 09 2008): The Chairman of All Parties Hurriyet Conference (APHC), Mirwaiz Umar Farooq has announced that a trade delegation form occupied Kashmir would visit Pakistan and Azad Jammu and Kashmir within a period of ten days to explore avenues of commerce and trade through Srinagar-Muzaffarabad road.

According to Kashmir Media Service, the announcement was made in a press conference held at the residence of Mirwaiz Umar Farooq in Nageen, on Monday. The Caihrman, APHC emphasised that the Hurriyet was serious about looking for the opening of Srinagar-Muzaffarabad road not in symbolic way but for providing an alternative viable road for Kashmiris' trade. He underlined the need of allowing the people of Kashmir to visit any part of the world through Srinagar-Muzaffarabad road.

The Chairman, APHC maintained that the Indian government in line with a premeditated plan was pushing Kashmiris to wall so that they could once again resort to violent means to resolve the Kashmir dispute. He said that in such case India should know that it would not be able to control the situation. However, he appealed the people of Kashmir not to give up the peaceful way of resistance.


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## dr.umer

*Pakistan, GCC countries to sign Free Trade agreement​*
ISLAMABAD, Sep 9 (APP): The Free Trade Agreement between the GCC Countries and Pakistan will be signed during the next meeting scheduled this year.

This was disclosed by the Pakistans Ambassador to Kingdom of Saudi Arabia, Admiral Shahid Karimullah (Retd) after the conclusion of the second round of negotiations for Free Trade Agreement (FTA) between GCC and Pakistan, held in Riyadh, the Saudi Arabia capital.

The Ambassador said the free Trade Agreement (FTA) would augment the volume of trade between Pakistan and the gulf countries and would further strengthen the commercial bonds and brotherly relations.

The agreement will pave the way for enabling entrepreneurs of these countries to explore multifaceted avenues of trade and possibilities of enhanced cooperation, Shahid Karimullah said.

The meeting attended by the Gulf Countries was represented by Secretary, Ministry of Commerce, Syed Asif Shah and Pakistans Ambassador to Saudi Arabia.


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## Neo

*Pakistan Agrees to Provide 20,000 Labourers to Bahrain Every MonthSuad Hamada ​*
10 September 2008 

Manama  Pakistan has stepped in to help Bahrain deal with the soaring demand for skilled manpower in the construction sector by agreeing to provide 15,000 to 20,000 workers a month, a diplomat said on Tuesday.

Six months ago, hardly around 7,000 Pakistani workers arrived every month to Bahrain. However, the situation will soon improve as a result of cooperation between the two countries under which Bahraini employers will give preference to Pakistani workers, Community Welfare Counsellor at the Pakistani Embassy, Habibur Rehman Gilani, told Khaleej Times yesterday.

Gilani refused to link the increase in demand for workers from his community to employment restrictions imposed by the Indian Embassy on its manpower, including its refusal to allow companies with labour violations record to recruit Indian labourers as well as a plan to implement minimum wage for Indian labourers.

The demand for our manpower has nothing to do with restrictions on workers from other nationalities as Pakistani workers possessed the required skills to meet the demands of the construction sector, mainly the strength and determination to deal with tough working conditions.

He said three years ago Pakistan launched a massive training programme for its blue-collar workforce at various training centres to enhance their efficiency. Pakistani workers are known for their honesty and hard work and are willing to work on reasonable wages that make them the perfect choice for construction companies.

Gilani said all workers had been briefed about Bahrains culture and job requirements before coming here, while they had also been instructed not to not engage in illegal activities and strikes We have told them to try to solve their work-related disputes through negotiations and approach us for help to protect the reputation of our community.

Gilani revealed that there are more than 40,000 Pakistanis labourers working in Bahrain while the community comprised around 55,000 individuals and the figure is expected to double soon.


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## Neo

*Indonesia wants increased trade with Pakistan ​* 
Wednesday, September 10, 2008

KARACHI: Consul General of Indonesia, Mustakeem has said that his country wants to expand trade with Pakistan and for this Jakarta would facilitate Pakistani businessmen.

He said this on his visit to the Korangi Association of Trade and Industry (KATI) on Tuesday. He added that Indonesia is a strong economy and Pakistan could benefit from its experiences while Indonesian businessmen are exploring the possibilities of new business avenues, particularly joint ventures in various fields.

In reply to a query of KATI Chairman, he said, His office is willing to provide full support for visas to Pakistani businessmen who are recommended by KATI. Sheikh Fazle Jalil, Chairman, KATI said that Pakistan is an agro based country and our produce like rice, wheat, vegetables, fruits, tobacco, and raw cotton would be attractive for Indonesian markets. He suggested that improvement in bilateral trade needs long lasting concrete efforts from both the governments, like exchange of frequent trade delegations and other such steps.


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## Neo

*Tuwairqi to build 104-metre high furnace tower ​* 
Wednesday, September 10, 2008

KARACHI: Tuwairqi Steel Mills Limited (TSML), the upcoming integrated steel-manufacturing project, recently hired a gigantic Crawler Crane of 600-ton capacity to construct a 104-metre high Reduction Furnace Tower.

The furnace employs the worlds most advanced Direct Reduced Iron (DRI) technology of MIDREX Process owned by Kobe Steel of Japan.

The tower, which currently stands 50 metres high, will be making one of the skyscrapers in Pakistan. Tuwairqi Steel Mills is being set up in Pakistan by Al-Tuwairqi Group of Companies, the biggest private steel producer in Saudi Arabia.

The crane (Demag CC 2800) engaged to construct the tower is considered a speedy and reliable tool for lifting heavy structural members globally during a high-rise construction. TSML has obtained this crane from a Turkish company the Sarilar International Transport & Commerce.


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## Neo

*Industry sees stability under new president​*
KARACHI, Sept 9: Businessmen and industrialists see the election of Asif Ali Zardari as president of Pakistan a major step leading towards economic stability.

They believe that the political turmoil has reached its logical end with completion of the process of the restoration of democracy in the country.

They hoped that the government could now focus on reviving the economic stability.

Acting president Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Zubair Tufail said that the economic stability was not far away after taking over the top post of president by Asif Zardari.

He said it would be easy for the government to announce some incentives and package as both the president and the prime minister belong to the PPP. There will be understanding between them on various issues, he added.

The new president is aware of the economic crisis and now the road appears clear for him to revive business activities, he said.

Zubair said that a delegation of the apex trade body would meet the president next week to submit proposals for the resolution of economic issues being faced by the country.

The acting FPCCI president said that consumers were hoping to get relief in oil prices as crude prices had settled at $101 per barrel from $147 two months back.

Similarly, the palm oil prices have fallen to $850 per ton from $1,200 few months back. Due to bumper rice crop, its prices have already started falling in the markets, he added.

President Karachi Chamber of Commerce and Industry (KCCI) Shamim Ahmed Shamsi predicted the revival of economic activity after the election of Asif Ali Zardari for the countrys top post.

I think that the government will now definitely focus its attention on economic stability after the improvement in the political scenario, he said adding: Time has come for the Pakistan Peoples Party (PPP) government to deliver on its promise to improve economic indicators.

Mentioning some short-term challenges, he said that the government should reduce the interest rates to encourage capital flow and take measures to enhance exports as the Christmas season and winter buying by the European buyers will get underway very shortly.

Chairman Korangi Association of Trade and Industry (Kati) Shaikh Fazl-e-Jalil said economic prosperity should come after the end of political instability to some extent.

Industry now pins hope for some policy direction after the appointment of Zardari as president.

He recalled that the PPP-led coalition government had not given any solid economic policy since February.

However, he said that economic stability would come when the government appoints full time ministers of various economic portfolios.

Chairman North Association of Trade and Industry (Nkati), Noor Ahmad Khan said that economic revival now seemed imminent after the settlement of a big political issue.


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## Neo

*Securitisation of $700m remittances planned​*
KARACHI, Sept 9: The government has planned securitisation of $700 million remittances being sent by overseas Pakistanis to ease pressure on the rupee.

Sources said the plan was being finalised and a few top foreign banks were engaged, which means early encashment of future receivables.

Pakistan had received record remittances of about $6.5 billion during the last fiscal year. The remittances have been witnessing a rising trend for the last five years. In the first month of the current fiscal year remittances maintained this trend.

During the last fiscal year, the country had to face record current account deficit and half of which was met by the remittances.

As imbalances have created a serious threat and have made multiple impacts, the country is in dire need of foreign exchange.

The shortage of dollar has already increased pressure on the rupee which lost one-fifth value against the dollar, trade and current account imbalances are haunting economic managers of the country and fast depleting reserves may lead the country to a default.

Sources said that the re-entry of the IMF is also expected as lender of the last resort.

Moreover, the government has started removing all kinds of subsidies which were being provided for oil and food sector.

The removal of subsidies suddenly resulted in increasing prices of food and petroleum products, which engulfed the entire economy and inflation touched over 24 per cent.

Bankers were of the view that Pakistan had strong position over remittances which were rising.An analyst said if securitisation of $700 million plan was completed, it would be a temporary respite for the country as the problem could not be handled with this meagre step.

The countrys reserves slid to below $9 billion while the oil import bill alone could be over $12 billion, even after fall of oil prices in the international market.

Currency dealers said the possible inflow of $700 million through securitisation would give hope for better performance of the local currency.


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## Neo

*Govt borrowing swells to Rs58.2bn ​* 
Thursday, September 11, 2008

ISLAMABAD: Due to Pakistan economys burgeoning income-expenditure gap, the governments borrowing for budgetary support increased to Rs58.24 billion during the first month of fiscal year 2008-09, depicting an increase of 40.95 per cent compared to borrowing of Rs41.32 billion in the corresponding month of the last fiscal. 

During July 1 to July 26, governments borrowing from the State Bank of Pakistan stood at Rs30.07 billion and from scheduled banks Rs28.17 billion, while in corresponding month of the last fiscal borrowing from the central bank stood at Rs41.32 billion however Rs4.07 billion were retired of scheduled banks. Economists believe that expansionary government fiscal policy is also considered as a source of diluting effects of the SBP tight monetary policy formulated for capping high inflation. 

It is feared that running a loose fiscal policy may crowd out private investment in the country. Currently, inflation is touching a record high which is not only affecting the macro economic indicators but also severely disturbing social life of million of poor Pakistanis. 

Besides, the loose policy had also crowded-out private investment in the country. Though public spending help in developing right infrastructure for encouraging private investment, however if surge in the government spending is not accompanied by increase in government revenue and proportionate hike in real GDP, it creates public debt and inflation respectively. The higher public spending may put upward pressure on the interest rates and thus discourage private investors to invest. It is worth-mentioning that during fiscal year 2007-08, fiscal deficit stood at Rs777 billion or 7.4 per cent of GDP against Rs398.8 billion (4 per cent of GDP) targeted for the fiscal under review. 

In order to bring back the budget on a sustainable track, fiscal deficit for 2008-09 is proposed at 4.7 per cent of GDP i.e. Rs582.3 billion. During July-June 2007-08, the government borrowed Rs461.28 billion from banks (scheduled and central bank), which is about 469 per cent or Rs380.28 billion more than the actual target of Rs81 billion for fiscal year 2007-08, while Rs359.26 billion (or 352 per cent) more than, it borrowed in corresponding period of the last fiscal 2006-07 (Rs102.015 billion). More worrisome was that the government borrowing from the SBP increased to alarming Rs633.17 billion as against Rs58.57 billion it retired last year. 

Of scheduled banks, it retired Rs171.89 billion against Rs160.59 billion it borrowed in corresponding period of the last fiscal. It is also feared that if the government was unable to attract external inflows as a result of low remittances, slow down of privatization proceeds, the borrowing volume could balloon to unbearable level that could further affect the governments efforts to rein in the inflationary pressure and bring down the poverty level in the country. 

The State Bank since last year has time and again advised the government to reduce its dependence on bank borrowing especially, on SBP in order to control inflation and support the monetary policy. 

According to the bank, the excessive borrowing from the SBP spur the inflationary pressure in economy due to excessive money circulation in economy. Resultantly, it becomes a source of demand pull inflation, a scenario when too much money chases too few goods. Few months back, the central bank also asked the government that the fiscal deficit be contained in years ahead to reduce the risk of crowding out of the private investment. 

Besides, it should also retire borrowing from the banking system particularly from the SBP.


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## Neo

* Trade deficit widens to $1.87bn in August ​* 
Thursday, September 11, 2008

ISLAMABAD: Pakistans trade deficit widened to $1.87 billion in August compared with $1.64 billion in July and $1.28 billion in August last year, the statistics bureau said on Wednesday.

Exports stood at $1.58 billion in August this year, against $1.46 billion in the same month last year. Imports were worth $3.46 billion compared with $2.74 billion in August last year.

An analyst said a strike of more than a week by lorry drivers at the main port of Karachi in late August disrupted exports worth millions of dollars.

Export numbers are likely to improve in September partially due to the backlog, said Asif Qureshi, head of research at Invisor Securities Ltd. Qureshi said it was encouraging that imports showed a sign of decelerating in August, declining 2.48 per cent compared with $3.54 billion in July.

The trade deficit swelled by 52.95 per cent to $20.74 billion in the 2007-08 (July-June) fiscal year, as against $13.56 billion in the 2006-07 year, mainly on account of a heavy import bill for crude oil and food.

The import bill for crude oil and petroleum products rose more than 66 per cent to $11.35 billion in 2007-08, compared with $7.33 billion the previous year, as world fuel prices surged. The food import bill was up nearly 54 per cent to $4.20 billion in 2007-08, compared with $2.74 billion in 2006-07.

The rising import bill has contributed to a fall in foreign reserves which slipped to $8.89 billion in the week that ended on Sept 3 from an all-time high of $16.5 billion in October last year.

The current account deficit widened to $14.016 billion in 2007-08, while in July it expanded 24 per cent to $1.01 billion from July last year. The government last month imposed duties up to 50 per cent on 379 luxury goods to help cut the import bill.


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## Neo

*Gas load-shedding to lead to Rs22bn ​*
Thursday, September 11, 2008

ISLAMABAD: Urea manufacturers have clearly conveyed to the Ministry of Food, Agriculture and Livestock (MINFAL) that with minimum gas loadshedding of 30 days during peak hours in winter, the government will require Rs22 billion ($306 million) for importing urea.

Total import requirements with or without gas loadshedding will be 549,000 tonnes for Rabi season 2008-09, reveals a calculation prepared by one of the urea manufacturers and sent to MINFAL for discussion in the Fertiliser Review Committee meeting on Thursday.

The government will require $439 million and if the Saudi facility worth $133 million extended in July is deducted, the balance foreign exchange requirement will be Rs22 billion ($306 million), as stated in the calculation.

Urea price in the international market is $800 per tonne while its price in the domestic market is $180 per tonne, thus the government is paying $620 per tonne extra on imported urea.

All the four main urea manufacturing companies in Pakistan with daily urea production of 4,863 tonnes will not be able to produce 72,945 tonnes if remained closed for 15 days and 145,890 tonnes if plants remain closed for a maximum 30 days. The financial impact of the closure of fertiliser units for 15 days would come to $58 million and for 30 days $117 million.

Pakarab Multan, Dawood Lahore, Pakamerican Daudkhel are connected with Sui Northern Gas Pipelines Ltd (SNGPL) while Fauji Fertiliser Bin Qasim is linked with the Sui Southern Gas Company (SSGC) and FFC and Engro with Mari Gas. The daily production of Pakarab is 333 tones, Dawood Hercules Lahore 1530 tonnes, Pakamerican Daud Khel of 1065 tonnes and Fauji Fertiliser Bin Qasim 1935 tonnes.

MINFAL in a summary sent to the Prime Minister has anticipated a shortage of half a million tonnes of urea for the Rabi season and submitted a plan for importing the commodity from friendly countries on credit.

The retail price of urea in the open market is over Rs900 per 50kg bag against the official price of urea, which is Rs650 per 50kg.


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## Neo

*$500m ADB tranche likely this month: IMF issues Letter of Comfort​*
LAHORE, Sept 10: The government expects to get the first tranche of $500 million of $1.3 billion Asian Development Bank (ADB) loan before the end of this month as the hitch of a clearance by the IMF has finally been removed.

A senior official in the federal finance ministry, who did not want to identify himself, claimed while talking to Dawn from Islamabad on Wednesday that the International Monetary Fund had issued the Letter of Comfort (LoC) to pave the way for the release of the ADB programme loan to Pakistan.

The loan, part of the financial sector reforms programme, will be used by the government to support its budget.

The tranche will also help the government slightly shore up its dwindling stocks of foreign exchange reserves, which have already dropped below $9 billion on the back of rising oil, food and other import payments from a record high of $16.4 billion in October last year.

The current account gap too expanded to above eight per cent of the gross domestic product (GDP) to above $20 billion during the last fiscal as trade deficit rose to over $14 billion. The current account deficit had grown 24 per cent to more than $1 billion in July this year from same period last fiscal.

The government direly needs foreign capital inflows in the form of multilateral and bilateral loans, aid, grants, foreign direct investment and private transfers in order to improve its forex reserves.

The official said the government also planned to float sovereign bonds in the international financial markets to raise funds. But he did not give any idea of the size of the loan the government intended to raise from the global financial markets.

No one can give the idea of the size of the funds we are going to rake up from the global financial markets. It will be known only when we enter the market. We dont yet know what would be the response of the international investors to our offer, the official said.

He said the bonds would be floated at an appropriate time in order to keep down the spread on the sovereign paper. Thats why I cannot tell you the exact date or month when the bond would be floated, he said in answer to a question.

He said Islamabad had asked the Saudi government to extend it the oil on deferred payment for next two to three years to ease the pressure on its resources.

Pakistan buys 110,000 barrels of oil per day from Saudi Arabia and the extension of the facility would automatically help its the government plug bleeding of meagre foreign exchange reserves.

He, however, expressed his ignorance about the negotiations with Riyadh for an economic package for Pakistan to bail it out of the current economic crisis. Im not aware of any such development, he said when he was told that the finance minister was reported to have stated that the Saudi government was putting together such a programme for Pakistan.


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## Neo

*Pakistan slips to 77th slot in business index: No reforms initiated in 2007-08​*
ISLAMABAD, Sept 10: Pakistan did not introduce any reforms in 2007-08 to reduce regulatory burden on doing business as it ranked 77th among 181 world economies in providing an environment conducive to investment.

This is part of findings of the World Banks global report on Doing Business 2009 released here on Wednesday.

No reforms were recorded in Pakistan this year, the report said, adding the country occupied 74th position last year and slid three slots since then.

Karim O. Belayachi, co-author of the report, in a videoconference from Washington said the best thing for Pakistan would be to lower cost to formally register business. Doing Business ranks economies on the basis of 10 indicators of business regulation that track the time and cost to meet government requirements in starting and operating business, trading across borders, paying taxes and closing a business.

Pakistan is placed at 93rd position on dealing with construction permits due to high number of days involved in the procedure. A businessman has to spend more than seven months or 223 days to get a construction permit. To transfer property from one business entity to another, as many as 50 days are required that consumes precious time, says the report.

Overall, Pakistan grabbed 97th place on registering property indicator.

On a question, one of the authors of the report said by reducing administrative cost of doing business, the countries that are facing problem of high electricity cost could reduce at least one barricade to the business. The report coincided with about 40 per cent increase in power tariff for industrial consumers and would be accounted for in the next report.

Karim O Belayachi said past five years experience showed that the governments brought more reforms when they were under pressure, especially under financial difficulties.

The government commitment is most important in both, home grown or donor-assisted reforms, he said and added, reforms in doing business were straightforward and could easily be applicable anywhere.

Sri Lanka was the best reformer among the South Asia region. Singapore, New Zealand and the United States, in that order, are the three top performers among 181 countries.

Pakistan got the highest position in South Asia on protecting investors, scoring 24th position.

Pakistan has done tremendous job in protecting investors, said Karim Belayachi.

Pakistan was the worst performer in enforcing contracts where it stood at 154th number. It takes 32 months or 976 days in contracts enforcement. Employing workers was the second worst and paying taxes was the third worst indicator for Pakistan. A businessman needs 47 days or 560 hours to pay his taxes in a calendar year. The report says total tax rate, as percentage of profit in Pakistan is 28.9 per cent.

The country performed moderately on getting credit indicator and scored 59th position. Trading across the borders indicator won 71st place for Pakistan. On the last indicator, closing a business, Pakistan is placed at 53rd position. It takes about three years to shut a running business. The recovery rate in Pakistan is measured at 39.2 cents per dollar.


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## Neo

*TSML to construct furnace tower​*
KARACHI: Tuwairqi Steel Mills Limited (TSML), the incoming state-of-the-art integrated steel-manufacturing project, has recently hired a gigantic Crawler Crane of 600 tonnes capacity to construct a 104-meter high Reduction Furnace Tower. 

The furnace employs the worlds most advanced Direct Reduced Iron (DRI) technology of the MIDREX Process owned by KOBR Steel of Japan. The tower, which currently stands at a height of 50 meters, will be making one of the skyscrapers in Pakistan. 

Tuwairqi Steel Mills Limited is being set up in Pakistan by Al-Tuwairqi Group of Companies, one of the leading business concerns in the Kingdom of Saudi Arabia and the largest private sector steel producer. 

The crane (Demag CC 2800) engaged to construct the tower is considered a speedy and reliable tool for lifting heavy structural materials globally during a high-rise construction. TSML has obtained this crane from a Turkish company, namely, SARILAR International Transport and Commerce. Prior to operating at TSML site, it was working at ARAMCO Rabigh Site in the Kingdom of Saudi Arabia. 

The DRI Plant of 1.28 million per annum capacity constitutes the first phase of the project and it is expected to be completed in the first quarter of 2009. Along with the construction of the DRI plant, an Intermediary Phase is also being executed, which includes the setting up of a chain of Induction Furnace to produce 0.3 million tonnes of billets per annum. 

The Intermediary Phase would be completed close to the completion of DRI Plant. Phase-II of the project consists of an Electric Arc Furnace and a Constitute Caster to produce 1.28 million tonnes of high quality billets. As background integration, a Pelletisation Plant of 2.4 million tonnes capacity shall also be set up. The project spreads over an area of 220 acres at Port Qasim.


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## Neo

*Hopes for economic revival high as president takes oath ​*
ISLAMABAD: Hopes for economic revival are high as one of the most powerful civilian ruler has taken over as President of Pakistan. Now Asif Ali Zardari should ensure political and economic stability as country is paralysed since eighteen months due to power struggles, said Pakistan Economy Watch on Tuesday. 

A press release issued here on Tuesday revealed that the cancellation of holiday in Sindh has not only saved billions but also assured that Asif Zardari is very serious about economy. His soft and compromising stance during the press conference says volumes about his plans. He is expected to find solution to energy crisis with the help of China and contain lawlessness and unemployment. 

A number of issues have been cropped up during last eighteen months that must be tackled at the same time; country cannot afford the luxury of resolving issues one after another, said Dr Murtaza Mughal, President, Pakistan Economy Watch. 

The power struggle among Pakistan Peoples Party, PML-Nawaz, former President Musharraf; issue of restoration of deposed judges coupled with deteriorating law and order situation has resulted in Asias highest interest rates, record borrowings, riskiest financial obligations, the weakest currency, dwindling forex reserves and a stock market depressed by almost 50 percent in last five months. 

Political instability and failed attempts to shore up the market has spurred an exodus of investors. Steps like curbs on stock trading are neither positive, nor sustainable and should be avoided in future. 

Asif Ali Zardari has taken oath today and he should immediately appoint fulltime finance and commerce ministers as the economy has braved three finance ministers in last six months. Three finance ministers with different views have served Pakistan in the current year including Salman Shah, Ishaq Dar and Naveed Qamar, said Murtaza.

Subsidies, fiscal slippages and other unnecessary spending have widened the budget deficit to a 10-year high and the fiscal issues are the weakest link in the policy mix.


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## Neo

*Pakistani products gaining ground in Italian markets​*
PESHAWAR: Pakistans ambassador to Italy, Tasneem Aslam has said that demand for Pakistani products increased in the Italian markets due to strong and ever-growing friendly ties between Pakistan and Italy. Farman Ali Niazi, hailing from District Swabi, led a traders delegation to Italy and held a detailed meeting with Tasneem Aslam in Rome. Mr. Niazi in statement here said that the Pak envoy in her talks with the delegation said that there was great scope for the Pakistani products in Italy, which needed to be explored. She said that Pak Embassy in Rome was struggling to help settle problems of the expatriate Pakistanis. She said Italian government has made lot of investment in Pakistan in various sectors. Tasneem Aslam also stressed on the Pakistanis community living in Italy to play their due role in promoting their culture.


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## Neo

*Govt prepares $5.2 billion power distribution road map​*
ISLAMABAD: The government has prepared a power distribution road map spanning 9 years, from 2008 to 2017, and approved a corresponding $5.2 billion investment plan for distribution companies (DISCOS) of WAPDA in order to support the power distribution sector expansion. 

The total investment requirement for the DISCOs for 20082017 is estimated at $5.2 billion. The investments consist of improvements to the secondary transmission grid (STG), distribution of power (DOP), energy loss reduction (ELR), capacitors, and other required investments to the distribution system. 

These investments have been estimated at $262 million in FY2008, $315 million in FY2009, $367 million in FY2010, $472 million in FY 2011, $577 million in FY 2012, $682 in FY 2013, $786 million during FY 2014, $891million in FY 2015, $577 million during FY 2016 and $315 million in fiscal year 2017. 

The distribution systems are heavily loaded and in parts already overloaded, with high

losses and poor reliability levels. If recent increases in demand continue, power shortages and the already frequent customer disconnections or load shedding will become much more regular unless all elements of the power sector are significantly improved urgently. Significant investment requirements remain on the distribution systems of the eight DISCOs to enable the power to be effectively, reliably, and safely delivered to satisfy the demands of existing and new customers, observing the necessary environmental and social safeguard requirements. There is also the need to address compliance with regulatory requirements. To date, these have not been priority issues for the DISCOsthey are generally aware of the regulatory requirements but will not be able to achieve compliance at this stage. 

The immediate priority for investment in the distribution systems is to address the capacity shortfalls that currently result in regular system outages and supply interruptions to customers. There is a degree of urgency on this work to avoid rapid deterioration of power transformers caused by overloading, which can result in failures with lengthy return to service times. The identified priorities begin with the addition of circuit and transformer capacity at the sub-transmission level to enable the already overloaded systems to deliver present demand reliably and meet the expected load growth.

A second priority is loss reduction. The primary and secondary distribution system suffers from high technical and commercial losses, outdated design, and poor performance. Improvements to system reliability and further downstream loss reduction are required on the lower voltage systems of all DISCOs alongside system extensions to un-served villages. 

The power sector entities, specifically the DISCOs, do not have the required level and mix of skills or support systems necessary to operate as independent entities covering the whole range of electricity business requirements. 

In the short and medium term, Asian Development Bank would prioritise assistance for economic infrastructure projects that address critical gaps and constraints in the overstressed transmission and distribution systems and rehabilitate and modernise the power infrastructure. However, investment in additional generation is only justifiable if the transmission and distribution system can handle the additional load. ADBs assistance to the energy sector also prioritises power sector reform, energy efficiency and renewable energy development.


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## Neo

*Pakistan debates sale of assets to support economy ​*
LAHORE: Pakistan plans to sell valuable energy assets, beginning with a major gas field, as it tries to reap billions of dollars from deals with investors in industries like banking and farming, a report in New York times said on Tuesday. Because of a hefty oil bill and a slowing economy, Pakistan is struggling under its biggest budget deficit in a decade, $21 billion; inflation that hit a 30-year high, 24.3 percent, in July; and fast-rising unemployment projected to reach 6.6 percent in 2009, government leaders are eager to raise quick money, the report said.

The government is going through all its funding options, a banker advising the Pakistani government said. Financial advisers to the government spoke on the condition of anonymity. According to the report, the Qadirpur gas field in Pakistan, a natural gas reserve of 2.9 trillion cubic feet in the Indus river flood plain, may be one of the first big-ticket sales. The field, the second largest in the country, is valued at about $3 billion.

Bids for the field, about 260 miles northeast of Karachi, may be submitted in the next week or so, bankers say. Likely bidders include foreign companies already involved in Pakistans energy industry, like Kuwaiti state corporations and OMV, a private Austrian energy company. Theyre testing the market with an auction, said an energy banker who asked to remain anonymous. The selling of the Qadirpur field could be controversial because it is considered a strategic asset. Pakistan imports more than three-quarters of its petroleum and is struggling to become less dependent on imports. But a person close to the deal said there were no guarantees that the field would be sold. He characterised the bid solicitation as an informal process.

The report cited that some investors were questioning the wisdom of Pakistans selling valuable assets and wondering if the sales would be conducted transparently and fairly. But there is no question that the country needs to raise money, analysts said. Pakistans economic situation is a result of rising commodity and food prices, exacerbated by a lot of pre-election spending by the previous government, said Gareth Price, head of the Asia Program at Chatham House, a research centre in London. In an effort to win votes, the previous government, led by General (r) Pervez Musharraf, kept subsidies high on food, electricity and oil, helping drive up the budget deficit. 

The sale of the Qadirpur field is part of a full-scale review of the biggest energy company in Pakistan, Oil and Gas Development, which owns 75 percent of Qadirpur. Merrill Lynch is leading the review. Pakistans privatisation commission said in late August that it also planned to offer stakes in Kot Addu Power on international stock exchanges this year and to privatise Hazara Phosphate Fertilizers. It invited bidders for 51 percent of Jamshoro Power, a long-discussed privatisation deal. Salt and coalmines are also scheduled to be privatised. 

The list of state assets for sale may not necessarily be followed by deals, analysts warned. Talk of investing huge sums of money doesnt always materialise, because people are put off by the political machinations in Pakistan, Price said. Pakistans economic curse is that the ruling elite  civil servants, politicians and the military  have worked in their own interest, not that of the wider population, limiting how much capital the country can raise, he said. One possible source of new investment is the Middle East, the report said. There is a cultural and long-term affinity between the two regions, said Youssef Nasr, the chief executive of HSBC in the Middle East. Saudi Arabia and Abu Dhabi in particular have been strong supporters of Pakistan. daily times monitor


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## Neo

*After NBP, OGDCL plans share buyback​*
KARACHI: Oil and Gas Development Company Ltd (OGDCL) has expressed its intention to buy back its shares from the stock market.

This is the second company after National Bank of Pakistan to announce share buyback within the last couple of days. OGDCs board of directors is due to meet on September 11, 2008 to take the final decision over the buyback shares proposal, a notice of the company to Karachi Stock Exchange (KSE) stated here on Wednesday. In the prevailing market situation, the buyback of shares by heavyweights of the stock market is widely considered an important tool to support the stock market, which fell unprecedently in the last five months with no signs of recovery. 

The floor has been placed on the stock market since August 27, 2008 and as per the latest decision of frontline regulator Karachi Stock Exchange, it will stay on until a review meeting of its board of directors on September 25, 2008. Buy backs are generally carried out at times of crisis in equity markets. For instance on Monday Oct 19, 1987 (also known as black Monday), stock prices in the US nose divided by 20 percent. The following day Citicorp approved a plan to repurchase $250 million of the companys stock and a number of other companies followed suit. As a result, over a 2-day period, firms announced a buy back plan worth a massive $6.2 billion, which helped to stem the slide in the stock prices. After the NBP and OGDCL, share buyback announcements from some other state owned cash rich companies are also expected in coming days, analysts believed.


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## Neo

*Trade deficit crosses $3 billion in two months​*
KARACHI: Countrys trade deficit widened sharply by 47.67 percent during the first two months (July-August) of current financial year to $3.552 billion over $2.385 billion in the corresponding period of previous year.

The deficit also surged by 46.37 percent in month of August to $1.877 billion compared to $1.282 billion in the corresponding month of last year, Federal Bureau of Statistics (FBS) reported on Wednesday.

The major increase in the deficit was caused by heavy spending on oil import, which pushed up the overall import bill of the country during the period under review.

The export registered substantial growth of 18.85 percent to $ 3.489 billion in the first two months against $2.936 billion in the same period of previous year. Whereas import bill stood at $7.011 billion during the period under review, depicting a growth of 31.77 over $5.321 billion in the corresponding period of previous year.

On YoY basis, export recorded 8.16 percent growth to $1.584 billion during the month of August over $1.464 billion in the corresponding month of last fiscal whereas imports surged sharply during the period by registering 26 percent growth to $3.461 billion compared with $2.747 billion in the previous year.

The inflated import bill has rung alarms among the economic managers of the country because of widening trade deficit, which is badly distorting balance of payment position and enlarging current account deficit

Last month, in order to curtail the burgeoning import bill, government imposed 10 to 50 percent regulatory duty on 379 luxury and non-essential items as well as 100 percent LC margin was imposed by State Bank of Pakistan to discourage the import of these items.

Government estimates to cut down the import of these items to $750 million from $1.2 billion, spent earlier on importing luxurious items. 

Analysts, however foresee little relief from these measures as far as the import bill is concerned. It is the oil import bill, which is the main contributor in deteriorating the trade deficit, they felt.

With the decreasing international oil prices, which fell to less than $100 per barrel from all time high level of $147, Pakistan import bill is also likely to come down in the coming days.

On the export side, the increase in the two months was quite encouraging and this rise could be attributed to a surge in non-traditional items export.

The five-month old ruling coalition is faced with the gigantic task of putting the economy on right track, which is in shambles due to soaring inflation, record trade deficit, depleting forex reserves and devaluing rupee.

Analysts said that unfortunately the PPP-led coalition has been still directionless on how to manage the economic side, but the businessmen community hopes that with the election of Asif Ali Zardari as President of Pakistan, some tangible work is expected to come on ground in the economic arena.


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## Neo

*Pakistan won't be going to IMF: Zardari ​*
KARACHI (September 10 2008): Pakistan will not seek an assistance package from the International Monetary Fund, but will 'tighten its belt,' the country's new president Asif Ali Zardari said after being sworn in on Tuesday. Zardari, in a joint news conference in Islamabad with Afghan President Hamid Karzai, apologised in advance for the hardships people would face as a result of the austere measures that needed to be taken.

Some bankers have said they would welcome Pakistan entering an IMF programme, as it would help restore investor confidence in a country suffering deteriorating economic fundamentals and prolonged political uncertainty. The international bond market has already priced in a possible default. Goodwill towards Pakistan's five-month-old civilian government, however, should translate into loans of billions of dollars needed to avoid a default early next year, analysts say.

The international community is keen to see democracy succeed in a Muslim nation that is on the frontline in the war on terrorism and whose support is crucial to the success of the Nato mission to stabilise Afghanistan. Analysts hope the government led by Prime Minister Yousaf Raza Gilani, a Zardari nominee, will act fast to avert an economic crisis now that the presidency issue has been settled. "Gilani and his cabinet will face up to the challenge," Zardari said.


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## Neo

*Government least interested in implementing competition law ​* 
ISLAMABAD (September 10 2008): The government seems least interested in implementing competition law to do away with cartelisation in different sectors as the Minister of Finance has not provided required funds despite repeated requests by the Competition Commission of Pakistan(CCP), it is learnt.

Sources told Business Recorder about a letter recently written by the CCP to the Ministry of Finance, asking for financial resources, as provided under the competition law. There is funding provision in the competition law which envisages four to six different modes with the most viable one being that the government should determine a specific percentage of levies being charged by other regulators for the CCP's smooth functioning.

All the Ministry of Finance is required is to notify that percentage. The Ministry of Finance neither kept money for CCP in the budget nor it has notified the specific percentage from the fee of other regulator despite repeated requests.

The CCP has so far approached three Finance Ministers and five Finance Secretaries, with Ministers including Salman Shah, Ishaq Dar and Naveed Qamar, and Secretaries Ahmed waqar, Tanveer Agha, Waqar Masood, Furrukh Qayyum and now Ahmed Waqar again, but unfortunately failed to move any one of them.

This is a sad affair that the law is not being implemented in totality maybe because of mounting pressure by different cartels such as cement, banking and many others against whom the CCP has taken action recently and some of them were also penalised.

The CCP Chairman had also taken up the issue of financial constraints of the Commission during a meeting with Minister of Finance Naveed Qamar on July 26 wherein he was assured of all-out support, but this promise, too, like previous promises, proved only a word that never materialised.

The CCP in a letter to the Ministry of Finance said that it had become impossible for it to work against entrenched cartelisations with the prevailing financial constraints, and aske it to take a decision whether it was serious and wanted the CCP to bring about competition in different sectors of economies. The role of the CCP has become extremely important in the prevailing market-based economy to discourage unfair trade practices, said an official of the CCP.


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## Neo

*Vending industry opposes auto parts import from India ​* 
KARACHI (September 10 2008): Pakistan's automotive vending industry has opposed the entry of automotive parts from India for use in the assembly of vehicles here. Pak Suzuki Motor Co Ltd had proposed to the Ministry of Commerce change of source of engine and transmission components (not localised) from Japan to India and export of Suzuki Ravi pickup, or its 'Knocked Down' (KD) components, to India.

A delegation of Pak Suzuki Motor Co Ltd, led by Hirofumi Nagao, its managing director had a meeting with Commerce Secretary in Islamabad last month where the issue was discussed in detail. Subsequently, the proposal was reduced in writing, and sent to Secretary, Commerce, for approval.

THE PROPOSALS INCLUDED: 

-- The annual import of engine and transmission components (not localised) from Maruti India instead of Suzuki Motor Corporation Japan is expected to be $29 million.

-- Pak-Suzuki will export Suzuki Ravi pickup (or its KD components) to Maruti India worth $29 million. Pak Suzuki Motor Co Ltd had also pointed out to the merit of the proposal for the economy of Pakistan through this bilateral trade as follows:

-- Change of source of the above-mentioned components from Japan to India will not put additional burden to balance of payment. In fact, there will be foreign exchange saving due to lower Indian prices compared to Japan and freight cost.

-- By export of Suzuki Ravi pickup there will be earning of foreign exchange for Pakistan.

-- According to Pak Suzuki Motor Co, the above proposal will be net earner of foreign exchange for Pakistan and also will create further opportunities to promote bilateral trade between Pakistan and India and to increase automobile exports for Pakistan automobiles/components to India.

The Company had assured that in case the Ministry of Commerce agreed to the proposal, it will submit the import parts list along with prices from Maruti Suzuki, and further prices of Suzuki Ravi pickups in Complete Built Unit (CBU) and its KD components, which will be offered to Maruti Suzuki India. In this connection the Company had also assured that it will ask Maruti Suzuki India to get approval from Indian government to import 5-10 units of Suzuki Ravi pickup in CBU for testing purpose.

The stakeholders look at this development as a matter of very serious concern for automotive vending industry and desire that it should be placed for open discussion before Auto Industry Development Committee (AIDC), constituted by the Ministry of Industries & Production.

The stakeholders believe that automotive vending industry in Pakistan has the capability of developing and manufacturing these components locally. The proposal for exporting of equivalent value Suzuki Ravi (or its KD) to Maruti India put forward by Pak Suzuki Motor Co is a mere 'lollipop', the stakeholders said.

The most worrisome scenario will be when tracking Pak Suzuki footsteps other Original Equipment Manufacturers (OEMs) will also join the course and ask for similar concessions. What will be the state of dwindling reserves and sliding currency in case import from Maruti India is allowed, they asked.

Instead Pak Suzuki Motor Co Ltd should be persuaded by the Ministry of Commerce to commence localisation of these parts either by providing financial assistance or Technology Acquisition Support (TAS) to local vendors. In the meetings held between Ministry of Commerce and the stakeholders the unanimous view that usually emerge is that they favour expansion of the positive list for imports from India.

The imports from India suffer from no protection of statutory tariff application on imports of automotive parts. Finance Minister Naveed Qamar had recently said: "The enhanced import tariffs shall not apply on the concessional agreement based imports.

Moreover we are still suffering from one thing that the import duties to last up to 2009 do not apply on the import tariffs notified for SAARC including India".

Further, Saarc tariffs including India have a time schedule tending to zero with the passage of time. Presently these exist at half of the percentages of statutory tariffs for imports from other countries. The worst scenario, in the opinion of stakeholders, would be if the imports proposed by Pak Suzuki Motor Co Ltd took place but the exports of Suzuki Ravi did not come off. This would have multi-dimensional adverse impact on Pakistan's industry, they said.


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## Neo

*To meet IPI gas line expenses: Ogra allowed to include up to Rs 3 per BTU in gas bills ​* 
ISLAMABAD (September 11 2008): The Economic Co-ordination Committee (ECC) of the Cabinet on Wednesday allowed Oil and Gas Regulatory Authority (Ogra) to include up to Rs 3 per BTU in gas bills to meet the expenses of the Iran-Pakistan-India (IPI) gas pipeline.

This inclusion in the gas bills is premature considering that the US geopolitical interests in the region have to-date militated against the IPI agreement being finalised - US pressure on Pakistan in particular is unlikely to abated in coming years.

"The ultimate benefit of developing gas import project will go to consumers through the gas companies. So, the revenue expenditure on their development should also be borne by them," the Petroleum Ministry argued in its summary.

The IPI steering committee/subcommittee of the ECC in its meeting on July 15, 2008 had recommended that revenue expenditure of ISGS may continue to be included in the operating costs of SSGC and SNGPL respectively, in the ratio of their current shareholding 51:49, to be recovered from gas consumers in the form of consumer gas tariff.

The meeting once again disputed the proposal of Rs 12 billion package for textile industry that infuriated Textile Minister Ahmed Mukhtar who directed the secretary to take the proposal back as he would have got it approved from the Cabinet now.

The participants of the meeting raised serious questions about the performance of the textile industry with some members asking as to what the ministry has done with the amount it was given last year. Some members dubbed the textile bailout package as "social welfare programme for the rich."

The meeting approved additional amount of urea and rejected a proposal of the Ministry of Food Agriculture and Livestock (Minfal) for export of rice fearing that the proposal was similar to that of wheat export that had created shortage of the commodity in the country.

As a result the previous government who had allowed export of wheat initially was forced to import it on double price following a severe shortage of the commodity in the domestic market. The meeting directed the Minfal to fix minimum price of the rice and if the price of commodity goes further down in the local market the Trading Corporation of Pakistan would intervene by purchasing surplus stock.

The meeting also turned down a proposal of the Interior Ministry regarding exemption from allied taxes and customs duties on import of weapon/ammunition for civil armed forces with directives to first calculate the revenue impact of the proposal then bring it to the meeting for consideration. Meanwhile, the meeting allowed gas allocation for three power plants that are to be set up in different parts of the country.


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## Neo

*Country may not get $8 billion-10 billion from foreign sources ​* 
ISLAMABAD (September 11 2008): Pakistan's immediate financial requirement of approximately $8 billion to $10 billion is unlikely to be met from foreign countries, international lenders and donor agencies which are being proactively pursued by the government. Sources told Business Recorder that the government is in a fix as it does not want to go to the IMF programme.

While other options for the country are not viable to meet this huge demand for injections. It is clear to all that the International Monetary Fund (IMF) programme is offered on very tough conditions, which are difficult to fulfil both from economic and political perspectives.

Sources said that the target of $10 billion is very challenging. The inflow of loans is not that high even in the aftermath of 9/11, 2001 when, as a reward for President Musharraf's unconditional support for the US-led war on terror, bilateral and multilateral agencies had injected huge amounts into Pakistan economy.

At the present moment in time, in spite of the democracy dividend, analysts are cautioning the government about the considerable difficulties in generating such a large amount from China, the US, Saudi Arabia, and some of the Gulf countries--an amount for which there is no precedent.

In 2001-02, Pakistan received $3.795 billion. This was the highest figure for one year, recorded in the current decade. In 2002-03, the loans declined to $1.37 billion, and in 2003-04, the total volume of loans reached $2.07 billion. In 2006-07, the inflow again surged to $3.51 billion. And, in 2007-08 (July-March), total loans procured from bilateral and multilateral sources were $1.8 billion.

Sources said that if one looked closely at facts, foreign loans are unlikely to cross $4 billion a year mark even if Pakistan is supported by the US, the European Union, Saudi Arabia, and GCC countries along with the World Bank, IMF and other institutions. In addition, they point out that Pakistan just does not have the absorption capacity for even the amount of loans it has already procured--a fact reflected by commitments exceeding disbursements every single year.

A former finance minister, Sartaj Aziz, told Business Recorder that for political and economic reasons, Pakistan must not go to the IMF. He said that it was a positive sign that the government was not going to go the Fund for assistance.

He said there were some positive indications from the US and Saudi Arabia, who were waiting for political stability after Musharraf's resignation. He said that Pakistan needed to focus on agriculture for overall development of the economy and employment generation. Another economists, Senator Khurshid, hailed Zardari's statement of not going to IMF. The Fund's conditionalities are always tough and anti-growth.

Pakistan will have to keep its economy mortgaged to IMF, and even budgetary decisions would be made on its advice, he said. Pakistan has about $9 billion reserves, enough to pay for two months' imports, and efforts are underway to muster financial help from China, Saudi Arabia and some Gulf countries.


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## Neo

*Government gets $500 million offer against securitisation of remittances ​* 
ISLAMABAD (September 11 2008): The government has received Saudi American Bank and Al Raji Group's offer to provide Pakistan 500 million dollar against sercurtisation of remittances. Al Raji Group manages a major portion of Pakistan's remittances and Saudi American Bank owns Cres Bank in Pakistan.

These two parties have offered Pakistan to arrange $500 million against securitisation of remittances. Securitisation of remittances for raising money from the banks or other fund managers to support fast depleting foreign exchange reserves is one of the options being considered by the government. The government is now waiting for some competing offers.

Pakistan's remittances had touched all time high level of $6.9 billion in 2007-08. This year the government is expecting even more inflows as remittances and on the same calculations it decided to use the option of securitisation of these inflows.

Pakistan foreign exchange reserves had gone up to around $17 billion at one point. Then due to slow down of the inflows it started to decline. The fast depletion of the foreign change reserves have created an alarming situation for the government. The financial crisis is forcing the government authorities to weigh up every possible option for raising money to get out of the situation but there seems no visible source for immediate make-up except non-traditional sources such as securitisation of remittances and privatisation.

The government is already on its feet to implement a multi prong strategy for improvement on economic front. It has approached Saudi Arabia for seeking oil facility valuing around $6 billion against deferred payment, besides requesting many other countries to provide Pakistan support to overcome economic crisis. It is also seriously pushing forward privatisation programme. For the first time those assets which in the past were not on the priority list for divestment have been included in the sell-off list. The Oil and Gas Development Company's (OGDC) proven reserves of oil and gas is one of such assets. The government needs around 8 to 10 billion dollars to get out of the financial mess.


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## Neo

*Good practices for doing business: Pakistan ahead of India and Bangladesh ​* 
ISLAMABAD (September 11 2008): Pakistan ranks 77 in good practices applied for doing business as compared to Bangladesh and India that rank 110 and 122 respectively, a World Bank report revealed. According to the report, there are 10 indicators for measuring the good practices applied for doing business.

These include starting the business, dealing with construction permits, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contractors and closing a business.

The World Bank issued a report on 'Doing Business 2009'on Wednesday that focuses on easing the regulatory burden of doing business through reforms in most of the countries of the world.

The report shows that the introduction of reforms in business regulations makes it easier for a country to obtain credit by strengthening the legal rights of creditors and enhancing the availability of credit information. The main purpose of the report is to encourage the countries to bring about changes to improve their competitiveness globally.

The report shows that there are eleven procedures required to start a business in Pakistan in contrast with India where the number is 13, whereas it requires just seven procedures in Bangladesh to start a business. Similarly, it takes 24 days in Pakistan for starting any business while in Bangladesh 73 and in India it is 30.

According to report it requires twelve per cent of per capita income to start any business in Pakistan, while in India the trend goes up to 70 per cent and in Bangladesh it's 25 per cent. Pakistan stands 43rd on the table regarding the rigidity of employment while India is 30th and Bangladesh 35th, the report stated.

The report revealed that six procedures are required to register property both in Pakistan and India while in Bangladesh the number goes up to eight. The report indicates that the cost of doing business can be reduced to a great extent by easing regulatory burden through local reforms and getting inspiration from other economies.

According to the report, New Zealand can be considered as benchmark regarding the credit information, while Pakistan and India rank four in contrast to Bangladesh two. Pakistan ranks sixth in the table regarding the strength of investor protection, extent of disclosure and the extent of direct liability, the report reads.

The report shows that in Pakistan 47 payments are required for an entrepreneur to pay tax while the number goes up to 60 in India while the number in Bangladesh is 21. According to the report Pakistan requires $611 per container to export any commodity while the cost goes up to $944 per container in India whereas in Bangladesh the cost is $970. Pakistan requires $680 per container to import, while India requires $960 and Bangladesh $1375.


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## Neo

*KCCI suggests industrial estate on National Highway ​* 
KARACHI (September 11 2008): President, Karachi Chamber of Commerce and Industry (KCCI), Shamim Ahmed Shamsi, has urged the provincial government of Sindh to establish an industrial estate on the National Highway in Karachi on the pattern of Site industrial estate.

In a communication to Sindh Minister for Industries and Economic Affairs, Muhammad Abdul Rauf Siddiqui, he said that the new industrial estate would boost economic activities and create employment opportunities in the province. He also suggested that like the northern by-pass, another expressway is also the need of the hour to link DHA, Korangi with superhighway, which will facilitate transportation and solve traffic problems. He emphasised the need to develop and modernise the agro-based industry in the province.

Establishment of food/fruit processing units be encouraged, lucrative incentives be announced for the business entrepreneurs, metallic roads and necessary infrastructure be made available to create access of products to the markets. He also suggested setting up of fisheries projects which would create new employment opportunities and availability of seafood as nutrition for the common man.

The export of seafood is one of the rich sources of foreign exchange earnings. The condition of the fish harbour needs to be improved to enable Pakistan to regain its market in the European Union (EU). He said that by improving the coastal areas of this province, the standard of living of the population would improve.


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## Neo

*Outsourcing of data from EU to Pakistan: PSEB issues recommendatory guidelines for IT companies ​* 
ISLAMABAD (September 11 2008): Pakistan Software Export Board on Wednesday issued recommendatory guidelines for IT companies to adopt model clauses for transfer of personal data from the European Union to third countries including Pakistan. Talib Baloch, Managing Director said that we want to address concerns of Pakistan's IT industry with regard to stringent requirements by EU, & binding corporate rules for international transfers of personal data.

He said that these guidelines are recommended for both Pakistani IT and IT-enabled businesses, especially the BPO (Business Process Outsourcing), to process data and personal information being transferred from anywhere in the EU to Pakistan as well as for businesses with a presence in Pakistan and frequently involved in global transfers of data.

Baloch said that PSEB is aware of the stringent legal requirements by EU regarding outsourcing of data for processing to countries outside the EU and the problems Pakistani companies, at times, face in getting business from EU. He added that PSEB is also aware of the marked differences between the requirements of the EU as opposed to the US in the area of privacy law and data protection.

EU and the US markets are both important for Pakistani IT and IT-enabled trade, the approach to be adopted must not adversely affect the possibilities of Pakistani businesses to export their services to either jurisdiction." he added.

Baloch indicated that this was the first step in implementation of the roadmap, which is part of the Data Confidentiality Law and Framework Project, which is under way. PSEB, in the meantime, has issued guidelines to facilitate the IT industry and encourage companies in exploring adoption of the measures in compliance with the requirements laid down by the EU Directive on Data Protection.

It is envisioned that by adopting these measures, the Pakistani IT and IT-enabled businesses would be able to improve their legal coverage in exporting their services and enter relationship for outsourcing of personal data from the EU to Pakistan. Baloch was happy with the patronage and encouragement expressed by the international businesses in the US & EU on becoming the first mover in the region to adopt compatible international best practices in the area of data protection.


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## Neo

*PKTCL, Plexus sign software maintenance agreement ​*
KARACHI (September 10 2008): Pak-Kuwait Takaful Company Limited (PKTCL) and Plexus has entered into a software maintenance agreement after Plexus successfully implemented its General Islamic Insurance Software at Pak-Kuwait Takaful Limited. To formalise the event, a signing ceremony was held at PKTCL headquarters in Karachi.

An annual maintenance and support agreement was signed between Abdul Rahman, Chief Operating Officer, Plexus and Zubair Ahmed, Chief Financial Officer, Pak-Kuwait Takaful Company Limited.

According to a press release issued here on Tuesday, PKTCL choose Plexus to develop and implement software for their core-business automation which is designed to meet the growth of its business. Plexus' solution has helped PKTCL team create operational efficiency and provided them with a robust technology platform to deploy new and innovative products quickly.

Speaking at the occasion, Imtiaz Bhatti, Deputy Managing Director Pak-Kuwait Takaful said: "Plexus insurance solution covers major insurance business processes starting from underwriting to claims to accounts and Re-Takaful. The system addresses the need for efficient and timely reporting that helps in identifying problem causes and assists management in making effective decisions. The ease of use of reports for senior management is also a plus point we observed while using this system".

Abdul Rahman, Chief Operating Officer, Plexus commented that "Successful implementation of Plexus software solution involved strong commitment from the leadership at PKTCL and consistent efforts from the entire business user."-PR


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## Neo

*Fesco needs $710 million to improve power system during 2008-17 ​* 
FAISALABAD (September 11 2008): The Faisalabad Electric Supply Company (Fesco) has required total investment of $710 million during 2008-17 to improve power distribution infrastructure through system rehabilitation, augmentation, and expansion; and relieve the power system from distribution bottlenecks and constraints; enable continued operation and maintenance in accordance with best international practices; and commercial operations.

According to offical sources, the Asian Development Bank (ADB) will provide financial assistance to Fesco for launching 'Energy Investment Plan'. According to ADB study, the distribution companies (DISCOs) including Fesco plan to fund 40 percent of this through self-generated funds and the rest through borrowing from the Asian Development Bank (ADB) and other financiers.

The federal government is actively looking for funds from the private sector and other agencies, but other financiers have not been confirmed. ADB's proposed multitranche financing facility (MFF) will act as the anchor for the investment plan. Financing of the immediate and urgent sub-projects planned for tranches 1 and 2 will provide additional revenues for DISCOs to carry out further system enhancements. The investment program support component, funded from ADB's Asian Development Fund (ADF) resources, will assist DISCOs to structure the sub-projects so they can attract investment from other sources.

The power sector entities, specifically the DISCOs, including Fesco lack the required level and mix of skills or support systems necessary to operate as independent entities covering the whole range of electricity business requirements. Improvements in corporate governance and support systems are required.

A support component is an integral part of the proposed Investment Program. The total cost of the Investment Program's support component is estimated at $10 million for the duration of the Investment Program. The objective of the component is to provide both resources and capacity to enable the DISCOs to improve and expand their current project preparation, implementation, and monitoring capabilities.

Support activities will be developed to cover (i) general power distribution business management, including project implementation, portfolio review, project management, and program management; (ii) technical operation and maintenance; (iii) accounting, financial and economic management, and financial reporting; (iv) contracting, procurement, and inventory management; (v) a management information system and economics of cost recovery and tariff setting; and (vi) project development, including policy development, a feasibility study, site identification, and project design.

This Investment Program focuses on power distribution. In order to enable the power to be effectively, reliably, and safely delivered to existing and new customers, the power distribution companies (DISCOs), including Fesco, in co-ordination with the Ministry of Water and Power have prepared the Power Distribution Sector Road Map, 2008 -17.

Based on current system demand and load growth forecasts in each region, the road map recommends short (priority), medium-, and long-term system improvement projects and details the investment needs. The objective of the road map is to show how the eight DISCOs, including Fesco can deliver reliable and high-quality power supply to the rising number of industrial, commercial, agricultural, and domestic customers.

IT IS CONSISTENT WITH THE GOVERNMENT'S POVERTY REDUCTION STRATEGY AND HAS THE FOLLOWING INTENDED OUTCOMES: 

(i) A more efficient power system;

(ii) high-quality power supply through a more reliable and stable system;

(iii) greater geographic coverage; and (iv) greater availability of and access to affordable electricity, by relieving the power distribution constraints.

The eight DISCOs were established as part of Pakistan's power sector unbundling in 1999. Among them, they cover the whole Pakistan, except areas serviced by the Karachi Electricity Supply Corporation, tribal areas, and the Northern Areas.

Each DISCO is required by incorporation and by regulatory requirements to (i) maintain and upgrade its current system; (ii) plan, design, and implement system expansion; and (iii) operate the system according to operational needs and distribution license conditions to ensure effective, reliable, and safe distribution of electricity from the supply points to customers' premises across its licensed territory.

According to ADB study, Pakistan's power sector faces difficulties in its efforts to support the government's strategy of increasing the electricity supply to its urban and rural population and of securing overall economic growth. The key problems are (i) lack of generation capacity, (ii) increasing constraints in the transmission and distribution systems, (iii) weak financial management and sustainability of the sector entities, and (iv) inadequate corporate governance structures for the power companies.

To support development of the power sector and encourage private sector participation, the government has approved power sector policies, strategies, and road maps to (i) ensure independent regulation of the power sector; (ii) complete the power sector unbundling of the Water and Power Development Authority (Wapda) by establishing four generations, one transmission, and eight distribution companies; (iii) begin the power sector privatisation program; and (iv) evaluate and optimise the fuel sources of the power sector to ensure energy security and minimise overall tariff requirements.

Implementation of the government's power sector strategy would have three main outcomes: (i) sector reforms to increase efficiencies and effectiveness and create an enabling environment for more private sector participation and investment; (ii) capacity building in all sector organisations, covering financial management, efficiency improvement, the clean development mechanism, and project management; and (iii) completion of large infrastructure development projects in generation, transmission, and distribution.

The Investment Program is closely linked to Pakistan's power sector strategy and is an integral part of the power distribution development program. The Investment Program will enhance the efficiency of the overall power distribution system; and provide an adequate and reliable power supply to a greater number of industrial, commercial, and residential customers.


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## Neo

*Let us have a homegrown agenda instead of an IMF programme ​*
EDITORIAL (September 11 2008): Asif Ali Zardari, in his maiden press conference after he took oath as the President of the country, categorically stated that Pakistan will not seek assistance from the International Monetary Fund (IMF). This, of course, does not imply that Pakistan has no need of assistance or that it would not hectically seek large injections of money from all its friends abroad.

It implies that the present government regards an IMF package with a deep concern for a reason that is well acknowledged by all: an IMF structural adjustment programme would be accompanied by a host of macroeconomic conditions, which are not only difficult to implement, but would almost certainly damage the country's political leadership in power in the eyes of the domestic public.

A 2008 study undertaken on structural conditionalities in IMF-supported programmes by the IMF's Independent Evaluation Office (IEO) noted that conditions attached to loans have become more focused, but found that there were still too many of them and that some conditions may not have been tied to the main goals of the programme.

These findings must be viewed with concern and could well be a deterrent for any country suffering from weak macroeconomic fundamentals, like Pakistan at present, to willingly opt for the IMF programme. And, needless to say these findings post-date the IMF staff revised guidelines issued in 2006 which recommended that, "adoption of new guidelines for conditionality has been motivated by an increasing recognition of the importance of several interrelated principles for successful design and implementation of Fund-supported programmes.

Chief among these are national ownership of reform programmes, parsimony in the application of programme-related conditions, tailoring of programmes to the member's circumstances, effective co-ordination with other multilateral institutions, and clarity in the specification of conditions."

Within this context it is relevant to note that the last IMF mission to Pakistan insisted that the budget deficit be brought down from 7.2 percent to 4.2 to 4.3 percent - a decline that would reduce the budgetary allocation on development while increasing the need to levy mini-budgets throughout the year either in the form of a raise in energy prices and oil prices in the country that would not reflect a decline in the international price of this commodity and cutting down subsidies on wheat and other essential kitchen items.

It reflects favourably on the negotiating skills of the present government that the IMF accepted its deficit target of 4.7 percent. However what is not to the credit of the present set of economic managers is the fact that the revenue side of the budget lacked clarity and international donors specially the World Bank are reluctant to extend support without stabilisation programme of the Fund.

However, the Bank could be persuaded to lend more than twice the funds sought if Pakistan's economic managers could draw a homegrown framework on similar lines as the Fund aims at boosting exports, curbing demand, thereby lowering the external account deficit and also lowering the budget deficit to below four percent.

This is indeed doable and will also be saleable to the people. Generally, Pakistanis make sacrifices when a popular leadership makes such demands, but they are annoyed at having a programme from abroad suddenly thrust on them. A local drawn-up programme expects sacrifice from top to bottom and not just from the masses.

Be that as it may President Zardari's statement with reference to not going on the Fund programme must not be viewed in the context of there being no need for foreign injections. Estimates place the figure at as high as 8 to 10 billion dollars. As of 2007-08 (July-March) total foreign debt was around 37.2 billion dollars. This represents a figure accumulated over the years.

In 2001-02 total debt incurred from all sources, bilateral as well as multilateral, for the year after Musharraf wholeheartedly supported Bush's war on terror, was 3.79 billion dollars. This figure was not exceeded during the next five years. Thus to generate 8 to 10 billion dollars in one year by tapping friendly countries like China, Saudi Arabia and other GCC countries would remain a considerable challenge.

One would hope that the government can access this large amount and that some of it is in the form of grant but based on past foreign injections this amount appears to be too optimistic. If he fails to generate the amount then President Zardari would have to revisit the promise he made during his first press conference as president of the country.

And, even if some of these inflows do materialise - these would be just one-off nature. Should President Zardari want to translate his words that we are making history into Zardari legacy, all he needs to do is to maintain a sharp focus on ways and means to boost exports and a forward thrust to obtain a double digit growth in agriculture output.

This extra food and other farm surplus will not only help the country attain food security, these will also immensely contribute towards generating exports and with value addition through agri-based industry the country can also meet the future economic challenges on a better footing.


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*Govt turns down World Banks consultancy offer ​* 
Friday, September 12, 2008

ISLAMABAD: The government gave cold shoulder to the World Bank for its proposed assistance programme in some of the ongoing agriculture development projects, sources privy to a meeting held in that regard told The News. 

The World Bank has shown interest in capacity building and other technical assistance projects dealing with food security, water efficiency and dairy-related matters, said a participant of the meeting after the deliberations at the Ministry of Food, Agriculture and Livestock on Thursday.

The projects in which the Bank had shown interest in investing include Crop Maximisation Project-II (CMP-II) of Rs8.013 billion, high efficiency irrigation system of Rs18 billion and dairy sector project worth billions of rupees.

A World Bank team, headed by its sector manager Adolfo Brizzi, in the meeting with Secretary MINFAL Mohammad Zia-ur-Rehman along other senior officials of the ministry, discussed the Banks assistance in MINFALs ongoing development projects funded under Public Sector Development Programme allocation.

The multilateral agencies are interested in development projects rather than in other programmes as the country is facing financial crisis and its foreign reserves are depleting. The federal government is likely to cut Rs100 billion of development projects funded under the PSDP of 2008-09 mainly due to financial constraints as the central bank refuses to give more loans to the government.

The MINFAL is only carrying out three foreign-funded projects by the Asian Development Bank (ADB) of Agribusiness of Rs3.27 billion, Agriculture Sector Development Loan of Rs10.26 billion and PARC of Rs2.96 billion.

Another participant of the meeting said that the bank is offering consultancies for investing in development projects and in consultancies the donors repatriate nearly half of their investment in the projects. The ministry, which is running 66 development projects including ongoing and new ones with estimated cost of Rs125.63 billion, has also closed down some of slow-going projects.


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*No cut in PSDP allocations for Balochistan ​* 
Friday, September 12, 2008

ISLAMABAD: The government has decided to expedite releasing funds for the development projects in Balochistan.

Owing to the lack of funds the most important projects including the Gawadar connectivity project (N-8, N-85) and roads that connect Punjab province to Pak-Iran border have been delayed.

This decision was taken after the meeting of Balochistan Chief Minister Nawab Aslam Raisani with Prime Minister Syed Youaf Raza Gillani in Islamabad onm Wednesday.However, keeping in view the backwardness of the most marginalized federating unit, the government has also decided no to place cut on development projects in Balochistan, a senior official told The News on Thursday.

PSDP allocation for Balochistan for this fiscal year is Rs42.5 billion. Besides, the Prime Minister has allocated further Rs3 billion for the uplift of the province.Finanace Minister Mr Naveed Qamar had announced to place cut of Rs100 billion on development budget.

Under the directives of Prime Minister the development project in Balochistan were reviewed in a high level meeting at the Planning Commission on Thursday. 

Chief Minister Balochistan, Nawab Aslam Raisani along with concerned Members of the Provincial Cabinet met with Deputy Chairman Planning Commission, M. Salman Faruqui and had a detailed discussion on the on going development projects in the province.

Mainly the progress on major highways that connect Balochistan to Sindh, Punjab to Iran border and within Balochistan was reviewed.All the concerned Federal Government representatives and contractors gave an update on the progress so far made on the projects. Faruqui directed the Ministries and contractors to expedite the work for timely completion of the projects and also set deadlines for the completion of some priority projects. 

Additional Chief Secretary Balochistan was appointed as the provincial coordinator to facilitate work on the projects.Deputy Chairman assured the Chief Minister of the timely release of funds for the on going projects and apprised him that according to the directions of the Prime Minister, no cut on PSDP allocation for Balochistan would be applied.

The issue of flood damages in the province also came under discussion whereupon the Deputy Chairman Faruqui assured the Chief Minister that Federal Government would release special funds to make up for those damages.

The Chief Minister and his colleagues expressed their full confidence and satisfaction on the steps being taken by the Federal Government to complete the development projects in Balochistan. 

Federal Minister for Population Welfare, Finance Minister Balochistan, Secretaries of Planning & Development Division, Finance, Communication, Chief Secretary Balochistan, Chairman NHA, Members of the Planning Commission, Director General FWO, and Commander Engineer NLC attended the meeting.


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## Neo

*Special force to be formed for industrial zones ​* 
Friday, September 12, 2008

KARACHI: Federal Interior Minister Rehman Malik has announced that a special elite force would be formed for the security of five industrial zones of Karachi with their separate industrial police stations.

He said this at an Iftar dinner hosted by Rauf Siddiqui, Sindh Industry and Commerce Minister at Sindh Governor House on Wednesday. A DIG rank policeman would head this system, and an SP would be positioned in each industrial zone of the city, he explained.

Sindh Governor Dr Ishrat ul Ebad said that business community can play an important role in bringing out Pakistan from current problems. The government has been involved in taking every step to overcome the difficulties of businessmen and it is heartening to say that the business community has full confidence in our efforts.


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## Neo

*Monetary growth slowed in 2007-08 ​* 
Friday, September 12, 2008

KARACHI: The main monetary aggregate grew by 15.35 per cent in the fiscal year ending on June 30, compared with 19.32 per cent growth in the previous year, and there was a small contraction in the first few weeks of July, central bank data showed. 

The M2 monetary aggregate contracted by 2.87 per cent from the beginning of the financial year on July 1 to July 26, the State Bank of Pakistan said. That compared with a contraction of 1.84 per cent between July 1 and July 28 last year, according to SBP data released late on Wednesday. 

According to analysts, a contraction in the broad money supply in July is a seasonal trend and money supply is likely to expand after August. Broad money (M2) is currency in circulation, plus other deposits with the central bank and total demand and time deposits, including residents foreign currency deposits. 

The government borrowed a total of Rs58.24 billion ($761million) from July 1 to July 26, out of which Rs30.07 billion ($393 million) was from the SBP and Rs28.17 billion ($368 million) from other banks, according to the data. 

In the July 1 to July 28 period last year, the government had borrowed a total of 45.39 billion from other banks and it paid Rs4.07 billion back to the SBP. The government has made a commitment to cut quarterly net borrowing from the central bank to zero, in order to help control inflation running at close to 25 per cent. The government borrowed Rs689 billion from the central bank for budgetary support in the 2007/08 fiscal year while it repaid Rs134 billion to other banks.


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## Neo

*Services export jumps by 18.9pc​*
ISLAMABAD, Sept 11: The services sector export is up by 18.93 per cent during the first month (July) of the current fiscal year over the corresponding month of last year, suggested data of federal bureau of statistics (FBS) here on Thursday.

Higher growth in services export proceeds was recorded mainly because of transportation, communication, construction, business and royalties and license fees.

An official source said that the liberalisation of services sector would help further increasing the exports from the sector during the months ahead.

An agreement on the services sector was also under consideration with the Chinese government to be made part of the operational Free Trade Agreement (FTA).

However, the export of services declined by 13.3 per cent to $3.589 billion in the year 2007-08 as against $4.140 billion of the previous year.

There are four ways or modes of supply of trade in services --mode-1 or cross border, mode-2 or consumption abroad, mode-3 or commercial presence and mode-4 or temporary movement (presence of natural person under the General Agreement on Trade in Services).

On the other hand, Pakistan has opened up its market for foreign services providers, particularly in the banking, insurance, telecommunication, retail and some other sectors, which were flooded by foreign services providers.

Statistics showed that import of services declined by 10.23 per cent to $690.725 million in July 2008 as against $769.442 million over the same month last year. Due to this decline in import of services, the deficit in the services sector has also declined by 22.01 per cent to $427.515 million during the month under review as against $548.134 million over the corresponding month of last year.

The services imports, which declined, include -- transportation, financial services, royalties and personal, culture services during the period under review this year over last year.

Statistics showed that an increase of 19.04 per cent recorded as services imports climbed to $9.892 billion in the year 2007-08 as against $8.310 billion over the previous year.

Due to this increase in imports, the deficit soared by 51.14 per cent to $6.302 billion in the year 2007-08 against $4.169 billion over the previous year.


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## Neo

*Two Chashma units to help generate 600 MW power​*
** Venture to cost Rs 139.011 billion with Rs 99.538 bilion FEC​*
ISLAMABAD: The Pakistan Atomic Energy Commission (PAEC) is ready to initiate the Chashma Nuclear Power Project Units 3 & 4 of 300 MW each with financial assistance of China and the Pakistani government. 

The total cost of the project that stands at Rs 139.011 billion includes Foreign Exchange Component (FEC) of Rs 99.538 billion and it would be completed within the stipulated period of eight years. The project consists of setting up total of 600 MW installed capacity consisting of two additional units with normal capacity of 300 MW each at the existing Chashma site in district Mianwali. Each unit will comprise of Nuclear Steam Supply System (NSSS), a turbine-generator set and the associated auxiliary equipment and installations, sources told Daily Times here on Friday. 

The NSSS consists of a reactor and two coolant loops connected in parallel to the reactor vessel. Each loop consists of a reactor coolant pump and steam generator. Sources further informed that the design of C-3 and C-4 units is essentially same as that of the under-construction C-2. The C-2 design is an improved version of C-1. These improvements are based on feedback from C-1 and safety enhancements to meet the requirements of the Pakistan nuclear Regulatory Authority (PNRA).

The sources further informed that the some site infrastructure was already developed needing only incremental upgrading. 

The government has already allocated Rs 200 million as token allocation in the Public Sector Development Programme (PSDP) 2008-09 for the project in review. 

About available facilities, the sources said that one nuclear power plant Chashma Nuclear Power Plant (CHASNUPP) unit-1 (C-1) of 300 MW was already operating while another similar unit C-2 was undergoing construction at the Chashma site. The cooling water for the two proposed 2X300 MW units would be obtained from the Chashma-Jhelum (C-J) Link Canal. 

The project would help the government to reduce dependence on imported fuels for power generation and diversifying energy sources by enhancing use of nuclear power technology. It will also help in maximising new power generation capacity requirement from indigenous resources i.e. coal, local gas and renewable as well as from nuclear. The project in review will be presented in the CDWP meeting scheduled to be held on 18th of this month. 

During the eight years of the projects completion, the breakdown of capital cost of the project will be as: Rs 15.381 billion with FEC Rs 12.489 billion in 2008-09, Rs 17.284 billion with Rs 12.729 billion as FEC in 2009-10, Rs 21.382 billion with FEC Rs 15.186 billion in 2010-11, Rs 26.719 billion with FEC Rs 19.122 billion in 2011-12, Rs 21.688 billion with FEC Rs 15.342 billion during 2012-13, Rs 16.363 billion with Rs 11.530 billion as FEC in 2013-14, Rs 12.646 billion with Rs 8.564 billion as FEC in 2014-15 and Rs 7.548 billion with Rs 4.576 billion as FEC in 2015-16.

The sources further informed that the existing power generation capacity is not sufficient to meet the ever-increasing demand of the country. Therefore, there is a dire need to install/commission additional capacity in the power generation system. The power demand projection based on growth rate shows that power demand will increase from 15,183 MW in 2007-08 to about 20,000 MW in 2010-11 in the WAPDA system and severe shortage of power is expected in the next two years. ijaz kakakhel


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## Neo

*US to provide 50,000T wheat to Pakistan in aid ​*
ISLAMABAD: The United States has agreed to provide 50,000 tonnes of wheat to Pakistan under a food-aid programme and shipment is likely in October or November, a Food Ministry official said on Friday. The agreement for 50,000 tonnes of wheat from the US under the PL-480 scheme has been finalised, said Shahid Hussain Raja, Additional Secretary at the Food Ministry, adding the agreement is expected to be signed over the next three days. Raja said the US had also agreed in principle to provide wheat worth $100 million on deferred payments, while discussions were in progress with the Canadian Wheat Board, which has made a similar offer for 500,000 tonnes of wheat.


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*Inflation accelerating in Pakistan: ADB ​*
TOKYO (September 13 2008): Inflation rather than an economic slowdown is the greatest risk and biggest policy challenge for developing countries in Asia, the head of the Asian Development Bank said on Friday. The Manila-based agency plans to slightly cut its 2008 average growth forecast for developing Asia, which excludes Japan, Australia and New Zealand, while boosting its forecasts for inflation.

"While global growth is rapidly slowing, the slowdown in emerging economies in Asia has been relatively modest. On the other hand, inflation is accelerating rapidly," ADB President Haruhiko Kuroda told Reuters in an interview. Its 2008 average growth forecast for developing Asia will drop slightly from its current projection of 7.6 percent while its 2009 estimate will likely fall to around 7 percent, down from 7.8 percent.

It will revise up its inflation forecast for developing Asia to around 7-7.5 percent this year from 5.1 percent. The ADB will issue updated growth and inflation forecasts on Tuesday. Its current estimates were made in April. Kuroda said he hoped inflation would slow to around 5 percent in 2009 but uncertainty remained over commodity prices and monetary tightening measures in some countries.

"Inflation is the greatest risk in emerging economies in Asia," Kuroda said, adding that while it has peaked in China, South Korea and Thailand, it is accelerating in countries like Vietnam and Pakistan. "Rather than supporting economic growth, the biggest policy challenge is tackling inflation."


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## Neo

*Outflow of foreign portfolio investment continues ​* 
KARACHI (September 13 2008): The foreign investors withdrew another $4.396 million from the Pakistan equity market during the week ended on September 12. According to the data released by National Clearing Company of Pakistan Limited (NCCPL), the cumulative outflow of this mode of investment increased to $359.633 million in the current year from January 01, 2008 to date.

"The outflow of foreign portfolio investment continued during the week mainly due to the offshore investors concerns over the geo-political situation and weakening economic indicators of the country," analysts believe. A massive outflow of foreign investment was witnessed on the first day of the week as the foreign investor withdrew over $6.498 million on Monday.

The negative trend continued as an outflow of $1.021 million and $2.028 million was recorded on Tuesday and Wednesday respectively. However, a fresh inflow of $5.152 million of portfolio investment was recorded on the remaining two days of the week, as a net inflow of $1.680 million was recorded on Thursday and $3.472 million on Friday.


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## Neo

*Seven more export processing zones to be set up shortly ​* 
SIALKOT (September 13 2008): The Export Processing Zone Authority (Epza) will set up seven more export processing zones in the country and Azad Kashmir in near future. Official sources told Business Recorder here on Friday that the proposed EPZs would be established at potential sites like Larkana, Multan, Sukkur, Faisalabad, Gwadar, Gilgit and Mirpur (Azad Kashmir) for boosting export-oriented industries of these areas.

The Epza has already announced highly attractive incentives and concessions for business community for setting up industrial units in the EPZs for further accelerating the pace of export activities aimed at enhancing exports volume of the country.

Incentives offered include 100 percent ownership rights, 100 percent repatriation of capital and profit, no minimum or maximum limit for investment, duty-free import of machinery, equipment and material, no sales tax on input goods including electricity and gas bills, foreign exchange control regulation of Pakistan not applicable, freedom from national import restrictions, EPZ manufacturer would be treated at par with bonded manufacturers in tariff areas for any future incentives to be announced for the exporters, relief from double taxation subject to bilateral agreement, inter-unit transfer of finished goods among exporting units.

Facilities available include: one-window service and simplified procedure, availability of infrastructural facilities like water, electricity, gas and telecommunication and peaceful, secure and environmentally protected pollution free work area has been ensured in export processing zones of the country.

The Sialkot Export Processing Zone (SEPZ) six units are successfully functioning in SEPZ, and Epza is stressing the business community of Sialkot that they should focus their attention on setting up industrial units in Sialkot Export Processing Zone (SEPZ) and enjoy the benefits. The setting up of industrial units in SEPZ would not only help in doubling the export volume but would also generate employment opportunities in the area.

The location of SEPZ is very important because some adjoining small industrial areas like Daska, Hafizabad, Wazirabad, Gujrat and Gujranwala would benefit and promote their units. Besides, Sialkot Dry Port and Sialkot International Airport are also located on the same track, sources added.


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## Neo

*FDI in telecom sector dips to 21 percent in fiscal year 2007-2008: Chairman PTA ​* 
ISLAMABAD (September 12 2008): Foreign Direct Investment (FDI) in telecom sector has declined from 27 per cent in 2007-08 to 21 per cent in 2007-08, Chairman Pakistan Telecommunication Authority (PTA) Dr Muhammad Yaseen told newsmen here on Thursday at a press briefing.

Talking to newsmen at an Iftar reception hosted by the PTA, Dr Yaseen said that total FDI in telecom sector was $5 billion during last five year but it has declined in 2007-08. He said that PTA would block all the illegal/unverified mobile connections by September 30, adding that so far over 7.1 million unverified connections has been blocked and data of remaining subscribers would be verified by September 30.

Giving details about the revenue contribution, he said that PTA has contributed Rs 47.426 billion in Federal Consolidated Fund (FCF) from 1998-99 to 2007-08, which includes Rs 2.432 billion contribution of 2007-08 to USF and research and development account. The contribution to the FCF was Rs 5 billion during 2007-08, he added.

He said that telecom industry has contributed more than Rs 111 billion to national exchequer in different heads of direct and indirect taxes, including Rs 44.6 billion GST in 2007-08 and Rs 19.2 billion activation tax from mobile companies in 2006-07.

He said that mobile banking is another contribution of telecom sector that will further facilitate the prompt, reliable and accurate banking transactions on the go with minimum costs 24 hours 7 days of the week. The telecom sector, he said has contributed positively to the employment by providing over I million direct and indirect jobs and that was the result of market liberalisation.

After liberalisation, he said telecom sector has shown tremendous growth with overall teledensity going beyond 59.8 1 per cent at the end of July 2008 as compared to mere 2.3 per cent in 1999-00 and surpassed all the regional neighbours.

He claimed that coverage of cellular mobile services has reached to 91 per cent population and revenues of cellular companies grew by 22 per cent in 2007-08 and reached at Rs 182 billion. He said that PTA was striving to convince the leading manufactures of the world to establish their facilities in Pakistan so that impact of telecom sector import, $1.3 billion in 2007-08, could be minimised on Pakistan economy.


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## Neo

*Taking electricity to northern areas ​* 
ARTICLE (September 13 2008): The mountainous Northern Areas have also been struck by the regular loadshedding, as other regions of the country, adversely affecting the normal life and trade in its main towns. According to recent reports, trade activities at Sust, the busiest town and trade hub near Pak-China border, as well as various offices in the Gojal valley are facing power shortages and outages.

Similar is the situation in Gilgit city, the headquarters of the Northern Areas. One of the major issues facing the government is that of raising the quality of life of the people of the Northern Areas who are currently deprived of even the basic amenities like electricity. Shockingly, Pakistan is ranked one of the lowest, 152 among 208 countries of the world, in terms of per capita consumption of electricity.

The latest global data of 2007 shows 453 kWh per capita annual consumption in Pakistan, that is even lower than Bolivia and Mozambique. Compared to this figure, per capita yearly consumption of electricity in the Northern Areas is just 44 kWh, the lowest in any part of the country. The federally administered Northern Areas, populated by about one million, are spread over 72,496-sq. km.

There are about 650 towns and villages, widely scattered, with population density of 10 persons per sq. km. Primarily, the electricity is used here for lighting of households, schools and dispensaries etc. Still, only 45% of the population has access to electricity, which, unfortunately, is not even available to some of the valleys at all.

Nonetheless, the demand is increasing at a fast rate, as tourism, trade and the SMEs develop in major towns. The national grid is at a distance of 350 km from Gilgit and its extension to the Northern Areas is neither practical nor justifiable. The electricity network here is, therefore, being operated in isolation, and in many remote areas even the transmission lines and grid stations do not exist.

Today, total installed capacity for power generation in the Northern Areas is around 102 MW. Major source of power generation is hydroelectric, of cumulative capacity of 95 MW, whereas thermal power generation is to the level of over 7 MW only. These diesel generators were installed, mostly in Gilgit city, to meet the peak demand of power, and are of great help to reduce the present loadshedding in the surrounding areas.

Due to logistic and financial factors involved in transportation of diesel, further increase in thermal power generation capacity is not feasible. The Northern Areas present enormous hydropower potential from River Indus and its various tributaries with steep gradients. A network of small, mini and micro hydropower stations, generally in the wide range of 50 kW to 4 MW, has been constructed.

There are more than 400 mini and micro hydropower stations operating in remote localities. In addition, there are many small hydropower stations, up to a maximum capacity of about 11 MW installed in Gilgit. Indeed, it is a tremendous job to provide electricity to the Northern Areas as it is a region of high mountains and narrow valleys where infrastructure is practically non-existent.

Furthermore, the widely varying topography, geology and hydrology, coupled with extreme weather conditions, make the construction of power stations difficult. The stability and reliability of power supply is also impacted in the wake of frequent floods and landslides.

Thus the available power supply is optimal during summer, but the season covers three months only. During the remaining 9 months of the year the net electric supply is reduced to almost half of the installed capacity due to non-availability of water for power generation.

Administratively, the Northern Areas consist of six districts namely Gilgit (including Hunza and Nagar valleys), Skardu (including Shigar and Khaplu valleys), Diamer (Chilas valley), Ghanche (Baltistan), Ghizer and Astore. There are 35 hydroelectric power stations of cumulative installed capacity of 34.76 MW in Gilgit district.

Thermal power generation is limited to 4.3 MW installed capacity. Power demand at present is estimated to be net 30 MW, which would further increase to 54 MW by the year 2010. To narrow the gap in supply and demand, three hydel power stations, Naltar IV of 18 MW, Pari of 1 MW and Cane of 3 MW installed capacity, are under construction at present.

The projects under construction include a 1-MW hydropower station at Sermik (Skardu), a 2-MW station at Talu-Rondu (Baltistan) and a 1-MW station at Tolti (Shigar). Other approved projects, currently in various stages of implementation, are 1-MW power station at Shumayal (Skardu), 1-MW at Kindas (Ghanche), 2-MW at Thalley (Ghanche), 1-MW at Hassanabad (Ghanche), 2-MW at Gultari (Skardu), 1-MW at Kindrik (Skardu) and 2-MW capacity at Bordas (Balgher).

To cater for increasing demand of electricity, a broad-based plan for the development of small hydropower generation is being implemented. Many potential hydel sites, up to 50 MW capacity projects, have been identified and techno-economic feasibility studies prepared.

These include 18-MW project at Hanzel (Gilgit), 3-MW at Juglot-Sai (Gilgit), 2-MW at Misgar (Hunza), 2-MW at Pissan-Minapin (Nagar) and 1.3-MW project at Cane-Kargah. Other approved projects are 2-MW at Nolti, Bathrez (Ghizer), 4-MW at Pakora Gudai (Astore), 2-MW at Darmadar (Ghizer), whereas three projects are to be constructed in Diamer district, namely Darel-Chilas III of 1.5 MW, Khanbary of 2 MW and Botogah-Chilas of 1 MW capacity.

The government has recently approved Naltar III and Naltar V hydropower projects of 16 MW and 14 MW capacity, respectively, to be installed near Gilgit city, for which financial resources to the tune of Rs 3 billion have been committed. Wapda is also actively involved in contributing towards addition of power generation capacity in the Northern Areas.

WAPDA is constructing Satpara dam and hydropower station of 13 MW in Skardu, in three phases, whereas design and engineering is in hand for Basho project of 28 MW capacity, which will be connected to Skardu and other upstream valleys through 66 kV transmission line.

Likewise, Harpo hydropower projects of phase I of 15 MW and phase II of 33 MW capacity are to be developed in Skardu district. Also, planning work is being done by Wapda for developing a power station on Phunder Lake, Ghizer.

Development of hydropower projects in the Northern Areas will be accelerated if Pakistan can build the capacity to manufacture and install small power stations of above 5 MW. The same is lacking at present though various items of electrical and mechanical equipment and related materials are being produced locally, and the infrastructure for implementing small hydel schemes is available.

The requisite advanced technology is essentially required for achieving the purpose of creating indigenous capability for design, engineering and manufacturing of equipment for power plants. The government, therefore, needs to take initiative in this direction, pursuant to its policies of developing far-flung areas and promotion of renewable energy.

(The writer, former Chairman of State Engineering Corporation, is currently on the Board of Directors of National Engineering Services Pakistan Pvt Ltd--NESPAK, a company of the Ministry of Water and Power)


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## Neo

*Technologies being introduced to utilise water resources judiciously ​*
ISLAMABAD (September 13 2008): The government is in process of introducing technologies to judiciously utilise and manage the water resources in Southern Indus Plain through conducting pilot projects and disseminating research findings to the farmers at their fields.

Under a project, a study on refinement of skimming well technology was carried out by installing wells in the lower reaches of lower Indus basin and data were collected for fresh and saline interface movement. It was suggested that continuous pumping of less than five hours will have not any threatening effect on up-conning of under lying saline layer.

According to an official at Ministry of Science and Technology here on Friday, a survey of private tubewells in the districts Hyderabad, Badin, Mirpurkhas and Nawabshah revealed majority of tubewells were operated for 7-12 hours (50-56 percent) and with excessive discharge (65-83 percent).

Similarly, the official said a survey of Indus Delta from Thatta to Keti Bunder was carried out by installing observation wells and collecting and analysing water samples for probable sea water intrusion in the coastal and agricultural lands.

He said research was also conducted on the use of saline groundwater after making it marginal by mixing fresh groundwater and canal water in different ratios, for better crop yield.

The official said different water conservation technologies and practices such as bed and furrow irrigation, zero tillage, laser land levelling, growing low delta crops and irrigation scheduling are also being evaluated at the farmers' fields, with their participation and the results of these studies showed better crop yield with maximum water use efficiency. The research study on evaluation, monitoring, and management of municipal wastewater, for crop production is also in progress, he added.


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## Neo

*Widening of trade deficit ​*
EDITORIAL (September 13 2008): There seems to be no end to the negative developments in the external sector. According to the data released by the Federal Bureau of Statistics (FBS) on 10th September, 2008, with imports outstripping the pace of export growth by a wide margin, the country's trade deficit ballooned to an unprecedented level of $3.522 billion during the first two months (July-August) of the current fiscal year, up by a whopping 47.67 percent from $2.385 billion over the corresponding period of 2007-08.

The import bill reached $7.011 billion in July-August, 2008 as against $5.321 billion in the same months last year, indicating a sharp increase of 31.77 percent. Export proceeds, on the other hand, recorded a lower increase of 18.85 percent to stand at $3.489 billion as against $2.936 billion in the same period of the previous year.

On monthly basis, export growth was considerably lower at 8.16 percent while imports showed a growth of 26 percent during August, 2008 over the corresponding month of last year. Another notable feature of the trade data was a decline of 16.86 percent in exports, down from $1.905 billion in July, 2008 to $1.584 billion during August, 2008.

While higher imports of luxury goods, including mobile phones, vehicles and the bulging oil bill continued to impact the total bill during the year, export growth slowed down because of steady decline in sales of textiles and clothing, which are the main export commodities of the country.

An increase of over 47 percent in trade deficit during the first two months of the current fiscal year, is indeed disturbing. If the present trend continues, Pakistan could end up with a trade deficit of over $21 billion during 2008-09 which would be impossible to cover through normal inflows of home remittances, foreign investment, etc with the result that the country may have to face the consequences of further deterioration in its current account.

It may be mentioned that the government had fixed an export target of $22.10 billion for 2008-09 while imports, for which no target was prescribed, are increasing at a much faster rate and making things difficult for the policy makers.

In order to restrict the level of imports, the government has recently imposed additional customs duty on more than 370 items and the State Bank was quick to enhance LC margin to 100 percent on luxury items. Steep depreciation of the rupee in the recent months could also decrease the demand for imports.

Decreasing trend in oil prices in the international market may reduce the oil import bill which had crossed $11 billion mark last year, the highest in the country's history. However, certain items like fertilisers and wheat have to be imported in greater quantities to cope with domestic shortages.

Although it is too early to project the impact of the relevant factors on the trade balance, the situation needs to be closely watched in order to narrow the gap in the external sector to sustainable limits in the remaining part of the current fiscal year.

This may entail still harsher measures like further depreciation of the rupee and tightening of monetary and fiscal policies which could curb import demand. In our view, the country cannot afford to enjoy the luxury of importing commodities which are more than double the value of its exports, especially at a time when its foreign exchange reserves are also depleting fast and could touch dangerously low levels in a few weeks.

Securitisation of remittances, privatisation proceeds and loans and assistance from IFIs are one-off or at best temporary measures to tide over a precarious situation. These are, by no means, a substitute for a long-term strategy needed to be urgently put in place to keep the country solvent by restoring a proper balance in its external accounts.


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## Neo

*Consolidation phase expected in financial sector ​* 
Saturday, September 13, 2008

KARCHI: After four years of mergers and acquisitions, consolidation activities in the domestic banking sector has remained stagnant in 2008, though a fresh wave of mergers and acquisitions is likely to be initiated from the year 2009-10, financial analysts believe.

Almost all banks have fulfilled the minimum paid-up capital requirement of Rs6 billion set by the State Bank of Pakistan (SBP) by the end 2009, which is the major reason of slow activity in the consolidation of financial sector this year, said the analysts while spelling the rationale.

According to the State Bank of Pakistans (SBP) 10-year Strategic Plan, there is a possibility that the paid-up capital requirement may be increased to $300 million. However, we were assuming a timeline lasting till 2017 for the implementation of the said rule, Mohammad Imran of First Capital Equity Limited said.

However, he said it is quite surprising that the SBP provided timeline requires banks to raise their paid-up capital by almost four times to Rs23 billion by 2013, approximately Rs4 billion a year from 2009.

By looking at the current profit generation capabilities of banks coupled with lower economic growth possibilities, we feel this requirement is quite a hard task for banks to meet, he said.

He said that as per their calculation, only large banks are on the safe side. 

He said on the basis of tier 1 capital, among top 8 listed banks, Standard Chartered Bank Pakistan (SCBP) and NIB have already fulfilled the requirement of Minimum Capital Requirement (MCR) and assuming their CAMELS-S rating of 1&2, these banks are adequately capitalized. NIB issued TFC of Rs4billion in Feb 2008 therefore seems on the safer side.

CAMELS is an international bank-rating system where bank supervisory authorities rate institutions according to six factors. The six factors are represented by the acronym CAMELS. 

The six factors examined are: C - Capital adequacy, A - Asset quality, M - Management quality, E - Earnings, L - Liquidity and S - Sensitivity to Market Risk.

Bank supervisory authorities assign each bank a score on a scale of one (best) to five (worst) for each factor. If a bank has an average score less than two it is considered to be a high-quality institution, while banks with scores greater than three are considered to be less-than-satisfactory establishments. The system helps the supervisory authority identify banks that are in need of attention. 

National Bank is the safest among all banks with Capital Adequacy Ratio (CAR) of 20.1 percent and tier 1 capital of Rs72billion. Allied bank and BAFL rank as the least capitalized with CAR of 9.3 percent and 9.9 percent. Analysts viewed that a combination of right shares and bonus will meet this shortfall for these banks without compromising loan book growth. 

In order to meet the requirement, a fresh wave of mergers and acquisitions by the domestic banks is likely to be initiated from the year 2009-10. 

Apart from top 8 banks, all banks may opt for the consolidation. Though, there is a possibility that the banks having strong overseas investors (like RBS, SAMBA and GE Corporation) could inject further equity in these banks.

Moreover, financial analysts said that looking at the sectors profitability profile, it is evident that the return on fresh equity will be substantially lower than last 4 years average return. From shareholders point of view, it also reflects that now the premium on acquisition is not high as it used to be in last 2 to 3 years (on average PBV of 4.8 percent). 

They said that from advances growth point of view, the bank which has higher CAMELS-S rating will require to reduce its risky exposures in addition to increase its capital base, which will definitely hurt its advances growth. 

Our initial calculations in this regard indicate that our long-term (next 10-year) advances growth assumption of 15 percent carries a downward revision risk, analysts said.


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## Neo

*Weekly inflation rises by 29.3pc ​* 
Saturday, September 13, 2008

ISLAMABAD: The Federal Bureau of Statistics (FBS) on Friday reported that weekly inflation measured by Sensitive Price Indicator (SPI) year-on-year of 53 daily use kitchen items for week ending on September 11, 2008 has increased by 29.38 per cent as compared to the corresponding week of the last fiscal. 

The bulletin revealed that inflationary pressure during the week under review was higher on lowest income group earning below Rs3,000 per month. For them, SPI registered an increase of 30.71 per cent. Income group Rs3,001 to Rs5,000, it stood at 29.55 per cent, for Rs5,000 to Rs12,000 it was at 29.32pc and for income earners of more than Rs12,000, it stood at 29.76 per cent as compared to the same week of the fiscal year 2007. 

According to the SPI bulletin, year-on-year the rise in the prices of some necessities and kitchen items was exorbitant. These items were bananas, onions, chicken, potatoes, LPG, tomatoes, potatoes, gur, firewood, firewood, eggs, beef, fresh milk, rice, wheat flour, ghee, wheat, petrol, diesel and all type of pulses.

The bulletin on SPI, based on data collected for about 53 items from 17 centers, showed that 16 items registered increase whereas 15 items showed decline while prices of 22 items remained unchanged. In a span of one week, prices of gur up by 3.45 per cent to Rs36.86 per kilogram, LPG by 2.39 per cent to Rs975.53per 11 kg cylinder, wheat 2.34 per cent Rs21.89 per kg, sugar 0.65 per cent to Rs32.36 per kg, beef 0.61 per cent to Rs136.44 per kg, wheat flour 0.25 per cent to Rs23.78 per kilogram as compared to previous week.

Further analysis of the data revealed that year-on-year basis; some items are dearer by double digits. These include; LPG which was costlier by 64 per cent, mustard oil 59 per cent, wheat 57 per cent, wheat flour 47 per cent, washing soap 42 per cent, bath soap 40 per cent, firewood 23 per cent and beef price up by 13 per cent over corresponding week of the last fiscal.

Prices of 15 items decreased, yet compared to the prices of corresponding week of last year, items which showed increase in their prices were; masoor pulse dearer by 120 per cent, rice IRRI-6 dearer 93 per cent, kerosene 81 per cent, Bananas 74 per cent, rice basmati (broken) 64 per cent, gram pulse 57 per cent, vegetable ghee loose 49 per cent, potatoes 44 per cent, egg 27 per cent, onions 19 per cent and chicken farm by 16 per cent over corresponding week of the last fiscal. 

Though the price of 22 items remained unchanged yet the prices of some items as compared to corresponding week of the last week are still dearer by double digit. These items include diesel which was costlier by 71 per cent, petrol 62 per cent, tea packet 45 per cent, vegetable ghee (tin) 43 per cent, plain bread 34 per cent, curd 23 per cent, fresh milk 21pc and powder milk prices up by 11pc.


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## Neo

*Agenda revised: CDWP to take up 52 projects worth Rs 322.460 billion now​*
** Foreign exchange component of projects amounts to Rs 117.966bn​*
By Ijaz Kakakhel

ISLAMABAD: The agenda for the first meeting of Central Development Working Party (CDWP) of the current financial year 2008-09 to be held on Sept 18 has been revised and now it is likely to take up 52 development projects worth Rs 322.460 billion including foreign exchange component (FEC) worth Rs 117.966 billion. 

Planning Commission Deputy Chairman M Salman Faruqui will preside the meeting in projects for 14 sectors including agriculture and food, devolution and area development, education, water resources, energy, environment, forestry and wildlife, governance, health, Higher Education Commission (HEC), information technology sector, mass media/culture, social welfare, transport and communication sectors. 

Some of the projects of national importance in the CDWP are the Chasma Nuclear Power Project units 3&4 worth Rs 139.011 billion, establishment of 43.5 MW Jagran Hydropower Station (Phase-2) District Neelum AJK worth Rs 5.003 billion with Rs 2.222 billion as FEC. Agriculture Sector Development Loan Project Phase-II worth Rs 10.029 billion and Indus Water Sector Capacity Building and Advisory Services Project (WCAD) with a cost of Rs 2.546 billion. 

The CDWP can only approve projects costing up to Rs 500 million and projects costing above this limit must be approved by the Executive Committee of the National Economic Council (ECNEC). Therefore, the CDWP will recommend projects costing above Rs 500 million to ECNEC for further approval.

The revised CDWP agenda obtained by Daily Times shows that the agriculture and food sector consists of three projects worth Rs 10.289 billion. The devolution and area development sector consist two projects worth Rs 872.391 million having Rs 402.68 million as FEC. 

The education sector has five projects worth Rs 1.848 billion. The agenda shows six projects for water resources sector with a total cost of Rs 11.364 billion with FEC worth Rs 2.546 billion. 

The energy sector consists of 11 projects worth Rs 267.936 billion with Rs 103.030 billion as FEC. The environment sector consists of four developmental projects worth Rs 1.956 billion with Rs 1.039 billion FEC. The revised CDWP agenda further revealed that the forestry and wildlife sector has a single project namely, Rehabilitation of denuded forest areas through sowing and planning and development of farm/social forestry with community participation in northern areas, with a cost of Rs 170.869 million having Rs 1.200 million as FEC. 

The governance sector consists of three projects worth Rs 6.163 billion with Rs 190 million as FEC. The health sector has a single project worth Rs 796.050 million with Rs 787.500 million. 

The Higher Education Commission (HEC) has eight development projects with a total cost of Rs 5.912 billion having Rs 1.731 billion as FEC. The information technology sector has single project namely, IT training for the elected lady representatives: Phase-II, worth Rs 97.288 million. The mass media, culture, sports and tourism sector has single project namely, Establishment of Pak China Friendship Center at Islamabad (Modified PC-1), worth Rs 1.602 billion. The social welfare sector also has single project namely, Communication for effective social services delivery (CESSD): A community participation project, Phase-II, worth Rs 560.500 million, with Rs 560.500 million as FEC. 

The transport and communication sectors have five development projects worth Rs 12.888 billion with Rs 6.450 billion as FEC.


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## dr.umer

*E-banking transactions grow by 32% to Rs 13.9 Tln in FY08​*
KARACHI, Sept 13 (APP): Electronic Banking (E-banking) is getting increasingly popular as the number and value of E-banking transactions in the country have shown a significant growth in the last fiscal year. 

According State Bank of Pakistans report titled  Retail Payment Systems of Pakistan (Paper-based and E-banking) , a total of 124.6 million E-banking transactions valuing Rs 13.9 trillion were recorded during the last fiscal year (FY08), showing a growth of 25.4% in numbers and 32.3% in amount when compared with the fiscal year (FY07). 

During FY08 , the volume and value of e-Banking channels (POS, Internet and Call Center/IVR , and Mobile) transactions in the country reached 20.0 million and Rs 120.1 billion depicting an increase of 15.6 percent in numbers and 31.9 percent in value as compared to 46.0 percent in numbers and 63.8 percent in value in the previous fiscal year. 

According to the Report , the quantity of active (in-use) debit / credit cards during FY08 reached at 6.7 million, which shows an aggregate growth of 15.8 percent compared to 53.7 percent increase in the previous fiscal year. The quantity of credit cards has in fact decreased by 8.9 percent as compared to 74 percent increase in the previous fiscal year reaching at 1.5 million. In contrast, the debit cards registered a growth of 24.7 percent as compared to 45.3 % increase in previous fiscal year and stood at 5.0 million. 

The Report pointed out that the total number of Automated Teller Machines (ATMs) during FY08 reached at 3,121 registering a growth of 21.0 percent as compared to 17.0 percent increase in the previous fiscal year. The volume of Real Time Online Branches (RTOB) during FY08 reached at 5,282 and recorded a growth of 26.4 percent as compared to 5.0 percent decline in the previous fiscal year. The volume of Point of Sales (POS) reached at 55,853 showing a growth of 21.0 percent in number as compared to 4.0 percent increase in previous fiscal year. 

According to the Report, during FY 08 the volume and value of ATM transactions in the country reached 67.9 million and Rs 453.0 billion showing an increase of 31.8 percent in numbers and 43.2 percent in value as compared to 47.1 percent increase in numbers and 49.9 percent in value in the previous fiscal year. Moreover, the volume and value of RTOB transactions in FY08 reached 36.9 million and Rs 13.3 trillion showing an increase of 19.9 percent in numbers and 32 percent in value as compared to 46.2 percent increase in numbers and 49.0 percent in value in the previous fiscal year. 

The Report said that the volume and value of paper-based transactions in the country during FY08 reached 334.4 million and Rs.137.4 trillion registering an increase of 3.1 percent in numbers and 20.9 percent in value as compared to 48.1 percent increase in numbers and 29.4 percent in value in the previous fiscal year. 

The Report said the overall total retail payments in the country during FY08 reached at 459.0 million and Rs.151.3 trillion respectively registering an increase of 8.4 percent in number and 21.8 percent in value as compared to 17.2 percent increase in numbers and 35.0 percent in value in FY07. 

It may be mentioned here that retail payments are mainly made by consumers and between commercial counterparts to purchase goods and services. At the retail level, most transactions use paper based instruments. However, electronic mode is also getting momentum with the passage of time. Retail payments in Pakistan are comprised of various paper-based and electronic instruments from conventional cheques to modern smart cards.


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## dr.umer

*Growth target to be cut in new integrated economic package​*
ISLAMABAD: With the deliberations of Planning Commission's Panel of Economists, the government will announce an integrated economic package next month with revised macro-economic targets, including cutting the GDP growth below five per cent.

The Panel of Economists, comprising eminent economists and members of academia and headed by Dr Hafeez A Pasha, started two-day deliberations here on Saturday as they got briefings from all secretaries of economic ministries about the latest developments in their respective areas. 

They would hold their internal meeting today (Sunday) for finalising their recommendations to put the economy back on the right track. They also held meeting with Prime Minister Syed Yousuf Raza Gilani.

The new package will give a clear-cut roadmap to apprise the donors and the nation of its future course of action on immediate, short and long-term basis for stabilising the ailing economy.

"We have formally kick-started brain storming sessions with eminent economists of this country as the government wants to come up with stabilisation package within one month period," Deputy Chairman Planning Commission, Salman Faruqui, told a couple of journalists after attending daylong maiden deliberations of the Panel of Economists constituted by the Planning Commission (PC) to get input on overall economic situation here on Saturday evening.

The PC deputy chairman said that the government was so far doing good work in "piecemeal" but now they have decided to put in place an integrated programme for achieving stabilization of the national economy.

The country's eminent economists, he said, would present various options before the government for tackling the challenging economic situation on the macroeconomic front as well as monetary and fiscal policies. He said the panel of economists constituted by the Planning Commission and Economic Advisory Council (EAC) under the chairmanship of Finance Minister Syed Naveed Qamar, would hold joint meetings in future to firm up the stabilisation programme.

He said the Finance Ministry was preparing a separate stabilisation programme and these two formulated programmes would be integrated into one for putting in place an effective programme for short as well as on long-term basis.

He said the comprehensive package would provide out of box solutions to the existing energy and food crises and giving a roadmap to overcome loadshedding till December 2009.

The ongoing exercise is aimed at revising all macro-economic targets including the GDP growth as estimates showed that cotton production was not up to the mark. The production of rice and upcoming wheat crop is expected to achieve the envisaged target but lower cotton production will hamper the overall growth of the agriculture sector.

"The continuous loadshading and surge in mark-up will also hamper growth of large scale manufacturing so we will have to revise downwards the overall GDP growth from 5.5 per cent to below 5 per cent for 2008-09," a federal secretary who briefed the panel of economists told The News outside the Planning Commission Auditorium on Saturday afternoon.

The major challenge for the government, the secretary said, is to stabilise the economy at the first stage as all economic indicators are in nosedive mode and the immediate requirement is to reverse this trend.

The panel was further informed by the secretaries of economic ministries that Islamabad would be able to get over $5 billion package from Saudi Arabia in the shape of deferred oil payment, cash assistance and fertilisers on deferred payments.

"There is expectation of holding another follow-up meeting between officials of Saudi Arabia and Pakistan probably after Eid either in Islamabad or Jeddah in order to finalise the modalities," said the sources while quoting secretaries as saying.


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## Neo

*Remittances rise 23pc to $1.22bn ​* 
Sunday, September 14, 2008

KARACHI: Remittances sent home by overseas Pakistanis continued to rise as $1,219.51 million was received in the first two months (July-August) of the current fiscal year 2008-09, showing an increase of $234.31 million or 23.78 per cent over the same period of the last fiscal year.

According to the State Bank of Pakistan (SBP), the amount of $1,219.51 million includes $0.06 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

The monthly average remittances for the period of July-August, 2008 comes out to $609.76 million as compared to $492.60 million during the same corresponding period of the last fiscal year, registering an increase of 23.78 per cent.

The inflow of remittances in the July-August, 2008 period from USA, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UAE, UK and EU countries amounted to $319.84 million, $264.64 million, $206.70 million, $201.45 million, $74.82 million and $32.70 million, respectively as compared to $265.33 million, $202.40 million, $142.88 million, $156.88 million, $82.81 million and $28.88 million, respectively in the July-August, 2007 period.

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the first two months of the current fiscal year 2008-09 amounted to $119.30 million as against $105.60 million in the same period last year, SBP said.

During the previous month (August 2008), Pakistani workers remitted an amount of $592.30 million, up $102.79 million or 21 per cent when compared with an amount of $489.51 million brought into the country in August 2007.

The inflow of remittances into Pakistan from almost all countries of the world increased last month as compared to August, 2007. According to the break up, remittances from USA, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UAE, UK and EU countries amounted to $151.45 million, $131.38 million, $101.39 million, $101.35 million, $32.78 million and $15.63 million, respectively as compared to the corresponding receipts from the respective countries during August 2007, ie $137.34 million, $95.85 million, $72.58 million, $79.53 million, $43.31 million and $14.07 million.

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during August, 2008 amounted to $58.31 million as compared to $46.70 million during August, 2007.

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## Neo

*Situation in Fata depressing businessmen​*
KARACHI, Sept 13: The uncertainty triggered by increasing US attacks in the tribal areas is hurting business sentiments in Karachi, Lahore and other cities, but businessmen are not forthcoming with a direct and straight comment because of obvious reasons.

Few warn that outcome of the present firework would emerge after some time, but many believe that business and economy in Pakistan is in its worst phase and any further worsening would deteriorate the situation.

In private, the businessmen agree with the assessment given by politicians, academics and well known analysts that US administration is applying all pressure on Pakistan to get some tangible results to show to US electorate before next American presidential elections.

They believe that extremists have been using women and children as human shield and their casualties in Pakistan-Afghan border from US intrusion is stimulating strong anti-American feelings which has a potential of turning into a strong anti-Islamabad wave and may cause destabilisation.

Many businessmen believe that business sentiments in Pakistan were shaken by the killing of PPP leader Benazir Bhutto on Dec 27 and it never recovered from that shock.

There are very few occasions to enjoy, a business leader recalled while reminding Feb 18 election results, the formation of a coalition of major political parties. That was followed by depressing events.

It has all along been dull and drab, and the situation has remained uncertain for the last eight or nine months, said a corporate leader who added that the flight of capital from Pakistan was witnessed on an unprecedented scale. Multinational corporations, international organisations, world sport bodies and business bodies are reluctant to hold events in Pakistan.

Imagine Harvard alumni from South Asia planned to have their annual session in Pakistan in December 2007, a well known corporate leader said to point out that the event was held in New Dehli.

A task force on Small and Medium Enterprises of Organisation of Islamic Countries (OIC) held its meeting in Bangkok last month instead of Pakistan because of the reasons known to all.

No impact at all, remarked Akbar Sheikh, a former chairman of All-Pakistan Textile Mills Association, as he is convinced that business sentiment in Pakistan, at present, is at its lowest ebb to the extent that it cannot be pulled further down. Why should we bother on implications of US intrusion in our territory when Pakistans industry has been given a crippling blow by the budget and post-budget measures, he remarked in a telephonic conversation from Lahore.

Nonetheless, as a Muslim, a Pakistani and as a human being my heart bleeds on killing of innocent men, women and children in these attacks.

Any threat on national security is bound to dampen business sentiment, remarked spontaneously another former chairman of All-Pakistan Textile Mills Association who fears further mounting pressure in the days to come.

Saudi Arabias delay in taking a decision on extending six billion dollars oil facility to Pakistan is the first manifestation of how Americans can pressure Pakistan.

As he disclosed, the elected government was planning to approach Kuwait, Qatar and UAE to seek financial relief from the present acute economic crunch.

At least for the next few weeks, till the next US presidential elections, he advised that we should wait and see.

Iqbal Ibrahim, the All-Pakistan Textile Mills Association chairman in Europe, endorsed the position taken by the Army chief and the government, but refused to go beyond this as what he said, I am not a politician.

He made it clear that as a businessman and leader of business community it was none of his business to advise what the government should do and what it should not do.

He declared that the business community would be with the government on whatever position it takes on external relations.

Majyd Aziz, a former president of Karachi Chamber of Commerce and Industry, said that the business community is yet to take stock of the situation arising from recent developments on Pakistan-Afghan border.

He appreciates the position taken by the Army chief which was later endorsed by the elected political leadership, but supports opposition parties plea of convening a joint parliamentary session.

Prudence and caution should be the hallmark of the position to be taken on such a sensitive and explosive issue, he suggested.

The best course, he said, would be to demonstrate to US and world at large that all Pakistanis share same concern on US intrusion into our territory.

Only Pakistanis have a right and the capacity to address this issue, he stressed.


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## Neo

*Gilani asks for solutions to economic issues​*
ISLAMABAD, Sept 13: Prime Minister Syed Yousuf Raza Gilani on Saturday emphasised on the eminent economists and members of the academia to engage in an active dialogue for finding solutions to major economic problems.

In a meeting with the participants of the first round-table of the Planning Commissions Panel of Economists who called on him at the PM House, Mr Gilani said the government was taking bold initiatives and seeking out of the box solutions to face the pressures on economic front which include rising inflation and low economic growth.

The prime minister welcomed the setting up of the panel at a time when the economy was faced with serious challenges.

He said the government was committed to protecting the poor and vulnerable groups.

Mr Gilani expressed the confidence that the panel would assist the government in formulating policy response in key areas by identifying structural changes for sustained growth, transforming the economy to production-led growth, investment, prioritising sectors for economic growth especially agriculture sector, best utilisation of available resources, attracting private investment and encouraging public-private partnership in infrastructure development.

He also emphasised the importance of health and education sectors being the basis of future economic development and most effective ways of assisting the poor in improving their living standards.

The round-table was informed that the Planning Commission was being converted into a knowledge commission where the best minds of the country could debate and discuss the pressing economic challenges.

Task forces have been set up on food security, energy, science and technology, infrastructure, social sector and climate change.

The panel comprising the brains in the economic field was holding a two-day round-table to advise on how best the country can regain macroeconomic stability with respectable growth in the most efficient and equitable manner.

Dr Hafeez A. Pasha, chairman of the panel, pledged his best to the nation saying that the panel comprises representatives from all the provinces and will work in close coordination with the Economic Advisory Council.

Other members of the advisory panel included Dr Rashid Amjad (Convener), Dr Akmal Hussain, Dr Akhtar Hassan Khan, Dr Naveed Hamid, Dr Riazuddin, Dr Kaiser Bengali, Dr Qazi Masood Ahmed, Dr Ali Cheema, Haris Gazdar, Dr Asad Sayeed, Dr Toseef Ahmed, Dr Aisha Ghaus Pasha, Dr Faisal Bari, Dr Naseer Ali Khan, Dr Saqib Sherani and Dr Rehana Siddiqui.

Ehtisham Ahmed of the IMF and Ijaz Nabi of the World Bank also attended the round-table.

State Bank of Pakistan Governor Dr Shamshad Akhtar, secretary finance, secretary water and power, secretary economic affairs, secretary commerce, secretary food and agriculture, secretary industries, acting secretary petroleum and the Wapda chairman also attended the meeting.


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*Macro-Economic Stabilisation Plan being finalised ​*
** Panel of economists formed by PC to recommend short-, medium- and long-term strategies​*
ISLAMABAD: A Macro-Economic Stabilization Plan will be finalized as an integrated package in one-month time to cope up with fiscal and monetary difficulties, setting short, medium- and long-term goals, Deputy Chairman Planning Commission M Salman Faruqui told Daily Times on Saturday. 

Planning Commissions Panel of Economists started its work in this regard here on Saturday. Ministry of Finance in collaboration with Economic Advisory Committee would also recommend measures for economic stabilization and final plan would be integrated to meet the challenges. 

In the light of Macro-Economic Stabilization Plan, the government is expected to revise downwards its Macro-Economic targets fixed in the budget for the current fiscal year 2008-09. First Roundtable of Planning Commissions Panel of Economists was held here Saturday. Deputy Chairman Planning Commission M. Salman Faruqui chaired it. Governor State Bank Dr Shamshad Akhtar, Secretary Finance, Secretary Water and Power, Secretary Economic Affairs, Secretary Commerce, and Secretary Food attended the roundtable. 

The Panel of Economists termed as best human capital of Pakistan is comprised of eminent economists like Dr. Rashid Amjad (Convener), Dr Akmal Hussain, Dr. Akhtar Hassan Khan, Dr. Naved Hamid, Dr. Riazuddin, Dr. Kaiser Bengali, Dr. Qazi Masood Ahmed, Dr. Ali Cheema, Haris Gazdar, Dr. Asad Sayeed, Dr. Toseef Ahmed, Dr. Aisha Ghaus Pasha, Dr. Faisal Bari, Dr. Naseer Ali Khan, Dr. Saqib Sherani and Dr. Rehana Siddiqui. Ehtisham Ahmed of IMF and Ijaz Nabi (associated with World Bank till recently) also attended the roundtable.

Faruqui told Daily Times that during the first roundtable issues relating to energy, wheat, hydal power, dams, industry, commerce, petroleum and food and agriculture were discussed in the light of presentations given by the respective ministries. The Panel of economists would be proposing within a month a Macro Economic Stabilization Plan to the government to meet the challenges faced by each sector of economy with short-, medium- and long-term strategies. 

He said task forces for Economy, Energy, Infrastructure, Social Sector, Food and Agriculture have been formed to recommend concrete measures for the Macro-Economic Stabilization Plan. He said the PC has also decided to form a task force on Climate Change to suggest ways to deal with the situation arising out of melting of glaciers.


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## Neo

*GDP growth target likely to be lowered to 5 percent​*
** IMF team starts review of economy to help meet challenges​*
ISLAMABAD: Pakistans Gross Domestic Product (GDP) growth target for the fiscal year 2008-09 is likely to be lowered from 5.5 percent to around 5 percent, a senior official at the Ministry of Finance told Daily Times on Saturday.

GDP growth targets are being revised in view of disturbed manufacturing due to the increased load shedding and the cotton crop output being less than expected, the official disclosed. 

Changes being finalised in the macroeconomic framework would result in the lowering of the growth forecast of the economy in the current fiscal year, the official said, adding that macroeconomic targets would be re-adjusted and a revised growth forecast made ready in a month.

The Ministry of Finance had set the GDP growth target at 5.5 percent for fiscal year 2008-09, despite having 6.8 percent GDP growth in the previous fiscal year 2007-08. This was due to power shortages, less water availability for agriculture production and rising oil prices. 

Challenges: The official added that a technical mission from the International Monetary Fund (IMF) had started a technical review of the economic situation and was holding meeting with economic managers.

He said the purpose of the missions visit was to help the Pakistani authorities to meet the challenges posed by the current economic imbalance.

The IMF would provide technical input to Pakistan to meet the economic challenges in the short term as well as the medium term, he said. 

Explaining the background of the Letter of Comfort condition imposed by the IMF authorities for new loans, the official said that recent economic destabilisation needed immediate correction and stabilisation measures. The stabilisation of Pakistans economy would help remove the condition of the Letter of Comfort, the official explained. 

Earlier, the World Bank (WB) and the International Finance Corporations flagship report Ease of Doing Business 2009 had ranked Pakistan 77 among 181 countries around the globe.

The report had noted that in terms of the ease of procedures to start business, Pakistan stood at the 11th place. 

An entrepreneur is required to pay 47 types of taxes in Pakistan. Tax rates as percentage of profits in are 28.90 percent, according to the report. 

WB expert Karim Belayachi had told journalists that in terms of investors protection, Pakistans performance had been remarkable and its efforts were ranked the highest in South Asia.


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## Neo

*Redesigning gas pipeline: Pakistani team to hold talks in Tehran on September 27 ​* 
ISLAMABAD (September 14 2008): Pakistan has simply ignored US advice to stay away from the India-Pakistan-Iran (IPI) gas pipeline as it will be sending a three-member official delegation to Tehran on September 26 for two-day talks with Iranian authorities for redesigning the gas line as a two-nation project.

The talks are to be held in Tehran on September 27 and 28. Petroleum Secretary (Incharge) G A Sabri will lead the Pakistan side. Pakistan's Ambassador to Tehran will assist the Pakistan delegation. Sources said that Pakistani would ask the Iranian counterpart in next round of talks to give a final deadline for completing all formalities and executing the project as early as possible.

Pakistan's concern is that its gas reserves are quickly depleting and market demand is growing. Islamabad is fully conscious of the significance of early execution of the IPI line for supplementing domestic gas supply. The government is desperately looking for materalising at least one of the three gas line projects.

Since IPI pipeline project has made some progress in the recent past, Pakistan wants to bring it on the ground within the possible shortest time period. The concerned authorities are of the view that Pakistan's side would tell Iranians about urgency in the coming talks and seek a well-defined timeframe for laying down of the pipeline.

The two sides had agreed to follow a segmental approach for IPI line to avoid delay in an accord they signed in Islamabad at the end of steering committee meeting held in May last. Islamabad is not bothering what the US thinks on Iranian gas pipeline. It is convinced that IPI project is the only possible option for importing gas for plugging the gap in demand and supply of gas.

The US had shown concern over Pakistan's consistent approach for IPI project. Its delegation, which visited Islamabad last month for talks with Pakistani officials on energy, reiterated its stance on the issue. The US delegation led by Secretary on Energy told the officials in Islamabad that Iran-Pakistan-India (IPI) gas pipeline project was not acceptable to Washington, as long as its standoff with Tehran on nuclear issue persisted. The US officials demanded that instead of wasting its time and resources on IPI project Islamabad should work on some alternative sources to get additional sources of comparatively cheaper sources of fuel.

The US Secretary for Energy who held talks with the officials on Pakistan's energy crisis and possible resources was categorical in one of the meetings that Washington was seriously concerned over the way Pakistan was pushing forward its plan for making IPI project a two-nation project. IPI is the worst victim of US policy of blocking any project which Washington feels is not in line with its interests in today's quickly changing world. During the last over one decade it has suffered for one reason or another.


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## Neo

*250 million tons of coal reservoirs discovered near Chakwal ​* 
LAHORE (September 14 2008): About 250 million tons of coal reservoirs have been discovered near Chakwal. Punjab government is considering generating energy on cheaper rates from these reservoirs. This was revealed during a meeting held to review various proposals and options regarding provision of energy to industrial estates in Lahore. Punjab Chief Minister, Shahbaz Sharif presided over the meeting.

Sources told Business Recorder that the Punjab government is considering various options to meet the electricity demands in industrial estates for which top priority has been given to energy generation from coal.

Addressing the meeting, Shahbaz said that provision of energy to industrial estates is of paramount importance for the promotion of industrial production and foreign investment and Punjab government is considering various options to meet this demand in which top priority has been given to energy generation from coal. Besides this, suggestions for generation of energy from waste bio-mass and hydel power are also under consideration, he added.

Shahbaz said that we have to utilise all resources for generation of energy to enhance industrial production and experts should compile their recommendations as soon as possible so that final strategy could be evolved in the light of these recommendations.

He said that private sector should be included in the projects of generation of energy from coal and it should give proposals regarding exploration of coal from mines. He said that foreign companies should also be contacted in this regard. Shahbaz directed to set up a committee for giving final shape to various suggestions.

Nadim Babar highlighted various suggestions regarding provision of energy to industrial estates. Secretary Industries, Secretary Irrigation, Chairman Planning & Development, Haroon Khawaja, Mohsin Syed, Ahmad Alman Aslam, Shafqat Elahi, Mansoor Afrin, Waqar Ahmad Khan and other concerned officers were also present in the meeting.


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## Neo

*Significant fall in oil production ​* 
KARACHI (September 13 2008): Oil production of the country fell by a significant 9.3 percent on year-on-year basis in July 2008 due to the annual turnaround and maintenance jobs at some key oil fields. However, gas production increased by 2.5 percent whereas LPG production fell by 13.7 percent in this period.

According to official figures Pakistan's hydrocarbon production has shown a meager increase of 1.2 percent on year-on-year basis in July 2008. OGDC's oil and gas production fell by 9 percent and 5 percent on yearly basis respectively, whereas LPG production fell by a sizeable 46 percent during the first month of FY09.

"The fall in oil production was mainly on the back of production falls in the Bobi, Chanda, Pasakhi and Sono fields", Saad Arshad, an analyst at Invest Capital Securities said.

However, this decrease was somewhat offset by a jump in production from the Kunar, Tando Alam and Mela fields, he added. Gas production of the company was affected by falls of 4 percent and 8 percent in the operated and non-operated fields respectively.

PPL's overall production rose by a modest 1.3 percent on yearly basis in July 2008, following an increase of 1.4 percent in gas production. The increase in gas production was mainly on account of production hikes in the Qadirpur and Kandhkot fields. Oil production of the company fell by a meager 0.2 percent, largely due to annual turnaround at the Adhi field. The fall in production from the Adhi and Manzalai fields offset the production increases from the Mela and Makori fields.

POL's overall production fell by 21 percent in July 2008 as the company's oil and gas production fell by 29 percent and 15 percent respectively. The company's LPG production was also down by 20 percent. The fall in oil production was mainly due to 63 percent fall in Pindori field's production.

The other three major fields of the company, Meyal, Balaksar, and Pariwali also suffered production falls of 11 percent, 38 percent and 21 percent respectively. Gas production was down due to production falls of 8 percent, 26 percent, 20 percent and 15 percent in the Pariwali, Ratana, Adhi and Manzalai fields respectively.


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## Neo

*Agriculture sector performs poorly during 2007-08 ​*
ISLAMABAD (September 14 2008): The agriculture sector has performed poorly in the financial year 2007-08, growing at 1.5 percent against the target of 4.8 percent. "The poor performance of agriculture can be attributed to an equally poor performance of major crops and forestry, registering negative growth of 3.0 percent and 8.5 percent, respectively," official sources said.

Livestock, minor crops and fishing have been the saving grace as these sectors have performed reasonably well to compensate the performance of major crops and forestry to arrive at 1.5 percent growth in agriculture this year. Major crops, accounting for 34 percent of agriculture and 7.1 percent of GDP, suffered on account of poor sowing of wheat and cotton and less than satisfactory performance of rice crop.

Sugarcane and maize being other two major crops performed impressively in 2007-08, sources added. The cotton crop suffered for a variety of reasons including heavy rainfall in May 2007 causing poor germination in Punjab, high temperature during August and September 2007 causing more shedding of fruit parts and pest attack, especially dangerous mealy bug infestation. Consequently, cotton production declined to 11.7 million bales this year from 12.9 million bales last year, thus registering a negative growth of 9.3 percent, sources added.

The wheat crop was adversely affected by the shortage of irrigation water by 23.3 percent over normal supplies during Rabi and inordinate spike in prices of DAP fertiliser. Accordingly, production of wheat declined to 21.7 million tons from 23.3 million tons last year, registering a decline of 6.6 percent. However, the two other major crops performed better with sugarcane recording highest ever production level of 63.9 million tons, 16.8 percent higher than last year.

The production of rice witnessed a modest growth of 2.3 percent and stood at 5.6 million tons. Minor crops accounting for 12 percent in agriculture value added posted a growth of 4.9 percent against the negative growth of 1.3 percent last year.

The performance of livestock accounting for 52.2 percent of agricultural value added was satisfactory at 3.8 percent. The performance of fisheries has been impressive as it grew by 11 percent in 2007-08 because inland fish catch has increased by 11.1 percent while the output of marine fishing grew by 11.5 percent during 2007-08.

Forestry followed the traditional negative growth pattern for the fifth year in a row. This small sector with only one percent stake in the overall value-addition in agriculture, registered negative growth of 8.5 percent in 2007-08 as the turnout of production of timber and firewood during the year declined by 9.3 percent, the sources added.


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## Neo

*Pakistan out of default risk ​* 
ISLAMABAD (September 15 2008): Pakistan is out of any default risk, as reduction in oil prices in the world market and cut in subsidy have provided it much room to manage its foreign liabilities comfortably. This was a message from the Secretary of Economic Affairs Division (EAD), Furrukh Qayyum, for economists who met here the other day.

The Planning Commission had convened the economists' meeting for taking input from government departments for its five-year development plan. EAD Secretary shared, with the participants, that Pakistan was 100 percent in comfortable position to meet in time its foreign liabilities, and there was no risk of default at any stage. Finance Secretary Dr Waqar Masood, SBP Governor Dr Shamshad Akhtar, Petroleum Secretary Incharge GA Sabri, Secretary Industries Shahab Khawaja and Secretary Food and Agriculture, and Wapda chairman gave presentations at the meeting on their respective ministries' issues/challenges and future plans.

Dr Waqar Masood told the participants that Finance Ministry was following a multi-pronged strategy to save every possible penny by cutting down non-developmental expenditure and removing distortions in economy that pushed Pakistan's economy into the grey area during the last few years.

Petroleum Secretary Incharge GA Sabri told the economists that unprecedented rise in oil prices in the global market had exposed Pakistan's economy to serious risks. However, with sharp decline in crude oil prices, things were now shaping up for improvement.

Wapda chairman briefed the panel on power crisis. He said that the government was doing its level best for the new power generation projects to materialise to overcome loadshedding. He said the government was focusing on hydel and coal-based power projects to get comparatively cheaper electricity for the consumers.

The State Bank of Pakistan (SBP) Governor Dr Shamshad Akhtar made a stunning disclosure. She said the Shaukat Aziz government had kept her in 'custody' for stopping from voicing concern over Pakistan's deteriorating economy.

"In Previous (Shaukat Aziz) regime, I was not allowed to meet the people to let them know the real economic condition. Now those who are at the helm of the affairs do listen to me and also give weightage to my opinion" she said.

She briefed the panel about SBP's policies for implementation of the monetary policy. She also had a message for the government that it should minimise borrowing from SBP and live on own resources.

Akhtar had been known for giving this kind of statements at different forums, asking the government not to exceed budgetary limit for borrowing from SBP, but she for the first time accused Shaukat Aziz government of keeping her in 'custody' when she wanted to voice concern over Pakistan's weakening economy.


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## Neo

*Pakistan may follow 'shadow programme' ​* 
ISLAMABAD (September 15 2008): The deteriorating economic fundamentals might force Pakistan to follow the International Monetary Fund (IMF) 'shadow programme' under which the country would follow the IMF policy without taking financial assistance.

This was stated by two prominent economists who are members of the Economic Advisory Committee (EAC) and the panel of economists formed by the Planning Commission (PC).

They said it is too early to predict anything precise about the course of action to be proposed by the two teams for 'Macro-Economic Stabilisation Plan'. "However, it looks to be almost certain that Pakistan would follow the Fund's policy in one way or the other," they stated.

If Pakistan enters into this programme, which looks imminent, then the government would have to follow the IMF instructions or conditionalities without taking any financial assistance. The options for the country, they said, are limited in the context of increasing budget and trade deficits.

President Asif Ali Zardari, in his maiden media interaction after taking oath as president, said that Pakistan would not seek an assistance package from the IMF. He said the government will go for austerity measures to cut down the expenditure.

However, economic analysts are of the view that Pakistan's re-entry in IMF programme would help gain the investors' confidence as the country is in the dire need of foreign investment and curtailing the capital flight from the country.

The PC's panel of economists has started its work. This work would be integrated with that of the EAC and final report would be submitted to the government most likely by the end of this month or early next month.

The first and foremost task of the PC panel of economists is to frame terms of reference (TORs). This task is going to be finalised in a week time. Following this, some working groups would be formed and TORs will be framed for each group.

Groups on growth, social protection, institutional framework, and micro economy will be formed, said a member. He was of the view that EAC and PC panel of economists will also look into each other work before submitting the Economic Stabilisation Plan. He also opined that political stability is must for the economic stability.

"We hope that political stability will come to the country after the presidential election," he said. Since the transition is over, the central government needs not to take any ill-conceived measure in any province, especially in Punjab that could spark a wave of political instability. The PC has already constituted task forces on energy, food, infrastructure, and social sector to recommend necessary measures to the commission, they said.


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## Neo

*Five-year policy framework: IMF analysing economic statistics​* 
ISLAMABAD (September 15 2008): The International Monetary Fund (IMF) team has started analysis of Pakistan's economic statistics submitted by the finance ministry before assisting the government in finalisation of new five-year macroeconomic policy framework, informed sources told Business Recorder here on Sunday.

The IMF delegation, which arrived in Islamabad on September 12, will submit its recommendations by September 24 before leaving for Washington. "This is a beginning; the IMF has just started examination of economic data. We will enter into policy mode after September 18," the sources added. Asked if the IMF delegation will dictate about economic policies of present government, the sources said that Fund's delegation was here to assist Pakistan and not to dictate it. "Pakistan has drafted a new five-year macroeconomic policy framework, which will be reviewed by the IMF team," the sources added.

Sources said the IMF team will examine what steps the government has suggested to deal with economic crisis and what are shortcomings in proposed policy measures.

"They (IMF team members) will look into the targets fixed by the government along with policy measures to achieve those targets," the sources added. Sources said that IMF will also suggest actions to improve the proposed macroeconomic policy framework after completing analysis of performance of every sector.

Recently, Prime Minister Syed Yousuf Raza Gilani had attributed the increase in oil and electricity prices to the IMF and the World Bank. On the other hand, World Bank President Robert B. Zoellick had grilled Pakistan's economic team headed by the Prime Minister Special Assistant on Economic Affairs Hina Rabbani Khar for presenting exaggerated statistics of the country's economy to seek project and program loans.

Hina Khar was part of the official delegation accompanying Prime Minister Syed Yousuf Raza Gilani during his much talked about visit to the United States. The economic team, which met the World Bank president, comprising former Secretary Finance, Furrukh Qayyum and Jeved Talat, Pakistan Executive Director to the World Bank.

"Zoellick was very harsh with Pakistan's delegation for reportedly presenting a picture of the economy which was far away from the reality," the sources added. However, The IMF team visiting Islamabad is said to be cool and not using pressure tactics as was used in the past, said another official.


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## Neo

*Gas supply for power plant: 'favoured project' approved by PPIB ​*
ISLAMABAD (September 15 2008): The Economic Co-ordination Committee (ECC) of the Cabinet in its meeting on September 10, 2008 approved 40 mmcfd gas for the 175 mw rental power project, whose credentials are not even available at its own website.

Sources told Business Recorder that a 'Favoured project' has been processed by the Private Power Infrastructure Board (PPIB), with an extraordinary speed never seen before. A government official who was present in the ECC meeting was shocked when he was apprised about what had happened in the previous ECC meeting, which was presided over by Finance Minister Naveed Qamar.

The 'efficiency' of the PPIB can be gauged from the fact that the company had written a letter to the PPIB on August 19, 2008, showing interest in establishing a 'rental power' project which, supposedly, would start commercial operations by June 2009, premised on securing a three-year agreement with the purchaser, Pepco.

PPIB, showing its 'efficiency', forwarded the copy of the proposal to Petroleum and Natural Resources Secretary for allocation of gas, who in turn sent the summary to the ECC for approval of gas for the project.

Interestingly, when this correspondent searched the site of the company on the internet, as mentioned in the letter, it was found that no such company was registered. When this scribe called the listed telephone for the company no one attended the phone. This company was not even listed in the SECP's list of registered companies.

An insider told Business Recorder that two of the top officials of a ministry were regularly meeting every evening in the office of a chartered accountant, situated in F-7 Markaz where such fictitious projects are formulated. He said that such 'companies' win contracts through 'influence' and then sublet the project to other parties on huge commissions.

The sponsors of the company, in a letter, said that it had the expertise in management, development and consulting for various national and internationally scaled projects. "With a dedicated team of professionals and expertise from local as well as international resources we are experts in projects of all scales," the firm claimed.

The proposed plant would be 'based' on General Electric (GE) generators 'LM 6000 A' (or equivalent), burning gas. Exact plant configuration would be finalised in the development phase, the company further clarified.

The ECC in its meeting on September 10 approved gas allocation of 20 mmcfd on the recommendations of Ministry of Defence for DHA Cogen Limited (DCL) power project which would provide additional power to KESC by mid-2010 along with supply of portable water for residents of DHA.

In addition, another request was made by Aiden Ventures (AV) for setting up a power plant at Dadu, requiring gas allocation. PPIB and Ministry of Water and Power had requested the Petroleum Ministry for confirmation of 40 mmcfd gas for a period of three years on round the year basis.

Another request of First Tri Star Modarba for 110 mw plant at Hawkes Bay, Karachi, was received from the PPIB, asking for confirmation of availability of 20 mmcfd of gas against the gas allocation withdrawn from two IPPs sponsored by Tapal and Fauji Koranji.


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## Neo

*Development of mines sector top priority: Riaz ​* 
LAHORE (September 15 2008): Punjab Minister for Mines & Minerals Raja Riaz Ahmad has said that welfare of mines workers and development of mines sector on modern lines is in the priorities' list of the government. Talking to media men here, he said that government wanted to create enabling environment for the prospective investors in mines and minerals sector.

He said that a sum of Rs. 28.4 million was being spent on pilot project of provision of clean drinking water for mining labour at Katha Sagral (Khushab) and Choa Saiden Shah. Filtration plants would also be set up to provide clean water to the nearby inhabitants, he added. Raja Riaz said that mining sector was very vital area which needs further investment for the exploration of new mineral resources. Mines workers are important part of the sector and investors should give priority to their well-being, he concluded.


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## Neo

*Karachi faces massive power shortfall​*
KARACHI, Sept 14: Prolonged power outages triggered by the tripping in one of the high-tension circuits and shortage of about 700MW caused by reduction in generation by the KESC sparked power riots in several areas of Karachi on Sunday.

According to sources, the problem of prolonged disruption in supplies was the result of alleged theft of a conductor of the EHT circuit between Baloch Colony and Lines Area.

The problem of the massive shortfall was a week-old one but the utility failed to solve it because the management was trying to save money on furnace oil and was operating its plants at much below their capacity. They also did not get supplies from two IPPs  Gul Ahmad and Tapal. And the government also did nothing to address the problem.

People aware of the problem stressed the need for immediate government intervention and severe corrective measures.

Vast areas of Karachi were without electricity for more than eight hours during the day as the utility tried unsuccessfully to keep the overloaded distribution system going.

Agencies add: Sindh Governor Dr Ishratul Ebad has taken notice of the power crisis in Karachi and contacted Minister for Water and Power Raja Parvez Ashraf.

He had a detailed discussion with the minister and conveyed to him the concerns of the people of Karachi. He called for supply of more electricity by Wapda to the KESC.

The minister assured the governor that the water and power secretary would be in Karachi on Monday and take steps to improve the situation.

Many other towns of Sindh have also been hit by power outages.

Protests were held on Sunday in Hyderabad, Larkana, Sukkur, Naushehro Feroz, Garhi Yaseen, Khairpur, Badin, Kot Ghulam Mohammad, Nawabshah and Mirpurkhas.

Loadshedding has crippled business activities in Nooriabad and Kotri industrial areas, and affected small industrial units in Shikarpur, Sukkur and Hyderabad.


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## Neo

*Outlook for kharif crops​*
Water scarcity, frequent power outages, short supply of fertiliser and a lingering dispute between millers and cane growers on pricing have hit the kharif crops this year, and initial production estimates of cotton are confusing. Cane cultivation is lower and rice is set to give a bumper output.

Water scarcity delayed cotton sowing, informed Sohail Mahmood, a leader of ginners from Multan, on telephone. Frequent power breakdowns too hampered water pumping from tube wells, and there was not enough fertiliser, he added.

Amjad Rasheed, who has an interest in textile business, said that area under cotton cultivation is lower by 10-11 per cent but the crop is good. The crop estimates vary between 11-12 million bales that also depends on weather conditions in Punjab in next few weeks.

The growers dispute with millers on price and quality, payment delays and finally the prospects of getting a better return on other crops have forced farmers to cut down heavily on cane cultivation and opt for other crops. Cane cultivation area is less in Sindh but crop is good, Sindh Agricultural Secretary, Subhago Jatoi disclosed. A large number of farmers were tempted to cultivate rice mainly because the crop offered them handsome return. Farmers in Sindh got as much as Rs1,200- 1,300 a maund last season on non -Basmati rice, Subhago Jatoi said.

Rahim Janoo, a senior leader of Rice Exporters Association of Pakistan, said the farmers got about Rs400 for a maund in the initial period of last season but as international demand for rice mounted, prices went up to Rs1,200 per maund. No wonder then the price shot up to about Rs80 per kilogramme or more for Basmati and Rs50 for IRRI.

Janoo attributed sudden spurt in international rice demand last season to a panic caused by some international food organisations that left no choice for countries like Iran, Saudi Arab, Kuwait, UAE, Qatar and many African countries to build up buffer rice stocks. The international demand prompted countries like India to impose a ban on rice export as they feared a serious scarcity of grain in domestic market. Jodia Bazar merchants believe it was a gimmick played by the global food merchants who have a knack of creating a crisis and then making quick money out of it. Estimates for rice crop also vary. Some rice exporters estimate it at even seven million tons, indicating that about four million tons would be available for export to fetch $2 billion this year. But there are many in REAP who do not endorse this assessment and believe that crop output would be six million tons plus. They have also doubts about the international rice demand matching that of last year.

There may be demand for non-Basmati in Africa, Bangladesh and few other countries but affluent countries like Saudi Arabia, UAE, Qatar and Kuwait are not likely to add much to their demand. Traders in local market doubt if they would be able to bargain at last years prices.

Economists say that kharif crops have a special significance in the national economy. Agriculture constitutes about 21 per cent of GDP and the crops contribution is anywhere from 10-11 per cent. The kharif cash crops have a major role with almost seven per cent direct share in the overall economy But what is more important is that these crops sustain key industries--textile and sugar--and also a very big chunk of national and international grain trade.

Crop estimation is speculators game rather than an accurate monitoring by satellites , remarked a top leader of textile industry who wondered as to why a patwari still remains the only source of information on crop estimates. Cotton prices fluctuate in the market on reports of crop estimates, infestation reports and pest attacks and therefore textile industry wants a modern and a well-equipped institution, whether public or private to do the estimation job.

Cotton picking has started in lower Sindh and a few ginneries have started reporting arrivals but there is no indication of any meeting of Pakistan Central Cotton Committee (PCCC). The Crop Estimation Committee of Karachi Cotton Association has yet to meet. Bankers report that not many textile business people have come with demands for sanctioning credit limits even when two weeks of September have passed and it is entering its third week. Normally, the textile business starts approaching banks for their credit limits from the middle of August to buy cotton from the ginneries.

Domestic spinners demand is for 16 million bales of cotton, Anwar Tata, a former Chairman of All Pakistan Textile Mills Association, said and recalled that in the outgoing fiscal about three million bales were imported. But many mills are closing down for different reasons and I would not be surprised if a reduced cotton production of 11-12 million bales will be more than enough for us he replied when asked to indicate cotton import requirement for 2008-09.

With only two weeks left for the commencement of sugar crushing season from October 1, there are no indications as to when the actual crushing will begin this season. We plan to hold a stake holders meeting soon about commencement of sugar crushing, Sindhs Agricultural Secretary Jatoi said.

Industry sources indicate possibility of half a million tons of sugar import in 2008-09 for building up a buffer stock to keep prices stable. There is fear that sugar prices may touch Rs40 a kilogramme this year. The government had not much time to address kharif crops issue, an official conceded but added that there was enough time to look towards Rabi and for wheat crop. The government intends to announce support price-Rs900-1,000-per 40 kilogrammes of wheat immediately after Eid, according to indications here.

Such an announcement is bound to impact the current wheat flour prices, he said. However the government would take necessary administrative steps to keep prices within control.

Crop estimate vary from growers to traders, fueling speculations in commodity prices.


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## Neo

*Capital inflows and structural reforms​*
A couple of years back, the World Bank Group hailed Pakistan in its annual report  Doing Business in 2006  as the top reformer in the (South Asian) region and the number 10 reformer globally.

Pakistan was ranked at the 60th position on key business regulations and reforms. India was ranked 56 and China 31 places after Pakistan.

The latest edition of the report, Doing Business 2009, issued last week records no major reforms in Pakistan, and downgrades its ranking to the 77th position  only six places before China. India, ranked 122 among 20 economies, still lurks 45 places after Pakistan though.

The World Bank Group report tracks only a set of regulatory indicators related to business start-up, operation, trade, payment of taxes, and closure by measuring the time and cost associated with various government requirements while ranking the economies (in terms of ease or difficulty in doing business in any given country). In this report, it does not track variables such as macroeconomic policy, quality of infrastructure, currency volatility, investor perceptions etc

The findings of two reports tell a great deal about Pakistans determination  or should we call it lack of it?  in reforming and restructuring its economy, says a leading businessman from Lahore who has worked with successive governments during the last 15 years.

Economic and business reforms in Pakistan are a painfully slow process; these are undertaken only when a government finds itself compelled to seek assistance from multilateral lenders like the International Monetary Fund (IMF) or the World Bank or the Asian Development Bank (ADB), the businessman, who did not want to be identified, said.

Also, we, as a nation, have never been able to develop a consensus on reforming the economy because reforms in this country are considered as something imposed on us by some foreign forces through their local agents to plunder our people. Reforms are never taken as a way of moving forward on the road to sustainable economic and social growth, he complained.

Some economic experts, however, point out that lack of political will was not the only factor that has prevented most government from undertaking economic, administrative, business, and other reforms. Most of the time, we didnt have enough money or fiscal space to put together and initiate the reforms programme, an economist, who teaches at the Lahore University of Management Sciences, told this scribe.

When we had money flowing into the country from all sources in the post 9/11 years, our rulers squandered the opportunity to reform and restructure the economy. Had we undertaken reforms in those years wed have been far better off today than we are, he said.

No country could achieve sustainable economic growth without implementing wide-ranging financial, business, administrative, social and other reforms. Our recent past corroborates that fact, the LUMS economist insisted.

Most believe that economic growth obtained in the post-9/11 years - the gross domestic product (GDP) increased by above six per cent annually during the last six years to FY08) was not sustainable because consumer spending drove it and it was import intensive.

Thats precisely why we are facing expanding current account deficit (of more than eight per cent of GDP), widening trade gap, escalating price inflation (running at 25 per cent), growing fiscal deficit (of over eight per cent of GDP) and a deteriorating balance of payments position. You cannot achieve solid growth, curb poverty, remove macroeconomic imbalances, and improve the balance of payments unless you invest in and promote productive sectors  agriculture and industry instead of encouraging services sector and consumption, he said.

An economist associated with a foreign bank said the capital inflows had played a big role in the GDP increase in the recent years. The previous government of Pervez Musharraf and Shaukat Aziz sold itself well to the West, particularly the United States (after 9/11), and leveraged economic growth on capital inflows, he said.

Though the (Musharraf-Aziz) government did take some policy measures initially to deregulate and liberalise the economy, it failed to undertake any meaningful, basic economic restructuring. Tax revenue did rise substantially in these years (to Rs1 trillion ), but the tax- to -GDP ratio remained unchanged. Also the government expenditure was not rationalised. But then it is the story of last 60 years of Pakistan: when capital inflows are pouring in we show spurts of impressive growth for a few years and then relapse into a crisis like situation, he said.

With the completion of transition to democracy following the election of Pakistan Peoples Party leader Asif Zardari as president, most people are anticipating multilateral and bilateral lenders to renew their focus on Pakistans economy. The indications so far are that Pakistan should begin receiving foreign inflows in the form of loans/grants/aid over the next couple of weeks with the release by the ADB of programme loan tranche of $500 million.

The American administration has already put together a financial assistance package of $15 billion spread over next 10 years and the Saudis are most likely to announce an oil facility of just below $6 billion. The Saudi government is also said by finance minister Naveed Qamar to be considering another economic package to help Pakistan come out of its current economic difficulties.

The international forces do recognise the difficult economic situation. We dont yet know how much shall we receive from multilateral and bilateral donors over the next year. But that should be sufficient to take care of our immediate economic and financial problems, arrest downward slide and stabilise the economy and put it back on the growth trajectory, said a senior official in the federal finance ministry from Islamabad.

Besides, he said, the government also intended to float sovereign bonds to raise funds from the international financial markets. But he did not give the size of the loan the government planned to raise by issuing bonds. He also refused to say anything as to when the global financial markets would be tapped.

Although most economic experts believe that both multilateral and bilateral lenders are most likely to bail out Pakistan because of its strategic importance in the global war on terror, they are skeptical of the return of private direct foreign investment.

We may obtain something from the donors/lenders because of political reason. But I am not too optimistic about the private capital inflows. That would require a substantial change in the country perception and the strength of the economy. Also their concerns over security situation have to be removed. Therefore, I think it will take a while before we get capital private inflows, says Navaid Hamid, who teaches economics at the Lahore School of Economics (LSE). The finance ministry official argued that certain unseen global factors  like runaway food and energy prices and turmoil in the international financial markets  as well as domestic developments  like growing political instability, deteriorating law and order conditions, etc  had badly affected the economy at a time when what he often describes as business cycle was maturing.

Rest assured that the government is working to restore macroeconomic stability, the finance ministry official said. He said the government was committed to achieve its budgetary target of containing fiscal deficit by cutting subsidies on oil and power, reducing development expenditure and taking other austerity measures.

But he did not say if the government planned to undertake crucial civil service, property, tax, judicial, and other reforms to put the economy on the road to sustainable growth. Fundamental restructuring (of the economy) will have to be done concurrently, said the economist from the foreign bank.

You may once again leverage the much anticipated foreign inflows to achieve yet another spurt of growth in GDP and stabilise and improve the macroeconomic indicators. But that will not be sustainable unless you reform various sectors of the economy and the legal, judicial, administrative, and legislative processes. Nor will that benefit the poorer segments of the population. Once the capital inflows dry up again, we will be back to the square one, he argued.


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## Neo

*Wheat: how to achieve the dream target?​*
IN his maiden press conference, newly-elected President Asif Ali Zardari pledged to increase food supply and tackle the price spiral through massive production.

Punjab Chief Minister Shahbaz Sharif also lost no time and the very next day fixed wheat production target of 20 million tons for his province.

Both the gentlemen did not divulge how they were going to face the adverse ground realities and achieve these dream targets.

Almost all crucial factors of wheat production are in negative, at least at present. A critical challenge in achieving the official wheat production target will be the availability of water.

Water levels in both the dams of the country have already started depleting, even before they could be filled. The Mangla Dam has touched a level 1,200 feet  two feet below the maximum level and is emptying fast. On September 9, the lake had dropped to 1,198 feet level. So was the case with Tarbella Dam, which has seen a drop of 13 feet in the five days ending Sept 9.

Both Sindh and Punjab are drawing heavily to save their standing crops (cotton and rice) at the risk of Rabi crop--wheat. While it is too early to predict water shortage during the coming Rabi season with any certainty, experts feel that deficit may range between a staggering 35 - 40 per cent.

What plans the government has to deal with this crucial factor, nobody really knows. The alternative is pumping water out of the soil. It is not economically feasible after the current 30 to 50 per cent raise in power charges and governments refusal to bring diesel prices down, which powers over 80 per cent of tube wells. With water shortage, how the federal and provincial governments plan to bring about 25 per cent increase in yield cannot be fathomed.

The second crucial factor is the support price, which determines the financial viability of the crop. The government has still not announced its procurement price, though sowing is about to start in certain parts of Sindh. In the next 10 weeks, sowing should be completed in the entire country.

An increased wheat price would put the government in a Catch-22 situation. Any increase in price at this stage would work as an incentive for hoarders to stock wheat; even purchase it from official sources and hoard it. But if it does not announce the raise on time, farmers would be reluctant to sow wheat and miss the acreage and production target.

The government has been facing this dilemma for the last many years, but has not been able to be innovative about it. Every year, it delays announcement of new price and suffers on targets, leading to supply and price crises  and this year does not seem to be an exception.

The third crucial factor for wheat yield is the availability of fertiliser. The farmers have been protesting against its short supply and price surge. The availability of both urea and DAP at an affordable price has assumed a serious proportion. The urea, a major part of which is produced locally, has disappeared at the most crucial stage. The farmers simply cannot afford DAP at its current price of Rs3,500 per bag. It is beyond their purchasing power and makes no commercial sense to apply it to crops at its current price, if farmers are to be believed.

The entire supply sector has been hijacked by hoarders and stockists. They have rendered the entire official machinery ineffective. How the current set-up plans to be effective in the next two months remains to be seen.

Beyond some short-term steps to manage the crises, the research wing of the agriculture departments has not been able to come up with any high-yielding variety. For the last 15 years, the country is depending on a variety that has lost its vigour and is now vulnerable to various diseases.

The farmers are not trained in modern methods of sowing and harvesting, and no one is ready to train them either. Farm mechanisation is almost non-existent and the formal sector only caters to 30 per cent of credit requirements of the agriculturists.

In order to stem first the rot and then reverse the situation, the government needs a long- and short-term sound planning and scrupulous execution. Rhetoric will not do.


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## Neo

*Measuring change in poverty​*
The most frequent questions asked include, who are the poor? How many poor are there? Where do they live and what is their social and economic profile?

In order to answer these questions, the Rural Support Programmes (RSP), with the help of Grameen Foundation, US , have developed a poverty scorecard.

The scorecard has been developed as a tool to measure change in poverty in an effective way and to support the management of development programmes in microfinance and also in other development sectors. It is also a useful tool for social investors that need to measure their results according to the triple bottom line objectives --- financial, social and environmental results.

The poverty scorecard uses the 2001 Pakistan Integrated Household Survey to construct an easy-to-use, objective poverty scorecard that estimates the likelihood that a participant has expenditure below the national poverty line. It uses 10 simple indicators that field workers can quickly collect and verify.

Scores can be computed by hand on paper in real time. With 90 per cent confidence, estimates of groups overall poverty rates are accurate to within +/1.1 percentage points. The poverty scorecard can help programmes target services, track changes in poverty over time, and report on poverty rates.

The poverty scorecard is based on existing national expenditure surveys from which 10 indicators are selected as proxy for poverty. The indicators are quantitatively summarised through a statistical procedure - adding up 10 non-negative positive integers - to give a score, which represents a probability of being poor. The indicators are simple and inexpensive to collect as well as easily verifiable, such as selected housing features and ownership of consumer items (e.g. type of latrine and roof, radios, kitchen material, etc.).

Proper selection of indicators is relevant; however, their weighting is astonishingly not crucial. The accuracy depends on the recentness and quality of the national expenditure. The low-tech scorecard is derived from Pakistans 2004-2005 Household Income and Expenditure Survey (Ahmed, 2004). The indicators were selected to be:

* inexpensive to collect, easy to answer, and simple to verify; strongly correlated with poverty; liable to change as poverty status changes over time.

All scorecard weights are non-negative integers. Scores range from 0 (most-likely poor) to 100 (least-likely poor). Field workers can compute scores by hand in real time.

A participants score corresponds to a poverty likelihood, that is, the probability of being poor. The share of all participants who are poor is the average poverty likelihood. For participants over time, progress is the change in their average poverty likelihood.

By construction, the scorecard is accurate in that, on average, the estimated poverty likelihoods of individuals and the overall poverty rate of groups are equal to the true values. The scorecard is also accurate for targeting in that poor people are concentrated among low scores and non-poor people are concentrated among high scores.

Precision was measured by bootstrapping a hold-out sample. The 90 per cent confidence intervals for estimated poverty likelihoods are about +/5 percentage points, and the 90 per cent interval for estimated overall poverty rates is +/1.5 percentage points.

About 1,500 potential poverty indicators were prepared for the 15,503 households from the 2004-2005 PHIES were used to construct the scorecard. Broadly, the indicators cover:

Household and housing characteristics (such as cooking fuel and type of floor); individual characteristics (such as age and highest grade completed) ; household consumption (such as milk and meat) ; household durable goods (such as electric fans and stoves).

Many indicators are similar in terms of their link with poverty. For example, households with a flush toilet connected to public sewerage are also more likely than other households to have piped water. If a scorecard already includes flush toilet connected to public sewerage, then piped drinking water is superfluous. Thus, many indicators strongly linked with poverty are not in the scorecard because similar indicators are already included.

The scorecard also aims to measure changes in poverty through time. Thus, some powerful indicators (such as education of the female head/spouse) that are unlikely to change as poverty changes were omitted in favour of slightly less-powerful indicators such as the presence of a radio) that are more likely to change. None of the consumption indicators (such as In the past two weeks, did anyone in the household eat any tomatoes) were selected because they cannot be directly observed nor verified.

Finally, some indicators were not selected because they are difficult to collect (Have you received or contributed to Zakat, Usher, or Nazrana?), difficult to compute, (what is the ratio of adults to children in the household?) or too sensitive (who decides whether the female head/spouse uses contraception?).

The scorecard is an easy-to-use, inexpensive tool for identifying the poor could improve targeting and speed progress out of poverty. The scorecard which is built and tested using data on 15,503 households from the 2004-2005 PIHS is calibrated to estimate the likelihood of being poor (expenditure below the official line) or very poor (poorest half of the poor).

The poverty scorecard has been used by the Sindh RSPs Consortium to estimate the likelihood of being poor of more than 400,000 households in more than 110 union councils of Sindh. For individual poverty likelihoods (whether poor or very poor), estimates are within 10 percentage points of the true value with 90 per cent confidence. For a groups overall poverty rate (again, whether poor or very poor), estimates are within 1.1 percentage points of the true value.


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## dr.umer

*Petrol price down Rs5, diesel up Rs3.50​*
ISLAMABAD: The government of Pakistan has revised petroleum prices whereby petrol price has been slashed by Rs5 per litre while rates of High Speed Diesel and koresene oil have been raised by Rs3.5 per litre.

The new petroleum prices will remain effective for next 15 days. According to sources, the government is still giving a subsidy of Rs. 10 per litre on diesel.

The new prices, which will be effective from Tuesday, will help cut gross subsidy to 2.6 billion rupees in the current fortnight, from 4 billion rupees in the one before.

But on petrol, the government has been making Rs. 19.65 as petroleum development levy. The government has decided to pass on benefit to the consumer after a major drop in the international crude oil prices.


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## Neo

*Cotton production misses target ​* 
Tuesday, September 16, 2008

ISLAMABAD: Cotton production has missed the target by three million bales owing to the governments negligence, and now raw cotton will have to imported, further burdening the foreign exchange reserves.

Cotton production is expected to be around 11 million bales, registering a shortfall of three million bales compared to the target of 14.1 million bales for 2008-09, The News has learnt. Cotton output this year will be around last years production as pest attack, particularly of mealy bug, is less severe than the preivous year, said Dr Qadir Bux Baloch, Agriculture Development Commissioner (ADC) at the Ministry of Food, Agriculture and Livestock.

However, Dr Baloch admitted that cotton production this year would not achieve the target and would be above 11 million bales. Cotton production for 2007-08 was 11.6 million bales against the target of 14.1 million bales as cotton leaf curl virus and mealy bug damaged nearly 30 per cent of the crop in Punjab only.

This will be the fourth year in a row when cotton production will miss the target, said an official at the Pakistan Agriculture Research Council (PARC). Citing some of the hurdles in the way of meeting the cotton production target, the PARC official said the gap between research institutes and policy-makers both at the provincial and federal levels was the main cause for the failure. None of the institutes at the provincial and federal levels had introduced any high-yield variety for the crop, he added.

It is an irony that MINFAL with the cooperation of the Asian Development Bank will soon offer a voluntary separation scheme to the scientists and researchers of PARC to cut workforce at the countrys premier agriculture research body.

Officials of the provincial and federal agriculture departments are directly or indirectly involved in the business of seeds, patronising the over-charging of fertiliser prices and backing mafia involved in pesticide adulteration, a progressive farmer alleged.

He further said, What Pakistan is producing in agriculture is purely because of the interest of farmers and the governments intervention at any level is zero. All the departments relating to food and agriculture should be closed down as they were mere burden on the national exchequer, he suggested.

Textile mills, spindles, rotors and looms operating in the country require nearly 13 million bales of raw cotton. According to an official at the Ministry of Commerce, around $1 billion worth of raw cotton was imported last year to meet local demand.


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## Neo

*Govt to adopt production-led growth strategy​*
KARACHI, Sept.15: The popular elected government is finally divorcing the concept of consumption-led growth to shift to production-led growth during the next five years for which the panel of well-known economists of the country did an initial brain storming session on Saturday and Sunday.

For last eight years, we practiced with religious zeal the principle of consumption led-growth for our economy and have ended up now with an unprecedented unemployment, a battered agriculture, a crippled industry and a market that is flooded with consumer goods from all over the world, an economist associated with a well-known private consultancy remarked.

He said only the banks, stock exchanges and brokerage houses flourished, thrived and earned massive profits in last eight years. But now all these institutions are on the verge of collapse these days after losing state patronage.

The government is desperately looking for relief on bilateral and multilateral basis and has asked the economists to develop a home grown strategy for production-led development and growth for next five years. This document will be given to all our friends, who are ready to help Pakistan on bilateral or multilateral basis, he disclosed.

Initially for a short-term strategy, it is agriculture-led growth and finally the real sectors -- agriculture and manufacturing  both are expected to be upgraded to contribute in growth, generate employment, revenue and strengthening social security nets, a well-known economist, who is a member of the panel engaged by the government, informed from Lahore.

For this purpose, the panel in its two days session, in which Prime Minister Yousuf Raza Gilani, Deputy Chairman Planning Commission Salman Farouqi and several federal secretaries participated, constituted four working groups to prepare reports.

Dr Hafiz Pasha, a former federal minister and adviser, is preparing the main report, which is expected to be completed by end October on macroeconomic stabilisation. Simultaneously, three other groups are being asked to prepare reports on growth strategy, institutional framework for development and security nets.

While the findings and recommendations of main report on macroeconomic stabilisation will be put into operation very soon -- late October or early November  when the government will unfold its new economic agenda and new targets for the year 2008-09, the suggestions of three other reports will be incorporated in budgets of the coming years, a source disclosed.

Sources in government and in private consultancy say that the government on its part has taken most of the harsh and unpopular decisions in last four months. The burden of subsidy on the budget has been shed off to a great extent after recent decisions to raise oil, gas and electricity prices, the inflation has apparently touched its peak and whatever harsh criticism could be made on the government has been leveled.

After a big cut in expenditure budgetdevelopment and non-development both, the government expects substantial relief from friends on bilateral and multilateral basis, there are all possibilities of unleashing of a spate of good news, private and government sources expect. They also hope for a gradual fall in inflation.

Relief from international donors on bilateral and multilateral basis hinges on undisclosed and unwritten political agenda and targets set by the international community. A temporary peace truce in Balochistan is helping to reduce expenditure on movement of army contingents. Right results from the NWFP operations should also go a long way in improving expenditure budget.

Economists in Karachi and Lahore say that Pakistans 60 years history is replete with one economic and political crisis following the other. It is because the ruling elite in Islamabad are a prisoner of a sick concept. Pakistans geo-political location has made it an indispensable ally for international community. Come what may, howsoever reckless Islamabads ruler may be, USA, Saudi Arabia and Middle Eastern Muslim kingdoms just cannot afford any destabilisation of Pakistan, he observed.


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## Neo

*Power crisis turning into a tragedy of worst proportions​*
** Businessmen estimate production losses between 30 to 70 percent​*
KARACHI: The industrial sector is incurring immense losses due to the ongoing power crisis, which has been continuing unabatedly and it has turned to be a tragedy of worst proportions.

The prolonged and intermittent power outage has almost rendered the industrial units dysfunctional as most of them do not possess alternate power generation to keep their units in operation in case of power breakdown, the representatives of industrial associations said.

The Karachis industrial area, stretched from SITE to Korangi, the largest industrial areas of the city, encompassing relatively small industrial areas of FB Area and North Karachi have seen worst situation in the last one year. The situation has become so grim at the moment, that the industrialists have lost hopes of any betterment from the authorities.

All our hue and cry falls on deaf ears whenever the higher authorities are approached to resolve the miseries of the industrial sector, an enraged businessman said and lamented it seems that economy is not on the agenda of government.

Businessmen estimate the production losses between 30 to 40 percent for the industries, which have alternate power generation, whereas those, which do not have such facility, have been incurring more than 70 percent losses in the last few days.

Zubir Motiwala, former Chairman SITE Association of Industry said that industrial units in SITE have been facing worst time due to prolonged and unannounced power outage. He pointed out that though all the units have been incurring losses, the small and medium industries units have been on the brink of collapse because of the prevailing situation.

He said power demand for SITE industrial area is around 200MW but it is presently receiving only half of its demand.

When asked if the industry approached the high ups of the government in the wake of current situation, Motiwala deplored that authorities were contacted a number of time in the past and even in the current crisis to rescue the industry, but they seem to be totally oblivious to the suffering of the businessmen community.

Idris Gigi, Chairman FB Area Association of Trade & Industry said that power breakdowns have multiple affects on the industries because these are not only causing production losses, but also damaging the sophisticated and expensive plants and equipments.

In Ramzan, when working hours are cut short, the power problem has added insult to injury as the industry remained perturbed throughout the year due to political instability and law & order situation in the country, Gigi said.

Sheikh Fazal-e-Jalil, Chairman Korangi Asssociation of Trade & Industry said that industrial units in Korangi are incurring around 40 percent losses in production as well as the export commitments are also suffering due to the inability of units to deliver the cargo in time.

Castigating the management of KESC, Sheikh said that it used to hold a fortnightly meeting with the association over the power situation in the area, however this time, no such meeting was arranged to apprise about the worst power crisis in the area.


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## Neo

*Pakistan expects $5.5bn to $6.5bn foreign exchange​*
** Amount will include $1 billion from ADB, $500 million from IDB and $4 billion to $5 billion from Saudi Arabia​*
ISLAMABAD: Pakistan is expecting between $5.5 and $6.5 billion foreign exchange cushion from international donors during the second quarter (October-December) of the current fiscal year, official sources said on Monday.

The amount would include $1 billion from the Asian Development Bank (ADB), a $500 million syndicate financing from the Islamic Development Bank (IDB) and $4 billion to $5 billion in the form of an integrated economic assistance package from Saudi Arabia, the sources said. 

According to the sources, the Asian Development Bank is set to start its disbursements for the current fiscal year with the $500 million Economic Stabilisation Programme (ESP) by the end of September. 

They said the ADB was considering some tough stipulations in the programme, and that the fund would be released to the country after they were finalised. 

The Asian Development Bank would also provide $500 million in the second quarter as part of its annual commitment to finance projects in the pipeline. 

According to the sources, Saudi officials are finalising an integrated package worth $4 billion to $5 billion for Pakistan, which will include cash economic assistance, the provision of fertiliser on deferred payment and a major portion for the Saudi oil facility. 

Pakistan is also negotiating a $500 million syndicate financing package with the Islamic Development Bank. Islamabad has previously negotiated $50 million and a deal for another $50 million is underway for various import options. A dialogue will soon start for the syndicate financing of $400 million for the import of fertiliser.

Inflows of over $1 billion and other foreign exchange cushion against imports would help Pakistan manage its depleting gross foreign exchange reserves that stand at $9.1 billion.

According to the sources, gross foreign exchange reserves of the country include $3 billion in foreign currency accounts maintained in commercial banks. Net foreign exchange reserves of the country are estimated at $4.6 billion.

The World Bank and other international financial institutions have stopped programme loans for Pakistan because of its macro-economic instability. The country will get loans from the World Bank only after it improves the macro-economic indicators as per benchmarks set by international financial institutions.


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## Neo

*Preparation of recommendations for economic stability: EAC won't seek IMF assistance ​* 
ISLAMABAD (September 16 2008): The Economic Advisory Committee (EAC) will not take any input from the International Monetary Fund (IMF) in the preparation of its recommendations for economic stability, it is reliably learnt here on Monday. Sources told Business Recorder that the EAC was likely to meet the IMF officials in the next few days, but they made it clear that EAC would not take any input from the Fund.

"We will present our independent views," said a member of the EAC. He said that the EAC was expected to hold a meeting with IMF delegation, which is currently visiting here to review Pakistan's economic situation. The meeting is expected to be held later this week or early next week. "It will be one time interaction with the Fund officials," he added.

The IMF delegation arrived here on September 12 to review Pakistan economy and it would complete the exercise by September 24. The EAC, he said, would not be meeting the IMF delegation on a daily basis. The IMF is examining the steps being suggested by the government to deal with economic crisis.

The delegation will pinpoint the shortcomings in the proposed policy measures. When contacted, EAC convenor Shaukat Tareen confirmed to the Business Recorder that the EAC was not in contact with the IMF after its delegation arrived here last week.

However, there was a possibility that the EAC would meet the IMF delegation, but this interaction did not mean that it would influence our own findings, he said. The EAC was formed by the government as a think tank of independent economists before the announcement of budget for the current financial year. Under the EAC's terms of reference (ToRs), it is bound to give independent views as majority of the EAC members is from the private sector.

Some circles are of the view that the panel of economists, formed by the Planning Commission (PC), has some members, who worked in certain capacities with the international financial institutions (IFIs). Deputy Chairman of Planning Commission Salman Faruqui was not available for comments when this correspondent contacted him on his phone.

A member of the panel of economists, however, clarified that terms of reference (ToRs) are still to be framed for the panel. The panel will form different working groups and then it will give its report to the government. He said that it was not feasible that the panel of economists would talk to the IMF for preparing its report.


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## Neo

*Money and energy saving plan discussed ​* 
ISLAMABAD (September 16 2008): The government is ready to take harsh steps under a national 'money and energy' saving programme basically worked out for judicious use of indigenous available resources to reduce dependence on loans to a possible level. The programme envisages short and long term measures.

Sources said short term steps being recommended to the federal cabinet in its next meeting include ban on import of luxury cars, ban on marriage parties at night, closure of lights in food streets after 10 pm, reduction in street lighting, shut down of electricity in public parks after 9.00 pm and stoppage of last show in cinemas throughout the country.

Closure of petrol pumps for one day every week, two days holidays a week for saving electricity, gas and other resources which are being spent on the government and public transport are also the part of the national saving programme.

Other steps recommended to the federal cabinet include launching of a campaign of one bulb closure in compounds/yards. It also includes introduction of higher capacity public transport vehicles and introduction of mass transit transport in the major cities to save fuel to cut down import bill.

Long term steps include mini hydel generation like Nandipur on Head Marala canal, zone distribution of energy for industrial, commercial and residential sectors. These also included small size generation on perennial canals, water channels in northern areas and mass education on energy utilisation.

New and renewable sources of energy and coal resources utilisation are also a part of the national saving programme. The possible steps for implementation of the national saving programme were discussed here at a meeting on Monday. The working paper presented at the meeting said annual requirement of POL products in 2007-08 was around 19 million tones which was arranged through import of 9 million tones of deficit petroleum products and remaining was produced in the local refineries by processing of imported and local crude oil.

It added that petroleum products imported during 2007-08 were as follows. HSD 4.5 million tones, kerosene oil 4.2 million tones, jet fuel 0.119 million tones, and motor spirit 0.127 million tones.

The meeting was informed that during 2008-09, total demand of petroleum products is estimated at 21.48 million tones, 9.9 million tones of deficit petroleum product valuing $7,427 million while the rest of demand will be met from local refinery production.

It was told that five major oil refineries are functional in Pakistan with 1.3 million tones refining capacity. 12 oil marketing companies (OMCs) provide refined products in Pakistan, having 6,087 retail outlets.

Only HSD and MS is sold through petrol pumps throughout the country. According to current estimates for demand of HSD and MS a weekly off in sale of these products would reduce their total demand by 14 percent on annual basis. HSD to be saved by one off 1,173 tones and MS 213 tones.

It would be relevant to point out that exact quantum of POL product conservation due to one day closure of petrol pumps can not be determined as the customers will fill their vehicles a day before. High Speed Diesel (HSD) and Furnace Oil (FO) are main deficit products. The annual import of HSD/FO is about 4.5 million tones each valuing around 6 billion.

To cut down import of these products, following steps need to be taken: Maximise indigenous production of oil to enhance production of HSD/FO by local refineries; maximise exploitation/use of coal to replace furnace oil in power/industry; maximise indigenous gas production for use in the power/industry to reduce furnace oil consumption; increase hydel power generation to reduce FO consumption.

The national saving programme also includes introduction of mass transport system, especially in major cities to reduce HSD consumption. Energy conservation policy must also be announced to rationalise the genuine use of these two deficit fuels.

Other measures which are being recommended to the federal cabinet are annual vehicle check ups in order to optimise fuel consumption, tuning of boilers and furnaces at industry level, optimisation of bus routes within cities (shortcut travel distance) needs to be implemented.


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## Neo

*Vital projects being removed from CDWP agenda ​* 
ISLAMABAD (September 16 2008): A large number of ministries face serious setback as their important development projects are being removed from the agenda of the Central Development Working Party (CDWP), and the schemes are being replaced with politically motivated projects.

Sources told Business Recorder on Monday that CDWP will meet on September 18, but the agenda had been revised three times to accommodate projects being launched in the constituencies of PPP leaders, sitting on most of the powerful seats in the government.

According to the original agenda, water and power ministry had sought Rs 116.60 billion for Diamer Basha dam's land acquisition and resettlement plan, and Rs 0.65 billion for detailed engineering design and tender documents of Munda dam.

However, the Munda dam project has been removed from the agenda, which is a serious setback for the water and power ministry that is under serious criticism for power shortage, currently faced by the country. Munda dam is an important project. It has already been delayed, and putting it off the agenda would dent the water and power division efforts expedite the project.

It is still unclear that Diamer Basha dam land acquisition and resettlement plan would make it to the final agenda, to be taken up by the CDWP later this week. This would be the first meeting of the CDWP in the current financial year, during which the government is facing resource crunch for taking the development agenda ahead.

Sources said that government high-ups are more concerned about the development schemes in Multan and Larkana. To accommodate these schemes, important projects in infrastructure sector are being ignored, they added. According to agenda, the meeting was to take up 52 development projects, costing over Rs 322 billion, including a foreign exchange component (FEC) of Rs 117.96 billion. Since the agenda is under revision, nothing could be said for sure how many of these projects would stay for consideration of the meeting.

In the energy sector, Pakistan Atomic Energy Commission (PAEC) is also seeking Rs 139.01 billion for Chashma Nuclear Power Project, Units 3 and 4. Pakistan expects to get foreign assistance of Rs 99.53 billion for establishing the two units.

Besides this, the water and power ministry is also demanding Rs 6.43 billion for import of power from Tajikistan. The ministry also forwarded a plan of conducting feasibility study for supply of canal water to Thar Coal Power Project. However, the ministry gave no details of the required allocation for the study. Sources said that late on Monday, a new agenda of the meeting was circulated.

Food and agriculture has three projects worth Rs 10.289 billion. The devolution and area development sector consist of two projects worth Rs 872.391 million. The education sector has five projects worth Rs 1.848 billion. The agenda shows six projects for water resources sector with a total cost of Rs 11.364 billion.

The energy sector consists of 11 projects worth Rs 267.936 billion. The environment sector consists of four developmental projects worth Rs 1.956 billion. The forestry and wildlife sector has a single project namely, 'Rehabilitation of denuded forest areas through sowing and planning and development of farm/social forestry with community participation in northern areas', with a cost of Rs 170.869 million.

The governance sector consists of three projects worth Rs 6.163 billion. The health sector has a single project worth Rs 796.050 million. The Higher Education Commission (HEC) has eight development projects with a total cost of Rs 5.912 billion. Transport and communication sectors have five development projects worth Rs 12.888 billion.


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## Neo

*Load shedding shrinks trade, industrial activity to 20 percent ​* 
KARACHI (September 16 2008): The rampant electricity load shedding by 12-16 hours a day in the city has shrunk the trade and commercial activities to 20 percent, whereas small and medium production units are facing financial crunch and due to unavailability of electricity have scaled down their productions by 80 percent, traders said on Monday.

The SME sector is faced with serious financial crisis which has emerged in the wake of acute electricity deficit, which has restricted the production to only 20 percent. As a result, production in many units remains at a halt, said Mehmood Hamid, President of All Pakistan Organisation of Small Traders and Cottage Industry (APOSTC).

He termed the prolonged electricity load shedding as a "conspiracy" to put adverse effect on the country's economy. In spite of a 12-hours working shift at these production units, hardly the machines operate for two hours. Workers remain inactive due to dull activity, while owners have to pay them even for overtime every day, he said, adding that such a situation has brought the small and medium industrialists into a financial crisis.

"The entire city has been left to the mercy of Karachi Electric Supply Company (KESC). And, violent protests can erupt any time due to the abrupt and prolonged electricity cut to residential and industrial consumers by KESC on daily basis," Hamid expressed fears.

He maintained that on the one hand the trade deficit widens, spurring inflation and, on the other, the government increases electricity tariff, which is making the economy more sluggish. Even though the bigger industrial units are striving hard to cope with the huge electricity deficits, the SME sector is stepping towards a closure, he said.

The national exchequer bears over Rs 100 million losses per day for electricity shortage to industries, he said, adding that the government should pay attention to Karachi's SME sector and resolve their problems.

In the retail markets, sales has almost reached 20 percent, said Fareed Qureshi, general secretary of Karachi Retail Grocers Group (KRGG). He said that for almost 16 hours load shedding is being carried out, which has inflicted huge losses on retailers and put negative impacts on the business. UPS have also stopped proper functioning due to over-utilisation, while the batteries are also costlier, he said, adding that small retailers cannot afford to buy generators.

Atiq Mir, chairman of alliance of market associations, said that business activities remain for less than six hours a day. He criticised the recent government's decision of making the electricity costlier by 31 percent, saying that such moves will bring an increase in the electricity theft.

He expressed pessimism that electricity load shedding will continue to unless a short term plan is devised, while a job that should have been done two decades ago for enhancing electricity generation is not yet on the government's agenda.


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## Neo

*Blockade of Chenab River inflicts Rs37bn loss to agriculture ​* 
Wednesday, September 17, 2008
By Khalid Mustafa

ISLAMABAD: Punjab, the food basket of entire Pakistan, has sustained a huge monetary loss amounting to almost Rs37 billion in the wake of a blockade of Chenab River by India.

According to a senior official in the Punjab irrigation department, over 10 million acres of land in the province has been affected and the standing paddy crop in the area has suffered a lot, as it was the time of maturity and the province badly needed the last watering, which could not be completed just because of the blatant violations of Indus Waters Treaty 1960 by India and continuing to fill up the dead shortage of Baglihar HPP beyond August 31, 2008.

Under the treaty, India cannot reduce the flow in Chenab River below 55,000 cusecs between 21st June and August 31, 2008, whereas Pakistan had been receiving a discharge of as low as 20,000 cusecs during August-September 2008.

The official further said that the government had projected the rice production at 5.7 million tonnes, but the reduction in flows in Chenab River at this point of time will reduce the production by 15 to 20 per cent. This means that rice production will come down from the expected target of 5.7 million tonnes to 4.7 million tonnes.

To a question, he said that these are the preliminary estimates. However, Punjab irrigation department has started working to exactly ***** the losses, which the agrarian economy of the province will sustain.

To a question he said that 10 million acres land in areas of Sialkot, Gujranwala, Sheikhupura, Hafizabad, Faisalabad, Okara, Lahore, Pak Patan, Vehari and Bawalnaghar have been affected. Out of 10 million acres of land, 5.6 million acres of land has adversely been affected in the areas of Sialkot, Gujranwala, Jhang, Faisalabad and Sheikhupura.

When contacted, Pakistan Commissioner of Indus Water Syed Jamaat Ali Shah, who was on his way to Lahore after attending the meeting in Islamabad held on Tuesday with Minister for Water & Power, Raja Pervez Ashraf in the chair over the interference of flows of River Chenab at Marala head works in Pakistan, said that Pakistan has the option to move Neutral Expert or Court of Arbitration seeking for penalty against India for violation of the treaty.

First the issue will be taken up at the level of Permanent Commission of Indus Waters (PCIW) for solution once and for all and incase of failure, Pakistan has the option to move Neutral Expert and Court of Arbitration.

He said that Neutral Expert under the treaty can be moved for compensation of water loss and Arbitration Court for financial loss in case India refuses to pay the compensation. 

In the forthcoming meeting of PCIW, he said that Pakistan would come up with solid proof based on undeniable data about the blatant violation of the treaty committed by India.

To another query, Shah said that India has stored 0.2 million acre feet of water for Baglihar project to make it operational in the current month of September.

He vowed that he is to soon visit the site of the Bagluhar project as he has sought dates for the visit from Indian Commission of Indus Water to this effect. However, he said that the Indian Commission is still unmoved over the demand of Pakistan seeking the data of inflows in Chenab River. My counterpart has so far shown inability in letting us know about the exact inflows of the Chenab River.

Meanwhile, a very crucial meeting on the reduction in flows of River Chenab at Marala head works was held in the Ministry of Water & Power under the Chairmanship of Minister for Water & Power, Raja Pervez Ashraf. The meeting was attended by senior officers of Ministry of Water & Power, Foreign Office PCIW, Law & Justice, WAPDA, Irrigation Department, Punjab and the related institutions.

The meeting was apprised that India had committed a blatant violation of the Indus Water Treaty by reducing Chenab flows to Pakistan and continuing to fill up the dead shortage of Baglihar HPP beyond August 31, 2008.

Pakistan Commissioner for Indus Water (PCIW) gave a detailed presentation on the issue and informed that he had already taken up the issue with his Indian counterpart. This was followed by a comprehensive discussion. The members were apprised that the initial filling of dead storage of Baglihar Plant in AJ&K on river Chenab resulted in to a substantial reduction of water at Marala.

This has caused a massive agricultural loss to vast areas of Marala command canals. It has also resulted in early depletion of Mangla dam reserves so as to mitigate some of the adverse affects on certain canals. The overall loss to the national economy (loss of water, damage to agricultural crops, overconsumption of energy for running tube wells, etc) had thus been colossal, which are being assessed by the Government of Punjab.


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## Neo

*ADB scales down Pak growth rate projection to 4.5pc ​* 
Wednesday, September 17, 2008

ISLAMABAD: Asian Development Bank (ADB) has revised downward the macroeconomic projections for Pakistan by scaling down the GDP growth rate to 4.5 per cent from 5.5 per cent.

ADB assessment is based on unprecedented increase in inflationary pressure of up to 20 per cent against the target of 11 per cent and the possibility of missing the fiscal deficit target of 4.7 per cent of the GDP.

Asian Development Outlook (ADO-2008) an ADB report states that political tensions in Pakistan will lessen leading to a more stable political environment, though uncertainty and security concerns will continue to affect economic decision making and investors confidence.

The measures announced in the budget to rationalize subsidies and curb demand will be implemented and overall demand management policies will be tight.

International oil prices will remain high and the ending of oil subsidies as well as continued power shortages will increase the cost of doing business and therefore exacerbate inflation.

On these assumptions, growth in FY2009 is expected to remain subdued at 4.5 per cent, with a continued slowdown in commodity producing sectors, the ADO-2008 states.

Domestic spending will have to rise less than output for the current account deficit to shrink, the ADB report says. In these circumstances, export growth becomes crucial, as it will help make the current adjustment less painful.

The faster the growth in exports the smaller the reduction in growth required to close the deficit.

The ADO-2008 says that cotton production is likely to fall short of target due to a reduction in the sown area and a mealy bug attack. Lower cotton production will hurt the textile industry.

It is too early to predict the winter wheat crop, which will depend on the availability of water. 

Robust growth in services is expected to continue, although the sector will be affected by the tax measures announced in the budget and by power shortages, it stated.

Consumption in FY2009 will be hit by higher prices as food, oil, and power subsidies are rationalized. Government expenditure will be suppressed by measures announced in the budget to contain current spending. Investment levels will be restrained by uncertainty, low capital inflows, and power shortages. 

The present power shortages, the ADB states, are due to under-investment in new generation capacity, power transmission and distribution infrastructure, and delayed institutional reforms. 

With the Government setting out to progressively rationalize the oil subsidy by passing on higher prices to consumers and by reducing the subsidy between the full-cost producer price and tariffs charged for electricity, average inflation is projected to reach 20.0 per cent in FY2009, higher than the government target of 11.0 per cent, the ADO-2008 states. 

The planned adjustment of the domestic wheat procurement price will contribute to higher food inflation.

SBP has increased the discount rate several times since June 2007, taking it from 9.5 per cent to 13.0 per cent, and yet inflation has climbed. Moreover, the ensuing increase in the Karachi interbank offered rate has led to a rise in bank lending rates. 

To the extent that inflation in Pakistan is driven by high commodity prices, monetary tightening will have a limited impact on inflation and will most likely aggravate the economys other structural problems.

Excessive dependence on higher interest rates to stabilize prices will make firms reluctant to use debt financing and therefore push them to rely more heavily on self-financing, which might lead to less efficient capital allocation. Moreover, unless interest rates are raised significantly, it will probably take a long time for monetary policy to have an impact on the economy and inflation.

Although a tightening of expenditure policies, such as fiscal discipline, helps keep inflation in check, it also acts as a deflationary force resulting in underused production capacity and higher unemployment.

A more effective anti-inflation tool would be identifying and eliminating fiscal programs that induce an inflationary bias in the economy, combined with pushing through moderate increases in interest rates to limit excessive credit expansion.

The Government expects a significant reduction in the fiscal deficit as a result of the measures adopted in the FY2009 federal budget. However fiscal deficit will likely exceed the government target of 4.7 per cent of GDP-but the outcome should be much better than in FY2008, the report added.

It is crucial to protect the poor from the impact of high oil and food prices. In this regard, the social protection programs announced by the Government in the budget need to be implemented quickly. As part of this effort, the Government has launched the Rs34 billion Benazir Income Support Program, under which qualified beneficiaries will receive Rs1000 a month. Imports are projected to grow at the relatively slow pace of 9.5 per cent (in nominal US dollars) in FY2009. 

If Saudi Arabia grants a deferred-payment facility for oil it will help reduce pressure to finance the current account deficit. The long-term solution to the external deficits, however, involves a substantial upgrading and diversification of the export base.

Government will need to maintain fiscal discipline, persist in cutting down subsidies and reduce reliance on borrowing from SBP.


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## Neo

*Domestic debt balloons to Rs3.26 trillion ​* 
Wednesday, September 17, 2008

KARACHI: Government borrowed Rs662.7 billion from domestic sources in order to meet its budgetary expenses in financial year 2008, which is 137.5 per cent higher than domestic borrowing of Rs279 billion in fiscal year 2007. 

According to the State Bank of Pakistan (SBP), up to June 30, 2008 total volume of domestic debt swelled to the historic high level of Rs3.264 trillion which was recorded at Rs2.601 trillion a year back on June 30, 2007. 

The countrys floating debt, which is generally acquired through the market treasury bills, borne the lions share in the unprecedented growth in the total domestic debt which stood at Rs529.7 billion in fiscal year 2008 as compared to Rs167.4 billion in 2007. 

The overall floating debt touched peak level of Rs1.6379 trillion by end of June 2008 against Ra1.1082 trillion in June 2007, which is 5 per cent up witnessed FY07. Moreover, the permanent debts went up by Rs55.4 billion to Rs608.4 billion in 2008 as against Rs553 billion in June 2007. 

Unfunded debt which comprises Defence Saving Certificates, National Deposit Certificates, Khas Deposit Certificates, Special Saving Certificates (Reg), Saving Certificates (Bearer), Regular Income Certificates, Premium Saving Certificates, Bahbood Savings Certificates, Khas Deposit Account, Savings Accounts Savings Accounts, Mahana Amdani Accounts, Pensioners Benefit Accounts, Postal Life Insurance and GP Fund grew by Rs55.4 billion to Rs608.4 billion in FY08 comparing with Rs553 billion in June 2007.


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## Neo

*Focus on labour intensive industries needed to create jobs ​* 
Wednesday, September 17, 2008

LAHORE: Economic managers of the country face a daunting but doable task of creating jobs in declining growth by focusing on agriculture and labour intensive industries that would also promote more inclusive growth.

The decline in GDP growth is a reality. The local experts were contemplating to reduce the GDP growth target for this fiscal to 5 per cent, while the Asian Development Bank has assessed it at 4.5 per cent. This is a massive reduction of 2 per cent over the original growth target fixed in Federal budget 2008-09. Traditionally, declining growth not only stops new job creation but might result in some job losses as well.

Although former Federal Finance Minister Dr Salman Shah has stated that reducing the GDP growth rate to 5 per cent would result in 400,000 less jobs, many economists tend to differ with him. They point out that job creation is not directly related to GDP growth, but is linked to the quality of GDP growth based on state policies.

Senior economist Naveed Anwar Khan FCA said that the average growth of seven per cent achieved during the five years of the previous regime did not create many jobs because the growth was heavily tilted towards the elite class. The rich were becoming richer and the poor were further marginalised. He said that import based growth based on local consumerism in fact marginalised many local industries.

He said even the robust textile sector was forced to look for government subsidies as the import facilitations of the previous regime encouraged foreign apparel manufacturers to dump the Pakistani markets. He said the local apparel sector has been booted out of the local market as a result of this policy.

He added that apparel is the most labour intensive textile sector. Apparel manufacturers employ 6 persons per sewing machine. He said at least half a million machines are lying idle because of loss of local market. A proper apparel and fabric import policy that denies foreigners easy access to local markets can revive this sector and create at least a million jobs a year, he noted.

Respected chartered accountant Yunus Kamran FCA said that during the audit of many textile sector companies, he found that most of the companies that went sick were victim of government policies. He said the revival of the economy would take some time as the government assumed power when every economic indicator was on the decline and the economic managers placed their thrust on revenue generation without simultaneously devising a viable economic plan.

He said the government is lucky that despite the massive increase in construction cost, this industry is still showing robust growth. He said the construction industry is not only labour intensive, but also absorbs a major chunk of the unskilled labour, which is in abundant in Pakistan. He said the government should devise policies that facilitate this industry and regulate the rates of construction items prudently. He said boosting the apparel and construction industry coupled with import restrictions would boost employment at lower GDP growth.

Leading knitwear exporter and former chairman Pakistan Hosiery Manufacturers Association M I Khurram said that the industry now realises that the salvation of the economy lies in exploiting Pakistans agriculture potential. He said one reason for the gloom in textiles is that Pakistan is not producing enough cotton to feed its textile sector.

The potential of cotton production through biotechnology is enormous. He said Pakistan could be a cotton surplus country if high quality BT cotton is introduced in the country. He said boosting cultivation of oilseeds and food grains through dedicated policies could provide the economy a breathing space before the industrial activities speed up. He said sustained agricultural growth would boost the agro-based industries and provide rural jobs.


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## Neo

*Pakistan to miss major goals: ADB​*
ISLAMABAD, Sept 16: The Asian Development Bank has forecast that Pakistan will miss major economic targets set for the current fiscal year, with growth faltering at 4.5 per cent, inflation rising to 20 per cent and fiscal and current account deficits going beyond budgeted limits.

In its Asian Development Outlook 2008 Update released here on Tuesday, the bank also warns of political risks including further increase in political uncertainty and a deterioration in the security situation on the countrys western border.

The country needs to adopt and implement a coherent and credible short- to medium-term economic stabilisation and reform programme to move forward, it said.

The bank said: With continued high oil prices, an ongoing power deficit, and tightened demand management policies to correct macroeconomic imbalances, economic growth in fiscal year 2009 is put at only 4.5 per cent rather than budgeted target of 5.5 per cent, with a continued slowdown in commodity producing sectors.

It said high inflation will persist as domestic fuel, food, and power subsidies are rationalised. Although imbalances are expected to shrink they cannot be eliminated quickly.

The bank believes the continued power shortages will increase the cost of doing business and therefore exacerbate inflation to touch 20 per cent against targeted 11 per cent. Domestic spending will have to rise less than output for the current account deficit to shrink. Therefore, the export growth becomes crucial, as it will help make the current adjustment less painful.

The report pointed out that tightening of expenditure policies could act as deflationary force resulting in underused production capacity and higher unemployment. Therefore, the government should adopt effective anti-inflation tool by identifying and eliminating fiscal programmes that induce inflationary bias in the economy, combined with pushing through moderate increases in interest rates to limit excessive credit expansion.

Moreover, to prevent a wage-price spiral, the authorities should consider implementing policies that link nominal wage increases to productivity increases and that limit increases in firms mark-ups, through, for example, tripartite agreements among the state, employer and the worker.In agriculture, cotton production is likely to fall short of target due to a reduction in the sown area and to a mealy bug virus attack, which will hurt the textile industry. The services sector is expected to post robust growth, although it will be affected by the tax measures announced in the budget and by power shortages.

On the demand side, private consumption in current year will be hit by higher prices as food, oil and power subsidies are rationalised. The bank said the investment levels will be restrained by uncertainty, low capital inflows and power shortages.

Private investment, it said, has stagnated, falling to 14.2 per cent of GDP while national savings as a share of GDP declined even more, widening the savings-investment gap.

With the government setting out to progressively rationalise the oil subsidy by passing on higher prices to consumers and by reducing the subsidy between the full-cost producer price and tariffs charged for electricity, average inflation is projected to reach 20 per cent, higher than the target of 11 per cent. The planned adjustment of the domestic procurement wheat price will contribute to the higher food inflation.

It said the State Bank of Pakistan has increased the discount rate from 9.5 per cent in June 2007 to 13 per cent, yet the inflation has climbed. To achieve targeted 14 per cent increase in money supply, the government would need to have strict limits on budget access to SBP credit. Since the inflation in Pakistan is driven mostly by high commodity prices, monetary tightening will have limited impact on inflation and will most likely aggravate the economys other structural problems.

Excessive dependence on higher interest rates to stabilise price will make firms reluctant to use debt financing and therefore push them to rely more heavily on self-financing, which might lead to less efficient capital allocation. Moreover, unless interest rates are raised significantly, it will probably take a long time for monetary policy to have an impact on the economy and inflation.

The bank said in last financial year, the oil imports increased by 43 per cent and food imports by 46 per cent, causing the trade deficit to worsen and touch $15.3 billion. Though the export target of $19.2 billion was exceeded it was mainly because of higher rice exports and some improvement in cement exports.


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## Neo

*Pakistan may move WB against India over Chenab water​*
** Water loss of 0.2m cusecs estimated
* Islamabad to ask New Delhi to compensate by releasing water in Sutlej, Chenab, Ravi​*
ISLAMABAD: Pakistan on Tuesday decided to approach the World Bank (WB) in a last ditch effort for arbitration over a violation of the Indus Water Treaty by India if New Delhi did not concede the violation.

According to sources, India reduced water flow in the Chenab River that had hit the kharif crop hard in Pakistan. India has committed gross violations of the Indus Water Treaty by reducing water flows in the Chenab River to fill Baglihar Dam. Pakistan will demand compensation for the water loss, they said.

Chairing a high-level meeting held at Head Marala to consider Indias interference in the flow of the Chenab River, Water and Power Minister Raja Pervez Ashraf decided to lodge a strong protest with India against the violation. Sources said the Punjab Irrigation Department had also been asked to assess all losses incurred to the kharif crop.

Sources said Pakistan would take up the issue with India on a water commissioner-level meeting likely to be held in New Delhi. We will demand compensation estimated at 0.2 million cusecs in water loss. If India does not accept the violation, Pakistan will go to the WB for arbitration, they said.

Compensate: They said Pakistan would ask India to compensate the water loss by releasing water in the Ravi, Sutlej and Chenab rivers. They said the meeting had also asked the Punjab Irrigation Department to assess the losses that would be placed before the Indian authorities during the water commissioners meeting.

Sources said Pakistan had also demanded that the Indian government conduct the inspection of Baglihar Dam, adding that the Pakistan commissioner for Indus water (PCIW) had taken up the issue with his Indian counterpart. They said the Indian water commissioner had written to the ministry concerned and the Indian-held Kashmir government to get the dam inspected by Pakistani officials.

The water and power minister and the participants took serious note of the reduction of water in the Chenab River and decided to lodge a strong protest with India against the violation. The minister directed the concerned quarters to take necessary action, and directed the Pakistan commissioner to undertake a tour of inspection and hold formal discussions with the Indian commissioner.


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## Neo

*FBR to collect Rs 1.250 trillion in taxes this year​*
Karachi: Chairman Federal Board of Revenue (FBR), Ahmed Waqar, said that the board had fixed the target of Rs 1.250 trillion for tax collection in the 2008-09 fiscal year.

"FBR has received Rs 145 billion during the first two months of the current fiscal year," Ahmed Waqar expressed his views in the inaugural ceremony of First-KIOSK launched by FBR in a local Mall center here on Tuesday.

FBR chairman said that during the previous fiscal year the target of tax collection was Rs 1.125 trillion but this year board has increased the target to Rs 1.250 trillion.

While talking to newsmen he said that reason for the imposing of regulatory duty on luxurious items is to reduce the country's import bill.

Ahmed Waqar denied the notion of receiving any suggestion regarding the CVT and said that it would be considered if any suggestion is received in this regard.

He told the journalists that the board wants to establish cordial relations with the taxpayers and to provide them with a friendly atmosphere for tax receiving.

FBR chief told that the increase in the tax target is aimed at providing enough money for the development projects.

On the occasion, TRO Karachi, Israr Rauf said that for the facilitation of the taxpayers, 50 KIOSK centres would be established in the 18 towns of Karachi.

After the launching of KIOSK scheme the TRO Karachi will be able to collect more than 1 million returns till 30 September.

He said that the reaction to the KIOSK scheme has remained positive and it is evident from the fact that 730,000 returns were submitted in the previous year and only 446,000 were submitted in the 2006. staff report


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## Neo

*Pakistan may face 30-40% water shortage​*
ISLAMABAD: Pakistan is likely to face a 35 to 40 percent water shortage during the forthcoming Rabbi season and the Indus River System Authority (IRSA) has called a meeting of its technical committee on September 22 to chalk out a plan, sources in IRSA said on Tuesday. Pakistan is pursuing an aggressive agriculture productivity enhancement agenda to achieve food security and the water shortage may negatively impact the wheat crop, the sources said, adding that the water storage level in reservoirs was at a lower level compared to the Rabbi season last year. They said water inflows in the rivers had also fallen to the lowest level in 10 years.


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## Neo

*Stop blaming the IMF! ​*By Meekal A Ahmed

Pakistans present economic crisis is the consequence of its persistent failure to follow IMF advice and implement a programme in full

I would like to take issue with Manzur Ejazs article Perilous policies (Daily Times, September 10). I agree with him that Shaukat Azizs policies contained the seeds of their own destruction, something that should have been foreseen. The likeliest explanation is that even though it was known the strategy was flawed, Aziz and Co. were only concerned with the short-term gains as none of them was going to be around for the long-term.

An easing of monetary policy provided a significant boost to the economy. Real growth accelerated at first. Inflation, which started from an unusually low base of around 2-3 percent started to pick up, but did not appear to be a matter of concern in the initial phase of the economic upswing. This proved to be deceptive. At a later stage, the strength of inflationary pressures probably caught everyone by surprise as the lagged effects of the loose policies were felt. Inflation was made worse by the exogenous oil and food price shocks.

Mr Ejaz wonders where the International Monetary Fund was when all this was happening. The simple answer is that Pakistan had graduated from the use of IMF resources, leaving the latter with no leverage or influence in shaping policy anymore.

Pakistans relationship with IMF-sponsored reforms has been a recurring pattern of hope, euphoria, despair and crisis. And then the cycle repeats itself all over again. An IMF programme is agreed to; it turns the balance of payments around, and foreign exchange reserves start to build up. Confidence returns. Capital flight reverses. Pakistan gets debt relief from the Paris Club and other bilateral donors. Aid flows increase, and so on. The economy stabilises.

The next step is a transition to the second phase of adjustment: acceleration into sustained, non-inflationary growth, but it is subject to one critical proviso: the macroeconomic polices must not be loosened prematurely.

No government in Pakistan has been able to resist the temptation to ease the policy stance in the mistaken belief that loose policies produce economic growth and tight policies dont. The evidence suggests the opposite. The false comfort afforded by the presence of a large reserve cushion leads policymakers to relax and begin taking risks, which invariably include populist measures. With no IMF around, there are no constraints on decision-making.

As policies are loosened, at some point, with demand racing ahead of supply, inflation picks up. The balance of payments deteriorates because of excess demand, and foreign exchange reserves start to deplete. The rupee comes under pressure as capital flight accelerates. From a position of strength and promise where the economy had been stabilised and was poised to grow, political pressures, undue haste, mismanagement and bad policy decisions bring the economy back to the brink of disaster. Pakistan is once again forced to turn to the IMF and the whole scenario repeats itself all over again.

Mr Ejaz feels that IMF policies have hurt Pakistan, but it is not clear which policies he is referring to that Pakistan has implemented. I know of none. This talk about harsh IMF policies and their impact on the economy is a myth. Pakistan has never implemented an IMF programme in earnest and never taken ownership of an IMF adjustment programme as being in its own interest, having always used the IMF as a scapegoat for tough measures, claiming them to have been taken under IMF pressure.

Pakistan has never demonstrated a lasting commitment to reform and structural change. Adjustment fatigue quickly sets in and macroeconomic populism takes over. Reforms are implemented haltingly and partially, taking the line of least resistance. There is much muddling through, cutting corners, and massaging the data.

Two key reforms sponsored by the IMF relate to the tax system and central bank autonomy. And how well has Pakistan implemented these reforms? Despite having received more advice and technical assistance than any other government agency, the performance of the Federal Bureau of Revenue (FBR) has actually worsened. A country which cannot collect more than 9 percent of GDP in taxes has no future and no hope of meeting the growing needs of its citizens.

The IMF is not responsible for the appalling record of the FBR. For one thing, the IMF cannot collect our taxes for us: that is entirely for the FBR to do.

Granting the State Bank full autonomy was also part of IMF conditionality but the Bank has never exercised that autonomy. Monetary policy has not been conducted independently, and the same is true of interest rate and exchange rate policy. The State Bank has failed to keep inflation under control, another key variable under the IMF programme.

In addition to taxation reform and central bank autonomy, there are many examples of reforms that Pakistan committed itself to but never implemented, except superficially. Other reforms were halted, rolled back or abandoned, the most egregious rollback being the reinstatement of all the exemptions and concessions initially withdrawn.

It is on record that by the time of the first IMF Review, the programme was usually found in complete disarray with most if not all targets breached, making it necessary to reset them. This constant resetting of targets nails another myth, namely that IMF programmes are too tough to implement. If programme targets are constantly reset, if the adjustment path is constantly redrawn and pushed out into the future, how tough can that programme be?

Astonishingly, despite the constant resetting of targets, Pakistan could still not complete an IMF programme, barring one exception. As such, there is nothing wrong with the IMF or its programme: there is something wrong with us. Can any economy grow steadily under these circumstances, provide jobs for its labour force, raise living standards, reduce poverty, and bring prosperity? Pakistans present economic crisis is the consequence of its persistent failure to follow IMF advice and implement a programme in full.

A start-stop, one tranche, multiple waiver, target reset, halt, abandon, rollback, short-cut, fake-the-data approach will just not work or bring prosperity to Pakistan. Pakistans policymakers need to wake up as nothing is to be gained by placing the blame for all the nations economic ills at IMFs doorstep. The IMF is not responsible for a 25 percent rate of inflation, a fiscal deficit in excess of 7 percent of GDP, a tax-to-GDP ratio of 9 percent of GDP, and an external current account deficit at a record 8 percent of GDP.

The IMF has not played a role in, nor contributed to, the many egregious examples of our incompetence, mismanagement, non-implementation, programme interruptions and programme failures. Nor is it responsible for our policy deviations, blunders and resort to fraudulent data. The plight we find ourselves in today is part of a familiar, repetitive cycle, and not because of IMF policies that remain unimplemented.

But there is good news. The President has said we are not going to the IMF. This is a blessing in disguise: I, for one, cannot deal emotionally and mentally with another adjustment programme that we will turn into a farce.

The writer is an economist who has worked with the Planning Commission and the IMF


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## Neo

*Current account deficit widens to $2.57bn in July-Aug ​* 
KARACHI (updated on: September 17, 2008, 17:19 PST): Current account deficit widened sharply to $2.572 billion in July and August, the first two months of the 2008/09 fiscal year, the State Bank of Pakistan said on Wednesday. This compared to $1.571 billion in the same period last year.

The two-month deficit is equivalent to about 1.6 percent of Pakistan's gross domestic product (GDP), and compares with a full-year target of 6.0 percent of GDP.

The current account balance without official transfers, transfer payments which are directly made to the government, amounted to $2.633 billion, compared with $1.575 billion in the first two months of fiscal year of 2007/08.

"There were hefty oil payments in August," said Asif Qureshi, head of research at Invisor Securities Ltd.

"With oil prices coming down, we might see some pressure ease off the current account balance."

On Tuesday, global oil prices fell to a seven-month low in a broad cross-market sell-off.

However analysts said the July-August current account number was alarming and in the short-term steps to reduce imports would be necessary.

Trade deficit widened to $1.87 billion in August compared with $1.64 billion in July and $1.28 billion in August last year.

The consumer price index in August rose 25.33 percent from a year earlier, compared with a full-year target of 12 percent for the current fiscal year.

The Pakistani rupee hit a record low of 77.65 on Wednesday due to import payments, weak economic fundamentals and concern over tension with the United States, Pakistan's largest donor, over US military attacks on militants in Pakistani territory.


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## Neo

*Economic growth in fiscal year 2009 likely to remain subdued: ADB report​* 
FAISALABAD (September 17 2008): The Asian Development Bank has observed that the unprecedented increase in global oil and food prices and domestic policy uncertainties in a turbulent political year stressed the Pakistan economy in FY2008, resulting in a slowdown in growth, build-up in inflation, wide fiscal and current account deficits, a weaker currency, and a large drop in foreign reserves.

The 'Asian Development Outlook 2008 Update' (ADO Update) has forecast that the growth in FY2009 is expected to remain subdued at 4.5 percent, with a continued slowdown in commodity producing sectors. Domestic spending will have to rise less than output for the current account deficit to shrink.

Increased risk perception was seen in downgrading of credit ratings, rise in sovereign bond spreads, slide in capital inflows, and declining access to international capital. With continued high oil prices, an ongoing power deficit, and tightened demand management policies to correct macroeconomic imbalances, economic growth in FY2009 is put at only 4.5 percent, ADO Update 2008 said.

The ADO Update 2008 says that high inflation will persist as domestic fuel, food, and power subsidies are rationalised. Although imbalances are expected to shrink, they cannot be eliminated quickly. To move forward, a coherent and credible short- to medium-term economic stabilisation and reform program needs to be adopted and implemented, the ADO Update added.

According to ADO Update, FY2008, ended June 2008, was a tumultuous year, and GDP growth slowed to 5.8 percent in Pakistan. Agriculture in particular suffered as major crops such as cotton and wheat failed to reach targets because of weather conditions, insufficient water, pest attacks, higher costs of fertiliser, and a delayed government announcement of the support price for wheat (which led to a lower sown area).

Manufacturing growth, hit by a listless textile subsector, power shortages, and political disturbances in major industrial towns, fell by half to 5.4 percent, after averaging over 11 percent in the previous 4 fiscal years. Construction maintained relatively strong growth. Services remained the main economic driver, rising by 8.2 percent, backed by thriving wholesale and retail trade, a strong expansion in telecommunications, and robust financial activity.

Real private consumption was the largest contributor to growth from the demand side, underpinned by booming remittances and high food and fuel subsidies. Private investment in contrast stagnated, falling to 14.2 percent of GDP on account of political uncertainty, power shortages, and a downgrade in credit ratings.

National savings as a share of GDP declined even more, widening the savings/investment gap. Net exports once again subtracted from growth as import volumes expanded markedly, with demand bolstered by domestic subsidies on oil and some food commodities.

Some pass-through of the substantial rise in international food and oil prices from March 2008 (when the Government began raising administered prices), together with lower domestic food production, a depreciating currency, and strong consumption led to a surge in inflation in FY2008. It averaged 12.0 percent for FY2008, the first time in 11 years it had hit double digits.

Food inflation year-on-year reached 32 percent in June 2008 as prices of essential food commodities jumped, and inflation accounted for much of the 21.5 percent increase in overall inflation in June. It also fed into core inflation, which rose by 13.0 percent in June 2008, year on year.

The State Bank of Pakistan (SBP), in its Monetary Policy Statement for July-December 2008, estimated that about one-third of inflation came from direct and indirect impacts of higher commodity prices in FY2008. To help protect consumers from the impact of rising inflation, ADO Update observed, Pakistan Government provided large subsidies for oil products, electricity, imported wheat, and fertiliser.

Although actual subsidies in FY2008 were much higher than had been budgeted, many subsidies were not targeted and therefore had only a weak impact in protecting the poorest. The large gap between actual and budgeted subsidies and higher interest payments overrode the impact of lower than targeted development expenditure, and resulted in a significant deterioration in the fiscal deficit, which substantially widened to 7.4 percent of GDP, surpassing the targeted deficit of 4.0 percent.

The budgeted revenue target was achieved, helped by rising non-tax collections. However, revenue growth did not match that of nominal GDP, causing the revenue-to-GDP ratio to fall to 14.3 percent from 14.9 percent in FY2007, while the tax-to-GDP ratio was stagnant at 10.0 percent.

To finance the burgeoning fiscal deficit in FY2008 at a time of dwindling external capital inflows (which covered only 26 percent of the fiscal deficit), and given the reluctance of commercial banks to purchase Treasury Bills, the Government was compelled to borrow Rs 689 billion from SBP, equivalent to almost a third of total government expenditure.

Pakistan Government borrowing from SBP was the single largest contributor to the 15.4 percent growth in broad money supply, which was inconsistent with SBP's effort to contain monetary growth. That would have been higher still had it not been accompanied by a marked drop in net foreign assets of the banking system.

With regard to monetary measures in FY2008, SBP raised the discount rate three times by a cumulative 250 basis points (bps) and increased commercial banks' cash-reserve requirements. Real commercial lending rates stayed negative. Private sector credit grew by 16.5 percent, only slightly less than a year earlier. Nevertheless, high inflation persisted as a result of elevated commodity prices.

The ADO Update said that the fiscal slide, precipitated by the failure to pass on the hike in international oil prices, became intertwined with the corresponding rise in the oil import bill, which was driven higher by both price and quantity increases.

The direct subsidy on diesel and kerosene oil--the Price Differential Claim paid to oil marketing companies as well as the implicit subsidy through a reduction in the Petroleum Development Levy--helped sustain the high oil demand.

The biweekly adjustment mechanism in domestic oil prices to respond to changes in international prices had been suspended in May 2006, and oil price adjustments only restarted in March this year, with five subsequent upward moves through 21 July.

So far, the adjustment to counter the impact of the rise in international prices had been incomplete, although the Government had committed itself to eliminating all subsidies on oil products by December this year.

Oil imports increased by 43 percent in FY2008, and reached $10.5 billion. This was the major cause of the worsening trade deficit, which soared by 57.4 percent to $15.3 billion, even though the annual export target of $19.2 billion was exceeded.

The main reasons for the good export performance were higher rice exports, which increased by 40 percent following sluggish production and export restrictions in the major rice producing countries and higher international prices; the trebling of cement exports resulting from strong demand by Middle East and African countries; and strong growth of exports of chemical products, especially plastic materials.

These categories' robust performance compensated for the continued stagnation of textile exports, which stemmed from strong international competition, domestic production losses due to power shortages, and disruption caused by the political and security situation.

The food import bill swelled by 46 percent and was another key contributor to the trade deficit, driven by $1.52 billion imports of edible oil and $571 million of wheat imports, as domestic consumption outstripped supply.

The overall trade deficit and deterioration in the services and income accounts resulted in a huge $14.0 billion current account deficit, or 8.4 percent of GDP. This deficit would have been even wider had it not been for healthy workers' remittances, which, helped by the oil boom in the Middle East, continued to grow by 17.4 percent to total $6.5 billion in FY2008.

The heavy fiscal and current account deficits struck at a time when capital inflows slowed over anxieties concerning the domestic political and security situation and the turmoil in international credit markets. Led by a significant drop in portfolio investment, foreign private investment fell by 38.4 percent (despite the resilience of foreign direct investment, which was unchanged from a year earlier).

This decline, along with a stall in the privatisation program, was indicative of investors' concern over the weakened fundamentals of the economy. The larger current account deficit thus resulted in a significant drawdown of foreign exchange reserves, as capital inflows slowed. Overall foreign exchange reserves fell by almost a third, from a high of $16.5 billion in October 2007 to $11.3 billion in June and to $9.4 billion as of 22 August 2008 to drop below 10,000 on 4 August, ADO Update said.

It points out that the negative market sentiment was reinforced in May when Standard and Poor's downgraded Pakistan's debt rating from B+ to B and its long-term local currency rating from BB to BB-. Moody's quickly followed suit. This market pessimism translated into a risk premium of 912 basis points on the spread of sovereign bonds by 19 August 2008, and consequently plans to access international capital markets through sovereign bond issuance and global depository receipts were deferred.

Undermined by the current account deficit, the slowdown in capital inflows, and the drop in reserves, the rupee-dollar exchange rate depreciated by 12 percent between 1 July 2007 and 30 June 2008. Subsequently, it depreciated further by about 11 percent through end-August, ADO Update said.

Furthermore, higher interest rates were insufficient to arrest the decline of the rupee and, since end-April this year, SBP adopted administrative measures, including suspending forward booking of imports, reducing advance payments against imports' letters of credit, and requiring foreign exchange companies both to obtain approval for transactions of over $50,000 and to surrender their "surplus" foreign currency to SBP.

The sharp depreciation in the nominal exchange rate overshadowed the upward movement in the relative price index, such that the real effective exchange rate depreciated by 2.3percent over the four quarters of FY2008. According to ADO Update, 'Economic Prospects for FY2009' remain sobering and require steadfast commitment by the Government to implement the various adjustment targets it has set for itself.

It will need to maintain fiscal discipline, persist in cutting down untargeted subsidies and in passing through price increases (while compensating the poor adequately), and reduce reliance on borrowing from SBP. The reform program should also aim for a significant reduction in the current account deficit. Unless export growth picks up, this will require a significant reduction in domestic demand.

In parallel, the Government also needs to generate greater external inflows in order to increase foreign reserves through privatisation, access to capital markets, and support from international development partners, besides pursuing and finalising the Saudi oil facility.

Finally, over the medium term, the Government needs to implement programs that promote upgrading and diversification of the economic base. Potential risks include further increases in political uncertainty and a deterioration in the security situation on the country's western border.

Economic projections for FY2009 are based on following assumptions: political tensions will lessen, leading to a more stable political environment, though uncertainty and security concerns will continue to affect economic decision making and investors' confidence; the stabilisation measures announced in the budget to rationalise subsidies and curb demand will be implemented and overall demand management policies will be tight; international oil prices will remain high (averaging $120 per barrel, as assumed in the baseline for this ADO Update); and the pass-through of price adjustments related to the ending of oil subsidies as well as continued power shortages will increase the cost of doing business and therefore exacerbate inflation, said ADO Update.

On these assumptions, it said, the growth in FY2009 is expected to remain subdued at 4.5 percent, with a continued slowdown in commodity producing sectors. Domestic spending will have to rise less than output for the current account deficit to shrink.

In these circumstances, export growth becomes crucial, as it will help make the current adjustment less painful. The faster the growth in exports the smaller the reduction in growth required to close the deficit.

In agriculture, cotton production is likely to fall short of target due to a reduction in the sown area and to a mealy bug virus attack. (Lower cotton production will hurt the textile industry.) It is too early to predict the winter wheat crop, which will depend on the availability of water and on the supply response of farmers to the expected adjustment in the procurement price to bring it close to international prices.

Robust growth in services is expected to continue, although the sector will be affected by the tax measures announced in the budget and by power shortages. On the demand side, private consumption in FY2009 will be hit by higher prices as food, oil, and power subsidies are rationalised.

Government expenditure will be suppressed by measures announced in the budget to contain current spending. Investment levels will be restrained by uncertainty, low capital inflows, and power shortages. The present power shortages are a result of chronic under-investment in new generation capacity, high operational inefficiencies due to the lack of expansion of the power transmission and distribution infrastructure, and delayed institutional reforms.

Although the Government is undertaking investment and reform in all these areas, the demand-supply gap will remain until new generation capacity comes on stream and the transmission and distribution infrastructure is upgraded. With the Government setting out to progressively rationalise the oil subsidy by passing on higher prices to consumers and by reducing the subsidy between the full-cost producer price and tariffs charged for electricity, average inflation is projected to reach 20.0 percent in FY2009, higher than the government target of 11.0 percent.

According to ADO Update, the planned adjustment of the domestic procurement wheat price will contribute to higher food inflation. SBP has increased the discount rate several times since June 2007, taking it from 9.5 percent to 13.0 percent, and yet inflation has climbed.

Moreover, the ensuing increase in the Karachi interbank offered rate has led to a rise in bank lending rates. SBP's interest rate tightening should increase the attractiveness of Treasury bills for commercial banks, and this would help reduce the Government's dependence on borrowing from SBP.

An efficient way to achieve this objective, as recognised by SBP in the Monetary Policy Statement for July-December 2008, would be to limit the amount that the Government can borrow from SBP and encourage long-term non-bank borrowings. Achieving that statement's target of a 14 percent increase in money supply in FY2009, which is lower than in FY2008, would require strict limits on budget access to SBP credit, observed the ADO Update.

To the extent that inflation in Pakistan is driven by high commodity prices, ADO Update stated that monetary tightening will have a limited impact on inflation and will most likely aggravate the economy's other structural problems.

Excessive dependence on higher interest rates to stabilise prices will make firms reluctant to use debt financing and therefore push them to rely more heavily on self-financing, which might lead to less efficient capital allocation. Moreover, unless interest rates are raised significantly, it will probably take a long time for monetary policy to have an impact on the economy and inflation.

Although the tightening of expenditure policies, such as fiscal discipline, helps keep inflation in check, it also acts as a deflationary force resulting in underused production capacity and higher unemployment. A more effective anti-inflation tool would be identifying and eliminating fiscal programs that induce an inflationary bias in the economy, combined with pushing through moderate increases in interest rates to limit excessive credit expansion.

Finally, to prevent a wage-price spiral, the authorities might consider implementing policies that link nominal wage increases to productivity increases and that limit increases in firms' mark-ups through, for example, tripartite (state, employer, worker) agreements.

The Government expects a significant reduction in the fiscal deficit as a result of the measures adopted in the FY2009 federal budget. These aim to reduce subsidies, curtail general government expenditure, and boost revenues. A rationalisation of the large public sector development program announced in the budget will help contain public spending.

However, the difficulties in achieving a planned increase in tax revenues of almost 25 percent, a 20 percent increase in public sector salaries and pensions, and the projected slowdown in growth imply that the fiscal deficit will likely exceed the government target of 4.7 percent of GDP. But the outcome should, though, be much better than in FY2008.

Despite the need to reduce the budget deficit, a crucial requirement is protecting the poor from the impact of high oil and food prices. In this regard, the social protection programs announced by the Government in the budget need to be implemented quickly. As part of this effort, the Government has launched the Rs 34 billion Benazir Income Support Program, under which qualified beneficiaries will receive Rs 1,000 a month.

Despite possible reduced oil consumption as a result of ending domestic subsidies, international oil prices are expected to remain relatively high. This will result in a continued heavy oil import bill. However, the projected slowdown in the economy, tight monetary policy, SBP's administrative steps to stabilise the exchange rate, and higher customs duties imposed in the budget on nonessential items will discourage non-oil imports particularly.

As a result, imports are projected to grow at the relatively slow pace of 9.5 percent (in nominal US dollars) in FY2009. The Government's trade policy has set an export target of $22.1 billion, 10 percent higher than FY2008's exports. Even if this target is met, with slower growth in industry and weak global demand conditions, projected import growth will still result in a large trade deficit.

Taking account of continued growth in remittances, the current account deficit is projected to be marginally smaller than in FY2008, at 8.0 percent of GDP. The financing of the large fiscal and current account deficits will remain major challenges. If Pakistan's request to, for example, Saudi Arabia to grant a deferred-payment facility for oil is granted, this will help reduce pressure to finance the current account deficit. The long-term solution to the external deficits, however, involves a substantial upgrading and diversification of the export base.


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## Neo

*Inflation to drop in second half of current year: experts​*
ISLAMABAD (September 17 2008): Economic experts believe that the country would be able to cut down the increasing inflation rate by the second half of the current fiscal year. "Fall in international oil prices and improved agriculture outlook, specially in rice and wheat, would help dampen current high inflation during the second half of this year," Dr Rashid Amjad, Vice Chancellor Pakistan Institute of Development Economics (PIDE), told APP here on Tuesday.

It may be recalled that the Consumers Price Indicator (CPI) during August 2008 showed a record increase of 25.33 percent over the same month of previous year. Dr Rashid Amjad, however, was of the view that the real challenge for the government was to put in place an effective and affordable safety net for the poor and vulnerable groups of the society.

"The government's credibility will wrest on to ensure that the income support programmes, including Benazir Income Support Card Scheme help the needy people through a transparent manner," he said. He said that the government would, however, need to supplement this scheme with public works programme in the form of employment guarantee scheme to be launched in the poorer districts and provinces.

Ultimately curtailing the inflation and bringing back the economy on a sustainable growth path would be in restoring confidence of both domestic and foreign investors. A credible stabilisation programme, backed by tough integration and comprehensive strategy package would restore the much-needed business confidence, he added.

Commenting on the record rise in inflation rates, Dr Amjad said that external oil and food prices' shocks were one of the main reasons of increasing inflation, adding that this led to tripling of oil and doubling of food prices in the global market.

He was of the view that preference accorded to political ramification by the previous government and interim government, especially in 2007, and ignoring facing the economic realities and not passing on the increasing oil prices to the consumers became another reason for inflation.

This, he said, resulted in almost doubling of fiscal deficit nearer to 8 percent, leaving the government with no choice but to pass on this prices, otherwise the government would have bankrupted. Another economic expert, however, said that loose monetary policy followed by the State Bank of Pakistan, first to jump start the economy post-2002-03 and then financing government deficit through increasing the money supply in 2007 resulted in inflation.

This was the serious violation of the Fiscal Responsibility and Debt Limitation Act, the expert said, adding that the parliament which passed this act should now pursue those who violated it. Commenting on the issue, a leading economist Kaiser Bengali told APP that inflation was an international phenomenon and Pakistan was no exception.

He said that the State Bank of Pakistan (SBP) is taking measures to tighten monetary policy and it will take another six months or more to control inflation in the country, provided the fiscal side of the government expenditure is reduced. He said that demand driven money supply was created during past three to four years and the money created through this policy cannot be withdrawn overnight.

Bengali maintained that Pakistan was facing double-digit inflation for the last three to four years and observed that inflation registered the double digits in the year 2005 while in the last financial year the inflation was demand driven.

Kaiser said that inflation increased this year was cost-driven and mainly due to increases in the oil and food prices and that happened in almost all countries of the world. He stressed the need for reducing government's fiscal side expenditures for controlling inflation the country is facing.


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## Neo

*Current account deficit swells to $2.5bn ​* 
Thursday, September 18, 2008

KARACHI: The countrys current account deficit widened to $2.572 billion during the first two months of fiscal year 2008-09 as compared to $1.571 billion in the same period of last fiscal 2007-08. 

The deterioration of $1.001 million in the current balance was the combined effect of trade and services accounts deficit. During July-August 2008 goods worth $3.643 billion were shipped outside the country. 

However, in the same period merchandises valuing $6.299 billion were brought into the country. Similarly, during July-August 2008 an inflow of $119 million was recorded in the services sector compared to an outflow of $802 million. 

The break-up of statistics released by the State Bank of Pakistan shows that in the first two months of the current fiscal year the combined impact of goods and services deficit came to $4.408 billion on current account balance. 

However, in the month of August 2008 the overall balance of payments of the country narrowed to $874 million which was recorded at $1.598 billion in July 2008, thanks to a fresh inflow in the financial account and influx of workers remittances. 

SBP figures shows that overall balance payment of the country slightly narrowed to $2.472 billion in July-August 2008 which was recorded $3.730 billion in the same period of last fiscal. The country received recorded $1.219 billion remittances during July-August 2008, compared to $985 million sent back by Pakistanis living abroad during the same period of fiscal 2007-08, combined with the foreign direct investment surged to $414 million against $340 million in July 2008 helped in offsetting the impact of widening gap between current account deficits. 

Although historically the volume of workers remittances ($592) in August 2008 is high but it is still lower than $627 million sent back by overseas Pakistanis during July 2008. The analysts were anticipating much higher inflow of remittances in month of August as of received because the chronology shows that volume of foreign remittances always records surge in month of Ramazan. 

In addition the total size of foreign direct investment in July-August 2008 stood at $754 million which was recorded $459 million in the same period of last fiscal year. Alone in August 2008 an inflow of $9 million was witnessed in portfolio investment against an outflow of $120 million in last month of current fiscal year, which was also another positive sign for economy of the country. 

Economists believe that one remedy could be brought into force by stopping the imports of all luxury items including electronics, cars and other stuffs which could prepare locally and prioritize just those imports which are required for development of local industrial based economy.


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## Neo

* IMF extends letter of comfort to ADB for $500m loan to Pakistan ​* 
Thursday, September 18, 2008

ISLAMABAD: In a positive development, the incumbent regime sees a ray of hope to build foreign reserves as the International Monetary Fund (IMF) has given a Letter of Comfort (LoC) to the Asian Development Bank that will enable the Bank to extend $500 million loan to liquidity-hit Pakistan by the end of ongoing month of September.

Pakistan is right now in dire need of liquidity to improve its balance of payments and contain the widening dollar-rupee parity that is causing inflation and capital flight.

The $500 million loan will provide solace to the country to some extent keeping in view the fast dwindling foreign reserves which stand at just $9 billion, a senior official of the Ministry of Finance said.

The letter of comfort from IMF is mandatory for donor agencies to qualify for extending programme loan to any country.

After the LoC from the IMF, the Asian Development Bank (ADB) would now extend the said loan under Accelerated Economic Transformation Programme. The said programme consists of a single tranche of $500 million. 

However, the World Bank has not sought any letter of comfort from IMF to give any programme loan to Pakistan, as the World Bank has refused to extend any programme loan to the crisis-stricken country; rather it has decided to give project loans.

Foreign reserves of the country stand at $9 billion, out of which commercial banks have $3.38 billion and State Bank of Pakistan $5.62 billion. Out of $5.62 billion, $ 1.5 billion have already been consumed because of the forward booking liabilities. 

It means the country possess $4.12 billion in real terms. However, remittances have increased and exports have surged by 54 percent in the month of July, even then countrys receivables situation is appalling.

The fate of oil facility amounting to $6 billion from Saudi Arabia is still in doldrums even after the election of Asif Zardari as President of Pakistan.

The sources said that unless US gives green signal to Saudi Arabia, the Kingdom will not consider to extend the oil facility. It is to pertinent to mention that Prime Minister some two months back visited Saudi Arabia and sought the oil facility for the liquidity hit country. 

In that particular visit Asif Zardari also met top people of the Kingdom and after that Foreign Minister Shah Mehmood Quershi visited the Kingdom, but no progress has so far been made.

The two instalments of $266 million each of $133 million from UAE based Etisalat Company against the privatisation of PTCL which are due since long have been further delayed, because the land of the PTCL in four federating units has so far not been transferred to the Etisalat company.


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## Neo

*AJK to have independent economy: minister ​* 
Thursday, September 18, 2008

MIRPUR (AJK): The government of Azad Jammu and Kashmir was taking revolutionary steps to establish an independent economy based on self-reliance for the welfare of the masses across the liberated territory.

The AJK Minister for Electricity Malik Muhammad Nawaz said this addressing an Iftar dinner hosted by Chief Engineer Electricity (South) Tariq Mahmood Mallick here late Sunday in honour of Nazir Ahmed Mir Chief Engineer (North) on the eve of his retirement from service.

Malik Muhammad Nawaz the government has launched a human resource development programme so that the state may have its own skilled workers and to ensure their active and fullest role in the overall speedy progress in all sectors of life in the liberated territory.

He said that AJK would soon emerge as the best welfare state of Asia following the translation of the vision of green and skilled Kashmir into a reality. He said that the government had also designed and started implementing a comprehensive policy to promote economy based on self-reliance in Azad Jammu Kashmir. The government, he said, is determined to turn AJK into a true model welfare state.

AJK Minister for Commerce & Industries Ch. Muhammad Yousaf, Secretary Electricity Muhammad Iqbal Rattiyal, Secretary Housing and Planning Sardar Muhammad Altaf, Secretary Auqaf Iqbal Muhi-ud-din and hundreds of other serving and retired officials of AJK Electricity Department and the city elite including senior journalists also attended.

The chief guest - Nazir Ahmed Mir, retired Executive Engineer and founder of electricity department AJK Malik Muhammad Iqbal, Secretary Housing Sardar Muhammad Altaf, President Non-gazetted Employees Organization Ch. Gulzar Ali, Sayed Qaiser Shiraz Kazmi and Yaqoob Bhatti also addressed the gathering. Elaborating the fiscal development plan launched by the state electricity department, Malik Muhammad Nawaz said that over Rs800m are being spent for completion of various schemes under annual development program.


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## Neo

*Cotton output to fall below 12m bales​*
ISLAMABAD, Sept 17: Pakistans cotton output in the 2008-09 is likely to be less than 12 million bales, falling short of a target of 14.1 million, officials and producers said on Wednesday, increasing the need for imports.

Pakistan, the worlds fourth-largest cotton producer, had to import nearly 4.7 million bales the previous year after production in 2007-08 fell to 11.6 million bales against a target of 14.14 million.

A fall in the area under cotton, pest attacks and shortage of fertiliser were the major factors that hit production in the 2008-09 crop year, which runs from April to March.

It will be a big achievement even if we touch the 12 million bales mark, said Ibrahim Mughal, chairman of the Agri-Forum, a farmers association.

The area under cultivation is almost 500,000 acres less than the target area of 8 million acres, and there have also been pest attacks like mealy bug and cotton leaf curl virus.

A spokesman for the Food and Agriculture Ministry confirmed that the target of 14.1 million bales was out of the question but did not give a new estimate. Another ministry official said it would be below 12 million bales.

Ministry officials and farmers representatives are likely to meet in a few weeks to reach an estimate for the new crop.

The final assessment is usually made around February.

Pakistans domestic consumption fluctuates between 14 million and 16 million bales a year. Cotton and textiles account for about 60 per cent of the countrys exports.

Pakistan achieved record cotton production of 14.6 million bales in 2004-05, but output has been falling since then, meaning the country has to import cotton every year to meet the requirements of its textile mills.

Cotton imports in July and August, the first two months of the financial year to June 2009, were 300,000 bales, an industry official said.

Farmers forum chairman Mughal said rising production costs, because of higher prices of power, fuel and fertiliser, were discouraging farmers from growing more.

There are simply no incentives for farmers, no profits.


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## Neo

*Pakistan to dent Indian basmati exports​*
NEW DELHI, Sept 17: Indian basmati rice exports are expected to fall sharply as an export tax makes the grain more costly while its rival, Pakistan, gains from a steep fall in its currency, a top exporter said on Wednesday.

R.S. Seshadri, director of Tilda Riceland, Indias largest basmati rice exporter, said the price gap between premium varieties from the two countries had risen to about $500 a ton. With a gap of $500 a ton, there is no chance that a foreign buyer will look at India. This gap has been existing for the last two months, he told Reuters.

In neighbouring Pakistan, where rice accounts for about 8 per cent of the countrys exports, traders said shipments were rising. Rice exports have become attractive due to the rupees devaluation, and we have seen exports going up, said Abdul Baseer, vice-chairman Rice Exporters Association of Pakistan.

Pakistans total rice output is expected to rise at least 10 per cent to more than 6 million tons in the 2008-09 fiscal year on a larger planted area, officials and growers say.

But exporters estimate rice output at 7 million tons and say exports could exceed 4 million tons.

A Pakistani exporter, who did not want to be named, said annual basmati exports from the country might rise to 1.2 million tons next year from 800,000 tons.

Pakistans minimum export price is lower on basmati rice than Indias and along with the devaluation exports are going to be more attractive, he said.

EXPORT CURBS: Seshadri said new export contracts were usually signed in October, just ahead of the harvest of the new crop.

Indias basmati rice is quoted at about $1,400 a ton for varieties usually shipped to the Middle East. The government slapped a tax of about $200 per ton on overseas sales of its aromatic basmati variety of rice earlier this year.

It also allowed exports of the premium grades only at a floor price of $1,200 per ton.

The $200 tax is just the last straw and it is not at all helping. Neither does it go to the farmer nor to the trader, Seshadri said. A clarification on this is needed as quickly as possible. The new rice crop is going to come in a month or two. He added the government would be under pressure to roll back the export tax by October or November if Indian exporters lost market share, but by then farmers would have already sold the crop at a lower price.

India banned exports of non-basmati rice earlier this year to ensure domestic supplies, but this month allowed shipments of the premium non-basmati variety, Pusa-1121.Reuters


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## Neo

*Forex reserves drop to $8.91bn ​* 
KARACHI: September 18, 2008: Pakistan's foreign reserves fell $190 million to $8.91 billion in the week that ended on Sept. 13, from $9.10 in the previous week, the State Bank said on Thursday.

The State Bank of Pakistan, said its own reserves fell to $5.52 billion from $5.72 billion previously, while those held by commercial banks rose marginally to $3.39 from $3.38 billion.

Pakistan's foreign reserves hit a record high of $16.5 billion in October last year but have dwindled due to a soaring import bill, and foreign investors's withdrawal due to political uncertainty gripping the country.

Some inflows are expected in coming weeks, including $1 billion from the World Bank, $500 million from the Asian Development Bank (ADB).

An expected Saudi oil facility would also help Pakistan save foreign exchange. But all of these have still to materialise.

The rupee hit a record low of 77.77 rupees to the dollar in early trade on Thursday and dealers said they expect pressure to remain.

The current account deficit widened sharply to $2.572 billion in July and August, the first two months of the 2008/09 fiscal year, which is equivalent to about 1.6 percent of gross domestic product (GDP), compared with a full-year target of 6.0 percent of GDP.

The consumer price index in August rose 25.33 percent from a year earlier, compared with a full-year target of 12 percent for this fiscal year.


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## Neo

*World Bank willing to develop Thar coal​* 
ISLAMABAD (September 18 2008): The World Bank has expressed its desire to help federal and provincial government develop Thar coal and other mineral resources in Sindh, official sources told Business Recorder. Aslam Sanjrani, Managing Director, Thar Coal and Energy Board (TCEB), met with Yusupha Crookes, Country Director for Pakistan, at the World Bank office on August 29, 2008.

Said Al Habsy, Operations Advisor and Rashid Aziz, Senior Energy Specialist of the bank's Islamabad office, also attended the meeting. The sources said Sanjrani provided an overview of the status of activities of TCEB and its plans for the immediate future. He also elaborated on TCEB's needs for establishing the institution and building up the capacity of its staff and officials.

Sanjrani also dealt with the needs of the Minerals and Mining Department of Sindh government, as a separate entity, the sources added. The sources said, Yusupha Crookes stated that the bank was interested in helping the government - federal and provincial levels - and TCEB to develop Thar and other mineral resources of Sindh.

The bank's support will be driven by three primary considerations: (i) enabling the Sindh government to promote (through TCEB) the Thar coal deposits to potential investors; (ii) assisting Sindh government in overall development of the mining sector; and (iii) strengthening the institutional capacity of the concerned provincial government ministries, departments and entities/agencies.

After discussion, it was decided that the bank's task force will interact with the provincial government and TCEB to develop a programme through a technical assistance project of the bank support for Sindh and TCEB.

The technical assistance requirements are initially expected to be for: (a) strengthening the capacity of the concerned government ministries including, to the extent required, at the federal level, departments and specific agencies such as TCEB; (b) advisory services for establishing and strengthening TCEB; and (c) for technical, financial and legal advisors to carry out the required reviews, studies and analyses and assist the government.

The federal government had withdrawn its notification for establishment of Thar Coal Authority (TCA), approved by Prime Minister Syed Yousuf Raza Gilani due to continuous resistance of Sindh government; and on July 22, the provincial government issued two notifications to establish Thar Coal and Energy Board (TCEB) and enhance the strength of the board members, setting aside the notification of the federal government.

"We accept that coal exploration is the right of the respective province, but power generation is a Federal subject," said one of the officials of the Ministry of Water and Power. The ministry, which had earlier made an effort to establish the authority's office in the PPIB, is of the view that the principal seat of the board would be in Karachi.


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## Neo

*'IMF mission's visit, financial crisis have no impact on foreign exchange market'​* 
ISLAMABAD (September 18 2008): Senator Khurshid Ahmed, a prominent economist, in an exclusive to Business Recorder stated that the ongoing IMF mission and financial crisis in the international markets had no impact on the sentiment of the currency markets in Pakistan. He said that the rupee was facing immense pressure due to depleting foreign exchange reserves and weak macro economic fundamentals.

He said that the IMF mission is currently engaged in reviewing Pakistan economy with a view to providing guidance to Pakistan government in terms of identifying specific targets for macroeconomic indicators and the prescriptions to achieve these targets.

It may be recalled that Pakistan is not on IMF Poverty Reduction Strategy Grant (PRSG) and President Asif Ali Zardari in his maiden press conference after taking oath as the President had categorically stated that Pakistan would not go on any PRSG. Khurshid said that precisely because Pakistan is not on IMF program, the Fund's findings were unlikely to have any negative impact on the rupee-dollar parity.

In contrast to these views, Nabeel Iqbal, market and research manager of Khanani and Kalia International (KKI), opined that the recommendations of current IMF mission would set the sentiment of the currency markets in Pakistan. IMF observations could change the market sentiment.

If it is ready to issue the 'letter of comfort' with positive findings, it would improve the rupee-dollar parity. In case of any negative findings, it would further have negative impact on the local currency. He said that all current macro economic indicators like current account deficit and trade deficit are linked with the appreciation of dollar against rupee.

During Ramazan, there is some buying pressure on the rupee as demand for foreign currency rises due to many leaving for Umra. Before Eid, home remittances are expected to rise, which would improve the sentiment of the currency markets. These remittances come from both channels, the open market and interbank market, which would improve the situation.

However, if the current economic fundamentals continued to remain negative, it would again result in substantial pressure on the rupee after Eid. However, he said, the international developments in financial markets like fall of world stock markets was not directly linked with the appreciation of dollar against rupee.

Other experts said that the interbank rate of dollar touched Rs 77.60 on Wednesday, and following the interbank rate, the rupee-dollar parity in the kerb market was traded at the highest rate of Rs 77.60. However, the rate of dollar against the rupee came down to Rs 76.20 at closing time. They said that Pakistan's economy has been under tremendous inflationary and deficit pressure, and the stock market has also shown sluggish activity.

The government's reluctance to get any financial assistance from IMF, in spite of the fact that it is in dire need of "substantial external financing" to rebuild fast shrinking foreign currency reserves, is a cause of the depreciating rupee against dollar and further weakening the already deteriorating economic conditions.

During the first quarter of the current fiscal year the rupee lost more than 20 percent against dollar. Trade deficit (TD) in July-August 2008-09 widened to $3.522 billion, as imports shot up to $7.011 billion against total exports of $3.489 billion. On the other hand, the forex reserves of Pakistan in the current fiscal declined by $9.102 billion from a record forex reserve of $16.5 billion in October 2007.


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## Neo

*Donors await IMF report on Pakistan ​* 
Friday, September 19, 2008

ISLAMABAD: The desperately needed dollar inflows for Pakistan depend upon the outcome of the ongoing visit of the IMF mission, which is currently discussing macro-economic health of the country as well as future course of action, it is learnt.

When the IMF mission will give positive report about its macroeconomic framework and future line of action after September 23, then the multilateral as well bilateral donors will come up to rescue Islamabads ailing economy by pouring dollar inflows in a substantial manner, including the much awaited Saudi Oil Facility worth $5 billion, official sources in the donors agency told The News here on Wednesday.

The IMF and Pakistan have so far agreed to scale down the GDP growth target to 4 to 4.5 per cent from 5.5pc for the current fiscal year, owing to expected bad performance of agriculture sector especially cotton output as well as water shortages, which would negatively impact the next wheat crop.

Inflation will remain on the higher side and both the IMF and Pakistan are discussing CPI inflation hovering around over 20 per cent in the current fiscal year against envisaged target of 11pc.

The IMF has not allowed slippages in achieving the fiscal deficit target of 4.7 per cent of the GDP for the current fiscal year. 

There is also no possibility to reduce the envisaged revenue collection target of Rs1250 billion for the ongoing financial year 2008-09.

The IMF mission is arguing with Islamabads authorities to revise the tax collection target upward owing to favorable factors such as higher inflationary pressure and depreciation of rupee, which will help the FBR in increasing its revenue collection manifold.

The government may not revise upward the tax target, but they know that the FBR is in a position to achieve its envisaged target of Rs1250 billion by June 30, 2009, which was considered quite ambitious at the start of the current fiscal year. The FBRs tax collection is more than Rs11 billion in the first two months of the current fiscal against envisaged target.

The prices of every product surged owing to highest CPI of over 25 per cent in the countrys history and it will push up the tax collection of the FBR. On the other side, there is depreciation of rupee by 24 per cent against the dollar, which would help FBR for increasing custom duty collection in the current fiscal year.

When macroeconomic framework will be endorsed by the IMF by giving positive report about Pakistans economy then dollar inflows would come into Pakistan in a substantial manner. The expenditure side will also be reduced including development and non development side.


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## Neo

*42 projects worth Rs 237.7 billion approved by CDWP​* 
ISLAMABAD (September 19 2008): The Central Development Working Party (CDWP) on Thursday approved 42 new development projects costing Rs 237.7 billion and revised 9 schemes costing Rs 25 billion. The total foreign assistance for the projects has been estimated at Rs 91.2 billion.

The CDWP met here with Deputy Chairman Planning Commission (PC) Salman Faruqui in the chair. This was the first meeting of the CDWP of the current financial year. This was also the first meeting of the body after the PPP came into power in March, 2008. Briefing newsmen spokesman PC Asif Sheikh said that cost of each of the 22 projects is over Rs 500 million. The total cost of the projects is Rs 255.5 billion and they will be placed before Executive Committee of the National Economic Council (Ecnec) for approval.

He said that 46 projects costing Rs 218.4 billion will be financed by the Federal Government. Of 18 projects located in Punjab, 13 projects are under Multan Development Package for which Government of the Punjab will contribute Rs 500 million.

One project located at Punjab titled "Construction of Cherah Dam Project" costing Rs 5.31 billion will be financed by Government of the Punjab. Two hydro power projects located in AJK costing Rs 6.7 billion will be financed on 30:70 cost sharing basis between government of AJK and federal government. The federal government will provide Rs 4.72 billion from PSDP.

Of 51 projects, 9 projects have been revised. Their cost has increased from Rs 14.0 billion to Rs 24.7 billion, he said. Allocation of Rs 5.8 billion exists in the PSDP 2008-09 against the 22 projects.

"Establishment of inland Container terminal Dry port near Sher Shah Railway Station Multan" will be financed through Public Private Partnership. Ministry of railways will give the land free of cost. One project "Deepening & Widening of Port Qasim Navigation Channel" costing Rs 8.1 billion will be financed by the PQA from its own resources.

The CDWP also conceptually cleared the projects titled "Balochistan Local Service Delivery and Government Project", "Rehabilitation of the Medium Wave Radio Broadcasting Network for the enhancement of Education", "Health and Enlightenment in NWFP, FATA and Balochistan in Islamic Republic of Pakistan" and "Establishment of National Road Safety Secretariat/Authority".

The CDWP also approved "Revival of Karachi Circular Railways as Modern Commuter System" costing Rs 52.3 billion. A foreign assistance of Rs 39.2 billion is expected for the project. Asif Sheikh said that federal government would not bear the operational losses after completion of the project in five years.

A total of 32 development projects were approved in the infrastructure sector costing Rs 238 billion that also include foreign exchange component (FEC) of Rs 81.26 billion. He said that "Land Acquisition and Resettlement Plan of Basha Dam" costing Rs 116.7 billion has been approved. According to him 99 per cent area to be affected by the dam is in the Northern Areas (NAs). The plan, which was approved by the CDWP, was framed by NA administration. Total of five projects costing Rs 123.88 billion have been approved in the energy sub sector.

In the water resources, four projects valuing Rs 8.05 billion have been approved. The PAEC plan of establishing two power generation units (C3 and C4) were dropped from the agenda. In social sector, 18 projects costing Rs 24.37 billion were approved in social sector.

The important schemes in the transport and communication are Rehabilitation of Larkana-Naudero-Lakhi Road costing Rs 1.92 billion and Dualization/Rehabilitation of Larkana Moenjodaro valuing Rs 1.93 billion. Of the 18 projects for Punjab, 14 projects costing Rs 4.2 billion would be launched under the Multan Package, said Asif Sheikh. He said that Punjab government will also provide Rs 500 million for the package.


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## Neo

*FTSE Group takes Pakistan off its watch list ​*
KARACHI (September 19 2008): Global Index compiler FTSE will no longer demote Pakistan from secondary emerging market status to frontier market. This was stated in a communiqué on September 18, 2008. FTSE offers benchmark indexes for pension funds, sovereign wealth funds and other fund managers, classifies into four categories: developed, advanced emerging, secondary emerging and frontier markets.

It may be noted that FTSE as part of its annual country classification review, on September 12, 2006 announced that they have placed Pakistan on its Watch List for possible removal from FTSE Global Equity Index Series(GEIS), which is used by institutional investors world-wide.

KSE management has been in dialogue with FTSE since early this year and also visited FTSE in May 2008 to make a comprehensive case in favour of Pakistan, which successfully convinced the FTSE group to keep Pakistan on their list.

Adnan Afridi MD Karachi Stock Exchange commenting on the decision said, "This reflects our commitment to capital market reform process and we will continue to strive to protect investor interest and help grow towards our ultimate objective of becoming a hub for capital formation in Pakistan", a press release issued by KSE public relations department said.-PR


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## Neo

*Pakistan and Argentine to expand cooperation​*
RAWALPINDI (September 19 2008): Pakistan and Argentine have reiterated their desire to further boost and expand bilateral co-operation in various fields particularly in the areas of trade, economy and defence. This was discussed at a meeting between Federal Minister for Defence, Chaudary Ahmad Mukhtar and the Ambassador of Argentine to Pakistan, Rodolfo Martin Saravia, who called on him here Thursday, a statement said.

Both sides exchanged views on matters of bilateral importance and underscored the need for maintaining closer co-operation for mutual benefits of the two countries. The Minister briefed the envoy about the potential and capability of the defence industry of Pakistan. The meeting also discussed the possibility of undertaking joint venture in the area of defence collaboration.

The meeting agreed to increase co-operation in the area of training by offering courses to the military personnel of the two countries in each other's training institutions. The anti-terror efforts made by Pakistan also came under discussion at the meeting. The Minister said that the international community needed to acknowledge Pakistan's key role against the war on terror and extend its support so as to stem the tide of terrorism.

He told the envoy that terrorism can only be defeated by addressing its root causes like alleviation of poverty and providing economic opportunities as well as educational/health infrastructures to the people of the areas engulfed by poverty, ignorance and unemployment.


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## Neo

*Piaf welcomes World Bank offer to develop Thar Coal reserves​* 
LAHORE (September 19 2008): Pakistan Industrial and Traders Associations Front (PIAF), while welcoming the World Bank offer to develop Thar Coal reserves, hoped the government will accept this offer as the exploration of coal will help generate cheaper electricity to bridge demand and supply gap of 5000MW.

The PIAF Chairman Irfan Qaiser Sheikh and Vice Chairman Khawaja Shahzeb Akram in a joint statement said that despite the huge coal deposits, the electricity being produced through different means other than hydle and thermal, is very small.

If the World Bank, the existing huge coal reserves are tapped and used for power generation, the electricity situation in the country would substantially increased, they added. Moreover, they said that due to shortage of energy, the industrial activity had already slow down considerably and if alternate resources were not utilised, the industry would be forced to bear additional burden.

The Kalabagh Dam could not be built for want of consensus in all the four provinces thus the government should immediately accept the World Bank offer so that the manufacturing sector could be able to have its due place in the global market. Because of the shortage of energy, the textile sector was the biggest loser and the country's total exports registered a sharp decline.


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## Neo

*2.9 percent decline in oil consumption for first two months of fiscal year 2009​* 
KARACHI (September 19 2008): The oil consumption in the country posted a slight decline of 2.9 per cent as total POL products volume recorded 2.98 million tons in the first two months of FY09 against 3.07 million in the same period in FY08.

According to data released by OCAC local refineries provided 1.56 million tons (52 per cent of total) whereas remaining 48 per cent of the consumption was met through imports (avg. 55 percent were imports for FO and HSD in two months of FY09 against 52 per cent in the same period in FY08).

The Black Oil products (FO and LDO) consumption declined by 6.7 per cent on year-on-year basis with their combined volume standing at 1.24 million tons, which was central to the overall decline in growth during the two months in FY09 (98 per cent contribution to the total fall).

FO and LDO consumption fell by 6 per cent and 39 per cent on year-on-year basis, respectively in the two month of FY09 while their combined volume stood at 1.24 million tons in the two months of FY09 (42 per cent of total volume) against 1.33 million tons (47 per cent of total) in the two months of FY08). On the other hand, White Oil products contributed a meager fall of 0.1 per cent on year-on-year with total volume of 1.74 million tons in the two months of FY09.

FO decline came amid its skyrocketing prices (126 per cent increase on year-on-year basis standing at Rs 61,852 per ton), which aggravated Pepco (using coal as an alternate), Hubco, Kapco and other IPPs' cash positions (high generation cost and low reimbursement), forcing decline in FO consumption despite rising power shortages in the country, Khurram Schehzad senior analyst at Invest Capital Securities said.

He added that LDO decline was due to the rainy season, which rendered less demand for the product in agricultural activities. During the first two months of FY08, Mogas's decline of 10.2 per cent on year-on-year (8 percent of total volume.) can also be attributed to rainy spell in Centre/North of the country, price speculation (formula change which led to lower price for refineries than their raw material Naphtha, which forced refineries to scale down production), resuming smuggling from Iran and realignment of fleet by some OMCs.

Slight growth of 1.5 per cent on yearly basis in HSD (43 per cent of total volume) came only on the back of its use in transportation and household power generators due to acute electricity shortage in the two months of FY08. This restricted White Oil products decline to only 0.1 per cent on yearly basis (-4.5 per cent on yearly basis ex. HSD). Other than HSD and MS, White Oil products - HOBC, JP-8, JP-1 and Kero - witnessed volume growth of only 2 per cent on yearly basis to 223,000 tons.

During Jun-08, POL consumption posted a decline of 8.4 per cent on yearly basis mainly because of negative growths in Black Oil of 6.1 per cent (FO 5.3 per cent on yearly basis, 11 per cent on month-on-month and LDO 44 per cent on yearly basis, 26 percent on monthly basis) and White Oil of 10.1 per cent (mainly by HSD 13 per cent, MS 17 per cent and JP-1 11 per cent on yearly basis), while volumes nominally supported by JP-8 and HOBC (a combined 54 per cent on yearly basis, 4 per cent of volume). Sky-high FO price and sharp decline in LDO consumption owing to rising prices, low agricultural activities amid rains and transportation strike in August-08 led to fall in consumption. The Government of Pakistan's steep price pass-ons of Rs 7 to Rs 11 per liter on regulated products coupled with alternates (CNG/LPG) also impacted HSD and Mogas volumes declining by 13 per cent and 17 per cent on yearly basis (27 per cent and 8 per cent on month-on-month basis), respectively in August-08. Kero also witnessed an 11 per cent on yearly basis decline due to price pass-ons.

PSO secured largest slice of 68.2 per cent of the market share in the two months of FY09; however, declining by 186bps on yearly basis due to posting volumetric decline of 5 per cent on year basis (30-month low). Shell stood with 14.3 per cent yearly basis with 105bps improved share due to 5 per cent volumetric growth while APL shared 5.4 per cent of the market with a decline of 36bps yearly basis due to negative volumetric growth of 9 per cent on yearly basis in the two months of FY09.


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## Neo

*Plan to sell energy assets to avoid default​*
KARACHI (September 18 2008): Amid rising rumours of an imminent financial default, the government recently laid out an ambitious emergency plan to dispose of its multibillion-US-dollar energy assets to raise money. Among the first in line is the sale of rich Qadirpur gas field in Sindh.

With whopping reserves of around 2.9 trillion cubic feet, the gas field is considered worth more than 3 billion dollars in international markets and is also regarded as a vital strategic asset.

On Friday, the Privatisation Commission recommended different options on Qadirpur field privatisation, prepared by financial adviser US-based Merrill Lynch, to the cabinet committee on privatisation for a final decision. A source close to the deliberations said a decision would be taken by September 25th over when to open the bidding.

Among the likely suitors are Austrian OMV and some state-owned corporations from the Persian Gulf, such as Kuwait Petroleum Corporation (KPC), who may finalise their final bids by the end of this month.

Two other national jewels in top slots of planned privatisation include the billion-dollar 880-megawatt Jamshoro Steam Power Plant, and strategic shares in Kot Addu power plant, operated by Kapco, the country's largest independent power producer.

But the planned sales might trigger political tensions in the new ruling coalition, as the two key allies have taken divergent positions on the issue and both have warned Pakistan Peoples Party (PPP) of grave consequences if the decision is taken against their will.

Awami National Party (ANP) from North West Frontier Province supports the sell-off deals but wants their member to parliament to be appointed as the oil minister before the agreements are signed. On the other hand, Muttahida Qaumi Movement, a major partner in both Sindh and federal capital Islamabad, has threatened to mobilise a mass movement against the planned sales of the oil and gas fields. "In this scenario selling energy assets and expediting privatisation effort is one sure ticket to wriggle out from the current financial morass," said Saad bin Ahmed, head of research at Capital One Equities.


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## Neo

*Land acquisition, resettlement plan: Rs 116.7 billion Bhasha Dam project PC-1 approved​* 
ISLAMABAD (September 19 2008): The Central Development Working Party (CDWP) on Thursday approved the Wapda's PC-I, amounting to Rs 116.7 billion of Diamer Basha Dam land acquisition and resettlement plan. Deputy Chairman Planning Commission Salman Farooqui chaired the meeting.

The 272-metre high Diamer-Basha dam will be highest roller compacted concrete (RCC) dam in the world with more than 100-kilometre long reservoirs. Live storage capacity of the reservoir will be 6.4 MAF. The project will generate 4500 MW electricity.

The dam will contribute more than 18,000 giga watt-hours of electricity annually. This will also help the government to cope with increasing demand of water. The project will also be an important step in increasing the ratio of low-cost hydel power in the national grid.

Basha is a project of immense importance and will be the biggest project ever executed in any sector in the country. The pre-qualification process of the contractors has already been initiated and is likely to be completed soon. The construction on the project will commence next year following international competitive bidding (ICB).

It is worth mentioning that the development vis-a-vis construction of Dimaer Bhasha Dam project is a reflection of the commitment of President Asif Ali Zardari, Prime Minister Syed Yousuf Raza Gilani and Minister for Water and Power Raja Pervaiz Ashraf for harnessing the water and power resources in view of the current scenario of the country.


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## Neo

*Pakistan's vicious financial and economic circle​* 
ARTICLE (September 19 2008): The fact that inflation is rising almost everywhere suggests some of its causes are global. For now, rising food and energy prices are inflation's prime drivers. Core inflation, a measure that excludes volatile food and energy prices, is not rising as quickly as overall inflation. But commodity-price gains are beginning to work their way through the global economy.

Even if commodity prices stay where they are, global inflation could continue rising for months to come as companies react to previous price rises. High food and energy costs hit developing countries, including Pakistan, where consumers spend a larger share of income on those necessities.

Apparently the tattered economy has been hit hard due to deteriorating socio-political situations, war going on in the northern areas and rising inflation. The Consumer Price Index (CPI), that is the most relevant tool of measuring inflation of consumer goods, registered a drastic hike and increased by 25.33% over August 2007.

This outrageous inflationary behaviour is imposing detrimental high costs on our society and is severely hurting the poor 'common man' class that makes up a majority of our debilitating economy. Higher inflation has resulted in a spurt in interest rates and hit the car and other retail loans market, besides hampering the expansion and launch of projects planned by corporates.

The government is unable to reign in the surge in the inflation rate because the price of several other commodities like sugar and cotton has shot up. Along with the rising inflation, the rupee continues to depreciate against the US dollar. The weakening rupee is pushing up prices of imports, ricocheting 'cost increase' impact right down to the final consumer that is already burdened up with ever increasing utility, fuel and food bills.

The story does not conclude in a dismal end here. Inflation, eroding away the purchasing power of masses and making financing dearer for corporates consequently reduces affordability. Low affordability threshold results in a sliding demand. Dropping demand curve means that companies' revenues get hit and they tend to offset it with cost saving/reduction initiatives and this fuels the nightmare of stock markets.

As Pakistan does not have any developed debt (bond) market, a huge proportion of investments make its way in the stock market. Given that our stock market is not governed by fundamentals but whims, fancies and herd mentality as shown many a time in the past, the hyper inflationary scenario wreaks havoc on investors. Inflation robs investors by raising prices with no corresponding increase in value.

One has to pay more for less and even that less a return, if there is any, needs to be paid back to institutions as margin call and eventually an investor, at the end of the day has to pay off from his own pocket and ultimately he breaks down and defaults. This is what happened with Karachi Stock Exchange (KSE) whereby stocks have lost over 45 per cent since January, including more than 12 per cent in just one week after the resignation of former President Pervez Musharraf.

The Board of KSE froze the floor of KSE 100 index at 9,144 points amid continued recession and unabated downslide at the stock market. Although such an action seems preposterous in an institution that supposedly has to run on the vagaries of free demand and supply notions. Yet in the wake of the current situation of Pakistan this was the best regulators could come up with.

Theory suggests that exchange rate management, coupled with restrictive monetary policy, are the twin objectives in the quest for combating inflation in a hyper inflationary economy. This is exactly what the State Bank of Pakistan (SBP) has been doing. But is it going to work in the case of Pakistan?

There is a serious doubt about it because the government is one of the key borrowers to fund its alarmingly widening budget deficit and finance its import bill of oil on the back of ever weakening rupee.

SBP has raised the discount rate to 13.00% which will make financing dearer for government and eventually will be borne by the public in the form of taxes and surcharges or if the government tries to save the people from this burden, it will resort to printing new money and both these measure will further erode the purchasing power of the public and result in further inflation.

The only solution that appears feasible is that along with the tight stance of SBP measures monitoring the demand side, the government should try to take measures to enhance the supply of the of the products in order to effectively and collectively combat this vicious circle, else it will go on and on and any single sided steps will further fuel its ferocity.


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## Neo

*Ruling out the risk of default​*
EDITORIAL (September 19 2008): In a meeting convened by the Planning Commission in connection with the preparation of its five-year development plan, some leading lights of the bureaucracy highlighted certain important aspects of the economy.

The Secretary of Economic Affairs Division (EAD), Farrukh Qayyum told the participants that Pakistan was entirely in a comfortable position to meet in time its foreign liabilities, and there was no risk of default at any stage. The country was out of any default risk because reduction in oil prices in the international market and cut in subsidies had provided it ample space to manage its foreign liabilities comfortably.

Finance Secretary Waqar Masood informed the meeting that his ministry was following a multi-pronged strategy to save every possible penny by cutting down non-development expenditures and removing distortions that had pushed the economy into the grey area during the last few years.

The Wapda Chairman briefed the participants about power crisis and revealed that the government was focusing on hydel and coal-based projects to get cheaper electricity for the consumers. State Bank Governor Shamshad Akhtar informed the participants about the monetary policy of the State Bank and again advised the government to minimise borrowings from the SBP and live within its own resources.

From the above statements, it appears that some top functionaries of the government have almost declared victory before fighting the battle of restoring the deteriorating health of the economy. For instance, it is true that the fall in international oil prices and cut in subsidies would reduce the total import bill of the country, but to say that these developments would totally eliminate the risk of default is not true.

One does not have to be an economic expert to conclude that even after accounting for the favourable impact of these developments, the country would still face the ugly prospect of a huge current account deficit due to the widening gap in its trade account, capital flight and certain debt payments.

Authorities of the country have been desperately seeking Saudi Arabian Oil Facility and loans and assistance from international financial institutions (IFIs) to bridge the gap in the external accounts, but these initiatives have not yielded the desired results so far.

There is also no certainty that such efforts will bear fruit at all or in a specified timeframe. Coupled with this is the constant decline in foreign exchange reserves of the country, which is scaring away foreign investors and putting increasing pressure on the rupee. The latest developments on the western borders of the country would further aggravate the economic situation and damage export growth.

The statement by the Wapda Chairman that the government is focusing on hydel and coal-based power projects seems like a wish of an individual oblivious of reality. No worthwhile or practical efforts are in the offing to indicate that Pakistan is going to get a major share of its electricity requirements from these sources in the foreseeable future.

The State Bank governor has been advising the government to reduce its dependence on the banking system for its borrowing requirements to contain price pressures in the economy for a long time but the relevant data during 2007-08 and July-August, 2008 show that her urgings are a kind of cry in the wilderness.

Overall, while evaluating the statements of various top officials of the government, it is hard to escape the conclusion that the country would be served better if only facts are revealed in such meetings without offering pre-judgements and over-optimism is avoided to tackle the issues in a more forthright, realistic manner.


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## Neo

*IMF asks Pakistan to raise revenue target​*
Islamabad, Sep 19 : The International Monetary Fund (IMF) has asked Pakistan to raise its tax collection target of Rs.1,250 billion (USD 16 billion) during the current fiscal, but no figure has been specified.


"Due to depreciation of the rupee by 24 percent against the dollar and higher inflationary pressure in the range of 20 to 25 percent, (the IMF says) the tax collection target should be fixed on the higher side of earlier target of Rs.1,250 billion," The News Friday quoted official sources as saying.

According to Federal Board of Revenue (FBR) chairperson Ahmed Waqar, discussions were underway with the IMF, which had been asked to present its evaluation report, following which Pakistan would take a decision on raising the tax collection target.

"We will take decision on jacking up the tax target by the end of the second quarter (October-December) of the fiscal year," he added.

"Increased tax collection is a dire need for creating fiscal space to meet the requirements of the education and the health sectors," Waqar maintained.

According to the official, the tax target depended on GDP growth and if this projection was on the higher side, the revenue target could be revised upward.

The FBR has collected Rs.146 billion in the first two months (July-August) of the fiscal against a target of Rs.135 billion, an increase of Rs.11 billion despite political turmoil and other constraints.

The IMF mission here is currently engaging with Pakistani authorities for their perception of short-term macroeconomic framework, including projections of GDP, fiscal deficit, tax collection and expenditure, as well as projections related to external imbalance in the wake of growing current account deficits.

On GDP growth, the IMF has advised Pakistan to scale down its projection for the fiscal from 5.5 percent to 3.5-4 percent and scaling up the inflationary target to over 20 percent against 11 percent.


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## Neo

*Pakistan Telecom Authority launching 3G Service shortly​*
Friday, 19 September 2008 

Chairman Pakistan Telecom Authority (PTA) Dr Muhammad Yaseen has said the authority is launching 3G service, rural telephony, consumer protection cell, strategy, development division, mobile virtual network operators, and broadband.

He said this while chairing a high-level meeting here Thursday.

"Consultation regarding 3G service with the stakeholders had been carried out through Industry Fora and Seminars from time to time. It is expected that 3G spectrum auction will be held late this year and modalities are being finalised in this regard. Ministry of IT is also being consulted in procedure of 3G auction," he said.

"The PTA is now focusing on improvement of telephone services in far-flung areas of the country and number of steps is being taken to increase rural telephony. Basically this issue is being tackled through Universal Service Fund (USF)," he said.

However, PTA has also initiated Rural Telephony Projects through the Rabta Ghar Scheme aimed at the proliferation of telecom facilities in the rural and far-flung un-served and undeserved areas of Pakistan to bridge the digital divide between urban and rural areas, he added.

"It also provides employment opportunities to graduates of remote and rural areas," he added.

"The growth of broadband services could not take fast pace in view of its high costs. PTA has now focused on this area and with the launch of some recent services like Wimax penetration of broadband across the country would increase resulting in enhanced data and voice services available to a common Pakistani. More than 100 percent growth of broadband was recorded in the last year. 3G will also increase mobile broadband services," he said.

"In view of prompt redressal of consumer complaints a dedicated consumer protection cell has recently been established at PTA. This Cell would work in close coordination with mobile, fixed, internet and other operators to solve consumers' complaints regarding their services. Consumer regulations are also being formed which would help in dealing with consumer related issues. Other measures in this regard would also be taken," he added. He said a new division namely strategy and development has been formed in PTA which would work as a think tank and would advise the authority on future telecom policies.

Taking into account the increasing scope of Mobile Virtual Network Operators (MVNO) in world cellular market, Government of Pakistan took a principal decision to allow MVNO services in Pakistan and included it as a clause in mobile cellular policy 2004.

The same was added in new cellular mobile licenses," he said and added that in compliance with the policy, PTA issued a Framework for MVNO services in Pakistan in March 2006.

"This framework was twice revised in May 2007 and April 2008 respectively to incorporate feedback from industry.


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## Neo

*Hub attacks pushing away companies from Balochistan ​* 
Saturday, September 20, 2008

KARACHI: Recent incidents of violence in and around the Hub Industrial Area and the RCD Highway which connects this Balochistan town to Karachi has forced investors to rethink expansion plans and also to take unprecedented steps to protect their employees, a survey by The News has learnt.

In all this, the governments of both Balochistan and Sindh have remained unhelpful to the investor companies and it is feared that their scaling down of business would affect hundreds of jobs and thousands of livelihoods connected to this industrial area. An official of a company, when asked by The News, said that there is fear amongst those multinationals who are working out of Hub. We fear for our employees who make the trip daily and we are afraid our head office will tell us to wind up the operation in Karachi, said a senior executive asking not to be named. 

Crime rate is low in this area. The main problem is politically motivated terror attacks. In one such attack, a bomb exploded in the main market of Hub town, killing and injuring a number of people. In another attack, a convoy of foreigners was attacked. In third instance, the chairman of the Shipbreakers Association was murdered. The police remain unable to identify those responsible. 

The town of Hub starts from the outskirts of Karachi with Hub Chowki, a busy street with shops on either side. It is a bustling market and a busy bus stand giving the impression of thriving trade and commerce. Nearby is Lasbela, which is the industrial capital of Balochistan. This is also the gateway to the upcoming Gwadar Port, and its industrial growth rate has been outstanding due to its proximity to Karachi, as well as the favourable terms of setting up business here.

Local officials told The News that the total area of Lasbela is 15,153 square kilometres. The 1998 census shows it has a population of over 313,000. The prominent cities of Lasbela district are Hub, Winder, Gadani, Uthal, and Bela.

Hub is unquestionably the centre point of industrial and business activities of Balochistan, say government officials. According to the revenue collection data of Balochistan for 2004-05, Hub generated Rs1,395 million out of the total revenue collection of Rs1,740 million of the province. The remaining Rs345 million was generated by the rest of Balochistan, including Quetta, the provincial capital.

The industrial estates in Lasbela are Hub Industrial Trading Estate (HITE), Winder Industrial Trading Estate (WITE), Uthal Industrial Trading Estate (UITE), Gadani Ship-Breaking Yard, and some newly established industrial areas such as Marble City and Zero point.

Lasbela Chamber of Commerce and Industry (LCCI) was formed in 1995. In 2004-05, the LCCI said that there was an investment of around Rs145 billion in the district with total 150 operational units. Currently, LCCI represents over 230 industries with Rs250 billion estimated investments.

There are total of 230 to 250 industries in Lasbela with 200 to 225 active units operating in Hub alone. The total workforce in the Hub industrial area is estimated to be 0.3 million.

The industries in Hub produce power, cement, textile yarns and fabrics, food products, pharmaceuticals, chemicals and petrochemicals, ceramics, engineering goods, as well as the traditional marble and granite products.

Notable multinational companies, such as Dawood Yamaha Ltd, Otsuka Pakistan Ltd, Proctor & Gamble Pakistan Pvt Ltd, and Cadbury Pakistan Ltd, also operate in the district.

Security concerns were raised in Hub when back-to-back incidents occurred, leaving several casualties. Some months back, a firing incident left three people dead and several other employees of Attock Cement injured. Such incidents in the area tarnish the countrys image and affect investment prospects, said Babar Bashir Nawaz, Chief Executive Officer of Attock Cement near Hub Chowki.

We used to have three shifts of eight-hour everyday, but after the security threat, we have cut them down to two 12-hour shifts without affecting our production.

Nawaz added that the company had taken security measures, but also pointed out that the overall law-and-order situation is the governments responsibility. At present, the law-and-order situation is under control, but how can one be so sure when some disturbances have taken place recently?

However, according to Ismail Suttar, CEO of Hub Pak Salt Refinery and Vice-President of LCCI, The peaceful business environment in Hub is outstandingly appealing.

He said that industries employ locals when facing a shortage of hands. 

Industry workers from Karachi cost two thousand to three thousand rupees per employee in transport charges. One is not clear whether the move is to terrorize businesses or drive away employees from Karachi, say some officials. 

In all this, the business prospects of not just Hub but of Balochistan have come under a cloud. 

While smaller companies say that they will weather the storm, larger companies are fearful if their schedules are disrupted further, they would have to pack up and move away, possibly not just from Balochistan but from Pakistan too. 

In all this, the Balochistan government, which remains resource deficient has left matters be without showing any initiative or interest.


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## Neo

* Foreign investment in July-Aug FY09 surged by 105.6pc ​* 
Saturday, September 20, 2008

KARACHI: Net foreign investment of the country increased by 105.96 per cent to $643.18 million during the first two months of the current fiscal year against $312.29 million in the same period of the last fiscal year.

Foreign direct investment surged by 64.33 per cent to $754.06 million from July-August 2008, while portfolio investment recorded a growth of 24.35 per cent to minus $110 million against minus $146 million in the same period of the last fiscal year.

Foreign investment from developed countries including Western Europe, European Union, Luxembourg, Denmark, France, Germany, Netherlands, Sweden, UK, other Western Europe, Norway, Switzerland, besides North American countries including Canada, USA, Australia, Japan and other specified countries, collectively dropped by 34.6 per cent to $134.5 million against $205.7 million in the same period of fiscal year 2007-08.

In addition, foreign investment from developing economies including Caribbean Islands, Cayman Island, Bahamas, and other Caribbean countries increased by 221.5 per cent to $449.6 million against $139.9 million recorded in July-August 2007-08.

Moreover, investment from African countries including Libya, Egypt, Mauritius, and South Africa, declined by 62.7 per cent to $18.7 million against $41.6 million in the same period of the last financial year. However, it witnessed a robust growth of 334.5 per cent to $423.9 million against the $97.6 million inflow of investment in the same period of the previous fiscal year from Asian countries including West Asia, Oman, Iran, Kuwait, Bahrain, Qatar, Saudi Arabia, Turkey and UAE.

Likewise, from South East and South East Asian countries including Bangladesh, China, Hong Kong, Malaysia, Singapore, India, and Korea, investment jumped by 729.7 per cent to $436.8 million compared with $0.1 million in July-August 2007-08. Similarly, in the first two months of FY09, foreign investment from unspecified developing countries also increased by 103.9 per cent to $60.7 million, against $29.7 million.


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## Neo

*Gawadar to get 100MW from Iran ​* 
Saturday, September 20, 2008

ISLAMABAD: Iranian Energy minister is due to visit Pakistan from October 15 to 17 and will participate in the launching ceremony of transmission line for import of 100MW power for Gawadar from Iran.

Ambassador of Iran to Pakistan, Masha allah Shakeri sated this on Friday in meeting with Federal Minister for Water and Power Raja Pervez Ashraf. It was agreed in the meeting to expedite the process of importing 100MW power by Pakistan from Iran on the fast track basis for its early completion.

The ambassador offered to invest in the power projects and said the Iranian companies are also interested in up-gradation projects of transmission lines system in the country on low cost basis. He also offered sizeable investment in hydropower plants and expressed intention to finance power projects in the country. He stated the Iranian government would provide all type of assistance to the new political government in every sector.

The minister while welcoming the Iranian envoy said the country had close brotherly relations with Iran. Pakistan values the help and support of Iran and is desirous of expanding bilateral relations in all sectors.

He said currently the country is facing many internal and external challenges and energy deficit is also one of them. The government is taking necessary measures to generate electricity to bridge the demand and supply gap through fast track projects.

The government has planned to bring 35,000MW by the year 2016 and steps are being taken in this regard. He said the government now attaches high priority to exploit the indigenous resources like coal, hydro and wind for power generation. He said that first wind mill in the private sector will be operative next month.

Ashraf lauded the offer of the Iranian side and said Pakistan has already signed an MoU to purchase of 100MW from Iran. He also assured his full support and assistance to facilitate Iranian investors to invest in water and power sectors in Pakistan. He also expressed this meeting would further strengthen and enhance the bilateral and economic relations between the two countries.


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## Neo

*All fuel subsidies withdrawn​*
ISLAMABAD, Sept 19: The government decided on Friday to eliminate subsidies on oil and gas and to phase out the subsidy on electricity by June 2009 under a plan to stabilise the economy.

Announcing an economic package at a press conference, Finance Minister Naveed Qamar said it was aimed at bringing about macroeconomic stability, narrowing down the fiscal and current account deficits and minimising pressures on foreign exchange reserves.

The finance minister, who was accompanied by State Bank Governor Dr Shamshad Akhtar, said Pakistan would not seek any new assistance from IMF, but international financial institutions and donors could monitor implementation of the package.

We are not going into an IMF programme, he said, adding that the home-grown package had been worked out in consultation with different stakeholders, including the World Bank, IMF and ADB.

I can safely announce today... we have eliminated the entire fuel subsidy and there is no additional subsidy today that is going out of the budget to subsidise fuel, Mr Qamar added.

He said the subsidy on gas had also been withdrawn and the actual cost of gas would now be passed on to consumers.

He admitted that the passing on of subsidies to consumers would add to peoples hardship, but said the government had to stabilise macro-economic indicators which had deteriorated because of the policies of the previous government. He said the government was trying to be close to the fiscal deficit of around 4.7 per cent.

The finance minister said that various measures had been proposed to minimise government spending, but did not elaborate. However, he said the government was looking at PSDP allocations.

We can only spend what we have in the kitty and suggest a drastic cut in the development sector, he added.

Admitting that excessive borrowings from the SBP had led to inflation, Mr Qamar said the government had decided to launch non-bank borrowing schemes, including PIBs and commercial papers, in order to curb inflation.

He said that there would be no additional borrowing from the SBP and the government wanted to reduce the net borrowing to zero. He said that interest rates had to be reflective of the market.

The finance minister said the government had imposed additional duty on consumer goods to curtail import bill which was putting pressures on the reserves, adding that an increase in remittances would reduce pressure on the balance of payment.

He said the government would continue to pursue the policy of privatising state-run firms in the oil and gas sector despite a turmoil in domestic and international markets. We are getting inputs regarding investment in Pakistan.

In reply to a question, he said the government had invited the World Bank, IMF and ADB to help it to reduce the impact of looming crisis in the international market. He said that all these measures were part of an immediate plan and a medium-term plan would also be in place to stabilise economic indicators.

He said the country was expecting bumper crops of rice and wheat this year, adding that the wheat support price would be announced soon.The SBP governor said the package was aimed at stabilising the countrys economy. She said the central bank was trying to curtail inflation.

Answering a question, she said the exchange rate reflected the macro-economic indicators. We have managed floating regime.

Dr Shamshad said the SBP had been monitoring the rupee depreciation, adding that rebuilding the forex reserves to cover at least two to three months of import was a key part of the government strategy.

Asked if the international financial crisis had any impact on Pakistans economy, Dr Shamshad said that so far the impact had been witnessed only on the local stock market. However, she said that it might impact the overall economy.

She said the countrys international trade and foreign direct investment had witnessed a growth. She said that the increased demand for consumer goods had pushed up the inflation.

The current account deficit rose sharply to $2.572 billion during the first two months of the 2008-09 fiscal year -- equivalent to about 1.6 per cent of GDP. The full-year target is six per cent of GDP. Foreign reserves have declined to $9 billion from a record high of $16.5 billion in October last year.


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## Neo

*Plan to buy N-power plants discussed​*
ISLAMABAD, Sept 19: Prime Minister Yousuf Raza Gilani approved on Friday constitution of a committee to work out modalities for buying nuclear energy plants and satellite communication system.

The committee will include the deputy chairman of the Planning Commission, secretaries of finance, foreign affairs and water and power and the director-general of the Strategic Planning Division.

The deicision was taken during a briefing on nuclear energy and satellite communication projects by Chairman of the Joint Chiefs of Staff Committee General Tariq Majeed, deputy chairman of the Planning Commission and director-general of the Strategic Planning Division at the Prime Ministers House.

The meeting discussed proposals for purchasing nuclear energy plants to meet growing energy needs from non-conventional resources. The prospects of initiating communication projects were also discussed.

According to sources, it was acknowledged at the meeting that the country was facing an acute shortage of power and the need to produce sufficient electricity within the shortest possible time to overcome the crisis.

The meeting was attended by Minister for Defence Ahmed Mukhtar, Minister for Finance Naveed Qamar, federal secretaries and other senior officials.


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## Neo

*Low credit growth points to economic slowdown​*
KARACHI, Sept 19: Banks advances growth in eight months (Jan-Aug) 2008 declined to nine per cent against an average growth rate of 23 per cent in the last five years.

The impact of higher interest rate has started reflecting in the slow credit growth and there may be an expected fall in the corporate earnings.

Bankers said the advance growth should be higher than previous average growth of 23 per cent because the higher inflation slashed the purchasing power of rupee and increased the input cost.

Bankers expect that the cotton and textile sector borrowing would increase in the next few weeks as it was high time for working capital requirement of the sector and it may improve overall growth in advances of the banks.

However, the net interest income of banks has increased due to higher lending rates.

Banks have been investing in government treasury bills but in the wake of 25 per cent inflation, the real rate of return on t-bills is negative.

Banks are lending at much higher than 13 per cent while the banks were renting their rupee at 25 to 28 per cent to consumer financing which increases their NII.

Higher interest rates have started affecting lending, as evident from the recent slowdown. Higher interest rates are likely to cause a further dent to the credit appetite of the industry.

We expect advances growth to further slowdown and average around seven per cent in 2008, said an analyst at JS Research.

Representatives of industrial bodies have been asking the State Bank to reduce the interest rate. The higher interest rate has increased the cost of production which would ultimately further increase inflation.

Brokerage houses also hold the higher interest rate responsible for the fall of the shares market. Though the fall of stocks is a global phenomenon, brokers said the banks have stopped investing in the equity market and higher lending rates have increased the risk manifold for borrowers, which weakened the market further.

Analysts said despite tight monetary policy of the State Bank, the inflation was rising, and to curb the inflation, the SBP increases interest rates, but it proved a failure many times.

Credit disbursement data showed that advances to agriculture and oil and gas exploration have increased and these were the only two sectors which easily surpassed the hurdle of higher interest rate.

Analysts expect that the growth would be led by the heavy-weight exploration sector that is likely to post an earning growth of 33pc in next years, mainly because of higher oil prices and weakening rupee.


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## Neo

*Pakistan says no to IMF assistance​*
** Govt announces macro-economic stabilisation package
* Oil subsidy abolished, power subsidy to go by July 2009​*
ISLAMABAD: Finance Minister Naveed Qamar unveiled a policy package on Friday to restore economic stability, ruling out seeking assistance from the International Monetary Fund.

The package includes elimination of subsidies, reduction in development expenditures, financing through non-inflationary instruments and arranging foreign exchange through privatisation of oil, gas and power sector entities.

The package will bring down the fiscal deficit and current account deficit and protect our reserves, Naveed Qamar told a news conference.

He said the measures had been decided by the government, and hoped the IMF would endorse them.

Elimination of subsidies: Qamar said elimination of subsidies on fuel and electricity was a key element in the package.

I can safely announce today ... [that] we have eliminated the entire fuel subsidy and there is no additional subsidy today, he said.

Qamar said the government would do away with the subsidy on electricity by the end of the 2008/09 (July-June) fiscal year, but the bulk had already been phased out.

State Bank Governor Dr Shamshad Akhtar said the immediate target of the package was to increase foreign exchange reserves to provide an import cover two to three months.


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## Neo

*Pakistan considers buying nuclear power plants​*
ISLAMABAD (September 20 2008): Pakistan is considering purchasing nuclear power plants to meet its growing energy shortages, the government said on Friday. The country is suffering from acute power shortages, and officials say there is a power deficit of up to 4,000 megawatt.

In recent months state-run utilities have switched off power for several hours a day across the country, though the situation improved towards the end of summer, as air conditioners are in less use. Prime Minister Yousaf Raza Gilani on Friday held a meeting with senior officials to discuss the possibility of buying nuclear plants.

Gilani set up a committee of senior officials "to work out the modalities and financial arrangements before a formal decision is made on the purchase of nuclear energy plants," his office said in a statement without giving further details. Pakistan has two nuclear power plants.

Its first nuclear power plant was set up with Canadian help in 1972 and has a capacity of 137 megawatts. The second nuclear power plant was built with the help of its long-time ally, China, in 1999 in Chashma, a town in the central Punjab province. It has a generation capacity of 325 megawatts. China is helping Pakistan build a third plant near Chashma.

Pakistan has previously asked the United States for a deal along the lines of one struck between the United States and rival India, that gives access to US know-how and technology to develop civil nuclear energy capacity.

The United States refused because of a scandal involving Pakistan's top nuclear scientist. Abdul Qadeer Khan was put under house arrest in 2004 after admitting he had run a smuggling ring to supply nuclear parts to countries including Libya, Iran and North Korea. Pakistan and India became nuclear-armed states in 1988.


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## Neo

*Foreign investment up by 106 percent​* 
KARACHI (September 20 2008): Net foreign investment in Pakistan rose by 106 percent during the first two months of the current fiscal year 2009 on hopes for political stability and high profit rates. "Foreign investors believe that with the resignation of President Musharraf, political stability will take place in Pakistan. Therefore, they once again intend to invest," economists said.

They said, that foreign investors are still reluctant to invest in the equity market due to the continued negative trend for the last few months and have adopted the wait and see policy.

The State Bank of Pakistan on Friday said that net foreign investment had gone up by 330.89 million dollars in the July-August period of current fiscal year and reached $643.18 million as compared to $312.29 million during same period of the last fiscal year.

Exclusive of privatisation proceeds, foreign private investment increased by 72 percent to 644.78 million dollars during the first two months of fiscal year 2009 as against 375.29 million dollars in July-August of fiscal year 2008.

The foreign direct investment (FDI) presented better performance as compared to portfolio investment and during the period FDI surged by 64.33 percent and portfolio investment went up by 24.35 percent. With current raise, FDI amounted to 754.06 million dollars by the end of August, which previously stood at 458.86 million dollars during the same period of last fiscal year, depicting an increase of 295.2 million dollars during first two months of current fiscal year.

Portfolio investment presented a negative trend of 110.88 million dollars during the July-August 2008, which was also in negative position of 146.58 million dollars in same period of last fiscal. However, the negative trend was less than last fiscal year 2008.

Economists said that country is attracting foreign investment in spite of political turmoil since last November, which is a positive indication for the economy and reflects that foreign investors are still relying on Pakistan's economy. "We are hopeful that the country will attract more foreign investment with political stability, which will be seen in the near future," they added.


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## Neo

*Government striving to ensure economic stability: Zardari​* 
ISLAMABAD (September 20 2008): President Asif Ali Zardari on Friday said government was determined to manage the country's economy by taking sound economic measures. These measures will help the country avoid entering into the tough IMF programme. The President said this while talking to Mohsin S Khan, Director Middle East and Central Asia Department of International Monetary Fund (IMF) who called on him at the President House.

Minister for Finance Syed Naveed Qamar, Governor State Bank Dr Shamshad Akhtar and Secretary Finance Waqar Masood were also present in the meeting. President Zardari said that Pakistan needed and welcomed development partners but was also capable of continuing to manage its economy on sound and recognised principles. The meeting discussed the overall economic situation of the country.

The national economy, Zardari said, is resilient enough to withstand the shocks it faced recently and has the capacity to adjust itself to such shocks, he added.

In the meeting, the IMF Director highlighted the relative importance of monetary factors and structural supply-side factors for inflation in Pakistan. The official stressed the need for persistent implementation of sound economic policies and broad-based structural reforms.

President Zardari said the country was facing economic crisis. However, he added the government was striving to ensure the implementation of effective policies for the stability of the economy. The role of IMF includes surveillance, financial assistance and technical assistance to meet the changing needs of its member countries in an evolving world economy, Khan said.


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## Neo

*Ministry hopes government will revisit stance on Kalabagh Dam​* 
ISLAMABAD (September 20 2008): The Ministry Water and Power hopes that the government will revisit its stance on the controversial Kalabagh Dam which has been deferred till a consensus is developed amongst the provinces as construction of mega reservoirs is the top priority of the ministry, sources close the ministry's advisor told Business Recorder.

"The required consensus hasn't reached as yet despite the administrative and technical efforts of Wapda and presentations at different levels in the provinces about the merits of the project. Therefore the project is being deferred until such time that consensus is developed on its construction amongst provinces," the sources quoted a summary which is part of the files of the ministry and can be opened any moment on the directions of the President and/or Prime Minister.

The sources were of the view that political dialogue, possibly at IPCC level instead of administrative efforts would be helpful in removing province's reservations on the dam. The sources said the Cabinet in its meeting on April 23, 2008 had decided that the Ministry of Water and Power should seek fresh approval on big and small dams. The Cabinet had also directed that the royalty issue of Diamer-Basha Dam may be deliberated upon between the Ministry of Water and Power, NWFP and Northern Areas administration.

In order to meet the growing demand for irrigation and power, the Cabinet in its meeting on January 17, 2006 had decided to construct five large dams. Had the decision been implemented by the target date of 2016, an addition of 17.8 MAF of water and 9,373 MW of electricity would have been visible.

Unfortunately, progress on construction of five large dams has not been satisfactory. Preliminary activities on Diamer-Basha Dam have started and land acquisition plan was approved by the CDWP on September 18, 2008 - two years after the decision taken by the Cabinet to construct five large dams.

However, the biggest hindrance in the implementation will be accessing 8.5 billion dollars for which no significant headway has been made despite several meetings of the task force constituted for the purpose in the Finance Division. The National Economic Council (NEC) headed by the Prime Minister had allocated Rs 500 million for the Diamer-Basha Dam in 2008-09. Work on the dam is expected to commence after international bidding.

The sources said that progress on other dams was too slow and the preliminary work on the Kurram Tangi Dam has been resumed with the land surveys and demarcation, etc, after a long delay due to law and order situation and the NWFP demand to raise its height to enable storage of 1.20 MAF water.

The detailed engineering design on the revised parameters has been completed by Wapda and the survey work for land acquisition has been resumed by the provincial revenue department and Wapda. Frontier Works Organisation (FWO) was also carrying out the preliminary activities as a contractor. The ministry expects that with the improvement of law and order situation the progress on the main activities of the project will improve.

Regarding Akhori Dam, the sources said that feasibility study prepared by Wapda is pending Planning Commission approval, which is held up as the province's reservations could not be removed. On Munda Dam, the sources said that the private investor M/s AMZO Corporation has failed to make any headway beyond the feasibility study as the two partners of the company have gone into litigation stalling the work indefinitely.

Wapda has been given the task to prepare detailed engineering design to implement the multi-purpose project in the public sector or a Public Private Partnership (PPP) mode, if a reliable partner in the private sector is found to share the financing of the project.

The sources said water situation in the country for agriculture and other usage is deteriorating with every passing day. The water availability of 5000 cubic meters per head at the time of partition has come down to less than 1100 cubic meters per head and if this situation continues unabated, Pakistan will be categorised as a water-deficient country.

"Construction of five dams and other storage projects will add 20 MAF water to the system. It will also generate 25000 MW of cheap electricity which will help reverse the worsening water and power shortages," the sources observed.

According to sources, global warming also requires to put in place a cascading dam system on the rivers of Indus Basin to store additional water as a result of accelerated glacier melting of Himalayan Mountains. The sources said the ministry can move its summary to the Cabinet at any time if it receives directives from the top. Water and Power Minister Raja Pervez Ashraf had announced recently that the Kalabagh dam plan has been shelved.


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## Neo

*Top expert urges US to ease tariff policies to bolster Pakistani exports ​*
WASHINGTON (September 20 2008): Arguing that the most vital step the Unites States can take to help Pakistan succeed is to create economic opportunities for its people, a top American expert has urged Washington to ease its tariff policies toward Pakistani products as a way to bolster the South Asian country's exports.

"The single most useful thing the United States can do to help Pakistan succeed is to put Pakistanis to work. And the single most effective step toward this end Washington could take would be to eliminate its current punitive tariff policies on Pakistani exports," Robert Hathaway, Director of Asia Programme at Woodrow Wilson Centre says.

As it currently stands, US trade policy actually discriminates against Pakistan, he noted in an article entitled "Getting Smart on Pakistan." "US tariffs on Pakistani textiles' easily Pakistan's most important export" are far steeper than on similar goods from other countries. As Edward Gresser of the Progressive Policy Institute has pointed out, each container of exported towels puts 500 Pakistani men and women to work.

"Yet, textile exports from literally dozens of developing countries around the world face lower US tariffs than do Pakistani textiles. The least we could do is to level the playing field for Pakistani goods," Hathaway reasoned in the article distributed by the Common Ground News Service. The author/editor of several articles and books on Pakistani economy and energy needs said many rich countries enjoy US trade benefits not available to Pakistan.

Last year, Pakistani exports to the United States totalled not much more than a quarter of the value of Sweden's exports. Yet the $365 million in tariff duties the US imposed on Pakistan was almost three times the figure it extracted from Swedish goods. "No wonder many Pakistanis disbelieve our protestations of good intentions toward their country."

"It makes good political, economic, and strategic sense for the United States to move - and quickly - to give Pakistani textile exports preferred tariff status " or at least parity with their competitors.

"Doing so will not be easy. Entrenched US interests will denounce the idea as too costly for American industry and too destructive of American jobs. But surely a way can be found to meet the legitimate concerns of US companies and workers. As the United States seeks to help Pakistan, trade parity should be at the top of the next administration's agenda." On the political side, he advocated that the United States must work to sustain democratic governance and the rule of law in Pakistan.

"In the days and weeks ahead, the administration must make clear its expectations of Pakistan. The good news is that - contrary to what Pakistanis widely believe - the United States wants for Pakistan the very same things most Pakistanis desire: a stable government responsive to their wishes, a prosperous economy that meets the needs of the meekest as well as the mightiest, a judicial system that dispenses impartial justice, an end to extremist-sponsored violence and peace with its neighbours."

In the United States, there is widespread support for generous and long-term assistance to Pakistan, he said citing bipartisan legislation, the Biden-Lugar bill, which is now under consideration on Capitol Hill. The bill envisions a tripling of US assistance during the next decade and prospects for its adoption are promising, Hathaway added.


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## Neo

*Pak expects up to $5 billion assistance from FOP forum ​* 
Sunday, September 21, 2008

ISLAMABAD: Pakistan expects to get commitments of an additional assistance up to $5 billion in order to meet yawning financing gap for the current fiscal year during the upcoming Friends of Pakistan initiative, which will be held on September 26 at New York on the sideline of UN General Assembly session.

There is an initial estimate that Pakistan can meet its financing requirements by obtaining $3 to $5 billion commitments from Friends of Pakistan (FOP) forum, a senior official at Finance Ministry told The News here on Saturday when he was asked about expectation of Islamabad from this upcoming forum in terms of financing availability.

The FOP forum will be co hosted by President Asif Ali Zardari, Foreign Secretary USA and UK in which Islamabads authorities will brief the dignitaries about the financing needs of the country as well as requirements related to ongoing war against terrorism.

The worlds major financial nations such as USA, Canada, France, Germany, Italy, Japan and UK have agreed to be part of this initiative as have China, Saudi Arabia, the UAE, Australia and Turkey.

Pakistans economic managers, the sources said, expected to receive commitments from all bilateral donors during the upcoming FOP forum. Then follow up visits will be arranged by the authorities concerned to the respective countries for meeting with heads of states where there is positive response on Islamabads forwarded request for obtaining much needed financial requirements.

Total package of assistance will be on much higher side for medium to long term period over five year period in order to provide relief to democratically elected government in Pakistan.

Pakistans economic managers held extensive talks with the visiting IMF mission on Saturday in order to finalize the estimates of financing requirements for which Islamabad will formally made request to the upcoming FOP forum for ensuring dollar inflows in months ahead. 

It is imperative to take the IMF into confidence on all kinds of prospects as positive report of the Fund will open opportunities from all donors as well as private sector to invest in this part of the world, he added.

When Deputy Chairman Planning Commission, Salman Farooqi was asked how much Pakistan expects from this upcoming FOP forum, he said, sky is the limit as it will be quite significant occasion when G-8 countries as well as Saudi Arabia, UAE, Turkey and many other countries will participate to listen our leaderships viewpoint on various challenges being faced by the country.

He said that after receiving positive response from Pakistans friends, the government will plan follow up visits for meeting head of states if required for getting the desired results. The FOP forum will be attended mainly by the Foreign Ministers of the respective countries so there may be requirement to conduct follow up of their commitments.

When Planning Commissions Chief Economist, Dr Rashid Amjad was asked about financing requirements of Islamabad over the short term period, he said that Pakistan required $5 to $7 billion over the short term period in order to remove its economic woes. 

The financing requirements, he said, depends upon imports coming into Pakistan during this fiscal year as the prices of POL products have started witnessing declining trend in international market. If Pakistan gets an additional amount in the range of $5 to $7 billion, it will be comfortable on external deficit during the current fiscal year, he added.

To another query regarding ongoing exercise to prepare stabilization program, he said the panel of economist constituted four task forces and one task force on stabilization program started its deliberation from Saturday and it was expected that they would finalize their recommendations very soon.

A high-level official of Finance Ministry was of the view that Pakistan would seek $3 to $5 billion assistance from the FOP forum and it would result into creating comfortable situation for the countrys economy.

The countrys foreign reserves are depleting rapidly and touched below to $9 billion, resulting into putting more pressure on rupee against dollar. There is also expectation that Saudi Arabia will give positive announcement on Saudi Oil Facility (SOF) on deferred payment in the upcoming FOP forum. MH


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## Neo

*Private sector to add 2,380MW to national grid ​* 
Sunday, September 21, 2008

ISLAMABAD: A total of 2,380MW will be added into the system by the next year, while another 1,100MW will be injected into the national grid the following year ie year 2010 through the private sector.

This was conveyed in the 77th meeting of the Board of Private Power and Infrastructure Board (PPIB) held on Saturday with Minister for Water & Power, Raja Parvez Ashraf in the chair.

The minister said that as proper power planning had not been done in the past, the nation today, is subjected to acute power shortages resulting in the menace of load-shedding, which is not only a nightmare to the common man, but is also creating a huge loss to the economy of the country.

He said that the present government realises the importance of the power sector, and that is why, immediately after accession to power, our government took immediate measures to induct electricity into the system in the coming years.

The minister lauded the efforts of the PPIB team for attracting the investor community to establish power plants in the country, with specific reference to materialising the fast track initiative of the government, where an interest of around 3,000MW was received during the competitive bidding of 1,500MW fast track projects.

A transparent process was followed for these, bids were opened in public in front of the media, and accordingly eight projects with a cumulative capacity of 1,366MW will commission in 2009-2010.

We wow to eliminate load shedding in the country by next year, he continued.

Ashraf said that we believe in the policy of facilitating the investors, and do not want them to face any hurdles or delays during the processing of their projects. He further added that in order to make electricity affordable, an energy mix is utmost necessary, and therefore for future we are stressing on the use of indigenous resource like hydropower and our local coal at Thar, as well as imported coal.


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## Neo

*National grid to get 3,480MW more by 2010​*
ISLAMABAD, Sept 20: Minister for Water and Power Raja Pervez Ashraf has said the private sector will add 3,480MW of electricity to the national grid by 2010.

Presiding over a meeting of the Private Power and Infrastructure Board on Saturday, he said 2,380MW would be added to the system by next year and another 1,100MW the following year.

The minister said that due to wrong policies of the past regime, people were facing acute power shortages resulting in massive loadshedding, which was not only a nightmare for the common man but was also causing huge losses to the economy.

Mr Ashraf said that soon after taking charge, the PPP-led government had taken urgent corrective measures. He lauded the efforts of the PPIB which had evinced keen interest in the governments fast-track initiative. The minister said the government had adopted a transparent process for short-listing the companies for these projects. Eight projects with a cumulative capacity of 1,366MW would be commissioned in 2009.

Mr Ashraf said the government believed in facilitating the investors and they would not face any hurdles or delays during the implementation phase of the projects.

He said an energy mix of hydropower, coal from Thar and imported coal was necessary to make electricity affordable.

Federal Board of Revenue Chairman Ahmad Waqar, Planning Commission Secretary Suhail Safdar, Petroleum and Natural Resources acting Secretary G. A. Sabri, Water and Power Development Authority Chairman Shakil Durrani, PPIB Managing Director Fayyaz Elahi and other senior government officials attended the meeting.


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## Neo

*Hotel industry fears severe blow​*
KARACHI, Sept 20: Hotel industry leaders fear a massive decline in room occupancy to below 20 per cent and more strict travel advisories by the foreign missions in the aftermath of a powerful bomb blast outside the Marriott Hotel in Islamabad on Saturday in which at least 60 people were killed.

They said that the Islamabad blast would have severe impact on the entire hotel industry in the next five to six months. The blast has definitely frightened foreigners as well as the local businessmen, but so far no massive check outs have been reported especially from the foreigners. They will return to their homeland on Sunday or Monday, they added.

Pakistan Hotels Association Chairman Mustansar Zakir said that the room occupancy had been low between 30-45 per cent in Karachi and upcountry for the last six months in the back drop of political uncertainty, security situation in tribal areas and incidents of suicide attacks.

The room occupancy likely to come down below 20 per cent in the next 15-20 days especially in Islamabad hotels, he fears.

Foreigners will definitely fly back to their homes after the cancellation and postponement of various events and conferences due to the blast, he said.

The foreign missions of various countries, who had been issuing travel advisory note (TAN) for the last few months, will issue more strict advisories after Islamabad incident, he added.

The foreign missions have been cautioning their citizens to restrict their movement in the wake of deteriorating law and order situation in some of the cities declaring them highly unsafe to visit.

I think that the foreigners will cancel or restrict travelling to Pakistan in upcoming months after this incident, Mr Zakir said, adding that much however would depend on the law and order situation in coming days.

He said that usually foreigners presence in the hotels used to range between 20-22 per cent, but for the last six months their presence had come down to only one to two per cent.

The industry has been surviving on the domestic businessmen and travelers, he added.

Amin Hashwani of the Hashwani Group told Dawn that around two years back, the hotels room occupancy was almost cent per cent, but for the last one year it had dropped to about 50 per cent.

I think the uncertain business climate will further hit the sentiments of the travelers and tourism, which had been at the bottom, will further suffer badly, he observed.

He said that the share of business through tourism activities, which used to be 20 per cent in the hotels, had already fallen to zero after tensions in Northern Areas and FATA. However, the share of other business (events, functions, conferences and staying of domestic businessmen), which used to be 80 per cent in hotel business, would decline.

When asked to why the hotels had not reduced the rate of room charges and were still high despite low room occupancy for the last one year, Mr Amin said that the room rates had been cut down slightly keeping in view of demand and supply situation.

The attack on Marriott Hotel in Islamabad came hours after President Asif Ali Zardari delivered his first address to Parliament, which is just a few hundred metres away.

The hotel industry has been very sensitive to such incidents of terrorism and law and order situation in which not only the foreigners restrict their visits to the country, but also domestic travellers exercise caution.


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## Neo

*Roadmap for electronic industry discussed​*
RAWALPINDI, Sept 20: The Study Group on the Electronic Goods Industry, in its maiden meeting held in Islamabad on Saturday discussed the roadmap for its working and constituted sub-committees for different segments of the electronic sector.

The group had been constituted by the Ministry of Industries and Production on the initiative of Engineering Development Board (EDB) and assigned to study and evaluate the potential of indigenous manufacturing of electronic equipments not only to meet the local demand but also to venture into the global arena by evolving a coherent strategy for its development.

The meeting was chaired by Mian Muhammad Jawed, ex-chairman, PTCL and PEMRA as its convener. In his opening remarks, Mian Javed called upon the electronic industry to take a fresh look in order to make the country self-sufficient in meeting the needs of consumers and entering global market for reducing trade deficit.

He lamented that the electronic industry was heavily depending on imports and it will be difficult for the country to meet demand in future as the rupee cost of consumer items would increase manifold and the nation would not be in a position to bear this burden. He described indigenisation as the only way of survival.

In this regard he cited the example of Finland a small country with 40 per cent global market of mobile phones and said that Pakistan was spending more than a billion dollar yearly on import of mobile sets.

He underlined the need of moving from assembly to innovation in order to avail vast opportunities of exports. He said that this would increase the profit of the industry, therefore, they should focus on exports and indigenisation.

EDB Chief Executive Officer Asad Elahi in his remarks described electronic industry as vital and important for the progress and development of the country.

He said that EDB was a special organisation as it was pursuing the policy of public-private cooperation in formulation of various policies and strategies for development of engineering sector.


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## Neo

*Five major banks extend Rs14.6bn to farm sector​*
KARACHI, Sept 20: Five major commercial banks of the country extended a total of Rs14.699 billion credit to the farm sector during July-August 2008 period, compared with Rs14.022 billion disbursement made by these banks during the same period of the last fiscal year, showing an increase of almost five per cent or Rs0.647 billion.

The banks extending credit to the sector included Allied Bank, Habib Bank, MCB Bank, National Bank and United Bank.

Commercial and specialised banks continued to extend credit to the agriculture sector which, according to the State Bank of Pakistan, increased 12.48 per cent year-on-year to Rs28.749 billion during the first two months (July-August) of the current fiscal year (2008-09).

In absolute terms, agriculture credit disbursement rose by Rs3.19 billion in JulyAugust when compared with disbursement of Rs25.559 billion during the same period of the last fiscal year 2007-2008.

According to an SBP press release, the ZTBL disbursed Rs5.838 billion, compared with Rs5.060 billion, while Punjab Provincial Co-operative Bank Limited extended credit to the tune of Rs0.713bn, compared with Rs 1.032bn during same period last fiscal year. Apart from this, 14 domestic private banks (DPBs) also loaned a combined Rs7.528bn in July-August 2008 period, which was up 38.27pc when compared with Rs 5.444bn disbursed in July-August 2007.


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## Neo

*Inflation, high prices cut down purchasing power of people​* 
ISLAMABAD (September 21 2008): Already under tremendous pressure of the high inflation, the low income group find it difficult to purchase clothes or other for their children as prices of garments and other accessories have shot up sharply with the nearing of Eid-ul-Fitr.

A survey conducted by Business Recorder revealed that as Eid comes close, prices of clothes, bangles and artificial jewelleries are soaring with each passing day in the capital. Consumers have been left at the mercy of shopkeepers, who have increased manifold, the prices of all Eid-related accessories.

The price of a single stitched suit for men has gone up to Rs 2500 to Rs 3000, as compared to Rs 1000 to Rs 1500 before Ramazan. Similarly the prices of unstitched clothes for men have gone up to Rs 1500 as compared to Rs 700 to 1000 before Ramazan.

Unstitched suit for female, which was available at Rs 1000 to 1500, is being sold at Rs 3500, which is quite shocking for any buyer. Similarly the prices of shoes have also gone up. A pair of shoes which was available at Rs 500 to 700 before Ramazan, is now being sold at Rs 1000 to 1200.

"Price of a dozen bangles ranges from Rs 100 to Rs 300, depending on their quality and style," a shopkeeper Ahmad Ali said. No haggling can be done with tailors, who are lurking these days in every nook and corner of the twin cities like elsewhere in the country to make most of the season.

In the holy month of Ramzan, tailors are busy like bees even in godly hours, making quick bucks with both hands in every small and large scale market and the people have no option but to yield to have their suits sewn for the Eid-ul-Fittar. These tailors have also raised their prices. In normal condition they stitch one suit at Rs 250 now stitching at Rs 300 to 500.

"We are having the real joy of Eid (Asal Eid tuo hamari ha) by making a lot of money", Tufail Khan, a tailor remarked when asked for comments on his business before Eid ul Fittar. In wake of the rocketing price hike, the poor and low-income group of our society are unable to buy cheerfulness and joy for their children in the shape of only normal clothes and shoes.


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## Neo

*Approval of Rs 237.7 billion projects​*
EDITORIAL (September 21 2008): The Central Development Working Party (CDWP) at its first meeting of the current fiscal year has approved 42 new uplift projects worth Rs 237.7 billion and has also upwardly revised the estimates for nine on-going schemes from Rs 14 billion to Rs 24.7 billion. As in the past, the predominant focus this time around too is on development of infrastructure, which remains the weakest sector of the economy.

Chaired by Deputy Chairman of Planning Commission Salman Faruqui, it was the first session of CDWP after the induction of the PPP-led government in March this year. Briefing newsmen after the meeting, a Planning Commission spokesman said that as the cost of 22 projects was over Rs 500 million each, these would be placed before the executive committee of National Economic Council (Ecnec) for final approval.

According to the breakdown of the projects and their estimates provided by the spokesman, 46 schemes worth Rs 218.40 billion would be funded by the federal government. Thirteen out of the 18 projects located in Punjab will be executed under the Multan Development Package for which Punjab government will contribute Rs 500 million. One of the schemes, Cherah Dam, will be funded by Punjab government at a cost of Rs 5.31 billion.

Two hydropower projects in AJK, costing Rs 6.7 billion will be executed on a 30:70 cost-sharing basis by the AJK government and the federal government respectively, with the latter providing Rs 4.72 billion out of PSDP. Six projects worth Rs 94.40 billion approved for Sindh include, among others, the deepening of Port Qasim Navigational channel at a cost of Rs 8.1 billion, and the construction of 50-km Karachi Circular Railway at a cost of Rs 52.372 billion.

The CDWP has also approved Rs 2.546 billion for the Indus water sector capacity building. Similarly, CDWP has conceptually cleared projects such as Balochistan Local Service and Delivery Scheme. Further, land acquisition and resettlement plan of Bhasha Dam has been approved at a cost of Rs 116.7 billion.

Two projects worth Rs 600 million have been approved for NWFP. Five projects at a cost of Rs 123.88 billion have been approved in the energy sector, four of Rs 8.05 billion in water sector, and 18 projects worth Rs 24.37 billion have been okayed in social sector, including higher education, health and environment.

As in the past, the strategy adopted by the new dispensation rightly lays optimum stress on infrastructure development, which is the need of the hour. However, going by the approval of mega allocations, it appears that the planning (and implementation) bureaucracy is back at its old game.

For instance, in February this year the Ecnec had approved 23 new development schemes worth Rs 309 billion, including 15 in infrastructure, eight in transport and communication, one in water resources, four in energy and two in physical planning and housing sectors.

The Ecnec had also revised the cost of nine on-going projects from Rs 6.2 to Rs 8.2 billion. This had brought the total number of projects approved till then to 116 at a total cost of Rs 685.9 billion, including a foreign exchange component of Rs 260.5 billion.

Incidentally, what is the current status of these projects or the utilisation of huge financial allocations approved for them? Have the projects been fully implemented, partially implemented or abandoned? Further, has the funding approved for them lapsed, or does it survive in a carry-over shape?

A news report had quoted the then Deputy Chairman of the Planning Commission as saying that the government would have to curtail development expenditure during the remaining five months of FY2007-08, because of the tightening financial crunch.

Earlier, in October last year, it was disclosed that as many as 632 projects worth Rs 2.36 trillion had been approved in the last eight years, including 394 in infrastructure sector and 200 in social and other sectors. However, despite all the hype then generated, our economy remains hopelessly enmeshed in crippling infrastructure handicaps.

In fact the economic slowdown the country is experiencing today is a direct result of gross neglect of project implementation by the previous government. The spiralling energy cost and the galloping steel and cement prices have become a major cause of project cost over-runs, which have become the real bane of the country's economy. Analysts have often attributed the problem to a serious mismatch between our ambitious projects and our restricted delivery capacity, largely because of the country's infrastructure and expertise constraints. The present government should break the vicious circle.

According to experts, the whole trouble has primarily arisen due to adoption of the policy of planned development, under which the budget serves as an instrument for carrying out objectives of the Plan, as against the previous practice of categorising the budget into revenue and capital expenditures. The distinction had kept the picture relatively clearer, and had also ensured greater financial transparency in project implementation.

The government of Prime Minister Yousuf Raza Gilani should keep closer tabs not only on planning of the projects, but also on their timely and quality implementation. It should also ensure that the element of personal discretion in project formulation or implementation, at political or bureaucratic level is whittled down to the minimum in the interest of absolute transparency.


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## Neo

*2380mw to be added to system by next year​*
Sunday, 21 September 2008 

A total of 2,380 MW will be added to the system by the next year, while another 1,100 MW will be injected into the national grid the following year i.e year 2010 through the private sector.

This was conveyed in the 77th meeting of the Board of Private Power and Infrastructure Board (PPIB) held here today with Minister for Water & Power Raja Parvez Ashraf in the chair.

The meeting was attended by the Chairman Federal Board of Revenue Mr. Ahmad Waqar, Secretary Planning Commission Mr. Suhail Safdar, Acting Secretary Petroleum and Natural Resources Mr. G. A Sabri, Chairman WAPDA Mr. Shakil Durrani and Managing Director PPIB Mr. Fayyaz Elahi, besides other senior government officials.

The Minister said that as proper power planning had not been done in the past, the nation today, is subjected to acute power shortages resulting in the menace of load-shedding, which is not only a nightmare to the common man, but is also creating a huge loss to the economy of the country.

He said that the present government realizes the importance of the power sector, and that is why, immediately after accession to power, our government took immediate measures to induct electricity into the system in the coming years. The Minister lauded the efforts of the PPIB team for attracting the investor community to establish power plants in the country, with specific reference to materializing the fast track initiative of the government, where an interest of around 3,000 MW was received during the competitive bidding of 1,500 MW fast track projects.

A transparent process was followed for these, bids were opened in public in front of the media, and accordingly eight projects with a cumulative capacity of 1,366 MW will commission in 2009-2010. We wow to eliminate load shedding in the country by next year, he continued.

Raja Parvez Ashraf said that we believe in the policy of facilitating the investors, and do not want them to face any hurdles or delays during the processing of their projects. He further added that in order to make electricity affordable, an energy mix is utmost necessary, and therefore for future we are stressing on the use of indigenous resource like hydropower and our local coal at Thar, as well as imported coal.


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## Neo

*Bumper rice crop despite major constraints​*
RICE is the second food crop next to wheat cultivated in the country. It is a cash crop that earns foreign exchange. Punjab is the largest rice producing province followed by Sindh, Balochistan and the NWFP.

In Sindh, rice was grown on 7,12,524 hectares during 2008, compared with 5,94,026 hectares last year. This shows that there has been an increase in rice growing area. Rice is mainly grown in Larkana, Shikarpur, Jacobabad and Dadu districts in upper Sindh and Thatta and Badin in lower Sindh. Besides, its illegal cultivation in cotton-wheat growing districts i.e., Nausheoroferoz, Khairpur and parts of Sukkur district.

A survey carried out to ascertain the increase in rice area in the current year revealed that there has been 24 per cent increase in the cultivation area. The major increase of area under rice crop was in the cotton-wheat cropping zone (46.4 per cent), followed by in the mixed cropping zone (27.4 per cent). Very small area (two per cent) increased in the rice-wheat zone. This is mainly because rice was already cultivated in this area and it was only replaced by fodder and vegetable area.

The main reason behind increase in rice area, growers said, was the serious attack of mealy bug on cotton crop leading to its complete destruction the previous year. Tremendous increase in rice prices also motivated farmers to bring more area under rice crop. Many of the growers cultivated paddy for the first time on their farm. Interestingly rice was also cultivated in almost all date palm orchards of Khairpur district.

Rice varieties: The IRRI-6 is the main variety covering more than 50 per cent of the total area under cultivation. The other coarse varieties are: KS-82, IRRI-9, Gunja (red), Dokri-70, Shandar and Hybrid. Whereas, the fine varieties, super Basmati was the major variety covering 15 per cent of the area, followed by the Russi and B-2000 varieties.

The per cent area under rice varieties grown in major cropping zone in Sindh is given in table 2.

Fertilisers: Availability of fertiliser remained a serious problem in all the cropping zones in Sindh. Most of the farmers did not use DAP during the current crop season due to sharp increase in its price. Few rice growers said they used SSP and TSP as substitute of DAP, but were disappointed.

Availability of urea also remained a problem during the whole season. The price of urea at the time of transplantation was Rs700 per bag which escalated to Rs1,000 per bag in September 2008.

Prices of other inputs like weedicide, pesticide, zinc etc. remained at higher side as compared to their prices last year. Majority of growers used Kartip against insect/pest control. The average price of kartip remained between Rs350-400 during last year. The price of kartip ranged between Rs800-850 per bag during the current year.

Overall crop position was satisfactory

except at few places where farmers reported shortage of irrigation water and expected low yield due to none use of fertilisers.

Prices of coarse grain varieties last year started from Rs400/md and reached up to Rs900/md. Similarly, the price of Basmati varieties started from Rs735/md and reached up to Rs1000/md. Also at the end of harvesting season, the prices had gone up about Rs300-500/mds. Moreover, paddy growers reported that they partially benefited by this price hike.

During this season growers are expecting prices of coarse grain varieties around Rs700-800/md and prices of Basmati varieties around Rs900-1100/md. Keeping in view the sharp increase in input prices in the current season, the minimum price reported by farmers is essential to save them from default situation.

Paddy marketing: There are three types of paddy buyers in rice-growing areas of Sindh -- shopkeeper, fertiliser and input dealers (arhties) and rice mills. Shopkeepers located in village level and they purchase it from small growers in small quantity and sell the produce daily or weekly to rice mills.

In cotton-wheat zone, where only few rice mills operate on small scale, fertiliser and input dealers (arhties) normally provide all inputs on credit to growers on condition that they would sell their produce to them. These dealers also stock the produce for some time and then sell it to rice mills.

In the rice-wheat and mixed cropping zones, rice mills are directly involved in purchase of paddy from growers. In this area rice mills also provide inputs on credit to farmers. These mills have more capacity to stock rice as well as paddy. In rice-wheat zone, where basmati varieties are also cultivated, most rice mills shell only coarse varieties as they do not have facility to shell Basmati varieties. These mills purchase basmati varieties but send it to other mills mostly to Punjab. In rice-wheat zone, some commission agents are also involved in purchase of Basmati varieties and they send it to rice mills in Punjab.

The mill owners perceive that they expected up to 34 per cent more supply of paddy in the current year, due to increase in area and good crop condition. They are ready to handle extra supply and they have no difficulty in handling and marketing. However, due to more supply they expect decline in paddy prices but they pointed out that paddy prices mostly depended on export of rice.

According to them last year prices of coarse varieties started from Rs460/md and reached up to Rs915/md and this year they expect the price in the market at around Rs600-650/md. For Basmati varieties, the last year prices started from Rs710/md and reached up to Rs1800/md and this year the expected prices is Rs1000-1100/md. The mill owners reported that they would try to purchase more produce during current year as compared to last year. They have all the resource to buy paddy.

Majority of the mill owners reported that they earned reasonable benefit from last years price hike as they did not stock rice while exporters and stockists gained higher benefit.

Suggestions: The government needs to sustain the momentum of rice crop by removing marketing barriers. Factors like water, fertiliser, pesticides, marketing and pricing are very crucial for the future prospects of crops. The government must come up with a strategy to balance interest of all stakeholders.

The rice growers suggested that government should not impose ban on export of rice which affects the farming community adversely. They also demanded of the government to announce paddy procurement price well in time before harvesting. In case of market failure, the government should be ready as a second buyer to keep the price at a stable position and acceptable to growers.


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## Neo

*Planning for the energy sector​*
Pakistan needs to rethink its entire stance towards the development of the energy sector. The country should not procrastinate any further in properly developing a sector of such vital concern for the economy.

Over the last 60 years, the sector has not developed according to a well thought out strategy. Such a strategy  had one been formulated would have given careful consideration to at least the following aspects. Given the countrys resource endowments, what was the appropriate mix of fuels for the various users of energy? In this context what should be the main sources for generating electricity? How should the prices of various sources of energy be determined; should they be left to the market or should the government have a role to play?

If the government were to get involved, should it subsidise some groups of consumers so that they can gain access to different sources of energy supply? Such subsidies can be justified on social as well as economic grounds but their use as a part of public policy has to be carefully weighed against the governments budgetary situation. The traditional approach is to use the price mechanism for providing subsidies. This creates serious distortions in the market place and usually helps those who are not the main target groups.

Should the government undertake careful demand analysis based on various elasticities (price, increase in national incomes, increases in the incomes of different categories of consumers etc) to determine how much energy the country will need over some specified period of time? Or should this be left to the private sector if private enterprise was to get deeply involved in various aspects of energy development? If the government assumes the responsibility for the supply of some forms of energy, how should it plan to meet the anticipated demand?

Even if the state is heavily involved in the energy sector, as is the case, should the various functions associated with the efficient performance of the sector be carried out only by the federal government or should other levels of government also get involved?

For federal systems as large as Pakistan, should the production and distribution of various forms of energy be the responsibility of the federal administration, or of the governments at the provincial level, or of the district administrations? It would not be unreasonable or irresponsible to let the provinces into the energy sector and give them some responsibility for generating and distributing it.

In Pakistan, most of these questions were never posed the way I have asked them. In fact, even though the state assumed the responsibility for energy production and supply, it allowed energy policy to be developed as a series of responses to the crises the country has faced over the last six decades. Consequently, the energy sector at this time is a patchwork of the initiatives taken when supply shortages appeared in some form of energy supply.

In 2008, Pakistan is faced with multiple energy crises. There is a serious shortage of electricity which has manifested itself in the form of power outages  we call them load shedding  that have already taken a heavy economic toll. The government itself estimates the demandsupply gap in electric power at 4,000 to 5,000 MW or 20 to 25 per cent of the total installed capacity.

This will impact economic growth; it will, probably, shave off two percentage points from the rate of GDP growth this year, possibly also next year. By allowing loadshedding to affect productive activities to such an extent, the government has allowed unemployment to increase. The informal sector has been particularly affected and it is on this that most poor depend for their livelihood. Power shortages will contribute to increase the incidence of poverty. This will be the case in particular in the countrys large cities.

Pakistan has also been hit hard by the sharp increase in the price of oil, a commodity vital for the working of the economy but of which very little is domestically extracted. This has produced a heavy burden on the governments budget since for many months Islamabad resisted the advice that it should allow the increase in prices to be passed on to the consumers. Resort to various forms of subsidies was the easier, short-term option but with heavy long-term costs. These costs will come in the form of very serious fiscal stresses.

Passing the price increase to the consumers would have no doubt resulted in some inflation but by taking on the burden on itself, the government is setting the stage for even greater and persistent inflation. This will certainly be the case if the budget deficit is financed through bank borrowing. In so far as helping the lower income groups is concerned, it is always economically more efficient to have the likely decline in their incomes resulting from inflation to be redressed by direct income transfers. Mechanisms for direct income support exist for compensating the poor and they should be used.

The third energy crisis concerns the shortages that have appeared in the supply of natural gas. The two publicly owned gas companies can no longer meet the growing demand for this particular fuel.

Most of the gas consumed in the country is produced at home but the large deposits discovered more than half a century ago have yielded a significant proportion of what they hold. No major discoveries have been made in recent years in part because those responsible for the business have not searched hard enough. For the last several years, Islamabad has been attempting to negotiate deals with the gas rich countries in its neighborhood for the construction of gas pipelines.

The project that has advanced the most is the pipeline from Iran that will not only supply Pakistan with large quantifies of this fuel but also India. However, the IPI pipeline is subject to geo-politics with the Americans putting a great deal of pressure, particularly on India, to abandon the project. Washington has considerable leverage on India at this time since New Delhi is in the middle of concluding a deal that will allow it to procure nuclear technology from America and other countries of the industrialised West.

Very careless management of what were once rich forest resources have produced the fourth fuel crisis for Pakistan. The country is losing its forest cover at an alarming rate and this means that the access to fuel is becoming increasingly more difficult for the poor living in the countrys poorer areas. Once again an energy crisis is causing increased suffering for the poor.

This long tale of woe should be enough to draw the governments attention to finding long-term solutions to the energy problem. This has not happened for years if not for decades. The Planning Commissions work in this area does not give much hope. One of the several vision statements it produced over the last several years concerns energy. It presented a blueprint for increasing the supply of electricity severalfold over the next couple of decades.

Translated into annual rates of growth, the Planning Commissions suggested plan would have increased electricity supply by more than eight percent a year.

This is in keeping with the seven per cent increase it envisaged in GDP. The accompanying table lays out the plans main targets. It is clear from the table that the plan depends on natural gas as the main source of power generation. It does not make clear how this additional supply of gas would be obtained.

The need of the moment, therefore, is to abandon ad hoc responses to the management of the energy crises and to develop a medium-term programme (for the next five to 10 years) that finds operational answers to the several questions raised in the opening paragraphs of this article. Now that a committee has been convened to begin work towards the formulation of a five -year development plan this may be a good time to begin addressing these questions.


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## Neo

*What ails the economy ?​*
It is agreed on all hands that Pakistan is faced with a serous economic crisis. The difference is on the reasons.

Some, mostly in official quarters, want to link it to international factors, mainly higher prices of fuel and food. This is an oversimplification of a complex situation that has been in the making for quite some time. The external shocks have exposed the basic structural weaknesses of the economy, which may be broadly classified as those pertaining to development strategy, priorities, management and the rampant corruption.

To begin with, the development strategy was devised to be investment-driven relying heavily on external resources. Their contribution is manifold as they support balance of payments position, finance federal budget and help increase national investment. No wonder, the growth rate has moved in tandem with the availability of external resources.

External resources, except for negligible grants, entail cost and are justified only if wisely employed to enhance the productive capacity more than that cost so as to leave something to benefit the population. If not, this becomes a drag on the domestic economy. They are thus justified on the condition that they supplement and not supplant domestic effort for development or domestic saving/investment. Unfortunately, the latter is the case for Pakistan.

External resources have been treated as a substitute for domestic saving and not a temporary supplement. Promotion of domestic saving has never been part of development strategy.

If any thing, the policies have been positively anti- domestic saving. As a result, Pakistan has one of the lowest rates of domestic saving not reflecting the impact of economic growth with greater concentration of income and wealth in the higher income groups with higher known propensity to save.

The nature of the external resources has also changed basically from official loans and those from international financial institutions to foreign investment. This has far reaching implications for recipients. In case of the loans, the liability is pre- determined and known but in the foreign investment case it is not so. If the capital and current return thereon can be freely repatriated, as is legally allow, this exposes the recipient to uncertainty of withdrawal of foreign investment at a  time when the country can ill-afford it. In recent years, foreign investment, both direct and portfolio investment, has assumed significant proportions to rescue as well as upset the economy. .

The Musharraf regime radically changed the growth strategy from investment driven to consumption driven and actively supported it by consumer financing on a massive scale. Consumer financing outstanding shot up from Rs124 billion in FY 04 to Rs367 billion as of December, 2007, a three-fold increase in three years. This is more than twice the bank advances to agriculture, hunting and forestry at Rs156.3 billion on that date. The result is quite obvious in the drop in domestic saving from 18.1 in FY 02 to 16.3 during FY 06 to 16.0 per cent in FY 07 and is estimated at 11.7 per cent in FY 08. Dependence on foreign savings for investment has thus increased from 1.6 of GDP (MP) in FY 5-5.7 per cent in FY 07 and is estimated 7.6 per cent in FY 08.

External resources have helped investment but the rate remains much below the minimum considered necessary for sustainable growth. National investment in current terms improved from 16.8 of GDP (MP) in FY 02 to 22.9 per cent in FY 07 but dropped to 21.6 per cent in FY 08. In constant terms, the ratios for gross fixed capital formation (GFCF) in private, public and general government sectors have been 15.8, 17.8 and 17.3 per cent. respectively. Even so investment is more consumption rather than production-oriented. Palatial offices and residential buildings, multi-storeyed air conditioned commercial plazas, bullet proof extremely expensive cars, aircrafts for VIP travel would count as investment but have little impact on public welfare.

As to the priorities, industry has been the focus of attention and agriculture has been practically neglected. Whatever is done for that sector stops at the doorstep of the big farmers leaving in the cold the small farmers who are the real backbone of agriculture. Industry is urban based with diversified economic interests and tremendous political and administrative clout to pre-empt all facilities. They are farmers as well as owners of sugar and textile mills. Whatever, they might lose in the price of sugar cane and raw cotton, they more than make up in the price of sugar and textiles.

It is a shame that a basically agriculture country, which was self- sufficient a few years back, now imports, cotton, wheat, pulses, potatoes, onions, tomatoes, etc. and is faced with a serious wheat crisis. The growth rate for agriculture declined from 6.5 in FY 05 to 3.7 in FY 07 and is estimated at 1.5 per cent for FY 08. The rate for major crops fell from 17.7, to 8.3 and 1.5 per cent, over these years.

Engaging in real productive activity not only brings wealth to the entrepreneur, but also makes the country economically strong and prosperous. Otherwise, individual may become rich but the country remains poor and the common man has to be content with low standard of living. There was a genuine productive activity to give a purely agricultural country an industrial base. For quite some time, the pace of new industrial investment has slackened, if not practically stopped and textile industry remains the main venture attracting it mainly for balancing and modernisation of old units.

In the current market prices, the ratio of GFCF for the private sector declined from 25.2 per cent in FY 00 to 20.2 in FY 07 and 19.3 per cent in FY 08. In constant terms, the ratios were 27.2, 20.1 and 19.3 per cent. In fact, the absolute investment in the last year increased by 0.9 against 10.4 per cent in the preceding year. The large scale industry investment declined by 3.3 in contrast to an increase of 3.2 per cent in the preceding year.

It is easier and safer to acquire wealth through devious means than to face the problems of management of business,. particularly in the industrial sector. There is quite a variety of such means in the form of corruption such as sale of sub-standards goods and services at the price of standard one, over and under-invoicing of foreign trade, tax evasion, financial scams, loan writ off, smuggling, both commodities and human beings, land grabbing, patronising if not actually managing, mafias extorting protection money from the hapless public and engaging in daylight robbery, kidnapping for ransom, speculation, mainly in real estate, commodities and at the stock exchange, etc. All this means diversion of energy and resources away from productive economic activity where the cost of doing business has become quite exorbitant for a new comer with no contacts who may dare to enter industry.

In a new environment of globalisation, removal of import quotas along with practically scrapping of tariff, indicates a lack of adequate attention to expansion and improvement in quality of industrial output and hence the inability to compete in intensely competitive world markets is proving difficult and costly. In fact, this has been a case of benign neglect of WTO obligations by government as well as the exporter. No wonder, exports are lacklustre. Industrialists used to exploiting a highly protected domestic market and assured access for exports under quotas feel ill at ease facing increasingly competitive world markets after 1st January 05. .

Fiscal operations of government, for their size, are a major determinant of economic situation and federal budget is of crucial significance. The budget is based on cash basis, that is cash received and paid. In order to show a good picture at the end of the fiscal year or on other specific dates, there is lot of manipulation on both receipt and expenditure sides.

There is lot of arm twisting to seek advance tax and withholding of refunds and rebates to achieve the revenue targets while payments are delayed. The latter has given rise to a huge circular debt in the public sector and this divorces the fiscal operations, as reflected in budgets, from the real economy that is the actual use of goods and services.

Recent large payment of arrears of some Rs100 billion by the federal government to oil companies, mainly to PSO who, in return, paid the oil refineries is indicative of that phenomenon. Explicit liabilities cash flow streams from the federal budget have gone up from Rs16.2 billion in FY 06 to Rs63.1 billion. Contingent liabilities of the federal government have meanwhile gone up from Rs69.9 billion to Rs156.2 billion. The budget has become more an exercise in public relationing than an effective tool of management. Among other things, supplementary budgets are an eloquent proof of that.

The assessment of the State Bank is that the budget overstates revenue and understates expenditure. In fact, no one in government has any idea about the amount due as arrears by the public sector, much less its net worth.

The experience of the FY08 federal budget confirms the SBPs observations. A few large variations may be pointed out. Total expenditure was budgeted at Rs1,555 billion but according to revised estimates, it turned out to be Rs1,948 billion, an excess of 25.3 per cent. Current expenditure was budgeted at Rs1,056 billion but this was Rs1,516 billion, as per revised estimates, an excess of 43.6 per cent.


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## Neo

*Doing without IMF loan​*
At a time when the countrys finances are in dire straits, the arrival of a team of International Monetary Fund (IMF) with an advisory mission has lent strength to speculation, already rife, that Pakistan may again seek an IMF support programme.

Pakistan had last time taken a $1.3 billion loan package in 2001 which concluded in 2004. These programmes had compelled the country to liberalise its economy on neo-liberal lines, sell its big industrial assets, reduce tariffs, and cut down drastically its expenditure on health and education. While the IMF was on board, foreign investment did not pick up till such time capital and financial inflows, after 9/11, brought about economic recovery and growth.

Senior government functionaries are emphatic and consistent in their denial of any move to seek IMF bail out and intend to put more stress on seeking help from friendly countries. Even Asif Zardari, in his first press conference after assuming office of the president, categorically rejected the idea of going to the IMF and said Pakistan will instead tighten its belt to overcome the difficulties. His finance minister reiterated on Friday the goverments position.

But a recent report by the Citigroup, quoted by Newsweek, recommends (sees) Pakistan as the IMFs next big customer. The report finds Pakistan running a big risk of sovereign-debt default next year, primarily because of a weak rupee and higher energy prices (oil prices are now falling). And it comes at a time when the IMF seems going out of job and is on the track of permanent downsising since early this year because emerging-market growth with comfortable foregn exchange reserves has left it without any clients.

At present, the IMF does not have a programme in any country except Turkey. And its latest customer is Georgia, now an ally of the West, whose economy suffered because of last months Russian invasion. So, the IMF would naturally be looking for clients. It will even offer its credits at very favourable rates in the beginning to lure a client into borrowing. But once one starts borrowing and becomes dependent, the rates may be raised. The current commodity boom, ( though weakenin now), the report says, might just put the IMF back in business.

Pakistans economy needs a substantial infusion of external funds as an urgent step to achieve some measure of stability. But becoming IMFs next big customer shall be the most disastrous option. The hard facts are that the country has spent more than $7 billion of its foreign currency reserves in 10 months (reserves have been falling at a rate of about $800 million a month), and its budget deficit has reached its highest level since the late 1970s.

Latest data released by the finance ministry shows the reserves fell from $9.13 billion on August 30 to $8.89 billion on September 3, the lowest level since 2002, of which the central banks reserves accounted for $5.5 billion.

The country is, in fact, struggling to pay its debts, though it was recently granted breathing space by Saudi Arabia, which it owed almost $6 billion for oil already delivered.

The Saudis have agreed in principle to provide an oil facility, which would defer the payment of part of the oil import bill but they are not eager to help us in any extraordinary manner.

The five-member IMF team which arrived in Islamabad on September 12 has been holding talks with officials of economic ministries and the State Bank and is to give its expert advice on the macro-economic framework prepared by the officials concerned.

An economist at the Citibank is of the view that under the prevailing conditions Pakistan needs IMF advice more than money. But the international bond market has also been pricing in the risk on Pakistans possible default on its debt early next year.

Meanwhile, Mohsin Khan, IMFs director for the Middle East and Central Asia, says that Pakistan has not asked the Fund for loans. In fact, he thinks, Pakistan does not need to turn to the IMF for loans in the next 10 months only if its government cuts spending, abolishes all fuel subsidies by December as planned, stops borrowing from the central bank and sticks to its privatisation plans to raise money. His advice covers all the guidelines (or essentials) that an IMF assistance programme stipulates.

He is also of the view that instead of seeking IMF money, Pakistan should get funds from other sources. The SBP Governor has hinted at securing over $1 billion worth of loans from the World Bank and the finance ministry officials expect another $500 million from the Asian Development Bank from its $1.3 billion loan programme. But the problem is that the IMF conditionalities have now become the general conditionalities for the developing countries if they were to get financial assistance from any non-IMF institution falling within the ambit of the Washington Consensus.

Pakistans immediate financial requirement is stated to be between eight and ten billion dollars for the current year and it is unlikely to be met. Foreign loans may at most cross $4 billion this year if supported by the US, Europe and GCC. So, it is a Catch-22 situation for the government as it does not want to go to the IMF for loans.

But it is more or less the same predicament for the US and Europe because they cannot afford to let Pakistan default or descend into a meltdown for it happens to be a frontline state in their war on terror and its support is crucial to the success of their long-term strategy and also Natos mission in Afghanistan. So, Pakistan must be rescued to enable it perform their task.

Pakistan became IMFs customer for the first time in 1988 and was tasked to implement a structural adjustment programme during the first Benazir government. Since then there had been collapse and renewal of IMF programmes.

Later, during Musharraf era, the structural adjustment programme was renamed as Poverty Reduction and Growth Facility (PRGF) programme. (It was coined by James Wolfensohn, ex-WB chief, for he thought poverty reduction was an attractive slogan.).

The programme was initiated in December 2001, just two months after 9/11 and Pakistan, by taking a U-turn in its foreign policy had become Americas most favourite ally. All economic sanctions, resulting from 1998 nuclear test, were lifted and a fresh inflow of dollars began soon after. By the time, the programme drew to a conclusion in December 2004, seven reviews were undertaken by the IMF officials to declare it a success.


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## Neo

*IMF advises government to formulate aid-free economic plan​* 
ISLAMABAD (September 22 2008): Pakistan has been advised to formulate an economy stabilisation programme, which is not dependent on external financing, it is reliably learnt. In the ongoing technical engagement with the team of the International Monetary Fund (IMF) last week, the visiting Fund experts were of the opinion that raising of POL prices, electricity and gas tariff and reducing subsidy in the budget were not enough to overcome the economic crisis being faced.

Ministry of Finance officials are reported to have told the Fund team that RS 160 billion, borrowed for budgetary support, was on account of delay in receiving external financing. And, once these expected inflows would materialise, the borrowing from SBP on net basis would be zero.

The Fund experts were of the opinion that the measures taken so far were not enough, and the government needed to do more as it is still "behind the curve". Pakistan team, led by Finance Minister Naveed Qamar is reported to have given details of various controls that would be in place to reduce the budgetary deficit and the current account deficit.

The Fund experts instead wanted market-oriented measures to reduce the demand. This included further draining of liquidity and more depreciation of the currency.

This has put Pakistan managers in a bind as the local trade and industry want measures which are totally opposite ie increase the liquidity, reduce lending rates and keep the rupee-dollar parity fixed within a narrow band.

The economic advisory team, led by a former finance minister, Dr Hafeez Pasha, has been given the task to draw up a home-grown stabilisation programme that can be given to the Fund just after Eid holidays.

Pakistan wants a good house-keeping seal from the Fund when the South Asia Division places it for consideration under Article-IV by October 16, 2008. Pakistan needs the IMF green light to access aid from multilateral agencies such as the World Bank and the Asian Development Bank.


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## Neo

*Setting up mini-steel plants: government to engage consultant to report feasibility​* 
KARACHI (September 22 2008): An international consultant will carry out feasibility study for setting up of mini steel plants based on Kalabagh and Dilband iron ore through blast furnace and basic oxygen furnace route.

The decision was taken at the third meeting of the Committee on Development of Steel Industry, Engineering Development Board (EDB), Ministry of Industries, Production & Special Initiatives, Government of Pakistan held in Islamabad in the last week of August. According to the minutes of the meeting available here on Saturday, the services of consultant would be hired through a body formed under public/private partnership and the EDB would act as a facilitator.

Iron ore mining leases would be provided to the captive users, along with facility of soft loans for prospecting, exploration, mining and development due to long gestation period and low returns. Pakistan Steel Mills will be provided maximum support for iron ore exploration, through a steering committee to be constituted by EDB.

It was decided that Pakistan Council of Scientific and Industrial Research (PCSIR) which is carrying out test trail for production of steel based on Kalabagh iron ore should be extended full support both technical and financial in collaboration with Pakistan Steel Mills and private sector through EDB.

The committee desired that in order to establish steel-city around 3,000 acres of land would be made available in north and south of the country along highways or motorways. Ten years tax exemption to the iron ore based units due to long gestation period, heavy capital outlays and low returns were recommended.

Other decisions taken included: 

a) Land area assigned to setup steel mill should be of 10, 20 & 50 acres to help establish integrated steel mills. An area of 500 acres may be allocated for down stream industry, which may require 1/2 to 5 acres of land for each unit.

b) The land may be offered on ownership basis with pay back period between 10 to 15 years based on biannual payments. The price of land may be determined in consultation with EDB and both the associations of steel sector.

c) In order to promote setting up of sizeable quality producing and cost effective steel mills, a minimum capacity of 100,000 tons of melting whether they install electric arc furnace or induction furnace and similarly the rolling mills with automation facility of not less than 200,000 tons capacity should be allowed. The certified plans from the respective associations for setting up these units in steel-city should be made mandatory.

d) To meet the requirement of heavy electric load ie more than 5 MW for integrated steel mill a separate grid station will be required to be installed. The government should provide these grid stations with buy back arrangement as in the case of land on 10-15 years basis.

e) The steel units may be allowed for the captive power generation with the permission for synchronisation with the national grid.


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## Neo

*Present government to reduce budgetary deficit: chief executive TDAP​* 
MULTAN (September 22 2008): Present regime would succeed in reducing the budgetary deficit by imposing heavy duty on luxury items, unproductive items and big cars, however, previous regime did not care for the imports nor increased the exports to maintain the balance.

Our imports climbed to 40 billion dollars while exports were less than 20 billion dollars, said Chief Executive Officer of Trade Development Authority of Pakistan (TDAP), Syed Mohib-ullah Shah while addressing the member of executive committee of Multan Chamber of Commerce and Industry (MCCI) chaired by Khawaja Muhammad Jalaluddin Roomi here on Sunday. He said, "we are bringing a big trade project for Multan which would be completed in two years while an expo centre would be developed at Multan airport.

He said that exporters, manufacturers and traders would avail 50 percent more opportunities than preceding years to take part in trade exhibitions, festivals. He said that TDAP had formed nine advisory boards including agro-food, engineering, minerals export, and human resource advisory boards. These boards would keep vigilant eye on the world market with the collaboration of exporters and it would meet quarterly to recommend the exports of Pakistani products where these are required.

He said that TDAP was focussing on the needs and priorities of the stakeholders. He said that Pakistan's textile exports are 62 to 64 percent while India was exporting only 16 percent. However, our mineral export is zero while India's export climbed to 18 percent. Secretary TDAP Naveed Arif also spoke on the occasion.

In his welcome address Khawaja Muhammad Jalal-uddin Roomi said that due representation must be given to MCCI in different official committees and quota be fixed for Multan Chamber in trade fair, exhibitions, seminar and trade delegations. He suggested that a ten-member trade delegation comprising MCCI members should be arranged for foreign visits. Proper representation be given to MCCI in federal economic board and export development fund, mark-up rate on export refinance scheme be cut considerably.


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## Neo

*'Marriott blast to hit economy hard'​*
ISLAMABAD (September 22 2008): Pakistan Economy Watch has condemned Marriott bombing in strongest possible terms and described it an inhuman act aimed at destabilising Pakistan.

The way common people have been targeted a day ahead of International Day of Peace only shows the effectiveness and reach of terrorists and failure on the part of the government, said Dr Murtaza Mughal, president, Pakistan Economy Watch, on Sunday.

He said that America knows that its policies are behind such carnage and yet it would always offer help in probing such incidents. Dr Murtaza Mughal said that this bombing will hit economy in general while hospitality, stocks, tourism and IT industries would be major losers.

"Hotel business has already lost around 50 percent of revenues due to political uncertainty and the bombing will add to its sufferings," he said, adding that the future of many under construction hotels is now uncertain.

As far as the IT is concerned, said Dr Murtaza Mughal, it is the single most loosing sector. Every Marriot bombing results in lost opportunities for Pakistan's IT sector.

A number of companies operating in Software Park have gone bankrupt after earlier bombings. Some of these companies were in business of keeping critical date of western companies from security breaches.


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## Neo

*Marble exports decline by 50 percent due to power cuts​* 
KARACHI (September 22 2008): Prolonged load shedding, which is being carried out for months, has caused negative impact on almost every industry especially the marble sector where over 50 percent decline in exports has been witnessed.

Sanaullah Khan, former chairman, All Pakistan Marble Mining Processing Industry and Exporters Association (PMMPIEA) told Business Recorder on Saturday that Karachi Electric Supply Company (KESC) is carrying out 10 to 12 hours load shedding daily, causing immense financial losses to the sector, which already suffers due to inadequate resources.

He urged the government to take positive measures to facilitate marble sector, saying the government should make a plan to provide interest free loans to install gas generators and demanded from the government to make efforts for providing gas for the sector.

Khan said that domestic consumption, which was earlier generating around Rs1 billion per annum, has depicted 50 percent decline where marble processors have failed to meet the market demand, owing to recurrent prolonged load shedding.

He however said that electricity tariff has also massively been increased and termed it as another factor for the decline of marble exports, saying that the government has increased 31 percent electricity rates, which directly reflects on its cost. "Marble exporters are facing difficulties to compete international market with high cost of production, causing considerable decline in its exports," he was quoted as saying.


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## Neo

*Pakistan ranks 62nd on IT index ​* 
Tuesday, September 23, 2008

KARACHI: Pakistan ranks 62 in the world in the 2008 IT industry competitiveness index, falling two places from its 2007 ranking of 60 in the index.

In comparison, most neighbouring South Asian countries were ranked more favourably; for example India ranked 48th, Sri Lanka ranked 54th and Bangladesh ranked 60th. These are among the findings of a new study issued by the Economist Intelligence Unit and sponsored by the Business Software Alliance (BSA).

The study, now in its second year, assesses and compares the information technology (IT) industry environments of 66 countries to determine the extent to which they enable IT sector competitiveness. Although the top 20 economies remain the same from one year ago, nine countries moved up and 11 went down in the rankings. Three countries in the top five are new: Taiwan, Sweden and Denmark. The top five countries in Asia-Pacific Region are Taiwan, Australia, South Korea, Singapore and Japan.

This years index shows that a countrys IT competitiveness rankings can move upward or downward very quickly, said Aly Harakeh, BSA spokesperson for Eastern Mediterranean & Pakistan, The ability of local governments and IT industries to deliver jobs and a better quality of life through IT is strongly affected by how they handle the six drivers of competitiveness.

Pakistan needs to invest in its R&D environment and IT infrastructure in order to improve its competitiveness in the IT industry. Although fair scores were achieved for the business environment as well as support for IT industry development and legal environment, there is still a lot to do to move up the global ranks.

The study finds that Pakistan performed strongest in business environment (55.3) as well as support of IT industry development and legal environment (both 41.0) areas of improvement include R&D environment where the country scored the lowest, 0.2 points.

Policymakers and business leaders need to address the full combination of factors that enable competitive IT industries, maintains Denis McCauley, Director, Global Technology Research with the Economist Intelligence Unit. Few countries can hope to build strong IT production sectors without strong business and legal environments, deep pools of talent, support for innovation, and the widespread use of technology throughout society.

According to the Economist Intelligence Unit, six factors work together to create a sound environment for the IT sector, including: an ample supply of skills; an innovation-friendly culture; world-class technology infrastructure; a robust legal regime that protects intellectual property, such as patents and copyrights; an open, competitive economy; and government leadership that strikes the right balance between promoting technology and allowing market forces to work.

Those countries that perform well in these six competitiveness enablers generally are home to high-performance IT industries. High performing IT sectors directly contribute more than 5 per cent to the gross domestic product of most advanced nations. They also drive momentum in the wider economy by helping organisations and workers to be more efficient and productive.


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## Neo

*WB interested in capacity building ​* 
Tuesday, September 23, 2008

KARACHI: World Bank mission showed keen interest in capacity building and other technical assistance programme dealing with food security, water efficiency and dairy related programmes in Pakistan.

The World Banks mission headed by Christine Rennie visited the Zarai Taraqiati Bank Limited (ZTBL) head office in Islamabad on Monday, and exchanged views on matters of mutual interest with ZTBL Chief Muhammad Zaka Ashraf.

During the meeting water conservation, irrigation, innovative technology for agriculture and other areas of investment for agriculture uplift came under discussion.

Zaka Ashraf President Zarai Taraqiati Bank Limited gave a detailed presentation on the banks operational activities and business plan for agricultural development and financing the agriculture community to alleviate rural poverty.

He apprised the delegation that the bank held a major share of institutional credit in the agriculture sector and has devised a plan to focus particularly on off farm activities and increase in yield per acre through innovative use of agriculture technology.


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## Neo

*Import of raw cotton to cost $1.5 billion​*
KARACHI, Sept 22: While the foreign exchange is running out, it may be difficult for the country to spend a huge sum of about $1.5 billion on import of raw cotton.

The textile sector, which earns over 60 per cent of total export proceeds for the country, needs additional imported cotton worth $1.250 to $1.50 billion for the new fiscal year.

Both the US Department of Agricultures World Agricultural Supply and Demand Estimates for September 2008 and the International Cotton Advisory Committee (ICAC) have predicted a significant reduction in world cotton production and observed that Pakistan would be one of the low producing countries.

Last year, the country had to import raw cotton worth $1.101 billion when it faced a shortage. The problem is more intense this year than last year.

The cotton prices in the international market have gone up by over 40 per cent compared to last year as the world bodies watching cotton production, have predicted a global shortage of cotton.

The country is facing a serious shortage of foreign exchange and the reserves are not enough to finance import of petroleum products for this year.

Analysts said any effort to discourage import of raw cotton would make an impact in two ways. First the exports would drop with a further widening of the trade deficit; secondly, there would be a slow economic growth, with the possible laying-off of thousands of workers in the textile industry.

During July and August, the country imported raw cotton worth $93.65 million, which reflected a complete awareness of the textile sector regarding cotton shortfall.

During this period, arrival of cotton in the domestic market was nonstop.

The imported raw cotton would be translated into exportable products to attract more dollars than the investment initially required for raw cotton import.

However, currency experts and analysts said the outflow of $1.5 billion would cost much more to the country. They said with an outflow of each dollar from the reserves, the rupee gets weaker.

The historic fall of rupee suggests that the rupee gets weaker with shrinking reserves.

The rupee continued to shed its weight since the fall of reserves in October 2007 when it touched a peak level of over $16.5 billion. The rupee lost 24 per cent since January 2008.

What is more serious about the shortfall of cotton production is that the country is unable to import raw cotton or in other words it is unable to finance this import for textile which is the backbone of the economy, said an analyst.

He said that the economy is already under severe internal and external pressures, and any addition in it would aggravate the situation, making it more difficult for the survival of economy.

The newly-elected government trapped by the situation is making efforts to get Saudi oil on deferred payment, get soft loans from friendly countries and to get loans from donors, like the IDB, the World Bank and the IMF.

The finance minister had recently denied that the government was getting IMF help, but the IMF delegations have been in Islamabad, meeting high-ups, which is an indication that the IMF is already active to clear the path for its entry.


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## Neo

*Export of non-textile goods up by 57pc: July-Aug​*
ISLAMABAD, Sept 22: The export of non-textile products soared by 57.2 per cent to $1.73 billion during the first two months (July-August) of the current fiscal year against $1.1 billion in corresponding period 2007-08, mainly due to a substantial increase in export of edible products.

Led by high growth in export of food commodities, the trend showed that the fiscal year started with an impressive growth in export of traditional products, like rice, sports goods, leather products, footwear, surgical and engineering goods despite the fact that the input cost of such products witnessed a substantial increase during the period under review.

Data released here on Monday by Federal Bureau of Statistics revealed that however, textile and clothing exports dipped by 4.21pc to $1.759 billion as against $1.836 billion in the same months last year.

Export of food group inched up by 73.52pc. Of these export of rice went up by 147.34pc during July-August 2008-09. In the rice group the export of basmati rice up by 84.82 pre cent, others 326.49 percent.

This showed that Pakistan became one of the leading exporters of rice following export restrictions on rice from India, Vietnam, Thailand etc., due to shortages in the yield of the commodity last year.

The export of fish products export up by 31.53pc, fruit 1.46pc, sugar 100 per cent and meat 34.40pc.

Export of petroleum products increased by 39.65pc, sports goods 11.24pc, leather products 4.92pc, footwear 20.27pc, surgical instruments 16.60pc, engineering goods 44.20pc, cement 73.80pc, molasses 264.75pc, jewellery 183.20pc, gur 10.92pc during July-Aug 2008 over the same months last year.

On the other hand, product-wise details showed that export of readymade garments declined by 3.64pc, cotton yarn 21.24pc, cotton cloth 0.53pc, cotton carded 54.79pc, knitwear 8.52pc, bed-wear 12.51pc, made-up articles 0.94pc, other textile material 28.84pc during the period under review over the same months last year.

However, export of raw cotton was up by 236.34pc, towels 38.12pc, and tents 0.75 per cent.

Analysts said this showed a natural diversification of the export base, as share of textile and clothing in total exports declined to 50.4pc in the months under review from 62.5pc last year despite support of billions of rupees to the sector.

While the share of non-textile products soared to 49.58pc in July-Aug 2008 from 37.4pc last year, without any financial package from the government.

Analysts say that subsidies are not the real issue, but there is a need to address the structural weaknesses in the textile sector.

This also means that the production capacity of the sector has reached a saturation point.

With the exception of raw cotton and towels, all other major components of textile manufactures registered a negative growth despite a major depreciation of the rupee and an appreciable gain made by the currencies of the competitor countries, like India and China.


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## Neo

*Pakistan loses $1.5bn due to water blockade​*
ISLAMABAD: Pakistan Economy Watch said that India has inflicted a loss of $1.5 billion on Pakistan due to the water blockade. Over five million acres of Kharif crops, particularly cotton and sugarcane, are facing devastation but the prime sufferer would be Rabi crop. The continuous closure of Chenab will hit the Rabi crops especially wheat, and lack of water will result in low production which will have serious consequences. We had over 23 million tonnes of wheat this year but additional 2 million tones were imported; the ratio is set to increase as a shortfall of 40 percent water is expected during, said Dr Murtaza Mughal, President, Pakistan Economy Watch. Pakistan is facing a shortfall of 36,000 to 37,000 cusecs daily and Government is being forced for excessive discharge from dams to save the standing crops.


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## Neo

*Package likely for Gwadar EPZ to attract investment: ECC meets today ​* 
ISLAMABAD (September 23 2008): The Economic Co-ordination Committee (ECC) of the Cabinet is likely to approve an incentives-laden package for Gwadar Export Processing Zone (GEPZ) when it meets here on Tuesday (September 23). Prime Minister Yousuf Raza Gilani would be in the chair. The Ministry of Industries and Production has submitted a summary to the ECC for grant of a lucrative package of incentives to attract investment for the GEPZ.

Sources said the incentive package included 10-year tax holiday for the GEPZ, and added the tax holiday would be applicable to the investors from the date of start of commercial operation of the project, permission for export of production from the zone to tariff area of the country up to 80 percent on the payment of normal duties.

According the sources, the package also promises normal incentives for exports from the GEPZ as available to projects, established anywhere in the country, would be applicable to exports from the projects in the zone. As an incentive, the plots in the GEPZ would be provided to investors on lease (as per the existing EPZA procedure) at a reasonable rate to be determined in consultation with the government of Balochistan, said the sources.

The package also includes zero-rated sales tax on supply of construction materials to the GEPZ investors or development of zone infrastructure. It also includes exemption from stamp duty and exemption from import policy orders issued from time to time.

The sources said the presentation on national economy was another important item of the ECC agenda, and added the Finance Division would brief the ECC on the latest economic condition of the country and the challenges it was facing due to slow down of its major sectors and widening gap of the current account deficit. The committee would be also apprised of the measures taken to overcome financial crisis and the negotiations held with an International Monetary Fund (IMF) mission.

The presentation will cover the impact of international credit cards crisis on Pakistan's economy, the sources, and added the Finance Division would apprise the committee about Economic Monitoring Committee's (EMC) decisions. Trading Corporation Pakistan (TCP) Chairman would brief the committee on availability of sugar, wheat and urea fertiliser. He would also inform the committee on the latest status of import of urea from Saudi Arabia, said the sources.

According to the sources, the Utility Store Corporation (USC) Managing Director would inform the committee on the steps taken by his department to sell items of daily use on subsidised rates and availability on its outlets. The committee would also review key indicators of the economy and their performance to support the ailing economy. The ECC would also consider for approval a textile industry's summary for tariff structure of polyester chain and magnetisation of tariff, said the sources.


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## Neo

*5.78 percent decline in textile exports in two months ​* 
ISLAMABAD (September 23 2008): Textile exports declined by 5.78 percent in August 2008 to $853.516 million from $905.12 million of July, according to Federal Bureau of Statistics (FBS) on Monday. Figures released by FBS showed a negative growth of 4.21 percent in July-August 2008 against same period of last year, with the exports declining to $1.759 billion in 2008 from $1.836 billion of 2007.

The growth in export cotton yarn declined by 21.24 percent during the first two moths of current fiscal year; cotton carded or combed by 54.79 percent; cotton yarn other than cotton by 18.15 percent; knitwear by 8.52 percent; bed wear by 12.51 percent; readymade garments by 3.64 percent; made-up articles by 0.94 percent; and other textile materials declined by 28.84 percent.

The exports growth in cotton carded of combed decline to $264 million during the first two months of current fiscal year against $584 million of last year; cotton yarn $195.467 million from $248.188 million; yarn other than cotton $4.603 million from $5.624 million; knitwear $325.574 million from $355.903 million; bed wear $279.890 million from 319.917 million; readymade garments $254.545 million from $264.150 million; made-up articles to $90.315 million from 91.172 million; and other textile materials $42.834 million from $60.197 million.

The positive growth was witnessed only in raw cotton with its exports going up during the period under review from $4.368 million to $14.754 million. The export of towel also increased from $80 million to $111 million; tents canvas and tarpaulin to $10.011 million from $9.936 million; and art silk and synthetic textile to $117.647 million from $82.312 million.

Analysis of monthly figures showed that a decline of 11.40 percent was witnessed in cotton yarn in August from previous month, 30.77 percent in cotton carded or combed, 3.61 percent in knitwear, 3.51 percent in bed wear, 37.17 percent in tents canvas and tarpaulin 35.74 percent in readymade garments, 12.93 percent in made-up articles and 7.05 percent in other textile materials.


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## Neo

*Services sector trade deficit amounts to $1.16 billion ​* 
KARACHI (September 23 2008): The country has faced a deficit of 1.16 billion dollars in the services sector trade deficit during first two months of the current fiscal year mainly due to high payments on account of transportation, travel and government services, besides decline in service exports.

The State Bank on Monday said that the country's services sector trade performance was improving as overall imports and deficit had decline by 2.52 percent and 2 percent respectively during the July-August period of current fiscal year.

The two months' services sector exports amounted to 423.188 million dollars against imports of 1.49 billion dollars, depicting a deficit of 1.0675 billion dollars, which, however, was lower that 1.089 billion dollars of the same period of last fiscal year.

"Heavy payments, on account of transportation, travel services, insurance, technical fee, royalties and government sector, were the major contributors in the services trade deficit," economists said. They said that declining exports of services sector was also matter concern, and policy makers should take some steps to check the poor performance in exports.

However, they said, decline in imports of services sector was a positive indication, which should help to reduce current account deficit. During the period under review, exports of services sector declined by 3.7 percent to 423.188 million dollars as against exports of 439.494 million dollars during the same period of last fiscal year.

Services sector imports dipped by 2.25 percent to 1.49 billion dollars as compared to 1.529 billion dollars during the July-August of fiscal year 2008. Only imports of transportation sector contributed 638.34 million-dollars share in overall deficit faced by services sector due to the increasing international freight, analysts said.

Meanwhile, services deficit in August stood at 541.709 million dollars with 759.895 million dollars imports and 218.186 million dollars exports. The country earned some 177.861 million dollars on account of transportation services, 41.361 million dollars from travel, 15.89 million-dollars in communication, 16 million dollars in insurance and 5.8 million dollars from financial sector during July-August.

On the other hand, transportation imports stood at 638.34 million dollars, travel 281 million dollars, communication 18.02 million dollars, construction 3.56 million dollars, insurance 13.83 million dollars, financial sector 35.42 million dollars and computer and information sector imports at 20 million dollars.

Similarly, royalties and licence fee payments reached 18.88 million dollars, government services 37.43 million dollars and other business services payment at 424.17 million dollars. It may be mentioned here that the country's overall services trade sector exports stood at 3.59 billion dollars against imports of 9.892 billion dollars during last fiscal year, depicting a deficit of 6.302 billion dollars.


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## Neo

*President in New York with heavy assignment of seeking aid ​* 
NEW YORK (September 23 2008): President Asif Ali Zardari arrived here Monday to lead Pakistan's delegation at the 63rd session of United Nations General Assembly. Besides addressing the world top forum.

The President is scheduled to meet leaders from a number of countries including President Bush, Prime Minister Wen Jiabao of China, President Mahmoud Ahmedinejad of Iran, Prime Minister Manmohan Singh of India, President of France Nicolas Sarkozy, President of Turkey Abdullah Gul, President of Brazil Luiz Ino Lula da Silva Afghan President Hamid Karzai and South Korean Prime Minister.

Arrangement for his meeting with US presidential candidate John McCain is yet to be finalised. Zardari is also expected to talk to Democratic presidential candidate Barrack Obama on phone to discuss the situation in Pakistan's tribal areas and Afghanistan.

Analysts are of the view that it would be very difficult for President Zardari to convince the American Administration that Pakistan Army, especially Inter Services Intelligence (ISI), is fully co-operating with the government to wipe out terrorists from the tribal areas.

The President will be accompanied by Foreign Minister Mahmood Qureshi, Finance Minister Naveed Qamar, Information Minister Sherry Rehman, Advisor to Prime Minister on National Security Mahmoud Ali Durrani and senior officials. In his address to General Assembly, the President is expected to spell out priorities of his government in security and economic areas.

Soon after his arrival here, the President will meet Deputy Secretary of US Treasury Robert M Kimmitt. In the evening, he will attend the banquet to be hosted by President George Bush in honour of the heads of states and governments attending the UN meeting. He will also have a meeting with UN Secretary General Ban Ki-Moon.

A special conference aimed at evolving a comprehensive plan to provide urgently-needed economic assistance to Pakistan would also take place on September 26 on the sidelines of UN summit of world leaders. The 'Friends of Pakistan' will be hosted by President Asif Ali Zardari and would be attended by US Secretary of State Condoleezza Rice and British Foreign Secretary David Miliband and other representatives of the G-8 countries including France, Russia, Germany, Japan, Italy and Canada, China, Saudi Arabia and United Arab Emirates (UAE).

The conference will assess Pakistan's needs and come up with short-term and long-term strategies to help the country come out of its economic hardships. Analysts are of the view that economic assistance, if any to be committed by the Friends of Pakistan, would be based on Pakistan's commitment to war on terror as they would press for 'do more' policy.

During the visit, the President has interviews lined up with the Washington Post, CNN and the Wall Street Journal. Democratic vice presidential candidate Josehp Biden will also call on President Zardari and discuss US-Pakistan relations. Biden is a key sponsor of a landmark legislation pending before Congress on increasing US assistance for Pakistan to $1.5 billion annually for a period of ten years.


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## Neo

*Pakistan to hold two investment conferences in China ​*
BEIJING (September 23 2008): In order to lure Chinese investors, Pakistan is scheduled to hold two investment conferences in the month of November this year. These conferences are part of Pakistan government's efforts to attract FDI from China in terms of latest policy initiative of Chinese government to invest abroad as per policy of diversification of investment and business, said Economic Minister at Pakistan Embassy, Sardar Aminullah Khan while talking to APP on Monday.

He said the first Pakistan-China Investment Conference will be organised by the Investment Division of Board of Investment on November 17. The second such conference will be held in Shanghai on November 19, he added. He pointed out that conferences are likely to be attended by businessmen of both the countries interested in making investment in different sectors of power generation, mining, manufacturing and infrastructure.

Aminullah further said Pakistan is one of the attractive places for Chinese investors in view of most cordial relations between the two countries, besides geographic proximity, resource endowment of Pakistan and complementary in large economic fields.


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## Neo

*88.17 percent rise in July-August oil import bill ​* 
ISLAMABAD (September 23 2008): July-August 2008 oil import bill surged by 88.17 percent to $2.532 billion, against $1.334 billion of same period of last year, according to Federal Bureau of Statistics (FBS). Figures released by FBS on Monday showed 97.73 percent increase in import of petroleum products, followed by 79.37 percent crude oil products over the same period of last year.

Total import bills of petroleum products and crude petroleum products amounted to $1.296 billion and $1.236 billion respectively against $655.701 million and $689.105 million for the same period of last year.

Pakistan oil import bill was closed at $11.30 billion in 2007-08 with 55.14 percent increase over previous year's $7.335 billion on the back of steep rise in oil prices in the international market. As a result, Pakistan witnessed highest ever trade deficit last year.

Further analysis of the data showed that there was a decline of 3.26 percent in imports of oil products in August over July, apparently because of falling oil prices in the global market. Oil imports of $1.245 billion in August were slightly less as compared to $1.287 billion in July 2008.

A decline of 27.73 percent was also witnessed in imports of petroleum products with the bill going down to $543.917 million in August from $752.618 million in July 2008. In contrast, the imports of crude oil in contrast increased during August 2008 by 31.20 percent, swelling to $701 million against $534.625 million for July 2008.

The imports of food products showed an increase of 13.52 percent during the period under review due to import pf un-milled wheat, milk cream and milk food for infants, pulses, tea, spices and palm oil. The import of food items was further increased in August over previous month of July 2008 with showing an increase 17.56 percent.

Pakistan imported $309.937 million food items in August as against $239.088 million over the month of July 2008. Pakistan imported 7.66 percent milk more during the first two months over the same period of previous year, wheat 1610 percent, tea 44 percent, spices 13.66 percent, palm oil 14.30 percent and import of pulses was 44.81 percent higher. Machinery import increased by 3.48 percent during July-August 2008 over the same period of last year mainly because of power generation and construction machinery imports.


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## Contrarian

*Moody's cuts Pakistan bond outlook to negative*

Pakistan's government bonds to negative from stable because of the country's depleting foreign currency reserves as economic reforms are hit by political mayhem.

Moody's analyst Aninda Mitra said on Tuesday he was concerned about arrears on sovereign debt and missed repayments as Islamabad's access to foreign exchange worsens.

The agency also highlighted the risk the economy faces from the growing political turmoil, rising religious extremism and high inflation that could hold up reforms such as liberalisation, deregulation and privatisation.

Pakistan has to contend with heightened security fears. Total foreign currency reserves stood at $8.91 billion on Sept. 13, barely enough to cover two months of imports at a time when alarming levels of current account and trade deficits could require emergency funding, analysts said.

The current account deficit is running well ahead of target: It widened to $2.57 billion in July and August --equivalent to about 1.6 percent of gross domestic product and more than a quarter of the government's full-year target of 6percent of GDP.

"The outlook has been changed mainly due to the deteriorating economic and law-and-order situation of Pakistan," said Muhammed Imran, head of research at First Capital Equities Ltd.

"The government needs to step up and take some quick, concrete and constructive measures on the economic front to promote exports and curtail imports. Otherwise there will be no improvement.

Moody's cuts Pakistan bond outlook to negative


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## dr.umer

*Pakistan and Iran make significant progress on gas pipeline​*
NEW YORK: Significant progress had been made on the Iran-Pakistan gas pipeline and the foreign ministers of the two countries will meet in early October to flesh things out, Information Minister Sherry Rehman told a press conference on Tuesday.

She said Iran and Pakistan would set up a joint company with Iran providing the required sovereign guarantee. Five deputy ministers from each side will meet to co-ordinate their efforts towards the establishment of the pipeline project.

Sherry described the meeting between President Asif Zardari and Iranian President Mahmoud Ahmedinejad as very good. 

She also spoke about the meeting between Zardari and French President Nicolas Sarkozy, while informing the press that the French leader had accepted an invitation extended to him by President Zardari to visit Pakistan.
Sherry said Foreign Minister Shah Mahmood Qureshi would be staying back for a meeting on the US-Pakistan strategic relationship to be held on September 28 in Washington. 

The Friends of Pakistan conference, which comprises G-8 countries, China and Saudi Arabia, will take place this week and more people are expected to join in, she said.

The minister gave the media a glowing account of the Bush-Zardari meeting, saying that the chemistry between the two leaders was strong. 

The US president had expressed praise for the courage of President Zardari and the forbearance with which he had handled personal tragedy. Bush also condemned the terrorist attack in Islamabad and expressed sympathy for the families of those who had lost their lives. Sherry said Zardari had briefed Bush on Pakistans priorities, which were economic development and the fight against terrorism. The minister said Bush was appreciative of the role Pakistan is playing in the war against terrorism. She said Bush had reaffirmed that he was alive to Pakistans concerns over its sovereignty.

The minister was asked if Bush had extended any assurance to Zardari that there will be no more American boots on the ground as had happened last month when US commandos had landed in Pakistan and carried out a deadly operation. She refrained from giving a positive answer, referring instead to Pakistans earlier demand that under no circumstances should its sovereignty be violated. She reiterated what has been said several times before, namely that any actionable intelligence that the United States has should be passed on to Pakistan for necessary action. She said Zardari had also stated this in his meeting with Bush. 

Sherry said among other things discussed at the Bush-Zardari meeting was a democracy divided and the two counties strategic relationship. No longer is this going to be a military to military relationship.


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## Neo

*IMF asks Islamabad to downgrade growth to 4.5pc ​* 
Wednesday, September 24, 2008

ISLAMABAD: The International Monetary Fund (IMF) on Tuesday handed over ad memorandum to Islamabads authorities, asking them to revise downward real GDP growth target to around 4.5 per cent from 5.5 per cent.

They have also asked to jack up inflation target to 20 per cent from envisaged target of 11 per cent and reduce fiscal deficit to 4.3 per cent from set target of 4.7 per cent for the current fiscal year.

Pakistan and the visiting technical mission of the IMF concluded its talks on Tuesday as the Fund is set for giving advice to Islamabad on its envisaged macroeconomic stabilisation program before Eid-Ul-Fitr.

Four members of the IMFs technical mission had already flown back in the aftermath of deadly suicide attack at Marriott Hotel on Saturday night and the visiting missions head Juan Carlos Di Tata left Islamabad on Tuesday after handing over Ad Memorandum to Islamabads authorities on which they would submit their comments within this ongoing month.

After obtaining copy of ad memorandum from the IMF, Finance Ministry high-ups sent SOS to Finance Minister, Syed Naveed Qamar, and Secretary Finance, Dr Waqar Masood, who are currently in USA along with President Zardaris visit for attending UN General Assembly session in order to give them all relevant details for incorporating it in the draft document of the IMF before making it public.

We have sent ad memorandum to Finance Minister and Finance Secretary, who are currently in USA, for giving policy input, which will help the IMF to come up with its findings to give advice to Islamabad for stabilizing the macroeconomic situation on immediate basis, said the sources.

When a high-level official in finance ministry was contacted, who is also part of negotiating team with the IMF technical mission, said that the fiscal deficit would remain in the range of Rs582 billion in nominal terms for the current fiscal year. When he was asked whether the fiscal deficit would remain in the range of 4.7 per cent of the real GDP terms, he said that it would certainly come down from 4.7 per cent of the GDP to around 4.3 per cent for the current fiscal as the fund is asking to further tighten the belt by reducing expenditures and mobilising revenue generations.

The IMF also insists upon authorities to jack up tax revenue target from Rs1250 billion keeping in view higher inflation and depreciation of rupee by 24 per cent against dollar as revenue mobilisation will help Pakistan to curb its yawning budget deficit beyond its limits.

The IMF, the sources said, also pressed upon the authorities for taking steps to lure private sector investments which will help Islamabad to remove its existing difficulties on long term and sustained basis. Instead of getting easy solution, Pakistan should focus upon long terms solution such as attracting private sector investment to restore higher growth trajectory, the sources quoted IMF high-ups as saying during their meeting with Pakistani authorities.

The nominal growth, the sources said, is likely to remain on higher side mainly because of unprecedented inflationary pressures, which never witnessed history of this country. But the real GDP growth will remain on much lower side compared to the initial estimates made by the government of Pakistan, the IMF assessment showed.

Pakistan has envisaged real GDP growth target of 5.5 per cent for the current fiscal year but the IMF is asking to revise it downward to 4 to 4.5 per cent keeping in view bad performance of agriculture sector as well as manufacturing sector in the wake of severe load shedding and hike in interest rates. The GDP growth target should be kept in mind keeping in view the ground realities said the IMF high-ups.

On inflationary target, the IMF assessment shows that it will remain in the range of 20 per cent against earlier envisaged target of 11 per cent for the current fiscal year. Another Finance Ministry official, when contacted, said that the IMF mission would give advice within this ongoing month but it would not be binding on Pakistan because Islamabad was no more in the Fund program.

We will listen to their advice carefully but it will not be binding on us to accept their viewpoint totally, the official concluded. MH


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## Neo

*Gawadar Export Processing Zone not approved ​* 
Wednesday, September 24, 2008

ISLAMABAD: The government has refused to accord approval to Gawadar Export Processing Zone (GEPZ) seeking huge incentives including 20 years tax holiday, saying that the government wants to end the tax exemption culture from the country.

The decision to refuse the Gawadar Export Processing Zone (GEPZ) with huge incentives came in a meeting of the Economic Coordination Committee (ECC) held here on Tuesday with Prime Minister Syed Yousaf Raza Gillani, a senior official who attended the meeting told The News.

He said, The Ministry of Industries and Production had submitted a summary to the ECC for approval of a lucrative package of incentives to attract investment for the GEPZ. In the meeting, Governor State Bank of Pakistan Dr Shamshad Akhtar and Chairman FBR Waqar Ahmad strongly opposed the proposal seeking huge tax exemptions, arguing that if it goes on with the same exemptions, then who will pay the tax. They said that there is a dire need to expand the taxation base in the country.

In the summary, Ministry of Industries also sought the permission for export of production from the zone to tariff area of the country up to 80 per cent on the payment of normal duties. The package also included zero-rated sales tax on supply of construction materials to the GEPZ investors or development of zone infrastructure. It also included exemption from stamp duty and exemption from import policy orders issued from time to time.

The official said that the ECC also did not subscribe the view of the Ministry of Industries, rather the meeting constituted a committee comprising Advisor to Industry, Deputy Chairman Planning Commission and top officials of the Ministry of Finance and FBR. The committee would look into the demand and furnish its own recommendations in this regard, which would be taken up in the next meeting of the ECC.

In addition to this, ECC also gave a green signal to Fatima fertilisers for 75 mmcf per day gas for its plant that is to be operational on November 2009. The official said that Fatima Fertilisers also sought 35 mmcf per day gas to run its plant on full capacity to produce 1.58 million tonnes of fertiliser, as under the existing allocation it can only produce 1.068 million tonnes of fertiliser.

However, the officials from Ministry of Water and Power sought the allocation of the same amount of gas for 100MW of power plant installed by the same Fatima fertiliser company near Okara. On this, the ECC meeting again constituted a committee consisting of Advisor to Industries, Deputy Chairman Planning Commission, and Ministry of Water and Power to look into the matter and come up with a feasible solution.


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## Neo

*Punjab evolves plan to promote SMEs ​* 
Wednesday, September 24, 2008

LAHORE: Chairman Chief Minister Task Force Industries Development and SMEs Yawar Irfan Khan has said that Punjab government has evolved comprehensive strategy for promoting small and medium size industries which will result in generating of new job opportunities as well as alleviating poverty. 

This was stated by him during a meeting with a delegation of industrialists at his office here Tuesday. 

Yawar Irfan Khan said that cluster development centres and business support centres are being set up in various cities of the province where training will be imparted to the needy people on modern machinery. He said that industrialists should also submit concrete proposals for the promotion of small and medium industries. He said that the promotion of cottage industry is very vital for generation of job opportunities. He said that survey of small, medium and cottage industry in urban and rural areas has been completed.


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## Neo

*Sino Coal, Engro Pakistan to work on Thar coal project​*
ISLAMABAD: Sino Coal, a Chinese company and Engro Pakistan Limited have agreed to work jointly for exploiting the Thar coal reserves for power generation, a senior official told Daily Times on Tuesday. 

He said that during the visit of Pervez Musharraf to China, Sino Coal expressed interest for investing in Thar coal reserves for power generation. Now, during the upcoming visit of president Asif Ali Zardari to China next month the issue of investment by Chinese company in Thar coal reserves would be finalised. Amidst the energy crisis in Pakistan the current government is pursuing the policy to exploit Thar coal reserves that could help generate cheaper power as compared to thermal and hydle power generation. 

He said that the current government had allocated Rs 500 million in the current financial year 2008-09 Public Sector Development Programme for Thar coal infrastructure development. Federal government has directed the Thar Coal authority to complete the bankable feasibility study within six months time that would help mining of the coal reserves and determining the tariff of coal based power plants. He said that the said bankable feasibility study would cost $15 million that would be generated from financial institutions like World Bank and Asian Development Bank. 

In this regard, Thar Coal Task Force was formed in 2001, headed by former President Musharraf to carry out a Thar mining bankable feasibility study. The fate of this report on which upfront tariff for coal-based power generation was to be based, remains a mystery. Official said that without a credible bankable feasibility, no international investor of merit would show interest in the project. 

Chinese Company, Shenhua was ready to build the integrated mining and power generation complex at a guaranteed power tariff of 5.75cents per unit but NEPRA refused to pay more than 5.34 cents. The Chinese company packed its operations in Pakistan and went back to China leaving no good sign for the investors interested in coal based power plants. 

The row between Sindh and NEPRA still persists, as NEPRA has allowed indicative tariff of 7.5 cents per unit that was earlier not ready to grant 5.75 cents per unit. However government has abolished the Sindh Coal Authority to end the row over the tariff issue and now government has formed Thar Coal Authority over which Sindh government has shown serious concern. Thar Coal Authority has been formed to attract investment for coal mining and coal gasification at Thar and other areas in the Sindh for power generation. Chief Minister Sindh is the Chairman of the authority while Vice Chairman is Federal Minister for Water and Power and Deputy Chairman Planning Commission is its deputy Chairman.


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## Neo

*Cotton production to fall short by 2.5m bales in 2008-09​*
KARACHI: Pakistans cotton production for 2008-09 is expected to remain below the level of 11.5 million bales, around 2.5 million lower than the governments target of 14.1 million bales.

According to Pakistan Cotton Ginners association (PCGA) Monday the country achieved 11.7 million bales of cotton during 2007-08 production year, which was lower than 2.4 million bales to the initial target of 14.1 million bales set by the government. In 2007-08 the country had failed to meet the cotton production target set by the government.

The higher cotton prices would put further pressure on the gross margins of textile manufacturers, and at the same time, the 23 percent rupee depreciation (year to date) is expected to translate a significant revenue increase impact for export oriented ventures, which would ultimately help them to more than mitigate the pressure on margins. 

The textile and spinning sector will have to bear additional burden around $1.20 billion on the import of lint to keep their wheels running, said Ghulam Rabbani a senior trader, director on Board of Karachi Cotton Association (KCA), ginner and exporter.

The US Department of Agricultures World Agricultural Supply and Demand Estimates for September 2008 also indicate lower world cotton production on the back of reduced contribution from India, Australia, Pakistan, African Franc Zone and Turkey. 

Pakistan would not able to achieve next cotton crop target in 2008-09 unless production of quality seeds, supply of quality inputs and water availability is not assured, said Ghulam Rabbani a senior trader, director on Board of Karachi Cotton Association (KCA), ginner and exporter.

During August 2008, average domestic cotton price reached an all-time high level of Rs 4,235 per maund, he added. He said though, with the initial arrival of new crop in the market during September 2008, domestic prices receded to the level of Rs 4,050 per maund. He said lint price was still 46 percent higher than last years average price level of Rs 2,840 per maund during the same month. 

The cotton prices are likely to remain at soaring levels with lower production and comparatively higher consumption. He said lack of expertise in fighting cotton virus and minimising crop from heavy rainfall, around 20 percent crop in the Punjab and interior Sindh has been affected. 

Other factors attributing behind lower production are less area under cultivation due to shift towards sunflower and sugarcane etc, severe weather conditions and crop diseases like Cotton Leaf Curl Virus (CLCV) and mealy bug. 

In recent report of September 2008, the International Cotton Advisory Committee (ICAC) has cut its world cotton production estimates at 114 million bales for 2008-09, almost 900,000 bales lower than that of August 2008. 

Mr Rabbani said ICAC has revised its production target by almost 8 percent or 10 million bales during the period April to August 2008. 

The lower world production of lint is attributed to lower cultivated area in USA, Brazil and Turkey etc and increasing competition from the alternative crops. 

On the consumption side, ICAC projects 1 percent yearly decline in world cotton consumption during 2008-09 due to slowdown in global economic growth and relatively higher cotton-polyester price ratio. 

The recent rains and virus attack in many cotton growing areas in Punjab damaged around 50 percent crop on more than 200,000 acre of land, Fazal Ahmad, a trader at KCA said.

Around 25 percent of crop in Multan and Vehari has totally been damaged after mealy bug attack while 26 percent crop in Multan, Vehari, Mazzafar Garh, Sahiwal, Pakpattan and adjoining areas was affected, he said.

He said mealy bug and CLCV damaged about 26 percent crop in Punjab growing areas while 18 percent crop was damaged by CLCV attack in these areas.


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## Neo

*Pakistan improves ranking to become 46th most corrupt country​*
KARACHI: Pakistan improved slightly its ranking on Transparency Internationals Corruption Perceptions Index (CPI) released on Tuesday, and is now the 46th most corrupt country in the world.

Pakistan has improved its ranking jumping from 138th of 180 countries to 134th, but the government still needs to save the country from a disaster, Transparency International Chairman Adil Gillani said during a press conference at the Karachi Press Club. The CPI measures perceived levels of public sector corruption in a country and is a composite index based on surveys among experts and businessmen. The 2008 CPI scored 180 countries on a scale from zero (highly corrupt) to ten (highly clean). For the second year running, Somalia, Myanmar and Iraq received the poorest marks, with Somalia scoring 1.0 and Myanmar and Iraq scoring 1.3 each. 

Denmark retained its ranking as the worlds least corrupt nation, alongside Sweden and New Zealand. All scored 9.3. An analysis of Pakistan and Indias CPIs for the last 10 years shows a strongly inverse relationship between perceived corruption levels and the economy, Gillani added. In 1998, Pakistan and Indias reserves were at $1.6 billion and $26 billion respectively and in 2008 they are at $9.1 billion and $237 billion respectively, Gillani said, adding that besides an increase in the gap of foreign reserves of Pakistan and India, Pakistans trade deficit has also increased manifold.

Gillani said that despite ratifying the UN Convention Against Corruption (UNCAC) on August 9, 2007, Pakistan has not initiated any reform to ease out the regulatory burden of doing business in the last one year. The country needs immediate enforcement of good governance and a transparent administration to counter the acute problems of terrorism, hyperinflation, reduction of the KSE-100 index, the 20-percent devaluation in currency and the increase in the dollars value from Rs 64 to Rs 77 due to the bad governance during the last 10 years, he said.


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## Neo

*Debt servicing crossed $3 billion mark in fiscal year 2008 ​* 
KARACHI (September 24 2008): The country's payment under debt servicing is gradually increasing and crossed 3 billion dollars mark during last fiscal year (2007-08), compelling the central bank to utilise foreign reserves for foreign debt payment, while about 1.2 billion-dollars worth debts have also been rescheduled in fiscal year 2008 due to the huge burden of debt servicing.

Economists say that major reason behind this surge is the amount of rising foreign loans. Therefore, payments under debt servicing are also on the rise. They say that rising payment of debt servicing is on an alarming position and due to the high payment the country's foreign reserves are already on downward track.

The central bank on Tuesday said that payment under debt servicing had gone up by 6.18 percent to 3.161 billion dollars in last fiscal year 2008 as compared to 2.977 billion dollars in fiscal year 2007, depicting an increase of 184 million dollars. However, the principal amount in overall payments of debt servicing stood at 61 percent, while 39 percent had been paid on account of interest.

During the last fiscal year, 1.931 billion dollars was paid as principal amount of foreign loans and 1.23 billion dollars on account of loans' interest. Economist said that huge payment under debt servicing has put a negative impact on rupee and foreign exchange reserves, besides compelling the central bank to make payments from its own reserves.

Foreign inflows are already on decline for the last one year on the back of slow privatisation process. Therefore, during the last fiscal year the central bank had spent about 5.78 billion dollars reserves to make sure foreign payments on time, they said. "We are expecting that 'Friends of Pakistan' meeting, scheduled to be held on September 26 in New York, would capture millions of dollars funding and loans, which would put positive impact on the rupee and reserves," they said.

However, they said, after the meeting and funding, economy would need long-term policies to back the economy on fast growth track and if bold step for economy would not be taken then positive results of 'Friends' would not be witnessed.

Major payments under the debt servicing had been made on account of public and publicly granted loans, in which some 2.129 billion dollars (including 1.187 billion dollars principal amount and 942 million dollars interest) had been paid for debt servicing.

Payments of debt servicing under private non-guaranteed loans stood at 603 million dollars in fiscal year 2008 as compared to 549 million dollars in fiscal year 2007. Payment to Paris Club stood at 629 million dollars including 244 million dollars principal amount.

Pakistan paid 191 million dollars, including 173 million dollars principal amount and 18 million dollars on account of interest to IMF in last fiscal year, which earlier stood at 144 million dollars in fiscal year 2007.

During the last fiscal year, the country had also availed the opportunity of rescheduling in the wake of high debt servicing payment, and rescheduled some 1.2 billion dollars worth of loans to deferred payments for a specific time period. Although the rescheduling of loans is some 100 million dollars less than last fiscal year. However, it is still a large figure, which requires to be further minimised in the future.


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## Neo

*'Shahbaz focusing on agriculture, industrial sectors growth' ​* 
LAHORE (September 24 2008): The Punjab government is trying to exploit its huge industrial and agriculture potential to steer the country out of present economic crisis in a professional way and the days are not very far when the people will witness revolution in industrial and agriculture sectors.

This was observed by Lahore Chamber of Commerce and Industry (LCCI) President Mohammad Ali Mian while talking to a delegation of Lahore Township Industrial Association (LTIA), led by its Chairman Amjad Ali Jawa, who called on him here on Tuesday.

He told the delegation that Chief Minister Mian Shahbaz Sharif was focusing on agriculture and industrial sectors with a team of highly professional people and through co-ordinated planning that was bound to yield results in both the areas that had been suffering for the last many years.

He said that this was for the first time that a provincial government was working on the agriculture sector with such a dedication and sparing no efforts to increase per acre yield.

The agriculture was the largest sector, contributing about 22 percent of gross domestic product (GDP) and employed around 45 per cent of labour force, while more than 70 percent of the cropped area of the Indus River basin was situated in Punjab, he said, and added that a little attention by the government could do the miracles. He said that the province had no dearth of resources in the shape of fertile land, water and livestock, but were going waste only for want of good governance.

About the worsening law and order situation in the country that has eroded the confidence of the business community, the LCCI President said that the provincial government was in touch with all the stakeholders so that they could be able to continue their respective businesses with peace of mind. Mian said that Punjab was the most industrialised province of the country.

The Punjab manufacturing industries produced textiles, sports goods, machinery, electrical appliances, surgical instruments, metals, bicycles and rickshaws, floor coverings, and processed foods, but the high cost of doing business, exorbitant mark-up rates and law and order situation were pushing it to the wall.


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## Neo

*Marriott blast destroyed 90 percent of country's IT industry: PCA ​* 
ISLAMABAD (September 24 2008): About 90 per cent of IT industry of Pakistan has been completely destroyed at the Evacuee Trust Building following suicide bombing at Hotel Marriott, reflecting total collapse of the computer industry.

Pakistan Computer Association (PCA) on Tuesday disclosed that the most of the leading computer companies and software houses were operating at the Evacuee Trust Building, which has been declared as dangerous. Resultantly, not a single company was saved from the deadly bomb blast in Islamabad.

The PCA has expresses deep grief over the loss of precious human lives as a result of cowardly act of suicide bombing. The association has also expressed its solidarity with the aggrieved families of several IT professionals, who lost their lives while working in their offices located in adjacent Evacuee Trust Building.

President PCA, Munawar Iqbal opined that many of the IT professionals have lost their lives and every single IT-related set up in the building has been destroyed completely. He urged the government to immediately help out the industry so that the hapless effectees of the incident may be able to revive their businesses.

He said that the tragic incident has marred the possibilities of streamlining national economy and the government ought to deal with situation by helping out business community. He said that 90 per cent of local IT industry was based in Evacuee Trust Building, which has been destroyed completely and the collapse of industry would damage further the other sectors.

He reiterated that government should not only help the families of those, who have been martyred in the incident but also help the IT community to the extent that they might be able to restart their businesses without any delay as the sector is providing thousand of IT professionals who are confronting with the menace of joblessness as result of tragic suicide bomb-blast.


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## Neo

*Work on first IT Park at SSUET starts ​*
KARACHI (September 24 2008): Work has started on the setting up of Pakistan's first Information Technology Park to be constructed on 200 acres of land by Sir Syed University of Engineering and Technology (SSUET) in the Education City, where land has also been allotted to reputed institutions like Aga Khan University, ZABIST, Sindh Madressah, Shaukat Khanum Hospital etc.

The progress of the gigantic project was reviewed in detail at a meeting held under the chairmanship of SSUET Chancellor Z.A. Nizami here on Tuesday. Yahya Waliullah, a former Provincial Secretary IT and Planning and Development has been appointed as Project Director for IT Park project. The meeting was informed that feasibility of the project has been completed and now the costing involved was is being revised.

Chancellor Z.A. Nizami made it clear that he wanted a proper feasibility based on international standards, as the quality of entire work would depend on it. He directed that feasibility, inter alia, must envisage the resources for funding besides outlining technical collaboration with International Organisations involved in such projects.

He advised the Technical Committee members to establish direct contacts with relevant IT organisations in Manglore and Hyderabad. He called for preparation of PC-I of the project for submission to government and said that it was time for quick action. Nizami said that while preparing feasibility study, previous studies made for the project should also be taken into consideration.

SSSUET Chancellor told newsmen that development work on 200 acres of land for IT park in Education City was in full swing and Master Plan being prepared. He said that under-ground sweet water had been explored at a depth of 560 feet while tree plantation is being carried out at a fast pace. He informed that necessary allocation for the project for fiscal 2008-09 has been made in the budget.


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## Neo

*Another jolt to the economy ​*
EDITORIAL (September 24 2008): Troubles never come alone is a well known proverb. Together with a series of adverse economic developments comes the news that Pakistan's cotton output during 2008-09 is likely to be less than 12 million bales, falling substantially short of the target of 14.1 million bales.

Although no firm estimates are available for the new crop, this pessimistic scenario is confirmed by the officials of Food and Agriculture Ministry, farmers' representatives and other stakeholders. A fall in the area under cotton, pest attacks and shortage of fertilisers were the major factors that hit production in the 2008-09 crop year, which runs from April to March.

Ibrahim Mughal, Chairman of the Agri-Forum, a farmers' association, was of the view that rising production costs, because of higher prices of power, fuel and fertilisers, were also discouraging farmers from growing more cotton. The area under cotton cultivation was almost 500,000 acres less than the target of 8 million acres and mealy bug and cotton leaf curl virus continued to damage the crop.

It may be mentioned that Pakistan had achieved record cotton production of 14.6 million bales in 2004-05 but the output has been falling since then, meaning that the country had to import cotton every year to meet the requirements of its textile mills. As is well known, Pakistan's domestic consumption fluctuates between 14 million and 16 million bales a year and the country had to import nearly 4.7 million bales during 2007-08 after production fell to 11.6 million bales against the target of 14.14 million bales.

Missing the cotton crop target by more than 15 percent during 2008-09 would undoubtedly have serious consequences for the economy. Cotton is the most important non-food cash crop of the country and a significant source of foreign exchange earnings. It accounts for 7.5 percent of the value added in agriculture and about 1.6 percent of GDP and contributes 60 percent, directly and indirectly, to the country's exports.

Another important contribution of cotton is its potential in generating employment and promoting overall economic activity, both in the rural and urban areas of the country, due to backward and forward linkages of the textile sector. Also to be noted is the fact that crop shortfall has occurred at a time when it would be very hard for the country to import large quantities of cotton to meet its requirements due to paucity of foreign exchange.

Current account deficit of the country continues to be at an alarmingly high level, the rupee is depreciating fast and foreign exchange reserves of the country are touching dangerously low levels. Added pressure on the external sector is thus coming at a time when it is least able to bear it.

Obviously, there is nothing much that could be done for the present year, but keeping in view the crucial importance of the cotton crop in the economy of Pakistan, continuous shortfall in cotton production over the years is a phenomenon which needs to be seriously investigated with a view to creating an environment for better productivity in future.

Of course, lower cotton output could partly be attributable to the overall neglect of agricultural sector in the country, but there are certain other factors which have been equally responsible for poor yield of the crop and one fails to understand the callous attitude of the authorities to do something about them.

For instance, availability of adequate and insect specific pesticides, particularly for mealy bug and white fly, is not ensured throughout the growth and development period of the crop. Substandard or fake pesticides are still available in the market to compound the miseries of the farmers.

Provincial Agriculture Departments and extension services are not too effective to make a substantial difference. Availability of certified seeds of approved cotton varieties is often inadequate. In our view, no stone should be left unturned to redress the problems of cotton growers and ensure optimal yield of cotton crop in order to sustain the economy and improve the living conditions of the people.


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## Neo

*Pakistan has a strong case for FTA ​*
EDITORIAL (September 24 2008): In his meeting on Tuesday with Jack Straw, Britain's Law and Justice Secretary, who is more familiar with the problems facing Pakistan from his previous stint as foreign secretary, Prime Minister Yousuf Raza Gilani sought London's help for his government's efforts to acquire greater access to the EU market, especially its quest for a free trade agreement (FTA).

Our request for FTA, in fact, has been pending with the EU for a while. The officials concerned seem to be in no hurry, as they should have been in view of Pakistan's peculiar situation, to give it due attention. Meanwhile, Pakistan being a frontline state in the West's war against terrorism, the country's economy has suffered immensely on account of a violent blow-back from Afghanistan.

Investments, both local and foreign, have gone down to a significant extent. An unprecedented increase in the international price of oil has made a bad situation worse, severely impacting our balance of payments. As Pakistan has been telling the Western nations since long what it needs is trade rather than aid to strengthen its economy on a long-term basis.

But EU trade policies seem to favour Pakistan's trading competitors. The Generalised System of Preferences (GSP) extended to it for a while has been withdrawn; and our exports face both tariff and non-tariff barriers. Representatives of our badly hit textile sector have reason to complain that whereas our bed linen exports are subjected to a 5.8 percent anti-dumping duty and 9.6 percent customs duty on all textile exports, our competitors from India and China get preferential treatment as well as free market access.

Then our exporters have to deal with non-tariff barriers such as security situation related travel advisories for importers and travel restrictions for exporters together with certain other conditions. Other regional competitors comprising Bangladesh, Nepal, Sri Lanka, Bhutan and the Maldives are entitled to duty-free access to EU as Least Developed Countries (LDCs).

Pakistan is fortunate enough not be included in the LDC category. Yet it needs some sort of encouragement. After the withdrawal of GSP, it expected to be given GSP Plus status that would have placed it in a better position to deal with its regional rivals, but that move was blocked in the WTO on a member's appeal.

It is obvious enough from these details that Pakistan faces serious difficulties in the EU market, which happens to be its largest trading block. Considering that certain security interests of its Western friends too are tied to its political and economic stability, EU needs to facilitate this country's trade, and bring down the barriers in its way.

Pakistan has already fulfilled almost all of the 27 ratification and promulgation conventions necessary for it to qualify for FTA. It is about time its friends like Britain used their clout within the EU to help Pakistan secure the much-needed FTA.


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## Neo

*Marriott blast hits aviation, tourist industry ​* 
Thursday, September 25, 2008

KARACHI: The deadly suicide attack at a hotel in Islamabad has started to take its toll on aviation and tourist industries, while experts fear deteriorating law and order could scare off foreign carriers and travelers.

First signs of repercussions came on Tuesday when British Airways announced suspending flights to the capital in wake of the blast there last Saturday that killed 60 people and gutted the five-star Marriott hotel.

Some airlines have stopped crew layovers here, said a senior official of the Civil Aviation Authority (CAA), talking about the intermittent stay of pilots and airhostesses. After some of its staff was injured at Marriott, Saudi Airlines has shifted its crew to Muscat.

He said normally poor security is of paramount concern for European airlines and insisted that Middle East-based carriers have not given any indication of seizing operations. Nevertheless, he cautioned, the government must curb the suicide bombings at the earliest.

No good carrier would want to come to Pakistan now, lamented Haider Jalal, Chief Operating Officer, Gerrys, a travel management company. Even if security is beefed up, there are labor unions which forbid crew from traveling to unsafe places. He said improving foreigners perception should be the top most priority of the authorities.

Deliberating on the situation, Tariq Bin Yousuf, General Manager of Destinations of the World, a travel agency, said some countries have stopped insuring passengers coming to Pakistan. Negative travel advisories and reluctance to come here will continue to affect the tourist industry.

CAA, which drives most of its aeronautical revenues from airlines using Pakistans airspace, has been endeavoring for last few years to increase passenger traffic. It almost succeeded in doing so as new airlines like UAEs Air Arabia started operations while British Airways, Malaysian Airlines and Etihad Airways increased number of flights.

German carrier Lufthansa, Oman Air and Singapore Airlines have also recommenced their operations before the law and order deteriorated rapidly since late last year. Lufthansa recently stopped flights after only a few months into operation. Some other airlines which were planning to start operations to the country will be closely monitoring measures that the government will take to counter terrorism, industry officials say.

Astreaus, Virgin Atlantic, British Midland, UAEs Ras-al-Khaima, Air Italy, Al-Jazeera, the second carrier of Kuwait and Bangladeshs GMG were all supposed to commence operations. But despite all the odds, Jalal says, the growing number of Pakistani passengers would lure foreign carriers. Fares have skyrocketed but passengers are still traveling. This is an indication that traffic has not reduced.

Yousuf also believes that these difficult times offer an opportunity. The government must revisit its policies with neighbors, he said. We should target the nearest market in India and put in place a tourist visa arrangement.


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## Neo

*Trading on Karachi bourse shrinks to 10-year ​* 
Thursday, September 25, 2008

KARACHI: The equity market saw record low turnover of last 10-years and also reduced number of active stocks on Wednesday ahead of floor review meeting.

KSE 100-share Index posted anther decline of 8.76 points or 0.10 per cent and closed at 9,190.75 points. Its junior partner the 30-Index also shed 0.42 point and ended the day business at 10.064.44 points.

Amid the day turnover in ready market shrank further to 2.792 million shares, which is a new record low in the last 10-yeas period. The day turnover is the lowest one since Pakistan tested its nuclear missiles in 1998.

In the absence of any investment-friendly news, the market sentiment is worsening every passing day at the local bourse since May 2008.

This is evident with the situation that the sellers are there to offload their holding at the day minimum possible rates, but buyers are reluctant to enter into the deal for two reasons. One for the reason that participants are short of money, and secondly those who are having hard cash to do the business they foresee further fall in market ahead of removal of floor mechanism sometime in early October.

Therefore, Board of Directors of KSE is meeting tomorrow, Sep 25, to review the market situation. They are most likely to announce a date for removing floor price mechanism, which is there since Aug 27.

The number of active stocks on board shrank to mere 86 out of total 654 companies listed at KSE. Usually 300 companies are used to active on board. Therefore, out of total actives, 58 companies ended the day business with no change in their share prices, 19 stocks fell in red while remaining nine stocks closed on positive note.

Analysts said that the downgrading of Pakistani bond by the international rating agency Moodys is also having potential to jot the market, but floor again prevented occurring losses.

The chief 100-Index moved by as many as 9.80 points either side of the fence between 9,200.55 points intra-day high and 9,190.75 points intra-day low. Market was opened on positive note, but failed to maintain there in green for the reason of thin attendance of market participants.

The future market turnover, however, surged to 6.635 million shares as compared to 3.994 million shares - showing an increase of over 66 per cent on day-to-day basis. Dealers said that banning of balk-selling in future market tried to restore investors confidence that resulted in enhancing future market turnover. 

The overall market capitalisation declined by another Rs2.2 billion and stands at Rs2.849 trillion.

Hasnain Asghar Ali said Actions speak louder than words, even the magic words of assurances on economic issues by the US president failed to infuse confidence in the local equity markets, as the participants seems to have decided not to react on verbal commitments rather wait for action. Adding to the pressure is yet another issue of rising rates in the CFSMKII, which surged to three year high at 24 per cent in this session. The product was running without a ceiling, exploitation will no doubt give birth to yet another crisis. The trades which came under the sword of forced release i.e. 25 working days find a high rate to be refinanced thereby leaving no option for the buyer, but to either arrange funds in the desert or opt for financing at sky rocketing rates, he added.

Highest volumes were witnessed in Engro Chemical at 1.060 million closing at Rs180.44 with a loss of 23 paisa, followed by Siddiqsons Tin at 0.262 million closing pegged at Rs14.50, Jah. Sidd.(R) Spot at 0.218 million closing at five paisa with a loss of four paisa, Eye Television Net at 0.188 million closing pegged at Rs42.20 and Telecard at 0.129 million closing pegged at Rs3.70.


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## Neo

*ICCI for allowing provinces to generate energy ​* 
Thursday, September 25, 2008

ISLAMABAD: Due to lack of financial resources, central government should share the responsibility of generating power with the provinces to overcome energy shortage in the country.

Pakistan is currently experiencing acute power shortage problem, which ranges between 3000 MW to 4000 MW according to the demand of the season.

President, Islamabad Chamber of Commerce and Industry (ICCI) Muhammad Ijaz Abbasi said in a statement here Wednesday.

The energy demand is expected to grow at 8.7 percent per annum and the demand-supply gap is expected to exceed 5000 MW by 2010 if additional capacity is not added.

The one way to cope with this growing electricity demand-supply gap is to bring in the provinces into the energy sector by allowing them to generate power so that the countrys economy may not further suffer on this account.

ICCI President said Pakistan is presently confronted with unprecedented economic crisis while power shortage is hampering the economic growth by affecting business and industry and the investment in the country.

He said WAPDA can handle large power generation projects, while the smaller units should be allowed to be established either by the private sector or by the provincial governments.

Abbasi said the central government should allow the provincial governments to establish their own power generating companies with the support of or in partnership with the private sector with authorization to trade electricity with one another.

So that energy deficit provinces could purchase electricity from energy surplus provinces to meet their energy needs, he added.

He said determination of sale price of electricity also be assigned to provinces through negotiations as this practice will enable each province to tap its own resources.

ICCI President said each province is endowed with certain natural resources, which they can exploit for generating power.

He said Sindh and Balochistan have sufficient resources of coal, natural gas and wind power to generate power.

NWFP could exploit its enormous hydel potential while Punjab could develop small hydel units on the many canal heads that are part of its large irrigation system, he added.

He said each province could develop solar power abundantly available to all of them.

Ijaz Abbasi said the revenue generated through the sale of power to local consumers or traded with other provinces would provide capital for investment leading to further growth of economic activities.


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## Neo

*Govt refuses to buy costly Canadian wheat​*
ISLAMABAD, Sept 24: The government has declined to purchase 700,000 tons of wheat from Canada because of its being too expensive, it is learnt.

Canada had offered Pakistan to buy its wheat at $474.75 a ton or over Rs1,800 per 40kgs compared to the 2.5 million tons of red wheat the government has been importing from Russia at Rs1,200 to 1,400 a ton since August, shipment of which would be completed in October.

The finance ministry and relevant authorities had sought the opinion of the Federal Ministry of Food, Agriculture and Livestock (Minfal) on the Canadian offer. But, sources told Dawn that Minfal authorities informed the federal finance minister that there was no need to accept the offer as the Canadian wheat was $115 per ton more expensive than that of the Russian wheat.

Minfal had also warned the finance minister that acceptance of the offer might give air to speculations and allegations of possible kick-backs if the offer was accepted by Pakistan at a time when the country had many other venues to buy cheaper wheat.When contacted, Minfals agriculture development commissioner, Qadir Bakhsh Baloch, told Dawn that the Canadian offer was conditional and had to be accepted within 24 hours when it was floated on Sept 14.

He said the Minfal did not agree to the offer because with the upcountry transportation cost, the Canadian wheat might have become more expensive.

In response to a question, he said Pakistan was getting such offers from various countries, like Argentina and Brazil, on almost on daily basis, but an offer did not mean a deal.

He also said that the US had provided 50,000 tons of wheat to Pakistan in the shape of grant, dispelling the impression in some quarters that some people had accepted kick-backs while ordering import of wheat from the US.

Sources told Dawn that at present the provincial food departments and the Pakistan Agricultural Storage and Supplies Corporation (Passco) possessed around three million tons of wheat stocks.

The Minfal believes that after the completion of shipment of the Russian red wheat, Pakistan should not import wheat further.

But, Minfal has also informed the Economic Coordination Committee (ECC) of the Cabinet that if the Punjab government kept on supplying wheat to flour mills at subsidised rate of Rs545 per 40 kgs than the Rs750-800 market price in the province, only Punjab may need import of two million tons of wheat further until the harvest of domestic wheat crop starts in March/April.

Minfal has strongly opposed the announcement of Ramazan package by the PML-N government in Punjab which has led to a more than 100 per cent difference in the price of wheat flour in the Punjab and the rest of the country.

Flour is being sold at Rs300 per 20kgs in Punjabs rural areas, but the same quantity of the commodity costs Rs600 to 700 in the NWFP, Sindh and Balochistan. This, the Minfal believes, has led to hoarding and smuggling and was benefiting some big fish.

A Minfal official told Dawn that the food ministry had informed the prime minister and the ECC that it was in the best interest of the countrys farmers and the national food security to announce wheat support price next week well ahead of Eidul Fitr.


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## Neo

*Telecom attracts FDI of $219.4m: July-Aug​*
ISLAMABAD, Sept 24: Pakistan attracted Foreign Direct Investments (FDI) of $754.06 million in July-August 2008, compared to $458.86 million during corresponding period of last financial year showing an increase of 64.33 per cent.

Board of Investment (BOI) sources told APP that in the month of July 2008 the countrys FDI inflow was recorded at $340.7m while it was $413m in the month of August.

They added that the top investment countries in Pakistan were Singapore $216.7m (28.7pc), Malaysia $138.4m (18.4pc), US $126.7m (16.7pc), Norway $50.2m (6.7pc), UK $44.4m (5.9pc), Hong Kong $33.9m (4.5pc), Switzerland $28.0m (3.7pc) and other investments in the country were $116.3m (15.4pc).

Giving the break-up of the FDI in various sectors, the BOI sources further said that telecommunications sector attracted an FDI of $219.4m (29.1pc), financial business $189.3m (25.1pc), oil and gas exploration $78.6m, (10.4pc), power sector $34.1m (4.5pc), personal services $33.7m (4.5pc), information technology $32.4m, (4.3 pc), and other sectors attracted FDI of $166.6m (22.1pc).

The FDI position in the financial year 2000-01 to FY 2007-2008 was as under:

2000-01, $322.4m; 2001-02, $484.7m; 2002-03, $798m; 2003-04, $949.4m; 2004-05, $1524m; 2005-06, $3521m; 2006-07, $5140m and 2007-08 $5,153m.


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*Monitoring of crops: Satellite-monitoring system likely to be introduced​*
ISLAMABAD: To avoid massive losses due to climate change and other natural calamities, the federal government has decided to arrange satellite-monitoring system for major cash crops of the country.

In this regard a project, Monitoring of crops through satellite technology, with a total cost of Rs 165.739 million is planned. This will help in collectiong, analysing and presenting accurate and timely crops data for estimating area of crops and forecasting crop yields. This is a continuation of Phase-I project implemented during 2005-06 to 2007-08 with a total cost of Rs 111 million covering 61 districts in four provinces of the country.

The crops include cotton, wheat, rice, sugarcane and maize for their area, yield and production estimations. For transfer of technology, local and expatriate training programmes were arranged by SUPARCO.

An official of the planning commission told Daily Times here on Wednesday that an evaluation committee of the commission discussed Phase-I project few days ago and discussed in detail the scope of work and past achievements. The committee agreed on continuation of activities in Phase-II of the project and would focus on the following areas.

Increased Role for Provinces: Five training laboratories at crop reporting service Centers (Lahore, Hyderabad, Peshawar, Quetta and Muzaffarabad) will be established. These labs will provide a basis for training/breeding manpower base with number of 420 trainees. Stakeholders will be involved in ground surveys, transferring of technology and crop yield modeling.

Linkages with FAO, UN and other sources: SUPARCO had benefited in transfer of technology from FAO and Spot Image, France. Cooperation for transfer of technology with these sources will continue in Phase-II. Basic objective of the Phase-I was monitoring of crops using remote sensing/GIS/crop agronomy, ground information and simultaneous transfer of technology. The objectives of the Phase-II project are to further refine technology development, field-testing on large scale and assign increased role for Provincial Crop Reporting Services (PCRS).

Under this scheme, SUPARCO has to continue the monitoring of crops and further improve GIS based area frame and sample design. It would also help in improving and upgrading laboratory and field techniques for crop sector and improving crop estimation techniques.

Under this project, the government will develop and apply crop yield estimation models using multiple regression regimes based on the variable of agro-meteorology, remote sensing, farm inputs and other important factors of production.


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## Neo

*I won't ask US for economic package: Zardari​* 
NEW YORK (September 25 2008): President Asif Ali Zardari on Wednesday said that he would not ask the United States for any economic package as his visit to the United States of America was not a state visit and he was here only to represent the country at the United Nations General Assembly.

However, every world leader understood Pakistan's economic situation and saw it very sympathetically, he added. "I will not ask the US for any economic package as I am not on a state visit. My first official foreign visit will be of China," he said while addressing a press conference here at a local hotel on the sidelines of the UN General Assembly.

He said he had already directed the Foreign Office to prepare for his first state visit to China and it was likely some time next month. Responding to a question in the context of his meeting with President George Bush, he said that the US leader's acknowledgement of Pakistan's sovereignty is reflective of Washington's position on the issue.

"We are in constant dialogue with them and we are also talking to regional countries including Afghanistan, China and other members of the international community to take joint ownership of the anti-terror fight - we have to win hearts and minds first," Zardari stated.

"We need to revisit the situation with regard to war on terror," he added while referring to the need for redressing the sufferings of people and unrest in the affected areas and overcoming the drawbacks in the struggle through their socio-economic uplift.

Calling anti-terrorism fight a tough challenge, the President said he is endeavouring to secure international and regional support on taking forward the struggle holistically with a simultaneous thrust on political, economic and security dimensions.

"I have discussed the situation with world leaders including President Bush and we are pursuing the idea of a regional conference towards broader owning the struggle and moving forward with a much greater emphasis on battle for hearts and minds," he said.

He reaffirmed Pakistan's stance to protect its sovereignty in the fight against terror and at the same stressed that the country needs international support to give hope for better economic opportunities to the people in the remote areas. Replying to another question, he said that there were weaknesses indeed but both sides were trying to turn those weaknesses into strengths.

"They have made mistakes and we have made mistakes but we are going to revisit those mistakes and correct them," Zardari added. He said that the issue of Inter Services Intelligence (ISI) had not come under discussion during his one-to-one meeting with President Bush.

Zardari underscored that sustaining the struggle against violent extremism required taking people along and said he found international acceptance of Pakistan's stand in this respect.

"There is the physical (security) dimension, there is the economic side - the idea is to increase acceptance of the fight inside Pakistan and outside Pakistan - and we are striving to improve on this idea."

On unilateral strikes into Pakistani territory by US-led forces from across the Afghan border, he said definitely such actions undermine Pakistani efforts to curb extremism. "Yes, such actions weaken our position to win hearts and minds of the people. That is the moral of the story. We have to win hearts and minds first."

Regarding the initiative on holding a conference in support of Pakistan's economic development, he was confident that the event at the United Nations on September 26 would help devise a comprehensive strategy towards that end. The conference on Friday is to be attended by representatives of the world's top industrialised nations, China, Saudi Arabia, the United Arab Emirates, the United Nations and the European Union.

Replying to a question he said that he would take up Chenab water and Kashmir issues during his meeting with Indian Prime Minister Dr Manmohan Singh. "We need to do something about it," Zardari said reflecting the concerns Pakistan feels about the unannounced reduction in water flow in the Chenab River, which is violation of the Indus Water Treaty between the two countries.

Reduction in water could impact Pakistan's vital agriculture sector, he maintained. The President without elaborating said his discussions with Indian Prime Minister would encompass all issues. Talking about occupied Kashmir, he said that as far as Kashmir issue is concerned it is core issue for Pakistan and it had been raised by different Pakistani leaders at different times.

Uprising in occupied Kashmir is indigenous and situation is changing very rapidly there, he observed, adding Pakistan is providing them just moral and diplomatic support and our position is well accepted in accordance with Simla Accord.

"I think if the people of both the countries stand together, the issue of Kashmir can be resolved" However, Zardari refrained from commenting whether Pakistan's position of Kashmir was still anchored in UN resolutions. He said that people-to-people contact was necessary, adding that Prime Minister Syed Yousuf Raza Gilani would soon sit together with other parties in the Parliament to finalise Pakistan's strategy in this regard.

World leaders did understand the economic situation of Pakistan as after congratulating him on becoming President, they also discussed Pakistan economy with him.

"I think it gives us a lot of room enabling us to restart a dialogue as the democratic government is revisiting the whole situation and insisting more and more people ie Americans, Europeans and Muslim Ummah which means that there was a good response all the sides.

He termed his meeting with Iranian President very positive as they discussed gas pipeline project in detail. "We are making it public private partnership in the financial world," he added. He said that friends of Pakistan were coming forward to help it. They can only give us economic tools and RoZs will be those kind of tools, adding that Mehsood tribe would have one industry and Khattack tribe would have the second industry. Answering a question, he said that the Parliament would decide about the fate of deposed Chief Justice Iftikhar Muhammad Chaudhry.

Zardari said that he had great respect for Mian Nawaz Sharif and considered him elder brother but there were some hawks in his party, who did not want to see both parties united and were creating problems in this regard. These elements were not giving good advice to their leadership, he observed.


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*Moody's changes outlook on four Pakistan banks​*
SINGAPORE (September 25 2008): Moody's Investors Service has changed the outlook on the B3 long-term foreign currency deposit ratings of four banks to negative from stable. The following are the banks affected by today's rating action: - National Bank of Pakistan (B3 Neg/NP/D) - Habib Bank Ltd (B3 Neg/NP/D-) - United Bank Ltd (B3 Neg/NP/D-) - MCB Bank Ltd (B3 Neg/NP/D).

This rating action follows the recent announcement by Moody's sovereign risk group that it has changed the outlook on Pakistan's B3 foreign currency bank deposit ceiling to negative from stable, following a substantial erosion in the country's external liquidity position.

All four banks' foreign currency deposit ratings remain constrained by this country ceiling. The outlook on the bank financial strength rating (BFSR) of each of the four Pakistani institutions remains stable despite the challenges they face in the local operating environment.

However, Moody's cautions that, in the event of a possible prolonged economic deterioration combined with heightened political turmoil that erodes business confidence and performance, the BFSRs could also potentially be adversely impacted going forward.

In particular, Moody's will focus on the banks' asset quality trends as well as on the provisioning costs with regard to their loan and investment book and how this will impact both their earnings and solvency positions. For the time being, however, Moody's continues to regard the rated Pakistani banks as displaying satisfactory financial fundamentals and solid franchises.

Although challenging financial market conditions during the second quarter of 2008 had an impact on the equity component for most of the country's banks, their performance remains adequate in terms of both business growth and profitability.

As all four banks' short-term foreign currency ratings are already at Not Prime, the outlook on these ratings remains stable. National Bank of Pakistan had total assets of Rs 798.1 billion (US $11.7 billion) at the end of June 2008.

Habib Bank Ltd had total assets of Rs 735.7 billion (US $10.8 billion) at the end of June 2008. United Bank Ltd had total assets of Rs 592.2 billion (US $8.7 billion) at the end of June 2008. MCB Bank Ltd had total assets of Rs 453.2 billion (US $6.6 billion) at the end of June 2008.


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*Currency depreciation investors' top concern: economist​* 
KARACHI (September 25 2008): Economists here are worried over the continued declining trend in rupee value and say that at present currency depreciation is the top concern of both local and foreign investors. The Pakistani rupee is around Rs 78 to a dollar, down about 16 percent since July 1, and 27 percent since January 2008.

To stem rupee deprecation requires some economic steps from the PPP-led government, which has become the most powerful ruling party after winning the presidential election, they said. "Rupee depreciation against dollar is the top concern of foreign investors, and portfolio managers, in particular, which is something that could hurt their confidence," said Muzammil Aslam, an economist at Merrill Lynch.

"The downtrend in Pak rupee may not persist. However, we expect investor stress to sustain due to volatile global commodity prices including oil, which is moving in a 25 percent volatility band, uncertainty on foreign and credit flows, and poor law and order situation in Pakistan," he said.

About the real exchange rate he said: "We are expecting some decline in the exchange rate. However, it would remain in the range of Rs 75-77 to the dollar". He said that due to the decline in the currency rate, foreign investors believe that they would face huge losses. For example, suppose an investor had invested 10,000 dollars (say, Rs 620,000) when the dollar was at Rs 62. If now he wants to withdraw his investment, he has to pay Rs 780,000 to take back his 10,000 dollars.

However, he said, the rupee depreciation is for a short time, and it would slightly recover in the future. "We expect poor sentiment on Pak rupee to linger, but believe the currency might soon show some stability due to some steps including bilateral arrangements with friendly and partner countries and an economic package from G-8," Muzammil said.

He said that multi-lateral loans from IFIs, mainly ADB and World Bank, and most probably from IMF, and privatisation flows, import demand restriction, and expectations of lower inflation should help keep the rupee stable. Last year was Pakistan's most volatile political year, since 1971--one that diverted policy direction away from economics, he said. The global commodity shocks have led to higher inflation in Pakistan, making the rupee hugely undervalued in the trade-weighted index and fuelling a trade imbalance, he added.

He said that the rupee has depreciated by over 23 percent since May, more than offsetting the 18 percent (average) inflation since January. With the 16 percent depreciation in rupee since July, it is estimated that the rupee has depreciated by over 7.5 percent year on year in trade-weighted terms since August 2007, against India's 5.7 percent and Thailand's 5.5 percent. China, Malaysia, and Indonesia have, meanwhile, appreciated by 9.2 percent, 2.7 percent and 5.8 percent, respectively, Muzammil said.


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*Development projects worth Rs 700 million to be started in Larkana: Qaim​*
LARKANA (September 25 2008): Sindh Chief Minister Syed Qaim Ali Shah said that development projects would also be started in Larkana district and that as per directives of President Asif Ali Zardari the Federal Government had already announced an amount of Rs 500 million besides an allocation of Rs 200 million by the Sindh Government.

Addressing an Iftar-dinner at Circuit House, Larkana, he said the mission of Shaheed Benazir Bhutto would be completed at any cost, adding that Larkana district had already been declared a model district. Syed Qaim Ali Shah said the bill to rename Chandka Medical College as Shaheed Benazir Medical University had already been passed by Sindh Assembly, and added Shaheed Zulfiqar Ali Bhutto besides establishing Chandka Medical College Larkana had also set up a model hotel.

As for the government, he said 200 acres land had been acquired to establish housing colonies for providing accommodation to the homeless poor people of Larkana district. The Chief Minister on the occasion announced that a journalist's colony would be established in Larkana, where all journalists working in print and electronic media would be provided with plots. He said the PPP was committed to solve problems faced by doctors, engineers and lawyers besides the labours and Haries.

Shaheed Benazir Bhutto Youth Development Programme was started to provide technical know how in different trades to the youth so that they may have maximum job opportunities in the country and outside the country, ultimately improving economic condition of the poor section of the society.

He said that 50,000 to 60,000 jobs would be provided to the poor but educated youth so that the poverty rate might be decreased and they could stand on their feet. Qaim Ali said there was shortage of nurses in the country and outside the country included in Australia, Middle East and other countries.

The CM said the advertisement regarding the technical training had appeared in different newspapers so that the low literate people might also avail the opportunity and attain technical training in relevant fields. He said the government had brought an end to the contract system in government departments.

He said the government was giving priority to provide free education to children, especially the girl students and the latter studying in class V to X would be provided an amount of Rs 1,000 per month so that the girl students might be encouraged and acquire education without being burden on their parents.

The CM said in the present tenure of Pakistan Peoples Party, the law and order situation in Sindh had improved and instances of kidnapping for ransom had also declined in upper Sindh area, Hyderabad (Sindh) and other districts.

Qaim Ali claimed that street crime was also brought under control in Karachi. On the occasion, Sindh Law Minister Muhammad Ayaz Soomro also appreciated the efforts of Syed Qaim Shah who was working for the welfare working class and the dream of Shaheed Benazir Bhutto would be completed at all cost.

Anwar Ali Bhutto, Muhammad Yasir Junejo, Aftab Bhutto, Ghulam Mujtaba Isran, Mazhar Junejo, Ghulam-ul-Allah Mahota, Abdul Razzak Soomro, Barkat Shaikh and others also spoke on the occasion and appreciated the efforts of President Asif Ali Zardari and Chief Minister of Sindh Syed Qaim Ali Shah. The Iftar-dinner was largely attended by high officials including RPO Sukkur Muhammad Ramzan Channa, DCO Larkana Abdul Aziz Uqaili, councillors, Taluka Nazims, City and Taluka Presidents of PPP etc.


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*FDA utilises 98 percent development funds in 2007-08​* 
PESHAWAR (September 25 2008): Fata Development Authority (FDA) incurred Rs 698.799 million during financial year 2007-08 on 36 development projects, with 98 percent funds utilisation. The highest amount Rs 400.119 million was spent on Mineral related projects, besides completing 4 development schemes during the period.

This was told to the NWFP Governor Owais Ahmed Ghani in a presentation at Governor's House here on Wednesday. The meeting, attended by the Additional Chief Secretary Fata, Chief Executive FDA, Secretary to Governor, Chief Engineer Works and Services, Political Agent Khyber besides General Managers and Managers of FDA also reviewed the Annual Development Program of FDA for the year 2007-08 and progress made thereon.

The General Manager Planning while making the presentation said that four projects including construction of roads in the mine bearing areas of Orakzai and Mohmand Agencies and feasibility study for Small Dams and Check Dams projects in Fata had been completed over the period under review. Presenting an overview of the financial utilisation, it was told that as per revised allocations, Rs 74.817 million was spent in the small dams/power sector, Rs 400.119 million in the Minerals sector, Rs 43.063 million in the skill development sector and Rs 171.540 million in the physical planning and housing sector.

While reviewing the physical achievements, the meeting noted that the FDA during the period furthered work on completion of feasibility studies for dams, construction of Danday Small Dam in NWA, Raghagan Dam in Bajaur Agency and Gandaw Dam in Mohmand Agency.

The meeting was also informed about the progress made in the mineral sector with particular reference to the Investigation and Evaluation of Manganese prospects in Bajaur and Mohmand Agencies and exploration and evaluation of precious stones in Mohmand and Bajaur Agencies respectively.

Similarly 28-km roads were constructed to provide easy and all weather access to mineral deposits in different parts of Fata. Under the Youth Skill Development project, 405 trainees were sent to various institutes, out of which 82 had so far passed out. Substantial progress has also been made in another project, which provides 70 Women Skill Development Centres in Fata.

Governor Owais Ghani expressed satisfaction on the over all performance of the FDA. He, however, stressed the need for better co-ordination between various executing departments. The governor also pointed towards the significance of small dams in the agricultural development and economic uplift of Fata people, saying that the govt under a well thought out strategy was focusing this vital sector in Fata to strengthen agriculture and make prosper, the life of common tribesmen.

He also urged the officials to give preference to the local population in all the development projects and ensure that they get their due share. The governor also directed the officials to evolve an effective monitoring mechanism so that proper check and balance could be maintained in the development process.


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*Debt servicing crossed $3 billion mark in fiscal year 2008​* 
KARACHI (September 24 2008): The country's payment under debt servicing is gradually increasing and crossed 3 billion dollars mark during last fiscal year (2007-08), compelling the central bank to utilise foreign reserves for foreign debt payment, while about 1.2 billion-dollars worth debts have also been rescheduled in fiscal year 2008 due to the huge burden of debt servicing.

Economists say that major reason behind this surge is the amount of rising foreign loans. Therefore, payments under debt servicing are also on the rise. They say that rising payment of debt servicing is on an alarming position and due to the high payment the country's foreign reserves are already on downward track.

The central bank on Tuesday said that payment under debt servicing had gone up by 6.18 percent to 3.161 billion dollars in last fiscal year 2008 as compared to 2.977 billion dollars in fiscal year 2007, depicting an increase of 184 million dollars. However, the principal amount in overall payments of debt servicing stood at 61 percent, while 39 percent had been paid on account of interest.

During the last fiscal year, 1.931 billion dollars was paid as principal amount of foreign loans and 1.23 billion dollars on account of loans' interest. Economist said that huge payment under debt servicing has put a negative impact on rupee and foreign exchange reserves, besides compelling the central bank to make payments from its own reserves.

Foreign inflows are already on decline for the last one year on the back of slow privatisation process. Therefore, during the last fiscal year the central bank had spent about 5.78 billion dollars reserves to make sure foreign payments on time, they said. "We are expecting that 'Friends of Pakistan' meeting, scheduled to be held on September 26 in New York, would capture millions of dollars funding and loans, which would put positive impact on the rupee and reserves," they said.

However, they said, after the meeting and funding, economy would need long-term policies to back the economy on fast growth track and if bold step for economy would not be taken then positive results of 'Friends' would not be witnessed.

Major payments under the debt servicing had been made on account of public and publicly granted loans, in which some 2.129 billion dollars (including 1.187 billion dollars principal amount and 942 million dollars interest) had been paid for debt servicing.

Payments of debt servicing under private non-guaranteed loans stood at 603 million dollars in fiscal year 2008 as compared to 549 million dollars in fiscal year 2007. Payment to Paris Club stood at 629 million dollars including 244 million dollars principal amount.

Pakistan paid 191 million dollars, including 173 million dollars principal amount and 18 million dollars on account of interest to IMF in last fiscal year, which earlier stood at 144 million dollars in fiscal year 2007.

During the last fiscal year, the country had also availed the opportunity of rescheduling in the wake of high debt servicing payment, and rescheduled some 1.2 billion dollars worth of loans to deferred payments for a specific time period. Although the rescheduling of loans is some 100 million dollars less than last fiscal year. However, it is still a large figure, which requires to be further minimised in the future.


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*Agriculture needs enterprise focus: 'economic and political preoccupations'​* 
ARTICLE (September 24 2008): That the two challenges-fighting militancy and reviving economy-are making a formidable combination, both appear to be astoundingly daunting. It is, however, extremely difficult, if not impossible, to identify which one is more formidable. But there's no denying that the relation between the present deteriorating law and order situation and the nose-diving economy is indeed a close one, and it remains to be seen whether or not this runs both ways in the context of the present-day situation.

"Ultimately the relevance of our ideas on this subject [economic inequality] must be judged by their ability to relate to the economic and political preoccupations of our times."-Amartya Sen

In his highly acclaimed on economic inequality, Amartya Sen has found a close relationship between "inequality and rebellion [or, arguably, a serious law and order situation as we see in our country's north-western areas and a semi-insurgency in Balochistan]" and, according to him, the relation between the two is indeed a close one, and it runs both ways.

"The concepts of equality and justice have changed remarkably over history, and as the intolerance of stratification and differentiation has grown, the very concept of inequality has gone through radical transformation," says the Nobel laureate.

Although one may not be able to draw appropriate parallels between the present situation in which people are witnessing a war-like situation on account of reasons that far outweigh those related to only acute economic concerns of a particular segment of population or those involved in militancy under a battered national economy's strain and the concepts of inequality presented by Sen or those enunciated and propounded so well by Rousseau in the preface of A Dissertation on the Origin and Foundation of Inequality of Mankind, one would be convinced by the assertion of the present-day analysts that our economic woes will continue to be accentuated by acute concerns on security and economy.

Moody's decision to change its outlook on our B2 bond ratings to negative from stable and lower its outlook on B3 foreign currency bank deposit ceiling to negative only reinforces such arguments.

That the people of tribal areas are said to be a valid case of inequality, including inequality among the poor, in the country, it is heartening to note that the government with US support has decided to make massive investment to create economic zones in the tribal areas with a view to providing jobs to unemployed people and weaning them off from the militants.

These plans are also aimed at bringing the tribal people into the country's social and political mainstream. This may be good for the tribal areas, but the rest of the country, or its major part, needs an enterprise focus on agriculture or an agri approach to stem the tide of unemployment and protect it against food shortages before inequality between the poor and the rich and among the poor becomes more pronounced.

In his Pakistan: An economy of an elitist state (first published in 1999), former State Bank governor Dr Ishrat Husain has pointed out that the main structural change that has occurred during the last five decades is that agriculture now accounts for 25 percent of GDP compared to 50 percent, and primary commodity exports are down from 80 to almost 10 percent. But half the population of the country still derives its livelihood and employment from the agriculture sector, according to him.

While agricultural reform has the potential to significantly raise productivity and employment, it is strongly perceived that Zardari has a good understanding and appreciation of agriculture, and the paradigm changes this sector has undergone over a period of time.

Not only has President Zardari stated in his address to the joint session of Parliament that the immediate task for the government is the food security for the poor and that the biggest challenge for the government is the economy, the President has often been found stressing the need for a new focus on agriculture.

It is also interesting to note that he has also been stressing the timely announcement of wheat support price for the growers in order to pre-empt acute shortages of the most important commodity in the country. According to him, the wheat crisis that hit the country recently was due to the fact that farmers were not given a reasonable or competitive wheat price or a fair deal so that they could have been discouraged from shifting their focus from this crop to others.

Historical evidence shows that massive inflows of foreign aid in the 1960s, remittances from workers from Middle East and North Africa in the 1970s, Afghan war in the 1980s and shifting of capital from abroad and massive increase in remittances following 9/11 in 2001 have immensely helped the country's economy.

The last government had fully thrived on the 9/11 windfalls, leading to increase in foreign exchange reserves and easing pressures on Balance of Payment and Current Account in particular. The newfound wealth not only allowed it to say goodbye to IMF, it also enabled it to deal with external debt on a sound financial footing.

There is no denying the fact that the real havoc was caused by the caretakers and the Shaukat-led cabinet in its last four months, the present government's performance since March has been disappointing, nevertheless. Now the government seems to be desperately needing an injection of a minimum $10billion to help revive the economy in the strictest sense of the word and pay off the due instalments of its sovereign debt to avoid a looming default.

Not only is the government required to do away with most of the subsidies while bringing about a significant reduction in expenditure with a view to keeping the fiscal deficit within the budgetary target to avoid further erosion of its credibility in terms of its rating by international agencies, it must take all the needed steps to protect itself against the woeful interest rates which any nearing-default economy could encounter in a similar or worse situations.

Dr Husain has argued that agriculture has generally performed well relative to other countries in the region. "It has grown by more than 3 percent a year over the past 30 years [40 years]," according to him.

That economists of high repute have advocated that the key to overcoming the present crisis lies in the focus on agriculture, and Zardari could fully exploit his potential and ask his economic managers to devise strategies aimed at enabling the country increase agri growth to some new levels through a marked improvement in per hectare yield, coupled with efforts aimed at putting in place an integrated network of farm-to-market freightways in order to achieve not only food security and give impetus to exports to ease pressure on the rupee, but also to create massive employment opportunities given that there are more unemployed people in rural areas than in urban areas.

They will also be required to show the ability of thinking of new projects or new ways of doing things and make them successful in this sector. Time is running out fast. The government must convene a meeting in this respect at the earliest while fully acknowledging the fact that the key to success lies in agriculture and agri-driven exports. In a nutshell, the government agenda must encourage transition to commercial agriculture. They are also expected to address the issues of "inequality, welfareism and justice" without any further loss of time.


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*Home grown economic package​*
EDITORIAL (September 25 2008): The "Indigenous Package" unveiled by Finance Minister Naveed Qamar in a press conference last week contains most of the elements of a sound stabilisation programme to pull the economy out of a bad patch. In a rare move, removal of all subsidies on petroleum products was announced, while power sector would be made subsidy-free by June, 2009.

The Finance Minister also referred to an upward revision in import duty on 350 items, besides raising the letter of credit (LC) margin for a fairly large number of items and asserted that the economic situation demanded further harsh steps to discourage import of luxurious or non-productive items.

On the fiscal front, the government would stick to the budget deficit target of 4.7 percent of GDP by cutting down the current expenditures and development budget. Without elaborating in detail, the Finance Minister said that various measures had been proposed to reduce government spending.

Terming the financing of the budget an important part of the package, Naveed Qamar revealed that the government had decided not to borrow from the central bank as it triggered inflation in the country.

Instead, the government would rely more on National Saving Schemes, commercial papers and Pakistan Investment Bonds for financing the budget deficit. Besides, the government would continue to pursue the policy of privatising state-run firms in the oil and gas sector despite turmoil in the domestic and international markets.

Negating the impression that the economic stabilisation programme of the government was formulated by the IMF or it was a shadow plan, the minister categorically stated that ours was an absolutely home-made programme which was prepared much before the arrival of the recent IMF mission. Nonetheless, their advice was sought to pull the beleaguered economy out of crisis and the country had no intention to go to the IMF to seek financial assistance.

The PPP government, according to Naveed Qamar, had inherited the present economic crisis due to the wrongdoings in the last one decade but we were up to the job to resolve the problems in the shortest possible span of time.

The State Bank Governor, who was present at the press conference, had to face a barrage of questions on monetary policy and foreign exchange reserves of the country. She explained that the monetary policy was tightened by announcing a host of measures but it had so far not worked very effectively because aggregate demand in the economy had been very high.

On the worsening rupee-dollar parity, the Governor admitted that it was a reflection of the health of macroeconomic indicators and the currency would appreciate once these indicators showed a healthy improvement. It was also revealed that the central bank had agreed to maintain minimum level of foreign exchange reserves, enough to cater for the import requirements of two-and-a-half months.

However, the Governor refused to divulge the minimum level of reserves to be maintained, saying that it entirely depended on the level of imports. In the absence of a detailed policy framework, it is difficult to comment comprehensively on the stabilisation programme envisaged by the government, but, broadly speaking, it contains all the right initiatives to restore the deteriorating health of the economy as reflected in the worsening macroeconomic indictors.

It is also true that most of the problems now confronted by the PPP government are due to the mismanagement of the economy in the last one year or so by the Musharraf-Shaukat government when it decided not to take harsh policy decisions for reasons of political expediency. Now, the authorities at the helm have to pick up the pieces and administer high doses of bitter pills to save the situation from worsening further.

All the measures stipulated in the economic package like complete withdrawal of subsidies on some of the major items, higher import duties, curtailment of budget expenditures and a stringent monetary policy are undoubtedly harsh and would evoke a great degree of criticism but were necessary for bringing about macroeconomic stability, narrowing down the fiscal and current account deficits and minimising pressure on the rupee rate and foreign exchange reserves of the country.

If the authorities had refused to recognise the reality at this juncture and shied away from taking these unpopular measures, the economy of the country would have destabilised further and the pain of adjustment in the subsequent period would have been more severe.

However, seen closely, while most of the measures would have an impact on economic indicators and the life of the people, removal of subsidies on petroleum products at this stage does not seem to be such a big move. There is an element of cross-subsidy on some POL products but overall the government has already managed to bring down the subsidy to zero level on all petroleum products.

Therefore, not much needs to be done in this area for the present. The real test from now onwards would, nonetheless, be to pass on the whole impact of the rise in international oil prices to end consumers in the domestic market if the situation warranted so. Also, it needs to be understood by both the supporters and the critics of the government that such policy frameworks pre-suppose peace and tranquillity in the country.

If the security situation in the country deteriorates further and tension in FATA continues to be high, efforts of the government to stabilise the economy and improve its macroeconomic indicators would not yield the desired results for obvious reasons.

However, while appreciating the measures contained in the economic policy package, we fail to understand repeated assertions of the government not to negotiate a programme with the IMF. The government, we believe, needs to have a balanced view, and reconsider its allergic attitude towards the Fund.

The government and the IMF may not have exactly the same prescriptions to pull the economy out of the quagmire but most of the measures contemplated under the home grown programme would not appear to be very much different than those likely to be prescribed by the IMF at this juncture. Also, as is well known, IMF staff is always open to negotiations and waivers from conditionalities in emergencies.

Besides, a negotiated and agreed stabilisation programme with the Fund would ensure flow of its resources at a low cost, give the much needed confidence to the investors and encourage other IFIs to be more generous to the country. Therefore, there is no harm in keeping all the options on the table.


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## Neo

*Harnessing Sindh's economic potential​*
EDITORIAL (September 25 2008): In a memorandum to Sindh Minister for Industries and Economic Affairs, Muhammad Abdul Rauf Siddiqui, the President of Karachi Chamber of Commerce and Industry (KCCI), Shamim Ahmed Shamsi, drawn his attention to a number of potential initiatives beckoning the government of Sindh to ensure gainful development of the province's economy.

Mention, in this context, may specifically bed made of the move to establish an industrial estate on the National Highway in Karachi on the pattern of Site industrial estate. For, as Shamsi pointed out, the proposed industrial estate would boost economic activities and create employment opportunities in the province.

Allied to this, will distinctly appear to be his idea of putting in place another expressway link, such as the northern by-pass, to connect DHA, Korangi, with Superhighway, as it will greatly facilitate transportation, thereby solving serious traffic problems.

Significantly, at the same time, Shamsi has done well to focus on purposeful development and modernisation of the agro-based industry in the province, the tremendous potential of which has, unfortunately, remained ignored rather too long, to the increasing detriment of the rural economy of the province.

In this contest, reference may, specifically, be made to the KCCI chief's proposal to encourage establishment of food/fruit processing units, from lucrative incentives to attract business entrepreneurs, along with enabling infrastructural facilities, such as provision of metallic roads in order to ensure access of products from farms to the marketplace.

Needless to point out, the whole approach of these projects will appear to have been inspired by the several years old initiative of corporatisation of agriculture in Pakistan. It is, however, just another matter that due to a glaring lack of imagination on the part of the former economic managers of the country, the moves in the desired direction have left a great deal to be desired.

However, now that the PPP-led coalition governments in Sindh and in the centre seem to be set to pull the country out of its economic turmoil, Sindh will be seen as having the unique opportunity to bolster its economy in such a manner as to make its gains felt also in the other province in no small a way.

And for that matter it is no idle dream either. As such, last but not the least, Shamsi's idea of setting up fisheries projects which would create new employment opportunities and availability of seafood as nutrition for the common man, should appeal to reason too.


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## Neo

Continued from : Pakistan Economy - News & Updates

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## Neo

To be continued: here


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## Neo

*Home grown economic package​*
EDITORIAL (September 25 2008): The "Indigenous Package" unveiled by Finance Minister Naveed Qamar in a press conference last week contains most of the elements of a sound stabilisation programme to pull the economy out of a bad patch. In a rare move, removal of all subsidies on petroleum products was announced, while power sector would be made subsidy-free by June, 2009.

The Finance Minister also referred to an upward revision in import duty on 350 items, besides raising the letter of credit (LC) margin for a fairly large number of items and asserted that the economic situation demanded further harsh steps to discourage import of luxurious or non-productive items.

On the fiscal front, the government would stick to the budget deficit target of 4.7 percent of GDP by cutting down the current expenditures and development budget. Without elaborating in detail, the Finance Minister said that various measures had been proposed to reduce government spending.

Terming the financing of the budget an important part of the package, Naveed Qamar revealed that the government had decided not to borrow from the central bank as it triggered inflation in the country.

Instead, the government would rely more on National Saving Schemes, commercial papers and Pakistan Investment Bonds for financing the budget deficit. Besides, the government would continue to pursue the policy of privatising state-run firms in the oil and gas sector despite turmoil in the domestic and international markets.

Negating the impression that the economic stabilisation programme of the government was formulated by the IMF or it was a shadow plan, the minister categorically stated that ours was an absolutely home-made programme which was prepared much before the arrival of the recent IMF mission. Nonetheless, their advice was sought to pull the beleaguered economy out of crisis and the country had no intention to go to the IMF to seek financial assistance.

The PPP government, according to Naveed Qamar, had inherited the present economic crisis due to the wrongdoings in the last one decade but we were up to the job to resolve the problems in the shortest possible span of time.

The State Bank Governor, who was present at the press conference, had to face a barrage of questions on monetary policy and foreign exchange reserves of the country. She explained that the monetary policy was tightened by announcing a host of measures but it had so far not worked very effectively because aggregate demand in the economy had been very high.

On the worsening rupee-dollar parity, the Governor admitted that it was a reflection of the health of macroeconomic indicators and the currency would appreciate once these indicators showed a healthy improvement. It was also revealed that the central bank had agreed to maintain minimum level of foreign exchange reserves, enough to cater for the import requirements of two-and-a-half months.

However, the Governor refused to divulge the minimum level of reserves to be maintained, saying that it entirely depended on the level of imports. In the absence of a detailed policy framework, it is difficult to comment comprehensively on the stabilisation programme envisaged by the government, but, broadly speaking, it contains all the right initiatives to restore the deteriorating health of the economy as reflected in the worsening macroeconomic indictors.

It is also true that most of the problems now confronted by the PPP government are due to the mismanagement of the economy in the last one year or so by the Musharraf-Shaukat government when it decided not to take harsh policy decisions for reasons of political expediency. Now, the authorities at the helm have to pick up the pieces and administer high doses of bitter pills to save the situation from worsening further.

All the measures stipulated in the economic package like complete withdrawal of subsidies on some of the major items, higher import duties, curtailment of budget expenditures and a stringent monetary policy are undoubtedly harsh and would evoke a great degree of criticism but were necessary for bringing about macroeconomic stability, narrowing down the fiscal and current account deficits and minimising pressure on the rupee rate and foreign exchange reserves of the country.

If the authorities had refused to recognise the reality at this juncture and shied away from taking these unpopular measures, the economy of the country would have destabilised further and the pain of adjustment in the subsequent period would have been more severe.

However, seen closely, while most of the measures would have an impact on economic indicators and the life of the people, removal of subsidies on petroleum products at this stage does not seem to be such a big move. There is an element of cross-subsidy on some POL products but overall the government has already managed to bring down the subsidy to zero level on all petroleum products.

Therefore, not much needs to be done in this area for the present. The real test from now onwards would, nonetheless, be to pass on the whole impact of the rise in international oil prices to end consumers in the domestic market if the situation warranted so. Also, it needs to be understood by both the supporters and the critics of the government that such policy frameworks pre-suppose peace and tranquillity in the country.

If the security situation in the country deteriorates further and tension in FATA continues to be high, efforts of the government to stabilise the economy and improve its macroeconomic indicators would not yield the desired results for obvious reasons.

However, while appreciating the measures contained in the economic policy package, we fail to understand repeated assertions of the government not to negotiate a programme with the IMF. The government, we believe, needs to have a balanced view, and reconsider its allergic attitude towards the Fund.

The government and the IMF may not have exactly the same prescriptions to pull the economy out of the quagmire but most of the measures contemplated under the home grown programme would not appear to be very much different than those likely to be prescribed by the IMF at this juncture. Also, as is well known, IMF staff is always open to negotiations and waivers from conditionalities in emergencies.

Besides, a negotiated and agreed stabilisation programme with the Fund would ensure flow of its resources at a low cost, give the much needed confidence to the investors and encourage other IFIs to be more generous to the country. Therefore, there is no harm in keeping all the options on the table.

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## Neo

*Forex reserves fall $89m ​* 
Friday, September 26, 2008

KARACHI: Pakistans foreign exchange reserves declined further by $89.2 million during the third week of September. According to the State Bank of Pakistan, total liquid reserves held by the country stood at $8.824 billion on September 20 compared to $8.913 billion a week earlier on September 13.

The SBP said its own reserves dropped by $117.7 million to $5.407 billion against $5.525 billion. Interestingly, however, foreign exchange reserves held by banks increased by $29.5 million to $3.417 billion compared to $3.388 billion last week at a time when the State Banks reserves are continuously falling.

Forex dealers said banks are desperately buying dollars on the pretext of demand which creates panic in the market and adversely affects the rupee-dollar parity. The rupee has shed more than 25 per cent of its value during the last few months.

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## dr.umer

*U.S. to form consortium for Pak economic aid​*
September 27, 2008

NEW YORK: U.S. secretary of state, Condoleezza Rice Friday assured continued U.S. support towards improving the economic condition of Pakistan..

She held out the assurance while talking to media after conclusion of the Friends of Pakistan Conference here which was attended by G-7 countries besides China, Saudi Arabia and UAE.

President Asif Ali Zardari represented Pakistan at the conference.

Condoleezza Rice said a consortium will be formed for financial assistance of Pakistan.

British Foreign Secretary, David Miliband also pledged extension of cooperation towards the economic progress of Pakistan.

President Asif Zardari on the occasion said the next Friends of Pakistan Conference will be held in Abu Dhabi after a month.

&#8220;We want to see Pakistan&#8217;s economy as stable and strong,&#8221; he added.


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## Neo

*Major powers vow sustained economic support for Pakistan ​* 
UNITED NATIONS: September 26, 2008: 

Major world powers on Friday pledged to assist the democratic Pakistani government in its efforts to overcome economic and security challenges as they stood united behind the South Asian country at the launch of a new "Friends of Pakistan" forum.

"We had a very constructive meeting today," President Asif Ali Zarrdari said in post-meeting comments with Secretary of State Condoleezza Rice, Foreign Secretary David Miliband and UAE Foreign Minister expressing full backing for the elected government's endeavors to deal with difficulties confronting it.

The initiative would be institutionalised with top representatives from influential capitals slated to meet again in Abu Dhabi next month to concretize the assistance pledges to help the country pull itself out of economic straits.

The meeting on Friday was attended by top representatives of the G-7 industrialised countries, China, UAE, European Union and United Nations.

Zardari said the overwhelming expression of support for Pakistan reflects the "world cares about Pakistan and the people of Pakistan can rest assured that democracy does work and it is the success and victory of democratic Pakistan that we are standing before you."

"There is very strong support of the international community for Pakistan's democratically elected government, we know Pakistan has many challenges in the security and economy fileds)," stated Secretary Rice, standing alongside the new Pakistani leader.

The international community will be by the side of the young Pakistan as "it takes difficult decisions to move towards a more stabile and prosperous Pakistan," she added.

Washington, she said, is engaged with Pakistan "through financial institutions that it is and must take on economic reforms."

"All of us are working very closely with the international financial institutions to make certain that there is support for Pakistan."

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## Neo

*World Bank pledges $1.337 billion support​*
NEW YORK (September 26 2008): World Bank President Robert Zoellick has assured President Asif Ali Zardari of the financial institution commitment to Pakistan's development, informing him that 1.337 billion dollars new programmes are in pipeline in the current year. Zoellick said the World Bank-funded programme in the pipeline this year included sectoral investment such as energy, water, infrastructure etc.

He also assured of the bank's support for development in Federally Administered Tribal Area (Fata) as well as pro-poor programmes in Pakistan. President Zardari apprised the bank chief of Pakistan's macroeconomic stabilisation programme, Benazir Income Support Programme for pro-poor support and mobilisation of resources for industrialisation and investment in Pakistan.

The political government, he said, had taken difficult decisions to meet the current economic challenges, saying the programmes would help Pakistan move out of this difficulty in the near-term. Zardari also spoke of "Friends of Pakistan" initiative, stating that it was aimed at mobilising support for Pakistan's development. The President also shared his vision for fast-track development and industrialisation in the Fata to provide employment opportunities in that area.

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## Neo

*Saudi Arabia to provide $300 million more for urea purchase​* 
ISLAMABAD (September 26 2008): Saudi Arabia has accepted Pakistan's request for an additional credit facility of 300 million dollars for the purchase of urea. Saudi Arabia has already agreed to provide a credit facility of 258 million dollars for the same purpose. The government of Saudi Arabia will provide 150,000 tonnes of urea fertilisers to meet the domestic consumption of the commodity.

Sources told Business Recorder here on Thursday that the black marketing and smuggling of urea had increased and it was being sold at Rs 1,150-1,200 per 50-kilogram bag. Punjab has become a most affected area by the hoarders' mafia. There was sufficient quantity of urea in the country, but with the rise in prices of urea in the international market, which touched 800 dollars per tonne, the price in Pakistan remained below 200 dollars per tonne.

This huge price difference prompted the local dealers to resort to smuggling of the commodity. The prices of urea in Pakistan have floated around 180 dollars, while in the neighbouring countries, the rate of the fertiliser has touched the figure of 800 dollars per tonne.

"The non-availability of urea at the time of cultivation and the furious attacks of mealy bug and cotton leaf curl virus (CLCV) can result in a shortfall of over two million bales of cotton in 2008-09, depriving the country in achieving its production target of 14.1 million bales", reliable sources said.

Use of urea in most parts of the world has increased over the past years. That is why urea consumption in India and China has increased considerably. Pakistan produces 4.8 million tonnes of urea, while the country's requirement is around 5.6 million tones, leaving a gap of 0.8 million tonnes in supply and demand. Sources pointed out that delay in announcement of a fertiliser policy and installation of additional fertiliser plants were the major causes in not achieving self-sufficiency in fertiliser production.

Farmers in Pakistan started using chemical, mainly nitrogenous fertilisers in the early 1960s, and the consumption was risen to around 300,000 tonnes in 1970-71, to over one million tonnes by 1980-81; and around 2.2 million tonnes or about 100 kilograms per hectare of cropland in the mid-1990s. With the increased amount of fertiliser, the farmers have also shifted from the mainly nitrogenous to more complex (compound) fertilisers containing phosphorous and potash.

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## Neo

*PAFL comes up with highest offer of Rs 1.34 billion for HPFL​* 
ISLAMABAD (September 26 2008): Pak-American Fertilisers Limited Lahore on Thursday gave the highest offer of Rs 1.34 billion (Rs 70 per share) for 100 percent shares of Hazara Phosphate Fertilisers Limited (HPFL). The bidding was supervised by Secretary Privatisation Commission Ahmed Jawad for sale of minimum of 90 percent shares of HPFL along with management on 'as is, where is' basis.

The bidders included consortium of Akbar Brothers and Green Force Limited, Multan, consortium of Kissan Chemicals and Fertilisers and Chaudhry Steel Re-Rolling Mills Limited, Lahore, Pak American Fertilisers Limited, Lahore and Warble (Pvt) Limited, Lahore became eligible for participating in the bidding process after depositing earnest money of Rs 40 million each. The bidding held in the presence of all the stakeholders and a large number of the representatives of the print and electronic media.

During the first round, the authorised representatives of the bidders deposited their sealed bids in the transparent box in the presence of the media, all stakeholders and the general public, which were opened. The offers received during the first phase the consortium of Akbar Brothers and Green Force Limited, Multan was the highest of Rs 69 per share (total offer as Rs 1,320,881,283).

Pak American Fertilisers Limited, Lahore was the second with an offer of Rs 48 per share (total Rs 918,873,936) and Warble (Pvt) Limited, Lahore stood third with an offer of Rs 31 per share (total Rs 593,493,417). The lowest offer of Rs 21.44 per share (total offer Rs 410,430,358 came from a consortium of Kissan Chemicals and Fertilisers and Chaudhry Steel Re-Rolling Mills Limited, Lahore.

In the second phase, three highest bidders were asked to improve with a Re 1 or multiple thereof the highest offer of Rs 69 per share received from the consortium of Akbar Brothers and Green Force Limited, Multan, considering it as base price. Pak American Fertilisers Limited, Lahore improved their offer to Rs 70 per share making total offer to Rs 1,340,024,490. The remaining parties after detailed consultations with their consortium partners decided not to proceed further and to withdraw in favour of the highest bidder while congratulating them.

The participants termed the bidding process as transparent, highly professional and above board and lauded the services extended by the Privatisation Commission officials during the pre-bid process, in general and Zahid Aziz transaction manager, in particular.

The authorised representative of Pak American Fertilisers Limited, Lahore Ahmed Bilal MD, PAFL elaborated the plan to enhance the efficiency and the profitability of the plant by making further expansion in the plant and to curtail the cost by adopting certain technologies by improving the plant.

Talking to the media representatives Secretary PC said the highest offer would be considered by the PC Board to formulate recommendations for a decision by the Cabinet Committee on Privatisation (CCoP). According to the standard procedure, the successful bidder will be issued letter of acceptance (LOA) after PC Board and CCoP approval and the buyer is bound to deposit 25 percent of the bid price within 14 days after the issuance of LOA while remaining 75 percent of the bid price is to be paid within 60 days, he said.

He added that in October 2008 three transactions-SME Bank, Heavy Electrical Complex (HEC) and National Power Construction Company (NPCC) were scheduled for bidding whereas efforts were being made to bring forward 16 transactions for privatisation within the current year.

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## Neo

*​* 
NEW YORK (September 26 2008): President Asif Ali Zardari has said that fight against extremism can't be won only by guns and bombs and battleground must be economic and social as well as military. This is what he is expected to say at the 63rd session of the United Nations General Assembly here on Thursday.

According to a copy of his speech which is available with Business Recorder, President Zardari said that Pakistan will win when people are mobilised against the fanatics and to mobilise them, they should be given hope and opportunity for their future.

"People need jobs, their children must need education, they must be fed and they must have energy," Zardari said, in his speech. He said an economically viable Pakistan will be stable which will suck the oxygen from the terrorists' agenda, adding that economic justice and political democracy are the worst nightmare of the terrorists.

He said that the Bhutto doctrine of reconciliation is a roadmap not only to a new Pakistan, but to a new era of peace and co-operation between East and West, between people of all faiths, a roadmap that it followed will avoid the clash of civilisations and clash of religions which is the terrorists' ultimate goal. The Bhutto doctrine is that an economically viable Pakistan will be the centrepiece of the victory of pluralism over terrorism. The Bhutto doctrine will ultimately prove to be as critical to the victory of freedom in this century as the Marshall Plan to the triumph of liberty in the last.

"Ours is the doctrine of reconciliation and terrorists is the doctrine of death," he said. He said if al Qaeda and the Taliban believed that by silencing Shaheed Mohtarma Benazir Bhutto, they were silencing her message, they were very wrong. "We have picked up the torch and will fight against terrorists who attack us, and fight against terrorists who use our territory to plan attacks against our neighbours or anywhere in the world," he maintained.

Zardari said once again, Pakistan was the great victim in the war on terror and people wonder whether they stand-alone. "Thousands of our soldiers and civilians have died fighting the common enemies of humanity. We have lost more soldiers than all 37 countries that have forces in Afghanistan put together," he added.

Giving the background of war in tribal areas, he said the roots of today's terrorism can be traced to a war involving the world's superpowers in Afghanistan during the 1980s. Afghanistan and Pakistan, and increasingly the world, are reaping the bitter harvest sowed towards the end of the cold war.

He said Pakistan may be the target of international terrorism, but it will never succumb to it, adding that terrorism cannot be fought by military means alone. Fighting it requires political will, popular mobilisation, and a socio-economic strategy that wins the hearts and minds of nations afflicted by it.

"Unilateral actions of great powers should not inflame the passions of allies. Violating our nation's sovereignty is not helpful in eliminating the terrorist menace. Indeed, this could have the opposite effect," he said. Zardari said, globalisation is not just economic; it is also political. The terrorist vision strikes out at all continents and all nations. The world must draw the line on their rampage that line in Pakistan.

At the same time, we are fighting in the trenches of the battle that will determine the course of the new millennium - the battle against extremism and terrorism - between the forces of ignorance and the forces of education, between bigotry and tolerance, between justice and discrimination, between confrontation and reconciliation.

Democracy is not like water from a tap that can be turned on and off when it's convenient. It is a universal value guaranteed to all men and women. He was of the view that it was time for the world to take notice as Pakistan was not the cause of the problem of terrorism, but was its victim. Talking about his own life, he said that I did not come to the office of President, to this moment, by design. As his wife once said about herself, I did not choose this life.

He said that UN should investigate the murder of the Benazir Bhutto. An impartial inquiry based on credible information should be held, he asserted. He further said that inquiry should be carried out keeping the suffering due to war on terror in view.

President Zardari further said that if the president of the country and his children cannot get justice through UN then how would the poor and dispossessed around the world find the reassurance that the UN is capable of protecting the weak and sufferings people of this world.


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## Neo

*Pakistan's foreign exchange reserves fall to $8.82 billion​*
KARACHI (September 26 2008): The country's foreign exchange reserves fell $90 million to $8.82 billion in the week that ended on September 20, from $8.91 the previous week, the central bank said on Thursday. The State Bank of Pakistan said its own reserves fell to $5.41 billion from $5.52 billion previously, while those held by commercial banks rose marginally to $3.41 billion from $3.39 billion.

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## Neo

*Chinese-aided projects to be expedited​* 
ISLAMABAD (September 26 2008): The government on Thursday said that the work on projects being launched with the Chinese assistance would be expedited for speedy completion of the schemes that are important for the national economy. This assurance was given by the deputy chairman Planning Commission Salman Faruqui in a meeting with Chinese Ambassador Lou Zhaohui.

Both discussed the progress on the development projects being executed by Chinese companies in Pakistan. The issues relating to Pak-China Friendship Center in Islamabad, Pak-China Friendship Center in Beijing, Thar Coal Field Block-2, Mining and Power Generation Projects, Reqodiq Copper Project and Pakistan China Haier Ruba Industrial Zone were discussed in the meeting.

Faruqui informed the ambassador that most of administrative and financial matters relating to Chinese projects have been resolved at appropriate level and instructions have been issued to facilitate Chinese companies. The Chinese ambassador expressed his satisfaction over the efforts made by the government of Pakistan to remove the impediments in the projects and hoped speedy completion of the projects.

Faruqui asked the ministries to extend maximum administrative, logistical and financial facilities to these companies. He said the Chinese investment in these projects would help bring macroeconomic stability in Pakistan. Secretaries/representatives of the Ministries of Foreign Affairs, Petroleum and Natural Resources, Culture, Board of Investment, Railways, Communication, Water and Power also attended the meeting.

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## Neo

*Pace of development projects reviewed​* 
LAHORE (September 26 2008): The Chief Minister of Punjab, Mian Muhammad Shahbaz Sharif, has said that a number of mega projects have been started in the province to provide better facilities to the masses forthwith. He said this, while addressing a high level meeting to review pace of implementation of various development projects in the province here on Thursday.

During the meeting he emphasised to ensure quality and timely completion of uplift projects, adding that foundation stone of Lahore-Rawalpindi expressway would be laid in the first week of October.

Chief Engineer GHQ Lieutenant General Shahid Niaz, Director General Frontier Works Organisation (FWO), Director General Lahore Development Authority (LDA) and senior officers of concerned departments attended the meeting. The chief minister said that a number of projects had been launched for the benefit of the masses and their completion would yield positive results.

He said that all-important projects would be executed by FWO and no compromise would be made on quality of work and proper utilisation of each and every penny of funds would be ensured. He also directed FWO to carry out construction work round the clock for early completion of the projects to save people from inconvenience, moreover, he was informed that the construction work of Madre Millat road and Sabzazar road would be started before Eid.

In addition, Shahbaz Sharif said that FWO would further improve its standard and maintain its previous record regarding quality completion of projects within set timeframe. He said that FWO would not face any shortage of fund as funds would be released to FWO at the completion of each project. He also directed to release Rs 500 million immediately to FWO for development activities.

He also constituted a committee headed by Khawaja Ahmad Hasaan for better co-ordination between various government departments. Earlier, Lieutenant General Shahid Niaz informed the meeting that additional troops had been called for the timely completion of ongoing development activities. The meeting also reviewed various development projects including Adyala road and Pindi Ring road.

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## Neo

*QIE gets status of model industrial estate​* 
LAHORE (September 26 2008): Quaid-e-Azam Industrial Estate (QIE) has attained the status of a model industrial estate of the province because of its computerised property record, 24-hour security system, well-equipped fire-brigade station, model labour canteens and best sewerage system.

Pakistan Industrial Traders Associations Front (PIAF), Chairman Irfan Qaiser, attributed the development to the Punjab Chief Minister Mian Shahbaz Sharif and the Board of Management headed by its President Mian Nauman Kabir.

Irfan Qaiser, during a visit to the estate, Irfan Qaiser said the improvement of infrastructure has always been a prerequisite for business activity. With the improvement of road network and foolproof security system, the units operational in the industrial estates are working in a very cordial atmosphere and the area industrialists could invite their foreign customers to show them their facilities. Moreover, he said that there was a time when visit of industrial estate was impossible even during the day times because all the roads were in a shambles.

He said that Chief Minister, Mian Shahbaz Sharif, also deserves congratulations for extending full support to the Quaid-e-Azam Industrial estate Board of Management in making this largest industrial estate of the province exemplary. Earlier, the Estate's Board of Management President gave a detailed briefing to the visiting PIAF delegation about the ongoing projects in the industrial estate.

He further said that the industrial estate that has an area of 565 acres is ensuring all the necessary facilities to the industrialists at their doorstep. The Quaid-e-Azam Industrial Estate is the best example of public-private partnership, he added.

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## Neo

*Economic Freedom Report 2008: Pakistan ranks 104 out of 141 states​* 
LAHORE (September 26 2008): Economic Freedom Report 2008 has ranked Hong Kong number one, followed by Singapore then New Zealand. Zimbabwe once again has the lowest level of economic freedom followed by Angola and Myanmar, according to the Economic Freedom of the World: 2008 Annual Report, released on Thursday by Pakistan's first free market think-tank, Alternate Solutions Institute.

"Weakness in the rule of law and property rights is particularly pronounced in sub-Saharan Africa, among Islamic nations, and for many nations that were part of the former Soviet bloc," said James Gwartney, lead author of the report and professor of Economics at Florida State University.

Pakistan ranked 104 out of 141 countries this year, after ranking 102 (out of 141 countries) in the last year's report. In 2007 Report Pakistan scored 6.08 points out of 10; while this year its scored fell to 6.05. The areas that caused a decline in Pakistan's overall performance are: size of government; legal structure and security of property rights; and, access to sound money. The areas in which Pakistan improved are: freedom to trade internationally; and, regulation of credit, labour, and business.

The annual peer-reviewed report uses 42 different measures to create an index ranking countries around the world based on policies that encourage economic freedom. The cornerstones of economic freedom are personal choice, voluntary exchange, freedom to compete and security of private property. The report is produced by Canada's Fraser Institute in co-operation with independent institutes in 76 nations and territories including the Alternate Solutions Institute in Pakistan.

Research shows that individuals living in countries with high levels of economic freedom enjoy higher levels of prosperity, greater individual freedoms, and longer life spans. This year's report also contains new research showing the impact of economic freedom on poverty reduction.

"Economic freedom is one of the key building blocks of the most prosperous nations around the world. Countries with high levels of economic freedom are those in which people enjoy high standards of living and personal freedoms. Countries at the bottom of the index face the opposite situation; their citizens are often mired in poverty, are governed by totalitarian regimes and have few if any, individual rights or freedoms," said Alternate Solutions Institutes' Executive Director, Dr Khalil Ahmad.

Pakistan scores in key components of economic freedom (from 1 to 10 where a higher value indicates a higher level of economic freedom. The key components include the size of government that changed to 7.01 from 7.26 in the last year report, legal structures and security of property rights changed from 4.35 to 4.31, access to sound money changed from 6.50 to 6.45, freedom to trade internationally changed from 5.78 to 5.91, and the regulation of credit, labour and business from 6.49 to 6.56, the reports said.

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## Neo

*Pakistan can address energy problem through Chinese technology​*
BEIJING (September 26 2008): Pakistan can address to a large extent its power crisis through Chinese innovative hydro power generating technology, said a senior official at Pakistan Embassy in an interview. "China has advance technology of generating electricity through small and medium size hydro power plants and Pakistan can greatly benefit from it".

The Counsellor Technical Affairs Syed Ali Tallae told APP on Thursday after a visit to Hanzhou province where these plants were functioning successfully. He said during the visit, the Chinese side showed one of the demonstration projects that can conveniently generate 2 MW electricity.

Through this most modern technology, a 40-meter deep tunnel is excavated and with the thrust of pouring water on the turbine through the tunnel it starts generating 2-MW electricity. He further explained that the tunnel for passing water is excavated at water level of a lake, similar to the Rawal Lake in Islamabad.

Tallae said the Hanzhou Provincial Government has said that generating electricity through this technology can greatly benefit Pakistan to address their energy problem. He further said the Chinese side also indicated their willingness to lay a network of such kind of small hydro power plants in Pakistan on turn-key basis.

They have also indicated the possibility of setting up a demo-plant at Gulberg Canal in Lahore with specifically construction design. Tallae said that in China, the definition of small Hydro Power station ranges from 100 KW to 50 MW while below 100 KW is called Micro-Hydro Power Station. The Dam on lake can also be constructed to control the flood, he added.


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*Singh promises to resolve water issue​* 
NEW YORK (September 26 2008): Indian Prime Minister Dr Manmohan Singh has assured Pakistan that he will resolve the issue of Chenab water in true letter and in spirit of Indus Basin Treaty 1960. According to Pakistani officials, India had reduced water releases by 60 per cent in August to fill the newly constructed controversial Baglihar dam in held Jammu and Kashmir.

Pakistan is of the view that reduction in water releases in August has damaged its ready crops spreading over millions of acres in Punjab. "The Indus Water Treaty will be implemented in letter and in spirit. It is the obligation of Indian government and we will invite the Indus Water Commissioner soon after Eid to inspect the Baglihar dam," Singh told President Zardari on the sidelines of the UN General Assembly. Indian Water Commissioner did not respond to the letter of his Pakistani counterpart Syed Jamaat Ali Shah, who even had lodged protest over the delaying tactics by the Indian side.

The Indus Waters Treaty is a water-sharing treaty between Pakistan and India which was signed in Karachi on September 19, 1960. The World Bank is a signatory as a third party. The Indus System of Rivers comprises three Western Rivers - the Indus, the Jhelum and Chenab and three Eastern Rivers - the Sutlej, the Beas and the Ravi.

In the hour-long meeting, the two leaders pledged to resolve all outstanding issues, including Kashmir dispute and vowed to continue the peace process for bringing lasting peace to the region. Dr Manmohan said all outstanding issues could be resolved through peaceful dialogue. "We discussed all aspects of our relations - trade, Jammu and Kashmir - we are not afraid of word (Kashmir)".

Official sources told Business Recorder that President Zardari had conveyed to the Indian Prime Minister that Pakistan would approach the World Bank (WB) if India does not implement the Indus Water Treaty. Pakistan is to seek compensation in the shape of water from Sutlej river or money to disburse it amongst the farmers whose crops have been damaged.


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*Strategy for inclusive and sustained growth​* 
ARTICLE (September 26 2008): Pakistan has maintained an absolute real GDP average growth rate of 6.6 percent annually over the past six years with per capita income growing at 13.2 percent per annum from 586 USD in FY03 to 1085 USD in FY08 during this period. This growth has been mainly consumption driven with a contribution of 6.0 percentage points compared to investments (capital accumulation) contributing 1.5 percentage points and exports contributing -0.9 percentage points.

The total investments have consistently increased between FY04 and FY07 from 15.3 percent of GDP to 21.3 percent whereas the domestic savings declined from 20.8 percent in 2002-03 to 17.8 percent during the same period. However, Pakistan has managed to successfully tap into foreign savings for closing the saving - investment gap.

Pakistan's six-year economic performance, which has transformed it into an emerging economy, has been at the back of the Government's policy of attaining macroeconomic stability by encouraging private sector led growth. This policy direction was supported by the structural adjustment implemented under the IMF's three-year PRGF programme between 2001-2004.

The programme helped Pakistan re-profile its unsustainable debt burden hovering at over 100.3 percent of GDP in FY99 and reduce it to a level of 56.2 percent in FY07 with debt servicing amounting to only 1.1 percent of GDP in FY07; exercise fiscal prudence to result in public savings (fiscal deficit maintained at -4.3 percent of GDP and 1.7 percent primary saving achieved); loosen the monetary policy to boost demand for loanable funds and contribute to bringing the economy to full employment (the real interest rates dropped into the negative zone with lending rates reaching a low of 4.63 percent in July 2004 from almost 15 percent in 2001); liberalise the economy by removing non-tariff barriers (100 percent foreign ownership permitted in all sectors except agriculture) and rationalising the tariff structure (custom duty structured into slabs with net duty rates reduced to about 16 percent, the lowest in the region); deregulate commodity price controls and free - float the exchange rate (PKR/USD parity remained stable at 60 PKR/USD); put in place a comprehensive privatisation programme for improving the competitiveness of the economy (166 state owned enterprises in telecom, energy, financial and industrial sectors privatised between 1991-2007); and channel public funds towards providing public goods including infrastructure and regulatory/legal mechanisms necessary for a business friendly investment climate along with targeted social protection interventions through direct subsidies to benefit the poor and vulnerable (total pro-poor expenditures on community services, human development, rural development, safety nets and governance increased from 3.9 percent to 5.6 percent of GDP between FY02 and FY07).

Inflation was kept in check using monetary policy tools at under 8 percent until the end of 2007. As a result, Pakistan received Foreign Private Investments worth 6.96 billion USD in FY07 up from 1.524 billion USD in FY05.

*IMPEDIMENTS* Pakistan's six-year economic growth has also been characterised by certain market and government failures which have resulted in negative externalities, including high inequality and vulnerability to external shocks. This growth has been focused on attaining macroeconomic stability with capital deepening focused in financial, telecom, oil refining/marketing and retail/wholesale sectors.

These services oriented sectors, which have absorbed most of the FDI inflows so far, have not contributed sufficiently to improving the Total Factor Productivity of the productive sectors, including agriculture and manufacturing.

The growth in the industrial sector, 9.0 percent over five years, has occurred due to further capital deepening of the conventional large scale industries such as textile, sugar and cement owned by a few conglomerates.

This market failure of non-optimal allocation of resources has led the private sector to concentrate capital accumulation in mature industries with diminished marginal productivity of capital (MPk) or in unproductive services sectors. As a result, factor accumulation from new labour has been marginal with most new jobs being created in the non-paid family workers category.

Furthermore, the untapped domestic savings have alternatively fuelled consumption demand and contributed to ballooning the housing prices and equity prices due to speculative trading until recently.

With low productive competitiveness and high consumer demand resulting in a widening saving-investment gap, the pressure on Pakistan's external account has consistently been building with the Current Account Deficit rising from 1.3% of GDP in 2003-04 to 8.6% of GDP in 2007-08.

Institutional vehicles ideally should have been developed by the market to mobilise domestic savings of small investors, which could be used in capital deepening in labour intensive sectors such as Agri - processing, SME etc with high marginal productivity of capital (MPk).

The Government failures which have on the other hand hampered the pace of the economic reform process include the presence of a predatory state whereby large industrialists and agriculturists have been members of the ruling government's cabinet; state capture by influential market players especially large stock brokers, land mafias, industrialists, large corporate entities and large agricultural land holders; rent-seeking by duty bearers; limited institutional capacity for effectively targeting pro-poor expenditures; and inability of the government to maintain law and order.

These failures have contributed to oligopolistic behaviour in the factor and product markets, whereby mafias are active in land grabbing, stock market manipulation, causing artificial price hikes in commodity markets, enjoying loan waivers and lobbying for 'special tax/non-tax business incentives' from the Government.

The above inefficiencies and failures have side-tracked Pakistan economic growth from what should have been a capital widening of labour intensive sectors enabled through a broad-based mobilisation of domestic resources, complemented by social investments for building human capital and supported by a fast tracked transfer of technologies.

Pakistan is caught up in a poverty trap whereby influential market players and government failures have precluded providing the masses necessary means to participate in mainstream productive economic activity.

Given this background, it is no surprise that Pakistan's economy once again finds itself in dire straits in the face of multiple exogenous shocks from rising global food and oil prices, the global financial crisis, rising terrorism and the internal political instability.

The resulting rapid outflow of foreign portfolio investments and a slowdown in foreign direct investment inflows, had rendered maintaining the fiscal balance (-6.5% of GDP in FY08) given the persistently rising current account deficit (-9.0% of GDP in FY08) a daunting task. Pakistan's foreign reserves have rapidly diminished to below 10 billion USD and the PKR/USD parity has depreciated almost 19 percent.

In order to meet its liabilities the Government has resorted to borrowing from the State Bank of Pakistan which has contributed to spiralling the economy into stagflation. The income inequality which had been worsening steadily is now threatening to add millions more who cannot afford the skyrocketing cost of living, to the existing 38 million poor in Pakistan. The poverty gap is also expected to rise as more and more will be pushed further below the poverty line.

*THE WAY FORWARD *Pakistan's economy, with almost a decade of progressive economic reforms behind it, has placed itself in a position to launch into a second round of economic reforms to ascertain inclusive and broad based growth in the future. However, the threat it faces from the deteriorating law and order situation can wash away this opportunity unless addressed immediately. Unless the war on terror is also treated as a serious counter cyclical measure, a recession may be gripping the economy in the near future.

Cutting the losses already borne due to the aforementioned exogenous shocks, the Government needs to implement an economic strategy with the following elements to attain sustained and equitable economic growth in the future:

-- Ensure fiscal space by exercising fiscal prudence, eliminating subsidies on oil and budgetary support to SOEs and expanding the direct tax revenue base. Minimise tax/non-tax subsidies to industrial, agricultural and corporate giants.

-- Refrain from inflationary borrowing from the State Bank and resort to non-inflationary sources such as commercial papers, bonds and GDRs to bridge budgetary gaps.

-- Tighten monetary stance to sterilise liquidity and reduce inflationary pressures. Expand and deepen microfinance schemes, SME financing and Agricultural credit to provide access to capital to small entrepreneurs to help broad based capital deepening.

-- Alter duty structures to dampen consumption demand for imported luxury goods.

-- Undertake capital market reforms to introduce innovative institutional finance products and restructure the National Saving Schemes to mobilise domestic resources from small investors.

-- Prioritise public development funds for building physical capital, human capital and TFP of the labour intensive sectors (agriculture/livestock, SMEs.). Develop non-farm infrastructure, provide tariff and non-tariff incentives on inputs, target social sector spending on education and skills development and enable technology transfer for value addition. Also provide easy access to ports and facilitate exports to help producers get the best price for their products.

-- Increase social sector spending (Health, Education, Safety, Water and Sanitation...) to help reduce poverty and contribute to labour productivity. Establish a social safety net to protect the extreme poor and vulnerable in the society. The Government has already made steady inroads into implementing these economic reforms. What is needed is the political commitment to eliminate the highlighted market and government failures.


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*Downgrading of Pakistan's credit rating outlook​*
EDITORIAL (September 26 2008): Pakistan's deteriorating economic indicators are forcing the credit rating agencies to reassess their outlook for the economy. Moody's Investors Services downgraded Pakistan's bond rating to negative from stable on 23rd September, 2008, saying that the country could face difficulties in repaying its debts.

It also lowered the outlook on its B3 foreign currency bank deposit ceiling to negative because of "a substantial erosion in the country's external liquidity position, and which is not likely to be adequately reversed by prospective external assistance or ongoing efforts at macroeconomic stabilisation".

Moody's analyst for Pakistan, Aninda Mitra, said that he was concerned about arrears on sovereign debt and missed repayments as Islamabad's access to foreign exchange worsened. The economy's future was also not promising. After the election of President Zardari, domestic political stability may improve somewhat, but underlying tensions will be difficult to remedy.

Economic stabilisation measures are expected to remain under pressure from deteriorating socio-economic conditions as well as worsening external environment, and key macroeconomic objectives may not be met.

Anticipated foreign assistance from official quarters may not prove timely or sufficient to avert near-term financing problems, while considerable delays in disbursements have already contributed to a greater-than-expected erosion of foreign exchange reserves.

"It remains unclear how Pakistan would rebuild its external liquidity in the medium-term, unless either considerably larger amounts of foreign assistance were disbursed, or foreign investor sentiment improved sharply," the credit rating agency added. It may be recalled that Standard and Poor's (S&P) had also cut its rating to B from B Plus in June and has now a negative outlook on its rating, meaning that another downgrade is on the cards.

The downgrading of Pakistan's credit rating, in our view, was neither unexpected nor unjustified though it would prove harmful to the economy of Pakistan in certain ways like sending a negative signal to the foreign investors. Obviously, the balance of short-term and even medium-term economic and external financial risks confronting the economy has tilted to the downside, prompting the negative outlook.

Foreign exchange reserves of the country are now barely enough to cover two months of imports while trade and current account deficits are running well ahead of the target, indicating a bleak external position. While other indicators are also discouraging, the country faces growing political turmoil, rising religious extremism and high inflation and unemployment that could also hold up reforms such as liberalisation, deregulation and privatisation.

Most probably, Moody's assessment was finalised before the Marriott tragedy in Islamabad, otherwise the growing tide of religious militancy and extremism along with the ineptitude of the government to handle the unfortunate incident could have played an added role in undermining our credit rating.

Anyhow, all the negative factors are at work now, that could fundamentally weaken the much-needed capacity to generate higher savings, tax revenues and foreign exchange, exacerbating an already very fragile state of the economy. All the claims of the previous government about the rehabilitation and resilience of the economy and its angling at a take-off stage now look like a distant dream and a big joke.

In order to safeguard the solvency of the country, the government has taken certain measures to promote exports and contain imports, which need not be recounted here. It has also approached the Saudi Arabian government for an Oil Facility and certain IFIs to provide assistance.

An IMF mission was also called to help devise a framework for stabilisation programme. A couple of days back, the Finance Minister unveiled a "home grown package", without giving details about the precise strategies and outcomes at different points of time.

The latest initiative is the establishment of "Friends of Pakistan" forum including China, UAE and Saudi Arabia, besides the members of G-7 to devise a strategy to help Pakistan overcome its economic crisis and consider a bailout package. However, the exact impact of all these initiatives is still uncertain and would largely depend on the will of the government to confront the economic problems earnestly, squarely and more realistically.

In our view, there are at least two pre-requisites to save the situation from going bad to worse. Firstly, the country needs to have a zero tolerance for growing militancy and lawlessness. No investor is going to hitch his fortune in a country with an uncertain future and where life and property are not safe.

And secondly, the macroeconomic framework unfolded by the Finance Minister to reduce the country's imbalances and reassure investors would not find credibility if steps are not taken to guarantee that the package devised by the government would be implemented in letter and spirit and is certain to meet the specified objectives in time.

We believe that the government has to take on board and develop an understanding with some agency like the "Friends of Pakistan" forum or one of the IFIs to sell its programme to the donors.

It is true that the measures proposed to be implemented to improve the situation are going to be harsh and unpopular but there are no easy alternatives. The credit rating of a country is a reflection of its economic fundamentals and would automatically follow an upward path if we take the right steps.


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*Telenor and Abacus Consulting to Provide Call Centre Services in Pakistan ​*
Friday, 19 September 2008 

Telenor Pakistan has partnered with Abacus Consulting to provide high quality call centre services to its customers in several languages such as English, Urdu, Punjabi and Pasthu.

In this regard, a contract signing ceremony was held here. Chief Marketing Officer Telenor Pakistan, Lars Christian Iuel and President Abacus Consulting Asad Ali Khan, signed the contract of the call center outsourcing in Lahore. Later, Lars Christian Iuel inaugurated the call centre.

Speaking on the occasion, Iuel described the agreement as not only an indication of the growing maturity of the market, but also Telenor Pakistans commitment towards its customers. He was of the view that by establishing an alliance with Abacus Consulting, Telenor intends to provide its customers even better services.

Asad Ali Khan commenting on the occasion said that Telenor Pakistan and Abacus Consulting share a common commitment towards quality and excellence.


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*Experts stress long-term policy to revive economy ​* 
Say donors assistance will not work if radical changes in policies are not made

Saturday, September 27, 2008


LAHORE: Economic experts have urged the government to devise a long-term policy for achieving sustained economic growth instead of looking for a short-term economy bailout package from developed countries.

They say the leaders of ruling party while consuming all their energies for a temporary relief to stay afloat are delaying an economic package which is necessary for revival of the manufacturing sector.

The experts say the entrepreneurs have not let the government down by paying 20 per cent higher taxes than last year despite a decline in production. However, the government has failed to take any facilitating steps that could improve the sagging growth.

The News has learnt that many leading economists the government has engaged to evolve an economic stabilisation programme have expressed strong reservations about the credentials of some newly-appointed government functionaries. They have politely excused themselves from the economists panel formed by the government. It has also been found that some of those who are on board have strong differences with the way the economy should be handled.

Many economists are appalled by the way the government is handling the economy as federal Finance Minister Naveed Qamar has stayed back while President Zardari seeks an economic package from the US and the Friends of Pakistan.

Even with a large foreign exchange support from the donors, they say, the economy would continue to slide unless radical changes in economic policies are made. The rulers have not set their priorities for taking the economy out of the present mess.

Senior economist Naveed A Khan, commenting on the issue, says the government seems to have no clear plan about the economy except the hope that foreign friends of Pakistan would rescue the country as a reward for the fight against terrorism. He says the friends may provide a temporary one-time relief but the survival of the country is linked to sustained economic growth through a dedicated plan which is nowhere in sight.

Dubai-based chartered accountant Faisal Qamar says the government has not learnt any lesson from past experience. He says the country has been brought on the verge of economic collapse by a renowned former banker prime minister. Now the government is contemplating to appoint another banker as economic adviser with the rank of federal minister. Pakistan is not a corporate entity or a financial institution.

They say the country needs a dedicated economic expert and not a banker to steer it out of troubles. Transparency and good governance needed for fair and equitable growth is absent.

Pakistani-Canadian Certified Public Accountant Asif Ali Shahid says Pakistan should have taken steps to improve its economic credentials first before asking for foreign assistance. The foreigners, he says, would think twice before committing aid to a country where inflation is high, currency is weak, interest rates are high and exports cover less than 50 per cent of imports.

No serious effort has been made by the government to improve macroeconomic indicators, he says, adding any assistance will go down the drain if these indicators are not improved.


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*Friends unveil initiative to avert collapse: Over $15bn needed: media​*
​
NEW YORK, Sept 26: A permanent forum was launched in New York on Friday to help raise billions of dollars to avert a possible economic collapse in Pakistan.

The forum, which will be called the Friends of Pakistan, will hold its first meeting in Abu Dhabi next month.

The decision to form such a body was made at a meeting of some of the worlds richest nations that also have close ties to Pakistan and want to help.

I dont want them to give us the fish. I want to learn how to fish and do it myself, said President Asif Ali Zardari while explaining what Pakistan expected from the new forum.

We are engaged with Pakistan through international financial institutions, said US Secretary of State Condoleezza Rice. We will support the steps Pakistan must take for economic reforms.

British Foreign Secretary David Miliband described the meeting as a very strong signal of political and economic support to the democratically elected government in Pakistan.

UAE Foreign Minister Shaikh Abdullah bin Zayed said his country fully backed the initiative to show our commitment to Pakistan.

The three officials were among half a dozen world leaders who attended Fridays meeting formally inaugurated by President Zardari.

The United States, Britain, Italy, Germany, France, Japan, China, Australia, Turkey, Canada, Saudi Arabia and the UAE attended the inaugural meeting.

European Union and the United Nations sent their representatives. Other countries are also likely to join.

Recent reports in the western media indicate that Pakistan needs as much as $10 billion to avoid an economic meltdown.

The United States and Britain jointly launched the initiative to form a group to help Pakistan after realising the seriousness of the economic crisis confronting the country.

Diplomatic sources told Dawn that at a meeting with President Zardari on Wednesday US President George W. Bush had told him that Pakistan needs help today, rather than tomorrow.

Pakistans foreign currency reserves are falling fast and if forward liabilities are included, the real reserves may go down to $3 billion. This cannot meet the import bill of one whole month.

Out of total reserves of $8.467 billion, the reserves held by the commercial banks stood at $3.461 billion on September 23. From September 22, the reserves fell by around $180 million, as there were no receipts while the government made heavy payments for oil and other imports.

This week, Moodys Investors Service lowered Pakistans credit outlook to negative due to the risk of missed repayments on the nations debt.

Pakistans gradual economic decline, which started last year, alarmed the United States and Britain as they feared that financial chaos could allow terrorists to deepen their roots in the country.

To avoid such an eventuality, they decided to launch a new group of donors.

After Fridays meeting, President Zardari told journalists outside a UN conference room that the participants had decided to make the Friends of Pakistan group a permanent body.

All of them want to help. They want to make democracy work, said Mr Zardari.

He said countries in Pakistans region realise that they had to support its efforts to fight terrorism, which was a regional issue as well and therefore needed a regional ownership.

There is a very strong support for Pakistans democratic government and the world wanted to help it deal with the economic challenges the country faces, he said.

They want to help bring stability to the young democracy and to help it take difficult decisions for economic recovery, Mr Zardari added.

Ms Rice, who accompanied Mr Zardari and Mr Miliband to the media briefing, said that those joining the Friends of Pakistan group had stayed very closely engaged with international financial institutions that provided economic assistance to Pakistan.

We look at the US and the world support to (our economy) as a blessing, said Mr Zardari while responding to Ms Rices expression of support.

The British foreign secretary said that every single country that joined the Friends of Pakistan group stands shoulder to shoulder with Pakistan.


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*ZTBL targets Rs72 billion disbursement​*
ISLAMABAD, Sept 26: Zarai Taraqiati Bank President Mohammad Zaka Ashraf has said that the bank will disburse Rs72 billion among the farmers during the current financial year.

Speaking at the inaugural ceremony of the Deposit Management System (DMS) and Field Operation Computerised System (FOCS) at Zonal Office here on Friday, Mr Ashraf said the bank had disbursed Rs68 billion to the farming community in last financial year against the target of Rs60 billion.

He said the pace of disbursement was very satisfactory and that the bank would easily achieve the target within time.

He said the bank had successfully launched the Online Loan Processing System which was designed to ensure timely provision of all financial services to its rural clientele especially small farmers.

He said the DMS had been launched to cater to the requirement of retail banking as it was integrated with NADRA system to access and to verify the Computerised National Identity Card (CNIC) data of its clientele.

He said the FOCS and DMS would work together bringing not only transparency but good governance in the ZTBL besides facilitating borrowers for in-time and effective delivery of financial and banking services.

Mr Ashraf said since the bank was launching its Zarkhaiz One window Operation from October 6, 2008 for provision of production loans, so the new system would support the banks credit delivery mechanism effectively.

The banks 114 branches had been brought under online Loan Processing System and by the end of December all the remaining branches will be connected accordingly under the FOCS.

He said 750 banks officials will be imparted training by the end of this year to handle the new system effectively.


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*40MMCFD gas for 1,000MW thermal plants sought​*
** Water and Power, Petroleum Ministries will meet next month to discuss matter​*
ISLAMABAD: The Water and Power Ministry has approached the Petroleum Ministry to arrange gas for 1,000MW thermal power plants on fast-track basis for a two-year period, sources in the Petroleum Ministry told Daily Times on Friday.

The sources said that the Economic Coordination Committee (ECC) of the Cabinet in its meeting held on Sept 10 had approved the 40 million cubic feet per day (MMCFD) gas availability for the 1,000MW thermal power plants for a two-year period. They said the Water and Power and Petroleum Ministries would hold meeting in the second week of the next month to indicate the availability of the gas for 1,000MW thermal power plants to overcome the power shortage crisis in the country. 

They said the ECC in its meeting had also cleared 1,500MW power projects that included 1,000MW thermal power plants and 500MW rental power plants that would be set up in Karachi, where citizens were witnessing prolonged periods of load shedding. The ECC has estimated that foreign and domestic investment would be available for these power projects amounting to $2 billion. 

The sources said the ECC had approved the power tariff of 13-13.5 cents for these thermal and rental power plants. Thermal power projects would be commissioned in the next twelve months, whereas rental projects of 500MW would be operational in the next six months, the sources added. They said rental power projects would be commissioned in the Karachi city that would be an immediate arrangement to end the load shedding in the city.

The sources said the ECC had also directed the Petroleum Ministry to co-operate with the Water and Power Ministry to arrange the 40MMCFD gas for the 1,000MW thermal power plants that were cleared also by ECC. They said that now these two ministries would hold a meeting in the second week of the next month to arrange the gas for the thermal power plants.

The present government had inherited the problem of power shortage and it had directed the Public Power Infrastructure Board (PPIB) to attract the investors for setting up 1,000MW thermal and 500MW rental power plants that could help end load shedding in the country.

They said that in this regard, bids of receiving proposals for setting up these power plants were opened on July 15, 2008 in presence of the bidders and the media, a total of nine bids of 3,060MW were received for Package-A (thermal power plants), whereas for Package-B rental projects.

Three bids of 678MW against 500MW were received. A bid evaluation committee, comprising the representatives of Ministry of Finance, NEPRA, WAPDA/PEPCO and PPIB processed these bids, and out of the twelve bids, nine bids were declared as qualified.

Under package A, the investors had sought the power tariff of 13 cents to over 15 cents/Kwh. Under the package B for the rental power plants, the investors had sought maximum power tariff of 17 cents.

Sources said that the country has been facing the power shortage of 3,500-4,000MW that caused a series of load shedding in the country. They said that the country required 6,000MW power to inject in the national grid system to overcome the power shortage in the one year and government is committed that there would be no load shedding by the end of the next year.

They said that these thermal and rental power plants are a part of the governments strategy to end the load shedding by the end of the next year. They said that the operational Independent Power Plants (IPPs) were the main contributors to the load shedding in the country as they had dropped power generation citing the reason that they had no money to provide fuel for running the power projects.


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*Major powers vow sustained economic support for Pakistan​* 
NEW YORK (September 27 2008): Friends of Pakistan Group, comprising major world powers meeting on Friday assured Pakistan of its full support to bring the country out of its present economic crisis. The next meeting of the Group (which will be made a permanent body changed with the aim of finding solutions for the economic crisis faced by the country) will be held in Abu Dhabi next month.

President Asif Ali Zardari termed the international community's support to Pakistan as blessing. The group, which met here on Friday, assured Pakistan that it would extend its full support to bring it out from prevalent economic crisis which, according President Zardari, is a blessing for Pakistan. Pakistan needs 10 billion dollars urgently to come out of financial crisis and the same case has been placed before the international community.

US Secretary of State Condoleezza Rice said that the US would ask the financial institutions, ie World Bank, International Monetary Fund (IMF) and Asian Development Bank (ADB), to support Pakistan. The group comprised upto 15 member countries, including the US, European Union (EU), Japan and the United Arab Emirates (UAE) discussed Pakistan's economic and security situation for an hour in the United Nations where they agreed to help Pakistan in this critical juncture.

"We have very constructive meeting with the Friends of Pakistan, who revisited Pakistan's situation," said President Asif Zardari at the conclusion of the meting. Replying to a question, he said that Pakistan was doing its best, transformed into democracy, fulfilling its commitments and the proof was that partners were standing before the media.

Answering another question, he said: "We are a strong nation of 180 million which needs to work very hard to get our nation back on track." "I don't want them to give us the fish. I want to learn how to fish and do it myself," said President Zardari while explaining what Pakistan expects from the new forum.

The US Secretary of State, while replying to a question, said that it was a very good meeting and the international community had assured strong support. "We are engaged with Pakistan through international financial institutions," said Condoleezza Rice.

"We will support the steps Pakistan must take for economic reforms," she added. She was of the view that US was very much engaged with Pakistan and we are working with Pakistan through financial institutions closely to ensure a rapid, secure financial support. British Foreign Secretary David Miliband described the meeting as "a very strong signal of political and economic support to the democratically elected government in Pakistan."

UAE Foreign Minister Sheikh Abdullah bin Zayed said his country fully backed the initiative to "show our commitment to Pakistan." The two officials were among half a dozen world leaders, who attended Friday's meeting formally inaugurated by President Asif Ali Zardari. The group called Friends of Pakistan includes the United States, Britain, Saudi Arabia and the UAE. Other nations are also expected to join.

APP ADDS: President Zardari said the overwhelming expression of support for Pakistan reflects the "world cares about Pakistan and the people of Pakistan can rest assured that democracy does work and it is the success and victory of democratic Pakistan that we are standing before you."

"There is very strong support of the international community for Pakistan's democratically elected government, we know Pakistan has many challenges in the security and economy fields)," stated Secretary Rice, standing alongside Zardari. The President said whenever the leaders of Pakistan and the US meet they discuss the weaknesses in relationship and try to convert these into our strengths.

"All weaknesses have to be looked at and if there are any weaknesses or any foresight, definitely we will talk about it." British Foreign Secretary Miliband expressed solidarity with the Pakistani people over the horrible Marriott Hotel bombing last weekend saying "equally important every single one of our countries stands shoulder to shoulder with the democratically elected government and the people of Pakistan in their struggle against terrorism, which is a threat to them as well as a threat to us."

*TEXT OF THE STATEMENT BY CHAIRMEN OF THE FRIENDS OF PAKISTAN:* Following is the text of a statement by the Chairmen of the Friends of Pakistan following the Friends of Pakistan Group meeting in New York on Friday, September 26, 2008:

"The Foreign Ministers of Australia, Canada, China, France, Germany, Italy, Japan, and Turkey, and representatives of the European Union and the United Nations met under the co-chairmanship of President Zardari of the Islamic Republic of Pakistan and the Foreign Ministers of United Arab Emirates, the United Kingdom and the United States, to launch the Friends of Pakistan Group in New York on Friday, 26 September.

Those present congratulated President Zardari on his election as President and noted the significant opportunities for Pakistan under democratically-elected, civilian leadership. They made clear their determination to support the Government of Pakistan in its efforts to consolidate democracy to enable the people of Pakistan to benefit from this historic opportunity.

They expressed their outrage at acts of terrorism in Pakistan, in particular the recent attack on the Marriott Hotel in Islamabad, and made clear that the Group of Friends stood shoulder-to-shoulder with Pakistan in its fight against such terrorism.

The Group of Friends noted the formidable challenges Pakistan faces and the importance of well-co-ordinated international co-operation as the Government works to address them. They welcomed the Pakistani leadership's focus on national development as a strategic priority and desire to promote peace and stability in both the country and the region.

With this in mind, the Friends agreed that the Group should work in strategic partnership with the Government of Pakistan and other relevant partners in the following areas:

*I. STABILITY:* The meeting recognised the significant problem of violent extremism in Pakistan and looks to Pakistan to lead the fight against this extremism, with the support of the international community. The Group committed to work with the Government of Pakistan to develop an over-arching Pakistani-led strategy and to provide technical assistance for this.

*II. DEVELOPMENT:* The meeting agreed to develop a comprehensive approach to the economic and social development of Pakistan, with a particular focus on education, health, and human development. The Group acknowledged the need for Pakistan to undertake serious economic reform and agreed to look at improved trade access for Pakistan to their markets. The Group also agreed to encourage private sector involvement in Pakistan's development.

*III. BORDER AREAS:* The meeting noted the importance of the border areas to the overall territorial integrity of Pakistan, as well as the impact the situation there was having beyond Pakistan. The Group agreed to form a partnership with Pakistan to develop a comprehensive and co-ordinated approach to the security, development, and political needs of the border.

*IV. ENERGY:* The Group agreed to look at ways of addressing Pakistan's energy shortfall.

*V. INSTITUTION-BUILDING:* The Group agreed on the importance of supporting Pakistan's democratic institutions, including in support of economic reform, rule of law, good governance and countering extremism.

At the request of the Government of Pakistan, the Group agreed that a special representative should be appointed from a member nation or organisation to take forward the above agenda. The Group agreed to meet again at official level in Abu Dhabi within a month to determine a detailed programme of work to take forward the above agenda."


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*SPI surges up to 28.72 percent​* 
ISLAMABAD (September 27 2008): The weekly inflation measured by Sensitive Price Indicator (SPI) surged up to 28.72 percent on week ending September, 25, owing increase in the prices of 15 essential commodities, according to Federal Bureau of Statistics (FBS). A surge in inflation was recorded in the week ended on September 25 as compare to the previous week, as inflation measured through SPI was 27.93 per cent.

The SPI inflation is calculated on the prices' trend of 53 essential commodities for all income groups taken from 17 centers in urban areas. Further analysis of the data showed that dearness for families bracketed in Rs 3000 income group was increased from 29.31 per cent last week to 30.23 per cent.

The price hike particularly of essential commodities of kitchen items has been making lives of salaried class and low-income group harder with the government having nothing except rhetoric to lessen their miseries.

The dearness for families earning monthly income between Rs 3001 to Rs 5000 has increased during the week from 27.99 per cent to 29.09 per cent and for Rs 5001 to Rs 12000 to 28.90 per cent. For families earning over Rs 12, 000, the dearness increased slightly during the week from 28.29 per cent last week to 28.72 per cent on September 25.

The prices of 15 commodities have increased during the period under review, 14 showed a decline whereas 24 remained stable during corresponding week as well as the same week of previous year.

Further analysis of the data showed that prices of per kg Chicken (Farm) has increased to Rs 105.42 during the week under review over Rs 101.52 for previous week, Gur per kg to Rs 38.33 from Rs 37.39, potatoes per kg to Rs 25.48 from Rs 24.99, garlic per kg to Rs 45.45 from Rs 44.63, sugar per kg from Rs 34.14 to Rs 33.60, wheat average quality per kg to Rs 22.33 from Rs 22.07, bread plain mid size each to Rs 22.79 from Rs 22.62, cigarettes K-2 per packet (small) to Rs 8.88 from Rs 8.82, washing soap nylon per cake to Rs 12.57 from Rs 12.51, wheat flour average quality per kg to Rs 23.93 from Rs 23.83, tea (prepared) per cup to Rs 8.03 from Rs 8.00, bath soap lifebuoy per cake to Rs 21.37 from Rs 21.30, beef per kg to Rs 137.08 from Rs 136.73, curd per kg to Rs 42.40 from Rs 42.32 and mutton per kg to Rs 251.92 from Rs 251.66 Prices of 14 commodities included tomatoes, bananas, red chillies, vegetable ghee rice basmati and others declined marginally during the week.


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*World Bank likely to release $500 million: Salman Bashir​* 
ISLAMABAD (September 27 2008): Foreign Secretary, Salman Bashir said on Friday that Pakistan needs $10 -15 billion. As against that World Bank (WB) is expected to release $500 million immediately. Addressing a press conference here, he said that one of the major highlights of the visit 'Friends of Pakistan' initiative was to express support and solidarity with Pakistan from several important countries.

" Pakistan's requirement is 10 to 15 billion dollars but we are expecting $500 million immediately," he added. He said that most important element of this meeting was that the big countries have the capacity to help, and UN, the entire EU collectively will supported Pakistan

Replying to a question, he said that joint statement issues after the meeting of President Zardari and Indian Prime Minister, Manmohan Singh was very constructive, adding that engagement with India is important for both Pak and India.

He was of the view that links between the political leaderships is easy, they pick up the telephones and talk to each other, track- 2, the only track that got under shadows was the composite dialogue track, several positive things emerged from those talks.

He said that the modalities also cover the list of items that is traded. Pakistan, he said had four doable, Sir Creek, Siachen issue, trade and visa liberalisation.

He said first two could be resolved as a lot of work has already been done whereas there were problems in the remaining two. "We have agreed to convene the fifth round by December, our approach will always be constructive and positive," he continued.

We are engaging with the coalition and the Nato, it is not only in their interest but also for Pakistan, he said adding that the policy is being followed by other partners. Replying to a question, he said that as for as sentiments of the Kashmiris are concerned there was no ambiguity.


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*Qureshi pleads Pakistan's case for greater access to EU market​* 
ISLAMABAD (September 27 2008): Foreign Minister Shah Mehmood Qureshi pleaded Pakistan's case for greater access to EU market and handed over a concrete plan for building long-term relations with EU. He also briefed EU Troika on the multi-pronged strategy being adopted to combat terrorism, says a statement issued here by the Foreign Office here on Friday.

The Troika of European Union, consisting of deputy foreign minister of France, foreign minister of Czech Republic and commissioner of foreign relations of the European Union, met Shah Mehmood Qureshi and discussed Pak-EU relations, efforts to combat terrorism, Pak-Afghan relations and Pak-India peace process.

Qureshi called for strengthening multifaceted relations with EU, the largest trading partner of Pakistan. He proposed strategic dialogues with EU and to upgrade ministerial level dialogue to summit level.

He said a stable Afghanistan was in the interest of Pakistan, as Islamabad wanted peace with its neighbours. The EU troika expressed complete faith in the resolve of the newly elected government to combat terrorism. They said that EU was working on a draft package for economic assistance to Pakistan and Afghanistan.


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*ADB wants Pakistan to enter into PPPs to attract private capital investment​* 
FAISALABAD (September 27 2008): Asian Development Bank (ADB) has emphasised the needs that motivate governments including Pakistan to enter into Public-Private Partnerships (PPPs) to attract private capital investment (often to either supplement public resources or release them for other public needs); to increase efficiency and use available resources more effectively and to reform sectors through a reallocation of roles, incentives, and accountability.

According to ADB study report, most of the Asian governments face an ever-increasing need to find sufficient financing to develop and maintain infrastructure required to support growing populations. Governments are challenged by the demands of increasing urbanisation, the rehabilitation requirements of ageing infrastructure, the need to expand networks to new populations, and the goal of reaching previously un-served or under-served areas. Furthermore, infrastructure services are often provided at an operating deficit, which is covered only through subsidies, thus constituting an additional drain on public resources.

Combined with most governments limited financial capacity, these pressures drive a desire to mobilise private sector capital for infrastructure investment. Structured correctly, a PPP may be able to mobilise previously untapped resources from the local, regional, or international private sector, which is seeking investment opportunities.

ADB report mentioned that the goal of the private sector in entering into a PPP is to profit from its capacity and experience in managing businesses (utilities in particular). The private sector seeks compensation for its services through fees for services rendered, resulting in an appropriate return on capital invested.

The efficient use of scarce public resources is a critical challenge for governments and one in which many governments fall far short of goals. The reason is that the public sector typically has few or no incentives for efficiency structured into its organisation and processes and is thus poorly positioned to efficiently build and operate infrastructure. Injecting such incentives into an entrenched public sector is difficult, though not impossible, as Singapore has demonstrated by developing a government-wide dedication to efficiency while maintaining many critical services within the public domain.

Private sector operators, however, enter into an investment or contracting opportunity with the clear goal of maximising profits, which are generated, in large part, by increased efficiency in investment and operations. If the PPP is structured to let the operator pursue this goal, the efficiency of the infrastructure services will likely be enhanced. Improving the efficiency of services and operations also increases the chances that those services are economically sustainable and provided at affordable rates even after satisfying the profit requirements of the private operators.

PPP allows the government to pass operational roles to efficient private sector operators while retaining and improving focus on core public sector responsibilities, such as regulation and supervision. Properly implemented, this approach should result in a lower aggregate cash outlay for the government and better and cheaper service to the consumer. This should hold true even if the government continues to bear part of the investment or operational cost since government's cost obligation is likely to be targeted, limited, and structured within a rational overall financing strategy.

Governments sometimes see PPP as a catalyst to provoke the larger discussion of and commitment to a sector reform agenda, of which PPPs are only one component. A key issue is always the restructuring and clarifying of roles within a sector. Specifically, there is a requirement to re-examine and reallocate the roles of policy maker, regulator, and service provider, particularly to mobilise capital and achieve efficiency, as outlined above. A reform programme that includes PPP provides an opportunity to reconsider the assignment of sector roles to remove any potential conflicts and to consider a private entity as a possible sector participant.

Implementing a specific PPP transaction often forces concrete reform steps to support the new allocation of sector roles such as the passage of laws and establishment of separate regulatory bodies. In essence, re-examination of the regulatory and policy arrangements is critical to the success of a PPP project, ADB report concluded.


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*Comprehensive plan to develop northern Lahore: Hamza​* 
LAHORE (September 27 2008): The Punjab government has prepared a comprehensive plan of development of Northern Lahore under which besides construction and expansion of roads, facilities of provision and drainage of water would be increased. The Pakistan Muslim League-Nawaz (PML-N) leader, Hamza Shahbaz Sharif MNA said this while inaugurating eight development projects at Mian Muhammad Aslam Road in UC-12 Datanagar Badami Bagh.

Hamza said the Punjab government would provide clean environment to its citizens which will help improve living standard of the masses while best medical and educational facilities would also be made available to them, he added. Provincial Minister for Excise and Taxation Mian Mujtaba Shuja ur Rehman, MPAs Khawaja Salman Rafiq, Chaudhry Shahbaz, Nazims and Naib Nazims, DCO Lahore Sajjad Bhutta, elite of the are and a large number of PML workers were also present on the occasion.

Hamza said that government is making efforts for bringing backward areas at par with the developed ones so that people of these areas could also benefit from the fruits of development. He said that NA-119 is like his own home and that is why he is starting the development work from this constituency under his own supervision. He said that an amount of Rs 180 million would be spent for construction of 7-km long eight roads, restoration of sewerage system and provision of potable water in Data Nagar. He said that these development projects would be completed within seven months, which would resolve the problems of the area.

He further said that now the public money is being spent on the uplift of living standard of common man rather than on luxuries of rulers. He said that Punjab government has always given priority to the service of poor masses because it is our vision. Provision of daily use items and atta at cheaper rates in Ramzan and Sunday Bazaars and tandoori roti at Rs 2 through subsidy of billions of rupees are proof of the fact that the provincial government is poor-friendly in real sense, he said.

He said that employment package for unemployed persons would be announced after Eid. He said that Chief Minister Shahbaz Sharif has helped the oppressed through open courts. He said that PML-N would improve the living standard of the people, which is the real essence of democracy.

Addressing on this occasion, Provincial Excise and Taxation Minister Mian Mujtaba Shuja ur Rehman said that Mian Shahbaz Sharif considers himself as "Chief Servant" of the people instead of ruler and he is serving the people day and night. He told that more than Rs 500 million are being spent on the development works in Northern Lahore.


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*Mini-industrial estates in rural areas on the cards​* 
SIALKOT (September 27 2008): The setting up of mini-industrial estates in remote rural areas is on the cards aiming at promoting non-traditional products being produced in these areas and generate employment opportunities for skilled and semi-skilled persons at their doorsteps in the Punjab.

Official sources on Friday told Business Recorder that the government has accorded special attention on the promotion and development of cottage industries and for this purpose Rs 400 million would be spent on accelerating the pace of exports and enhancing the productivity in Punjab.

The development of industrial sector was top on government agenda and during current fiscal period Rs 1.30 billion were being spent on the development of industrial sector in the province. The government has already introduced business-friendly policies for ensuring maximum establishment of industries in private sector and to expand the radius of setting up industries to rural areas for bringing industrial revolution in the Punjab.

In order to facilitate the SMEs the Punjab government would soon initiate a "Micro Finance" loaning scheme with an amount of Rs 1 billion during current fiscal period for the development of cottage industries and creating self-employment opportunities in the province. The concept of introducing this scheme was to extend loan facilities to the interested persons for setting up small scale and cottage industries in the Punjab.

Punjab government has evolved a strategy to develop "Business Friendly" environment and setting up cottage industries aimed at ensuring Direct Foreign Investment (***) in various fields of industrial sector in the province while exporters and manufacturers were being motivated for bringing innovation and diversification in their products to cope with global market more easily sources added.


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*Zardari and Manmohan meeting new era of cooperation: SCCI​*
ISLAMABAD (September 27 2008): Tariq Sayeed, President Saarc Chamber of Commerce and Industry (Saarc CCI) and Iftikhar Ali Malik, Vice President Saarc CCI have hailed the joint statement of President Asif Ali Zardari and Indian Prime Minister Dr Manmohan Singh for restarting composite dialogue between India and Pakistan and said that the meeting between them in Washington will instigate a new era of socio-economic co-operation which would positively impact on the South Asian region as a whole.

They regarded this initiative as an earnest commitment of the leadership of two major players of South Asia, reflecting their mindset towards resolving core issues, impeding socio-economic growth of the region.

"The decision to restart the stalled Composite Dialogue process will instigate a new era of co-operation between two countries and will positively impact the region as well" said President SCCI and appreciated the statement of Dr Manmohan that a peaceful, prosperous and strong Pakistan was also in India's interest and statement of President Zardari that peace with India was part of Benazir Bhutto's doctrine of peace, prosperity and progress and her vision for a better and improved South Asia.

President and Vice President Saarc CCI welcomed the under consideration agreement between two countries that would allow commerce across the Line of Control in Kashmir and open the land route for trade between New Delhi and Kabul.

He said that the decision for commencing cross-LoC trade on the occupied Srinagar-Muzaffarabad and Poonch-Rawlakot roads from October 21, 2008 and agreeing on opening the Wagah-Attari road link and Khokrapar-Munabao rail route to all permissible items of trade will facilitate trade between two countries. President SCCI said that the long-lasting demand for unfettered trade through this transit route and opening the road link will meet after these decisions are materialise.


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*Zardari for using tourism as economic engine​*
ISLAMABAD (September 27 2008): President Asif Ali Zardari has stressed for using tourism as a potential economic engine, and said it is important to maintain the standards of tourist industry, and save tourists and inhabitants from facing climatic changes.

"These climatic changes are a great challenge in the path of achieving international development targets," the President said in message on 'World Tourism Day' being observed throughout the world on (September 27) with the theme of supporting measures adopted to prevent sudden climatic changes. The President said Pakistan is contributing in the international efforts to counter the unusual climatic changes besides taking steps for promotion of tourism.

"The rich culture and the civilisations of Harappa, Moenjodaro and Gandhara which existed here, are a great source of attraction for the tourists. The Northern Areas are a tourist paradise, visited by thousands of tourists every year," he said. President Zardari said tourism in a way cannot only highlight the beautiful planet Earth, but also generate much-needed revenue which in turn can be used to manage the threat of global climate change.

He said being realised rather belatedly, climate change has the potential of radically changing people's lifestyle. The President said on the occasion of World Tourism Day, Pakistan, as member of the United Nations World Tourism Organisation (UNWTO), welcomes tourists from all over the world for visit.


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*Gaddani beach: PTDC to develop tourist resort with world class facilities​*
BEIJING (September 27 2008): Pakistan Tourism Development Corporation (PTDC) has got approval of three mega projects from its board of directors, including construction of a tourist resort with world class facilities at Gaddani beach located on border of Sindh-Balochistan provinces and two in Islamabad.

"The PTDC is very keen to develop tourism in Pakistan on most modern lines and there is a need to raise mega projects", the Managing Director of PTDC Brigadier Aman Ullah (Retd) said in an interview with APP here on Friday.

Highlighting these three important projects for the promotion of tourism in Pakistan, he said "luckily, we have a 172-acres piece of land at a prime location at Gaddani beach, on which PTDC to construct a beautiful hotel, develop a lush green golf course and most modern water sports facilities".

He said that when completed, the project would be the icon to attract a large number of tourists from Europe and other parts of the world. "I am sure that we would be able to develop this project within next two to three years to welcome a large number of tourists, with state of the art facilities to be ensured for them", he noted.

Likewise, he continued that PTDC has a 25-acre of plot in Islamabad, and we want to construct a Tourist Village on it. The plan envisages construction of a 3-star motel, comprising 300-rooms, so that maximum number of domestic and international tourists could stay there. He said that all allied facilities including swimming pool, shopping centre as well as most modern Theme Park would also be constructed on it.

The PTDC, he said has an other plot of 9-canal behind the Marriott Hotel and it plans to build a most modern office plaza on it to accommodate the offices of Ministry of Tourism and PTDC, while the remaining portions of it will be leased out to multi-nationals, as it will help to address the financial constraints of PTDC.

He made it clear that all three mega projects would be raised on Public-Private partnership, adding that he has already obtained permission of these projects from the board of directors. Brigadier Aman said that after approval, the PTDC has now handed over these projects to IPDF, an arm of Ministry of Finance that is responsible for preparation of feasibility report, inviting investors, calling construction companies, floating tenders and finally handing over these projects to the successful bidders.

The MD, PTDC said that foundation stone of this motel was laid by the Prime Minister Syed Yousuf Raza Gilani in 1994. But after a passage of over 14 years the project could not be completed.

Brigadier Aman said that on assuming the responsibility of PTDC he immediately paid the attention towards its completion and with the blessing of God it will be ready for inauguration sometime next month. "This will be a very beautiful and attractive tourist facility to be available for Karachiites", he observed.


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*Wapda commissions Satpara Power House-2​* 
LAHORE (September 27 2008): Pakistan Water and Power Development Authority (Wapda) has successfully commissioned Satpara Power House-2 with an installed capacity of 8.72 mw in the vicinity of Skardu. According to a spokesman of the Authority, Satpara Power House-2, comprising two units of 4.36 mw each, will supply 52 million units of electricity to Skardu town, thus earning a revenue of Rs 208 million annually.

It is pertinent to mention that Satpara Power House-1 was commissioned in October last year and has already generated 4.3 million units of electricity so far. Total installed capacity of the project will become 17 mw after commissioning of Power House 3 and 4.

Satapara Power House 1 to 4 are amongst the components of Satpara Dam Multipurpose Project being executed by Wapda in Northern Areas. The project, in totality, is at the advanced stage of its completion. Besides generating electricity, it will also provide irrigation supplies for a total command area of 15,000 acres in addition to supply drinking water of 3.1 million gallon per day to Skardu town, the spokesman concluded.


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*'Agriculture sector can pull out country from economic crisis'​* 
LAHORE (September 27 2008): Agriculture being largest sector of economy has potential to pull out the country form current economic crisis. This was said by Ahmad Ali Aulakh, Minister for Agriculture, Punjab while chairing meeting for providing agricultural implements, machinery at subsidised cost to farmers under ADP project.

The meeting was attended by Director General Agriculture (Field), Director General Agriculture (Extension), Director General Agriculture (Water Management) and Agricultural machinery manufactures in Punjab. The minister for Agriculture said that this particular sector is source of raw material for industry besides meeting food requirements of burgeoning population. He added that current government has taken a number of initiatives in very short time to promote mechanised farming and to enhance farmer's income in the province.

He said these initiatives and interventions including launching of Green Tractor Subsidy Scheme, provision of 13 different agricultural implements, machinery at subsidised rate and reducing bulldozers rent for land development from Rs 1200/- to Rs 560/- per hour will yield positive result to enhance agricultural productivity.

He underlined that applications received under Green Tractor Scheme are being scrutinised and 10000 tractors will be provided with subsidy of Rs 200,000 per tractor during current financial year. He further said that Agriculture Department Punjab launched effective drive to check fake, spurious and substandard pesticides during current Kharif and pesticides worth Rs 24 crore were recovered.

The minister for Agriculture requested agricultural machinery manufactures to reduce their profit margin for providing implements and machinery to farmers for which 55 crore rupees are being provided as subsidy by Punjab government. The minister reiterated that all measures will be taken to protect interests of all stakeholders, particular by the growers in Punjab.


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*Benazir Tractor Scheme: ZTBL to distribute 25,000 tractors among farmers​* 
MULTAN (September 27 2008): Zarai Taraqiati Bank Limited (ZTBL) Chairman Muhammad Zaka Ashraf has said that Zarai Bank would introduce Benazir Tractor Scheme and would distribute 25,000 tractors among the farmers. It has already introduced on line banking in Punjab and now it would be expanded to Sindh and Rs 72 billion would be advanced to small farmers @ 8 percent mark-up while an effective action was being taken to recover Rs 75 billion from the chronic and influential defaulters.

Talking to newsmen at the residence of Dr Khalid Khokhar, Director of the ZTBL he said that Kissan Credit card will facilitate the farmers. He said that ZTBL has made elaborate arrangements to advance loans to farmers on soft terms and under "Green Tractor Scheme" of Punjab government.

He said that chief minister Punjab, to bring agricultural revolution, plans to provide a subsidy of Rs 200,000 each to 10,000 farmers across the province through computerised balloting for the purchase of tractor. He said remaining balance of the total cost of the tractor would be advanced by the ZTBL to the concerned manufacturers for onward distribution of tractor to farmers.

He said loans would be disbursed among the farmers on first come first serve basis subject to the completion of all formalities required for loaning. He said ZTBL would have to accommodate the major chuck of the total number of beneficiaries of this scheme because the procedure for grant of loan of ZTBL is simplified with low mark up as compared to cumbersome formalities of other commercial banks.

He said that a record amount of Rs 67 billion production loans would also be disbursed to farmers across the country at their doorsteps during the current fiscal year. He said that last year they disbursed a sum of Rs 67 billion in production loans to farmers, against a target of Rs 60 billion.

These loans were granted to farmers on first-come-first-serve basis under the one window operation, through a network of 342 branches spread across the country. He said foolproof arrangements had been made for transparent disbursal of the loans to farmers at their doorsteps, while various teams from the bank will pay surprise visits to bank branches to monitor the staff's performance in this regard.

Responding to a question about refusal of issuance of loans to farmers at some branches on the pretext of non-availability of funds, the chairman said that fund was made available to all branches on the basis of the number of local population.


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* Wrong decisions caused economic downslide: Dr Salman ​* 
Sunday, September 28, 2008

LAHORE: Former federal finance minister Dr Salman Shah has said wrong decisions taken by the present regime has led to the economic meltdown and pointed to the cancellation of GDRs worth $4 billion of five public sector companies at a time when MCB raised $850 million by selling 20 per cent of its shares abroad.

Talking to The News, Dr Salman Shah said the rulers were begging around the world for an immediate relief of $4 to $5 billion while they were sitting on public assets worth over $425 billion.

He pointed out that the capital market, which was at its peak of 15,700 points in April, had crashed. At the boom time, he said, Global Depositary Receipts (a bank certificate issued in more than one country for shares in a foreign company) for National Bank, Habib Bank, Kot Addu Power Company and Pakistan State Oil were planned to be offered to foreign investors.

These GDRs and foreign exchange bond, which were cancelled by the new regime immediately after assuming power, were worth $4 billion, he added.

That money, he said, could have provided the government with required fiscal space, adding there would have been no need to borrow from the State Bank had the amount, equivalent to Rs250 billion, been realised.

Who took the decision to cancel the GDRs, he wondered and said when private sector bank MCB was able to sell 20 per cent of its shares at Rs470 to collect $850 million, then why public sector companies were stopped from offering their shares in foreign markets.

Now share values of all these enterprises have melted by 40 to 50 per cent. That one wrong decision had a cyclical impact on the entire economy, he added.

He said increased government borrowing from the central bank created inflationary pressures and the country was deprived of foreign exchange worth $4 billion which put pressure on foreign exchange reserves. The depletion of foreign reserves, he added, exerted pressure on the local currency.

He said negative economic indicators impacted the buoyant capital market which caved in as investors saw a bleak economic future of the country. The investors, he added, realised that the new regime had no economic plan.

He said besides losing foreign investments worth $4 billion the country also saw flight of capital worth a similar amount. He termed the handling of economy by the present regime mismanagement of the highest order and said it would require a lot of efforts and prudent policies to take the economy out of the present mess.

Shah said the economic managers and their advisers were still following economic theories of the 20th century, adding they do not understand the globalisation process which is taking place all around.

He said the trade deficit was the result of high oil prices and the gap could be bridged with foreign inflows and selling of non-liquid government assets from which it was earning nothing. Exports would ultimately pick up after adjusting to new realities, he anticipated.


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*Gwadar port faces hurdles ​* 
Sunday, September 28, 2008

ISLAMABAD: The governments lack of political will and some hidden forces are the main hurdles in the way of fully operationalising the Gwadar deep-sea port, it is reliably learnt.

The port, which is the third deep-sea port in the country, was inaugurated in March 2005 by then president Pervez Musharraf and became operational in March this year when first ship carrying 52,000 tonnes of wheat from Canada berthed at the port.

Without the federal governments active support, the Gwadar port cannot be operational and it will remain a dream to make it a hub of activities in the area and an alternative port for the rest of the country, said Muhammad Salim Khan, Secretary Ports and Shipping, when asked for comments.

The federal government provided not only funds but also infrastructure facilities to the two main ports in Karachi in the recent past, he said.

According to experts, the port would prove to be a trade corridor for central Asian states, China and the Gulf as 60 per cent trade of oil and gas is done through this route. China has provided 80 per cent of Gwadar ports $248 million initial development cost.

It is the political will of the government that can only make the port operational, otherwise it is not economically viable to ship imported goods from other ports of the world, said a member of a committee formed by the Economic Coordination Committee to report on the economic viability of the port.

The ECC of the cabinet, after the request of Balochistan Chief Minister Nawab Aslam Raisani, directed the authorities concerned to allow one-third of total imported wheat to be shipped to Gwadar but later changed the decision saying that the allocation should be made after reviewing economic viability of the shipments. Finally, the ECC formed a committee to submit a report for making the port operational.

None of the shipping companies and importers were ready to offer lower bids for shipments to the Gwadar port compared to the Port Qasim and Karachi Port thus leaving no option for the authorities but to receive imported commodities at the two main ports, said another member of the committee.

Another problem for imported goods at Gwadar is that the importers need extra Rs2,200 per tonne to transport the goods from Gwadar to Karachi or to Quetta via Sukkur as infrastructure facilities were yet to be completed, the official added.

Putting aside all these reservations about the Gwadar port, the ports and shipping secretary said, there was celebration in the town when first ship from Canada docked at the port last year and businesses like hotelling and other related activities were in full swing.

Citing another hurdle in the way of Gwadar port, a national leader from Balohcistan was of the view that a powerful lobby from Karachi was mainly behind this to block it as it would hurt activities at the ports in Karachi.


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*NAVTEC to impart training to Balochistan youth ​* 
Sunday, September 28, 2008

ISLAMABAD: The Federal government, under the directives of Prime Minister Syed Yousuf Raza Gilani, is paying special attention to improving the conditions of the people of Balochistan. To achieve this, the National Vocation and Technical Education Commission (NAVTEC), has already established its regional office in Quetta for imparting technical training to the youth of Balochistan.

Adnan A Khawaja, Chairman NAVTEC stated this while talking to Ayatullah Durrani, MNA from Balochistan, at his office in the Prime Ministers Secretariat here on Saturday.

Khawaja told the MNA that technically trained youth will be given priority in filling vacant positions in various public and private industrial concerns not only in the country, but also in meeting the demand received from Arab and other foreign countries from time to time.

He informed the MNA that he would be personally visiting Balochistan after Eid-ul-Fitr to explore the areas where there was a genuine demand of opening institutes for technical and vocational training of the youth. He requested the MNA to identify the areas where the youth would be available for training in reasonable numbers. He said that NAVTEC has already provided funds for running some courses at the Balochistan Institute of Technical Education (BITE) with the cooperation of the Pakistan Army.

Earlier, Durrani, in his presentation, told the NAVTEC chairman that thousands of youth from Balochistan were available for technical training.


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*Friends of Pakistan​*
MAKE no mistake about it  this is Pakistans hour of economic reckoning. We need every friend we have ever had and every dollar we can possibly get. It seems then that the Friends of Pakistan forum, which will hold its first meeting in Abu Dhabi next month, could be the right tonic for our economic ills. But caution is in order. Pakistan is running out of dollars at an alarming rate. According to Agost Benard, an associate director at Standard & Poors, The external liquidity position which is now the key concern is continuing to deteriorate rapidly. What Mr Benard says matters because his agency can dramatically affect Pakistans ability to do business in the international market.

Economic analysts are worried by Pakistans current account deficit  last year it stood at $14bn, while in just July and August it ballooned to $2.6bn. With foreign exchange reserves standing at a paltry $8.8bn last week, Pakistan simply does not have the foreign currency to sustain the current account deficit. In the medium term, a current account deficit can be turned around by exporting more and importing less. In the short term, foreign aid is the only realistic chance of improvement. The problem is that foreign aid will likely come with strings attached  which will impose wrenching change on the average Pakistani. Through US Secretary of State Condoleezza Rice, the Friends of Pakistan forum has indicated that it is not keen to give Pakistan quick money on easy terms. We are engaged with Pakistan through international financial institutions, Ms Rice told the news media, and also mentioned the need for economic reform.

The IFIs have a fairly basic recipe for Pakistan: strip away subsidies, increase tax revenues and cut down the budget deficit. These are good, necessary steps that Pakistan must take in order to improve its long-term economic outlook. The problem is  and experience bears this out  that steps such as these taken in a panic follow a fairly predictable pattern: the cost of living for the poor is driven up, development expenditure is slashed and meaningful reform is shelved once the worst has passed. However, there are several reasons to give Pakistan the benefit of the doubt for now. First, there are international factors involved in Pakistans economy going sour  most notably the price of oil and food. Second, the economy is seized by the worst level of inflation in decades. Third, Pakistan has already done away with most subsidies and has planned to slash expenditure. Fourth, Pakistan is struggling to come to terms with a militancy threat that could destabilise the very foundations of the state. Surely the Friends of Pakistan must realise how much more costly it would be to rescue Pakistan later were money to be delayed right now.


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*SBP injects Rs 37.65bn into money market​*
KARACHI: The central bank on Saturday injected Rs 37.65 billion into the money market through 9-day reverse repo. On last Thursday, there was a maturity of Rs 98 billion in the money market, out of which the central bank picked Rs 35.266 billion through T-bills auction. The central bank is continuously supporting the money market by injections to counter short liquidity position faced by the commercial banks. The dealers demand Rs 40.15 billion repo from the State Bank. This may be the last injection of the central bank, said a money market expert. Banks customers are withdrawing huge amounts from their accounts on account of eid shopping The overnight rate stayed at 12.90 percent in the money market, the expert said.


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*Govt to train labour force for nuclear power schemes​*
** Project to cost Rs 491.42 million​*
ISLAMABAD: For completion of different nuclear-related power generation schemes, the government has planned to produce high skilled labour with emphasis on learning technical Chinese and industrial training in China.

The project, namely Developing manpower to meet the requirements of the Pakistan Atomic Energy Commission (PAEC) nuclear power programme, will cost the government Rs 491.42 million with Rs 166.70 million as Foreign Exchange Component (FEC).

The PAEC will be the executing agency of the capacity building project. The trained personnel under the propose project will be adjusted against approved posts of others projects of the PAEC.

Meeting the target of generating 8,800MW nuclear capacity by 2030 would require trained and qualified professionals to collaborate in the design and construction of almost 10 nuclear power plants.

Practically, it amounts to allowing 200-250 professional per plant and an overhead of about 600-800 centrally placed professionals to participate in the project management, design, engineering construction, and installation of the nuclear power plants. Presently, the available manpower for this purpose is less than 150 persons.

In addition to meeting the urgent requirement of the manpower, main purpose of the scheme was to provide to these individuals sufficient competency in the Chinese Language to enable them to communicate with the vendors and manufacturers in China. Other goal of the project was to provide them some on-the-job hands-on training in the Chinese nuclear industry specially those related to manufacturing.

Under this project, the government plans to recruit 400 persons in the next five years at the rate of about 80 persons per year and keep them under training for a period of 20 months. The training programme of these people will primarily consist of teaching them Technical Chinese language. According to sources, the services of NU ML and language specialists will be used for this purpose. These personnel will also be provided some nuclear power plant orientation and those who do well in Chinese language and in orientation courses (top two third of the total) will be sent for on-the-job training in China for up to four months depending upon their areas of expertise and the availability of the training location.

The government has allocated token money of Rs 15 million in the Public Sector Development Program 2008-09. During construction of nuclear power plant CHASNUPP unit-1 (C-1) and another similar unit (C-2) is under construction at the Chashma site, the PAEC personnel have gained some knowledge of the Chinese language. However, in depth knowledge of technical Chinese language is required to negotiate contracts of several nuclear power plants (costing billion of dollars) with the Chinese in a successful and convenient manner. The Energy Security Action Plan (ESAP) envisages electricity requirements to increase from the installed capacity of 19681 MW in 2007 to some 162000 MW by the year 2030. It is planned to increase the nuclear power generation capacity to 8800 MW by the year 2030.


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## Neo

*'Political will' crucial to tax reforms: World Bank​* 
ISLAMABAD (September 28 2008): The World Bank has conveyed to the Federal Board of Revenue that 'political will' is crucial to tax reforms in Pakistan, as lack of political backing is hampering reforms in tax administration. Sources told Business Recorder on Saturday that the World Bank has recently completed a review of the Tax Administration Reform Project (Tarp).

In this connection, the WB mission had meetings with the Ministry of Finance and FBR. During presentation of the World Bank, it has been pointed out that tax collection would not be substantially improved unless and until political leadership is serious about reforming the tax machinery. The FBR should also bring structural changes in the tax administration under the reform program.

Explaining the structural changes and distortions in the tax system, sources said that the potential sectors of economy are contributing nothing in the form of taxes. The revenue collection would not improve unless these distortions in the tax system are not removed.

Textile industry with zero-rated sales tax is a clear violation of the Value Added Tax (VAT) regime. The FBR failed to control inadmissible refunds in leading sectors, which forced the department to zero-rate the entire textile sector. The zero-rating of five major export-oriented sectors is the biggest violation of standard sales tax system. The completion of VAT chain is not possible till all the potential sectors start paying sales tax.

Another major area ie agriculture income is also not taxable pointing towards serious flaws in the taxation system where major sectors were neglected in the past. Sources said that the withdrawal of sales tax and income tax exemptions are needed to ensure level playing field for all industries and sectors. On the whole, 64 percent of potential revenue is being collected from the manufacturing sector and 57 percent from mining and quarrying sector.

Whereas the services sector contributes only 13 percent of its potential, the contribution of agriculture sector is far too low. The services sector presents a gloomy picture. In fact, except for few subsectors like telecom, finance and insurance, electricity and gas distribution, and sale maintenance and maintenance of motor vehicles, the remaining services sector has negligible tax contribution. Break-up of direct and indirect taxes in the services sector showed that barring finance and insurance and other services, no other sub-sector makes any significant direct tax contribution.

The revenue collected from construction, transport, storage and communication, sale, maintenance of motor vehicles and hotels and restaurants remains frightening below their respective potential. While this situation improves slightly when indirect taxes are considered, but overall contribution of the services sector is extremely low.

The services sector has always been a difficult-to-tax area, but a mechanism has to be developed to improve collection from this potential sector. Tax administration cannot ignore this sector whose overall contribution to GDP is over 50 percent and this share is growing with the passage of time, sources added.


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## Neo

*Foreign investors withdraw $3.681 million from KSE​* 
KARACHI (September 28 2008): Foreign investors opted to offload their holdings and withdrew $3.681 million from the Karachi share market during the outgoing week that ended on September 25, 2008. According to National Clearing Company of Pakistan Limited (NCCPL) data, the cumulative figure of this mode of investment has reached negative $351.231 million during the current year from January 1 to September 25, 2008.

"The main cause of continuous outflow of foreign portfolio investment was prevailing political uncertainty, deteriorating economic indicators and depreciating PKR value, which forced the offshore investors to offload their holdings," analysts said.

The foreign investors adopted cautious stance from the start of the week and remained net seller of share worth $27,514 on Monday. Panic selling by foreign investors was witnessed on Tuesday $4,414,678 were withdrawn from the share market on the second day of the week.

On Wednesday, the situation slightly improved and a fresh inflow of portfolio investment of $386,022 was witnessed at the share market. This trend continued and another net inflow of $375,129 was witnessed on Thursday. The market remained closed on Friday due to Jumma-tul-Widda.


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## Neo

*Government will focus more on privatisation policy: Gilani​* 
KARACHI (September 28 2008): Prime Minister Syed Yousuf Raza Gilani on Saturday said the government will focus more on privatisation policy, which has been initiated with the sale of a fertiliser factory.Addressing the business community at Iftar dinner hosted by Sindh Governor Dr Ishratul Ibad Khan at Governor House.

The Prime Minister said that the government is committed to taking necessary steps to improve law and order situation to boost economic activities in the country. The State Bank Governor, Planning Commission Deputy Chairman, Sindh Chief Minister, Sindh Assembly Speaker, federal and provincial ministers and large number of dignitaries from business community attended the programme. He noted that Karachi is the hub of the country's economy and the government realises the importance of this mega city.

He said the government also realises that stable political system is necessary to boost economic activities in the country and despite having majority, People's Party decided to form coalition governments in the centre and also all provinces. "Actually we wanted to revive the confidence of the business community that the government is stable and they can do their businesses with full courage," he added.

He assured the business community that the government will listen to their problems and will try to solve them. "The government is committed to providing them a peaceful environment to run their businesses," he said. He asked the business community to join hands with the government to curb extremism so that economic activities could pick up in the country.

The Prime Minister pointed out that the present government has taken many unpopular decisions to put the country's economy on right track. The Prime Minister said there in no clash between the government institutions. The parliament is supreme and all the institutions were working under a democratic system, he added.

He pointed out that the government was working on a three-pronged policy to improve law and order situation in the northern parts of the country. Firstly, he said the government wants dialogue with the peace-loving elements in those areas.

The government wants to bring them in the mainstream politics to eliminate their sense of deprivation. Secondly, the government wants to improve the life standard of the people of tribal areas with providing them better health and education facilities. The government also wants to provide more job opportunities to the people of tribal areas. Finally, he said, the government will take serious action against those who are challenging the writ of the government.

The Prime Minister said now the people of tribal areas are joining hands with the government and setting up their 'Lashkars' to curb extremism in tribal areas. Earlier, Sindh Governor Dr Ishratul Ibad Khan, in his address of welcome said the government was facing challenges of extremism and terrorism.

He said that a number of business community leaders met the Prime Minister and informed him about their problems and their concerns about the country's deteriorating economy. "We all - the government, people and business community will have to join hands to face all challenges," Gilani added.


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*Pakistan keen to promote economic collaboration with China​* 
ISLAMABAD (September 28 2008): Foreign Minister, Makhdoom Shah Mahmood Qureshi has said that Pakistan is keen to promote economic collaboration with China and is aiming to raise the bilateral trade from $7 billion to $15 billion by 2011. He stated this during his meeting with the Chinese Foreign Minister Yang Jeichi on the sidelines of the 63rd UN General Assembly session, says a Foreign Office statement here on Saturday.

Qureshi said that he was looking forward to visit China with President Asif Ali Zardari in the middle of October. The President valued China's friendship, which was demonstrated by his decision to send his son for the opening ceremony of the Olympic Games, he said.

Chinese Foreign Minister Yang Jeichi said that China was proud to have assisted Pakistan and had done its best to advance co-operation. China would endeavour to continue this co-operation in the future as well. He said that China attached great importance to the PPP government's commitment to promote friendly relations with China.

The Chinese government, he underlined, was concerned about the security of its nationals in Pakistan. China appreciated the complexity of the matter and the efforts made by the Pakistan government for their safe release.

Foreign Minister Qureshi assured the Chinese Foreign Minister that the safety of Chinese nationals was important to Pakistan and it will do everything to ensure their protection. Meanwhile, Makhdoom Shah Mahmood Qureshi also called on Foreign Minister of Ireland, T D Martin on the sidelines of the 63rd session of the UN General Assembly in New York. The Foreign Minister appreciated the award conferred by Ireland on Shaheed Mohtarama Benazir Bhutto. She had visited Ireland in 1994 and wanted to cultivate close relations with it.

The Foreign Minister requested the Irish Foreign Minister to open its embassy in Pakistan, which would give further impetus to the bilateral relations. He also requested the Irish Foreign Minister to encourage investment by Irish companies in Pakistan.

He invited Ireland to participate in the Food Technology and Agricultural Show, Expo 2008 and the Ideas exhibition. He said that Irish companies were already present in Pakistan in several fields including the power sector and oil exploration. He said as part of its Asia strategy, Ireland wished to develop strong economic relations with Pakistan. He felt that Pakistanis were playing a prominent role in Ireland and welcomed their presence in the country.

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*'Government taking effective steps to promote tourism'​* 
ISLAMABAD (September 28 2008): The government is taking effective measures to promote tourism in the country, make it an attractive destination for tourists. Federal Minister for Tourism, Water and Power, Raja Parvez Ashraf, expressed his views, while addressing the participants of a seminar organised to celebrate World Tourism day here on Saturday.

The function was organised by the Ministry of Tourism and Pakistan Tourism Development Corporation (PTDC). Secretary Tourism, Ali Arif, MD Pakistan Tourism Development Corporation, Brigadier Amanullah, GM Environment wing National Highway Authority (NHA), Tariq Mehmood and former secretary Tourism, Shehzad Qaiser were also present.

Moreover, the minister said that the military operation in Swat and Bajaur agency is dearly affecting tourism but the government is trying its level best to bring normalcy in the area. Speaking on the occasion, Tariq Mehmood said that NHA has launched a new policy to promote tourism in the country. The Authority has established a separate wing to plan projects on issues related to environment and would also conduct the environmental assessment reports.

In addition, he said that the NHA has hired various experts that would help it in executing these projects effectively, adding that Asian Development Bank (ADB) and World Bank are funding for these projects. The World Tourism Day celebrated throughout the world on September 27 every year under the auspices of the United Nations World Tourism Organisation (UNWTO) and the theme for this year is: "Tourism Responding to the Challenge of Climate Change". The main purpose of World Tourism Day is to foster awareness among the international community about the importance of tourism and its social, cultural, political and economic values.

In this connection, a photographic, poster and mobile phone photography competition was also held by PTDC. Later, awards and cash prizes were distributed by the chief guest among the winners. Qazi Usman (Islamabad) won first prize in amateur category of photographic competition, while Hadia Sohail (Lahore) stood second.

In professional category of photographic competition, Maheen (Islamabad) won first prize and E. Philip was second. Hadia Sohail (Lahore) was also the winner of first prize in poster competition and Mohammad Sohail won the second prize. Farah Rani (Islamabad) took first prize in mobile phone photo competition and Abdul Malik (Quetta) stood second.

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*Tourism could be source of earning foreign exchange: Fehmida​* 
ISLAMABAD (September 28 2008): Dr Fehmida Mirza, Speaker National Assembly, has said that Pakistan has rich culture and immense tourism potential, which could greatly contribute to earn substantial amount of foreign exchange. She also termed it an economic engine, which could bring prosperity to the country. She expressed her view on her message in a bid to the World Tourism Day.

The Speaker said that this day is being commemorated with focus on supporting measures to be adopted for prevention of sudden climatic changes; therefore, it is imperative to adopt such measures, which help in sustaining the climate for the generations to come.

The Speaker said that due to global warming and sudden change in weather patterns, the climate has substantially changed resulting in less arrival of tourists to the tourist destinations in the country.

The Speaker called upon the people involved in Tourism Industry, tourists and inhabitants of the tourist destinations to adopt measures for protection of fona and flora, which have a corresponding effect of climate. On the occasion she asked the media and corporate entities to run an aggressive media campaign to create awareness among the people.

Dr Fehmida Mirza, Speaker National Assembly said that Pakistan is substantially contributing in the international efforts to counter the unusual climatic changes besides taking steps for promotion of tourism. Moreover, she said that civilisations of Harrapa, Crhandhra and Moenjodero are great source of attraction for tourists.

The Northern areas are tourists' paradise and visited by thousands of tourists every year she added. The Speaker said "Tourism in a way not only highlights the beautiful planet 'Earth' but also generate much needed revenue which could be used to manage the global threat of climate change.

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*Government should pay heed to improve agriculture production: PCPA​* 
MULTAN (September 28 2008): Chairman, Pakistan Crop Protection Association (PCPA), Engr Javed Saleem Qureshi, said that the significant issue at the moment within the country is not to counterfeit pesticides, instead of increasing the agricultural production, therefore, the government should pay attention to it.

While talking with Business Recorder, Qureshi said that the ratio of counterfeit pesticides within the country is almost zero because there is a very tough competition among different multinational companies, local manufacturing companies. He underscored that if we do not pay attention, especially, to increase the per acre production of wheat in the upcoming years we will have to face the acute shortage of wheat.

Furthermore, he said that in Punjab only, the cultivated area of sunflower has reached up to 0.35 million acre and if the current situation prevails for some more time, then in the next Rabih season the cultivation area of sunflower could reach up to 1 million acre, whereas the cultivated area of wheat is decreasing on the other hand, so keeping in view the above scenario, we may have to import double amount of wheat next year, he added.

He further said that the government should strengthen its own farmers instead of strengthening the foreign farmers. He suggested that government should fix the support price of wheat for the next Rabih season at Rs 1,000 per maund because the foreign farmers has been paid Rs 600 more on the import of wheat as compared to the local prices. "The wheat production could increase from 30 to 40 maunds if only Rs 50 would be spent in the fields of local farmers", he added.

Responding to a question, Qureshi said that farmers, fertiliser companies and agriculture scientists are also being included in the PCPA so that a joint strategy to increase the agriculture production would be formed from the same platform.

He hoped that good relationship would be formed with the government of this platform. He said that this is the first time in the 61 years history of the country that any government is seriously forming the positive policies for the development of agriculture and the prosperity of farmers.

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## Neo

*Energy crisis - where planning went wrong​*
BRIGADIER (RETD) MUSHTAQ AHMED

ARTICLE (September 28 2008): Pakistan, though lacking in oil resources, is blessed with lots of streams, with enormous hydro power potential. Pakistan is also gifted with huge gas and coal reserves which are sufficient for many decades to meet the energy needs. The question arises that in the presence of huge gas, coal and water resources, where it went wrong that today Pakistan is facing acute energy crisis.

Our industries have virtually been rendered non-productive, and are suffering huge losses due to non-availability of gas and electricity. The inconsistent supply of gas and electricity has further aggravated the productive capability of industry, the highest price of electricity in the region not withstanding. This has virtually put tremendous pressure on the poor labour class which is facing lots of difficulties for its survival. The situation of small industrial owners is no different.

I will not discuss the oil resources which are not even sufficient to meet domestic requirements, what to talk of their use in industry and power generation. There can be four major resources for generating electricity which are gas and coal for setting up thermal power stations, water for hydro electricity and technology for nuclear plants.

As per the reliable estimates, Pakistan is blessed with about 185 billion tonnes of coal reserves which can be used for coal based thermal power plants to generate over 15000 MW daily of electricity for over one hundred years.

The hydro power potential of the country is estimated to be 47,486 MW. The nuclear power production entirely depends upon availability of nuclear power plants. Presently, save for China - the most trusted friend - no country in the world is willing to offer us the nuclear power plant/ technology.

One plant of 350 MW is operational at Chashma and another one is in the process of installation; their consistent operation round the year (yearly maintenance time not being considered) carries many questions. It is also worth considering that most of the advanced countries have now set up nuclear plants of 650 MW and above, which are considered to be most viable and efficient.

The question now arises that keeping in view the precise availability of resources in the form of gas, coal and hydro power sites, with identified potential of source of each site and anticipated yearly growth rate of electricity, who made the mess in failing to devise proper strategy to ensure that balance in demand and supply of electricity (catering for spinning reserve) and what could be the reasons for this improper planning.

Basically three players - WAPDA (including PEPCO), Pakistan Privatisation Infrastructure Board (PPIB) and Ministry of Water and Power are responsible for identification, completion of feasibility studies, detailed designing of viable projects and their implementation. These players are further responsible to prioritise these projects and making comprehensive plans setting short term, medium term and long term goals/targets.

The scarlet thread in the planning should be that the availability in every year should be slightly more than the requirement of electricity in the corresponding year to cater for any unforeseen eventuality. At the time of creation of WAPDA in 1959, the total power generation capacity was about 119 MW. Pakistan had to lose control on the waters of River Ravi, Sutlej and Chenab after the signing of Indus Basin Treaty in 1960.

This loss of water, however, became the source of creating big reservoirs in the shape of Mangla and Tarbela. The country nearly got about 4700 MW hydel electricity from the Mangla and Tarbela Dams. With the installation of a number of thermal and hydel power stations, both by Independent Power Producers and WAPDA, and a nuclear power station at Chashma, the total installed capacity stood at about 19,530 MW in 2003.

Some planners at this juncture thought that keeping in view the total requirement of electricity during peak hours, which varied between 12500 to 13000 MW, the country had surplus of about 3000 MW which could be exported to India. The demand of electricity suddenly started surging from year 2003 mainly because of non-development activities.

The availability of split AC and other electric/electronic appliances on installments further blew the demand of electricity manifold and future planning carried out by WAPDA, PPIB and Ministry of Water and Power just turned out to be a useless paper. The energy crisis has accentuated to a very great extent. The industries have virtually come to a standstill. Children are studying and taking their examinations using candle lights.

This failure in meeting the requirement of electricity can mainly be attributed to the wrong policies of the Government of Pakistan and lack of vision, seriousness, dynamism and patriotism among the planners. The officials sitting in the ministries have been trying to please their political bosses who just had no plans, will, vision and concern for the country.

The major reason for this shortfall is that we only remained focused on the construction of Kalabagh Dam and did not accelerate the work on Neelum-Jhelum, Munda Dam, Bunji Dam, Bhasha Dam projects, Kohala, and other proposed projects to be completed by year 2010. Wapda, as per its vision 2025, had planned to achieve 9,986 MW of electricity by the year 2010 against the anticipated power shortage of 5000 MW.

THE PROPOSED MAJOR PROJECTS INCLUDED RAISED MANGLA: 130 MW, Neelum-JHELUM: 969 MW, Kalabagh: 3600 MW, Kohala (Jhelum): 740 MW, Matiltan: 84 MW, Gulpur: 116 MW, Abbasian-Jhelum: 125 MW, Rajdhani (Punch): 132 and combined cycle on gas/coal 3600 MW. These projects were to be undertaken by public/private sectors. The plan was excellent but the execution has been pathetic.

Out of all these projects only Raised Mangla along with some thermal power stations could come on ground. The additional power availability has been around only 300 MW against the planned capacity of 9,986 MW (3 percent).

Besides Hydro Power Projects to be undertaken by WAPDA, the Private Power Infrastructure Board (PPIB) has been signing many Letters of Intent (LOI)/Agreements and its chairman (Minister of Water and Power) has been making many local media statements after every meeting. The ground reality is that the PPIB has failed to set up any worthwhile project.

Rather, PPIB, supposed to serve as an instrument to help WAPDA - a prime mover for meeting energy needs - is acting as stumbling block in the efforts of WAPDA to overcome energy crisis. It has been due to the unprofessional strategy adopted by the PPIB that nothing has been achieved so far.

A regular reader, having some interest on energy resources, might have been feeling satisfied that PPIB has been able to sign about one hundred Letters of Intent, both with international and domestic investors. But the ground reality is that no worthwhile project has been added.

The cases of Kotli Hydro Power, Gulpur Hydro Power, Rajdhani Hydro Power and Munda Dam projects besides many thermal power stations can be quoted as examples where the Letters of Intent have been issued many years back. In some cases, even feasibility studies have been completed and Letters of Support have been issued, but nothing concrete has been done.

The so-called investors have come with the sole objective of making money and are on the lookout to find some other financiers to whom they could sell these agreements. The other player (the most important) responsible to ensure timely planning, and launching of mega projects is the Ministry of Water and Power.

However the main player has never been pro-active in its approach to cater for the energy needs. It, rather, has been acting as post office between WAPDA and PPIB. Its sole focus has been on media projection and grabbing power to be used for personal motives rather than focusing on national interest.

The Ministry has never served as a think tank to ensure identification, planning and implementation of power projects to keep a balance between the demand and availability of power potential.

THE FOLLOWING RECOMMENDATIONS MAY SERVE AS FIRST STEP IN INDICATING PLANNING FOR HANDLING ENERGY CRISIS AT VARIOUS LEVELS: 

A dedicated cell should be formed at government level under the Planning Commission/Prime Minister Secretariat which should be responsible for detailed planning of energy requirements, keeping in view the realistic annual growth. This cell should serve as a think tank and should comprise specialist engineers and administrative staff.

The boss of this cell should ensure preparation of short term, medium term and long term plans. The cell should have three sub cells, responsible for monitoring of studies, detailed planning and designing, award of contracts and finally implementation of construction within each sub cell.

The staff should have specialisation in both thermal and hydel projects. It should operate through monthly meetings to be attended by representatives of Ministry of Water and Power, PPIB WAPDA and PEPCO. The head of this cell should be a technically qualified officer and has to be a hard task master to ensure that every target is met by the scheduled date.

As per the National Power Policy, all the provinces are authorised to set up their own power plants up to 50 MW. Wapda, again, has done commendable work in identification of sites in each province. Unfortunately, none of the provincial governments has made any serious efforts to set up such plants and contribute towards the hydropower production.

The Government of NWFP can be given some credit in setting up Malakand III Project of about 80 MW, which will start generation soon. The Government of Punjab now seems to be keen to play its part in setting up small hydropower plants on canals. To achieve meaningful results, all provinces (interested in setting up hydel plants) must have a core set up on hydropower generation. There should be a separate Secretary of Power coming from a technical cadre to lead the provincial power cells.

There should be dedicated energy planning cell. The head of this cell again has to be a specialist. All cases received from WAPDA, PEPCO in the shape of PCII and PC1 should be processed immediately. All queries be resolved through meetings rather through letters which takes months to get upto date reply. The detailed organisation can be worked out at the Ministry.

The Private Power Infrastructure Board, which is almost non-functional with relation to physical result, is required to be made dynamic. No political interference should be allowed. The PPIB, through pro-active approach, should only work on the projects earmarked by the main core cell at Government level.

All Letters of Intent issued and agreements signed by PPIB should have cut off dates for completion of feasibility studies, detailed designing and commencement of work. No extension of time in any activity be granted. The present practice is that dummy investors, having political influence, are coming forward with the sole aim of subletting the project to some other investor and aiming at making money.

Progress of all agreements be monitored by the central cell and parties making no progress be given immediate exit. Though WAPDA has already devised a very comprehensive plan titled as Vision 2025, yet its implementation is lagging drastically behind schedule. There could be many reasons for this failure, but the most important being the bidding system.

As per the prevailing practices, only the lowest bid is accepted. Land acquisition process is time consuming and lacks flexibility. In most of the cases WAPDA fails to acquire the land required for the projects due to litigation process. Some projects have been delayed due to non -availability of material from identified sources as the influential cartels get sources on lease and later on dictate their terms with the contractor.

The Government of Pakistan/WAPDA should fix the cut off percentage lower than the engineer estimate beyond which the contractor should be declared as non responsive. Land acquisition process be started much before the award of contract so that the land is available by the time the contract has been awarded.

No quarries site be auctioned and WAPDA should be given basis of all borrow material quarry site. The contractor in turn will get the required material from WAPDA quarry sites at much lower rates which will subsequently reduce the overall cost of the project.

It has also been seen that some contractors abandoning their work on one project, instead of being put on blacklist and not to be considered for awarding of further projects, still have been awarded contracts due to outside pressure. This practice by WAPDA, instead of deterring, has encouraged other contractors to also adopt the same approach and thus abandon projects once they feel that they will be undergoing losses.

This vague policy of WAPDA has also contributed in the delay of a couple of mega projects. It is recommended that any contractor who abandons his project's site without any valid justification be blacklisted and should not be considered for award of future contracts. WAPDA should expedite the commencement and completion of all projects conceived in Vision 2025.

No time should be wasted on penny-wise, pound-foolish approach, which presently is the main source of delay in the timely award of contracts. WAPDA should also carry out analysis of additional cost due to delayed award and subsequent delayed completion of projects, while undertaking projects' bid evaluations and making decisions for re-bidding.

The people responsible for causing delay in the schedule of completion should be taken to task. There should also be some incentive, both for contractors and project authorities for the timely completion of projects. It has remained the policy of the Government to reward some retired bureaucrats and Government officials and make them the heads of technical departments, like WAPDA, KESC, and Railways; irrespective of their qualifications.

It is funny to assume that a good administrator would also be equally efficient in a technical department. A non-technical boss will always look towards his immediate subordinates, being totally unaware of the technical implications.

It is high time that people sitting at the helm of affairs should realise the ground realities and post technically qualified, capable and competent officers as heads of technical departments. If it is inevitable to reward non-technical, retired officers there are hundreds of non-technical slots both at the provincial and federal levels.

It is time that our leaders realise this very important aspect and stop posting non-technical officers as heads of technical departments. To conclude, it has gone beyond doubt that Government of Pakistan has miserably failed to cater for energy needs of the country. The concerned people have to make serious efforts to bridge the gap between demand and availability.

This is only possible if all players responsible for initiation and completion of power projects work in harmony and sincerely at each end and if our leaders stop posting non-technical men in technical departments as bosses. (The writer has done his Masters in Engineering from Purdue University, USA and has worked for over six years in WAPDA as General Manager Projects North)


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*Strategy for inclusive and sustained growth​* 
ARTICLE (September 26 2008): Pakistan has maintained an absolute real GDP average growth rate of 6.6 percent annually over the past six years with per capita income growing at 13.2 percent per annum from 586 USD in FY03 to 1085 USD in FY08 during this period. This growth has been mainly consumption driven with a contribution of 6.0 percentage points compared to investments (capital accumulation) contributing 1.5 percentage points and exports contributing -0.9 percentage points.

The total investments have consistently increased between FY04 and FY07 from 15.3 percent of GDP to 21.3 percent whereas the domestic savings declined from 20.8 percent in 2002-03 to 17.8 percent during the same period. However, Pakistan has managed to successfully tap into foreign savings for closing the saving - investment gap.

Pakistan's six-year economic performance, which has transformed it into an emerging economy, has been at the back of the Government's policy of attaining macroeconomic stability by encouraging private sector led growth. This policy direction was supported by the structural adjustment implemented under the IMF's three-year PRGF programme between 2001-2004.

The programme helped Pakistan re-profile its unsustainable debt burden hovering at over 100.3 percent of GDP in FY99 and reduce it to a level of 56.2 percent in FY07 with debt servicing amounting to only 1.1 percent of GDP in FY07; exercise fiscal prudence to result in public savings (fiscal deficit maintained at -4.3 percent of GDP and 1.7 percent primary saving achieved); loosen the monetary policy to boost demand for loanable funds and contribute to bringing the economy to full employment (the real interest rates dropped into the negative zone with lending rates reaching a low of 4.63 percent in July 2004 from almost 15 percent in 2001); liberalise the economy by removing non-tariff barriers (100 percent foreign ownership permitted in all sectors except agriculture) and rationalising the tariff structure (custom duty structured into slabs with net duty rates reduced to about 16 percent, the lowest in the region); deregulate commodity price controls and free - float the exchange rate (PKR/USD parity remained stable at 60 PKR/USD); put in place a comprehensive privatisation programme for improving the competitiveness of the economy (166 state owned enterprises in telecom, energy, financial and industrial sectors privatised between 1991-2007); and channel public funds towards providing public goods including infrastructure and regulatory/legal mechanisms necessary for a business friendly investment climate along with targeted social protection interventions through direct subsidies to benefit the poor and vulnerable (total pro-poor expenditures on community services, human development, rural development, safety nets and governance increased from 3.9 percent to 5.6 percent of GDP between FY02 and FY07).

Inflation was kept in check using monetary policy tools at under 8 percent until the end of 2007. As a result, Pakistan received Foreign Private Investments worth 6.96 billion USD in FY07 up from 1.524 billion USD in FY05.

IMPEDIMENTS Pakistan's six-year economic growth has also been characterised by certain market and government failures which have resulted in negative externalities, including high inequality and vulnerability to external shocks. This growth has been focused on attaining macroeconomic stability with capital deepening focused in financial, telecom, oil refining/marketing and retail/wholesale sectors.

These services oriented sectors, which have absorbed most of the FDI inflows so far, have not contributed sufficiently to improving the Total Factor Productivity of the productive sectors, including agriculture and manufacturing.

The growth in the industrial sector, 9.0 percent over five years, has occurred due to further capital deepening of the conventional large scale industries such as textile, sugar and cement owned by a few conglomerates.

This market failure of non-optimal allocation of resources has led the private sector to concentrate capital accumulation in mature industries with diminished marginal productivity of capital (MPk) or in unproductive services sectors. As a result, factor accumulation from new labour has been marginal with most new jobs being created in the non-paid family workers category.

Furthermore, the untapped domestic savings have alternatively fuelled consumption demand and contributed to ballooning the housing prices and equity prices due to speculative trading until recently.

With low productive competitiveness and high consumer demand resulting in a widening saving-investment gap, the pressure on Pakistan's external account has consistently been building with the Current Account Deficit rising from 1.3% of GDP in 2003-04 to 8.6% of GDP in 2007-08.

Institutional vehicles ideally should have been developed by the market to mobilise domestic savings of small investors, which could be used in capital deepening in labour intensive sectors such as Agri - processing, SME etc with high marginal productivity of capital (MPk).

The Government failures which have on the other hand hampered the pace of the economic reform process include the presence of a predatory state whereby large industrialists and agriculturists have been members of the ruling government's cabinet; state capture by influential market players especially large stock brokers, land mafias, industrialists, large corporate entities and large agricultural land holders; rent-seeking by duty bearers; limited institutional capacity for effectively targeting pro-poor expenditures; and inability of the government to maintain law and order.

These failures have contributed to oligopolistic behaviour in the factor and product markets, whereby mafias are active in land grabbing, stock market manipulation, causing artificial price hikes in commodity markets, enjoying loan waivers and lobbying for 'special tax/non-tax business incentives' from the Government.

The above inefficiencies and failures have side-tracked Pakistan economic growth from what should have been a capital widening of labour intensive sectors enabled through a broad-based mobilisation of domestic resources, complemented by social investments for building human capital and supported by a fast tracked transfer of technologies.

Pakistan is caught up in a poverty trap whereby influential market players and government failures have precluded providing the masses necessary means to participate in mainstream productive economic activity.

Given this background, it is no surprise that Pakistan's economy once again finds itself in dire straits in the face of multiple exogenous shocks from rising global food and oil prices, the global financial crisis, rising terrorism and the internal political instability.

The resulting rapid outflow of foreign portfolio investments and a slowdown in foreign direct investment inflows, had rendered maintaining the fiscal balance (-6.5% of GDP in FY08) given the persistently rising current account deficit (-9.0% of GDP in FY08) a daunting task. Pakistan's foreign reserves have rapidly diminished to below 10 billion USD and the PKR/USD parity has depreciated almost 19 percent.

In order to meet its liabilities the Government has resorted to borrowing from the State Bank of Pakistan which has contributed to spiralling the economy into stagflation. The income inequality which had been worsening steadily is now threatening to add millions more who cannot afford the skyrocketing cost of living, to the existing 38 million poor in Pakistan. The poverty gap is also expected to rise as more and more will be pushed further below the poverty line.

*THE WAY FORWARD* Pakistan's economy, with almost a decade of progressive economic reforms behind it, has placed itself in a position to launch into a second round of economic reforms to ascertain inclusive and broad based growth in the future. However, the threat it faces from the deteriorating law and order situation can wash away this opportunity unless addressed immediately. Unless the war on terror is also treated as a serious counter cyclical measure, a recession may be gripping the economy in the near future.

Cutting the losses already borne due to the aforementioned exogenous shocks, the Government needs to implement an economic strategy with the following elements to attain sustained and equitable economic growth in the future:

-- Ensure fiscal space by exercising fiscal prudence, eliminating subsidies on oil and budgetary support to SOEs and expanding the direct tax revenue base. Minimise tax/non-tax subsidies to industrial, agricultural and corporate giants.

-- Refrain from inflationary borrowing from the State Bank and resort to non-inflationary sources such as commercial papers, bonds and GDRs to bridge budgetary gaps.

-- Tighten monetary stance to sterilise liquidity and reduce inflationary pressures. Expand and deepen microfinance schemes, SME financing and Agricultural credit to provide access to capital to small entrepreneurs to help broad based capital deepening.

-- Alter duty structures to dampen consumption demand for imported luxury goods.

-- Undertake capital market reforms to introduce innovative institutional finance products and restructure the National Saving Schemes to mobilise domestic resources from small investors.

-- Prioritise public development funds for building physical capital, human capital and TFP of the labour intensive sectors (agriculture/livestock, SMEs.). Develop non-farm infrastructure, provide tariff and non-tariff incentives on inputs, target social sector spending on education and skills development and enable technology transfer for value addition. Also provide easy access to ports and facilitate exports to help producers get the best price for their products.

-- Increase social sector spending (Health, Education, Safety, Water and Sanitation...) to help reduce poverty and contribute to labour productivity. Establish a social safety net to protect the extreme poor and vulnerable in the society. The Government has already made steady inroads into implementing these economic reforms. What is needed is the political commitment to eliminate the highlighted market and government failures.

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## Neo

*The IPI gas pipeline​*
EDITORIAL (September 28 2008): President Asif Ali Zardari and Iranian President Ahmedinejad met on the sidelines of the sixty-third United Nations General Assembly meeting and discussed bilateral relations with the focus on launching the Iran-Pakistan-India (IPI) gas pipeline.

This was revealed by Sherry Rehman, Federal Information Minister who is part of a very small delegation accompanying the President on this trip. Pakistan registered a trade surplus with Iran - 66 million dollars worth of our exports and 59 million dollars worth of imports from Iran in the first three months of the current fiscal year.

The commercial Attache at the Consulate General of Iran, Ahmad Fasihi recently stated that "the total trade volume will be increased to one billion dollars this year from last year's 420 million dollars after the signing of Preferential Trade Agreement (PTA) between the two brotherly countries."

Both countries have reduced customs duty to 20 percent on 648 tradable items which are included in the list under PTA. However, even the target of a billion dollars, if achieved, would represent a very small percentage of the two countries' total trade; Iran's investments in Pakistan's development or as a source of remittance income remaining negligible.

However, if the IPI project can be implemented, then there is little doubt that the relationship between the two countries would strengthen considerably with Iran not only becoming a major source of energy for our energy starved country but also as a means of earning valuable foreign currency from India if the IPI is completed. India has periodically expressed reservations about relying on an energy supply route through Pakistan, that it regards as a security risk.

However, one would hope that through the continuation of the composite dialogue, a commitment made by President Zardari during his address to the joint sitting of Parliament, as well as their desire to meet their own rising energy requirements would lay to rest most of these reservations.

Of more concern to Pakistan with respect to the IPI, however, are America's reservations about the deal. The US wants to isolate Iran and has not minced words while telling Pakistan governments, past and present, not to go ahead with the deal. The US has been supporting Central Asia as an alternate energy source for Pakistan, though lack of security in Afghanistan has made these proposals difficult, if not downright impossible, to launch.

With energy shortage assuming critical levels in Pakistan and with the US refusing to extend the same nuclear deal as given to India, it is doubtful if any Pakistani government would be able to resist public pressure to begin construction work on the IPI project. Sherry Rehman added that the Pakistani and Iranian presidents agreed to schedule a meeting between their Foreign Ministers, on October 9 and 10, to further plan out the details of the IPI pipeline.

They also agreed to constitute a team of five deputy ministers from each country and establish a joint company and provide it with a sovereign guarantee to facilitate raising capital in Pakistan and the Middle East. The West, of course, is not an option given the fact that sanctions have been imposed on Iran.

There are adequate finances in the Middle East to make this project see the light of day. However, it is extremely doubtful if the Middle East, strong US allies, would be immune to pressure from Washington on the one hand and be able to generate huge amounts of cash required for the project given the global liquidity crunch these days on the other. It is, therefore, clear that the IPI project is unlikely to commence this fiscal year at least.

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## Neo

*Pepco is facing 1500MW shortfall​*
ISLAMABAD, Sept 28: The director general of the Pakistan Electric Power Company, Tahir Basharat Cheema, said on Sunday that the company was experiencing a power shortfall of 1500MW which was being overcome by load-shedding.

Talking to a private TV channel, he said that power generation might drop in October because of shortage of water in reservoirs.

He said that pleasant weather had played a major role in bringing down load-shedding in Ramazan.

However, he said, over the past two days the demand had gone up to 15000MW, forcing the company to undertake load management.

He said the company had prepared a plan to rid the country of load-shedding by August 14 next year.

He said two rental plants with a capacity of 1200MW power would start functioning by

April. Besides, he said, 15 independent power producers had agreed to invest in the country. Three IPPs would start producing power by December this year and others next year, he said.

Mr Cheema said a few more power projects would start production next year, making it possible for the company to end loadshedding by August 2009.

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## Neo

*The non-transparent KESC sale​*
The government has done it again. The KESC has been sold to a real estate developer. Can Pakistan afford another such (mis)adventure which may prove more costly and socially more disastrous? Apparently, care and transparency were not exercised in sale of public assets.

In July this year, the PPP government went whole hog after the owners of the KESC threatening to re-nationalise the utility by invoking certain clauses of the privatisation deal. The KESC was told to either get its house in order or be ready to face action (re-nationalisation). These threats were given by the Federal Minister for Water and Power, Raja Pervaiz Ashraf.

The previous management has left but the questions remain unanswered regarding the terms and conditions on which the new owners have been inducted. Similar questions were raised when the previous owners took over the utility in December 2005. No one answered the questions then, nor anyone is ready to respond now.

What happened to the three-year ban on the sale of KESC to any new buyer? What has the government, which is supposed to save Karachi from darkness and keep economic lifeline of the country intact, has done to ensure that the past mistakes are not repeated?

The Privatisation Commission sold KESC in December 2005 to a consortium comprising Saudi-based Al-Jomiah and Hassan Associates and the Siemens providing technical support. None of them had any previous experience in running a public utility. Siemens is manufacturer of electrical gadgets. The consortiums claims about the turnaround in KESC proved to be a hoax.

The new buyer, Al-Abraj, according to its internet profile, is a land development company based in the UAE, again with no previous experience in running a power utility.

Can an investment company succeed, where one such investor has just failed? Can it be trusted once again? If it can be, as the PPP government seems to believe, on what basis?

To begin with, 73 per cent shares of the KESC were sold at a rate of Rs1.65 per share  at a total cost of Rs15.86 billion  along with management to the previous buyer.

Under the so-called financial improvement plan, the government promised to invest Rs14 billion in next five years, bringing the de facto price down to a mere Rs1.86 billion. As an additional favour, the government reduced face value of KESC shares and total paid capital cost from Rs131 billion to a paltry Rs62 billion.

The government also wrote off Rs92 billion debts to the KESC before handing it over to the new buyer, and a dowry of Rs22 billion receivables from Karachites were given to the new owners  a cumulative loss or accommodation of Rs114 billion on this head alone.

Within weeks, the new owners sold 22 per cent shares to Kuwait Fund at a rate of Rs4.65 per share, thus recovering their own investment in one go. Then what happened to three-year ban on its sale?

Though the government did not make the covenants of sale public, the new CEO of the company, however, shed some light on them in his press conference. He pledged to invest $800 million to improve generation, transmission and distribution of the company in next three months (by February 2006).

When the power supply situation deteriorated in next few months, the government immediately transferred Rs14 billion to the KESC instead of forcing it to make its part of investment. Interestingly, no external audit of the amount has been conducted so far and no one knows where and how judiciously the money was spent. In addition to these Rs14 billion, the government also paid Rs30 billion in subsidy till June last and the KESC currently owes Rs60 billion to Pakistan Electric Power Company. If one adds cost of industrial loss, which the Karachi Chamber of Commerce and Industry puts at Rs400 billion, the magnitude of disaster that was wreaked on financial health of the economy becomes evident.

The power failure has also forced the industry to invest $2billion on power generation of its own, hugely affecting the import bill and hiking fuel import bill by $600 million, as per the KCCI claims.

Instead of revisiting the entire privatisation process in the light of these huge damages, the PPP government seems to have chosen to complicate, rather than altering, the big picture. It never cared to make the sale and its terms and condition public, or re-nationalise the KESC or re-sell it through a credible process.

It also failed to attract credible and experienced buyer through a strict pre-qualification process. No one knows what the new owners are supposed to do and what would be the timeframe to bring improvement in service. The government has already paid a huge cost of non-professional management of the previous owners. It is not known if the government has ensured that the new owners are professionally competent enough to run the utility  improve generation, transmission, distribution and revenue collection.

Does the new purchase agreement include timeframe for such improvements and very stringent rules and regulations to achieve them? And what about a vigilant watchdog to ensure on-time implementation of agreed covenant? Moreover, does the new sale agreement include the condition that assets of the company would not be used for any purpose but for system augmentation?

All other terms and conditions should also be made public by the government to escape the allegations that it has been levelling against the previous government  cronyism, corruption and existence of a nexus between sellers and buyers.


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## Neo

*Wind energy: targets missed​*
The National Energy Security Plan 2005-2030 envisaged development of renewable energy, with focus on wind-power, to achieve, from almost zero to a five per cent share in national power generation mix by 2025. However, the ground realities do not raise any such hopes.

Anticipating completion of the pioneering 150-MW wind-power project and other renewable energy on-going schemes of 30 MW capacity by 2005, the plan envisages progressively adding 700 MW to the national grid by 2010. Another 800 MW to attain a total of 1,680 MW installed capacity by 2015. By the end of 2025, it is planned to have 5,850 MW cumulative renewable/wind energy power, while total power generation capacity at national grid is projected at 110,760 MW.

But the Alternative Energy Development Board (AEDB) has not yet been able to develop a single project worth mentioning, either of wind-power or of solar energy. Tall claims made by AEDB since its inception in July 2003 have proved to be mere rhetoric.

Over the last five years, the AEDB has issued as many as 93 LOIs (letter of interest) to foreign and local investors for setting up a number of wind-farms, each of 50 MW or higher capacity, on build, operate, own and transfer (BOOT) basis. Many other EOIs (expression of interest) are said to be in various stages of processing for approval.

None of the prospective independent power producers (IPPs) however has obtained the letter of support (LOS) as the requisite power purchase agreement (PPA) with Wapda/KESC has not been concluded by any. The signing of an Implementation Agreement (IA) is next step towards achieving financial close for the project. Most of these LOIs have thus become invalid. Interestingly, the government has already allocated 23,645 acres of land in Sindh to 15 prospective IPPs and an additional 10,330 acres of land allocated provisionally to another seven investors.

Initiative for promoting large-scale use of wind-power was taken sometime in 1997-1998, when the United Nations Development Programme (UNDP) undertook a comprehensive study for commercialisation of wind-power potential. The study, completed in April 2001, confirmed that the coastal belt of Sindh possesses enormous potential, of 50,000 MW power generation, for economic and sustainable wind-power development.

The first project identified consisted of two or three wind-farms of 50 MW capacity each in the Gharo-Keti Bunder wind corridor. The project, to be developed by the then ministry of environment, rural development and local government was to take-off in June 2002, but was transferred, at initial stages, to the AEDB on the promise of implementing it on fast track basis.

AEDB was provided Rs100 million by the government for some of the activities related to the project that was basically funded by the UNDP, GEF (Global Environment Facility), a division of the World Bank) and NORDIC of Norway. In addition, technical assistance was provided to the board by the GTZ (German Agency for Technical Co-operation) worth euro 3.50 million and the Asian Development Bank (ADB) amounting to $0.55 million. Instead of implementing the project itself, however, the AEDB decided to associate private sector through international competitive bidding.

After evaluation of the proposals received from many international and domestic entrepreneurs, the board had awarded these projects of cumulative 150 MW capacity to three selected companies. A 50-MW wind-farm will cost about $50 million and spread over an area of 1,000-1,200 acres of land. But, the Sindh government has allotted 19,807 acres of land to these prospective IPPs.

The projects, which were to be completed by June 2005, were re-scheduled twice and the last COD (commercial operations deadline) for the three projects was committed by the AEDB as June 2007. But there is no progress achieved on any of the three projects as yet, and it is not known when the projects could see light of the day, if at all. If implemented in time, it would have helped in reducing present power shortage in the KESC system.

A variety of factors are cited that have impeded implementation of the projects in hand, such as non-availability or longer delivery of wind turbines due to recent surge in international market, and lack of wind mapping and resource assessment.

This is hardly acceptable since all the three projects are being developed by world-reputed manufacturers of wind turbines, i.e. GE Energy of Canada, Vestas of Denmark and Siemens/Fuhrlander of Germany, in partnership with the domestic investors, and have developed similar projects recently in other countries.

On the other hand, the government offers various financial and fiscal incentives to encourage investment in wind-power, including guarantee for power purchase and protection against various risks including that of availability of wind speed that impacts on energy output. The land required for wind-farms too has been made available on subsidised government rates. Tariff for wind power generation has been revised upward a numbers of times, and the latest levelised tariff for the first 10 years is cents 11.6089 per kWh and for next 10 years cents 4.0300 per unit. This is comparable to tariff allowed for thermal power generation projects.

Progress on other wind-power projects, of cumulative 700 MW capacity, also remains unsatisfactory. In all, seven prospective IPPs have completed project feasibility studies, which are reported to be neither bankable document nor of international standard, as required under the policy.

National Electric Power Regulatory Authority (NEPRA) has issued generation licenses to six companies; namely New Park Energy (Pvt) Ltd, WinPower (Pvt) Ltd, Green Power (Pvt) Ltd, Tenaga Generasi Ltd, Milergo Pakistan Ltd and Zorlu Enerji Pakistan Ltd. Meanwhile, a new transmission- line network from Mirpur Sakro to Thatta is being constructed by Wapda/NTDC in order to sustain the load generated by the proposed wind-farms.

Wind energy is rapidly growing energy resource in the world. Today, global installed wind-power capacity has surpassed the mark of 100,000 MW, including on-shore and offshore installations. In 2007, wind-power capacity had increased by a record 20,000 MW bringing the world total to 94,100 MW.

Germany, with 22,200 MW, has the largest wind-based power generation installed capacity, followed by the USA (16,800 MW) and Spain (15,100 MW). Denmark leads in offshore wind-power installations. Emerging markets include India, with installed capacity of 8,000 MW, and China, with 6,050 MW in 2007.

China has made remarkable progress in wind-power developmentfrom 2,600 MW in 2006 to 10,000 MW by August 2008. Now China plans to set up the worlds largest wind-power project in the northwest, consisting of three wind-power plants, with an initial capacity of 6,000 MW to be attained in 2010, and finally reaching at 15,000 MW in 2015. When would Pakistan, which has around 346,000 MW wind-power generation potential, get on the bandwagon?

It is time for effective implementation of action plans and programmes launched by the AEDB. As Pakistan faces acute shortage of power generation, it becomes imperative to exploit, on priority, all possible avenues of energy resources commercially, in particular clean, abundant, inexhaustible, cheap and indigenous resource----that is wind-power! The writer is former chairman of State Engineering Corporation, Ministry of Industries and Production.


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## Neo

*MoU on construction of houses signed with Chinese firm​*
ISLAMABAD (September 29 2008): Pakistan and China XiaJiang Beixin Construction and Engineering Corporation signed a Memorandum of Understanding (MoU) on Sunday (28th September) in the Ministry of Housing and Works for the construction of houses, flats and commercial areas in Islamabad, Lahore, Karachi, Quetta under Prime Minister's Housing Scheme.

Vice President of XinJian Beixin Corporation, Sun Yu and Managing Director, Pakistan Housing Authority (PHA), Raja Muhammad Abbas signed the MoU documents. Federal Secretary, Housing and Works Samiul Haq Khilji, Chief Engineering Advisor, Ali Abid, DG PHA, Shahid Nadeem and members of the Chinese delegation also attended the ceremony.

Under the MoU, the Chinese Company will build low cost housing units for the poor, needy government employees and public besides developing of commercial areas in the respective places, with investment of billions of dollars.

The Federal Secretary Housing and Works, Samiul Haq Khilji said that the delegation of Chinese company held a detailed discussion with Pakistani officials on investment opportunities and expressed their keen interest in the housing projects.

Further, he said that the government is thankful to China for its co-operation in the socio-economic uplift of our country. "Pak-China co-operation in the construction sector would benefit the two countries to learn from each other's experience in this vital field of economy," he added.

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## Neo

*Pakistan likely to export 4.1 million tonnes rice this year​* 
MULTAN (September 29 2008): Pakistan will be able to export 4.1 million tonnes of Rice this year as the government is expecting a higher rice output of about 6.3 million tonnes for the year 2008-09 against last year's 5.561 million tonnes, officials informed Business Recorder on Thursday.

The domestic consumption of rice is about 2.2 million tonnes and if the target of 6.3 million tonnes were achieved, the country would be able to export 4.1 million tonnes of the staple food.

Such huge exportable quantity would help the country to earn foreign exchange that the country needs badly. Last year, the world rice production had failed and Pakistan produced good quality surplus rice and exported the commodity and rice growers earned good return for their hard produce.

Keeping in view the higher returns last year, farmers opted to produce more this year. However, global rice production also returned to the higher side. The expected excessive rice crops led to a downward tendency in the price of the staple food. It is expected that the price of the commodity would fall further in the future and badly affect growers.

Further, the government has announced and set a rice production target for 2008-09 as 5.72 million tonnes from an area of 2.594 million hectare, with 2,205 kg per hectare production.

In 2007-08, 2.515 million hectare area was brought under rice crops while this year, the area increased to 2.594 million hectares, showing a three percent increase in the area under rice crops.

The break-up of the rice target for 2008-09 stands: In Punjab, Basmati production target is 2.666 million tonnes with Irri and others 0.622 million tonnes, totalling the production 3.288 million tonnes.

In Sindh, the rice target is set as 1.776 million tonnes, in NWFP the target is 0.129 million tonnes and in Balochistan it is 0.525 million tonnes. During the Rice Advisory Board meeting held few days ago, Punjab government had informed that the area under rice production in the province had increased by about 13.3 percent on an overall basis, while in Sindh, as per the initial report, the area had been increased by 16 percent.

The overall increase in rice crop areas was estimated at about 13 percent. With this increase, the estimated rice production may exceed six million tonnes versus 5.56 million tonnes indicating an increase of 13 percent based on the last year average yield. The higher or bumper rice production might badly affect the farmers, as their prices would go down in the local market.

In order to safeguard the crop, the government has directed the Pakistan Agriculture Storage and Supplies Corporation (Passco) for the procurement of paddy if prices of the commodity fall in the domestic market. Officials in the Ministry of Food, Agriculture and Livestock told on Saturday that that rice (Irri) production was just arriving in the market and initially it earned Rs 800 per 40 kg but with the passage of time, it began declining and now it is Rs550 per 40 kg and below.

If this declining trend continues, it would badly affect the rice growers and they would not be able to cover even their cost of production. The supply of rice would continue in open market till December this year.

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## Neo

*Zardari vows to put Pakistan on sound economic footing​*
NEW YORK (September 29 2008): President Asif Ali Zardari says it is his vision to take Pakistan forward and put it on sound economic footing. He said this during his telephonic conversation with the Democratic Vice Presidential candidate Senator Joseph Biden here on Sunday. The President said it is in Pakistan's interest to curb the menace of extremism.

Zardari said that the country needs international support to move forward with a comprehensive strategy emphasising economic development of the people. Biden said both the countries have shared interest, in a broad-based and long-term relationship.

Former US President Bill Clinton met President Asif Ali Zardari in New York. They discussed Pak-US relations and the challenges in the South Asian region. Later Senator Hillary Clinton also joined the meeting during which Zardari briefed the US leaders about the democratic government's endeavours to overcome economic and security problems.


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## Neo

*Kashmala urges foreign investors to invest in Pakistan​*
BEIJING (September 29 2008): MNA Kashmala Tariq who is representing Pakistan at the 2008 Summer Davos of the World Economic Forum (WEF) being held in Tianjin urged foreign investors to play their due role in making investments in Pakistan to address the socio-economic problems of the people.

"I have held very fruitful meetings with CEOs of a number of key business tycoons including one dealing with solar energy and another business magnate from Holland that is keen to make investment in dairy and mobile banking in Pakistan, Kashmala Tariq told APP in an interview on Sunday.

She pointed out that while addressing a number of sessions of the WEF and holding meetings with Chief Executive Officers and business tycoons of multi-national companies from around the world who were attending the Forum, she emphasised them to make investment in Pakistan as there are number of international companies who were already doing roaring business in her country.

Speaking on war on terror in which Pakistan is the front line state, she said her country is committed and will continue to play its important role to eliminate extremism and terrorism from all farm of its manifestations.

Kashmala Tariq said that by setting up joint ventures with Pakistani counterparts, the international investors would also contribute greatly to eliminate the extremism and terrorism as unemployment, deprivation and lack of basic amenities are some of the reasons behind this menace.

Referring to law and order situation, she said that there are still a number of international companies doing excellent business and if any businessmen intend to make investment in joint ventures with Pakistani business they would be able to earn huge profit. "The government will give guarantee for their investments and facilitate them in all aspects", she added.

Kashmala suggested to the internationally acclaimed companies that for the women empowerment, it is necessary that they should come forward and allocate a quota of 30 or 50 percent for women in employment to help address their socio-economic challenges being faced by them. To address the challenges of poverty and deprivation is possible only through economic empowerment of women in the world, she observed.

She informed that at the WEF the presence of women was 14 percent and demanded to provide them maximum participation. Meanwhile, the Chinese Premier Wen Jiabao who inaugurated the 2-day WEF on Saturday said that his country has full confidence and capability to overcome various difficulties to ensure sound and fast economic growth.

Wen said China is in the stage of rapid industrialisation and urbanisation, and has huge potential for economic growth. The important period of strategic opportunities for China's development will last quite a long time and even longer period of time, said Premier Wen Jiabao.

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## Neo

*Government focusing on achieving export target of $22.1 billion​*
ISLAMABAD (September 29 2008): The government is focusing on the diversified sectors to achieve the export target of US $22.1 billion set for the current financial year. Sources told agency that a series of steps have been taken to boost exports of pharmaceutical items, gems and stones, furniture and herbal medicines.

In view of the good prospects of pharmaceutical export, the government has decided to support setting up of new pharmaceutical plants by providing an incentive of 90 percent exemption in the first year on investment in plant, machinery and equipment.

Gold, silver, platinum, palladium, diamond and precious stones would be exempted from levy of customs duty and sales tax with a view of increasing their exports. Further, Ministry of Industries would set up a wood seasoning plant and Navtec will set up a couple of vocational training centres on modern lines to promote export potential of furniture.

Similarly, a Flora Common Facility Centre would be set up in collaboration with Punjab government near Lahore while an Irradiation Facility in Karachi to promote floricultural exports.

To promote export of herbal medicines, 50 percent cost of registration of herbal medicines abroad would be picked up by the government. There will be an especial focus on promotion of various activities related to the Prime Minister's programme of "one village one product" with a view of promoting export of handicrafts. The sources said the export policy announced by the present government for the current year 2008-09 is aimed at poverty alleviation, value addition, compliance with international standards, reduction in cost of doing business and diversification of products and market.

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## Neo

*Pepco chalks out plan to end loadshedding by August 2009​*
ISLAMABAD (September 29 2008): Pakistan Electric Power Company (Pepco) has chalked out a comprehensive plan to rid the country of the menace of loadshedding by August 14 2009, Director General and spokesman Pepco Tahir Basharat Cheema said Sunday. Talking to a private TV channel he said two rental plants having the capacity to generate 1200mw power would start functioning by April 2009.

As many as 15 Independent Power Producers (IPPs) have agreed to invest here in the country. Three IPPs would start producing power by December 2008 and others would follow the suit from next year.

And some more power generation projects would start production from next year - making possible to end loadshedding by August next year, he said. Currently the short fall is up to 1500-mw, which is being overcome by load management.

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## Neo

*World Bank's positive Gesture​*
EDITORIAL (September 29 2008): When faced with a crisis situation, even a small gesture of goodwill from a prospective source is welcome. This is true in the case of both individuals and nations. In a meeting with President Asif Ali Zardari in New York, World Bank President Robert Zoellick assured the Pakistani leader of his institution's continued support for the economy of the country.

A $1.377 billion package was being considered to help Pakistan overcome its economic problems, while a $1.337 billion World Bank funded programme was already in the pipeline. The funds will mostly be used for investment in energy and water sectors, besides developing infrastructure in other areas. Assistance will also be provided for development projects in FATA as well as poverty alleviation programmes.

President Zardari apprised the Bank's Chief of Pakistan's macroeconomic stabilisation programme and sought his help in mobilising resources for industrialisation and investment in the country. The political government had taken difficult and tough decisions to meet the current economic challenges and was doing its best to bring the country out of the economic crisis. The President of Pakistan also referred to the Friends of Pakistan group that was being mobilised to support the country's economic recovery.



We feel that the meeting between the President of Pakistan and World Bank's Chief was quite productive so far as spelling out the relative positions and the intentions of the two parties were concerned. While Zardari appeared to be quite convincing in impressing upon the World Bank President that Pakistan was very much prepared to take tough measures for a stabilisation programme envisaged by the government, Robert Zoellick's remarks were quite encouraging and explicitly meant to convey the commitment of continued financial support which by no means is small.

Understandably in a short meeting like this one, which was almost like a courtesy call, the nitty-gritty of the programme could not be finalised but the beginning appears to be good and we hope that the relevant authorities of the country would be able to make the most out of the goodwill generated in the meeting. Pakistan's foreign exchange reserves which had hit a record high of $16.5 billion in October last year dwindled to $8.82 billion on 20th September, out of which only $5.41 billion are held by the State Bank, due mainly to the soaring import bill and political uncertainty.

Some other inflows are expected but whether and when these would materialise or not, is not yet certain. In a situation like this, continued flow of resources on a substantial scale from the World Bank is of critical importance for the country. However, the authorities of the country would need to keep at last two things in mind in this connection.

Firstly, a proper framework for the macroeconomic stabilisation programme and justification for the proposed projects have to be provided for the satisfaction of the World Bank and agreed upon between the two parties. And secondly, we have to retain the sympathies of the western countries, particularly the Americans, to keep the World Bank in a helpful mood. Their quotas and consequently influence in the institution are too overwhelming to be ignored.

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## Neo

*Wärtsilä To Deliver 200 MWe Million Power Plant To Pakistan - Value EUR 131 Million​*
Wartsila; Corporation, Company announcement, 
29 September 2008

Wartsila of Finland received in September an order for a power plant, worth EUR131 million, from Pakistan. The power plant will be delivered as a
turnkey project to Nishat Chunian Power Ltd, which is an independent
power producer that will supply electricity to the national grid in
Pakistan. The plant will have a total electrical power output of 200
MWe.

This latest order follows another power plant order from Nishat Power
Ltd, signed by W&#228;rtsil&#228; earlier this year. These two orders will,
together with other W&#228;rtsil&#228; power plants already under construction
or in operation in Pakistan, produce a combined generating capacity
of more than 1500 MWe.

The Nishat Chunian power plant, which will run on heavy fuel oil
(HFO), is scheduled to be fully operational in March 2010. It will be
located next to the Nishat Power plant on the same site in Jambar
Kalan, Kasur District, near Lahore.

"W&#228;rtsil&#228; and the Nishat Group have worked together as one team. Our
first project, developed by Nishat Power Ltd., is under construction,
and we were pleased to award our second project, developed by Nishat
Chunian Ltd., also to W&#228;rtsil&#228;. We are very happy with the level of
support that we have received from W&#228;rtsil&#228;." says Mr Mian Mohammad
Mansha, Chairman of the Nishat Group.

The Nishat Chunian plant will comprise eleven W&#228;rtsil&#228; 18V46 diesel
generating sets with exhaust recovery boilers. The power plant will
have a high overall efficiency of 45 percent for its lifetime. The
high overall efficiency will enable the generating costs to be
competitive. W&#228;rtsil&#228; is a leading provider of power plants for
distributed and flexible power generation.

W&#228;rtsil&#228; will supply the plant equipment, then erect, test and
commission the plant and provide local construction supervision. An
operations & maintenance (O&M) agreement to operate and maintain the
power plant is also under negotiation.

"We have enjoyed a long standing relationship with the Nishat Group.
With the new orders from both Nishat Power and Nishat Chunian, the
Nishat Group will be our largest customer in Pakistan, with over 490
MW of installed capacity by 2010. This order endorses not only the
reputation of the W&#228;rtsil&#228;, but also the support service capability
that we are able to provide from our regional office in Lahore," says
Nomi Ahmad, Regional Director, Middle East, W&#228;rtsil&#228; Power Plants.

Both Nishat Chunian Power Ltd. and Nishat Power Ltd.are independent
power producers and members of the Nishat Group. The two companies
have signed Power Purchase Agreements with the National Transmission
& Despatch Company. The Nishat Group is one of the leading business
groups in Pakistan with interests in the textile, cement, insurance
and banking sectors.

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## Neo

*Pakistan urgently needs $3-4 bln to stabilise: adviser​*
29 September 2008 

ISLAMABAD - Pakistan needs a capital infusion of $3-$4 billion 'up front' to stabilise its economy and bolster rapidly dwindling foreign currency reserves, said an economist serving on the prime minister's economic advisory council.

Sakib Sherani said Pakistan faces a total financing gap of $7 billion to cover a projected current account deficit of $14 billion for the fiscal year ending June 20, 2009, but not all the funds were needed immediately.

"Up front we need at least 3 to 4 billion dollars to stablise the economy," said Sherani, who is chief economist at Royal Bank of Scotland in Islamabad.

He described the projected financing gap for the current account as a "ballpark figure", that took into account already expected financing, and foreign direct investment and portfolio flows.

"The financing gap could be higher or lower, depending on how world oil prices go and what happens to imports."

There are expectations that multi-lateral lenders and friendly governments will help the six-month-old civilian government avoid defaulting on a sovereign bond maturing in February, though the market has priced in the risk.

Analysts say Pakistan hopes to bridge the financing gap with a Saudi oil facility, around $2.5 billion from multilateral lenders and $1.5 billion in U.S. aid.

Former army chief Pervez Musharraf quit as president last month to avoid being impeached by the parliament elected in February, to bring down the curtain on nearly nine years of military rule.

Pakistan's support is regarded as crucial for the U.S. war against terrorism and for the NATO mission to stabilise neighbouring Afghanistan.

The new government is banking on support from the international community for its transition to democracy while faced with potential economic meltdown and the threat from al Qaeda linked Islamist militants.

A suicide truck bomb attack on the Marriott Hotel in Islamabad that killed 55 people on Sept. 20, has heightened concerns of foreign investors in Pakistan.

Foreign direct investment (FDI) has been concentrated in telecommunications, oil and gas, and banking.

Farhan Rizvi, senior analyst at JS Global Capital Ltd in Karachi, said he expected FDI to to fall to $3-3.5 billion this financial year compared with $5.15 billion in 2007/2008.

Crunch Time

The government does not want a support package from the International Monetary Fund, and is devising its own strategy to tackle a widening current account deficit, an unsustainable fiscal deficit, and inflation running at over 25 percent.

Prime Minister Yousaf Raza Gilani was scheduled to hold a news conference late on Monday that would focus on the government's plans to raise funds through privatisation.

Sherani said potential donors have been waiting to evaluate the government's strategy before pledging funds, but the situation was becoming increasingly desperate.

"Now, whether we have a policy framework or not, the donors need to step in and give us the money," Sherani said.

Data released on Thursday showed total foreign currency reserves had fallen to $8.82 billion in the week ending on Sept. 20, down $90 million from the previous week. The central bank's reserves were put at $5.41 billion.

The current account deficit widened to $2.572 billion in July and August which is equivalent to about 1.6 percent of gross domestic product, and compares with a full-year target of 6.0 percent of GDP.

The rupee was quoted at 78.05/15 to the dollar at noon on Monday, having dropped more than 21 percent since the start of the year to hit a record low of 78.55 on Sept. 22.

The Karachi Stock Exchange has kept an artificial floor under the main share index to protect share prices that have plunged nearly 35 percent this year. Foreign investors have been withdrawing from the market, but had become locked in by the price floor.

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## Neo

*ADB provides $500m financial assistance​*
KARACHI - The Asian Development Bank is set to provide 500 million dollars to Pakistan today (Tuesday) to support the country to stabilise its foreign exchange reserves and to meet its financial obligations, The Nation learnt on Monday.

The ADB had made a commitment with the government to provide 1.50 billion dollars worth economic support to Pakistan in 2008-09, out of which 500 million dollars were being released on today (Tuesday), sources said. They said the federal government had approached the ADB to get released the amount on urgent basis. The senior government officials had raised this issue with the ADB during recent meeting of the Friends of Pakistan forum, held in New York on Friday that was chaired by President Asif Ali Zardari. As a result, the ADB officials had promised to meet this demand of the Pakistan government urgently, said the officials.

Officials said the World Bank would also provide 1.37 billion dollars to Pakistan in FY09 and the bank is expected to disburse the money according to the schedule.

It is worth noting that in first two months of current fiscal, Pakistan had received a record amount of 712 million dollars, whereas in the corresponding months of last fiscal the country had been provided only 99 million dollars from the donors. Thus in monetary terms, Pakistan had got 613 million dollars more foreign exchange during July and August 2008 as compared to the same months of last fiscal.

Official sources said that the disbursement of the economic assistance would increase further in this fiscal as the Friends of Pakistan have promised to come up with economic support in the next meeting, to be held in Abu Dhabi.

During recent meeting in New York, the Pakistan government had demanded 10 billion dollars economic assistance from the Friends of Pakistan.

The dignitaries who attended the Friends of Pakistan forum meeting included the representatives from United Arab Emirates, United Kingdom, United States, Australia, Canada, China, France, Germany, Italy, Japan, Turkey, European Union and United Nations. President of Pakistan Asif Ali Zardari chaired the meeting in New York last week.

In 2007-08 the disbursement of economic assistance to Pakistan amounted to 3.05 billion dollars as against 2.76 billion dollars in 2006-07.

However, in 2008-09 the government is expecting the disbursement of well over 4 billion dollars.

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## Neo

*Mango export falls by 20pc​*
ISLAMABAD, Sept 29: Mango export witnessed more than 20 per cent decline this year than last year as Pakistan received the lowest per kg rate for its mango in the international market due to poor quality.

Sources in the Pakistan Horticulture Development and Export Board (PHDEB) told Dawn on Monday that by the end of August, the country had exported 79,000 tons of mango, 36,000 tons less than 115,000 tons exported till the end of August 2007.

Of the total shipments, 58,000 tons was sent by ship and 21,000 tons by air to major destinations, including UAE, Saudi Arabia, Oman and the UK.

The drop in export is being attributed to high domestic price. The country had to export out-graded fruit this year due to decline in production owing to which its per kg price remained the lowest in the international market and far behind its Indian competitor, an official in the Federal Ministry of Food, Agriculture and Livestock (Minfal) told Dawn.

Lack of proper post-harvest handling is yet another reason of poor quality of Pakistani mango as farmers were not able to properly determine the fruit maturity time.

A PHDEB official said that slow pace of export continued throughout the current month as well and that exports could hardly touch the figure of 90,000 tons at the end of the season compared to 120,000 tons exported last year.

Minfal believes that new awareness plans about international requirements, including Global GAP certification needed to be launched.

It says efforts should be made to develop pack-houses on modern lines and provide cool-chain facilities to avoid huge post-harvest losses.

Farmers also need to be trained in fruit maturity determination by using maturity guide, refractometers and visual observation of fullness of cheeks and skin appearance.

Pakistans fruit exports, during the fiscal year 2007-08, surged by 27 per cent in terms of value and 20 per cent in terms of volume despite multifarious irritants faced by the fruit exporters during the export process and non-cooperative attitude by foreign shipping lines operating their services between Pakistan and different destinations across the globe.

During the previous fiscal year of 2006-07, quantity of fruit export was 343.424 tons, with a value of $113.635 million.

During 2007-08, it grew to 413.726 tons with a net value of $144.676 million, depicting an increase of up to 27 per cent during the period.

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## Neo

*Gwadar oil city project stumbles ​* 
Wednesday, October 01, 2008

ISLAMABAD: A mega oil city at Gwadar port, which is the most strategic project with an investment of $40 billion, has hit snags as the process of acquiring land has been delayed because of a massive rise in prices of real estate.

The Government of Balochistan has informed the federal government that the cost of land for the oil city has increased manifold, which is why it is not possible to acquire land on nominal rates.

The government wants to establish at the Gwadar port the biggest crude and refined oil storage base in the region, for which it had allotted 12,500 acres of land in 2006. It had announced that the required land be made available on lease at nominal rates to interested parties for setting up refineries or making investment in oil logistics and storage facilities.

But in the latest scenario, the cash-strapped Balochistan government has no money to pay the high cost of the land needed for the project.

An official said the Balochistan administration had told the Centre that it had identified 100,000 acres of land for the project at a cost of Rs38,000 to 40,000 per acre. Balochistan also requested for release of Rs3.8 billion to acquire the land and warned of more increase in land prices if funds were not released timely.

Under the plan, the official said, the project would be executed in two phases. In Phase-1, a petrochemical city will be set up with an initial investment of $12.5 billion. In this city, a big refinery, along with petrochemical, oil logistics and storage complexes will be set up.

In the first three years, the refinery will be able to refine 10.5 million tonnes of oil annually. This capacity will be increased up to 21 million tonnes in seven to nine years.

The official said Chinese Petroleum Chamber would come up with a $12.5 billion investment plan for the project.

On behalf of China, Great United Petroleum Holdings Company Limited (GUPC) is working on the feasibility study of the petrochemical city project.

The official said GUPC would first conduct the feasibility study and preparation work for the project and then both countries would enter into a formal agreement for materialising the petrochemical city project.

The official said GUPC would also build 1,000-2,000 service stations in Pakistan as service terminals for the petrochemical city.

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## Neo

*KSE requires Rs30-40bn to stabilise near 9,000 points ​* 
Wednesday, October 01, 2008

KARACHI: According to a local brokerage houses comprehensive report, the Karachi stock market immediately requires Rs30-40 billion to stabilise near and around 9,000 points, otherwise the KSE 100-share index can fall to 7,000 points ahead of floor removal.

The current market is running under a floor price mechanism since August 28. KSE Board of Directors has hinted to remove this floor sometime in October along with introducing a market rescue package. In this regard, they have called on Governor SBP and have reportedly conceived the idea of constituting a market rescue fund.

So far the market has fallen by 41 per cent or 6,500 points to date from an all time high closing of 15,676 points on April 18. During the same period, an outflow of over Rs1.9 trillion was also recorded from overall market capitalisation.

According to JS Global Research, market needs fresh injection without any delay as each passing day is affecting investor morale and confidence. While the size of the fund needed is a tricky question, we believe, if Rs30-40 billion ($400-500 million approximately) is injected, the market may stabilise close to 9,000 points level.

If availability of funds is less than the actual requirement, investors could see the index falling 12-25 per cent to 7,000-8,000 levels after the lifting of the price floor mechanism. This assumption is based on historic trends using years 1999 and 2002 as proxies for a worst case scenario, the brokerage house said.

It expects recovery in the medium term in case Pakistans external account position improves in the first half of the calendar year 2009. Though reaching to its original (earlier expected) target of 14,000 looks difficult, brokerage said it expected a recovery in the medium term.

Strategy: Worsening global market conditions may not help Pakistan in attracting huge FDI in the short to medium term. This, coupled with the governments slow movement to tackle serious economic issues, raises the probability that Pakistan will seek an IMF programme. And if that happens by the beginning of the first quarter of 2009, one may see investor confidence improving and stock market providing opportunities. The IMF programme would help to chalk a sound long term macroeconomic policy framework, which would enforce fiscal discipline along with addressing structural problems. Moreover, monitoring by IMF would instill confidence amongst other potential investors, hence paving the way for foreign inflows into Pakistan.

In the medium term, the house advised investors to also look for stocks trading on cheap multiples and offer decent growth opportunities. Thus, besides HUBCO, PPL and FFC, it recommended investors to gradually buy OGDC, POL, PSO, ENGRO and PTC for the medium term.

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## Neo

*Pakistan risks expulsion from MSCI index​*
LONDON, Sept 30: Pakistans imposition of a floor under its main stock index could see it expelled from the benchmark MSCI emerging equities index while Colombias recent easing of investment curbs could help the country remain in it, the index compilers research head said on Tuesday.

If capital controls are strict and prevent investors from moving in and out, that country needs to leave the index, Remy Briand, global head of index research at MSCI Barra, told Reuters.

Definitely the situation in Pakistan is not good.

Fund managers and other investors use MSCIs emerging markets index to benchmark their investments, and removal from the index can exclude companies or markets from capital flows due to fund regulations.

The Karachi Stock Exchange imposed a floor on its benchmark 100-share index on Aug 27 as part of a series of steps taken by authorities there to protect share prices.

Colombia, along with Argentina, is among the countries with capital controls that could be removed from the MSCI Emerging Markets Index as part of a wider consultation expected to end by December.

But Colombia lifted its restrictions on foreign portfolio investments in shares on September 1.

We are monitoring the situation but its a positive development. If there are no capital controls, there is no reason why we should transition Colombia

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## Neo

*Govt to build shipyards in Karachi & Gwadar​*
ISLAMABAD: The federal government has decided to build shipyards in Karachi and Gwadar to meet the growing needs of shipping lines.

A committee has been constituted to finalise the sites for building shipyards and submit its report before the policy board within two weeks for final approval.

Prime Minister Syed Yousuf Raza Gilani, while expressing governments resolve for the development of shipbuilding industry in Pakistan, said that the setting up of two shipyards at Karachi and Gwadar would go a long way in catering to domestic as well as international needs.

The Prime Minister observed this while chairing a meeting to review the progress on the development of shipbuilding industry in the country here at the Prime Ministers house this afternoon.

The Prime Minister constituted a committee under the chairmanship of the Minister for Ports and Shipping, Qamar Zaman Kaira, to finalise the sites for building shipyards at Karachi and Gwadar.

The Prime Minister emphasised upon the need to make Pakistan a leading shipbuilding country of the region thus contributing towards economic development and poverty alleviation.

While highlighting Pakistans unique geo-strategic location and trained manpower, the Prime Minister said, advantage needs to be leveraged to enter into shipbuilding industry in a big way through joint venture with reputable international shipyards. He said shipyards not only generate employment opportunities but also develop wide range of ancillary industries.

Earlier, MD Karachi Shipyards briefed the Prime Minister about the progress made on the development of shipbuilding. He also apprised the Prime Minister that two world-class shipyards on Joint Venture basis are proposed to be built at Gwadar and Port Qasim.

Minister for Ports and Shipping, Qamar Zaman Kaira, Chief of Naval Staff, Admiral M. Afzal Tahir, Secretary Defence Production, Secretary Ports and Shipping, Secretary Planning, Secretary BOI, MD Karachi Shipyard also attended the meeting.

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## Neo

*Govt plans to divert floodwater for irrigation purposes​*
ISLAMABAD: In order to prevent heavy losses to the crops by flood and to divert the floodwater for irrigation purpose, the government has planned a scheme Remodeling measures for dhana sadoori irrigation scheme on porali river with cost of Rs 158.889 million.

The scheme would also help the government to protect agricultural land, town and infrastructure from the threat of flooding and will provide drinking water supply facilities to the inhabitants of the area. The recent floods across the country brought destruction particularly to the agriculture of the country along with loss of precious human lives and property. The government is now taking appropriate steps for controlling the effects of floods, a senior official in the ministry of water and power told Daily Times here on Tuesday.

Under this scheme, the government would construct two escape structures at Usman Wali and Mehrullah Bunds. According to the working paper of the project, strengthening / raising of existing DhanaSadoori and Mehrullah Kulli Gharib Bunds would be carried out. The government has allocated Rs 500 million for the project in the Public Sector Development Programme 2008-09.

Pakistan is an agricultural country with largest irrigation network in the world. About 64 percent of its population resides in the rural area, 57 percent of rural workforce is engaged in agriculture and 23 percent of GDP is attributed to agriculture.

However, the per capita availability of water, which was 5650 cubic metres in 1951, has been reduced to 1200 cubic metres and is projected to drop to the critical limit of 1000 cubic metres by 2010. This is a very alarming situation and it is, therefore, of utmost importance that water is used judiciously, efficiently and wastage of water should be avoided.

The project would help the government to address various problems like water scarcity, need for additional reservoirs, safe disposal of drainage effluent to sea, protection of infrastructure form onslaught of floods, mining of ground water, and seepage losses in irrigation system.

Explaining details of the project, the official said Dhana-Sadoori and Mehrullah  Kulli Gharbi complexes were constructed by irrigation department in 1968 to divert the floods flows of porali river from where Old Gidri, Lakhar and sheh Gidri channels receive irrigation water.

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## Neo

*Electricity shortage increases to 2,100 MW​*
LAHORE: The shortage in electricity has started increasing once again, reaching 2,100 megawatts on Tuesday. The Pakistan Electric Power Company (PEPCO) has claimed however that there will be no load shedding on the eve of Eidul Fitr.

Sources in the Water and Power Development Authority (WAPDA) told Daily Times on Tuesday that PEPCO had asked all electricity distribution companies to carry out load shedding for four to six hours a day. The sources said PEPCO had also asked all the companies to announce the load shedding schedule after Eid, so that consumers could make adjustments to their daily schedules. Currently, all the distribution companies are forced to carry out load shedding due to the extra demand on the system, they said, adding that electricity demand had reached 16,000 to 16,500 megawatts, while the generation remained at 14,000 megawatts to 14,500 megawatts.

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## Neo

*ADB releases $500 million from $1.5 billion loans ​* 
KARACHI ( October 01, 2008): Asian Development Bank will provide $1.5 billion in three tranches under the Accelerated Economic Transformation Programme. The first tranche of $500 million was released on Tuesday, under a formula based approach, after the Federal Cabinet approved.

(A) Consolidated supervision law whereby State Bank of Pakistan will regulate all kinds of deposit taking in the country; thereby transferring leasing companies, investment banks and Development Financial Institutions (DFIs) from supervision of Securities and Exchange Commission of Pakistan (SECP) to SBP;

(B) Cabinet has approved the Draft of Anti-Money Laundering Law and approval of Ministry of Law for issuance of an Ordinance or passage of law by Parliament is awaited; and;

(C) Raising the minimum capital for banking companies to $300 million already in offing. The next tranche of $500 million is expected to be released after Pakistan complies with Basel-II requirements; establishes a deposit protection scheme and modernises the SBP Act to effectively become the lender of the last resort.

The programme for the third tranche of $500 million will be drawn up for compliance later by SBP. The ADB loan basically uses this vehicle for easing Pakistan's balance of payments difficulty.

According to reliable sources the full amount of $500 million (Rs 39 billion) will be utilised to retire the SBP debt. Government had committed not to borrow from SBP after July 1st, 2008 and retire Rs 22 billion of existing borrowing by 30th September 2008. Contrary to the commitment over Rs 160 billion were borrowed during the first seven weeks of the first quarter. With last date for tax return extended to October 31st, it would be difficult for the government to meet its commitment.

A press release issued by ADB from Manila says: The Asian Development Bank (ADB) has approved a $500 million loan to support Pakistan's efforts to address harm done to poor families and the country's economy by unprecedented international food and fuel price hikes.

The ADB loan will support ongoing changes in the energy and agriculture sectors, and will help lay the foundation for a radical transformation of the economy by diversifying, deepening and expanding a competitive industrial sector, and creating much-needed jobs for Pakistan's young and growing labour force.

ADB support comprises a key part of a global financing plan underpinning the government's economic stabilisation program. The stabilisation plan includes actions to shore up and manage foreign reserves, improve monetary policy, trim the fiscal deficit and, its financing gap, and cut back on government borrowing from the State Bank of Pakistan. The stabilisation plan is focused on protecting the poor through special safety net programs, and reassuring financial markets through fiscal and monetary discipline.

"Addressing the impact of fuel and food price increases unleashes immediate benefits to Pakistan's people and to markets," said Juan Miranda, Director General of ADB's Central and West Asia Department. "The fiscal space created by reforms will cut financing gaps, generate conditions for a better deal in the sectors down the road, and provide much-needed cash flow to pay for safety net programs that protect the most vulnerable. ADB's support balances the need for addressing the needs of Pakistan's people while reassuring markets that the government is on the right track with its ongoing economic stabilisation program."

The stabilisation plan was formulated by the Government, with technical advice from other parties. "ADB financing takes place within the context of this stabilisation framework," added Mr Miranda. "We are one of several parties contributing to the financing of this plan; others will soon follow with their own financing and programs."

Pakistan will strengthen the legal and regulatory framework of its financial sector through the ADB program. The State Bank of Pakistan, working closely with the government, has undertaken a series of actions to improve risk management in the sector, strengthen payment systems and protect consumers. This will create stability at a time when international markets are in turmoil.

"The measures supported by ADB's program will benefit ordinary Pakistanis, directly as well as indirectly," said Mr Miranda. "Timing is of the essence here." ADB is a major financing partner of Pakistan. Its strategy focuses on three areas: infrastructure (roads, irrigation and logistics), utilities (power, energy, urban services) and reforms (including social service provision and finance, public financial resource management, financial sector intermediation and capital markets development).

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## Neo

*India may ease FDI norms for Pakistani firms​*
NEW DELHI (October 01 2008): India may ease foreign direct investment (FDI) norms for Pakistani companies once political situation becomes more stable in Pakistan. Indian state minister of Commerce & Power Jairam Ramesh said the country would lift restrictions on investment from Pakistan just as it did with Bangladesh a few months back.

He said investments from Pakistan are not allowed due to security concerns. He said FDI could be allowed from Pakistan on a case-by-case basis and not through automatic route. FDI approvals to Pakistani firms could be granted through Foreign Investment Promotion Board (FIPB).

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## Neo

*Bilateral trade, poverty: Pakistan and India need to be flexible in tackling South Asian issues​* 
ISLAMABAD (October 01 2008): Pakistan and India have a leading role in regional grouping and the two countries can ensure a good future to masses if they show flexibility, which will immediately result in augmenting bilateral trade to the tune of 10 billion dollars, said Dr Murtaza Mughal, President of Pakistan Economy Watch (Pew) here on Tuesday.

"Both the countries are major players in South Asian Association for Regional Cooperation (Saarc) and their positive role can help provide relief to 500 million poor living in South Asia", Dr Mughal added. He said that if the Saarc members set aside the political differences, a new era of growth would spur and Pakistan would reap dividends, as Asia would be world's centre of economic activity by next decade.

Pakistan needed to avail of this chance and initiate preparation as "we have missed many opportunities in past," he said, adding that Pakistan would be world's leader in textiles and banking. He said that 500 million people were living below poverty line in South Asia and their plight would end only if the region could grow at a rate of eight percent, which was possible only in presence of enhanced regional trade.

He said that regional trade was five percent of the total Saarc trade activity, while the trade among Association of Southeast Asian Nations was 30 percent. Intra-European Union commerce had been estimated at around 55 percent he added. Dr Mughal stressed the need for evolving common strategy the purpose, and said India should rethink about her aims of regional dominance and expansionism, otherwise everybody, including New Delhi, would be at the loosing end.

He said that New Delhi was mulling to ban foreign direct investment (FDI) from Pakistan, which would send very negative signals, and added that the region needed to focus on FDI, tourism, deficits and technical expertise in which it was behind other regions. "Political differences, corruption, lack of proper infrastructure etc are also stumbling blocks," he said, adding that agriculture insurance was a very positive step that could change the fate of Pakistan if executed properly.

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## Neo

*LSM growth down by four percent in July​* 
KARACHI (October 01 2008): Large Scale Manufacturing (LSM) growth has decelerated and witnessed a decline of some 4 percent during the first month of the current fiscal year due to negative economic indicators, high interest rates, and shortage of utilities.

LSM already had presented poor performance during the last fiscal year and registered a six-year lowest growth of 3.76 due to the political uncertainty, power shortage, and deteriorating law and order situation.

The performance of the manufacturing sector had been impressive during the last five years, as it had posted an average growth over 10 percent per annum since 2003. However, the battles on political front, poor law and order situation, and negative economic indicators have pushed the LSM growth in a downward side.

The Federal Bureau of Statistics (FBS) on Tuesday informed that the Quantum Index Number of LSM industries shows a negative trend of some 3.85 percent during July 2008 as compared to July 2007.

The Quantum Index Number of LSM industries stood at 196.64 points in July 2008 as compared to 204.52 points in July 2007. Official provisional statistics of Quantum Index Numbers of Large Scale Manufacturing Industries (QIM) of FBS depicting the production of major industries in the country have not been growing.

QIM shows the industrial productivity of the 100 items received from different sources ie Oil Companies Advisory Committee (OCAC), Ministry of Industries & Production and Provincial Bureaus of Statistics. The OCAC supplied the data of 11 items, the Ministry of Industries & Production supplied the data of 35 items and Provincial Bureaus of Statistics provided data for 54 items.

Major share in present negative growth has contributed by OCAC, as during the July 2008 OCAC index have declined by 5.14 percent to 173.94 points from 183.37 points while, the ministry of industries index has dipped by 3.35 percent to 185.25 points.

The LSM growth during July 2008 also has registered a decline of 7.21 percent in growth, when compared to June 2008. As in June 2008 QIM stood at 211 points. Economists said that poor law and order situation, high interest rates, shortage of power and other utilities are the major contributors to the slow growth of LSM in last fiscal year and in July 2008. The production of petroleum products has decreased by 5.14 percent during July. In addition the production of cigarettes, soda ash, motorcycles and tractors registered a growth of 20.30 percent, 0.36 percent, 1.40 percent and 10 percent, respectively during the first month of the current fiscal year.

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## Neo

*Manpower shortage in re-rolling sector: EDB for hiring workforce from neighbouring states​* 
KARACHI (October 01 2008): To overcome the acute shortage of skilled manpower in re-rolling sector, which is heading progressively towards world level of automation and modernisation, it was decided that experts and technicians from neighbouring countries specially India may be allowed to work on work visas.

This was one of the important decisions taken at the 3rd meeting of the committee on development of steel industry, Engineering Development Board (EDB), Ministry of Industries, Production & Special Initiatives held last month in Islamabad. Recommendation of EDB and respective association would be required for seeking visas.

The non-availability of skilled manpower is adversely affecting this import sector of industry. To put new technologies in practice, the industry desired to have skilled personnel for trouble shooting of day to day problems. The meeting, therefore, considered it appropriate and in the best interest of this sector and the country if the government approved the EDB decision.

The immediate hurdle being faced by re-rollers is the uncertainty and slow down of economic activity in the country. The sale of finished products of steel has considerably gone down resulting in idle capacity of re-rolling industry at the moment. In order to fully utilise the available capacity in re-rolling industry its exports should be encouraged through reduction or removal of 25 per cent RD on export of steel products. This will help bring precious foreign exchange to the country as well.

Re-rolling mills association desired that EDB take up the issue of unscheduled breakdown and tripping of power due to poor maintenance of supply system with the concerned authorities.

Since most of the steel melting units are fragmented with small capacities, continuous casting machines and refining facilities can not be installed. PEPCO supplies only 5,000 KW load on B-3 tariff to these furnaces. Therefore, to meet the requirements of extra load a separate grid station is required to be installed. The cost of grid stations varies between Rs 70 million to Rs 150 million depending upon the capacity, which is very difficult for the entrepreneurs to invest from their own resources or through normal banking channels. The meeting, therefore, recommended that both steel smelters and steel re-rolling associations should qualify for availing LMM facility on recommendation of EDB for setting up of grid stations.

Steel smelting industry is also confronted with severe dearth of skilled and qualified smelters to identify the use of proper scrap and produce quality steel. Steel melters, therefore, desired to seek the help of EDB to arrange experts for training and knowledge sharing initially through workshops and seminars. Further it was also recommended that work visa may also be arranged on the recommendations of EDB and melters association for experts to be arranged from neighbouring countries to immediately overcome this problem in the short run.

Industry desired to improve environmental problems and control the menace of pollution. But no organisation in Pakistan has adequate knowledge to guide the industry to achieve this goal. India has effectively overcome this problem and EDB should arrange a seminar for the local industrialists to appraise them of the strides made by India in this field.

The steel melting units consume more than 600-700 Mega Watts of power alone. The meeting was of the opinion that this sector could and should shift to captive power generation based on local coal, which would not only reduce the burden on the existing PEPCO system but would also reduce the cost of production. EDB should arrange a workshop initially with the most renowned manufacturers of power plants from countries like China and India to appraise the local industrialists and if found feasible LMM facility should also be extended on long-term basis to set up such power generating units along with the permission of synchronisation with national grid.

The melting industry desired that import of DRI as a replacement of normal steel scrap should be allowed immediately at zero-rated sales tax and import duty through land route from India. This would enable the industry to produce better quality of steel and shall also induce interest among the local steel smelters to set-up their DRI plants based on local ores in the long run.

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## Neo

*Economic development and terrorism: Pakistan, US discuss advancing cooperation​*
WASHINGTON (September 30 2008): Pakistan and the United States on Monday discussed advancing co-operation in wide-ranging fields including economic development, counter terrorism, education, energy, and agriculture as Foreign Minister Shah Mahmood Qureshi and Deputy Secretary of State John Negroponte co-chaired the strategic partnership dialogue.

Senior Pakistani officials including Foreign Secretary Salman Bashir, National Security Council Adviser Mahmud Ali Durrani, Ambassador Husain Haqqani assisted the Foreign Minister in the third round of dialogue at the State Department, which called it a "symbol of US long-term commitment" to the South Asian anti-terrorism partner.

The dialogue, following a meeting between President Asif Ali Zardari and President George W Bush last week on the sidelines of the UN General Assembly in New York, also focused on security co-operation including anti-terrorism efforts, defence supplies and coalition support fund. The two sides looked at ways to further enhance co-operation for socio-economic development in tribal areas and progress towards establishing preferential trade programme of reconstruction opportunity zones, legislation on which is pending before US Congress.

The Strategic Dialogue trades working groups on education, economic growth, energy, science and technology, and the new agriculture working group, deliberated on developing specific proposals for joint action by the US and Pakistan to achieve the shared development objectives. "The Strategic Dialogue is a symbol of our commitment to a stable, broad-based and long-term relationship serving the interests of both the United States and Pakistan," Spokesman Sean McCormack said in a statement over the weekend.

The US side included Richard Boucher, Assistant Secretary of State for South Asia, Donald Camp, Principal Deputy Assistant Secretary for South Asian Affairs, Ruben Jeffrey, Under-secretary of State for economic, energy and agricultural affairs and senior State Department counterterrorism adviser. At the conclusion of the meeting, the two sides will release a joint statement.

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## Neo

*'Hydel power potential of NWFP enough to overcome energy crisis'​*
PESHAWAR (October 01 2008): The country is blessed with an enormous hydropower and the prevailing energy crisis could be overcome by exploiting the resources properly. Managing Director Sarhad Hydel Development Organisation (SHYDO), Engr S Ishtiaq Hussain Shah expressed his views here on Tuesday.

The country at the moment is facing worst power crisis of its history and there is an urgent need to focus on initiating both small and large size hydel power projects, besides developing alternative means of energy in view of the growing power demand.

Although the current electricity crisis has badly affected every sector of life including the domestic consumers yet the business sector was the badly hit which was ultimately affecting the economy of the country besides being a major contributing factor for price hike and inflation, he said.

Moreover, he maintained that with a view to explore and develop the hydropower potential in the Province, the NWFP Government set-up Sarhad Hydel Development Organisation (SHYDO) in 1986 that work under the administrative control of Irrigation and Power Department NWFP.

In line with its objectives, SHYDO has completed the feasibility report of several hydel projects, including Daral Khwar, Batal Khwar in district Swat, Ranolia and Summar Gah in district Kohistan, besides identifying 12 sites for small hydel projects with the capacity of 80 MW power generation in district Chitral.

Moreover, several large hydropower projects, including Khan Khwar, Allai Khwar, Duber Khwar were under implementation by Wapda whereas the feasibility study of Chor Nala, Spat Gah, Keyal Khwar and Kandiah was in process.

Engr S Ishtiaq Hussain Shah said that Pakistan is blessed with a hydel potential of approximately 40,000 MW out of which 70 per cent is located in NWFP adding that the total installed capacity of hydropower stations in the country was about 6595 MW with 50 per cent share of NWFP that produce 3767 MW.

He informed that a number of hydel projects with the total capacity of about 700MW in NWFP are under implementation adding that 6000 MW of hydel potential has been identified by the organisation so far that was under various stages of planning.

He said that SHYDO could issue Letter of Intent (LOI) up to 50 per cent Megawatt capacity hydel projects to private investors as per the revised Hydel Power Policy NWFP, while the Private Power and Infrastructure Board (PPIB) and Wapda could issue the LOI for more than 50 MW capacities.

Ishtiaq Hussain Shah said that Malakand-III project has been completed that could produce 81 MW. Power generation from the project has been started which would earn two billion rupees in the head of the net hydel for the Province annually as compared to the six billion rupees earned by other hydel projects of Tarbela, Jaban, Warsak and Dargai.

Giving details about the on-going hydel projects, he said that Pehur hydropower project with the capacity of 18MW power generation would be completed by the end of the current year whereas Reshun and Shishi hydel projects with the total capacity of 4.2 and 1.8 MWs respectively have been completed in Chitral.

He said that the present government has realised the hydel potential of the province and has not only financially supported SHYDO but has also assured to authorise the organisation to issue LOI of up to 200 MW to private investors.

In reply to a question about the current shortfall of electricity in the Province, he said that NWFP was facing the shortage of 400 MW, as the total requirement of the Province was 2100 MW whereas it was receiving 1,700 MW.

Furthermore, he added that the total power requirement of the country stand at 17,000 Megawatt whereas the current power production was 13,000 MW taking the shortage to 4,000 MW.

The feasibility report of Daral Khwar, Ranolia Machai hydel projects were completed with the assistance of Asian Development Bank (ADB) and the construction work on these projects would be started by the end of the current year, he added. Similarly, mega hydel projects costing millions of US dollars were under construction by Wapda, he said, adding that these projects include Allai Khwar (121 MW), Duber khwar (130MW), Kheyal Khwar (130MW), Khan Khwar (72 MW), Golen Gol (106MW) and Gomal Zam Dam (17.4MW).

He said that NWFP could produce 864 MW of electricity if only the feasible hydel projects in Swat valley were completed that would help in overcoming the power shortage that has badly crippled different activities of life.

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## Neo

*'Pakistan may address energy crisis through Chinese technology'​*
BEIJING (October 01 2008): Pakistan can address to a large extent its power crisis through Chinese innovative hydro power generating technology, said a senior official at Pakistan Embassy in an interview. "China has advance technology of generating electricity through small and medium size hydro power plants and Pakistan can greatly benefit from it", Counsellor Technical Affairs Syed Ali Tallae told APP after a visit to Hanzhou Province where these plants were functioning successfully.

He said during the visit, the Chinese side showed one of the demonstration projects that could conveniently generate 2-MW electricity. Through this most modern technology, a 40-meter deep tunnel is excavated and with the thrust of pouring water on the turbine through the tunnel it starts generating 2-MW electricity.

He further explained that the tunnel for passing water was excavated at water level of a lake, similar to the Rawal Lake in Islamabad. Tallae pointed out that the Hanzhou Provincial Government had informed that generating electricity through this technology could greatly benefit Pakistan to address its energy problem.

He further said the Chinese side also indicated their willingness to lay a network of such kind of small hydro power plants in Pakistan on turnkey basis. The Chinese side, he said, had also indicated the possibility of setting up a demo-plant at Gulberg Canal in Lahore with specifically construction design.

Tallae said that in China, the definition of small Hydro Power station ranges from 100KW to 50MW, while below 100KW was called Micro-Hydro Power Station. The Dam on lake could also be constructed to control the flood, he said.

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## Neo

*Barnai Area Development Programme: household income of beneficiaries will increase to $147-724 by 2016​* 
FAISALABAD (October 01 2008): Improved household income and health in four Barani area districts of Punjab province would increase household income of beneficiaries of Barnai Area Development Programme to $147 and $7,724 per annum by 2016, depending on land tenure and farm size.

According to project review report of Barnai Area Development Programme by Punjab Government, by 2013 the promgramme will convert 11,500 hectare of rain-fed agriculture to irrigated agriculture and will improve irrigation of 10,000 hectare on existing small dams.

Punjab Government hoped that 100 per cent increase in crop yields and 35 per cent increase in livestock production for 22,000 beneficiary farms. Also 65 metric ton increase in fish production in Barani Areas, increased access to domestic water (90 liters per capita per day) for 9,050 rural households, at least 3 per cent of the incremental stored water released in bulk to nearby rural towns, after completion of this project with the financial assistance of Asian Development Bank.

Punjab Government sources stated that Agriculture and livestock have been the traditional sources of revenue for people in Barani areas, still account for 40 per cent of their income in Punjab.

Improvement in livelihood for Barani residents, especially for a large majority of small landholders and tenants, will depend to a large extent on gains in agriculture and livestock productivity and growth in the local non-farm sector. Improvement in both on-farm and non-farm sectors is constrained by several factors common to rural areas of Pakistan.

Among the constraints are (i) impeded access to markets, inputs, and services due to inadequate or non-existent transportation infrastructure; (ii) lack of access to electricity, with negative consequences for the productive potential of both the agriculture and non-farm sectors; (iii) productivity constraints arising from the lack of access to and inadequate social services; (iv) lack of access to finance and business development services; and (v) poor access to agriculture and livestock advisory and support services.

The Government with external support is currently giving considerable emphasis and committing significant resources to address those constraints. The constraint that most significantly affects Barani areas and agricultural and livestock productivity is shortage of water.

With no or limited secure water sources, farming depends on rainfall, which is irregular in both annual and seasonal amounts as well as intensity in any given storm event. Farmers have developed farming systems with very low input requirements to keep the financial risk of crop failures manageable. This practice results in low productivity. The primary crops grown and their average yields are wheat (0.5 tons/ha [t/ha]), maize (0.7 t/ha), and groundnuts (0.4 t/ha).

In contrast, irrigated yields are as follows: wheat (3.1 t/ha), maize (1.7 t/ha), and groundnuts (1.5 t/ha). In addition to lower average yields, Barani areas are highly susceptible to prolonged drought and associated poverty shocks due to the absence of reliable surface or ground water sources. The most recent 2001-2003 drought had a devastating effect, especially on the more arid parts of Barani areas, and forced many families to migrate to urban areas, sell off productive assets, and face serious indebtedness.

The scarcity of reliable perennial water sources, including groundwater, also poses serious challenges to the provision of municipal water to the quickly growing rural communities and small towns in Barani areas. It constitutes a serious impediment to the sustainable development of local industrial and service activities, and represents a tremendous burden and loss of productive potential on families, mainly women, who may spend hours collecting water on daily basis.

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## Neo

*Punjab government to spend Rs 11.3 billion on irrigation system​* 
SIALKOT (October 01 2008): Punjab government is spending Rs 11.3 billion during current fiscal period on the improvement of irrigation system in the Province. Official sources told Business Recorder here Tuesday that under the programme 37,000 kilometres long irrigation network would be improved in Punjab. Special attention would also be accorded on minimising the chances of wastage of irrigation water throughout the Punjab Province.

The Provincial Irrigation system is one of the most important assets and is playing an important role in the promotion of agriculture sector by ensuring sufficient water for the crops.

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## Neo

*Crisis in KSE - a survey​*
ARTICLE (October 01 2008): Everywhere the performance of Karachi Stock Exchange (KSE) was being lauded. The Stock Index stood at its historical peak of 15,676.It looked as if the capital from all over the world was gravitating towards Pakistan, despite the deteriorating law and order situation in the country, and investors were keen on Pakistan's equity market with unwavering confidence, even though the crude oil prices were setting new records daily in the world markets; our own economic indices were headed down and the economic fundamentals had no correlation with the stocks indices.

The only reason was that there was ample liquidity in the system at that point in time, which now no longer exists due to hike in interest rates and other domestic and external factors and threats. All this crisis is a creation of the absence of liquidity now. Secondly, speculation dominated our share markets unfortunately.

Therefore the present situation is not very much surprising. Today, only within five months, Pakistan's economy, including the stock market, is utterly in shambles for the last one month, the stock market seems to be locked to the price level of 27th August closing, or completely stagnant, reducing trading activity to almost 'nil'.

In preceding four months only, the index has fallen by nearly 41% or 6,500 points. This crisis of Pakistan Capital Market is becoming more complex with each passing day. Five months earlier, the average daily volume of trading in the stock market was 258 million shares, which has dwindled to an average of only 3.5 million shares last week. Thus a fall of 99% in the volume is evident.

"Badla" financing, five months ago, used to be capped at a limit of 55 billion rupees more or less, at an interest rate of 11 to 12%. Now the cap has descended to only 15 billion rupees at the rate of 30%, which is a 3-year record level.

Foreign exchange reserves, which stood at $16 billion last year, came down to $12 billion in April this year, and since then, there has been a further fall of $4 billion, reducing the present forex reserves to a paltry sum of $8.8 billion only, of which the commercial banks have 3.4 billion dollars, while the central bank (State Bank of Pakistan) has only 5.4 billion dollars.

For the last one month, the stock market seems to be stuck at the floor price. Movements of index are in a maximum range of 8 to 10 points. However, the figures of Foreign Investor Portfolio Investment need an explanation. Firstly, the website of National Clearing Company shows only the net result of day's transactions in Pak rupees only, without disclosing the volume of shares dealt with, even though for calculating the day's activity of foreign investors, the number of their shares (both purchased and sold) on that day, is added up to depict the volume of trading.

It is also observed that the ready market volume was only 13 million shares, while the foreign investors traded 6 million shares that same day. Also the market movements were confined to a range of 10 to 15 points only. Thus the foreigners' performance was nearly half of what the ready market achieved and that is not even being brought to public notice.

The second problem is to deciding as who is to determine that these so-called 'foreigners' are really all foreigners, or include some locals also. It is rumoured that some members, who possess dual nationality are trading by opening accounts on their foreign passports. It is hoped that SECP will take action to eliminate such irregularities if they exist. On the whole, a review of last five months' state of affairs shows that there was a fall in the market value of shares of enterprises in various sectors as follows:

=============================================
Average
=============================================
1) Commercial banks 52%
2) Insurance companies 36%
3) Textiles 66%
4) Cement 54%
5) Refineries 50%
6) Power Generation and Distribution 27%
7) Oil and Gas Marketing 43%
8) Oil and Gas Exploration 31%
9) Fertilisers 48%
=============================================
Finally, in the present tight liquidity situation it has been proposed that the companies should buy back their own shares, because most of the companies shares are being traded at less than their book value.

In the beginning this proposal created a considerable measure of optimism but later, due to the legal complications or the sponsors' fears of further fall in the market values of shares, the scheme did not attract favourable response. At the moment, the system needs an infusion of rupees 25 billion in liquid funds immediately, but there is no solution in sight.

Initially, the Ministry of Finance (MoF) tried to solve the matter very seriously and set up a fund, however till this moment the Fund has not been able to secure firm commitments from the donors.

In the beginning the regulators, SBP, MoF, banks and the brokers' community, all of them seemed to be quite active, and the action by US administration and regulators in an attempt to bail out (Wall Street) was greatly appreciated, but later, the criticism levelled by the Congressmen to support the stock market with US tax-payers money, caused voices in Pakistan also to be subdued.

Now we have to see how the crisis will be tackled after Eid-ul-Fitr holidays, while the KSE Board of Directors have categorically stated that they will terminate the floor price in the market, come what may.

(Translated from Urdu text by Rais Ahmad Khan)

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## Neo

*Pakistan to get USD 500-mn ADB loan to accelerate economic transformation​*
Islamabad, Oct 1: The Asian Development Bank (ADB) has approved a USD 500 million loan for Pakistan to help the troubled nation tackle the increasing poverty and deteriorating economic conditions in the wake of the ongoing global financial crisis, the Online news agency reported Wednesday.

The loan will help Pakistan in dealing with the current food and fuel price rise and resurrect the country's economic owes, Juan Miranda, director general of ADB's Central and West Asia Department, said while announcing the loan in Manila Tuesday.

"Addressing the impact of fuel and food price increases unleashes immediate benefits to Pakistan's people and to markets," Miranda said in a statement.

"The ADB loan will support ongoing changes in the energy and agriculture sectors, and will help lay the foundation for a radical transformation of the economy by diversifying, deepening and expanding a competitive industrial sector, and creating much-needed jobs for Pakistans young and growing labour force."

According to the agency, the ADB support comprises a key part of a global financing plan underpinning the Pakistan's economic stabilisation programme.

The stabilisation plan includes actions to shore up and manage foreign reserves, improve monetary policy, trim the fiscal deficit and its financing gap, and cut back on government borrowing from the State Bank of Pakistan.

The stabilisation plan is also focused on protecting the poor through special safety net programmes, and reassuring financial markets through fiscal and monetary discipline.

The stabilisation plan was formulated by the government led by Prime Minister Yusaf Raza Gilani, with technical advice from other parties.

"ADB financing takes place within the context of this stabilization framework," added Miranda. "We are one of several parties contributing to the financing of this plan; others will soon follow with their own financing and programmes."

The Manila-based bank is a major financial partner of Pakistan and focuses on the areas of infrastructure development, power, energy, financial sector intermediation and capital markets development.

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## Neo

*US to Announce $100 MLN Package for Agri-Sector of Pakistan: Envoy​* 
LAHORE, Oct 2 Asia Pulse - The US Ambassador to Pakistan Ms Anne W Patterson has said that the United States wants long-term, broad-based relations with Pakistan and is going to announce a US$100 million package for its agriculture sector soon.

The US Ambassador was speaking at Lahore Chamber of Commerce and Industry here on Monday. LCCI President Mohammad Ali Mian, Senior Vice President Mian Muzaffar Ali and Vice President Shafqat Saeed Piracha also spoke on the occasion. Principal Officer US Consulate Bryn D Hunt and top business community leaders, including a large number of former LCCI Presidents attended the meeting.

The US Ambassador emphasized that the United States would continue and increase bilateral trade and investment in Pakistan. She said that despite some economic difficulties the volume of trade between the two countries has been increasing and the fact remains that the US is the largest single investor and the largest single donor of Pakistan.

She said as many as 90 new US development projects in social sector are in the pipeline that would get a final shape as soon as the situation in Pakistan takes a positive turn. She said that as soon as the youngsters in troubled areas particularly in Tribal Areas get jobs there are little chances of improvement in situation there.

The US Ambassador said that the US is committed to long-term relations with Pakistan and is convinced that the present government is extending maximum cooperation in its war against terrorism and is serious about weeding out the menace. While expressing optimism about Pak-US trade relations, she said Pakistan has a huge potential in the energy and IT sectors.

Speaking on the occasion, the LCCI President Mohammad Ali Mian said that Pakistan and United States are not only partners in war against terrorism but also enjoy remarkable trade relations with each other, which is evident from the fact that more than 80 US companies are working in Pakistan. Out of which 50 plus companies are located in Punjab province alone providing employment to more than 50,000 workers directly and over one million people indirectly.

He said that being a close ally of US, Pakistan should also be benefited from US experience in the fields of commerce, industry, education, health sciences and diplomacy.

Mohammad Ali Mian said that Pakistan's economic profile has been badly affected for being an ally of the US. It is facing mass unemployment due to cancellation of export orders from buyers. And is seeing no further industrialization and foreign investment and if the present wave of terrorism continues the sustainability of present industries cannot be ensured.

He said Pakistan's textile industry is heavily dependent on the US market. Almost 60 per cent of textile products are exported to US alone. It is providing manufacturing base to large number of US brands. Therefore, Pakistan badly needs US support in shape of duty free access to its Markets to save the people of Pakistan who are fighting war against terrorism as frontline state with America.

He said there was an increasing gap in demand and supply of electricity. "Load-shedding and fuel shortages have seriously destabilized our economy, causing large-scale unemployment, which is ultimately leading to law and order problem and encouraging terrorism. In order to support Pakistan's economy, there is need for direct funding to the industrial set up through institutions like IFCs on low markup rates. It is believed that US companies can provide immediate solution to the tumbling Pakistan economy."

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## Neo

*Stocks end down, volume falls below 1m​*
KARACHI, Sept 30: The trading volume on the Karachi Stock Exchange on Tuesday fell to a new all-time single-session low at 0.986m shares as investors watched the fresh massive plunge on world equity and financial markets after the rejection of Bushs $700 billion bail-out package by the US Congress rather than making fresh commitments. The world markets have been well on the recovery path following closely the official moves about the passage of the bail-out package, but reports of its rejection by the US House of Representatives sent bearish signals the world over causing the crash of markets, analysts said.

The foreign investors who still long positions in some of the local shares were, however, worried over the rejection of the bail-out package as it will further block their moves to get out of the local market, they added.

However, being under floor, the local market was saved from any massive selling or price crash but the only victim was the daily turnover figure, which maintained its falling trend.

The prevailing turmoil on the world markets could further delay the removal of floor on the index, some analysts said, but some others said the long Eid holiday week ahead may witness some positive developments on the world financial markets and the post-Eid opening of the local market could be positive.

The positions in MK-2 at Rs15 billion though down by 22 per cent from Rs19 billion after the index was capped on Aug 27, are not on the higher side but investors fear the CFS could be lower than it, said a leading analyst Tabish H. Rajabali.

The KSE 100-share index shed another 3.12 points at 9,179.68 as compared to 9,182.80 a day earlier but its junior partner the KSE 30-share index was again held unchanged at the previous level of 10,064.44.

The fall of the daily volume below one million shares is the lowest in the trading history of the KSE and reflects investor apathy to take fresh positions at this stage, floor brokers said. They said the current lower levels reached by all those shares, which ensures higher capital gains, were also neglected by those who could take financial risks.

Minus signs again dominated the list in dull trading, under the lead of National Foods, which fell by Rs6.55 at Rs397.

Royal Bank, Capital Asset Leasing, Network Leasing, Habib-ADM Sugar and Al-Ghazi Tractors followed them, off by 55 paisa to Rs1.99.

Leading gainers were led by Millat Tractors and Pak Datacom, up by Rs3.90 and Rs1.70 followed by Escort Bank, Standard Chartered Modaraba and Gharibwal Cement, up by 60 paisa to 99 paisa.

Trading volume fell to record low of 0.985m shares as losers held a modest lead over the gainers at 13 to nine, with 73 shares holding on to the last levels.

Southern Electric led the list of actives, unchanged at Rs3.90 on 0.220m shares, followed by Gharibwal Cement, up by 99 paisa at Rs18.99 on 0.115m shares, Elite Capital Modaraba, lower 50 paisa at Rs3.25 on 0.102m shares, Pak Elektron, easy by 19 paisa at Rs40.80 on 0.79m shares, Standard Chartered Bank, off 31 paisa at Rs10.89 on 0.76m shares, Shakarganj Sugar, unchanged at Rs11.84 on 0.36m shares and Nishat Chunian, unchanged at Rs12.78 on 0.35m shares.

S.S. Oil also unchanged at Rs6.50 on 0.27m shares, Bosicor Pakistan, unchanged at Rs8.70 on 0.25m shares and Millat Tractors, higher by Rs3.90 at Rs229 on 0.23m shares.

*FORWARD COUNTER:* Engro Chemical came in for stray support and was quoted higher by five paisa at Rs181.65 on 0.232m shares followed by MCB Bank, static at Rs238.26 on 0.01m shares and OGDC, also steady at Rs95.92 on 500 shares.

*DEFAULTER COMPANIES:* Five shares came in for stray buying but most of them ended higher under the lead of Taxila Engineering, up by Re1 at Rs2.50 on 1,000 shares followed by National Asset Leasing, higher by 19 paisa at Rs0.60 on 500 shares and Al-Qaim Textiles, up by 25 paisa at Rs1.25 on 2,000 shares. Others were held unchanged.

*DIVIDEND*: Al-Khair Gadoon, cash 10 per cent, United Distributors, bonus shares 15 per cent, Buxly Paints, 10 per cent, Dawood Capital Management, bonus shares 10 per cent, Crescent Modaraba, six per cent, Goodluck Industries, cash 20 per cent, Aruj Garments, 15 per cent, Mirree Brewery, cash 50 per cent, bonus shares 10 per cent and Standard Chartered Modaraba, 16 per cent.

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## Neo

*ADB releases $500 million from $1.5 billion loans​* 
KARACHI (October 01 2008): Asian Development Bank will provide $1.5 billion in three tranches under the Accelerated Economic Transformation Programme. The first tranche of $500 million was released on Tuesday, under a formula based approach, after the Federal Cabinet approved.

(A) Consolidated supervision law whereby State Bank of Pakistan will regulate all kinds of deposit taking in the country; thereby transferring leasing companies, investment banks and Development Financial Institutions (DFIs) from supervision of Securities and Exchange Commission of Pakistan (SECP) to SBP;

(B) Cabinet has approved the Draft of Anti-Money Laundering Law and approval of Ministry of Law for issuance of an Ordinance or passage of law by Parliament is awaited; and;

(C) Raising the minimum capital for banking companies to $300 million already in offing. The next tranche of $500 million is expected to be released after Pakistan complies with Basel-II requirements; establishes a deposit protection scheme and modernises the SBP Act to effectively become the lender of the last resort.

The programme for the third tranche of $500 million will be drawn up for compliance later by SBP. The ADB loan basically uses this vehicle for easing Pakistan's balance of payments difficulty.

According to reliable sources the full amount of $500 million (Rs 39 billion) will be utilised to retire the SBP debt. Government had committed not to borrow from SBP after July 1st, 2008 and retire Rs 22 billion of existing borrowing by 30th September 2008. Contrary to the commitment over Rs 160 billion were borrowed during the first seven weeks of the first quarter. With last date for tax return extended to October 31st, it would be difficult for the government to meet its commitment.

A press release issued by ADB from Manila says: The Asian Development Bank (ADB) has approved a $500 million loan to support Pakistan's efforts to address harm done to poor families and the country's economy by unprecedented international food and fuel price hikes.

The ADB loan will support ongoing changes in the energy and agriculture sectors, and will help lay the foundation for a radical transformation of the economy by diversifying, deepening and expanding a competitive industrial sector, and creating much-needed jobs for Pakistan's young and growing labour force.

ADB support comprises a key part of a global financing plan underpinning the government's economic stabilisation program. The stabilisation plan includes actions to shore up and manage foreign reserves, improve monetary policy, trim the fiscal deficit and, its financing gap, and cut back on government borrowing from the State Bank of Pakistan. The stabilisation plan is focused on protecting the poor through special safety net programs, and reassuring financial markets through fiscal and monetary discipline.

"Addressing the impact of fuel and food price increases unleashes immediate benefits to Pakistan's people and to markets," said Juan Miranda, Director General of ADB's Central and West Asia Department. "The fiscal space created by reforms will cut financing gaps, generate conditions for a better deal in the sectors down the road, and provide much-needed cash flow to pay for safety net programs that protect the most vulnerable. ADB's support balances the need for addressing the needs of Pakistan's people while reassuring markets that the government is on the right track with its ongoing economic stabilisation program."

The stabilisation plan was formulated by the Government, with technical advice from other parties. "ADB financing takes place within the context of this stabilisation framework," added Mr Miranda. "We are one of several parties contributing to the financing of this plan; others will soon follow with their own financing and programs."

Pakistan will strengthen the legal and regulatory framework of its financial sector through the ADB program. The State Bank of Pakistan, working closely with the government, has undertaken a series of actions to improve risk management in the sector, strengthen payment systems and protect consumers. This will create stability at a time when international markets are in turmoil.

"The measures supported by ADB's program will benefit ordinary Pakistanis, directly as well as indirectly," said Mr Miranda. "Timing is of the essence here." ADB is a major financing partner of Pakistan. Its strategy focuses on three areas: infrastructure (roads, irrigation and logistics), utilities (power, energy, urban services) and reforms (including social service provision and finance, public financial resource management, financial sector intermediation and capital markets development).

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## Neo

*Canada offers 750,000 tons of wheat on deferred payment​*
ISLAMABAD, Sept 30: The ministry of food, agriculture and livestock informed the Economy Monitoring Committee on Tuesday that Canada has offered 750,000 tons of wheat on deferred payment.

The EMC, which met with Federal Minister for Finance, Privatisation and Investment Syed Naveed Qamar in the chair, advised the agriculture ministry to work out financial terms and conditions by seeking extension in validation period so that an assessment of the offer and decisions could be made.

The agriculture ministry gave a presentation on stocks and release of wheat. The committee was informed that import of 1.7 million tons of wheat had been finalised and some of it had already arrived.

The ministry said additional consignments of one million tons (250,000 tons from the US and 750,000 from Canada ) under deferred payment were in the pipeline.

The committee expressed satisfaction over wheat stock position and progressive releases to provinces. Wheat production for 2007-08 stood at 23.3 million tons. Earlier, the government had allowed import of 2.5 million tons to supplement existing stocks.

The ministry of commerce briefed the committee on unloading and transportation of 150,000 tons of imported wheat, adding that the matter needed referral to the economic coordination committee of the cabinet for decision on transportation from Karachi/Gwadar up north.

The ministry of commerce was directed to submit a proposal to the ECC on unloading of imported wheat at ports.The EMC was briefed on the supply of flour in all provinces and in Utility Stores.

The agriculture ministry said prices of urea ranged between Rs650 and Rs700 and briefed the committee on its availability. The import of urea under a Saudi facility of $125 million was on track, it added.

The EMC directed that the Saudi facility should be tracked fast to ensure adequate availability of urea in the coming months.

The committee was informed that the availability of urea and DAP fertiliser, coupled with imports, was satisfactory and would meet the demand.

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## Neo

*Pakistan PM eyes nuclear deal after India-U.S. pact​*Thu Oct 2, 2008

MULTAN, Pakistan (Reuters) - India's landmark nuclear trade agreement with the United States should open the way for a similar deal for Pakistan, the country's prime minister said on Thursday.

The U.S. Congress approved the deal late on Wednesday ending a three-decade ban on U.S. nuclear trade with India, unleashing billions of dollars of investment and drawing the world's biggest democracy closer to the West.

Critics say the deal does grave damage to global efforts to contain the spread of nuclear weapons, by letting India import nuclear fuel and technology even though it has tested nuclear weapons and never signed the Non-Proliferation Treaty (NPT).

In nuclear-armed Pakistan, Prime Minister Yousaf Raza Gilani said the deal should not be seen as a cause for concern.

"You don't have to be worried about it," Gilani told reporters in his home town of Multan when asked about the deal.

Pakistan has fought three wars with India since their independence in 1947 and nearly went to war a fourth time in 2002. Their relations have improved since they began a peace process in early 2004.

"Pakistan will now be justified to also make a demand for a similar deal as we don't want discrimination," Gilani said.

"Pakistan will also now make efforts for a civil nuclear (deal) and they will have to accommodate us," he said.Pakistan tested nuclear weapons in May 1998 in a tit-for-tat response to tests by India. Pakistan has also never signed up to the NPT.

Pakistan is one of the biggest recipients of U.S. aid and is a major ally in the U.S.-led campaign against militancy.

But in U.S. eyes, Pakistan cannot be treated like India because it lacks a long track record of democracy and nuclear non-proliferation.

A ring led by the scientist seen as the father of Pakistan's nuclear bomb, Abdul Qadeer Khan, smuggled bomb-suitable nuclear technology to unstable regions before it was smashed in 2004.

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## Neo

*Overseas Pakistanis should send foreign exchange through banks: Khalid Shaheen ​*Thursday, October 02, 2008 

JEDDAH: The Executive Vice President of Habib Bank, Khalid Bin Shaheen has said that overseas Pakistanis should transfer their money through banking channels in order to increase foreign exchange reserves in country.

This, he said while talking to media in Jeddah on Thursday.

Shaheen said Pakistan is passing through difficult phase and advised the Pakistani people settled in Saudi Arabia to send their money through banking channels so that foreign exchange reserves could be increased to over US$9 billions.

Talking to Geo News, he said Pakistan is in dire need of foreign exchange, adding overseas Pakistanis sent a huge amount of money to Pakistan.

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## mumtazapiracha

'Friends of Pakistan' are examining the proposal to lend US$ 15 billions to bail out Pakistan's economy from near-collapse. The question is: who is going to pay back, how and when?

Our economic indicators are just miserable. We have estimated annual revenue Rs. 1000 billion as compared to our domestic debt of Rs. 3000 billion. Our foreign exchange reserves have fallen to US$ 8.80 billion against our imports of US$ 40 billion and export of US$ 19 billion. Foreign direct investment and home remittances account for US$ 5 billion each. Our rupee-dollar parity has escalated to Rs. 78 per dollar as compared to India's Rs. 46. Since Dec 2007, our rupee depreciated by 28% as compared to India's 18%. Our democratically-elected government borrowed from SBP Rs. 162.5 billion during the first 66 days of the current fiscal year as compared to Rs. 73 billion during the same period last year.

Our foreign debt stood at US$ 46 billion as on 31-3-2008. Adding another US$ 15 billion will only add to our economic sickness. It may prove to be a poison than cure.


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## Neo

mumtazapiracha said:


> 'Friends of Pakistan' are examining the proposal to lend US$ 15 billions to bail out Pakistan's economy from near-collapse. The question is: who is going to pay back, how and when?
> 
> Our economic indicators are just miserable. We have estimated annual revenue Rs. 1000 billion as compared to our domestic debt of Rs. 3000 billion. Our foreign exchange reserves have fallen to US$ 8.80 billion against our imports of US$ 40 billion and export of US$ 19 billion. Foreign direct investment and home remittances account for US$ 5 billion each. Our rupee-dollar parity has escalated to Rs. 78 per dollar as compared to India's Rs. 46. Since Dec 2007, our rupee depreciated by 28% as compared to India's 18%. Our democratically-elected government borrowed from SBP Rs. 162.5 billion during the first 66 days of the current fiscal year as compared to Rs. 73 billion during the same period last year.
> 
> Our foreign debt stood at US$ 46 billion as on 31-3-2008. Adding another US$ 15 billion will only add to our economic sickness. It may prove to be a poison than cure.



Dear Mumtaz,

Please provide link when quoting from online media.
Thanks!

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## Neo

*Hydropower projects: Wapda envisages 42,000 megawatts installed capacity by the end of 2016​* 
LAHORE (October 04 2008): The Water and Power Development Authority (Wapda) is vigorously carrying out feasibility studies and engineering designs for various hydropower projects with accumulative generation capacity of more than 25,000 MW and most of these studies are at an advanced stage of their completion. These studies, which are under way, include Bunji (5,400 MW) and Kohala (1,100 MW).

After the completion of these projects, the installed capacity is expected to be around 42,000 MW by the end of year 2016, sources told Business Recorder on Friday. Sources said Pakistan had been blessed with ample water resource, but it could develop only 13 percent storage capacity of the annual flow of its rivers, and that too were fast depleting due to sedimentation.

Under the Wapda's National Water Resource and Hydropower Development Programme - Vision 2025 - five mega hydropower projects are to be completed by 2016 with the generation capacity of 9,500 MW. Two projects were ready for awarding construction works, while three projects were in the stage of feasibility studies and preparation of tender documents, the sources added.

According to the sources, Neelum-Jhelum hydropower project has 969 MW installed capacity and will generate 5.15 billion KWh of annual energy. The project is expected to be completed in 2016. Diamer Basha Dam project, having total capacity of 4,500 MW, will produce annual energy of 16.7 billion KWh. The project had a live storage of 7.9 billion m3. The expected year of commission was 2016 with an approximate cost of 9.5 billion dollars, the sources said.

The sources said that today, the total generation capacity exceeded 17,366 MW and all big cities, towns, and a large number of big villages had the benefit of electricity. The number of consumers had also gone up to over 17.7 million, the sources said, adding that length of the lines had crossed the figures of 447,349 kilometres and the number of grid stations had increased to with 601 transmission capacity of more than 12,745 MVA.

To bridge the supply-demand gap and to do away with the load shedding, the Wapda on its part was taking many a corrective measures, which included improvement in power plants efficiency, energy loss-reduction through erection of extra high tension lines of 500 KV capacity and replacing old and worn out and overloaded distribution lines and transformers with that of high capacity etc, the sources said. According to sources, the Wapda's SCARP programme has raised new hopes for the control of the twin menace of salinity and water logging, which had gathered menacing proportions as a result of the unlined irrigation system.

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## Neo

*Economic slowdown hurts sale of steel products ​* 
Saturday, October 04, 2008

KARACHI: Low economic activity affected sales of steel products in the month of Ramazan and after Eid the prices of those products were expected to come down as a result of a fall in the international market, said Karachi Iron and Steel Merchants Association President Shamon Baqar Ali.

Prices of billets had decreased internationally but if power and gas tariff increased and the rupee depreciated there would be a small decline in local steel prices, he said. Shahab Ahmed, co-partner in Amaan Steel, said the demand of steel was disappointingly low as the country faced a sharp economic slowdown and uncertainty on the political front. Like all other sectors, the steel industry had also been badly affected with lacklustre business activity.

We had stopped all our operations well before a week from Eid and work will resume from Monday next week. Our workers have gone to their hometowns in upcountry areas for Eid holidays and we would make the most of this time and complete maintenance work of the factory, he said.

There had been a complete halt to our business since July this year. Both supply and demand sides are presenting a gloomy picture, he said, adding the steel sector was facing the brunt of low economic activity.

Pakistan Steel Re-rolling Mills Association Chairman Ali Ahmed said slack economic activity and small number of government projects had hit sales of steel products.He said the construction sector had been very slow during the last three months, especially in the last month which saw insignificant steel demand.

We are not very much hopeful of a better change in near future as government policies are not supporting the steel industry. Industries had already stopped operations from Saturday as all workers are on Eid holidays. Most of our workers hail from Punjab and it is expected that industry operations will resume next week, he said.

Re-rolling mills of the city would remain closed for about 10 days due to the Eid season. But the fact is that high production and low demand have irked steel producers, especially in Ramazan usually a period of slow activity.

Steel and cement are two most important contributors to the construction industry but unfortunately high prices of the two commodities in the country have played an important part in dwindling construction activities during the last one year. A lacklustre construction business affects demand of mildbars (sarya), forcing re-rolling steel mills to trim their production.

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## Neo

*From sea to shore: A businessmans struggle in Pakistan ​* 
Saturday, October 04, 2008

KARACHI: After assuming charge of a navy merchant ship at a very young age, Haleem Siddiqui thought it was time for him to move on and sail into the world of commerce instead. Little did this seafarer know then that for doing so, he will have to brave through a tumultuous sea of Pakistani politics in the bargain.

Even now, as Chairman of the Pakistan International Container Terminal (PICT), the only such facility in the private sector which is owned by a Pakistani, he claims that all odds are against him.

However, there is good news in the near future. On October 5, 2008, when a ship carrying two sophisticated sea-to-shore quayside cranes for his terminal anchors at Karachi port, he will have a different reason to prove that Pakistanis can compete with any foreign terminal operator.

You must come and see them. It will be something so different, an enthusiastic Siddiqui, 67, said about the cranes, which help load and unload cargo from a ship. PICT already has four quayside cranes, two mobile harbor and 10 rubber tired gantry cranes.

For PICT the importance of new addition to terminal facilities is much more than just competing with other private operators. It is over and above the contractual obligations which Siddiqui had committed when he was finally allowed to set up the terminal after a battle of more than 20 years.

His lifelong struggle has its roots in advice given by his father almost 50 years ago. I remember it very well. He told me whatever work you do, do it whole heartedly otherwise you will go nowhere. Age was an important factor and I had to firm up my mind then.

Born to a doctor in 1941 in Lucknow, Siddiqui was fascinated by traveling to different places. After college, he migrated to Pakistan in 1958 when only 17. By the next year he was on the seas, living his dream onboard the ship Pakistan Promoter. Back then there were no marine academies, he recalled. We used to go straight to the ship for training.

For 12 more years, he remained affiliated with merchant navy, completed his masters and worked with different Pakistani and international shipping companies. By the time he decided to move on, in 1971, he was already commander of a ship. There were not many qualified people in the marine services industry, he said recalling how new shipping lines were fast coming up against lackluster growth in service providers on port.

A strong foresight backed by experience of service in merchant navy had made Siddiqui conscious of the changing trends in the shipping industry. He decided to venture into the stevedoring business despite having no experience in this particular field.

Life is a gamble. One has to take risks, he said about the decision to quit the job and invest whatever he had saved in the business. I had my wife and a son and no liability as such. I must say my wife was supportive. I told her if something happened, Ill just pick up my bag and go to sea again.

Just like that, he bought a partnership into a struggling stevedoring company, Premier Mercantile Services and jumped into the world of cargo handling. Stevedoring is loading and unloading cargos from a ship. It looks very simple but seriously it is not, he said in a recent interview with The News. While loading and unloading cargo, you are playing with the stability of a ship, you are also responsible to safely store cargo according to its nature and considering the voyage it is bound to make.

Aware of the shift in mode of transportation, which started in 70s, from conventional shipping to containerization, Siddiqui knew it was imperative to equip his company with modern equipment.

We kept on investing in the business and hardly took anything home. This is something which ship owners started to see as we improved and avoided even invisible damages to containers, he said, adding big names like Cowasjees and Dinshaws slowly disappeared from the ports and shipping scene as they did not keep pace with changing trends.

In the ensuing years Premier Mercantile Services Limited had established its name as a leading company in the stevedoring business. In December 1981, he wrote to authorities that he wanted to establish a container terminal at Port Qasim, which was being constructed 50km from Karachi center.

I still remember we wrote to Port Qasim suggesting that we were interested in developing a container terminal, he said, lamenting They laughed at me. They said it was not possible for container ships to come there.

An opportunity to prove him right was to present itself soon. In early 80s dock labor at Karachi Port Trust (KPT) went on strike and Siddiqui pushed forward the idea of handling the ships at Port Qasim.

Overnight we shifted all the equipment to Port Qasim and handled seven ships there. I was the first one to that, he said, adding that made Port Qasim Authority (PQA) realise the importance of its location and finally in 1983 invitations were sought for construction of a container terminal there.

His company also participated but the contract was awarded to Dubais Al-Ghurair despite the fact that Premier Mercantile was handling bulk of the cargo at Pakistani port. Al-Ghurair which had no experience of handling container cargo did not invest anything till 1996.

Similarly in 1990 when KPT invited firms to develop the infrastructure, his company also participated. Again we were rated the best technically and financially as we had the backing of IFC (International Financial Corporation).

This project which would have made Karachi port the first in the world to move from public to private sector was made hostage by labor unions that were backed by the ports administration, he claimed.

During that period, Siddiqui went to court and finally on September 15, 1993, Supreme Court ruled in his favor. Admiral Tasneem, Chairman KPT, ringed me up the same day and said lets sign the agreement without any delay.

However, just when he was near achieving his ambition, a decision to venture into politics turned everything against him. That same year he ran for a seat in parliament and was elected member of national assembly on a Pakistan Muslim League (PML) ticket, which as a party did not do well at the polls.

Nawaz Sharif dragged me into politics, he said recalling the time he got acquainted with the politician who was loved by industrialists for his business friendly policies. The government formed by Pakistan Peoples Party created every hurdle in my way and the project was cancelled in 1995, he said.

While he took the battle to the court again, foreign companies were preferred for setting up container terminals at KPT and Port Qasim. His fortune did not change even when PML was voted into government in 1997. When the PML government decided to set up a new terminal, Siddiquis company was disqualified on the pretext that he was in politics. And again he went to court. It was not until 2002, when then President Pervez Musharraf was in power that KPT had to negotiate with his company following orders of high court.

Finally the PICT was commissioned in 2004. The growth it has shown in last four years has been phenomenal. From around 90,000 twenty foot equivalent container units (TEUs) it handled in its first year, growth has jumped 420 per cent to more than 472,000 TEUs in fiscal year 2008.

Now as Haleem Siddiqui is increasing the number of quayside, rubber tired gantry and mobile harbor cranes in anticipation of increase in cargo handling, there is another challenge facing him.

Ports are the barometer of an economy, he said, adding that We are the first industry to get hit when trade slows down and that has started happening. These are mixed blessing for the maverick shipping man turned politician. Despite the obvious downturn, he says he is hopeful. From a man who has done so much, these are encouraging words indeed.

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## Neo

*Coal import to increase on rising consumption at cement plants​*
KARACHI: The continuous expansion of the cement industry is fuelling the demand for imported coal in the current financial year, a leading coal importer told Daily Times.

It is expected that the cement industry would consume 3.2 to 3.5 million tonnes of coal this year.

Najeeb Balgamwala, a leading coal importer said that the reason for the rise in import was the massive capacity expansion undertaken by the cement industry. In the previous year the industry used 2.9 million tonnes of coal and until this month importers have brought around 0.7 million tonnes of coal for cement companies.

Pakistan imports coal mainly from South Africa, Indonesia and China. The country has also imported coal from Australia and Russia but in very small quantities. He said that it is expected that the country would import around 4 million tonnes during the current fiscal year, as the cement industry is expanding.

According to him the coal import would have been much higher but some of the local companies have started to buy local coal because of the high prices of imported coal.

Previously the companies bought about 0.3 to 0.5 million tonnes from importers, but as the prices of the coal rose the demand has reduced, he added.

Pakistan started importing coal a few years ago as the demand from the cement companies surged after the industry switched its plants from oil to coal to decrease its cost of production.

Pakistan has around 180 billion tonnes of coal reserves, with the reserves in Thar at an estimated 175 billion tonnes. Pakistan produces 3.2 million tonnes of coal every year, but most of it is not of good quality. As local coal mines are not mechanised, miners have to go 500 to 1000 feet deep, which increases cost of production.

A coal washing plant, which was imported form united Kingdom was set up last year at Dhabeji costing Rs 50 million with a capacity to purify 2000 tonnes of coal per day. Both local and imported coal is being washed in the plant making local coal useable for the companies.

Three more plants are currently being installed in Punjab. Coal-washing plants ensure that the coal has little impurities that reduces the production cost of cement industry. Cement makers have to use expensive imported coal because the locally available coal do not meet their specific requirement.

Coal is the cheapest source of thermal energy used in industrial sector and has the ability to replace other expensive fuels such as furnace oil. Local coal has a higher sulphur content than imported that makes it unable to produce the required heat level. This makes it acceptable for power plants, but not for cement plants.

Pakistan, India and China are three countries in the world having reserves sufficient for the next 250 years.

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## Neo

*Unexplored reserves: Balochistan govt can receive Rs 25bn royalties​*
ISLAMABAD: The Government has estimated the potential of unexplored oil at 9 billion barrels and gas reserves at 80 trillion cubic feet in Balochistan province, sources in Petroleum Ministry told Daily Times.

Sources said that if only 5 percent of the said oil and gas reserves is explored, Balochistan would receive the additional royalty of Rs 25 billion on both oil and gas. The province would have an additional royalty of Rs 11 billion on oil and Rs 14 billion on gas reserves per annum. They said that total oil production in the Balochistan province stood at 22 million barrels that is contributing to 18 percent of the total requirement of oil in Pakistan. They said that Balochistan has demanded the federal government to take action against the oil and gas exploration companies that were granted licenses around 10 years ago but they had not started work on exploration activities.

Sources said that Balochistan government has also demanded the federal government to cancel the licenses of those oil and gas exploration companies that were delaying the exploration activities eying the higher profits and margins in the future. Balochistan government believes that oil and gas exploration companies were just playing delaying tactics that resulted in reduction of gas production in Balochistan province. They said that gas production in Balochistan has reduced to 23 percent of total potential which was 53 percent in 1990.

Sindh province was producing 70 percent gas, Punjab 5 percent and North West Frontier Povince (NWFP) at 2 percent. Balochistan has assured to provide security for undertaking the exploration activity by the companies.

These oil and gas fields are located in Qala Abdullah, Qala Saifullah, Bar Khan, Khazdar, Dera Bugti and Kohlu. Sources said that the law and order situation in these areas was under complete control excluding Dera Bugti and Kahlu. They also assured that Frontier Corps would also provide the security in the areas of Dera Bugti and Kahlu to initiate exploration activities.

Some oil and gas explorations companies had got the licenses to initiate the oil and gas exploration activities in Balochistan province on 16 gas fields around over 12 years ago but these companies have not started the exploration activities yet.

Following the protest of Balochistan, federal government has given warning to the oil and gas exploration companies involved in delay of the exploration activities to start the operating activities otherwise their licenses would be cancelled.

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## Neo

*Country may face 2.1m cotton bale output shortfall​*
** Cotton sowing areas more than 10% behind the target​*
ISLAMABAD: The countrys cotton production is likely to remain 12 million bales from sowing areas of 2.875 million hectares, against the annual target 14.1 million bales from 3.20 million hectares set by the government for the outgoing Kharif season 2008-09.

Last year, the government had achieved cotton output of 11.65 million bales from 3.05 million hectares sowing areas.

Cotton areas sown this season were provisionally reported at 2.969 million hectares, which was over 10 percent less than the target and almost six percent less than the last year.

The province-wise shortfall of cotton areas recorded was: Punjab 2.294 million hectares (mh) against the target 2.520mh, showing a net area shortfall 8.9 percent of the target area.

In Sindh, the target area for cotton sowing was 0.630mh and actual areas sown was 0.540mh showing a 14.28 percent shortfall of the targeted area.

Similarly in Balochistan and NWFP, the targeted cotton area was 0.050 mh, but the actual area under cotton sowing recorded 0.023 mh, showing an 18 percent shortfall of the targeted areas under cotton sowing.

Officials in the Ministry of Food, Agriculture and Livestock (MINFAL) attributed the inability to achieve the target of cotton crop sowing areas to the late release of irrigation water in the early season and power disruption.

Besides, farmers in some areas were reportedly more interested in cultivating rice on account of its higher prices.

Regarding the current crop condition, the officials said the average plant population and number of bolls are reported to be more than last year, both in the Punjab and Sindh. Among various insect pests, incidence of white fly, mealy bug and mites was higher than last year in Punjab. Cotton leaf curl virus of low intensity was recorded in the districts of Multan, Vehari, Bahawalpur, Lodhran, Khanewal and Muzaffargarh.

Cotton prices are likely to remain at soaring levels with lower production and comparatively higher consumption. He said lack of expertise in fighting cotton virus and minimising crop from heavy rainfall, around 20 percent crop in the Punjab and interior Sindh has been affected.

Pakistan would not able to achieve next cotton crop target in 2008-09 unless production of quality seeds, supply of quality inputs and water availability is not assured, a MINFAL official said.

About world cotton production, the officials said that it was expected to decline by 6 percent in 2008-09 to 113.6 million bales (480 lbs each) due to the decline in world cotton area caused by increased competition from alternative crops.

The world yield was projected down by one percent to 779 kg per hectare from the record of 787 kg per hectare reached in 2007-08, but it would remain the second highest yield to date.

They said that the projected decrease in world production in 2008-09 was driven by an expected fall of production in the US to 13.8 m bales from 19.2 million bales of last year. Production was also expected ton decline significantly in Turkey, China (mainland), Brazil and Egypt.

The officials further informed that the world cotton mill use was expected to decline by one percent in 2008-09 to 120.5 million bales, due to slower global economic growth and higher prices of cotton relative to polyester. Cotton mill use is expected to decrease in 2008-09 in Turkey, the US, Brazil, the European Union, Mexico, Thailand, Russia, China (Taiwan) and the Republic of Korea. However, cotton mill use is expected to continue to increase, more slowly in China.

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## Neo

*Pakistani project selected for World Challenge final​*
KARACHI: The Pakistani venture Hashoo Foundation has been selected as a finalist in World Challenge 08, the worldwide competition that rewards projects and small businesses that have shown enterprise and innovation.

The northern areas of Pakistan are among the poorest and most isolated regions in the country. Effective development assistance has yet to reach these hilly, remote areas and it is the women and children who are most affected.

The only workable and sustainable solution is to capitalise on local resources, building on what is achievable as well as culturally acceptable.

The Hashoo Foundation assists local beekeepers to boost their income by selling high-quality honey through a network of five-star hotels in Pakistan.

Through the project, honeybee farmers are able to earn more than twice the price they would in the local market, while making the most out of their skills and environment without placing pressure on the local ecosystem.

BBC World News will broadcast six 30-minute programmes profiling each of the 12 World Challenge 08 finalists, showing how their projects and businesses are changing lives.

Newsweek magazine will mirror the programmes content in a six-part series of advertorials. The audience and readers are then invited to vote online at theworldchallenge.co.uk for their favourite project or business from October 1,2008. The winner will receive a $20,000 grant while two runners up will each receive $10,000 to help develop their initiative. app

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## Neo

*Pakistan rejects US geological survey offer​*
ISLAMABAD: Pakistan has rejected a United States offer of conducting a free of cost geological survey in the country due to security concerns to its strategic assets, sources said on Friday.

Petroleum Ministry sources told Daily Times that the US has been insisting time and again on being allowed to conduct of the survey, which could help expose the unexploited natural resources of the country. The US authorities will also scan the areas being surveyed using satellite equipment that could expose the security assets of Pakistan, the sources said. This is the reason Pakistan did not allow the US government to conduct a geological survey, they added. 

The sources said that the US offer had been previously rejected by the former government that cited the same concerns, but US Deputy Secretary of State John Negroponte had again made the offer to the coalition government during his visit to Pakistan. They said Negroponte had also asked former petroleum minister Khwaja Asif to allow the survey, who had declined the offer after then Petroleum secretary Farrukh Qayum and the IT minister opposed the proposal. 

The Petroleum Ministry sources said that Pakistan was rich in gas, oil, copper, gold and coal reserves, but needed the geological survey to explore these resources. They said that Pakistan has large reserves of gold and could become the fifth largest exporter of gold if the reserves were exploited.

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## dr.umer

*PM to seek Chinese investment for dam​*ISLAMABAD: President Asif Zardari during his maiden visit to China later this month will seek Beijings investment in building Pakistans biggest dam, official sources reveal. 

Planning Commission deputy chairman Salman Farooqui in a meeting with Chinese ambassador to Pakistan Lou Zhao Hui last week conveyed Islamabads desire to finance the $8bn Diamer-Bhasha dam, an official said yesterday.

The government wants to sensitise the Chinese leadership about Pakistans development priorities before the important visit of the president, he said, adding that the two officials also discussed the progress on the development projects being executed by the Chinese companies in Pakistan.

The issues related to Pakistan-China Friendship Centre in Islamabad and Beijing, Thar Coalfield block-2 and mining and power generation projects, Rediq copper project and Pakistan-China Haier Ruba Industrial Zone were highlighted in the meeting.

The Diamer-Bhasha dam will be built on the Indus river and after completion will have an annual 6.4mn ft surface water storage capacity, which will supplement irrigation supplies during low flow periods.

The dam is expected to also harness renewable source of clean and cheap energy through installed capacity of 4,500MW and reduce dependence on thermal power and save on fuel imports. The project would pay back its cost in ten years. The government has recently allocated Rs116bn for the land acquisition.

The sources said the Planning Commission has also sought Chinese investment in the Thar coal project. The Shenhua Group Corporation of China was earlier tasked to complete the $1.5bn Thar coal project. 

The company left the mega venture and decided to roll back its plan for setting up coal-fired power plants in Sindh due to differences on tariff issue with the government.

The project was expected to add 1,000MW to the national power grid in three years. The main reason for the companys withdrawal was the power tariff rate offered by Pakistan, which the Chinese side deemed insufficient to continue power generation.

Pakistan offered 5.7 cents per unit tariff against the Chinese company demand of 6.5 cents per unit. Farooqui has assured the Chinese to remove all impediments related to the execution of various projects by the Chinese investors.

Farooqui informed the ambassador that most of administrative and financial matters related to the Chinese projects have been resolved at appropriate level and instructions have been issued to facilitate the Chinese companies. 
The Chinese ambassador expressed his satisfaction on the efforts of the government of Pakistan to remove the hurdles in implementation of the projects and hoped their speedy completion.  Internews


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## Neo

*Market witnesses fresh inflow of foreign investment​* 
KARACHI (October 04 2008): A fresh inflow $0.3 million of portfolio investment in the country's equity market was witnessed during the two trading sessions of the outgoing week. According to National Clearing Company of Pakistan (NCCPL) data, the cumulative flow of this mode of investment was recorded at negative $350.022 million on September 30, 2008.

The week started with a positive trend as $256,393 came in the country on Monday. The trend continued on Tuesday as another $54,548 came in the country on the second day of the week. The market remained closed on the remaining days of the week on account of Eid-ul-Fitr.

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## Neo

*'Stock market needs immediate injection of Rs 40 billion for stability'​* 
KARACHI (October 04 2008): Non-availability of funds is the root cause of the stock market crisis and a fresh injection of around Rs 40 billion is needed to stabilise the market close to 9,000 points level, analysts said. "The market needs fresh injection of funds without any delay as each passing day is affecting investor morale and confidence", Muhammad Sohail, senior analyst at JS Global Capital Limited said, in his research report.

Karachi Stock Exchange (KSE) has hinted that the price floor mechanism would come to an end sometime in October. The floor, implemented last month, has kept the market largely immune to some negative developments, including the worsening economic situation, with reserves falling to a 6-year low of $8.8 billion. The situation in tribal areas is getting tense that resulted in Islamabad bomb blast.

Moreover, the recent global liquidity crunch, led by US financial crisis, has sent shock waves in major international markets with some high profile casualties. And the rising cost of leveraging has seen Continuous Funding System (CFS), share financing, rates reaching a 5-year high of 30 percent.

He said that non-availability of funds is the major issue. However, no concrete steps have yet been taken to provide liquidity to the market. "Few shares buy-back have been announced, but unfortunately the process is slow while market needs fresh injection without any delay.

Regarding the continuous outflow of foreign investment from the country's equity market, he said that there has been a common trend of shift of funds from emerging markets, with an outflow of $35 billion in the last four months. Moreover, Pakistan's worsening economic situation, with depleting foreign exchange reserves, downgrading of sovereign debt rating by S&P to B from B+ in May 2008 and 21 percent depreciation of the Pak rupee so far in 2008 have compounded worries. The recent price floor mechanism has further affected foreigners' confidence who still hold shares worth $2.3 billion (25 percent of the market free float).

"If availability of funds is less than the actual requirement, we could see the index falling 12-25 percent to 7,000-8,000 levels after the lifting of the price floor mechanism", Sohail said and added this assumption is based on historic trends using years 1999 and 2002 as proxies for a worst case scenario.

"However, we expect recovery in the medium term in case Pakistan's external account position improves in the first half of the calendar year 2009", he said and added "Though reaching our original target of 14,000 looks difficult, we can expect a recovery in medium term". Our view is based on the assumption that the worsening economic situation would force the government to go for an IMF programme and this would hence help improve the investor confidence and pave the way for fresh foreign inflows into Pakistan".

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## Neo

*Pakistan safe for foreign investors: Pakistan HC to Malaysia​*
LAHORE (October 04 2008): 'Pakistan is still a safe country to do business and Malaysians are urged to invest in Pakistan.' The High Commissioner for Pakistan to Malaysia, Lieutenant General Tahir Mahmud Qazi (Retd) stated this in an interview with a renowned Malaysian Journalist, R Ravichandran of Bernama News Agency in Kuala Lumpur.

In an email message, Pakistan High Commission told Business Recorder on Friday that the High Commissioner has assured Malaysian business community and the public in general that no foreign company has quit the country and in fact some international companies were investing in Pakistan at present.

He noted that in the World Bank's 'Doing Business Report 2009,' Pakistan was placed well above major world economies such as China and India in the ranking among 181 economies of the world, describing this as a show of confidence in Pakistan by the world.

Qazi urged Malaysian investors to invest in Pakistan's power and energy and oil and gas sectors, as they possessed huge potential. Another area of interest was construction, where Pakistan with some 162 million people is in need of more than 500,000 new houses annually, he said.

The High Commissioner further said, despite the incidences of bomb blasts and terrorism, the latest being the Marriott Hotel bombing, the overall security situation in the South Asian country was under control. 'Well, this is the time to come and invest. Those who take the initiative, are always the winners. I urge Malaysians businessmen to take the initiative and be among the winners,' he added.

Further, Qazi said that important thing was the will and capability to tackle terrorism and in this context he stressed that Pakistan's armed forces, being one of the best in the world and the government, are capable of overcoming this threat.

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## Neo

*Government determined to rescue economy: Naveed​*
HYDERABAD (October 04 2008): Federal Finance Minister Syed Naveed Qamar has said that the government is determined to bring the country out of the economy crisis with the co-operation of the people and the national unity, adding that soon the country will witness a new era of development.

The Finance Minister expressed these views in an informal talk with the guests and a group of mediamen, who visited him at his residence here on Eid day to exchange Eid greetings. Syed Naveed Qamar said that it was the first Eid for the leaders and workers of Pakistan Peoples Party after the assassination of Benazir Bhutto, therefore, the party leadership had decided to celebrate Eid in a simple manner.

The vision and courage of Shaheed Benazir Bhutto remained in the hearts of the party leaders and workers and it was the reason that the party leadership with the support of masses had defeated anti-democratic forces and restored democracy in the country in its true form, he said.

Though the country was suffering multiple internal and external issues, the present government had prepared an effective strategy to bring out the country of the economic crisis and move the country towards progress and prosperity.

The sacrifices of the leaders and workers were the great honour for the party and the present government would not disappoint the people, who reposed their full confidence in PPP leadership, the minister said, and added that the problems, including price hike, load shedding, shortage of wheat and unemployment would be resolved soon as the government had initiated concrete measures.

The minister met the party leaders, Regional Police Officer of Hyderabad, Deputy Inspector General of Police, Hyderabad Zone, District Co-ordination Officers (DC)) and District Police Officers (DPOs) of Hyderabad and Tando Muhammad Khan districts and exchaged Eid greetings.

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## dr.umer

*Pak plans communications satellite by 2011​*
Islamabad, Oct 4 (PTI) Pakistan plans to have a communications satellite by 2011 as part of its National Satellite Development Programme, a top official said today.

The country currently has the leased satellite Paksat-1, and this will hopefully be replaced with the state-of-the-art Paksat-1R communications satellite in three years, said Air Commodore Arshad Hussain Siraj, Secretary of the Pakistan Space and Upper Atmosphere Research Commission (SUPARCO).

SUPARCO is working on the National Satellite Development Programme, which includes a communications satellite, a remote sensing satellite, satellite launching vehicle and human resource development, he said.

Pakistan is also a founding member of the Asia-Pacific Space Cooperation Organisation, launched in collaboration with China and aimed at making regional countries self-sufficient in space technology, Siraj said. The APSCO is patterned after the European Space Agency.

The organisation is likely to become fully functional by the end of this year next year. China is contributing "major support" for the organisation, he added.

Siraj said space programmes are costly and no individual country has the capacity to complete a satellite project on its own. The APSCO will provide an opportunity for regional countries to help each other, he said. PTI


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## dr.umer

*Pakistan's forex reserves drop to $8.1b ​* 
MENAFN - 05/10/2008 

(MENAFN) A report issued by the State Bank of Pakistan showed that the country's foreign reserve crisis has deepened further last month as the bank's net foreign reserves fell to around $8.1 billion against $8.8 billion, DPA reported.

The report indicated that out of the $8.1 billion, around $4.68 billion are the central bank's own reserves while the rest are deposits of private financial institutions.

In September, the Asian Development Bank approved a tranche of $500 million to Pakistan for balance of payments support but it hasn't arrived yet.

The plunge in reserves from over $16 billion just nine months ago brought the country's ratings to negative among the leading credit rating agencies such as Moody and Standard & Poor. Both agencies expect Pakistan is close to defaulting on its commitments of external loan repayments.


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## Kumar

dr.umer said:


> *Pakistan's forex reserves drop to $8.1b ​*
> MENAFN - 05/10/2008
> 
> (MENAFN) A report issued by the State Bank of Pakistan showed that the country's foreign reserve crisis has deepened further last month as the bank's net foreign reserves fell to around $8.1 billion against $8.8 billion, DPA reported.
> 
> The report indicated that out of the $8.1 billion, around $4.68 billion are the central bank's own reserves while the rest are deposits of private financial institutions.
> 
> In September, the Asian Development Bank approved a tranche of $500 million to Pakistan for balance of payments support but it hasn't arrived yet.
> 
> The plunge in reserves from over $16 billion just nine months ago brought the country's ratings to negative among the leading credit rating agencies such as Moody and Standard & Poor. Both agencies expect Pakistan is close to defaulting on its commitments of external loan repayments.




Pakistan will have to do something seriously now. Coz $8.1B is not enough to make the payments and exp for more than 2 months. 
I think that is the reason Pakistan President is asking for 100$ to run the country.


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## dr.umer

*Wireless Local Loop WLL outpace PTCL's fixed line teledensity ​*
5 Oct 2008

Wireless Local Loop (WLL) subscribers have been growing fast in Pakistan, while fixed-line teledensity was dwindling, according to the telecom indicators of Pakistan Telecommunication Authority (PTA). The PTA statistics showed that WLL subscribers of all the five major operators had been adding the number of users to their network.

The WLL subscribers of Pakistan Telecommunication Company Limited (PTCL) have increased from 1,126,585 million in July to 1,139,399 million in August, followed by Telecracd from 523,773 million to 534,809 million, WorldCall from 500,159 million to 509,606 million, Great Bear from 47,214 to 43,847 and Buraq from 388 to 400. The total number of WLL subscribers has increased from 2,224,128 in July 2008 to 2,251947 in August.

The PTA telecom indicators showed a declining trend in fixed line subscribers with going down from 4,086,206 million subscribers in 2007 to 4,546,443 million in the first two months of 2008. The PTCL fixed-line subscribers have declined from 5,128,442 million in 2006 to 4,405,161 million in August 2008. However, the subscribers of other fixed-line operators WorldCall, NTC, Brain Limited and Union Communication have increased during the current fiscal.

The fixed-line subscribers of NTC have increased from 99,665 million in 2007 to 103,059 million during the period under review of ongoing fiscal. The subscribers of Brian Limited have gone up from 6,089 in 2007 to 7,376 in the first two months of 2008. The subscribers of World Call and Union Communication have increased from 10,748 and 2500 in 2007 to 11,347 and 3,500 respectively in August 2008.

The fixed-line users of Naya Tel have increased from 11,000 in 2007 to 16,000 in 2008. The data showed that fixed-line teledensity dwindled to 2.80 in 2008. The PTA's quarterly telecom review also pointed that fixed-line teledensity in the country was on decline with the PTCL losing its fixed lines users.

The review revealed that the dropout started from 2006 when the PTCL fixed-line subscribers were 5,128,442, but declined to 4,405,161 in 2008. The telecom experts say that the fixed-line users have been declining because of increase in WLL and mobile users, besides decline in the PTCL service.


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## Neo

*Forex reserves drop $688m in one week ​* 
Sunday, October 05, 2008

KARACHI: Escalating payments for oil and other import products swallowed another chunk of $688 million from the countrys foreign exchange reserves during the last one week, putting the rupee under tremendous pressure.

In spite of financial and economic problems faced by the country, the unbridled and non-stop imports have further widened the trade and fiscal deficits.

The State Bank of Pakistan (SBP) said the countrys foreign reserves fell to $8.136 billion on September 27 compared to $8.824 billion a week before on September 20. The central banks own reserves dropped by $721.2 million to $4.686 billion. Contrary to this, foreign reserves held by commercial banks rose by $33.5 million to $3.450 billion.

Forex dealers said panic buying of dollars by banks caused a rise in their foreign reserves amid high demand from customers, which brought heavy pressure on the rupee. The speculative buying of dollars by banks led to a depreciation of the rupee, which touched a record low on Saturday at Rs78.50 in the inter-bank market.

In the prevailing situation, there is no scope of an improvement in foreign exchange reserves which may further deteriorate macroeconomic indicators, an economist commented.

A currency dealer said: Although some foreign lending institutions have agreed to provide financial assistance for Pakistan and the Asian Development Bank has released $500 million, it will take time to rebuild liquid reserves.

Pakistans total liquid foreign exchange reserves stood at its highest level of $16.078 billion in September 2007. Of that figure, the reserves held by the central bank were over $13.804 billion and those by commercial banks at $2.275 billion.

However, in a short span of one year due to sky-high oil prices in the international market and excessive reliance on imported commodities, almost 50 per cent of foreign reserves were washed away. On the other hand, the pace of foreign inflows has not been commensurate with the fast depleting reserves.


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## Neo

*Telecom companies make billions as customers suffer ​* 
Sunday, October 05, 2008

KARACHI: Telecommunication companies in Pakistan made billions during the three days of Eid-ul-Fitr while choked service lines caused trouble to people with their calls and SMS, leading to deduction in balances without satisfactory communications.

As Muslims in the country wished each other through phone calls and SMS for the arrival of the month of Shawwal, many around the nation complained that they faced troubles such as repeated disconnection of phone calls, disruption in line or failure to send messages successfully.

The subscribers of various local cellular service providers and landline packages said that they had their balances deducted from their phones despite failing to make a connection with the required destination. The worst hit ones were those who tried to make international calls and had their balances subtracted without succeeding and those who had sent bulk messages and failed to receive the delivered report to even one sent message.

Shahzad Anwer, a subscriber of Warid, said that he does not subscribe to any free SMS package and had loaded a Rs200 card just to send messages. However, he was shocked to find out that none of his friends had received a message from him and he had lost all his balance.

Aliya Matloob, another subscriber of Mobilink said that she had tried calling her parents who live in Dubai to wish them but faced repeated disconnections which made her lose several hundred rupees.

Similarly, Nadeem Akhtar, who arrived in Karachi from the UK, faced trouble in contacting his brothers on the first day of Eid when he waited at the airport for them to receive him and could not get through. He also had his balance deducted from his account.

On the other hand, Pakistan Telecommunications Company Limited (PTCL) made millions of rupees by fleecing subscribers off their money during the three-day Eid-ul-Fitr holiday as they stopped their facility of free phone calls from September 30, and failed to inform their subscribers.

This resulted in subscribers making several calls during the stipulated free call time between 11pm to 6am, unaware that the facility had been withdrawn, which is likely to lead towards higher telephone bills for the current month.

Upon contacting PTCL, the company spokesman Ali Kader Gilani informed The News that PTCL had informed the Pakistan Telecommunications Authority of their reversal of the facility through a written notification and also sent out advertisements to various leading newspapers of the country.

He added that a release had also been issued in this regard which clearly stated that the free local call promotion was being discontinued to be replaced with another alternative package. He stressed that PTCL had not cheated its subscribers and had in fact introduced a new weekend package which would come into effect on October 5, and would be offering them further improved and reduced rates.


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## Neo

*Relief as Pakistan receives $500m from ADB​* 
*Another $500m may be released by June 2009​*
Sunday, October 05, 2008

ISLAMABAD: Pakistans struggling economy got a sigh of relief by receiving $500 million first tranche out of a total $1.4 billion loan facility from the Asian Development Bank (ADB) under the Accelerating Economic Transformation Programme.

Yes, we transferred the first tranche of $500 million on September 30 at 9pm into the accounts of the Government of Pakistan, said a senior ADB official while talking to The News here on Saturday.

The second tranche of $500 million, he said, would be disbursed by June 2009 keeping in view the pace of reforms committed by Pakistan in the energy, agriculture and financial sectors.

The last tranche of Accelerating Economic Transformation Programme (AETP) worth $400 million will be disbursed by June 2010 on the basis of the performance achieved by the government in certain sectors of the economy, he added.

The ADBs Board granted its consent for $500 million loan facility after attaching a Letter of Comfort of the IMF along with the document on the basis of which this amount was approved on September 30.

The ADB attached certain conditions for approving the release of first tranche worth $500 million for Pakistan, under which Islamabad will be bound to eliminate power sector subsidy by June 30, 2009. 

The elimination of power sector subsidy means that Islamabad will have to increase power tariff by at least average 30 per cent till June 2009. 

The subsidies on fuel will be abolished completely as currently the government is giving subsidy on diesel in the range of Rs5 to Rs8 per liter.

The ADB and Pakistan also agreed under Pak Accelerating Economic Transformation Programme to resolve the issue of circular debt in the power sector by October 2010, the official sources quoted attached conditions of the ADB.

Pakistan also agreed to fully implement targeted safety nets programme till 2010 by improving network and coverage of Benazir Income Support Programme and other safety net programmes.

The PPP government also agreed to come with Structural Transformation Strategy and Action Plan to be adopted by the federal cabinet by 2010, added the official. Pakistan and ADB also plan to come up with auto industry development plan under this programme. Islamabad will also take measures to put in place risk based custom inspection and e-filing of Sales Tax and Customs.

The financial sector regulations will be strengthened by the State Bank of Pakistan under the approved amount programme of the ADB. The Anti Money Laundering bill will also be approved, said sources.

The wheat support price has also been increased in accordance with the ADBs programme. The issue price of wheat will be around 90 per cent of the market price at that time.

The ADB loan will support ongoing changes in the energy and agriculture sectors, and will help lay the foundation for a radical transformation of the economy by diversifying, deepening and expanding a competitive industrial sector, and creating much-needed jobs for Pakistans young and growing labour force.


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## Neo

*Pakistan spearheads launching of regional space body ​* 
Sunday, October 05, 2008

ISLAMABAD: On the pattern of European Space Agency, Pakistan is planning to set up Asia-Pacific Space Cooperation Organisation (APSCO) in collaboration with China aimed at making regional countries self-sufficient in the field of space Technology.

The organisation is likely to start functioning by end of this year or in next year, Secretary Pakistan Space and Upper Atmosphere Research Commission (Suparco) Air Commodore Arshad Hussain Siraj told PTV on Saturday.

Pakistan is founding member of APSCO, while China being time-tested and all-weather friend of Pakistan is contributing major support in setting up of such an organisation, he added.

World Space Week is being observed from October 4 to 12 to create awareness among masses about importance of space and its related education for the contemporary world.

The space week is celebrated across the world because first space shuttle was launched on October 4, 1957.

Air Commodore Siraj said Suparco was working on a National Satellite Development Programme under which projects like communication satellite, remote sensing satellite, satellite launching vehicle and human resource development would be completed.

Presently, he said Pakistan had a leased satellite PAKSAT-1, which would hopefully be replaced with state-of-the-art technology PAKSAT-1R in 2011. It would be a communication satellite, he mentioned.


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## Neo

*Govt to initiate new power distribution scheme worth Rs 3bn​*
ISLAMABAD: To meet sever power shortfall and continuous load shedding, the government is initiating several power generation/distribution scheme through utilisation of internal and external resources.

For increasing power generation capacity, the government is planning Power distribution enhancement project Phase-I scheme with a cost of Rs 3.005 billion with Rs 240 million as foreign exchange component (FEC).

Pakistan Electric Power Company (PEPCO) will be the sponsoring agency and the executing agency is PESCO. The project will be partly funded by Asian Development Banks loan and partly by Peshawar Electric Supply Company (PESCO) own resources. The expected time for completion of project is 30 months.

It would help in extension of existing 132KV grid stations and augmentation of transformer capacity at various locations. Under this project, the installation of capacitors within switchyard of the grid stations and on 11KV feeders will be completed. The scheme would help in the completion of Distribution of Power (DoP), which includes new 11KV feeders and installation of distribution transformers for accommodating new rural/urban customers. The project would help the government to initiate Energy Loss Reduction (ELR) programme of existing feeders.

Official in the Planning Commission told Daily that the project was discussed in the Central Development Working Party (CDWP) meeting. PEPCO earlier submitted an umbrella PC-I containing the components of STG, ELR and DoP for all DISCOs therefore, it was decided in the meeting that respective DISCOs should prepare separate projects/ PC-Is containing the component of STG, ELR and DoP and submit to the commission for approval.

The government has already allocated Rs 804 million for all DISCOs in the Public Sector Development Programme (PSDP) 2008-09. The existing power generation capacity is not sufficient to meet the ever-increasing demand of the country. In the recent years, as economic activity picked up in Pakistan, there is a supply and demand gap in the existing system (more than 4000MW power deficit recorded in May 2008).

For additional power generation requirement, emphasis is laid on the development of indigenous resources i.e. hydro, renewable, coal, natural gas and nuclear. The power sector requires immediate enhancement in capacity to meet the economic growth targets. Electricity demand is expected to grow by around 10 percent per annum during the coming years. To cope with this high growth in demand, it is estimated that Pakistan would require about 2000MW additional capacity annually, which would need to be distributed through transmission and distribution network. Consequently, enhancement in the capacity of PESCOs system is urgently required. The proposed scheme will help to meet the requirement of over all distribution system efficiency and stability to deliver reliable power to their customers.

At present, numbers of power generation projects are under implementation stages through public and private sector. A total of 1689MW of power is expected to be available by the end of 2008. Out of which 1217MW of thermal power projects are under process by the public sector (150MW at Faisalabad, 100MW at Guddu, 192MW at Multan, 150MW at Sialkot, 200MW rehabilitation of existing GENCOs and 425MW of Rental power generation) and hydropower project of Satpara (16MW). In private sector, 375MW of thermal (150MW of Attock Gen Ltd and 225MW of orient thermal power) and 81MW of hydro power (Malakand-III). The detailed engineering of Diamer-Basha Dam Project has recently been completed and its construction is expected to start by mid 2009. In addition, a number of projects for extension and augmentation of existing grid station have also bee initiated by NTDC.


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## Neo

*Iran to reduce Pakistans gas if Indian supplies suspended​*
ISLAMABAD: Iran has proposed a reduction in Pakistans gas supply if supply to India is wilfully disrupted.

Official sources in Islamabad told Daily Times on Saturday that the ECC of the cabinets Sub-Committee on Gas Import Projects has been informed that Iran has proposed to include the new clause to the proposed Gas Sale Purchase Agreement of the Iran-Pakistan-India gas pipeline project. If the supply of gas to India is wilfully disrupted by Pakistan, Iran shall have the right to reduce Pakistans gas supply in the same proportion.

The sources said the committee had decided that the proposed change could be agreed on if a clause ensuring Pakistan most favoured nation status is also included.


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## SmashJ

Pakistan plans to sell valuable energy assets, beginning with a major gas field, as it tries to reap billions of dollars from deals with investors in industries like banking and farming.


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## SmashJ

SmashJ said:


> Pakistan plans to sell valuable energy assets, beginning with a major gas field, as it tries to reap billions of dollars from deals with investors in industries like banking and farming.



http://www.nytimes.com/2008/09/09/b...nture.html?partner=permalink&exprod=permalink


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## SmashJ

In addition to my previous post.


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## Neo

*Pakistan seeks Chinese investment in cement sector​* 
ISLAMABAD (October 05 2008): In a major move to encourage Chinese investment, Pakistan has approached the Chinese firms to encourage investment in the cement sector by establishing new plants in the country. Sources told Business Recorder on Saturday that the issue of new Chinese investment in Pakistan and progress of existing Chinese projects was discussed in a recent meeting between Chinese Ambassador in Pakistan Luo Zhao Hui and senior officials of different ministries at the Planning Commission.

The meeting thoroughly reviewed all Chinese projects in Pakistan, which was attended by the senior officials of the Planning Commission, Federal Bureau of Revenue (FBR), Finance Division, Ministry of Petroleum, Board of Investment (BoI), Ministry of Railways and Ministry of Foreign Affairs. According to sources, the government has invited Chinese firms to express interest in the establishment of the cement plants in Pakistan. The idea is to ensure maximum investment in potential sectors, particularly cement industry.

The duties and tax concessions on the import of plant, machinery and equipment under different FBR notifications and tax laws are available to the new foreign investors. The procedure of "advance ruling" under Income Tax Ordinance 2001 is also available for new investors to know about their income tax liability in advance before making any investment in Pakistan.

During the meeting, the Chinese Ambassador informed the Pakistani government that during the visit of President Asif Ali Zardari to China, a memorandum of understanding (MoU) on sharing of knowledge between Chinese and Pakistani Planning Commissions might be signed.

The agreement would be instrumental in strengthening long-term relationship between the two countries. The Chinese Ambassador also thanked the government of Pakistan for supporting expeditious planning and implementation of projects being executed by the Chinese companies.

Sources said that the meeting was informed that the Cabinet on September 23 2008 approved the grant of long distance license to Pak-China Mobile Company. According to sources, the meeting was also informed that the ECC of the Cabinet on September 22 approved the award of specific contracts by ERRA to the Chinese companies at the agreed rate of 25 percent of the projects' costs being funded through the Chinese Preferential Buyer's Credit (PBC) loan of around 300 million dollars.

The meeting also discussed that the significant progress has been achieved in the removal of 132 KV line and its pylons from the plot for Pak-China Friendship Centre in Islamabad, and the removal would be completed by end of current month. Revised PC-I, incorporating the demand for additional vehicles, has been approved by the Central Development Working Party (CDWP).

The land for the Pak-China Friendship Centre at Beijing has been identified. About the extension of the exploration license for Baska Block, the meeting was informed that the Ministry of Petroleum had issued extension of one year to the relevant Chinese firm.

As far as Duddar lead-zinc project is concerned, 60 kilometres of road out of a total of 106 kilometre has been completed and the balance work is being completed on fast track basis. The meeting was informed that Sichan Electric Power Company of China had completed the work on 500 KV substations at Lahore, however, due to some defects in the relay equipment, the taking over of the substation was delayed. The equipment is expected to be ready within three weeks after which the substation would be taken over for the final testing.

The Rawat substation is also ready, however, its testing would be conducted during October 10-15 and would subsequently be taken over once it qualifies the testing. The government also asked the Ministry of Petroleum and Natural Resources to take necessary steps to avoid delays in initiation of Qadirpur gas compression station project. Similarly, Sinocoal of China and Engro have planned to set up a joint venture to participate in the Thar Coalfield Block-2 and Mining and Power Generation Project.

The meeting was informed that MCC of China had shown interest in acquiring the Reqdiq project. However, the project has already been awarded to a Chilean and Canadian firm, which have invested by now 20 million dollars and are in the process of converting their licenses into lease.

The government of Balochistan has equity in the project. The MCC could join in some other forthcoming projects in the vicinity. About selling of shares of Pakistan Steel Mills, it was stated that the government was in the process of segregating the core and non-core businesses of Pakistan Steel Mills. Once the job was completed, decision on selling of the shares would be taken subsequently, the sources said.

Sources said that the Pakistan Railways had recently awarded two tenders - signalling and replacement of locos - to Chinese companies. About the Pak-China Haier Ruba Industrial Zone, the issue of land has been resolved and it has been decided that the cost of the land will be jointly borne by the Federal government and the government of Punjab.

Sources said that the Pakistan was committed to provide Rs 18 billion for the Pak-China Higher Education University. This funding would be available in addition to the Higher Education Commission (HEC) present Public Sector Development Programme (PSDP) allocation for establishment of the university during the next eight years. The HEC has been asked to start the courses in the campus of COMSATS and continue it there for next two years till a final decision is taken to establish and build a new campus.

The Chinese Ambassador expressed his concerns over non-starting of the session, since the Chinese faculty had already arrived Pakistan at the cost their jobs back in China. The relevant Pakistani authorities assured the Chinese envoys that the session would start as agreed with their counterparts.

The meeting also discussed other projects of Chinese investors in Pakistan. The satellite project with Chinese has been approved at the highest level, and the government of Pakistan is waiting the pricing, incentives and technical details from the Chinese side.

The Chinese side was requested to plan funds for the construction of Diamer Bhasha Dam. Recently, Rs 116 billion was approved for acquisition of land for the project. The Chinese side expressed its willingness to consider the funding for the dam. The meeting also discussed the issue pertaining to new location for Chinese Embassy in Pakistan.

The Chinese Ambassador said that the Capital Development Authority (CDA) was asking for some additional funding for the land reserved for new Chinese Embassy, which, in their opinion, was not a fair charge. The relevant authorities the ambassador assured that the matter would soon be resolved once the CDA Chairman was back in town. He asked the Chinese side to provide the price differential. The Chinese side agreed to provide the information for speedy establishment of new Chinese Embassy in Pakistan.


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## Neo

*World Bank to provide $50 million to Pakistan for poverty reduction​* 
FAISALABAD (October 05 2008): World Bank will provide $50 million to Pakistan for launching "Pakistan Social Protection Project" to reduce poverty and inequality and promote human capital investments among the poor families through the provision of direct monetary transfers and incentives.

Integrated Safeguards Data Sheet of World Bank revealed that WB and IDA assistance under the proposed project would aim to contribute to these ultimate objectives of poverty reduction and human capital development among poor families.

The objective of the proposed project is to strengthen the ability of the FSP and CSP programmes to play an effective role in the country strategy to reduce poverty and inequality and to foster investments in human capital, as well as to assist the Pakistan in the development of a minimum package of social care services for the poor structured around these programmes.

Pakistan Social Protection Project proposes to support the Government of Pakistan (op) in the development and implementation of a minimum assistance package targeted to poor households with the objective of increasing the effectiveness of social protection interventions in Pakistan in terms of both poverty alleviation and promotion of human capital accumulation.

Recent economic growth has significantly contributed to poverty reduction in Pakistan, with the poverty rate declining from 34 to about 28 percent between 2000-2001 and 2004-2005 (the latest available data). This improvement could be felt both in urban and rural areas, as well as across all four provinces.

Specifically, WB report said that under Phase-1 of the project would support the effective strengthening and implementation of the Food Support Program (FSP) and Child Support Program (CSP) programs and of a minimum package of social care services.

EFFECTIVENESS WOULD BE ASSESSED IN TERMS OF: 

(I) the targeting, coverage, and adequacy of the benefits/services;

(ii) efficacy of the CSP conditionalities (co-responsibilities) to foster investment by beneficiary families in human capital; and (iii) the capacities of involved institutions (including ministries, program staff, service providers, and beneficiary groups) to manage these programs efficiently, to monitor results, and to (begin to) evaluate impacts.

Under Phase-2 of the Project would consolidate and deepen the reforms, further perfecting the design of the programmes based on experience under phase-1.

Such second generation reforms might include measures to enable scaling up/down depending on country conditions, further strengthening of M&E, additional administrative efficiency gains, possible development of complementary social protection instruments/services for poor people who are highly vulnerable but do not have children (and thus are not eligible for the co-responsibility requirements of the CSP); and development of mechanisms to enhance prospects for self-sufficiency of poor families.

Achievement of these goals and the ability to monitor them adequately will be evidence of improvement in the institutional framework and capacities for the program. Progress towards the ultimate objectives of poverty reduction and human capital accumulation will be difficult to assess and to attribute to the program during the project life span with statistical rigor.

Nonetheless, the project will include both baseline and follow-up work to evaluate program impact on educational performance, in addition to building upon the results of the first phase of the impact evaluation of the CSP pilot.

To achieve the objective of "Pakistan Social Protection Project", WB stated that the project will include activities aimed at reaching the very poor (ie, the poorest 10-15 percent of the population), designing and implementing a minimum assistance package for this group, and, more generally, strengthening the overall capacity of the government for the effective provision and implementation of social protection.

IN PARTICULAR THE PROJECT WILL BE STRUCTURED AROUND THREE COMPONENTS: 

A. Design and implementation of an effective targeting mechanism for social protection interventions. The project will provide technical and financial support for the development of a targeting instrument for the FSP and CSP programmes, as well as other social programmes. Activities under this component will include:

(I) Technical assistance to the design of targeting tool;

(ii) Technical validation, including discussions with government representatives and others as well as piloting of new instrument;

(iii) Implementation.
 
B. Design and implementation of a minimum assistance package for the very poor, with a focus on cash transfers and social care services. With respect to cash transfers, the project will support ongoing reform efforts within PBM, including the strengthening of the FSP and the implementation of the CSP. With respect to social care services, the project will support innovations in delivery models in order to increase effectiveness and impact and to promote complementarities between such services and cash transfers. Activities under this component will include:

(iv) Development of effective mechanisms in PBM for program management, including, entry (enrollment) and exit, monitoring of conditionalities under CSP, and benefit payment;

(v) Design and implementation of innovation fund or similar mechanism for the delivery of social services to poor households;

(vi) Development of a communications and social accountability strategy to improve beneficiaries understanding about rights and responsibilities under various programs, and their capacities to hold service institutions accountable.

C. Institutional capacity building. The project will support activities aimed at strengthening supervision and implementation capacity at the federal, provincial and district levels, as well as at articulating policy making across these three levels of government around the National Social Protection Strategy.

The team is currently considering the potential inclusion of a fourth component that would directly finance both cash transfers and social care services on a performance-based manner. The team would like to receive management guidance on this issue, however, prior to any discussions with the Pakistan. The main rationale for the inclusion of such component would be to strengthen the alignment of incentives between the Ministry of Finance and the MoSWSE regarding project and programme implementation.


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*GDP growth mainly depends on sound agriculture sector​* 
ARTICLE (October 05 2008): The gross domestic product (GDP) is one of the primary indicators used to gauge the health of a country's economy. It represents the total value of all goods and services produced over a specific time period. Our country lies on No 47 in world list of GDP prepared by International Monetary fund for the year 2007.

Agriculture sector is the sustenance of our country's economy. It contributes around 21% to the GDP, employees 44% of labour force and contributes to 68% of foreign exchange earning through export of raw material, semi processed and processed agriculture products. Sector wise contribution towards formation of GDP and its growth over the last five years is shown in table and chart. Data extracted from SBP website.

=========================================================================================================================
YEARS
=========================================================================================================================
SECTOR 2002-2003 2003-2004 2003-2004 2004-2005 2004-2005 2005-2006 2005-2006 2006-2007 2006-2007
% % % %
=========================================================================================================================
Agriculture 941,942 964,853 2.43 1,027,403 6.48 1,043,587 1.58 1,095,673 4.99
Industry 926,183 1,076,808 16.26 1,207,268 12.12 1,267,413 4.98 1,353,554 6.80
Services 2,053,979 2,173,947 5.84 2,358,559 8.49 2,585,736 9.63 2,791,494 7.96
TOTAL 3,922,104 4,215,608 7.48 4,593,230 8.96 4,896,736 6.61 5,240,721 7.02
=========================================================================================================================

Around 70% of our population lives in rural areas and their livelihood depends on agriculture and its allied economic activities. We have observed uncertain growth and overall decline against the targeted growth in this sector over the period of the last five years. Nowadays, we are facing its impact in shape of scarcity of food items and unprecedented hike in their prices.

Overall industrial growth has also declined due to increase in cost of production ie cost of raw material, fuel/power and of capital. Most of our manufacturing units have become incompatible in local as well as in export market.

China's products due to its cost compatibility, are replacing our domestic product and our manufacturing units cost is also increasing on account of small scale production. In the context of implementation of WTO a great stress is being forecast on our manufacturing sectors.

There is extreme need to make efforts to bring down the cost of fuel/power and capital on war footing basis to bring this sector in a viable position. Over the last five years service sector has performed very well. In case of prolonging of the present socio-economic and political situation its growth seems to be affected in the future as it is again linked with the health of overall economy of the country.

Our agriculture sector has great potential for sustainable and higher growth of GDP in Pakistan as we have space for horizontal as well as vertical expansion of this sector. The vertical growth potential can be assessed from the data given below in table No 2, derived from the website of Ministry of Agriculture of Pakistan and Food Agriculture Organisation of UNO.

=======================================================================
YIELD COMPARISON
=======================================================================
Products National Progressive National Average
=======================================================================
Average Growers Yield Yield Developed
Yield Pakistan Pakistan countries
(Tons/Hector) (Tons/Hectors) (Tons/Hector
=======================================================================
WHEAT 2.51 5.5 7.20 (Germany)
4.00 (Australia)
2.82 (USA)
4.45 (China)
-----------------------------------------------------------------------
COTTON LINT 0.704 1.45 1.86 (Australia)
1.24 (China)
0.80 (USA)
-----------------------------------------------------------------------
SUGAR 49.22 110 91.97 (Australia)
73.82 (USA)
82.52 (China)
-----------------------------------------------------------------------
RICE PADDY 3.16 7.30 6.30 (Australia)
7.70 (USA)
6.26 (China)
-----------------------------------------------------------------------
POTATOES 13.34 25.00 34.41 (Australia)
43.66 (USA)
14.35 (China)
-----------------------------------------------------------------------
ONION DRY 13.82 N/A 42.88 (Australia)
51.18 (USA)
20.61 (China)
-----------------------------------------------------------------------
APPLES 3.12 N/A 13.82 (Australia)
29.80 (USA)
13.71 (China)
=======================================================================
It undoubtedly shows that there is great potential for vertical expansion in agriculture sector as our progressive farmer is taking a yield of more than double of our national average yield. Further, nation-wide average yield of developed countries is more than our progressive farmer's yield, which shows a gap between national average yields of our country and the developed countries yield. It is high time that our government and other regulatory and facilitating departments relating to this sector should sit together and formulate laws and policies in consultation with all stakeholders for the development of this sector that our national average yield come up to the level of national average yield of developed countries. In the first step our national average yield be brought to the level of our progressive farmers yield within a span of five to eight years.

Similarly other allied activity to agriculture sector like dairies/livestock, fisheries, forestry and horticultures also need to be promoted through advanced technology that may meet international standard for enhancing their exports. Our country has great potential to increase production of these products to meet domestic demands as well as exports.

At the same time we must also take drastic steps for establishing of food processing and packaging industries of international high quality and standards for increased demand of our products abroad. At present our financial institutions paying no attention to provide credit facility to farmers as they feel insecure due to lack of legislation in this sector and the State Bank of Pakistan is not performing its regulatory role effectively for utilising available funds with the financial institutions.

SBP should devise such regulatory measures for investment portfolio of financial institution that could reduce artificial demands, may enhance productivity, increase GDP with the stabilisation of all other economic sectors. Investment portfolio of financial institutions, data taken from website of SBP for April 2008 is depicted in this chart.

It is very strange that the sector which is contributing 21% to GDP, employing 44% of labour force and having potential to increase production and exports more than double, is highly neglected by the financial institutions of our country by providing only 3.7% of credit/loaning to this sector. On other side massive loaning to Government of Pakistan, consumer financing, NBFC is questionable. It creates artificial demand and speculation, adds nothing to real productivity and growth of economy.

I am very much optimistic that our agriculture sector can play a vital role in sustainable and higher growth of GDP, provided government and other regulatory/facilitating bodies like SBP, SECP, FBR, Financial Institutions and agriculture extension and research department play their role for the development of this sector.


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## Neo

*Increasing agricultural productivity​*
EDITORIAL (October 05 2008): Prime Minister Yousuf Raza Gilani deserves to be applauded for taking timely and integrated decisions to raise agricultural productivity. He told a news conference in Islamabad on Tuesday that the support price of wheat would be increased from last year's Rs 625 to Rs 950 for the new crop.

Since the announcement has come well before the sowing season, it is expected to act as a good incentive for the farmers to grow more wheat. Gilani pointed out that the measure would cost the government Rs 10 billion whereas last year a hefty sum of Rs 62 billion was spent on wheat imports. Indeed, it is a pertinent comparison considering that food from abroad made a significant contribution to the inflating of our import bill.

And yet, the country continued to face serious food shortages, which were likely to get worse unless the government put its act together and paid serious attention to our own agriculture sector. Another welcome decision pertains to the launch of a Crop Loan Insurance Scheme under which it would be compulsory for loan seekers to insure all major crops like wheat, rice, maize, sugarcane and cotton.

Crop insurance has been tried and tested in a number of countries as an important means to provide farmers protection against natural calamities. Our government has taken a radical step forward in announcing it would share some of the burden of subsistence level farmers obtaining loans for major crops.

The banks granting loans to this category of farmers would pay the agreed premium to the concerned insurance companies, and claim reimbursement from the government on biannual basis following verification by the State Bank. Properly implemented the scheme can go a long way in increasing productively as well as improving socio-economic conditions in our rural areas, where live a vast majority of the poor.

As they go about their business the concerned banks and companies must pay due attention to the fact that illiteracy is rampant in these areas, and hence the procedure of obtaining production loans should be kept simple and easy to deal with.

The State Bank has also moved in conjunction with the government announcements to rationalise credit limits in view of the recent surge in the prices of various agricultural inputs, such as fertiliser, pesticides, fuel and electricity, etc. The Bank said it was enhancing the indicative credit limits for major as well as minor crops, orchards and forestry by an average of 70 percent.

There is also need for longer term measures to help raise productivity through not only better techniques and inputs with loans but also by giving land ownership rights to landless peasants. As the past experience shows, the landed aristocracy ruling this country would not allow any meaningful land reform in the foreseeable future. What is doable at this point in time is distribution of state lands among the peasants.

Indeed, there have been some such attempts in the past, but sans the provision of basic requirements, ie, loans for the procurement of inputs, and assured water supply. Notably, so far the goal has been to increase productivity through better inputs, which is important. But it is important to consider achieving that goal by enlarging farmers' participation as well.

Together with distribution of state lands among landless peasants the government should not only introduce loan schemes, but must also start work on new water projects. While announcing the latest agriculture-related sector measures, the Prime Minister did say the government was focusing on the availability of irrigation water, too, by building small dams. Hopefully, that focus will yield results sooner rather than later.


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## Neo

*Punjabs approach to fiscal autonomy​*
PUNJAB has begun firming up its strategy for retaining the existing population-based formula for inter-provincial distribution of resources from the federal divisible pool of taxes under the National Finance Commi-ssion (NFC) award.

The provincial government expects the first meeting of the recently constituted commission to be held this month. It will determine the NFCs terms of reference and formal discussions will be initiated for the next award.

While pressing for retaining population as the sole criterion for distribution of financial resources amongst the federating units, Punjab will also try to seek greater fiscal autonomy for the provinces.

We will actually be beginning from where we left the discussions for the inconclusive sixth award in 2006, a senior Punjab finance department official told Dawn following a briefing last week for provincial minister Tanvir Ashraf Kaira on the provinces stand.

Beginning with the demand for an increase in the provincial share in the divisible pool and cut in the federal governments allocation, Punjab is also looking forward to greater autonomy for the provinces to raise cheaper debt from the domestic market and expansion of their tax-base.

We want the central government to allow the federating units to impose and collect sales tax on services, and any other federal tax  for example, capital value tax on immovable property. Also, we want permission to raise debt from the domestic market, the official said.

He said these issues are of immense importance for Punjab.

Therefore, we want the terms of reference of the new NFC wide enough to include these issues.

Punjab is hopeful that the other three provinces would support its demand for fiscal independence as agreed during an informal meeting of the four provincial finance ministers in June in Lahore.

The federal government has consistently rejected the demand for transferring to the provinces the right to tax major revenue generating services like telecommunication and financial sectors  which cut across provincial boundaries  to the federating units because it thinks it could cause a new dispute on territorial jurisdiction between provinces, particularly Punjab and Sindh.

Also, the centre feels that the proposal would deprive Balochistan and the NWFP of chunk of their share in tax revenue as the services sector there remain underdeveloped. But it is not averse to the provinces taxing services like retail and wholesale markets within their respective territories to increase their tax revenues.

Punjab will also oppose the federal governments decision to benchmark the resource allocation under the NFC on the basis of the current expenditure and own resource generation of the provinces.

The method adopted by the centre is to give a uniform growth rate on the actual current expenditure made by respective provinces in the financial year 2008, and project it over the NFC period. There is an element of discretion in this exercise, which is exploited by the centre, said the official.

This proposal is to the disadvantage of Punjab because of its conscious policy to reduce the level of the current expenditure  it amounts to penalising the prudent province and rewarding the undeserved ones.

The officials are also hopeful that the provinces would unanimously demand an increase in provincial share in the divisible pool.

The provincial share, including subvention grants, is set to rise to 50 per cent of the total divisible pool funds in the last year, 2010-11, of the current interim arrangement.

The interim award was announced by the president in 2006 when the provinces had failed to evolve a consensus on the criteria for inter-provincial distribution of the funds.

Punjab stuck to retaining population as the sole basis for the distribution of funds and the rest of the provinces called for a formula based on multiple indicators.

Punjab feels that the demand for multiple indicators is being advocated on the basis of political necessity rather than economic rationality.

Sindhs argument that the NFC resources be allocated on the basis of revenue collection only takes the point of collection as the basis and not the point of incidence or the real taxpayer. We insist that the NFC should also take into consideration the contribution of taxpayers from Punjab towards federal taxes, said the official.

Balochistan and the NWFP have always argued for inclusion of backwardness, poverty and area in the horizontal distribution formula. But Punjab says that it has the highest number of poor in absolute numbers and the provinces can be compensated for poverty and underdevelopment through the system of subventions.

Punjabs insistence to stick to population as the only criterion for inter-provincial sharing of the NFC resources stems from its heavy dependence on transfers from divisible pool due to lack of natural resources.

While other provinces have guaranteed royalties, excise duty and hydro-electricity profits under the Constitution that make them less dependent on their share from the divisible pool, we are heavily dependent on federal divisible pool share, the official said. Besides, if we closely examine the entire system of federal transfers, we are receiving far less funds than our share in population.

Punjabs total share in the federal transfers and provincial own receipts is calculated at just less than 50 per cent against its share of 57.36 per cent in the countrys population, the official said.

On the other hand, Sindhs share of 30 per cent in the federal transfers and provincial own receipts far exceeds its contribution of 23.71 per cent to the population. The NWFP is also getting 14 per cent or slightly more than its population of 13.82 per cent and Balochistan seven per cent against 5.11 per cent.

An analysis of the federal and provincial budgets for 2007, for example, shows that Punjabs share in the straight transfers (on account of natural resources) is only 11 per cent against Sindhs 61 per cent, NWFPs 16 per cent and Balochistans 13 per cent. Similarly, Punjabs share in subventions  distributed on the basis of backwardness  is 11 per cent against Sindhs 21 per cent, NWFPs 35 per cent and Balochistans 33 per cent.

Punjab is getting lesser share  six per cent  from the divisible pool than its share of 57.36 per cent in the nations population because of distribution of 2.5 per cent GST under different proportions among the provinces.

Punjab is also ahead of the rest of the country in generating its provincial own receipts as was reflected by its share of 63 per cent in the total provincial own receipts of the four units together. Sindhs share is 27 per cent and NWFPs and Balochistans is negligibly low to just seven and three per cent.

The per capita resource of Rs3,221 available to Punjab is also the lowest. Sindh gets Rs4,741, NWFP Rs3,722 and Balochistan Rs5338. Punjab must be compensated for this. Potential own source revenues plus straight transfers need to be realistically assessed and fiscal needs of the provinces taken into account. We will highlight absence of benchmarking and idea of cost of service provisioning and needs, the official insisted.


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## Neo

*Re-opening ancient trade route​*
Following an agreement in principle between the two top leaders of Pakistan and India for allowing Indians an overland trade access to Afghanistan via Pakistan, businessmen are eagerly waiting to see the historic Grand Trunk Road re-emerge as a busy trade corridor between South and Central Asia.

The road built by the famous Pathan king, Sher Shah Suri in the 16th century linked Peshawar with Calcutta. For centuries, it served as a trade route between the Central and South Asia. Many business visionaries feel confident of revival of this old highway.

On the political level, the two states continue to trade accusations, but businessmen from both sides remain locked in consultations without any break, to improve trade and explore investment opportunities, a Jodia Bazar trader said. He had a lot of information on what was going on quietly to improve bilateral business links.

He recalled that the first truck carrying tomatoes from India rolled into Punjab via Wagah for the first time on October 1 last year. Since then no official review has been made of trucks and railway wagons carrying goods from either side, to improve the traffic. But in the year 2007, imports from India exceeded $1 billion. Pakistans exports were a little over $400 million.

In 2008, the two-way trade could be close to $4 billion, he reckoned and estimated that the volume may go beyond $6-7 billion by 2010, once the two sides finalise mutual investment arrangements.

The Indian Prime Minister, Dr Manmohan Singh and Pakistans President, Mr Asif Zardari met recently in New York on sidelines of 63rd United Nations General Assembly session and announced mutual agreement on four vital business related issues. This accord will allow Indians an overland access to Afghanistan, open up the line of control between the two parts of Kashmir in October for resuming cross border trade and bilateral trading via railways of permissible 2,000 items at Wagah in Punjab and at Khokhrapar in Sindh.

May be, it is a mere coincidence that while the Zardari-Singh accord was being announced in the New York, Karachi businessmen were talking to executives of a top business house in Mumbai about a joint venture project for assembling of CNG buses in Pakistan. The only hitch on moving ahead with the plan is law and order situation, said a businessman.

Pakistan never sought import of CNG buses in CBU, Tariq Sayeed, Chairman of Saarc Chamber of Commerce and Industry said, adding that the idea was to seek Indian co-operation for setting up a plant. The CNG buses and heavy vehicles have a big market in Pakistan, India and in Afghanistan. And Pakistan has initiated a six billion dollars international trade corridor project; on its completion, the demand for heavy vehicles will increase manifold.

The Saarc Chamber Chief disclosed that the deputy chairman of Pakistans Planning Commission visited India sometimes back and offered investment opportunities. Every investment proposal will be considered on case to case basis, Tariq recalled. But, he said, the Indians are keen to invest in transport, steel and coal fired electric projects etc. Pakistan stands to benefit from Indian investment, he argued because an auto project like CNG buses will help revive sagging vendor industry. It will also create jobs for our people.

Indian business houses have stepped up their investment exploration since last one year or so. As recently as in May this year, Ruia brothers, Shashi and Ravi of ESSAR group met Prime Minister Syed Yusuf Raza Gilani in Islamabad. ESSAR is interested in energy, steel and shipping sectors.

In the last quarter of 2007, top Indian businessmen landed in Islamabad with investment proposals. Ratan Tata is said to have come in his personal plane with about half a dozen directors of his numerous companies to discuss investment proposals with the then Prime Minister Shaukat Aziz. Ramesh Ambani from the House of Reliance, involved in a number of fields-telecommunications, energy, synthetic textiles, visited Islamabad and Lahore in late 2007. His main interest lay in setting up a giant polyester fibre plant that could cater to textile needs in India and Pakistan and the export markets. But no headway could be made on these proposals because of political developments.

Possibly, this government will pick up the thread from where it was left by the previous one to begin a new chapter of business relationship with India, Siraj Kassim Teli, an influential former President of Karachi Chamber of Commerce and Industry said. We want the governments of two countries to draw up an agreed framework of consultation on business which should be allowed to operate freely without any official interference, Teli added.

Ejaz Khokar, a well-known sports wear manufacturer and exporter from Sialkot named half a dozen Indian fashion design companies and owners of store chains who are keen to work with Pakistani businessmen. Stop and Shop is one such chain in India looking for Pakistani products for sale.

Mr Rahul Mehta, a well-known fashion designer in Mumbai is seeking visa to visit Pakistan to talk to a Lahore-based fashion design gallery owner for putting his products on exhibition and for sales.

You know Indian bridal dresses are now a craze in affluent classes in Karachi, Lahore, Islamabad and other places, Ejaz said and pointed out that these much sought after bridal dresses are coming mainly through informal channels.

His proposal is to have joint venture for expensive dresses to cater to the needs of 15-20 million consumers in Pakistan and 300 million in India. At the same time, the two sides can join hands to offer low cost dresses to 800-900 million consumers in both countries through outlets under joint ownership.

Bilal Mullah, another garment manufacturer and exporter however advises caution before entering into a big business arrangement with Indians. A small gap in bilateral trade is affordable but a big and ever-widening deficit can hurt us financially and also our industry, he warns.

But as this debate goes on, there are many businessmen in Karachi, Lahore and other places who plead for joint ownership of retail outlets in India and Pakistan for offering various products.

After all, we were earning over $3 billion from exports of low value products to the US, an exporter said. He believes that India and Pakistan with so many common factors, poverty being one of them, should join hands in serving their people.


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*Government borrowing for budgetary support reaches Rs 173 billion ​* 
KARACHI (October 06 2008): The government borrowing for budgetary support has mounted to Rs 173 billion mark with an upsurge of 102 percent during the first 11 weeks of the current fiscal year due to increasing expenses and slow inflows.

The over 100 percent increase in government budgetary borrowing reflects that federal government is relying on the State Bank and other banks for budgetary support despite the central bank request to reduce the borrowing and retire the existing debt. State Bank of Pakistan (SBP) has revealed that government sector borrowing for budgetary support has gone up by Rs 87.546 billion during the July 1, to Sep 13 (approximately 11 weeks) of current fiscal year as compared to same period last fiscal year.

With the current upsurge in government's budgetary borrowing from banking system (SBP and other banks) has mounted to Rs 173.235 billion during the first 11 weeks of fiscal year 2009, as against Rs 85.689 billion in same period of last fiscal 2008, depicting an increase of 102 percent.

"Increasing oil and food subsidies have compelled the government to borrow from SBP to meet financial requirements, however the government is expecting that borrowed amount would be retired soon after the improvement in economy" economists said. They said that recently federal government has auctioned first Government of Pakistan Ijara Sukuk, which would help reduce the borrowing from central bank.

The issue of Ijara Sukuk also reflects the government's attempt to discover some new tools of financing as per SBP suggestion, they said. They added "therefore, in the future it is likely that government would reduce its borrowing form central bank", even though budgetary borrowing from SBP is still on the rise at present."

The statistics depict that borrowing from central bank has reached Rs 179.443 billion during the period as previously it stood at Rs 2.886 billion during same period of last fiscal year, depicting an increase of 6117 percent or over Rs 176 billion during the first 11 weeks. However, the government's budgetary borrowing from other banks shows sharp decline and government borrowing for budgetary support has stood at a negative position of Rs 6.207 billion from banks as compared to Rs 82.803 billion borrowing during the same period of last fiscal.


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## Neo

*Tehran parleys widen gap of mistrust over IPI ​* 
ISLAMABAD (October 06 2008): Tehran parleys have widened the gap of mistrust between Iran and Pakistan over Iran-Pakistan-India (IPI) gas pipeline as the host country did not show any flexibility in its demand of reopening of agreed issues of the project.

Pakistan's official delegation which visited Iran between September 27 and 29 told Iranian counterparts during the course of meetings that IPI was a 3-nation project and any agreed issue can be renegotiated once all the parties agree on it.

Iran demands reopening of gas pricing system, besides reviewing the gas sale-purchase agreement (GSPA) for IPI. Pakistan, however, is willing to carry on the formula that was agreed by the parties during the steering committee meeting in Islamabad.

Sources said Iran's changing demands are confusing the decision-makers in Islamabad to such an extent that they have started wondering if Tehran really wants the project to go forward.

A 4-member Pakistan delegation, led by acting Petroleum Secretary, G.A, Sabri, had visited Iran for discussing with Iranian counterparts modalities for IPI. The two sides had held four rounds of talks in Tehran, but they could not make progress on items in their agenda.

Iran had invited Pakistan to negotiate IPI-related issues which had been agreed upon previously in a steering committee meeting held in Islamabad in April last. Since Pakistan is keen to make IPI a reality as early as possible it showed flexibility by accepting Iran's demand to negotiate some issues of the project.

The officials in Islamabad claim that Iran has not reciprocated Pakistan's flexibility. They are of the view that Iran's changing stance is giving negative signal to Islamabad. "We have developed strong feeling now that instead of wasting more time and money on IPI Islamabad should take into account some other workable project to have an additional source for import of gas. The new development can shift our focus from IPI to Turkmenistan-Afghanistan- Pakistan-India (TAPI) gas line project, they said.

IPI is a case of inordinate delay. The project was conceived by India in early 90s. After initial survey, Iran and India thought it necessary to offer Pakistan to become a party to it. Energy-deficit Pakistan immediately accepted the offer and joined the project, which was then renamed as 3-nation gas line. Between 1994 and 2008, the project witnessed different phases. It has been a worst case of economic and geo-political situation. Delay has already pushed up the cost of the project from initial estimates of $2.5 billion to $7.5 billion. Even after an increase of 300 percent in cost, there seems no clear hope of early maturity of the project Pakistan once thought could bail it out from energy crisis.


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## Neo

*Plan for cottage industries uplift ​* 
SIALKOT (October 06 2008): Punjab government has prepared a comprehensive plan for setting up maximum industries aimed at generating employment opportunities in Punjab. Under the plan government was utilising Rs400 million on the development and promotion of cottage industries in the province.

Official sources told Business Recorder here on Sunday that the step was being taken for further accelerating the pace of exports and enhancing the productivity in the Punjab. The development of industrial was top on the government agenda and making adequate efforts for redressal the problems being confronting by the private sector in the Punjab.

The government was also considering establishing mini industrial estates in remote rural areas aiming at promoting non-traditional products being produced in these areas and generate employment opportunities for skilled and semi-skilled persons in their doorsteps in the Punjab, sources added.


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## Kumar

Bloomberg.com: India & Pakistan 

Pakistan's Rating Cut by S&P on Debt Payment Concern (Update3) 
By Khalid Qayum

Oct. 6 (Bloomberg) -- Pakistan's credit rating was cut by Standard & Poor's, which doubts about the country's ability to meet $3 billion in debt-servicing costs as terrorism risks grow and investors flee emerging markets.

The nation's long-term foreign-currency rating was cut two levels to CCC+ from B, with a negative outlook, the U.S. rating company said in a report today. The rating may be lowered further if the government fails to stop the growing external imbalances, the report said.

Pakistan's President Asif Ali Zardari is seeking $100 billion to overcome the nation's economic crisis and to fight terrorism, the Wall Street Journal reported last week. The funds will help stop the outflow of capital from the country each time there is a bomb blast and it will build business confidence, Zardari said, according to the report.

``It is not a good sign for future foreign inflows,'' said Muzzammil Aslam, an economist at KASB Securities Ltd. in Karachi. ``This will halt efforts by Pakistan to raise funds from international financial markets and it will have to seek funds from bilateral or multilateral lenders.''

Pakistan is the world's riskiest government borrower, according to credit-default swap prices from CMA Datavision, with investors concerned by a deterioration in security that saw 53 people killed in a bomb attack on the Islamabad Marriott hotel last month.

``The negative outlook reflects our expectation that multilateral and bilateral aid, including deferred oil payment schemes, may not be timely enough,'' S&P said in the statement. The agency cut Pakistan's rating to B in May.

Foreign-Exchange Reserves

Pakistan is running short of money to repay state debt. Its foreign-exchange reserves have dropped 67 percent in the past year to about $4.7 billion, S&P estimated.

Pakistan's next interest payment on its dollar-denominated bonds is due in December and the government is scheduled to repay $500 million in February on a 6.75 percent note.

Credit-default swaps on Pakistan's $2.7 billion of dollar- denominated bonds outstanding have more than doubled since the start of September to 2,050 basis points, Royal Bank of Scotland prices show. That means it costs $2.05 million annually to protect $10 million of the country's debt from default for five years.

Karachi's KSE100 Index has lost more than a third of its value this year and the rupee has fallen 27 percent. The Karachi Stock Exchange imposed trading curbs on Aug. 28 that stopped stocks from falling below their Aug. 27 level. The curbs are due to be reviewed this month.

Balance of Payments

Pakistan's balance of payments deficit increased six-fold in the first two months of the year that started July 1 to $2.5 billion and the current account deficit reached 1.6 percent of the $150 billion gross domestic product, the report said.

``Pakistan's balance of payments is under significant and rising pressure,'' S&P said. Capital inflows are ``increasingly deterred by the prolonged political uncertainty and adverse security climate.''

An economic bailout may be considered by members of the Friends of Pakistan group, which is led by the U.S., the U.K. and the United Arab Emirates, at a meeting in Abu Dhabi this month, Dawn newspaper reported Oct. 5.

The group's first meeting was held in New York on Sept. 26 on the sidelines of the annual UN General Assembly. The other countries who joined the Sept. 26 meeting were Australia, Canada, China, France, Germany, Italy, Japan, and Turkey.

More than 2,000 people were killed in Pakistan in 2007 in terrorist attacks that the government blames on militants opposed to its support of the U.S.-led campaign against terrorism.

To contact the reporter responsible for this story: Khalid Qayum in Islamabad at kqayum@bloomberg.net.


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## Neo

*WB to provide $2.25 billion for trade and energy corridor​*
** Loan expected to ease burden on Finance Ministry for providing Rs 2 billion to PSO for oil terminal at Gwadar
* China to develop oil city in Gwadar, railway track to be laid to China​*
ISLAMABAD: The World Bank (WB) is likely to provide Pakistan $2.25 billion to lay the infrastructure of a trade and energy corridor, a senior official in the Petroleum Ministry told Daily Times.

The official said Pakistan had requested the WB authorities to provide $2.25 billion for developing the infrastructure of the trade and energy corridor that would serve as a gateway for commerce and transport between South Asia, Central Asia, China and the Gulf countries.

He said negotiations were under way and the WB had indicated it would provide the loan.

Oil Terminal: The official said the government had planned setting up an oil terminal at the Gwadar Port and the Pakistan State Oil (PSO) had estimated the setting up of the terminal would require Rs 2 billion. He said the Planning Commission had asked the Finance Ministry to provide the amount to the PSO. He said the Finance Ministry was under pressure regarding the financing and WB funding could help in the circumstances.

China: He added China would develop an oil city in Gwadar and many oil refineries would be set up, resulting in huge investment as well as enhancing Pakistans oil storage capacity. He said a railway track would be laid from Gwadar to China to provide transportation to Chinese investors.

He said that with the sustained inflow of investment, Pakistan would be able to execute projects worth billions of dollars and utilise the Gwadar Ports key location to best advantage.

Any land-based trade between the Gulf region and the South Asian states can best take place through Pakistan. The country would work as a link between the Gulf region, Iran, Afghanistan, China and Central Asia that would make all of us natural trading partners, he said. Pakistan is the ideal approach for the shipment of Indian goods to Afghanistan and the Central Asian markets, he added.

He said transit through Pakistan could provide the most economical shipment route of fuel from energy-rich Gulf states, Iran and Turkmenistan to energy-deficient India. This would be particularly effective for natural gas pipelines from Iran and Turkmenistan.


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## Neo

*SBP injects Rs54bn into money market ​* 
*Central bank moves in after call money rates hit 32 per cent; rupee touches bottom, recovers as banks sell dollars to meet cash crunch​*
Tuesday, October 07, 2008

KARACHI: The State Bank of Pakistan on Monday intervened in the money market to help cash- strapped banks.

The banks were facing severe liquidity crunch soon after the festive occasion of Eid to the extent that overnight rates (the rate at which banks lend to each other) were hovering between 28 and 32 per cent.

The State Bank of Pakistan through its Open Market Operation (OMO) on Monday injected Rs53.90 billion into the money market at 12.63 per cent rate of return for 7-days Reverse Repo.

The SBP received bids worth Rs54.40 billion offers of which it accepted Rs53.90 billion. The market sources said that SBP operation partially helped cash scarce banks in overcoming their liquidity shortfall, which helped overnight lending rates to simmer down to 18 per cent from 28 to 32 per cent quoted earlier in the day.

The primary cause of liquidity squeeze is said to be the depletion in countrys forex reserves which declined to $8.136 billion on September 27, 2008, as a result the net foreign assets have gone down by Rs167 billion - as against Rs24 billion fall at same time last year.

Banking sources said that without injection of additional liquidity banks were finding it difficult to extend cotton financing to textile sector at a time when Kharif season is about to kick-off. Volatility continued in forex market as rupee depreciated to the lowest level versus US dollar during the day but closed with significant recovery on Monday the first trading day of the week.

On Monday usually the volume of outflows is higher than inflows but today there was comparatively lower demand for US dollar which reduced pressure on rupee, a forex dealer said. The banks are facing worst liquidity crunch and with dearth of cash they preferred to sell dollars reserves instead of pilling them up, which helped rupee to recover back some grounds, a forex dealer said.

In early hours of day there were some obligatory foreign payments, which caused rupee exchange value to plunge to Rs78.60 on buying and Rs78.70 on selling counters, however, rupee recovered some grounds and closed at Rs78.20 on buying and Rs78.35 on selling counters in interbank market before day trade closed. 

Banking sources said that accountholders withdrew approximately Rs1.3 trillion during Ramazan and before Eid in order to pay Zakat, fitr, and other religious obligations as well as financing of Eid expenses.


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## Neo

*Foreign debt soars after rupees plunge ​* 
Tuesday, October 07, 2008

LAHORE: A sharp fall of the rupee has played havoc with the economy, with foreign debt rising from Rs2,759 billion to Rs3,493 billion, size of the economy dropping below $150 billion and per capita income slipping to $780.

Economists have urged the government to realise the urgent need of addressing the factors that are putting pressure on the rupee and damaging the economy. They say Pakistans foreign debt at the end of the last fiscal year in June stood at $44.5 billion, which has increased in rupee terms by Rs743.25 billion as the currency plunged after July from Rs62 to a dollar to Rs78.50. The decline is still on and the government has not taken any concrete steps to stem the rot.

Gross domestic product, which was $160 billion on the basis of the rupee value of Rs62, has slipped below $150 billion. Earlier, Pakistan was moving steadily to join the club of Middle Income Group countries as its per capita income increased to $990 at the end of the last fiscal in June. However, the per capita income has now declined to a little over $780 after the sharp fall in rupees value.

The country is likely to remain among low income states for a long time. This, the economists say, is in line with the purchasing power of the rupee which has declined considerably during the past six months.

They say the government would have to revisit the poverty profile, which has deteriorated in line with the decline in the purchasing power of the country. Some economists state that poverty must have increased by 10 per cent to above 30 per cent based on the soaring inflation.

They say Pakistan had a better Gini Coefficient than India till the 1990s. Now Pakistan is classified among countries with Gini Coefficient ranging from 0.30 to 0.34 depicting huge inequality in society. Indias Gini Coefficient ranges from 0.35 to 0.39. (Gini Coefficient of zero indicates complete inequality and one depicts complete equality).

Constant increase in imports after over 20 per cent decline in the rupee is a dilemma which has surprised most economists who say Pakistan is perhaps the second country after the US which has seen its trade deficit widen irrespective of the value of the currency at that time. The US, however, bears a huge trade deficit because its foreign exchange inflows are three times its trade gap and it ends up with a huge current account balance.

Pakistans foreign exchange reserves are depleting and except for workers remittances from abroad other inflows are too low to cover its huge trade deficit.

Economic experts point out that every country in the world devises a trade policy which benefits the local industry. The US has average import tariff of less than five per cent but its import duties on textile products from Asian economies range from 11 to 25 per cent. This has been done to protect the labour-intensive clothing industry.

The economists say import duties on textile products from high-cost Western European countries are either zero or a little higher according to the prices of apparel which does not hurt their high value-added clothing industry.

The trade regime in Pakistan is operated in such a way which encourages imports and discourages local industry. Pakistan is the only major cotton-producing and textile-based economy in Asia where imported clothing and fabrics dominate local markets because of a flawed import regime. They point out that smuggling is another major menace which could only be controlled if those monitoring border checkposts are made fully accountable.


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## Neo

*S&P downgrades Pakistan further into junk territory ​* 
Tuesday, October 07, 2008

HONG KONG: Standard & Poors cut Pakistans sovereign rating further into junk territory, saying the countrys worsening external liquidity may imperil its ability to meet about $3 billion in upcoming debt obligations.

The widely expected action comes after Pakistan said on Saturday its foreign reserves fell $690 million to $8.1 billion in the week ended September 27, an announcement that helped send the Pakistani rupee to a record low against the dollar on Monday. The countrys central bank, the State Bank of Pakistan, said its reserves fell to $4.7 billion from $5.4 billion previously, representing a little over two months of import cover.

S&Ps downgrade of Pakistan was its second this year, as the country faces the prospect it will default on its debt due to dwindling foreign currency reserves. Foreign investor confidence in the country has also been dented amid worries urgently-needed economic reforms will be delayed in a year plagued by political and security concerns.

S&P on Monday lowered its foreign currency debt rating on the country to CCC-plus from B, just several notches above a level that would indicate default. Pakistans local currency debt rating was lowered to B-minus from BB-minus. The ratings agency noted Pakistan will require external assistance in meeting its debt obligations, which includes $500 million in dollar bonds maturing in February, but expressed concern about whether it could count on the help in time.

S&P also noted the uncertain political situation and social tension cast doubt about whether the government would have the ability to adopt the appropriate policy measures. The rating on Pakistan could be lowered further if the foreign exchange reserve cushion continues to shrink and meaningful economic stabilization measures remain wanting, S&P warned in its statement.

Rival credit agency Moodys Investors Service last month cut its outlook on Pakistans debt to negative from stable, citing similar reasons, though it maintained its ratings at B2. The cost of protection against a default in Pakistans sovereign debt trades at 1,800 basis points, according to its five year credit default swap , a level that indicates investors believe the country is already in or will soon be in default. An investor would thus need to pay $1.8 million annually to insure against $10 million of Pakistans sovereign debt.

TOUGH OUTLOOK: Pakistan is in fast need of cash. According to S&Ps estimates, the countrys $4.7 billion in net foreign reserves at the central bank marked a 67 per cent plunge from a year ago. Its current account deficit is also running well ahead of target, reaching $2.5 billion in July and August. That means that in just the first two months of the new fiscal 2009 year, Pakistans shortfall reached 1.6 per cent of gross domestic product, or more than a quarter of the governments full-year target of 6 per cent of GDP.

Though the Asian Development Bank said last week it approved a $500 million loan to help Pakistan, the country will need far more money than that according to analysts. A senior adviser to the government said last month the country would need $7 billion in total to cover its projected current account deficit of $14 billion for the fiscal year, of which it needed $3 to $4 billion upfront.

According to a Citigroup report last week, Pakistan is losing about $1 billion of its foreign exchange reserves a month, at a time when the prospects of raising money whether through asset sales or international bonds have become very difficult in the midst of a global financial crisis. 

At this juncture, Pakistan does not appear to have the financial sources to service its near-term amortizations, including the $500 million maturing Eurobond in February, the analysts said in the report. Those maturing bonds were trading at 44 cents to the dollar before S&Ps sovereign downgrade.


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## Neo

*FPCCI demands ban on import of luxury items ​* 
Tuesday, October 07, 2008

KARACHI: Former president of Federation of Pakistan Chambers of Commerce & Industry (FPCCI) Tariq Sayeed has suggested to the government to slap a ban on such imported goods for six months without which the country could survive.

He advised that it should be regarded as a short-term approach to improve the balance of payments, which will help avoid conditional loans from the IMF and other such agencies. He was of the opinion that instead of promoting import liberalisation, production-oriented policies should be adopted with a special focus on promoting the agriculture sector to save huge amounts of foreign exchange, the acute deficiency of which had brought economic turmoil in the country.

He demanded the remodeling of policies to reduce the import bill of such products without which the country could survive. He also emphasised on maximising production to gain surplus and to check the influx of such imported goods, which were unnecessary and could be produced locally.

A country like Pakistan, which had already been facing fiscal deficit of more than 8 per cent of GDP, burdened with foreign debt of more than $44 billion and trade deficit of over $20 billion, cannot afford importing such luxurious items, which account more than $8 billion, said Sayeed.

He counted several such items like import of over $1.5 billion of chocolates, candies, canned juices, confectionary items, assorted fruits etc, stating that they were not affordable for an agro-based country such as Pakistan.

Similarly he criticised the huge import bill of over $1.0 billion in respect of cellular phones and allied equipments, coupled with unnecessary electrical home appliances like refrigerators, air conditioners, ovens, accounting for over $1.5 billion in addition to the import of cars, motorcycles and other completely built units of over $500 million, which not only add to the trade deficit but have increased the import bill for oil.

If the government puts a ban on the import of vehicles and other such equipments, the import bill for oil can be reduced to $2 billion Sayeed articulated. He said that the government earnestly needs to review economic policies for effective utilisation of available resources, further arguing that though in the era of globalisation, it was not possible to ban imports but such bold decisions will have to be taken to safeguard the country from an economic collapse. He feared that if tangible measures were not adopted, the country may face irrecoverable losses.


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## Neo

*Pakistan launches Economic Diplomacy Initiative ​* 
Tuesday, October 07, 2008

ISLAMABAD: Foreign Minister Makhdoom Shah Mahmood Qureshi launched the Economic Diplomacy Initiative by holding a meeting with the heads of Chinese companies engaged in business/projects in Pakistan here at the Foreign Office on Monday.

The focus of the meeting was on undertaking increased investments and projects in Pakistan and pre-visit preparations for the forthcoming visit of President Asif Ali Zardari to China. The foreign minister, while acknowledging the significant role played by the Chinese companies in Pakistan's national development, underscored the importance of corporate sector in further improving the economic and commercial content of the Pakistan-China fraternal relationship.

He said that Pakistan and China had developed a comprehensive architecture for economic and project cooperation in various fields like trade, power generation, financial and banking sector, and exploration of natural resources.

Foreign Minister Qureshi emphasized the need to translate this framework into on-ground project implementation on fast-track basis.He described the Government's vision to broaden economic cooperation with China to bring it at par with the excellent political and security relations that existed between the two countries.

The foreign minister said that during his forthcoming visit to China, the president will hold meetings with the heads of Chinese companies and financial institutions. He also assured the Chinese companies of the fullest cooperation and facilitation by the government to promote their businesses in Pakistan.

Pakistan launches Economic Diplomacy Initiative


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## Neo

*Debt crisis looms for Pakistan after rating downgrade​*
ISLAMABAD: The risk that Pakistan could become the bankrupt state it was before a military coup nine years ago loomed larger on Monday as the rupee struck an all-time low and its debt was relegated deeper into junk bond territory.

The six-month-old civilian government led by President Asif Ali Zardari is engulfed with crises left behind by former army chief General Pervez Musharraf, who resigned as president in August.

On Monday, amid gloom over an economic morass and a security threat posed by Islamist militants after Islamabads Marriott Hotel was blown up last month, the rupee hit 78.65 per dollar. That took its loss since the start of the year to more than 21 percent. The central bank has just enough foreign currency to cover two months of imports, and a potential default on a sovereign loan is looming in February.

The fiscal and current account deficits are unsustainable. Inflation is over 25 percent and rising.

Rating agency S&P cut the rating on the countrys sovereign debt rating to CCC-plus, a few notches above default level.

S&P said Pakistans worsening external liquidity may imperil its ability to meet about $3 billion in upcoming debt payments.

The Pakistani authorities now need to demonstrate that the financing gap in the balance of payments is capable of being bridged, said Tim Condon, economist at ING Bank in Singapore.

Analysts say Pakistans best hope lies in the goodwill of multilateral lenders and friendly governments, like the United States and Saudi Arabia, keen to see the six-month-old civilian government succeed and stop a nation on the front line of the global war on terrorism sliding into chaos.

Thats their only lifesaver. The rest is a mess, said a Singapore-based fixed income fund manager from a major US asset management firm, who asked not to be named.

The Asian Development Bank finally came through with a $500 million loan last week, but much more was needed.

An adviser to Prime Minister Yousaf Raza Gilani said last week that $3-4 billion was needed fast to stabilise the economy.

Pakistans foreign reserves fell $690 million to $8.13 billion in the week that ended on September 27. The State Bank of Pakistan said its own reserves fell to $4.68 billion, representing a little over two months of import cover.

Liquidity Crunch: The constant pressure to pay import bills and meet debt payments has drained liquidity, and forced the government to borrow more from the central bank.

Data released on Monday showed government borrowing was more than 100 percent up at $2.21 billion  all of it from the central bank  in the first 11 weeks of a fiscal year that began on July 1, compared with year-ago levels.

Coming back on Monday for the first full days trading since the Muslim festival of Eid al-Fitr, Pakistans illiquid money markets saw volatile call money rates surge to 40 percent before settling back below 30 percent. Pakistani bankers called for urgent central bank action to stop a liquidity crunch putting banks in jeopardy.

It should do something immediately, as there is risk for systematic failure, said a senior banker, who requested anonymity due to the authorities sensitivity regarding management of the markets.

Some bankers said they expected State Bank of Pakistan to cut banks statutory liquidity requirement (SLR) or cash reserve requirement (CRR) by at least 50 basis points, or possibly both.

Longer term, bankers said the central bank may need to raise the discount rate, which was hiked to 13.0 percent in July.

Stock Exit Plan: While the currency has slid and the money market dried up, Pakistans stock market has been propped up by an artificial floor placed under the index at the end of August.

Authorities are expected to review on Friday how long to keep the floor and to consider establishing an exit mechanism for foreign investors, a senior official told Reuters.

The floor has killed trading volumes, with investors unable to sell at prices that could attract buyers in a market that has lost almost 35 percent since the start of the year. The benchmark 100-share index ended flat at 9,178.97, less than 34 points above the 9,144 floor.

The imposition of an index floor could result in Pakistan being removed from the benchmark MSCI emerging equities index. Remy Briand, the global head of index research at MSCI Barra warned that countries which curb the free flow of capital were likely to be relegated to the frontier markets index, which covers economies with underdeveloped stock markets. reuters


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## Neo

*Oil reserves fall by 7.6%, gas 8% in FY08​* 
KARACHI: The countrys oil and gas reserves dropped by 7.6 and 8 percent in 2008 versus previous year as the original recoverable reserves of some key fields were slightly revised down by their respective operators, a report said on Monday.

Major oilfields that witnessed depleting of reserves were Zamzama, Sakhi, Bobi, Jabo, South Mazari, Zaur and Chak-66 NE fields (representing a cumulative 8.6 percent of the total oil reserves of the country). This is downward revision in their original recoverable reserves, an analytical report prepared by Investcap said. However, the report added, the downward revision in these fields was partly offset by an upward revision in the Mela field by an approximately 50 percent year-on-year which increased its original recoverable reserves to 23.86 million bbl in FY08 from 15.87 million bbl a year earlier, especially since the Mela field represents approximately 6.7 percent of the countrys total oil reserves. On a company wise basis, BPs oil reserves fell by 4.3 percent YoY in FY08, which represents approximately 10.4 percent of the total oil reserves of Pakistan.

This downward revision was moderately countered by an upward revision of 1.4 percent in Oil and Gas Development Limiteds (OGDC) original recoverable reserves, which represent the lions share of 45 percent of the countrys total oil reserves.

Amongst the gas fields, which saw downward revisions were the Bahu (-20 percent), Miano (-40 percent), Rehmat (-42 percent), Chachar (-8 percent) and Sawan (-35 percent) fields, which cumulatively represent approximately 4.5 percent of the total recoverable gas reserves of the country. An upward revision of 2 percent in the Uch field from 4.99tcf to 5.01tcf slightly offset the fall in reserve numbers from other fields. The Uch field represents approximately 15 percent of the countrys total recoverable gas reserves, the Investcap report said.

Of the 11 discoveries made in FY08, the reserves of a meagre three have been included in the latest figures released by the PPIS, namely Adam (operator  PPL), Missri (BP) and Moolan North (OGDC). Of the previously discovered fields, reserves of three fields were added, namely Zaur West (operator  BP), Ahmed (OPII) and Tando Allah Yar North (gas - OGDC). Reserve addition of the eight other discoveries should provide a welcome boost to the countries total oil and gas reserves.

The report said that Pakistan Petroleum Limiteds (PPL) oil and gas reserve lives remain comfortably positioned at 24 and 16 years respectively. Although the addition of Adam field helped in increasing the companys reserves, its high production seems to be having an eroding effect on the companys total gas reserves as no major addition was made to the reserves. The gas reserve replacement ratio (RRR) of the company was at -67 percent in FY08.

However, reserves addition from the promising Mami Khel field is expected to improve the companys gas RRR. On the other hand, an upward revision in the oil reserves of Mela field propelled the oil RRR of PPL to 144 percent in FY08. No oil and gas reserve additions were made by Pakistan Oilfield Limited (POL) because of which the companys RRR was recorded at 0 percent while its oil and gas reserve lives stand safely at 20 and 41 years respectively. However, POLs high reserve lives stem largely from a low production base, thus undermining its significance. OGDC remains nestled in its position with respective oil and gas reserve lives of 11 and 31 years. Melas upward revision also boosted OGDCs oil RRR to 14 percent as the company has a 56 percent stake in the field. Gas RRR in FY08 was at 1 percent.


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## dr.umer

*Security fears as Pakistan veers towards bankruptcy​*October 8, 2008

*PAKISTAN'S foreign exchange reserves are so low it can only afford one month of imports and faces bankruptcy.

Officially, the central bank holds $US8.1 billion ($10.9 billion) of foreign currency, but if forward liabilities are included, the real reserves may be only $US3 billion - enough to buy about 30 days' of imports such as oil and food.*

*Nine months ago, the nation had $16 billion in the coffers.*

The Government is engulfed by crises left by Pervez Musharraf, the military ruler who quit the presidency in August. High oil prices have combined with corruption and mismanagement to damage the economy.

Given the country's standing as a front-line state in the US-led war on terrorism, the economic crisis has profound consequences. Pakistan faces worsening security as the army clashes with militants on Afghan border. The economic crisis has placed the future of the civilian Government in doubt.

*The President, Asif Ali Zardari, has faced numerous but unproven allegations of corruption dating from the two governments led by Benazir Bhutto, his wife, who was assassinated last December. The Wall Street Journal said Pakistan's economic woes were "at least in part, a crisis of confidence in him".*

While Shaukat Aziz, Mr Musharraf's prime minister, often likened Pakistan to a "tiger economy", the former government left it on the brink of ruin.

The Pakistan rupee has lost more than 21 per cent of its value this year and inflation is running at 25 per cent. The rise in world prices has driven up Pakistan's food and oil bill by a third in a year. Efforts to defer payment for 100,000 barrels of oil supplied every day by Saudi Arabia have yet to yield results, while the Government has failed to raise loans on favourable terms from "friendly countries".

Mr Zardari told The Wall Street Journal Pakistan needed a bail-out worth $US100 billion.

"If I can't pay my own oil bill, how am I going to increase my police?" he asked. "The oil companies are asking me to pay $US135 [a barrel] of oil and at the same time they want me to keep the world peaceful and Pakistan peaceful."

Ratings agency Standard and Poor's, has given Pakistan's sovereign debt a grade of "CCC +", a few notches above default. It said Pakistan may be unable to cover $US3 billion in debt payments.

Mr Zardari is expected to ask for a international rescue package at a meeting in Abu Dhabi next month.

Telegraph, London


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## Neo

*'Outlook negative': S&P lowers foreign currency rating​*
HONG KONG (October 07 2008): Standard & Poor's Ratings Services said on Monday its lowered its long-term foreign currency sovereign credit rating on the Islamic Republic of Pakistan to 'CCC+' from 'B' and its long-term local currency rating to 'B-' from 'BB-'. At the same time, we lowered our short-term rating on the sovereign to 'C' from 'B'. The outlook on the long-term rating is negative.

The rating on Pakistan's senior unsecured local currency debt has also been lowered to 'B-' from 'BB-', while the foreign currency debt rating has been lowered to 'CCC+' from 'B'. The downgrade comes in the wake of continued steep erosion of Pakistan's external liquidity position, the extent and pace of which casts rising doubts about the sovereign's ability to meet approximately US $3 billion of external debt servicing commitments in the coming year.

"Pakistan's balance of payments is under significant and rising pressure, whereby existing structural trade imbalances are magnified by exogenous price shocks," said Standard & Poor's credit analyst Agost Benard. "At the same time, capital inflows, which had in the past covered much of the current account gap, are increasingly deterred by the prolonged political uncertainty and adverse security climate."

Net foreign reserves of the central bank have fallen 67 percent to just US $4.7 billion since October 2007, as the country recorded an overall balance of payments deficit of US $5.7 billion for fiscal year 2008 ended June. For the first two months of fiscal 2009, the overall balance of payment deficit expanded more than sixfold year on year to nearly US $2.5 billion, with the current account shortfall reaching 1.6 percent of GDP against a full-year target of 6.0 percent.

Standard & Poor's believes that stabilising Pakistan's external position, and thus avoiding near-term debt service stresses, will require substantial and timely multilateral and bilateral assistance, concurrent with fiscal and monetary policy measures aimed at paring aggregate demand to cut import growth.

The negative outlook reflects our expectation that multilateral and bilateral aid, including deferred oil payment schemes, may not be timely enough, or sufficient in magnitude to stem the loss of external liquidity. It also incorporates the view that the necessary policy measures, some of which are likely to be prerequisites for multilateral assistance, will face obstacles and delays in implementation, given the fractious and unstable domestic political scene, and rising social tension.

The rating on Pakistan could be lowered further if the foreign exchange reserve cushion continues to shrink and meaningful economic stabilisation measures remain wanting. Conversely, the rating could stabilise and eventually be raised if external assistance and domestic policy programs successfully stabilise Pakistan's balance of payments position and foreign reserves.


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## Neo

*Foreign investors: 25.5 percent drop in repatriation of profit​* 
KARACHI (October 07 2008): The repatriation of profit by foreign investors after a consistent rise for the last few years, has registered a significant decline of 25.5 percent in the first two months of the current fiscal year due to the poor economic conditions.

The repatriation of profit and dividend witnessed continuous rise for the last few years and in the last fiscal year of 2008 it registered a growth of some 15 per cent to $921.4 million, as compared to $804.2 million in the corresponding year. The Shukat Aziz-led government had allowed 100 percent transfer of profit and dividend to the foreign investors with the aim to boost foreign investment in the country.

Although foreign investors are still enjoying government's investment friendly policies fully and consistently sending their earnings to the abroad.

However, the State Bank of Pakistan statistics on Monday revealed that the repatriation of profit by the foreign investors has registered a significant decline of 25.5 percent during the first two months of the current fiscal year 2009, mainly due to the negative economic indicators.

With the current decline, the overall repatriation remained $98.6 million during July-August of the current fiscal year, as against the $132.3 million in the same period of the last fiscal year, depicting a decline of $33.7 million.

Profit's repatriation from almost all major sectors comprising communication, financial business, food, tobacco, chemicals, pharmaceutical, transport equipment, construction and social services has depicted a downward trend.

However, the power sector still present a healthy growth in repatriation, as foreign investors have invested million of dollar in power sector during last few year due to increasing demand. Investors have taken back some $37.4 million profit from power sector up from 12 million dollar during July-August, depicting a surge of 213 percent during the first two months of current fiscal year.

While the oil and gas sector seconds with the repatriation of some $12.3 million profit during July-August as against $7.7 million dollar during the same period of last fiscal year. SBP latest statistics show that foreign investors have sent $2.9 million from food sector, $8.7 million from beverages, $5.3 million from tobacco & cigarettes, $2.4 million from chemical sector, $7.9 million from petroleum refining and some $12 million has been sent from oil and gas exploration sector during the first two months.

Besides, some $2.4 million have been sent from fertiliser sector, $0.1 million from transport, $1.8 million form storage facilities, $3.6 million from communication sector, $8.8 million from financial sector and some $3.9 million from other sectors has been repatriated during July-August.


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## muse

*Fundamental economic changes must come now*
Gulfnews: Fundamental economic changes must come now 

10/07/2008 11:26 PM | By Farhan Bokhari, Special to Gulf News



Pakistan's economic crisis has deepened this week after the rupee declined to an all-time low against the US dollar while Standard & Poor's, the global rating agency, downgraded the country's rating on its sovereign debt to CCC-plus, just a few notches above default level.

These new pressures on the Pakistani economy underline mounting concerns over the deterioration in Pakistan's balance of payments situation in the midst of the global financial turmoil.

Added to these trends on Monday came rising pressure driven by a liquidity crunch as Pakistan's illiquid money markets saw volatile call money rates surge to a whopping 40 per cent before settling back to below 30 per cent. 

In the meantime, an alarming increase in the government's borrowing from the central bank during the first eleven weeks of the financial year, which began in July, has further complicated what is a fast worsening picture.

*All together, Pakistan's economic outlook is fast heading for a bad downswing. For many Pakistanis, the significant question is: Can Pakistan's economic fortunes recover from more than a year of downswing? The answer to that question must take account of some of the events which have taken place during this period.

The political turmoil unleashed in the wake of the situation which emerged when former president Pervez Musharraf dismissed Iftikhar Mohammad Chaudhary, former chief justice of the supreme court of Pakistan, has indeed taken its toll. In this period since March 2007, Pakistan has remained a restless country, with mounting protests and demonstrations*.

The culmination of such protest movements took place with a landslide defeat for Musharraf's loyalists in parliamentary elections in February of this year. A new government led by the Pakistan People's Party (PPP) has taken charge of the country with promises of giving a new direction to Pakistan. 

Luxury of time

But that new direction has not arrived despite Musharraf being forced to resign in August in the face of threatened impeachment. What has come to the fore is a regime which is yet to demonstrate a workable plan to take Pakistan forward, both politically and economically. 

The luxury of time is not on Pakistan's side. With global markets in turmoil and the international economy slowing down, *it is not possible to imagine Pakistan being able to continue on its present course*.

*Furthermore, Pakistan's own leaders such as president Asif Ali Zardari are buoyed by unrealistic expectations. The Pakistani president has recently urged the global community to consider giving up to $100 billion (Dh367 billion) in assistance to Pakistan, to help the south Asian country overcome its economic challenges. It is clear that in the midst of the global economic turmoil, this kind of money for a one-country programme is far from feasible*.

The immediate focus of the government must essentially be to place its own house in order, dealing with long overdue reforms and hugely pressing issues. Across the country, there is much evidence of a breakdown of government caused by years of neglect of key institutions. 

*The economic challenges faced by Pakistan today are in no way recent. Their roots lie in the way the country has been governed over time. One such neglect lies in the failure of successive governments to overcome the challenge of dealing with a large black market economy. The fact that less than 1.5 per cent of Pakistan's population compose the country's tax paying community, speaks infinitely louder than words on areas in need of a reform process to begin in the near future*.

The writer is a journalist based in Pakistan.


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*Pak suffered over $5billion losses in Oct 8 earthquake ​* 
Wednesday, October 08, 2008 

ISLAMABAD: Prime Minister Syed Yosuf Raza Gilani said on Wednesday that the October 8 earthquake was a national tragedy which affected the economic growth of country.

He was speaking at the National Disaster Management Conference in Islamabad on the occasion of third anniversary of October 8 quake.

Prime Minister Gilani said the country had suffered losses worth $5 billions due to the 8 October earthquake.

The prime minister said that proper planning was required to deal with natural calamities, adding there was also need to enhance the technical capabilities of organizations formed to tackle such disasters. He added that we would have to build a strong warning system of flood and other catastrophes. 

Premier Gilani reiterated its governments resolve for rehabilitation and re-construction of quake-devastated areas. Women and children are affected directly by such disaster, he said, adding countries have to face economic and social issues. 

He called upon the media to play its part in creating awareness among the people on natural calamities.


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*Pakistan to apprise donors of efforts to improve economy ​* 
Wednesday, October 08, 2008

ISLAMABAD: A high-powered delegation, headed by upcoming Adviser to Prime Minister on Finance Shaukat Tareen, will leave for Washington on Thursday morning for attending an annual meeting of Bretton Wood Institutions (BWI), the International Monetary Fund and World Bank, from October 10 to 12, The News has learnt.

Pakistans struggling economy is experiencing a nosedive on major macroeconomic indicators, especially the foreign currency reserves, which has resulted in a massive fall of the rupee against the dollar, touching Rs79.60. The annual moot of the IMF/WB is going to take place at a time when Standard & Poors downgraded Pakistans rating by two notches in one go, which was never done before in the countrys history.

Tareen, who is likely to take oath as Adviser to PM on Finance on Wednesday, will lead the delegation consisting of Finance Secretary Dr Waqar Masood, EAD Secretary Farrukh Qayyum, State Bank Governor Dr Shamshad Akhtar and Debt Office DG Dr Ashfaque Hassan Khan.

Although, Prime Minister Syed Yousuf Raza Gilani has not yet approved a summary allowing members of the delegation to leave for Washington but official sources say that the summary would be approved on Wednesday.

Yes, the summary has not yet been approved, a senior official at the Finance Ministry told The News on Tuesday afternoon but added in the same breath that Shaukat Tareen would take oath on Wednesday and the delegation would depart for Washington by Wednesday night or early Thursday morning.

Sources said the delegation would hold crucial meetings with finance ministers of major donor countries on the sidelines of the annual moot of the IMF and WB during the three-day stay in Washington. The moot will take place at a critical juncture for Pakistan when it is making all-out efforts to keep itself at bay from getting a bailout package from the IMF.

The danger of default will be hovering over the countrys economy if Islamabad remains unable to inject much-needed dollar inflows into the rapidly depleting national kitty, said an official source.

Top heads of International Financial Institutions (IFIs) and donor countries would be informed about the future economic roadmap of the country as economic managers have recently prepared a macro-economic framework to bring the derailed economy back on track.

Pakistan will apprise them that it will not let fiscal deficit cross the envisaged target of 4.7 per cent of the GDP during the current fiscal year compared to over 7 per cent last year. In this regard, all major subsidies such as on POL and power sector will be done away with. The government would also cut down on development and non-development spending in order to control growing expenditure side.

The donors will also be informed that the government would launch various schemes to generate financing under which more tools will be introduced in National Savings Schemes (NSS), Government Commercial Papers (GCPs) and Pakistan Investment Bonds (PIBs).

The financing to bridge fiscal deficit would also be arranged through mobilization of domestic and external resources. 

The government has also taken stringent steps to reduce the imports in the country which are exerting the pressure on balance of payment. The government had slapped 15 to 25 per cent duty on import of non-essential items and increased Letter of Credit margin by 100 per cent.


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*Pakistan, China may enter deals for more nuclear power plants ​* 
*Zardaris visit to Beijing may see accords for car manufacturing, hybrid seeds,cement factories and steel mills​*
Wednesday, October 08, 2008
By Khalid Mustafa

ISLAMABAD: Pakistan will seek help from China in installing two more nuclear power plants at Chashma, materialising the Diamer-Bhasha Dam project, and joint ventures in manufacturing and assembling cars during the visit of President Asif Ali Zaradri to Beijing that is to start from October 14.

According to a senior government official at Finance Ministry, Pakistan and China may also strike deal in manufacturing and assembling of trucks. This is basically the proposal of Heavy Mechanical Complex.

Islamabad and Beijing may also enter into agreements for setting up steel mills and cement plants and for developing the agriculture industry.

China would be invited to invest in pesticide production and hybrid seed industry. During the visit, Pakistan would also seek cooperation in developing the electronics industry and home appliances.

When contacted Deputy Chairman Planning Commission Salman Faruqui confirmed that the cooperation on the said economic sectors would be sought from the top authorities of Beijing.

According to the official, Pakistan has only 29 cement plants having annual production capacity of 39 million tonnes. Pakistan wants more investment in this sector.

Likewise, we need more steel mills keeping in view the increasing needs in the country particularly for developing the earthquake hit areas, the official said.

Pakistan will seek financing from China to install more nuclear power plants at Chashma and satellite communication system during the upcoming visit.

Pakistan is going to install two more nuclear power plants at Chashma which are to be known as C-3 and C-4. These power plants will cost over Rs139 billion including foreign exchange component of Rs99.538 billion, he said.

The two projects would generate 600 MW of electricity. Each plant will comprise of Nuclear Steam Supply System (NSSS), a turbine generator set and the associated auxiliary equipment and installations. The NSSS consists of a reactor and coolant loops connected in parallel to the reactor vessel. Each loop comprises a reactor coolant pump and steam generator.

Chashma Nuclear Power Plant (C-1) is already providing 300 MW of electricity and the Chashma-2 with the same capacity to generate nuclear power is under implementation phase. The design of the C-3 and C-4 is essentially the same as that of under construction C-2. The C-2 design is an improved version of C-1.

The C-3 and C-4 will be completed in 8 years and they would provide electricity to NTDC (National Transmission and Dispatch Company) at the rate of Rs6.06 per unit. The annual power generation of the project will be of 4467.6 million kilowatt hours.

According to the official, the country has also planned to establish a Nuclear Power Fuel Complex (NPFC) at the cost of Rs51.298 billion to locally fabricate fuel that will b used for the future nuclear power plants in country. Nuclear Power Fuel Complex is under implementation that consists of five components that include Chemical Processing Plants, Enrichment Plant, Seamless Tube Plant -1; Fuel Fabrication Plant; and Nuclear Fuel Testing Plant.

To materialize this very important project of NPFC, the country needs nuclear fuel technology from China to fabricate local fuel for the future nuclear power plants.

With four similar power plants at Chashma site, it will be possible to reduce maintenance and physical security costs, the official said.

The existing power generation capacity is not sufficient. The power demand projection based on growth rate shows that power demand will increase from 15,183 MW in 2007-08 to about 20,000 MW in 2010 in the WAPDA system and severe shortage of power is expected in next two years. 

To meet this demand an additional capacity of about 8000 MW would be needed by 2010. At present, about 65 percent of the total electricity generated is based on fossil fuel plants (gas 36 per cent, oil 29 per cent). The fossil fuels are depleting fast besides their price in international market is very volatile. 

Therefore it is imperative to diversify the fuel mix in power generation. Under the Energy Security Action Plan, Pakistan will increase the share of nuclear power from 1 per cent to 5.4 per cent by installing 8,800 MW nuclear power plants by 2030.


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*PPAF disburses Rs15bn for reconstruction ​* 
Wednesday, October 08, 2008

ISLAMABAD: Pakistan Poverty Alleviation Fund (PPAF) has so far disbursed over Rs15 billion for reconstruction of seismically-safe housing units, health & education facilities and capacity building and infrastructure schemes in 34 union councils of NWFP & AJK which were badly damaged in the October 8, 2005 earthquake.

Till the third anniversary of the tragedy falling on October 8, 2008, the PPAF has disbursed this amount through its six partner organisations for reconstruction of 121,448 seismically-safe housing units out of a total of 122,332 completely/partially damaged, 19 health & education facilities, and capacity building and infrastructure schemes in the Earthquake Reconstruction and Rehabilitation Authority (ERRA)-assigned 34 union councils of AJK & NWFP. The housing reconstruction strategy followed by PPAF remains focused on training a maximum number of craftsmen and house-owners.


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*Exports to US can decrease by 30%​*
LAHORE: The exports to United Stated of America (USA) can plunge by 30 percent, says National Bank of Pakistan (NBP) President, Ali Raza.

He was addressing a seminar arranged by the branch managers of the bank. He said that the US economy is a consumer-based economy and the recent mayhem caused by the financial markets will take its toll on the purchasing power of worlds biggest economy. Therefore the export of Pakistan could suffer as a result. Raza said that food crisis is emerging due to use of food products for bio-fuels. He was of the view that there is great potential in agri-sector of Pakistan, which can cash in on the paradigm shift observed in the terms of trade due to the food price hike. We should enhance the food production by giving special attention to the agriculture sector, Raza said.

He said that NBP is making all-out efforts to please its customers through better quality and good banking. He emphasised the branch managers of the bank to take extra care of the customers. Better customer service would bring good name to the bank.


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*Pakistans banking sector is resilient: SBP​*
KARACHI: Governor, State Bank of Pakistan, Dr Shamshad Akhtar has said that Pakistans banking sector is quite resilient and has been and will be able to withstand market shocks and adverse macro economic conditions.

This capability has been achieved through continuous financial reform process distinctively pursued during the past few years. There should not be any cause for concern about the stability of the banking system in the coming days, she said in a statement issued to the press on Tuesday evening.

She pointed out that the investors maintained their confidence in the banking system and have injected additional capital of around $500 million since 2006 which, coupled with retained earnings, improved the capital base of the banks. Dr Akhtar said that the banking sectors capital adequacy was well above the minimum requirement. The capital adequacy ratio of the system is 12.1 percent as of June 2008, which is well above the international benchmark. The non-performing loans ratio and the ratio of non-performing loans to capital are also quite low and within acceptable ranges, she said.

The infection ratio (net) in June 2008 has improved to 1.1 percent from 1.6 percent in Dec-2006, signifying that the banks set aside more reserves out of their earnings to cover the increase in non-performing loans. Accordingly, the NPL coverage and capital impairment ratios have also improved, the SBP Governor added.

She said that Pakistani banks largely focus on conventional lending and are not exposed to subprime credit instruments in the international market. The lending and investments of the banks are subject to stringent prudential regulations of SBP, which prohibit the banks from clean lending and investment in low quality assets. Further, the banks are required to recognize the loan losses and provide for these losses in line with the established best practices. State Bank of Pakistan through its on-site inspection and off-site supervision wings keeps a close watch on the state of each bank as well as the banking system in entirety for any risk to the stability of the banking system.

In 2007, SBP made loan provisioning requirements more stringent in order to create adequate cushions to withstand any potential credit adversity. Stress testing analysis of the system suggests that the system is capable of withstanding variety of plausible shocks in major risk factors without losing its solvency, Dr Akhtar added.


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*2nd CDWP meetings agenda: 58 development projects worth Rs 203bn to be approved​*
ISLAMABAD: The second meeting of the Central Development Working Party (CDWP) in the current financial year 2008-09 to be held on Oct 11 is likely to recommend and take up 58 developmental projects worth Rs 203.114 billion with foreign exchange component (FEC) worth Rs 101.537 billion.

Planning Commission Deputy Chairman M Salman Faruqui will preside over the meeting that will take up projects for 12 sectors including water resources, energy, transport and communication, physical planning and housing (PP&H), agriculture and food, Higher Education Commission (HEC), education, environment, forestry and wildlife, governance, information technology sector, industry and commerce.

The CDWP can only approve projects costing up to Rs 500 million and projects costing above this limit would be recommended to the Executive Committee of the National Economic Council (ECNEC) for approval.

The CDWP agenda, obtained by Daily Times here on Monday, shows that the Water Resources sector has five projects worth Rs 8.809 billion with foreign exchange component (FEC) worth Rs 779.50 million.

The energy sector consists of two projects namely, Chashma Nuclear Power Project Units 3 and 4 worth Rs 139.011 billion including Rs 99.538 billion as FEC.

The second important energy project is Media advertising campaign of energy conservation and institutional strengthening/capacity building of ENERCON worth Rs 200 million. The transport and communication sector has 19 projects worth Rs 22.031 billion.

The PP&H has seven projects with a total cost of Rs 15.241 billion. Agriculture and food sector consists of three projects worth Rs 10.289 billion. The HEC has four development projects with a total cost of Rs 863.11 million including Rs 205.717 million FEC. The education sector has nine projects worth Rs 3.860 billion.

The agenda further reveled that the environment sector consists of three development projects worth Rs 1.495 billion with Rs 1.2 million FEC. The forestry and wildlife sector has a single project namely, Rehabilitation of denuded forest areas through sowing and planning and development of farm/social forestry with community participation in northern areas with a cost of Rs 185 million and Rs 1.200 million FEC.

The governance sector has a single project namely, Construction of 50-rooms hostel at SCA Walton Lahore worth Rs 55.700 million. The agenda further showed that the information technology sector has a single project namely, IT training for the elected lady representatives Phase-II worth Rs 97.288 million.

The industry and commerce sector consist of three projects worth Rs 974.50 million with Rs 40 million as FEC.

Some of the projects of national importance to be taken up by the CDWP are: Construction of Ghabir Project District Chakwal with a cost of Rs 2.164 billion, detailed engineering design and tender documents of Munda Dam Project (revised PC-II) worth Rs 651.862 million with Rs 224.820 million FEC, Satpara dam project (revised) worth Rs 4.805 billion.

Other projects include: Acquisition of land and resettlement to provide the right of way (Row) to the Hasanabad Havellian-Mansehra Expressway worth Rs 2.997 billion, Extension of the motorway M-4 from Shamkot to Multan (Kot Rab Nawaz (39 km) worth Rs 9.860 billion, Construction of low-income housing scheme at Multan worth Rs 3.539.619 billion and Agriculture sector development loan, project Phase-II worth Rs 10.029 billion.


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*Pakistan, Iran to boost co-operation in various sectors​*
ISLAMABAD: Mashallah Shakiri, Iranian Ambassador and Salman Faruqui, Deputy Chairman Planning Commission on Monday agreed that bilateral cooperation in various sectors of the economy like energy, railways, roads and trade would be enhanced. The Iranian ambassador stated that his country was ready to export electricity to Pakistan and they had adequate capacity to carry out such projects. He also apprised that Iran was already working on Sahara hydel power project on the river Chenab and had raised its capacity from initially proposed 65 mega watts to 130 mega watts through IPP. The ambassador said that the present volume of trade between the two countries showed that the bilateral trade potential was untapped.


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*Pakistan cannot afford sanctions​*
** Defence secy tells Senate panel success in terror war impossible without US help
* Drones guard border with Pakistans consent​*
ISLAMABAD: Pakistans credit rating is nearing bankruptcy and its economy cannot afford sanctions by the world powers, Defence Secretary Kamran Rasool told the Senate standing committee on Defence in a briefing on Tuesday.

Pakistans financial position was very week, he said, and the country could not talk about taking on the US. He said Pakistan could not succeed against terrorists without co-operation and intelligence-sharing with the United States and that if Pakistan pulled out of the alliance, it would have to bow down after international powers imposed sanctions on it and declared it a terrorist state.

He said unmanned drones of NATO and the International Security Assistance Force in Afghanistan used Pakistani airspace with the consent of the Pakistani government. But he added that Pakistan had repeatedly denied permission to coalition forces to attack targets inside Pakistan.

Border violations of any kind will not be tolerated and we have made this thing crystal-clear to them.

Rasool contradicted speculations by certain defence analysts that the US had designs in the region, saying there was no evidence to support such claims. He also said success was not possible in Pakistans fight against terrorists without a consensus. The military alone could not win the war, he said. The defence secretary condemned civilian killings in Afghanistan.

Senator Professor Khurshid Ahmad from the Jamaat-e-Islami said the United States had its own agenda in the region and that the leaders of Pakistan and other Muslim states had failed to identify the real source of threat.

He said the tribal system had been destroyed but there were no alternatives, and that had created a vacuum in the Tribal Areas.

He suggested the involvement of Russia in the region, saying it had decided to pay back the US by supporting insurgents in Afghanistan through money and armaments. Russia wants to take revenge from the US by supporting anti-US elements in Afghanistan, he said. He also accused India and said he could not rule out Israels interference in Afghanistan to create insurgency. He said things needed to be handled with great sensitivity and sense.

Senator Kamil Ali Agha protested President Asif Ali Zardaris reported statement that Pakistan had consented to US attacks inside Pakistan. The government has already denied the president said that.

Dr Rifaat Hussain said that the US must keep in mind the spillover effect of the war on terror, and insisted that it could not be won without winning the hearts and minds of the local people.

He called the Taliban a divergent force, which needed to be tackled while keeping in mind all kinds of realities. He suggested the development of soft power in tandem with hard power while dealing with terrorism.

He said the fight against terrorism was a test of the maturity and political acumen of the elected leadership. The meeting was presided over by Committee Chairman Nisar A Memon.

An Online report said Memon underscored the need for enhanced intelligence and dialogue with tribal elders.


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*Pakistan wants greater market access to EU: Prime Minister​* 
ISLAMABAD (October 07 2008): Welcoming the French statements that every country has the right to use nuclear energy for peaceful civilian purposes, Prime Minister Syed Yousuf Raza Gilani has expressed hope that France will help Pakistan to use nuclear technology to meet its energy requirements.

Pakistan attaches high importance to its relations with France which is among its leading trading and development partners in the European Union (EU), the Prime Minister said while talking to Admiral Edouard Guillaud, Military Joint Chiefs of Staff to President of France, who called on him at the Prime Minister House on Monday.

He stressed the need of resumption of the strategic consultations between the two countries to take this relationship at new heights. The bilateral defence co-operation between Pakistan and France has progressed satisfactorily and Pakistan now has the largest world-wide fleet of Mirage III and V aircraft, he maintained.

He appreciated the French assistance for assembling the AGOSTA submarine to Pakistan and expressed hope that this co-operation will be expanded further in the future.

Pakistan wants greater market access to the EU, preferably in the form of Free Trade Agreements (FTAs), especially since the EU has started FTA negotiations with India and all other countries in South Asia, Gilani said, adding that leaving out Pakistan in trade talks is discriminatory.

Referring President Asif Ali Zardari's meeting with President Sarkozi on sidelines of the UN General Assembly meeting, Gilani said that initiatives of President Sarkozi to broaden the scope of engagement with Pakistan and further expanding the multifaceted ties are source of satisfaction and welcomed largely.

He expressed hope that Sarkozi would undertake the visit to Pakistan by the end of this year. PM also briefed the French delegation in detail about Pakistan's efforts on war against terrorism and welcomed Sarkozi's stance that incursion of US and Nato forces in Pakistan's territory will be counter productive.

While conveying his gratitude to the Prime Minister for receiving his delegation, Admiral Edouard Guillaud reiterated his government's policy of respecting the territorial integrity and sovereignty. He said France wanted its relations with Pakistan to be back on track.

French troops were in Afghanistan to help Pakistan and not as substitute to Pakistan's forces fighting against terror on their soil, he said. He agreed that a stable and peaceful Afghanistan was in Pakistan's interest and stated that France wanted a strong democratic dispensation in Afghanistan to defeat the menace of extremism and terrorism in the region.


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*Uplift projects: Qureshi holds meeting with Chinese companies executives​* 
ISLAMABAD (October 07 2008): Foreign Minister Makhdoom Shah Mahmood Qureshi held a meeting with the heads of Chinese companies executing development projects and doing business in Pakistan here at the Foreign Office on Monday. The focus of the meeting was on attracting and undertaking more investment projects in Pakistan and re-visit preparations for President Asif Ali Zardari's forthcoming visit to China.

Launching the Economic Diplomacy Initiative the Foreign Minister, acknowledged the important role played by Chinese in development of Pakistan and highlighted the value of corporate sector in further enhancing the economic and commercial relations of Pakistan with China.

Both the countries are co-operating in various fields and have developed a broad strategy for further improving co-operation in trade, power-generation, financial and banking sector, and exploration of natural resources.

Qureshi emphasised the need to translating this strategy into reality by implementing the project in the pipeline on fast-track basis. He described government's vision to broaden economic co-operation with China to bring it at par with the excellent political and security relations that exist between the two countries.

He said that during his forthcoming visit to China, the President will hold meetings with the heads of Chinese companies and financial institutions.

He also assured the Chinese companies of the fullest co-operation and facilitation by the Government to promote their businesses in Pakistan.

Sources said that Pakistan will specially seek further assistance in nuclear power generation as a nuclear power project with the capacity of 300MW has already been completed by China in Chashma and is setting up another there. There is also an understanding that Beijing will build six nuclear power plants with an installed capacity of 300MW each, sources added.

Pakistan's growing nuclear energy needs are becoming an important incentive for China to act as a global player in the nuclear power industry, sources concluded.


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*Uplift schemes run into bureaucratic snags​* 
KARACHI (October 07 2008): Several new development schemes of Rs 28.9 billion are unlikely to be initiated due to bureaucratic hurdles, as some of the top brass in Finance and Planning and Development (P&D) departments intend to allocate maximum funds to their favourite private firms.

Well-placed sources in the P&D department told Business Recorder on Monday that the top bureaucrats in both departments were misusing their powers as several contracts of development schemes were being granted to the favourite private firms without evaluating their competency.

They said that the top officials had taken these decisions without discussing with the Chief Minister and cabinet members and planned to grant over 50 percent development funds to these firms.

"The involvement of private sector is always laudable by all stakeholders but in current situation, its proper implementation is a questionable," they added.

The sources said that a top official in finance department was also interfering in the work of other departments. Exposing some flaws in this regard, they said that Hyderabad and Mirpurkhas Road, which was federalised but later it had been de-federalised on the request of Finance Department while the Work and Services Department was not taken on board in the regard, which is the real administrative and concerned department for the project.

They disclosed that even some retired bureaucrats were still availing government facilities such as official vehicles, drivers, petrol etc. Instead of strengthening the monitoring mechanism and recruiting more professionals before allocating funds, private sector had been involved in development schemes, which had created lucrative opportunities for black sheep to embezzle funds, they said.

"Sindh cannot be developed unless the authorities concerned take bold steps to eradicate political favouritism in the process of decision-making," they said. They further said the Finance and P&D departments were not transferring the authority of funds' utilisation to the departments concerned and wanted to supervise all development projects, which were causing disenchantment among the departments.

They said that all departments concerned expressed serious concern over the issue, saying that both departments were not capable of implementing all development schemes and urged the transfer of funds so that they could play their due role in the development of Sindh province. They alleged that P&D was not work properly and efficiently as top official was trying his best to foil the government by not approving the schemes. Delaying tactics were also being used to discourage public representative schemes, they added.


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*Pakistan cannot afford economic sanctions: Defence secretary tells Senate body ​* 
ISLAMABAD (October 08 2008): A top government official on Tuesday said that the Pakistan's credit rating is little better than the level of bankruptcy and it cannot afford sanctions by international powers. Briefing the Senate Standing Committee on Defence, Secretary Defence Kamran Rasool said that Pakistan would have to soften its stance if global powers tried to impose sanctions after declaring the country as a terrorist state.

Success in war against terror cannot be achieved without Pak-US sharing of intelligence information/data, he said, adding that Nato and Isaf drones use Pak air space with the consent of government of Pakistan. Analysing the situation realistically, Rasool said the country is in severe financial crunch and rupee is losing its value against dollar with each passing day, whereas foreign exchange reserves are also depleting rapidly and we are talking about taking on the US.

Commenting on the defence analysts views pertaining to US designs vis-à-vis South Asian region, Rasool disagreed with their opinion, adding that there is no evidence clearly spelling out US designs. He said without developing national consensus we cannot achieve visible success in war on terror, adding that military alone could not suppress the uprising in the area. He condemned the civilian killings in Afghanistan in the name of collateral damage.

The defence experts warned the government as well as the policy makers to beware of US designs as it wants to create instability in Fata and change the map of Pakistan according to its will.

Renowned defence analyst Dr Shereen Mazari said there are international players, which are contributing to insurgency in Balochistan. Iran, India, Russia and even Israel have their own interests in the region and they are making their utmost effort to destabilise Pakistan, she added.

"We must understand the ground realities before taking any action. The definition of terrorism we are facing is not clear," she added. "The US is not an ally but is hostile towards Pakistan and wanted to make inroads into the country for which 9/11 provided an opportunity", she maintained.

She suggested liberalisation in Balochistan to reduce the influence of local sardars, who are a tool for sowing hatred. Pakistan must desist from US support in war against terror as the country would not be able to win this war, she added. She maintained that the Nato has no legitimacy to be in Afghanistan as per UN resolution only Isaf forces were mandated to operate in Afghanistan.

She further warned that the country's nuclear facilities should not be open for all and sundry. "The State should now drop naming Pak-Afghan border as the Durand Line, she further suggested.

Mazari said the suicide bombers targeting Pakistan have no clear mission in their minds as the Palestinians have. She was of the view that withdrawal from the tri-lateral commission, suspension of the Nato supplies and taking back air space facility from the US forces could be used as a tool to press the allied forces in Afghanistan to avoid border violations.

She further recommended that the foreigners in the tribal areas should be isolated and the Afghan refugees should be sent back to their homeland. Fata should be given the normal provincial status and its merger with the NWFP is viable option, she added.

Senator Professor Khurshid Ahmad of the Jamaat-i-Islami also endorsed Dr Mazari's perceptions regarding US agenda about the region. He said the leadership of Pakistan as well as the other Muslim states has totally failed in identifying the real source of threat. He said the tribal system was 'destroyed' without introducing the alternate which created vacuum in the tribal areas.

Senator Kamil Ali Agha criticised President Zardari's reported statement regarding consent for US to launch attacks inside Pakistan. He observed that the PPP-led government has trampled the mandate given by the nation. Dr Rifat Hussain said that the US must keep in mind the spillover effect of the war against terrorism. He was of the view that without winning minds and hearts of the local people, war against terrorism could not be won.


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*Cement exports swell to 2.5 million tons in first quarter​* 
KARACHI (October 08 2008): Country's cement sector has maintained its healthy growth as its exports witnessed a raise of 60 percent to 2.5 million tonnes during the first quarter of the current fiscal year while the local dispatches have scaled down by 15 percent because of the slow construction activities.

Industry sources said that although the local cement manufacturing units are taking fully advantage of cheapest and easy availability of raw material and exporting the huge quantity of cement to the regional countries, but the decline in the local sales is a threat to the cement sector, which could also hurt the profitability.

"The local sales is on decline despite the price stability for the last few months and due to slow construction activities on the back of poor economic circumstances," they said.

All Pakistan Cement Manufacturers Association (APCMA) Secretary Shahzad Ahmed said the country's cement export has crossed two million mark during the first quarter and reached 2.497 million tonnes as compared to 1.565 million tonne during the same period last year.

The cement exports during September 2008 has also been gone up by 18 percent to 0.89 million tonnes as compared to some 0.754 million tonnes during September 2007. The local sale of cement has been gradually declining and during the first quarter the overall local dispatches has declined by 15.5 percent during the first quarter.

With current decline overall local dispatches stood at 4.833 million tonnes during the first quarter of current fiscal year as compared to 5.71 million tonnes during the corresponding period last fiscal year. The local dispatches of cement during September 2008 also showed a dip of 17 percent to 1.497 million tonnes from 1.8 million tonnes. Industry sources said the cement sector overall performance is encouraging, however, the declining trend of local dispatches a matter of concern, which would hurt overall industry.


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*Economists say Pakistan not going to default​* 
KARACHI (October 08 2008): Economists have rejected the impression that Pakistan is going to default, saying that it has the ability to lure huge foreign inflows and pay off its debts. They said that despite the declining trend in the country's foreign reserves, it is expected that country has ability to bring huge foreign inflows from some international financial institutions to meet its requirements.

"Now-a-days rumours of Pakistan's default is on rise due to the balance of payment and liquidity difficulties, many questions have been raised over Pakistan's ability and willingness to honour its upcoming 500 million dollars, Euro bond debt obligation," they said.

They, however, made it clear that there is not a single chance of default and we believed that country is still in a position to fulfil its commitments with the foreign institutions.

On October 6, 2008 Standard & Poors has revised down Pakistan's credit rating from B to CCC+, the second downward revision since January 2008. Rising external vulnerability on the back of a thin liquidity cushion is the primary cause of the rating adjustment.

"We believe the recent 500 million dollars disbursement from ADB, encouraging statements from the World Bank, and the formation of the Friends of Pakistan consortium led by G-7, China and Middle-Eastern countries will at least help Pakistan to honour upcoming debt obligations and the balance of payment financing crisis," said Muzamil Aslam, an economist.

He said that still the IMF also has not closed its doors on Pakistan for financial assistance and a risk to this exceptional financing is Pakistan's relationship with the US, which has been under some strain recently. A rating downgrade reduces a country's ability to tap money through remittance securitization bonds, slowing down the rate of foreign investment and privatisation, Muzamil said. He said that S&P step could further raise concerns over external liability and prompt dollarization and speculation in the forex market.


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## Neo

*Iran ready to provide electricity: joint shipping company proposed​* 
ISLAMABAD (October 08 2008): Iranian Ambassador Mashallah Shakiri said that his country was ready to provide electricity to Pakistan and the Iranian government had adequate capacity to carry out development projects. Shakiri also proposed to establish Pak-Iran Joint Shipping Company that would enhance connectivity leading to increase in bilateral trade.

He said this during a meeting with Deputy Chairman Planning Commission (PC), Salman Faruqui. The two sides agreed that bilateral co-operation in various sectors of economy like energy, railways, roads and trade would be enhanced.

The Iranian envoy apprised that Iran was already working on Sahara hydel power project on the river Chenab and had raised its capacity from initially proposed generation capacity of 65 mega watts to 130 MW through Independent Power Producers (IPPs). He said that the present volume of trade between the two countries showed that the bilateral trade potential was untapped. The volume of trade between Iran and other regional countries is significantly higher than trade between Pakistan and Iran.

According to him, one of the main problems was lack of physical as well as institutional connectivity between the two countries. He also showed his country's interest in enhancing the co-operation in banking sector by opening up branches of banks in each other's countries on reciprocal basis.

Deputy Chairman PC said that Pakistan was interested in importing electricity from Iran as Pakistan was currently facing power shortage. He suggested bilateral negotiations to work out the modalities related to pricing and transmission. He appreciated the proposal to establish a Joint Shipping Company to boost maritime co-operation and mutual trade and promised to examine the proposal. Pakistan National Shipping Company (PNSC) would be asked to look into this matter, he further said.

Faruqui also underlined the importance of modern railroad between Quetta and Taftan. For this purpose, he said that funds could be raised together with Iran and by using the forum of Economic Co-operation Organisation (ECO) or Islamic Bank. Both the sides agreed to increase co-operation in health services and pharmaceutical sector as well. Faruqui informed Shakiri that PC had good mutual relationships with its Indian and Chinese counterparts and it wanted the same level of institutional interaction with its Iranian counterpart.

Shikri appreciated this proposal and assured that Iran would welcome this institutional linkage that would further enhance business to business contacts for regional development.


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## Neo

*Chinese investment in Wapda projects discussed​* 
LAHORE (October 08 2008): Wapda Chairman, Shakil Durrani, called on the Chinese Ambassador to Pakistan and discussed with him ways and means of the Chinese investment in different Wapda projects.

Discussing a number of future projects of water and hydropower sectors including Diamer-Basha Dam, Neelum-Jhelum, Kohala and Bunji hydropower projects, the Chairman informed the Ambassador that these projects would help provide a good opportunity for international financing, especially, Chinese, for their lucrative economic rate or returns.

The pace of work on various ongoing Wapda projects being constructed by the Chinese companies was also discussed in the meeting. The Chairman said Wapda is indebted to the Chinese Engineers for their role in execution of the projects in water as well power sector. The Chairman also condoled the demise of a Chinese worker, who died of land sliding while working on Khan Khwar Hydropower Project near Besham couple of days ago.


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## Neo

*Rs 1.6 billion Balochistan village electrification project in the pipeline​*
QUETTA (October 07 2008): About 700 villages would be electrified and three new 132KV power grid stations would be established in Balochistan under Rs1.6 billion Second Rural Village Electrification Project also known as Kuwait Fund, sources in Balochistan Provincial and Planning department told APP on Monday.

They said work on the project has not been launched yet as a survey is being carried out to identify the villages that have to be electrified in all 30 districts in the province.

The survey is about to be completed and practical work on the project would be launched as soon as the survey completes, they said, adding the scheme is not being sponsored by Kuwait government only, as the federal government would also contribute its share in this regard.

Referring to grid stations, the sources said three new 132KV grid stations would also be established in Dera Bugti, Chammalang coal field and Gwadar district under the scheme to be implemented by Quetta Electric Supply Company in collaboration with the provincial Irrigation and Power department.


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## Neo

*Wind energy: missed targets​*
ENGINEER HUSSAIN AHMAD SIDDIQUI

ARTICLE (October 07 2008): The National Energy Security Plan 2005-2030 has set target for the development of renewable energy, with focus on exploiting wind-power resources, to achieve, from practically non-existent share, to five percent share in national power generation mix by the year 2025. Given the present conditions, however, it seems almost impossible to reach the mark.

Anticipating completion of the pioneering 150-MW wind-power project and other renewable energy on-going schemes of 30 MW capacity by 2005, the Plan envisaged establishing renewable/wind energy projects, progressively adding 700 MW to the national grid by 2010.

In subsequent years, another 800 MW installed capacity is to be created to attain a total of 1,680 MW installed capacity for power generation through alternative energy resources by 2015. By the end of 2025, it is planned to have 5,850 MW cumulative renewable/wind energy capacity, while total power generation capacity at national grid is projected at 110,760 MW.

The ground reality, however, is that the Alternative Energy Development Board (AEDB) has not yet been able to develop a single project worth mentioning, either wind-power or of solar-energy. Tall claims repeatedly made by the management, since its inception in July 2003, have proved to be false and rhetoric. During the last five years, the AEDB has issued as many as 93 LOIs (Letter of Interests) to foreign and local investors for setting up a number of wind-farms, each of 50 MW or higher capacity, on Build, Operate, Own and Transfer (BOOT) basis. Many other EOIs (Expression of Interests) are said to be in various stages of processing for approval.

None of the prospective Independent Power Producers (IPPs), however has obtained the Letter of Support (LOS) as the requisite Power Purchase Agreement (PPA) with WAPDA/KESC has not been concluded by any. The signing of an Implementation Agreement (IA) is next step towards achieving financial close for the project. Most of these LOIs have thus become invalid. Interestingly, the government has already allocated 23,645 acres of land in Sindh to 15 prospective IPPs and an additional 10,330 acres of land allocated provisionally to another 7 investors.

Initiative for promoting large-scale use of wind-power was taken sometime in 1997-1998, when the United Nations Development Programme (UNDP) undertook a comprehensive study for commercialisation of wind-power potential in Pakistan. The study, completed in April 2001, confirmed that the coastal belt of Sindh possesses enormous potential, of 50,000 MW power generation, for economic and sustainable wind-power development. The first project identified to develop consisted of two or three wind-farms of 50 MW capacity each in the Gharo-Keti Bunder wind corridor. The project, to be developed by the then Ministry of Environment, Rural Development and Local Government was to take-off in June 2002, but was transferred, at initial stages, to the AEDB on the premise and promise of implementing it on fast track basis.

AEDB was provided Rs 100 million by the government for some of the activities related to the project that was basically funded by the UNDP, GEF (Global Environment Facility, a division of the World Bank) and NORDIC of Norway. In addition, technical assistance was provided to the Board by the GTZ (German Agency for Technical Co-operation) worth Euro 3.50 million and Asian Development Bank (ADB) amounting to $0.55 million. Instead of implementing the project itself, however, the AEDB decided to associate private sector through international competitive bidding.

After evaluation of the proposals received from many international and domestic entrepreneurs, the Board had awarded these projects of cumulative 150 MW capacity to three selected companies. A 50-MW wind-farm will cost about $50 million and spread over an area of 1,000-1,200 acres of land. But, the Sindh government has allotted 19,807 acres of land to these prospective IPPs. The projects, which were to be completed by June 2005, were re-scheduled twice and the last COD (Commercial Operations Date) for the three projects was committed by the AEDB as June 2007. But there is no physical progress achieved on any of the three projects as yet, and it is not known when the projects could see light of the day, if at all. If implemented in time, it would have helped in reducing present power shortage in the KESC system.

A variety of factors are cited that have impeded implementation of the projects in hand, such as non-availability or longer delivery of wind turbines due to recent surge in international market, and lack of wind mapping and resource assessment. This is hardly acceptable since all the three projects are being developed by world-reputed manufacturers of wind turbines, ie. GE Energy of Canada, Vestas of Denmark and Siemens/Fuhrlander of Germany, in partnership with the domestic investors, and have developed similar projects recently in other countries.

On the other hand, the government offers various financial and fiscal incentives to encourage investment in wind-power, including guarantee for power purchase and protection against various risks including that of availability of wind speed that impacts on energy output. The land required for wind-farms too has been made available on subsidised government rates. Tariff for wind power generation has been revised upward a numbers of times, and the latest levelled tariff for the first 10 years is Cents 11.6089 per kWh and for next 10 years Cents 4.0300 per unit. This is comparable to tariff allowed for thermal power generation projects in the country.

Progress on other wind-power projects, of cumulative 700 MW capacity, also remains unsatisfactory. In all, seven prospective IPPs have completed project feasibility studies, which are reported to be neither bankable document nor of international standard, as required under the policy. National Electric Power Regulatory Authority (NEPRA) has issued generation licenses to six companies; namely New Park Energy (Pvt) Ltd, WinPower (Pvt) Ltd, Green Power (Pvt) Ltd, Tenaga Generasi Ltd, Milergo Pakistan Ltd and Zorlu Enerji Pakistan Ltd. Meanwhile, a new transmission- line network from Mirpur Sakro to Thatta is being constructed by WAPDA/NTDC in order to sustain the load generated by the proposed wind-farms.

Wind energy is rapidly growing energy resource in the world. Today, global installed wind-power capacity has surpassed the mark of 100,000 MW, including on-shore and offshore installations. In 2007, wind-power capacity had increased by a record 20,000 MW bringing the world total to 94,100 MW. Germany, with 22,200 MW, has the largest wind-based power generation installed capacity, followed by the USA (16,800 MW) and Spain (15,100 MW). Denmark leads in offshore wind-power installations. Emerging markets include India, with installed capacity of 8,000 MW, and China, with 6,050 MW in 2007.China has made remarkable progress in wind-power development-from 2,600 MW in 2006 to 10,000 MW by August 2008.

Now China plans to set up the world's largest wind-power project in the north-west, consisting of three wind-power plants, with an initial capacity of 6,000 MW to be attained in 2010, and finally reaching at 15,000 MW in 2015. When would Pakistan, which has around 346,000 MW wind-power generation potential, get on the bandwagon, one wonders?

It is about time that we realise the need for effective and timely implementation of action plans and programmes launched by the AEDB. As Pakistan faces acute shortage of power generation it becomes imperative to exploit, on priority, all possible avenues of energy resources commercially, in particular clean, abundant, inexhaustible, cheap and indigenous resource -that is wind-power!

(The writer is former Chairman of State Engineering Corporation, Ministry of Industries and Production.)


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## Neo

*Friends of Pakistan - how much assistance can we expect?​* 
ARTICLE (October 06 2008): President Asif Zardari successfully launched a Friends of Pakistan group. What was significant about this group was that he managed to attract some big names to the launch held in New York on the sidelines of the sixty-third General Assembly meeting of the United Nations: Condoleezza Rice, the United States Secretary of State; David Miliband, British Foreign Secretary who, unfortunately was dismissed as a 'novice' by his own Prime Minister during the Labour Party conference, and United Arab Emirates Foreign Minister Sheikh Abdullah bin Zayed. Germany, France, Italy, Japan, China, Australia, Turkey, Canada and Saudi Arabia also sent representatives to attend the meeting; as did the European Union and the United Nations.

No one can deny that high level representation to the conference is symptomatic of the fact that our Western friends are cognisant of our considerable financial needs - estimated at over 10 billion dollars. But at the same time being aware of a problem that is fairly evident to anyone remotely tuned into the Pakistani economic scene, and making pledges that are subsequently kept, are three different things altogether.

What is significant is that during the conference there was a lot of verbal support for Pakistan's cause, but at the same time no pledges were made. And even if pledges had been made the West has a poor track record of not always meeting its own pledges. Be that as it may, the Friends of Pakistan conference agreed to a follow-up conference, expected in Dubai within the month, and it would be interesting to see the level of representation by Western donors at that conference.

However, to be fair to the West, it is important to acknowledge that aid to Pakistan consortium, or the Paris consortium, already extends assistance to Pakistan as it does to other indebted countries. And its 19 members include all the Western countries that participated in the Friend of Pakistan conference. The consortium extended 306.7 million dollars as aid in 2006-07, which was almost halved in 2007-08 to 143.2 million dollars. These are trivial amounts compared to our needs today. Be that as it may, the consortium also focuses on other indebted countries and it is highly unlikely that assistance will increase, given Pakistan's poor governance record, which does not seem to be the focus of the new leadership in Islamabad yet, or the low absorption capacity of assistance in Pakistan.

In addition to extending assistance through the consortium, individual countries extend bilateral assistance to Pakistan as well, notable amongst which are the USA, UK, Germany and Japan. However, it is doubtful if these governments are going to cough up still more money for Pakistan, specially given the passage of the 700 billion dollar bail-out package by the US to stem the impact of toxic debts, followed by lesser bailout packages by some other European countries - bail-outs that no doubt would mean high budget deficits and lower priority to development assistance.

Thus, it is no wonder that the Pakistani government is expected to focus on the non-Paris Consortium members for increasing assistance levels considerably - countries like UAE, Saudi Arabia, China and Turkey - though the latter country is not in a position to extend financial assistance. Within this non-Consortium group of Friends the most notable grant assistance was extended by Saudi Arabia in 2007-08 of nearly 300 million dollars.

Pakistan was given no assistance by Saudi Arabia in 2006-07 but received 200 million dollars in 2005-06. At present negotiations are reported to have reached the final stage for Saudi Arabia to extend an oil facility to Pakistan which, essentially, envisages providing oil on deferred payment. In terms of loans and credits extended to Pakistan, Saudi Arabia gave nothing in 2007-08 but extended 133 million dollars in 2006-07. From 1988-89 till 2002-03, Saudi Arabia extended no loans but gave 25 million dollars in 2003-04. Thus, going by precedence, it is doubtful if Saudi Arabia will significantly increase assistance to Pakistan.

Chinese grant assistance to Pakistan has been traditionally small but China extended 327 million dollars in 2007-08 as a loan. In 2004-05 Chinese assistance had peaked to 683 million dollars. China is more focused on joint infrastructure ventures that have a much greater long term impact on productivity.

UAE too has not extended grant assistance to Pakistan since 1999-2000. In terms of loans, UAE extended a 265 million dollar loan in 2001-02 and then again a 55 million dollar loan in 2006-07. It is therefore not likely that UAE would extend greater assistance to Pakistan given its past history in this regard.

So can we expect 10 billion dollars from the Friends of Pakistan conference? Not likely, given past precedence. What about multilaterals one may well ask? The World Bank, perhaps on the instructions of the Bush administration, suddenly announced a 1.3 billion dollar package for the current year. The World Bank President, a Bush appointee, stated that this assistance was already in the pipeline.

It was certainly possible, but this assistance is unlikely to be targeted as budgetary support as Pakistan has failed to meet the basic macroeconomic conditions, according to senior Bank officials. And in defiance of the claims by multilaterals that they harmonise their policies, the Asian Development Bank has already extended assistance of 500 million dollars for programme lending or budgetary support. Analysts are flabbergasted at this support given the fact that the government has still not spelled out its budgetary revenue targets.

The Financial Times of London has carried a number of stories in recent months about the lack of accountability in ADB and pointed out that ADB's Board of Directors has been particularly critical of its lack of transparency and accountability. Be that as it may, total assistance from multilaterals in not expected to exceed 2.5 billion dollars in the current year.

Why did President Zardari think that he would be able to generate resources from this newly launched forum? Whether this was to the democracy dividend, as harped on by President Zardari, or an acknowledgement of the critical role that Pakistan plays - being a frontline state - in the ongoing war on terror is not clear.

President Zardari during his recent visit to America praised President Bush for his role in ushering in democracy in Pakistan - a liberty he obviously took with the truth as the Bush administration had openly declared its unwavering support for the military dictator Musharraf; this is reflected in the US brokered Musharraf-Benazir Bhutto deal which envisaged retaining Musharraf as the President of the country after the elections in which the PPP was targeted to win a majority. Not till Musharraf began threatening the new government did President Zardari took measures to oust him. However, one cannot deny that the US did ensure that elections were free and fair and that alone maybe the reason why we have a PPP government instead of a PML (Q) government today.

The democracy dividend is thus just as dependable as the US administration may consider it to be. The fact that US attacks on our tribal areas have not stopped, compromising the claims of the Zardari government that the US respects our sovereignty goes to show that the democracy dividend's impact is minimal on US policy.

The war on terror is the only trump card that the government has and it must be used wisely to bring not only the US but also the local people on board. The former will ensure assistance that our economy so desperately needs and the latter will ensure popular support for the modalities of the war on terror - modalities that were yet another reason for Musharraf's unpopularity and consequent isolation within the country.


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## Neo

*President Zardari's interview to Wall Street Journal​*
EDITORIAL (October 07 2008): President Asif Ali Zardari, in an exclusive interview to Wall Street Journal, reportedly requested a 100 billion dollar aid package from the West.

The raison d'etre of this request: if the US can spend 10 billion dollars a month in Iraq where there is little danger of an al Qaeda resurgence - the US acknowledged antagonist in its war on terror - then there is reason to spend all that much more in Pakistan to ensure that al Qaeda operatives hiding in the inaccessible regions along the Pak-Afghan border are dealt with appropriately, a claim made repeatedly by senior Pentagon and Bush administration officials.

There is no doubt that Pakistan has been engaged in a fight on behalf of the West since 1979 when Soviet tanks rumbled onto the streets of Kabul sending the Pentagon into the jitter. The outcome of our involvement was catastrophic ranging from the proliferation of kalashnikovs in our streets as well as the drug culture that caused severe socio-economic issues that the country continues to grapple with today.

Afghanistan post-Taliban is again in the grip of a civil war and it is Pakistan that is, again, paying a heavy price in terms of loss of life, directly through US attacks on our tribal areas as well as the collateral damage due to our military's ongoing operation in that part of the country; increasing number of displaced persons as well as loss of property and, what is also disturbing, the reappearance of the dreaded polio amongst children in the tribal areas who could not be vaccinated due to the insurgency there.

Political analysts also allege that Afghanistan in 1979 and 2001 provided two of our military dictators' legitimacy in the eyes of an international community that had initially refused to accept Zia-ul-Haq and Pervez Musharraf as legitimate leaders of Pakistan. Thus given the scale and extent of our problems attributable to our fighting proxy wars on behalf of the US the request for 100 billion dollars does not appear to be outlandish.

President Zardari's argument is simple: the US cannot afford to let the government fail, and the prospect of a nuclear armed Pakistan losing the fight to al-Qaeda as untenable to the West was raised by the interviewer. Many in Pakistan would challenge such logic; after all nuclear armed Pakistan is able to defend its nuclear weaponry from a bunch of terrorists hiding along the Pak-Afghan border.

Be that as it may, it is highly improbable that assistance amounting to 100 billion dollars would ever find its way into Pakistan's treasury within the year as a loan, leave alone as a grant as requested by President Zardari. Past precedence shows that even after the massive earthquake of October 2005 - horrific images of which were beamed world-wide resulting in mounting public pressure on Western governments to extend all possible assistance to the government of Pakistan to cope with the crisis - the world, including multilaterals, pledged 6.2 billion dollars. And Pakistan learned at that time that pledges simply cannot be equated with actual disbursements.

In addition, the Western countries are extending assistance to Pakistan not only through the Paris Consortium but also bilaterally. It is therefore unlikely that there will be any significant increase in assistance to Pakistan in the current year, given the additional factor of the global economic crisis and its associated bail-out package resulting in mounting budget deficits. Multilaterals are also unlikely to go well beyond their programming targets for Pakistan which would account for assistance of 2.5 to 3 billion dollars this year maximum.

President Zardari's statement that India has never been a threat to Pakistan is incomprehensible given Pakistan's three wars with India, its recent military manoeuvres in Siachen, constant Indian charges of cross border terrorism against Pakistan and the recent cutting off of water supply in contravention of the Indus Water Treaty.

President Zardari also labelled Kashmiri freedom fighters as terrorists - a statement likely to alienate large sections of the Pakistani public. The President would be well advised to consider the reasons behind Musharraf's failure to hold on to power: mainly because of his growing alienation from large parts of the public because of his policies. But President Zardari did insist and, rightly so, that Islamabad be treated at par with New Delhi with respect to the Indo-US nuclear deal.


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## pkpatriotic

*Banks capable of absorbing market shocks, says SBP*
*October 08, 2008 *

*KARACHI, Oct 7: The resilience of Pakistans banking sector will enable it to absorb market shocks and adverse macro-economic conditions, says State Bank Governor Dr Shamshad Akhtar.*

In a press statement issued by the central bank on Tuesday, Dr Akhtar said the capability had been achieved through a continuous financial reform process pursued over the past few years. There should not be any cause for concern about the stability of the banking system in the coming days, she said.

The statement comes at a time when the developed world is in the grip of a financial turmoil and even large banks are facing a serious liquidity crunch, causing stocks exchanges the world over to nosedive.

The SBP governor said that Pakistans banking system was showing a strong performance and holds a promising outlook.

Dr Akhtar said that investors confidence in the banking system remained unshaken and they had injected an additional capital of about $500 million since 2006 that coupled with retained earnings improved the banks capital base.

The banking sector, she said, had strong capital adequacy, well above the minimum requirement. The capital adequacy ratio is 12.1 per cent as of June 2008 which is well above the international benchmark.

The non-performing loans ratio and the ratio of non-performing loans to capital are also quite low and within acceptable ranges.

The (net) infection ratio in June 2008 has improved to 1.1 per cent from 1.6 per cent in December 2006, signifying that the banks have set aside more reserves out of their earnings to cover the increase in non-performing loans. Accordingly, the non-performing loan coverage and capital impairment ratios have also improved, the SBP governor said.

Pakistani banks, Dr Akhtar said, largely focussed on conventional lending and remained unexposed to sub-prime credit instruments in the international market. The lending and investments of banks were subject to stringent prudential SBP regulations which prohibited the banks from clean lending and investment in low-quality assets.

She said banks were required to recognise loan losses and provide for these losses in line with the established best practices.

According to the SBP governor, the State Banks on-site inspection and off-site supervision wings kept a close watch on the state of each bank and the banking system, to avert any risk to the banking systems stability.

In 2007, she said, SBP made loan provisioning requirements more stringent to create adequate cushions, enabling the banking system to withstand any potential credit adversity. An analysis of the system suggested that it could withstand any number of shocks without losing its solvency, Dr Akhtar said.

Referring to some recent pressures on money market rates, she said that these mainly pertained to the seasonal factor of cash withdrawal for Eid. In order to meet their requirements for Eid preparations, depositors tended to withdraw large sums from the banking system, creating a liquidity crunch for a few days after Eid. This situation, however, reverses in due course of time as the funds ultimately return to the banking system.

Public at large should cooperate and should help in channelling liquidity within the formal system. The SBP governor also urged banks to launch aggressive deposit mobilisation efforts.


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## pkpatriotic

*State Bank reduces cash reserve ratio*

*KARACHI: The State Bank of Pakistan reduced banks' cash reserve ratio (CRR) to 8 per cent from 9 per cent, effective from Oct. 11, the SBPs spokesman told Reuters on Wednesday.*

The central bank will further slash the CRR to 7 per cent effect from Nov. 15.

The State Bank of Pakistan said a cumulative decrease of 200 basis points (bps), from 9 per cent to 7 per cent, would release 61 billion rupees ($767 million) into the system.

It must be remembered that this is a temporary measure aimed at accommodating extraordinary liquidity requirements of the banking system and, therefore, should not be construed as a change in the monetary policy stance, State Bank Governor Shamshad Akhtar said in a statement on Wednesday.

The central bank action came as overnight calls rates rose above 50 per cent on Saturday and went as high as 38 per cent on Wednesday, partly due to depositors' withdrawals ahead of last week's Muslim Eid ulFitr festival, but also because of nerves over liquidity in the banking system, analysts said.

The central bank reiterated its tight monetary stance to counter inflation and high twin deficits and said government borrowing was still very high.

The fiscal stress continues to be high, Akhtar said.

The governor said government borrowings have continued to rise unabated since the start of the fiscal year in July and this excessive recourse on the borrowing is straining credit availability for banking sector and causing complications for liquidity management. 

The external sector is a major source of concern as lack of financial inflows have widened the financing gap and drained the rupee liquidity.

According to the central bank the Net Foreign Assets (NFA) of the banking system have depleted by 166.5 billion rupees ($2.1 billion) during July 1 to Sept. 20 of fiscal year of 2008/09.

*Bankers had privately urged the central bank to reduce the statutory liquidity requirement (SLR) or CRR by at least 50 basis points, or possibly both, to stop a liquidity crunch putting banks in jeopardy.*


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## Neo

*KESC gets relief of Rs26bn ​* 
Thursday, October 09, 2008

ISLAMABAD: The Federal government has formally notified Karachi Electric Supply Companys (KESC) status as ex-WAPDA power distribution company which will provide a relief of Rs26 billion to the utility, a senior government official told The News.

Under the new scenario, Pakistan Electric Power Company (PEPCO) will charge KESC the same rates for electricity supply as it is charging eight power distribution companies. PEPCO will treat KESC as a power distribution company as off July 1, 2008.

Liquidity-starved KESC will get relief worth Rs26 billion, as the rates at which electricity is supplied to the distribution companies are much lower than the rates at which power was supplied to KESC prior to the notification.

The official said that KESC is required to pay arrears amounting to Rs56.163 billion to PEPCO against electricity supply. After the notification, its arrears would come down to Rs30 billion.

This will be a substantial relief to KESC and in turn, its new management needs to come up with an investment programme to cater to the existing and future energy needs of Karachi, the business centre of Pakistan.

Karachi Electric Supply Company has also increased its tariff by 118.42 paisa per unit on account of removal of four per cent price cap. The financial health of KESC has also strengthened after a $400 million investment in thermal and rental power projects.

Here the question arises as to why the decision to erase 4 per cent cap for increasing tariff and giving power distribution company status to KESC was taken before. It should have been taken at least two years ago. Had it been taken then, the new management would have not taken over KESC, because the previous management had preferred to stay on.

To a question, the official said that the arrears of PEPCO have surged to Rs139.653 billion, out of which KESC has to pay Rs56.163 billion, FATA Rs74 billion, Sindh government Rs7.620 billion and Azad Jammu and Kashmir Rs1.870 billion.

Out of the Rs139.653 billion dues, the official said it seems impossible to recover dues from the federally administered tribal areas because of political compulsions. He also hinted that it was quite difficult for PEPCO to get its dues from KESC as the Pakistan Peoples Party government is in full command.

Earlier PEPCO had not only threatened to switch off electricity supply to KESC, but it in fact did switch off the supply when Munnawar Basir was Managing Director PEPCO.

However, he hoped that PEPCO, with intervention from the center, would be able to collect its arrears from AJK and the government of Sindh.


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## Neo

*No let-up in rupee slide ​* 
Thursday, October 09, 2008

KARACHI: The rupee slid-down to a record low of Rs80.30 to US dollar in interbank market on Wednesday due to continued pressure from import payments amid multiple problems that shacking economic confidence.

Market sources said that after State Bank of Pakistan (SBP) intervention sentiments driven forex market slightly calmed-down. However, SBP remained tight-lipped regarding fresh volume of dollars it sold in interbank market. Banking sources said that SBP might sell $100 million in interbank market, which helped rupee to recover some grounds before trade closed.

After depreciating almost 2 percent as compared to Rs78.69 on Tuesday rupee finally closed at Rs79.55 at buying and Rs79.65 on selling counters in interbank market. National currency has lost almost 23.3 percent so far this year.

The shortage of dollars in the kerb market was even more acute as the rupee-dollar exchange rates plunged to Rs80.30 at buying and Rs80.50 on selling before day trade closed.

In order to stabilize forex trade the central bank has been intervening in forex market periodically since last few months but failed to control steady fall in rupee amid insufficient forex reserves. 

The State Bank, with less than $5 billion, has just enough foreign currency to cover two months of imports. 

In a same move SBP in a meeting with heads of exchange companies on Wednesday advised them to ensure uninterrupted supply of cash foreign currency to their customers. Besides SBP also assured exchange companies of its support in case of any liquidity requirement. 

The market remained under grip of rumours, however, SBP also categorically denied rumours regarding the freezing of foreign currency accounts and sealing of lockers at banks. In a bid to restore confidence, State Bank of Pakistan Governor Shamshad Akhtar said in a statement late on Tuesday that the countrys banking system was resilient enough to withstand market shocks and the adverse macroeconomic situation.

There should not be any cause for concern about the stability of the banking system in the coming days, she said, adding that capital adequacy was well above the minimum required.

Despite her reassurance, call rates went hit 38 percent on Wednesday, partly due to depositors withdrawals ahead of last weeks Eid ul-Fitr festival.

Dollar vanishes from Lahore: The US dollar disappeared in open market on Wednesday amid storm of rumours, our Lahore correspondent adds. 

The greenback was in short supply in Lahores open currency market from the start of trading but was completely unavailable after rumours of financial institutions and country defaults.

The dollar opened Rs79.40 and 79.80 on buying and selling counters and continued to move upwards and finally closed at Rs80.00 and Rs80.50 on buying and selling counter after registering an increase of 70 and 85 paisa respectively.


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## Neo

* Rs161bn withdrawal from banks sparks dollar demand ​* 
Thursday, October 09, 2008

ISLAMABAD: A huge cash withdrawal of Rs161 billion from depositors accounts of commercial banks from July 1 to September 20 has pushed up dollar demand and sparked capital flight estimated to be worth $500 million to $1 billion. This has worsened economic crisis, resulting in a fall of the rupee against the dollar, it is learnt.

The rupee ended at Rs79.80 against the dollar on Wednesday after recording a record low of over Rs81 in the open market.

State Bank of Pakistan (SBP) reportedly injected $100 million in order to ease the demand of dollar, which resulted in a slight recovery of the rupee. But market sources say that the central bank did not inject up to $100 million and it intervened by injecting only $20 to $30 million, which helped the rupee recover slightly at the end of the day in the inter-bank market. The buying of dollar was at Rs79.70 while selling was at Rs79.80 at the end of day.

We expect that the SBP will continue to intervene in the market on Thursday in order to meet dollar demand, a market source said and added that the central bank wanted to keep rupee-dollar parity within the range of Rs80 in the open market.

Referring to the pressure on money market rates, governor State Bank of Pakistan said in a statement on Tuesday that these mainly pertain to seasonal factor of cash withdrawal for Eid festival. In order to meet their expenditure requirements for Eid preparation, the depositors tend to withdraw large sums from the banking system, creating a liquidity crunch for a few days after Eid. This situation, however, reverses in due course after Eid as the withdrawn funds ultimately retract to the banking system.

When an SBP spokesman was contacted for seeking his comments on withdrawal of Rs161 billion from depositors accounts in two months and 20 days, he refused to share any further information in that regard. When he was asked how much money was withdrawn from depositors accounts in the same period of the previous fiscal year in order to do comparison, he said, you will have to rely upon the statement of the governor SBP which was issued yesterday and nothing more can be shared in this regard.

However, another official who is affiliated with the SBP said that there was pressure on cash withdrawal from depositors accounts and this situation would normalise in the next 15 days. There is nothing unusual in this regard, he said and added that one should keep in mind the monetary growth while making any analysis.

Sources said capital flight continues unabated especially to the Gulf region in the housing sector and around $50 million are being invested every week.

Talking to this correspondent, a Planning Commission high-up said that he proposed to the government to offer higher rates of dollar to those who are holding it in their individual capacity in order to replenish dried dollar reserves. We can ask people to submit their dollars and get rupees at higher rates, he said and added that he was fully confident that the government could generate $1 to $3 billion easily.


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## Neo

*IMF says Pakistans economic situation is fragile ​* 
Thursday, October 09, 2008

ISLAMABAD: Estimating Pakistans financing gap at $7 billion in the current fiscal year, the International Monetary Fund (IMF) has said the countrys macroeconomic situation is very fragile and further significant losses in reserves would make it vulnerable to a crisis. 

IMF Macroeconomic Assessment Letter about financial health of the countrys economy given to the Asian Development Bank on September 28, which paved the way for the release of $500 million, states that IMFs staff preliminary projection for 2008-09 based on a continuation of the prevailing monetary policy stance, expected external financing and revised oil prices, saw external current account deficit of $14 billion (7.7 per cent of GDP). 

With capital inflows of about $7 billion, the IMF staff estimates external financing gap of $7 billion. Given the difficulties involved in forecasting capital inflow in an unsettled macroeconomic environment, this financing gap is subject to a high degree of uncertainty, the fund further states. 

The fund staff believes that tax revenues should be increased by at least 3-4 per cent of GDP over the medium term (from 10pc of GDP in 2007-08) by broadening the base of the general sales tax to services, taxing commercial agriculture under the income tax, eliminating other tax exemptions and significantly strengthening tax enforcement. On prospects of real GDP growth for 2008-09, the IMF says that GDP growth is expected to slow further to about 4.5 to 5pc in the current fiscal year while average inflation is projected to increase to 16 to 17pc owing in part to the envisaged pass through higher international prices of energy and food. 

The country has set inflation target at 12pc for 2008-09. Recently, the countrys authorities specified their policy plans for the current fiscal year and stressed their commitment to addressing macroeconomic imbalances and putting the economy back on a sustained path. 

Moreover, following the recent increases in the discount rate and the adoption of policy of greater exchange rate flexibility, the authorities indicated that the SBP stood ready to take further actions in this direction, as needed. The authorities also committed to meeting the governments domestic financing needs through market based instruments and ensuring that both borrowing from the SBP is zero on a net basis at the end of each quarter, the IMF noted. 

The authorities have taken some measures to by adjusting fuel and electricity prices as well as slowing down the development spending, further measures are required to achieve the target of reducing the fiscal deficit to 4.7pc of the GDP. 

On the expenditure side, the IMF says, the authorities need to move ahead with planned increase in electricity tariff and with larger than budgeted reduction in other outlays to offset the impact of potentially higher interest rates on the governments debt servicing. 

This will require removing other subsidies, containing other non-interest current expenditures and carefully prioritizing development spending, said the IMF. 

The authorities should also ensure the implementation of targeted social protection mechanism to cushion the impact of lower subsidies on vulnerable groups. 

Regarding revenue generation, the IMF says a stronger than envisaged effort is needed to broaden the tax base by eliminating some tax exemptions. 

On the monetary side, the IMF mentioned the recent increases in interest rates have been insufficient to stem reserve losses and eliminate the central bank financing of the government. 

If the SBP follows guidelines outlined by the IMF, rupee will further depreciate against dollar in coming days, said market analysts. The IMF says looking beyond 2008-09, a further fiscal effort, together with continuation of tight monetary policy and exchange rate flexibility, will be required to notch a sustainable current account position and bring down inflation. 

In particular, strong tax and policy administration measures will be necessary to further reduce the fiscal deficit.


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## Neo

* Dollar-based saving instrument for expats planned ​* 
Thursday, October 09, 2008

ISLAMABAD: The government is working on a proposal to introduce a dollar-based national saving scheme instrument for expatriates to attract dollars in the country, a senior government official told The News.

The government will offer expatriates better interest rates compared to interest rates they are getting in USA, UK and Middle East. The expats get only two to two and half percent on their deposits in their respective countries.

The government would give far better interest rates to expatriates that will help end the dollar crisis in the country. When asked if local people will be allowed to participate in the dollar based saving scheme, the official said it would lead to dollarisation in the country so this scheme would be confined only to Non Resident Pakistanis (NRPs).

In addition, for Pakistanis, the government is planning to introduce short term national saving schemes based on three months, six months and twelve months period and the scheme holders will be offered market based interest on higher side. 

We are replacing the old debt stocks by launching new schemes in order to attract more investments during the current fiscal year, the official said.

Pakistans fiscal situation is on the decline owing to debt stocks maturity of Defence Savings Certificates (DSC) with 17 to 18 per cent interest rates, which was obtained by the last PML (N) government in 1997 and 1998 and after ten years these DSC matured in year 2007 and 2008.

The governments plan for short-term schemes will be initiated next month in order to lure investments, which the National Savings Schemes have given back to investors after maturity of DSC.

To a question the official said that Central Directorate of National Savings has paid back Rs171 billion to investors after maturity of various savings schemes.

The government is also working a proposal to allow disabled persons of the country to benefit from highest ever 15 per cent per month profit on their investment in Behbood Saving Certificates.


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## Neo

*President to launch Rs 34 billion BISP for poor today ​* 
Thursday, October 09, 2008

ISLAMABAD: President Asif Ali Zardari is scheduled to formally launch today (Thursday) Rs34 billion Benazir Income Support Programme (BISP) initiated by the federal government for the poor and vulnerable segments of the society. 

Under the scheme, a poor family would be given Rs2,000 after every two months and as many as three million people will initially benefit from it, said Information Minister Sherry Rehman while addressing a press conference here on Wednesday while giving details of the programme. 

Flanked by Parliamentary Secretary for Information Azeem Daultana and Coordinator Benazir Income Support Programme Qaiser Bengali, she gave the salient features of the BISP, saying that it is intended to compensate economically vulnerable families for the erosion their purchasing power has suffered. It is the third largest allocation in the current budget and constitutes 0.3 per cent of GDP and will cover up to 12-14 per cent of the population in low income bracket in the entire country, including Fata,the Northern Areas and Azad Jammu & Kashmir, she added. 

She said for families earning Rs5,000 per month, the Rs1,000 payout will amount to a 20 per cent increase in their current purchasing power. At current flour prices, the additional Rs1,000 a month will be sufficient to finance 20-25 days of flour needs for a 5-6 member low income family, she observed. 

About disbursement, she said it will be made through Pakistan Post, delivered by postal money order at the recipients address, so that they do not have to incur any cost in obtaining the amount. 

She further said work is under way to develop a smart card system that will ultimately become the medium for disbursement for the programme as well as for other supports the government is contemplating to launch in due course. 

She said that unique feature of the programme is that payment will be made only to the female head of the family and womens empowerment impact is likely to be decisive, particularly in the context of social development. 

To a question, she said that special attention has been paid to remote areas such as in Balochistan, Chitral, North and South Waziristan, Kohistan, and Tharparkar. Apart from being the largest direct cash grant scheme in the countrys history, a distinguishing feature of the programme is that it is free from any element of political partisanship, she added.

She said that all members of parliament, irrespective of party affiliation, have been provided with equal opportunity to recommend deserving families, based on specified criteria. About the process of BISP, she said that each parliamentarian is being allocated 8,000 forms which would be distributed by MNAs/senators in their respective constituencies. 

She said that filled in forms would be required to be verified by the union councillor as well as the area MNA. She said MNAs/senators will collect completed and signed forms in multiples of 500 and mail them via Post Office to Nadra in pre-addressed envelopes provided by BISP. 

The information minister said the Nadra would transcribe and verify the information in 15 days and the final list would be posted on a website being created specifically for this purpose. She said the list would also be displayed at the General Post Offices of all areas across the country to ensure that those not having access to the Internet can also be informed. 

Replying to a question, she said an internal monitoring mechanism is also being put in place to verify actual delivery of exact amount to the designated families. There will be five coordinators in all the four provinces as well in Northern Areas/Azad Kashmir for the programme and any complaint regarding irregularities by the post offices can be submitted to the regional Coordinators which will be resolved within 15 days after submission. About eligibility, she said, there is a strict criteria for the funds and only families with monthly income of less than Rs6,000 would be eligible to apply. 

She said widowed/divorced women, those without adult male members in the family, those with any physically or mentally retarded person(s) in the family and those with any family member suffering from a chronic disease would also be eligible to apply but criteria for the family income to be less than Rs6,000 will apply in all cases. 

The information minister said to ensure transparency care has been taken to obtain maximum objectivity in the programme, adding that this has been done by the separation of programme into management, recipient selection, verification, and disbursement processes. 

She said the disbursement mechanism has been designed in a way that there is minimum intermediary involvement or human interaction in the process of transmission of funds from the treasury to the recipient. Nadra, by way of CNIC has important information on identity cards holders of the country and this includes data on passports and bank accounts etc and CNIC has therefore been made as a compulsory condition for the purpose of applying for the scheme. Those with no CNIC are being provided a free-of-cost service to issue a CNIC, she said. 

Answering another question, she said the forms are protected through security code and they cannot be duplicated or reproduced and only original submissions would be acceptable. She said another important step towards transparency is the availability of the data through website as well as through post offices and added this data would be available for viewing for the general public. Anybody can review the data and point out anomalies, if any, to ensure judicious distribution of the funds, Sherry said. 

The minister said that the government considered every option for form distribution and verification and after months of consultations, it has decided that form distribution through parliamentarians is the best option. 

She said involving parliamentarians also ensures judicious distribution of the funds across the country. All areas would receive equal attention through this system. All parties have a fair representation in both the Houses and all parliamentarians would be entitled to receive and distribute the forms. This is the best way to ensure the fair distribution of funds across the country. 

She said this is a step in the direction of strengthening a representative system since parliamentarians are directly responsible for representing their constituencies and added this would also lead to greater public ownership of the programme by way of increased interaction between the parliamentarians and the public. 

The minister said the display of information on the website as well as in the post offices would also act as a pressure for politicians to ensure that they do not favour any select group of people as a part of their political consideration.


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## Neo

*Joint shipping firm with Iran proposed​*
ISLAMABAD, Oct 8: Pakistan and Iran agreed to enhance bilateral economic cooperation in various sectors, including energy, railways, roads and trade, besides exploring the need for establishing a joint shipping company to boost maritime cooperation and mutual trade.

The issues related to enhancing trade were discussed during a meeting between Iranian Ambassador Mashallah Shakiri and Deputy Chairman Planning Commission Salman Farouqui here.

Speaking on the occasion the Iranian ambassador said that his country was ready to export electricity to Pakistan, adding that Iran was already working on Sahara hydel power project on the river Chenab and had raised its capacity from initially proposed 65MW to 130MW through IPP.

He said that the present volume of trade between the two countries showed that the bilateral trade potential was untapped, adding that the volume of trade between Iran and other regional countries is significantly higher than that with Pakistan.

He pointed out that the main problem was lack of physical as well as institutional connectivity between the two countries and proposed to establish Pak-Iran joint shipping company that would enhance connectivity leading to increase in bilateral trade.

He also showed his countrys interest in enhancing cooperation in banking sector by opening up branches of banks in each others countries on reciprocal basis.

Deputy Chairman Planning Commission Salman Farouqui told the ambassador that Pakistan was interested in importing electricity from Iran as it was currently facing power shortage. He suggested bilateral negotiations to work out the modalities on pricing and transmission.

He promised to examine the proposal for joint shipping and said that Pakistan National Shipping Corporation would be asked to look into this matter.

Mr Farouqui also underlined the importance of modern railroad link between Quetta and Taftan. For this purpose, he said, funds could be raised together with Iran and by using the forum of ECO or the Islamic Bank.APP


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## Neo

*Default reports termed mere speculations​*
LAHORE, Oct 8: Federal finance ministry officials shrug off reports of the countrys possible default on its foreign obligations over the next several months as mere rumours. But they also dont see dollars flowing into the country any time soon.

This is all hot air, a senior finance ministry official, who requested anonymity, said of speculations that Pakistan could default on its foreign repayment obligations when they become due in February if it didnt receive immediate bilateral and multilateral assistance to shore up its foreign currency reserves.

The speculations about default got credence when the Standard & Poors downgraded Pakistans sovereign ratings to the junk category on Monday.

We have enough reserves to cover our expenditures and avoid any immediate possibility of default. Besides, we are expecting help from our friendly countries. Talks are already underway, the official, who has worked at important positions in the ministry during the last seven years, told Dawn.

But he did not say how much foreign assistance was the ministry expecting in the short- to medium-term, and when.

Islamabad is already sending a delegation to the United States for talks with the international finance institutions (IFIs) including the World Bank and the International Monetary Fund.

But another finance ministry official warned against attaching any hopes with the meeting. Its a routine meeting that has been set for this month. It is not going to yield any dollars for Pakistan over the next few weeks, he said.

In answer to a question, he said the government had already received a tranche of $500 million from the Asian Development Bank (ADB) under a $1.5 billion credit-line negotiated with the bank several months back.

That is all we are going to receive from the ADB this year unless it decides to extend another credit line, he said.

The country is facing a difficult balance of payments situation as the foreign currency reserves have depleted to $8.135 billion including $3.45 billion held by the banks from above $16.4 billion a year ago in spite of $500 million provided by the ADB last week.

The foreign capital inflows coming in the shape of loans, grant and investment, which were used by Islamabad to cover its ballooning current account gap, have either dried up or slowed down during the last one year for a variety of reasons.

As a consequence of this, the exchange rate was under immense stress and the rupee hit an all-time low of 78.65/75 to a dollar in the inter-bank market on Tuesday.

Finance Minister Syed Naveed Qamar, however, sounds pretty much optimistic about the future. We are expecting $1 billion from the ADB and $1.2 billion from the World Bank, he told Dawn. But he wouldnt say when.

Foreign investors, particularly from the cash rich Gulf states, have also shown immense interest in the energy and financial sectors, he said of the possible impact of global financial turmoil on Pakistans efforts to attract foreign investment.

Money stays in circulation. If it finds a market in turmoil and risky, it moves to safer shores, he added.

In reply to a question about the prospects of Pakistan issuing sovereign bonds in the international markets after the downgrade of its sovereign rating by the Standard & Poors, the minister said it would be difficult to issue government bonds at present.

But, he said, we are proposing to float other instruments like securitisation of remittances where the governments capacity to repay doesnt matter much. On those instruments we will get a better spread.

Replying another question about the Friends of Pakistan Group, the minister said the ADB and the World Bank were also interested in joining the forum launched in New York last month to help Pakistan cope with issues relating to terrorism, development, economic collapse, etc.

He acknowledged that Pakistan had not received any firm pledges of economic assistance at the forum from the participating countries. (The donors/lenders) dont always carry cheque books with them, he said and added: The forum is not an aid to Pakistan consortium; it is much wider than that though economic cooperation is also one of the points on its agenda.


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## Neo

*400 foreigners to attend Expo Pakistan​*
KARACHI, Oct 8: The Trade Development Authority of Pakistan (TDAP) is expecting arrival of over 400 foreign buyers from 34 countries in the Expo Pakistan 2008 being held on Oct 27 to 30.

The mega event for the first time will witness foreign exhibitors as a number of companies have already confirmed their participation and booked space in the Expo 2008.

This was stated by TDAP director general Javed Anwar Khan at a news briefing here on Wednesday. He categorically denied reports that Expo Pakistan 2008 is being cancelled.

He said that the government is not canceling the mega business event which has the approval and endorsement from the highest level of policy makers.

The local exhibitors have overwhelmingly responded as it gives them the opportunity to display their products under one roof with high turnover of local and foreign visitors, he said.

The DG further disclosed that the TDAP has announced free of cost stalls for participants from remote areas of the country which will encourage business community having meager resources.

He confirmed that around 50 per cent of the exhibition space has been booked.

He said that leading world buyers and trade bodies and chain stores from US, UK, South Africa, Malaysia, Japan, Bangladesh, Germany, France, Argentina, Mexico, Norway, Brazil, Greece, Spain and UAE would participate in Expo Pakistan 2008.


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## Neo

*Economy to improve within 3-4 weeks: Tareen​*
KARACHI: Newly appointed advisor on finance, Shaukat Tareen on Wednesday said that rumours about the bankruptcy of Pakistan are groundless and the government will not seal bank lockers or freeze the foreign currency accounts.

Shaukat Tareen said that economic situation would improve within three to four weeks and that some foreign inflows were expected which would stabilise rupee.

Talking to journalists at Karachi Airport before leaving for Washington, he said a reform process would be initiated to improve the economic situation of the country. The economy will show improvement within three to four weeks. Particularly, there will be foreign inflows which will help stabilize the rupee, he added.

He said the rupee was kept at a certain level artificially for last three to four years and it had been overvalued. The current value of rupee is more reflective of market conditions, he said.

About reports of banks bankruptcy, he said: We wouldnt let banks go bankrupt.

He said he was leaving for Washington where he would meet IMF officials and talk to them about reforms needed by the Pakistani economy.

He would also talk to officials of friendly countries to seek their support for Pakistans economy.

He remarked that the forex reserves had depleted because of high oil import bill. Now that prices of oil are coming down internationally, stability in foreign exchange reserves can be expected, he added.

He alleged that there were some speculators who had stocked the US currency to exploit the situation. Besides, he said, some banks had formed a cartel to take advantage of the fall in rupees value.

Commenting on the decision to place floor under the Karachi Stock Exchanges index, he said that it was wrong. He informed that an exclusive fund would be established through non-residents to provide support to the share market.

APP adds: Shaukat Tareen said the government would devise a special strategy to alleviate poverty from the country and would increase annual growth rate by promoting agriculture and industry, adding that special measures would be taken to promote our agricultural sector.

We can afford decline in annual economic growth rate but not increase in national imports, he added.

The government is striving to resolve all the issues confronting the local industry and it would welcome the positive suggestions and recommendation from the business community in this regard, he added.

The Advisor said that Pakistan was not facing that financial crisis like some other countries because our banking system is on sound footing. However, there is lack of confidence and the major issue is the deficiency of the capital, which would be resolved through effective policies being formulated by the government.

He said on his return from the US visit, he would help restore the confidence of the investors to assure them that the economic reforms would continue and no basic change would be made in the economic policies of the country.

He said not only the local, but also the foreign investors would be taken into confidence to establish the fact that the government is business-friendly.

SBP tries to reassure public: The State Bank of Pakistan has categorically denied rumours regarding freezing of foreign currency accounts and sealing of lockers at banks.

Describing the rumors as totally baseless, State Banks spokesman said in a statement on Wednesday that there is no such action under consideration at any level.

The spokesman pointed out that foreign currency accounts are already enjoying protection under Foreign Currency Accounts (Protection) Ordinance 2001. The general public is, therefore, requested not to pay any attention to such rumours and continue their business normally, the spokesman said.


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## Neo

*Satpara Dam Project to be presented on 11th for approval​*
** CDWP to approve the project, which costs 130% more than the previously presented one worth Rs 2.090 billion​*
ISLAMABAD: The government is likely to present Satpara Dam Project Revised for approval with 130 percent higher cost of Rs 4.805 billion against the earlier cost of Rs 2.090 billion, Daily Times learnt on Wednesday.

The power generation and irrigation related project is probably to be approved in the Central Development Working Party (CDWP) scheduled to be held on 11th of this month. 

The project would help in reducing prolong load shedding in the country. Other objective of the project is to provide water for agriculture purposes. The government has already allocated Rs 100 million in the Public Sector Development Programme 2008-09.

The project demands implementation on fast track for completion in stipulated time period (January 2003 to December 2006) already lapsed. Original PC-1 of the project was approved by the ECNEC on Septemeber 2, 2002 at cost of Rs 2.090 billion including foreign exchange component (FEC) of Rs 195.786 million. Now the sponsors have submitted a revised PC-I at a capital cost of Rs 4.805 billion. Location of the project is across Satpara Nullah, the downstream end of the Satpara Lake, which is about 6 km south of Skardu Town.

Main objective of the project is to provide sustainable irrigation water supply to an area of 15,536 acres of land in Skardu and to generate 17.36 MW of electricity, an official in the ministry water and power told Daily Times here on Wednesday.

The project would also help integrated water resources activities by providing 3.10 million gallons per day drinking water to Skardu Town and nearby villages.

The official informed that the economy of the Skardu area was largely dependent on agriculture. However, the yield per acre was too low due to non-availability of irrigation water. The agriculture land lies about 50 to 150 feet above the level of Indus River making gravity irrigation supply impossible from this source.

Presently, the irrigation water supply around Skardu is derived from perennial stream locally known as Satpara Nullah and some semi continuing streams flowing down the Deosai plain. All these combined factors are the reasons for inadequate water supplies and consequential low crop yields.

There are two hydroelectric power stations of a total installed capacity of 1,200 KW are functioning on Satpara Nullah, still most of the villages surrounding Skardu town and many houses within the town are not yet provided with electric power due to power shortage. The people deprived of electricity use expensive imported kerosene oil for lighting purposes, the official maintained.

Only about half of Skardu towns population is provided with potable water and the people in villages store water from the watercourses in their underground katcha tanks for winter season and use it for drinking. Due to protected water rights of certain people in the area, during low periods, the supply of potable water is also restricted due to power shortage and additional water cannot be tapped for drinking purposes.

To resolve these problems, the official said construction of a dam on Satpara Nullah was proposed. The stored water would be raised to improve power generation of the existing stations and to generate additional power from the new powerhouses. The water would also be utilised for domestic use and for irrigation of the lands around Skardu Town.


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## Neo

*Pakistan drops 9 places on global competitiveness index​*
GENEVA: Pakistan fell nine places on the Global Competitiveness Index for 2008-2009 from number 92 last year to 101. The rankings are based on a poll conducted by the World Economic Forum (WEF) that asked 12,000 business figures to assess 134 national economies. USA, Switzerland, Denmark and Sweden topped the list in that order. India dropped from number 48 to number 50. Burundi, Zimbabwe and Chad were at the bottom of the list.

The WEF is a non-profit foundation best known for its annual meeting in Davos, Switzerland which brings together top business and political leaders to discuss the most pressing issues facing the world. ap


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## Neo

*$7.427 billion needed for import of refined POL products: ECC informed ​* 
ISLAMABAD (October 09 2008): An official working paper presented to the Economic Co-ordination Committee (ECC) of the Cabinet says Pakistan needs $7.427 billion for import of refined petroleum products for 2008-09, $1.2 billion extra against $6.2 billion of the last fiscal year. This import bill does not include the financial cost that Pakistan paid for import of crude oil, which was over $4 billion for the last fiscal year.

The oil import figures quoted by the government in budgetary documents were over $11 billion. Refined high speed diesel (HSD) consumed more than half of total import bill. Its net import stood at $3.86 billion. Other refined imported petroleum products were furnace oil ($2.1 billion), jet fuel ($119 million) and motor spirit ($106 million).

Sources said the official working paper was presented to ECC in its last meeting to apprise it about the finances that the government would require during the current fiscal year for import of refined petroleum products.

"During 2008-09, total demand of petroleum products is estimated at 21.48 million tonnes. Of it 9.9 million tonnes deficit (against 9 million tonnes of 2007-08) would be met by importing refined petroleum products, valuing $7.427 billion. The remaining 11.58 million tonnes would be met by refining imported and locally produced crude oil," says the working paper.

The official estimates indicate that despite some dip in the oil prices in global market, Pakistan would need more money than the last fiscal year for import of crude oil from different sources. Pakistan is forced to import refined petroleum products, as its domestic refining capacity does not meet its requirement.

Pakistan has five refineries with total refining capacity of 1.3 million tonnes. It indicates a deficit of 0.848 million tonnes for the current fiscal year alone. The working paper adds that Pakistan's petroleum products' consumption in 2007-08, was around 19 million tonnes.

Of total consumption, 9 million tonnes deficit were imported in refined form and the rest 10 million tonnes were met through refining of imported and locally produced crude oil.

Pakistan's indigenous crude oil production is slightly over 4 million tonnes annually, which helps Pakistan to make some adjustments in the prices when the rates globally remain high. Historically, high oil prices and subsequently huge surge in import bill in 2007-08, is one of the factors, which pushed Pakistan's economy in red zone. The government is struggling to find some sources to pull the economy out of the red zone.


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## Neo

*US asked to give MFN status to Pakistan​*
MULTAN (October 09 2008): United States should give Pakistan the status of Most Favourite Nation (MFN) to make it economically stable, strong and prosperous, just as it has already given the status to other developing nations like Sri Lanka. President, Multan Chamber of Commerce & Industry (MCCI), Khawaja Muhammad Jalaluddin Roomi, expressed his views during his meeting with US Consulate's Political Economic Officer, Matthew Lowe, held here on Wednesday.

During the meeting he suggested that volume of exports to United States from Pakistan could be enhanced if US lifts its restrictions on Pakistani products in America as Pakistan is one of the allies of war against terrorism. Moreover, he said that terrorism and lawlessness was an international phenomenon and Pakistan is one of the major victims of it.

He said that there was a wide scope of joint ventures and investment in Pakistan in various sectors like electricity, oil & gas exploration, textile, leather industry because their manpower and raw material was available in abundant. He said that Pakistan imports wheat un-milled, Pulp and waste paper, Old clothing's, Petroleum and Petroleum products Soya bean oil, Crude, Pharmaceutical products, Fertiliser NS, Nitro/ phosphates.

Di-Ammonium phosphate (DAP), Organic chemicals, Iron and steel, Power generating machinery/equipment, transport vehicle/equipment, general industrial machinery/equipment/parts, Telecommunication appliances/-equipment, Chemicals material and products Paper, paperboard and articles etc.

While it exports fish and other sea food, rice, vegetables and fruits, chilly powder, guwar gum, liquorices roots, leather and leather manufactures, textile yarn and fabrics, articles of apparel/cloth accessories, Surgical instruments, manufacture of metal, sports goods and others.

Matthew Lowe said that Southern Punjab was a very important area of Pakistan, which produces 80 per cent of total cotton produced and it also contributes significantly in wheat and rice, but this area has been neglected and less industry was set up in this area than required.

He eulogised the handicraft of this zone and suggested its introduction and recognition internationally. Mian Mughis' A Shaikh said that a display centre was being developed in Multan as prime minister had approved this plan. Khawaja Muhammad Yousaf said that elected representatives could play a vital role in reducing the cost of production so that Pakistan could compete in world market.


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## Neo

*Lowering of Pakistan's credit rating​*
EDITORIAL (October 09 2008): The credit rating of a country is a reflection of the state of its economy, particularly its ability to service its foreign debt, at a particular point of time. Given the fact that Pakistan's economy faces many challenges and its foreign exchange reserves are depleting fast, the international rating agency, Standard & Poor's (S&P), cut the country's sovereign rating further and consigned it to junk territory on 6th October.

While doing so, it stated that the worsening external liquidity may imperil Pakistan's ability to meet upcoming debt obligations, amounting to about three billion dollars. More specifically, the foreign currency debt rating was lowered to CCC plus from B, just a few notches above a level that would indicate a default, while local currency debt rating was reduced to B minus from BB minus.

The widely expected announcement came after Pakistan's foreign exchange reserves fell by 690 million dollars to 8.1 billion dollars during the week ended 27th September and the Pak rupee sank to a record low on 6th October. Reserves held by the State Bank came down to only 4.7 billion dollars from 5.4 billion dollars in the previous week, or equivalent to a little over two months of import cover.

S&P feels that the country faces the prospect of default on its debt due to continuously dwindling foreign currency reserves and denting of investors' confidence amid worries that urgently-needed economic reforms may be delayed in a year plagued by political and security concerns.

Pakistan, according to the rating agency, would require a huge amount of external assistance to meet its debt obligations, including 500 million dollars in bonds maturing in February, a sum that is difficult to get from outside sources in time. "The rating on Pakistan could well be lowered further if the foreign exchange reserve cushion continues to shrink and meaningful economic stabilisation measures remain wanting. S&P warned in its statement.

In our view, there can be no argument against the S&P's decision to lower our credit rating. Moody's Investors Services, a rival credit agency, had also downgraded Pakistan's bond rating to negative from stable on 23rd September, 2008, citing similar reasons.

It had also lowered the outlook on B3 foreign currency bank deposit ceiling to negative because of substantial erosion in the country's external liquidity position which was "not likely to be adequately reversed by prospective external assistance or ongoing efforts at macroeconomic stabilisation".

The reasons for the deteriorating outlook on the economy by the two most reputed credit agencies of the world are obvious. Though all the main economic indicators like the twin deficits, price level and exchange rate are worsening, the weakening of country's ability to honour its debt obligations due to rapidly depleting foreign exchange reserves position is the most damaging so far as investors' confidence and the market perception about the Pakistan's solvency are concerned.

Foreigners are neither concerned nor interested in the reasons, yet the fact is that the country is running a current account deficit at a level which is simply unsustainable. Due to an extremely stressful situation in the foreign sector in the recent past, 4.7 billion dollars in net foreign reserves now held by the State Bank mark a 67 percent plunge from a year ago and are hardly sufficient to finance a few weeks of imports.

Unfortunately, Pakistan is fast losing its foreign exchange reserves at a time when the prospects of raising money through asset sales or international bonds have become very difficult in the midst of a global financial crisis. The Asian Development Bank did approve a 500 million dollars loan last week to help Pakistan, but the country clearly needs far more money to cover the projected current account deficit of 14 billion dollars during 2008-09.

According to certain analysts, Pakistan would require loans amounting to about seven billion dollars from different sources, of which 3-4 billion dollars should be upfront to keep it solvent. The present gloomy scenario calls for urgent and bold initiatives to turn the tide and avoid default in payments which could have horrendous consequences for the economy and well-being of the people.

A sound macroeconomic programme needs to be devised and implemented earnestly and without losing more time to rehabilitate and strengthen the economy. This would necessarily involve very harsh measures which would not be easy to undertake in the prevailing political and security environment.

Since such policy measures will take a longer time to yield the desired results, foreign resources would need to be immediately mobilised from multilateral sources and other donors at a high level to fill the gap in the current account and arrest the decline in foreign exchange reserves.

The "Friends of Pakistan" forum and all the IFIs, including the IMF, must be persuaded to come to our rescue at this critical juncture. Needless to say, the existing rating would automatically be upgraded if we are successful in stabilising the economy and improving the balance of payments and reserve position of the country.


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## Neo

*ADB conditions for $2bn loan accepted ​* 
*Islamabad to withdraw power subsidy, eliminate circular debt, restructure PASSCO, enact new SBP Act by 2010​*
Friday, October 10, 2008

ISLAMABAD: Pakistan and the ADB have signed official documents for loan facility of $1.8 to $2 billion over next two years under which Islamabad will have to withdraw power sector subsidy by passing on whole burden to consumers, elimination of circular debt of power sector, raising support and procurement price of wheat to market level and enactment of new SBP Act till June 2010.

The Asian Development Bank (ADB) has recently released a tranche of $500 million to cash-starved Pakistan under the Accelerated Economic Transformation Program. The Finance Minister of Pakistan and the President of ADB signed the agreement. A copy of the 114- page document is exclusively available with The News. 

According to official document Pakistan has accepted the ADBs condition to put in place market based wheat pricing and efficient reserves management by increasing support price to at least 80 per cent of import parity level by June 2009 and support and issue price of wheat be raised to market level till June 2010.

Pakistan and ADB also agreed that wheat reserves be set at three months of national annual average consumption requirements; and pursuant to this, administrative restrictions on domestic movement of wheat eliminated.

It was also agreed between both sides that the operational reserves for wheat should be eliminated and the strategic reserves capped at two months of annual average national consumption requirements as well as restructuring of PASSCO and the provincial food departments and directorates completed till June 2010.

The document states that the PPP government obtained Parliamentary approval to reduce electricity subsidies through: (i) elimination of generalized sales tax subsidies for all domestic consumers and up to 500 units for commercial consumers; (ii) introduction of automatic monthly fuel price adjustments through a surcharge; and (iii) introduction of an additional surcharge to be levied on all consumers to reduce the gap between determined and notified tariffs.

Work on estimating power sector debt overhang and circular debt has been initiated. Pakistan accepted that the circular debt in the power sector should be eliminated and the overall debt liabilities adequately settled while differential between the determined and notified tariff eliminated to reflect the actual cost of supply of power to end consumers (except lifeline households).

The document states that all past electricity subsidy payments worth Rs133 billion for financial year 2008 was fully settled, and Rs88 billion allocated in the FY2009 budget to partially cover the difference between determined and notified tariffs [for FY 2009].

The State Bank of Pakistan (SBP) has launched work on a new Central Bank Law that provides for greater autonomy and accountability of SBP in its monetary and financial policies, effective regulation and supervision of financial institutions under its oversight, and clarity in the role of SBP in financial safety net and lender of last resort functions. Both the ADB and Pakistan agreed that new SBP act enacted and key provision implemented by June 2009.

Payments Systems and Electronic Funds Transfer Act (2007) enacted, Real-Time Gross Settlement (RTGS) system launched and Centralized online system for retail payment systems established. Both sides agreed that RTGS fully rolled out and retail payment systems being implemented. Consumer Protection Department established in SBP and work launched on a Consumer Protection Law and it would be enacted by June 2009. Deposits Protection Scheme would be launched by June 2010.


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## Neo

*Late buying allows KSE to gain 2.62 points ​* 
Friday, October 10, 2008

KARACHI: Equities stayed flat on the Karachi bourse during Thursday session with thin buying in Pak Services in closing moments allowing a positive closing, otherwise it was about to conclude with zero point fluctuation on benchmark KSE 100-share Index.

The KSE 100-share Index recovered 2.62 points or 0.03 per cent and closed at 9,181.35 points. Market opened on a flat note remained intact at pre-opening level during session. The last moment change of 100 shares in Pak Services, however, moved index up.

This scrip generated total 2.62 points on the chief Index. Pak Services closed at Rs485 with a gain of Rs22. Parallel running junior 30-Index remained unbroken at 10,043.41 pre-opening level throughout the session.

Turnover in the ready market jumped up by approximately 43 per cent at 1.792 million as compared to 1.256 million shares a day earlier. Accordingly, the overall market capitalisation enhanced by Rs447 million to stand at Rs2.845 trillion.

Future market turnover, however, again produced zero shares against three thousand shares changed hands yesterday. CFS rate rises to new high level:

Rate on Continuous Funding System (CFS) counter rose to new high level of 62.97 per cent on an average from 54.88 per cent all time high a day earlier. Investment on this counter, however, further declined by another Rs300 million to Rs12.6 billion.

Small investors who use CFS financing for playing at the local bourses, were not trading since long. And those who were still working on this counter also want to exit the market owing to volatility in local and foreign markets, an analyst commented.

The reason for increase in CFS rate was said to be the pulling of funds by financers at the completion of 90-days commitment period, he added.

On the other hand, the foreign portfolio investors remained dormant for the second consecutive day at local bourse and made no transactions throughout the session.

Market analysts said that the State Bank of Pakistan's strategy to ease the pressure on rupee against dollar and major currencies worked, as its temporary reduction in Cash Reserve Requirement (CRR) by two per cent in two phases appreciated rupee against dollar on Thursday, they said.

They maintained that if rupee recovers its lost value even partially in the days to come the equity market would also react positively.

The strengthening of rupee would also lure back foreign investors, they hoped. Among 63 active stocks on board, 43 ended with no change, five closed in negative column and remaining 15 stocks closed on positive note.

Highest volumes were witnessed in Royal Bank at 0.510 million closing pegged at Rs28.67, followed by Meezan Bank at 0.450 million closing pegged at Rs27.20, Southern Electric at 0.282 million closing pegged at Rs3.90, Karachi Electric Supply Corporation at 80 thousand closing pegged at Rs3.80 and Dominion Stock at 70 thousand closing pegged at Rs5.70.


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## Neo

*Forex reserves up $186m after ADB loan ​* 
Friday, October 10, 2008

ISLAMABAD: Pakistans precious foreign currency reserves improved by $186 million in one weeks period and went up to $8.321 billion after receiving $500 million tranche from the Asian Development Bank, official data released by the central bank showed on Thursday.

Till the Feb 18 elections when PPP won the general elections, the countrys foreign reserves stood at over $14 billion which nosedived to $8.321 billion on October 4, 2008, registering a decrease of around $6 billion in the last seven months.

The Zardari-led government is making all out efforts to get dollar inflows from all possible avenues including its initiatives of Friends of Pakistan in order to control downslide of macroeconomic indicators, which is posing threat of possible technical default. Except the ADBs tranche of $500 million, Islamabad has so far remained unable to materialise any other deal for attracting any programme or project loan or grant from bilateral as well as multilateral creditors. The newly appointed Advisor to PM on Finance Shaukat Tareen had hoped on Wednesday before leaving for Washington that Pakistan would be able to get dollar inflows very soon.

The rapidly depleting foreign currency reserves have resulted into putting massive pressure on rupee against the dollar which already touched its lowest level of Rs80 against one dollar. The countrys reserves had gone down to $7.8 billion on September 29, 2008 which jumped up to $8.3 billion after receiving $500 million tranche from the ADB during this week period.

Pakistans reserves position is quite vulnerable because the real reserves after keeping in view forward liabilities of over $1.5 billion, stood at around $3 billion, which can meet import bill demand of just one month.

Pakistans rapidly depleting foreign currency reserves have put pressure on rupee, which fell by over 24 per cent during the last two and a half month period, said official sources while talking to The News here on Thursday.

According to the central bank, the total liquid foreign reserves held by the country stood at $8,321.6 million on 4th October, 2008. The break-up of the foreign reserves position shows that the foreign reserves held by the State Bank of Pakistan stood at $4.866 billion while net reserves held by commercial banks (other than State Bank) were $3.455 billion.

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## Neo

*EDF approves Rs243m for projects to enhance exports ​* 
Friday, October 10, 2008

ISLAMABAD: The Export Development Fund (EDF) of the commerce ministry on Thursday approved Rs243 million for various projects to enhance exports, says an official announcement.

The projects include construction of Pakistan Institute of Fashion & Design at Johar Town, Lahore (Rs190 million) and budget for the Horticulture Development and Export Board, Lahore for 2007-08 and 2008-09 (Rs48.478 million), the announcement added.

The 53rd meeting of the EDF Board of Administrators was held here in the committee room of the Ministry of Commerce under the chairmanship of Ch Ahmed Mukhtar, Federal Minister for Defence, Commerce and Textile Industry.

The participants of the meeting included Senator Ilyas Ahmad Bilour, secretaries commerce and textile industry, Chief Executive Trade Development Authority of Pakistan (TDAP), Secretary TDAP, representatives of the Ministries of Finance, Food & Agriculture, Industries & Production, State Bank of Pakistan and Federation of Pakistan Chambers of Commerce and Industry, presidents of Karachi Chamber of Commerce & Industry and Sarhad Chamber of Commerce & Industry and chairmen of prominent Trade Associations.

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## Neo

*GDP growth may fall to 3.5pc next year: IMF​*
ISLAMABAD, Oct 9: Pakistans economic growth rate may slip to 3.5 per cent in 2009 as countries in South Asia are not totally immune to the financial crisis in the US and its subsequent fallout, International Monetary Fund data suggest.

Pakistans Gross Domestic Product (GDP) is likely to decline to 5.8 per cent this year and to 3.5 per cent next year, said the IMF World Economic Outlook 2008 released ahead of annual meetings of the IMF and the World Bank.

Pakistan recorded a GDP growth of 6.9 per cent in 2006 and 6.4 per cent in 2007.

The GDP rate in South Asia is estimated at 7.6 per cent this year and 6.4 per cent in 2009. The rate was 8.7 per cent in 2007.

Weakening external demand is likely to weigh on exports, but in some cases the impact may be mitigated by still-loose macroeconomic policies and currency depreciation.

Investment will also moderate, mainly because of deteriorating export prospects. Consumption will ease because of still-high fuel and food prices, although subsidies, which are common in the region, may cushion the impact on purchasing power, the report said.

The growth rate for 2009 is projected at 6.9 per cent in India, 5.6 per cent in Bangladesh, 5.7 per cent in Bhutan, 5.5 per cent in Nepal and 5.1 per cent in Sri Lanka.

Inflation for 2009 in Pakistan is projected at 23 per cent as against 12 per cent recorded last year.

The average inflation for 2009 in South Asia is projected at 8.8 per cent.

The inflation in India will be 6.7 per cent followed by 10 per cent in Bangladesh.

Capital flows to some countries have become more volatile, particularly to those running sizable external deficits. Their currencies have come under pressure prompting central banks to intervene in support are India, Pakistan and Vietnam.

A number of currencies in Africa and South and East Asia (for example, India, Korea, Pakistan, and South Africa) have depreciated over a longer period, in part owing to rising costs of commodity imports and widening current account deficits, the IMF added.

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## Neo

*Kohala power project attracts Chinese firm​*
ISLAMABAD, Oct 9: A Chinese company has shown interest in investing in the $2 billion Kohala hydro-electric power project in Azad Kashmir.

A five-member delegation of the Sinohydro Corporation called on Minister for Water and Power Raja Pervez Ashraf here on Thursday and said it was keen to invest in the 110 megawatts project.

Mr Ashraf said his ministry would facilitate the company in joining open bidding.

The Chinese firm is involved in the Gomal Zam Dam and Khan Khawar and Dubair hydropower projects.

The proposed plant in Azad Kashmir would be one of the largest hydro-electric power projects in the private sector in South Asia, an official said. It would require a 16kms tunnel, a diversion from Seran village and a powerhouse in Barasala. The project would be linked to the national grid at Rawat near Rawalpindi through a 115kms 500kV transmission line, he said.

He said it was a high risk project and any company venturing to invest there would demand open-minded discussion with the government of Azad Jammu and Kashmir and the Water and Power Development Authority on tariff and other issues.


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## Neo

*Forex reserves rise to $8.32bn​*
KARACHI, Oct 9: Pakistans foreign reserves rose $190 million to $8.32 billion in the week that ended on Oct 4 from the previous week, the central bank said on Thursday.

The State Bank of Pakistan said its own reserves rose to $4.87 billion from $4.68 billion previously, while those held by commercial banks were flat at $3.45 billion.

The foreign exchange reserves hit an all-time high of $16.5 billion in October last year, but have been falling since then due to weak economic fundamentals, political uncertainty and security concerns.

ADB on Sept 30 approved a $500 million loan to help Pakistan address the impact of high fuel and food prices on its people and the economy.

The loan may be reflected in the latest figures.

Analysts said the rise can also be attributed to banks being closed from Oct 1 till Oct 4 for Eid holiday.

Pakistan needs up to $3 billion of foreign capital inflows to arrive quickly if it is to meet upcoming debt obligations.

The newly-appointed finance advisor to the prime minister, Shaukat Tarin and central bank governor Shamshad Akhtar left late on Wednesday to attend the annual International Monetary Fund (IMF) meeting in Washington on Oct 13, officials said, though the government has said it is not seeking an IMF support package.

Dealers expect the rupee to remain under pressure due to import payments and lack of foreign inflows.Reuters

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## Neo

*Pakistan may seek IMF credit facility​*
LAHORE, Oct 9: Pakistan may seek another International Monetary Fund (IMF) credit facility to improve its dwindling foreign currency stocks and cover its increasing current account deficit, officials told Dawn on Thursday.

Until recently the government had consistently been shrugging off reports that it could join a fund programme to salvage the sliding economy.

Nothing can be ruled out. A low-cost IMF loan is one of the several options being considered by the government, a senior finance ministry official told this reporter from Islamabad.

We need dollars to ease pressure on the rupee and restore the investor confidence in our economy and currency, and are exploring various avenues, he said in reply to a question.

The departure of a delegation, headed by the newly-appointed prime ministers advisor on finance, Mr Shaukat Tareen, on Wednesday night for Washington for discussions with the IMF and the World Bank on Islamabads strategy to get out of its current economic morass has triggered speculations in both the official and business circles that Pakistan may join another fund programme.

The last time the country joined a fund programme  the Poverty Reduction and Growth Facility (PRGF)  of $1.5 billion was in December 2001 for a period of three years.

The arrangement was, however, terminated prematurely because the then government did not feel the need to complete it.

At that time, the government had also stated that it was the last time Pakistan had joined an IMF programme.

But with the countrys foreign currency reserves falling to $8.3 billion from $16.4 billion a year ago and the rupee hitting its historic low in the inter-bank market during the last couple of days, the finance managers appear to be reconsidering seeking a fresh facility from the IMF to cover its immediate foreign exchange needs.

Pakistan is said to be requiring immediate foreign capital inflows  almost all sources of foreign capital inflows have already dried up or slowed down since the beginning of the year  of more than $10 billion to boost the economy over a period of next few months.

If Pakistan joins the IMF facility, it will not be for shoring up our foreign currency reserves alone. We will be seeking it because the IMFs decision to support us will send a very positive signal to the world and help restore the investor confidence in our economy and our ability to get out of the present economic mess, the official said.

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## Neo

*Pakistan wont go bankrupt​*
** President Zardari launches Rs 34 billion BISP, says Pakistan not a limited company
* Vows to wipe out cancer of terrorism​*
ISLAMABAD: Pakistan will not go bankrupt due to the ongoing economic crisis, President Asif Ali Zardari said on Thursday.

Pakistan is not going to bankrupt. It is not a limited company ... We are negotiating with the international community to address the situation, Zardari said at the launch of Rs 34 billion Benazir Income Support Programme (BISP) at Aiwan-e-Sadr.

Under the scheme, families with a monthly income of less than Rs 6,000 will be paid Rs 2,000 every two months.

Zardari said he understood there was a sense of depression among people due to the current economic situation, and gave assurances that the government was taking effective measures to address the situation.

Cancer: The president said the government was not afraid of terrorists and that it would wipe out this cancer from society.

We are not afraid of terrorists. The government, the people and myself are all steadfast in our resolve to wipe out this cancer from society.

He said strong nations handle crisis with courage. He urged people to have faith in the government, which he said was capable of rising to all challenges. He said the Pakistan Peoples Partys stance on the Kashmir issue was unchanged.

Zardari called an in-camera joint session of parliament on the countrys security situation a positive step towards the strengthening of democracy. He also praised ANP President Asfandyar Wali Khan for fighting extremism and terrorism.

Commenting on the BISP, he said the scheme was a step towards the empowerment of women and reducing sufferings of the poorest of the poor. app


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## Neo

*1,100 megawatts Kohala hydropower project: Chinese company keen to invest​*
ISLAMABAD (October 10 2008): A Chinese company, Sinohydro Corporation, has showed interest in investment in Pakistan by constructing 1100 MW Kohala Hydropower project. The company official said this during a meeting with Minister for Water and Power, Raja Pervez Ashraf here on Thursday.

The company gave a detailed presentation to the minister about their ongoing projects and briefed him on the company's expertise in the construction of hydropower projects. Water and Power Minister said that the government would remove all bottlenecks to facilitate the foreign investors to invest in the water and power sector in Pakistan as there are great opportunities in this sector.

He said that the foreign investment in the hydel power generation will help to meet the country's future power requirements at affordable prices. The Minister also informed the company's delegation that Pakistan was embarking on construction of multipurpose dams, which would meet the power needs on a long term basis.

The delegation also informed that it is working on 156 hydropower projects in various countries of the world. The company is already constructing Gomal Zam dam, Khan Khawar hydropower project and Dubair Khawar hydropower project in Pakistan.

The Minister appreciated their interest of the company to invest in the hydel power generation and said that international consultants have been appointed for detailed engineering, designs and tendering documents for Kohala Hydropower project, which are in final stages.

He expressed the hope that the company would take opportunity to participate in the international competitive bidding to be held for Kohala Hydropower and various other water and power projects. He said that the government will provide complete assistance to the Chinese companies to invest in this sector. He stated that the confidence of the foreign investors would gain new heights and the economy would be made more stable through adopting rational policies to remove all hindrance and bottlenecks in this respect.

The pace of work on various ongoing Wapda projects being constructed by the Sinohydro Corporation was also discussed during the meeting. Adviser to Ministry, Chairman Wapda, Additional Secretary and other senior officials of the Ministry and Wapda were also present. Later, the Minister expressed his deep sorrow and grief over the tragic death of Chinese engineer, who died while working in the Gomal Zam dam project last month.


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## Neo

*ADB to provide $2 billion loan for LRTS​*
KARACHI (October 10 2008): Asian Development Bank (ADB) has agreed to lend over $2 billion to Pakistan which is considering to introduce Light Rail Transit System (LRTS) in one of its most congested cities, Karachi. According to official sources the regional loaning institution has expressed its willingness to provide Pakistan with a soft loan to be used for development of the mega project.

"ADB has committed to provide us a big loan of over $2 billion for the LRTS project," said an official in Sindh government. They said feasibility study for LRTS would soon be initiated jointly by the Sindh and city governments.

The present Pakistan People's Party-led government is eyeing the proposed light rail system as an effective and practicable way to encourage the masses to prefer public transport as a means of travelling rather than private cars or motorcycles, said the sources.

The new system, they said, would have a subway-like mechanism of stop-by-stop brakes, like most of the developed and some of the developing countries. They said the government was following a comprehensive strategy that includes projects, like Bus Rapid Transit System (BRTS), LRTS and Heavy Rail Transit System to improve the overall transportation system in the metropolis.

The government of Pakistan, they said, was already in talks with ADB for a soft loan worth $600 million to finance the Bogota-like Bus Rapid Transit System in Karachi. The ADB loan for BRTS would also be used for conducting feasibility study for the LRTS, added the sources. "This is the success of Sindh government that the international loaning institutions like ADB is committing such a big loan to us," said the official.


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## Neo

*Japanese investors invited to invest in Sialkot EPZ​*
SIALKOT (October 10 2008): Economic Adviser to Embassy of Japan in Pakistan Eriko Murata on Thursday visited Sialkot Chamber of Commerce and Industry (SCCI) to discuss various issues pertaining to bilateral trade with the business community of Sialkot. Speaking on the occasion, acting President of SCCI Ziaullah Mirza invited the Japanese investors to invest in Sialkot Export Processing Zone (SEPZ) and avail of the most attractive benefits and incentives.

He said that the SEPZ would open a new era of industrial revolution and foreign investment in this region. "It is encouraging that the two countries have developed institutionalised mechanism for bilateral consultation on various matters, including the security dialogue, counter-terrorism talks and economic policy dialogue that is the manifestation of strength of co-operation and understanding on bilateral and global issues," he said.

Expressing his confidence, he said that Japanese business community would avail full advantage of our liberals' investment regime and strategic location. He said: "We would like to encourage Japanese investors to utilise the investment opportunities in Pakistan, especially information technology (IT), manufacturing and agro-based industries." He also welcomed the progress being made by Pakistan-Japan study group to promote trade and investment and for exploring a free trade agreement (FTA).

Zia further said that an important factor of Japan's success lay in the promotion of small and medium enterprise. As a result of the policy of SMEs promotion, majority of small companies was providing employment to approximately 64.5 million people and 30 percent exports came from the SMEs, he said.

Undoubtedly, the SMEs had been instrumental in bringing out spectacular growth in Hi-tech and value-added industries in the developing countries, he added. The acting President of SCCI further said that in Pakistan, the SMEs were playing a key role, and they were being encouraged through a well-defined programme. Zia Mirza was of the opinion that exchange of trade delegations and one-to-one meeting of businessmen of both the countries was vital to improve bilateral trade.

For this both the countries must ensure simple via policy so that the businessmen could get visas easily. The private sectors of Pakistan and Japan should come forward and interact more frequently to explore and develop co-operation in mutually beneficial fields, he added.


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## Moin91

*Trade deficit rises to $5.5bn*

Saturday, October 11, 2008
By Israr Khan

ISLAMABAD: Trade deficit rose 52.65 per cent to $5.55 billion during the first quarter (July-September) of fiscal year 2008-09, compared to $3.63 billion in the corresponding period of last year, the Federal Bureau of Statistics (FBS) reported on Friday.

According to latest FBS figures, the country recorded imports worth $10.82 billion during the period under review, which were more than double its exports of $5.27 billion. During the same period of last fiscal 2007-08, imports stood at $8.05 billion and exports at $4.42 billion. That depicted 34.29 per cent growth in imports and 19.19 per cent in exports.

It indicates that Pakistan is marching towards another huge trade deficit, which would jack up the current account deficit.

The figures negated predictions that the deficit would fall with the weakening of the rupee. Instead, the trade gap has mounted increased pressure on the rupee.

Despite the rupees decline against major currencies, the economy got no significant respite through increase in exports and decrease in imports.

According to the Statistics Division, during September 2008 trade gap widened to $2.03 billion, up by 7.97 per cent from $1.88 billion recorded in August 2008. During the month under review, imports were up by 9.97 per cent to $3.81 billion and exports rose by 12.34 per cent to $1.78 billion over the previous month.

The government in its trade policy for the current fiscal year has set export target at $22.1 billion. Although no import target has been formally announced, the commerce ministry officials estimate it at $37 billion, indicating $15 billion trade deficit by the end of June 2009.

Trade deficit rises to $5.5bn


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## Moin91

*No banking crisis in sight but rumours hurting industry*
Saturday, October 11, 2008
By our correspondent

KARACHI: The past week has been a trying one for bankers and financial managers in Pakistan as rumours circulated of a possible freeze in foreign currency accounts and sealing of safe deposit lockers in banks.

While still unsure about the source of such rumours, what is more worrisome is the effect that they had on the general banking business in the country. Technology has also played its part in creating panic, the overuse of SMS messages only created a hype that things are going out of hand.

For a country that has come out of bigger crisis situations, it is surprising how quickly people start believing the ridiculous. For example, begums and businessmen alike lined up bank at branches for most of the week to take out their valuables on fears that their lockers would be sealed. There is no precedence that such a thing has happened in Pakistan but some are willing to believe anything.

More recently a rumour was started about a leading bank of the country. Bank Alfalah. SMS messages started to circulate over the fact that the bank was about to go bankrupt.

The fact that this bank is a solid investment from the UAE did not deter believers into thinking that such a thing could happen. As a result, the bank suffered in terms of customers getting jittery.

After a clean up operation that was ably handled by then SBP Governor Ishrat Husain some years back, the financial sector in Pakistan is one of the best in the region. The systems in place work and the State Bank has done an admirable role as a regulator. In such a scenario, expecting financial trouble of the kind that is being talked about is misplaced judgement.

People are thinking that the financial problems in the West especially in the US are now having their effect in Pakistan. This is not true, say bankers who argue that most banks in Pakistan are protected in that sense. There are some smaller banks that may be facing liquidity issues but the crisis is not one of them going bankrupt.

In all this, pressure has been put on the rupee dollar exchange rate with the result that this week, the dollar crossed the Rs80 mark. Also, the price of gold has risen owing to panic buying. This is a crisis of our own creation. A crisis caused by vested rumour mongers possibly but believed by an ill-informed public willing to accept anything without asking logical questions.

Part of the fault also lies with the government for not coming out with reassurances. But many say that a strong message by the government may have been taken the other way by a disbelieving public.

In these trying times, one can only hope that the panic buttons are switched off and the people feel more comfortable with what is happening in terms of the financial sector. All is well at this point and we should believe it is so. This is for our own good and for the good of Pakistan, say senior analysts.

No banking crisis in sight but rumours hurting industry


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## Neo

*Pakistan looks towards IDB for $500m loan ​* 
Saturday, October 11, 2008

ISLAMABAD: Pakistans economic managers are making desperate endeavours to get dollar inflows from all possible avenues including the Islamic Development Bank (IDB). In this regard, it is striving to achieve a $500 million loan under Trade Finance Facility to purchase oil products.

In another relevant development, the Economic Cooperation Organisations ECO Bank has recently approved a $50 million loan facility for Pakistan, which will be used to obtain petroleum products in the coming weeks.

After attending annual meeting of Bretton Woods Institutions (BWI), the International Monetary Fund (IMF) and the World Bank (WB), at Washington from October 10 to 13, Finance Secretary Dr Waqar Masood would go to Turkey to attend a Board of Governors meeting of the IDB in order to pursue the bank to extend $500 million loan facility.

The Board of Governors of the IDB is scheduled to hold a two-day meeting on October 17 and 18 in which the secretary finance would represent Pakistan, an official source told The News here on Friday.

Pakistani authorities, sources said, are hoping that Saudi Arabia would announce the much-awaited oil facility worth $5 billion on deferred payments during the upcoming Friends of Pakistan (FOP) forum, which will be held by next month in the UAE. Although the US Undersecretary of State, Richard Boucher had made it clear that the Friends of Pakistan was not meant for providing financial assistance and Washington was asking the IMF to support Pakistan.

Pakistan may face problems after the second quarter of the current financial year as it will have to pay $500 million Eurobond installment by January 2009. When a high-level official in the finance ministry was contacted for comments, he said that Pakistan is asking IDB to come forward for rescuing the ailing economy. The IDB has so far approved $100 million Trade Finance Facility during the current fiscal year and Islamabad is asking them to approve the remaining amount of $400 million in the near future, said the official.

The ongoing second quarter (October-Dec) is quite crucial for Pakistan as it will determine future course of action for tackling complex economic issues, said the official and added that either Pakistan will go for a bailout package from the IMF, or bilateral friendly countries will come forward to give dollar inflows for rescuing Pakistans economy.

According to estimates done by the multilateral creditors including the IMF, WB and ADB, Pakistan requires $7 billion to bridge its financing gap on external front in the wake of yawning current account deficit. Although, the government had taken measures to curtail imports by slapping regulatory duty as well as imposing 100 per cent L/C margins on luxury items, but these measures failed to achieve the desired results.

The creditors are asking the government to take some more stringent measures to curtail its growing trade deficit, which was well above $2 billion in September 2008.


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## Neo

*New IPPs, rental plants to improve power supply ​* 
Saturday, October 11, 2008

LAHORE: Electricity supply to Karachi would vastly improve after the completion of two independent power projects with combined capacity of 775 megawatts and installation of two rental plants with capacity of 436MW.

Secretary Ministry of Water and Power Mohammad Ismail Qureshi stated this during a meeting with the Karachi Electric Supply Companys management.

He informed the new management that two IPPs were going to install combined-cycle power plants of 305MW and 470MW at Port Bin Qasim in Karachi.

Moreover, two rental plants were planned to be installed, one with a capacity of 205MW at Korangi and the other having 231MW capacity also in Karachi.

After completion of those projects, he added, there would be a significant addition of power to the existing system of KESC.

The meeting also reviewed measures advised in the previous meeting held on September 15 such as enhancement of gas allocation by Sui Southern Gas Co, regular supply of furnace oil by Pakistan State Oil, reducing KESCs load-shedding duration by purchasing adequate power from IPPs, etc.

It was noted that as a consequence of adopting those measures, the power supply situation in the city had improved compared to the condition prior to September 15.

Progress on technical matters relating to existing power plants and upcoming projects were also reviewed. PEPCO suggested that a few major works/modifications on the Bin Qasim power plant such as installation of ball-cleaning system on unit No 6 and rectification of furnace vibration on gas burning at unit No 3 and 4 should be undertaken during the overhauling schedule.

Recurring faults in unit No 4 of KTPS should also be attended to immediately to enhance its power generation capability.

Progress on 220MW combined-cycle project at KTPS was also reviewed. PEPCO suggested that performance test and commissioning of GT-1 and GT-2 should be carried out expeditiously, as inordinate delays had already occurred in the project. The KESC management assured that those activities would be completed by mid-November, resulting in addition of around 90MW to the existing system.


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## Neo

*Bank Alfalah in good health Abu Dhabi Group to invest up to $5 bn in Pakistan ​* 
Saturday, October 11, 2008

ISLAMABAD: Chief Executive Officer of Abu Dhabi Group Bashir A Tahir said on Friday that Bank Alfalah enjoyed good financial health and the group would increase its investment in Pakistan by $3-5 billion which would go to the construction of a huge complex in Lahore and to the power sector.

After rumours about the financial health of Bank Alfalah, the CEO flew from Abu Dhabi for addressing a press conference here. He said total capital of the bank stood at more than Rs8 billion against the State Banks requirement of Rs4 billion.

He said the Abu Dhabi Group invested over $10 billion in Pakistan in telecommunications and other areas and it would bring in more investment in the range of $3-5 billion. He said the decision to freeze foreign currency accounts in 1998 was wrong and no government could do that again. He said the Abu Dhabi government planned to invest $1.5 billion in the power sector.

The Abu Dhabi Group, he said, signed a memorandum of understanding with the Punjab government to construct a huge complex in May 2005 and it took almost three years to get permission from the provincial government which was achieved in March this year. The cost of the complex had increased from $900 million to $1.5 billion and it would be completed very soon, he added. Answering a query, he said he did not know how rumours about the bank spread without any solid ground.


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## Neo

* IPI gas line: Pakistan may renew offer to China ​* 
Saturday, October 11, 2008

ISLAMABAD: Pakistan is likely to formally ask China to become part of the multi-billion dollar IPI gas pipeline project, keeping in view the evasive attitude of India to make the project economically viable, a senior government official told The News.

Pakistan is in a dire need of energy and cannot afford further delay in initiating the project. However, India seems not serious in the project. President Asif Zardari is likely to formally invite China to join the project during his visit starting from Oct 14.

The proposal to invite Beijing in the project would be firmed up during the upcoming visit of Iranian Foreign Minister Manouchehr Mottaki, who arrived on Friday. Pakistan wants to take Iran into confidence in this regard prior to floating the proposal to China.

When contacted, Foreign Office spokesman Mohammad Sadiq said the Iranian foreign

minister would have talks on bilateral issues, including the regional situation. He said Pakistan and Iran would also discuss the IPI project on bilateral basis.

When asked if President Zardari would formally invite China during his visit for becoming a part of the project, Sadiq said the offer was already on the table. The official, who has been part of the negotiations with the Iranian authorities on this very vital project, told The News Iran was unable to develop Paras field from where the gas would be exported to Pakistan and India because of liquidity crunch.

The official said India had managed to get some blocks in Iran for developing oil and gas fields. India is investing hugely there and that is why Iran is not in any mood to exclude 

New Delhi from the project despite the fact that India is using delaying tactics.

Tehran has come up with new terms and conditions, under which Tehran will not hesitate to block gas flows to Pakistan if India gets no gas, in case of any disruption in Pakistans territory. This new condition came from the Iranian authorities that have actually jolted the top Pakistani officials.

Pakistan wants to include China and will try to persuade Beijing to come up with investment in Iran to develop the Paras field so that the project could be implemented.

This will not only provide gas to China if the project is converted into Iran-Pakistan-China (IPC), but would also allay the Iranian concerns about developing the Paras field and making the project economically viable. Iran wants to include India to make the project viable. In case China becomes a part of the project, Iran will not bother about India.


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## Neo

*Govt needs $4bn to settle subsidies, circular debt: ADB​*
ISLAMABAD: Asian Development Bank (ADB) has assessed that the settlement of the past subsidies owed by the government of Pakistan will cost $1.1 billion.

Similarly, addressing the circular debt and debt overhang is likely to need $3 to $3.5 billion over 2008-2010.

ADB in its report on Accelerating Economic Transformation Programme said that specific policies are needed to deal with the root causes and consequences of high energy prices. Although the current political economy and global landscape pose complex policy challenges, the government has taken certain key actions under the programme. These include: ensuring up-to-date payments of the tariff differential subsidies to power distribution companies (DISCOs), allocating sufficient resources for energy subsidies in the budget to meet the forecast needs over FY2009, and determining the extent of circular debt and debt overhang in the electricity sector and ring fencing the debt owed by DISCOs. The settlement of the past subsidies owed by the Government will cost $1.1 billion.

Another achievement of the programme is to enhance awareness of the need to move from the poorly targeted and inefficient subsidies in the food and energy sectors to a more targeted safety net system.

To sustain high rate of growth, Pakistan needs to address immediate distortions in the economy, particularly in the agriculture and energy sector. The pricing and procurement system for wheat needs to be restructured, and subsidies should be better targeted to benefit the poor and vulnerable. The poorly targeted subsidies cost the government Rs 40 billion ($600 million) in FY2008, not including the additional resource requirements  estimated at $1.6 billion at a minimum - to cushion the poor against the escalating prices. Pakistan also needs to fix its subsidy system in the electricity sector. In the absence of an automatic adjustment mechanism, the government has not been able to settle the payments owed to distribution companies, which has resulted in a vicious circular debt problem and debt overhang in the sector. This problem needs to be addressed urgently to resolve the present energy crisis facing Pakistan.

While energy prices have also gone up by about 30 percent in the first quarter, the rise in poverty incidence is estimated to be much smaller of about 1.5 percentage points. ADBs analysis also shows that, if every poor person were to be compensated to offset the loss in real expenditure, the government may incur Rs 18.5 billion (0.3 percent of GDP).

In addition, parliamentary approval was obtained to reduce electricity subsidies through:

(i) elimination of generalised sales tax subsidies for all domestic consumers and up to 500 units for commercial consumers; introduction of automatic monthly fuel price adjustments through a surcharge; and introduction of an additional surcharge to be levied on all consumers to reduce the gap between determined and notified tariffs. sajid chaudhry


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## Neo

*Pakistan, Japan sign agreement to avoid double taxation​*
ISLAMABAD: Pakistan and Japan exchanged diplomatic notes to ratify a revised and already signed Pak-Japan convention on avoidance of double taxation between the two countries.

The ceremony to ratify the revised convention, which was signed on January 23, 2008 in Islamabad following in-depth deliberations and negotiations between the two governments was organised at the FBR Headquarters and the two sides were represented by Chihiro Atsumi , Japan s ambassador extraordinary to Pakistan , and Irfan Nadeem, member (direct taxes) Federal Board of Revenue, from Pakistan.

The convention modernises the regulations of the existing convention signed in 1959 with a view to positively promote mutual investment between the two countries. Based on the international model income tax treaty, the new convention revises the taxation formula for business income and royalties paid in the respective countries and contains extensive revisions of the existing convention for the first time in 49 years.

The main features of the revised convention include tax exemption for government-owned banks and financial institutions as well as exemption on remuneration to students and business apprentices from 360,000 Japanese yen to 1,500,000 Japanese yen.


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## Neo

*CDWP approves 32 projects worth billions of rupees​*
ISLAMABAD: The Central Development Working Party (CDWP) on Friday approved 32 projects of national importance out of 60 worth billion of rupees and the remaining would be discussed today (Saturday). Planning Commission Deputy Chairman M Salman Faruqui presided over the meeting of the CDWP. The officials discussed and approved various projects related to transport and communication, energy, physical planning and housing, governance, information technology and industry and commerce. However, the details of the meeting would be disclosed after completion of the CDWP agenda on Saturday, officials in the planning commission told Daily Times. Some important projects related to water resources, agriculture and food, higher education commission, education, nutrition and other would be taken up and approved on Saturday.


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## dr.umer

*Pakistan-China to sign Investment Protocol next week ​*
BEIJING, Oct 11 (APP): Pakistan and China will ink an agreement on Investment Protocol during President Asif Zardaris visit to China next week. Pakistans Ambassador to China Masood Khan told APP Saturday that negotiation between senior officials of ministries of commerce of Pakistan and China have been completed on Investment protocol to make FTA more comprehensive. 

I am fully confident that during President Zardaris state visit to China both the countries will sign agreement on it which further push forward their economic partnership, he said. 

Khan pointed out that negotiations between the two countries on FTA in Trade and Services were going on successfully. We hope to complete that phase in the coming month of December. 

Ambassador Khan said that Pakistan was the first country with which China has signed the FTA. When the FTA was fully implemented, it would further give boost to the bilateral trade. First phase of FTA in Goods and Investment has been completed in July this year and became operational, he said.


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## Neo

*Pakistan seeks Iranian oil on deferred payment​* 
ISLAMABAD (October 11 2008): Pakistan on Friday requested Iran for supply of oil on deferred payment with increase in the time period. The Iranian Foreign Minister promised to take up the matter with his government. The request was made by Foreign Minister Shah Mahmood Qureshi, during talks with his Iranian counterpart Manoucheher Mottaki.

This was disclosed at a joint press conference after the meeting of foreign ministers. "If implemented the facility will certainly help stabilise economic situation in Pakistan and improve balance of payment position," Qureshi said.

He said under Iranian law crude oil could be imported on deferred payment for a maximum of three months and Mottaki had said the Iranian government would consider extending this period further so that Pakistan could reap maximum benefits.

Mottaki also hinted that Pakistan and Iran would go ahead with a trans-regional project to pipe Iranian gas to south Asia even without India. Qureshi said Iran-Pakistan-India (IPI) gas pipeline project was of strategic significance and as it has been agreed in a meeting of presidents of Pakistan and Iran in New York in September 2008, it has been again stressed that it should be executed on fast track basis for the economic benefit of the two countries.

Referring to the outstanding issues relating to IPI, the Foreign Minister said out of five issues, four have been resolved while the fifth issue relating to pricing of the gas being sorted out and it would be settled soon. The minister said both the countries also agreed to establish a joint financing company to gather resources for executing the gas pipeline project.

Qureshi said Pakistan has also shown interest in buying additional 1000 MW electricity from Iran. The modalities for purchase of this power will be chalked out later by the experts of both the countries. Iranian Foreign Minister has given nod for the transaction to further expand economic and trade relation between the two countries.

He said: "We condemn terrorist activities that took place in last several weeks in Pakistan which will not benefit any country in the region but would increase insecurity and instability."

Referring to the importance of 1000-km border between Pakistan and Iran, Mottaki said: "We have to protect it, because of projects like IPI, road and railway links." He expressed interest in importing rice from Pakistan and said that volume of trade between the two countries would be expanded which will be of mutual benefit.


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## Neo

*SBP disburses $25 million at notional rate of Rs 80 to exchange companies​* 
KARACHI (October 11 2008): The State Bank of Pakistan has disbursed some 25 million dollars at the notional rate of Rs 80 to the exchange companies aimed at stopping free fall of the rupee. However, no positive impact was witnessed on Friday, as once again the PKR lost 50 paisa against the dollar to close at Rs 80.70 in the open market, Business Recorder has learnt.

Although, on Thursday the central bank intervention had dealt a positive impact on the currency market and the rupee recovered some 25 paisa in the interbank and some 30 paisa in the open currency market. On Friday once again the dollar demand surged in the open currency market as the general public made huge buying of dollar amid strong rumours of banks' defaults. But, the interbank market remained stable due to the slow activity.

Sources said that exchange companies are taking full advantage of the SBP's offer to get dollar at a notional rate of Rs 80 to meet customers' requirements and during the last two days exchange companies acquired some 25 million dollars from the central bank.

"We have acquired some 10 million dollars on Thursday from the central bank, while on Friday about 15 million dollars were also taken to overcome the dollar shortage in the open currency market," said Munaf Kalia, general secretary of Exchange Companies of Pakistan.

He said that the SBP has assured full logistic support to maintain the dollar at a reasonable rate and it is expected that more positive results would be seen in the next few days. He said that the open currency market is still facing huge demand of the dollar, therefore some pressure was witnessed on Friday and the dollar closed at Rs 80.30 with a gain of 10 paisa.

However, market sources said that on Friday the rupee further depreciated, losing 50 paisa against the dollar to close at Rs 80.70 despite the SBP intervention. Sources said that Lahore and Peshawar currency markets see more demand of the dollar and in these markets the dollar was sold at Rs 81 on Friday and if the supply would not improve, it would go up further.

Munaf Kalia said that Lahore and Peshawar markets have huge demand, which would be met with the help of the SBP. He indicated that exchange companies would acquire more dollars on Saturday from the central bank. He requested the general public not to hold dollars, as its price would soon decline and they can suffer huge losses.


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## Neo

*Oil sector posts 41 percent profit growth in fiscal year 2008​* 
KARACHI (October 11 2008): The entire oil sector of Pakistan (E&P, Refineries-ex-Bosicor, and OMCs) marked a record profitability growth of 41 percent on year-on-year basis in FY08 with total profits amounting to Rs 114 billion. E&P secured the largest share of 68 percent in FY08 oil sector profits (down from 84 percent in FY07 due to increased share of refineries and OMCs in the total), whereas OMCs and Refineries stood second and third in the row.

All three listed OMCs combined punched in a spectacular profit growth of 206 percent in FY08. Contrary to FY07, sector's gross profits grew at a staggering 132 percent on yearly basis owing to a number of factor ie volumetric growth, ex-refinery prices, product margins and the most noteworthy one, repayment of the PDCs arranged by the government.

PSO, Shell and APL shared 64 percent, 24 percent and 12 percent of the FY08 overall profit pie. Khurram Schehzad, senior analyst at Invest Capital and Securities said that the profitability growth can be attributed to a number of factors, which fuelled bottom lines of the OMCs. Firstly, volumetric growth of POL products at 9 percent (triggered by FO 3 percent, HSD 11 percent and Mogas 27 percent) - along with increased sales of high-margin products like Lubes, Naphtha and CNG. This resulted in an extraordinary 35 percent on yearly basis rise in the sector's topline to Rs 688 billion, he added.

Secondly substantial after-tax estimated inventory gains of around Rs 13.7 billion owing to sharp rise in oil prices in the international market (average Arab Light rose 52 percent on yearly basis in FY08, leading to 71 percent average jump in ex-refinery prices of different POL products and 20pps rise in margins) against estimated inventory losses of Rs 2.9 billion last year (due to steep decline in oil prices). Therefore, FY07's inventory losses also resulted in low profitability base leading to a pronounced growth of 206 percent for FY08. Net after-tax inventory gains for PSO were estimated at Rs 10.7 billion (EPS impact Rs 62.5) while Rs 2.55 billion (EPS impact Rs 46.6) and Rs 0.41 billion (EPS impact Rs 8.5) for Shell and APL, respectively in FY08 - contributing 55 percent, 26 percent and 23 percent to PSO, Shell and APL's gross profits. As a consequence, gross margins of the sector leapt by 2.90pps to 6.96 percent in FY08.

Finally, the entire recovery of the previously lingering PDCs (completely paid by the GoP by Jun-08) led to only 15 percent on yearly basis rise in financial charges (61 percent in FY07), which further strengthened the bottom line of the OMCs. These factors made their way to the bottom line of Rs 21.8 billion in FY08 (net margins rose by 1.77pps to 3.17 percent) against paltry Rs 7.13 billion in FY07.

PSO, due to its largest share of above 70 percent in almost all POL products, grabbed 64 percent of the total sector's profitability (68 percent in FY07). Shell (10 percent profit share in FY07), managed to increase share to 24 percent in FY08 while APL (24 percent in FY07) bagged a slice of 12 percent in the OMC profits in FY08.


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## Neo

* Rumour-mongers to be punished: Dr Ashfaq ​* 
Sunday, October 12, 2008

ISLAMABAD: The government will give stern punishment to the culprits who made last Wednesday the blackest day in economic history of the country, Dr Ashfaq H Khan, Adviser to the Finance Ministry told The News on Saturday.

On that particular day, some unscrupulous elements in some of the banks under an engineered plot came up with rumours that banks are running short of liquidity that led to unprecedented panic among depositors.

The State Bank of Pakistan and Ministry of Finance are engaged in investigating the issue and once the culprits are found, they would be severely punished accordingly, Dr Ashfaq H Khan said.

To a question, he said: We will leave no stone unturned in fixing the responsibility on those people who caused a colossal loss to the banking sector last Wednesday.

He said that the State Bank of Pakistan made timely intervention by reducing Cash Reserve Requirement by 2 percentage points and offering dollars to exchange companies at Rs80 per dollar.

This has stabilised the banking and forex markets to a great extent, Dr Khan said. A few banks attempted to manoeuvre the market, particularly exchange market, and the government is trying to find out real culprits, who will be severely punished. Dr Khan said that in 2005, similar type of artificial pressure was created on exchange market. The then government took action against the culprits and one of treasurers of the banks was thrown out of country.

He said that the rumourmongers have deliberately targeted Bank Alfalah and have been spreading rumours against the bank. The Bank Alfalah is the healthiest bank in the country and backed by Abu Dhabi Group, which is chaired by His Highness Shaikh Nahayan Mabarak Al Nahayan. 

This group has invested $10 billion in various sectors of economy in Pakistan. He said that spreading rumours for such a strong bank simply confirmed the ulterior motives of the rumourmongers.

He said that inter-bank call money rate ranges between 10-13 percent as of today trade. The pressure has now eased in foreign exchange market as rupee traded with range of 79.15 to 79.25 and market closed at 79.17.

He said that Pakistans banking and financial sector is one of the strongest in the Asian region because of reforms introduced since 1988-89. Dr Khan said that first and second generation reforms initiated two decade before have made Pakistans banking sector one of the best in the region.


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## Neo

*India says it wont oppose US-Pakistan nuclear deal​*
WASHINGTON, Oct 11: India has indicated it would not object to the United States offering a civilian nuclear deal to Pakistan, although the United States has said it cannot offer a similar agreement to Islamabad.

We believe every country has the right to use nuclear energy for peaceful purposes, said Indian External Affairs Minister Pranab Mukherjee when asked at a news conference about Pakistans demand for an India-like nuclear deal with the US.

We will like to encourage civil nuclear cooperation for peaceful use of nuclear energy, said Mr Mukherjee after signing an implementation document with US Secretary of State Condoleezza Rice.

The document, known as the 123 agreement, will allow India access to nuclear reactors, fuel and technologies from the US after a gap of 34 years. The US terminated nuclear cooperation with India after New Delhi conducted a nuclear test in the Pokhran desert of Rajasthan in 1974.

While the US administration is presenting the nuclear deal with India as a major foreign policy breakthrough, it has refused to offer a similar agreement to Pakistan.

It is unique to India, not a model for anything else, said US Assistant Secretary of State Richard Boucher when asked at a briefing earlier this week if Washington could also sign a similar nuclear deal with Islamabad.

Pakistan believes that the deal would allow India to dedicate some of its existing reactors for producing weapons and thus create a strategic imbalance in South Asia. Mr Mukherjee, however, disagreed with the suggestion that any gain for India in this field is a loss for Pakistan.

There is no reason, for any apprehension in Pakistan, he said. We are determined to build good relations with Pakistan. In fact, we are doing so through the composite dialogue process. We are addressing all outstanding issues between our two countries.

President Asif Ali Zardaris recent statements about India never being a threat to Pakistan and Islamabad having no objection to the India-US nuclear deal were really encouraging, Mr Mukherjee said.

The minister recalled that India had imposed a unilateral voluntary moratorium to nuclear tests after it conducted five-in-a-row tests in 1998. Indias commitment to non-proliferation is second to none, he said.

Earlier, India and the US sealed the landmark civil nuclear deal, after three years of tough negotiations.

The deal guarantees uninterrupted supply of US nuclear fuel to India and allows American companies to benefit from the multi-billion-dollar Indian nuclear programme.

This is truly a historic occasion. Now there is nothing we cannot do, said Secretary Rice after signing the implementation document with Mr Mukherjee.


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## Neo

*Pakistan to seek compensation for Chenab losses​*
ISLAMABAD, Oct 11: Indus Water Commissioner Jamaat Ali Shah has said that he will press his Indian counterpart to ensure that Pakistan is compensated for last months water loss of 0.2million acre feet (MAF) when he visits India for a week from next Saturday.

India had completely blocked the supply of regular water (23,000 cusecs a day) to Pakistan from the Chenab River last month while filling its Baglihar Dam, badly affecting Pakistans share of irrigation water. The move is being considered by Pakistan a violation of the Sept 1960 Indus Water Treaty.

Talking to Dawn on Saturday, Mr Jamaat Ali Shah said the treaty was between two nations, and not two persons to be taken too lightly or be violated.

We must respect this treaty as responsible nations. I tell you there are no guarantors in bilateral agreements between nations, but the nations concerned are its guarantors, Mr Shah replied when asked whether the treaty has any guarantor(s) for the World Bank, which arbitrated the treaty, has cleared its position by calling its status as that of a mediator.

Mr Shah will be leading a Pakistani delegation to New Delhi on October 18 to discuss last months violation of the treaty by India. The delegation will stay in India till Oct 24 and will also visit the Baglihar dam site in held Kashmir.

In reply to a question, he said the meeting of the commission was the first step in resolving water issues related to the Indus Water Treaty. He said it was premature to say anything about the outcome, but Pakistan reserved the right to take up the issue with the World Bank again if India refused to compensate it.

He said that India had violated the Indus treaty by unilaterally blocking the flow of the Chenab River to Pakistan. He said there were always some loopholes in all water treaties, but this did not mean that a nation should use this to its advantage and to the detriment of the other. Mr Shah said at present Pakistan was getting the normal flow of water from Chenab.


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## Neo

*47 development projects worth Rs 50 billion approved​*
** CDWP okays construction of Ghabir Dam worth Rs 2.16bn​*
ISLAMABAD: The Central Development Working Party (CDWP) in a two-day meeting that concluded on Saturday approved 47 different development projects worth Rs 50.1 billion including foreign exchange component (FEC) worth Rs 5.8 billion.

This was the second meeting of the CDWP in the current fiscal year 2008-09 and the projects approved will be financed from three-eight years.

Of the total 47 projects, the infrastructure sector has 25 projects while the social sector has 18 projects, besides four other projects.

Planning Commission Deputy Chairman M Salman Faruqui chaired the CDWP meeting.

In the transport and communication sector, 18 projects were approved by the CDWP mainly to provide modern and safe travel to the general public.

The Infrastructure Project Development Facility (IPDF) was asked to seek expression of interest from private parties to finance these projects including Hasanabdal-Havailian-Mansehra Expressway worth Rs 2.997 billion.

Ghabir Dam: In the water sector, the CDWP approved the construction of Ghabir Dam worth Rs 2.164 billion in district Chakwal, Punjab province. The government of Punjab will provide the entire cost of the project through the Annual Development Plan allocation.

The CDWP also approved the PC-II to undertake detailed engineering design and tender documents of Munda Dam project worth Rs 651.862 million with FEC Rs 224.826 million. The Munda Dam project will generate 748MW electricity and help increase agriculture production through irrigation over 23,000 acres of land.

In the education sector, a new college of home economics and management sciences will be established in Islamabad. Similarly, a project has been approved for the development of the university faculty.

The CDWP also conceptually approved the upgrading of Training Equipment of Pakistan Marine Academy project worth Rs 1.230 billion with Rs 1.140 billion FEC.

Additional chief secretaries (ACSs) (development) represented their respective provincial governments and special areas. The sponsoring agencies were represented by the respective secretaries or their heads.

The IPDF and Board of Investment (BoI) have also been made permanent members of the CDWP to solicit their views over which of the projects under consideration could be shifted to the public private partnership mode.

However, due to non-presence of the NWFP ACS (development) in the last two meetings, a project of national importance, the Chashma Right Bank Canal (CRBC) (Lift-Cum-Gravity) worth Rs 39 billion with FEC Rs 10.675 billion was deferred.

The official absence also affected other important projects related to the NWFP and the Planning Commission deputy chairman also expressed serious concerns over the situation, a senior official told Daily Times.

The main objective of the CRBC project was to provide sustainable irrigation water supply to 286,140 of agricultural land so as to increase agricultural production and uplift the socio economic condition of the inhabitants, the official added.

The vast area of piedmont plain in Dera Ismail Khan district having high agricultural potential was lying barren due to shortage of water. At present this area is under less productive rod kohi (hill-torrent) and barani (rain fed) agriculture.

Due to shortage of water and fodder, the livestock population is also low. The CRBC project plans to provide perennial irrigation to 286,140 acres productive land falling in DI Khan, Kulachi, Paharpur and Daraban tehsils of DI Khan district. The project area is contiguous with the right bank of CRBC project. Due to unfavourable topography, irrigation water diverted from Chashma barrage through a feeder canal will be pumped into the main canal though 64-feet lift.

Realising the importance of the CDWP meeting, National Assembly Deputy Speaker Faisal Karim Kundi also attended it.


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## Neo

*WB to provide $ 1.4 billion this year, DFID doubles economic assistance ​* 
WASHINGTON (October 12, 2008): The World Bank has pledged to provide $ 1.4 billion support for Pakistan in the current year which can be front-loaded to fast track investment projects and budgetary lending. The amount includes $ 600 million for investment portfolio and $ 800 million for budget support as macroeconomic stabilisation program moves forward.

The offer, first made by World Bank President Robert Zoellick at a meeting with President Asif Ali Zardari last month in New York, was reiterated Saturday as Pakistans Adviser on Finance met with the Banks Managing Director Ngozi Okonjo-Iweala.

Meanwhile, Department for International Development has doubled its economic assistance for Pakistan to UK pound 586 million. Minouche Shafik, Permanent Secretary of DFID told the Pakistani delegation that the Department plans to expand its development work to federally administered tribal areas and Balochistan.

The advisor to prime minister also had productive meetings with German minister for Economic Cooperation and Development Wieczorek-Zeul, United States Undersecretary of State for Economic, Energy and Agricultural Affairs, Reuben Jeffrey and Assistant Secretary of State for Economic, Energy and Business Affairs Daniel Sullivan.

The German minister vowed to provide support for social safety nets and also offered debt swap for HIV AIDS and Malaria Global Fund.

The U.S. officials reaffirmed Washingtons continued support for Pakistans economic development. Tareen also discussed bilateral cooperation with Afghan Finance Minister Anwar ul Haq Ahady.

Shaukat Tareen briefed his interlocutors about the current economic challenges and blew impact of the war on terrorism that Pakistan being the front line state has to face on its economy. He spoke of the tough and difficult measures that have been taken by the elected government. He also expanded on Pakistans program to deal with these challenges including social safety nets for targeted subsidies.

The Finance Adviser urged donors support for Pakistans efforts to pull itself out of the current difficult phase. He also highlighted the impact of global financial crisis on developing countries, particularly on those intending to access capital market but cannot do so because of liquidity crunch.

The World Bank, DFID, U.S. and German officials appreciated the courageous measures taken by Pakistan to correct the macroeconomic imbalances and reaffirmed their commitment to support the country in meeting its economic challenges and establishing safety nets for the poor.

The Pakistani delegation including Governor State Bank Dr Shamshad Akhtar, Finance Secretary Dr. Waqar Masood, Secretary Economic Affairs Division Farrukh Qayyum and Economic Minister at the Pakistani embassy in Washington Wajid Rana also participated in a number of events including the WB-IMF Constituency Meeting, Saarc Finance Governors Meeting and the International Monetary and Finance Committee meeting.


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## Neo

*Rs 31 billion injected in banking system​* 
KARACHI (October 12 2008): Some Rs 31 billion was injected in the banking system on Saturday as the State Bank of Pakistan has reduced Cash Reserve Requirement (CRR) by one percent, enabling banks to meet their liquidity shortage, banking sources said on Saturday. The banks were facing huge liquidity shortage from last few weeks and liquidity constraint in the system has resulted in a rising trend in overnight call rates touching peak level of 40-48 percent, they said.

Therefore, taking a sudden step aimed to provide relief to the banks, the State Bank of Pakistan (SBP) on Wednesday announced reduction in the Cash Reserve Requirement (CRR) by 200 bps to 7 percent from 9 percent in two phases, to facilitate big payments. However, the central bank announced reduction in the CRR for all deposits up to one-year maturity by 100bps to 8 percent from 9 percent effective November 11.

SBP was expecting that market liquidity would be increase by Rs 61 billion with 200 bps reduction in CRR. "The first reduction of 100 bps from 9 percent to 8 percent has been effected from Saturday and central bank has injected some 31 billion in the banking system," sources said.

They said that overnight call rate has already declined, however this step would also help to ensure that call rates are reflecting the real fundamentals in the money market. Due to the implementation on the reduction announcement, banks have not used discounting counter of SBP on Saturday, they added.

Sources said that SBP has some Rs 680 billion on account of Cash Reserve Requirement and Statutory Liquidity Requirement (SLR), which stood at 8 percent and 19 percent respectively. The SBP has held close to Rs 600 billion on account of SLR and some Rs 280 billion on account of CRR, they added.


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## Neo

*Zardari for ending loadshedding on war footing​* 
ISLAMABAD (October 12 2008): President Asif Ali Zardari on Saturday said power and energy was most critical for economic development of the country and directed swift measures to end loadshedding and power shortages on a war footing.

During a detailed presentation on "International Competitive Bidding for new IPP and Rental Power Projects on Fast Track," the President asked the ministry and the Planning Commission to consider new and innovative models to attract international investment in energy sector. The presentation team was led by Minister for Water and Power Raja Pervez Ashraf. The President asked the team to study the models of other countries that have addressed their power crisis through international investments.

He said setting up of dedicated power plants for specialised sectors like the industrial units should also be given consideration. The President evinced keen interest in the measures taken for resolving the power crisis in Karachi and asked that the required steps be taken expeditiously.

He said that he will chair another meeting on the power situation in Karachi and other parts of the country that had been affected by electricity shortages that have had a negative impact on the national economy and caused hardships for the people.

The progress made and the issues involved in raising of Mangla dam and desalting of Tarbela dam were also discussed during the meeting. Earlier the Federal Minister for Water and Power Raja Pervez Ashraf mentioned the steps taken so far to end loadshedding by the end of next year.

He thanked the President for his support to end loadshedding in the country. The meeting was informed that the entire bidding process was completed by the PPIB in a record time of 117 days after the Cabinet decision of May 14 to invite bids for 1,000 MW IPPs and 500 MW rental projects as against almost one year taken normally by such bidding process.

As a result of encouraging response, 42 requests for proposals had been issued to the interested sponsors and investors. The presentation reflected that a total of 12 bids were received by the bid submission deadline and the evaluation of bids was conducted under a completely transparent process and was submitted before the ECC on September 10 after due deliberations by a cabinet sub committee.

As a result the ECC approved three IPPs of 929 MW and two rental projects of 437 MW. Following the approval Nepra was advised to approve the tariff of the aforesaid approved projects, in accordance with the provisions of the government guidelines for determination of tariff for IPPs.

The meeting was attended by Salman Farooqi, Deputy Chairman Planning Commission, Muhammad Ismail Qureshi, Secretary Water and Power Shakeel Durrani, Chairman Wapda Khalid Saeed, Chairman Nepra Navid Ismail, Chief Executive KESC Fazal Ahmad Khan, MD Pepco and Fayyaz Elahi MD PPIB.


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## Neo

*CDA to execute Ghazi Barotha water project soon​* 
ISLAMABAD (October 12 2008): Capital Development Authority is soon executing the Ghazi Barotha Water Supply Project (GBWSP) costing Rs 47 billion to overcome water shortage in Rawalpindi and Islamabad. This was stated by Tariq Mehmood, new chairman of CDA while briefing the media here on Saturday.

He said that the authority has submitted the feasibility report of the project to Indus River System Authority (Irsa) for approval. He said that CDA is trying to remove the concerns of different quarters, including Sindh, NWFP and especially Irsa, which are not in favour of sharing water with the twin cities as the provinces are already running short of water to meet the irrigation needs.

Due to reservations of provinces about the project, the government in the current year's Public Sector Development Programme (PSDP) has not allocated funds for the project, but CDA is trying to convince the provincial representatives.

According to the plan a separate water supply line would be laid for Rawalpindi from Ghazi-Barotha along with a 65-km supply line for Islamabad. Besides, CDA is planning to construct two more dams in the Capital. One for fulfilling the drinking water needs of the Capital residents and the other to meet the future demand after the expansion of the city.

Almost everyday the authority receives 800-900 complaints of water shortage from various localities of the Capital but majority of them were not responded. Besides the filtration plants installed by CDA in various sectors are also out of order. People who are already suffering from the heat of high inflation, unemployment, wheat crisis and loadshedding can not bear the water shortage.


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## Neo

*Pakistan and China to sign Investment Protocol next week​*
BEIJING (October 12 2008): Pakistan and China will ink an agreement on Investment Protocol during President Asif Zardari's visit to China next week. Pakistan's Ambassador to China Masood Khan told newsmen on Saturday that negotiation between senior officials of Ministries of Commerce of Pakistan and China had been completed on Investment Protocol to make free trade agreement (FTA) more comprehensive.

"I am fully confident that during President Zardari's state visit to China both the countries will sign agreement on it, which further push forward their economic partnership", he said. Khan pointed out that negotiations between the two countries on FTA in Trade and Services were going on successfully. "We hope to complete that phase in the coming month of December", he added.

Ambassador Khan said Pakistan was the first country with which China had signed the FTA, adding that when the FTA was fully implemented, it would further give boost to the bilateral trade. First phase of FTA in Goods and Investment had been completed in July this year and became operational, he said.


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## Neo

*To achieve sustained growth: Pakistan needs structural transformation in three directions: ADB​*
FAISALABAD (October 12 2008): To achieve sustained growth, Pakistan needs to deepen its industrial base, as well as to improve its performance in agriculture and services. While the share of the manufacturing sector in total output is not low (nearly 20 percent), it has remained stagnant since the 1970s.

In an updated project report of Accelerating Economic Transformation Program (AETP), prepared by J. Miranda, Director General, Central and West Asia Regional Department of Asian Development Bank and their team, it was pointed out that the share of manufacturing value added accounted for by high-technology products is low and has remained so during the last 40 years.

Pakistan 's exports per capita are low, and it continues to compete with exports from even poorer countries (eg, rice, cotton yarn, undergarments, cotton bed linen, and other woven fabrics). Labour productivity has increased very slowly since the 1970s with an annual growth rate of only 2.6percent.

Unless the production and trade structure of the economy is transformed to enable it to compete effectively in global markets, Pakistan 's 6-7percent real GDP growth per annum is unsustainable. ADB report said that Pakistan's economy has been seriously affected by the skyrocketing international prices of oil and food.

The severity of the exogenous shocks, aggravated by the uncertainties surrounding the recent political transition, has been felt on several fronts over the last fiscal year (June 2007-July 2008) the year-on-year overall domestic inflation reaching 24percent from 7percent; deterioration in the external accounts with current account deficit widening to 8.5percent of GDP from 4.8percent; depreciation of the Pakistani rupee (PRs) by 22percent; foreign exchange reserves declining by more than 40percent to $6 billion (about 1.5 months of imports); and unprecedented fuel, food and electricity subsidy needs, which rose four-fold to PRs 408 billion ($6 billion) from their original budgeted level.

Symptomatic of the declining investor confidence, the Karachi stock index dropped by more than 35percent during April-July 2008, and the spreads on sovereign debt have surpassed 1,100 basis points at end-August 2008 from less than 200 basis points in early 2007. The outcome of all this has been a decline in real gross domestic product (GDP) growth to 5.8percent from 7percent during the previous year.

ADB report observed that these challenges facing Pakistan have come despite steady real GDP growth of 7.3percent on average per year during FY2004-FY2007. But they have also come in the context of, as well as due to, persistent fiscal, trade and investment imbalances and lack of any significant structural changes in the economy.

*ADB EXPERTS OBSERVE THAT PAKISTAN NOW NEEDS TO TRANSFORM ITSELF IN THREE DIRECTIONS:* First, it has to address the immediate distortions facing the economy, particularly in the agriculture and energy sectors. The pricing and procurement system for wheat needs to be restructured, and subsidies better targeted to benefit the poor and vulnerable.

Untargeted wheat subsidies cost the Government PRs 40 billion ($600 million) in fiscal year (FY) 2008. In the electricity sector, Pakistan does not yet have an automatic tariff adjustment mechanism. The Government needs to reform the subsidy system in the sector, since it has not been able to settle the payments owed to distribution companies, which has resulted in a vicious circular debt problem and debt overhang. This needs to be addressed urgently to resolve the present energy crisis.

Electricity subsidies are estimated to have cost Rs 133 billion in FY2008 ($2 billion). In addition to these subsidy needs, an estimated $1.6 billion is required to partially protect the poor.

Second, Pakistan needs to strengthen financial inter-mediation to facilitate structural transformation. At the macro level, the Government has relied heavily on the central bank for its fiscal requirements, a practice that needs to be reversed. In parallel, the legal and regulatory framework should be strengthened to manage risks more effectively in the financial sector, promote consumer confidence, and deepen financial inter-mediation.

Third, over the medium to long term, the production and trade structure of the economy needs to be transformed so Pakistan can compete more effectively in the global economy. A deeper industrial base is vital, along with a more productive agricultural sector, greater value creation in the service sector, and far greater export sophistication.

To achieve this, the Government has to (i) address short-term policy and institutional distortions, (ii) identify industries where it might compete on a global scale, and (iii) attract private sector investments. ADB has worked in the past with Pakistan alongside other development partners to support reforms and investments in all three directions.

The challenges now facing the country are diverse and significant that immediate assistance is needed to address the short term constraints and to provide safety nets for the poor, while paving way for boosting Pakistan 's competitiveness, they added.

To address the present macroeconomic challenges, ADB experts mentioned that Pakistan Government has adopted a four point stabilisation plan, working in tandem with the State Bank of Pakistan (SBP).

It has also sought technical advice from development partners, including the International Monetary Fund (IMF), the World Bank and ADB in developing the plan, which focuses on: (i) ensuring price stability and effective demand management through interest rate adjustments; (ii) pass-through of subsidies while protecting the poor from economic shocks; (iii) shoring up foreign exchange reserves; and (iv) restoring fiscal discipline and reducing borrowing from SBP.

Commenting over the Medium-term agenda, ADB experts said that as it deals with the short-term challenges during the current fiscal year (by June 2009), the Government also plans to launch medium-term structural reforms in two key directions.

Increasing infrastructure investments in power and transport is a key part of its strategy, besides adopting measures to deepen Pakistan's industrial base and making its agriculture sector more productive. The Government plans to achieve this by rationalising its own involvement in key economic sectors, and by attracting greater private sector participation.

The fiscal space generated will help ensure adequate social safety nets as well as adequate spending on health, education and other priorities. In parallel, Pakistan also has adopted a framework for a medium-term financial sector strategy to strengthen financial inter-mediation and promote confidence. The proposal comprises (i) a program cluster for the Accelerating Economic Transformation Program (AETP) with four subprograms totalling $1.8 billion to $2 billion, (ii) two loans totalling $500 million equivalent for subprogram 1 of the AETP, and (iii) a technical assistance (TA) grant of $800,000.

The proceeds of subprogram 1 will be used by the Government mainly to cushion the impact of food and fuel inflation through the provision of targeted safety nets for the affected segments of the population. Of the $500 million for subprogram 1, $200 million will be from Asian Development Fund (ADF) resources.

The AETP will help Pakistan achieve and sustain higher economic growth in the medium term. The expected outcome of the AETP is structural economic transformation through (i) removal of short-term distortions in the agriculture and energy sectors; (ii) strengthening of financial inter-mediation; and (iii) development and implementation of a national structural transformation strategy.

Highlighting Special Features, ADB experts said that the AETP would help Pakistan address the challenges posed by the ongoing food and energy crisis in a systematic manner. Subprogram-1 is also one of ADB's responses to the food crisis in the region, a response that was first announced by the President at the ADB Annual Meeting in May 2008 and recently set forth in the paper ADB's Response to the Food Crisis.

ADB has worked with other development partners on the short-term as well as the medium-term issues. On macroeconomic stabilisation measures, ADB has relied on advice from the IMF and the World Bank and exchanged views with other bilateral partners. Part of the short and medium-term agenda, as it relates to agriculture, infrastructure and finance sector issues, is well grounded in ongoing investment and policy support by ADB and other partners.

Regular dialogue has taken place, including in finalising the AETP actions, with the concerned partners. The structural transformation agenda is new and being developed. Several institutions support investment climate and competitiveness reforms, with some specialising in selected sectors.

Once the principal studies under the AETP are completed by early 2009 ADB will co-ordinate closely with all stakeholders in helping the Government chalk out the future reform directions. The AETP will not only help stabilise the macroeconomic situation but also benefit target groups affected by fuel and food inflation.

*IT WILL HELP:* (i) Meet the large and immediate fiscal needs. (ii) The Government transition from the current system of inefficient and untargeted subsidies toward a targeted safety net program for the poor. Beginning with about 2 million households immediately, and expanding to cover 5 million households during the 2008-2009 fiscal year if the safety net program implementation is smooth, the AETP could potentially target up to 9 million households.

(iii) It will raise public confidence in the banking system through a depositor protection scheme, and stronger financial intermediaries that are better able to mobilise and allocate resources and risks. (iv) It will open the way for structural transformation. (v) It will cut transaction costs for businesses by reducing red tape and improving the investment climate. (vi) Overall, the AETP framework will enable ADB to sustain policy dialogue on structural reform in sectors where ADB has been actively involved through past and current investments.


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## Neo

*Pakistan to stabilise economy, encourage growth: Tareen​*
WASHINGTON (October 12 2008): Pakistan will pursue a comprehensive plan to stabilise its economy, encourage production in agricultural and industrial sectors and promote public-private partnership to move towards sustained high growth, Adviser on Finance Shaukat Tareen said on Friday afternoon.

In a series of meetings at the World Bank-IMF annual gathering, he held out the elected government's commitment to the policy of privatisation and deregulation as well as bolster competitiveness of the manufacturing sector. He was confident that the policies and reforms introduced by the government would lead to higher economic growth and enhance the international confidence in Pakistan's enormous economic potential.

Tareen met with leaders of international financial institutions including the World Bank, Asian Development Bank, International Monetary Fund and Finance Ministers from China and Saudi Arabia.

He also addressed a gathering of leading American investors arranged by Pakistan-US Business Council, where he affirmed the government's commitment to facilitate foreign investment. He urged American entrepreneurs from various sectors including energy to avail tremendous business opportunities existing in the country.

The adviser spoke of structural reforms in capital markets in order to transfer economic gains to the people. He informed his interlocutors about the government's focus on technological development as a way to empower people and lift them out of poverty.

The government, Tareen said, accords a high priority to human resource development and will therefore focus on better education and health facilities for the people as well as their skill development. He also apprised the finance and business leaders of the government's programmes to provide safety nets for the poor and reduce poverty.

Tareen also touched on efforts toward rationalising expenditure, increasing tax revenues and establishing Resolution Trust Corporation for running business more efficiently. In view of the rapidly expanding energy requirements of the country, he said the government is following an integrated energy plan to ensure sustainable development.

On the public-private partnership, he said, the government will promote it to shift infrastructure development to the private sector. The Finance Adviser's talks with the World Bank Vice President Isabel Guerrero and Asian Development President Haruhiko Kuroda revolved around Pakistan's program to stabilise the economy and the future course of action. They also discussed fast tracking current year lending program and investment portfolio in education, energy, trade, and other sectors.

The adviser also met with China's Vice Minister of Finance, Li Yong and Finance Minister of Saudi Arabia, H.E. Ibrahim Abdulaziz Al-Assaf and Deputy Managing Director IMF Murilo Portugal. Besides, Shaukat Tareen and the economic managers also attended 80th meeting of the Ministers of Group of 24 developing countries.


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## Neo

*Analysts foresee GDP growth dip to 4.2 percent in fiscal year 2009​* 
KARACHI (October 12 2008): The country's GDP growth is expected to slow down to 4.2 per cent in FY09 from 5.8 per cent in FY08 as high input costs coupled with reduced purchasing power will likely to depress manufacturing and services sector growth, analysts said. Agriculture sector is expected to grow by 3 per cent against 1.5 percent last year, on account of higher support prices encouraging output.

The current account balance deteriorated by 64 per cent on year-on-year basis to $2.6 billion in the first two months of FY09, maintaining pressure on the foreign exchange reserves. With Moody's and S&P's downgrading their outlook on Pakistan's sovereign debt, the ability to borrow from international financial markets will suffer, Sarah Mazher at Global Securities Pakistan said. Rising security concerns owing to series of blasts in the past few weeks would likely hinder future investment inflows, she added.

She said that with the IMF analysts team's hurried departure following Marriot hotel blast and the expected Saudi Oil facility flashing into the dark, help is being sought from 'Friends of Pakistan' who will meet this month to discuss the country's critical economic situation. August 2008 recorded highest ever inflation of 25.3 per cent on yearly basis, while core inflation increased to 16.1 per cent in August 08 from 14.7 per cent in July 08.

A fall in SPI inflation for 3 consecutive weeks (from an average 31.4 per cent in Aug08 to 29.7 per cent in Sep08) implies a downturn in September 08 inflation number. However, inflationary pressures in the coming months will remain under fire, fuelled by increased government borrowing.


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## Neo

*Zardari urges Ministry to work for uplift of rural areas​* 
ISLAMABAD (October 12 2008): President Asif Ali Zardari on Saturday directed the Ministry of Local Government and Rural Development to come up with concrete and specific proposals to bridge the urban-rural disparity in the country. While talking to Haji Ghulam Ahmad Bilour, Federal Minister for Local Government and Rural Development, the President said the government must work for uplift and development of rural areas, which remained neglected in the past.

The Minister for Local Government and Rural Development (LGRD) briefed the President about the status of various ongoing development projects. He said all projects for the rural areas were formulated in close consultation with the provincial governments.

He said the Ministry of Local Government and Rural Development was ensuring provision of basic necessities of life to the people at their doorsteps. The President said there was a need to study the best practices being followed in other countries with regard to local government and rural development and should benefit from their experience. He also emphasised the need for better co-ordination with the provincial governments to streamline the working of the institutions to make them more effective.


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## Neo

*Malaysia second largest foreign investor in Pakistan​*
ISLAMABAD (October 11 2008): Malaysia has become the second largest investor in Pakistan with 205.9 million dollars whereas Singapore took the first position with 210 million dollars during the first two months, July-August of current financial year 2008-09.

According to a data by Board of Investment (BoI) for the first two months of the current financial year, the total foreign investment inflow reached at 643.2 million dollars as compared to 312.2 million dollars in the corresponding period of last year registering an increase of 105 percent with Malaysia emerging as the second largest country in terms of Foreign Investment Inflow to Pakistan, said a news release here on Friday.

According to BoI data, US with 126.5 million dollars made the largest Foreign Direct Investment (FDI) followed by Norway with 50.2 million dollars, UK 44.4 million dollars, Hong Kong 33.9 million dollars and other making up total of 754.1 million dollars in the first two months of current financial year as compared to 458.9 million dollars of corresponding period of last year registering an increase of 64 percent.

The data also revealed that the largest FDI in Pakistan during July-August 2008 was made in communication sector stood at 251.8 million dollars, followed by financial business at 189.3 million dollars, oil and gas sector 78.6 million dollars, and power sector at 34.1 million dollars.

According to BoI, there has been consistent increase in Foreign Investment Inflow in the country since 2001-2002. The total FDI in the year 2001-02 was 585 million dollars that grew to 5,019 million dollars in 2007-08, whereas foreign investment inflow for the month of July-August, 2008-09 alone stood at 754.1 million dollars, which is a reflection of confidence reposed by foreign investors in Pakistan's economy and lucrative investment regime of the country.


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## Neo

*Inflation to shoot up to 23 percent during current fiscal year​* 
ISLAMABAD (October 11 2008): Pakistan current account balance is more than double of India's, which is an emerging economy in the region whereas the position of Bangladesh is not alarming in the South Asian region.

According to IMF World Economic Outlook 2008, the current account balance of Pakistan is -8.7 per cent of its GDP in 2008 as compared to -3.9 per cent in 2006 that clearly shows a decline of 4.8 per cent in GDP growth.

The report has projected -6.4 per cent current account balance of GDP growth of Pakistan in 2009 as compared to India that is projected to have -3.1 per cent whereas Bangladesh's current account balance is 0.9 per cent.

Total current account balance of South Asia in 2008 remained -3.3 per cent that is 1.9 per cent less than that of -1.9 per cent in 2006. Similarly, the report shows that the projected current account balance of GDP growth in the region will remain -3.3 percent in 2009.

It is worthy of mentioning that the report has projected four times higher consumer prices in Pakistan than India and more than twice of Bangladesh in 2009. The inflation rate in Pakistan, according to the report, is projected to shoot up to 23 per cent in 2009 as compared to 12 per cent in 2008 whereas the inflation rate was just 7.9 per cent in 2006. This shows an increase of 15.1 per cent in inflation rate in 2009 as compared to that of 2006.

The inflation rate of India in 2009 is expected to be 8.8 per cent that is 16.3 per cent less than of Pakistan's while Bangladesh is expected to have 10 per cent high inflation that is 13 per cent less than of Pakistan's. The average inflation for 2009 in South Asia is projected at 8.8 per cent.

The report shows that Pakistan's economic growth rate may reduce to 3.5 per cent in 2009 as compared to 5.8 per cent in 2008. On the other hand, India and Bangladesh are expected to have 6.9 per cent, 5.6 per cent GDP rate respectively. Earlier, a recent report issued by the Asian Development Bank (ADB) showed that Pakistan GDP growth is expected to decrease to 4.5 per cent in the current fiscal year against 5.8 per cent achieved in the last fiscal, as, according to the report, the country would continue to face the deteriorated state of economic fundamentals and inflationary pressures.


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## pkpatriotic

*World Bank reiterates pledge for $1.4 billion*
*By Anwar Iqbal *
*Monday, 13 Oct, 2008* 

*WASHINGTON: The World Bank, which is providing $1.4 billion for investment projects and budgetary support to Pakistan, has also identified lack of policy action during the past two years and high international commodity prices for the economic crisis the country faces.*

*The amount, offered during a meeting between President Asif Ali Zardari and 
World Bank President Robert Zoellick in New York last month, includes $600 million for investment portfolio and $800 million for budget support.*

*It is not clear if the money promised to President Zardari is a separate pledge or comes from the Pakistan Country Assistance Strategy fund.*

*The banks country assistance strategy for 2006-09 envisaged a flexible lending programme of up to $6.5 billion, a substantial increase over the previous CAS period. This included between $200 and $850 million annually from International Bank for Reconstruction and Development, one of five institutions that comprise the World Bank Group.*

The current portfolio consists of 22 projects, with total commitments of $2.3 billion. In a related report, the bank noted that 'Pakistan faces an economic crisis due to high international commodity prices and a lack of policy action during the past two years.'

_The bank also noted that the government of Pakistan was now starting to implement reforms on petroleum and power prices, tightening monetary policy and controlling expenditures. 'But more needs to be done,' it added.

The report noted that Pakistans development emphasis remained on social protection, poverty reduction, and infrastructure, particularly in water management, transport, and energy. Over the last few years, Pakistans human development indicators had generally improved, but largely lagged behind other countries in the region, the report added.

*'Key challenges facing Pakistan include a poorly targeted social safety net, an infrastructure deficit, particularly in energy, transport, and irrigation, and poor delivery of social services.'*

The World Bank pledged to deepen its engagement on social protection, community-led development, water management, energy, and infrastructure, while maintaining strong programmes in education, and irrigation._

Meanwhile, *Britains Department for International Development has doubled its economic assistance for Pakistan to £586 million.* DFID is a part of the British government that manages Britain's aid to poor countries and works to get rid of extreme poverty.

DFIDs Permanent Secretary Nemat Minouche Shafik told the Pakistani delegation attending World Banks annual meetings in Washington that her department plans to expand its development work to federally administered tribal areas and Balochistan. 

Mr Tareen also had productive meetings with German Minister for Economic Cooperation and Development Wieczorek-Zeul, US Undersecretary of State for Economic, Energy and Agricultural Affairs Reuben Jeffrey and Assistant Secretary of State for Economic, Energy and Business Affairs Daniel Sullivan. 

The German minister vowed to provide support for social safety nets and also offered debt swap for HIV AIDS and Malaria Global Fund. US officials reaffirmed Washingtons continued support for Pakistans economic development.

Mr Tareen also discussed bilateral cooperation with Afghan Finance Minister Anwar ul Haq Ahady. He briefed his interlocutors on current economic challenges confronting Pakistan and on the impact of the war on terrorism which is also affecting the countrys economy.

Mr Tareen sought donors support for Pakistans efforts to pull itself out of the current economic crisis. He also highlighted the impact of global financial crisis on developing countries, particularly on those intending to access capital market but cannot do so because of liquidity crunch.


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## Neo

*Pakistan Seeks Expatriate Funds to Support Stocks, Tarin Says ​*
Oct. 13 (Bloomberg) -- Pakistan, seeking $10 billion from overseas to avoid defaulting on its debt, will set up a fund for expatriate investors to buy stocks, before lifting emergency trading curbs that have prevented a rout in equities.

The fund will invest in state-run companies including Oil & Gas Development Co., National Bank of Pakistan, and Pakistan Petroleum Ltd., Shaukat Tarin, the Prime Minster's finance adviser, said in a telephone interview from Washington yesterday. Tarin, appointed on Oct. 8, didn't provide further details.

``We are looking at creating a fund for non-resident Pakistanis to consist of government stocks,'' Tarin said by telephone. ``The values are very good so we want to create a bouquet to offer to non-resident Pakistanis this month.''

Pakistan has twice imposed trading restrictions, bailed out individual investors, and promised an earlier fund to buy equities in failed measures to support a market that lost a third of its value this year. The Karachi Stock Exchange will meet today to review six-week-old rules that prevent stocks from falling below their Aug. 27 closing prices after rejecting calls from brokers to shut the exchange.

``There was a proposal to close the market for two weeks till the government resolves the fund issue,'' Arif Habib, chairman of Arif Habib Securities, a brokerage firm, said by telephone from Karachi. ``Then it was suggested issues should be resolved while the market stays open.''

The restrictions have prevented Pakistan from following a global sell-off in stocks on concern the escalating credit crisis will push more economies into recession. The KSE100 index ended little changed on Oct. 10 as the MSCI Emerging Markets Index fell 4 percent, extending the biggest weekly decline in the global benchmark since the index was established in 1987.

``The market will open as normal,'' Adnan Afridi, managing director of the exchange, said by telephone from Karachi.

Suicide Bomber

The exchange first imposed the trading restrictions Aug. 28 and extended them on Sept. 25 after a suicide bomber destroyed the capital's Islamabad Marriot Hotel and economic conditions deteriorated. Since the curbs were imposed Pakistan's credit rating has been cut to the world's second-lowest. Tarin said he didn't know about the proposal from brokers to halt trading.

Tarin, a 25-year veteran of Citigroup Inc., is in the U.S. seeking to raise $10 billion in emergency aid, in his first assignment since his appointment by President Asif Ali Zardari.

The World Bank will provide $1.4 billion this year to help narrow the nation's budget deficit, which is at a 10-year high, state-run Associated Press of Pakistan reported.

The offer was first made to Zardari last month and reiterated yesterday to Tarin, who met with the World Bank's Managing Director Ngozi Okonjo-Iweala, APP reported, without saying where it got the information.

Remove Curbs

Pakistan was forced on July 11 to remove the first curbs it imposed after trading in Karachi slumped to the lowest in 10 years. Regulators had banned short-selling and narrowed the limit on declines in measures announced late on June 23.

Hundreds of investors stoned the exchange and shouted anti- government slogans on July 16 after the bourse removed a 1 percent daily limit on price declines.

The exchange also banned short-selling Sept. 23, bailed out individual investors in July and announced a 20 billion rupee ($256 million) fund to buy stocks last month.


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## Neo

*UK decides to double economic aid to Pakistan​*
LONDON: The British organization for international development decided to double the economic aid for Pakistan. This aid now will be up to 586 million pounds.


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## dr.umer

*Pakistan seeks joint ventures with Iran​*
Posted: 10/13
From: MNN

A Pakistan provincial minister has called for joint economic ventures with Iran, especially in IT and Telecom sectors.

Minister for Industries and Commerce in southern Sindh province, Rauf Siddiqi in a meeting with the Iranian Consul General Masood Mohammed Zamani and Economic Counsellor, Gholam-Reza Tajik, called for expansion of bilateral economic cooperation.

He invited Iranian industrialists and investors to cooperate in agro-based industries under joint venture, including production of tomato paste and juices as well as processing of dates and fresh fruits.

Meanwhile, Zamani outlined Iran's expertise in basic and light engineering and oil and gas machinery, stressing that such potentials provide an opportunity for investment by Pakistani industrialists and investors.

The two sides discussed setting up industrial exhibitions in the two countries and called for exchange of high-ranking delegations. --IRNA


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## pkpatriotic

*Banks hit by speculative withdrawals*
*By Afshan Subohi *
*Monday, 13 Oct, 2008 *

*The domestic financial market experienced a mild shock last week following rumours about the viability of 2-3 banks to the freezing of foreign currency accounts and seizure of bank lockers.*

It led to noticeable withdrawals of money from the banking system experiencing liquidity crunch. Post-Eid illiquid money markets saw volatile call money rates surge to 40 per cent before settling back to 20 per cent later in the week.

Many experts contacted by Dawn for comments termed the statements by Governor of State Bank of Pakistan Dr Shamshad Akhtar and the newly-appointed advisor to Prime Minister on finance Shaukat Tareen timely, strong and well-worded. While others considered these very people partially responsible for the situation: Madam Governor for letting banks indulge in imprudent consumer financing ( the policy initiated by Dr Ishrat Hussain) and Shaukat Tareen for patronising brokers by introducing a new brand of badla  the CFS (continuous funding system).

As the currency market turned volatile, the SBP intervened to ease liquidity by injecting $20-100 million (different sources quoted different amounts) in the currency market and lowering the limit of cash reserve requirement (CRR) for banks from nine to seven per cent. The two per cent phased lowering of CRR is expected to release an estimated Rs60 billion to the banking system for credit expansion.

Experts felt that in the short-run the government can cut cash reserve requirements and statuary liquidity requirement (SLR) but in the long-run change in discount rate could be used to manage the market.

However, the government is currently more focused on mobilising funds from friendly countries to come out of the financial distress.

All financial managers including the finance minister, secretary finance, financial advisor and SBP Governor are attending the annual meetings of the World Bank and the IMF in Washington. Some officers of the ministry of finance said the meetings could provide an opportunity to pursue the donors.

Several bank branches in Karachi confirmed that they were approached by customers with queries of all kinds. There were reports of withdrawals from few not-so-strong small banks but the activity was within manageable limits.

As of June 2008, according to figures given out by the State Bank, there are in all 24.816 million depositors in the country in all the banks combined. 

Approximately two-thirds of these people primarily use banks to draw their salaries. Many of the rest, with their savings parked in banks, demonstrated some uneasiness in the post-Eid week.

Several bank branches in Karachi confirmed that they were approached by customers with queries of all kinds. There were reports of some withdrawals from certain banks but the activity was within manageable limits.

People remember the co-operative and financial companies fiasco of 1980s and 90s. They have not forgotten nor forgiven how the government breached their trust by freezing their foreign currency accounts in 1998. If they get swayed by rumour mongers it is because they have sour memories, said a depositor.

There were some reports of more than normal activity at the branches of banks with locker facilities. Generally people expressed anxiety but the level was not high enough to motivate them to take their valuables out of lockers. 

Besides, in the current law and order and security situation what other options are available, a bank manager asked. He argued that people would not touch their lockers even when they made uncomfortable by rumours.

Let the fog of suspicion created by the whispering campaign settle and sanity prevail.The banking sector has a strong foundation. It would be wrong to confuse the liquidity crunch in the money market or falling value of rupee with the fundamentals of the banking sector, an ex-banker close to ruling party said.

The financial and corporate circles differ on factors responsible for the current pass and also on the most appropriate measures to sustain the confidence level in the banking system.

Some blamed economic policies of demand-led growth of the previous government. Others held brokers-bureaucrats-politicians nexus responsible for creating a bubble economy by diverting the countrys financial resources to speculative capital market.

Yet another group blamed the imprudent financial conduct of the present and the last government and their reliance on the State Bank for their liquidity needs. They said they have drained liquidity from the market.

The government borrowing rose by over 100 per cent in the first 11 weeks of the current fiscal year to a total of Rs173.23 billion from July 1 to Sept 13.

Pakistan is already struggling with a high inflation rate at more than 25 per cent and a widening current account deficit. Foreign exchange reserves are fast depleting. The rupee lost about 23 per cent in its value since the start of the year.

Pakistans rating by Standard & poor has been revised to CCC-plus, a few notches above default level. The S&P said: Pakistans worsening external liquidity may imperil its ability to meet about $3 billion in upcoming debt payments.


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## Neo

*Zardari heads to China amid strained US ties ​* 
ISLAMABAD ( October 13, 2008): President Asif Ali Zardari flies to China on Tuesday seeking economic investment and support for his country as its ties with the United States come under increasing strain. Pakistan is one of China's closest allies in Asia, with Beijing seeing the country as a counter-balance to India.

Though the four-day visit is Zardari's first state visit since he assumed office in September, he met US President George W. Bush in New York late last month for the UN General Assembly.

Former army general Talat Masood told AFP that Zardari was still "learning on the job" and had a difficult diplomatic balancing act to pull off.

"Both the US and China have a strong presence in Pakistan and Zardari will seek to ensure that their joint presence is used to find maximum benefit for the country as it faces further difficult times," he said.

With Pakistan also feeling the economic pinch -- it has been forced to ask its Western backers to stave off bankruptcy -- Zardari will be looking for aid and investment in gus talks with President Hu Jintao and Prime Minister Wen Jiabao.

China, described by Pakistan as its "all-weather friend," has boosted its economic interests in the country, funding major infrastructure, engineering and mining projects including a deep sea port at Gwadar in the southwest.

"This is the first official bilateral visit of President Asif Ali Zardari abroad, and is to a country with which we have always enjoyed a high degree of understanding, trust and goodwill," the foreign ministry said.

The Beijing government has said it hopes Zardari's visit will "deepen the strategic partnership between China and Pakistan."

Other topics for discussion are likely to include the fate of two Chinese telecoms engineers kidnapped by pro-Taliban militants six weeks ago near the Afghan border.

China made an official request for the Pakistani government to rescue the hostages.


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## Neo

*World Bank to lend $1.4 billion, DFID doubles aid​*
WASHINGTON (October 13 2008): The World Bank has pledged to provide $1.4 billion support for Pakistan in the current year, which can be front-loaded to fast track investment projects and budgetary lending. The amount includes $600 million for investment portfolio and $800 million for budget support as macroeconomic stabilisation programme moves forward.

The offer, first made by World Bank President Robert Zoellick at a meeting with President Asif Ali Zardari last month in New York, was reiterated Saturday as Pakistan's Adviser on Finance met with the Bank's Managing Director Ms. Ngozi Okonjo-Iweala.

Tareen and his team of top economic mangers had also discussed development co-operation with WB Vice President on Friday. Meanwhile, Department for International Development has doubled its economic assistance for Pakistan to UK pounds 586 million. Minouche Shafik, Permanent Secretary of DFID told the Pakistani delegation that the Department plans to expand its development work to federally administered tribal areas and Balochistan.

The Advisor to Prime Minister also had productive meetings with German Minister for Economic Co-operation and Development Ms Wieczorek-Zeul, United States Under-secretary of State for Economic, Energy and Agricultural Affairs, Reuben Jeffrey and Assistant Secretary of State for Economic, Energy and Business Affairs Daniel Sullivan. The German Minister vowed to provide support for social safety nets and also offered debt swap for HIV AIDS and Malaria Global Fund. The U.S. officials reaffirmed Washington's continued support

for Pakistan's economic development. Tareen also discussed bilateral co-operation with Afghan Finance Minister Anwar ul Haq Ahady.

Shaukat Tareen briefed his interlocutors about the current economic challenges and blow impact of the war on terrorism that Pakistan being the Front Line State has to face on its economy. He spoke of the tough and difficult measures that have been taken by the elected government. He also expanded on Pakistan's program to deal with these challenges including social safety nets for targeted subsidies. The Finance Adviser urged donors' support for Pakistan's efforts to pull itself out of the current difficult phase. He also highlighted the impact of global financial crisis on developing countries, particularly on those intending to access capital market but cannot do so because of liquidity crunch.

The World Bank, DFID, US and German officials appreciated the courageous measures taken by Pakistan to correct the macroeconomic imbalances and reaffirmed their commitment to support the country in meeting its economic challenges and establishing safety nets for the poor.

The Pakistani delegation including Governor State Bank Dr Shamshad Akhtar, Finance Secretary Dr Waqar Masood, Secretary Economic Affairs Division Farrukh Qayyum and Economic Minister at the Pakistani embassy in Washington Wajid Rana also participated in a number of events including the WB-IMF Constituency Meeting, SAARC Finance Governors Meeting and the International Monetary and Finance Committee meeting.


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## Neo

*Pakistan urged to check remittances inflow through illegal means​* 
ISLAMABAD (October 13 2008): Pakistan should take appropriate steps to check flow of foreign remittances through illegal channels to get optimum benefits of the expats hard earned money with annual inflow of more than $9 billion.

In an exclusive interview with the Daily Business Recorder, Bashir A. Tahir Chief Executive Officer (CEO) Dhabi Group shared his international banking experience; rupee-dollar parity, future investment plans and role of banking sector in current economic situation for improving the economy.

Terming "Hundi and Hawala system" as a major hurdle in foreign remittances through legal banking channel, he said that why Pakistan could not get rid of the "hundi system" which India effectively tackled during the tenure of Indra Ghandi.

He said that the late Indian Prime Minister Indira Gandhi with the imposition of emergency banned illegal means of transmitting expats money. She not only plugged all the channels but also confiscated the assets of people dealing in it. This sent a strong message to both the dealers and expatriates that the money they send through illegal means was not safe.

He said that $9 billion would be a huge amount that Pakistan can get annually through legal means provided it takes measures to break the illegal channel, which has been causing enormous damage to foreign exchange reserves.

Declaring "no risk" in Pakistani banking system, he said that the banks are not facing any kind of risk during the current economic scenario in Pakistan. Presently, Pakistani banking sector is robust with no sign of default. The general public should not be worried and need not to pay any heed to rumours of default. Such kinds of rumours are created by the vested interest, who want to distort the image of Pakistan aboard.

According to him, Pakistan banking system was sound for which the credit must be given to the Central Bank that has been playing a proactive role. No country of the world could develop without a strong banking system and the responsibility to make it stronger lies equally with the people as well as the regulator, he added.

It is the responsibility of the regulator to closely monitor all the banks and take measures against those who are not functioning properly within the laid down parameters. As far as Pakistan is concerned, the regulator is very strong which examines each and every aspects of bank in a critical way and sends report to the all banks individually. He said that the systems within the banking sector have to remain stable. If one system is being disturbed, it might hurt the entire banking system.

To a question, he said that prevailing international economic turmoil will also have an impact on Pakistan economy as well but at the same time there are positive signs for Pakistan with reduction in oil prices that according to international experts are likely to stabilise somewhere in $70s per barrel. The declining oil prices as well as remittances could help Pakistan manage its balance of payments to some extent. The legal transmission of foreign remittances by overseas Pakistanis could be a ray of hope for economy in the prevailing economic situation.

He regretted that there was a huge capital flight during last two years from Pakistan to the UAE and the government must have acted and taken into confidence the investors by addressing their fear and anxieties. Still the government can do a lot to restore local investors' trust for which it has to have meaningful talks with them aimed at giving them the message that it was fully supporting them on their legitimate demands, he added.

About the current depreciation of Pak rupee against the dollar, Bashir A. Tahir said that there is a need of policy with national interest to check this phenomenon in Pakistan. The currency exchange dealers sometimes indulged in the phenomenon of "talking the currency up", which means speculation by the dealers to create panic for extracting more value of the currency in consideration.

Comparing US with Pakistani media, he said that you would never see negative images in the Western media which could have negative impact on their economy. Similarly, the Western media never projected the terrorism casualties. The media in Pakistan also need to understand that exaggerated portrayal of terrorism incidence could immensely hurt Pakistan's economy.

Sharing a study conducted by him, the CEO of Dhabi Group said that the comparison of expatriate workforce between Pakistan and Philippines showed interesting results. Over 80 percent of the workforce of Philippines comprises of women against Pakistan's 95 percent male workers. The foreign remittances have been substantially increased from $9 billion to $10-$11 billion for Philippines. However, our situation has not improved, pointing towards some problems in our systems. About the future plan of the Dhabi Group, he said that the group would continue its investment plan for Pakistan, as the group has not budged from its plans in the worst scenario.

Bank Alfalah stands as one of the fastest growing financial institutions in Pakistan, expanding on local as well as International frontiers and working on the most modern dynamics of customer care and asset growth in banking. Bank Alfalah has recently unfolded a new phase of expansion by planning 49 new branches across Pakistan in order to meet the growing demand of reliable and Innovative banking products. The commencement of these branches is scheduled by the end of the current year.

Bank Alfalah is now ranked as the fifth largest bank of Pakistan within only ten years of its operations. To this date, the Bank has become the leading credit cards brand, and has innovated consumer products by redefining market dynamics. Presently, the Bank has 225 branches across 88 cities in Pakistan with eight foreign branches across Afghanistan, Bangladesh and Bahrain. The phenomenal corporate success of the Bank has been made possible through expanding its customer base and focusing on client needs.

He said that the Bank Alfalah is working on an extremely sound financial rooting and is in a progressive mode. Bank Alfalah for the half year ended June 2008 has shown remarkable growth. The deposits have grown to Rs 287.7 billion against Rs 270.6 billion in June, 2007, the Advances have grown to Rs 184.9 billion from Rs 158.6 billion, the Foreign Trade business has increased to Rs 150 billion from Rs 131 billion and profit before provisions and taxation has increased to Rs 3.28 billion from Rs 2.4 billion registering an impressive growth of 35% during the period under review.

He added that the Bank Alfalah is backed by an extremely strong investment commitment or the Abu Dhabi Group which has experienced growth on extraordinary scale across the Middle East and has Investments in Pakistan exceeding US $10 billion.

The Consortium is headed by the visionary HH Sheikh Nahayan Mabarak Al Nahayan who has always demonstrated keen Interest to invest in Pakistan. Alongside Bank Alfalah, the Group's other Investments comprise United Bank Limited, Alfalah Securities (Pvt) Limited, Alfalah Insurance Company Limited, Alfalah GHP Investment Management Ltd, UBL Insurers Company Limited, Wateen Telecom (Pvt) Ltd and lastly, Taavun (Pvt) Limited (a real estate joint Venture between Dhabi Group and Government of Punjab) in which Dhabi Group has announced an Investment of $1.2 billion, he added.


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## Neo

*Pakistan and China to sign Investment Protocol next week​*
BEIJING (October 12 2008): Pakistan and China will ink an agreement on Investment Protocol during President Asif Zardari's visit to China next week. Pakistan's Ambassador to China Masood Khan told newsmen on Saturday that negotiation between senior officials of Ministries of Commerce of Pakistan and China had been completed on Investment Protocol to make free trade agreement (FTA) more comprehensive.

"I am fully confident that during President Zardari's state visit to China both the countries will sign agreement on it, which further push forward their economic partnership", he said. Khan pointed out that negotiations between the two countries on FTA in Trade and Services were going on successfully. "We hope to complete that phase in the coming month of December", he added.

Ambassador Khan said Pakistan was the first country with which China had signed the FTA, adding that when the FTA was fully implemented, it would further give boost to the bilateral trade. First phase of FTA in Goods and Investment had been completed in July this year and became operational, he said.

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## Neo

*Alternate energy could reduce power shortages​* 
SIALKOT (October 13 2008): Citizens of Sialkot belonging to various walks of life including businessmen and students have expressed deep concern over the poor performance of Wapda demanded voluntarily resignation by its chairman for rendering pitiable services.

They alleged that Chairman Wapda and other concerned high-ups were trying to hoodwink the consumers through their statements whereas, ground realities were entirely different and practically nothing had been done for overcoming the electricity crisis.

They said that the industrial sector was being adversely affected due to unscheduled as well as over and again load shedding as a result of which the productivity has come to a standstill in and around to Sialkot. People of Sialkot further stated that it is a clear fact that the government was making sincere efforts for the development of industrial sector and bringing a boom in the country's exports.

However, it was unfortunate that some anti-government lobbies were trying hard to sabotage the government's efforts while Wapda appears to be the major player. The business community had put their heart and soul in bringing big boost to export activities but Wapda totally failed in providing sufficient electricity facilities to the business community of the country.

As a result, fixed target of exports was not achieved. They further alleged that Wapda had become a 'White Elephant' and the government should take immediate action, say good-bye to Wapda and save the masses from further miseries.

They also called upon the government to take immediate practical steps for the construction of big dams like Kala Bagh for overcoming the severe crisis pertaining to electricity.

Furthermore, unscheduled load shedding had created unrest among the student community especially, the postgraduate students because, rapid load shedding largely disturbs their exam preparation.

They suggested that government should take immediate measures to introduce alternative sources of energy like 'Solar Energy' system in order to curtail the people's problems. Solar system, if introduced, could enable the people in obtaining inexpensive electricity and the government should involve private sector in producing low-cost power through solar system, they demanded.


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## Neo

*Wither the economy - is it all downhill from now on?​* 
ARTICLE (October 13 2008): Recently a close friend of mine was diagnosed with cancer. It came as a huge shock as she was super fit, jogging around 4 kilometers each day, six days a week and was into a healthy balanced diet with ample daily portions of fruits and vegetables. She began the chemotherapy, and was put on some other oral medication. Soon she was literally dragging her feet.

When I asked her why she said she had contracted arthritis. But, I spluttered, you are around 40 years old and that is no age for arthritis. Her doctor had told her that it was the cancer medication that had brought forward the arthritis by at least a couple of decades.

The experience of my friend is strangely reminiscent of Pakistan's economy. High inflation, a credit crunch of a magnitude never before witnessed in this country, the rupee losing its value at an unprecedented level, rising energy shortage that is impacting on productivity and consequently on government revenue, and a government that has so far proved unable to deal with the situation.

If the liquidity crunch is tackled through injections, then the inflationary pressures which are already alienating large parts of the population from the democratically elected PPP government may well prove to be the last straw on the camel's back, leading to riots and a call for fresh elections. And if a tight monetary policy is continued in an effort to check the rate of inflation, then the credit crunch would assume alarming proportions and may well lead to a further decline in productivity with its obvious implications for employment levels and the ability of the government to generate revenue for its coffers.

Amidst all this bad news the State Bank has at times appeared at odds with the government with frequent statements attributed to its Governor and to those working in the finance ministry from the minister down to his senior and mid-level staff blaming each other for the current financial morass.

The Governor of the State Bank has reportedly, laid the blame on heavy borrowing by the federal government and the federal government has laid the blame squarely on the State Bank for its prescriptions to deal with a worsening rupee value and the liquidity crunch that are 'too little, too late'.

While there has been a noticeable decline in the rhetoric from both sides it is imperative for President Zardari to ensure that such public bickering on the part of the State Bank and the Ministry of Finance ends forthwith. Both the institutions must be committed to working together to ease the financial crisis that the country is facing.

Because foreign assistance, given the nature and extent of the global crisis, is unlikely to be extended on a scale needed the overriding principle must be an indigenous action plan to reform the economy: a plan that must not rely on our local experts, be it an advisory council staffed by experts from the private sector or public sector bureaucrats, directing the government to seek as much foreign assistance as possible. An indigenous plan must thus consist of trying to make ends meet given what the government can realistically be able to access in terms of both tax and non tax revenue and foreign assistance.

Expenditure must then be drastically curtailed in an effort to ensure that the budget deficit is within manageable limits which, in turn, would reduce the pressure on the government to borrow from the State Bank, reducing inflationary pressures in the long run. This would enable the government to meet its internal financial requirements.

But can Pakistan meet its external financial requirements in the short run? Our foreign exchange reserves are just about adequate to pay for two months of imports. The much talked of Saudi oil facility or deferring oil payments for one year remains elusive in spite of statements attributed to the Pakistani officialdom that the delay is because the Saudi oil minister has been on vacation. While even for Pakistanis used to frequent holidays by our leadership, the Saudi Minister's absence for over four to five months is incomprehensible.

Yet there is evidence to suggest that the Saudis have agreed, in principle, though no one has explained the cause behind the continued delay in actually penning the agreement. The government also needs foreign exchange to honour its 500 million dollar Euro bond obligations apart from the normal debt servicing payments that are due each year on past loans.

Then of course there is the element of foreign exchange reserves providing a buffer to the domestic value of the rupee. Banks have, reportedly, imported a huge consignment of cash dollars, against their funds held abroad in corresponding banks, in an effort to meet the sudden surge in local demand which has been attributed to the perception that the government may take drastic measures to stem the eroding confidence in the rupee, including freezing foreign currency accounts as in 1998. SBP has revealed that foreign exchange reserves have risen by 190 million dollars - an amount that is almost a drop in the ocean given our need for about 10 billion dollars to stem the decline in the economy. Meanwhile, the rupee value has eroded further and reached the all time high of over 80 per dollar. And its arrest is nowhere in sight.

The government would have to change its fundamentals before the check would take effect which, in turn, would require restoration of public confidence, increase in energy supply on an emergency basis, a tax system that is perceived to be fair and equitable and a budget deficit that is sustainable.

The PPP government's response to all this: bring Shaukat Tareen, a technocrat, as an answer to our economic woes. The people of Pakistan may be wary of technocrats, Shaukat Aziz as a case in point comes to mind, and expectations are at an all time low. However Tareen, like Aziz before him, is essentially a commercial banker and his capacity to overhaul our macro-economy is, therefore, not tested.

Be that as it may, it is hoped that pressure groups, and one has to include members of the stock exchange who met with Zardari when he was only a party co-chairman, and put pressure on him not to impose capital gains tax, are not allowed to make deals with politicians, which bypass the finance ministry. For this to take effect, the office of the President and the Prime Minister must allow Tareen not only carte blanche in dealing with pressure groups but also the heads of departments of international financial institutions. Strengthen the hands of the advisor and not countermand his orders on political grounds must be the new mantra. Only then would we have a chance to turn the economy around.


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## ejaz007

*Shaukat Tareen claims IMF-WB bailout*
By Khalid Hasan

WASHINGTON: The Pakistani delegation to the Fall meetings of the International Monetary Fund (IMF) and the World Bank has claimed success in obtaining assurances of a bailout for the countrys deeply troubled economy, but did not reveal the specifics.
A news release issued by the Pakistan embassy announces that Shaukat Tareen, finance adviser to the prime minister, who is leading the Pakistani delegation, had met the managing director of the World Bank, the German development minister, a British official in charge of external aid and the finance minister of Afghanistan, among others, while claiming that all bilateral meetings remained very productive. But it gives no details. The adviser is said to have briefed all dignitaries about the current economic challenges and blow impact of war on terrorism (Pakistan being the front line state) on the economy, tough and difficult measures that have been taken by the political government, Pakistans programme to deal with these challenges including social safety nets for targeted subsidies and urged for donors support in moving out of the current difficult phase. He is also stated to have highlighted the impact of global financial crisis on developing countries particularly for those which intends (sic) to access capital market but cannot do so because of liquidity crunch.
The news release states that the World Bank, DFID (UK Department for International Development), US and Germany appreciated tough and courageous measures that have been taken by Pakistan to correct the macroeconomic imbalances which many developing countries are reluctant to take. They also expressed their commitment to support Pakistan in meeting its economic challenges, establishing safety nets for the poor, and providing bilateral support. The news release also declares that the US will continue its support to Pakistan but provides no details.
What remains unclear is whether the World Bank is willing that the $1.4 billion support for Pakistan it has offered can be front-loaded to fast track investment projects and budgetary lending. The falling Pakistani rupee is evidence of massive capital flight, so the question being asked here is whether despite the risks, Pakistan is willing to impose some sort of temporary controls on capital outflows, as the Malaysian did with much success during the Asian Crisis.
The recent decline in the Pakistan stock market suggests that the bubble has burst, and experts fear that this is likely to spread to the real estate market which like the stock market is irrationally overpriced. It has been noted here that Pakistan has failed to announce details of the macroeconomic programme its financial managers claim to have activated, but it is being treated like a secret. One former IMF economist told Daily Times, Everything seems to be ad hoc and incrementalist. There should be a programme that puts everything together, makes sense, and is credible. And, most importantly, which the donors can/will buy. Such a programme needs to be put out there so as to build confidence. It will help foster the impression that government has a plan in hand.
Apprehensions have been expressed here that a debt default has become inevitable because Pakistans reserve losses are running into millions of dollars per week. Pakistan may soon be in debt service arrears. Experts have also wondered that if government policies are tight as claimed, how is it that imports are still surging and the external deficit is still widening? Where is the demand and credit coming from? The present global financial meltdown will make borrowing by Pakistan on capital markets even more expensive. The fact that Pakistans economic situation is in such disarray will make it even more so. The Paksitani delegation has not explained how Islamabad intends to cope with this double-whammy. 
Economic observers feel that it is too late to avoid a meltdown. The fiscal and monetary measures that have been taken are too little, too late. Neither is it clear what specific support the US has offered and what specific support is expected from the Friends of Pakistan group. It is also not clear if the next meeting of Friends in Abu Dhabi is going to be a pledging session. 
*Mystery also surrounds the promised Saudi oil facility. There is speculation that the Saudis have backed out. *

Daily Times - Leading News Resource of Pakistan


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## Neo

*QIE power plant to help overcome energy crisis ​* 
Tuesday, October 14, 2008

LAHORE: Quaid-e-Azam Industrial Estate will have its own coal-run power plant that would help overcome energy crisis in the estate within 26 months.

The assurance was given by Chairman Chief Minister Inspection and Monitoring Cell Haroon Khawaja during a visit to the industrial estate. A large number of the QIE Board of Management members, including its president, were also present.

The Implementation & Monitoring Cell chairman also inaugurated the Computerised Property Record. He appreciated the efforts of the IT department of Quaid-e-Azam Industrial Estate (QIE), Kot Lakhpat, Lahore in computerising the complete QIE property record.

The chairman gave assured that in the future, funds will be allotted directly to the QIE under the umbrella of Punjab Industrial Estate (PIEDMC) but such funds will be spent by the Board itself and not the PIEDMC, after following a proper legal channel.

Continuing, he said that Chief Minister of Punjab Mian Muhammad Shahbaz Sharif wanted to see the industry boom but the present energy crisis in the country, restricted this and most of industrial units have become sick .


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## Neo

*Bhasha Dam construction to begin next year: Raja ​* 
Tuesday, October 14, 2008

LAHORE: Minister for Water and Power Raja Pervaiz Ashraf has said the construction of the Bhasha Dam will start in September 2009 and a committee has been constituted to resolve the issues regarding other mega water reservoirs.

He expressed these views while addressing a press conference here at the Aiwan-e-Iqbal on Monday after inaugurating the 20th International Congress on Irrigation and Drainage, jointly organised by the International Commission on Irrigation and Drainage (ICID) and the Water and Power Development Authority (Wapda).

The minister announced that the first windmill of the country would be installed at Jhumpir next week, adding that the project was owned by a Turkish company.

He said developments on the Thar Coal Power Generation Project were going on at a rapid pace and breakthrough in this regard was expected soon.

He hoped that the practical work on the project would start at the end of the year. 

Admitting to the fact of increased load-shedding, the minister directed the Pepco authorities to avoid the unannounced power outages and try their best to reduce its duration.

He said Wapda had saved almost 250 megawatt of power through the energy conservation programme launched by the government after coming into power and by forwarding clock by an hour.

Raja pointed out that the government had started a power-generation programme to overcome the energy crisis.

He expressed the hope that the government would succeed in this regard by December 2009.

He said the country had received rental powerhouses and they would start producing 600 megawatts of electricity by Feb 2009. 

The government has chalked out a long-term energy-generation policy, under which the cheap hydro, coal, wind and solar energy will be generated, he said.

He added that the government had completed the bidding for the generation of 1,500 megawatt of electricity in a transparent way.

He hoped that the said amount of electricity would also be added to the Wapda-distribution system by December 2009.

To a question regarding the losses faced by the country after the stoppage of water by India by constructing the Baglihar Dam, the minister said the president and the foreign minister had lodged their protests against India.

Pakistan has asked India to compensate the losses and refrain from violating the Indus Water Treaty in future, he maintained.

Responding to another query, the minister said hydrogeneration had been dropped. Due to this, the duration of power outages had increased, he said.

He added that there was no issue of payments to the IPPs.

Talking about the Karachi Electric Supply Company (KESC), he said negotiations with the new management of the company were under way.

He added that the company would start its self production soon. After which, 700 megawatt electricity being supplied to it from the Wapda-distribution system would also be utilised by Wapda.


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## Neo

*305MW power unit to be set up at Port Qasim​*
ISLAMABAD, Oct 13: Progas Pakistan and KUB Malaysia Berhad have won the bid to construct a 305 MW independent power project at Port Qasim.

According to Private Power and Infrastructure Board (PPIB) here on Monday, out of the 12 bids received, three bids of Progas Energy, Cavalier Energy and Ruba Energy Pakistan were approved for construction of three independent power projects with total power generating capacity of 929.06 MW and two bids of Karkey, Karadeniz Eledkrik Uretim AS and Walters Power International were approved for renting of two power generators of 418.802 MW capacity.APP


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## Neo

*Chenab waters and Pakistans fear​*
President Asif Zardari has given expression to the general unease in Pakistan about the sharp reduction of water in the Chenab River over which India has recently inaugurated the Baglihar Dam in the Indian-administered Jammu & Kashmir state. His statement was careful and it was conditional, admitting an area of uncertainty over whether India was blocking the water or not: Any Indian move to block Pakistans water supply from the Chenab River would damage bilateral ties. In response to Pakistani requests, India has offered to stage talks in New Delhi on the Chenab water flows on the 23rd of this month.

Concern over water is different from claims over territory. It generally arouses intense public fear which is not the case when it comes to territorial disputes. As an upper riparian state, India must deal with both genuine and exaggerated fears from lower riparians like Pakistan and Bangladesh. In the case of Pakistan, a past lack of trust has tended to politicise the issue; in the case of Bangladesh, trust gained in 1971 has eroded, and today the people of Bangladesh dont feel too friendly towards India.

When people panic and protest it is politically advisable for concerned governments to raise the issue with the respondent state. In Pakistans case, first, the Pakistan Indus Water Commissioner, Jamaat Ali Shah, stated a bit defensively that India was violating the Indus Waters Treaty by illegally blocking the water of the Chenab River and that this might be owing to the wrong collection of water in the Baglihar Dam in Jammu. Thereafter, however, the press in Pakistan took up the refrain and began accusing India of an injustice over which Pakistan had allegedly objected officially. Mr Jamaat Ali Shah then made it clear that he had in fact asked for discussions and possible inspection at Baglihar under the rules to see if the filling of the new Dam was properly done. His statement on TV made it clear that Pakistans objections to the Dam had been met in 2007 as India had modified the Dam in light of the verdict of the neutral expert appointed by the World Bank under the 1960 Indus Basin Waters Treaty between India and Pakistan. In fact, the neutral expert had supported four out of the five objections raised by Pakistan to the structure of Baglihar Dam. India is allowed by the treaty to build dams on rivers allocated to Pakistan for the production of electricity but not for storage of water for irrigation.

The issue is with the water coming down to Pakistan. This is complex as it involves water quantities and the filling of the Baglihar Dam within a certain period of time. Mr Jamaat Ali Shah had rightly asked his Indian counterpart for discussions to see if the water releases pledged under the treaty were being observed. The season is of rice cultivation and scarcity of water in Chenab can deprive Pakistan of US$3 billion in export earnings in these days of high food prices in the global market. India and Pakistan need to consult on the matter quickly to prevent the issue from becoming a part of the national trauma that a near-total destruction of all the rabi crops in Pakistan can bring about.

Indias National Security Adviser Mr MK Narayanan has stated that India will not block the Chenab waters to hurt Pakistan and has referred to the excellent chemistry developing between Mr Zardari and the Indian prime minister, Mr Manmohan Singh, for the normalisation of relations between the two countries. This is exactly what is needed: that the two leaders save the gains they have made in restoring mutual trust; and it is for India to arrange to defuse Pakistani fears in the forthcoming meeting of the water commissioners. Unfortunately in the past much of the bad blood was created because of the delays India created in the arrangement of these meetings.

Cooperation rather than conflict is needed to address the water problem. If India helps Pakistan assure its people that its waters have depleted from natural causes, the right focus will develop in lieu of looking for the Indian scapegoat. The truth is that Pakistans annual renewable water availability has shrunk from 5,600 cubic metres per person in 1947 to 1,000 cubic metres today, a level that is expected to induce chronic water scarcity on a scale sufficient to impede human development. On top of that, Indias resolve to construct 16 to 17 dams on the Chenab River and six to seven on the Jhelum River  both Pakistani rivers  doesnt help in allaying the fears aroused by the low Chenab flows at the present time.


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## Neo

*Pakistan lost 2MAF Chenab water​*
LAHORE: Pakistan has suffered a loss of two million acre feet (MAF) of water after India reduced water flow in the Chenab River to fill its newly-constructed Baglihar Dam. Pakistan will involve third-party arbitration if India did not compensate Pakistan for the loss, Pakistans Indus Water Commissioner Jamaat Ali Shah said on Monday. 

Talking to reporters after the 59th Executive Council meeting of the International Commission on Irrigation and Drainage and the 20th International Congress on Irrigation and Drainage at Aiwan-e-Iqbal, Shah said Pakistan will ask India to release this water to Pakistan for Rabi crops (November-April). He said that the agriculture and irrigation department had been evaluating the losses faced by Pakistan after the reduced water flow. He said that a delegation would visit India from October 18 to inspect the sites and assess the Indus Water Treaty violations.


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## Neo

*10 years of operations: SMEDA facilitated investment worth Rs 15.34 billion​*
LAHORE: The Small and Medium Enterprises Development Authority (SMEDA) has facilitated investment of Rs 15.34 billion during the first decade of its operation, out of which Rs 9.5 billion investments was in the transport sector only.

This was disclosed by SMEDA Chief Executive Officer Shahid Rashid on Monday while addressing a press conference at the SMEDA Head Office to mark the completion of the first decade of SMEDA, which was established on October 13, 1998. General Managers Jameel Afaqi and Iftikhar Hussain, SMEDA-Punjab Chief Alamgir Chaudhry and Deputy General Manager Liaqat Ali Gohar were also present on the occasion.

Shahid Rashid said that the investment facilitation was made possible through programme lending schemes designed for various SME sectors including fisheries, transport, furniture, power loom, cutlery, automobile parts, carpet, footwear, khaddar, mining and textile. The major banks involved in these schemes were NBP, Bank of Khyber, SME Bank, and the Union Bank.

The SMEDA CEO presented a review of the performance of his organisation on its tenth anniversary. He stated that SMEDA, despite having a tiny structure with a small group of about 130 professionals, was striving to provide support and facilitation to the maximum number of SMEs around the country. The sector development strategies facilitated by SMEDA, in collaboration with other stakeholders, in fisheries, transport, dairy, gems and jewellery, marble and granite, furniture, surgical instruments, textile and leather sectors are contributing to enhancement of trade and investment, besides creating a number of employment opportunities and fresh avenues for exports. For instance, the Urban Transport Strategy of SMEDA had created 8,500 new jobs by bringing an investment of Rs 9.5 billion and developing urban transport city network in seven cities i.e. Lahore, Karachi, Faisalabad, Rawalpindi/Islamabad, Sargodha, Multan and Gujranwala, he added.

Shahid Rashid said that by undertaking 16 projects of Rs 1.68 billion investment under the Public Sector Development Plan, SMEDA has considerable work on ground. He said that the projects initiated by SMEDA under the PSDP had a significant importance in development of infrastructure for small and medium industries and business throughout the country. The projects include Gujranwala Business Centre costing Rs 98.78 million, Agro-food Processing Plant, Multan costing Rs 135.19 million, Support Industries Development Centre, Sialkot costing Rs 272.61 million, Women Business Incubation Centre, Lahore costing Rs 31.22 million, Glass Product Design and Manufacturing Centre, Hyderabad costing Rs 37.08 million, Revival Project of Cutlery Institute, Wazirabad costing Rs 39.36 million, Chromites Beneficiation Plant, Balochistan costing Rs 8.38 million, SME Subcontracting Exchange, Lahore and Gujranwala costing Rs 26.09 million, Women Business Incubation Centre, Karachi costing Rs 34.03 million etc.

Shahid Rashid pointed out that policy environment before creation of SMEDA was very unfavourable for growth of SMEs, SMEDA has been striving hard to create a conducive environment for SMEs. The most significant success on this front came with approval of the first ever SME Policy of Pakistan last year. The SMEDA CEO said the government policies at times remain shelved for long and become redundant. To obviate this, an implementation plan and a monitoring mechanism was appended to the SME Policy, which rests on the creation of a National Committee on SMEs (NCSME) at Federal level and Provincial committees on SMEs (PCSME) at Provincial levels. He added that NCSME comprising members from both public and private sectors had been set up and its first meeting was held in August last year.


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## Neo

*Tareen hopes to bridge $4 billion gap​*
WASHINGTON (October 14 2008): Adviser to Prime Minister on Finance Shaukat Tareen on Monday ruled out the possibility of the country defaulting on its international payment commitments and voiced the confidence to bridge the financing gap of $3 to 4 billion in a year through a range of measures including additional resources from financial institutions.

Tareen, who led Pakistan at the World Bank-IMF meetings, told Washington-based Pakistani journalists that Pakistan is expecting $2 to 2.5 billion additional support from the IFIs including the World Bank, Asian Development and Islamic Development Bank to overcome the financing gap.

The adviser to prime minister said the government wants to front load the assistance committed by the World Bank to overcome difficulties in the next 12 months. He was confident that the country would get additional $1.5 to 2 billion dollars in foreign remittances if they are channelled through the government sovereign banks. The World Bank has pledged to provide 1.4 billion support this year.

"We are making multiple arrangements and also have back up plans," Tareen said, adding both budgetary support assistance and development projects assistance will help. Pakistan, he said, will also welcome assistance from Friends of Pakistan meeting next month in Abu Dhabi.

Brushing aside suggestions of worst-case scenarios by some experts he cited Pakistan's success in bringing down fiscal deficit from 7.4 percent last year to 4.3 per cent this year. He said the maturity of Sukuk bonds in January will ease the financial pressure. The trade gap was $20 billion and the country was facing over a billion month current account gap.

'We basically are encouraging reserves to meet day to day requirements " the Sukuk (bonds) maturity we will meet in a very timely manner, even if the aid is not forthcoming immediately from Friends of Pakistan initiative."

"We will have enough resources for an orderly move forward." The adviser said the government is also looking at both short-term and long-term measures, trying to correct imbalances in macroeconomic indicators. "We are also working on a multi-points simultaneous agenda to provide safety nets to needy people, to give skill based training, provide health insurance, employment, so they basically come out of poverty " we will also increase tax avenues and cut expenditure on wasteful expenditure".

Meanwhile, Adviser to Prime Minister on Finance Shaukat Tareen highlighted Pakistan's development requirements in a host of fields as he met Sunday with leaders of international financial institutions, who appreciated the government's efforts for economic stability.

Tareen also had a meeting with Iranian Finance Minister Dr Shamseddin Husseini and discussed efforts to promote bilateral co-operation in various fields including oil and gas as well as trade. At a meeting with Lars H Thunnel, Executive Vice President of International Finance Corporation, the adviser spoke of Pakistan's development needs in infrastructure, mega dams, energy and financial sector reforms.

The IFC leader applauded Pakistan's economic stabilisation programme and reassured expansion of its portfolio in Pakistan in the areas of infrastructure development, energy including dams and financial sector reforms as well as privatisation in Pakistan.

Tareen also met with Dominique Strauss-Kahn, Managing Director of the International Monetary Fund and discussed with him the current global financial crisis and its impact on developed and developing countries, the strategy of IFIs to handle the crisis and regulatory regime proposed to avoid such recurrences in the future.

The communique issued by G-7 Finance Ministers also came under discussion. The IMF Chief appreciated the hard decisions that have been taken by Pakistan to eliminate subsidies, improve tax revenues and manage expenditure.

Tareen also met with senior officials of the rating agencies - Standard and Poor's and Moody's - and apprised them of the democratic government's programme to meet current challenges and stabilise the economy. Earlier, the adviser represented Pakistan at the World Bank Development Committee meeting.


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## Neo

*Canada offers 750,000 tonnes of wheat on deferred payments​* 
ISLAMABAD (October 14 2008): Canada has once again offered 750,000 tonnes of wheat on deferred payment to Pakistan. Earlier, the offer could not be mature due to the shortage of time for getting ECC clearance, well-placed sources told Business Recorder here on Monday.

According to the sources, the Ministry of Food, Agriculture and Livestock (Minfal) told the 17th meeting of the Economic Monitoring Committee held on September 15 that Canada had offered 750,000 tones of wheat on deferred payments at the price of US $474 CNF Karachi that includes 360 days credit. This offer has to be responded to by 1800 hrs on September 15, 2008, the sources said.

Sources said that this offer could not be responded positively due to shortage of time. "The committee was of the view that without the approval of Economic Co-ordination Committee (ECC), the offer could not be entertained. So, the offer was rejected".

A senior official of Minfal told this scribe that now Canada has offered the wheat again and the ministry might accept the offer if discount cost of deferred payment and transportation are netted out and it should not go beyond $340 per tonnes.

Sources said that almost 1.4 million tonnes imported wheat has reached the country, while the rest of 1.1 million tonnes will reach in December. Despite the import of huge quantity of wheat, NWFP and Balochistan are still facing shortage of this essential commodity.

The 20 kg of wheat is being sold at Rs 800 and price of Roti (piece of bread) has shot up to Rs 10 in the provinces. Sources said that the inter-provincial ban on wheat movement by Punjab might be the main reason behind this extreme shortage. They said that the Food Ministry would soon write a letter to the Prime Minister Yousuf Raza Gillani requesting him to press Punjab Food Department to lift the ban.


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## Neo

*The worsening trade deficit​*
EDITORIAL (October 14 2008): The news on the external sector of the economy continues to be distressing. According to the latest data released by the Federal Bureau of Statistics (FBS), Pakistan's trade deficit during July-September, 2008, has swelled to a record level of 5.549 billion dollars, registering a huge increase of 52.65 percent from 3.635 billion dollars during the corresponding period last year.

The deterioration resulted from a much larger increase in imports than exports. While imports climbed by 34.29 percent from 8.056 billion dollars to 10.818 billion dollars, exports grew by 19.10 percent from 4.42 billion dollars to 5.269 billion dollars during the first quarter of 2008-09.

The trend during the latest month was particularly alarming. At 2.027 billion dollars, trade deficit in September, 2008 was higher by 62.13 percent than 1.25 billion dollars in the same period last year. Pakistan's imports during the month stood at 3.80 billion dollars as against the exports of merely 1.77 billion dollars.

The ballooning of the trade deficit to an unprecedented level during the first quarter of the current year, needless to say, is highly disturbing and should be a warning signal for the economic managers of the country to do something urgently to correct the course in the external sector. At the present rate, the all time high trade deficit of 20 billion dollars recorded in the previous year would easily be surpassed during 2008-09, posing enormous difficulties for the management of the economy.

Already, the foreign exchange reserves of the country are down to a level enough to finance only a few weeks of imports and the rupee is at a record low in the exchange market. With rumours of a default circulating in the market, businessmen and ordinary people are almost panic stricken and investors are losing confidence despite repeated assurances of the State Bank and the Government about the resilience and solvency of the economy.

The government had imposed additional customs duty on more than 370 items and LC margins were raised to 100 percent to curtail the flow of imports in a bid to reduce the trade deficit, but its impact is yet to be seen.

Clearly, the government needs to do much more to contain the trade deficit within manageable limits by adopting highly restrictive policies because the country cannot afford to continue with the existing level of imports which are more than double value of its exports.

Keeping in view the critical position of the balance of payments, authorities of the country are also making efforts to attract foreign flows from different sources. However, the response so far has not been very encouraging.

While the response from Saudi Arabia for an oil credit facility is still awaited, "Friends of Pakistan" and IFIs, except the Asian Development Bank, have made no concrete commitments for disbursements so far.

In a desperate move, Pakistan has now requested Iran to provide crude oil on deferred payment to ease the current account position of the country. The only saving grace is a substantial decline in international oil prices that would reduce the import bill and provide some relief to the economy.

However, the duration and extent of this relief will depend on the duration and extent of recession in the developed countries. Also, the effect of declining international prices may be partly cancelled by weaker exports due to a global recession.

All said and done, the country has to make swift and effective structural adjustments in the external sector and at the same time make frantic efforts to attract financial flows immediately from a variety of sources. This is essential to avert the fast developing balance of payments crisis and insulate the economy from its impact. Hopefully, the government would be able to manage this very difficult situation by utilising all options available.


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## Neo

*A deal with Iran can stabilise macroeconomic fundamentals​*
EDITORIAL (October 14 2008): In the aftermath of a momentous meeting between the Pakistan Foreign Minister, Shah Mehmood Qureshi, and the visiting Iranian Foreign Minister, Manouchehr Mottaki, a joint press conference was held signalling the imminence of two agreements which, if formally signed, would have extremely positive implications for Pakistan's macroeconomic stabilisation programme.

First, the possibility of extending the three-month deferred payment for oil facility, a time period granted under the existing Iranian law, would be 'sympathetically' considered by the Iranian government, according to the Pakistan Foreign Minister.

This would reduce the pressure on Pakistan's balance of payments and strengthen Pakistan's foreign exchange reserve position, thereby providing some buffer for the fast eroding rupee value. The PPP-led federal government had already made overtures for deferring oil payments to Saudi Arabia, Qatar and United Arab Emirates; however, in spite of extremely positive statements in this regard there has been no formal agreement as yet.

Thus if the deal for oil payment deferral beyond three months with Iran goes through, then the Pakistani economy would have won some breathing space which would allow the government to undertake fiscal and monetary reforms designed to strengthen our existing macroeconomic fundamentals, so weak at present.

Iranian crude can also undergo value addition in Pakistan and be refined for exports which would essentially imply an oil sector able to generate its own revenue in foreign exchange and thereby meet a significant portion of the cost of crude.

Secondly, and equally importantly, the two Foreign Ministers dwelt on the possibility of a two-nation (Iran-Pakistan), as opposed to the original three-nation India-Pakistan-Iran (IPI) gas pipeline project, with the capacity to meet Pakistan's energy needs in the medium term.

There is little doubt that if our energy needs are fully met, our productivity, a victim of constant load shedding in the country these days, would dramatically rise, propelling the Gross Domestic Product growth rate to heights similar to what was witnessed during the post 9/11 Musharraf era, a rise attributed to an influx of foreign assistance.

During the previous government, the economic facade crumbled as soon as assistance slacked off and external shocks like the dramatic rise in the international prices of oil and food came into play; however, once domestic productivity rises, external shocks would be easier to bear.

US opposition to the IPI gas pipeline is well established; however one hopes that the Pakistan government would withstand US pressure in the light of the decision taken by the incumbent US administration to deny Pakistan a nuclear deal similar to the one extended to India as well as the delay in the supply of energy to Pakistan from the Central Asian Republics due mainly to (i) serious continuing security issues in Afghanistan and (ii) the Russian Gasproms' deal with these republics to purchase all their surplus.

It is thus in Pakistan's interest to ensure that the IP deal does go through. One hopes though that the Iranian side does not reopen the contentious issue of pricing as that had caused the delay in the agreement in the past. During the press conference, Qureshi stated that Pakistan was willing to go it alone, ie without India. However, both ministers were categorical that this would not imply that India could not come on board at a later date.

If India indeed comes on board later, then Pakistan would be able to charge India a transmission fee payable in foreign exchange which, in turn, will further strengthen our foreign exchange reserve position. All in all the deal is a win-win situation for Iran and Pakistan and if India does decide to become a party to the pipeline then it too will benefit.


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## Neo

*Pak offers tremendous incentives to Chinese investors: Zardari ​*
Wednesday, October 15, 2008 

BEIJING: President Asif Ali Zardari has said that Pakistan is offering tremendous investment opportunities to the Chinese investors. 

Addressing the Pak Business Forum here on Wednesday, President Zardari said that an economic zone would be set up to facilitate the Chinese investors in Pakistan. 

He said that geographically, Pakistan is situated in the most important location of region and a large consumer market for foreign investors. 

President said, Chinese investors should take full advantage of the incentives being offered to them in Pakistan.


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## Neo

*Remittances take leap to $1.88bn ​* 
Wednesday, October 15, 2008

KARACHI: Remittances sent home by overseas Pakistanis continued to rise as an amount of $1.88 billion was received in the first quarter (July-September 2008) of the current fiscal year. That represented an increase of $378.61 million or 25.22 per cent when compared with the same period of last fiscal year, the State Bank of Pakistan (SVP) said on Tuesday.

The SBP said that out of the total amount, $0.11 million was received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

During September 2008, Pakistani workers remitted a record amount of $660.35 million, almost $144.3 million or 27.96 per cent up when compared with $516.05 million sent home in September 2007. The previous highest amount remitted in a single month was recorded in July 2008, when $627.21 million was sent back by overseas Pakistanis.

The inflow of remittances in July-September 2008 from USA, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UAE, UK and EU countries amounted to $499.65 million, $398.02 million, $315.37 million, $312.18 million, $118.57 million and $51.78 million respectively. These compared with $420.90 million, $294.99 million, $217.14 million, $237.39 million, $119.91 million and $44.78 million in July-September 2007.

The country received remittances from Norway, Switzerland, Australia, Canada, Japan and other countries during the first three months of the current fiscal year 2008-09 amounting to $184.18 million against $165.51 million in the same period last year.

The monthly average remittances for the period of July-September 2008 comes out to $626.62 million as compared to $500.42 million during the corresponding period of the last fiscal year, registering an increase of 25.22 per cent.

The inflow of remittances into Pakistan from almost all countries of the world increased during September 2008 as compared to the corresponding month of the last fiscal year.

The break up shows that during September - 2008 remittances sent back by Pakistanis living in USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $179.81 million, $133.38 million, $110.73 million, $108.67 million, $43.75 million and $19.08 million respectively.

Moreover, remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries was recorded at $64.88 million as compared to $59.91 million in September, 2007.


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## Neo

*Nothing new in WBs $1.4bn loan pledge ​* 
Wednesday, October 15, 2008

ISLAMABAD: The World Banks commitment for $1.4 billion loan facility as well as 480 million pounds from UK Department for International Development (DFID) is nothing new and Islamabad will have to meet pre-requisite conditions attached with various projects for achieving these dollar inflows in order to avoid risk of a technical default, The News has learnt.

The commitment of the WB worth $1.4 billion per annum has been in the pipeline from several months but there is nothing new in it as Islamabad is striving hard to get immediate inflows in order to meet yawning external imbalances, official sources confirmed while talking to this scribe here on Tuesday.

They said there is definitely a great difference between commitment and the authorities ability to materialise it into a reality.

Regarding DFIDs commitment for providing 480-580 million pounds, a donor agency official based in Islamabad told The News that the DFID decided to double its assistance for Pakistan from 2008 to 2010, which was already announced in the past. The DFIDs assistance stood at 480 million pounds for a three-year period and if earthquake related assistance is included it would be jacked up to 580 million pounds.

The DFID has recently approved 50 million pounds for State Bank of Pakistan and its first tranche will be released shortly, said the official.

The DFID, the official said, is also negotiating with Pakistani authorities for providing around 150 million pounds for education sector but this program will take several months for reaching a stage where the money will be released.

The World Bank, the sources said, has clearly conveyed to Islamabad that it will not extend budgetary support to Pakistan if its macroeconomic situation remains unsatisfactory. I dont think that the WB is going to change its mind on immediate basis, said a senior official at Finance Ministry.

President Asif Ali Zardari held an extensive meeting with WBs President Robert Zoellick in New York recently during his visit and now the newly appointed Advisor to PM on Finance Shaukat Tareen also met with WB high-ups but nothing concrete came out.

There are many slips between the cup and the lips and Islamabad will have to deliver on macroeconomic front for resuming assistance from the World Bank, which was suspended from the last year, said the official sources while talking to this scribe here.

Under the World Banks procedures and rules of engagement with the government, the Bank cannot provide budget support if the overall macroeconomic situation is unsatisfactory.

Development Policy Credits are among a variety of instruments and approaches that the World Bank and its clients adopt with mutual understanding for achieving a set of outcomes. Different circumstances and situations may require adoption of different instruments, for example project versus programmatic approach or a combination of programmatic and project approach.

The timeframe will be determined by the state of preparedness for different programs and projects implementation. 

The Poverty Reduction Strategy Paper (PRSP-II) can only pave the way for approving the PRSC credit line worth $300 to $500 million, said the official. By November 2008, the government will table the PRSP-II before the federal cabinet for getting approval, which would pave the way for getting loans under the PRSC from the WB and other donors in months to come.

Pakistan is striving to get dollar inflows in order to build up its dwindling foreign currency reserves that have already dipped to around $8bn. The reserves, in real terms, are hovering around $3bn, which cannot meet import bill requirements for one-month period.


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## Neo

*Pakistans first wind mill near completion ​* 
Wednesday, October 15, 2008

KARACHI: A Turkish company is close to completing the first windmill in Pakistan, which is suffering from severe energy shortage and a ballooning current account deficit as it continues to spend billions of dollars on import of fuel oil to run thermal power plants.

Zorlu Enerji Pakistan has almost completed foundation work for five wind turbines in Jhimpir, 70km from Karachi, each capable of producing 1.2 megawatts of electricity. Though initially 6MW of electricity will be produced, the project will be expanded to 50MW in the next few years.

We are looking forward to erecting the structures by the end of November, said Osman Ipek, CEO Zorlu while talking to newsmen on Monday. The potential is immense, wind density and speed is sufficient.

It has been quite some time since a natural wind corridor from Gharo to Keti Bandar in Sindh province was discovered. This windmill will mark the first of many such projects in the pipeline. Alternative Energy Development Board (AEDB), a government body tasked with promoting indigenous sources of renewable energy, has successfully formulated a policy which ensures better return for investors.

Project Manager Yagmar Ozdemir said sale price of wind energy in Pakistan is better than other countries. Internal rate of return of 15 per cent (annually) is very good. Other countries do not offer more than 12 per cent.

National Electric Power Regulatory Authority (NEPRA) has awarded the company a tariff of 12.1 cents per kilowatt hour (kWh) while the government has insured purchase of electricity. Getting a reasonable tariff has been a thorny issue in the establishment of wind mills and many companies including Zorlu have had to seek new tariff repeatedly.

The company is waiting to sign Energy Purchase Agreement (EPA) with National Transmission and Dispatch Company (NTDC), a power ministrys arm which buys power from generation companies. Total cost of the project is $110 million. The company has also applied for carbon credits as it will replace emission of 10,500 tonnes of carbon dioxide every year. Since creation of AEDB in 2003 a lot of companies had applied for wind power generation licenses, but not a single megawatt has been added to the national grid up till now. An AEDB official says reasons for lackluster progress are technical issues like Sindh governments delay in leasing out land. Agreement on 33,000 acres of land has just been issued to us, he added.

Meanwhile, Sindh Alternate Energy Minister Asakri Taqvi on Tuesday warned that the government can cancel land lease if wind power projects failed to show progress in a given time. Speaking at a conference here, he said Sindh Governor Ishratul Ibad has informed him during a recent briefing on wind power that land of those projects will be given to other interested wind mills. The minister said that the governor has expressed his disappointment over the delay in the implementation of wind power projects.


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## Neo

*Oil industry aims to minimise imports ​* 
Wednesday, October 15, 2008

KARACHI: Pakistans oil industry is preparing a strategy to minimise import of petroleum products to stop exodus of foreign exchange, an Oil Companies Advisory Committee (OCAC) statement said.

In this regard, an OCAC meeting on Tuesday drew up industrys recommendations, which will be shared with the government after completion.

It said refineries and oil marketing companies (OMCs) are carrying out a review of stocks of petroleum products in order to minimise imports and maximise local product availability. Focus will be on imported products like HSD, jet fuel and furnace oil. This analysis will ensure that targeted volumes keep country stocks at acceptable levels, and ensure that petroleum product demand is met.

However, it did not divulge on how it intends to cut imports when the government was allowing installation of more furnace oil-fired power plants. It is not clear if industry will recommend cutting down minimum quantity of oil stock maintained by it.

It is prudent to recall that oil industry has still not come to terms with the governments move of cutting margins of OMCs and refineries. 

From August this year, a change in pricing formula for diesel had brought down margins of refineries. Last year petroleum development levy (PDL) was excluded from retail price-build-up, on the basis of which margins of OMCs and their dealers were calculated.

In 2006, sales tax was removed from the formula for calculating petrol price which had a direct impact on the earnings of the OMCs and dealers.


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## Neo

* ICCI for seeking Chinas help in energy sector ​* 
Wednesday, October 15, 2008

ISLAMABAD: Currently Pakistan depends mainly on hydel power generation to meet its energy needs which has dropped considerably due to water shortage in the country. This is high time that Pakistan should seek Chinas help in energy sector to meet its growing energy needs to strengthen economic growth in the country.

This was stated by Islamabad Chamber of Commerce and Industry (ICCI) President Muhammad Ijaz Abbasi in a statement on Tuesday. Pakistan should explore coal, nuclear, wind and solar energy resources as well as installation of more nuclear power plants with Chinas help to increase its power generation capacity.

President Asif Ali Zardaris first official visit to China carries great significance and substantive value as the history of more than half a century of Pak-China relations has been marked by frequent, intensive and fruitful interactions between the top leadership of the two countries, he added.

Abbasi said Pakistan is facing a widening gap between the demand and supply of energy. Our leadership should request China to give Pakistan its full support, particularly for the development of its energy sector, he added.


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## Neo

*IDB pledges support for Pakistan ​* 
Wednesday, October 15, 2008

WASHINGTON: The Islamic Development Bank (IDB) on Tuesday pledged its full support for Pakistans efforts towards overcoming its current financial difficulties, with chief of the Bank assuring of additional support and increased financing for the countrys imports from member countries.

President of the Bank, Dr Ahmad Mohamed Ali Al-Madani said the IDB will respond positively to the cooperation the Pakistani delegation sought from it at the annual World Bank-IMF meetings.We will do everything possible to help Pakistan, Dr Al Madani stated in an interview, when asked to comment on the Banks response to Pakistans call for support as the country strives to bridge the financing gap in meeting its international payment commitments.

Dr Al-Madani was commenting on the IDBs role in Pakistans efforts in the context of his meeting with Pakistans Finance Adviser Shaukat Tareen and his delegation of top economic managers.

He did not give any figures but said the bank will shortly inform Pakistan about its support. The top Pakistani finance officials said here on Monday that they expect about $ 2 to 2.5 billion from international financial institutions including World Bank, Asian Development Bank and the IDB to overcome a $ 3 to 4 billion financing gap facing the country in a year.


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## Neo

*Pepco facing 4,000MW deficit​*
LAHORE, Oct 14: The Pakistan Electric Power Company is facing a deficit of over 4,000MW against a demand of over 14,000MW, causing countrywide protests against loadshedding.

A Pepco official told Dawn on Tuesday that the company could not do anything to reduce loadshedding because its overstretched generation system was facing a huge deficit.

It can only request people to understand causes of the crisis that are beyond the mandate of the company.

Listing reasons for the drop in generation, the official said that the water releases from Tarbela Dam had been cut to 33,700 cusecs per day from over 100,000 cusecs last week, and from Mangla lake to 29,000 cusecs from 39,000 cusecs a few days ago.

He said the company had suffered a drop of 4,300MW in hydel power generation to 1,800MW from 6,100MW last week.

Reduction in gas supply to rental power and Faisalabad Gas Turbine Station had also caused another loss of over 350MW, he added.

The previous highest deficit during the current season was 3,500MW  a generation of 13,500MW against a demand of 17,000MW.

Talking about Mondays pledge of the federal minister for water and power that there would be no unannounced loadshedding, he said: If reality bends to talk, there would be no loadshedding at all in the country. But, unfortunately, that has not been the case. The country is faced with huge a power shortage, so neither Pepco nor the ministry can do anything about it.

He said that conceding over 10-hour a day loadshedding would be politically and socially too risky for the government. The ministry would call it unannounced loadshedding and blame it on Pepco despite being fully in the picture about the supply and demand situation.

About the sacking of some Pepco employees, the official said the action might provide some political mileage to the government, but it would not solve the problem.

He said that power generation did not seem to be a priority area for any government agency.

The Indus River System Authority squeezes water as per its irrigation priorities and gas companies stop supplies as per their own maintenance schedule without even bothering to consult Pepco. With both inputs virtually squeezed out of existence where would the power come from.


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## Neo

* Benazir Income Support to cover four million poorest of poor​*
ISLAMABAD, Oct 14: The government has decided to enhance the ambit of Benazir Income Support Programme from existing 3 million to 4 million poorest of the poor households throughout the country.

We have extended the facility to give support to maximum families, who are hard hit by over 24 per cent inflation, National Coordinator Benazir Income Support Programme (BISP) Dr Qaiser Bengali told Dawn on Tuesday.

Poor family would be given Rs2000 after every two months under the scheme to the people of four provinces including federally administered tribal areas, Azad Jammu and Kashmir and Northern Areas.

Under the scheme, 1,640,000 families would get the assistance in Punjab province followed by 776,000 in Sindh, 520,000 in NWFP, and 312,000 in Balochistan.

Moreover, 160,000 families will get assistance under the scheme belonged to Fata, 48,000 in the federal capital territory and 80,000 minorities across the country.

He said that every effort has been made to make the scheme more transparent and apolitical. I have no office or staff at the stage of evolving of the programe. I have done it entirely alone, Dr Qaiser claimed.

He said it is the third largest allocation in the current budget and constitutes 0.3 per cent of the GDP adding it will cover up to 12-14 per cent of the population in low income bracket in the entire country, including Fata, Northern Areas and the AJK.

For families earning Rs5000 per month, the Rs1000 payout will amount to a 20 per cent increase in their current purchasing power, he elaborated. He said that those people who were already getting more than Rs6000 per month would automatically not qualify for the scheme.

A letter sent to the legislators of the upper and lower houses by the office of the national coordinator of the Benazir Support programe, a copy of which was made available to Dawn, narrated the detailed procedures for availing the facility.

The family defined under the scheme as wife, husband and children. Parents or married sisters or daughters living in the same house will classify as another family and may qualify separately for payment. And only one adult female member from each qualifying family will be eligible to apply.

The eligible family will be a female having CNIC, monthly income is less than Rs6000, widowed/divorced without adult male members in the family, any physically or mentally retarded person in the family and any person suffering from a chronic disease.

The family cannot avail itself of the facility if any of its members is in employment of government, semi-government, authority, department or armed forces or drawing pension from either of these offices; receiving any post-retirement benefits from any department or agency or a family member owns more than three acres agriculture land or residential house/plot of more than eight square yard (3 marlas).

Those members are also not entitled where any member of a family is receiving income support from any other sources; family posses machine readable passport; possess national identity card for overseas Pakistanis and where any person has account in foreign bank branches.

Application forms filled in by the applicant will be verified by any one union councilor and by the MNA/Senator according to the criteria. MNAs/Senators will collect completed and signed forms and mailed them via post office to NADRA in pre-addressed envelopes provided by BSIP.

The NADAR will verify the applications and prepare a final list, which will be forwarded to Pakistan Post. Those not meeting the criteria will be excluded.

Pakistan Post will prepare money orders accordingly and deliver the amount of Rs2000 every alternative month to designated female members of identified families on production of CNIC copy.

Third party validation of all recipients will be carried out. If the information provided in the form is found to be incorrect, the name of the recipient will be de-listed from the programme and the benefits withdrawn, he added.


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*Bristol-Myers Squib to wind up Pakistan operations​*
KARACHI: A leading multinational pharmaceutical company Bristol-Myers Squib (BMS) has decided to wind up its operations in Pakistan.

The company has circulated confidential papers among the potential buyers in the local pharma industry recently, well-informed sources in the sector confided to Daily Times here on Tuesday.

The American BMS, located in Korangi Industrial Area Karachi, has decided to wrap up its business in the country due to pressing economic conditions, which are making it difficult for the company to continue operations.

The fast-deteriorating business environment especially for the pharmaceutical companies in the wake of high cost of production has been burdening the local pharma sector.

Also, the cap on drug price by the government for the last seven years has further aggravated the situation. The last price increase, which was of 3 to 4 percent, was allowed by Ministry of Health in December 2001.

The prices of the Active Pharmaceutical Ingredients (APIs) used for the manufacturing of drugs as well as of the other raw materials like paper, plastic, glass, rubber, etc. have increased manifold since 2001. The cost of oil, gas, electricity, transportation and labour has also spiked dramatically during this period.

BMS has an annual turnover of around Rs 1.5 billion and is the second multinational pharmaceutical company, which is going to pack up from the country. Earlier, Merck Sharp & Dohme (MSD) closed down its operation in Pakistan some months back and was acquired by a local pharmaceutical firm Organon Bio Sciences (OBS).

It is not the end but the beginning of the pharmaceutical companies, especially the MNCs shutting down business because of tough business conditions, a high official of a leading pharmaceutical company pointed out as many more MNCs are mulling to close operations in Pakistan.

After MSD and BMS, two more firms will follow suit in the near future, he said and added that the local pharmaceutical companies are also facing hard times as well and they are opting for merger to survive in the present scenario.

Recently two local pharmaceutical companies Hilton Pharma and SAMI Pharmaceutical consolidated their operations in order to survive in the current situation.

The potential buyer for BMS might be again a local pharma company as the MNCs are least interested to go for this venture at present, sources said.

Sources didnt rule out a major retrenchment by laying off employees once the company is sold.

According to people in the pharma industry, the crisis has been haunting the sector for quite some time and the industry has been demanding the government to increase the drug prices, frozen since 2001.

There are more than 500 pharmaceutical companies operating in Pakistan out of which twenty are MNCs. The pharma industry provides direct employment to over 70,000 and indirect employment to around 150,000 across the country.


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*Remittances soar by 28pc in September​*
KARACHI, Oct 14: Overseas Pakistani workers sent 28 percent higher remittances during September, showing their trust in the government which needs dollars to meet its foreign obligations.

While the economic mangers are trying to get loans to meet the rising trade deficit, overseas Pakistanis sent $1.879 billion during the first quarter (July-September 2008) which is 25.22 per cent higher than the first quarter of last year.

During last month, Pakistanis remitted a record amount of $660.35 million, up $144.3 million or 27.96pc when compared with an amount of $516.05 million sent home in September, 2007.

The previous highest amount remitted in a single month by Pakistani workers was recorded in July, 2008, when an amount of $627.21 million was received in the country.

The rising trend of remittances showed that the overseas Pakistanis ignored rumours that the government was planning to seize foreign currency accounts to use dollars lying in commercial banks. Both the Central Bank and the government denied such a move.The monthly average remittances for July-September, 2008, come to $626.62 million as compared to $500.42 million during the same period in the last fiscal year, registering an increase of 25.22 per cent.

The amount of $1,879.86 million includes $0.11 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

The inflow of remittances into Pakistan from almost all countries of the world increased last month as compared to September, 2007.


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*Violence deprives Sindh of $5bn investment​*
KARACHI, Oct 14: Investment worth $4-5 billion committed to projects in Sindh was thwarted by worsening law and order situation that prevailed in the country following the assassination of Benazir Bhutto, political uncertainty during and after elections and recent suicide bombing incidents in Islamabad and elsewhere, industry sources revealed this week.

Sources in the Sindh industries department told Dawn that the Qatari government had shown interest in investing in a huge livestock farm on 10,000 acres at Nabiser on National Highway, apart from a cement plant, and a five star hotel in Karachi.

Sufficient progress was made in some of these projects and even land was selected and allocated but investors did not turn up.

The MoU for the livestock farm with a million heads of cattle was signed between the government and the Qatari investor during the previous regime and the investors even gave approval of the land. The idea was to raise milk and meat production at the farm not only to meet the local market requirements but also export surplus to the Gulf countries, which import huge quantities of mutton from India. The cost of the project has been estimated at $500 million.

The land department had processed allotment applications from investors and sent several messages to the party to collect the orders but to no avail.

An MoU was signed for setting a up a cement plant and a site near Port Qasim was also selected for the project which was not aimed at meeting the local market requirements but also to have buyback arrangements with Qatar where there is a boom in construction industry.

Sources further informed that a Qatari investor was interested in building a five-star hotel and discussed the project with the city nazim Mustafa Kamal who offered prime land near Water Board office on Sharea Faisal.

The project was supported by the Trade Development Authority of Pakistan which faced problems of hotel accommodation during mega expos and world fairs organised from time to time at the Karachi Expo Centre.

The project met the same fate as of its predecessors due to poor law and order situation.

The most ambitious project for which an MoU was signed was for an oil refinery to be set up near Port Qasim by a Kuwait-based US company Midrock Tussonia. It was also shelved for the same reasons, sources said.

The refinery to be built at a cost of $2 billion was designed for producing 30,000 barrels petrol and other products a day.

The US firm assigned its regional manager Zafar Ali to handle the refinery project in Karachi.

Sources said that the Industries Minister, Rauf Siddiqui, used his influence with some of Arab investors and they pledged to come back, but then came the most destructive suicide bomb attack on Islamabad Marriot Hotel, which killed many foreigners, and it laid a final nail in the coffin of foreign investment.


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*Pakistan may not get all of $1.4 billion WB loan in 2008-09​*
** Countrys programme loans still face suspension, only project loans to qualify after talks​*
ISLAMABAD: The $1.4 billion lending to Pakistan by the World Bank (WB) is not expected to fully materialise during the current fiscal year 2008-09, as programme loans for the country were still facing suspension, and only project loans that were still to be negotiated in due course would qualify for lending, a WB official told Daily Times on Tuesday.

The figure $1.4 billion is just an indicative figure mentioned in the Country Assistance Strategy 2006-09 for proposed lending for Pakistan in the current fiscal year 2008-09 and does not necessarily mean that WB is bound to release this much amount of foreign exchange to the country.

Despite the claims of the government that the WB has agreed to provide $1.4 billion during the current fiscal year 2008-09, the actual lending to Pakistan during the current fiscal would be much less than the figure released by the Pakistani authorities after the bilateral meeting held in Washington, explained the sources.

The WB has already changed its lending strategy for Pakistan keeping in view the downturn in the economic conditions of the country. According to the existing strategy of the WB for Pakistan, until the countrys macro-economic indicators were improved according to the benchmark, programme loans for Pakistan would remain suspended.

However, the WB would continue to provide project loans to Pakistan as and when negotiations for these projects were successfully concluded between the bank and the government.

The WB country office has not recommended any project loan for Pakistan - despite the passage of the first quarter (July-September) of the current fiscal - to its Washington-based head office and any new project loan for Pakistan would undergo detailed negotiations and discussion, the sources added.

Due to the high ranking of Pakistan in the International Monetary Funds vulnerability index, the WB has changed its lending arrangements with Pakistan from programme loans to project loans.

This change has resulted in releases of funds in periodical installments as per progress on the project instead of release of full funding in one go for programme loans, said the sources.

Programme loans are comprised of loans for reform programme that require funding in one go for entering in to implementation phase, however, project lending requires hectic work from documentation to implementation and lending for these types of project loans comes in installments some time in years period keeping in view the progress on the project.

At present Pakistan desperately needs release of funds in one go so that it could push up its depleting foreign exchange reserves, stop further depreciation of the rupee and well as to meet enhanced imports requirements in the months to come.

The vulnerability index comprises of many factors like different economic indicators i.e. macro and micro economic situation, economic growth, current account deficit, inflation and the countries having their important economic indicators in negative zone face difficulties in getting new loans for the lending agencies.

Although the present government has taken bold decisions and initiatives, it is still trying its best to convince international financial institutions for resumption of programme loans as well as quick project loans to carryout its development agenda.


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## Neo

*SBP gives no hint about FY08 report​*
KARACHI, Oct 14: As the current fiscal year 2008-09 enters its second quarter (October to December), there is apparently no indication of State Bank of Pakistan releasing its annual report for 2007-08 that would give a review of economic performance of three governments and offer a glimpse of projections under the present government.

There is no news on meeting of the Board of Directors as yet, an official of the State Bank of Pakistan told Dawn on Tuesday and hinted that in all likelihood the draft of the annual report had been prepared and it awaited a formal approval by the board.

The annual report of the outgoing fiscal year is usually released in November, he reminded.

The official was partly true as in last few years the State Bank had been releasing annual reports of the outgoing fiscal year even in first week of December. But, normally in last several decades, the SBP used to bring out its annual report by end-September or early October with a full dress review and analysis of the outgoing fiscal year giving broad hints on direction of the economy in various sectors in the current fiscal year.

The year 2007-08 was an eventful year, which in all probability has left deep imprints on Pakistan. These events during 2007-08 are still casting long shadows on current political, social and economic events of the country.

Therefore, the social scientists, politicians, media persons, bankers and many others are keenly waiting to know how the central bankers view economy from July to November 2007 when emergency was promulgated. How did the actors of economy reacted on promulgation of emergency? Are there any lessons to learn from that experience and decisions taken by the highest and mightiest in the country? Then, the tragic killing of Ms Benazir Bhutto on December 27, 2007 and the three-day frenzy that gripped Karachi and rural Sindh calls for an in-depth assessment of the central bankers on its impact on the economy.

Did the results of February 18 general elections and installation of elected popular government at the federal and provincial levels have led to any quality improvement in economic decision-making? And finally what are the prospects for the current fiscal year?

In short, the State Banks annual report for 2007-08 is expected to give detailed analysis and explanation of staggering 7.5 per cent fiscal deficit, over $20 billion trade imbalance, staggering current account imbalance, governments unprecedented borrowing of about Rs800 billion and the impact of a virtual galloping inflation on the industry, trade, agriculture and a vast number of poor who have been left with nothing to lose during the year.

Also worth interesting would be to know how the central bankers look at the economic performance of the government during first quarter of 2008-09. Has the withdrawal of subsidies on gas and electricity brought some healthy looks to national budget? But how it has impacted on production cost of manufactured goods and quality of life of middle income group? Who was responsible to shake up Pakistans banking system immediately after Eid? Did the State Bank probe how many bankers at senior level were in the communication network that informed millions on bankruptcy of a few banks and bouncing of cheques issued by government institutions?


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*Pakistan, China may ink civil N-pact​*
** President Zardari arrives in Beijing on first official visit
* Will sign agreements, MoUs, protocols to expand co-operation
* FT report says Zardari expected to seek soft loan of between $500 million and $1.5 billion​*
BEIJING/ISLAMABAD: President Asif Ali Zardari may sign a preliminary civilian nuclear pact with China during his visit to the country, Pakistans ambassador to China said on Tuesday.

Speaking to Geo News channel in Beijing, Masood Khan hinted that a nuclear deal could be on the cards during four days of talks.

Both countries have always supported the peaceful use of civil nuclear energy, Khan said, adding an agreement was expected in this connection.

Chinese Foreign Ministry spokesman Qin Gang also indicated that nuclear energy co-operation would be discussed during Zardaris visit, when he will meet President Hu Jintao and Prime Minister Wen Jiabao, but he gave no specifics.

China and Pakistan share sound co-operation in nuclear energy. China is ready, on the basis of equality and mutual benefit, to continue its co-operation with Pakistan, he said.

First visit: The president arrived in China Tuesday on his first official visit since assuming office. The formal welcome ceremony for the president will be held today (Wednesday) at the Great Hall of the People, where Jintao will receive him. Zardari will also hold meetings with National Peoples Congress Chairman Wu Bangguo, Chinese Peoples Political Consultative Conference Chairman Jia Qingling, and business leaders.

Agreements: Over a dozen agreements, memorandums of understanding and protocols to expand co-operation in diverse fields between Pakistan and China are to be signed during the visit.

Soft loan: The Financial Times newspaper also reported Tuesday, without citing sources, Zardari would seek a soft loan of between $500 million and $1.5 billion from China to help Pakistan out of its financial crisis. agencies


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## Neo

*Pakistan, China ink 11 agreements ​* 
​ 
BEIJING (updated on: October 16, 2008, 03:35 PST): Pakistan and China on Wednesday signed eleven agreements, MoUs and protocols to enhance bilateral co-operation on sound footing in diverse sectors including infrastructure, energy, telecommunication, agriculture, industry, minerals, trade, disaster relief and space technology.

The signing ceremony held, at the Great Hall of the People here, was witnessed by President Asif Ali Zardari and his Chinese counterpart Hu Jintao after an hour long one-on-one interaction between the two leaders and two-hours long delegation level talks.

The two presidents will issue a joint statement (Thursday) reflecting their resolve and commitment to carry the bilateral relations and co-operation to new heights. President Hu Jintao hosted a banquet in honour of the President and his delegation at the Great Hall of the People after the delegations level parleys and agreements-signing ceremony.

Earlier both sides agreed to strengthen strategic partnership in all dimensions, reinvigorate the multi-faceted bilateral relations, intensify economic co-operation and foster people to people contacts in the coming years. The two leaders and their delegations had wide-ranging discussions in warm and friendly atmosphere characteristic of long-standing ties between the two countries, Pakistan's Ambassador in China Masood Khan told the media persons after the signing ceremony.

The talks emphasised upon retrieving the economic co-operation on strong footing in multi dimensions in line with the mutuality of interests and convergence of views in this regard. The importance of President's engagements on Wednesday is also marked by his threadbare interactions with the heads and chief executives of major Chinese companies operating in different sectors including banking, steel, mineral, cement, trade and other important segments of the economy.

The President' visit to China has a special significance not only as President Zardari's first official visit abroad, but also as the first interaction between Pakistan's newly elected democratic leadership and China's fourth Generation leadership that has overseen China's dramatic economic development and progress.

Meanwhile, heads and Chief Executives of major financial, industrial and investment institutions of China Wednesday called on President Asif Ali Zardari here at the State Guest House and showed keen interest for further investment in diverse fields in Pakistan.

Those who called on the President representing important Chinese institutions included China International Capital Corporation (CICC), Export and Import Bank of China (Exim Bank), Sinoma Group (Tianjin Cement and CMBC), MCC (Steel Construction Company), All China Federation of Industry and Commerce (ACFIC) and Industrial Commercial Bank of China (ICBC).

During the meetings, Foreign Minister Makhdoom Shah Mehmood Qureshi, Defence Minister Chaudhry Ahmed Mukhtar, Advisor to Prime Minister on Interior Rehman Malik, Minister for Environment Hameedullah Jan Afridi, foreign Secretary Salman Bashir, Pakistan Ambassador in China Masood Khan and other senior officials were present on the occasion.

During the interaction with the President, the heads of Chinese institutions discussed the present level of Pak-China co-operation in different sectors, which is reflective of deep-rooted bilateral relations between the two countries.

They evinced keen interest and willingness in enhancing the existing level of co-operation in important sectors of the economy including infrastructure, banking and financial sector, agriculture, cement, steel and industry.

Talking to the Pakistani media the Chairman CICC, Levin Zhu described his interaction with the President very fruitful. He said Pak-China ties are of immense importance for the mutual advantages in different economic fields. As a financial institution, he said "we can help promote co-operation in the financial sector of Pakistan. He expressed confidence that existing co-operation will not only continue but will also grow in future.


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*CHINESE INVESTORS OFFERED PREFERENTIAL TREATMENT:​*
President Asif Ali Zardari offered special preferential treatment to the Chinese investors in Pakistan, urging them to invest in Pakistan and take advantage of the country's geo-strategic location.

"With a well-placed geographical location, Pakistan has to offer you the investor-friendly environment, laws and legislation, human capital and other resources", the President told a luncheon meeting with over 200 top Chinese corporate executives here at the State Guest House.

President Zardari said his first state visit to China was reflective of the deep-rooted, strong and historic 40 years ties with the two countries, which were pioneered by Shaheed Zulfiqar Ali Bhutto and carried forward by Mohtarma Benazir Bhutto Shaheed.

Taking pride of the fact that it was the PPP and Shaheed Zulfiqar Ali Bhutto who established relations with China ", the President said Pakistan needed further Chinese investment in various fields for the mutual benefit of the two friendly countries.

President Zardari said Pakistan shares the pride and considers China 's success in various fields as its own, adding, China by holding successful Olympics told the world how strong it was.

He stressed that Pakistan provides ample opportunities of investment in diverse fields including trade, industry, financial services, banking, energy, construction, real estate, tourism, etc and the Chinese companies can are welcomed to invest in any field to help develop the country's untapped potential.

President Zardari said with half of the world population living in China and Saarc countries, the increased Sino-Pak co-operation in all spheres of life and economy can help bring development and prosperity in the region. "With other countries interested to tap the trade potential of Pakistan, we offer the Chinese companies and entrepreneurs access to warm waters and beyond", he added.

The President said Pakistan located at the confluence of South Asia, Central Asia and the Middle East and a vast coastline provides a trade and energy corridor to many regional countries and China can take the lead in this respect for the mutual benefit.

Zardari said Pakistan having a lot of investment potential in various fields the development of Pakistan and China can go together. "Let us work together for mutual benefit and development of region", he added. The President mentioned hydro power, coal energy, tourism etc as the particular areas of co-operation between Pakistan and China and called upon the Chinese companies and investors to exploit the potential of these fields.

He said with other countries of the world and region taking keen interest in these areas, Pakistan will prefer Chinese entrepreneurs to come and invest in the country. The President assured all facilities to Chinese investors and said the government will establish a special cell for the creation of Pak-China industrial and economic zones across the country including the coastal areas.

Pakistan's Ambassador to China Masood Khan and Vice Chairman Chinese People's Political Consultative Conference (CPPCC), Huang Meng Fu in their introductory remarks highlighted the strong, deep-rooted, strategic and historic bonds that exist between Pakistan and China.

They also highlighted the ever-growing co-operation between the two friendly countries in diverse fields including trade and economy and stressed for further strengthening these ties for the mutual benefit of Pakistan and China. The members of President's entourage including the Ministers for Foreign Affairs, Defence, Environment, Advisors to PM on Finance and Interior, PPP's Secretary General Jahangir Badr and senior officials were present on the occasion.

Earlier, President Zardari had a pre-lunch meeting with Vice Chairman Chinese People's Political Consultative Conference (CPPCC), Huang Meng Fu and discussed the prospects of enhanced investment in Pakistan in various fields.

CDB GOVERNOR CALLS ON ZARDARI: Governor China Development Bank (CDB), Chen Yuan called on President Asif Ali Zardari here at the state guest house on Wednesday and discussed the prospects of trade and investment in various fields in Pakistan.

He assured the President of CDB's all out assistance and support to the public and private sector for the socio-economic development of Pakistan, particularly the development of infrastructure, to cater to the needs of growing economy.

President Zardari appreciated the CDB's support to Pakistan and hoped that the bank will continue to extend its assistance for Pakistan's development efforts. Foreign Minister Makhdoom Shah Mehmood Qureshi, Defence Minister Chaudhry Ahmed Mukhtar, Minister for Environment Hameedullah Jan Afridi, Advisor to PM on Interior Rehman Malik, Advisor to PM on Finance and Economic Affairs Shaukat Tareen and senior Pakistani officials were present in the meeting.


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*Industrial and economic zones: incentive-laden package approved by ECC ​* 
ISLAMABAD (October 15 2008): The Economic Co-ordination Committee (ECC) of the Cabinet which met here on Tuesday with Prime Minister Syed Yusuf Raza Gilani in the chair, approved an incentive-laden national policy to attract investment for existing and upcoming industrial and economic zones.

Sources said the Board of Investment (BoI) had submitted the summary to the ECC for grant of a lucrative package to attract investment for Gwadar Export Processing Zone (GEPZ) and other existing and upcoming economic and industrial zones. The policy offers 10-year tax holiday for the zones.

Sources said tax holiday in the case of GEPZ will be applicable to investors from the date of start of commercial operation of the project, permission for export of production from the zone to tariff area of the country up to 80 percent on payment of normal duties.

The package also offers normal incentives for all kinds of exports from the zones as available to projects established anywhere in Pakistan. As an incentive, the plots in the zones will be provided to investors on lease (as per existing procedure) at a reasonable rate to be determined in consultation with the respective provincial government.

The package also includes zero rated sales tax on supply of construction materials to investors or development of zones' infrastructure. It also includes exemption from stamp duty and exemption from import policy orders issued from time to time.

The committee deferred gas load management plan for 2008-09 winter season and constituted a 5-member committee headed by MNA Hina Rabbani Khar, to revisit the whole scheme to make it more doable. The members of the committee were petroleum secretary, textile secretary, industries secretary and water and power secretary. The committee will submit revised gas load management plan to the ECC in next meeting.

The Ministry of Petroleum and Natural Resources (MP&NR) presented gas load shedding plan to the committee for approval. The Economic Monitoring Committee (EMC) had approved the plan last month.

The officials of the Petroleum Ministry informed the ECC that this year the gap in gas demand and supply will be more than last year and it has to introduce one weekly off of gas for the industrial sector. They also informed the committee that a rotational formula would be implemented for different industrial sectors for one-day weekly gas holiday.

According to the official statistics, only 2,567-mmcfd gas will be available for different consumers' categories during upcoming winter season when consumption will go all time high with additional demand of domestic sector. It shows a gap of 1000-mmcfd gas in demand and supply during winter season.

The ECC was also informed about the progress of liquefied natural gas (LNG) import project. The LNG import project is being seen as an important move to have an alternative sources to minimise the gap in gas demand and supply in future. The ECC was informed about sugar, wheat and fertiliser availability and their price trend for future.

The committee also approved a summary of the Water and Power Ministry for early resolution of issues confronted with Karachi Electric Supply Company (KESC). It directed the concerned authorities to sort out payment and other issues to help KESC overcome its financial crisis and perform better to ensure more supply of electricity to its consumers.

The officials of the Finance Ministry informed the ECC that the price of sugar and the wheat stock position were stable in the open market. The committee on the issue of subsidy decided to provide a Rs 22 billion subsidy for DAP and urea at affordable rates. The committee was also given a presentation on kitchen items. It was informed that the prices of the most of kitchen items including cooking oil/ghee were showing downward trend.


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*$1 billion Saudi investment in different sectors anticipated ​* 
ISLAMABAD (October 15 2008): Pakistan anticipates about $1 billion investment from Saudi investors in different sectors of the economy with agriculture and petroleum considered the most attractive sectors, Business Recorder learnt reliably. Sources said that a two-day Saudi-Pak investment conference attended by investors from Pakistan and Saudi Arabia will be held in Jeddah and Riyadh on October 20-21 to explore investment possibilities.

Pakistani delegation would be leaving for Saudi Arabia on October 17 and will include over 125 private investors from different sectors of the economy. Informed sources revealed that the government of Pakistan will be carrying a wish list from 12 sectors desperately seeking financial injection from Saudi investors. These sectors include: petroleum and petro-chemical, power sector, textile, manufacturing, banking and financial sector, fertiliser, Small and Medium Enterprises (SMEs), agriculture, infrastructure, construction, tourism industry and IT telecom sector.

The major thrust is to be on the agriculture sector with the government seeking Saudi investment in dairy, livestock and fisheries sub-sectors. An official told this scribe that the government of Saudi Arabia has bought 60,000 acres of land in Thailand to grow rice and become less dependant on food items' import.

The Pakistan delegation is expected to propose a similar idea to the Saudi government and investors. The deal is envisaged to be between the private sectors of the two countries and the official informed this scribe that the Saudis would be offered land on a lease basis. The details have not yet been worked out and would be firmed up after consultation with the Saudi investors. Joint ventures may also be possible between Pakistani landowners and Saudi investors.

Saudi investment will also be sought in petroleum and power sectors. Pakistan needs two oil refineries with a capacity of 6 million tonnes each; and power projects to overcome electricity shortage that has been affecting industry as well as domestic households. The government is expected to ask Saudi investors to set up coal, hydel and gas based power plant in Pakistan.

The conference is being jointly organised by the Pakistani Board of Investment, Saudi Ministry of Finance and Council of Saudi Chambers to effectively promote and encourage investment in the potential sectors and joint ventures between the businessmen of both the countries. The Pakistani investors' delegation will be led by Finance Minister, Housing Minister, Deputy Minister of Investment and Federation of Pakistani Chambers of Commerce and Industry (FPCCI).

In Jeddah, the conference will commence on October 21 in the auditorium of the Jeddah Chambers of Commerce and Industry, followed by business-to-business meetings and sector wide group meetings between the businessmen of both the countries. The event will be provided full coverage by local and foreign media through conducting media sessions and press briefings.


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*Pakistan and China likely to ink civil nuclear pact: envoy ​*
ISLAMABAD (October 15 2008): Pakistan's ambassador to China Masood Khan has said that a civil nuclear pact is expected between China and Pakistan during President Zardari's maiden visit to China. Talking to a private TV channel on Tuesday, Masood Khan said both countries would ink several agreements in the field of technology, agriculture, minerals and free trade agreement (FTA).

Khan said the President would also sign a new protocol of free trade in which permission for more trade will be granted. To a question on civil nuclear pact, Khan said, "Both countries have always supported the peaceful use of civil nuclear energy, adding agreement is expected in this connection."

He said Zardari's four-day visit to Beijing will be a milestone in the bilateral relationship "which have matured into comprehensive strategic partnership" between the two sides. Khan said the two countries had "exemplary friendly relations" and the top leadership is committed to further deepen the "time-tested" ties. China had last week said that it is looking forward to and welcomes Zardari's visit to the country. China expects Zardari's visit to deepen bilateral strategic and co-operative partnership, a Chinese Foreign Ministry spokesman said.


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*India will abide by provisions of Indus Treaty: Durrani assured ​*
NEW DELHI (October 15 2008): Pakistan's National Security Adviser Mahmud Ali Durrani conveyed concern over reduced flow in Chenab river during his meeting with Indian counterpart M.K. Narayanan on Monday. Sources said that Durrani was assured that India would abide by the provisions of the Indus Water Treaty.

According to the sources, Durrani categorically stated during the meeting that no Pakistani agency was involved in the recent explosion at the Indian embassy in Kabul. In response to a point raised by the Indian side during the talks, he stated that all security agencies, including ISI, were firmly under the control of political leadership, the sources said.

The adviser assured his Indian interlocutor that Pakistan was committed to upholding the cease-fire on LoC in Kashmir, emphasising that there was a need to strengthen the relevant mechanism so that the concerns of both sides were addressed fairly.

National Security Adviser Mahmud Ali Durrani described his meeting with Indian External Affairs Minister Pranab Mukherjee here on Tuesday as "very good." Talking to media persons briefly after the meeting, he said, "I had a very good meeting with the foreign minister and things are going okay." "No No No Incorrect," was his answer when his comment was sought on the allegation about Pakistani agency's role in the recent bombing at the Indian Embassy in Kabul.

Durrani discussed bilateral relations during the meeting with the Indian external affairs minister. Meanwhile, Durrani also called on Indian Prime Minister Manmohan Singh here on Tuesday afternoon. They discussed ways to improve bilateral relations for the benefit of people of both countries.


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*14-17 percent decline in sugarcane output likely ​* 
ISLAMABAD (October 15 2008): The country may suffer 14 to 17 percent decline in sugarcane production in the current fiscal year, well-placed sources told Business Recorder here on Tuesday. The production target is 56.5 million tons for 2008-09 as compared to 63.9 million tons during 2007-08, showing a decrease of about 11.6.

There are about 200 countries producing 1,324.6 million tons of sugarcane. Nowadays, about 70 percent of the world sugar supply is derived from sugarcane, while the remaining 30 percent from sugar beet, the major quantity of which is produced in industrialised countries. The highest production of sugarcane during 2007-08 was recorded in Punjab with an average yield of 690mds/acre, while the lowest in NWFP with average yield of 566mds/acre.

Due to surplus production in 2007-08, farmers were paid less than the minimum support price of sugarcane. "The total cost of production was around Rs 20000 per acre and Rs 60 per maund while the transportation cost doubled because of waiting for weighting for over 30-36 hours at the mills' gate," sources said.

They said that the growers received just Rs 28 per maund. Sources said that less price of the commodity has discouraged farmers grow more this year. One million hectares of sugarcane crop consumes 15 million acre feet (MAF) water till its maturity. Tarbela Dam's capacity is 15 MAF.

They said that some areas of Southern Punjab were facing shortage of water. Last year, the government had fixed Rs 67 per 40-kg sugarcane support price but sugar mill owners refused to purchase the crop on this price. Later, the government re-fixed it at Rs 63 per 40-kg.

Due to non-availability of expensive fertilisers like DAP and urea on affordable rates in the domestic market coupled with shortage of water, the government has decided to fix the minimum support price of sugarcane at Rs 80 per maund, that may lead to increase in the prices of sugar. Sources said that the government should make sure that crushing season must be start on time from mid of October.

Sources disclosed that due to the less production, sugar mills owners would offer more in competition and resultantly the sugarcane prices may increase to Rs 100 per 40-kg in the upcoming crushing season. There are 78 sugar mills in Pakistan. The sugar industry in Pakistan is the second largest after textiles.

Currently, 76 sugar mills produce at or below capacity. About 80-85 percent of the total sugarcane production goes to the production of sugar. The country is likely to face sugar shortage next season as consumption has increased to 4.2 million tons while expected production next season could be close to 3.5 million tons. The sources said that the country may import one million tons sugar in the coming season to overcome the shortage.


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*Sugar industry sees 3.7-3.8 million tons output from 2008-09 season: EMC informed ​* 
ISLAMABAD (October 15 2008): The Economic Monitoring Committee (EMC) has been informed by the Finance Ministry that the sugar industry projects 3.7 to 3.8 million tons sugar production from 2008-09 crushing season, commencing November 15.

The committee in its last meeting was also informed that the sugar industry has given a commitment to the government to begin upcoming crushing season from November 15.

Sources said despite less area of plantation, PSMA pins hopes of a reasonable sugar output from upcoming season on the grounds that the crop yield was going to remain better than last season due to timely rains. PSMA Punjab and Sindh zones have already submitted crushing season plan to the respective provincial Cane Commissioners.

A PSMA team headed by Punjab zone chairman Javed Kayani had held meetings with the officials in Islamabad to apprise them of the sugar industry plan to encourage growers to work closely with mills to increase per acre yield. The plan stressed the need for eliminating middleman's role in sugarcane buying and give direct benefit to growers. It also gives a commitment on the part of the industry to ensure timely payments to growers. Over the years payment to growers is becoming a bitter controversy. The growers complain of delay in payments by sugar mills.

A report presented to the EMC indicated that with the start of the crushing season, sugar prices will come down reasonably to the benefit of the consumers. The government and PSMA had serious differences over the start of the crushing season that provided a golden opportunity to the middleman to exploit the market and create an impression of sugar shortage.

Sugar prices are showing upward trend for several months and in the open market the prices of one kg sugar ranges between Rs 35 and Rs 36. The EMC was informed that the government will take all possible steps to keep the sugar rates at a reasonable level.


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*Pakistan gets help from China for ailing economy​*By GILLIAN WONG, Associated Press Writer 
Wed Oct 15, 2008

BEIJING - Pakistan's president Wednesday won more help from longtime ally China as his country grapples with an ailing economy and chronic electricity shortages, though the prospect of a much anticipated civilian nuclear deal remained uncertain.

Pakistani media have speculated that President Asif Ali Zardari would seek a nuclear power deal with China after neighbor and nuclear archrival India secured a similar pact with the United States.

Zardari and Chinese President Hu Jintao attended a signing ceremony here for 11 agreements, including deals on economic and technical cooperation, minerals, environmental protection, satellite purchases, agricultural research, and electricity.

However, no specifics of the deals were released, and there was no mention of a civilian nuclear deal.

Pakistan has argued in vain for equal treatment from Washington after India secured an agreement allowing American businesses to sell nuclear fuel and technology to India for use in civilian programs.

Pakistan is desperately seeking assistance to alleviate an economic crisis brought on by higher oil and food prices.

Increased expenses have pushed inflation to 25 percent, wrecking the government's finances and exacerbating a trade gap that is fast eating up the country's foreign currency reserves.

Rising demand and inadequate energy infrastructure in Pakistan has led to nationwide electricity outages, fueling protests. Residents must contend with up to 10 hours a day of power outages, though officials are trying to maintain supplies to factories.

Compounding the problems, al-Qaida and Taliban militants are using Pakistan's tribal areas as bases from which to attack U.S. and NATO forces in Afghanistan, spurring U.S. frustration with Pakistan. Cross-border U.S. raids have strained ties with Pakistan.

Zardari is on a four-day trip to China, his first official bilateral visit since taking office in September.

Pakistan and China have been close allies for decades, and China is a leading source of investment and arms supplies for Pakistan. Bilateral trade between the two topped $7 billion last year, with a goal of reaching $15 billion by 2011.

Both nations have also fought border wars with rival India.

"The only way I could do justice to the memory of my late wife and my late father-in-law was to make sure that I made my first president's trip to China as my official visit," Zardari told Hu during a welcoming ceremony at the Great Hall of the People.

Zardari's wife, former Prime Minister Benazir Bhutto, who was killed in a bombing last year, and his father-in-law, Prime Minister Zulfikar Ali Bhutto, "are old friends of the Chinese people,"' Hu replied.

The two "made important contributions to the initiation and development of China-Pakistan relations in their lifetime. This is something we will never forget," Hu said before the two leaders went into private meetings.

Experts say a nuclear agreement with Pakistan would need to overcome significant political uncertainties in the South Asian country.

"The political situation is so uncertain, nobody quite knows how strong the radicals are ... I would be surprised if the Chinese made a concrete offer," said Rajesh Basrur, an associate professor at the S. Rajaratnam School of International Studies in Singapore.

Basrur said members of the Nuclear Suppliers Group states would also need to approve the deal. The group restricts nuclear trade with states that have not signed the Nuclear Nonproliferation Treaty or don't have comprehensive safeguards.

Zardari was scheduled to hold talks with other top Chinese leaders, including Premier Wen Jiabao.

Zardari easily won the presidency last month after longtime U.S. ally Pervez Musharraf quit under threat of impeachment.


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*Population, Fertility and Family Planning in Pakistan: 
A Program in Stagnation​*volume 4, issue 1

October 6, 2008

*PAI Research Commentary By Karen Hardee and Elizabeth Leahy​*
Since 2001, the geopolitical significance of Pakistan has become increasingly clear to the world, as has the countrys instability. Throughout this decade, Pakistan has suffered from growing strife, including, in the last year, the assassination of former Prime Minister Benazir Bhutto and the bombing and destruction of the countrys most prominent American-owned hotel. The recent change in government from military to fragile civilian rule, accompanied by growing strength among extremists in tribal areas, has only compounded the precarious nature of the country's security.1 

from these recent headlines, few outsiders may realize the significant role that demographics play in Pakistans overall development and security. And few are likely aware of the stagnation of Pakistans family planning program, which provides key services to Pakistani families and affects the countrys larger demographic trajectory. The provision of comprehensive, voluntary family planning and reproductive health services is a fundamental human right, and yet today these services still remain out of reach for millions of Pakistanis.2 In fact, one-quarter of married women want to either wait before having another child or end childbearing altogether, but are not using a method of contraception. The broader impacts of this unmet need for family planning on health and development are significant and should not be ignored. 

In countries such as Pakistan, the challenges of providing for peoples well-beingopportunities for education and employment, as well as access to quality health carecan be exacerbated by a rapidly growing population. Research has found that countries with a very young and youthful age structurethose in which at least 60 percent of the population is younger than 30, like Pakistan (Figure 1)are more likely to have autocratic governance and face outbreaks of civil conflict.3 Young people are not inherently problematic or dangerous, and many countries with very young age structures achieve higher levels of development without internal conflict. However, governments that are already weak, unstable or corrupt can see their political and economic resources further strained by demographic factors.

​Figure 1. Pakistans Age Structure, 2005

The context for providing family planning in Pakistan is challenging. The political strife that has intensified over the past two decades, coupled with cultural constraints limiting the empowerment of women, make the implementation of effective programs in many parts of the country difficult. As a result, most Pakistani women who say they have had enough children or that they want to wait to have their next child do not have ready access to the contraceptive services and reproductive health care they need. Pakistans family planning program needs strong and consistent leadership, a sustained strategy to expand access to services and adequate resources. 

Pakistan was among the vanguard countries in Asia in starting a family planning program more than five decades ago, with intermittent support from international donors including the United States. Despite this history, fertility has declined more slowly in Pakistan than in most other Asian countries (Figure 2). Related measures of maternal and child health are concerning as well; the countrys infant mortality rate of 75 deaths per 1,000 live births is higher than in Bangladesh, India, Nepal and Sri Lanka. In 1950, Pakistan had a population of 37 million people and was the worlds 13th largest country as measured by population. By 2007, Pakistan was the sixth largest country with 164 million people. Pakistan is projected by the United Nations to move to fifth place in 2050 with 292 million people, after India, China, the United States, and Indonesia.4

​Figure 2. Total Fertility Rates in Selected South Asian Countries, 1965-20055

*Fertility Remains High at Four Children*

Results from the 2006-07 Demographic and Health Survey (DHS)6 show that Pakistans fertility rate has remained persistently high over the past decade (Figure 3)7. The total fertility rate (TFR)8 in Pakistan is now 4.1 children per woman. Women in urban areas have an average of 3.3 children compared to their rural counterparts, who have an average of 4.5 children. 

Currently married women in Pakistan report that on average, their ideal family size is 4.1 children, which is equal to their actual total fertility rate. However, women also say that 24 percent of recent births were mistimed or unwanted; rural and poor women are especially likely to have more children than they want to have. Although family planning decisions tend to be made by couples rather than by women alone, communication is sometimes lacking; about one-fifth of women dont know how many children their husband would like to have.9 

​Figure 3. Estimates of Pakistans Fertility Rate, 1994-200610

Pakistan remains a predominantly rural country with an unevenly distributed population. One-third of the women interviewed in the 2006-07 DHS lived in cities, while two-thirds lived in rural areas. Nearly 80 percent of the population lives in the two eastern provinces, Punjab and Sindh (Figure 4)11. The DHS reflects this geographic distribution; of the 10,023 women of reproductive age interviewed in the DHS:
58 percent were from the Punjab, 
24 percent were from Sindh, 
14 percent were from the North West Frontier Province (NWFP), and 
5 percent were from Balochistan12. 

​Figure 4. Map of Pakistan

Available from Home-Planning Commission of Pakistan

*Women Know About Family Planning, but Knowledge Does Not Always Translate into Use*

After nearly 50 years of family planning programs in the country, 96 percent of currently married women are aware of at least one modern method of contraception. However, only half of Pakistani women said they had ever used contraception and, at the time of the 2006-07 survey, only 22 percent of married women who were not currently pregnant said they were currently using a modern contraceptive method; another eight percent were using less effective traditional methods. 

Although Pakistan had success in increasing contraceptive use in the 1980s and 1990s, a plateau has been reached in recent years. The contraceptive prevalence rate (CPR), or the percentage of married, non-pregnant women using both modern and traditional methods of contraception, rose from 12 percent in 1990-91 to 28 percent in 2000-01, but has remained around 30 percent since then. Almost half of currently married women have used contraceptives (modern or traditional methods) at one time, indicating that a significant share of women have discontinued use of family planning.

The most common contraceptive methods in use in Pakistan are either long-term or have low effectiveness (Figure 5). These include female sterilization (8 percent of married women), traditional methods such as rhythm and withdrawal (8 percent), and condoms (7 percent). Contraceptive use is lowest among young and rural women, but rises with education. Women living in urban areas are two-thirds as likely to use modern contraceptives as those in rural areas (30 and 18 percent prevalence rates, respectively). The gap between women with differing levels of education is smaller than the rural-urban divide, but still significant. Only 19 percent of women with no education are using a modern method of family planning, compared to 26 percent of women who completed secondary school. The link between higher levels of education among women and smaller family size across the developing world is clear; on average, each year of girls education has been found to reduce fertility rates by 0.3 to 0.5 children per woman.13 This is a particularly salient connection for Pakistan, where most womenfully 65 percent of those surveyed in the DHShave no education.

​Figure 5. Current Use of Contraceptive Methods among Married Women Age 15-4914

A large share of Pakistani women continue to have an unmet need for family planning; that is, they want to either wait for their next child or not have any more children but are not using a method of contraception. One-quarter of married women of reproductive age are estimated to have an unmet need, with a greater share of the need among women who say they want no more children. Unmet need is highest among the poor, those living in rural areas, and women with no education.

Among married women who are not using family planning and have no intention to use contraceptives in the future, only three percent cite a desire for more children as their reason, and another three percent dont know how to use or obtain a contraceptive method. The most common barriers to use of family planning among married women are a belief that fertility should be determined by God (28 percent); opposition to use by the woman, her husband, others or a perceived religious prohibition (23 percent); infertility (15 percent); and concerns about health, side effects or the cost of family planning (12 percent).

*More Women in Pakistan Would Use Contraception if Services Were More Widely Available*

Many experts have written about Pakistans family planning program and the reasons for its limited success.15 Causes relate to both the strength and reach of the family planning program and to strong cultural deterrents to contraceptive use, such as religious beliefs and womens limited autonomy in decision-making. Over the years Pakistans family planning program has experienced varying levels of political and donor support and many shifts in strategy and program management. 

In the early 1990s, when contraceptive prevalence was 14 percent, a mere 20 percent of the countrys population was considered to be effectively covered by Pakistans Population Welfare Program.16 At that time, one study found that women living in villages covered by a family planning center were much more likely to be using contraception than those outside the village.17 Given womens limited mobility due to the cultural practice of Purdah, in which womens activities outside the household are severely constrained, many women were likely out of reach of reproductive health care even when clinics were available in their villages. Zeba Sathar, the director of the Population Council in Pakistan has noted that the subordinate status of womenwhose legal rights may have even weakened in recent decadesas well as the governments past neglect of the education sector have direct implications for fertility rates.18 Women remain underrepresented in many aspects of Pakistani society. Only 35 percent of adult women are literate, compared to 65 percent of men; and women represent just one-quarter of the countrys professional and technical workers. 19 

To help address cultural and geographic barriers, in the early 1990s Pakistan instituted outreach programs in which women are visited at home in their villages by Lady Health Workers, members of the community who have received 15 months of training to deliver primary health care.20 A recent evaluation of the Lady Health Workers program found that womens movement was still constrained. The 2002 evaluation found that only 15 percent of rural women had been outside their village in the previous month without being accompanied by another adult,21 and confirmed that services are much more effective when offered closer to where women live. Contraceptive use in villages with the community-based workers was 74 percent higher than in villages without.22 

Pakistans family planning program is administered by two government ministries, the Ministry of Health (MOH) and the Ministry of Population Welfare (MOPW), which have each had inefficiencies in implementation. In both ministries, delivery of family planning services has been plagued by weak logistics systems and lack of contraceptive methods at service points as well as staff ill-trained and ill-equipped to provide quality services to clients. The Lady Health Workers program, while successful in reaching more women, faces high turnover of staff. 

*Pakistans Population Policy *

Pakistans latest population policy dates from 2002, and reflects the governments concerns about the rapid pace of population growth and its link to persistently high rates of poverty in the country.23The objectives of the policy are to reduce population growth (from 2.1 percent in 2002 to 1.9 percent by 2004 and 1.3 percent by 2020) and to reduce fertility through voluntary family planning (to 4 births per woman by 2004 and 2.1 births per woman by 2020). Pakistan has pledged to provide universal access to family planning by 2010, in line with being a signatory along with the United Statesto the Programme of Action of the 1994 International Conference on Population and Development in Cairo.

Given the persistently high fertility rates and unmet need for family planning outlined in the recent Demographic and Health Survey findings outlined above, major challenges remain in achieving the objectives of the population policy. According to the governments Poverty Reduction Strategy Paper, the population policy also outlined a goal to steadily increase contraceptive use, with prevalence rising to 43 percent in 2006 and 57 percent in 2012.24With the target for 2006 already missed, access to family planning will have to scale up rapidly to reach 57 percent in the next four years.

Beyond the stagnation of the family planning programs reach, Pakistan faces broad challenges to improving womens reproductive health. As assessed by PAIs A Measure of Survival, the country falls in the high risk category for womens sexual and reproductive health. Only 16 percent of women receive at least four antenatal care visits during pregnancy, fewer than one-third of births are attended by skilled health personnel, and the maternal mortality ratio, at 320 maternal deaths per 100,000 live births, remains high.25,26 

*Trends in Funding for Family Planning in Pakistan *

External funding for population assistance (comprising programs and research related to family planning, reproductive health, HIV/AIDS) in Pakistan has fluctuated significantly over the past decade. The total donor funding level of $32.5 million in 2005 was a slight decline from the $33.5 million received in 1996, although it varied dramatically in the intervening years, from as high as $57.3 million in 2003 to as low as $9.5 million in 2004.27

Figure 6. Donor Support for Population Assistance to Pakistan, 1996-200528

Within overall population assistance, funding for family planning activities in Pakistan has declined considerably in the 2000s, with average annual support falling by nearly half from $12.9 million from 1996-2000 to $6.7 million between 2001-2005. Donor support for reproductive health, which includes activities such information and education and prenatal, post-natal and safe delivery care, peaked in 2004 at $35.1 million, mainly due to a very large contribution from the government of the United Kingdom. The median annual external funding for reproductive health has been $9.1 million over the ten-year period. Meanwhile, funding for HIV/AIDS has generally been below that of both family planning and reproductive health, averaging $3.5 million annually. HIV/AIDS has not spread widely across Pakistans population, with prevalence among adults estimated at 0.1 percent in 2007.29

Bilateral and multilateral organizations, such as the United Nations and World Bank, have historically provided the bulk of donor support for population activities in Pakistan. U.S. government population assistance to Pakistan has been sporadic for most of the past decade. Until 2005, the U.S. Agency for International Development (USAID)s highest level of annual population funding had been just over $600,000. However, in 2005 USAID provided $10.6 million to Pakistan, with nearly 80 percent of the funds directed to family planning activities. For example, USAIDs Family Advancement for Life and Health project, implemented by the Population Council, works to raise awareness about the health benefits of birth spacing and train family planning providers. 


The Future for Family Planning in Pakistan
Expert demographer and family planning program specialist John Ross and colleagues have found that countries in which contraceptive prevalence reaches a plateau generally take steps to address the stall in family planning use, and that plateaus rarely repeat in a county. Their analysis has also found that once prevalence reaches the range of about 25 percent it continues upward.30Although total contraceptive prevalence (including both modern and traditional methods) is 30 percent in Pakistan, this is an increase of only 0.3 percent annually since 2000-01 and a decline from a measurement of 32 percent in 2003, which seems to signal a plateau. Likely factors for the current plateau in family planning include weakened programs at all levels and a narrow method mix, with few effective options of short term methods.


Still, some factors bode well for the future of Pakistans family planning program. There is a clear latent demand for family planning, with 70 percent of married women using no contraceptive method and 25 percent indicating an unmet need for family planning. Long-term methods, which by nature have lower discontinuation rates, are popular. Further, Pakistans low HIV prevalence means fewer stresses on reproductive health budgets and less competition for funding. 

Past initiatives have shown that most women want to determine their own family size and that they use family planning when they have access to services and have had educational opportunities themselves. Pakistans challenge is to expand access to high quality, voluntary family planning and reproductive health care so that individuals and couples can meet their desires for smaller families, while also improving womens standing within families and society. That means expanding access to family planning in rural and hard-to-reach urban areas, as well as among the poor, and focusing on eliminating gender disparities. 

Although young age structures can exacerbate challenges to development, these profiles are not static. Pakistans government should also take heed of the proven and cost-effective family planning and reproductive health policies that can promote greater demographic balance. Meanwhile, donors such as the United States, which have already identified Pakistan as a key strategic ally worthy of intense political cooperation, should ensure that the health and well-being of Pakistans people are no less of a priority. Working together, Pakistans government and donors can help Pakistani women and men achieve their desired family size by providing consistent support for Pakistans efforts to provide voluntary family planning.

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*USAID to assist Pakistan in energy sector​*
ISLAMABAD: Mission Director USAID Ms Anne Aarnes on Wednesday assured for increasing assistance to Pakistan in the energy sector to meet the ongoing severe energy crisis.

She expressed these views during a meeting with Deputy Chairman Planning Commission, M Salman Faruqui. It was a preliminary meeting to discuss Pak-US Energy Dialogue, which has not been held for the last two years.

Deputy chairman appraised the delegation of the acute problem of energy shortage currently being faced by the country and emphasised the need of a fast-track power generation programme. He also informed the delegation of governments plan to introduce mass transit programme that would substantially save energy and ensure easy and economical mode of transportation for the public.

Ms Aarnes said that USAID would focus on empowering Pakistan energy policy and energy efficiency and capacity under the Energy Development Programme. The USAID would assist Pakistan by providing two full time technical experts supported by short- term technical assistance for energy strategy formulation, implementation and support for energy policy dialogue. Technical assistance would also supply targeted feasibility studies in energy resource development, energy efficiency, transactions support and pricing.

The energy efficiency and capacity component of USAID would develop the private sector market for energy efficiency by facilitating firms, conducting public information campaigns on energy efficiency including plans to minimise damage to business from blackouts. Capacity building activities will assist human resource departments in power sector companies to develop and implement coordinated training programmes for staff at all levels.


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*Pacts signed by Pakistan and China​*
* Agreement on Economic and Technical Co-operation

* Amending Protocol to Free Trade Agreement

* Framework Agreement on Co-operation in Mining

* Memorandum of Understanding (MoU) on Co-operation between the Ministry of Land Resources of China and Ministry of Petroleum and Natural Resources of Pakistan

* Agreement on Environmental Protection

* Framework Agreement for Co-operation in Radio and Television

* Paksat-IR Satellite Procurement Contract

* MoU on Scientific Collaboration in Agricultural Research and Technical Co-operation

* Agreement on Properties Exchange between the Ministry of Foreign Affairs of China and the Ministry of Foreign Affairs of Pakistan

* Co-operation Agreement between Beijing Museum of Natural History and the Museum of Natural History of Pakistan

* MoU on Co-operation between Cricket Association of China and the Pakistan Cricket Board

* MoU on Project of X-Ray Container/Vehicle Inspection System


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*Dubai-based group to generate 5,000 job opportunities​*
ISLAMABAD: A delegation of MAF Hypermarkets Pakistan (Pvt) Ltd on Wednesday apprised Saleem H Mandviwalla, Chief of Board of Investment (BoI) regarding their investment plans to reduce inflation in the country.

MAF Hypermarkets Pakistan (Pvt) Ltd, a company of MAF Hypermarkets LLC Dubai was led by Daniel Penco, Country Head and accompanied by Mubashir JALILI Vice President Development Pakistan and Shaukat Bhatti, GM Finance.

The delegation informed that MAF Hypermarkets LLC, Dubai is in the process to generate 5,000 direct employment opportunities through ever first retail chain of 10 stores Hypermarkets within next 5 years in Pakistan, 500 job opportunities for each Store (5,000 jobs for 10 stores) to reduce inflation.

MAF Hypermarkets would help to reduce inflation by discount price policy, which puts pressure on retail prices and supports economic growth, contributes to modernise the manufacturing industry and transfer of retail knowledge. MAF Hypermarket is committed to create and promote export opportunities for international stores from Pakistan.

Majid Al Futtaim Group (MAF) LLC Dubai UAE (Established in 1992) entered into Pakistan and has established a 100 percent owned company, MAF Hypermarkets Pakistan (Pvt) Ltd.

The delegation further informed that the company has started construction of its first hard discount store at Fortress Stadium, Lahore with a loan from parent Company MAF Hypermarkets LLC Dubai of Rs 1.2 billion. The company has already signed up 5 stores so far in Pakistan and has plans to open at least 10 stores at Lahore, Karachi, Islamabad, Multan and Faisalabad in the coming 5 years.

MAF Hypermarkets LLC, Dubai, has authorised capital of Rs 500 million and paid up capital of Rs 300 million at present. It is a franchisee of Carrefour for 15 Middle Eastern countries including Pakistan and Iran. Currently the company has 30 stores operational in 8 different countries and many more to come up.

The BoI authorities assured full support to the group in their endeavour to execute their project in a smooth way.

Home | Business


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*Chinese CEOs affirm further investment in Pakistan ​* 
Friday, October 17, 2008

BEIJING: A number of heads and chief executives of key Chinese corporate sector called on President Asif Ali Zardari here at the State Guest House on Thursday and exchanged views with focus on augmenting economic cooperation between the two countries.

Prominent Chinese entrepreneurs told President Zardari that they believed that investment climate was hospitable and secure for further investment in the country.

They told the President that they intend to avail of investment opportunities in Pakistan.

Those who met President Zardari included Chief of China National Petroleum Corporation, China Mobile, Huawei Technology and ZTE Electronics.

The delegation led by China National Petroleum Corporation (CNPC) Jian Jiemin assured the President on behalf of CNPC to continue cooperation in trade and seismic activities.

Talking to media, the Director General of CNPC Zhang Xin said that his company was already carrying out large-scale construction in Pakistan.

Right now CNPC has over 300 employees working in Pakistan and all of them are very safe, he said.

Zhang said that during the meeting with President Zardari the two sides discussed further cooperation in oil exploration, trade and investment in refining and services sector.

Chairman China Mobile Wang Jianzhou said that this year his company has invested $200 million and plans to expand its project by further investing $600 million.

Wang said that for acquisition of PakTel, China Mobile had paid $400 million and also made further investment of $400 million for improvement of its network.

The chairperson of Huawei Technology Ms. Sun Ya Fang said after meeting with President Zardari that over 1600 local employees were working in her organization in Pakistan. She said that both sides talked on how to make further expansion in telecom sector.

She said that Huawei Pakistan is the number one telecom solution provider and is the only vendor serving all the mainstream telecom operators of the country such as PTCL, Ufone, Mobilink, Telenor, Warid and Zong etc. Chairperson Huawei donated one million dollars for establishment of e-Government project in Pakistan.


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*Car sales fall by 51 per cent ​* 
Friday, October 17, 2008

KARACHI: The bonanza of local car manufacturers has come to a halt with local car sales plunging by 51 per cent in the first quarter of financial year 2008-2009.

According to recent numbers released by Pakistan Automotive Manufacturers Association (PAMA), car sales for the month of September were down 29 per cent at 7,889 units against 11,072 units sold during the same month last year.

However, on month on month basis, the car sales increased by 23 per cent primarily due to notable growth in Corolla sales at 1,280 units, which is 275 percent higher than 341 units sold during August 2008. This impressive sales growth is attributable to the commercial production of new model of Corolla.

On cumulative basis, during 1QFY09, total car sales remained 51 percent lower at 19,066 units as compared to 39,297 units sold during the same period last year.

During the 1QFY08, almost all manufacturers registered a decline in sales units. Among major players, massive drop was witnessed in Indus Motors sales units with 64 percent decline at 4,659 units that followed by Pak Suzuki Motors (PSMC), which registered 48 per cent decline in sales volume over the same period of FY08. 

Indus Motor suspended its production of Corolla in July-August in order to launch its new model, which resulted in 80 percent decline in the sale of the model.

Owing to the production break, Corollas market share during the quarter was shredded by almost 820 bps to 24.4 per cent. 

On the other hand, market shares of its prime competitors Honda Cars (HCAR) PSMC improved by 690 bps & 350 bps to 6.9 per cent & 3.5 per cent, respectively.

Cumulative sale volumes of Dewan Motors and HCAR also depicted respective declines of 91 per cent and 19 per cent to 86 units and 3,232 units.

During 1QFY09, in 1300cc segment, HCAR witnessed notable stretch in its market share at 60 per cent as against only 27 percent in the same period last year. 

Moreover, in 800cc segment, PSMCs market share eroded by 830 bps to 65 percent while Indus Motors (INDU) share has increased by the same percentage.

On MoM basis, sales volume of all manufacturers has improved over the last month of prevailing fiscal. Sale units of Dewan motors, Indus Motors, Pak Suzuki, and Honda cars recorded an increase of 193 per cent, 76 per cent, 10 per cent and 5 per cent, respectively. During the month (September 2008), the market share of all manufactures registered a decline with exception of Indus Motors, which recorded an 850 bps increase in its market share. 

Kamran Rehmani auto analyst at First Capital stated that a host of factors are attributable to this notable industry wide decline i.e. declining real income of consumers, slowdown in car financing due to high mark-up rates, price hike due to pass-on impact of higher input cost and increase in GST by 100bps.

More interestingly, this is not the domestic phenomenon only as more or less for the same reasons (as mentioned above for local car assembler), auto assemblers all over the world are going through a tough time. 

This phenomenon is mainly attributable to change in auto finance policies by the suppliers of funds. As pre-emptive measures amid mortgage crisis, auto financiers have become more fastidious or reluctant of disbursing auto loans.


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*Textile productivity may be increased by 20pc ​* 
Friday, October 17, 2008

KARACHI: Pakistan may increase production capability of its textile industries by up to 20 per cent with little effort, which will help increase exports of the apparel industry, said Fayyaz Ahmed Riaz, DGM Small and Medium Enterprise Development Authority (SMEDA).

He said that SMEDA has surveyed over 150 textile-related units with Japanese experts and found that there is immense room to enhance their efficiency by 15 to 20 per cent with some effort.

He was speaking at a one-day workshop on Evolving Paradigms in Pakistans Garment Industry, jointly organised by SMEDA, United Nations Development Programme (UNDP), GEN-PROM, gender promotion in garment industry through skills development in Sindh and Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) at the Federation house on Thursday. He said these are critical times for Pakistans economy and demands from us to review our growth strategies with the fast changing world.

Amit Gugnani, Associate Vice President KSA-Technopak, India said that China, which has a lions share in US imports, is under serious problem with the cost of quota, penal duties and rising cost of production in manufacturing. This is prime time for other regional countries like Pakistan, India and Bangladesh to make the most of this opportunity and increase their exports to the US.

While giving his presentation on Global Trade Scenario he said, The changing world has brought various problems along with opportunities like rising cost of production and consumer inflation in regional countries. Like 11.6 per cent consumer inflation in Bangladesh, 14.1 per cent in Vietnam, 5.5 per cent in India, 7.4 per cent in Indonesia, 11.9 per cent in Pakistan and 8.2 per cent in Turkey.

Pakistan should go for value added products as the largest category that is being traded in the world is of sweaters, jerseys and jackets for men and women. It is high time to redefine and improve overall business structures including training of employees, he added.

Azfar Hasan, CEO Matrix Sourcing, in his presentation on Pakistan buying scenario: key opportunities and challenges said that Pakistani companies should give due importance to innovation and quality to their products as many a time innovation attracts buyers.


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## Neo

*No shortage of wheat, flour in country: Gondal ​* 
Friday, October 17, 2008

Islamabad: Federal Minister for Food, Agriculture and Livestock, Nazar Muhammad Gondal here Thursday categorically rejected any shortage of flour and wheat in the country, saying that the crisis might have been caused due to mismanagement.

There may be some management problems but as far as the stocks are concerned there is no shortage in the country, Gondal told journalists after attending a seminar on World Food Day at NARC. He stressed the need for improving management to ensure timely and proper supply of the commodities to the people.

Gondal reiterated governments commitment to provide incentives to the farmers with an aim to encourage them enhance crop productivity and make the country self-sufficient. The wheat support price has been enhanced to encourage farmers cultivate more wheat, which is a staple crop of the country he said adding that when farmers do not get proper prices, they do less struggle to enhance productivity or switches to other crops. To a question, he said that the enhancement in wheat support prices would have impact on other crops, however, added that the wheat was the most important crops as compared to others.

To a question, the federal minister said that the country was having more than sufficient DAP stocks and there was no shortage of the fertilizer. He said that DAP was being provided to farmers on subsidized rates of Rs3,050 per 50 kg bag to enhance production.

It may be recalled that the government had provided subsidy of Rs27 billion to the manufacturers and importers who would pass it on to the farmers by providing the commodity on subsidised rates. The wheat and potato cultivation season is already in progress which consume high quantity of DAP due to which October and November become the most consuming months of the fertilizers.


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## Neo

*President Zardari, Chinese premier hold formal talks: China vows to bail out Pakistan​*
** Offers help and support within capability
* Ready to advance strategic co-operation
* Beijing, Islamabad agree to step up Five-Year Development Programme, convene meeting of Economic Co-operation Group​*
BEIJING: China vowed on Thursday to do what it could to help cash-strapped Pakistan avert financial disaster as President Asif Zardari continued an official visit aimed at rustling up crucial Chinese investments.

The promise came as Premier Wen Jiabao met Zardari and said during formal talks China is ready to advance strategic co-operation with Pakistan.

As a long friend of Pakistan, China understands it is facing some financial difficulties, Chinese Foreign Ministry spokesman Qin Gang told reporters at a briefing. Were ready to support and help Pakistan within our capability.

Qin offered no specifics on the form that Beijings financial help would take.

Chinas massive foreign currency holdings make it a prime candidate to inject much-needed cash into Pakistans economy, where inflation running at 25 percent has wrecked the governments finances and exacerbated a trade gap that is fast eating up the countrys foreign currency reserves.

China is already a leading source of investment for Pakistan. Bilateral trade between the two countries topped US$7 billion last year, with a goal of reaching US$15 billion by 2011.

In recent years, Pakistans manufacturing sector has suffered from cheap Chinese imports while the economy as a whole has benefited from Chinese investment and cut-rate prices for infrastructure projects such as road building and telecommunications.

Pakistans Ambassador to China Masood Khan said earlier this week an agreement on a civilian nuclear pact with China could be reached during the trip.

But Qin declined to give any details on the agreements made so far.

Im not aware of the specifics of the deals signed, he said.

Joint statement: In a joint statement quoted by Chinas Xinhua news agency, Pakistan stressed that (the) Pakistan-China relationship is the cornerstone of its foreign policy, and friendship with China represents the common desire of all Pakistani people.

It said the two countries also agreed to step up their Five Year Development Programme on Economic Co-operation and make full use of their free trade agreement . . . and Pakistan-China Joint Investment Company. They agreed to convene a meeting of Pakistan-China Economic Co-operation Group soon, the statement said.


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## Neo

*Pakistan seeking $3bn from China, says WP​*
WASHINGTON: Pakistan is seeking $3 billion from China in emergency aid, according to the Washington Post. The visiting State Bank of Pakistan Governor Shamshad Akhtar told the Post that Pakistan is also seeing assistance from Saudi Arabia and the United Arab Emirates. The Bush administration and Congress have been shaping a long-term economic and military assistance package for Pakistan, but there is no indication the US is able to step in with a short-term financial lifeline, the report says. It says there are fears that Pakistan may not be able to secure the funds to avoid a debt default early next year, and its investor potential insolvency could grow into a panic in coming weeks. Investors are more concerned about Pakistan now because Saudi Arabia has not yet responded to a Pakistan request for an oil facility, it said.


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## Neo

*Total cost of PQ steel project is $740m: TSM​*
KARACHI: A spokesman of Tuwairqi Steel Mills (TSM) has clarified that the total cost of its fast coming up steel making plant at Port Qasim is $740 million and not $100 million as quoted in a statement of Investment Division and Board of Investment which was reported earlier. In a clarification here on Thursday, the spokesman said that estimated investment of the DRI plant of TSM is $265 million and the total cost of the project including electric arc furnace is $740 million. He said the plant was coming up on fast track basis and is expected to start production in the middle of next year.


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## Neo

*New solar technology lab​*
KARACHI: Provincial Minister for Environment and Alternative Energy Askari Taqvi laid the foundation stone of the first solar energy laboratory at Hamdard University on Thursday.

To overcome the power crisis, it is mandatory to get electricity from alternative resources such as solar energy, he said, adding that the technology must be introduced in Pakistan so that electricity can be provided to the public at cheaper rates.

He said that the Hamdard University is playing a significant role to boost the technology in the country and is also planning to start short courses in solar energy.

He said that formal permission has been taken from Sindh Chief Minister Syed Qaim Ali Shah for launching solar energy projects.

Earlier, Hamdard University Vice Chancellor Dr Naseem said that the university is working on a temporary solar energy laboratory from where students complete their final year projects. Taqvi visited various sections of the solar lab and inspected the projects.


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## Neo

*World has interest in helping Pakistan: Haqqani​*
** Ambassador to US says Pakistan will serve as corridor for fast growing regional economies of China and India
* Says there has been tribal awakening in parts of FATA​*
WASHINGTON: Pakistans elected leadership wants to use the countrys strategic location as a regional trade and energy corridor, Ambassador to the United States Husain Haqqani said while urging world support for efforts to prosecute a smart fight against extremists along the Afghan border.

Haqqani told a gathering of students and intellectuals at Johns Hopkins University that the Pakistani government was committed to consolidating democratic institutions, and wants to improve relations with its neighbours.

He said the world had an interest in helping Pakistan at the crucial time when the people were backing anti-terrorism efforts.

Now more people know that the security of the US, and possibly the world, rests on the stability of Pakistan, and Pakistans security relies on global security because if terrorists take advantage in Pakistan-Afghanistan border, if the Taliban regain control over any part of Afghanistan and manage to expand their influence into parts of Pakistan and give Al Qaeda a safe haven, it will not be good for global security.

Tribal awakening: Haqqani said there was a tribal awakening in parts of the Tribal Areas where people are supporting the fight against the Taliban.

It is important for Pakistans friends like the US to understand that they need to work with the Pakistani government, they dont need to position themselves as potential violators of Pakistani sovereignty.

He particularly called for legislative progress in the US Congress towards creating Reconstruction Opportunity Zones under a preferential programme, saying the resultant job generation would help offset the influence of extremists in the border regions of Pakistan and Afghanistan.

The ambassador also sought passage of Biden-Lugar legislation on enhancing socio-economic assistance for Pakistan.

There is an opportunity, we can actually get the international community engaged productively and seriously in the institution building, reconstruction in Afghanistan and parts of Pakistan, in isolating the terrorists and prosecuting a smart war against terrorism.

Responding to a question on US-Pakistan relations, he said it was important that Americans leaders saw Pakistan as a friend and ally of the US. There are issues between Pakistan and the US but they need to be resolved as issues are resolved between friends and allies.

To a question, he said the government was committed to revamping the Tribal Areas political system, introducing political parties like rest of the country, making sure there is a process whereby the Tribal Areas eventually become settled areas  it is not a six-month plan, (but) will take several years.

On the state of democracy, he remarked there has been an intellectual transformation of the discourse in Pakistan and there is consensus on having democratic rule. He said there is a great opportunity to put Pakistan on rails of constitutional governance.

President Asif Ali Zardari has a vision for Pakistan where there is no place for extremism, but a nation of creative people and entrepreneurship that endeavours for development and where young do not resort to violence, he said.

Corridor: Regarding regional co-operation, the ambassador said Pakistan would serve as a corridor for two fast growing regional economies  China and India  that can benefit enormously from trade and energy supplies through Pakistan.

Commenting on relations with India, he said, both Pakistan and India needed to be reciprocal in assuring each other on security.

I think it is time for India to take measures to strengthen Pakistans feeling of security.

He saw a great opportunity between the two countries. and said they need to resolve issues and at the same time continue to work together. That does not mean we will stop thinking about or talking about Kashmir. We will remain concerned about what happens in the (Indian-held) Kashmir. The people of Jammu and Kashmir definitely have a major stake in their future (and) India definitely needs to address that problem. app


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## Neo

*Hydel power generation: sharp decline deepens power crisis, says minister​* 
ISLAMABAD (October 17 2008): The sharp decline in hydel power generation from 6000 megawatts to 1600 megawatts has deepened the power crisis in the country, said Minister for Water and Power Raja Pervez Asharf. Speaking at a news conference here on Thursday after a meeting at National Power Control Centre (NPCC), the minister said that reason for decline in hydel power generation was release of water from Tarbela and Mangla dams to the provinces on the requests of provincial governments.

The minister wanted provincial governments to review their indents on realistic basis from Tarbela and Mangla dams enabling generation of more power to cope with the shortage of electricity.

Asharf also acknowledged that 100 percent results of energy conservation programme could not be achieved. He said power generation projects initiated by the government would be completed by the next year to achieve 6,000 megawatts power. He said the mistakes committed by the Wapda and Pepco have also contributed to the power crisis but the government is taking measures to increase the production. The construction work on Basha Dam would be started by the next year, he added.

The minister said that the country was facing worst power crisis because of shortage of 4,000 MW but the efforts are afoot to bridge the demand supply gap. All means of power generation are being explored to overcome the shortage, he added.

Earlier, the minister directed the NPCC to chalk out a plan of action on war footing basis to minimise the load management on the country. He directed that all concerned authorities should work jointly to overcome the prevailing challenge of power crisis that was adversely affecting the economy as well as the household.

The minister was given a briefing about the objectives and functions of the NPCC and was informed that because of low flow of water from Tarbela and Mangla, the hydel generation had been badly affected. Similarly the shortage of gas supply to some power plants also affected the power generation capability of number of powerhouses.

The minister also directed the ministry to approach the concerned quarters including petroleum ministry to provide the required gas to these plants for generating maximum power.


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## Neo

*Petraeus seeking financial support for Pakistan​*
WASHINGTON (October 17 2008): Even before he takes command of US military strategy for Afghanistan and Pakistan, General David Petraeus is reaching beyond the military sphere to encourage international support for stabilising the region.

Petraeus, whose innovative thinking is credited with helping save Iraq from civil war, met International Monetary Fund and World Bank representatives last week in preparation for new efforts in Afghanistan and Pakistan, officials said.

The move, unusual for a military commander, underscores the Pentagon's emphasis on unifying military, economic, political and diplomatic aid to help the two countries cope with militant violence and economic dislocation, officials said. On October 31, the Army general will become head of Central Command, responsible for American military interests in 20 countries across the Middle East and Central and South Asia.

"The purpose (of the World Bank and IMF meetings) was to touch base and note the Central Command's interest in supporting comprehensive approaches in Pakistan, Afghanistan, and others," said a military official close to Petraeus. His arrival at Centcom is widely expected to reinvigorate US strategy in Afghanistan, where US and Nato efforts face grave challenges from an increasingly confident Taliban.

Petraeus will launch a 100-day assessment of US strategy for Afghanistan, Pakistan, Iran, Iraq and other countries in the Centcom region once he takes over, officials said.

He has already spoken publicly of the strategic value of reconciling members of the Taliban with the Afghan government as a possible way to reduce violence in areas of Afghanistan where security has deteriorated this year.

Military officials say they are studying the country's tribal landscape to identify leaders who might be willing to join the West against hard core insurgents.

HELP FROM WORLD BANK, IMF: Petraeus has also spoken out about the need for military strategy to be sustained by major financial and development support for the region from the international community.

"That is one of the steps that has to be taken by our government together with other countries in the coalition and elsewhere including some of those in the Gulf states," Petraeus told the Heritage Foundation in Washington last week.

Officials said his recent meetings included a session with World Bank President Robert Zoellick to discuss what the bank might do for Afghanistan and Pakistan. There was no word of any outcome. The World Bank and IMF are already involved in talks about helping the countries.

Military officials are also looking at US relations with Colombia as a possible model for Afghanistan and Pakistan, saying something like Washington's Plan Colombia strategy could help the two countries against militants.

US officials credit the multibillion-dollar, multiyear Plan Colombia policy with helping Bogota overcome a threat from guerrillas and paramilitaries that once dominated large parts of the country and ran much of its drug trade. The United States has funnelled $5.5 billion in mostly military aid to Colombia since 2002.

Colombia "is a great overarching strategic model that I think we can look at for the way ahead," Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, said recently. Pentagon officials have spoken favourably about a bipartisan measure in Congress that would triple non-military aid to Pakistan to $7.5 billion over the next five years.


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## Neo

*Pakistani garment export to US up, EU down: IMF​* 
ISLAMABAD (October 17 2008): Pakistan's garment export to European Union and Canada registered a decline while to the US market, the garment export posted a slight increase, an IMF report revealed on Thursday. The garment export to EU market declined from 1.7 percent in 2003 to 1.5 percent in 2007.

The share of Bangladesh in garment export to the EU has increased to 7.1 percent in 2007 as compared to 6.6 percent of 2003. This is 5.4 percent higher than that of Pakistan. The report further revealed that export of garments from India have also increased by 1.2 percent in 2007 as compared to 2003 while these were about 4.7 percent more than that of Pakistan.

Similarly, during 2003, the garment exports to Canadian market were around 1.5 percent that decreased to 1.0 percent in 2007 which shows a decline of 0.5 percent. The garment export of Bangladesh to the Canadian market has increased from 5.3 percent in 2003 to 6.4 percent in 2007 showing an increase of 1.1 percent while it was 5.4 percent more than that of Pakistan.

India exports show the same trend vis-à-vis Pakistan as its garments export to the Canadian market decreased from 7.3 percent in 2003 to 4.7 percent in 2007. According to the IMF report, the garment export of Pakistan to US market increased to 2.0 percent in 2007 from 1.6 percent in 2003 showing a decrease of 0.4 percent. On the other hand, the garment exports of Bangladesh and India to the US markets are showing an upward trend in 2007 being 4.0 percent and 4.3 percent, respectively.


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## Neo

*Pakistan's foreign exchange reserves fall below $8 billion​* 
KARACHI (October 17 2008): The country's foreign exchange reserves plunged by 571.9 million dollars to 7.7497 billion dollars, during last week that ended on October 11. The State Bank of Pakistan on Thursday said the country's foreign exchange reserves have declined to 7.7497 billion dollars during the week ended on October 11, against 8.3216 billion dollars a week earlier.

The major decline has been witnessed in the State Bank's reserves, which declined by 530.9 million dollars to 4.3353 billion dollars in a week. These reserves stood at 4.8662 billion dollars on October 4, 2008. The reserves held by banks also show a negative trend during the week as overall reserves stood at 3.4144 billion dollars as compared to 3.4554 billion dollars a week earlier, depicting a decrease of 41 million dollars.


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## Neo

*China to invest $1.7bn to generate electricity in Pakistan ​* 
BEIJING (October 17, 2008): A prominent Chinese power generating entrepreneur has said that it will make investment to the tune of $ 1.7 billion for generating low cost hydel electricity in Pakistan.

The assurance for investment was given to President Asif Ali Zardari when a delegation of China International Water and Electricity Corporation (CWE) held a detailed meeting with him here on Friday.

"We just met with President Asif Ali Zardari and the talk focused on Bhasha and Kohala Dams", said Deputy General Manager of CWE Jin Zheping, said talking to media after meeting the President here at State Guest House.

Jin said for Bhasha Dam CWE was developing concept with Chinese Hydel power generating groups and also with WAPDA as it is a gigantic project.

He said the MoU in this regard has already been signed.

Jin pointed out that President has shown high vision on cooperative relations in economic sector between the two countries.

The CWE Deputy General Manager said the President has assured that he will particularly welcome Chinese entrepreneurs for investment in Pakistan.

President Zardari specially mentioned that he will steer China-Pakistan trade economic cooperation to encourage Chinese companies to invest and come to Pakistan for setting up of various projects.

CWE has been working on water resources and hydropower engineering for over 50 years. Over the years, the Company has been active in international contracting, foreign economic aid, international trading and manpower export sectors. CWE is recognized one of the major state-owned enterprises in China.

By the end of September 2007, the company has completed over 600 international contracts in more than 60 countries and regions.


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## fatman17

*Economic Indicators*

*Annual 2007/08 * 
Foreign Debt $45.00bn 
Per Cap Income $1085 
GDP Growth 5.8&#37; 
Average CPI 12.00% 

*Monthly September * 
Trade Balance $-2.02bln 
Exports $1.78bln 
Imports $3.80bln 

*Weekly October 16, 2008* 
Reserves $7.7497 bln 

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*China to help build 2 Pakistan nuclear plants​*
ISLAMABAD, Pakistan  Pakistan said Saturday that *China will help it build two more nuclear power plants*, offsetting Pakistani frustration over a recent nuclear deal between archrival India and the United States.

*The agreement with China was among 12 accords signed during Pakistani President Asif Ali Zardari's recent visit to Beijing, said Foreign Minister Shah Mahmood Qureshi.*

While Qureshi gave few details, the accord deepens Pakistan's long-standing ties with China at a time when its relations with Washington are strained over the dragging war against terrorism.

U.S. officials including Assistant Secretary of State Richard Boucher, who arrived in Islamabad on Saturday for talks, have rejected Pakistani calls for equal treatment with India on nuclear power.

*Chinese leaders "do recognize Pakistan's need, and China is one country that at international forums has clearly spoken against the discriminatory nature of that understanding" between Washington and New Delhi, Qureshi said.* 

Zardari met with China's top leaders during his first official trip to Beijing since replacing stalwart U.S. ally Pervez Musharraf as president in September.

*China, a major investor and arms supplier for Pakistan, has already helped it build a nuclear power plant at Chashma, about 125 miles southwest of the capital, Islamabad. Work on a second nuclear plant is in progress and is expected to be completed in 2011.*

*Qureshi said the Chashma III and Chashma IV reactors would provide Pakistan with an additional 680 megawatts of generating capacity.*

He didn't say when they would be built or what assistance China would provide.

Nor did he discuss any measures to prevent nuclear materials from the new plants from being diverted to Pakistan's atomic weapons program. Pakistan has placed several other civilian reactors under International Atomic Energy Authority safeguards.

Pakistan's nuclear program remains a sore topic with Washington because of its past record of proliferation.

International sanctions were slapped on Pakistan after it detonated its first nuclear charges in 1998 in response to similar tests by India.

The sanctions were eased after Musharraf agreed to help Washington hunt down al-Qaida terrorists responsible for the Sept. 11, 2001, attacks in the United States.

But the revelation in 2004 that the architect of Islamabad's nuclear program, Abdul Qadeer Khan, had passed nuclear secrets to Iran, Libya and North Korea set back Pakistan's hopes of becoming a trusted member of the world's exclusive nuclear club.

The U.S.-India deal allows American businesses to sell nuclear fuel, technology and reactors to India in exchange for safeguards and U.N. inspections of India's civilian  but not military  nuclear plants.

Boucher told reporters earlier this month that the pact with India was "unique" and that a similar agreement with Pakistan was "just not on the table."

He said Washington would help Pakistan  where chronic power shortages are contributing to a gathering economic crisis  develop its huge coal reserves, expand hydroelectric power generation and build wind farms on its Arabian Sea coast.

Pakistan, the Islamic world's only known nuclear weapons state, began operating its first nuclear power station with Canadian assistance near the southern port city of Karachi in 1972.


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## Neo

*China to help Pakistan build two more nuclear plants​* 
ISLAMABAD (AFP)  Energy-hungry Pakistan said on Saturday that China had agreed to help it build two more nuclear power plants in a major boost to the country's long-term plans to end crippling electricity shortages.

Foreign Minister Shah Mahmood Qureshi announced the deal after President Asif Ali Zardari returned from a four-day state visit to China which Qureshi said had been "very significant."

Pakistan, which already has one Chinese-built nuclear power station and another under construction, would benefit from an extra 680 megawatts of energy from the two extra plants, he said without giving further details.

The government has an "energy security plan" envisaging an increase in nuclear power generation from the current 425 megawatts to 8,800 megawatts by 2030 to meet its growing energy demands.

China is one of Islamabad's closest allies as well as its largest arms supplier.

Pakistan's nuclear weapons programme has been under the spotlight since a 2004 confession by Abdul Qadeer Khan, the father of its nuclear programme, that he sold atomic secrets to Iran, Libya and North Korea.

Khan was pardoned by then president Pervez Musharraf in 2004 but has been kept at his Islamabad villa ever since, guarded by troops and intelligence agents.

Pakistan has rejected international demands for access to Khan.


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## Neo

*Pakistan central bank cuts cash ratio to inject liquidity​*
KARACHI (AFP)  Pakistan's central bank moved to inject liquidity into the country's struggling financial system on Saturday by cutting the amount of cash commercial banks must hold in reserve.

The bank lowered the cash reserve ratio two percentage points to six percent, and said it would be cut to five percent on November 15, as it sought to ease tight credit conditions that have hit economic demand around the globe.

Shamshad Akhtar, governor of the State Bank of Pakistan (SBP), said the move would inject 180 billion rupees (2.2 billion dollars) into the system and that the overall package would total 270 billion rupees.

"The State Bank will monitor the liquidity flow after the injection of massive liquidity into the banking system," she said.

"We would like judicious use of liquidity," she said, adding Pakistan's banking sector was "quite resilient and fully capable of withstanding market shocks and adverse macro economic conditions."

The country's biggest stock market, the Karachi Stock Exchange, announced this week it would on October 27 remove the "floor" it imposed two months ago.

The bottom limit for the benchmark KSE-100 was put in place following a 40 percent fall in prices since April due to political uncertainty, terrorism and economic instability.

The country is still reeling from the bombing last month of the Islamabad Marriott Hotel, one of the few remaining symbols of foreign investment.

Pakistan's government has repeatedly denied that the country is at risk of defaulting on its foreign loans or suffering a balance of payments crisis.

Shaukat Tareen, the new finance adviser to Prime Minister Yousuf Raza Gilani, reiterated the stance to reporters on Saturday saying there was "no danger" of a loan default.

At the press conference, which followed President Asif Ali Zardari's return from a state visit to China, Tareen said a range of Chinese companies had vowed to invest 1.2 billion dollars in Pakistan over the next year.


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## Neo

*Foreign investment in Pakistan falls 9.67 pct in Q1​*
KARACHI, Oct 18 - Net foreign investment inflows to Pakistan fell 9.67 percent to $938.21 million in the first quarter of fiscal year of 2008/09 , according to the State Bank of Pakistan.

Foreign private investment fell 12.12 percent to $940.41 million in the July to September period, compared with $1.01 billion in the corresponding period, the central bank said on its Website.

Out of the total foreign investment inflow, foreign direct investment was worth $1.11 billion, up 9.5 percent from the year-ago period.

There was a $172.75 million outflow if foreign portfolio investment, meanwhile, compared with an inflow of $24.15 million in the year-ago period.

There have been outflows from the stock market due to political uncertainty and economic and security concerns.


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## Imran Khan

Rs270bn bailout plan for banks: SBP eases monetary policy


By Shahid Iqbal

KARACHI, Oct 17: The State Bank on Friday eased its tight monetary policy and announced a plan to inject Rs270 billion into the banking system to help the sector tackle a credit crunch and restore depositors confidence.

Governor Dr Shamshad Akhtar told media that with her fresh decision, Rs180 billion would be injected into banks on Saturday.

The banks are facing a serious liquidity shortage in making large payments and continuing to extend credit to the private sector. Bank-to-bank lending has also dried up while large banks have stopped lending to small banks altogether.

The liquidity will help banks ease depositors fears and scotch rumours that the government was considering seizing all deposits or that some banks could wind up operations. The governor dismissed all such apprehensions.

The Cash Reserve Requirement (CRR, which banks keep with the State Bank as reserve money) was reduced by two per cent to six per cent. It would be brought down to five per cent from Nov 15.

The SBP exempted time deposits of one-year tenure and above from the Statutory Liquidity Requirements (SLR), yielding another Rs120 billion to the market.

The governor said the central bank was examining the monetary policy and would bring corrections, if required.

The SBP had been maintaining a tight monetary policy for the past two and a half years, raising the interest rate and making money costlier for borrowers.

Although the bank argued that the interest rate was increased to check inflation, prices have gone through the roof over the past six months.

More easing of monetary policy is on the cards as the governor said that more media conferences would be held to provide details about further steps.

However, she maintained that the measures were temporary, aimed at accommodating extraordinary liquidity requirements of the banking system and should not be construed as a change in the monetary policy stance.

Ms Akhtar said the SBP was working with banks and was aware of the situation.

The liquidity shortage is not because of what is happening in US banks and other countries.

She said the problems here had local reasons. Withdrawals made by depositors had started coming back into the system, she added.

The governor also blamed excessive government borrowing for credit problems.

The meltdown in the US and Europe has cast shadows the world over, but the governor expressed confidence in Pakistani banking system. Our banking is on sound footing and quite capable of facing shocks.

The governor restricted the press briefing to the liquidity issue. She said the central bank had also been providing temporary liquidity through open market operations (OMOs). About Rs300 billion were injected through OMOs.

The governor said the inter-bank money rate, which was 30 per cent on Oct 4, fell to 16 per cent on Oct 16 because of the central banks decisions on liquidity generation.

The State Bank will monitor the liquidity flow after the injection of massive liquidity into the banking system, she said. We want to be assured that liquidity is being effectively utilised.

She said massive liquidity would be required for commodity operations, which would be at their peak next month. She advised banks to maintain an advance-to-deposit ratio of at least 70 per cent. The governor gave six months to all banks to bring the ratio up to 70 per cent.

She asked the media to be cautious in reporting about the liquidity ratio because panic could deal a body-blow to the sector.


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## Imran Khan

Pakistan can raise up to $50bn, says Burki: Taxation system criticised


By Anwar Iqbal

WASHINGTON, Oct 17: Pakistan can raise $40 billion to $50 billion from international donors to recover from the current economic crisis, says a former World Bank vice-president Shahid Javed Burki.

Theres an appetite in the world for helping Pakistan, he told Dawn. What we need to do is to come up with credible programmes that can translate this interest into financial assistance.

Mr Burki, who also is a former finance minister of Pakistan, believes that much of these $40 to $50 billion can be uploaded, with international donors providing funds for the first two or three years of a five-year programme while Pakistan matching the rest in the remaining period.

Mr Burki believes that eight to 10 donors  the US, Japan, UK, Saudi Arabia, UAE, Kuwait, possibly Germany, the World Bank and the Asian Development Bank  are eager to help Pakistan, some for strategic reasons.

Both Republican and Democratic candidates in the US election describe Pakistan as the most dangerous place on earth, said Mr Burki, and would not like to create a situation that destabilises this dangerous place.

Mr Burki believes that some Arab nations have a genuine interest in helping Pakistan and their interest in the country is not linked to its strategic location.

But lack of confidence, absence of credible programmes for donor-funding and of a medium-term framework, prevents this interest from translating into financial assistance.

Pakistan, he said, needs to make a serious effort for structural adjustment and economic reforms to encourage donors to come forward and help.

At a recent meeting, some World Bank officials, involved in talks with Pakistani officials on its effort to get the banks assistance for economic recovery, expressed similar views.

They said that Pakistans inability to raise revenues forced Pakistan to take measures that hurt the ordinary people.

They noted that the government levy taxes on what can be taxed, not what should be taxed, as one official said.

Salaries are taxed. Cars are. But agriculture income is not. Real estate is not taxed as thoroughly as it should be because people are not willing to pay taxes and the government does not have the infrastructure to make them pay, the official said.

Explaining why the country was facing a power shortage, the official said Pakistan still had the capacity to produce enough electricity to meet its requirements but was unable to do so because private electricity producers were not producing electricity.

This is because the government is unable to pay them, the official said.

The government, the official said, could make enough money to pay private producers by selling electricity if it could force all the consumers to pay. But millions of consumers across Pakistan never pay their bills and the government cannot force them to pay.

This situation, he said, forced the government to levy indirect taxes, which pinched the poor more.

The World Bank officials also strongly backed the governments decision to withdraw subsidies on fuel, food and electricity.

Mr Burki agreed with this suggestion but he also urged the government not to borrow from the IMF.

The IMF conditions will constrain Pakistan, he said. At this stage, Pakistan needs to avoid constraints. The government should have a free hand to spend on power-development, creating employment, and on other similar measures.

Mr Burki also advised the government to start income generating programmes for the poor to neutralize the effect of ending subsidies on oil and fuel.

He urged the government not to go door-to-door, asking for help as it hurts the countrys image.

Instead, he said, the government should make credible programmes that encourage donors to give.

Mr Burki noted that recently, the UAE, Saudi Arabia and Qatar invested a lot of money in large agricultural programmes in Kazakhstan and other Central Asian states.

Although Pakistan is ideally suited for such investments, it failed to attract investors, he regretted.


----------



## Imran Khan

*IFIs link $4b aid to tough steps
*WB, ADB, IDB discuss options to avert crisis | Pakistan in dire need of economic support

ISLAMABAD: International Financial Institutions (IFIs) have pledged to provide over $4 billion to Pakistan in the near future to meet its short and medium term requirements, official sources said. 

The international community has assured Pakistan of providing the money to avoid bankruptcy, but in return Islamabad will have to introduce some tough economic reforms. American and diplomatic sources in Washington said that Pakistan had started negotiating with international financial institutions and friendly countries soon after realising that it might have to default on its payments without foreign help. 

US played a vital role in these talks. A US official present at the talks said there was real panic in the Pakistani side, adding Pakistani diplomats had made 10 visits to the US during the last 10 days. The final negotiations were undertaken during Financial Adviser Shaukat Tareen's visit to Washington who arrived here to attend the annual meetings of the World Bank. 

During these talks, the World Bank, Asian Development Bank, Islamic Development Bank and other IFIs discussed various options for providing short to medium-term support to Pakistan. 

During the current financial year, the World Bank will provide $1.4 billion. If Pakistan's programmes are approved, its IDA share will also be front-loaded. This includes a total $3 billion of international development assistance over three years, from 2008-2011.

The Asian Development Bank is negotiating assistance of another billion dollars. The Islamic Development Bank is negotiating a proposal to raise its trade facility from $500 million to one billion. This brings the total pledges to about four billion dollars. 

"Pakistan urgently needs this money to stabilise the falling economy. At this stage, $3-5 billion will do for us. We do need more money afterwards," a senior official at the Finance Ministry told The Post. 

"The IFIs have pledged around $ 4 billion to give us a cushion. Shaukat Tareen's US trip is bringing some good news at last." Pakistan needs some $10 billion to tide over its short to medium term requirements, for which it is taping several sources.

The frontline ally in the US-led campaign against Al-Qaeda and Taliban militants has been forced to seek $10 billion from western backers to stave off the threat of going bankrupt as early as February 2009.

The Finance Ministry official said the government will "definitely" have to accept the terms and conditions of the IFIs to get the required money. 

"At this point, we are not in a good bargaining position. We need the money and we just are cashing in on our lead role in the war on terror. That's the only point which we are concentrating", he said. 

The government had started negotiations with IFIs and friendly countries soon as the economic crisis surfaced with fears of default on its payments without foreign help.

The official said, "The US has been helpful in these (financial) assistance pledges. They (the US) have praised our role in the war on terror and advocated for us".

During the talks in the US, the official said, the Asian Development Bank, Islamic Development Bank, the World Bank and other IFIs put forth various options for immediate help to Pakistan.

"They also discussed the terms and conditions. One of them is to withdraw subsidies to improve the economy", said the official.

During the current financial year, the World Bank will provide $1.4 billion. The ADB is negotiating assistance of another $1 billion. The IDB and other institutions are discussing things and are expected to contribute $ 2-3 billion. The IDB's possible share includes a total $ 3 billion of international development assistance over three years from 2008-2011.

The State Bank of Pakistan meanwhile expects to receive the first tranche of the approved 50 million pounds from UK-based Department for International Development (DFID) in the current month. 

The SBP and DFID have already signed a Memorandum of Understanding (MoU) for Financial Inclusion Programme (FIP) and both sides are now working out details for the release of the amount out of the total 50 million pounds.

The programme, under which money will be disbursed to FIP through SBP, will focus on mobilising much-needed market-based resources for the micro finance sector.

The DFID will provide first loss guarantee of up to 10 million pounds from its grant financing. The programme will heavily invest in innovative technology-based products for the poor and will also support liquidity in the micro finance sector under the prevailing cash crunch situation in the financial market.

Also, China International Water and Electricity Corporation (CWE), a prominent Chinese power-generating entrepreneur, has pledged an investment of up to $ 1.7 billion for generating low-cost hydroelectricity in Pakistan. 

The assurance for investment was given to President Asif Ali Zardari when a delegation of CWE held a meeting with him in Beijing on Friday.

China satisfied with Pakistan security: Asif

Agencies 

BEIJING: President Asif Ali Zardari has said that the heads and senior executives of major Chinese companies who met him during his first state visit to China had expressed no security concerns about Pakistan. "I met with many companies and 99.9 percent of their chief executives told me they felt secure", said President Zardari in an interview with leading Chinese newspaper Peoples Daily. The mouthpiece of the party published prominently and extensively President Zardari's interview on Friday. 

"No doubt Pakistan has some problems but the government was giving full attention to address the situation," the president said while responding to a question as to what steps his government has taken to fight terrorism. He said the entire world was confronted with this problem which is the legacy of the Second World War and Cold war as well as the fallout of the breakdown of the Soviet Union. 

"However, the world is now alive to the situation and wants to fight out this scourge," he said, adding that he had very productive talks with Chinese President Hu Jintao who also assured him of his government's help in this regard. 

The president said he was trying to convince everyone that terrorism was a regional as well as international problem and the international community should come forward as Pakistan could not fight it alone. 

He said: "We are looking to the world for cooperation in curbing this menace." President Zardari said China has always been very cooperative, adding that during all difficult times "we have been supportive to each other." 

He said his talks on the subject with the Chinese president were very productive. 

"I think I am trying to make everybody realize that it is an international problem," he said, adding that it is also regional issue which can not be resolved by Pakistan alone or just America or other countries that had fought war in Afghanistan. 

President Zardari said that regional ownership was needed to tackle the issue of terrorism and extremism and Pakistan tends to take on board China as well. 

Asked as to what changes he observed in China during this visit as compared to his previous visits, President Zardari said that his last visit to China was with his wife (Ms Benazir Bhutto Shaheed) so it brings some sad memories also, but at the same time "I am proud that with the passage of time my Chinese brothers have done remarkable progress". 

President Zardari said that it was 1988 when he first visited China. He said at that time, China was coming out of its old system to introduce a new form of market economy. 

The president pointed out that Pakistan has been following China's progress and "we take pride in their success, because we are like a family." 

"Chinese and Pakistani people are like a family", he said. "We see their progress with pride and are happy to see our friends strong. If China is strong, we are strong." 

To another question on Sino-Pak relations, President Zardari said that he was amazed at the wisdom of our forefathers --- Chairman Mao Ze Dong, and Shaheed Zulfikar Ali Bhutto who at that time realised what the relationship means. 

He said that these leaders transformed the neighborly contacts into best and brotherly friendship. 

"So I am proud of the heritage and proud of the farsightedness of our leaders who realised our future relations," he said.

He said Pakistan and China were two brotherly nations, having strong, historic, deep-rooted and time-tested ties. 

To another question regarding what kind of steps the new government was contemplating for the betterment of Pakistani people, the president said that again he looked forward to the Chinese economy, adding that sometime ago "overheating" was the expression used in the financial world for China. 

He said that for a country to become economically balanced was a lesson that one could learn from China. The president said that he would head an inter-ministerial committee which would look at China-Pakistan cooperation and future business relations. The president said that he intended to hold the body's meeting after every month and the Chinese ambassador would also be invited to this meeting. 

Zardari meets CPPCC chief: President Zardari Friday met Chairman of Chinese People's Political Consultative Conference Jia Qinglin and exchanged views to strengthen the multi-faceted, time-tested and strategic ties between Pakistan and China.

During the meeting at the State Guest House, President Zardari said Pakistan and China had deep-rooted, strong relations spanning three generations.

He vowed to take these forward to the next generation for the mutual benefit of the two countries. Zardari said he was in China to take forward the legacy of Shaheed Zulfikar Ali Bhutto and Premier Zhou Enlai who laid the foundation of Pak-China friendship. 

He thanked the Chairman CPPCC for inviting him and said this provided an opportunity of exchanging views on various matters of bilateral cooperation.

The CPPCC chairman congratulated President Zardari on his election as Pakistan's democratic head of state and said CPPCC welcomed him on the state visit.

He said President Zardari's choice of China as the destination for his first state visit reflected the importance of Pakistan-China relations. 

China to invest $1.7b in hydropower

Associated Pres of Pakistan 

BEIJING: A prominent Chinese power-generating entrepreneur has said that it will make investment to the tune of $1.7 billion for generating low cost hydroelectricity in Pakistan. The assurance for investment was given to President Asif Ali Zardari when a delegation of China International Water and Electricity Corporation (CWE) held a detailed meeting with him here on Friday. "We just met with President Zardari and ours talks focused on Bhasha and Kohala dams", said Deputy General Manager of CWE Jin Zheping, while talking to the media after meeting the president here at the State Guest House. Jin said for Bhasha Dam CWE was developing a concept with Chinese hydropower groups and also with WAPDA since it was a gigantic project. He said a memorandum of understanding has already been signed in this regard. Jin pointed out that president had shown high vision on cooperative relations in the economic sector between the two countries. The CWE deputy general manager said the president told him that he would make sure that a conducive environment was created for Chinese entrepreneurs in Pakistan. 

President Zardari particularly mentioned that he would lift China-Pakistan trade economic cooperation to new heights to encourage Chinese companies to invest and come to Pakistan for setting up of various projects. CWE has been working on water resources and hydropower engineering for over 50 years. 

The company has been active in international contracting, foreign economic aid, international trading and manpower export sectors. 

CWE is recognized one of the major state-owned enterprises in China. By the end of September 2007, the company has completed over 600 international contracts in more than 60 countries.


----------



## Neo

*No danger of Pakistan defaulting: Shaukat​*
ISLAMABAD (Agencies): There was no risk of Pakistan defaulting on international debts as funds were being lined up to cover a balance of payments deficit and rebuild currency reserves, the country's newly appointed economic troubleshooter said on Saturday. "I am very confident that I have plans to make sure, whatever it takes that we should build our reserves and that we do not default," Shaukat Tarin said a day after returning from overseas visits to Washington and Beijing to drum up support. 

"Now, there is no danger," he told journalists after a news conference in Islamabad. Tarin, appointed last week as adviser to the prime minister on economic affairs, had attended the annual International Monetary Fund meeting in Washington and later joined President Asif Ali Zardari on a visit to China earlier this week. 

"If we want to go to the IMF, we can ... but only as a backup," Tarin said, adding that he was confident Pakistan had a viable plan to work through its problems. Tarin said he planned to bridge a financing gap for the balance of payments deficit in the fiscal year ending June 30, 2009, mainly through other multilateral lenders the World Bank, Asian Development Bank front-loading disbursements from development assistance programmes. 

The Islamic Development Bank and Britain's Department for International Development are also expected to virtually double their planned assistance, he said. There was also a plan to securitise workers' remittances from overseas to the tune of $1.5-2.0 billion. "We think we will be in a very good shape within the next 30 to 60 days," Tarin said of the prospects of sewing up funds to cover a financing gap that the IMF estimates at up to $4.5 billion, and Pakistan reckons at $3.0 billion. 

Neither Tarin or Foreign Minister Shah Mehmood Qureshi divulged whether China had given any firm commitments on loans, though there were uncorroborated media reports that Zardari asked China for close to $3 billion. Potential donors, including China, are expected to gather in Abu Dhabi in mid-November, under the banner "Friends of Pakistan". 

Qureshi told the news conference that senior Chinese bankers were coming to assess Pakistan's needs, and Chinese firms had pledged to invest $1 billion by June 2009. Aside from seeking financial support from multilateral lenders and friendly governments, Pakistan has asked oil suppliers in the Gulf to accept deferred payments. 

The international bond market had already priced in a Pakistani default on a $500 million bond maturing in February, though there had been widespread expectation that the international community would rally round a nuclear-armed Muslim nation returning to democracy, while under threat from Islamist militancy. Pakistan's stock market has been moribund since late August, when authorities imposed a floor that blocked off investors exiting a market that has dropped 35 percent this year.


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## Neo

*USAID to provide technical assistance in energy sector ​* 
Saturday, October 18, 2008

ISLAMABAD: USAID has agreed to provide financial and technical assistance to Pakistan to develop the energy sector in the country. 

A four member USAID delegation led by Anne Arnes, Head of the USAID mission to Pakistan, met on Friday with Federal Minister for Water and Power Raja Pervez Ashraf and informed him about the action plan in this regard. 

The delegation submitted that USAIDs Empower Pakistan Energy Development Program would consist of two activities. The first is Empower Pakistan Energy Policy (EPEP) programme which will assist Pakistan by providing two full-time technical experts supported by short-term technical assistance for energy strategy formulation, implementation and support for transactions. 

Technical assistance will also supply targeted feasibility studies in energy resource development, energy efficiency, transactions support and pricing. 

The other programme is the Empower Pakistan Energy Efficiency and Capacity (EPEEC) which will develop the private-sector market for energy efficiency by, 1) facilitating firms that conduct energy audits and engage in energy efficient building and construction,(2) conducting public information campaigns on energy efficiency and (3) including plans to minimize damage to businesses from blackouts by developing coordinated schedules for outages. 

Capacity building activities will assist human resources departments in power-sector entities to develop and implement coordinated training programmes for staff, in part through twinning arrangements between US and Pakistani power sector entities, the minister was informed. 

The delegation told the objectives of these programme which are to improve institutional framework for power sector policy, planning and implementation, increase private sector investment in energy generation to help meet 5,00 MW energy deficit, integrate functioning of supplemental energy agencies and institutions through creation of a single power entity, to help 3-5 distribution companies implement advanced demand side management and power rationing techniques, to develop and implement energy conservation plan for 15 industrial sectors and to help create 10 profitable, unsubsidized private sector energy service companies that provide energy audits to at least 300 industrial users and help them upgrade equipment to conserve energy. 

The minister lauded the action plan of the USAID delegation and thanked the delegation for this cooperation which would improve the energy system in the country.


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## Neo

*British paper for supporting Pakistan ​* 
Saturday, October 18, 2008

LONDON: A leading British newspaper has urged the international community to support Pakistan, saying that the case for propping up the countrys civilian government under Asif Ali Zardari is strong.

In an editorial comment titled Pakistan needs support, The Daily Telegraph described the new government as a bulwark against both extremism and a return to military dictatorship. However, the paper was of the view that if President Zardari is to get $ 10 billion which he is seeking over the next 18 months to avoid defaulting on debt payments and other liabilities, there should be conditions.

First and foremost is the stiffening of the fight against the Pakistani Taliban and al-Qaeda, which have established a springboard in the countrys tribal areas. Second is the strengthening of the technocratic element in a government faced with minimal foreign exchange reserves, an investment drought and a currency which has reached an all-time low against the dollar. Improvements in the second obviously depend on success in the first, the editorial said. 

The paper noted that Zardari has been more forthright on combating terrorism than his deeply ambivalent predecessor, General Pervez Musharraf. On the economic front, it said, Shaukat Tarin, a banker, has been appointed economic adviser to the prime minister.

The Telegraph further said at their forthcoming meeting in Abu Dhabi, the Friends of Pakistan Group should give Zardari the benefit of doubt. The case for supporting a democratically legitimate government could be compelling, it said.


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## Neo

*Chinese companies offer $5bn investment​*
BEIJING, Oct 17: Chinese entrepreneurs have offered to invest $5 billion in Pakistans defence, banking, oil exploration and mining sectors, develop Thar coal, build Bhasha and Kohala dams and launch PakSat-1R in 2011. The offers were made during meetings with President Asif Ali Zardari, who concluded his four-day official visit and left for Pakistan on Friday.

Heads of the business delegations said they were ready to intensify cooperation in defence production, oil and gas, energy, poly-technologies, electronics, hydropower generation and other sectors.

They took deep interest in business, trade and investment opportunities in Pakistan.

Among leading industrialists and business tycoons who called on President Zardari at the State Guest House included chairman of Northern Industries Ma Zhigeng, chairman of Poly Technologies Zhang Liansheng, chairman of the CETC Yan Lijin, president of Sinohydro Fan Jixiang and Liu Minkang of the Chinese Banking and Regulatory Authority.

A delegation of China International Water and Electricity Corporation (CWE) met President Zardari and offered to invest $1.7 billion in Bhasha and Kohala dams.

We just met President Zardari and the talks focused on Bhasha and Kohala dams, the deputy general manager of CWE, Jin Zheping, told the media after the meeting.

Mr Jin said CWE was involved in conceptual development of Bhasha dam with Chinese hydroelectric power generating groups and also with Wapda, adding that an MoU had already been signed.

Mr Jin said the president had told the delegation that the government wanted Chinese entrepreneurs to visit Pakistan to acquaint themselves with the investment climate.

Ma Zhigeng, the chairman of Norinco, offered cooperation of his company in oil exploration and defence production sectors.

He said that new ventures in oil and gas sectors were also discussed during the meeting with the president.

He said that the company had already invested $30 million in oil exploration which would be further increased.

The Chairman of Poly Technologies, Zhang Liansheng, offered technical assistance and investment in oil exploration and generation of electricity from coal-fired power plants.

He said his company could also play an important role in expanding bilateral cooperation in media and education.

The business leaders said Chinese banks would set up branches in Pakistan to take advantage of the countrys economic growth potential.

SATELLITE LAUNCH: Earlier a spokesman of the China Great Wall Industry Corporation (CGWIC), the space industry concern, said that a Long March 3B rocket would be used to put the satellite into orbit. It will be launched from the Xichang satellite launch centre in Chinas southwestern Sichuan province.

The company said ground control facilities for the satellite would be delivered to Pakistans Space and Upper Atmosphere Research Commission (Suparco) after it entered into orbit.

The satellite will have a lifespan of 15 years and Pakistan will use it for domestic telecommunication and broadcast services.

The president was seen off at the airport by Chinese Assistant Foreign Minister Hu Zhengyue.

During his four-day stay, President Zardari held talks with President Hu Jintao and Premier Wen Jiabao on issues of regional and international concern.

The talks focused on strengthening Pakistan-China strategic partnership and cooperation in trade, investment, defense, banking sector and science and technology.The president also met the Chairman of the National Peoples Congress, Wu Bangguo, and the Chairman of the Chinese Peoples Political Consultative Conference, Jia Qingling.

Business executives, heads of financial institutions and corporate leaders called on Mr Zardari.


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## Neo

*Steel plant​*
KARACHI, Oct 17: The estimated investment of the DRI plant of Al Tuwairqi Steel Mills in Karachi due to start production in the middle of next year amounts to over $265 million. The total cost of the project is estimated to be above $740 million and not $100 million as reported in an App report published in Dawn, says a press release.


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## Neo

* The helping hand of China​*
Editorial: The foremost crisis facing Pakistan on the eve of President Asif Ali Zardaris visit to China is the financial gap that points to a possible default at the beginning of 2009. The US-India nuclear deal too has taken place but this is not the crisis on which to ask our friend China for a bailout. Therefore, it is wrong on the part of important people, including some officials, to surmise loudly that China will surely come up with a balancing nuclear deal with Pakistan. The joint communiqué after the Zardari visit is framed in general terms, so the world can go on wondering what actually transpired between President Zardari and President Hu Jintao.

The promise came informally and in the form of a report on the meeting between the two presidents: China vowed on Thursday to do what it could to help Pakistan avert financial disaster as President Asif Ali Zardari continued an official visit aimed at rustling up crucial Chinese investments. There was also the standard reference to strategic partnership which will be interpreted differently in different quarters, but definitely wrongly in the warlike quarters of Pakistan. The more concrete fact is that Pakistans foreign exchange reserves stand at $7.7 billion, hardly enough to finance the countrys imports in the coming months.

The Washington Post says Pakistan is seeking $3 billion from China as emergency aid. China has promised to help and may come up with less than that and Pakistan will have to look for help from other sources too. An estimate says Pakistan needs an immediate $4.5 billion and is targeting multilateral and forum sources for it. The World Bank has already committed $1.4 billion for the current financial year while pledging $3 billion over the next three years. The US assistance of about $900 million is in the pipeline and the Friends of Pakistan forum is said to have committed $4 billion before convening in Dubai.

But all these financial commitments may not materialise as easily as we might think. The Saudi deferred facility has still not materialised although hopes remain high. The Friends of Pakistan may pledge many things but find it difficult to actually shell out the funds because most of them are tight on liquidity. In these circumstances, China can help significantly if it is within Chinas capacity, as the Chinese side told President Zardari. Of course, Chinese investments could have come in larger volume had not its experts working in Pakistan been targeted by the terrorists. China had to pull out of a dam-building project in the Tribal Areas after its engineers were kidnapped by Abdullah Mehsud following his release from Guantanamo Bay. Chinese repairmen were target-killed in the NWFP and a Chinese massage shop was attacked in Islamabad by the extremists of Lal Masjid in 2007. There is no denying that the state moved quickly to assure China that it had taken the attack seriously, but later developments in Islamabad in favour of Lal Masjid must have deterred more Chinese investment.

What Pakistan has to realise is that, even as the people of Pakistan think of China as their perennial friend, Al Qaeda thinks of China as an obstacle in their project of dominating the state of Pakistan. Unfortunately, not many people look at Al Qaeda from this perspective. China has a strategic interest in Pakistan but it is more economic than military. China is deeply involved in the Gwadar development project and looks at the new gas pipelines and road connections with the oil-rich region of the Gulf with great interest. Pakistan realises this too and often there are futuristic statements about how China will rely on the trading corridor of Pakistan for its energy demands. But most politicians are not intellectually prepared to abandon their warlike projections to think in trading terms. In their minds China and America are locked in a potentially military standoff in Pakistan. But China is more likely to help Pakistan out of its current crisis because of Pakistans trading potential than its capacity to go to war.

The world will surely aid Pakistan in these times of scarce cash if Pakistan is willing to tackle its terrorism problem single-mindedly. For any economic remedy to succeed Pakistan must have enough internal sovereignty  read law and order capacity  and less division of opinion among its institutions. But the sad story so far is that it is not only the politicians who are divided because of the incapacity of some to think of the national economy, some state institutions too have developed the habit of ignoring the countrys economic survival while developing new strategies of national security.


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## General Fujita

*China to invest to generate hydel electricity * 

Written by Pakistan Daily: Breaking News, Pakistan, World, Politics, Business & Sports News 

Saturday, 18 October 2008 11:41 
A prominent Chinese power generating entrepreneur has said that it would invest $1.7 billion for generating low-cost hydel electricity in Pakistan.

The assurance for investment was given to President Asif Ali Zardari when a delegation of the China International Water and Electricity Corporation (CWE) held a detailed meeting with him here on Friday.

We just met with President Asif Ali Zardari and the talk focused on the Bhasha and Kohala Dams, said Deputy General Manager of the CWE Jin Zheping while talking to the media after meeting the president at the State Guest House.

Jin said the CWE was developing concept with Chinese hydel power generating groups and also with the Wapda for the Bhasha Dam. He said the MoU in this regard had already been signed.

Also, China will launch a telecommunication satellite, named PakSat-1R, for Pakistan in 2011. The satellites chief contractor, the China Great Wall Industry Corporation (CGWIC), said on Friday that a Long March 3B rocket will be used to put the satellite into orbit. It will be launched from the Xichang satellite launch centre in the south western Sichuan province.

Meanwhile, leading industrialists, business executives and investors called on President Zardari and discussed prospects and opportunities for augmenting Chinese investment in important sectors.

Those who called on the president along with their respective delegations included Chairman NORINCO Ma Zhigeng, Chairman Poly Technologies Zhang Liansheng, Chairman Chinese Banking and Regulatory Authority Liu Minkang, Chairman CETC and President Sinohydro Fan Jixiang Yan Lijin.

Zardari said that the heads and senior executives of major Chinese companies had expressed no security concerns about Pakistan. I met with heads of many companies and 99.9 per cent told me how secure they were feeling, said President Zardari in an interview to leading Chinese newspaper.

He said though Pakistan had some problems but the government was giving full attention to address the situation. The president said he was trying to convince everyone that terrorism was a regional as well as an international problem and the international community should come forward as Pakistan could not fight it alone. We are looking towards the world for cooperation in curbing this menace.

The president said he would head an inter-ministerial body that will look at the China-Pakistan cooperation and future business relations. About the inter-ministerial body, the president said he intended to hold this meeting after every month and the Chinese ambassador would also be invited to this meeting.

Meanwhile, Zardari met Chairman of the Chinese Peoples Political Consultative Conference Jia Qinglin and discussed further strengthening the multi-faceted, time-tested and strategic ties between Pakistan and China.

During the meeting at the State Guest House, Zardari vowed to take these ties to the next generation for the mutual benefit of the two countries. He thanked the chairman CPPCC for inviting him and said this provided an opportunity of exchanging views on various matters of bilateral cooperation. Jia Qinglin congratulated Zardari on his election as Pakistans democratic head of state.


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## General Fujita

*Sixteen Malaysian Companies to attend Expo Pakistan 2008 * 

Written by Pakistan Daily: Breaking News, Pakistan, World, Politics, Business & Sports News 
Friday, 17 October 2008 17:31 
High Commissioner for Pakistan in Malaysia, Lt. General (Retd) Tahir Mahmood Qazi has announced in a press statement issued in Kuala Lumpur today said that Expo Pakistan 2008 provides a great venue for forging new alliances and business ventures to foreign businesspersons including Malaysia. 
Malaysia is being representing by sixteen (16) companies in Expo Pakistan being held in Karachi, Pakistan on 27-30 October 2008, which is an event of commercial and cultural diversity of Pakistani products and services and provides an ideal showcase venue for sourcing value products to satisfy consumers the world over including Malaysia. According to Trade Development Authority of Pakistan (TDAP), around 450 international buyers from 46 countries have confirmed their participation in Expo Pakistan 2008. TDAP has further said that the exhibitors were showing great enthusiasm and so far more than 50% confirmed booking has been received from Textile and Garments, Food, Auto parts, Engineering Goods, Pharmaceuticals, Surgical Goods, Sports Goods, Rice, Furniture, Sea Food, Fruits, IT, and Women Entrepreneurs. 

Mr. Qazi said that the representation of 16 Malaysian companies in Expo Pakistan is a reflection of the confidence of Malaysian businesspersons reposed on business friendly environment of Pakistan and lucrative trade and investment regime of the country, as Geo-commercially Pakistan has emerged as an international hub for trade and commerce; which augurs well for structuring business relationships and investment opportunities the high commissioner said that Trade Development Authority of Pakistan (TDAP) has specifically been requested to accord a rousing welcome to Malaysian businesspersons and facilitate them to see first hand what Pakistan has to offer but also learn about its people, customs, culture, arts and crafts that have a 5,000 year old history, tradition and richness of heritage. 

He termed the aim of this mega event as to provide an unprecedented opportunity for its participants to display quality and value added products to a wide range of high value buyers, establish new business leads, strengthen existing contacts and maximize business portfolios and expressed the hope that Malaysia traders and investors would fully exploit this opportunity, he added. 

The companies so far agreed to take part in Expo Pakistan includes Sunlite Textile Sdn Bhd, Sayma Trading (M) Sdn Bhd, Pollution Engineering, (M) Sdn Bhd, Sunshine Amanjaya Sdn Bhd, Rahmat Maju Sdn Bhd, Intelek Istimewa Sdn Bhd, Lonepark Corporation Sdn Bhd, I-Kartini Sdn Bhd, Sehreis Sdn Bhd, N.A.Z Medical Supplies Sdn Bhd, Expomal Sdn Bhd, Baidura Hodling Sdn Bhd, MenaraCekap Sdn Bhd, Abdul Hamed Car & Co, and Bareeza etc.


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## General Fujita

*Azerbaijan offers Pak to provide low cost electricity *

Written by Pakistan Daily: Breaking News, Pakistan, World, Politics, Business & Sports News 
Friday, 17 October 2008 17:57 
Azerbaijan expressed its interest in investing in water and power departments and offered Pakistan to provide low cost electricity via Iran. 
Azer diplomat, Ainullah Madtalli, has expressed these views in meeting with Federal Minister for Water and Power, Raja Pervez Ashraf on Friday. 

Federal Minister appreciated the offer and said that Azerbaijan should invest in the projects of generating power through water reservoirs. "Government will provide all kind of facilities to investors", he added. 

He also notified that power crisis had become serious in Pakistan and in this prospective, government was working on emergency basis in order to generate power through coal, water and other alternate sources. 

"We are trying to make in use coal reservoirs in order to meet the energy requirements, while government has established Thar Coal Development Board to obtain low cost electricity through this project", he said. 

Federal Minister also stressed to enhance tourism, trade and public contacts between the two countries.


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## General Fujita

*Risk free banking can change the fate of Pakistan 
*
Written by Pakistan Daily: Breaking News, Pakistan, World, Politics, Business & Sports News 
Friday, 17 October 2008 17:47 
Pakistan Economy Watch has said that government can attract huge local and foreign investments by taking necessary steps to secure the interests of accountholders by ensuring risk-free banking in Pakistan. 
Banks needs to be transformed from risk-taking institutions to risk less entities protected by government. 

Steps to enhance the confidence of depositors as well as investors will not only negate rumors that have gripped international market as well as Pakistan but also attract immense capital from other countries, said Dr. Murtaza Mughal, President, Pakistan Economy Watch. 

He said that such steps would help government to overcome budget deficit and current account imbalances etc. 

"After the slide in US markets, people as well as businesses are no more trusting banks and other financial institutions and the assurances by top government officials are viewed by majority of stakeholders as insufficient," he said. 

In this scenario, the capital will naturally flow where it is more secure. It is impossible to stop flight of capital and bar people from opening accounts in other countries in the age of internet banking. 

Pakistan is experiencing flight of capital towards Dubai and Malaysia, which could not be stopped despite best efforts of departments concerned. Similarly, the capital of other countries with less secure banks can travel towards Pakistani banks, provided they are more secured. 

Dr. Murtaza Mughal said to make this possible; government will have to provide a little bit of more security to depositors and investors as compare to other countries. Government can ensure deposit insurance products and can consider nationalizing some banks. 

The capital will now flow to the banks having government guarantees and regulators can charge extra fees against state guarantee. 

Such steps will boost confidence but it will increase expanses of lenders. To cope with this depositors and investors can be given some liberty. 

Non-nationalized banks with good reputation and solid background can also be given some relaxations


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## General Fujita

*Pakistan Telecommunication Company Limited offers free Internet service from today 
*
Written by Pakistan Daily: Breaking News, Pakistan, World, Politics, Business & Sports News 
Saturday, 18 October 2008 19:43 
Pakistan Telecommunication Company Limited (PTCL) has decided to offer free Internet service to all its customers, effective from today (Saturday). 

PTCL SEVP (Commercial) Dr Sadik Al-Jadir stated, With this perspective, PTCL, the largest IP service provider in Pakistan, now brings a revolutionary offer for all its landline subscribers, which is unmatched anywhere in the world.

He said, We strive to create value for our customers. We put value creation first and pursue it with a passion to achieve excellence and facilitate our customers.

Effective from October 18, all landline subscribers will have dial-up Internet services free of charge, he added.

He said that all PTCL landline subscribers could now experience the best dial up speeds with unlimited Internet usage during night hours from 10:00 p.m. to 07:00 a.m. Furthermore, subscribers can also avail up to 100 hours of free dialup Internet on monthly basis from 07:00 a.m. to 10:00 p.m. everyday.

In order to access the Internet, the subscriber can simply dial 131-77777 with ptcl as login and password, he added.

From October 18, PTCL customers availing unlimited dial up Internet package of Rs199/month would not be charged anymore, however, customers exceeding 100 hours of free Internet during daytime would be charged as per the existing tariff of PTCL dial up Internet at Rs6 per hour, he said.


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## Neo

*July-Sept current account deficit widens to $3.95bn​*
KARACHI: Pakistans current account deficit widened to $3.952 billion in the first quarter of fiscal year 2008/09 (July-September), compared with $2.271 billion in the same period last year, the central bank said on Friday. This is equvilant to 2.4 percent of the gross domestic product, analysts said.


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## Neo

*Current account deficit widens by 74 percent in first quarter​* 
KARACHI (October 18 2008): The country's current account deficit widened by 74 percent to 3.9 billion dollars during the first quarter of the current fiscal year mainly due to slow foreign inflows and rising imports. Official statistics on Friday revealed that during the July-September of FY09, the country faced current account deficit of 3.952 billion dollars against 2.271 billion dollars during the corresponding period of FY08, depicting an increase of 1.681 billion dollars in first quarter of 2009.

Economists said that rising current account deficit is a major challenge for the economic managers and high current deficit would cast further negative impact on foreign exchange reserves and the economy.

They said that the country's economy is already facing grim situation for last one year and the government has failed to take corrective measures. a"Increasing trade deficit followed by slow growth in exports and high imports are chief reasons of this increase in current account deficit," they added.

The State Bank of Pakistan statistics also indicated that principal factors responsible for the widening of current account deficit include a widening trade deficit, which surged by 84 percent to 4.366 billion dollars during the first quarter of FY09 against 2.369 billion dollars during the same period of FY08.

Services deficit registered a negative growth as it declined by 22 percent to 1.238 billion dollars in July-September of FY09 as compared to 1.594 billion dollars in corresponding period of FY08.

Similarly, income deficit has also witnessed a slight increase of 15 percent or 147 million dollars to 1.099 billion dollars from 952 million dollars. During the first three months, the country's overall income from abroad stood at 253 million dollars as compared to payments of 1352 million dollars to the overseas partners.

While, overall deficit including trade, services and income stood at 6.703 billion dollars against the current account transfers of 2.775 billion dollars in first quarter of FY09. Statistics show current account deficit without official transfers climbed to 4.046 billion dollars during the first three months of FY09 as compared to some 2.285 billion dollars during the same period of FY08.


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## Neo

*Azerbaijan offers to supply electricity via Iran​* 
ISLAMABAD (October 18 2008): Azerbaijan has shown interest to export electricity via Iran to Pakistan and to invest in the water and power sectors. According to a statement, the Ambassador of Azerbaijan, Dr Enyullah Madatli called on Federal Minister for Water and Power, Raja Pervez Ashraf here on Friday and discussed matters of mutual interest and bilateral relations to further boost economic ties between the two countries.

While welcoming the Envoy, the Minister lauded the idea of providing electricity through Iran to Pakistan. He offered him to make investment in the energy sector and said that this sector has great potential and the foreign companies are getting good returns on their investments.

The Minister said that currently Pakistan was facing many internal and external challenges and energy deficit is also one of them. He informed the envoy that the government was taking necessary measures to generate electricity to bridge the demand and supply gap through fast track projects.

He informed that the government now attaches high priority to exploit the indigenous resources like coal, hydel and wind for power generation. He said that the present government has set up Thar Coal Development Board to generate cheaper energy from Coal. He said the Azerbaijan expertise in hydroelectric power generation will benefit Pakistan and invited the Azeri investors to invest in these sectors.

He assured the envoy that Pakistan government would welcome them to invest and participate in the hydroelectric generation projects in Pakistan. The Minister also stressed the need to explore possibilities of co-operation in other sectors particularly in tourism. He said that both the countries should exchange delegations to promote tourism between the two countries.

The Ambassador also discussed other matters of mutual interest especially investment possibilities in water and power, particularly hydroelectric sectors. The Ambassador said that Azerbaijan has great electricity potential with surplus power and will provide every possible assistance and technical co-operation in this regard, which was appreciated by the Minister. He also expressed the hope that this meeting would further strengthen and enhance the bilateral and economic relations between the two countries.


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## Neo

*IMF aid, Saudi oil facility to help overcome economic crisis​* 
ISLAMABAD (October 18 2008): Former economic advisors believed that assistance from the International Monetary Fund (IMF), Saudi oil facility and any other financial support by the international community could rescue Pakistan from prevailing economic crisis.

Former top ranking economic managers told Business Recorder on Friday while explaining the current options available for the government to improve the economic situation.

Former Finance Minister, Sartaj Aziz and former Minister of State for Finance, Omer Ayub urged the government to restore the confidence of investors and international community to rescue the economy from being worsened. They showed unanimity on the point that the present economic situation is not favourable for attracting investment and foreign borrowing because of the law and order situation, poor economic policies and international recession.

Aziz suggested that the government should immediately set its priorities and evolve short, medium and long-term strategies in a bid to rescue the unstable economy. 'As a short-term strategy, the government should approach leading international financial institutions, focus on the Saudi Arabian Oil facility and arrange borrowing of 'foreign exchange reserves' of at least $10 billion from any country like China to back up the economy', he added.

Further, he emphasised that availability of Saudi Arabian oil facility may help bringing the country out of the prevailing economic crisis up to a large extent. The former Minister lamented that Pakistan's non-development expenditures are exceeding its development ones. 'As a medium-term strategy, the government should compress import, curtail non-development expenditure and concentrate on the industrial growth as well as achieving the 25million tons target of wheat production set for 2008-09.'

Further, 'If we succeed in achieving oil facility and wheat production target, then our most of the problems concerning squeezed foreign reserves, can be solved to some extent', Aziz said optimistically. He further mentioned that the country's reserves dropped to below $8 billion, which is alarming for the economy. Omer Ayub Khan said that due to the frequent reshuffling of finance ministers and finance secretaries, the system has remained inconsistent and demoralised.

'As a result of this reshuffle, people have shifted their money to other countries and no new investor is ready to come to Pakistan amid uncertainty,' he maintained. He alleged that rulers concentrated on their politics instead of evolving efficient and people's friendly policies under the unstable national and international economic atmosphere.

The former State Minister suggested that the rulers have to regain the confidence of foreign investors willing to invest in Pakistan, motivate donors and stabilise the currency. He defended economic policies of his government, saying that it was not responsible for power crisis and wheat shortage. All this, he said, is the outcome of the mismanagement of the present regime.

Further, Omer was of the opinion that the thermal plants has failed to generate power owing to non-payment of its dues by the government. 'There is no significant change in the population then how the demand of 5000mw has increased all of a sudden whereas the entire power requirement of the country is 7000mw,' he questioned. In addition, the government has to show its seriousness and competency to rescue the economy by formulating effective policies. Otherwise, the situation could turn to a massive economic disaster.


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## Neo

*Industrial output registers rapid decline​* 
MULTAN (October 18 2008): Pakistan's industrial output has registered a rapid decline during the current fiscal year. According to a report, during the current fiscal year, Pakistan could not achieve its output target, as during the last couple month of this year, it posted a negative trend of growth 4.22 percent.

The declining trend of manufacturing sector began during the last few years, due to inadequate level of investment in the country, especially in the industrial sector. According to the report, in the past, no efforts have been made to enhance the capacity of the industrial sector, which resulted in rapid decline in industrial growth.

On the other hand, increasing trend of cost of production, due to high power tariff, load shedding, gas shut down and worsening law order situation, made it impossible for industrial sector, especially textile and steel sectors, to maintain pace of growth, which plummeted to 8.8 percent.

Referring to the closure of many industries, especially textile and steel, the report pointed that that the flow of money and investment were the major cause of decline industrial production. While the import was rising, the environment of exports was also not encouraging, as the exporters had to face tough competition from their rivals - China, India and Bangladesh.


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## Neo

*PPIB asked to award Tarbela hydro project to Wapda​* 
ISLAMABAD (October 18 2008): A four-member committee has recommended to the Private Power Infrastructure Board (PPIB) to award 960MW Tarbela extension hydro project to Water and Power Development Authority (Wapda).

Sources said the PPIB had constituted the committee comprising PPIB Managing Director, Additional Secretary (CF), the Ministry of Finance, Member (Water) Wapda and Hussain Ahmed Siddiqui (a board member), in its meeting held on September 20, 2008 to deliberate on the issue and present recommendations to it within two weeks.

The committee noted in its report that on the basis of infrastructure and other logistic support, the award of contract to Wapda, which was working on the project for years, can ensure early completion of this key power project and help Pakistan overcome growing electricity shortage.

The committee in its recommendations observed that Wapda was working on the project for last 8 to 10 years and award of contract to it will result in its early completion. It also noted that Tarbela Extension Hydro Power Project is an irrigation project and award of its contact to a private sector party can delay its completion.

Wapda had shown willingness to get Tarbela Extension Power Project contact. Wadpa chairman in a letter had submitted to the PPIB board that instead of handing over the project to M/s Tarbela Hydro Limited and Associate could delay completion of this key project.

The Wapda chairman's letter presented in the PPIB board meeting said: "Tarbela dam project in of key importance for national economy, which demands its development in the public sector by Wapda." The board was informed that in pursuance of its decision taken in 72nd meeting, the PPIB had issued notification of pre-qualification to M/s Tarbela Hydro Limited and Associates on November 8, 2007 and asked for performance guarantee (PG) within one month.

In response the sponsors (M/s Tarbela Hydro Limited and Associates) submitted PG with a request to incorporate a special clause in the Letter of Intent (LoI) regarding reimbursement of the feasibility study cost, in case the project is discarded by GoP after approval of the feasibility study.

The board was briefed about the provisions of 2002 Power Policy regarding hydel projects and reimbursement mechanism for cost of feasibility studies to sponsors in case or failure of tariff negotiations with the power purchaser.

It was highlighted that the project is under process for the last couple of years and it was being awarded to the private sector with explicit agreement and consent of Wapda. Non-award of project to private sector at later stage may have serious repercussions for GoP initiative to attract investment from private sector. The members stressed the need to thoroughly deliberate the implications of non-issuance of LoI after submission of PG by the sponsors.


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## Neo

*World Bank to provide $26 million for Sindh coal project​* 
FAISALABAD (October 18 2008): World Bank will provide technical assistance Credit of approximately $26 million for Sindh Coal Technical Assistance Project (SCTAP), while Pakistan Government would arrange $6 million for this project.

In a project report, Michael Stanley, Lead Mining Specialist Oil, Gas, Mining and Chemicals Department of World Bank said that this Project will help the Governments of Sindh and Pakistan strengthen the enabling policy, legal, and regulatory frameworks conducive to new investments in the coal-to-energy sector; and to assist the Governments of Sindh and Pakistan to attract qualified private investors to develop Thar coal deposits and build new capacity for coal thermal power generation, guided by high standards of environmental and social sustainability.

The Project will also ensure that the coal-to-power sector development responds to the needs of Pakistan's long-term energy strategy. Expected Project outcomes would be: (i) various policy, legal and regulatory instruments, consistent with international good practice, used by the Governments of Sindh and Pakistan in developing coal-to-power sector; and (ii) bidding and negotiations leading to financial close on new investment into at least one coal mine and at least one independent power producer (IPP) in Thar, he added.

Commenting on the first Component, WB expert Michael Stanley said that this component Provide policy, legal and regulatory advisory services to key government agencies and other counterparts in order to facilitate coal-to-power sector development, including ancillary infrastructure development, and complete the transaction for a selected Thar coal block.

To this end the project will assist in developing the coal sector policy and the coal development road-map in line with Pakistan's long-term energy strategy, updating applicable laws and regulations (including those related to mineral licensing and tendering procedures), and setting up operational environmental and social management framework for coal-to-power sector. The project will also strengthen the capacity of the provincial and federal governments to improve sector governance and attract quality private investments.

Second Component related to Transaction Advisory Services, which will support of the governments' efforts to attract quality private investors to develop Thar coal and to produce thermal power, the project will (i) update, or develop where needed, key technical, financial, market, and local impact analysis and other information relevant to the investors, including a basin-wide land-use plan for Thar; and (ii) provide transaction advisory services and due-diligence monitoring for a coal mine and an IPP transactions in a selected block of Thar, including preparation / issuance of requests for proposals, and assistance to the government with bid evaluations, negotiations, and financial closing, he mentioned.

Commenting on the Third Component, Michael Stanley said that this related to Project Management and Communications. Finance costs associated with managing the proposed Project, including project co-ordination among implementing agencies, procurement and financial management, and environmental and social management.

The project will also assist the Government of Sindh and Government of Pakistan to develop communications and outreach strategy with regards to the Project and to improve public consultations. Michael Stanley said that Pakistan faces increasing economic hardship through reliance on high-cost, imported energy resources used in end-use markets.

The healthy energy demand growth is expected to continue in the coming two decades, with Pakistan requiring an estimated additional 35,000 MW of power generation capacity by 2020, according to GoP's projections. The GoP expects a significant demand-supply gap to remain even after all low-carbon energy resources (such as indigenous hydropower, gas, and renewables) are matched to demand:

-- Pakistan's hydroelectric potential is estimated at 40,000 MW, out of which the economic hydroelectric potential is around 20,000 MW, whereas the capacity developed to date amounts to 5,010 MW. The risks to development include hydrological and geological risks; and production is seasonal (Pakistan's current installed hydropower capacity of 6,400MW falls to less than 2,000MW during the 4-5 months of winter when water flows are minimal). Cost of hydroelectric projects is very high, while interest from private sector has been low given security concerns.


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## Neo

*Pakistan discusses IMF aid option​*By Farhan Bokhari in Islamabad

Published: October 18 2008 

Pakistan officials on Saturday announced fresh plans to restore investor confidence and avoid default on foreign payments. The plans include the option of returning to an International Monetary Fund program to stem a further fall in already depleted foreign exchange reserves.

Pakistan cannot wait for long. Pakistan has to take action in the next 30 days said Shaukat Tarin, financial adviser to the prime minister. Mr Tarin acknowledged for the first time that a future IMF program was one of the options on the table, in addition to significant financial assistance from industrialized western countries and China.

Mr Tarin said a default on foreign debt payments was out of the question, adding that friendly countries and international financial multilateral institutions such as the World Bank and the Asian Development Bank were expected to give more than $4.5bn to help fill a financing gap for the current financial year.

Mr Tarin said Pakistan was seeking an additional $5bn-$6bn to not only fill the gap, but also build up quickly depleting foreign currency reserves within the central bank. However economists said Pakistan needs $10bn-$12bn in additional external resources to overcome the crunch.

I think Mr Tarin may be understating the worst case scenario if Pakistan is not able to restore confidence even with $5bn- $6bn of additional inflows. We are then looking at $10bn-$12bn as a safe option said a senior western economist.

Shah Mehmood Qureshi, the foreign minister, who has just returned from China, where he spent the previous four days accompanying president Asif Ali Zardari on a diplomatic visit, said China had agreed to widen the scope of its economic and nuclear energy cooperation with Pakistan. They [China] have agreed to help Pakistan more than the resource gap said Mr Qureshi without specifying the Chinese commitment in dollar terms.

A Pakistani finance ministry official said China had offered to help Pakistan avoid a default in its external payments with an initial offer of a soft loan of $500m. This offer is open ended. When there is a tough crunch, the Chinese will help us added the finance ministry official.

Mr Qureshi revealed for the first time that China had agreed to build two new nuclear power reactors in the central part of Pakistans Punjab province at Chashma. The Chinese have already built one reactor and are building a second in the region.

Western diplomats said the agreement was not a duplicate of the India-US civil nuclear accord signed recently, though it reflected Chinas commitment to further promote its nuclear energy cooperation with Pakistan.

This is very much a step-by-step Chinese approach where they will go from one reactor to another rather than publicly announce a long-term program and also get international approval from key institutions such as the nuclear suppliers group or NSG-the international umbrella of key nuclear supplier nations.

In recent years, Pakistan has faced a storm of international criticism over its nuclear program after it was revealed in 2004 that Abdul Qadeer Khan, the father of the countrys nuclear program, had traded knowledge and technology with Iran, Libya and North Korea.

Mr Khan has since lived practically under house arrest in Islamabad while successive Pakistani governments have denied requests from the western world, notably the US, for investigators to interview him with the aim of assessing the scale of Irans nuclear program.


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## Neo

*IMF may be approached for balance of payments support ​* 
Sunday, October 19, 2008

ISLAMABAD: Pakistans economic managers agreed on Saturday to approach the International Monetary Fund (IMF) if they fail to win required injection of dollars to fill the financing gap in balance of payments.

Only the announcement of $7 billion commitment to fill the financing gap will ease pressure on foreign reserves and the rupee value. Dollar inflows must start coming into the national kitty within one and half months, a senior official at the finance ministry said talking to The News after the Adviser to Prime Minister Shaukat Tarins press conference here on Saturday.

Governor State Bank of Pakistan Dr Shamshad Akhtar on Friday announced a bailout package for the banking sector by reducing CRR and SLR, which would ensure injection of Rs220 billion into banks.

This package was announced one week after the finance ministry gave written recommendations to the SBP for taking these steps on October 9. Evidently the central bank had to evaluate the viability of the proposals and take decision keeping in view the immediate and long-term affects of lowering the safety standards that protect the depositors interests.

Pakistan is facing a financing gap of $7 billion. If International Financial Institutions (IFIs) assistance worth $3.5 billion materializes, Islamabad will have to arrange remaining $3.5 billion from the rest of the world.

There is no other option left except formally writing a letter to the IMF for extending its balance of payments support to Pakistan. Now it is a matter of time when Islamabad formally approaches the Fund for a bailout package and it will be done within next one and half months, said a high-level official at the finance ministry.

Adviser to PM on Finance Shaukat Tarin said Saturday if Pakistan fails to arrange financing from plan A and B there would be the option of approaching the IMF.

The official sources said that President Zardaris expected from Chinese government to extend balance of payment support on immediate basis.

The second expectation of Islamabad leads towards Saudi Arabia, UAE and Kuwait. Zardaris third expectation is getting some assistance package from the Friends of Pakistan Forum, which will meet by the next month in UAE.

But the sources in Finance Ministry made it clear that the Friends of Pakistan forum is not meant for providing financial assistance to Pakistan. So dont increase expectations from the Friends of Pakistan forum.

Saudi Oil Facility on deferred payment on immediate basis seems unlikely, the sources said adding no Muslim country seems willing to rescue Pakistan by injecting $5-$7 billion on immediate basis.

President Asif Ali Zardari was contacting bilateral donors countries to inject few billion dollars in the next one and a half month period, a senior official of Gilani government said.

If it does not happen the remaining foreign reserves will start depleting rapidly as measures to curtail imports have failed, said the sources.

He was of the view that Pakistan would not default on paying $500 million Euro bond instalment, which will be due by Feb 2009.


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## Neo

*Tareen unveils plan to line up $4bn​*
ISLAMABAD, Oct 18: Adviser to the Prime Minister on Finance Shaukat Tareen unveiled a plan on Saturday to line up $4 billion with a short-term financial lifeline to bridge the deficit in balance of payments and build foreign exchange reserves.

I am very confident that we can do whatever it takes to build our foreign exchange reserves and avoid default, Mr Tareen told journalists after addressing a press conference.

Mr Tareen attended the Word Bank-IMF meetings in Washington recently and visited Beijing with President Asif Ali Zardari to drum up support for averting any balance of payments crisis.

He said that Pakistan needed around $4 billion for bridging the gap in balance of payments during the current fiscal year. He said his plan would be finalised in four to five weeks after consultation with all stakeholders. We will be in a sound position in the next 30 to 60 days, he asserted.

He said plan A aimed at bridging the gap in balance of payments, mainly through multilateral lenders (the Word Bank and Asian Development Bank) and frontloading disbursements from development assistance programmes in the current fiscal year.

The PMs adviser said the Islamic Development Bank and Britains Department for International Development were also expected to virtually double their planned assistance.

The World Bank will provide $1.5 billion and the ADB $1.6 billion. Five hundred million pounds would come from DFID, $500 million from the IDB and $1.5 billion from workers remittances bonds.

This is in excess of our needs and does not include assistance from the Friends of Pakistan forum, he said.

Mr Tareen said that under plan B, the government was expecting the required assistance from Friends of Pakistan to balance its budget deficit. China and Saudi Arabia are likely to make huge commitments at the Friends of Pakistan meeting in Abu Dhabi next month.

He said under plan C, Pakistan would seek assistance from the International Monetary Fund. We can go to the IMF if we want, but only as a backup, Mr Tareen said, adding that he was confident Pakistan had a viable plan to surmount its problems.

If the IMF approves our plan, then we will go for it. We are not getting additional conditionality. If they approve our plan, we can always talk. Pakistan cannot wait for a long time, he replied to a questioner.

We need action to induce money into the economy over the next one month. Otherwise, we have to see option C to curtail the decline in reserves, he said. The plan has been presented to international financial institutions to bail out the country from current economic woes.

He said donors were informed that the government had compounded peoples misery by increasing electricity tariffs and oil prices. We urged them to come forward to help the six-month old democratic government, he said.

Mr Tareen gave an upbeat account of his meetings with finance ministers of various countries and heads of international financial institutions, emphasising that only the next 12 to 24 months were problematic for Pakistan.

He said at the end of this period, macro-economic indictors  inflation and fiscal deficit -- would improve and expenditure would be reduced. Tax and non-tax revenue would be increased from 10.5 per cent to 15 per cent within five years, he added.

POVERTY: Talking about poverty alleviation, the adviser said poor families would be given vocational training to help them come out of poverty. He said medical insurance ranging between Rs15,000 and Rs20,000 per year would be given to the poor. More working facilities would be created at the union council level to create employment opportunities, he added.

Mr Tareen said the rupee had been overvalued for the past two to three years. The overvaluation inflicted heavy losses to local industries. It has increased cost of doing business, while consumers opted for cheaper imports.

We need a flexible and realistic exchange rate. It does not mean that the rupee would regain its value at 60 against the dollar, but it would be realistic.We have to show flexibility in the currency to discourage imports. The economists are working on it.

The adviser said agriculture growth had been declining for the past few years. He said the government was planning to augment water resources, implement food processing facilities, improve marketing and credit availability.

Mr Tareen said the government had decided to establish a trust to consolidate sick industries. After consolidation, these units should go into the hands of efficient people. We need export diversification. We will give incentives to encourage value-addition.

He said the government was planning to develop an integrated energy plan that would not only include electricity and gas, but also coal-based energy.

He said more reforms would be introduced in the banking sector and the stock market would be integrated with the mainstream economy.


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## Imran Khan

Pakistan can go to IMF: TarinBy SHAHBAZ RANA submitted 15 hours 5 minutes ago 

ISLAMABAD - Pakistan would have to knock the door of International Monetary Fund (IMF), if it could not get much-needed financial assistance from other world donor agencies and Friends of Pakistan during next month and a half, says Shaukat Tarin, Advisor to Prime Minister on Finance. 

We cannot wait any longer...Pakistan must show action in 30 days time, said the Advisor during a joint Press conference with Foreign Minister Shah Mahmood Qureshi here on Saturday after visiting China.

The Foreign Minister said China would help Pakistan build two more nuclear power plants, Chasma 3 and 4, with 680 megawatts power capacity. The total cost of these projects is estimated Rs 140 billion. On a question, Qureshi said Pak-China civil nuclear cooperation was an ongoing process and China recognised Pakistan needs. He said security of Chinese investors would be the priority of Pakistan.

To a question on seeking Nuclear Suppliers Groups (NSG) confirmation for expansion of civilian nuclear programme, the Foreign Minister said Pakistan and China had a strategic partnership and had been cooperating in the civil nuclear field for a long time.

He said Pakistan is a responsible state and is cognizant of its international obligations. Pakistan and China had cooperated in civil nuclear field under difficult circumstances in the past and would continue to do so in the future, he added.

Tarin said the IMF would sit in Dubai within 10 days and if it endorsed Pakistans proposed plan, then the country could get financial assistance from the Fund on its own conditions as back-up.

Pakistan is passing through the worst balance of payments crisis. The current account deficit, gap between foreign receipts and expenditure, has widened to $3.9 billion in just three months of the current fiscal year. The net foreign investment dipped by 9.7 per cent in the first quarter and the central bank is only left with $4.7 billion, which can hardly support one-and-a-half-month imports in the backdrop of fast devaluing rupee which was traded at 1$=Rs87 in the open market.

The Advisor said the rupee was falling because of reserves were eroding fast and, he added, when inflows would start coming in, rupee would be stable. He said the issue of Saudi oil facility worth $5 billion will be settled in next month and added Pakistan was not going to default on Sukuk bond, which will mature in February 2009.

We can arrange up to $5 billion immediately but we also have to look what we want, he added. 

The newly-appointed Advisor was confident that Pakistan had a viable plan to work through its problems. He said under the Plan A, Pakistan was hopeful to get aid from the International Financial Institutions and if that could not work, then it would turn to Plan B, envisaging assistance from the Friends of Pakistan, which were going to meet in mid-November in Abu Dhabi, UAE


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## Neo

*State Bank injects Rs 5.4bn, banks use discount window​*
** Some market players initially failed to understand mechanics of changes introduced by central bank​*
By Mushfiq Ahmad 

KARACHI: The State Bank of Pakistan had to inject Rs 5.448 billion into the banking system on Saturday even after the host of measures that the central bank governor announced on Friday took effect.

There was a scheduled outflow of Rs 58 billion from the market against the inflow of Rs 60 billion due to cut in CRR by 200 basis points. The net inflow in the market was only Rs 2 billion, said a banker. As the markets needs were larger, the banks went for discounting and the SBP had to inject money, he added.

A treasury official at one of the five big commercial banks said that some of the market players initially failed to understand the true impact of the measures announced by the Governor State Bank. The market actually received only Rs 60 billion in cash on Saturday as against Rs 180 billion or Rs 210 billion the people had expected after reading newspapers and listening to television stations, he said. The exemption of SLR on deposits of one year and above and the increased eligibility of PIBs towards SLR did not increase availability of cash in the banking system, but it did increase the availability of securities with the banks.

People were very relaxed in early trade as they were lending money even at 7-8 percent, he said. Later when they realized how much was actually available to the market they had to go to the central banks discounting window.

The borrowing at call rate, however, declined because the banks that were borrowing money at call rate because of non-availability of securities were able to borrow money at repo rate thanks to increased availability of securities. But some small banks continued to borrow money at 20-22 percent call rate because the cut in CRR and exemption of SLR did not benefit them much.

Small banks will continue to face problems until they recover their loans and bring their advance to deposit ratio down, said a seasoned banker. Their loan portfolio is too big. They actually need to recover their money from borrowers. That is the real solution of their problems. The governor did say at the press conference that some banks ADR was too high and they need to bring it down.

The treasury official said the central bank had not actually loosened its monetary stance. Restricting the banks from keeping ADR above 70 percent means the monetary stance has not changed, he said. It will result in 30 percent of banks money going to government securities, he added.

As a result of these measures, banks solvency would increase, commented a banker. After bringing ADR to 70 percent and investing the rest of the money in government securities the banks would be able to borrow money from the central bank whenever they are short of cash. There will not be such panic in the market as has been witnessed in the recent weeks, he added.


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## Neo

*Gemstone export can earn $1bn annually​*
KARACHI: Pakistan can earn $1 billion annually by exporting its value-added precious and semi precious coloured gemstones, Jawad H Khan, Chief Executive Pakistan Gems and Jewellery Development Company (PGJDC), said Saturday.

In order to achieve $1 billion export annually, there is a need to expedite the entire value chain thorough undertaking different initiatives including raising value chain productivity, setting up common facility training and manufacturing gems processing centres.

Currently we are exporting our precious gemstones in raw shape at throwaway prices because our workforce and professionals are not aware of latest mining skills besides traders do not have the facilities and resources of value-addition, he added. He said we need to create awareness of latest technology being used by the gems and jewellery sector of other countries and also need to focus on value added exports of gemstone from Pakistan.

To achieve the billion-dollar export target annually, PGJDC has established countrys first Gems and Jewellery Training and Manufacturing Centre (GJTMC) in Saddar Town recently. He said GJTMC would not only be used to impart technical training but industry could also use the machines to produce their big orders on latest machines by taking them on lease.

He said GJTMC of Karachi was first of the four planned centres to be established by PGJDC. Such centres are also being established in Lahore, Gilgit and Quetta.

CAD/CAM a state of the art jewellery manufacturing technology has been introduced in Pakistan for the first time by PGJDC. One each of CAD and CAM machines have been installed in two of the PGJDC in Karachi and Lahore. These centres would provide state of the art training in cutting and polishing gemstones as well as common processing facilities in order to enhance the value of gemstones sold at the local and international markets. He hoped trade would respond positively and the exports and imports would grow to hundreds of millions of dollars.

He said participants from across the world took keen interest in Pakistani Gemstone especially traders from Thailand, Sri Lanka and China the ICA at the Gem Show 2008, held in Dubai on October 13-15, 2008. He said PGJDC had displayed a rich variety of gemstones from Pakistan and made success in terms of establishing business-to-business contacts. He said possibly export would cross the billion-dollar mark and all this would happen for the first time in the history of Pakistans jewellery industry.


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## Neo

*Naveed urges reduction in gap between exports, imports​*
ISLAMABAD (October 19 2008): Finance Minister Naveed Qamar has underlined the need to reduce gap between imports and exports to drive the economy from the negative zone to comfortable levels. The gap has considerably increased due to record high oil prices in the world and diminishing purchasing power of rupee against greenback whereas the exports have not registered increase quantitatively and in price terms accordingly.

Talking to BBC Radio he said, the government is trying to narrow the gap between imports and exports for stabilising reserves and national economy. "If you see the remittances, they are pouring in on record level whereas the exports were going at normal rate besides routine income from traditional channels."

The import bill has surged considerably due to multiple factors, he said. "We only need to narrow the gap and we are doing that", he remarked. Attributing the fiscal deficit to the increased borrowing from banks since October last year, he said, the government was aware of the need to curtail the same.

Responding to a question about the help from World Bank and IMF, he said IMF examined measures taken by the government in this regard against their own models. "Then they too testified that these steps are sufficient to keep our economy under checks, which are needed." However, he added, such things take time to yield results.

When you take a step today, its effect comes after three or four months." Some other measures still need more time to produce desired results, he said adding that some of the measures taken by the present economic managers would fully impact the economy in three to four months.


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## Neo

*US urged to move quickly on Pakistan's economic crisis​*
WASHINGTON (October 19 2008): The United States and Pakistan should draw a plan to measure up to Pakistan's immediate economic and development requirements, as lingering economic difficulties could affect the country's war on terror efforts, former Interior Minister Aftab Sherpao said at a Washington think tank.

The chairman of PPP-Sherpao party said Pakistan remained firmly committed to the fight against terrorism in its own interest. "We have two challenges - one is security the other is economic - and they are intertwined - if we melt down economically, how do you expect us to counter the menace of terrorism (more effectively) there," he stated at the US Institute of Peace. Asked as to what Pakistan expects from the US at this moment, Sherpao underlined the importance of economic and anti-terrorism equipment support.

He welcomed Biden-Lugar legislation pending before the US Congress on expanding economic assistance for Pakistan to 1.5 billion dollars annually over next 10 years but noted the two partners need to move quickly on co-operation in the energy, economic and agricultural fields.

"Both Pakistan and the US share the goal to eliminate terrorism - we should help and complement each other," he said while analysing challenges facing Pakistan in its border areas with Afghanistan.

"If there is something that hurts us, we have to come up with solutions, which are compatible," he remarked when questioned about American unilateral strikes into Pakistani territory, which he said are counterproductive to anti-terror efforts as they add to negativity.


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## Neo

*Structural transformation in Pakistan: ADB urges clear corporate, business uplift plan​* 
FAISALABAD (October 19 2008): Asian Development Bank (ADB) has emphasised the need for establishment of a clear corporate and business development plan to achieve structural transformation in Pakistan. In a report on "Overall Growth and Competitiveness Concerns", ADB experts mentioned that Pakistan's contribution to global trade in high-value commodities is negligible.

The experience of the newly industrialised economies in Asia shows that robust growth needs to be sustained for at least 2-3 decades to have a significant and long-term impact on poverty reduction. With increasing links between more sophisticated markets across the region and the world, the government needs to set some clear targets for itself, and to develop the right policies and institutions.

While there have been many studies and some very good measures have been put in place by the government, it needs to establish a clear corporate and business development plan to achieve structural transformation, they added.

Commenting over the "Incentives for Investments", ADB experts stated that the Pakistan Government has implemented reforms to simplify cross-border trade and reduce tax rates to stimulate investment. Nevertheless, the payment of taxes and duties remains an impediment to doing business in Pakistan.

Businesses need to spend about 2 months a year (560 hours) to comply with tax regulations. Tax administration remains hampered by unduly bureaucratic processes with excessive scope for discretion and rent seeking by individual staff, lack of adequate systems of financial and physical control, weak human resources, and an absence of inspection controls in customs.

Discretionary powers need to be reduced and tax assessment and collection procedures that do not involve contact between taxpayers and tax officials introduced. This calls for better use of information technology and risk-based audit systems to reduce processing time, increase administrative efficiency and transparency, and raise levels of compliance, ADB experts added.

Commenting over the "Labour Legislation", ADB report stated that most surveys of business conditions in Pakistan indicate a major concern with the labour legislation. Businesses in Pakistan need to comply with from 72 to over 100 laws covering such issues as employment, working conditions, payment of wages and industrial relations.

The resulting complex web of legislation and institutions increases compliance costs and decreases both employers' compliance with the laws and the employees' effective protection from employers' abuse. Preventing Money Laundering, ADB report said, safeguarding the financial sector from being used to launder the proceeds of criminal activities is a key priority for the Government.

Under principle 18 of the Basel Core Principles for Effective Banking Supervision (2006) (Basel Core Principles), "supervisors must be satisfied that banks have adequate policies and processes in place, including strict 'know your- customer' rules, that promote high ethical and professional standards in the financial sector and prevent the bank from being used, intentionally or unintentionally, for criminal activities", it was explained.

ADB report said that it aims to develop and implement legal and institutional measures that will meet international standards to combat money laundering and the financing of terrorism, notably the Financial Action Task Force on Money Laundering's (FATF) recommendations on anti-money laundering and combating the financing of terrorism (AML/CFT), usually described as the FATF 40+9 Recommendations.

To this end, Pakistan has embarked on a range of efforts, including becoming a member of the Asia/Pacific Group on Money Laundering, a regional body associated with the FATF tasked with promoting implementation of the FATF 40+9 Recommendations in Asia and the Pacific, and committed to implementing international standards for AML/CFT.

At the national level, Pakistan adopted an Anti-Money Laundering Ordinance in September 2007. The ordinance provides the legal framework for AML activities, including recognising money laundering as a criminal offence and establishing a Financial Monitoring Unit (FMU) in SBP to receive and process reports of suspicious activities.

While the adoption of the ordinance is a significant milestone toward greater transparency, further improvements are needed. First, the Anti-Money Laundering Ordinance provides for a cumbersome supervisory structure consisting of a national executive committee and a general committee. The national executive committee includes relevant ministers, the SECP chairman, the SBP governor, and the director general of the FMU.

The general committee includes principal civil servants from the ministries represented at the national executive committee, the SECP chairman, the SBP governor, and the director general of the FMU. While the general committee is intended to provide assistance to the national executive committee in carrying out its functions under the Anti-Money Laundering Ordinance, it is unclear how this is supposed work in practice.

One national committee to develop policies and strategies for AML/CFT would be a better structure. The Anti-Money Laundering Ordinance also envisages that the director general of the FMU be supervised and controlled by the general committee. This is inconsistent with international standards and best practices, as the FMU should have financial and operational autonomy.


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## Neo

*Services trade deficit narrows down by 22 percent​*
KARACHI (October 19 2008): The country's services sector trade deficit declined by 22 percent, to 1.2 billion dollars, during the first quarter of current fiscal year, mainly due to rising trend in services export. The State Bank on Saturday said that the services sector trade performance was very encouraging and the services sector deficit had reduced by about 356 million dollars during the July-September period of the current fiscal year.

During the quarter, services sector deficit stood at 1.238 billion dollars as against 1.594 billion dollars of the same period of last fiscal year. Economists said that although the services sector deficit had declined by about 22 percent but it was still at a high level, and should be reduced further in the future to save the forex reserves.

According to the SBP, the services exports presented a significant growth during the first quarter and surged by 67 percent, or 425 million dollars, to 1.053 billion dollars, as compared to 628 million dollars in the corresponding period of last fiscal year. However, this sector's imports continued to grow and increased by 69 percent, to 2.291 billion dollars, in this quarter, over the imports of 2.222 billion dollars of the same period of last fiscal year.

Economists said that increasing trend in exports of services sector was a positive indication, but the rise in imports was a matter of concern. They said that the huge import payments of transportation travel services, insurance, technical fees, royalties and government sector were the major contributor in the high import of services.

Meanwhile, during the month of September services deficit stood at 171 million dollars, with 629 million dollars exports and 800 million dollars imports. The country earned about 267 million dollars on account of transportation services, 57 million dollars from travel, 25 million dollars from communication, 7 million dollars from construction and some 488 million dollars in other government services during the quarter under review.

On the other hand, transportation payments stood at 999 million dollars, travel 425 million dollars, communication 29 million dollars, construction 10 million dollars, insurance 33 million dollars, financial sector 48 million dollars and computer and information technology sector payments at 30 million dollars in the July-September period.


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## Neo

*SBP bailout plan: business community shows mixed reaction​* 
LAHORE (October 19 2008): There was mixed reaction of businessmen and investors of Lahore on the State Bank of Pakistan's Rs 270 billion bailout plan for banks. Pakistan Association of Automotive Parts & Accessories Manufactures Chairman Malik Mohammad Aslam said that Paapam would welcome and support all steps taken by the State Bank to strengthen and stabilise the rupee.

He said that a depreciated rupee is neither in the interest of exporters nor importers of the engineering goods or raw materials. Former President of the Federation of Pakistan Chambers of Commerce and Industry Iftikhar Ali Malik welcomed the bailout plan as a prudent monetary policy but said all segments of society should perform their patriotic role and not buy dollar in panic.

The veteran business leader called upon the patriotic businessmen and rich people to bring their dollars in the market and foil attempts of Pakistan's enemies who are conspiring to destabilise it by weakening the rupee.

Former Vice President of Lahore Chamber of Commerce and Industry, Aftab Vohra opined that Rs 270 billion cash with banks would further surge the demand for dollar and depreciate value of the rupee. He argued that banks will utilise this money to buy dollars from the open market, invest in the speculative stock market or consumer financing.

A leading textile miller Mian Faraz Alam said instead of risky bailout for banks, the government should steer the textile sector out of crisis with a comprehensive relief package. He said the textile sector has the potential to boost the country's exports to $35 billion in a couple of year, remove the trade imbalance and stabilise the rupee.


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## fatman17

Capitol Hill paper urges fast-track economic assistance for Pakistan 

WASHINGTON, Oct 19 (APP): Highlighting Pakistan&#8217;s sustained push against militants along its Afghan border, an influential Capitol Hill newspaper has called for fast-track economic assistance for the country as Islamabad&#8217;s envoy in Washington reaffirmed the democratic government&#8217;s commitment to simultaneously fight extremism and restructure the economy. 

*&#8220;Congress could play its part by passing legislation sponsored by Sens. Joseph Biden (D-Del.) and Dick Lugar (R-Ind.) to provide $1.5 billion a year in economic aid. *

&#8220;The next president certainly will put more forces into Afghanistan. But as long as Congress is spending billions on bailouts and stimuli, it ought to be able to come up with a billion for strategic Pakistan Roll Call said in its latest edition. 

*The Biden-Lugar legislation has been endorsed by both presidential candidates and has won approval of the Senate Foreign Relations Committee but it remains to be voted by the full Senate and the House, where it is still to be introduced.* The newspaper claimed Pakistan is seeking $10 billion to $12 billion in guarantees from the international financial institution, the United States, China and Gulf Arabs to tide over its financial difficulties. 

Noting the US administration&#8217;s endeavors to help Pakistan, the Roll Call reported &#8220;the United States is helping with an IMF plan &#8220; likely to be $5 billion to $10 billion, a State Department official said &#8220; and Secretary of State Condoleezza Rice has tried to form a &#8220;Friends of Pakistan&#8221; consortium, but so far has gotten only &#8220;promises, not pledges or numbers.&#8221; 

What Pakistan is trying to do, Ambassador Husain Haqqani said, is &#8220;fight a war and restructure an economy simultaneously. It&#8217;s not easily done.&#8221; The newspaper applauded the positive signs in the anti-terrorism campaign launched by Pakistan military under the civilian government. The analytical report noted the State Department and Pentagon officials acknowledge the Pakistani campaign under President Asif Ali Zardari. 

&#8220;We have a tribal awakening program whereby the tribes are being mobilized to fight al-Qaida and the Taliban,&#8221; Pakistan&#8217;s ambassador to the United States told executive editor of the publication. Haqqani particularly cited the Pakistani forces&#8217; actions in the tribal area of Bajaur, which borders Kunar province in Afghanistan, a stronghold of al-Qaeda-linked militants. 

*&#8220;And, we have used our air force for the first time, thereby diminishing the need for America to come into the Pakistani side and bomb,&#8221; the ambassador stated.*


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## Neo

*IMF encourages Pakistan to accept funding ​* 
DUBAI (October 20, 2008): Pakistan should consider seeking an emergency support package from the International Monetary Fund, a senior IMF official said on Monday ahead of talks on Pakistan's restructuring plan.

Mohsin Khan, director of the Middle East and Central Asia department at the IMF, said Pakistan has not made a formal request to the IMF for emergency funds but that options were running out.

"Market borrowing is not an option, not in the current markets," Khan told Reuters in an interview.

Officials from the IMF and Pakistan will meet on Tuesday in Dubai to discuss details of the country's financial restructuring plan, which does not include IMF funding at this stage, Khan said.

Pakistan is rapidly losing foreign currency reserves, and analysts say it needs up to $3-4 billion urgently to stabilise the economy, although the total financing gap for the balance of payments was projected at around $7 billion for the fiscal year ending June 30, 2009.

Khan estimated that Pakistan had unmet funding needs of around $4 billion. "Where that money is going to come from is anybody's guess," he said.

Many wealthy donor nations are embroiled with their own financial crises, leaving few options for Pakistan, he said, other than some of the energy exporting nations in the Gulf and multilateral organisations like the IMF.

"There has been no formal approach to the IMF," Khan said ahead of the meeting. "Would I encourage them to? The answer is yes."

The IMF would be able to provide funding to Pakistan on favourable conditions with around 5-6 percent interest, Khan said, adding the most painful part of restructuring requirements -- the abolition of petrol subsidies -- had already been done.

"Were they to make a formal request, we can move really fast," he said.


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## Neo

* To attract foreign investment: CDA to hold property exhibition, road show in Dubai​* 
ISLAMABAD (October 20 2008): The Capital Development Authority (CDA) is planning to hold property exhibition and road show in Dubai with the objective to attract foreign investment in the real estate sector in Islamabad. These events aim to generate funds for development projects planned by CDA and to bring the scarce foreign exchange into the country.

This was stated by the newly appointed Chairman of CDA, Tariq Mehmood, in an exclusive interview with Business Recorder.

He said that these events in Dubai would take place in March or April next year, and the Privatisation Commission, the Planning Commission and other relevant departments would also be involved in this programme.

"We are facing acute financial crunch, which could mar the ongoing development projects of the Authority", Mehmood said, adding that the projected budget of the CDA for last fiscal year was Rs 25 billion, out of which Rs 20 billion was targeted to be generated through land auction. However, no auction took place during the last one and a half years. He lamented the fact that the major issue of water shortage had been put on backburner because of government focus on developing other infrastructure. This had forced the CDA to ration water in the capital.

"We need 125 million gallons water a day to supply drinking water to the inhabitants of the capital, while availability is just 51 million gallons a day. Thus, we are facing acute shortage of over 60 percent", he said, and added that besides water shortage 30 percent of available water is being wasted through leakage from outdated pipelines.

With the underground water table going down, several tube-wells have become useless, he said, adding that a survey was being conducted to dig the existing tube-wells deeper. He said that issue of water shortage was taken on war footing basis and it is expected that six small dams will be constructed in Islamabad.

Chief of metropolis admitted that most of the water in Islamabad is contaminated due to rusty pipelines and, in many places, water supply lines are mixed with sewerage lines. There is a problem in filtration plants, and a task force was formed to look into the matter thoroughly, he added. "We are looking to construct small dams on the pattern of the study conducted by Japan International Cooperation Agency (Jica) for construction of small dams in 1987", he said, adding that the task force on water was asked to review this study to meet the water shortage.

CDA, he said, had plans to bring a pipeline from Ghazi Barotha, at a cost Rs 47 billion, but this project is still to be implemented. Mehmood vowed that he would remove all procedural bottlenecks in this regard and work will be started on the project soon.

Talking of procedural and political bottlenecks of the Ghazi Barotha pipeline, he said that provinces have their share in this project while the capital was totally ignored. "We have 4000 to 5000 families from NWFP residing in Islamabad, 500 to 700 families from Balochistan and over 1500 from Sindh, while all provinces have their houses and fixed quota in federal government jobs and they have to accept the water share of the capital", he said. He said a special committee of senior and influential citizens from all four provinces was formed and merged to form a water task force to resolve the water issue of Ghazi Barotha pipeline.

Talking of his vision for the future, he stated that CDA would construct one 'Cineplex' at Murree Road, for which land has already been procured. A second Cineplex will also be constructed as soon as land is identified for it. He said that two international standard ladies' parks in F-7 and F-10 sectors would be developed besides ladies clubs in G and I sectors. He said that the park constructed for disabled persons had been completed and within a week or two it would be opened after formal inauguration.

About roads infrastructure he said that the Authority would give priority to all the on-going projects and would try to complete them on schedule. This includes expansion of Rawal Lake Park, up-gradation of Saidpur Village, Shakarparin Park, construction of important Avenues, roads, underpasses, overhead bridges, widening of Islamabad Highway, and so on.

He said in the past priority was given to road infrastructure leading from North to South in Islamabad while 9th and 7th Avenues have been constructed which have proved helpful in dealing with increasing traffic pressure. "But my focus would be on establishment of road infrastructure from east to west", he maintained.

He said that 11th and 10 Avenues will be built soon while Kashmir highways will be expanded to 5 lanes from existing 3 lanes. He said that Margalla Avenue will be constructed starting from Nicolson Monument at G T Road to Murree Road which will facilitate people coming from NWFP and Northern Areas. Regarding establishment of new residential and industrial sectors, Tariq said that ten new sectors, including 8 residential, one industrial and one institutional, are in the works.

He said that CDA is acquiring about 4500 acres land in Kurri, Jhaba Teli and Pindori; and the current residents of these areas would be settled in 'Model Villages' in these areas. "We have resolved the decades-long issue of E-11, F-11/4, I-11, I-12", he said. He said that his main focus would remain on beautification of Islamabad to make it a capital of international standard and an attraction for foreigners.


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## Neo

*AETP to help achieve, sustain 8 percent annual economic growth​* 
FAISALABAD (October 20 2008): Accelerating Economic Transformation Programme (AETP) will help Pakistan achieve and sustain average annual economic growth of about 8 percent from 2010 to 2020, through a process of structural transformation of the country's economy.

In a final project report, R. Subramaniam, Sector Director and Team Leader of Central and West Asia Governance and Finance Division (CWGF) of Asian Development Bank said that the AETP will provide the fiscal and implementation support needed to enable the Government to undertake and leverage reforms. The expected outputs of the AETP are: (i) the removal of existing distortions, thereby initiating structural transformation; (ii) strengthening of financial intermediation to support structural transformation; and (iii) development and implementation of a national structural transformation strategy, he added.

Subramaniam said that the AETP is structured as a cluster of four subprogrames over 2008-2011. Subprogram-1 attends to the urgent task of addressing the fiscal implications of the current food and energy crisis and short-term investment climate problems. It will initiate reforms that will be carried forward in the medium term. Subprograms 2-4 will build on these fiscal consolidation reforms and on analytical work and stakeholder consultation.

These subprograms will support the government to implement policies targeted at economic diversification and structural transformation. By addressing costly and inefficient subsidies in the energy and agriculture sectors, the AETP will provide fiscal space for the government so it can finance overall development efforts. By helping to raise confidence in the banking system through a stronger regulatory environment, the AETP will mobilise financial resources and help to develop strong financial institutions that can channel investments to their most productive uses, he added.

In tandem with a new industrial policy to diversify and deepen the industrial and export base, Subramaniam said that these efforts are expected to initiate an economic transformation that will enable Pakistan to sustain high economic growth.

AETP is premised on three key principles. First, Pakistan needs to address certain economic distortions in the short term, specifically by reducing and eventually abolishing inefficient subsidies and targeting them to benefit the poor and vulnerable. Second, Pakistan needs to deepen financial intermediation and increase financial sector stability and soundness. Third, Pakistan needs to diversify its economy and increase the share of industry from the current level of 26 percent of GDP and to increase the share of manufacturing with high value-added. In parallel, it needs to increase agriculture productivity and make its services sector produce greater value.

It is estimated that Pakistan will need more than $1.6 billion to transition from the inefficient subsidy schemes to a targeted cash transfer and food safety net programme in the first year of AETP, and about $3 billion to resolve the accumulated debt in the electricity sector. The AETP will help Pakistan to address the ongoing food and energy crisis in a systematic manner. Subprogram-1 is also one ADB's first responses to its developing countries' needs in the food crisis, first announced by the President at the Asian Development Bank (ADB) Annual Meeting in May 2008 and contained in the Board information paper ADB's Response to the Food Crisis, Subramaniam explained.

He pointed out that the Structural Transformation of an economy of the size and nature of Pakistan's cannot take place quickly or through rigidly prescribed conditions. To achieve the principles, the AETP sets out a 4-5 year design and implementation period, and a cluster structure of four subprograms that will provide flexibility to meet evolving circumstances. It sets out short-and medium-term actions, with changes to come beyond the programme period. The AETP will only tackle the policy issues, with a large number of procedural and process-related changes taking place in parallel to the proposed reform measures.

Subramaniam said that AETP envisages immediate reforms to remove pricing, procurement, or other finance-related distortions (eg, debt) in certain key sub-sectors such as wheat and electricity. Reforms are also needed in the financial sector to boost public and investor confidence. In parallel, Pakistan needs to initiate the process of structural transformation of its economy.


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## Neo

*314 small dams to be built in four years​*
ISLAMABAD (October 20 2008): Three hundred and fourteen small dams will be constructed over a period of four years in the country under National Programme for Small Dams. The initiative will provide two million acre feet (MAF) of additional water to irrigate additional over four hundred thousand acres of land.


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## Neo

*Liquidity injection good, CBMs also needed​*
EDITORIAL (October 20 2008): On October 4th 2008, the State Bank of Pakistan reduced the Cash Reserve Ratio (CRR) by one percent and announced a second reduction effective from November 15th to cumulatively provide Rs 62 billion liquidity to the banking system. After providing Rs 31 billion in the first stage, SBP Governor Dr Shamshad Akhtar flew out to Washington D.C. to hold discussions with the International Monetary Fund and the World Bank.

Meanwhile, the banking system came under increased stress as nervousness among bankers themselves caught on with clients and the liquidity gap in the system increased several-fold. As a result, the Governor upon her return, had to inject Rs 120 billion through an additional reduction of two percent in CRR, effective from October 18. Simultaneously Rs 120 billion of bank held government securities were freed from Statutory Liquidity Requirements (SLR), enabling the banks to use them to raise cash for meeting the pressure of withdrawals.

The new SBP move is nothing more than a single dose of a sedative analgesic, when a full course of strong antibiotics is still needed to remove the deadly infection afflicting the financial system. The root cause continues to cause unabated pain.

A solution to the fast growing current account deficit needing inflows of foreign capital cannot be found in printing rupees and injecting them into the financial system. The result of this failed policy is all too apparent. The monetary overhang of Rs 600 billion plus from the outgoing financial year is the source further fuelling imported inflation arising from high oil and food prices. Framing a budget, while using the traditional methodology, has resulted in further borrowing by the government - to the tune of Rs 262 billion - in the first quarter of the current financial year. Keeping the fiscal deficit at 4.70 percent instead of reducing it to below four percent for FY09 is just not tenable. During the July-September period, net foreign assets (forex reserves) have fallen by Rs 185 billion.

The currency-in-circulation has risen by Rs 98 billion. And, bank deposits have dropped by Rs 146 billion. All this has happened at a time when bank advances are seasonally expected to peak in the next two months, mainly for agri items such as cotton, rice and sugarcane. This situation requires at least Rs 300 billion. So the challenge for the SBP is to see that the infusion of liquidity trickles down in letter and spirit to meet the immediate need, as it is an inescapable requirement for exports as well as food import programme.

Borrowing from local banking system for the budget is carried out to meet the residual gap between expenditure and resources. These sources are: revenue; non-tax income receipts such as earning of public sector enterprises and fees, and, foreign funds such as loans and borrowings. Unfortunately, however, it is the virtual drying up of the last source which has resulted in bloating government bank borrowing.

Rising bank borrowing has diluted the impact of monetary tightening as core inflation continues to swell. However, the catalyst for last week's banking crisis is the capital market. Failure to restore political stability and bring an end to persistent uncertainty have caused flight of capital. The KSE is continuously sliding since April - the month after achieving a record high. This has made investors nervous. There was a mistaken notion that a virtual bourse shutdown through the placement of a floor, while denying a quick exit to investors, could somehow bring a semblance of stability.

This in fact resulted in redemptions on mutual funds, forcing money market open-end funds to withdraw their deposits from the banking system. What was a severe headache of the Securities and Exchange Commission of Pakistan's has now turned into a full-blown infection, which desperately needs strong medicine from the SBP, while the banking system requires a prompt surgical procedure.

SBP needs now to be proactive instead of reactive. It needs to meet treasurers and risk managers of each bank to analyse gap position and review credit lines availability and utilisation. After analysing the susceptibility on liquidity gap, Advance to Deposit Ratio (ADR) - prepare an anesthetic dose - and use its Open Market Operations (OMOs) to redistribute liquidity within the interbank market and manage the rates.

Banks which cannot balance the gap book within next three months, through change in both liability and asset profile should be ordered to undertake a rights issue. The rights issue should be at least one and half times the liquidity drawn from the interbank market. Otherwise, the persistent, liquidity borrowed be converted into equity. The dilution of existing shareholders would help in arranging a sale or merger. It would be difficult, in the current business cycle. However, every effort should be made to protect the depositors. A similar surgery for the non-bank financial sector is needed. Weak institutions must be handed-over to strong commercial banks for nurturing and growth.

The bulk of reduction in CRR and SLR, etc is set to go to the big banks, while the liquidity need of smaller banks and non-bank financial institutions is going to become more critical. The high level of Advance to Deposit Ratio (ADR) has been persistent for six months or more. Now the system average is said to be 75 percent. And, according to Governor Akhtar, since some banks are highly leveraged, they are being ordered to reduce the ADR to 70 percent within the next six months.

What will be the psychology of lenders in an ebbing business cycle? They will probably become more risk averse. Some of them will have the liquidity but they will be hesitant to lend aggressively. Others, who are at 80 or 85 percent ADR, will not lend at all. Without a reduction in circular debt of oil and utility corporates from the banking system, government's continued reliance on the banks would crowd out the private sector which seasonally is in a borrowing phase.

Providing liquidity is not a solution in itself. A mechanism to refinance the mutual fund industry, suspension of subjective provisioning as well as mark-to-market accounting rules may be needed. Bankers have become gun shy and standby and back-up facilities need to be in place. They may not be needed, but confidence-building measures (CBMs) are as essential as liquidity for stabilising the financial system.


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## Neo

*US diplomat warns no blank cheque for Pakistan​*
ISLAMABAD (AFP)  The top US diplomat for South Asia met Pakistan President Asif Ali Zardari on Monday and warned that international donors would only give carefully targeted aid to the troubled country.

US Assistant Secretary of State Richard Boucher visited Pakistan as its leaders face a growing Islamic militant insurgency and major economic difficulties.

But Boucher warned that no hand-outs would be available from the "Friends of Pakistan" -- a group of nations, including China, the US, Britain and the UAE, which have pledged to help the country to stabilise.

"There is no money on the table," Boucher told reporters in Islamabad. "The goal is to put the money where it belongs. It is not a cash advance."

Pakistan has denied being at risk of defaulting on its foreign loans or suffering a balance of payments crisis.

Shaukat Tareen, the new finance adviser to Prime Minister Yousuf Raza Gilani, repeated at the weekend there was "no danger" of a loan default.

However, he admitted "plan C" was a loan from the International Monetary Fund.

Boucher's visit came after a series of US missile strikes into the country's tribal regions that have strained bilateral relations.

He and Zardari had discussed the "war on terror" and Pakistan's worsening economic problems, a Pakistani government official told AFP on condition of anonymity.

The United States says insurgents striking international troops in Afghanistan are based in Pakistan's border tribal belt, and has stepped up its missile attacks since a new government came to power in Islamabad in March.

Ties between the allies were further tested last month by US special forces in Afghanistan launching a raid into Pakistan that killed several Pakistanis.

Zardari has vowed zero tolerance against violations of his country's sovereignty amid the attacks, which have stoked anti-US sentiment in Pakistan.

In the latest of Pakistan's own military operations against Islamic militants, at least 12 Taliban were killed when jets and artillery pounded hideouts in a tribal region near the Afghan border, officials said.

The clashes took place in Bajaur, where Pakistani troops and militants linked to Al-Qaeda and Taliban have been engaged in fierce fighting since August.


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## Neo

*Pakistan May Need $10 Billion Over 2 Years, IMF Says ​*
By Matthew Brown

Oct. 20 (Bloomberg) -- Pakistan may need as much as $10 billion from donors over the next two years to avoid defaulting on its debts, the International Monetary Fund said.

Pakistan calculated ``they needed financing somewhere in the region of $3 billion to $4 billion,'' IMF Regional Director Mohsin Khan said in an interview in Dubai today. ``We thought that it was closer to $5 billion; $5 billion this year and $5 billion next year.''

Pakistan may seek an IMF loan for the first time in four years to prevent the nation defaulting on its debt. Finance adviser Shaukat Tarin said Oct. 19 his country may seek a loan from the International Monetary Fund in a month should other lenders decline a request for as much as $4.5 billion in funds to help overcome an economic crisis.

Foreign-exchange reserves of South Asia's second-largest economy have plunged more than 74 percent to about $4.3 billion, enough to pay for less than two months of imports, in the past year and the country has $3 billion in debt-servicing costs due in the coming year.

Pakistani and IMF officials are meeting in Dubai over the coming days ``to look at the Pakistani program in much finer detail, to say that if Pakistan were to make a formal request, could we support this program or not,'' said Khan.

At the end of the meeting in Dubai, the IMF should have a ``firm idea of how much they need, who else is in the picture, and then it will be worked out what the IMF can do,'' said Khan.

All-time Low

The rupee slumped to an all-time low last week as the current-account deficit widened to a record and inflation jumped to a 30-year high. The local currency had its biggest gain in seven years today on optimism a bailout may help avert a crisis. Pakistan came off its last IMF program in December 2004.

``If I don't feel the comfort level with the multilateral agencies and our bilateral friends in three to four weeks, then I'll have to write to the IMF,'' Tarin said in an Oct. 19 interview.

Standard & Poor's, doubting Pakistan's ability to repay debt, cut the long-term foreign-currency rating on Oct. 6 to seven levels below investment grade, and said it may lower it again. Moody's Investors Service lowered its credit outlook to negative on Sept. 23, citing a risk of ``missed repayments.''

Pakistan has said it has almost removed subsidies on fuel by raising domestic fuel prices six times between April and July in line with global crude costs. Subsidies on electricity are due to be removed by June 2009.

Conditions Attached

``The most difficult measures that the government has had to take have been the elimination of subsidies and the commitment to zero net borrowing from the central bank,'' said Khan today. ``My guess would be that the other conditions that would be attached to any loan would be relatively minor compared to these.''

Pakistan's $750 million in 6 7/8 bonds due in June 2017 were quoted at a price between 40 and 43 cents on the dollar, according to a Bloomberg survey of four dealers. None of them reported trades today. The notes are lower after their initial sale in May last year at par, or 100 cents on the dollar.

Riskiest Borrower

Five-year credit-default swaps on the country's debt were quoted around 2450 basis points in New York on Oct. 17, making Pakistan the riskiest government borrower after Argentina. That means it costs $2.45 million annually to protect $10 million of the country's debt from default for five years. The cost reached a record $3.07 million on Oct. 6.

Pakistan's next interest payment on its dollar-denominated bonds is due in December and the government is scheduled to repay $500 million in February on a 6.75 percent note. Multilateral and bilateral aid may not be timely enough, S&P said on Oct. 6.

The South Asian country's balance of payments deficit widened in the quarter to Sept. 30 to $3.95 billion from $2.27 billion a year earlier, while the current-account deficit reached a record $14 billion in the year ended June 30, according to data provided by the government.

``A default is not on the cards,'' said Khan. ``A balance of payments crisis is much closer. Some people are saying they are already there; others say they are very close to being there.''


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## Neo

*Strict measures in place to put economy on track: Tareen​* 
Tuesday, October 21, 2008

ISLAMABAD: Adviser to the Prime Minister on Finance Shaukat Tareen on Monday said that the government had adopted strict measures to put the national economy on the right track. An action plan will help bring in $3 to 5 billion in the foreign reserves within 30 to 45 days, he optimistically told a TV channel.

He said that the problems of fiscal deficit and imbalance in payments would be addressed within 24 months as you have to stand on your own feet. You have to build your reserves. The adviser said that the country needed to create revenue streams in the long run to mitigate the financial problems and improve the living standard of the common man. Replying to a question about seeking financial assistance from the IMF, Tareen said that if the government contacted the IMF, the assistance would match Pakistans own requirements. He said that the government had abolished subsidies and was making efforts to overcome the fiscal deficit. Besides, it will ensure the zero per cent borrowing from the State Bank of Pakistan at the end of every quarter, he added. Primarily, the IMF stresses on the same steps, which the country is already taking, for good governance while issuing financial assistance to any country, he said. If the government seeks assistance from the IMF, it will be cheaper and sufficient to steer the country out of the economic crisis, the adviser observed.


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## Neo

*Pakistani team arrives in US to discuss energy cooperation ​* 
Tuesday, October 21, 2008

WASHINGTON: A top-level Pakistani delegation arrived here on Sunday evening to discuss energy cooperation with the international financial institutions and United States officials as the country strives to overcome power shortages through various projects.

The delegation includes Deputy Chairman Planning Commission Salman Faruqi, Secretary Water and Power Ismail Qureshi, Chairman Wapda Shakil Durrani, Chairman Sindh Coal Authority Syed Asad Ali Shah and Managing Director Private Power and Infrastructure Board Fayyaz Elahi.

The members of the delegation will have several meetings with the World Bank, International Finance Corporation, EXIM Bank and the US Administration officials. They will also be meeting with selected hydro-turbines manufacturers. The officials are expected to discuss a host of hydro, thermal and coal projects and to seek investment for these projects. Pakistans energy requirements have been expanding rapidly and the country is now facing power shortages. The visit by Pakistani officials is significant in seeking assistance for enhanced power generation through the use of available sources. According to Pakistans Ambassador to the US Husain Haqqani, the government is accelerating its efforts to mobilise the international support and investment for its comprehensive energy programme.


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## Neo

*Extremism, poverty biggest challenges, says Qureshi ​* 
Tuesday, October 21, 2008

ISLAMABAD: Foreign Minister Shah Mehmood Qureshi on Monday said that undoubtedly, extremism, terrorism and poverty were the biggest challenges faced by the country.

He expressed these views while addressing a ceremony at the Islamabad Club and talking to journalists later. He said all the South Asian countries must play a pivotal role to make sure that the challenges faced by Pakistan could be eradicated at the earliest.

He said that Pakistan was fighting the war against terrorism under a comprehensive strategy, urging that the US must understand the ground realities in Pakistan. Qureshi said that terrorism was the biggest threat to humanity and it was destroying peace and human beings were being killed everywhere.

Replying to a question, the minister said that the visit of US Assistant Secretary of State for South and Central Asian Affairs Richard Boucher was a routine one, adding that, a host of issues were discussed with him, especially the war on terror and the border situation.

Qureshi said that they had made it clear to Boucher that no compromise would be made on the integrity and sovereignty of Pakistan.

He said that until and unless peace was restored in South Asia, all the lingering and thorny disputes could not be solved in an amicable manner.

Answering another question, Qureshi termed the Iran-Pakistan-India gas pipeline a significant project, saying that trade relations between the South Asian countries were the need of the hour.


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## Neo

*Afridi for initiating 10 KBD-like projects ​* 
Tuesday, October 21, 2008

LAHORE: Federal Environment Minister Hameed Ullah Jan Afridi has stressed the need for initiating 10 Kalabagh Dam-like projects in Pakistan.

He stated this while talking to reporters after addressing a seminar on Efficient use of energy for sustainable economic growth held here on Monday. To a question, Afridi said: In my view, ten Kalabagh Dam-like projects should be initiated in the country as the water war is fast grasping the world.

To another question, the minister said that a joint working group was being constituted to ensure early implementation of fresh MoUs on environment reached between Pakistan and China. This would largely help tackle the grave problem of global warming, he added.

He said the ministry had formed environment tribunals to address the problems related to pollution, especially the industrial pollution. This initiative is largely welcomed by various concerned quarters as well as the provincial governments, he added.To another query, Afridi observed that chieftains must be taken on board on the anti-terror policy. The tribal elders are the only people, who can give a viable and an amicable solution to this fiasco, he added.


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## Neo

*Up to $5bn will be added to reserves in 45 days​*
ISLAMABAD: The government has devised an action plan that would help bring in $3 to $5 billion in foreign reserves within 30 to 45 days, Adviser on Finance Shaukat Tareen said on Monday. The government has abolished subsidies in an attempt to overcome fiscal deficit, he said. If the government sought assistance from IMF, it would be cheaper to steer the country out of economic crisis, he said. app


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## Neo

*Pakistans dependency syndrome​*
Analysis by Rasul Bakhsh Rais

We can double our revenues if we have an honest and efficient tax collection set-up and governance that delivers, earning the confidence of citizens. This is the difficult task that, if accomplished, would break our begging bowl

Remember how our ruling classes bragged about having broken the begging bowl without mending the structural problems of Pakistan? The routine panhandling before friendly states and international institutions  followed by repudiation for political mileage  is an indicator of the monumental failure to manage the financial resources of the state.

The economic crisis  some are calling it a meltdown  that Pakistanis are witnessing helplessly is due to the structural flaws of the economics and governance practiced by the Musharraf regime for almost a decade. A few pleasant macroeconomic indicators that suggested steady growth in visible sectors hid the weaknesses of other vital sectors.

There was phenomenal growth in telecommunications, banking and consumer finance, spurring the production of consumer items. These are the areas where the previous regime can take credit. But that had more to do with turning the economy into a consumer market of goods and services, provided largely by foreign firms, instead of building our own capacity to pay for these items through value-added exports.

Some troubling questions about economic planning remain. For example, could telecommunications, car manufacturing (or its financing through banks) in a weak foreign oil-dependent economy sustain growth in the long-term? Not really, and we saw the crumbling of the Musharraf-Aziz economy last summer well in advance of the elected government taking over in February this year.

The situation has since worsened, and the economic slide continues. Who is responsible? Even the present regime, an elected one at that, seems confused and unwilling to address the structural problems of the economy.

Our ruling classes  the military, the bureaucracy and the shape-shifting politicians  have always taken the easier route, one less costly in political terms, instead of taking the difficult decisions in the national interest. Borrowing from internal and external sources is a lot easier than generating resources indigenously, which requires efficient, law-bound and politically responsive governance. In such a system, taxpayers would also question the allocation of state resources, forcing power holders to be accountable and transparent. These are the last political virtues our ruling classes wish to embrace.

The main reason why the public is not willing to pay taxes happily, if at all, is the trust deficit of the government. Service delivery is so poor that most feel cheated while filing tax returns or paying indirect taxes on almost everything.

That the tax regime is loaded against the poor is evident from the fact that most taxes are consumption-based and apply on almost everything purchased by the poor. Affluent sections of society  professional groups, businesses, agriculturists and property owners  are hardly taxed.

The result is obvious: the ruling classes resort to easy finance, i.e. they borrow to fund expenditures. And both the administrative and development sections of the budget are misused due to lack of transparency and accountability. Pakistanis really dont get bang for their buck.

Sadly, the budget deficit has remained unbridgeable. We have yet to see any politician, party or official even think about a balanced budget. The habit of borrowing, developed over decades, has added to our deficit because the mark-ups and debt retirement schedules drain a massive portion of the budget. This bitter fact is presented in such a diluted manner that after spending hours going through economic surveys and government documents, it is not possible to figure out the exact percentage of the national budget allotted to debt servicing.

And the hunger for easy debt remains strong, mostly due to wasteful projects. Often, large portions of loans from the World Bank, ADB and other sources is plundered by project managers and bureaucrats.

Have billions of rupees in loans from the ADB made a difference in improving our judicial system or, say, the environment of Rawalpindi? What about procuring World Bank loans to send rusty bureaucrats in their last few years of service to upgrade their skills at foreign institutions? Can anyone justify obtaining foreign loans for tree plantation drives? What a greedy, unaccountable and anti-people lot we have as our rulers.

Pakistan will continue to pay back these loans for decades, while consultants, project managers, banks and bureaucrats continue to sit pretty. The nexus among these forces is strong, and national and international accountability institutions are took weak to hold them responsible for their malpractices. Our civil society and media, though developing faster than anyone expected, are not strong enough to question fishy deals or follow up on reports of corruption.

As we debate on how to get ourselves out of this economic mess, we must consider our resources and strengths and how best we can utilise them to reduce our dependence on donors to restore some semblance of national honour and sovereignty. It is not that we are a resource-poor country, the issue is how we utilise these resources.

Let us consider just two natural resources: our hydroelectric potential and coal deposits, one of the largest in the world. Each can generate nearly fifty thousand megawatts of electricity, or together over six times the power we are currently generating. Why have these resources not been tapped, and why are we loath to planning and executing projects of such high national importance?

Indigenous resource development in the energy sector would have given our industry a greater competitive edge as compared to the heavy burden placed on us by the independent power producers. There is more bad news: the new democratic government wants more of the same with IPPs setting up offshore units to feed our national grid.

Finally, bad governance and dependency go hand in hand. Our tax-to-GDP ratio is around 10 percent, while the average for developing countries is 18 percent. We can double our revenues if we have an honest and efficient tax collection set-up and governance that delivers, earning the confidence of citizens. This is the difficult task that, if accomplished, would break our begging bowl.

Dr Rasul Bakhsh Rais is author of Recovering the Frontier State: War, Ethnicity and State in Afghanistan (Lanham, Maryland: Lexington Books 2008) and a professor of Political Science at the Lahore University of Management Sciences. He can be reached at rasul@lums.edu.pk


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## Neo

*PPP promises 3,000MW more from existing plants​*
KARACHI: Leaders of the Pakistan Peoples Party are sure that the shortage of power generation will be mitigated with the additional production of at least 3,000MW through the existing power plants by the end of 2009.

We face a shortage of 5,000 MW but the installation of a new power plant will take at least three years, PPP Sindh General Secretary Nafees Siddiqui told Daily Times on Monday.

He said that additional power might be generated by overcoming leakages and wastage, which needs good management, and enhancing the capacity of the existing power plants.

Advisor to the chief minister on political affairs Rashid Rabbani blamed the former government for the electricity-related crisis and raise in power tariffs. We cried out when the former government decided to privatize KESC but the government turned a deaf ear to our genuine demand, he said.

He added that Sindh Chief Minister Qaim Ali Shah and Sindh Minister Rauf Siddiqui have held meetings with the business community and discussed the crisis with them. They have assured them that problem will be solved soon. Leader of the House in the Senate Raza Rabbani has said that the third increase in tariff in a year by KESC is unreasonable.

It has placed a huge burden on the working class. The privatization agreement froze rates for over five years, he said in a statement issued from his office.

Raza Rabbani said that until an agreement is reached between the consumers and the KESC, there should be no disconnections of consumers electricity connections.

He warned that disconnections would have a serious effect on production and employment, adversely affecting the economy.

Nafees Siddiqui said that good management and cooperation of the consumers would help the relevant authorities to save 40 percent of the electric power that is consumed through kunda (illegal) connections.

However, no PPP leader could satisfactorily explain why of 60 percent law-abiding consumers are being forced to pay for the 40 percent theft of power. The finance minister had argued that the 31 percent increase was made in the utility bills because of 40 percent theft through illegal connections.


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## Neo

*TDAP will send team to explore Russian market​*
KARACHI (October 21 2008): Trade Development Authority of Pakistan (TDAP) will send a trade delegation to explore Russian market in near future," said Syed Mohibullah Shah, Chief Executive TDAP. He was chairing a meeting with representatives of 10 major buying houses from Karachi, who apprised him of their problems, saying that 25 percent of Pakistan's exports are made to USA.

They maintained that due to US economic recession the country's textile industry is facing with severe problems. "There is a dire need to find new markets. Countries in Asia in general and Russia in particular are promising markets that have not been explored as yet. Entering into these markets will increase exports manifolds," said Mohibullah Shah.

He said that textiles and apparel is the largest contributing sector of Pakistan's export. He encouraged the representatives of buying house to visit Expo Pakistan 2008 as TDAP has invited much larger number of buyers this year as compare to previous years.

"It is expected that number of international buyers as well participation of exhibitors from all over Pakistan will be much larger this year," he said. He reiterated that there will be frequent interaction with trade and other stakeholders in future as well.-PR


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## Neo

*Development of project consortiums: Gilani stresses need for Italian corporate sector participation​* 
ISLAMABAD (October 21 2008): Prime Minister Syed Yousuf Raza Gilani on Monday said that Pakistan attaches great importance to its political, economic and cultural ties with Italy and both the countries share common perceptions on most of the regional and global issues, particularly terrorism and UN reforms. The Prime Minister expressed these views in a meeting with the Italian Foreign Minister Franco Frattini, who called on him at the PM House.

While expressing Pakistan's desire for reinvigorated broad-based and long-term relationship with Italy, Gilani expressed the hope that Italy would extend its fullest support to Pakistan for greater market access for its products to the European Union markets. He underlined the need for Italian corporate sector's participation in development of project consortiums in various fields including infrastructure, energy, agriculture and mining.

Gilani conveyed the gratitude of the government of Pakistan to Italy for swapping its debt of $100 million for socio-economic projects and its economic assistance for the development of SMEs in Pakistan and said that the list of projects to be undertaken by Pakistan using this money would soon be conveyed to Italy. He commended Italian archaeologists valuable contributions to the conservation of Swat cultural heritage and expressed the hope that the establishment of Centre of Excellence of Archaeology in Swat would go a long way in benefiting Pakistani students and researchers. Underlining the fact that his hometown Multan was one of the oldest cities of the world, the PM hoped that Multan and Rome - the eternal city - will soon be declared as sister cities. He also welcomed the offer for the Italian assistance for rehabilitation of the old city centre of Multan.

The Prime Minister said that he is looking forward to meet his Italian counterpart on the sidelines of the Asem summit in China later this week. Franco Frattini stated that his visit was meant to reaffirm his government's desire to further strengthen the bilateral co-operation with Pakistan in multifaceted fields.

He underscored the common interest of Pakistan and Italy in the stability of Afghanistan and in war against terrorism as well as in UNSC reforms. Frattini informed Gilani that Italy in its capacity of leader of G-8 in 2009 would invite the Foreign Ministers of Pakistan, Afghanistan, China, India, Saudi Arabia and UAE to G-8 Foreign Ministers meeting to find ways and means for stabilising the situation in Afghanistan. He assured Gilani of complete support to Pakistan in the war against terror and of economic co-operation in trade and investment fields.

He said an Italian corporate sector delegation would soon visit Pakistan to explore the investment opportunities and hoped that both the countries will sign MoU on security and defence in the near future to promote defence co-operation as well as exchange of intelligence information. The meeting was attended by the Minister for Foreign Affairs, Makhdoom Shah Mehmood Qureshi Minister for Water & Power, Raja Pervez Ashraf; Vincenzo Prati, Ambassador of Italy in Pakistan and other senior officials.


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## dr.umer

*Bosnian company shows interest to invest in various sectors ​*
KARACHI, Oct 20 (APP): Bosnias Tele Informatica, has showed interest to work in the housing, energy and railway transportation fields in Karachi. 

In this regard Companys CEO Mirco Skribic Monday met City Acting Nazim Nasrin Jalil. EDO Transport Malik Zahirul Islam, EDO Master Plan Ateeeq Baig and D.O. Solid Waste Management Khalid Javed were also present on the occasion. 

Talking to the delegation, Nasrin Jalil pointed out that Karachi is an important location in the region and offers best investment opportunities to international investors. 

She said that the projects which used to take years in the past, the present city government completed the same in months. 

We are focussing on the development of Karachi because we want the country to progress, she said adding that Karachi is like backbone of economy. 

Acting Nazim said that because of initiatives of present city government, score of investment opportunities were created here and because of continuity of development process a number of local and foreign companies are making investment here in various sectors. 

She referred to city governments efforts made during the last 3 years on improvement of obsolete infrastructure and said that just within 3 years underpasses, flyovers and roads were constructed and modern u-turns provided. 

She observed that when Bosnian company will start work in the aforesaid fields, then it would not only add to facilities for citizens but would also provide job opportunities. 

On the occasion Company CEO Mirco informed that this company represents six different copanies working in Bosnia. He said his company will bring investment to work in these fields while they would need certain facilities from city government. 

He said he is visiting Karachi to get information in these fields and would again come here after a month. 

Mirco said that despite incidents of terrorism in Pakistan, he is interested to work here.


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## dr.umer

*Al-Minhal, SSI ink deed to launch mobile technology​*IslamabadAl-Minhal Group, a leading telecommunication investment company of Dubai, and Sports Star International (SSI), have inked an agreement to launch state-of-the- art mobile technology in Pakistan. The signing ceremony in this regard took place at the occasion of G-Tax, the biggest IT Expo, being held in Dubai. Rashid Khawaja, the Consultant of SSI, and Sohail Mubarik Al-Azhari, the Chairman of Al-Minhal Group, signed the agreement.

Under the agreement, Al-Minhal Group, in collaboration with the SSI, would introduce latest mobile technologies in Pakistan with the investment of US$ 20 million. Al-Minhal Group would also telecast the transmissions and programmes of various Pakistani TV channels around the world through mobile phones and internet.

These services would also enable the subscriber to find out the locations of their friends and relatives and to trace the snatched or stolen mobile phone sets as well.

Moreover, Al-Minhal Group has announced that it would invest in energy sector of Pakistan in future as a joint venture with Sports Star International. Besides others, Saeed Khan Mohmand, the Counsel General of Pakistan, also attended the ceremony. He expressed his gratitude for Al-Minhal Group for investing in Pakistan and said that other organizations should also come forward to bring investment in Pakistan. On behalf of the Government of Pakistan, Talib Baloch, Managing Director of Pakistan Software Export Board, assured that Al-Minhal Group of full support in launching of these services.APP


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## dr.umer

*Govt to welcome Italian participate in PM housing scheme: Kakar ​*
ISLAMABAD, Oct 21 (APP): A four-member Italian delegation, which is on an official visit to Pakistan on Tuesday called on Federal Minister for Housing and Works Rahmatullah Kaka and exchanged views on investment opportunities in the upcoming mega housing projects. 

Ambassador of Italy to Pakistan Vinceazo Prati, Secretary Housing and Works Samil-Ul-Haq Khilji, Managing Director Pakistan Housing Authority (PHA) Raja Muhammad Abbas, Chief Engineering Advisor Ali Aabid and other senior officials were also present during the meeting. 

Welcoming the Italian delegation the minister said that there exists tremendous opportunities for the Italian companies to participate in the upcoming mega housing projects for their mutual advantage. 

He said that under Prime Minister Housing Programme one million housing units would be constructed annually in the country for the poor, needy and low-paid government employees and general public. 

Secretary Housing and Works Samiul Haq Khilji informed the delegation about the salient features of the PMs housing scheme. He said that Pakistan Housing Authority has identified the land area and initial framework where the housing units would be constructed. 

He said that government would encourage and facilitate the Italians participation in the construction of houses/flat, which would benefit both the countries to learn from each others experience in the construction sector. 

Head of the Italian delegation Agortino Da Polenz thanked the minister for housing and works for providing opportunity to exchange views on investment potential for finding a working plan regarding housing project. 

He said that participation of Italian companies in the upcoming housing scheme would bring the two countries more closer to each other.


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## dr.umer

*Number of mobile users in Pakistan exceeds 90 million​*October 21, 2008

KARACHI: The number of mobile phone users in the country has crossed 90 million.

According to Pakistan Telecommunication Authority (PTA), an increase of 29 per cent was recorded in mobile phone subscription during the month of September in comparison with the same period in the previous year whereas it increased by 0.7 per cent against August.


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## pkpatriotic

*Back to the IMF?*
*Wednesday, October 22, 2008*
*Shahrukh Rafi Khan*

*Being abroad, I have witnessed economic debates carried out on these pages but avoided participating. However, I am breaking this self-imposed restraint given the stark choice Pakistan currently faces. It appears that the funds needed for fiscal and balance of payments support ($10 billion over two years, according to an IMF estimate) are not going to be forthcoming from our traditional friends, the Saudis or the Chinese, and the USA had its own agenda and problems. Going back to the IMF has been expressed as the default option and some suggest that this may be salutary.*

For example, my fiend Nadeem Ul Haque (currently an IMF employee) and Meekal Ahmad (ex-IMF) write frequently as though there is only one source of wisdom, and that is the neo-liberal economic ideology promoted by the IMF, the WTO and the World Bank.

Evidence seems to have little to do with pushing this agenda since it is driven by a simplistic ideology suggesting that liberalisation, deregulation and privatisation are the answers to all economic problems. In economics, as in other social sciences, it is easy to downplay or reject critiques by questioning data, method, or interpretations although ideological predilections might actually be at play. Even so, there is mounting evidence that suggests that neo-liberalism has not delivered.

There are scores of case studies and cross-country studies (albeit suspect) that have questioned the effectiveness of specific neo-liberal policies. Also, economic performance in Latin America and Sub-Saharan Africa in the bad old days of state intervention far exceeded their performance under the tutelage of the IMF and the World Bank. The East Asian and South Asian economies did well by making intelligent use of their economic sovereignty and policy space. Dani Rodrik and Arvind Subraminian have shown that even the Indian economic takeoff had more to do with the pro-business policies of Rajiv Ghandi in the 1980s than with the liberalising reforms of the 1990s. In fact, even the latter were selective and contained. Perhaps the strongest indictment of the free-wheeling deregulation and liberalisation is the current global financial crisis.

*The Musharraf takeover in 1999 had no political legitimacy, but at least it made a bid for economic sovereignty by ending the IMF tutelage. Unfortunately, this military regime's economic advisors sought to show that they were "more loyal than the king" and pushed the old, tried privatisation, liberalization, and deregulation agenda. The one major innovation the banker finance minister pushed, because that is all he seemed to understand, was a credit-based consumption-driven economy. The chickens have come home to roost and the country is bankrupted once again and facing across-the-board high indebtedness and risk that it has much less capacity and resources to deal with than economic tutors in Washington. A high profile debt committee was appointed in 1999 to get rid of the domestic and foreign indebtedness once and for all. However, despite much debt relief and grants (ironically some suggest $10 billion) and much big talk, the country is faced with debt driven economic disaster apart from other structural problems.*

*There are three key issues that confront the current political regime. Where to get the resources to overcome the current crisis and for the future? What to do with them in terms of a coherent economic strategy? How to build the capacity for implementing such a strategy?* 

*This crisis can be seen as an opportunity. A wise Hungarian economist, Janos Kornoi, argued that firms in Eastern and Central Europe did not perform well compared to Western counterparts because they were on a soft budget constraint. He argued that since these companies always had the state to rely on if things did not go well, they were not driven by the hard edge of competition that meeting the bottom line generally produce for Western companies. The Pakistani state has been similarly inefficient because it has been able to drawn from time to time on benefactors, for strategic reasons, and the begging bowl has been the soft budget constraint preventing hard choices. It is now in a situation where for various reasons all "friends" have been aggravated and it must rely either on its own resources or go running back to the IMF.* 

If going to the IMF helps, why are we still in the economic mess we are in after so many years of their direct or indirect advice? IMF economists say things would be even worse had we not relied on their advice or, better, had we fully implemented it. Since history cannot be replayed this issue is difficult to resolve conclusively. Simulations tend to use dubious assumptions and are often controversial. One could argue that the military government was publically given high marks by the IMF for reform compliance but it has little to show for it. 

As I pointed out earlier, evidence strongly suggests that neo-liberalism is disgraced as an economic ideology. As Samuel Huntington suggested, it is only sustained by powerful interests in the West for creating economies in its own image because this facilitates the global resource drawing interface. Eric Reinert and Ha Joon Chang have shown, drawing on history, that current high-income countries like the USA and Germany dispensed with the free-trade and liberalisation advise of the then economic leader, Great Britain, and protected their economic sovereignty and interests based on their own national economic institution. So, going back to the IMF is not a good option. However, avoiding this option requires coming up with resources.

Political regimes have options that military regimes do not, and perhaps it is finally time to make the hard choices and for the country to get on a hard budget constraint. First, there is much fat in the military budget; particularly weapon systems and off budget activities. The military can be persuaded that a strong economy is also in its long term interest; which really should not diverge from the national interest. Second, much fat can be trimmed from non-development expenditure line items. For example, if education is a provincial subject, why does the country need such a huge central educational bureaucracy and if it is to be effectively devolved to the district or lower levels, there are yet more savings to be had. Third, while attempts at land reform on social justice and economic efficiency grounds among others have failed, there is ample scope for progressive agricultural income taxes. 

*Thus, the needed resources are domestically available and the taxation, cost cutting, and expenditure restructuring must start now. A portion of the funds saved need to be used by the state to provide protection to the vulnerable adversely impacted.*


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## dr.umer

*Pak Telecom industry ripe to brace 3G technology; says Telenor EVP ​*
ISLAMABAD, Oct 23 (APP): Executive Vice President, Corporate Affairs, Telenor Pakistan, Irfan Wahab Khan Wednesday said that Pakistani telecom Industry was ready to brace the 3G technology as the relevant equipment prices have come down significantly during the past years. &#8220;The time is ripe for Pakistani telecom industry to brace the 3G Technology as the prices of equipment have come down significantly - thanks to the Chinese Industry. The introduction of 3G would not only enhance services but also would lure lots of Foreign Direct Investment (FDI),&#8221; he said while addressing a workshop organised for working journalists. 

The moot was titled &#8220;MNP to 3G - The Development of Mobile Communications in Pakistan&#8221; and hosted by Telenor Pakistan with an objective to inform the media on the development of mobile communications in Pakistan. 

Manager Intercarrier Strategy, Salman Malik and Manager MNP, Nauman Arshad briefed the workshop participants on 3G and Mobile Number Portability (MNP) whereas CEO Jon Eddy Abdullah also gave a special message. 

Irfan said the telecom companies have to provide high quality broadband bandwidth and the only answer to the question was 3G technology. 

&#8220;The world is heading towards convergence. This is the time we should also take a jump into future. Today, the customers need high quality Internet and other high quality services. This would also help enhance the service of mobile TV,&#8221; he added. 

On MNP, Irfan maintained that Telenor Pakistan continues to view Mobile Number Portability as an effective tool contributing towards availability of more choices for the consumer. 

Salman Malik said 3G offers operators business continuity as the associated spectrum allows additional voice capacity to address urban capacity constraints. 

&#8220;This would also bring more efficient spectrum usage to drive down operator costs; provides for enriching Value Added Services (VAS) to enhance customer experience and is considered the only viable solution to increase mobile broadband penetration in Pakistan,&#8221; he added. 

Telenor Pakistan CEO Jon Eddy Abdullah, in his message, said that 3G offers broadband connectivity over mobile networks, which span the rural-urban divide, can stimulate internet penetration in Pakistan just like new 2G licenses boosted cellular penetration to record levels over just a few years. 

&#8220;The time for introducing 3G technology in Pakistan is now, he said, and added that as the country needs a more efficient communications network, the 3G was the solution to it,&#8221; said Jon. 

The presenters at the seminar explained that 3G is the third generation of mobile phone standards and technology that enables network operators to offer users a wider range of more advanced services. Whereas, MNP benefits the customer by giving him the liberty to choose the service provider with the best overall value while retaining his phone numbers including the code. 

Only recently, Telenor Pakistan had sponsored a high profile seminar along with other telecom operators on 3G. The aim of this workshop was to create media awareness on what new technologies will be applied for 3G and what improvements have been made by the industry on MNP. 

Telenor Pakistan aims at taking the expert&#8217;s role in keeping the media informed. Telenor ASA is an international provider of high quality telecommunications, data and media communication services. 

It ranks as world&#8217;s 7th largest mobile operator with a total of 153 million subscribers in its mobile operations. Telenor Pakistan is 100 percent owned by Telenor ASA and adds on to its operations in Asia together with Thailand, Malaysia and Bangladesh.


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## dr.umer

*Pakistan calls for conventional arms control to promote peace ​*
UNITED NATIONS, Oct. 22 (APP): Pakistan has called for controlling conventional weapons at the lowest possible levels of armaments and military forces, in order to promote regional and international peace and security. A stable balance of conventional forces is necessary to ensure strategic stability, particularly in the regions riven with tensions, Raza Bashir Tarar, the Pakistani delegate, told the General Assemblys First Committee, which deals with Disarmament and Security issues. 

Massive induction of sophisticated weaponry accentuates conventional asymmetries and compels greater reliance on nuclear and missile deterrence in the regions that have such capabilities, he said in a thematic debate on Conventional Weapons. 

In South Asia, he said Pakistan was pursuing a Strategic Restraint Regime, which had three constituents: conflict resolution; nuclear and missile restraint; and conventional balance. As part of a dialogue to address outstanding issues and work towards strategic stability and nuclear risk reduction, Pakistan would strive for conventional balance at the lowest possible level of armaments. 

In the interest of peace and security in South Asia, there must be restraint both in the demand and supply of conventional weapons, the Pakistani delegate emphasized. Tarar said that while there was an urgent need to address the challenge of small arms and light weapons trade, it was imperative not to allow that debate to divert focus from the destabilizing impact of the huge volume of trade in combat aircraft, aircraft carriers, airborne and early warning and control systems, missile defence, nuclear submarines and warships, as well as related technologies. 

Such dealings disrupted regional balances and exacerbated tensions, he said. Driven mostly by commercial considerations, that trade had no meaningful legal or moral underpinning. The Pakistani delegate said that citizens of developing countries were the target clientele for such sales. For sellers, a conflict situation opened a window of opportunity for peddling the wares of destruction to both antagonists. It was a moral and legal imperative to promote conventional arms control at the lowest possible levels of armaments and military forces, in order to promote regional and international peace and security. 

The key to ensuring success of conventional arms control was in its regional and subregional pursuit since most threats to peace and security originated from conflicts between States located in the same region or subregion. Efforts must be stepped up to curb excessive and destabilizing accumulation of conventional arms, as well as their uncontrolled transfers.


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## dr.umer

*Pak-Saudi ties to strengthen in future: PM ​*
ISLAMABAD, Oct 22 (APP): Prime Minister Syed Yousuf Raza Gilani on Wednesday said that brotherly relations between Pakistan and Saudi Arabia are rooted in common ethos, shared values and faith which transcend the changing global environment and expediency of international politics. The Prime Minister expressed these views in a meeting with the Saudi Arabian Ambassador Awadh Asseri, at the PM House. 

Paying reverence to the Custodian of the two Holy Mosques King Abdullah bin Abdul Aziz, the Prime Minister said these sentiments are deeply embedded in our hearts, and he believes that Saudi Arabias strength is Pakistans strength. 

During the meeting, matters of mutual interests also came under discussion. The Prime Minister lauded the valuable contributions of Ambassador Asseri for strengthening bilateral relations between the two countries and expressed hope that these relations would be further strengthened in future.


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## dr.umer

*Egyptian firm signs MoU for construction of housing units ​*
ISLAMABAD, Oct 22 (APP): The Government and Egyptian firm on Wednesday signed a Memorandum of Understanding (MoU) for participation in the construction of houses/flats under the Prime Ministers Housing Scheme. 
Managing Director, Pakistan Housing Authority, Raja Muhammad Abbas and Chief Executive officer, Egyptian Arbiyya lel Istithmaraat Company Mohammed Metwall signed the MoU on behalf of their respective governments. 

Federal Minister for Housing & Working Rehmatullah Kakar, Secretary Housing & Works. Sami ul Haq Khilji, Chief Engineering Advisor, Ali Abid, Director General, PHA, Shahid Nadeem and senior officials of the ministry also attended the ceremony. 

Under the agreement, Egyptian firm has expressed the desire to develop affordable housing units as part of the Prime Misters one million housing program in various cities and towns. 

The Egyptian company also agreed to make investment in Pakistan in order to build/develop low-cost housing units available at affordable price. The company would also construct commercial areas at the identified sites of international standards. 

Minister for Housing & Works, Rehmatullah Kakar thanked the Egyptian company for showing keen interest in the mega housing scheme which would provide shelter to the poor, needy government servants and general public at an affordable cost. 

He said that the government would welcome foreign investment in housing sector and extend all out cooperation to foreign and local investors in this regard. 

Secretary Housing & Works, Sami ul Haq Khilji told the Chief Executive Officer of Egyptian company that all necessary arrangements have been finalized to launch the Prime Minster Housing scheme in the country. He assured him to provide maximum facilities and incentives to carry out the gigantic project. 

It may be added that world renowned companies from Malaysia Canada, Germany Spain, Iran, China and USA have shown their keen interest to participate in the mega housing scheme and signed Memorandum of Understanding in this regard.


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## dr.umer

*International donors must help Pakistan financially: Report ​*
LONDON, Oct 22 (APP): A respected British daily Financial Times has urged the international community to help bail out Pakistan from its current financial problems. President Asif Ali Zardari must be given the means to try to overcome the current crisis as well as improve the countrys long-term prospects. The best hope is an IMF loan, augmented by individual countries, that is flexible on conditions without compromising on the most vital of reforms, said the influential paper in a comment. 

The paper said amid global financial turmoil, countries are queuing up to IMF for support and Pakistan is the most precarious one. 

It noted that Pakistans economy is in trouble with growth slowing, high inflation, the current account deficit widening in the past fiscal year and the IMF estimates the budget deficit to have been 7.7 per cent of GDP. 

A loan from the IMF, possibly jointly with other international institutions and bilateral donors, would shore up confidence. Pakistan may need up to $ 15bn over two years. This should stave off any immediate crisis. 

However, FT said in order to address long-term problems, structural reforms are needed, as they have been for years. 

FT said IMF faces a dilemma of its ability to force reform by attaching conditions to the loan as heavy-handed intervention would be deeply unpopular in Pakistan. 

But if some aspects of conditionality look too risky, Pakistans government should nevertheless be induced to endorse tax reform, raise spending on education and commit to rebuilding the countrys institutions, it added. 

The paper spoke of Pakistans strategic importance and said any loan will have a political dimension given countrys unresolved conflict with India over Kashmir and has also been sucked into fighting on its Afghan border.


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## dr.umer

*Atlas, KASB, Mybank in queue for sale ​*22 Oct 2008

KARACHI: A new wave of mergers and acquisitions has swallowed up three more small banks KASB Bank, Atlas Bank, Mybank  leaving no option for them but to change their status after realising their existence under the current circumstances is no more possible.

Industry sources said that a consortium led by Hussain Lawai had finalised a deal with Mybank. The same consortium had signed an MoU with the Arif Habib Securities Limited (AHSL) to invest Rs4.5 billion to acquire up to 50 per cent shares of the Arif Habib Bank Limited (AHBL).

Sources said the amount involved in the deal of Mybank was about Rs5.3 billion, however, it was not known that when this process of acquisition would be completed. Mybank, which was incorporated in 1992, operates with 76 branches across the country. The paid-up capital of the bank is Rs4.243 billion, equity Rs5.148 billion and total assets Rs41.344 billion.

On the other hand, the KASB and Atlas Group on Tuesday announced that they had agreed to merge their respective banks. As a result, KASB Bank, KASB Capital and Atlas Bank would merge together to form KASB Atlas Bank.

The State Bank of Pakistan immediately approved the merger and termed it a positive move.

The merged entities would have a capital base in excess of Rs12.5 billion and a branch network exceeding 110 branches.

The small and medium-sized banks, which are not more than 12, in Pakistan have been in the grip of fear since the enhancement of minimum capital requirement (MCR) by the State Bank.

In August, the SBP had raised the MCR of banks to $300 million and asked all banks to attain the target till 2013 in phases. Till 2009, banks were bound to achieve MCR of Rs6 billion.

'The sharp jump in MCR to $300 million is beyond the capacity of these small- and medium-sized banks to achieve,' said Aamir Ahmed Khan, a banking analyst. 'These banks are now looking for opportunity to leave the field for large banks,' he added.

The recent turmoil in the US and European banking industry has also put enormous pressure on the local banking industry. 'These banks have geared up their efforts to get out of the industry or merge with a giant for mutual survival,' said a senior banker.

With equity of over Rs5.2 billion and assets base of over Rs.24.79 billion, Atlas Bank is supported by the trusted equity of Atlas Group, a leading manufacturing, financial services and trading group.

Among the small banks Atlas Bank is relatively stronger one. It began its journey back in the year 1990 when Atlas Group and the Bank of Tokyo-Mitsubishi Limited entered into a joint venture as Atlas Investment Bank Limited.

Later in 2002, the bank merged with Atlas Lease Limited and acquired Dawood Bank Limited in December 2005 and renamed it as Atlas Bank Limited and merged Atlas Investment Bank in to Atlas Bank in 2006. Atlas Capital Markets (Private) Limited was also incorporated in 2006 and is currently a wholly-owned subsidiary of the bank.

The KASB Bank, formerly Platinum Commercial Bank Limited, was incorporated in Lahore on October 13, 1994 as a public limited company under the Companies Ordinance, 1984 and received banking licence from the State Bank of Pakistan on January 9, 1995. The bank is currently operating with 41 branches in different cities. Total equity of the bank is Rs4.159 billion with paid-up capital of Rs4.015 billion.

*SBP welcomes*

Meanwhile, the State Bank in a statement has supported the merger and approved it saying it is in line with its 10-year Financial Sector Vision and Strategy.

The SBP has been working towards catalysing a new wave of mergers and acquisitions across the banking sector which is likely to yield more solid and substantive results, particularly in the present environment, the central bank said.

Anticipating more mergers and acquisitions, SBP Governor Dr Shamshad Akhtar said that the central bank was working round-the-clock to help generate such partnerships and would work closely with concerned parties to conclude such transactions smoothly and speedily.

'The merger is in line with consolidation policy being pursued by the State Bank of Pakistan to make the financial sector of Pakistan more vibrant, robust and resilient so that it could meet the financial needs of all sectors and segments of the society in the country,' she added.


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## Neo

*Govt sets 25m tonnes wheat production target ​* 
Wednesday, October 22, 2008

ISLAMABAD: The government on Tuesday unveiled its Rabi crop plan with emphasis on growing more wheat while ignoring rest of the crops and no details of availability of inputs and weather condition.

The official press brief distributed after the meeting of The Federal Committee on Agriculture (FCA) held at the P block with Federal Minister for Food, Agriculture and Livestock Nazar Mohammad Gondal in the chair, not even mentioned the production Rabi crops of sunflower and other oilseeds.

Overlooking oilseed crops is contrary to the directives of Prime Minister Syed Yousuf Raza Gilani for depending less on imported cooking oil. Palm oil worth over $1.4 billion nearly 70 per cent of local consumption is imported from Malaysia and Indonesia.

Briefing the media at PID along with high-ups of MINFAL, Nazar Mohammad Gondal announced that the target for next wheat crop would be 25 million tonnes while for the rest of the crops the target remains unchanged. 

He did not share any specific plan for achieving this target and reducing the increasing prices of wheat for the consumers. 

Ensured Guaranteed Minimum Price (GMP) for wheat is the only formula to have good next crop and the federal government is pursuing this policy, the minister said.

It is responsibility of the government to feed its citizen locally grown grain rather than imported one. Now the commodity is at par with international price and no subsidy would be given to wheat grower of Canada, US and CARs, he said. 

The minister also did not mention the availability of water, fertilizer, and pesticides for achieving wheat production of 25 million tonnes. 

To a question about the rising sugar price, the minister said that there is no shortage of commodity in the market and coming cane crop is enough to meet the domestic consumption of the sugar. 

The minister said that agriculture sector is still not competitive and profitable enough to bear agri-income tax, although growers are paying numerous indirect taxes on inputs, levy on transport of produce to markets, in addition to land revenue and water charges where applicable. 

About the Kharif crops Gondal said: We have a record production of rice while cotton and sugarcane were short of target at 14.1 and 63 million tonnes respectively. The government is working on promotion of Bt cotton for achieving excellence in cotton production, the minister said.


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## Neo

*Rice output seen up to 6.54m tonnes ​* 
Wednesday, October 22, 2008

ISLAMABAD: Pakistans rice output is expected to rise to 6.54 million tonnes in the 2008/09 crop year, up from 5.50 million tonnes the previous year, Food and Agriculture Minister Nazar Muhammad Gondal said on Tuesday.

Pakistans eight-month-long rice season runs from April to November. Final estimates for the crop are due in late December.

Despite a shortage of irrigation water, our rice crop has increased, Gondal told a news conference in Islamabad.

Gondal did not give an estimate for how much of the crop would be available for export, but said: As far as exports are concerned, rice is the major crop.

Pakistan is the worlds fifth-largest rice exporter and it has removed a minimum export price on basmati and non-basmati rice after expectations of a bumper crop.

Overall rice exports in the first quarter of the July-June financial year to September rose 41.58 per cent to 619,090 tonnes compared with the same quarter last year, according to the Federal Bureau of Statistics.

Exporters expect rice output of 7 million tonnes this year and say exports could exceed 4 million tonnes compared with 3.3 million tonnes last year.

Annual domestic consumption is about 2.3 million tonnes.

However, a Karachi-based rice trader said earlier, Pakistans rice exports could fall in October and November because Pakistani ports have been inundated with wheat cargoes and buyers have slowed rice purchases because of weakening global prices.

Rice accounts for about 8 per cent of Pakistani exports and 12 per cent of gross domestic product.


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## Neo

*IMF clearance necessary ​* 
Wednesday, October 22, 2008

LAHORE: Without even opting for an International Monetary Fund facility, Pakistan would have to follow conditions of the Fund as loans from multilateral donors have already been linked to a letter of comfort from the IMF.

All international lending agencies seek the opinion of the IMF before sanctioning loans for any country. The IMF states that letters and statements prepared by the staff for providing a signal to the lenders should contain a clear assessment of the quality of macroeconomic and related structural policies of the country seeking loan.

According to the IMF, this assessment should focus on the extent of macroeconomic imbalances and related structural distortions, and on the extent to which current and planned policies are dealing with (or perhaps contributing to) these problems. It should indicate whether the Funds staff has major outstanding concerns about these policies. In case of extreme macroeconomic imbalances or pervasive distortions which would likely nullify the benefits of any particular loan or grant, the staff would draw attention to these distortions.

Economic experts point out that the IMF and World Bank first ask the government seeking assistance to remove policy flaws that have forced it to come to the lending agencies. This is done to improve revenues, plug leakages and eradicate corruption in the system and these actions actually hit the influential segment of the society more than the common man.

However, senior economist Naveed Anwar Khan, an FCA, said the dictates from donor agencies were for public consumption only, adding loans were granted by Bretton Woods Institutions with the tacit nod from the US and EU even if the recipient country promises to take measures other than those suggested by the donors to improve revenues.

Instead of improving governance and broadening the tax base, he said, the government resorted to indirect taxation which was an implicit tax on the poor. This is the reason that despite taking the IMF structural adjustment facility several times the distortions in the economy are the same as were at the time of first structural adjustment loan more than two decades ago.

He said foreign inflows might bring a temporary relief to the economy but real solution lay in better governance and transparency where every segment of the society was taxed according to its income.

The trade and industry, meanwhile, is shuddering on the possibility of the government going for a further increase in taxes without widening the tax base. They have a reason to worry as both domestic and export sales are on the decline. Addition of new taxes would further depress the sales, particularly in the local market.

Prices have gone out of the reach of consumers, said Syed Nabeel Hashmi, former chairman Pakistan Association of Automotive Parts and Accessories Manufacturers.

He said car manufacturers had been forced to increase prices despite a 50 per cent decline in sales as undue taxes, high dollar rates and rampant corruption were pushing up the production cost while there were no buyers of the products.

Industry circles pointed out that the tax base had remained almost stagnant in the last decade while tax revenues increased three-fold.

The increase in the number of taxpayers during the period came mainly due to the workers as they crossed the income tax ceiling after a rise in salaries. Otherwise, the number of companies or traders had not increased substantially.

They pointed out that tax compliance had not kept pace even with the increase in the gross domestic product. 

In fact, the tax-to-GDP ratio declined by three percentage points in the last 10 years, though the tax amount increased three times. That, they added, indicated that the ratio of non-documented economy was on the rise.

Industry circles said that non-development expenditure of the government also quadrupled during October 1999 to October 2008. 

Defence budget has doubled while the tax is being taken from the same set of entrepreneurs that were paying taxes in 1999. 

They said the capital market, agriculture, real estate, lawyers, doctors, engineers and above all traders should be forced to pay according to their real income and not on the basis of declared income.


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## Neo

*Pakistan weighs options as payments crisis looms ​* 
Wednesday, October 22, 2008

ISLAMABAD: Pakistan has just a few weeks to raise billions of dollars in foreign loans needed to keep meeting debt payments and pay for imports, according to the countrys newly appointed economic troubleshooter.

Shaukat Tarin, the adviser to the prime minister on economic affairs, reckoned Pakistan needs $10 billion to $15 billion to avoid a balance of payments crisis and undertake adjustments needed to right the economy over the next two years.

The government has been seeking the International Monetary Funds endorsement of its economic strategy, and appears poised to ask the IMF for a loan. Other donors could follow suit.

The international community can ill afford economic chaos in a nuclear-armed, front-line state in the war on terrorism.

How much foreign currency does Pakistan have? 

As of Oct 11, Pakistan had $7.75 billion of foreign currency reserves, of which the central bank held $4.34 billion, barely enough to cover six weeks of imports. And that was 10 days ago.

The rupee hit at an all-time low of 84.40 per dollar on Oct 17, around 27 percent weaker than it started the year, but had recovered to 80.90/81.70 on Tuesday.

The News daily has reported $1.5 billion of central bank reserves were accounted for by forward booking liabilities.

How long can Pakistan go on b4e fore it runs out of dollars?

Tarin said on Saturday Pakistan had to show some action in the next 30 days, but he also said he was confident that financing would be sown up within 60 days.

The international bond market has already priced in a default on a $500 million bond due to mature in February.

Pakistani officials say it wont come to that. Officials are hopeful of other multilateral lenders and friendly governments coming to Pakistans aid, if not theyll go to the IMF.

How much money does Pakistan need to stay afloat?

Pakistan needs between $10 billion and $15 billion. Tarin said immediately, but Pakistan doesnt need it all at once.

The IMF estimates the financing gap on Pakistans balance of payments at up to $4.5 billion, compared with the governments estimate of $3.0 billion for the fiscal year ending on June 30 next year, Tarin said.

A senior IMF official has been quoted as saying the gap is more like $5 billion this year and $5 billion next year.

How much is Pakistan spending?

Economists say Pakistan is shedding reserves at a rate of about $1 billion a month.

The September trade deficit was $2.207 billion.

In July-September the current account deficit widened to $3.95 billion from $2.27 billion in the same period a year ago.

The main factors behind the widening deficit are soaring oil and food prices, compounded by a poor wheat crop last year.

Recent falls in the oil price should help reduce the deficits.

How can Pakistan help itself?

The rupees depreciation will go a long way to inducing overdue adjustments in the economy.

The central bank could raise interest rates, while easing banks liquidity, impose capital controls, ban imports of non-essentials, limit dollar purchases by foreigners in Pakistan.

Inflation around 25 per cent is a good reason to raise interest rates, but a rapid slowdown in growth limits the scope.

Pakistan can also stop foreigners from withdrawing funds. A floor imposed on the stock market in August effectively stopped investors exiting a market that had fallen 35 per cent this year. The Karachi Stock Exchange plans to remove the floor on Oct. 27. Investors fear it will probably spark a rush for the door.

Bringing in rules to make foreigners keep proceeds from sales of stocks or bonds in Pakistan for a set period is an option.

The central bank can also buy time by imposing capital controls that would break the link between onshore and offshore players, like ending credit facilities for offshore players.

What can Pakistan do to fix its budget?

Stop government borrowing from the central bank.

Cut current, development and defence spending. Zardari may face objections from Pakistans powerful army as it battles against Islamist militants across the northwest, and tries to match Indian military power.

Broaden the tax base. At 10.5 per cent, Pakistans tax as a percentage of GDP is one of the lowest in the world.

Raise taxes on agriculture, a move long resisted by Pakistans influential landed aristocracy.

Raise taxes on services, including real estate and stock market transactions. Even though the market is in a very fragile state, analysts say it will eventually recover.

Where could help arrive from?

The global economic crisis clouds prospects for help.

The IMF would offer Pakistan favourable terms of 5-6 per cent interest. The World Bank has $1.4 billion available under an existing programme for Pakistan, but it needs board approval. The Asian Development Bank, the Islamic Development Bank, and Britains development agency would all help, Tarin says.

The US presidential election complicates prospects in the short term, but the United States is already Pakistans biggest lender and there are long-term proposals to boost financing.


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## Neo

*Saudi-Pak investment conference begins ​* 
Wednesday, October 22, 2008

ISLAMABAD: The 2nd Saudi-Pak Investment Conference was jointly inaugurated by the Vice Chairman of the Jeddah Chamber of Commerce and Industry, Mazen Baterjee and Pakistans Minister for Ports, Shipping, Investment and Privatisation, Syed Naveed Qamar in Jeddah on Tuesday.

According to a statement by Consulate General of Pakistan Jeddah, Baterjee while welcoming the guests said that the Kingdom was building new economic cities and needs Pakistani investors to invest in these mega projects. He said that 300 new Pakistani investors have been registered with Saudi Arabian General Investment Authority (SAGIA) and they were working in construction, services and other allied sectors, said the statement received here on Tuesday.

Batterjee informed that the Kingdom has revised its laws to allow maximum facilities to the new investors to participate in the development of the Kingdom and also share the profits. He said that six million people were expected to perform Umrah and Hajj in the coming year and all investment in the services sectors will be of immense benefit to these investors. He said that the Saudi market was the biggest market of the region and a gateway to the African countries, adding that Jeddah being the hub of economic activities and the gateway of the Kingdom, provides immense opportunities for trade and investment.

Speaking on the occasion, Syed Naveed Qamar said that the people and the Government of Pakistan hold the people and Kingdom of Saudi Arabia especially the Custodian of the Two Holy Mosques, King Abdullah bin Abdul Aziz and the Royal family, in high esteem. The Minister said that opportunities exist in Pakistan due to its geo-strategic location adding that Pakistan was the gateway to the landlocked Central Asian countries and as such is the biggest market of the region.

Syed Naveed Qamar said, this is the time when Saudis should come forward and take the benefits from the available opportunities. The Minister said that he has brought high-profile people representing various sectors who can ensure confidence building in Jeddah with their counterparts for greater collaboration in these sectors.

The Minister again offered collaboration and investment in agriculture sector where investment can be made to ensure food security.


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## Neo

*New measures to stabilise economy ​* 
Wednesday, October 22, 2008

ISLAMABAD: The government is taking new measures to increase foreign exchange reserves which would stabilise the economy within months, Adviser to Prime Minister on Economic Affairs Hina Rabbani Khar said here on Tuesday.

Talking to PTV, she said Pakistan was considering to seek loans from other countries and financial institutions to meet its payment crisis. Replying to a question, she said there was no danger of default but Pakistan needed to bring down inflation and show flexibility on the rupee exchange rate. 

About the IMF, she said: If we want to go to the IMF, we can... but only as a backup, adding, she was confident Pakistan had a viable plan to work through its problems. Hina was optimistic that economic situation would improve and Pakistan would be in a very good position within the next 5 to 6 months.


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## Neo

* Balochistan facing 445 MW power deficit ​* 
Wednesday, October 22, 2008

QUETTA: Quetta Electric Supply Company (QESCO) Chief Executive Officer Engineer Shafiq Ahmed Khattak on Tuesday said Balochistan was facing a shortfall of 445 megawatt. Addressing a news conference here at the press club, the QESCO CEO said electricity requirement of Balochistan stood at 1,250 megawatt, but it was producing 805 megawatts; thus, there was a shortfall of 445 megawatts in the province. 

As a result of the shortfall, the QESCO has been forced to carry out load-shedding for six hours in Quetta, eight hours in the surrounding areas, 12 hours in the rural areas, 12-18 hours for steel furnaces.

Engineer Shafiq Ahmed Khattak regretted that 10-11 per cent power was being reportedly pilfered. The head of QESCO revealed that around 150 QESCO personnel had been suspended on charges of their involvement in the power pilferage.

The QESCO chief said new meters would be installed in the city in the morning and evening timings for implementing new tariffs. He disclosed that Rs 9,764 million were outstanding against its consumers. Of the mentioned amount, Rs 867 million is due against the provincial government, Khattak added.


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## Neo

*Law and order situation in Sindh viable for foreign investors: Qaim ​* 
Wednesday, October 22, 2008

KHAIRPUR: Sindh Chief Minister Syed Qaim Ali Shah Jilani on Tuesday said that the law and order situation in Sindh was viable for foreign investors.

Talking to various delegations, which met him at the Jilani House here, Qaim said that during the visit to the US, he had met US investors. He said that he motivated them to invest in Sindh and assured them of providing a good atmosphere.

He added that China had decided to invest in Pakistan.Qaim said that President Asif Ali Zardari had resolved wisely the political crisis and would also resolve the economic crisis intelligently.He said the Sindh government was keen to provide justice to the people at their doorsteps and resolve their issues.

He said that he had issued directives to take severe action against hoarders and those who were selling flour at excessive rates. He said that there was no flour crisis.Qaim said that for strengthening the agriculture sector, the government had increased the rate of wheat.

The chief minister said that the Benazir Bhutto Income Support Programme was being implemented.He said the Sindh government was trying to provide jobs on merit, adding that the recruitment process had started.

He said that there was no threat of terrorism in Sindh. He added that the deteriorating law and order situation in Sindh had been improved by appointing professional police officers, especially in interior Sindh where the cases of kidnappings for ransom were on the rise.

Qaim said that they would accomplish the mission of Shaheed Benazir Bhutto.Meanwhile, the chief minister visited the office of the EDO Health where representatives of the PAIMAN briefed him on their programme.

On the occasion, Qaim said that the Sindh government was focusing on the provision of health facilities and allocated more funds for the purpose.


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## Neo

*IMF offers $6bn package​*
By Anwar Iqbal

WASHINGTON, Oct 21: The United States has repeated its offer to help rescue Pakistan from the current financial crisis as diplomatic sources in Washington say the International Monetary Fund has agreed to provide $6 billion to the country to boost up its ailing economy.

Its hard for me to speculate, said State Departments deputy spokesman Robert Wood when asked if the IMF had agreed to offer a rescue package to Pakistan. But we obviously will try to see what we can do to help Pakistan get through its financial crisis.

Pakistan had no choice but to seek help from the IMF, said another State Department official. The official, who was not identified, was quoted in the US media as saying that Pakistani officials knew it would not be a popular decision in Pakistan but they had to go to the IMF.

It wont be popular with the public and it sends a lot of negative signals about Pakistans financial situation, its creditworthiness. But its a decision the Pakistanis are going to have to make, he said.

The countrys inflation is running at around 25 per cent, and its foreign currency reserves are rapidly depleting, forcing the government to seek emergency cash advance from friendly countries and international financial institutions.

Pakistan is reportedly discussing a $10 billion to $15 billion support package with the IMF and other bodies.

Diplomatic sources in Washington have told Dawn that the IMF has agreed to provide $6 billion to Pakistan to stabilise its economy and to help avoid defaulting on foreign debt repayments due next year.

The money will be available at 5 to 6 per cent interest while Pakistan also has agreed to readjust its monetary policies to qualify for the loan.

The country has already withdrawn subsidies on oil and oil products, a major IMF demand that may hurt millions of ordinary consumers across Pakistan.

Since Pakistan had already taken some of the most difficult and painful measures, the IMF is willing to help, said a diplomatic source involved in negotiations between Pakistan and the IMF.

Diplomatic sources said the United States is playing a key role in persuading international financial institutions to help Pakistan but it is also urging Islamabad to undertake serious economic reforms.

Some of Pakistans key allies, such as China, also have urged Pakistan to go to the international community with concrete economic plans for seeking assistance instead of going door-to-door, asking for money, said Shahid Javed Burki, a former finance minister and vice president of the World Bank.

At the State Department briefing, Mr Wood refused to disclose US plans for helping Pakistan but assured Islamabad that Washington was considering various options.

It would be premature for me to get ahead of what we may decide to do back here from Washington  but obviously, the situation there is of great concern, not just to us, but obviously to the Pakistanis, he said.

And so we will look at ways we can try to help Pakistan, you know, get through this crisis. But beyond that, I dont have any specifics for you.

Pakistans front-line role in fighting terrorism persuades Washington to help prevent an economic collapse. Policy planners in Washington fear that an economic meltdown will leave this nuclear-armed country of 160 million at the mercy of extremist groups like Al Qaeda and Washington wants to avoid this.

Other Western and Middle Eastern nations also have similar fears and are willing to help.


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## Neo

*Foreign firm to set up project at PQ​*
LONDON, Oct 21: Pakistan High Commissioner to the UK Wajid Shamsul Hasan handed over a letter of intent (LoI) to the chairman of Trans Polymers Limited (TPL) for setting up a petrochemical complex costing $2 billion at Port Qasim.

The project, the first of its kind in Pakistan, is expected to create over 3,000 jobs. According to the high commissioner, TPLs investment in the complex should help save over $500 million foreign exchange annually, as a result of import substitution and exports, reducing the trade deficit of Pakistan.

He also said the entire production of plants should be sufficient to meet the projected local requirements for polymers.

TPLs investment, the high commissioner said, should be viewed as a strong indicator of foreign companys confidence in the policies pursued by the new democratic government of Pakistan. TPL Chairman Peter Lloyd-Cooper apprised the high commissioner of progress of the project in Pakistan.


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## Neo

*Parent raises stake in Unilever Pakistan​*
Karachi, Oct 21: Unilever Overseas Holdings Limited said on Tuesday that they had acquired 323,548 additional shares in Unilever Pakistan Limited, raising their holdings in the company to 9.68 million shares representing 72.84 per cent of the total paid-up capital, from 70.40 per cent previously. The Unilever Overseas has also accumulated 70.52 per cent of the preference share capital of the company.

Analysts viewed it as rare good news for the countrys stock market, where a foreign investor (if only a holding company) has shown confidence in its Pakistani subsidiary. But there are reasons to be optimistic.

The Unilever Pakistan is one of the highest quoted scrips on the stock exchanges with price tag of Rs2,340 for a 50-rupee share.

The recent waves of equity erosions passed over the Unilever stock, licking almost nothing from the value of Rs2,361 quoted on April 18, the day when the market was caught in the downward spiral.

Shareholdings in Unilever Pakistan, other than those by overseas holding company, are widely dispersed among institutional and individual investors. But much of them are in frozen blocks as the stockholders seldom part with their stake.

The turnover in Unilever stock stood at just about 81,120 million shares in the nine months period of the current calendar year (Jan-Sept) against the companys issued and paid-up shares of 13.3 million.

On June 30, the Unilever Pakistan reserves amounted to Rs1,746 million and total equity at Rs2,415 million. The balance sheet footing was Rs11 billion.


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## Neo

*Pakistan needs $10-15 billion urgently, says Tareen​*
** Economic adviser says circumstances make routine meeting extraordinary
* Pakistan must correct imbalance in 24 months​*
ISLAMABAD: Pakistan requires $10 billion to $15 billion of support from foreign lenders to avert a balance of payment crisis, Economic Adviser Shaukat Tareen said on Tuesday, as talks between Pakistani and International Monetary Fund (IMF) officials began in Dubai.

In 24 months, we must correct the imbalance we have created, Tareen told Dawn News television. Immediately we dont need more than $10-15 billion.

The ongoing meeting with the IMF is an annual economic health check-up, which all IMF members have to go through. It is not an extraordinary meeting but, yes, the circumstances have made it so, Tareen told AFP.

Well discuss with the IMF the present economic and financial situation we are facing, he said.

Inflation in Pakistan is running close to 25 percent, the budget deficit is unsustainable, government borrowing from the central bank has squeezed liquidity in the banking system, and the international bond market fears a debt default.

The talks that are now taking place will ensure that the Fund can act quickly should there come a request from the Pakistani authorities, said an AP source in Dubai with knowledge of the discussions underway.

Consultations with the IMF are taking place in the Gulf because of security concerns, and are likely to continue for days.

Last month, an IMF team left Islamabad in a hurry after a suicide bomber killed 55 people and destroyed the Marriott Hotel.

The government has been trying to get IMF endorsement for its economic strategies in order to persuade other multilateral lenders and friendly countries to come to its rescue. But it does not want to take IMF money unless they were out of options.

Potential donor governments are also scheduled to meet in Abu Dhabi next month, but Tareen stressed the urgency of Pakistans situation last Saturday by saying Pakistan needed action in 30 days.

Analysts say Islamabad needs up to $3 billion to $4 billion urgently to stabilise the economy, although the total financing gap for the balance of payments was projected at around $7 billion for the fiscal year ending June 30, 2009.

Falling oil prices have helped, but there will be another hefty financing gap in fiscal 2010 to cover. agencies


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## Neo

*Non-textile exports up by 51 percent​*
KARACHI: The export of non-textile products increased by 51.3 percent to $2.53 billion during the first quarter of the current fiscal year against $1.694 billion in corresponding period last fiscal.

This surge in export can be attributed to substantial growth seen in the export of food group.

The current fiscal year began with the handsome growth in the export of goods other than textile, whose exports have continuously showing a declining trend amidst power shortages and fierce competition from China, India and Bangladesh. Textile sector miserably failed to record any growth in its export and remained flat during the period under review.

During the first quarter non-textile products posted impressive growth with an unprecedented increase in rice export, which led the boom in the export of non-textile products.

The export of traditional products, like rice, sports goods, leather products, footwear, surgical and engineering goods rose despite the fact that the input cost of such products witnessed a substantial increase during the period under review.

During July-September period, export of food group was up 71.69 percent. In this group, the export surged by 139.24 percent  basmti by 74.31 percent and other varieties by 352.10 percent.

Pakistan benefited tremendously by the restrictions placed by India, Vietnam and Thailand on rice export due to shortage of staple food in their respective countries, analysts and exporters citing the reasons for the export growth in rice said.

The export of fish products was up by 2.79 percent, fruit 2.03 percent, sugar 100 percent and meat 43.85 percent.

Export of petroleum products increased by 13.64 percent during the quarter under review, sports goods 7.68 percent, leather products 6.56 percent, footwear 23.42 percent, surgical goods and medical instruments 18.57 percent, cement 78.19 percent, molasses 291.25 percent and gur 17.55 percent during July-September of this fiscal.

Analysts pointed out that despite the poor performance of textile products, the growth in export volume depicts the diversification in the export base of the country. This is urgently needed to enhance the export base because the tough competition faced by textile exports as well as capacity constraints of the sector are hampering its ability to post any substantial growth in export, they said.

The export of other products managed to make-up the losses suffered by the shortfall in export of textile products. The traditional products are fetching the much-needed foreign exchange reserves for the country at this critical time, they said.


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## dr.umer

*Pakistan to seek world counter-terrorism support at Asia-Europe summit ​*
BEIJING, Oct 23 (APP): Pakistan will seek extensive support for war on terror and cooperation to meet its growing energy demand at the 45-member Asia-Europe (ASEM) summit to be held here Friday. The present democratically elected government attaches great importance to this apex forum as it is for the first time that Pakistan is taking part at the summit since it joined the group in 2006, with Prime Minister Syed Yousuf Raza Gilani to lead his country. 

This was stated by a senior Pakistani official here Thursday while briefing newsmen on the summit. 

The Prime Minister will address the plenary session of the international forum and is likely to highlight his countrys fundamental position on key issues, facing the region. 

The leaders at the summit may discuss wide-ranging matters of common concern like global financial crisis and socio-economic disparities. It will be the highest-level interaction of Prime Minister Gilani with key political and economic regional and international players. According to the sources, Pakistan and China may take a similar position on the global issues, especially war on terror. Pakistan has already endorsed the theme of the seventh summit of ASEM, i.e. Vision and action towards a win-win situation. The first plenary session of the summit, to be addressed by the Prime Minster will focus on International Economic and Financial situation. 

Pakistans admission to ASEM as its formal member is an acknowledgment of the important role it is playing in the international arena. 

It is also a manifest of recognition by the international community of Pakistans vital geo-strategic position and its ability to contribute towards ASEM process. Pakistan is ready and committed to playing a most useful role in furthering the ASEM process, the sources added. 

I expect a lot of interactions with all the world leaders. And there would be an opportunity to discuss with them our basic problem, that is about extremism and terrorism in the country, Prime Minister Gilani said in an interview on the eve of his trip to Beijing. 

Gilani said Pakistan, being strategically in the front-line of the anti-terror war, has suffered a lot from its fight against terrorism and extremism and wished to have a joint strategy to promote peace and security. 

We want to ensure a better life for our people by availing all available resources with the support of our foreign friends, especially China, he added. 

Delegates to this summit are to discuss global economic and social development as well as the current financial crisis, and make future action plans, Foreign Minister Yang Jiechi said. 

Yang told newsmen that the summit would focus on the world economic and financial situation, and global issues such as food security and disaster relief cooperation, and sustainable development. 

Leaders from Asian and European countries would communicate and coordinate on the issues, deliver documents and pragmatic cooperation proposals, and make action plans for the next stage, Yang said. 

As usual, the summit would issue a chairmans statement, expounding the stances of Asia and Europe on major international and regional issues. 

This summit is an important international meeting set against special global conditions. 

The world financial crisis is getting worse. Global issues such as energy, climate change and food security interweave, and the international community is facing serious challenges, Yang said. 

Several state leaders are coming to China for ASEM7, including Prime Minister Gilani, Indian Prime Minister Manmohan Singh, German Chancellor Angela Merkel, Dutch Prime Minister Jan Peter Balkenende, Slovenia President Danilo Turk, Danish Prime Minister Anders Fogh Rasmussen, Polish Prime Minister Donald Tusk, Singaporean Prime Minister Lee Hsien Loong, and Vietnamese Prime Minister Nguyen Tan Dung, Foreign Ministry spokesman Qin Gang announced yesterday.


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## dr.umer

*US EXIM Bank assures Pakistan of support for energy sector ​*
WASHINGTON, Oct 23 (APP): The US EXIM Bank has assured Pakistan of its support for its power sector as top officials the country apprised the Bank of challenges as well as the efforts the government is making to resolve the power crisis. The Pakistani delegation led by Deputy Chairman, Planning Commission, Salman Faraqi briefed the senior EXIM Bank officials about current challenges facing the energy sector, strategic vision and direction of the elected government to resolve power crisis and strategy of the government for a financially viable and sustainable power sector. 

The members of the Pakistani team shared with the EXIM Bank the measures that have already been taken during the last six months to stabilize the economy, to rationalize and streamlining the institutional set-up in the energy sector for speedy decision-making, to improve the financial situation of the power sector and to mitigate the impact of elimination of subsidies on the poor and the vulnerable. 

They highlighted huge opportunities available in the energy sector and openness of the government to all modes of investment including public-private partnership. In this context, financing of Thar Coal Project, Gudu Power Project, small to medium hydro projects including Tarbel-IV, Munda Dam, Kurrum Tangi and large water reservoirs such as Basha Dam came under discussion. 

Clearly, the government is moving forward to tap huge indigenous potential in hydro and coal related power generation to resolve the power crisis on long-term basis, said the Deputy Chairman of the Planning Commission. 

The delegation proposed establishing an Infrastructure Financing Facility for Pakistan to seek support of the US EXIM Bank. Given the robustness of the banking system with a very high presence of foreign banks, the proposed facility would help Pakistan meet its urgent needs in power and energy sector. 

The senior management showed keen interest in various power projects as well as proposal for the Infrastructure Financing Facility. They underlined the already growing relationship between Pakistan and US EXIM Bank that supported acquisition of 777-LR for PIA and is considering two power projects. 

They assured support of the EXIM to the power sector of Pakistan and it was agreed that the Government of Pakistan would initiate discussions with its banking sector regarding the specific proposal and prepare a policy framework for further negotiations with the EXIM Bank. In the meantime, the EXIM Bank would carry out internal discussions. 

The Pakistani delegation also included Ismail Qureshi, Secretary, Ministry of Water and Power, Shakil Durrani, Chairman, WAPDA, Asad Ali Shah, Member, Thar Coal and Energy Board, Aslam Sanjrani, Managing Director, Thar Coal and Energy Board, Fayyaz Elahi, Managing Director, Private Power and Infrastructure Board and Abdul Wajid Rana, Economic Minister at the Pakistani embassy in Washington.


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## dr.umer

*Rs 50 billion lifeline for stock market​*
23 Oct 2008 

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) held consultations with the three stock exchanges on Wednesday night, paving the way for a Rs 50 billion package for the equity market, aimed at providing comfort to foreign investors and a soft landing to the market after the proposed removal of the floor on Oct 27.

The Karachi Stock Exchange had put a floor under the index level of 9,144 points on Aug 28 to halt a free fall after the market had lost 41 per cent in four months.

The regulators on Wednesday approved a Rs20 billion market support fund, which would invest in seven giant state-owned entities to save their stock values from nosediving.

A late night statement on Wednesday by the SECP said chairman Razi-ur-Rehman briefed participants (board of directors of the three stock exchanges) on the modalities of the new Rs20 billion open-end fund being set up by the government. It would be managed by NIT.

'The SECP today gave the formal approval for establishing the required fund', the regulators statement said, adding that the NIT was in the process of finalising details for a smooth operation.

The fund would invest in seven state-owned entities  Oil and Gas Development Corporation, Kot Addu Power Company, Pakistan Petroleum Limited, Sui Southern Gas Company, Sui Northern Gas Pipelines Limited, Pakistan State Oil Company and the National Bank.

The SECP observed that in addition to the market operation, the fund was being provided with a Rs 30 billion government guarantee to enable it to write put options on the seven entities.

A technical adviser was being appointed to advise NIT on pricing the put option. The facility would be available to foreigners who were on investors list on Aug 27.

Sources told Dawn that foreign investment in the stock market was currently valued at $2billion and brokers and traders feared that foreigners could pull back their portfolio investment to the tune of $400million once the floor was removed.

The guarantee of Rs30 billion had been provided to foreign investors to give them the comfort of reimbursement of their loss in case stocks fell below the floor in one year.

The offshore investors were at liberty to sell their stocks if they fetched considerably higher prices during the year.

The SECP stated that participants of the meeting, considering a proposal made by 103 members of the KSE for the closure of CFS market, were of a consensus that the CFS market should not be discontinued immediately to avoid any ensuing liquidity crises and until there were alternative products available in the market.

'It was unanimously agreed that the risk management of the product be further improved to remove the negatives that still exist in the system,' the regulator said.

In order to further strengthen the CFS and deliverable futures market and to reduce the risk therein the a number of additional risk management measures were proposed to be adopted with effect from Oct 27 in order to plug loopholes before opening of the markets.

The meeting also accepted a number of other proposals: strict compliance of mandatory collection of VaR-based margin by the brokers from clients in each markets effective from Oct 27; implementation of 'new capital adequacy regime' with effect from Jan 1,; uncapping of 'investor protection fund' at KSE effective October 27, 2008; transfer of risk management from the stock exchanges to the National Clearing Company of Pakistan Limited with effect from Dec 1, 2008; and regular bi-weekly reports to be submitted by the exchanges to the SECP in respect of regulatory compliance, compliance with risk management requirements and monitoring and surveillance effective from Nov 17.

The Fund building by the SECP comes on top of the several confidence building measures announced by the State Bank of Pakistan earlier in the week.

The KSE is currently in a state of limbo, showing a negligible three points decline on Wednesday and the historic low volume of just 123,600 shares. Average turnover in the 12 months prior to the current market turmoil was in the region of 185 million shares a day.


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## dr.umer

*Parliamentary body to solve power tariff issue​*October 23, 2008

KARACHI: Federal Minister for Water & Power Raja Pervez Ashraf extended the deadline for payment of bills by 10 days on Wednesday and decided to form a parliamentary committee to resolve the issue of new electricity tariff in a meeting with business leaders at the Governor House Sindh.

He said that the government would call a meeting of all stakeholders including the business community in Islamabad in a day or two to discuss the issue at length.

Sheikh Fazle Jalil, Chairman Korangi Association of Trade and Industry (KATI) said the meeting with Raja Pervez Ashraf ended on a good note as he decided to extend the deadline for paying electricity bills by 10 days until the matter is solved with all stakeholders.

He said that businessmen would be leaving for Islamabad to discuss the matter with the government. 

We have also asked the government to reconstitute both National Electric Power Regulatory Authority (NEPRA) and Oil and Gas Regulatory Authority (OGRA).

Anjum Nisar, President Karachi Chamber of Commerce and Industry (KCCI) and others from the FPCCI and industrial associations of Karachi were present in the meeting with the minister to discuss the standoff over KESC bills.

They deliberated upon this issue with the federal minister that the business community as well as the general public of Karachi were angry over excessive billing by the KESC due to the recent hike in tariff and said that unless the issue of excessive billing is resolved by the KESC, no bills would be paid.

Naveed Ismail, Managing Director KESC and Dr Ishratul Ebad, Governor Sindh, were also present in the meeting.

Muhammad Iqbal Ebrahim, Chairman All Pakistan Textile Mills Association (APTMA) after meeting Raja Pervez Ashraf said that gas companies sought 33 per cent increase in tariff while the increase in electricity tariff of around 60 per cent has already threatened the industry. Its not a good omen, he said.

He said that the parliamentary committee that has been constituted for solving the power tariff issue in the next 10 days would also decide on the gas tariff issue.


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## Neo

*Economic managers asked to prepare revival plan​* 
ISLAMABAD (October 22 2008): Prime Minister Yousuf Raza Gilani has asked the economic managers to chalk out a comprehensive plan for revival of the economy. During a presentation by Advisor to Prime Minister on Finance Shaukat Tarin and his team on economic agenda on Monday, October 20, the Prime Minister had directed the economic managers to work out an effective strategy for revival of the economy.

The nine-point agenda would not only propose measures to attract local and foreign investment, but would also improve socio-economic progress in the country. The economic revival plan would particularly focus on immediate measures needed to ensure smooth working of industrial and manufacturing sectors in the country.

Beside Advisor to Prime Minister on Finance, other members of the economic team are Secretary, Finance, Dr Waqar Masood, Federal Minister for Water and Power Pervaiz Ashraf and Special Assistant to Prime Minister on Economic Affairs Hina Rabbani Khar.

Tarin informed the Prime Minister that the proposed economic agenda would be announced within eight weeks. Primarily, major focus of the economic agenda is to enhance economic stability and socio-economic uplift in the country. The proposed economic agenda would be instrumental in meeting economic challenges for accelerated development of human resources, health, education, energy and banking sectors.


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## Neo

*Africa seen buying more rice from Pakistan​*
CHIANG MAI (October 22 2008): African nations, which buy some 9 million tonnes of rice a year from Asia, are likely to import the bulk of white rice from Pakistan and Vietnam because of competitive prices. "In Pakistan the new season has started, their prices are very competitive," said the head of the rice division at an international trading house.

"With government intervention from Thailand, I think Africa will buy from Pakistan and Vietnam, especially white rice." The benchmark Thai rice price is likely to decline from $660 per tonne after the government cut the price it will pay farmers for their paddy rice by nearly 15 percent, but it is much higher than the other origins.

Pakistan, which is expecting a bumper crop, is quoting non-basmati rice at around $390-$400 per tonne, while Vietnam is offering a similar variety at $420 per tonne, traders said on the sidelines of a global seminar in Chiang Mai. African countries, including the top buyers Nigeria and South Africa, are well stocked and are unlikely to tap the international market before December. "Nigeria is covered for 3 to 4 months, they have something like 400,000 to 450,000 tonnes," said one rice exporter. Nigeria annually imports 1.2 million tonnes of rice.


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## Neo

*Saudi-Pak conference to help bring more investment: Naveed​*
ISLAMABAD (October 22 2008): Federal Minister for Privatisation and Shipping Syed Naveed Qamar on Tuesday said the on-going Saudi-Pak Investment Conference in Saudi Arabia would help bring more foreign investment in Pakistan. Talking to a private TV channel, he said the conference is aimed at promoting contacts between private sectors of the two countries.

At such forums, Pakistan would apprise foreign investors about investment-friendly policies and conducive atmosphere for investors in Pakistan. Pakistan will be able in getting more and more foreign investment in short span of time as Pakistan is an attractive and safe destination for investors, he optimistically said.


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## Neo

*Pakistan and India resume Kashmir trade after 60-year freeze​*
CHAKOTI (October 22 2008): Trucks loaded with apples, onions and nuts crossed the line of control in Jamu and Kashmir for the first time in decades on Tuesday as nuclear-armed India and Pakistan opened a trade link aimed at easing tension. The decision, taken only last month, to allow limited trade across the line of control in Kashmir symbolises attempts to solve the Kashmir dispute by creating "soft borders" allowing the free movement of goods and people.

"I'm quite confident that this beginning will lead us to proper and regular trade and commerce," Sardar Attique Ahmed Khan, prime minister of Azad Kashmir, told reporters. But Khan cautioned against hopes the opening of trade across Line of Control (LOC), would lead to a quick solution of the more than 60-year dispute of Kashmir. "All these steps, cross-LOC trade, communication, people-to-people contacts, talks, all these things slowly and gradually they are contributing factors towards the ultimate resolution," Khan said.

"But no high hopes should be attached, no wild wishes should be attached to only the one event of today. But this is a great success," he said. The Occupied Kashmir's puppet governor, N.N. Vohra, said the trade link was a major step in a slow-moving peace process: "Today is a historic day ... The trade volume will increase."

On Tuesday, white doves of peace were released as 14 Pakistani trucks bedecked with the national flag crossed a bridge into Indian Kashmir carrying rice, onions and dried fruit. Schoolchildren chanted "Long Live Pakistan" and "Kashmir will become a part of Pakistan" as a brass band played patriotic music.

"A DREAM COME TRUE": Indian trucks garlanded with marigolds and banners reading "long live cross-border trade" set off the other way loaded with apples, honey and nuts. "I'm delighted, it's a dream come true," said 35-year-old lorry driver Gulam Hassan Baba.

It was the first time vehicles had been allowed across the LOC and the newly constructed Aman Setu, or Peace Bridge, since a 1948 war. But it does go some way towards meeting one of the demands of freedom fighter in Occupied, who have been leading months of pro-independence protests, some of the biggest in years.

A bus service connecting Srinagar, Indian Kashmir's summer capital, and Muzaffarabad, capital of Pakistani Kashmir, was launched in 2005, one of many confidence-building measures undertaken since the two sides began a peace process in 2004. But because of elaborate security checks, suffocating bureaucracy and mistrust, only 9,000 passengers have travelled between the two sides of Kashmir on the "peace bus" service.

For the time being, trade will take place just once a week, with a limited list of goods allowed. Khuwaja Farooq, head of the Muzaffarabad Chamber of Commerce, said he wanted free trade. "It should be a permanent feature ... but as of now, nothing seems permanent," he said.

AFP ADDS FROM SALAMABAD (IHK): A convoy of 13 trucks carrying mostly apples set off on the historic trip to Azad Jammu and Kashmir. "It is a historic day which will surely help the economy of both parts of Kashmir," said occupied Kashmir's Governor N.N. Vohra as he flagged off the convoy from Salamabad, 12 kilometres (seven miles) from the Line of Control.

"I hope it will herald peace in the region," he said of what officials on both sides are aiming to turn into a twice-weekly trading event. The largely symbolic crossing shortly after midday was the first time vehicles were allowed to cross Aman Setu or Peace Bridge on the Line of Control since India and Pakistan fought a war over the region in 1947.

"Vehicles from both the sides have crossed over making history," senior Indian industries official Pawan Kotwal said at Kaman Post, just near the Peace Bridge, as reporters from both sides waved at each other. A freedom struggle launched in occupied Kashmir in 1989 although violence has fallen sharply since the nuclear-armed states began a peace process in 2004 aimed at settling all issues including the future of Kashmir.

But in the past few months, the occupied Kashmir has witnessed the biggest pro-independence demonstrations since the movement in 1989, triggering a violent crackdown by Indian security forces. "The items were scanned in x-ray machines," police officer Faisal Qayoom said. Kashmiri truckers from both sides said they were delighted about the resumption of trade. "I'm very happy to be part of this historic moment," said Ghulam Hassan Baba, a driver from Srinagar.


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## Neo

*Agri credit disbursement up 28pc ​* 
Thursday, October 23, 2008

KARACHI: Disbursement of to agriculture sector by commercial and specialised banks increased 28.36 per cent year-on-year to Rs46.618 billion during the first quarter (July-September) of the current fiscal year, the State Bank (SBP) said on Wednesday.

Overall credit disbursement by five major commercial banks including Allied Bank Limited (ABL), Habib Bank Limited (HBL), MCB Bank Limited, National Bank of Pakistan (NBP) and United Bank Limited (UBL) went up 31.52 per cent to Rs25.638 billion compared to the first three months of the last fiscal year.

Zarai Taraqiati Bank Limited (ZTBL), the largest specialised bank, disbursed Rs8.7 billion compared to Rs7.2 billion last year while disbursement by Punjab Provincial Co-operative Bank Limited (PPCBL) was down at Rs0.819 billion from last years Rs1.265 billion. Besides, 14 domestic private banks also loaned a combined Rs11.42 billion up 36.97 per cent.

It may be recalled that the State Bank of Pakistan has set an indicative agriculture credit disbursement target of Rs250 billion for the current fiscal year which is 25 per cent higher than the Rs200 billion target of the last fiscal year and 18 per cent higher than the actual disbursement of Rs212bn in FY08.


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## Neo

*Pak, Saudi entrepreneurs sign MoUs ​* 
Thursday, October 23, 2008

KARACHI: Pakistani entrepreneurs have signed several Memorandum of Understandings (MoUs) with investors in Saudi Arabia for setting up industries in agriculture, dairy farming, livestock, fisheries, food processing, manufacturing and power generation in Pakistan.

According to information reaching on Wednesday, these MoU have been signed at the largely attended Investment Conferences jointly held by Government of Pakistan and Finance Ministry of Saudi Arabia in Riaz and Jeddah.

Investment conference at Jeddah was told that Al-Tuwairqi Group will expand its steel mills at Port Qasim with an additional investment of $1 billion while Samba Group of Saudi Arabia will streamline the projects in agriculture, dairy, power generation and livestock in Pakistan with the help of BOI.

Federal Minister for Investment and Privatisation Syed Naveed Qamar, who is leading Pakistani delegation, held meetings with Saudi trading and investment groups in presence of some leading Pakistani businessmen.

Qamar invited Saudi business groups to invest in Pakistan as it was offering best investment opportunities. He pointed out that Pakistans private sector was also very active and mutual investment and trading cooperation between the sectors of two countries will bring in positive results.


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## Neo

*ADB to provide trade finance ​* 
Thursday, October 23, 2008

ISLAMABAD: The Asian Development Bank (ADB) and Sumitomo Mitsui Banking Corp (SMBC) announced on Wednesday that they had entered into a risk-sharing agreement that would enhance support for international trade in developing countries of Asia.

The Risk Participation Agreement Initiative, which comes under the umbrella of ADBs Trade Finance Facilitation Programme (TFFP), will extend trade finance facilities to selected financial institutions on a risk-sharing basis, with transactions ranging from short-term letters of credit to tenures that last up to two years.

The programme will be introduced in phases. Phase-I will be launched in Pakistan and Sri Lanka while phase-II will extend its coverage to include financial institutions in Cambodia, Lao PDR, Mongolia, the Philippines and Vietnam.

TFFP plays an important role in ADBs efforts to develop public-private partnerships through risk mitigation. The programme works with private sector financial institutions to support trade in developing countries by sharing the risk of financing and guaranteeing trade transactions.

These types of risk-sharing agreements can be particularly important in developing intra-regional trade between smaller developing countries and in supporting the growth of small and medium-sized enterprises that are involved in international trade.

We are very pleased to work with SMBC by sharing risk in some of Asias lowest income countries to support development through trade, said Philip Erquiaga, Director General of ADBs private sector operations.

ADB aims to attract private capital to support development in the poorest countries of Asia. Trade is an important component of economic development and the ADB is working to promote trade by developing, among other things, public-private partnerships that involve risk-sharing arrangements.


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## Neo

*Punjab explores new avenues to promote tourism ​* 
Thursday, October 23, 2008

LAHORE: Punjab Minister for Tourism, Chaudhry Abdul Ghafoor has said that the provincial government is determined to promote tourism sector, in order to explore new avenues to attract maximum number of foreigners.

He said that no government in the past did the needful to promote this sector which is a major source of earning for a number of countries around the globe. He was addressing a seminar on Challenges in Hospitality, Travel and Tourism arranged by the Lahore Chamber of Commerce and Industry (LCCI) in collaboration with the Tourism Development Corporation of Punjab (TDCP) on Wednesday.

Ghafoor said that responsibility lies with Pakistani ambassadors posted abroad to highlight a positive image of the country that has been tarnished by the anti-social elements. He was also of the view that neighbouring India was earning $5 billion annually through tourism industry but in Pakistan the situation is not that encouraging.

He said that private sectors recommendations would be prioritised in the new tourism policy to ensure their maximum participation. Ghafoor also urged both the print and the electronic media to play their role in the promotion of this sector. Speaking on the occasion, LCCI Acting President, Mian Muzaffar Ali said that the tourism sector, if encouraged and promoted on modern lines, can help the country earn millions of dollars through foreign exchange.

There is need to create awareness among the business community and investors about the vast potential of tourism sector, especially in the scenic Northern Areas of Pakistan. If intelligently promoted, the northern areas could be rated among the worlds best tourist spots. Although rich in natural beauty, these areas are neglected in terms of availability of basic amenities, education and health.

Tourism is the main source of foreign exchange in several countries like Switzerland, Sri Lanka. We must develop this sector to attract local and foreign tourists, he added. The country could earn billions of dollars every year from tourism, he asserted.

TDCP Managing Director, Mian Waheedud Din in his address said that it is striving to meet their objectives by focusing on regional and domestic tourism since its inception in 1987. 

On domestic level, he said that cultural exchange programmes with other provinces are also being arranged.


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## Neo

*Cut in non-productive expenditures may ease crisis ​* 
Thursday, October 23, 2008

LAHORE: Former Chairman Pakistan Pharmaceutical Manufacturers Association and Chairman Highnoon Group of Industries, Jawaid Tariq Khan has demanded that the government further reduce non-productive expenditures in order to bring the country out of its financial crisis.

He asked the government to stop borrowing from banks and increase import duty on luxury goods and said that the current economic crisis is due to the wrong policies of the previous government.

Speaking at a press conference here on Wednesday, he pointed out that due to the policies of the previous government Pakistans economy has converted into a consumer economy from producing economy. He said that non-productive expenditures of the government increased manifold resulting in heavy borrowing from the banking sector. He said to bring the country out of the crisis, the government should cut down on non-development expenditure by 40 per cent and stop borrowing from banks.

He also said the revenue collecting agencies have failed to bring tax collection to the level of other developing countries of the world. He called for a revamp of the industrial sector by encouraging it to make new investments and in some cases give subsidy to make it competitive so the exports could be increased to the maximum.

Imports of all luxury goods should be stopped including the imports of vehicles above 2000cc. Prices of petrol and hi-octane should be according to international prices but the price of diesel and kerosene oil should be subsidised.


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## Neo

*Pakistani investors may lose billions in Dubai: PEW ​* 
Thursday, October 23, 2008

ISLAMABAD: The Pakistan Economy Watch has said that international financial turmoil and receding oil prices have shaken the oil-rich Arab nations with Dubai among the worst hit.

Dubai, known as the safe heaven among investors, traditionally relies on realty, tourism and financial sectors that are badly hit due to global recession. It is no longer regarded as financially invincible and its boom is under threat, said Dr Murtaza Mughal, President Pakistan Economy Watch.

Dubais debt is much more than GDP, which is soaring at an alarming rate creating new financial challenges. The federal and state governments are also keeping critical data secret, which is adding to nervousness of investors.

Mughal said the situation had the pushed international and local investors to withdraw a minimum of 60 billion dollars from Dubai and flight of capital continued. He cautioned that Pakistanis should be vigilant before making any new investments. 

Dubai has asked the UAE and Abu Dhabi, the richest among the seven units, for help but could get only 33 billion dollars. Some big international concerns, including banks, finance houses and developers have realized the situation and altered major investment plans. Some institutions have dropped idea for investment in Dubai while others have started mergers, he said, adding that the local property giants had started firing their employees.

Lending to the property sectors amounts to 17-20 percent of the total loans issued by the banks in Dubai and some banks are feeling pressure of the situation. The international turmoil has also cut the number of visitors to Dubai which is yet another blow to the city-state which saw the boom on weak foundation.


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*Rs50 billion lifeline for stock market​*
ISLAMABAD, Oct 22: The SECP held consultations with the three stock exchanges on Wednesday night, paving the way for a Rs 50 billion package for the equity market, aimed at providing comfort to foreign investors and a soft landing to the market after the proposed removal of the floor on Oct 27.

The Karachi Stock Exchange had put a floor under the index level of 9,144 points on Aug 28 to halt a free fall after the market had lost 41 per cent in four months.

The regulators on Wednesday approved a Rs20 billion market support fund, which would invest in seven giant state-owned entities to save their stock values from nosediving.

A late night statement on Wednesday by the SECP said chairman Razi-ur-Rehman briefed participants (board of directors of the three stock exchanges) on the modalities of the new Rs20 billion open-end fund being set up by the government. It would be managed by NIT.

The SECP today gave the formal approval for establishing the required fund, the regulators statement said, adding that the NIT was in the process of finalising details for a smooth operation.

The fund would invest in seven state-owned entities -- Oil and Gas Development Corporation, Kot Addu Power Company, Pakistan Petroleum Limited, Sui Southern Gas Company, Sui Northern Gas Pipelines Limited, Pakistan State Oil Company and the National Bank.

The SECP observed that in addition to the market operation, the fund was being provided with a Rs 30 billion government guarantee to enable it to write put options on the seven entities.

A technical adviser was being appointed to advise NIT on pricing the put option. The facility would be available to foreigners who were on investors list on Aug 27.

Sources told Dawn that foreign investment in the stock market was currently valued at $2billion and brokers and traders feared that foreigners could pull back their portfolio investment to the tune of $400million once the floor was removed.

The guarantee of Rs30 billion had been provided to foreign investors to give them the comfort of reimbursement of their loss in case stocks fell below the floor in one year.

The offshore investors were at liberty to sell their stocks if they fetched considerably higher prices during the year.

The SECP stated that participants of the meeting, considering a proposal made by 103 members of the KSE for the closure of CFS market, were of a consensus that the CFS market should not be discontinued immediately to avoid any ensuing liquidity crises and until there were alternative products available in the market.

It was unanimously agreed that the risk management of the product be further improved to remove the negatives that still exist in the system, the regulator said.

In order to further strengthen the CFS and deliverable futures market and to reduce the risk therein the a number of additional risk management measures were proposed to be adopted with effect from Oct 27 in order to plug loopholes before opening of the markets.

The meeting also accepted a number of other proposals: strict compliance of mandatory collection of VaR-based margin by the brokers from clients in each markets effective from Oct 27; implementation of new capital adequacy regime with effect from Jan 1,; uncapping of investor protection fund at KSE effective October 27, 2008; transfer of risk management from the stock exchanges to the National Clearing Company of Pakistan Limited with effect from Dec 1, 2008; and regular bi-weekly reports to be submitted by the exchanges to the SECP in respect of regulatory compliance, compliance with risk management requirements and monitoring and surveillance effective from Nov 17.

The Fund building by the SECP comes on top of the several confidence building measures announced by the State Bank of Pakistan earlier in the week.

The KSE is currently in a state of limbo, showing a negligible three points decline on Wednesday and the historic low volume of just 123,600 shares. Average turnover in the 12 months prior to the current market turmoil was in the region of 185 million shares a day.


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*Balochistan peace must for oil exploration: Zardari​*
ISLAMABAD, Oct 22: President Asif Ali Zardari said on Wednesday that the government would restore peace in Balochistan and make it safe for oil and gas exploration after holding dialogue with stakeholders.

At a briefing on energy crisis and the pace of oil and gas exploration in the province by officials of the ministry of petroleum and natural resources at the presidency, he said energy security was as much vital for the nation as food security.

Sources in the petroleum ministry told Dawn that the president agreed with views being held by most of exploration companies and officials of the ministry that without bringing lasting peace to Balochistan, no major increase could be witnessed in exploration and production of oil and gas in the province.

Mr Zardari, they added, was informed that the confidence of investors interested in gas and oil fields in Balochistan could only be restored through peace and peace was not possible until tribes were taken into confidence.

An official announcement said the president stressed the need for innovative and out-of-the-box solutions to increase oil and gas production. He called for stepping up oil and gas exploration.

He said that the economy could not be sustained without energy. There is a pressing need for multiplying domestic energy production.

Mr Zardari said energy security, like food security, was critical in the modern world. He called for devising a comprehensive energy security plan. An effective energy security plan also involved dialogue at the regional level for cooperation in the filed of energy, he said.

He stressed the need for carrying out aerial surveys for exploration of oil and gas.

The president said that during his visit to Beijing, he found the Chinese political leadership keen to assist Pakistan in all development activities.

Mr Zardari called upon relevant officials to develop new models of private-public partnership in the oil and gas sector with Chinese entrepreneurs.

The sources said that the president was also briefed on the issues which could arise from the privatisation of the Qadirpur gas-field and the ongoing maintenance of the same gas field and its impact on energy situation.


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*Pakistan has sought help, says IMF​*
WASHINGTON, Oct 22: The International Monetary Fund moved on Wednesday to bail out cash-strapped Pakistan in the Funds first bid to shore up an Asian economy following global financial turmoil.

The Washington-based fund said Pakistan had sought its help to deal with a balance of payments crisis, which had raised the prospect of the country defaulting on its foreign debts.

The Pakistani authorities have requested discussions with the IMF on an economic programme supported by financial assistance from the fund to meet the balance of payments difficulties the country is experiencing as a result of high food and fuel prices and the global financial crisis, IMF managing director Dominique Strauss-Kahn said in a statement.

A fund mission will begin discussions with the authorities in the next few days on a programme aimed at strengthening economic stability and enhancing confidence in the financial system, he said.

Strauss-Kahn said the amount of IMF financing had yet to be determined but reports said that Pakistan needed as much as $15 billion for up to three years to extricate itself from a severe financial crisis.

About $4 billion of that was required in the next month.

We are in dire need of dollars so the situation is that we have no choice, a senior Pakistani government official said in Islamabad, speaking on condition of anonymity.

IMF officials were holding talks with Pakistani officials in Dubai which could last a few days and a bailout package worth about half of what is required by Pakistan could be arranged by the IMF within two weeks, sources told AFP.

Financing could be made within framework of the funds Emergency Financing Mechanism, Strauss-Kahn said, referring to a fast-track process that the IMF has revived to help countries experiencing economic problems from the global financial crisis.

Emergency financing is done fairly quickly, possibly within two weeks, and the Dubai meeting will basically determine the amount of financial assistance required ahead of a board decision, one source said.AFP


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*New petroleum policy finalised: Incentives to exploration firms​*
ISLAMABAD, Oct 22: The government has finalised a new five-year petroleum policy which offers various fiscal incentives to exploration companies with a more simplified procedure of licencing and award of contracts, it is learnt.

The policy has been forwarded to the Minister for Petroleum and Natural Resources, Shah Mehmood Qureshi, for approval and would then be forwarded to the Economic Coordination Committee of the Cabinet for final endorsement and approval.

The new policy seeks exploration of 50 new blocks but also suggest 33 to 117 per cent increase in consumer gas prices, sources told Dawn.

Under the new policy, the government has proposed an 80 per cent increase in gas prices by exploration companies in case crude oil prices remain at $100 a barrel.

With this increase, the price of gas which hovers between $2.61 and $2.99 per mmbtu (Million British Thermal Unit) at present will touch $4 to 6.5 per unit.

But if oil price in the international market reaches $150, the companies would be entitled to increase gas prices by 90 to 117 per cent, sources said.

However, if crude oil prices surpass $150 a barrel, any further increase in the price of gas would go to the government and not the exploration companies.

This means that the government will earn windfall profit, if crude oil prices cross $150 a barrel in the next five years, a source said.

Yes, the new petroleum policy is ready. We have prepared it in a record time of four weeks compared to the Petroleum Exploration and Production Policy of 2007, which took more than one year, Secretary, Petroleum, G A Sabri told Dawn.

He said that the proposed policy provides a number of fiscal incentives to exploration companies. The procedure for award of contracts had also been simplified to encourage investments in oil and gas sectors. He said the new policy tries to plug all loopholes in the previous one.

A source said the new petroleum policy suggested bidding time for new exploration licences to be decreased to 30 days from existing 90 days in order to save time.

There will also be no prequalification involved in this process and companies with good working programmes would be awarded contracts.

There is a general impression that the 2007 petroleum policy failed to show any better results. When the policy was approved last year, Pakistans average daily production of crude oil and gas in 2005 was 66,500 barrels and 3,800 million cubic feet, respectively. Then, the countrys current crude oil production met only 17 per cent of the total demand for domestic consumption. The balance requirement was imported involving large expenditures of foreign exchange. Hardly anything has changed since then.

The situation, however, has rather deteriorated as law and order situation in the country scared away investments in oil and gas exploration and production.

The domestic gas production and supply presently fails to meet the demand of domestic users, the industrial sector and power generation. The unavailability and shortages of furnace oil and gas supplies to independent power producers is one of the reasons behind the present 5,000 MW power deficit, making the government to officially allow up to 11 hours of load-shedding.

The government had introduced the first petroleum policy document in 1991 followed by new petroleum policies in 1993, 1994, 1997 and 2001. Whenever previous policies were superseded by a subsequent policy document, the existing rights granted under licences/Petroleum Concession Agreements (PCAs) / Production Sharing Agreements (PSAs) were not affected.

The 1997 policy, while preserving the provisions of the 1994 policy with respect to onshore areas, introduced a new offshore package of terms based on production sharing arrangements. Under the 1997 policy, existing licence holders in offshore areas were given an option to convert their concession agreements into PSAs.

The 1997 policy was replaced in 2001 by the Petroleum Policy 2001, coupled with Petroleum (Exploration and Production) Rules, 2001, a model offshore PSA and a model onshore PCA.

In 2003, a revised model offshore production sharing agreement was introduced, complemented by the Offshore Petroleum (Exploration and Production) Rules 2003.


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*ADB to launch trade facilitation plan for Pakistan​*
RAWALPINDI, Oct 22: Pakistan will be the first country where the Asian Development Bank plans to launch its Trade Finance Facilitation Programme (TFFP), aimed at attracting private capital to support development in the poorest countries of Asia.

The programme works with private-sector financial institutions to support trade in developing countries by sharing the risk of financing and guaranteeing trade transactions.

These types of risk sharing agreements can be particularly important in developing intraregional trade between smaller developing countries, and in supporting growth of small and medium-sized enterprises (SMEs) involved in international trade.

The Asian Development Bank and the Sumitomo Mitsui Bank Corp (SMBC) announced on Wednesday that they have entered into a risk-sharing agreement that will enhance support for international trade in the developing countries of Asia.

The will broaden SMBCs risk mitigation capabilities and enhance profile of the underlying trade finance transactions as SMBC would be able to benefit from ADBs AAA credit rating, said an ADB announcement on Wednesday. The programme will assist not only local banks in Asian countries that have been slow to integrate with the global trading system, but can also help maintain, reestablish and enhance trade finance lines for local banks hurt by political or systemic crises.

The programme will be introduced in phases. Phase-I would be launched in Pakistan and Sri Lanka while phase-II will extend coverage to include financial institutions in Cambodia, Lao Republic, Mongolia, Philippines and Viet Nam.

The programme will enable both SMBC and ADB to continue facilitating the growth of trade business in these countries as well as strengthen relationships with financial institution clients.

TFFP plays an important role in ADBs efforts to develop public -private partnerships through risk mitigation.

The programme aims to help develop member countries banks provide trade finance products to private sector importers and exporters.

This is a means to facilitate international trade to, from, and between DMCs.

The TFFP develops the capabilities of local issuing banks. It has two main components which include revolving guarantee facility, without sovereign counter-guarantee, under which ADB guarantees payment to participating regional and international confirming banks, covering commercial and political risks.


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*SSGC serves over 2m customers​*
KARACHI, Oct 22: The customer base of Sui Southern Gas Company (SSGC) has risen to 2.072 million, of which 2.045 million are domestic, 22,558 commercial and 3,561 industrial customers.

The SSGC operates 3,309 km high-pressure transmission network and a 31,911 km distribution network extending across the two southern provinces of Sindh and Balochistan, says a press release.

The companys $800 million 5-year development plan formulated in 2003-04 is designed to expand transmission and distribution (T&D) capacity to 1.8 bcfd by the year 2009, enhance system efficiency and optimise service quality.

During 2007-08, SSGC laid a total of 2,643 km of transmission and distribution pipelines, comprising 2,624 km of distribution and 19 km of transmission lines. The company provided connections to 93,829 domestic customers, 1,733 commercial and 407 industrial customers in the same fiscal year.


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*IMF revisited​*
PAKISTANS hopes of securing immediate funding from friends to overcome its balance-of-payments crisis and avert a possible default on international debt have been dashed. Lenders are no longer ready to trust us with fresh cash handouts to squander on importing luxuries. This in spite of our strategic location and us being a front-line state in the war on terror. Even the strong commitment of many friends to support the nascent democratic government doesnt compel them to open their coffers to us. The world expects us to do more on the economic front  just as it wants us to do more in the terror war. Pakistan wouldnt be able to tap global markets to raise cash even if there wasnt a global liquidity crunch. The international rating agencies have already declared Pakistan the riskiest government borrower after Argentina.

The countrys finance managers are now preparing to appear in the court of the International Monetary Fund (IMF) to secure the funding needed to stave off a possible economic meltdown. It may now only be a matter of days before the government joins a fresh IMF programme. Pakistan and the IMF are already engaged in crucial talks in Dubai to determine the countrys exact cash needs. The IMF says Islamabad requires $10bn in two years to stabilise the economy. The last time Pakistan came off an IMF programme was in December 2004, insisting that it would never borrow from the agency again.

The decision to join an IMF programme now will be unpopular at home. But we have run out of options. The opposition to seeking the IMFs help doesnt stem only from the fact that its economic stabilisation recipes have been discredited around the world. The rulers dread going to the Fund because it imposes a tight fiscal framework on their functioning to ensure financial discipline by cutting expenditure. Ordinary citizens dislike it because the IMF conditions hurt them. The government has already removed subsidies on fuel. Subsidies on electricity will be eliminated by June 2009. The measures were taken in order to seek the IMFs approval that could in turn send a positive signal to bilateral and multilateral lenders and restore investor confidence. With the most difficult measures already taken, there is little for the ordinary man to fear from the other possible conditions attached to an IMF loan. If anyone stands to lose anything from the IMFs conditions, it has to be the rulers who should understand that this could be their last chance to stabilise the economy on a sustainable basis. And last may mean last this time.


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*Calm returns to market: Banks invest Rs 60bn in three-month bills​*
** Interest rates would go up if the government goes to IMF​*
KARACHI: Banks invested over Rs 60 billion in treasury billsmostly in three-month tenoron Wednesday, indicating that they want their money to be placed in safe avenues keeping in view the current tight monetary conditions.

Banks invested Rs 59.86 billion in three-month treasury bills, Rs 470 million in six-month papers and Rs 443 million in one-year papers.

A banker said the market was interested in investing in three-month paper because after the recent chaos at the market banks have become cautious and they would not be investing their money in high-risk areas. Banks bought treasury bills because government securities are the safest place to invest money in the current circumstances, said head of treasury of a large commercial bank. Only one bank invested in six-month and twelve-month papers.

He said the market was mainly interested in three-month paper because interest rates are widely expected to go up. If the government goes to IMF to seek funding, then the IMF will ask it to raise interest rates to promote savings and curtail money in circulation, he said.

The State Bank set cut-off yield on three-month paper at 12.5631 percent; six-month paper at 12.6649 percent; and one-year at 12.7873 percent.

The banks had been facing liquidity shortage since the market opened after Eid holidays. Call rates had averaged 30 percent in sessions immediately after Eid. One bank had even borrowed money at 40 percent. This prompted the central bank to announce reduction in cash reserve requirement for deposits of up to one-year maturity by 200 basis points in two phases. But this didnt help much and the central bank was soon forced to take more measures. It enhanced the eligibility of PIBs towards statutory liquidity requirement and then announced another 200 basis points reduction in CRR for deposits of up to one-year maturity. Besides, it exempted the deposits of one-year maturity and above from SLR. These measures have brought some stability to the banking system, but bankers said the small banks are still facing problems because their advance-to-deposit ratio was very high. Keeping the experience of last 20-22 days in mind the banks have now adopted a very cautious approach and they are more inclined to invest in government securities. Prior to this the banks had been showing little interest in government securities because of expectations of further discount rate hikes. Now banks would take more interest in government securities also because the central bank has restricted them from keeping their ADR at more than 70 percent.


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*Pakistan goes to IMF  finally​*
** IMF Middle East director encourages Pakistan to move fast but says it's their call*

WASHINGTON: Pakistan will need $15 billion over the next two or three years to pull itself from its severe financial crisis, with up to $4 billion required, according to Mohsin Khan, International Monetary Fund (IMF) director for the Middle East and Central Asia, according to the Wall Street Journal.

The Associated Press in the meanwhile reported that Pakistan had decided to approach the IMF for a financial bailout.

"I would encourage them to move fast but it's their call," said Khan from Dubai where IMF and Pakistani official began a meeting on Tuesday. He said the country was not at great risk of defaulting on its debts because its only major coming commitment is a $500 million Eurobond payment due in February. But Pakistans foreign-exchange reserves are dangerously low, down to $7.75 billion as of October 11, down from $16.4 billion a year ago. In other words, Pakistan is only left with money enough to pay for two months of imports. While Pakistan has been hoping that the Friends of Pakistan group formed in New York will come up with cash, it is not clear if member states are willing to provide the money Pakistan needs. China has failed to announce the cash injection of $3 billion Pakistan was seeking and Saudi Arabia has yet to decide if it will come up with the much anticipated oil facility. Khan said the Pakistanis have "developed a pretty good (economic) programme of their own, which could be a good basis for requesting IMF assistance. Fuel and electricity subsidies are to be eliminated to help bridge the fiscal deficit.

According to Shaukat Tareen, the newly-appointed financial czar, Pakistan expects to raise $1.4 billion from the World Bank, and it may raise $1.5 billion to $2 billion through an offshore bond issue backed by remittances from overseas Pakistanis. The Wall Street Journal report said an endorsement of Pakistan's economic stabilisation package by the IMF will almost certainly lead to more taxes and a further interest rate hike, at a time when the government is already doing away with subsidies on oil and electricity. The inflation in Pakistan is 25 percent and the interest rate is 13 percent. Economists recommend that real interest rate should be more than the rate of inflation in order to give better returns to depositors.

Elsewhere, former Federal Board of Revenue chairman Abdullah Yousuf said that capital gains taxes on stock market and real estate were the two major exemptions that the government had awarded. However, he added, the current capital loss in the stock market, which was also a global phenomenon, would make the condition unfavourable for withdrawing the exemption. He said the issue of tax on agriculture sector was a provincial subject and the federal government had little to do with it until and unless the constitution is amended. He said the real issues were proper documentation of the economy and proper valuation of the property and the resolution of both these issues could resolve the government's financial problems to a larger extent.


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*IMF moves to bail out Pakistan​*
WASHINGTON (October 23 2008): The International Monetary Fund moved Wednesday to bail out cash-strapped Pakistan in the Fund's first bid to shore up an Asian economy following global financial turmoil. The Washington-based fund said Pakistan had sought its help to deal with a balance of payments crisis, which had raised the prospect of the violence-hit country defaulting on its foreign debts.

"The Pakistani authorities have requested discussions with the IMF on an economic program supported by financial assistance from the fund to meet the balance of payments difficulties the country is experiencing as a result of high food and fuel prices and the global financial crisis," IMF managing director Dominique Strauss-Kahn said in a statement.

"A fund mission will begin discussions with the authorities in the next few days on a program aimed at strengthening economic stability and enhancing confidence in the financial system," he said. IMF officials were meeting Pakistani officials in Dubai, sources told AFP.

Strauss-Kahn said the amount of IMF financing had yet to be determined but reports said that Pakistan needed as much as 15 billion dollars for up to three years to extricate themselves from a severe financial crisis. About four billion dollars of that was required in the next month.

"We are in dire need of dollars so the situation is that we have no choice," a senior Pakistani government official said in Islamabad, speaking on condition of anonymity. Dwindling foreign currency reserves can cover the nuclear-armed Islamic republic's import bill for only six more weeks, and Pakistan's new civilian administration admits rapid action is required.

"Financing could be made within framework of the fund's Emergency Financing Mechanism," Strauss-Kahn said, referring to a fast-track process that the IMF has revived to help countries experiencing economic problems from the global financial crisis.

The Financial Times reported on Tuesday that Pakistan was in "informal discussions" with the IMF and other bodies over a 10 to 15 billion dollar international support package designed to stabilise its economy. Just over half would come in the form of an IMF loan while the rest would come from the World Bank, the Asian Development Bank and donors including Saudi Arabia, the report said.

The move to shore up the Pakistani economy is the first in Asia by the IMF since financial crisis spread across the globe triggered by a US home mortgage debt conundrum. The fund is also nearing agreements to make emergency loans to Iceland and Ukraine and discussing an aid package with Hungary in moves that would draw its direct involvement in helping to contain the global crisis. During the 1997-98 financial crisis in Asia, the IMF loaned billions of dollars to Indonesia, Thailand and South Korea to cover their foreign exchange denominated debt.

Pakistan's finances have "deteriorated significantly" according to an IMF report released this week due to recent political instability, Islamic militant violence, and high oil and food prices. Its foreign reserves have sunk from 14.3 billion in June 2007 to 4.7 billion in September 2008, while the rupee has lost 25 percent of its value this year and the stock market has dropped 35 percent, it said.

Pakistan's precarious financial situation has caused world-wide alarm due to its role as a key ally in the US-led "war on terror" and its position as the Islamic world's only nuclear power. A group of bilateral donors known as the "Friends of Pakistan" - including China, the United States, Britain and the UAE - pledged in September to help the country to stabilise. But the top US diplomat for South Asia, Richard Boucher, warned on Monday that any aid from the group is "not a cash advance" and would only be carefully targeted.


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*International community urged to help overcome crisis​*
LONDON (October 23 2008): A respected British daily "Financial Times" has urged the international community to help bail out Pakistan from its current financial problems. "President Asif Ali Zardari must be given the means to try to overcome the current crisis as well as improve the country's long-term prospects. The best hope is an IMF loan, augmented by individual countries, that is flexible on conditions without compromising on the most vital of reforms," said the influential paper in a comment.

The paper said amid global financial turmoil, countries are queuing up to IMF for support and Pakistan is the most precarious one. It noted that Pakistan's economy is in trouble with growth slowing, high inflation, the current account deficit widening in the past fiscal year and the IMF estimates the budget deficit to have been 7.7 percent of GDP.

"A loan from the IMF, possibly jointly with other international institutions and bilateral donors, would shore up confidence. Pakistan may need up to 15 billion US dollar over two years. This should stave off any immediate crisis." However, FT said in order to address long-term problems, structural reforms are needed, as they have been for years.

FT said IMF faces a dilemma of its ability to force reform by attaching conditions to the loan, as heavy-handed intervention would be deeply unpopular in Pakistan. But if some aspects of conditionality look too risky, Pakistan's government should nevertheless be induced to endorse tax reform, to rise spending on education and commit to rebuilding the country's institutions, it added. The paper spoke of Pakistan's strategic importance and said any loan will have a political dimension given country's unresolved conflict with India over Kashmir and has also been sucked into fighting on its Afghan border.


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*Saudi Arabia may buy basmati rice from Pakistan​*
CHIANG MAI (October 23 2008): Saudi Arabia, a leading rice importer in the Middle East, is planning to build up a buffer stock for aromatic basmati rice and is in talks to buy at least 200,000 tonnes from India, traders said on Wednesday. "The message that we got is that they will soon visit India to negotiate a deal," said one Indian basmati rice exporter on the sidelines of an industry seminar in Chiang Mai.

"They have said 200,000 tonnes, which is a very small quantity for a country like Saudi Arabia. They will require half a million tonnes just for the buffer and they will buy from Pakistan also."

Saudi Arabia imports 800,000 tonnes of long-grain basmati rice annually, with the bulk of 700,000 tonnes from India and the balance shipped from neighbouring Pakistan. Traders said Saudi Arabia was likely to sign a deal this year and it could be a government-to-government deal.

"They will make an agreement within the next two months and by the end of December the business should be concluded," another Indian rice trader said. One Pakistani rice exporter also said he had heard Saudi Arabia was looking for additional cargoes for a buffer stock but had no ideas on the quantity. "They need to build a buffer, like other nations are doing." Indian basmati rice was quoted around $1,250 per tonne FOB (free on board), sharply down from a record high of more than $2,400 in July, when prices shot up due to concerns over supplies.


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*Strategy developed to upgrade Pak-Afghan trade, economic ties​* 
ISLAMABAD (October 23 2008): Pakistan and Afghanistan have developed a comprehensive strategy to upgrade economic and trade relations for which documents were shared for consideration of the Afghan government, said Foreign Minister Shah Mahmood Qureshi at a joint press briefing with Afghan Foreign Minister Dr Rangin Dadfar Spanta here on Wednesday.

He said that the main areas identified for mutual co-operation are transportation and communication, energy and mineral resources development along with development of trans-border economic zones linking both countries by rail with the help of China.

A Joint Ministerial Commission (JMC) will oversee the implementation of all uplift projects and will meet in Kabul in November. There was also agreement between the two foreign ministers on the modalities and Jeddah talks, he said, adding that regional economic conference would be held on January 18-19 in Islamabad.

Regarding reports that India has dispatched troops to Afghanistan in the garb of bringing peace in the region and also established 16 consulates in Afghanistan, Spanta said: "Neither there is any Indian soldier in Afghanistan nor any person imparting training to Afghan army. There are some Indian engineers working on different reconstruction projects."

"Both Pakistan and India have consulates in Afghanistan. Four Indian consulates were set up before the Karzai government some seven years ago. Similarly, three Pakistani consulates are also working in Jalalabad, Kandahar and Kabul", he added.

"We will not let enemies of Pakistan use Afghan soil for their nefarious designs", Spanta said forcefully. Commenting on the attacks by US drones on Pakistan side of the tribal belt, killing hundreds of civilians, Qureshi said that "we had extensive talks on this issue with our friends and UN members, and showed our concern that such strikes would be counter-productive. The Nato forces have distanced from such actions".

He said that illegal border crossings would be closed and especial security system would be installed at legal crossing points to check infiltration of terrorists.

Qureshi said that parliament is having an in-camera session vis-à-vis policy on Afghanistan, particularly the operation conducted by the army in the tribal belt and future plan of action will be chalked out after comprehensive debate in the parliament to check cross-border terrorism. About authority given to Afghanistan to dismantle terrorist camps inside Pakistan both foreign ministers were of the view that terrorist sanctuaries on both sides would be destroyed by the respective governments in their areas of jurisdiction.

Afghan foreign minister said that "intensity of our interaction shows that how committed both countries are to rid the region of the menace of terrorism and make it more secure place for our future generations".

This was the sixth meeting in six months after coming into power of democratic government in Pakistan, Spanta said, adding that the next meeting between the two foreign ministers will be held in Herat this year. "We are happy that old and new commitments of $51 billion made by the international community will come soon for Afghan reconstruction and fighting militancy", he added.

About eradication of opium production, which is main source of financing extremism and terrorism, Spanta said that this problem had aggravated due to 30 years of violence which Afghanistan faced, and added that in 2007 United Nations was involved to reduce the poppy production which produced good results.

Commenting on informal talks being brokered between different Afghan warring factions and Saudi Arabia to bring peace in the region he said that Afghan government is not in favour of talking to terrorists until and unless they lay down arms and respect the constitution of the country. However, some clerics from both Saudi Arabia and Afghanistan are engaged in informal talks with Taliban for achieving peace, he said. Adding to the same question, Qureshi said that Pakistan's multipronged strategy is being appreciated by all allies engaged in war against terrorism.

He said that "we have also made some achievements despite security difficulties ie suicide and roadside bombings, which are as under: seven years ago Afghan women were not having voice but now more than 30 percent have representation in the parliament; we have built 7,000 km roads during the last seven years; economy is also growing as per capita income now is $400 as compared to $185 during previous regime".


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*Kabul keen on enhancing trade, economic ties with Pakistan​* 
ISLAMABAD (October 23 2008): Afghan Foreign Minister Dr Rangin Dadfar Spanta has said that the Afghanistan's doors are open for Pakistan for all kind of co-operation, particularly in the areas of trade and economy. During a meeting with National Assembly Speaker Dr Fehmida Mirza on Wednesday, the Afghan Foreign Minister said that Pakistan and Afghanistan were having tremendous commonalties, and stressed the need for enhancing co-operation to strengthen their relations.

Emphasising the need to enhance co-operation in the fields of trade and economy, he said that Afghanistan's doors were open for Pakistan for all kind of co-operation. "Afghanistan can learn a lot from the experiences of Pakistan in democracy through more interaction between the parliamentarians of the two countries," he added. Speaking on the occasion, Dr Fehmida Mirza said that both Pakistan and Afghanistan were victims of terrorism and both suffered a lot from the menace of extremism.

She said that both the countries needed joint strategy and closer co-operation to address the root causes of terrorism. She said that Pakistan wanted stable, peaceful and prosperous Afghanistan and it was also in the interest of the region. Underlining the need for enhanced interaction between the parliamentarians, she said that parliamentary leaders could play an important role in strengthening relationship between the two countries.

She also underlined the need for greater interaction between women parliamentarians of the two countries. The Speaker added that she was having great expectation from mini-Jirga that would be held in Islamabad on October 27-28.


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## Neo

*Foreign currency accounts and home remittances​*
EDITORIAL (October 22 2008): The State Bank of Pakistan (SBP) has categorically denied that it has the authority to take action against any person maintaining an overseas account beyond 1000 dollars. A historical perspective on this issue is warranted. The 1947 Foreign Exchange Regulation Act, at a time when the rupee was linked to pound sterling, specified a limit of 25 pounds in a foreign account without SBP authorization.

In 1972 through an SRO, which remains on the statute books, the first Bhutto government linked the rupee to the dollar, devalued the rupee and raised the limit of foreign currency to be held by Pakistani residents to 1000 dollars.

In 1992, the Protection of Economic Reforms Act (PERA) was enacted and it allowed freedom to bring, hold, sell and take out foreign currency and immunity from taxation on such accounts: "all citizens of Pakistan resident in Pakistan or outside Pakistan and all other persons shall be entitled to and free to bring, hold, sell, transfer and take out foreign exchange within or out of Pakistan in any form and shall not be required to make a foreign currency declaration at any stage nor shall any one be questioned in regard to the same...and shall continue to enjoy immunity against any inquiry from the Income Tax Department or any other taxation authority as to the source of financing of the foreign currency accounts."

In 1998, the government of Nawaz Sharif froze foreign currency accounts in the aftermath of the nuclear tests. Economic desperation behind this move was quite evident: foreign currency accounts held by private Pakistanis totalled around 11 billion dollars while the SBP reserves were down from $1.53 billion at the end of April to $415 million by November 12, 1998.

The actual impact of this move was catastrophic: money, extremely susceptible to perceptions, left the country. Nawaz Sharif during his remaining stint in government was forced to apologize and reassure Pakistani diaspora abroad that his government would allow foreign currency accounts again. In October 1999, Musharraf took over the reins of government in a bloodless coup and the country was isolated from the international community as a consequence with severe repercussions on the economy.

This forced the Musharraf government to amend the 1992 PERA in December 1999 and a proviso was added: "immunity (granted in 1992) will not be available to citizens of Pakistan residing in Pakistan and to firms, companies and other bodies registered or incorporated in Pakistan in respect of any new foreign currency account opened or deposits created on or after 16 of December 1999 or to any incremental deposits thereafter in an existing foreign currency accounts.

The balances in the foreign currency accounts and income therefrom shall continue to remain exempted from the levy of wealth tax and income tax and compulsory deduction of zakat at sources," provided that such exemption was on interest earned post December 1999. One would have expected further capital flight however after 9/11 Western governments began freezing accounts held by the so-called suspect Muslim individuals, groups and charities.

This fuelled the flow of capital held by Muslims to Muslim countries, mainly the Central Asian Republics, and Pakistan benefited from such capital as well. This money inflow stimulated real economy or manufacturing in Pakistan. It is critical to note that both the SBP and the Federal Board of Revenue (FBR) are in favour of protecting the provisions of the 1947 Act.

And the latter would also like to see the 'no question asked' policy in respect of foreign remittances received in rupee accounts to be rescinded. SBP has argued that if the 1947 Act comes into force again then its current depleted foreign exchange reserves will be augmented considerably; and the FBR has argued that the protection to remittances received in the rupee accounts would increase tax collection.

Ignored however is the fact that if the 1947 Act comes into effect then capital flight, through hawala or hundi, would negate any short-term gains that SBP expects and rescinding of the protection to foreign remittances in the rupee accounts, as promoted by FBR, would lead to the banks losing considerable deposits, ballooning of the informal sector and choking up investment.

Be that as it may SBP was successful in convincing former Finance Minister Naveed Qamar to protect the 1947 Act and include this provision in the Finance Bill, and, thereby override the 1992 Act. Serious reservations on this move were voiced in the Senate as the Finance Bill was not considered an appropriate forum for this amendment and the Finance Minister was forced to withdraw this on the floor of the House.

Besides its overall negative fallout if the amendment was allowed, it would have had a devastating impact on the private finances of the two mainstream parties that had been in exile for the past eight years. However if accounts are held offshore and not under their own names then it is extremely difficult if not impossible for the revenue authorities of the country where these accounts are held to inform FBR under the avoidance of double taxation treaties with these countries.

It is true that apart from Pakistan no other government allows foreign currency accounts to its residents. However it is significant for those in favour of the 1947 Act to understand that money is unlikely to remain in a country by decree.

If a new law is enacted it is a foregone conclusion that money will exit the country through the hundi and hawala system. The only effective way to keep money in the country is essentially to generate confidence amongst the people about its safety and about the macroeconomic fundamentals in the country.


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## jupiter2007

Instead of posting varies articles we should brain storm and come up with ways to help Pakistan. 
List things Pakistani government can do to improve Pakistan economy.


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## pkpatriotic

*Pakistan | Special committee announces power tariff relief*
*By Sher Baz Khan* 
*Friday, 24 Oct, 2008* 

*ISLAMABAD: A special committee constituted to review the recent hike in power tariffs announced on Friday that consumers across the country will pay only 60 per cent of their total bills for this month.* 

Penalties for late payments have also been waived and the last date for deposit of bills has been extended by ten days. 

The Pakistan Electric Power Company (Pepco) will issue instructions to all distribution companies, including the much-criticised Karachi Electric Supply Company (KESC) to make arrangements for deducting 40 per cent from electricity bills.

This relief facility will apply to all consumers - domestic, commercial and industrial. 

The decision was reached after hours of deliberations amongst committee members, which include representatives from parliament, trade associations, distribution companies and the Ministry of Water and Power.

Headed by Water and Power Minister, Raja Pervez Ashraf, the committee decided that consumers should not pay full bills until a sub-committee found the 31 per cent increase to be justified.

Consumers who have already paid the new bills will receive adjustments in future bills as soon as a decision is announced. 

The controversy over the increase in power tariffs has caused nationwide anti-government protests, with angry mobs attacking government property and power distribution companies.

On the directive of Advisor to Prime Minister on Finance and Revenue, Shaukat Tareen, a sub-committee has been constituted to further investigate the tariff increase and provide recommendations to the committee for a final decision.


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## Janbaz

jupiter2007 said:


> Instead of posting varies articles we should brain storm and come up with ways to help Pakistan.
> List things Pakistani government can do to improve Pakistan economy.



Ill gove u one:

Crack down on corruption, so what is mant for the masses actually does trickle down and has an effect. Its pathetic to hear experiences in WAPDA when the medical directorate recives bribes to include medicines of certain pharma companies and dinner's in Avari, PC etc. Doesnt matter how much it costs the poor system, one "dozakh" of stomach is more important!

Just erase or limit corruption and have people who actually give a damn about the poor public in charge.................


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## dr.umer

*Pakistan joins hands with Asia, Europe to face challenges​*
BEIJING, Oct.24 (APP): Pakistan Friday joined hands with the ASIA-Europe Meeting (ASEM) as its full member to face the challenges, including the issues of terrorism and global financial crisis. Pakistan is being represented at the seventh summit of 45-member Global Forum by the Prime Minister Syed Yousuf Raza Gilani. At the Great Hall of the Peoples (Venue of the gathering ) Prime Minister Gilani was warmly received by his Chinese counterpart Wen Jiabado. 

Pakistans admission to ASEM as its formal member is an acknowledgment of the important role it is playing in the international arena. 

It is also a manifest of recognition by the international community of Pakistans vital geo-strategic position and its ability to contribute towards ASEM process. Pakistan is ready and committed to playing a most useful role in furthering the ASEM process, said a senior Pakistani official while talking to APP. 

Pakistan is looking forward extending its full support to this high-profile body, having a joint strategy to face the emerging challenges, he added. 

The 7th ASEM, with Vision and Action: Towards a Win-Win Solution as its theme and the international economic and financial situation topping its agenda, will be an important opportunity for Asia and Europe to jointly deal with the financial crisis. 

Political observers here attach great importance to Pakistans joining ASEM and it will be for the first time that the country is being attended by the top leadership. 

ASEM is an informal dialogue process initiated in 1996. It consists of twenty seven EU, ten ASEAN and six Asian countries (China, India, Japan, Mongolia, Pakistan and Republic of Korea) and the EU Commission and ASEAN Secretariat. 

The Polish Prime Minister on the occasion drew the attention of Prime Minister Gilani towards the recent kidnapping of a Polish engineer from District Attock. 

Prime Minister Gilani held out an assurance to Prime Minister Donald Tusk that the government had already ordered the relevant agencies to recover the kidnapped Polish citizen expeditiously. 

He said the government was actively engaged in efforts to ensure peace and security for foreigners who were playing important role towards national development in Pakistan. 

The two Prime Ministers resolved to have regular contacts at various levels for the promotion of common objectives.


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## dr.umer

*Italy to help Pakistan in overcoming present financial difficulties ​*
BEIJING, Oct 24 (APP): Prime Minister Syed Yousuf Raza Gilani met here on Friday his Italian counterpart Silvio Berlusconi and discussed with him Pakistans plan to steer it out of the current financial crisis. Silvio Berlusconi said his country is a member of recently formed Friends of Pakistan group and wished to work together for addressing financial crisis. Prime Minister Gilani said that since Italy will be future head of the G-8, he hoped that it will actively work in addressing the serious financial crisis being currently faced by the world.

Prime Minister Gilani told newsmen after the meeting held at the Great Hall of the People that the Italian Prime Minister had expressed his wish to extend all possible help and assistance to Pakistan to overcome the financial difficulties. 

He further said that the Italian Prime Minister in principle agreed on Pakistans economic plan, presented to him during the meeting and assured that after studying it in detail he will send it back to Pakistan. 

Both Prime Ministers had also agreed to expand cooperation in the field of agriculture.


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## dr.umer

*Gilani urges Chinese companies to invest in Pakistan ​*
BEIJING, Oct 24 (APP): Prime Minister Syed Yousuf Raza Gilani Friday urged the Chinese companies to invest in Pakistan in a big way, strengthening the bonds of ever-lasting Sino-Pak friendship through economic diplomacy. Addressing the Chief Executives of the top Chinese corporate sector here Friday at the State Guest House, he said his country provides immense opportunities to the foreign entrepreneurs, especially those from China to establish joint partnership and undertaking profitable business. 

There is very favourable business environment in Pakistan, he said while inviting the Chinese side to visit Pakistan. He said he feels honoured to be in China on his second visit in less than three months. The visits, he said, have provided him an opportunity to meet prominent Chinese businessmen. 

In Pakistan, the Prime Minister said we have always, admired Chinese skills and felt comfortable working with them. 

New generation of Pakistani entrepreneurs is keen to take Pakistan to a higher platform of performance in business and industry and feels pleasure to work in joint ventures with their foreign friends, he added. 

Prime Minister Gilani said that despite all the changes at international horizon, the two countries have remained steadfast in their solidarity. 

He particularly mentioned the role played by former prime ministers Zulfikar Ali Bhutto and Shaheed Benazir Bhutto in laying the foundation and strengthening the all weather China-Pakistan friendship. 

Prime Minister pointed out that today we have a sound architecture in place for developing and strengthening strategic political, economic, commercial, scientific, technological and cultural relations between our two countries.
The Free Trade Agreement in Goods and Investment came into effect in July this year, the Prime Minister said, adding that both the countries have made good headway in negotiations on FTA in Trade and Services. We are likely to sign it by the end of this year. 

The Joint Five-Year Programme, for Trade and Economic Cooperation, signed by the two sides, gives us an elaborate, roadmap for tangible targets. The government has decided to mobilize its resources for the speedy implementation of the Five Year Plan. 

This is why it has establishment an inter-ministerial task force, headed by the President to monitor progress of the projects initiated under the programme. 

We have a Joint Investment Company (JIC) with paid up capital of US$ 200 million. This company will act as a bridge for Chinese investors coming to Pakistan and play a lead role in launching economic projects. 
We have designated the target of US$ 15 billion for our bilateral trade by 2011. If we work harder, we can meet this ambitious target before 2011. 

The Prime Minister said, as we go forward, we have to move into the new sectors for investment, joint ventures and marketing. 

Pakistans cement industry, he said for instance is witnessing a boom. Its production and sales are poised to grow further, as the demand in Pakistan and our neighbourhood increases, because of anticipated growth and construction of houses, infrastructure, and industrial estates. 

China and Pakistan can deepen their cooperation in this sector, he noted. He said that Pakistan realizes that we will have to expand production of steel fast. Our present capacity of steel manufacturing has to increase; therefore we are planning to set up new plants. 

The Prime Minister invited leading Chinese enterprises with proven competence to step in. He pointed out that Pakistans fast growing economy has huge energy requirements. Our energy demand is expected to increase from present 18,000 MW to more than 160,000 MW by 2030. 

He in this connection also invited Chinese companies to invest in the growing economy and become partners in achieving these goals. 

Pakistan has the worlds second largest reserves in coal; the Prime Minister said and added that we need to produce more than 20,000 MW energy from coal in the next 20 year. We need Chinese expertise and technology to turn this reservoir into energy. 

He said that the joint collaborative projects in agriculture, food production and food processing sectors will lead to enhanced trade between the two countries. 

In terms of connectivity, the Prime Minister said Pakistan has to conquer new frontiers. Karakorum Highway is a monument to Pakistan-China friendship, ingenuity and industriousness. 

We can link China and Pakistan by railways, by optic-fiber, by oil and gas pipelines and by building trans-boarder economic zones, along the Karakorum Highway, he noted. 

This trans-border cooperation can soon morph into trans-regional project cooperation among China, Pakistan and Afghanistan. The time is ripe to encourage Chinese banks and financial institutions to establish their presence in Pakistan, Prime Minister Gilani said. 

The Prime Minister said that he knows that the Chinese banks are keen to support the Pakistan-China Joint Investment Company. Pakistan would contribute directly, to the construction of the facilities of JIC. He said that the fundamentals and macro-economic basis of our economy are being steered in the right direction. 

The Prime Minister said that his party has formed the new government as a particularly perilous time for our economy. But we are optimistic that we will overcome these. This years budget has set out a series of incentives to spur growth in agriculture and manufacturing sectors, he said. Our GDP has doubled to US$ 170 billion, our resilient population with a rich agriculture base and sufficient natural resources will support an economical revival. 

Geographical proximity of China and Pakistan, the exceptionally close political relations between them and Pakistans location as a bridge between several geographical regions, create a natural interface between our two countries for friendship for transactions, for commerce and for joint undertaking. 

All the doors open warmly as you step into Pakistans homes, offices and business, the Prime Minister said.


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## dr.umer

*Pak-Canada bilateral relations need to be promoted: Pak High Commissioner​*OTTAWA,(Canada), Oct 24 (APP): High Commissioner of Pakistan in Canada, Musa Javed Chohan has said Pakistan and Canada need to make efforts to reinforce their bilateral economic relationship, specially trade and commercial exchanges for which there is great potential. 

Talking of bilateral relations, the High Commissioner said there is a strong political will at the highest level to further strengthen and broaden Canada-Pakistan relationship. 

Pakistan has well developed institutions, legal systems, infrastructure and English knowing labour force and Canada can benefit from it, he said. 

Addressing a roundtable meeting organised by the prestigious institution the Norman Patterson School for International Affairs at the Carleton University, here Chohan said that with a population of approximately 165 million people, Pakistan offers an attractive and huge market for Canadian exports and investments. 

He said foreign investment is critical to Pakistans endeavours to maintain its economic growth rate of 7 percent so necessary to meet the requirements of burgeoning population. 

Highlighting Pakistans contributions in the war against terrorism, the High Commissioner said, Pakistan is fighting the war against terrorism in our own vital national interest and making every possible effort to eliminate this scourge from the globe. 

He said Pakistan has adopted three prong policy based negotiations with those elements who lay down their arms, socio-economic development of FATA and use of force as a last resort against recalcitrant elements. 

Military force alone will not resolve the issue of winning the hearts and minds of the people and public support is required, he added. 

Mr. Chohan said the unfolding Afghan tragedy is not a recent phenomenon. For over three decades, Pakistan bore the brunt of the conflict in Afghanistan, he added. 

We are resolved to support our Afghan brethren, out of whom four million, at one time, sought refuge in Pakistan, HE SAID. 

The High Commissioner said peace, stability and security in Afghanistan are crucial for region. He said without stability in Afghanistan there cannot be stability in Pakistan. He said Pakistan is providing $300 million for Afghanistans reconstruction. 

We have offered 1000 scholarships for training of Afghan cadres. Despite our own food shortages we are assisting to overcome the shortage of wheat in Afghanistan, said the ambassador. 

He said Pakistan has deployed 100,000 troops to fight terrorism which is more than the collective presence of international troops, deployed across Afghanistan. 

The High Commissioner appreciated the sacrifices made by Canada in the war against terrorism. 

He said Canadian involvement and troops presence in Afghanistan added another perspective to Pakistan-Canada relations.


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## Neo

*Gilani urges Chinese companies to invest in Pakistan ​* 
Friday, October 24, 2008 

BEIJING: Prime Minister Syed Yousuf Raza Gilani Friday urged the Chinese companies to invest in Pakistan in a big way, strengthening the bonds of ever-lasting Sino-Pak friendship through economic diplomacy.

Addressing the Chief Executives of the top Chinese corporate sector here Friday at the State Guest House, he said his country provides immense opportunities to the foreign entrepreneurs, especially those from China to establish joint partnership and undertaking profitable business.

There is very favourable business environment in Pakistan, he said while inviting the Chinese side to visit Pakistan. He said he feels honoured to be in China on his second visit in less than three months. The visits, he said, have provided him an opportunity to meet prominent Chinese businessmen.

In Pakistan, the Prime Minister said we have always, admired Chinese skills and felt comfortable working with them.

"New generation of Pakistani entrepreneurs is keen to take Pakistan to a higher platform of performance in business and industry and feels pleasure to work in joint ventures with their foreign friends," he added.

Prime Minister Gilani said that despite all the changes at international horizon, the two countries have remained steadfast in their solidarity.

He particularly mentioned the role played by former prime ministers Zulfikar Ali Bhutto and Shaheed Benazir Bhutto in laying the foundation and strengthening the all weather China-Pakistan friendship.

Prime Minister pointed out that today we have a sound architecture in place for developing and strengthening strategic political, economic, commercial, scientific, technological and cultural relations between our two countries.

The Free Trade Agreement in Goods and Investment came into effect in July this year, the Prime Minister said, adding that both the countries have made good headway in negotiations on FTA in Trade and Services. We are likely to sign it by the end of this year.

The Joint Five-Year Programme, for Trade and Economic Cooperation, signed by the two sides, gives us an elaborate, roadmap for tangible targets. The government has decided to mobilize its resources for the speedy implementation of the Five Year Plan.

This is why it has establishment an inter-ministerial task force, headed by the President to monitor progress of the projects initiated under the programme.

We have a Joint Investment Company (JIC) with paid up capital of US$200 million. This company will act as a bridge for Chinese investors coming to Pakistan and play a lead role in launching economic projects.

We have designated the target of US$ 15 billion for our bilateral trade by 2011. If we work harder, we can meet this ambitious target before 2011.


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## Neo

*Pakistan, US sign agreements for $341 mn projects ​* 
Friday, October 24, 2008 

ISLAMABAD: Acting Deputy Administrator, for the United States Agency for InternationalDevelopment's (USAID), James Kunder and Pakistan Economic AffairsAdvisor to Prime Minister, Shaukat Tarin Friday inked six amendments totaling $341 million to the bilateral agreements between the United States Government and the Government of Pakistan.

These assistance agreements are a cooperative effort between the two countries to support economic growth, education, health, governance and earthquake reconstruction in Pakistan.

In 2008, the United States Government, through USAID, provided a total of $406 million in assistance to Pakistan.

According to Mr. Kunder "...The agreements we signed today in partnership with the government of Pakistan, will strengthen the education system, improve maternal and newborn health services, prevent the spread of major infectious diseases, create employment, and develop more independent and democratic institutions."

He added that "...the strategic partnership between the United States and Pakistan is of vital importance and we are committed to sustaining assistance to aid Pakistan in tackling some of its greatest challenges affecting development."

Kunder is meeting with representatives and leaders in various fields to hear their views about Pakistan's development and US assistance programs.


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## Neo

*Media asked to be careful in reporting on power crisis ​* 
Friday, October 24, 2008

KARACHI: Top executives of electricity distribution companies have advised media to be careful in reporting protests against power breakdowns as sensational coverage is encouraging more and more people to take to streets throughout the country.

Protests, which have erupted against incessant load-shedding amid the worst power shortfall, have now snowballed into a campaign advocating non-payment of electricity bills, they said.

These protests are having a chain-reaction effect, said Amin Sahi, CEO of Multan Electric Power Company (Mepco), victim of one the first power riots which erupted a few weeks back. People must understand that there is not much that can be done immediately.

Mepcos area of coverage which is spread in Punjab from district Multan, Khanewal to Muzaffargarh, D G Khan and down to Rajanpur is facing a power deficit of more than 50 per cent.

Sahi said while it was justified for people to vent their anger, it is useless to resort to violence. In this collective suffering we should be patient and rather consumers should conserve energy.

In April this year, factory workers in Multan angry over the loss of daily wages due to power breakdowns had burned the office of Mepco, something which Sahi says cost the company more than Rs3 million.

The past few days have seen people come out on streets in Sheikupura, Toba Tek Singh and Faisalabad with demands of downward revision in power tariff. Earlier in the week in Lahore, an office of a local power supply company was torched by an angry mob.

Rana Ashraf Zahid, CEO of Gujranwala Electric Power Company (GEPCO) said that the issue of power crisis was being politicised as some political parties were patronising the protests.

He said consumers must be made to realise that power crisis could not be addressed overnight. Government has taken steps on a fast track basis like the installation of rental power plants. A 1000mw rental plant is being set up here as well.

Now, the countrywide sentiment is being reflected in Karachi where traders on Wednesday burned monthly power bills and held demonstrations. Authorities had to beef up security at the Karachi Electric Supply Company (KESC) head office after some of the scattered protests turned violent.

Power crisis has not been as severe in Karachi as the rest of the country but KESC, the only privatised utility, has to face consumer ire due to inflated monthly bills.

Experts say consumers have to pay more because substantial line losses in the dilapidated power transmission and distribution system of the country are reflected in bills. Line losses are highest in Peshawar and Hyderabad.

Farhat Ali, CEO of ABB, a power engineering company, said that increase in generation capacity will be fruitless without simultaneous investment in new transmission lines and grid stations.

While water scarcity and consequent reduction in hydro electricity generation has reduced overall power supply, it has also added to the cost of production as imported fuel oil is being used in thermal power plants.

A drastic increase in demand for relatively cheaper natural gas in other sectors has also lessened its availability for power production.


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## Neo

*Bailout package news fails to move sentiments on KSE ​* 
Friday, October 24, 2008

KARACHI: The Rs50 billion bailout package announced by government of Pakistan for the bourses has apparently failed to generate on-record activity at Karachi bourse on Thursday as well, as turnover fell to new low at 0.120 million shares.

KSE 100-share Index inches fell by another 0.86 point and ended at 9,182.88 points.

Some activity in a few of front line stocks, therefore, pushed 30-Index down after remaining stagnant at the day pre-opening level at 10,042.85 points for the last nine consecutive sessions.

Therefore, this benchmark freshly fell by 34.62 points or 0.34 per cent and finished the day business at 10,008.23 points.

KMI-30 Index remained flat for another day at 11,224.18 points, while KSE All Share Index shed mere 0.88 point and closed at 6,639.17 points.

As far as the fluctuation in chief 100-Index is concerned the day index-mover was Habib Metro Bank, which occupied the top rank among the day leaders with 25 thousand shares turnover.

The scrip closed at Rs37.40 with a decline of 39 paisa, contributing as many as 0.86 points in minus on 100-Index.

Furthermore, the day turnover fell below the all time low of 0.123 million shares of yesterday to 0.120 million shares in this session. While future market, for the eleventh consecutive session, failed to invite any activity.

This situation resulted in an outflow of Rs4.4 billion from the head of overall market capitalisation, which fell to fresh low at Rs2.830 trillion.

On the contrary, foreign portfolio investors showed their optimism by injecting another $11,033 into the local bourses in the day session. 

This was the second consecutive session, in which foreign buying was noted at bourses trading floors.

Analysts said that dissatisfaction of stakeholders over Rs50 billion bailout package for bourses never allowed participants to think positive. They added that confusion over the ways and means of injecting Rs20 billion market support fund and also only in seven government-owned entities was a big concern of investors.

Members KSE, at an informal general body meeting held here on Thursday, has proposed government to expend its circle of rescuing mere seven stated-run companies to all the listed ones.

Hasnain Asghar Ali at Aziz Fidahusein said, Green signal from Islamabad on giving a smooth landing to the local bourses (if implemented) will certainly provide relief to the locals (retail and institutional participants), as it will restrict the downside in at least the government listed companies, thus leaving the investors and brokers to evaluate the fair value of remaining 649 companies to address their risk management.

The strategy of funds placement, however, still stays a question, that whether the fund will suck the entire unclaimed float in the mentioned securities on the landmark Oct 27 or will it continue with the bargain hunting strategy.

Out of total 36 active stocks on board, majority of them (23 stocks) closed unchanged in their share price, seven of them closed on positive note and remaining six of total fell in red.

Highest volumes were witnessed in Habib Metro Bank, followed by UDL Mod at 19 thousand closing at Rs4.05 with a loss of 30 paisa, Southern Electric at eight thousand closing at Rs3.72 with a gain of seven paisa, First Fid Leasing at eight thousand closing pegged at Rs4.20 and Sitara Energy at seven thousand closing at Rs20 with a gain of Re1.


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## Neo

*Turkey willing to help Pakistan ​* 
Friday, October 24, 2008

LAHORE: Turkish President Abdullah Gul has said Turkey, as a well-wisher of Pakistan, considers itself duty-bound to continue to extend support to Islamabad in all fields for its economic well-being.

He expressed these views during a meeting with Lahore Chamber of Commerce and Industry President Mohammad Ali Mian on Thursday who called on him and Turkish Prime Minister Recep Tayyip Erdogan in Istanbul during the 12th MUSAID International Fair.

During the meeting, Abdullah Gul and Erdogan said Pakistan was passing through a very critical time during which all sections of society, particularly the business community, should focus on the future of the country.

Mohammad Ali told them that existing level of trade between Pakistan and Turkey left much to be desired keeping in view the size of the markets catering to a combined population of 236.2 million.

Pakistans trade with Turkey was hardly 1.14 per cent of its total international trade during 2006-07 and its exports amounted to 0.24 per cent of Turkeys total imports.

He informed the Turkish leaders that currently Ankaras foreign direct investment in Pakistan was negligible at $0.82 million and said there is a lot of scope to make investment in Pakistan.

He said Turkish businessmen could make direct investment in oil and gas, information technology and telecom, power, textile, leather, chemical, engineering, agriculture (corporate agriculture farming, livestock and fisheries, horticulture, food processing and preservation) tourism, infrastructure, housing construction and defence production.


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## Neo

*Global competitiveness Pakistan loses ranking by 9 pts​*
ISLAMABAD: Pakistan has lost its global competitiveness ranking by 9 points compared to the previous years ranking as the country has been ranked at 101 out of 134 countries in the Global Competitiveness Report 2008-09 prepared and released by Geneva based World Economic Forum.

The country was ranked at 92 out of 131 countries in the Global Competitiveness Report in the last year 2007-08 and 82 out of 122 countries in the year 2006-07.

The most problematic factors for doing business and key factors hindering improvement in Pakistans global competitiveness have been identified as government instability and coups, corruption, inefficient government bureaucracy, inflation, inadequate supply of infrastructure, inadequately educated workforce, policy instability, access to financing, crime and theft, poor workforce ethics, tax regulations, foreign currency regulations, restrictive labour regulations and poor public health.


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## Neo

*Pakistan seeking market access, not cash from US, EU: Tareen​*
** Financial adviser says formal request for IMF cash assistance not yet made
* Other international lenders, Friends of Pakistan forum are priority​*
ISLAMABAD: Pakistan has not asked the United States and the European Union for cash assistance, but sought help with enhanced market access, free trade agreements, securitisation of remittances and oil facilities, Financial Adviser Shaukat Tareen said on Thursday.

Our demand from the United States and the European Union is not to provide cash but to give us market access for enhanced exports through inking free trade agreements, he told reporters at a briefing. We cannot force anybody to give us cash. The Friends of Pakistan [forum] has shown willingness to support Pakistan, however, they can help us in terms of oil, securitisation of remittances and export market access.

He said Pakistan had not made a formal cash assistance request to the International Monetary Fund (IMF), saying it was Plan C, if financial help from other international financial institutions and Friends of Pakistan was not available by November 15. Timing is the issue, he said.

We have not formally requested the board of IMF for a facility as of now. . . We will do that when our discussions are complete and once we believe that there is no other option.

Tarin said that discussions with the IMF had been started so that if Pakistan needed funding, the Fund would have ample time to prepare. We will need $3.5 billion to $4.5 billion in foreign exchange over the next 30 days, Tareen said.

He said the central bank governor and top Finance Ministry officials were in Dubai to brief IMF officials about Pakistans plan to deal with the crisis.

Discussion with IMF was going on about reducing the budget deficit to 4.3 percent, flexibility in exchange rate, control on fiscal deficit, he said.

Tareen said Pakistans actual financial gap is estimated at $3.5 billion, but we want to secure a $5 billion deal apart from normal lending from international financial institutions not only to bridge the gap but also to build foreign exchange reserves.

To a question, Tareen said a possible IMF loan would come under a standby arrangement and would carry interest rate of 3 to 4 percent, which are high when compared with the Poverty Reduction and Growth Facilitys 0.75 percent service charges.

Regarding the Saudi oil facility, he said it was very much on  its quantum and modalities of its supply would be discussed during the Friends of Pakistan meeting scheduled next month in Abu Dhabi.

He said the government had provided Rs 180 billion to tackle the liquidity crisis in the banking sector and another Rs 90 billion would be added in November, so that cotton procurement is ensured.

If I had a magic wand I would have used it to avert the current financial crisis, reduce terrorist attacks and produce more electricity to restore the confidence of local and foreign investors, he said.


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## Neo

*WB considers support to Pakistans energy system​*
ISLAMABAD: The World Bank has assured Pakistan that it would consider support for key operations to improve the countrys energy sector. The assurance came at a meeting between a Pakistani delegation led by Planning Commission Deputy Chairman Salman Farooqui, WB officials and the International Finance Corporation in Washington. The delegation is in Washington to seek support for the development of the energy sector in Pakistan. The bank will consider investment support to improve the efficiency of the sectors distribution companies, facilitate their privatisation and introduce conservation techniques. It told the Pakistani officials that it would also consider supporting an increase in the generation of power  from 1,100 megawatts to 1,600 megawatts  and the reliability of the gas-based Guddu Power Station, through a suitable public-private partnership. 

The bank will also contemplate financing for technical assistance to complete preparatory studies and attract private investors to develop Pakistans coal resources and power generation facilities in Thar. The World Bank has decided to deliberate on investing in the import of electricity from Central Asia. Support for medium-sized hydropower and water resource management projects is also likely. Specific projects to be considered include the fourth extension of the Tarbela Power Plant to add 960 megawatts, an expert study to de-silt Tarbela Dam and an 840-megawatt increase in the capacity of Suki Kinarihydro power project. The delegation told the bank about other areas the government is seeking to improve.


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## Neo

*$4.5 billion needed within 30 days to build up reserves: Recourse to IMF last option, says Tareen​*
ISLAMABAD, Oct 23: Pakistan needs hard cash in 15 to 30 days to fill a financing gap ranging between $3.5 and $4.5 billion to build up dwindling forex reserves, Adviser to Prime Minister on Finance Shaukat Tareen said on Thursday.

Briefing the media on options for a bailout of the economy, Mr Tareen said the government cannot wait for more than 30 days to get cash assistance from multilateral lenders and friendly governments merely to avoid recourse to the International Monetary Fund.

We are running out of time. We cannot wait for long.

Mr Tareen said Islamabad had not formally asked for a facility from the IMF. We are still hoping to secure funds from other multilateral lenders and friendly governments.

We have not formally requested the board of the IMF for a facility, as of now. When we believe we wont get enough money from plan A or B, the government will make a formal request, he said.

We have started discussions with the IMF in advance to be ready for all options. In case of no from other sources, we wont have to wait for long to get IMF facility, Shaukat Tareen said.

Under plan A, the government is looking for $1.5 billion from the World Bank, $1.6 billion from ADB, $800 million from DFID, $500 million from the IDB and $1.5 billion from workers remittances bonds.

This is in excess of our needs and does not include assistance from the Friends of Pakistan forum, the adviser said. Friends of Pakistan have good intention to help us. But we cannot wait as these governments take time for taking decision.

He brushed aside an apprehension that friends of Pakistan were not ready to provide cash. We have discussed only the agenda items for the dialogue in Abu Dhabi with the president. We have to give menu to Friends of Pakistan for help, he added.

In reply to a question, Mr Tareen said Friends were ready to help us, but we are running out time.

You will see all friends will come to help us. It is just a matter of time, he added. But time is of the essence.

He further said that Pakistan was in dire need of assistance to build its foreign exchange reserves. The reserves at present were only enough to fund imports for two months.

He agreed with a questioner that the current global crisis may have diverted attention of friendly countries from Pakistan for the time being, but added that they would help Pakistan eventually. The Saudi oil facility is still on, he said. It would be taken up in the meeting in Abu Dhabi next month.

Shaukat Tareen said Pakistan would prefer aid from the United States and the European Union to preferential market access. We will be willing to negotiate free trade agreements (FTAs) with USA and EU rather than just seeking one-time cash assistance, the adviser remarked.

The IMF has already started spadework for offering assistance to developing countries, including Pakistan.

He said a home-grown economic stabilisation programme had already been submitted to the IMF. The governor of State Bank and the finance secretary have already left for Dubai for discussions with Fund representatives, he added.

Mr Tareen said the proposed plan required Pakistan to bring down the fiscal deficit to 4.3 per cent. We have said we will not borrow money from the State Bank this year. We have said we will keep the exchange rate flexible and curtail expenditure.

Any IMF facility would have to be on the basis of a plan Pakistan has proposed to the fund. I would love to have more money coming. The IMF programme is for 24 months. We will make a long-term policy to sustain growth, Shaukat Tareen said.

In reply to a question, he said the notification regarding changes in the national finance commission (NFC) would be made soon. The file is already on my table. It involves some legal problems, which will be rectified soon, he added.


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## Neo

*Reserves fall​*
KARACHI, Oct 23: Pakistans foreign exchange reserves fell $430 million to $7.32 billion in the week that ended on Oct 18, the central bank said on Thursday.

The State Bank of Pakistans own reserves fell to $4.04 billion from $4.34 billion a week earlier, and reserves held by commercial banks were $3.28 billion compared with $3.41 billion.Reuters

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## fatman17

*China preparing rescue package for Pakistan *

Saturday, October 25, 2008

By Hamid Mir

BEIJING: China is quietly working to provide Pakistan a soft loan of $1.5 billion to overcome its financial crisis in addition to more than $3.7 billion to be invested in the telecom and power generation sectors in the next two to three years, Chinese officials told The News here on Friday.

Despite all security issues and financial pressures, China has decided to stand by its two trusted friends &#8212; Pakistan and Nigeria &#8212; where China will invest more than $4 billion by the end of 2009, they said.

Top Chinese government officials emphasised that both Nigeria and Pakistan were very important countries for China. Many Chinese oil companies are working in the dangerous Niger delta zone of Nigeria, while in Pakistan China is planning to connect its Xingjian province with African countries through the Gwadar Port.

Chinese experts are sure that their workers in both Nigeria and Pakistan are becoming victims of an international conspiracy and say that China will expose the hands behind this conspiracy very soon.

Nigeria was the first country to get a Chinese satellite in orbit and Pakistan will be the second country to use a Chinese telecommunication satellite by 2011. This satellite, named PakSat-IR, will have a lifespan of 15 years and will open new opportunities for foreign investment in Pakistan.

At a briefing in Beijing on Friday, hundreds of European and dozens of Indian journalists tried their best to force Chinese government officials to say that China would not build two more nuclear power plants for Pakistan but foreign office spokesman Qin Gang told a briefing: &#8220;We will help Pakistan for the peaceful use of nuclear energy under the IAEA laws.&#8221;

China is also aware of those countries that are not happy over its presence in Africa and Gwadar. A Chinese official told this scribe that three Chinese workers were abducted by unidentified kidnappers this year in Calabar, the capital city of Nigeria&#8217;s southern cross-river state.

Five Chinese telecom workers were kidnapped early last year in southern oil city Port Harcourt while two workers of a Chinese company were abducted in southern Nigerian state of Anambra by unidentified kidnappers late last year. 

These kidnappings began in 2007 when China announced to provide a multi-billion dollar telecommunication satellite to Nigeria. India organised a powerful public relations campaign in the Chinese newspapers on Friday. Many Chinese papers were filled with &#8220;Incredible India&#8221; advertisements with pictures of Taj Mahal.

Though, the Pakistani government did nothing to use the Asian-European summit to tell the delegates of 43 countries what China was doing in Pakistan, many Chinese journalists and diplomats were fighting for Pakistan by saying that Pakistan did not support enemies of China like India supported Dalai Lama.

It appears that the Indians cannot make any breakthrough in China until they decide to expel Dalai Lama from India. This Tibetan rebel leader is an &#8220;honourable guest&#8221; of India for the past many decades.

Chinese government officials have tried to make it clear not only to Indians but also to some Europeans that they are not in a position to help them out of the way. The China Daily gave a clear warning on Friday that the financial crisis was also damaging China&#8217;s own economic growth.

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## nitesh

Daily Times - Leading News Resource of Pakistan

The chief minister of Punjab, Mr Shehbaz Sharif, received a delegation on Thursday which an official handout called a &#8220;team of foreign investors&#8221; but which the newspaper Dawn has reported as a delegation from the Tata group of industries in India. It called on the chief minister to seek his support for their plan to set up a plant for CNG buses in Punjab. Given the fact that our chief minister is development-oriented and is looking to boost the Punjab economy when no one in the world wants to invest in Pakistan, we hope that his support would be forthcoming for this project.

The handout however lays out the vision of the chief minister for the transport system of his province. He not only wants the foreign investors to set up a plant for the manufacture of CNG buses but also to run the buses after making them, as a part of the transport grid in Punjab. He has asked the &#8220;investors&#8217; delegation&#8221; to submit &#8220;practicable&#8221; recommendations &#8220;at their earliest&#8221; so that he can move the project forward. The federal government has already envisaged CNG buses from India in its trade policy for 2008-09, including a factory inside Punjab. The &#8220;foreign investors&#8221; pledged to submit their report in a week&#8217;s time. It hardly matters who it is, and if Tata has the credentials, let us get the project started. Mr Shehbaz Sharif, more than anyone, is the right man to deal with such issues


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## dr.umer

*Traders cancel Rs 5.5 bln import orders ​*
KARACHI, Oct 25 (APP)- Traders have canceled import orders worth Rs 5.5 billion keeping in view the fast depleting foreign exchange reserves in the country. 

Chairman Trader Action Committee (TAC) Siddique Memon said that traders had contracted for the import of 85 items from China, Thailand and Indonesia one month ago. Most of the orders had been canceled now, he added. 

We have decided to stop imports of these items as our forex reserves were falling, rising foreign currency rates and the present financial crisis in the country, he opined. 

Memon said that traders have decided to promote locally made items instead of imported merchandises. 

He said prices of imported items have surged by at least 50 percent in the market due to rising dollar.


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## dr.umer

*PSO warns govt of default if dues not paid by next week ​*
By Zafar Bhutta 

ISLAMABAD: Pakistan State Oil (PSO) has warned the government that PSO might default during the next week if its dues were not cleared immediately. 

Sources in Petroleum Ministry told Daily Times on Friday that banks have refused further credit and are reluctant to open Letter of Credit (LC) for oil import. They said that due to these reasons, PSO is expected to default to banks during the next week. In this regard, PSO authorities have written letter to Petroleum, Water and Power Ministries. 

They said that during the meeting held with the President Asif Ali Zardari and Prime Minister Syed Yousuf Raza Gilani, held on October 20, it was guaranteed that PSO would be provided a sum of Rs 600 million on daily basis for further supplies of fuel. 

They said that PSO was released Rs 8.3 billion price differential claims on October 21 that were paid to oil refineries but PSO was not being released Rs 600 million on daily basis to clear the back log of payments. During the meeting with President and Prime Minister it was decided to settle the backlog of payments of PSO on priority basis to ensure uninterrupted fuel supply, but due to non payment of backlog PSO has informed the government that the entity was facing extreme financial difficulty and was not able to open LC for further import of oil. 

Sources said that PSOs total receivable amount stood at Rs 71.6 billion, which includes dues against different entities in power sector and price differential claims on petroleum products. They said that overdue amount against Water and Power Development Authority (WAPDA), HUBCO, KAPCO and PIA was Rs 54.15 billion and the amount that was not yet due stood at Rs 5.6 billion. 

They said that out of total receivable amount, price differential claims were Rs 11.8 billion. PSO has asked the government to clear all the dues so that it would be able to pay refineries and open LC for the oil import. Due to non-payment of such huge receivable amount, the entity was facing financial difficulty to run its operations of fuel supply in the country. 

Sources said that PSO had also to pay huge amount to the oil refineries. They claimed that PSO was to pay Rs 70.8 billion dues to the oil refineries and these oil refineries were pressing the PSO to make payments for further fuel supply. PSO has to pay Rs 41.9 billion to PARCO, Rs 11.09 billion to ARL, Rs 6.08 billion to NRL, Rs 3.07 billion to Bosicor and Rs 281 million to other fuel suppliers. 

Due to non payment of billion of rupees by WAPDA, HUBCO, KAPCO and PIA, PSO failed to pay Rs 59.6 billion dues to oil refineries. PSO requires Rs 19.9 billion to open LC for oil import that was due up to November 13, 2008.


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## Neo

*32pc Pakistanis eat less as prices rise: survey ​* 
Saturday, October 25, 2008

ISLAMABAD: Thirty-two per cent of Pakistanis say they have cut down on food because of rising prices, for which 70 per cent of the population blame the government, a research group said on Friday.

Soaring food prices and shortages of staples mean about 77 million of Pakistans 160 million people are food insecure, a 28 per cent increase over last year, according to UN World Food Programme (WFP) estimates.

The survey, of 1,732 people in rural and urban areas, conducted in early August, also found that 56 per cent of people said rising costs of food, fuel and electricity had had a severe impact on them and their families.

It might be a serious concern for the government to know that 70 per cent of Pakistanis blame the food price hike on government policies as opposed to other factors such as global price trends, said the Pakistani Institute of Public Opinion, which carried out the survey. The institute is the Pakistani affiliate of Gallup International.

Like most emerging economies, Pakistan was badly hit by soaring global oil and food prices over the past year and the country was facing an economic crisis even before the global financial crisis developed.

Pakistan is facing inflation at close to 25 per cent, a balance of payments crisis and foreign reserves falling by $1n billion a month.

With no external funding, analysts say the country will most likely have to agree to help from the International Monetary Fund.

International organisations say about a third of Pakistanis live in poverty and an increasing number of them are turning up at food centres set up by charity organisations.

If we dont tackle the problem, well start finding dead bodies, said Abdul Sattar Edhi, head of one of Pakistans main private aid groups, the Edhi Foundation. Well find entire families dead from hunger.

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## Neo

*S Arabia says no to urea supply on deferred payment ​* 
Saturday, October 25, 2008

ISLAMABAD: Saudi authorities have plainly refused to extend $400 million from its Development Fund for supply of urea fertiliser on deferred payment, official sources in the Economic Affairs Division told The News on Friday.

The Kingdom has serious concerns about smuggling of imported urea fertiliser from Pakistan to the Central Asian States through Chaman border, an EAD official said.

We have differences over modalities but hopefully the Saudi Development Fund (SDF) may release the amount, an official of the Ministry of Food, Agriculture and Livestock (MINFAL) said when asked for comments.

Besides a credit facility of $125 million for fertiliser, Pakistan has received Saudi credit facility of $133 million, which the Kingdom pledged after the devastating earthquake of 2005 and Pakistan imported urea fertiliser due to its shortfall in the country during the last couple of years.

Federal Minister for Food, Agriculture and Livestock Nazar Mohammad Gondal, addressing a press conference at B block, told media that the finance minister has authorised MINFAL to import about 0.25 million tonnes of urea for the forthcoming Rabi season as it had released $100,000 for the purchase of the commodity through the Trading Corporation of Pakistan from the international market.

After getting a nod from Saudi authorities, MINFAL with the consent of urea manufacturers are forwarding a summary to the ECC for permitting the private sector to import the commodity at their own and the government would pick the price differential under the head of subsidy.

The availability of DAP and urea fertilisers for the coming Rabi season will be quite enough to meet the domestic consumption that is around 990,000 tonnes DAP and 2.6 million tonnes urea, said a statement distributed at the press conference.

To ensure the food security, the government has planned to import an extra one million tonnes of wheat thus totalling wheat import to 3.5 million tonnes against the previous import of 2.5 million tonnes for 2008-09, the statement added.

The statement further said that up till now, the Trading Corporation of Pakistan (TCP) has contracted 1.7 million tonnes and 1.5 million tonnes of wheat have already arrived in the country.

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## Neo

*Pakistan fully committed to IPI construction, Senate told ​* 
Saturday, October 25, 2008

ISLAMABAD: Minister for Law and Parliamentary Affairs Farooq Naek on Friday told the Upper House of parliament that Pakistan was fully committed to the Iran-Pakistan-India gas pipeline project, which was expected to meet substantial portion of ìour energy needsî.

Replying to a question raised by Nisar Memon during the Question-Hour, he hoped that the project would be finalised soon.He said two obstacles had impeded its progress. These include Irans decision to renegotiate gas sales and the Indian indecision to participate in the project. The minister said implementation of the project would take five years.

He told the House that Iran and Pakistan had decided to establish a joint finance company on public-private partnership basis to raise funds for the project. While responding a question from Dr Ismail Buledi, the minister said presently there were three persons working as ambassadors in Pakistan embassies. 

He said the present government realised that in the past Balochistan peoples rights were usurped and it would compensate them. Answering a question, he said some posts of ambassadors were vacant which would be filled soon on merit.Meanwhile, Minister for Food and Agriculture Nazar Muhammad Gondal told the Senate on Friday that many projects were under progress to enhance the storage capacity for food grain in the country.

The minister said the storage capacity at present was 3.87 million tons against the procurement target of 6.5 million tons of wheat for the coming crop.Replying to Senator Talha Mahmoodís question during the Question-Hour, Gondal said these projects included some projects of Passco and some of the provincial food departments.

To a question from Nisar Memon, he said Pakistan did not import rice as the country had surplus quantity of the commodity. He said the local varieties of rice were being grown in the AJK, the Fata and the Northern Areas.

He said rice may be available for export during the current financial year after meeting the domestic requirement of about 3.5 million tons.To another question raised by Senator Talha, Gondal said animal health infrastructure in the country had been developed to cater to the needs of veterinary services.

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## Neo

*IMFs decision on Pakistan package next month​*
WASHINGTON, Oct 24: The International Monetary Fund will consider a rescue package for Pakistan on Nov 7 during a meeting of its board of governors in Washington.

Diplomatic sources in the US capital say the Fund has agreed in principle to help Pakistan avoid defaulting on its foreign debt repayments but a final decision can only be taken by its governors.

The IMF has estimated that Pakistan has unmet funding needs of around $4 billion and needs some extra cash to meet its other urgent requirements. The Fund is willing to provide up to $6 billion.

On Thursday, Finance Adviser Shaukat Tareen told reporters that Pakistan needed up to $4.5 billion within the next 15 to 30 days to avoid a default.

If IMFs board of governors approves a rescue package for Pakistan on Nov 7, the country can meet its balance of payment requirements on time but this may not be enough to jumpstart its ailing economy.

Pakistani officials believe that IMFs endorsement will not only bring the much-needed cash advance but will also encourage other donors to come forward and help.

But a credit-rating company, Standard & Poors, warned on Thursday that the IMF bailout package might not be enough to save Pakistan from further credit-rating cuts.

It doesnt mean they are out of the woods, said Agost Benard, a Singapore-based associate director at S&P, which cut Pakistans debt rating on Oct 6 to CCC+, seven levels below investment grade. Its just the first step in the right direction, or the only direction Pakistan has to go now.

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## Neo

*French envoy asks govt to work for GSP+, FTA ​*
KARACHI, Oct 24: Danel Jouanneu, Ambassador-designate of France, has advised the government to take up the matter of Generalised System of Preferences (GSP) Plus with the European Union (EU) vigorously so that Pakistan exports could be exempted from customs duty from January 1, 2009.Speaking at a dinner organised by Pakistan Bedwear Exporters Association (PBEA) here on Thursday, the French envoy suggested that Pakistan should also work on Free Trade Agreement (FTA) with the EU to overcome its economic crisis.

He said presently there was a lack of confidence between Pakistan and the West and this needed to be overcome by adopting other methods to extend financial assistance to pull the country from financial crisis.

Mr Danel said his country, which presently holds the chairmanship of the EU, would assist Pakistan in getting GSP Plus which would give Pakistan exports duty-free access to EU member states.

The envoy said that the previous government worked hard for getting GSP plus but the link had been broken after a political turmoil engulfed the country for over a year. Therefore, the present government should immediately take up the matter for duty-free market access with the EU, he suggested.

PBEA Chairman Shabir Ahmed said that in 2001 the EU had offered Pakistan duty-free market access which helped it to generate employment and also enhance export earnings.

He said the business community would like to have duty-free market access which would help to jumpstart the economy and generate employment. The cost of production is much higher than the regional countries rendering our exports uncompetitive on world markets, he added.

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## Neo

*Foreign exchange saving drive: Govt plans to boost local tea production to reduce import bill​*
ISLAMABAD: To save the precious foreign exchange being spent on the import of tea, the government has initiated a scheme Commercialisation of Tea Production through Public Private Partnership worth Rs 5.272 billion on commercial scale.

This programme will be implemented in the tea growing areas of NWFP and AJK with the help of private sector. Official in the Ministry of Food, Agriculture and Livestock (MINFAL) told Daily Times that after completing the project in 2011, the country would be produce about 1000 kilogram tea per acre per annum. According to the officials about 4200 acres of land would be brought under tea production.

The officials said that the country has a long tradition in tea consumption, which has become an integral part of the social life. The per capita consumption of tea is 1 kg. All the tea consumed in the country is being imported. Last year the government imported approx 102,000 metric tonnes of black tea with the total cost of Rs 13.73 billion and 1,260 metric tonnes of green tea with total cost of Rs 104 million. Pakistan imports its black tea from 21 different tea-producing countries with the major share of 63 percent from Kenya. Green tea is imported from China, Vietnam and Indonesia.

Keeping in view the heavy drain of precious foreign exchange the GoP started tea cultivation in the northern parts of NWFP in districts Mansehra, Battagaram and Swat. Simultaneously, the private sector and the provincial Tea Development cell of NWFP also started tea plantation on the farmers land in small pockets. For processing the black tea from the raw material obtained from tea gardens at the NTRI and farmers filed, a processing plant with the capacity of one tonne made tea per day was procured form China and installed at the NTRI during the year 2001.

During the same year the private sector Lever Brother (Pvt) Ltd, also procured the black tea processing plant with the capacity of one tonne tea per day. A pilot green tea plant with the capacity of 100 kg made tea was installed with the financial assistance of the Pakistan Science Foundation, Islamabad at NTRI, Shinkiari. Similarly, a pilot green tea processing plant of 50 kg capacity was installed for Tea Development Cell, NWFP at Matta Swat.

The successful plantation has been demonstrated, its yield potential and quality have been assessed to be economically viable and finally a production package has been evolved by the long efforts of scientists.

Tea is the worlds most popular beverage due to its palatability, comparative cheapness and other beneficial effect. Such as a source of dietary water, stimulatory effect on central nervous system causing pleasure with increased capacity for sustained intellectual efforts, more rapid flow of thoughts and ideas accompanied with reduction in fatigue. Tea plant originally from South East China, gradually expanded to India, Srilanka and further into tropical and sub-tropical countries.

The project aims at development of tea production as part of diversification to high value agriculture and increase in agriculture development in the remote region of NWFP and AJK according to their specific comparative advantages. The project also helped in creation of economic opportunities in the mountain areas and alleviation of poverty in remote areas.

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## Neo

*Pakistan, US sign $339m agreements​*
By Sajid Chaudhry

ISLAMABAD: Pakistan and the United States on Friday signed six amendments worth $339.1 million for the year 2008-09 under the existing Strategic Objective Agreements (SOGA) for education, economic growth, governance, health and population welfare, earthquake reconstruction programme and FATA development programme.

USAID Pakistan Director Anne Aarnes and Economic Affairs Secretary Farrukh Qayyum signed the SOGA amendments on behalf of their respective governments, while Adviser on Finance Shaukat Tareen, USAID acting Deputy Administrator James Kunder and US embassy Deputy Chief of Mission Gerald Feierstein signed the agreements as witnesses. The US has committed to provide $128.9 million for the Education Sector Support Programme. This contribution would strengthen and improve basic education and higher education programme. Financial assistance under the head of governance to the tune of $23.2 million would be spent for improving the judicial system, civil participation and media freedom, the electoral process and the decentralisation programme.

The $76.5 million allocated for health and population welfare would ensure the improvement of reproductive health, combating HIV/AIDS, tuberculosis, increasing maternal and child health and water supply and sanitation in Pakistan. Financial assistance under economic growth, amounting to $43.5 million, would help stabilise the economy in fields such as trade and investment, infrastructure, agriculture, private sector competitiveness and strengthening of micro-enterprises productivity. The US would provide $48.5 million for the Earthquake Reconstruction Programme.

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## Neo

*Gilani calls upon Chinese companies to invest in Pakistan in a big way​*
BEIJING (October 25 2008): Prime Minister Syed Yousuf Raza Gilani on Friday urged the Chinese companies to invest in Pakistan in a big way, strengthening the bonds of ever-lasting Sino-Pak friendship through economic diplomacy.

Addressing the Chief Executives of the top Chinese corporate sector at the State Guest House, he said his country provides immense opportunities to the foreign entrepreneurs, especially those from China to establish joint partnership and undertaking profitable business.

There is very favourable business environment in Pakistan, he said while inviting the Chinese side to visit Pakistan. He said he feels honoured to be in China on his second visit in less than three months. The visits, he said, have provided him an opportunity to meet prominent Chinese businessmen. In Pakistan, the Prime Minister said we have always admired Chinese skills and felt comfortable working with them.

"New generation of Pakistani entrepreneurs is keen to take Pakistan to a higher platform of performance in business and industry and feels pleasure to work in joint ventures with their foreign friends," he added. Gilani said that despite all the changes at international horizon, the two countries have remained steadfast in their solidarity.

He particularly mentioned the role played by former prime ministers Zulfiqar Ali Bhutto and Shaheed Benazir Bhutto in laying the foundation and strengthening the all weather China-Pakistan friendship. The Prime Minister pointed out that today we have a sound architecture in place for developing and strengthening strategic political, economic, commercial, scientific, technological and cultural relations between our two countries.

The Free Trade Agreement in Goods and Investment came into effect in July this year, the Prime Minister said, adding that both the countries have made good headway in negotiations on FTA in trade and services. We are likely to sign it by the end of this year.

The Joint Five-Year Programme, for Trade and Economic Co-operation, signed by the two sides, gives us an elaborate roadmap for tangible targets. The government has decided to mobilise its resources for the speedy implementation of the Five-Year Plan.

This is why it has established an inter-ministerial task force, headed by the President to monitor progress of the projects initiated under the programme. We have a Joint Investment Company (JIC) with paid up capital of $200 million. This company will act as a bridge for Chinese investors coming to Pakistan and play a lead role in launching economic projects.

We have designated the target of $15 billion for our bilateral trade by 2011. If we work harder, we can meet this ambitious target before 2011. The Prime Minister said: "as we go forward, we have to move into the new sectors for investment, joint ventures and marketing.

Pakistan's cement industry, he said for instance is witnessing a boom. Its production and sales are poised to grow further, as the demand in Pakistan and our neighbourhood increases, because of anticipated growth and construction of houses, infrastructure and industrial estates. China and Pakistan can deepen their co-operation in this sector, he noted. He said that Pakistan realises that we will have to expand production of steel fast. Our present capacity of steel manufacturing has to increase; therefore we are planning to set up new plants.

The Prime Minister invited leading Chinese enterprises with proven competence to step in. He pointed out that Pakistan's fast growing economy has huge energy requirements. Our energy demand is expected to increase from present 18,000 MW to more than 160,000 MW by 2030.

He in this connection also invited Chinese companies to invest in the growing economy and become partners in achieving these goals. Pakistan has the world's second largest reserves in coal; the Prime Minister said and added that we need to produce more than 20,000 MW energy from coal in the next 20 year. We need Chinese expertise and technology to turn this reservoir into energy.

He said that the joint collaborative projects in agriculture, food production and food processing sectors will lead to enhanced trade between the two countries. In terms of connectivity, the Prime Minister said Pakistan has to conquer new frontiers. Karakoram Highway is a monument to Pakistan-China friendship, ingenuity and industriousness.

"We can link China and Pakistan by railways, by optic-fiber, by oil and gas pipelines and by building trans-boarder economic zones, along the Karakoram Highway", he noted. This trans-border co-operation can soon morph into trans-regional project co-operation among China, Pakistan and Afghanistan. The time is ripe to encourage Chinese banks and financial institutions to establish their presence in Pakistan, Prime Minister Gilani said.

The Prime Minister said that he knows that the Chinese banks are keen to support the Pakistan-China Joint Investment Company. Pakistan would contribute directly, to the construction of the facilities of JIC. He said that the fundamentals and macroeconomic basis of our economy are being steered in the right direction.

The Prime Minister said that his party has formed the new government as a particularly perilous time for our economy. But we are optimistic that we will overcome these. This year's budget has set out a series of incentives to spur growth in agriculture and manufacturing sectors, he said. Our GDP has doubled to US $170 billion, our resilient population with a rich agriculture base and sufficient natural resources will support an economical revival.

Geographical proximity of China and Pakistan, the exceptionally close political relations between them and Pakistan's location as a bridge between several geographical regions, create a natural interface between our two countries for friendship for transactions, for commerce and for joint undertaking. 'All the doors open warmly as you step into Pakistan's homes, offices and business," the Prime Minister said.

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## Neo

*Saudi Arabia to support Pakistan in all economic sectors​* 
ISLAMABAD (October 25 2008): Ambassador of Saudi Arabia Ali Saeed Mohammad al-Awad Assery has said that the government of Saudi Arabia is ready to support Pakistan in all sectors of the economy.

During a meeting with Dr Fehmida Mirza, Speaker National Assembly on Friday, the Ambassador stressed the need for spreading the true message of Islam through placing appropriate people on the pulpit for curbing extremism from the Muslim World.

The Saudi Ambassador also handed over a letter from Imam-e-Kabah Dr Saleh Bin Abdullah in which Imam-e-Kabah condemned the Islamabad explosion on his behalf and on behalf of the Members of Shura Council of Saudi Arabia. The Imam-e-Kabah Dr Saleh Bin Abdullah Bin Humaid expressed his sympathies for the affected families and prayed for the departed souls.

While talking to the Ambassador at the Parliament House, Dr Fehmida Mirza said that Saudi Arabia has always supported Pakistan in difficult times and is also expected to play a leading role in the Group of Friends. She said that new government was facing many challenges, which could be overcome with the support of friendly countries like Saudi Arabia.

She said that the adoption of unanimous resolution by all political parties on the issues of national security and curbing terrorism was a landmark achievement of the Parliament and has sent a clear message to all that the whole nation was united on issues of national importance. She said that the resolution in fact envisages change in the course of history. The Speaker said that stable and strong Pakistan was necessary for stability of the region. She said that Pakistan was pursuing a multi-pronged policy including dialogue, development and determination to end terrorism and extremism from the country. The Speaker informed the Ambassador that the Speaker's Relief Fund for the internally displaced people of Bajaur and Fata has been established to provide them relief and rehabilitation. The Speaker further informed that the fund was established with the consent of the House and a committee comprising parliamentarians was formed to oversee and handle the relief work.

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## Neo

*'Great potential to boost economic ties between Pakistan and Canada'​*
ISLAMABAD (October 25 2008): Pakistan and Canada need to reinforce their bilateral economic relationship, specially trade and commercial exchanges for which there is a great potential, High Commissioner to Canada, Musa Javed Chohan said while addressing the ambassador's roundtable organised by the prestigious institution the Norman Patterson School for International Affairs at the Carleton University in Ottawa.

Chohan said that with a population of approximately 165 million people, Pakistan offers an attractive and huge market for Canadian exports and investments. "Foreign investment is critical to our endeavours to maintain our economic growth rate of 7 percent so necessary to meet the requirements of our burgeoning population," he added.

Highlighting Pakistan's contributions in the war against terrorism, Chohan said Pakistan was fighting the war against terrorism in its national interest and making every possible effort to eliminate this scourge from the globe. He said peace, stability and security in Afghanistan were crucial for Pakistan. Without stability in Afghanistan there cannot be stability in Pakistan.

Pakistan was providing $300 million for Afghanistan's reconstruction, besides offering 1000 scholarships for training of Afghan cadres. He said Pakistan was following a policy of constructive engagement with the Karzai government. Pakistan has deployed 100,000 troops to fight terrorism, which is more than the collective presence of international troops, deployed across Afghanistan.

Chohan said there were institutional frameworks available for co-ordinating military actions in Afghanistan such as the Tripartite Military Commission. As far as Pakistan was concerned, it will continue its efforts to eradicate the menace of terrorism and extremism, which affects the fabric of body politics. Chohan appreciated the sacrifices made by Canada in the war against terrorism. He said Canadian involvement and troops presence in Afghanistan added another perspective to Pakistan-Canada relations.

He said Pakistan was firm in its commitments to Afghanistan and hoped that other nations involved were equal in their resolve. Talking of bilateral relations, he said there was a strong political will at the highest level to further strengthen and broaden Canada-Pakistan relationship. The function was attended by Canadian Academia, intelligentsia and media persons.

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## Neo

*Grants for social sector areas: Pakistan and US sign $339 million agreements​* 
ISLAMABAD (October 25 2008): Pakistan and USA on Friday signed agreements, worth $339.10 million, on strategic objective grant to be spent in areas of economic growth, education, governance, health, population welfare, earthquake reconstruction programme and Fata development programme during fiscal year 2008-09.

Under the strategic objective grant agreements, for Education Sector Support Programme US Government has committed to provide $128.9 million. This contribution will strengthen and improve basic education and higher education programme. It will further enhance the need and merit-based scholarships programme with the collaboration of Pakistan Higher Education Commission.

The financial assistance under Governance to the tune of $23.2 million will be spent for improvement of justice system, civil participation and media freedom, improvement in electoral process and decentralisation programme. Similarly, the amount allocated for Health & Population Welfare of $76.5 million will ensure improvement of reproductive hea1th, HIV Aids, tuberculosis, maternal and child health and water supply & sanitation in different parts of the country.

The financial assistance under economic growth amounting to $43.5 million will ensure the economic stability in the areas such as trade & investment, infrastructure, agriculture, private sector competitiveness and strengthening of micro enterprises productivity.

Under Earthquake Reconstruction Programme the Government of United States has committed to provide $48.5 million. The said contribution will further enhance the technical assistance & capacity building in the affected areas and will also be utilised for construction and procurement.

In September 2007, US Government had approved huge package assistance for Fata Development amounting to $750.0 million over a period of five years (2007-2012). Last year, US Government provided $73.0 million under this programme, whereas now $20.5 million will be disbursed during the year 2008-09. The funds under this programme would be utilised for capacity building of Fata Secretariat and other government institutions for service delivery, good governance, infrastructure, economic growth, micro enterprises development, health arid education.

Earlier, Anne Aarnes, Director, USAID/Pakistan and Farrukh Qayyum, Secretary, Economic Affairs Division, signed these SOGA Amendments on behalf of their respective governments, whereas James Kunder, Acting Deputy Administrator of USAID, Gerald Feierstein, Deputy Chief of Mission, US Embassy, Islamabad and Shaukat Tarin, Adviser to Prime Minister on Finance, Revenue and Economic Affairs signed the agreements as witnesses.

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## Neo

*'Makro committed to build world class centres in all major cities'​* 
KARACHI (October 25 2008): Makro is committed to build world class wholesale centres in all major cities of Pakistan, Makro Pakistan Managing Director Merek Minkiewicz said at a seminar on 'Makro Modern Retailing', organised by Management Association of Pakistan here on Thursday.

He said that Makro, with the help and share of Habib, already has three centres operational in Karachi and one in Lahore, and its fifth centre, at Model Town, Lahore, is scheduled to open by the end of this year. Each Makro centre is air-conditioned, has a sale area of 12,000 sq ft, and parking space for 400 vehicles, and is open seven days a week from 8:00 am to 12:00 midnight, he said.

Other speakers included Imran Ejaz, Director, Season Food, Sadia Naveed, MD English Biscuit Manufacturers, and Abrar Hasan, CEO, National Foods. Makro, a chain of wholesale centres operating in many countries around Asia and South America, dealing in food and non-food consumer goods, has pioneered the modern, organised and qualified retails in Pakistan.

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## pkpatriotic

*Banks refuse to accept bills with 40pc reduction*
*By Muhammad Anis*
*Sunday, October 26, 2008*

*ISLAMABAD: The consumers of Rawalpindi and Islamabad could not avail the facility to deposit 60 per cent of their electricity bills, as they were told by the scheduled banks to make the full payment.* 

*Just 18 hours after the announcement by the Minister for Water and Power Raja Parvaiz Ashraf that the people should pay 60 per cent bills, the consumers were made to suffer by the offices of the Islamabad Electric Supply Company (Iesco) and various branches of banks in the twin cities. We will receive full payment as we have not yet recieved any notification, a bank officer in Pandora branch, Rawalpindi, said. Other bank officials said almost the same.* 

They said they could not make calculations at their own unless they recieved anything in writing. *We have not been told in writing or verbally to make calculations,* a bank officer of a bank in the Commercial Market said.

The Iesco office located on the Murree Road near the Chandani Chowk also refused to facilitate the consumers, returning hundreds of them and asking them to come again on Monday. The concerned officials present on duty said they would start making correction of bills from Monday. The consumers were also told the due date of bills would also be extended and as such there would be no surcharge. 

It may be pointed out here that October 25 was the last date for the payment of electricity bills, which made the consumers to worry that they would have to pay 10 per cent surcharge if the bills were not corrected immediately. 

It has also been learnt that some branches of the Pakistan Post Office facilitated consumers and received electricity bills after making corrections on the spot. 

*An official of the Iesco present at the head office in Islamabad said on condition of anonymity that written directives would reach the concerned banks by Saturday evening or on Monday morning.*


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## pkpatriotic

*Govt mulls power tariff cut*
*By Jawwad Rizvi*
*Sunday, October 26, 2008*

*LAHORE: The government is considering a reduction in electricity tariff. Proposals for restoring the previous slab system and partially withdrawing the general sales tax (GST) from bills are also under consideration.*

A committee and a sub-committee, which were constituted to look into the increase in power tariff and overbilling, discussed different prospects of saving the public from the hike and providing relief to them. *Some members of the committees told The News the proposal of a cut in tariff by 0.22 paisa per unit had been discussed and endorsed by the private sector stakeholders.*

Members belonging to the private sector proposed to the government to decrease the power tariff as much as possible. The government representatives did not reject the proposal and discussed how much tariff could be reduced in the current situation.

The meetings also discussed restoring the previous slab system. According to the new system, when consumers enter a new slab, they have to pay the electricity bill according to the last slab rate which they consume. 

In the previous system, they had to pay only the price of units consumed in every slab. The restoration of the previous slab system may provide substantial relief to consumers. Its restoration was supported by almost every member of the sub-committee.

*A proposal of withdrawing the GST from power bills was also discussed. The members of the committee were of the view that a large number of power consumers were not taxable, so the GST should be removed.*

*However, FBR chairman, while talking to industrialists in Lahore on Friday, had ruled out any possibility of withdrawing the GST.*

Meanwhile, sources said President Zardari had taken a serious notice of public protests against the government due to miscalculations in the power tariff hike formula.


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## pkpatriotic

pkpatriotic said:


> *Govt mulls power tariff cut*
> *By Jawwad Rizvi*
> *Sunday, October 26, 2008*
> 
> *LAHORE: The government is considering a reduction in electricity tariff. Proposals for restoring the previous slab system and partially withdrawing the general sales tax (GST) from bills are also under consideration.*
> 
> A committee and a sub-committee, which were constituted to look into the increase in power tariff and overbilling, discussed different prospects of saving the public from the hike and providing relief to them. *Some members of the committees told The News the proposal of a cut in tariff by 0.22 paisa per unit had been discussed and endorsed by the private sector stakeholders.*
> 
> Members belonging to the private sector proposed to the government to decrease the power tariff as much as possible. The government representatives did not reject the proposal and discussed how much tariff could be reduced in the current situation.
> 
> The meetings also discussed restoring the previous slab system. According to the new system, when consumers enter a new slab, they have to pay the electricity bill according to the last slab rate which they consume.
> 
> In the previous system, they had to pay only the price of units consumed in every slab. The restoration of the previous slab system may provide substantial relief to consumers. Its restoration was supported by almost every member of the sub-committee.
> 
> *A proposal of withdrawing the GST from power bills was also discussed. The members of the committee were of the view that a large number of power consumers were not taxable, so the GST should be removed.*
> 
> *However, FBR chairman, while talking to industrialists in Lahore on Friday, had ruled out any possibility of withdrawing the GST.*
> 
> Meanwhile, sources said President Zardari had taken a serious notice of public protests against the government due to miscalculations in the power tariff hike formula.



The direction given to banks to deduct 40 per cent from the bills as they are presented nevertheless brings some relief to consumers. The deduction will mean that, in effect, the previous rate has been restored. A final decision on the matter will be taken by the sub-committee which is to assess the situation and submit recommendations to the government. The demonstration by the government that it is willing to hear the voice of people is welcome. Even though the wave of anger ignited by crippling loadshedding combined with inflated bills should have been anticipated and the raise considered in the light of the overall situation before it was imposed, it is still better to act late rather than not at all. In the recent past we have seen too many ugly sights of people attempting only to draw attention to their grievances being ruthlessly bludgeoned by police goons acting on orders to quell any display of dissent. Such attacks, on journalists, on teachers, on lawyers and on ordinary citizens, had been one of the especially distasteful aspects the last military regime led by former president Pervez Musharraf. One of the many merits of democracy, no matter how flawed its working may be, is that governments are more receptive to public will and less willing to use brutal force against them.

But the decision taken regarding the power tariff must not be over-played. There are still very real fears that the increase will be restored, fully or partially and that the committee may well be a temporary measure to deflect severe public criticism and anger. The power protests must be regarded as evidence of the wider plight of people. The government must remember that its primary duty is to these people. The decision regarding the power tariff is a miniscule one when superimposed on the full picture. The degree of human misery and the extent of frustration over a system of rule that has been unable to provide the people with basic needs is currently immense. This problem needs to be addressed. The leadership needs to demonstrate it is willing and able to do so. Otherwise we will have more crises such as the one created by the power riots. A holistic strategy is needed to tackle the desperation that exists everywhere. Piecemeal solutions, like the temporary suspension of the power price raise, will in the long run serve little purpose.
_Excerpted by Editorial The News_


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## DarkStar

Neo said:


> *'Makro committed to build world class centres in all major cities'​*
> KARACHI (October 25 2008): Makro is committed to build world class wholesale centres in all major cities of Pakistan, Makro Pakistan Managing Director Merek Minkiewicz said at a seminar on 'Makro Modern Retailing', organised by Management Association of Pakistan here on Thursday.
> 
> He said that Makro, with the help and share of Habib, already has three centres operational in Karachi and one in Lahore, and its fifth centre, at Model Town, Lahore, is scheduled to open by the end of this year. Each Makro centre is air-conditioned, has a sale area of 12,000 sq ft, and parking space for 400 vehicles, and is open seven days a week from 8:00 am to 12:00 midnight, he said.
> 
> Other speakers included Imran Ejaz, Director, Season Food, Sadia Naveed, MD English Biscuit Manufacturers, and Abrar Hasan, CEO, National Foods. Makro, a chain of wholesale centres operating in many countries around Asia and South America, dealing in food and non-food consumer goods, has pioneered the modern, organised and qualified retails in Pakistan.



As i wrote a few weeks ago, this spells doom for pakistani traders. in the long run, it will be the death knell to small and medium sized businesses. will somebody plz listen. this is not the kind of FDO that we want or need.


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## pkpatriotic

darkStar said:


> As i wrote a few weeks ago, *this spells doom for pakistani traders. in the long run, it will be the death knell to small and medium sized businesses.* will somebody plz listen. this is not the kind of FDO that we want or need.



Dear DS........Here is not only makro who growing up fast by openng its stores in karachi besides Lahore, but 'matro' is also in pipeline, they already have aquired lands for its stores in Karachi and lahore.
In our present senario, to be honest non of our rulers knows the vital impacts & contributions of SMEs & VOT on country's socio-economy which especially the major source to boom cash flow, reduce unemployment........and enhance the tax-net, but unfortunately who care about SMEs.......delivering speeches on the occassions by secratory's drafted papers is totally different then the real understandings of the issues. ........even our major industry has been collapsed particularly textiles the major export revenue generated industry is at the verge due to non-professional (I can say crimnal) negligencies, but no one care to immediate reforms while we have dire need of foreign exchange never ever before.......so?


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## Neo

* Fiscal deficit to be cut to 4.3pc ​* 
Tarin says real estate, agriculture, bourses to be taxed

Sunday, October 26, 2008

KARACHI: Adviser to Prime Minister on Finance & Economic Affairs Shaukat Tarin has said that the government has resolved to reduce the countrys fiscal deficit from 7.4 per cent to 4.3 per cent of GDP within a year.

He said that the government had already planned revenue enhancement strategies which would help stabilise both foreign exchange reserves and balance of payments.

Tarin met with prominent members of the business community at the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Saturday where he expressed concern over the news that the business community was facing a severe crisis because of the present economic and financial conditions prevailing in the country.

He explained that the first and foremost measure would be to tax those sectors which had been provided relief by the government until now, adding that real estate, agriculture and stock market would be amongst the sectors to be brought under the tax net.

He further said that the private sector would be involved in public sector projects and cited the example of India which had taken the services of private sector businessmen in utilities.

Tarin stressed that the government needed to rationalise its expenditures and stop wastage of precious resources. He said that a helpline was being set up where businessmen could call and complain if local banks were cancelling their credit lines.

If a bank has liquidity problems then it should inform its customers and cannot cancel credit lines of businessmen, and therefore this helpline would aid the business community in providing solutions if any problem does arise, he added.

Shaukat Tarin said that his government would ensure that interest rates of banks were brought down to below 10 per cent in the next two to three years as it would help establish better industries.

He was of the view that macroeconomic indicators needed to be stabilised in which curbing of inflation remained the governments top priority, adding if inflation was controlled the local currency would also remain in control, thus solving some of the macroeconomic problems.

He opined, We have plans to establish different industrial parks where each one may specialise in its sector concerned. 

We should be a production-based country and not consumption-based. There is no such thing as a local industry and an export industry as both industries are ours and if local industries progress, then they would start exporting too.

Tarin requested the business community to give him 30 days for plans to be implemented and repeatedly stressed that they would be involved in decision-making.

He stated that the government had decided to involve stakeholders from every sector in the Planning Commission, particularly business leaders, and this think tank would help in institutional building.

He appealed to the business community to join hands with the government and work along with it as the country was in crisis and needed its people to help revive the rapidly falling economy.

It has been most unfortunate that Pakistan keeps falling back to where it started from, Tarin commented. We were close to becoming the Asian Tigers and broke several records, however, we once again face economic crisis, he said.

Tarin shared that all their plans A, B and C that he had announced earlier in the week involved the people of Pakistan in the form of banking sector, agriculture sector, energy, gas and petroleum sector amongst others.

He articulated that one mechanism that the government had planned out was to determine household incomes of the rich and poor people of Pakistan and only after an assessment would financial relief be provided to the poor class of the community, such as lower electricity bills, whereas others would have to abide by the state laws.

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## Neo

*Agriculture may give economy a jumpstart ​* 
Sunday, October 26, 2008

LAHORE: China, which has emerged globally as the most progressive agricultural country, could facilitate Pakistan in increasing agricultural productivity, helping it come out of current economic crisis.

The News has found that while going around the world in search of hard cash to avoid looming default, the economic managers have failed to give a viable proposal which could ensure that the country would not need similar assistance a few months later.

The industrial sector is shattered and most of the industries like textile, engineering, steel and plastic are on the verge of collapse for one reason or the other. High interest rates, inadequate infrastructure, high energy cost and cash crunch have impacted the industrial sector in such a manner that the revival of many units may not be possible. However, prudent economic policies in future may spur industrial growth in the medium term of three to four years.

Increasing agricultural productivity is the shortest possible and sustainable way to give the economy a jump-start. Pakistan has the infrastructure to improve its agricultural productivity which at present is much below its potential. Current food crisis is likely to last for a while and would provide opportunities to producers of surplus commodities to replenish their reserves.

Pakistan could request China to provide technical and financial assistance in this field only. The progress made by China in agricultural productivity could be judged from the fact that, according to Food and Agriculture Organisations statistics, wheat productivity in Pakistan and China was at the same level of 1.14 to 1.17 tonnes per hectare in 1970. However, Chinese wheat production has now reached 4.78 tonnes per hectare while Pakistan harvests 2.67 tonnes per hectare.

Germany, with wheat yield of 7.1 tonnes per hectare, is the world leader while Pakistani scientists claim the country has the potential to produce average 6.8 tonnes per hectare if proper facilitations are provided to farmers.

Rice production in China is three times higher than Pakistan and it produces 2.5 times more garlic per hectare than Pakistan. Productivity of onion in China is 1.8 times higher than Pakistan and it also has higher productivity in sugarcane and cotton. In 1970, Pakistan and China had same levels of productivity in all crops.

China might have some reservations about providing cash relief to Pakistan but it would gladly offer required support for agriculture by transferring its technological research and seeds to boost farm growth. Pakistanis, on the other hand, have better competence in agriculture than other fields and farmers could replicate Chinese experience here.

Agricultural experts say Pakistan needs laser levelers for its farms to conserve water which China could supply. The country has required number of qualified agricultural graduates in provincial extension departments, which are lethargic.

Wheat farmers get 40 per cent of the agriculture extension support required for the crop against 90 per cent provided by China. The extension departments nurture crops the world over by ensuring availability of best seeds, quality fertilisers and pesticides and advising farmers about the quality of their soil. They also suggest remedial measures to improve soil quality.

Chinese experts could revitalise the extension departments of the provinces and could also provide handy soil-testing equipment.

High agricultural productivity would create opportunities for agro-based industries in rural areas and the industries would be more sustainable as basic raw material would come from local agriculture.

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## Neo

*Chinese company keen on building hydropower project ​* 
Sunday, October 26, 2008

ISLAMABAD: China International Water and Electric Corporation (CWE) has shown its willingness to make an investment of $1 million in Pakistan by constructing 1,100-megawatt Kohala hydropower project on build, operate and transfer basis.

CWE Vice President Wang came up with this resolve to build the hydropower project during his presentation on his companys activities in various sectors of the economy. He gave the presentation to Federal Minister for Water and Power Raja Pervez Ashraf here on Saturday.

The minister said that the government would facilitate and provide an investor-friendly environment to the Chinese and all foreign investors to attract investment in the water and power sector.

He said that Chinese interest to invest in hydel power generation projects would help meet the countrys future power requirements at affordable prices.

During the presentation, the Chinese companies top official also informed that the company has completed 600 projects in 60 countries around the world. The company has completed 17 projects in irrigation, thermal, water control, and highways sectors in Pakistan. It has also completed two hydropower projects in Pakistan.

The Minister appreciated their interest to invest in the hydel power generation and said that international consultants have been appointed for detailed engineering, designs and tendering documents for the Kohala hydropower project, which are in their final stages. He said that the government will consider the proposals of the Chinese company for this very important project.

He said that the government will provide complete assistance and data information related to the hydel projects to the Chinese companies that are interested in investing in this sector. He stated that there is a favorable business environment in Pakistan and confidence of the foreign investors would gain new heights and the economy would be made more stable through adopting rationale policies to remove all hindrances and bottlenecks in this respect. Later, a six member delegation of the said Chinese company here on Saturday in the ministry, met top officials of the Ministry of Water and Power which include Adviser to Ministry, Additional Secretary and other senior officials of the Ministry and Wapda.

The Minister said that Chinese investment in Pakistan will strengthen the bonds of the everlasting Sin-Pak friendship. He said that Pakistan has always admired Chinese skills and felt comfortable working with them.


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## Neo

*Tax-to-GDP ratio to be raised to 15 percent: Tarin​* 
KARACHI (October 26 2008): Advisor to the Prime Minister on Economy, Shaukat Tarin on Saturday said the government has drawn up a roadmap to revitalise economy and the measures announced by him would have far-reaching effects in putting the economy back on track.

The measures include improvement of stock exchanges, real estate and agriculture and bring non-taxpayer sectors into the tax net while the tax-to-GDP ratio would be increased from present 10.5 percent to 15 percent.

Addressing the meeting of traders and businessmen at Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Saturday, Tarin said the country is faced with challenges such as poverty and soaring inflation. The majority of the population that earns one dollar per day has presently reached 45 percent from 25 percent. The poverty in the country has risen to 25 percent from 12 percent, he added.

He said that Pakistan will not default, as it has three options A, B and C, adding that the IMF will be contacted under option C. He said the government will borrow money from the IMF on its own terms and conditions, if needed.

Tarin said the government will provide loans to agro-based industries, while the fiscal deficit will be reduced to 4.3 percent from 7.4 percent. He said that the tight monetary policy should be taken, however, it requires time, as the previous government published excessive currency notes lent huge credits, forcing the present government keep the policy tightened. He said the government and civil society should evolve a plan for reducing the increasing poverty in the country, which has reached 40 percent in last few months.

The advisor said that although stock exchange capitalisation has increased to 70 billion dollars from two billion dollars, it is yet to be included in the economic system. He assured the traders and industrialists that banks will not default, adding that reforms are being introduced to improve the banking system and protect the public wealth.

Regarding the ailing industries, he said that with the consultation and best planning, over 4000 industries running on gas and the power plants will soon resume operation. Commenting on declining prices of petroleum products globally, the advisor said the government will also reduce them in the domestic market in next three months.

Tarin said that he has directed banks not to cut credit lines being provided to traders and industrialists. He said the government will inject liquidity into financially weak banks. He said, "we will have to chalk out plans for the next 20 year for becoming the 'Asian Tiger'. Although the previous government claimed of becoming the Tiger, the ground realities and economic indicators were altogether contrary to it," he added.

He said that no policy will be drawn without taking the businessmen community into confidence, adding that some will be included in the board of governors of the Planning Commission. He said that polices drawn in the Commission will immediately be executed.

About the taxation system, he said that the government will run it on smooth and lenient manner so that taxpayers could overwhelmingly pay taxes without any difficulties or fear. He said that the international audit firms will also be called for audit of companies randomly.

He suggested that the interest rate should not be over double digits It should be 3-5 percent. He said that all the utilities will be formed uniformly, while all subsidiaries will end. Meanwhile, the advisor assured the delegation of Pakistan Cotton Ginners Association led by its Chairman Chaudhry Muhammad Akram that Trading Corporation of Pakistan would support the cotton market by purchasing cotton from ginners and stabilise the cotton prices.

On this occasion, President of FPCCI, Taveer Ahmed Shaikh, has said that they are happy on confidence building measures (CBMs) taken by the government, and especially by advisor Shaukat Tarin, but the business community has some reservations on present economic situation and policies.

He said that now it was being felt by the industry that the liquidity provided by change in CRR and SLR might be used to maintain the stock market indicators. That would be risky strategy. He also drew attention of the advisor on the issues of cost comparison of electricity being provided to industries with other countries, including China, India, Bangladesh and Sri Lanka.

He said that being a major consumer of electricity with 40 percent of total electricity, industry was facing great hardship due to decision of sharp increase in electricity tariff. He demanded of the advisor that industry should be consulted before taking any step towards raising prices.

He also discussed the monetary policy and banking spread, L/C margin, deteriorating law and order situation and energy crisis. The meeting was attended by FPCCI President Tanveer Ahmed Shaikh, Vice President Zubair Tufail, Farooq Dadabhoy, President Lahore Chambers of Commerce and Industry, Azhar Saeed Butt, former president of FPCCI, Tariq Sayeed, Captain Haleem Siddiqui and others.

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## Neo

*Ministry asked to set up power plants to overcome crisis​* 
ISLAMABAD (October 26 2008): President Asif Ali Zardari on Saturday directed the Water and Power Ministry to step up power plants for overcoming the severe power crisis being confronted by the country. He said this while chairing an emergency meeting on power situation held here at the Presidency.

Zardari said there was no alternative to reduce the pass-through cost of electricity and asked the Ministry to consider whether it can be done through commodity trading enabling the government to book oil cost in the international market on the long-term basis. Earlier, Water and Power Minister Raja Pervaiz Ashraf gave a detailed presentation on the availability of power, the specter of load shedding and the prevalent tariff.

The minister said a special committee had already been constituted to review the increased power tariff, which decided to provide interim relief to the consumers and a sub committee had been set up to review the tariff structure. Pervaiz Ashraf said there was a power deficit of over 4700 mega watt (MW) in the country which led to resorting to hours long load shedding.

The minister also outlined the steps already taken to end load shedding by the end of next year. According to the plan, rental power plants at Faisalabad, Guddu, Sialkot, Multan and Quetta will generate 1000MW. It also include setting up of another four power plants run on LPG with a total capacity of 900 MW and the projects will be set up on fast track basis. Over 1200MW of power will be generated by IPPs and another 72 MW from hydro sources, the minister said.

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## Neo

*BOT basis: Chinese company ready to build Kohala hydel project​* 
ISLAMABAD (October 26 2008): A Chinese firm, China International Water and Electric Corporation (CWE), has consented to invest in the 1100 mw Kohala hydropower project on 'Build, Operate, Transfer' (BOT) basis. The vice-president of the company, Wang said this in a meeting with the Minister for Water and Power, Pervez Ashraf, here on Saturday.

A six-member CWE delegation also showed interest to invest in other projects in hydel generation. The minister said the government would facilitate and provide investor-friendly environment to the Chinese and all other foreign investors to attract investment in the water and power sector.

He said that interest of the Chinese to invest in hydel generation projects would help meet the country's future power requirements at affordable price. He said that Chinese investment in Pakistan would strengthen the bonds of everlasting Sino-Pak friendship, and added that Pakistan has always admired Chinese skills and felt comfortable in working with them.

Earlier, Wang gave a detailed presentation to the Minister on his company's ongoing projects and briefed him on the expertise in the construction of hydropower projects. The company showed interest in making millions of dollars investment in Pakistan by constructing 1100 mw Kohala hydropower project on BOT basis.

The minister was informed that the company has completed 600 projects in 60 countries of the world. The company has completed 17 projects in irrigation, thermal, water control, highways sectors in Pakistan. It has also completed two hydropower projects in Pakistan.

The minister said that the government would provide complete assistance and data related to hydel projects to the Chinese companies who would be interested to invest in this sector. He said that there is favourable business environment in Pakistan and confidence of foreign investors would gain new heights and the economy would be made more stable through adopting rational policies to remove all hindrances and bottlenecks in this respect.

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## Neo

*'16 million went below poverty line during previous government'​*
ISLAMABAD (October 26 2008): Former finance minister Sartaj Aziz said on Saturday that about 16 million more people went below poverty line during the previous regime due to inadequate economic policies. Talking to a private TV channel, he said, according to a survey, presently about 60 million people are living below the poverty line in Pakistan.

He said during the last eight years no due attention was given on the agriculture sector, which is backbone of the country's economy. The former minister said there is sufficient wheat stock but some restrictions on its free movement, because of smuggling fear, are creating problem in smooth supply of this essential commodity.

He underlined the need for ensuring uniformed price of flour across the country, which would help stop smuggling and hoarding. In reply to a question, he said Benazir Income Support Programme is in place to extend financial help to the people living below the poverty line on regular basis.

But, business community in collaboration with welfare organisations must arrange "Langar" (free food) for deserving people to provide them immediate relief, he added. Sartaj Aziz was confident that due to prudent economic policies of the present government the food situation would return to normalcy during the next year.

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## Neo

*Sending money from abroad: Zardari for encouraging expatriates to use legal channels​* 
KARACHI (October 26 2008): President Asif Ali Zardari on Saturday directed concerned authorities to devise mechanism for encouraging overseas Pakistanis to use legal channels for sending money home. Zardari gave these directives during a meeting held in Islamabad with a delegation of Karachi Chamber of Commerce and Industry led by its former president and leader of business community, Siraj Kassim Teli.

The delegation told the President that overseas Pakistanis who are sending small amount of 200 or 500 dollars prefer to send it through Hundi to save bank charges. Giving account of meeting with Asif Ali Zardari, former President of KCCI Zubair Motiwala said that the business community has suggested to the President that if that small amount gets a parity with Kibor rate, expatriates may use legal channel instead of Hundi for sending money home.

Motiwala said that the delegation deliberated on four points which included bank mark-up rate, monitory policy, power and gas tariff The delegation demanded immediate withdrawal of power tariff raised for domestic consumers, small and medium industries. Asif Ali Zardari assured the delegation that a decision would be taken on the issue within next three to four days.

On the issue of gas tariff, the delegation apprises the President about the impact of increase in gas tariff for industrial and commercial consumers and demanded its withdrawal. They also discussed the issue of subsidy provided to fertiliser companies, which was not passed on to fertilizer consumers. They demanded withdrawal of gas subsidy to fertilizer companies. The delegation demanded that mark-up rates be reduced by 4 percent through reducing spread, which is 7 percent.

The President assured the delegation that the matter would be considered and a decision would be announced in next few days. KCCI President Anjum Nisar said that the President agreed to appoint business community representative and former president of Karachi Chamber of Commerce and Industry as Deputy Chairman, Oil and Gas Regulatory Authority (Ogra).

The president also directed leader of business community and former president of KCCI, Siraj Kassim Teli to nominate persons from private sector to be included in board of directors of National Electric Power Regulatory Authority (Nepra), Trade Development Authority (TDAP), Export Processing Zone (EPZ) and State Bank of Pakistan. The delegation also demanded reconstitution of regulatory authorities.

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## Neo

*Expo Pakistan to attract 350 foreign buyers​*
KARACHI, Oct 25: Expo Pakistan 2008 is expected to attract around 350 foreign buyers and visitors form 45 countries, including US, UK, Canada, Japan and Middle East.

Individuals, business houses, corporate and representatives from trade bodies would be attending the show form these countries, official sources said.

The four-day mega event, starting from Oct 27, will be a showcase for a large number of local exhibitors who would be displaying a large range of their products.

Measures have been completed to ensure security for the event and foreign visitors.

Commerce Minister Ahmed Mukhtar will be inaugurating the trade fair in the morning and on the same day Sindh Governor Ishratul Ibad will host a dinner in honor of foreign dignitaries.

Sources said that foreign buyers have started arriving and around 332 have confirmed their visit to Expo Pakistan 2008.

There will 174 foreign buyers who would be state guests and their all sorts of expenditures, including air travel ticket, hotel room and other courtesies, will be fully paid by the government of Pakistan.

Strict criteria has been laid down for those who would be enjoying the status of state guests.

According to the Trade Development Authority of Pakistan (TDAP), the organizor of the event, for availing the status of state guest the foreign buyer or visitor must have a business turnover of over $10 million and imports to the tune of $5 million.In the other category of foreign visitors belonging to SMEs, the visitors must have a potential to import, having a turnover of $5million and import volume of $1 million. They are being paid for their hotel room and courtesies which includes protocol and transport.

Similarly, visitors from non-traditional markets, such as Africa, CIS, etc., having a business turnover of $1 million imports or less than dollar one million will also get free hotel room and courtesies.

The TDAP has made a comprehensive document for getting full information about the status of each foreign visitor.

The commercial consular had been given the task to get the relevant information and fill the document giving company, buyer or trade profile, etc.

Sources said that 400 local exhibitors will be displaying a large range of products, starting from food items, pharmaceuticals, engineering, surgical goods, sports and leather goods, textile, home and decor, information technology, services (pavilion and clubs), handicrafts, etc.

The display of products at the Expo Pakistan 2008 being held at Karachi Expo Centre will stay throughout the four days of the exhibition but general visitors have been given two days Oct 29 and 30.

Local trade visitors are allowed to visit on Oct 27 and 28 and will have to get their tickets from gate 2 opposite SSGC building on paying Rs200 and presenting their ID cards and business cards.

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## Neo

*OICCI asked to invest $3-4bn in Pakistan​*
KARACHI, Oct 25: Adviser to the Prime Minister on Finance Shaukat Tareen on Saturday asked the Overseas Investors Chamber of Commerce and Industry (OICCI) to increase its annual investment to $3 to $4 billion in Pakistan.

Talking to media after holding a marathon meeting with the OICCI members, the adviser said that normally their annual investment ranged $1.5 to $2 billion and urged them to increase it gradually.

He said that the mother companies of OICCI members made an investment of about $150 to $200 billion every year around the globe and at least one to two per cent of them should come to Pakistan.

We will solve all their problems and encourage them to expand their investment in Pakistan. This is a business-friendly government and we want to encourage both local as well as foreign investors. We will reduce cost of doing business, remove red tapism and hold a regular dialogue with them, he added.

The adviser said that he would hold meetings with business chambers every three months to listen to their problems and address them accordingly.

Tareen noted that increase in foreign and local investment would create opportunities for employment and boost the economy. This will increase confidence of business community in the government, he observed.

OICCI President Waqar Malik said that the members of the chamber had full faith in the policies of Shaukat Tareen and they believed that he would be able to turnaround the countrys economy with his plan.

He said that the nine-point agenda of Mr Tareen for economic revival and the aspirations of the OICCI had the same direction. This has boosted our confidence, he noted.

Tareen has shared his plan with OICCI members and we are confident that this would stabilise exchange rate and very quickly resolve balance of payments problem in next 30 to 45 days, he elaborated.

He said that OICCI has also informed him about the issues confronting foreign investors including law and order and also submitted suggestions.APP

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## Neo

*Industrial output declines by 5pc​*
ISLAMABAD, Oct 25: Pakistans industrial output declined by around five per cent in the first two months of the current fiscal year in the wake of international financial crisis, sending fears of massive layoffs, particularly in the electronic industries, officials told Dawn on Saturday.

Pakistans economy has not yet felt fully the consequences of the global crisis at this juncture, and it is hard to estimate their severity and duration, but some impact has already been obvious, like slumping in the industrial production and steady decrease in dwindling forex reserves.

Many sub-sectors of the large-scale manufacturing did not perform well during July-August, particularly electronic goods, indicating that the 6.1 per cent LSM growth target set for 2008-09 is unlikely to be achieved.

An official said textile sector is labour intensive and any drop in production or exports is signaling massive layoffs, particularly those people who are working on daily wages to feed the families.

Data compiled by the federal bureau of statistics showed that production of cotton yarn declined by 0.82 pc, cotton cloth 1.33 pc and power-looms 54.13 per cent during the first two months of the current fiscal year over last year.

Among the electrical production, refrigerators recorded a negative growth of 2.60 pc, deep-freezers 26.32pc, air-conditioners 6.39pc, electric bulbs 20.97pc, electric tubes 9.21 pc, electric motors 37.48pc, electric meters 27.60pc, switch gears 17.61pc, electric transformers 14.80pc, TV sets 5.06pc and bicycles 20.95 pc during the period under review.

Analysts said industrial production has been adversely affected by the crisis through both price effects that increase the cost of production and income effects that decrease the demand for products in the markets.

The sever power shortage and highest-ever increase in energy prices also further fuel the crisis, which led to cuts in production, particularly in the textile based industries resulting into lower exports.

It is believed that the trend indicates a declining move for the current fiscal, amid growing concern over the de-industrialisation trap. And the current declining trend or a flat rate of growth is the forecast for the next fiscal year.

Iron and steel production declined by 0.84pc, pig iron 10.35pc, billets 32.85 pc and HR sheets 12.44pc during July-Aug over the same period last year. However, billets production declined by 4.97pc.

In the automobile sector, production of busses declined by 39.35 pc, jeeps and cars 43.91 pc and motorcycles 4.40 pc, respectively during the period under review. These sectors and associated vendors also provide scores of jobs.

An official in the industry ministry said it is not clear how large and widespread the impact is. But it is believed that some industries might get benefit from the crisis, particularly those using domestic raw material.

But to avoid losses, some factories will have to increase their production prices which would ultimately lead to lesser sales, the official added.

The industrial growth had been shrinking for the last three years as it grew by 5.4 per cent in the year 2007-08 down from 19.9 pc growth recorded in the year 2004-05 owing to capacity constraints and high cost of doing business that resulted into closure of many units.

As a result of decline in industrial output, the import bill of consumer and electronic goods swelled during the period under review.

The slump in the industrial growth had greatly affected the export of commodities, particularly the textile and clothing exports which already declined from the start of the current fiscal.

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## dr.umer

*UAE to invest $40m in Balochistan ​*
ISLAMABAD, Oct 26 (APP):The United Arab Emirates (UAE) will invest $40 million in agriculture, irrigation, health and education sectors of Balochistan. According to Radio Pakistan, this decision was taken in a meeting held in Quetta between Balochistan Chief Minister Nawab Muhammad Aslam Raisani and a seven-member delegation of UAE headed by Minister for Investment Khadim Abdullah Al Dari. 

The meeting was informed that the UAE government in collaboration with an international farming company- Al Dahra - would initially initiate a project of agriculture farming on 18,000 acres of land in Mirani Dam command area to cultivate wheat, cotton, pulses and other grains. Later,the cultivation area would be stretched over to 33,000 acres. 

The work on the project would commence in the start of next year.This investment would provide employment to about 12000 jobless people of the area. 

The Balochistan CM has approved the setting up of a high-level committee for finalizing the additional clauses of the agreement on behalf of the Balochistan government, which would be implemented in consultations with the concerned officials of UAE.


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## dr.umer

*Govt retracts decision to remove electricity subsidy ​*
27 Oct, 2008 

ISLAMABAD: The government have differed its earlier decision to cut the subsidy on electricity by Rs120billion and pass it on to the masses following the immense pressure of countrywide strikes against the recent increase in power tariff and load-shedding.

The decision was announced by Minister for Water and Power, Raja Pervez Ashraf, at a hurriedly called news conference here on Sunday.

Anti-government protests over the power tariff and load-shedding issue are still being held on in different parts of the country despite the government's decision to cut the present electricity bills by 40 per cent by putting off the implementation from September of 31 per cent hike in power tariff approved by the National Electric Power Regulatory Authority (Nepra).

Ashraf said that earlier the government had decided to slash its Rs185billion annual subsidy on electricity by Rs120billion by bringing it down to Rs65billion. The government wanted to pass on the reduction in subsidy to masses, but had decided now to put off the decision, he observed.

In response to a question, the water minister said that the previous government had left Rs400billion in circular debt in the power sector in legacy for which the new Pakistan Peoples Party (PPP) led political government was paying the price.

He said this huge amount of circular debt had not only affected the supplies of furnace oil and gas to power generation companies but also took heavy toll on the power generation capacity of not only the independent power producers (IPPs) but also the functioning of the Water and Power Development Authority (Wapda) and distribution companies as well.

He also referred to Rs60billion outstanding loan released to IPPs a few days back which is believed to have helped in increasing power generation.
I appeal to the masses that these protests should stop now as the increase in tariff has not been implemented, he observed.

The water minister also claimed that some people also wanted to project their politics by fueling up the issue. He said those who had resorted to protests and were damaging the public and private property were not serving their country. He also appealed to politicians to not play politics on an issue that was created not due to the incompetence of the present government but the previous one.

He said the government needed some time to launch and complete some of the power generation projects on fast track basis. He said that he was confident that there would be no load-shedding in the country by the end of next year.

Ashraf said the government had made a roadmap which would focus on involvement of rentals, IPPs and Wapda power houses to generate maximum electricity to overcome load-shedding as well as handle future energy needs.


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## dr.umer

*Microsoft Pakistan introduces lower prices for home users ​*
26 Oct 2008

Microsoft in spirit of true innovation launched its "Fully Packaged Products" for the general consumer market aimed specifically at students and individual home users. The FPP offering introduces genuine MS Office in home and student editions at a price 40 percent lower than its former price.

The single full packaged product allows for licensed installation on 3 computers for the price of one-a benefit unique to the FPP. This promotional offer is being introduced to harbour greater interest and offer affordable solutions to the public.

The FPP launch marks Microsoft's global initiative to expand availability and access to genuine software in emerging markets and Microsoft Pakistan is determined to fulfil the company's vision to bring benefits of technology to one billion more people by 2015.

The FPP campaign has been launched after considerable groundwork and research into emerging markets. Prior to the launch, pilot studies were conducted in five emerging markets and the results yielded a high willingness of individuals to purchase genuine Microsoft products. The products that are directly engendered under the fully packaged product portfolio include MS Office home and student 2007; MS Office Student and Home Word; MS Office Home and Student Excel 2007; MS Office Home and Student PowerPoint; and MS Office Home and Student OneNote 2007.

The FPP products, backed by authenticity of Microsoft are free from malicious viruses and spyware that affect a majority of desktops around the country. According to Global Software Piracy report, Pakistan uses 84 percent pirated software out of which 25 percent contain viruses and spyware thus exposing us to IT inefficiencies.

Country General Manager Microsoft Pakistan, Kamal Ahmed, addressed the gathering and emphasised the need and benefits of virtualisation for businesses in Pakistan. He said, "At Microsoft, we are striving to increase the accessibility to genuine products that are specifically designed to cater to the needs of the public. The fully packaged products are being offered at a price 40 percent less than its former price which makes it all the more appealing and affordable to the masses."

In addition he also said, "Our FPP products will help us establish an IT ecosystem within the country conducive to economic, personal growth and free from pirated and counterfeit software. We are sure that our FPP products can bring competitive advantage to not only our business but to our country by leveraging our nation's human asset. Additionally, secure and genuine softwares from Microsoft will equip Pakistani individuals with the necessary tools to combat global competition in arenas of IT and other commercial avenues".

Saeed Sheikh, Country Manger eSys Pakistan, said "Genuine software technology has tremendous potential in our country where 84 percent software used is pirated. This renders the IT infrastructure vulnerable to inefficiencies and other malicious content such as viruses. By bringing the best from Microsoft and building upon its knowledge and capabilities we can surely capitalise on this potential and capture a substantial market in Pakistan".

Sheikh also stated, "eSys Pakistan is distributing Microsoft's FPP products in Pakistan keeping in view the encouraging results and favourable demand of the product". The launch of the FPP products will be followed by initiatives designed to maximise reach and visibility and also awareness campaigns among the masses. The FPP products will initially be available on selected stores but this will increase with the passage of time.


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## Neo

*Do we need a bailout plan?​*
Pakistans economic predicament is becoming grimmer. Although Pakistans year-long economic crisis is largely self-created, the looming global financial crisis is also a part of the problem.

With so much uncertainty hanging over the worlds creaking financial structure, there are so few countries or institutions which want to part with cash, even though they may be sitting over piles of them.

The country is focused almost exclusively on how it would be able to service the $40 billion plus foreign debt, which is more than 10 per cent higher than when Musharraf took over, than to put food on the floor (on which most people eat) of its poverty-stricken bottom 40 per cent of the population.

The primary concern of our economic managers seems to be on how to save Pakistan from the threat of default on its foreign loans, which must be paid by the years end. The amount being discussed is in the region of $3-4 billion of immediate payments, although the total financing gap for the balance of payments was projected at around $7 billion for the fiscal year ending June 30, 2009.

The immediate requirement is less than three per cent of the GDP and equivalent to the remittances it receives every year from its workers and professionals abroad. It is something which the nation could easily adjust to if people had faith in their rulers and if they could be mobilised to make sacrifices equitably, even though the poor are already so heavily burdened that any additional sacrifice on their part cant be suggested with any seriousness.

Unfortunately, this is not likely to be the case because the elites are unwilling to give up their gains acquired during the Musharraf regime. What is more likely is that the current budgetary deficit of seven per cent of GDP will be slashed to four per cent, largely by curtailing the expenditures likely to benefit the poor  such as food and fuel subsidies and social expenditures  while those benefiting the rich will be maintained or even increased.

The only thing being debated now is whether such a reduction in the budget deficit will be made under the auspices of an IMF agreement, which would include other contractionary and restrictive provisions.

The government of Asif Ali Zardari is apprehensive of concluding any agreement with the IMF which would compromise his partys populist image and would further aggravate the suffering of the poor and lead to even greater unrest on the streets. It seems that the IMF is willing to recognise this political difficulty and get Zardari on board for longer-term reforms by bailing the country out from the brink of the precipice it stands at now. For that, the government is hoping that Friends of Pakistan consortium meeting in Abu Dhabi next month will approve a larger package of, say $10 billion, for stabilising the economy over the next two years (or seven quarters).

Pakistan has been in this kind of situation several times in its brief history, the last time being the period after its nuclear testing in May 1998 when the US imposed sanctions on it. It ended up by freezing over $12 billion of foreign currency accounts, much the same way the $12 billion of foreign exchange reserves have been put to as a result of a combination of political instability, economic mismanagement and deliberate efforts to ruin the economy.

It is now well-known that bailouts create serious moral hazard problems, never succeed in reforming and rebuilding the debtor economy. What is even more troubling is that bailouts result in rescuing those economic actors who are the primary cause of the default or who have most benefited from the foreign loans, which the country is unable to service.

The rest of the nation, especially the poor, who have played no part in foreign borrowing or have benefited, are being denied the attention they deserve from their elected representatives in the solution of their pressing economic problems, which have steadily escalated to unprecedented levels since the beginning of this year.

If the IMF-sponsored agreements are signed they will, notwithstanding the usual assurances about safety nets, they are likely to bring much more misery to them. The scare being created about the consequences of a default is highly exaggerated and is really intended to letting the nose of the foreign camel in the tent.

Many Latin American countries during the 1980s debt crisis and since have survived after debt default and have come out none the worse for it. What Pakistan needs at this time is not a contraction of public expenditures, except non-development, but an expansion of employment-generating development and social protection expenditures, which are likely to be curtailed in the event of an IMF-supervised package. A recent IMF working paper evaluates empirically four types of cost that may result from an international sovereign default: reputational costs, international trade exclusion costs, costs to the domestic economy through the financial system, and political costs to the authorities. It finds that the economic costs are generally significant but short-lived, and sometimes do not operate through conventional channels.

It is only the political consequences of a debt crisis which seem to be particularly dire for incumbent governments and finance ministers. If default is so important to the political class, especially the incumbents, it would behove them to pledge some of the prime properties and other assets owned by them in UK, Dubai and elsewhere, as a pledge against the amount due to avoid default.In many ways, Pakistans debt trap is a mirror-image of what has been happening to the US economy in the past decade. Both economies have been driven by the stimulus of foreign inflows and large current account and budget deficits that have provided the growth momentum to their economies.

At the end of the economic booms experienced during this period, both are finding themselves in grave difficulties, because the booms became unsustainable. Pakistan being a much more narrowly based and less highly leveraged economy was less susceptible to the financial crisis that the United States faced when the housing bubble burst a year ago.

It was however much more vulnerable to the extraordinary rise in oil and food prices earlier in the year, hurting the poor much more severely. Another common characteristic of the growth pattern of the two economies was the high inequality that it gave rise to in both countries. The entitlements of the poor, in terms of health, education and social services  albeit at very different levels  have been curtailed in both countries.

For almost a decade, both economies have been defying some of the basic economic laws with impunity, largely due to fortuitous global and domestic factors that have enabled the more well-heeled sections of society to enjoy a level and pattern of living that is well beyond the collective resources of their economies.

Both countries have one of the lowest savings rate in the world. While the United States has so far been bailed out by the rest of the world, especially China, East Asia and the oil-producing countries who have invested their current account surpluses in US securities and assets, Pakistan has run out of reliable sources of foreign savings to complement their low domestic savings rate. The current shock to both economies may well pave the way for corrective action to pursue sustainable paths of development for them in future.


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## Neo

*Return of a semblance of stability​*
THE days preceding the October 17 announcement of market- stabilising emergency measures by the Governor of the State Bank of Pakistan reminded many of us of the scenes witnessed soon after May 28, 1998, but by responding boldly (though belatedly) to the challenges, the SBP has revived the market sentiment.

The two per cent immediate cut in Cash Reserve Requirement (CRR) and another one per cent effective November 15, and exemption of deposits with life spans of one year and above from the Statutory Reserve Requirement (SLR) helped all market players; with banks less restrained, they too heaved a sigh of relief.

Along with the one per cent relief given on October 11, the total CRR relief in October implied injection of Rs102 billion into the system. But during July-September, bank deposits fell by Rs232 billion and Rs54 billion worth of reserves freed by this fall had already flown into the system. The post-October 17 injection therefore added only Rs48 billion  too little at the start of the peak borrowing season.

But the relief in SLR has returned to banks over Rs125 billion of T-Bills for collateralising and borrowing there against. With these bills, banks, that couldnt borrow from other banks on clean basis, can do so now. A more significant relief is the doubling of PIBs share in the SLR. The bonds issued in 2004-05 were a burden; besides being loss-making investments, they were also ineligible for collateralisation.

Another important relief is the acceptance of the demand for converting short-term loans secured by shares into one-year term loans to help postpone sale of shares till their prices rise realistically. This will slowdown a slide in share prices (and in foreign portfolio investment) that is feared after removal of the lower lock on share prices, but could block scarce bank credit in these loans.

Together, these measures have lowered inter-bank lending rates significantly (down to four per cent), and prevented money-centred banks from benefiting for too long from the liquidity crisis. The overall effect has been the return of a semblance of stability, which has also strengthened the rupee in the inter-bank as well as the open market, and discouraged dollar hoarding.

In spite of all this, this scenario wont last without long-term stabilising measures. To begin with, despite lowering the CRR and SLR (that could boost banks capacity to lend up to 75 per cent of their deposits), the SBPs lowering of the loan-deposit ratio to 70 per cent implies contracting credit supply in a quarter known for high credit off-take triggered by cotton buying.

Second, according to the latest SBP statistics, in the next quarter, the State Bank will sell back to banks close to $2 billion under maturing swap deals. This will suck out from banks nearly Rs160 billion in counter-value. As it is, there isnt enough liquidity in banks; unless bulk of the swaps is rolled-over, the twin effect of the credit hike for cotton buying and payment of counter-value of the swaps could again strain bank liquidity.

Cutting the CRR along with lowering loan-deposit ratio (by March 31, 2009) implies that fresh loans be funded by fresh deposits sucked out of the money in circulation. Thats prudent. Of the bank deposits withdrawn so far, over Rs142 billion went into money supply raising it to a whooping Rs1.14 trillion.

But with inflation eating into the capacity to save and mounting demands by trade and industry for lower lending rates, it would be hard for banks to offer attractive deposit rates and also cut lending rates. In this setting, banks cant earn the high interest rate spreads that they got used to, tragically, at the expense of long-term economic interests.

Vacation of the stay granted by the SHC against the CCP action against banks on the charge of cartelisation manifests that banks were less than fair in compensating depositors as well as in pricing loans. During the past four years, it was repeatedly pointed out that bank profitability was eating into the cost efficiency of business and industry but to no avail.

Now banks must provide borrowers the life support of cheap credit. Banks dont have a choice. It is their biggest challenge and obligation that remained on the backburner for too long. If they want to earn fair profit during the coming recession, they must do so by helping their borrowers regain their competitive strength and, within banks, by increasing resource productivity, not interest rate spreads.

But indications are that they are now more concerned about safety of risk assets. Thats why on October 22, they invested another Rs60 billion in T-bills rather than lend to business and industry. Banks must realise that long-run survival of the economy is in everybodys interest and all stakeholders must strive for a balanced (not skewed) sharing of the benefits.

Striking that balance, which we ignored under self-centred leadership in institutions, is now imperative. Not doing so could prove disastrous for all stakeholders because of a systemic failure triggered by large scale-failure of businesses. Reduced or expensive credit to business and industry to insulate banks from loan losses could lead to business closures.

Indications are that this trend is developing and external pressures may force a rise in mark-up rates. To prevent this tragedy from crystallising, banks must mobilise huge amounts of a wide variety of fresh domestic resources to bring down the overall cost of deposits instead of either reducing credit or making it expensive. This is what the SBP Governor hinted at in her October 17 press conference.

Both banks and the SBP overlooked for far too long the fact that, if stiffly regulated, support services like risk-rating, advisory, custodial, and asset valuation, can extend vital assistance to banks in containing credit risk. However, they remain weakly regulated instead of being properly licensed (separately for each business niche) by truly competent authorities and supervised very effectively. If businesses arent helped, the build-up of slow-moving loans will perk-up loss provisions and greatly dampen the pace of profit growth witnessed during 2004-07. This could hurt investment sentiment if banks were to rely on issuing stock dividends and right share issues to increase bank equity, year-after-year for the next four years, as envisaged by the SBPs over-optimistic capital adequacy demands.

The merger of KASB Bank and Atlas Bank, and news about an investor group headed by Mr Hussain Lawai of the MCB fame acquiring (and logically thereafter merging) MyBank and Arif Habib Bank to create more viable banks out of synergy, is a positive development. There may be more mergers, but based on recent experience, the SBP must not lose sight of the hiccups the process involves.


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## Neo

*Deepening foreign exchange crisis​*
By Dr Parvez Hasan

THE deepening foreign exchange crisis is all too visible. The sharp deterioration in world economic prospects, much slower growth of output and trade and likely disruption of private capital inflows from western markets add to Pakistans difficulties.

Despite some measures to improve the macroeconomic situation over the last six months, the grave underlying disequilibrium in the balance of payments persists. A comprehensive plan to deal with the situation has yet to be announced by the government, though a distinguished group of economists, led by Dr Hafiz Pasha has finalised a report for the Planning Commission. Meanwhile, urgent efforts to raise large sums of money from friendly countries and international institutions have met with only limited success as yet.

How big is the balance of payments crisis? What are its causes? What can be done to bring down the large macroeconomic imbalances and arrange necessary financing without hurting economic growth too much?

The current account balance of payments deficit during 2007-08 totalled $14 billion or over nine per cent of GDP, surpassing all records. The SBP data for the first two months of current fiscal indicates that the deficit was moving at an annual rate of over $15 billion.

The large current account balance of payments also denotes a sharp worsening of the saving  investment balance. In 2007-08 nearly 45 per cent of investment was financed from foreign savings, another record.

There is little doubt that the present government inherited a very difficult economic situation. The previous regime ignored the need to adjust to severe external shocks notably the rise in international oil prices. The rise in the oil import bill from $4.7 billion in 2004-05 to $11.4 billion in 2007-08 alone has meant a loss of nearly five per cent of GDP over the last three years. Though the average GDP growth rate during 2005-08 was 6.5 per cent per annum, the national income growth adjusted for the terms of trade loss was only 4.5 per cent per annum.

The proper response to this evaporation of economic gains should have been speedy energy price adjustments, a change in the expansionary fiscal stance, a tightening monetary policy, and selective restraint on new public investments. This was not done. Growth in both consumption and investment far outstripped the availability of domestic resources. Nearly 40 per cent of the increase in consumption and investment over 2006-08 was financed from external resources including sale of assets to foreigners.

The new government is scrambling to mobilise financial resources to fill the large balance of payments gap without a further catastrophic drop in foreign exchange reserves. But short-term efforts cannot succeed unless both the international community and citizens are convinced that the government has a clear plan for restoring financial stability in the medium-term.

The attitude of citizens is important because unless their confidence is restored capital flight may continue.

The current account balance of payments needs to be brought down to a sustainable level of four per cent of GDP in 2-3 years and the reliance on external resources to finance investments should be gradually reduced to less than 20 per cent. An urgent goal of economic policy should be to reduce the deficit in 2008-09 to $ 8-9 billion or 5.5- 6 per cent of GDP. This might appear an impossible goal because it would mean cutting the deficit almost into half in the remaining part of the year from the level in the first quarter. Fortunately, the recent decline in international oil prices combined with domestic energy price adjustments could help cut the annual oil bill by as much as $2- 3 billion. Still a great restraint on both public spending and private consumption is necessary.

Despite large energy price adjustments during the last six months, public spending has not been brought under control. Though fiscal deficit figures for recent months are not available, the SBP data indicates that net government borrowing from the banking system was Rs131 billion during July-September 2008. In addition, credit to public sector enterprises increased by Rs55 billion. Thus public sector bank borrowing is running at the annual rate of over Rs700 billion or well over six per cent of GDP. The fiscal deficit obviously must be larger despite the reported improvement in government revenues last quarter.

Government borrowing from the State Bank in July-September reached record levels, much above the annual rate in 2007-08, as the government retired scheduled bank debt. While inflation caused by the rise in international commodity prices is likely to be reversed, monetary expansion has become a real threat for future inflation.

Expansion of public expenditure in critical areas such as recently announced income support programme for the poorest households and food grain subsidies for the low-income household are essential, the income support programme as announced would cost less than 0.4 of GDP. All other public expenditure requires careful scrutiny, consolidation and cutbacks.

After no growth in the 1990s, the real non-interest public spending increased by around 70 per cent over 2004-08. After such a period of rapid growth, it should be possible to eliminate waste and prune low priority expenditures without adversely effecting economic and social goals. All current expenditure (including defence) and development spending should be subject to review. Development spending should give priority to job creating short -gestation period projects.

Expenditure curtailment efforts must be combined with the renewed efforts to tax the well-to-do who have been the main beneficiaries of the recent economic boom. So far neither the governing elite nor the government has shown much appetite for mobilising larger revenues from taxation on high income earners and much under-valued property and closing the loopholes provided by absence of taxation on agriculture and capital gains. The present financial crisis must be used not only to mobilise additional revenue equal to at least two per cent of GDP over 2-3 years but also to ensure that basic unfairness of the system in which the rich substantially escape the tax net, is at least partly rectified.

A supplementary budget might be needed to implement new taxation and expenditure decisions.

Resistance to additional taxation would be strong; large increases in food and energy prices are cited as causing severe hardship. The government and the society have an obligation to help the poor who have been hurt the most. The income support programme should be even larger. However, the government cannot protect everybody in a situation where the gap between domestic spending exceeds resources by nearly 10 per cent.

Restraining consumption is always painful. But it must be recognised that during the last two years, average real private consumption grew by 10 per cent per head and as a large segment of the population apparently did not share in this increase, the gains for the top 10-20 per cent of the households must have been very sizable. This is the group that can afford belt tightening the most. Monetary incentives for increased saving by all can and should be strengthened by ensuring that depositors and savers receive positive real interest rates.

Even with very strong economic adjustment, $12-15 billion for net resource inflow will be needed for 2008-09 not only to finance the current account deficit but to restore the foreign exchange reserves at least to the end June 2008 level and preferably to the February 2008 level of $14 billion. For the subsequent two years, another $12 billion annually is likely to be needed.

It is hard to see how such a large package can be put together without the help of the IMF. There should not be any loss of prestige in going to the IMF provided the essential economic policy package is strong and home grown and the IMF agreement ensures a revival of the growth rate from say four per cent this year to six per cent in a couple of years.

Despite a dismal financial situation, Pakistan can restore high growth by focusing on agriculture, small and medium industries and exports. The exchange rate depreciation has strengthened competitiveness as recent export recovery suggests. Even though the international trade conditions would be tough especially for textiles and clothing, there remain tremendous opportunities in exports of other manufactured goods in which the country has virtually no world presence. Meanwhile, opportunities for import substitution in both agriculture and manufacturing have grown.

However, the fundamental solutions to our longer-term economic problems continue to lie in better governance, greater equity in public policies, higher productivity through investment in human capital, and last but not the least a culture that rewards, hard work, savings, and merit and punishes wrong doing.

The writer is a former chief economist of the World Bank.


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## Neo

*Diversifying exports​*
EFFORTS are on, both at the government and at the private level, to explore new markets and also to consolidate positions in places where Pakistan has a token presence in export volumes, following the shrinking of the US and EU markets hit by economic slump.

For long, the EU and the US absorbed as much as 40-45 per cent of Paskistans total annual exports and remained as the main suppliers of capital goods. But during the last decade, Pakistan slowly diversified its export markets and signed Free Trade Agreements (FTAs) with China, Malaysia, Mauritius and Sri Lanka. A proposed FTA with US has been a subject of periodical bilateral consultations over the last few years but with no outcome.

With market diversification, the exports of non-textile products rose by more than 24 per cent in the first quarter this fiscal year. While the textile sector seem discouraged by the withdrawal of research and development subsidy, exporters of leather and leather products, sports goods, surgical instruments, cutleries, furniture and a variety of other assorted items, have grabbed the opportunity offered by rupee depreciation, and they are all set to push their foreign sales in different markets of the world.

Textile exports were down by five per cent in the first quarter 2008-09, mainly because of the economic meltdown in the US and EU, forcing many to look elsewhere. My next destination is South America, says Iqbal Ibrahim, Chairman All Pakistan Textile Mills Association (APTMA) who mentions Brazil, Mexico etc as other promising markets. Yes, there are logistics and freight issues involved in export business, but then no business in the world is problem-free, he maintains.

Akbar Sheikh, a prominent APTMA leader from Lahore looks at China where textiles can have a market. With increased prosperity there, the labour cost is rising, pushing up the production cost and offers opportunities for export of selected textile products. We have generations-old relationship with many Hong Kong businessmen who would serve as a springboard for an export drive in China mainland he said. If the government helps textile exporters in resolving some of logistics problems, we can generate a few billion dollars from exports in such non- traditional markets,  Akbar added.

Aziz Memon, a leading garment manufacturer and exporter does not mind, collaborating with competitors in new markets. He was obviously referring to Indian businessmen who are found in many non-traditional markets such as, South America, Africa and Asia and who may consider to join hands with their Pakistani competitors in the marketing of selected textile products.

Pakistans declining dependence on the US and EU markets was more than visible in 2007-08 when exports to the US came down to $3.72 billion from $4.18 billion a year ago. The US share in total exports was also down to 19.5 per cent in 2007-08 as against almost 25 per cent in 2006-07. In the current fiscal, exports to US are likely to further come down because of fall in value as well as volume. UAEthe hub of cross-country trade-- has shown almost 50 per cent jump in imports from Pakistan amounting to over $2 billion in 2007-08.

The export is handicapped because of its very narrow base, consisting hardly of 1,200 products as against the trading of over 5,000 products in the international market. Right now we are striving to get our due share in the international halal food business that is controlled to the extent of 80 per cent by non-Muslims, said Syed Mohibullah Shah, the Chief Executive of Trade Development Authority of Pakistan (TDAP). While trying to explain the strategy for diversifying the expanding the export base. Pakistan, he said, has all the potential to offer branded halal food products.

Our focus is on value addition and branded products. Shah has held. a series of meetings with businessmen recently in which his emphasis was on discouraging sale of agricultural raw material as far as possible; and instead to go for industrial processing, hygienic packaging and obtaining a number of products from a single agriculture produce. There are bright prospects of harvesting 24-25 million tons of wheat next spring, he said, which should make at least one million tons of wheat available for export sometimes in May or June next year. But our strategy is to export bakery products, confectionary items and a variety of cookies from wheat surplus rather than exporting it in raw form, he said. Pakistans confectionary industry has expanded considerably in last decade and has ample potential to enter export market in a big way.

The UAE and Saudi Arabia have a big food import bill and are eyeing Egypt, Pakistan and Sudan as their sources of food requirement. The UAE investors have indicated their plans to acquire huge farms in Pakistan to produce grains, fruits and vegetables and even dairy products. In the early eighties, Saudis invested in a livestock farm at Mianwali but suffered heavy losses because of a lack of entrepreneurship and managerial skills of their local partners. Official planners are considering this option for export.

A glaring example of market diversification is the seafood export. For long, Europe remained as the main market for food, that fetched about $250-300 million a year. For the last few years, the EU de-certified Karachi fish harbour because of its unhygienic conditions and put a ban on fish import.. We are now exporting fish of the same volume with better prices to Asian countries, the TDAP Chief Executive informed. Plans are in hand to give a clean look with hygienic environment to Karachi Fish harbour, upgrade local fish industry and modernise fishing boats. We want to regain our share in European sea food market and would rather like to improve it and at the same time further push up our presence in South East Asian and Middle Eastern countries, he said.

New markets and new products are the two main pillars on which the future export policy is being planned. Russia has already been targeted for future market exploration as its 300 million population has much more purchasing capacity because of oil and gas earnings. A delegation to Moscow is being planned sometimes in December/January.

Depending on reports from commercial counsellors from East European countries, Pakistans proposed trade delegation may include Ukraine and other East European or Central Asian countries in its itinerary. China and East Asia are other target markets. Minerals and agro-based products are set for enlarging Pakistans export product line in future. Pakistan is in rich minerals but its exploitation system needs to be modernisd. The last mineral policy was made in 1995 and preparations are afoot to revamp it under the changing conditions.


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## Neo

*Why an interim industrial relations bill?​*
THE Pakistan Peoples Party has adopted an interim Industrial Relations Bill- 2008 in the Senate to replace the Industrial Relations Ordinance-2002.

The interim bill would be replaced in the next 18 months or two years by a permanent new Industrial Relations Act, say press reports. Any industrial legislation provides a legal foundation upon which labour-management relations are built with balanced rights and interests while the government acts as a guarantor and a watchdog to ensure industrial peace and harmony.

The need to replace the Industrial Relations Ordinance-2002 (IRO-2002) is legitimate for it is a demand of millions of industrial workers. While the effort towards that change is in the right direction, the way it is being pursued through an interim bill would later pave the way for legal complications which are easily avoidable.

The elected representatives have a chance to come up with a piece of legislation which is efficient and enjoys the trust of all the parties concerned. But they appear to face the same pitfalls as their predecessor did. However, the following points should be considered in order to have a clear approach towards a new piece of legislation:

First ,if the IRO-2002 has to be discarded, the Industrial Relations Bill-2008 would become legally complex, giving rise to needless discussions, because it is not a new bill with fresh contents. Sensing the popular demand of restoring IRO-1969 and the need to evolve a more permanent piece of legislation in another two years time, legislators are using IRO-1969 as a base for new interim bill while not fully restoring it with a number of amendments. This approach would be unnecessarily a convoluted exercise giving rise to a lot of confusion. Why not simply add various amendments to the IRO-2002? It would be easier to amend the existing legislation with certain favourable features of the IRO-1969.

Second, after passing the interim bill based on IRO-1969 or IRO-2002, the judicial explanation and interpolation of various terminologies and case-laws have to be developed and new disputes to be settled all over again. This will go on while the clock will keep ticking for two years. Under the given circumstances, it is difficult to say when or whether at all this piece of legislation would get materialised.

Third, it is not clear whether the new interim bill would completely restore the IRO-1969. But if it is so, it will also revive a number of provisions which were obsolete even when the legislation was in force. Some of these are: definition of a workman (Sec 2), archaic structures like Workers Participation in Management and Joint Management Board (Sec 23-B and C), and provision of compensation in lieu of reinstatement in case of worker is aggrieved by his wrongful termination from service (Sec 46(5).

On the other hand, if the new interim bill would not fully restore the IRO-1969, rather new features would be added to it, obsolete sections would be removed and certain other sections like the forum of Labour Appellate Tribunal (Sec 38) to provide speedy justice would be revived. Between 2000-2002, the debate was going on the promulgation of new IRO which eventually became IRO-2002. It was suggested by all stakeholders, including this writer, to eliminate the additional legal forum of Labour Appellate Tribunal for speedy justice in case, other measures were to be adopted. Unfortunately, Appellate Tribunal was eliminated without adopting any of the recommended measures, nullifying all its benefits. Once again, Labour Appellate Tribunal forum is being revived for precisely the reason it was eliminated.

Fourth, The existing IRO has been in operation for the last seven years and whatever harm it caused to industrial peace and harmony has already been done. If it is allowed to operate for another two years, there will not be any harm on continuous basis. Nor there is any legal vacuum at the moment which must be filled with something else. All stakeholders have already suggested numerous amendments in it including the conclusions and recommendations of the ILOs committee on Freedom of Association.

All these amendments and recommendations once incorporated in the IRO, 2002 would eliminate almost all violations, complaints and sources of tension. Hence the easiest path for the legislators to follow is to amend the existing IRO-2002.

The judiciary has developed thousands of case-laws over the last seven years which are valuable assets. In future, negotiations can continue among all stakeholders until a new permanent piece of legislation is written.


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## Neo

*The fear of unemployment​*
IF 2008 can be described as a year of inflation, 2009 may turn out to be a year of unemployment unless the government gives up its habit of waiting for an issue to assume the proportion of a crisis, and re-energises the economy to nip the problem in the bud.

Even people not conversant with economics understand what it means when nan (bread) sells at Rs7-10, up from Rs3-5, in many parts of the country. It is not difficult to understand the impact of the hike in basic food items on the family budget of the segment of population that spends 60 per cent of its income on kitchen items. Currently, the average food inflation at 35 per cent is an all-time high.

While the citizenry is reeling under the pressure of inflation, the problem is being compounded by lay-offs and retrenchments or the fear of job loss in the days ahead.

There is no firmed up data available, but scattered information suggests that the slow down in the economy is now taking its toll on an already uncomfortable employment situation in almost all categories.

No consolidated figures of people pushed out of regular work over the last six months are available and the official figures put unemployment at 7.5 per cent in fiscal 2008. This rate is higher by one per cent over the previous year.

An informal survey by Dawn, however, reveals that the situation is alarming in many key sectors that include some star performers that dominated the economic horizon during Musharaf/Shaukat Aziz regime. There are reports that indicate that problem is brewing in financial sector, real estate business, media, supporting services in capital market, currency business, automobile, pharma and the ailing textile industry.

Javed, 27, joined a media group three years back as a member of supporting staff at a salary that far exceeded his expectations at that time. He was shunted out along with a few dozen others this month as media houses struggled to readjust to difficult times by cutting costs.

A few marketing executives in private media outfits confirmed that the flow of advertisement income has come down by at least 10 per cent in case of leading groups as compared to the last year. The situation is worse for smaller companies. There are unconfirmed reports that at least two TV channels have been closed down and a few others are seeking mergers and sell-offs.

The advertisement budget is the first to come under axe in situations of distress and the last one to increase when a business is booming, said a frustrated marketing professional. If business shrinks, the employment-base in an organisation also shrinks. It hardly comes as surprise to me if media groups are trimming to become leaner. I expect many more lay-offs from media organisations across the board if the current economic environment persists, a corporate head responded from his office in Lahore.

The financial sector, currency, capital and real estate markets are all depressed. The mutual funds and asset management firms are involved in an exercise to contain their losses. The situation is worse for currency dealers who reportedly have fired a sizeable number of their staff. The real estate and capital market have an all-time low turnovers for the last few months driving small time brokers out of the rings.

Car sales during July-September have come down by 40-50 per cent for many companies. The situation has impacted adversely on the car vendors, who have responded by cutting on their staff in Karachi and some cities in Punjab.

I used to make a decent salary a year back. There was more work than the company could handle in the market. The overtime used to supplement my regular salary. The situation has changed drastically over the last one year as orders from major companies have declined. First, overtime was stopped, then contractual workers were shown the door, now the jobs of even regular workers are at risk, said Tauqeer, father of five school-going children, an experienced automobile expert engaged in the automobile vendor sector.

The drastic drop in sale of cars and motorcycles has led to closure of some auto vendors while others are struggling to keep afloat with fewer workers, said owner of a small workshop.

In banking, there are no reports of noticeable retrenchment but the mood is understandably grim. The trend of poaching and jumping jobs in an upbeat sector has disappeared and people are worried for their future. The process of mergers and acquisition, now taking place, entails human cost. Some people are shunted out, said a senior banker watching developments from close quarters.

There are some reports of closure of 50 per cent of textile ginning units in Faisalabad and to a lesser extent, in some other cities. Dilshad, an experienced housemaid, said that her family paid an agent Rs75,000 to arrange placement for her son-in-law in the Middle East. For the last eight months Javed has not been able to find a regular job. You cannot let young men wander around and become useless. When my daughter got married, he was working in a garment factory but the factory closed down and he was rendered jobless eight months back she said.

Three major multinational pharmaceutical companies - MSD, Orgenon and BMS - have left and half a dozen are rumoured to be in the process of winding up their operations. There is anxiety in workers over terms of employment and great concern over their future in the industry. Some trading companies also confirmed that many firms are troubled as increase in customs duties has led to reduction in demand of imports in certain categories.

Are there some inherent anti-workers biases in corporates that induce them to retrench them at the first opportunity, a local tycoon was asked?

Not at all, retrenchment of workers is a very difficult decision for any entrepreneur and is taken when it becomes unavoidable. We do not run welfare trust. I can only hire if there is need. Besides, we cannot cut on fixed cost, so cost on variables has to be rationalised when a business comes under stress, said a business executive in Karachi. Syed Khursheed Shah, federal minister for labour and manpower and overseas Pakistanis, was not available for comments. Malik Asif Hayat, secretary labour and manpower, however, was not too worried as he expected mild impact of the global economic upheaval on the domestic economy. He said textile sector was almost unaffected that employs the highest number of workers.

He dismissed the view that unemployment would assume serious proportion in the near future; besides, he felt, that the elected government was alive to the problems facing the country. The governments economic revival package will be announced shortly. It concentrates on pumping huge sums of money into the economy through massive public sector development programmes (PSDP). It will take care of many problems being faced by the economy, he said confidently.


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## Neo

*'Expo-Pakistan 2008' starts today​* 
KARACHI (October 27 2008): The country's largest trade show, 'Expo-Pakistan 2008', which is expected to receive around 500 foreign visitors and expatriates amid an airtight security, is being held from October 27 to 30 at Karachi Expo-Centre. The Trade Development Authority of Pakistan (TDAP) is the official organiser of the show, which will be inaugurated by Federal Defence Minister Ahmed Mukhtar.

He will also hold a press conference. Although, there will be no seminars or workshops during the event, the participating companies will sign MoUs. Rafeo Shah, Director Expo-Pakistan, TDAP, told Business Recorder on Saturday that the government has done the spadework for watertight security for the event.

He said that assistance has been sought from police, rangers and Sindh home department to provide maximum security. "The government has taken maximum precautionary measures to ensure sound security to the participants of the show. "Participants are also visiting from Britain and the US," he added.

Asim Siddiqui, Chief Executive Officer of Pegasus Consultancy, event manager, said that intelligence and law enforcing agencies would be responsible for security. He said that about 500 visitors including European, South and North American, Middle and Far East have confirmed their participation.

"The major countries are UK, Spain, France, Japan, Arab countries, China, Brazil, Mexico, US, Bangladesh, Sri Lanka and Morocco are taking part besides the expatriates. Bangladesh will represent the largest delegation in the event," he said.

Over 400 exhibitors will displays their products including textile garments, sports, surgical instruments and food items, he said, adding that three foreign exhibitors - two from Sri Lanka and one from Poland--will also display products. Over 650 stalls are being set up, while many interested parties are on the waiting list.

TDAP has given maximum concessions on stall bookings to participants from far-flung and underdeveloped areas of the country including Azad Kashmir and interior parts of all provinces to increase the volume of country's exports.


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## Neo

*UK businessmen keen to invest in Pakistan: Sindh chief minister informed​*
KARACHI (October 27 2008): Pakistan High Commissioner in Britain, Wajid Shamsul Hassan, called on Sindh Chief Minister, Syed Qaim Ali Shah, here at the Chief Minister House on Sunday.

They remained together for sometime and discussed matters of mutual interests. Wajid Shamsul Hassan informed Syed Qaim Ali Shah that with the people's government coming to power in Pakistan, our ties with Britain have strengthened further. He also informed the Sindh chief minister about the interest of the British businessmen regarding investment in Pakistan.

Qaim Ali Shah on the occasion apprised Wajid Shamsul Hassan of the projects that have been initiated in the light of the manifesto given by Shaheed Mohtarma Benazir Bhutto. He also informed that the government has started Shaheed Benazir Bhutto Youth Development Programme whereby over 40,000 youth will be imparted technical training and in the meantime they will be given stipend in the range of Rs 4,000 to Rs 10,000.


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## Neo

*Reduction in load shedding from November 1: Pepco​* 
LAHORE (October 27 2008): Pakistan Electric Power Company (Pepco) will reduce the daily load shedding by six hours from 1st November, Pepco General Manager Tahir Basharat Cheema told Business Recorder here on Sunday. He said that ongoing 10 to 12 hours daily load shedding will be considerably reduced to pre-Ramazan level during the next four days.

He said, "On the orders of President Asif Ali Zardari, gas companies have assured Pepco of supply of 90 MMCFD gas for its power plants. Besides, he said, Pepco will have additional hydel power due to increased outflows from Mangla dam from 8,000 to 25,000 cusecs and thermal power Muzaffargarh power stations will also start operating soon.

Talking about the basic reason for the severe load shedding in the country, he said that four independent power producers (IPPs), Hubco Power Plant (300MW), AES Power Plant (350MW), Uch Power Plant (510MW), Fauji Kabirwala Power Plant (75MW) were closed for annual maintenance and Pepco had to face 1,235MW power shortfall because of closure of these IPPs.

"The total availability of power, at present, is 9,500 MW against the demand of 14,500 MW which caused a short fall of 5,000 MW in supply and demand" he elaborated.

He said when the IPPs start production of 1,235 MW electricity in a couple of days the Pepco would be able to further reduce the duration of load management to the pre-Ramazan level from November 01, 2008. He said that in this regard, help of customers was sought for conservation of energy, which could result in reduction of demand leading to further reduction of power outages. He said that conservation was considered as a very important factor, as this would create an enabling atmosphere till such time that new power plants join in, whereby power deficits and ensuing load shedding would be banished by the end of 2009.

He said that the new power generation facilities would comprise of rental plants, IPPs, small hydel stations in the public sector, two combined cycle high efficiency power plants again in the public sector, fast track PPIB sponsored generation and wind power arranged by the AEDB. All these plants would be operational during the period 2008-10.

He said that 20.5 million customers of Pepco had been facilitated by the government to pay only 60 percent of their revised tariff bills from Monday without any late payment surcharge.

"In order that the customers do not face any problems, the field officers of the distribution companies would personally visit the banks to facilitate the customers" he added. He said that when the government takes a decision on the recommendations of the committee headed by Federal Minister for Water & Power Raja Pervez Ashraf, necessary adjustments would be made in the electricity bills receivable during the next month.


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## Neo

*Acceptance of reality​*
EDITORIAL (October 27 2008): It seems that Pakistan is limping towards Plan C after getting a disheartening response from the IFIs and friendly countries for its Plan A and Plan B for balance of payments support. Under Plan A, it may be recalled, the government was looking for 1.5 billion dollars from the World Bank, 1.6 billion dollars from the ADB, 500 million dollars from the IDB and 1.5 billion dollars from increase in workers' remittances.

This amount was in excess of the financing gap estimated to be around 4.5 billion dollars during 2008-09. Plan B stipulated financial support from Friends of Pakistan with a meeting scheduled for next month, while Plan C comprises an approach and negotiations with the IMF for an Emergency Financing Mechanism. Briefing the media on the options for a bailout package on 23rd October, Advisor to Prime Minister on Finance Shaukat Tarin insisted that, 'Friends of Pakistan' had good intentions, and were ready to help the country but the country was running out of time which was of great essence.

Also, Friends were worried about their own economies due to the global financial crisis. The real problem is that "the government cannot wait for more than 30 days to get cash assistance from multilateral lenders and friendly governments merely to avoid recourse to the International Monetary Fund." Pakistan had not yet "formally" asked for a facility from the IMF. However, a request will be made when the government believes that it cannot get enough money under Plans A or B. The Advisor revealed that the State Bank Governor and the Finance Secretary had already left for Dubai to discuss a "home grown" economic stabilisation programme with the Fund representatives.

This, according to him, was being done under Plan C to prepare the ground "in advance" for exercising all options. The IMF programme could be for 24 months and may require Pakistan to bring down its fiscal deficit substantially, curtail expenditure, maintain a flexible exchange rate and embark on a long-term policy to sustain growth.

Commenting on a report, attributed to the IMF Managing Director, that Pakistani authorities had requested discussions with the Fund on a financial assistance programme to meet balance of payments difficulties, Tarin said that senior Pakistani officials were meeting the IMF staff in Dubai for Article IV consultations to review the economy. The ongoing meetings, however, would pave the way for assistance in case Pakistan was unable to get the necessary funds from multilateral donors and Friends of Pakistan.

While Tarin sounded as if he was still weighing his options yet it is not difficult to read the writing on the wall and guess the way the scales are now tipped.

The government, for all practical purposes, seems to have lost the hope that friendly countries and certain multilateral institutions will open their coffers and come to our rescue to finance a huge gap in our external sector to avoid default on payments. Belatedly perhaps, it has realised that IFIs, like the World Bank, do not feel confident in lending to a country that does not have a proper understanding with the Fund and its seal of approval for the proposed policies.

While friendly countries have their own problems and are not inclined to be generous to countries likely to knock at their doors time and again without putting their house in order. Anyhow, the realisation on the part of the government that the people of the country need to be prepared for cohabitation with a fund programme with all its conditions is indeed a welcome sign of its pragmatism and needs to be appreciated in national interest. How long can we continue to be in a state of denial and look the other way when foreign exchange reserves left with the State Bank are likely to last for not more than two months and other sources of funding are far from certain?

The IMF programme, apart from providing adequate level of resources, would also ensure that the government is obliged to follow the principles of sound macroeconomic management, enabling the country to attain a sustainable position, particularly in its external sector, in the medium term.

Of course, a member country goes to the IMF when its economy is ailing and it is prepared to swallow the bitter medicine to become healthy. Obviously, such a bitter medicine has to be taken even if the country does not choose to go to the Fund. From hindsight, it would appear that Pakistan could have escaped the present traumatic conditions if it had managed the economy well during the last few years and utilised the available foreign exchange resources in an optimum fashion.

Of course, such a huge jump in international oil prices was unexpected but this could have been taken care of at the appropriate time by restrictive policies aimed at keeping the current account deficit within manageable level. The main thrust of the IMF conditions is not difficult to contemplate. In return for providing balance of payments assistance and cushioning the foreign exchange reserve position of the country, the Fund would ask for strict fiscal discipline, narrowing the current account deficit, tightening of monetary stance keeping in view the inflation rate, flexibility of exchange rate etc.

Seen closely, this is the only strategy which can plug the haemorrhage in the foreign sector, improve foreign reserve position of the country, reduce inflationary impulses in the economy and put back the country on a sustainable path of development. While the substance and the content of the measures, or their inevitability are understandable, there is however, a need for our economic managers to insist on some kind of safety net for the poor, during the programme period, so that they are not deprived of the basic necessities of life.

Be that as it may, we feel that it was a good strategy on the part of Tarin to let the country know in a subtle way that Plans A or B were (in fact they were non-starters) almost unworkable and the only option left with the authorities was to go to the IMF at this critical juncture. It is better to accept the reality that extraordinary steps are taken to get out of a very difficult situation. It is no use pretending that the country can somehow muddle through without taking unpopular decisions.

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## Neo

*India would be a big trade market for Pakistan in future, says Mukhtar ​*
KARACHI: Urging Pakistani traders not to fear enhancing trade with India, Federal Minister for Trade and Defence Minister Chaudhary Ahmed Mukhtar has predicted that India would become a big market for Pakistani products in future. 

Addressing a press conference here after inaugurating Expo Pakistan 2008 here on Monday, the Trade and Defence Minister said that obstacles in the way of trade with other countries are being removed and the responsibility also lies on traders to play their role in the promotion of trade. 

He said that Pakistan can achieve big success by increasing trade volume with countries in which it (Pakistan) has less trade. 

Ahmed Mukhtar underlined that besides worsening law and order situation in FATA and other areas, the process of investment is not affected in the country and the large number of participants in Expo 2008 is a proof it. 

The situation in Pakistan is not so grim which is being projected and the participation of foreign observers in Expo reflect this, adding that 15 delegations of the United States, 12 from Japan and 10 delegations of Britain are being participated in the Expo. 

He said that as much as 225 foreign observers participated in the Expo on the first day while more than 100 observers would reach Pakistan in the second day to participate in Expo, adding the participation of foreign observers in Expo would improve Pakistans positive image in comity of nations. 

Chaudhary Ahmed Mukhtar further stated that 20 percent target of exports has been achieved in first three months of current fiscal year and the target of $22 billion would be achieved besides current electricity crisis and increased production cost. The targets set for exports would not be affected besides electricity crises, added by the minister. 

He informed that the investment of $350 million would be started in earthquake affected areas and tribal areas within two to three months. 

Talking on prevailing electricity crisis in the country, the Minister said that no doubt the country is facing the crisis but efforts are underway to solve that issue and expressed with confidence that the electricity system would be improved in the next month. 

Speaking on devaluation of rupees, the minister stated that the value of rupees would be risen after flowing of funds form abroad. He said that after the implementation of the system of World Trade Organisation, there would be no need to sign Free Trade Agreement with any other country, adding Pakistan has signed FTA with China and Sri Lanka.


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## asaad-ul-islam

^^^"india would be a big trade market for Pakistan"
is that some sort of joke? did he forget that his beloved bhutto wiped out corporate Pakistan? what can we possibly trade with them besides cement? do we have any industry left, oh wait, we don't! that would spell an economic takeover of Pakistan. the hell is wrong with these people?


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## ejaz007

*Exports up over 16pc in Sept*
submitted 10 hours 17 minutes ago 


ISLAMABAD (APP) - Exports from Pakistan during September, were recorded at Rs.137,319 million as against Rs.117,685 million in August, last, showing an increase of 16.68 percent.

As against the same month of the last financial year, exports during the September 2008 increased by 52.55 percent. Exports were recorded at Rs.90,014 million during September, 2007, according to provisional figures released by Federal Board of Revenue.

Exports during July-September, 2008 totalled Rs.389,507 million as against Rs.267,520 million during the corresponding period of last year showing an increase of 45.60 percent.

Main commodities of exports during September, 2008 were Cotton cloth (Rs.14,166 million), Knitwear (Rs.13,190 million), Bedwear (Rs.12,451 million), Rice basmati (Rs.8,078 million), Cotton yarn (Rs.7,922 million), Readymade garments (Rs.7,713 million), Rice others (Rs.6,168 million) Art, silk & synthetic textile (Rs.5,514 million), Petroleum products (excl Top Naphta) (Rs.4,989 million) and Towels (Rs.4,743 million).

On the other hand, the imports during the month under review grew by 14.22 percent as against August 2008.

The imports during September 2008 amounted to Rs.293,760 million as against Rs.257,186 million in August, 2008.

As against the imports of Rs.165,835 million during September, the imports during the month under review showed an increase of 77.14 percent.

Imports during July-September, 2008 totalled Rs.801,532 million (provisional) as against Rs.487,547 million during the corresponding period of last year showing an increase of 64.40 percent.

Main commodities of imports during September, 2008 were Petroleum products (Rs.51,141 million), Petroleum crude (Rs.50,653 million), Wheat unmilled (Rs.17,385 million) Palm oil (Rs.12,965 million), Power generating machinery (Rs.10,984 million), Fertilizer manufactured (Rs.9,227 million), Plastic materials (Rs.8,746 million), Electrical machinery and apparatus (Rs.6,952 million), Iron & steel (Rs.6,168 million) and Other Apparatus (Telecom) ( Rs.5,314 million).

Meanwhile, Pakistan during the current fiscal year will export rice valued $3 billion.


Exports up over 16pc in Sept | Pakistan | News | Newspaper | Daily | English | Online


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## pkpatriotic

*Moodys cuts Pakistan rating to B3 from B2*
*Tuesday, October 28, 2008*

*LONDON: International rating agency, Moodys International has cut down Pakistan Bonds rating to B3 from B2.*

International rating agency, Moodys Internationals analyst, Aninda Mitra said that the persistently depleting foreign reserves, deficit in balance of payments and failing to arrange immediate assistance from the global monetary organizations were the basic reasons of the downgrading of Pakistans credit rating. *He said that the suspense in IMF loans also negatively impacted Pakistans rating.*

*The analysts further said that Pakistan economy facing threats from the global recession too, while the country would also have to take measures for the recovery of its export proceeds in a bid to enhance its foreign exchange reserves. It may be recalled that Moodys in September also had changed Pakistans outlook from stable to negative.*


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## Neo

*Tarin hopes IMF will endorse Pak proposals for assistance ​* 
Tuesday, October 28, 2008

LAHORE: Advisor to Prime Minister for Finance, Shakuat Tarin Monday hoped that the International Monetary Fund (IMF) will endorse Pakistans proposals for seeking its financial assistances. 

We have decided to reduced fiscal deficit, keep flexible exchange rates and net zero borrowing from the central bank, he said while talking to reporters after meeting the Punjabs industrialists and traders here at Punjab Planning & Development Board building. Punjab minister for finance Tanveer Ashraf Kaira, who plays vital role to bridge the gap between the federal government and Punjabs business community was also present on this occasion. 

Tarin said that the government has decided to increase Tax to GDP ratio to 15 per cent. We principally have decided run Public Sector Development Programme (PSDP) on Public-Private partnership concept, he said. 

However, Tarin did not reply to the query that if the IMF will not endorse Pakistans proposal will the government still ask for financial assistance. 

Earlier, chairing the meeting, Tarin said that the biggest target of the government was to bring down the inflation to 5 per cent in six to nine months. He claimed that the core inflation is standing at 17 to 17.5 per cent. He was of the view that the food inflation and energy inflation had registered a declining trend globally and the impact will also be witnessed in Pakistan soon. 

Once the core inflation comes down to single digit, the banks will also lower their mark-up rates in single digit and run behind the people to take loans, he opined. 

Criticising previous government policies, he said that during the last eight years the growth was maintained by adopting consumption based policies. Resultantly, the manufacturing and agriculture sector growth declined and now the bubble of consumption based growth have burst and every segment of society is in trouble, he remarked.

Tarin also openly mentioned to change the tax regime in the country as well as restructuring of Federal Board of Revenue. He pointed out that there should not be more then two taxes in country namely Income Tax and Value Added Tax (VAT).

He was of the view that the turnover tax, withholding tax and other tax regimes do not see if taxpayer is in a position of paying tax or not.The government has made it clear to the FBR officers that it will not bear harassment of taxpayers, only those who are eligible must pay tax, he said.

The government will spread the tax net instead of imposing new taxes adding all grey areas out of tax net before will be brought into tax net.Talking about the restructuring plan of FBR, Tarin said that the private sector people would be directly inducted in FBR to make this department more effective and increase its transparency. The government is committed to change the mindset of FBR people as well as the business community to willingly pay taxes. Pointing out tariff structures of utilities, he said that it is impossible to understand complicated tariff structures of gas and electricity.

It is astonishing that there is different calculation of tariff for units of a similar product, he said adding that the government is working to bring a simplified tariff formula both in gas and electricity.

Single value of electricity unit and gas cubic feet charges across the board for every industry will be introduced, Tarin announced. The adviser said that the stakeholders would be consulted in formulating Trade Policy, Industrial Policy and other policymaking process. There would be no objections once policies are drafted with consultations. However, the government will keep the poor people in safety net to protect them.

Earlier, opening the meeting for discussion, Punjab Finance Minister Tanveer Ashraf Kaira said the government is firmly committed to resolve economic as well as every other crisis. He said that the government with the support of stakeholders is resolving the issues.

Tarin visits LCCI: Latter speaking at Lahore Chamber of Commerce and Industry, Tarin said that government would bring foreign investment in stock market. Discussing its agenda, he pointed out that the government will buy shares with Rs20 billion and latter market them in international market and bring foreign investment. The government step will boost the confidence of both local and foreign investors. Talking about stock market floor, he said Im against the floor in stock market.

Tarin assured the industrialists at Lahore chamber to bring down bank mark-up rate in single digit within 12 to 18 months. He said that Planning Commission is being strengthened and effective planning would be done in consultation with the stakeholders could be made. In the past, he said that short-term, mid-term and long-term plans were made but these were made in isolation that was the reason why the set objectives could not be achieved. Through these plans, no coherent strategy was evolved for the betterment of industry, he added. 

He floated the idea of formation of Resolution Trust Corporation (RTC) whose affairs must be regulated through the private sector people and the government would restrict on extending funds to it. He also said that the industrialists could take much benefit through Bond Market which must be introduced.

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## Neo

*Export target to be easily met: Mukhtar ​* 
Tuesday, October 28, 2008

KARACHI: Federal Minister of Commerce and Defence Ahmad Mukhtar has said that despite rising cost of production and electricity charges, the countrys exports would continue to grow and easily achieve the target of $22 billion as previous three months saw export growth of 20 per cent.

He said though the textile sector recorded a decline of 4 per cent, other sectors exports rose by 24 per cent, resulting in an average growth of 20 per cent since July 2008.

Formally inaugurating Expo Pakistan 2008 at the Karachi Expo Centre on Monday, Mukhtar informed the audience that Reconstruction Opportunity Zones (ROZ) would receive an investment of $350 million in the next two to three months.

He stressed that there had been no cut in Trade Development Authority of Pakistans (TDAP) expenditures and the government would continue to support its efforts to promote exports. He especially threw light on the expanding role of small and medium enterprises in the countrys progress and said they should be encouraged so that they could expand their businesses abroad.

The minister said the government was exploring untapped markets for Pakistani products, particularly textile goods, adding adoption of WTO protocols would eliminate trade barriers and free trade agreements (FTAs) would no longer be required.

He was of the view that disturbance in tribal areas had not affected incoming investments in any way and in fact India would prove to be a potential market for Pakistani products in the years to come and therefore businessmen should concentrate on that sector.

He added the government was working on removing trade barriers with India which should help enhance trade with it. Mukhtar also said that foreign delegates, who participated in Expo Pakistan, would help improve Pakistans image across the world.

He suggested that exhibitions like Expo Pakistan should become a regular affair and all efforts must be made to ensure that they were held strictly on schedule to facilitate international delegates.

He said that attendance of over 600 international buyers from 55 countries, despite trade advisories from some countries, was testament to the peaceful and secure environment of Pakistan in general and Karachi city in particular.

Mukhtar was hopeful that the exhibition would end up attracting more than 1,000 international buyers and clarified that most of the buyers had come on self-finance basis.

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## Neo

*We will solve the financial crisis of Pakistan ​* 
Tuesday, October 28, 2008

ISLAMABAD: German Deputy Chancellor and Foreign Minister Dr Frank-Walter Steinmeier has said that Germany is committed to solving the economic and financial crisis faced by Pakistan, and long-term friends of Pakistan, like Germany, would like to make a concerted contribution to the countrys economic and political stabilisation.

In an exclusive interview to The News, the German foreign minister also said militancy in Pakistan could be reduced by providing jobs to uneducated youth of the troubled areas. You will not stop al-Qaeda by drilling a well, but you might help reduce militant opposition if you provide job prospects to the young and uneducated in the border region between Afghanistan and Pakistan, he said.

The foreign minister is visiting Pakistan with a big delegation of economic experts and businessmen. He will meet President Asif Ali Zardari and Shah Mehmud Qureshi in Islamabad on Tuesday and some important announcements are expected.

Following is the transcript of his interview:

Q: What brings you to Pakistan, Sir?

FM: My country has an interest in Pakistans stabilisation and sustainable development. The situation in Pakistan at the moment is not easy. Germany would like to assist the Pakistanis and the newly elected democratic government during this difficult time. We would like to help solve the short-term problems Pakistan is facing, namely security threats due to terrorism and violence, and the economic and financial crisis the country finds itself in. Long-term, in the interest of Pakistan, we would like to contribute to strengthening the rule of law, human rights and civil society as a whole.

Q: Germany is a member of the new group of Friends of a Democratic Pakistan ñ what role does this group has to play in the coming days?

FM: I personally worked to help establish this group of long-term friends. Its establishment sends a sincere message to Pakistan that the international community would like to make a concerted contribution to the countrys economic and political stabilisation. But the Group of Friends will not be an all-purpose tool. The major international finance organisations such as the Asian Development Bank, the World Bank and not least the International Monetary Fund have a decisive role to play here. The Group of Friends also looks to the region. That is why it is especially important that, for instance, a number of Gulf states are members of the Group. The Gulf region has a special responsibility here. I will also be visiting that region on this trip.

Q: The first Bonn Conference on Afghanistan in 2001 announced several goals for stabilising Afghanistan, do you see any progress for the achievement of those goals in Afghanistan in the last 6 years?

FM: In Bonn, we launched the largest reconstruction campaign the international community has undertaken since the end of the Second World War. Even if we havent yet achieved all of our goals, we have made a lot of progress over the last six years. Here Im talking about roads and health care, about education and job opportunities for young people. Im also talking about Afghans having a say through parliament. Finally, the country can begin to regain hope for the future. We all need to work together to achieve this. The vast majority of Afghans know that occupation is not what we have in mind! We will only maintain a military presence in the country until the Afghans are again able to assume full responsibility for their security.

Q: Being prominently involved in Afghanistan, do you agree with some experts that it is now time to talk to the Taliban in Afghanistan because the west cannot win against the Taliban by military means? What is your reaction to some reports regarding indirect talks between the Karzai administration and the Taliban in Saudi Arabia?

I would caution against interpreting readiness to enter into a dialogue as a sign of weakness! On the basis of the Afghan constitution, talks with forces that are prepared to forego violence and terror can well be part of an intra-Afghan reconciliation process. Bearing in mind past experiences and knowledge of the Talibans close contacts to al-Qaeda, one might be less than optimistic, but in the end the responsibility lies with the Afghan government. What is important to me is that the successes of reconstruction are not jeopardised by such talks. I share this view with the United Nations and am thankful that the Afghan government has also taken this position.

Q: During the G-8 presidency last year, you launched a G-8 initiative to promote cooperation between Afghanistan and Pakistan. Where does that stand?

This is what I am asking my Pakistan and Afghan friends! Pak-Afghan cooperation cannot be engineered from outside or forced upon from abroad. It depends on the willingness of both Pakistanis and Afghans to take on a sense of ownership for a common future. We can only provide assistance. Beginning with our G-8 meeting in Potsdam, near Berlin, last year, the G-8 has proposed more than 150 projects to promote better bilateral cooperation, from student exchanges to border controls. One of the aims of my visit is to discuss how we can also strengthen the political and regional dimension of the initiative. I welcome the fact that both President Karzai and President Zardari have recently made it clear that increased bilateral cooperation is not only desirable, but absolutely crucial. Im counting on both sides to intensify their bilateral cooperationGermany and the G-8 as a whole stand ready to assist.

Q: Will you support any talks by the Pakistan government with the militants in Fata?

This is, first of all, a decision for the Pakistani government to take. The situation is complex, and it is not my governments place to advise our Pakistani friends on such an issue. But we welcome the clear words by President Zardari and both houses of Pakistan parliament in this regard. However, government decisions are only one side of the coin. Im under the impression that the population in Pakistan is tired of militants, whether foreign or local. And only if the government and local populations work together will the militants learn that they are not welcome in Pakistan.

Q: What are the major achievements in the war against terror? Is the west winning the war against terrorism since Sept 11, 2001 in Iraq and Afghanistan?
 
I am not a friend of this wording because it suggests that terror can be defeated by military means alone. It is clear that Germany and its partners have a common interest in protecting themselves from the threat of international terrorism. But we shouldnt simplify things: there are numerous threats that require careful strategies. You will not stop al-Qaeda by drilling a well, but you might help reduce militant opposition if you provide job prospects to the young and uneducated in the border region between Afghanistan and Pakistan.

Q: Dont you think that the presence of foreign troops in Iraq and Afghanistan has increased misunderstandings between ordinary Muslims and the west?

We are not naÔve. Foreign troops are not welcomed by all parts of the population. But the vast majority of Afghans support the security assistance provided by the west. They understand that it is not occupation we strive for, but rather a self-sustaining Afghan security sector that would make a foreign presence superfluous and allow peaceful development. And let me underline that we have never defined the issue at stake here as a problem between Muslims and the west. We oppose militant extremism, not Islam. Terrorism is immoralno matter what apparently divine will it claims to serve! Terrorism diminishes development perspectives for all. I know that we share this view with Pakistan and the millions of the Pakistanis looking for a better future.

Q: How do you assess the bilateral relations between Germany and Pakistan? Where will we stand when you come back next time?

We are on a promising path! What most people think of first are business relations and political dialogue. And rightly so, as Germany is Pakistans most important EU trading partner and considering that the number of Pakistani exhibitors at German trade fairs is steadily increasing. The experience we have had with MACRO is also a success: MACRO has recently opened two wholesale centres in Lahore and Islamabad and is planning to open several more across Pakistan. I hope that other German companies will follow this example.

Going beyond business, few people know that Germans also have a strong interest in Asias cultural heritage. For example, one of the most prestigious museums in Germanythe Bundeskunsthalle in Bonnwill host an exhibition on Gandhara Art in November. And the German cultural presence in Pakistan has been greatly expanded recentlywe have established institutions such as the Goethe-Institute in Karachi or the Annemarie Schimmel House in Lahore. Education is also of particular value to us. We are establishing a worldwide network of schools that offer German as a foreign language, including schools in Pakistan. Currently, more than 100 students from Pakistan start or continue higher education studies at German universities every year. We wish to expand this further. And finally, plans to open a German-Pakistan Technical University in Lahore are well under way. So I hope the fruits of all of these efforts will be evident upon my next visit.


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## Neo

* Shahbaz vows to make Pakistan self-sufficient in wheat ​* 
Tuesday, October 28, 2008

RAWALPINDI: Punjab Chief Minister Mian Muhammad Shahbaz Sharif has said that they will again make Pakistan self-sufficient in wheat production.

Despite all hurdles, we will Inshallah achieve the production target of 20 million tons of wheat through hard work, the chief minister said. He said that in order to increase the agriculture production, the government would utilise all the available resources.

Shahbaz announced that hundred tractors would be provided free of cost to the farmers of that division who will produce more wheat in the Punjab. Similarly, 75 tractors would be provided to the farmers of the division remaining at second, while 50 tractors to the farmers of that division remaining on the third position through ballot.

He was addressing a public meeting after inaugurating the Kisan Mela in Chakwal. Federal Food and Agriculture Minister Ch Nazar Muhammad Gondal, Provincial Agriculture Minister Ahmad Ali Aulakh and MNA Ch. Ayyaz Mir also addressed the gathering. Besides others, President PML-N, Sindh and former chief minister Sindh Syed Ghaus Ali Shah, and other office-bearers and workers of the party and the PPP were also present on the occasion.

The chief minister said that as a pilot project, hundred tube wells, which run through solar energy, would be installed in three divisions producing more wheat. He said that the increase in the support price of wheat was a laudable decision which would have positive impact on wheat production. The provision of quality seeds, fertilizers and water is vital for increasing per acre yield, he added. Earlier, Federal Food and Agriculture Minister Ch Nazar Muhammad Gondal said that we they had increased the support price for ensuring due returns of wheat to farmers.

Gondal said the Punjab government had proved people-friendly with its Food Support Programme of 22 billion rupees. Similarly, the federal government has also started a programme under which Rs 1,000 per month are being given to the poor families through Benazir Cards, he added. 

He said the federal government would also provide Awami Tractors to farmers at subsidised rates. The minister said that he saluted Shahbaz Sharif for ensuring the provision of quality seeds and tractors to farmers.


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## Neo

*Germany says will help Pakistan strike IMF deal​* 
ISLAMABAD (October 28, 2008): Germany said on Tuesday it would help Pakistan in negotiating a deal with the International Monetary Fund (IMF) and hoped an agreement could be reached soon to help Pakistan out of its economic difficulties.

Pakistan is facing a balance-of-payments crisis and has just a few weeks to raise billions of dollars in foreign loans needed to meet debt payments and pay for imports.

Islamabad's 7-month-old government, running Pakistan after more than eight years under former army chief Pervez Musharraf, has been reluctant to go to the IMF and has been looking for help from friendly governments.

But little assistance has materialised.

Visiting German Foreign Minister Frank-Walter Steinmeier held talks on Tuesday with President Asif Ali Zardari and Foreign Minister Shah Mehmood Qureshi and said both had told him Pakistan would not be able to move ahead without IMF involvement.

Steinmeier said an agreement on help for Pakistan was needed within days.

"I hope the decision will be taken soon. It won't help to have it in six months, or six weeks. Rather, we need it in the coming six days," Steinmeier said at a joint news conference with his Pakistani counterpart.

With donors caught up with their own problems brought on by the global financial crisis, they would apparently prefer to wait for IMF involvement which would bring discipline by attaching conditions and targets, analysts say.

Pakistan has yet to formally ask the IMF for a facility but an IMF spokesman said on Friday talks going on in Dubai between the fund and Pakistani officials would enable the fund to respond swiftly should a request be made.

Steinmeier said Germany was ready to help.

"We will support your country in the negotiations with the IMF," he said.

"FRIENDS" SEEN WAITING 

Steinmeier, who will be travelling to Saudi Arabia and the United Arab Emirates later this week, has said he wants to use his trip to prepare a meeting of the "Friends of Pakistan" group in Abu Dhabi next month.

The group, launched on the sidelines of the UN General Assembly in New York last month, includes the United States, the European Union, the UAE, the United Nations and China.

Analysts say group members expect Pakistan to come to a deal with the IMF before they will make concrete offers.

Steinmeier signalled a similar stance on Tuesday, when he was quoted as telling local a daily the Friends group could be no "all-purpose tool".

Steinmeier told the news conference Germany would be ready to step up development assistance to Pakistan but he declined to give a figure.

Steinmeier also said he hoped a meeting of political and tribal leaders from Afghanistan and Pakistan would calm tension on the border between the uneasy neighbours.

Surging violence in Afghanistan has strained ties between the Western allies, with Afghanistan complaining Pakistan has not done enough to stop Taliban infiltrating from sanctuaries in its northwestern ethnic Pashtun lands.

The leaders, meeting in Islamabad, are due to wind up two days of talks on ways to end the violence later on Tuesday.

"We hope that this process is going to be continued because we hope that this process will help in calming the situation at the border," Steinmeier said.

Germany has about 3,500 soldiers in Afghanistan.

The German parliament voted this month to extend Germany's participation in a Nato peacekeeping mission there and to increase the number of troops it can send to 4,500, despite public misgivings about the mission.


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## Neo

*Pakistan resisting IMF's insistence on 3.5 percent hike in SBP discount rate ​* 
ISLAMABAD (October 28 2008): The talks between Pakistan and the International Monetary Fund (IMF) to build up country's foreign exchange reserves with a clear objective to enable it avoid default are expected to conclude in Dubai, UAE, on Wednesday. While an agreement on most of the performance, as well as indicative, criteria, has reportedly been reached one thorny issue is still needs to be settled - the Fund insistence that policy rate by the State Bank of Pakistan is raised further.

-- Agreement on containing fiscal deficit for fiscal year 2009 at 3.9 percent of GDP.

-- IMF prescription would push over 5 million more people under the poverty line and render 1.5 million jobless.

According to informed sources in corridors of power, the Fund staff is insisting on a 3.5 percent hike in the SBP discount rate which, at present, is 13 percent. Six months KIBOR is around 14.7 percent and most corporates are already paying interest in the range of 16 to 17.5 percent.

Pakistani negotiators while agreeing to a partial increase have produced empirical evidence of industrial slowdown resulting in the erosion of corporate profitability and therefore an adverse impact on tax collection. According to the module - IMF's prescription would push over 5 million more people under the poverty line (ie falling below $1 a day) and render 1.5 million jobless.

Due to an abnormal rise in oil prices and mismanagement in administered prices of food, the year-on-year inflation has nearly doubled from 16 percent in February 2008 to 30 percent in November. The period average for July to September is 32.6 percent.

The non-food, non-energy inflation is half of this, ie, 16.1 percent. This is basically due to high government borrowing from SBP. This is inflation financing by the government and Fund wants to bring this borrowing under control. Pakistan is reportedly asking for a pause in further hike in SBP discount rate.

The Fund wants further tightening and wants the Budget deficit is reduced from 4.7 to 3.5 percent. According to informed sources, the two sides have agreed to contain the fiscal deficit at 3.9 percent of GDP for FY-09. It was also learnt that the recent government decision to restrict the electricity tariff hike and allow consumers to pay 60 percent of the bill for month of September was frowned upon by the Fund staffers.

However, the Pakistan side reportedly convinced the Fund that the hike would substantially reduce the government subsidy. With oil prices coming down, the government will have more space to fully eliminate the subsidy like it has happened in the case of POL products.

In the stabilisation programme the Fund had presented tough conditionalities like cut in budget deficit, privatisation of government managed entities and liberalisation of markets. However, the stance taken by US and European authorities in the current crisis shows that the old IMF needs to diverge from its old script and agree to policy prescriptions that improve long-term sustainability without crippling the short term outlook.

Asking Pakistan to increase the lending rates looks rather odd at a time when the world is cutting them to counter a growth slowdown. Pakistani authorities hope that the Fund would soften the stand and avoid unacceptable political strings. Pakistan is banking on its friendly countries dominating the Fund Board for help in this regard.


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## Neo

*World Bank terminates talks on $300 million loan ​* 
ISLAMABAD (October 28 2008): The World Bank has terminated talks with Pakistan on $300 million Economic Stabilisation Program Loan meant for fiscal and balance of payment support. Both sides initiated parleys in fiscal year 2007-08 on the same loan with expected disbursement of $500 million, which was then reduced to $300 million. "That was the time when relations of Government of Pakistan and World Bank were much better and flows were coming smoothly.

But later a wrong portrayal of economic overview by Pakistani visiting team to Washington, angered the World Bank President", said sources. However, talks were still on till few months back when government was conveyed notice of termination of talk on this program loan.

"This project is no longer in the lending program. Further reporting will be discontinued", said a World Bank document. Pakistan had to take many measures to rectify macroeconomic imbalance like cutting subsidies. "Pakistan introduced such reforms but by that time World Bank was changing goal post and was adding more conditions than we discussed initially", said a Finance Ministry official.

But World Bank implicated IMF in this change of mind. "IMF had asked us not to give such loans, which is basically IMF's area of lending. But if government of Pakistan creates more pressure then we can also consider it", replied a World Bank official.

"Our otherwise annual disbursement could just be over $500 million, while total size of projects approved in a year could be crossing $1 billion" added the official. Remaining project aid depends upon quick policy implementation in the government, which is also lacking at this stage. Policy co-ordination is non-existent, said the official. This year the area of focus of WB lending is transport sector, water and sanitation, urban development, telecom, mineral and higher education.


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## Neo

*OGDCL to lose billions by giving Kunnar project to LPG group ​* 
ISLAMABAD (October 27 2008): The Oil and Gas Development Company Limited (OGDCL) has dumped 12 bidding companies, most of them foreign, by holding back its tender for development of Kunnar Passaki Deep project. Some of the aggrieved parties include Hyundai, ABB, Descon Presson, Etimad, Petrosin, and Speciality Processing.

The OGDCL, a public sector exploration and production company, had floated international press tender for development of Kunnar Passaki development project. Interested parties were asked to submit their tender documents by 1200 hours on April 30, 2008.

Since it was a field development project, 12 reputed foreign and local companies purchased the tender documents. Later on, date for submission of bids was extended to July 21, 2008. On July 19, 2008, the bidders were informed, through fax and e-mail messages, that the company had postponed the bid submission date and they would be informed further shortly. The bulletin No 12 dated July 19 turned out to be a shocking news for the bidders. Although the OGDCL had promised the bidders to come back to them soon but, in fact, it had an entirely different scheme: it had decided to undertake development of Kunnar Passaki field with LPG plant, instead of working on the original plan of development this field with LPG plant.

The project was held back in connivance with SSGC, which has full backing of a strong Lahore-based LPG mafia.

According to the new plan, OGDCL would provide gas to SSGC, and LPG mafia would install LPG plant on its pipeline. By doing so, OGDCL would lose billions of rupees, and provide advantage to the LPG mafia. Chanda field's case is available in OGDCL records for ready reference wherein OGDCL had made 250 million rupees as signature bonus for sale of LPG. This did not include the money that the company would get from the sale of gas at the rate of Rs 48,000 per ton per day. The case of Kunnar Passaki development project, and other three fields of OGDCL, is of more importance than Chanda field, since these fields have more gas and its quality is better. They will produce 400 barrels natural gas liquid (NGL) and approximately 670 tons LPG per day. .By giving this project of installing LPG plant to SSGC, which is acting on behalf of the Lahore-based LPG mafia, OGDCL would lose Rs 6.7 billion just as signature bonus, and its loss in terms of NGL gas would be over Rs 1.2 billion per annum.

On average, the life time of these three fields is 20 to 30 years. Total loss that OGDCL would incur over the years for signing the agreement with SSGC and, in fact, with the LPG mafia, for installing LPG plant would be approximately Rs 100 billion.

One can not understand why, instead of installing LPG plants itself, the OGDCL is happily ready to give the benefit of 100 billion rupees to the SSGC-led LPG mafia.

Another question that arises is about OGDCL's generous attitude towards SSGC. It is also surprising why one public sector company is involving another public sector company for development of LGP. Does SSGC plan to install and operate LGP plant to be set up at Kunnar Passaki itself? The answer is in negative. Many in OGDCL believe that SSGC was acting for a local LPG mafia in respect of Kunnar Passaki LPG plant project.

They also believe that SSGC is actually working on behalf of LPG mafia, and the plan of offering the field for development, without LPG, is a conspiracy against OGDCL. Successful 'handling' of Kunnar Passaki will encourage SSGC and its likeminded mafia to try to deprive OGDCL of LPG asset available at Bobi and Sangoro gas fields.

The Kunnur Passaki field development case is being presented to OGDC board on October 27 for approval. The board should ask OGDCL why it is not carrying on the development of Kunnar Passaki field with LPG plant, to add billions of rupees to its revenue annually? It should also question OGDCL management why it is planning to give its rightful benefit, of billions of rupee to SSGC and its influential LPG mafia.

It may be recalled that OGDCL's pervious board had refused to endorse the proposal of giving development work of Kunnar Passski field to the LPG mafia.


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## Neo

*Government asked to accord top priority to manpower export ​* 
ISLAMABAD (October 28 2008): President Asif Ali Zardari has asked the government to accord highest priority to manpower export, as the people working overseas are playing important role in economic growth of the country. Addressing a meeting here on Monday, President Zaradri said overseas Pakistanis were the second highest source of foreign exchange earnings for Pakistan after exports, he said, adding.

"We have to produce skilled workforce not only for our own industries, but also to export the manpower abroad." Minister for Labour and Manpower Syed Khursheed Ahmed Shah, Senator Muhammad Enver Baig and the Secretary, Labour and Manpower, attended the meeting. Saudi Ambassador in Pakistan Ali Awad Al Aseeri also attended the meeting on special invitation.

In his presentation, Syed Khursheed Ahmed Shah highlighted the problems and issues involved in the manpower export. Speaking on the occasion, the Saudi Ambassador said that the Kingdom valued skilled manpower export from Pakistan. The meeting discussed in detail the manpower export potential and the ways to increase it.


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*http://www.brecorder.com/index.php?id=826698&currPageNo=1&query=&search=&term=&supDate=​* 
MULTAN (October 28 2008): Federal Minister for Labour and Manpower Syed Khursheed Shah has said that the government was adopting effective measures including sending of one million skilled manpower abroad for enhancing foreign remittances from $4.5 billion to $6.5 billion next year.

Talking to the mediamen here on Monday he disclosed that one million skilled manpower would be sent abroad next year, some 550,000 above the target of 450,000 skilled people fixed for current year. He added that last year some 283,000 skilled persons were sent abroad for jobs.

Regarding previous government's plan of sending skilled persons abroad, he said there were some lacunae in the MoUs signed by the former government due to which the promoters failed to achieve the set targets. However, he said, talks are underway with US, Italy, Qatar and other countries, to where we are interested to send our skilled manpower with a view to improve their financial conditions and enhance foreign remittances to supplement the national economy.

He said that PPP-led government had so far regularised some 165,000 employees of PIA, CAA, Pakistan Steel and other departments. He said that employees who were fired during the past regimes were also being reinstated and efforts were made to create new job opportunities.

He said that it was good news for workers that Industrial Relations Ordinance (IRO) 2002 was being revised. He said that 15000 homes would be built for workers and promised that workers will get homes with ownership rights. He said that wedding-grant has been enhanced from Rs 50,000 to Rs 70,000 for workers' daughters and added that restriction of relief for only two daughters and condition of draw have also been abolished.

To a question about privatisation of Qadirpur Gas plant, he said that government would not take final decision on the matter without thoroughly considering all aspects of the issue. The minister informed that the government would arrange road shows in Saudi Arabia, UAE, Bahrain and Qatar before December 31 to export a quarter million skilled Pakistanis in the next two to three years.

The Minister said the government was making arrangements to put in place a job placement mechanism under National Vocational and Technical Education Commission (NAVTEC), which would make efforts to export skilled labour force. The labour force would complete its training at 1,300 vocational institutes across the country.

The Minister said that the government had brought major changes in the policy of the commission by focusing only on four major sectors rather than the 218 sectors identified by the previous regime. "We will focus upon developing skills of workers in agriculture and livestock, construction, information technology, telecom and services sectors," he said and added all-out efforts would be made to train at least 100,000 workers before June 30 next."


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*ADB emphasises increasing manufacturing sector's share of GDP to 21 percent​*
FAISALABAD (October 28 2008): Asian Development Bank has emphasised the need to promote manufacturing sector's share of GDP increased from 19percent in FY2008 to 21percent and high-value-added output's share of exports increased to at least 15percent by FY2012 in Pakistan.

According to update study and project reports of ADB, banking sector credit to private sector will also be expanded to 32percent of GDP by FY2012.

The top five most sophisticated manufacturing products were (i) fabrics, woven of continuous synthetic fibres; (ii) medical instruments and apparatus, excluding electro medical; (iii) other outdoor sports materials; (iv) fabrics, woven of discontinuous synthetic fibres; (v) stockings, knitted or crocheted, not elastic.

ADB study mentioned that the industrialisation and technological upgrading can not occur without increases in productive investments and capital formation in the proper sectors, especially since productive capacity and technology are embodied in capital goods. The growth diagnostics approach aims at identifying the binding constraints in the economy that prevent investment and growth in potentially productive and dynamic sectors of the economy and, ultimately, industrialisation.

Bottlenecks or constraints to investment and industrialisation in the productive sectors may involve general problems such as poor infrastructure, poor energy generation, bureaucratic impediments, difficulties and delays in setting up and undertaking entrepreneurial and innovative activities, as well as political/economic instabilities. But the binding constraints may also take the form of lack of economic incentives for investment and innovation/technological and scale improvements in dynamic sectors.

ADB study pointed out that the lack of incentives may be in the form of: "Industrialisation and technological upgrading cannot occur without increases in productive investments and capital formation in the proper sectors, especially since productive capacity and technology are embodied in capital goods. The growth diagnostics approach aims at identifying the binding constraints in the economy that prevent investment and growth in potentially productive and dynamic sectors of the economy and, ultimately, industrialisation".

Furthermore, ADB study mentioned that the bottlenecks or constraints to investment and industrialisation in the productive sectors may involve general problems such as poor infrastructure, poor energy generation, bureaucratic impediments, difficulties and delays in setting up and undertaking entrepreneurial and innovative activities, as well as political/economic instabilities.

But the binding constraints may also take the form of lack of economic incentives for investment and innovation/technological and scale improvements in dynamic sectors. The lack of incentives may be in the form of:

(i) lack of specific inputs (such as specialised infrastructure - eg, IT-related infrastructure for computer-dependent sectors) and institutional/legal structures to facilitate specific economic sectors (such as the lack of public institutions to cater to the specific technical and regulatory needs of, for example, medical diagnostics - eg, there should be institutions catering to the training, certification of good quality of the technicians and equipment, and legal institutions and procedures in case of charges of erroneous diagnoses).

(ii) lack of human capital and specialised skills needed for specific sectors (eg, the lack of qualified engineers or software experts due to brain drain and/or lack of training/education facilities).

(iii) lack of technical, R&D and technological investments and support for potentially dynamic industries.

(iv) absence of (or distorted) economic incentives given to productive entrepreneurial, as well as innovative and activities with the potential to be technologically upgraded.

All these possible constraints should be looked at in order to come up with policy suggestions for manufacturing expansion and product up scaling. ADB study also identified possible potential and promising sectors. But it will take time to come up with a plan for manufacturing expansion, product diversification and sector upgrading until all the above possible binding constraints are sufficiently studied and analysed.

In the medium to long-term macroeconomic stability is a necessary, but certainly not a sufficient condition, for a country's development. The latter consists in the upgrading and diversification of the production and export structures. Only the countries that succeed in this endeavour manage to achieve high and sustainable growth rates, and ultimately develop.

The development literature is filled with empirical evidence and examples that show successful development in a country like Pakistan entails passing through different stages, where the essence is the transfer of resources from the less productive sectors of the economy (agriculture in general) to the more productive sectors (industry and services in general).

At one point, manufacturing (and industry in general) must take the lead in the growth process, as this sector is characterised by increasing returns to scale. Likewise, development is accompanied by technological and scale upgrading of the products produced in the economy, especially in the manufacturing sector (as the successes of People's Republic of China, Japan, the Republic of Korea and Taipei, show).

Finally, the literature also shows that the successful countries enter a phase of fast export growth during which they manage to upgrade their export structures significantly.

Despite Pakistan's relatively good growth record over the last decades, its industrialisation achievement lags significantly behind that of other countries, especially those in East and Southeast Asia. Pakistan's manufacturing output share in GDP is much lower than that of PRC, Indonesia, Malaysia, the Philippines, Thailand and Vietnam.

Moreover, the size of this sector has barely changed in decades (during the last few years it has increased and is already close to 20percent). In terms of technology and scale, Pakistan's manufacturing is still dominated by products at the lower end (in terms of technology level) of the spectrum.

Pakistan's manufacturing structure is tilted towards low technology and scale products. Given this, it is likely that the manufacturing structure will also be skewed toward the same type of products. The question is whether it is possible for countries like Pakistan to move up in the development ladder. Standard trade theory seems to imply that indeed it is possible.

This theory explains trade and production structures of a country based on its relative endowments of physical and human capital, labour, and natural resources, plus the quality of institutions. These variables determine countries' relative costs and the specialisation pattern. An implication of comparative advantage is specialisation. It is a country's specialisation in the products in which it has comparative advantages what raises the productivity of the economy.

In the standard theory, changes in the export basket are regarded as a passive consequence of changing factor endowments, and therefore, any attempt to reshape the production pattern beyond the one set by the factor endowments is likely to fail and, even to impede growth, ADB study mentioned.

However, ADB study stated that the recent research examining the patterns of sector concentration and diversification in a cross-section of countries finds a statistically robust U-shaped relationship between specialisation and per capita GDP. It is found that as poor countries get richer, sectoral production becomes more diversified.

This diversification process continues until relatively late in the development process and only after a country's income level reaches threshold level, production patterns start to become more concentrated. The intuition behind this idea is that for countries to be able to manufacture advanced products, they must have mastered the production of a relatively wide range of other products.

This learning process provides them with the necessary capabilities (eg, production knowledge). This finding has a significant implication for the development strategy for poor countries, since it suggests that economic diversification should stand at the centre of their development strategy.

ADB Figures show the specialisation index and per capita GDP of 14 Asian countries. Given its income level, Pakistan is still in the diversification stage and far below the threshold income level where countries' production structures start concentrating. For Pakistan, economic diversification is needed to bring the economy to a higher income level.

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*Power generation up by 1,000 megawatts in NWFP ​* 
PESHAWAR (October 28 2008): The measures of supplying 90 MMC gas, increase in outflow of water from Mangla Dam and initiation of power generation by two units in Muzafargarh had improved electricity production by 1000 megawatt that would result in respite of people from hours-long power load shedding.

This was disclosed by Chief Executive, Peshawar Electricity Supply Company (PESCO), Engineer Mohammad Qasim Khan while addressing a news conference here at Wapda House on Monday. He said that one thousand decline in demand of the power would ultimately cut down the size of the load shedding. "Today (Monday) we are following the scheduled load shedding and no suspension had been carried out from Islamabad," Qasim Khan stated.

The situation of supply and demand of electricity has improved and the company is following only scheduled load shedding of 9 and 12 hours. The PESCO chief was optimistic that in next two days the situation would be further improved and with the beginning of November, the company would further cut down the size of load shedding to 6 to 8 hours.

The decline in power generation vis-à-vis demand, he said was overloading grid stations and the situation was so deteriorated that the companies were even not in position to identify the station for closures. In such a situation, he said only National Power Control Company (NPCC) was in a position to take decision resulting in 2 to 3 consecutive power suspension in the areas of our distribution company.

The situation, he said was not only limited to PESCO, but other power distribution companies (DISCOs) had to face the burden of load shedding. However, he said that they are now hopeful that after November first the situation would be further improved.

He informed the newsmen that during the next two years, 6000 megawatt power would be included in the system as the government had initiated a number of small and large power generation products that would start production.

These projects, he highlighted were included Neelam Power Project, Basha Dam and number of other thermal units, which would be completed in 2010. "By the end of 2009, the people would be completely retrieved of the load shedding," he added.

He said that during the crisis, the difference between supply and demand was more than 7,500 megawatt while generation was merely 6,000 megawatt. Load during that period, he said was more than 1,3000 megawatt. That huge gap, he said, is now fill able through only schedule load shedding. Presently, Wapda is facing the shortage of 3,800 megawatt against the demand of 14,000 megawatts. The proportion share of the PESCO, he said is 15.5 percent of the shortfall.

He said that the shortfall would be filled through conservation of energy and requested consumers to co-operate with the company in this regard and avoid the unnecessary consumption of energy. The company, he said has 2.3 million connections and the switching of at least one bulb could save 230 megawatt of electricity.

Regarding 40 percent interim relief in the utility bill of the electricity, he said that the decision was not implementable for NWFP consumers. He said that the government of NWFP had obtained stay from Islamabad High Court (IHC) against the proposed increase in power tariff. He urged the consumers to pay their bills before the due date.

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*Zardari asks India to stop blocking flow of water ​* 
ISLAMABAD (October 28 2008): President Asif Ali Zardari on Monday asked India to stop blocking Pakistan's water because this could damage the relations between the two countries. President Zardari talking to Indian High Commissioner to Pakistan Satyabrata Pal, who called on him at Presidential House, said that India should abide by the terms of Sindh Taas Treaty.

The violation of the treaty by India could dent the confidence building measures between the two countries, he added. President Zardari was of the view that blocking of Chenab River's water damages the fertile land in its catchments area as most of the time India releases Chenab water which destroys standing crops. Pakistan wants talks with India on all the issues that are required to be resolved, he said. Bilateral relations, regional situation and other matters of importance came under discussion during the meeting.

It may be recalled that President Zardari had also taken up the water issue with Indian Prime Minister Manmohan Singh during a brief meeting with him at the sideline of UN General Assembly Annual Session in New York last month.

Despite Indian Prime Minister's assurance to President Zardari that New Delhi would not violate the treaty; the India side has again stopped the flow of the Chenab River water to Pakistan to fill the Baglihar Dam on the occasion of its inauguration. Experts say the situation is very critical for Pakistan with its food security totally dependent on availability of water resources divided between India and Pakistan with their share determined under Sindh Taas Treaty.

The violation of treaty by the India, according to economists could be disastrous for Pakistan in term of its agriculture output. It could hit hard Pakistan crops and subsequently the country would face acute shortage of staple food, eg wheat and rice, they added. The Indus Water Commission had apprised the federal government of this situation and demanded of them to take up the issue at the highest level to avert any disaster.

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*NSS attracts Rs90bn investment ​* 
Wednesday, October 29, 2008

ISLAMABAD: National Savings Schemes (NSS) generated Rs90 billion during last financial year 2007-08 against a target of Rs80 billion, data compiled by the Central Directorate of National Savings (CDNS) revealed on Tuesday.

The government has set a target of Rs150 billion for CDNS in current financial year 2008-09 but the finance ministry is said to be creating hurdles in the way of approving various products, currently in the pipeline.

The government claims it is making efforts to lessen its dependence on borrowing from the central bank but finance ministry high-ups are blocking other available options to generate required resources for meeting current years fiscal deficit target of 4.3 per cent of GDP.

CDNS had requested to raise the rate of Defence Saving Certificate, but the finance ministry has not yet granted its approval, a source said and added it sent alternative proposals, on ministrys request, for introducing new schemes, but those were also lying on the tables of finance managers.

CDNS has failed to meet its target of Rs37 billion by attracting investors in the first quarter (July-Sept) of the current fiscal year, said the official source in the budget wing of the finance ministry.

When high-ups in CDNS were contacted, they said efforts to attract investors slowed down in the first quarter of every fiscal year and gained pace in the second quarter. If the government approves a corporatisation plan, there will be no problem in achieving the target of Rs150 billion for 2008-09, the source said.

Pakistan has the lowest investment-to-GDP ratio in the whole South Asian region. Without launching new products, investors would not invest their money in their own country. Without making a corporation, CDNS cannot exploit its real potential, the source said.

Various plans have been put on hold owing to a lack of independence required by this institution. A proposal was under consideration for joint ventures with reputed financial institutions in the Middle East to lure millions of dollars of investment from non-resident Pakistanis (NRP) but nothing has been done so far.

NSS expects to attract investments of around $500 million per annum from NRPs. The NSS management can utilise available avenues by inking agreements with Western Union and others for fast delivery of remittances through its 378 branches across Pakistan.

The government, the sources said, had prepared a feasibility report for expanding NSS operations in the Middle Eastern region.


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*Japanese IT co to invest $50m ​* 
Wednesday, October 29, 2008

KARACHI: A Japanese information technology company has planned to invest US$50 million in Pakistan by establishing a state-of-the-art call centre, data centre and Japanese language centre in Karachi.

DTS Inc is a Japanese IT concern founded in 1996 and has worldwide operations. It has been operating in Pakistan since 2002 serving NUST and Karachi University in the IT sector.

Sindh Minister of Commerce & Industries Rauf Siddiqui and Consul General of Japan Akinori Wada will grace the foundation stone laying ceremony of DTS on October 30.

Director DTS Irfan Siddiqui said DTS has planned to invest $50 million in the IT sector in the coming five years. The business plan will generate more than 1,500 employment opportunities for Pakistani graduates. He added, DTS is willing to make more investment by enhancing its infrastructure in Karachi.

In Pakistan, DTS has initial plans to establish call a center, data center, business consultant center and a Japanese language center; DTS will proceed towards manufacturing of computer hardware and IT related products as well.


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*Foreign investors inject fresh funds into local equities ​* 
Wednesday, October 29, 2008

KARACHI: Local investors maintained their highly cautious stance on Karachi bourse while the overseas investors poured in more dollars on Tuesday.

Fresh injection of $145 thousand foreign funds in the absence of local support could not turn the bourse up and pessimistic sentiments kept activities dull.

The number of active stocks on trading floor further reduced to mere 21 in the aftermath of fresh developments on economic front, while indices remained squeezed.

The KSE 100-share Index, KSE 30-share Index and KMI 30-shares Index remained flat at 9,182.88 points, 10,003.99 points and 11,224.18 points, respectively.

The KSE-All Share Index fluctuated by 0.48 point either side of the fence and ended at 6,638.59 points with a nominal decline of 0.47 point.

Turnover in the ready market, however, rose to 402 thousand shares from 249 thousand shares in the ready market - showing an increase of 61 per cent on day-to-day basis.

After attracting trade of zero shares in the last 12 consecutive sessions, the future market at last witnessed change of hand of 1,000 shares in NIB Bank at Rs8.50 pre-opening price.

But, the overall market capitalisation fell by Rs200 million to Rs2.829 trillion.

Commenting on the situation, analysts said that there was no investment-friendly development since long, but the continuous appearance of bad news in the circulations made the situation more misery. The Moodys downgrading of Pakistans bond rating from B2 to B3 has mounted further pressure on local currency. Rejection of Rs300 million assistance by World Bank on the intervention of IMF, and IMFs tough conditions to aid Pakistan to save it from default were all disturbing news.

Analysts, however, expressed doubt over the fresh foreign inflow under the current economic situation and questioned that none-of the front line stocks were active in market then where these dollars were being invested.

If dollars are being invested in the tier two active stocks of these days then are foreigners changing their mindset or reshuffling their portfolio, or was it just speculation from overseas investors to trap the local? Hasnain Asghar Ali at Aziz Fidahusein said that steps taken by SBP to ensure smooth financing against shares and permitting banks to invest up to 30 per cent of their equity in shares will certainly be beneficial if done without delay; while benefit is likely to be felt on unfreezing market. It is therefore recommended to start weighing the stocks having huge growth potential, he added. Among 21 active issues 16 closed unchanged, four in red and one in green.

Highest volumes were witnessed in Trust Modaraba at 283 thousand closing pegged at Rs1.35, followed by First.Fid.Leasing at 50 thousand closing at Rs4.10 with a loss of 10 paisa, Sitara Energy at 29 thousand closing at Rs18.11 with a loss of 14 paisa, Gharibwal Cement at eight thousand closing at Rs17.20 with a loss of 78 paisa and Unilever Pak at five thousand closing pegged at Rs2,340.


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*Punjab industrial zones to install power plants ​* 
Wednesday, October 29, 2008

LAHORE: Punjab has allowed all industrial zones to install their own power plants so that they could be able to cope with ongoing energy crisis.

Provincial Industries Secretary Tahir Rizvi announced that while speaking in a meeting of the Board of Management of Quaid-e-Azam Industrial Estate.

The provincial secretary said full cooperation would be extended to all industrialists who wanted to get licence from the Lahore Electricity Supply Company (LESCO) for installing their own plants. He said the business community was the backbone of the economy and resolution of their genuine problems would be given priority.

He said the government was working out an economic revival plan which would help the industry and facilitate business community which had been under tremendous pressure owing to multiple factors.


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*Tough IMF conditions difficult to accept: Asif​*
ISLAMABAD, Oct 28: President Asif Ali Zardari said on Tuesday the government could ill-afford International Monetary Funds financial assistance with tough conditions.

Time is running out and there is an urgent need for the Friends of Pakistan to extend a helping hand, he told Adviser to the British Prime Minister Simon McDonald who had called on him at the Presidents House.

Mr Zardari, however, made it clear that Pakistan was not looking for aid, but needed friends help to enhance trade and economic and investment opportunities.

According to a Foreign Office news release, the discussion focussed on Friends of Democratic Pakistan Initiative, measures and options being considered by the government to address the economic difficulties, Doha Process, situation in the border region, Afghanistan and bilateral cooperation. The president highlighted the government strategy to handle economic issues, socio-economic initiatives to settle tribal areas, including the Benazir Card for every household, and negotiations with the IMF.

He stressed that the war on terror, which had its roots in other regional events, had now become Pakistans war and the country and its people were paying a heavy price that needed to be acknowledged by the international community.

Mr Zardari quantified how one incident of terrorism impacted the already turbulent economy. He stressed the need to identify the forces that were funding militants in this expensive war. He was not convinced that drug money could be the only source of funding.

The president informed the British official about the state of relations with Afghanistan and termed recent exchanges and developments such as mini-jirga a manifestation of growing understanding and forward movement in relations.

Mr McDonald conveyed greetings from Prime Minister Gordon Brown and said that he fondly recalled the presidents visit to the UK in September when they had a fruitful and candid exchange.

The British adviser was highly appreciative of the unanimous resolution adopted by parliament on governments policy for tackling terrorism.


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*FDI rises to tap lucrative sectors​*
KARACHI, Oct 28: While the global financial system is facing a worst scenario since the great depression of 1929, Pakistans traditionally attractive sectors maintained their charm during the last troubled three months.

Oil and gas exploration, petroleum refining, power, telecommunications and most importantly financial business attracted foreign direct investment to push the first quarterly (July-Sept) FDI over nine per cent higher than the same period last year.

Financial business attracted the highest investment of $295.5 million, an increase of 68 per cent compared to the first quarter of last fiscal.

Financial business (banking and finance) is the main target of current turmoil in the financial system of developed economies of which the economists are predicting a complete meltdown and discussing finding a new financial system.

The situation is encouraging for Pakistan as banking system is still intact and the Governor, State Bank of Pakistan, announced last week that countrys financials system escaped unhurt.

The mammoth growth of telecommunications which attracted huge foreign investment, continued to prove its potential for growth and a total inflow during the said quarter attracted $259 million, though it was 29 per cent less than three months of last year.

Oil and gas exploration sectors performance was morale boosting for the country facing severe shortage of foreign exchange and fearing that it will have to embrace IMF.

The sector during the quarter attracted $190.7 million, 43 per cent higher than the same period of last year.

With slight fluctuation of investment, the FDI is on the same pattern and could provide up to $4.5 to $5 billion till the end of the fiscal year 2008-09 as it gathered a total of $1.110 billion during this period.

The oil prices are just 44 per cent of what it was six months before which means the countrys oil bill could drop to $4.5 to $5.5 billion against over $12 billion of last year, said Abid Saleem , an analysts, adding that it would provide enough space to adjust the balance sheet with a big slash in current account deficit.

He also pointed out that commodity prices have started falling in the global market like the edible prices which fell to 35 per cent of what it was during the 10 months till September.

Further, Pakistan is expected to produce enough wheat this year, thus there would be no requirement to import the commodity.

Analysts believe that things are improving for Pakistan even on external front but it depends on the perception of economic managers which shape of economy they would like to craft.


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*Restore macro-economic stability: WB removes 2 projects from lending plan, puts another on hold​*
** It has 12 projects under consideration for loan programmes 2008-09​*
ISLAMABAD: The World Bank has removed a $79 million project of Karachi Dockers Labour Board Restructuring from its lending programme and has put on hold the $300 million project for restructuring National Trade Corridor Improvement Programme till macro-economic stability of the country is not restored, a World Bank report said on Tuesday.

The WB has also removed a loan of $300 million of Economic Stabilisation Support Programme from the lending programme for the current fiscal year as this programme, according to the WB was not recommended to the WB board for consideration.

World Banks Pakistan country operation report gives complete overview of projects under consideration for loan programmes for the current fiscal year 2008-09.

Higher Education Support Programme: The objective is to support the government of Pakistans higher education medium term development framework to foster public private partnership in the delivery of higher education and to provide substantial technical support to the client in developing a reasonable financing plan consistent with the macro-framework of the country. Project preparation is underway for a loan of $100 million (IBRD).

Mineral Sector Technical Assistance: The objective is to implement a strategy to accelerate sustainable mineral sector development by strengthening governance, transparency, and capacity in the management of mineral resources. Project preparation is underway for a loan of $50 million (IDA).

Rural Telecommunications and e-Service: The objectives are to (a) accelerate access to communications in un-served and underserved areas by using targeted subsidies for rural expansion, (b) strengthen legal, policy, regulatory and spectrum management and (c) monitor functions and expansion of e-services. Negotiations are scheduled for December 2008 for $124 million (IBRD) loan.

Second Sindh Structural Adjustment: The objective is to implement reforms to improve fiscal and financial management, governance, public service delivery, and the states regulatory framework. Project preparation is underway for $100 million loan.

Support to Safety Nets: The objectives are to support the effective strengthening of implementation and monitoring mechanisms for delivery of cash transfer programmes. Project preparation is underway for a loan of $50 million (IDA) loan.

Karachi Dockers Labour Board Restructuring: The objective is to make the nations ports more competitive by reducing their labour costs and thus the cost for users. This project is no longer in the lending programme.

National Expressways: The objective is to improve trade flows, lower transit costs and times along the programme corridor through the sustainable delivery of a high-speed, safe and reliable access-controlled expressway system. Appraisal scheduled for January 12, 2009 for a loan of $500 million (IBRD).

National Trade Corridor Improvement Programme: The objective is to enhance export competitiveness by reducing the cost of trade and transport logistics and bringing service quality to international standards. This project is put on hold until the macro-economic situation does not improve and the loan is worth $300 million (IBRD).

Trade and Transport Facilitation II: The objectives are to (a) facilitate the implementation of the NTCIP; and (b) facilitate the simplification and modernisation of Pakistans international trade procedures and practices. Decision meeting is scheduled for late-September 2008 for $24 million (IDA) loan.

Punjab Large Cities Development Policy: The objective is to promote economic growth in the major cities through strategic planning, integrated infrastructure investments, and efficient urban service delivery. Appraisal is scheduled for late-October, 2008 for $100 million (IBRD) a PHRD grant for preparation is anticipated.

Second Punjab Barrages Rehabilitation and Modern-isation: The objective is to prevent the occurrence of disastrous barrages failure and ensure their sustainable use, providing improved and reliable irrigation and drinking water supplies. Decision meeting is scheduled for June 1, 2009 worth $120 (IBRD).


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*Pakistan looking for trade, not aid: FM​*
** Qureshi seeks German support for greater EU market access
* Germany says will help Pakistan in IMF deal​*
ISLAMABAD: Pakistan is looking for strengthened trade ties with Germany and access to European markets particularly in the textile sector for sustainable progress, Foreign Minister Shah Mehmood Qureshi said on Tuesday.

What we are looking forward to is not aid but trade, he said while addressing a press conference with his German counterpart Dr Frank Walter Steinmeier.

Steinmeier said Germany would support Pakistan on bilateral and multilateral forums in its efforts for both short and long term economic stability, including a loan deal with the International Monetary Fund. Germany will support Pakistan on short and long term basis in the economic as well as social sector, especially health and education, he told reporters.

But he refused to quantify the assistance when asked, saying Germany and the rest of the world would continue to support Pakistan.

Steinmeier also met President Asif Ali Zardari and Reuters said both had told him Pakistan would not be able to move ahead without IMF involvement.

We need to talk about ways and means in which the international community can provide assistance to Pakistan, especially in the border and Tribal Areas, he said.

Qureshi proposed initiating a Pakistan-Germany Strategic Dialogue at the foreign secretary-level to institute closer co-operation.

He said Germany was Pakistans largest trading partner in Europe and its help was crucial in a greater access for Pakistani products to the European markets.

He said he also raised the issues of anti-dumping duties by the European Union (EU) on Pakistani textile products that make 69 percent of all the countrys exports, adding that withdrawal of the duty would help improve Pakistans economy.

Qureshi also called for more German investment in Pakistan and said the government would address the security concerns of German firms interested in investing in the country. He said that the two countries shared common interest in the stability of Afghanistan.

Qureshi appreciated German support to Pakistan in the Friends of Pakistan forum as encouraging, supportive and positive, particularly in education and development of the Tribal Areas. He said defence co-operation between the two countries would also continue.

The German foreign minister said the issue of cross border attacks inside Pakistan by US-led forces was Pakistans internal matter and it was the prerogative of Pakistan to decide on such matters.

He appreciated the ongoing jirga between Pakistan and Afghanistan and hoped that the process would continue and help calm down the situation in the Tribal Areas.

He said political ties between Pakistan and Afghanistan need to be enhanced, as they were vital for achieving stability in the region.

Steinmeier also mentioned eight partner schools in Pakistan to boost co-operation between the Pakistan and Germany in the education sector.

He urged the world to help Pakistan meet its challenges.


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*Pakistan calls for steps to meet N-energy demand​*
** Delegate says IAEA should ensure equitable access to nuclear materials, technology and equipment for peaceful purposes​*
UNITED NATIONS: Pakistan on Tuesday called for evolving a universal and non-discriminatory criterion that would ensure every states right to peaceful nuclear energy use to meet the growing worldwide energy demand.

In this regard, principles should be placed above expediency and commercial interests, Raza Bashir Tarar, the Pakistani delegate to the United Nations General Assembly said on Monday, while reaffirming Pakistans commitment to nuclear non-proliferation.

A non-discriminatory approach in promotion of civilian nuclear co-operation would help reinforce confidence and creditability in the IAEA (International Atomic Energy Agency) safeguards system and strengthen the non-proliferation regime, he said.

Access: Tarar said the agency could make a significant contribution in meeting the century needs by ensuring equitable access to nuclear materials, technology and equipment for peaceful purposes.

The agencys founding Atoms for Peace paradigm must be at the centre of any future vision, he said, explaining that such a vision could be ensured only with a balance between its promotional activities, and work in verification, nuclear safety and security. 

The Pakistani delegate urged the agency to maintain its focus on its technical promotional character.

He also appreciated the Department of Technical Co-operations excellent programme delivery. For its part, Pakistan was prepared to contribute to the agencys promotional activities.

Pakistan had advocated harnessing nuclear technology for peace, and had developed the entire range of the nuclear fuel cycle facilities, Tarar said, noting that two nuclear power plants were in operation, a third was under construction, and plans were under way to establish a uranium conversion and enrichment facility.

He added that he looked forward to the agencys assistance to complete its nuclear power generation plan.

Tarar said Pakistans atomic energy development programme had always recognised nuclear safety and security, in the national and international context, as a vital objective, and the government had followed guidance contained in the agencys Code of Conduct on the safety and security of radioactive sources.

Tarar reiterated Pakistans commitment to nuclear non-proliferation, noting that his countrys track record on safeguards was immaculate. app


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## Neo

* Karachi to have 550MW power plant in 14 months ​*
KARACHI: City Naib Nazim Nasrin Jalil has said that the Ministry of Water and Power (Private Power and Infrastructure Board) has given approval to the setting up of a 550 MW power generation station in Karachi that will be installed by UAEs Dhabeen Power Engineering Company. 

Besides power generation, the plant will also supply 50 mgd water. In this regard Nasrin Jalil thanked Federal Minister Raja Parvaiz Ashraf and MNA Faryal Talpur. Talking to Dhabeen Engineering CEO Tanvir Zaidi at her office on Tuesday, the naib nazim said that after the power station goes into operation, it would greatly help in overcoming the ongoing power shortage and difficulties being faced by the citizens.

She said the plant would be setup in the area of Lyari Development Authority that will particularly help Lyaris youth to get jobs. She said the company would also establish a training centre here to produce technicians for the power plant. On the occasion Tanvir Zaidi thanked Sindh Governor Dr Ishratul Ebad Khan, City Nazim Mustafa Kamal, Naib Nazim Nasrin Jalil, MNA Dr Farooq Sattar and Dr Mohammed Ali Shah whose efforts and interest resulted in the federal government giving approval to the setting up of 550 MW power plant in the city. He said the plant would become operative in 14 months after issuance of letter of support from the government. He said in the first phase, 350 MW of electricity would be supplied, followed by 550 MW and 50 mgd water in the second phase, while an addition of 1800 MW would be supplied in the third phase along with desalination and supply of 150 mgd seawater. He said in the third phase, the plant would be run on coal gas. app


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## Neo

*PM urges Turkish businessmen to invest in Pakistan​*
** Pakistan, Turkey vow closer defence, energy, trade ties
* Erdogan urges international community to extend co-operation to Pakistan​*
ANKARA: Prime Minister Syed Yousuf Raza Gilani on Tuesday asked Turkish investors to take full advantage of Pakistans investment friendly atmosphere and assured them the government would extend full support and co-operation to them.

Addressing a luncheon reception hosted in his honour by Union of Chambers and Commodity Exchanges (TOBB), Gilani said, Pakistan offers vast investment opportunities in the sectors of energy, oil, gas mining, engineering, automobiles, infrastructure development, construction, IT and Telecom, health, education, agri-business as well as small and medium enterprises.

We would welcome Turkish brothers to invest in any sector and we assure you that your investment will bring rich dividends in the lines of those already doing in wind energy and thermal power stations, he said.

The prime minister said the government had implemented measures to encourage foreign investment with liberal foreign exchange framework and full legal protection to foreign investment.

All sections of the economy are now open to foreign investment. Foreign investors can hold 100 percent equity and the business opening process has been extremely easy, Gilani said.

He thanked the TOBB for its initiative in developing business in Pakistan, especially in the fields of construction, power generation, auto and textile industry.

Reaction: Gilani said the deteriorating law and order in Pakistan was in reaction to the military action taken by the government against terrorists. However, he said the situation was improving due to the timely government action.

The prime minister said he was confident that the private sectors of Pakistan and Turkey would join hands with the governments of the two countries to create greater links and inter-dependencies for the mutual benefit of the people and contribute towards the strengthening of brotherhood.

Gilani said Pakistan and Turkey shared common interests and aspirations and the strategic partnership was a factor for global peace, stability and progress.

We are united in our desire to promote the peaceful resolution of all international disputes, including Cyprus and Kashmir and the promotion of mutually beneficial co-operation among all countries, he added.

Gilani also expressed gratitude on behalf of the people of Pakistan for the sacrifices made by the Turkish people whenever Pakistan faced adversity, especially after the 2005 earthquake.

Meanwhile, after bilateral talks between the prime ministers of the two countries, Islamabad and Ankara vowed to further strengthen their bilateral relations in defence, energy, commerce and communication sectors and set up a target to raise annual bilateral trade to $1 billion.

Addressing a joint press conference with Gilani after bilateral talks, Erdogan appreciated Pakistans role in the war on terror and urged the international community to extend full support to the country.

The two countries also agreed to enhance their bilateral relations in trade, economic, defence and communication sectors.

Co-operation: Erdogan said Turkey would provide more assistance to Pakistan in the defence sector and had already offered to provide expertise in F-16 upgradation and joint production of 973 GMC trucks. He said more joint ventures in defence production were being discussed at the highest level.

AFP quoted Erdogan as saying the two sides were working on a defence agreement.

Erdogan said a trilateral summit of Pakistan, Turkey and Afghanistan would soon be held in Turkey to ensure peace in the region. agencies


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## Neo

*2-hour load shedding respite as 1,000MW added to system​*
ISLAMABAD: With the addition of 1,000 megawatts of electricity to the national grid station, the Pakistan Electric Power Company (PEPCO) has cut the load shedding duration by 2 hours across the country. PEPCO sources told Daily Times that following President Asif Ali Zardari and Water and Power Minister Raja Pervez Ashrafs intervention, 90 million cubic feet of gas (MMCFD) were now being supplied to thermal power plants across the country  a move that had increased the production of electricity. One third of the additional supply is being provided by the Sui Northern Gas Pipeline Limited.

The sources said that two 300-megawatt power plants in Muzaffargarh had also started their operations, and the increase in water levels at Margala had also added to the power generation capacity of the country. They said that all these steps had led to a reduction in the number of loadshedding hours a day. In addition, the Indus River System Authority (IRSA) has decided to increase the flow of water from Mangla and Tarbela reservoirs for Rabi crops from November 1  which would also facilitate the generation of power. zafar bhutta


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## Neo

*Pakistan resisting IMF's insistence on 3.5 percent hike in SBP discount rate​* 
ISLAMABAD (October 28 2008): The talks between Pakistan and the International Monetary Fund (IMF) to build up country's foreign exchange reserves with a clear objective to enable it avoid default are expected to conclude in Dubai, UAE, on Wednesday. While an agreement on most of the performance, as well as indicative, criteria, has reportedly been reached one thorny issue is still needs to be settled - the Fund insistence that policy rate by the State Bank of Pakistan is raised further.

-- Agreement on containing fiscal deficit for fiscal year 2009 at 3.9 percent of GDP.

-- IMF prescription would push over 5 million more people under the poverty line and render 1.5 million jobless.

According to informed sources in corridors of power, the Fund staff is insisting on a 3.5 percent hike in the SBP discount rate which, at present, is 13 percent. Six months KIBOR is around 14.7 percent and most corporates are already paying interest in the range of 16 to 17.5 percent.

Pakistani negotiators while agreeing to a partial increase have produced empirical evidence of industrial slowdown resulting in the erosion of corporate profitability and therefore an adverse impact on tax collection. According to the module - IMF's prescription would push over 5 million more people under the poverty line (ie falling below $1 a day) and render 1.5 million jobless.

Due to an abnormal rise in oil prices and mismanagement in administered prices of food, the year-on-year inflation has nearly doubled from 16 percent in February 2008 to 30 percent in November. The period average for July to September is 32.6 percent.

The non-food, non-energy inflation is half of this, ie, 16.1 percent. This is basically due to high government borrowing from SBP. This is inflation financing by the government and Fund wants to bring this borrowing under control. Pakistan is reportedly asking for a pause in further hike in SBP discount rate.

The Fund wants further tightening and wants the Budget deficit is reduced from 4.7 to 3.5 percent. According to informed sources, the two sides have agreed to contain the fiscal deficit at 3.9 percent of GDP for FY-09. It was also learnt that the recent government decision to restrict the electricity tariff hike and allow consumers to pay 60 percent of the bill for month of September was frowned upon by the Fund staffers.

However, the Pakistan side reportedly convinced the Fund that the hike would substantially reduce the government subsidy. With oil prices coming down, the government will have more space to fully eliminate the subsidy like it has happened in the case of POL products.

In the stabilisation programme the Fund had presented tough conditionalities like cut in budget deficit, privatisation of government managed entities and liberalisation of markets. However, the stance taken by US and European authorities in the current crisis shows that the old IMF needs to diverge from its old script and agree to policy prescriptions that improve long-term sustainability without crippling the short term outlook.

Asking Pakistan to increase the lending rates looks rather odd at a time when the world is cutting them to counter a growth slowdown. Pakistani authorities hope that the Fund would soften the stand and avoid unacceptable political strings. Pakistan is banking on its friendly countries dominating the Fund Board for help in this regard.


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## Neo

*Pakistan mulls IMF aid, no chance of default: SBP ​* 
DUBAI (updated on: October 29, 2008, 14:27 PST): Governor State Bank of Pakistan said on Wednesday that an International Monetary Fund (IMF) package would be announced in due course and there was "no possibility" that the country would default on its debt.

"We are taking steps to build up the reserves. We are developing a macroeconomic stabilisation package which will help us attract capital flows," said Shamshad Akhtar, governor of the State Bank of Pakistan.

"We have a technical engagement with the IMF and in due course a package will be announced," she said on the sidelines of an Islamic finance meeting in Dubai.

Asked if Pakistan would turn to the IMF, she said "it is under consideration. We have a few plans and we have other options.... There will be no default by Pakistan."


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## Neo

*ADB to provide $450 million for sustainable economic growth​* 
FAISALABAD (October 29 2008): Asian Development Bank will provide US $450 million (Asian Development Fund US $100 million and Ordinary Capital Resources US $350.00 million) for Sustainable Economic Growth Governance Accelerating Economic Transformation Programme-2 during the year 2009.

According to official sources, the Technical Assistance programme of ADB will be implemented over a period of two years starting in October 2008 and running until September 2010. This sub-project will focus on the design and implementation of targeted safety net programs for the poor and vulnerable, gradual elimination of wheat and energy subsidies, and restructuring of the electricity sector debt.

Pakistan Government has agreed with the ADB that the targeted safety net program coverage expanded to over 5 million households, while market-based pricing for farmers and flour millers will be adopted by 2010. It was also agreed with the ADB that the electricity subsidy will be brought to zero by June 2010, and would be maintained at that level, except for lifeline tariffs.

The design for this new TA takes into account existing TAs and will be supplemented by a sub-project from ADB's ongoing governance TA cluster, financed by the Department for International Development of the United Kingdom. This sub-project will focus on the design and implementation of targeted safety net programs for the poor and vulnerable, gradual elimination of wheat and energy subsidies, and restructuring of the electricity sector debt. In addition, an ongoing TA will also support Pakistan's anti-money laundering efforts.

The TA is estimated to cost $1,040,000 equivalent. ADB will provide $800,000 on a grant basis from its TA funding program. The Government's contribution of $240,000 equivalent will cover office accommodation, training and workshop facilities and counterpart support.

According to official sources, the Ministry of Finance will be the executing agency for the TA and will help co-ordinate the work of the TA with the implementing agencies. For the financial sector component, the work wil

l be co-ordinated and supervised directly by the concerned regulatory agencies. The TA will be implemented over a period of 2 years starting in October 2008 and running until September 2010. The AETP will provide significant benefits and will have a positive impact on the poor.

First, the immediate outcome of AETP, particularly under sub-program-1, will be to help Pakistan overcome the short-term exogenous shocks of spiralling food and fuel prices and meet the immediate and large fiscal needs. Second, it will help the Government move away from inefficient and untargeted subsidies to a targeted safety net program for the poor. Beginning with about 2 million households immediately, and expanding to cover 5 million households during the 2008-2009 fiscal year if the safety net program implementation is smooth, the AETP could potentially target up to 9 million households.

In parallel, the AETP will also assist the Government in embarking on a medium term reform agenda. As such, third, the AETP will raise public confidence in the banking system through a depositor protection scheme, and stronger financial intermediaries that are better able to mobilise and allocate resources and risks.

Fourth, the AETP will open the way forward for structural transformation, and in the process, it will help cut transaction costs for businesses (eg, by reducing red tape in tax payments) and improve the investment climate. Fifth, the AETP framework will enable ADB to sustain policy dialogue on structural reform in sectors where ADB has been actively involved through past and current investments.

Commenting over the "Social Protection and Safety Nets in Pakistan", ADB expert mentioned that the National Social Protection Strategy which aims to bring social safety nets to 6.2 million households in the next five years was approved by the Government of Pakistan in 2007.

Pakistan's existing safety nets include: (i) cash transfers (Zakat, Pakistan Bait-ul-Mal's Food Support Program, and conditional cash transfers); (ii) Old-age income security (pension for Government employees, employees old age benefit institutions); (iii) other employment-based programs (Workers Welfare Fund, programs through various foundations); (iv) Micro credit and NGO programs (Pakistan Poverty Alleviation Fund, Khushhalibank, Rural Support Programs etc); (v) Public works Programs; (vi) food based programs (Tawana Pakistan Mid-day school meals); (vii) wheat subsidy; and (viii) social security programs (pension - old age, survivor and disability and benefits to formal sector workers).

Prior to the 2007 Strategy, there was no overarching social protection strategy in Pakistan. It obviously led to lack of direction and poor co-ordination on the part of individual agencies and programs working in this area. The absence of a social protection strategy could also explain the low and irregular budgetary allocations for the purpose. Public spending on key safety net programs is only 0.5percent of the GDP.

This is low by international standards and inadequate to meet existing needs. It is hard to assess the effectiveness of these programs in addressing poverty and vulnerability given a lack of monitoring and supervision system, any third party verifications, and feedback loops for self-correction and learning.

Organisations implementing safety net programs are involved in multiple activities not part of their core competency (running schools, hospital, training centre etc) hence thinly spreading limited resources and providing no synergies between agencies and program. There is no systematic targeting and beneficiaries are selected on the basis of administratively determined criteria.

Ad hoc selection process of beneficiaries, distribution system and discretion of the government functionaries leaves room for leakage of funds. All this has reduced the effectiveness of the programs and lowered their credibility in public eye, they pointed out.

ADB report stated that Pakistan offers income support through two cash transfer programs, Zakat and Bait-ul-Mal. Zakat, managed by federal Ministry of Religious Affairs, Zakat and Ushr, is a State-based option for Muslims to meet their charitable obligations through a deduction once a year at the rate of 2.5 per cent on the value of certain financial assets.

It applies only to Sunni Muslims and others can choose not to be included in the scheme and pay their zakat privately. Pakistan Bait-ul-Mal (PBM) is a semi-autonomous organisation within the Ministry of Social Welfare and Special Education. Bait-ul-Mal's objectives as stated in the Bait-ul-Mal Act are to provide financial assistance to destitute and needy widows, orphans, invalid, infirm and other needy persons.

Unlike Zakat, Bait-ul-Mal benefits are open to all regardless of creed. Also, unlike Zakat, the funds are entirely controlled by public servants. It has offices at provincial and district levels that are closely linked to, but not part of provincial administrations.

Bait-ul-Mal's main programs of direct assistance to individuals are the Food Support Program, Individual Financial Assistance, National Centres for Rehabilitation of Child Labour, Vocational Training Institutes, Tawana Pakistan (school feeding program) and building of homes. It also gives grants to NGOs to provide institutional support for orphans, the disabled and abandoned and destitute women, and the aged. It also provides some grants for water supply. In the past, it has also completed a housing development scheme for the poor in Sindh.

The PBM programs face problems of poor targeting, fragmentation, duplication, inadequacy, poor monitoring and sustainability. The government has laid out its strategy to deal with these issues in the National Social Protection Strategy. The Vision of the Strategy is to develop an integrated and comprehensive social protection system, covering all the population, but especially the poorest and the most vulnerable.

The Core Instruments proposed by the Strategy include expanding the coverage of cash transfers using conditional cash transfers (CCTs) supplemented with unconditional transfers (through the Food Support Program (FSP) and Zakat) among others. PBM is undertaking efforts to improve targeting, delivery mechanisms and monitoring through a number of initiatives.

They are in the process of cleaning-up their database and creating a comprehensive computerised Management Information System based on relatively authentic Computerised National Identity Cards (CNIC). Developing, piloting and expanding proxy means tested targeting mechanism in combination with community validation is expected to enhance transparency and credibility of the system. Fiduciary risks are being minimised through improved financial management and introduction of consolidated accounts at the field level to ensure effective reconciliation, they added.

ADB report mentioned that the Pakistan Government has announced the launch of a new cash transfer program in addition to the already existing program of Zakat, Bait-ul-Mal, and provision of food items at subsidised rates through the existing and expanded network of government-run Utility Stores.

The new program, named after the former Prime Minister of Pakistan, is called "Benazir Income Support Program". For this purpose, the Government has allocated an amount of Rs 34 billion to be raised to Rs 50 billion in the future.

The program entails provision of a cash grant of Rs 1000 per month to each qualifying household to be selected through a means tested program based on the CNICs. Relying on this system will require the Government to address the coverage issues of the CNIC database. Additional TA will be required to develop systems for the new scheme.

Despite challenges, ADB experts pointed out that it is very clear that the Government not only has existing safety nets but also intends to improve their coverage and targeting. The programs are expected to target more than 5 million households.

They have also substantiated their intentions by allocating substantial amounts in the budget. Subject to improving systemic issues, the programs have a significant scope and need for expansion. World Bank is working with the Ministry of Social Welfare and PBM to improve targeting of their existing programs. UN has fielded a joint mission to assess the situation and propose immediate and medium to long-term measures in the wake of recent food crisis, they concluded.


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## Neo

*Pakistan and Turkey to sign framework agreements ​*
ANKARA (October 29 2008): Prime Minister Syed Yousuf Raza Gilani held tête-à-tête followed by a detailed delegation level meeting with Turkish Prime Minister Recep Tayyip Erdogan, here on Tuesday. Both Prime Ministers covered whole gambit of bilateral relations in a very cordial and friendly atmosphere and there was complete agreement between the two on almost every issue of mutual interest.

Noting that the present bilateral trade of around $700 million was not commensurate with the potential and opportunities available in both countries, it was agreed that it would be enhanced to level of $1 billion as soon as possible by diversifying the export products. Turkey would assist Pakistan in development of its tourist infrastructure and tourism sector by sharing its experience in this important field.

It was agreed that Pakistan and Turkey would sign framework agreements for co-operation in economy and trade, science and technology, defence and on upgradation of cultural ties and promote student exchange and people-to-people contacts.

Pakistan and Turkey would also promote project co-operation and place negotiations for Preferential Trade Agreement on fast track. The meeting of Joint Ministerial Commission, which has remained dormant since 2002, would be convened in the near future to add new impetus to the existing overall economic co-operation.

Turkey would encourage its corporate sector to invest in Pakistan in Thermal and Hydel power generation, agriculture, packaging of agro products, housing and infrastructure construction sectors. The Turkish Exim Bank would offer buyer's credit to Pakistan to finance the supply of trucks to Pakistan's Armed Forces.

The Prime Minister of Pakistan assured his Turkish counterpart that his government would help in resolution of some problems being faced by the Turkish investors in the country. Pakistan would also look into the Turkish request for strengthening the transport links between the two countries for facilitation of trade links, particularly by road transport.

The Turkish Airlines would be allowed to increase the numbers of its weekly flights to Karachi and would also be permitted to start operating its flights to Lahore and Islamabad. Both sides also agreed to cooperate in counter-terrorism campaign. The Interior Ministers of Pakistan and Turkey would remain in close regular contact in this regard to determine the ways and means of enhanced co-operation in this area.

The Prime Ministers of Pakistan and Turkey also discussed the regional and international issues of mutual interest particularly South Asia, Middle East and Afghanistan. Pakistan offered its complete support to Turkey's Istanbul Initiative on Afghanistan.


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## Neo

*All set to achieve $22 billion export target: TDAP chief​* 
KARACHI (October 29 2008): Chief Executive, Trade Development Authority of Pakistan (TDAP) Syed Mohibullah Shah said on Tuesday that the country is all set to meet its export target of 22 billion dollars fixed for current fiscal year 2008-09.

Talking to Business Recorder on the second day of Expo Pakistan organised by TDAP in collaboration with Pegasus at Expo Centre Karachi, he said that Pakistan has done "breakthrough" in the export sector by arranging ever-biggest exhibition "Expo Pakistan" in the history of Pakistan. He said that all negative concepts about peace situation in the country and worst economy proved wrong.

He said, now Pakistan has proved the world that the country has excellent potential and open for the world business community. He said that it was now very easy not only to meet exports target of 22 billion dollars but hopefully it will exceed the target. "There were two reasons behind arranging this event, one was to undo the negative propaganda about law and order situation and secondly attracting the world business community that we have achieved by arranging the event successfully," he added.

Mohibullah Shah said that various countries were giving advises to their citizen especially to the businessmen to avoid visiting Pakistan, which after this event has proved wrong and in future these countries will hesitate in giving such advises. He said that international media is not sculpturing the proper picture of Pakistan, which is condemnable.

He said that over 500 delegates from 50 countries had visited the exhibition and most of them are serious buyers. He said that most of these delegates called on him and assured him of increasing and enhancing their business in Pakistan. He said these delegates expressed their satisfaction over peace situation and trade potential persisting in the country. "However, I admitted that security is tightened but it has perspective of international law and order situation, which on every passing day would be resolved and security arrangements would be softened for visitors," he added.

He said that although the exports are growing but sectors in which the exports are being done are very narrow and the country will have to broaden its trading field like agro-based industries, mechanical, minerals, sports, medicines and others.

Shah said TDAP also arranged tours of industrial zones in various cities like Lahore, Faisalabad, Multan, Islamabad etc, as well as in five industrial zones of Karachi for foreign delegations and give them more and broad exposure regarding business in Pakistan.

He said that it was the first time in Pakistan history that 100 percent stall capacity has been booked, while 40-50 companies could not get space in the exhibition. "I was told by some traders even by some chambers not to arrange the event due to law and order situation, but I took bold step and proved that Pakistan is not a war-zone," he said.


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## Neo

*Industrialists allowed to have power plants​* 
LAHORE (October 29 2008): All Industrial zones in the Punjab province were allowed to have their own power production plants so as enable them to cope with the ongoing energy crisis. Provincial Secretary Industries Tahir Rizvi disclosed this while addressing the Board of Management of Quaid-e-Azam Industrial Estate.

He said that full co-operation would be extended to all the industrialists who wanted to get license from Lesco for having their own plants. The business community is the backbone of the economy and all the genuine problems would be given priority, he said. The present government is working out an economic revival plan that would help the industry and facilitate the business community, which is under tremendous pressure owing to multiple factors.

It is a happy sign that the Quaid-e-Azam Industrial Estate was well on way and for this credit goes o the Board of Management of the Quaid-e-Azam Industrial Estate. Speaking on the occasion, the President of Quaid-e-Azam Industrial Estate Mian Nauman Kabir said the business community is paying high cost of power and gas while the rising interest rate has made the local products uncompetitive in the global market. He also said the industrial estate needs Rs 300 million to start work on Phase-III and expressed hope that the government would release required funds soon.


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## Neo

*Marble sector likely to miss fiscal exports target by 25 percent​* 
KARACHI (October 29 2008): The country's marble sector is likely to miss the current fiscal export target of $60 million by at least 25 percent, owing to the rampant electricity load shedding and deteriorating law and order in the country, exporters said on Tuesday. They said that prolonged load shedding, which is frequently being carried out for months, has created negative impact on its exports, hindering its growth.

Talking to Business Recorder Sanaullah Khan, former chairman, All Pakistan Marble Mining Processing Industry and Exporters Association (PMMPIEA) said that the Karachi Electric Supply Corporation (KESC) is carrying out 10 to 12 hours load shedding daily, causing immense financial losses to the sector, which already being suffered by inadequate resources.

He said that electricity tariff has also been increased and termed it as another main factor for the decline of marble exports, saying that the hike in electricity tariff has directly reflected on the cost of marble production, creating immense difficulties to compete international market with high cost products.

The meeting with KESC management to be held on November 1, he said. Highlighting the agenda of a meeting, Khan said that association would urge KESC to give industry status to the sector, which is currently being entertained as commercial consumers.

He said that the association would also stress the need of eradicating illegal electricity connections (Kundaas), causing low voltage. He informed that the government had approved around Rs 4.5 million fund for upgrading electricity transmission infrastructure of the marble sector in last fiscal budget, but he added that no positive measures have yet been taken in this connection by KESC.

He said that industry has potential to achieve exports target fixed for current fiscal year by the government but continued electricity failure hampered its growth and making the target as "unachievable task".

He said the government has completely ignored the sector in its policies, however sector has privately taken some positive measures for its survival. "Marble exporters have no option left but to windup businesses, owing to the government's unfriendly policies". He said marble industry has discovered new venue Middle East for marble export, which is encouraging strength to the industry.


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## Neo

*PSO maintains Rs 222 billion turnover in first quarter​* 
KARACHI (October 29 2008): Pakistan State Oil (PSO) despite difficult conditions in the country maintained a turnover of Rs 222 billion in the first quarter maintaining the overall market share of 71.3 percent with a market share of 60.2 percent and 85.2 percent in white and black oil respectively.

This was stated by Kalim Siddiqui, Managing Director, Pakistan State Oil while briefing the media here on Tuesday. He said that the extraordinary external factors including foreign exchange and inventory losses led oil marketing companies and the refineries to report losses in the first quarter of FY09.

He highlighted that the average Opec crude oil price for the FY-08 was $1l4/bbl while the spot on price as of October 23, 2008 is reported to be $60.27/bbl. To further explain the impact of external factors, he presented PSO's Profit and Loss statement without foreign exchange and inventory losses which stated a profit after tax of Rs 3.53 billion.

He further highlighted the key issues facing the largest oil marketing company importing approximately 80 percent of fuels, which includes the circular debt of Rs 72 billion which has led PSO to delay the payment to refineries.

Kalim Siddiqui explained that the circular debt primarily was caused due to non-payment of Hubco, Wapda, Kapco, PIA and the Price Differential Claim (PDC) accumulated with the government. The circular debt has compelled the company to take financial assistance at high interest rates from the banks resulting in payment of over Rs 1 billion as financial cost on borrowing, he added.

He pointed out that the PSO's receivables from Wapda had increased to Rs 17 billion, which are currently Rs 12 billion, from Hubco Rs 34 billion, from Kapco Rs 11 billion and from PIA that amount is Rs 4 billion. On the other hand, PSO's delayed payments to refineries were Rs 66 in September 2008 and currently it has increased to Rs 71 billion.

He mentioned that the government is aware of the liquidity crunch faced by PSO and is taking all possible measures to facilitate the company. He said the media that the government has ensured the payment of PDC at the rate of Rs 600 million/day to pay off the current accumulation of Rs 12 billion in the next few days. On October 21, 2008 the government of Pakistan paid Rs 8.34 billion on account of PDC and another 5 billion on October 27, 2008 to offset dues from power companies.

He underscored the importance of immediate resolution of circular debt to effectively plan the future imports of POL products and continue the supply of fuel to the country. He thanked the media for their support in this difficult time.


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## fatman17

Pakistan Oil and Gas Report Q4 2008

market research reports, research reports and industry analysis

&#169; companiesandmarkets.com

2008-10-30 04:55:02 - Pakistan Oil and Gas Report Q4 2008 - a new market research report on market research reports, research reports and industry analysis

The latest Pakistan Oil & Gas Report forecasts that the country will account for just 1.45&#37; of Asia Pacific regional oil demand by 2012, while providing 0.91% of its supply. Asia Pacific regional oil use of 21.40mn b/d in 2001 reached 25.68mn b/d in 2007. It should average 26.32mn b/d in 2008 and then rise to around 28.99mn b/d by 2012. In terms of natural gas, the region in 2007 consumed 409bcm, with demand of 565bcm targeted for 2012, representing the strongest growth globally (34.40% between 2007 and 2012). Production of 336bcm in 2007 should reach 471bcm in 2012, but implies net imports rising from 85bcm per annum in 2007 to 94bcm in 2012. This is in spite of the fact that many Asian gas producers are major exporters. Pakistan&#8217;s share of gas consumption in 2007 was 7.32%, while its share of production was 9.17%. By 2012, its share of gas consumption is forecast to be 7.10%, with the country accounting for 8.49% of supply. 

In Q208, we estimate that the OPEC basket price averaged just under US$115 per barrel &#8211; up around 24% from the Q108 level. The OPEC basket price had exceeded US$127 on the 22nd of May, slipping back towards US$121/bbl later in the month. In June, we assumed an average of around US$120, to deliver our quarterly estimate of US$114.98/bbl. The estimated Q208 average prices for the main marker blends are now US$118.63 for Brent, US$119.61 for WTI and US$115.89/bbl for Russian Urals (Mediterranean delivery). Our projections for 2008 as a whole have been revised upwards from the last quarterly report. 

We are now assuming an OPEC basket price average of US$106 per barrel for 2008, compared with the US$81 estimate provided by our last quarterly report. Based on recent price differentials, this implies Brent at US$109.71, WTI averaging US$110.64/bbl and Urals at US$106.88/bbl. 

Pakistan&#8217;s real GDP growth for 2008 is forecast by BMI at 6.6%, down from 7.0% in 2007. In 2009- 2010, growth is put at 6.7%, followed by 6.8% in 2011-2012. Several state-controlled oil and gas companies are in the throes of privatisation and already work with international oil companies (IOCs) in the upstream segment. We foresee oil and gas liquids production of no more than 78,000b/d by 2012, with the country able to pump an estimated 72,000b/d in 2008. Consumption is forecast to increase by around 3.5% per annum to 2012, implying demand of 420,000b/d by the end of the forecast period. The import requirement would therefore be approximately 342,000b/d by 2012. Gas demand is set to rise from 31bcm in 20076 to 40bcm by 2012. 

Between 2007 and 2018, we are forecasting a reduction in Pakistan oil production of 20.3%, with crude volumes falling steadily to 55,000b/d in 2018. Oil consumption between 2007 and 2018 is set to increase by 39.8%, with growth slowing to an assumed 3.0% per annum towards the end of the period and the country using 506,000b/d by 2018. Gas production is expected to rise from around 31bcm in 2007 to a possible 45bcm by 2017/2018 (+46%). With demand growth of 79%, this requires imports rising to 10bcm by the end of the forecast period. Details of the new BMI 10-year forecasts can be found in the Appendix of this report, which provides global, regional and country-specific projections. 

Pakistan now ranks fifth, just behind the Philippines, in BMI&#8217;s updated Upstream Business Environment rating, reflecting a reasonable resource position, better-than-average output growth outlook and falling state involvement. The country sits just ahead of Thailand and Malaysia, and should be able to keep both at bay over the near term. Pakistan now ranks outright eighth in BMI&#8217;s Downstream Business Environment rating, reflecting its significant refinery capacity expansion plans, above-average oil and gas demand growth outlook and low level of retail site intensity. It is ahead of Thailand and just behind Indonesia in the league table. 

Mike King
Web: market research reports, research reports and industry analysis


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## dr.umer

*Wateen and Motorola to Expand WiMAX Network in Pakistan​*30 Oct 2008

Motorola, Inc. (NYSE:MOT) has signed a contract with Wateen to expand Wateen's WiMAX network, enhancing coverage and doubling the capacity of the network which covers a population of 30 million across 22 cities in Pakistan. Wateen's customers will benefit from improved access to wireless broadband service. 

Wateen's WiMAX service, launched in 2007, brings customers price and quality benefits through innovative services such as voice calling and WiMAX for residential customers and enterprise-level services which include Data VPN, high speed Internet access, VoIP, conferencing and find me/follow me applications for business customers. By expanding the network, Wateen will extend its service to more subscribers, and continue its dedication and commitment to serving Pakistan with an enriched experience. 

Tariq Malik, CEO Wateen said, "Wateen Telecom was the first company in the world to roll out an 802.16e WiMAX network on a nationwide scale. Today's announcement confirms our commitment to WiMAX and continued investment in our network to ensure our customers receive the most advanced services using the latest OFDM-based WiMAX solutions. Working with a global leader such as Motorola, we are revolutionizing broadband communications and enriching the lives of consumers in Pakistan." "Together Motorola and Wateen have pioneered the deployment of WiMAX. We're proud to have created one of the world's largest and most advanced wireless broadband networks and excited to be expanding its reach," said Ali Amer, Vice President Sales, Middle East, Africa and Pakistan, Motorola Home & Networks Mobility. "It is a clear display of Wateen's faith in Motorola, and a demonstration of the strength of our relationship and solutions that we remain Wateen's exclusive supplier of WiMAX equipment and services in Pakistan." Motorola's network expansion for Wateen is already underway and will be fully operational in the fourth quarter of 2008. 

Wateen Telecom selected Motorola's WiMAX and IMS core technology to build its next-generation wireless broadband network in 2006. With Motorola's global experience and services expertise, Wateen's WiMAX network was deployed in 17 major cities within a short time span of just nine months. Wateen also selected Motorola's managed services capability which ensures the service provider focus on critical resources, helping to increase operational efficiencies and match the pace of rapidly advancing technologies. 

Wateen Telecom uses Motorola wi4 WiMAX technology to bring wireless broadband to Pakistan. A portion of the purchase of this contract is being financed by Motorola About WateenWateen Telecom is the Abu Dhabi Group's latest communication investment in Pakistan, after the successful launch of Warid Telecom which provides mobile GSM services customers in 145 cities across Pakistan. Wateen Telecom is set up to become the leading "Carrier's Carrier" providing services based on quality, reliability and affordability in the communication and media sector. Wateen is committed to bringing next generation services to your doorstep... today. For more information about the company, please visit Wateen Telecom ::: 

Motorola is known around the world for innovation in communications. The company develops technologies, products and services that make mobile experiences possible. Our portfolio includes communications infrastructure, enterprise mobility solutions, digital set-tops, cable modems, mobile devices and Bluetooth accessories. Motorola is committed to delivering next generation communication solutions to people, businesses and governments. A Fortune 100 company with global presence and impact, Motorola had sales of US $36.6 billion in 2007.


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## Neo

*'Pakistan has potential to enhance trade with Turkey' ​* 
ISLAMABAD (October 30 2008): Pakistani business leaders and Industrialists in MUSAID International Trade Fair and International Business Forum in Turkey used this forum to attract the businessmen and investors of more than 60 participating countries to take advantage of attractive investment opportunities in different sectors of Pakistan.

"Our efforts were to make sure that Pakistan could get maximum investment in this critical phase of its history", said Muhammad Ijaz Abbasi, ICCI President after his return from Turkey on Wednesday.

The ICCI President said MÜSIAD is an Independent Industrialists and Businessmen's Association and MÜSIAD International Trade Fairs promise to give the indispensable means of increasing sales, expanding to the promising markets. He said MÜSIAD has the potential to continue to initiate prosperous commercial opportunities for the enterprising business entrepreneurs who are willing to take part in its fairs.

He said many sectors of the economy like machinery, computers, automation, automotive, spare parts and electrical goods, textiles, garments, leather and carpets, construction, furniture and building materials, food, beverages, packaging and service sectors get representation in this trade fair to explore more business opportunities.

Speaking about the opportunities of further enhancing bilateral relations between Pakistan and Turkey, ICCI President said Turkey ranks 3rd in the world glassware production and 6th in the world textiles and garments production while Turkey's production capacity ranges from food industry to hi-tech based products such as F-16 warplanes and electronics.


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## Neo

*Korea keen to boost bilateral trade with Pakistan​* 
KARACHI (October 30 2008): Leaders of Korean trade delegation and Vice Chairman KEMA, Kin Hyon has said that Korea is interested to boost two-way trade and want to establish industrial units in joint venture with Pakistan.

Speaking at a meeting of Karachi Chamber of Commerce and Industry (KCCI) on Wednesday, he said that there is number of areas in which Korea can cooperate with Pakistan and provide technical information Speaking on the occasion, Commercial Counsellor of Pakistan in Korea, Fawad Hasaim Rabbani said that 80 percent goods export to Korea from Pakistan comprises raw material.

He advised business community to export goods after some value addition to fetch more foreign exchange. He said there is good chance to export fish and fish products, vegetables and fruits etc. Referring to rice export to Korea, he said that Korean prefer another brand of rich which is not produced in Pakistan. He said that Korea imports only five percent of its total consumption of rice.

He said that yarn export from Pakistan to Korea also declining due to yarn contamination. However consumption of Pakistani fabric is on rise in Korea. He advised business community to frequently visit Korea to apprise themselves about Korean requirement and try to meet their demand as well as standards to boost export from Pakistan.

He pointed out that during 2007-08 Pakistan exported goods worth 490 million dollars to Korea and imported 650 million dollars which indicated that trade gap between two countries have narrowed down to some extent. President KCCI Anjum Nisar said Korea is an advance country and it can help Pakistan by establishing power generating units in joint ventures.


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## Neo

*Foreign investors much impressed by Expo Pakistan: TDAP official​* 
KARACHI (October 30 2008): The Chief Executive, Trade Development Authority of Pakistan (TDAP), Mohibullah Shah, on Wednesday said that Expo Pakistan had impressed foreign investors, as most of the delegates were likely to ink new export contracts with Pakistan shortly.

Talking to Business Recorder on the third day of Expo Pakistan, he said that although the main contracts would be unveiled at the concluding press conference, most of the delegates expressed interest in many fields, including agro-food, pharmaceutical, bio-medical and others.

He said that over 22 delegates, who had been brought by commercial counsellors, and nine delegates from other countries, called on him and showed their interest. He said that a delegate from Argentina assured him to establish a lithotripsy manufacturing plant in collaborating with local manufacturers after doing research and development, and added that this plant would produce hundreds of thousands of machines and bring more investment in Pakistan and job opportunities.

He said these machines are being produced at very high prices at the native country but now these would be produced at cheaper rates. Similarly, the delegates from China and Hong Kong showed interest to import agro-food including dates, mango, oranges, apple etc from Pakistan, while the delegates from Argentina are likely to ink contracts to import rice from Pakistan, especially Basmati rice.

He said that most of country's exports are being done through middle countries, even some time there are three or four companies of different countries involved in exports, which eventually increase the prices of goods. But after developing these new contacts, Pakistan would export its goods directly to targeted countries on cheaper rates that would open new dimensions of exports in the country.

He said that the delegates from France, led by Ms Rene Mardellet, expressed much confidence over Pakistani business and they are mulling to open institution of fashion designing including designing. He said that they would also help in drawing the curriculum regarding textile including designing, merchandising, dyeing, etc.

He said that the delegates who showed their great interest were from Sweden, Los Angeles (USA), Spain, South Africa, France, Malaysia, Romania, Bangladesh, Argentina, Morocco, South Korea,, Hong Kong, Norway and Moscow.

Regarding the impression on law and order situation he said that the delegates were highly satisfied with security arrangements, and added that most of the delegates were freely moving in the industrial areas of the city as well as in the market for shopping.

Meanwhile, M D, Pegasus Consultancy, Asim Siddiqui said that the event would be helpful to attract foreign buyers at large scale and bringing foreign exchange into Pakistan. owever, he added that getting exports from these types of exhibition were year-lasting exercise, but TDAP was reviewing inputs that were claimed by commercial counsellors.

He said that the TDAP had arranged tours for other cities including Lahore, Faisalabad and Sialkot to seek new trading dimensions across the country. He said that this event was a breakthrough in the prevailing uncertain condition and would provide support to the business community.

Regarding tight security arrangements he said it was not a local issue but internationally the countries have made security arrangements as their first priority to avoid any untoward incident, which could defame the country's creditability. He said that Expo Pakistan had proved that Pakistan has best atmosphere for international buyers.


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## Neo

*Industrial and special export processing zones to be converted into SEZs​* 
ISLAMABAD (October 30 2008): Industrial Zones and special export processing zones established in different cities of the country would now be converted into Special Economic Zones (SEZs) which would be enclaves for sector specific economic activities.

Sources told Business Recorder on Wednesday that SEZs would be given incentive-laden package to make them more competitive in the international market. The SEZ, which would be an enclave for enterprises operating in well-defined geographic location with certain economic activities which are sector specific are promoted by a set of policy measures generally not applicable to the rest of the country.

In consultation with the Ministry of Industries, the Ministry of Privatisation had moved a summary to ECC on Special Economic Zones framework to make the industries to be sold more attractive for the prospective buyers, which the ECC had approved.

It was proposed in the summary that these zones be given handsome concessions like the incentives being carved for the Special Re-construction Opportunities Zones (ROZs) for encouragement of Zone developers and investors that included corporate income tax holiday of up to 10 years.

The other incentives include: minimum size of the Economic Zones reduced from 500 to 50 acres; the condition of minimum 40 percent foreign equity would not be applicable in these economic zones; and country/company specific provision would be deleted.

Policy framework for the establishment of SEZs would be protected through an Act of Parliament, which is being drafted at the federal government level.

The policy framework for SEZs emphasises development and operational management of SEZs by the public sector or through Public-Private Partnership. It includes governing of all aspects of the zones from planning, development, land allotment and zone management; to defining mechanism for the establishment and administration of SEZs.

The framework also encompasses incentives for promotion of investment; industrial estates, parks and small industrial parks; and reconstruction opportunities Zones (ROZs) in the NWFP and Balochistan with special status as accorded by the United States.

The modalities of the SEZ policy framework include a Board of Approval (BoA) at the federal level. The BoA will be comprised of relevant ministries, business leaders, and provincial governments and will be chaired by the Prime Minister. It would have the authority to grant SEZ status to all new and existing zones. The BoI will work out details of the administrative methods for processing applications for approving SEZs. The BoI will provide secretariat services to the BoA and will cater for all matters of SEZs through creation of SEZ Cell by hiring services of required professionals.

The private sector or public-private partnership zone developers, once approved for SEZ status, shall have authority to develop their master plans, allot land and approve individual investors in compliance with the rules set forth in the SEZ policy frame work.

Zone developers may purchase land privately on ownership or lease land from Federal/Provincial/Local Governments. The minimum size of an SEZ would be 50 acres with lease period of 50 to 100 years. The SEZ cell, BoI would facilitate investors in acquisition of already notified land in co-ordination with concerned government/department.


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## Neo

*UAE group keen to invest in Prime Minister's 'House for All' scheme​* 
ISLAMABAD (October 30 2008): Talon Group of United Arab Emirates (UAE) has shown interest of investment in mega housing projects of the Prime Minister Housing Scheme, "House for All." A delegation of the group held a meeting with Federal Minister for Housing and Works Rehmatullah Kakar here on Wednesday, and expressed the keenness to participate in the upcoming housing scheme in Pakistan.

The delegation, headed by its Chief Executive Kerman Shahchi, exchanged views with the Minister on the modalities, financing and other issues of common interest related to the construction of housing units/flats under the Prime Minister's "Housing for All" programme. Housing Secretary Sami-ul-Haq Khilji, Managing Director of PHA Raja Muhammad Abbas, Chief Engineering Advisor Ali Abid, Director General of Pak. PWD, Ali Akbar Sheikh and other senior officials of the Ministry also attended the meeting.

Rehmatullah Kakar expressed gratitude to the UAE delegation for their interest of participation in the upcoming mega housing schemes in Pakistan. He said that there existed a lot of potential for the local and foreign companies in the construction of one million housing units in the country annually under the Prime Minister's housing programme and the government would provide all out co-operation.

Housing Secretary Sami-ul-Haq Khilji briefed the visiting delegation about the salient features of the scheme which, would be provided to the poor, needy government servants as well as to the general public on affordable cost. He said that all arrangements had been made to kick off the gigantic housing scheme.


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## Neo

*UAE sets Nov 17 for urgent Pakistan aid meeting ​* 
ABU DHABI (updated on: October 30, 2008, 15:26 PST): Potential donors to Pakistan will meet in Abu Dhabi on Nov. 17 to discuss urgent help in a financial crisis that has left the country needing billions of dollars in loans, the UAE foreign minister said on Thursday. 'It is an important conference,'Sheikh Abdullah bin Zayed al-Nahayan said during a joint news briefing with his visiting German counterpart Frank-Walter Steinmeier.

"It will be important for the Friends group to act quickly to shield Pakistan from the worsening impact of the financial crisis," he said through a translator, referring to the "Friends of Pakistan" group launched in New York last month.

Pakistan is facing a balance-of-payments crisis and has just a few weeks to raise billions of dollars in foreign loans needed to meet debt payments and pay for imports.

Steinmeier, whose tour has already taken him to Pakistan and Saudi Arabia, welcomed progress towards new talks on Pakistan, which German diplomatic sources said would take place at the level of senior officials.

Germany and the United Arab Emirates are both members of the "Friends of Pakistan" group. Saudi Arabia confirmed on Tuesday that it would also attend the meeting in Abu Dhabi next month.

Steinmeier earlier this week urged Pakistan to seek the help of the International Monetary Fund to tackle its financial woes and said Germany would be ready to help negotiate a deal.

Seven-month-old government, running Pakistan after more than eight years under former army chief Pervez Musharraf, has been reluctant to go the IMF but has been looking for help from friendly governments.

Donors caught up with their own problems brought on by the global financial crisis apparently prefer to wait for IMF involvement, which would bring discipline by attaching conditions and targets, analysts say.

Pakistan has been in talks with the IMF in Dubai since last week but has yet to decide if it will seek extra IMF aid.

"I assume that by the date of the (Friends of Pakistan) conference the negotiations with the IMF will have been concluded," Steinmeier said. "This assumes that there is agreement on the conditions. We are both confident that this will happen in the next few days."

Steinmeier has insisted that the global market crisis can only be tackled with international cooperation, saying the circle of the Group of Eight had to be expanded on this issue. He has welcomed Gulf states' willingness to get involved.

Asked about British Prime Minister Gordon Brown's call on Gulf oil producers to boost funds to the IMF, Steinmeier said: "We have seen that there is a lot of demand on the IMF. In this context the IMF is reaching the limit of its capacity and we must find possibilities to keep it liquid together. This is the duty of everybody including the Gulf states."

Sheikh Abdullah said Gulf Arab states were willing to make all the necessary efforts to protect the international economy from the effects of the financial crisis.


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## Neo

*Fund still insisting on big increase in discount rate​* 
ISLAMABAD (October 30 2008): Pakistan has reportedly agreed to a front loaded stabilisation programme of $6 billion for a period of 20 months with the International Monetary Fund. This will be in addition to $4 billion the country is expecting to get from other multilateral sources.

According to informed sources, Pakistan would receive up to US dollar three billion as a first tranche after due approval from the Fund's Board of Directors. The talks held in Dubai between the two sides concluded on Wednesday without reaching an agreement on the discount rate. The IMF wants that discount rate is adjusted upward by the State Bank of Pakistan.

Pakistan to get $3 billion as first tranche of $6 billion programme: 

The programme will be for a 20- month period: The Fund team was initially asking for a four percent hike in the SBP policy rate. However, later, the seemingly tough conditionality was pruned to 3.5 percent.

With the support of all the relevant data the SBP Governor argued for four hours that it was not advisable to hike the rate so steeply in an environment of world-wide recession, causing a reduction in demand. The hike would raise the average lending rates to 18 to 20 percent range. Not only will the existing industrial units shut down, the feasibility of new investments would be seriously jeopardised, it was argued.

The Fund technical experts' reported stance appears to be in conformity with the standard macroeconomic model which requires a reduction in fiscal deficit and a more tighter monetary stance to reverse the present forex reserve loss. In the cases of Iceland and Hungary, the Fund has hiked the policy rate by three percent to around 18 percent. Iceland had reduced its prime rate by three percent.

The Fund has forced it to raise it by six percent. Hungary had also raised its base rate by three percent to avail help from the Fund. The Stand-By Arrangement (SBA) will commence in November 2008 and end in June 2010. Local economists fear that a rise in SBP discount rate would embellish inflation due to institutionalising of high interest rate.


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## Neo

*WSJ slams IMF's prescriptions​*
NEW YORK (October 30 2008): An influential US newspaper has criticised the prescriptions of the International Monetary Fund (IMF)--cuts in government expenditures, devaluation, and tax increases--for bailing Pakistan out of the financial crisis, saying that the measures would have opposite effect.

"Pakistan needs market-oriented reform along the Chilean and Irish models, not the IMF's austerity prescriptions," The Wall Street Journal said in an editorial, titled 'Does the IMF have no fresh ideas?' "Pakistan's economic wellbeing matters not only for its 165 million citizens but also because it's a key country in the world-wide war on terror," the editorial said.

The Journal said the IMF declined comment on a Pakistan Finance Ministry spokesman's statement last week that the Fund "wants Pakistan to reduce its government expenditures, maintain a 'flexible' exchange rate and 'increase' its tax-to-GDP ratio".

"These are exactly the 'beggar-thy-neighbour' policies that sent Thailand, South Korea and Indonesia reeling in 1997-98," the editorial said. "Cutting subsidies is necessary, but politically impossible right now, with inflation running at 25 percent and daily power cuts. Depreciating the rupee vis-a-vis the dollar might benefit the country's crony capitalists who make money by selling cheap exports, but it would hurt the vast middle class, raising taxes in the middle of the financial crisis--no one is talking about cutting them--would drive away foreign investment."


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## Neo

*Economy won't suffer after loan: Tarin tells Senate​* 
ISLAMABAD (October 30 2008): Advisor to Prime Minister on Finance, Shaukat Tarin on Wednesday said that Pakistan would avail the IMF loan facility on its own terms and conditions, negating the notion that our economy would suffer after IMF facility.

Giving a policy statement what he termed 'the government roadmap' in the Senate during a five-hour long question-answer session in which all the Parliamentarians were given opportunity to express their thought over the prevailing economic crisis, Tarin said that trade deficit of over $20 billion was the biggest problem, disturbing the balance of payment.

He said that it is not the government business to borrow from the State Bank and if it is in need of money it must borrow from the open market on existing interest rate. He said that he has directed the Finance Ministry in this regard strictly.

He categorically said that Pakistan requires short-term injection of $5billion, which would not affect our economic fundamentals, as we have to make structural adjustments according to our requirements. Tarin said that personally he was not in favour of IMF programme but as a last resort this would be the last option to save economy from default.

He said that the country immediately needs an inflow of $5billion to sustain its present economic position. Though we need this amount next 15 to 20 days we expect it from Friends of Pakistan or international financial institutions. If Plan A and B does not work according to our expectations, we will seek short-term assistance from the IMF. He informed the Senate that if our plan will be acceptable to the IMF, Pakistan would avail the facility.

He dismissed the impression that the IMF facility would be linked with stringent conditions and the government would have to take anti poor measures as a result of this facility. "We will get out of the IMF facility within two years," he told the House adding that situation of Pakistan economy was entirely different today from 1998 because of galloping trade deficit and over $1.5 billion current account deficit.

Tareen said that all the International Financial Institutions (IFIs) have been asking Pakistan to get endorsed its economic recovery plan from the IMF. He said that there was a difference of opinion between the IMF and Pakistan over 17 percent core inflation and 13 percent interest rate.

"Pakistan needs a cohesive and well conceived plan backed by the nation to address the prevailing economic crisis." Responding to Senators' questions, he said that Iran has offered to give oil on deferred payment, which the government is considering. He said that the problem was that Iran's oil contains heavy crude. He said that none of the country has given financial help to Pakistan but China was evaluating some projects to make investment in Pakistan.

The advisor made it clear that there would be tax on real estate and agriculture and over taxation system would be rehashed with the purpose of rationalisation. There would be only two taxes, income and consumption tax while all other taxes would be abolished. A progressive taxation system was the need of hour and tax-to-GDP ration has to be increased from 10.5 percent to 15 percent for sustainable growth.

He said institutionally, there is no planning in the country and whatever planning we had, it was done in a vacuum 'without foundations.' "We need executional framework on national level." Sharing his views on the capital market reforms, he said though our banks are performing well, there is still a question mark that are they meeting people's requirements? However, he stressed that banking system and capital markets need to be people-friendly. The banks must enlarge their operations in the rural areas to cater for the needs of farming community and to streamline their saving.

He said that our agriculture is 22 percent of GDP and just 7 percent of our credit. SME banks customers are huge and need to be focused. He said that Pakistan being an agrarian economy has to concentrate on improving farm output to raise the living standard of more than 60 percent population living in rural areas. This has resulted in increased imports, putting extra burden on reserves. Inflow of foreign currency has dropped and due to lack of control on high energy and food bills, the economy continues to suffer.

Tarin emphasised on controlling inflation and strengthening macroeconomic indicators to ensure sustainable growth. He particularly referred to the performance of current tax machinery and said that the tax-to-GDP ratio will have to be increased from 10.5 percent to 15 percent in next five to seven years. We cannot show seven to eight percent growth with current pace of revenue collection. Everybody has to contribute his share in the taxes to get country out of this economic mess.

He admitted that the Federal Board of Revenue (FBR) has to take enforcement measures to plug loopholes in the existing tax collection system. For this purpose, broadening of tax-base and brining more people into tax net without harassment is of utmost importance.

He mentioned to cut down non-development expenditures like vehicles and petrol and foreign visits, involving the private sector in executing public sector development programme. "If half of the spending come from the private sector and management is shifted to them, it would enhance efficiency." He said the amount saved this way would be spent on poverty alleviation and human development.

Tarin said abject poverty has doubled over the last two years rising up to 28 percent and overall poverty is exceeding 40 percent. Inflation is at 25 percent of which food inflation is now at 30 percent. Fiscal deficit which was 7.4 percent was actually heading towards almost 10 percent. Balance of payment deficit is at 8.4 percent of GDP and is one of the highest for any country.

He said our balance of payment is under pressure and we need assistance from international financial institutions. He said through macroeconomic measures we shall have to strengthen our reserves.

He said our first strategy would be to evolve a safety net for country's poor which was earlier neglected. "As 28 percent are living in abject poverty, we need to double the household getting assistance under Benazir Income Support Programme from existing 3.5 million to 7 million. "We shall have to pick one child from each household for relevant technical training for six to nine months enabling them to earn living and help alleviate poverty," he said.

The third initiative, Tareen said, would be health insurance for every poor family. For this, we shall have to pay Rs 15,000 to 20,000 annually for each family.

"We shall also have to start public works at union council level to provide employment to local people," he said and added, "for all these measures we shall have to cut down allocations of certain areas." He also underlined promotion of 'production led growth.' "It is a pity that an agricultural country like Pakistan is facing food shortage. We shall have to sit down with all stakeholders and prepare a comprehensive plan to move forward."

Tareen said the government is also resolving the issue of under payment to farmers. Wheat price has been put at reasonable level and rice and cotton prices would also be improved to benefit 66 percent people associated with agriculture.

The manufacturing sector, he said is showing negative growth due to power and gas shortages. "This sector is fragmented and needs innovation and consolidation to compete in international market." If we do not have sufficient power, gas and petrol, we cannot get desired results. We shall have to devise an integrated energy plan.

He also stressed the need for public-private partnership to develop communication infrastructure like construction of roads, bridges and other projects. We need to develop policy framework inviting private sector to come in and invest in utilities. He also mentioned to success of this strategy in certain countries and said: "it would reduce burden on the government and also enhance efficiency of various sectors."

In the past, he said no long term planning was made by the government to enhance sectoral performance, totally ignoring the culture of long term debting. "We suffered big losses for minor savings. But, we shall now create a system for long term sustainability and to benefit real economy," he said, "we shall also ask the capital market to contribute to real economy."

For effective implementation, he said, we shall have to put in place effective administrative machinery. Though it is already too late, yet we shall devise institutional framework and put in place a think tank at national level.


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## Neo

*Economic recovery roadmap​*
EDITORIAL (October 30 2008): Prime Minister's Advisor on Finance Shaukat Tarin has said that the roadmap drawn up to revitalise the economy and the measures unveiled by him would go a long way to help the government put the economy back on track. The predominant focus of the government will be on taxing sectors such as real estate, agriculture and stock exchanges that have been provided relief until now.

However, under the roadmap these would be fully brought under the tax net in an initiative aimed at raising the tax-to-GDP ratio from 10.5 percent to 15 percent. He has also said that the private sector will be involved in public sector projects. A very important point Tarin has stressed in his address to traders and businessmen at the FPCCI office in Karachi is that the government needs to rationalise expenditures and stop waste of precious resources.

He has promised that the government will ensure that the interest rates of banks are brought down to below 10 percent in the next two to three years, as this will help establish new industries. Macroeconomic indicators need to be stabilised to curb runaway inflation as well as poverty that has risen to 25 percent from 12 percent.

An important plank of the economic recovery strategy is that if inflation is controlled, the local currency will also remain under control, which in turn will help the government address the macroeconomic problems. Tarin has rightly said that Pakistan should be turned into a production-based and not a consumption-based country.

This will also substantially contribute towards attaining the government's target of securing a cut in fiscal deficit from 7.4 percent at present to 4.3 percent of the GDP within a year. As things stand today, the short-term solution to the grave financial crisis gripping the country today lies in acquiring a financial bailout under the three-option package evolved by Tarin.

And, as we have argued in this space earlier, Pakistan seems to be limping towards Plan C of the package after getting a discouraging response from IFIs and the friendly countries for Plan A and B for the balance of payments support. Viewed at a larger plane, a fundamental cause of the economic problems the country is facing today has been the traditional propensity of our governments to spend more than what they earn.

According to one estimate, our imports, for instance, are valued at $15 billion more than our exports. This has contributed to the piling up of fiscal deficit. Secondly, exemptions granted to agriculture, real estate and stock exchanges have played a major role in depressing the country's tax revenues.

Taxing agriculture income has, in fact, been subject of heated debate over the decades, with the feudal heavyweights arguing that most of the land holdings are too small to be able to generate taxable income. It appears to be a sound argument, though it cannot be denied that agriculture is a major contributor to the national economy, as a leading supplier of raw material to industry as well as a market for industrial products.

However, this argument has been effectively countered by the pro-tax lobby which has based its position on the universal principle that it would be untenable to make a distinction between agricultural and non-agricultural income for purposes of taxation, because all earners of taxable income, whether from agricultural or non-agricultural sources, must pay income tax. Just as non-agricultural income below a certain level is exempted from tax, the same principle should be applied to agricultural income.

Analysts have also justified taxing agricultural income on the ground of horizontal equity; ie individuals in equal economic position should be taxed equally. Further, income tax is imposed on personal income, and not on sectors. Hence there is no justification for tax exemption extended to agriculture sector.

Secondly, the lucrative real estate sector, along with its numerous subsidiaries, has witnessed in recent years an unprecedented growth, with a turnover running into billions of rupees. However, despite the boom the sector has stayed out of the rigorous tax regime, resulting in a huge loss to the exchequer. The real estate sector has a large number of importers, exporters, contractors and suppliers who play an important role in its subsidiaries, but a majority of them reportedly remain non-filers.

We believe that a permanent solution to the country's economic woes lies in generating more resources and then frugally spending them through well-targeted allocations for national projects. Secondly, bringing non-compliant sectors under the tax net is as important as honest collection of taxes from the sectors already under the tax net, for which the entire tax machinery needs to be overhauled.

The implementation of Tarin's advice to the government to plug waste of financial resources, and widen the tax base can go a long way towards putting the country's economy back on track. Thirdly, observance of genuine fiscal discipline in all its diversity can rid the country of all these evils.

There is an urgent need for the government to address the problems of water and power sectors on a priority basis because expansion in agriculture and industrial sectors will not be possible without such initiatives. And lastly, the implementation bureaucracy should be suitably activated to meet the deadlines for projects in all sectors of the economy.


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## Neo

*Tough decisions to bring economic stability: Tareen​*
ISLAMABAD: To address the ailing economy of the country, Pakistan has developed a homegrown economic stabilisation plan based on a set of tough decisions, Adviser to Prime Minister on Finance, Shaukat Tareen said.

He was talking to Simon McDonald, Adviser to British Prime Minister on Foreign and Defence Policy. Tareen said that the plan would address issues like fiscal deficit, balance of payments and energy scarcity. Countrys homegrown economic stabilisation plan is robust enough and is likely to be supported by IMF, he maintained.

An integrated energy production plan was also in the offing to develop business, commercial and industrial sector, he added.

Tareen said Pakistan is currently passing through hard times but the country would soon attain macro-economic stabilisation. The government aims to provide a safety net to the underprivileged sections through Benazir Income Support Programme (BISP).

BISP is designed to provide a social package comprising health, education and insurance cover to the poor and the vulnerable, Tareen maintained

He briefed the visiting British advisor on matters relating to Pakistans ongoing economic development issues, interaction with world communities on matters of multilateral economic interest and Pakistans recent overall policy initiatives for peace and development in the region.

The banking system in Pakistan witnessed unprecedented growth on the back of consumer finance, which, in the short-term, helped to improve the macro-economic indicators. This consumption led growth was unsustainable and was bound to put the economy under stress.

Adviser to British Prime Minister briefed Tareen on his evaluation of world economic crisis and its impact on the regional. Both the sides also discussed the existing politico-economic scene in the South Asian Region and Britains commitment to improve the overall social conditions focusing world peace.

They also agreed that recent downslide in oil prices will likely ease the existing economic pressures.


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## Neo

*Higher rates seen as bitter IMF pill for Pakistan​*
KARACHI: With Pakistani and International Monetary Fund officials remaining tight-lipped about talks that are expected to lead to IMF help, analysts said on Wednesday that interest rates are likely to be the biggest bone of contention.

The 7-month-old government running Pakistan after more than eight years under former army chief Pervez Musharraf has been loath to go to the IMF but the severity of its balance-of-payments crisis has left little option.

An IMF package is usually contractionary and often involves cutting spending, raising taxes, accelerating privatisation, increasing interest rates, and exchange rate flexibility to correct fiscal and external imbalances and control inflation.

Analysts said the most bitter pill for Pakistan to swallow might be having to tighten monetary policy. At this stage, given the fact that monetary conditions are already tight and there are some banks that are feeling more of a squeeze than others, this sort of standard tightening of interest rates could be a little problematic for the authorities to implement, said Mushtaq Khan, a London-based economist for CitiBank.

Khan said the government had already taken the difficult measures of eliminating subsidies and allowing the exchange rate to depreciate under payment pressures.

As subsidies have been cut, Pakistan has raised retail fuel prices seven times since February and electricity rates have almost doubled. Inflation is close to 25 percent.

The rupee has fallen nearly 31 percent against the dollar this year, while total foreign reserves have fallen sharply from a high of $16.5 billion in October last year to $7.32 billion on Oct. 18, of which the central bank accounted for $4.04 billion. The central banks reserves represent about one-and-a-half months of import cover.

Businesses could buckle: The central bank raised the key discount rate in July by 100 basis points to 13 percent, putting a squeeze on hard-pressed businesses which would hate another rise imposed by the IMF.

There would be much debate about the unpopular decision of further monetary tightening as theres already pressure from the business side, said Asif Qureshi, head of research at Invisor Securities Ltd.

Another interest rate rise could drive some businesses to the wall, said another analyst.

Already reeling from the rate rises in the past few months, businesses have cut back on expansion, said Asad Iqbal, managing director at Ismail Iqbal Securities Ltd. With the IMF looking to contract the economy to stabilise the balance of payments, businesses are likely to buckle due to increased financing costs. But CitiBanks Khan said an interest rate rise was needed to put off government borrowing from the central bank.

A certain increase in interest rates, unfortunately, is required and for a very specific reason, that government borrowing from the banking system has been very high and most of the borrowing comes from the central bank, said Khan. This needs to be reversed. Pakistans economic woes began before the global financial crisis set in, but analysts say the crisis has compounded Islamabads difficulties by making donors reluctant to step in.

The country needs short-term help to fill a financing gap of between $3.5 billion and $4.5 billion, and $10 billion to $15 billion to cover a current account financing gap and undertake adjustments over the next two years. reuters


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## Neo

*Exporters eyeing $3 billion rice export on expected bumper crop​*
KARACHI: The government has set export target of $3 billion compared to $2.5 billion last year, as bumper rice crop is expected during the current season, Rahim Janoo, newly elected chairman of Rice Exporters Association of Pakistan told Daily Times.

Pakistan so far has exported a total of $1 billion rice out of which the largest share was exported to Kenya, the largest buyer of Pakistani rice in Africa. It is expected that rice worth Rs 200 billion will be exported to Kenya this year.

The exports to Iran are also expected to resume, which were earlier hindered by Indian exports. Recently, Iran has also reduced import duty on the staple food, which is an additional advantage for the local exporters.

Ijaz Ahmed Choudhary, a rice exporter, told Daily Times that the decision of cutting the import duty by Iran would definitely boost Pakistani rice export.

In the international market the prices of Irri-6 plunged by almost 100 percent from $800 per tonne to $400.

An exporter, Muhammad Amin said that the local market would witness the impact of declining prices in the international market. The traders are continuing to fleece the consumers and are not providing any relief to them. The government should take serious notice of this malign practice, he demanded. Replying to a question about rice husking, Jano said, About 7000 rice husking mills need technical staff to increase their productivity and REAP plans to establish training centers for providing skilled labour to the husking mills.

REAP has planned to set up two training schools for the training of the technical staff who can operate modern machines. We need a grant of Rs 100 million form the government in this regard, he demanded. REAP has also set a vision 2020, by which the association has set a target of $20 billion rice exports.

Earlier, high commissioner of Pakistan in Kenya, Iftekhar Ahmed Arain held a meeting with REAP managing committee members. Iftekhar said that besides Kenya, Uganda and Tanzania are also interested to import Pakistani rice.

He said that there is substantial demand for rice in the international markets, as Philippines, India and other rice growing countries have banned exports to prevent local food shortages.

The ban on non-basmati rice exports from India will continue to keep local prices firm and put a tight rein stocks in the UAE. Pakistan can earn much-needed foreign exchange through rice exports, he added. Replying a question he said that substituting rice for tea is not a viable option and we are not going to take that course. He demanded that a free trade agreement should be negotiated with African countries, as it is a potential market for Pakistani rice.


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## Neo

*Pakistan financial crisis : IMF advised not to recycle past mistakes​*
WASHINGTON: The International Monetary Fund has been advised not to recycle past mistakes by preaching its damaging elixir of currency devaluation and tax hikes to Asian nations in financial crisis.

An editorial in Wall Street Journal noted that as Pakistans economy teetered, the IMF was once again on the scene with familiar policy prescriptions, but this is no time to recycle past mistakes. The newspaper also noted that like Ukraine and Iceland, Pakistan was in a balance-of-payments crisis. The country imports large quantities of food and fuel, and pays for it in US dollars. As the price of these commodities rose over the last year because of the US Federal Reserves easy money policies, Pakistan spent down its foreign exchange reserves. Government officials estimate Pakistan needs $3 billion to $4 billion to cover its foreign-currency debt obligations over the next month alone. Islamabad could ask for as much as $15 billion from donors, the Wall Street Journal speculated.

According to the newspaper, Pakistans new government could have mitigated this pressure earlier this year had it moved quickly to stabilise the countrys security situation and court foreign investment. Instead, it focused on domestic political battles  such as the reinstatement of judges deposed under former president Pervez Musharraf. Domestic terrorism re-emerged in major cities, investors fled and the local currency fell 25 percent in value, fuelling inflation and making imported fuel and food relatively more expensive. The newspaper said that Islamabad now had few good options. Its traditional partners  Saudi Arabia, China and the US -- have declined so far to provide additional short-term capital. A Friends of Pakistan donor conference is scheduled for next month in Abu Dhabi, but Pakistans time is running short, and the IMF  which has not had much to do since governments cleaned up their balance sheets after the Asian financial crisis  is peddling its services.

The IMF prescription now achieves ends that are contrary to what it was set up to do. A Pakistan Ministry of Finance spokesman confirmed last week that the fund wants Pakistan to reduce its government expenditures, maintain a flexible exchange-rate (translation: further depreciation), and increase its tax-to-GDP ratio.

The IMF has declined comment. These are exactly the beggar-thy-neighbour policies that sent Thailand, South Korea and Indonesia reeling in 1997-98. Cutting subsidies is necessary, but politically impossible right now, with inflation running at 25 percent and daily power cuts. Depreciating the rupee vis-à-vis the dollar might benefit the country's crony capitalists who make money by selling cheap exports, but it would hurt the vast middle class that has seen its savings inflated away. Raising taxes in the middle of the financial crisis  no one is talking about cutting them  would drive away foreign investment, which already sees Pakistan as an expensive and dangerous place to operate  Pakistans economic well-being matters not only for its 165 million citizens, but also because its a key country in the worldwide war on terror. Pakistan needs market-oriented reform along the Chilean and Irish models, not the IMF's austerity prescriptions, the Wall Street Journal wrote. khalid hasan


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## Neo

*IMF loan on our own terms, says Tareen​*
ISLAMABAD, Oct 29: The government told the Senate on Wednesday it would consider an IMF aid package on Islamabads own terms if other sources failed to provide up to $5 billion it needed within the next 15 to 20 days to cope with the present economic crisis.

The prime ministers adviser on finance Shaukat Tareen said at the start of a debate in the upper house on the countrys prevailing economic situation that other sources being tapped for the immediately needed inflow of funds were the newly created Friends of Pakistan Forum and international financial institutions (FIs).

We need this amount within next 15 to 20 days and if Friends of Pakistan or other IFIs do not ensure us this amount, we shall have to go to IMF, he said in his first speech to the Senate in which he also gave outlines of a roadmap to take Pakistan out of its present economic difficulties marked by fears of a default in repayment of foreign debts if a bailout is unavailable.

But he said the roadmap would be discussed in detail with all stake-holders.

The advisers speech was followed by a bombardment of questions from both the opposition and treasury benches until late into the night when Mr Tareen told the house the International Monetary Fund had not proposed any new conditionalities for the package although questions about ways to contain the rising inflation were being debated.

Many members from both sides of the house either opposed taking an IMF package or voiced fears about the cost of such a course, particularly a possible adverse impact on the poor sections of society. But some members said there was no other option left because they did not hope Pakistan would get the needed help from other sources such as Friends of Pakistan, which includes several friendly countries including the United States and China as well as the United Nations and the European community.

If I have my say, I will not have the IMF programme, Mr Tareen said in his second speech of the Senate sitting while referring to criticism of the Fund vis-à-vis the experience that Pakistan and many other developing countries went through in the past.

But he said the situation had changed now and there would be no harm in opting for the IMF if it accepted Pakistans economic plan, which he added would not hit its poverty alleviation programme or agriculture.

If they (IMF) endorse our plan, and they put the money on the table, I will ask the government to consider it rather than face a default, he said.

He said Pakistan could not afford a default whatever the pain.

The adviser also informed the house in reply to a question from the leader of house Raza Rabbani that our leadership is seriously considering Irans offer in a difficult situation to supply oil to Pakistan on a deferred payment basis although the Iranian crude was heavy while Pakistan had refining facilities only for light crude.

ROADMAP: Explaining his roadmap, Mr Tareen said Pakistan needed immediate measures for economic stability and said: We need to stand on our feet. We cannot afford to default. Wherever we can go and whatever we can get, we have to fulfil our financial obligations.

He called for planning to strengthening macro economic indicators to control inflation and ensure sustainable growth.

To achieve these targets, he said, tax to GDP ratio will have to be increased to 15 per cent from the existing 10.5 per cent in five to seven years.

He also hinted at plans to remove perceived loopholes from the tax system. We shall not be harassing anyone, but we shall have to collectively frame the rules and bring more areas into tax net through consultation.

He proposed cutting non-development expenditures such as on vehicles, petrol usage and foreign visits and involving the private sector in executing public sector development programme in what he called public-private partnership.

If half of the spending comes from the private sector and management is shifted to them, it would enhance efficiency.

Mr Tareen said the government strategy would be to evolve a safety net for the poor and doubling the households getting assistance under Benazir Income Support Programme from 3.5 million to seven million.

We shall have to pick one child from each household for relevant technical training for six to nine months enabling them to earn living and help alleviate poverty, he said.

Another initiative, he said, would be health insurance for every poor family for which the government would pay Rs15,000 to 20,000 annually for each family.

We shall also have to start public works at union council level to provide employment to local people. For all these measures we shall have to cut down allocations of certain areas.

He said the government would also resolve the issue of under-payment to farmers for their crops.The manufacturing sector, he said, was showing a negative growth due to power and gas shortages and needed innovation and consolidation to compete in the international market. We shall also have to devise an integrated energy plan.

He also stressed the need for public-private partnership to develop communication infrastructure like roads, bridges and other projects. We need to develop a policy framework inviting private sector to come in and invest in utilities.

Talking of the need to develop the capital market, Mr Tareen said although Pakistani banks were healthy, it was still a question mark if they were also meeting the needs of the people.

We shall have to tell our banks to become responsible citizens of Pakistan. They must go to rural areas and care for the needs of people there. he added.


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## pkpatriotic

*Pakistan's mounting troubles | Treacherous ground* 
*Oct 30th 2008 *
*From The Economist print edition*

*An earthquake adds to Pakistans woes*

ON TOP of a bloody insurgency and a listing economy, Pakistan must now contend with a natural calamity. Before dawn on October 29th, an earthquake of magnitude 6.4 or greater struck the mountainous province of Baluchistan not far from its capital, Quetta. The death toll quickly exceeded 200.







It was the biggest earthquake since one in October 2005 that killed over 70,000 in Pakistan-controlled Kashmir. After that catastrophe, America spent almost $1 billion on relief operations, ferrying supplies to mountain villages by Chinook helicopter. According to one American official, cited by an independent working group on Pakistan policy, the goodwill America earned represents the most successful strategic confrontation to date in the battle with the terrorists in South Asia.

Even before the latest earthquake, Pakistan was again hoping its strategic position would persuade the world to rush to its aid. The ground is giving way beneath its economy. A distracted, overstretched government has allowed inflation to soar (see chart), the rupee to plummet and foreign-exchange reserves to seep away. On October 17th the central banks stash of hard currency was just over $4 billion, enough to cover just four to five weeks of imports. 






Pakistan hoped for an infusion of cash from the Friends of Pakistan, an informal circle including China, America and Saudi Arabia. But to its dismay, only the IMF appears ready to offer the sums it needs as quickly as it needs them. The IMF is expected soon to approve a loan of up to $12 billion, probably spread over two years. 

*Pakistan and the IMF may not be friends*; but nor are they strangers. Some of the politicians and civil servants now in power were *pretty traumatised *by the IMF programmes they endured during the 1990s, says Mohsin Khan of the fund. In those days, the IMF twisted their arms to make tough fiscal commitments they could not keep. *In 2005 *the military regime, having proudly turned down the last two instalments of its loan, declared that it had *broken the begging bowl forever*. 

Which arms will be twisted this time? Pakistans newspapers are full of speculation. One even suggested the IMF would slash the armys budget by 30%. But that is far beyond the funds mandate. *We are economists not defence specialists,* says Mr Khan. The government perhaps has less to fear than it thinks. It has already decided to grasp the most painful macroeconomic nettles on its own. In a plan drafted in September, it resolved to cut the budget deficit to 4.3% of GDP, refrain from borrowing from the central bank and remove fuel and electricity subsidies. If it can do all that, the fund will have little more to add except money. No arms need be twisted.

But the government is struggling to keep its own promises. Bravely, it has raised fuel prices, even as the cost of crude has dropped. The price Pakistanis now pay at the petrol pump is more or less the market rate, Mr Khan says. But the government still had to borrow from the central bank last quarter. More seriously, it this week reversed its decision to raise electricity prices by 31%. Households and firms are loth to pay more for power that now seems to run only every other hour. Some of them burned their bills in the streets instead.

*It seems clear, then, that Pakistan will soon enter an IMF rehabilitation programme. But its not at all clear it will finish it. What is economically necessary may not yet be politically feasible. If so, later instalments of the IMF loan will be withheld. The danger is that Pakistan may have to endure the greater evil of fuel shortages, currency controls and even default before it accepts the lesser evil of stiffer taxes, higher electricity bills and the IMF.*


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## Neo

*Technical level talks with IMF conclude ​* 
*Pakistan continues to oppose IMFs insistence on increasing discount rate​*
Friday, October 31, 2008

ISLAMABAD: Technical level talks between Pakistan and the IMF concluded on Thursday at Dubai and the Fund has endorsed major points of economic stabilization program tabled by Islamabad except one or two things, which included IMFs insistence for further raising discount rates by 3 to 4 per cent, it is learnt reliably.

It requires further discussion between the two sides to sort out differences on these one and half point, official sources privy to talks between Islamabads economic managers and the IMF mission led by its Middle Eastern Region head, Mohsin Khan, said after reaching Islamabad on Thursday night.

Pakistans technical level delegation comprised of Secretary Finance Dr Waqar Masood, Governor SBP Dr Shamshad Akhtar, Joint Secretary Ministry of Finance Mumtaz Malik, Additional Secretary Asif Bajwa and two FBR members, who reached back to the country on Thursday afternoon after holding talks with the IMF mission in Dubai.

Except one and half point, the IMF has endorsed our economic stabilization program, official sources close to Islamabads delegation revealed to The News here on Thursday night.

The official refused to share details of differences areas where consensus could not be developed during last 8 to 10 days talks held at Dubai.

Regarding the exact size of possible bailout package from the IMF under Standby Arrangement (SBA), the official said that under the existing Special Drawing Rights (SDR) quota, Pakistan could get $1.6 billion. Pakistan can get multiple of SDR quota to 4 and 8 times which means that Islamabads financing size will be hovering around from $6.4 to $12.8 billion, he explained.

Another official confided that Pakistan may get six time higher than its SDR quota which means that its financing for 21 months SBA will be $9.6 billion, starting from the ongoing quarter (October-Dec) period and there will be remaining 6 tranches after every three months period till end of 2009-2010.

Pakistan will get upfront loaded SBA arrangement from the IMF, which will enable Islamabad to draw $3 to $4 billion first tranche within November 2008 after approval from the Board of Directors of the IMF, said the official.

Regarding challenging areas for the economic managers to do under the IMF program, the official said that the IMF is pressing to raise existing discount rates of 13 per cent to 17 to 18 per cent in order to curtail ballooning inflation. The IMF is trying to raise the discount rate in order to suppress demand side, said the official and added that Pakistan wanted to review its policy after six months in order to assess whether SBPs existing rate is helping in achieving the desired results or not.

We should forget higher GDP growth if discount rate is further increased, said a concerned official.

Another challenging area, according to the official, will be Islamabad ability to increase tax to GDP ratio by 5 per cent in the next five years which means that the government will have to increase its tax revenues in the range of Rs140 billion to Rs250 billion per annum by expanding the tax base on agriculture, services sector and capital gains tax..


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## Neo

*88MW more to be available from November: KESC ​* 
Friday, October 31, 2008

KARACHI: Under its plan to add 400 megawatts additional power generation by June 2009 to minimise electricity deficit, the Karachi Electric Supply Company (KESC) on Thursday announced the starting of partial operations by its new 220 MW power generation plant at Korangi after whose commissioning 88 MW will be available from the first week of November.

The new Abraaj-led management of the KESC also announced that after a decade when not a single megawatt was added to the generation capacity of the power utility it also received the first shipment of its plan to produce 50 MW of rental power generation for providing a temporary solution to the power supply woes of the Karachiites. It said that initial electricity production from the rental power plant would be available to the KESC from November 28.

Addressing a media briefing here at a local hotel, newly appointed Chief Executive Officer KESC Naveed Ismail said that efforts were already underway to minimise the duration of load shedding during the next summer season but given the situation of widened shortfall of electricity, there would be no quick solution to the problem of load shedding.

The CEO KESC was flanked by senior members of the new KESC management and Abraaj Capital. Replying to queries of newsmen, Ismail said that there would be continuity of load shedding instances in the metropolis but of limited duration during the upcoming winter while he remained evasive to the question as to when the KESC would be able to completely resolve this problem.

Further he said that it is also impossible for the KESC to overcome load shedding by the summer of 2009 but arrangements and steps are being taken to minimise its occurrence.

About the plan of KESC to add additional 400 to 450 MW power generation till the summer of 2009, the CEO said that other than the 220 MW Korangi power plant and 50 MW rental power generation the KESC would install another 200 MW power generation plant on a fast track basis, 50 MW additional power generation would be availed by enhancing the capacity of the existing generation plants, and 50 to 70 MW would be availed from the industry that would be surplus to its needs.

He said that KESC had plans to enhance its indigenous power generation capacity by 1000 MW in the next three years. Ismail also nullified the impression that KESC had been deliberately running its own generation plants below their capacity in order to conserve its capital, saying that in actuality there is no capital available to the new management of the KESC that could be conserved by not using it for fuel purchase.

He said the new power utility management had been exhausting whatever finances were available to it to procure furnace oil and gas to run its generation units especially at Bin Qasim Thermal Power Station.

But, he added that at the end of day there is not enough finance available for the procurement of fuel when KESC has been facing financial deficit to the tune of Rs900 million to Rs1 billion on a monthly basis. He informed newsmen that at present, KESCs balance sheet reveals total accumulated losses of Rs51 billion.

He said that in a situation when no new power generation plant had been installed by the KESC since 1997, 13 out of 19 of its existing plants have exceeded their intended life cycles. The average life cycle of the existing KESC plants is 27 years, he said.

He said that at present, KESC had been facing 38 to 40 per cent high transmission, distribution, and commercial losses and efforts should be made to minimise them and for this cause, the example of other electricity distribution companies in the country, like those in Lahore and Islamabad, could be followed.

He said the transmission and distribution network of KESC is highly overloaded due to the constantly rising demand of electricity in the city and in such a situation all 15,000 transformers of KESC are overloaded. He said that in such a situation exposing such overburdened electric supply system to frequent load shedding is highly hazardous for the system and causes tripping and breakdowns in electricity installations.

He said that Karachi is a metropolis, which is bigger than 70 countries of the world and extraordinary efforts, teamwork, and resources are required for its power supply.

He said the new KESC management would lead 17,500 workers of the power utility in an innovate manner, to best utilise and apply their efforts for improved working and services of the utility. He said that there would be no lay-offs or retrenchment among existing contractual employees of the KESC.

To a newsmens query, the KESC head said that the new management is very well aware of the complaints of power consumers regarding the extraordinary running of the newly installed electricity meters and a process had already been started to review the problem of the new meters.

He said the Abraaj-led management of KESC had been initially investing an unprecedented amount of 361 million US dollars to improve the working system and services of the utility, to achieve customer satisfaction. He said that in the coming years the investment would increase to one billion dollars.

Also addressing the briefing, CEO Abraaj Pakistan Syed Farrukh Abbas, said that components of complete transparency and public accountability would be observed in the financial and investment affairs of KESC, led by the new management, as had been the established tradition for the working of various companies run by Abraaj in 11 countries of the world.

He said the new investors and management of KESC enjoy complete confidence and trust of major concerned stakeholders of the country, be it in the arenas of politics or the business industry, so that the electricity needs of the metropolis, which is the hub of the trade and financial activities of the country, are ably fulfilled.


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## Neo

*$50m worth of deals inked at Expo Pakistan ​* 
Friday, October 31, 2008

KARACHI: Chief Executive Officer of TDAP, Syed Muhibullah Shah Informed that export contracts worth US$ 50 million have been signed between Pakistani traders and foreign buyers during the four days of the Expo Pakistan while several memorandums of understanding promise another $100 million worth of businesses to enter the country in the following months.

During a press conference on Thursday at the Karachi Expo center, Shah further informed that a US$ 10 million contract had been signed by Korea with local counterparts for ethanol related products. He added that Argentina had also introduced a new surgical instrument for laparoscopy for which they had brought the patent to Pakistan.

Since our surgical equipments are of the highest quality, the patent to manufacture these surgical instruments have been granted to Sialkot from where the finished goods would be exported back to Argentina he stated.

Contracts and MoUs have been signed for the follows products: handicrafts, leather products, tiles, surgical equipments and textile garments amongst others.

Shah expressed that on commercial terms, the event had been extremely successful and in fact demand had exceeded the space available and therefore a new exhibition hall is to be constructed before next years event.

He commented that the 6000sq meters space of the Karachi Expo Centers six halls was proving to be insufficient for the events that are held there as demand from foreign visitors was increasing with time. He observed that despite warnings from travel advisories, foreign investors and buyers continued to visit Pakistan as there were ample trading opportunities in the country.


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## Neo

*Six hydropower projects to be initiated by 2010 ​* 
Friday, October 31, 2008

LAHORE: In addition to initiating construction work on the 4,500 MW Diamer-Basha Dam Project next year, another half dozen mega hydropower projects including Kohala, Dasu, Bunji, Munda, Palas Valley would be undertaken in 2010-12.

This was stated by WAPDA Chairman Shakil Durrani during a briefing here at WAPDA House today arranged for a delegation of the 89th Management Course of National School of Public Policy, Lahore led by its Rector Lt. Gen. (R) Javed Hassan. These projects would generate about 21,000 MW of electricity on their completion and help improve low-cost hydropower proportion in the national grid. 

The delegation was briefed that Pakistan has been blessed with the identified hydropower potential of more than 54,000 MW but only 16 per cent of this potential has so far been taped due to variety of reasons.

After its bifurcation last year, WAPDA is fully focused on water and hydropower development. The work on 969 MW Neelum-Jhelum Hydroelectric Project has already started, while feasibility studies and detailed engineering designs of most of the mega projects in both water and power sectors are currently at the advance stages and likely to be completed by the next year, 

The delegation was informed that Pakistan is storing only 11 per cent of the annual water flows of its rivers and, if this capacity is not increased, Pakistan will be a water short country by 2012. The delegation was told that the accumulative gross storage capacity of Tarbela, Mangla and Chashma reservoirs that originally used to be 18.37 million acre feet (MAF), has reduced to 13.24 MAF due to sedimentation, resulting in 28 per cent loss of storage capacity. 

PEPCO MD / Member (Power) WAPDA Fazal Ahmed Khan, dilating upon the various short and long term measures, said that PEPCO is striving hard to minimize the gap between consumption and generation of electricity. He appraised the delegation that the Government has made arrangements for induction of more than 9,000 MW to the national grid from January 2009 to December 2012.


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## Neo

*Sporting arms export to be raised to $100m by 2011 ​* 
Friday, October 31, 2008

PESHAWAR: The Pakistan Hunting and Sporting Arms Development Company (PHSADC) would upgrade the most neglected industry, claiming to achieve $100 million export target by the year 2011.

Briefing journalists at the Small and Medium Enterprises Development Authority (SMEDA) office on Thursday, the newly-appointed chairman of the PHSADC and a leading industrialist, Nauman Wazir, said the company was incorporated in 2006 under the Companies Ordinance 1984, working under the Ministry of Industries, Production and Special Initiatives. He, however, lamented that officials in the past failed to promote the arms industry. During the past two years, the officials did not perform well to boost this sector, but I am committed to unleash the hidden potential, which can earn the country millions of dollars in the coming three years, Nauman Wazir said.

The newly-appointed chairman of the company said their main objectives were to develop Dara Adamkhel as an organised industrial cluster, establish linkages for export of hunting and sporting arms and develop a high value added market for handmade replicas and guns.


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## Neo

*Pakistans GDP growth seen contracting​*
ISLAMABAD, Oct 30: Pakistan is unlikely to achieve the 5.5 per cent economic growth target for this fiscal year as it prepares for an IMF stabilisation package and manufacturing and services will be constrained, states a Citigroup market analysis report.

We project 3.7 per cent growth in gross domestic product of the country, states the report available with Dawn.

It analyses the currencies, stocks, sovereign debt, local rates records and other economic indicators as on October 27, 2008 of 43 emerging economies from Asia, Latin America, Europe, Africa, Middle East and Euroasia. The report also forecast various economic indicators of these countries for the next two years (2009 and 2010).

In Pakistan, it says food inflation has eased from its 34 per cent year-on-year (YoY) peak in August this year, with headline Consumer Price Index (CPI) at 23.9 per cent in September.

It expects average inflation to peak in March 2009 and average the year at 21.2 per cent. Non-food inflation will continue to rise until early 2009 as subsidies on fuel and power have been eliminated by the government.

The economic problems facing the country have overshadowed the politics, it states, adding that Pakistan was unable to secure external assistance from donor countries, but this had more to do with the lack of an underlying stabilisation programme, than political differences between Pakistan and its allies.

We do not expect much political activity till the outcome of the US presidential elections, the report states.

Fiscal pressures, the report states, remain the biggest policy challenge facing the country. The fiscal gap in year 2008 was 7.4 per cent of GDP against a target of 4 per cent. The government has projected a sharp reduction in the gap to 4.7 per cent in 2009.

But, we think this is too ambitious  the IMF is aiming for about 4.3 per cent [fiscal gap], the report states.

With an IMF Standby Arrangements (SBA) - that is non-concessional loan - likely before this years end, there will be lots of pressure to ease spending. Although the IMF should seek another round of monetary tightening, this may not be forthcoming as Pakistans banking sector could experience a fresh wave of non-performing loans (NPLs).

The report expects that a slowdown in consumer demand should help ease payment pressure, but the sharp fall in the price of oil will make the real difference. The impact has yet to be felt as the first quarter of the current financial year, which saw the current account deficit almost touched $4 billion against $2.3 billion in the corresponding period last year.

However, with demand management likely to be imposed, the current account gap should fall from $14 billion in 2008 to a more manageable $8-9 billion in 2009.

We think the IMF will endorse the governments stabilisation programme, the report states. But, adds that inflation will continue rising due to fiscal pressures and cut in subsidies.

The report says that risks to Pakistans economy are closely related to a number of developments which are in the making including the quantum of the IMF package, and how much of this is front-loaded; commitments from the other international financial institutions (IFIs); hard numbers for the balance of payments and fiscal account for the next two years; bilateral assistance crowded in by the IMF programme; and whether the US steps up its activities in the tribal regions, and how the government and the Pakistan Army responds.


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## dr.umer

*Saudi Arabia agrees to supply oil on credit to Pakistan​*ISLAMABAD: Saudi Arabia has agreed to supply oil on credit to Pakistan. 

The acknowledgement follows the acceptance of special request by Pakistan and keeping in view the forthcoming visit of President Asif Ali Zardari to Saudi Arabia. 

Reliable sources have informed that President Asif Ali Zardari is due to visit the Saudi Kingdom on 04th Nov, where besides meeting with top leadership, he would also request supply for oil on credit. 

Sources have also informed that special advisor to PM on Finance, Shaukat Tareen would also visit Saudi Arabia in this connection, while the Saudi officials are also expected to make a formal official announcement in this regard soon. 

Saudi Arabia has agreed to supply 1,10,000 barrels of oil daily , according to which Pakistan would be facilitated to pay U$. 65 per barrel, summing upto U$. 2 billion per year. 

This facility would lessen Pakistans reliance on unreliable aid of Global Financial Funds.


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## sunny_aus

Neo said:


> *WSJ slams IMF's prescriptions​*
> NEW YORK (October 30 2008): *An influential US newspaper has criticised the prescriptions of the International Monetary Fund (IMF)--cuts in government expenditures, devaluation, and tax increases--for bailing Pakistan out of the financial crisis, saying that the measures would have opposite effect*.
> 
> "Pakistan needs market-oriented reform along the Chilean and Irish models, not the IMF's austerity prescriptions," The Wall Street Journal said in an editorial, titled 'Does the IMF have no fresh ideas?' "Pakistan's economic wellbeing matters not only for its 165 million citizens but also because it's a key country in the world-wide war on terror," the editorial said.
> 
> The Journal said the IMF declined comment on a Pakistan Finance Ministry spokesman's statement last week that the Fund "wants Pakistan to reduce its government expenditures, maintain a 'flexible' exchange rate and 'increase' its tax-to-GDP ratio".
> 
> "These are exactly the 'beggar-thy-neighbour' policies that sent Thailand, South Korea and Indonesia reeling in 1997-98," the editorial said. "Cutting subsidies is necessary, but politically impossible right now, with inflation running at 25 percent and daily power cuts. *Depreciating the rupee vis-a-vis the dollar might benefit the country's crony capitalists who make money by selling cheap exports,* but it would hurt the vast middle class, raising taxes in the middle of the financial crisis--no one is talking about cutting them--would drive away foreign investment."




it&#8217; not even in the interest of IMF to let the Pakistani economy collapsed because of any default. they just want to make sure that the money they are going to lent pakistan will have a suitable &#8220;return path&#8221; with at least a &#8220;not bad&#8221; interest rate.

I think, Pakistani government would in fact thank IMF for their any type of advice for economic reforms like withdrawn of few unnecessary subsidies. its in fact good that someone want to advise you for anything which may result in a better future of economy and at the same time they will also get a confidence that Pakistan will be able to pay back the loan also.

there is a need to utilize this expected $10-12bn loan for making better infrastructure. it won&#8217;t be like Pakistan just covered the trade deficit for next 5-6 months by using $5-6bn and paying back the immediate debt obligations and then again you need money to pay for the next deficits and debts. 

Global economic slowdown has reduced value of key resources like oil, gas, steel, coal etc. pakistan has a pretty good chance to reduce it&#8217;s trade deficit to a comfortable level within next 5-6 months, and at the same time, building a $10-12bn world class infrastructure by using this loan. 
in fact, this much investment may cause a type of revolution in a comparatively small economy of Pakistan. 

And for this to happen, there will be a need of a type of war to protect this much money from corruption. any type of procedure to have a watch on the invested money, how it is spent and where it goes, may be a solution, I think.


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## Neo

*President, PM agree not seeking loan on IMF tough terms ​* 
ISLAMABAD (updated on: November 01, 2008): President Asif Zardari and Prime Minister Yousuf Raza Gilani have agreed for not taking loan on tough IMF conditions.

According to Aaj TV sources, Prime Minister Yousuf Raza Gilani met with President Asif Zardari in Presidency and briefed him on Turkey's visit.

Both leaders have agreed that final decision about taking loan from IMF would be taken after President Zaradari's visit of Saudi Arabia and meeting of friends of Pakistan which would be held in Abu Dhabi.


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## Neo

*Rs 20 billion capital market fund in few days: Tarin​* 
KARACHI (November 01 2008): The Advisor to Prime Minister on Finance, Shaukat Tarin, has said that the proposed Rs 20 billion market support fund will be made available within the next few days. Speaking at a meeting with members of Karachi Stock Exchange (KSE) during his visit here on Friday, he said that the KSE board would decide the issue of 'floor' removal, and government would not interfere in this matter.

He said that four institutions--National Investment Trust (NIT), Employees Old-age Benefit Institutions (EOBI), State Life Insurance Corporation of Pakistan (SLIC), and National Bank of Pakistan--would contribute Rs 5 billion each in the market support fund. "All these institutions are ready to arrange the fund, which will be available much before removal of floor," he added.

He said that the government had already proposed to the public sector companies to buy back their shares to support the market. The government wants to revive the investors confidence, he added. The Advisor said that world economies have suffered due to international economic crisis, and Pakistan's economy was also affected negatively.

He said that energy and food crisis, worsening law and order situation, decline in exports and slow manufacturing led to pressure on stock exchanges. He said that Pakistan "has great potential" to come out of the prevailing situation to stabilise the economy.

He said that agriculture and manufacturing sectors needed more attention to enhance exports and to create more job opportunities in the country. "We should use our natural resources, like mining, especially coal, to generate more electricity to cater for domestic needs", he added.

"We have our own economic growth plan to bring down inflation, lowering the fiscal deficit and to generate more revenue", he said, and added that discussions were underway with IMF and 'Friends of Pakistan'. Regarding law and order situation, the advisor said that the government was taking various measures to improve the situation, mainly in the northern parts of the country, and formation of jirgas was part of this policy. The government has also planned to start economic activities in those areas to control extremism, he said.

He said that the government wants to create investment-friendly environment in the country so that foreign investors could come here with confidence. The expectation of good returns and confidence would bring investment in the country and inflow of foreign funds will stabilise the economic situation in the country.

He said that the government wants to increase tax net. However, the government does not want to harass the people. "We have to change the FBR culture and its mindset so that the people will be ready to pay taxes without any harassment", he added. Earlier, the Advisor also held a meeting with KSE board of directors and discussed various issues regarding the prevailing situation in the stock market.


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## Neo

*Government borrowings from SBP reach Rs 266 billion​* 
KARACHI (November 01 2008): The borrowing by the government for budgetary support from State Bank has reached Rs 226 billion mark, an upsurge of about 2000 percent, during the current fiscal year due to slow foreign inflows, besides rising expenses. The State Bank of Pakistan (SBP) Governor, Dr Shamshad Akhtar, on Friday announced that that government was committed to zero borrowing from November 1, but the borrowing has already gone up.

Banking sources said that the 2000 percent increase in government borrowing reflected that the government was relying on SBP for budgetary support, despite the central bank's request for reduction, and retirement of the loan.

SBP said that government from it had gone up by 2334 percent--Rs 266.633 billion--from July 1 to October 18 (approximately 16 weeks) as compared to Rs 10.951 billion from July 1 to October 20 of last fiscal year. This depicts an increase of Rs 255.682 billion.

However, government borrowing from other banks showed sharp decline to Rs 137.903 million during the period under review as compared to Rs 80.137 billion during the same period of last fiscal year.

Analysts said that government's commitment to not borrow from central bank is a good decision, which would help the central bank to reconsider its monetary policy. It may be mentioned here that government borrowing for budgetary support from banking sector has gone up by 352 percent to Rs 461.280 billion during the last fiscal year 2008.


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## Neo

*Saudi Arabia commits $100 million for quake victims​* 
ISLAMABAD (November 01 2008): Saudi Finance Minister Dr Ibrahim Al-Assaf on Friday committed immediate transfer of $100 million relief and rehabilitation support for earthquake victims of Balochistan. Dr Ibrahim further said that Saudi government would be providing a package of health and relief support along with the financial assistance already committed.

During a meeting with advisor to the prime minister on finance and economic affairs, Shaukat Tarin, Al-Assaf expressed sympathy over the loss of precious lives and property during the earthquake, which devastated many areas of Balochistan.

The Saudi Finance Minister on behalf of Saudi Kingdom commiserated with bereaved families and conveyed the resolve of his government for all-out support to the victims. Tarin thanked his Saudi counterpart on the concern shown by the Kingdom of Saudi Arabia with whom the people and government of Pakistan share deep-rooted historical ties.


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## Neo

*Belgium swaps euro 30 million assistance​*
ISTANBUL (November 01 2008): Prime Minister Syed Yousuf Raza Gilani on Friday expressed gratitude to Belgium for swapping its debt of Euro 30 million as assistance for reconstruction of 2005 earthquake hit areas. In his meeting with the Belgian Foreign Minister, the Prime Minister underscored the importance that Pakistan attached to its relations with Belgium.

The Belgian Foreign Minister condoled the loss of lives and property in Balochistan earthquake. He informed the Prime Minister that Belgium was planning to send the relief assistance for earthquake victims. Both the leaders agreed to convene the meeting of Pak-Belgium Joint Commission in the coming months to reinvigorate their co-operation in the area of trade, investment, education, IT and scientific fields.

On the request of the Prime Minister for Belgium support to Pakistan's case for inclusion in the GSP plus scheme and initiation of FTA talks with the EU, the Belgian Foreign Minister stated that his government would give these matters sympathetic consideration.

The Belgian Foreign Minister requested briefing from the Prime Minister on Pakistan's counterterrorism campaign, on chances of success of US and Nato military campaign to root out extremists from Afghanistan and Pakistan's assessment of the overall situation in the region.

The Prime Minister highlighted the fact that all the allied forces must strive to win hearts and minds of the people rather than relying exclusively on the military means to win against extremists and militants in Afghanistan. He said that his government was following that policy so that people of Pakistan should own its campaign against terrorism.

Noting that Belgium is an important member of Nato which had its troops in Afghanistan, the Prime Minister asked for Belgian support and intercession to stop US and Nato incursions into Pakistani territory.

The Belgian Foreign Minister fully agreed with the Prime Minister that incidents involving heavy collateral damage were only fuelling the anti-West sentiments. This, he added, was detriment to the common cause of Pakistan and the allied forces.

He said his country was against such violations and would not support it. The President of Latvia in his meeting with the Prime Minister also condoled the loss of precious lives in Balochistan earthquake. He also sought the assessment of the Prime Minister on the ongoing US/Nato war against extremism and terrorism.

He said that Latvia, a member of Nato, had its troops stationed in northern Afghanistan and like most other such countries wanted to have a close co-ordination with Afghanistan's most important neighbour in this campaign. Prime Minister briefed him on steps Pakistan was taking to counter terrorism and extremism in the country. The two leaders also agreed to upgrade the current status of Pakistan-Latvia relations through enhanced exchanges and interaction.


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## Neo

*How about a Plan 'D'​* 
ARTICLE (November 01 2008): In wake of financial crisis all over the globe Governments, Central Banks, Financial experts, Economist, Planners, Think tanks and Strategist are busy and struggling to find out ways on how to overcome the debacle, but we have more gloomier faces than ever. To offset the impact of global slowdown, the authorities around the world are taking drastic measures to boost domestic growth, avoid inflation, strengthen the equity market and avoid sharp fall of currency.

The issues are numerous. After sub-prime, banks bail out is a big headache. Despite aggressive global rate cut and liquidity injection, quality lending is the only consideration, as confidence crisis prevails and therefore, even good names are unable to get credit.

Foreclosures and delinquencies are a pain in the neck and extra funding will be required for another bailout package. Drastic measures have been taken by Fed and European Central Bank to halt emerging market crisis by providing USD 5 billion to 30 billion swap facilities. Next problematic issue that is queuing up is the consumer business ie, credit cards and auto loans.

Pakistan is luckily miles away from all such jumbled up issues. But we certainly have our own home-grown problem, which needs to be cleared up. Earlier, we missed out the opportunity badly, as after nine-eleven, we were blessed with overseas remittance, which poured through official channel, as overseas Pakistani started sending more money through banks instead of sending money through unofficial channel. Prior to nine-eleven official remittance would hover around USD 1.2 billion? It was only once during General Zia era that our workers' remittances surpassed USD 2 billion mark.

Today, despite a record USD 7 billion remittances number, we are, financially a most disorganised lot. We wasted our money in cultivating a consumer culture. We managed to survive on asset sales and FDIs, until the oil prices started climbing.

We paid no heed despite our oil bill surpassing our textile exports, and today we are madly knocking at each door in search of donors. So far, no one has shown keenness to listen to our plea, probably because our appeal lacks conviction or we are unable to make an acceptable presentation. It seems IMF is the lone choice that can provide temporary relief, but only with some very bitter pills.

As the saying goes "it is never too late". Why don't we ask Fed, ECB, BOE and Friends to Pakistan to consider our proposal, which offers better return to them? This would be quite a professional approach. And we are not begging either. Why can't we work on plan "d" and insist for this option. It is a much better option and serves our need.

We have to make a strong argument based on recent global developments in which effort was made to rescue the world's emerging markets. Pakistan requires similar consideration. They have to consider our case seriously as we are part of the emerging market. We should also counter their double standard approach when dealing with Pakistan.

Our argument should be based on the recent Fed decision to provide US Dollar swap opportunity against emerging market's domestic currency to rescue their market from collapse. This is swapping of US dollars for the domestic currency of each country, which was important because many them were short of US dollars, causing their local currency to weaken, which was also causing inflation. The Dollar liquidity shortage could have stifled international trade as a high percentage of international trade contracts are denominated in US dollars.

Pakistan is currently facing an identical problem and our foreign exchange reserves are depleting so sharply that we cannot to survive after next 30 days. Hence, we should either be provided with a similar dollar swap facility against Pakistani rupee, or provided help under plan "d". Why not invest in our 3 years, 5 years and 10 years Pakistan Investment Bonds (PIBs)? All they have to do is purchase rupee against foreign currency and they get lucrative return.

The question arises as to who bears the exchange risk? This would be a direct GOP deal and therefore, exchange rate risk and PIB Yield can be worked out between two Central Banks. Borrowing loan either from IMF or Friend of Pakistan would ultimately inflate our external borrowing head, which will certainly impact exchange rate at the time of maturity. So, from Pakistan's point of view, both the deals have same impact. But, plan "d" perfectly suits our requirement.

Imagine, our government borrowing issue will be settled. Inflation caused thorough government will be zero. Exchange rate will become stable. Foreign Exchange Reserves would get the boost. Fiscal deficit target of 4 pct will be easy to attain. The economy will get the much-required breathing space. Revenue could also get the required kick off. No big slash would be required on government spending. Meanwhile, the country will have enough time to plan its next strategy until the deal matures. The only things we need to do are make a serious effort, make strong argument and present our case with firm determination.


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## Neo

*Zardari leaves for Saudi Arabia on November 4​* 
ISLAMABAD (November 01 2008): President Asif Ali Zardari will seek Saudi support for Friends of Democratic Pakistan initiative and the oil facility requested by Pakistan, said Foreign Office spokesman Mohammad Sadiq during a weekly media briefing here on Friday. "President Zardari is visiting Saudi Arabia on November 4-5, to seek economic assistance to overcome balance of payment and financial deficit problems" he informed.

Friends of Pakistan (FoP) will meet in Abu Dhabi after November 15, Sadiq said, adding that the countries will be represented at the ministerial level and the framework/modalities of the meeting are being worked-out. Commenting on US drone attacks in the tribal belt he said that people are furious due to frequent missile attacks and Pakistan's peace efforts against terrorism is getting severe blow due to such attacks by US.

"The government of Pakistan has repeatedly expressed its concern over US attacks inside Pak territory as they strengthen the militants instead of helping the war on terror," he maintained. To a question the Spokesman said that Pakistan is seeking help from many countries including US to strengthen its law enforcement agencies against terrorism as it is need of the hour.

Talking about continues violations of Indus Water Treaty (IWT) by India he said that some breakthrough is expected in New Delhi talks within two days. "The IWT be implemented in letter and spirit as use of Chenab water by India is affecting the Pakistan's agriculture sector and damaging its economy badly," he opined. The spokesman ruled out about presence of any Pakistani prisoner at US Bagram airbase, saying that US and Afghan authorities have assured that no Pakistan national is present at the base.

Replying to a question about probe into BB's assassination, he said that United Nations is still working on a commission to investigate the assassination of Benazir Bhutto. Sadiq said that the government has not asked for any support from the international community for quake victims of Balochistan, but the response is overwhelming, which is a welcome gesture.

To a question on the whereabouts of Dr Aafia's children Maryam and Salman, he responded that the government has no authentic information. Commenting on recently held Pak-Afghan Jirgagai, the spokesman said that both Pakistan and Afghanistan are striving for peace in the tribal region for which efforts are being made to hold talks with Taliban and other warring factions.


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## Neo

*IMF asks Pakistan to make oil payments through market flows​* 
KARACHI (October 31 2008): The International Monetary Fund estimates that Pakistan's growth will slow down to 3.5-3 percent in the current financial year after Pakistan signs for Stand-By Arrangement (SBA) facility with the Fund. In fact, the Fund is not concerned at the annual GDP growth even if it falls below three percent because the Fund fully appreciates the facts that historically Pakistan has shown that once it is able to achieve macroeconomic stability the growth of above six percent is also achieved for a long period of time.

-- The growth path would be 'U' shaped (low growth) if the country does not increase the policy rate. The Fund, therefore, would like the growth path to be in 'V' shape if Pakistan adheres to its loan conditionalities. If Pakistan does not increase the policy rate by 3.5 percent to 16.5 percent (which is close to a 17 percent rise in CPI), the Fund fears that Pakistan's growth path would be 'U' shaped ie low growth for a longer period.

EXCHANGE RATE: The Fund team, which negotiated with Pakistani authorities in Dubai, for the last seven days, is satisfied with the present exchange rate which is market driven. However, the Fund wants the State Bank of Pakistan to let the market flows meet the oil import payments instead of utilisation of SBP reserves for this purpose.

An L/C opening bank needs to accumulate the dollars from the inflows as it knows when the L/C will be encashed. At present, SBP meets the bank needs as the lumpy payment increases the volatility in exchange rate movement. Pakistan would need to improve its forex reserves by $700 million from the present level of $7 billion at the end of one year of the programme. This estimation is based on the various Sukuk bonds and other payment due by until November 2009.

Pakistan is committed to improve its tax-to-GDP ratio to 15 percent in medium term, however, it would need to improve this ratio by at 0.6 percent to FY09 in case it awaits the Fund seal of approval. Since Pakistan has already met over 80 percent of the Fund's normal conditionalities on its own ie reduction in subsidy on oil and utilities and a market driven exchange rate - there is very little left for further discipline.

The insistence of 3.5 percent in SBP discount rate is the only real pain that the nation would need to undergo. However, the Fund would allow this policy rate to come down once it is clear that the core inflation has reversed.

It takes six to 12 months for monetary tightening measures to work through the system in Pakistan. Helping the Mutual Fund industry is likely to be acceptable to the IMF. But any bail-out or guarantees for the stock market are favoured by the Fund, say informed sources.


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## Neo

*Agreement reached on $9.6 billion SBA​* 
ISLAMABAD (October 31 2008): IMF and Pakistan teams in Dubai have informally agreed on a $9.6 billion Stand-By Arrangement for a two-year period, sources said. At the conclusion of over 10-day talks IMF was stressing on more revenue generation and extending tax net, which was one of the last points of the agenda after going through external, manufacturing and services sectors performance.

IMF staff under leadership of Advisor Middle Eastern and Central Asia Division would prepare Article-IV Consultation papers and letter of intent(LOI) for the expected agreement. Pakistan could get $3 billion in first tranche depending upon its need and remaining would depend on quarterly instalments after detailed reviews.

The same had been demanded by World Bank and other donors that under such precarious conditions Pakistan should get regular "medical check up" of economy from IMF. Friends of Pakistan had also asked for IMF broader agreement of Pakistan's stabilisation plan.

IMF has also asked for enhancing discount rate, keeping fiscal deficit at 4.3% of GDP and to reduce borrowing from State Bank to curb inflation. PM Advisor on Finance had said that there was disagreement on issue of discount rate where core inflation is still 17%, which is based on money supply growth. IMF was stressing on enhancing discount rate which also pushes up cost of borrowing of State Bank which in actually turns to be at zero rate of return, when government's interest cost is covered in SBP's profit


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## Neo

*Inflation swells to 29.79 percent​* 
ISLAMABAD (November 01 2008): The inflation measured through SPI increased to 29.79 percent on week, ending on October 30 over the same period of last year, said Federal Bureau of Statistics on Friday. The data on SPI released showed that there was an increase in the prices of 14 essential items, including vegetables, pulses, tea and plain bread.

The price of one kilogram tomatoes has increased during the week from Rs 28.12 to Rs 131.80; tea packet of 250 grams from Rs 94 to Rs 100; potatoes per kilogram from Rs 25.70 to Rs 27.06; masoor pulse washed per kilogram from Rs 126.92 to Rs 130.02; eggs per dozen from Rs 61.24 to Rs 62.60; bath soap (Life Buoy) from Rs 21.53 to Rs 22; firewood per 40 kilograms from Rs 256 to Rs 258; and bread plain from Rs 23.62 to Rs 23.68.

With this increase in the prices of essential commodities, the dearness for the low-income group families bracketed in Rs 3,000, was recorded at 231.72 per cent more over the same period of last year, followed by 30.46 per cent for families, falling between Rs 3,001 to Rs 5,000 income group and 31.41 percent for Rs 5,001 to Rs 12, 000.

The dearness for above Rs 12,000 income group was recorded at 29.75 percent during the period under review. The SPI bulletin, based on data of 53 items collected from 17 urban centres showed increase in prices of 14 essential commodities, decline in 19, while the prices of 20 commodities remained stable during the week, but were higher as compared to the last year.

Further analysis of the data showed that prices of 19 commodities, including vegetable ghee, bananas, cooking oil, chicken, onions, vegetable ghee (loose), gram pulse (washed), red chillies, wheat average quality, rice irri, sugar, rice basmati broken, mustard oil, moong pulse (washed), liquefied petroleum gas (LPG), kerosene, gur and garlic have declined during the week. According to the FBS, the prices of 20 essential commodities remained stable during the week. However, a comparison with the same period of last years showed that prices of 42 essential commodities have increased to double digit.


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## Neo

*Chief engineers directed to accelerate pace of work on uplift schemes​* 
LAHORE (November 01 2008): Senior Minister, Raja Riaz Ahmad has directed the Chief Engineers of Irrigation & Power department to accelerate the pace of work on developmental schemes and ensure that 50pc of the work be completed by January 15,2009 adding that action would be taken against CEs failing to do so.

He was presiding over a high level departmental meeting of Chief Engineers, Superintending Engineers and other high ranking officials, which was also attended by Secretary Irrigation, Babur Bharwana at Irrigation Committee Room, here on Thursday.

At the outset, the meeting reviewed the annual development plans and observed that pace of work be expedited for their timely completion. A sum of Rs 11300 million was reserved in annual development programme for the execution of development plans. Rs 8290 million are meant for on-going schemes and Rs 3010 million are allocated for new projects in the current fiscal year.

All the CEs must ensure that their projects be completed well in time so that payments could be made before June 30, he told. Meeting also reviewed 19 un-approved schemes one by one. Meeting was further informed that Punjab Information Technology Board (PITB) was developing necessary software for computerised monitoring of canals and water channels in the province and this project is expected to be launched in 2009-10. A sum of Rs 209 million is reserved for this project.

Meeting observed with concern less than 20% budget utilisation on releases in 67 slow moving schemes. Raja Riaz directed to send 3-member Irrigation officials' teams to every district to monitor water availability in channels/canals and distributaries for giving report till November 13.

He also asked that Project Management Information Unit (PMIU) to arrange computerised maps of canals and channels. Director PMIU, Mr Bodla disclosed that G.I.S system was being developed by the unit. He directed that use of political influence for postings /transfers be curtly discouraged.


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## Neo

*PHSADC vows to set $100 million export target​* 
PESHAWAR (November 01 2008): The new management of Pakistan Hunting and Sporting Arms Development Company (PHSADC) vowed to bring the sector under regulations and set a target of 100 million dollars for annual export.

Addressing a news conference the newly appointed chairman and acting Chief Operating Officer (COO), PHSADC, Nauman Wazir said that the company would focus 50 per cent of its attention to only the development of cluster in Darra Adam Khel (DAK) and remaining 50 per cent to other parts of the country.

He said that due to security situation, no economic activity is going on in the tribal area. The government has also planned the establishment of Reconstruction Opportunity Zones (ROZs). The aim and purpose of our company is to bring improvement in the arms manufacturing skill of the people in DAK.

"The company plans to promote the skills of the arms manufacturers and would arrange workshop on technical aspect of the sector in the technical institutions of the city," said Nauman Wazir adding that the potential of the export of the sector would be promoted through holding seminars.

He said that a link between the local manufacturers and Pakistan Steel Mills (PSM) would be established for supplying raw materials while an industrial estate with 100 per cent guarantee of electricity would be established where raw material for the units would also be made available.

The big benefit of the company would be regulation and documentation of the arms manufacturers and check on the arms pilferage from the area. The area, he said had been accused for the supply of arms to other parts of the country, the regulation of the sector would help retrieve them. Due to specific importance, the company would give priority to the manufacturing of customised and completely hand made products.

The Board of Directors of the Company, he said has also approved the hiring of 6 consultants and 4 other officials. He said that the company would talk to arms manufacturers from all four provinces on preparation of future strategy. The completion of work on the plan would take one month, which would be a roadmap to be started next month. He said that next three years will be the implementation phase of the company and on the completion of five years, the affairs of the company would be handed over to a strong association of the arms manufacturers.

The company, he said had a seed money of Rs 60 million provided by Pakistan Industrial Development Corporation (PIDC) for its operation while the funds for feasibility studies would also be get approved through PIDC. The company, he said would establish a proofing house comprising of three to four foreign companies that would comprise a common facilitation centre (CFC) and gunsmith factory.

Regarding the performance of the previous management of the company, he said that they had wasted precious period of two and half years. He said that during that period the company held six meetings of the Board of Directors, but failed to initiate.

Pointing towards the former chairman, who was a retired colonel of military and COO, a retired brigadier, the new chairman said that the company did not require the services of retired military personnel but of experts to run it successfully. He agreed with one questioner that the previous management miserably failed.

He said that previous management during two and half years recruited only five persons, which knew only how to get their salaries. But, the present management, he said had hired the services of 6 highly qualified consultants while four others would be appointed shortly. The strength of the employees, he said would be shortly raised to 30. He said that two marketing experts would also be hired shortly.


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## Neo

*Repatriation by foreign investors up by 23 percent in first quarter​* 
KARACHI (October 31 2008): Repatriation of profit and dividend is rapidly increasing, as foreign investors have transferred some 222 million dollars abroad with a growth of 23 percent during the first quarter of current fiscal 2009 due to the negative economic indicators.

Economist said that poor economic performance of country's economy has pushed the foreign investors to repatriate their profit and dividend on priority basis to avoid any loss. Resultantly the repatriation, which witnessed a decline of 25 percent during the first two months of current fiscal year, has surged by 23 percent during the first quarter of fiscal year 2009.

The State Bank of Pakistan statistics revealed that the repatriation of profit by foreign investors has registered a significant increase of 41.7 million dollars during July-September of the current fiscal year mainly due to the negative economic indicators.

With current increase the overall repatriation has reached at 222.7 million dollars during the first quarter of the fiscal year 2009, as against the 181 million-dollar repatriation of profit during the same period of the last fiscal year 2008.

Sources said that the government has allowed 100 percent transfer of profit or dividend to the foreign investment aimed to boost the foreign investment in the country and foreign investors are fully enjoying government's move and consistently sending their earnings abroad.

Petroleum refining and power sectors are the major contributors in the increasing repatriation, as these two sectors are the most favourite and profitable sectors for the foreign investors. Foreign investors have made millions of dollars investment in petroleum refining and power sectors during last few years due to the rising shortfall of power in the country.

Central bank's latest statistics show investors have taken back some 58.9 million dollars profit from petroleum refining during the July-September 2008, and during the same period of last fiscal year no amount was sent abroad on account of petroleum refining sector.

Power sector is second in number in the repatriation of profit and dividend with 40.4 million dollars, however the amount is some 9.3 percent less than the same period of last fiscal year. While the power sector is the second leading sector, where some 40.4 million dollars has been sent abroad in first three months, however it is some 9.3 percent less than the same period of last fiscal year 2008.

In addition, the trading sector is on the third number with repatriation of 24.2 million dollars in first quarter of fiscal year 2009, as compared to 1.6 million dollars same period of fiscal year 2008. Similarly, foreign investors have sent 12.4 million dollars from oil and gas exploration sector, 14.6 million dollars from food sector, 9.9 million dollars from tobacco and cigarette sector and some 13.1 million-dollars from the beverages.

In addition, some 0.3 million dollars was repatriated from textile sector, 3.2 million dollars from chemical, 2.4 million dollars from fertiliser, 3.1 million dollars from cement, 2.4 million dollars from transport and some 13.1 million dollars from communication sector. It may be mentioned here that during the last fiscal year 2008 repatriation has registered a growth of some 15 percent to 921.4 million dollars, as compared to 804.2 million dollars in fiscal year 2007.


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## Neo

*Manpower export: a boon or bane?​*
EDITORIAL (November 01 2008): The Chairman of National Vocational and Technical Education Commission, Adnan A. Khawaja has said that skilled workforce would be sent to the Middle East to increase the flow of home remittances. Remittances are, in fact, already playing a vital role in Pakistan's balance of payments support and economic growth.

Khawaja has rightly said that export of a good number of skilled workers would greatly help reduce Pakistan's dependence on foreign assistance. Secondly, sending workers abroad can also offer a partial solution to the country's acute unemployment problem, which has become one of the most pressing challenges, demanding the government's immediate attention.

Thirdly, viewed purely in economic perspective, imparting technical training to high school graduates or even to school dropouts can prove highly cost-effective in terms of the investment the government needs to make in producing skilled workers and the amount of remittances they would send back home while working abroad.

There has been a steady decline in Pakistan's manpower export largely because of availability of comparatively cheaper, and perhaps better-trained labour from Bangladesh, Philippines, Thailand and India. A comparative study conducted in 2006 had put the decline in Pakistan's manpower export in 2004-05 at 18 percent - a decrease that should be made up through initiating training programmes for youths.

There is clearly a need to establish a vocational authority empowered to award skill certification to diploma holders of technical training institutes affiliated to it, which will help our workers to get better-paid jobs in foreign countries. At present only certified electricians are being produced in the country and sent abroad.

The facility should be extended to all categories of technicians such as masons, plumbers, carpenters etc-etc so that they are able to get employment commensurate with their professional training and expertise. According to the study conducted in 2006, as many as 173,824 workers were sent abroad in 2004, compared to 142,135 who left the country in 2005.

Further, Pakistan received an amount of $2055.20 million as workers' remittances in the first half of FY 2005 as against $1,946.14 million it had received in the corresponding period of the preceding year, representing an increase of $109.06 million. The role of remittances as a short-term stabiliser of the economy, as well as a vehicle for economic betterment at the grassroots level, cannot be denied. However, this is only one aspect of the issue.

It should be mentioned here that single-minded export of trained workforce in the long-term perspective could prove extremely harmful to our industrial sector. Exodus of trained manpower cannot only stunt our industrial growth but can also frustrate the government's plan to effect a policy shift of focus from the services to the manufacturing sector.

How can the government achieve the policy sift if trained workers in large numbers are sent abroad to earn petrodollars? There is, therefore, a need to effect a pragmatic balance between the requirements of the country's industrial sector and its needs of foreign remittances. Tilting the balance either way can jeopardise our national interest.


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## Neo

*Pakistan and Kyrgyzstan decide to cooperate in energy sector​*
ISTANBUL (November 01 2008): Pakistan and Kyrgyzstan have decided to co-operate in various sectors particularly in the field of energy besides enhancing bilateral trade. It was agreed during a meeting between Prime Minister, Syed Yousaf Raza Gilani and Prime Minister of Kyrgyzstan, Igor Chudinov held here on the sidelines of the World Economic Forum.

Kyrgyzstan offered to provide electricity to Pakistan to cope with the present power shortage and assured full help and co-operation to implement the project as early as possible.

Both the leaders also discussed options for co-operation and also decided to increase number of flights between the two countries to increase people-to-people contacts and promote bilateral trade and economic activities. Gilani said Pakistan attaches great importance to its friendship with Kyrgyzstan and other central Asian states.

Highlighting various steps taken by Pakistan to improve communication network and connectivity, the Prime Minister said due to strategic location, Pakistan provides unique opportunities for the central Asian states to reach the world through deep-sea ports. Further, Gilani said Pakistan has significant importance in the region and it is becoming energy and trade corridor and the central Asian states could fully benefit from the facilities available in the country.

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## Neo

*WB to provide $26m credit for coal energy​*
ISLAMABAD: World Bank (WB) is considering providing technical assistance credit of approximately $26 million to strengthen the enabling policy, legal and regulatory frameworks conducive to new investments in the coal-to-energy sector of Pakistan, it was learnt on Friday.

In this regard the WB would assist the government of Pakistan and the Sindh government to attract qualified private investors to develop Thar coal deposits and build new capacity for coal thermal power generation, guided by high standards of environmental and social sustainability. This assistance would be a first step to rebalance Pakistans energy portfolio by utilisation of indigenous coal resources for large-scale thermal industries and power generation.

The WB, based on the least-cost energy portfolio expansion plan, would assist the country in obtaining technical and policy advice needed to develop indigenous coal resources for power generation (and other potential use) in line with good international practices.

The WBs work in the sector, including clean-coal initiatives, and the climate change agenda, will inform reforms necessary for sustainable coal-to-power development in Pakistan; in particular, development of Thar coal deposits suitable for large-scale power generation.

The project will ensure that the coal-to-power sector development responds to the needs of Pakistans long-term energy strategy.

Preliminary component of the project included to provide policy, legal and regulatory advisory services to key government agencies and other counterparts in order to facilitate coal-to-power sector development, including ancillary infrastructure development and complete the transaction for a selected Thar coal block. The project will also strengthen the capacity of the provincial and federal governments to improve sector governance and attract quality private investments.

In support of the governments efforts to attract quality private investors to develop Thar coal and to produce thermal power, the project will update, or develop where needed, key technical, financial, market, and local impact analysis and other information relevant to the investors, including a basin-wide land-use plan for Thar and provide transaction advisory services and due-diligence monitoring for a coal mine and an IPP transactions in a selected block of Thar, including preparation, issuance of requests for proposals and assistance to the government with bid evaluations, negotiations and financial closing.

The project will also assist the government of Sindh and government of Pakistan to develop communications and outreach strategy in regards to the project and to improve public consultations.

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## Neo

*ECNEC may okay Rs 262.4 billion development projects​*
ISLAMABAD: The Executive Committee of the National Economic Council (ECNEC) is expected to approve 39 development schemes worth more than Rs 262.456 billion including Rs 16 billion as Foreign Exchange Component (FEC). Diamer-Bhasha Dams acquisition of land and resettlement project is also a part of the schemes in the energy sector, Daily Times learnt on Friday.

The meeting to be presided by Prime Minister Yousuf Raza Gilani on November 6 will review the economic situation and challenges being faced by the country. All the chief ministers, provincial finance ministers and provincial planning and development ministers are likely to attend the meeting.

Three projects on ECNECs agenda are related to two projects of devolution and area development worth Rs 5.672 billion including Rs 5.275 as FEC, one environment related project worth Rs 955.100 million, one project of education worth Rs 657.631 million including Rs 626.888 million as FEC, Higher Education Commission has 2 projects worth Rs 2.004 billion.

The health sector has two projects worth Rs 27.191 billion including Rs 1.365 billion as FEC, transport and communication sector has 17 projects worth Rs 53.205 billion including Rs 4.914 billion as FEC, the PP&H sector has four projects worth Rs 21.499 billion, water resources sector has five projects worth Rs 30.668 billion including Rs 2.546 billion as FEC, the energy sector has three projects worth Rs 118.686 billion including Rs 214.24 million as FEC, the industries and commerce sector has only one project worth Rs 1.352 billion including Rs 498.63 million as FEC and the last sector social welfare has a single project worth Rs 560.500 million including Rs 560.500 million as FEC.

The Diamer-Bhasha Dam is a national importance project keeping in view the ongoing water and power shortage in the country. The 272-metre high dam will be the highest roller compacted concrete (RCC) dam in the world with more than 100-kilometre long reservoirs. Live storage capacity of the reservoir will be 6.4 MAF. The project will generate 4,500 MW electricity.

The dam will contribute more than 18,000 giga watt-hours of electricity annually. This will also help the government to cope up with the increasing demand of water. The project will also be an important step in increasing the ratio of low-cost hydel power in the national grid.

Bhasha is a project of immense importance and will be the biggest project ever executed in any sector in the country. The pre-qualification process of the contractors has already been initiated and is likely to be completed soon. The construction on the project will commence next year following international competitive bidding (ICB).

Other important projects are the Up-gradation of Karakuram Highway of Bhasha Diamer Dam Project (Manshera to proposed dam site) worth Rs 12.058 billion, revamping/rehabilitation of irrigation and drainage system in Sindh province (modified) worth Rs.16.795 billion, national programme for family planning and primary health care (revised) worth Rs 26.533 billion including Rs 1.365 billion and many others.

The meeting also expected to approve a project namely, Construction of Low Income Housing Schemes at Multan with a total cost of Rs 5.309 billion that further classified the construction of houses in Multan City with a cost of Rs 3.539 billion, Shujabad Town Multan worth Rs 884.905 billion and Jalalpur Pirwala Town Multan worth Rs 884.905 million.


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## Neo

*Friends can help Pakistan avoid IMF: Gilani​*
** PM says no possibility of default, denies IMF has asked for cut in defence budget
* Govt to seek deferral of oil dues from Saudi Arabia​*
ISTANBUL: Ruling out possibility of facing bankruptcy, Prime Minister Yousuf Raza Gilani has said he hopes Pakistan can avoid IMF assistance if it wins billions of dollars in aid from friendly governments to cope with a balance of payment crisis.

We are already talking to the IMF and they are talking about terms and conditions, Gilani told Reuters in an interview on the sidelines of a World Economic Forum meeting in Istanbul on Thursday.

Whether those terms and conditions are suitable to Pakistan or not, my advisers have to make up their mind, he said.

The Friends of Pakistan are making a package to get Pakistan out of the present situation, Gilani said.

If our friends start supporting us immediately, maybe Pakistan will not need IMF support, he said.

The Friends of Pakistan forum will meet in Abu Dhabi on November 17 to decide on providing aid to Pakistan.

Gilanis top economic adviser, Shaukat Tareen, said earlier this week Pakistan had no alternative to seeking IMF money, but that Islamabad would accept their programme on our terms. Asked if the IMF had suggested a cut in defence spending as part of any deal, Gilani said: Certainly not.

Oil payments: Gilani said there was no possibility of default and Pakistan would seek deferred oil payments from Saudi Arabia.

Asked if his country also planned to ask Iran for deferred oil payments, Gilani said: I think there is no harm in talking to Iran (about oil deferred payments). Certainly we will ask all our friends to help us out of the difficult situation.

Gilani criticised recent US attacks on Taliban on the Pakistani side of the border.

These actions are counterproductive and are not helping us combat terrorism, Gilani said. There is only one policy the people of Pakistan are not happy with the United States, and that is the interference of the territory and the sovereignty of Pakistan, he added.

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## saeedabasi

*I am Saeed Khan Abbasi from Pakistan ( South-Asia). I have announced my own invented Socio-Economic Management Formula(SEMFO) for Pakistan to avert economic disaster. Salient feature are @ would enable Pakistan with Deficit Free Budget for the next fiscal year despite stern economic conditions. @ Enable country to get rid of trade, fiscal and social sector deficit. @ With SEMFO Plan, there would be no need to get IMF or World Bank reliance for our own fiscal and economic budget making, while these donors and agenci should be engaged as Pakistan's Economic Development Friendly Advisors. details on saeedabasi dot blogspot dot com]World class Lobbying & Image building Expert[/url]
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## dr.umer

*Barack Obamas statement for enhancing non-military aid to overcome poverty hailed ​*ISLAMABAD, Nov 1 (APP): President of Islamabad Chamber of Commerce and Industry (ICCI) Muhammad Ijaz Abbasi on Saturday welcomed the statement of US Presidential candidate Barack Obama for enhancing non-military aid to Pakistan to overcome poverty. 

The business community of Pakistan appreciate the statement of US Presidential candidate Barack Obama for enhancing non military aid to Pakistan for reducing poverty in the country, Mr.Abbasi told APP here Saturday. 

He accepted that subversive activities like bomb blasts are causing threats to national economy. The President of ICCI attributed the declining trend in the national economy to the poor law and order situation in the country. The United States of America is a friend of Pakistan and it has supported and played an important role in war against terrorism to the former. US being a friend of Pakistan should help Pakistan financially to overcome its financial woes like poverty, he added. 

The President of ICCI also called upon the US to develop Reconstruction Opportunity Zones (ROZs) and industries in FATA in order to create employment opportunities and poverty reduction in the area.


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## dr.umer

*Rs 270 billion liquidity package for banks completed: SBP reduces CRR to five percent​*KARACHI ( 2008-11-02 04:34:19 )

The State Bank of Pakistan's liquidity package worth Rs 270 billion for banks to provide additional liquidity completed on Saturday as the central bank further reduced the Cash Reserves Requirement (CRR) by 100 bps to 5 percent.

Amendment in the Advance Deposit Ratio (ADR) already has enhanced the banks' existing lending capacity to Rs 550 billion as the average of advance-to-deposit ratio has dropped from 75 to 57 percent.

Banks were facing huge liquidity shortage for last two months due to the tremendous withdrawals of cash from banks in the wake of default remorse, as a result of which the overnight rate reached new peak of 40-48 percent in the domestic market.

Therefore, keeping in view overall liquidity condition of the market, Governor, State Bank of Pakistan, Dr Shamshad Akhtar, announced a relief package of Rs 270 billion to bring out the banks of the liquidity crunch.

To met the banks' liquidity requirements, the SBP decided to take some new measures and provided some relief to the banks and announced phase-wise reduction in CRR by 4 percent, besides exempting the time deposits of 1 year tenor and above from Statutory Liquidity Requirements (SLR). The SBP has decided to reduced the CRR by 100 bps from November 1, 2008 instead of November 15 2008.

The SBP on Saturday issued a circular to the Presidents and Chief Executive Officers of all banks including Islamic banks, which said: "It has been decided to reduce Cash Reserve Requirements by 1 percent to 5 percent as under, with immediate effect, instead of 15th November 2008 as earlier notified."

The SBP has instructed banks to make sure weekly average of CRR at 5 percent (subject to daily minimum of 4 percent) of total Demand Liabilities (including Time Deposits with tenor of less than 1 year). However, Time Liabilities (including Time Deposits with tenor of 1 year and above) will not require any Cash Reserve.

The current mover of central bank would inject a liquidity of Rs 30 billion in the banking system easing them to meet their customers' demand, while cumulatively with SBP's current and previous moves will have released liquidity of Rs 270 billion in the banking system.


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## dr.umer

*$0.56 million foreign portfolio investment received in October​*Karachi
2008-11-02

A fresh inflow of over $0.56 million of foreign investors' portfolio investment (FIPI) in the country's equity market was observed in October, 2008, out of which $0.349 million came in the last week of the month. The market had been witnessing a declining trend in foreign investment during the last few months, as an outflow of $6.010 million was seen only in September 2008.

According to National Clearing Company of Pakistan Limited (NCCPL) data, the net figure of this mode of investment was recorded at negative $336.098 million from January 01, 2008 to October 31, 2008. "The fresh inflow is a positive sign for local share market and it shows foreign investors' interest to invest here on expectations of healthy returns", analysts said.

The foreign investors opted to offload their holdings on their concerns over the political uncertainty and weakening economic indicators of the country. Other world markets also remained under heavy selling pressure during this period.

The Karachi share market had witnessed heavy declining trend during last few months as KSE-100 index declined by 42 percent, or 6493.46 points on October 31, 2008, from its peak level of 15,676.34 points on April 18, 2008 to 9,182.46 points.

The foreign investors once again started their investment at the local share market mainly due to recent very attractive levels and expectations of good returns, analysts said. The analysts were expecting more foreign investment to come in the local equity market.

The week started with positive sign as a fresh inflow of $22,120 was recorded on Monday. This trend continued as another 144,981 came in the country on Tuesday. A net inflow of $147,511 was witnessed on Wednesday while $34,856 came on Thursday. However, a meagre outflow of $330 was recorded on Friday.


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## dr.umer

*Oil on deferred payment: Islamabad mulling Tehran offer​*2 Nov 2008
Islamabad

Prime Minister Yousuf Raza Gilani said on Saturday that Pakistan is seriously considering Iranian offer for acquiring oil on deferred payment. Briefing media on his return from the five-day visit to Turkey, he said why should Pakistan refuse such an offer, if Iran is ready to give oil on deferred payment.

"International community is willing to help Pakistan because it is convinced that a stable Pakistan is in their favour," he said, adding that Pakistan is not isolated, as friends of democratic Pakistan as well as other countries are seriously thinking to help Pakistan out of the prevailing crisis. They believe that a stable Pakistan could ensure peace to the rest of the world, he said.

The Prime Minister said that he had held constructive talks with the business community and Chamber of Commerce of Ankara and they were apprised about Pakistan's policies and investment opportunities in different sectors.

He said that bilateral talks with Turkish leaders were aimed at increasing co-operation between the two countries in defence, economy, energy, health and education sectors. There was unanimity in views between the two sides against war on terrorism, with Turkey supporting Pakistan's stance, he added.

The Prime Minister said he also explained Pakistan's point of view and approach on issues including war to terror to the world leaders during his address to the World Economic Forum (WEF). Moreover, he said, he held bilateral talks with Afghan President Hamid Karzai that followed trilateral talks, with Turkey also joining them, and they agreed to enhance regional co-operation.

The Prime Minister said that US attacks had increased troubles for Pakistan and have been causing failure of Pakistan's policy of isolating militants from the tribal people. "I will take up the issue with US ambassador during a meeting with her," he added.

Gilani said that Army action was not a solution to the problem. Army action creates a vacuum that has to be filled by the law enforcement agencies, and the government was striving for capacity building of the law enforcement agencies to cope with such a situation.

The Prime Minister said that he had told the international community that Pakistan has the will and capability to play due role for peace, progress and prosperity and the 3D strategy for countering terrorism includes dialogue, development and deterrence.


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## dr.umer

*Quake hits apple orchards of Ziarat​*
​
QUETTA: The earthquake has destroyed many orchards in Ziarat, depriving local apple-farm workers of their livelihoods at a time when the crop was nearly ripe for harvest. 

Besides loss of lives and property, the 6.4-magnitude tremor also destroyed many trees in Ziarat, a media report said. 

The valley of Ziarat district is famous for its ancient juniper forests and orchards filled with golden and green apples. Ziarat is the largest apple producing area in the country.

About 100,000 population in this picturesque corner of mountainous Baluchistan province are involved in apple farming in some way, either as orchard owners or labourers. Honey farming is also a major source of earning. 

Pakistan produced an estimated 350,000 tonnes of apples in 2007, more than Canada, Britain or Israel, according to the latest available UN Food and Agriculture Organisation statistics. 

Most were grown in Baluchistan while many of the remainder come from the district of Swat in North West Frontier Province and the tribal areas of South and North Waziristan. 

Meanwhile, traders in Quetta, some voiced fears that the earthquake could hit apple supplies in Pakistan and abroad.

Baluchistan province's Qilla Abdullah and Ziarat (districts) mainly supply the rest of Pakistan and export apple varieties to many countries. 

The apple-loving larger provinces like Punjab and Sindh had already seen shorter supplies and the quake can worsen the situation.


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## Neo

*Exports to Iran rise by 69pc ​* 
Sunday, November 02, 2008

KARACIH: Commercial Attache of Iran, Ahmed Fasihi stated that during the past six months Pakistans export to Iran increased by 69 per cent and amounted to $118 million whereas Irans export to Pakistan hiked by 11.5 per cent and reached $129 million compared to the same period last year.

During a meeting with the members of Karachi Chambers of Commerce and Industry (KCCI) recently he said that with the assistance and cooperation of respected economical, commercial and political officials of the two countries good bilateral relations will further develop as much as possible.

He also said that both the countries are completely rich in the potential strength of trade however, the transaction despite common religion, long neighbourly borders and as brotherly nation are not agreeable in such a way as they were supposed to be.

In order to strengthen the traditional, commercial, industrial and reciprocal relationship between Pakistan and Iran to maintain spirit of regional friendship, a Memorandum of Understanding (MOU) was signed between KCCI and Esfahan Chamber of Commerce, Iran on 31st October, 2008 by KCCI President, Anjum Nisar and Esfahan Chamber of Commerce, Iran Senior Vice President, Jafar Zarreh Bini, respectively.

Zarreh Bini added that Iran wishes to enhance trade volume with Pakistan. He said as brotherly countries both nations should vigorously go ahead for developing trade and business in the preset worldwide economic crisis scenario and stressed for active role of private sector of both countries to help the governments for promotion of trade and business.

Anjum Nisar briefed the delegates about the composition and role of KCCI towards promotion of business and trade activities locally and globally. He highlighted the ample opportunities of bilateral trade and business in the areas of development of infrastructure, engineering sector, transfer of technology, export of Pakistani fruits, vegetables and rice to Iran.

He also stressed upon acceleration of trade and business activities by both the countries in the fields of exchange of professional services, broad based business promotion through chamber to chamber contacts which would further strengthen the bilateral trade and business relations between the two countries.

Nisar further said that they are in the process of helping SMEs to develop and extend close cooperation to Iran to develop this sector. Zarreh Bini also proposed that his country is very keen if a joint protocol for trade and business development be signed between Iran and Pakistan.


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## Neo

*What keeps the economy going?​*
KARACHI: More than anything, it is the peoples sense of survival against heavy odds that sustains national economy and prevents it from sliding below a certain level.

In Pakistan, economic resilience, reflected partially in a robust retail-sector performance, does not seem to be policy-induced. Officially put at 11 per cent and unofficially at 20, the growth of the retail sector here is a powerful testament to the element of resilience in economy. That the sector has caught the attention of international retail chains is not without reason. Makro and Metro, for instance, have already opened their outlets at several spots in urban Pakistan despite all that is wrong in the country, and a few more giants are at different stages of making their entry into the market.

The least financially empowered people  petty farmers, homemakers, the self-employed, hands-on trained technicians, artisans, craftsmen and the toiling masses  seem to be collectively producing more wealth than that reported by the formal economy. Their productivity makes up for the low level of capital formation in the formal sector to sustain the 160-million-strong population. The official rate of capital formation at 20.4 per cent in 2007 is, indeed, too low to have sustained such a big chunk of people.

The outcome of an informal survey by Dawn suggests that the tensile strength of the economy is rooted in a combination of a set of varied tangibles and intangibles. These include strong survival instincts of the dispossessed, fertile land, strong family ties, business acumen, technological inclination of the uneducated mass (high density of mobile phones is an indicator), exposure to modern life (people residing not only in urban shanty townships, but even those in backwaters have this window to peep through electronic media, leading to higher aspiration levels) and the trait of personalised charity encouraged by the belief structure dominant in Pakistan. A study had put charitys quantum at an estimated Rs700 billion some 10 years back which is projected to have more than doubled over this period.

There are understood to be more money transfers from abroad that supplement the locally-generated family income than indicated by the official remittance figures. This could be because of monetary transfers by Pakistani workers abroad through channels other than banks. There are reasons to believe that there are significant direct injections of liquidity in economy by certain overseas organisations working for certain causes.

The NGO sector in Pakistan is bigger and wealthier than perceived. And add to this the black economy, the ill-gotten wealth, say, generated from smuggling. That, after all, is also used in whatever way by whosoever largely within Pakistan.

Though there are no credible studies available on the subject, the informal economy in the country is believed to be twice as big as its formal counterpart.

Officials themselves doubt the quantity and quality of data that at best provide some pointers and trends, but not necessarily the whole reality of a transformational economy. The likes of Shaukat Aziz and Pervez Musharraf were probably referring to this dichotomy when they reportedly told various forums in the presence of foreign dignitaries in so many words that the per capita income in Pakistan was close to $1,000, but the per capita spending power was one-and-a-half times higher at $2,500. What they did not bother to do was to explain where the people were getting this extra money from over and above the reported average household income.

The government hierarchy accepts that data-collecting tools and organisations are outdated, but so far there is nothing to suggest that either the incumbent or the previous government treated it as a priority area or made an effort to reform it. This reflects the low commitment of the rulers towards economic planning.

Since the quality of planning depends on the quality of information it is based on, the absence of credible data makes all exercises done in the name of economic planning futile for all practical purposes.

Generally an economic meltdown is followed by social unrest and political chaos. One explanation that was forwarded for the remarkable level of patience displayed by the people in the country is that their interaction with sectors under strain is at best marginal. Yes, price hike is crippling and has driven people to do multiple jobs for as long as 12 to 14 hours a day, and has transformed the traditional single-earner household to multiple-earner ones, but a very narrow percentage of the population is actually banked or has invested in the capital market.

According to current SBP data, only 15 per cent Pakistanis are banked and less than one per cent invested in securities. The fact is that the majority is not bothered where the financial sector is headed and, for that matter, whether or not the capital market shall be bailed out because they do not have a direct stake in these sectors.

Pro-government segments find the absence of mass social unrest as an indication of political support, but they may well be stretching their case a bit too far.

There is, however, no denying the fact that the current Pakistan Peoples Party government has succeeded in creating, if nothing else, an impression that it is more sensitive to demands of the rural economy than was the previous government. It has taken some steps to appease its support base in rural Pakistan. The revision of support prices of wheat and rice and extension of certain subsidies on agriculture inputs have created some goodwill for the government in its support base.

The situation has actually improved for us since the last government was voted out. The benefits of pro-farm policies have yet to reach the farming community, but the mood is optimistic. We perceive the farming community to be a part of the current power equation in the country, said Syed Zulfiqar, an educated progressive farmer who owns a medium-sized farm on alluvial belt in the fertile central Punjab.

Another important factor that seems to lend stability to the economy of Pakistan and saves it from experiencing more horrific poverty is the natural inclination of the illiterate people towards technology. It explains why the West is so wary of the copy culture of the East. Those who cannot read or write make next-to-perfect replicas of advanced industrial machinery, such as home appliances, units used by industry and mechanical farm implements. The quick adoption of skills and new technology by the small-scale engineering sector in central Punjab and Karachi has not only supported several hundreds of thousand of families, but has actually improved the productivity of agriculture and industry by supplying low-cost equipment.

Rice harvesting, for example, used to take a month-and-a-half until the introduction of mechanical harvesters a few years back when some agriculturists had imported old used harvesters from Europe and given them to small engineering workshops in Gujrat. Within days they made them functional and within the next few months produced their home-made replicas of different sizes. The induction of these harvesters has reduced the harvesting time from 45 to nine days, and reduced the wastage remarkably. Today, these harvesters are used across the country.

An executive of an NGO, involved in developing skills of small-time self-made engineers, told Dawn a while back that western countries welcome Pakistani technicians in training institutes, but discourage on-shop training or even visits to their industries.

They are truly afraid of Pakistanis who they refer to as rugged smart-heads. A German businessman once said they prefer not to take Pakistani batches to their units of disposable plastic syringes because they fear that they will copy their investment-intensive technology and blunt their edge in the market, he said.

The ingenuity of the people to understand changes in the market identifies a business possibility and their response in time to tap that opportunity is amazing.

The absence of formal education and denial of access to the echelons of power for institutional support have only sharpened the instincts of the poor but enterprising Pakistanis. Their business instincts have developed under circumstances that for most have remained difficult, if not tricky. Their understanding of the market and willingness to work hard makes it work for them despite a disadvantage of being in the informal sector.

It, however, does not normally permit them to cross the glass barrier and make it big. The lack of finesse because of limited resource base keeps such businesses at little above subsistence level, absorbing family members and some hired hands. It produces enough to sustain the establishment, but not to expand it beyond a certain level, a Lahore-based expert on SMEs told the scribe some time back.

While experts puzzle over how to explain the sturdiness of the poorer segments, the Dawn survey suggests that in their struggle for economic survival, they have led a silent revolution that has used whatever little window of opportunity there was to build long-term resilience and development in their communities. They consciously strategise and develop their families accordingly. It is a subject in its own right how women in such households use the family income to make the most of it. I can never understand how she manages. I work hard, but she feeds and clothes my eight-member family within the meagre budget. I could not have done it without her, said Shabbir, praising his wifes money-management skills. He told Dawn that the local saving and credit group compensates for the absence of a bank in their squatter settlement.

Economic pressure is forcing more and more people to let their women work despite social prejudices against the notion.

I cannot finance the marriage of my daughters on my own. I saw it happen in my neighbourhood. The pampered, unmarried daughter met a horrific fate after the death of her mother when she was packed off to a home for the destitute by her own brothers. For me the choice was to either lose my daughters to such a shelter or let them work and settle down on their own. I opted for the latter, a bearded middle-aged property dealer in Surjani Town area told Dawn.

As for the lack of inclination on the part of the people towards collective action against the government, a plausible explanation is provided by Adil Khan, a driver who works 13 hours a day for a contractor.

Only people with resources to fall back on can afford to participate in trade union and political activities. Though I feel tempted all the time, every hour counts for me and my family. Had there been more energy in my body, probably I will have preferred to work an extra hour to make some more bucks to ease pressure on the family budget, he explained to Dawn.

Not for the first time, Pakistan is on the brink economically. Forget perceptions: even the official data is disturbing. Over the course of a year, the double-digit inflation has shot through the roof, the rupee has lost 22 per cent in value against the dollar since the February 18 elections, stocks have seen free fall with as much as Rs2 trillion wiped out from market capitalisation from Rs4.8 trillion in April to Rs2.8 trillion today, real estate value has depleted by 20-30 per cent, foreign exchange reserves are down by 50 per cent, and the twin deficits are at record high.

No wonder, then, that the Standard & Poors last month downgraded the credit rating and shunted the country to junk category. People are under immense economic stress and yet life goes on. Away from the sporadic incidents of parents selling children or young men committing suicide out of despair, the face of hunger and poverty in Pakistan is not as horrific as seen on the African continent or even in neighbouring India, where the national economy has been on a gallop for a long time. The retail, considered a valuable indicator of the strength of household economy, has not shrunk correspondingly in Pakistan. One wonders:

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## Neo

*Economists divided over reliability of official data​*
KARACHI: The official statistics reflect the state of the formal economy, it does not gauge the potential of the informal economy, which according to some independent estimates, is equal to or even bigger than the documented economy, and the real source of resilience.

The economists in Pakistan are divided over the reliability of the official statistics. In developed documented economies, official statistics reflect the true picture, but in Pakistan lack of documentation and limitation of data collecting agencies statistics are seen with suspicion.

Some private think-tanks and NGOs challenge the government figures and give out their own numbers. The reliability of their statistics is also a mystery to many.

Recently, the adviser to the prime minister on finance had informed a gathering of business elite that the number of poor had crossed over 44 per cent of the population which included 28 per cent living in abject poverty.

The adviser particularly mentioned that these latest figures were released by the same institution which had claimed in Musharraf regime that the poverty rate had fallen down to 23.5 per cent from 34 per cent.

Prof Khurshid Ahmed, Naib Amir of Jamaat Islami, an economist, said that there was a lack of credibility of the official data since procedures and techniques being employed from sampling to generalisation of the statistics were not up to the mark.

He hastened to add that since it was a government agency so manipulation of figures was common as successive governments influenced it to paint a rosy economic picture.

So how can you expect the data is reliable, accurate and timely and give you the true picture when its handling lacks the standard scientific rules and transparency? he posed a question.

He further said that diagnosis on the basis of these flawed statistics would further aggravate economic issues and would never help it to get recovered unless right and appropriate prescription as per the symptoms was adopted to cure it effectively. He further said that during Musharraf regime the Federal Bureau of Statistics (FBS) had been operating without any head for over three years reflecting the level of seriousness over the issue.

When asked about the reasons of relative political calm despite depressing economic situations, he said that the situation was not good but it was not that bad as being made to believe as agriculture and the industry, particularly small and cottage industry, had the resilience to absorb the economic shocks.

He pointed out that there were protests and demonstrations against hike in power rates and load-shedding and wheat crisis, but general masses usually pinned their hopes on the new government in the hope that their hardships would be eased. Change through vote is better option rather violence or street power, he observed.

He added that the impact of current financial turmoil may add pressure on economy as about 30 per cent of goods and services of total GDP depended on the international trading system and if the global economy slowed down, it would have a limited impact on us also, but it would be absorbable.

He, however, pointed out that the Great Depression of 1930 had not any major impact on this region because it was not that much integrated with the international economic system.

About economic resilience, he said that it derived from the informal economy which is about over 50 per cent of the total GDP, besides the culture, social values and tradition also matter.

Sartaj Aziz, former finance minister of PML-N government and a seasoned economist, said unfortunately the Musharaff-Shaukat government had manipulated the economic data to present the picture they wanted to show during the last eight years and now the economy was paying its cost.

He particularly mentioned the poverty data and said it was distorted to paint excellent performance of their government which was against the reality and tantamount to unfair conduct. This has also shattered the reliability and transparency of the official economic data, he added.

He said statisticians and economic experts knew what happened to these statistics and they had also questioned it, but unless the Federal Board of Statistics was not made independent and free from the influence of the ministry of finance and the Planning Commission, the official data would lack credibility.

He said that the previous government had also committed manipulation of per capita income which was shown at $800 from $400 in just five years owing to rebasing of the year.

At least 24 years would be needed to double the per capita income, if national income rises at the rate of three per cent in real terms, Mr Aziz added.

About the poverty rate, he said it had shown some decline from 32 to 29 per cent, but not that sharp decline as claimed by the Musharraf regime on the basis of a fake survey of 750 households in the capital, now again it surged to over 40 per cent.

He ruled out the default and economic emergency and said that the situation was not that worse as being highlighted in the face of the global recession and financial crisis, saying that in 1999 the country had only $400 million forex reserves and it was not defaulted. Presently reserves are over $7 billion so we need not to worry. However, he appealed to Pakistanis, particularly politicians who have foreign currency accounts abroad, to bring their money back.

He was of the view that global crises would have limited impact on the economy as the local banking sector was safe and sound, but said the flight of capital was needed to be checked.

Our real sector  agriculture and industry  is in good shape and will absorb the external shocks in terms of slow export, but imports must be cut down to maintain judicious balance of payments in view of slow inflows of foreign investment, he said.

About unbridled rise in inflation which has hit low-income groups the most, he said that the Benazir Income Support Programme (BISP) would help give cover to over 4-5 million households from food inflation and added that the inflation would start easing with the arrival of new wheat crop.

However, Mohammad Suhail, Director at JS Global, was of the view that there was no reason to lose faith in official data and statistics as were painting the real picture of the economy. You could say not 100 per cent, but it is the only source which gives us an insight of the economy and tells us how it is and which state it was in.

When asked why there was a general impression that the official figures, particularly about inflation, unemployment, GDP growth, per capita income, etc., were understated or manipulated deliberately by the government, he rejected this impression, saying that only media and politicians create mess about the reliability and transparency of official data for obvious reasons.

He pointed out that over the years not only the quality of statistics had improved, its reliability and acceptability had also increased.


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## Neo

*Rs 270 billion liquidity package for banks completed: SBP reduces CRR to five percent​* 
KARACHI (November 02 2008): The State Bank of Pakistan's liquidity package worth Rs 270 billion for banks to provide additional liquidity completed on Saturday as the central bank further reduced the Cash Reserves Requirement (CRR) by 100 bps to 5 percent.

Amendment in the Advance Deposit Ratio (ADR) already has enhanced the banks' existing lending capacity to Rs 550 billion as the average of advance-to-deposit ratio has dropped from 75 to 57 percent.

Banks were facing huge liquidity shortage for last two months due to the tremendous withdrawals of cash from banks in the wake of default remorse, as a result of which the overnight rate reached new peak of 40-48 percent in the domestic market.

Therefore, keeping in view overall liquidity condition of the market, Governor, State Bank of Pakistan, Dr Shamshad Akhtar, announced a relief package of Rs 270 billion to bring out the banks of the liquidity crunch.

To met the banks' liquidity requirements, the SBP decided to take some new measures and provided some relief to the banks and announced phase-wise reduction in CRR by 4 percent, besides exempting the time deposits of 1 year tenor and above from Statutory Liquidity Requirements (SLR). The SBP has decided to reduced the CRR by 100 bps from November 1, 2008 instead of November 15 2008.

The SBP on Saturday issued a circular to the Presidents and Chief Executive Officers of all banks including Islamic banks, which said: "It has been decided to reduce Cash Reserve Requirements by 1 percent to 5 percent as under, with immediate effect, instead of 15th November 2008 as earlier notified."

The SBP has instructed banks to make sure weekly average of CRR at 5 percent (subject to daily minimum of 4 percent) of total Demand Liabilities (including Time Deposits with tenor of less than 1 year). However, Time Liabilities (including Time Deposits with tenor of 1 year and above) will not require any Cash Reserve.

The current mover of central bank would inject a liquidity of Rs 30 billion in the banking system easing them to meet their customers' demand, while cumulatively with SBP's current and previous moves will have released liquidity of Rs 270 billion in the banking system.


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## Neo

*FPCCI not in favour of IMF loans​* 
KARACHI (November 02 2008): The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has expressed concern over Pakistan entering into an agreement with the IMF on rigid and unfavourable terms and conditions which could be detrimental to the country's interests.

In a statement to the press issued here on Saturday. Tanvir Ahmed Sheikh, President of FPCCI, regretted that this would be the third government that would ignore FPCCI in seeking its feedback and not take the apex trade body into confidence on matters of vital interest before signing the agreement.

FPCCI was not consulted on two previous such occasions also, which resulted in leaving festering wounds on the trade and economy of Pakistan. IMF policy stresses on "demand management, withdrawal of subsidies, higher rates on indirect taxes and high cost of financing", which would have overall adverse effects on the country's economy, already under tremendous pressure at the moment, he said.

The FPCCI President stressed that the government should negotiate, and identify, sources of revenue generation and also as to how it would manage to pay back huge IMF loans without offering industrial competitiveness.


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## Neo

*IMF asks Pakistan to cut defence budget​*
Islamabad, Nov 2, IRNA 
Pakistan-IMF

*The International Monetary Fund (IMF) has asked Pakistan to cut its defence expenditure.​*
Adviser to Prime Minister on Finance, Shaukat Tareen has said that Pakistan is at war on its western border and no effort should be made to slash down the defence expenditure at this critical juncture.

"If the armed forces keep their expenditures within the envisaged allocated amount for this fiscal year, it will be a great achievement on their part," he said.

The adviser hinted at raising the discount rate in the near future, as insisted by the IMF, saying the core inflation stood at 17 per cent while the discount rate was 13 per cent at the moment, which could be reviewed to tackle the inflationary pressure in a more effective manner.

The economy of Pakistan has been facing many serious challenges such as trade deficits, galloping inflation, increase in the level of poverty, power outages, water shortages, closure of industries and food insecurity.

The country's inflation is running at around 25 per cent, and its foreign currency reserves are rapidly depleting, forcing the government to seek emergency cash advance from friendly countries and international financial institutions.

The government of Pakistan has already said it would seek the IMF loan only as a last resort if it cannot secure some US$5 billion it needs to stabilize its economy.

"Within the first seven days of November, we will complete the indoor consultation for formally approaching the IMF," Tareen has said.

However, if the current "political realities", are analyzed, Pakistan seems to have little option but to go to the IMF. The United States also wants Pakistan to work with the IMF.

An IMF-backed plan would require Pakistan's government to cut spending and raise taxes, among other measures, which could hurt the poor. The government of Pakistan has already taken steps to reduce expenditures keeping in view the difficult economic situation being faced by the country.

It is said that all the other expenditures of the country would have to be brought down to reduce the fiscal deficit from 7.4 per cent of the GDP to 4.3 per cent on June 30, 2009.

There are other non-development expenditures as well that could be reduced such as the reducing the fuel limit for bureaucrats, continuation of the ban to purchase cars.

For imposing the agriculture tax, the government will have to move a constitutional amendment in the Parliament for seeking a nod before imposing this tax and if the PPP government could devise a mechanism in this regard during its five-year term, it would be an achievement on their part.


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## Neo

*Pakistan Injects $484 Million Into Market to Boost Banks' Funds ​*
Nov. 1 (Bloomberg) -- Pakistan's central bank injected 39.37 billion rupees ($484 million) into the country's money markets to increase the funds available for banks to lend to each other.

The Karachi-based State Bank of Pakistan added the funds through so-called two-day reverse repurchase agreements at a rate of 12 percent, it said in a statement today. The central bank received offers for 39.87 billion rupees of the funds.

Repurchase agreements allow banks to borrow money using treasury bills as collateral and are used to manage occasional shortages or surpluses of cash in the interbank market.


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## Neo

*Pakistan won't accept stringent IMF terms: President and Prime Minister meet​* 
ISLAMABAD (November 02 2008): Pakistan has decided not to accept stringent International Monetary Fund (IMF) conditions for economic bailout package, but a final decision would be taken on the conclusion of President Asif Ali Zardari's visit to Saudi Arabia and 'Friends of Pakistan' meeting in Abu Dhabi. This was agreed in a meeting between the President and Prime Minister Yousuf Raza Gilani in Aiwan-e-Sadr on Saturday.

The two leaders said that the economic experts of Pakistan were busy in dialogue with IMF for loan package, and Pakistan is minutely looking into the conditionalities of IMF, and after this review it would be decided whether to take loan or not.

The President and Prime Minister said that if IMF loan would be against Pakistan's national interest, the government would not waste a moment to avoid it. "If our 'friends' start supporting us immediately, maybe, Pakistan will not need IMF support", they said. They expressed hope that the 'Friends of Pakistan' countries would help Pakistan in facing the challenges of financial crisis.

In their meeting, President Zardari and Prime Minister Gilani called the continuous missile attacks by US drones in tribal areas as attacks on Pakistan's sovereignty, and asked the US leadership to respect the sovereignty of Pakistan.

They also asked America to respect the unanimous resolution adopted by Pakistani Parliament regarding the elimination of terrorism and extremism. Gilani apprised the President of his recently concluded visits to China and Turkey and also discussed matters pertaining to the ongoing rescue activities in the earthquake affected areas of Balochistan.


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## Neo

*Pakistan, IMF agree in principle on $9.6bn loan ​*
ISLAMABAD: The International Monetary Fund agreed in principle on a $9.6bn economic stabilisation plan for Pakistan during a week-long meeting between the two sides in Dubai, an official from the country's finance ministry said.
"The Pakistan team concluded talks with the IMF on Thursday to get consent for $9.6bn for two years as a standby arrangement," the official, who was part of the government delegation to Dubai, told Dow Jones Newswires.
The first tranche - which would only come after Pakistan has filed a formal request and the IMF has approved the aid - is likely to be for $3bn to $4bn, said the official.

An official from the IMF confirmed the in-principle agreement with Pakistan. The final approval will be given by the Fund's executive board, said the official, without providing details.

Shaukat Tarin, economic adviser to Prime Minister Yousuf Raza Gilani, will take a final decision on the formal request after discussing it with President Asif Ali Zaradari, the government official said.

IMF staff will prepare the Article IV Consultation Review Report and a letter of intent, which will be signed by Tarin as a formal request and agreement on conditions for release of the funds, he said.

Meanwhile, David Hawley, Senior Adviser, External Relations Department of IMF, confirmed talks in Dubai have concluded and said some "key points were still to be formalised."

IMF and Pakistani officials plan to resume discussions on a potential loan in the next few days.
"The stage of talks that took place in Dubai has concluded. Further discussions will take place in the next few days," Hawley said.

Pakistan is urgently seeking funds to help it weather a fast-deteriorating balance of payments situation. It hopes that agreement with the IMF on lending could unlock funds from governments friendly to Pakistan such as the US, the UK and the United Arab Emirates.

Few details about the potential conditions to the loan have emerged, although Tarin recently said the IMF has agreed not to push for an increase in Pakistan's already high interest rates.

Addressing the country's fiscal deficit will also be key. Improving tax collection could be part of that, so could privatisation of government-controlled firms.

Meanwhile, in an interview yesterday Tarin said Pakistan is at war on its western border and no effort should be made to slash down the defence expenditure at this critical juncture.

Citing the example of suspending the work on the construction of the new GHQ in the federal capital, Tarin said they had already taken steps to reduce expenditures keeping in view the difficult economic situation being faced by the country.

"If the armed forces keep their expenditures within the envisaged allocated amount for this fiscal year, it will be a great achievement on their part," he said and added that all the other expenditures would have to be brought down to reduce the fiscal deficit from 7.4% of the GDP to 4.3% on June 30, 2009.

The adviser hinted at raising the discount rate in the near future, as insisted by the IMF, saying the core inflation stood at 17% while the discount rate was 13% at the moment, which could be reviewed to tackle the inflationary pressure in a more effective manner.

He conceded that it would not be an easy task to bring the agriculture income and the services sector under the tax net. "We are not saying that it will be done immediately, but we want to set a course for increasing tax to the GDP ratio from 10% to 15% in the next five to seven years," he added.
However, sources said the government had accepted the IMF demand to cut down development and non-development expenditures by 35-40% and 7-10%, respectively.

On the non-development side, the defence budget is likely to be rationalised without announcing any cut as the panel of economists has recommended cutting down the defence spending by 7% at least during the current fiscal year 2008-09.

There are other non-development expenditures as well that can be reduced such as the government is considering reducing the fuel limit for bureaucrats, continuation of the ban to purchase cars and trying to reduce stationery for office work.

These are all minor steps but it will be a token for other segments to bring simplicity in their lives, added the sources.

"For imposing the agriculture tax, the government will have to move a constitutional amendment in parliament for seeking a nod before imposing this tax," the sources said and added that if the PPP government could devise a mechanism in this regard during its five-year term, it would be an achievement on their part.

"There is a need for upgrading the Index Production Unit (IPU) related to agriculture production," the sources said and added that the imposition of the GST on services also required the consent of the provincial governments before moving towards the desired direction.

"The FBR may slap the Federal Excise Duty (FED) on more services as alternate to the GST on services, which is a subject of the provincial governments," the sources said. - Agencies


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## Neo

*Pakistan accepts 11 IMF conditions ​* 
Sunday, November 02, 2008

ISLAMABAD: After minor changes in the 11-point agenda of the International Monetary Fund (IMF), the Pakistan government has agreed to gradually impose the Central Excise Duty (CED) on services and agriculture sectors at the rate of eight to 18 per cent in place of the General Sales Tax (GST), The News learnt here on Saturday.

In view of the IMF demand, the Pakistani currency will also be devalued after slight changes in the discount rate and exchange rate will be decreased officially by six to seven per cent, an official in the Ministry of Finance disclosed, wishing to remain anonymous.

Moreover, the official said the release of 60 per cent funds for the next three quarters of the current financial year, under the Public Sector Development Programme (PSDP), would be reviewed downward to 45 per cent.

According to the official, the foreign assistance flow had already declined by 40 per cent because donors had refused to provide funds for new projects at the federal and provincial levels under the PSDP against the ongoing projects funded by the Japan-IBRD, the World Bank, the Islamic Development Bank and the Asian Development Bank.

ìThe IMF proposal received by the federal government in the last week of October contained 16 conditions having 180 points that were discussed in four meetings between Pakistani and IMF officials in Dubai,î the official disclosed. 

Eleven of the 16 conditions have been accepted with slight changes,î he added.

The official said that major conditions accepted by the Pakistan government included changes in the Islamic Development Bank loans and differentiation between loans and grants, devaluation of rupee, freezing of non-development expenditure under the defence budget for the last three quarters of the current financial year, non-provision of supplementary grants to government departments, ending subsidy on gas and electricity, 20 per cent reduction in non-development expenditure of civil departments and federal ministries, increase in markup rate of banks and on inter-bank transactions, uniformity in the inter-bank and open market dollar exchange rate and stoppage of government financial intervention in stock markets.

ìUnder the conditions accepted by the government, the IMF will be informed at the time of the issuance of credit line by any international financial institution, including the World Bank or immediately after it,î the official said. 

ìThe matters on which the government and its financial managers have differed with the IMF include release of $1.5 billion to$2 billion for the current financial year under the annual assistance package,î he said.

The government wants the IMF to provide $3 billion and another $1.5 billion to $2 billion for adjustment of the loan instalments and maintenance of the balance of payments during the current financial year, said the official.

ìBut the IMF wants to release $2 billion for repayments in the first six months after reaching the agreement for saving Pakistan from default and another $500 million for the stability of the national economy,î he said. ìFor this too, the IMF wants increase in the markup rate on the already approved 600 million World Bank loan and grant,î he added.

The official opined that despite all the tough conditions, objections and differences, Pakistan would be compelled to seek the IMF assistance package because under the IMF pressure on the Friends of Pakistan, no friendly country has so far agreed to extend loan to Islamabad to meet its repayment obligations. ìTherefore, the government has decided to write a letter of intent to the IMF for assistance,î he said.


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## Neo

*Home-grown policies and IMF prescriptions​*
The International Monetary Fund is back on the scene to help Pakistan overcome its financial crisis in less than four years after the claim that the government had smashed the begging bowl, never to return to the fund.

Barring a couple of officially dubbed minor differences on defence spending cuts, the policy framework for the proposed package is almost final, and it is hardly a matter of days before the disputed matters are settled and prime ministers advisor on finance Shaukat Tareen uses his last option to raise capital from the fund for balance of payments support.

IMFs macroeconomic stabilisation policy prescription and harsh conditions attached to its funding are immensely unpopular because these invariably involve tax hikes, expenditure (including subsidies) cuts, and exchange rate flexibility (or currency devaluation).

Pakistans proposed home-grown economic stabilisation package discussed with the fund in Dubai during the last week of October pledges to follow these policy guidelines to ensure fiscal discipline.

The package commits Pakistan to reduce fiscal deficit to 4.3 from 7.4 per cent, raise tax to GDP (gross domestic product) ratio to 15 per cent from the existing 10.5 per cent in five years, maintain a flexible exchange rate, achieve zero net borrowings from the central bank by cutting subsidies this year, and involve private sector in the public sector development programme (PSDP).

The successful conclusion of the deal is also feared to result in interest rate hike as money supply is further tightened under IMF pressure.

But could the fund be avoided? We could if the government hadnt lost its handle on the economy during the last few months, experts say. But not now as the economy is in distress and macroeconomic fundamentals are slipping by the day. Foreign-currency reserves of the central bank (exclusive of foreign-currency accounts of $3.2 billion held by the banks) are down to $3.71 billion - equivalent to imports of just five weeks, from life high of $14.24 billion a year ago.

The rupee has lost 25 per cent in value to a dollar since the beginning of the year. Fresh foreign capital inflows have dried up or slowed down. Tareen estimates that $6-10 billion had been taken out of the country in last six months. Price inflation is running at 30-year high of 25 per cent.

The government estimates that it needs $3.5 billion to $4.5 billion in next 30 days to cover its balance-of-payments obligation and rebuild foreign-currency reserves. But Pakistans friends have declined its request for hard cash in the short-term to rescue its economy.

Tareen says our international friends want the IMFs endorsement of our economic policies before they move to bail us out. They want their money well spent under the watchful eyes of the fund.

Were in a situation where money has to come from somewhere - even if it has to be IMF - to end turmoil in the markets and restore confidence in the economy, Pakistans former chief economist Pervez Tahir argues.

Why didnt the government move when we still had comfortable level of foreign exchange is a mystery to me. Either the policy makers didnt see the oncoming cash flow crisis, or they sat on their haunches waiting for a miracle to happen, Shahzad Azam Khan, a businessman, remarks.

Pressures on the economy could be mitigated if government had realised seriousness of the situation, put together a package of credible economic policies and sought financial bailout from our friends well in time. But the policy-makers missed the bus assuming the world couldnt afford to let us down because of our strategic location and us being the frontline state in the terror war, he says.

Pakistan is likely to seek sizeable funding from the fund, far greater than its quota of $1.6 billion.

Tareen says the fund could give Pakistan $3-5 billion immediately to improve cash flow and cover balance-of-payments obligations, and $8-10 billion in next two years. That is precisely what he requires in the short to medium-term to steer the economy out of current crisis and restore stability to the markets.

In the short-term, the IMF funding and endorsement of governments policies will improve things to some extent by ending uncertainty and confusion about our ability or lack of it to meet our liabilities and easing pressure on the rupee, halting further capital flight, Shahid Kardar, an economic expert, insists.

Moreover, itd send a positive message to the global financial markets and give confidence to the donors that were serious about exercising fiscal discipline, he says.

But the business remains wary of and uneasy at the prospects of IMFs return, fearing its rigid and harsh conditions could slow down economic growth.

Apart from expenditure cuts and tax hikes, the businesspersons fear another round of monetary tightening and currency devaluation when the economy needs just the opposite.

A Citigroup market analysis report estimates GDP growth to contract to 3.7 this year from 5.8 per cent last fiscal as it suspects the fund to put pressure on government to ease spending.

The IMF funding is unlikely to revive long-term investment, which we direly need at the moment. Possible tax and interest rate hikes, expenditure cuts and currency devaluation will work against long-term investment and growth, says Tahir.

Textile manufacturer Akber Sheikh says the so-called package shows that government had loyally owned IMFs prescription and is selling it to the nation as homegrown formula.

We dont disagree with the direction of the policies. But the definite timelines that IMF is going to demand for achieving these targets could jeopardise our growth prospects, he insists.

The fund is also going to spell out its priorities, listing the sequence of reforms the government is promising to undertake. That is where the problem lies and that is where your ability to take independent decisions in accordance with your own conditions and ground realities is curtailed and difficulties compound, Sheikh argues.

If interest rate is hiked, new taxes imposed and currency devalued it would create serious problems for the business and the industry by raising the cost of doing business. That would bring the business down, he says.

Almas Haider, an auto parts manufacturer, considers the fund prescription of fiscal contraction a sure recipe of disaster for the industry in the existing domestic and global economic environment.

If the credit cost is raised further to curb demand, for example, it will also squeeze production, he says.

Inflation has to come down and current account gap to narrow in next several months anyways as the global oil and food prices are falling on the back of fears of global economic slowdown. Our economy also has to deflate over time. At the moment we need to reduce the credit cost for the production sector, Haider contends.

He also warns against tax hikes for production sector because it would also adversely affect growth at this moment.

New taxes should be imposed on consumption or income from speculative activities and not on industry or production. We need a democratic economy where everyone pays his taxes, Haider says.

The advisor has also indicated plans to tax agriculture, real estate, and other hitherto untaxed sectors to increase revenues

If tax hikes and monetary tightening is to push the cost of doing business, the spending cuts - unless made in the unproductive expenditure, and elimination of food and energy subsidies is going to hit ordinary people facing high price inflation, and possibly increase poverty, vulnerability and unemployment.

The fund is ideologically against subsidies, which we need badly to support the poor suffering under high price inflation. We shall see some pro-poor programmes like the federal governments Benazir Income Support Programme and Punjabs two-rupee roti initiative, but there wont be enough money for them (once the IMF is here), he says.

Officials acknowledge the popular concerns relating to harsh IMF conditions and timelines for their implementation. But they claim the fund conditions and timelines this time are not going to be as rigid or harsh as before.

Let me say at this stage that our international friends and allies in terror war are aware that harsh IMF conditions could create a lot of problems for our people and government, as well as our efforts against terrorism. Even President Zardari has conveyed it to our western friends, a senior federal finance ministry official says.


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## Neo

*Time to restructure the economy​*
An analysis of deteriorating economic conditions takes one to a crossroad. Are these the impacts of the current global financial crises, a case of economic mismanagement or an effort to tighten economic rope?

The economic managers say that the only option is to go to the IMF. The financial assistance from IFIs has always been on stringent economic conditions. Today, these conditions may as well be of strategic nature and may, perhaps include issues of national security.

It is time that Pakistan should learn lessons from its mistakes and instead of picking up the economic bowl once again, should stand on its own feet. It should generate all the resources it requires domestically and try to live within its economic means.

Apparently, the economic managers have not fully considered the options of generating internal financial requirements. The GATT / WTO provide clear cut rules and regulations for developing countries to take specific measure to support their economies.

Instead of looking for external balance of payments support, policymakers can take the following steps to shore up the foreign exchange reserves.

Foreign exchange depletion can be handled by:

(a) regulatory and punitive measures by the State Bank to stop the trade of dollars as a stock,

(b)Prevent money changers and banks from transferring dollars abroad without foolproof business or other legitimate reasons. For this, the Federal Board of Revenue and SBP should ask for fortnightly returns from the money changers and banks.

(c) money laundering laws should be strictly implemented

(d) export proceeds should be ensured within stipulated period.

(e) Transfer of deposits ofindenting commission on import/export should be made mandatory

(f) foreign exchange for the import of luxury/unnecessary items should be arranged by the importers through their own external sources. The government should issue a list of items with customs PCT numbers for the import of which foreign exchange from internal sources may not be provided, and

(g) strict actions should be taken against over- and under-invoicing.

Long-term measures on war footings need to be taken for enhancing exports through increased market access for goods and skilled personnel and resources be reallocated for import substitution industry.

The issues of trade imbalance are much more serious than being envisaged. Statistics indicate that our imports are being under-invoiced by up to 50 per cent. Some of the foreign exchange earned on exports on consignment basis is being routed through money changers instead of authorised banks and is not being surrendered to the SBP. This needs to be taken care of.

Various studies reveal that out of Rs100, the government collects 38 per cent of the total revenue and 62 per cent is shared by the tax payers, collectors and practitioners. If strict measures are taken, substantial additional revenue can be generated from the following sectors as given in the table:

In some other major essential commodities, there has been profiteering resulting to the great disadvantage to the consumers and concealment of income from the tax authorities of about Rs463 billion. This concealment has resulted in the colossal revenue loss on account of income tax of about Rs165 billion which is apart from the income tax evasion mentioned earlier.

In recent years, the real estate sector has witnessed enormous price appreciation. The prices of some other consumer commodities like rice, tea, pulses, beverages and gold have witnessed a substantial increase in prices. Similarly, consumer durables and industrial inputs have also witnessed substantial appreciation in their value despite the fact that the government had considerably reduced customs duty on their imported inputs. Adequate measures to tax these sectors can yield substantial revenue.

The government should consider levying high tariffs or even quantitative restrictions which takes full account of the continued level of demand for imports. The external trade needs to be restructured considering our commitments under the market access negotiation under the WTO regime.

Pakistan should renegotiate its bound level of tariffs taking into account (i) the needs of individual industries, (ii) use of tariffs to support our economic development programmes and special needs for revenue and (iii) all other relevant circumstances, including the fiscal, developmental, strategic and other policy requirements.

Overseas Pakistanis should be encouraged to invest or remit fifty percent of their liquid assets, for the protection of which, necessary guarantees be provided by the government.

The writer is former economic consultant NAB


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## Neo

*Deposits higher by Rs14.257 billion​*
In order to ensure prudent liquidity management by banks, it has been decided that henceforth advances to deposit ratio of any bank shall not exceed 70 per cent at any time.

On October 17, the State Bank of Pakistan decided to reduce the Cash Reserve Requirement to a weekly average of six per cent of total demand liabilities. CRR will be further reduced to five per cent effective November 15, 2008. The Statutory Liquidity Requirement w.e.f. October 18, is nine per cent (excl. CRR) of total demand liabilities.

According to the weekly statement of position of all scheduled banks for the week ended October 25, 2008, deposits and other accounts of the scheduled banks which had fallen in the preceding week, rose in the current week and stood at Rs3,681.110 billion, higher by Rs14.257 billion over preceding weeks figure of Rs3,666.853 billion. Compared with last years corresponding figure of Rs3,451.075 billion, the current weeks figure is larger by Rs230.035 billion. During the current week commercial banks deposits showed an increase of Rs14.071 billion over the week to Rs3,669.774 billion, against preceding weeks Rs3,655.703 billion. Specialised banks deposits stood at Rs11.336 billion, against preceding weeks Rs11.150 billion, a rise of Rs0.186 billion.

Borrowings by all scheduled banks decreased further. It declined to Rs424.428 billion over preceding weeks figure of Rs436.978 billion, a fall of Rs12.55 billion. Compared to last years corresponding figure of Rs405.156 billion, current weeks figure is higher by Rs19.272 billion. Current weeks decline was due to a fall in the borrowings by commercial banks, which fell to Rs342.923 billion against previous weeks Rs355.480 billion, or by Rs12.557 billion. Borrowings by specialized banks stood at Rs81.506 billion, against preceding weeks figure of Rs81.497 billion, higher by Rs0.009 billion.

Gross advances stood at Rs3,092.451 billion in the week under review, a rise of Rs20.922 billion over preceding weeks figure of Rs3,071.529 billion. Compared to last years corresponding figure of Rs2,482.220 billion, current weeks figure is larger by Rs610.231 billion. In the week under review, advances by commercial banks increased to Rs2,993.142 billion against earlier weeks figure of Rs2,972.279 billion, or by Rs20.863 billion. Advances of specialised banks stood at Rs99.309 billion, larger by Rs0.059 billion over earlier weeks figure of Rs99.250 billion.

Investments of all scheduled banks increased in the week by Rs17.139 billion to Rs921.043 billion against preceding weeks figure of Rs903.904 billion. Compared to last years corresponding figure of Rs1,243.254 billion, current weeks figure is smaller by Rs322.211 billion. In the current week, commercial banks investment increased to Rs909.344 billion, from earlier weeks Rs891.571 billion, or by Rs17.773 billion. Specialised banks investment stood at Rs11.698 billion, against preceding weeks Rs12.333 billion, smaller by Rs0.635 billion.

Cash and balances with treasury banks of all scheduled banks decreased by Rs8.48 billion during the week to stand at Rs350.217 billion against earlier weeks Rs358.697 billion. Current weeks figure was higher by Rs2.678 billion compared to last years corresponding figure of Rs347.539 billion. In the current week, the figure for commercial banks stood at Rs347.180 billion against preceding weeks figure of Rs355.058 billion, a fall of Rs7.878 billion, while of specialized banks it stood at Rs3.037 billion over previous weeks Rs3.639 billion.

Total assets of scheduled banks stood at Rs5,018.496 billion, higher by Rs6.693 billion, over preceding weeks figure of Rs5,011.803 billion. Current weeks figure was higher by Rs363.39 billion compared to last years corresponding figure of Rs4,655.106 billion. Meanwhile, commercial banks assets, in the current week, stood at Rs4,895.835 billion, higher by Rs5.648 billion over previous weeks figure of Rs4,890.187 billion. Specialised banks assets rose to Rs122.661 billion, or by Rs1.045 billion over previous weeks Rs121.616 billion.


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## Neo

* Rupee resists decline against dollar​*
The countrys macroeconomic indicators continue to be weak. Pakistan is in dire need of financial support to the tune of $10 billion to finance worsening balance of payment deficit, honour debt repayments, build up forex reserves and reverse capital outflows.

Due to negative economic indicators, foreign investment has halted. Foreign investors have reportedly repatriated large chunk of profit and dividend outside the country. Even domestic investors are reluctant in making new investment. A large portion of capital has found its way outside the country.

At the same time, government borrowings for budgetary support from the banking system have sharply risen, while foreign exchange reserves have fallen below $7 billion. As a result, the rupee is also under tremendous pressure. Its value in relation to dollar has eroded sharply over the past 11 months. In recent weeks however, the rupee has managed to resist free fall due to various measures taken by the State Bank of Pakistan. Since January this year, the rupee has so far depreciated by about 23.5 per cent against the dollar.

The rupee resisted sharp declines versus the dollar in the local currency market this week. Modest erosion in the rupee value continued against the dollar. In the inter bank market, the rupee commenced the week on a negative note, as it lost 10 paisa against dollar, which traded at Rs81.60 and Rs81.65 on October 27due to stronger demand. The dollar had closed last week at Rs81.50 and Rs81.55. No change was observed in the rupee/dollar parity amid dull trading on October 28. The rupee on October 29 suffered marginal fall of 5 paisa with dollar trading at Rs81.65 and Rs81.70.

Calm prevailed in the inter bank market on October 30, as there was no rush for dollar buying. However, the parity remained in the negative territory, with the rupee falling slightly by five paisa against the dollar, which was seen changing hands at Rs81.70 and Rs81.75 as strong dollar demand by banks persisted. The rupee displayed strength over the dollar on October 31, as it managed gain 15 paisa on the buying counter and another 20 paisa on the selling counter, changing hands at Rs81.45 and Rs81.55. Against the dollar, the rupee in the interbank market managed to gain five paisa on buying while retaining last weekend rate for selling this week.

In the open market, the rupee managed to retain its previous weekend level against the dollar on the buying counter but lost 30 paisa on the selling counter, trading at Rs82.70 and Rs83.50 on the opening day of the week.

It further shed 30 paisa in relation to dollar for buying but remained unchanged on the selling counter, changing hands at Rs83.00 and Rs83.50 on the second trading day of the week in review. The rupee further weakened on the third trading day, posting fresh losses of 50 paisa for buying and 100 paisa for selling at Rs83.50 and Rs 84.50.

On the fourth trading day however, the rupee managed to show firmness against the American currency, gaining 20 paisa on the buying counter and another 50 paisa on the selling counter to trade at Rs83.30 and Rs84.00 against the dollar. The rupee further extended its overnight gains on October 31, recovering 45 paisa on buying and 70 paisa on selling to close the week at Rs82.85 and Rs83.30, bringing cumulative losses versus the dollar in the open market this week to 20 paisa.

Versus the European single common currency, the rupee rebounded sharply on the opening day of the week in review, recovering Rs1.35 on the buying counter and Rs 1.55 on the selling counter to trade at Rs103.15 and Rs104.15 on October 27 against last weekends Rs105.50 and Rs105.70. On October 28, however, the rupee failed to hold its overnight firmness, as it depreciated by 135 paisa to trade at Rs104.50 and Rs105.50 on the second trading day.

The rupee weakening trend persisted on October 29, when the rupee suffered sharp losses in single day trading. It shed 360 paisa on the buying counter and 280 paisa on the selling counter, changing hands at Rs108.10 and Rs108.30.

The rupee further lost Rs1.20 on October 30, when the euro was seen trading at Rs109.30 and Rs109.40. Finally on October 31, the rupee appreciated sharply against euro, gaining Rs3.95 on the buying counter and Rs4.05 on the selling counter to trade at Rs105.35 and Rs106.35. However during the week in review, the rupee on cumulative basis shed Rs2.20 against the European single common currency.

In the international financial markets, the dollar and yen advanced on the opening day of the week as fears of global recession prompted investors to abandon risky assets, boosting both currencies that were sold to finance these investments. The yen hovered near 13-year peaks against the dollar. The dollar climbed to its strongest level against the single euro zone currency in about 2-1/2 years. In New York, the dollar was hovering around 94.00 yen. The US currency had slid to a 13-year low of 90.95 at the end of last week.

The euro was also a little firmer at around $1.2544. Earlier, it fell to a 2-1/2-year low at $1.2335. The pound fell sharply hit by ongoing risk aversion as investors worried about the spectre of a global recession, with the UK seen as particularly exposed to a prolonged economic downturn. Recession fear sparked further unwinding of riskier positions in all asset classes, with European shares tumbling more than five percent at one point. It was down three per cent against the dollar at $1.5448, but was off session lows at around $1.5280 and above a six-year low of $1.5265 hit last weekend.

On October 28, the yen slumped across the board, recording its worst one-day decline against the euro. The Japanese currency also posted its biggest daily fall versus the US dollar since 1974.

In New York, the dollar jumped 5.4 per cent to 97.75 yen, moving away from a 13-year low just above 90 yen struck last weekend. The euro also rose two per cent to $1.2715 after hitting a 2-1/2-year low earlier. Sterling was up 0.5 per cent at $1.5620, after rising more than one percent earlier in the session. But it still held above a six-year low of $1.5265 last week.

On October 29, the US dollar posted its biggest one-day fall in 23 years with the Federal Reserve delivering an interest-rate cut, easing investor concern about the world economy and reducing the need to repatriate dollars from riskier markets. In New York, the euro was up 1.9 percent against the US dollar at $1.2953. The US dollar was down 1.5 per cent against the yen at 97.26 yen, having gained more than six per cent on October 28, its biggest one-day rise in 34 years. Sterling was up over 2.5 per cent on the day at $1.6315, far above a six-year low of $1.5265 hit last week.

On October 30, the US dollar rose against the yen but was little changed against the euro, after gains in world stock markets and an interest rate cut by the Federal Reserve helped ease the recent flight into the dollar. The dollar climbed 1.2 per cent against the yen to 98.60 yen, extending its recovery from a 13-year trough just below 91 yen touched last week, while euro was down 0.2 per cent at $1.2930, but well above a 2-1/2-year low of $1.2329 hit this week. The pound fell 0.8 per cent to $1.6279, although it stayed above the six-year low of $1.5265 hit late last week. Earlier in the day, sterling rose as high as $1.6671, its strongest in more than a week, as an early rise in share prices revived some demand for higher-yielding currencies.

At the close of the week on October 31, the yen rose against the dollar and euro as a drop in Tokyo share prices renewed investor concern over riskier assets. The dollar fell 1.2 per cent against the yen to 97.38 yen after rising to a high of 99.13 yen. The US dollar dropped more than 8 percent against the yen this month, the biggest slide since 1998. The euro fell 1.4 per cent at $1.2740, down sharply from a high of $1.3300 on October 30. Sterling fell against a broadly stronger dollar, with heightened risk aversion roiling share markets, while data showed the global financial crisis weighing heavily on British consumer morale. The pound was down around one per cent versus the dollar at $1.6185.


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## Neo

*Ban on illiterate workers​*
WHILE it is not clear to what extent the Saudi ban on issuing visas to illiterate Pakistani workers will affect remittances, it is evident that the blow will be a considerable one to our economy. Remittances from Saudi Arabia amounted to over a billion dollars in the last financial year with the Saudi embassy issuing a maximum of 1,200 work visas per day. According to reports, only a quarter of those granted visas were able to read and write. With the money  totalling billions of dollars  from expatriate labour in various countries crucial to sustaining our economy, it is evident that the labour ministry will have to reassess its performance. The ministry may pride itself on making a significant contribution to national finances through the export of Pakistani labour. But surely greater attention should be paid to basic requirements, like education, that would enhance the value of our workers in countries where there is a market for their services. After all, we have the example of other developing countries like Sri Lanka whose women are in great demand in the Gulf and other Arab countries for domestic duties. Trained by government-run centres in household duties and made aware of cultural sensitivities, they have so far proved to be assets abroad, and contribute significantly to the Sri Lankan economy  although several cases of maid abuse are now forcing Colombo to review its overseas employment policy.

No doubt our workers too toil diligently abroad. But illiteracy is the source of many ills, and according to the Saudi embassy is causing difficulties for its government. The removal of this hurdle is essential and a workforce with at least basic education requirements should be applying for overseas jobs, and not specifically in Saudi Arabia. Asking Riyadh to delay the implementation of the new rules is of little use. This hardly serves Saudi Arabias interests and would do little for ours in the long run. What we need are literacy programmes and better government policies and infrastructure for training that would facilitate our expatriate workers during their stint abroad. This would also encourage them to rely on government institutions and thus escape the trap that dubious recruiting agents lay for them with promises of greener pastures in foreign lands. At the same time it is necessary to strengthen forums for registering and acting on the complaints of expatriate workers, many of whom are treated shabbily in the Arab countries. Only a government that is sensitive to its workers needs can expect maximum output from them.


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## Neo

*Utilising natural and economic resources: new project management policy being implemented ​* 
FAISALABAD (November 03 2008): The federal government is implementing a new 'Project Management Policy,' which will not only efficiently utilise natural and economic resources of the country for socio-economic welfare of the people, but will also achieve stipulated targets and tangible returns within the time limits.

According to Planning Commission sources, the project management encompasses all the stages of project cycle ie, identification, preparation, appraisal/approval, implementation and post-completion evaluation. First three stages of project cycle precede the actual project implementation stage. Once the implementation stage is reached, the "project supervision/monitoring" assumes greater importance, which is followed by the final stage ie, project completion/post-completion evaluation. Project monitoring is one of the most important management tools. Unfortunately, it has not been very effective in Pakistan. An enhanced government role in project monitoring will lead to efficient and proper implementation of projects.

The term project management covers all activities that are necessary to (i) ensure that the project is implemented with due diligence to achieve planned objectives within approved cost and time frame; (ii) to identify problems promptly as they arise, help resolve them, and modify the project, if necessary, or as circumstances change; (iii) to close a project if it is no longer justified, particularly if it can no longer achieve its developmental objectives and targets; (iv) to draw significant lessons for designing future projects; and (v) to prepare completion reports, sources of Planning Commission highlighted the new policy.

According to planning commission sources, these activities are carried out at three different levels: (a) Project director, who supervises day to day affairs of the project; (b) Sponsoring ministry/department, which takes policy decision, and (c) Provincial planning and development department or projects wing of planning commission, which acts as central agency to oversee execution of projects through periodic monitoring/evaluation. By and large, project monitoring methodology entails physical inspections, studying of day to day & periodic reports and sector implementation reviews covering several or all projects. It is important to note that project management falls in domain of the head of the project sponsoring division/ministry and projects wing of the planning commission.

To ensure proper results, management must receive adequate priority in the allocation of staff and other resources. The project executing and sponsoring agencies and concerned federal ministries/divisions should allocate the resources commensurate with the nature, complexity, duration and size of each project, the problems experienced, and institutional capabilities and needs.

This also implies flexibility in the timing and frequency of supervision, content of progress reports and effective use of available staff. To strengthen institutional capabilities and increase the cost effectiveness of management, project executing authorities should (a) as much as possible, integrate the government's progress reporting requirements with the project executing authority's own monitoring and evaluation system, (b) where necessary, assist in improving and/or developing such systems, and promoting their effective use, and (c) where appropriate, engage local consultants to help carry out supervision.

Where implementation problems are particularly severe, or where many projects face similar problems, project management may be usefully supplemented by sector implementation review meeting with concerned officials to review overall progress, paying particular attention to problems and sectoral and cross sectoral issues. To sum up, a good project may turn out to be a bad project with poor management and a bad project can become a good project with good management. Thus the role of project director is very crucial in the realm of project management.

According to planning commission's guidelines, it outlines the normal policies, procedures, and responsibilities of various agencies for managing projects. It is particularly designed to provide guidance to project directors/authorities who are responsible for day-to-day management of the supervision process.

According to planning commission sources, project management policy of the government of Pakistan is to efficiently utilise natural and economic resources of the country for socio-economic welfare of the people.

This objective may be achieved only when development projects are planned and executed with vigilant management. Objective of development planning is to have projects implemented for the benefit and social uplift of the society. For achievement of stipulated targets and tangible returns, it is imperative to entrust management and supervision of the project during implementation stage to capable and competent persons of required qualifications, experience and calibre.

Project director, who is the focal point in project implementation, is responsible for project execution according to its objectives, work scope and implementation schedule. Suitable and qualified project director should be appointed in case of each project that should not be transferred during currency of the project. Project director should be delegated full administrative and financial powers to improve project management, supervision and help fix technical and financial responsibility.

No member of staff working under administrative control of the project director should be posted/transferred without his/her prior consent/concurrence. As a team leader, he/she is under obligation to account for all actions, steps and decisions taken during project execution.

It is advisable to set up headquarters of the project director as close to the site of work as possible preferably at site, to ensure his availability for spot decisions on unforeseen issues and other ancillary matters. Project director should supervise project and try his/her best to resolve day-to-day problems faced in implementation independently within the administrative and financial powers delegated to him/her for project execution. If necessary, he/she may seek help from concerned federal ministry and/or provincial government for resolving the problems.

In case of mega projects, consultants should be appointed for preparation and supervision of work. Consultants should be associated from the stage of preparation of the project. Donor agencies generally insist on appointment of consultants in accordance with their own procedures. Government of Pakistan should endeavour to employ Pakistani consultants, who should work with devotion and responsibilities. In case it is not acceptable to a particular donor agency, we should insist that our local consultants should work jointly with foreign consultants at equal status and reasonable salary structure comparable with their counterparts, except for the top positions where foreign consultants may continue to operate.

Projects wing of planning commission is responsible for ensuring that mega development projects are executed as per approved scope, targets and timeframe. Projects wing despite its best efforts cannot perform this responsibility without help and co-operation of concerned federal ministry/division and/or provincial government.

Project director should send project implementation status to projects wing on specified proforma and updated monthly progress reports on specified PC-III (B) proforma on 5th of each month on regular basis and indicate problems faced in project implementation. Projects wing would computerise information received on its project monitoring & evaluation system (PMES). Projects wing would prepare project profile and monitoring report of projects and would make necessary recommendations in monitoring report for resolving problems/issues at the highest forum, which are hindering progress. Projects wing would request concerned organisations to resolve issues, which are unnecessarily disrupting or jeopardising progress.

According to planning commission sources, a comprehensive system should be evolved to ensure that quality material is made available in requisite quantity and utilised well in time on execution of project. This should also include installation of field laboratories adequately equipped for day to day testing of materials. In case of mega projects, this should also form part of the duty of the supervisory consultants.

It is important to watch that progress is not pushed at the cost of quality. It is also equally important that the works are not delayed/suspended or slowed down due to impediments in timely supply of materials, acquisition of land, and/or want of requisite funds at appropriate stages. All these strategic points must be sorted out well in advance by the project director in co-ordination with the concerned quarters to avoid time and cost over runs.

Project progress should be monitored on the basis of project implementation schedule/approved work plan. Progress reports are essential for planning supervision and fact finding so that policymakers can concentrate on problem solving. Project directors should ensure that proper procedures for reviewing and responding to progress reports are established and followed.

Project executing and sponsoring agencies should be responsible for monitoring of progress reports and computerise all information under project monitoring and evaluation system (PMES) already developed by the projects wing. MIS should be set up by each sponsoring agency in line with requirement of PMES.

Project implementation agencies/departments should seek the approval of the competent authority as soon as they consider change in scope of work or revision in cost. Sponsoring agencies should also anticipate likely delays. They should also fix responsibility for the delays. Those responsible for not undertaking forward planning and causing delays in implementation of projects should be taken to task.

Projects wing officials will undertake project monitoring/supervision visits to review periodic progress, provide advice and obtain additional necessary information. Monitoring and evaluation, which are also supervisory management tools, play an important role in helping to improve quality of information about implementation and operation of the project.


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## Neo

*Need for comprehensive rescue package ​* 
ARTICLE (November 03 2008): The Federal Government and the two apex market regulators - the State Bank of Pakistan and the Securities and Exchange Commission of Pakistan - need to put in place a well thought-out package, to rescue the non-banking financial sector. Or, we should be ready to see very soon long queues of investors scrambling to redeem their investments.

Failure to do this effectively, appropriately, and judiciously prior to the removal of floor from Karachi Stock Exchange could also render the entire banking sector vulnerable to this toxicity. Financial stability is essential for achieving any kind of macroeconomic stability. SBP raised the discount rate and used other monetary tightening tools such as Cash Reserve Ratio and Statutory Liquidity Ratio to check the second-round impact of inflation.

Unfortunately, however, the impact of monetary tightening got diluted on account of high government borrowing from the SBP (the caretaker set-up was the main culprit). As a consequence, inflation continued to grow in leaps and bounds, and with high interest rate adversely affecting trade and industry. Among the worst affected is the capital market.

The mutual fund industry has shrunk from Rs 407 billion in April to Rs 266 billion by mid-October. At present, around Rs 120 billion are invested in equity funds and Rs 118 billion in money market funds. Banks had invested in money market funds to avail tax exemption on the return earned. And, money market funds had invested around Rs 30 billion in Term Finance Certificates (AA rated) of corporates; and if 'A1+' and 'A' rated TFCs are added the aggregate amount is estimated at nearly Rs 50 billion. Thus a circuit has been created among the non-bank financial institutions; banks and industry.

There are around 19 money market funds - of which four or five are regarded as financially weak by the regulators. In the present crisis, they desperately need help. The mutual fund industry is pleading with the government to issue guarantee to banks to lend against these TFCs in order to obtain the liquidity for redemptions. Any such or similar arrangement would require the involvement of government, SECP and SBP. This may solve the problem of liquidity for ill-liquid funds but would certainly not address the problem which is solvency of weak funds. A better option that needs to be examined could be a take-over of these weak entities by strong financial entities.

Since October 6th, Rs 35 billion in redemption have been paid off by the Asset Management Companies. Around Rs 6 billion are said to be already overdue (ie not paid within six days of request for redemption).

The biggest chunk of bank advances constitutes corporate borrowings and agriculture loans. They are largely based on cash flow of borrowers. A slowdown or closure of units in the real sector would cause the non-performing loans (NPLs) of banks to rise. This would badly affect banking sector's ability to lend.

The SBP needs to force bank credit to flow in adequate quantum and at affordable price for commodity operations, as well as textiles and cotton based value added sectors. This entails a more focused and co-ordinated approach. The government, the SBP and the SECP need to move swiftly to avoid a slowdown in credit disbursement to the private sector, as it is the real engine of growth.

Out of 19 money market funds (AMCs), around six are not part of a group owning a bank as well. There are some, however, where the bank, in the group itself, is very weak. These AMCs as well as the bank need to be hand-held, by the regulator, and later sold off to a strong financial institution. There is a view that in a free market these institutions should be allowed to wind up. Historically, failure of governments to timely intervene has generally contributed towards pushing the economy into recession, even into deep recession in some cases.

Therefore, it is time to move aggressively not only with financial intervention armed with a list of confidence building measures as well. It may include GoP or SBP guarantees. Authorities must effect a strong flow of credit in the economy at affordable rates. Failure or even slow progress would have a contagion effect on the real sector or real economy which broadly comprises industry and agriculture. And, banks which hold fixed assets as a backstop collateral will not be able to sell these assets in the absence of buyers. The interconnectivity in economy needs to be fully appreciated and a comprehensive rescue package for the economy needs to be approved by the Parliament.


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## Neo

*Pakistan hopes for Saudi aid amid financial crisis​*
ISLAMABAD, Pakistan  Pakistan is turning to Saudi Arabia for financial aid to ease an economic crisis that already has forced the militancy wracked South Asian nation to start talks with the International Monetary Fund.

Pakistani President Asif Ali Zardari arrives Tuesday in the oil-rich Arab nation to request a deferral on oil payments and other possible support, the Foreign Ministry said. Another potential topic: negotiating with the Taliban.

Nuclear-armed Pakistan needs billions in outside assistance to avoid defaulting on its international loans. The impoverished nation of 170 million people is hampered by high inflation, chronic power outages and a sinking currency, as well as a violent Islamist insurgency  all of which threaten to undermine the fledgling pro-U.S. government.

Analysts said Zardari's visit could yield some temporary relief, but that he was unlikely to return with a package that would render moot politically unpopular IMF aid.

An IMF assistance package would likely come with painful requirements to cut government spending that could affect programs for the poor, making it a tough choice for the politicians.

Economist Muzammil Aslam predicted Zardari would ask for $3 billion in deferred oil payments from the Saudis, but warned that Pakistan should prepare for IMF assistance.

"If you miss the IMF now, you will need it again some months later, and that time you will have to accept more tough conditions," he said.

Pakistan hopes that its front-line role in the war on terrorism will nudge its allies to prevent its economic downfall. But Saudi Arabia, the U.S. and other nations may condition any aid they give on Pakistan submitting to an IMF package, which would come with strict spending rules, said Shahid Hasan Siddiqui, a top economist.

Pakistan Finance Ministry chief Shaukat Tareen has said that if he does not get indications of a forthcoming bailout from allies by Nov. 10 "there is no other option but to go to the IMF."

One outlet Tareen and others have turned to is a new group of countries called "Friends of Pakistan"  among them the U.S. and Saudi Arabia. Pakistan hopes the group and the World Bank will provide about $5 billion to help it avoid the IMF.

But in a recent visit to Pakistan, U.S. Assistant Secretary of State Richard Boucher said the group's "goal was not to throw money on the table," indicating unconditional or even direct financial aid was unlikely.

Pakistan's Foreign Ministry said Zardari's visit to Saudi Arabia would also look at "efforts to counter the menace of terrorism and extremism," an indication that discussions about possibly negotiating with the Taliban may also be on Zardari's agenda.

At a recent meeting, top Afghan and Pakistani officials decided to reach out to the militants whose insurgency has bedeviled their countries. The Taliban's former ambassador to Pakistan said the two sides recently had contacts in Saudi Arabia.

Top U.S. military officials have indicated support for negotiation efforts with moderate elements of the Taliban.


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## Neo

*Yawning trade gap a greater worry: experts ​* 
Tuesday, November 04, 2008

LAHORE: Pakistan is paying the price for bad governance allowing the International Monetary Fund and donor agencies to impose harsh conditions as its regulatory institutions are weak and corrupt.

Economists say IMF or donor assistance would simply help Pakistan meet its immediate liabilities to its creditors. However, the yawning trade gap is a matter of greater concern for both its economic managers and donor agencies.

The News has learnt they differ on the approach to controlling increasing imports. IMF wants a cut in imports through further depreciation of the rupee which would make imports and smuggling more costly. On the other side, Pakistans economic wizards want to restrict imports by increasing import duty and imposing other conditions like opening of letter of credit on 100 per cent cash margin. However, these measures may not impact import of luxury cars as the rich class of the society will buy the vehicles at any price.

These steps may curb import of smaller smuggling-prone items like cosmetics, food products and milk preparation. But regulatory authorities had failed to check smuggling in the past. Donor agencies think that it would be more appropriate to discourage smuggling through rupee depreciation which would take these products out of the reach of people. Experts of World Bank and other donor agencies are discussing currency depreciation with local businessmen privately.

They point out that a big cut in rupees value would bring back competitiveness of local products and would boost exports. The countrys exports have risen even in the current economic downturn because of a fall of the rupee. However, the impact on imports is not significant due to the appetite of domestic consumers.

Local economic managers would have to fight on two fronts. First, they would have to raise the governance level and second they would have to check consumerism and promote savings.

In the interim period, the economists say the government would have to toe the IMF line to put an immediate halt to excessive consumption and imports till governance vastly improves. In a poor country like Pakistan, they point out, domestic demand is no substitute for the liberal global market. Pakistan has the lowest savings rate of 13.9 per cent in the region which forces it to seek investment from outside. 

Its home market is small and relatively inelastic as elite classes usually do not like what the home producers make and prefer imported stuff.They point out that all successful economies promote domestic savings by making their financial systems unwilling to extend consumer credit. By doing so, they force their citizens to save.

Senior economist Naveed Anwar Khan says in order to encourage savings prudent economic managers tackle high and unpredictable inflation, which redistributes wealth from savers to debtors and discourages people from holding financial assets. Citizens, he adds, must forgo consumption today in return for higher standards of living tomorrow.

This bargain will be accepted only if the countrys policy-makers float a credible vision of the future and a strategy for getting there. But unfortunately, he says, the current economic team is yet to spell out its economic strategy.

He says the IMFs recipe of a weaker rupee would trigger inflation and to control this it has advised further increase in discount rate. The economic managers, he suggests, should not fear for a high budget deficit in the short term as long as they remain fiscally responsible.

All they have to do is to ensure that public debt does not get out of hand, by ensuring that the economy grows faster than the stock of public liabilities. Growth, he says, is more than economics, it requires committed, credible and capable governments.


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## Neo

*Exporters seek promotion of non-traditional items in Germany ​* 
Tuesday, November 04, 2008

KARACHI: Pakistani exporters have underlined the need of promoting non-traditional products including minerals, marble & onyx, information technology, fruits and vegetables in the German market.

This suggestion was made during an interactive session between Pakistani Ambassador to Germany Shahid Kamal and 20 local exporters from different sectors at the Trade Development Authority of Pakistan (TDAP) here on Monday.

TDAP Director General Mir Nasir Abbas chaired the session. Germany is the fifth largest export market of Pakistan and the exports to Germany surged by 16.5 per cent to $816.6 million during 2007-08, rising $701 million in 2006-07.

Main products included readymade garments, bedwear, cotton fabrics, leather goods, sports goods and surgical instruments.

Kamal highlighted the importance of German market and briefed the exporters about activities of the mission for export promotion in this particular market. He said recently two young and dynamic honorary consul generals have been nominated in Munich and Hamburg to further strengthen Pak-German bilateral trade. 

He also pointed out that Pakistans mission in Germany is maintaining an updated website and regularly publishing e-news letter that is widely circulated among business circles in both the countries. 

A database of around 600 importers of Germany has been formed comprising small and medium enterprises which will be immensely beneficial for the exporters. The ambassador asked participants to send relevant articles for getting it printed in German press to improve Pakistans image. Mir Nasir Abbas informed the participants that TDAP actively participates in exhibitions held in Germany as some of them are the largest in the world. Germany being hub of European Union attracts exhibitors and visitors from the world.


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## Neo

*Ecnec to approve mega projects on 6th ​* 
Tuesday, November 04, 2008

ISLAMABAD: A meeting of the Executive Committee of National Economic Council (ECNEC) would be held here on November 6 to review and approve various mega development projects worth billions of rupees. Prime Minister Syed Yousuf Raza Gilani will chair the meeting, official sources told APP here on Monday. Deputy Chairman Planning Commission Salman Farooqi is likely to brief the Ecnec on the projects referred by the CDWP for approval besides new mega projects. The federal ministers, the chief ministers and the finance ministers of the four provinces, the secretaries and senior officials of the Planning Commission would also attend the meeting. The development projects to be reviewed and approved by the Ecnec related to different sectors.


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## dr.umer

*30 trillion cft gas trapped in Tight Reservoirs​*
​
ISLAMABAD: Secretary Petroleum has said that gas in excess of 30 Trillion Cubic Feet may be lying trapped in the Tight Reservoirs of Pakistan.

In a statement read out at a two-day seminar organised by Pakistan Petroleum Exploration and Production Companies Association (PPEPCA) here, secretary petroleum , G. A. Sabri said that the Government is working hard to enhance the exploration activities in Pakistan through pragmatic policies to increase the discoveries and production of oil and gas.

The Secretary, who is currently visiting Saudi Arabia with the President of Pakistan, sent a statement to the seminar here. 

Sabri said there is a need to develop strong local and Foreign E&P companies and service sector to further strengthen the oil and gas producing capacity of the country.

Syed Wamiq Bokhari, President of PPEPCA Technical Expert Committee explained that the tight reservoirs are requiring additional effort and expensive technologies to recover gas from them.

Modern technologies and improvements in fiscal terms will make recovery of gas from some of the tight reservoirs economical and help meet, to some extent, Pakistan's deficient energy needs. 

Bokhari also stated that Tight Reservoirs are successfully being produced in several countries of the world and their experiences are being shared during the seminar.

The seminar was attended by several senior officials from the government, CEO's of several Oil and Gas Companies, CEOs and officials from service companies and foreign and local experts.

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## Neo

*IMFs condition to raise revenue collection target accepted​*
ISLAMABAD: Pakistan has agreed with the International Monetary Fund (IMF) for enhancing the tax collection target for current fiscal year 2008-09 from Rs 1.250 trillion to Rs 1.360 trillion to limit its budget deficit within budgetary target of 4.7 percent of the Gross Domestic Product (GDP), official sources told daily Times on Monday.

During the talks on proposed bailout package for Pakistan held at Dubai last week Pakistani authorities have shown willingness with IMF authorities for putting additional tax burden of Rs 110 billion on taxpayers of the country during the current fiscal year.

This additional tax burden would be realised from the existing tax base and some new taxation measures are also expected during this month, the sources added.

The increase in federal tax collection target of Rs 100 billion will help to adjust over 30 percent depreciation of the rupee in the recent months.

The consumers of public utilities and other products would bear the burden of increase in tax collection target, as the government has no mechanism to realise this increase exclusively from rich and elite of the society, a tax official told Daily Times on Monday.

This increase in tax collection target has been done without prior approval from the parliament, which is the prime authority for budget approval, he said. It would put additional burden of Rs 100 billion on poor consumers of the country that are already facing high inflation and impact of depreciation of the rupee, he added.

In this regard, the FBR has started conveying enhanced revenue collection targets in all taxes to their respective field formations. By the start of the current fiscal year 2008-09, the budget deficit was estimated at Rs 661 billion and Rs 79 billion cash balance surplus of provinces would help bring consolidated budget deficit down to Rs 582.3 billion in the current fiscal year 2008-09.

By adopting prudent fiscal discipline, the federal government has been able to limit its consolidated budget deficit to Rs 144 billion or 1 percent of the Gross Domestic Product (GDP) against the projected deficit of Rs 147 billion or 1.2 percent of the GDP in first quarter July-September period of current fiscal year.

A senior official at the Ministry of Finance (MoF) told Daily Times that elimination of POL and power subsidies well before the targeted date of December 31 and other expenditure control initiatives taken by the government have helped the government to limit its budget deficit.

To keep the budget deficit within the projected level of 4.7 percent of the GDP the government has already placed a Rs 100 billion cut in Public Sector Development Programme. Current expenditures at federal ministries and divisions are being squeezed especially there is reduction in number of foreign visits by prime minister with minimum entourage as well as federal ministers and cut in fuel entitlement is also on the cards.


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## Neo

*Govt to provide land for ancillary port facilities at Gwadar​*
ISLAMABAD: The government is planning to acquire 78 acres of land adjacent to the Gwadar Port for provision of ancillary port facilities, like container parks, banks stevedore and clearing services, offices, workshops, storage yards and others, sources in the ministry of Ports and Shipping told Daily Times here on Monday.

These facilities would help in swift port operations and to meet the future requirements of the Gwadar Port users. The structures and facilities of the newly completed port have already been outsourced to Port of Singapore Authority International (PSAI) and according to Concession Agreement already executed with them, the Concession Area, which encompasses the entire developed and non-developed area of the port was to be handed over to the PSAI. In such situation, the sources said that it would become difficult for the Gwadar Port Authority (GPA) to plan and conduct any activities of its own, which were essentially required for any Port Overseeing Authority and also to fulfill its commitments.

For addressing these issues, the GPA submitted a proposal for the acquisition of 100 acres of additional land at Mullabund Area in the second meeting of Gwadar Coordination and Implementation Committee (CIC) held last year. This scheme would cost the government Rs 490 million for which an allocation of Rs 12.732 million had been made in the MTDF for Ministry of Ports and Shipping under Transport Development Sector, the sources maintained. However, for this project the federal government has made no allocation in the Public Sector Development Programme.

The government is determined to make Gwadar an investment-friendly nucleus and a regional hub for economic activities. Efforts are already made on fast track process for providing necessary infrastructure for future development activities.

The Gwadar Port could handle ships of up to 50,000 deadweight tonnes through its three berths and after completion Gwadar Port would became the busiest port of the region, equipped with warehousing, trans-shipment and industrial facilities. Gwadar Port is located 460 km, away from Karachi, so, making itself less vulnerable for Indian blockade, which Pakistan faced in 1971 and was threatened in 1999.

Once a small fishing town along the Makran Coast would now become a mega seaport, which would fulfill the requirement of three geographically important regions, the entire subcontinent, West China, central Asia States, and Afghanistan, the sources maintained.

The operation and management of the port was handed over to the Singapore Port Authority (SPA) under a 40-year agreement between the GPA and the Concession Holding Company (CHC) - a subsidiary of the SPA that was operating 22 ports in 11 countries.

The port would not only promote trade and transport with Gulf States, but would also provide tans-shipment of containerised cargo, unlock the development potential of hinterland and would become a regional hub for major trade and commercial activities.


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## dr.umer

*SBP directs banks, DFIs on debit recovery​*
​
November 4 , 2008 

KARACHI: The State Bank of Pakistan has formulated and issued Fair Debt Collection Guidelines to set minimum standards to be observed by banks and DFIs for the recovery of their debt to address the grievances of customers/borrowers.

These guidelines are applicable to various types of consumer financing facilities including credit cards, housing loans, auto and personal loans etc., says SBP statement issued here on Tuesday.

In a circular issued to Presidents/Chief Executives of all Banks/DFIs, State Bank said that if any bank/*** has already developed its debt collection code of conduct, the same shall appropriately be modified in line with these guidelines.

The State Bank has asked the Banks/DFIs to adhere to the following minimum guidelines in their debt collection efforts:

1) Before proceeding for debt collection/recovery from their customers / borrowers, the bank/*** will ensure to provide him/her all information relating to payments fallen due.

A minimum of 14 days notice will be served to the customer / borrower through letter/SMS advising him/her to make overdue payment, before a visit to his/her residence / business place is undertaken in a lawful manner to negotiate recovery of the outstanding amounts.

Advance notice will be required to be served to the customer when bank/*** staff picks up the payment and if it is done on customers request then it should be properly recorded.

2) Banks/ DFIs in their collection/recovery efforts will ensure that (a) the customers / borrowers are not contacted at an inconvenient time (b) proper disclosure of identity, name of the bank and the purpose of call is provided (c) only lawful and acceptable business language and professional attitude is adopted in establishing such contact.

3) Banks/ DFIs will also ensure that (a) collection calls are properly recorded (b) customers / borrowers are contacted at the given address/phone numbers and in case they cannot be contacted, at alternate address/phone number obtained through collection efforts (c) Visit Reports will be kept on record in the form of hard copy or on electronic collection systems for at least six months (d) collection staff shall not harass their family members.

However, necessary information could be obtained from family/friends/third party of the borrower if he/she is not in contact for 30 days after the first missed payment.

4) Banks/DFIs shall give 14 days written notice before repossessing the leased vehicle on breach of an agreement / default on repayment by the customers / borrowers, banks/DFIs and the recovery agencies employed by the bank/*** are advised to allow the customer/borrower to take possession of their valuables/goods out of the vehicle.

5) Banks / DFIs have been advised to ensure that (a) their collection/recovery staff do not transfer or misuse any personal data of customers / borrowers without their prior approval (b) any information of customer/borrower provided to the collecting staff are properly documented.

6) The banks/DFIs shall ensure that the collection/recovery agencies employed by them must be enrolled with Pakistan Banks Association (PBA) once the arrangements in this regard are in place.

In this regard, PBA is being advised to develop a criteria keeping in view the guidelines on Outsourcing Arrangements issued by State Bank of Pakistan.

In order to effectively control the functions of collection/recovery and the human resources engaged in this process, banks/DFIs would ensure the following:

1) Frame a code of lawful conduct for recovery staff.

2) Introduce a well defined mechanism for addressing complaints against the collection/recovery staff.

3) Undertake a periodical review of their recovery procedures / mechanism for improvement in line with law, market practice/development.

4) Engage suitably qualified staff in collection/recovery and provide them necessary training.

5) Regularly monitor the activities of collection/ recovery staff / agencies.

These guidelines shall be in addition to, and not in derogation of the relevant laws / regulations.

The State Bank of Pakistan during the course of inspection will check compliance of above guidelines. Strict action shall be taken against the bank/*** for non-compliance of above guidelines, the circular added.


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## dr.umer

*Cement export exceeds three million tons ​*
KARACHI (November 04 2008): Cement exports exceeded 3 million tons as 3.497 million tons cement was exported in July-October of the current fiscal year depicting 73 percent growth as compared to 2.025 million tons during the same period of last fiscal year. This was due to huge export orders from Middle East, industry sources said.

They said that surged in cement export was due to high demand and its shortage in the region, especially in Dubai, Afghanistan and India, where construction activities are at peak. Following the rising demand for cement on international front, the industry is also rapidly growing and its production capacity has increased by about 50 percent to 37 million tons from 21 million tons.

Cement exports in October 2008 also broke all previous records, as over one million tons cement was exported in a single month. However, due to poor economic situation in the country, local dispatches declined by 14 percent during the period under review. Local cement dispatches declined to 6.337 million tons during this period as compared to 7.456 million tons of last fiscal year. But overall cement dispatches increased by 3.71 percent to 9.834 million tons as compared to 9.482 million tons of last fiscal year.

Industry sources expect further increase in cement export in the future. However, they expressed concerned over the declining trend in local dispatches. Ahead of regional demand, cement manufacturers have also done huge investment under their expansion plans during last three years to meet the international cement requirements, he added.


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## Neo

*Tarin to sign LoI for credit facility: talks with IMF to be finalised by November 10​* 
ISLAMABAD (November 04 2008): Pakistan will finalise its talks with IMF by November 10 and IMF's Board is likely to take up Pakistan's case for approval for a bail-out package, says the PM Advisor on Finance Shaukat Tarin. "We will finalise all matters with IMF after holding second round of talks by November 10th," Shaukat Tarin, Advisor to Prime Minister on Finance, told Business Recorder.

-- Pakistan will be required to pay 3.5 to 4.0 percent interest on a 20-month facility. Tarin needs to resolve with the Managing Director of IMF the percentage increase in the State Bank of Pakistan's policy rate and its timing. The Fund's technical team wants it to be an action prior to the release of funds while Pakistan is insisting that its need should be determined keeping the prevailing liquidity conditions after taking into account the level of uncertainty.

Further, the Pakistan side feels that once the government's borrowing is strictly contained there will be no need to raise the SBP policy rate. The Fund team is reportedly taking a textbook approach and wants a three percent steep hike in SBP's discount rate.

Pakistan has finalised issues at technical level and for the final round of talks, he would meet IMF officials and would sign the Letter of Intent (LoI), Tarin said. Fund has also agreed with a gradual transfer of oil repayments to the interbank market from the SBP reserves.

Signing of Letter of Intent means the government of Pakistan assures the Fund of implementing all agreed conditions. He however, did not, give more details on further issues. Pakistan is entitled to obtain three or even four times its quota of $1.5 billion. It would need to pay 3.5 to 4.0 percent interest on a 20-month facility.

In another talk with Voice of America, Tarin said that IMF Board is likely to take up the approval of Stand-By Arrangement for Pakistan on November 15. Tarin also told Business Recorder that he would be leaving Saudi Arabia late Monday to discuss issue of Deferred Oil Facility with the Saudi officials. Pakistanis likely to get 11000 barrels oil per day from Saudi Arabia on deferred payment of six months to a year which can save over $2 billion on $65 per barrel. However, any such announcement can be made during President Zardari's upcoming visit starting on November 4 (today).

Last week, Finance Ministry officials during over 10-day-long talks with the IMF in Dubai, which concluded last Thursday, obtained consent from the Fund for $9.6 billion for two years as a Stand-By Arrangement (SBA). IMF's first tranche of Stand-By Arrangement would come after Pakistan files a formal request followed by Fund's approval of the aid, which is likely to be $3 billion to $4 billion. Pakistan is urgently seeking funds to help it weather a fast-deteriorating balance of payments situation.


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## Neo

*Cement export exceeds three million tons​* 
KARACHI (November 04 2008): Cement exports exceeded 3 million tons as 3.497 million tons cement was exported in July-October of the current fiscal year depicting 73 percent growth as compared to 2.025 million tons during the same period of last fiscal year. This was due to huge export orders from Middle East, industry sources said.

They said that surged in cement export was due to high demand and its shortage in the region, especially in Dubai, Afghanistan and India, where construction activities are at peak. Following the rising demand for cement on international front, the industry is also rapidly growing and its production capacity has increased by about 50 percent to 37 million tons from 21 million tons.

Cement exports in October 2008 also broke all previous records, as over one million tons cement was exported in a single month. However, due to poor economic situation in the country, local dispatches declined by 14 percent during the period under review. Local cement dispatches declined to 6.337 million tons during this period as compared to 7.456 million tons of last fiscal year. But overall cement dispatches increased by 3.71 percent to 9.834 million tons as compared to 9.482 million tons of last fiscal year.

Industry sources expect further increase in cement export in the future. However, they expressed concerned over the declining trend in local dispatches. Ahead of regional demand, cement manufacturers have also done huge investment under their expansion plans during last three years to meet the international cement requirements, he added.


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## Neo

*Revenue target may be raised to Rs 1,350 billion​* 
ISLAMABAD (November 04 2008): The government may revise upward the revenue collection target of Federal Board of Revenue (FBR) from Rs 1250 billion to Rs 1,350 billion for 2008-09. Sources told Business Recorder on Monday that the board is likely to enhance the revenue collection targets for Large Taxpayer Units (LTUs), keeping in view the possible increase in tax projections, from Rs 1250 billion to Rs 1350 billion, during 2008-09.

A meeting of LTUs Directors-General was held here to chalk out a comprehensive strategy for achieving revenue collection target. The main agenda of the meeting was to devise an effective plan for achieving the revenue budgets assigned to each LTU. As LTUs are dealing with all leading multinational companies, corporate entities and business establishments, there is need to primarily focus on LTUs for improving revenue collection.

In case the revenue target is enhanced to Rs 1350 billion, the major role in achieving the upward revised target would be the large taxpayer units. The meeting discussed ways and means to improve revenue collection during the remaining months of the current financial year. The meeting was also informed that FBR would convey the parameters for selection of cases for audit in the next one or two days to LTUs DGs for effective audit under section 177 of the Income Tax Ordinance 2001.

Sources said that the major chunk of revenue would be coming from large taxpaying units, for which effective enforcement measures are needed to be implemented. The Directors-General of LTUs also submitted information about large taxpaying companies to Member, DT, with particular focus on sectoral analysis. The data from major revenue spinners was also discussed in the meeting.

Meanwhile, customs officials told this scribe that duty collection was ahead of the target during the current year. However, the customs department has not yet conveyed any upward revised targets to the Model Customs Collectorates (MCCs).

In view of satisfactory performance of customs collectorates, the FBR may upward revise the target in the remaining months of current fiscal year.

On sales tax side, collectors of sales tax have not yet received any upward revised sales tax projections. The increased revenue collection on sales tax side has enabled the board to meet the monthly targets.


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## Neo

*IMF loan not needed if Saudi Arabia helps: Tarin​*
ISLAMABAD (November 04 2008): Prime Minister's Adviser on Finance Shaukat Tareen on Monday said that all sectors of economy should be brought into the tax net for fair play and promotion of tax culture in the country. In an interview to VOA, he admitted that the government has to make difficult political decisions for improving taxation system in the country.

Replying to a query, he said all issues have been resolved with the IMF technical team and the next phase of the talks will focus the payment. He said first time in the history of the country agriculture sector would be brought under tax net.

Tareen said he has full support from President Zardari for improving the tax system adding that the tax rate will be enhanced to bring it to 15 percent of the gross national income. He said borrowing loans from the IMF is one of our last options to cope with the current economic crisis. Pakistan has presented the plan to the IMF, which sent a team to Dubai to analyse the plan.

Now negotiations with it have concluded successfully, he remarked. The IMF will take our plan to its board by November 15, he added. "We are going to Saudi Arabia on November 4 and 5 so we will not require the IMF support in case we succeed in getting money from Saudi Arabia. But I think that the IMF has accepted our conditions so we will try to take it from Friends of Pakistan," he said.

"We want to present a comprehensive solution to the current economics issue. The IMF has not given its own plan or co-ordination and we are carrying on talks on our own terms." He alleged that the previous government did not raise prices with the fear that it would make the then ruling party unpopular during the election year."

If there is any proposal from the stock exchanges relating to the reduction in capital value tax (CVT), then this could be reviewed in the next budget, he added. He said if the proposal for slashing the CVT was sent, then it could be seriously considered but only in the next budget.


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## Neo

*Punjab spending Rs 6,760 million on urban development​* 
LAHORE (November 04 2008): The Senior Minister, Raja Riaz Ahmad has said that the government was spending Rs 6,760 million on sustained urban development and improvement of people's lifestyle in the province. He was talking to an assembly of public representatives, Councillors of Local Bodies and MPAs at his office on Sunday.

Appraising of the meeting about the government's reform agenda and policies to make urban masses engineer the economic growth, he said that the government has check-marked the provision of useful services in five city districts through financial support to specialised the institutions like development authorities, Wasa and City District Governments.

The provincial government also gave Rs 30 million for identification, master planning and development of intermediate cities in Punjab, he disclosed. This intervention will discourage migration and reduce pressure on civic amenities of large cities, he maintained. Further, the Government is also prioritising basic services like water supply, sewerage and roads in Katchi Abbadis with an amount of Rs 2000 million, the Minister said.


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## saeedabasi

*PAKISTANI YOUTH ANNOUNCES SOCIO_ECONOMIC PAKISTAN TO AVERT DISASTER *: 

Karachi-Pakistan (Souh-Asia) October 31,2008: A Pakistani youth expert with Media, Lobbying and Socio-Economic experience has offered his services to avert fiscal and economic default of Pakistan through his invented Saeed Abbasi Socio-Economic Management Formula(SEMFO) Plan. Saeed Khan Abbasi, 39 years old from Karachi claimed that through his said SEMFO Plan he would enable Pakistan to draft Deficit Free Budget for the next fiscal year despite stern domestic and international economic conditions. 

According to Saeed Abbasi, his SEMFO Plan will enable country to get rid of trade, fiscal and social sector deficit. He will enable Pakistan with immediate USD: 4 to 5 billion's liquidity to cope with default threat. He said that with SEMFO Plan, there would be no need to get IMF or World Bank reliance for our own fiscal and economic budget making, while these donors and agencies like the IMF, WB, ADB and Friends of Pakistan should be engaged as Pakistan's Economic Development Friendly Advisors instead of the Loan Providing Sources. He expressed hope that his formula would enable the country to avert a default in international market due in February 2009 because of a due payment against USD: 500 billion's Euro Bonds.

Mr.Saeed said he could enable Pakistan to generate funds of about USD: 40 to 50 billion for three and five years' fiscal period. SEMFO Plan would slash inflation from current 17% to 2% (Over all 25% to 4%), Poverty rate of current 40% to 15% and gradually at very low level, and will make more than 50% increases in currency value. He said that SEMFO would increase the GDP growth rate from 3-4% to 25% and 50% onward in short period.

He claimed that his plan would enable the ongoing current account deficit of 15% to around 5%, Pakistani reserves will be more than USD: 10 billion constant for five years, foreign remittances of Pakistani abroad will be turned into attractive investment plan which will enable Pakistan to have about USD: 15-20 billion reserves in account. According to his SEMFO Plan we would not need to slash a huge amount of 60 to 100 billion rupees instead of this our budget would provide more than 100 billion rupees for development projects. He said that the stable and positive purchasing power for all Pakistanis with an investment heaven image of Pakistan is his focus with this plan.

Saeed Khan Abbasi also announced to prepare a "Credible Recovery Plan" of Pakistan for international donor agencies, countries and monetary organisations like the IMF, WB etc as well as domestic agencies to get Pakistan out of 700 billion rupees outstanding amount, which Pakistan has to pay. He assured that by implementing his plan Pakistan would not only become more economic power in the region but would be a leading Food and Energy Planning country of the world. He offered his formula to help the other countries of the world confronting the worst global recession.

He requested the President Asif Ali Zardari, Prime Minister Syed Yousif Raza Gilani, members of the Pakistan Senate and the National Assembly and media to extend their favour to serve the country. He ruled out any demand of official portfolio and a single penny expense for his personal benefit from the government's treasure in this regard.

(M.Saeed Khan Abbasi).
Socio-Economic, Media, Lobbying & Image Building Expert
Karachi-Pakistan (South Asia). 
saeedabasi at hotmail dot com saeedabasi at yahoo dot com
Cell: 0092-333-2124418 (Local: 0333-2124418) 
saeedabasi dot blogspot dot com


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## dr.umer

*IMF, S Arabia agree to provide oil to Pakistan on late payment​*November 04, 2008

ISLAMABAD: The International Monetary Fund (IMF) agreed Tuesday on the supply of oil from Saudi Arabia to Pakistan on late payment.

In this regard, the IMF and Saudi Arabia have reached an agreement under which Saudi Arabia will supply 100,000 barrels per day to Pakistan against the payment to be made late by one-year.

These talks were held at the highest level but Pakistan will have to make an additional payment of two billion dollars despite a decline in price of oil in world market.

However, an important decision regarding the supply of oil is expected to be announced on the eve of President Asif Ali Zardaris visit to Saudi Arabia.

The IMF will provide to Pakistan a loan of $1.3 billion for improving the financial condition of the government and $3.5 billion for alleviation of poverty from the country.

Pakistan has assured the IMF that it will completely free the exchange rate after signing a $4.8 billion loan agreement.


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## dr.umer

*Saudi Arabia assures all possible assist: Tareen​*
5 Nov 2008

ISLAMABAD: Advisor to Prime Minister on Finance Shaukat Tareen Wednesday said King Abdullah bin Abdul Aziz of Saudi Arabia has assured to extend all possible financial assistance to Pakistan.

Talking to state-run TV from Saudi Arabia, he said King Abdullah gave this assurance to President Asif Ali Zardari during a one-on-one meeting.

He said matters pertaining to the economic assistance would be finalized in a meeting with Saudi Finance Minister upon his return, who is presently abroad.

Shaukat Tareen said Saudi Arabia has great affection for Pakistan and gives great importance to it. 

"Saudi Arabia considers Pakistan as one of its closest friends," he added.

In reply to a question, he said several issues have been discussed with the Saudi government and its response to each and every issue was positive.

He said efforts would be made to export more manpower to Saudi Arabia as some gigantic development projects are in the offing in the holy land.

Commenting on financial assistance from IMF and Friends of Pakistan, he said all options would be put on the table and the decision would be made keeping national interest supreme.


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## Neo

*Exhibitors win big orders at Expo Pak ​* 
Wednesday, November 05, 2008

KARACHI: Local exhibitors and traders have received a tremendous response from foreign buyers at Expo Pakistan 2008 and said that numerous orders have been placed to export their merchandise to various international markets.

The exhibitors expressed the view that the event had helped them finalise deals which were likely to help Pakistan improve and strengthen its export sector, though many complained of tough security checks they had to go through.

Expo 2008 concluded on Oct 30 after four days where over 400 exhibitors displayed their wares from different industries and sectors in the six halls of the Karachi Expo Centre.

Emerging Energy Systems Business Development Executive, Nadeem Shafi shared that they had several successful meetings with foreign counterparts and since the event had been predominantly a business to business (B2B) exhibition, it had helped their cause further.

Deep Blue Sea Foods Owner Hamza Zahid, also claimed to have received many export orders and said that the response had been phenomenal which was a surprise since he had not expected so many foreign buyers to visit Pakistan keeping in mind what our country is going through right now along with the rest of the world.

Similarly, Tanweer Younus of Rockrete said though their business was of concrete paving stones in Pakistan, they had witnessed keen interest from foreigners and had received orders from various parts of the world.

Saleem Bukhari, who arrived from Multan to promote bridal dresses and party wears under the label of Fatima Enterprises commented that he had received more orders from foreign buyers than local ones. Women representatives at his stall informed that they had been expecting local interest in the bridal wears but had in fact created hype amongst foreign women who have already placed confirmed orders with them.

Meanwhile, exhibitors complained over the extremely strict checking which sometimes led to a chaos putting off both visitors and exhibitors alike. 

They stated that while the move was appreciated especially by the foreigners, it was a little too claustrophobic for many as it led to unnecessary delays and also minor scuffles in some circumstances.

Nadeem Shafi while appreciating the safety concerns, also said that it hindered their work sometimes as it meant going through the vigorous security checking repeatedly. Similarly, Aamer Saleem, another exhibitor was also critical of the security checks.

He went on to say that blocking some routes for the public and restricting cars into the expo area was unnecessary as it hassled not only the exhibition visitors, but the massive traffic jam that ensured outside the expo in adjacent roads were uncalled for.

Several visitors of the event also criticised the lengthy security process. Sana, a student of Karachi University said that she and her three friends had to walk all the way from the first gate at main Hassan Square to the second gate in front of Mashriq Center.

I am wearing heels and since this is the first time we have visited Expo Pakistan and so we were not aware of entrance being allowed only through the second gate. My feet are hurting badly with all the walking in under the hot afternoon sun and I am not so excited now upon entering the hall as I was when I was on the way when arriving here she complained.

Rizwan, who preferred to be known just by his first name criticised that he had to make several rounds around the Expo centre before learning that cars without stickers were not being allowed to enter into the centres vicinity. I burnt petrol, wasted my time, got stuck in the traffic all in the name of security he ranted. Not once did any traffic police officer guide me to what I should do and eventually I had to park really far away he continued.

Asim Siddiqi, MD of Pegasus Consultancy defended that it had been necessary to ensure strict security checks due to the continuous threats that the country faces and with so many foreigners in one location, the precaution was even more pivotal.

When foreign delegates were questioned on the matter, needless to say they were both impressed and delighted and some even commented that they had made better deals with local traders and exhibitors since they felt safe and secure and had little to worry on the matter.

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## Neo

*Diamer-Basha contractors to be selected soon ​* 
Wednesday, November 05, 2008

LAHORE: Water and Power Development Authority is vigorously carrying out feasibility studies and preparing engineering designs for various hydropower projects with a combined generation capacity of more than 25,000 megawatts. These projects are mostly located in Northern Areas including 4,500MW Diamer-Basha hydropower project.

WAPDA Chairman Shakil Durrani stated this during a meeting with Northern Areas Chief Secretary Babar Yaqoob Fateh Muhammad.

He said Diamer-Basha dam was a project of immense importance and would be the biggest ever executed in any sector in the country. The process of pre-qualification of contractors has already been initiated and is likely to be completed soon. Construction of the project would commence next year following international competitive biddings.

Dilating on the salient features of the dam, the WAPDA chairman said the 272-metre high Diamer-Basha dam would be the highest Roller Compacted Concrete (RCC) dam in the world with more than 100-km-long reservoir. Live storage capacity of the reservoir will be 6.4 million acre feet, generating 4,500MW of electric power.

Diamer-Basha dam will contribute more than 18,000 gigawatt hours of electricity annually and go a long way in coping with the increasing demand of water and electricity in the country. It will also help increase ratio of low-cost hydel power in the national grid.


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## Neo

*IT sector Witnesses 30-50pc growth​*
KARACHI, Nov 4: Pakistans IT and ITES sector has been growing at the rate of between 30 and 50pc annually. This growth is being witnessed for the past five years with the largest member of companies grossing between $15 and 30m in annual revenue and receiving $100m valuations.

Many that started with a small number of people have grown to strong 40-50 people product companies or service companies with teams of 300 to one,000 people, and this growth has resulted in high-paid employment for knowledge workers and an increasingly changing image of technology savvy Pakistan, said Imran Zia, Chairman, Pakistan Software Houses Association in his opening remarks at the annual flagship ICT awards event recently.

In its 4th year, the awards event recognised creativity and innovation in the local ICT sector and encourages excellence, the emergence of new ideas and entrepreneurship and was attended by a 300 strong contingent from the corporate sector, the ICT sector, the government and faculty and university students, says a press release.


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## Neo

*Fair Debt Collection Guidelines: SBP issues debt recovery standards for banks​*
** Sindh High Court had asked commercial banks in May to formulate loan recovery policy​*
KARACHI: The State Bank of Pakistan on Tuesday issued Fair Debt Collection Guidelines to set standards to be observed by banks and DFIs for recovery of their debt.

These guidelines are applicable to various types of consumer financing facilities including Credit Cards, Housing Loans, Auto and Personal Loans, etc.

It is pertinent to mention here that the Sindh High Court had asked commercial banks in May to formulate a loan recovery policy under the guidance of the State Bank and in accordance with the law and constitution after hearing a petition moved by a borrower who was subjected to threats and humiliation because of default.

There have been widespread complaints about high-handedness of recovery teams of banks. Borrowers say that banks make threatening phone calls and send goons to their residences, who use abusive language not only with them but also with their families. Police also failed to provide them protection. Banks contract out recovery rights to professional contractors so that they could claim that their employees were not involved in unlawful recovery measures. In interviews for recovery jobs, aspirants are judged on the basis of their ability to effectively threaten borrowers. Those who are members of political party or have contacts in the police are preferred for the job.

In a circular issued to all banks/DFIs, the State Bank said that before proceeding for debt collection or recovery from their customers and borrowers, the bank/*** should provide him or her all information relating to payments fallen due.

A minimum of 14 days notice will be served to the customer or borrower through letter/SMS advising him or her to make overdue payment, before a visit to his or her residence or business place is undertaken in a lawful manner to negotiate recovery of the outstanding amounts.

Advance notice will be required to be served to the customer when bank/*** staff picks up the payment and if it is done on customers request then it should be properly recorded.

Banks/DFIs in their collection or recovery efforts shall ensure that (a) the customers or borrowers are not contacted at an inconvenient time (b) proper disclosure of identity, name of the bank and the purpose of call is provided (c) only lawful and acceptable business language and professional attitude is adopted in establishing such contact.

Banks/DFIs shall also ensure that (a) collection calls are properly recorded (b) customers or borrowers are contacted at the given address or phone numbers, and, in case they cannot be contacted, at alternate address or phone number obtained through collection efforts (c) Visit Reports shall be kept on record in the form of hard copy or on electronic collection systems for at least six months (d) collection staff shall not harass family members of borrowers.

Necessary information could be obtained from family, friends and the third party of the borrower if he or she is not in contact for 30 days after the first missed payment.

Banks/DFIs shall give 14 days written notice before repossessing the leased vehicle on breach of an agreement or default on repayment by the customers or borrowers.

The central bank asked banks/DFIs and the recovery agencies employed by them to allow the customer or borrower to take possession of their valuables and goods out of the vehicle.

It asked banks/DFIs to ensure that (a) their collection or recovery staff do not transfer or misuse any personal data of customers or borrowers without their prior approval (b) any information of customer or borrower provided to the collecting staff are properly documented.

The central bank said banks/DFIs should ensure that the collection or recovery agencies employed by them must be enrolled with Pakistan Banks Association (PBA) once the arrangements in this regard are in place. In this regard, PBA is being advised to develop a criteria keeping in view the Guidelines on Outsourcing Arrangements issued by SBP, said the SBP.

The central bank said that banks/DFIs would ensure a code of lawful conduct for recovery staff in order to effectively control the functions of collection or recovery and the human resources engaged in this process.


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## Neo

*Pak-Saudi agree to upgrade trade, economic relations ​* 
RIYADH (November 05, 2008): Pakistan and Saudi Arabia agreed to upgrade economic and trade ties and declared stability, security and prosperity of both brotherly states was interlinked.

This was agreed during talks on Tuesday night at Royal Palace here between President Asif Ali Zardari and Saudi King Abdullah bin Abdul Aziz. The two leaders reviewed relations between two brotherly countries as well as regional and international issues of mutual interest.

They noted that both countries have stood by each other in difficult times and would continue to do so. The two leaders were later joined by their aides in talks that continued over banquet hosted by King Abdullah in honour of President Zardari and members of his entourage.

They expressed satisfaction over existing state of cooperation and renewed their commitment to reinforce bilateral cooperation, particularly in trade and investment.

Advisor to Prime Minister on Interior Rehman Malik talking to newsmen later described ``talks as very positive and successful.' He said ``unprecedented welcome reflects deep brotherly feelings Saudi Arabia and its leadership have for Pakistan.'

King Abdullah and President Zardari later had exclusive meeting and agreed to expand and facilitate investment, joint ventures especially in energy, agriculture, food and infrastructure with participation of their private sectors.

Regional and global threat of extremism and terrorism figured in talks between both leaders who termed it ``threat to humanity.' They stressed need to intensify and coordinate bilateral, regional, International cooperation to combat terrorism and eradicate its root causes.

Both leaders stressed need to cooperate in security and combating terrorism. They agreed to complete work on agreement for more cooperation against crimes at the earliest.

Zardari said Pakistan was committed to combating terrorism and extremism in its own national interest. It is long-term struggle, with complex challenges, requiring a multi-pronged approach combining political, military and development tracks.

He briefed on recent in-camera special joint meeting of parliament which adopted unanimous resolution on the issue. Pakistani nation was united on this issue and stands together to fight this menace.

He welcomed King Abdullah's initiative to convene international conferences on interfaith dialogue in wake of challenges confronted by the Ummah. Pakistan upholds respect for diversity of religions, condemns acts of desecration, insults to their symbols, religious discrimination, exploitation of religions, and combating menace originating from these vices.

Zardari said Pakistan will participate in follow-up conference, scheduled to take place during a high-level session of UN General Assembly on Nov. 12-13.

He sought Saudi Arabia's assistance for Friends of Pakistan group that includes United States, United Kingdom, China, France, UAE & Germany. It will meet in Abu Dhabi on November 17 to discuss matters dealing with stability, development, border areas, energy and institution building.

Zardari thanked King Abdullah for $100 million assistance for relief and rehabilitation of Balochistan earthquake and earlier in October 2005 for devastating earthquake that killed around 86,000 and rendered over 3.5 million homeless in Azad Kashmir & NWFP. He discussed Kingdom's new labour regulations. Over one million Pakistanis living in Saudi Arabia contribute to its progress and development.

He sought Saudi support for early finalization of Pakistan- GCC Free Trade Agreement. Saudi Arabia assured to play role in concluding Free Trade Agreement FTA at earliest which will provide opportunity to Pakistani exporters to tap demand for goods in GCC states under reduced tariff in first phase and without tariff in long term.


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## Neo

*Size of PSDP being curtailed​*
ISLAMABAD (November 05 2008): The government has decided to cut the size of Public Sector Development Programme (PSDP) owing to prevailing economic situation, said Planning and Development Division Secretary Suhail Safdar.

Current economic situation does not allow Rs 541 billion PSDP and ministries and divisions have been asked to prioritise the important projects that could not be avoided, said the Secretary here on Tuesday after the inaugural session of National Co-ordination Committees (NCC) on Saarc Social Charter.

Suhail Safdar said that remaining projects would be adjusted next year and only the important ones would be taken up this year. The decision to this affect would be taken in the next meeting of the Planning Commission.

To another question, he said that number of people living below poverty line must have gone up in Pakistan after global price hike. However, the accurate figures about poverty could only be ascertained by a survey that is yet to be completed, he added.

The total PSDP covers 1000 ongoing and 300 new development projects. There were reports that over Rs 100 billion cut is likely to be effected in the PDSP due to prevailing economic situation.

Earlier, addressing the inaugural session of NCC, the Secretary Planning & Development Division said the new government has taken initiatives to restore macroeconomic stability, overcome energy crisis and reduce poverty and vulnerability.

He said that the environment for trade and investment was improving and all these developments in majority of Saarc countries were impacting positively on poverty reduction, improvement in human development indicators and increase in per capita income. There are still some areas of concern with 41 percent people living below poverty line in the region with less than a dollar per day income. The joint efforts have to be made to address this situation.

Representative of the Secretary General Saarc, Hasan Shifau said that the Saarc platform could be very useful for poverty alleviation, improving literacy rate and heath facilities. The Saarc countries would have to assess progress, learning through shared knowledge and shape future of social development in South Asian region following the agenda of Saarc Social Charter.

Eizaz Ahmad Chaudhry, Additional Secretary, Ministry of Foreign Affairs in his address of welcome said that dramatic increase in oil and food prices coupled with global financial crisis ignited inflation and eroded Saarc countries' capability to maintain respectable economic growth and reduce poverty and vulnerability.


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## Always Neutral

Neo said:


> *Size of PSDP being curtailed​*
> ISLAMABAD (November 05 2008): The government has decided to cut the size of Public Sector Development Programme (PSDP) owing to prevailing economic situation, said Planning and Development Division Secretary Suhail Safdar.
> 
> .
> 
> Eizaz Ahmad Chaudhry, Additional Secretary, Ministry of Foreign Affairs in his address of welcome said that dramatic increase in oil and food prices coupled with global financial crisis ignited inflation and eroded Saarc countries' capability to maintain respectable economic growth and reduce poverty and vulnerability.



I propose good old Neo as Finance Minister of Pakistan. He probably does more research on the economy than probably the Finance Minister.



Regards


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## Neo

*Hydropower project: Pakistan and Opec Fund sign $30 million agreements​*
ISLAMABAD (November 05 2008): Pakistan and the Opec Fund for International Development (OFID) on Tuesday signed two agreements of US $15 million each for the Golan Gol Hydropower Project. The agreements were signed in Vienna by Shahbaz, Ambassador of Pakistan to Austria and Suleiman J Al-Herbish, Director General of the OFID on behalf of government of Pakistan and Opec Fund respectively, said a press release received here on Tuesday.

The project, involving $30 million co-financing from the OFID, is located on the Golan Gol River, a left bank tributary of the Mastuj River. The powerhouse of the project is located in the North West Frontier Province (NWFP) along Chitral-Bunni Road at a distance of about 25 kilometers from Chitral.

The project has an installed capacity of 106 MW (annual energy production : 436 million kWh). Work on the project is already under way and the Opec Fund's financial assistance will be utilised in procurement, installation and testing of transmission line and grid stations extension.

Speaking on the occasion, the Director General OFID, Suleiman J Al-Herbish, recalled that OFID Pakistan co-operation spanned over more than 30 years now. He expressed the Fund's continuing commitment to this cooperation in coming years.

Referring to the global financial turmoil, he stressed that OFID's decision to sign two loan agreements with Pakistan during these times showed the trust which the Fund had in the resilience of the economy of the country. In his remarks, Ambassador Shahbaz thanked the Director General for OFID's financial support for a number of projects in Pakistan.

Regarding the Golan Gol Hydropower Project, he underlined its particular importance for Pakistan at a time when the country was faced with imbalance between energy demand and its production capability. He expressed the hope that the co-operative relationship between Pakistan and the Fund will grow further.

The OFID has been co-financing, both the public and the private sector, projects in Pakistan. Fifteen of these projects have already been completed. After the signing of these loan agreements, the Fund's total financial assistance to Pakistan will rise to about $300 million. Pakistan and the Fund also have an encouragement and protection of investment agreement, which was signed in February 2001. OFID has also been extending humanitarian assistance to Pakistan at the time of natural disasters as it assisted during the floods in 2007 and disastrous earthquake in 2005.


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## Neo

*China donates Rs 324 million for engineering, cutlery centres​* 
ISLAMABAD (November 05 2008): China has donated Rs 214 million for Light Engineering Service Centre and Rs 110 million for Cutlery & Small Industries Service Centre to install hi-tech machinery, provision of facilities of material testing, advanced welding and fabrication, hi-frequency heat treatment, machining of dies & modules, induction & vacuum hardening and plasma cutting machinery at Gujranwala and Wazirabad.

On the completion of machinery work at Tevta Light Engineering Service Centre, Gujranwala and Cutlery & Small Industry Service Centre, Wazirabad, an agreement was signed between Pakistan and China here recently. Chairman Tevta, Mohsin Syed and Economic & Commercial Counsellor of China Zhou Zhencheng signed the documents. First Secretary of Chinese Embassy in Pakistan Yan Jianming, Zonal Manager (North) Group Captain Muhammad Rashid (Retd), Manager Service Centres Akhtar Abbas Bharwana and Manager Public Relations Mustafa Kamal Pasha were also present.

The upgradation of these centres will enhance capacity building of existing workers and teachers. Tevta has planned to introduce demand driven and market oriented new vocational training courses very soon on the latest and high technology machines donated by China.


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## Neo

*Under construction Pehur Hydel Project: selling of 18 megawatts electricity to industrialists likely​* 
PESHAWAR (November 05 2008): The provincial government of NWFP is looking into the modalities to sell the 18MW electricity of the under construction Pehur Hydel Project to the local industrialists.

The decision was taken during a meeting regarding power load shedding and supply of low pressure natural gas to the industries of the province by Peshawar Electricity Supply Company (Pesco) and Sui Northern Gas Pipeline Limited (SNGPL) held here at the Committee Room of the Finance Department, Civil Secretariat on Tuesday.

Besides Secretary Finance, Ziaur Rehman, Secretary Industries Shah Wali Khan, MD SHYDO, Chief Executive Pesco, MD SIDB, representative of SNGPL and prominent industrialist Nauman Wazir and other high level officials of line departments attended the meeting.

The minister directed all concerned departments in this connection to chalk out financial as well as legal modalities for selling out the electricity of Pehur Hydel Project to the industrialists of the province.

He assured the provincial industrialists that B-3 and B-4 industries would be exempted from load shedding and low management of Sui gas as soon as possible, saying that the industries contribute huge amount in the form of revenue to the national exchequer as well as generating employment opportunities for the people of the province.

The minister for industries said that the government would encourage establishment of hydel power projects under public-private partnership in the province in order to overcome the prevailing power deficiency in the country.

He informed that establishment of hydel power projects are being encouraged in India as well as in other developing and under-developed countries. He said that the industrialists have the financial potential to establish mega hydel power projects in the province. He assured that the provincial government would extend every possible help to the private sector to establish such projects in the province.


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## Neo

*Hampered credit flow despite liquidity injection​*
EDITORIAL (November 05 2008): Despite slashing of cash and liquidity ratios, as well as greater emphasis on sectoral financing to key areas of the economy, the private sector is complaining of a credit squeeze and risk, besides cost of borrowing. About a fortnight back, the Governor of State Bank of Pakistan (SBP), had announced certain measures in an extraordinary press conference to boost the liquidity of banking system by about Rs 240 billion.

Cash Reserve Requirement (CRR) for deposits up to one year maturity was slashed by 200 basis points to 6.00 percent and time deposits of one year and above were exempted from Statutory Liquidity Requirement (SLR). These two measures were expected to release an aggregate liquidity of Rs 180 billion immediately into the system and contribute significantly in alleviating the liquidity strain in the market.

The central bank also directed the banks to maintain "advance to deposit ratio (ADR)" equal to or less than 70 percent, but in order to ensure a smooth transition of banks' balance sheets, March 31, 2009 was prescribed as the cut-off date to meet this requirement.

Almost a week earlier, ie on 11th October, 2008, the State Bank had injected Rs 30 billion in the banking system through a reduction of 100 bps in CRR. It was also announced in the press conference that CRR would be lowered further by 100 bps to five percent on 15th November, which would add another Rs 30 billion to the liquidity of banking system.

According to the SBP Governor, all of these measures were temporary and aimed at accommodating extraordinary requirement of the banking system and, therefore, should not be construed as a change in the monetary policy stance. All of a sudden, the State Bank has now moved to cut the banks' CRR by one percent to five percent on 1st November, or a fortnight before it was due on 15th November.

The State Bank, as is well known, has been following a tight monetary policy since 2005 in view of excessive liquidity expansion and the resulting inflationary impulses in the economy. It was generally believed that the central bank would ease its monetary policy once the goal of price stability was achieved.

As the latest developments show, the price level, instead of stabilising, has witnessed a sharply rising trend, indicating the need of tightening the monetary stance further. However, the State Bank seems to have changed the course due to abnormal developments in the financial markets of developed countries, liquidity squeeze in the local banking system and apprehensions of depositors about the safety of their deposit accounts which could have led to a run on the banks.

Some analysts were of the view that the State Bank's apprehensions were mostly misplaced since the factors which had caused global meltdown were not very relevant to the situation in Pakistan, but it could also be argued that the injection of a huge amount of liquidity was precautionary and meant to neutralise the fall-out from adverse developments, both at home and abroad.

Although it is difficult to pronounce some sort of final judgement yet the State Bank seems to have acted in good faith and on solid grounds. Persistence of unusually high rates in the interbank money market and the requirement to finance commodity operations in the coming busy season seem to have played a vital role in the State Bank's decision to boost liquidity in the banking system.

However, what is not understandable is the unusual reaction of the State Bank to the developments which could have been dealt with in a routine fashion. For instance, eyebrows were raised when the Governor called an extraordinary press conference late in the evening of 17th October to announce measures herself which could have been communicated to the banks through a circular.

People were expecting that night some draconian measures in the foreign exchange market to stem dollarisation of the economy and outflow of foreign exchange, but were dismayed to hear monetary terminology which was generally beyond their comprehension.

Liquidity had dried up in big network banks, primarily due to heavy borrowing by the public sector entities. And, small and mid-tier banks had been adversely placed due to the fall in the equity market.

The release of Rs 240 billion liquidity has allowed the banks to top up their tanks. However, despite being comfortably placed, banks are hesitant to expand their credit portfolio. This hesitancy is primarily due to the fear factor. Even on committed loans, banks are demanding a higher rate after pricing in the upsurge in risks in a global slowdown.

Banks are not sure about the monetary and fiscal position after Pakistan has signed up with the International Monetary Fund. Further, the present crowding out of private sector credit will persist until the IPPs' existing advance to various oil sector and utility companies is retired. That can only happen once aid and loans from multilateral agencies (excluding IMF) and Friends of Pakistan materialise.

Only then the lending pool will expand. This may take a few more weeks or a little longer. As a bridge finance, SBP could reduce the SLR from 18 to the normal 15 percent level in order to prime the credit flow in the peak lending season. SBP had formed a committee of bankers to fine tune the KIBOR formula. It appears that the focus on reducing bank spreads has shifted as the banking system is being increasingly relied upon to rescue the players in the capital market.


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## Neo

*Boosting Pakistan-Iran mutual trade​*
EDITORIAL (November 02 2008): Coming in the midst of global quandary on the economic front, it is somewhat reassuring to learn that the Karachi Chamber of Commerce and Industry (KCCI) and Isfahan Chamber of Commerce and Industry (ICCI) signed a memorandum of understanding (MoU), in Karachi on Thursday, to boost cultural, commercial and industrial relations between the two countries.

As KCCI President Anjum Nisar and Senior Vice President of ICCI Jafar Zarreh Bini signed the accord, the two sides also agreed to hold joint meetings once a year in Pakistan and Iran, and to build a dependable, pragmatic relationship between the two countries.

Mutual desire was also expressed on the occasion to ensure enhanced interaction between the two people and making the MoU mutually favourable. Significantly, prior to the signing of the MoU, need for exploration of prospects of further expansion in the volume of trade between Pakistan and Iran was hinted at a meeting of KCCI, which was also attended by a delegation of ICCI.

Speaking on that occasion, ICCI Senior Vice President Jafar Zarreh Bini emphasised the need of developing more contacts between private sector of the two countries to boost mutual trade, pointing out that during the last six months Pakistan's exports to Iran had increased by 69 percent ($118 mln) and, similarly exports from Iran to Pakistan went up by 11.5 percent ($129 mln) compared to the same period last year.

Again, while suggesting that a little additional effort and frequent exchange of delegations could substantially boost the two-way trade, he invited Pakistani businessmen to visit Isfahan to assess the market demand. Similarly, on his part, KCCI President, Anjum Nisar said that Iran had urged Pakistan to connect Europe through a trans-Asian railway.

Moreover, as he said, the road transportation system between the two countries should also be streamlined. While saying so, he must have had good reason to add that Pakistan happens to be in a position to supply fresh fruits, including mangoes, bananas and citrus varieties, besides cloth, surgical instruments and sports goods at lower and competitive rates.

More to this, Pakistan's Commercial Counsellor in Iran, Dr Mohammed Saeed Jadoon expounded on these prospects, by recalling that around two years back, the two countries signed a Preferential Trade Agreement (PTA) which has been instrumental in considerable increase in their mutual trade. This must have been why he deemed it advisable for the business community to suggest inclusion of these items in PTA, at the meeting for its review, which is scheduled for December this year.

Now that both Pakistani and Irani businessmen have started taking increasing interest in boosting trade with close neighbours in the ECO community of which both Pakistan and Iran happen to be the founders, time has come for their respective governments to fully involve businessmen in the efforts to boost mutual trade.


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## Neo

*Saudis "positive" on economic help for Pakistan​*Wed Nov 5, 2008

By Kamran Haider

ISLAMABAD (Reuters) - Saudi Arabia has assured Pakistan of economic help, Pakistan's top economic official said on Wednesday, but he gave no details of any specific assistance.

Pakistan is facing a balance-of-payments crisis that analysts say has left the nuclear-armed U.S. ally little option but to accept International Monetary Fund (IMF) help.

But Pakistan is hoping to avoid an IMF programme, which entails painful conditions, by securing help from allies and other multilateral lenders.

President Asif Ali Zardari travelled to Saudi Arabia on Tuesday in the hope of securing help.

Before his departure, Zardari said he would ask Saudi Arabia to defer payments for crude oil. Pakistan's annual oil bill had risen to $12 billion from $3 billion in five years, he said.

The prime minster's top economic adviser Shaukat Tarin, who is with Zardari in Saudi Arabia, told Pakistani state television Saudi King Abdullah bin Abdul-Aziz had assured Zardari of help and had responded "positively" to the request on oil payments.

"Everything was put on the table by Mr President and their attitude was positive towards everything," Tarin said by telephone from Riyadh.

"Now details have to be finalised but this should be taken as they have an intention to help Pakistan economically," he said. 

Saudi Arabia has deferred Pakistani oil payments before but diplomats say donors, including Saudi Arabia, want to see the government reach an agreement with the IMF before offering their own support.

Pakistan imports about 82 percent of its crude oil from Saudi Arabia. Analysts say deferred payments on a third of that, as requested, would provide Pakistan with relief of up to $1.8 billion a year on its balance of payments, at current oil prices.

*"BEST INTERESTS"*

Tarin said Pakistan would decide in the next few days if it would go to the IMF for a loan.

"We'll analyse all the options in the next few days and whatever is in our best interests we'll adopt," he said.

Pakistan's economic woes began before the global financial crisis set in, but analysts say the crisis has compounded Pakistan's difficulties by making donors, trying to shield their own economies from the financial storm, reluctant to step in.

While holding out for bilateral help, Pakistani officials have also held days of negotiations with the IMF in Dubai.

Pakistan needs urgent help. Its foreign reserves dwindled to $6.92 billion on Oct. 25, out of which the central bank accounted for $3.71 billion, not enough to cover September's imports worth $3.807 billion. 

Zardari said earlier he would also seek Saudi support for the Friends of Pakistan group, which is due to meet in Abu Dhabi on Nov. 17.

The group was set up in September on the sidelines of the U.N. General Assembly in New York by countries that want to help Pakistan, whose support is seen as vital in defeating al Qaeda and bringing stability to neighbouring Afghanistan.

Analysts say Saudi Arabia has no interest in seeing Pakistan descend into chaos, not least because that would strengthen al Qaeda which has set its sights on the kingdom's rulers.

Saudi Arabia also sees Sunni Muslim-majority Pakistan as a counterweight to Shi'ite Iran, analysts say.


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## Neo

*S Arabia to give $4b to Pakistan​*
By MUBASHIR HASAN 

MADINA - Saudi Arabia has agreed to give $4 billion to Pakistan and provide oil facility on one-year deferred payments.

It has been learnt from reliable sources privy to the meeting held here the other day between King Abdullah bin Abdul Aziz and President Asif Ali Zardari. Advisor to Prime Minister on Finance Shaukat Tarin assisted the President during the meeting.

A formal announcement in this regard will be made at the meeting of the Friends of Pakistan to be held on November 17 at Abu Dhabi, said the source, adding, that Pakistan was aiming to accumulate $25 billion, which were being considered enough for bringing the economy back on track for the next 10 years.

Moreover, King Abdullah during the one-on-one meeting with Zardari has also agreed to provide oil to Pakistan on one-year deferred payments, for which the agreement is expected to be signed soon, confided the source to The Nation, maintaining that Presidents visit had come at a time when Pakistan direly needed money to tide over its trade and budget deficits.

Moreover, Pakistan had contemplated a short-term loan from the International Monetary Fund, but sources said this would be its last resort, given the IMFs stringent conditions.

An oil facility from Saudi Arabia could help the country avoid the IMF loan, or at least put it on a better footing to negotiate for more favourable conditions.

Prime Minister Syed Yousuf Raza Gilani had requested the Saudi govt for the deferred oil payments during his visit to Saudi Arabia in July, mentioned the source.

The sources said Zardari had held talks with King Abdullah during a two-day visit, and the two leaders had also discussed the recent Saudi initiative in bringing the Afghan government and Taliban leaders to the dialogue table. Economic, political and military cooperation between the two countries goes back several decades. Both the leaders are expected to sign a number of agreements on cooperation and investment in various sectors, while Zardari is also expected to ask Saudi businessmen to invest in Pakistans various sectors, said the sources.

Sources said Pakistan needed more than $5b within a month to meet its international obligations.

The Friends of Pakistan nations include the US, UK, France, Saudi Arabia, China, the UAE and several other countries, which are meeting in Abu Dhabi on November 17 to devise ways for stabilising Pakistans economy, added the source.

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## DarkStar

I think Zardari is missing a trick. He should have asked Nawaz and Shahbaz Sharif to help in this issue, as they are highly regarded among the power circles within Saudi ARabia, especially King Abdullah. I'm sure his intercession and assurance would go a long way to settlind any doubts the Saudis have in regard to extending help towards Pakistan.


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## DarkStar

I hope this is the good news we were waiting for. Although to delay teh announcement until the FoP meeting sounds a bit fishy. It means, maybe there might be some strings attatched, like aproval from the IMF. I hope that is not the case.


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## Neo

This is indeed good news, considering the past record I have been expecting something like this to happen. Saudi help comes on most crucial moments, they've never let us down.


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## Neo

*Pakistan should accept IMF terms: Ishrat ​* 
Thursday, November 06, 2008

KARACHI: Dean and Director of IBA, Dr Ishrat Hussain has expressed the opinion that keeping in mind the economys situation, Pakistan should accept IMFs terms and conditions and receive aid from it.

He said that it is essential for the State Bank to continue with its tight monetary stance and in fact further increase interest rates as this is the only way to control the economy.

Dr Hussain explained that within a growing economy, inflation is expected to rise as people have improved spending power which leads to inflation. You cannot have growth and low inflation at the same time and anyone who has studied economics should know that.

Dr Hussain addressed the audience on Wednesday at the launching ceremony of FPCCI Economic Review, a quarterly economic journal which is a publication of the FPCCI research and cell department.

Referring to the research capabilities of Pakistan, Dr Hussain said that there is complete monopoly of the government and all the analysis and reviews that are published in the country are doubtful as they reflect what the government wants to portray and not the reality.

He said that most locally produced analyses are either without concrete facts and figures or borrowed data from international organisations such as the IMF, World Bank and United Nations.

He further commented that the State Bank of Pakistans annual report is the only independent report issued which is authentic and therefore it is eagerly anticipated by the people of Pakistan.

Following the launch of the FPCCI economic review, Dr Hussain expressed his relief over another independent business research journal and encouraged the federations R&D department to continue with the effort as an essential for the progress of the country.

He said that R&D can actually generate good revenue for the country as it is a sector within itself which can also create employment opportunities for the local people and therefore we should work towards that and earn money out of research rather than ask for donations to conduct researches.

The dean of IBA further articulated that to be a good researcher it is essential for him to be cool minded and dispassionate and hard work, work ethics, team work and complementing each other are methods for progress.

He said that the problem with Pakistan was that some so called experts were spreading misinformation in the economy as they attempted to interfere in all sectors of the economy and claim to know it best and often appeared in the media with their personally formed opinions which influenced the rest of the community.

Dr Hussain repeatedly stressed that such practices should be discontinued and Pakistanis should learn to conduct their own researches to find the right facts as misinformed people have cost the country adversely.

President FPCCI, Tanveer Ahmed Sheikh stated that countries are now being replaced by economies and therefore business related issues cannot be discussed in isolation anymore and trade bodies now have more important and non traditional roles to play.

It was announced that the FPCCI would follow this Economic Review with two more publications in the near future, namely: Business Performance Index and Trade Directory of Pakistan.


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## Neo

*Govt must endorse past economic policies to get $7.5bn IMF loan ​* 
Thursday, November 06, 2008

ISLAMABAD: The government in order to qualify for the IMF loan of $7.5 billion under the newly created Short-Term Liquidity Facility (SLF) is left with no option but to endorse the economic policies of the last decade, a senior official told The News.

The SLF is available to emerging economies with a track record of implementing strong macroeconomic policies, but caught up in the global financial crisis, the IMF website says.

If Pakistan is to formally move IMF for this loan, it would have to show that country has good track record of implementing good economic policies the official said.

If new economic mangers say that country did not perform well in the past, it will not be eligible to qualify for IMFs Short-Term Liquidity Facility, he said.

The purpose of this Facility is to provide large, upfront, quick disbursing, short-term financing to help countries with good track record to address temporary liquidity problems in capital markets. The IMF Executive Board approved the SLF on October 29.

Pakistan is to get 500 percent of its quota, which stands at $1.5 billion that amounts to $7.5 billion for two years.

If the current government moves the IMF for the newly created SLF it would mean that Musharraf regimes economic policies were in right direction that lifted Pakistan from low to medium income country, the official said.

In the last Friends of Pakistan meeting held in New York the economic managers of the present government acknowledged that Musharraf regimes economic policies were in right direction owing to which the macro economic indicators improved. President Asif Ali Zardari was also present in the meeting.

During that meeting it was acknowledged that the size of the economy swelled to $170 billion from $60 billion during the Musharraf regime and the per capita income also increased to over 1000 dollars from 500 dollars. The GDP growth increased to over seven percent for most of the period and foreign exchange reserves scaled to unprecedented height of $16.5 billion in October 2007.

The Zardari regimes economic managers marketed the performance of the Musharraf regime in the Friends of Pakistan meeting in USA and also in Dubai talks with IMF to qualify the help of friend countries and IMF loan to bail out itself from the economic morass.

This shows that Zardari regime has dual faces as it acknowledges before the world that Pak economy performed well in the last decade, but on domestic front it says that economic polices of Musharraf have ruined the economy.

The economic wizards to qualify for their help the and IMF loan want the Friends of Pakistan to believe that the country performed well in last decade and its balance of payment situation has worsened due to global financial crisis and massive hike in oil and food prices.

The official said that Pakistan has now decided to place formal request to IMF after the meeting of Friends of Pakistan that is to be held in Dubai on November 17, as Pakistan wants to exhaust this opportunity first.

However, Friends of Pakistan and international financial institutions (IFIs) want to take IMF on board so that the Fund could monitor the economic policies of Pakistan and to ensure their financial help is being used properly.


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## Neo

* FTAs with China, Malaysia worsen Pak trade imbalance ​* 
Thursday, November 06, 2008

ISLAMABAD: Pakistan has so far signed three Free Trade Agreements (FTAs), of which trade balance with two countries is in negative while the remaining one shows marginal growth.

Trade balance with China and Malaysia was not in favour of Pakistan as imports from the two countries surpassed the goods exported to them during the outgoing fiscal, reveals official data compiled by the Ministry of Commerce.

The FTA between Pakistan and Sri Lanka signed in 2005 and with China in November 2006 while the FTA with Malaysia is operational from January 2008.

Trade balance between China and Pakistan is widening ever since the signing of FTA and it swelled from $2.95 billion in 2006-07 to $4.01 billion in 2007-08 while trade figures with Malaysia ballooned from $872 million in 2006-07 to $1.44 billion in 2007-08, it said.

There was a phenomenal growth in import of Chinese machinery and parts, chemical elements and compounds, fertilizer manufactured, yarn and synthetic fibers, construction material and others.

FTA with Malaysia is also in negative and the commodities imported from Malaysia include animal and vegetable oils and fats, chemical elements and compounds, machinery and parts and others.

The FTA between Pakistan and Sri Lanka is in favour of Pakistan as the trade balance is in surplus, however the exports registered only a nominal growth of $15 million when compared with the corresponding period.

The commodities showing surge in exports include rice and vegetables & pulses whereas cotton fabrics exports declined.

Sri Lanka would be able to enjoy duty free market access on 206 products in the Pakistani market including tea, rubber and coconut. Pakistan, in return, would gain duty free access on 102 products in the Sri Lankan market. These products include oranges, basmati rice and engineering goods.


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## Neo

*Forex reserves shrink to $6.75 bn ​*
Thursday, November 06, 2008 

KARACHI: The foreign exchange reserves of the country declined to 6.75 billion dollars.

According to the State Bank figures, the foreign exchange reserves witnessing a further fall of 163.7 million dollars stood at 6.75 billion.


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## Neo

*Meeting for approval today: ECNEC may okay Rs 311.5bn uplift projects​*
ISLAMABAD: The revised agenda of Executive Committee of the National Economic Council (ECNEC) is expected to approve 42 developmental projects of national importance worth Rs 311.533 billion including Rs 25.725 billion as Foreign Exchange Component (FEC) today (Thursday), reveals the revised ECNEC agenda obtained by Daily Times on Wednesday.

The previous agenda of the ECNEC consisted of 39 development projects worth Rs 262.456 billion including Rs 16 billion as FEC. However, in the revised agenda some new projects were included.

The revised agenda also included water and power related projects, which are of national importance, namely Diamer-Bhasha Dam  acquisition of land and resettlement project worth Rs 116.607 billion.

The meeting to be presided by Prime Minister Yousuf Raza Gilani today (Nov 6) will review the economic situation and challenges being faced by the country. All the chief ministers, provincial finance ministers and provincial planning and development ministers are likely to attend the meeting.

The revised ECNEC revealed that the Transport and Communication sector consisted of 16 projects worth Rs 47.365 billion with Rs 7.012 billion as FEC. Water Resources consist of five projects worth Rs 32.921 billion including Rs 3.078 billion as FEC.

The Energy sector consists of three projects worth Rs 118.701 billion including Rs 228.380 million as FEC, the Physical Planning and Housing (PP&H) has six projects worth Rs 70.618 billion including Rs 4 billion as FEC.

The Heath sector consists of two developmental projects worth Rs 27.191 billion including Rs 1.365 billion as FEC. The Environment sector has two projects worth Rs 2.232 billion including Rs 973 million as FEC. The Devolution and Area Development sector consists of two projects worth Rs 5.672 billion including Rs 5.275 billion as FEC.

The Education sector consists of a single project worth Rs 657.631 million including Rs 626.888 million as FEC. The Higher Education Commission (HEC) sector also has two projects worth Rs 2.006 billion. Social Welfare sector has only one project worth Rs 560 million, Culture, Sports and Tourism sector has a single project worth Rs 2.519 billion including Rs 2.120 billion as FEC. Industry and Commerce sector has one project worth Rs 1.085 billion including Rs 486.018 million as FEC. The Diamer-Basha Dam is a project of national importance keeping in view the ongoing water and power shortage in the country. The 272-metre high dam will be the highest roller compacted concrete (RCC) dam in the world with more than 100-kilometre long reservoirs. Live storage capacity of the reservoir will be 6.4 MAF and will generate 4,500 MW electricity.

The dam will contribute more than 18,000 giga watt-hours of electricity annually. This will also help the government to cope with the increasing demand of water. The project will also be an important step in increasing the ratio of low-cost hydel power in the national grid.

The pre-qualification process of the contractors has already been initiated and is likely to be completed soon. The construction on the project will commence next year following International Competitive Bidding (ICB).

Some of the important projects are the up-gradation of Karakuram Highway of Bhasha-Diamer Dam Project (Manshera to proposed Dam Site) worth Rs 12.058 billion, Revamping/Rehabilitation of irrigation and drainage system in Sindh worth Rs 18.516 billion, National Programme for Family Planning and Primary Health Care worth Rs 26.533 billion including Rs 1.365 billion, Sindh Cities Improvement Programme worth Rs 40.400 billion and many others.

The meeting also expected to approve a project namely, Extension of Motorway (M-4) from Shamkot to Multan with a distance of 39 km (Kot Rab Nawaz) and total cost of Rs 8.330 billion.


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## Neo

*Energising Pakistan ​*By Talat Masood

We pride ourselves, justifiably so, in having made the transition to democracy. But democracy does not mean merely an adoption of the ballot box. Our parliamentarians should take genuine interest in legislation and discuss national issues seriously

The expansion of the federal cabinet was long overdue. One could fault it for being unwieldy, especially at a time when the economy of the country is in distress, but the selection of ministers appears to be on merit and most of them have good political standing.

Regrettably, the government since its inception has not demonstrated a sense of urgency that the current economic and security situation demands. People justifiably expect that with the induction of a new team, this attitude would change and that the government will be more focused, professional, and will work with greater zeal.

Meanwhile, President Asif Zardaris excessively large entourage of over 200 people to Saudi Arabia, from whom we are seeking financial assistance and an oil facility, would not resonate well with them or other multilateral donors. It also sets a poor precedent and sends the wrong signal back home.

The response of our leaders to the tragic earthquake in Balochistan was also disappointing. Surprisingly, neither the president nor the prime minister visited the quake survivors to express their sympathy and solidarity with them. Provincial governments could have ensured the security of the VIPs with assistance from the military. After all, President Bush, President Sarkozy and Prime Minister Brown have all regularly visited the most dangerous areas in Iraq and Afghanistan. Why are our leaders so scared and insensitive to the misery of their people?

A larger question needs to be answered by our leaders as well: for almost all our internal problems, whether these pertain to economy or security, why are we becoming increasingly dependent on foreign help? Instead of finding indigenous solutions to our problems, our success is now based on how much of assistance we can get from abroad.

We have lost our sense of pride and dignity as a people and as a nation. A country that is not economically viable cannot claim to be independent in the true sense. Little effort has been made by the government in the last eight months to improve the quality of the countrys economic institutions.

The highest priority at this point should be given to education. A significant reason for lack of progress is our dysfunctional primary and secondary education. This education fiasco is not because of a failure of our children. In fact, they are as good as any others, if provided the basic facilities. It would be unrealistic to expect growth in major sectors of the economy  agriculture, industry and services  without first-rate scientific and technical education.

Agriculture is a major sector of our economy, and yet it was grossly neglected during the previous regime and continues to suffer. We also need to widen and deepen our industrial base. Apart from implementing measures necessary for macroeconomic stability, monetary and financial policies should facilitate growth in the agricultural and industrial sectors.

Pakistan has had its share of difficulties more than most countries, mostly due to our own failures but at times forced by external factors. The current situation is indeed very challenging, but also affords an opportunity for us to revisit our destiny. We need to introspect as to what makes nations tick and what makes them fail. How do nations rise from obscurity and what ingredients give them vitality.

Economic dynamism is by far one of the most expressive forms of a nations vitality  as we are witnessing in China and to some extent in India, or as we saw in the growth of the tiger economies of East Asia. It takes the form of development of infrastructure in energy, communications and transportation. Investment starts flowing as other countries also develop confidence in economically dynamic countries.

Do we have the ability to bounce back from our present state? What should be done in the short and long term to ensure economic growth, political stability and domestic peace?

We pride ourselves, justifiably so, in having made the transition to democracy. But democracy does not mean merely an adoption of the ballot box. Our parliamentarians should take genuine interest in legislation and discuss national issues seriously, so that the government can formulate sound policies.

It was disappointing to learn that during the security briefing, attendance of parliamentarians was poor. It would be appropriate if the parliament also discussed the state of economy and major foreign policy issues, and made recommendations to the cabinet.

There is no doubt that the power in the country today lies in the hands of collective mediocrity. But our institutions were throttled by the military regime and the country has to go through this transitional phase before a new generation of more capable leaders will emerge. The current weakness or inexperience of our leaders could be partially offset if they draw strength from institutions and refrain from ad-hoc decision-making.

There are some obvious shortcomings in our democratic dispensation. First, the political parties, in power or in the opposition, have to be more democratic and less dynastic. It would be electrifying if leaders are chosen on the basis of merit and not on lineage or feudal power. The rise of Barack Obama to the US Presidency shows how fair play and strong institutions facilitate the emergence of good leaders.

As Pakistan has a parliamentary form of government, the prime minister, and not the president, should be the focal point of executive and political power. The current aberration has to be removed and the president should play the classic role of head of state and be more inclusive. What Pakistan needs is more democracy, not less, to progress.

Development of civil society is also essential for giving vitality to a nation. The lawyers movement and several NGOs have helped in this regard. It is unfortunate that the previous regime suppressed such movements instead of embracing them.

The present government too feels uncomfortable with the lawyers movement, but it has to realise that the issue of judges will not go away until resolved amicably. No country can claim to be civilised or modern until it has a sound and independent judiciary.

The writer is a retired Lieutenant General of the Pakistan Army. He can be reached at talat@comsats.net.pk


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## Neo

*Package for textile sector approved by Cabinet​* 
ISLAMABAD (November 06 2008): The Cabinet on Wednesday approved a package of Rs 1.2 billion for textile sector provide relief in interest rate for loans to spinning sector, and research and development (R&D) support to textile and clothing industry. Under the package, mark-up reimbursement facility has been extended till June 30, 2009, and the spinning sector will be allowed reimbursement @ 3 percent, for which approx Rs 1.2 billion will be required.

Giving details of the Cabinet meeting, held with Prime Minister in the chair, Minister for Information Sherry Rehman said that measures to provide relief in the interest rate for loan to spinning sector and R&D support to textile and clothing industry has been approved.

She said that the meeting decided in principle to reinstate all government employees sacked after dismissal of Pakistan People's Party's government in 1996. All those employees, who were provided employment by PPP during 1993-96 and were removed from service later, would be reinstated with seniority and back financial benefits.

She said that the sacked employees of Sui Southern Gas Company were also included in the package and the Prime Minister has constituted a special committee to assess the financial implications, oversee the decision, and ensure its implementation.

She said that the government has also decided to release 50,000 tons sugar in the market to bring down sugar prices, whereas 3.4 million tons wheat stock is available with the government.

Moreover, the Cabinet also approved a bill against harassment of women, and the government would present a set of legislations on sexual harassment at workplace. The legislation titled 'Protection from Harassment at Workplace Act' (PHWA), would also include amendments in Pakistan Penal Code (PPC) and the Code of Criminal Procedure (CCP).

The government would also introduce 'Smart Electricity Meters' (SEM) to eliminate complaints of inflated and manipulated billing to consumers because such complaints have been received in the big cities of Karachi and Lahore.

The Minister dispelled impression that a huge Cabinet was a burden on the kitty. She said that the government was criticised for not appointing allministries when it was running the affairs with 15 ministers. Now, it is being criticised for appointing ministries for all divisions.

The Minister said that the present cabinet was neither biggest in the history of Pakistan nor salaries of Ministers would be more than the Members of National Assembly. She explained that the salary of a minister is less than an MNA.


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## Neo

*US to provide $200 million wheat on deferred payment​* 
ISLAMABAD (November 06 2008): The United States will provide wheat worth $200 million to Pakistan, on deferred payment of two years, under GSM-102, while the government has decided to provide $100 million to the Trading Corporation of Pakistan (TCP) for purchase of urea, Business Recorder learnt here on Wednesday.

Earlier, in September, the government had decided to import 0.25 million tons wheat from USA, on deferred payment of $100 million, and another $115 million grant was being given by the US authorities to overcome shortage of wheat in the country. In this regard, the Food Ministry also informed the government that by October, wheat import agreements with US would be finalised.

The country would have to face a lot of problems in case of import of wheat from US, because the American embassy was reluctant to accept all specifications of Pakistan government. Pakistan wanted that each consignment of imported wheat should be checked at American ports, before loading, and cleared by the Plant Protection Authority that the consignment was disease-free. So, the matter got delayed.

In 1996, India had also rejected wheat import from US for reason of inferior quality. Two diseases, Kernel Bunt and Tellitia Walker, are very frequently observed in American wheat, besides several weeds. In international market, the price of wheat is $245, against last year's $333, per ton thus indicating a decrease of 26 percent over last year. Even the meeting between the representatives of American embassy and the Food Ministry, held on July 31 to finalise the modalities about wheat import, did not prove to be fruitful.

But an official on Wednesday told this scribe that US has agreed to all specifications of Pakistan and it would soon provide wheat worth $200 million in spite of $100 million on deferred payment. The official said that the government has provided $100 million to Trading Corporation of Pakistan (TCP) for import of 250,000 tons urea.

"In this regard, TCP will open tenders on November 11. First tender will be opened for import of 0.1 million tons, while the next one for the import of wheat of the same quantity will be opened on November 30 and, on December 15, a tender for the import of 50,000 tons wheat would be moved", he said.

Use of urea in most parts of the world has increased over past some years. That is why urea consumption in India and China has increased considerably. Pakistan's requirement of urea in Rabi is 2.6 million tons and, according to official data, the stocks available with the government are of 2.2 million tons. But with an increase in prices of the fertiliser in international market, which touched $800 per ton, the price in Pakistan remained below $200 per ton. This huge difference prompted the dealers to resort to smuggle the commodity. Urea would be imported through both Karachi and Gwadar ports.


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## Neo

*Textile composite sector shows 12 percent profits growth​* 
KARACHI (November 06 2008): Among the three textile segments, only one--composite sector--has shown positive growth of 12 percent in profits at Rs 1.5 billion in the first quarter (July-September) of FY09. The net sales of this segment grew by 34 percent to Rs 30.3 billion, primarily on the back of rupee depreciation, enhancing rupee-based export sales, Bilal Hameed, an analyst at JS Global Capital, said.

Gross margins, hence, improved by 450 bps to 21.3 percent. Negative impact on profits came from financial charges, which rose by 117 percent due to higher interest rates, and 34 percent fall in recurring other income, he said. The spinning sector plunged into losses during this period as it booked net losses of Rs 474 million, as compared to profits of Rs 249 million in the same quarter of FY08.

Sales improved by 20 percent, whereas gross margin stood at 12.5 percent, depicting an increase of 100 bps. Conversely, financial charges went up by a considerable 79 percent to Rs 1.5 billion. Other income and share of profit/loss from associates turned negative also, causing bottom line to dip.

The weaving sector also remained in losses as net losses amounted to Rs 24 million, against loss of Rs 5 million in the same period of last year. Although good growth in revenue and gross profit was witnessed, profits in the weaving sector were again victim of higher financial charges.

Similarly, other income, as in other segments, declined by a good 92 percent, providing no support to the bottom line. The analysis is based on a sample of 12 textile composite, 6 weaving and 25 textile spinning companies, representing 78 percent, 94 percent and 70 percent market cap of their respective sectors.


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## sunny_aus

Neo said:


> *S Arabia to give $4b to Pakistan​*
> By MUBASHIR HASAN
> 
> MADINA - *Saudi Arabia has agreed to give $4 billion to Pakistan and provide oil facility on one-year deferred payments.*
> 
> It has been learnt from reliable sources privy to the meeting held here the other day between King Abdullah bin Abdul Aziz and President Asif Ali Zardari. Advisor to Prime Minister on Finance Shaukat Tarin assisted the President during the meeting.
> 
> &#8216;A formal announcement in this regard will be made at the meeting of the &#8216;Friends of Pakistan&#8217; to be held on November 17 at Abu Dhabi&#8217;, said the source, adding, that Pakistan was aiming to accumulate $25 billion, which were being considered enough for bringing the economy back on track for the next 10 years.
> 
> &#8216;Moreover, King Abdullah during the one-on-one meeting with Zardari has also agreed to provide oil to Pakistan on one-year deferred payments, for which the agreement is expected to be signed soon&#8217;, confided the source to The Nation, maintaining that President&#8217;s visit had come at a time when Pakistan direly needed money to tide over its trade and budget deficits.
> 
> Moreover, Pakistan had contemplated a short-term loan from the International Monetary Fund, but sources said this would be its last resort, given the IMF&#8217;s stringent conditions.
> 
> &#8216;An oil facility from Saudi Arabia could help the country avoid the IMF loan, or at least put it on a better footing to negotiate for more favourable conditions&#8217;.
> 
> Prime Minister Syed Yousuf Raza Gilani had requested the Saudi govt for the deferred oil payments during his visit to Saudi Arabia in July, mentioned the source.
> 
> The sources said Zardari had held talks with King Abdullah during a two-day visit, and the two leaders had also discussed the recent Saudi initiative in bringing the Afghan government and Taliban leaders to the dialogue table. &#8216;Economic, political and military cooperation between the two countries goes back several decades. Both the leaders are expected to sign a number of agreements on cooperation and investment in various sectors, while Zardari is also expected to ask Saudi businessmen to invest in Pakistan&#8217;s various sectors&#8217;, said the sources.
> 
> Sources said Pakistan needed more than $5b within a month to meet its international obligations.
> 
> &#8216;The Friends of Pakistan&#8217; nations include the US, UK, France, Saudi Arabia, China, the UAE and several other countries, which are meeting in Abu Dhabi on November 17 to devise ways for stabilising Pakistan&#8217;s economy&#8217;, added the source.



will Pakistan have to return this $4bn? any info? 
Is there any interest charged on the deferred payments for oil?


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## Neo

sunny_aus said:


> will Pakistan have to return this $4bn? any info?
> Is there any interest charged on the deferred payments for oil?



Good question!
I recall the situation after May '98 when Pakistan was facing another and more severe economic malaise Saudi's granted soft loans and supplied oil on deferred payments for more than a year. The loan and differed payments were written off.

Same might happen again if we play the cards right.


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## dr.umer

*Pakistan keen to exports its goods to Malaysia: DGTDAP ​*
ISLAMABAD, Nov 6 (APP): Pakistan is keen to export its products to Malaysia and welcome a reciprocal move towards enhancing bilateral trade between the two countries by doing so, both of them could establish a chain of business activities for mutual benefit. 
This was stated by Nusrat Iqbal Jamshed, Director General, Trade and Development Authority of Pakistan (TDAP), in Karachi last night, while talking to 8-member delegation of Malaysian and Brunei journalists who are on a ten-day working visit to Pakistan. 

Nusrat said, We would like to be involved in activities such as the marble industry, textile, handicraft, pharmaceuticals, carpet, fish and fish preparations while Malaysia could export its expertise and investments in palm oil, rubber and tin. Karachi can be a reservoir and hub for Malaysian investment activities for Malaysian export to other countries, he added. 

Director General TDAP said that currently bilateral trade between the two countries is in Malaysias favour and Malaysias exports to Pakistan stand at round US $1.7 billion while imports are at only $104 million. 

The two countries have signed a Free Trade Agreement (FTA), which was implemented in 2006. 

It was enlarged in its scope through the Malaysia Pakistan Closer Economic Participation (MPCEPA) agreement last year. 

The MPCEPA is Pakistans first comprehensive agreement on goods, services, investment and economic cooperation with any country in the world. It is also the first such agreement between the two members of the Organisation of Islamic Countries (OIC). 

The agreement is also Malaysias first with a country in South Asia. 

Nusart said that 61 percent of Pakistans exports are in textile and clothing particularly raw cotton, yarn, fabrics, garments, tents and canvas while a further 23 percent relates to rice, leather and leather products, sports goods, wool, carpets, surgical instruments and petroleum products. 

Fish and fish preparations, fruits and vegetables, chemical products, pharmaceuticals, marble and granite, gems and jewellery, IT, meat and poultry and cement represent seven percent of exports with the balance being other types of goods.


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## dr.umer

*$100 billion FDI in pipeline, says BOI Chief ​*
7 Nov 2008

Chairman, Board of Investment (BoI) Saleem H Mandviwalla has informed business community that an Italian firm has agreed to make 100 million dollar investment in marble sector in Pakistan. Speaking at a meeting of Karachi Chamber of Commerce and Industry (KCCI) on Thursday, dispelling the impression that local and foreign investors are not making investment in the country.

He said that besides Italian company Fiat company, Nacellay, Palmar and other companies have shown their interest in making investment in Pakistan. Mandviwalla hoped that agreement with these companies would be signed soon. He noted that Pakistan have already signed 114 investment MoUs with China which are inactive. These MoUs will be activated, he assured.

The chairman said that representatives of chamber would be included on the board of directors of BoI. Replying to a question about high mark-up rates, he said that Pakistan is not interested to go to IMF, as their terms are very tight and requires many things to do, which are not in interest of the country.

Replying another question about electricity problem, he held previous governments responsible for this crisis. There is no quick solution of the problem, he added. However the government is aware of the issue and taking many steps to redress problems as soon as possible, he maintained.

Replying to another question regarding sales tax refund and audit, he assured that he will take-up the issue with Chairman Federal Board of Revenue (FBR).

He said that the BoI would soon inject new blood in revamping its Karachi and Lahore officers. Replying a question about honorary consuls general of Pakistan working in different countries, he said that BoI is constantly monitoring performance of honorary consuls general and replacing those whose performance remained un-satisfactory On issue of ban on manufacturing polyethylene bags blow 300 micron, he assured that he will take-up the issue with City Nazim.

Acting President KCCI, Jawed Bilwani pointed out that most of Pakistani commercial counsellors posted abroad, unfortunately did not make the hectic effort for boosting and enhancing of image as well as exports of Pakistani products.


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## dr.umer

*Exhibition of Pakistani goods inaugurated in Tokyo ​*
November 07, 2008

ISLAMABAD: There is great potential of non-traditional Pakistani export items in Japan and the embassy will extend all possible support to the exporters in marketing these goods, says a message received here on Thursday by Pakistan embassy in Tokyo.

Inaugurating a five-day exhibition of Pakistani goods in Jica global plaza Tokyo, Pakistan's Charge d'affaires, Imtiaz Ahmad appreciated the Pakistan Chamber of Commerce for holding a successful event. He also thanked Japan International Co-operation Agency (Jica) for hosting the exhibition.

Chief guest Kenji Kondo, director general, Ministry of Industries and Commerce, Japan assured his full support in promoting export of Pakistani goods. I had served in the Japanese embassy in Islamabad as a first secretary, Kondo recalled his fond memories of his stay and said that Pakistan is like his second home. He offered his co-operation to the members of the Pakistan Chamber of Commerce in Japan.

The Pakistan Chamber of Commerce Japan has organised the exhibition in collaboration with the Embassy of Pakistan and the Japan International Co-operation Agency. A number of Japan-based as well as Pakistan-based exporters participated in the exhibition, says the message.

Commercial secretary, Rahman Hamid, president of the Chamber, Zulfiqar Ali, secretary general of the Chamber, Malik Habibur Rehman, member executive committee of the Lahore Chamber of Commerce, Muhammad Riaz, and an active member of the Pakistani community, Abdul Rehman Siddiqui also addressed the gathering.


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## dr.umer

*Heavy agenda and financial constraints mar Ecnec meeting ​*
7 Nov 2008

ISLAMABAD - The meeting of Executive Committee of the National Economic Council (Ecnec) that was to approve 42 developmental projects worth Rs 311.53 billion for various sectors ended up without completing its business. Sources said that only half of the projects on agenda could be taken up during the daylong meeting and it was not clear when exactly the next meeting would be held to take up rest of the agenda.

When contacted an official said that the next meeting of Ecnec might be convened on Saturday or next week for taking up rest of the projects but the date was not yet fixed. Though the heavy agenda was the official excuse for the inconclusive Ecnec meeting, but such meetings with even heavier agendas were completed within one day in the past.

The actual reason for delay in approving projects on the agenda might have been differences between federal and provincial authorities and the looming financial constraints faced by the country. The provinces, according to the sources, have protested non-release of funds for the important ongoing development projects.

The government, which is facing severe financial constraints, wanted a substantial cut on the Rs 541 billion Public Sector Development Projects (PSDP) size and had directed the Ministries and Division to prioritise the important projects because the prevailing financial troubles were not permitting the release of PSDP allocation set in the budget.

The representatives of the provincial governments told the meeting that there is a need to prioritise the ongoing development projects instead of approving new ones amid financial difficulties. They said that most of the projects being executed in the provinces are getting delayed due to lack of funds. The finance ministry is not releasing funds to the projects which are of paramount national importance.

The Ecnec, which met with Prime Minister in the chair, was expected to approve projects including Diamer-Bhasha Dam - acquisition of land and resettlement project worth Rs 116.607 billion in water and power sector.

The meeting was to take up 16 projects of Transport and Communication sector worth Rs 47.365 billion, five projects of Water Resources of Rs 32.921 billion, three projects of energy worth Rs 118.701 billion, two projects of health sector worth Rs 27.191 billion, two projects of environment worth Rs 2.232 billion, two projects of devolution and area development worth Rs 5.672 billion, one project of education sector with Rs 657.631 million, two projects of Higher Education (HEC) 2.006 billion, one project of social sector of Rs 560 million, one project of cultural Sports and Tourism of Rs 2.519 billion and one project of Industry and Commerce worth Rs 1.985 billion. The six projects of Physical Planning and Housing with the cost of Rs 70.618 billion were also on the agenda.


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## dr.umer

*Pakistan, India to take up basmati issue​*November 07, 2008

ISLAMABAD: Pakistan and India have decided to hold talks to settle issues pertaining to joint registration of basmati rice under Geographical Indication (GI).

A joint working group of both sides would deliberate on the issue in a meeting here on Nov 7-8, official sources told The News on Thursday.

Both Islamabad and New Delhi had agreed during the process of composite dialogue in June 2006 to set up a joint working group for looking into various aspects of joint registration of basmati. The working group, in its first meeting in New Delhi in April, had agreed to iron out differences over the issue.

European Union has said it will not accept basmati registration separately and consider it as a product of both Pakistan and India, an official who is part of the negotiating team of Pakistan said.

Under the World Trade Organisations Geographical Indication law, property rights will be given to a member country where any product or item is produced or manufactured traditionally. No other country can claim rights over such products.

India had included basmati in its list of exportable commodities in May 2006 but 80 per cent of basmati exported to EU and Gulf markets was not original, an official dealing with trade-related intellectual property (TRIP) laws in the commerce ministry commented on the issue.

On the other hand, Pakistan has notified DNA testing of super basmati, which proves that its characteristics match with the variety already notified in the Gazette of Pakistan on January 1, 1998.

The dispute between India and Pakistan over registration of basmati rice erupted when Delhi claimed developing a super variety in Kharif 2003 season under the Exports Inspection Certification Act. 

After the Indian claim, sources said, Pakistan decided to carry out DNA test of the variety at National Institute for Biotechnology and Genetic Engineering (NIBGE), Faisalabad, which matched the characteristics of the variety already registered under Seed Act 1976 on January 1, 1998.

Super basmati is originally grown in Pakistan as a cross between traditional pure basmati and modern dwarf rice. Super basmati has always had an edge over Indian Pusa Basmati-1 in international markets. Pakistan fears if India starts exporting the same rice, it could lose up to 40 per cent of its world market.

Super basmati is globally recognised as Pakistans rice and is very well accepted with exports of over 800,000 tons. It has a high yield and earns a lot due to its superior quality. According to an estimate, annual rice exports from India and Pakistan fetch around $2.5 billion.


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## dr.umer

*Economic downturn takes toll on property rates​*7 Nov 2008

LAHORE: Real estate rates are under pressure, as entrepreneurs are trying to offload their assets to remain afloat or convert the assets into dollars.

The News has found that almost all industrial sectors are incurring losses, as they are unable to recover their cost due to high interest rates, inflation and plunging sales. These factors have made it impossible for industries to service their loans.

It has been found that most industries first tried to slash their inventories by selling them at discounted rates to overcome cash crunch and pay loan instalments.

After exhausting this option, some of the manufacturers preferred to delay payment of bank dues while some disposed of their property to repay their bank loans on time.

It has been found that the industries that have been regularly rescheduling their loans in the past preferred to delay bank payments as their asset values were less than their loan amount. They know that banks would ultimately approach them for rescheduling loans again instead of going into litigation.

However most of those manufacturers that have never defaulted in the past nor they availed any rescheduling opportunity preferred to dispose off their property and pay banks on time.

They have a reason to do so. They have built up assets by remaining update on their loans. They run the most efficient industries in their sector that has saved them from minor economic downturns in the past.

The current economic decline is beyond their capability as the cost of production has risen taking the costs beyond the reach of the consumers. The rates of real estate have declined by 30-40 per cent during last 10 months as large numbers of entrepreneurs are offering their high valued property for sale. The decline in rupee value during past two months has accelerated this process.

The pressure on property further intensified as businessmen saw huge risk to their capital because of massive devaluation of rupee. They are also disposing of their assets in rush. They are transferring capital abroad to save themselves from the decline in their asset value. The Advisor to the Prime Minister on Finance has admitted that billions of dollars have been transferred abroad in recent months. 

It was found that stock market players also had bought big properties from the wealth they accumulated during the good days in the stock market. Some of them had already cashed the assets and parked money in dollar accounts while many are contemplating disposing their properties to settle their accounts with the bourses when the lower floor cap on the market is removed. 

After shock in capital market they do not consider property as a safe avenue. Most want to get rid of the property and convert it in to foreign currency. 

It was found that property rates have declined more sharply in the posh localities where most of the industrialist elite and capital market investors had accumulated large properties. The decline in middle class housing schemes is half decline witnessed in posh residential colonies.


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## dr.umer

*Govt blocks floating of $4bn GDRs, bonds​*7 Nov 2008

**Ishaq Dar says PPP govt got confused and shelved plans*​*
ISLAMABAD: Despite presenting a plan before the federal cabinet, the PPP-led government has been unable to push ahead with $4 billion transactions related to issuance of Global Depository Receipts (GDRs) and exchangeable bonds of Oil and Gas Development Company. This has forced the country to discuss a bailout package with International Monetary Fund, it is learnt.

Earlier, the government stopped GDRs of National Bank of Pakistan, Kot Addu Power Co (KAPCO), sale of 15 per cent shares in Habib Bank and 10 per cent exchangeable bonds of OGDC, arguing that these institutions are silver assets and they would not be sold. However, within six months, the government has taken U-turn and is ready to sell Qadirpur gas field, sources said.

The government blocked $4 billion worth of transactions without giving authorities concerned any alternative option for generating dollar inflows, a source said and pointed out the situation in the international market was not so bad during April compared to present difficult conditions in the aftermath of financial turmoil afflicting many economies of the developed world.

We missed an opportunity and are now forced to pick up begging bowl for dollar inflows from the IMF programme at the cost of national sovereignty, the source added.

Talking to The News on phone, former finance minister and PML-N leader Ishaq Dar disclosed that he had placed a viable plan to generate $4 billion before June 30 keeping in view the difficulties faced by the country on the external front. Out of these $4 billion, Islamabad received $400 million from the US on account of disbursements made to Pakistan Army for its ongoing operation in FATA, he said.

But, according to him, PPP got confused and its leadership decided to shelve other plans such as issuance of GDRs and exchangeable bonds in order to avoid shattering of confidence that actually resulted in creating more difficult situation for economy.

Referring to his recent speech delivered in the Senate while discussing the issue of national economy, he said that the increase in interest rates on the demand of the IMF would be simply a disaster for the economy of this country.

He also criticized the government policy for raising the support price of wheat saying that if the government wanted to give international prices to food commodity then it should also increase per capita income of people of Pakistan in accordance with international standards. It is time for prayer but we should also do right things to place economy on the right track, he concluded. 

The sources in Finance Ministry said that the former finance minister had tabled a plan during the cabinet meeting on April9, 2008 for generating $4 billion before June 30, 2008. When the PML (N) decided to quit the government on the issue of restoration of judges, the PPP government blocked $4 billion transactions on the directives of President Zardari.

Even at that time, the Finance Ministry had given mandate to JP Morgan, ABN Amro Bank (now RBS) and Barclays Bank and kick-off were convened on April 22 and 23, 2008, the sources recalled.

The delay in issuance of GDR of NBP, KEPCO, 10 per cent exchangeable bond of OGDC and offloading of 15 per cent share of HBL resulted into creating panic in the market and forced the government to discuss bailout package with the IMF in order to get $4 billion as first tranche of expected Standby Arrangement (SBA) within this month.

Pakistans beleaguered state of the economy worsened further with the decline in its foreign exchange reserves. According to State Bank of Pakistan countrys foreign exchange reserves declined to $6.6 billion. The depleting foreign exchange reserves has been playing a critical role in economic collapse a it led to a 26 per cent depreciation in the value of national currency against US dollar over the last 8 months.

When Secretary Finance, Dr Waqar Masood was contacted for seeking official comments on it, he said that the Standard & Poor raised the issue soon after announcement of the 2007-08 budget that the fiscal side would remain quite weaker in this scenario.

He said that when the incumbent regime took over reigns of power at that time three quarters (July-March) had already passed. He said that the fiscal side had gone out of control before assuming power by the incumbent regime and fiscal deficit was much higher than initial estimates made by the previous government

Owing to weakening fiscal side, he said the spread had gone over 600 basis points and the international market was not ripe to enter into it with new transactions. 

At that time, there were two views and one of them was to stop these transactions because it could be hasty borrowing, which would not provide benefit to the countrys economy.


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## dr.umer

*KSE: investors stay on sidelines​*
7 Nov 2008

KARACHI : Trading activity at the local share market remained dull due to prevailing uncertainty over the floor issue, which kept the investors on the sidelines and the benchmark KSE-100 index ended unchanged at 9,183.14 points. The investors' lack of interest was evident as the ready market volume declined to 236,700 shares as compared to 622,200 shares traded a day earlier while no trading was witnessed at the futures counter.

The overall market capitalisation declined by Rs 91 million to Rs 2,829.614 billion. Trading took place in only 23 scrips, of which four closed in positive, eight in negative while the value of 11 scrips remained unchanged. Al-Zamin Leasing was the overall market volume leader of the day with 115,500 shares, however, it declined by Re. 0.05 to close at Rs 1.95. National Assets closed at Re. 0.41, up by Re. 0.01 with 39,000 shares.

Sitara Energy lost Re. 0.29 to close at Rs 20.76 with 21,500 shares. U.D.L. Modaraba closed at Rs 3.30, down by Re. 0.01 with 10,500 shares. Nimir Resins closed at Rs 5.05 without any change with 10,000 shares. Mukhtar Textile remained unchanged at Re. 0.53 with 10,000 shares.

Gharibwal Cement lost Re. 0.51 to close at Rs 17.08 with 6,000 shares. KESC remained unchanged at Rs 3.80 with 5,000 shares. Mohammad Farooq lost Re. 0.23 to close at Rs 2.01 with 3,500 shares. Dewan Auto Engg remained unchanged at Rs 1.45 with 3,500 shares.

AzgN and Tri-Star Power were the highest gainers and gained Re. 1.00 and Re. 0.21 to close at Rs 9.75 and Rs 1.85 respectively while Pak Datacom and Gharibwal Cement were the worst losers and lost Re 1.00 and Re. 0.51 to close at Rs 49.00 and Rs 17.08 respectively.

Ahsan Mehanti at Shehzad Chamdia Securities said that trading activity remained low on prevailing negative sentiment following SBP's announcement to raise yields on T-Bills auctions, indicating possible discount rate hike. Members default expectations, falling foreign exchange reserves, no announcement of Saudi oil facility on deferred payments, foreign selling in the market were major concerns, which kept the market participants on the sidelines, he added.


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## sunny_aus

Neo said:


> Good question!
> I recall the situation after May '98 when Pakistan was facing another and more severe economic malaise Saudi's granted soft loans and supplied oil on deferred payments for more than a year. The loan and differed payments were written off.
> 
> Same might happen again if we play the cards right.



Even if Pakistan will have to pay back a part of this loan and of deferred oil facility, it&#8217;s clear that Saudi Arabia alone has solved the problem almost &#8220;completely&#8221;. this $4bn is even more than the immediate dept liabilities and on the other hand Pakistan will get relief of about $8bn to $10bn for oil import over next one year which is well enough to adjust the decline in foreign reserve. also, supports from US and other countries for war against terrorism is going to make Pakistan fully comfortable on trade side


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## Neo

* Foreign exhibitors get $50m orders ​* 
Friday, November 07, 2008

KARACHI: Foreign exhibitors have expressed satisfaction over the business generated both in terms of quality and quantity, totaling more than $50 million during the three-day automobiles and auto parts exhibition held at the Karachi Expo Centre.

Local businessmen and industrialists also found the Machine Tool Exhibition extremely useful and identified new technologies that can and will be put to good use in the food and textile sectors of the country.

The 4th International Automobile, Auto Parts and Accessories Exhibition (AAPP 2008) and 4th International Machine Tools and Automation Industry Exhibition (MTAP 2008) held simultaneously at the Karachi Expo Centre concluded on Thursday.

Belgian Consul Emmanuel Rixhon was very appreciative of the fact that such a large show was held despite the economic challenges being faced by the country. He was hopeful that such shows will play an important role in bringing about a much-needed economic turnaround.

Rixhon informed that the Belgium Embassy had played an important role in attracting representatives from Belgian companies to the exhibition. Interaction between representatives of local manufacturers and their Belgian counterparts will prove invaluable in forging technical partnerships, he said.

Trade Commissioner of Italian Embassy, Marco Pintus was pleased at the presence of Italian companies and products at the show. 

He commended the organisers for putting up an exhibition that will go a long way in boosting trade ties between Italy and Pakistan.

The Taiwanese exhibitors also shared that they were happy that they came to Pakistan and attended the event as they found Karachi to be not only safe and secure but also completely opposite to the image that is always being projected by the international media.

4th AAPP 2008 and 4th MTAP 2008 played host to more than 200 companies from 20 countries including USA, UK, Taiwan, China, India and Thailand.


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## Neo

*Trade surplus with Afghanistan up $213m in FY08 ​* 
Friday, November 07, 2008

ISLAMABAD: Trade balance of Pakistan with Afghanistan registered a surplus of $213 million in 2007-08 compared to a year earlier.

Exports, which had slipped below $1 billion and were $753 million, once again surpassed the billion-dollar mark and touched $1.14 billion during 2007-08 whereas imports from Afghanistan were $76 million in 2006-07 and jumped to $91 million in 2007-08.

The trade balance, which was $677 million in 2006-07, is now $890 million and Afghanistan is the only regional country where Pakistan has a surplus trade. Pakistans trade with land locked Afghanistan has registered a double-digit growth besides over a billion dollar illegal trade.

The exports registered only a growth of 23 per cent while imports of limited list from war torn country showed a growth of 16 percent, reveals official trade figures.

Imported items from Afghanistan showing a phenomenal growth are iron ore and fruits while exports to Afghanistan are petroleum, animal and vegetable fats & oil, machinery parts, iron and steal manufactured, cement, rice and sugar (raw & refined).

Trade balance between Pakistan and Afghanistan was $280 million, $445 million, $708 million and $ 1.01 billion in 2002-03, 2003-04, 2004-05 and 2005-06 respectively.


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## Neo

*Rs 400 bn debt caused power crisis: Raja Pervez ​* 
Friday, November 07, 2008

ISLAMABAD: Water and Power Minister Raja Pervez Ashraf has said all efforts are being made to overcome the energy crisis.

The minister, while giving assurance to the Senate Standing Committee on Water and Power, said keeping in view the situation, the government was bringing in rental power generation units and maximising generation from the Independent Power Producers (IPPs) to augment the existing supply.

He said a debt of Rs 400 billion had created problems for the power generation sector out of which Rs 260 billion were receivables of the eight power companies while Rs 140 billion had to be paid to the oil companies.

The power generation companies had no money to pay to the oil companies due to which the situation went from bad to worse, he added.The minister said low discharges from Tarbela and Mangla dams due to preservation of water for the Rabi crops was another problem due to which the power generation suffered.

He said that provision of gas to the power generation companies had been placed on top priority. The Senate body thoroughly discussed the issue of load-shedding and energy crisis in the country and future plans of power generation drawn by the Water and Power Ministry.

The committee underlined the need for chalking out emergency plans to increase power generation capacity to meet the growing demands of electricity in the country and overcome the energy crisis, which the country is facing at present.

Members of the committee were of the view that a proactive approach was required to address the issue on both short- and long-term basis. The committee directed the ministry to expedite work on power generation units being installed in different parts of the country. It was also decided that it would visit Quetta and see progress on the Sheikh Manda power generation unit.

The committee assured all support to the ministry in overcoming various problems being faced with regard to increasing the power generation capacity and bottlenecks in plans chalked out by the ministry to address the important issue.

The meeting was attended by Senator Muhammad Amjad Abbas, Ms Agha Pari Gul, Abdul Razak A Thahim, Maulana Rahat Hussain, Maulana Gul Naseeb, Raza Muhammad Raza and Dr Javed Laghari, besides the minister for water and power and senior officials of the ministry.


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## Neo

*Steel Mills privatisation plan scrapped: minister​*
ISLAMABAD, Nov 6: Federal Minister for Industries and Production Mian Manzoor Ahmad Wattoo said on Thursday that the capacity of Pakistan Steel Mills would be raised to 3.3 million tons from the current 1.1 million tons over the next three years.

This expansion may reach 10 million tons in the next few years to meet the rising demand of steel in the county, the minister told a press conference. He said that the privatisation of the Pakistan Steel Mills (PSM) had been put into cold storage.

We will not allow the privatisation of the PSM. It is our national entity and it will remain in the public sector, he said.

In reply to a question about dependence on foreign sources for raw materials, the minister said the government was considering various options to purchase raw materials from Balochistan and the NWFP. Annually, the PSM spent around Rs25 billion on imports of raw materials, he added.

He said money would be given to these provinces to start development programmes including opening of new schools and hospitals.

Mr Wattoo also announced formulation of a national industrial policy to attract foreign investment. He did not give details of the proposed policy. He said around $2 billion investment was expected in the petrochemical industries, adding that all formalities had already been finalised.

He admitted that the industrial sector had been facing severe pressure because of rising input cost and fallout of global financial meltdown.

Asked why the government was not taking action against a steady increase in the sugar price, the minister replied that government would import raw sugar to convert it into white. However, he did not mention that the governments decision to allow massive exports of sugar was responsible for the shortage.Mr Wattoo said that during the past five months, the government had established 1,500 utility stores across the country. These new stores also provided employment to 3,500 people.

After negotiations with oil and ghee industries, the minister said, the consumer price of ghee/ oil had been brought down to Rs98 per kg from Rs140 recently.

He said quality and quantity display system had been introduced in these stores to address these issues, adding that the government would also establish these stores on the pattern of multinational stores chain. We have already sought the help of LUMS in this regard.

He said urea supply would improve in the next few weeks. He said that cement prices had increased because of export to neighbouring countries.


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## Neo

*Future of coal-based power projects: World Bank team trying to resolve Sindh-Centre rift​*
KARACHI: The World Bank is trying to resolve the prolonged rift between the Sindh government and the federal government over the authority of large coal deposits in the country.

Officials in the Sindh Mines and Mineral Department told Daily Times on Thursday a WB team had arrived here six days back and were actively engaged in discussions with the officials of provincial and federal governments.

They said that the delegations priority was to resolve the rift between the two governments and help out the provincial government in selection of a firm, which would provide technical assistance in developing the worlds fourth largest coal deposits land at Thar.

The officials said that key decisions regarding developing coal sites in Sindh were expected, which would remove impediments in the way.

The WB has pledged to provide $26 million funds to the selected foreign firm in Sindh that would carry out technical assistance to all coal-based power projects in the future.

Presently, there are four companies including two from Germany and one each from the United Kingdom and China that have keen interest to conduct this project but eventually the government would have to select one of them.

During the recent exercise, the WB officials held meetings with officials of Federal Ministry of Petroleum and Natural Resources and Sindh Mines and Mineral Department. Officials of other possible stakeholders that would be a part of the coal-based projects such as WAPDA, IPPs are scheduled to meet by international funding agency to streamline the track of understanding among them.

It has been observed that the two governments are at loggerheads on the future earnings to be generated through coal reserves. One by one, several authorities had been established in the past that ensured the interest of the two governments.

In the recent past the Asian Development Bank has conducted a study on Thar coal, which identified that the rift between the two governments was a major impediment in materialising Thar coal.

Sources in the Sindh Coal Authority (SCA) told Daily Times that the WB officials are conducting negotiations between the two governments keeping in view their rights of natural resources that is defined by constitution of the country.

The provincial government claims that it has the right to take all measures on its mineral reserves with full autonomy so all the revenue generation should be go in its kitty. On the other hand, the federal government had kept on intervening in all coal issues as it has been working by its ministry.

Finally, the government has formed Thar Coal Authority some three-month ago keeping the interest of both the governments. The CM Sindh is the chairman and managing director belongs to the federal government.

This authority is formed aimed at ensuring the long-term friendly settlement between the governments.

Earlier, the previous government had formed Thar Coal Mining Company (TCMC) to bridge the widening row between the two governments, which the federal government has shelved.

All action plans proposed by TCMC have been rejected categorically by federal governments as they could not create any weight, it is also learnt.


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## Neo

*Reserves down by $163 million ​*
KARACHI: Pakistans foreign exchange reserves dropped to $6.758 billion on November 1, down by about $163 million or 2.35 percent from $6.921 billion the country held during the previous week, State Bank said on Thursday. Foreign reserves held by the State Bank of Pakistan stood at $3.529 billion, down by over $184 million or 4.95 percent from $3.713 billion the previous week. Net foreign reserves held by banks other than SBP stood at $3.228 billion, gaining $20 million or 0.62 percent from $3.208 billion. 

Historically high trade and current account deficits have eaten away the foreign exchange reserves by more than half during last one year, as the central bank had to spend dollars to protect the rupee from extreme volatility. Since the beginning of the current calendar year, the central bank has been intervening in the foreign exchange market quite frequently to support the rupee, which sharply lost its value against the dollar. Besides, the central bank has to give dollars to banks for their customers oil import payments. Whereas this support extended to rupee resulted in sharp depletion of foreign exchange reserves, it did not succeed in stopping the rupees slide. The rupee has lost about 32 percent of its value against the greenback since January.


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## Neo

*WB operations summary: WBs projects worth $1.46 billion still on list​*
ISLAMABAD: Despite removal of projects worth $379 million from World Banks Pakistan country operations, projects amounting to $1.468 billion are still on its list of operations. The WB continues to keep on hold $300 million project of National Trade Corridor Improvement Programme (NTCIP) in November.

According to the WBs monthly operational summary for the month of November 2008, 10 projects that are still in the WBs country operations list include, the Education sector, Higher Education Support Programme project worth $100 million is for providing support to the government of Pakistans higher education medium term development framework to foster public private partnership in the delivery of higher education and to provide substantial technical support to the client in developing a reasonable financing plan consistent with the macro-framework of the country. 

Mineral Section: In the energy and mining sector, the project of Mineral Sector Technical Assistance worth $50 million is to implement a strategy to accelerate the sustainable mineral sector development by strengthening governance, transparency, and capacity in the management of mineral resources. 

Rural Telecommunication: In the area of information and communication project, Rural Telecommunications and e-Service worth $124 million is for (a) accelerating access to communications in un-served and underserved areas by using targeted subsidies for rural expansion, (b) strengthen legal, policy, regulatory and spectrum management and (c) monitor functions and expansion of e-services. Negotiations are scheduled for December 2008. 

Law and Justice: Law and Justice project, Second Sindh Structural Adjustment worth $100 million is for implementation of reforms to improve fiscal and financial management, governance, public service delivery, and the states regulatory framework. 

Social Protection: The project Support to Safety Nets worth $50 million is for supporting the effective strengthening of implementation and monitoring mechanisms for delivery of cash transfer programmes. 

Transportation: The project Trade and Transport Facilitation II worth $24 million is to facilitate the implementation of the NTCIP, and facilitate the simplification and modernisation of Pakistans international trade procedures and practices. The meeting is scheduled for 4 December 2008. 

Expressways: The project National Expressways worth $500 million is for improving trade flows, lower transit costs and times along the programme corridor through the sustainable delivery of a high-speed, safe and reliable access-controlled expressway system. Appraisal is scheduled for January 12, 2009. However, project NTCIP worth $300 million would remain in the pending till the improvement of the macro-economic situation.

Urban Development: The project Punjab Large Cities Development Policy worth $100 million is to promote economic growth in the major cities through strategic planning, integrated infrastructure investments, and efficient urban service delivery. World Bank appraisal is scheduled for late-October 2008. 

Water and Sanitation: The project Second Punjab Barrages Rehabilitation and Modernisation worth $120 million is for preventing the occurrence of disastrous barrages failure and ensure their sustainable use, providing improved and reliable irrigation and drinking water supplies. The meeting is scheduled for June 1, 2009.


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## Neo

*Will Iran and Saudi Arabia help?​*
The Adviser to the Prime Minister on finance, Mr Shaukat Tareen, said on Wednesday that Saudi Arabia had agreed to provide all possible financial assistance to Pakistan. Although details were available from President Asif Ali Zardaris meeting with King Abdullah of Saudi Arabia in Riyadh, the guesstimate is that the Saudi government has agreed to give Pakistan initial relief through deferment of payments for oil purchases to the tune of $1.8 billion annually.

A similar concession has been reported from Iran. As earlier stated by the visiting Irani Foreign Minister, Mr Manouchehr Mottaki, Iran has agreed to supply Pakistan with furnace oil with a deferment concession of three months, something normally offered to buyers with tight-cash problems. Mr Tareen has indirectly signalled positive developments by saying that Pakistan would weigh all conditions before agreeing to an IMF programme. Presumably Mr Tareen is referring to the conditionalities of the proposed IMF package rather than the decision to opt for it, which has already been taken.

Mr Tareen is hoping to finalise the details with his Saudi counterpart as agreed during President Zardaris visit. Pakistans reserves are at risk at the present moment. They dwindled to $6.92 billion on October 25, out of which the State Bank accounted for $3.71 billion, not enough to cover Septembers imports of $3.807 billion. Its oil bill has climbed from $3 billion to $12 billion a year.

Before his departure for Saudi Arabia, President Zardari had hoped to get the Saudi concession that would relieve some of the pressure the national economy was facing on the eve of going to the IMF. Pakistan imports 82 percent of its oil from Saudi Arabia and would like a more realistic concession to tide over the coming weeks and months of hardship. All we have from the Saudi side so far is the news that King Abdullah has responded positively to his request. But a concession of only $1.8 billion annually will not be enough. Pakistan needs cash immediately to make payments that have become due if it wants to avoid default. Yet President Zardari keeps on saying that Pakistan doesnt need cash but investment from its friends. His visit to China has raised hopes all around, but the up-front declarations were mostly project-related. For some reason if there are any pledges of cash made by Pakistans friends they are not being made public.

Irans concession on furnace oil is not Pakistan-specific. But Pakistan wants Iran to extend the deferment period to three years so that its liability on the furnace oil it imports to fire a section of its power stations is reduced in the short term. But does Pakistan have enough leverage with the two regional states to swing the deal and avoid going to the IMF, its conditionalities and its holding back of tranches unless tough conditionalities are met?

The Friends of Pakistan forum gathering in Dubai in the second week of November wants Pakistan to have entered into some kind of a deal with the IMF before they can come up with a bailout package. Understandably that is the position taken by the Western states among these friends. The concern among these states is Pakistans credibility and its willingness to undertake reforms that would drastically change the economic scene, deeply probe the society for tax collection, and impose discipline with negative consequences for the common man.

Talking about leverage, Pakistan has traditionally friendly relations with Saudi Arabia and other Arab states in the Gulf. Despite appearances, it is not a one-way street. Pakistans deference to the Arabs desire to deal informally with their demands is understandable. Pakistans politicians as well as the army have abided by this style of relations and have grown accustomed to being treated specially. Both Mr Nawaz Sharif and Ms Benazir Bhutto were able to spend their periods of exile among their Arab friends.

The truth of the matter is that the cash crunch is not experienced only by Pakistan but by a whole lot of other countries. China with $1.9 trillions as reserves (expected to rise to $3 trillion next year) has already agreed with the EU at the October session of Asia-Europe Meeting (ASEM) to participate in a collective effort to rescue the Asian region with a fund of $80 billion, the details of which will be finalised this month in coordination with the United States. Saudi Arabia and the oil-rich Arab states in the Gulf are under a similar pressure to help through an institutional as opposed to a bilateral channel. As for Iran, the relationship has to be nurtured further after India has literally slipped out of the three-state IPI gas pipeline project. With the passage if time, Iran will realise the importance of the pipeline and will pay more heed to Pakistans economic concerns. Meanwhile, Pakistans diplomacy to secure cash to meet immediate payment deadlines must proceed in parallel to its bargaining with the IMF. *


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## Neo

*Saudi Arabia agrees to bail out Pakistan​*
LAHORE: Saudi Arabia has agreed to bail out cash-strapped Pakistan with substantial oil supply on deferred payment and cash assistance, according to a Dawn News report on Thursday.

Another report by the Online news agency said Saudi Arabia had agreed to provide tangible assistance to ease Pakistans balance of payment pressure and has assured the visiting Pakistani delegation of investing more than $1 billion in the livestock and agricultural sectors. 

Foreign Minister Shah Mehmoud Qureshi is expected to announce the Saudi package in Islamabad on Friday, Dawn News said.

Online said the Saudi leadership also said they would increase hiring of Pakistani labour and would provide more financial assistance through the Friends of Pakistan initiative.

President Zardari and King Abdullah decided to expand the volume of mutual trade from $5.7 billion to $7 billion. They stressed long-term strategic mutual ties and enhanced defence co-operation.

Zardari accepted the Saudi kings invitation to the Interfaith International Conference scheduled in New York for November 12. daily times monitor/online


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## Neo

*UAE being urged to ask its central bank help offset Pakistan's crisis ​* 
ISLAMABAD (November 07 2008): Adviser on Finance Shaukat Tarin on Thursday dashed to Dubai to hold talks with the UAE authorities for financial help ahead of Friends of Pakistan meeting. According to well-placed official sources, Tarin left for the emirate after attending an inconclusive Ecnec meeting in the federal capital.

That meeting, which was chaired by prime minister Yusuf Raza Gilani, is expected to take up its remaining agenda on Monday upon his return from the emirate by Sunday evening. Tarin is expected to meet top economic leadership of the UAE with a view to successfully convincing them about Pakistan's financial woes and soliciting their support on a bilateral basis.

The sources said that Tarin would also be looking forward to a liquidity support through UAE's central bank in order to improve the country's falling forex reserves and strengthen its position in relation to balance of payments.

Elaborating, the sources said the UAE's central bank or the Central Bank of the UAE could act on the pattern of the European Central Bank. The ECB, the sources pointed out has recently rushed to the aid of Hungary, opening a special repurchase facility allowing the Hungarian central bank to borrow up to EUR5 billion to help offset its financial crisis.

The UAE government would be requested to ask its central bank to help boost liquidity in the Pakistani banking system and support a plummeting Pakistani rupee. "The size of the liquidity that Pakistan looks forward to will be determined only after the UAE authorities have made the right overtures in this respect," a top government official told Business Recorder, requesting anonymity.

Second, he said, Pakistan would be asking the UAE government to provide it relaxation in making oil payments. The relaxation could be on the pattern of an extended deadline of payment, or through deferred payments. In addition to these two bilateral arrangements, the UAE would be expected to contribute generously in efforts towards bailing out Pakistan at the forum of Friends of Pakistan, scheduled to be held on November 17 in the emirate.


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## Neo

*Saudi Arabia agrees to give $4bn, oil to Pakistan ​* 
RIYYADH (November 07, 2008): Saudi Arabia has agreed to give $4 billion to Pakistan and provide oil facility on one-year deferred payments, sources said.

During the meeting between King Abdullah bin Abdul Aziz and President Asif Ali Zardari, Saudi Arabia agreed to provide economic assistance and oil on one year deferred payment. Sources said a formal announcement in this regard will be made at the meeting of the 'Friends of Pakistan' to be held on November 17 at Abu Dhabi.

*They said that Pakistan was aiming to accumulate $25 billion, which were being considered enough for bringing the economy back on track for the next 10 years. 'Moreover, King Abdullah during the one-on-one meeting with Zardari has also agreed to provide oil to Pakistan on one-year deferred payments, for which the agreement is expected to be signed soon.*

Sources said Pakistan needed more than $ five billion within a month to meet its international obligations. 'The Friends of Pakistan' nations include the US, UK, France, Saudi Arabia, China, the UAE and several other countries, which are meeting in Abu Dhabi on November 17 to devise ways for stabilizing Pakistan's economy".


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## Neo

*Pakistan wants to export products, expertise to Malaysia ​*
KARACHI (November 07 2008): Pakistan is keen to export its products and expertise to Malaysia and welcomes a reciprocal move towards enhancing bilateral trade between the two countries. "Both countries can establish a chain of business activities for mutual benefit", said Nusrat Iqbal Jamshed, Director-General, Trade and Development Authority of Pakistan (TDAP).

While talking to a 8-member delegation of Malaysian and Brunei journalists' who are on a ten days visit to Pakistan. "We would like to be involved in sectors such as marble industry, textile, handicraft, pharmaceuticals, carpet, fish and fish preparations while Malaysia could export its expertise and investments in palm oil, rubber and tin", he said adding that Karachi can be a reservoir and hub for Malaysian investment activities for Malaysian export to other countries.

DG TDAP said that currently bilateral trade between the two countries was in Malaysia's favour and its exports to Pakistan stand at around US $1.7 billion while imports are at only $104 million. The two countries have signed a Free Trade Agreement (FTA) which was implemented in 2006 and its scope was enlarged through Malaysia-Pakistan closer Economic Participation (MPCEPA) agreement last year.

MPCEPA is Pakistan's first comprehensive agreement on goods, services, investment and economic co-operation with any country in the world. It is also the first such agreement between the two members of the Organisation of Islamic Countries (OIC). The agreement is also Malaysia's first with a country in South Asia.

Nusart said that 61 per cent of Pakistan's exports are in textile and clothing particularly raw cotton, yarn, fabrics, garments, tents and canvas while a further 23 per cent relates to rice, leather and leather products, sports goods, wool, carpets, surgical instruments and petroleum products. Fish and fish preparations, fruits and vegetables, chemical products, pharmaceuticals, marble and granite, gems and jewellery, IT, meat and poultry and cement represent seven per cent of exports with the balance being other types of goods.


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## Neo

*'100,000 jobs to be created during financial year' ​* 
ISLAMABAD (November 07 2008): Federal Minister for Industries and Production Inaytullah Durrani has said that at least 100,000 vacancies will be created during the current financial year to bring the country out of the economic crisis. He expressed these views in his first meeting with the officials of his Ministry here on Thursday.

Additional Secretary Hafizullah Chaudhry briefed him about the performance of the ministry. Talking to the officials, Durrani said that the government would provide maximum facilities to the industrialists from countries like Japan and Malaysia to with a view to attracting foreign investment in the industrial sector. He asked the officials to work hard, and assured them that their problems would be solved on priority basis.


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## Neo

*Businessmen upbeat on positive economic change ​* 
LAHORE (November 07 2008): The leaders of PIAF-Founders Alliance have said that the economic situation in the country is taking a positive turn and hopefully with the new wave of change in the United States, Pakistan would regain its status as the hub of business activities.

The Alliance leaders including Mian Anjum Nisar, Iftikhar Ali Malik and Mohammad Ali Mian expressed these views while speaking at a luncheon reception hosted by the businessmen of Liberty Market and Hafeez Centre. The business community leaders of Liberty Market and Hafeez Centre Rana Tariq, Safdar Butt, Gibrael Qamar Butt, Malik Amer Mohsin and Abdul Rauf also spoke to the gathering.

They said that the whole country, particularly the province of Punjab is a land of opportunities and a true leadership at all levels could help realise the dream of a prosperous Pakistan in coming years. The alliance will continue its struggle for the betterment of business community, as its consistent liaison with the federal and provincial governments in the last five years, has helped lessen the problems of both the trade and industry.

Further, the businessmen said that all measures were taken in the recent months to convey the business community's concern over ongoing crisis ranging from hike in power tariff and shortage and rapidly increasing cost of business. The association also pleaded the government effectively for all matters concerning the cause of business community that resulted in withdrawal of decision regarding imposition of 35 per cent L/C margin, they added.

Appreciating the LCCI for its effective role in co-ordinating with the federal and provincial levels, they said that they had remained in touch with the governments to get resolved the businessmen's problems.

The office bearers also held meetings with the foreign diplomats and tried to dispel Pakistan's negative impression being painted by western media regarding the investment scenario in the country. The trade leaders of Liberty Market and Hafeez Centre while reposing their confidence in the Alliance assured their support to them. The Alliance Associate Class candidates were also present in the reception.


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## Neo

*Investment continues in telecom sector ​*
ISLAMABAD (November 05 2008): Pakistan, after obtaining thriving growth and investment in telecom especially in cellular sector, still offers best opportunities for investors as million of rural people awaits to benefit communication services. Becoming a destination for investments in IT and telecom and attracting more than US $9 billion Foreign Direct Investment (FDI) during last few years, Pakistan is still a high potential area where major companies of the world like Mobilink are still investing.

It is the sector, which is attracting more investment than any other sector in the country where total number of fixed and mobile subscribers has reached from 8 million in 2003 to over 89 million in 2008 with major contribution coming from the mobile sector especially the Mobilink, which has around 31.5 million subscribers base.

Teledensity in the country has also increased to 58% of the population which is the highest in South Asia. A question usually arises these days, can Pakistan wherein last year mobile industry invested close to US $3 billion continues to be one of the fastest growing telecom markets in view of world-wide economic crunch?

The answer is that we all probably aware, we are currently in a global economic slowdown and with rising international oil prices coupled with consumer price inflation. In the developed world including US, western Europe and Japan where new mobile subscriber growth had saturated some time ago, the telecom industry is now bracing for a major slowdown.

In addition to a slowdown in new mobile subscriptions, it is expected to be a slowdown in the sales of handsets as well. Pakistan, of course, cannot remain shielded from this global turmoil. But in fact the telecom sector in Pakistan is not doing too bad. The sector was by far the largest recipient of foreign direct investment in 2007-08. As per PTA, the industry continues to add more and more new mobile subscribers every month even under the current conditions.

In fact all know we in Pakistan have a huge growth potential as far as telecom is concerned, even if we compare with just the neighbouring countries. Majority of the rural population still awaits cell services. There are 3G and 4G technologies yet to be deployed, and there's so much more to value added services than downloading ring tones and Bolo SMS. So in short, the answer to the question posed in the title is "No".

Considering the situation, there is no saturation point as yet. The industry is showing a healthy growth in spite of the global economic slowdown. And best of all, no layoffs announced in the local mobile industry as opposed to other parts of the world.

Mobile companies are still committed that the industry will continue to work with the government for the rapid provision of state-of-the-art information and communication services in Pakistan, with a heightened focus on empowering rural communities. All the mobile companies have continued their trend of investment and introducing new services. Sale of new connections also continues.

Mobilink, having a leading market share with more than 31 million customers and crossing the figure of covering over 10,000 locations across the country is now focusing on rural population. Growth trend would remain continue in the mobile industry uninterrupted provided more proactive steps need to be taken.

Commitment is there both from the government and operators sides to the further promotion of telecom sector, however incentives most importantly relaxation in taxes would help leverage its strength for growth of economy and social inclusion of all sections of population.


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## Neo

*Why shouldn't we manufacture solar systems in Pakistan? ​*
AIR CDRE (RETD) AZFAR A KHAN 

ARTICLE (November 06 2008): Pakistan is facing the worst ever crisis of electricity shortage these days. It's becoming extremely difficult for a common citizen to pay off his/her monthly electricity bills. The bills keep soaring day by day and there seems to be no respite in the foreseeable future.

The electricity generated through the fossil fuel is very costly as its cost is linked to the cost of imported fuel. We are spending a hefty amount ($11 billion plus) on the import of oil annually to meet the country's oil requirements. Hence, there's a need to resort to other forms of generation of electricity, solar being one of them.

This article dwells on the discussion regarding production of cheap solar panels/cells in Pakistan; the problems that are holding up things, the status of our industry, why industry is not sensitised to do things, current market situation and suggestions to resolve these problems.

One thing that must be stated right at the outset is that generally it's presumed that solar energy is an expensive form of energy which is beyond the reach of the common man and it's rightly so. The next question that comes to one's mind is: How to reduce this cost? In Pakistan's environment, it's very much possible as we have all the plus points at our disposal. The only thing is that we should be able to exploit them. The strategy is given in the succeeding paragraphs.

Let's say that the government decides to venture in a big way in this form of energy. It wants to see solar panels mounted at the roof of each and every house of the country's urban and rural areas. It simply means that we would be requiring solar panels not in thousands but in millions or rather in hundreds of millions! Each solar panel utilises 100-200 solar cells which are pasted on the panel that is made of glass, generally 2 ft x 5 ft in dimensions.

Presently, a solar cell costs more than Rs 1000 if imported from abroad. Just imagine how much budget we would need to go ahead with this project! Naturally, such a huge number of solar cells can't be imported from abroad as they would be prohibitively costly.

These cells are costly because they are being manufactured by manpower that is hired by the manufacturing companies @ $45 per hour! Hence, the best option would be to manufacture solar cells in the country. But, would their manufacture really bring the cost down. The answer to this question is a big YES! See how? To manufacture solar cells in the country, we have three requirements: raw material, machinery with necessary infrastructure and trained manpower.

*RAW MATERIAL* As far as raw material is concerned, there are two types of raw materials used in the manufacture of solar cells, one is quartz and the other silica. Quartz is available in abundance in the northern areas of our country. People of the northern areas are raising walls of their houses utilising this raw material in place of bricks.

The other raw material silica is available in our rivers and many other places. Our bulb manufacturing companies, three of them being in the NWFP, are already using this raw material for decades. So, to venture into manufacturing of solar cells, both types of raw material is available in the country.

*MACHINERY AND NECESSARY INFRASTRUCTURE* But, the availability of this raw material alone would be of no consequence unless we have necessary infrastructure with arrangements for its purification, development and finally conversion to solar cells. For this purpose, we'll have to import necessary machinery from abroad. But, it would be a one-time investment only.

*TRAINED MANPOWER* Regarding manpower, I have no reservations in making a statement here that we have the finest and the most hard-working, skilled manpower. From my personal experience spanning over a period of 31 years, I could say with conviction that the retired personnel of the defence services who have been working on sophisticated electronics and telecommunication equipment during their service careers (preferably in the Air Force) would be the best choice for deployment on the manufacture of solar cells.

These people are highly skilled and disciplined and get retired at an early age. Shaheen Foundation, Islamabad maintains an up-to-date computerised record of such personnel who are just a telephone call away. The expertise of these people is not less than any technician deployed in the western countries for such jobs.

The only difference is that a European worker of such calibre gets US $45 per hour whereas a Pakistani worker, if he is paid $5 per hour in his own country would be the happiest man around. While starting manufacturing of solar cells, it would be advisable if we do it in collaboration with a world-renowned company as India has done in the case of wind turbines.

It had a joint venture for the manufacture of wind turbines with a company that has 26000 wind turbines to its credit! This company has a name in wind industry and its wind turbines are being used the world over! This way, we can also join hands with a world-renowned solar systems manufacturing company. We would be able to lay our hands on the latest technology in the field of solar energy and our manpower would also be trained through short orientation courses as they already possess sound knowledge and strong technical base.

By deploying our local manpower we would already be saving $40 per person per hour which would drastically reduce the cost of manufacture of solar cells. Further reduction would be effected through raw material which's available at a throw-away price. This way, the "prohibitively costly" solar panels employing locally produced solar cells would come within the reach of the common man. The energy crisis would thus be a history of the past.

*THE PROBLEMS THAT ARE HOLDING UP THINGS* In Pakistan, the main problem for solar energy not taking off is the absence of commitment from the government. Once, the government shows its commitment, things would be quite different. Next is absence of awareness among the general masses. This awareness wouldn't come on its own. It has to be created. The country's TV channels could divert some time for the propagation of the need for solar energy among the masses.

Similarly, the newspapers and radios can play their role in creating awareness. Another thing; if some businessman, through his innovative thinking and foresight establishes a factory to manufacture solar panels, he's not patted at his back.

It looks as if he has committed a sin! If there's a contract to be awarded for mounting solar panels on the rooftops of the houses of a village, then this businessman is not given preference over those who import these panels from abroad and do the job. It's really pathetic!

*THE STATUS OF THE INDUSTRY* Presently, there's one and the only one factory manufacturing solar panels in Pakistan which's located at Hattar Industrial Area near Taxila, 1-1/2 hours drive from Islamabad. But, it's producing solar panels only. Though, it has plans to manufacture solar cells as well, yet it's not possible for the company at present due to the huge cost involved.

It could be done through public-private partnership. The government must help the company financially to set up the required facilities. The infrastructure is already available. It has taken us decades and we're still engrossed in thinking mode. Let's come out of this inertia and do something practical!

THE OFFICIAL POLICIES Is there really any official policy in this regard? I very much doubt! Why? Because, had there been any official policy, then it would have trickled down to the people and made attractive for the businessmen.

THE CURRENT MARKET Due to absence of government's commitment, the market for this form of energy hasn't taken off. People are also unaware of this alternate source of energy. They want to do away with their dependence on the existing source of energy ie utilising fossil fuel. If the solar cells are made cheaper, this industry is bound to take off.

THE TARIFF RATES There should be no tariff on various products of solar energy as only then the investors would come forward and invest. Rather, fabulous benefits should be given to the investors.

*HOW DO WE RESOLVE PROBLEMS?*

*THE PROBLEM COULD BE RESOLVED IN THE FOLLOWING WAYS*:-

-- AEDB should be made more effective. They say: "Seeing is believing." So, their progress must be seen and felt by everybody.

-- Cheap solar cells should be manufactured in Pakistan.

-- More factories should be installed for manufacturing solar panels in the country.

*WHY INDUSTRY IS NOT INSENSITISED TO DO THINGS?* The industry is insensitive to the production of this form of energy due to the high cost involved. But then somebody should answer my question too: If the cost is really that high, then how Nevarra is coping up with this high cost? It's meeting 70 % of its energy needs through solar and wind energy despite the fact that it doesn't have that much sunlight as we have!

The authorities in Nevarra must have taken some tangible measures to bring the cost down, out of which, one could be the manufacture of solar panels including solar cells in country. If the use of solar energy was that costly, then Nevarra would have abandoned this initiative long ago.

To conclude, it can be said that solar energy is one of the most viable options for Pakistan. Even countries with less sunlight are making best use of this free resource (sunlight). We, in Pakistan, aren't short of sunlight as sun shines on the entire length and breadth of the country throughout the year. We can make use of this inexhaustible resource and contribute towards meeting the shortfall of electricity.

If we don't do it now, then it would be just a matter of time when oil would be touching $200 a barrel and the World Bank would be pressing us hard to increase the electricity price by the same ratio. At that time, we would be left with no option but to grab every opportunity to generate electricity from any available source, what-so-ever!

We should opt for the manufacture of solar panels, including solar cells in the country, for which, we should establish not one but several factories for the same. We have unimaginable quantities of raw material at our disposal and our manpower is second to none.

With the availability of abundant raw material at throw-away price and the cheapest yet highly skilled technical manpower, the profits that would be accrued is mind boggling!, It's said that if enough solar panels using indigenous solar cell are installed and energy efficiencies are ensured, the home owners can receive a zero power bill!


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## Neo

*Pakistan to privatise part of Qadirpur gas field​*Fri Nov 7, 2008 

ISLAMABAD, Nov 7 (Reuters) - The Pakistani government said on Friday it would privatise 37 percent of the state's stake in the Qadirpur gas field to accelerate exploration and increase production.

The state-owned Oil and Gas Development Company Ltd. (OGDC.KA: Quote, Profile, Research, Stock Buzz), Pakistan's largest listed company, owns 75 percent of the gas field, while the remaining 25 percent is held by foreign companies.

"We have decided to sell 37 percent of OGDCL's shares in the Qadirpur gas field," Privatisation Minister Naveed Qamar told a news conference after a meeting of the cabinet committee on privatisation, chaired by Prime Minister Yousaf Raza Gilani.

Qamar did not give a deadline for the sale but said authorities would try to complete it in the 2008/09 financial year (July-June).

Qadirpur gas field is 8 km (5 miles) from Ghotki town in Sindh Province. It was discovered in March 1990 and production started in September 1995.

Workers have been agitating against any move to sell the gas field but Qamar said jobs would be protected.

According to the Karachi Stock Exchange Web site, OGDCL has an index weighting of 16.26 percent and a market capitalisation of $5 billion.

It also holds the largest share of the country's recoverable hydrocarbon reserves; 32 percent of gas and 37 percent of oil.

The cabinet committee had considered the options of privatising OGDCL itself or selling some of its shares but decided against both options, given depressed world financial markets, Qamar said.

An official of the Privatisation Commission, which oversees the sale of government assets, said the foreign listing of Kot Addu Power Co, planned for October, had also been delayed because of market conditions.


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## batmannow

Delegations expenses were borne by Asif
By Syed Irfan Raza
dawn news.com
ISLAMABAD, Nov 6: Prime Minister Syed Yousuf Raza Gilani has denied reports that expenses on the delegation which accompanied President Asif Ali Zardari to Saudi Arabia were borne by the government.

Talking to reporters here on Thursday, he said he wanted to clarify that the expenses of the large delegation were borne by the president.Mr Zardari went to Saudi Arabia on a two-day visit on Tuesday with a delegation of up to 200 people to seek financial assistance package from the kingdom.

Sources told Dawn that the presidents visit to Saudi Arabia involved three chartered flights. An advance party had gone on Monday. Most members of the delegation were Mr Zardaris friends and close aides who were taken to perform Umrah.

The president had only 15 people with him in his plane  his personal staff and some friends. No federal minister or senior bureaucrat was in that flight.

The other chartered flight carried 175 people, mostly friends and close aides of the president. Ministers and government officials who were in the plane included National Assembly Deputy Speaker Faisal Kundi, Foreign Minister Shah Mehmood Qureshi, Finance Adviser Shaukat Tarin, Minister for Labour and Manpower Khursheed Shah, Law Minister Farooq H. Naek, Interior Adviser Rehman Malik and Minister for Parliamentary Affairs Dr Babar Awan.

guss , what ?
its the real picture, of our travlling economy!
that is how our respected presidnt will going to solve eco-crisis?


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## pkpatriotic

*Nation will hear many good news on economy soon: FM*
*Saturday, November 08, 2008* 

*MULTAN: Nation will hear many good news about our economy soon, said foreign minister Makhdoom Shah Mahmood Qureshi here on Friday. Talking to journalists at the local airport he said President Asif Ali Zardaris Saudi visit emerged successful.* 

He dismissed the negative impression about the tour. Shah Mahmood Qureshi said soon PMs advisor on finance will tour Saudi Arabia, our time-tested brotherly country, to discuss the economic assistance package. 

He said Chinese visit was also successful although some cynics termed it unsuccessful. He said both the visits will prove fruitful in the days to come. 

The foreign minister said Pakistan is discussing aid package with the IMF on its own terms. He said the IMF package will be of short term. 

He said the prices of petrol, diesel and vegetable ghee have been decreased and prices of other consumer items will also come down and the common man will heave a sigh of relief.  *Quote:* Where is this shop dear minister................you may be dreaming.............or throwing flock i think u did make a mistake about prices reduction as every thing came to your house sure completely free

He said, we are coming out of the woods which is indicated by the falling price of dollar from Rs. 86 to Rs. 82. 

Shah Mahmood Qureshi said the question of US attacks on our territory has been taken up with the US General and with US allies. 

*He said US has witnessed a big change in the recent presidential elections. He said our foreign policy couldnt be changed overnight.*

*QUOTE:*
Hmmmmmm.... by the way yeh raat kitni lambi ho gi......... You peoples keep on chanting /saying like this: "Nation will hear many good news very soon" since last 8 months........so plz for God sake tell us, wo subha kab hu gi????
as we whole nation cudnt hear any foot step leads for godo news as yet, abhi tak tu "govt elites hi ki panchon ungli ghee mein hein aur sir kharhayi mein"


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## Neo

*Pakistan retains growth potential in financial sector ​* 
Saturday, November 08, 2008

KARACHI: Managing Director of First Data for Middle East region, Brian Quarrie believes that Pakistan still has tremendous growth potential in the financial sector and as it is still a relatively small market, there were more opportunities for them to sell their services effectively. 

Therefore, though the global financial crunch took everyone by surprise as it was unexpected and sudden, we still intend to push ahead, he said in an exclusive telephone interview with The News.

Elaborating on the workings of First Data, Quarrie said that the company was involved in finance-related services. We cater to both holder of credit and debit cards and to the merchants, he said.

First Data is a global technology leader in information and internet commerce. The company processes transaction data of all kinds which ranges anything between payment solutions, card issuing solutions, prepaid & payroll solutions, mobile commerce solutions, e-commerce solutions, loyalty solutions, terminals & supplies and ATM solutions.

Government solutions, customer service solutions, fraud/risk management solutions, bill payment solutions, analytic & decision management solutions, global merchant acquiring solutions and cash management solutions are some of other services.

Worldwide, his list of clientele includes grocery stores & pharmacies, gas stations & convenience stores, restaurants, retailers, financial institutions, travel & entertainment, e-business, automotive, professional trades, government agencies, healthcare and utilities.

First Data officially has been inaugurated in August 2008 in Karachi with our clients Bank Al Falah and Allied Bank to whom we offer our complete range of services. We now plan to penetrate the market further and therefore have also opened our office in the city recently, the MD elucidated.

To establish ourselves in Pakistan, we had to go through a step by step process which was required of us by the government. The State Bank of Pakistan did not intervene directly since we arent into processing financial transactions like a bank and therefore there were no rules and regulations that were to be imposed on us and instead the SBP just gave us some lessoning on how things are done in Pakistan, he continued.

Quarrie articulated that here he has started with dealing financial institutions initially and is looking towards retailers and then eventually the other sectors too. We have a more mature market in Europe and USA, he said.

Quarrie was unaware that Pakistan is rather poor in technological knowledge. 

He agreed that people may need to be educated in using their full services in Pakistan but added that First Data is not looking to set its past 25 years ideal model example in this nation within its first year of operating here. 

Referring to the question regarding security precautions against fraud and manipulation involving his services, Quarrie expatiated that he packaged his own products and more importantly one of his own services is on risk management.

He said Pakistan may have high cases of frauds but then this type of crime has been prevalent for a long time in all the societies of the world and so far he has been selling his products successfully all over the world and is positive he would do so in this country as well.

While Quarrie declined to put a figure to his investments here, he did share that he was planning to create good job opportunities for qualified people in the country. Sales and marketing are just some of the efforts and as his clientele has grown with time. Currently he has nine people working for his organization at this initial stage.

First Data is also looking forward to doing a number of joint ventures here. However, the organization would continue to remain a foreign holding with no local shares in the market, he enunciated.

Quarrie said the financial markets landscape has become more competitive as there are more players in the market and as the products as well as clients have become more innovative. He cited the example of the introduction of Islamic cards for this region. The world market has become more mature and choosier for people and thats why we have taken Pakistan in our stride, the MD commented.


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## Neo

*Govt plans 1m tonnes wheat buffer stock ​* 
Saturday, November 08, 2008

ISLAMABAD: The government will keep a buffer stock of one million tonnes of wheat in storages of Pakistan Agriculture Storage and Services Corporation and replace existing stock with fresh produce, a senior government official told The News on Friday.

We have learnt from the current food crisis across the globe and have decided to keep minimum stocks of staple food with the public sector in order to ensure food security, said Shahid Hussain Raja, Additional Secretary Food and Agriculture.

Earlier, the federal cabinet, while fixing wheat support price at Rs950 per 40 kg for the coming crop, had directed the Ministry of Food, Agriculture and Livestock (MINFAL) to procure 6.5 million tonnes of wheat after fresh harvest.

Out of total procured wheat in next season, 5.5 million tonnes will be used to meet local consumption and remaining one million tonnes would be stocked for next year, he explained. Wheat stocks will be kept in PASSCO godowns.

Federal Committee on Agriculture (FCA) has fixed wheat production target of 25 million tonnes against local consumption of 24 million tonnes.

About import of 3.5 million tonnes of wheat, the additional secretary, who had also served as Punjab food secretary, said Trading Corporation of Pakistan had so far contracted 1.75 million tonnes, of which 1.64 million had arrived, adding tenders for remaining quantity will be issued next week.

Besides imports, Pakistan is also expecting $200 million worth of white wheat from US on deferred payment and another 50,000 tonnes as grant from the US government.

To a question about maintaining strategic reserves, Shahid Hussain said, the ministry with the help of Planning Commission is working on a plan not only to upgrade existing storages but also construct modern silos for the purpose.

Two main public sector organisations, food departments and PASSCO, have total storage capacity of over six million tonnes, but in case of bumper crops or the need to store other commodities, there is no extra space.


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## Neo

*Economic team overlooks manufacturing sector ​* 
Saturday, November 08, 2008

LAHORE: Buoyed by increasing revenues due to high inflation and currency depreciation, the economic team of the country has overlooked the need for reviving the sagging manufacturing sector.

Industry circles are so deeply concerned over inaction of the government to facilitate local industries that instead of creating new employment opportunities, they are downsizing their workforce. They said a proper evaluation of the situation would reveal that industries were paying higher taxes on declining productivity. Sales were slowing due to low demand and even then industries were forced to increase prices due to rising costs.

Former senior vice president of Lahore Chamber of Commerce and Industry (LCCI), Farooq Iftikhar said the present regime had taken all steps necessary to increase its revenues.

He said revenues had shown a robust growth of 28 per cent in the first four months of the current fiscal year, adding most of the taxes in fact increased the cost of production of the local industry.

He said with the dollar going up from Rs62.50 to Rs82, receipts from imports had multiplied as entrepreneurs now pay much higher sales tax on duty-paid value of their raw material. Resultantly, he said, increase in the production cost of products further increased final sales tax which manufacturers paid to the government.

Former chairman Lahore Stock Exchange, Group Captain (R) Naeem A Khan said the government had abolished entire subsidy on petroleum products. In the last fiscal, it had paid a huge subsidy of Rs175 billion on petroleum products.

He said the withdrawal of the huge subsidy in four months had also contributed to the increase in production cost as petroleum products were used in all economic activities from manufacturing to marketing.

A leading knitwear exporter Adil Butt said the increase in electricity tariff had hit both domestic and industrial consumers badly. He said the subsidy on electricity had either been completely eliminated or drastically reduced.

However, crude oil is now available in the global markets at much less than half the rates Pakistan paid in August this year. He noted that the cost of thermal electricity production had declined by over 30 per cent after accounting for the decrease in rupee value. Electricity tariff has twice been increased during this period and exemption from 16 per cent GST on electricity has been withdrawn.

An artificial leather manufacturer Mian Anjum Nisar said that the government had every right to boost its revenues. However, he added sustained revenues would come only if the industry grew. Pakistans economy at its current stage of development could not survive on the growth of services sector only, he said, adding main engines of growth should be industry and agriculture. Exportable surplus would come from these sectors only, he pointed out.

He said there would be no economic revival if industries were allowed to bleed to slow death. Cost of doing business has to come down to exploit the actual potential of local industries, he added.

Former chairman Pakistan Association of Auto Parts and Accessories Manufacturers Syed Nabeel Hashmi deplored that the government did not have resources to facilitate the domestic industry while it lined up Rs20 billion and Rs30 billion funds to rescue capital markets brokers. 

He said the capital market was exempted from capital gains tax and had created many billionaires because of this during the past seven years.

He said banks that minted money for over five years had been facilitated by taking measures to increase their cash flow. He regretted that no such measures had been adopted for the manufacturing sector which provided revenue to the government.


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## Neo

*Millac says doing good in Pakistan ​* 
Saturday, November 08, 2008

KARACHI: Despite high inflation sales in Pakistan are going well and it is expected to carve out market with new products, Zeshan Siddiqui, National Sales Manager, Millac Foods Pakistan, said. 

He was speaking at a launching ceremony of a new dairy product Gro instant milk powder of Millac Foods Pakistan here on Friday. 

Hamood Sheikh, Brand Manager Millac Foods Pakistan, said the company collects milk from local farms located in different parts of the country and then add pre-mix to some other food additives that are imported from Ireland. 

Gro instant milk powder is made of fresh and pure milk. It is especially formulated for children and is recommended for the three-plus growing children. The expert formulation entails essential vitamins, calcium and proteins to give a balanced diet to the children, making their growing years healthy, active and energetic. 

Millac Foods is currently engaged in the manufacturing and marketing of dairy products in Pakistan.


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## Neo

*Pharma industry targets $500m exports ​* 
Saturday, November 08, 2008

LAHORE: Pharmaceutical industry, encouraged by crossing $100 million mark in exports, is focusing on achieving a target of $500 million by 2013 provided the government ensures elimination of producers of spurious drugs in local markets which affects the industrys image abroad.

Pakistan Pharmaceutical Manufacturers Association Chairman Kashif Sajjad Sheikh stated this during a visit of Dr Asad Ashraf, Chairman Chief Ministers Task Force on Spurious Drugs, to the Lahore Chamber of Commerce and Industry. He said the whole pharmaceutical industry would support the government and extend full cooperation in its drive against unqualified people, who were defaming the industry.

The chairman of chief ministers task force on spurious drugs assured that stern action against all such unqualified people would be taken, who were harming the pharmaceutical industry for petty gains. He said the government was well aware of the fact that a few unscrupulous people were tarnishing the image of the whole pharmaceutical industry, which was not only catering to domestic needs but also earning foreign exchange for the country.

Speaking on the occasion, LCCI President Mohammad Ali Mian said Pakistan had a very vibrant and forward-looking pharma industry. At the time of independence, there were hardly any pharmaceutical manufacturers, but today Pakistan has about 400 manufacturing units including those operated by 25 multinationals, he said.

The pharma industry, almost evenly divided between national and multinational companies in terms of market share, meets around 70 per cent of the countrys demand of medicines.


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## Neo

*Auto industry faces shortage of skilled manpower ​* 
Saturday, November 08, 2008

ISLAMABAD: The auto industry of the country has been facing a severe shortage of skilled manpower, Auto Industry Development Committee on Human Resources said.

During its meeting held here on Friday, the committee observed that the training institutes of the country were producing only 0.2 to 0.3 million skilled manpower annually, while the requirement of the industry was more than one million.

The meeting was held under the chairmanship of Sikandar Mustafa Khan, Chairman, Millat Group of Companies to identify level of skills required for the industry, said a press release by the Engineering Development Board.

On the occasion, Dr Abid Ghumman, DG, School of Mechanical and Manufacturing Engineering, NUST gave a presentation on Human Resource Development for Auto Parts Manufacturers, it added.

He underlined the importance of training needs of the senior executives in addition to workers and supervisors, adding that four Universities were presenting various types of training courses for Senior Management of the industry but the response from the industry was not encouraging.

The representative of NAVTEC informed the meeting that they were conducting a comprehensive institute-wise survey for collecting data about training facilities in the country. The committee also reviewed the progress made on the decision taken in the earlier meeting.


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## Neo

*WB loan depends on number of poor Pakistanis ​* 
Saturday, November 08, 2008

ISLAMABAD: A new controversy has hit the Zardari regime over how many people live below the poverty line in Pakistan with the Planning Commission and the Finance Ministry giving divergent views, which could jeopardise the $500 million loan from the World Bank.

The Planning Commission believes that there are around 35 per cent of the population falling below the poverty line while the Finance Ministry estimates only 22.3 per cent in accordance with the latest official survey.

This controversy, if not resolved immediately, could potentially block the World Bank loan worth $500 million for Pakistan under the Poverty Reduction Strategy Credit (PRSC), which is desperately required to improve the depleting foreign currency reserves.

Under the World Bank conditions, Pakistan will have to prepare the Poverty Reduction Strategy Paper (PRSP), envisaging targets to reduce the prevalence of poverty and establishing social safety nets for obtaining credit line of $500 million from the PRSC. The Finance Ministry is preparing the PRSP document for presenting to a visiting mission of the World Bank but it is completely clueless about which figure is the official line.

There are two different estimates of the Planning Commission and the Finance Ministry, sources said and added the World Bank had already validated the official figure of 22.3 per cent in May 2008 and they would not let the authorities to jack up the figure up to 35 per cent without carrying out a new survey.

The Planning Commissions view is based on the recent endorsement made by its panel of economists in which they used expenditures data of the latest official survey (Household Income and Expenditure Survey HIES 2005-06) but used the recent inflationary figures for projecting the population living below the poverty line up to 35 per cent against the official poverty figure of 22.3 per cent, which was basically found by the Musharraf regime in consultation with the World Bank, which the PPP government also endorsed by allowing to release it through the Economic Survey 2007-08.

It is a completely wrong methodology to compare apple with oranges, said one official and added the best way for resolving the issue was to wait for the latest data for the HIES survey and then making an analysis on the basis of recent inflation in order to come up with the latest official figures.

Officials having knowledge of poverty issues are saying that it was not the right thing to use expenditure data of 2005-06. The expenditure pattern of households may also have changed in the last three years, so it is not the right methodology to project the poverty figures.

However, when Chief Economist Planning Commission and Convener of the panel of economists, Dr Rashid Amjad, was contacted for comments, he said there were two estimates on the basis of 2004-05 survey in which the official circles were estimating poverty at 23.9 per cent while the World Bank had estimated poverty at 29 per cent by using another methodology.

It is unbelievable that the poverty has come down from 29 per cent to 22.3 per cent in one year, he said and added that the Panel of Economists estimated 35 per cent population living below the poverty line by accepting the World Bank estimates of 2004-05. Yes, we used expenditure data of household for 2005-06 and applied the latest inflation figures in order to project the prevalence of poverty, he added.

While referring to the recent statement of Adviser on Finance Shaukat Tareen in which he estimated 50 million people living below the poverty line, he said the Finance Ministry had estimated 22.3 per cent population falling below the poverty line, which declined to around 30 per cent for projection purposes in accordance with the latest estimation. We estimate that the poverty is standing at around 35-36 per cent, he added.

When he was asked which figure will be inserted into the PRSP document  30 per cent or 35 per cent  on prevalence of poverty, he did not offer any answer. This correspondent also tried to contact the Planning Commission Secretary Sohail Safdar but he was not available.


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## Neo

*Plan for sale of Qadirpur gas field approved: Heavy Electrical Complex and SME Bank also to be privatised​*
ISLAMABAD, Nov 7: Prime Minister Yousuf Raza Gilani approved on Friday a plan to privatise Qadirpur gas field, Small and Medium Enterprises Bank and Heavy Electrical Complex.

The decision comes two days ahead of a scheduled meeting of the executive board of the International Monetary Fund (IMF) that will decide about a loan to Pakistan.

The decision, however, ignores strong opposition of trade unions of these units which have threatened to hold protests against the sale of what they said amounted to selling family silver.

Some political circles have criticised the plan to sell national assets at a time when it will be difficult to get a fair price.

While in opposition, the PPP itself had questioned the sale of state-owned units and called for a debate in parliament before any transaction.

Pakistan requires $3.5 billion to $4.5 billion to repay its debts during the current fiscal year. A similar deficit is expected for the next year as well. The government did not disclose the price it expects to get for the units.

The Cabinet Committee on Privatisation (CCOP) headed by the prime minister approved the plan for the sale of 37 per cent shares of Oil and Gas Development Company Limiteds Qadirpur gas field along with the transfer of operational control.

Stressing the need for taking all stakeholders on board, Mr Gilani urged the ministry of privatisation and the Privatisation Commission to address all concerns before the gas fields privatisation.

He said that quality players should be brought in for accelerating exploration and production.

Stressing the need for maintaining utmost transparency, Mr Gilani urged the ministry of privatisation to ensure that investors ensured creation of new job opportunities besides protecting jobs of existing employees.

The CCOP also approved the severance package agreed with the SME Bank employees and the banks valuation.

The banks transaction will include divestment of 93.88 per cent government shareholding along with the transfer of management control. The SME Bank has an unrestricted commercial banking licence.

The potential buyer will have to retain the name SME Bank Ltd. for one year after the sale and maintain its charter for at least three years.

The government of Pakistan will retain the right to appoint at least one director on the board of directors.

The CCOP also approved the valuation of Heavy Electrical Complex and directed the Privatisation Commission to go ahead with the bidding process.

The buyer shall continue to operate the companys manufacturing facility and shall not in any way abandon, cease to operate or otherwise shut down the existing company manufacturing facility.

The cost of Golden Handshake Scheme for permanent workers and Voluntary Separation Scheme for the executives will be shared equally by the new buyer and the Privatisation Commission. The bidder shall bid on the basis of audited accounts of June 2006 and may also factor in the latest un-audited accounts available prior to the bidding.


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## Neo

*Export of alcohol fetches $220m​*
KARACHI, Nov 7: The country earned around $220 million on export of little over 0.3 million tons of alcohol up to Oct 31 while another 50,000 tons of alcohol is expected to be exported during the November-December period.

The country produced around 2.661 million tons of molasses during 2007-08 sugarcane crushing season and on adding 50,000 tons of carry-over stocks at terminals and an equal quantity at the mills, the total available stocks of molasses stood at 2.761 million tons, industry and export sources said.

Since conversion ratio of molasses to alcohol stands at 5:1 (five tons of molasses required to produce one ton of alcohol), the estimated requirement of distilleries stood at 1.650 million tons for molasses.

Sources said alcohol prices in the world market remained on the upper side during 2008 which enabled the country to earn more foreign exchange through exports. After touching around $800 per ton, alcohol prices receded back to $600 per ton.

Consequently, on exporting around 312,000 tons up to October 31, 2008, at an average price of $725 per ton, the country managed to earn around $220 million through export of alcohol.

According to industry sources, the country exported around 1,90,585 tons of alcohol last year (2006-07) and earned $112 million at an average price $550 per ton.

With advent of each sugarcane crushing season, the country had been exporting millions of tons of molasses at throwaway prices to European countries and Japan, Mohammad Kasim Hashim, chairman, Terminal Association of Pakistan (TAP), said.

However, for the last several years it is being converted into three grades of alcohol i.e. fuel or anhydrous, neutral or extra neutral (ENA) and industrial or rectified ethanol (REN), Mr Hashim said.

Presently around 16 distilleries are operating in the country at 60 per cent capacity, he added.

The TAP chief further stated that as more and more distilleries are coming up every year, there has been a constant rise in export of alcohol.

During 2004, the country exported 99,711 tons of alcohol, but in the subsequent year, the figure jumped to 122,104 tons.

After exporting around 255,812 tons last year (2007), the country is now poised to export a record volume of 350,000 tons of alcohol this year (2008), he maintained.

He said around 9,000 tons of alcohol had been exported this year through ISO containers which were the latest method for haulage of liquid cargo.

Giving some details, Mohammad Kasim Hashim said that ISO containers/tank are filled with alcohol from distilleries and loaded on trailers for direct loading on to ships.

These tanks are air-tight and expensive because they are first cleaned by steam and are used only after survey is carried out.

He, however, said that the industry is encouraging use of ISO tanks because they are fast for haulage of liquid cargo and are also easy to handle.

Presently they are mostly reaching Dubai, but in coming years will encourage their use for Middle East and Africa, he added.

Export of alcohol is being hindered by congestion at the Karachi Port where tanker ships have to wait for their turn for several days, resulting in heavy demurrage charges.

This is also draining out valuable foreign exchange because demurrage is paid in dollars, TAP secretary Sultan Ahmed complained.


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## Neo

*Pakistan losing jobs in ship scrapping: UN review​*
RAWALPINDI, Nov 7: While the boom in shipping is creating new jobs in shipbuilding countries of Asia, employment is lost in countries of the sub-continent, including Pakistan with high ship scrapping activity.

The latest review of Maritime Transport released by the United Nations Conference on Trade and Development (Unctad) says shipping operators faced with considerable losses may also decide to scrap older tonnage, which has potential implications for steel prices as well as for jobs in major ship-breaking nations.

Such intensified ship-scrapping activities pose further challenges for safety, health and environmental conditions in the countries of the sub-continent. The trend in the demolition and recycling of ships is correlated with the trend in the delivery of ships; while 2007 saw record highs in new buildings, it also saw record lows in demolitions.

In total, demolitions were equivalent to only 0.4 per cent of the existing world fleet. Tanker tonnage continues to assume the highest share among the vessel types demolished in 2007, with 2 million deadweight ton (DWT), corresponding to half the years total.

The category of other vessel types increased its share to almost half, reaching 1.9 million DWT in 2006, while hardly any dry bulk carriers were demolished in 2007, and a reflection of the high demand for older tonnage of this type of vessel, which is used to carry the main dry commodities, including grains.

The average age of demolished ships in 2007 was highest for general cargo vessels (34.9 years), followed by tankers (31.4 years), containerships (29.6 years) and dry bulk carriers (29.1 years). For all vessel types, the average age at demolition has increased significantly since the beginning of the decade, albeit with some fluctuations.

In general, scrapping activity is negatively correlated to developments in freight rates, as high freight rates reduce the economic interest of owners to sell their vessels to scrap yards.

The Unctad report shows that international seaborne trade surged to record levels last year but has since declined because of the financial crisis, jeopardising the health of many developing countries, especially those that depend on commodities.

The review of the maritime transport finds that seaborne trade surpassed 8 billion tons last year and reached a peak at the start of this year.

But the report highlights that the Baltic Dry Index (BDI)  an indicator that predicts future economic activity by measuring global supply and demand for the commodities shipped aboard dry bulk carriers  declined by over 90 per cent between May 2008 and early in October.

Such a decline indicates that the unfolding financial crisis has spread to international trade, with negative implications particularly for commodity-reliant developing countries.

While a drop in fright rates would be an immediate effect of a falling BDI  which would be beneficial for exporters or importers of food and commodities  a declining index is also accompanied by reduced demand for shipping services, increasing the effects of the financial crisis and global demand for goods.

The report reveals that by 2008 the total world merchant fleet had expanded by 7.2 per cent to reach 1.12 billion DWT. Likewise, the order booked for new vessels in 2008 was at its highest level ever, with over 10,000 ships, marking a 28 per cent increase on the current merchant fleet.

In the meantime, the declining BDI has also led international port terminal operators to announce the suspension of some major port expansion plans owing to the foreseen decline in demand for shipping services.

With more than 80 per cent of international trade in goods carried by sea, and an even higher percentage of developing-country trade carried by ships, the review of maritime transport, an annual publication prepared by Unctad, is an important source of information on this vital sector.

The challenge for developing economies remains how to achieve or maintain revenue collection and provide security procedures whilst financing change and reducing bottlenecks. Ports are facing increasing demands for a quick turnaround of vessels from customers with ever increasing size of ships.

Improving turnaround time by increasing port performance is, however, no easy task, for the main bottleneck is in crane handling. Ports have not made any significant breakthroughs in container handling, even with the arrival of tandem lift and triple lift cranes.

Noting that port developments around the world continue at an uneven pace, the report welcomed that in Pakistan, plans were announced to dredge the Port Qasim to 10.5 metres, while HPH was to build a new container terminal in Karachi.


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## Neo

*$9bn IMF loan over two years​*
** Official says Pakistan will get $1.5bn now, remainder in quarterly instalments 
* IMF to ask govt to cut deficit, improve tax collection​*
LAHORE: Pakistan is likely to sign a $9 billion agreement with the International Monetary Fund (IMF) next week to come out of its economic crisis and shore up its dwindling foreign exchange reserves. 

The agreement is expected to be signed between November 10 and 12, Dawn News quoted an unidentified official as saying on Friday. 

According to Prime Ministers Adviser on Finance Shaukat Tareen, Pakistan needs $10 billion to $15 billion to avoid a balance of payments crisis and make adjustments over the next two years.

According to the channel, the official said though the IMF had not announced the size of the aid package, Pakistan would get about $9 billion over two years. 

He said Pakistan would get $1.5 billion immediately while the remaining amount would be received in quarterly instalments. 

The IMF is expected to ask the Pakistani government to cut fiscal deficit, improve tax collection and reduce the current account deficit, the channel said. 

Pakistan needs $3.5 billion to $4.5 billion quickly to fill a financing gap.

Total foreign reserves, including those held by commercial banks, have fallen sharply from $16.5 billion in October 2007 to $6.76 billion on November 1, of which the State Bank of Pakistan accounted for $3.53 billion.

The State Banks reserves are less than Septembers total imports of $3.807 billion.

Big payments for oil and wheat have been major factors behind Pakistans widening trade deficit.

The government is also hoping for assistance from the Friends of Pakistan forum  consisting of China, Saudi Arabia and the United States - which is due to meet in Abu Dhabi on November 17.

Pakistan last entered an IMF programme in December 2001, when it was granted a $1.5 billion poverty reduction and growth facility. It received $1.26 billion under the three-year programme but declined the last two tranches in November 2004.

In an interview with Reuters, Tareen said Saudi Arabia had given a positive response to a Pakistani request for crude oil on deferred payments but had yet to decide how much it could give. Pakistan imports about 82 percent of its crude oil from Saudi Arabia. daily times monitor


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## Neo

*China to help agri sector in research, technical areas​*
KARACHI: China will help to broaden the long-term scientific collaboration in research and technical areas in agriculture sector as a Memorandum of Understanding (MoU) has already been inked in this regard.

According to a member on crop sciences PARC, Dr Ghulam Jilani on Friday, the Pakistan Agricultural Research Council (PARC) and Chinese Academy of Agricultural Sciences (CAAS) would co-operate in water resource management, hybrid cotton, maize, horticulture and other transgenic crops.

He said CAAS and the PARC under Ministry of Food, Agriculture and Livestock (MINFAL) reaffirmed their mutual interest focusing on the broad areas of science and technology. These departments are focusing on the natural resources for preservation and profitability of agriculture in both the countries, he added. 

The agro-economic experts, PARC and CAAS scientists will pay reciprocal visits to collaborate in new areas of research or plan for additional long-term exchanges, Dr Jilani added. He said the PARC and CAAS would work for mutual benefits in animal science, plant science, soil science, agriculture, natural resources management and other related fields with mutual consultation. The MoU is intended to serve as a framework for discussion and co-ordination in matters related to agriculture and natural resources managements. It will also facilitate collaborative activities between both sides in matters of science and technology.

The individual projects should be mutually developed by PARC and CAAS and their institutions will co-operate on the basis of specific research and development besides the CAAS may arrange short and long-term academic training in its institutions in various areas for PARC, he added.

The Chairman Fruit and Vegetable Processors and Exporters Association (FVPEA), Mateen Siddiqui said both the countries would encourage and facilitate direct contact among the relevant institutions and specialists and work toward long-term co-operation in agricultural research, exchanges, training and development programmes.


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## Neo

*Govt approves 3 projects worth Rs 17.75 billion​*
** Other important projects to be approved in ECNEC meeting today​*
ISLAMABAD: The government approved projects of national importance with a total cost of Rs 17.75 billion. The projects are 'construction of 100 delay action dams in Balochistan: Package-I (20 dams)', 'construction of Shadi Kaur dam, appurtenant works and related irrigation system', 'revamping/rehabilitation of irrigation and drainage systems'.

These projects were approved in the Executive Committee of National Economic Council's (ECNEC) meeting held on Thursday while some of the important projects would be approved today (Saturday). 

The ECNEC approved 'Construction of 100 delay action dams in Balochistan: Package-I (20 dams)' at a cost of Rs 2.15 billion. Under this project, 20 delay action dams will be constructed in districts of Awaran, Kallat, Bolan, Chaghi, Gwadar, Khuzdar, Killa Abdullah, Killa Saifullah, Kech, khuzdar, Lasbela,,Loralai, Mastung, Musakhel, Panjgoor, Dishin, Quetta, Washuk, Ziarat and Zhob of Balochistan. 

The project on completion would add 55,000 acre feet (AF) of additional water, which would benefit 35,000 acres of agricultural land. It would also recharge the groundwater, which would help to maintain the water table. More than 13,000 households would benefit from the project. The dams would be completed in three years. 

During construction of dams more than 5,000 skilled and non-skilled personals would be engaged from the province of Balochistan providing livelihood for the local community. Gross value of the production of crops would increase from Rs 17.42 million to Rs 389.53 million yearly and per acre income would increase from Rs 12,778/ to Rs 25,650 yearly. The project would be financed by the federal government. The ECNEC directed fast track completion of the project with international financial assistance and additional resource mobilisation for the project.

The ECNEC, on first day of the meeting also approved 'Construction of Shadi Kaur dam, appurtenant works and related irrigation system' at a cost of Rs 2.637 billion. The dam would be constructed at 50 km north of Passni, district Gwadar with storage capacity of 37,000 AF. The safety of the dam would be ensured by a proper engineering design. The construction of the dam would provide water for irrigation of 7,600 acre of land for crop production. The project would also be a source of drinking water for 15,000 persons. As the dam would store the floodwater hence it would also mitigate the flood hazards. The project would be completed through 260 professionals and an additional 10,390 full time jobs will be generated for the local community after completion of the project. The ECNEC desired to complete the project on fast track basis and to explore the possibility of international financial assistance and additional resource mobilisation for the project. 

The meeting also approved 'Revamping/rehabilitation of irrigation and drainage systems in Sindh' project costing Rs 12.963 billion. The main objective of the project is to improve the operational efficiency by ensuring safety of the canal system and delivering due share of water to the farmers at the tail reaches (end of the canal). This will be achieved through strengthening of canal and drain banks (8,082 km long), silt clearance of branches (3,635 km), stone pitching of canal bank (380 km), repairing or remodeling of 241 regulators, rehabilitation of 201 bridges, repair and extension of 11,725 modules, revamping and rehabilitation of Salinity Control and Reclamation Project (SCARP) tube-wells and re-sectioning of 568 km surface drain. The ECNEC directed completion of the project on fast track basis and to explore the possibility of international financial assistance and additional resource mobilisation for the project. 

The meeting also approved several other important projects, and some will be approved today (Saturday). Prime Minister Syed Yousuf Raza Gillani will chair the meeting.


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## Neo

*'Pakistan accepts most of IMF terms' ​* 
ISLAMABAD (November 08 2008): Pakistan has agreed with most of the conditionalities of International Monetary Fund (IMF), and its executive board is expected to meet next week to take final decision to help Pakistan in paying foreign debts. Official sources said that IMF executive board would meet some time next week. There is a possibility that the board will meet on November 10. However, the IMF has, so far, given no schedule of the meeting on its website.

Under the standby facility, Pakistan has requested for a loan of $9 billion for the next two years. Sources said that the board would meet just a few days ahead of the scheduled meeting of the 'Friends of Pakistan' (FOP) in Abu Dhabi. Some circles were of the view that Pakistan would not get more than $7 billion. Pakistan needs over $4 billion for payment of its debts. The amount is also needed to improve the country's falling forex reserves.

The IMF wants Pakistan to stop providing foreign exchange by the State Bank in opening LCs at the time of oil import, and abolishing the intervention in currency market by the central bank. These two conditions were put by the IMF, and the government accepted these conditions, sources said.


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## Neo

*Saudi Arabia likely to provide $4 billion and oil facility ​*
RIYADH (November 08 2008): Saudi Arabia has agreed to give $4 billion to Pakistan, and provide oil facility on one-year deferred payment, sources here said. During the meeting between King Abdullah bin Abdul Aziz and President Asif Zardari, Saudi Arabia agreed to provide economic assistance and oil on one-year deferred payment.

Sources said a formal announcement in this regard would be made at the meeting of the 'Friends of Pakistan', to be held on November 17 in Abu Dhabi. They said that Pakistan aims to accumulate $25 billion, which is being considered enough for bringing the economy back on track for the next 10 years.

'Moreover, King Abdullah during the one-on-one meeting with Zardari had also agreed to provide oil to Pakistan on one-year deferred payment, for which the agreement is expected to be signed soon.

Sources said that Pakistan needed more than $5billion, within a month, to meet its international obligations. 'The 'Friends of Pakistan' nations include the US, UK, France, Saudi Arabia, China, the UAE and several other countries, which will be meeting in Abu Dhabi on November 17 to devise ways for stabilising Pakistan's economy.


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## Neo

*Chinese focus on Pakistani market ​* 
KARACHI (November 08 2008): China considers Pakistani market a source of great opportunities and its key areas of focus and exploration in Pakistan include oil exploration, trade and investment in refining and services sector, according to official sources here. China is a global driver of economic growth and has undergone massive growth in productivity.

Its increasing linkages with international economy have also led to important transfer of technology, especially in developing countries such as Pakistan and other countries in South Asia.

Leading Chinese companies operating in Pakistan include white goods maker Haier, Shenzhen based telecommunications firm ZTE, Shanghai based electronic giant SVA, and a number of motorcycle companies from Chongqing. The demand for Haier's quality electrical appliances exists all over the world. According to experts, "Haier is no longer a simple label; its service and management will lead the modern Chinese economy to create more well-known brands."

Bilateral trade between China and Pakistan was more than $7 billion in 2007, and the two sides have set a target of $15 billion annually by 2011, according to Xinhua news agency. China is the second largest economy in the world with a GDP of over $6.9 trillion (2007), measured on purchasing power parity (PPP) basis. "China would grow by more than 11 percent, and India at around nine percent this year, with almost equal rates in 2008," according to Rodrigo Rato, Managing Director of the International Monetary Fund (IMF).

During his recent visit to China, Pakistan's President met chiefs of China National Petroleum Corporation (CNPC), China Mobile, Huawei Technology and ZTE Electronics. These leaders vowed to enhance bilateral economic co-operation between industrial and business communities. The two countries will focus on enhancing 'connectivity' by developing new communication links including fibre optic links, according to Pakistan-China recent joint statement.

China will launch a telecommunication satellite, 'PakSat-1R' for Pakistan in 2011, according to Xinhua report. Pakistan will use this satellite for domestic telecommunication and broadcast services. The contract for this initiative was sealed on October 15, 2008 in the presence of both Presidents from China and Pakistan.

CNPC "is already carrying out large-scale construction in Pakistan," with over 300 employees working in Pakistan, said the Director General of CNPC, Zhang Xin. Telecommunication is a booming sector in Pakistan, and has immense support from China's leading telecommunication companies to enhance and improve service in the country. China Mobile has invested $800 million in its first international venture Zong, and plans to expand its project further to expand Zong network in Pakistan.

Huawel Technology is the Number One telecom solution provider and is the only vendor serving all the mainstream telecom operators in Pakistan including PTCL, Ufone, Mobilink, Telenor, Warid, Zong, etc.

Also, San Ya Fang has donated equipment valued at one million dollars for establishment of e-government project initiative taken by Pakistan Government. A growing priority for Chinese leaders is scientific and technological modernisation. China's key areas of interest include microelectronics, telecommunications, computers, automated manufacturing, and energy.


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## Neo

*'Energy crisis to be overcome with increased power generation' ​*
ISLAMABAD (November 08 2008): Director General Energy Management Pepco Tahir Basharat Cheema on Friday said a number of power generation projects are at various stages of completion to meet the soaring consumer demand. Talking to a private TV news channel, he said energy crisis could be overcome with increase in generation and control of wastage of electricity with a range of conservation measures.

The DG Pepco said a number of rented power plants and IPP run plants would be brought into operation. A 1000-megawatt power plant acquired on one year rent would be available for power generation from April 2009 to June 2009. A set of hydel power plants with the generation capacity of 516 megawatts will become operational in coming months.

Fifteen IPPs are working on high efficiency thermal power plants having generation capacity of 2868 megawatts. One of them, Attock power plant will start working soon followed by two plants in Nandipur and Chechokimalyan. Building of micro hydel power projects is also continuing, he added.

The government has set its eyes on the Thar coal project, which has reserves of 184 billion tonnes of the mineral resource enough to supply 100,000 megawatts for more than 400 years. The government has set up Thar Coal Authority with the objective to produce 10,000 megawatts of low cost electricity.

The DG Pepco said work is continuing on five hydel power projects. Neelum Jhelum and Diamer Bhasha dams would produce 1000 megawatts after their completion. Alternate Energy Development Board is working on a project to produce 350 megawatts in next few years. He said although Pepco is now not resorting to loadshedding but the energy crisis has not diminished yet.

He said power sector is intensive needing massive investment but this vital sector was ignored in the previous years. In developing countries, he said power load growth of two to three percent is seen. However in developed countries, mostly there is negative load growth because they are moving towards energy efficiency by increasing production and reducing usage. In Pakistan energy demand grew by 10 percent.

He said during the previous years it was decided that new thermal plants would not be installed by Wapda but by the private sector. Private power infrastructure was established through one widow operation to encourage private investment but this measure could not enhance electricity production, he added. Experts have warned since 2005 about the energy crunch. The government was banking on various under construction power plants to save country from power shortages.

He termed complacency as the main reason for the power crisis, which stifled the economy. He said the government gave relief to the consumers who paid 60 percent of the bills last month. The DG Pepco said the government is introducing a new concept of smart metering using digital meters, which are interactive and accurate. Old meters were tardy and slow and people were having complaints.


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## fatman17

*NDU seminar: &#8216;Economy facing serious macroeconomic challenge&#8217;*

Staff Report

ISLAMABAD: The state of economy of any country has a direct bearing on the security and sovereignty of that country, said National Defence University (NDU) President Lieutenant General Muhammad Hamid Khan on Friday.

According to a press statement of Inter-Services Public Relations, Khan said this while addressing a daylong seminar on &#8220;Pakistan&#8217;s Economy: Challenges and the Way Forward&#8221; held at the NDU and attended by representatives from various ministries, divisions, departments, armed forces of Pakistan, academia and think tanks, course participants and faculty members of the NDU.

He said that Pakistan&#8217;s economy was under great pressure facing a serious macroeconomic challenge that had been caused by both exogenous and endogenous factors. 

He highlighted role of the NDU as a premier institution of learning and research for senior officers of the Pakistani armed forces, civil services and allied officers. 

Noted economists Dr Ishrat Hussain, Sartaj Aziz, Dr Mirza Ikhtiar Baig, Saeed Ahmed Qureshi, Kaiser Bangali and Riaz Riazuddin were among the speakers while Mueen Afzal was moderator of the event.

The seminar focused on the theme &#8220;Pakistan&#8217;s Economy&#8221; in three sessions. 

&#8220;Analysing Macroeconomic Strategies/Policies with Focus on Performance and Challenges,&#8221; &#8220;Strategy to Deal with Macroeconomic Challenges&#8221; and &#8220;Economic Governance&#8221; were the sub themes.

It was part of the series of conferences, seminars and workshops, which had been regularly held on different subjects of national, regional and international interest. Such events provide a forum to seasoned economists to review issues pertaining to Pakistan&#8217;s economy, evaluate existing and emerging challenges and propose a way forward.

The seminar was designed to be interactive through presentations by eminent economists, comments by the moderator followed by question and answer sessions. The discussion held was frank and highly informative for the government representatives as well as the academia.

http://www.thedailytimes.com.pk


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## fatman17

*USDA Attache: Pakistan's 2007-08 Rice Exports Surge *

Editor: Sharon Li

6 Nov 2008

Unfettered by government intervention or an export ban, Pakistan rice exports surged in MY 2007/08 to an estimated at 4.2 million metric tons, positioning Pakistan to overtake the United States as the world's third largest exporter of rice, according to a U.S. Department of Agriculture attache report posted Wednesday on the Foreign Agricultural Services Web site. 

Access to last season's strong international prices encouraged farmers to move additional planting area to rice, and as a result, MY2008/09 rice production is estimated to reach a record 6.3 million tons. 

In light of this year's bumper crop and the softening of international prices, the Government of Pakistan has announced its intention to purchase one million tons of domestic paddy in an effort to support local prices. The trade is wary of any government intervention in this highly successful, private-sector led market and has responded cautiously to the government's rice procurement scheme. 

RICE Production 

Based on Government of Pakistan (GOP) data, Post's estimate of MY 2006/07 rice production was increased (5 percent) to 5.45 million metric tons (MMT), the MY 2007/08 production estimate was increased (4 percent) to 5.7 MMT, and the MY 2008/09 estimate increased by (12.5 percent) to a record 6.3 MMT. An expansion in area planted to rice coupled with timely rains and reduced pest activity contributed to this year's record crop production level. 

In response to this year's bumper crop and the tempering of international prices, the GOP has announced a procurement scheme to purchase one million tons of domestic paddy in an effort to support prices received by farmers. The state owned organization Pakistan Agricultural Services and Storage Corporation (PASSCO) will purchase the paddy at a support price of PKR 700 per 40 Kg (USD 219/MT: 1USD=Rs 80) for coarse varieties. A paddy support price for "Super Basmati" was announced on October 30, 2008 at PKR 1,500 per 40 Kg (USD 468/MT) and a paddy price for Basmati 385/2000 of PKR 1,250 per 40 Kg (USD 390/MT). The Rice Exporters Association of Pakistan (REAP) has expressed concern about the government's decision to intervene in this highly successful, private-sector led market. 

Consumption 

Strong international demand and prices, coupled with the government's establishment of a minimum export price (MEP) contributed to a steep increase in 2008 domestic rice prices. In September 2008, retail rice prices were about 60 percent higher than last year's prices. As a result, Pakistan rice consumption in MY 2007/08 is estimated at 2.0 MMT, down about 18 percent from the previous year. Consumption is expected to rebound somewhat (10 percent) in MY 2008/09 and is estimated at 2.2 MMT. 

Trade 

In response to high international prices Pakistan rice exports surged in MY 2007/08 to an estimated 4.2 MMT, positioning Pakistan as the world's third largest rice exporter. Traders estimate that this year's rice export earnings could top out at more than $2 billion, likely making Pakistan the world's second largest rice exporter on a value basis. Rice exports are projected to remain strong in MY 2008/09 and are estimated at 4.0 MMT. 

Stocks 

Due to higher exports, MY 2007/08 ending stocks are projected to decline and are estimated at 200,000 metric tons. In response to this year's record crop production and the taming of international rice prices, stocks are expected to recover in MY 2008/09 and are estimated at 300 TMT. Here-to-fore, stocks have been held in relatively small lots by the private sector. It is unclear at this point; however, how the government's new procurement scheme will affect the country's stock situation in the coming year. 

http://www.news.alibaba.com


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## Neo

*Friends ask Islamabad to first move ​* 
*IMF to qualify for assistance​*
Sunday, November 09, 2008

ISLAMABAD: Friends of Pakistan including Saudi Arabia have asked Islamabad in plain words to first formally move International Monetary Fund some time during November 10-15 to qualify for their formal financial commitments, said a senior official at Ministry of Finance.

Pakistan after exhausting its endeavour to get maximum relief from Saudi Arabia, has also decided to formally move the International Monetary Fund seeking 500 per cent of its quota that stands at $1.5 billion to bail out its ailing economy, a senior government official told The News.

Earlier the top leadership of the country had decided to formally place the request with IMF after the Friends of Pakistans meeting that is to be held in Dubai on November 17, but in the new scenario particularly after the visit of President Asif Ali Zardari to Saudi Arabia, the government has made up its mind to formally move the IMF sometime between November 10 to November 15 to avoid any default-like situation, as net foreign reserves of State Bank of Pakistan have reduced to $3.4 billion as on November 4.

It is pertinent to mention the IMF executive board meeting is to start on November 10 and Pakistan cannot afford to lose opportunity of seeking IMFs loan.

According to the sources, during the recent one-on-one meeting between President of Pakistan and King of Saudi Arabia, the Kingdom promised the six month oil facility on deferred payment which would be announced in the Friends of Pakistans meeting. 

However, according to some informal communications with Friends of Pakistan so far made, the message has been given to Pakistan that Islamabad should first formally move the IMF, then they would come up with formal commitments in the meeting scheduled for November 17 in Dubai, the official said.

Pakistan ailing economy, with fast dwindling net foreign reserves of State bank of Pakistan that have reduced to $3.4 billion as on November 4, is left with no option but to receive the IMFs soft terms loan.

The official said as on November 4, the foreign reserves stood at $6.7 billion out of which State Bank of Pakistan possessed $4.199 billion including CRR (cash reserve requirement) deposits amounting to $729.6 million, while the commercial banks had $3.2 billion. If the CRR deposits are excluded, the net foreign reserves that State bank of Pakistan has, stand at $3.4 billion.


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## Neo

*Pakistan to raise tax target to Rs1.36 trillion ​* 
Sunday, November 09, 2008

ISLAMABAD: The International Monetary Fund (IMF) and Pakistani authorities have agreed to jack up annual tax collection target by Rs110 billion from Rs1.250 trillion to Rs1.360 trillion for 2008-09 by initiating effective audit to find tax dodgers and improving its management, it is learnt. Pakistan is likely to get a bailout package worth $7.4 to $9.6 billion for the next 21 months by next week after approval of the Board of Directors of the Fund. 

Pakistan will get front loaded programme after formally approaching the IMF as its first installment is expected to be around $4 billion, which will be released soon after approval of its board. 

On expenditure side, defence expenditure will be slashed as depreciation of the rupee against the dollar has negatively impacted overall defence budget. 

The depreciation of rupee has resulted in a growing bill on account of foreign purchases by 30 per cent but the government will not increase its envisaged allocation for the current fiscal year, said a senior official involved in recent Pak-IMF talks while talking to The News here on Saturday. 

The major cut on expenditure side will be made on development budget which will be reduced substantially, said the official and added that the development budget would be slashed down by Rs100 billion. 

The basic purpose of IMF is to reduce the fiscal deficit by bringing it down from 7.4 per cent of the GDP in the last fiscal year to curtail hovering around in the range of 4 per cent of the GDP for the current fiscal year. 

When the official was asked about logic being presented by the IMF for increasing tax revenues, he said tax target is fixed on the basis of nominal growth by calculating value addition in various sectors of the national economy and existing inflation. 

The nominal growth is likely to remain in the range of 26 per cent to 27 per cent for the current fiscal year. 

The FBRs tax target of Rs1,250 billion was fixed on the basis of 18 per cent nominal growth by estimating growth at 5.5 per cent and inflation at 12 per cent. But now the nominal growth is estimated to go up so there is opportunity for collecting additional Rs110 billion in 2008-09, said the official. 

To another query regarding any taxation measures within the ongoing fiscal year for collecting additional Rs110 billion, the official said the issue of imposition of agriculture income tax and bringing services sector into the tax net was discussed. 

But these steps required time to materialize it, the official said and added that the provinces as well as feudal lobby would oppose any move to move ahead with the desired objectives. It will be an achievement to finalize a mechanism in the next four to five years for collecting income tax on agriculture income. 

The Central Excise Duty (CED) on certain services will be an option, said the official but added that there was no need to take new measures for collecting additional Rs110 billion in order to jack up the annual target up to Rs1.360 trillion.


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## Neo

*Gem Bazaar in Peshawar ​* 
Sunday, November 09, 2008

KARACHI: Pakistan Gems and Jewellery Development Company (PGJDC) is organising a Gem Bazaar at its newly-built Gem Exchange at Khayal Arcade Namak Mandi, Peshawar from Friday.

The bazaar would be inaugurated by Vice Chancellor University of Peshawar, Professor Dr Azmat Hayat Khan. This is the third of its kind, which will provide a lucrative opportunity and platform for those interested in buying and selling gemstones and mineral specimen.

A variety of gemstones and mineral specimen will be displayed under one roof where interested buyers will have maximum exposure to a wide range of quality display. PGJDC CEO Fawad H Khan said that the event would be organised in a professional manner, which would ensure high security in trading. 

This will be an ongoing feature, which will contribute immensely to continuous efforts that PGJDC is putting in for development of gems and jewellery industry. He said such initiatives by the company will boost confidence, motivation and trust in PGJDCs initiatives for the development of the industry. It will further enhance the value chain productivity of the sector.


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## Neo

*Ecnec approves $400m ​* 
*Sindh Cities Improvement Programme​*
Sunday, November 09, 2008

ISLAMABAD: The Executive Committee of the National Economic Council (Ecnec) has approved the Sindh Cities Improvement Programme worth US $ 400 million.

Of the total expenditure, the Asian Development Bank would provide $ 300 million whereas the Sindh government would afford $100 million, said a Planning Commission press release issued here on Saturday.

The project is aimed at improving the urban infrastructure and services, environment, public health and creating economic opportunities for the people of the province through an integrated programme of reforms and investments.

The project will provide clean drinking water in areas where its availability is inadequate and develop sanitation facilities to improve environmental health in Sukkur, New Sukkur, Larkana, Khairpur, Shikarpur and Rohri.

The project will be completed in 10 years.

The Ecnec also approved the conversion of the Mirpurkhas-to-Khokhropar meter gauge section into broad gauge and extension up to the Indian border.

This is a revised project that envisages conversion of 135 km long existing meter gauge railway track into a broad-gauge track from Mirpurkhas to Khokhropar.

The link connects the existing Karachi-Hyderabad-Mirpurkhas track with the Indian railways network.

Ecnec also approved the Japanese-assisted rural road construction project phase-II.

The total cost of the project is Rs 5,114 million. Out of which, the Japan Bank International Cooperation will provide a loan of Rs 4,729 million whereas the Sindh government will afford Rs 385 million.

Under the project, 500 km of rural roads in various districts of the province will be constructed in five years.

The project is aimed at supporting rural transformation and agricultural development, reducing the transport cost and facilitating efficient movement of goods and people.

The Ecnec also approved a project for training and support of the Levies forces in Fata. The total cost of the project is Rs 558.89 million. Out of which, the US grant includes Rs 546 million whereas Rs 12.89 million is the local component.

The project envisages provision of essential infrastructure to law-enforcement agencies in areas of strategic significance.

The Ecnec also approved a project worth Rs 657 million for the promotion of primary education in Fata.

With the assistance of the World Food Programme, low-literacy rate will be addressed and participation rate at primary level will be improved in the Mohmand Agency and Landi Kotal Tehsil of the Khyber Agency.

The Ecnec has directed the National Highway Authority (NHA) to construct roads and bridges through public-private partnership.

Besides, it approved construction of a new bridge over the Sutlej River at Emanwala near Multan. The bridge will connect Multan with N-5.

The council further approved construction of a bridge over the Chenab River at Head Muhammad Wala, Multan. The total amended cost of the project would be Rs 2,376.8 million and it would be completed within three years.

Rehabilitation of the Larkana-Moen-Jo-Daro Road at a cost of Rs 1,931.1 million was also approved.

Further, New Mineral Survey Scheme (NMSS) will be launched. The cost of the scheme is estimated at Rs 1,085.39 million, including a foreign exchange component of Rs 486.01 million. The projected is being sponsored by the Pakistan Atomic Energy Commission for the exploration of nuclear mineral resources.

Development projects worth Rs 15 billion were also approved for Azad Jammu and Kashmir.

The Ecnec also approved the Rawalakot City Development project worth Rs 8 billion. Out of which, Rs 4 billion would be provided by the Saudi government in the form of soft loan.

The council also approved setting up of the Pak-China Friendship Centre in Islamabad at a cost of Rs 2,519 million.


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## Neo

*Pakistan, Japan to hold talks on FTA & SEZs​*
TOKYO: A 10-member Joint Study Group (JSG) of Pakistan and Japan comprising prominent business community will hold talks here from Monday for promotion of trade and investment opportunities between the two countries, said a senior official at Pakistan Mission. Last year, the JSG has been established by the Government of Pakistan and Japan, said Economic Minister at Pakistan Mission Iftikhar Babar while talking to APP. The JSG includes prominent businessmen drawn from chambers of commerce and industries of both the countries and had been assigned the task to examine and submit recommendations on rapid industrialisation, enhance trade and investment.


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## Neo

*Money laundering scam worth $10bn ​*
*Khanani and Kalia arrested​*
** Three other partners also held 
* Nine NADRA officials arrested for making fake ID cards​*
By Faraz Khan

KARACHI: Munaf Kalia and Javed Khanani, partners in top moneychanger firm Khanani and Kalia International, were arrested on Friday on charges of illegal transfer of about $10 billion out of Pakistan.

The Karachi and Lahore wings of the Federal Investigation Agencys (FIA) Crime Circle also arrested three other partners in the company  Saleem, Yousuf Kalia and Anees Rajput  after the federal government ordered a crackdown against illegal transfer of foreign currency also known as Hundi and Hawala. 

At least nine officials of the National Database and Registration Authority (NADRA) were also arrested from various offices including those in Kemari, Lyari, Awami Markaz and the DHA on charges of making fake identity cards.

An FIA official told Daily Times that the team raided the office of Khanani and Kalia International on II Chundrigar Road at around 9pm on Friday. They arrested Javed Khanani, a director of the firm, and seized computers, records and cash.

Raids were then made for Munaf Kalias arrest, the official said, and a warning was conveyed to him that his family would be held if he did not surrender. Munaf Kalia turned himself in later on Friday, and the FIA official said he was being questioned.

He said the government had sealed offices of the company all over the country and stationed FIA staff outside them. 

The government has also formed four teams to make more arrests. Officials denied reports that several suspects had been put on the exit control list.

FIA Director General Tariq Pervez told Dawn News the agency had been monitoring Khanani and Kalia for two months and its franchise in Gujranwala had a special counter for Hawala transfers. 

According to an APP report, FIA Director Zubair Mehmood told a delegation of moneychangers that records of Dunya Exchange in Gujranwala showed illegal transactions of billions of rupees through Khanani and Kalia, and that the record in the Karachi office provided evidence.

He said that the State Bank, being a licence-issuing authority, had a right to take action against moneychangers involved in illegal transfers. Saturdays arrests were made after significant evidence was found, he said, adding, Innocent moneychangers will not be harassed.

Malik Bostan, representative of the Forex Association of Pakistan, said the association would turn in anyone found involved in illegal transfers. The FAP collects $7 billion foreign exchange annually and gives it to the government. If we are targeted and harassed, this money will not be received, he said.


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## Neo

*Foreign investment of $15,574 withdrawn equity market ​* 
KARACHI (November 09 2008): An outflow of $15,574 of foreign investment was witnessed the country's equity market during the outgoing week ended November 07, 2008. According to the National Clearing Company of Pakistan Limited (NCCPL) data, the cumulative figure of this mode of financing stood at negative $337.778 million in the current calendar year January 01, 2008 to November 07, 2008.

"The foreign investors opted to offload their holdings during the week on their concerns over the prevailing economic situation and uncertainty on removal of floor mechanism", analysts said. The week started on a positive note as an inflow of $182,643 was witnessed on Monday, however, this trend could not continue as the foreign investors withdrew $29,312 on Tuesday.

The negative trend continued as an outflow of $252,913 was recorded on Wednesday and the offshore investors withdrew $201,288 on Thursday. A positive trend was witnessed on the last day of the week as an inflow of $284,175 was seen on Friday.


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## Neo

*Ecnec approves 11 projects​*
ISLAMABAD (November 09 2008): The Executive Committee of the National Economic Council (Ecnec) has approved eleven projects in infrastructure, education, energy, security and rural uplift sectors in its meeting held recently, sources told Business Recorder on Saturday. It has given go-ahead for setting up of Pak-China Friendship Centre, costing Rs 2519 million as a gesture to cement the deep-rooted Sino-Pak ties.

A Chinese company has started construction of the centre and Rs 287 million were spent on purchase of land and preliminary works. The centre will include hall, exhibition centre, multipurpose hall, hostel and a library. Basically, the project is being undertaken to promote tourism through projection of culture.

It will also provide opportunities for income generation along-with promoting Pakistani culture through institutional arrangements. Development projects for Sindh: The Ecnec also gave go-ahead for Phase-II of Japanese-assisted rural road construction project under which 500 km rural roads in various districts of Sindh will be constructed 2008 to 2013.

The project will cost Rs 5114 million, of which Japan Bank International Co-operation (JBIC) will provide a loan of Rs 4729 million, whereas Sindh government will spend Rs 385 million. This project is continuation of an agreement between Pakistan and JBIC for construction of 3000 km rural roads in Pakistan.

The project will provide better access to market and alleviate poverty to improve socio economic condition of the poor people. It will also help reduce unemployment and under employment in the rural areas.

*SINDH CITIES IMPROVEMENT PROGRAMME:* To improve urban infrastructures for creating better economic opportunities in Sindh through reforms and investment, promoting services delivery system, costing $400 million, of which ADB will provide $300 million, whereas Sindh government will share $100 million.

The project will provide clean drinking water supply in areas where availability is inadequate and develop sanitation facilities to improve environmental health through increased investment in water supply and sanitation sub-sector in six secondary cities of Sukkur, New Sukkur, Larkana, Khairpur, Shikarpur and Rohri. It will be completed in 10 years and about 4 million people will benefit.

Similarly, Ecnec has approved revised projects for conversion of 135 km long existing metre gauge railway track into broad gauge track Mirpur Khas to Khokhropar. The link connects the existing Karachi-Hyderabad-Mirpur Khas with Indian railways network. The cost of the project will be Rs 1860.17 million.

*PROJECTS FOR FATA/NWFP:* The meeting also approved project for training and support of Levy forces in FATA at a cost of Rs 558.89 million, out of which US grant is Rs 546 million, whereas Rs 12.89 million is the local component. The project envisages provision of essential infrastructure to station the law enforcement agencies (Khassadars, Levies and FC) at strategic location at the junctions of FR Kohat, FR Peshawar and Khyber Agency to have integrated and co-ordinated force.

*PRIMARY EDUCATION IN FATA:* The Ecnec approved another project costing Rs 657.00 million for promotion of primary education, with the assistance of World Food Programme in Mohmand Agency and Landi Kotal tehsil of Khyber Agency in FATA.

Under this project, flour, vegetable oil and biscuits will be provided as incentive for parents to send their children for schooling. The donor agencies, especially World Food Programme is assisting Pakistan to achieve Millennium Development Goals (MDGs), universal primary education, implementation of Saarc action plan and reduction of gender gap.

*KARAKORAM INTERNATIONAL UNIVERSITY, GILGIT:* The meeting also approved establishment of Karakoram International University, Gilgit worth Rs 449.792 million. Presently, the university has no proper campus and it will be constructed in Gilgit to enhance the access of the people of the Northern Areas to higher education. The project will be funded through Federal PSDP.

*NEW MINERAL SERVICE SCHEME:* A scheme sponsored by Pakistan Atomic Energy Commission (PAEC) for exploration of minerals has also been approved by the Ecnec. The estimated cost of the project is Rs 1085.395 million, including foreign exchange component of Rs 486.018 million.

The project aims at establishment of additional Reasonable Assured Reserves (RAR) of uranium and other nuclear minerals to meet nuclear fuel requirements of the country to generate electricity. Under this project, detailed geological mapping, drilling, test-mining operations and collection of samples and their testing etc would be carried out. It would help in establishing techno-economic parameters of various mineral deposits in the country.

The survey will cover twenty (20) major geological rock formations located in Punjab, Balochistan, NWFP, FANA and FATA. It will be completed in five years (2008-13). Bagh City Development Project, AJK: For reconstruction and rehabilitation of earthquake damaged infrastructure the Ecnec has given approval of Bagh City Development project, costing Rs 7.00 billion as part of Erra's Urban Development Programme. The project will be implemented in 10 years in two phases.

Similarly, the Ecnec also approved Rawalakot City Development project worth Rs 8 billion, of which Saudi government will give 4.00 billion in the form of soft loan. The umbrella project includes 48 infrastructure development schemes seismic safety.

*NHA TO CONSTRUCT ROADS/BRIDGES THROUGH PUBLIC-PRIVATE PARTNERSHIP:* The Ecnec has approved construction of a 2-lane, 600 metres long bridge across the river Sutlej at Emanwala near Multan, worth Rs 1147.77 to be completed in 22 months.

The bridge will connect Multan with N-5 through the existing provincial road through Jalalpur Pirwala and Uch, whereas it will be maintained through toll tax. Similarly, the Ecnec approved construction of high level bridge over Chenab River Head Muhammad Wala, district Multan, at a cost of Rs 2376.8 million, to be completed in 3 years (2008-11).

*DUALISATION/REHABILITATION OF THE LARKANA - MOEN-JO-DARO ROAD: *The project has also been approved with a cost of Rs 1931.1 million to be completed in 22 months. The project includes upgradation of existing 2-lane road through 4-lane, including reconstruction of 8 bridges. The road connects Larkana city with Moenjodaro Airport.

NHA will execute the above-mentioned project and the project will be funded through federal/NHA PSDP subject to federalisation, otherwise 50:50 cost sharing will be done by federal and provincial government. IPDF will explore private sector investment for the project.

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## DarkStar

Neo said:


> *Gem Bazaar in Peshawar ​*
> Sunday, November 09, 2008
> 
> KARACHI: Pakistan Gems and Jewellery Development Company (PGJDC) is organising a Gem Bazaar at its newly-built Gem Exchange at Khayal Arcade Namak Mandi, Peshawar from Friday.
> 
> The bazaar would be inaugurated by Vice Chancellor University of Peshawar, Professor Dr Azmat Hayat Khan. This is the third of its kind, which will provide a lucrative opportunity and platform for those interested in buying and selling gemstones and mineral specimen.
> 
> A variety of gemstones and mineral specimen will be displayed under one roof where interested buyers will have maximum exposure to a wide range of quality display. PGJDC CEO Fawad H Khan said that the event would be organised in a professional manner, which would ensure high security in trading.
> 
> This will be an ongoing feature, which will contribute immensely to continuous efforts that PGJDC is putting in for development of gems and jewellery industry. He said such initiatives by the company will boost confidence, motivation and trust in PGJDCs initiatives for the development of the industry. It will further enhance the value chain productivity of the sector.



WAs there last year, absolutely useless exhibition. Hardly any buyers, mostly some touristic minded diplomats. Most of the stuff there was low grade, not befitting an international exhibition, considering Pakistan has some of the worlds finest mineral and gem specimens.

But the organisers were able to get a huge grant from Parvez musharraf a couple of years ago, along with the Agha Khan. So it was a gravy train for the organisers, I guess.


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## Neo

*Veteran banker at helm of Pakistans economy ​* 

Tarin...No-nonsense banker​ 
KARACHI: Shaukat Tarin, Pakistans top economic official, is known as a hard-headed straight-talker who loves a challenge.

Which is good because the veteran banker might just be up against his careers biggest  steering Pakistan out of its most dire economic straits in years.

A balance of payments crisis has left the central bank with foreign reserves of $3.53bn, less than Septembers import bill of $3.81bn, and there is concern that without help, the country could default on a bond maturing early next year.

Analysts say its almost inevitable the government will, however reluctantly, have to agree to an IMF programme.

Tarin was appointed the prime ministers top adviser on economic affairs last month, shortly after he turned 55. IMF negotiators are likely to find him a tough nut.

Tarin joined Citibank as a trainee in 1975, after graduating with a masters degree in business from Punjab University, Pakistans oldest, where he majored in finance.

He rose to take charge of several banks and also served as chairman of the Karachi Stock Exchange before joining the government as de facto finance minister. He cant be appointed a cabinet minister as he is not a member of parliament.

Although Tarin has shunned politics throughout his career, Muneer Kamal, a colleague at Citibank, said he wasnt surprised to see his old friend join the government.

Most people would run away from the sheer weight of responsibility but Shaukats not that type, said Kamal. If he feels its a challenging job and he can do something positive, he wont be shy.

A stocky man with a moustache, Tarin once told the New York Times he was most proud of building up the business at Citibank, where he also worked in the Gulf and Thailand.

Citibank was where I learned all about banking and my experiences there laid the foundations for my career, he told the newspaper in an interview.
At the request of the government, he took over as chairman and president of Pakistans largest bank, Habib Bank, in 1997, turning it around from a $230mn loss in 1996 to a profit of $30mn in 1998.

He had similar success at Union Bank, which he took over in 2000, making it one of Pakistans top banks in five years and preparing for its sale to Standard Chartered Bank.

Old colleagues speak of a no-nonsense style and attention to detail.
Hes a very aggressive person and he means what he says ... hes very blunt, said one banker who worked under Tarin at Saudi Pak Commercial Bank.

He has a deep understanding of finance and with numbers hes excellent. Its almost as if he has a photographic memory, said the banker, who declined to be identified.

Despite the gruff manner, colleagues say Tarin has always been fiercely loyal to staff, and they to him, and has always been able to attract top talent to work with him.

Another old friend and colleague said Tarins political masters would be wise to leave him alone to get on with the job.

He has the ability and the capability to deliver provided hes given a free hand. Otherwise hell simply get frustrated and resign one day ... He does not ever succumb to pressure.

Tarin was born in the eastern city of Multan, where his father, Jamshed Ahmed Tarin, was an army doctor. The elder Tarin has no fears for his son in the tough negotiations he faces.

Hes honest and an honest man is always a little braver. If you have some credibility then you can negotiate with anybody, he said.
An occasional golfer, Tarin is married with three children.  Reuters

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## Neo

*IMF conditions not hard: Tarin​*
ISLAMABAD, Nov 9: As the countdown begins for Pakistan to formally request the International Monetary Fund for a bailout package of up to $5 billion, Adviser to the Prime Minister on Finance Shaukat Tarin has said the funds conditions will not be tough.

The IMFs conditions are not hard. All it wants is that

Pakistan should fulfil the promises it makes prior to getting the financial assistance, he told newsmen in Mardan after visiting the residence of former NWFP governor Fazl-e-Haq to attend the Chehlum of his brother Pir Fazal Hussain.

Mr Tarin said that Pakistan would provide details of all its projects to the IMF board because the government knew better which areas needed funding.

He said the rupee was heading towards stabilisation and it would gain more value in coming days.

About the arrest of the chief of the countrys largest foreign exchange company on charges of illegal transfer of billions of US dollars abroad, Mr Tarin said the government was taking necessary steps to stop the flight of capital and curb money laundering at a time when the country was facing balance of payments problem.

Pakistans foreign exchange reserves have fallen from $16.5 billion in October last year to $6.75 billion this month.

Mr Tarin said that prices of various items would decline in the next six months and give a breathing space to the government and people.

Overall, he said, the economy would soon start improving.

He said the government was focussing on agriculture to increase production of major crops, including wheat, which would help improve the condition of farmers.

Answering a question, the adviser said the Friends of Pakistan, particularly Saudi Arabia and China, were ready to help Pakistan and provide support in different ways. Saudi Arabia, he said, could help by providing oil on deferred payment.

President Asif Ali Zardari visited China and Saudi Arabia with the hope of getting assistance in cash as well as technical support to avoid IMFs non-concessional loans.

However, so far China or Saudi Arabia has not come forward with cash on the table. Pakistan can now wait till Nov 15 to avoid the IMF.

Pakistan immediately needs around $5 billion to keep the economy afloat. The loan from the IMF will be under the standby arrangement, carrying higher interest rate than the Poverty Reduction and Growth Facility Programme.


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## muse

> The IMFs conditions are not hard. All it wants is that Pakistan should fulfil the promises it makes prior to getting the financial assistance,




Incredible! What does it say about what financial community's both public and private institutions thinking about what kind of debtor Pakistan are?

What does it say about what has been "hard" for Pakistan to do?

What do "populist" politicians find hard to do? other than be honest and serve the public interest 

Why have so many Pakistani and other investors pulled out money from Pakistan?

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## Neo

muse said:


> Incredible! What does it say about what financial community's both public and private institutions thinking about what kind of debtor Pakistan are?
> 
> What does it say about what has been "hard" for Pakistan to do?
> 
> What do "populist" politicians find hard to do? other than be honest and serve the public interest
> 
> Why have so many Pakistani and other investors pulled out money from Pakistan?



Valid questions!


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## Neo

*Managing natural resource at the district level​*
THE devolution plan has not been able to fully meet the aspirations of the people as envisaged, particularly in the provision of basic amenities to the masses, and the environment sector remains most neglected.

In a report, the Punjab Planning and Development Department has revealed that most of the district governments being in the nascent stage do not include environment high on their agenda. The major urban cities of Punjab are confronted with environmental hazards such as noise pollution, air pollution, drinking water contamination and waste water problems. The situation is no different in other big cities.

The report further points out that constraints are due to lack of competent staff. At present the Environment Protection Agency (EPAs), Punjab, has a staff of some 270 persons. Among them only 22 are inspectors who are responsible for around 50,000 industrial units in the province. Efforts to train staff have been undermined by a vicious circle of low motivation, under-funding and poor results, with trained workers leaving to find jobs elsewhere. Resources are short: computers have been purchased, but are not being used productively, and records are still kept in brown paper files, obviating rapid and targeted analysis, the report points out.

The provincial EPAs are confined to provincial capitals except in Punjab where devolution has taken place in various districts. The Punjab EPA has a weak relationship with the EPA at the federal level. It is primarily a provincial entity rather than being a branch of the EPA at the provincial levels.

The report says major urban cities of Punjab suffer from water contaminated with bacteria and arsenic poison. Unplanned industrialisation of urban centres has turned rivers into dumping ground of industrial waste. The devolution plan envisaged the creation of separate environment department headed by a district officer in each district. This has resulted in two problems: it perpetuates the segregation of renewable natural resource management from the rest of economic development activities and overlaps with the jurisdiction of several other departments including agriculture and education.

However, the devolution plan has not been implemented in true spirit in all provinces. In Sindh, environment has not been devolved, where degradation of environment and natural resources is more severe.

Environment and renewable natural resource portfolio should have been integrated into all sectoral interventions and projects. For any initiative to be implemented, environment and local level renewable natural resource management would have been factored into concept, design, project formulation, financing approval and implementation and monitoring.

It would have been more realistic, if the district co-ordination officer would have been given overall responsibility of environmental issues. As this position is better placed for aggregating at the district level--- all land use plans and environmental management plans developed by or in consultation with the citizen community boards. To some extent, in NWFP, this kind of mechanism has been devised.

As a matter of fact, distribution of the district financial resources among various sectors is of serious concern. In this context, environment and its related sectors are always at a disadvantage. This is because local politicians are more interested in infrastructure interventions rather than addressing chronic and potentially more serious problems such as solid waste management, sanitation, forest depletion, loss of biodiversity, degradation of grazing lands and loss of agriculture productivity through soil erosion etc.

The district nazims are tenure specific, hence they are more interested in short-term interventions and are unable to see bigger picture. They do not like long-term strategic interventions. Though, it is mandatory under the plan that the district nazim would give development vision.

Management of environment and natural resources has been seriously constrained by the apparent apathy on the part of many local communities to resource management concerns. This impression of disinterest arises precisely because there is no governance mechanism that allows local management. Since, people are not organised at the local level; there is no mechanism for collective analysis of local problems and hardly any attempt to solve them.

While individuals in communities are fully cognizant of degradation and depletion of natural resources, they are powerless to do any thing about them because management authority either lies with the federal or provincial authorities. Almost every community is committed to wise management of natural resources, but they get no official recognition and are, therefore, not in a position to make lasting impact. The devolution plan provided an opportunity to remedy that situation but it was not availed.


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## Neo

*How to overcome the economic crisis​*
SOON after its induction in March 2008, the elected government faced an abrupt increase in international oil and food prices. It resulted in a huge current account deficit and diminishing of foreign exchange reserves to a dangerously low level within a few months.

While the shock exposed the myth of economic growth under the previous regime, subsequent events also brought into limelight the lack of capacity and competence of the new ruling elite to put the economy on a sound footing.

Some people wrongly associate the current economic crisis with the global financial crisis, which had its origin in the US. That the crisis in Pakistan came at the same time as the global financial crisis may be merely a coincidence. However, it has one thing in common with the US financial crisis, that it too is self-inflicted!

The problem arises from the policies the successive governments had followed. The new ruling elite obviously has no plan based on indigenous resources and capability to follow. They tend to look outward for assistance. Hence the Friends of Pakistan forum came as an answer to their prayers. The new regimes initial response was to extend the begging bowl to their friends for immediate relief.

Perhaps, they thought the services they were rendering to the US in its war on terror were sure to induce the friends to immediately dole out at least $10-15 billion to tide over present difficulties. These hopes were soon dashed when Richard Boucher made clear in a news conference in Islamabad that the friends wouldnt throw money on the table, which has been interpreted to mean that any assistance will follow a thorough assessment of Pakistans plans.

As friends did not come forward, they moved on to other plans. The latest is that seeking help from the IMF would also make friends and IFIs provide funds to Pakistan. But subsidies on food and fuel were eliminated. Thus the regime was doing all it could to please the IMF.

A point to ponder: what is the fundamental source of our economic problems? It is no different from the malady that ails the worlds biggest economy, the United States, which our ruling elites have made their role model, though in the wrong way. They imitate all its flaws and ignore its strengths. Let the experts say what they will; the similarity between the two can be described simply as living beyond means.

The scale may be different, but the approach is the same. The Pakistani leadership failed to see that while the US could afford to stall the inevitable implosion far longer because their national currency is a reserve currency and they can raise money selling dollar-denominated bonds on world capital markets. Pakistan could ill-afford to live beyond its means. In the words of Time, Americas chief export is debt. On the other hand, debt is our chief import!

The source of Pakistans problems is the very loans so eagerly sought by the ruling elite. To add insult to injury, they call such loans, obtained with tough conditionalities attached, aid. The so-called aid is a misnomer because it is credit, to be ultimately paid through the nose by the nation, and amounts to putting the countrys economy under a permanent oxygen tent. Meeting the huge current account deficit through credit is unsustainable unless we tap domestic resources. While increasing the external national debt, external assistance is largely wasted, expropriated and recycled back to the creditors.

The assistance from the industrialised countries and the IFIs particularly is weighted with conditionalities. Recipients are compelled to follow given recipes. If these recipes were so sound, the lenders own economies wouldnt be facing the severest recession since the Great Depression, necessitating a massive $700 bailout!

Indigenous saving and investment, rather than external capital flows, should be the mainstay of our economy. If we can somehow put our industry and agriculture on a sound footing, if our ruling elite have the necessary credibility, we can certainly tap the foreign currency owned by Pakistanis, both residents and non-residents, for investment.

Pakistans government may be poor, but its elite are rich. It should not be difficult for them to raise a substantial amount, if they cough up even a tiny percentage of their foreign assets for a national cause! They are said to have huge assets worth hundreds of billions of dollars abroad.

The slide in the value of the rupee is largely due to the rush on dollars, courtesy the rich elite. The rush on foreign hard currency is the very reason the economic crisis has deepened. One wonders what safe havens the rich elite of this poor land have in mind, at a time of global financial crisis that is in danger of turning into a global depression?

If people stop buying dollars and stashing them abroad, and if non-essential imports are banned, perhaps the economy can possibly right itself in due course of time.

On a longer-term basis, it is time they start prioritising the real economy, the one in which the people work extremely hard to produce wealth, and control the tendency of the rentier and speculator class that feeds the casino economy Unfortunately borrowing from the IMF will only sustain the economy for a little longer before it comes crashing down again.

The policy of credit-addiction has been applied for decades to no real effect. The creditors usually tie down their offers to hard and painful conditionalities  reforms that led us nowhere in the past and are unlikely to do so now! The current regime discontinued the subsidies, and exorbitantly increased power charges, thereby compounding the peoples miseries. In the absence of economically productive utilisation of loans, how long will they last?

Pakistani ruling elite, which include the business elite and economic planners, have simply been moving in circles all these years, trying to secure their personal and group interests. Interest groups vie for a piece of the cake and the ruling elite caters to their whims. The planners think they have all the time in the world to keep tinkering with fiscal and monetary policies to turnaround the economy.

Both foreign and domestic economic policies are in urgent need of reappraisal, as also resolved by the parliament recently. The repercussions of our acceptance of conditionalities go much beyond the economy! No amount of ad hoc borrowing from external sources can cure the real malady, which are lopsided priorities, corruption, bad management and living beyond means. The economy can only be sustained by honest, hard work and good planning and governance!


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## Neo

*Pakistan facing major challenge in sustaining rapid economic growth ​* 
FAISALABAD (November 10 2008): Developing member countries (DMCs) including Pakistan in South Asia are facing a major challenge in sustaining rapid economic growth, while containing pressure on environmental resources and the threat of climate change.

According to Asian Development Bank future plan reports revealed that some of the consequences of global warming have already become visible. Monsoon rains have become more intense and less predictable, Himalayan glaciers are melting, floods and droughts are more frequent, and mangrove forests are disappearing at an alarming rate.

Public health, biodiversity, agriculture production, accesses to drinking water, and national security will be affected. Cognisant of these serious conditions, South Asia Department (SARD) is preparing a South Asia regional climate change implementation plan in line with national policies and action plans of DMCs to combat climate change.

According to ADB reports, climate change is one of the key development challenges faced by DMCs. The social dimensions of climate change will have wide-ranging consequences. However, consideration of these issues has lagged behind mitigation. Climate change may radically affect current migration levels and patterns, elevate conflicts, disrupt the livelihoods of rural and urban communities, and facilitate the spread of fatal diseases. Climate change threatens the achievement of the MDGs, and could bring about a significant rollback in the achievements to date.

ADB Strategy 2020 emphasises that ADB will help its DMCs transform their economies towards low-carbon growth paths and help them adapt to the unavoidable impacts of climate change. ADB's mitigation efforts will focus on promoting renewable energy and energy efficiency, and the wider adoption of cleaner energy sources.

Regarding adaptation, ADB report mentioned that the emphasis will be on building climate-resilient economies by addressing vulnerabilities at national, sector, and project levels. These activities will be performed in close co-ordination with ADB's disaster risk management operations to implement the new Disaster and Emergency Assistance Action Plan, which will strengthen mainstream links between disaster preparedness and response structures and climate change adaptation planning.

Dialogue will continue with other development partners to help DMCs transform their development plans to achieve low-carbon and climate-resilient economies, as well as to respond to requests to participate in international forums to showcase ADB's knowledge and programmes on climate change.

ADB will respond to climate change by focusing on the following areas: 

(i) Momentum in energy efficiency and clean energy investments will be sustained, scaling up beyond the current level of $1 billion per year. Energy conservation, and clean and renewable energy sources, will be the focus of East Asia Department EARD's and SARD's programme in the energy sector, and a significant component in other regions.

(ii) Transport is the largest sector in ADB operations. ADB will help its DMCs move away from their current heavy emphasis on investments in roads and highways towards a more balanced and sustainable mix, which includes rail and public transport systems coupled with sound urban mobility planning.

(iii) As a global and/or regional public good, forest and other ecosystems provide valuable services by absorbing carbon from the atmosphere and fostering biological diversity. ADB will explore strategic, selective ways of supporting its DMCs in sustainable land management and the forestry sector.

(iv) Adaptation will be supported through the preparation of regional climate change implementation plans, and by systemically including adaptation analysis in the CPS preparation process to guide ADB country operations, particularly in countries with special climate change risks. Assistance will be provided to DMCs to integrate climate change adaptation into national development strategies and enhance resilience of sector strategies. In addition, screening tools will be introduced to identify projects at risk and critical investments, including infrastructure requiring "climate proofing." Adaptation will figure prominently in the PARD work programme, including preparation of a regional climate change implementation plan, and management of coastal and marine resources in five DMCs that lie within the "coral triangle".

ADB future plan disclosed that research to support the climate change agenda would be one of the top ADB knowledge generation priorities in 2009-2011. The Regional and Sustainable Development Department (RSDD) will also support macro and sector-development planning and climate proofing of vulnerable projects. In addition, Regional and Sustainable Development Department (RSDD) is preparing three climate change studies covering energy, agriculture, and migration, all of which will be published in 2009. Economics and Research Department (ERD) will include in its research programme the analysis of the costs and benefits of climate change. Capacity development and policy analysis TA planned by regional departments will also support analysis at the country level and design of appropriate responses and policies.

The considerable realignment of operations to address climate change and environmental sustainability will require a corresponding adjustment in the skills mix and staff strength, as well as closer partnerships with other institutions and sources or custodians of funds.


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## Neo

*Poland keen to boost economic ties with Pakistan: Consul General ​* 
KARACHI (November 10 2008): Pakistan is a very important trade partner for Poland in South Asia and the country is deeply interested in further development of relations with Pakistan in all fields.

Speaking at a reception at his residence on the occasion of 90th anniversary of the Restoration of Poland's Independence, the Polish Consul General in Karachi, Ireneusz Makles, said that Pakistan has the potential to become major economic leader in Asia. Poland is a fast developing member of the European Union and wants to see greater trade and economic relations between the two countries.

Poland feels both nations have a lot to contribute to the world, he added. He said that there is interest and need for establishing joint ventures between Pakistan and Poland. Vast opportunities exist in the fields of textile, leather, furniture, clothing, construction, fisheries, food processing, beverages, pro-ecology projects, granite, marble, building materials.

He said that trade volume between the two countries shows upward tendency. In 2007, the bilateral trade volume was $127.5 million. The trade volume has touched $110.05 million in seven months (January-July) of 2008-09 and it is expected that it would increase to $200 million in the current calendar year, he added. Pakistan's strategic location as a regional hub, a principal gateway to the Central Asian Republics, a large consumer market, abundant natural resources, a talented and entrepreneurial people and a skilled and hardworking working labour offer enormous opportunities to foreign investors.

He said that Pakistan and Poland have 60-year long tradition of commercial co-operation. There are great opportunities waiting to be explored and further enhance trade relations between the two countries, he added.

The Polish Consul General said that Poland is keen to expand trade ties with Pakistan and cooperate in the fields of oil & gas, energy, mining, infrastructure, maritime, engineering, pharmaceuticals, chemicals and food processing sectors and development of small and medium enterprises (SMEs). He said that Poland can also supply electric equipment including diesel generators, railways equipment, agriculture machinery and spare parts, heavy vehicles and marine and diesel engines. "Pakistan and Poland have enormous potential, but we are not utilising these possibilities", he said, adding: "We should do much more to boost the trade and economic relations between both countries".

He said that Pakistan and Poland can complement each other to their strategic geographical positions. They can prove to be the base in each other's respective regions to enhance their trade relations with the neighbours. For Poland, Pakistan can serve as a launching board for its exports in South and Central Asia and for Pakistan, Poland can serve as the gateway to the Central and Eastern European countries. The Polish Consul General said that just after creation of Pakistan some Polish pilots assisted in the establishment of Pakistan Air Force.

During the Second World War there were two camps consisting of Polish refuges in Karachi. These camps were home to more than 35,000 people. It is worthy to mention that the first official Polish delegation paid a visit to Pakistan in 1948. As a result of trade negotiations the first trade agreement was signed. One year later, despite lack of diplomatic relations, the first Polish trade mission was established in Karachi, which later became the Polish Embassy and ever since very friendly relations have existed.


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## Neo

*New envoy urges US to bail out Pakistan​*
By Farah Stockman 
Globe Staff / November 10, 2008 

*Ex-BU professor facing tough task​*
WASHINGTON - With Pakistan teetering on the brink of bankruptcy, Husain Haqqani put on a powder blue tie and made his pitch. A quick infusion of US cash, he said, would ensure that Pakistan will be able to afford to keep up its expensive military operations near the Afghan border.

Husain Haqqani, Pakistan's new ambassador to the United States, has requested more funds to help his country get through a time of crisis.

*DIFFICULT TASK*

"All Pakistan is asking for is a bailout of $10 billion to fight terrorism" and get back on its feet, he told a packed audience recently at the Foundation for the Defense of Democracies, a Washington-based think tank.

Fleeing investors and mounting debts have become serious threats for Pakistan, along with a smoldering insurgency and a history of corruption. Now Haqqani - a former Boston University professor of international relations who became Pakistan's ambassador to the United States in May - is charged with an almost impossible task: trying to secure more funding from the already depleted coffers of the US government.

Haqqani has been an Islamic activist, a war correspondent, a savvy politician, a beloved professor, and an aide to two rival Pakistani prime ministers.

As an envoy from one of Washington's most precarious allies, Haqqani must be an opti mist against the odds. He must believe that the newly elected government he represents can clean up corruption, defeat a Taliban insurgency, survive a major financial crisis, and improve relations with the United States.

"Pakistan has many security challenges," he acknowledged. "It's tough."

Haqqani, 52, came to the United States in 2002, working as a scholar at the Carnegie Endowment for International Peace, where he helped Americans make sense of the Sept. 11 attacks. He then took a professorship at Boston University, where he remained until this year.

A former spokesman for Pakistani Prime Minister Benazir Bhutto, who was assassinated last December, Haqqani rose to prominence in February when Bhutto's party won rare democratic elections.

Haqqani's wife, a member of Pakistan's Parliament, is now spokeswoman for Bhutto's party, which is headed by Pakistani President Asif Ali Zardari, Bhutto's widower.

The election - a resounding defeat for the US-backed military leader, Pervez Musharraf - caused a sea change in US-Pakistani relations.

After Sept. 11, 2001, the United States had wholeheartedly backed Musharraf, paying about $125 million per month to Pakistan to support 100,000 Pakistani soldiers on the Afghan border. But Musharraf, who had ruled Pakistan since a 1999 military coup, became increasingly unpopular with his dictatorial moves. He also lost favor with many in the United States.

This summer, a House subcommittee uncovered evidence of graft in the more than $6 billion worth of US military aid that went to Musharraf's government.

Haqqani faces the task of rebuilding both the Pakistani image in the United States, and the US image in Pakistan, which has been tainted by the Bush administration's association with Musharraf.

"I'm the man in the middle," Haqqani said, adding that he is frequently criticized in Pakistan for being too close to the United States. "It will take a while before the average Pakistani starts trusting the Americans."

But Haqqani has gone about his work with great enthusiasm, touting Pakistan's prospects at public speeches across Washington. This summer, he gave gentle reminders to members of Congress that the alleged corruption took place under the previous government, said Representative John F. Tierney, a Salem Democrat who headed the subcommittee that investigated the graft.

Haqqani is trying to persuade the Americans to fast-track about $1 billion owed to Pakistan for its military operations from April to October, roughly half a percent of Pakistan's gross domestic product. The money has been held up by new Pentagon rules designed to improve accountability, Pakistani officials say.

The latest payment was $364.7 million in September to cover costs for military operations from December 2007 through last March, according to Lieutenant Colonel Mark Wright, a Pentagon spokesman. The Pentagon is reviewing claims for April, and seeking additional documentation for May, Wright said. No further claims have been filed.

Privately, some Pakistani officials warn that the funds must come soon, before Pakistan's economic hardships curb the military operations. But Haqqani issues a more general plea.

"If the world is willing to put the resources into Pakistan, there is no reason why Pakistan is not willing to defeat [terrorism] and become a more predictable nation," he said.

Haqqani is also seeking an additional $10 billion loan from the United States at a "Friends of Pakistan" summit in the United Arab Emirates on Nov. 17. US officials have made no commitments so far.

President-elect Barack Obama supports a plan to give Pakistan a $1.5 billion "bonus" if it remains a democratic state. But it is unclear when, or if, that money will come through.

Tierney said the current financial crisis has become a major test for Pakistan and for Haqqani.

"In the next couple of months, we will see where they are in this financial thing, how they have been able to get through this," he said. "They have to make sure that the graft and corruption that was there is not there."

In many ways, Haqqani's life mirrors changes in Pakistan itself. Born to a conservative Muslim family in Karachi, he joined Jamaat-i-islami, a powerful student movement that has since become known as a religious party with ties to militant groups.

"Coming out of a certain background, this is what you did," said Marvin Weinbaum, a former State Department specialist now at the Middle East Institute.

After getting his master's degree in international affairs, Haqqani became a journalist, covering the Afghan war against the Soviets in the 1980s. He later recounted to his students in Boston how he met Osama bin Laden at that time.

"He likes to stress he was not impressed with [bin Laden] whatsoever - never thought he would amount to anything," said Garrett Eucalitto, a BU master's degree candidate in international relations.

Haqqani soon got into politics, working for both former Pakistani prime minister Nawaz Sharif and Sharif's rival, Bhutto. After Bhutto was ousted on corruption charges, she saw democratic elections as the future of Pakistan and her own return to power, Weinbaum said.

Haqqani became one of the most outspoken voices for democracy, arguing passionately that the United States would be safer from terrorism if it let democracy bloom, rather than back military leaders.

"The average shelf life of a Pakistani dictator is a decade," he said.

At BU, Haqqani was known for never forgetting a face and using a Socratic style in his classrooms to spark debate. He routinely appeared on television as a pundit on the war on terrorism, but was always available for office hours, students said.

"Almost every day there'd be a least three or four students sitting outside his office, and one or two sitting inside," said Aparna Pande, a doctoral candidate whose thesis is still being overseen by Haqqani. "He was like a star and yet someone they could approach."

As a professor, Haqqani cultivated political connections that now served him well.

He helped Representative William D. Delahunt, a Quincy Democrat, hold a town hall meeting for residents of Cape Cod about the Iraq war.

In the summer of 2007, President Bush invited him to the White House with other Muslim scholars to give advice on how to improve the US image in the Muslim world.

But he also maintained ties with an aide to Obama. This summer, Haqqani attended the Democratic National Convention and joined a meeting between Obama and the new Pakistani prime minister.

"Ambassador Haqqani is a hero of Pakistan's struggle for democracy," said Bruce Riedel, a former CIA officer who advises Obama on Pakistan. "Haqqani's message . . . is one that the senator understands very well."

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## RescueRanger

Here we go again, phir humarey leaders gey potli ley kar...  mabye if the spent less money at Royal Plam, IC and on their luxury cars we would not be in this situation!


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## muse

Pakistanis are again in a financial jam - WHY? of course the "dictator" and all that and of coure the price of oil -- Why do China, Saudi, And Emirati and most importantly, Pakistanis, not trust this "democratic" government??

Could it be because they see in this government a criminal enterprise ??? A kleptocracy of criminal proportions??

Now all kinds of blame is being shifted to forex companies - for exactly what?? It's private money and it can do what it wants or does the "democratic" government have a problem with that?? And is it not exactly that, which is the reason for capital flight???


* Is there a forex reserve scam? *



Tuesday, November 11, 2008
By Farrukh Saleem

ISLAMABAD: As of February 2008, according to data compiled by the State Bank of Pakistan (SBP), net foreign exchange reserves held by the SBP were $ 11.9 billion and that of the commercial banks were $ 2.1 billion. 

Over the following nine months, net foreign exchange reserves held by the SBP have gone down to $ 4 billion while that of the commercial banks have actually gone up to $ 3.28 billion. In essence, the SBP has lost $ 7.88 billion while the commercial banks have gained $ 1.18 billion. *In other words, the SBP has surely lost but there is no evidence that Pakistani citizens have taken their dollars out of their dollar accounts and sent them abroad*.

*Where then is the foreign exchange reserve scam? Has the SBP been sending dollars through money changers? Money has wings. It flies to where it feels safe. And that means Hawala or Hundi. Hawala is an alternative means of transferring value from Point A to Point B. 

It is based on two things: honour and performance. The truly unique feature of the Hawala system is that no promissory instruments are exchanged between the Hawala brokers; the transaction takes place entirely on the honour system.*

As the system does not depend on the legal enforceability of claims, it can operate even in the absence of a legal and juridical environment. No records are produced of individual transactions; only a running tally of the amount owed by one broker to another is kept. In that sense, Hawala is a bank that never was.

Intriguingly, elements of commercial law under common law also have their origin in Hawala. Even the French and the Italians studied Hawala and developed the Aval in French civil law and the Avallo in Italian civil law.

*Do our money changers undertake Hawala transactions? From a legal standpoint, the more important question is if Hawala can be proven in a court of law. From a practical standpoint, the more important question is if the government of Pakistan can put an end to Hawala.

For the record, our government has so far failed to attract dollars. Thus comes the unsubstantiated accusation that money changers are to be blamed. The main reason that the SBP has lost nearly eight billion dollars in as many months is a billion-dollar-monthly trade deficit, not the money changers. 

The main reason that the rupee has lost a quarter of its value is the $ 20 billion annual trade deficit, not the money changers. What does the government really get out of handcuffing leading businessmen? Nothing but damage its own credibility. What does the government really get out of arresting the wheels of an economic system? Nothing but hurt the economy. *


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## allbestmessages

The economy has suffered in the past from decades of internal political disputes, a fast growing population, mixed levels of foreign investment, and a costly, ongoing confrontation with neighboring India. However, IMF-approved government policies, bolstered by foreign investment and renewed access to global markets, have generated solid macroeconomic recovery the last decade. Substantial macroeconomic reforms since 2000, most notably at privatizing the banking sector have helped the economy. Pakistan has seen a growing middle class population since then and poverty levels have decreased by 10% since 2001.

GDP growth, spurred by gains in the industrial and service sectors, remained in the 6-8% range in 2004-06. In 2005, the World Bank named Pakistan the top reformer in its region and in the top 10 reformers globally

Now a day pakistan economy is badly failed reseason of some crises 

political instability 
boob blast 
foriegn investment forner are not invest the money in pakistan
energy crises 
Stock market 
Manufacturing and finance 
Growing middle class 
Poverty alleviation expenditures 
unemployment 
these are the factor of our economy if these factor are handles than our economy is grow


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## Neo

*CPI surged to 25 per cent in October ​* 
*Food inflation up 31.6pc, wholesale prices of vegetables up 42pc, wheat flour 19.9pc, sugar 14.5pc, chicken 11pc​*
Tuesday, November 11, 2008

ISLAMABAD: Fuelled by runaway food inflation the Consumer Price Index (CPI) inflation during October 2008 rose to 25 per cent, up 2.12 per cent against September 2008 and 9.31 per cent against October 2007 the Federal Bureau of Statistics (FBS) reported on Monday.

According to FBS the food inflation during October 2008 stood at 31.67 per cent, in which prices of non-perishable items surged by 37.07 per cent and perishable items by 18.97 per cent over October 2007.

Four-month (July-October 2008-09) average inflation stood at 24.64 per cent while the Wholesale Price Index (WPI) stood at 32.79 per cent. Last year during the same period, CPI stood at 7.67 per cent and WPI at 9.18 per cent. Huge increase in WPI-based inflation indicates further increase in retail prices of essential commodities. The rising inflation is making it more difficult for pensioners and low-income people living on a very nominal fixed income. 

Dwindling value of Pakistani rupee is pushing up prices of essential commodities and making imports costlier. CPI that covers the retail prices of 374 items in 35 major cities and reflects roughly the changes in the cost of living of urban areas. According to it, in October 2008, transport and communication charges went up by 39.30 per cent, food and beverages by 31.67 per cent, fuel and lighting 21.69 per cent, cleaning laundry and personnel appearances 20.33 per cent, house rent 15.96 per cent, education 15.90 per cent, apparel textile and footwear by 15.77 per cent, household furniture and equipments 13.75 per cent, recreation and entertainment 12.20 per cent and medical expenses increased by 12.49 per cent over October 2007.

During last one year, the State Bank of Pakistan (SBP) has increased four times the discount rate to contain inflationary pressure. The SBP raised the discount rate (the rate at which central bank lends to banks) by 100 basis points to 13 per cent effective July 30, 2008. 

Earlier, the central bank raised the rate by 50 bps from 9.5 percent to 10 percent in July 2007 and some 100bps in January 2008 from 10 percent to 10.50 percent. In May 2008, the SBPsuddenly took a tight monetary stance due to rising inflation and continuous depreciation of Pak rupee against the dollar and increased the discount rate by 150 bps to 12 percent.

Economic pundits believe that imported inflation, which is expected to weaken as a result of declining crude oil prices, would also help in minimizing the pressure of cost push inflation in the coming months.

They believe that for each one per cent increase in inflation, more and more Pakistanis fall into poverty indicating that inflation was hitting poor Pakistani consumers harder than the more affluent ones.

It is interesting to note that high inflation trend in food has been noticed since the start of the last fiscal (July 2007), food inflation stood at 8.47 per cent, August 8.62 per cent, September 12.97 per cent, October 14.67 per cent, November 12.47 per cent, December 12.21 per cent, January, 2008 it stood at 18.25 per cent, February 16.05 per cent, March 20.61 per cent, April 25.5 per cent, May 28.48 per cent, June 32.05 per cent, July 33.81 per cent, August 34.09, September 29.91 per cent and now during the month under review (October 2008), it stood at 31.67 per cent.

Wholesale Price Index (WPI) has also jumped up to 28.38 per cent during the month under review as compared to 11.81 per cent in corresponding month of the last fiscal. In the basket of WPI, building materials prices went up by 40.53 per cent, food 32.59 per cent, fuel, lighting and lubricants expenses up by 31.08 per cent, raw materials 19.31 per cent and manufacturers price went up by 16.42 percent in October 2008 over corresponding month of the last fiscal. 

The wholesale prices of vegetables went up by 42 per cent, wheat flour 19.58 per cent, wheat 16.33 per cent, maida 16 per cent, sugar refined 14.47 per cent, chicken 11 per cent, gur 7.19 per cent, egg 7.15 per cent and powder milk prices by 5.61 per cent over September 2008. 

In raw materials, wholesale pig iron price went up by 53.65 per cent, cotton seed 1.88 per cent, hides 1.73 per cent and skins by 1.01 per cent. Among building materials, cement prices went up by 15.69 per cent, wire & cables 3.47 per cent, sanitary ware 2.35 per cent, cement blocks 2.15 per cent, glass sheets 1.60 per cent and pipe fitting by 1.28 per cent over September 2008.


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## Neo

*Trade deficit widens to $7.5bn ​* 
Tuesday, November 11, 2008

ISLAMABAD: Despite a weakening rupee, Pakistans export and import gap widened to a record $7.52 billion during July to October, as the country recorded imports worth $14.28 billion and exports worth $6.76 billion, said the Federal Bureau of Statistics on Monday.

The big trade deficit negates the Bretton Woods institutions advice to the government to depreciate the rupee for increasing exports and bridge the trade gap. Despite the rupees massive decline against major currencies, the economy has got no respite in the way of enhancing exports and controlling imports.

According to the FBS trade figures, imports during the four months were more than double the exports.During the same period of the last fiscal 2007-08, imports totalled $11.44 billion and exports $5.79 billion, a 24.86 per cent growth in imports and 16.62 per cent in exports.

During July-Oct 2008, the trade deficit rose by 33.33 per cent or $1.88 billion from a gap of $5.64 billion in the corresponding period of last fiscal. The most depressing aspect of the trade figures was that during October 2008, exports declined by 14.62 per cent to $1.52 billion while imports dipped by 8.91 per cent to $3.47 billion over September.

This indicates that the country is once again marching towards another huge trade deficit which would further jack up the current account deficit, a potential threat to the economy. Because of the soaring trade deficit, the government will face the problem of balancing its financial accounts. Depreciating rupee and record high inflation are the other two factors that have badly confused the governments policy-makers.

The government in its trade policy for the current fiscal year (2008-09) has set an export target of $22.1 billion. Although it has not formally announced any import target, commerce ministrys officials put it at $37 billion, estimating a $15 billion trade deficit by the end of June 2009.


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## Neo

*Foreigners investing in off-market take quick exit ​* 
Tuesday, November 11, 2008

KARACHI: Situation at the Karachi bourse remained extremely sluggish in this session as well, but overseas investors disinvested over $2.9 million from local bourses on Monday. The number of active stocks remained thin at 21 companies while the day turnover rose above 0.1 million shares as compared to below this level on last Friday.

KSE 100-share Index, KSE 30-share Index and KMI 30-shares Index remained flat at 9,183.14 points, 10,003.99 points and 11,224.18 points, respectively, throughout this session too.

KSE-All Share Index, however, witnessed a fractional fall of 0.12 point and finished at 6,639.01 points. During the session, this benchmark fluctuated by 0.63 point the two sides of the fence.

Commenting on massive outflow of dollars by foreigners in a single session, analysts said that the just emerged uncertain situation in money exchange companies made them (foreigners) panic and they preferred to exit from market at any available prices.

As a matter of record, the activities of money exchange companies have come into question followed by the arrest of top officials of a couple of exchange companies by FIA.

However, huge disinvestments by foreigners hinted their participation in off-record market, as the amount they had pulled back and the amount of day trading were mismatched with a big difference.

The day trading stood at Rs0.968 million at KSE as compared to Rs236 million pulled back by overseas. Moreover, the shares in their portfolios were not active in this session in on-record market reportedly.

Therefore, the day turnover slightly surged to 0.123 million shares against 78 thousand share record low changed hands on last Friday - showing an improvement of 57 per cent on day-to-day basis. Activities in future market remained nil in this session too.

In line with the dull movement in KSE All-share Index, the overall market capitalisation also lowered by Rs46 million to Rs2.829 trillion. 

Other analysts said that the news of likely increase in central banks discount rates was another anti-investment news and convinced the locals and foreigners to get exit at whatever the prices available. The added that the hike in policy rate would raise the cost of doing business at the local bourses furthermore and would discourage the day jobbers to continue working in share business.

Hasnain Asghar Ali at Aziz Fidahusein said that mixed and contradictory statements regarding the unfreezing of market, subject to availability of funds, has kept the confusion regarding removing floor on higher side. Moreover, there was a news item that the participating financial institutions have shown some reservations regarding the market support fund and so has the international fund regarding governments support for stock market rescue operation.

The step taken by NCCPL has, however, brought some relief to the position holders in CFS, as it extended the rolling over period on CFS counter till the fifth day of unfreezing market, he added. 

Out of 21 actives, 11 ended the day trading with no change in their share prices, five closed on positive note, while remaining five fell into red region.

Highest volumes were witnessed in Gharibwal Cement at 38 thousand closing at Rs17 with a loss of 18 paisa, followed by National Assets at 25 thousand closing at 40 paisa with a loss of one paisa, Indus Poly at 20 thousand closing pegged at Rs5.05, Nimir Resins at 10 thousand closing pegged at Rs7 and East West Life at six thousand closing pegged at Rs9.25.


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## Neo

*Bilour urges economic bailout package for industry ​* 
Tuesday, November 11, 2008

ISLAMABAD: Senator Ilyas Bilour on Monday urged the government for an economic bailout package for industry as members of the upper house raised different issues on points of orders, seeking the earliest intervention of the government.

The world is facing an economic recession and every government, even India and China, are facilitating industrialists with bailout packages. Let our government also go for it and at least reduce the mark-up rate to provide a breathing space for industry, Bilour said on a point of order.

If the business community is not provided relief, half of industry will have to stop operation, making producers and exporters to suffer heavy losses, he added. Bilour regretted delayed action by the State Bank. Why measures are not announced well in time, he asked.

Senator Anisa Zeb Tahikheli drew attention of the house towards miseries of the displaced people of Bajaur, Swat, Mohmand and Dir areas and said that a lot of work needed to be done to provide them basic facilities.

She appreciated initiative of the National Assembly speaker but urged the federal government to briskly move forward for resolving the food, shelter, education and health problems of the displaced people.

More than 400,000 people are displaced and the government should take this problem seriously, she said. Senator Sabina Rauf referred to the hardships of the quake victims in Balochistan and described the measures taken by the provincial government as insufficient.

She urged the provision of winter tents to the displaced people and the start of reconstruction of houses immediately. Senator Seeme Siddiqui raised the issue of killing of Tasleem Solangi and expressed dissatisfaction over the pace of investigation into the incident.


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## Neo

*AEDB to produce 5,000MW energy in five years ​* 
Tuesday, November 11, 2008

ISLAMABAD: Alternative Energy Development Board (AEDB) has planned to produce 5,000 MW energy within five to seven years by utilising renewable energy resources available in the country.

This generation would certainly help meet the current energy shortfall, Chief Executive Officer AEDB Arif Allaudin said while talking to journalists here on Monday after the conclusion of an inaugural session of a two-day stakeholders consultative workshop on the Development of Medium Term Renewable Energy Policy for Pakistan, jointly organised by the AEDB and the Asian Development Bank (ADB).

The AEDB chief said the board is planning to make medium term and long-term policy in consultation with the concerned stakeholders. He said the Board has been assigned by the government the target of producing 5 per cent energy from renewable resources out of total power generation capacity. 

He said the countrys first 50 MW wind power project is scheduled to be commissioned next month. He said five turbines of 1.2 MW capacity each would be installed in the first phase of the project. He said the tariff issue will be resolved in consultation with stakeholders and people will get cheaper electricity. He said in an effort to harness the renewable energy resources, the AEDB is encouraging private sector to develop renewable energy power projects.

Earlier, addressing the participants of the workshop, the CEO AEDB said the country is facing an energy crisis, adding, the board would fully utilise the alternative energy resources available in the country. He said as per the mandate given by the government the board is encouraging the use of renewable energy resources for captive power generation. He said several innovative steps will be taken to create a market-based environment conducive to the private sector investment and participation.

Country Director Asian Development Bank Rune Stroem said the ADB would continue to support Pakistan to achieve the energy security by utilising the abundantly available indigenous alternative energy resources. 

He said Pakistan has tremendous potential in renewable energy and urged stakeholders to work together for greater use of these resources. He said immediate planning can help overcome power crises in the country.


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## Neo

*EMC calls for utilisation of Gwadar Port for imports, exports​*
ISLAMABAD: Economic Monitoring Committee (EMC) here on Monday asked the Ministry of Ports and Shipping for better utilisation of the Gwadar Port for the transportation of imports and exports of the country. 

The EMC, which met under the chairmanship of Mr Shaukat Tarin, Adviser to Prime Minister on Finance, while reviewing the cement exports situation directed the Ministry of Ports and Shipping to remove all the bottlenecks being faced by exporters. EMC also advised the Ministry of Food and Agriculture to act as an equalizer in judicious distribution of wheat stocks to the provinces. 

The EMC was informed that the Ministry of Food and Agriculture has currently a balance stock of 3.25 million tonnes wheat while another 455,000 tonnes of imported wheat had already landed to supplement the balance stocks. The EMC advised the Ministries of Food, Agriculture and Commerce to ensure that the deficient areas be actively targeted to facilitate the common man. 

Adviser to the PM on Finance directed the concerned Ministries to ensure that in future sufficient stocks are procured and distribution system is duly streamlined to meet any emergent situation. He directed that the people should get quality flour for their consumption. 

The EMC was informed that the overall situation of prices of the food items remained stable during the last week and would further improve through an equitable distribution of these commodities.

Deliberating upon the demand and supply of urea in the country, the EMC was of the view that the middleman and dealer were profiteering and if required the distribution of urea to the farmers could be entrusted to alternate means of distribution. The EMC called for immediate action to refurbish the urea stocks as any shortfall in the availability of urea to the farmers could be harmful for the next crop. 

On a point raised by Utility Store Corporation, the Adviser to the Prime Minister directed the Ministry of Finance to respond to the USCs claims positively and help them out of their economic problems.


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## Neo

*Pakistan needs new development paradigm: Faruqui​*
ISLAMABAD: The search for a new development paradigm to steer Pakistans future growth path is a pressing imperative, Deputy Chairman, Planning Commission Salman Faruqui said on Monday. 

He expressed these views during his address to the faculty and students of Pakistan Institute of Development Economics (PIDE). He said the Planning Commission was actively engaged in developing a new strategy to respond adequately to the real needs of the people. Our aim is to ensure growth and development with a human face, he said. 

There are challenges both on the domestic and international front and the dominant global economic paradigm was under serious threat in the face of an unprecedented financial crisis. Developing countries, he said, after a serious bout of high oil and commodity prices could not remain unaffected by this financial crunch and the very fundamentals of unfettered globalisation and capitalism, driven purely by market considerations, were fast unraveling. 

Pakistan is no exception. We are facing similar challenges with people seriously questioning the development strategy followed in the recent past, which failed to benefit the ordinary people, he maintained. It ignored the agriculture sector where the majority of the people live and work. It was consumption rather than investment and production-led strategy, which turned out to be unsustainable, he added. 

He elaborated that a determined step in this new direction was the Public Sector Development Program (PSDP) 2008-09 in which the largest ever allocation for the social sectors is made. It now accounts for more than half of this years PSDP. 

Significant increases have been made in allocations for water and energy sectors including fast track power generation projects to overcome shortages and building of small dams for water and power generation. 

He was of the view that agriculture should be given priority as the leading sector of economic development by increasing incentives through announcing support prices that reflect world prices. 

The other important initiative in operationalizing the new strategy of development with a human face was the strengthening of the Planning Commission with the induction of new advisers and members who are leading specialists with rich international experience in their respective fields. My aim is to build the Planning Commission into a Knowledge Commission. We have setup a number of task forces on food security, climate change, social sectors, infrastructure and energy. A Panel of Economists has also been established to help us devise a homegrown stabilisation programme and a medium-term development strategy. We are launching today a Task Force on Private Sector Development, he said. 

Deputy Chairman said that he shared the Vision of the Vice-Chancellor of the PIDE to make it a world-class research and teaching institution. 

Faruqui announced that the land, which was earmarked for the PIDE in Islamabad had on his request been officially offered to the PIDE by the CDA. He emphasised the need for quality research and teaching in the institute. I firmly believe that research invigorates teaching and teaching invigorates research, he said. Research, however, must focus on practical issues that help resolve real world problems. Such research would help produce graduates who are employable and will effectively contribute to Pakistans economic development, he opined. 

He suggested the University to build links with the leading economics research and teaching institutes in the world with an objective of attracting visiting scholars including Pakistanis teaching abroad to come to the PIDE and enrich its existing faculty.

He urged that the PIDE must take advantage of being in Pakistans capital and contribute to strengthening the capabilities of the officials who run and manage the government and the economy. 

Dr Rashid Amjad, Chief Economist and Vice Chancellor PIDE, in his welcome address highlighted the achievements of the institution. He informed that PIDE was providing cutting edge knowledge and has fifty students enrolled in Ph.D programme. He said that it was a unique example that PIDE and Planning Commission were working in collaboration with each other.


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## Neo

*Special cabinet meeting to okay 9-point economic bailout agenda ​*
** Plan will be placed before IMF after approval 
* Govt to formalise transfer of $10bn foreign exchange 
* Ineffective institutions will be scraped, possibility of reduction in ministries​*
ISLAMABAD: Prime Minister Yousuf Raza Gilani and Finance Adviser Shaukat Tareen met on Monday to discuss a nine-point economic agenda to be tabled in a special cabinet meeting for approval. 

Tareen also briefed the prime minister on the ongoing negotiations with the International Monetary Fund for a likely $9 billion loan over the next two years for the recovery of Pakistans ailing economy. The economic plan will subsequently be placed before the IMF Executive Board.

Foreign currency: As part of the plan, the government will formalise the transfer of up to $10 billion a year in foreign currency into Pakistan  so that the money, currently being routed through the Hundi and Hawala systems, is sent to Pakistan through banks and foreign exchange companies.

Pakistans foreign missions will be converted into economic and investment missions, facilitating remittances, foreign direct investment and exports, a senior Finance Ministry official told Daily Times. 

The government is set to approve the launch of a number of schemes for overseas Pakistanis, including dollar-dominated bonds, in the special cabinet meeting likely soon.

Ineffective institutions: To limit federal government expenditures, the new plan would include the proposal to scrap ineffective institutions. The official said the possibility of reducing the number of ministries and divisions would also be explored and austerity measures would be taken to ensure fiscal discipline.

The plan also includes accelerating the privatisation process. The government would involve the private sector in the construction of dams, roads, ports and other required infrastructure to help increase GDP growth to more than 8 percent annually, the official said, and inflation will be brought down to one digit.


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## Neo

*ECNEC approves up-gradation of Karakoram highway to facilitate Bhasha dam ​*
​ 
ISLAMABAD (November 11, 2008): The Executive Committee of the National Economic Council (ECNEC) met here on Tuesday approved the up-gradation of Karakuram Highway to facilitate the Diamir-Bhasha Dam by clearing necessary funds to the tune of Rs.60 billion for acquisition of land and resettlement of affectees.

The ECNEC meeting was held her under the Chairmanship of Advisor to Prime Minister on Finance, Shaukat Tarin to take up remaining agenda items after November 06 meeting, chaired by the Prime Minister. 

The Council considered a number of development projects for approval in the field of Energy, Environment, supply of Clean Water, Highways, and Railways. 

The development projects considered on Tuesday for the approval are to be completed in all the four provinces, Northern Areas and AJK. 

The ECNEC also approved the reconstruction of projects of Rawalakot and Bagh cities which were affected by 2005 earthquake. 

The ECNEC also approved rehabilitation and widening of earthquake-affected road, Alpuiri-Besham section of N-90, which connects N-95 and N-235 highways. 

The ECNEC discussed replacement of Railway signaling system for the sector Lodhran-Shahdaram, double gauge tracks for Mirpur Khas- Khokarapar, and, double railway track for Lodhran-Khanewal sector. 

In the communication sector among others, the ECNEC approved the 106 km road project for acquisition of land and procurement for Hasanabdal, Havallan, Mansehra Express Way. 

In the energy sector, ECNEC approved Interconnection of IPP's with national grid to ensure generation of additional 1600 mw of electricity. The project would be executed on self-finance basis. 

The Committee also approved Power Distributions Enhancement project to reduce energy/line losses. 

In the water sector, the ECNEC approved capacity building and advisory 

services project, in principle and advised ministry of Water and Power to 

initiate the process, ECNEC also approved establishment of Environment Monitoring 

System. 

The ECNEC also approved in principal, the communication for effective social service delivery, initially in 18 out of 24 districts of NWFP at a total cost of Rs. 565 million.


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## Neo

*2.6 million acres of government land transfer to 520,000 landless farmers suggested ​* 
KARACHI (November 11 2008): A panel of economists, led by a former finance minister, Dr Hafiz Pasha, has called for transferring 2.6 million acres state owned land to landless, peasants along with creation of an institutional framework, providing access to high quality seeds, fertiliser, water and extension services.

This suggestion has been made in its 'Interim Report on Economic Stabilisation with a Human Face', published recently. Regarding land for landless farmers, the report says that ownership rights, together with access to markets for inputs, may play a vital role in making the small farm sector the leading edge of a faster and more equitable agriculture growth.

It recommends institutional changes to open up the land market together with the provision of credit to tenant farm households for enabling them to purchase land.

On giving state land to the landless the report appreciated and hoped that an initial step of providing productive assets to the rural poor could make a significant contribution to the reduction of rural poverty.

Citing an example, the report said that if 2.6 million acres land is transferred to landless farmers in holdings of 5 acres each, then some 520,000 tenant farmers would become owner-operators, which would mean that out of total number of tenant farmers ie 896,000, some 58 percent would become owner-operators.

"However, it is important to recognise that providing ownership of land to the landless is a necessary but not a sufficient condition for alleviating their poverty, adding it needed to make the transferred land cultivable, to achieve a sustainable increase in their income, productivity and savings are equally important factors in making the scheme successful," the report suggested.

The report further said the remaining 42 percent out of total tenant farmers, could be enabled to buy land through credit and institutional changes in the land market so that existing tenant households could become owner-operators who could play a strategic role in generating a faster and more equitable agriculture growth.

"Out of a total of 896,000 tenant farmers, 376,000 households could be enabled to acquire ownership rights over 5-acre farms through purchase of land that would create the institutional basis of providing both the incentive and the ability to tenant farmers to increase yields per acre," it added.

The report suggested that these objectives could be achieved through adopting four policy actions including a consortium of government, donors and commercial banks a credit fund for providing land to the landless and follow up extension services, amounting to about Rs 332 billion (USD 4.24 billion) could be created.

Secondly, on systemisation of land records, the report suggested to update, systematise and computerise the land revenue records to establish clear ownership rights of existing owners.

To solve the farmers' problems the report suggested formation of small farmer associations at union council and tehsil levels with a view to providing small farmers with the leverage to get equitable access over the markets for seed, fertiliser, tube-well water and pesticides.

The report said farmers' organisations in partnership with extension service organisations of the Ministry of Rural Development could provide high quality support to small farmers for soil testing to enable appropriate fertilisers use, improved on-farm water management, and improved agriculture practices to improve organic profile of the top soil.


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## Neo

*Government to get over $11 billion aid, oil on deferred payments ​* 
ISLAMABAD (November 11 2008): A foreign assistance of over $11 billion as well as oil on deferred payments from different sources is in the pipeline that would help Pakistan overcome economic crisis. Sources told Business Recorder on Monday that this was stated by advisor on finance Shaukat Tarin in a meeting with Prime Minister Syed Yousuf Raza Gilani.

According to the sources, Tarin informed the Prime Minister about the negotiations with the International Monetary Fund, other donor agencies and various states.

During the meeting which remained one-on-one for some time, the Prime Minister was informed that Pakistan was expecting $11.7 billion from different sources including $7-7.5 billion from the IMF and over $1 billion each from the World Bank, the Asian Development Bank, the Islamic Development Bank and $0.8 billion from the UK Department for International Development (DFID).

Saudi Arabia, Kuwait and UAE, which are the important countries of the Friends of Pakistan (FOP) have not committed any cash but agreed to provide oil on deferred payment. Iran has agreed to provide furnace oil on deferred payment, said the sources. The US would provide $200 million wheat as well as announce Bilateral Investment Treaty (BIT) and the establishment of Reconstruction of Opportunities Zones (ROZs) in Fata.

The European Union has agreed to give GSP Plus, which will enable Pakistani products get more access in EU markets. The advisor also apprised the Prime Minister about the action taken against a forex firm. According to the sources, the Prime Minister was informed about the cross border smuggling of the foreign currencies especially the US dollar.

It was learnt that Pakistan needed not to impose any cut on defence budget for qualifying for the IMF assistance. The Prime Minister directed the advisor to explore all the avenues simultaneously.

Meanwhile, an official statement said that discussion also included the plan to present 9-point agenda to the Cabinet for approval. The Prime Minister assured the Advisor of his support and said a special Cabinet meeting will soon be called to discuss the country's future economic plan.


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## Neo

*Clampdown on foreign exchange companies: FIA finds transfer of $500 million in 10 months ​* 
KARACHI (November 11 2008): The Federal Investigation Agency (FIA) has found that some of the accused had transferred at least 500 million dollars abroad from their personal accounts during the last ten months, Business Recorder learnt on Monday.

According to sources, the FIA officials were busy in checking the computerised data and other record of Khanani & Kalia International (KKI) in search for evidence to prove the exchange company guilty of monopolisation and illegal transfer of dollars abroad.

They, however, claimed that while the investigation had entered 5th day, the Agency had not been able to find any solid evidence against the company for illegal transfer of dollars, except some indications that Munaf Kalia, one of the accused, and his colleagues had transferred some 450-500 million dollars during last 10 months from their personal account.

Sources said that FIA had shifted its focus of investigation in this direction and was trying to collect more details in this regard. "The FIR number 23/2008 launched by FIA Crime Circle Lahore has so many week points, and this is the Karachi Circle which has found some evidence against the KKI chief and other directors," they added.

However, they said that under the protection of Economic Reforms Act, 1992 any foreign and local is permitted to transfer and bring any foreign currency without quantity limitation. FIA's Crime Circle Karachi on Monday presented unshackled Munaf Kalia in the court and got three-day physical remand, but later he was shifted to Lahore, where FIA crime circle Lahore would again get remand.

Meanwhile, a joint meeting of Forex Association of Pakistan (FAP) and Exchange Companies Association of Pakistan (ECAP), attended by representatives of "A" and "B" Category exchange companies, criticised the FIA's Lahore Circle for presenting some of the KKI directors handcuffed in Lahore Sessions Court on Sunday. The meeting also decided to meet the high-ups in State Bank of Pakistan (SBP), FIA and others concerned agencies.

A delegation, led by Haroon, Chairman ECAP and Malik Bostan President FAP also met Director FIA Crime Circle Zubair. Zubair assured the delegation that in future FIA would take the exchange companies' association into confidence before taking action against any exchange company would be raided in the presence of SBP officials.


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## Neo

*Govt borrows Rs269.5bn from SBP ​* 
Wednesday, November 12, 2008

ISLAMABAD: The government borrowed Rs269.5 billion from the State Bank of Pakistan (SBP) during less than four months, it is more than ten and a half times compared to borrowing of Rs23.28 billion during the same period of last fiscal. 

It is a well-known fact that the government has been borrowing heavily from the banking system due to the burgeoning income-expenditure gap. During the period from July 1 to October 25, it stood at Rs150.27 billion against Rs74.42 billion in the corresponding period of last year. 

However, it was depressing that the government depended more on the central bank borrowing instead of commercial banks. This scenario, according to economic pundits, did not support the governments efforts to tame inflation and pull the poor out of acute poverty. Since last year, the central bank has time and again advised the government to reduce its dependence on bank borrowing, especially the SBP, in order to control inflation and support monetary policy. 

According to the bank, the excessive borrowing from the SBP spurs inflationary pressure in the economy due to excessive money circulation. 

According to the banks latest monetary snapshot, currency in circulation during the period under review increased by 84 per cent to Rs142.52 billion from Rs77.41 billion in the same period of the last fiscal. 

Few months back, the central bank also asked the government that the fiscal deficit be contained in years ahead to reduce the risk of crowding out of the private investment. Besides, it should also retire borrowing from the banking system particularly from the SBP. 

Economists believe that expansionary government fiscal policy is also considered as a source of diluting effects of the SBP tight monetary policy formulated for capping high inflation. It is feared that running a loose fiscal policy may crowd out private investment in the country. Despite the banks advice, borrowing from the central bank is going up and up. Though public spending help in developing right infrastructure for encouraging private investment, however if increase in government spending is not accompanied by increase in government revenue and proportionate increase in real GDP, it creates public debt and inflation respectively. The higher public spending may put upward pressure on the interest rates and thus discourage private investors to invest. 

During July 1 to October 25, 2008, governments borrowing from the SBP stood at 269.51 billion while retired Rs119.23 billion of scheduled banks. In corresponding period of the last fiscal borrowing from the central bank stood at Rs23.28 billion and of scheduled banks it stood at Rs51.13 billion. Currently, inflation is touching record high which is not only affecting the macro economic indicators but also severely disturbing social life of million of poor Pakistanis. Besides, the loose policy had also crowded-out private investment in the economy. It is also feared that if the government was unable to attract external inflows as a result of low remittances, slowdown of privatization proceeds, the borrowing volume could balloon to unbearable level that could further affect the governments efforts to rein in the inflationary pressure and bring down poverty level in the country. 

It is worth-mentioning that during fiscal year 2007-08, fiscal deficit stood at Rs777 billion or 7.4 per cent of GDP against Rs398.8 billion (4 per cent of GDP) targeted for the fiscal under review. 

In order to bring back the budget on a sustainable track, fiscal deficit for 2008-09 is proposed at 4.7 per cent of GDP i.e. Rs582.3 billion. 

To fill the fiscal gap, during July-June 2007-08, the government borrowed Rs461.28 billion from banks (scheduled and the central bank), which is about 469 per cent or Rs380.28 billion more than the actual target of Rs81 billion for fiscal year 2007-08, while Rs359.26 billion (or 352 per cent) more than, it borrowed in corresponding period of the last fiscal 2006-07 (Rs102.015 billion). 

More worrisome was that the government borrowing from the SBP increased to alarming Rs633.17 billion during FY2007-08 as against Rs58.57 billion it retired last year. Of scheduled banks, it retired Rs171.89 billion against Rs160.59 billion it borrowed in corresponding period of the last fiscal.


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## Neo

*Qadirpur gas field to be sold in 6 months ​* 
Wednesday, November 12, 2008

ISLAMABAD: The government is determined to go ahead with the planned privatisation of Qadirpur gas field despite the ongoing protest against its sale, and expects attractive offers from foreign investors.

We will sell the field in the next six months, a senior official told The News. Anything less than $1 billion will not be fruitful for Pakistan. The hope is that the offer will definitely be much beyond this. However, he said that for the moment it was impossible to predict the level of offers that would be made by interested parties. But he said gas fields like Qadirpur were in great demand internationally and expected that American, British, European and Middle Eastern companies would take part in the bidding.

Thirty-seven per cent of the gas field will be sold with transfer of management control while the Oil & Gas Development Company Ltd (OGDCL) will retain 38 per cent. Twenty-five per cent share is already in private hands. At present, OGDCL owns 75pc while Kirthar Pakistan 8.5pc, Pakistan Petroleum Limited 7pc and PKPEL and PKPEL-2 own 4.75pc each. It is Pakistans second largest gas field, having gas reserves of about 3.5 trillion cubic feet worth $3 to $5 billion.

The official said that the OGDCL gets 18pc of its revenue from the Qadirpur gas field, adding that if a decision to keep the management control with OGDCL is taken, the present protest movement might die down and suspected it was inspired by the OGDCL.

He said that when Pakistan goes to international financial institutions with a request for funding, they do ask what the government was doing to mobilise money from its own resources and to improve the budgetary scenario. At that stage, the issue of privatisation does crop up and the government can well argue that it was making efforts. Privatisation becomes more necessary when foreign direct investment is not coming in a significant manner.

The official said that the question as to who would own the unknown deeper formation (reserves) was being left undecided during the privatisation so that OGDCLs interests remained secure. Only the known reserves are being sold. 

He said that the gas pricing formula was yet to be decided and what prevailed now was an interim arrangement. When this formula is firmed up, the actual evaluation of the field would be available.

The official said that it would be ensured that none of the 650 employees of the gas field are laid off. He said the next buyer would not take all the profit out of Pakistan, but would invest a major part of it in the facility to improve its output. 

The OGDCL, he said, has no means to make investment in the field while the new owner would be asked to spend on further exploration as well.

He dispelled the impression that this was not a good time to privatise any state entity given the prevailing security climate in Pakistan, and pointed out that five days after the September 20 Marriott Hotel Islamabad terrorist attack, the Privatisation Commission fetched a more than expected price for the Hazara Phosphate Fertiliser.

The Qadirpur Gas Field located in Sindh is described as a goldmine of Pakistans natural reserves. Merrill Lynch is the financial advisor for its privatisation. The field was developed in three phases, increasing its capacity from the initial 235 mmscfd to 500 mmscfd. 

The average daily sales during the third quarter of 2006-07 from the field were 495 mmscfd of purified gas, 35 mmscfd raw gas and 103 barrels of condensate.


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## Neo

*Remittances rise to $2.34bn ​* 
Wednesday, November 12, 2008

KARACHI: Remittances sent home by overseas Pakistanis continued to show a rising trend as $2.34 billion was received in the first four months (July-October) of the current fiscal year 2008-09, showing an increase of $264.5 million or 12.71 per cent over the same period of last year. 

The amount of $2.34bn includes $0.16 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs). Monthly average of remittances for the period comes to $586.50m as compared to $520.37m during the same period of the last fiscal year, registering a surge of 12.71 per cent. Inflow of remittances from USA, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UAE, UK and EU countries amounted to $626.93m, $494.80m, $395.47m, $388.09m, $149.77m and $65.15m, respectively as compared to $590.81m, $390.91m, $302.14m, $334.82m, $164.50m and $60.68m, respectively in previous year. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries amounted to $225.62m as against $236.96m in the same period last year. During last month of October, Pakistani workers remitted an amount of $466.13m.


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## Neo

*France to help Pakistan combat energy shortage ​* 
Wednesday, November 12, 2008

LAHORE: Ambassador of France, Daniel Jouanneau, has said that Paris is ready to extend cooperation to Pakistan in overcoming its energy shortage by building wind mills and initiating solar energy projects.

He was speaking at the Lahore Chamber of Commerce and Industry (LCCI) on Tuesday. The French ambassador said that Pakistan could overcome its energy shortage by building wind mills with cooperation of France as it has a lot of windy areas. He said not only France but the whole world is interested in having a stable Pakistan.

He said France would take every possible step to help Pakistan in coping with all challenges it is facing today. We cannot have more active presence in Asia if we bypass Pakistan because it is a hub between Central Asia and South Asia.

Daniel, however, stressed the need for image building of Pakistan that had been lost in the eyes of the world community due to multiple reasons. 

He said French multinationals had maintained a visible presence in Pakistan in various sectors like pharmaceutical and chemicals, telecommunication equipment; oil marketing, textiles and food processing.

France has also significantly contributed to the building up of defence capability of Pakistans Air Force and Navy by supplying Air Defence System and fleets of mirages and transferring technology for building up of sub-marines. This speaks of remarkable relations that exist between the two countries, which form the basis for more cooperation in other fields also. 

The LCCI Acting President Mian Muzaffar Ali said France and Pakistan have a long history of close ties in all fields, whether they are political, economic, cultural or defence. 

The relations between the two countries have traditionally been excellent and friendly, characterised by a high level of mutual consultations.


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## Neo

*Something to cheer about : Remittances rise 13% to $2.346bn in Jul-Oct​*
KARACHI: Remittances sent home by overseas Pakistanis during first four months of current fiscal year grew by $264.5 million or 12.71 percent to $2.345 billion compared with $2.081 billion in the same period of last year. 

The monthly average remittances for the period (July-October 2008) comes out to $586.50 million as compared with $520.37 million during the same period of last fiscal year. At a time when every other economic indicator is pointing towards a downslide in the economy, remittances is the only source of comfort for the economic managers of the country. The large amounts sent by these Pakistanis have helped the government cover trade deficits for past several years. Without this support, the country could have defaulted on its foreign exchange payments much earlier. 

The inflow of remittances from USA, Saudi Arabia, GCC countries (Bahrain, Kuwait, Qatar and Oman), UAE, UK and EU countries amounted to $626.93 million, $494.80 million, $395.47 million, $388.09 million, $149.77 million and $65.15 million, respectively, compared with $590.81 million, $390.91 million, $302.14 million, $334.82 million, $164.50 million and $60.68 million, respectively, during the same period of last year. 

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries amounted to $225.62 million as against $236.96 million in the same period last year. 

During October 2008, Pakistani workers sent an amount of $466.13 million. According to breakup, remittances from USA, Saudi Arabia, GCC countries (Bahrain, Kuwait, Qatar and Oman), UAE, UK and EU countries amounted to $127.28 million, $96.78 million, $80.10 million, $75.91 million, $31.20 million and $13.37 million, respectively. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during October 2008 amounted to $ 41.44 million. 

The amount of $2.345 billion sent home by expatriates includes $0.16 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).


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## Neo

*ECNEC okays Diamer-Bhasha dam project​*
ISLAMABAD: Executive Committee of National Economic Council (ECNEC) on Tuesday accorded approval to the Diamer-Bhasha dam worth $12.6 billion. 

Federal Minister for Water and Power, Raja Pervez Ashraf during the press briefing on the Diamer-Bhasha dam project said that dam would generate 4500MW electricity. He said that government would open bids for the pre-qualification of the project by November 30 to hire contractors. 

Minister said that ECNEC had also approved comprehensive plan for the displaced families and they would be provided compensation. The project would be completed in the next seven years. Minister further said that project would provide electricity worth $1.5 billion per annum and the agriculture sector would get the benefit of $500 million annually. 

Minister said that the project would help benefit the agriculture sector and there would be no power shortages crisis in the country after the completion of the project. He said that during the presidents visit to China, Chinese Companies had taken interest in materialising the Diamer-Bhasha dam project. 

Minister further informed that Arab and European countries are also interested in the project and wanted to make a consortium for the completion of the project. He said that Pakistan required $1.5 billion per annum financing for the project.

ECNEC had also decided that both North West Frontier Province (NWFP) and Northern Areas would get the royalty as per their land rights. Minister said that government had chalked out a comprehensive strategy to initiate projects in the power sector. He said that government would enhance the power generation capacity by 2015 and would require $30 billion in this regard. He said that public sector would provide $10 billion whereas private sector would be asked to generate $20 billion. He said that country would need 116,000MW electricity by 2030 as the power growth rate was increasing 7 to 8 percent annually. 

He said that government was also looking at the alternative resources that included Thar coal, wind and solar energy and expedited the work on these projects. He said that investors were taking interest in the Thar coal reserves. 

While talking to media men, Chairman Water and Power Development Authority (WAPDA) said that acquiring land and resettlement plan of Bhasha dam would need Rs 60 billion and Rs 90 million would be spent to replace the relics to place in the museum. He said that 30,000 relics had been identified at the place of the dam.


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## Neo

*Govt seeks $46bn for mega projects from Gulf countries​*
ISLAMABAD: The government is likely to seek much-needed foreign exchange worth over $46 billion for infrastructure related mega projects including Diamer Bash dam and others from Gulf States, sources told Daily Times here on Tuesday. 

President Asif Ali Zardari and other economic mangers of the country expect to hold meeting in Dubai with leaders of Dubai, Sharjah and other gulf countries on November 17, sources said. Pakistan leader would inform leaders of the oil-rich gulf countries about financial crises of the country. Pakistani leaders would try to plea Pakistani case regarding much required foreign exchange reserves for meeting international obligations of the country. 

At the same time, sources said that Pakistan team would seek financial assistance for 31 mega projects, mostly related to the development of infrastructure sector of the country. Total cost of these 31 projects is more than $46 billion. Majority of these projects are related to water, power and other sectors. 

The government is particularly seeking financial assistance for the construction of Diamer Bash dam, which is approved by the ECNEC on November 11. The dam would be built on Indus River and after completion it would have an annual 6.4 million acres feet surface water storage capacity, which would supplement irrigation supplies during low flow periods. 

The project will also harness renewable source of clean and cheap energy through installed capacity of 4500MW and reduce dependence on thermal power, hence, saving foreign exchange. The dam would pay back its cost in ten years, the sources added. 

Apart from Diamer Bhasha Dam Project, the sources said Pakistani leaders would also discuss other national importance projects. Some of these are: New Khanki Barrage Construction Project worth Rs 20 billion, GEPCO, Gujranwala secondary transmission lines and grid station improving project worth Rs 5.173 billion, Rohri Hydro Power Project worth Rs 794.573 million, Kurram Tangi Dam WAPDA Mardan worth Rs 17.205 billion, Rehabilitation of Irrigation canals in Punjab Irrigation System worth Rs 6.260 billion, Rural road construction project Phase-II (JABIC) Rs 5.114 billion and several other important projects.


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## Neo

*Efforts on to improve economic indicators: Kaira ​*
LAHORE (November 12 2008): The government was working to improve the economic indicators of the country by facilitating industry and investment as much as possible within its resources, said Punjab Minister for Finance, Planning and Development.

Talking to a business delegation called on him here on Tuesday, Tanvir Kaira said the government was keenly alive to the vital role of industry in national development, and was taking necessary measures to restore investor confidence, including closer liaison with the business community. He also assured the business community that nobody would be unduly harassed for tax recoveries.


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## Neo

*Japan to invest $872.316 million for KCR revival ​* 
KARACHI (November 12 2008): The government of Japan will invest $872.316 million for the revival of Karachi Circular Railway (KCR) to overcome traffic problems in the metropolis. According to sources, Japan External Trade Organisation (Jetro) commissioned by the ministry of economy, trade and industry, government of Japan would provide 100 percent funding for the project under Japanese STEP loan at 0.2 percent mark-up rate for a 40-year payback time, including a 10-year grace period.

They said Jetro, as a first parameter, will dualise KCR's 30-km loop with modern signalling and telecommunication system at a cost of $536.852 million. Further, the sources said at least two dedicated tracks along with the main line from City (Railway) Station to Drig Road Station of 14.5 kms, which would later be linked to the airport with a distance of 6-kms, at a cost of $179.464 million.

They said Karachi Urban Transport Corporation (KUTC) would be the vehicle for the implementation of the project having on its Board-Directors the senior officials of Pakistan Railway, Government of Sindh and City District Government Karachi (CDGK).

Currently, the project was under different assessment studies, such as Environmental Impact Assessment (EIA), Special Assistance for Project Formation (Saprof), led by a group of Jetro and would be completed within two to three months, said the sources adding that PC-1 for the project had also been cleared in principle. They said the government f Pakistan and Jetro were likely to sign a loan agreement by May 2009, within three to four years of which the project would be completed.


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## Neo

*Economic issues come under focus during last few months: report ​* 
KARACHI (November 11 2008): The economy has deep-rooted structural problems, which have come sharply under focus during the last few months as the economic difficulties emerged. This was stated in an interim report of the panel of economists on 'Economic Stabilisation with a Human Face' made available to Business Recorder here on Monday.

"These structural problems need to be tackled if we are to avoid the 'stop-go' cycle of growth linked to the level of foreign assistance," the report said. The panel has accepted the responsibility of preparing a 'home grown package' to achieve stabilisation of the economy and remove the structural imbalances.

The report said that emergence of very large and unsustainable macro-economic imbalances coupled with a high and rising rate of inflation necessitate the resort to a strong stabilisation programme in the short run if the country is to avoid a default eventually on its international obligations and to prevent inflation from acquiring a runaway character, leading to a social breakdown in an already difficult security situation.

Therefore, the stabilisation programme has to be designed in such a manner that the trade-off with respect to growth is essentially of a short-term character and it is possible for the economy to get back to a relatively high growth path in a medium run, it added.

The Panel is also of the view that the package of reforms should be developed independently of the quantum of external assistance that is likely to become available. There is need to avoid any perception that the reform effort will be weaker if more foreign resources are forthcoming. The case for stabilisation can be made powerfully by developing a 'counterfactual' scenario of the economy in which strong policy actions are not taken and we essentially continue for the next few months with 'business as usual.'

There is very prospect of increasing panic in the markets and fast continued erosion of business confidence, some of which we have seen already. The rupee is plummeting while the rate of foreign reserves depletion intensifies. It is conceivable that if no concerted action is taken to stem the slide the rupee it could depreciate much further as the foreign exchange markets attempt to equalise the demand and supply for foreign currency.

This will lead to a severe import compression of over 20 percent and not only create a dislocation in production processes but also lead to shortages and lack of affordability by bulk of the population of essential food and other items. The overall inflation in prices in this scenario could be almost treble the last year's rate of 12 percent.

Private investment could fall by over 25 percent, worsening greatly the prospects for gainful employment of the large number of new entrants to the labour force. Over two million additional workers could be unemployed and as many as ten million people could fall below the poverty line. The consequences are too horrendous to comprehend, leave alone accept. We have no other option but to adopt a strong domestic stabilisation programme if we are to avert a national crisis, especially at a time when there are serious security threats to the country.

Pakistan has faced financial crisis before. Perhaps the best most recent example is the situation after the sanctions imposed upon us following the nuclear blasts of 1998. In the presence of extremely low foreign exchange reserves, Pakistan had to negotiate an IMF stabilisation programme, with a series of tough conditionalities.

The key elements of the stabilisation strategy agreed with the IMF in January 2009 included a severely contractionary monetary policy characterised by very high real interest rates and strong curbs on private sector credit; exchange rate policy involving a transition from a dual exchange rate (with the lower rate on essential imports) to a unified, but significantly depreciated rate; continued process of trade liberalisation with declining import tariffs; major public expenditure containment, especially of development expenditure and no significant measures of social protection during the adjustment process due to lack of 'fiscal space.'

The stabilisation programme did succeed in converting the current account deficit into a surplus by 2000-01 and in bringing down the fiscal deficit to sustainable levels. The inflation rate, which was double-digit in 1994-97 fell to low single digit by 1999-2000. But this strategy imposed a high cost in terms of the decline in the rate of growth of the economy, which fell to a low below the average of 3.5 percent in the first four years after the launching of the programme.

The central message from this stabilisation episode is that while the strategy followed under the aegis of an IMF programme was instrumental in removing the macro-economic imbalances it was achieved at too high a cost in terms of the growth foregone and rise in poverty. Clearly, there is need to develop an alternative, perhaps more 'home grown,' strategy, which does not fundamentally impair the medium-run prospects for growth and avoid placing more of the burden of adjustment on the relatively weaker and more vulnerable sections of society, the report said.

The principles underlying a 'home-grown' stabilisation strategy with a human face are preserve the growth momentum by protecting levels of public and private investment to the extent possible and aiming for pro-poor growth, the policy actions and reforms should be designed in such a manner as to insulate the poor to the extent possible from negative impacts and a strong social protection strategy needs to be put in place to reach out to particularly vulnerable groups at this time.


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## Neo

*Software piracy costs Pakistan Rs 10 billion annually ​* 
ISLAMABAD (November 07 2008): Pakistan has taken up seriously the growing menace of piracy that has been hurting the productive sectors and causing a loss of Rs 10 billion revenue every year, said Chairman of Anti-counterfeit and Infringement Forum Aamina Saiyed here on Thursday.

Speaking at a workshop, on "Countering software piracy as a social and economic Issue," organised by Microsoft to create awareness, she said that the menace was not confined to a specific sector and appallingly critical medicines used in intensive care were also either pirated or fake.

She deplored that even some government organisation were also involved in piracy, and said a book on Micro electronic circuit of Oxford University Press was being prescribed by all the engineering universities of Pakistan. The interactive workshop was designed for journalists to raise awareness on the role of media in the fight against software piracy, copyright infringement and to highlight the value of genuine software to consumers, businesses and the national economy.

Famous brands lose seven to 20 percent of sales, coupled with huge impact in terms of tax revenue loss to the government as individuals, "it is our responsibility to shed light on such issues, create awareness and initiate steps that would eliminate the economic differences imposed by counterfeit trade and piracy," she said.

Software Manager of Microsoft, Pakistan, Salman Siddiqui, said that software piracy was a problem of the entire world as it caused losses of over 40 billion dollars annually. He said that in Pakistan, the productive sector was bearing the brunt of massive use of pirated and untaxed software. A mere 10 percent decrease in piracy rate could contribute 163 million dollars to the gross domestic product (GDP) and raise 23 million dollars in additional income to the government.

He said that the increased use of legitimate software would also promote a better environment for foreign companies to invest in Pakistan. At the same time, it would also inspire more of entrepreneurship in the information technology (IT) sectors, thereby resulting in higher software exports, he added. He said that piracy was not just an economic issue, rather it was a social phenomenon as artists, writers, and even local small businesses were impacted by it.

He said Pakistan was lagging beyond in the region in terms of IT competitiveness, and according to a study conducted by Business Software Alliance (BSA), Pakistan's ranked at 62 in current IT competitiveness, which placed it behind other comparable economies like India, Bangladesh and Nepal Citizenship Manager at Microsoft Afzaal Mirza said that his company had initiated various programmes in Pakistan to promote IT education in the deprived segments of the society.


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## Neo

*Reforms must be distinct from foreign assistance ​*
EDITORIAL (November 12 2008): A report titled "Economic Stabilisation with a Human Face", prepared by a panel of economists, with Dr Hafiz Pasha, former Deputy Chairman of the Planning Commission, in the lead, argues in favour of an independently developed package of reforms. This, the report contends correctly, is critical to ensure avoiding the stop-go cycle of growth inextricably linked to the level of foreign assistance.

The report is particularly damning in terms of the possibility of the present government achieving any of its budgetary targets. The budget deficit of 4.7 percent, as agreed with the International Monetary Fund (IMF) team in May this year after much debate over the Fund's initial insistence that the deficit be brought down to 4.2 to 4.3 percent, is not likely to be achieved. The panellists' projection works out to 6.4 percent with a deficit of 853 billion rupees instead of the targeted 584 billion rupees. Inflation is unlikely to be contained at 12 percent and a GDP growth rate of 5.5 percent is also unrealistic, so states the report.

Given the weekly inflationary figures of over 25 percent and an industrial and farm sector reeling from an energy crunch, the projections of the panelists make intrinsic sense. Their report also notes and correctly so, that current expenditure is understated because of the fast eroding rupee value, which accounts for a more rapidly growing foreign debt than was envisaged during the budget preparation as well as a higher domestic debt due to higher interest rates offered to facilitate greater non-bank borrowing (a large proportion of which is short term).

The estimated rise in debt servicing alone: 72 billion rupees. And if one adds the 20 percent rise in the salary for military personnel as well as civil servants, as announced in the budget amidst much applause, current expenditure is likely to be higher by 169 billion rupees than what was budgeted.

Some would, no doubt, argue that the panelists' suggestion to formulate a package of reforms independent of dictation by international financial institutions may not be compatible with the projected inability of the government to achieve any of its budgetary targets. And with the Pakistani leadership having formally revealed its intent to go on the IMF programme there is a definite likelihood that stringent conditions would be more reflective of a donor developed package instead of an independent indigenously developed package of reforms. Dr Pasha, in his former capacity as the United Nations Assistant Secretary General, must be aware of the constraints under which countries with poorly performing macroeconomic fundamentals like Pakistan today operate, especially when they require urgent injections of between 5 to 10 billion dollars.

Be that as it may, few in Pakistan would disagree with what Dr Pasha and his team, have proposed: a home-grown package designed to achieve stabilisation and remove structural imbalances. While his critics may well argue that the home-grown recipe, devised by those who have done a stint in the international financial institutions, may not be all that home-grown, yet the fact remains that Pakistani governments, have too often abandoned reforms half way, thereby going headlong into a tailspin that brought us to our knees again, begging for assistance.

The principles underlying the home-grown strategy have been identified in the report, namely, preserving the growth momentum though the IMF is likely to insist on a brutal contractionary monetary policy with negative implications on growth, a pro-poor growth unlikely given the massive reduction in subsidies in recent months that are raising poverty levels nation-wide, and a strong social protection strategy for which the government of Pakistan has no funds.

Dr Pasha's team has suggested 2.6 acres of government land to be transferred to 520,000 landless farmers - an approach reminiscent of the five marla scheme endorsed by some political parties in the past. It is also suggested that all inputs be provided as well, however, Dr Pasha may do well to recall that small farms do bring the national yield average down. He would no doubt argue that this would be a pro-poor policy. However, one would hope that this policy would not be abused as in the past, whereby land so transferred was hijacked by the rich landlords.

The panellists have also suggested, in line with the statements by the Advisor to the Prime Minister on Finance, Shaukat Tarin, that the exchange rate must be allowed to depreciate to a level at which the trade imbalance would be eliminated. A trade imbalance is unlikely to be eliminated through depreciation alone for Pakistan, principally because the value of our imports is almost double that of our exports.

Most of the remaining prescriptions identified by the panellists have formed part of government policy over the past decades though their implementation remained unsatisfactory: (i) A more comprehensive framework for the prioritisation of projects in the PSDP which requires a restructuring of the existing portfolio of projects to reduce the throw-forward to five years or less; (ii) promotion of higher value addition in exports and, to that end, rebates should be linked to the rate of increase in exports rather than the level; (iii) fiscal policy to level the playing field between tradable and the non-tradable sectors. The current incentive structure favours investment in the non-tradable sectors.

This should be corrected by expanding the tax net to include the services sector, make property taxes realistic and levy capital gains tax to prevent asset price bubbles in the non-tradable sectors; and (iv) the growth strategy has to proactively aim to reduce regional as well as sub-regional inequalities by actively targeting less-developed areas of the country, together with selecting sectors and sub-sectors for targeted development over the next 5 years through rebates, tax relief, establishment of a one window export documentation board, infrastructure development, marketing and R and D support, and removal of import restrictions.


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## Neo

*Pakistan, Opec Fund sign $30m accords​*
ISLAMABAD, Nov 11: Pakistan and the Opec Fund for International Development (OFID) have signed two agreements of $15 million each, for the Golan Gol Hydropower Project.

The agreements were signed in Vienna by Shahbaz, Ambassador of Pakistan to Austria and Suleiman J Al-Herbish, Director General of the OFID on behalf of the government and the Opec Fund respectively, said a press release received here on Tuesday.

The project, involving $30 million co-financing from the OFID, is located on the Golan Gol River, a left bank tributary of the Mastuj River.

The powerhouse of the project is located in the North West Frontier Province (NWFP) along Chitral-Bunni Road at a distance of about 25 km from Chitral.

The project has an installed capacity of 106MW (annual energy production: 436 million KWH). Work on the project is already under way and the Opec Funds financial assistance will be utilised in procurement, installation and testing of transmission line and grid stations extension.

Speaking on the occasion, Suleiman J. Al- Herbish recalled that OFID Pakistan cooperation spanned over more than 30 years now.

He expressed the Funds continuing commitment to this cooperation in the coming years.

Referring to the global financial turmoil, he stressed that OFIDs decision to sign two loan agreements with Pakistan during these times showed the trust which the Fund had in the resilience of economy of the country.

Ambassador Shahbaz thanked the Director General for OFIDs financial support for a number of projects in Pakistan.

Regarding the Golan Gol Hydropower Project, he underlined its particular importance for Pakistan at a time when the country was faced with imbalance between energy demand and its production capability.APP


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## Neo

*Foreign investors to continue investment: survey ​* 
Thursday, November 13, 2008

KARACHI: In spite of constant security threats in the country, 76 per cent of Overseas Investors Chamber of Commerce and Industry (OICCI) members have said that they would continue with the investment plans for the next two years, though 63 per cent foreign investors said that their expansion plans would be limited.

However, 88 per cent of the 110 members who replied to the OICCI Perception Survey 2008 stated that the governments efforts to control the law and order situation were not effective enough.

The perception survey was conducted by the OICCI between August and September 2008 and its report was formally launched on Wednesday at the chambers head office by its President Waqar A Malik.

Pakistans overall system of corporate governance was viewed as effective by 79 per cent of the respondents. With reference to the Federal Budget 2008-09, investors had mixed sentiments regarding its impact on business activities.

While half the respondents viewed it in positive light, the other half was not so optimistic and considered it a further drain on foreign investments. This stands as a sharp contrast to the previous year when 63 per cent of the investors saw the budget for 2007-08 in favorable terms.

In respect to the different ministries, the Ministry of Commerce, Communication, Finance, Economic Affairs and Foreign Affairs were termed to be the best performing bodies with 70 per cent of the OICCI members approving of their performance.

In contrast, the Ministries of Health, Water and Power and Law and Justice were the most unpopular with more than 60 per cent of the respondents deeming their performance as below average.

Moreover, with the exception of WAPDA, and Intellectual Property Organisation of Pakistan whose functions were termed unfavorable by at least 70 per cent members, all other bodies were considered satisfactory in terms of performance.

Financial institutions and bodies such as State Bank of Pakistan (SBP) with 58 per cent and Securities and Exchange Commission of Pakistan (SECP) with 62 per cent acceptance fared amongst the best institutions, whereas Federal Board of Revenue (FBR) and the Pakistan Telecommunications Authority (PTA) were also strongly appreciated.

However, even though 50 per cent respondents found Pakistans business environment to be better than other emerging markets around the world, the pharmaceutical and financial sectors preferred other emerging markets to this country.

Other than the pharmaceutical sector, the oil and gas sector also preferred other countries in the region of South Asia to Pakistan and this was mainly due to the circular debt issue that the country is currently facing.

On the other hand, an astounding 96 per cent of the OICCI members termed the internal law and order situation of Pakistan as the most pressing concern for foreign investors and a major impediment to Foreign Direct Investments (FDI) into the country.

Breaking down the ratio, out of 110 respondents, 101 termed the internal political situation as poor, 7 acceptable and only one member termed it good compared to last years statistics of 69 members terming it poor and the rest acceptable. The law and order situation was also termed poor by 106 members, whereas only 4 members deemed it acceptable with none ranking it good this year.

Meanwhile, 77 per cent of the OICCI members were strongly concerned about the implementation of policies in Pakistan, of which 18 foreign investors said that they may wind up their operations if the law and order situation persists in the country.

Worst still, 90 per cent of the respondents termed the rupee-dollar parity as a major impediment negatively affecting local businesses, whereas 72 per cent of the OICCI members expressed disapproval of the way the domestic economy was progressing this year compared to 50 per cent for the last year.

Furthermore, 62 per cent of the members also found the corporate tax rate at 35 per cent to be unacceptably high, amongst which, the pharmaceutical sector was the most disapproving.

On the issue of utilities, the availability of electricity was deemed almost as non existent as 109 members marked it poor against one members acceptable and none ranking it good.

Some of the recommendations that the survey brought forward by foreign investors were that corporate tax rate should be made comparable to the region, whereas strengthening of the domestic economy and improvement in policy implementation was also stressed upon by the investors.

The foreign investors identified five key areas that are a challenge for the government: law and order, political uncertainty, energy deficiency, cost of operations and infrastructure. 

They also advised different ways to conserve energy and generate additional power.

As 86 per cent of the OICCI members said that the government has been inefficient in its efforts to improve the perception of Pakistan amongst potential foreign investors, they advised that the government should develop more aggressive and optimistic media campaigns, address the concerns of the business community in a more concrete manner and draft a more robust investment promotion strategy and implement it.


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## Neo

*NFC meeting after macroeconomic stability ​* 
Thursday, November 13, 2008

ISLAMABAD: Economic managers are mainly focusing on obtaining a bailout package worth $7.5 billion from the International Monetary Fund and after achieving macroeconomic stability the government will convene the first session of the National Finance Commission (NFC), it is learnt.

Yes, the main focus of the finance ministry is on achieving macroeconomic stability after which they will convene the first session of the NFC, Sindhs non-official member Dr Kaiser Bengali said in response to queries of The News. 

He said the government has not yet fixed any date for holding a meeting of the NFC. Now there is no news when the government is going to hold a meeting of the NFC as all-out efforts are under way to bridge the financing gap of $7 billion in order to address the woes on the external front. 

There are also some unresolved questions on the composition of the NFC body after appointment of Adviser to the PM on Finance Shaukat Tarin including whether he could chair the meeting of the NFC because the provinces had objected in the past when former adviser to the PM on finance Dr Salman Shah had chaired the NFC meeting during the Shaukat Aziz regime. 

Earlier, the finance ministry was giving indication to convene first meeting of the NFC after Eid-ul-Fitr. Now one and half month have passed but there is no movement on this front. The countrys external side vulnerabilities forced the incumbent regime for taking immediate steps aiming to avoid default on payment of over $3 billion in shape of principle amount as well as interest payment on its external debt and liabilities of over $46.03 billion, official sources said while talking to The News here on Wednesday. 

The NFC Award has always remained stumbling block in the way of resolving this lingering controversy as it requires consensus of all stakeholders concerned which could not be achieved owing to sticking to their viewpoint by all parties after lapse of last award in 2002. 

For giving weightage to other factors for distributing financial resources, Balochistan NWFP and Sindh will ask Punjab to accept 75:25 formula in which 75 per cent resources should be distributed on the basis of population and remaining 25 per cent should be distributed on inverse population density, backwardness and revenue generation efforts. 

The PPP government had notified much awaited 10-member National Finance Commission to ensure equitable financial resources distribution formula between Centre and four federating units. Other than four provincial finance ministers, four representatives which include Dr Gulfraz Ahmad who is to represent Balochistan, Saeed Qureshi Punjab, Kaiser Bengali Sindh and Senator Haji Mohammad Adeel NWFP. Hina Rabbani Khar, Adviser to the Prime Minister on Economic Affairs will be the special member of new National Finance Commission. 

The poor provinces such as Balochistan and NWFP are pinning a lot of hopes on the new NFC that they would be able to get their shares in the financial resources of the country that the new coalition government seems too much objective in resolving the long-standing issues of the provinces. 

Then the president was requested by provinces to intervene and he, under Article 160(6) of the Constitution, amended the Distribution of Revenues and Grants In Aid Order, 1997 and implemented the new NFC award with effect from July 1, 2006 under which provinces share will be jacked up 46 per cent till 2010.


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## Neo

*Discount rate decision to hurt investment, business ​* 
Thursday, November 13, 2008

ISLAMABAD: The countrys economy is left with no option but to be exposed to the massive slowdown in the wake of the decision of the State Bank of Pakistan to raise the discount rate by 200 basis points to 15 per cent which is the highest in South Asia. 

The decision will also discourage private investment, raise unemployment and stop businesses expansion, say independent economists. 

As globally, falling prices of commodities, food and crude oil could provide a breathing space to taming inflation, reducing trade deficit and ultimately twin deficits (current account and fiscal deficit). But the bank took the decision prematurely that could compromise economic growth. Dr Salman Shah, former Adviser to the PM on Finance and Revenue in Musharraf regime, told The News with the decision to raise discount rate, the countrys ailing economy will collapse. This decision has been taken to contain inflation, but inflation is no more the issue, if kept in view the fast declining prices of oil, palm oil and food commodities in the international market. 

Actually, the recession is the challenge and to cope with this issue, the government should have avoided taking the said decision. Shah said in the days to come, inflation would hover in the negative zone in the whole world except Pakistan as inflation would decrease in the country to some extent because of decline in oil and food prices, but it would remain very much in the scene just because of the governments faulty decision to alarmingly raise the wheat procurement prices up to Rs950 per 40kg as wheat substantially contributes its share to the basket of CPI (Consumers prices Index). 

This is the fifth consecutive increase since July 2007 when the central bank raised the rate by 50 bps from 9.5 per cent to 10 per cent and some 100bps in January 2008 from 10 per cent to 10.50 per cent and May 2008, it raised it by 150 basis points to 12 per cent. 

After two months, the bank again took a tight monetary stance in July 2008 due to rising inflation and continuous depreciation of Pak rupee against the dollar and increased the discount rate by 100 bps to 13 per cent. 

One of the negotiators of the governments economic managers with the International Monetary Fund (IMF) told The News, yes earlier, it was one of the major conditionality of the Fund but when the governor stat bank explain its position and convinced them that raising discount rate was not in the best interest of the economy then the demand was shelved of its conditionalties. He said I dont know how the central bank took the decision. 

Islamabad Chamber of Commerce and Industry (ICCI) president Muhammad Ijaz Abbasi while condemning the banks decision told this correspondent This would hurt overall economic activities, businesses, raise the cost of doing business, reduce exports, increase capital flight and decrease investment and employment. ICCI has time and again requested the government to reduce banks discount rate to single digit, as with the high rate, doing business was not feasible. 

More and more industrial units were closing down due to increased cost of doing business. How our products would compete in international market with its higher prices? the Islamabad business community question. Businesses were already confronted with higher energy, raw materials and labor cost; the decision would be another bombshell for the businessmen and would push the economy towards economic recession, Ijaz said. 

Globally, due to expected economic slowdown, various countries have reduced their discount rate but contrary to that, Islamabad has increased the bank rate. At the moment, Pakistan needs a sizeable investment in every sector especially in industrial sector but the high banks benchmark would hurt it, ICCI president said.


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## Neo

*Blockage of Chenab water to wreck Punjab economy: CM ​* 
Thursday, November 13, 2008

LAHORE: Punjab Chief Minister Shahbaz Sharif has said that blocking the flow in the Chenab by India will devastate the agricultural economy of the province and adversely affect 5.6 million acres of its fertile land. He said there was a need for prompt and effective measures to deal with the grave situation. 

He was addressing a meeting held to consider the issue of the Chenab and its impact on the agriculture sector here at the Chief Ministers Secretariat on Wednesday The chief minister said that the violation of the Indus Basin Treaty by India and blockage of Pakistans share of water was a serious issue and it would cause irreparable damage to the agriculture sector in Punjab if it was not tackled properly. He said the blockage of Chenab water would adversely affect fertile areas of Lahore, Narowal, Sialkot, Sheikhupura, Kasur, Hafizabad, Faisalabad and Nankana Sahib. He said in view of the gravity of the situation, he would ask Prime Minister Yousuf Raza Gilani to talk to India for addressing the issue. 

Shahbaz said the water of the Chenab was vital for agri sector of the province. He directed the Irrigation secretary to evolve a plan for storage of the flood water while assuring that all necessary funds would be provided for this purpose. He said any shortfall in agri production would affect the national economy and there was a need to find solution to this problem as well as the alternative sources. 

Earlier, the Irrigation secretary gave a detailed briefing on the issue of the Chenab water. He said that under the Indus Basin Treaty, India was bound to release at least 55,000 cusec water to Pakistan at Marala but it was violating the agreement and releasing less water than Pakistans share. 

He said India was launching power generation projects at more than 10 places, including the Baghliar and Salar dams. Chief Minister directed Secretary Irrigation to submit him a comprehensive report on the issue within next 48 hours. 

Punjab Senior Minister Raja Riaz Ahmad, Senior Advisor Sardar Zulfiqar Ali Khan Khosa, Tanveer Ashraf Kaira, Rana Sanaullah, Ahmad Ali Aulakh and the chief secretary were also present on the occasion.


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## Neo

*Discount rate raised to 15 percent​* 
KARACHI (November 13 2008): Faced with falling forex reserves, rising inflation, persistent government borrowing and deteriorating macroeconomic imbalances, the State Bank of Pakistan, for the seventh time, raised on Wednesday its policy rate from 13 percent to 15 percent. However, unlike last time, it decided to pump more liquidity (Rs 319 billion) to meet exceptional liquidity requirements of the banking system.

Addressing the media at the SBP head office, State Bank of Pakistan Governor Dr Shamshad Akhtar said: "Active and calibrated liquidity management is a part of prudent monetary management, necessary to ensure effective monetary transmission mechanism, which is critical to advancing financial as well as overall macroeconomic stability." As such, these money market measures must not be construed as a change in SBP's monetary policy stance, she added.

The Governor said that monetary tightening was warranted to reduce the external current account imbalance, reinforce fiscal tightening and discipline, arrest rising inflationary pressures, build up the foreign exchange reserves and calming the foreign exchange market, besides restoring confidence and stability in money markets and demand pressures.

She said that raise in the policy rate by 200 basis points was not an easy decision for SBP, and in the post-July 2008 period the SBP had taken a number of measures, at appropriate times, and in phases, to avoid other attendant risks.

However, she said, the ever-highest 25 percent inflation and micro economic imbalances had compelled the central bank to take some strict measures, aimed to improve the sovereign guarantee. Otherwise, the country' economy would have faced more difficulties on both domestic and international fronts, besides decline in the foreign inflows.

She said that despite $2.3 billion workers' remittances and $7.1 billion exports, the import bill of $12.9 billion had raised external current account deficit to $5.9 billion during July-October FY09. With financial inflows slowing down ($1.1 billion only in July-October FY09), the external current account deficit had to be financed by drawdown of SBP's foreign exchange reserves, she added.

As a result, the country's foreign exchange reserves has been reduced by $5.0 billion since the beginning of this fiscal year, up to Nov10, 2008. The recent decline in international oil and other commodity prices were a positive signal for the external sector. However, a sustained decline in overall imports demand was critical to avoid further reserves loss after its expected build-up.

Dr Akhtar said that SBP's new move would not only help in aligning aggregate demand with supply but would also provide room to accommodate the government's financing requirements from commercial banks. In addition, this would help calm the sentiment in the foreign exchange market and would also stem the second-round impact of high inflation from spreading further, she said.

She added that appropriate monetary policy stance was only one ingredient of the macroeconomic stabilisation program and, as such, its effectiveness would depend on co-ordinated fiscal and external sector actions to ensure swift and sustainable stability.

"Economic outcome during first four months of FY09 has deviated substantially from our expectations, and increasing public sector spending, imports and inflation are three principal factors complicating macroeconomic management," the Governor said.

She said that government budgetary borrowing from the SBP had reached up to Rs 369 billion during period from July 1 to November 8, 2008, while import bill had gone up by 35.2 percent, and headline and core inflation had mounted to 25 percent and 21.7 percent, respectively, in October 2008.

She said that recognising the continuing economic challenges and complexities, Pakistan has launched a comprehensive macroeconomic stabilisation package for the medium term to curb the growing macroeconomic imbalances and strengthen the fiscal and monetary co-ordination. It is also expected to facilitate official and private foreign inflows, which are critical to stabilise and build up the foreign exchange reserves to an adequate level, she added.

The Governor said that the crux of this program revolves around reducing the external current account deficit, supported with appropriate exchange rate policy and bringing the fiscal deficit to sustainable levels by rationalising expenditures and strengthening tax revenue generation.

This stabilisation package will help to proactively manage supply and demand pressures, which are critical to restoring economic confidence and stability. The need for an effective macroeconomic stabilisation package had heightened early in the year as the economic indicators came under stress because of the impact of global commodity price hikes combined with a persistent rise in aggregate demand pressures.

Challenges and risks have magnified as the unanticipated adverse macroeconomic outcome of FY08 persisted and spilled over into FY09 compelling the central bank to take some more steps, she said.

Dr Akhtar said that Pakistan's economic situation is different from global and regional developments. Therefore, policy responses have to be different. She added that "the world is in grip of the worst financial crisis, while a number of advanced countries are facing severe liquidity crisis, which transformed into an insolvency crisis".

In contrast, Pakistan, hit by the global commodity price shock, and given the delays in passthrough of this price effect, witnessed a growth in its fiscal and external current account deficits that reached unsustainable levels and alarmingly high inflation.

She said that stagnating tax-to-GDP ratio had not only enhanced recourse to borrowings from the SBP but also resulted in a fall in foreign exchange reserves, triggering depreciation in the exchange rate.

"Considering the size of macroeconomic imbalances, the SBP remains committed to achieve price stability over the medium term and thus has to launch steeper monetary tightening to tame the demand pressures and restore macroeconomic stability in FY09" the Governor said.

She said that recognising the economic challenges and given the macroeconomic outcome, there was need to extend the macroeconomic stabilisation program to mitigate the emerging risks. "Similarly, though import growth is expected to significantly slow down to 2.0 percent (and may even turn negative) due to falling international prices and exchange rate induced domestic demand moderation, the external current account deficit is projected to lie between 6.2 to 6.8 percent of GDP," she added.


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## Neo

*100 percent export refinance to be provided​* 
KARACHI (November 13 2008): In order to further facilitate exports, the State Bank of Pakistan (SBP) on Wednesday announced willingness to provide 100 percent financing to banks, under Export Refinance Facility Part-II (ERF) and Long-Term Financing Facility, which will inject an additional amount of Rs 39.5 billion into money market.

Earlier, the SBP was only financing 70 percent under ERF, while the remaining liquidity was provided by banks themselves. The central bank has already released close to Rs 270 billion through lowering of reserve ratios and around Rs 10 billion by providing 100 percent refinancing to banks under Part I of EFS to meet the growing working capital financing requirements of the exporters.

SBP Governor Dr Shamshad Akhtar, presenting the monetary policy, announced that to provide more liquidity to the banks, the central bank would provide 100 percent finance against Part II of EFS and Long-Term Financing Facility (LTFF) to promote real investment in the country.

This would inject an additional amount of Rs 39.5 billion into money market, making the cumulative size of liquidity comfort provided to commercial banks to Rs 319.5 billion. These measures, aimed at accommodating exceptional liquidity requirements of the banking system, must not be construed as a change in the SBP's monetary policy stance, she added.

She said that active and calibrated liquidity management was part of a prudent monetary management necessary to ensure effective monetary transmission mechanism which is critical to achieving financial as well as overall macroeconomic stability. In addition, flexible application of reserve ratios and open market operations helps effective monetary management.

Export finance, already provided by banks under Part-II of EFS from own sources at the ratio of 30 percent and outstanding as on date of issuance of the present circular, would be refinanced by the State Bank for the remaining period of individual loan.

The central bank has asked the banks that they should approach the respective field offices of the SBP along with a list of cases under the Scheme for release of refinance against their share of 30 percent for the remaining period.

Banks will henceforth not be entitled to deduct the funds provided under both parts of the Scheme from their Time and Demand Liabilities determined for the purpose of computation of both Cash Reserve Requirement and Statutory Liquidity Requirement.

As the funds under EFS are provided to the exporters at substantially lower rates when compared with the market rates, banks have been strongly advised to ensure legitimate utilisation of these funds for increasing exports of the country, the SBP said in its circular regarding ERF.


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## Neo

*Sonda-Jherruk project: PPIB asks DHCL to submit performance guarantee by November 15​* 
ISLAMABAD (November 13 2008): The Private Power Infrastructure Board (PPIB) has warned Dadabhoy Group that the government will cancel its 220 MW integrated coal mining and power generation project at Sonda-Jherruk if the firm fails to submit performance guarantee by November 15, official sources told Business Recorder.

The sources said the company had not fulfilled its earlier commitments with regard to finalisation of coalfield lease with the Sindh government despite the passage of several months. "You were advised on April 15, 2008 to expedite your project otherwise inform us whether or not you are interested in developing the project. In response, you confirmed your interest with the promise that the Sindh government has agreed to issue lease of allocated coalfield, which will be finalised within one month," said, PPIB Managing Director Fayyaz Elahi in a letter to Managing Director of Dadabhoy Hydrocarbon Limited (DHCL) Amin Dadabhoy.

Elahi also claimed that on July, 2008, the PPIB again sought the status of the project and the firm revealed that the Mines and Minerals Development Department gave its consent to grant lease to the DHCL and a summary was sent to the Sindh Chief Minister for approval.

"Approximately three months have lapsed since you made the last promise. As such, you are advised to finalise your other formalities and revert to the PPIB by November 15, 2008 with performance guarantee at 5,000 per MW and processing fee 100,000 dollars (non-refundable) for issuance of letter of support (LoS), failing which the Federal government would consider cancelling earlier approval of your project and invite expression of interest from other serious investors," the sources quoted Fayyaz Elahi as warning to the firm.

Earlier, General Manager, Investment, Engineer. A. Wahab Memon, in a letter to the PPIB had stated that the DHCL was committed to implement the subject project positively without any iota of doubt.

He, however, requested the PPIB to pursue the Sindh government for its urgent approval as, according to him, the DHCL was committed to implement the project on fast track basis. The PPIB had also been apprised that the DHCL had made the entire project implementation related arrangements with its foreign associate firm for its implementation within the stipulated time.


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## Neo

*Foreign trips, princely expenditures tarnishing government's image: PEW​* 
ISLAMABAD (November 13 2008): The government should stop counter-productive foreign trips and princely expenditures for seeking monetary support, as it is losing confidence of the masses and tarnishing its own image, said President of Pakistan Economy Watch (PEW) Dr Murtaza Mughal here on Wednesday.

"A number of foreign trips of top leaders with hundreds of entourage are costing public exchequer heavily. What Pakistan is getting, in return, is sweet words and promises only. Leaders seem loosing ground back home",

Dr Mughal said while talking to reporters. "Besides global economic turmoil, political uncertainty at home and our track record of massive economic mismanagement, there is something wrong, which is forcing friends to turn their backs on our repeated requests," he said.

He said that the government was delaying revolutionary measures to avoid default and relying on the International Monetary Fund (IMF), which had not contributed towards the development of any country since its inception. Around 70 per cent of total loan acquired so far by Pakistan was believed to channelled back to Dubai, Malaysia and the US banks via pockets of politicians and bureaucrats, he said.

"However, masses are always asked for sacrifices that have never benefited from these borrowings," he said, adding that the government should avoid princely expenditures otherwise our delegations might not be welcomed anywhere in future. He called upon the present government not to break the record of former prime minister and president who tried to make a century of foreign tours, wasting billions of rupees.

Top political leaders joined hands and uprooted dictatorship, but now they were acting in a strange manner, creating problems for themselves and loosing trust of the masses, he said. "The government says they have no option but to swallow bitter pill of the IMF, but fact is that we have some other workable options, which are being neglected due to some reasons," he said.


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## Neo

*Pakistan seeks $9 bln loan from IMF ​*
Friday, November 14, 2008 

ISLAMABAD: Pakistan has asked the International Monetary Fund (IMF) for a $9 billion bailout along with help from other lenders to avert a balance of payments crisis, a finance ministry official said on Friday.

"We are asking $9 billion from the IMF, they are talking about $7.4 billion. IMF can give us up to $7.6 billion," a finance ministry official told a foreign news agency. 

The official said that the government would soon deliver a letter of intent to the IMF, paving the way for the world's lender of last resort to release funds rapidly.

Another official said on Friday that the letter of intent would probably be sent before Monday, when potential donors are due to gather in Abu Dhabi for a "Friends of Pakistan" conference.

The conference of officials is not expected to result in loans being pledged, but it could pave the way for a ministerial meeting later.

Credit ratings agency Standard & Poor's cited Pakistan's tardiness in securing foreign assistance for a decision on Friday to lower its rating on the nation's sovereign debt deeper into junk bond territory.


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## Neo

*Pakistan to enjoy easing oil prices impact by March ​* 
Friday, November 14, 2008

ISLAMABAD: Governor State Bank of Pakistan, Shamshad Akhtar on Thursday said impact of the global decline in certain commodities including oil would be felt in the countrys economy by the February-March next. Talking to a local TV channel, the SBP governor said the latest bill that the government has paid on oil import range around $123 per barrel. She said temporarily liquidity shortage phenomena is now over as the Central Bank injected around Rs320 billion as straight cash into the economy. 

The situation of liquidity shortage emerged during the months of September and October due to Eid withdrawal and rumours factor but it was controlled immediately. 

The SBP governor said owing to multiple factors the countrys economy was facing a stress like-situation at present and it was the duty of all stakeholders to take some measures to put it on right track. 

To a question she said it was the countrys need to approach the IMF in prevailing conditions adding the IMF has no compulsion whatsoever in this regard. 

She said correction in the economy was imperative to attract the investors interest and the IMF was approached after due deliberation and consultation. The discussion is still going on with IMF. She said inflation was still at growing pace and the core inflation rate may reach 20 per cent by the end of June next. 

The SPB governor said the interest rate of the central bank is still lower than the inflation rate and some observers and analysts are of the view that these rates be further increased. She said it is imperative to control and curtail the inflation because it impacts the economic growth rate and affects the lifestyle of low income citizens.


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## Neo

* IMF aid not required ​* 
Friday, November 14, 2008

KARACHI: Former President of Karachi Chamber of Commerce and Industry (KCCI), Zubair Motiwala has stated that Pakistan does not need any aid from the International Monetary Fund (IMF) as it has foreign reserves of over $6.7 billion whereas over the past 30 years, Pakistan has recorded foreign reserves as low as $1.5 billion and therefore the current reserves are sufficient to run the country.

During a meeting with Acting Governor of Sindh, Shehla Raza at the KCCI on Thursday, he further said that if it was essential to receive the aid, then the advisor to PM on finance and economic affairs should appear on the media and clearly state all the terms and conditions IMF expects to be fulfilled by the country.

He commented that all the positive and negative aspects of the IMF terms should be made public so that they can also decide whether the aid is feasible or not for the country.

He further stated that EU and several other countries had put trade barriers, which should be removed, now that Pakistan has a democratically elected government.

Shehla Raza assured full support to the business community and said that she would direct all the business communitys grievances to the federal minister of finance.


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## Neo

*Pakistan to add 20,000MW in 10 years ​* 
Friday, November 14, 2008

LAHORE: Pakistan is likely to add 20,000MW hydro-electricity generation capacities in next 10 years that besides mitigating power shortage would have sobering effect on the average cost of electricity generation.

Water and Power Development Authority (WAPDA) Chairman, Shakeel Ahmad Durrani stated this during an interview with The News. He said the major hydro-electric generation would come from Dialmer Basha Dam that would produce 4500 MW electricity, the construction of which would start by second quarter next year. He said earlier, WAPDA was concentrating on mega dams only that served the dual purpose of providing water for irrigation and generating electricity. He said now it has been decided to explore all avenues from where the hydro-electric generation is possible.

He said Bunji a run of the river project would produce 5400MW electricity. Engineering of this project has been completed and its tenders would be invited in early 2010. This project would be completed in seven years and its cost is $6 billion. The project would be built on River Indus near Gilgit, he added.

He said Dasu is another run of the river electricity generation project, located 2km upstream on Indus River 69km downstream of Diamer Basha dam. He said feasibility study of the project would be completed within this year. He said tentative project cost is $6.5 billion. The project he added should be completed within a decade as its implementation period is estimated to be 7 years.

The other projects that are likely to be completed within next decade includes 1100MW Kohala hydro-power project on River Jhelum and Munda Dam at Swat River would produce 740MW electricity with water storage capacity of 0.67 million acre feet, he added.

Durrani said all these projects are commercially viable as the costs are recovered in five to seven years. He said multilateral donors would definitely take interest in these projects. He said almost 50 per cent of the cost could be arranged through suppliers credit.

He said the run of the river projects would be independent of irrigation needs. Most of these projects, he added are located in the northern areas of the country and are independent of dam water. He said the web for generating maximum hydro-electricity has been laid and it would pave way for a sustained economic growth of the country.

Chairman WAPDA said that the authority releases waters according to the instructions received from Indus River System Authority (IRSA). He said the dams are basically meant to facilitate irrigation and electricity production is a by product.

He said there is however some technical matter relating to safety of Ghazi Brotha project that have been explained to IRSA. He said due to safety of Ghazi Brotha canal it is not possible for WAPDA to reduce outflows by more than 10000 cusecs a day. 

He said if IRRSA indents supply of 65000 cusecs water daily then requires reduction to 25000 cusecs then WAPDA would take four days to reach that level. He said IRRSA officials have assured that they would from now on keep this aspect in mind while issuing water release indexes from Tarbela.


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## Neo

*Germany, Pakistan sign protocol on development cooperation ​* 
Friday, November 14, 2008

ISLAMABAD: Pakistan and Germany signed a Protocol on Development Cooperation under which Germany would provide Euro 81 million for various development projects in Pakistan in the fields of education, health, microfinance and poverty alleviation.

The protocol was signed following bilateral economic negotiations on development cooperation between the two countries held in Berlin. Secretary, Economic Affairs Division Farrakh Qayyum led Pakistans delegation while Germanays delegation was headed by Dr Friedrich Kitschelt, Director General for Asia and South-Eastern Europe Division of the German Ministry for Economic Cooperation.

During discussions both sides reviewed the progress on current development projects in the fields of education, health and energy being undertaken with German assistance. The two sides also discussed potential fields to further deepen bilateral engagement particularly German assistance in the area of technical and vocational training.

Both sides concluded a Debt Swap-IV Agreement according to which Germany would write off a loan of Euro 20 million and the amount would be utilized by Pakistan government in building infrastructure for schools in NWFP.

Germany would also provide Euro 7.5 million for improvement of health delivery system in FATA. The German side would also consider a proposal for establishment of a medical college and a teaching hospital in FATA at a cost of Euro 10 million.

Germany and Pakistan have a longstanding and cooperative relationship and development cooperation is an important aspect of these relations. Germany is expanding its development cooperation with Pakistan and the next round of bilateral economic negotiations would be held in Islamabad in April next year.

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## Neo

*$200m inflow from IDB slows reserves slide​*
KARACHI: The Islamic Development Bank (IDB) provided $200 million to Pakistan as aid a few days ago, a central bank official said on Thursday.

The spokesman for State Bank of Pakistan (SBP), Syed Wasimuddin, said the country had received $200 million from the bank on November 6. 

This inflow helped the central bank restrict the depletion in foreign exchange reserves during the week from November 1 to 8. The country's liquid foreign reserves dropped to $6.736 billion on November 8 from $6.758 billion on November 1, a decline of $22 million or 0.32 percent. This depletion in reserves was much smaller than those recorded during previous many weeks. The country had been losing, on average, $400 million every week for past few months owing to extremely high trade and current account deficits. 

The country is expected to receive large funds from International Monetary Fund and friendly countries within the next month after signing an agreement with the multilateral lender. Top officials have had meeting with IMF in Dubai and reportedly agreed on various measures to take the country out of the quagmire it is stuck in. 

A huge gap between country's imports and exports has eaten away the foreign exchange reserves by more than half during last one year, as the central bank had to spend dollars to protect the rupee from extreme volatility. 

Since the beginning of the current calendar year, the central bank has been intervening in the foreign exchange market quite frequently to support the rupee, which sharply lost its value against the dollar. Besides, the central bank has to give dollars to banks for their customers' oil import payments. 

Whereas the support extended to rupee resulted in sharp depletion of foreign exchange reserves, it did not succeed in stopping the rupee's slide. The rupee has lost about 32 percent value against the greenback since January. The dollar is now available in the interbank market at around Rs 81 compared with Rs 61 at the beginning of the year. 

Foreign reserves held by the State Bank of Pakistan fell to $3.496 billion from $3.529 billion, a drop of $33 million or 0.93 percent. 

Net foreign reserves held by banks other than SBP rose to $3.239 billion from $3.228 billion, up by $11 million or 0.34 percent.

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## Neo

*Rs 130 billion Neelum-Jhelum Hydroelectric Power Project​*
*Donor countries to offer funding in foreign exchange​*
* IDB, Saudi Fund for Development, Kuwait Fund for Development and Abu Dhabi Fund for Development would attend meeting on 17th to discuss project

By Ijaz Kakakhel

ISLAMABAD: The bilateral donor countries and institutions are likely to offer Pakistan the much needed funding in foreign exchange for the construction of the Rs 130 billion Neelum-Jhelum Hydroelectric Power Project, sources told Daily Times on Thursday. 

The donors meeting is likely to be held on November 17. The Neelum-Jhelum Hydroelectric project was launched by former president General (r) Pervez Musharraf in February this year. With the depreciation of the Rupee and increase in the value of the Dollar, the cost of the project would further increase, sources added. For the construction of the project, the government had enhanced its efforts and was seeking financial assistance from Friends of Pakistan and international donor agencies. 

Willingness: For financing the Neelum-Jhelum Hydroelectric power project, the sources said, four Islamic institutions had expressed willingness and confirmed that they would attend the joint meeting of donors likely to be held on the 17th. The Islamic Development Bank, Saudi Fund for Development, Kuwait Fund for Development and Abu Dhabi Fund for Development are the four institutions. The sources said these institutions were expected to financially help the government in the construction of the much-needed hydroelectric power project. The sources said the country faced an energy shortage and such a power project would greatly help the government to meet its energy requirements, which is badly needed for the economic development of the country. 

The hydroelectric project would help the government to generate 969MW and would help in producing about 5,150 giggawatt-hours electricity annually. 

Officials in the Ministry of Water and Power told Daily Times it was a very important project and would have far-reaching strategic implications. The project would be completed with Chinese assistance in eight years. The officials described it as yet another symbol of Pak-China friendship and added it would also contribute towards the economic progress of the country.

The project is located in the vicinity of Muzaffarabad in Azad Jammu and Kashmir. It envisages the diversion of the water of Neelum River through a tunnel into Jhelum River. The intake of Neelum-Jhelum is at Nauseri, 41 kilometres east of Muzaffarabad. The powerhouse would be constructed at Chatter Kalas, 22 kilometres south of Muzaffarabad. After passing through the turbines, the water would be released into the Jhelum River about 4 km south of Chatter Kalas. The construction contract of the project was awarded on July 7, 2007 to M/s CGGC-CMEC Consortium China. Under the project, water from the Neelum River would be diverted through a 47km-long tunnel. 

Federal Minister for Water and Power Raja Pervez Ashraf, answering a question in the National Assembly a few days ago regarding the construction of Kishan Ganga Project by India in Indian-held Kashmir, had said India started the project on River Neelum in 

IHK in 1994. The project features include storage of 0.14MAF of water and its diversion to Wular Lake located on Jhelum Main, which was against the Indus Water Treaty.

He said Pakistan raised objections based on the design of the project and having adverse affects on Pakistans Neelum-Jhelum Hydroelectric Power Project. He said that now Pakistan had started construction of Neelum-Jhelum project and under the international law, India could not reduce the flow of water.

For meeting the energy demand, the minister in a statement said work on 11 projects with an accumulative power-generation capacity of more than 12,000MW would start by 2009. These projects include Bunji (5,400MW), Dasu (4,000MW), Kohala (1,100MW), Spatgah and Palas Valley (1,230MW), he added.

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## Neo

*China to provide $500m aid to Pakistan​*
ISLAMABAD: Following President Asif Ali Zardaris visit to China, the Chinese government has agreed to provide financial assistance of $500 million to the Pakistani government. According to an official statement issued by the Ministry of Finance on Thursday night, this gesture by the Chinese government bears testimony to the close relations between the two countries.

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## Neo

*Terror war will now cost Pakistan $8bn ​*
** Ministry of Finance estimates $34.5 billion losses to Pakistan since 2001​* 
ISLAMABAD: The direct and indirect cost of the war on terror borne by Pakistan is likely to increase to $8 billion per annum in the next couple of years from the current $6 billion, an official source told Daily Times on Thursday.

According to the official, estimates compiled by the Ministry of Finance indicate that during the eight years since 2001, direct and indirect losses to Pakistans economy due to the war on terror have been estimated at $34.5 billion. According to the official, the loss of lives and economic cost imposed by the war is now rising to an unbearable level and a very negligible portion of these costs is defrayed by the governments development partners.

Since 2001, losses of $5 billion have been estimated in foreign direct investment, more than $5 billion in exports and $5.5 billion in privatisation, the official said.

Impact: There has also been deterioration in law and order. Travel advisories have been issued against Pakistan by the United States and other major allies in the war on terror, which has resulted in a reduction in the number of intending investors, foreign buyers interested in taking part in the privatisation of major national assets. The official said this had an impact on the privatisation programme, exports, and resulted in a decrease in the foreign direct investment and revenue collection due to the economic slowdown.

The official said expenditures related to security have multiplied in recent years. Physical infrastructure like bridges, roads, girls schools and official buildings has been destroyed, resulting in increased cost of maintenance or reconstruction.

Hundreds of thousands of people have been left with no option but to migrate from areas where security operations are being conducted, he said. The government is bearing the costs of facilitating the migrating families.

The official said Pakistans tourism destinations like Swat, Gilgit and Naran were no longer attractive for local or foreign tourists. The decline in tourism has resulted in loss of revenue as well as employment.

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## Neo

*Zardari calls Clinton, gets support for the Biden-Lugar $15 billion package ​* 
NEW YORK November 14, 2008): President Asif Ali Zardari on Friday called Senator Hillary Clinton on telephone who has emerged as a choice of President-elect Barack Obama for the US Secretary of State.

The President, now in New York to attend the dialogue on interfaith harmony, said Pakistan was striving for peace in the region and its nascent democracy needed support and cooperation of the international community to confront several challenges it was facing.

Hillary Clinton, a senator from New York, extended full support to President Zardari for the dollar 15 billion assistance under the Biden-Lugar bill for the next ten years as a long-term engagement with Pakistan.

Hillary Clinton said the United States of America was keen to see the economic and social uplift of the people of Pakistan and the new US administration and the Congress would work together to attain that objective.

The US media reported Clinton was the top contender for the slot of U.S. Secretary of state, following her meeting with President-elect Barack Obama on Thursday to discuss her role in the new administration.

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## Neo

*Country to miss growth target by 1.5 percent in fiscal year 2009 ​* 
KARACHI (November 14 2008): The State Bank of Pakistan on Thursday projected that the country will miss its Gross Domestic Products (GDP) target by 1.5 percent in FY09 and expected that the growth would be some 4 percent, the lowest in last six years. The country is witnessing over 6.5 percent GDP growth rate since FY03 and during FY08, the country's economy registered a growth of 5.8 percent.

The central bank in its detailed monetary policy statement presented the outlook of economy on Wednesday and said that poor law and order situation, besides structural weaknesses such as power shortages, etc, are responsible for slow economic growth during the current fiscal year.

"Although, growth during 2009 would be lower than the target of 5.5 percent and actual estimated growth of 5.8 percent in FY08, however economic growth would be maintained or even sacrificed depending on the evaluation of the trade-off between inflation and growth," the SBP said.

The SBP said that tight monetary policy is the only ingredient of the macroeconomic stabilisation programme and several changes in the fiscal, external, and financial sectors are required immediately in the medium term to put the economy back on track.

The central bank also projected that inflation is likely to decelerate during second half of FY09 following the positive impact of global commodity prices, which are declining. The SBP estimated some 14 percent YoY headline inflation from 25 percent in October 2008, while on average basis, inflation will be close to 21 percent for FY09; well above the 11 percent target for the year.

Import growth for FY09 is also expected to be around 2.0 percent and may even turn negative due to the declining oil prices in world market and slowdown in domestic demand due to a depreciated rupee.

However, the SBP has said that growth slowdown and recession in Pakistan's major trading partner countries, particularly US, EU, and Japan, is likely to have an adverse effect on our exports, which expected growth would be around 10 percent during FY09.

"As per projected imports and exports and assuming a continuation of existing trend in workers' remittances, the external current account deficit is estimated to stand between 6.2 to 6.8 percent of GDP," SBP said.

The SBP said that fiscal deficit will have to be cut considerably, even lower than the projected 4.7 percent of GDP target for FY09 with the government's commitment to eliminate reliance on borrowing from the SBP to finance fiscal deficit and the lower availability of external financing. The expected developments in the external and fiscal sectors will be reflected in a monetary growth of around 12 to 13 percent.


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## Neo

*Qadirpur Gas Field will not be privatised at this stage: Prime Minister ​* 
ISLAMABAD (November 14 2008): Prime Minister Syed Yousuf Raza Gilani has said that Qadirpur gas-field will not be privatised at this stage and the parliament would be taken into confidence before the government decides to privatise the field. Speaking in the Senate here on Thursday, he said the government was not selling Qadirpur gas-field.

"The Senate will be taken into confidence before the gas field is privatised," the Prime Minister said in a policy statement. The policy statement came a day after the parliamentarians both from treasury and opposition benches expressed their reservations over the proposed sell off of Qadirpur gas-field.

Gilani also announced a grant of Rs 2 billion for construction of houses damaged by last month's earthquake in Balochistan. Pakistan Army has been tasked to carry out survey and compensation would be given to completely damaged, partially damaged and slightly damaged houses. He said the estimated cost of reconstruction of a house damaged by the earthquake had been estimated at Rs 378,000.

Gilani said that the elected government would not accept tough conditions set by the International Monetary Fund (IMF). The Prime Minister also offered to quit his office if anybody came out with a claim that he was in better position to solve the problems the country is facing.

He assured the house that Qadirpur gas-field's privatisation would be fully transparent. "The government is serious in deciding matters of national importance in the parliament," he said. The government, he said, can never take a step which is detrimental to the security and integrity of the country as the elected representatives have to go back to their constituencies for seeking vote in next elections.

The PPP and its coalition partners, he added, came into power after a hard struggle for democracy. "The government has not been gifted to us. We are here because of long struggle for democracy, therefore, the present democratic government will not take any decision, which will be harmful for the country, he added.

He said he was happy to note that the house has debated a number of issues and the unanimous resolution on national security in the joint in-camera session of the parliament was testimony to the fact that the present government held parliament in highest of esteem.

He said the government was constructing six thousand one-room houses to provide shelter to the affected people during winter when they cannot initiate construction activity. The affectees can either get the rooms being built or receive fifty thousand cash to build temporary shelter on their own for three months. The Prime Minister said there was no dearth of medicines and food stuff for the affected people but acknowledged the distribution system could be deficient.

Referring to the foreign exchange companies' issue, he said as a result of the measures taken by the government, the rupee-dollar parity has come down. He said an inquiry is underway and after its completion the Advisor on Interior would brief the House. The Prime Minister said in view of the economic difficulties of the country, the government was making strenuous efforts to diversify the economy by giving boost to agriculture.

He said it was because of this that the support price of wheat has been increased to Rs 950 per 40 kg and rice Rs 1500 per 40 kg. He held out an assurance that the government would lift every grain of wheat and rice if prices of these commodities fall down. He said the government was providing subsidy worth Rs 32 billion on fertilisers.

Syed Yousuf Raza Gilani said the ECNEC has approved construction of dams to increase water storage capacity while it will take some time to eliminate load shedding. He, however, pointed out that except Karachi, there was no load shedding in the country. The Prime Minister said the country was facing problems of terrorism and economic crisis which are inter-linked.

He invited the members to give their suggestions for resolution of these problems. He said the government would bring all issues before the parliament and it is responsibilities of the members to contribute towards their solution.

Gilani pointed out that several Ministers from the Senate have been included in the federal cabinet and it will ensure greater presence of Ministers in the House. He said there was a need to set healthy traditions and in this regard lauded PML-N Nawaz Sharif for going to the President to congratulate him on his election.


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## Neo

*China agrees to provide $500 million, Tarin tells Senate ​* 
ISLAMABAD (November 14 2008): China has agreed to extend financial assistance of $500 million to Pakistan, said advisor to the Prime Minister on finance Shaukat Tarin while concluding debate on current economic situation in the Senate Thursday.

He said that the government was expecting $5 to 6 billion at the lowest interest rate from IMF next month. It may offer loan on four percent interest rate, he said, adding that IMF had attached no condition.

"The government has announced tough measures for reducing fiscal deficit, current account deficit and inflation in the budget. These targets set in the budget are tough. The IMF will not seek any other measure from Pakistan," he told the Senate.

The advisor defended the SBP move of increasing the discount rate. However, he said that parliament is the supreme institution and it can seek explanation from SBP about the raise. He clarified that this had nothing to do with proposed IMF package.

At the same time he said inflation was fatal for economy. Citing the cases of Argentina, Brazil and a number of other countries, he said that these countries showed negative growth for some years to contain inflation. "Inflation has touched 25 percent. The inflation will have to be reduced and the SBP move in that direction," he added. He said that high inflation could lead to hyperinflation and at that stage things would get out of control. By increasing the discount rate, we are trying to help the country in controlling the inflation within the limits specified in the budget 2008-09. "We need to undertake some difficult decisions to improve the economic situation," he said. He said that IMF was a reformed organisation and it has been improved from what it was in 1990s.

Tarin said that once inflation showed a declined and it reached at permissible level, the discount rate would be reduced. He hoped that plight of capital could be arrested once the government announced its economic plan.

He said Pakistan could not afford default on debt repayment. The countries, which had done in the past, have to struggle for long to get back to the track. Tarin accused the previous government for not taking actions on right time. Most of the corrective measures were delayed by the previous government owing to election year, he said.

Meanwhile, in a press release the finance ministry stated the Chinese assistance is a goodwill gesture from Beijing, which bears testimony to the brotherly relations between the two countries. The financial assistance of US $500 million is in addition to the same amount deposited by the Chinese government with the State Bank of Pakistan (SBP) in June 2008, the ministry clarified.

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## Neo

*Japanese companies: Pakistan offers to establish special economic zone ​*
ISLAMABAD (November 14 2008): Pakistan has offered setting up a special economic zone for Japanese business companies, Japanese Ambassador to Pakistan, Chihiro Atsumi was informed by Deputy Chairman Planning Commission, Salman Faruqui on Thursday. Faruqui said that Pakistan was already establishing such facility for China in Lahore and was willing to do so for Japan in the south of the country, probably in Karachi.

The Ambassador welcomed the proposal and stated that the Japanese business companies working in Pakistan had a very good perception about doing business in Pakistan and were willing to enhance their investment here. He said that Japan was providing assistance of $500 million for a number of development projects in Pakistan for the current year.

The Ambassador was briefed on a wide range of business and investment opportunities for the Japanese investors in Pakistan such as energy, agriculture, and infrastructure development projects. He was informed that Pakistan needed financial assistance for mega projects like Bhasha Dam and mass transit projects in the same fashion as Japan helped Pakistan in constructing Ghazi Brotha project and Indus Highway-both the projects were funded by Japan.

He expressed his special interest in assisting Pakistan in development work in FATA. He said that Japan was already providing financial assistance in education and health sectors in FATA and was willing to extend this co-operation in other areas as well.

Upon this, the Deputy Chairman informed the Ambassador that Japan could help in construction of dams in FATA as these projects would significantly alleviate poverty from the region by providing jobs to the local population. The Japanese Ambassador assured to consider the proposal.-PR


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## Neo

*Pakistan to attend IITF 2008 as partner state ​*
KARACHI (November 14 2008): Pakistan is participating as Farther Country in India International Trade Fair (IITF 2008) which is commencing from November 14, New Delhi. Pakistan Pavilion located in the International Hall will have a unique distinction in terms of size and variety of products which include Kitchenware, Textiles, Garments & Home Furnishings, interior & Home Décor.

Furniture, Healthcare & Cosmetics, home decoration items, plastic goods, artificial jewellery, cutlery, ceramics, marble and granites, leather goods, herbal cosmetics and toiletries, cooking ranges etc. There are 85 companies including SMEs and Women Entrepreneurs in Pakistan Pavilion measuring 1,100 sq mtrs which is the ever biggest participation of Pakistan in IITF organised by FPCCI on self-finance.-PR

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## UnitedPak

*Chinese company ready to set up car manufacturing plant in Pakistan *



> ISLAMABAD, Nov 14 (APP): Chinese car manufacturers have expressed their willingness to establish an eight&#8209;seater car manufacturing plant in Pakistan.
> 
> Cars produced in this plant would be sold on cheaper rates as compared to cars of other companies, King Ping, Chairman of Chinese Mini Car Manufacturing Company told Minister of State for Industries and Production, Ayatullah Durrani, during a meeting here on Friday.
> 
> King Ping is heading a Chinese manufacturing delegation to Pakistan.
> 
> In the beginning we will bring one thousand cars to Pakistani market for introduction and after that we will start manufacturing here, he said adding that *the production capacity of the plant would be 1,000 cars per month.*
> 
> On the occasion, the minister told the delegation that there was a great scope for investment in Gwadar as the government was providing complete security to the foreign investors.
> *Durrani assured the delegation that if they set up a car manufacturing plant in Gwadar, the government of Balochistan will provide complete securities and land on cheep rates to them.*
> *He said that the government has also declared free tax zone to the industrial sector in Gwadar adding that the future of Gwadar was very bright as it would open new vistas for trade and economic activities in Pakistan.*
> 
> He informed the delegation that many Chinese manufacturing companies were also in touch with the Pak&#8209;Government to seek industrial plots in Gwadar.
> 
> He said that the government would provide all kinds of opportunities to the investors who invest in Pakistan and provide new technology.
> 
> Ms. Lucky Chow, Trade representative of Shihao Jiche, Mini Car Company and High officials of Ministry of Industries and Production also attended the meeting.



Associated Press Of Pakistan ( Pakistan&#039;s Premier NEWS Agency ) - Chinese company ready to set up car manufacturing plant in Pakistan

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## Neo

*IMF to extend $7.6 bln loan to Pakistan: Tareen​*
Saturday, November 15, 2008 

KARACHI: The International Monetary Fund (IMF) will extend 7.6 billion dollars to Pakistan under a 23-month loan programme, said Adviser on Finance Shaukat Tareen on Saturday. 

Addressing a press conference here at State Bank of Pakistan, the Adviser said the IMF will provide this loan under stand by credit limit at interest rate ranging between 3.51 and 4.51 per cent and its repayment will be made in five years beginning from 2011. 

Governor SBP, Dr. Shamshad Akhtar was also present on the occasion.

Shaukat Tareen said IMF has not attached any new condition to the loan facility. 

The IMF will release 4 billion dollars as the first tranche of the loan this year while the rest will be provided in the coming year. 

However, he said the IMF will make its final decision regarding the loan programme after its board meeting.

The Finance Adviser expressed his inability to announce the exact date of receiving the loan but said it will happen during the current month. 

He said the prime objective of receiving the IMF loan facility is to improve the position of SBPs foreign exchange reserves. 

The loan will not be utilized in the stock market and for this purpose a fund is being set up from the countrys own resources, he clarified.

He ruled out the reduction of SBPs discount rate until the easing of the current high inflation rate.

The foreign rating agencies downgraded Pakistans credit rating due to the ongoing economic crisis in the country, he said, adding the government is doing its utmost to tackle this challenge.

The Adviser said the balance of payments has been badly affected due to the depleting foreign exchange reserves of the country which shrank by half in one year.

The rupee value declined by 21.8 per cent as oil and food prices galloped. The rate of inflation kept on rising, creating hardship for the people specially the poor.

He said the Government has decided to stop borrowing from SBP and added that the fiscal deficit will be brought down to 4.1 per cent from 7.4 per cent.

Shaukat Tareen said the Government supports SBP stance of tightening the monetary policy.


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## Neo

*Pakistan to seek $20bn from IFIs to compensate for war on terror losses ​* 
Saturday, November 15, 2008

ISLAMABAD: Owing to being part of US led war against terrorism, Pakistan has estimated a loss of Rs2.080 trillion on its economy on account of exports, foreign investment, privatisation, industrial output and tax collection during the last five years from 2004-05 to 2008-09, an official document of Finance Ministry reveals on Friday.

Pakistans government for the first time made public the details of massive losses of Rs2.080 trillion borne by the country through its official document called draft of Poverty Reduction Strategy Paper (PRSP-II) here on Friday.

Pakistan will seek over $20 billion funding on the basis of PRSP-II document from the International Financial Institutions (IFIs) such as the IMF, WB, ADB, IDB as well as bilateral donors to compensate its losses in the next three to five years.

Pakistans participation in the anti-terrorism campaign has led to massive unemployment in the affected regions. Frequent bombings, worsening law and order situation and displacement of the local population have taken a toll on the socio-economic fabric of the country, stated the official document of PRSP-II.

According to details outlined in the PRSP states that the country had to face direct cost of US led war against terrorism in the range of Rs67.103 billion in fiscal year 2004-05 while indirect cost borne by the country stood at Rs192 billion, totalling the cost up to Rs259.103 billion in 2004-05.

The countrys total losses were Rs300 billion in FY 2005-06 in shape of direct losses to the tune of Rs78.060 billion and indirect losses of Rs222.720 billion. Pakistan faced total losses of Rs82.499 billion on account of direct losses while Rs278.400 billion as indirect losses in 2006-07.

Pakistans direct losses owing to become part of war against terrorism stood at Rs108.527 billion while indirect losses were Rs375.840 billion in FY 2007-08, totalling the amount of Rs484.367 billion. 

The countrys losses stood at Rs677.793 billion in 2008-09 in shape of direct loss of Rs114.03 billion and indirect losses of Rs563.760 billion.

The PRSP-II document states that the anti-terrorist campaign, which began as a result of the unfortunate 9/11 event in the United States in 2001, over-strained Pakistans budget as allocation for law enforcement agencies had to be increased significantly which meant erosion of resources for development projects all over Pakistan, particularly in FATA and nearby NWFP areas in addition to human sufferings and resettlement costs. 

Several development projects, started earlier in the affected areas are afflicted with delays which may ultimately result in large cost over-runs. Since the start of the anti-terrorism campaign, an overall sense of uncertainty has prevailed in the country, which has contributed to capital flight, as well as, slowed down domestic economic activity making foreign investors jittery. 

It is apprehended that Foreign Direct Investment, which witnessed a steep rise over the past several years may be adversely affected by the on-going anti-terrorism campaign in FATA and other areas of NWFP. Pakistans participation in the international campaign has led to an excessive increase in the countrys credit risk, which has in turn made borrowing from the market extremely expensive. 

Pakistans sovereign bonds have under-performed due to increased law and order concerns amongst other reasons including domestic political and economic instability.

The draft of PRSP-II has been envisaged on nine pillars that include macro-economic stability, protecting the poor and vulnerable, increasing productivity and value addition in agriculture, integrated energy development plan, making industry internationally competitive, human development for 21st century, removing infrastructure bottlenecks through public private partnership, capital finance for development, construction and housing industry and governance for a just and fair system.

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## Neo

*Industry to face 7.5pc handicap against imported goods: economists ​* 
Saturday, November 15, 2008

LAHORE: The economists are dismayed by recent anti-industry increase in policy rates by the State Bank of Pakistan to control inflation that was already set to decline due to reduction in petroleum rates; electricity tariff, commodity and edible oil prices.

They said increase in policy rates to 15 per cent would provide market access to foreign products as the local manufacturers would be paying 7 to 10 per cent higher mark-up on their bank loans than the manufacturers in competing economies.

The local industry would be facing a handicap of at least 7.5 per cent against competitors that export similar products to Pakistan 

They pointed out that in contrasting policy moves the State Bank of Pakistan has been reducing the cash reserve requirements of the commercial bank and has increased the policy rate to 15 per cent. The Reserve Bank of India (RBI) in contrast increased the cash reserve ratio of its commercial banks by half per cent to 7.5 per cent. It has kept the policy rates unchanged at 7.75 per cent. The trend in other economies they pointed out is in line with the policies pursued by RBI.

Differing with the State Bank of Pakistans monetary policy stance senior economist Naveed Anwar Khan FCA said it is not based on ground realities. He said that the inflation would have declined in next few weeks as the electricity rates are on decline, the rates of petroleum products are being further reduce; the price of edible oil is set to decrease appreciable.

The rates of rice this year are lower and the cotton prices are weak. The bank he added knew this reality and should have refrained from increasing the mark-up.

He said central banks the world over devise policies to boost local economy. They rarely act as regulators with the basic aim of controlling inflation only. He said now that the federal government has also assured not to borrow from the central bank the fear of inflationary pressures should have subsided.

Dubai based chartered accountant Faisal Qamar said that two per cent increase in interest rates would weaken the position of local manufacturers against imported products. He said the policy rates in competing economies are almost half compared with Pakistan. He said businessmen all over take working capital from the banks.

The local manufacturers, he added would start production with a handicap of at least 7.5 per cent against their competitors that export similar products to Pakistan. Higher import duty on finished products, he added is not a problem for the importers that under-invoice imports to compete with local manufacturers.

Canada based economists Asif Ali Shahid CPA suggested that the central bank should ensure low interest credit for the manufacturing sector and higher mark-up on consumers and services loans. 

He said this would help the manufacturers in increasing production and would curb consumption as well. He said inflation would be tamed only if consumption is reduced.

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## Neo

*Chinese car-maker may set up plant in Pakistan ​* 
Saturday, November 15, 2008

ISLAMABAD: Chinese car manufacturers have expressed their willingness to establish an eight-seater car manufacturing plant in Pakistan.

Cars produced in this plant would be sold on cheaper rates as compared to cars of other companies, King Ping, Chairman of Chinese Mini Car Manufacturing Company told the Minister of State for Industries and Production, Ayatullah Durrani, during a meeting here on Friday.

King Ping is heading a Chinese manufacturing delegation to Pakistan. In the beginning we will bring one thousand cars to the Pakistani market for introduction and after that we will start manufacturing here, he said adding that the production capacity of the plant would be 1,000 cars per month.

On the occasion, the minister told the delegation that there was a great scope for investment in Gwadar as the government was providing complete security to the foreign investors.

Durrani assured the delegation that if they set up a car manufacturing plant in Gwadar, the government of Balochistan will provide complete security and land at cheep rates to them. He said that the government has also declared free tax zone to the industrial sector in Gwadar adding that the future of Gwadar was very bright as it would open new vistas for trade and economic activities in Pakistan.

He informed the delegation that many Chinese manufacturing companies were also in touch with the Pak-Government to seek industrial plots in Gwadar. He said that the government would provide all kinds of opportunities to the investors who invest in Pakistan and provide new technology.

Lucky Chow, Trade representative of Shihao Jiche, Mini Car Company and High officials of the Ministry of Industries and Production also attended the meeting.


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## Neo

*No cut in defence expenditures: Hina Khar ​* 
Saturday, November 15, 2008

ISLAMABAD: Minister of State for Finance and Economic Affairs Hina Rabbani Khar said on Friday that there was no plan to cut defence expenditures. 

The government in its budget 2008-09 has announced to control the government expenditures but we will not reduce the defence expenditures, she told the media after attending a one-day National Workshop for sharing of Draft Poverty Reduction Strategy Paper (PRSP-II) here on Friday. 

Hina Rabbani Khar said consultative process for loans from the International Monetary Fund (IMF) is continuing and almost final. She said the government has taken all stakeholders into confidence on the IMF issue, adding, the has government started a debate in parliament on the matter. 

Three-day debate was held on the IMF in the Senate, she said, adding, the discussions for loans from the IMF was almost final and the government would present it in the next meeting of the cabinet for approval.

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## Neo

*Cement export surges 73% in July-October​*
KARACHI: The cement export witnessed a growth of 73 percent in 4MFY09 to reach 3.5 million tonnes as total dispatches register an increase of 4 percent year-on-year (YoY) basis, with total sales amounting to 9.8 million tonnes.

On the exports front, depreciation of rupee has rendered Pakistani cement as a highly attractive option. The north has primarily contributed to the impressive increase in exports, where exports have taken a leap of a commendable 80 percent YoY.

This is primarily due to the higher demand pouring in from India, which now constitutes 6.5 percent of exports FY09. Afghanistan accounts for 28 percent of the exports (36 percent in FY08). This is because the incremental exports have primarily been directed towards the cement thirsty UAE, the elaborate construction projects of which have yet to take a hit from the looming economic slowdown, an analyst said.

Though sales have increased, capacity utilisation has taken a hit by falling to 76.4 percent, which is down by 21 percentage points. This is primarily because of the expansion ensuing an increase of 1.5 million tonnes YoY (4 percent) in rated capacity, which was unmatched by a 0.35 million tonnes YoY (3.7 percent) increase in demand. Lucky cement has also made its mark in terms of capacity utilisation as its plant in south zone boasts of a level of 117 percent.

Local sales: Local sales fell by 15 percent YoY to 6.3 million tonnes. This opposing change has been conducive to a reshuffling in the sales composition, as exports now contribute 36 percent to the total sales, a jump of 15 percentage points YoY.

Decline in local volumetric sales was primarily due to the price hike of 69 percent YoY in retail prices, skyrocketing to an average of Rs 369 per bag over 4MFY09. Recurring monetary tightening measures have also strangled demand, which is made worse by soaring inflation, analyst added.

Several commercial projects have come to a halt following the unfavorable economic and political conditions, and the hike in input prices. Local sales in the north zone, constituting more than 80 percent of the total local demand, have decline by 19 percent YoY. The sliding demand in northern areas is also due to the onslaught of winter in the region and the worsening law and order situation curbing construction activity.

In volume terms, Luck prevails as the leader, with a market share of 17.5 percent, followed by DGKC (13.1 percent). All in all, the 5 cement conglomerates now cumulatively take up 59.3 percent of the total market share (+3 percentage points YoY). Lucky also leads on the export front, with a market share of 25.3 percent, while second place is taken up by Maple leaf (13.9 percent), followed by DGKC (10.3 percent).

Analyst said that contractionary fiscal policy calling for an imminent cut in PSDP of Rs100 billion is expected to bring about a slowdown in construction activity further. Volumes are also expected to decline as winter strikes more vehemently. However, fall in coal prices (46 percent FY09) is expected to give a breather to gross margins.

Citing reasons for decline in local sale, a market dealer said that usually sales remain low between November to February owing to a slowdown in construction activities all over the country.

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## Neo

*Pakistan to tap Japanese garment market​*
TOKYO: Pakistan Embassy, in an effort to tap the Japanese garment market, was planning to hold a fashion show to introduce popular dresses tailored by the countrys prominent designers.

Preparations in this connection were underway to invite famous Pakistani dress designers and outlets for participation in the dress show.

The fashion show is scheduled for March next year at the premises of Pakistani mission.

Pakistani dress designers and their products are very popular in USA, UK, UAE and many international markets, and the objective to hold fashion show in Tokyo is to make inroads in the Japanese market, said Economic Minister at Pakistani Mission Iftikhar Babar.

The objective is to find out value-added market of this sector in Japan, he added.

Meanwhile, to invite Japan based Pakistani business community for investment in Pakistan, the economic minister said that Pakistan Embassy organised a seminar on trade and investment opportunities available in his country.

Babar said that he briefed the prominent Pakistani businessmen and traders about new investment and trade opportunities that existed in Pakistan.

He invited them to make investment either individually or through joint-ventures with Japanese entrepreneurs in Pakistan.

There was lot of potential available for investment in energy, housing, mining, tourism, telecommunications and IT sectors, banking and financial services, he said.

Babar assured full assistance to traders doing business in used-cars for the establishment of Special Economic Zone (SEZ) for used cars re-export from Pakistan on the pattern of Dubai re-export zone.

The present economic crisis, he said is short lived and Pakistan soon would overcome fiscal and trade deficits and the country would successfully emerge as a vibrant economy since the economic fundamentals are very strong.

He said that because of time constraint, many Japanese buyers opt to purchase cotton from neighbouring Hong Kong, Thailand, Philippines or other nearby countries as the shipment from Pakistan takes around 25 days to arrive here.

Babar, in this connection, invited Pakistani businessmen to establish large-scale warehouses and cold storages in Japan for imported goods particularly raw cotton, yarn and towels and perishable goods from Pakistan, which are in great demand but suffer due to interrupted supplies and long travelling times involved during passage.

He was of the view that the construction or hiring of warehouses in Japan would help in timely delivery of various commodities to the Japanese buyers.

The economic minister also briefed the Pakistani businessmen about the potential for non-traditional items like fish, fruits and vegetables, mineral salt, leather products, gems, precious stones and jewellery and stressed the need to tap the Japanese market in these areas to help bridge the yawing trade gap, which is mounting day by day in Japans favour. app

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## Neo

*Hillary Clinton to work for early approval of $15bn aid​*
LAHORE/NEW YORK: US Senator Hillary Clinton has assured President Asif Ali Zardari that she will work with Congress for the early approval of a $15 billion Biden-Lugar aid package for Pakistan, a private TV channel reported on Friday.

According to the channel, Zardari telephoned Clinton and told her the Pakistan government was working hard to bring economic stability to the country. Clinton appreciated Zardaris efforts for establishing democracy in Pakistan and praised Islamabads role in the war on terror.

APP reported that the president said Pakistan was striving for peace in the region and its nascent democracy needed support and co-operation of the international community to confront several challenges it was facing.

Clinton said the US was keen to see the economic and social uplift of the people of Pakistan and the new US administration and Congress would work together to attain that objective. The US media reported Clinton was the top contender for the slot of US secretary of state. daily times monitor/app

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## Neo

*Economic crisis to be over in six months: Gilani​*
RISALPUR: The present economic impasse would be over within six months as the friends of Pakistan will lend all possible support in overcoming the financial crisis,

Prime Minister Syed Yousuf Raza Gilani said on Friday. Talking to reporters after addressing the graduation ceremony at the Pakistan Air Force (PAF) Academy Risalpur, Gilani said Pakistan was not the only country that had been hit hard by economic recession. Both the under-developed and developed countries with strong economic bases have started approaching the IMF to get some relief for their economies, he added.

He said Pakistan would seek the financial assistance of the world monetary body on its own terms and conditions.

He expressed the confidence that Pakistan will get oil facilities too. Gilani said China would financially assist Pakistan in the due course of time.

To another question, he categorically said that army action is no solution to any problem as his government believes in negotiations. He added that the Pakistani army would remain in the restive areas until peace was completely restored.

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## opinion786

Thanks NEO, for updating this page and providing such wonderful & vital information daily! Really this page would be nothing without you!


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## pkpatriotic

*Pakistan agrees on $7.6 bln IMF loan *
*By Sahar Ahmed*

*KARACHI (Reuters) - Pakistan has agreed with the International Monetary Fund (IMF) on a $7.6 billion emergency loan to stave off a balance of payments crisis and pave the way for a broader economic rescue plan.*

*The IMF said on Saturday its executive board was expected to meet shortly on the 23-month standby credit, after IMF staff and Pakistan agreed on a reform program.*

*"This support is part of a broader package that includes financing from other multilateral institutions and regional development banks," IMF Managing Director Dominique Strauss-Kahn said in a statement.*

*The international community is concerned that an economic meltdown in the nuclear-armed state could play into the hands of al Qaeda and allied Islamist militant groups seeking to destabilize the Muslim nation of 170 million.*

The eight-month-old civilian government is banking on good will toward Pakistan during its transition to democracy after more than eight years under former army chief Pervez Musharraf, who quit as president in August to avoid impeachment.

World leaders were meeting in Washington at the weekend to discuss the worst global economic turmoil since the 1930s and consider reforms to world financial institutions such as the IMF.

Shaukat Tarin, the recently appointed adviser to the prime minister, said the formalities should be concluded next week.

"We are expecting it this month," he told a news conference in Karachi when asked when the first tranche might arrive.

"We have requested IMF to give as much as they can."

The interest rate on the credit facility would vary between 3.51 and 4.51 percent with changes according to market conditions, and would be payable between fiscal 2011/12 and 2015/16, Tarin said.

The IMF did not disclose details. But it said the credit under its emergency funding facility would be tied to Pakistani economic reforms, including higher official interest rates and tighter fiscal policies, plus a well-funded social safety net to protect the poor.

*Pakistan expects the World Bank and other lenders to step forward with several billion dollars of additional loans, and steadfast ally China to pitch in with $500 million. But other multilateral lenders and friendly governments were waiting for the IMF accord before acting, in order to bring some discipline to Pakistan's economic management, analysts said.*

*Other potential donors are gathering in Abu Dhabi on Monday for a "Friends of Pakistan" conference.*

*State Bank of Pakistan Governor Shamshad Akhtar said the IMF money would be used to build up the central bank's foreign currency reserves, which Tarin said should be equivalent to more than three months import cover.*

*The central bank's reserves stood at $3.5 billion on November 8, equivalent to just nine weeks worth of imports, and Pakistan faced defaulting on international debt obligations in February next year unless it received a multi-billion dollar infusion.*

The rupee has lost 23 percent in value against the dollar since the start of the year, and foreign investors have fled a stock market which is down around 35 percent.

Stocks would have fallen further but for an artificial floor authorities placed under the Karachi market's benchmark index at the end of August, and almost certainly will fall further once the floor is removed.

*FRIENDS IN THE WINGS*

Tarin said the IMF had endorsed Pakistan's own strategy to bring about structural adjustments needed to correct unsustainable current account and fiscal deficits.

The strategy included reducing excessive government borrowing from the central bank to zero, and boosting the tax base, but did not involve a cut in defense spending, one of the heaviest items on the budget, Tarin said.

The only point of difference with the IMF, according to Tarin, was the fund's desire to see higher interest rates. But a 200 basis point hike in State Bank's policy discount rate to 15 percent announced on Wednesday partially met those concerns.

With headline inflation running above 25 percent and core inflation at 18.3 percent, real interest rates are still in negative territory.

*Tarin's statement came a day after Standard & Poor's cut its ratings on the nation's sovereign debt deeper into junk bond territory, eight rungs below investment grade.*

S&P highlighted Pakistan's tardiness in raising funds it badly needs to avoid defaulting on its debt liabilities.

*Pakistan had been in talks with the IMF for months, but officials had been coy about admitting they were seeking an IMF package, because of the harsh conditions the fund often imposes.*

_(Additional reporting by Stella Dawson in Washington and Augustine Anthony; Writing by Simon Cameron-Moore; Editing by Andrea Ricci)_

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## Neo

*Real estate boom ​* 
*People liquidating bank savings to invest in property; FPCCI body on housing and construction SVP Munir Sultan says rates to remain stable and hike after March; realtors say investors fearing financial meltdown in UAE coming back home*

Sunday, November 16, 2008

KARACHI: Local builders in Pakistan are having a field day as the newly introduced projects all over Pakistan have received tremendous positive response marking the first signs of real estate sector revival in the country.

Real estate agents and builders said that though prices continue to remain low owing to recession - the demand for properties is increasing as investors are coming back home after trying their luck in UAE.

Senior Vice President of FPCCI Sub committee on Housing and Construction, Munir Sultan predicted that the prices of properties would remain stable for the time being and would only hike after March. 

Estate agents and experts informed that the buyers of these properties are investors having money stashed in local and foreign banks and following the global credit crunch feared for their savings.

Sultan explained: These are ordinary well to-do people of our society who liquidated their bank savings and opted for safe heaven investment in real estate. Properties are sound investments as no one can steal them from you and more importantly because regardless of the political or economical conditions, land assets do eventually gain value with time.

He further said that Pakistan urgently needs to work on its investors confidence and the government should take steps to clear the country of its black economy that is working parallel to the legal system.

He advised the government to introduce a law similar to UAEs Escrow account concept, which provides investors peace of mind over their investments and helps reduce fraud cases.

However, Sultan went on to inform that DHA Lahore, Islamabad and Karachi would not witness any changes both in terms of revival and price fluctuations as the demands in these areas were artificially created particularly by stock exchange investors.

These investors purchased plots in great numbers and artificially pushed up the prices and therefore they are not accounted for in the overall countrys real estate movements. DHA properties investment rules are also quite different from the rest of the country, he continued.

In Karachi, residential projects with ground floor commercial shops in scheme 33, near Super Highway are the most well received ones according to most estate agents in the localities of PECHS, Gulistan e Jauhar and Gulshan e Iqbal. 

Abu Masood Khan of Khan Estate Agency and Ashok of Ashok Builders informed of similar results in Hyderabad. They said that there has been a hike in residential projects and shopping complexes in their city.

The idea of commercial projects has especially gained momentum and there are increasing number of shopping plazas that have been introduced Ashok said. Latifabad, Heerabad, Saddar and the area around Isra University have witnessed the maximum projects, Khan shared.

Similarly, Basit Mahmood, a project director of Globiz in Lahore informed that his city is also experiencing a revived interest in empty plots and constructed projects and real estate related advertisements have popped up across the citys billboard, cable televisions and newspapers. 

Meanwhile, an expert dealing with Gwadar expressed that the place continues to remain in doldrums and so far no changes have been witnessed there. 

Let us hope the investment fever that is spreading in the other parts of the country also reaches here to save us from disaster too he added.

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## Neo

*Govt expects to net Rs40bn through farm income tax ​* 
Sunday, November 16, 2008

ISLAMABAD: The government is expecting to fetch Rs40 billion through income tax on agriculture land holdings to comply with the IMF demand. 

The federal government can collect additional revenue ranging between Rs10 to Rs40 billion by imposing controversial tax on the farming community, reveals an official work out on the proposed measure. 

Imposing agriculture income tax is the bone of contention between the central governments and its federating units and the provinces would let the federal government take this tax away from the last several years. 

According to estimates of the Federal Board of Revenue (FBR), they are expecting a total revenue collection of Rs60 billion by taxing agriculture whereas total agriculture tax collection during the last fiscal was below Rs1 billion with Sindh contributing Rs200 million and Punjab Rs700 million. 

Besides collecting irrigation tax (Aabiana) by the provincial governments, they are also collecting variable tax on fields and orchards. 

The farming community is opposing the move as they are already contributing billions of rupees under the implicit tax by the policy makers, a leading farmer told this correspondent. 

According to a number of studies by Pakistan Institute of Development Economic (PIDE), the farmers are already paying over Rs100 billion as implicit tax. 

Implicit tax is a kind of indirect tax, which the federal government levied on the farm produces, to provide cheap commodities to its urban segments. 

The effective imposition of farm tax in the income mode will be fixing the average amount of agriculture rent (Theka) per acre and apply it to the land holdings, said the working. 

Likewise of salaried class, the landholders having not more than 12.5 acres would not fall under the agriculture income tax while the landholders possessing more than 12.5 acres would be taxed, it added. 

Out of the total cultivated area of 22 million hectares, the working said that nearly 44 per cent (10 million hectares) fall under the category of 12.5 acre, thus leaving 12 million hectare to be taxed for contribution to the national kitty. 

Fixing an average Rs8,000 per acre as agriculture rent (Theka), the working further estimates that the total collection at the rate of 5 per cent would be Rs10 billion, it would be Rs20 billion at the rate of 10 per cent, Rs30 billion at 15 per cent and Rs40 billion at 20 per cent. 

Pakistans total GDP of $160 billion, agriculture sector contributes slightly above 20 per cent ($32 billion).

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## Neo

*Local economy resilient, has survived major shocks in past ​* 
Sunday, November 16, 2008

KARACHI: Restoration of confidence in public is must for economic revival and that is a big challenge for the government at current. Otherwise issues in domestic economy like current account deficit and balance of payments are of very basic nature, which can be resolved with strong economical will.

The experts and stakeholders developed this consensus at a one-day investment forum on Investing in Change: Pakistan and the World, which was organized by BMA Fund here on Saturday at a local hotel.

Speakers said that the local economy was of resilient nature. It had faced more or less the same challenges in the past as well and had survived major shocks. They were of firm believe that this time too the nation would come out of depression and would successfully set economy back on rails.

Replying to a query from audience, Director Institute of Business Administration, Dr. Ishrat Hussain said the timeframe of recovery in economy was totally dependent on governments will and sincerity. As quick as it (government) would take decisions it will succeed in overcoming issues.

He, therefore, said that forex reserves in hand would restore the confidence of Pakistans economy and if it (country) was not getting it (dollars) from its friends like China, Saudi Arabia, United States and etc then it should go better and quickly to International Financial Institutions (IFIs) without wasting anymore time, he strongly recommended.

Having said that people have short memory, Dr. Hussain reminded that Pakistan had a growth rate of 1.8 per cent in 2000 and it entered into IMF program. The program proved fruitful and helped country getting back on rails.

Pakistan established access to international markets following its entrance into IMF program. As a result of that, it launched European Bond in world markets in 2004 for the first time. Then it launched Islamic Sukuk and then sold 10-years and 30-years bonds in US market at 200bps above the US Treasury rates just two years ago, he recalled.

Moreover, country achieved a GDP growth rate of seven per cent on an average for the first five years. The poverty reduced to 25 per cent from 33 per cent. The unemployment rate slashed to 6.2 per cent from 8.5 over the same period, he added.

Dr. Hussain, former Governor State Bank of Pakistan (SBP), said: 20 per cent core inflation at present is not the result of economic policies, but this is a result of not taking timely decisions, and postponement of decisions on economy owing to shot-term political gains by governments.

He further said that current account deficit was not going to kill the country. 

The difference between the saving of a country and investment in domestic economy and can be managed by non-debt creating tools, he suggested.

He was of the opinion that government business was to facilitate private sector and remain out of conventional business. But in this module of business, the regulatory bodies should be given autonomous power to deal with guilty in the country.

While, private sector in Pakistan will have to change its mindset to compete at world level, as it was yet showing an attitude of approaching, privileging and getting associated with the government in powers for short term gain.

It (private sector in Pakistan) can compete at world level by adopting three-pronged strategy that included enhancing productivity, efficiency, and investing in labour.

Other speakers said that the issues of circular debt can be resolved by sitting stakeholders across the table including WAPDA, KESC, IPPs, PSO, NRL, PRL and Ministry of Finance will have to play its active role in this exercise.

Waqar A. Malik, President, OICCI, urged upon extensively working on institutional building and evolving a policy framework to adopt ahead. He said Pakistan was having a number of challenges, but the biggest opportunity it was having was its 180 million populous.

He said giving subsidies was not a bad practice. The developed countries like US and China also do it. But subsidy should not be given on across the board and be provided to some selective sectors.

He maintained that Pakistan was an agriculture based country and it much provide relief to farmers and also wide it tax net by brining in some new economic sectors and rich people.

S. Ali Raza, Chairman and President, NBP, said that financial managers should think out of box as boom in economy has become history. He said floor at local bourse be removed after getting sure that country was having enough reserves to facilitate foreign investors smooth exit. 

Tariq Iqbal Khan, Chairman-NIT, said that cut in the disbursement of profits to the shareholders gave birth to bearish sentiment at local bourses. While, higher profitability to them would ensure their return and restore their confidence.

Farrukh H. Khan, CEO, BMA Caital; Muddassar Malik, CEO, BMA Fund; Tawfiq A. Hussain, President & CEO, Samba Bank and many others also spoke on the occasion.

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## Neo

*Gilani urges China, India to utilise Karachi port​*
KARACHI, Nov 15: Prime Minister Yousuf Raza Gilani has said that Pakistani ports could cater for the needs of Indias northern and northwestern states and also Chinas Xinjiang province because of proximity.

After inaugurating the third expansion phase of Karachi International Container Terminal (KICT) here on Saturday, the prime minister said that during pre-partition era, Karachi port used to handle a large part of cargo meant for present-day Indias western province, hoping that the same could be done now.

He said as Pakistani ports were nearer to India than other regional hubs, it would be advantageous for Indian traders to use our ports.

Chinas Xinjiang province could also use Karachi and Qasim ports for trade because they are closer than ports on Chinas eastern seaboard.

However, he stressed the need to make Pakistani ports competitive and efficient so that Indian and Chinese traders opted for them.

Mr Gilani said the late Zufikar Ali Bhutto had envisioned an infrastructure that could bring all communities closer and that benefited trade and industry.

The prime minister said it is heartening that a port which made a modest start in 1947 has now embarked on development on modern lines.

At the time of independence the ports capacity was a meagre 1.2 million tons of dry cargo and one million tons of POL products per annum. On the other hand, the port is now handling over 12 million tons of liquid cargo and 25 million tons of dry cargo, including 1.213 million TEUs.

He said by making Karachi port state of the art, we could make it a hub of the region.

Praising ongoing development projects and future expansion plans, including a deep sea container terminal, the prime minister said other large public sector organisations should emulate the KPT.

Earlier KPT chairperson, Ms Nasreen Haque, gave details about major projects being undertaken by the port to meet future challenges. She said that the Deep Sea Terminal Port, having a draft of 18 metres, would be constructed at Keamari, which can handle post-Panamax vessels.

She said a project for developing a cargo village on the ports western backwaters and another for deepening all existing berths to 16 metres would be undertaken soon.

Sindh Chief Minister Qaim Ali Shah and acting Governor Shehla Raza were also present on the occasion.

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## DarkStar

Maybe Pakistani govt. should actually first start using the port itself. There has hardly been a ship docking there, as vested interests have manouvered to make sure that Karachi remains the only viable trading port. The govt. should start using the port itself, and offer concessions and enducmements to pvt. firsm to do the same.


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## Neo

*Current account deficit at $5.9 billion​*
KARACHI: External current account deficit during the first four months of the current fiscal year stood at $5.9 billion, up by $2.5 billion or 98.56 percent from $2.993 billion during the same period last year.

The current account deficit rose to such a high level despite proceeds from workers' remittances and exports of $2.3 billion and $7.1 billion respectively, chiefly because the import bill rose to $12.9 billion.

Underlying this sharp growth in imports by 35.2 percent was the rising oil bill that reached $4.9 billion, which was close to $1.23 billion per month as the international oil prices for this period averaged $123 per barrel, well above the FY08 average of $87.4 per barrel. Consequently, the share of oil bill in the total import bill has increased to 38 percent as compared with 30 percent in FY08.

Non-food-non-oil imports also grew by 6.8 percent during Jul-Oct, FY09, adding to the pressures. With financial inflows slowing down by $1.1 billion only in Jul-Oct, FY09, the external current account deficit had to be financed by draw down of SBP's foreign exchange reserves - this involved depletion of reserves by $5 billion since the beginning of this fiscal year up to November 10, 2008.

The recent decline in international oil and other commodity prices bodes well for the external sector, but a sustained decline in overall import demand is critical to avoid further reserve loss after its expected build up and after the government receives loans from the IMF.

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## Neo

*Pakistan to get $7.6bn from IMF​*
** Tareen says formal request will be made next week
* First tranche likely this month
* IMF says loan is 500 percent of Pakistans quota​*
WASHINGTON/KARACHI: Pakistan and the International Monetary Fund (IMF) have reached an initial agreement on key elements of an economic programme supported by a $7.6 billion loan to meet the countrys serious balance of payments difficulties, Finance Adviser Shaukat Tareen and IMF Managing Director Dominique Strauss-Kahn announced separately on Saturday.

The 23-month Stand-By Arrangement is subject to the approval by the IMF Executive Board, which is expected to meet to discuss the programme shortly, under the Funds emergency financing mechanism.

The IMF said the proposed loan amounted to some 500 percent of the countrys quota in the Fund. In a press statement, the IMF said Pakistans programme had two main objectives: to restore the confidence of domestic and external investors by addressing macroeconomic imbalances through a tightening of fiscal and monetary policies; and to protect the poor and preserve social stability through a well-targeted and adequately funded social safety net.

The IMF managing director said both objectives are an integral part of IMF support for Pakistan. This support is part of a broader package that includes financing from other multilateral institutions and regional development banks. I would like to call on the donor community to work together and act quickly to support Pakistans programme in order to mitigate the impact of the current economic difficulties on the poor and ensure an adequate level of spending on development programs, Strauss-Kahn added.

Tareen: In Karachi, Shaukat Tareen said the government would formally apply for the loan with a letter of intent next week and the first tranche is expected this month.

The interest rate is 3.51 to 4.51 percent, he said. Repayments will begin in 2011 and end in 2016. khalid hasan, mushfiq ahmad and sajid chaudhry

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## Neo

*Highlights of bailout package​*
* 23-month stand-by arrangement is subject to approval by IMF Executive Board

* Interest rate set at 3.51 to 4.51 percent

* Repayments will begin in 2011 and end in 2016

* High interest rates to control core inflation

* No borrowing from central bank between October 08 and June 09

* GDP growth target will be revised

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## Neo

*Plan A & B evaporate: Pakistan recourses to begging bowl​*
KARACHI: The country has finally swallowed the bitter pill of recourse to IMF, for stabilising the ailing economy, by almost shelving the oft-repeated Plan A & B.

Finance Adviser, Shaukat Tarin on Saturday announced that IMF would extend $7.6 billion to Pakistan under 23-months loan arrangement at 3.5 to 4.5 percent interest.

The loan is issued under IMF's standby facility, which is designed to help countries address short-term balance of payments problems. Stand-Bys have provided the greatest amount of IMF resources. The length of a SBA is typically 12 to 24 months, and repayment is normally expected within 2 to 4 years.

The official announcement has finally put all the speculation, circulating in the cross-section of the country about the possible financial assistance from the IMF, to rest.

"It proves that government miserably failed to secure financial assistance from avenues other than IMF," suggests the opinions expressed by industrialists, economists and analysts.

An economy considered resilient just one year back collapsed like ninepins and now is compelled to use the IMF option, which is very unpopular amongst the people.

The economists and industry people are also unwilling to buy the argument that the financial assistance of IMF has been secured on our own terms and would not bring with it more miseries for the people at general and industry at particular.

"This can be accepted by only miss-informed people but not by those who have good knowledge of the history of IMF financial programmes for Pakistan and for the other countries of the world," they said. However, at one point most of them agreed that failure to receive any assistance left the economic managers with no other option from international financial institutions and Friends of Pakistan has pushed the government to take this unpopular decision. IMF, which is considered a lender of last resort-proved the same in case of Pakistan, as other "friendly" countries and organisations are willing to assist only by routing it through IMF, economists say. "We still believe that friendly countries are ready to help Pakistan at this critical time, but they are suspicious of the way we have behaved in the past as after every five to ten years we are knocking at their doors to help us financially, economist Dr Asad Saeed noted.

"This can be short-term solution to shore-up the depleting stocks. The long-term solution lies with development of our real sectors and to curtail the unprecedented growth of imports, which are eating up major chunk of precious forex reserves," he strongly contends.

The trade deficit jumped to $20 billion in the last financial year from just $4 billion only four years ago. Although the high international crude and commodities prices have been blamed for this increase in deficit, Saeed also attributed this to unchecked import of luxurious items like food items, garments, cosmetics by the privileged and elite class of the country.

KCCI President, Anjum Nisar also viewed the IMF as the last option in the current circumstances following the months long effort to win some financing from other avenues.

Analyst, Mohammad Sohail at JS Research said that IMF financial assistance would give some breathing space to government, at least in on one front i.e. forex reserves for the time being.

Home | Business

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## Neo

*India agrees to compensate for Chenab water​*
LAHORE: India will provide Pakistan 200,000 acre-feet water as compensation for the reduced flow of water in the Chenab River, Federal Minister for Water and Power Raja Pervez Ashraf said on Saturday.

According to a private TV channel, Ashraf told reporters as saying Indian Prime Minister Manmohan Singh had assured Pakistan of providing 200,000 acre-feet water as compensation for the water lost by Pakistan due to Indias construction of Baglihar Dam.

The minister said Bhasha Dam would produce over 4,500MW of electricity helping overcome load shedding. He said the dam would compensate for the expenditure incurred on it within seven years. daily times monitor

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## Neo

*US investors express keenness in housing, power generation​*
ISLAMABAD (November 16 2008): Investors of United States have shown keen interest for making investment in housing sector, and hydel and thermal power units. According to a press release issued by the Board of Investment (BOI) on Saturday, a two-member delegation from US visited the Ministry of Investment and called on Executive Director-General Riaz ul Haq to look into the possibilities of investment in various sectors of the economy.

The delegation comprised Jack Wilkins, Chief Executive Officer of Visionary Industries Inc, and Hamid S Khan, Country Manager, Ultimate Building Systems Inc. Foreign investor expressed interest to invest in the housing sector. In this regard, they have already signed an MOU with the Ministry of Works for the construction of a number of housing units under the Prime Minister's initiative for building one million houses.

They will construct these units in different cities of Pakistan for which funds will he invested from America and they will not raise any loan from the banking industry of Pakistan. Pakistan is facing current shortage of six million houses and needs one million houses every year.

The delegation also expressed interest in hydel and thermal power units to cope up with the electricity shortages. The members of the delegation stated that they have expertise and huge funds available, which can be utilised by Pakistan for the purpose of generating electricity,

Presently, Pakistan electricity shortfall is 5000 MW. It is expected that electricity demand will increase at the rate of 10 percent per annum with the size of economy. It is expected that the government can fill these gaps in demand/supply in both power/housing sectors with the help of such foreign investors. The Ministry of Investment is working aggressively to facilitate such investors, the press release added.-PR

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## Neo

*Prime Minister for venturing into cargo shipments to India and China​* 
KARACHI (November 16 2008): Prime Minister Syed Yousuf Raza Gilani has underlined the need for catering to the trade cargo transportation needs of north western India and central China through Pakistani ports. Highlighting geo-strategic importance of the country at the inauguration ceremony of Phase-III Extension at Karachi International Container Terminal on Saturday, he said.

"Our geo-physical attributes make Pakistani ports economical and one of the strongest regional links, whether these are trade routes to India, China or Central Asian Republics." "Pakistan's geographic proximity to the over two billion population of China and India makes Pakistani ports a lucrative recourse," said the premier.

He said the centre of Chinese province of Xinkiang was closer to Karachi than Port of Shanghai. "In the Northwest for the Central Asian Republics Pakistani ports, especially Gwadar can play a major role," he added. Terming development of Phase III as a hallmark, the premier said Karachi Port had graduated from the handling of 2.5 million tons of cargo in 1947to 37 million tons of handling with its two modern container terminals.

He said 10 years ago, the container handling capacity of Karachi Port was little over 0.5 million TEUs, which had now reached over 50 percent of the total container volume of the port. The prime minister lauded M/s Hutchison Group of Companies for working with a public concern and completing the task of Phase-III development works.

He said the design of the new facility had been prepared taking into account the latest future generation technologies in the field of marine transport. Karachi Port Trust, the PM said, had embarked on a number of other development projects, the outcome of which would certainly propel the growth of the country and would lead to a healthy economy. "Our trade priorities envision a diversity of sources for developing new avenues for business and trade. It is incumbent upon our government to pursue the infrastructure development, which shall manifest in building of roads, improved provision of energy, ports, harbours, rail and mass transition," the prime minister said.

The prime minister also lauded KPT's futuristic vision in the face of Pakistan Deep Water Container Port saying that the project would bring this region once again to the forth as a regional hub. The prime minister also lauded the services of workers of both KPT and Port Qasim to handle and deliver massive quantities of much needed wheat and fertiliser at a time of crisis.

The new facility of KICT, which is member of the Hutchison Port Holdings (HPH) Group, is located at Berths 26 and 27 at West Wharf of Karachi Port. KICT now has a total area of 26.03 hectares with a quay length of 973 meters, and offers a yard stacking capacity of 21000 TEUs. The Phase III Extension was initiated in collaboration with KPT to meet growing cargo-handling needs of Karachi Port.

With extensive foreign direct investment, KICT's Phase III Extension involved increasing the depth alongside, enhancing handling capacity by redeveloping additional land adjacent to original facility, and deploying additional quayside and container yard equipment.

With the inauguration of Phase III, KICT operates a total of seven ship-to-shore (STS) gantries, two mobile harbour cranes, 23 TRGs, eight reach stackers, eight empty container handlers, 53 terminal tractors, 75 chassis, four forklifts, 58 reefer plugs capacity and radio data terminals (RDTs) on all terminal equipment.

Earlier, in his address State Minister for Ports and Shipping Sardar Nabeel Gabol lauded KPT and KICT for their efforts to make the country's ports capable of catering to a fast soaring global demand. He also assured support of his side to the port operators. Earlier, KPT Chairperson Nasrin Haque and KICT CEO Anjum Sajjad welcomed the guests and highlighted various aims and achievements of their respective organisations.

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## Neo

*Call for transfer of technology from India​* 
MULTAN (November 16 2008): Chairman Pakistan Crop Protection Association, Engineer Javed Saleem Qureshi has said that our production could increase incredibly through mutual trade and transfer of technology between Pakistan and India. He said that if even we compare our agriculture standard with India, we are far behind, whereas the farmers of developing countries are taking maximum advantage from it.

He expressed these views in an interview with Business Recorder after coming back from his 5-day visit to India along a delegation of 8. Qureshi said that our rulers are talking about getting 3 maunds per acre more production, whereas we have the potential to get 30 maunds extra production by adopting the latest technology of agriculture.

He said that we are now getting hardly 28 maunds per acre production whereas in India and the other developing countries are taking about 50 maunds per acre production.

He said that the main hindrances in the better production includes high prices of diesel, electricity, fertiliser, seeds etc whereas in India, the farmer is getting every facility on his door step. India is getting most of its production from barani areas, but here in Pakistan, the cultivation in barani areas is very low.

Javed Qureshi said that the subsidy given by the government gives no benefit to farmers. He blamed that last year the middlemen minted about Rs 35 billion under the subsidy. "If the average production would be more then there would have been no need to give subsidy", he added. He further added that when the farmer would get Rs 20 to 30 thousand extra per month, then he would also purchase DAP.

He appealed to the Prime Minister and Chief Minister Punjab, that they should take out the private sector from the clutches of bureaucracy for the development of agriculture. He said that Prime Minister is himself a farmer and he understands every ups and downs of agriculture.

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## Neo

*Boosting apple exports from Balochistan​*
EDITORIAL (November 16 2008): Now that the Agribusiness Support Fund (ASF) has approved a matching support grant of Rs 0.50 million for the Balochistan Horticulture Co-operative Society (BHCS) as start-up cost for operational expenses of an apple grading plant in Quetta, it may mark the beginning of long due stimulation of that province's agricultural potential in fruits, flowers and vegetables.

Thanks to the active interest of Pakistan Horticulture Development and Export Board (PHDEB), the imported grading plant which was lying non-functional for quite some time, has been revived in collaboration with the Agriculture Department of Balochistan, the Board adding a locally made waxing unit will, hopefully, be able gainfully to process around 6000MT apples per annum, with further addition of a cold storage facility and leasing the outfit to BHCS in order to encourage local apple growers and run it for two to three years initially on experimental basis.

Quoting ASF Chief Executive, Khalid Khan, a report says that the approved ASF grant will help the BHCS meet its initial costs and that once a certain stage of progress is reached the ASF would provide it with further financial assistance towards operational and marketing expenses.

According to Khalid Khan, the grading plant would not only provide good business opportunities to the local trading community, but would also add value to the fruit, which is already grown in abundance in the province, thereby, reducing the post-harvest losses to the minimum level. This should be all the more possible as the BHCS involves medium and large sized apple growers from various parts of Balochistan.

The basic purpose of the initiative being motivation of local business community to develop entrepreneurial skills and utilise the resources available in the province, its prospects of growth should leave little to doubt.

For as it is, aridity of climate and high elevations help Balochistan produce good quality deciduous fruits in a comparatively disease-free environment, apple alone constituting 30 percent of the area under deciduous fruits and 34 percent of its total fruit production, including 220,000 tons of a wide variety of apples per year, the season lasting mid-July to end October.

Again, in the world apple market of around 5 million tonnes per year, with France, Chile, Belgium, USA and Netherlands in the lead, Pakistan also figures prominently among regional competitors - Iran and China. Needless to point out, whatever edge Pakistan has acquired owes little to any tangible effort in the sense of catching up with modern enabling measures until very recently.

First things first, this has reference to the belated formation of the PHED, itself. However, despite the fumbling in its initial years, it got a breakthrough with the launch of $24 million Agribusiness Support Fund (ASF) to develop agribusiness in Pakistan, as part of an ADB Agribusiness Development Project, focusing on enhanced farm productivity and improved marketing.

It goes without saying that improved agribusiness is an essential prerequisite to maintenance and expansion of export markets for agricultural products. Now that mangoes and some other horticulture crops have started benefiting from ASF, there should be every reason to believe that the new thrust will prove instrumental in booting apple exports from Balochistan.

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## Neo

* IMF Loan to Pakistan May Spur Help From Other Donors​*
NOVEMBER 16, 2008
By MATTHEW ROSENBERG

NEW DELHI -- Pakistan's new agreement with the International Monetary Fund over a $7.6 billion loan may lead to more help from other donors and is expected, at least for now, to stave off economic collapse in the South Asian nation.

But the IMF's package falls well short of the $10 billion to $15 billion that Pakistani officials have said they need over the next two years to fix the economy. Some of that shortfall will be made up by loans from the World Bank and Asian Development Bank. Islamabad hopes the rest will come from the so-called Friends of Democratic Pakistan, a group of allies such as the U.S., China, European powers and Saudi Arabia that is holding a meeting Monday.

Pakistani and IMF officials said Saturday that the international lending agency had reached a deal for a financial stabilization package, and that Islamabad would make a formal request this week.

The IMF will deliver $4 billion  the amount Pakistan says it needs immediately to avoid defaulting  this year, with the rest to be disbursed in 2009, said Shaukat Tarin, an economic adviser to Pakistan's prime minister, told reporters in Karachi. The annual interest rate on the IMF program will run between 3.51% and 4.51% and Pakistan will start repaying the money in 2011, Mr. Tarin said.

"The outlook for next six months will get better from the present crisis-like situation," said Samiullah Tariq, head of research at Investcapital, a brokerage based in Karachi, Pakistan's financial center.

The IMF loan is likely to boost the confidence among donors and investors who doubted Pakistan's ability to right its economy without the fund's oversight. But it is nonetheless a major reversal for the new government of President Asif Ali Zardari. Officials had repeatedly insisted the IMF was a last resort, and were banking on allies in the West and Asia for a rescue, figuring no one wanted to see an all-out economic collapse in a country at the front line of the war against the Taliban and al Qaeda, said a finance ministry official.

In recent days, however, it became "clear that without the IMF, no one was going to give us the sums we need. There was no trust there," said a finance ministry official.

Most of Pakistan's allies had either publicly or privately pressed Pakistan to seek IMF assistance, and only China had offered any money  Pakistani officials say Beijing has agreed to give a $500-million loan  prior to Saturday's announcement.

The Friends of Democratic Pakistan are holding a meeting of mid-level technical officials in Abu Dhabi on Monday, and "maybe after the meeting there should be some news," said Ashfaque Hassan Khan, a finance ministry official, in a telephone interview from Islamabad.

Following Saturday's announcement, the IMF urged major donors to offer Pakistan additional financing, and a Western diplomat in Islamabad on Sunday praised Pakistan's turn to the IMF, saying: "It should lead to more help." But the diplomat would not say if any firm commitments had been made.

Even if Pakistan gets all the money it needs, it faces a tough economic road. Inflation is running at around 25%, its stock market is down about 35% since the start of the year, the rupee has plunged against the dollar and Pakistan currently has only enough hard cash on hand to cover about two months of imports.

Pakistan has recently taken a host of painful economic measures to lay the groundwork for help from abroad, moves that were praised by the IMF in Saturday's announcement. The State Bank of Pakistan on Wednesday increased interest rates by a hefty two percentage points to 15%, and the government eliminated fuel subsidies earlier this year in a move to sharply cut its deficit.

Write to Matthew Rosenberg at matthew.rosenberg@wsj.com

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## opinion786

*Foreign Reserves Phenomenon: Shaukat Aziz versus PPP*

Written By: Afreen Baig


Foreign Reserves  a significant economic indicator and of vital importance to every expanding economy. Foreign Reserves is the first and basic economic indicator that transmits an air of confidence and trust, amongst the potential foreign & local investors and the nation. Foreign Reserves are held in abundance and accumulated - in order to sustain the confidence of a countrys capacity to carry out external trade confidently, to balance the momentum between demand & supply of foreign currencies, and also used as an intervention tool by the State Bank. Reserves also bail out the economy in times of financial crisis. 

By October 2007, at the end of Prime Minister Shaukat Azizs tenure, Pakistan raised back its Foreign Reserves to a handsome $16.4 billion. His exceptional policies kept our trade deficit controlled at $13 billion, exports boomed to $18 billion, revenue generation increased to become $13 billion and attracted foreign investment of $8.4 billion.

Pakistan recently has seen a drastic drop in its Reserves by 50% and its currency devalued by 40%, which has left ordinary people confused and the usual cynics have started heaping the blame onto the policies of Mr. Shaukat Aziz, without even knowing the basic macro-economic indicators nor understanding the relationship b/w Foreign reserves, Trade deficit and Currency devaluation.


The Trade deficit (Exports minus Imports) is always managed in ratio to Revenue generation, Capital inflows and Reserves. Almost all developing economies face the dread of trade deficit but their abundant foreign reserves gives them the fiscal space to overcome those grievances.
Illustrating in mathematics for ordinary readers, on October 2007, when PM Shaukat Aziz left us:
Exports - $18 billion

Imports - $30.53 billion

Trade deficit - $12.53 billion

Foreign Reserves - $16.4 billion

What is to be seen above is that, Pakistans Foreign Reserves $16.4 bn exceeded the trade deficit $12.53 bn by a comfortable $3.87 billion and with an additional foreign investment of $8.4 billion  Pakistans currency stayed stable at Rs.61 per dollar.

Currency starts to devalue ONLY when the Trade deficit surpasses the Foreign Reserves. This rare phenomenon occurred in PPPs incompetent & dense minded government, which has led to devaluation of the currency by 40%. They failed to protect our Sovereignty - our Foreign Reserves!

In PPPs inept government of eight months,

Trade deficit - $20.74 billion

Foreign reserves - $8 billion

Under PPP, the Reserves fell from $14 billion to $8 billion and the trade deficit increased from $12.53 billion to $20.74 billion.

The moment the foreign reserves ($8 bn) fell below the trade deficit ($20.74 bn), the currency starts to devalue. Under Mr. Shaukat Aziz, Rupee stayed stable till October 2007, because our Reserves $16.4 billion EXCEEDED our Trade deficit of $12.53 billion. 

In 2007, when international oil prices reached an alarming level of $140 per barrel it hurt the Imports bill of many developing countries, by increasing the trade deficit. The experienced Mr. Shaukat Aziz gauged this situation and immediately started monitoring & controlling individual sectors that were importing. He allowed imports only in sectors that were export specific. His efforts resulted in decreasing our Import bill by 6.53% by September 2007 (one month before he left). 

Rupee stayed stable throughout Mr. Musharrafs supported governments. Trade deficit never exceeded the foreign reserves in the last eight years. The results were as follows  a stable rupee:

2001-02: Rs. 61
2002-03: Rs. 57.7
2003-04: Rs. 57.92
2004-05: Rs. 59.66
2005-06: Rs. 60.16
2006-07: Rs. 60.5
2007 (Dec): Rs. 61

What did the inefficient PPP do in these last eight months? They failed to monitor each sector of imports to control them individually. Pakistans economy started destabilizing because PPP could not guard our $14 billion reserves. Nor did they utilize any effort to increase the reserves from where Mr. Shaukat Aziz left it at $16.4 billion! The easier way out for them is to beg around the world barefaced or go back to IMF disgracefully.

What did the PPP further do? They increased the import bill by 55% in the months April to June 2008 and again increased it by 52.65% in the months July to September 2008  though world oil prices fell from $140 per barrel to $70 per barrel.

Flight of capital takes place ONLY in economies where there is lack of trust and faith! Investors and endowing Public do not trust the government of PPP and are wary of PPPs earlier corrupt reputation. 

In the first four months of PPP, around $22 billion were withdrawn from the economy and KSEs market capitalization fell by $29 billion. The State Bank was forced to place ban on transfer of dollar outside Pakistan. 

Foreign reserves get hurt twice in this depletion process. First, when the investors and public pull back their money. Second, when macro-economic indicators witness imbalance and the government is forced to pay their external liabilities through these Reserves. This second stage occurs only when the government loses other means of regular income and is unable to control their imports.

Every country in the world is forced to make Imports. Imports help boost Exports. Even the world exporter China makes an import worth around $954 billion, to further promote their exports. But, Imports should be Export specific  scrutinized and restrained monthly  which was being done under the policies implemented by Mr. Shaukat Aziz.

Lets analyze the steady India, as an example, with GDP growth of 9%.

Indian Imports - $188 billion (compared to Pakistans imports of $40 billion)

Indian Trade deficit - $63 billion (compared to Pakistans deficit of $20 billion)

The Indian currency is not devaluing because their Foreign Reserves $308 billion exceed their trade deficit of $63 billion. 

Had Mr. Shaukat Aziz continued, the Trade deficit would have been kept controlled in accordance with Pakistans Revenue generation, Capital inflows and Foreign Reserves  which would have kept our rupee stable and economy booming at 7% GDP growth.

If Pakistan wishes to remain free from influence of IMF, there is no better option than to assert our economic sovereignty and accumulate Foreign Reserves, which in return will keep our currency stable. Regrettably, PPP lacks the credibility and the reliability to attract back that trust and confidence!



*Afreen Baig is an independent analyst majoring in International Relations and Economics. She can be reached at afreenbaig@gmail.com *


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## Neo

*'Friends of Pakistan' pledge support to Islamabad ​* 
ABU DHABI (November 17, 2008): A group dubbing itself 'Friends of Pakistan' pledged support to the extremism-hit country at a meeting in Abu Dhabi on Monday during which a 'framework' for cooperation was discussed, a top official said. 'It was a very successful meeting, we had (pledges of) unanimous support and solidarity,' Pakistan's additional foreign secretary for South Asia, Aizaz Ahmad Chaudhry, told reporters at the end of the meeting.

"People are interested in finding ways to help," he said, adding that the gathering had "put together a framework" for cooperation in the fields of development, security, energy and institution building.

The meeting of representatives from China, European states, Saudi Arabia, Turkey, the United Arab Emirates and the United States, came two days after Islamabad said it had secured an IMF loan of nearly eight billion dollars.

A Pakistani diplomat told AFP that countries represented at the gathering had not come to pledge donations.

"This is not a donors' club meeting," said Javed Malik, Pakistan's ambassador at large. "This is for galvanising broader support to Pakistan."

Economic support was just one of the issues discussed, in addition to building institutions, supporting Pakistan's democratic government and battling extremism.

"Pakistan played a very important role in fighting terror... that needs to be supported," Malik said.

On Saturday Pakistan announced it will receive a loan of 7.6 billion dollars from the International Monetary Fund.

Islamabad needs approximately 4.5 billion dollars (3.5 billion euros) to deal with a balance of payments crisis that has raised the risk of the violence-hit nation defaulting on its foreign debts.

"The impact of the financial crisis in the world and the difficulties we faced at home impacted gravely, particularly on our foreign exchange reserves which were 16.4 billion dollars in October 2007 and now are less than 7 billion dollars," Shaukat Tarin, top financial adviser to the Pakistani premier, said on Saturday.


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## Neo

*All subsidies to go; no SBP intervention in foreign exchange market: IMF sets harsh conditions​* 
ISLAMABAD (November 17 2008): Pakistan will have to withdraw subsidies across the board by the end of the current fiscal year and bar the State Bank of Pakistan (SBP) from intervening in the forex market. These are two major conditionalities the International Monetary Fund (IMF) has placed on Pakistan under its rescue package.

The subsidies in power, gas and petroleum products will be eliminated by the end of this fiscal year, sources told Business Recorder. This is one of the two major conditions put by the IMF prior to approval of loans amounting to $ 7.6 billion as rescue package, sources added. This condition would be much harder if it was applied to agricultural inputs as presently the government provides a subsidy of Rs 32 billion on fertilisers.

The government has not made the IMF conditions public so far. But insiders are of the view that some of the conditions are very harsh and the government will have to burden the people, especially the poor, for meeting the Fund's demands.

The IMF is of the view that Pakistan would have to increase the tax-to-GDP ratio to 15 percent by 2013. This issue, according to sources, is also considered to be harsh in the sense that the government would have to increase indirect taxes, instead of direct taxes. The indirect taxes will, again, hit the people. As a result, the ratio of general sales tax may have to be increased.

However, sources did not say whether the tax-to-GDP ratio would be taken to 15 percent by increasing indirect taxes. They were of the view that the government could improve the tax net by bringing more people under direct taxes.

According to sources, the IMF is also keen that banks' profits should be linked with the inflation rate prevalent in the country. Besides these conditions, the IMF has also asked Pakistan to keep getting loans from SBP, within certain limits. They said that IMF wanted Pakistan not to get loans from the SBP till the conclusion of the IMF programme. However, the government successfully told the IMF that SBP credit could be kept within certain limits, and full ban on the facility would be very hard to meet.

Pakistan has also been asked to bring fiscal deficit to 4.3 percent of the GDP within the current fiscal year. Government circles claim tat these conditionalites are not harsh, and most of them have already been included in the current year's budget. In order to slash its deficits, current account and trade will have to be bridged by withdrawing all subsidies, sources said.

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## Neo

*Region's biggest oil refinery to be built near Gwadar: minister​*
KARACHI (November 17 2008): The people's government is committed to complete the Gwadar deep water port project making the strategic Mekran region the pearl trade and energy corridor for the entire region catering the bulk needs of the landlocked Central Asian countries.

The Minister of State for Ports and Shipping, Nabil Ahmed Gabol, said in a statement on Sunday that the biggest oil refinery and biggest oil storage facility of the region would be constructed near Gwadar besides making the port city of Balochistan the route of the Iran-Pakistan-India gas pipeline project. He hoped that work on the Iran gas pipeline would start soon, after sorting out some of the pending issues.

The minister said that both President Asif Zardari and Prime Minister Gilani would visit Gwadar soon for reviewing all development projects on the spot and issue fresh instructions guiding the officials how to proceed to make Gwadar the real hub of economic activities.

He said that the government would develop Gwadar region the biggest corridor for energy and trade catering the need of the landlocked countries of Central Asia.

Gabol pledged to develop the entire coastal belt from Karachi to Jiwani catering the basic needs of the people who were denied livelihood for the past many decades.

He said that the PPP government would fulfil all its promises and pledges with regard to the Gwadar port and President Zardari had already spelled out government policies on future of Gwadar port when he addressed the Baloch intellectuals at President House earlier last month. He pledged to defend the legitimate interests of the Baloch people in Gwadar conceding their demand for right of control over their resources.

The minister assured the fishermen and other segments of the civil society on the Mekran coast that the government was committed to develop the entire coastal region for the benefit of the indigenous people of Balochistan residing in the coastal region.

Regarding making Gwadar port operational, he said that the government would divert cargo from Karachi port and Port Qasim to make it sustainable giving an incentive to the Singapore Port Authority to implement the second phase of the Port development at Gwadar.

The minister dispelled the impression that the PPP government at the centre or in Balochistan would continue the discriminatory policies of the Musharraf regime, and said that there would be a marked deviation from the old policies and making plans beneficial for the indigenous people only, preferably the local fishermen, including preserving their fishing grounds and barring illegal fishing.

He hoped that both the federal and the provincial governments would join hands in defending the legitimate interests of local fishermen first and later on the people residing in the surrounding human settlements of the Mekran and Lasbela coast.-PR


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## Neo

*Shahbaz to seek Chinese investment for Punjab​* 
LAHORE (November 17 2008): 'Pakistan's friendship with China is vital and we should extend the hand of friendship towards Chinese people,' Punjab Chief Minister, Mian Muhammad Shahbaz Sharif said this on Sunday before leaving for a official visit to China.

'I am bound for China to explore the opportunities of Chinese investment in the province and to discuss the matters of technical training with the host,' he said.

Sharing his opinion with newsmen at the airport about electricity generation, he said that coal should be used to generate electricity that would minimise the prevalent power shortage in the country.

'A lot of employment opportunities would emerge if the coal power generation is introduced,' Shahbaz said.

Talking about hydel power generation in the Province, he said that one and half to 20-megawatt production of hydel power exists.

Further, dams could be constructed on upstream of Basha Dam, the CM said adding that it was pitiable that the previous regime wasted a valuable time but could not do anything practically. On a question about extension of cabinet in Punjab he said that a 30-35-member provincial cabinet would not be a burden.

Shahbaz would return to the country after his tour to China on November 22, 2008.

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## Neo

*US investors express keenness in housing, power generation​*
ISLAMABAD (November 16 2008): Investors of United States have shown keen interest for making investment in housing sector, and hydel and thermal power units. According to a press release issued by the Board of Investment (BOI) on Saturday, a two-member delegation from US visited the Ministry of Investment and called on Executive Director-General Riaz ul Haq to look into the possibilities of investment in various sectors of the economy.

The delegation comprised Jack Wilkins, Chief Executive Officer of Visionary Industries Inc, and Hamid S Khan, Country Manager, Ultimate Building Systems Inc. Foreign investor expressed interest to invest in the housing sector. In this regard, they have already signed an MOU with the Ministry of Works for the construction of a number of housing units under the Prime Minister's initiative for building one million houses.

They will construct these units in different cities of Pakistan for which funds will he invested from America and they will not raise any loan from the banking industry of Pakistan. Pakistan is facing current shortage of six million houses and needs one million houses every year.

The delegation also expressed interest in hydel and thermal power units to cope up with the electricity shortages. The members of the delegation stated that they have expertise and huge funds available, which can be utilised by Pakistan for the purpose of generating electricity,

Presently, Pakistan electricity shortfall is 5000 MW. It is expected that electricity demand will increase at the rate of 10 percent per annum with the size of economy. It is expected that the government can fill these gaps in demand/supply in both power/housing sectors with the help of such foreign investors. The Ministry of Investment is working aggressively to facilitate such investors, the press release added.-PR

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## Neo

*Restoration of investor confidence vital to economy​* 
KARACHI (November 16 2008): Speakers at an investment forum said that the nation would come out of depression and successfully put the economy at right track. However, they said, restoration of investors and general public confidence is necessary for economic revival. The one day investment forum on "Investing in Change: Pakistan and World" was organised by BMA Funds at a local hotel here on Saturday.

Speaking on this occasion, former Governor of State Bank of Pakistan (SBP) and Director of Institute of Business Administration (IBA) Dr Ishrat Hussain said that Pakistan should go to IMF without wasting time. He said that Pakistan had a growth rate of 1.8 per cent in 2000, when it entered into IMF programme. After entering into IMF program the country achieved an average GDP growth of seven per cent.

The IMF programme helped country back on track and Pakistan established access to international markets. Pakistan also launched European Bond and Islamic Sukuk. According to him the poverty reduced to 25 per cent from 33 per cent and the unemployment rate slashed to 6.2 per cent from 8.5 in the same period after entering into the IMF programme.

He said that increase in discount rate is one of the measure to control inflation. He was of the view that government should not borrow from the central bank. S. Ali Raza, President, National Bank of Pakistan (NBP), said that the banking system in the country is standing on strong footing.

Tariq Iqbal Khan, Chairman NIT, said that the investment are always made on expectations of good returns. Waqar A. Malik, President, OICCI; Farrukh H. Khan, CEO, BMA Capital; Muddassar Malik, CEO, BMA Fund; Tawfiq A. Hussain, President, Samba Bank and others also spoke on this occasion.

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## Neo

*Businessmen urged to set up new industrial units​* 
LAHORE (November 16 2008): The anti-industry regulatory framework has kept the potential investors away who could have established new industry in the country but they opted investment in real estate, capital market or other sort of businesses for short-term gains.

"Unfortunately our economic managers have not right approach to accelerate industrialisation without which Pakistan can not survive in the longer run", said Engineering Consultant and Founding Chairman of the Pak-China Economic Relations Standing Committee of the Lahore Chamber of Commerce and Industry Siddiq ur Rehman Rana.

Rana, who was the key player in preparing 5-year Pak-China Economic Co-operation Plan to enhance balance trade between the two countries to $15 billion, said, "I am contesting the LCCI election from corporate class with the objective to execute plan through public-private partnership without further delay.

To a question, he said that under Free Trade Agreement, Pakistan has real potential and can export about 1700 non-traditional items. Fortunately, about 350 commercial value herbs including 56 high value herbs can be exported to China, which is currently importing these herbs from other countries, he added.

Talking to Business Recorder, he said our businessmen need to change their investment priority because the real estate or capital market are no more viable and profitable in the long-run rather they should set up new industrial units to make the country economically strong.

"It is right time to take rational and prudent decisions to ensure conducive industrialisation environment because growth of industry and Greenfield investment is the solution to present economic crises" he maintained.

Interestingly, no province, except NWFP, has department of Science and Technology that reflects the government priority, he said. He suggested that the government should immediately set up Real Economy Development Boards at district level, which could provide guidance and help setting up of new industrial units in different sectors.

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## RabzonKhan

*Stand-by arrangement with the Fund* 

EDITORIAL (November 18 2008): Adfter showing a great deal of reluctance, at least outwardly, the government of Pakistan has made the right move to avail itself of the stand-by facility of the International Monetary Fund (IMF). Announcing the decision, the Advisor to the Prime Minister on Finance, *Shaukat Tarin said that the minimum amount of the bailout package would be $7.6 billion or five times of our quota in the Fund and the interest rate on the loan would range between 3.51 and 4.5 percent per annum.*

*The Facility will be available over a period of 23 months or seven quarters and Pakistan would be required to pay back the loan amount from 2011 to 2016. Making a simultaneous announcement from Washington, IMF's Managing Director, Strauss-Kahn added that this support was part of a broader package that includes financial assistance from other multilateral institutions and regional development banks.*

He called on the donor community to act quickly to support Pakistan's programme in order to mitigate the impact of the current economic difficulties of the poor and ensure an adequate level of spending on development programmes.

*It was also asserted in a press statement that Pakistan's programme was meant to restore the confidence of domestic and external investors by addressing macroeconomic imbalances through a tightening of fiscal and monetary policies *and to protect the poor and preserve social stability through a well-targeted and adequately funded social safety net.

*Giving the background which necessitated recourse to the Fund programme, Tarin highlighted the fact that Pakistan was facing challenging economic conditions brought about by a combination of global shocks, inaction of the previous government in certain key areas and the ongoing financial crisis hitting every part of the world.*

The ultimate reflection of what has happened to Pakistan's economy is seen in the massive loss of exchange reserves from $16.4 billion in October, 2007 to less than $7 billion at present.

Other indicators of economic stress are the slowdown in growth, rising inflation, excessive expansion in monetary assets (21 percent reserve money growth during 2007-08), rising fiscal deficit, depreciating exchange rate (21.8 percent since March, 2008) and a steep decline in stock market valuation.

*Salient features of the programme proposed by Pakistan are a sharp reduction in fiscal deficit from 7.4 percent to 4.3 percent of GDP, zero net borrowing from the State Bank, slowdown in monetary growth (M2) to 14 percent, monetary tightening stance of the central bank, adherence to exchange rate flexibility, raising of tax to GDP ratio from 9.6 percent to 15 percent over the next 5-7 years and the provision of adequately funded social safety net (SSN).*

The Advisor was very frank in admitting that the government had approached the multilateral agencies and friendly countries to support our programme and help plug the financing gap. They were willing "to give us a helping hand" but advised us to get the endorsement of our programme from the IMF. The IMF, when contacted, showed a positive approach and felt that our targets were reasonable except the interest rate which was proposed to be enhanced further to curtail the core inflation.

*The Advisor to the Prime Minister on Finance has, in our view, made a good case and provided adequate justification for going to the IMF and seeking its assistance at a time when major indicators of the economy were fast deteriorating or becoming untenable.*

In order to placate the negative sentiments against the IMF prevailing in the country, it was also essential to establish that the financing gap was huge and no other source was willing to come forward to provide the needed assistance until and unless the programme was endorsed by the IMF and backed by its tangible assistance.

After the approval of the programme by the Fund Board, which is almost a certainty, we are sure that financial inflows including an amount of $4.5 billion from the IMF during 2007-08 would be enough to keep our foreign exchange reserves at a comfortable level and maintain solvency of the country.

*A great advantage of the Fund programme would be restoration of credibility in our reform effort and the faith of international community that the country would soon regain macroeconomic stability. This will encourage both domestic and foreign investors and give a lot of comfort to donors and other multilateral agencies.*

The improved investment environment coupled with the expected reduction in the imbalances in the economy would definitely help in overcoming the economic difficulties now being faced by the country. The claim by Shaukat Tarin that the programme was mostly home grown was probably directed to show that economic policies of the country would not be dictated by the IMF.

This was perhaps not needed because everybody knows that conditionalities are agreed by mutual consultations. It was another matter if, keeping the past experience in view, economic managers of the country were already aware of the IMF prescriptions and willing to accept them beforehand for successful negotiation of the programme at an early date.

However, experience suggests that negotiation of the programme is the easier part. The devil is in its details and implementation. For instance, while measures like tightening of monetary policy and maintaining exchange rate flexibility could be undertaken without much resistance, fiscal part of the programme would be most difficult to implement.

*The Government of Pakistan has pledged to increase tax to GDP ratio to 15 percent in the medium term, reduce the budget deficit from 7.4 percent last year to 4.3 percent this year and maintain a strict financial discipline throughout the programme period. This would call for measures like imposition of income tax on exempted sectors and withdrawal of subsidies, besides pruning of both current and development expenditures.*

Although it is well known that worsening fiscal outcome is the root cause of most of the economic problems of the country, the above mentioned measures are likely to be resisted all the way, risking the derailment of the programme. The recent uproar against the privatisation of Qadirpur gas field and increase in electricity tariff is a rough indication of the things to come.

*Wriggling out of the Fund programme under public pressure would be highly regrettable and sure to hurt the image of the country very badly. Unfortunately, opposition parties of the country are not known for extending a helping hand to the government in matters of fiscal prudence and preparing the public for necessary sacrifices.*

While Pakistan has its own difficulties, IMF also needs to change its outlook in order to ensure successful conclusion of its programmes. Assistance of $7.6 billion over a period of two years appears to be small compared to the projected current account deficit during this period and reflects the desire of the Fund to keep the country on a tight leash.

It would have been better to increase the loan amount under the Facility to about $10 billion so that economic managers of the country could fully concentrate on the reform process without feeling the need to run in other directions and negotiate for funds from other sources.

Also, the broad parameters of the (detailed conditionalities are not yet available) the terms agreed with the Fund indicate that compression of demand has been given more importance than supply side imperatives to restore macroeconomic stability. We feel that a Fund programme should be so devised that it is desirable and doable without inflicting an intolerable degree of pain.


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## Neo

*Sugarcane output may fall by 40pc in Sindh ​* 
Tuesday, November 18, 2008

KARACHI: Future of Sindhs sugarcane crop seems bleak as delays in payments to growers as well as in crushing season have forced the growers to switch over to other crops, this year alone Sindh would face drop of more than five million tonnes in the cane production.

Last year Sindhs sugarcane production remained around 14 million tonnes, this year it is expected to come down by 40 percent to less than nine million tonnes. This would result in huge sugar shortage by the end of next year. We expect shortage of more than 40 percent, said Cane Commissioner Sindh.

Each year the month of November witnesses protests and blames of growers and millers against each other. This year it is yet to start despite of delay in the crushing season by the millers.

Officially, crushing of the sugarcane was to start from 10th November but, due to policies of the sugar mills and strong involvement of its owners in the government, the officials remain reluctant to take action against them, Abdul Majeed Nizamani, President Sindh Abadgar Board told The News.

With exception to three sugar mills out of 30 operational mills, none started crushing cane on time resulting in losses to the growers as well as future of the sugarcane crop. It is no more a cash crop as, More than Rs200 million are not paid to the growers from last years crop only, said Nizamani.

Umer Latif, spokesperson PSMA Sindh zone when asked about the delay in crushing season told The News that it was not necessary that all mills have to start simultaneously, it is not lunch that all eat together, some have to take time, which does not matter, he said.

Some very influential mill owners are part of the current government set up and the officials were not taking any action against them. However, Cane Commissioner Sindh said they would take the legal action against the mills if they failed to start crushing in this month.

Abdul Majeed Nizamani said influential groups own around 12 mills. I dont think anyone would take action. I dont see any change. Two important persons like Chairman Pakistan Sugar Mills Association (PSMA) Pakistan and PSMA Sindh chapter were also silent on the issue. 

Nizamani said that during his visit to Badin district he found that several sugar mills were not working. Badin Sugar mills, Bawani sugar mills, Khoski Sugar mills, Army Welfare Sugar Mills, Pangrio Sugar Mills, Mirza Sugar Mills and Deewan Sugar Mills were silent, he said.

Tando Muhammad Khan Sugar Mills and Sehri Sugar Mills were also having no activity on Thursday. Delaying in the crushing season results in loss to growers in three ways. Firstly, the crop loses weight and farmers get lesser amount for their yield. 

Secondly, sugarcane crop needs more water and delay in harvesting causes wastage of water, which could be used in the cultivation of wheat. Thirdly, the sugarcane land would not be ready for wheat cultivation. 

These three reasons besides delayed payments by the sugar mills have forced the growers to move towards other crops. People cultivating around 200 acres have shrunk their sugarcane crop to 25 acres. I dont see much crop on land, said Nizamani. 

More than Rs800 millions of the growers are outstanding towards sugar mills from the crop of 2007-08 only. There are also some payments from 2005-06 and 2006-7 crops towards some mills. Time is the best tutor, now price security and peak season are gone. Growers would leave sugarcane and go to the other crops, said the Abadgar Board President. 

Cane Commissioner Sindh, Nazeer Jamali said the official date of starting sugarcane crushing was November 10, but only three mills started making sugar. Twenty mills fired boilers. Three sugar mills lit up boilers on Nov 12 and four were yet to start till Thursday evening. Whether government was willing to take action, the cane commissioner said, the action goes through process and we would take it.

Cane Commissioner said the growers were not in a hurry as sugarcane was not mature. On the contrary, sugar mills were worried about the quantity of the sugarcane. He said owing to pest attack and water shortage, more than 40 percent decline is likely to occur in the crop this year as compared to last year. A loss of 15 percent land use was also recorded, he added. 

Jamali did not say any word about the decline in the crop due to policies of the sugar mills, which had been delaying payments and the cane crushing season most of the times. 

After igniting their boilers the sugar mills must keep them burning using baghas - local name for fuel made sugarcane waste. All mills would start crushing from this week, the Cane Commissioner said. 

Contradicting the Cane Commissioner, Syed Qamar ul Zaman Shah, Chairman Sindh Chamber of Agriculture said the crop was ready by the start of September. PSMA, on the other hand, requested the government for the import of raw sugar before the end of the season, as crop shortage would lead towards the increase in prices and shortage of sugar. 

But growers have decided to block the move to allow millers to import raw sugar instead of buying sugarcane from local farmers, we would oppose it, Syed Qamar ul Zaman Shah vowed.


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## Neo

* LSM depicts negative growth of 6.76pc ​* 
Tuesday, November 18, 2008

ISLAMABAD: Hard hit by acute energy shortage, the Large Scale Manufacturing (LSM) sector during September 2008 registered negative growth of 6.76 per cent. 

Three months (July-September) 2008-09 average growth also stood at negative 6.20 per cent over the same period of the last fiscal, the Federal Bureau of Statistics (FBS) reported on Monday. Pakistan economy is facing negative industrial growth for the last four months consecutively and the State Banks decision of increasing its discount rate by 200 basis points to 15 per cent would further deteriorate the situation, as economic pundits believe that this would resultantly increase unemployment in the country. According to the FBS latest bulletin on the large manufacturing industries, during the first quarter (July-September 2008-09), the hard hit sectors were the steel and petroleum. 

Coke production declined by 1.50 per cent to 73,244 million metric tons (mmt), pig iron by 10.95 to 234,255mmt, billets/ingots by 39.26 per cent to 525,862mmt and H/C.R Sheets, strips, coils and plates production declined by 22.04 per cent to 849,733 million metric tons. During July-September 2008-09, the petroleum products production declined by 5.41 per cent to 3.376 billion liters. 

Within the petroleum group, diesel oil production declined by 28.80 per cent to 31.8 million liters, jet fuel oil by 12.81 per cent to 310 million liters, Liquefied Petroleum Gas (LPG) by 19.19 per cent to 109 million liters, lubricating oil by 4.19 per cent to 55.2 million liters, jute batching oil by 14.59 per cent to 1.15 million litters, furnace oil by 6.66 per cent to 876.87 million litters, motor spirits by 9.89 per cent to 448.5 million litters, solvent naptha by 4.89 per cent to 291.3 million litters and other petroleum production declined by 18.20 per cent to 75.42 million liters over the same cycle of the last fiscal year. 

Some categories of the sector gave encouraging figures as kerosene oil production up by 7.36 per cent to 68.17 million liters and high speed diesel increased by 3.04 per cent to 1.11 billion liters, during the period under review, cotton cloth production reduced by 0.88 per cent to 254.54 million square meters and cotton yarn by 0.55 per cent to 736,336 metric tons. 

According to the FBS figures, production of buses declined by 41.25 per cent to 198, jeeps and cars by 47.16 per cent to 24,412 and motor cycles production edged down by 8.49 per cent to 222,876. However, tractors production during these three months increased by 5.14 per cent to 12,261, trucks 14 per cent to 993 and LCVs production up by 27.17 per cent to 5,981. Cement production increased by 0.64 per cent to 6.74mmt, nitrogen fertilizers by 5.31 per cent to 631,648 metric tons and Phosphatic fertilizers production increased by 8.65 per cent to 126,041 metric tons during July-September 2008-09. 

The figures reveal that production of most of the electronic goods declined i.e. deep freezers production dip by 29.2 per cent to 29,041, electric bulbs by 21 per cent to 27,065, electric tubes by 11 per cent to 3,654, electric motors 32.43 per cent to 2,398, electric transformers by 5.86 per cent to 7,256, electric meters 19 per cent to 312,716, switch gears by 22.78 per cent to 3,319, TV sets by 10.83 per cent to 133,442, air conditioners by 22.55 per cent to 69,937 and refrigerators production decline by 1 per cent to 228,653. 

Vegetable ghee production down by 12.49 per cent to 250,925 metric tons, cooking oil by 8.55 per cent to 62,085 metric tons, wheat and grain milling by 10.4 per cent to 1.15mmt, beverages 17.82 per cent to 1.98 billion bottles, woolen and carpet yarn by 6.13 per cent to 658 metric tons, knight wool 5 per cent to 800 metric tons, upper leather by 1.58 per cent to 5.1 million square meters, sole leather by 14.29 per cent to 24 metric tons, cycle tyres by 37.27 per cent to 741,000, cycle tubes by 42.44 per cent to 1.69 million, sugarcane machines by 52.84 per cent to 133, power looms by 62.42 per cent to 62 and bobbins and shuttles production dip by 15.38 per cent to 22,000 during the quarter review over the corresponding period of the last fiscal. 

The commodities which witnessed growth in their production during July-September 2008-09 over the same period of the last FY, included tea blended whose production up by 10.82 per cent to 15,212 metric tons, footwear 26.59 per cent to 8.43 million pairs, plywood by 59.61 per cent to 23.8 million square feet, paint and varnishes (S) by 30.58 per cent to 7,818 metric tons, paint and varnishes (L) by 25.74 per cent to 17.5 million litters, motor tyres by 5.84 per cent to 1.9 million, motor tubes 22.78 per cent to 3.56 million, diesel engines by 18.28 per cent to 5,158 and wheat threshers production up by 20.3 per cent to 243.


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## Neo

*Pakistan 8th biggest gold consumer ​* 
*Lack of hallmarking resulting in country losing exports​*
Tuesday, November 18, 2008

LAHORE: Pakistan is the eighth biggest consumer of gold in the world and annually imports 127 tonnes gold but unfortunately there is no consumer satisfaction and Pakistani jewellery industry suffers from unfair competition by those who under-carat gold and therefore sell at a lower price.

Non-existence of hallmarking results in Pakistans increasing loss of exports, self-dependence and less acceptability of Pakistani jewellery products in local and global markets. These views were expressed by the speakers at a seminar titled Latest Trends in Jewellery Hallmarking, organised by Pakistan Gems and Jewellery Development Company (PGJDC).

Speaking on the occasion Project Director (PITMAEM), PCSIR Dr Shahzad Alam said that in order to improve the quality of jewellery products, complete quality assessment and hallmarking of gold is imperative. 

He informed that hallmarking refers to physically marking a piece of jewellery according to specific laws to certify the purity of metal. Hallmarks are small markings stamped on gold, silver and platinum articles.

A hallmark means that the article has been independently tested and guarantees that it confirms to all legal standards of purity (Fineness). These tests are carried out only by an assay office. A number of successful jewellery industry in the world use hallmarking both as a marketing tool and to ensure consumer confidence, he added.

PGJDC CEO Fawad H Khan informed that the decision to develop hallmarking in Pakistan is part of national strategy submitted by SWOG and ministry of industrys support. It was aimed at helping Pakistans small and medium sized enterprises to reposition themselves on a more competitive footing in the domestic and global markets.

Fawad said that apart from other countries of the world implementation hallmarking law in Pakistan would help country increase its export to approximately 18 signatories countries of Vienna convention. He said that the main objective is to create awareness among common people and to improve the image of our local jewellery industry at international levels.

He informed that PGJDC is working on setting up an assaying and hallmarking system with the help of government organisations like (PITMAEM, PCSIR Labs complex) and to develop a strong cooperation between local and international manufacturers of gold jewellery.

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## Neo

*Pak hydropower plans viable investments ​* 
Tuesday, November 18, 2008

LAHORE: Secretary Economic Affairs Division Farrukh Qayyum has said that the ongoing as well as upcoming hydropower projects in Pakistan provide excellent investment opportunities because of their attractive Economic Internal Rate of Returns (EIRR).

An international donors conference was held Monday for seeking financial assistance for various hydropower projects, especially Neelum-Jhelum Hydroelectric Project. The delegates of the Islamic Development Bank, Saudi Fund for Development, Kuwait Fund for Development and Abu Dhabi Fund for Development attended the conference.

WAPDA Chairman Shakil Durrani said that besides enhancing the water storage capacity, hydropower development is the prime focus of attention of WAPDA, as Pakistan has been blessed with a potential of generating more than 54,000 MW of hydropower.

He said that construction work on 969-MW Neelum-Jhelum Hydroelectric Project has already started early this year, while pre-qualification of the civil contractors for 4,500 MW Diamer-Basha Dam Project is underway. 

Construction work on this gigantic project will start next year following the award of contract through international competitive bidding. Likewise, Golen Gol Hydropower Project of 160 MW is also ready for construction, he added. 

WAPDA Chairman further said that the feasibility studies and detailed engineering designs of various other hydropower projects with accumulative generation capacity of 21,000 MW are also being carried out by the world renowned consultants. Most of these studies would be completed by the next year. These include Kohala (1,100 MW), Dasu (4,000 MW), Bunji (5,400 MW), Munda (760MW). He said that these projects could be undertaken with the involvement of the private foreign as well as local investors. 

NJHEP General Manager Hasnain Afzal and Consultant Grosskops made presentation to the delegates on the project.


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## Neo

*FDI growth low ​* 
Tuesday, November 18, 2008

ISLAMABAD: Foreign Direct Investment (FDI) to Pakistan during the first four months of the fiscal year 2008-09 was up by only 0.15 per cent to $1.321 billion as compared to the corresponding month of the last fiscal 2007-08, when it stood at $1.319 billion, the State Bank of Pakistan (SBP) reported on Monday.

Portfolio investments however, dipped by 146 per cent to negative $158.68 million during July-October 2008-09 against the corresponding period of the last fiscal year when it stood at $345.65 million.

It is a well know fact that Pakistan is a place where profit ratio is high compared to other countries of the region and at the moment various countries and business tycoons are interested to invest in Pakistan. Economic experts believe that stabilising the political and economic situation would help boost investment inflow in the country.

According to the break-up of investment by region, developed countries direct investment in Pakistan declined by 35 per cent to $611.7 million and its portfolio investment declined by 147.5 per cent to negative $165.4 million. During the same period of the last fiscal, the economy fetched $940.6 million FDI and about $348 million portfolio investment.

Among developed countries, Western Europe made a direct investment $257 million, while it withdrew $56.6 million portfolio investment from the economy. Last year in the same month its FDI stood at $232.6 million and portfolio at $31.9 million. European Union FDI stood at $150.5 million and portfolio at negative $24.4 million against last years FDI of $156.5 million and portfolio at $57.4 million.

Interestingly, developing economies FDI into Pakistan increased substantially. These economies direct invest into the country was up by 89.6 per cent to $546.8 million and portfolio investment by 221.5 per cent to $5.8 million. Asian countries (West Asia, South, East and South East Asia) direct investment in Pakistan was up by 137.9 per cent to $492.8 million against $207.1 million recorded in previous year.

USA was the major investor in Pakistan with total FDI of $270.3 million. However, it was 58 per cent less than what it invested in the corresponding period of the last fiscal ($643m). It also withdrew its $104.6 million portfolio investment, which stood at $339 million in the corresponding period. Singapore was the second major investor in Pakistan with total FDI of $219.4 million against $17.5 million in same period of the last fiscal. Malaysia was the third, with FDI of $205.9 million.

United Kingdoms (UK) direct investment to Pakistan stood at $95.6m, experiencing a dip by 14.9 per cent as during the same period of the last fiscal it stood at $112.3m. Mauritius FDI in Pakistan stood at $63m, Switzerland $56m, Norway $50.3m, Hong Kong $41m, Japan $31.1m, Netherlands $27.3m, Australia $25m, Sweden $16m, Saudi Arabia $12m, Germany $10.6m and Bahrain direct investment in Pakistan stood at $10.5m.


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## Neo

*Power generation from Thar Coal to start in next five years: Raja Pervaiz ​* 
Tuesday, November 18, 2008

KARACHI: Federal Minister for Water and Power, Raja Pervaiz Ashraf on Monday said power generation from Thar Coal deposits will start within the next five years. Presently, the country is short of 3500 MW to 4000 MW of electricity.

Another major step in this direction is the construction of Bhasha Diamir dam and the contract of which has been awarded to the Chinese Consortium. The project has 25,000 MW identified potential. China excels in the construction of dams.

The Minister was talking to the media during a seminar on Energy Trade in South Asia: Prospects and Challenges for Regional Integration  here. The seminar was organised by SAARC Chamber of Commerce and Industry (SCCI) led by Tariq Sayeed, in collaboration with the Federation of Pakistan Chambers of Commerce and Industry (FPCCI).

He said Pakistan is a very attractive land for foreign investment. We floated bids of $1.5 billion for the dam but received offers of $4 billion with bank guarantees, he said. He informed that a Turkish Company was installing a windmills power generation project with the capacity of 1000 MW.

The Government has also purchased 1100 MW from Iran for Balochistan. He said under the long term plan, we need $13 billion for power generation, $10 billion out of which will be from the private sector, he said.

Pervaiz noted by the end of 2009, there will be no load-shedding in the country. The Federal Minister said that the present government was trying its best to provide maximum relief to the common man despite the economic recession, which is a global phenomenon. We will cut power rates in line with international oil prices, Raja Pervaiz Ashraf said. The major component of power generation in the county is oil-based. Sixty-five per cent of total generation is thermal, which is certainly costlier than other hydel and coal fired generation.

He said the government has offloaded the burden of $4 billion from the shoulders of the public by revising the electricity tariff. Now, the government will have to bear the burden of $117 billion. He said the PPP led government was very concerned about the peoples grievances and all its policies/decisions are meant to provide relief to them, instead of accepting any outside dictation. He also clarified that those who have paid the excess amount of electricity bills will get the respective amounts adjusted in their next bills.


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## Neo

*Pakistan may lose compensation from India in Rabi season ​* 
Tuesday, November 18, 2008

ISLAMABAD: Pakistan may lose the opportunity of getting compensation from India in the current Rabi season as New Delhi is constantly engaged in delaying tactics to avoid the resolution of the issue of Chenab water stopped at the Baglihar Dam, The News learnt on Monday.

The water will be of no use in case not available in the ongoing six-month Rabi season and the Indian authorities are attempting to delay the things despite reminders and warnings on the part of Islamabad, official sources said at the Ministry of Water and Power and the Foreign Office.

There are three channels  the Foreign Office, the Indus Waters Commission and the highest level (president, prime minister)  to take up the issue with the neighbouring country to ensure that more than 200,000 cusecs of water blocked at the Baghliar Dam is restored within the Rabi season  from October 2008 to March 2009.

At present, the Foreign Office is comparatively slow moving and there is no progress since President Asif Ali Zardari announced to write a letter to the Indian prime minister to get back the blocked water. 

Neither is the Foreign Office active nor there is any headway to formally write letters on behalf of the president. However, the Pakistani officials of the Indus Waters Commission have formally approached their Indian counterparts, reminding them of the pending issue. But, so far, New Delhi is tight-lipped.

At the same time, neither the Foreign Office nor any other body has planned to move 

the World Bank for arbitration or appointment of a neutral expert on the pending issue 

as a further delay would ultimately damage the interests of Pakistan.

We have formally reminded and offered the Indian Indus Waters commissioner to come along with his team in the last week of this month (November) to examine the Marala water inflows as per their demand, said Pakistani Indus Waters Commissioner Syed Jamaat Ali Shah when contacted.

He said that the Indian commissioner had promised to respond by Tuesday (today) or Wednesday (tomorrow) to give a reply on the formal invitation in the backdrop of the New Delhi talks held between the two sides at the platform of the bilateral commission on October 23-24.

The session was called after President Zardari personally took up the matter with Indian Prime Minister Manmohan Singh in their meeting in New York.

In the session, the Indian side had not only refused to compensate either in the form of commodity or cash but also rejected the data presented by Islamabad and the violation of the Indus Waters Treaty, 1960, which their country had committed.

There was a big gap between the statistics presented by the Pakistani team and the Indian officials. Pakistan had accused India of stopping huge quantity of water to fill the Baglihar Dam without maintaining the discharge under the Indus Waters Treaty. This was not only untimely but also caused a substantial decrease in the flow of the Chenab River, causing losses to standing crops in the Punjab.

Pakistan had demanded compensation for stopping the water and called for releasing the same quantity in the Rabi season.Islamabad heavily depends on the waters from India in the season as the flow of the Indus River decreases due to slow snow-melting on glaciers.


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## Neo

*IHC to decide Munda Dam case in two months ​* 
Tuesday, November 18, 2008

ISLAMABAD: A division bench of the Islamabad High Court (IHC) here on Monday announced its decision in an intra-court appeal of awarding the contract of building the Munda Dam to Wapda.

The division bench, comprising Chief Justice Sardar Muhammad Aslam and Justice Raja Saeed Akram, directed a single bench of the august court to decide the matter within two months, while the stay orders on building of the dam by Wapda would remain effective during this period.

In its appeal before the IHC, the Munda Hydro Power Project Company had stated that it had been given the project for building the dam. After approval of the project, it even prepared its feasibility report. The company challenged the decision of the government to give away the contract of the project to Wapda.

In its decision, the IHC said that during this period, both parties could furnish some additional facts before the court. Earlier, the company had filed a petition before the IHC for grant of stay in the case.



A single bench dismissed the petition, but a division bench of the IHC granted stay in the case. The plaintiffs have filed a civil suit for US $1.2 billion against Wapda, Private Power Infrastructure Board (PPIB), government of Pakistan and government of NWFP.


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## Neo

*Shahbaz seeks Chinese help to tap ME market ​* 
Tuesday, November 18, 2008

LAHORE: Punjab Chief Minister Shahbaz Sharif said on Monday that cooperation between Pakistan and China in the agriculture sector could help tap huge Middle East market.

According to a DGPR handout, the chief minister, talking to the Chinese Vice-Minister for Agriculture Niu Dun, said Punjab is the granary of Pakistan and it could export its finished agriculture products to the Middle East and beyond with the cooperation of China. He said Middle East was importing agricultural products from America, Europe and Far East.

China has made tremendous achievements in the field of agriculture, Shahbaz said and added, We have come here to share your experience and use it in our country for the common benefit.

Shahbaz said Punjab produces 70 per cent of total agriculture produce in Pakistan. He said in Punjab there were small dams to provide irrigation water to adjoining areas, but to further develop the sector he would like to seek Chinese advice on how to grow crops with minimum water. In this regard, he especially mentioned drip and pressurise irrigation systems.

The chief minister identified various areas of cooperation and said his government would also seek advice and cooperation from China on the construction of water reservoirs on River Chenab. He said water stored in the reservoir could greatly help the farming community for crop cultivations when there was a shortage of water.

Earlier, welcoming the chief minister and his delegation, the Chinese vice-minister said his visit would further enhance cooperation in the agriculture sector between the two sides. Meanwhile, chairman of Chinese Peoples Political Consultative Conference (CPPCC) Jia Qinglin has lauded Nawaz Sharif for strengthening relations between China and Pakistan. During a meeting with Shahbaz Sharif at the Great Hall of the People, he said Nawaz had made commendable efforts for strengthening economic, trade and cultural relations between the two countries.

APP adds: Identifying areas of trade and economic cooperation between Pakistan and China, Shahbaz said partnership in the fields would greatly help cement bilateral bonds. He expressed these views in a meeting with Chinese Vice-Minister for Commerce Chen Jian.

The Punjab chief minister said he was impressed by the network of flyovers and expressways in Beijing and invited China to come forward and contribute to the development of the road network in Punjab.


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## Neo

* Construction of dams a must to meet energy crises: Wapda chief ​* 
Tuesday, November 18, 2008

PESHAWAR: Chairman Wapda Shakil Durrani said construction of big and small dams was the utmost requirement of the country so that the countrys energy and water requirements could be fulfilled.

He said this while presiding a high-level meeting at the Wapda House here on Monday. The meeting was held to review the pace of work on all the ongoing hydel and power projects in the NWFP.

The chairman Wapda said the country is facing worst energy crisis of its history and Wapda is taking all possible measures in order to increase the power generation capability so that the countrys energy requirement could be fulfilled. 

He said the government has chalked out a strategy to overcome the current energy crisis. He said the NWFP has a great potential for hydel power generation and efforts are under way for utilisation of these natural resources.

He directed all the project directors to accelerate the pace of work so that the people and the country could benefit from it. He was optimistic that the completion of the projects would bring prosperity in the country and more economic activities would be generated. 

He said these projects on completion will contribute more than 206 MW of electricity to the national circuit and more water resources would be available for irrigation. Earlier, the general manager (Projects) North, Mehar Ghani gave a comprehensive presentation to the chairman Wapda regarding the status and pace of work on all ongoing development project. 

He told the chairman in detail about the pace of work, technical progress of Kurram Tangi Dam, Gomal Zam Dam and Golden Gol Hydro power projects. He said efforts are under way to complete all the ongoing development projects within the stipulated timeframe.


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## Neo

*Total foreign investment down $487m in July-Oct​*
KARACHI: The countrys foreign investment has slightly declined by $487 million or 29.8 percent to $1.145 billion in July-October this year compared to $1.633 billion received in 2007-08.

The main reason behind this fall in the total foreign investment is the outflow of portfolio investments, which remained negative $175.48 million or 155.8 percent during last four month.

The data shows that the country did not receive any privatisation proceed including the sell-off money of Pakistan Telecommunication Company Limited (PTCL) in last four months. An amount of $133 million per year is due from the privatization of PTCL.

According to the State Bank of Pakistan, the country received direct investment of $1.321 billion in July-Oct compared to $1.319 billion received in the same period last year. The direct investment, however, rose by $1.96 million or 0.15 percent.

Major outflows were recorded by the western countries including USA, which pulled back an amount of $104 million from the local bourses in last four months.

In spite of the flour set by the management of the Karachi Stock Exchange (KSE), the investment in the local bourses was received from two countries namely Qatar and Caribbean Islands, which stood at $11.5 million and $16.1 million, respectively in last four months, the data shows.

The outflows are the major reason of declining portfolio investment, an analyst said, and added there is no indication of any improvement in the coming months.

In last four months, USA made a direct investment of $270 million compared to $642 million received in the same period last year, down by 57 percent.

The develop countries invested $611.7 million July-October compared to only $940 million in the same period last year, Western Europe $257 million against its previous year investment of $232 million and European Union $150.5 million this fiscal year compared to $156.5 million in July-October 2007-08.

Analyst said, internal law and order situation is blocking foreign direct investment and this investments trend would continue till the normalcy. Sanctioning of $7.5 billion from the International Monetary Fund for reserve-building may help boost the economy.

Shaukat Tareen, newly appointed finance advisor of the government, had said, it is not a proper time to privatise governments entities. After there is no chance of any new GDR in the coming months, the analyst claimed.

In the last fiscal year, the SBP received total foreign investment of $5,193 billion, while $20 billion was received in portfolio investment. The government had received an amount of $133 million from the privatisation proceed of PTCL.


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## Neo

*Soros fund to provide technical assistance to Pakistan​*
ISLAMABAD: Soros Economic Development Fund (SEDF) has agreed to provide technical assistance to the government of Pakistan in economic, finance, tax reform, export, and agriculture sectors.

This was agreed in a meeting between a delegation of Soros Economic Development Fund led by Robert Franklin, Member of the Tax Advisory Group, SEDF and Deputy Chairman, Planning Commission, Salman Faruqui.

The Soros Fund delegation is currently visiting Pakistan to discuss the possibilities of providing technical assistance to Pakistan in various areas of economy. The delegation would hold its discussions with the relevant ministries/ Boards including Privatisation, Finance, Federal Board of Revenue, Economic Affairs Division, and Foreign Affairs. The delegation would prepare a report pointing out the areas the fund could assist Pakistan in bringing about structural reforms in economy.

The need to improve tax collection, especially the reforms in the collection of direct taxes was discussed.

Salman Faruqui briefed the delegation about the present governments plan of bringing about macroeconomic stability in the country. He further elaborated that planning commission was being restructured from merely a project approval body to a knowledge commission that would be able to give actionable plans to the government in all the development areas.


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## Neo

*Pakistan shows positive signs of stability: new report​*
WASHINGTON: A new report released here on Monday has found "positive signs and opportunities for Pakistan's democracy and, ultimately, stability."

The report issued by the Centre for American Progress points out that despite a history of interference in the political process, the Pakistani military has intentionally provided space to Pakistani civilian leaders to find their footing since the Feb. 18 election. However, Pakistan will pose "one of the greatest foreign policy challenges" for the incoming Obama administration, and how Pakistan addresses its militancy, weak governance, and economic difficulties will directly influence the security of the United States and its people. "The Obama administration must seize these opportunities and work with Pakistan, its friends, and neighbours to create a new strategy for enhancing security in Pakistan," the report recommends.

According to the report, US policymakers must understand the key challenges facing Pakistan and the region, as well as the critical opportunities that the Obama administration can leverage over the next four years. The challenges include a growing insurgency, weak governance, and a collapsing economy, problems with which Pakistan must be helped by its international partners. There is growing internal violence and regional instability. Pakistani fears of encirclement by India translate into continued support to some of the militant groups by elements of the Pakistani security establishment to counterbalance India. Pakistan ranks as one of the weakest countries worldwide: the ninth state most at risk of failure out of 177 countries. A dangerous disconnect exists between the needs of the Pakistani people and the ability or inclination of their leaders to provide for them. Pakistan's economy is in a downward spiral.

The United States needs to make a shift from a reactive, transactional, short-term approach that is narrowly focused on bilateral efforts in favour of a more proactive, long- term strategy that seeks to advance stability and prosperity inside Pakistan through a multilateral, regional approach.

The report is critical of US policy towards Pakistan, which it calls reactive. The United States has suspended aid, imposed sanctions, and intermittently renewed contacts for decades, depending on the paramount strategic concerns at the time. What's worse, the United States has approached Pakistan in a vacuum, neglecting to recognise the regional nature of Pakistan's challenges and the competing and sometimes contradictory roles played by numerous countries in Pakistan. However, for the first time in almost a decade, the United States and the world have partners in a democratically elected government of Pakistan, which while internally divided and weak, has greater legitimacy than previous governments because of the February 2008 elections, which most observers deemed as a legitimate expression of the will of the Pakistani people.

Pakistan has numerous allies in the region and the world beyond the United States that are assisting Pakistan in addressing the challenges it faces.

The report points out that the current distrust that the government of Pakistan and its people hold towards the Bush administration has undermined a cooperative Pakistan-US relationship. The Obama administration has the potential to mend the strained US-Pakistan relationship and offers a fresh opportunity to reach out anew to other strategic players in the region and the world to coordinate international efforts on Pakistan. Pakistan's civil society, including the lawyers' movement and the media, are increasingly calling Pakistan's leaders to account. These forces have the potential over time to influence their leadership to address their leading concerns, including unemployment and inadequate education, as well as to demand a strengthening of civilian government institutions.

The report recommends that the US should make a shift in its approach to Pakistan, recognising both the importance of Pakistan to regional and international security, as well as the limitations of US power. US policy must recognise that the military component alone is insufficient to build stability and security in Pakistan. Military operations alone will not defeat Pakistan's militant groups. Even if Al Qaeda were to be destroyed in Pakistan tomorrow, Pakistan would face other challenges to its stability including domestic militancy, fragile governance, regional tensions, and economic turmoil. The United States must integrate all the elements of American power to engage more deeply on these sources of instability. Addressing Pakistan's instability will not be easy. Pakistan presents an exceptionally difficult strategic challenge. A deep tension exists between the short-term challenge of confronting terrorism emanating from the borderlands and the long-term challenge of strengthening Pakistan's governance structures and economy. Short-term measures such as military strikes to increase pressure on Al Qaeda and the Taliban may undermine the credibility and effectiveness of Pakistan's civilian leadership. The United States will need to find the proper balance of responding to the urgent security threat without undermining broader goals.

The report also recommends that the US recognise the limitations of direct US influence in Pakistan and continue moving towards a multilateral approach, with Pakistan as a full partner. At this point in time, Pakistani perceptions of the United States are so dismal that efforts to pursue change in Pakistan with the United States in the lead may automatically discredit the effort. The United States needs to work with Pakistan's neighbours, other global powers, and international organisations such as the World Bank, IMF, and the United Nations in order to assist Pakistan over the long term. The Obama administration should with Congress and the international community strive to help Pakistan weaken Al Qaeda, the Taliban, and affiliated militant groups; secure borders between Pakistan and its neighbours, with all border disputes including Kashmir and the Durand Line either resolved or in a credible process for resolution; foster a stable internal political system that is based on the inclusive participation of all Pakistani citizens, civilian oversight of key security and intelligence agencies, and governing authorities that respect basic human rights; and create an economy that is integrating with the global economy, and providing for the needs of its citizens.


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## DarkStar

Neo said:


> *Soros fund to provide technical assistance to Pakistan​*
> ISLAMABAD: Soros Economic Development Fund (SEDF) has agreed to provide technical assistance to the government of Pakistan in economic, finance, tax reform, export, and agriculture sectors.
> 
> This was agreed in a meeting between a delegation of Soros Economic Development Fund led by Robert Franklin, Member of the Tax Advisory Group, SEDF and Deputy Chairman, Planning Commission, Salman Faruqui.
> 
> The Soros Fund delegation is currently visiting Pakistan to discuss the possibilities of providing technical assistance to Pakistan in various areas of economy. The delegation would hold its discussions with the relevant ministries/ Boards including Privatisation, Finance, Federal Board of Revenue, Economic Affairs Division, and Foreign Affairs. The delegation would prepare a report pointing out the areas the fund could assist Pakistan in bringing about structural reforms in economy.
> 
> The need to improve tax collection, especially the reforms in the collection of direct taxes was discussed.
> 
> Salman Faruqui briefed the delegation about the present governments plan of bringing about macroeconomic stability in the country. He further elaborated that planning commission was being restructured from merely a project approval body to a knowledge commission that would be able to give actionable plans to the government in all the development areas.



Georuge Soros door hi rahe to achha hay...tiger economies ka is nay jo haal kya tha, sub jantay hain...


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## Neo

*Friends of Pakistan agree to road map​* 
ISLAMABAD (November 18 2008): A group of donor countries dubbed as Friends of Pakistan Group agreed on Monday to a roadmap with a resolve to enabling Pakistan overcome its present financial crisis, according to sources. The experts meeting, which was held in Abu Dhabi, was jointly chaired by the UAE and Pakistan, also overwhelmingly offered complete support to Pakistan in providing financial resources, investments, technical assistance and technology to help better its economy.

Senior diplomats from 16 nations and multilateral agencies attended the day-long presentations. Speaking to reporters after the meeting, Pakistan ambassador Aizaz Ahmed said that the meeting was essentially organisational in nature. According to him, the participants are trying to put together a frame work for co-operation and have identified four key areas of co-operation which include economic development, energy, security and institution building.

Sources said detailed presentations were made on the health of the country's economy, resource gaps, areas of potential investment, and the recent letter of intent issued to IMF for a $7.6 billion assistance. "This is the road-map we have prepared today for the experts' meeting in Islamabad in the third week of January next year. There was unanimous agreement on the road-map, which will be discussed in detail and in the experts' meeting, which will conclude a set of recommendations that will be sent to the Friends of Pakistan group ministers' meeting to be held in Islamabad in February," sources quoted him as saying.

He termed the meeting as a road-map of need assessments, where areas were identified for what he called "Partnership", according to sources. The meeting, Chaudhary said was successful as there was a unanimous support expressed by senior diplomats of all friends of Pakistan, in fighting its economic problems and rebuilding the nation's economy besides supporting economic development projects.

Apart from economic issues a presentation was made on internal security also, where capacity of law enforcement agencies in fighting the war on terrorism was spotlighted, as Pakistan wants to re-build its internal security forces on modern lines, in order to tackle the security challenges it faces. Asked what are Pakistan's expectations from the Group, Chaudhary said since it was an initial meeting so there was no request discussed.

In the course of next two months, meetings would be held at experts level, where the areas of co-operation identified, would be further fine tuned in order to prepare concrete proposals for investment projects. In the next meeting experts will present their reports showing their interest in specific areas and present it at the foreign ministers meeting to be held in Islamabad, in the third week of February.

To a question about Pakistan seeking oil supplies on deferred payment, he said it was not the platform to make such requests." It can only be discussed at the next meeting, where request for help in specific areas could be made", said Chaudhary. Delegates from Australia, Canada, Britain, US, China, Saudi Arabia, Turkey, European Union, European Commission, UN, Japan, Germany attended the meeting.

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## Neo

darkStar said:


> Georuge Soros door hi rahe to achha hay...tiger economies ka is nay jo haal kya tha, sub jantay hain...



Bhai aajkal to Pakistan mai sab kuch jazi hai, calta hai, halal hai.
Inko bhi anay do!

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## Neo

*Public-private sector to invest $30 billion in power generation: Ashraf ​* 
KARACHI (November 18 2008): To meet the growing power requirements, some $30 billion will be invested in power generation, while letters of intent (LOIs) of companies which did nothing for generating power will be cancelled soon.

Minister for Water and Power Pervaiz Ashraf announced this while addressing a seminar on 'Energy Trade in South Asia', organised by Saarc Chambers of Commerce and Industry in collaboration with the Federation of Pakistan Chambers of Commerce and Industry at a local hotel on Monday.

The minister said that the government ($10 billion), in collaboration with private sector ($20 billion), would invest $30 billion by the end of 2015 to mitigate the growing energy requirements due to the liberal policy of the PPP-led government.

The minister blamed the previous government both for causing energy crisis and giving of LOIs to incompetent companies, "those who damaged the country's wealth and created hurdle in energy generation". He added that soon, in meeting of Alternative Energy Development Board (AEDB), all such LOIs would be cancelled.

About giving subsidies on energy, he claimed that the previous government was giving Rs 77 billion subsidy, but after recent withdrawal of increase in power tariff this subsidy had increased to Rs 177 billion. Regarding power generation from Thar coal, the minister said that the project would start power generation in next five years. He said that the entire Saarc region was facing different challenges as it was a region of 1/3 population of the world.

He said that country was facing shortage of some 4000 mw, which is 1/3 of total energy consumption that compelled the government to do eight-hour load shedding. "The government will meet this shortage of energy by the end of 2009, and government had done agreements for 1500 MW on war footing," he added.

The minister said that to meet the rest of energy requirements work on Naleem-Jhehlum hydro power project has already been started, while power generation would be initiated soon from Kuholo hydro power project. He said that government is mulling to import energy from Central Asian states, and added that a plan of 1100 mw was under consideration of government to import energy from Iran to fulfil Balochistan energy needs. He said that a Turkish company would start work for generating 100 MW energy through windmill at Jhimpir.

About Karachi energy situation he expressed hope that new Karachi Electric Supply Company (KESC) administration would fulfil the energy need of the industrial hub of Pakistan with better performance. He said the government is drawing plan to provide 6000-7000 MW to Karachi by the end of 2015.

On water shortage made by India, he said that due to first filling of Baglihar dam, the country had faced severe shortage of 0.2million acre-feet (MAF) water shortage, and a claim in this regard had been filed in International Court. To overcome the water shortage, the minister said that government has already approved many dam projects.

Commenting over nation's fate Ashraf said that Pakistanis are not poor, but poorly managed for past 60 years. These crises were due to lack of policy, planning failure and intense negligence.

Regarding consumption of energy in South Asia, the President of Saarc Chambers of Commerce and Industry, Tariq Sayeed, said that as compared to last two decades, when the energy consumption was 5.8 percent against low energy production of 2.3 percent, the demand for energy was growing at a rate of 10 percent annually, which has almost doubled in last decades. Chief Executive Officer KESC Navid Ismail, Vice President FPCCI Zubair Tufail and other also spoke on the occasion.

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## Neo

*PPIB opens bids for 301 megawatts rental power projects ​* 
ISLAMABAD (November 18 2008): The Private Power Infrastructure Board (PPIB) on Monday opened financial bids for two rental power projects of 301.4 mw cumulative capacity, which are being planned by consortiums of local and international investors. The issue of tariff of both projects will be placed before the evaluation committee prior to taking a decision.

"We have opened financial proposals for two fast track rental power projects, to be commissioned by end of 2009, and are making every effort to realise these projects as early as possible," said one of PPIB officials. The meeting was presided over by Managing Director, Fayyaz Elahi.

The bid evaluation committee had recommended two bids--Gulf Rental Power (80.5 MW), and Independent Power Pvt Ltd (220.9 MW)--as "responsive", which are in accordance with the evaluation criteria.

The proposed tariffs for Gulf Rental Power and Independent Power Pvt Ltd ares 16.3724 cents per kwh and 18.8824 cents per kwh respectively. The term of the tariff for each these projects is five years. However, the tariff will be reviewed by the bid evaluation committee and the successful bidder will be notified within a week.

PPIB stated that the government had approved fast track private sector power initiatives in order to address the immediate power shortfall in the country. This was advertised on September 26, 2008 on the basis of International Competitive Bidding (ICB).

Three bids for establishing rental power projects of around 500 MW cumulative power generation capacity were received within the bid submission deadline and the technical and qualification bids were opened on October 30, 2008 in the presence of all stakeholders and the media.

Minister for Water and Power Pervaiz Ashraf had conveyed to the investors that a bid evaluation committee comprising members from PPIB, Nepra, Wapda/NTDC and Finance Division would review the technical proposals according to the predefined criteria and the financial proposals of the bids would be opened at an early date.

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## Neo

*THE RUPEE: IMF deal helps recovery ​* 
KARACHI (November 18 2008): The rupee managed to recover more ground against the dollar on Monday in both open and interbank market as was expected that it will improve further after the government's agreement with the International Monetary Fund (IMF) for a 7.6 billion dollars emergency loan is signed, dealers said.

In the interbank market the rupee posted fresh gain versus the greenback, rising by 40 paisa for buying at 79.80 and by 35 paisa for selling at 79.90 in process of trading, they said. In the meantime some dealers were of the opinion that the rupee nay stabilise in the short-term, following the IMF accord, but a balance of payments (BoP) is still a crisis.

In beginning session of the Asian trade yen trimmed losses against dollar and euro as Tokyo stocks erased much of their earlier gains, fuelling investors' risk aversion. Investors had initially turned more risk averse after the Group of 20 financial summit at the weekend failed to produce concrete measures to avert a global downturn, underpinning the yen as a safe-haven currency.

OPEN MARKET RATES: The same reflection was mirrored on the open market as the rupee showed its muscles with solid gain of 100 paisa in terms of the US currency for buying and selling at 78.50 and 79.00, they said. The rupee also gained sharply against euro for buying and selling at Rs 99.50 and 100.00, they said.

================================
Open Buying Rs 78.50
Open Selling Rs 79.00
================================

Interbank Closing Rates: Interbank Closing Rates For Dollar On Monday.

==============================
Buying Rs 79.80
Selling Rs 79.90
==============================
=================================================================
Repo Rates (Yield p a)
-----------------------------------------------------------------
Tenor Low Bid High Bid Low Offer High Offer Average
=================================================================
Overnight 1.00 7.00 1.50 8.00 4.38
1-Week 9.00 9.50 9.75 10.00 9.56
2-Week 10.00 10.75 10.75 11.25 10.69
1-Month 11.00 11.50 11.25 11.75 11.38
2-Months 12.75 13.00 13.00 13.25 13.00
3-Months 13.50 13.75 13.75 14.00 13.75
4-Months 13.50 13.75 13.75 14.00 13.75
5-Months 13.60 13.90 13.80 14.10 13.85
6-Months 13.60 14.00 14.00 14.25 13.96
9-Months 13.90 14.20 14.25 14.50 14.21
1-Year 14.00 14.25 14.30 14.55 14.28
=================================================================
Call Rates (Yield p a)
-----------------------------------------------------------------
Tenor Low Bid High Bid Low Offer High Offer Average
=================================================================
Overnight 4.00 12.00 5.00 13.00 8.50
1-Week 12.00 14.00 13.00 15.00 13.50
2-Week 14.00 15.00 14.50 15.50 14.75
1-Month 15.00 15.50 15.50 16.00 15.50
2-Months 15.25 15.75 15.50 16.00 15.63
3-Months 15.50 16.00 16.00 16.50 16.00
4-Months 15.50 16.00 16.00 16.50 16.00
5-Months 15.75 16.25 16.25 16.75 16.25
6-Months 16.00 16.50 16.50 16.75 16.44
9-Months 16.25 16.75 16.75 17.00 16.69
1-Year 16.50 17.00 17.00 17.50 17.00
=================================================================
RUPEE IN LAHORE: The rupee remained unchanged on buying side while it lost 30 paisa on selling side in relation to the greenback in the open currency market on Monday. There was no visible change in the dollar's demand and supply situation that helped rupee stability on buying side while it slide down on the selling side against the dollar. The dollar was traded at Rs 79.00 and Rs 80.50 on buying and selling counters against last Saturday closing of Rs 79.00 and Rs 80.20, respectively. On the contrary, the rupee showed significant gain and improved against the pound sterling. The pound was purchased and sold at Rs 117.00 and Rs 121.00 as compared to last week closing of Rs 121.00 and Rs 125.00, respectively.


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## Neo

*ADB to provide $1.3 billion in three years ​*
ISLAMABAD (November 18 2008): Asian Development Bank will provide $1.3 billion quick disbursement loans to Pakistan to support broader reforms, correcting macro imbalance and budgetary support over next three years, says Manila based bank's documents. These programmes are designed under "Accelerating Economic Transformation Programme" approved as a technical assistance in September 2008.

The programme's total lending stands at $1.8 billion. First part of the programme loan of $500 million in the series was approved in October this year and the next in the series would be of $450 million, to be taken up by ADB Board by June 2009. Another $450 million for 2010 and last one $400 million are scheduled to be considered in 2011.

Pakistan now needs to transform itself in three directions. First, it has to address the immediate distortions facing the economy, particularly in the agriculture and energy sectors.

The pricing and procurement system for wheat needs to be restructured, and subsidies better targeted to benefit the poor and vulnerable. Untargeted wheat subsidies cost the government Rs 40 billion ($600 million) in FY08, the bank said. In the electricity sector, Pakistan does not have an automatic tariff adjustment mechanism.

The government needs to reform the subsidy system in the sector, since it has not been able to settle the payments owed to distribution companies, which has resulted in a vicious circular debt problem and debt overhang. This needs to be addressed urgently to resolve the present energy crisis. Electricity subsidies are estimated to have cost Rs 133 billion in FY2008 ($2 billion).

In addition to these subsidy needs, an estimated $1.6 billion is required to partially protect the poor. ADB further says that secondly, Pakistan needs to strengthen financial intermediation to facilitate structural transformation. At the macro level, the Government has relied heavily on the central bank for its fiscal requirements, a practice that needs to be reversed.

In parallel, the legal and regulatory framework should be strengthened to manage risks more effectively in the financial sector, promote consumer confidence, and deepen financial intermediation. At third place, over the medium to long term, the production and trade structure of the economy needs to be transformed so that Pakistan could compete more effectively in the global economy.

A deeper industrial base is vital, along with a more productive agricultural sector, greater value creation in the service sector, and far greater export sophistication. To achieve this, the government has to address short-term policy and institutional distortions, identify industries where it might compete on a global scale, and attract private sector investments.-PR


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## DarkStar

love to know the interest rates that ADB is charging...


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## Neo

*Investments, not aid, likely from Friends​*
WASHINGTON, Nov 17: Pakistan is not expecting pledges of financial support from a group of friendly nations that met in Abu Dhabi on Monday to consider various proposals to help revive its ailing economy.

Diplomatic sources in Washington told Dawn that Mondays meeting only included mid-level officials and focussed on exploring investment opportunities in Pakistan.

Pakistani officials briefed the officials on investment needs and opportunities.

Based on this information, the member countries will encourage their investors to invest in Pakistan.

Although Pakistani officials briefing the media tried to give the impression that the group would offer financial assistance as well, President Zardari had taken a totally different position during a media briefing in New York after the forums inaugural meeting.

We are not asking for fish, he said. We are asking for the equipment and want to do our own fishing. His statement made it obvious that if theres an infusion of funds from the Friends of Pakistan group, it would come in the form of investments, not aid.

On Monday, the group adopted a work plan for cooperation in broad areas that cover economic development, financial stability, energy needs, building institutions and bringing peace and stability to the region.

Pakistan, however, expects bilateral financial assistance from the United States and China, particularly after concluding an agreement with the International Monetary Fund for a $7.5 billion rescue package.

Diplomatic sources in Washington told Dawn that Islamabad would be among the first to receive US assistance when the new Obama administration took charge in January.

Official US sources also confirmed that the US Congress was likely to approve a multi-billion aid package for Pakistan, known as the Biden-Lugar bill, early next year.

Senator Barack Obama backed this bill when it was introduced in the Senate and promised to use his influence to get the bill passed after he was elected president on Nov 4. Senator Biden, who was elected vice-president in the same election, has promised similar support.

Two other senior senators Hillary Clinton and John Kerry  also pledged to push for an early adoption of the bill when President Asif Ali Zardari telephoned them from his hotel in New York last week.

Mr Zardari received similar assurances from senior members of the Obama team.

Pakistans another close ally, China, has promised to deposit $500 million in the State Bank of Pakistan to strengthen foreign reserves. They money, however, will not be available to the government for current spending.

China provided a similar assistance in 1996 by depositing $500 million in the State Bank of Pakistan. In 2001, the loan was renewed for additional five years but in 2006 Pakistan refused to pay back, annoying the Chinese.

The Chinese shared their annoyance with President Zardari when he visited Beijing last month and asked for financial assistance. Beijing has since overcome its annoyance and is now willing to loan another tranche of $500 million.

Pakistan, however, will have to pay interest on this loan which will be determined later.

Pakistans other key ally, Saudi Arabia, is still reluctant to provide financial assistance as it will have to give similar support to other nations as well if it accepted Islamabads request.

The Saudis also are experiencing a massive increase in their own domestic spending, which limits their capacity to offer financial assistance to others.


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## Neo

*Current account deficit up 98pc​*
KARACHI, Nov 17: Pakistans current account deficit rose sharply in the first four months of the running fiscal to $5.943 billion, reflecting the depressing inflow and the higher outflow of the foreign exchange.

Data issued by the State Bank showed on Monday that the current account deficit during July-October 2008-09 was 98.5 per cent higher than the corresponding period of last year.

The country is facing a serious balance of payments problem and reached an agreement with the International Monetary Fund (IMF) to meet the imbalances.

The imbalances are rising despite steep fall of oil and food prices in the world market which forced the government to spend over $12 billion alone to import petroleum products during the last fiscal ended on June 30, 2008.

The four-month data tells that Pakistan was still paying the highest amount for import of oil and food.

During the period, Pakistans payment for oil went higher than the four months of last year. The oil bills rose to $4.924 billion compared to $2.551 billion of last year which is 93 per cent higher.

The oil prices, which had reached $147 per barrel during this calendar year, have now fallen to just $50 a barrel. The demand fell in the developed economies because of slowdown of economic growth after financial meltdown started a year ago.

The food bill of the four months rose to $1.577 billion against the corresponding period of last year when the food bill was limited to $890 million. This is 77 per cent higher.

The State Bank report reflected a continued steep rise in import bill while the export was rising with traditional speed of just 14 per cent. The import of four months reached $12.899 billion which is 35 per cent higher than previous years four months.

Pakistan reached an agreement with the IMF for a total loan of $7.6 billion for two main purposes; first to meet the severe balance of payments problem and secondly to strengthen the exchange rate.

Analysts said the second quarter report (October-December) would reflect the falling oil and food prices and the balance of payments position would improve.

They said the governments effort to reduce the import bill seems to have failed and the prescription for the purposes lost its significance.

We are curiously watching the balance sheet of the country. If it improves, the economy will get strength and recovery from the current economic status is possible, said an analyst.

But the impact of IMF loan is equally important to be watched as interest rate has gone up to 15 per cent and a slowdown of economy might not allow its recovery in short term, he said.

If the economy goes for a long-term recovery, its dependence on economy will prevail and hard time for general people will not be over for at least three to five years, he said.


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## Neo

*Bids for 300MW on fast-track opened​*
ISLAMABAD, Nov 17: A bid evaluation committee on Monday recommended Gulf Rental Power and Independent Power Pvt Ltd for generation of 80.5 and 220.9 megawatts, respectively.

The two companies were recommended after the financial proposals of bids received for fast-track rental power projects to be commissioned by the end of next year were opened at a meeting at the Private Power and Infrastructure Board (PPIB).

The meeting was headed by PPIB Managing Director Fayyaz Elahi and attended by Water and Power Minister Raja Pervez Ashraf, the responsive bidders and members of the board.

The read out tariff of Gulf Rental Power is $16.372 per kilowatts (Kwh) and that of Independent Power Pvt Ltd is $18.882 per Kwh.

The term of tariff for both the projects is 60 month each. However, the tariff will now be reviewed by the bid evaluation committee and the bidders will be notified within a week.

The evaluation committee has recommended the bids as per the 2005 government tariff guidelines, an official announcement stated.

The minister said that the government had advertised its demand for bids on September 26 in order to generate the power on fast-track basis.

He said that the PPIB, Water and Power Development Authority (Wapda), the National Transmission and Dispatch Company (NTDC) and Finance Division will review technical proposals according to the predefined criteria and the financial proposals of the bids would be opened at an early date.


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## dr.umer

*China to set up car manufacturing plant in Pakistan ​*
RAWALPINDI, 18 Nov (APP): China has shown interest to set up car manufacturing plant which was commendable and appreciable and will open avenue of trade between two friendly countries. 

There would be a tremendous investment in the country due to this plant. 

These views were expressed by the President Rawalpindi Chamber of Commerce & Industry (RCCI) Abdul Rauf Chaudhry here on Tuesday. 

He said Pak&#8209; China friendship was deep rooted and time tested. 

He lauded China for making huge investment in Pakistan saying this shows bonds of love and affection towards each other. 

RCCI president said this project would persuade other countries to make investment in Pakistan. 

China has been evincing keen interest for the development and prosperity of Pakistan saying by setting up of car manufacturing plant would open new avenue of trade and economic activities and the cars would be available on cheap rates. 

Initially, 1000 vehicles would be brought in the market and then the plant would start production according to market trend, he added. 

He referred Federal Minister for production statement that there are extensive opportunities of investment in Gwadar saying that would open new avenue of trade and boost the economy of the country. 

He further said that by establishing the car manufacturing plant would help generate economic activities as well as employment opportunities in the country.


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## dr.umer

*Govt to facilitate Chinese investors in EZs​*
19 Nov 2008

ISLAMABAD: The Government is committed to ensure active facilitation for the Haier-Ruba Group, who are in process of setting up China Pakistan Economic Zone in the Country.

China Pakistan Economic Zone would house a large number of Industrial units to produce goods for duty free export to China and would encourage Chinese investors for setting up industries and manufacturing units in Pakistan.

Already some thirty companies have expressed interest.
With the success of this project, Pakistan will reap in the field of economy, business, investment, trade and employment generation an official of the Ministry of Investment told state news agency here today.

The Ministry of Investment acknowledges the positive approach of the Chinese group towards investing in Pakistan and assures all the due support and the facilitation on behalf of Government of Pakistan, so as to successfully complete this exemplary project.


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## dr.umer

*Pak-Turkey keen to boost bilateral ties​*
19 Nov 2008

ISLAMABAD: Turkey is keen to promote bilateral cooperation with Pakistan in various sectors particularly in economic and trade, technical education and culture.

This was stated by the leader of the visiting 32-member Turkish delegation and Chairman of Pak-Turk Foundation, Unal losur while speaking at a reception hosted by National Vocational and Technical Education Commission (NAVTEC) here today.

Expressing the desire of Turkish business community to invest in Pakistan, Mr. Unal expressed the hope that the investors will be facilitated in the country.

He also suggested the bilateral visits of university students to each others countries under bilateral exchange programme.

He was confident that these visits would enhance cultural relations and will make positive impact on economic ties which will ultimately benefit the people of the two countries.

He also wished all success to NAVTEC in its endeavours to skilling Pakistan.

Earlier, welcoming the Turkish delegation, the Executive Director, NAVTEC, Mr. Muhammad Athar Tahir said We were trying to establish strong links between technical trained workforces of Pakistan with Turkish business community.

Outlining the objectives of the establishment of NAVTEC, Athar Tahir said that all possible efforts were being made to upgrade the level of technical education in the country at the desired level.


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## dr.umer

*Italy to invest in energy, marble, agri sectors​*19 Nov 2008

ISLAMABAD: Italian government Tuesday expressed its interest in investing in Pakistans various sectors including energy, textile, agriculture and marble.

The Ambassador of Italy Vincenzo Prati in a joint news conference with Chairman Board of Investment (BOI) Saleem Mandiwalla here said that despite the hurdles in Pakistan, there were a lot of investment opportunities in various sector of the Pakistani economy. 

We are aware of the fact that the problem of insecurity has become a major issue in Pakistan but we want to initiate various projects in energy, marble, agriculture and textile sectors in Lahore, Karachi and Islamabad, he said. 

A Memorandum of Understanding (MOU) regarding the cooperation in different sectors of the economy has already been signed between the two governments as too boost bilateral investment. Law and order situation definitely affected Foreign Direct Investment (FDI) in Pakistan but there were several opportunities for enhancing investment, particularly in energy and marble and granite sectors, he said. 

About the exact amount of foreign direct investment (FDI), the ambassador said that not only one or two Italian companies were ready to come here for investment but also substantial numbers of companies would come along with modern machineries and equipments in Pakistan.

Chairman Board of Investment (BOI) Saleem Mandiwalla turned down the report that foreign investors were hesitant to invest in Pakistan due to security situation. He noted that foreign businessmen were still visiting Pakistan to seek investment opportunities. Government will facilitate all the companies that want to invest in Pakistan. 

He said government was taking appropriate measures for improving law and order. Most of world economies were suffering from war on terror but Pakistan was suffering the most. 

He said local investors were flying out of the country due to the rumours about fragile economic situation. He assured that economic situation was under control and the local investors shouldnt believe in false statements and forecasts. BOI Chairman said former government invested mainly in banking and services and neglected manufacturing sector. He stressed for increased investment in manufacturing sector.

We also support investment in services sector but the present government focus is on increased investment in neglecting sector i.e. manufacturing, he maintained. 

The government wanted to promote both local as well as foreign investors in the country. He said foreign investors had some concerns regarding law and order situation but it couldnt be said that they were not investing or winding up their business operations in Pakistan.


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## dr.umer

*External debt decreased by $613m during first quarter​*19 Nov 2008

ISLAMABAD: Pakistans economy external debt has declined by $613 million during the first quarter (July-September) 2008-09 because of favorable foreign currency translation impact, as US dollar till end September 2008, appreciated sizably against major currencies including euro, pound sterling and Japanese yen.

Pakistan eternal debt has declined to $43.85 billion at the end September 2008, which was at $44.47 billion at the end of the last fiscal year (June 2008). 

It is interesting to note that at March 2008, dollars depreciation against these major currencies piled up external debt burden to record $44.59 billion and now dollar appreciation is benefiting in reducing its burden on the economy. The other main reduction of $124 million was noticed in foreign exchange liabilities due to withdrawal of money from foreign currency accounts (FCAs). 

Combined external liabilities (external debt and foreign exchange liabilities) have also been reduced by $737 million to $45.547 billion at the end September 2008 against $46.28 billion earlier at the end June 2008. 

The government is finding it hard to get disbursement of agreed loans from the World Bank, Asian Development Bank and friends of Pakistan because they require nod from the International Monetary Fund (IMF) regarding macroeconomic stability. 

It is hoped that in the future, the government would receive it. According to the government figures, during the last six years the external debt increased significantly. On June 30, 2003, it stood at $32.46 billion, June 2004 ($32.93 billion), June 2005 ($34.04 billion), June 2006 ($35.97 billion) June 2007 ($39.00 billion) and at the end of June 2008, it jumped to $44.47 billion. Economists believe euro and dollar bonds floating in the Pervez Musharraf regime built up the countrys reserves but increased its liabilities. According to the banks data, the countrys public and publicly guaranteed debt declined to $39.72 billion against $40.24 billion at the end June 2008. Out of this, the medium and long-term debt (more than one year) during the period under review decreased from $39.33 billion to $38.99 billion at the end of September 2008. 

According to the break-up of the medium and long-term debt, the multilateral debt by end-September 2008 come down to $21.34 million from $21.45 billion while bilateral debt rose to $1.14 billion from $1.13 billion recorded at end June 2008. During the period under review the volume of Paris club debt also edged down as at the end September 2008, it stood at $13.68 billion against $13.93 million at the end June 2008. Short-term external debt (less than one-year) from Islamic Development Bank (IDB), also dip to $540 million against $713 million recorded at the end of June 2008. 

The Private non-guaranteed debts (more than one-year) during the period under review also were reduced by $11 million to $2.623 billion. IMF debt also declined by $98 million to $1.239 billion at the end of first quarter as against $1.337 billion recorded at June 2008. 

The foreign exchange liabilities excluding foreign exchange bearer certificates, foreign currency bearer certificates and dollar bearer certificates up by $344 million during the period under study to $1.82 billion from $1.47 billion at the end June 2007. 

The foreign exchange liabilities excluding foreign exchange bearer certificates, foreign currency bearer certificates and dollar bearer certificates declined by $124 million during the period under study to $1.69 billion from $1.817 billion at the end June 2008. Of this, during the period under review the special US dollar bonds declined to $119 million, as it was $121 million at the end of the fiscal 2008. 

Besides, foreign currency bonds declined by $22 million to $44 million from $66 million end June 2008. While the central bank deposits stood stagnant at $1.2 billion for the last three months, while NBP/BOC deposits declined to $300 million at the end September 2008 from $400 million recorded at end June 2008. 

Economic pundits believe each one rupee appreciation in US dollar, the stock of Pakistani external debt increases by Rs44 billion. It is interesting to note that during the fiscal year 2007-08, greenback appreciated against rupee by more than Rs12.

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## Neo

*MoU for 390MW power project inked ​* 
Wednesday, November 19, 2008

LAHORE: Punjab Industrial Estates (PIE) and Amwal International Investments of Kuwait on Tuesday signed a Memorandum of Understanding (MoU) for the construction of a 390 MW power project in Sundar Industrial Estate.

Punjab Industrial Estate was represented by its chairman Mohammad Ali Mian while Muthanna Al-Saleh inked the MoU on behalf of Amwal International Investments of Kuwait. CEO of Akkadian Energy Ltd, Ross Connelly, and CEO Punjab Industrial Estates Sabir P Chohan were also present at the occasion, states a press release.

PIE chairman Mohammad Ali Mian, who is also president of Lahore Chamber of Commerce and Industry (LCCI), termed the MoU a major breakthrough, which will help the government overcome electricity shortage that has jolted the very base of the Industrial sector.

The project represents approximately $400 million of Foreign Direct Investment (FDI) in the country. Equity for the project will be provided by Amwal and PIE, and debt financing will be provided by the International Finance Corporation of the World Bank Group and other international financial institutions.

The plant will be built by using state-of-the-art General Electric turbines and will utilize gas and high speed diesel fuels to provide Pakistan with cost effective power. The project complies with all international best practices and will meet or exceed the World Bank guidelines on environment.

It will be located at Sundar Industrial Estates in Punjab, and will provide power to meet the growing needs of the countrys industrial sector. The plant, which is likely to become operational by December 2010, is a private-public partnership between the Government of Punjab, private investors and Akkadian Energy Ltd. The latter was awarded the bid for the project by PIE through an internationally competitive bid process in 2007.

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## Neo

*Telecom sector shows steady growth ​* 
Wednesday, November 19, 2008

ISLAMABAD: The Pakistan economy seems to have passed through a difficult year after so many good years of increasing growth rates close to 7% per annum. The economy registered growth rate of 5.8% this year as against the target of 7.2%.

In relation to the slow economic growth, the telecom indicators both financial and other also exhibited slow growth trends. Teledensity in the country has reached 58.8%, showing a growth rate of 30.6%. The telecom sector contribution to national coffer, which is mainly in the form of taxes and duties, reached Rs111.7 billion this year. The total tax collection from telecom sector was Rs111.7 billion which was almost Rs100 billion last year. This rise is mainly because of GST that increased from Rs36 billion in 2006-07 to Rs44 billion in 2007-08. Similarly, activation tax also showed an increase of about 11% this year. Although the volume of GST collection grew this year, its growth in relation to previous year grew from 18% to 17% during the reported year.

Telecom imports declined marginally and stood at $1.33 billion, whereas in order to discourage the imported handsets, the government imposed duty of Rs500 per mobile handset along with regulatory duty of 50%. The PTA always ensured an investor-friendly environment, and this year the telecom sector had a total of $3.1 billion investments, of which more than $2 billion was made by mobile operators. 

As for the Foreign Direct Investment (FDI), the telecom sector was second financial sector as major FDI recipient with a sum of $1.4 billion in 2007-08. Although the telecom revenue growth was 18% this year as against 21% in 2006-07, the revenues of mobile segment declined from 48% in 2006-07 to 37% in the reported year.

On the regulatory front, the PTA continued its efforts towards further growth of the sector while introducing new regulatory schemes and strengthening the present regulatory set-up in the authority. In this way, the PTA maintained the level-playing field for all the operators and a conducive investor-friendly environment prevailed, where much satisfied telecom customers have been enjoying large number of telecom and related services. 

Number of important regulatory initiatives were taken during the year. With the new leadership in the authority, major restructuring of the PTA was done in consultation with senior management  an effort to improve the efficiency of the organisation. Similarly, to improve the functioning of the regulator in order to deal with future challenges a think tank has been created in the PTA. This think tank would be focal thinking machinery of the PTA on policies, technical and development aspects and other important issues pertaining to the telecom sector.

In pursuance of its objective of protecting the telecom consumers the PTA has taken a major initiative of setting up Consumer Protection Directorate (CPD). The directorate is mandated towards evolving institutionalised consumer grievances redressal mechanism for the speedy resolution of telecom consumers issues and complaints. 

The PTA has decided to set up a joint system for monitoring and reconciliation of international telephony traffic along with the LDI operators, and in this regard all the ground work including regulations have been finalised. The PTA is now very focused on proliferation of broadband and related technologies. In this regard, as a first step, the authority chairman has been highlighting ways to facilitate deployment of broadband technologies, optimise timely spectrum availability and harmonisation of regional practices and standards. The PTA also worked in number of areas including verification of mobile and WLL subscribers antecedents, deployment of online verification system and verification of WLL subscribers, in collaboration with law enforcement agencies, MOIT&T and NADRA, to curb illegal businesses in telecom sector.

So far, over 10 million SIMs have been closed down which could not be verified. Similarly, the PTA took number of initiatives for further curbing handset theft and provided online access to get UAN and Toll Free numbers. In addition to Rabta Ghar, the Universal Service Fund has started awarding contracts to service providers in rural areas to improve telecommunication facilities in far-flung areas of the country. 

Mobile cellular segment remained engine of growth of the telecom sector in particular and the economy in general with its social and economic benefits spreading across the country. Pakistan mobile market has remained one of the fastest growing mobile markets among the emerging markets. This year a total of over 25 million subscribers were added to the total subscriber base of 62.9 taking it to a total of 88.0 million at the end of 2007-08.

Today almost 91% of the total population of Pakistan is covered with mobile networks. All operators are expanding their networks and up till 2007-08 almost 9,369 cities/towns/villages have mobile networks by one or all operators. During the reported year, Telenor emerged as fastest growing mobile operator which added almost 7.4 million subscribers to its network in 2007-08. However, Mobilink remained market leader with almost 35% of total market share in terms of subscribers. CMPak performance remained outstanding wherein it added 2.9 million subscribers in first year of its operations. 

In 2007-08, revenues of mobile sector grew by 37% and reached Rs182 billion which were Rs133 billion in 2006-07. However, the average revenue per user depicted another year of declining growth trend and today the industry ARPU stands at $3.1. 

Mobile segment remained one of the major contributors of national exchequer and contributed almost Rs82 billion in the form of GST/activation/witholding taxes. According to the BMI, an independent telecom analysis company, mobile subscribers in Pakistan would reach 135 million in 2012 with average growth rate of around 20% to 25%. During the reported year the Carrier Services Providers rapidly rolled out their networks across the country and total point of presence grew by 40% amounting to almost 178 in total. The revenues of new LDI operators showed a growth of 42% where the total revenues of the LDI segment reached Rs21.9 billion.

The revenues of incumbent PTCL are continuously declining where as companies like LinkDirect and Wateen are making good profits. Reliance of LDI operators on PTCL for backbone connectivity is reducing everyday, whereas injection of FDI by foreign companies in local LDI operators is enabling these operators to invest more in network expansion. Worldcall received $200 million from Omantel and Buraq Telecom received $220 million from QTel after sharing some of their shares to them. Total investment made by LDI segment in 2007-08 is $390 million. International outgoing traffic grew by 31% where almost 1.2 billion minutes were terminated to their respective networks. International incoming traffic grew by 163%. 

The PTA has taken a measure to safeguard interest of new LDI operators making it mandatory for interconnection and lease of media from the PTCL. The fixed line segment of telecom sector after deregulation could not improve much due to availability of alternative services including mobile and WLL. For yet another year, the fixed line teledensity dropped and reached 2.7% during 2007-08, loosing both on urban and rural side.

The PTCL maintained its SMP position and subscriber share remained same, however, the NTC improved its share and now maintains 2.4% of total market. Total fixedline subscribers at the end of 2007-08 stand at 4.4 million. Wireless Local Loop (WLL) showed a positive growth trend but the growth rate was as low as 32% in 2007-08 which was almost 66% in 2006-07. Today total WLL subscribers are 2.23 million with WLL teledensity standing at 1.4%. The total payphones in the country at the end of 2007-08 reached 449,121 showing a growth rate of 16%. There are currently 59% payphones working on WLL technology whereas 27% are fixed and only 14% are mobile PCOs. Broadband proliferation in the country has been very slow during all these years and this segment of telecom sector is still in its infancy stage. Total number of broadband subscribers in Pakistan is approximately 170,000, whereas the segment experienced a growth rate of almost 160% in one year. The costs which are one of the deterrent in broadband growth have been drastically reduced from $55-16 for a 512 kbps unlimited DSL connection. 

It is estimated that there will be 5 million broadband subscribers in Pakistan by 2010. The PTA has been working rigorously for liberalisation of telecom sector of the AJK and Northern Areas. In this regard licensing of mobile operators for the AJK and NA was done last year whereas this year licensing of LDI and WLL operators was made. Similarly the CMPak was also awarded license to operate mobile services in the AJK and NA during this year. Today total teledensity in the AJK and NA is almost 33% of which mobile teledensity is leading with 30%. Total mobile subscribers in the AJK and NA reached 1.61 million showing a growth rate of 77%. The SCO, the incumbent operator in the AJK and NA, has total subscriber base of 264,787 of which 126,000 are cellular subscribers. The SCO is still maintaining its monopoly in fixedline which would finish once the newly licensed companies would start their services in the area. 

Telecom sector of Pakistan continued to grow positively during 2007-08, however, the pace of growth was not fast. Since the liberalisation has been completed and most of the segments of the sector have competition in some form, therefore it can be said that market is now moving towards maturity. Similarly internal and external factors including political and economic situation of the country also played a major role in current growth trends. With the new government in place and extensive work on regulatory measure taken by the PTA for future would result in improved growth patterns of the sector.

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## Neo

*Economists propose cut in expenditure, mobilisation of domestic resources: interim report on economic stabilisation presented ​* 
ISLAMABAD (November 19 2008): Prime Minister Syed Yousuf Raza Gilani on Tuesday said that the findings of the report on economic stabilisation will help policymakers in formulating indigenous action plan, giving them a clear roadmap for negotiations with the donors. Addressing the panel of economists, headed by Dr Hafiz Pasha, who presented the interim report on economic stabilisation.

The Prime Minister said it is a good omen that the economic stabilisation programme envisages equitable resource distribution efficiently. The government is committed to bring about economic stability by restoring the confidence of international as well as domestic investors, and a new face of stabilisation is absolutely necessary for sustainable economic growth for the benefit of the poor and needy segment of the society, he added.

The Prime Minister was optimistic that economy will be back on track with the passage of time, keeping a strict check on inflation, to pass on the fruits of growth to masses who are under immense pressure due to price hike. Gilani said that the country has the desired capacity to manage utilisation of funds efficiently to be provided by donors and Friends of Pakistan.

He asked the panel of economists to address the structural weaknesses of the economy and prepare a medium-term framework for sustainable growth. "Pakistan being an agrarian economy, needs valuable inputs by economists to further bolster the agriculture sector to contribute to the economic development of the country," he maintained.

Advisor to the Prime Minister on Finance, Shaukat Tarin said the government's 9-point economic plan implementation will be monitored by a policy board co-chaired by the President and the Prime Minister. The policy board will comprise government representatives, members of the Planning Commission and economic experts from different fields and an executive committee will work under the board.

Each committee member will head a group working on various subjects of the economic plan, Tarin elaborated. The plan has been prepared after taking politicians and private sector on board, he said, adding that economic stability will be the top priority of the government.

Social protection, agriculture, industrial competitiveness, human resource development, integrated energy plan, strengthening of capital markets and public private partnership are major areas of the 9-point plan. Shaukat Tarin, Minister for Planning and Development, Makhdoom Shahabuddin, deputy chairman Planning Commission, Salman Farooqi and State Minister for Finance, Hina Rabbani Khar were also present during the briefing.

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## Neo

*Pakistan seeks $55 billion investment in various sectors ​* 
KARACHI (November 19 2008): Pakistan is believed to have requested the Friends of Pakistan for as much as $55billion investment in a host of projects in various sectors. According to Dubai-based Khaleej Times, Pakistan has sought funding for projects worth about $55 billion in sectors such as infrastructure, energy, agriculture and services from the members of Friends of Pakistan Group at a meeting held in Abu Dhabi on Monday.

Quoting a senior Pakistan finance ministry official who, according to the newspaper, requested anonymity, the projects Pakistan has offered for investment include construction of dams, electric power generation plants, roads, highways, agriculture development, privatisation of state-owned industries and investment into social and services sectors.

The official was also quoted as saying that the group would present responses on Pakistan's request from their respective governments in the next meeting to be held in Islamabad in the third week of February. Friends of Pakistan group have agreed to a roadmap or a work plan with a resolve to enabling Pakistan overcome its present financial crisis.

The experts meeting, which was jointly chaired by the UAE and Pakistan, also overwhelmingly offered complete support to Pakistan in providing financial resources, investments, technical assistance and technology to help better its economy. Delegates from Australia, Canada, Britain, US, China, Saudi Arabia, Turkey, European Union, European Commission, UN, Japan, Germany attended the meeting.

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## Neo

*Rs 400 billion of PSDP lying with banks: Tarin estimates inflation at 20 percent, GDP growth at four percent​* 
ISLAMABAD (November 19 2008): Pakistan will miss its inflation target of 12 percent, achieving around 20 percent annualised CPI inflation by fiscal year 2008-09 end and would be fortunate if it attains 4 percent GDP growth against its target of 5.5 percent in this global economic meltdown, said Finance Advisor in an interview with Aaj TV/Business Recorder.

"To remain below 20 percent of average inflation in whole fiscal year, we need to achieve 12 percent by June 2009, which was at 25 percent in October. So, how can we achieve 12 percent annualised target?" remarked Shaukat Train, Advisor to Prime Minister on Finance.

He apprehended that GDP growth target would be missed due to a host of factors. Even if Pakistan touched a bit over 4 percent (GDP growth), that would be an achievement when global growth is down and the country would miss its 5.5 percent target, Tarin said.

He said that in the next two years he would secure $20 billion from various sources. "IMF would give $7.5 billion; other multilateral like WB, ADB, DFID and IDB $5-7 billion; and at least $5-6 billion investment from friendly countries in the next two years, that would help reboot economy and address balance of payments crisis," said the Finance Advisor.

The flow of aid has started again as the country is almost through with IMF now. He also indicated that President Zardari had talked to US Vice-President-elect Joseph Biden, who as Chairman of US Senate Foreign Relations Committee, supported a $1.5 billion bill for Pakistan's aid and hoped that it would be processed as the new government takes office.

He has also talked to USA to give status of duty-free zone to Balochistan and NWFP where four industrial zones are already operating and whose exports can have access to US markets.

He reiterated that tax on agriculture income, stock market and real estate should be levied. In case of agriculture income tax as the sector earns more income and anybody earning over Rs 200,000 a year should pay tax. The country has to achieve 15 percent tax to GDP ratio in next 5-7 years.

Some composition of taxes also needs improvement as similar sales tax in Sri Lanka at the rate of 15 percent collects up to 7 percent of GDP while it is only 3 percent in Pakistan. He said that reduction in prices would need some forced action and then in 12-18 months people would feel relief in prices. International fall in prices is now being reflected by even government, as it has announced many cuts.

He said that almost Rs 400 billion of previous approved development projects is still with banks and projects are receiving interest on that sum with lesser progress on the projects. So it is a question of prioritisation of the projects and the government also wants to manage expenditures without State Bank's borrowing, which it would cover from foreign funds largely with some tax receipts.

But tax collection in anyway should remain hassle-free. "I have determination not to borrow from SBP which distorts interest rates, debt market and ultimately inflation," said Tarin. He said that he also expected $2.5 billion from securitisation of remittances, which would also add relief towards balance of payments for the country.

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## Neo

*Italy willing to boost Pakistan's economy through investments ​* 
ISLAMABAD (November 19 2008): Italy will invest in different sectors of Pakistan, including energy, textile, agriculture and marble sectors, to boost its economy. This was stated by Italian Ambassador Vincenzo Prati during a press conference along with the Chairman of the Board of Investment (BoI) Saleem Mandiwala here on Tuesday.

The ambassador said: "We are aware of the fact that the problem of insecurity has become a major issue in Pakistan, but we want to initiate various projects in energy, marble, agriculture and textile sectors in Lahore, Karachi and Islamabad".

The ambassador said that despite the hurdles in Pakistan, there were lots of investment opportunities in various sectors. About the exact amount of foreign direct investment (FDI), the ambassador said that substantial numbers of Italian companies were ready to come along with the modern machineries and equipments in Pakistan.

Pakistan and Italy had already signed a memorandum of understanding (MoU) regarding the co-operation in different sectors. Responding to a question, the ambassador said the law and order situation definitely affected the FDI in Pakistan, but there were several opportunities for enhancing investment, particularly in energy, marble and granite sectors.

Speaking next, the BoI Chairman rejected the report that foreign investors were hesitant to invest in Pakistan due to deteriorated security situation. He noted that still foreign businessmen were visiting Pakistan to seek investment opportunities. Some times FDI increased and in other times, it slowed down, he added. The government would facilitate all those companies that wanted to invest in Pakistan, he said.

He said that foreign investors were still investing in various fields despite facing law and order problems, and added that the government was taking appropriate measures for improving law and order situation. He said that Pakistan had unique position and its long border with Afghanistan was main cause of disturbance along with the international war on terror.

Mandiwala claimed that Pakistan was heaven for every investor and the government offered a number of incentives to foreign investors. To a question, he said there was no target fixed to attract investment. But, the government was taking many corrective measures and providing incentives to strengthen the confidence of local and foreign investors, and expressed the hope that the FDI would enhance in next few months.

He said the local investors were flying out of the country due to the rumours about fragile economic situation. He, however, that economic situation was under control and the local investors should not believe in false statements and forecasts.

Replying to a question, the BoI Chairman said that the former government made investment in certain sectors, mainly in banking and services, and neglected manufacturing sectors. He stressed the need for increased investment in manufacturing sector. "We also support investment in services sector, but the present government's focus was on increasing investment in neglected sector, ie manufacturing," he maintained.

He said the foreign investors had some concerns regarding law and order situation, but it did not mean that they were investing or winding up their business operations in Pakistan. He disclosed that "we are hopeful of getting investment from Saudi Arabia as our negotiations in this regard are in process".

He lamented that war on Pak-Afghan border had also discouraged the foreign investment. The BoI Chairman maintained that Pakistan was offering great business opportunities to the foreign investors. The foreign investors could get 40 percent return on their investment, while in other parts of the world; the return was just five percent. He admitted that the war on terrorism had damaged the image of Pakistan in global level.


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## Neo

*US experts for wider economic support to Pakistan ​*
WASHINGTON (November 19 2008): Seeing a vital opportunity to forge broad-based US-Pakistan relations following victory of President-elect Barack Obama and emergence of a democratic government in Islamabad, a panel of top American experts on Monday urged wider international economic support for the South Asian country as well as focused efforts to address its regional security concerns including Kashmir.

"The United States needs to make a shift in its approach to Pakistan, recognising both the importance of Pakistan to regional and international security, as well as the limitations of US power," a new report released on Monday by the Center for American Progress said, asking the incoming Barack Obama Administration to work with regional and other major powers to help Pakistan overcome its economic and security challenges.

Entitled "Advancing a New Strategy for Prosperity and Stability in Pakistan and the Region," the report has been drafted after a year-long study by about three dozen experts. It particularly underlines the need to foster long-term relations with Pakistan that benefit its people and address disputes on its borders with India and Afghanistan.

"The new US administration, with Congress and the international community, should strive to help Pakistan weaken al Qaeda, the Taliban, and affiliated militant groups so that they no longer threaten stability in Pakistan, Afghanistan, India, the broader region, the United States or the world and secure borders between Pakistan and its neighbours, with all border disputes including Kashmir and the Durand Line (the disputed boundary between Afghanistan and Pakistan), either resolved or in a credible process for resolution."

At the same time, the panel of security, trade and economic relations experts and foreign policy analysts - including Bruce Riedel, who is now an Obama adviser on South Asia - remind that the "US policy must recognise that the military component alone is insufficient to build stability and security in Pakistan."

They stress pursuance of "a diverse approach, including strengthening governance and rule of law, creating economic opportunities, and exploring political negotiations" to curb militancy. "A fundamental strategic shift in US policy on Pakistan should occur away from a narrow focus on military and intelligence co-operation.

Pakistan's problems will not be solved by military means alone. Long-term stability in Pakistan depends not only on curtailing extremism and militancy in Pakistan, but on strengthening Pakistan's economy and democracy and on reducing tensions between Pakistan and its neighbours. US military approaches must be integrated into a wider political strategy for the region.

"The US government should engage with leaders of Pakistan's civilian institutions and civil society in addition to its military establishment. Integrating the full range of US and other countries' powers diplomatic, economic, and political" the United States should quietly and carefully expand US-Pakistan partnerships on a broad set of issues, including intelligence co-operation, economic development, energy, education assistance, and more.

"The Obama administration should embark on a strategic dialogue with Pakistan that sets common goals for the two countries, building on the major non-Nato ally status it has already achieved. These goals should include both tactical counter-terrorism and longer-term counterinsurgency objectives and should specifically engage Pakistan's security concerns."

The authors note since the Pakistani parliamentary elections in February 2008, the US government has begun to make some changes in its policy toward Pakistan. It has shown support for the new civilian government and increased assistance to the Pakistani people through programmes in education, economy, energy, health care, and more. However, these changes are not sufficient to meet the considerable challenges.

Advocating the need to build trust between the two countries under the new US Administration, experts point out that the "current distrust that the government of Pakistan and its people hold toward the Bush administration has undermined a co-operative Pakistan-US relationship." "Furthermore, the strains between the Bush administration and numerous other countries including our European allies have hurt our nation's efforts to cooperate and co-ordinate on Pakistan".

"The Obama administration has the potential to mend the strained US-Pakistan relationship and offers a fresh opportunity to reach out anew to other strategic players in the region and the world to co-ordinate international efforts on Pakistan."

Despite the seemingly overwhelming challenges facing the country, numerous factors offer an opening for a positive shift in the US-Pakistan relationship. "For the first time in almost a decade, the United States and the world have partners in a democratically elected government of Pakistan. The government has greater legitimacy than previous governments because of February 2008 elections, which were a legitimate expression of the will of the Pakistani people."

"US engagement in Pakistan has been inconsistent, transactional, and reactive for decades. The United States has suspended aid, imposed sanctions, and then intermittently renewed contacts, depending on paramount strategic concerns at the time.

The United States must create a long-term plan to partner with Pakistan, understanding its challenges will not be resolved in the short-term. Even if Osama bin Laden were captured tomorrow in Pakistan, challenges to its stability and the regions would remain," the report says urging President-elect Obama to assist Pakistan in confronting its biggest challenges of insecurity, governance, and economic difficulties.

Launching the report experts including Caroline Wadhams, Senior National Security Policy Analyst, Center for American Progress, Jonah Blank, Chief Policy Advisor for South Asia, Central Asia and Archipelagic Southeast Asia, Majority staff of the Senate Foreign Relations Committee, Steve Coll, President & CEO, New America Foundation, Robert L. Grenier, Managing Director and Chairman for Global Security Consulting at Kroll and Lawrence Korb, Senior Fellow, Center for American Progress & Senior Advisor, Center for Defence Information, also agreed on the need for greater trade access for Pakistan, co-operation in the energy field, provision of counter-terrorism equipment like night vision goggles, support by the major powers at Friends of Pakistan forum and backed the Biden-Lugar legislation as way forward to sustained economic partnership.

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## Neo

*Economic situation likely to improve shortly: Taseer ​* 
LAHORE (November 19 2008): The economic situation in the country is likely to improve shortly in the backdrop of expected assistance of $3-4 billion from the "Friends of Pakistan", while the IMF loan and reduction in oil import bill by $500 million, following declining oil prices internationally, would not only help stabilise the Pak rupee, but also support in overcoming the trade deficit.

The Punjab Governor Salman Taseer expressed these views while addressing the inaugural session of the 2nd International Foundry Congress and Exhibition-2008, organised by Pakistan Foundry Association here on Tuesday. "Pakistan has bumper rice crop in this season whose exports can fetch foreign exchange up to $2.5 billion.

Under this situation, the balance of payment would certainly improve to provide significant relief to the national economy", he added. He said that not only the local currencies, but also other currencies substantially declined against the dollar. The Indian rupee declined by 35 percent, Australian dollar by 40 percent and pound sterling was slide down by 30 percent against the greenback, he claimed.

He said the world has been facing severe recession for last few months and because of globalisation, its negative impact would badly hit Pakistan's industry. Our industry should bring innovation and improve its system so that the negative impact could be minimised, he added.

The Governor stressed the need for developing academia-industry linkages for the economic development and asked the association to send its members abroad for training.

The Association Chairman Sikandar Mustafa Khan and General Secretary Asim Qadri also spoke on the occasion and highlighted the aims and objectives of the congress and gave an overview of the foundry sector in the country.

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## Neo

*Interim report on economic stabilisation presented to PM : Panel suggests Rs 115 billion cut in expenditure​*
ISLAMABAD: A Planning Commission panel of economists on Thursday unveiled a proposed macro-economic stabilisation plan for 2008-10 seeking a Rs 115 billion cut in the countrys expenditures. 

Prime Minister Yousuf Raza Gilani was briefed on the interim report at a meeting attended by Finance Adviser Shaukat Tareen, the planning and development minister, the Planning Commission deputy chairman and the state minister for finance. 

The proposed plan slashes defence expenditure and subsidies by Rs 30 billion each, debt servicing by Rs 25 billion and other expenditures by Rs 40 billion. The panel said that several proposed steps to mobilise revenue would have their full impact in the medium term, but their implementation would nonetheless secure revenue. 

The panel recommended revenue mobilisation of Rs 75 billion through additional taxation proposals  including imposition of a broad-based regulatory duty on non-essential imports (excluding wheat, edible oil, pulses, pharmaceuticals, fertilisers and petroleum products) that do not already carry a duty, at a rate of 4 percent on machinery and 8 percent on other items. In a bid to broaden the base of the tax system, the panel recommended levying a services tax  similar to the type in India  by January 1, 2009, on 12 selected services initially, an excise duty on non-essential consumer goods and durables, a capital gains tax on the transfer of properties by provincial governments, and an agricultural income tax by provinces. The economists also proposed the withdrawal of some income tax exemptions. They have called for bringing the highest slab of income tax at the same level, or close to the corporate tax rate; reducing the revenue threshold of companies for the purpose of corporate taxation; and a reduction in sales tax thresholds. 

The panel also proposed increased reliance on non-bank borrowing to finance up to Rs 250 billion of the budget deficit, and said a reduction in borrowing from the central bank would necessitate an increase in the average return on national saving schemes. It further endorsed the recent increase in the interest rate.

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## Neo

*Macroeconomic Stabilisation Plan 2008-10: Plan to retard GDP growth in short-term, calls for fiscal prudence​*
** Independent Federal Bureau of Statistics proposed​*
ISLAMABAD: Macroeconomic Stabilisation Plan 2008-10 would have some negative impacts on economy in the short-term and the plan indicates that Gross Domestic Product (GDP) growth of the country would fall to 4.4 percent in 2008-09 as compared to the target of 5.5 percent. However it projects that GDP growth will increase to 5.1 percent in next fiscal year 2009-10.

Panel of Economists has also suggested institutional reforms stating that a parliamentary resolution be passed renewing its commitment to the Fiscal Responsibility and Debt Limitation Act and enact an amendment limiting the extent of government borrowing from the State Bank of Pakistan.

The plan also calls for an independent Federal Bureau of Statistics (FBS) headed by a professional that directly reports to the parliament and not to the government.

It is projected that balance of payments gap would be reduced to $4.5 billion in 2008-09 from $6.2 billion in 2007-08 and will be largely eliminated in 2009-10. Growth of exports is targeted $23.5 billion by 2009-10 whereas imports are expected to decline to $31.4 billion in 2008-09 from the target of $35.4 billion. The plan forecasts that remittances will continue to show rapid growth while foreign investment is expected to fall in 2008-09 and then rise once again in 2009-10 to $5 billion.

Fiscal deficit is seen falling to 4.5 percent of the GDP in 2008-09, from 7.4 percent in 2007-08 and further to 4.0 percent in 2009-10. No real growth in PSDP 2008-09 will be done (as compared to 2007-08) resulting in a nominal reduction of Rs 63 billion in current PSDP in 2008-09 covering both federal and provinces.

The plan says that unemployment will increase to 6.5 percent in 2008-09 (from 5.3 percent in 2006-07) adding 1 million to the number of unemployed. Poverty incidence will also increase mainly due to high inflation and higher food prices.

Consumer Price inflation (CPI) is estimated at around 22 percent in 2008-09 falling to below 17 percent in 2009-10 and exchange rate is expected to depreciate over 2008-09 and remain stable in 2009-10.

The proposed stabilization and reform programme is based on the following principles:

Mobilisation: It is proposed that no effort would be spared to mobilise domestic resources and cut expenditures to reduce the resource gap to manageable levels.

Protection: The stabilisation programme has to ensure that the vulnerable and the poorest are protected via cost-effective social safety nets.

Prioritisation: Stabilisation and the reform programme built on it have to demonstrate our ability to utilise domestic and external resources efficiently.

The global economic scenario is fast changing and fragile. The interim report takes into account both positive developments in terms of reduction in oil and commodity prices as well as the negatives, as the US economy has slowed down and other industrial economies are in recession, which will adversely affect our export prospects. The plan suggests that we need to be fully prepared to respond to a more volatile global economy. The measures outlined will cut down financing gap in the balance of payments in 2008-09 to close to $4.5 billion compared to $6.2 billion in 2007-08. In addition, an immediate injection of around $4 to $5 billion is required to provide cover of 3 months import.

It is expected that the stabilisation programme will be regarded as "credible" by the international community and will attract the much-needed support.

The reform programme also suggests drawing upon broad-based support to ensure national ownership. Parliamentarians, provincial governments, civil society and the private sector must be taken on board and their counsel be sought in monitoring the implementation of the programme.

An independent panel of experts should be engaged in the consultative process in the design, implementation and monitoring of donor supported projects critical to the medium-term economic recovery. This will ensure transparency, rigour and relevance.

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## Neo

*Government urged to defer all new projects in current fiscal year​*
ISLAMABAD: Realising the gravity of financial crunch, the Panel of Economists on Tuesday proposed the government to defer all the new developmental projects starting in 2008-09 under the Public Sector Development Programme (PSDP).

The Panel of Economists of the Planning Commission forwarded this proposal to the Prime Minister Yousuf Raza Gilani in a presentation. In the view of the panel, events since the announcement of the Budget 2008-09 have rendered some of the expenditure proposals unrealistic and it needed to be revised.

It was proposed that the PSDP be reduced in a manner that social programmes were safeguarded and that adjustments in allocations in public projects allow growth to bounce back quickly. The guiding principle was a short sharp reduction in growth in the short-term and a quick rebound back to a higher trend growth rate.

The required reduction in the PSDP consistent with the macroeconomic stabilisation programme was Rs 63 billion (equivalent to 10 percent of the federal and provincial government PSDP). The Panel of Economists, however, recommended a larger cut of Rs 100 billion in this year's PSDP allocations. This was to allow for a cushion for social protection measures needed to soften the impact of the harsh (but needed) stabilisation measures on the vulnerable citizens and also to protect carefully selected, cost-effective programmes in least developed provinces and regions.

The panel also recommended a review of actual expenditures and new commitments in the PSDP taken place in March 2009 to determine what amount if any is available from the Rs 37 billion 'cushion' for reallocation to ongoing projects. During presentation to the PM, the Panel of Economists suggested criteria for restructuring the current year's PSDP, according to which priority would be given to projects that had incurred at least 50 percent of total cost. The panel suggested for protection and enhancement the refined and fine-tuned Benazir Income Support Programme (BISP). Under the PSDP, the BISP would not be affected and the deserving persons would be able to get monthly Rs 1,000.

According to the Panel of Economists, priority would be given to the developmental projects for special regions and those that enhance national security. Under this criteria there would be no cut in spending for the development of Balochistan province as already announced by the PM. ijaz kakakhel

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## Neo

*Pakistan Lowers Growth Outlook to Slowest in 7 Years ​*
Nov. 19 (Bloomberg) -- Pakistan, on the verge of a bailout from the International Monetary Fund, expects the economy to grow at the slowest pace in seven years as inflation averages 20 percent and industrial and farm output slows.

The $150 billion economy may grow 4.3 percent this fiscal year to June 30, lower than the earlier predicted 5.5 percent, Waqar Masood, secretary at the finance ministry, said in a phone interview. Inflation will exceed the government's previous target of 12 percent, he said.

Pakistan is counting on a $7.6 billion IMF rescue this month to avoid defaulting on its debts after foreign-exchange reserves shrank 75 percent in a year to $3.5 billion. Growth may slow after central bank Governor Shamshad Akhtar increased the benchmark interest rate to 15 percent from 13 percent as part of IMF loan condition to curb inflation.

The Washington-based IMF may approve Pakistan's first bailout in four years and release funds as early as Nov. 21, Massod said from the capital, Islamabad.

Consumer prices in Pakistan rose an average 24.6 percent in the first four months of this fiscal year, according to data on the Web site of state-owned Federal Bureau of Statistics. The economy expanded an average 6.8 percent in the past five years, according to the government.

``We expect inflation will slow in coming months as global crude and commodity prices have reduced,'' said Masood. The government will formally revise the economic targets later this month or next month, he said.

Lower Than Target

Farmers are likely to produce 12 million bales of cotton this year, less than the target of 14 million, he said. Agriculture accounts for 21 percent of the country's gross domestic product.

Pakistan needs the IMF loan to help it win additional aid from a group of other lenders and donor nations, including the U.S., U.K., China and Saudi Arabia. The group's Nov. 17 meeting in Abu Dhabi adopted a ``work plan'' for financial help to Pakistan, the foreign ministry has said.

``We are trying to hold a ministerial meeting of `Friends of Pakistan' group next month,'' said Masood. ``The prospects of more financial aid and investment from donor countries are good.''

Pakistan left its last IMF program in 2004 with a credit rating from Standard & Poor's of B+, four levels below investment grade. S&P on Nov. 14, one day before the latest IMF loan was announced, cut the nation's rating to CCC, citing a risk of default on external debt payments.

Moody's Investors Service, which rates Pakistan's debt at B3, said Nov. 17 the rating remains on review for a downgrade as the country needs to show it will secure additional assistance from donors and other lenders.

Pakistani rupee in October plunged to an all-time low and the balance of payments deficit in the first three months of the fiscal year started July 1 widened to $3.95 billion, from $2.27 billion a year earlier. The deficit reached a record $14 billion last year.

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## fatman17

*Pakistan needs aircargo makeover * 

Thursday, 20 November 2008 

A Pakistan study has estimated that total air cargo in the country will increase from about 330,000 tonnes in 2004-05 to about 866,000 tonnes in 2015-16. 

However, it has highlighted problems with the countrys air cargo handling facilities that will hinder growth if not rectified. 

They include a lack of ground and aircraft capacity, charging anomalies, the lack of foreign cargo operations, security, lack of cold storage facilities and inefficient business processes. 

About 95 per cent of Pakistans exports are by sea, but the tiny percentage of air freighted items are estimated to be worth eight per cent of the total value. 

Exporters in the study complained there were security problems -- such as a lack of suitable lockers with strong rooms -- at Karachi, Lahore and Peshawar airports for gems, jewellery and other valuables. 

They also said carrier Pakistan International (PIA) levied excessive charges to carry these items. 

The study, by the Ministry of Commerce, said Pakistan Customs Computerized System (PACCS) should be introduced by Pakistan Customs at all airports and the IT systems of CAA, airlines, air cargo agents and cargo handling agents should be integrated with it to function as a single window. 

Among its other recommendations were: Aircraft landing charges and fuel prices charged at Pakistani airports to be common-rated with the lower charges at regional airports; the CAA to establish suitable adjudication mechanisms at each airport for quick resolution of disputes relating to throughput charges and modern scanners adequate for cargo loads to be installed at all airports. 

There are 42 civil airports in Pakistan, 10 of them international airports.


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## Neo

*Pakistan smells *** in ratings downgrade by S&P ​* 
Thursday, November 20, 2008

ISLAMABAD: The downgrading of Pakistans rating by Standard & Poors on October 6 by two notches and then on November 14 by one notch seems to be the part of international politics, as it has increased the vulnerability of Pakistan many times.

Owing to this very factor, banks have started showing hesitation in opening of L/Cs of the importers, a senior official in the Finance Ministry.

To substantiate Pakistan economic managers view, JP Morgan in its latest comment doubted the downgrading of Pakistan by S&P saying: S&P decision to downgrade Pakistan to CCC last week, based on the ongoing delay by Pakistan in securing external assistance essential for the immediate stabilization of its balance of payments position, was curious.

Finance ministry official said that the authorities concerned were shocked over the apparently politically dominated decision of S&P to further downgrade Pakistan rating on November 14 as during the period between October 6 and November 14, the government of the day had to set its direction to move IMF to bailout its economy.

The economic mangers smelt the *** in the move to downgrade Pakistans economy from CCC+ to CCC as some countries want to ensure that Pakistan must move IMF, the official said.

He said that influential countries having major stakes in the IMF would have access to monitor Pakistans expenditures particularly in defence area. It is worth mentioning that USA has time and again raised the issue of unbridled expenditures of Inter Services Intelligence for its activities particularly with regard to combating terrorism.

Pakistan earlier wanted to escape moving the IMF.  Pakistan would not move IMF at any cost and in case Pakistan decides to move IMF it would be would be done over his dead body, Advisor to Prime Minister on Finance and Revenue had said at Karachi airport in reply to a media query prior to leaving for World Bank and IMF annual meetings held in Washington DC on October 11-13.

But the Friends of Pakistan including Saudi Arabia, USA, UAE and UK and donor agencies including World Bank, DFID, IDB and ADB asked Islamabad to first move IMF, then they would come up with the soft loan for beleaguered economy. The official said that recent downgrading of Pakistan by S&P is also the part of the campaign to ensure that Pakistan moves IMF.


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## Neo

*Donors pledge $328m for Neelum-Jhelum power project ​* 
Thursday, November 20, 2008

LAHORE: The international donors pledged an initial financial assistance amounting to $328 million for construction of 969MW Neelum-Jhelum hydroelectric project.

This announcement was made in a meeting attended by the delegates of Islamic Development Bank, Saudi Fund for Development, Kuwait Fund for Development and Abu Dhabi Fund for Development.

Islamic Development Bank representative Farrukh Muhammad said that the financial assistance is meant for the first three lots of the contract of Neelum-Jhelum hydroelectric project. Terming the project an important one, he assured that more funding would be made available as the project proceeds further.

According to WAPDA spokesman, speaking on the occasion, WAPDA Chairman Shakil Durrani said that Neelum-Jhelum is an environment friendly project with 26 per cent Economic Internal Rate of Returns (EIRR). He said that the project would help increase hydel ratio in the overall power generation by contributing more than 5 billion cheap electricity units annually to the national grid.

The chairman expected that the project would be completed ahead of schedule, as a bonus clause pertaining to early completion of the project has been introduced in the contract.

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## Neo

*World Bank team arriving for its own poverty assessment ​* 
*Asks Pak govt not to change goalpost​*
Thursday, November 20, 2008

ISLAMABAD: A high powered mission of the World Bank will be visiting Pakistan from November 22 to 28 for finalizing Poverty Assessment Report (PAR) and discussing other technical issues related to conducting in-depth analysis on poverty, The News has learnt.

Although, the WB has validated official poverty figure of 22.3 per cent in accordance with the latest survey of 2005-06 but the Bank will come up with its own poverty figure in the upcoming Poverty Assessment Report.

Basically, the WB had used another methodology (Tornqvist Price Index (TPI) survey, which resulted into giving poverty figure of 29 per cent in 2004-05 against official figures of 23.9 per cent.

There will be slightly different number from the official estimates of 22.3 per cent for 2005-06 in the upcoming PAR of the World Bank.

The PAR will give detailed analysis on various aspects of the prevailing poverty trend in case of this part of the world.

The World Banks team has an important role in analysing poverty in Pakistan twice in 2004-05 and 2005-06 because the Bank experts along with UNDP conducted in-depth analysis and validated the methodology in order to avoid controversy over it.

The upcoming mission of the WB will be comprised of poverty experts of the World Bank who will also visit Lahore, Karachi and other cities during their stay in the country.

The WB has prepared various analyses on various aspects of poverty which will also be shared with stakeholders, said the official sources and added that the experts possessed data of Household Income Expenditure Survey (HIES) for 2005-06 and they would come up with detailed analysis, which would be shared with concerned stakeholders during a workshop.

The poverty figure always remained controversial in the country and the previous Shaukat Aziz regime decided to involve international donors in order to avoid plunging into any controversy.

The Finance Ministry, the sources said, will recommend the government to again involve international donors for conducting and validating analysis on upcoming poverty figures on the basis of HIES survey for 2007-08. The latest poverty figure will be made public probably by January 2009.

The government used Consumer Price Index (CPI) to determine people living below the poverty line on the basis of 2350 calorie intake per person. 

The WB has recommended the government not to change goalpost for achieving trust of the people and experts on the poverty issue. 

The WB working paper also recommends the authorities concerned to assess the poverty figures after three to five years period as much of change cannot be achieved in one year period.

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## Neo

*British companies eager to take part in privatisation programme: HC ​* 
Thursday, November 20, 2008

ISLAMABAD: British High Commissioner to Pakistan, Robert Brinkley on Wednesday here expressed that the Britains companies have tremendous interest to take part in the privatisation programme of Pakistan. 

In a meeting with Syed Naveed Qamar Federal Minister for Privatisation, the envoy informed the Minister that the British entrepreneurs working in Pakistan were having continued interest to work and safeguard their businesses in Pakistan and were looking forward to the opportunities to further increase their operations by expanding the existing projects and to explore new avenues for investment.

Brinkley refuted the impression that the British companies working in Pakistan were winding up their projects. Robert W Gibson Deputy High Commission was also present during the meeting.

Syed Naveed Qamar Federal Minister for Privatisation lauded the interest shown by the British companies and said that the government was committed to the privatisation of public sector entities through a competitive, transparent, fair and open process to improve the efficiency, production, bring in expertise, latest technology and fresh investments in the largest interest of the nation and the country.

He appreciated the offer made by the British envoy for enhancing the interaction between the British investors and Pakistans Privatisation Commission and assured that strategy would be devised to have constant touch with UKs business groups.

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## Neo

*BISP to target 7m vulnerable people ​* 
Thursday, November 20, 2008

ISLAMABAD: Planning Commission Deputy Chairman Salman Faruqui said here on Wednesday that the government intends to target 7 million vulnerable people through Benazir Income Support Programme (BISP). Initially the government had allocated budget of Rs34 billion to provide assistance to 3.5 million people, however, the outreach would be enhanced up to 7 million people, he said while chairing a meeting with the World Bank team on social protection at the PC. 

Among others, PC members, Akram Malik, Dr Rashid Amjad, Dr Pervez Butt, Gen Zubair and Dr Ashfaq were also present on the occasion. The team, led by Mansoor Rashid, Sector Manager WB Washington, has been visiting Pakistan to hold discussions with government officials and agencies for establishing sustainable and viable safety network for the poor. 

Faruqui said the government would also introduce agriculture credit cards to facilitate farmers get credits for agriculture input and enhance agriculture production to help ensure food security in the country. He informed the WB delegation that the country needed to provide immediate relief to the vulnerable population and cannot afford to delay it more. 

He said the governments current poverty reduction strategy would continue, however, the government would keep on exploring better alternative and acceptable poverty reduction strategies. He also briefed the WB team about the reforms process taking place in the PC, saying that it would be made more effective by taking several measures. 

He said the Planning Commission has decided to utilize services of experts and create a link between the commission and provincial institutions for the proper execution of development projects. A consultative workshop is also scheduled to be held on Friday with an aim to make the poverty reduction strategy programme more viable and sustainable with focus on addressing the vulnerable population.

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## Neo

*Indonesia to help Pakistan in rubber and food items sectors ​* 
Thursday, November 20, 2008

KARACHI: Consul General of the Republic of Indonesia, Mustakim said that his country would extend all possible help and assistance towards promoting trade in the sector of rubber and food items besides the textile sector.

On a visit to Karachi Chamber of Commerce & Industry (KCCI) on Wednesday, he added that Indonesia and Pakistan had already agreed to enhance the existing volume of mutual trade in various sectors of the economy and there are ample opportunities to enhance and promote the existing trade and business relations between both the countries.

He said that exchange of trade delegations would enable both the countries to learn from each others experiences for exploring new avenues of trade, business, investment and technical education in sectors like livestock, dairy farming, palm oil and fisheries.

Anjum Nisar, President KCCI speaking on the occasion said that Pakistani businessmen and trade community may join hands with Indonesia in energy, communication, livestock, dairy farming, fisheries and palm oil sectors.

He also stressed upon acceleration of trade and business activities by both the countries in the fields of exchange of professional technical services, broad based business promotion through Chamber to Chamber contacts which would further strengthen the bilateral trade and business relations between the two countries.

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## Neo

*Govt plans to merge all departments working on alternative energy ​* 
Thursday, November 20, 2008

ISLAMABAD: The government has decided to abandon various departments related to alternative energy currently working under the umbrella of four ministries/divisions and merge them with Alternative Energy Board in order to reduce millions of rupees expenditure incurred on each of them on per annum basis, it is learnt.

We have decided merger of departments of alternative energy related initiatives working under various ministries/divisions in order to reduce expenditures and avoid duplication of work, a senior government official disclosed while talking to The News here on Wednesday.

However, when official spokesman of Alternative Energy Board (AEB) was contacted for comments on Wednesday, he said that the AEB was not aware of any development in this regard.

But the ministerial level source insisted that the decision to this effect was taken by high powered ministerial committee of the PPP government in a bid to overcome severe criticism on the incumbent regime for appointing battalions of ministers, minister of state and parliamentary secretaries at a time when the country is getting loan from the IMF. 

Yes, we have decided to abolish those departments where there is duplication of work going on under various ministries/divisions in a bid to curtail expenditures, a top official of Gilani government told The News. By merging all departments only single institution will be made responsible to avoid duplication of work being done under umbrella of various ministries.

The first decision, he said, has been taken by the government to merge Alternative Energy related departments currently working under various ministries including Ministry of Science & Technology and others for doing the same kind of work.

A Ministerial committee held its meeting on Tuesday in which it was agreed in principle to merge all departments into Alternative Energy Board in a bid to avoid duplication of work, he added.

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## Neo

*CDWP likely to recommend 56 projects worth Rs 131.531 billion​*
ISLAMABAD: The Central Development Working Party (CDWP) is likely to recommend and take up 56 developmental projects worth Rs 131.531 billion with foreign exchange component (FEC) worth Rs 9.1451 billion, according to the CDWP agenda obtained by the Daily Times.

Deputy Chairman, Planning Commission, Salman Faruqui will preside the meeting to be held on November 22.

The projects are for different sectors including transport and communication, water resources, energy, Physical Planning and Housing (PP&H), Higher Education Commission (HEC), Social Welfare and Women Development, Mass Media and Health.

The CDWP can only approve projects costing up to Rs 500 million. Executive Committee of the National Economic Council (ECNEC) must approve the projects above this limit.

The CDWP agenda shows that the transport and communication sector has 11 projects worth Rs 11.259 billion with FEC Rs 2.567 billion. The Water Resources has 4 projects worth Rs 70.962 billion. The Energy sector consists of 18 projects worth Rs 35.787 billion including Rs 5.187 billion as FEC.

The PP&H has 11 projects with total cost of Rs 9.290 billion with Rs 751.342 million FEC. The CDWP agenda further reveals that the HEC has 4 development projects with total cost of Rs 1.816 billion including Rs 635.243 million FEC.

The Social Welfare and Women Development sector has 5 projects worth Rs 2.352 billion. Mass Media has single project namely "Up-Gradation of 10KW to 100KW Transmitter at Larkana" worth Rs 63.150 million. The cost of 2 Health related projects is not mentioned in the agenda.

Some of the national importance projects in the CDWP are; "Lining of distributaries and minor in Sindh province worth Rs 6.278 billion", "Manufacture of 530 New Design Bogies Wagons including brake vans worth Rs 4.589 billion", "Construction of Sibbi-Dhadar section of National Highway N-65 including 2 bridges Rs 1.008 billion", "Power distribution enhancement project phase-I STG-ELR-DOP, Rehabilitation capacitor installation and system modernisation (FESCO) worth Rs 1.392 billion with Rs 363 million FEC".

Other important projects are; "Power distribution enhancement project Phase-I STG-ELR-DOP rehabilitation capacitor installation and system modernisation (ISECO) worth Rs 2.610 billion with Rs 145.97 million as FEC", "Power distribution enhancement project Phase-I STG-ELR rehabilitation, capacitor installation (HESCO) worth Rs 3.057 billion with Rs 1.729 billion as FEC", "Power distribution enhancement project Phase-I STG-ELR-DOP rehabilitation, capacitor installation and system modernisation (QESCO) worth Rs 2.283 billion", "Power distribution enhancement project Phase-I STG-ELR-DOP rehabilitation capacitor installation and system modernisation (LESCO) worth Rs 3.281 billion with Rs 424.630 million as FEC", Development of under developed area of Sindh province worth Rs 4.721 billion with Rs 1.363 billion as FEC".

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## Neo

*Expenditure to be rationalised through PSDP projects audit​*
ISLAMABAD: The government would put in place audit programme for all Public Sector Development Programme (PSDP) projects, adviser to Prime Minister on Finance and Economic Affairs, Shaukat Tareen said on Wednesday.

The audit would be conducted by internationally recognised agencies to streamline expenditure and rationalise the development projects, he said while addressing the Development Partners, who joined consultative workshop for sharing Draft of the Poverty Reduction Strategy Paper-II.

Tareen said that the government is prioritising all PSDP projects at federal, provincial and local levels.

He stressed the need that all development projects must have a pilot project to ensure success of subsequent full cycle projects and added that infrastructure development on nation-wide basis is a priority of the government.

The adviser also underlined the need for developing an integrated energy generation and conservation plan in a manner that could boost agriculture, industry and other production sector.

He said that government was making all out efforts to create a social safety net to protect vulnerable groups. The launch of the Benazir Income Support Programme while ensuring that benefit reaches to the target population.

He said that the government is working for stabilisation of macroeconomic indicators and all its initiatives are likely to be put in place by end January 2009. The government plans to bring down inflation, scaling down fiscal and current account deficit, besides paying special attention to mobilisation of additional internal resources.

Describing the agriculture as key to economic prosperity in Pakistan, he said its development must incorporate a pre-defined income security mechanism for farmers that could lead to productivity enhancement and high value crops focusing internal consumption and export needs.

He said that the government would put in place a system of infrastructure development to create competitive industrial base and special economic zones.

He added that the government plans to build its export market and trade system in a manner that access to EU and US market is made efficient, besides encouraging foreign direct investment and introducing organisational reforms in BoI to create greater efficiency.

The government is putting in place twenty years development rolling plan with prefixed goals that also contains six quarters rolling forecast in terms of best possible economic planning and development.

Planning Commission has been geared up for this objective and a Policy Board is being formed to implement the decisions, he added.

The adviser said, The problem of circular debt needs to be broken down through instituting fiscal measure.

He underlined the need for putting in place a set of administrative reforms so that government becomes an employer of choice for those who want to join it.

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## Neo

*SBP picks up Rs 103.46 billion​*
** Raises yield on 3-month paper​*
KARACHI: State Bank of Pakistan picked up Rs 103.46 billion in a treasury bill auction on Wednesday, thanks to ample liquidity in the market.

The central bank picked up Rs 101.59 billion by selling three-year papers at 13.85 percent, a yield higher by 29 basis points than last auction's cut-off yield of 13.56. The central bank had set a target of Rs 75 billion.

A banker said the central bank managed to lift such large amount partly because of decrease in uncertainty in the market and partly because of the pressure it exerted over banks to elicit bids for large amounts at low rates. "Also, the money market rate was very low around 8 to 9 percent, so it was prudent to lend to the government," said the banker. Bankers said liquidity in the market had increased after the cuts in cash reserve requirement and some other changes in regulations that the central bank effected to help banks cope with the liquidity crisis.

"It was an encouraging sign for the government that the market participation was so big," said a banker. "They had been unable to raise their targeted amounts in the previous auctions because of uncertainty regarding interest rates." He, however, said the central bank would remain under market's pressure to raise the yields on treasury bills further. The central bank also picked up an insignificant Rs 1.86 billion through sale of six-month papers at 14.01 percent. State Bank of Pakistan lifted Rs 103.467 billion in all. Banks had offered Rs 124.83 billion in all.

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## Neo

*Forex reserves fall $100m to $6.64bn​* 
KARACHI (November 20, 2008): Foreign exchange reserves fell $100 million to $6.64 billion in the week that ended on Nov. 15, the State Bank of Pakistan said on Thursday.

The State Bank of Pakistan's own reserves fell to $3.46 billion from $3.50 billion a week earlier, and reserves held by commercial banks were $3.18 billion compared with $3.24 billion.

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## Neo

*Cabinet approves economic stabilisation plan​* 
ISLAMABAD (November 20 2008): The Federal Cabinet has approved economic stabilisation plan and directed the Ministry of Finance to finalise negotiations with International Monetary Fund (IMF) for reaching a formal agreement.

The special Cabinet meeting with one point agenda to review the overall economic situation held with Prime Minister Syed Yousuf Raza Gilani in the chair on Wednesday was of the view that accepting IMF facility was the only option to stabilise the economy and put the country on road to development and prosperity.

Advisor to Prime Minister on Finance Shaukat Tarin briefed the meeting on latest interaction of the government with IMF and latter's projected commitment to accept Pakistan's home-grown Economic Stabilisation Plan.

On Standby Facility offered by IMF, he informed the meeting that the Programme is spread over 23 months (7 Quarters), involving $7.6 billion at the interest rate of 3.51% to 4.51%. The Standby Facility will be approved by the IMF Board and a minimum of $3.2 billion will be credited to the State Bank of Pakistan (SBP) account in New York immediately after the approval, he added.

He said that contrary to the general impression in the country, IMF has never asked specifically for levying tax on agriculture sector. The IMF only asks for improved tax enforcement and tax to GDP ratio. The IMF facility was the best option to move forward for economic stabilisation, containing inflation, increasing forex reserves and containing budget/current account deficit, the advisor added.

Tarin said that increase in interest rate by 2% will not only control the core inflation but will also help in raising the saving by 2%. It was informed that with better financial discipline, the inflation will soon start coming down.

The meeting was told that the government has put in place a multi pronged strategy aiming to bolster overall economic scene during CFY-2008-09 in vital economic sectors like checking devaluation of rupee, reinvigoration of privatisation programme, expediting inflow of pending instalments from already privatised units, floating of workers remittances-based securitization bonds, FDI, and getting support from Friends of Pakistan.

Shaukat Tarin further briefed the cabinet on an urgent need to develop an integrated energy generation and conservation plan in a manner that could boost our agriculture, industry and other production sectors. The capital market needs to be strengthened. Banking sector's participation in overall economic development and support to the small investors merits special attention.

Advisor on Finance underlined the need for infrastructure development on nation wide basis which is to be attached utmost priority. He said that the government is making all out efforts to create a social safety net to protect vulnerable groups of the population through extending outreach of Benazir Income Support Programme that shall incorporate comprehensive transparency while covering the poor sections of society.

He said that the government is putting in place 5-10 years development rolling plan with prefixed goals which also contains six quarters rolling forecast in terms of best possible economic planning and development. Planning Commission has been geared up for this objective. A Policy Board is being formed to implement the decisions.

Shaukat Tarin further briefed the cabinet on comprehensive package that focuses working out a stabilisation of macro-economic indicators and all Government's initiatives are likely to be in place by end January 2009.

He said that government has planned to bring down inflation to less than 10% in 24 months, simultaneously scaling down fiscal and current account deficit, besides paying special attention to mobilisation of additional internal resources.

The problem of circular debt needs to be broken down through instituting special measures, the Cabinet was briefed. The meeting was also informed that the government is prioritising all PSDP projects at federal, provincial and local levels. The programme audit of all PSDP projects by internationally recognised agencies, of the ongoing processes to streamline expenditure and rationalise the development projects, shall be put in place. What the government would emphasise is that all development projects must have a pilot project to ensure success of subsequent full cycle projects.

The cabinet was informed that agriculture is key to economic prosperity in Pakistan and its development must incorporate a pre-defined income security mechanism for farmers that could lead to productivity enhancement and high value crops, focusing internal consumption and enhanced export needs/standards.

The meeting was told that the government shall put in place a system of infrastructure development to create competitive industrial base and special economic zones, which, currently is facing a downslide.

The Government is planning to encourage Pakistan's access to EU and US market, besides encouraging FDI and introducing organisational reforms in BOI to create greater efficiency and put in place professionally defined sectoral windows to facilitate domestic and foreign investment.

The Prime Minster said that good governance is the key of success as people have given us the mandate for change and in this regard huge responsibility rests on all the elected representatives. He directed the Ministers to set their own targets in their respective ministries aimed at changing the destiny of the people and also ensure its efficient implementation. He said that he would visit each Ministry to get a briefing on their future plan and their current performance.

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## Neo

*South Korea extending $161 million loan​* 
ISLAMABAD (November 20 2008): South Korea is extending $161 million loan to Pakistan for energy, health and infrastructure, of which $1,573,800 will be paid to a Korean consultant, official sources told Business Recorder. The agreement signing ceremony will be held on Thursday (November 20) in the Economic Affairs Division (EAD).

Secretary EAD, Farrukh Qayyum will sign the documents on behalf of Pakistan government whereas Korean ambassador Shin Un will represent his country. The sources said Gujranwala Electric Supply Company (Gepco) has indicated to the EAD that the company's Board of Directors has agreed to undertake the consultancy with the consortium of M/s Kepco and M/s Buycksan of Korea at a cost of $1,573,800. The board has also authorised Gepco CEO to enter the deal.

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## Neo

*Tarin outlines macro-economic policies​* 
ISLAMABAD (November 20 2008): GDP growth of 4.4 percent in the current fiscal year, 5 percent in 2009-10 and 5.5 percent in 2010-11 was forecast by Prime Minister's Advisor on Finance Shaukat Tarin while addressing development partners during a consultative workshop to review the drafts of Poverty Reduction Strategy Paper-II and Medium Term Policy Framework (MTPF) 2008-09 to 2010-11.

With regard to fiscal policy, he said that the government would focus on expenditure control, elimination of subsidies, automatic price adjustment for petroleum products and electricity, and institutionalisation of MTPF. In the MTPF, the government has pledged that it would raise tax-to-GDP ratio from less than 10 percent to 15 percent by the end of 2012-13 through a combination of elimination of exemptions, strengthening of federal tax administration, improved enforcement and removal of distortions in the tax system.

According to the drafts, the government would make efforts to bring down public debt, as percentage of GDP, by 2.5 percent per annum with effect from 2009-10. Public guarantees would be kept to 2 percent, or below, per annum; whereas savings as percentage of GDP were forecast at 13.1 in 2008-09, 15.1 in 2009-10 and 16.7 in 2010-11.

Investment to GDP is expected to be 19.5 percent in 2008-09, 20 percent in 2009-10 and 21 per cent in 2010-11. Inflation has been projected at 22 percent in 2008-09, followed by 13 percent in 2009-10, and 9.5 percent in 2010-11, while growth target in money supply (M2) has been forecast at 10.6 percent in current fiscal year and 15.9 percent in 2009-10.

Forex reserves with the SBP have been estimated at $8.5 billion in the current fiscal year, $9.1 billion in 2009-10 and $10.3 billion in 2010-11. He said: "We have planned to bring down inflation to less than 10 percent, scale down fiscal and current account deficit, besides paying special attention to mobilisation of additional internal resources."

Tarin said total allocations for the Benazir Income Support Program (BISP) for the fiscal year 2008-09 is Rs 43 billion which would be enhanced to Rs 50 billion. "This is unlikely to alleviate poverty, but will serve to protect nutrition intake to a large extent," the MTPF documents claimed.

He said that there was an urgent need to develop an integrated energy generation and conservation plan in a manner that could boost agriculture, industry and other production sectors. The capital market needs to be strengthened.

Banking sector's participation in overall economic development and support to the small investors merits special attention, he said. He further said that infrastructure development on nation-wide basis "is a priority", and the government was making all out efforts to create a social safety net to protect the vulnerable groups of population through extending outreach of BISP, that needs to incorporate comprehensive transparency while covering the poor sections of society.

He said: "GoP is putting in place 20 years development rolling plan with prefixed goals which also contains six quarters' rolling forecast in terms of best possible economic planning and development. Planning Commission has been geared up for this objective. A Policy Board is being formed to implement the decisions.

"We are working towards stabilisation of macro-economic indicators and all our initiatives are likely to be in place by end January 2009." He said the problem of circular debt needs to be dealt with through instituting special fiscal measures.

Tarin said GoP is prioritising all PSDP projects at federal, provincial and local levels. The programme audit of all PSDP projects by internationally recognised agencies in an effort to streamline expenditure and rationalise the development projects would be put in place.

"What GoP would stress is that all development projects must have a pilot project to ensure success of subsequent full cycle projects," he added. He also stressed need for development of agriculture and industrial sectors which have not yet shown progress in accordance with expectations.

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## Neo

*China to build power generating unit at Tunsa Barrage​*
BEIJING (November 20 2008): China to build a power generating unit at Tunsa Barrage to help meet growing energy demand of the Punjab province. A Memorandum of Understanding in this regard was signed between Dongfang Electric Corporation (DEC) of Sichuan and Punjab government in the presence of Punjab Chief Minister Mian Muhammad Shahbaz Sharif here on Tuesday.

Later, talking to APP, the Deputy General Manager of DEC Hu Liming said that his company will bring an initial investment of $200 million for the project and would welcome partners from Pakistani side as well.

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## Neo

*$60 billion uplift projects presented to Friends of Pakistan​* 
ISLAMABAD (November 20 2008): Pakistan has presented about 71 projects worth nearly $60 billion to the Friends of Democratic Pakistan Group in Abu Dhabi seeking partnership to support its ventures in infrastructure, agriculture and education development alongwith medium/small dams construction.

The copies of presentation were distributed among media persons at a briefing held in Planning Commission here on Wednesday. The major thrust is on education, small and medium dams, agriculture along with market access.

These development projects encompassed strategy of balanced rural and urban growth to generate equitable economic activity, job opportunities for improving living standard of the people. The project areas have been selected keeping in view the provision of basic facilities and security situation. The demand for improvement of education system including madarassa reforms is US $1.876 billion.

INFRASTRUCTURE: Pakistan has placed demand for construction of new roads before the Friends of Democratic Pakistan to improve market access and transportation of goods from Karachi to upcountry destinations. The proposed amount for National Trade Corridor is US $9.0 billion; connectivity of Gawadar Port US $300 million; Gharo-Keti Bander Road US $50 million; Upgradation of KKH (Mansehra-Sazin Section) US $258 million; Realignment of KKH, US $200 million; Construction of 18 km long elevated highway (Rawalpindi Flyover) US $250 million, Lowari tunnel project US $125 million; Basha-Diamir Dam Site Road US $2.600 billion; Munda Dam project US $1150 million and Thar Coal Development project US $1000 million.

The cost of 32 small and medium dams is Rs 115 billion of which 22 are ready for construction costing Rs 78 billion. The demand for Livestock and Dairy development projects is US $119 million, Crop maximisation project US $100 million; Agri Research US $47 million and Special Agriculture Projects US $2 billion.

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## Neo

*'Agility Logistics invests $100 million in various industrial fields'​* 
KARACHI (November 20 2008): Chief Executive Officer, Agility Logistics (AL), Moin Ahmed Malik has said that the company has invested around 100 million dollars in the country in logistic, warehouses and agro-based industry. Speaking at a meeting of Karachi Chamber of Commerce and Industry (KCCI) on Wednesday evening, he said that company establishing state of art warehouses and cold storages throughout the country.

He said that the company has already established one state of art warehouse at Port Qasim and a vegetable and fruits processing plant at Sharak Pur near Lahore. Another will be established in Karachi soon, he added. The CEO said that the company has also made a plan to operate road-train of cargo from Karachi to Lahore. Trial-run has been completed successfully. Now the company will start its regular operation very soon. He said that this road-train will save consumption of diesel.

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## Neo

*Friends of Pakistan: much ado but no cash injections​*
EDITORIAL (November 20 2008): A press release issued by the Foreign Office asserts that the Friends of Pakistan meeting held in Abu Dhabi adopted a work plan that envisages greater co-operation in the fields of security, energy, development and institution building - areas where Pakistan needs support.

The outcome of the Friends of Pakistan meeting was the scheduling of additional meetings, the next one from 13 to 16 January 2009, with the participation of 'experts' in each of these areas, which would lead to building of strategic partnerships. However, the Press release was ominously silent on what Pakistan needs the most urgently: financial injections to enable the government to shore up its fast depleting foreign exchange reserves, stabilise the balance of payments position as well as strengthen the declining rupee value.

To many this silence comes as no surprise. The reasons being cited for this are varied. Some believe that the Friends of Pakistan want to keep Pakistan on a tight leash in an effort to ensure that our government continues its commitment to the war on terror with little flexibility to undertake policies that are not supported by the international community.

Others argue that Pakistan must first go on an International Monetary Fund (IMF) programme which would force the government to set its house in order through adopting conditionalities that would have implications for improving governance as well as macroeconomic stability. The adoption of these conditionalities would, in turn, increase the comfort level of bilaterals with respect to how we utilise their assistance, which may follow later.

However it is relevant to note that there is a gestation period, estimated at between six months to a year, before these conditionalities begin to impact positively on the economy and increase our credit rating. Such reasoning would, therefore, imply that the government must not expect additional financing from Friends of Pakistan any time soon.

The substance of the IMF conditions was revealed by Shaukat Tarin, Special Advisor to the Prime Minister on Finance, in a television interview. First, fiscal deficit would have to be reduced from 7.4 percent during 2007-08 to 4.4 percent as envisaged in the budget, to be eventually brought down to 3 percent; however the 2008-09 budget document was vague on the actual source of revenue, and hence meeting the 4.4 percent deficit is likely to be a challenge requiring a mini budget by the end of the current calendar year that would, according to Tarin, increase taxes on agriculture, stock market, real estate and others.

The second IMF condition is to expand the revenue base from 5 to 15 percent, as per Tarin. With a decline in output in recent months - both farm as well as industrial output - it maybe difficult for the government to hasten with imposition of a new tax or raise existing taxes on the productive sectors. Tarin expressed optimism and stated categorically that the government would upgrade the farm sector and make it a profit earning. Again this would take time and in the interim period prices may well soar with the imposition of a tax on agriculture.

However, the government is considering privatisation as a means of meeting some of its expenditure requirements. According to informed sources, the plan is to generate around 5 billion dollars from privatising state-owned companies. Given today's global financial crisis, the government must put this policy on hold as it is unlikely to receive the amount that it would be able to once the crisis has blown over.

Third, the government would have to limit its borrowing from the State Bank of Pakistan, a policy that would reduce the pressure on prices. Deficit financing is a highly inflationary policy and it is hoped that the government restricts its use to what is absolutely necessary. And finally Tarin also stated that the IMF has urged the government not to make oil payments through the State Bank, which would assist in saving foreign exchange reserves and the rupee value is likely to strengthen without any intervention from the State Bank.

There is a need, therefore, for the government to accept that it is unlikely to access any additional financing in the short term at least. IMF and other international financial institutions are going to operate within our economy and impose a set of conditionalities that are unlikely to be pain-free and, unfortunately, experience shows that the poorer one is the more would be the impact of IMF conditionalities. This is in spite of the assurance by the IMF that it would ensure social protection to the poorest of the poor.

What the government should do is to ensure that belt tightening is across the board and non-development expenditure cuts must be more pronounced relative to development expenditure. Unfortunately this has not been visible in recent weeks, with numerous foreign junkets, by bureaucrats and some politicians, as well as the cabinet expansion.

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## Neo

*Govt seeks investment in infrastructure, poverty alleviation​* 
Friday, November 21, 2008

ISLAMABAD: Senator Waqar Ahmad Khan, Minster for Investment has said that his Ministry would be focusing to enhance local and foreign investment in various sectors of economy to bring improvement in infrastructure, growth, poverty alleviation and achievement of millennium development goals of country (MDGs). 

The Minister for Investment was talking to the H.E Anne .W. Patterson Ambassador of US, H.E Robert Edward Brinkley British High Commissioner and His Excellency Shin-un, Ambassador of Korea who called on him at his office in the Ministry of Investment. 

Pakistan is the land of opportunities and offers tremendous potential for local and foreign investors in a host of areas like oil and gas exploration, coal and energy sector, said the Minister for Investment, Senator Waqar Ahmed Khan. 

The Minister for Investment said that the mandate of his Ministry would be to play the role of facilitator and enhance the local and foreign investment in various sectors of economy to bridge the growing needs between demand and supply. He said that the govt. believes in level playing field for the local and foreign investors. The Minister said that the government will offer business friendly policies for the investors as well ensure the continuity of policies. 

The Minister said that the Board of Investment is planning to organize an investment conference in Korea on Feb. 9, 2009 and would be largely attended by local and foreign investors. He said that it will help a great deal to Korean investors, to learn about the potential investment areas of Pakistan. The Minister appreciated the ongoing investments initiatives by the Korean companies. 

The Minister also apprised the visiting Ambassadors that the govt. is considering establishing special economic zones in various parts of the country. He said that it would offer various incentives to the local and foreign investors and give a boost to business activities in the country. 

The US and Korean Ambassadors also discussed the matters of bilateral interest regarding prospective investments by their countries. They congratulated the Minister on assuming the charge of the Ministry and assured the support of their countries.

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## Neo

*Bahrain remains lucrative place for skilled Pakistani workforce: envoy ​* 
Friday, November 21, 2008

ISLAMABAD: Numerous employment opportunities exist for highly skilled Pakistani workforce in public as well as private sectors of Bahrain, said Ambassador of Bahrain to Pakistan, Mohamed Ebrahim Mohamed Abdulqader.

Talking to Chairman National Vocational & Technical Education Commission (NAVTEC), Adnan A Khwaja, who called on him here on Thursday, he said although the Pakistani workforce working in Bahrain was good in number but there was a scope for absorption of properly trained Pakistani manpower in various sectors, including construction, services, banking and health. He, however, said employment opportunities for skilled Pakistani women like doctors, nurses, bankers and the security women were comparatively higher.

He said many of the Pakistanis were enjoying a good status and reputation in his country in banking, police, intelligence and navy. 

Ambassador Ebrahim assured Adnan Khwaja that the Bahrainís mission will fully cooperate with the NAVTEC for exploring more jobs for Pakistanis in Bahrain. On the occasion, Chairman NAVTEC said his organisation, under a comprehensive strategy, was producing highly skilled workforce through technical training courses. 

In this connection, he referred to the establishment of eight Centres of Excellence in Pakistan with the technical assistance of the British Council and the JICA to help Pakistan in producing skilled manpower of international standards.

Khwaja told Ambassador Ebrahim that since its establishment in 2006, the NAVTEC had already trained 70,000 youth in various disciplines. ìWe have planned to train 100,000 more next year. We are confident that our newly trained workforce will be an asset for any organisation it will work for,î he added.

Welcoming the NAVTEC chairmans forthcoming visit to Bahrain, Ebrahim assured him all possible help and support to make the visit fruitful and rewarding. He, however, suggested the chairman to fully involve the Pakistani mission in Bahrain for interaction with the countrys major employers for availing maximum job opportunities. Executive Director NAVTEC Muhammad Ather Tahir and Director General (Planning & Development) Muhammad Riaz Khan were also present.

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## Neo

*Tough times for Pakistan, regardless of IMF ​*
KARACHI: Pakistan faces more austerity whether or not its government keeps the promises made to the International Monetary Fund in return for a $7.6 billion bailout from a balance of payments crisis. 

The cash-strapped country expects the first $3 to $4 billion tranche of the IMF loan, spread over 23 months, by the end of November, saving it from almost certain default on an international bond maturing in February.

Pakistan has entered several IMF programmes in the past, but the only one it completed was during the tenure of former army chief Pervez Musharraf, who retired in September, and the country has a reputation for falling short on commitments to the Fund. 

The IMF is a life-saving injection to a patient, but then you have to go into proper rehabilitation in order to regain health, so thats the analogy here, said Asad Saeed, an economist. 

There can be no two ways about stabilisation in a situation where your external and fiscal deficits are completely out of sync 

The IMFs patience is likely to be tried once again as the eight-month-old civilian government struggles to hold a firm policy line. 

The bottom line is that the IMF programme will be tested severely from the beginning as the economy continues to face unrelenting pressure from many directions, Deutsche Bank economist Taimur Baig said in a note on Wednesday. 

Enormous challenges: The coalition, led by President Asif Ali Zardaris Pakistan Peoples Party, has been at pains to say it went to the IMF on its own terms, even though the only alternative was to default. 

The IMF, it says, backed policies for economic adjustment needed to correct unsustainable external and fiscal deficits that have put Pakistan on the verge of bankruptcy. 

Even with an IMF programme now finally announced, the challenges facing Pakistan beyond the 23-month term of the stand-by agreement (SBA), indeed, even beyond the next few months are enormous, said David Fernandez, head of emerging Asia economic and sovereign research at JPMorgan in a note. 

While IMF funding provides a short-term answer to Pakistans external debt problems, its balance of payments will remain stressed without serious structural reforms. 

Pressures on its foreign currency reserves and on the rupee exchange rate will resurface by the end of the fiscal year next June if efforts are not made to bridge the trade gap, said Asad Farid, economist at AKD Securities Ltd. 

If the IMF had its way interest rates would have gone up by far more than the 200 basis point hike in the central banks discount rate to 15 percent announced last week. Most analysts expect another rate hike of up to 200 basis points in January. 

A panel of economists on Tuesday presented a stabilisation policies labelled economic stabilisation with a human face which was endorsed by Prime Minister Yousaf Gilani. The proposal includes a Rs 200 billion ($2.5 billion) spending cut, made up of a Rs 115 billion cut in current expenditure and a Rs 63 to Rs 100 billion reduction in development spending, according to economist Asad Saeed, who was on the panel. 

Unpopular decisions: He said revenues would be increased by Rs 75 billion through duties on non-essential imports. The report projected gross domestic product growth at 4.4 percent for fiscal 2008-09 against the governments target of 5.5 percent. The government has already taken unpopular decisions by removing subsidies on food and fuel, but it will have to go further by slashing spending, curtailing borrowing from the central bank, and cutting non-essential imports. 

Government promises to reduce net borrowing from the central bank to zero may have looked good, but the IMF probably knows the target will be missed, analysts say. 

Persuading a powerful army that defence, one of the top items on the budget, should also take a hit will be hard so long Islamist militancy and fears of Indian hegemony haunt generals. 

The government knows it has to increase the tax to GDP ratio, which at 9.6 percent of GDP is one of the lowest in the world. The government plans to raise it above 15 percent by 2015. Income tax revenues could be raised, and a farming tax that Pakistans influential landowners have long resisted could be introduced, while a service tax on property and the stock market would be welcomed by many economists. reuters

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## Neo

* Boosting Exports: Economists for revising incentive structures​*
ISLAMABAD: In order to promote international competitiveness and growth of the country, the Panel of Economists in its report suggested the government to revise the structure of incentives to promote export-led growth requirements. 

The report recommended that guiding objectives should be the promotion of higher value addition in exports and, to that end, incentives should be linked to the rate of increase in exports. They also suggested the government to contact the services of private firms in seeking market potential in foreign countries for Pakistan products. 

The Panel of Economists report, presented to the Prime Minister yesterday, identified that structural weakness of the economy, highlighted by the current crisis, is due to the lack of international competitiveness that retards an export-led growth strategy. 

According to the economists report, the government has to take information from private marketing firms with local knowledge of potential export markets. The governments role in providing marketing information and producing to international standards needs to be revamped, the report suggested. 

Economists also suggested the government to upgrade skill development programmes for potential labour forces. Worker skills were critical to give firms a competitive edge in international markets; programmes for skill upgrading need to be modernised. 

They suggested the government to address quickly the current power shortages through medium-term power plan that provides reasonably priced and uninterrupted power to industry. A communication strategy should be in place to inform industry as to when improvements in power could be expected, the economists wrote in the interim report. Within country logistics costs should be reduced which would require investment in upgrading infrastructure and institutional and regulatory reform. 

Geo-political developments provide an opportunity to open up new vents for sustained long-term growth by exploiting scale of economies arising from opening regional trade, in particular trade with India. This has the potential for unleashing productivity and income enhancing export led growth, which would be similar in scale to the earlier major growth vents such as import-substitution industrialisation following partition, the spread of green revolution technology in the 1960s and the 70s and the flow of remittances in the 1980s and 1990s.

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## Neo

*Korea to lend $205m to Pakistan​*
ISLAMABAD: Pakistan and Korea signed two loan agreements worth $205 million under the Economic Development Cooperation Fund (EDCF) on Thursday.

Economic Affairs Division Secretary Farrakh Qayyum and Korean Ambassador to Pakistan Shin Un signed the agreements on behalf of their respective governments, while State Minister for Economic Affairs Hina Rabbani Khar witnessed the signing ceremony. The first agreement was in connection with a framework arrangement between the two governments concerning loans from EDCF for the years 2008-2011.

Under the agreement, Pakistan would be entitled to avail the EDCF loan from Korea up to $160 million at the interest rate of 0.1 percent with repayment period of 35 years including a 10-year grace period.

Under the second agreement, Korea would provide Pakistan $45 million EDCF loan concerning Gujranwala Electric Power Company (GEPCO) substations for the Rural Distribution Construction Project. The loan would be utilised to design, procure and install equipment with technical assistance from Korea for the construction of 132/11 KV sub-stations in GEPCO region.

Speaking on the occasion, Hina Rabbani Khar said that at this time of economic hardship and energy shortage, Korea had come forward and stood with Pakistan to further strengthen the bilateral economic co-operation. She hoped that the agreement signed for the development of the power sector would help reduce the power crisis.

The Korean ambassador also hoped that the agreements would help further enhance bilateral economic co-operation.

The Korean government had established the EDCF in June 1987 to promote Korea's economic co-operation with developing countries. It assists developing countries by providing necessary funding for industrial development and economic stability. The Exim Bank of Korea is responsible for the operation of the EDCF, including project appraisal, execution of the loan agreement and evaluation after project completion. app

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## Neo

*FTA boosts Pak-China trade volume to $6.54 billion: counsel general ​*
KARACHI (November 21 2008): After signing of a Free Trade Agreement (FTA), the trade volume between Pakistan and China, a time-tested all-weather friends, has reached to $6.54 billion. The Counsel General (CG) of China in Pakistan, Chen Shanmin said this in a seminar, entitled 'Inside China', organised by Management Association Of Pakistan (MAP) at a local hotel on Thursday.

He said China was investing in plenty of fields in Pakistan, most dominantly in agriculture, energy, defence, telecom and health sector. The two countries had recently signed an agreement to install two nuclear powers, the phase -3 and phase-4.

Shanmin said that his country was also investing $618 million in coal mining and power generation to meet the power shortages in Pakistan. Further, he said that Chinese mobile companies were also investing around $800 million in Pakistan, which would increase the trade volume up to $7billion in near future.

To a question, he said that a delegation of bankers were also in Islamabad to see the scope and environment of banking in Pakistan. The Chinese envoy said that by the time, more than 1,000 Pakistani students were studying in his country on scholarship and the number would be further increased in future. Shanmin said that after choosing the way of reform that began in the rural areas, China was celebrating its 30th successful year of reform and this year.

With momentous changes like building infrastructure, factories, spreading education, research and development and other extrapolations, China was expected to be the world's largest economy in 2030, he added. Pointing out on the social and political system in china, the CG said that socialism had grown up on their own land and the communist party had won the minds and hearts of Chines people after the war with Japan in 1949.

'Chines democracy is not only the one exists in the world but, our peoples know its real meaning. We do not copy the western form of democracy, though we shoo the best of other political or social system,' he added. Citing the economic development of the country, Shanmin said that the GDP growth from one percent in 1990 to the five-percent in 2008 was the result of the successful reform in the modern co-operative system, macro economic regulatory system of the advanced and centralised economy of China.

According to the CG, due to its fast developing economy, the China part in the in the world's poverty reduction was estimated to 67 percent. China recently had spent a historical huge amount of $43 billion in the Olympics game held in its own territory.Despite the recorded developments inside the country, China still had 50 million people in the clutches of poverty and its GDP behind the 100 GDPs of the states across the world, he added.

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## Neo

*Tariff framework for imported coal power projects: government, multinational companies fail to evolve consensus ​*
ISLAMABAD (November 21 2008): The Federal government and multinational companies have failed to develop consensus over tariff framework and determination process for imported coal power projects, well-informed sources in PPIB told Business Recorder.

The representatives of AES and Mitsui, who have completed their feasibility studies and are in the process of finalising the EPC contracts before submission of tariff petitions with the National Electric Power Regulatory Authority (Nepra), deliberated with the officials of Private Power and Infrastructure Board (PPIB) and the Nepra recently to prepare an alternate tariff determination for imported coal project, but the issue remained unresolved.

The sources said the representatives of multinational firms were of the view that due to very high demand for power generating equipment, the EPC contractors were not responding to any sponsor or investor, who did not have either the Nepra's determined tariff or letter of support (LoS) issued by the PPIB. The sponsors were requesting for an alternate tariff determination procedure to resolve this issue, which appears to have stalled any further progress of their projects.

The AES representatives, after recapitulating the problems of low validity price period being offered by the EPC contractors and its impact on the bankability of the project, suggested two-tier tariff mechanism whereby Nepra would admit tariff petition based on updated EPC cost estimates as provided in the feasibility study.

They also suggested that Nepra should hold public hearings and complete other requirements of tariff determination process. Finally, the Nepra will issue first tier tariff and also provide guidelines for international competitive bidding (ICB) process for the EPC.

After obtaining the actual EPC price as per the government's guidelines, the sponsors would submit the price to Nepra and it would adjust the tariff based on actual EPC price and issue final tariff without repeating the process of normal tariff determination.

Simultaneously, the AES proposed that the sponsors would strive for completing reasonable due diligence with their proposed lenders and draft agreements required for achieving financial closing. The AES continuously insisted that NEPRA should follow the tariff mechanism as developed under the tariff framework, the sources continued.

Mitsui representatives Saria Abubakr and Sheikh Muhammad Iqbal agreed with the AES, but suggested first tier tariff from Nepra without updating the feasibility study numbers, because in their views updating feasibility numbers would unnecessarily waste the time.

They were of the view that a restriction should not be put regarding obtaining the EPC cost through the ICB only, and commented that Nepra may decide appropriate mechanism like a negotiated deal to get the most competitive EPC cost. Furthermore, they requested to include sea-based infrastructure instead of jetty only for the purpose of providing linked with change of work scope.

The sources said the General Manager (WPPO), Water and Power Development Authority (Wapda) argued that the EPC cost as well as O&M cost may be sought through a competitive bidding process. He agreed with the concept of first tier tariff determination on available feasibility study figures, but did not agree with the concept of automatic tariff adjustment based on whatever prices obtained through competitive bidding process, as desired by the sponsors.

He was of the view that Nepra should have the right to examine the costs obtained through bidding. The PPIB and Nepra representatives were also supportive of these views. According to sources, the sponsors also suggested that re-opening of prices obtained through bidding process would defeat the very purpose of this exercise because reopening of prices at that later stage would not only enhance the risk in the project, but would also not be acceptable to lenders.

Investors also argued that to ascertain transparency in the bidding process, they may allow the Nepra, PPIB and WPPO to observe the bidding process, or may become part of evaluation committee for processing the bids and then the prices obtained must be adjusted automatically in the final tier tariff.

The sources said the PPIB and WPPO stated that a blanket commitment (that whatever prices are determined through bidding process will be accepted by Nepra) cannot be made as the prices could be very high. During the meeting, an effort was made to formulate stepwise determination process. A draft, therefore, was effectively formulated.

*THE FOLLOWING ARE THE MAJOR POINTS:* 

-- Determination of first tier tariff without updating feasibility study numbers.

-- Second (final) tier tariff on the basis of only EPC prices obtained through bids instead of both EPC and O&M costs obtained through bids, (c) including sea based structures related to jetty for re-openers in case of change in scope were agreed. Interestingly, both the AES and Mitsui were indecisive on the timing of LoS issuance. The AES was skeptical for repeating the full tariff determination exercise during final tier tariff and was of the view that the final tier tariff should follow the hydel tariff mechanism.

There was a general inclination for accepting the suggestion to follow hydel tariff mechanism, which suggests "while determining the tariff, the Nepra may carry out detailed prudence of costs. However, if the applicant supports its petition by providing competitive bids from a number of reputable contractors, the Nepra may accept the lowest of bids without going into detailed diligence exercise".

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## Neo

*650 megawatts to be added to the national grid early next year ​* 
ISLAMABAD (November 21 2008): The Minister for Water and Power, Raja Perviaz Ashraf said on Thursday that an addition of about 650MW in the first quarter of 2009 to the national grid will substantially improve power supply position in summer. He said that presently there is no load shedding due to change in the weather.

The Minister said three provinces objected to the construction of Kalabagh dam and it is not in the interest of the federation to initiate any controversial projects, he said.

The Executive Committee of the National Economic Council (Ecnec) has approved the Diamer Basha Dam with a capacity of generating 4500 MW, he said. Responding to a question in the National Assembly about steps being taken to increase power generation in the last five years, the Minister said six power projects including Ghazi-Barotha with installed capacity of 2200mw were added to the system during the last five years.

Further, the government has planned 25 power projects with the installed capacity of about 5730mw for 2009-2010. These projects will help the government end load shedding, he added. On a query that why load shedding persists in Karachi, the Minister replied that 500mw power is supplied to the KESC by Pepco to overcome the problem. 'We are making efforts to improve the system to resolve this issue on permanent basis,' he maintained.

Commenting on a question by Beelum Husnain concerning the expenses on Khushal Pakistan advertisement campaign in print and electronic media, Minister for Information and Broadcasting, Sherry Rehman said that the claim of print media of Rs 240 million have been settled. The campaign was passed by a high level committee of the previous regime.

About 100 million were paid to different TV channels through three agencies ie, Ad Group, Midas and Kenad, she said adding that committee has been formed to fix the responsibility and make ads awarding system transparent.

Responding to a question about the number of overseas Pakistani workers and remittance of foreign exchange by them, the Minister for overseas Pakistanis observed that 2.686 million Pakistanis are working abroad and their remittances in 2007-08 were $6451.24 million.

Further, promotion and use of Urdu in the government offices was supported by a number of law makers, saying that heads of state should make their speeches in Urdu while on foreign trips as all international leaders visiting other countries speak in their national language.

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## Pk_Thunder

*Sharif's China visit termed highly successful​*
RECORDER REPORT
LAHORE (November 21 2008): Terming current visit of Punjab Chief Minister, Mian Shahbaz Sharif highly successful, Central Finance Secretary Pakistan Muslim League-Nawaz (PML-N), Pervez Malik said that it would help bring substantial Chinese investment in the country. Malik hailed agreements reached between Punjab government and Chinese institutions as a result of Chief Minister, Shahbaz Sharif's efforts.

He hoped that Shahbaz's visit would lead to further strengthening co-operation between the two countries. He further said that Mian Shahbaz Sharif would definitely succeed in restoring confidence of Chinese investors. The PML-N leader called for strengthening the parliamentary democracy to bring the country out from present crisis.

"If the parliament is sovereign, no individual or institution would dare to exploit others", he said. He further said the people had voted democratic forces for change of system and not mere faces. He regretted that no solid steps have so far been taken by the PPP government to provide relief to the masses and end their deprivations.

He urged the rulers to follow the footsteps of Mian Nawaz Sharif to resist foreign pressure. Despite strong worded statements by the President and Prime Minister, US predators are continuously violating Pakistan's territorial integrity and killing innocent peoples in tribal areas, he said.

He was of the view that the present government has badly failed to protect sovereignty of the country and life and property of the masses Malik also underlined the importance of independence of judiciary for elimination of extremism and promotion of democracy in the country.

He asked the government to implement Charter of Democracy and Murree Declaration for ensuring political stability in the country. He added secret agreements of the government with foreign powers and international financial institutions would cause severe blow to national economy and democracy

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## Pk_Thunder

*Turkey keen to promote cooperation with Pakistan in trade, technical, education *​ 
ISLAMABAD, Nov 18 (APP): Turkey is keen to promote bilateral ties and cooperation with Pakistan in various sectors particularly in economic and trade, technical education and culture.

This was stated by the leader of the visiting 32&#8209;member Turkish delegation and Chairman of Pak&#8209;Turk Foundation, Unal losur while speaking at a reception hosted by National Vocational and Technical Education Commission (NAVTEC) here last evening.

Expressing the desire of Turkish business community to invest in Pakistan, Mr. Unal expressed the hope that the investors will be facilitated in the country.

He also suggested the bilateral visits of university students to each others countries under bilateral exchange programme.

He was confident that these visits would enhance cultural relations and will make positive impact on economic ties which will ultimately benefit the people of the two countries.

He also wished all success to NAVTEC in its endeavours to skilling Pakistan.

Earlier, welcoming the Turkish delegation, the Executive Director, NAVTEC, Mr. Muhammad Athar Tahir said We were trying to establish strong links between technical trained workforces of Pakistan with Turkish business community.

Outlining the objectives of the establishment of NAVTEC, Athar Tahir said that all possible efforts were being made to upgrade the level of technical education in the country at the desired level.

He suggested for more cooperation between the two countries in technical education and vocational fields.

Later, Executive Director, NAVTEC presented a souvenir to Unal losur, Chairman, Pak&#8209;Turk Foundation and M. Ali Yalandag, Turkish businessman in Home Textile.

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## Neo

*No Pakistan defense budget cut in IMF loan​*
ISLAMABAD, Pakistan, Nov. 21 (UPI) -- The Pakistani government hasn't agreed to any defense budget cut to secure a bailout package from the International Monetary Fund, a minister said Friday.

Pakistani Finance Minister Hina Rabbani Khar told the National Assembly the government has also not agreed to impose any agriculture tax in return for IMF help to resolve the country's balance-of-payment crisis, the state-run Associated Press of Pakistan reported.

"We have agreed to no such issues and there is no such plan on the table ... IMF will not give dictation to Pakistan," Khar said.

She said while there are a number of wrong perceptions among the public about the IMF rescue, the program doesn't entail indirect taxes, the report said.

Khar said the IMF loan will carry an interest rate of 3.5 percent to 4.5 percent.

Pakistan is facing a severe economic crisis, critically low foreign exchange reserves and inflation running as high as 25 percent. It is negotiating with the IMF for a $7.6 billion bailout but IMF loans usually come with tough conditions.

Pakistani officials have said the government has approved an economic stabilization program and completed talks with the IMF.

Khar said Pakistan's foreign exchange reserves as of Nov. 14 totaled $6.6 billion, the news agency reported. She said direct taxation in the country remains a challenge as only 1 million people were under the tax net.

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## dr.umer

*Pakistan's Rupee Strengthens for a Fifth Week Against Dollar ​*
Nov. 21 (Bloomberg) -- Pakistan's rupee posted a fifth weekly gain, its best winning streak in a year, after the government said it expects to receive the first installment of an International Monetary Fund bailout this weekend. Bonds fell. 

The currency closed at a six-week high after the government said it expects a minimum $3.2 billion of a $7.6 billion IMF loan to be transferred to the central bank as soon as the fund's executive board approves the payment. The rupee tumbled as much as 26 percent this year, reaching a record low last month as concern mounted the government would default on its overseas debt obligations. 

"The main reason behind the fall in dollar demand is the anticipation of long-awaited default-avoiding funds coming in from the IMF,'' said Imran Khan, head of research at First Capital Equities Ltd. in Karachi. "The government's clear policy announcements also helped curb speculative activities in the currency market.'' 

The currency rose 1.3 percent this week to 79.29 per dollar as of 4:50 p.m. in Karachi, according to data compiled by Bloomberg. It reached 79.15 on Nov. 19, the highest since Oct. 10, after strengthening from a record-low 83.55 on Oct. 17. 

Pakistan is counting on the IMF bailout to help build up its foreign-exchange reserves, which shrank 75 percent in a year to $3.5 billion, and to attract investment that will boost an economy predicted to grow at the slowest pace in seven years. 

The yield on the benchmark 9.6 percent bond due August 2017 rose 0.1 percentage point to 15 percent. Bond yields move inversely to prices.


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## Pk_Thunder

*Pakistan conventional products exports up 44pc​*
Friday, November 21, 2008
Pakistan conventional products exports up 44pc KARACHI: Pakistan exports of conventional products during the first quarter of the current fiscal year surged by 44 percent, while those of textile products declined by 0.97 percent.

Federal Statistics Department released data said that the exports of conventional products during July-October amounted to $3.023 billion as compared to $2.225 billion in the same period last year. Rice, sports goods, engineering, leather products, footwear, surgical and other products were included among those, whose exports were seen rising.

On the other hand, textile products exports decreased by 0.97 percent and thus, the exports of textile and clothes aggregated to $3.539 billion, while in the same period last year, it had remained at $3.573 billion and textile machinery imports also plummeted by 28 percent.

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## dr.umer

*Joint Study Group of Pakistan-Japan agree to further examine areas of cooperation ​*21 Nov 2008

TOKYO, Nov 21 (APP): The Joint Study Group (JSG) of Pakistan and Japan has agreed to further hold consultation on areas of cooperation and submit their respective reports again next month to be finalized by February 2009. Both sides during their two days meeting held at the Tokyo Chamber of Commerce and Industry presented proposals for cooperation to help Pakistan to address the challenges the South Asian countrys has been facing due to the financial crisis around the region. 

Almost both sides had consensus on major areas, except on FTA which would be sorted out after mutual consultations, the Minister Economic at Pakistan Embassy told APP in an interview on Friday. 

During course of meeting Japanese side stressed the need in areas to be given priority like Agriculture, Water Resources, Traditional industries like textile, rice, mango, vocational and technical training, infrastructure development that included energy and communication, sustainable development through industrialization, high tech-value added products, Free Trade Agreement, public and private partnership, political stability and improvement in law and order situation. 

The Pakistani side emphasized for development of key industries, like steel mills, ports and shipping, chemical industries, development of textile industry as well as its transformation into a value added goods, promotion and spread of education, FTA, policies towards Foreign Direct Investments and energy sector development. 

The Japanese asked Pakistanis side to give some time to further review these proposals and both sides agreed to exchange the draft report next month for giving a final shape in February next year. 

A 10-member Pakistani team was led by Mr. Abdul Qadir Jaffar, Chairman Pakistan-Japan Business Forum included experts and professionals from IBA, while Mr. Makoto Kakebyashi, the Chairman Pakistan-Japan Study Group headed Japanese delegation. 

The Minister Economic at Pakistan Embassy, Iftikhar Babar represented as observer from Government of Pakistan. 

Iftikhar Babar also presented a proposal to the JSG regarding setting up of Special Economic Zone in Karachi and said that it would help to play a critical role in rapid industrialization of Pakistan and in boosting countrys exports. The proposal was highly appreciated by the Japanese side and said that they would get due weightage in its main report. 

The JSG was constituted at the High Level Dialogue Meeting held between the two governments in July, 2007 to help in devising a strategy for realization of goals as enunciated in Pakistans Vision-2030.


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## dr.umer

*Pak-Brunei MoU on double taxation​*
21 Nov 2008

ISLAMABAD: Pakistan and Brunei have signed a Memorandum of Understanding (MoU) on avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income.

Pakistans High Commissioner to Brunei, Major General (rts) Syed Haider Jawed on behalf of Pakistan and Permanent Secretary Finance, Awg Haji Bahrim bin Haji Abdullah of Brunei representing the Sultanate of Brunei, signed the MoU in Brunei Darussalam last night.

Talking to media after the signing ceremony, Pakistans High Commissioner to Brunei said the agreement was an important step in consolidating and diversifying existing relations that existed between the two countries in the fields of trade and commerce.

Syed Haider Jawed said various steps were underway to diversify bilateral trade relations. He referred to the Joint Study Group between Pakistan and Brunei, that provided an institutional framework for a comprehensive economic partnership between the two countries.

The High Commissioner said Pakistan and Brunei had also established a Joint Investment Company, as a result of MoU signed between Pakistan and Brunei in 2005. The Company provides forward thrust to bilateral commercial cooperation in industrial manufacturing and non manufacturing sectors, financial services and marketing of production in Pakistan and abroad.

The Company was also mandated to establish subsidiary companies to carryout particular projects.

The High Commissioner said Pakistan had huge reservoirs of skilled workforce and expressed his countrys interest in providing skilled workforce to Brunei.


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## Neo

*Sales of basic industrial items down 13pc over 2 months ​* 
*FBR figures, however, show a 32pc yoy rise in GST collection on these items​*
Saturday, November 22, 2008

ISLAMABAD: After the closure of 1,588 major industrial units out of 44,976 operating in Pakistan only 11 months ago, another shock report has come from the market players that sales of essential products and materials used in industrial production and value addition faced a decline of at least 13 per cent over the past two months.

Nearly 45,000 industrial and commercial units were registered as operational by end-2007 another 27 had been launched at the beginning of this year.

Despite a 32 per cent increase in the domestic sales tax collected by the government from trade and industry in July-October 2008 over the same period of last year, the actual sales of essentials and materials slumped from September to mid-November by nearly 13 per cent.

Most of these goods are those attracting no domestically applicable GST or lower rate of tax. Medicines, food preparations, clothing, hosiery, construction materials, auto and hardware parts, sewing machines and telephone sets, motorbikes and stationery top the list of such items facing slump.

Both the Statistics Division officials and traders said the slump was unusual as a downswing never occurred in sales in the September-November period. They were unanimous in pointing out that sales increased in these months as wholesale and retail purchase of clothes, appliances and materials always increased in this period.

The Federal Board of Revenue (FBR), however, compiled figures on domestically collectible GST, showing an increase in GST collection this year in the July-October period. Last year in the same period the DCGST amounted to Rs49.2 billion whereas in the same period this year this totaled Rs74.7 billion.

Since these deposits are collectible on local sales, The News asked a senior FBR official to explain the fall of 13 per cent in actual sales and the increase of 32 per cent in the collected GST.

Member Media and Reforms Mehmood Alam said the DCGST figures covered the entire period of July-October, but there had been a slowdown for the past two months (September-October).

On the industrial side, nearly 1250 units that operated as major taxpayers in this period deposited 95 per cent of the total tax paid this year. The rest of nearly 32,000 units faced an acute downslide in sales, as per reports complied by relevant officials at the Pakistan Revenue Automation Limited (PAL). It is alarming for us to see such a downslide, said a senior PRAL official. But he pointed out that recession was an international phenomenon and it might cause further downslide in coming months.

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## Neo

* Govt providing Rs117bn subsidy to facilitate power consumers​* 
Saturday, November 22, 2008

ISLAMABAD: Water and Power Minister Raja Pervaiz Ashraf on Friday said the government was providing Rs117 billion per annum as subsidy to facilitate the consumers in the power sector.

Talking to journalists at the parliament house, the minister said despite generating power on higher prices, the government had returned Rs47 billion to the consumers. We are concerned about the plight of the poor and for this reason we keep taking steps to facilitate the poor masses. Despite the fact that country is passing through financial crunch situation, we have taken steps to facilitate the poor, he remarked.

He said besides Bhasha Dam construction, the government was focusing on minor dams which would help produce power on cheap price. With the advent of more thermal and hydel power projects, we would be able to provide cheaper electricity. We would also lower the rates of electricity with reduction in furnace oil prices, he added. To a query, Ashraf said the government had a plan to privatise DISCOs, however, he said any future decision would be taken keeping in view the experience of privatisation of Karachi Electricity Supply Corporation (KESC).

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## Neo

*China, India to help devise strategies for Planning Commission​* 
Saturday, November 22, 2008

ISLAMABAD: The government will exchange experience with India and China in the field of devising effective planning mechanism.

A top level official in the Planning Commission told The News on Friday that they have signed Memorandum of Understanding (MoU) with Planning Commission of India and China in order to facilitate exchange of information for devising effective planning and strategy to overcome existing problems in shape of energy deficiency and in others fields.

The Gilani government is making efforts to make the Planning Commission a think tank for generating ideas rather than focusing only on project related planning and its execution.

Indian Planning Commission members are scheduled to visit Pakistan during the first week of next month to share experience with Pakistani authorities, the official informed.

Chinese Planning Commission high-ups have also invited Deputy Chairman Planning Commission Salman Farooqi for visiting Beijing in January, said the official.

Pakistan would also like to get experience from China in construction of dams, energy and infrastructure and would learn a lot by using modern technology to build better in all relevant fields.

During the tenure of former Prime Minister Shaukat Aziz, the Planning Commission was mainly dominated by the engineers and they did not bother to even appoint any Chief Economist after removing Dr Pervez Tahir unceremoniously from this slot during the financial year 2004-05. 

The so called restructuring process was initiated during the Musharaff-Aziz tenure that brought engineers and former military generals in the Planning Commission, failing to bring any desired change in the professional work of the Commission. It only resulted into re-employment of high-ups after their retirement on lucrative salaries.

The PPP government appointed Salman Farooqi as Deputy Chairman Planning Commission, which initially raised many eyebrows on this appointment.

The incumbent Deputy Chairman really changed this perception when he made all out efforts to give extension to Planning Commissions Secretary Sohail Safdar who is considered as man of integrity among the top bureaucrats. It shows that the incumbent Deputy Chairman seems serious in doing his assignment.

This government, the official said, will put in place a mechanism under which the Planning Commission would regain its lost importance and weight in the devising of effective policies as well as playing its role to implement them in its true letter and spirit.

We will have to wait for a while to witness whether it is only lip service or the government takes practical steps for achieving the desired results in months ahead, said the sources and concluded that the next five to six months would exactly determine the authenticity of claims being drummed by the close associates of the high-ups of the Planning Commission.

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## Neo

* Italy offers technology transfer ​* 
Saturday, November 22, 2008

KARACHI: The Trade Commissioner of Italy, Dr. Marco Pintus said that Italy has world-class technology to offer to Pakistan.

He said that the Pakistani authorities have identified sectors that need to be developed.

During a meeting with KCCI members of Friday, he added that in order to diversify the export base, boost employment and middle-sized businesses, create economic opportunities in remote areas Karachi will have to play a leading role in such development.

He said that Italy and Pakistan have always enjoyed friendship to develop the vast scope for economic cooperation between the two countries: for sectors having big potential in Pakistan, like agriculture and food processing, marble and granite quarrying and processing, gems and jewellery manufacturing, tanning and leather manufacturing, textile, construction, power generation, etc.

On the other hand, Italy is a big market of about 60 million people that overall have significant purchasing power. Pakistan textile and clothing; products, leather goods as well as other items on a smaller scale, have succeeded in entering our quality-conscious market as an increasing number of Pakistani companies have made huge strides kin improving their standards and streaming production processes and facilities.

Needless to say, Karachis skilled trading community and the strategic position that makes this city a logistic hub in South Asia are instrumental in fostering increasing trade volumes with Italy.

The Italian Trade Commission enjoys wonderful relations with the local business community. He said that he always encouraged Pakistani companies to refer to his office for any business query they may have.

President KCCI, Anjum Nisar briefly described the strength of relations existing between Pakistan and Italy and invited participation of Italy in the events of My Karachi Exhibition arranged by KCCI with spirit of promotion of trade and business between the two countries, which would help to promote products of both the countries and access to market as well.

He added that there are ample opportunities exist in Pakistan for trade, business and investment by Italy in the sectors like leather, sports, engineering, textile, foods and technical know-how for gem industry.

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## Neo

*ADB gives $600m for setting up Sindh Bank ​* 
Saturday, November 22, 2008

KARACHI: Sindh government has received $600 million fund from Asian Development Bank (ADB) for setting up Sindh Bank in the province.

This was stated by the Prime Ministers Advisor on Petroleum Dr Asim Husain during a presentation of Nazim Karachi Syed Mustafa Kamal to President Asif Ali Zardari at the Governor House here on Friday about the completed, on-going and future development projects in Karachi.

Dr Asim said the City District Government Karachi (CDGK) and Sindh government have 50 per cent share each in the bank. He said $600 million will be used as seed money of the Sindh Bank while both these organisations will put in their share in the bank. Dr Asim said the Chief Minister will be chairman of the bank while City Nazim will be vice-chairman. He said the company will be registered with Security and Exchange Commission of Pakistan (SECP).

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## Neo

*Balochistan to continue receiving preferential treatment, says Sherry ​* 
Saturday, November 22, 2008

ISLAMABAD: Minister for Information and Broadcasting Sherry Rehman on Friday said the PPP-led coalition governments policies were aimed at benefiting and mainstreaming the people of Balochistan, which will continue to receive a preferential treatment. 

Talking to a delegation of editors that called on the minister here, she said the government was committed to resolving the issues of each and every sector of the province. The president and prime minister have repeatedly emphasised that Balochistan deserves special attention and affirmative action so that the issues of the region must be addressed on a priority basis, she added. 

Sherry said the province needs to be seen beyond the prism of its resource-rich structure. For our government, Balochistan is an important region that must be brought into the mainstream because it is an integral and vital part of Pakistan. 

She said all these years of confrontation with the province was not only fruitless, it also caused immense damage to the cause of a united federation, adding that all our development and policy efforts for the province were initiated from the perspective of benefiting its people. 

Sherry assured the editors delegation that her ministry would address their issues at its earliest. She accepted the delegations invitation to visit the province. It would be an opportunity to personally interact with media representatives of the province, and understand their problems, and present the federal governments viewpoint. 

She added that all high-level visits to the region, including those of the president and PM to Balochistan, were aimed at strengthening people-to-people contacts with the province. The minister hailed the release of Mir Abdul Nabi Bangulzai and said the release of all political prisoners, including Sardar Akhtar Mengal, Safdar Sarki and Mir Shahzain Bugti, was part of the PPP governments reconciliation move. 

We are determined to close the chapter on the culture of political victimisation. The government has also removed the FC checkpoints from the area, in response to a longstanding demand of the people of Balochistan, who have complained of harassment at the hands of FC troops, she said. 

Sherry said the prime minister had allocated a significant sum from his discretionary grant for the development projects of the province, which was a special priority for the federal government. We are committed to going the extra mile for the development of the province, she added. 

The minister said preparations were on for convening an All Parties Conference for the resolution of the issues of the province. The Balochistan Reconciliatory Committee formed by the president is actively working to restore the environment of trust and political mainstreaming of the Balochistan population, she said.

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## Neo

*Meeting today: CDWP likely to take up 59 projects worth Rs 151.008bn​*
ISLAMABAD: The government has revised the Central Development Working Party (CDWP) agenda and is likely to recommend/ take up 59 developmental projects worth Rs 151.008 billions with foreign exchange component (FEC) worth Rs 24.639 billion.

Deputy Chairman Planning Commission, M Salman Faruqui will preside the meeting in projects for 10 sectors including; transport and communication, water resources, energy, Physical Planning and Housing (PP&H), Higher Education Commission (HEC), Social Welfare and Women Development, Mass Media, Health, Industries & Commerce and Governance.

The CDWP can only approve projects costing up to Rs 500 million and the projects costing above this limit must be approved by the Executive Committee of the National Economic Council (ECNEC), so the CDWP will recommend to ECNEC for further approval if a project cost is above Rs 500 million.

The revised CDWP agenda, obtained by Daily Times here on Friday shows that the Transport and Communication sector has 11 projects worth Rs 20.260 billion with FEC Rs 2.567 billion, the Water Resources has 4 projects worth Rs 70.962 billion. The Energy sector consists of 17 projects worth Rs 28.979 billion including Rs 8.509 billion as FEC.

The PP&H has 11 projects with total cost of Rs 9.290 billion with Rs 751.342 million. The revised agenda further reveals that the HEC has 3 development projects with total cost of Rs 1.430 billion including Rs 267.154 million.

The Social Welfare and Women Development sector has 5 projects worth Rs 2.352 billion. Mass Media has single project namely Up-Gradation of 10 KW to 100 KW Transmitter at Larkana worth Rs 63.150 million. The Health sector has 4 projects worth Rs 4.522 billion with Rs 1.544 billion as FEC, Industry and Commerce sector has 2 projects worth Rs 326.579 million and the governance sector has single project namely Procurement/ Installation of non-intrusive vehicle X-ray inspection system (NVIS) worth Rs 12.822 billion including Rs 10.896 billion as FEC.

Some of the national importance projects in the revised CDWP agenda are; Procurement/Installation of Non-Intrusive Vehicle X-ray Inspection System (NVIS) worth Rs 12.822 billion with Rs 10.896 billion as FEC, Lining of distributaries and minor in Sindh province worth Rs 6.278 billion, Manufacture of 530 New Design Bogies Wagons including brake vans worth Rs 4.589 billion, Construction of Sibbi-Dhadar section of National Highway N-65 including 2 bridges Rs 1.008 billion, Power distribution enhancement project phase-I STG-ELR-DOP Rehabilitation capacitor installation and system modernization (FESCO) worth Rs 1.392 billion with Rs 363 million FEC.

Other important projects are; Power distribution enhancement project Phase-I STG-ELR-DOP rehabilitation capacitor installation and system modernization (ISECO) worth Rs 2.610 billion with Rs 145.97 million as FEC, Power distribution enhancement project Phase-I STG-ELR rehabilitation, capacitor installation (HESCO) worth Rs 3.057 billion with Rs 1.729 billion as FEC, Power distribution enhancement project Phase-I STG-ELR-DOP rehabilitation, capacitor installation and system modernisation (QESCO) worth Rs 2.283 billion, Power distribution enhancement project Phase-I STG-ELR-DOP rehabilitation capacitor installation and system modernization (LESCO) worth Rs 3.281 billion with Rs 424.630 million as FEC, Development of under developed area of Sindh province worth Rs 4.721 billion with Rs 1.363 billion as FEC.

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## Neo

*Pakistan wants greater access for its goods in EU market: FM​*
ISLAMABAD: Pakistan wants greater access for its goods to the European Union (EU) market, Foreign Minister Shah Mehmood Qureshi said on Friday.

According to a Foreign Office statement, Qureshi was addressing EU ambassadors at a dinner hosted by the French ambassador on behalf of heads of Mission of EU member states.

Qureshi discussed the growing relations between Pakistan and the EU and said it was important to increase high-level interactions.

He briefed the EU ambassadors about recent developments in Pakistan, including the presidential election, the political and economic situation, and the Friends of Pakistan forum. The Pak-Afghan mini-jirga, senior European officials visits to Pakistan, counter-insurgency operations, and Pakistans relations with its neighbours were also discussed in the meeting.

The foreign minister, while appreciating the EUs consistent political and economic support to Pakistan, stated that Pakistan attached the highest importance to its relations with the EU, which constituted its largest trading, investment and development assistance partner. The French ambassador, whose currently holds the EU Presidency, said the EU considered Pakistan as an extremely important country, especially in the context of peace and stability in the region.

He reiterated the EU was a close friend of Pakistan and was committed to a stronger and stable Pakistan - politically, democratically and economically.

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## Neo

*Worst-ever power crisis feared: Country to face about 4,000 megawatts shortage from December​* 
ISLAMABAD (November 22 2008): The country will be experiencing its worst-ever power crisis, starting next month as indigenous sources of energy, ie water and gas, will be unable to meet demand of power generation industry, well-informed sources in the Federal government told Business Recorder on Friday.

In recent months, the government faced severe criticism due to power load shedding throughout the country and in several cities, people came out on the streets to protest against non-supply of electricity for 18 hours a day.

"Pakistan will face up to 4000 MW power shortage from next month (December) and those ministers, who are taking credit for narrowing the gap between demand and supply of energy, will no longer be in a position to defend the government policies," the sources added. It is predicted that rural areas will have to face up to 15 hours of load shedding per day in winter, whereas cities will remain dark for six to eight hours a day.

Sources said the Indus River System Authority (Irsa), which regulated water releases from dams, had conveyed a very dismal picture of water in December to the Water and Power Development Authority (Wapda) with the advice that the utility should prepare an alternate power generation plan, using other sources. "We will start gradual reduction in releases from the last week of November and in mid-December, there will be complete closure," the sources added.

Irsa estimates that in January, outflows from Tarbela and Mangla reservoirs will be around 5000 cusecs each, which effectively means that hydel power generation will be at a low level. A couple of months ago, Irsa projected 35 per cent shortfall in water availability in December, January and February. An official from the Petroleum Ministry told Business Recorder that Pakistan Electric Power Company (Pepco) had already been informed that the gas companies would not be able to supply gas to dual fuel power plants in winter.

Minister for Water and Power Raja Pervez Ashraf had blamed the Musharraf regime for not inducting even a single unit in the power generation system, but two days ago the Ministry of Water and Power in a written reply to the National Assembly refuted the claim of its own Ministry. The ministry conceded that 2200 MW power had been injected in the system during the last seven years.

According to the Ministry of Water and Power, the total quantity of electric power installed capacity in the country is 19,671 MW, with hydel 6444 MW, thermal 4840 MW, IPPs (thermal) 6196 MW, IPPs (hydel) 30 MW and rental power plants 285 MW. Raja Pervez Ashraf informed the National Assembly that 650 MW electricity would be added to the national grid by December 2009.

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## Neo

*Biological diversity: Pakistan to sign Cartagena Protocol on Biosafety convention​* 
ISLAMABAD (November 22 2008): Pakistan is to ratify Cartagena Protocol on Biosafety convention on biological diversity after which it will be able to have modified products like BT cotton, bio-fertiliser, virus-free seed and potato etc. The issue had been placed before the cabinet a couple of weeks ago, which questioned the officials of Environment Ministry for proposing a pact, which has not even been signed by the United States.

The ministry informed the cabinet that Pakistan imported many food items and agricultural products from different sources. However, no system presently existed to differentiate normal products from Living or Genetically Modified Organisms (LMOs or GMOs), which were developed through genetic engineering techniques.

Although the imported products have advantages like improved yields, protection from pests and diseases etc, yet they could pose serious and irreversible impact on health and environment like spread of new toxins and allergens in foods, spread of diseases etc the cartagena protocol established a system that provided for trans-boundary movement of LMO for direct use as food or feed, or for processing their movement through web-based biosafety clearing-house.

The ministry claimed that proposed ratification of the protocol would place Pakistan in a better position to access international market for sale of its genetically modified products like BT cotton, bio-fertiliser, virus free seed, potato, etc that have been field tested in Pakistan. Besides assistance from the United National Environment Programme (UNEP), Global Environment Facility (GEF) would become available for capacity building.

Environment had proposed that the Ministry of Food and Agriculture (Minfal) be designated as Competent National Authority (CNA) for performing administrative functions, while the Ministry of Environment may be designated as National Focal Point (NFP) responsible for liaison with the secretariat of the protocol.

The sources said that the cabinet debated on the relevance of Ministry of Science and Technology, vis-à-vis Ministry of Food, Agriculture/ Pakistan Agricultural Research Council, and concluded that the Minfal was more relevant and better equipped to act as Competent National Authority (CNA).

The protocol is linked with food, plants and seeds and, therefore, the Minfal was supposed to be the most appropriate ministry. The Environment Ministry's apprehension that the protocol might put restrictions on Pakistan's exports was unfounded. It was clarified that the protocol was WTO compatible.

It was also apprised that an elaborate control regime would be developed and put in place once the protocol was ratified. The query regarding the United Nations' ratification of the protocol was replied in negative, but it was clarified that it would not affect Pakistan's export. The ministry also explained that delay in developing the proposal was caused by the lengthy process of consultations with a wide range of stakeholders.

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## Neo

*Inflation surges by 29.02 percent​* 
ISLAMABAD (November 22 2008): The Inflation measured through SPI has surged by 29.02 per cent on week ending November 20 over the same period of last years on the back of rising prices of 17 essential commodities, according to Federal Bureau of Statistics. The data released on Friday showed that combined SPI has surged from 27.91 per cent from last week to 29.02 per cent on November 21, showing 0.92 per cent increased during the week.

With this increase in the SPI, the dearness for the low income group of Rs 3000 monthly income was recorded 29.33 per cent, followed by 29.74 per cent for families of Rs 3001-5000 monthly income. The dearness was 30.06 per cent for monthly income of Rs 5001-12000 and 28.56 per cent for above Rs 12000 income group.

The data on SPI released by the FBS showed an increase in the prices of 17essential commodities, decline in 18 whereas prices of 18 commodities remained stable during the period under review. The price of kilogram tomatoes have increased during the week to Rs 35.71 from Rs 31.57, onions per kilogram to Rs 25.02 from Rs 22.34, chicken (Farm) Kg. to Rs 98.22 from Rs 92.33.

Electric charges 1-100 unit to Rs 3.22 from Rs 3.07, telephone local call to Rs 2.42 from Rs 2.31, egg hen (Farm) doz. to Rs 65.83 from Rs 64.22, tea packet 250 gram. to Rs 106.47 from Rs 104.71, Electric bulb 60wats each to Rs 13.91 from Rs 13.74, bread plain mid size each to Rs 23.97 from Rs 23.68, potatoes kg to Rs 27.53 from Rs 27.22, firewood 40 kg to Rs 265.06 from Rs 263.98, mash pulse washed kg to Rs 74.82 from Rs 74.59, bananas doz. to Rs 31.86 from Rs 31.78.

Shirting meter to Rs 79.06 from Rs 78.91, mutton kg to Rs 256.51 from Rs 256.20, beef kg to Rs 142.20 from Rs 142.13, Masoor Pulse Washed kg to Rs 129.28 from Rs 129.26. According to the FBS, the prices of 18 essential commodities remained stable during the week. However, a comparison with the same period of last years showed that majority of them increased in double digit.

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## Neo

*Pakistan offers special package for investors: Waqar​*
ISLAMABAD (November 22 2008): Minister for Investment Waqar Ahmed Khan said on Friday that the government was preparing a comprehensive and multi-pronged investment strategy for enhancing foreign and domestic investments in the country. The minister said that Pakistan offers investment friendly environment for the investors with tremendous potentials in various fields of the economy.

"Pakistan also offers incentives to the foreign investors specially in oil and gas sectors", he added.

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## Neo

*Foreign investors withdraw $4.434 million​* 
KARACHI (November 22 2008): The outflow of portfolio investment from the country's equity market continued as the foreign investors withdrew another $4.434 million during the outgoing week ended November 21. "The offshore investors remained cautious over the deteriorating economic condition and uncertainty over removal of price floor mechanism and opted to offload their holdings", analysts said.

Due to unavailability of buyers at current levels, off-market trading also continued with an average discount of around 25 per cent during the week. According to the National Clearing Company of Pakistan data, the cumulative outflow of portfolio investment has increased to $8.761 million in the current month from November 01 to November 21.

The cumulative figure of this mod of investment was recorded at negative $354.220 million in the period from January 01, 2008 to November 21, 2008. The week started on a negative note and an outflow of $272,471 was witnessed on the first day of the week. This trend continued as the foreign investors withdrew another $2,018,232 on Tuesday. An inflow of only $60 was witnessed on Wednesday. The foreign investors once again opted to offload their holdings and an outflow of $1,565,989 was witnessed on Thursday and $550,606 on Friday.

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## Neo

*China gives $500 million to Pakistan: envoy​*
ISLAMABAD (November 22 2008): China has handed over $500 million to Pakistan, a private TV channel reported on Friday. Talking to a private TV channel, Chinese Ambassador in Pakistan said $500 million have been handed over to Pakistan to stabilise its foreign exchange reserves.

He said Pakistan and China enjoys deep and friendly relations and China would take more steps in future to maintain the same relations. He said China has provided $1.5 billion to Pakistan since 1998.

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## Neo

*Modern industrial park to be set up: Punjab and China joint venture signed​* 
LAHORE (November 22 2008): Punjab government with the co-operation of Shen Zen province of China will soon build a modern industrial park equipped with latest IT facilities and technology. Punjab government will provide land for the purpose while, Chinese province will invest in the project and support with modern technology.

An agreement was signed in this regard during the visit of Punjab Chief Minister, Mian Muhammad Shahbaz Sharif to the world known industrial park of Shen Zen, said a message received on Friday. The CM during his visit offered co-operation to the Mayor of Shen Zen regarding construction of a similar park in Punjab to which, the Mayor agreed.

The Mayor further said that he had received especial instructions from Beijing to extend all out co-operation to Punjab CM. He issued instructions to the concerned authorities to prepare documents of the agreement immediately for fulfilling Shahbaz's desire.

Hence, a Memorandum of Understanding was drafted and signed between Shen Zen and Punjab province. The Director General Industries of Shen Zen and Secretary Commerce and Investment, Punjab signed the document. It may be mentioned that annual GDP growth of Shen Zen industrial park is $100 billion and it is a leading park at international level in IT sector.

Speaking on the occasion, Shahbaz said that he would always cherish the hospitality extended to him and his delegation by the government and people of China during his visit. Shahbaz said that Chinese authorities have taken memorable steps for the people of Punjab regarding agreements for joint ventures, which is a proof of the generosity of the host and entrepreneurs with regard to mutual co-operation in various sectors.

Further, the CM said that he is grateful to Chinese government and investors and assures full co-operation on behalf of Punjab government. He said that the agreements during his visit would leave a positive impact on Punjab's economy as well as the whole country.

Furthermore, mayor of Chinese Province, Shen Yen, Lou said that Chinese people are anxiously waiting for the visit of Chief of Pakistan Muslim League-Nawaz, Mian Muhammad Nawaz Sharif to China.

He said that Nawaz will be given rousing welcome on his arrival 'Services of Nawaz for strengthening the bilateral relations would never be forgotten,' he said and asked Punjab CM to convey his message to the PML-N leader that Chinese people wanted to see him among themselves as soon as possible. It may be mentioned that Chinese Ambassador to Pakistan during his meeting with Nawaz has also extended invitation for visit to China.

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## Neo

*KPT handles 12.94 million tons cargo​*
KARACHI, Nov 21: The Karachi Port handled 12.94 million tons or 12.72 per cent more cargo during the first four months of the current fiscal year (2008-09), compared to 11.48 million tons handled during the corresponding period of last year.

According to official figures, there was a substantial increase in the number of vessels called at the port during the period under review.

A total of 735 ships were handled during July-October as against 652 ships handled in the same period last year, showing an increase of 12.73 per cent in ship handling.

Similarly, container handling also increased from 374,653 TEUs to 413,384 TEUs, showing an increase of 10 per cent as compared to the corresponding period of last year. This means that daily cargo handing (import and export) increased to 105,209 tons during July-October period of the current fiscal year from 101,620 tons of the corresponding period of last year.

The Karachi Port handled 37.2 million tons cargo during the last fiscal year (2007-08) compared to 27.7million tons handled by Port Qasim.

However, when performance of both the ports is compared with regional ports, it is pathetic and it could easily be stated that they are victim of lethargy and inefficiency, ports and shipping experts said.

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## Neo

*Pakistan to manage $9bn soft loan ​* 
*plus $4.6bn from IMF: Tarin​*
Sunday, November 23, 2008

ISLAMABAD: The country will be receiving $4.6 billion from International Monetary Fund (IMF) during the current fiscal 2008-09 after getting a formal nod form the IMF Executives Board which is going to take up Pakistans case on Monday (Nov 24) in Washington.

In case of approval, Pakistan would receive $7.6 billion from IMF in seven quarters till 2010. The country will start paying back the $7.6 billion soft loan to the Fund from 2011 with an interest rate of 3.51 per cent for the first three installments and 4.5 per cent for the next four tranches, Shaukat Tarin, Advisor to Prime Minister on Finance told The News on Saturday in an exclusive talk.

The countrys foreign reserves which currently stand at $6.6 billion would jack up to $9.7 billion in the next week with the first tranche of IMF amounting to $3.1 billion.

However, by June 30, 2009, Pakistan will have $4.6 billion from the Fund out of $7.6 billion. Tarin, who is going to UAE on Monday November 24, with President Asif Ali Zardari on an official visit, said that country would manage to get $9 billion soft loan in toto during the current fiscal year including $4.6 billion from the Fund.

The soft loan in addition to $4.6 billion would, by June 30, 2008, include $1 billion from World Bank, $1.5 billion from Asian Development Bank (ADB) out of which $500 million has already been paid to Pakistan, $500 million from Islamic Development Bank, $500 million from China (already paid) and $500 million from DFID.

Discussing the post-$9 billion soft loan situation, the minister said that the real exam of the government would begin soon, as within the next 2 years it would have to improve its economic indicators particularly inflation and the current account deficit. 

Two years from now, the international market would be opened for Pakistan, as by then, the countrys rating would have improved.

Painting the picture of a future economic landscape of the country, the minister said that the country would, once having improved its economic indicators, experience impetus in flows of Foreign Direct Investment (FDI) and increase in remittances flows.

When asked if the Fund would disburse every installment to Pakistan after examining the execution of certain conditions/targets to be set for every quarter, the minister said no. He said that the loan would be given on our terms which would be fulfilled by the government.

To a question about the much trumpeted Saudi oil facility, the minister said that his Saudi counterpart is in USA at the moment, and when he is back in Saudi Arabia, he would soon go to the Kingdom for an exclusive meeting on the issue.

About the UAE visit, the minister said that he would divulge the issues to be taken up with UAE government after the visit. However, he said that UAEs role is very important in the Friends of Pakistan platform.

The minister said that the government is working on various tools in the national saving schemes to generate liquidity, including the scheme for expatriate in dollar currency.

However, the country needs expertise on consumer or retail banking to introduce the scheme for expatriates in dollar currency. Because of this scheme, dollar flow would increase in the country as the government would offer interest rate at a higher value than that being offered outside Pakistan. The interest rate in foreign countries hovers around 3 to 4 per cent.

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## Neo

*NPLs increase to Rs288.37bn from Rs251bn a year ago ​* 
Sunday, November 23, 2008

ISLAMABAD: Volume of non-performing loans (NPLs) or bad loans held by banks and DFIs during the quarter ending on September 2008, not only increased sizably but net of provisioning as well as net of total loans have also ballooned alarmingly, the central bank reported on Saturday.

At the same time, the other depressing aspect of the data released by the State Bank of Pakistan (SBP) was that cash recoveries went down about 50 per cent as against the previous quarter.

Non-Performing Loans (NPLs) or bad loans are those that remain unpaid for more than 90 days. Every Bank and *** is allowed a limit of bad loans by the SBP. Crossing that limit is considered financially unhealthy for the bank. 

SBP data show that the bad loans or NPLs stood at Rs288.37 billion at the end of September 2008 as compared with Rs251.11 billion at the end of the previous quarter.

NPLs net of provisioning rose to Rs60.93 billion from Rs40.91 billion a quarter earlier. At the end of September 2008, all banks and DFIs reported Rs6.97 billion cash recovery, down from Rs12.29 billion at the end of June 2008. Then NPLs as a percentage of net loans increased to 1.95 per cent from 1.38 per cent in the previous quarter.

Increasing volume of NPLs is indicative of the banks traditional inefficiency and lax administration.

Indeed, at a time when both the rate of interest and that of return on deposit are lower than the rate of inflation, the banks and the DFIs need to create adequate fiscal space to be able not to let the depositors suffer heavy losses which they are doing now, without in any way losing their (banks) own profit margins.

It is worth mentioning, if the depositors continued to be offered a rate of return of less than three per cent while the rate of inflation has gone beyond 25 per cent, the depositors will have no alternative but to take their savings to some other profitable ventures. If the deposits dry up then the banks will have nothing to advance.

While on the other hand, if the banks are charging at least about three per cent less than the rate of inflation on their advances, then they are hardly in the position to do anything about their depositors without first pushing up their interest rates beyond the inflation rate. But, this would stop in its tracks the accelerated investment activity which is being witnessed these days.

The only way the banks can sustain the present rate of return on advances and make it profitable for the depositors to keep their savings in the banks is by saving on the heavy cost of maintaining such a high volume of bad loans in their books.

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## Neo

*India has $2bn worth of trade potential in Pakistan: Pasha​* 
Sunday, November 23, 2008

LAHORE: Pakistan might see double digits of imports from India this year as the trade diversion policy of the present regime has already provided India $2 billion worth of potential in the Pakistani market, out of which, India could easily grab a $1.5 billion market this year.

Chairman of the panel of economists appointed by the federal government, Dr Hafeez Pasha stated this while delivering a lecture on the prospects and challenges of regional integration in the South Asia. The lecture was arranged by the SAARC Chamber of Commerce and Industry (SCCI).

Pasha appreciated the governments approach of diversion in trade that in fact, the panel of economists headed by him also supported.

Explaining his point he said that Pakistanis fear that trade with India would destroy their economy. He said in this context it was more prudent to allow Indian imports selectively for items that we import as raw material or finished machinery from other parts of the world.

He said naturally the Indian items would cost less as almost 80 per cent of the transportation charges would be saved. He said Pakistan in its new trade policy has allowed an additional import of 136 items.

He said Pakistan imports these items from other countries consuming $2 billion foreign exchange. He said same items could now be imported from India at a cheaper rate.

He noted the trade volume between India and Pakistan currently stands at $1.6 billion. Out of these, he added, exports from Pakistan amount to $300 million while imports from India are $1.3 billion. He said Pakistani exports to India have remained stagnant during the last three years while Indian exports to Pakistan are constantly increasing.

He said this year after trade diversion announced by the government of India, Pakistans trade volume would reach $3 billion that would make Pakistan the largest trade partner of India in the SAARC region. Currently, he added, Sri Lanka with exports worth $400 million and imports worth $2 billion is Indias largest trade partner in the region.

He said that the time is not right to devise a trade creation policy with India as it would hurt the local industry. He stated that trade diversion policy would impact the foreign supplier of goods to Pakistan. The local industry would not be affected. He said what we would eventually be importing from India, we are already importing from other countries.

Dr Pasha said according to a study conducted by the State Bank of Pakistan a few years back, there are 2646 items common in Pakistans import list that are manufactured in India as well. He said the study revealed that if these items are imported from India, there would be a foreign exchange saving of $1.5-2 billion annually.

He noted that all the regional countries fear Indias hegemony in regional trade. He said that Bhuttan, from where India imports cheap hydro-electricity, has a huge trade surplus against all other SAARC countries. India would have to be more flexible in its trade regime particularly for the regional countries. It would have to remove the trade and non-trade barriers against the regional countries, he added.


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## Neo

*Global financial crisis impact on Pakistan discussed ​* 
Sunday, November 23, 2008

KARACHI: The government has always been keen about foreign direct investment (FDI) rather than domestic investment -a policy that needs to be reviewed to improve investment in Pakistan, said Professor Dr Abdul Wahab, President, Mohammad Ali Jinnah University. 

Addressing a seminar on Impact of global/US financial crises in Pakistan organised by Shamrock Conferences International at a local hotel on Saturday Dr Abdul Wahab said no investor invests in any country where his investment is not secure. He stressed the need to improve security in Pakistan as investor always looks for two things one is security and second is return.

He also stressed that manufacturing and investment are the two most difficult tasks in country and government should improve the transparency in investing opportunities. 

Pakistans past economic performance and inadequate financial discipline have made it difficult to pass through the global crisis with minimum damage, unless, we immediately adopt and demonstrate immaculate financial discipline in coming years, Wahab added. 

Syed Ali Raza, Chairman, President and CEO of National Bank of Pakistan was optimistic and said that reverse flight of capital would take place in Pakistan because the world is in turmoil and investor has limited destinations to invest. 

He cited the report of a western think tank, which said that in coming future China, India, Iran and Brazil would be the fastest growing economies. We should be confident, that the surrounding countries of Pakistan would become the favourites region for investors and Pakistan could take the maximum benefits in coming future.

He also stated that the countrys banking system was strong and resilient to the challenges of the time.

CEO and President of Shamrock Communications Menin Rodrigues quoted Ban Ki-moon, Secretary General of United Nations that the world needs collective efforts to control current global financial crises before it turns into a human tragedy.

The first session on Policy Framework and Investment Crunch included presentations by Ehsan Elahi-SVP and Head of Research, National Bank of Pakistan, and Mir Mohammad Ali, CEO, UBL Funds Management.

The speakers highlighted the methods being used for economic stability by the government and how it could be better regulated for desired results. In the session on Roller Coaster Markets the Associate Director, BMA Capital, Sajjad Mankani, and Adnan Afaq, MD, PACRA, suggested ways to capitalize on the changing trends in the market.

Arif Elahi, Director General, Board of Investments (BOI), gave a very candid and positive analysis of the economic progress made by Pakistan, and bright chances of Pakistan successfully averting the impending crisis.

Anjum Nisar, President Karachi Chamber of Commerce, urged the business community to develop new export markets other than Western Europe and US. 

Syed Javed Hasan, Chief Executive Officer, IGI Funds, stressed the need for improving Pakistans financial discipline on both, individual and government levels, and stressed the understanding that the crisis was not a short-term problem but one that could last longer.

Imran Aslam, President, GEO Television, highlighted the medias relentless role in pursuing the realities of several issues before us and bringing it to the ears and eyes of people in all parts of the country; he also emphasized the need for training the media in subjects which can help reporters do their jobs better. 

Arshad Zuberi, Chief Executive and Editor, Business Recorder while reiterating the issues which have led the country into financial problems asked the educated class of Pakistan, to assist in educating and training the illiterate masses, in order to make them understand the economic issues faced by the country. 

The national conference on the Impact of Global / US Financial Crisis in Pakistan concluded with speakers from different sectors, government organizations, financial institutions, trade bodies and media concluded that Pakistan could not avert the current global financial crisis but could exercise restraint and prudence in facing the difficult times ahead.

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## Neo

*CDWP approves 43 projects worth Rs 75.4bn: Faster road link from Sui to Uch sanctioned​*
** Project will provide quick access to Dera Bugti 
* Karachi Harbour Crossing, Security Printing Press Karachi recommended to ECNEC​*
ISLAMABAD: The Central Development Working Party (CDWP) on Saturday approved and recommended 43 development projects worth Rs 75.4 billion with a foreign exchange component (FEC) of Rs 22.4 billion, including a 57 km long road from Sui to Uch.

The CDWP, which has the authority to approve projects that cost less than Rs 500 million, sanctioned 19 projects on Saturday. The remaining 24 projects, each costing more than Rs 500 million have been recommended to the Executive Committee of the National Economic Council (ECNEC) for approval. The recommended projects have a combined cost of Rs 70.7 billion.

Dera Bugti: Of the two projects in Balochistan, one project titled Construction of Black Top Road from Sui to Uch worth Rs 797 million was recommended to ECNEC.

The road link will provide faster access to Dera Bugti, and create employment opportunities and alleviate poverty in the area. Four projects of the water sector, located in Sindh and the NWFP and costing Rs 11.163 billion, were recommended, along with 15 projects in the energy sector costing Rs 26.889 billion. The Water and Power Development Authority will finance a majority of these projects itself.

An allocation of Rs 3.1 billion has already been made in the Public Sector Development Programme (PSDP) 2008-09 against some of these projects.

Projects recommended: The CDWP also cleared the project titled Karachi Harbour Crossing and a project of the Security Printing Press, Karachi.

Nine centres for women have been approved in the earthquake affected areas of Azad Jammu and Kashmir (AJK) and NWFP to alleviate the suffering of women.

The project involving a fencing wall around temporary official residence of the president at Naudero was also considered. 

A project for the renovation of the President House, approved in September 2005, has been completed and was placed before the CDWP for ex-post facto approval.

In the transport and communication sector, six projects costing Rs 9.801 billion, with Rs 2.567 billion as FEC, were approved.

Two projects of the Higher Education Commission worth Rs 946.496 million, one project of the Social Welfare and Women Development worth Rs 456.126 million and one project of mass media worth Rs 63.150 million, with Rs 28 million as FEC, were also approved.

In the health sector, the CDWP recommended two projects worth Rs 4.085 billion with Rs 1.544 billion as FEC and a project in the governance sector worth Rs 12.822 billion with Rs 10.896 billion as FEC was approved.

Two projects of the industry and commerce sector worth Rs 382.080 million, with Rs 104.650 million as FEC, were also approved in the meeting.

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## Neo

*Government plans to attract $5 billion *** ​* 
SIALKOT (November 23 2008): State Minister/Chairman Board of Investment, Saleem H Mandviwalla, has said that government has fixed the target to attain $5 billion Direct Foreign Investment (***) in the country. He disclosed this while talking to Business Recorder here on Saturday at Sialkot Chamber of Commerce and Industry (SCCI).

He said that in order to attain the set target the government has drawn a special line of action for achieving desired outcomes, adding that strenuous efforts are underway to attract foreign investors in different fields. He added, 'We have been making special efforts to bring foreign investment in energy and agriculture sectors of Pakistan for the last 30 years to attain sustainable results in long term investment.'

Expressing his confidence he said that the fixed target of *** would hopefully be achieved easily. The minister revealed that the establishment of "Special Economic Zones" was on the cards in the country. The government would facilitate the business community in special economic zones, adding that the government would soon announce its formal policy in this regard.

Mandviwalla said that under the programme exporter community could develop special economic zones individually in the country for further accelerating the export activities as well as enhancing the export volume. The regular functioning of special economic zones would be helpful in the establishment of new industries, which would ensure a strong industrial base while generate wide opportunities employment in the country he said.

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## Neo

*Shahbaz's successful visit: huge Chinese investment expected in Punjab ​* 
LAHORE (November 23 2008): Pakistan Muslim League-Nawaz President and Punjab Chief Minister Mian Shahbaz Sharif during his visit to China highly impressed the Chinese investors which will result in bringing huge Chinese investment in the Punjab province.

During his visit, Shahbaz Sharif explained the cardinal features of his "Economic Vision" and approach towards jacking up the volume and level of economic co-operation between the time tested and trusted partners - Pakistan and China - Pakistan Muslim League-Nawaz leaders said here on Saturday.

They said that China had very close ties with Pakistan Muslim League-Nawaz and the PML-N played an important role in cementing ties between the two countries. The "Economic Vision" of PML-N President was highly appreciated by the Chinese investors and now they are making plans for making investment in Pakistan, the PML-N leaders claimed.

PML-N central secretary finance Muhammad Pervaiz Malik said that Chief Minister Punjab Mian Shahbaz Sharif's visit to China has been very successful which would increase the volume of Chinese investment in the province. It may be mentioned that Shahbaz Sharif held meetings with Chinese side during his 5-day visit about the possibilities and the very bright prospects of investment in Punjab.

Speaking at a function here on Saturday, Malik said, Shahbaz Sharif has achieved the targets of his visit and Chinese entrepreneurs have recognised his administrative and political capabilities. He said that Shahbaz Sharif is dynamic and visionary leader and can meet any challenge. In the present difficult situation, only leaders like Nawaz and Shahbaz can restore the confidence of investors. He said people of the province are very happy over the success of Mian Shahbaz Sharif's visit to the friendly country.

Malik said establishment of modern Industrial Park in Punjab in co-operation with China would not only play important role in strengthening of local industry but also help provide job opportunities to the youth, besides strengthening of economy. He said agreements signed between the Punjab government and mega Chinese companies for co-operation in agriculture, industrial and various others sectors as a result of efforts of Shahbaz Sharif would go a long way in bringing about economic revolution in the country. He said Pak-China friendship is role model and all weather and "Pakistan should fully benefit from China as it has made great strides in all sectors of life."

Another Pakistan Muslim League-Nawaz leader Malik Muhammad Afzal Khokhar, MNA said that IMF bailout package will never help Pakistan to come out of economic meltdown. After taking loan from IMF, Pakistan would be locked economic whirlpool leading it to definite destruction, he said, adding that PML-N chief Mian Muhammad Nawaz Sharif had broken the begging bowl during his tenure.

He said that people had to pay the prices of wrong decision being made by PPP-led government. He said that political agenda of the PPP was contradictory to national interests.

Moreover, according to a message received here on Saturday, Punjab Chief Minister Shahbaz Sharif held discussion on mutual co-operation in the areas of power generation with the Independent Power Producers Forum at Hong Kong. Shahbaz briefed the power producers about the potential in energy sector in Pakistan and especially in Punjab. He laid especial emphasis on environment-friendly power generation.

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## Neo

*Trade diversion policy: imports from India can save 80 percent transportation cost, says Pasha ​* 
LAHORE (November 23 2008): The renowned economist Dr Hafeez Pasha, while delivering a lecture on "Prospects and Challenges of Regional Integration in South Asian Region" arranged by Saarc Chamber of Commerce and Industry, feared that Pakistan imports from India, because of the present government trade diversion policy, could be doubled by the end of this year.

Being chairman of the panel of discussion, Pasha said that India could easily capture Pakistan's market by exporting goods worth 1.5 billion dollars. He said that Pakistan government has allowed the import of 136 items from India in its trade policy, which were earlier being imported from other countries. The import of these items from India can help Pakistan to save 80 percent of transportation cost.

The import of these items from other countries that consumed over two billion dollars annually could be now imported from India at cheap rates. The trade volume between Pakistan and India stands at 1.6 billion dollars out of which we import goods worth 1.3 billion dollars against our exports of 300 million dollars only, he added. He further said that Pakistan imports are rapidly rising while our exports to India are stagnant. He was of the view that the import of selective items from India is in the interest of Pakistan thus there should be no fear in this regard.

In the backdrop of new trade diversion policy announced by the government, the trade volume is likely to increase to three billion dollars. As a result, Pakistan would become largest trade partner of India in the Saarc region. Sri Lanka is present biggest trade partner of India, which imports goods worth two billion dollars against the 400 million dollars exports.

While advocating trade with India, Pasha said that it was not suitable time to devise a trade creation policy with India as it could cause damage to the local industry. The trade diversion policy would affect only foreign supplier of goods to Pakistan while the local industry would not be affected because we would be importing the same items from India which we are currently importing from other countries, he maintained.

Referring to a State Bank of Pakistan study that was conducted few years back, that there are 2,646 common items in Pakistan's import list that are manufactured in India also. If we import these items from India, it could save a foreign exchange amounting to 1.5 billion dollars to two billion dollars annually. Pasha, however, said that India would have to be more flexible and remove trade and non-trade barriers against the regional countries.

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## Neo

*Expected fuel shortage may hit country within week ​*
ISLAMABAD (November 23 2008): The expected shortage of fuel is likely to hit the country within the week, informed sources told Business Recorder on condition of anonymity. Airlines including PIA are also likely to face jet fuel shortage due to lower production by oil refineries.

Reliable sources said that Shell has issued a warning letter to the Civil Aviation Authority (CAA) asking it to make alternative arrangements due to falling jet fuel stocks. Any shortage of jet fuel could disrupt the Haj flights and PIA and other airlines' operations, sources said.

Shell informed the CAA that the company was facing shortage of jet fuel due to lower production by oil refineries. Shell has also noted that its stocks could deplete due to oil refineries' low production. It urged the CCA to make alternative arrangements for PIA. Sources said that Karachi airport was receiving fuel from two oil refineries - PRL and NRL. PRL is shut for one week and the NRL was operating at 50 percent capacity, which has resulted in shortage of fuel for airlines.

They said that Shell is the supplier of jet fuel to PIA together with Pakistan State Oil (PSO) and Chevron. Shell also provides fuel to PIA (Karachi terminal). The three fuel suppliers will hold an emergency meeting on Monday in Karachi to review the fuel supply situation of jet fuel.

These major fuel suppliers were also relying on the local oil refineries for jet fuel supply to PIA. Shell has warned the CAA that its stocks of jet fuel were going to dry out and asked the authority to make alternative arrangements in case of fuel stock shortage. The Oil Marketing Companies are facing the same situation with respect to jet fuel stocks.

Sources noted that these OMCs had been pointing out the gravity of the situation but the government was stressing that the oil refineries must provide jet fuel to the airline. They said that after the government requested the oil refineries to provide petrol to OMCs to meet the requirements, they dropped the production of jet fuel. Local oil refineries were providing both jet fuel and petrol and these two products were not being imported.

The consumption of jet fuel by airlines had increased due to Haj flights and the production by oil refineries has been reduced as compared to consumption. Sources said that if the stocks of jet fuel dry out, these flights may try to access more fuel upon arrival in Riyadh. If this happens, scarce foreign exchange would be used to make the payment, sources added.

Shell was providing fuel to PIA in Karachi and Islamabad whereas Pakistan State Oil (PSO) was covering the PIA flights in Lahore. They said that if Shell and Chevron stopped fuel supply to PIA, PSO will be the only entity bearing the burden of supplying fuel to PIA.

When contacted, Abid Ibrahim, spokesman of Shell, said that Shell was unable to meet the demand for jet fuel by PIA at Karachi Airport. He also confirmed that Shell administration had written a warning letter to Civil Aviation Authority highlighting the shortage of jet fuel due to lower production.

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## Neo

*Government setting up 50 megawatts solar energy plants: Shahbaz ​* 
LAHORE (November 23 2008): Chief Minister Punjab Muhammad Shahbaz Sharif has said that Punjab government was undertaking a comprehensive plan to establish 50 MW solar energy power plants in the province. This was revealed in a information received from Punjab Government here on Saturday.

According to the information, the CM has assured Hong Kong Independent Power Producers Forum that the government would buy all electricity produced by them in the province. Shahbaz invited Hong Kong Independent Power Producers to visit Pakistan and personally examine the investment opportunities existed there. During his five-day visit, Shahbaz met businessmen, bankers and educationists

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## dr.umer

*Pakistan seeking Utah business ventures​*
Pakistan's ambassador to the United States, Husain Haqqani, touted his country Friday as a promising arena for Utah business owners eager to expand internationally.

Haqqani, who was named Pakistan's ambassador in May, told Utah business leaders gathered at a luncheon sponsored by The World Trade Center of Utah there are many opportunities in his country, particularly in the areas of energy and agricultural development.

"Anyone who is involved in power production and energy development would be welcomed with open arms to Pakistan," Haqqani said, pointing out that his country currently is plagued by a shortage of power generating facilities.

And much the same can be said of Pakistan's agricultural industry.

In recent years, Pakistan's government was run by "urban sophisticates" who had little use for "rural yahoos," Haqqani said. Consequently, Pakistan saw under-investment in agriculture despite its vast territory and long agricultural tradition.

Edward Jackson of Salt Lake City-based Sweetwater International, an agricultural management concern that currently is managing the construction of a dairy in northern Pakistan, agreed that there are opportunities up for grabs.

"Nestle Foods operates a processing plant there that every day is short 200,000 liters of milk [to meet demand], and that is just what is necessary to serve their existing customer base," Jackson said.

Lew Cramer, chief executive of the World Trade Center of Utah, noted that last year Utah exports to Pakistan were valued at $25.5 million. "That is particularly impressive considering the total was only $800,000 just five years ago."

Of those exports, over 96 percent involved transportation equipment, with the second largest category machinery and manufacturing supplies.

Haqqani said the political uncertainty that marked Pakistan's past is now abating with a new democratic government that he described as committed to the rule of law and providing the necessary protection for all investors in the country.

Cramer said one of the keys to successfully doing business in Pakistan is finding the right partner. And Haqqani said he is willing to help Utah businesses make the right connections so they can be successful in his country.

Still, Cramer said Utah business owners who want to do business in Pakistan should have a "high risk tolerance" for ambiguity and "long-term returns."


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## dr.umer

*Cuba assistance in Hepatitis B vaccine filling technology​*
ISLAMABADAmbassador of Cuba Gustavo Machine Gomez has offered Pakistan technology of filling capsules with vaccine of Hepatitis B and Interferon which can be supplied to Pakistan in bulk. 

The Ambassador talking to Minister for Health Mir Aijaz Hussain Jakharani here said Hepatitis B Vaccine can be made available if a formal request is made to Cuban Government after approval of the Cabinet and Joint Economic Commission of Cuba and Pakistan. 

He also offered other vaccines like Pantavalant Vaccine. He apprised the Minister that the Cuban Government has offered 1000 student scholarships to the government of Pakistan and presently there are 956 students studying in various medical colleges in Cuba. 

During meeting both discussed matters including expansion of cooperation between the two countries in the field of Medical Education, Public Health especially Primary health Care and supply of Hepatitis-B Vaccine. 

The envoy informed the minister that Cuba has infant mortality rate of five per thousand against Pakistans 78. He also mentioned that Cuba has one doctor for 123 persons while Pakistan has one doctor for 1300 persons. 

The government of Cuba achieved better results in health sector by establishing small health units which provide primary health care services and preventive health care services, he added. 

The Minister appreciated the achievements of Cuban Government in the health sector. He emphasized to strengthen the primary health care services in Pakistan with the support of Cuban government. 

He said Unless and until we improve our primary health care and preventive health care, we cannot achieve tangible results. 

The minister expressed the hope that mutual cooperation between the two countries in the health sector will be further strengthened. 

The problems of Pakistani students in Cuba also came under discussion. The Ambassador invited the Minister to visit Cuba and meet students there and examine the health system of Cuba.

He said that unless and until we can not improve our Primary Health Care and Preventive Health Care, we can not achieve tangible results.

The problems of Pakistani student s in Cuba also came under discussion. The Ambassador invited the Health Minister to visit Cuba and meet the students there and study the health system of Cuba. He also congratulated the Minister on his appointment as Minister for Health.

The Minister emphasized to strengthen the Primary Health Care Services in Pakistan with the support of Cuban Government. He said that the success of Cuban Government is due to the strengthen of Primary Health Care and Preventive Health Care.


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## dr.umer

*Experts urge strategic approach, support for Pakistan on water challenges ​*
WASHINGTON, Nov 23 (APP): Pakistan needs to pursue a strategic approach combining conservation, research, grassroots awareness and international collaboration initiatives to address impending scarcity of water, experts said here at a conference while analyzing criticality of the resource to the countrys future. 

American and Pakistani scientists and scholars examined water issues in domestic perspective population, health, energy needs etc. - and touched on the regional context availability and flows of the resource - saying the country must assign a high priority to look after the vital security issue. 

There is a logical point of collaboration, I think the next US administration is going to get away from a military emphasis in our bilateral relationship - and collaboration in water issues and health, environmental and economic, energy consequences make it a perfect channel for us to work together in a way that clearly addresses the needs of the Pakistani people, Robert Hathaway, Director Asia at the Woodrow Wilson Center, said. 

Hathaway, who has written extensively on Pakistans trade, economic and energy issues, said water is a key issue among the Pakistani provinces as well as in the strategically located country relations with its neighbors. 

So it cuts across the board, he added at the day-long moot, organized by his institution that will also publish deliberations of the conference. 

Sarah J Halvorson, an associate professor of Geography at the University of Montana, saw an enormous opportunity for collaboration among members of the scientific communities of the two countries to deal with a wide range of water related problems. 

I think there are collaborations going on currently, I think there is a lot more we can do to improve education around science and promoting water science in curriculum. The U.S. and Pakistan can collaborate to raise awareness at elementary and high school level education that help mobilize public involvement in planning and conservation of the resource, she added. 

The Internet can help greatly, laboratory facilities, access to technology, up-to-date texts and new approaches can help reinforce Pakistans curriculum in the area of water, the scientist, who is also associated with water supply studies in Pakistan's mountainous areas, remarked. 

Kaiser Bengali, national coordinator of the Benazir Income Support Program, presented a broader overview of the water-related issues and possible approaches to their solution. 

Domestically, he called for a shift from techno-centric to socio-centric paradigm, saying rather than building more and more new capital, the focus should be on management of the existing facilities and involvement of people for efficient use of water. 

On the issue of water flow in the River Chenab, he said, India was insensitive to the fact that winter years are a wrong time to start conservation. He said Indias ham-handed approach to Nepal and Bangladesh and its recent controversial moves vis-a-vis Pakistan demand regional management of the resource. 

The Indus Water Treaty has outlasted several security tensions between India and Pakistan but there is a need for political settlement of unresolved disputes, he observed. 

He lambasted the previous Pakistani regime for pushing the country into economic mess by cooking up economic figures and said the international community has a moral responsibility to support Pakistan in its hour of difficulty and help strengthen its institutions. 

Simi Sadaf Kamal, founder of the Karachi-based organization on water and food security, Hisaar Foundation, pleaded that overcoming paucity of the precious resource involves social construct, organization of production, and its efficient usage. Pakistan, she said, has 140 million acre feet of water that comes into the river system, 95 percent of it is used in agriculture. 

Of the 140 million acre feet of water, she revealed, as much as two third is lost to leakages while just one third reaches the farm gate. 

If we could repair leakages in the supply system, a lot of water can be saved. 

In terms of international cooperation, the essentials of changing the water debate in Pakistan have to come from Pakistan and Pakistanis, they have to have their voice---we need international support in developing some of the solutions--- my contention that is it must come as a response to the needs of what the people come up with. 

Lee Hamilton, former congressman and president of the Woodrow Wilson Center, lauded the participants for discussing various aspects of the water issue as Pakistan moves ahead to face the challenge of the scarce resource. Security and stability of Pakistan should be part of Washingtons agenda, he stated.


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## Pk_Thunder

*Pakistan offers special package for investors *​ 


ISLAMABAD, Nov 22 (APP): The government has been preparing a comprehensive and multi-pronged investment strategy for enhancing foreign and domestic investments in the country, Minister for Investment Waqar Ahmed Khan said.In a statement issued here, the Minister said that Pakistan offers investment friendly environment to the investors with tremendous potentials in various fields of the economy.



Pakistan also offerers incentives to the foreign investors specially in oil and gas sectors, he added.

The Minister called upon the investors to take optimum benefits of the opportunities and incentives for their own benefit and for socio-economic prosperity of the country.

He further said that Chinese investors were very keen to invest in Pakistan in services and telecom sectors adding that investors from Middle East were also interested in joint ventures.

Government intends to develop special industrial zones for Chinese investors in Punjab province, adding that special incentive package would be offered to investors, who intend to do business in special export zones of the country.

The Minister said that vast opportunities were available for the exploration of oil and gas in Punjab, Sindh and Balochistan provinces, adding that investors from the country as well as abroad have similar opportunities to invest in these sectors.


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## Pk_Thunder

*German business delegation to visit in January *​ 
KARACHI, Nov 23 (APP): A German business delegation will undertake a visit in january next year.

This was stated by the Consul General of the Federal Republic of Germany in Karachi, Christian Brecht.

Talking to reporters, he said that the members of the delegation would be looking for business and investment opportunities here.

Christian Brecht described the people of Pakistan as well as those of the city of Karachi as very hospitable and further pointed out that he is here for the past three months or so and feels quite well in Karachi.

He said that Germany is on good terms with Pakistan and that bilateral relations of our two countries are based on mutual respect and friendship.

The Consul General further stated that a delegation of German journalists will also visit here.


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## ejaz007

*Pakistan not keen on Saudi oil facility *
Monday, November 24, 2008
By Tariq Butt

ISLAMABAD: Pakistan is less enthusiastic about the Saudi oil facility because the drastic drop in oil prices in the international market has eased pressure on the countrys forex reserves. The unbearable pressure on Pakistan, with its foreign reserves plummeting extremely low, has evaporated due to the huge fall in oil prices, a senior official told The News on Sunday.

*He recalled the time when Pakistan was paying around $1,800 million for its monthly oil import bill and one barrel was costing as much as $144. Now the country is paying just $800 million a month for the same, according to a source, who argued the price decline had taken off the pressure on Pakistan.*

Arranging this amount of money is not a problem for us because this has been our standard oil import bill before the unusual increase in the prices, the official observed.

While working out the oil facility, he added, the real issue was the price that had to be locked in at the time of signing of agreement with Saudi Arabia for supply on deferred payments.

The price locked in cant be later subjected to downward or upward revision regardless of the cost of per barrel oil in the international market. Once it is fixed and inked by the two sides, it becomes final, he explained.

He reasoned that if the Saudi oil facility was started today and the international oil price fell below the one agreed with Riyadh, Islamabad would be a loser. However, if the price escalated above the rate agreed with Saudi Arabia, Pakistan would benefit.

For quite some time, the official conceded, the main reason behind non-finalisation of the Saudi oil facility had been the constant decrease in international prices. Pakistan was wary of a possible negative impact of a further drop in fuel prices, he continued.

When the oil prices were constantly soaring, the official pointed out, international forecast was that they would touch $170 a barrel. He would not say how long Pakistan would wait to decide on availing the Saudi oil facility and whether Islamabad would go for it at all.

He claimed there was a clear willingness on the part of the Saudi government to grant the favour at a time when Pakistan was facing a financial crunch. Islamabad had regained some confidence as a result of fruitful talks with the International Monetary Fund on the standby package, he maintained.

The last time Pakistan benefited from a similar Saudi facility was in 1998 after Islamabad detonated nuclear devices and was slapped with crippling international sanctions. The new facility will be a huge proposition, $4.9 billion oil to be available in three to five years. It was first taken up by Prime Minister Syed Yousuf Raza Gilani in the company of Asif Ali Zardari (before the latters election as president) during his first official visit to Saudi Arabia.

Later, President Zardari discussed the facility with the top Saudi leadership during his maiden official trip to Riyadh. Officials agreed Pakistan had not shown much urgency for vigorously pursuing the Saudi oil facility even when the oil prices were skyrocketing. 

Pakistan not keen on Saudi oil facility


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## dr.umer

*Pakistan in trade and arms offer to India​*24 Nov 2008

Pakistan is prepared to withdraw its first-strike nuclear threat and push to create an economic union with India in an effort to bring peace to south Asia, Asif Ali Zardari, Pakistan's president, said at the weekend in the warmest overture to his country's southern neighbour in decades.

His words are one of the strongest expressions yet of a desire to heal the rift that has existed since the partition of India in 1947 to create the Muslim majority republic. Both have developed nuclear weapons capabilities and fought conventional wars against one another.

The olive branch comes as Pakistan is close to agreeing a financial rescue package with the International Monetary Fund and as Kashmir, the disputed Muslim-majority Indian state, goes to the polls in state elections.

In a departure from Pakistan's official position, Mr Zardari offered to join its neighbour in a south Asian nuclear non-proliferation pact. "I can assure you that Pakistan will not be the first country to use [nuclear weapons against India]," he said in a video conference from Islamabad.

Mr Zardari told the Financial Times that India could help Pakistan overcome its serious economic difficulties by opening its borders to trade. Trade between the two is minimal. But Mr Zardari proposed that the two countries create an economic union, similar to that of the European Union.

"Let's open each other's borders to trade. If you can trade with China, why not trade with Pakistan?" he said.

The scars of partition, which led to one of the biggest forced migrations in history, run deep. Mr Zardari said Islamabad and New Delhi should help people move more freely across the border. Current visa restrictions should be replaced by passport-free travel. An e-card could be launched for regular travellers.

Analysts in Pakistan said it was too early to gauge whether Mr Zardari's conciliatory stance would mark a fresh chapter in Indo-Pakistani relations. "The big question is, can President Zardari take along Pakistan's ruling establishment, especially the military?" said Lieutenant General (retired) Talat Masood, a Pakistani commentator.

General Masood said Mr Zardari's ability to translate good intentions into reality depended on his government's ability to lead a significant improvement in Pakistan's troubled internal political and economic outlook.

New Delhi has welcomed the thaw in relations cautiously. One of the first tangible signs of improvement was the start of a small amount of trade across the Line of Control last month.

Mr Zardari's weekend comments follow an earlier breakthrough. Only last month, the Pakistani president described militants in Kashmir as "terrorists", a shift from a long-standing Pakistani policy of extending "moral and diplomatic support" to insurgents in the territory.

* A terrorist suspect linked to the 2006 attempt to blow up aircraft flying from London's Heathrow airport was killed on Saturday in a US attack in the remote Pakistani-Afghan border region.

According to senior Pakistani intelligence officials, Rashid Rauf died when a US drone launched missiles at a village in Pakistan's north Waziristan region.

"Rashid Rauf was among five people killed," one official told the Financial Times. An al-Qaeda commander of Arab origin known as Abu Asr Al-Misri was also killed.

On Sunday, the Pakistani foreign minister announced the government had disbanded the country's Inter-Services Intelligence (ISI) to concentrate its focus on counter-terrorism.

Copyright The Financial Times Limited 2008


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## dr.umer

*Pakistan to receive up to $4bn from IMF by Thursday ​*
24 Nov 2008

WASHINGTON: The executive board of the International Monetary Fund will consider a $7.5 billion rescue package for Pakistan on Monday to help the country avoid an economic collapse.

The board is likely to approve the package the same day as there seems to be a general consensus in Washington that its in everybodys interest to move rapidly to prevent an economic implosion in Pakistan.

If the rescue package is approved by Monday afternoon, the necessary documents allowing the transfer of money to Pakistan can also be signed the same day.

Pakistan is likely to get between $3.5 to 4 billion at the signing while the rest will be distributed in six equal installments.

After the approval the money will be transferred to the State Bank of Pakistans account in the US Federal Reserve in New York. The disbursement takes 48 to 72 hours, which means that Pakistan will have the money by Thursday.

This expected rapid disbursement enjoys the support of the US administration which wants to help Pakistan arrest the current economic deterioration as soon as possible.

But Pakistan experts in the US administration, as well as the World Bank and the IMF, also want Islamabad to make structural adjustments to set their economy in the right direction.

In a joint article for Washingtons Middle East Institute, former US ambassador to Islamabad Wendy Chamberlin and a former IMF economist Zubair Iqbal argued that a rescue plan could have the advantage of presenting an opportunity to force countries like Pakistan to come to grips with entrenched structural distortions in its economy.

The two authors also argued that countries like Pakistan could not count on the cash from wealthy oil producers in the Gulf for a bailout. Instead, they urged a more organized approach to aiding distressed economies.

The authors proposed establishing a trust fund made up of multilateral and regional lending agencies, selected GCC countries, and the G-7 to pool resources and facilitate their effective use by vulnerable counties under the IMF/World bank guidance.

The two authors and other experts are also urging Pakistan to reduce expenditure and increase revenue if it wants to have a stable economy.
But they also acknowledge that it may be difficult for a political government to reduce expenditure as such steps are unpopular and may cause political repercussions. So they want Pakistan to increase revenue.

It is particularly difficult to reduce expenditure when the economy is slowing, the private sector is upset and the government has just increased interest rate, said one such expert. So it is essential to increase revenue.

And when such experts talk about the need to increase revenue, they emphasise the need to introduce agriculture income tax which, they argue, will also raise domestic savings.

They reject Pakistans claim that they have introduced agriculture income tax. The experts argue that the taxes introduced in the name of agriculture income tax six or seven years ago were simply the land revenues which are being collected since the British days.

When we talk about agriculture income tax, we mean agriculture income tax and not an old medicine with a new package, said an expert.

The general public is receptive to the idea that the relatively affluent should pay their share. Therefore, it is just the right time to extend the tax net.
The expert also suggested introducing new taxes on capital gains and real estate appreciation.

The experts say that they have also been following Pakistans inappropriate exchange rate policy with concern. They say that Pakistan has been giving subsidies through tax reductions. They argue that it is time now to eliminate all such concessions especially those related to the general sales tax.

They point out that Pakistan has increased the interest rate but the interest rate spread remains very large and that is not beneficial for increasing savings. The government should encourage a reduction in the spread by raising the interest rates on savings to promote savings.

The experts argue that allowing the market to determine the exchange will not further depreciate the rupee. According to them, the recent depreciation was caused by a strong dollar which is going to depreciate in the next three to six months.

And when it happens, Pakistan should resist the temptation of letting rupee appreciate. They should let the market determine. They should not interfere, said an expert.


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## dr.umer

*Pakistan gets $7.6 billion loan package from IMF​*
ISLAMABAD, Pakistan (AP)  Pakistan, the front-line state in the battle against Islamist terrorism, has won final approval for a $7.6 billion loan from the International Monetary Fund to help stave off a possible economic meltdown.

The IMF said a first installment of $3.1 billion will be transferred immediately to the nuclear-armed country, which is battling surging violence by Taliban and al-Qaida-linked militants and is increasingly seen in the West as key to stabilizing neighboring Afghanistan.

The IMF said the Pakistani economy had been badly hit by the worsening security situation, higher oil and food import prices and the global financial and credit crisis.

"By providing large financial support to Pakistan, the IMF is sending a strong signal to the donor community about the country's improved macroeconomic prospects," said IMF acting Chairman Takatoshi Kato in a statement released after the decision Monday in Washington, where the fund is based.

Pakistan's young government had been reluctant to go to the IMF but had little choice after close allies  the United States, China and Saudi Arabia  turned down pleas for significant bilateral aid.

In mid-November, the IMF announced it had reached a preliminary agreement on the deal.

Opposition and nationalist lawmakers have criticized the government for turning to the fund, saying the IMF will impose austerity measures that will hurt ordinary Pakistanis, two-thirds of whom live on $2 dollar a day or less.

"This IMF loan the government is getting is in fact poison, and the nation has been forced to drink it," said Javed Hashmi, a senior figure in the main opposition party, told reporters.

The loan removes the most pressing risk facing the country  that it would not be able to repay dollar-denominated government bonds due to mature early next year, said Muzammil Aslam, an economist at the Pakistani securities firm KASB.

Aslam and other economists said Pakistan's government had already made some tough decisions, such as hiking the prices of fuel and electricity.

Many Pakistani economists and commentators argued that the country had no choice but to turn to the IMF. They say it is now critical that the money is well spent  always a worry in corruption-prone and chaotic Pakistan.

The IMF said in return for the money Pakistan had agreed to phase out energy subsidies, boost taxes and implement other money saving reforms. It said the World Bank would put in place a "comprehensive" social security net to shield the poor from any cuts.

In an interview with The Associated Press earlier this month, President Asif Ali Zardari said the loan was "a difficult pill, but one has to take medicine to get better,"

The loan will immediately boost Pakistan's foreign currency reserves, which have seen a rapid decline that has seen the value of the rupee fall some 20 percent since March, and enable it to pay off foreign-denominated debt due to mature soon.

The currency has clawed back some ground in recent weeks as it became clear that the IMF would step in.

The country is also wracked by power cuts, the costs of essential goods are soaring and the stock market has plummeted amid waning investor confidence.

Pakistan is one of a number of countries including Hungary and Ukraine that has sought IMF assistance in the wake of the global credit crunch. However, its strategic importance in the U.S.-led war against terrorism makes its financial and political stability particularly critical for the international community.

U.S. officials say that militants sheltering in its lawless northwest are behind much of the violence in Afghanistan, where a resurgent Taliban threaten the success of the U.S.-led mission there seven years after the invasion.

They also say that al-Qaida's leadership  including Osama bin Laden  has managed to regroup in the region, and is possibly plotting attacks on the West.

Pakistan's army is batting militants in several parts of the northwest, but some Western analysts and officials suspect elements within the security forces of sympathizing with the extremists.


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## dr.umer

*PASSCOs performance disappoints growers​*November 25, 2008

KARACHI: Pakistan Agricultural Storage and Supplies Corporation (PASSCO) has procured less than one per cent paddy out of its target of one million tonnes, and this has grieved the growers who remain disappointed from the governments intervention. Government intervention is not working, said Sindh Abadgar Board President Abdul Majeed Nizamani.

According to PASSCO details, more than 38,000 tonnes of paddy were procured from Punjab till Sunday evening while 3,800 tonnes were procured from Sindh. PASSCO has entered into agreement with 25 rice mills in Sindh and five in Balochistan out of 900 mills in the two provinces. PASSCO officials say that the total number of rice mills procurement centres in Sindh would reach 80 by Saturday. I am in Larkana and in the process of having agreements with more mills, PASSCO Director General Maj Gen Anwar Saeed Khan, told The News on Monday.

Contrary to Sindh, Punjab growers are getting better rates in open market and more mills have started their procurement. Above 90 against a target of 100 mills have already started their procurement in Punjab as compared to 25 in Sindh and five in Balochistan.

Besides, Punjab growers are getting price in the open market, Basmati Growers Association Chairman Hamid Malhi, told The News. Anwar Saeed Khan said that there would be around 200 procurement centres in the country. Out of which, 100 centres would be opened in Punjab while rest in Sindh and Balochistan, later with no more than 10-15 procurement centres.

Replying to the cries of growers he said procurement centres would increase to 80 in Sindh by Saturday, and that would help the problem, he said, We are monitoring the situation on daily basis and our staff is available in Punjab, Sindh and Balochistan.

However, the growers are unsatisfied. The situation was better before PASSCOs intervention, said Abdul Majeed. He said PASSCO started its procurement from 17th November. Paddy was sold for Rs630 to Rs680 per 40-kg on November 16 but the next day it declined to Rs570 per 40kg in open market.

The official procurement rate for IRRI-6 paddy has been fixed at Rs700 per 40kg. He said procurement at 25 centres out of 900 mills of Sindh and Balochistan were not going to help as the smaller percentage of mills would not be able to buy the entire paddy. PASSCO is not interested in Sindhs variety. The growers are at the will of millers, he said.

He said that harvesting in Sindh started two month ago and governments intervention came at the time when most of the paddy was already sold, the intervention was not working. We are disappointed from PASSCO, he said.

Nizamani said even the middleclass men were buying Sindhs IRRI-6 paddy at Rs565 from the field. The government could do better as there was no ban over export of such variety and there was demand. Likewise growers of Sindh, Punjabs farmers also remain unsatisfied. Farmers Association of Pakistan (FAP) Okara Director Brig Rasheed Baig told The News that the situation in Punjab was not changed.

We are not satisfied, he said PASSCO started procurement at big centres only. Accessibility was far away from farmers, he said, and PASSCOs staffs were very difficult to handle as they rejected rice at mills but their agents bargained at lower prices outside mills. We are facing crisis (of the price). I can not sell my rice in the market and have kept the paddy with me, he said.


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## dr.umer

*IMF condition may jeopardise next tranche​*25 Nov 2008

ISLAMABAD: The most difficult condition attached by the IMF for its $7.6 billion loan for Pakistan will be achieving net zero borrowing from the central bank for the budgetary purposes in the current fiscal year, which may prove potential threat to jeopardize second or third tranche from the Fund, a senior official said on Monday. 

All prior action taken by the PPP led government by increasing 2 per cent discount rates, cutting down expenditures and jacking up envisaged tax collection target helped Islamabad for moving towards the IMF loan under the Standby Arrangement (SBA).

Under the IMFs prescription for the ailing economy of Pakistan, the government has accepted the Funds condition to increase discount rate by 2 per cent and reducing expenditures mainly on development side, which would result into slowing down the economic activities and massive unemployment would further aggravate miseries of more people living below the poverty line on short term basis till end June 2010. 

The IMF viewed that the depreciation of rupee against dollar as well as higher inflationary pressure in the current fiscal would enable the tax authorities to increase revenues by Rs 110 billion from earlier envisaged target of Rs 1,250 billion to Rs 1,360 billion for 2008-09.

The most difficult condition for the incumbent regime to comply will be achieving net zero borrowing from the central bank for budgetary purposes in the current fiscal year, said the official sources who knew about attached conditionalities for obtaining the Funds loan here on Monday night.

The government has accepted that the net borrowing from the central bank for budgetary purposes will be brought to zero. It is simply impossible to achieve where there is Balance of Payment (BoP) deficit, said the official.

Pakistan will get $4.5 billion during the current fiscal year from the IMF, which will simply increase foreign currency reserves of the State Bank of Pakistan (SBP) and this money will not increase money supply.

The SBP has envisaged target to increase money supply growth by 15 per cent as against a nominal GDP growth of over 27 per cent. By definition, this level of growth in money supply is highly deflationary in its nature and this level of money supply will not be able to finance current level of economic activities.

The Net Foreign Assets (NFA) will continue to be negative and in order to achieve money supply target of the year, the Net Domestic Assets (NDA) has to increase in the range of Rs900 to Rs940 billion. During the last fiscal year, the NDA increased by Rs935 billion because Net Foreign Assets was negative to the extent of Rs300 billion. Pakistan had faced BoP deficit in the last financial year 2007-08.

After taking into account the private sector credit, which is not expected to increase more than Rs400 billion this year, there will be over Rs500 billion available for the government sector. With Rs500 billion, the central bank has to earmarked credit for public sector enterprises.

It is estimated that Rs200 to Rs300 billion net borrowing has to come from Treasury Bills (TBs) auctions in which the SBP failed to finance maturing TBs and as such the government and the central bank, the pressure will be increased massively. 

There is no difference in money market this year and the SBP will be facing tremendous difficulties in raising cash from the market for the maturity of TBs this year to generate Rs200 to Rs300 billion from auctions. It is the most difficult conditions to meet, which possessed potential to jeopardize second or third tranche from the IMF, said the sources.


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## dr.umer

*LSM on declining trend​*
25 Nov 2008

ISLAMABAD: Large-Scale Manufacturing (LSM) of the country has declined by 6.20 per cent during the first quarter of the financial year as against the same period of the last year.

The LSM production during September 2008 also witnessed a decrease of 6.76 per cent against the same month of last financial year, according to Federal Bureau of Statistics. The leading business community owes the decline in large-scale manufacturing to a variety of factors including power shortage and higher energy and capital costs during the current financial year. The falling industrial production has also been adversely affecting the GDP rate as well as for export sector, especially textile sector.

According to FBR figures, the petroleum sector posted 5.41 per cent negative growth during first quarter of current fiscal. The production of jet fuel oil declined by 12.81 per cent, motor spirits 9.89 per cent, diesel oil 28.80 per cent, furnace oil 6.66 per cent, lubricating oil 4.19 per cent, jute batching oil 14.59 per cent, LPG 19.19 per cent and other petroleum products 18.20 per cent. In petroleum group, only kerosene oil and high-speed diesel posted 7.36 per cent and 3.04 per cent growth, respectively during the period under review.

In Food group, the production of vegetable ghee was down by 12.49 per cent, cooking oil 8.55 per cent, wheat and grain milling 10.40 per cent, beverages 17.82 per cent, whereas the production of tea blended was up 10.82 per cent and starch and its products 18.53 per cent. The production of buses, jeeps & cars, and motorcycles decreased by 41.25 per cent, 47.16 per cent and 8.49 per cent respectively. The production of TV sets decreased by 10.83 per cent, bicycles 14.49 per cent, refrigerators 1.07 per cent and deep freezers 29.22 per cent. The production of cement and cotton cloth remained flat.


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## dr.umer

*SBP Governor sees positive signs of economy coming out of pit​*25 Nov 2008

JAMSHORO: State Bank Governor, Dr. Shamshad Akhtar has said that the positive indicators of county coming out of the current economic crisis have started to appear. 

This, she said, while addressing the students of Sindh University here on Tuesday.

We had to face shortages of water, power and energy as no attention was paid to the structural imbalance, she said. The State Bank Governor said, The gap between saving and investment has also widened for not focusing on countrys resources.

SBP Governor said the commodity price shock adversely affected our economy and added that the revenue share in total GDP having remained frozen also added to our economic miseries.


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## dr.umer

*NBFCs & NEs Regulations-2008 issued​*
25 Nov 2008

KARACHI: Securities and Exchange Commission of Pakistan (SECP) has notified the Non-Banking Finance Companies (NBFCs) and Notified Entities (NEs) Regulations-2008, which is aimed at industry facilitation, risk management and safeguarding the interest of the shareholders.

According to these new regulations, the requirement for listing at the stock exchange for entities engaged in deposit taking has been extended up to June 30, 2009 and the time schedule to comply with the minimum equity requirement has been raised by one year.

The time period for aligning portfolios by Asset Management Companies has been extended until June 30, 2009; the annual fees on mutual funds has been reduced depending on the category of a fund and procedure for cancellation of registration, and revocation of the open end scheme or closed end scheme by the AMC has been improved. 

The application of provisioning criteria on non-performing assets has been extended for a period of two years, per-party and per-sector exposure limits have been specified for different types of schemes and CIS has been barred from investing in securities of its Asset Management Company. Under the regulations, board of directors of NBFCs will be required to approve the opening of accounts with banks and brokers. It is to be noted that the NBFC Regulations issued in 2007 stand repealed and replaced by these Regulations.


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## dr.umer

*Mixed response to IMF loan package ​*
​
25 Nov 2008

KARACHI: The expected IMF loan would not be a miracle for economy, but would certainly tighten some loose ends at the cost of slowdown of economic growth, analysts and market sources said.

Instead of feeling confident, traders and industrialists found the IMF lending as anti-growth and recessionary.

Pakistan negotiated $7.6 billion loan with the IMF and expects to get it in the next couple of weeks.

However, analysts said the IMF loan will strengthen the exchange rate, increase foreign exchange reserves and improve the countrys ability to pay import bills.

Members of various chambers of commerce and industries have been meeting with government officials and State Bank leadership to explain their problems, which would only aggravate in the wake of high interest rates and tight monetary policy.

The working capital is no more working as cost of borrowing is too high, said Aamir Aziz, an exporter and manufacturer of readymade garments.

He said 20 to 22 per cent interest could easily kill the entire business sector of this country, especially the exporters would not survive.

High interest rate of 20 per cent with an inflation of 25 per cent means no business is feasible in the present cut-throat competition unless margin of profit is more than 50 per cent, said Mr Aziz.

The government claims that the IMF loan would strengthen economic fundamentals and prove helpful for the economy.

If $3-4 billion is immediately received from the IMF, Pakistans dwindling forex reserves are likely to get a major boost and can reach close to $9 billion (11 weeks of import cover) from the current $6.7 billion (8.5 weeks import cover) by the first week of December 2008, said Farhan Rizvi, an economist at the JS Research.

Rupee will float in the range of 75-80 versus the dollar in the short-term. We have already seen rupee strengthening by 1.5 per cent against the dollar last week, especially after the announcement of request for funding from the IMF by the government, said Mr Rizvi, adding that the rupee could strengthen further once the first tranche of $3-4 billion is received.

However, other researchers and analysts were of the view that the IMF loan would have a limited impact on overall economy.

The cut in development expenditure and tight monetary policy under high interest rate will have a negative impact on economic growth, said Shabir Adil, an economist teaching at a private college. He said slow economic growth would simply add to the already existing unemployment, reduce savings rate and slash public consumption, which runs the economic wheel.

The key-watchers of the economy expressed concern over slowing down of economy and believed that the IMF could be avoided.

Lack of planning and strategy from the government side is responsible for this IMF anti-growth package, said Aamir amid fears that the textile industry would be the worst hit, and hundreds of thousands of people may lose jobs.

He said that with the slowdown of economy, growth would decline and once again trade and current account deficit problem would emerge to grip the economy, forcing the government to keep asking for more IMF help.

After witnessing a balance of payments deficit of $5.7 billion in fiscal year 2008, pressures have continued with deficit of $5.1 billion in July-Oct FY09, mainly driven by widening current account deficit and lack of foreign inflows, said Mr Rizvi.


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## dr.umer

*UAE Firms want to invest in Pakistan​*
25 Nov 2008

ABU DHABI (November 25 2008): Heads and chief executives of two major UAE companies including the Abu Dhabi Fund for Development and Etisalat separately called on President Asif Ali Zardari here on Monday and expressed their keenness to further invest in different fields in Pakistan.

The President appreciated their interest and assured the government's every possible support to them in setting up and expanding their businesses in Pakistan. The President briefed them about the vast business opportunities in Pakistan in diverse fields particularly infrastructure, energy and telecom as well as the government's investment-friendly policies.

Director General Abu Dhabi Fund for Development, Muhammad Saif Al-Suwaidi after his meeting with President Zardari told Pakistani media that the Fund will soon send its high level delegation to Pakistan to explore new avenues for investment in Pakistan. He said the Fund has already financed various projects in Pakistan and was keen to further invest in various development projects.

Chairman Etisalat Muhammad Hassan Omran told media person that their company already has its presence in Pakistan with huge investment in telecom sector including a 26 percent stake in PTCL and plans to invest more in different fields of economy.

He termed his meeting with President Zardari as very productive and fruitful and said the President was appreciative of the company's strong presence in Pakistan and assured full co-operation of the government to Etisalat in its plans to expand their business in the country.


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## dr.umer

*Pakistan seeks 50,000 tons of crude oil on deferred payment from Iran​*
ISLAMABAD (November 25 2008): Pakistan is seeking 50,000 tons of crude oil per day on deferred payment from Iran to overcome oil shortage and secure the rapidly depleting foreign exchange reserves, sources in the Petroleum Ministry told Business Recorder on Monday. This is in addition to a similar request by Pakistan to Iran with respect to furnace oil.

Pakistan is currently importing 16,000 tons per day crude oil from Iran to meet its requirement. Sources said that Pakistan has written a letter to Iran seeking crude oil on deferred payment and if the Iranians agree then the two sides are likely to hold further discussions on the modalities of the deal.

Sources said the government has also held discussions with oil refineries here in Pakistan and they are also ready to take Iranian crude. Sources said that Iran has formally agreed to provide both furnace and crude oil on deferred payment. Iran can provide oil on deferred payment to Pakistan for three months without parliamentary approval; however any period greater than three months would require parliamentary approval.

Oil refineries in Pakistan are currently operating at 60 percent of their total capacity due to shortage of crude oil. Sources said that due to poor rating of the country, foreign banks had refused to open the Letter of Credit for crude oil imports to Pakistan; however after International Monetary Fund (IMF) agreement to provide assistance to Pakistan, banks have opened LC for crude oil import.

These banks are also charging 3 to 4 percent service charges for opening LC for crude oil import. Pakistan imports crude oil from Saudi Arabia, UAE, and Qatar on credit facility of 30 days whereas Kuwait had given extension in credit oil facility from 30 to 60 days.

The extension in credit oil facility from Kuwait would end in December. Pakistan had sought an extension in credit oil facility from these countries through diplomatic channels but had failed to get an extension. Sources said that due to reluctance of opening of LC for crude oil import by foreign banks, the import of crude has been delayed.

Sources maintained that the country had crude stocks sufficient enough for 10 days and Pakistan had received some shipment of crude. They said that Pakistan received one ship of crude oil on Friday and the second ship will arrive on Saturday at Karachi port. Pakistan would be getting another ship of crude oil on November 27 that would help boost oil reserves in the country.


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## dr.umer

*KSE: Banks must stand behind the nervous investor ​*
EDITORIAL (November 25 2008): The inflow of first tranche from the International Monetary Fund to Pakistan is due this week. Hopefully, the floor in place at the Karachi Stock Exchange will be removed by December 1st, 2008, after an off-market special session to clear the weak and over-leverage investors has been held within this week.

Putting the floor in KSE trading was obviously a wrong step. Initially, it was thought to be prudent for it was aimed at giving more time to brokers to collect overdue margins from their clients. However, once the deal was done; the floor removal became hostage to country's depleting forex reserves and weakening rupee.

Several steps have been taken in the ensuing period. Existing loans to brokers have been converted into one-year term loans. Moratorium has been declared on equity mutual funds. Rs 20 billion 'Opportunity-Fund' to repurchase nine government-owned stocks is reportedly in place. And, a Rs 30 billion 'put-option' mechanism has been devised to entice the foreign investors to maintain and even replenish their investment in KSE.

However, is the game plan to save the share values of public sector companies from a downward spiral and ensure a soft lending workable? We have some profound doubts! The basic stress on the market being on account of brokers defaulting in large numbers, is due to lack of liquidity. Providing a Rs 20 billion - Opportunity Fund - to buy after a fall of 15 percent in share index is just not enough.

The plan fails to address the systemic issue. Further, the so-called filters ostensibly aimed at not bailing out the 'big-boys' and letting them stem in their own juice are not workable. They are far more smarter than the regulators. They also have the support of small brokers to cover their tracks. Let us not forget that the "big-boys", have over the years, provided the insurance cover to the rank and file of KSE members in times of difficulties.

Just like any other market, the herd mentality for a sell-off is likely to make the market fall overshoot, ie, dip below the realistic level. In order to overcome a contagion effect, not just Rs 20 billion but at least Rs 75 billion of liquidity needs to be made available through the banking system.

Also, unhindered credit flow has to be ensured, otherwise settlement of trades even on day one of the post-floor bourse cannot happen. The State Bank needs to get the credit flow going and banks need to be effectively persuaded not to lay down harsher and stricter conditions for their loans.

It also must be recognised that foreign investors are similarly facing liquidity constraints and are likely to redeem their investments in Pakistan. Due to internal compliance prohibition, reputable foreign funds cannot sell (with the floor in place) outside the market in the absence of price discovery. At present, these funds' portfolio investment is estimated at nearly $1.7 billion.

After a 50 percent fall in the KSE index with the portfolio size reduced, one cannot rule out a $200-300 million sell-off despite the Put Option offer. This sell-off will put pressure on share values and could drag the price to below realistic levels. The moot question remains about investors, having cash but not the nerve or the confidence, to step forward and buy. This can only happen if the banks stand behind them to take the risk.


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## fatman17

*UAE company keen to set up coalbased power plant in Pakistan * 

ABU DHABI, Nov 25 (APP): Abu Dhabi National Energy Company on Tuesday showed its keenness to invest in Pakistan&#8217;s energy sector, particularly for setting up of a coal&#8209;based power plant in the country, *which has plenty of untapped coal reservoirs*.The interest was shown by Vice President of the company Abdullah Khunji, who called on President Asif Ali Zardari here at the Emirates Palace today. 
Abdullah Khunji during his meeting with the President had an in&#8209;depth discussion on the prospects and opportunities of investment in Pakistan with focus on energy sector. 

President Zardari welcomed the interest shown by the company for investment in Pakistan&#8217;s energy sector and said it will help boost the already existing cooperation, collaboration and joint ventures between the two counties in this vital field. 
He assured the Vice President of Abu Dhabi National Energy Company that the government welcomes the foreign investors to Pakistan and will extend all possible assistance to the company in their endeavors to invest in Pakistan&#8217;s energy sector. 
Abdullah Khunji later told Pakistani media that energy deficient Pakistan is a best market for investment in this sector and the company will soon enter the Pakistani market by launching and implementing its intended projects. 

Foreign Minister Shah Mahmood Qureshi was also present in the meeting. 

Chairman Emirates Investment Group Tariq Al Qasimi also called on President Zardari here at the Emirates Palace and discussed the global as well as the regional economic situation, with focus on the opportunities of potential of investment in Pakistan&#8217;s financial sector. 

The President told the company&#8217;s Chairman that the government welcomes and encourages the foreign investment in diverse fields of economy including energy, agriculture, construction, infrastructure development and banking and financial services sectors. 

Tariq Al Qasimi after the meeting told Pakistani media that their company already has its presence in Pakistan with investment in various projects and was exploring new avenues of investment in agriculture and banking sectors, as these sectors have vast potential of growth and development. 

He said Pakistan and UAE maintain excellent business relations and the official visit of President Zardari and his interaction with various entrepreneurs will help further strengthen these ties. 

Tariq Al Qasimi said the President has encouraged their company to expand its business and investment base in Pakistan for the benefit of two countries. 

Minister for Foreign Affairs Makhdoom Shah Mahmood Qureshi, Advisor on Finance and Economic Affairs Shaukat Tarin, Pakistan&#8217;s Ambassador to UAE Khurshid Ahmad Junejo and Ambassador at large Javed Malik were present in the meeting.


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## Neo

*Pakistan needs $13.4 bln external financing: IMF ​*
Tuesday, November 25, 2008 

NEW YORK: Pakistan's gross external financing requirement for the 2008/09 (July-June) fiscal year is $13.4 billion, a senior International Monetary Fund (IMF) official said on Tuesday.

The IMF will provide $4.7 billion of that total, Juan Carlos di Tata, senior adviser in the IMF's Middle East and Central Asia Department, told a news conference.

The gross external financing requirement for the 2009/10 fiscal year is estimated at $12.2 billion, Tata said.


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## Neo

*IMF condition may jeopardise next tranche ​* 
Tuesday, November 25, 2008

ISLAMABAD: The most difficult condition attached by the IMF for its $7.6 billion loan for Pakistan will be achieving net zero borrowing from the central bank for the budgetary purposes in the current fiscal year, which may prove potential threat to jeopardize second or third tranche from the Fund, a senior official said on Monday. 

All prior action taken by the PPP led government by increasing 2 per cent discount rates, cutting down expenditures and jacking up envisaged tax collection target helped Islamabad for moving towards the IMF loan under the Standby Arrangement (SBA).

Under the IMFs prescription for the ailing economy of Pakistan, the government has accepted the Funds condition to increase discount rate by 2 per cent and reducing expenditures mainly on development side, which would result into slowing down the economic activities and massive unemployment would further aggravate miseries of more people living below the poverty line on short term basis till end June 2010. 

The IMF viewed that the depreciation of rupee against dollar as well as higher inflationary pressure in the current fiscal would enable the tax authorities to increase revenues by Rs 110 billion from earlier envisaged target of Rs 1,250 billion to Rs 1,360 billion for 2008-09.

The most difficult condition for the incumbent regime to comply will be achieving net zero borrowing from the central bank for budgetary purposes in the current fiscal year, said the official sources who knew about attached conditionalities for obtaining the Funds loan here on Monday night.

The government has accepted that the net borrowing from the central bank for budgetary purposes will be brought to zero. It is simply impossible to achieve where there is Balance of Payment (BoP) deficit, said the official.

Pakistan will get $4.5 billion during the current fiscal year from the IMF, which will simply increase foreign currency reserves of the State Bank of Pakistan (SBP) and this money will not increase money supply.

The SBP has envisaged target to increase money supply growth by 15 per cent as against a nominal GDP growth of over 27 per cent. By definition, this level of growth in money supply is highly deflationary in its nature and this level of money supply will not be able to finance current level of economic activities.

The Net Foreign Assets (NFA) will continue to be negative and in order to achieve money supply target of the year, the Net Domestic Assets (NDA) has to increase in the range of Rs900 to Rs940 billion. During the last fiscal year, the NDA increased by Rs935 billion because Net Foreign Assets was negative to the extent of Rs300 billion. Pakistan had faced BoP deficit in the last financial year 2007-08.

After taking into account the private sector credit, which is not expected to increase more than Rs400 billion this year, there will be over Rs500 billion available for the government sector. With Rs500 billion, the central bank has to earmarked credit for public sector enterprises.

It is estimated that Rs200 to Rs300 billion net borrowing has to come from Treasury Bills (TBs) auctions in which the SBP failed to finance maturing TBs and as such the government and the central bank, the pressure will be increased massively. 

There is no difference in money market this year and the SBP will be facing tremendous difficulties in raising cash from the market for the maturity of TBs this year to generate Rs200 to Rs300 billion from auctions. It is the most difficult conditions to meet, which possessed potential to jeopardize second or third tranche from the IMF, said the sources.


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## Neo

* Online monitoring of exchange firms by year-end: SBP official ​* 
Tuesday, November 25, 2008

KARACHI: All foreign exchange transactions will be monitored by State Bank of Pakistan (SBP) in real time once an online link is established with foreign exchange companies, SBP Exchange Policy Director Syed Samar Hasnain said on Monday. 

Work on the system, which will help central bank ensure effective compliance of its guidelines, is expected to be completed by December 31, 2008, he told The News. 

In the first phase all exchange companies were required to link their branches with respective head offices, he said, adding now work is underway to connect the head offices with the central bank. 

Presently, foreign exchange firms submit weekly reports to SBP about their business transactions and only way to verify the record is through site inspections. The conduct of the central bank has come under scrutiny since a scam was unearthed a few weeks back in which an exchange company was found to be involved in carrying out undocumented transactions. 

Hasnain says there is no way to check off-record dealings of either the companies or individuals. State bank can take action only when violations are detected in the record keeping and reporting of firms registered with it.

Central bank also does not have the mandate to conduct raids to curb the havala business that is used to make payments in another country without physical transfer of cash, he said. He recalled that foreign exchange companies were allowed in 2002 to deal in remittances sent home by overseas Pakistanis with an aim to introduce financial discipline and proper corporate culture in the business. 

We intended to provide an alternative of the havala channel, which is quick and cheap, he said, adding that low-administrative expenditure allows exchange companies to offer that substitute.

About negative perceptions surrounding the foreign exchange companies, he said, these firms cannot be held responsible for depletion of countrys foreign currency reserves. Exchange companies are not allowed to make payments against imports. They can only deal with individuals. 

Between Jan-Oct 2008, $1.5 billion were remitted to Pakistan through the exchange firms, he said, out of which one billion dollars were sold in inter-bank market. As a policy matter, exchange firms have to sell surplus foreign exchange stock to banks.

Referring to apprehensions pertaining to authenticity of foreign exchange companies, he said people using the channel should ensure that they are dealing with SBP registered companies. They should also ask for computer generated receipts. Nevertheless, he said hands of SBP are still tide when it comes to effectively manage the exchange companies as it can not impose monetary penalties against their misconduct. 

The overriding effect of Protection of Economic Reforms Act 1992 over Foreign Exchange Regulations Act 1947 should also be done away with, he said, highlighting the anomaly in 1992 act which provides complete freedom to bring, hold, sell and transfer foreign exchange within or outside Pakistan.


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## Neo

*Rupee firms ​* 
Tuesday, November 25, 2008

KARACHI: The Pakistani rupee ended firmer on Monday on expectation the International Monetary Fund (IMF) will approve a $7.6 billion stand-by arrangement for the country, dealers said. IMF officials are due to meet in Washington on Monday to discuss a stand-by arrangement for Pakistan, according to the Funds Web site.

The rupee was quoted closing at 78.90/79.00 to the dollar compared with Saturdays close of 79.06/16. The rupee has been strengthening slowly for the past few days following the decision to enter an IMF programme, said a currency dealer. The loan should help the rupee stabilise, at least in the short term, after a sharp depreciation this year as a balance of payments crisis developed, dealers said.

A first tranche from the IMF is expected to arrive by the end of the month. Government officials said it was likely to be between $3 billion and $3.5 billion.The rupee has lost 22 per cent against the dollar this year. Pakistans foreign exchange reserves fell $100 million to $6.64 billion in the week that ended on Nov 15, the central bank said last week.


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## Neo

*Fitch affirms ratings of 4 Pakistani banks ​* 
Tuesday, November 25, 2008

NEW YORK: Fitch Ratings affirmed the ratings of the following four Pakistani banks on Monday.

- MCB Bank Limited (MCB): Individual rating affirmed at D, Support affirmed at 5;

- National Bank of Pakistan (NBP): Individual rating affirmed at D, Support affirmed at 5;

- United Bank Limited (UBL): Individual rating affirmed at D, Support affirmed at 5; and

- Habib Bank Limited (HBL): Individual rating affirmed at D/E, Support affirmed at 5.

The Individual ratings of these banks reflect their modest balance sheet strength in an international context, and generally good profitability. The ratings also factor the very volatile operating environment in Pakistan, which poses significant challenges and risks. The agency expects the prevailing extremely weak economic conditions in Pakistan to affect the financial profile of these banks. Although their Individual ratings, at the low end of Fitchs scale, substantially capture these risks, the agency also notes that their ratings may still face a downward bias, should the economic weakening cause significant deterioration to their financial profiles.

MCB has the strongest financial profile among Pakistani banks, as reflected by its adequate capitalization (equity/assets 11.1% at end-9M08), low net NPL/equity ratio (2.6% at end-9M08) and strong profitability (ROA of 3.6 per cent in 9M08). However, given the very weak domestic economy, MCBs financial profile is also expected to come under pressure, with any significant weakening in either asset quality or capitalisation likely to exert downward pressure on the rating.

NBP, the largest bank in Pakistan, could see its rating face downward pressure should its already weak asset quality (gross NPL ratio of 11.5 per cent at end-9M08) deteriorate substantially; which is a possibility, given its broader exposure to the economy and to directed lending. While NBP is well capitalised (capital adequacy ratio (CAR) of 17.8 per cent at end-9M08) Fitch notes that a high capital buffer is necessary, given Pakistans very volatile operating environment and bleak economic outlook.

UBLs gross NPL ratio has been steady, in the 6pc- 7pc range (gross NPL ratio of 6.5pc at end-9M08) since 2005. However given the banks sizable consumer lending portfolio (15pc of domestic loans at end-9M08) and rapid loan growth since 2004 (annual loan growth rate range: 20pc - 35pc), the downside risks on the rating could stem from both a deterioration in asset quality and any weakening in its capitalisation. UBLs capitalization (CAR of 11.5pc at 9M08) is considered modest in light of its limited risk absorption capacity, amid a very challenging operating environment.

HBLs Individual rating is already at a very low level given its generally weaker than peer, albeit improved, financial profile (9M08: gross NPL ratio of 6.9pc, equity/assets 8.8pc and ROA of 1.9pc). Fitchs Support rating for all four banks is at 5, the lowest on the agencys scale.


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## Neo

*Govt cuts down HEC grant by Rs6.5bn in six months ​* 
Tuesday, November 25, 2008

ISLAMABAD: All ongoing projects of the Higher Education Commission (HEC), including up-gradation of existing universities as well as around 3,000 students studying abroad on scholarships, might be affected owing to severe financial crisis being faced by the country, as the government cut down its envisaged allocations by Rs6.5 billion in the last two quarters, it is learnt.

The Gilani government is forced to cut down its expenditure side and the easy way for moving ahead is to slash down development expenditures. The public sector development programme (PSDP) is likely to cut down by Rs100-150 billion in the current fiscal year in order to meet the IMF demand for curtailing ballooning expenditure side for meeting envisaged fiscal deficit target.

The PPP led government cut down Rs3 billion for the HEC during the last quarter (April-June) of the fiscal year 2007-08 and this trend continued to persist by cutting down Rs3.5 billion in the first quarter (July-Sept) period of the ongoing financial year 2008-09.

Total deficit in funds grant went up to Rs 6.5 billion for the last two consecutive quarters and the situation has reached to the extent where contractors were planning to approach the higher judiciary for seeking compensations if their funds were not released immediately, official sources told The News here on Monday.

Pakistan had made commitments to jack up allocation for the education sector up to 4 per cent of the GDP in years ahead but Islamabad is moving other way round under which allocation for education is decreasing in the GDP terms.

The latest PRSP report of the finance ministry shows that the total spending on education was less than 2 per cent of the GDP in the last financial year, sources said.There is strong feeling within the ranks of the government to provide all-out financial resources to the HEC which were meant for 3,000 students studying abroad on scholarships for doing their PhDs in their respective fields, said the official sources and added but there was also one view that the previous government launched HEC projects without well-thought-out strategy and these projects needed to be rationalised in order to avoid wastage of money.

But the official sources also pointed out that if the government cut down allocations for the universities then the students studying abroad on scholarship could not be utilised in the country on their return and Pakistan would loose an opportunity to transform its economy on knowledge-based foundation.

The government has allocated Rs18 billion for development projects in the HEC for the current fiscal year 2008-09 and Rs15 billion for current expenditures of the commission in order to meet non-development expenditures, including salaries of professors and other working staff in the institutions falling under the HEC.

The government has not increased any amount for the HEC in the current fiscal year as it envisaged Rs18 billion allocations in FY2008-09 compared to the same amount of the previous fiscal year, said the official sources.

When HEC executive-director Sohail Naqvi was asked about financial difficulties being faced by the commission, he told this scribe that the HEC has completed all procedural requirements by submitting cash plans to the finance ministry and they are waiting for release of the allocated funds in the ongoing quarter (Oct-Dec) period of the current fiscal year.

We dont know when the government will release the allocated amount but it should be done within a few days, he said and added the higher education should be priority of the government. There were 397 development schemes under the PSDP head whereas throw forward touched new heights by touching Rs282.835 billion on June 30, 2007.


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## Neo

*Qadirpur gas field not to be privatised: Naveed ​* 
Tuesday, November 25, 2008

ISLAMABAD: Minister for Privatisation Syed Naveed Qamar on Monday said that the Qadirpur gas field would not be privatised at present.

The minister while talking to the Voice of America (VoA) said the privatisation programme is a policy of the government in which different aspect are to be kept in view. It is not ones personal decision but there are so many aspects and factors, which are taken into consideration while making list of the assets to be privatised. He said the interest of the country is always supreme in such policies besides the potential of the subject unit, adding that, the performance of any public sector entity which can be improved by a change in the management or privatisation is taken into account for this purpose.

The factor of profitability of the entity is not instrumental in privatisation policy but, in fact it carries immense importance as to what possible benefits would be achieved through privatisation for the progress and betterment of the economy, he said. 

Qamar said there are many units whose capacity and performance could significantly improve if they are privatised, adding that the performance depends on unit to unit. Responding to a question, he said, I want to make it clear that at present we are not going to privatise Qadirpur gas field. There are many issues involved in it. Besides there is an acute shortage of gas in Pakistan, he added. He said different options are under consideration in order to enhance the supply and production of gas in the country and a private sector company could help in achieving this.


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## Neo

*IDEAS 2008: Hotel room occupancy touches 90%​*
KARACHI: The hotel occupancy rate has spiked to 90 percent thanks to the mega event IDEAS 2008, which has helped the hotel industry to regain its business suffering the after shocks of the horrific incident of Marriot Hotel bomb blast on 20 September 2008.

IDEAS 2008 has proved to be a good omen for the industry as hotel industry is reaping the benefits of the event, an official of Marriott Karachi told Daily Times.

The room occupancy dropped to 25 to 30 percent after Marriott bomb blast on 20 September but the events like Expo Pakistan and this exhibition have played a key role for the industry to regain its position, official added.

The exhibition, with the participation of 162 defence manufacturing organisations from 58 countries, started from Monday 24 November 2008.

The five-day IDEAS 2008 event aims at bringing together local and international arms manufacturers and buyers, and exploring possibilities for cooperation and joint ventures in the field of defence production.

Industry sources said that the hotels were booked before the five-day mega event commenced. The hotels were witnessing a sharp drop in the room occupancy from September as foreigners, especially from the European countries, postponed their visits following the law and order situation of the country.

Hotel business relies heavily on the political and economic situation of the country and any act of terrorism or violence makes a direct impact on the hotel industry, an official of another hotel commented.

Defence Export Promotion Organisation (DEPO) Director General, Major General Muhammad Farooq, while briefing the media about the positive impacts of the exhibition said, this exhibition has benefited hotel industry the most, as almost all the hotels of the city were booked due to the event.


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## Neo

*KESC to acquire 192 MW gas turbine power plant​*
KARACHI: The Karachi Electric Supply Company (KESC) is acquiring a 192 MW gas turbine power plant and has signed an award of contracts with counterparts.

According to a Karachi Stock Exchange notice KSE/N-7705 dated November 24, the KESC has executed supply and services contracts for a new fast track gas engine power plant project with M/s GE Jenbacher Gmbh and Co OHG Achenseestrabe, Austria and M/s Orient Energy Systems, Pakistan respectively on November 22 in Dubai.

The project will generate approximately 192 MW at the Korangi Gas Turbine Power Stations (KGTPS) and Site Gas Turbine Power Stations (SGTPS).

Earlier, the utility took over commercial operations of the first phase of a 220 MW plant at the Korangi Thermal Power Station (KTPS) by linking two 28 MW power plants to KESCs grid taking use of the non-functional KTPS plant transformer. This added a total of 96 MW to the KESC grid.


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## Neo

*Pakistan to add $1bn in reserves during December: official ​* 
ISLAMABAD: November 25, 2008: Pakistan would be able to avail $ 1 billion from other than the IMF donors including $ 500 million from World Bank and $ 450 million from Asian Development Bank, Aaj TV reported.

Finance Ministry would be able to add $ 1 billion in our reserves in addition to the IMF's $ 3.1 billion to be reaching here within next 24 hours, as transaction takes almost 48 hours to complete after Fund Board approval, says a Finance Ministry official on condition of anonymity.


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## Neo

*Acquisition of NIB right shares: Country receives $97.5 million from Temasek Singapore​* 
KARACHI (November 25 2008): Country has received some $97.5 million sent by "Temasek Singapore" for acquisition of NIB Bank's right shares under its plan to raise a paid-up capital of the bank up to Rs 40 billion, banking sources told Business Recorder on Monday.

They said that NIB Bank is going to launch Initial Public Offer (IPO) of right shares for the existing shareholders from November 27 to December 28, 2008. However, NIB's holding group Temasek Holding Company Singapore is expecting poor response from the small shareholders in the wake of current worst situation in stock market. Therefore, Temasek has sent some $97.5 million in advance for acquisition of the right shares, which received in interbank market, they added.

NIB Bank had announced on October 24 to issue right shares worth Rs 12 billion (approximately some $152 million), which would be offered to all existing shareholders at the ratio of 42.198 right shares for every 100 shares held at the close of business on November 19, 2008, and would be issued at a subscription price of Rs 10 per share.

The issuance of right shares was approved by the Board of Directors of NIB Bank during its 27th Board Meeting held on October 24, 2008. The basic aim of the move is to increase NIB's paid-up capital up to Rs 40 billion for the support and growth of business, besides making NIB top bank in terms of paid-up capital in the country.

Sources said that at present NIB's share's market price stood at Rs 8-9 per share, while in few cases it is also available at lower price than the market. It is excepted majority of small shareholders would not accept NIB's right shares offer due to the prevailing economic situation and it is most likely that NIB holding company, Temasek, would purchase 100 per cent of the right shares being issued, they said.

"Therefore, Temasek (the major shareholder of NIB) fulfilling its commitment has sent first tranche of some $97.5 million for the subscription of the right shares if are not subscribed by other shareholders," sources said.

Sources said remaining amount of some $55 million is expected to be received after the IPO, probably in January 2009. The purpose of the Right Issue is to bolster NIB's capital to meet the challenges and opportunities it likely face during the next few years, they added.

The Right Issue would also enable the bank to meet the SBP's current and future's capital targets. Sources said that NIB had already increased its capital base to Rs 18 billion in the third quarter of 2007 through a 555 per cent Right Issue to acquire PICIC and its subsidiaries.

It is to be mentioned here that Fullerton Financial Holdings owned NIB 63.15 percent shares of NIB, which is a 100 per cent subsidiary of Temasek Holdings of Singapore, an investment company with global investments of $134 billion in diverse companies in financial services, real estate, transportation and logistics, telecommunications, media, health care, education and technology.


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## Neo

*Punjab to adopt results-oriented approach: 19 MoUs inked with China, says Shahbaz​* 
LAHORE (November 25 2008): Punjab Chief Minister Mian Mohammad Shahbaz Sharif on Monday announced to adopt results oriented approach to materialise 19 MoUs signed in different fields including Agriculture, Livestock, Power, Information Technology, Transport Energy, etc, for joint venture during his recent visit to China, which he described as highly successful.

Addressing a news conference, here Shahbaz said that he is holding a 'debriefing session' on Wednesday (November 26) during which various committees would be formed that would pursue the MoUs signed with different Chinese companies/organisations for initiating joint ventures. He also said that 'Punjab-China Desk' is being established to promote Chinese investment. Pakistan Consul General in Shanghai Zafaruddin Mahmood will head this Desk.

Shahbaz said that during this visit, an MoU for co-operation on Chinese experience on BT Cotton was signed, besides three MoUs on power generation. He added that DG LDA who accompanied him along with other delegation members is currently in China to review the Chinese experience in transport sector so that public transport system in Punjab could also be improved taking advantage of Chinese experience.


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## Neo

*Hinopak to export buses from Pakistan​*
KARACHI (November 25 2008): Hinopak Motors Limited is the trusted name of the truck and bus manufacturing industry of Pakistan and providing complete transportation solutions to the transporters of Pakistan. Hinopak is also Pakistan's first automobile company to export its buses to Middle East and African countries in early 90s'.

It is certainly proud to mention that, Hinopak buses once again have been selected by Hino distributors of Middle East and African countries. In this regard, recently a meeting has been organised by Hinopak Motors Limited with Hino distributors from Algeria, Jordan, Kuwait, Lebanon, Qatar, Saudi Arabia, and South Africa.

The objective of the meeting was to finalise the specifications of Hino buses as per the requirements of Hino distributors of Middle East and Africa. The participants of the meeting showed their full confidence on the capability of Hinopak and praised the quality workmanship of Hino bus bodies manufactured by Hinopak. We hope this export business will take us to the new horizon and will also support to enhance the image of Pakistan.-PR


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## Neo

*Special economic zone to be set up in Thar: Salman​*
ISLAMABAD (November 25 2008): Deputy Chairman Planning Commission Salman Faruqui said on Monday that Pakistan, by harnessing its water and coal resources, would not only be able to meet its domestic need but also be able to export energy to India.

Addressing the inaugural session of two-day conference on "Interdependence between Energy Policy and other Sectoral Policies" organised by Saarc Energy Centre here, Farooqi said that the government is planning to set up special economic zone in Thar area so that in future surplus energy from Thar coal reserves might be used in the close vicinity without incurring transmission line losses.

In this regard, he said that government has already constituted the Thar Coal Board. Deputy chairman said that Pakistan is working on how to reduce dependence on imported fuel and to increase reliance on domestic resources like water and coal reserves. He said that last year 11 billion dollars were spent on import of oil, which was equal to 65 percent of the total export of Pakistan.

This was one of the major reasons that Pakistan had to go to IMF for financial assistance, he added. Salman Faruqui underlined the need for bringing together policy planners from the energy, environment, health and transportation sectors from all Saarc member states to deliberate and discuss recent developments in their respective countries.

He said that Saarc countries need sufficient energy, good health, pollution free environment and better transport system, and to address all these issues, appropriate integration and correlation was required at policy making level.-PR


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## Neo

*Move to IMF - first option?​* 
ARTICLE (November 25 2008): The fiscal 2007-08 [FY-08] witnessed historical current account deficit of $14 billion. This was mainly because of unprecedented trade deficit as the imports were almost double of our exports. The trade deficit was partly offset by the workers' remittances exceeding $6 billion and partly from capital/foreign investment inflows. The overall balance of payments deficit was $5.8 billion.

The situation has not taken any positive turn during the first four months of the current fiscal 2008-09 [FY-09]. The government did not act promptly for tackling the critical situation in the external sector. The movement has started recently with the official visits of the President to China and Saudi Arabia. As usual, these visits have been termed very successful but the formal commitments given by these friends have not been made public. More emphasis, however, seems on approaching the International Monetary Fund [IMF] for cash funding.

Pakistan's external debt currently is over $44 billion and if we borrow additional $10 billion during the current fiscal, it will rise to $54 billion. This will be only one year arrangement. What about the coming years? Is there any medium/long term planning? We have to construct mega dams in the next one decade for which too, we shall have to borrow?

How deep shall we bury the nation under the debt? Do we not have an option other than borrowing and that too from the stringent lender IMF?We do have at least for the current fiscal. The prices of petroleum have halved during the recent weeks. During FY-08, we spent $4.318 billion and $6.177 billion on the import of crude/finished petroleum imports respectively. The reduction in the prices will cut import bill by $5 billion approximately.

There has been lot of talk about deferred payment [gratis] supply of crude oil by Saudi Arabia. It may be mentioned here that we import crude petroleum oil from three sources: Saudi Arabia, Iran and Abu Dhabi. Even if Saudi Arabia agrees to provide crude on deferred payment [or gratis] basis covering our requirements [of at least two years], it will not be prudent to fall back upon a single source leaving the other two.

It is not known how much crude comes from Saudi Arabia; let us take it @ 50 per cent. If an agreement is finally reached with Saudi Arabia, it will cut the import bill by other $2 billion.

The import of palm oil during FY-08 stood at $1.4 billion. The prices of this commodity have also reduced substantially in the international market. The import bill is expected to be cut by approximately $0.7 billion on this account. The government/State Bank of Pakistan [SBP] had recently raised import duties/placed 100 percent margin requirements on opening of letters of credit for import of some specified items with a view to curtailing imports.

SBP, however, did not place any such restriction on import of these items on "contract" basis. Thus the importers having influence or resources abroad are making imports without letters of credit while the cost of imports against letters of credit is inflating because of additional borrowings for placement with the banks as "margin. The proper course shall, therefore, be to temporarily place complete ban on the import of non-essential items after properly identifying them.

The telecom equipment alone, including mobile phones, ate away $1.3 billion during FY-08. Besides heavy amounts were spent on cars/cosmetics etc. It will not make much difference if import of such items is banned for a year or so. A foreign exchange savings of about $9-10 billion can be secured in the above manner during the current fiscal.

The import bill may even further be cut with the improvement in the electric generation and supply. It is believed that many power units were kept inoperative because the generating companies did not have funds to purchase the high priced fuel. With the lessening of fuel cost, these idle units will come into operation curtailing the bill on the import of power-generating machinery as well as fuel cost which these units consume. In FY-08, over $1 billion was spent on the import of power generating machinery. The workers' remittances are on the increase. They will bring additional over $1 billion during the current fiscal.

Thus instead of acquiring harshly conditioned IMF loan, the preferable course for the government would be to seek debt rescheduling for further three years or so. This could save another $3 billion, provide some solace for the next 3 years and will also not add to our external debt.

These measures can pull us out of FY-09 without knocking at IMF's doors and becoming [perhaps] its sole customer at the current moment. The approach to the IMF will prove to be disastrous as one of the pink pills of its treatment is believed to be 2 per cent raise in the interest rate at a moment when our manufacturing sector - which remained neglected during the Musharraf era - is groaning under the present SBP Governor's failed monetary tightening policies [in the garb of controlling inflation] which are adding a lot to the miseries of the sector in the form of increase in the "cost of doing business" rendering them uncompetitive in the international market. But seeking help from the IMF seems to be sole option/compulsion of the rulers.

These alternatives are not the perpetual remedies. The long term planning may have to commence forthwith taking into account the following aspects as well: There is a strong need to develop mass transit system for big cities of the country with a view to saving the expenditure on fuel/vehicle imports. The Sindh Governor had been endeavouring for the revival of Karachi Circular Railway but has not been successful [perhaps] because of stiff resistance from strong transport mafia.

As an initial stage of developing the mass transit in the city, the project needs to be promptly taken in hand. Like the northern areas, the government also needs to establish its writ over the strong mafia pockets existing in the big cities.

The huge coal reserves in Thar (Sindh) are obviously not meant to be formed part of the history for the coming generations. They are for utilisation in the country and also for exports. It seems that the provincial government of Sindh and the federal government are still busy in establishing their respective "writs" over these reserves even in the difficult time the country is passing through.

This entangle must end forthwith and the coal deposits should be exploited and used not only for generating electricity, conversion into gas for use by the transport but also for exports so as to ease pressure on foreign exchange resources. The purpose will not be served unless matter is tackled on "war footing".

The National Logistic Cell [NLC] was set up in the Zia-ul-Haq era primarily to transport huge quantities of imported wheat to up-country. Later on, it assumed permanent feature at the cost of Pakistan Railways and the goods transport eventually moved to the NLC from the Railways, This was a costly proposition in terms of heavy foreign exchange expenditure on import of fuel and vehicles/spare parts.

But our prodigal rulers were not to worry. The current vulnerable foreign exchange situation warrants that Railways' goods transport system should be fully revived promptly with efficient handling of the private sector cargo. This will result in a lot of foreign exchange savings through reduction in fuel/ vehicles and spares import bill.

An English daily on October 17, 2008 carried Kuldip Nayar's article saying that the corrupt Indian bureaucrats/politicians and businessmen etc have accumulated a holding of $1,456 billion outside the country. About a decade back, there has been a lot of talk about the overseas holdings of the Pakistani feudals/corrupt bureaucrats and industrialists etc and the amount was put at $100 billion. During the last one decade of rampant corruption in all walks of life that estimate may have at least doubled now.

Can an appeal to these 'wealth grabbers' to transfer a part of their overseas wealth - say - up to $25-30 billion to Pakistan to let the country tide over the present difficult situation prove effective? These conscienceless "wealth grabbers" are unlikely to heed the nation's call. However, FIA's current efforts against such people, if they are not politicised with the passage of time as generally happens in our country, may yield some results.


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## Neo

*Pakistan to revise downward macroeconomic indicators ​* 
Wednesday, November 26, 2008

ISLAMABAD: Pakistan and the International Monetary Fund (IMF) have agreed to revise downward all projected macroeconomic indicators for the current fiscal year.

Pakistan will revise downward the real GDP growth rate, inflation, fiscal deficit and current account deficit besides moving ahead with managed float exchange regime over the next 23 months for obtaining $7.6 billion loan from the Fund under the Standby Arrangement, the IMF states on Tuesday.

Under the agreed macroeconomic indicators between Islamabad and the IMF, Pakistans external debt is bound to rise sharply and will touch 31.4 per cent of the GDP in fiscal year 2008-09 against 26.5 per cent in last financial year 2007-08. The external debt will further go up to 33.2 per cent of GDP by 2009-2010.

The projected real GDP growth rate has been lowered from 5.5 per cent to 3.4 per cent during the fiscal year 2008-09, which is estimated to go up to 5 per cent of the GDP by 2009-2010. The inflation target has envisaged at 23 per cent during the current fiscal year 2008-09 from earlier set target of 12 per cent. The average CPI based inflation will be brought down to 13 per cent by 2009-2010.

The Gross National Saving in percentage of GDP is estimated at 13.5 per cent for 2008-09 and 15.7 per cent for 2009-2010. The Gross Capital formation in percentage of GDP is projected at 20 per cent for 2008-09 and 21.3 per cent for 2009-2010.

Pakistan and the IMF also agreed to scale down fiscal deficit target from 7.4 per cent of the GDP in 2007-08 to 4.2 per cent of the GDP for the current fiscal year. 

Both sides also envisaged to scale down the fiscal deficit further to 3.3 per cent of the GDP for the next fiscal year 2009-2010.

The overall debt in percentage of GDP will be hovering around 54.6 per cent by 2008-09 which will be slightly decreased to 52.4 per cent by 2009-2010. It means that the domestic debt will be decreased while external debt will rise in the next fiscal year.

Pakistan and the IMF also projected to curtail Money Growth (M2) in the current fiscal year to 10.8 per cent from 15 per cent in 2007-08. The money supply growth is estimated to grow by 15 per cent in next fiscal year 2009-2010.

Both the IMF and Pakistan also agreed to revise projections for the current account deficit (CAD) for the current fiscal year, which will remain hovering around 6.4 per cent of the GDP from 8.4 per cent of the GDP in previous fiscal year. The CAD has been projected at 5.7 per cent of the GDP by the next fiscal year 2009-2010.

Pakistan and IMF agreed to maintain foreign currency reserves at the level of $8.591 billion by end June 30, 2009 which will be jacked up to $11.291 billion on June 30, 2010.

The IMFs Executive Board has approved a $7.6 billion loan for Pakistan to support its program to stabilize and rebuild the economy while expanding its social safety net to protect the poor.

The 23-month Stand-By loan will enable the government to implement a stabilization program that envisages a significant tightening of fiscal and monetary policies to bring down inflation and reduce the external current account deficit to more sustainable levels. The program seeks to address current macroeconomic imbalances while protecting the poor and preserving social stability in the South Asian country of 170 million people.

By providing large financial support to Pakistan, the IMF is sending a strong signal to the donor community about the countrys improved macroeconomic prospects, said IMF Deputy Managing Director Takatoshi Kato.

The Governments program has two objectives: first, to restore overall economic stability and confidence through a tightening of macroeconomic policies, and second, to do so in a manner that ensures social stability and adequate support for the poor during the adjustment process, said Juan Carlos Di Tata, the IMF mission chief to Pakistan.

The Pakistan authorities have already taken some difficult steps to achieve these objectives: energy subsidies have been cut and the interest rate has been increased to tighten monetary policy. The authorities program for the coming 24 months envisages a number of additional steps.

The State Bank Of Pakistan (SBP) will act on monetary policy to build its international reserves, bring down inflation to 6 percent in 2010, and eliminate central bank financing of the government. The program includes measures to improve monetary management and enhance the SBPs bank resolution capacity, and avoid the use of public resources to support the stock market.

Expenditure on the social safety net will be increased to protect the poor through both cash transfers and targeted electricity subsidies. The fiscal program for 2008/09 envisages an increase in spending on the social safety net of 0.6 percentage points of GDP to 0.9 percent of GDP. Pakistan will also work with the World Bank to prepare a more comprehensive and better targeted social safety net program.

The financing from the IMF will help to ease the path of adjustment and will provide a strong signal of support to the international community. Of the $7.6 billion loan, $3.1 billion will be made available by the IMF immediately to strengthen the reserve position. And the regular monitoring of the economy by the IMF will show how the macroeconomic objectives set by the Government are being met and whether they need to be adjusted in the light of changing circumstances. 

It is important to point out that the program-and its conditionality-is based on the targets and measures that the authorities have themselves set for the next two years. The IMF is convinced that the best implemented programs are the ones that are home grown and fully owned by the country, Di Tata said. 

Alongside the IMFs financial support, there is an urgent need to mobilize additional donor support to strengthen Pakistans resilience to potential shocks, help finance the expanded social safety net, and allow for higher spending on development programs. The Fund stands ready to participate in any donor meeting to provide the economic and financial analysis that could underpin expanded support.

Success of the program could be affected by a number of risks. They arise from security and implementation uncertainties, a more severe-than-anticipated slowdown in economic activity in trading partners, and lower-than-expected private capital inflows. Sustained and forceful implementation will be key to the success of the program, Di Tata stated.


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## Neo

*$3.1bn to be immediately available from IMF ​* 
Wednesday, November 26, 2008

WASHINGTON: The Executive Board of the International Monetary Fund (IMF) has approved a $7.6 billion program for Pakistan with $3.1 billion becoming immediately available to the key South Asian country striving for economic recovery in the backdrop of soaring fuel prices, regional situation and global financial crunch.

Upon the Boards approval, an amount equivalent to SDR 2.067 billion (about US$3.1 billion) becomes immediately available to Pakistan, and the remaining amount will be phased in, subject to quarterly reviews, the Fund said in a statement Monday evening while announcing approval of the 23-month Stand-By Arrangement.

Takatoshi Kato, Deputy Managing Director and Acting Chairman of the Executive Board, said by providing large financial support to Pakistan, IMF is sending a strong signal to the donor community about the countrys improved macroeconomic prospects.

Pakistans ambassador to the United States Husain Haqqani described the IMFs approval of the program as a positive development in terms of the countrys enhancing international confidence in its economic potential. 

In his remarks, Takatoshi Kato said the Pakistani economy was buffeted by large shocks during FY2007/08, including adverse security developments, higher oil and food import prices, and the global financial turmoil.


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## Neo

* Zardari urges expats in UAE to invest in Pakistan ​* 
Wednesday, November 26, 2008

ABU DHABI: President Asif Ali Zardari has invited the UAE-based Pakistani businessmen to invest in their homeland and has offered special incentives and a preferential treatment.

The government will prefer Pakistani entrepreneurs to come and invest in various joint venture projects in Pakistan, he said in an interaction with the Pakistani business community on Monday night.

The President urged businessmen to take advantage of the new democratic governments investment-friendly policies by investing their capital, to help achieve increased socio-economic development and prosperity.

He said Pakistan, with a population of 180 million people besides a large market, offers vast opportunities of investment in energy, financial services, housing, construction, agriculture, oil and gas, telecom and infrastructure development, with great potential in various untapped areas.

Zardari said with complete restoration of democracy in the country, new government was formulating and implementing a number of policies which will help restore confidence of local and foreign investors in the Pakistani market. 

He said the government was focusing on the improvement of law and order situation in the country, assuring businessmen that their capital will be fully protected. President Zardari said the government fully believes in the policies of liberalisation and deregulation and all the sectors of economy are open for investment.

He referred to the ongoing privatisation process in the country and said it was the PPP government which initiated the process in 1988 and all the incumbent governments continued to follow that policy, which led to major investments in diverse fields.

The President said policy of privatisation was aimed at minimising the governments role and encouraging private sector to come forward and play their effective role in the countrys industrial development.

Zardari mentioned current economic crisis in Pakistan and said wrong and short-term policies of the previous non-democratic regime led to this situation, adding, however the present democratic dispensation was taking all out measures to put the countrys economy back on track.


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## Neo

*Fiscal deficit to be reduced to 3.3 percent in 2009-10​*
** End to energy subsidies and revenue mobilisation through tax policy would help achieve this
* IMF to help Pakistan gain further support from other IFIs​*
ISLAMABAD: International Monetary Fund (IMF) has said that fiscal deficit would be brought down to 4.2 percent of Gross Domestic Product (GDP) against the budgetary target of 4.7 percent in the current fiscal year 2008-09, similarly, the deficit would be further reduced to 3.3 percent of GDP in next fiscal year 2009-10.

This fiscal adjustment will be achieved by phasing out energy subsidies and strengthening revenue mobilisation through tax policy and administration. The reduction in expenditures will create room to increase spending on the social safety net, according to an IMF Executive Board assessment.

The IMF's Executive Board has approved a $7.6 billion loan for Pakistan to support its programme to stabilise and rebuild the economy while expanding its social safety net to protect the poor.

The 23-month stand-by loan will enable the government to implement a stabilisation programme that envisages a significant tightening of fiscal and monetary policies to bring down inflation and reduce the external current account deficit to more sustainable levels. The programme seeks to address current macroeconomic imbalances while protecting the poor and preserving social stability. "By providing large financial support to Pakistan, the IMF is sending a strong signal to the donor community about the country's improved macroeconomic prospects," said IMF Deputy Managing Director Takatoshi Kato.

Pakistan's economic programme: "The Government's programme has two objectives: first, to restore overall economic stability and confidence through a tightening of macroeconomic policies, and second, to do so in a manner that ensures social stability and adequate support for the poor during the adjustment process," said Juan Carlos Di Tata, the IMF mission chief to Pakistan.

The Pakistan authorities have already taken some difficult steps to achieve these objectives: energy subsidies have been cut and the interest rate has been increased to tighten monetary policy.

The State Bank of Pakistan (SBP) will act on monetary policy to build its international reserves, bring down inflation to 6 percent in 2010, and eliminate central bank financing of the government. The programme includes measures to improve monetary management and enhance the SBP's bank resolution capacity, and avoid the use of public resources to support the stock market. Expenditure on the social safety net will be increased to protect the poor through both cash transfers and targeted electricity subsidies. The fiscal programme for 2008-09 envisages an increase in spending on the social safety net of 0.6 percentage points of GDP to 0.9 percent of GDP. Pakistan will also work with the World Bank to prepare a more comprehensive and better-targeted social safety net programme. The financing from the IMF will help to ease the path of adjustment and will provide a strong signal of support to the international community. Of the $7.6 billion loan, $3.1 billion will be made available by the IMF immediately to strengthen the reserve position. And the regular monitoring of the economy by the IMF will show how the macroeconomic objectives set by the government are being met and whether they need to be adjusted in the light of changing circumstances.

It is important to point out that the programme-and its conditionality-is based on the targets and measures that the authorities have themselves set for the next two years. "The IMF is convinced that the best implemented programmes are the ones that are home grown and fully owned by the country," Di Tata said.

Alongside the IMF's financial support, there is an urgent need to mobilise additional donor support to strengthen Pakistan's resilience to potential shocks, help finance the expanded social safety net, and allow for higher spending on development programmes. "The fund stands ready to participate in any donor meeting to provide the economic and financial analysis that could underpin expanded support."

Success of the programme could be affected by a number of risks. They arise from security and implementation uncertainties, a more severe-than-anticipated slowdown in economic activity in trading partners, and lower-than-expected private capital inflows. From the early 2000s to mid-2007, Pakistan's macroeconomic performance was robust. During the period 2000-01 to 2004-05, when Pakistan successfully implemented two IMF-supported programmes, real GDP growth averaged 5 percent a year with relative price stability. The improved macroeconomic performance enabled the country to reenter international capital markets in the mid-2000s.

The macroeconomic situation, however, deteriorated significantly in 2007-08 and the first four months of 2008-09 on account of domestic and external factors. Adverse security developments, large exogenous price shocks (oil and food), and the recent global financial turmoil buffeted the economy.


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## Neo

*IMF terms package a strong signal to donors: $3bn to be released initially, $13bn needed for stabilisation​*
WASHINGTON, Nov 25: The executive board of the International Monetary Fund has approved a $7.6 billion loan for Pakistan under a programme that also requires Islamabad to reduce its fiscal deficit to 3.3 per cent of the GDP and bring down inflation to six per cent.

By providing large financial support to Pakistan, the IMF is sending a strong signal to the donor community about the countrys improved macroeconomic prospects, said IMF Deputy Managing Director Takatoshi Kato. The programme was approved at a board meeting at the IMF headquarters in Washington on Monday.

The programme aims to restore the confidence of domestic and foreign investors with a tightening of fiscal and monetary policies, while maintaining social stability through targeted spending, the IMF said.

Hours after the approval, IMFs mission chief to Pakistan, Juan Carlos Di Tata, told a news briefing on Tuesday that most of the adjustments for reducing fiscal deficit would come from eliminating fuel and electricity subsidies and from eliminating exemptions on income and agriculture taxes.

The government has already withdrawn fuel subsidies, while its efforts to increase electricity rates caused widespread protests this summer. Any measure that leads to an increase in fuel prices or electricity rates is bound to cause more violent reactions and may further reduce the already depleting popularity of the current government.

But the IMF assured the people of Pakistan that expenditure on the social safety net will be increased to protect the poor through both cash transfers and targeted electricity subsidies.

While many in Pakistan questioned the governments wisdom in going to the IMF, the Funds mission chief for the country warned that Pakistan was not out of the woods yet. He said the country needed as much as $13 billion during the current financial year to stabilise its economy.

Mr Di Tata spelled out some of the conditions attached to the loan, but said the IMF had not asked Pakistan to reduce defence spending because it was for the government to determine how it wanted to bring down its expenditure.

He said that out of the $7.6 billion pledged on Monday, Pakistan would get a total of $4.7 billion during the current fiscal year. The rest will be disbursed after quarterly reviews during the next 23 months.

The regular monitoring of the economy  will show how the macroeconomic objectives set by the government are being met and whether they need to be adjusted in the light of changing circumstances, the IMF said.

Besides the IMF, the World Bank and the Islamic Development Bank will also give $3.8 billion to Pakistan during the current fiscal year, while $4.5 billion will come from the Friends of Pakistan club and other donors.

Earlier, the IMF issued a statement saying that Pakistan would get immediate access to $3.1 billion from the $7.6 billion pledged and this amount may be deposited into Pakistans account at the US Federal Reserve in New York as early as Thursday.

The IMF expects Pakistans economic growth to slow to 3.4 per cent in the current fiscal year from 5.8 per cent the previous year. It is forecast to recover to five per cent next fiscal year.

The Fund expects the countrys budget deficit to be reduced to 4.2 per cent of gross domestic product in the current fiscal year and 3.3 per cent the following year -- from 7.4 per cent at the end of June.

The reduction will be achieved primarily by phasing out energy subsidies, better-prioritising development spending and implementing tax policy and tax administration reforms, Mr Kato said.

The State Bank of Pakistan, which recently conducted a two-percentage point hike in the discount rate, is expected to bring down inflation and shore up reserves, the IMF said. The central bank is also expected to stop financing the government.

The programme includes measures to improve monetary management and enhance the SBPs bank resolution capacity, and avoid the use of public resources to support the stock market.

Mr Di Tata noted that the reduction in expenditures would create room to increase spending on the social safety net.

The fiscal programme for 2008-09 envisaged an increase in spending on the social safety net of 0.6 percentage points of GDP to 0.9 per cent of GDP, the
IMF said.


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## Neo

*UAE firm wants to set up coal-based power plant​*
ABU DHABI, Nov 25: The Abu Dhabi National Energy Company has expressed interest in setting up a coal-based power plant in Pakistan.

The companys vice-president, Mr Abdullah Khunji, called on President Asif Ali Zardari here on Tuesday and indicated willingness to invest in power sector.

The president assured him of governments full support and cooperation.

Mr Khunji later told reporters that Pakistan was the best place for investment and his company would soon launch its energy projects in the country.

Emirates Investment Group chairman Tariq Al Qasimi also called on President Zardari and exchanged views with him on global and regional economic situation. He expressed his groups desire to invest in Pakistans financial sector.

The president said his government encouraged foreign investments in energy, agriculture, construction, infrastructure development and banking and financial sectors.

Mr Qasimi told reporters his company had its presence in Pakistan and was exploring new avenues of investment in agriculture and banking sectors.

UAE Minister for Petroleum Mohammad Dhaen Al Halimi also met President Zardari and discussed with him prospects of cooperation in energy and oil and gas sectors.

Mr Halimi said his government was encouraging its private sector to invest in Pakistans energy and petroleum sectors.

The president praised the UAE for investing $5 billion on a refinery in Balochistan and expressed the hope the private sector would invest more in joint venture projects in petroleum and energy sectors. He offered Pakistans technical expertise to the UAE in energy sector development.

Mr Halimi told reporters that during the meeting various areas of joint ventures had been identified. Prospects of investment in oil and gas exploration were also discussed.

Foreign Minister Makhdoom Shah Mehmood Qureshi, PMs Adviser on Finance Shaukat Tarin, Pakistans Ambassador Khurshid Ahmad Junejo, Ambassador-at-Large Javed Malik and Board of Investment Chairman Salim Mandviwala attended the meetings.

President Zardari also visited the mausoleum of Shaikh Zayed bin Sultan al Nahyan, the founder of the United Arab Emirates, and offered fateha.APP


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## Pk_Thunder

*Korean companies interested to construct Taunsa Barrage Hydropower Project *​ 

ISLAMABAD, Nov 26 (APP): Korean M/s Sambu Construction Co. Ltd, Korea Midland Power Company Limited (KOMIPO) and Korea Electric Power Corporation (KEPCO) are interested to construct Taunsa Barrage Hydropower Project (120MW) on BOT basis with 100 percent financing of US$ 300 million.

However, they are open for equity participation by WAPDA. The required formalities to start the projects would require 6 months and project would be completed in over 3-years.

The project feasibility prepared by WAPDA would be updated by Koreans in a period of 6-months.

The Korean delegation comprising M/s Sambu Construction Co. Ltd and M/S Korean Midland Power Company (KOMIPO) here Wednesday called on the Secretary, Ministry of Investment, Ashraf Hayat.

The Secretary discussed bilateral economic relations between the two countries and appreciated Korean companys interest for Investment in development of Taunsa Barrage Hydropower Project (120MW) on Build Operate and Transfer (BOT) basis.

The Secretary assured every possible support and facilitation to the Korean companies and urged them to invest in Hydel, coal, thermal and wind sectors for power generation.

Pakistan has located 200 various sites for wind turbine power generation, he remarked.

He also appreciated their concept of clean technology and suggested that Ministry of Environment and ENERCON may also be visited.

The Country Director of M/s Sambu Construction Co. Ltd informed that their company is in Pakistan for the last 15 years and is committed to bring more foreign investment in various projects.

He also mentioned that their delegation is expected to meet the Prime Minister by mid of next month.


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## Pk_Thunder

*Foreign companies agree to establish $ 2 bln infrastructure fund in Pakistan 
*​
ISLAMABAD, Nov 26 (APP): Federal Minister for Investment Senator Waqar Ahmed said Wednesday that the foreign investment companies operating in the country had agreed to establish an infrastructure fund amounting to $ 2 billion.

This amount will help boost economic activity in the country, he said after a dinner meeting, he hosted in honour of representative of different foreign investment companies here.

He said his ministry was working on a comprehensive investment strategy and expressed the optimism to fetch share from different countries, especially from China and Middle East states.

The minister said he would encourage foreign investors to come forward to benefit from investment friendly policies of the government. Pakistan has great potential, especially in agriculture, livestock, power sector and oil and gas exploration, he added.

He said the ministry of investment would work as a facilitator and remove bottlenecks and ease the official procedure.

Earlier, the representatives of the foreign investment companies assured the minister of their full cooperation and said they would try to bring other investors of their respective countries to Pakistan.

The meeting was attended by Senior Vice President Arif Habib Group Khursheed Zafar, Managing Director Pak-Libya Holding Company Kamaluddin Khan, Managing Director Pak-Oman Investment Company Zafar Iqbal, Managing Director Pak-Kuwait Investment Company Istaqbal Mehdi, Managing Director Pak-Brunei Investment Company Ayesha Aziz, Deputy Managing Director Pak-China Investment Company Syed Iqbal Asharaf and senior government officials.


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## Pk_Thunder

*MESP aims to bring down fiscal deficit, debt-to-GDP ratio​*

ISLAMABAD: Macro-economic Stabilization Plan 2008-10, agreed with International Monetary Fund (IMF) as performance criteria for $7.6 billion bailout package, seeks to bring down current account balance to negative 6.5 percent of the Gross Domestic Product (GDP) in current fiscal year 2008-09 and negative 5.7 percent of the GDP in next fiscal year 2009-10.

Similarly, overall debt to GDP ration that stood at 57.9 percent of the GDP in 2007-08 will be brought down to 54.6 percent of the GDP in current fiscal year 2008-09 and a further reduction to 52.4 percent is aimed for the next fiscal year 2009-10. However, external debt is projected to grow from 26.5 percent of GDP in 2007-08 to 31.4 percent in this fiscal and further to 33.2 percent in 2009-10.

Economic Indicators: The GDP growth that witnessed a growth of 5.8 percent in the last fiscal year is projected to nosedive to 3.4 percent in the current fiscal 2008-09 and rebound to 5.1 percent in next fiscal year 2009-10. Earlier, the government had projected that GDP growth of the country would fall to 4.4 percent in 2008-09, but IMF paper reveals that growth will fall further to 3.4 percent in the current fiscal year as compared to the budgetary target of 5.5 percent.

Pakistans actual foreign exchange reserves, which stood at $8.591 billion by the end of last fiscal year 2008-09, are projected to remain at similar level by the end of current fiscal. However, the foreign exchange reserves of the country are projected to increase to $11.291 billion by the end of next fiscal year 2009-10.

Earlier, in the interim report of the panel of economists, it was projected that fiscal deficit will fall to 4.5 percent of the GDP in 2008-09, from 7.4 percent in 2007-08 and further to 4.0 percent in 2009-10. However, IMF paper projects that budget deficit that had jumped to 7.4 percent of the GDP in last fiscal year 2007-08 would come down to 4.2 percent of the GDP in current fiscal year 2008-09 and will further be reduced to 3.3 percent in next fiscal year 2009-10.

According to the interim report of the panel of economists, balance of payments gap would be reduced to $ 4.5 billion in 2008-09 from $ 6.2 billion in 2007-08 and be largely eliminated in 2009-10. Growth of exports will take exports to $23.5 billion by 2009-10. staff report


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## Pk_Thunder

*Fiscal deficit to be reduced to 3.3 percent in 2009-10*​

* End to energy subsidies and revenue mobilisation through tax policy would help achieve this
* IMF to help Pakistan gain further support from other IFIs

By Sajid Chaudhry

ISLAMABAD: International Monetary Fund (IMF) has said that fiscal deficit would be brought down to 4.2 percent of Gross Domestic Product (GDP) against the budgetary target of 4.7 percent in the current fiscal year 2008-09, similarly, the deficit would be further reduced to 3.3 percent of GDP in next fiscal year 2009-10.

This fiscal adjustment will be achieved by phasing out energy subsidies and strengthening revenue mobilisation through tax policy and administration. The reduction in expenditures will create room to increase spending on the social safety net, according to an IMF Executive Board assessment.

The IMF's Executive Board has approved a $7.6 billion loan for Pakistan to support its programme to stabilise and rebuild the economy while expanding its social safety net to protect the poor.

The 23-month stand-by loan will enable the government to implement a stabilisation programme that envisages a significant tightening of fiscal and monetary policies to bring down inflation and reduce the external current account deficit to more sustainable levels. The programme seeks to address current macroeconomic imbalances while protecting the poor and preserving social stability. "By providing large financial support to Pakistan, the IMF is sending a strong signal to the donor community about the country's improved macroeconomic prospects," said IMF Deputy Managing Director Takatoshi Kato.

Pakistan's economic programme: "The Government's programme has two objectives: first, to restore overall economic stability and confidence through a tightening of macroeconomic policies, and second, to do so in a manner that ensures social stability and adequate support for the poor during the adjustment process," said Juan Carlos Di Tata, the IMF mission chief to Pakistan.

The Pakistan authorities have already taken some difficult steps to achieve these objectives: energy subsidies have been cut and the interest rate has been increased to tighten monetary policy.

The State Bank of Pakistan (SBP) will act on monetary policy to build its international reserves, bring down inflation to 6 percent in 2010, and eliminate central bank financing of the government. The programme includes measures to improve monetary management and enhance the SBP's bank resolution capacity, and avoid the use of public resources to support the stock market. Expenditure on the social safety net will be increased to protect the poor through both cash transfers and targeted electricity subsidies. The fiscal programme for 2008-09 envisages an increase in spending on the social safety net of 0.6 percentage points of GDP to 0.9 percent of GDP. Pakistan will also work with the World Bank to prepare a more comprehensive and better-targeted social safety net programme. The financing from the IMF will help to ease the path of adjustment and will provide a strong signal of support to the international community. Of the $7.6 billion loan, $3.1 billion will be made available by the IMF immediately to strengthen the reserve position. And the regular monitoring of the economy by the IMF will show how the macroeconomic objectives set by the government are being met and whether they need to be adjusted in the light of changing circumstances.

It is important to point out that the programme-and its conditionality-is based on the targets and measures that the authorities have themselves set for the next two years. "The IMF is convinced that the best implemented programmes are the ones that are home grown and fully owned by the country," Di Tata said.

Alongside the IMF's financial support, there is an urgent need to mobilise additional donor support to strengthen Pakistan's resilience to potential shocks, help finance the expanded social safety net, and allow for higher spending on development programmes. "The fund stands ready to participate in any donor meeting to provide the economic and financial analysis that could underpin expanded support."

Success of the programme could be affected by a number of risks. They arise from security and implementation uncertainties, a more severe-than-anticipated slowdown in economic activity in trading partners, and lower-than-expected private capital inflows. From the early 2000s to mid-2007, Pakistan's macroeconomic performance was robust. During the period 2000-01 to 2004-05, when Pakistan successfully implemented two IMF-supported programmes, real GDP growth averaged 5 percent a year with relative price stability. The improved macroeconomic performance enabled the country to reenter international capital markets in the mid-2000s.

The macroeconomic situation, however, deteriorated significantly in 2007-08 and the first four months of 2008-09 on account of domestic and external factors. Adverse security developments, large exogenous price shocks (oil and food), and the recent global financial turmoil buffeted the economy.


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## Pk_Thunder

*IMFs loan approval revives hope for stock market rescue
​*
By Tanveer Ahmed

KARACHI: The approval of financing facility by IMF for the country has rekindled the hopes of a rescue plan for the stock market, which has been kept under floor for almost three months.

The market participants were of the view that with the ample foreign currency coming into countrys forex reserves from IMF in next couple of days, the authorities at Karachi Stock Exchange will gear up efforts to press the government for market support fund.

The KSEs Board of Directors also decided yesterday to approach the government, once it received the IMF loan to honour its pledges regarding market stabilisation fund, a member-director of KSE confided to Daily Times.

The views about normal trading at the stock markets are mixed in the brokers community as well as the analysts of stock market. However, all of them have a unanimous opinion that IMF payments could generate some positive sentiments in the present uncertain situation of the economy.

It has also been argued for long that delay in lifting of floor was due to expected outflow of foreign investment in the stock market, which could further dent the forex reserves situation. After IMF tranche there would be ample foreign currency with the central bank to manage any major outflow from foreign funds. Foreigners hold close to $2.2 billion (on official closing price) worth of shares based on official data, analysts said.

It is now expected that regulators in Pakistan may start normal trading as soon as possible after three-month of floor rule, they hoped. However, the government authorities are still reluctant to give a specific timeframe for the activation of fund and are still awaiting the green signal from the high-ups to go ahead with the fund.

According to some brokers, the government is deliberately pushing the stock market players to a situation, where they would be compelled to lift the floor without the fund as the concerned quarters are no more interested to inject the funds in the stock market.

The four government institutions, sources said, are also hesitant to inject the fund because they construe it to be wastage of funds in the present position.

Another member-director of KSE, however, was not much optimistic about the market stabilisation fund. Nobody can say for sure when will the fund materialise and when the floor will be lifted, he said. On the other hand, the announcement by Finance Adviser Shaukat Tarin to resolve the liquidity problem in stock market during the current month of November also awaits to be materialised, as only 5 days are left in the current month. The possibility of any action in this regard looks remote.


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## Pk_Thunder

*Country to get out of economic crisis soon: Naveed​*
RECORDER REPORT
KARACHI (November 26 2008): Federal Minister for Privatisation Naveed Qamar has said that the higher interest rate will affect the investment, however the country will soon get out of economic crisis which is part of the global economic meltdown.

Speaking as a chief guest, at the graduate employer awards 2008 organised by PSHRM and Engage Human Resources (HER) at a local hotel on Tuesday, he said that the agreement with the International Monetary Fund was a difficult decision for the government.

He added that the government's decision to go to IMF was aimed to cope with the economic problems. He said that the government's consolidation was aimed to stabilise the political and economic systems of the country, in which it succeeded despite problems.

Later, he gave the PSHMR HR Awards 2008 to Telenor Pakistan for its employee life cycle engagement HR initiative. Other institutions received the award were Royal Bank of Scotland (RBS), Unilever Pakistan, Mobilink, P&G, Microsoft, Schlumberger and Siemens. While Wateen and British petroleum were identified as the most preferred graduate employers. On the occasion, Paul Keijzer, CEO HER, Khursheed Hadi, chairman HER and Navroz Surani president PSHRM also spoke.


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## Pk_Thunder

*Businessmen real economic drivers: Prime Minister*​
KARACHI (November 26 2008): Prime Minister Yousuf Raza Gilani said that businessmen were the real economic drivers of the country and they must produce quality products and services to enable the government to achieve its export targets. He was speaking at the award distribution ceremony of Brand Awards 2008 at a local hotel Tuesday.

Sindh Governor Dr Ishratul Ibad Khan, Chief Minister Syed Qaim Ali Shah were also present on the occasion. Emphasising the importance of branding in the present world, the prime minister said it was as crucial as engine in a car. "In today's world, the economic survival of a nation very much depends on the survival of its brands, because branded products not only ensure a healthy society, but play an important role to ensure that the country's economy is constantly progressing", he added.

He pointed out that stable economies of developed nations were based on their internationally reputed brands, which not only provide a healthy competition in business market, but also export brand equity value internationally.

The Prime Minister said that the country was encountering numerous internal and external challenges - the most critical is the menace of terrorism and extremism which is impeding flow of foreign investment and progress and prosperity of our people.

"The government was taking cognisant measures to counter the menace of terrorism and extremism, improving law and order situation which is pre-requisite for the smooth flow of foreign investment in the country and over all socio-economic upliftment of its people", he noted.

The Prime Minister said the government has formulated 9-point economic agenda, which would help regain the momentum of economic growth in a reasonable period of time by keeping inflation rate on the minimum lower side. "Only thereafter, the gains of the growth would flow to the common man and women of Pakistan", he observed.

The prime minister underlined the need to work collectively for harnessing the untapped natural potential at a fast pace to put our country on the track of progress and prosperity.

He noted that it was the prime responsibility of the commerce and trading community to work hard to provide quality products and services for fetching global trade and markets and it would help the government to achieve its export targets.

He assured that government would extend all out co-operation to the trade and industry community for organising such activities and expects from them to strive for clinching a befitting place in the international markets not only with their presence but also their uniqueness.

He also announced to provide support to business community in the establishment of brand university, which would provide education and knowledge of brand development.

Earlier, chairman Brand Award Council Tariq Saeed in his welcome address said that Pakistan has to develop brands for boosting country's exports. He said Pakistan was lacking in brand management, which in turn was affecting country's exports.

He said they were working on the establishment of brand university in Pakistan which will be functional by 2009. Later, the prime minister gave away awards and certificates to the recipients of best brands in Pakistan.


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## Neo

*$1 billion from donors will be added to reserves during December​* 
ISLAMABAD (November 26 2008): Pakistan would be able to avail $1 billion from other than the IMF donors including $500 million from World Bank and $450 million from Asian Development Bank, says an official. Finance Ministry would be able to add $1 billion in our reserves in addition to the IMF's $3.1 billion to be reaching here within next 24 hours, as transaction takes almost 48 hours to complete after Fund Board approval, says a Finance Ministry official on condition of anonymity.

Some other funds from some multilateral donors would make it almost $1 billion. It includes mostly project aid from ADB. Negotiations on an already stopped $500 million World Bank loan have been restarted and are on track to get approval in December, said the official.

Most of the conditions for $500 million WB loan like eliminating subsidies are already implemented and condition of getting the IMF approval on overall macro stabilisation plan is now done. Authorities are also showing commitment to all major reforms initiated in the last regime.

World Bank loan is Poverty Reduction and Strategy Credit-II (PRSC), while of ADB there are number of projects whose disbursement is due in December. Discussions on WB loan were started in June and later stalled. Later WB asked Pakistan to implement a number of reforms but reduced the amount of loan to $300 million and then blocked it till Pakistan goes under the IMF programme.

Other project aid of World Bank would also get a green signal now. This loan is similar in nature under which Pakistan got $500 million stabilisation funds from ADB. The IMF loan does not generate counterpart funds for budgetary support rather its equivalent rupee value is deposited with the IMF, while WB and ADB loan are helpful in generating funds for the Finance Ministry, which would be helpful for the ministry to get funds other than the SBP borrowing. The SBP borrowing for budget purposes is also blocked under the IMF conditions.


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## Neo

*$13.4 billion external funding needed: IMF​*
KARACHI (November 26 2008): Pakistan's gross external financing requirement for the 2008/09 (July-June) fiscal year is $13.4 billion, a senior International Monetary Fund (IMF) official said on Tuesday. The IMF will provide $4.7 billion of that total, Juan Carlos di Tata, senior adviser in the IMF's Middle East and Central Asia Department, told reporters.

The gross external financing requirement for the 2009/10 fiscal year is estimated at $12.2 billion, Tata said. "These amounts that I mentioned are needed to cover the external current account deficit for both fiscal years, and the maturing short-term debt and mobilisation of medium- and long-term debt," Tata told reporters over a conference call.

The IMF on Monday approved a $7.6 billion loan for Pakistan to avert a balance of payments crisis, out of which Pakistan will get immediate access to $3.1 billion under the 23-month facility.

The rest will be phased in subject to quarterly review, the Fund said. The package means Pakistan will be able to cover an international sovereign bond maturing in February. The Fund said on Monday the current account deficit is targeted at 6.5 percent of gross domestic product this fiscal year, and 5.7 percent in the 2009/10 fiscal year, compared with 8.4 percent in 2007/08.

The IMF said it projected foreign exchange reserves to be $8.591 billion this fiscal year and $11.291 billion next year. Tata said the gross external financing was a "critical part of the programme" and the financing requirement, not including the IMF's $4.7 billion, was about $8.7 billion.

The requirement will be covered by foreign direct investment of about $4.5 billion and also medium- and long-term borrowing from other multilateral and regional institutions such as the World Bank, Asian Development Bank and Islamic Development Bank and some financing from bilateral creditors for projects. The second tranche will be made available after the completion of the first review under the programme, which is expected to be completed in mid-March of 2009.

"This programme also has some quarterly quantitative targets on several variables including, for instance, the budget deficit, budgetary borrowing from the State Bank of Pakistan, international reserves and the domestic assets of the SBP," Tata said.

Tata said the second disbursement would be made available if quarterly targets are met, and also after the review of some benchmarks on structural issues that are included in the programme. He did not give target details. The Fund has also asked for an end to the central bank financing of the government from November 1. Tata said in order to eliminate borrowing, the interest rates set at Treasury Bill auctions would have to be attractive.

"The interest rates will have to be sufficiently attractive for commercial banks to purchase enough Treasury bills so that the domestic requirement of the government is covered through commercial bank sources," Tata said. He further said the target of zero government borrowing from the central bank could also be achieved by using non-banking sources such as Pakistan Investment Bonds and National Saving Schemes.


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## Neo

*Cement export, white wheat import via Gwadar: EMC decision​* 
KARACHI (November 26 2008): The government has decided that export of cement to Middle East and Persian Gulf regions and import of white wheat from the United States and Canada, under grant/deferred payment, would be exclusively through Gwadar Port.

According to sources, the decision was taken by the Economy Monitoring Committee (EMC), in its meeting on November 20 to make Gwadar port really operational and clear congestion at two ports in Karachi, which is hurting the growth of cement exports.

Sources said that the move would not only help the visiting vessels save thousands of dollars in terms of steaming time, that on average amount to $40,000 per day, but would also help the government to avoid payment of huge ship demurrage in case of congestion. The recent congestion at Karachi's ports had cost Trading Corporation of Pakistan (TCP) (for wheat import) around $30,000 per day in terms of ship demurrage, they added.

Sources said that when fully operational, the currently congestion-free Gwadar port would be in a better position to help the poverty-stricken country saving millions of dollars in terms of dispatch earning.

The cement vessels, which have to wait at the outer anchorage, sometimes for days together, would have quick berthing facility, which would ultimately put fascinating impact on cement export growth, added the sources.

The EMC took the decision after reviewing a presentation of the Ministry of Ports and Shipping on difficulties of cement export due to insufficient berth availability at Karachi Port and Port Qasim. EMC had also decided that cement exports for other destinations, like the African continent, would be through Karachi Port and Port Qasim.

To ensure safe and efficient handling of import of wheat at Gwadar the EMC had proposed that the tender conditions should include a "minimum shipment quantity 60,000 metric tons with vessel draught more than 10.5 metres but less than or equal to 12.5 metres," they added.

According to sources, EMC had noted that although the government had imported sufficient red wheat on time, but the essential commodity could not reach the user on time due to congestion and insufficient berthing and storage capacity at the two ports. The Committee had also noted that the above-mentioned situation had caused embarrassment to the government, sources said.


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## Neo

*US pressurising Pakistan to cancel locomotive deal with China ​* 
LAHORE (November 26 2008): Railways Minister Ghulam Ahmad Bilour presided over a lengthy meeting with senior Railway officials in Islamabad on Tuesday which was also attended by US embassy officials and some American engineers to reconsider Pakistan Railways' contract with a Chinese company for purchase of 75 locomotives.

Business Recorder has learnt that the United States has been pressurising Pakistan and has taken up this matter at the highest level to get the cancellation of PR's locomotive purchase contract amounting to Rs 8 billion and award it to a US company.

Senior officials who attended the meeting told Business Recorder that no decision has been taken in Tuesday's meeting and another meeting would be held on Thursday to decide the matter. He said Pakistan Railways awards contract after an open and transparent tender process. In the present purchase of 75 locomotive deal, Chinese company Dongfang was the lowest bidder and its price was half of the other competitors.

The Chinese company had offered to provide 75 engines at the cost of $107 million as against the US company's tender of $227 million. The cash starved Pakistan Railways had entered several agreements with Chinese railway companies for its development and modernisation of its outdated system In 2001, Pakistan Railways signed a $91.89 million contract with China National Machinery Import and Export Corp for the manufacture of 175 new high-speed passenger coaches. The project was funded by Exim Bank China on a supplier credit basis.

Under an agreement signed with China in 2003, Pakistan Railways purchased 69 locomotives of which 15 were delivered as completely built units while remaining 54 were built at Pakistan Railways' locomotive factory. The locomotives were purchased on suppliers' credit basis with funding provided by Exim Bank China through the Dongfang Electric Corporation.

However, some influential circles have been propagating that the Chinese railway engines were not up to the mark, therefore, Pakistan should not buy additional railway coaches and engines from China.

Nevertheless a senior Railway official remarked that the coaches and locomotives provided by China on credit are being successfully used on Pakistan's mail and express trains from Rawalpindi-Lahore-Karachi, Lahore-Faisalabad and Rawalpindi-Quetta.

He said: "Pakistan Railways is already facing an annual deficit of Rs 42 billion. Therefore we have to keep in mind the price tag of each locomotive engine. A man who could afford only a Suzuki car should not dream for a Mercedes or BMW car," he emphasised.

He said the technical and the tender committee had not unduly favoured Dongfang in awarding the contract as it has fulfilled all required technical requirements and standards.

Under another project, Chinese companies are rehabilitating 450 passenger coaches at an estimated cost of Rs 2.14 billion. The project also included the conversion of 40 coaches into air-conditioned cars and the conversion of 10 power vans. Furthermore, there was a provision of 100 new high-speed bogies, 30 of which were imported from China, while 70 were manufactured locally on a transfer-of-technology basis.


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## Neo

*'Zardari's visit to UAE will generate investment opportunities'​*
ISLAMABAD (November 26 2008): Minister of State for Industries and Production Ayatullah Durrani on Tuesday said the visit of President Asif Ali Zardari to UAE would help create investment opportunities in Pakistan. "Pakistan is playing an important role in the region and the decision of President Zardari to pay first official visit to UAE reflects the future strategy of present democratic government", he said while talking to PTV.

"Our government will prepare a long-term co-operation framework, which will strengthen the economic, commercial and cultural relations between the two countries," he said. Ayatullah said people wanted a welfare state where everyone should get justice and the government was taking steps to materialise their dreams.

The Minister said that under the guidance of President Asif Ali Zardari, the country would overcome its economic issues and people would soon witness a prosperous Pakistan. Asif Ali Zardari's first official visit to UAE will help boost the existing trade and economic co-operation between the two brotherly countries having common perceptions on various regional and international issues.


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## Neo

*IMF's double-edged rescue for Pakistan​*By Syed Fazl-e-Haider

QUETTA, Pakistan - The decision of the International Monetary Fund's executive board on Monday to approve a US$7.6 billion credit to Pakistan to stave off a balance of payments crisis reduces for the time being the prospect of Islamabad defaulting on its foreign debts.

In the IMF's first rescue in Asia since the beginning of the current global financial crisis, Pakistan will get between $3.5 billion and $4 billion as a first tranche, which is likely to be transferred to the country's central bank's account in the US Federal Reserve in New York. Cash-strapped Pakistan will have the money by Thursday, as the disbursement takes 48 to 72 hours.

Analysts believe that the rapid disbursement has the support of the US government, which wants to help Pakistan arrest its economic deterioration as soon as possible. Its precarious financial situation has caused widespread alarm due to Pakistan's role as a key ally in the US-led "war on terror" and its position as the Islamic world's only nuclear power.

Local analysts are, however afraid of the harsh conditions linked to the IMF loan and believe these conditions could convert the financial mess into a political crisis.

The credit will "support the country's economic stabilization program", the IMF said in a brief statement. The country's foreign exchange reserves shrunk just short of $100 million to $6.64 billion during the week ended November 15. Reserves held by the central bank declined in the week by $37.1 million to $3.459 billion.

The IMF cash may help the nation overcome a "crisis of confidence"' and improve its debt rating, Bloomberg reported, citing Asian Development Bank managing director Rajat Nag.

A rescue plan "could have the advantage of presenting an opportunity to force countries like Pakistan to come to grips with entrenched structural distortions in its economy", Dawn newspaper reported, citing a joint article from Washington's Middle East Institute by Wendy Chamberlin, the former US ambassador to Islamabad and former IMF economist Zubair Iqbal.
The Pakistani rupee ended firmer on Monday on expectation of the IMF giving the go-ahead for the stand-by arrangement, according to local currency dealers.

The rupee rose 1.3% last week to 79.29 per US dollar, touching 79.15 on November 19, the highest since October 10, after strengthening from a record low of 83.55 on October 17, according to Bloomberg. The rupee plunged in October as the balance of payments deficit in the three months from July 1 widened to $3.95 billion from $2.27 billion a year earlier.

Even so, the loan will not extend long-term help to the currency market, as one IMF condition is that the aid cash will not be used in the currency market, according to the local currency dealers. The rupee would only stabilize in the long term when there is an improvement in inflation and the current account deficit, according to the analysts.

The government is being strongly criticized for succumbing to IMF conditionalities even before the release of the bailout funds. Before approval of the loan, the IMF had called for measures including withdrawal of a wide range of subsidies by the end of the fiscal year ending next July 1, barring the central banks intervention in the foreign exchange market, and imposition of an agriculture tax.

Pakistan had to go to the IMF for the unpopular stand-by agreement to avert an economic meltdown because the government suffered a "trust deficit" which did not allow it to use other options with success, the Dawn reported, quoting a Finance Ministry official. Local businessmen and industrialists have strongly opposed the recent rise in the central bank's discount rate, the highest increase in more than a decade and one seen as being linked to the IMF deal.

Pakistans industrial landscape may soon be marked with dead and sick units and there will be massive unemployment because of the devastating impact on businesses of the higher cost of bank loans arising from the interest rate increase, according to Anjum Nisar, the president of Karachi Chamber of Commerce and Industry.

The IMF conditions have not yet been made public, but local media reports have suggested the terms may be almost impossible to implement in Pakistan.

"If Pakistan accepted the IMF funding, it would have to reduce the defense budget by 30% between 2009 and 2013 and would reduce the number of posts entailing pensions in the government and semi-government departments from 350,000 to 120,000," The News claimed last month.

According to the report, the loan terms would include the fund's intervention in central bank affairs, provision to the IMF of details of foreign exchange reserves, remittances and flow of foreign exchange through commercial banks, the imposition of a 7% tax on wheat production and a 3.5% levy on other crops, and IMF monitoring of preparations of the federal budget.

"The Pakistan government will have to provide details of loans it got from all other lenders, including China, 48 hours before signing the funding agreement with the IMF, and 25% of the government assets pledged as securities for such loans will be the property of the IMF," the report said.

Subsidies for power, gas and petroleum products will be eliminated by next July, according to the Business Recorder. This condition will be particularly tough if it is applied to agricultural inputs, as at present the government provides a subsidy of 32 billion rupee on fertilizers. The government will have to burden the people, especially the poor, to meet the IMF demands, the Business Recorder said.

Among other terms believed to be included in the IMF deal is an increase to 15% in the ratio of tax to gross domestic product. The government would have to increase indirect taxes, instead of direct taxes, which would hit the general public as the ratio of general sales tax may have to be increased, the Business Recorder report said.

Parliamentarians on both government and opposition sides have said they will strongly resist any move to tax agriculture, saying every farmer will come out on the streets against such a move after high diesel and other input costs have already made it hard to survive. The legislators claim an IMF deal is tantamount to making the country hostage to the global market.

Democratic governments in the 1990s failed to meet demands under an earlier IMF deal to levy an agriculture tax. "If Pakistanis once again fail to impose an agriculture tax, this will be the last IMF program they will have," Dawn reported one analyst as saying.

Low-income workers and the unemployed are already battling soaring prices, with year-on-year inflation according to the sensitive price index (SPI) hitting 29.02% during the week ended November 20.

Other data for the economy are as grim or grimmer. The current account deficit widened 98.5% to $5.943 billion in the July-October period compared with a year earlier, according to the central bank. The oil bill during the period jumped 93% year on year to $4.92 billion and the food bill surged 77% to $1.58 billion.

The imbalances are rising despite the recent steep fall in global prices of oil and food.

"No one could deny the fact that the conditions linked to the IMF package may be terribly harsh, but the fund's team monitoring disbursements will have a strict check on 'royal spending linked to the lavish living of a few at the top'," Dawn reported, citing a local analyst Hasnain Asghar Ali.

Another analyst, Ashraf Zakaria, said: "Although the IMF credit line has allayed fears of a possible default on foreign debt repayments, its fallout on the economy amid further increases in the discount rate and taxes could well prove a double-edged weapon. both for the financial and the corporate sector."

Syed Fazl-e-Haideem sfazlehaider05@yahoo.com, is a Quetta-based development analyst in Pakistan. He is the author of six books, including The Economic Development of Balochistan, published in May 2004.


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## Neo

*IMF bailout funds reach Pakistan, boost rupee​*
KARACHI, Pakistan (AP)  Pakistan received the first tranche of a $7.6 billion loan from the International Monetary Fund on Thursday, a bailout package aimed at stabilizing the economy as it fights soaring Islamist violence.

The currency strengthened slightly against the dollar after the Central State Bank of Pakistan said the IMF had transferred $3.1 billion, part a rally that begin several weeks ago when it was clear that the fund would help.

The IMF agreed to lend money to banish the immediate risk of a currency crash and debt default in a country already creaking under the pressure of 25 percent inflation and slowing economic growth.

Al-Qaida and Taliban militants based close to the Afghan border are behind a spreading insurgency against Pakistan's secular government and are also blamed for rising attacks against Western forces in Afghanistan.

The IMF said in return for the money Pakistan had agreed to phase out energy subsidies, boost taxes and implement other money saving reforms. The rest of the money will be transferred to Pakistan in quarterly installments, subject to it implementing the reforms.

The government has said it now expects to receive more money from Western allies, which have said they do not want to see further turmoil in the country.


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## Neo

*Funds for uplift projects cut to 15pc of allocations ​* 
Thursday, November 27, 2008

ISLAMABAD: In pursuance of the International Monetary Funds (IMF) demand to curtail expenditures the government has reduced fund releases to only 15 per cent of the allocations to all ministries/divisions during the second quarter (Oct-Dec) of the current fiscal year, officials informed on Wednesday.

The funds cut is likely to halt major portion of work on 1,900 development schemes going on all over Pakistan, it is learnt.Following the IMF conditions to cut expenditures for obtaining $7.6 billion loan the government has adopted 1990s strategy of slashing development spending - the first and most easy victim - without reducing its own extravagant spending for more than 55 ministers and ministers of state.

Yes, the Ministry of Finance has officially communicated to the Planning Commission for providing only 15 per cent funds releases for all kinds of development projects in accordance with submitted cash plans of concerned ministries, official sources confirmed while talking to The News on Wednesday.

The sources said that the decision for releasing 15 per cent funds would provide only Rs54 billion in Q2FY09 (Oct-Dec) for all ministries/divisions.After this decision, the massive cut in funds releases during last three quarters - Apr-Jun 07-08, Jul-Sep 08-09 and Oct-Dec 08-09 would hurt the development activities on all projects.

The Finance Ministry released only 15 per cent funds for Q1FY09 and the same level persisted for the Q2FY09.The Planning Commission high-ups are seeking time from the top economic managers for holding joint meeting to get first hand knowledge about the resource envelop the commission would get for the remaining months of the current fiscal in order to prioritise the ongoing development schemes.

This decision will lead towards slowing down of development projects executed by the public sector in the current fiscal, a senior official conceded. Various Ministries/Division have told the Planning Commission that the provision of only 15 per cent funds in the second quarter would not be sufficient to meet the financing requirements at all.

The sources said that the planning managers had sought 15 per cent releases by themselves, which made Finance Ministrys work easier to slash down funding of ministries/divisions.When a high-level official in Planning Commission was contacted for official comments, he said that the funds were released keeping in view spending capacity of various ministries.

He said that the financial position of the country would improve after substantial drop in global POL prices as well as strengthening of rupee against dollar in recent days.These developments will help the finance managers to bridge the financing gap in the remaining months of the ongoing fiscal year, said the official and added hoped that the government would be able to catch up envisaged development spending by June 30, 2009.

But the sources in Finance Ministry high-ups say that this level of fund releases would continue for the rest of the financial year to achieve fiscal deficit target.The sources said that the government would make sure that ministries utilise the funds. We have told the ministries and provinces to get releases when they will be able to spend it, added the sources.The government bears the cost of taking loans from the domestic or external avenues and it cannot allow funds lying idle.


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## Neo

*RoK firms interested in hydropower project ​* 
Thursday, November 27, 2008

ISLAMABAD: Korean construction and power companies are interested in investment for development of Taunsa Barrage Hydropower Project (120 MW) on built-own-operate-transfer (BOOT) basis.

A visiting Korean delegation comprising of M/s Sambu Construction Co Ltd and M/s Korean Midland Power Company (KOMIPO), called on the Secretary, Ministry of Investment, Ashraf Hayat. He welcomed the Korean delegation and discussed bilateral economic relations between the two countries and appreciated the Korean companys interest for investment in the development of Taunsa Barrage Hydropower Project.

The Country Director of M/s Sambu Construction Co Ltd mentioned that their company has been in Pakistan for the last 15 years and is committed to bringing in more foreign investment in the country for various projects. He also mentioned that their delegation is expected to meet the Prime Minister of Pakistan on 15-17 December, 2008. He thanked Secretary, MOI for arranging their meetings with Managing Director, PPIB, and Secretary, Irrigation, Punjab.


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## Neo

*SBP to get $3.1bn of IMF loan in next 24 hours ​* 
Thursday, November 27, 2008

ISLAMABAD: The first instalment of $3.1 billion of the IMF loan will be transferred into accounts of the State Bank of Pakistan (SBP) within next 24 hours, The News has learnt.

When this scribe contacted to spokesman of the SBP, Syed Wassimuddin on Wednesday evening, he said that the first tranche had not yet been received by the SBP. He said that there was time difference of over 10 hours and the offices in USA would not start opening so the confirmation of received instalment could be made on Thursday.

When Secretary Finance Ministry, Dr Waqar Masood was asked in this regard, he said that the money will be transferred into SBP accounts within next 24 hours. However, the sources said that the money would be transferred into the accounts of the SBP during Wednesday night (in accordance with Pakistan Standard Time) when there would be day time in USA. The SBP will confirm about receiving the $3.1 billion amount as first tranche of the IMF loan today (Thursday), said the official.


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## Neo

*Foreign cos to set up $2bn fund for Pak economy ​* 
Thursday, November 27, 2008

ISLAMABAD: Federal Minister for Investment Senator Waqar Ahmed khan has said the foreign investment companies operating in Pakistan have agreed to establish an infrastructure fund with an amount of $2 billion, which will help to boost the economic activity in the country.

The minister opined after a dinner meeting hosted in the honour of representatives of the investment companies at his residence in Islamabad here on Wednesday. He said the ministry is working on a comprehensive investment plan/strategy and expects to fetch its share especially from China and Middle East countries. He said he will encourage foreign investors to come forward to benefit from the investment friendly policies of Pakistan. 

He said there is great potential especially in agriculture and livestocks, oil and gas exploration and in the power sector. The minister said the ministry of investment has been established under the mandate to work as facilitator/coordinator and to remove the bottlenecks and ease the official procedure. He said, we are working to create an investor-friendly environment.


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## Neo

* Engineering goods share in total exports rises to 4pc ​* 
Thursday, November 27, 2008

LAHORE: Local engineering industry, lacking technology, increased its share in total exports from Pakistan from 2.4 per cent in 1999-2000 to 4.1 per cent in 2007-08, which is still only 0.12 per cent of the global engineering trade.

World engineering goods trade exceeds $6 trillion while the engineering goods exports from Pakistan were 708 million in 2007-08. The exports though increased three times from the $203 million exports of engineering goods achieved in 1999-2000, and are still negligible when compared with global engineering trade.

Engineering experts said that some of the low valued engineering industries of the country have achieved required efficiencies to capture some markets in developed economies that have stopped producing low value added products due to high labour costs.

However, the entrepreneurs say they have not been able to exploit this potential due to various policy flaws. They said steel is the basic raw material of the engineering industry but it is available in Pakistan above the global rates due to the protection provided to Pakistan Steel Mill.

They said more than two thirds of the steel used in the country is imported. Its cost increases because the government provides protection to the local mill that produces less than one third of the steel and steel products. The shortage of power and energy and their high rates are the other factors, they added.


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## Neo

*Pakistan to export its tanks, says Mukhtar​*
KARACHI: The successful inauguration of the Fifth IDEAS-2008 exhibition will bolster Pakistans defence industry, and it is hoped that the country would start exporting its battle tanks from next year, Defence Minister Chaudhry Ahmed Mukhtar said on Wednesday.

He said this while visiting the manoeuvres of the locally built AI-Khalid, Zarar and Saad Main Battle Tanks at EXPO-Centre Karachi. The defence minister said that Pakistan had achieved the technical know-how to build the tanks - AI-Khalid, AI-Zarar and APCs according to international standards.

The minister held a meeting with Chinese and Tanzanian officials at the Expo centre and discussed bilateral issues to promote interaction between respective defence industries.

While talking to journalists at a press conference, he said that the International Monetary Fund had not imposed any sanctions, which would cut the countrys defence budget. app


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## Neo

*Government urged to grant EPZ status to district of Sialkot​* 
SIALKOT (November 27 2008): Sialkot is total export-oriented city of Pakistan and possesses century-old industrial heritage. It has developed a remarkable export culture over the period and is contributing more than $1 billion in foreign exchange annually.

The business community of the area has urged the Federal and provincial governments that Sialkot district should be given the status of export processing zone for accelerating the pace of export activities and to increase the volume of exports from the district.

The exporters community is trying its utmost for doubling its export volume despite tough competition in the world market, to fetch more foreign exchange into the country. The small and medium enterprises (SMEs) are playing a significant role not only in strengthening the national exchequer but also in providing employment to thousands of workers.

In order to develop true and secure small and medium industries culture of Sialkot the government should formulate a special package of incentives and concessions for SMEs of the area to increase its export volume manifold and to solve their problems.

The development of cottage industries in Sialkot has assumed a model status for the developing world. The city has thousands of small and medium enterprises, engaged in meeting their global commitments for export of value-added quality goods such as sports goods, surgical instruments, leather goods, gloves, badges, musical instruments, etc.

The city has developed industrial edge over other cities of the country, especially in sports goods and surgical instruments. Over 0.12 million industrial workers are engaged in these industries and are earning their livelihood in a respectable way.

Many researchers of different foreign universities are considering conducting research on the unique export culture of Sialkot, which is a hub of cottage industries and an export-oriented city of Pakistan. The researchers would concentrate on ascertaining how Sialkoties are doing the export business successfully where every third person is an exporter. The business community of Sialkot is playing a tremendous role not only in bringing boom in exports but also fulfilling the social responsibilities and the uplift of the city on voluntarily basis.

Over 85 percent of production of soccer balls of the world comes from Sialkot, while all international brands are sourcing their supply of footballs from this city. The success story of Sialkot-based industries can be attributed to unmatched skill of local workers and their craftsmanship.

The soccer ball industry has totally been purged of the menace of child labour, and Sialkot has become a role model for others to follow for the elimination of child labour. The business community has developed the culture of 'Do-it-yourself' in Sialkot, under which the business community is playing a pivotal role for the development of the city and welfare of the people.

For the construction of city roads and drains, Sialkot Chamber of Commerce and Industry (SCCI) has initiated Sialkot City Package in collaboration of other trade bodies in the city.

Under the programme, exporters are voluntarily contributing 0.25 percent against their export invoices, as a result of which many city roads and drains have been constructed. The mega project of Sialkot international airport has become operational, which has been constructed by the local business community on the basis of 'Build, Operate and Own' (BOO), costing over Rs 2 billion.

It is expected that the more foreign airlines would soon start their passenger and cargo flights from Sialkot in near future. Sialkot international airport is a unique project in private sector and first of its kind in not only in the country but also in South Asia. Despite extraordinary contribution of the local exporters, the city is being ignored in many respects, which deserves a very special status.

Keeping in view the importance and contribution of Sialkot, the city should be treated as a city of cottage industry and both federal and Punjab governments should announce special concessions and incentives for this export-oriented city for the larger interest of the SMEs.


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## Neo

*Country to get out of economic crisis soon: Naveed​* 
KARACHI (November 26 2008): Federal Minister for Privatisation Naveed Qamar has said that the higher interest rate will affect the investment, however the country will soon get out of economic crisis which is part of the global economic meltdown.

Speaking as a chief guest, at the graduate employer awards 2008 organised by PSHRM and Engage Human Resources (HER) at a local hotel on Tuesday, he said that the agreement with the International Monetary Fund was a difficult decision for the government.

He added that the government's decision to go to IMF was aimed to cope with the economic problems. He said that the government's consolidation was aimed to stabilise the political and economic systems of the country, in which it succeeded despite problems.

Later, he gave the PSHMR HR Awards 2008 to Telenor Pakistan for its employee life cycle engagement HR initiative. Other institutions received the award were Royal Bank of Scotland (RBS), Unilever Pakistan, Mobilink, P&G, Microsoft, Schlumberger and Siemens. While Wateen and British petroleum were identified as the most preferred graduate employers. On the occasion, Paul Keijzer, CEO HER, Khursheed Hadi, chairman HER and Navroz Surani president PSHRM also spoke.


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## Neo

*Non-trade barriers restrict exports to India​*
KARACHI, Nov 26: Pakistans two-way trade volume with India is being estimated to have exceeded $5 billion in a year in which share of exports from Pakistan is only $400 million. Top leaders of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) blame non-trade barriers by Indian authorities for restricting exports from Pakistan.

Pakistan should not be made a dumping ground of Indian goods, demanded S. M. Muneer, the recently-elected president of Indo-Pakistan Chamber of Commerce and Industry at a press conference. He revealed that the formal trade volume between two countries is $2 billion a year. But the bulk trade is routed through Dubai, which amounts to $3 billion a year.

Overland trade with India through trucks was resumed in October 2007 after which about 80 to 100 Indian trucks come with perishables virtually every day, Muneer said but no truck from Pakistan is going to India because of logistics. Indians have not provided enough space on their side for parking of trucks, he revealed.

Mr Muneer was in India with Pakistani business leaders, where he was elected president for a two-year term of the Indo Pakistan chamber. Tanveer Sheikh, the FPCCI president said that the Indo Pak chamber as well as the apex trade bodies of two countries is taking up the issue of non-trade barriers with Indian authorities.

Despite complaints about non-trade barriers in India, the Pakistani business leaders shared Indian businessmen view that the Pakistan government should trade with India on negative list rather than a positive list of items as is being done now. Why am I not allowed to import machinery and equipment from India, which is cheaper than those being imported now from Europe and USA and on much less freight and within a timeframe that suits me, Muneer said.

Muneer, Tanvir Sheikh and many other leaders in the press conference shared the view that bureaucracies of the two countries were responsible for creating hurdles in two-way trade and resumption of normal relationship between Pakistan and India.

Muneer wondered as to why containers are not allowed for overland transportation of cargo between two countries when there is a provision for railway bogies and trucks.

He demanded that the governments of both India and Pakistan should take necessary steps to develop infrastructure and logistics at international borders to promote two-way trade between them.

Not only through Wagah but also at international border in Sindh, the cross border trade be promoted, he replied when informed that all through in his statement he talked of overland trade between Pakistan and India through Wagah border only.

Mr Muneer will convene the meeting of the executive committee of the Indo Pakistan chamber in February next and plans to hold a meeting at least once in a month.

All the countries of South Asia have a common history, common cultural heritage and family connections with their neighboring countries, says a prepared document given to journalists in the press conference to point out that almost all the disputes between South Asian nations are not based on beliefs, faiths or religions, they are mere politico economic in their nature.

Businessmen of the two countries have identified potential areas of mutual cooperation and joint ventures, which relate to agricultural products, tyres, auto parts, minerals, chemicals, pharmaceuticals, leather, textiles, telecommunications, gas pipeline, electricity generation using coal and wind energy in Sindh.

The businessmen urged the two countries to conclude a bilateral investment agreement to further broaden the scope of cooperation between India and Pakistan that should pave way to opening of banks and resumption of a full- fledged shipping connection.


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## Neo

*ADB report terms TAP gas pipeline a viable project ​* 
Friday, November 28, 2008

ISLAMABAD: After full backing of USA, the Asian Development Bank (ADB) has found Turkmenistan-Afghanistan-Pakistan (TAP) gas pipeline, as economically and financially viable project in its Technical Report (TA) but the Turkmenistan government has not yet completed evaluation and certification of the recoverable gas reserves at the Dauletabad field.

According to TA report of the ADB on TAP project, available with The News, the Government of Turkmenistan is financing an evaluation and certification of the recoverable gas reserves at the Dauletabad fields and a technical audit of its gas production and processing facilities.

The USA is sternly opposing any move to go ahead with Iran Pakistan India (IPI) gas pipeline and Washington is pursuing Islamabad and New Delhi to adopt TAP as alternate to TAP project.

The Turkmenistan-Afghanistan-Pakistan Natural Gas Pipeline Project consists of a gas pipeline of about 1,700 kilometers that can transport up to 20 billion cubic meters of natural gas annually from the Dauletabad fields in southeast Turkmenistan to consumers in Afghanistan, Pakistan, and possibly India.

The final report found helpful in establishing the basic parameters of the pipeline. It concluded that the Project was economically and financially viable based on certain gas pricing assumptions and a number of scenarios and sensitivities.

In particular, the Final Report (i) selected a preliminary pipeline route, (ii) presented the pipeline design parameters that were considered reliable and safe, (iii) produced an environmental and social assessment of the southern route selected by the three participating countries for further study, and (iv) prepared analyses of financial and economic viability of the Project.

ADB fulfilled its role as an active development partner helping mobilise necessary technical and financial resources for the Project.

In May 2002, the heads of state of Afghanistan, Pakistan, and Turkmenistan met in Islamabad and announced the formation of a coalition for implementing the Project. 

At its first meeting in Ashgabat in July 2002, the Steering Committee requested the Asian Development Bank (ADB) to play the role of a development partner and to provide regional technical assistance for feasibility studies of the Project.

The Project has significant potential for enhancing stability and improving living standards in South and Central Asia. It will be a pioneering effort in linking the energy-deficit economies of South Asia to the hydrocarbon-rich Central Asian countries. MH


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## Neo

*Pakistan lacks features for high growth: report ​* 
Friday, November 28, 2008

LAHORE: Thirteen economies that registered sustained average growth of seven per cent for 25 years after 1950, maintained macro-economic stability, mustard high rates of saving and investment, had creditable, capable and committed government that let markets allocate resources.

The World Growth Report points out these common features among the high growth economies. Pakistan unfortunately lacks these attributes needed for high growth and automatically leads to inroads in the global markets.

The economies that attained high, sustained growth in the post-war period include Botswana, Brazil, China, Hong Kong, China, Indonesia, Japan, the Republic of Korea, Malaysia, Malta, Oman, Singapore, Taiwan, China, and Thailand. Two other countries, India and Vietnam, may be on their way to joining this group the report adds.

A growing GDP is evidence of a society getting its collective act together. As its economy grows, a society becomes more organised, more densely interwoven. A growing economy is one in which energies are better directed, resources better deployed, techniques mastered and then advanced. It is not just about making money. A selected few in Pakistan are making huge money but the society is neither organised nor densely interwoven.

These economies opened up to global economy and imported knowledge, ideas technology and know how from rest of the world. They then exploited global demands which provided a cheap elastic market for their goods. They imported what the rest of the world knew and exported what it wanted.

Pakistans economy for decades has been based on the concept of protecting the domestic industries from competition. There was no emphasis on import of technology rather obsolete technology was allowed in the country for substituting imports through protection. This technology produced products that could only be used in Pakistan but could not be exported as the world had gone much ahead. We are producing cars from the small plants long abandoned in developed countries as they were too small and could not compete with the larger plants having economies of scale 100 times higher. After more than two decades of protection we can not export cars due to this inefficiency.

The four Asian tigers, on the other hand, increased their manufactured exports from $4.6 billion (2000 dollars) in 1962 to $715 billion in 2004. If there was any small decline in price, it was overwhelmed by the vigorous growth in sales. Governments in successful were also fiscally responsible. Many ran budget deficits for extended periods; some nursed high ratios of debt to GDP. But this public debt did not get out of hand, not least because the economy grew faster than the stock of public liabilities. Pakistani governments are not fiscally responsible and run unmanageable budget deficits and debt to GDP ratios.

All high growth economies were future-oriented, forgoing consumption in the present in pursuit of a higher level of income in the future. China has saved more than a third of its national income every year for the past 25 years. India has reached the same saving level of 34 per cent while Pakistans saving rate is almost half.

A countrys comparative advantage will evolve over time. In any period of fast growth, capital, and especially, labour moves rapidly from sector to sector, industry to industry. This mobility of resources was a feature of all the 13 high-growth cases. Governments did not resist (although they may have tempered) the market forces that pulled people into urban areas or destroyed some jobs, while creating others. Pakistani governments have been trying to shield its most inefficient industries. Sugar industry survived on this protection but is still not efficient enough to go in to global market.


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## Neo

*JP Morgan outsources brokerage business ​* 
Friday, November 28, 2008

KARACHI: JP Morgan, one of leading US Banks, has temporarily outsourced its brokering business in Pakistan owing to slowdown in local economy and maintenance of floor at local bourses since August 27, this year.

One of JP Morgans official at Karachi office dispelled the impression that his Company was winding up its complete business in Pakistan and replied on phone that the Company was just outsourcing its brokering business for the time being here and would continue to deliver services to its brokering clients too.

He maintained that the Company would continue to run the other two businesses at city office i.e. Treasury Services and Investment Banking. We want to give complete attention to our Treasury Services when floor is in place at bourses since long, he added.

J.P. Morgan would maintain its KSE membership card, which it purchased in 1996 and would resume delivering brokering service when the economic conditions and business sentiments at bourses are improved, he added.

Earlier, Company resumed its operations in Pakistan in early 2007 after a gap of five years in complete suspension. Prior, J.P. Morgan has closed its equity trading business in Pakistan sometime in 2001 as the Company was getting consolidated.


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## Neo

*Govt to issue LoS for 1,300MW power generation projects​*
ISLAMABAD: The government is planning to issue Letter of Support (LoS) for 1300MW power generation, which the present government initiated on Fast Track basis.

Engineer Ali Nawaz of Private Power and Infrastructure Board told Daily Times here on Thursday that the government issued LoS for 1500MW thermal and rental power generation out of which 1300MW matured for which the government would issue LoS very soon. He further said that the government had planned to generate 16,262MW by 2016 to meet countrys power requirements.

The PPIB official further informed that the government has plans to issue LoS for another 1500MW power generation in 2009. It would include power generation through rental and thermal sources. However, the government was evaluating the price of the new power generation and is considering various options for keeping the price at minimum, he claimed.

Earlier, participants at the seminar on How to overcome energy crises: Policy recommendations expressed dissatisfaction on the energy policies of the incumbent government. The energy experts, former bureaucrats and civil society representatives urged the government to make the process of agreements with Private Power Producers (IPPs), including tariffs, more transparent.

It was also said that all the agreements made with petroleum exploration companies should be made public forthwith in order to ensure public right to information. They demanded that the information regarding Production Bonus in the name of the President of Pakistan, since last 25 years by the oil and gas companies should also be made public.

Emphasising on following pro-peace and pro-people approach, the seminar urged that the government should finalise arrangements and pacts with countries like Iran, Afghanistan, Tajikistan and other Central Asian States regarding energy.


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## Pk_Thunder

*Minister sees $10 billion investment in different sectors*​

ISLAMABAD (November 28 2008): Minister for Investment, Senator Waqar Ali Khan said on Thursday that the government is expecting $10 billion investment in different sectors for which all the ministries have been asked to prioritise their areas for investment.

Addressing a press conference at his residence, he conceded that security of investors was an issue but the government was managing it and investors themselves were aware of it. For this purpose, Investment Division has proposed a task force to be headed by the Minister of State for Interior Affairs and Secretaries of Foreign Affairs and Investment Ministry to resolve security issues of investors.

He was of the view that the investors should know that an entity was there to resolve their security-related issues. "I am sure that the new multinational companies will have their security teams but we must also have a team which should help them out on security related issues," Waqar added.

He said, Investment Counsellors deputed in foreign countries have also been asked to send recommendations to the Investment Division as to how the government could interact with the multinational companies in their respective countries. Senator Waqar further said that Investment Division has held a meeting with the local investment companies like Pak-China, Pak-Kuwait, Pak-Libya, Saudi-Pak and Pak Brunei and asked them to function according to their mandate.

These companies have been told that their mandate was to promote investment and not invest in stock exchange, he continued. "We have asked these companies to create an investment fund and bring $2 billion investment from their respective countries so that liquidity crisis can be managed," Waqar continued.

According to him all the companies would inform the government about their priority areas for investment. He was also of the view that Bilateral Investment Treaty (BIT) with the US will be signed within a couple of weeks and for this purpose a summary would be submitted to cabinet after vetting by the ministry of law.

"It is our utmost effort that BIT with the US could be signed as early as possible," he stated. Senator Waqar further said that a delegation of German investors was visiting Pakistan, which has already conveyed interest in investing in energy sector projects.

He said, President's visit to United Arab Emirates (UAE) was highly successful as he held meetings with 50 investors of different sectors. "We are expecting investment of billion of dollars from UAE investors especially from UAE investment fund," he further added.

Replying to a question, he said that the government was also making efforts to strike a deal for gas import with Qatar in addition to Pak-Iran gas pipeline. He revealed that Al-Tuwairqi Group has shown interest in import of LNG gas for which a terminal would be established in Karachi.

Answering another question, he said that Ministry of Investment has been created just to give one window facility to the investors as in the past they were not treated properly. In reply to another question, he said that the government would take a policy decision to bring back flown capital very soon. This issue had also been discussed by the federal cabinet in its previous meeting.

He said that the government was also expecting $4-5 billion investment in different sectors from China which has already promised $500 million. He further said that an investment conference was also being arranged in Dubai to attract investment.


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## Pk_Thunder

*Joint working group to recommend measures to boost trade: Pak-Afghan JEC session ends*​
ISLAMABAD (November 28 2008): Adviser to the Prime Minister on Finance and Economic Affairs Shaukat Tarin, led Pakistani delegation to the 7th session of the Pak-Afghan Joint Economic Commission (JEC) held at Kabul from November 25 to 26.

Pakistani delegation held meetings with President Karzai, Afghan Minister for Finance and Minister for Foreign Affairs. The Adviser on Finance conveyed the goodwill of the President and the Prime Minister of Pakistan for the people and the leadership of Afghanistan.

The Adviser during his meeting highlighted importance of both countries for world peace and their joint stance in the war against terrorism. These two countries are the future corridor of energy and trade between East and West.

The 7th meeting of JEC proved to be very useful as it was held at a time when both the countries require pursuing joint strategy to fight terrorism increase trade and economic development.

It was decided to negotiate a new trade Agreement enabling provisions for the removal of all irritants faced by the business community of the two countries.

The bilateral trade between Afghanistan and Pakistan has great potential and therefore, it was decided to establish a joint working group on bilateral trade to review/evaluate the existing trade related issues and recommend measures to streamline trade between the two countries and sign a new trade agreement with Afghanistan.

It was decided to hold the JEC bi-annually meeting aiming at removing delays in implementation and existing gaps. For the development of infrastructure and for the capacity building in the social sector, Pakistan has allocated an amount of 300 million dollar.

The Adviser on Finance advised for the early completion of on-going projects for the building of roads, hospitals, educational institutions and capacity building initiatives for the health and other professions so that the common man could be benefited. -PR


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## Pk_Thunder

*Establishment of mini industrial estates in rural areas on the card​*
RECORDER REPORT
SIALKOT (November 28 2008): The proposal to set up mini industrial estates in rural areas is on the cards, which is aimed at promoting non-traditional products being produced in the areas and generate employment opportunities for skilled and semi-skilled persons in their doorsteps in the Punjab.

Official sources on Thursday told Business Recorder that the government was according special attention to promotion and development of cottage industries. For the purpose Rs 400 million would be spent for enhancing volume of exports and productivity of industries in Punjab, he added.

The development of industrial sector was top on government agenda and during current fiscal period Rs 1.30 billion were being spent on the development of industrial sector in the province. The government has already introduced business-friendly policies for ensuring maximum establishment of industries in private sector and to expand the radius of setting up industries to rural areas for bringing industrial revolution in of the Punjab.

In order to facilitate the SMEs the Punjab government would soon initiate a" Micro Finance" loaning scheme with an amount of Rs 1 billion during current fiscal period for the development of cottage industries and creating self-employment opportunities in the Province. The concept of introducing of this scheme was to extend loan facilities to the interested persons for setting up small scale and cottage industries in the Punjab.


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## Pk_Thunder

*Government to support Textile sector:Tarin *​ 

ISLAMABAD, Nov 29 (APP): Adviser to Prime Minister on Finance Shaukat Tarin on Saturday promised Pakistan Readymade Garments Manufacturers and Exporters Association that government would provide all out support to textile and garments sectors that employs 2 million workers in the garments sector only.

He stated this during a meeting with a delegation of Pakistan Readymade Garments Manufacturers and Exporters Association which called on him here this morning.

The Adviser noted that apparel sector performance during the period (June- September, 2008) comes to $ 1157.29 million which needs to be enhanced to increase export-based foreign exchange earnings.

Mr.Tarin also appreciated value additions made by domestic textile and garments manufacturers that help support our consumption and exports in local and international market.

The delegation of Pakistan Readymade Garments Manufacturers and Exporters Association which was led by Bilal Mulla, Chairman Pakistan Apparel Forum also informed the Adviser about industrys financial crisis relating to increased cost of production and other problems confronting business operations of the Association members.

The delegation further briefed the Adviser regarding recent competition from neighbouring and regional countries whereby Pakistan is loosing foreign markets.

The Association members explained to Shaukat Tarin their business related problems and impediments which need governments urgent attention for resolution - more specifically R&D support from government to the garments sector.

Apparel sector constitutes 23% of all the exports of Pakistan , with 2.8% decline in exports during 2007-08 because of energy crisis and other political factors, the delegation informed the Adviser.

Shaukat Tarin appreciated value additions made by domestic textile and garments manufacturers that helps support our consumption and exports in local and international market.

The government, he said has put in place an integrated energy generation plan that, once implemented, shall resolve uninterrupted power supply issues to the garments sector.

Shaukat Tarin explained to the delegation that with institution of ROZs in various parts of the country, the Apparel Sector shall receive governments support package to beef up production-led growth in garments and textile sectors.

He also assured them that relevant Government organizations shall sit together, complete its homework, and shortly shall come out with a clear policy framework supportive to Pakistan s apparel sector.

The Adviser to Prime Minister on Finance advised Ministry of Textile Development, FBR and other government stakeholders to sit with representatives of Pakistan Readymade Garments Manufacturers and Exporters Association to jointly work out a support plan for the apparel industry.


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## Pk_Thunder

*IMF loan facility a positive sign for national economy: ICCI *​ 
ISLAMABAD, Nov 29 (APP)&#8209; President Islamabad Chamber of Commerce and Industry (ICCI) Muhammad Ijaz Abbasi has said that approval of US $ 7.6 billion Stand&#8209;by Arrangement by the Executive Board of the International Monetary Fund (IMF) is a major achievement for the economy of Pakistan.

The total amount approved under the Stand&#8209;by Arrangement is 7.6 billion dollars, first tranche of $ 3.1 billion has been transferred to SBP account to meet Pakistans current account deficit and debt payments as well as to strengthen the reserve position of the country.
However, government should ensure that every penny of this loan is spent in the best interest of the country to achieve optimum results from this stand&#8209;by loan facility.

He said the threat of default in foreign payment obligations which was imminent due to the crisis in the external sector would now be averted.
The authorities should now devise such set of policies during the program period that should restore macroeconomic stability and put the country on a sustainable path of development, he said.
ICCI President said the IMF financial assistance normally comes with many tough conditions like eliminating subsidies, hiking interest rates, raising and expanding taxes, slashing development expenditures and tightening monetary policies, he observed.
Abbasi said, while all these measures normally prove detrimental for the smooth growth of business and industry as well as create further difficulties for the common man.
Therefore, government should make all possible efforts to utilize IMF 23&#8209;month credit facility of $ 7.6 billion judiciously and prudently to support the countrys economic stabilization program so that nation could be saved from further financial burden.
He said our external debt has gone up to US$ 46.3 billion and had this huge amount been utilized in the interest of the country, our economic scenario should have been far better.

He said the government must ensure judicious use of funds to be received from IMF, as wastage of financial resources on non&#8209;developmental expenditures would be very harmful for the country.
He said that government should ensure every single penny of IMF loan is used on the productive ventures aimed at accelerating economic activities in the country so that our economy could come out of present crisis and could march on the road to development and prosperity.


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## Pk_Thunder

*Pakistani delegation to seek market access from EU *​ISLAMABAD, Nov 28 (APP): Commerce Minister Makhdoom Amin Fahim along with Dr. Mirza Ikhtiar Baig Advisor to Prime Minster on Textile Industry will lead a delegation to EU for seeking market access for textile goods.

The delegation during the visit will lobby in the European Union to get market access for textile products before the meeting of our Foreign Minister with the European Union Trade Commissioner lady Ashton in Brussels, Belgium on December 8, says a statement issued here on Friday.

Sixteen leading exporters in different textile categories are also accompanying the delegation, who will visit Paris, London, Berlin, Rome, Spain and Brussels.

European Union is already in negotiation with India for signing a Free Trade Agreement (FTA) as Bangladesh is enjoying GSP+ duty free status with EU.

At the recent Friends of Pakistan meeting, strong indications were given by EU members to help Pakistan by enhancing Pakistans exports to EU.

In this connection, Dr. Baig has already met Daniel Jouanneau Ambassador of France to Pakistan, Vincenzo Prati Ambassador of Italy to Pakistan and Robert W. Gibson British Deputy High Commissioner who assured him their full support in this regard.
Secretary Commerce has been advised to coordinate with Pakistan missions for tentative schedule of meetings particularly with EU Trade Commissioner lady Ashton in Brussels for presenting the visiting delegations point of view.


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## Pk_Thunder

*Cement export via Gwadar: manufacturers turn down government proposal*​
RIZWAN BHATTI
KARACHI (November 29 2008): The cement manufacturers have turned down the government's proposal to export cement through Gwadar, industry sources said. They termed it a costly and unsustainable activity due to high cost of transportation. A meeting of cement manufacturers and government officials was held in Islamabad in the second week of November, in which representatives of cement industry completely rejected the government proposal, they added.

On last Thursday also a meeting of cement manufacturers was held in Lahore for election of new office bearers, wherein they again unanimously refused the proposal and demanded more facilities at Port Qasim and Karachi. Major General Rehmat Khan, newly elected Chairman of All Pakistan Cement Manufacturers Association (APCMA) also confirmed that cement manufacturers had rejected the proposal due to unsupportable infrastructure at Gwadar port and rise in cost.

He said that the export through Gwadar port would increase cost of cement export making it unviable, as at present there is no facility of cement export available at Gwadar. "We are already exporting cement at lowest margin due to high competition in the world market and shrinking construction industry in the Middle East and United Arab Emirates (UAE)," he said.

He said that cement export through Gwadar would put additional burden of some 6-8 dollars per ton cement, which is unsuitable for the industry. However, he added that if the government agreed to pay some subsidy on cement export and provided facilities at Gwadar, "then we will consider the proposal". The APCMA Chairman said that industry would support the government to make Gwadar port operational, but at preset when the country is facing adverse balance of payments situation and needs foreign exchange, this decision would hurt cement export.

He said that that the immediate requirement of wheat has been met in the country. Therefore its import of remainder quantity could be shifted through Gawadar. However, cement export through Gwadar port without subsidy and infrastructure is not viable for the cement manufacturers, APCMA chairman said.

He urged the Government to facilitate cement export by providing dedicated berths at Port Qasim and Karachi port, which would be supportive for the cement industry and benefit the country.

He also expressed concern over high interest rates being charged by banks and over high and unreasonable level of marking fee being levied by Pakistan Standards and Quality Control Authority (PSQCA) and said that it would seriously retard the growth of the industry.


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## Pk_Thunder

*29.41 percent rise in SPI inflation*​
ZAHEER ABBASI
ISLAMABAD (November 29 2008): The SPI inflation surged by 29.41 percent on week ending November 27 over the same period of last year because of sharp increase in the prices of some vegetables, meat and other commodities. Weekly figures on SPI inflation, released by the Federal Bureau of Statistic (FBS) on Friday, showed that after Rs 16 increase, the price of tomatoes per kilogram has gone up from Rs 35.71 to Rs 52.63 during the week.

Similarly, the price of dozen eggs has increased from Rs 65.83 to Rs 73.98 during the week. This is the second consecutive week that inflation has started resurging after a brief period of decline at the beginning of the month on the back of falling prices of commodities in the international market.

This trend in inflation shows that the tight monetary policy of State Bank of Pakistan (SBP) was not working to tame it. The SPI inflation re-surged from 27.91 percent to 29.41 percent during last two weeks, indicating that despite decline in some commodities prices in the global market, the prices of essential commodities have been on the rise. Though palm oil cost has declined substantially, the price of ghee and cooking oil has not been reduced.

The combined SPI after a surge of 0.32 percent during the week has gone from 29.02 percent last week to 29.41 percent this week. With this increase in the SPI, the dearness for the low income group bracketed in Rs 3000 was recorded 29.39 percent, followed by 29.85 percent for Rs 3001-5000 monthly income families. The dearness was counted 30.31 percent for the families earning monthly Rs 5001-12000 and 28.92 percent for above Rs 12000 income group.

The data on SPI released by FBS showed increase in the prices of 13 essential commodities, decline in 15 while the prices of 28 items remained stable but dearer with most of them in double digit as compared to last year.

The price of per kilogram tomatoes was increased during the week to Rs 52.63 from Rs 35.7, egg hen (farm) doz to Rs 73.98 from Rs 65.83, onions kg to Rs 26.87 from Rs 25.02, mash pulse washed kg to Rs 75.45 from Rs 74.82, potatoes kg to Rs 27.70 from Rs 27.53, electric bulb 60 watts each to Rs 13.97 from Rs 13.91,

firewood 40 kg to Rs 266.18 from Rs 265.06, bread plain medium size each to Rs 24.06 from Rs 23.97, mutton kg to Rs 257.13 from Rs 256.51, beef kg to Rs 142.24 from Rs 142.20.

The price of chicken (farm) kg declined during the week to Rs 92.12 from Rs 98.22, garlic kg to Rs 43.16 from Rs 44.15, bananas doz to Rs 31.25 from Rs 31.86, LPG (11 kg cylinder) each to Rs 819.97 from Rs 835.41, vegetable ghee loose kg to Rs 98.10 from Rs 99.93, red chillies kg to Rs 140.61 from Rs 143.03, sugar kg to Rs 35.10 from Rs 35.58, wheat flour average quality kg to Rs 26.72 from Rs 27.04, mustard oil kg to Rs 143.43 from Rs 144.76, wheat average quality kg to Rs 24.88 from Rs 25.06, gur to Rs 39.10 from Rs 39.34, rice basmati broken kg to Rs 48.46 from Rs 48.64, masoor pulse washed kg to Rs 128.81 from Rs 129.28, kerosene litre to Rs 68.28 from Rs 68.40, rice Irri-6 kg to Rs 38.54 from Rs 38.58.


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## Pk_Thunder

*NAB approves corruption references, investigations*​
ISLAMABAD (November 29 2008): A meeting of Executive Board of National Accountability Bureau (NAB) held here on Friday presided by Nawid Ahsan, Chairman NAB approved a number of references. According to a NAB press release, reference against Muhammad Aslam Chairman Kissan Co-operative Commercial Corporation Limited (KCCCL), Sargodha and seven others.

The investigation revealed that Chairman KCCCL in connivance with other accused dishonestly and frequently cheated public at large and misappropriated Rs 115.123 million. Moreover 4,144 depositors submitted their claims worth Rs 115.56 million. (b) Reference against ex-assistant collector Muhammad Abdul Latif who has acquired assets and properties disproportionate to his known sources of income to the tune of Rs 12.858 million which he was not able to justify.

(c) Reference was approved against Muhammad Saddique Khattak and others. According to investigation carried out by NAB, the accused in connivance with each other embezzled 57, 998 cubic ft timber of Hazara Tribal Forest Division and also embezzled government duties and owner royalties. The total loss to the government and owners is Rs 20.406 million.

(d) Reference against Abdul Rahim, Deputy Manager Regional Complaint Centre Multan Electric Power Company. The accused had acquired assets beyond his known sources of income.


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## Pk_Thunder

*Fortifying ties: Pakistan, US agree to sign BIT by year-end*​

By Sajid Chaudhry

ISLAMABAD: Pakistan and United States have agreed to sign Bilateral Investment Treaty (BIT) before the end of the current calendar year 2008 and hectic efforts have already started to settle all remaining issues to achieve the time line.

Federal Minister for Investment Senator Waqar Ahmed Khan informed Daily Times during an exclusive interview here on Friday that issues relating to arbitration, transparency clause still need to be resoled. In this regard, Pakistan has sought final comments from the US so that things could be finalised by mutual consent. In a recent meeting with US Ambassador and US Commercial Attaché the Ministry of Investment has sought final opinion of US authorities in BIT draft.

The present government wants BIT to be equally beneficial for both the signatory countries as this would be crucial for further negotiation to conclude bilateral Free Trade Agreement (FTA) with US, the minister added. The Pakistan Peoples Party led coalition government has decided to obtain legal as well as experts opinion on the draft of the BIT. In this regard, draft has been handed over to the Ministry of Law and Justice and private legal consultants so that its clauses could be analysed keeping in view the international best practices, said the minister.

Pakistan is of the view that signatory countries to BIT do not use any political influence or any media campaign if any matter is referred for arbitration as well as transparency is upheld by both sides for mutual benefit, the minister explained.

Once the comments are received from the US side this matter would be again discussed in detail and it would be placed before the federal cabinet for formal approval, said Khan. Replying to a question on allowing Indian investors to invest in Pakistan, the minister was of the view that investment from all counties should be allowed as this would help economic integration of the regional countries for the benefit of the people.

We are going to propose to the government that there should be legislation on continuation of policies so that protection of investment is ensured and long-term objectives of the investment vision is achieved.

The present government has fixed three priorities including restoration confidence of local as well as foreign investors, good governance with time management and improvement in law and order situation especially fool proof protection to the investors.

To achieve the prime objective of protection to the foreign investors the government would shortly set up a task force on investors protection that would be having participation from all the federating units. A special force would be providing security to the investors with the help of all law enforcement agencies in all parts of the country, he maintained.

The minister was confidant that Pakistan, being an emerging economy, would be able to attract sizeable investment in the coming years with quick service delivery to the foreign as well as local investors. In this regard, the one window facility, with micro-management, in the Ministry of Investment with focal persons in each federal ministry or department and each in all four provinces would facilitate investors, he said.

The investment ministry would finalise in three to four weeks time investment vision for the next five years and that would be taking into account all steps that are needed to attract investment from all parts of the world.

Foreign investment in Pakistan would be doubled in next fiscal year by facilitating investors having interest in making investment in Pakistan. Attracting huge investment in oil and gas, power generation and infrastructure development are the priorities of the proposed investment plan of the PPP led coalition government. Investment conferences are being planned to attract foreign direct investment from China, Middle East and European countries.

Foreign investors have agreed to set up open-ended equity fund for infrastructure development and similar equity fund would also be set up for the local investors and all investors would be allowed to participate.


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## Pk_Thunder

*TDAP establishes new divisions to boost exports*​

By Tanveer Ahmed

KARACHI: Trade Development Authority of Pakistan (TDAP) has made major structural changes in its setup by establishing new divisions to improve the working and efficiency of the organisation and export promotion, the basic objective it was created for.

A total of ten divisions  headed by Director Generals - have been established to streamline the functions of the authority. The objective cited for regrouping of the functions was the overlapping in critical areas, which was hampering the efforts to increase exports. The new setup will be effective from December 01, 2008. Under the new setup, the new divisions created include Agro Food Division, Textile & Clothing, Mines & Minerals Division, Engineering & Other Manufacturing Division Services Division, Europe Division, America & African Division, Human Resources, Finance & Administration, Asia Division, Facilitation Division. A separate investment and women entrepreneur wing has also been established in the authority. TDAP, established in 2006, replaced the defunct Export Promotion Bureau (EPB), is still in the process of transformation.

Now the direction has been set and the real work of authority to develop the trade and boost export starts now, an official pointed out. Since the change of guard at the authority some few months back, changes have been made in the organisational setup of TDAP. These divisions will be responsible for developing plans and projects and would carryout the activities to help developing the export potential of Pakistani products and services. Furthermore, the export potential of products will also be improved, according to official papers of the authority.


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## Pk_Thunder

*Mobile Money Order Service to be launched*​

KARACHI: Mobilink signed an agreement with Pakistan Post Office (PPO) to introduce Mobile Money Order Service in Pakistan here on Friday. The agreement was signed by Ahsan Basir Sheikh, Additional Director General (Financial Services) from Pakistan Post and Bilal Munir Sheikh, VP Marketing from Mobilink Elaborating the initiative, Bilal Munir Sheikh said, As a company on the forefront of technological innovation, Mobilink has pioneered the mobile-based commerce in the country. Continuing our tradition of firsts, the Mobilink Mobile Money Order Service is a unique offering that completely revolutionises the process of sending and receiving money orders. MMO enables our customer to send and receive money orders to any Mobilink customer across the country anytime, anywhere, via SMS. Mohammed Ahmed Mian, said the customers can not only remit money to their relatives and friends through mobile SMS but can also withdraw or deposit up to Rs 10,000. This can be done by simply filling out a form that will be available at authorised PPO branches across the country upon launch. Once they are submitted, within 24 hours customers will be able to send and receive money orders at their convenience to Mobilink users via SMS anywhere in Pakistan. staff report


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## Neo

*ADB to extend $810 million financing facility for power sector​*
ISLAMABAD (November 30 2008): Pakistan and Asian Development Bank (ADB) here on Saturday inked a $810 million financing facility agreement, under which the latter would provide the amount for 'Power Distribution Enhancement Multi-Tranche Financing Facility (MFF)' to Pakistan help improve its power management and efficiency in the energy sector.

The Loan Agreement of the first tranche of $242 million (OCR) and $10 million was signed by ADB's Country Director Rune Stroem and Secretary, Economic Affairs Division, Farrakh Qayyum, while the Project Agreement were signed by ADB's Country Director, Managing Director Pepco Fazal Ahmad Khan and the chief executives of the eight power distribution companies (Discos). The Executing Agency (EA) for the Investment Programme is the Pakistan Electric Power Company (Pepco).

The programme will be implemented by eight power distribution companies ie Fesco, Gepco, Hesco, Iesco, Lesco, Mepco, Pesco, Qesco. Pakistan's power distribution system faces technical and fiscal deficits. The system faces major challenges which include deterioration in system efficiency, reliability and quality of electricity supply, high technical and commercial losses, curtailed availability of electricity, and low voltage profile.

EAD Secretary Farrukh Qayyum thanked ADB for extending this financial facility for improving the transmission and distribution of electricity in the country. Addressing distribution constraints through power sector reform and investment planning and financing is urgently required and is Government's top most priority, he said.

He said that the Government is exploring the financing for not only power generation projects but also for power management and efficiency to improve the distribution network. "We appreciate that this distribution enhancement facility with the ADB shall help the government to overcome the energy crisis in the country & improve distribution efficiency", he said.

This Investment project is part of the long term investment program for energy security and part of the power transmission and distribution development programme of Pakistan. The investment programme will enhance the overall power distribution system efficiency across all eight distribution companies in the country by improving the reliability, quality and stability of the distribution system.

The investment program of $252 million is structured in at least three tranches with a batch of 'Subprojects' and their implementation support. The first tranche would finance nearly 160 'Subprojects' and a Subproject support component.

The subprojects will improve power distribution infrastructure through rehabilitation, augmentation and expansion of the secondary (below 132 KV) transmission network, and relieve the power system from distribution bottlenecks and constraints.

Specifically Discos will adhere to regulatory requirements and comply with the security standards, about 12 gigawatt hours (GWh) of additional power will be supplied through the national grid annually, the system will be capable of meeting peak demand, with electricity outages significantly reduced; and 60 million additional people will have access to electricity from the national grid.

In his remarks the ADB Country Director expressed hope that this financing facility would help Pakistan improve its transmission and distribution in the power sector. He added that infrastructure can play an important role in the economic growth of any country. He assured the support of his organisation to Pakistan for achieving this objective.


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## Neo

*Infrastructure maintenance: Pakistan spends below three percent against eight percent in Asia​* 
LAHORE (November 30 2008): Pakistan is lurking much below on the spending yardstick for maintenance and repairing of existing infrastructure in the Asia where majority of countries spend 8 percent of the total cost of the asset annually against less than 3 percent in Pakistan, causing a big blow to the growth of overall economy here.

Since a major chunk of the infrastructure development work in Pakistan depends upon the lenders' releases, often disrupted due to one or the other reason. Therefore, a constant deadlock is the hallmark of the infrastructure set up in Pakistan where the scarcity of funds has put the maintenance and repair of existing infrastructure on priority than rapidly building up new infrastructure assets.

Particularly, the recent energy deficiency has hit the national industry hard, which has experienced the worst-ever load shedding throughout the calendar year 2008 due to snail pace work on developing new energy resources. To cover the ugly face of country's infrastructure, the planners have chosen a short cut of concentrating on major cities like Lahore and Karachi, the provincial capitals, for launching new infrastructure projects.

This approach is supported through the argument that the existing infrastructure in major cities would be choked down in the absence of a timely expansion. But no serious attention is given to country's 80 percent rural-based population living in abject poverty generation after generation where members of national and provincial assemblies are siphoning off development funds under the garb of street soling and drainage.

To add fuel to the fire, the vindictive mindset of political leadership proves last nail to the coffin, hampering again the growth of infrastructure development in Pakistan.

Just to have an idea of this mindset, one may give a serious attention to the Punjab government sources who pointed out in a dejected tone that the Chief Minister Punjab Shahbaz Sharif has put the project of Lahore Rapid Mass Transit System (LRMTS) on the backburner despite a heavy spending of Rs 1.0 billion on its designing by the previous government of Chief Minister Chaudhry Parvaiz Elahi.

Instead of asking for speed up the development work, according to the sources, the Punjab Chief Minister has directed an evaluation of the project before proceeding any further on the project. Fears are getting high with every passing day that the spending of Rs 1 billion from the public exchequer would go unnoticed if such unnecessary delays are attributed to the fate of the project.

Interestingly, the Chief Minister Shahbaz Sharif had himself initiated the idea of LRMTS back in 1996-99. However, further development took place the regime of Chaudhry Parvaiz Elahi. Now when the policy makers are pulling a long over shelving of the LRMTS, the Chief Minister Punjab has initiated another Rs 50 billion idea of Lahore-Rawalpindi Elevated Express Highway while desiring from the infrastructure planners to put all their energies to make it a success story. It may be noted that the Punjab government is already executing Rs 100 billion Ring Road project, a major spending of which is again on the provincial capital.

Therefore, a total spending of about Rs 150 billion on developing infrastructure of Lahore and areas adjacent to it has resulted into a deep sense of deprivation among under developed regions of the province. The planning developers of the province are of the view that one major reason behind this deprivation is the highly selfish approach of the public representatives from those regions.

It is worth noting here that the road development fund allocated for the whole Punjab for 2008-09 is Rs 18 billion, out of which Rs 13 billion is to be spent on maintenance and repairing of existing roads, Rs 2 billion for new roads and Rs 3 billion to appease the MNAs and MPAs.


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## Neo

*Foreign investment: poor law and order situation main hurdle​*
KARACHI (November 30 2008): Canadian investors are intended to invest in Pakistan, however, poor law and order situation, lack of infrastructure and unclear economic policies are the main hurdles in the foreign investment.

Qamar Sadiq chairman Canadian Trade Council for South Asia and Canadian Investments and Immigration Consultants has said that terrorist activities, suicide attacks in the different parts of the country and political uncertainty is forcing foreign investors not to invest in the Pakistan till the situation is not controlled.

He said that at present, there are a lot of investment opportunities for the foreign investors in the different sectors like power and gas, however, they are reluctant to invest due to unstable government setup and poor law and order situation. He has urged the government to take immediate steps for the political and economical stability in the country, providing new avenues to the foreign investors.

"The Canadian government has recently black listed some immigration consultant after the examining their performance and around 40 percent consultants are still working illegal," he added. He said that Canadian government has planned to provide immigration some 250,000 persons annually ahead of increasing population in the Canada.-PR


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## Neo

*29.41 percent rise in SPI inflation​* 
ISLAMABAD (November 29 2008): The SPI inflation surged by 29.41 percent on week ending November 27 over the same period of last year because of sharp increase in the prices of some vegetables, meat and other commodities. Weekly figures on SPI inflation, released by the Federal Bureau of Statistic (FBS) on Friday, showed that after Rs 16 increase, the price of tomatoes per kilogram has gone up from Rs 35.71 to Rs 52.63 during the week.

Similarly, the price of dozen eggs has increased from Rs 65.83 to Rs 73.98 during the week. This is the second consecutive week that inflation has started resurging after a brief period of decline at the beginning of the month on the back of falling prices of commodities in the international market.

This trend in inflation shows that the tight monetary policy of State Bank of Pakistan (SBP) was not working to tame it. The SPI inflation re-surged from 27.91 percent to 29.41 percent during last two weeks, indicating that despite decline in some commodities prices in the global market, the prices of essential commodities have been on the rise. Though palm oil cost has declined substantially, the price of ghee and cooking oil has not been reduced.

The combined SPI after a surge of 0.32 percent during the week has gone from 29.02 percent last week to 29.41 percent this week. With this increase in the SPI, the dearness for the low income group bracketed in Rs 3000 was recorded 29.39 percent, followed by 29.85 percent for Rs 3001-5000 monthly income families. The dearness was counted 30.31 percent for the families earning monthly Rs 5001-12000 and 28.92 percent for above Rs 12000 income group.

The data on SPI released by FBS showed increase in the prices of 13 essential commodities, decline in 15 while the prices of 28 items remained stable but dearer with most of them in double digit as compared to last year.

The price of per kilogram tomatoes was increased during the week to Rs 52.63 from Rs 35.7, egg hen (farm) doz to Rs 73.98 from Rs 65.83, onions kg to Rs 26.87 from Rs 25.02, mash pulse washed kg to Rs 75.45 from Rs 74.82, potatoes kg to Rs 27.70 from Rs 27.53, electric bulb 60 watts each to Rs 13.97 from Rs 13.91,

firewood 40 kg to Rs 266.18 from Rs 265.06, bread plain medium size each to Rs 24.06 from Rs 23.97, mutton kg to Rs 257.13 from Rs 256.51, beef kg to Rs 142.24 from Rs 142.20.

The price of chicken (farm) kg declined during the week to Rs 92.12 from Rs 98.22, garlic kg to Rs 43.16 from Rs 44.15, bananas doz to Rs 31.25 from Rs 31.86, LPG (11 kg cylinder) each to Rs 819.97 from Rs 835.41, vegetable ghee loose kg to Rs 98.10 from Rs 99.93, red chillies kg to Rs 140.61 from Rs 143.03, sugar kg to Rs 35.10 from Rs 35.58, wheat flour average quality kg to Rs 26.72 from Rs 27.04, mustard oil kg to Rs 143.43 from Rs 144.76, wheat average quality kg to Rs 24.88 from Rs 25.06, gur to Rs 39.10 from Rs 39.34, rice basmati broken kg to Rs 48.46 from Rs 48.64, masoor pulse washed kg to Rs 128.81 from Rs 129.28, kerosene litre to Rs 68.28 from Rs 68.40, rice Irri-6 kg to Rs 38.54 from Rs 38.58.


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## Neo

*WFP to give $71m aid to support 3.1m more people hit by high food prices​* 
Sunday, November 30, 2008

ISLAMABAD: The World Food Program (WFP) will provide emergency assistance of $71 million in the 20 worst affected districts of Pakistan to support an additional 3.1 million people hard hit by high food prices.

In this regard an agreement was signed here on Saturday in the Ministry of Food & Agriculture. Secretary Food, Agriculture & Livestock Zia-ur-Rehman and Wolfgang Habinger Country representative of WFP signed the agreement.

The emergency assistance will be provided in the 20 worst affected districts of NWFP, Balochistan and Sindh and also, the assistance would compliment the Benazir Income Support Programme (BISP) started by the government to support the poorest of the poor, says an official statement.

The government of Pakistan has set up a National Task Force on Food Security in response to the food price crisis and this task force recommended safety net assistance for seven million households whose food consumption is less than 1700 kilo-calories per day. The governments new Benazir Income Support Programme will provide cash support of Rs1,000 per month for 3.5 million families.

Wheat bags of 50 kg are being distributed in WFP-assisted primary schools from October 2008 on a quarterly basis. Edible oil will continue to be distributed to students every month under WFPs ongoing country programme.

Federal Food Agriculture minister Nazar Muhammed Gondal said in his statement that the government is pursuing pro-poor policies, and direct financial assistance to the poorest of the poor through BISP is a great step towards bringing people out of the vicious circle of poverty and providing them with food security.

The Minister said that the agreement signed with WFP would strengthen the efforts of the government to face the challenges of poverty and food security. He commended the role of WFP assisting Pakistan in providing food security and eradicating poverty in the country.


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## Neo

*ADB to provide $252m loan to enhance power distribution ​* 
Sunday, November 30, 2008

ISLAMABAD: The Asian Development Bank (ADB) and Pakistan on Saturday signed a loan agreement worth $252m to enhance Pakistans power distribution system and capacities.

The $810 million Power Distribution Enhancement program was approved by ADB in September 2008, and will be implemented over a period of 10 years.

The agreement comprises of two components, Periodic Financing Request (PFR) of $242 million and Multi-tranche Facility (MFF) support component of $10 million.

The Investment Program is structured in at least three tranches with a batch of sub-projects and their implementation support.

ADBs first PFR under this MFF would finance about 160 sub-projects and a sub-project support component. 

The sub-projects will improve power distribution infrastructure through rehabilitation, augmentation and expansion of the secondary (below 132 kV) transmission network, and relieve the power system from distribution bottlenecks and constraints.

Specifically, (i) DISCOs will adhere to regulatory requirements and comply with the security standards, (ii) about 12 gigawatt hours (GWh) of additional power will be supplied through the national grid annually, (iii) the system will be capable of meeting peak demand, with electricity outages significantly reduced; and (iv) 60 million additional people will have access to electricity from the national grid.

The agreement for PFR component was signed by Rune Stroem, ADBs Country Director and Farrakh Qayyum, Secretary Economic Affairs Division; while the MFF support fund was signed by Rune Stroem and Fazal Ahmed Khan, managing director of PEPCO and chief executives of eight power distribution companies (DISCOs).

We understand and support the governments efforts to address power distribution constraints to improve efficiency and minimise losses in the system, said ADBs Rune Stroem. A stronger power distribution system, in addition to an efficient power transmission system, will not only help increase power generation capacity to support Pakistans economic growth targets, but it will go a long way in managing future power requirements of the country, Rune added.

Pakistans power distribution system is facing serious technical and fiscal challenges, which include deterioration in system efficiency, reliability, and quality of electricity supply.

High technical and commercial losses and resultant shortage of electricity, and low voltage profile are the other major problems facing the countrys stressed energy sector. MH


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## indiapakistanfriendship

> Similarly, the price of dozen eggs has *increased from Rs 65.83 to Rs 73.98 during the week*



That seems pretty expensive for dozen eggs


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## Neo

*Power plants sought in public-private partnership ​* 
Sunday, November 30, 2008

KARACHI: The Government of Sindh may follow the Punjab Government for establishing 50 MW generation plants at various locations in Punjab under public private partnership.

Engeneer MA Jabbar the new chairman of SAI for the year 2008-09 said his speech following the announcement of his election.

Election Commission of SITE Association of Industry (SAI) led by Abdullah Rafi declared Engr. M.A. Jabbar the new chairman of SAI for the year 2008-09 and Suleman Chawla and Naseem Anwar as Senior Vice Chairman and Vice Chairman respectively.

The announcement was made at the 44th Annual General Body Meeting of the Association held on Friday 28 November, under the chairmanship of out going Chairman Muhammad Nisar Shekhani.

Newly elected Chairman Engr. M. A. Jabbar in his speech said that he would try to capitalize the merit of the oldest and biggest industrial state of the country. He said that the biggest revenue generator of taxes among industrial states needs infrastructure rehabilitation and improvement.

He identified the resources possibly to come from discretionary grants and contingency amounts from the offices and institutions namely President, Prime Minister, Chief Minister, Governor of Sindh and City District Government.

He said that the old industrial estate should not become analogy of being claimed as old civilization. The infrastructure is to be upgraded and rehabilitated, one of the factors for reducing cost of doing business.

He also said that he would try to convince the Sindh Government to adopt relevant chapters in the Punjab Industrial Policy and bring an accord in labour relations and the management for moving the economy amid harmony instead of conflicts and contradictions.

He also said that the Sindh Government under public private partnership may pick up the role model of Punjab Government which is establishing 50 MW generation plants at various locations in Punjab which otherwise are also permissible under the National Power Policy.

He said that industrial cost structuring needs improvement by policy support of the government. Fiscal, monitory, tariffs and taxation needs rationalization including KIBOR to be close of discount rates. Spreads followed by KIBOR for short term and long term lending needs also spread reduction as SBP has relaxed many areas for banks to increase their liquidity.


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## Neo

* North Karachi Industrial Area development under way ​* 
Sunday, November 30, 2008

KARACHI: The government is carrying out infrastructure developments in North Karachi Industrial Area and its results would be seen in coming months, Noor Ahmed Khan, the outgoing Chairman of North Karachi Association of Trade and Industry (NKATI) told The News.

He said that government is laying new sewerage lines, which have improved the overall system in industrial zones.

Many projects have been completed and new roads will be laid once all the sewerage system is completed in the industrial area. We are used to of not planning well in every given task, but this time owing to good planning of government, infrastructure developments are going on systematically. Infrastructure developments are in full swing, and its results would be seen in some weeks, he said.

Younus Khamisani, the newly elected Chairman of NKATI, who would take charge from December 1 this year, said PC-1 of the developmental works has already been approved by government and soon projects of infrastructure development would start in the area.

We are an apex body and we do generate funds, but our associations funds are not used in infrastructure development, and all developmental works in North Karachi industrial zone have been taken place by North Karachi Industrial Trading Estate (NITE), one of the four public-private management firms that had been formed in each of the four industrial zones of Karachi, he added.

Korangi Industrial Trading Estate (KITE), Landhi Industrial Trading Estate (LITE), North Karachi Industrial Trading Estate (NITE) and Federal B Area Industrial Trading Estate (FITE) had received Rs250 million each in March 2008 for the infrastructure development by Sindh Industries and Commerce Department.

But, Sindh government had frozen the bank accounts of these four industrial management companies couple of weeks ago that were formed for infrastructure development in four major industrial estates of Karachi.


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## Neo

*ADB to give $800m for better power distribution​*
ISLAMABAD: The Asian Development Bank (ADB) and the Government of Pakistan on Saturday signed a loan agreement to improve Pakistan's power distribution system, which will help adding 60 million additional people to the national grid.

The $810 million Power Distribution Enhancement programme was approved by ADB in September 2008, and would be implemented over period of 10 years. The agreement signed comprised of two components: Periodic Financing Request (PFR) of $242 million; Multi-tranche Facility (MFF) support component of $10 million. The agreement for PFR component was signed by Rune Stroem, ADB's Country Director and Farrakh Qayyum, Secretary Economic Affairs Division; while the MFF support fund was signed by Rune Stroem and Fazal Ahmed Khan, managing director of PEPCO and chief executives of eight power Distribution Companies (DISCOs).

"We understand and support government's efforts to address power distribution constraints to improve efficiency and minimise losses in the system," said ADB's Rune Stroem. "A stronger power distribution system, in addition to an efficient power transmission system, would not only help increase power generation capacity to support Pakistan's economic growth targets, this would go a long way in managing future power requirements of the country," Rune added.

Pakistan's power distribution system is facing serious technical and fiscal challenges, which include deterioration in system efficiency, reliability, and quality of electricity supply. High technical and commercial losses and resultant shortage of electricity, and low voltage profile are other major problems facing the country's stressed energy sector.

Power distribution system in Pakistan is negatively impacted by the overloading, and poor maintenance, which had rendered it unreliable thus causing difficulties for customers due to heavy load shedding. The system needed immediate rehabilitation, augmentation, and expansion to meet growing customer demands.

The programme is part of ADB's support to Pakistan's long-term investment plan for energy security, power transmission and distribution development. It will enhance the overall power distribution system efficiency across all eight distribution companies in the country by improving the reliability, quality, and stability of the distribution system.

The investment programme was structured in at least three tranches with a batch of sub-projects and their implementation support. The ADB's first PFR under this MFF would finance about 160 sub-projects and a sub-project support component.


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## Neo

*IMF tranche boosts Pakistan's reserves to $9.4bn ​* 
KARACHI (December 01, 2008): Pakistan's foreign currency reserves stood at $9.4 billion by Nov. 26 after receiving the first tranche of $3.1 billion from the International Monetary Fund last week, the State Bank of Governor said on Monday.

Reserves had totalled $6.6 billion as of Nov. 22.

The IMF last week approved a $7.6 billion loan to avert a balance of payments crisis and prevent the government defaulting on its international debt obligations.

Pakistan will immediately have access to $3.1 billion under the 23-month facility, with the rest phased in subject to quarterly review, the fund said early last week.

The State Bank of Pakistan did not give up any break-up between foreign currency reserves held by itself, and reserves held by commercial banks.


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## Neo

*Germany forgoes $51 million debt in exchange for health investment​*
BERLIN (December 01 2008): Germany agreed Sunday to forgive 40 million euros (51 million dollars) of Pakistan's debt in exchange for an agreement from Islamabad to earmark half that amount for health programmes.

The deal between the German and Pakistani governments and the Global Fund to Fight AIDS, Tuberculosis and Malaria was signed on the sidelines of a United Nations conference on Financing for Development in Doha, the German Economic Co-operation and Development ministry said in a statement.

The agreement is part of the Debt2Health programme launched in 2007 offering debt relief to poor countries that agree to invest in health programmes via the Global Fund. Germany forgave 50 million euros in debt owed by Indonesia last year under the programme.

Pakistan is the second country to benefit from Berlin's participation, the statement said. "We hope that other creditor nations will join the initiative and also offer debt conversion deals to Pakistan as well as other countries contending with a heavy health system burden and heavy debt," Pakistani State Minister for Economic Affairs and Statistics Hina Rabbani Khar said in the statement.

The Global Fund, created by the G8 group of industrialised nations in 2002, has approved 100 million dollars in aid to Pakistan for fighting AIDS, tuberculosis and malaria, the statement said.

Cash-strapped Pakistan has said it needs up to 4.5 billion dollars to deal with a balance of payments crisis, raising the prospect that the violence-hit country will default on its foreign debts. The International Monetary Fund offered it a loan of 7.6 billion dollars this month in the first rescue in Asia since the global financial crisis began.


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## Neo

*10 percent cut in taxes for car makers suggested​* 
ISLAMABAD (December 01 2008): The Ministry of Industries and Production has recommended 10 percent reduction in taxes for local car manufacturers, to be considered by the Economic Co-ordination Committee (ECC) of the cabinet scheduled to meet on Tuesday, official sources told Business Recorder.

The office bearers of Pakistan Car Manufacturers Association (Pama) recently met the officials of Industries Ministry, Engineering Development Bank (EDB) and Ministry of Investment to apprise them of current situation of the industry. The delegation was of the view that their production has come to a halt with local car sales plunging by 51percent in the Q1 of financial year 2008-09.

According to recent number of car sales for the month of September were down by 29percent at 7,889 units against 11,072 units sold during the same month last year. The sources said, Pama had been assured that the Industries Ministry would submit a summary to the ECC for reduction in taxes by 10 percent with the consent of Federal Board of Revenue (FBR).

There are, however, reports that FBR is unwilling to give any concession to the auto sector with the argument that if the government accommodates one sector all industries would also demand the similar concessions, the sources added.

The summary titled 'measurers to address declining trend in automobile sector' has not yet been seen by the Prime Minister's Advisor on Finance, Shaukat Tarin whose role in the approval of this proposal would be very important, the sources continued.

On cumulative basis, during 1Q FY 2009 total car sales remained 51percent lower at 19,066 units as compared to 39,297 units sold during the same period last year. During the 1Q FY 2008, almost all manufacturers registered a decline in sales units. Among major players, massive drop was witnessed in Indus Motor's sales units with 64percent decline at 4,659 units that is followed by Pak Suzuki Motors which registered 48percent decline in sales volume over the same period of FY 2008, the sources concluded.


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## Neo

*Foreign investors withdrew $10.570 million during November​* 
KARACHI (December 01 2008): A massive outflow of portfolio investment was witnessed as the foreign investors withdrew $10.570 million from the country's equity market during the month of November 2008. An outflow of $1.750 million was witnessed only in the outgoing week while the cumulative outflow increased to $358.229 million in the current year from January 01 to November 28, 2008.

"The prevailing uncertainty over the price floor and no decision regarding market stabilisation fund forced the foreign investors to off-load their holdings to avoid further losses", analysts said. The law and order and geo-political situation in the region were also another factor, which discouraged them to stay, they added. The outgoing week started with the negative sentiment and the foreign investors withdrew $223,298 from the equity market on Monday. The situation slightly improved at an inflow of $33,858 was witnessed on Tuesday.


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## Neo

*'2008 will be remembered as worst year in Pakistan's history'​* 
MULTAN (December 01 2008): The year 2008 is the worst year in the history of Pakistan due to unscheduled load-shedding, inflated utility bills, soaring prices of petroleum products, depreciation of currency, tragic assassination of Benazir Bhutto, growing trends of terrorist incidents, bomb blasts and suicidal attacks.

Khawaja Muhammad Jalaluddin Roomi, outgoing President of Multan Chamber of Commerce & Industry (MCCI) said this here on Sunday, while delivering his farewell speech on Sunday.

He further said that in spite of all these odds, Prime Minister, Syed Yousaf Raza Gilani has announced to upgrade of Nishtar Medical College at Health Education University, extension of Multan airport, cottage village and a number of other projects to bring this backward area at par with developed areas like Lahore & Faisalabad.

These projects, he said, were sanctioned on the recommendations of the chamber. He further said that 29 acres of land was allocated in Multan industrial estate for developing the housing colony for industrial workers and a labour complex would be constructed on 32 acres of land.

He said that all facilities would be provided for information technology and business women. Roomi said that ambassadors and high commissioners of United States, Britain, Italy, Mexico, South Africa, Malaysia, Afghanistan, Phillipine and Brazil visited Multan chamber for the promotion of bilateral trade ties.

A sub-committee of women entrepreneur was constituted to protect the rights of women to redress their grievances regarding business matters. He said that help desks were introduced in collaboration with State Bank of Pakistan, Tevta, Business Support Fund.

Khawaja Jalaluddin Roomi said that MCCI would soon establish a welfare fund in collaboration with Punjab Government for the provision of medical facilities for poor, destitute. He urged people of all walks of life to come forward to elevating poverty from the society.


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## Neo

*'First Data' enters Pakistan to avail chances in current economic crisis​* 
KARACHI (November 17 2008): The global technology leader in information commerce, 'First Data', has entered Pakistan to avail opportunities in the current economic crisis when banks need to improve their operational activities.

Brian Quarrie, Managing Director of 'First Data', Middle East and Pakistan, in an exclusive interview with Business Recorder via e-mail, said that major changes in economic situations give rise to opportunities, especially where increased efficiency is required.

He said that some studies on the current crisis suggest that the current situation will bring an opportunity to banks to implement measures which have been postponed for too long but which are necessary to ensure their competitiveness at the regional and global levels.

"These are times when banks across the world are thinking creatively not only to manage liquidity crisis but also to improve operational efficiency," he said

First Data models offer both reduced costs and drive revenues for customers, characteristics which are both highly sought after by organisations currently when one considers the economic climate, Brian said.

"We expect our services to be in high demand. Hence, we are very pleased with the strategic decision to open office in Pakistan and look forward to working with financial and retail partners throughout the country," he added.

With a range of unique services products and highly experienced people, First Data is in a good position to face any changes in the economy in the short and long terms, he said.

He said that having such a diversified range of products in a vast number of markets can only be of benefit, "and we are working hard to analyse the situation, so we can take advantage of any arising opportunities".

He said, "First Data is the global technology leader in information commerce and helps businesses such as merchants and financial institutions to process electronic payment transactions across all modes of payments, safely and efficiently.

With operations in 37 countries, 'First Data' serves more than 5.4 million merchant locations and more than 2,000 card issuers and their customers across the world, he added.

'First Data' opened its office in Karachi in August 2008, and is offering a full range of payment card and loan processing services, merchant acquiring solutions, ATM and point-of-sale management, fraud and risk management as well as other value-added services to Pakistan's financial institutions and major retail organisations, he said.

Entry into the fast growing Pakistan market reflects First Data's strategy of developing a local presence in major markets around the world to deliver its global payment solutions, Brian said.

First Data's has appointed Khurram Gul Agha as country manager, who has a wealth of local knowledge on Pakistan's payments and collections market, specialising in transactional banking for the corporate and retail sectors, he added.

Considering the comprehensive range of flexible payment processing and consumer finance outsourcing solutions, First Data has a wide range of audiences but in the main these can be characterised as financial institutions, banks and retailers, he said, adding that "our wide range of tailored solutions enables us to provide a single source for payment processing virtually anywhere and any format as determined by our customers".

He said that like any economy in the world, people in Pakistan will be looking for payment mechanisms that are convenient, accessible and secure.

Meanwhile, confidence should also be gained from the fact that First Data processes more payments globally than any other provider (33.9 billion global merchant transactions in 2007, across 66 countries) enabling customers to efficiently gather, integrate and understand transaction data across payment types and regions, he said.

"We also have 27,000 experts employed world-wide including professionals based in Pakistan who are aware of the local requirements, so the in-house knowledge is at hand to provide solutions to all issues,' he informed.

He said that First Data comprehensive range of solutions provides fraud detection and prevention services at every stage of the payments life-cycle from application, activation, authentication and pre-transaction, through to transaction and beyond. While, it also provides a comprehensive suite of operational fraud services designed to deliver early detection of potential fraud events and to minimise customer inconvenience. We work in conjunction with our local clients to ensure appropriate implementation of functions for local needs.

About access in Pakistan, Brian said that the company is already providing a complete range if services to Bank Al Falah and Allied Bank. "But we're looking forward to developing clients further, as the office gets established and local institutions start to realise the potential benefits of working with First Data". About future plans, he said: "We are planning to continue to grow our business presence across all our existing lines of business and keep supporting our existing clients going forward. Since electronic payment processing as a business is in its formative stages, we do anticipate strong growth potential in the coming five years.


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## Neo

*Ufone to open job opportunities for 900 youngsters​* 
ISLAMABAD (November 28 2008): By 2009 Ufone will open new job opportunities for over 900 young graduates through its newly established contact centre in Islamabad, a facility created with three million USD investment in state-of-the-art IP based technology. Butt informed media that the company operates a total of 6 state-of-the-art contact centres all over the country.

However, the addition of the second contact centre in Islamabad is a major way forward to address customers' queries and complaints in the quickest possible time.


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## Neo

*Over 100 dams being constructed in Balochistan​*
QUETTA (December 01 2008): Balochistan government is constructing over 100 dams in different parts of Balochistan aimed at resolving water scarcity problems and facilitating growers in the province, official sources told here APP on Sunday.

They said that the government was stepping up all-out efforts for improving irrigation system in order to revolutionise the agriculture sector in the province.

They said the government preferred to launch projects of collective nature instead of implementing schemes who benefited individuals. In this regard all concerned officials had already been directed to devise comprehensive plans for launching collective nature of development schemes in the province.

They said that the government was making strenuous efforts to resolve problems of the people in all nook and corner of the province, adding that promotion of health, education and sanitation were top-most priorities of the incumbent government in the province.


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## Neo

*British halal meat industry: 5,000 Pakistani butchers can obtain jobs​*
LONDON (December 01 2008): As many as 5, 000 Pakistani butchers could secure jobs in the British halal meat industry under the Memorandum of Understanding (MoU) signed between National Halal Foods Group UK and Overseas Manpower Employment Corporation.

Speaking at the signing ceremony held over the weekend at the Pakistan High Commission, envoy Wajid Shamsul Hasan said that through the efforts of National Halal Foods Group (NHFG), opening of outlets of halal meat in leading supermarkets of UK and Europe, will provide employment opportunities for Pakistani butchers along with export of meat from Pakistan to the international market of halal meat.

The Community Welfare Councillor of Pakistan High Commission, Muhammad Talha Saeed on behalf of Ministry of Labour, Manpower and Overseas Pakistani and Chief Executive Officer of NHFG Muhammad Zahid Yaqoob signed the MoU.

Expressing his views, Yaqoob said as a result of this MoU, over 5,000 butchers from Pakistan would be in a position to secure employment in the UK halal meat industry for the leading chains of supermarkets.

According to Yaqoob, UK's meat industry is worth $5 billion including halal meat and the potential of Pakistan getting its share looks promising by meeting international standards.


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## Neo

*Defence production for peace​*
EDITORIAL (November 30 2008): Inaugurating the 5th International Defence Exhibition and Seminar (IDEAS) 2008 in Karachi last Monday, Prime Minister Syed Yousuf Raza Gilani, while assuring foreigners maximum possible security to them and their businesses in Pakistan, also dwell upon the objective of the terrorists.

For, as he put it, they seek to spread terror among the country's foreign friends, so as to force them to leave or to avoid Pakistan, thereby, causing capital flight, and decline in their investment here. More to this, as he rightly observed, this has led to negative stereotyping of Pakistan in the international media, spreading despondency and gloom, though basically betraying disconnect between perception and reality.

Nevertheless, understandably, enthused by the large-scale participation of foreign firms and dignitaries in IDEAS 2008, he viewed it as a proof of the fact that in spite of Pakistan's ongoing fight against terrorism, the economic activities, in the country remain unaffected.

Notably, Premier Gilani averred that to counter the present difficulties Pakistan has been facing as a sequel to its campaign against terrorism, and world economic crisis, it looked forward to increased foreign investment in order to generate a higher level of employment and to diversify its exports by gaining enhanced market access in the friendly countries, in which Pakistan's defence industry has to play an important role through its diversification.

Again, pointing out that Pakistan is now in a position to meet most of the defence equipment needs of friendly countries in Asia, Middle East, Africa and South America, he exhorted the participants to visit the country's defence production facilities and interact with manufacturers to explore possibilities of mutually beneficial defence co-operation.

Of course the IDEAS 2008 presents a wide variety of technology, ranging from equipment used in the Third World countries to the most sophisticated systems borrowed from the West, thus providing a reliable interactive platform for the foreign defence establishments to sort out the best products and technology to cater to their respective defence-related requirements.

Moreover, it also unfolds an ideal opportunity to the Third World defence manufacturers to enter into collaboration and joint ventures with Pakistan or other prospective international partners. It will be recalled that the preceding event, IDEAS-2006, had attracted as many as 221 leading defence manufacturers from 27 countries, including 148 foreign companies.

Significantly, it was attended by more than 30,000 defence professionals, analysts and service personnel. As for the prospects of IDEAS-2008, elaborating on this on its eve, Major General Muhammad Farooq, Director General, Defence Export Promotion Organisation (DEPO) in a press briefing, had unambiguously stated that it would be the biggest and most prestigious event in the exhibition industry of Pakistan.

According to him, it is for the first time that JF-17 (Thunder) is being displayed as a proud co-production by Pakistan defence industry and China, together with some highly effective and sensitive defence related ancillary products to complement the highly sophisticated support equipment. At the same time he said that Pakistan has shown the technological capabilities of producing highly sophisticated defence equipment fully embracing the concepts of modern technology.

Pakistan defence industry and participants from over 58 countries. More to this, he also noted that it provides a platform for some 80 percent small and medium enterprises of the country to display their defence support products and export the same to various markets.


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## Neo

*IMF delivers... now it is up to the government​* 
ARTICLE (December 01 2008): What a volte-face it has been: from insisting that Pakistan will never go on the IMF programme, a promise that generated hectic activity and many a foreign trip to rich lands considered to belong to an elite group referred to as Friends of Pakistan who could be easily tapped to extend assistance valued at anything between 10-15 billion dollars (our minimum need according to those holding the portfolio of finance) to 100 billion dollars (as noted by President Zardari to cover our cost of the war on terror as well as for the democracy dividend); to insisting that borrowing from the IMF was the last resort considered unlikely; to now insisting that IMF prescription is good for us.

The latest, according one senior member of the Executive who should remain nameless, except to the millions who watched him on television, is that the IMF package has not come attached with any conditionalities. If that is so, then the earlier hesitation of the government not to go on the programme is all the more inexplicable. Inexplicable, however, has been the operative word from the time the government began to feel the financial crunch to the time that a formal request for assistance was made to the IMF through a letter of intent last week.

But what is the real picture? Is the IMF programme good for us? Is it in line with our government's indigenous reform agenda? Many argue that we are already on a much needed reform programme that they consider part of IMF loan preconditions. And the first tranche at periodic intervals release additionally implies that there will be strict surveillance by the IMF of what the government does with respect to its economic policies. Failure to comply, which will be determined by failure to achieve macroeconomic targets, may result in non-release of the second tranche.

It is fairly evident that members of the government have not presented a united or, indeed, consistent front on this vital issue and reference here is only to the decision makers belonging to the ruling party. Be that as it may equally relevant is it to note two facts about the IMF programme that the Fund makes available on its website. First and foremost, it has a few lending instruments. First, Stand-By Arrangement (SBA) is designed to assist countries to address short-term balance of payments problems and this type of lending constitutes the largest amount of IMF resources.

The length of a SBA is typically 12-24 months, and repayment is normally expected within 21/4-4 years. Surcharges apply to high access levels. In the case of Pakistan, the SBA is for 7.6 billion dollars for 23 months, within the realm of the Fund's stipulated guideline. The applicable surcharge for Pakistan would vary from 3.51 percent to 4.51 percent, with repayment within five years beginning 2011. The loan amount constitutes 500 percent of our quota in the IMF.

Under the IMF policy of normal access, we would have been eligible for up to 100 percent of our IMF quota on an annual basis and 300 percent cumulatively, so Pakistan did receive considerably more than provided for in the guidelines. Iceland, it may be noted, a developed country, received 2.1 billion dollars from the IMF under the stand-by arrangement in October this year.

The second lending instrument is the Poverty Reduction Growth Facility (PRGF). Eligible countries (and Pakistan is eligible) can access around 140 percent of their quota. Pakistan's quota is 1033.7, and 140 percent of this would be around 2 billion dollars. While this amount was not adequate to meet the country's urgent needs, yet it might have been a coup for the government of Pakistan to access the money from this source. Ukraine received 16.4 billion dollars from the IMF under the emergency lending procedures, another IMF lending instrument, which provides interest subsidies and the release of the money taken between 48 to 72 hours.

To reiterate, with the exception of PRGF and crisis prevention instruments (like what was made available to Ukraine) all other IMF lending instruments are non-concessional or market related interest rate is applicable "known as the "rate of charge," and some carry a surcharge. The rate of charge is based on the SDR interest rate, which is revised weekly to take account of changes in short-term interest rates in major international money markets. Large loans carry a surcharge."

A function of the IMF, clearly stated on its website, is that of surveillance which involves the monitoring of economic and financial developments, and the provision of policy advice, aimed especially at crisis-prevention. Thus this function too is normal and not Pakistan specific. IMF is therefore going to monitor the economic indicators quarterly and any slackening in achieving the agreed stipulated targets, unless supported by data which indicates external factors are at play, would place us right back to where we started: a poor credit risk for concessional and non concessional funding.

Shaukat Tarin, when asked why the government of Pakistan requested for an SBA loan instead of the PRGF, which would have been a coup of sorts, replied "Pakistan's default risk to too high", and implied that we should be grateful to receive the IMF loan at the interest rate that we did. IMF is not into commercial lending and its support is invariably linked with economic advice for crisis ridden countries. Given that Pakistan is in a crisis the question remains: why did not the government seek concessional funding like that made available to the Ukraine and instead agreed to a SBA, like in the case of Iceland? One can only hope that an official response to this question would be forthcoming.

The IMF in a briefing revealed that: "the gross external financing requirements for 2008/09 are $13.4 billion. This includes the external current account deficit plus amortisation of medium-term and long-term debt and maturing short-term debt. And out of the $13.4 billion, the financing, not including the Fund, would be about $8.7 billion. That would include FDI of the order of $4.5 billion, plus also medium- and long-term borrowing from multilateral institutions including the World Bank, the Asian Development Bank, the Islamic Development Bank, and some financing from bilateral creditors for projects.

There are also a few items that are not so important, but then the remaining gap of the order of $4.7 billion will be filled by IMF resources in 2008/09." Thus the IMF injection will plug the foreign financing gap and Pakistan would be well out of the woods if financing other than the Fund's finds its way in.

Analysts however express doubt about a 4.5 billion FDI during a global financial crisis followed by recession in several Western countries and the fact that Friends of Pakistan have yet to make a firm commitment in this regard.

That they will do so shortly has been the mantra of the present government; however it must be borne in mind that the government has been over-optimistic about its ability to generate funds from abroad to date and one will have to follow the old adage: see an inflow to believe it. There is, of course, no disagreement about 2 to 2.5 billion dollars injection from the International Financial Institutions (IFIs); however, there is still concern about project financing from bilaterals, if what happened in the Friends of Pakistan meeting in Dubai is an indicator.

The IMF also noted that, "the idea in the programme (Stand-by Arrangement) is to discontinue this borrowing (from the State Bank) for the period between November - June of this fiscal year. And in order to eliminate this borrowing from the central bank, what is important is that in the auctions of Treasury bills, the interest rates will have to be sufficiently attractive for commercial banks to purchase enough Treasury bills, so that the domestic borrowing requirements of the government are covered through commercial bank sources, and also from other non-bank sources like Pakistan investment bonds, for instance, and the national savings scheme." This would necessitate a mini-budget and on an urgent basis no later than the current month of December.

To conclude there was little option for the government but to go on the IMF programme though one would have hoped that the government had negotiated more vigorously on the lending instrument that was made available. In addition the IMF inflow must not be seen as a case where inflationary pressures will abate - on the contrary they may well rise in the short to the medium term as the government struggles to meet its macroeconomic targets. One hopes that the sacred cows, and farm income of the rich landlords is major one, will be taxed to generate its revenue rather than relying on indirect taxes, like GST, whose incidence on the poor is relatively more than on the rich.


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## Neo

*No new move to tax farm income​*
FINANCE Adviser Shaukat Tarins remark that agriculture will be among the sectors whose incomes would be taxed as part of the new measures to boost revenue has provoked, as expected, a backlash from the countrys feudal lobby which dominates the legislatures.

Faced with a stiff resistance in both National and Punjab assemblies, as demonstrated by a rare unity among members of all the political parties opposing the move, he announced on Thursday that the government has no plans to tax agriculture and such a step, if taken, would come after 23 months of IMF programme.

The powerful landed gentry seemed determined not to let it happen even at the risk of scrapping of the IMF support programme.

The November 25 communique of the IMF executive board, however, briefly states that fiscal adjustment will be primarily achieved by phasing out energy subsidies and strengthening revenue mobilisation through tax policy and administrative measures. The thrust of the programme  and its conditionality  is primarily based on the targets and measures that Islamabad has itself set for the next two years.

Juan Carlos Di Tata, a senior IMF official, during a question-answer session, was specifically asked about agricultural tax. He did not give a categorical reply. He said that in the medium-term the Pakistan government wanted to increase the tax ratio significantly by three to four percentage points of GDP through the year 2012/13. And this would require a number of measures, including elimination of exemptions in the general sales tax, elimination of exemptions for the income tax, including possibly commercial agriculture, and also, at some point, introduction of a value added tax with a minimum number of exemptions.

During a visit to Washington in October to hold talks with the IMF officials, Tarin had promised to bring all sectors, including agriculture, under tax net, saying there would be no sacred cows. It makes one recall how similar promises Pakistan had been making to the IMF in the past to seek loans whenever it was in serious financial trouble and then had been managing to wriggle out of its commitments.

The feudal lords often try to confuse the issues by equating themselves with small growers. So, their major argument in the parliament was that the rise in prices of diesel and other agricultural inputs has already made the life of growers miserable and the tax would make it more miserable. Hence they should not be taxed.

The fact is that the life of growers and peasants would always remain miserable as long as archaic mode feudal production survives. Second, if their income is to be exempted, why the salary of a low-tiered employee should be taxed for he also faces similar difficulties? Equity demands that all incomes should be taxed without any discrimination. Agriculture accounts for 21.6 per cent of the GDP and 43.4 per cent of the total workforce and is the main source of livelihood for 66 per cent of the countrys population living in rural areas.

In 2001, the government of Gen. Pervez Musharraf decided to levy tax on agricultural incomes and issued a directive to all the provincial governments to go ahead and introduce the tax from July 1. Although some exemptions were incorporated to favour certain sections of the farming community, a positive aspect was that a beginning was being made. It began with the land tax whose collection has remained stuck at a paltry sum of Rs1.5-2 billion. Then, towards the end of Musharrafs rule, and general elections around, an unsuccessful move was made to federalise tax collection on farm income.

The hard fact is that the constitution exempts farmers from taxes on their incomes from agriculture and only provincial governments are allowed to levy a land tax. The federal government cannot directly impose taxes on farm incomes or land. The political power of large landowners has prevented Islamabad from seeking such a change in the constitution and also discouraging the provincial governments from using their authority to levy farm income taxes.

The only direct tax on agricultural producers, hence, happens to be land revenue or land tax. The federal government has, however, instituted a small wealth tax on agricultural land but collection from this tax are often about one-tenth of the land revenue.

Because of this peculiar situation, the agriculture sector has become a tax shelter for other forms of income. To avoid income taxes, some businesses transfer their incomes to agriculture and enjoy exemption on a large proportion of their taxable earnings.

The donor agencies have often brought this fact to the notice of Islamabad and pointed out that the exemption of agriculture sector from income tax laws has motivated industrialists to buy farm lands to hide their actual income. Owning big farms in the suburban areas in big cities is a matter of status as well as a source of weekend fun for corporate executives. But more than that, it provides a cover to all kinds of earnings when shown as agricultural income.

So, the farm sector has become a source of tax evasion instead of contributing revenue to the exchequer. By levying the same tax on agricultural incomes as being applied to other sectors, the government can earn substantial revenues over the medium term. And, by sparing agriculture, the government also puts a heavy tax burden on the rest of the economy.

The feudal lobby has always argued that the agriculture sector had been taxed quite heavily through indirect and implicit taxes in the past and substantial resources were transferred to other sectors. These policies distorted the allocation of resources. However, the measures taken in the 1990s have certainly weakened this argument. Major changes in the land revenue system were introduced in 1975. And now the governments procurement prices for farm produce, specially wheat have been significantly raised.

The Finance Act of 1977 represented a breakthrough as it removed the exemption of agricultural incomes from taxation. But after the military coup, Gen Zia suspended the Finance Act and restored the tax exemption on agricultural incomes by promulgating an income tax ordinance in 1979 and reintroduced the land revenue with higher rates.

Under the Finance Act of 1977, the tax on farm incomes was to be collected by the federal government but the proceeds were to be deposited directly in the account of the province from where the revenue was raised.

As part of the ESAF and EFF negotiated with the IMF in September 1997, the then government had committed itself to a strategy to tax agricultural wealth and incomes. It was to be implemented in two stages  first, a uniform land-based tax for all the provinces and, second, to move from land-based tax to agricultural income tax in the medium-term. By terms of the agreement, an agricultural income tax was expected to be in place some time in the early 21st century.


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## Neo

*No magic formula for sustained growth​*
The IMF does not have a magic formula to set Pakistans or for that matter any other countrys economy on the path to sustainable growth. It only serves as the lender of last resort for countries facing foreign debt default.

And the Fund conditionalities that come with the loan aim at quick-fix enhancement of the recipients capacity to repay the amount on the due date. But paradoxically these very conditionalities in the longer run erode the recipients ability to break what is called the beggars bowl.

The Funds very existence depends on the borrowers repeat requests for emergency loans. That is why during the decade leading to the 2007-08 collapse of the banking sector when even the African countries were showing annual average growth rate of six per cent, one would occasionally hear the talk that the time had come to replace the IMF with an institution more geared to the unending boom era.

Consequently, at the last World Economic Forum at Davos early this year a desperate Fund manager was heard uttering blasphemyit was prescribing deficit financing to rich countries to combat the economic chaos they were undergoing because of the unusually steep rise in prices of oil, food and other essential commodities.

Now that the so-called boom has burst and a number of countries facing massive debt defaults with Iceland, Ukraine and Pakistan asking for emergency loans, the Fund is back in business with its one-size fit-all formula---drastic curtailment of deficit financing, high interest and tax rates, withdrawal of subsidies, huge reductions in development and non-development budgets even if it meant causing widespread unemployment and steep rise in inflation leading to a debilitating economic standstill.

This formula has never worked in any country. Though we never had to suffer IMF induced food riots, still it was mainly because the Fund had brought the national economy to almost standstill with its prescriptions in the 1990s that the former State Bank Governor Ishrat Hussain could later describe the decade as the lost decade while justifying Musharraf governments requests to the Fund, first for a nine-month Standby and then for a three-year PRGF.

If 9/11 had not happened and the billions associated with it had not flowed in by mid-2002, the Fund prescriptions that came with SBA of 2000 and PRGF of 2002 would have sent Pakistan on the same route that it had just sent Argentinatearing downhill.

His claim in 2005 that Pakistan had broken the begging bowl notwithstanding, the designer bubble of services that was crafted in such a cavalier way by Shaukat Aziz with the 9/11 dole met the fate that it was destined to by the time he went back home.

There are host of reasons why the IMF formula does not work the way the recipients wish it to work. In the case of Pakistan particularly, however, it has failed again and again because the formula is not designed for an economy which has been suffering from war mania from the day the country came into being.

In the last 61 years, Pakistan has fought two full fledged and two half wars with India, one almost a decade-long proxy war against the defunct Soviet Union on behalf of the so-called Free World, two 10-year long low intensity wars in the 1990s, one in Afghanistan on the side of Taliban against the Northern Alliance and one in the Indian Kashmir on the side of the so-called Mujahedeen and is now engaged in an unfinished war for the last seven years against what is called international terrorism on behalf of the US and Europe. In between this country has remained in a state of war, fully mobilised to take on real and imaginary enemies all set with the first- use option.

Pakistans ruling elite been using most of the money that the country has been earning and the resources it has been borrowing on the excuse that it was about to go bankrupt plus the dole that is donated by bilateral and multilateral donors for building socio-economic infrastructure for buying the state of the art weapon systems to equip what is called the fifth largest army in the world.

So, all in all ours has been a war economy. And we have been financing this economy mostly with other peoples money. The IMF formula has no solution for correcting this kind of economy.

Secondly, the formula also does not do much to help boast the lynchpin of our economythe agriculture sector. In fact by the time the Fund formula starts taking effect, this comparative advantage of our economy has been seen to have regressed so much so that during both the decades1990s and 2000s ( so far) this backbone of our economy has grown at the abysmally low levels of 2-3 per cent on an annual average.

In the 1950s-70s period, the Bretton Woods Institutions used to talk a lot about land reforms but did nothing to implement this reform in Pakistan. Now they dont even talk about it.

Similarly every time we have gone to the IMF for emergency loan there have been a lot of rumours that under the loan conditionalities the country would be obliged to bring incomes from agriculture and stock trade under the income tax net. But after signing of each agreement with the Fund, Pakistani negotiators have been heard to announce proudly that they have successfully protected the countrys economic sovereignty by refusing to accept this particular conditionalitiy. It has happened this time again.

One more thing, by strictly imposing on the recipients the conditionality that demands that subsidies, even that which serve to boast agriculture produce but failing to make the rich countries withdraw their farm subsidies the Fund has been turning these recipient countries including Pakistan for ever dependent on the developed world for food.

So, unless Pakistan gives up willingly its war oriented economy and diverts most of the resources it earns and receives by way of loans and doles from outside to the agriculture sector while making all those who earn taxable income no matter from which sources to pay their dues to the treasury honestly and in full, Pakistan would forever remain an important borrower of the IMF.


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## Neo

*IMFs political bias​*
The $7.6 billion IMF loan to Pakistan must have been welcomed with a sigh of relief by both our government and those holding our sovereign bonds. Should people welcome this. The answer is lukewarm yes. Should this be seen as a vote of confidence in the government? No, it is a resounding no.

No doubt the economy was (is) at a precarious position and without this loan Pakistan would have faced serious balance of payment problems. Without taking a position on whether the economic crisis was a result of economic policy shortcoming or as the IMF puts it, a result of ... large shocks ... including adverse security developments, higher oil and food import prices, and the global financial turmoil, it is clear that the loan was necessary.

All of our friends were unwilling or unable to provide assistance and with the financial markets in tatters, tapping the international capital markets was not an option.

The swiftness and the size of the IMF loan were a surprise. The IMF press release says that the size of the programme is nearly 500 per cent of Pakistans IMF quota. This is exceptional since IMF lending is generally limited to 300 per cent of quota other than in special circumstances. So what explains this generosity by the IMF?

The political bias in IMFs lending decision has been an active area of research since the Asian crisis. The Meltzer Commission report, sponsored by the US Congress on IMF and the World Bank reforms, suggested that G7 governments and particularly the US use the IMF to promote their own political goals.

The current IMF loan is a necessary evil under present conditions. The question is how much of a role did our government play in getting that loan? IMF just like other international agencies is more a political organisation rather than a market driven financial institution. It is only accountable to its executive board where majority of the voting power is held by advanced economies. .

No doubt that IMF staff attempt their best to carry out due diligence on any loan. But once the programme has gone to the board, political considerations overtake economic realities. If you are in favour of the US government or the western governments in general, no sin is too big to forgive.

For supporting the US and it allies after 9/11, Pakistan was given a PRGF (poverty reduction and growth facility) loan to the maximum limit allowed under IMF rules. The question of whether or not Pakistan could manage the loan amount was not even considered.

Fast forward to 2008, suddenly the floodgates of the IMF funding have been opened for Pakistan again. But as long as we behave. A lot of fuss has been made in the press over the strict IMF conditionalities and the cutting of defence and social expenditures. But the reality is that Pakistan could agree to anything because the enforcement of these conditionalities is itself conditional.

For example, Pakistan has made a pledge that it will limit borrowing from the SBP and instead rely on bank borrowing. Suppose after the first tranche, it is suddenly discovered that the borrowing is continuing as usual. The IMF staff can write-up a harsh report recommending that future tranches be discontinued. But the decision is not theirs, the board decides and as long as Pakistan continues supporting US and its allies, nothing it does will cancel the programme.

The only role that the government has played in getting this IMF loan is to acquiesce to anti-terrorism co-operation. The economic programme itself is irrelevant since Pakistan has a checkered history of programme completion. The programme is certain to have some assurances of cost cutting, increase in tax collection, and targeted subsidies.

The loan should in no way be considered an endorsement of the governments economic recovery plan. It is only a measure to prop up an ally in the war on terror. As soon as that is over, even the most brilliant economic plan is unlikely to get a second look.

The more important consideration is why did the government make such a big show of hesitating on an IMF loan and is now touting the approval as an endorsement of the governments economic recovery plan? In addition to being able to pay our international lenders and supporting the rupee, the IMF programme also gives the government a carte blanche in terms of economic activity. For example, now the government is free to carry out a fire sale of assets, cut social programmes or cancel contracts handed out by the previous government, all in the name of thrift. Any decision can now be justified as being necessary to please the IMF and the international investors. Being in an IMF programme further erodes the limited checks and balances on the government behaviour.

At the same time, the reliance on IMF loans diminishes national sovereignty. We have to fall in line or lose our IMF loans. This reliance limits the development of institutions within the country which can prevent a government from driving the economy to the ground. These include an independent central bank, a transparent ministry of finance, an independent audit institution and rules which ensure that a governments spending plans are checked by the availability of resources.

As long as we continue to make our decisions based on an ad hoc basis and deflect every attempt at rules based governance, we cannot break the begging bowls.. Unfortunately, no government, military or political, wants to see effective rules passed and implemented, because tomorrow these rules/institutions may constrain them as well.

One may hope that the current government uses this respite to put the country back on the track of prosperity and restore the macroeconomic imbalances persisting for so long.


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## Neo

*Planning for sustained development​*
In mid-November, the government unveiled some measures that indicated a welcome, if belated, change in its earlier insouciance towards the economy and its management.

Many of the measures undertaken seemed largely intended to reassure the IMF and other friendly donors that it had awakened to its responsibility in economic management and was keen to build a monitoring-and-oversight structure that would guarantee that the funds obtained are used with prudence and sagacity and yield commensurate results.

Whether it is a reversal of the Musharraf regimes virtual disbandment of the planning machinery and its capture by the Generals cronies, is not yet clear. The steps taken so far are a far cry from the ideal institutional structure needed to ensure the achievement of development goals on a continual and sustained, rather than on an ad hoc basis and stop-and-go manner, as had been the case for much of the last three decades. Indeed, some of the steps taken e.g., the emergence of multiple centres of direction of economic management, raise doubts and confusion about the real intentions behind them.

After the many hiccups suffered during the course of the transition from election to assumption of power, the government awakened to the need for choosing an economic team to deal with the looming crisis. The budget exercise was undertaken somewhat perfunctorily, as the budget-makers were hamstrung by the commitments already made by the outgoing regime, which continued to insist on continuity, rather than change, leaving little room for its manoeuvre.

Several factors like political strife with the coalition allies, the judicial crisis, the insurgency in FATA and Baluchistan, galloping inflation and load-shedding distracted attention of the government from the real problems of the economy. It was also creating nervousness in the business community and the stock market, giving rise to capital flight and depreciation of the rupee.

The confluence of these factors were further reinforced by two other factors, namely the continued violation of Pakistani territory by US forces and the deterioration in the US financial crisis.

These factors forced the governments hands to confront the rapidly deteriorating financial situation highlighted by the rapid depletion of foreign exchange reserves by about $10 billion between July and October, 2008, and by a depreciation of the rupee by almost a third vis a vis the dollar, bringing it to the brink of default on its foreign loans by the end of the year.

A new non-political head of the finance ministry, Mr Shaukat Tarin, a former banker, with the title of finance advisor was appointed with the specific mandate of tackling the financial mess and preventing a possible default.

The newly-elected President, as well as the newly-appointed Finance Adviser, began a search of viable strategies to look for reliable donors who would roll out the needed cash.

After visiting a number of countries and forming a group of Friends of Pakistan in New York, who would be willing to support both the immediate and medium-term financial needs, Mr Tarin came up with three plans. Plans A (temporary relief from donors) was a non-starter and Plan B (long-term commitment by trusted friends and allies) was a pie in the sky.

With Richard Bouchers terse remark there was no money on the table in a preliminary meeting of Friends of Pakistan in late October and the largely unfruitful results of the high-profile foreign tours, the government was left with its last resort of seeking the assistance from IMF. The latter was only too eager to oblige at a time when its own raison detre, at least in its present form, was becoming questionable, notwithstanding the recent efforts to resuscitate it to deal with the global economic crisis.

President Zardari himself was averse to knocking the IMFs door, which is an anathema to a populist politician, especially when he was attempting to craft new terms of endearment with the United States. He was keen to present the war on the Afghan border as our own. The same logic was used to present the IMF agreement as a home-grown plan to make the bitter pill to be administered later, a bit more palatable.

Even so, the initiative taken by the government to form a Panel of Economists, under the chairmanship of Dr Hafiz Pasha to assist it in preparation of a stabilisation plan is a welcome move. Such ad hoc exercises, in the absence of a stronger commitment to systematic research and regular exchanges among competent experts and research institutes, often yield insignificant results. They are prone to be used by incumbent governments for their own narrow ends and limited agendas. They do little to help in the candid elaboration of the choices facing the nation. To be useful and productive, such exercises need to be undertaken with adequate preparation in independent fora.

In the past, the Panel of Economists were set up to review the work of the Planning Commission embedded in the five-yearly plans. That tradition has long been given up, both as a result of the jettisoning of the planning process since the 1970s and the resort to ad hoc economic management, largely under the combined auspices of national and international bureaucrats.

It is about time that the planning process be reinstated and a more systematic, as well as innovative, approach be adopted. That would require the resumption of the Five-Year Plans discontinued since the 1980s which were supplanted by Medium Term Plan Framework (MTPF) under the influence of the IMF and the World Bank.

Indeed, the entire structure of the planning machinery needs to be reviewed by the Parliament to synchronise it with the changed political and economic situation. The key positions of Deputy Chairman, Chief Economist and members of the Commission should not be filled arbitrarily, but based on strict criteria relevant to the post, in order to give its work the necessary credibility.

At present the Deputy Chairman is a re-instated bureaucrat, chosen more for his connection than for his vision and expertise, the part-time Chief Economist, though qualified, wears two other hats as full-time director and vice-chancellor of PIDE, which are supposedly autonomous institutions; the commission members are retired civilian and military officials.

To complement the planning machinery, there is also a need for establishing and funding academic and research institutions, which currently survive on donor and consultancy funds.

Unfortunately, Pakistan has a had poor tradition of conducting independent research on economic and social issues and an even poorer record of using it as an input into planning and policy-making. This is largely the result of continued dependence on foreign aid inflows, which often come with their own complementary baggage of policy advice, rendering the formulation of home-grown policy packages largely surreal.

There is, therefore, a need for a more robust institutional structure for planning and economic management to ensure that the economy attains a sustainable path of development which it has continually veered away from in the past.


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## Neo

*Pakistan and the world in 2025​*
To reflect on Pakistans economic presence and about its economic future, we will do well to begin by asking a series of questions about the way the world is being shaped and reshaped today by developments that were years in the making but which have come together to produce a perfect storm.

Questions about how some of these developments are likely to influence different parts of the globe including South Asia. How much of what is likely to occur here will depend in part on what will happen beyond our borders  not only in Afghanistan, India and Kashmir  but in places far beyond our borders. What will the world look like in a decade and a half from now, say in 2025? Will the United States still be the dominant player, able to project its economic and political power to all parts of the globe, unconstrained by international opinion?

Or would it be weakened by its involvement in the twin wars of Iraq and Afghanistan where military victory defined in conventional terms has eluded it? Will the grave economic crisis of 2007-08 that shows no sign of abating and is likely to rage on in 2009 and perhaps even beyond affect the USs position in the global economy?

Will the space likely to be vacated by the United States be occupied by some of the resurgent powers (Russia, for instance) or by large emerging countries (Brazil, China, India, South Africa, for instance), or by small but resource-rich countries (the countries in the Persian Gulf, for instance)?

Did the meeting of the G20 in Washington on November 20, set a process in place that may create a new international economic order of as much economic and financial consequence as the one established by the Breton Woods conference held in 1944 by the victors of the Second World War?

What will happen to the on-going conflict between militant Islam and the West? Will President George W. Bush, who will soon withdraw to his ranch in Crawford, Texas, leave a lasting legacy in the form of the war on terror in which there cannot be any accommodation with those who feel differently compared to the neo-conservatives in the United States or will the in-coming admisntration of President Barack Obama be able to separate genuine grievances from ugly ideology?

Will the moderate elements in Muslim societies around the globe overcome the extremists that have sullied their religion and be able to exist in a world in which religion occupies only personal space?

Which of the various regions of the world improve their situation and which will withdraw to the margins of the global economy and polity? Will Latin America led by a mixture of both pragmatic (President Ignacio da Silva Lula of Brazil, for instance) and ideological (Presidents Chavez of Venezuela, Morales of Bolivia, Ortega of Honduras, for instance) leaders finally realise its potential and begin to wield its weight in the global economic and political systems?

Will East Asia move further still in projecting its economic strength and, led by China, begin to play a dominant role in the global economic matters? Will South Asia, mired for decades in internal conflicts, finally begin to function as a region and not as group of countries unable to work together? South Asia too has a country with more than a billion people and like China, India too could become the regions anchor economy.

Is that something that would be acceptable to other countries of the region or would Indias ascent be viewed by them as the rise of a hegemonic power? Will South and East Asia be able to work together to usher in the Asian century in which both China and India manage to achieve the potential they have and which they had once shown before the advent of the colonial age?

What about Africa? Will it be able to rid itself of the tribal wars that that have gone on for decades and that have taken such a heavy human and economic toll on the continent? Will a new generation of leaders rise in the continent and replace those who have plundered and ravaged this land of plenty and bring it to the place of development it should have reached a long time ago?

And  to close the circle  will Europe successfully enter what many of its philosophers and political thinkers have called the post-modern era? Europe, unlike the United States, has a number of unique problems it must deal with in order to move forward. Most countries of the region have declining populations. Is demographic decline compatible with economic dynamism?

The relatively easy movement of people across international borders in recent times has begun to demographically churn the populations in some of the countries of Europe that have not known diversity. This is happening to the nations where the migrants from North Africa as well as from sub-Saharan Africa have begun to change racial and religious composition. Will this transition happen in peace or will it produce conflict that will last for decades?

Many new migrants are bringing with them a religion with which the Europeans always had an uneasy relationship. Will the increasing presence of Islam in Europe also lead to a conflict or will the assimilation happen in relative peace?Will the global economy progress in a way that allows those that are relatively underdeveloped to close the gap  not entirely but perceptibly  with those that have advanced at historically unprecedented rates by claiming a disproportionate share of non-renewable resources? Or are we entering an era of conflict over the use of resources that have depleted to the point that they have become a serious constraint on further progress? How will climate change affect different parts of the world and will the global community find the political will to take actions before the current trend becomes irreversible?

The Director of the United States National Intelligence Council released a report on November 20 that begins to answer some of the questions I have posed above, admittedly from the American perspective. The report, Global Trends in 2025  A Transformed World, took a year to complete and involved a number of agencies of the United States government.

It suggests that by 2025, the accelerating pace of globalization and the emergence of new powers will produce a world order vastly different from the system in place for most of the post-World War era. It projects a still preeminent US joined by fast developing powers notably India and China at the top of a multi-polar international system.

The US is projected to surrender some of the power it has wielded since the end of the Second World War. The USs authority in world affairs increased further after the collapse of the Soviet Union in 1991 and the demise of European Communism. Francis Fukiyama, the well known and regarded conservative scholar, declared that history had come to end, interpreting history as made up of conflict.

The US was now the worlds sheriff, that will keep peace all over the world by exercising its moral authority, and if that failed, by using its force. But the United States over-reached itself in Afghanistan and Iraq, and by ignoring global demands for control over climate change, and by refusing to act with other world nations to solve the problems it alone could not handle, it has lost its claim to leadership.

Now a US agency responsible for gathering intelligence and analyzing its consequences for its leaders has come to the conclusion that Pax Americana is over and what will now emerge is a global system in which there will be many leaders and even more players. It is interesting that this message was made public exactly two months before Barack Obama will take office. The DNI report says that the world of the near future will be subject to an increased likelihood of conflict over scarce resources, including food and water, and will be haunted by the presence of rogue states and terrorist groups with greater access to nuclear weapons. Widening gaps in the birth rates and wealth to poverty ratios and the uneven impact of climate change could exacerbate tensions.

One doesnt need to be too suspicious and paranoid to see Pakistan embedded in that last sentence of the DNI report. As we approach the world for capital to rescue us from our present economic difficulties, it would be right to understand how the world sees us. At the same time we will do well to study the changes that are taking place in the global economy to determine exactly where we can fit and get accomodated.


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## Neo

*Developing regional shipping facility​*
The international shipping industry is responsible for the carriage of some 92 per cent of world trade and is the life blood of the global economy. Even the land-locked countries are largely dependent on sea trade.

The seaborne trade has risen from 20,000 billion ton miles in 1994 to some 35,000 billion ton miles in 2006 and presently it is 38,000 billion ton miles. This mode of transport is considered as most economical and safe. Ships are high value assets and merchant vessels generate an annual estimated income of over $400 billion in freight.

Shipping is directly linked with ports. The development in ship design, size types and cargo handling techniques necessitates upgrading of ports and their facilities to suit the shipping requirements.

The operational cost of larger vessels is high particularly for transportation of small quantities of cargoes.

The freight rates become exorbitant and less affordable; thus hub ports are developed where cargoes, containers, etc., are discharged and smaller ships whose fixed operational cost per day is much lower than mother vessels are used to carry cargoes on lesser freight rates. Many small ports having lesser draughts have adopted systems to facilitate entry of larger ships.

To facilitate trade, Pakistan and India signed a protocol on December 14, 2006 to strengthen and develop relations in merchant shipping, navigational co-ordination and ship construction and repair.

Clause (1) of the protocol states: The provisions of this protocol shall apply to international maritime transport between the two countries and to cargo originating from/destined for a third country, except those for which cargo preference to domestic flag vessels is applicable and it shall be accomplished on the basis of the principles of free and non-discriminatory access to cargoes subject to domestic laws and prevailing practices.

To facilitate trade amongst the Saarc member countries, the merchant ships of both the countries should carry a sizeable agreed cargo from each other ports, destined for the ports of the South Asia Region, the land-locked countries of South Asia including, if agreed upon, for South East Asian countries, as well.

Presently, ports and shipping sector in Pakistan mainly depends on captive trade which is the main reason of higher costs in freight rates and ports operation and it is imperative to have transit trade that shall undoubtedly reduce freight rates and ports charges.

Unfortunately, the affairs in the merchant marine organisations have never been run by professionals and technocrats. Often, naval officers who were neither trained nor qualified nor had any experience of commercial shipping were at the helm of affairs of these organizations. Consequently, shipping industry has remained in doldrums.

Even during democratic governments, officials of the Pakistan Navy managed to get top slots, barring a few appointments from amongst the civilians having access to the civilian governments, but they did not possess any qualification and experience of commercial shipping.

Appointments are not made on merit and qualification. This has ruined the merchant marine industry. It is high time to change and formulate a new Merchant Shipping Act and Policy without any delay.

At least one of the countrys ports be developed as a hub port for transit cargo for the South Asia Region. Mother vessels may discharge cargoes and smaller feeder ships may carry cargo destined for other ports in the South Asia Region. Such an arrangement shall eventually reduce costs, provide employment and foster better relationship amongst Saarc countries.

The provisions of the protocol for best navigational co-ordination ship construction and repair between the two countries, if implemented, would prove economical. Furthermore, training and certification schemes of the two countries in particular and generally amongst Saarc countries for seafarers should be open to members of the Saarc countries in particular and that of the whole world. The exchange of views should be a regular feature amongst the citizens of Saarc region including employment of nationals on board merchant ships of the South Asia Region.

Clause (2) of the protocol provides that holder of seamans identity documents specified in Article (6) shall, during the stay of the vessel in the ports of the other country, be permitted to land on temporary shore leave without visa, on his obtaining a landing permit valid for a period not exceeding 24 hours, provided he deposits his continuous discharge certificate/seaman service book/seafarers identity.

In spite of the protocol the seafarers of either country are not allowed shore leave. The shore leave facility to both India and Pakistan seafarers for the period of vessels stay at ports of the respective country should be allowed to improve relations between the countries.


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## Neo

*IMF loan and after​*
MACROECONOMIC stabilisation invariably slows down growth as it usually involves an increase in interest rate and tax, and forces governments to cut their expenditure  sometimes essential spending  and causes a lot of pain to the common people. Pakistan, facing a serious balance-of-payments crisis along with an expanding fiscal deficit and runaway inflation, could not be a different story. Even before going to the International Monetary Fund (IMF) for a $7.6bn bailout package to avoid default on its sovereign debt and shore up its foreign currency reserves, the government had already begun implementing its efforts to stabilise the economy. The Fund has just put its signature on its homegrown solution to its problems.

The government has already hiked interest rates and eliminated oil subsidies. Power subsidies will totally be withdrawn by the end of this fiscal. While the abolition of subsidies has hit the common people directly by forcing them to cut their essential spending on food, education and health, the interest rate hike would affect them indirectly by spawning massive unemployment in the manufacturing, services and other sectors.

The panel of economists, who have drawn up the macroeconomic stabilisation programme sold to the IMF, estimate that gross domestic product (GDP) growth is likely to decelerate to four to 4.5 per cent this year. That, they say, will push up to 7.5 million more people into poverty and result in the loss of two to three million jobs over the two years of stabilisation. The IMF and others expect the GDP growth to slow down to below 3.5 per cent, well below last years 5.8 per cent. If that happens, it would leave even a greater number of people poorer than they are today. The job loss would also rise, substantially.With the economy teetering on the brink of collapse, the government could not risk bypassing the hard way of macroeconomic stabilisation. Nor could it afford to avoid begging for help from the IMF and other multilateral and bilateral lenders. That said the government has the responsibility of shielding the common man from the adverse effects of stabilisation. No lender stops it from doing so. In fact, the IMF requires the government to enhance allocation for its income support programme for poor households and named after Benazir Bhutto. The panel too has recommended an increase of Rs17bn. Also the panels recommendation to enhance and raise allocation for public works programmes to generate employment must be implemented. More importantly, the government should not repeat past mistakes and must protect development spending on the water, power, health and education sectors. Many generations will suffer the consequences if the government tries to save its unproductive expenditure at the cost of future development.


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## Neo

*Gwadar Port declared tax free zone for 20 years​*
ISLAMABAD: Balochistan Chief Minister Nawab Aslam Raeesani has declared Gwadar deep sea port a tax free zone for the next 20 years under the Gwadar Master Plan. Talking to a private television channel on Sunday, the chief minister said the decision had been taken after a meeting with Federal Industries Minister Manzoor Wattoo. Raeesani said no tax would be levied on the import of construction materials in Gwadar to expedite economic activities in the area. He said a majority of the local residents would be given jobs in the seaport. Earlier, Wattoo told the meeting that Gwadar port would be converted into an export-processing zone.


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## Neo

*Low population growth rate must for development ​* 
Monday, December 01, 2008

QUETTA: The speakers at a roundtable conference on the role of institutions in population control called for promoting awareness among the masses about bringing down the population growth rate, as it is vital for the national development and overall economic progress.

The resources are getting exhausted due to the abnormal increase in the population in the country and it has to be checked to ensure balance in the resources and the population. The speakers expressed these views at the roundtable conference on population control, which was arranged by Mir Khalilur Rahman Memorial Society in collaboration with the United Nations Population Fund (UNFPA) and Provincial Welfare Department, Balochistan here on Sunday.

Those who spoke on the occasion included former Senator Mrs Roshan Khursheed Bharucha, Professor Dr Abdul Ghaffar Nagi, Professor Dr Shahnaz Naseer Baloch, Dr Daud Barech, Dr Rasheed Panezai, Dr Salman Qazi and others. 

They stressed that the religious scholars should be included in the population welfare programmes. The maternal mortalitys highest rate in Balochistan was also discussed in the roundtable showing a great concern towards it.

The speakers, including health practitioners, experts, government officials, representatives of the civil society organizations and others, stressed the need to enhance the budgetary allocations for the health and education sectors in order to provide desired facilities to prevent the maternal and newborn child mortality and educate the people especially the females. 

They strongly believed that the men should also be included in the population welfare programmes along with the womenfolk.They said that the mothers health should be given focal attention in the population welfare programmes to reduce the newborn mortality rate.

They pointed out that 31 per cent women lacked the facilities with regard to the birth control in Balochistan. They also pointed out that the research and authentic data was lacking with regard to the population welfare.

The speakers were of the view that the parliamentarians and the local elected representatives should also have effective role to play in their respective constituencies in this regard.They also stressed that the population welfare issues should be included in the curricula and it could also be introduced as a subject at inter and graduation level.

The Chairman MKRMS, renowned columnist and In charge Health and Education Editor of daily the Jang Lahore Wasif Nagi was the host and moderated the roundtable.It was informed that the maternal mortality rate in the province is higher than that of the other parts of the country, because of certain problems mainly the poor health facilities for the mothers and newborn, lack of knowledge, resources constraints etc.

Speaking on the occasion, the chief guest, Provincial Secretary for Social welfare Asmatullah Khan Kakar underlined the need to promote coordination among different institutions whether governmental or non-governmental as well as the international agencies, in order to prevent the ever-increasing population growth rate.


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## Neo

*Pakistan to receive $4bn from WB, ADB, IDB and others ​* 
Tuesday, December 02, 2008

ISLAMABAD: Pakistan will receive $4 billion from the World Bank (WB), Asian Development Bank (ADB), Islamic Development Bank (IDB) and other bilateral donors such as USAID and UK based DFID in the remaining seven months of the current fiscal year, The News has learnt.

The inflows of $4 billion from IFIs as well as bilateral donors do not include more than two tranches from the International Monetary Fund (IMF). Yes, we will receive around $4 billion in the remaining months from the International Financial Institutions (IFIs) such as the WB, ADB, IDB as well as USAID and DFID before June 30, 2009, Secretary Economic Affairs Division, Farukh Quayum told reporters here on Monday after the Citi-PPAF Microfinance Award.

Giving details of the break-up of the upcoming $4 billion inflows mainly in the shape of project loans, Secretary EAD said that the ADB would extend $1.8 billion, $1.5 billion by the WB and $500 million by the IDB in the remaining period of the ongoing fiscal year.

We also expect around $350 million from USAID and $160 million from UK based Department for International Development (DFID) in the current fiscal year, he added. He said that receiving the project loan money depends upon the performance of the executing agencies of the relevant projects and the government is making maximum efforts to speed up the implementation on all kinds of foreign funded projects.

To a query regarding WBs loan under Poverty Reduction Strategy Credit $500 million, he said that Finance Ministry was working on Poverty Reduction Strategy Paper (PRSP-II), which would pave the way for requesting the WB to table this loan before its Board of Directors for final approval.

The Secretary EAD was not sure whether or not the government would get the approval from the cabinet as envisaged by the former Shaukat Aziz regime. However, Secretary Finance Dr Waqar Masood had told this scribe a few days back that the government would table this document before the cabinet in the near future.


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## Neo

*China to extend Rs10bn supplier credit ​* 
Tuesday, December 02, 2008

ISLAMABAD: China will extend Rs10 billion supplier credit out of total cost of Rs12 billion for construction of Karakorum Highway road to establish linkages with the site of the Basha dam, which will help to transport heavy machinery to the site of $12.6 billion cost of the dam. 

For upgradation of the Karakorum Highway project, Pakistan and China have agreed to bear cost of 15:85 per cent ratios respectively over the next three years 2008-2011. Islamabad has released its share of Rs2 billion for construction of this linkage road to the Basha dam site. The major chunk of 85 per cent cost of this project will be borne by China and Beijing will provide supplier credit to Islamabad to this effect. 

According to the minutes of the Executive Committee of the National Economic Council (ECNEC), that recently met with the prime minister in the chair, also decided to cut down the estimated cost for acquisition of procurement of the Basha dam land from Rs116 billion to Rs60 billion by excluding cost of certain accounts from the project. 

The governments decision to exclude two accounts resulted into saving Rs56 billion, said a high-level official of the government while talking to The News here on Monday. The ECNEC cut down interest cost during construction (ICD) head as well as utility charges which were incorporated in the initial official, which was tabled before the ECNEC, official sources said and added that this exclusion resulted into reduction in cost of acquisition of land to Rs60 billion only. 

Some participants of the ECNEC meeting objected the Ministry of Water and Power included utility charges in the estimated cost of acquisition of land at a time when there would be no cost in this regard because construction of the dam would be started at latter stages probably by the next fiscal year 2009-2010. 

The official claimed that the government has released Rs2 billion for construction of link road to Basha dam, which will ensure transportation of heavy machinery to the site of the dam. The dams work will be started by the next fiscal year but it will reach its peak in the next two to three year period. 

According to the ministry out of total allocated money for land acquisition of the Basha dam, there will be no foreign component involved in it and all resources will be provided from local avenues. The profile of the project states that there will be acquisition of land for the dam, reservoir and resettlement of 28,640 affected persons (4,135 households) and it will be multi-purpose dam with installed capacity of 4,500 Mega Watt (MW) and water storage capacity of 6.4 million acre feet (MAF). The submerged area of the dam will be 115 sqkm (28,500 acres) and it will be located at 315 km upstream of Tarbela dam and 40km down stream of Chilas, the district Kohistan.


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## Neo

*Industries suffer production losses: Violence hits business​*
KARACHI, Dec 1: Violence in the commercial hub of the country during the last three days marred industrial and business activity and attendance in industry and commercial establishments remained thin in the absence of public transport.

Following killings and torching of public transport vehicles, which began late Saturday evening, the city remained in the grip of fear for the third day consecutive day on Monday.

Almost all the five industrial estates suffered heavy production losses owing to thin attendance, while the SITE area, the largest and oldest industrial estate of the country, gave a deserted look.

Production losses went into billions and many exporters could not meet shipment schedules and may lose their foreign contracts or would have to air-lift consignments to save their L/Cs.

The losses occurred at a time when the country is already under tremendous financial and economic crisis.

The high cost of production and slump in the world market was already having its toll on the industry, but killing and arson which paralysed the city for three days has not only shaken up confidence of trade and industry, but also caused colossal loss to the exchequer.

Mian Zahid Husain, chairman, Korangi Association of Trade and Industry (KATI), told Dawn that due to thin attendance, most of the industrial units performed less than 50 per cent while some remained completely closed.

He said production losses worth around Rs1.5 billion were suffered by the industries in the KATI area and around Rs29 crore were lost in revenue. In the absence of public transport, he said, workers could not reach their work-places, and it resulted in thin attendance. The KATI chief further stated that the government should immediately take measures to ensure peace by maintaining law and order in the city so that industrial activity could resume.

He was apprehensive about the current fragile economic situation of the country and said this would further aggravate the condition.

M A Jabbar, chairman, SITE Association, said that the biggest industrial area of the country was giving the look of a ghost town.

Being in the proximity of the most disturbed areas, he said, mostly workers did not turn up to their work-places, fearing for their lives.

Since public transport was very thin on Monday, he said this aggravated the situation and people preferred to stay indoors, fearing fresh killings and arson.

Mr Jabbar said that of the 65 per cent revenue generated by Sindh to the national kitty, 40 per cent comes from the SITE industrial area. However, since fear has gripped the city, around 80 per cent of the workforce did not turn up.

A similar situation prevailed in the F B Area Association of Trade and Industry and North Karachi Association of Trade and Industry. Both the industrial areas are also in the proximity of most disturbed areas of the city and remained largely closed.According to reports, some miscreants from the adjoining locality stormed into the F B Industrial Area early in the morning, which forced most of the industries to close down their production process.

As a result, the industry suffered heavy production losses because around 60 per cent of units remained closed and the remaining operated up to 40 per cent capacity owing to thin attendance.

The Landhi Association of Trade and Industry, however, somewhat remained less affected because it houses large industrial units which have their own labour colonies inside their units. However, small industrial units suffered heavily because of thin attendance.


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## Neo

*IFIs to lend Pakistan over $4bn by June ​*
ISLAMABAD: After a $7.6 billion International Monetary Fund (IMF) bailout package, the government of Pakistan is expecting a loan of over $4 billion from international financial institutions (IFIs) by June 30, 2009. Economic Affairs Division Secretary Furrukh Qayyum told reporters that Pakistan had already received $800 million from the IFIs, and the remaining amount would be handed over in due course of time. The federal secretary said the WB was expected to lend the country $1.5 billion, the ADB $1.8 billion and the IDBs credit facility for Pakistan would be around $500 million. United Kingdoms Department for International Development would provide $160 million and USAID would assist Pakistan with $350 million, Qayyum said.


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## Neo

*Mumbai carnage won't affect Pakistan's economy: Tarin ​* 
ISLAMABAD (December 02 2008): Advisor to Prime Minister on Finance Shaukat Tarin has rejected the impression that Pakistan economy will suffer in the wake of raised temperatures between Pakistan and India in the aftermath of the Mumbai carnage. "We are trying to ease tensions that escalated after the recent spate of terrorist activities in Mumbai as early as possible," he added.

Talking to media after Citi-PPAF entrepreneurship awards ceremony here on Monday, he said that foreign exchange reserves had reached almost 10 billion dollars from a low of 6.5 billion dollars. "It is likely that the World Bank would release 500 million dollars for Poverty Reduction Strategy Credit (PRSC) by the end of current month," Tarin said.

When asked about the formulation of National Finance Commission (NFC) award, Tarin said that it was the prerogative of the Prime Minister, who would give the final decision.

Censuring the previous regime for its overspending, he said that the government would remain within the budgetary limits. He said the government had prepared a comprehensive policy framework to manage the current crisis with a stabilisation programme having adequate safeguards for protecting the poor and most vulnerable with income support, insurance and other mechanisms. Pakistan Poverty Alleviation Fund (PPAF) and Citi Foundation - a philanthropic arm of the Citigroup, jointly organised the fifth Citi-PPAF Micro entrepreneurship awards 2008, here on Monday.

Earlier speaking at the award ceremony, Tarin said the country was facing a number of difficult challenges on the economic and financial fronts, which emanated from a precarious global financial and economic situation.

He said: "We are equally alive to the fact that if timely and well-sequenced action is not initiated immediately, it will lead to substantial economic setback reflected by a further depreciation of the rupee and higher inflationary pressures."

The Advisor said that the government was focusing on identification and rectification of structural weaknesses of the economy with sound strategies, development priorities and institutional improvements. He expressed his satisfaction over catalytic role the PPAF had played over the last eight years in developing microfinance, health and education at the grassroots level.

Chief Executive Officer (CEO) of PPAF Kamal Hayat, in his welcome address, said that the objective of the Citi-PPAF micro entrepreneurship awards was to illustrate and promote the effective role that microfinance played in poverty alleviation around the world.

The programme sought to generate recognition of extraordinary contributions that individual micro entrepreneurs had made towards economic sustainability of the families as well as the communities in 27 countries across the globe, he added. Only two years ago, Citigroup was America's largest bank, but it was recently bailed out by the US government to avert a colossal financial collapse.

It came to Pakistan in 1961 and its philanthropic arm, Citi Foundation, has awarded nearly 20 million dollars in grants to 145 microfinance partners in more than 50 countries. The Citigroup Foundation's grants are awarded in three areas - financial education, educating the next generation and building communities and entrepreneurs.

He said the PPAF, since 2000 had partnered with 72 organisations working in 33,500 villages and 117 districts across the country. The PPAF's cumulative operational activities entailed over two million micro credit loans (impacting 12.5 million with 45 percent women and 100 percent recovery rate), over 18,000 health, education and water infrastructure projects, he added.


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## Neo

*Netherlands keen to help overcome economic crisis ​* 
KARACHI (December 02 2008): The Netherlands, bilaterally and as a member of the EU, is keen to assist Pakistan in its efforts to overcome the present economic crisis. This was stated by the Netherlands Ambassador Designate to Pakistan Tjeero Feico de Zwaan at a reception in his honour hosted by the Honorary Consul General of Netherlands Tarek M. Khan.

He said that the Netherlands would continue to promote investment and joint ventures for Pakistan. He said that Pakistan is facing critical economic situation this time and the international community should join hands with Pakistan. "We want economic and political stability in Pakistan", he added.

Pakistan and the Netherlands look back on a longstanding trade relationship and at present the Netherlands is the fifth largest EU importer of products from Pakistan, in particular leather goods, textiles, sports goods and selected agricultural produce. Dutch exports include agricultural products, specialised machinery, chemical products and pharmaceuticals.

He pointed out that the Netherlands ranked as the third largest investor in Pakistan after the UK and the US in 2007. "Our relationship is not only about trade, but also about economic development through several grant programmes encouraging new technologies", he added.

Apart from trade and business, the Netherlands, together with its development partners, will look for ways to help the poor of Pakistan in these tough economic times. Also, through the EU, the Netherlands participates in the group of Friends of Democratic Pakistan, which had its first meeting at ministerial level in New York in the margins of the UN General Assembly, September last, and recently met in Abu Dhabi to formulate a programme of economic co-operation, he added.


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## Neo

*50 megawatts power plant to be set up for Sialkot industry soon: SCCI president ​* 
SIALKOT (December 02 2008): Newly elected President Sialkot Chamber of Commerce and Industry (SCCI) Hassan Ali Bhatti has revealed that coal power plant of 50-megawatt would be installed in collaboration with Punjab government at Sialkot in near future.

Talking to Business Recorder here on Monday after assuming his office he disclosed that the proposed coal plant would be set up in public-private partnership and Punjab government would invest its 10 percent share while local exporters would provide the remaining funds for undertaking the proposed project.

Hassan Bhatti further stated that strenuous efforts were being made for undertaking the work on the project aimed at overcoming the shortage of electricity as well as getting rid of the menace of load-shedding. The new SCCI President further disclosed that special attention would be accorded on the new projects and projects in the pipeline.

Special attention would be given to the early completion of Sports Industry Development Centre to redress the problems being faced by the sports industry of the area. Similarly, an ultra modern Sportswear Development Centre would be established with the concept of tracking the industry on modern and scientific production lines, he disclosed.

Hassan Bhatti said that efforts would also be made for preparing a strategy with the help of federal government for the development of leather sector adding that extra-ordinary efforts would also be made for Rs 12 billion plans for the development of surgical industry of the area.

Expressing the hope he said that with the support and co-operation of the business community all projects would be accomplished as a result of which a large number of SMEs of the area would be benefited. Adequate efforts would be made for resolving the problems and difficulties being confronted by the SME sector of Sialkot on top priority basis he said.


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## Neo

*Renewable energy resources: PCRET directed to introduce latest technology​* 
ISLAMABAD (December 02 2008): The Standing Committee of National Assembly on Science and Technology has directed the Pakistan Council of Renewable Energy Technology (PCRET) to introduce the latest technology in the field of renewable energy resources to make the country self-reliant in energy sector.

The body met here on Monday with National Assembly member Dr Abdul Kadir Khanzada in the chair. The meeting was attended by the MNAs Justice Fakhar-un-Nisa Khokher (Retd), Anusha Rehman Khan, Chaudhry Mahmood Bashir Virk and Abdul Qadir Patel.

It also evaluated the performance and achievements of Pakistan Council of Renewable Energy Technology during the last three years. The members of the standing committee expressed concern over the redundant research made by Pakistan Council of Renewable Energy Technology.

The committee also directed to focus on remote areas for the supply of energy through renewable resources to their local environment, besides it recommended zoning of the areas for taking maximum benefit of the available energy resources.


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## Neo

*Country facing shortage of 1,000 megawatts power ​* 
LAHORE (December 02 2008): A power shortage of 1000 MW at present has resulted into a two-to-four hours loadshedding for domestic consumers in the country. Industrial consumers, however, have so far been exempted from loadshedding, said Tahir Basharat Cheema, said the Director General Energy Management & Conservation of the Pakistan Electric Power Company (Pepco) Monday.

Talking to Business Recorder, Cheema said partial closure of Rousch Power Plant (200MW) and Kot Addu Power Company (400MW) and complete closure of another power plant at Kabirwala (150MW) besides another reduction of 200MW power generation with reduction of water flow from Tarbela and Mangla has resulted in total power shortage of 1000MW.

The distribution companies have announced loadshedding for domestic consumers in different parts of the country with a total duration of two-to-four hours, Cheema added.

However, there is a general impression on the part of public that no such announcement is made by power distribution companies functioning under Pepco and the current loadshedding was unannounced. Heavy outages are being recorded after the midnight, which continue till six in the morning. Schoolchildren and van-laden female workers of different organisations have pointed out that they wake up in complete darkness due to absence of power.

Federal Minister for Water and Power Raja Pervaiz Ashraf and Pepco officials had been repeatedly pointing out that both the President and the Prime Minister had instructed the Sui Northern Gas Company Ltd (SNGPL) to ensure 100 mmcfd gas to power plants and therefore no heavy loadshedding would be carried out during December when canals would be closed for de-silting purposes. However, all these claims fizzled out when gas supply to these plants was disconnected.

Also, the Pepco officials had assured of continuous functioning of Independent Power Producers (IPPs) during December unlike December 2007 when majority of them were closed for maintenance purposes. However, so far these power plants have flopped one after the other and a full capacity generation from these sources is yet a far-fetched dream. The situation may be worst in case the fuel prices had not trickled down in last one month from $147 a barrel to about $50 a barrel.

The only good sign, in such a critical situation, is continuous supply of electricity to industry, which is already passing through painful period due to world recession. Particularly, the B-3 consumers are facing the tough time and majority for them have either closed down or the management there is forced to slash down production with heavy retrenchment of workers.

Former Chairman Wapda had once pointed out that the Indian government always But Pepco DG Energy Management & Conservation is of the view that power supply to industry is ensured for the time being and any further reduction in power generation may lead to disconnection of power to industrial units, which are facing disconnection of Sui gas at present.


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## Neo

*Huge quantity of coal found near Islamkot ​* 
KARACHI (December 02 2008): After recent drilling, an accumulative layer of some 42 meters of coal has been found near Islamkot, block 8 of Thar coal field, it has been reliably learnt by Business Recorder on Monday. The sources said this accumulative layer of some 138 feet includes ever-thickest layer in Thar coal reserves that is 29 meters, earlier the thickest layer was of 22 meters.

The sources said that although these new reserves are included in entire estimated reserves of 175 billion tonnes of Thar coal and 185 billion tonnes of entire Sindh, but it could also increase the total reserves. The sources said the drilling is being carried out by a company Deep Rock Drilling a Karachi based company under contract of Sindh Coal Authority (SCA).

The sources added these reserves were discovered in last week. "It would be premature to estimate exact weight of this new block but it could be some 2 billion tonnes," they added. The source said although the existing coal in Thar coalfield could not be exported and could not be used in cement plants due to its liquefied property, but it is much more suitable for power generation, synthetic fuel and gasification.

They added that the coal has 6500 BTU, a heating value for power generation and perfect for this purpose. Regarding the other properties of this new explored block the source added that it has least amount from 0.8 to 01 percent of Sulphur, which is less harmful for environment, while across the world it is very high in coal even in Lakhara this value, is up to 6-7 percent.


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## Neo

*Recent macroeconomic performance: some lessons for improving economic governance ​* 
ARTICLE (December 02 2008): "At the core of our dark experience lies the ugly truth that there was an absence of transparency, accountability, public interest, and public responsibility." Anand Panyarachun, former Prime Minister of Thailand.

The above quotation seems to be an apt description of the main causes of the present macroeconomic crisis our country, which hopefully would be tackled soon by implementing an appropriate stabilisation policy. The quotation also refers to the primary factors of good governance, which were absent then in Thailand and, sadly, still so in our country.

Without necessarily accepting, at the outset, the assertion in the last sentence, this paper presents an analysis with three-fold objectives. The first objective is to take a retrospective analysis of recent macroeconomic trends with a view to isolate the main economic factors responsible for rapid economic deterioration. Second objective is to link these factors with the quality of economic governance. Third objective is to draw some lessons for future improvement in economic governance necessary to propel our country into a sustainable path of growth and development.

I will first review in the following section, retrospectively, the recent macroeconomic events in terms of four inter-related sets of macroeconomic indicators pertaining to inflation, fiscal, monetary and external sectors. Before analysing the trends, lags in data compilation and availability should be kept in mind.

For example, presently (6 November 2008) we are in 2nd quarter of the fiscal year, but we do not know the size of fiscal deficit for the first quarter because the lag in compilation and release of fiscal data is at least two months. So we will know about the size of fiscal deficit of first quarter of FY09 next month (December 2008). In a retrospective analysis, this point becomes important and will be discussed later with reference to issues related to data timeliness and quality.

A RETROSPECTIVE ANALYSIS: 

Table 1 presents a synopsis of inflation indicators during FY07 to Q1-FY09. The first thing to note is the sudden and ferocious onslaught of inflationary pressures from the 3rd quarter of FY08, which took the inflation from 8.8% in December 2007 to 23.9% in September 2008. In contrast, from FY05 till the 4th quarter of FY07, there was almost a continuous, though, sluggish decline in inflation on YoY basis.

Also, in the first two quarters of FY08, when inflation started to rise, it remained below 9% in terms of all indicators except food inflation. However, core inflation had reversed its declining trend from first quarter of FY08 and SBP tightened its monetary policy in July 2007 by increasing its policy rate from 9.5% to 10.0%, besides increasing its cash and statutory liquidity requirements. SBP again increased its policy rate by another 50 basis points to 10.5% at the end of January 2008.

It is clear from Table 1 that the rapidity in inflation was primarily due to rapid increases in food and commodity prices whose source was largely external. Once begun as food inflation, and irrespective of the source, there is always a risk of second round impacts through expectation formation and wage-price spiral. Hence, monetary tightening is always needed in such circumstances. The needed strength of tightening, however, depends on prevailing level of excess aggregate demand in the economy.

When MPS January-June 2008 was issued in January 2008, inflation data available at that time pertained to December 2007. None of the forecasts of inflation available at that time correctly anticipated the strength of inflation that actually materialised for FY08 and beyond. SBP projections for FY08 made at end December 2007 indicated a range of 6.5% - 7.5% for inflation and 13.5% - 14.5% for broad money growth.

This projection for inflation proved to be widely off the actual observed average CPI inflation for FY08 which was 12.0%. In retrospect, it is easy to criticise SBP for not anticipating the strength of inflation. It is also now a common criticism by economic/financial journalists that whatever SBP did in terms of tightening monetary policy "it was too little and too late".

SBP welcomes all these criticisms; this is perhaps a firm indication that monetary policy transparency is increasing. Although there is still a considerable room for strengthening the mechanism of monetary policy formulation and implementation, the current set-up despite its weaknesses, enabled SBP to come up with periodic policy responses which it considered appropriate.

Hence, there was no absence of "public responsibility" (mentioned in the quotation) as far as actions of SBP are concerned. The strength of policy responses by SBP were, in fact, considerably more than its present level of independence allowed. I will revert to this central issue of governance in the later section.

Table 2 presents a summary of fiscal indicators during FY07 and FY08. We have already seen that extraordinary inflationary pressures started to develop from 3rd quarter of FY08. This was preceded by extraordinary pressures on fiscal account that is clearly visible in fiscal deficit to GDP ratio that increased to 1.5% (6.0%; annualised basis) in the first quarter of FY08.

Also note that this information became publicly available in end November 2007, along with other details of quarterly fiscal operations released by the Ministry of Finance in their website. These developments prompted SBP to write the following in its first quarterly report for FY08 sent to the Parliament on 5th January 2008:

"All key fiscal performance indicators deteriorated significantly in Q1-FY08 ... if current trends persist and strong corrective measures are not undertaken promptly, the annual fiscal deficit target of 4.0 percent of GDP for FY08 will not be met."

Fiscal stress continued to increase as is apparent from indicators in Table 2. While the deterioration was visible in all fiscal indicators, it was impossible to pinpoint it on subsidies because of the opaqueness of quarterly fiscal details of subsidies. Quarterly amounts of subsidies used to be disclosed in MOF website till 2004, but since 2005, subsidy amounts were disclosed only in annual budget statements.

Simply put, while annual fiscal data is relatively transparent, quarterly data is comparatively less transparent and opaque regarding subsidies. While the story regarding subsidies became known to public by the disclosure made by Ishaq Dar (then Finance Minister) on April 9, 2008, I will confine myself to only a few points visible in Table 2.

Annual size of the subsidies became 3.6% of GDP; 2.6 percentage points more than FY07. Interest payments became 4.7% of GDP; 0.5 percentage points more than the level in FY07. These two heads produced the major stress in fiscal operations in FY08. Also the bulk of subsidies were booked in the budget in 4th quarter of FY08. The last observation is apparent from the fact that 4th quarter non-interest expenditure (including subsidies) jumped significantly from its past trend.

While the size of the budget deficit alone indicates the severity of macroeconomic imbalance, its financing mix is of utmost concern not only to a central bank but to the public at large and for upholding the "public interest" (mentioned in quotation).

When deficit is being financed primarily from central bank borrowing, this is almost a sure sign of the onslaught of high inflation. In fact, if fiscal dominance of this high order continues, risks to very high and hyperinflation will soon compound. In FY08, 89% of the budget was financed by borrowing from SBP.

In fiscal data released by MoF, this composition of budget financing is opaque. Fiscal disclosure conveniently hides this under a head "Bank" which actually means the banking system that includes both the SBP and all scheduled banks. This opaqueness, however, is somewhat diluted by the weekly disclosure of monetary survey on the website of SBP that separately mentions government borrowings for budgetary support from SBP as well as scheduled banks.

Table 3 presents a summary of monetary indicators during FY07 to Q1-FY09. In the presence of fiscal dominance described earlier, together with a situation of depleting reserves, there is a greater need to exercise caution in interpreting various monetary indicators. For example, broad money growth at the end of first quarter of FY09 seemed rather benign at 13.5%.

This is not a correct conclusion. Since broad money is a sum of domestic credit (net domestic assets) and the net foreign assets of the banking system, continuous depletion in one factor (especially NFA) is the main cause of monetary and financial stress. I would have labelled the growth in M2 of 13.5% as within safe limits only under normal conditions of accumulation of reserves.

In fact, this composition of money supply is clearly revealing the main symptom of macroeconomic imbalance that is caused by high budget spending financed mainly from the inflationary borrowing from SBP.

It is precisely this spending that has aggravated the demand pressures in the economy to create the classic problem of twin deficits. Both the budget and current account deficits have far surpassed their sustainable limits; hence the pressure on reserves to deplete and rupee to depreciate.

More meaningful monetary indicators, in the current situation, are the growth in domestic credit (NDA), growth in reserve money, depletion rate in NFA and the size and growth in inflationary borrowing from SBP. FY08 flow of credit to GOP directly from SBP was to the tune of 6.6% of GDP, with outstanding stock at 9.9% of GDP.

This flow has not stopped in FY09, in spite of assurances by MoF about keeping these borrowings at zero. First quarter FY09 borrowing flow stands at 1.8% of GDP, with stock at 10.3% of GDP.

These numbers, unfortunately, hardly require any interpretation. Pure and simple, this is a balance of payments crisis, which we can tell without even looking at the data through its connection with net foreign assets to monetary data.

Table 4 presents selected indicators on external sector during FY07 to Q1-FY09. High import growth, which is causing the reserves depletion, was in fact driven by all categories of imports, and not just by oil, although oil import bill has caused the major stress. The first thing to note is about non-food non-oil imports. Their growth was brought down to just 4.0% in FY07 because of tight monetary policy, which was not destroyed by the inflationary borrowings of GOP then.

Import growth runs amok as soon as GOP went on a binge of inflationary borrowings from SBP in FY08. Year on year growth in non-food non-oil imports went as high as 42.4% in 3rd quarter of FY08, and started receding due to the depleting reserves and correction in exchange rate. This growth has come down to 14.6% in the first quarter of FY09, but is still very high.

Stress caused by oil import bill is too obvious. What is not obvious is that an earlier fiscal response of passing on oil price increase to consumers would have influenced them adjust their oil consumption. The notion that oil demand is inelastic and would not have made any dent in consumption can safely be rejected; elasticity would have been low but significantly different from zero.

What this implies is that a complete lack of a fiscal policy response in the earlier period of external price shock created severe difficulties not only for the fiscal sector, but monetary and external sectors as well, besides worsening the inflationary pressures. A timely fiscal response could have mitigated the stress on balance of payments, or lessened the speed of depletion of reserves.

An obvious question here rises about the exchange rate regime and the appropriate policy response by SBP. Exchange rate regime (fixed, managed, floating, etc) is always decided by the government. Once decided at government level, day-to-day exchange rate management lies with the central bank.

Here, the institutional arrangement is much more vague than the obviously flawed financing arrangement between SBP and MOF discussed earlier. I attempt to summarise this dangerous vagueness regarding exchange rate regime and its implementation here by briefly recalling past history.

During the last balance of payments crisis, triggered by nuclear detonation in 1998, a dual exchange rate regime was adopted by GOP and implemented by SBP. Later on, this regime was unified in May 1999 to become a free float. With ensuing pressure on exchange rate, a de facto cap was placed on dejure float. Later, it was also lifted to become a free float during July 2000.

Exchange rate again came under pressure in end 2004. To stabilise the exchange rate, a novel way of intervention was adopted, presumably, at the behest of then finance minister. Under this unique system, full "market support" for meeting oil import bill was provided to foreign exchange market. This strategy immediately quelled all speculative pressures in foreign exchange market.

Not surprisingly, free float became almost a fixed exchange rate regime. Since, it was not a dejure peg, it was classified separately by IMF as a de facto peg! This was a clever strategy suitable for that time; stable exchange rate proved very conducive in attracting FDI and portfolio flows.

Given a perennial and unified national obsession with maintaining the value of Rupee (against whatever odds) it was almost completely forgotten that this obsession is actually a deadly mirage. During the tenure of the present Governor, the proposal of gradually withdrawing "market support" for meeting import payments was taken up in the Monetary and Fiscal Policies Co-ordination Board, but the decision was to largely keep the irrational market support policy intact.

The above retrospective description about exchange rate regime is extremely important. While the SBP policy of providing "market support" was fully transparent, even the best and brightest of economists and financial analysts have criticised SBP only about the interest rate stance but seldom about the exchange rate misalignment, which was a main cause of distortion, along with fiscal indiscipline and dominance.


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## sohailbutt

*FBR collects Rs 423 billion revenue for July-Nov 2008​*
ISLAMABAD: Federal Board of Revenue (FBR) has collected Rs 423 billion revenue during the first five months of the current fiscal year, showing a 24.4 per cent increase as compared to the same period of last fiscal, FBR sources said. 

Giving the details about the provisional figures, the sources added that the FBR has collected Rs 68.73 billion for the month of November 2008, taking the overall collection figures to Rs 423 billion as against Rs 340 billion collected during the corresponding period last year. 

Giving the break-up of the tax collection figures, they said that Rs.137.2 billion were collected in the form the Direct Taxes against the target of Rs.144.5 billion up to November 2008.

Similarly, Rs.185.1 billion were collected in the form of Sales Tax against the Target of Rs.173.8 billion, showing an increase of 11.3 percent over the target. 

The Federal Excise Duty also witnessed an increase of 3 percent over the target. The FED was collected Rs.44.3 billion till November 30,2008 against the target of Rs.41.2 billion. 

In the head of Custom duty Rs.61.6 billion were collected up to November 2008 against the target of Rs.53.7 billion, showing an increase of 7.9 percent the sources added.

FBR collects Rs 423 billion revenue for July-Nov 2008 - GEO.tv


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## Neo

*Europe buyers skip India, buy basmati from Pakistan ​*
Wednesday, December 03, 2008 

NEW DELHI: European traders have bought 80,000 tonnes of basmati rice from Pakistan in the last 10-15 days, sidestepping Indias new season crop because of higher prices, a senior industry official said on Tuesday.

Gurnam Arora, joint managing director of Kohinoor Foods and former president of the All India Rice Exporters Association, told Reuters Indian exporters lost out largely because of an export duty of $200 a tonne imposed in April.

He said Indian basmati rice was quoting between $1,400 to $1,500 per tonne, about $400 to $500 above Pakistani prices.Traditionally, our rice is usually priced about $200 more than the Pakistani rice, he said. We have requested the government to remove the export tax as Pakistan is eating into our share.

There is no sense in this duty, Arora said, adding that Indian rice stocks were comfortable.India had also banned the export of non-basmati rice in April.The country exported about 1.5 million tonnes of basmati rice in the year to March 31, 2008, out of total exports of 5.5 million tonnes of rice.

Arora said there was no clarity yet on whether the government will scrap the export duty, despite trade requests.There is going to be a shortfall of 30 per cent in exports, if the export tax does not go immediately, he said.

Analysts say Pakistan, the worlds fifth-largest rice exporter, has become more price competitive than India due to a bumper crop and depreciation of the Pakistani rupee against the dollar.

Most people are holding back purchases (of basmati from India), as they are saying that they will buy once the duty is scrapped, Arora said.Only limited quantities are being bought from India by some rich western nations, he said, adding last weeks attacks in Mumbai could put traders off visiting India.


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## Neo

* Gwadar to handle cement exports in future ​* 
Wednesday, December 03, 2008 

ISLAMABAD: The government has decided to manage all cement export activities from Gawadar Port in future while some part of import of wheat and fertilizer would also be shifted on this port to enhance business activities in Balochistan besides creating job opportunities. 

Federal Minister for Industries and Production Mian Manzoor Ahmad Wattoo said this in a meeting with the Chief Minister Balochistan, Nawab Mohammad Aslam Khan Raeesani here on Tuesday.

They also discussed matters on various development plans initiated by Federal government especially Ministry of Industries and production in the province, says a news statement issued here. 

During the meeting, Industrial Minister said that Federal Government has prepared various development plans for the development of this province including supply of clean drinking water, development of precious stone industry, establishing of Export Processing Zone, facility of Utility stores and scheme of tax holidays for Gawadar Port.

He added that Ministry of Industries and Production was spending 80 percent of its development budget in Balochistan and appreciated the cooperation of Chief Minister and Balochistan government with him in development activities, initiated by federal government in the province and assured that the Gawadar Port would be converted into a modern seaport of the world as location of this port was very attractive for the UAE, China and Middle East countries. 

Wattoo also disclosed, We have requested the Prime Minister that the next Cabinet Meeting would be held at Gawadar Port as this will provide opportunity to cabinet members to share their ideas. 

Chief Minister Balochistan, Nawab Mohammad Aslam Khan Raeesani also urged that federal government should enhance trade activities at Gawadar Port and shift bulk cargo activities to the port as it was now capable for handling these activities.


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## Neo

*FBR collection up 24.4pc, IMF for upward revision of targets ​*
Wednesday, December 03, 2008 

ISLAMABAD: Tax authorities have collected Rs423 billion revenues during the first five months (July-Nov) of the current fiscal year 2008-09, registering a growth by 24.4 per cent compared to the same period of the previous financial year.

In view of achieving impressive growth, the International Monetary Fund (IMF) has asked Pakistan to jack up FBRs tax collection target by Rs110 billion to Rs1,360 billion from earlier envisaged target of Rs1,250 billion for the current financial year 2008-09.

The IMFs revenue projections for the FBR are based on higher inflationary pressure up to 23 per cent and steep depreciation of rupee against dollar, which would be generating additional tax revenues in the ongoing fiscal year without imposing any new taxes.

However, the Federal Board of Revenue (FBR) missed its envisaged tax collection target in shape of direct taxes for first five months of the current fiscal as the tax authorities were eyeing to collect Rs144.5 billion but they could generate Rs137.2 billion, registering decline by 12.3 per cent.

But the FBR achieved higher growth in indirect taxes, which yielded positive results and overall growth was registered by over 24 per cent compared to the same period of the last financial year in the first five months.

According to the provisional figures, the FBR has collected Rs68.73 billion for the month of November 2008, taking the overall collection figures to Rs423 billion as against Rs340 billion collected during the corresponding period last year.

In shape of Direct Taxes, the FBR collected Rs132.212 billion in first five months of FY 2008-08 against Rs113.413 billion in the same period of the last financial year, registering a growth by 16 per cent.

The indirect taxes have achieve revenue collection of Rs290.793 billion in the first five months of the current fiscal against Rs226.654 billion in the same period of the previous financial year. The refund amount remained almost same to the tune of Rs16 billion in the first five months of the current fiscal compared to the same period of the previous fiscal year.

The sales tax at import stage generated revenue collection of Rs92 billion in the first five months of the current fiscal year against Rs82 billion in the same period of the last financial year. The sales tax collection on domestic front rose to Rs92.970 billion in the first five months of the current fiscal compared to Rs64 billion in the same period of the previous financial year.

The Federal Excise Duty generated tax revenue of Rs44.170 billion in the first five months of the current fiscal compared to Rs31.238 billion in the same period of the previous financial year.

The Custom Duty collection went up to Rs61.561 billion in July-Nov period of the fiscal 2008-09 against Rs50.922 billion in the same period of previous fiscal 2007-08.


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*Germany offers cooperation in renewable energy ​*
Wednesday, December 03, 2008 

LAHORE: The Ambassador of Germany Dr Michael Koch has said Germany can help Pakistan in renewable energy generation.

The German Ambassador was speaking at Lahore Chamber of Commerce and Industry on Tuesday. LCCI President Mian Muzaffar Ali, Senior Vice President Tahir Javed Malik, honrary consul in Lahore Anisur Rehman, former LCCI Presidents Mian Misbahur Rehman and Shahid Hassan Sheikh also spoke on the occasion.

The Ambassador said that renewable energy sources could help protect Pakistan government against cost increases. He said the German government has created enabling environment for investment in renewable energy sector. The Ambassador said that efforts were being made to increase the two-way trade between Pakistan and Germany.

Speaking on the occasion, the LCCI President Mian Muzaffar Ali said that the volume of trade between the countries, though is progressing, but is still not up to the mark. He said that Pakistan is a producer of the finest quality of fruits & vegetable, rice, fish, textile products, readymade garments, bed wear etc and thus makes a strong point for the import of these products. 

The LCCI President said that the foreign investment in Pakistan by Germany, which was $11.2 million in 2001-02, had increased to $2 billion in the year 2007, shows a little improvement and needs to be increased.

He said that Pakistan offers a lot of potential for foreign investment. It is strategically located. The setting up of Gwadar Deep Sea Port, the opening up of trade with Central Asian States and gradual development of a South Asian economic region are all promising developments which can be exploited by foreign brand names. Any investment made in Pakistan will find its way to the regional countries. Doing business in Pakistan is easy as compared to other South Asian countries. Pakistans foreign investment policy is very liberal and friendly.


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*Pakistan, China to further strengthen economic ties​*
ISLAMABAD: The Chinese Ambassador to Pakistan, Honorable Luo Zhaohui and Federal Minister for Planning & Development Division, Makhdoom Shahabuddin reiterated their resolve to strengthen bilateral relations not only politically but also in the arena of economy. 

Shahabuddin appreciated Chinese cooperation with Pakistan in various fields of economy. The Chinese Ambassador mentioned that during President Zardaris visit to China, both the sides signed 14 agreements that would further raise the level of cooperation between the two countries.

He also said that as a trusted ally China had given $500 million to Pakistan for building its reserves. This help from China came at a time when Chinese economy was suffering adversely from global financial crunch that has negatively impacted Chinese export to Western countries, said the Ambassador. 

Shahabuddin stated that Planning Commission wanted to interact and work out an integrated relationship with its Chinese counterpart through joint seminars, mutual visits, and exchange of documents to the benefit of both the countries. He briefed the Ambassador on the reorganisation of the Planning Commission so that it could focus on strategic issues in the field of development. The basic purpose behind the reform was to develop a corporate working environment in the Planning Commission to serve as a think tank with a strategic focus and global perspective at conceptual and operational levels.


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*Expenditures continue to outpace revenues: Budget deficit hits Rs 139.46bn​*
ISLAMABAD: The overall budget deficit faced by the federal and all four provincial governments have reached Rs 139.461 billion during first quarter July-September of current fiscal year 2008-09. 

Total revenues of the government stood at Rs 384.961 billion and the total expenditures were Rs 524.421 billion during first quarter. The defence expenditures were Rs 82.181 billion during the first quarter July-September period. 

The federal government has transferred Rs 124.341 billion to the four federating units Punjab, Sindh, NWFP and Balochistan as provincial share in federal revenues under interim National Finance Commission (NFC) Award, during first quarter of current fiscal year. 

According to a report of finance ministry, the total revenues during the first quarter were Rs 384.961 billion out of which federal and provincial tax collection stood at Rs 276.812 billion. Rs 22.666 billion were collected from petroleum and gas sector that includes Rs 4.151 billion as petroleum development surcharge and Rs 4.626 from gas development surcharge. The non-tax revenues stood at Rs 97.035 billion during the July-September period of current fiscal year. 

According to the details of the expenditures of the federal government during July-September period of current fiscal year, the government has spent a total sum of Rs 470.679 billion out of which Rs 39.989 billion were the non-development expenditures. The details of the current expenditures in first quarter are: 

The government paid Rs 111.126 billion as interest on local and foreign loans, Rs 98.541 billion were spent on servicing of domestic debt and Rs 12.585 billion were spent on servicing of foreign debt. Total defence expenditures were Rs 57.546 billion, the development expenditure and net lending during the first quarter stood at Rs 129.817 billion. 

The budget deficit during the first quarter July-September stood at Rs 158.066 billion that was financed through Rs 36.798 billion from external resources and Rs 121.268 billion from domestic resources. 

The revenues of government of Punjab amounted to Rs 70.918 billion against the expenditures of Rs 68.127 billion. Punjab received grants worth Rs 1.036 billion and loans worth Rs 728 million from federal government. Development expenditures of the province amounted to Rs 11.349 billion and non-development expenditures were 68.127 billion. 

The total revenues of government of Sindh stood at Rs 46.669 billion and the total expenditures of the province remained Rs 46.631 billion. Sindh received Rs 15.489 billion as NFC Award share of the federal taxes from the federal government during first quarter. Non-development expenditures of the provincial government stood at Rs 14.459 billion and development spending remained at Rs 2.493 billion in said period. 

The total revenues of the NWFP amounted to Rs 23.854 billion and total expenditures of the province stood at Rs 16.925 billion. The NWFP government received Rs 15.484 billion as NFC Award shares during the said period. The total revenues of the government of Balochistan stood at Rs 18.810 billion and the total expenditures of the province remained at Rs 8.401 billion. The provincial government received a sum of Rs 11.702 billion as NFC Award share from the federal government during the said period.


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*Making countrys exports visible: IT bodies urged to get registered with SBP​*
LAHORE: Chairman Federal Task Force on Information Communications and Technologies (ICT) Salim Ghauri on Tuesday urged the Information Technology (IT) companies to get registered with the State Bank of Pakistan in order to make them visible in countrys exports. Ghauri said earnings of companies doing IT exports are much higher than the figures reported by the SBP. Ways and means should be proposed on how companies should be encouraged to report their earnings, he added.

The software exports in 2007-08 as reported by SBP were $170 million. In the first quarter of 2008-09, the exports have been about $70 million and it is expected that the target of $250 million for 2008-09 will be achieved. The PSEB data further reveals that only 17 IT companies were registered with SBP a few years back, which has now increased to about 179 companies, while the total number of companies registered with PSEB are around 1,200. The next 2 years are difficult for the IT industry in view of the global recession, he said adding that there is need to project industrys strengths and build up on its good past performance to overcome the upcoming difficult time. 

He said the potential of IT work in the domestic market should be explored by the companies and the government should take steps in this regard in order to cope up with difficulties foreseen in view of global slowdown. The government of Pakistan has recently formed a task force on ICT to place Pakistan as a major player in software exports.


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*Pakistan ranks 4th in broadband Internet growth​*
KARACHI: Pakistan is ranked fourth in terms of broadband Internet growth in the world, as the subscriber base of broadband Internet has been increasing rapidly with the total base crossing 170,000 in the country.

The rankings are released by Point Topic Global broadband analysis, a global research centre. According to the statistics, there are around 382. 4 million broadband subscribers worldwide by the end of August 2008 as compared with 317 million in August 2007, showing 17 percent growth.

Regional Broadband trend revealed that Western Europe has the largest share of broadband users with 26 percent followed by North America at 22 percent. South and East Asia regional is in the third place with 22 percent share.

In Pakistan operators are offering wide range of technologies like DSL, Cable, FTTH and WiMax. They have added 25,500 new broadband connections in the financial year 2007-08, which is around 150 percent increase compared to the previous financial year, Pakistan Telecommunication Authority (PTA) statistics reported.

The Internet Protocol (IP) traffic through high-speed access link has become the success factor that have made rapid the transfer of online information and communication services, data, voice and video footage. The easy way of communication owing to highly competitive market of service providers has been penetrating in the country with modest acceleration in the metropolis. 

At present Digital Subscriber Link (DSL) is the leading broadband service in the county with 65 percent of the market share. Major DSL providers in Pakistan are Micronet, LinkDotNet, CyberNet, MultiNet and PTCL.

Hybrid Fibre-Coaxial (HFC) is the second largest broadband technology in terms of the market share. Approximately 25 percent of the total broadband subscribers are using HFC technology. WorldCall (Pvt) Ltd is the larget provider of Cable Modem Broadband in Pakistan through its widespread HFC network in Karachi and Lahore. Wateen Telecom is another service provider which is providing HFC service in the country.

Global broadband market analysis has shown that subscribers base for FTTH technologies is increasing sharply with the emergence of innovative applications and services such as IPTV. These new services require very high access connectivity that can only be provided through FTTX technologies.

According to the PTA annual report 2008, operators have started offering FTTH and WiMax services in metropolitan cities. At present there are approximately 2,800 FTTH and 2,000 WiMax subscribers. 

A significant reduction in subscription and services charges has been witnessed in the country. The DSL subscription rate has declined to $15 (nearly Rs1200) per month from $55 (above Rs 4,000) per month for 512Kbs connection.

Subsequent to the introduction of high-speed broadband access in early 2000, telecommunication companies have started offering a whole new variety of services.


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*Pakistan seeks tech assistance from Sweden​*
ISLAMABAD: Pakistan has sought technical assistance from Sweden in the areas of textile, Agro-food industry, mining, alternate energy sector, capacity building and skill development of work force, market access for traditional handicrafts and projects for clean drinking water. 

Federal Minister for Commerce Makhdoom Amin Fahim is on an official visit to Sweden. 

During his stay in Sweden, the minister met with his Swedish counterpart Ms Eva Bjorling and the Foreign Minister Mr Carl Bildt. They discussed important trade and commercial issues of both the countries.


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*Iraq buys 30,000 tonnes of rice ​*
AMMAN (December 03 2008): Iraq's Grain Board has purchased 30,000 tonnes of Pakistani long-grain rice at $385 per tonne FOB basis for January shipment, a trade source said on Tuesday. Volumes in Iraq's wheat and rice tenders are viewed as nominal and it regularly buys more than originally sought. Iraq had also bought another 30,000 tonnes of Vietnamese rice at $411 per tonne FOB which was reported by Reuters on Tuesday.

Both sales were bought during a tender for a nominal 30,000 tonnes of rice that closed on Sunday. Reuters reported on Sunday that Iraq had bought up to 80,000 tonnes of rice and opted for cheaper Pakistani and Vietnamese rice, where offers ranged from $385 to $412 a tonne FOB, while rejecting Thai rice bids of at least $100 a tonne higher as too expensive.


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*SBP governor hopeful of decline in inflation in five months ​*
LAHORE (December 03 2008): State Bank of Pakistan (SBP) Governor Dr Shamshad Akhtar has termed the monetary policy as successful and said it is expected that core inflation will decline within two to five months. She expressed these views while talking to newsmen here on Tuesday, after the inaugural ceremony of Kashf Microfinance Bank's first branch.

She also said she could not say by how much the core inflation would decline by. "As for the Consumer Price Index (CPI), it is expected to decline on yearly basis from present 25 percent to 20 percent, since the prices of both commodities and oil has decreased in the international markets," she added.

On the International Monetary Fund (IMF) loan, she told the newsmen that the loan had been taken to strengthen the country's foreign exchange reserves and it had nothing to do with controlling inflation. On devaluation of rupee, the SBP Governor said that the central bank took measures to bring stability in rupee, which was weakened by macro economic imbalances.

She said the combination of IMF loan and decline in international oil prices had also helped in strengthening the Pakistani currency. "The SBP is not holding the rupee, in fact its valuation is left to market forces, and at present, the situation of the currency looks pretty good. "Effective measures taken by the central bank removed shortcomings in the currency and the situation is now normal. Also, no speculation was taking place in the currency market," she added.

When asked about mark-up rate, she replied if the macro economic fundamental improved, then there would be no need to have tight monetary policy. "However, after examining the financial data of November/December, the central bank would determine further line of action on interest rate; if needed, we would further tighten the monetary policy. It is always the government's efforts to have both low fiscal deficit and interest rate in the country," she added.

The SBP Governor refuted the allegation that any staff of the central bank was involved in the dollar scam. However, she did say if anyone had a proof against a State Bank's official in this connection, then the central bank would take an action.

"One should avoid making allegation without any evidence," she added. According to her, she made no such comments relating to the Pakistan Peoples Party's government. However, both the previous and the present government had taken measures to overcome economic pressures caused by global pressures.

She would make no comments on any government, but the decision of tight monetary policy was taken by the State Bank of Pakistan to overcome prevailing financial crisis. According to her, Kashf Microfinance Bank Limited was the first Microfinance bank to attain a license from the State Bank, which would benefit poor people to get small loans.

This was the best form of charity, but for microfinance banks to take root, it needed the support of the government, she added. Earlier, the SBP Governor inaugurated the first branch of Kashf Microfinance Bank in Lahore at Dharampura.

Kash Microfinance Bank Limited President Roshaneh Zafar, former Federal Financial Minister Sartaj Aziz, eminent citizens, leaders of the social sector organisations and senior executives from the financial sector were also present on the occasion.

Addressing the participants, the SBP Governor said Microfinance would help Pakistan tremendously, and on many occasions, she had advised leading NGOs to transform into bank, where their success lay. "The Kashf Foundation has proved that and this is a way to move forward," she added. She was of the view that it was a bank that gave financial services to the poor and it was imperative to commercialise Microfinance.

She said that Pakistan had to go through this and the Microfinance was the only way to reduce poverty in the country, which were around 40 percent. "The State Bank encourages setting up of Microfinance banks in the country, which could prove wondrous for Pakistan," she added.

She said the central bank was taking a number of measures for strengthening the Microfinance banks and also minimising the risk factors in Microfinance. "The central bank is planning to introduce a Credit Borrowing Scheme with a fund of 10 million sterling pounds, Smart Subsidy, Financial Innovative Fund and Community Investment Fund. "As a pilot project, we are also planning to establish a fund of 20 million dollars for the capacity building of Microfinance institutions," she added.

It may be mentioned that Kashf Microfinance Bank has been sponsored by Kashf Foundation, which is one of the leading Microfinance institutions in Pakistan and is helping poor families. Kashf Foundation was established in 1996 to replicate the Grameen Bank in Pakistan.

The bank's vision is to demonstrate a Microfinance model that relies on locally mobilised depositors, thus ensuring long-term access to financial services to low income communities. Over the next five years, it plans to reach out to one million depositors and 450,000 entrepreneurs, through a network of over 100 branches across Pakistan.


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*Low volume of trade between Pakistan and India: non-enforcement of bilateral trade agreements pinpointed as cause ​* 
ISLAMABAD (December 03 2008): Non-implementation of bilateral trade agreements and security issues are major hurdles in increasing volume of trade between India and Pakistan, said Siddhartha Mitra, Director Research, Consumer Unity Trust Society (CUTS) International.

In an exclusive interview with Daily Business Recorder here on Tuesday Mitra of Jaipur-based CUTS said that trade barriers should be minimised and trade facilitation infrastructure should be put in place on both sides of the border to maximise the volume of trade between the two countries.

Moreover, Confidence Building Measures (CBMs) process must continue to give peace a chance. Mitra is a member of Indian delegation attending the three-day 11th Conference on "Peace and Sustainable Development in South Asia" held under the aegis of Sustainable Development Policy Institute.

About the main hurdles in Pak-India trade Mitra said, "There is a positive list of items being traded between the two countries. Most of the countries follows negative list (items can't be traded) as it is fixed and changes are not made every now and then. This is the era of innovation and many tradable items are adding every day to the trade basket".

When asked what step Pakistan should take to promote trade with India, he opined, "It is need of the hour that Pakistan should give Most Favoured Nations (MFN) status to India which India has given to Pakistan in 1996. Non-tariff barriers like sanitary and psyto-sanitary measures should be uniform in both the countries."

About the trade facilitation measures being taken on both sides of the border, Mitra said that Indian was deficient in trade facilitation infrastructure like storage sheds, docks and proper goods clearance facilities. These facilities must be put in place for keeping consignments safe in the warehouses before clearance procedure is completed, he underscored.

He opined that both the countries were deficient in translating all the trade agreements into practice. Much of the trade routes have been decided in principle between the two countries on papers, but these pacts lack implementation, as there is very meager trade through these routes.

About the steps for increasing trade volume between the two countries Mitra suggested that import substitution strategy should be adopted ie the goods which are produced cheaply in India be imported by Pakistan, similarly items whose cost of production is less in Pakistan be imported by India.

For instance, potato seeds are much cheaper in India, Pakistan instead of buying it at high rates from other countries and giving to farmers at subsidised rates should purchase from India which is in benefit of both the countries.

In case of heavy transport like CNG buses Pakistan must explore the nearest market first and if buying from India is cost-effective Pakistan must avail the opportunity, similarly India can import cars from Pakistan depending on the make and model of the vehicles, he added.

He said it is astonishing to note that Indonesia, which is far away as compare to Pakistan has $7 billion bilateral trade with India, whereas its neighbour's (Pakistan) trade volume is just $1.6 billion. Regarding the measures that are needed to lessen travelling barriers between the two countries, he said visa restriction should be relaxed, there should be frequent exchanges of politician, students and cultural delegations, so that people on both the sides of the divide understand each other in a better way.

This would help in removing the misconceptions between them. "We need to discover each other through promotion of tourism." For nurturing strong and stable relations between the two countries he suggested of building trust between the two countries, urging both the countries to make joint efforts to fight terrorism and develop an anti-terror mechanism by sharing information to root out this menace as these people are few in number.

CBMs should continue to give peace a chance. He stressed that media on both sides must play constructive role in delicate situations like Mumbai terrorist attacks as efforts for normalisation of relations are badly hampered by taking extreme positions. "We must learn from the history and work together for promoting peace which is necessary for sustainable development in the region.


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*Prospects of copper and chromite identified in Waziristan ​* 
PESHAWAR (December 03 2008): Geologists of FATA Development Authority have identified prospects of copper, chromite and manganese in South Waziristan Agency. The geologists collected 64 representative hard rock samples in the field from these areas for chemical analyses to formulate further detailed follow-up work.

In addition, a new rock type, which can be marketed as a dimension stone, in the name of black granite, was discovered. Its cut and polished blocks have already attracted a number of investors. FATA DA intends to facilitate the potential investors to provide infrastructure to the mining areas, besides technical assistance and negotiations with locals and political Administration in this regard.


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*No sugar shortage this year ​* 
ISLAMABAD (December 03 2008): The country will not face any shortage of sugar, and there will be no need to import the commodity at all, despite 11 percent less production of sugarcane as compared to last year, sources told Business Recorder here on Tuesday. According to them, total domestic consumption of sugar would be 3.7-3.8 million tons, while the expected production of the commodity is 4.7 million tons.

Moreover, the carryover stock available with the Trading Corporation of Pakistan (TCP) is about 0.9 million tons. "We are hopeful that there will be no need, at all, to import sugar this year", sources said. They said that last year, due to surplus sugarcane production of 6.3 million tons, the growers had to face a severe crisis in the form of non-payment by sugar mill owners.

Sources said that despite tall claims of the government about payment of Rs 49 billion to sugarcane growers by sugar mill owners, an amount of Rs 100 million is still in doldrums. A sugar mill owner said that the sugar mills were not to be held responsible for late payments to the growers.

"We were forced to do so as our credit limits were not extended by the banks. It is absolutely wrong that mill owners had made a lot of money by late payments to growers, because it is the middle man who should be held responsible for that". He added that TCP should have started procurement of sugar from the local market in November/December last year to save the poor growers who were paid just Rs 40-45 per 40 kg for their crop due to surplus cane production.

"Everyone blames the sugar mill owners for the financial crisis faced by the sugarcane growers, but it is not fair at all, as the prices of sugar, contrary to our cost of last year production, decreased to Rs 22.50 per kg while our cost of production was Rs 28.50 per kg. So, tell me, were the sugar mill owners not suffering from the crisis as well, along-with the growers?" he asked.

He went on to say that the government should introduce a 'sugar policy' that should preserve the interests of both the sugar mill owners and the growers. "In 2005, a notification was issued by Central Board of Revenue (CBR) to ban the role of middle man in sugarcane buying and selling but it has not been implemented so far", he added.

He said that there should be no support price for procurement of sugarcane, as it should be purchased directly by sugar mills from the growers on the basis of sucrose recovery percentage. The sugar mill owner said that the government has banned export of sugar while the export of gur is going on. Pakistan exports 0/1 million tons gur, which should be banned with immediate effect, he demanded.


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*Recent macroeconomic performance: some lessons for improving economic governance - II ​*
ARTICLE (December 03 2008): Quality of economic governance Taking the cue from the one-sentence quote at the beginning of this paper, I define good economic governance simply as presence of transparency, accountability, public interest, and public responsibility in all government and semi-government institutions.

In the context only of monetary, exchange rate and fiscal policies, the above four characteristics of good governance are elaborated below, within a limited perspective gleaned from earlier retrospective analysis. Transparency is the free and timely dissemination of self explanatory reliable data and information regarding economic policies, events and public transactions.

Accountability is the obligation (legal, moral, or both) on the part of an institution to explain its policy actions and performance to public at large. Public interest is the objectives which are being pursued by economic policy makers, which are primarily about increasing the welfare of people.

Public responsibility is the ability to generate and implement appropriate and timely policy responses by the institutions, which are collectively responsible and accountable for the economic policy management. I pose a few questions regarding these four features of good governance and also attempt to answer briefly, with a view to obtain useful lessons:

Question 1. Is monetary and exchange policy regime transparent?

2. Is monetary and exchange data transparent?

3. Is State Bank of Pakistan accountable?

4. Does SBP uphold the public interest?

5. Does SBP exercise public responsibility?

6. Is existing SBP charter adequate to ensure good central bank governance?

*ANSWER 1* Obviously, the answer has to be different from a simple yes or no. Monetary policy transparency has increased considerably after issuance of six monthly Monetary Policy Statements initiated by the former Governor, Dr Ishrat Husain in January 2003.

During the regime of the present Governor, Dr Shamshad Akhtar, transparency has increased manifold because of her detailed press conferences to explain monetary policy stance. Monetary policy, however, is still relatively opaque because, policy formulation process is not clearly known to public. In order to move forward on this issue, several amendments in SBP Act, 1956 would be required.

*ANSWER 2* A detailed reassessment of monetary statistics dataset of the Report on Observance of Standards and Codes (ROSC) Data Module was conducted during November 1-15, 2006 by the IMF.

Assessment was done using Data Quality Assessment Framework (DQAF), which has six dimensions of data quality, with a total of 22 elements of quality practices. Reassessment concluded that out of 22 elements of data quality practices, 18 practices were fully observed and four were largely observed. Element of data transparency was found to be largely observed.

*ANSWER 3* SBP is accountable to Parliament under Section 9A of SBP Act, 1956, which requires it to submit quarterly reports on the state of the economy and its annual accounts. Moreover, Governor SBP is periodically called by the Parliament to give briefings about monetary policy, financial sector and state of the economy.

Furthermore, SBP publishes a number of monthly, quarterly and annual publications to keep the public fully informed about its activities and reviews of inflation, economy, banking and the financial sector.

*ANSWER 4* SBP tries its best, within its chartered powers, to achieve its objectives that are multiple. These objectives include keeping monetary and financial stability and providing support to economic growth. The existing charter of SBP does not clearly define these objectives in terms of priorities to be assigned to each.

Current central bank best legislation practices prefer a single objective of keeping inflation at low level. Hence, there is need to amend SBP Act, 1956 to make these objectives clearly stated to ensure upholding of "public interest" (by keeping inflation at low levels).

*ANSWER 5* SBP regularly exercises its public responsibility about changing its monetary, exchange and banking polices with the changing circumstances. Timeliness and appropriateness of policy responses depend on the professional competence and integrity of the staff and Central Board of Directors of SBP.

It is generally recognised that there was a considerable capacity building of SBP staff during the regimes of former Governors. This process is also continuing in the regime of the present Governor.

*ANSWER 6* Existing SBP Act, 1956 does not fully conform with the norms and practices that are followed in the legislation of best practising central banks. Some observations, in this regard, have already been mentioned in answers 1 and 4 above.

For good macroeconomic governance, the most crucial aspect that can ensure transparency, accountability, public interest and public responsibility, is the nature of the financing arrangement between the ministry of finance and the central bank of a country. This aspect is also at the core of the concept of independence and credibility of any central bank.

From this point of view, several important changes are required in SBP Act to improve the corporate governance structure at SBP. One very obvious point is that since the GOP is the largest borrower of money from the SBP, its representative should not be a member of Central Board of Directors of SBP, to remove the clear and dangerous conflict of interest.

Also, since the SBP Board is required to give independent reports on the state of economy to Parliament, this independent assessment should not be tainted by the views of the GOP through its representative in SBP Board. Moreover, SBP Act should include clearly defined, explicit, and enforceable limits of credit that can be extended to GOP by the central bank.

Another reform in SBP Act, related to strengthening of its independence as well as co-ordination of monetary and fiscal policies, is also needed. The existing functions and cadre of the Monetary and Fiscal Policies Co-ordination Board make it either practically ineffective in strengthening the needed co-ordination, or run the risk of impinging SBP autonomy.

Co-ordination can be effectively achieved by timely sharing of all necessary information and data between SBP and MOF. A working committee with senior officers from both institutions can perform this job more efficiently. Also, there are existing high level fora in the GOP, where macroeconomic targets can be aligned for integrated formulation of broad macroeconomic plans.

*National Economic Council *(NEC) can effectively perform this function, and as such, a case can be made for abolishment of Monetary and Fiscal Policies Co-ordination Board specified in Section 9B of SBP Act, 1956. Similarly, suitable amendments are also needed to remove any ambiguities about the exchange rate regime. In short, considerable work is still required to increase the autonomy and independence of the SBP.

*SOME LESSONS FOR IMPROVING ECONOMIC GOVERNANCE* In conclusion, I can draw the following lessons from the analysis and discussion presented so far.

1. Independence of policy making institutions (especially of a central bank) plays a paramount role in inculcating good economic governance.

2. Dissemination of timely, regular, and reliable information and data by economic institutions is essential for promoting good governance.

3. Accountability can only be strengthened by providing greater autonomy to any policy making institution.

4. Public responsibility of a policy making institution can only be strengthened by adequate capacity building of its human resources.

5. Public interest can only be ensured by clearly defining the ultimate objectives of a policy making institution.

*Check statistical chart here*


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*Steps sought to reduce cost of doing business​*
KARACHI, Dec 2: Karachi business leaders have stressed the need for a closer cooperation and active coordination between the government and the private sector to bring down interest rates of banks, cut utility tariffs and energy costs, contain inflation and restore law and order so as to revive closed industrial units, generate employment and enliven business environment in the country.

Responding to an appeal by Prime Ministers Advisor on Finance, Mr Shaukat Tarin, to cooperate with the government in the implementation of a reforms agenda, the President of Karachi Chamber of Commerce and Industry, Mr Anjum Nisar, at a businessmen forum on Monday evening pleaded for immediate reduction in banks interest rates to a single digit, review of gas, electricity and energy tariffs and other related issues.

The government must take appropriate steps to bring down cost of production and cost of doing business, the KCCI chief pleaded as he said that these steps would enliven business environment and motivate both industrialists and workers to collectively work for boosting production and pushing up exports.

He was critical of complexity of taxation system and demanded immediate one per cent cut in general sales tax.

He also demanded that the industry be exempted from levies, like social security, and instead workers be given security cover under insurance.

ATT

Anjum Nisar also pointed out that Afghanistan Transit Trade agreement signed 43 years ago had now become a conduit of quasi smuggling because bulk of the items are marketed in Pakistan instead of Kabul which is hurting local industry.

Siraj Kassem Teli, leader of the Businessmen Group in the Karachi Chamber of Commerce and Industry, in his brief remarks took exception to veiled threats and baseless accusations of Indian leaders on Pakistan in Mumbai terrorist attacks.

He declared that Karachi business community would be with defence forces against any aggression.

Teli too pleaded for a joint government-private sector mechanism to review interest rate, utility tariffs and all other business related issues.

He also demanded a critical and analytical review of seven per cent bank spread which is main cause of high interest rates in Pakistan.

Teli also raised the issue of arrest and implication of top money changers in a criminal case and informed Prime Ministers advisor that all businessmen, particularly those in money exchange companies, are confused and agitated.

Zubair Motiwala, a former President of Karachi Chamber of Commerce and Industry, pleaded for more support to agriculture, particularly the seed industry and strengthening of canals.

Prime Ministers Adviser on Finance Shaukat Tarin endorsed the proposal of cooperation between the government and private sector in implementation of social and economic reforms.

He promised to provide representation to private sector in framing of policy and implementation. About IMF package, Mr Tarin said the conditions were soft.


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*Non-performing loans rise to Rs290bn​*
KARACHI, Dec 2: Banks are facing serious problem of loans default as it has added Rs37 billion non-performing loans (NPLs) to the total figure reaching close to Rs290 billion in just three months.

The banks said it was the failure of consumer financing and the policy of high interest rates that might escalate the problem in next coming days.

The State Bank reported that the total default of banks and Development Financial Institutions (DFIs) rose to Rs288.372 billion till September 2008. A jump of Rs37.259 billion in default was noted during July-Sept.

The default figure is rising despite heavy provisioning made by the banks against NPLs last year and the process is still continuing.

The banks have been forced by the State Bank to clean up their balance sheets by heavy provisioning of NPLs, which drastically reduced their profits but the fresh NPLs will not allow the banks to clean up their balance sheets.

Analysts believe that the next year balance sheets of banks would be heavily burdened with the fresh NPLs.

The cash-starved banks can not afford such high rate of loan default and it could be disastrous for the entire banking system.The banks are already under crunch of the global financial crisis, while the liquidity problem is mounting pressure on many banks to look for help either from the State Bank or sell their shares, said a senior banker.

The gravity of the situation is evident from the series of steps taken by the State Bank to protect the banks from liquidity dilemma. Banks liquidity was increased through cut in Cash Reserve Requirement (CRR), Statutory Liquidity Requirement and other steps, including direct injection of over Rs350 billion temporary cash.The State Bank raised policy discount rate to 15 per cent, which was a condition for agreement with the IMF to get approval of $7.6 billion, of which $3.1 billion has already landed in the coffers of the State Bank.

The finance ministry said interest rate could see another increase if the core inflation does not come down from prevailing 18.3 per cent. While briefing the Senate Committee Governor State Bank Dr Shamshad Akhtar said on Monday that the further tightening of monitory system was needed thus endorsing the ministrys intention to increase interest rate.

Due to higher inflationary pressure and higher return on deposits the banks expenses have risen sharply resulting into decline of profits, thus minimising their ability to bear the additional heavy load of NPLs. The banks said under the circumstances the 15 per cent interest rate will further add to the total loan default figures of the banks and the real impact would be felt next year.

Farhan Rizvi, a researcher at JS Company, said the increasing asset quality concerns had forced banks to book heavy provisions for NPLs. According to SBP the total banking sector provisions rose by Rs44 billion until Nov 22, 2008.

We expect the sectors provisioning to reach Rs50 billion in 2008 compared to Rs32 billion in 2007, said Rizvi.

Banking experts and analysts have been warning that the continued tight monetary policy with rising interest rate could be counterproductive for the economy. Higher lending rates already attach high risk with the credits but the government is now bound to increase interest rate instead of reducing it.

From May to July 2008, the State Bank increased the discount rate by 4.5 per cent to 15 per cent, which translated into much higher lending rates by the banks.

While the banks are offering return on deposit up to 20 per cent, it is natural that they will rent their money at much higher rate to meet the expenses and earn profits, said another banker adding that it will enhance the loan default rate.


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## Neo

*ADB Approves $300 Million Loan For Pakistan's Sindh Province​*
MANILA (AFP)--The Asian Development Bank has approved a loan package to Pakistan's populous Sindh province that could be worth up to $300 million, the Philippines-based lender said Thursday.

The loan is designed to upgrade water services in the province's secondary cities, an ADB statement said.

While about half of Sindh's people live in the major cities of Karachi and Hyderabad, 6 million live in more than 20 secondary cities, where deficient basic urban services stifle economic growth, the bank added.

The first tranche of $38 million will be used in the cities of Sukkur, New Sukkur, Rohri, Khairpur, Shikarpur and Larkana, it said.

Sindh is Pakistan's second most populous province.


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## Neo

*IMF bars KSE from using public money to bail out stock market ​* 
Thursday, December 04, 2008

KARACHI: The International Monetary Fund (IMF) has barred Karachi Stock Exchange (KSE) from using public money to bailout a cash-starved stocks market, which has crashed by about 41 per cent since mid of April this year.

Earlier, IMF - which had virtually bailed out country by approving a $7.6 billion loan to it - had conditioned KSE not to lift floor without making consultation with it. And in a crucial development now, the Institution has restricted equity market authorities for not using public funds.

The Institution, however, left the decision of lifting floor fixed at KSE on its Board discretion, as when and how the floor should be removed without availing market support fund worth Rs20 billion, KSE-MD Adnan Afridi briefed it at an emergent members meeting, which was called here on a short notice on Wednesday.

This development came up just after two days from KSE-MD briefed market members on Monday regarding the current status of market support fund and floor removal issue. 

In that Monday meeting, MD had officially announced the receive of Rs12.5 billion in account of market support fund (called NIT-State Enterprises Fund) and added that the size of Fund would enlarge to Rs14.5 billion with an additional support of Rs2 billion from National Bank of Pakistan.

NBP was one of participants in NIT-Fund and had already pooled Rs5 billion in Rs20 billion in the Fund.

IMF argued against the use of public funds to support the market, told one of meeting participants who added that money, which was supposed to be used for bailing out market was of EOBI, State Life, National Investment Trust and National Bank, which are public institutions, and IMF was against of it, he added.

Given the weak external position, it is important that the removal of the current floor on stock prices take place only after the macroeconomic situation has stabilized and investor confidence has improved. In addition, the authorities should avoid using public funds to support stock prices, according to IMF website.

Experts are of the view that floor might be removed immediately after Eid-ul-Azha celebration, which is falling on Dec 9.

A very crucial meeting of Board of Directors of KSE was in progress at the time of filing this report.

Members proposal: In an immediate response to the IMF condition that market will not be bailed out by using public money, the members of the Exchange have proposed market authorities to hand over holdings on leverage counter i.e. Continuous Funding System (CFS) to the Fund financers and unfreeze market anytime.

At current there is worth Rs11 billion holdings placed in CFS market.

Members are of the view that the financers will have to bear no loss in case they own holding in CFS instead of asking for recovering their funds stuck-up in CFS market, as CFS financers had already received cash or collateral worth 25 per cent of total holding of Rs11 billion on CFS counter.


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## Neo

*Pakistan can come out of global meltdown ​* 
Thursday, December 04, 2008

KARACHI: Top corporate executives of national and multinational firms have manifested their confidence in Pakistan and said that Pakistan has all the potentials to come out successfully from the threats that global financial crisis has posed to Pakistan. 

This was the crux of the panel discussion of executives at the end of the first day of 11th Management Association of Pakistan (MAP) convention on Wednesday that was inaugurated yesterday at a local hotel. 

Parvez Ghias, CEO, Indus Motor Company Limited while commenting on current threats to Pakistan posed by global financial crises said, Its time to redefine our goals. Its time to invest in our human resource and improve their capacities so that after this current crisis they could emerge as our real and long term assets.

We at Toyota always open to experiments and encourage open communication among the managements hierarchy, he said, adding that what we polish problem solving skills of our employees in the first 10 years and always open to encourage junior management to bring bad news to bosses.

Arslan Nayeem, MD and Country Head, Barclays Bank commented, crisis always make new leaders so its time to redefine our policies and lets hope for the better future.

Abrar Hasan, CEO, National Foods Limited, commenting on the current crisis said, Our Company is also affected by the low sales, but we are successfully coping with the situation and making alternative plans and putting the right things at right time. 

He added that Pakistan needs to heavily invest in education and training so that our future generations reap the fruits of todays investment.

Participants of the convention stressed that current crises has given a unique opportunity to local firms to reduce our dependency on foreign countries: lets improve our standards and productivity and then go for partnerships like big Indian giants like TATA an others have done.

Sushant Rao, World Economic Forum, Switzerland said that we need to convey the governments of India and Pakistan that at what costs we are not engaging with each other in businesses. He cited the example of Taiwan and China, the two countries that doing businesses with each other despite variety of serious problems. 

Executives also highlighted that the world was different some two month ago, it is different now, and hopefully it will be totally different in future also. So, it is better to plan for tomorrow with hope that coming years will unfold good results. 

Marek Minkiewicz, Managing Director, Makro Habib said that we had aggressive plans to invest in Pakistan but due to some constraints we have been moving slowing, for instance we lack good locations for the retail centres and also because the land is expensive too. He further added that it is easy to launch and open number of outlets in country like Pakistan but for this you will need trained human resource which is scarce in this country. And hence it needs time to train people according to the requirements. Sarfaraz A Rehman, CEO, Engro Foods said that he is confident that change will come in Pakistan, and as far as our industry is concerned we have experienced a great change in last 3 years.


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## Neo

*IMF unveils agreement for 23-month $7.6bn bailout programme ​* 
Thursday, December 04, 2008

ISLAMABAD: The government will have to increase average base power tariff within months as per the schedule to be agreed with World Bank by end of December to eliminate electricity tariff differential subsidies by June 30, 2009.

It was revealed in the Letter of Intent, Memorandum on Economic and Financial Policies (MEFP) and Technical Memorandum of Understanding (TMU) agreed with International Monetary Fund for 23-month $7.6 billion bailout program.

The program will be subject to quarterly reviews and quarterly performance criteria as set out in TMU.

Completion of the first two reviews scheduled for end-March 2009 and end-June 2009 will require observance of the quantitative performance criteria for end-December 2008 and end-March 2009

The government has implemented increase in power tariff by 18 percent from September 5, 2008 to this effect. However, authorities concerned are in agreement with the Fund to further increase tariff to waive electricity tariff differential subsidies by end of on going fiscal.

During 2008-09, the government has fixed tariff differential subsidy of Rs77 billion {Rs65 billion for Ex-Wapda power distribution companies, Rs12 billion for KESC}. In next fiscal, under the agreement with the Fund, government will extend zero subsidies in power sector. 

This means that power tariff will gradually sky rocket in the remaining months till June 30, 2009 and after that.

The implementation of the electricity tariff increases will be followed up in the context of the program reviews. On the revenue side, further steps will be taken during the remainder of the fiscal year to strengthen tax enforcement. Moreover, fuel prices will continue to be adjusted to pass through changes in international prices.

The agreement posted by The Washington based lender in its websites also divulges Central Bank of Pakistan will raise discount rates more if the actual reserves for end-November and end-December 2008 fall short of the program monthly floors on the SBPs net foreign assets.

A further increase in the discount rate will be considered at the time of the monetary policy statement scheduled for end-January 2009.

In close collaboration with the World Bank, the government will develop a strategy and a time-bound action plan, by end-March 2009, for the adoption of specific measures to strengthen the social safety net and improve targeting to the poor.

The government will prepare a plan for eliminating the inter-corporate circular debt by end-March 2009. The transition to a single treasury account will be completed by end-June 2009.

The legal provisions relating to the operational independence of the SBP will be reviewed. These provisions will be strengthened based on the recommendations of an interagency committee that will be established by mid-November 2008, and taking into account technical recommendations from the IMF. The second program review will focus on specific details regarding required legislative changes in this area.

However, the agreement mentions no cut on defense expenditures and levy of income tax on agriculture sector meaning. It means that the government will not be bound to bring agriculture sector under the tax net to achieve the revised revenue target up to Rs1.360 trillion set for ongoing fiscal.

Under the agreement, the central bank SBP is committed to pursuing a flexible exchange rate policy. This means that central bank will not provide foreign exchange for the imports of oil products to make foreign reserves intact.

To achieve the target, SBP will not intervene in the open market and would also phase out the provision of foreign exchange for oil import during the period ranges from February 1, 2009 to Feb 1, 2010. The Central Bank promises IMF that it would erase facility of providing foreign exchange for import of furnace oil by February 1, 2009, diesel and other refined products by August 1, 2009 and crude oil by February 1, 2010. 

The government under the agreement will prepare, by end-March 2009, a plan for eliminating the inter-corporate circular debt within the fiscal deficit target. The plan will clearly identify all elements of circular debt, including (i) the identification of all debts owed and due among the corporations, duly reconciled; (ii) the determination of the validity of the claims; (iii) a schedule by which respective entities will discharge their liabilities to each other; and (iv) a timeframe during which the Federal Adjuster will use his powers to make adjustments, in case of failure, to adhere to the approved schedule.

The Fund has fixed fiscal deficit target of 4.2 percent for ongoing fiscal 2008-09 and 3.3 percent for next fiscal 2009-10. The Fund says that the targeted reduction in the fiscal deficit in 2008/09 will help eliminate SBP financing of the budget. The fiscal effort will be facilitated by the full-year effect of the elimination of energy subsidies by end-2008/09 and declining interest payments, following large bullet payments in the three-year period ending in 2009-10.

Under the accord with IMF, the government will limit SBP financing of the budget to zero on a cumulative basis during October 1, 2008-June 30, 2009. It means that the government will zero the loan borrowing from the central bank during Oct 1, 2008 to June 30, 2009. During this period, the fiscal deficit will be fully financed by available external disbursements (which have already been committed), the acceleration of the privatization process, the issuance of treasury bills, and other domestic financing instruments, including Pakistan Investment Bonds, Ijara Sukuk, and National Savings Scheme (NSS) instruments.

An integrated tax administration organization on a functional basis will be established at the Federal Board of Revenue (FBR) (integrating both the income tax and sales tax administration). In addition, audits will be reintroduced as part of a risk-based audit strategy that will be implemented by end-December 2008. A full description of the required reforms, together with an action plan will be provided to the IMF by end-December 2008.

The government will submit legislative amendments to parliament by end-June 2009. In addition, the excises on tobacco will be increased in the context of the 2009-10 budget. The government will initiate a process to implement a full VAT (value added tax) with minimal exemptions, to be administered by the FBR. Draft legislation for the VAT is expected to be ready for public debate by end-2009. The first program review will focus on the progress in developing the governments tax reform agenda.

The governments fiscal consolidation efforts will continue over the medium

term. The governments fiscal framework assumes a further reduction in the fiscal deficit to 2-21/2 percent of GDP by 2012-13. Fiscal consolidation will be supported by a strong tax effort, which will allow for higher spending in infrastructure and the social sectors.

The government is under the accord to increase tax revenue by at least 3.5 percentage points of GDP over the medium term as a result of measures to broaden the GST base, significantly reduce income tax exemptions, and further improve tax enforcement.

If the government manages to implement the agreement in true spirit the Fund paints rosy future of Pakistan economic landscape. It projected the real GDP growth would increase to 5 percent in 2009-10, which is projected to rise gradually to 6.5-7 percent a year by 2012-13, based on a significant increase in investment and further progress in structural reforms.

However, average inflation is targeted to decline to 13 percent in 2009-10, and to 5 percent by 2012-13. Prudent demand management policies would contribute to a gradual decline in the external current account deficit to 5.7 percent of GDP in 2009/10, and further to 3.6 percent of GDP by 2012-13. This, along with the expected pickup in capital inflows, would help increase gross international reserves to $14.5 billion (2.6 months of projected imports) by 2012/13, while reducing the external debt to 29 percent of GDP. The external financing gap for 2009-10, which is projected at $3.6 billion, will be covered by disbursements from the IMF and GDR (global depository receipts) proceeds. External financing gaps will be fully eliminated by the end of the SBA.

As a result of these policies during the ongoing fiscal, the 12-month inflation rate is projected to decline to 20 percent at end-June 2009, even after taking into account the impact of significant increases in administered energy prices. Real GDP growth would slow further to 3-3.5 percent in 2008/09 in response to the tightening of macroeconomic policies and a deceleration of growth in Pakistans trading partners.

The conduct of monetary policy will be facilitated by significant improvements in liquidity management, including by improving the forecasting of the governments cash flow position. As part of these efforts, the SBP and the Ministry of Finance have agreed on quarterly volumes of Treasury bill placements consistent with zero SBP financing of the budget during October 1, 2008-June 30, 2009. The SBP has issued an auction calendar for November-December 2008 on November 1st, 2008, and in the future will issue a calendar every quarter one month in advance. In addition, the SBP will review the current procedures for liquidity management, and will adopt and publicize a transparent liquidity management framework by end-July 2009 as part of its Monetary Policy Statement. 

State bank of Pakistan will eliminate the exchange restriction on advance import payments against letters of credit will be eliminated by end-January 2010, subject to a marked improvement in the balance of payments position. No intensification of existing restrictions and no new exchange restrictions or multiple currency practices will be introduced during the program period.

The SBP will prepare a contingency plan to deal with problem private banks by end-December 2008. The plan will contain criteria for SBP liquidity support, assessment of bank problems, and intervention procedures. The SBP has already dealt with problem banks through mergers. Looking ahead, if there are severe strains in the interbank market and interbank lending guarantees appear necessary, these guarantees will be provided in limited amounts only to solvent banks.

For the purposes of monitoring under the program, all assets and liabilities as well as debt contracted, denominated in SDRs or in currencies other than the U.S. dollar, will be converted into U.S. dollars at the exchange rates prevailing at test dates, as posted by the State Bank of Pakistan (SBP) on its web site. 

Net external budget financing and external cash grants will be converted into Pakistani rupees at the exchange rates prevailing at the day of the transaction, as posted by the SBP on its web site, unless otherwise indicated.


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## Neo

*ADB approves first tranche of $180m​* 
Thursday, December 04, 2008

ISLAMABAD: The Asian Development Bank (ADB) and Pakistan on Tuesday signed the agreement for the first tranche of $180 million for the Multitranche Financing Facility (MFF) of the National Trade Corridor Highway Investment Program.

The $180 million assistance will be used for the construction of a 58-kilometer highway (Section 1) between Faisalabad and Khanewal.

The Agreement was signed by ADB Pakistan Resident Missions Country Director Rune Stroem and Pakistans Secretary of Economic Affairs Farrakh Qayyum.

The investment is to help Pakistan achieve objectives set in its Vision 2030 Strategy by enhancing the trade-to-gross domestic product ratio from 30 per cent to 60 per cent. The program will help reduce transportation costs, improve trade competitiveness, and encourage export diversification.

An efficient road network is key to promoting economic growth and enhancing the welfare of the people by catalysing better opportunities for them in accessing markets, jobs, and social services, said Stroem.

The $900 million Multitranche Financing Facility is a part of the $5.36 billion investment plan by Pakistans National Highway Authority, which includes upgrading of the highway from Karachi to the city of Peshawar, as well as links to the port of Gwadar and the Peoples Republic of China (PRC). Once the road improvements have been completed, travel time between Karachi and Peshawar, a 

distance of 1,700 kilometers, will be cut from 72 hours to 36 hours.

The facility will help develop a fast and cost-effective corridor for land transportation, which will stimulate regional trade flows and will allow Pakistan to act as a transit artery for goods moving between Arabian Sea ports in the South and Central Asia and the PRC in the north.

Over the years, ADB has been assisting Pakistan to improve farm-to-market roads, urban transportation, provincial highways, and national highways that are critical for the countrys development.

Expansion and rehabilitation of national highway networks will have a positive impact on Pakistans economy, Stroem added.

The Program was approved by ADB in December 2007. The first tranche of $180 million comprises $170 million from the Ordinary Capital Resources to be used in Faisalabad to the Khanewal section of the highway and around $10 million from the Special Fund dedicated for capacity development.


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## Neo

*ADB approves $300m for water,sanitation in small cities of Sindh ​* 
Thursday, December 04, 2008

ISLAMABAD: The Asian Development Bank (ADB) on Tuesday approved a $300 million loan for improving water and sanitation infrastructure in the secondary cities of the province of Sindh. 

The province of Sindh will improve water and sanitation infrastructure in its secondary cities under a $300 million loan to the Sindh Cities Improvement Investment Program approved by the Asian Development Bank (ADB), the ADB announced here on Wednesday

The loan, in the form of a multitranche financing facility (MFF), will support urban sector reforms and capacity development, and priority investment in water supply, wastewater, and solid waste management infrastructure for Sindhs secondary cities.

The first tranche of $38 million (2009-2012) targets institutional change and priority infrastructure projects in the northern Sindh cities of Sukkur, New Sukkur, Rohri, Khairpur, Shikarpur and Larkana.

Sindh is the second most populous province in Pakistan. While about half the population lives in the major cities of Karachi and Hyderabad, six million people live in more than 20 secondary cities, where deficient basic urban services stifle economic growth and contribute to poverty.

Urban services in the smaller cities fall far short of targets for quality, continuity, and coverage. Only about half the urban population of Sindh, outside of Karachi, has piped water. Even then, the water quality is poor and often flows for only two to four hours a day. Sanitary drainage is extremely limited and sewer lines are often blocked. No sanitary landfills exist, which leads to solid waste being disposed of by burning or illegal dumping in open spaces or drainage channels, causing blockage and pollution.

The ADB loan facility will also assist the Sindh government establish local government-owned urban services corporations. These corporations will be professionally managed and guided by service agreements with the local governments for more efficient operations and financial management, sound corporate governance, improved cost recovery, enhanced accountability, and greater customer focus. 

The impact of the investments will be improved health and quality of life while creating more economically competitive secondary cities in Sindh. More than half a million households will also benefit from reforms that deliver a more reliable water supply, wastewater, and solid waste management. 

Not only will the city residents see better services in their water sectors, but over time we expect to see these cities transformed by long-lasting reforms, said Juan Miranda, Director General of ADBs Central and West Asia Department. Institutional reform and better service delivery will make secondary cities more attractive for business and investment, and create a healthier environment for residents.


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## Neo

* Pakistan survived slump due to strong banking system ​* 
Thursday, December 04, 2008

GUJRANWALA: The State Bank of Pakistan Governor Dr Shamshad Akhtar has said that like other countries, Pakistan also faced economic setbacks but the countrys strong banking system and the $3 billion loan from the IMF steered it out of the crisis. 

She was addressing the Gujranwala Chamber of Commerce and Industry (GCCI) members here on Wednesday. She claimed that price-hike was low in Pakistan as compared to other countries, including India. She said Pakistan had maintained its growth rate despite hurdles. 

Pakistan will witness economic growth and good time is not far, she hoped. The SBP governor said steps were being taken to overcome the energy crisis and develop the agriculture sector. 

She urged industrialists to assist the small industry. She disclosed that the SBP had fined two banks to the tune of Rs 450 million for not providing better services to the masses. She said the mark-up rate on loans should not be more than 10-12 per cent. 

Dr Shamshad said the country had suffered financial setbacks due to a sharp increase in the prices of oil and food in the international market, but the country faced it and now it had come out of crisis. 

Big financial institutions went bankrupt during the slump in developed countries. Pakistan survived it due to its strong banking system, she maintained and added that Pakistans credibility was intact as it had paid off loan instalments. 

She said banks had been directed to reduce the service charges. She said the SBP staff should come up to the expectations of the people. Earlier, she was accorded a rousing welcome at the GCCI.


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## Neo

*Inevitable conditionalities of IMF start surfacing​*
ISLAMABAD: Tough conditions of International Monetary Fund (IMF) have now started surfacing as IMF and the Government of Pakistan (GoP) agreed to discontinue oil import support, eliminate power subsidies and budgetary support of the government, public and private entities.
IMF and GoP have agreed to phase out the State Bank of Pakistans (SBPs) provision of foreign exchange for oil imports. According to the schedule, the forex provision for furnace oil will be ended by February 1, 2009, diesel and other refined products by August 1, 2009 and crude oil by February 1, 2010. 

According to IMF Letter of Intent (LoI) released on Wednesday, the SBP is committed to pursuing a flexible exchange rate policy. To that end, intervention in the foreign exchange market (including the provision of foreign exchange for oil imports) will be aimed at meeting the programmes reserve targets. 

The fiscal deficit (excluding grants) is targeted to decline to 4.2 percent of GDP (Rs 562 billion) in 2008-09, from 7.4 percent in 2007-08. This fiscal effort is necessary to help reduce the external current account deficit and move toward a sustainable fiscal position, and eliminate SBP financing of the government. To achieve the 2008-09 deficit target, the government will increase tax revenue by 0.6 percentage points of GDP and reduce non-interest current expenditure by about 1.5 percentage points of GDP, mainly through the elimination of oil electricity subsidies. 

The government plans to take additional fiscal measures in 2008-09. As noted above, electricity tariff differential subsidies will be fully eliminated by end-June 2009. To achieve this objective, the average base tariff will be further increased during 2008-09

according to a schedule to be agreed with the World Bank by end-December 2008 (structural benchmark), and the government will use fuel and other surcharges, as necessary. The implementation of the electricity tariff increases will be followed up in the context of the programme reviews. On the revenue side, further steps will be taken during the remainder of the fiscal year to strengthen tax enforcement. Moreover, fuel prices will continue to be adjusted to pass through changes in international prices. 

Putting in place a more comprehensive and well-targeted social safety net is a key priority under the programme. 

The government will prepare, by end-March 2009, a plan for eliminating the inter-corporate circular debt within the fiscal deficit target. The targeted reduction in the fiscal deficit in 2008-09 will help eliminate SBP financing of the budget. The government is committed to limiting SBP financing of the budget to zero on a cumulative basis by October 1, 2008 to June 30, 2009. 

Consistent with the governments objective of substantially increasing tax revenue, a number of tax policy and administration measures are envisaged during the programme period. Specifically, an integrated tax administration organisation on a functional basis will be established at the Federal Board of Revenue (FBR) (integrating both the income tax and sales tax administration). In addition, audits will be reintroduced as part of a risk-based audit strategy that will be implemented by end-December 2008. A full description of the required reforms, together with an action plan will be provided to the IMF by end-December 2008, following a planned seminar to review tax policy and administration. 

As part of this process, the government plans to harmonise the income tax and GST laws, including for tax administration purposes, and reduce exemptions for both taxes. 

The governments fiscal framework assumes a further reduction in the fiscal deficit to 2 to 2.5 percent of GDP by 2012-13. Fiscal consolidation will be supported by a strong tax effort, which will allow for higher spending in infrastructure and the social sectors. 

The programme envisages a significant tightening of monetary policy. To that end, the SBP recently increased its discount rate by 200 basis points, to 15 percent. Following this first step, interest rate policy will be sufficiently flexible to protect the reserves position, bring down inflation, and allow the government to place T-bills and other securities with commercial banks and non-banks in order to avoid further central bank financing of the budget. A further increase in the discount rate will be considered at the time of the monetary policy statement scheduled for end-January 2009. However, the discount rate will be raised earlier if the actual reserves for end-November and end-December 2008 fall short of the programme monthly floors on the SBPs net foreign assets. In addition, if the volume of T-bills placed in the auction scheduled for November 19 falls short of the announced target, understandings will be reached with Fund staff on corrective measures in order to meet the programme targets. 

The programme will be subject to quarterly reviews and quarterly performance criteria as set out in the technical memorandum of understanding (TMU). Completion of the first two reviews scheduled for end-March 2009 and end-June 2009 will require observance of the quantitative performance criteria for end-December 2008 and end-March 2009.


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## Neo

*Pakistans first windturbine project completed​*
KARACHI: Pakistans first wind turbine project has been completed at a pilot investment of $130 million in Jamphir by Turkish firm on Wednesday with an initial capacity to generate 1.2 Mega Watt (MW) electricity. Zorlu Energy Group is scheduled to supply electricity to around 60,000 households by January 2009 on the agreed tariff of 4.2/Kilo per hour (Kph) to HESCO. 

Chief Executive Officer Zorlu Energy Group Murat Sungur Bursa said that minimal electricity tariff will be enhanced to 12.1 cents when the company soars its energy generation capacity up to 5MW as per its plans. The tariff is lowest in the world but the firm has agreed with the regulators policy of tariff settlement of enhancing power building capacity, he said at a press briefing ceremony.
He said Pakistan has vibrant investment opportunities for power sector owing to its constant growing demand with the growth of population and industries. In 162 million population there is a deficit of 30 percent electricity, which shows greater opportunity for any power producer, he added. The turbine is 37-metre high with the 70-diameter that covers 200 metre total area of functioning. It is imported from Germany and manufactured in Czech Republic. The Turkish-made wind farm is situated at the wind coastal belt of Pakistan, that is, Gharo-Keti Bander having 12-month strong wind blowing corridor approved by Met Department.
Briefing on the upcoming project developments, he said the plant will reach a capacity of 50 MW in the second phase with plans to increase the capacity up to 300 MW that is congruent to the energy capacity of Kanupp nuclear plant of the country. Zorlu Energy singed an agreement with the Pakistan Alternative Energy Development Board in 2006 to establish a wind farm. As per agreement, the firm will generate electricity for a period of 20 years in the country. 

The other four turbines will be commissioned by the end of December 2008, hence providing 6 MW of energy for the first phase. However, the 29 tribunes with a capacity of 44 MW will be installed in the second phase by December 2009. On the occasion, Director General Board of Investment Karachi Arif Elahi said the countrys economy has been able to attract $1.321 billion FDI in the first quarter of the current fiscal year 2008-09.


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## Neo

*Govt inks $900m loan deal with ADB for construction of roads​*
ISLAMABAD: Pakistan and Asian Development Bank (ADB) have signed a $900 million loan facility for road construction and improvement. The government signed the loan agreement with Asian Development Bank for National Trade Corridor Highway Sector Development Programme financed by Multitranche Financing Facility (MFF). The signing ceremony was held at the ministry of Economic Affairs and Statistics. 

The ADBs Country Director, Rune Stroem and Secretary EAD, Farrakh Qayyum, signed the loan agreement for the first tranche of $170 million, from ordinary capital resources (OCR) and $10 million from Asian Development Fund (ADF). OCR is a pool of funds available for ADBs lending operations. These resources are replenished by borrowings from the worlds capital markets. OCR loans are made at near-market terms to better-off borrowing countries whereas ADF is a concessional, or soft-loan window, which is funded by ADBs donor member countries.
The implementing agency of the project is National Highway Authority (NHA) and the project would be completed by December 2013. The commitment charges have been reduced to 0.15 percent from 0.35 percent and 0.40 percent discount is given on the interest charges. The $900 million MFF will be utilised in the $5.36 billion investment plan by Pakistans NHA, which includes upgrading the highway from Karachi to the Peshawar as well as strengthening links between the port of Gwadar and the Peoples Republic of China.
The first tranche of $170 million would be used for 58Km Faisalabad to Khanewal Motorway (Section-I). For the subsequent tranches, depending on the appetite from private sector, structures such as guarantees and equity financing could be used under this programme to foster public private partnership. The government is determined to develop a fast, efficient and cost-effective corridor for land transportation, which would reduce the transportation cost, eliminate bottlenecks in the logistic chain, generate new jobs, and ultimately reduce poverty. 

The objective of the loan is to achieve the targets of Vision 2030 by raising the trade to the gross domestic product (GDP) ratio from 30 percent to 60 percent. The funds would help to materialise the key objectives of the Vision 2030 strategy to improve the trade competitiveness and export diversification. 

An enhanced road network will cut the time and cost of moving goods and services. The cheaper transport cost will increase private sector productivity, which will help deepen and diversify the industrial base, both of which are necessary to provide jobs for the growing population. The upgradation of the road network is also crucial for regional trade flows and will allow Pakistan to act as transit artery for goods moving between Arabian Sea ports in the south and Central Asian and the Peoples Republic of China in the north. 

It is expected that many other multilateral donors would further invest in Pakistan when macroeconomic stabilisation will commence in the country after fulfilling the conditions of IMF. The World Bank is also mulling over funding some of the projects related to the poverty reduction and Higher Education Commission.


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## Neo

*Government proposal for stock market rejected: no bail-out: IMF ​* 
KARACHI (December 04 2008): The International Monetary Fund (IMF) has rejected the government proposal for providing any fund to bail out the stock market. The IMF restricted the government from using public money to bailout a cash-starved stocks market, which has declined by around 41 percent from its peak level witnessed on April 18, 2008.

"The government is unable to provide any market support fund because of the IMF restriction from using public money to bail out the stock exchange," said MD KSE Adnan Afridi while briefing the members at an emergency meeting held here on Wednesday.

Earlier, the IMF while approving a $7.6 billion stand-by loan for Pakistan had conditioned that it will not provide any fund to stock market without having consultations with it. The meeting also discussed the possibility of floor removal without fund and discussed about any possible date for removal of floor. After the members' meeting, the KSE board of directors also held its separate meeting to take up the prevailing situation following the government decision.

Later, an emergency meeting between Securities and Exchange Commission of Pakistan and KSE board of directors was held to discuss the situation after the unavailability of fund. It is learnt that the boards of directors of Lahore and Islamabad stock exchanges also joined the meeting through videoconferencing system.

The meeting discussed various issues mainly arrangement of liquidity to settle Rs 9 billion CFS shares. However, the meeting remained inconclusive. Sources said that another meeting is expected to be held on Thursday (December 4) to finalise the removal of floor without the fund.

It is learnt that SECP wants to remove floor immediately to avoid Pakistan's exclusion from MCI, however, the KSE board wants some time to settle CFS and other issues before removal of floor. The SECP asked the KSE board to send their proposals regarding the removal of floor to the regulator so that any date to 'unfreeze' the market could be finalised.

On the other hand, the KSE members while protesting against the government decision said they were kept in dark for last three months about the availability of fund. They said that the government had give an impression that out of total Rs 20 billion fund, Rs 14.5 billion has been made available and the remaining would be available in next few days.

They said that the government took this decision when the date for removal of floor was to be finalised. It is learnt that the members would hold their meeting in next few days to discuss the situation after the government decision and the issue to remove floor without fund.


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## Neo

*Government undertakes to reduce fiscal deficit to 4.2 percent ​* 
ISLAMABAD (December 04 2008): The Letter of Intent (LOI), submitted by the government of Pakistan to the International Monetary Fund (IMF) on November 20, a prerequisite for IMF Board approval for the standby arrangement, has committed to reducing the fiscal deficit from 7.4 percent in 2007-08 to 4.2 percent in 2008-09.

This target is even lower than that envisaged in the budget for the current fiscal year, considered unrealistic at the time by half a percentage point. By 2009-10 the fiscal deficit will be brought down to 3.3 percent of GDP. Specifics of budget deficit decline have been clearly outlined in the LOI. First, a 0.6 percent increase of tax revenue as percent of Gross Domestic Product (GDP) in the short term. This is achievable, as it contains elimination of oil subsidies by December 2008.

The government also committed that fuel prices would continue to be adjusted to pass through changes in international prices. This policy is on track. The LOI has committed to eliminating electricity subsidies by June 2009. To achieve this objective, the LOI pledges that the average base tariff will be further increased during 2008-09, according to a schedule to be agreed with the World Bank by the end of December.

It maybe recalled that the government's decision to withdraw part of the raise in electricity rates last month after street protests would have to be re-imposed within the next few months. Second, a reduction in development expenditure by 1 percent of GDP through improved project prioritisation is promised. Again, this is on track.

A targeted reduction in fiscal deficit will eliminate the need for borrowing from the SBP. The LOI also commits not to borrow from the SBP from October 2008 till the end of the current fiscal year in June 2009.

During the current fiscal year, the LOI argues that "the fiscal deficit will be fully financed by available external disbursements (which have already been committed)--acceleration of the privatisation process, the issuance of treasury bills, and other domestic financing arrangements including Pakistan Investment Bonds, Ijara Sukuk and National Savings Scheme (NSS) instruments".

The government is again on track with respect to mobilisation of domestic savings through the recent increase of 1.5 percentage points on several NSS products. However, privatisation policy is unlikely to bear a dividend in the current year, because of the liquidity crisis in the global markets and the expected resistance from the unions, as was evident in the case of Qadirpur gas field.

In the medium term, the LOI commits to reducing the fiscal deficit to 2 to 2.5 percent of GDP by 2012-13, and tax revenue by 3.5 percent of GDP. Fiscal consolidation will be supported by a strong tax effort which will allow for higher spending in infrastructure and the social sectors. Unfortunately, the government has committed to broadening the GST base, and no mention has been made about any sacred cows being brought into the tax net in the LOI.

The LOI also focuses on expanding an effective social safety net, but the instruments in use are inadequate to meet the needs of the country's growing number of poor as a consequence of high inflationary pressures: Benazir Income Support Programme, Baitul Maal and subsidies for electricity use by poor households. Monitoring by the IMF will be on quarterly basis as set out in the technical memorandum of understanding.

TARGETS AND COMMITMENTS: 

-- Current Account deficit to be reduced from $14 billion (8.5 percent of GDP) FY08 to $10.4 billion (6.5 percent of GDP).

-- Forex reserves to rise from $5.7 billion to $8.6 billion by end June 2009.

-- Fiscal deficit to reduce from 7.4 percent to 4.2 percent of GDP (Rs 562 billion) by end June 2009.

-- Oil subsidies to end by December 2008, electricity subsidies to end by June 2009.

-- No R&D for textile industry.

-- Better tax enforcement.

-- Fuel prices adjusted to pass through changes in international prices.

-- Inter corporate circular debt to be eliminated by end March 2009.

-- Privatisation proceeds, issuance of T-Bills, PIBs, Ijara, Sukuk and NSS schemes to fully eliminate borrowing from SBP with immediate effect.

-- FY 2009-10 fiscal deficit target 3.3 percent of GDP and 2.5 percent by 2012/13.

-- Further discount rate hike to be considered in end January 2009.

-- No payment from SBP reserves for: Furnace oil import after February 1st, 2009; Diesel and other refined products by August 1st, 2010.

-- SBP may provide guarantees in limited amounts for interbank borrowing to solvent banks.

-- SBP to obtain more powers for bank take-over by end June 2009.

-- More operational independence for SBP.

-- Programme based on Rs 80 to a dollar convertibility.


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## General Fujita

*Iran interested to establish shipping company in Pakistan * 

Written by Pakistan News :: Pakistan Daily 
Thursday, 04 December 2008 18:16 
The Iranian Ambassador Mashallah Shakiri here on Thursday said that Iran is interested in establishment of Pak-Iran Shipping Company in joint venture. 
The Iranian ambassador here on Thursday called on the Federal Minister for industries and Production Mian Manzoor Ahmed Wattoo and discussed matters regarding promotion of business ties between the two countries. 

Shakiri said that Iranian business community was interested in joint ventures with Pakistani counterparts on various fields including cement, steel, energy, food and agro-based industries. 

He said exchanges of the views between the business communities of the two countries were essential for which business community was invited to visit Iran for further negotiations. 

He said Iranian business delegation was also ready to visit Pakistan for promotion of trade and business activities. 

He offered supply of the Crude oil to Pakistani refineries on soft terms as there was technically expertise in Pakistan. 

Talking to the Ambassador, Mian Manzoor Ahmed Wattoo said Pakistan and Iran are friendly neighboring countries and these relations would be strengthened more in future. 

He said Pakistan is hub of investment and there are various opportunities for the foreign investors in the industrial sector particularly in cement, energy, steel and engineering sector. 

He said that the joint efforts will be beneficial for both of the countries in cement and steel manufacturing field because of availabilities of raw materials and expertise in these fields. 

Minister said that government has planned to expand its cement and steel industries. 

He offered to Iran that Iran can utilize the Trans shipment facilities from Gwadar port as there are 85 births available at this port to handle the big and medium size ships. 

He disclosed that Gwadar port will be tax free port for the period of 20 years for all investors.


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## General Fujita

*Gwadar Port declared tax free zone for 20 years * 

Written by Pakistan News :: Pakistan Daily 
Monday, 01 December 2008 16:09 
Balochistan Chief Minister Nawab Aslam Raeesani has declared Gwadar deep sea port a tax free zone for the next 20 years under the Gwadar Master Plan. Talking to a private television channel on Sunday, the chief minister said the decision had been taken after a meeting with Federal Industries Minister Manzoor Wattoo. Raeesani said no tax would be levied on the import of construction materials in Gwadar to expedite economic activities in the area. He said a majority of the local residents would be given jobs in the seaport. Earlier, Wattoo told the meeting that Gwadar port would be converted into an export-processing zone.


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## General Fujita

*Renewable Energy and Oil The Future aspects of Pakistans Economy  *

Written by Pakistan News :: Pakistan Daily 
Thursday, 04 December 2008 17:56 
PAKISTAN is once again facing another energy crises and it seems that we are in the eye of the storm when things are calm for a while, but massive volatile fluctuations are just around the corner. 

Recently Pakistan State oil has been allowed to import 25000 metric tons of Petrol and 50,000 tons of Diesels to prevent the predicted shortfall. Most of the oil will be needed for our energy generation purposes and once again a circular debt scenario would start piling up leading to another crunch putting more and more burden on our fragile economy

The International Monetary Fund has also been approved a $7.6 billion to Pakistan of which the first installment of $3.1 Billion Dollars will be presented instantaneously

But the global financial crunch has also engulfed Pakistans economy, as it has with several other countries. A worsening security situation, and rising food and oil prices, have all been major contributing factors behind the phenomenon.
Gas and oil have 65% to 67% share in conventional electricity generation. Indigenous reserves of oil and gas are limited and the country heavily depends on imported oil. So once again energy requirements of Pakistan are not up to the demand .At the moment only 55% to 56 % of Pakistans population has access to electricity. Now that is a bleak picture

Energy security often hangs in a fragile balance because of oil supply and demand laws and oil volatility. Burning of Fossil fuel also contributes to Air pollution and increase in the Green house effect and robbing us of precious Carbon footprints.

According to the Islamabad own estimates by 2015 power demand in Pakistan will be nearly 22 percent greater than anticipated supply. By 2030, this energy deficit will be 64 percent. Now these are threatning figures and estimations especially when we need a jump start economy as fast as possible.


Higher prices, higher unemployment, higher threats and weaknesses, reduced opportunities, decline in quality of life and rise is crime and instability would be more common So Now is the time to move into the Green Zone and focus on clean and renewable energy options to meet Pakistans Energy needs .Pakistans hydropower potential is still untapped and coal resources under-utilized even today, Pakistans immense coal capital are the worlds sixth largest, and the government intends to boost the share of coal in the overall energy equation from 7% to 18% but that seems less likely


Pakistans renewable energy potential as great; water, wind, solar, Bio Mass and Fuel (Ethanol) are massive, although presently this potential remains largely untapped. Escalating oil prices in previous years have given Pakistan an additional inducement to invest in renewable energy technologies with very promising Return on Investments

Research by Khanji Harijan1, Muhammad Aslam Uqaili2, and Mujeebuddin Memon1 and Sher Mohammad Nasir Renewable Energy for Managing Energy Crisis in Pakistan in reference to renewable Energy and Wind Potential are very interesting reads.


For wind Potential areas in Karachi, Quetta , Jiwahi , Hyderabad and coastlines around Sindh and Balochistan are the best places for wind Energy and boasts an estimated 2.5 times current electricity generation .and for solar power generation is around 3.5 PWh per year . Now even if the approximations are half correct the immense potential cannot be ignored. Incentives need to be provided to local manufacturing for the


In 2003, the Pakistani government ambitiously declared that by 2015, around 10 % of the energy needs would be from Renewable energy sources and a formal board named as Alternative Energy Development Board but not much has been done by the Board.

Energy matters; It would play a crucial role. If Pakistan is to be successful in its motivated plans for economic progress, quality of living has to be increased, followed by democracy and political stability, and pay attention to its always ignored Environmental Problems Pakistanis must get serious about energy and have a well defined mission and vision In the end going green and going for renewable energy options would reduce Pakistans Energy Environmental and Economic problems and would improve the Socio Economic conditions of Pakistan and would lead to a better Pakistan for all of us. Imran Idris Mufti


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## Pk_Thunder

*Pak liquid foreign reserves figure $ 9.0819 Bln *​ 

KARACHI, Dec 4 (APP): Pakistans total liquid foreign reserves stand at dollars 9.0819 billion , says a statement issued from State Bank of Pakistan here on Thursday. On November 29, 2008 the foreign reserves held by State Bank figured dollars 5,942.8 million and the net foreign reserves held by banks other than SBP amounted dollars 3,139.1 millio


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## Pk_Thunder

*Germany exempts from payment of value Added Tax (VAT) to Pakistani traders *​

ISLAMABAD, Dec 3 (APP): Germany has granted exemption from payment of value Added Tax (VAT) to Pakistani traders visiting Germany for business purposes.

The VAT exemption would also apply to business community and government organizations participating in fairs and exhibitions in Germany.

According to a notification issued by the German government, received through Pakistan Embassy in Berlin, the decision of VAT refund will apply with effect from July 1, 2008.

Hence the VAT paid from that date could be claimed as refund by business community who have visited Germany for business or participation in fairs and exhibitions since the above date.

Pakistan is participating in a large number of fairs and exhibitions in Germany every year and the VAT paid at the rate of 19% will now be refundable resulting into enormous savings for the business community and the government organizations on account of their participations in fairs.

According to this decision Pakistani business community is now not required to pay VAT for purchase of goods and services during their stay in Germany for business purposes. The decision of the German government will help further boost trade relations between the two countries by the increased participation in trade related activities.


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## Pk_Thunder

*Pak-India business communities can play role in easing tension: *​

PESHAWAR, Dec 4 (APP): Sarhad Chamber of Commerce and Industry while expressing profound concern over growing unrest between Pakistan and India in the aftermath of Mumbai carnage, has impressed upon the business communities of both the countries to play their role in easing the tension between the two neighbors.

President of SCCI Sharafat Ali Mubarak expressed these views while chairing a meeting of the Executive Committee of the Sarhad Chamber here on Thursday.

The business communities of both the countries were against hostility and wanted that both the neighbors should work together for developing their economies, he said, adding, the businessmen and traders have a great role to play in this regard.

The meeting also called for formation of the citizen-police liaison committees at government level and inclusion of SCCI representatives on it. It observed that the traders were suffering hard due to worsening public order in the province and demanded of the government to gear up efforts for maintaining law and order situation and protection to the trading community.

It also expressed concern over issuance of notices by the SNGPL about the gas load shedding to the industrial units and stoppage of gas supply to textiles mills in Gadoon and Kohat. It urged the SNGPL authorities to follow the load management procedure instead of stopping gas supply to industrial and commercial concerns in the province.

The meeting demanded provision of better quality wheat to the flourmills in the province for saving the industry from collapse.

Leader of Businessman Forum Senator Ilyas Ahmed Bilour, Vice President SCCI Muhammad Ishaq, former SCCI Chief Haji Muhammad Asaf were present on the occasion.


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## Neo

*Pak-India trade talks postponed​*
December 05, 2008

ISLAMABAD: The trade talks between Pakistan and India have been postponed for an indefinite period in the wake of Mumbai terror attacks, the trade ministry sources told the Geo News on Friday.

The secretary level talks on enhancing trade ties were to be held in the first week of December in Islamabad.

The trade ministry sources told the two countries had to discuss a proposal to open three more trade routs. However, after the recent Mumbai attack, the talks have been postponed for an indefinite period.


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## Neo

*Turkish wind power project to start production​*
KARACHI: A 49.5 Mega Watt wind powered electricity generation farm developed by Zorlu Enerji Group of Turkey is expected to start production in early 2009. The project has been set up near Hyderabad where the Hyderabad-Gharo wind corridor provides an excellent environment for electricity generation. Chief Executive Officer Zorlu Group, Murat Sungur Bursa, at the second day of the 11th Management Convention hosted by the Management Association of Pakistan (MAP) Thursday said it was estimated that the world would need $22 trillion in investments in the next 20 years globally. Investments in the energy sector differ widely from other business ventures as production starts at least three years after investing the first dollar.


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## Neo

*IMF tranche pushes country's foreign exchange reserves over $9 billion ​* 
KARACHI (December 05 2008): The country's liquid foreign reserves have shown a significant surge of 2.4 billion dollar to nine billion dollars, as the country has got the first tranche of stand-by loan from International Monetary Fund (IMF). The State Bank of Pakistan's (SBP) statistics shows that overall foreign reserves have registered an increase of 38 percent or 2.485 billion dollars during the week ended November 29, 2008.

With current surge, country's foreign reserves have mounted to 9.0819 billion dollars on November 29, as compared to some 6.596 billion dollars a week earlier. The major increase has been witnessed in the reserves held by the central bank, which have gone up by 2.5 billion dollar to 5.942 billion during the last week from 3.438 billion dollars.

However, reserves held by banks show a downward trend during the last week and banks' overall foreign reserves reached 3.139 billion dollar as compared to some 3.157 billion dollar a week earlier, depicting a decrease of 18.3 million dollars.

It may be mentioned here that the country's overall foreign reserves stood at historical level of 16.3875 billion dollars in first week of November 2007. However, foreign reserves started a downward trend since the imposition of state of emergency on November 3, 2007 by Pervez Musharraf former President of Pakistan.

The rising current account deficit and high oil payments due to the high oil prices were the major reasons behind the decline in the country's foreign reserves. The rising foreign deficits compelled the central bank to join IMF programme and the latter Fund approved a stand-by loan facility of some 7.6 billion dollars for Pakistan. The first tranche of loan of some 3.1 billion dollars was received during last week, which helped to improve the reserves' situation.


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## Neo

*'EU to give free market access to Pakistan for one year' ​*
KARACHI (December 05 2008): Federal Advisor for Textile Ministry Dr Mirza Ikhtiar Baig has said that European Union (EU) has initially agreed to give free market access to Pakistan for one year. Addressing members of Karachi Association of Trade and Industry (KATI) on Thursday, he said that a delegation of commerce and textile ministries would visit EU to discuss and finalise the issue after December 25.

He termed agreeing EU to give market access is a good sign and hoped that period of market access will be extended later on. Referring to Research and Development (R&D) support, Mirza Ikhtiar Baig advised business community to forget R&D support and strive for duty drawback.

He emphasised the need of increasing regional trade, which helps increase bilateral trade among the countries. Quoting example of regional trade, he said that Nafta having trade among regional member up to 68 percent, EU 52 percent, Asean 26 percent whereas our regional Saarc has only 6 percent to 7 percent trade among member countries.

He said that there were lot of expectations after signing of Safta but due to political disputes between two major countries India and Pakistan, desired objectives are not achieved. Although the countries of Saarc region, particularly businessmen from India and Pakistan wanted to enhance trade and to get away with negative list.

He congratulated S M Munir on assuming as President of Indo Pak Chamber of Commerce and Industry for two years and said that "we should now take advantage as Presidents of IPCCI and Saarc chambers are both from Pakistan to develop regional trade and investment."

Counting his achievements, he said that recent accomplishment is getting from State Bank of Pakistan (SBP) concessional financing under export refinance II and LTGF for import of value added mechanism, withdrawal of LC 35 percent cash margin on import of industrial raw materials and allowing R&D claims for shipments up to June 30.

Munir urged the government to scrape National Power Regulatory Authority (NPRA) and Oil and Gas Regulatory Authority (OGRA) as both the organisations are not friends of the country as well as creating problems for the industrial sector and general public. Chairman, KATI, Mian Zahid Hussain has urged the government to reduce power, gas and bank markup rates to make industry viable.


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## Neo

*Rs 520 billion to be spent on National Trade Corridor by 2012 ​*
ISLAMABAD (December 05 2008): The government would spend Rs 520 billion by 2012 to develop National Trade Corridor (NTC) to boost trade activities and exports. A source in the Ministry of Communications told newsmen here on Thursday that the NTC would link upper parts of the country in the North with ports in the South to reduce travel time and fuel cost by improving existing road network and introducing new highways and motorways by 2012.

The development of NTC would cause multi-faceted benefits, reduce the losses and significantly contribute to the national exchequer, he added. On completion of the NTC by 2012, the cargo travel time from Karachi to Peshawar would be reduced from 72 hours to 36 hours, and road losses would be reduced to the tune of over one billion dollar per annum which would reduce annual transportation cost by 10 percent, the source added.

Talking about steps being taken for development of road network, he said 600 kilometres portion of Karakoram Highway was being upgraded and expanded by Chinese help with the cost of 350 million dollars.

He said the main artery and the main North-South Corridor linking Karachi with Torkham on Pakistan-Afghanistan border via Lahore, Rawalpindi and Peshawar the National Highway N-5 was the mainstay of the country's road network and its economic lifeline.

The Great Trunk Road N-5 has been converted into a dual carriageway and it is being rehabilitated on priority basis. Similarly Indus Highway (N-55), which is on the left bank of the Indus River, is also being constructed according to the specifications of the Asian Highways recommended by the Asian Development Bank. After construction of the Kohat Tunnel, N-55 was set to play a vital role not only for Pakistan but for inter-regional connectivity also, he added.

The transport cost of trade goods would be reduced through restructuring and modernisation of railway under the NTC programme, which will contribute in terms of saving of two to 2.5 billion dollars per year.

The administrative measures, reducing documentation would result in saving of 1.2 billion dollars per annum, he said. He said the modernisation of existing trucking fleet was also planned, which would reduce fuel import bill by 25 percent and road maintenance cost by one billion dollar.


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## Neo

*Agreement for $180 million first ADB tranche signed: donors to provide $4 billion for debt payments till June ​*
ISLAMABAD (December 04 2008): To meet foreign debt instalment payments and other liabilities, the multilateral donors will provide a loan of $4 billion to Pakistan by June 2009. Pakistan will receive $1.8 billion from ADB; $600 million from Islamic Development Bank (IDB); $1.3 billion from the World Bank (WB); and $300 million from bilateral donors during this period.

Economic Affairs Division (EAD) Secretary Farrukh Qayyum informed media persons about this after the loan signing ceremony with Asian Development Bank (ADB) here on Wednesday. ADB Pakistan Resident Mission's Country Director Rune Stroem and Farrakh Qayyum signed the agreement for the first tranche of $180 million, comprising $10 million ADF (concessional finance) and $170 million OCR (non-concessional funding) under the multi-tranche financing facility (MFF) of $900 million for National Trade Corridor Highway Investment Program.

The multi-tranche facility for Trade Corridor will be spread over five years, and is expected to be completed by December 31, 2013. Farrukh said that the Program was approved by ADB in December 2007. The first tranche of $180 million will be used for 58 km Faisalabad to Khanewal Motorway (MP-4) project, whereas ADB will provide second tranche of $330 million in 2009.

He said that the government has submitted a 'Country Strategy Paper' to ADB for review, and would receive comments within the next 45 to 60 days. The country strategy paper, submitted to ADB, also contains request for support for mega power projects, including Bhasha dam.

The $900 million multitranche financing facility is part of $5.36 billion investment plan by National Highway Authority (NHA), which includes upgrading the highway from Karachi to Peshawar, and providing links to Gwadar and China. After the completion of road improvements, travel time between Karachi and Peshawar, a distance of 1700 km, would be cut from 72 hours to 36 hours.

Farrukh said that in view of Pakistan's growing development needs and the government's priority for development, maintenance, and rehabilitation of country's road infrastructure, ADB had enhanced its investment portfolio in the road sector. Over the years, ADB has been assisting Pakistan to improve farm-to-market roads, urban transportation, provincial highways, and national highways that are critical for the country's development.

Stroem said that the investment would help Pakistan achieve its objectives set in its 'Vision 2030' strategy by enhancing the trade-to-gross domestic product ratio from 30 percent to 60 percent. The program will help reduce transportation costs, improve trade competitiveness, and encourage export diversification.

"An efficient road network is key to promoting economic growth and enhancing welfare of the people by catalysing better opportunities for them in accessing markets, jobs, and social services, " he said. He said that the facility would help develop a fast and cost-effective corridor for land transportation, which would stimulate regional trade flows and would allow Pakistan to act as a transit artery for goods moving between Arabian Sea ports in the south and Central Asia and the PRC in the north.

"Expansion and rehabilitation of national highway networks will have positive impact on Pakistan's economy. Reduced travel and transportation distances across the country will help deepen and diversify industrial base, and make agriculture-based and other businesses much more financially viable by cutting down time and cost of transportation significantly," he added.

Lack of adequate roads in Pakistan is leading to transport bottleneck. It is a major constraint in improving competitiveness and attracting private sector investment. To overcome this infrastructure deficit, ADB, in addition to making a strong investment in the sector, has provided extensive technical assistance to the government for policy reforms, institutional capacity development for designing and implementation of projects, and promoting policy dialogue.

He said that in 2007, ADB had approved $10.1 billion of loans, $673 million of grant projects, and technical assistance amounting to $243 million. Under ADF, Pakistan will have to pay to ADB an interest charge at the rate of 1 percent per annum during the grace period and 1.5 percent per annum thereafter, while the repayment period is 32 years, with a grace period of 8 years.

Under OCR, Pakistan will pay to ADB interest under ADB's London interbank offered rate (LIBOR)-based lending facility, is less than 3 percent at present, with a 25-year term, including a grace period of 5 years, an interest rate determined in accordance with ADB's LIBOR-based lending facility. Pakistan shall pay a commitment charge of 0.15 percent per annum.


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## Neo

*ADB's $36 million loan for 'Sindh coastal community development project' ​* 
FAISALABAD (December 05 2008): Asian Development Bank has urged the government to implement planting, filling of existing low-density areas, 350 hectares by third quarter of 2009, while implement planting new areas on 3,000 hectares @ 750 per year through fourth quarter of 2011.

In a draft of Project Administration Memorandum (PAM) of Sindh Coastal Community Development Project, prepared by Agriculture, Environment, & Natural Resources Division Central and West Asia Department, ADB experts stated that all major coastal plan components underway to be completed by the end of 2011, while Brackish water and fresh water fisheries and water quality survey to be completed and results promulgated by the end of 2010. Under this project, about 1,388 community groups will be formed to co-ordinate household based economic activities by the end of 2012, while 25,000 beneficiaries will be trained in income generation options and environmental management by the end of 2012.

All community organisations should have access to micro-savings and micro-credit within 2-years of formation of demand-driven small-scale civil works and/or services initiatives provided to community organisations in 700 villages by mid-2012. About 91 medium-scale civil works and/or services initiatives to be completed by districts by the end of 2012, ADB experts mentioned.

ADB urged that quantity & quality of participation in village meetings and activities be increased to 70 percent of participating villages. 100 pilot extensive prawn ponds, crab ponds, and 100 bivalve or seaweed rafts with adaptive replications be established by the end of 2012. Three hatchery sites to be upgraded with training facilities by the end of 2012, they mentioned.

ADB project updates revealed that Sindh Coastal Community Development Project, aims to reduce poverty for the inhabitants of the coastal zone of Thatta and Badin districts in Sindh province. The project area Talukas are: (i) Ghorabari, Jati, Keti Bander, Kharo Chan, Mirpur Sakhro, and Shah Bander in Thatta district; and (ii) Badin and SF Rahu (Golarchi) in Badin district.

The overall project impact would be reduction in poverty for households in Sindh province. The outcomes are improved, ecologically sustainable income opportunities, and access to services for poor residents in the eight coastal Talukas of Thatta and Badin districts. The outputs include (i) an environmentally sound coastal zone medium-term socio-economic development, management and conservation plan implemented by CDA; (ii) effective community-driven mechanisms for community planning and increasing household incomes; (iii) transparent and accountable community-driven mechanisms for small-scale civil works and public services delivery; (iv) sustainable community-managed income-generating mangrove stands, crab and prawn ponds, and bivalve rafts; and (v) an operational project management system.

To achieve output (i), the project will help CDA to develop a comprehensive coastal development plan that effectively addresses environmental, social development, economic, and other concerns. The project will enhance the capacity of CDA to implement its mandate through team building of an expanded CDA staff, provision of geographic information system (GIS) facilities, and support for appropriate leadership and cross-institutional collaboration. A survey of coastal fresh water and brackish water fisheries and water quality will be implemented by the Sindh provincial Livestock and Fisheries Department (SLFD) over three years in co-operation with district fisheries divisions and in consultation with other government and university organisations.

Output (ii) consists of activities towards the formation of at least 1,388 community organisations in no less than 700 villages; participatory planning and assessment of household and community needs; training of households in income-generating options and leadership; micro-savings and links to micro-credit and graduation of groups to community citizen boards.

Output (iii) involves providing grants for (i) community-demand small scale initiatives in not less than 700 villages within the project area, including small-scale rural service infrastructure and capacity building activities; and (ii) the construction of not less than 91 medium-scale rural infrastructure projects within the project area.

Output (iv) includes provision for (i) planting of not less than 3,350 ha clusters of mangroves at sites in the inter tidal zones to provide significant disaster protection from storm induced tidal surges and episodic cyclones; (ii) developing simple aquaculture ponds and trials of prawn, crab, bivalve, and seaweed cultivation methods; and (iii) minor production capacity upgrades to the Badin fresh water and brackish water hatchery, the Hawks Bay marine hatchery, and the marine rearing facility at Gharo.

Output (v) will be achieved by establishing the project management unit (PMU) within the CDA, staffed with a project director and supported by appropriate technical and supporting staff including a rural infrastructure engineer and two district project implementation units (DPIUs) in each project district of Thatta and Badin. A baseline and project performance monitoring system (PPMS) will also be established to monitor the progress of the project.

It may be recalled that upon the request of the government, the ADB will provide a loan equivalent to 36 million dollars from its special fund resources to finance 90 percent of the project cost. The government and beneficiaries will cover the balance. The loan will have on 32-year term, including a grace period of eight years, with an annual interest charge of one percent during the grace period and 1.5 percent thereafter. The government will re-lend the proceeds of the ADB loan to the government of Sindh on the same terms and conditions as those between the government and ADB. The government of Sindh shall make the entire proceeds of the loan available to CDA on a grant basis.


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## fatman17

*Pakistan eyes 1 million-tonne rice export to EU*

By Moonis Ahmed 

KARACHI: *Around one million tonnes of rice will be exported to the European countries owing to bumper crop this year, Rahim Janoo, chairman Rice Exporters Association of Pakistan (REAP) has said. Last year the figure stood at 80,000 tonnes.*

Janoo told Daily Times that the estimated target has been set as the demand from the European countries is increasing. About 500,000 tones of rice would also be exported to African countries including Kenya (250,000 tonnes) during the period between January to June 2009. He said that Kenya is the largest export market of rice in Africa. Pakistan has exported around 27,688 tonnes of rice to Kenya from 1 July to November 2008. Irri-6 is the main rice being exported to Kenya. 

He dispelled a news item that European countries are skipping India to buy rice from Pakistan. The statement of Gurnam Arora, former president of at All India Rice Exporters Association is just to pressurise their government to lift the heavy export duty of $200 per tonne. This is a reaction to the fact that Pakistani rice is making its way in the international market leaving behind India. 

*Rahim said that due to fall in staple prices in international market the prices of Pakistani rice has also declined and is being quoted at $1,100 per tonne for basmati rice as compared to $1,800 per tonne in June 2008. However, the Indian rice is available at $1,400 to $1,500 per tonne. India had also banned the export of non-basmati rice in April. Analysts say that Pakistan, the world's fifth largest rice exporter, has become more price-competitive than India due to a bumper crop and depreciation of the Pakistani rupee against the dollar.*
Home | Business


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## Neo

*Country to face massive power outages after December 26 ​* 
Saturday, December 06, 2008

ISLAMABAD: The ongoing power deficit is to swell many times during the next calendar year period December 26 to January 31, a senior official told The News on Friday.

Existing hydro generation of 2,500 MW will come down to its lowest ebb during the said time in the wake complete closure of canals by all federating units for annual de-silting, he said.

During the period, there will be no water demand from province to cater to their irrigational requirements and almost negligible water releases from Terbela and zero releases from Mangla will reduce the hydro generation up to 500 MW. This will add massive hike in load shedding across the country and the government may for massive cut in power supply to Steel Mills, and other industries to cope with the situation.

The spokesman of Pakistan Electric Power Company (Pepco) Tahir Basharat Cheema confirmed that the current power deficit to swell after December 26 and the government may think to cut power supply to steel units and other industries for 5 to 6 hour.

He said: This time the power crisis would be not worst as it was in last year as we have an elaborate plant to minimize the impact of power outages on masses of Pakistan.

He said that right now country is facing 1000 MW during day time and 1500 MW night time from 5pm to 9 pm. Cheema said that water released from Terbela has been slashed down from 70,000 cusecs to 36000 cusecs per day and from Mangla reservoir to 27000 cusecs from 42000 cusecs. Because the massive reduction in water released, he said that the hydro generation has tumbled to 2500 MW from 6500 MW in August-September this year.

Another reason of the current power deficit which why the country is experiencing the load shedding is nominal supply of gas to power houses which is around 8.5 million cubic feet gas per day.

He said that the three rental powerhouses, which only run on gas are producing zero electricity because of non-availability of gas. Pikhi and Sheikhupura rental power houses of 285 MW and GTPS Faisalabad of 210 MW have become non functional as not alternate fuel other than gas can be used in the said rental power houses. 

This has deprived the country from 495 MW of electricity. This has actually worsened the on going power deficit. If the gas gets provided then almost 500 MW the country would have in its system that will help reduce the power outages.

Dwelling light on the plan to mitigate the impact of reduction of hydrogenation in December 26, 2008 to January 31, 2009 period, Chaeema said that country would have 81 MW of Malakand-3 and 165 MW of Attock Power in and Kesc and Pepco system in the currant month. Besides this, 350 MW of AES Pak Gen which is at annual maintenance would come on stream by December 13, 180 MW of Muzaffarabad to start generating electricity by December 15, 200 MW of Jamshoro power house by December 25 and two units of Guddu power houses of 150 MW would also be operational in the current month after annual maintenance. This would help Pepco minimize the impact of canal closures on power deficit to some extent.

Other than it, 1000 MW will be saved through conservation of electricity as in last year 5 million energy savers were sold and in this year about 30 million energy savers have been sold out. This will help save about 1000 MW of electricity.

To a question, Cheema said that 8500 cusecs of water will continue to release from Terbala that will help turbine in dam itself, Ghazi Barotha and Chashma to generate about 500 to 7500 MW of hydrogenation during the canal closure period.


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## Neo

*ME developers plan low-cost housing projects in Pakistan​* 
Saturday, December 06, 2008

KARACHI: Three real estate developers from the Middle East are expected to invest over Rs5 billion in low cost housing projects in next two years and joint ventures in this regard are already being signed with local counterparts.

The News learnt from sources that Tasees Developers, owned by Saad Ibrahim Al Moosa of Dubai, Wadi Group from Abu Dhabi and a third group from Saudi Arabia are planning to introduce low cost housing projects along with a number of budget hotels all over Pakistan.

The source informed that local developers of the country were looking towards Pakistan to invest due to worst ever real estate crises in UAE. He said that these joint ventures were formed following the return of Pakistani investors from the UAE market.

He said that the low cost housing projects would be a blessing as Pakistan was facing a backlog of over eight million houses for the lower income and middle income groups.

He added that these Middle East developers have realized the potential in Pakistan and therefore following a meltdown in their own countries they had turned towards Pakistan for investment and profit. 

Senior Vice President of FPCCI Sub committee on Housing and Construction, Munir Sultan commented that investments could be higher if the government realized the worth of Pakistans real estate industry and concentrated on it. 

He said that the construction sector employed the highest number of labourers and also contributed significantly to the GDP of the country and yet the government was neglecting it.

He asserted that the government should stop facilitating developers launching projects for the elite who were not, in need of shelters on their heads, as much as the poor people of our society. 

Sultan commented that it was a positive sign for foreign investors to come to the country despite sensitive political and economical situation in Pakistan and if these low cost houses were constructed as planned, investments worth millions more can be expected soon as Pakistan is on its path towards the revival of the real estate sector.


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## Neo

*Pakistan, China sign pact on economic cooperation ​* 
Saturday, December 06, 2008

BEIJING: Pakistan and China have achieved two major milestones in cooperation in the economic sector during talks between top-level officials from the two countries here this week, a senior official at the Pakistan embassy said on Friday.

One of the major achievements in the realm of economic cooperation was completion of negotiations and signing of an agreement on the Joint Study for Comprehensive Economic Cooperation here early this week, Counsellor Commercial and Economic at the Pakistan Embassy Dr Naeem Khan told APP.

He said the pact was signed from the Chinese side by its Vice-Minister Yie Ziying while Pakistan was represented by the Senior Joint Secretary, Ministry of Commerce, Zahid Bashir. The deal, he said, would help think tanks and major economic and business groups of Pakistan and China in understanding in a better way the areas of economic cooperation for mutual benefits in trade and investment.

The negotiations for the joint-study group were initiated some two years back and the agreement was signed on Monday, Dr Naeem said. He added that the pact covered all areas of economic cooperation, including service, trade, investment, etc.

The second headway was achieved in the economic sector on Wednesday when both countries successfully concluded the fifth round of negotiations on a bilateral agreement on service trade and market access to the service sector.

The two sides have agreed that they will choose a time to sign the pact after getting approval from their respective governments.Senior Joint Secretary Zahid Bashir led the Pakistani side in the negotiations. The two countries signed a Free Trade Agreement covering goods trade and investment cooperation in November 2006 and a supplement pact on boosting bilateral investment in October.


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## Neo

*Australia to provide $30.5m in development assistance ​* 
Saturday, December 06, 2008

ISLAMABAD: Australia will provide approximately 30.5 million dollars in development assistance to Pakistan in 2008-09.

Bilateral programmes focus on improving health and education, building agricultural linkages between Australia and Pakistan, and providing scholarships at Australian institutions, said a news release issued here.

The Australian government is enhancing its engagements with Pakistan and will substantially scale up its aid programme in future. As many as 83 Australian scholarships recipients were hosted a farewell party here on Friday prior to their departure for Australia to undertake Masters and Doctorate-level studies in Australia during the 2009 academic year. 

The scholarships have been awarded under a number of programmes offered by the Australian government, including Australian Development Scholarships, Australia Pakistan Scholarships Programme, AusAID-Carnegie Mellon University Scholarships Programme and the Agriculture Sector Linkages Programme Awards. Students will study in the areas of health, education, environment, agriculture, governance, information technology, business, administration and economics. 

The Australian High Commissioner, Zorica McCarthy, said the scholarships were intended for emerging leaders in Pakistan and the region. The Australian Scholarship programmes aimed at contributing the long-term development needs of Pakistan, promoting good governance, economic growth and human development, McCarthy said. 

These scholarships will provide Pakistani professionals with the necessary skills and knowledge to drive change and influence development outcomes in Pakistan by obtaining relevant tertiary qualifications at high quality Australian institutions, she added. 

On completion of their studies, the scholars will return to Pakistan to contribute to the countrys development. Many previous scholarship holders have become leaders in government, the private sector and non-government organisations. 

The Australian government believes that scholarships would play a vital role in building lasting relationships with countries in the region. Up to 1,000 Australian Development Scholarships are awarded each year across 31 countries with scholarships awarded equally between men and women.


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## Neo

*French group to focus on energy efficiency in Pakistan​*
ISLAMABAD: French Development agency Group will focus on energy efficiency and renewable energy projects in Pakistan and will make investment around Euro 300 to 400 million for the next three or four years. 

The Government of Pakistan (GoP) and the French Development agency Group (AFD), a state owned financial entity of Government of France, signed an agreement for establishment of AFD Group Office in Pakistan. 

Farrakh Qayyum, Secretary, Economic Affairs Division on behalf of Government of Pakistan and Martha Stein-Sochas, regional Director, Asia on behalf of AFD GROUP signed the agreement. 

The ambassador of France to Pakistan, Daniel Jouanneau, witnessed the occasion. According to the agreement, the AFD will have full legal capacity conferred upon it by the government of France to carry out its development activities in Pakistan. As a positive step towards strengthening of Pak-French relationship, the GoP has granted permission to the AFD and its subsidiary PROPARCO, a development finance company for the private sector, to establish their office in Pakistan to develop projects in Pakistan, which will contribute to a better management of global public goods.


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## Pk_Thunder

*FBR Chairman says Rs 424b tax collected in five months ​*

LAHORE, Dec 6 (APP): The Federal Board of Revenue (FBR) has collected Rs 424 billion tax during first five month of the current financial year against Rs 413 billion target for this period.

The FBR Chairman Ahmed Waqar disclosed this in a press briefing after inaugurating the Computerised Risk-Based Evaluation of Sales Tax (CREST) here on Saturday night.

He said that board had set Rs 1036 billion tax collection target for the current fiscal year, adding the collection had been Rs 424 billion against Rs 413 billion target of first five month.

To a question, he said that FBR would review the tax collection after six month of the financial year (by the end of December 2008) and it would explore other sectors, if needed, for tax to meet the target.

Ahmed Waqar said that there was great potential to expand the tax net and efforts were being put in place to attain 10.2 GDP growth rate.

The new automation system would fully scan the containers at the seaports, he said and warned that any tax officer found involved in clearing the containers without taxes, would be taken to task.

The Chairman said that Sales Tax wing of the FBR developed the CREST software with objectives- a clean voluntary compliance system to remove the irritants that hurdle the complaints; fully automated setup to minimize the human interference; provide tax gap analysis to indicate areas of revenue leakage; a valuable tool to monitor the performance of machinery; and ensure transparency and efficiency in taxation system.

The basic algorithm of CREST is monitoring of declarations made in Sales Tax Return with available data of third party to have 360-angle review. For this purpose, the CREST utilizes data of return, registration, import export invoices, summaries and utilities. The registered person shall be given a chance to explain any discrepancy. It will be put in queue in case and on the degree of discrepancy. The system shall also show average benchmark in different sectors on the basis of taxpayers declaration. The person showing transaction well below such marks will be liable to audit. System doesnt have any room to select any case on presumptive.

CREST shall record the performance of all officers and through alerts will remind the next in command if the assigned task is not performed within specified time frame. All officers shall be assigned access only to areas of their specified job. Officers falling below their performance may lose special allowance, he added.


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## Pk_Thunder

*ADBs loan to support ongoing changes in energy and agriculture sectors *​ 

ISLAMABAD, Dec 6 (APP): The Asian Development Bank (ADB) has recently approved a $500 million loan to support Pakistans efforts to address the harm done to poor families and countrys economy by un-precedented international food and fuel price hikes.

According to ADB sources, the approved ADB loan would support ongoing changes in the energy and agriculture sectors, and would also help lay the foundation for a radical transformation of the economy by diversifying, deepening, and expanding a competitive industrial sector, and creating much-needed jobs for Pakistans young and growing labour force.

The ADB support comprises a key part of a global financing plan underpinning the governments economic stabilization programme.

The stabilization plan includes actions to shore up and manage foreign reserves, improve monetary policy, trim the fiscal deficit and its financing gap, and cut back on government borrowing from the State Bank of Pakistan, the sources added.

The sources added that stabilization plan is focused on protecting the poor through special safety net programmes, and reassuring financial markets through fiscal and monetary discipline.

Addressing the impact of fuel and food price increases unleashes immediate benefits to Pakistans people and to markets, says Juan Miranda, Director General, ADB Central and West Asia Department.

The fiscal space created by reforms would cut financing gaps, generate conditions for a better deal in the sectors down the road, and provide much-needed cash flow to pay for safety net programmes that protect the most vulnerable.

The ADBs support balances the need for addressing the needs of Pakistans people while reassuring markets that the Government is on the right track with its ongoing economic stabilization programm, the sources added.

They further said that the stabilization plan was formulated by the Government, with technical advice from other parties.

ADB financing takes place within the context of this stabilization framework, added Mr. Miranda. We are one of several parties contributing to the financing of this plan; others will soon follow with their own financing and programmes.

Pakistan will strengthen the legal and regulatory framework of its financial sector through the ADB programme.

The State Bank of Pakistan, working closely with the Government, has undertaken a series of actions to improve risk management in the sector, strengthen payment systems, and protect consumers.

This will create stability at the time when international markets are in turmoil, they added.

The measures supported by ADBs programme would benefit ordinary Pakistanis, directly as well as indirectly, said Mr. Miranda. Timing is of the essence here.

The ADB, they said is a major financing partner of Pakistan. It strategy focuses on infrastructure (roads, irrigation, and logistics); utilities (power, energy, urban services); and reforms (including social service provision and finance, public financial resource management, financial sector intermediation, and capital markets development.


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## Pk_Thunder

*State Bank gives overview of Economic Outlook *​ 

KARACHI, Dec 6 (APP): The State Bank Saturday issued its annnual report and while overviewing the economic outlook said the urgency for macroeconomic stabilization is now evident throughout the economy, which has been severely buffeted by the concurrent unfolding of several adverse developments, particularly through H2-FY08, and into the initial months of FY09.

Global shocks such as an extraordinary and unanticipated rise in food and energy commodity prices, and disruptions in the international financial markets, as well as domestic shocks and policy decisions contributed significantly to the imbalances in the economy. 

Domestic production was hit by the energy shortages, disappointing harvest of some key cash crops, and policy uncertainty during the transition of governments. 

Consequently real GDP growth declined to 5.8 percent in FY08, down considerably from the 6.8 percent growth recorded in the previous year (see Table 1.2). Weaker domestic production coupled with strong domestic demand and commodity prices shocks led directly to rising inflationary pressures, a widening current account deficit, declining foreign exchange reserves, rising public debt, a depreciating rupee, etc.

Table 1.1: Key Macroeconomic Developments in FY08

Unit Jul-Oct Nov-Jun Jul-Jun

CPI inflation period average 7.6 14.1 12.0

CPI inflation (end-period) YoY 9.3 21.5 21.5

Government borrowing from SBP billion Rs 23.3 665.4 688.7

Current a/c deficit % of GDP 1.8 6.6 8.4

LSM growth percent 7.6 2.4 3.7

The escalation in inflationary pressures was particularly strong in H2-FY08. Annualized CPI inflation soared to 12.0 percent during FY08 compared with 7.8 percent in the preceding year (see Table 1.1).

The rise in CPI inflation had been muted during the initial months of FY08, reflecting the effect of earlier monetary tightening by SBP. Notwithstanding, inflationary pressures then rose sharply as:

(1) demand-supply imbalances worsened; and (2) the impact of the record increases in international commodity prices was also particularly strong in Pakistan, as the countrys ability to absorb the shocks was constrained due to large fiscal and external current account deficits. 

The consequent acceleration in inflationary pressures (as evident by a surge in CPI inflation (YoY) from 7.0 percent in June 2007 to 21.5 percent by June 2008) quickly swamped repeated moves by the SBP to further tighten monetary policy and improve its transmission. 

Monetization of the large (7.4 percent of GDP) FY08 fiscal deficit aggravated inflation. During FY08, the government borrowed Rs 688.7 billion from SBP for budgetary support which is around 90 percent of the total financing requirement of the government for the year. 

As a result, the stock of MRTBs with SBP reached Rs 1,053 billion by end-June 2008 from Rs 452.1 billion at end-June 2007. Though the growth in broad money aggregates (M2) decelerated, the reserve money growth reached 21.6 percent during FY08 compared to 20.9 percent in FY07. Demand for domestic credit (both for the government and the private sector) rose steeply to 29.3 percent during FY08 from 15.8 percent in FY07. 

Furthermore, the unpredictable rise in government borrowings resulted in high growth in reserve money and weakened the transmission of policy rates to retail rates. 

Table 1.2: Selected Macroeconomic Indicators

FY03 

FY04 

FY05 

FY06 

FY07 FY08

Targets Actual

percent

Real GDP (at factor cost)1 4.7 7.5 9.0 5.8 6.8 7.0 5.8

Agriculture 4.1 2.4 6.5 6.3 3.7 4.8 1.5

Major crops 6.8 1.7 17.7 -3.9 8.3 4.5 -3.0

Manufacturing 6.9 14.0 15.5 8.7 8.2 10.9 5.4

Large-scale 7.2 18.1 19.9 8.3 8.6 13.0 4.8

Services sector 5.2 5.8 8.5 6.5 7.6 7.1 8.2

Consumer price index (FY01 =100) 3.1 4.6 9.3 7.9 7.8 6.5 12.0

Sensitive price indicator (FY01 = 100) 3.8 6.0 11.1 7.8 9.4 - 

14.2

Broad money (M2) 18.0 19.6 19.3 15.2 19.3 13.5 15.3

Reserve money 14.5 15.4 17.6 10.2 20.9 - 21.6

Private sector credit 20.9 34.3 34.4 23.5 17.3 - 16.5

Exports (f.o.b.) 22.2 10.3 16.9 14.3 3.2 13.1 13.2

Imports (c.i.f.) 18.2 27.6 32.1 38.8 6.9 5.8 30.9

Official liquid FE reserves2 (million US$) 10,769 12,389 

12,598 13,122 15,646 - 11,399

As percent of GDP

Total investment 16.8 16.6 19.1 22.1 22.9 23.8 21.6

National savings 20.8 17.9 17.5 18.2 17.8 18.8 13.9

Tax revenue 10.1 9.8 9.6 9.8 10.2 10.2 10.0

Total revenue 14.9 14.1 13.7 14.0 14.9 13.2 14.3

Budgetary expenditure 18.6 16.4 17.0 18.2 19.2 17.5 21.7

Budgetary deficit 3.7 2.3 3.3 4.2 4.3 4.2 7.4

External current account balance 4.9 1.8 -1.4 -3.9 -4.8 - -8.4

Total debt (including explicit liabilities) 80.1 71.4 65.8 59.5 57.9

· 60.7

(a) Domestic debt 38.0 35.1 32.8 30.1 29.9 - 30.6

(b) Foreign debt 39.5 34.4 31.3 28.2 27.0 - 29.0

© Explicit liabilities 2.5 2.0 1.7 1.3 1.0 - 1.1

1 During FY08 sectoral shares in GDP were as follows: agriculture (20.9 percent), industry (25.9 percent) and services (53.2 percent). 2 Foreign exchange reserves include CRR/SLR on FE-25 deposits. Note: Targets are based on Annual Plan, Trade Policy and Annual Budget Statement for FY08. 

Fiscal accounts reflected strains since FY05, however given continued improvement in debt indicators, a sharp increase in developmental spending and earthquake related expenditures generated political acceptability of fiscal expansion and complacency regarding its implications for macroeconomic stability. 

The slippage in fiscal accounts during FY08 is clearly unsustainable due to its adverse impacts on external accounts, inflationary outlook and debt indicators. The abrupt expansion of the fiscal deficit in FY08 reflects the combination of a slide in fiscal discipline, substantial maturities of very expensive domestic debt, as well as the consequences of a subsidy on some key prices in the economy. This raises some important considerations:

· First, sustainable economic growth requires that fiscal expenditures (particularly discretionary spending) be closely linked to the available resource envelope. In other words, growth in government spending must be dynamically linked to revenue trends, and the governments ability to borrow from the central bank be constrained through a legal framework. 

· Second, significant effort is needed to increase tax elasticity and buoyancy. Wherever possible, public expenditure must be focused on the provision of public goods and addressing market failures only. Broadening the tax base will be a key, as economic theory clearly shows that heavy taxes invariably create distortions in the economy, leading to allocation inefficiencies. 

· Third, the government needs to reduce its role in thedetermination of key prices in the economy. Pakistans recent history is testament that the excessive involvement of government in pricing mechanisms can distort both consumption and production decisions. In this context, the governments courageous decision to align key energy prices with international prices is appreciable.

The demand impetus from the fiscal deficit, and high international commodity prices, contributed to a worsening of the external current account. External current account deficit reached a record high of US$ 14.1 billion (8.4 percent of GDP) in FY08 relative to only US$ 7.0 billion (4.8 percent of GDP) in the previous year.

The impact of this sharp deterioration in Pakistans external account was further exacerbated by a decline in the financial account surplus during the period. Prior to FY08, the congenial international and domestic environment had allowed Pakistan to comfortably finance its large (and growing) current account deficit through non-debt creating inflows, sovereign debt issues as well as concessional loans from multilateral agencies. However, as pointed out by SBP in various reports, the large deficits increased the risk that the economy could be hit by any slowdown in these financing flows. In particular, portfolio investment is notoriously volatile, and the rising share of these in the financial flows of recent years was a concern. 

Thus, as the global financial crisis unfolded in FY08, and the country risk perception was further heightened by domestic economic and political developments, Pakistans ability to tap international capital markets was severely impaired. Planned privatization transactions had to be deferred, sovereign debt issues postponed, and portfolio investment plunged. The fall in capital inflows also resulted in drawdown of foreign exchange reserves and mounting pressure on exchange rate during the period, which was further intensified by heavy speculative activity in the forex market. Consequently, by end June FY08, reserves stood at US$ 11.3 billion witnessing a depletion of US$ 5.1 billion, while exchange rate depreciated by 11.5 percent.

Fresh and unprecedented build-up of imbalances in the external account requires demand management and exchange rate adjustments. Since adopting free float exchange rate regime in 1999, except for the initial years, the favorable balance of inflows and outflows enabled Pakistan not only to build up reserves but also to keep a relatively stable exchange rate. However, as this balance turned unfavorable and outflows far exceeded inflows, the country had little option but to fall back on the forex reserves that had been accumulated in the past few years. Consequently the reserves declined. With demand for foreign currency far exceeding supply, the Rs/US$ exchange rate depreciated sharply. Although SBP intervened in markets to reduce excessive volatility, seeking a moderation in the slide of the rupee, this policy by definition, cannot be a permanent solution. Empirical evidence clearly shows that any attempts to hold on to any particular exchange rate in the face of a fundamental imbalance, would have been futile and resulted in an even faster depletion of reserves. 

The pressures on the economy have only intensified in the initial months of FY09, as seen in all key macroeconomic indicators, and downgrades of the countrys sovereign credit ratings. Inflation is persisting at 25 percent levels in October 2008, with food inflation touching a staggering 31.7 percent YoY. The inflationary pressures appear to be supported by the continued monetization of the deficit; government budgetary borrowings from the central bank during Jul-Nov 17, FY08 reached Rs 378.9 billion, as compared to Rs 74.7 billion in the same period last year. The growth of the external account deficit has also accelerated sharply. It grew 98 percent YoY to reach almost US$ 6.0 billion during Jul-Oct FY09, as compared to US$ 3.0 billion in the corresponding period last year. At the same time, international financing flows have also dropped sharply to a mere US$ 1.1 billion from US$ 3.1 billion in Jul-Oct FY08, reflecting weakening fundamentals of the domestic economy, and the deepening international financial crisis. 

The drain on the countrys foreign exchange reserves therefore accelerated. After declining by US$ 5.1 billion in the eight months from the end-October 2007 peak of US$ 16.5 billion by end-June 2008, the reserves dropped to US$ 6.8 billion by end-October, 2008  a fall of US$ 4.6 billion in just four months.

The falling reserves put substantial pressure on the exchange rate, and drained liquidity from the inter-bank rupee market (as the central bank mopped up domestic currency against the provision of forex liquidity). So great was the liquidity drain that interest rates in the money market spiked, triggering rumors of a runs on banks. The SBP therefore moved promptly to diffuse the liquidity risks by easing statutory reserve requirements and taking other measures.

Recent decline in commodity prices reflects a mixed blessing. The recent broad-based decline in international commodity prices appears to offer significant relief on the external account in months ahead. The prices of key commodity imports such as petroleum products, edible oil, wheat, steel, etc. have all seen substantial declines (often ranging between 35 to 45 percent) from their recent peaks. Accordingly, as newer import deals are inked, Pakistans import bill is expected to decline sharply. However, as the decline in international commodity prices reflects the expectation of substantial economic slowdown in key exports markets, there is a risk that the overall trade deficit may not shrink as sharply as anticipated. Indeed, if exports weaken substantially, and/or remittances from the weakening economies (e.g. the US) slow, the overall external current account deficit could widen.

Also, lower international commodity prices may not help reduce inflation. This is because the substantial depreciation of the rupee in recent months would raise import prices in rupee terms. Thus, in the short-run, policy measures to shrink aggregate demand appear unavoidable. A combination of contractionary fiscal and monetary policies may also need to be supported, in the short-term only, by restrictive trade regime. If a moderation in demand can be implemented successfully, this would allow for a much-needed sharp contraction of both, the fiscal and current account deficits, as a percentage of GDP, in FY09 (see Table 1.3). As a consequence, real GDP growth is likely to fall well below the initial target level for FY09. 

Table 1.3: Projections of Major Economic Indicators

FY08 FY09

Annual Plan targets Projections

growth rates in percent 

GDP 5.8 5.5 3.5 4.5

Average CPI Inflation 12.0 11.0 20.0 22.0

Monetary assets (M2) 15.3 14.0 12.0 13.0

billion US Dollars 

Workers remittances 6.5 7.7 7.5

Exports (fob-BoP data) 20.1 22.9 21.5 23.0

Imports (fob- BoP data) 35.4 37.2 35.5 36.0

percent of GDP 

Fiscal deficit 7.4 4.7 4.3  4.8

Current account deficit 8.4 7.2 6.2 6.8

Note: Targets of fiscal and current account deficit to GDP ratios are based on Nominal GDP in the Budget document for FY09, while their projections are based on projected (higher) nominal GDP for the year. The impact of demand management policies on inflation will appear with some time lags. Headline inflation is likely to accelerate above 20 percent during FY09, before witnessing a fall. Expectation of a deceleration in inflation later in FY09 are contingent on a weakening of domestic demand (as impact of recent demand management measures percolates through the economy), improved domestic production in response to market price signals as well as some ease in international commodity prices as the global economy slows.

In terms of fiscal and administrative measures, even when acting to reduce demand, the government needs to be careful to ensure that the austerity is greater in the public sector, i.e., crowding out of private production and investment must be kept to a minimum. Second, there is a dire need to increase the share of investment in total aggregate demand, even as that of consumption is reduced. This will necessitate a delicate rebalancing of the incentives structure to promote both domestic savings and investment. 

In the medium to long-term, to achieve a sustainable high growth and low inflation, country also needs to support investment by moving to remove structural bottlenecks, reduce the cost of doing business and increase productivity. This is not easy task and requires implementation of well sequenced structural reforms, introduction of second generation reforms, as well as attention to promoting public-private investment partnerships to develop physical infrastructure and human capital. 

The role of second generation reforms is also important in conduct of economic policies. A key plank here will be building institutional capacities and improving governance in the economy. Pakistan is ranked second in South Asia according to World Banks ranking in Cost of Doing Business 2009.However, Pakistan is ranked at 77 out of 182 countries. Similarly, Pakistans rank dropped from 100 to 101 in Global Competitive Index (GCI) principally due to weakening in the perceived quality of public institution. This suggests that a lot more needs to be done.

Given that the country needs massive FDI inflows to achieve a rapid transformation towards industrialization, it is necessary to encourage this by reducing red tape, implement fast and transparent tax procedures, eliminate excessive regulatory bodies, simplify labor laws, make contract enforcement efficient by reducing costs and allowing quicker settlements of disputes, as well as making entry and exit of business firms less resource and time consuming.

Investment in physical and human resources is another important area for productivity gains. For example, Pakistan has enormous potential in increasing productivity in agriculture. Improvement in training and agri-extension services to gain benefits through increased use of certified seeds, use of appropriate mix of nutrients, mechanization of different activities from land leveling to harvesting, and use of low-water production techniques, may help manifold increase in productivity. Similar, opportunities are available in other segments of the economy.

Correcting the deterioration in macroeconomic imbalances is certain to entail difficult trade-offs, and the reforms will likely require disciplined implementation over an extended period, as the economy wears off the stresses from accumulated imbalances and adjusts to a tougher operating environment. However, history also shows us that appropriately planned and sequenced reforms can offer rich dividends, improving the resilience of economy to shocks and allowing more sustainable long-term growth.


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## Neo

*Pak hopes to get $2.5bn in addition IMF financial package: Tarin​* 
ISLAMABAD: December 06, 2008: Advisor to Prime Minister on Finance, Revenues and Economic Affairs, Shaukat Tarin has expressed the hope that Pakistan would get US $ 2.5 billion assistance in addition to the International Monetary Fund (IMF) financial package within next two or three months.

Talking to a private TV Channel, he also denied the reports regarding the abandonment of the market fund.

Tarin said that the entire plan of constituting market support fund has not been scrapped.

He added the government would ensure that no extra-ordinary pressure should be there on our small investors.

So, the impression is wrong that formation of market support fund has abandoned, he remarked.

We should hope that we would fulfil our promises to get the economy out of crisis, he added.

Replying to a question, he said that the value of Pak rupee will strengthen now and it will take 18-month.

We have a significant margin and interest rate will not be increased, However, interest rated will be increases if our inflation shoots up, which I think will not happen, he remarked.

He expressed the hope there will be no need to further increase interest rate and the already increase of 2% will be sufficient.

The Advisor to the Prime Minister on Finance hoped that the headline inflation would start decreasing from its present level of 25% and core inflation, which is 18.5% would also come down, an ease in the monetary policy will start taking place between first and second quarter of next month.

We have to ease the monetary policy to increase growth. We hope that an amount of US $ 800 million would start coming from the Asian Development Bank and the World Bank soon, he remarked.

China, he said, is also contributing US $ 500 million, we will also take some specific pledges at the friends of Pakistan forum which will be convened in the mid of next month in New York.

He hoped that US $ 2.5 billion assistance in addition to the IMF will come in the country within next two or three months.

Our import bill has decreased to more than half as compared to the level when the oil prices were 147 dollars per barrel. So, the decline of oil will cast pleasant effect on the economy, he remarked.

He said that government is also passing the benefits of decline in oil prices to the masses.

It is a blessing on us that price of oil is decreasing and today price reached below 40 dollars per barrel. We will also hope that performance of PEPCO and Discos will increase.

If oil prices remain at this level, I hope there will be no significant increase in electricity prices, he added.


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## Neo

*Pak-China pact on joint study for trade cooperation: service trade talks completed​*
BEIJING (December 06 2008): Pakistan and China have achieved two major milestones in co-operation in economic sector during talks between top level officials from the two countries here this week, a senior official at Pakistan embassy said on Friday.

One of the major achievements in the realm of economic co-operation was completion of negotiations and signing of agreement on Joint Study for Comprehensive Economic Co-operation here early this week, the Counsellor Commercial and Economic at Pakistan embassy Dr Naeem Khan told APP.

The pact was signed from Chinese side by its Vice-Minister Yie Ziying while Pakistan was represented by Senior Joint Secretary Ministry of Commerce Zahid Bashir, he added. The deal, he said will benefit the think tanks, major economic and business groups of both Pakistan and China to understand in a better way the areas of economic co-operation for the mutual benefits in trade and investment. The negotiations for joint study group were initiated some two years back and the agreement was signed on Monday, Dr Naeem said.

Dr Naeem Khan said that the pact covers all areas of economic co-operation including service, trade and investment. The second headway was achieved in the economic sector on Wednesday when both countries successfully concluded the fifth round of negotiations on the bilateral agreement on service trade and market access to the service sector.

The two sides have agreed that they will choose a time to sign the pact after getting approval from their respective countries. The negotiations from Pakistani sides were led by Senior Joint Secretary, Ministry of Commerce Zahid Bashir. The two countries signed a free trade agreement covering goods trade and investment co-operation in November 2006 and a supplement pact on boosting bilateral investment in October.


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## Neo

*SPI records increase of 27.75 percent year on year​* 
ISLAMABAD (December 06 2008): The SPI recorded an increase of 27.75 percent on week ending on December 4 over the same period of last year but saw a decline of 1.17 percent during the week, according to Federal Bureau of Statistics (FBS). The SPI inflation declined as shown in the statistics released by the FBS on Friday owing to slash in petroleum prices.

The data showed that prices of petrol declined by 13.13 percent, kerosene 6.82 percent and diesel 6.51 percent during the week. The prices of essential commodities remained same except marginal decline in three commodities.

The FBS data showed a decline in the prices of tomatoes and potatoes but their prices are on rise in the open market ahead of Eid-ul-Azha. Similarly, the price of sugar given by the FBS in SPI also varied from the price of commodity in the open market. The sugar is being sold at Rs 40 in the open market while its prices in the SPI statistics were given Rs 35.67 per kg.

The more you go into comparison the more you surprise over variance in prices of essential commodities in the open market and the one given by the FBS in the SPI. The prices are high in the open market but are understated in the weekly statistics. An accurate picture of prices would allow the government to deal with the situation as well as its impact on major economic indicators.

With this decline in the SPI, the dearness for the low income group with monthly income of Rs 3000 has come down from 29.33 percent to 28.38 percent, followed by 28.89 percent for Rs 3001-5000 income. The dearness was recorded 29.29 percent for families bracketed in monthly income of Rs 5001-12000 and 26.57 percent for over Rs 12000.

The SPI bulletin, based on data of 53 items collected from 17 urban centers showed increase in prices of 12 essential commodities, decline in 18 while the prices of 20 commodities remained stable during the week but were higher as compared to last year.

The prices of per dozen eggs during the week increased from Rs 73.98 to Rs 75.21, sugar from Rs 35.10 to Rs 35.67, kg garlic from Rs 43.16 to Rs 43.57, tea packet 250 gm from Rs 106.47 to Rs 107.06, firewood 40 kg to Rs 266.18 to Rs 267.31, shirting meter from Rs 79.35 to Rs 79.06, electric bulb 60-watt each from 13.97 to Rs 14.02, mash pulse washed per kg from Rs 75.45 to Rs 75.67, milk fresh from Rs 36.06 to Rs 36.16, beef per kg from Rs 142.24 to Rs 142.53, masoor pulse washed per kg from Rs 128.81 to Rs 129.06, vegetable ghee loose per kg from Rs 98.10 to Rs 98.23.


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## Neo

*GDP growth to be in range of 3.5-4.5pc: SBP ​* 
KARACHI: December 06, 2008: Pakistan's GDP is expected to grow by between 3.5 and 4.5 percent in the fiscal year 2008/09, slowing from 5.8 percent growth in the previous year, the State Bank of Pakistan (SBP) said on Saturday in its annual report.

"The urgency for macroeconomic stabilization is now evident throughout the economy," State Bank said in its annual report.

The International Monetary Fund, which last month approved a $.7.6 bailout package to help avert balance of payments crisis in Pakistan, has projected GDP growth of 3.4 percent for the year.

The State Bank projected inflation at 20 to 22 percent in the fiscal year to June 30, just below the IMF forecast of 23 percent.

Latest data for October showed inflation running at 25 percent.

Pakistan's inflation for fiscal year of 2007/08 was 12 percent.

The State Bank projected the fiscal deficit to range between 4.3 percent and 4.8 percent of GDP for the current fiscal year, compared with a target of 4.7 percent.

Fiscal deficit was 7.4 percent in the previous fiscal year.

The government hopes to achieve its target by eliminating subsidies and committing to zero net borrowing from the State Bank.

In the first quarter of fiscal year of 2008/09, fiscal deficit was 1 percent, the State Bank said.

The State Bank projected the current account deficit to be between 6.2 percent and 6.8 percent of GDP in 2008/09, compared with 8.4 percent in the previous year, when the economy was hit by a sharp rise in international oil and commodity prices and as well as some domestic shocks.

The IMF's projection for current account deficit is 6.5 percent of GDP for fiscal year ending June 30.


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## Neo

*Four million tons rice to be exported​* 
ISLAMABAD (December 06 2008): The government has set 4 million tons rice export target for the current fiscal year, and has directed Pakistan Agricultural Storage and Services Corporation (Passco) to procure paddy at the price already announced.

The decision to this effect was taken by Prime Minister Yousaf Raza Gilani in a meeting presided over by him to discuss procurement of paddy, which also decided that 100 percent payment of indicative price of paddy would be made directly to the farmers, through designated banks.

The Passco will procure one million tons paddy at the indicative price, while TCP would pick up 0.5 million tons rice through open tenders. It was decided that arrangements would be made for export of 1.5 million tons rice through TCP, out of total export target of four million tons. The entire export process would be monitored by a committee, headed by the Minister for Agriculture, Nazar Mohammad Gondal. The meeting decided that rice, which is to be picked up by TCP for export purposes, would be inspected by the Food Department of Minfal.

Earlier, the meeting was informed by Minfal Secretary that this year the production of rice crop was estimated at 6.5 million tons as compared to 5.5 million tons of last year. It was further stated that local consumption of rice is 2.5 million tons and there is a surplus of 4 million tons, which should be available for export.

The meeting was attended by Minister for Agriculture Nazar Mohammad Gondal, Advisor to PM on Finance Shaukat Tarin, Advisor to PM on Petroleum and Natural Resources Dr Asim Hussain; Minfal Secretary, Passco MD, TCP Chairman and Sughra Imam, Advisor to NRB Chairman.


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## Pk_Thunder

*Meetings by stock markets, SECP and NCCPL representatives: Chairman SECP proposes December 15 for floor removal
*​
By Tanveer Ahmed

KARACHI: A tentative date of December 15 is proposed in an important meeting to remove the stock market floor amidst a perplexing and frustrating situation for the investors in the market.

A flurry of activities was seen on Friday with a number of meetings between representatives of Securities & Exchange Commission of Pakistan (SECP), three stock exchanges i.e. Karachi, Lahore & Islamabad and National Clearing Company of Pakistan (NCCPL) were held to find a way out of the current situation, which the capital markets have been facing in the absence of market support fund.

Chairman SECP, Razi-ur-Rahman told Daily Times that he proposed to remove the floor from the stock market on December 15, 2008 in todays meeting if the concerned quarters are willing to support the market after the lifting of floor.

According to market participants main issues needed to be sorted out before the resumption of normal trading. These issues pertain to settlement of Rs 11.5 billion in CFS market and Rs 39 billion shares pledges.

About the settlement of stuck-up amount in the CFS market, a proposal to extend the rollover period from three to six months after the removal of floor is also under deliberations.

While the divergent views are prevailing on how to handle the situation, some quarters are terming the situation a force majeure and others disagree.

This is a force majeure situation, a director of KSE contended.

The emergent and unscheduled meetings speak themselves of the situation in the capital market, he added.

On other hand, Managing Director KSE, Adnan Afridi, said, I dont want to comment on this, when asked whether the situation can be termed force majeure or not. On the other hand, according to a participant of the meeting, the meeting remained inconclusive to reach any conclusion. Another meeting has been scheduled on Saturday to further deliberate on the various proposals.

The countrys capital market has been passing through its worst periods with no support in terms of financial bailout package, mainly due to rejection of IMF to extend such facility from the public money.

While the hopes faded in the absence of market stabilization fund, the stock market participants are impatiently waiting for the outcome of consecutive meetings being held at different tiers of the government to resume the normal trading in the market.

The floor was placed on August 27, 2008 to block the steep fall in the value of shares, which fell more than 40 percent from April 18 this year to the date of placement of floor.


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## Pk_Thunder

*Higher mark-up rates, double-digit inflation: Major banks to start downsizing from Jan 2009*​

By Nauman Tasleem

LAHORE: Major banks of the country are planning to downsize owing to financial crisis, decline in consumer financing and overwhelming financial burdens, the banking sources told Daily Times on Friday.

The downsizing is expected to start in the beginning of next year and the banks have planned to offer different schemes to their employees for leaving the office. Under the scheme, the employees would be paid lump sum amount before they are laid off. The scheme is for the regular employees only and the contractual employees would not have any part in the scheme.

A number of banks have already banned new hiring and are adjusting their personnel of consumer finance in other departments. However, those banks that could not adjust the employees in other departments are asking the employees to quit. Recently, a couple of banks have decreased the number of their employees. The majority of the employees who are laid off are from the consumer banking department.

"The consumer banking has suffered badly due to increase in mark-up rates as majority of banks have tightened the conditions for obtaining auto loans, home finance, personal loans and credit cards," said a banker Rana Atif Mehmood. "Some of the banks closed down their consumer financing departments while a few adjusted their employees," he informed. The banks are reluctant to issue fresh loans due to liquidity crunch while the consumers are also not interested due to higher mark-up rates along with double-digit inflation," Mehmood added.

The growth of consumer loans has shown a negative trend in 2007-08. According to State Bank of Pakistan, till June 21 2008, consumer loan remained Rs 17 billion during 10 months of FY07-08 compared to a growth of 13 percent during the same period last year. Within the consumer financing, highest share was in personal loans at 39 percent followed by car financing 30 percent, housing loans 18 percent, and credit cards at 12 percent at end April 2008.

The bankers said that since June 2008, the interest rates have been increased thereby reducing recovery, as Non-Performing Loans (NPL) have increased. The SBP report on NPL says that till September 30 2008, the NPLs increased by around Rs 20 billion. The NPLs till September 30 2008 stood at Rs 60.93 billion.

Another senior banker, while seeking anonymity, said that the banks are not going to lay off their employees in the month of December, as they have to achieve targets of maximum deposits. Banks' closings are made during the month of December and having maximum deposits is considered a positive point. "The lay off schemes would be for older people, who are no more productive for the banks," he informed. He said that majority of the employees would be from the lower ranks, however, employees from higher rank would also be asked to opt for the scheme.


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## Pk_Thunder

*French group to focus on energy efficiency in Pakistan*​

ISLAMABAD: French Development agency Group will focus on energy efficiency and renewable energy projects in Pakistan and will make investment around Euro 300 to 400 million for the next three or four years.

The Government of Pakistan (GoP) and the French Development agency Group (AFD), a state owned financial entity of Government of France, signed an agreement for establishment of AFD Group Office in Pakistan.

Farrakh Qayyum, Secretary, Economic Affairs Division on behalf of Government of Pakistan and Martha Stein-Sochas, regional Director, Asia on behalf of AFD GROUP signed the agreement.

The ambassador of France to Pakistan, Daniel Jouanneau, witnessed the occasion. According to the agreement, the AFD will have full legal capacity conferred upon it by the government of France to carry out its development activities in Pakistan. As a positive step towards strengthening of Pak-French relationship, the GoP has granted permission to the AFD and its subsidiary PROPARCO, a development finance company for the private sector, to establish their office in Pakistan to develop projects in Pakistan, which will contribute to a better management of global public goods. staff report


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## dr.umer

*Govt to use bio-technology for enhancing cotton production​*
December 06, 2008

ISLAMABAD: The Government on Saturday decided that it would facilitate the use of 
biotechnology to boost cotton production in the country.

This was stated by Federal Minister for Food, Nazar Muhammad Gondal at a meeting concerning production of seeds for growing cotton through biotechnology.

During the meeting proposals were made for enhancing production of BT cotton.

On the occasion, a representative of Monsanto  a U.S. company  offered to invest in the country for production of seeds and BT cotton.

In this regard, Gondal announced the formation of a subcommittee to finalize the modalities in connection with the joint investment with Monsanto.


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## dr.umer

*Saudi Arab, UAE to extend up to $2 bln to Pakistan​*December 06, 2008

WASHINGTON: Saudi Arabia and the United Arba Emirates plan to offer loans totaling nearly 2 billion dollars to Pakistan to help escape its ongoing financial crisis, a former IMF official said.

Mohsin Khan, the former IMF director for the Middle East and South Asia, told a small group of experts in Washington about the amounts Pakistan can expect to receive from other donors, including those from the Kingdom and UAE.

He said the IMF program has paved the way for other funds to be mobilized toward Pakistan. He said he expects to see one billion dollars from the UAE and anywhere from 500 million dollars to 1 billion from Saudi Arabia for Pakistans recovery program.


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## Neo

* Low-income group worst affected by inflation: SBP report ​* 
Unanticipated hike in global commodity rates, upward adjustment in fuel prices, rationalisation of wheat support price, pressure on wheat and wheat flour due to speculative shortages, and sharp depreciation of rupee also fuelled inflation

Sunday, December 07, 2008

KARACHI: Income group-wise distribution of inflation showed that the highest incidence of inflation was on low income groups throughout FY08 at 26.4 percent due to significant increase in food inflation which accounts as a greater proportion of their total expenditure.

In September 2008, the highest CPI inflation (YoY) of 26.4 percent was recorded for the lowest income group earning up to Rs3,000 followed by income group of Rs3,001 to Rs5m000 (25.9 percent) and income group of Rs5001 to 12,000 (24.7 percent). The highest income group of above Rs12000 experienced lowest inflation at 22.6 percent.

This was stated in the Annual Report of State Bank of Pakistan, which was issued on Saturday which further reported that the steepest hike in inflation had been witnessed in the last four months of FY08. 

It reported the hike to be the result of unanticipated strength of international commodity prices, upward adjustment in administered prices of key fuels, rationalization of wheat support price as well as pressures on prices of wheat due to speculative shortages in some parts of the country. A sharp depreciation of rupee during this period also fueled inflationary expectations in the economy. 

The strength in inflation during the first eight months of FY08 (Jul-Feb) was mainly driven by domestic food inflation as a result of strong demand pressures, high global commodity prices and domestic market imperfections, the SBP report said.

This increase in domestic inflation was exhibited by all price indices: annual average of CPI, WPI, SPI and GDP deflator. While food inflation is primarily responsible for surge in CPI and SPI, acceleration in WPI is equally contributed by both food and non-food inflation.

Consumer Price Index (CPI): After showing fluctuations during the first eight months of FY08, CPI inflation witnessed a steep rise to reach 25.3 percent in August 2008 before it dropped to 23.9 percent in September 2008, the publication stated.

This sharp rise in headline inflation during the later months of FY08 was mainly driven by food inflation. CPI food inflation increased almost four times in August 2008 from 8.6 percent in August 2007. 

In addition, second round effects of persistent high food inflation on various consumer goods and impacts of exchange rate depreciation are also evident in education,

Medicare, recreation & entertainment, cleaning, laundry & personal appearance sub-groups. 

While CPI food inflation showed persistence in FY07, it witnessed a sharp acceleration throughout FY08. CPI food inflation recorded annualized growth of 17.6 percent in FY08 compared to 10.3 percent during FY07.

CPI non-food inflation, which was quite benign in H1-FY08, accelerated in H2-FY08, and reached19.2 percent on YoY basis during September 2008 compared to 5.0 percent during the corresponding month last year. 

All sub-groups of non-food group recorded higher inflation in FY08 as compared to FY07. However, the major contributors in recent upsurge of non-food inflation are transport & communication, house rent index, cleaning, laundry & personal appearance and fuel & lighting subgroups reflecting the impact of high international commodity prices and pass through of high global oil prices to domestic prices of key fuels during H2-FY08 

Wholesale Price Index (WPI): Inflation measured by Wholesale Price Index (WPI) remained persistently high throughout FY08 principally driven by rising international commodity prices. WPI registered annualized (12-month moving average) inflation of 23.1 percent in September 2008 compared to 7.0 percent in September 2007. 

The SBP report said that within the non-food group of WPI, the fuel, lighting and lubricants sub-group was the major contributor in inflationary pressures. Inflation registered by this sub-group reached 52.0 percent in September 2008 compared to only 6.4 percent in the corresponding month last year. 

This steep rise is largely on account of high crude oil prices in the international markets that directly affected the wholesale prices of coke, furnace oil and Mobil oil in the domestic market. 

Sensitive Price Indicator (SPI): Weekly SPI inflation (YoY) increased considerably from 7.7 percent in the last week of FY07 to 29.8 percent by the last week of September 2008. In particular, the weekly SPI inflation (YoY) increased significantly from March 2008 to mid-May 2008. 

This uptrend in SPI inflation reflects the rising food prices as almost 60 percent of items included in the SPI basket are from the food group. The last few weeks of FY08 saw a relative stability in SPI inflation around 26 percent mark reflecting relative ease in inflation recorded by important kitchen items like tomatoes and pulse moong. 

The SBP report also mentioned that given the severity of the situation and to mute the second round impact of sustained high food inflation, the central bank tightened monetary policy during May 2008 through unusual interim monetary policy measures. In addition, rising external imbalances and pressures on domestic currency also compelled SBP to raise its key policy rate further in July 2008.

As a result of tight monetary stance, inflationary pressures are likely to ease in the second half of FY09, assuming no further adjustment in administered fuel and utility prices, as well as a continued down trend in international commodity prices, it further reported.


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## Neo

*Industrial growth hit 6-year low in 2007-08: SBP ​* 
*Manufacturing sector's growth declined for third consecutive year mainly due to energy, capacity and input constraints​*
Sunday, December 07, 2008

KARACHI: Growth in manufacturing sector of country has declined for the third consecutive year and posted a sixth year low growth rate in the fiscal year 2007-08. Most of the decline was seen in the Large Scale Manufacturing (LSM) while Small Scale Manufacturing (SSM) decelerated nominally, Annual Report of State Bank of Pakistan (SBP) for fiscal year 2007-08 revealed. 

SBP report says poor performance of LSM in year FY07-08 has been owing to the structural weaknesses in the economy.

Top three impediments that hit the manufacturing sector are energy constraints, capacity constraints and input constraints. 

Undoubtedly, the foremost concern is the present energy crisis that has seriously stifled the manufacturing activities in the country. In fact, growth in energy supply could not keep pace with the rising demand due to sharp increase in manufacturing activities in recent years.

Energy deprivation not only makes a high industrial growth in the long-term unsustainable, but it also increases the import burden on the economy.

Long power outages hit the industries which obviously affect production targets and similarly, this disturbed export targets of all export based industries. 

Input cost had been increasing throughout the fiscal year in which high oil and power costs played a big role. 

The domestic industrial sector muddled through a mix of major economic, political and structural setbacks throughout FY07-08. While the aggregate demand had already seen some relative moderation in the preceding year, rising fuel and commodity prices and intensifying energy shortages in the country further obstructed FY07-08 industrial activities.

Sectors that rely more on agro-based inputs observe quite a volatile growth pattern. Specifically, the four year low cotton harvest in FY07-08 was the sharpest blow not only to textiles growth but for the entire LSM growth during the year. 

The above assessment stems from the fact that 80 percent of textile production is export based and the 60 percent growth in textile exports of Pakistan is explained by domestic cotton production.


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## Neo

*'Pak investors lose billions in Dubai real estate downturn' ​* 
Sunday, December 07, 2008

ISLAMABAD: Pakistan Economy Watch on Saturday said a host of Pakistani businessmen have lost billions of dollars of investments in speculator-oriented Dubai real estate property downturn.

"Those who lured Pakistanis by showing them golden dreams of rich returns by investing in the oil-poor emirates have walked away silently, leaving the Pakistani businessmen in the lurch. These include salesmen, so-called developers, intermediaries and bankers, etc who must be brought to book," said a report issued by the Pakistan Economy Watch.

The report, titled "Overseas Risk Report", added that the shares of top property giants in Dubai have fallen as much as 85 per cent bringing many mega projects to a halt. "Many local and foreign companies have opted for mergers to avoid bankruptcy. 

The giants are cutting expenses, plans and number of employees," the report added.

It said the losses in the realty sector were roughly equal to that of the GDP of Dubai. The government of United Arab Emirates UAE) is pumping billions to avoid the failure and $30 billion have been pumped in to the banking system and selling of some highly acclaimed assets is under serious consideration.

Dubai is facing losses to the tune of hundreds of billions of dollars and risk of defaults. The situation has resulted in stock exchange crash, dried up credit and shaky wealth funds. Banks have minimised limit of credit cards and mulling their ability for foreclosures.

"UAE has already lost $100 billion in the global crunch and it has $500 billion of assets," said Dr Murtaza Mughal, President Economy Watch said while unveiling the report, adding that it was already under stress due to some 60 per cent slide in oil prices.

The plans to make Dubai a hub of financial activities may not realise as attempts for unnatural growth result in such a situation, he added.


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## Neo

*Country will exceed Rs22bn export target: TDAP ​* 
Sunday, December 07, 2008

KARACHI: Head of Pakistan's top trade development body has said that the country was going to surpass its export target of $22 billion this year as the data of first four months of the fiscal year had posted an increase of 20 per cent. "We are on track, we will surpass the export target," he said.

Syed Mohibullah Shah, chief executive, Trade Development Authority of Pakistan (TDAP) while addressing a press conference at the conference room of the Finance and Trade Centre, said that TDAP had been restructured after consultation with the trade bodies and chambers for five months and a target has been set to double the exports in the next five years.

Shah said TDAP developed a new export strategy (NES) to increase the production of the value added products and boost exports. He said Pakistan's exports had increased by 11 per cent over the last six years from 2002 to 2008, but they created a plan to increase it by 20 per cent for the next five years.

He said textile and clothing recorded around 55 to 60 per cent of total exports with a share of $12 billion, because it changed raw cotton into value added goods after using investments, technology and skills. Other agro based products would also bring huge wealth if these three areas were addressed.

Shah said Pakistan's economy was usually agro-based but there was not much production beyond the basic achievements of the crops.

Pakistan was the fourth largest producer of cotton, fourth largest milk producer, sixth largest producer of wheat, twentieth largest producer of meat, third largest in mango production, fourth in dates, but the unavailability of value added goods had kept it behind.

Citing the example of Thailand, Shah said the place did not produce wheat or corn but was a leading producer of pasta, contrary to which, Pakistan was the sixth largest produce of wheat in the world but it had ranked sixtieth in number in pasta production.

Similarly, Halal food was a market of $158 billion but Pakistan had no share in it. "We are good enough at the basics, but not at processing," he said.

He said mainly four sectors; agro-food, textile and clothing, minerals and services had the potential to earn $5-6 billion each in the next five years. Chief executive TDA said that the industrial revolution that arrived in Europe 200 years ago was only seen in one textile sector in Pakistan.

TDAP, in search of new market for the exporters, had divided its divisions in to three categories; Asia, Europe & Americas, and Africa to focus its energies and resources on how best to utilise the opportunities offered by these markets for increasing exports in the constantly evolving external environment. Asia would be the main market for Pakistan, Shah said.

He said Pakistani exporters, small, medium as well as large, were the centre of TDAP's New Export Strategy. TDAP has set up for the first time, a facilitation division, devoted towards helping exporters in availing the opportunities as well as in the removal of obstacles in expansion of the country's exports.

TDAP chief said there were several barriers for a newcomer in the field of trade and investment, including but not limited to, difficulty in getting loans, concession in taxation and subsidies, and collection of data and information. TDA would work to minimise all the barriers, he said.


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## Neo

*Tareen optimistic about $2.5bn financial assistance​*
ISLAMABAD: Adviser to the Prime Minister on Finance, Revenues and Economic Affairs, Shaukat Tareen has expressed the hope that Pakistan would get $2.5 billion assistance in addition to the International Monetary Fund (IMF) financial package within the next two or three months. He also denied the reports regarding the abandonment of the market fund. 

Tareen said that the entire plan of constituting market support fund has not been scrapped. 

He added the government would ensure that no extra-ordinary pressure should be there on our small investors. 

"So, the impression is wrong that formation of market support fund has been abandoned," he remarked. 

"We should hope that we would fulfill our promises to get the economy out of crisis," he added. Replying to a question, he said that the value of the rupee will strengthen now and it will take 18-month. "We have a significant margin and interest rate will not be increased, However, interest rated will be increases if our inflation shoots up, which I think will not happen," he remarked. 

He expressed the hope there will be no need to further increase interest rate and the already increase of 2 percent will be sufficient. 

The Adviser hoped that the headline inflation would start decreasing from its present level of 25 percent and core inflation, which is 18.5 percent would also come down, an ease in the monetary policy will start taking place between first and second quarter of next month. "We have to ease the monetary policy to increase growth. We hope that an amount of $800 million would start coming from the Asian Development Bank and the World Bank soon," he remarked. China, he said, is also contributing $500 million, we will also take some specific pledges at the 'friends of Pakistan' forum which will be convened in the mid of next month in New York. 

He hoped that $2.5 billion assistance in addition to the IMF will come in the country within next two or three months. 

"Our import bill has decreased to more than half as compared to the level when the oil prices were $147 per barrel. So, the decline of oil will cast pleasant effect on the economy," he remarked. 

He said that government is also passing the benefits of decline in oil prices to the masses. "It is a blessing on us that price of oil is decreasing and today price reached below $40 per barrel. We will also hope that performance of PEPCO and DISCOs will increase." "If oil prices remain at this level, I hope there will be no significant increase in electricity prices," he added. app


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## Neo

*GDP growth revised down to 3.5-4.5 percent​*
** State Bank of Pakistan report says inflation to remain near 
* 20 percent remittances may fall short of expectations​*
KARACHI: The State Bank of Pakistan (SBP) has revised its forecasted GDP growth in 2008-09 from 5.5 percent to 3.5-4.5 percent. 

Real GDP growth is likely to fall well below the initial target level for Fiscal Year 2008-09, said the SBP in its annual report for 2007-08 released on Saturday.

It has revised upwards the average CPI inflation projection from 11 percent to 20-22 percent. The SBP said in its outlook for the economy that it expects the fiscal deficit to be in the range of 4.3-4.8 percent of GDP and current account deficit to be in the range of 6.2-6.8 percent of GDP. It said the expatriate Pakistanis remittances this fiscal year were likely to be $7.5 billion, slightly lower than the earlier projection of $7.7 billion. The central bank said it expects exports of $21.5-23 billion during the year and $35.5-36 billion worth of imports. 

Headline inflation is likely to accelerate above 20 percent during Fiscal Year 2008-09, before witnessing a fall, said the SBP. Expectations of a deceleration in inflation later this fiscal year are contingent on a weakening of domestic demand (as an impact of recent demand management measures percolates through the economy), improved domestic production in response to market price signals as well as some ease in international commodity prices as the global economy slows. 

As the decline in international commodity prices reflects the expectation of substantial economic slowdown in key exports markets, there is a risk that the overall trade deficit may not shrink as sharply as anticipated, the State Bank said. If exports weaken substantially, and/or remittances from the weakening economies (eg the US) slow, the overall external current account deficit could widen, said the report. 

The State Bank said that the urgency for macroeconomic stabilisation is now evident throughout the economy, which has been severely buffeted by the concurrent unfolding of several adverse developments, particularly through second half of last fiscal year, and into the initial months of this fiscal year.


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*Industrial zones to be set up in Gwadar, Bostan: minister​*
QUETTA, Dec 6: Minister of State for Production and Industries Hayatullah Durrani has said that small industrial zones will be set up in Gwadar and Bostan area of the Pishin district to create employment opportunities.

Talking to reporters at the press club on Saturday, he said unemployment and poverty were affecting people in Balochistan and other parts of the country and private investment could play a vital role in stabilising the economy. He said the government would launch a programme in the two industrial zones shortly. He asked the local Baloch and Pakhtun businessmen to invest in Gwadar and Bostan areas to encourage private investment.

Referring to the Indian charges that Pakistan was involved in the Mumbai terrorist attacks, Mr Durrani said Pakistan was fighting this menace with all its resources and, therefore, it cannot simply tolerate terrorism in any country.

In reply to a question regarding recent violence in Karachi, he said cooperation and mutual understanding between different political groups could help thwart the motives of criminals. He said the reconciliatory policy of President Asif Ali Zardari was aimed to bring together all political forces to curb violence in Karachi and other parts of the country.

Mr Durrani dispelled the impression that Prime Minister Yousuf Raza Gilani was powerless and President Zardari took all important decision. He said the prime minister enjoyed all powers he had under the Constitution. However, he added, Mr Gilani consulted Mr Zardari on political issues in capacity as the co-chairman of the PPP.


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*Stop or curb borrowing from SBP: Shamshad​*
KARACHI, Dec 6: State Bank of Pakistan Governor Dr Shamshad Akhtar on Saturday suggested either stop altogether or effectively curb the governments unlimited borrowing from the central bank by amending the SBP Act, 1956 and Fiscal Responsibility and Debt Limitation (FRDL) Act, 2005.

Unlike many countries, there is no prescribed limit on government borrowings from the SBP, she declared in her keynote address on Saturday before a gathering of top businessmen, business professionals, scholars and faculty and students of Institute of Business Management on its 11th convocation in which 698 graduates were given degrees.

Her point was that the government borrowing from central bank is highly inflationary and that it complicates liquidity management, which pleaded a legal curb to stop this altogether or limit it.

She vehemently defended her monetary tightening policy, which she called an inevitable policy response for regaining macroeconomic stability. But she readily conceded of arousing public anxiety but made passionate plea of better public understanding.

Dr Shamshad read out a lengthy speech quoting from authorities in economic literature from Pakistan and other countries, who advocated price stability measures and how monetary policy framework operates to achieve this objective before giving her perception of Pakistan economic environment.

Effectiveness of monetary and fiscal coordination would be helpful, she stressed while pointing out provisions incorporated in the SBP amendments of 1994 and formation of a Monetary and Fiscal Policies Board in 1994 with a provision of quarterly meeting. It has been less than satisfactory, she told her audience that included a retired deputy governor of SBP, who recently pointed out in an article that SBP law has effective safeguards to stop government from excessive borrowing.

She informed that sequencing of economy wide projections is done in isolation of budget and monetary policy making process.

The SBP governor questioned the quality of the information, data and reporting of various government agencies that inhibits accurate analysis for development and framing of policies.

Unlike many developed and developing countries, data on quarterly GDP, employment and wages in Pakistan is not available, she said.

She also complained of considerable time lag in availability of information on government expenditure and revenue, output of large-scale manufacturing and crop estimates. This constraints an in-depth analysis of current economic situation and evolving trends and hinders ability of the SBP to develop a forward looking policy stance.

She also spoke on exchange rate management referring to a general perception that SBP is bound to keep the exchange rate at some pre-defined level. It is impossible to pursue an independent monetary and exchange rates policy as well as allowing capital to move out freely across the border, the SBP governor made it clear.

She said that SBPs responsibility was to ensure an environment where foreign exchange flows are driven by economic fundaments and are not misguided by rent seeking speculation.

Mr Ashraf W. Tabani, a senior businessman and a former governor of Sindh, who is chancellor of the Institute of Business Management, in his brief address said that the graduates should equip themselves with adequate knowledge to face the challenges, which are far more difficult than normal times because of the global and economic crisis.

Mr Shahjehan Karim, the IoBM president in his address informed that there were now more than 3,500 students in their colleges. In 1995, there were only 98 students on roll. Out of 1,100 MBAs, who graduated from IoBM since 1998 an overwhelming majority occupy senior and key positions in national and multinational business houses.

Sindh Governor Dr Ishratul Ibad in his brief remarks congratulated the successful graduates, faculty member and parents.


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*Agriculture expands by just 1.5pc in 2007-08: Poor resource management​*
KARACHI, Dec 6: The State Bank of Pakistan has said that failure in large crops production was mainly because of resource management issues and the absence of a clear pricing policy, which resulted in record low 1.5 per cent agriculture growth in 2007-08.

The SBP issued its annual report on Saturday with detailed comments and analysis of the economic performance of the previous fiscal year.

A number of adverse developments hit agriculture sector to record a dismal 1.5 per cent growth during the year under review, which is significantly lower than the 4.8 per cent target for the year and the lowest growth since FY03.

A weaker output by major crops overshadowed the record sugarcane harvest and relatively improved performance of minor crops; livestock and fishing sub-sectors during FY08, said the report.

A disappointing performance of major crops sub-sector is largely attributed to resource management issues and absence of a clear pricing policy. For instance, reduction in cultivated area under cotton, rice and wheat was a result of water shortages at the sowing time.

Delays in harvesting of cotton and sugarcane (mainly due to pricing issues), and lack of clear incentive signals (as the government could not announce its pricing policy before sowing) also resulted in area deficit for wheat crop. In addition, stubbornly high prices of fertilisers and pesticides also drained farmers to use appropriate agri-inputs; resulting in depressed yields by most of the major crops.

The agriculture sector, however, benefited from continued support through strong growth of institutional credit. A significant 25.3 per cent rise in farm credit during FY08 helped farmers to partly compensate the impact of high fertiliser prices, said the report.

Despite setback in major crops, prevailing high prices of agricultural commodities suggest that to enhance earning potential of the farmers Pakistan should focus on modernising agriculture sector with greater emphasis on crop diversification and its value chains.

Crop diversification experiments in major agriculture producing countries, for instance crops for bio-fuel, suggest that Pakistan could also benefit from favourable global prices, said the report.

Improved performance of fisheries sector in FY08, owed to both marine and inland fish catch, due to higher prices in domestic as well as international markets.

This growth is remarkable as better feed and management for inland fishing offset the negative impact of water levels in reservoirs and rivers during the year, said the report.

Fish production from marine also recovered well in FY08 and posted a respectable growth of 10.5 per cent as against 7.1 per cent decline in FY07.

Pakistan needs to improve hygiene and environmental conditions in handling fish and its products to increase its share in EU and Japanese markets, the report suggested.

Value addition by forestry sub-sector declined for the fifth year in a row, said the SBP report.

This continued disappointing performance is mainly due to massive deforestation - unabated cutting of trees and forests -- as well as poor law and order situation in Northern Areas.

As a result, timber and fire wood production from forests fell to the lowest level of 280 thousand cubic meters.

It is interesting to note that production of timber increased with the rise in area under forests until FY03. Since then, area has increased by 4 per cent, but production fell by a massive 66 per cent, said the report.

The major reason of this decline is probably poor law and order situation coupled with strong local demand from FY06 onwards due to massive reconstruction after October 2005 earthquake in affected areas. The report said that a gradual increase in the area under forest during last few years is likely to start paying dividends in the years to come. Therefore, a strong recovery is possible in forestry in coming years.


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*SBP releases annual report 2007-08: working capital, trade loans show increase while bank advances to equity market depict decline ​* 
KARACHI (December 07 2008): Review of the Economy: Both working capital and trade loans showed an increase while fixed investment loans and bank advances to the equity market demonstrated a decline in the last financial year, says the State Bank of Pakistan in its annual appraisal of the economy in financial year 2007-08. The document was issued Saturday, after a delay of five months.

The SBP said that a traditional feature of the credit cycle is a decline in net credit expansion during the second half of the fiscal year. But in FY-08, the trend was absent due to rising cost of inputs required for increasing exports on the back of a depreciating rupee.

The slowdown in advances under fixed investment loans in FY-08 was expected as expansion of cement plants, textile mills and construction expansion was materialising. However, swap of advances with locally issued debt instruments such as TFCs and sukuk further accentuated the sharp fall to 7.8 percent in FY-08 as against 25.6 percent growth in the previous year.

On the other hand, trade loans after recording a deceleration for two consecutive years depicted a growth of 29.7 percent during FY-08. On the import side, the growth was visible in manufacturing, commerce, trade and power sector. Trend in export finance suggests, says the report, that loans under EFS recorded a growth of 7-9 percent.

Growth in consumers loans for the second consecutive year, says SBP, decelerated and a modest growth of 3.1 percent in FY-08 was recorded. This deceleration in consumer loans together with a rise in gross NPLs in the category led to a sharp rise.

The slowdown was most visible in auto finance in absolute terms. Higher interest cost and increase in domestic prices of cars added to the pressure. Mortgage finance also slowed down significantly as outright purchases went up, said SBP. Monetary indicators: Rising inflationary pressure and growing competition from non-banks has led to a diminishing role of banks in financial intermediation in relative terms, says SBP.

Consequently, currency to deposit ratio increased in FY-08, after witnessing a falling trend since FY-03. Even though the overall growth in deposits decelerated, foreign currency deposits went up due to weakening of rupee against major currencies in FY-08, says SBP. Dollarisation of the economy is evident from the rising share of FCD in M2.

Due to slowdown in deposit growth and strong demand for credit to deposit ratio of banks - a crude indicator of liquidity comfort with the banks - increased from end January 2007 of 79.6 percent to 82.3 percent at end June, 2008.

SBP says bankwise analysis shows that out of 36 banks, 28 are well capitalised maintaining capital adequacy ratio (CAR) of over 10 percent. Two banks have seen their CAR fall below eight percent due to poor asset quality (advances) and low profits.

Banking spread: During FY-08, says SBP, the return on deposits improved by 120 basis points, whereas the rise in lending rates was limited by 63 bps. Consequently, banking spreads declined by 57 bps - the biggest cut in the preceding three years. The spread is more visible (102 bps) when non-remunerative deposits are included, the report adds. However, bank-wise analysis shows that while local private banks have posted the largest fall in spread, interest margin charged by foreign banks has actually increased. Twenty commercial banks experienced narrowing of spreads, 15 banks recorded a rise in their margins, the report concluded.


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*All major economic targets missed ​* 
KARACHI (December 07 2008): A four-year economic growth got disturbed, as the country has missed all major economic targets, including GDP, budgetary deficit, investment, agriculture, manufacturing, inflation, broad money growth, tax revenue, etc, during FY08 with domestic and external shocks being the main reasons.

While the central bank has predicted that during the current fiscal year, the country also has to miss it GDP growth target by 1-2 percent to 3.5-4.5 percent, which would be lowest since FY03.

According to the Central Bank's Annual Report on Economy for the fiscal year 2007-08, the country has missed its GDP growth with some 1.2 percent to 5.8 percent in FY08 well below the target of 7.2 percent due to a combination of domestic shocks such as energy shortages, some disappointing crop harvests, rising political uncertainty and external factors, which comprise a rise in international commodity prices and lower capital inflows.

Energy shortages, capacity and input constraints and political disruption have also impacted industrial sector performance. Similarly, critical water shortages at sowing time, incidence of viral attacks, and a disproportionate rise in fertiliser prices, etc, weakened the performance of major crops. As a result, the contribution of commodity producing sector to overall GDP growth in FY08 was the lowest in the last six years.

An important contributor to the slowdown in GDP growth was the weak investment demand in the country; reflecting investors' cautious response to political uncertainty, law and order situation and inflation expectations.

Agriculture sector growth fell to record low of 1.5 percent during FY08, which is significantly lower than the 4.8 percent target for the year, as well as, the lowest growth since FY03.

Shortfalls in wheat and cotton output overshadowed the record sugarcane harvest and relatively improved performance of minor crops, livestock and fishing sub-sectors during FY08. Major crops sub-sector performance was disappointing because of issues surrounding resource management and pricing policy for crops.

Growth in agriculture credit disbursements rose to Rs 211.6 billion in FY08, up by 25.4 percent. The domestic private banks fared well in both, disbursements and recoveries, while specialised banks could not maintain their market share.

Manufacturing sector growth continued to decline for the third consecutive year and posted the lowest growth in six years during FY08. Most of the slowdown was seen in large scale manufacturing (LSM), as growth in small scale manufacturing decelerated only slightly.

The industrial sector suffered a mix of economic, political and structural setbacks throughout FY08. Rising fuel and raw material prices and intensifying energy shortages in the country obstructed industrial activities in FY08. While, the heightened political uncertainty and law & order issues during the year also took their toll. The provisional estimates place the FY08 industrial growth at 4.6 percent compared with 8.0 percent in FY07.

The services sector showed above-target growth for the sixth time during the last seven years. The sector grew by 8.2 percent in FY08, significantly higher than the 7.2 percent annual target for the year, as well as the 7.6 percent growth seen in FY07. The resilience exhibited by the services sector helped keep GDP growth to a respectable level by contributing about three-fourth of the total value addition during FY08.

Inflationary pressures in the economy remained strong throughout FY08. All price indicators, including CPI, WPI, SPI and the GDP deflator, showed strengthening of inflation during the period mainly driven by domestic food inflation backed by strong aggregate demand pressures, high global commodity prices and domestic market imperfections.

A sharp depreciation of the rupee during this period also fuelled inflationary expectations in the economy, pushing inflation to levels not seen in the last three decades.

Consumer price index stood at 12 percent during FY08 as compared to the target of some 6 percent, some 100 percent over the target. In addition, broad money (M2) growth stood at 15.4 percent against the target of 13.5 percent, while reserve money growth reached at 21.6 percent.

During FY08, government borrowed Rs 688.7 billion from the SBP for budgetary support, instead of the net retirement recommended in the SBP's Monetary Policy Statement. The widening fiscal deficit coupled with the rising international commodity prices contributed to dramatic worsening of the external account position of the country. Resultantly, the current account deficit for FY08 jumped abruptly to 8.4 percent of the GDP in FY08 from 4.8 percent deficit in FY07.

Despite continued monetary tightening, growth in private sector credit gathered momentum after January 2008 and remained at 16.5 percent for FY08 - slightly lower than 17.3 percent rise witnessed in the previous year.

Fiscal deficit in FY08 reached 7.4 percent of GDP, a level not observed since FY99, against the budget target of 4.0 percent of GDP for the year and compared to 4.3 percent of GDP witnessed in the preceding year.

After consistent improvement from FY01 to FY07, Pakistan's debt position deteriorated sharply in FY08. The stock of Pakistan's total debt and liabilities (TDL) increased by 26.9 percent YoY to Rs 6,417.4 billion. In particular, the ratio of TDL to GDP, a broad measure of the country's capacity to sustain debt, saw an end to a seven-year declining trend, rising in FY08 to 60.1 percent.

During the last fiscal year, the only factor that provided some respite was the continued rise in workers' remittances, which increased by 17.4 percent during FY08.

On the financing side, as the global financial crisis unfolded in FY08, and the country risk perception was heightened by domestic political developments; the country's ability to tap international capital markets was severely impaired, the report said.

Planned privatisation transactions had to be deferred, sovereign debt issues postponed, and portfolio investment plunged. The fall in capital inflows also resulted in drawdown of foreign exchange reserves and mounting pressure on exchange rate during the period.

Trade deficit widened for the sixth consecutive year reaching unprecedented level of 20.7 billion dollars during FY08. The exceptional surge in the deficit is attributed to a sharp rise in imports, which overshadowed a yet sound growth in exports during this period. Overall exports posted a strong recovery, reaching all time high of 19.2 billion dollars, slightly above the annual export target set for FY08.

Pakistan being the sixth most populous country of the world has been trying to check its population growth rate, which has declined to 1.8 percent in 2008 from 2.1 percent in 2000. During the last fiscal year investment target was some 23.8 percent of GDP, however, it was not achieved and investment stood at 21.6 percent of GDP.

The national savings stood at 13.9 percent of GDP against target of 18.8 percent. The country has also missed its tax revenue target by some 0.2 percent and tax revenue stood at 110 percent of GDP as compared to target of 10.2 percent. Budgetary deficit target was fixed at 4.2 percent, while it reached 7.4 percent by the end of FY08 and budgetary expenditures mounted to 21.7 percent of GDP over the target of 17.5 percent.


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*Value-added textiles, emerging exports: IMF agrees to conditional R&D support ​* 
ISLAMABAD (December 07 2008): The International Monetary Fund (IMF) is reported to have agreed with the government to continue research and development (R&D) support to only the value-added textiles and emerging exports, sources in Finance Ministry told Business Recorder.

The two-year IMF sponsored stabilisation program comprises a home-grown package with emphasis on a strong social protection program to minimise the impact of lower growth on poverty. It underscores mobilisation of domestic resources, social protection, effective/efficient delivery and sustainable development strategy.

Fiscal policy under the program envisaged economy in current expenditure, raising the tax-to-GDP ratio and cut in PSDP through prioritisation. The measures in the monetary field included 2 percent increase in SBP discount rate/NSS rate of return and incentivised credit to priority sectors.

The stabilisation program was designed to yield GDP growth ratio of 4.4 percent in 2008-09 and 5.1 percent in 2009-10; fiscal deficit of 4.5 percent and 4 percent of GDP in 2008-09 and 2009-10; current account deficit of 5.5 percent and 4.4 percent of GDP in 2008-09 and 2009-10; and inflation at 22 percent and 16.5/percent in 2008-09 and 2009-10. Prime Minister's Advisor on Finance, Shaukat Tarin, has already hinted at devaluation of rupee which, according to him, is 7-8 percent over-valued.

The Cabinet was informed on November 19 that Economic Advisory Council (EAC) was focused on 9 areas, viz macro-economic stabilisation, social protection, agriculture, industrial competitiveness, human resource development, energy, capital markets, public-private partnerships, and administrative reforms.

For effective and target-oriented implementation of the suggested medium-term plan, and other strategic development plans, emphasis was placed on institutional framework in the form of a supra-governmental body/authority in the Planning Commission. The plan would be implemented in 6 quarters (18 months), rolling forward, and its progress would be regularly monitored at different fora. Key objectives for each of the 9 points of agenda were explained as follows:

i. Macro-economic stabilisation would be achieved through restraining inflation below 10 percent, containing current account deficit, building forex reserves, stabilising rupee, breaking circular debt logjam, improving tax-to-GDP ratio to 15 percent, enhancing level of domestic saving to 3-5 percent of GDP, lowering public debt-to-GDP ratio to less than 40-45 percent, and limiting throw-forward of PSDP.

ii. Social safety net would be vital to protect the vulnerable population from the immediate effects of these measures to achieve macro-economic stability. Extension of outreach of Benazir income support programme (BISP) to 7 million vulnerable households, improved transparency and extension of the safety net to health and employment sectors would be the salient features of the program.

iii. Agriculture would act as engine of growth and social transformation. It would generate food security, provide income security for farmers and build large exportable surpluses.

iv. Industrial competitiveness would be targeted through improved energy supplies, special industrial zones/ special economic zones, enhanced market access (Saarc, EU), consolidation of local industry and development of viable small and medium enterprises sector. Practical measures were identified to pursue these targets.

v. Human resource development, the key to long-term growth, would be focused through such objectives as skill development, extensive quality education and improved health. Greater co-ordination between the Centre and the provinces was emphasised because these were provincial subjects.

vi. Energy deficit would be effectively managed through conservation alongside upgraded operational capacity and exploration/production activities. Optimal energy mix of hydel, coal, wind, solar and nuclear was emphasised.

vii. Capital markets would be energised through developing corporate bond market, restructuring and re-invigorating equity markets and improving regulatory oversight. In this context, the government borrowing calendar for Pakistan Investment Bonds (PIBs), de-mutualization of stock exchanges and restructuring of National Saving Schemes (NSS) were highlighted.

viii. Public-private partnerships (PPP) would be leveraged to lessen the budgetary burden of PSDP. Projects best suited would be identified and at least 20 percent of PSDP projects would be converted to PPP model.

ix. Administrative reform was exigent to develop Pakistan to its potential. It was proposed to make the government the employer of choice, rationalise institutional setup, improve service delivery and introduce transparency. Sources said that the Finance Ministry and Planning Commission would implement the 9-point agenda in letter and spirit.


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*Five-year plan: TDAP sets forth strategy to double exports ​* 
KARACHI (December 07 2008): Chief Executive of Trade Development Authority of Pakistan (TDAP), Syed Mohibullah Shah on Saturday set forth the New Export Strategy (NES) under the restructuring plan to double the country's exports within next five years.

Speaking at a press conference at the TDAP office, he said that the country's exports during the last six years have grown up by 11 percent a year, but now the authority intends to raise it by 20 percent a year.

He said that there are four major potential sectors, which need a prime focus from the authority to be developed for achieving the set target of 20 percent annual export growth. They are agro-food sector, textile and clothing sector, mineral sector and human resource sector.

The authority will exert efforts on transforming these comparative export sectors into competitive ones to succeed the NES. Those sector having comparative advantages will be more focused and to build them, authority plans to attract investment, technology and skilled human resource, he said.

A facilitation division has also been established to help the exporters and remove hurdles no matter of their financial or business status. The services division is aimed to expedite in other markets for the provision of services, as Asian markets will be the primary targets.

Three marketing divisions have been set up, for Asia, Europe and America to increase the country's export sharing there. The human resource, finance and administration division has been assigned to provide quality human resource, finance and administrative support.

Shah said that the country's exports of textile and clothing constitute 55 to 60 percent of the total exports, which stands at 12 billion dollars a year. Production of textile and clothing are primarily indebted to the agro product - cotton which is shaped into weaving, clothing, denim, knitwear, towel, etc., while these products can be made through other agriculture sources. "But there is a need of applying technology, investment and skilled labour to all other sectors which have not properly been exploited for one or another reason," CE TDAP said.

He said that there is a need of agro food processing to increase the exports of products like dates, mango, pasta etc., and these products can earn five to six billion dollars through exports.

In the context of food, Shah further said that Pakistan being a major meat producer has no share in the 150 billion dollars of world export of Halal meat as there is a huge market in the world, which can help the country to win a major chunk of meat export.

Mineral sector is also important for Pakistan's export growth, he said, adding that it should be exploited with a proper use of technology and investment. Damage of marbles, and other precious stones during exploration can also be minimised, he added.

He said that human resource development is necessary to be exported. There is a greater opportunity for Pakistan to capitalise on the world's increasing demand for the skilled labour.

TDAP has also to understand the changing mood of the world markets to form better plans for succeeding the NES. To a question, he said that all stakeholders have been taken on board during the NES formation, which took four months to complete. He asserted that the country will surpass the fiscal exports target of 22 billion dollars, as during the last four months exports have risen by 21 percent.


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*PRSP-II to be finalised by December end ​*
ISLAMABAD (December 07 2008): The government is all set to finalise the Poverty Reduction Strategy Paper (PRSP)-II by the end of this month with an aim to devise a medium term policy matrix (2008-2011) to steer the country on path of sustained and broad based economic growth besides reducing poverty.

The draft of the PRSP-II has already been prepared and the government is engaged in consultations with the stakeholders to make it more comprehensive and result-oriented before finalisation. The 10 pillar PRSP-II ranges from microeconomic stability to poverty reduction and administrative reforms.

According to the document, the government intends to bring macroeconomic stability through cutting down the fiscal and trade deficits, strengthening debt management, raise tax to GDP ratio, expenditure control and tighten monetary policy.

It would protect the poor and vulnerable through the provision of safety net by supporting seven million households through Benazir Income Support Programme. In addition beneficiaries of Pakistan Bait-ul-Mal would also be increased to 2.2 million.

The government would also support the vulnerable through People's Rozgar Programme, People's Workers Programme, Low Cost Housing scheme and provision of Sasti Roti. The document envisages increasing productivity and value addition of agriculture to cater domestic needs and enhance exports.

For enhancing the quality production, the farmers could benefit from various schemes including crop insurance plan, special programme for food security, facilitation unit, agribusiness development and diversification project and livestock and poultry projects.

One of the pillars of the PRSP-II is to launch integrated energy development plan to ensure adequate supplies of energy to meet the growth needs of the economy by utilising hydel and coal reserves besides exploring gas and oil potentials.

The poverty strategy envisage to make industry internationally competitive by removing all distortions cause by traffic anomalies, inefficient provision of utilities, excessive of unnecessary regulation, complicated procedures for clearance and multitude of laws and regulation that sap industrial energies and add to the cost of doing business.

It wants human development for 21 century for which the government would develop an educated and healthy population base through investing in these sectors. According to the document, the government would also remove infrastructure bottlenecks through Public Private Partnership.

It would develop a mechanism and make its use to eliminate all bottlenecks in key infrastructure needs to support a growing economy. Special focus would be given in building highways, motorways, ports, airports, water reservoirs, railways, housing, and supply and transmission of electricity.

A system of finance and capital would be developed to mobilise development resources from the broadest set of savers and efficiently channel it to industry, agriculture and other sectors through a wide range of equity and debt instruments. The government would also ensure housing and land management to ensure that all assets are fully titled and recorded with a predictable and time-constrained transfer system.

It envisages the construction industry grows at its true potential duly linked and integrated with the financial system as well as administrative and judicial systems of the country. The PRSP-II also wants to ensure governance for a fair and just system.


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*Capital goods industry growth has more merits to help economy: SBP ​* 
KARACHI (December 07 2008): The growth in capital goods industry in Pakistan has more merits and it would be a reflective of business confidence on the dynamic economic performance. The State Bank in its annual report for the year 2007-08 said that in Pakistan, the correlation of GDP growth was highest with capital goods manufacturing compared with the production of intermediate and consumer goods.

It said that it was the growth in GDP that shaped the business confidence and thus the investors' decision to manufacture capital goods. The report said that FY02-FY07 was the only period when the capital goods industry grew by an average 22.2 percent. However, during the period, except for buses, switch gears and electric motors, all capital goods items posted a robust average growth during these years. As a result, share of capital goods industry in overall LSM also increased.

The growth in capital goods industry is an important indicator of current and future business prospects. On the one hand, it is used as a leading macroeconomic indicator; and on the other it is reflective of business confidence on the upbeat economic performance in the future. The SBP said that in a developing country like Pakistan, the growth in capital goods industry has more merits, which can be helpful for the economy.

The growth in capital goods industry has merits like machinery improves labour productivity and replaces subjective human judgements in the production process with more precise and controllable facilities, which need improvement.

In addition, there may be more rapid productivity increases and higher growth elasticities in these sectors compared to other sectors in a developing country context, the report added.

In addition, capital saving innovations take place in the capital goods industry and contribute significantly to productivity increase within the total economy through their diffusion.

Despite this, less attention was given to this industry. Prior to 1980s, the share of manufacturing of capital goods had less than 6 percent share in overall LSM production. For the subsequent decades, the share declined sharply and, by the end of the 1990s, the contribution of capital goods industry in total LSM reached a paltry 3 percent.

The sharp growth in production of electric transformers and electric meters was due to the increase in electricity distribution activities in the country. In particular, a sharp growth in village electrification contributed significantly in the growth in production of distribution equipment's.

Compared with the consumer goods (both durable and non-durable) and intermediate goods, growth in capital goods appeared to have a pronounced relationship with the economic growth.

While the imported capital goods were mainly in textile, agriculture and power generating sector; the domestic manufacturing/assembling of capital goods were in sugar, power distribution and transportation sectors. The sharp growth in raw material for capital goods was also reflective of the high dependence of capital goods manufacturing to imported raw material.

In specific terms, the correlation between the import of raw materials and production was higher for capital goods industry, compared with the consumer goods industry. Thus, a high growth in domestic capital goods industry was associated with a high import growth, the report said.


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*Italian envoy discusses projects in various sectors ​* 
ISLAMABAD (December 07 2008): Pakistan and Italy on Saturday discussed projects in the energy sector, SMEs development, higher education and archaeological excavations. Ambassador Lannucci, Head of Asia, Oceana and Pacific in the Italian Foreign Ministry held bilateral consultations with Additional Secretary (Europe), Akbar Zeb in the Ministry of Foreign Affairs here and discussed issues of mutual importance.

The consultations took place in the wake of the Italian foreign minister's recent visit to Islamabad and the meeting between the two Prime Ministers in Beijing on the sidelines of the Asem Summit in October. During these consultations, the two sides reviewed the important decisions taken during the two high level exchanges and resolved to translate these into concrete initiatives.

As part of the consultations, the two sides also discussed the regional situation in the aftermath of the Mumbai attacks, Afghanistan, the Friends of Democratic Pakistan initiative and UN Reforms. Pakistan and Italy enjoy close and cordial relations and take co-ordinated positions on important regional and global issues. Bilateral trade is over one billion dollars and Italy has substantial investments in Pakistan. Italy supports Pakistan at important regional forums.


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## Neo

*Pakistan to get two Chinese nuclear power plants next year: deal to be finalised by January 15 ​*
ISLAMABAD (December 06 2008): Pakistan will get two nuclear power plants from China next year and the two countries are set to finalise the modalities of the deal by January 15, 2009. Pakistan will get two nuclear power plants, with a power generation capacity of 320 MW, to extend Chashma power project known as Chashma 3-4 costing Rs 137.3 billion.

The government has estimated the cost of each project at Rs 68.6 billion in the Public Sector Development Programmme (PSDP) 2008-09. Economic Affairs Division (EAD) Secretary Farrukh Qayyum has confirmed to the Business Recorder that Pakistan and China are currently working on the modalities of the nuclear power plant deal that would be finalised by January 15, 2009.

He said that President Asif Ali Zardari had requested nuclear power plants during his visit to China and received a favourable response. After President Zardari's visit, the concerned authorities of the two countries began work on maturing the deal. These two more nuclear power plants would generate 640 MW power. These projects will be completed in eight years.

Sources said that the Musharraf government had planned to set up four nuclear power plants with 320 MW power generation capacity each, and former President Pervez Musharraf had requested the Chinese to provide financial and technical help for setting up the four nuclear power plant during his visit to China. The government plan at the time was to set up four nuclear power plants with power generation capacity of 320 MW each, two at Chashma and two nuclear power plants of the same power generation capacity at Karachi.

President Zardari's visit to China firmed up the deal regarding the nuclear power plants. These nuclear power plants are part of the Energy Security Action Plan under which, Pakistan will increase the share of nuclear power from one per cent to 5.4 per cent by establishing 8,800 MW nuclear power plants by 2030.

In the first phase, the government is going to extend the Chashma nuclear power project by adding Chashma 3 and Chashma 4 nuclear power plants. In the second phase, the government would set up two more nuclear power plants at Karachi, each having the power generation capacity of 320 MW.

Pakistan is already getting 300 MW electricity from the Chashma nuclear power plant (C-1) and the Chashma-2, with the same capacity, is under implementation phase. The Chashma-2 is the improved version of Chashma-1 and the design of the Chashma-3 and Chashma-4 will follow the design of Chashma-2 that is under the process of completion.


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## merchanta12

Hi,
When the service has been provided or the product has been shipped, the merchant can deposit the transaction with its acuiring bank and the funds will be transferred into its merchant account. You can know more information from www(dot)merchantacquiring(dot)co(dot)uk.


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## Neo

Thread continued from *here*.


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## Neo

*Cost of PSDP projects to rise by over 100pc as govt slashes funds ​* 
Tuesday, December 09, 2008

ISLAMABAD: The cost of 50 per cent of the total 2000 projects in the Public Sector Development Programme (PSDP) involving Rs1.7 to Rs2 trillion, is bound to escalate by over 100 per cent, owing to a massive cut in fund releases in the last nine months by the present government.

The cost escalation is estimated to burden the economy by 70 to 100 per cent in most of the cases, as the government remained unable to provide funds in accordance with the approved cash plan, official sources told The News here on Monday.

Alarm bells are ringing in the corridors of the Planning Commission over massive cut on cards against envisaged allocation of funds in the remaining period of the current fiscal year, which simply means that the cost of Rs1.7 trillion would be doubled over the next one to two years.

However, Advisor to PM on Finance Shaukat Tarin says that there are over Rs425 billion lying unutilised in the accounts of the ministries and attached departments, which should come forward only for more funds releases after spending the unutilised funds in their development projects.

On other side, the Planning Commission is all set to raise its hue and cry after Eid over the finance ministrys reluctance for apprising them about resource envelop to PC managers, in order to give them an opportunity to set priorities keeping in view the resource situation over the remaining two quarters of the current fiscal year. But the finance ministry high-ups are quite optimistic that they would change this scenario of PC high-ups approving a bulk of development projects without a well thought out strategy.

The Central Development Working Party (CDWP) is used to approving a number of projects, but the finance ministry is set to give them a tough time at the forum of ECNEC (Executive Committee of the National Economic Council), which approved all projects exceeding the cost of Rs500 million.

There is also a need to make maintenance cost as part of the development projects because once any project is completed there is no provision to ensure its maintenance in the years ahead, said official sources. The official said the finance ministry is also asking the government to hire international firms to check the work on development projects, in order to ensure effective utilisation of funds and achieving quality in accordance with the PC-I criteria.

When a member of the Planning Commission was contacted for comments, he conceded that throw-forward has become the most difficult issue in the development side of the country, where not much room is available to change focus towards the desired infrastructure, agriculture and manufacturing sectors of the country. There should not be more than 700 to 900 development projects in the PSDP, he said while referring to the existing number of 2000 development projects falling under the PSDP. He added that in such a time of resource constraints, cost escalation could not be avoided.

Now again the walls of the Planning Commission are witnessing that the ruling party ministers and MNAs have started lobbying for selection of their choices in terms of development projects, which would be a part of the next PSDP for 2009-2010, without keeping in view genuine requirements of the development sector of the country.

This means that there is no possibility of initiating a well thought-out strategy which could be adopted before setting the direction in terms of approving projects in the next fiscal, said the official. He added that it would only increase throw-forward and results would not be achieved in the near future for completing the development projects.

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## Neo

*Cost of PSDP projects to rise by over 100pc as govt slashes funds ​* 
Tuesday, December 09, 2008

ISLAMABAD: The cost of 50 per cent of the total 2000 projects in the Public Sector Development Programme (PSDP) involving Rs1.7 to Rs2 trillion, is bound to escalate by over 100 per cent, owing to a massive cut in fund releases in the last nine months by the present government.

The cost escalation is estimated to burden the economy by 70 to 100 per cent in most of the cases, as the government remained unable to provide funds in accordance with the approved cash plan, official sources told The News here on Monday.

Alarm bells are ringing in the corridors of the Planning Commission over massive cut on cards against envisaged allocation of funds in the remaining period of the current fiscal year, which simply means that the cost of Rs1.7 trillion would be doubled over the next one to two years.

However, Advisor to PM on Finance Shaukat Tarin says that there are over Rs425 billion lying unutilised in the accounts of the ministries and attached departments, which should come forward only for more funds releases after spending the unutilised funds in their development projects.

On other side, the Planning Commission is all set to raise its hue and cry after Eid over the finance ministrys reluctance for apprising them about resource envelop to PC managers, in order to give them an opportunity to set priorities keeping in view the resource situation over the remaining two quarters of the current fiscal year. But the finance ministry high-ups are quite optimistic that they would change this scenario of PC high-ups approving a bulk of development projects without a well thought out strategy.

The Central Development Working Party (CDWP) is used to approving a number of projects, but the finance ministry is set to give them a tough time at the forum of ECNEC (Executive Committee of the National Economic Council), which approved all projects exceeding the cost of Rs500 million.

There is also a need to make maintenance cost as part of the development projects because once any project is completed there is no provision to ensure its maintenance in the years ahead, said official sources. The official said the finance ministry is also asking the government to hire international firms to check the work on development projects, in order to ensure effective utilisation of funds and achieving quality in accordance with the PC-I criteria.

When a member of the Planning Commission was contacted for comments, he conceded that throw-forward has become the most difficult issue in the development side of the country, where not much room is available to change focus towards the desired infrastructure, agriculture and manufacturing sectors of the country. There should not be more than 700 to 900 development projects in the PSDP, he said while referring to the existing number of 2000 development projects falling under the PSDP. He added that in such a time of resource constraints, cost escalation could not be avoided.

Now again the walls of the Planning Commission are witnessing that the ruling party ministers and MNAs have started lobbying for selection of their choices in terms of development projects, which would be a part of the next PSDP for 2009-2010, without keeping in view genuine requirements of the development sector of the country.

This means that there is no possibility of initiating a well thought-out strategy which could be adopted before setting the direction in terms of approving projects in the next fiscal, said the official. He added that it would only increase throw-forward and results would not be achieved in the near future for completing the development projects.


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## Neo

*Cement exports register 61 per cent rise on high demand from ME ​* 
Tuesday, December 09, 2008

KARACHI: Cement exports of the country continues to depict healthy growth and were recorded at the level of 913,000 tonnes during the month of November that triggered massive growth of 61 per cent on year on year (YoY) basis. While, cumulative exports for the five months period (Jul-Nov 2008) also witnessed a significant upsurge of 70 per cent at the level of 4.4 million tonnes versus 2.6 million tonnes in the same period of last year. Increasing construction activities in the region amidst capacity constraints are solely attributable to such remarkable export growth. However, on month on month (MoM) basis, cement exports represented a decline of 8 per cent in November 2008, FCEL Research reported.

Galadari Cement CEO, Badruddin Fakhri told The News that low domestic cement demand in the country is due to the political uncertainty. He said cement exports from Pakistan would remain buoyant in coming future despite the world economic downturn and global financial crisis as Middle East has still huge demand of cement. Oil producing countries of the Middle East would require massive housing and construction works in years to come hence, a huge demand of cement is still present.Segregating the data, weight of sea based cement exports during the month was recorded at 66 per cent in overall cement exports if compared with 52 per cent in November 2007. Furthermore, cement exports to India during the month were recorded at 67,000 tonnes, which is lower when compared with the previous monthly average of 100,000 tonnes.

However, following the recent terror attacks in Mumbai, the Indian cement industry is now sensing an opportunity to demand a curb on Pakistan cement imports. In this regard, Indian cement industry is now approaching Indian government to review its trade talks with Pakistan with respect to cement, which could probably lead to a decline in Pakistan cement exports to India.

According to the provisional cement data, overall industry dispatches are likely to witness a decline of 3 per cent during the month of Nov 2008 at 2.5 million tonnes versus the same month last year.

On cumulative basis, cement dispatches during the first five months of FY09 (Jul-Nov 2008) is estimated to depict 2 per cent nominal increase at 12.3 million tonnes as compared to 12 million tonnes during the same period of last year.

The rise in cumulative cement dispatches is solely attributable to rising export volumes as domestic demand has remained depressed. Increasing regional cement demand from countries like Afghanistan, Middle East and African countries fuelled the export demand growth during the period. Utilisation level dropped to 80 per cent of the capacity In November 2008, cement plants of the country operated at 80 per cent capacity utilisation level as compared to 83 per cent in the same month of last year. While, overall utilisation levels for Jul-Nov 2008 recorded at 79 per cent as against 78 per cent in the corresponding period of previous year.

Local demand recovered in Nov on MoM basis: Local demand is likely to record higher volumetric sales as compared to the previous month. The local cement dispatches registered an increase of 4 per cent at 1.6 million tonnes during November 2008 versus 1.5 million tonnes in the previous month. On YoY basis this represents a heavy decline of 21 per cent.

In aggregate, the domestic cement dispatches for 5MFY09 were recorded at 7.9 million tonnes, depicting a decline of 16 per cent YoY. Segregating the data, Northern cement manufacturers led local dispatches with 1.3 million tonnes as compared to 232,000 tonnes for the southern zone during the period under review.


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## Neo

*Cement exports register 61 per cent rise on high demand from ME ​* 
Tuesday, December 09, 2008

KARACHI: Cement exports of the country continues to depict healthy growth and were recorded at the level of 913,000 tonnes during the month of November that triggered massive growth of 61 per cent on year on year (YoY) basis. While, cumulative exports for the five months period (Jul-Nov 2008) also witnessed a significant upsurge of 70 per cent at the level of 4.4 million tonnes versus 2.6 million tonnes in the same period of last year. Increasing construction activities in the region amidst capacity constraints are solely attributable to such remarkable export growth. However, on month on month (MoM) basis, cement exports represented a decline of 8 per cent in November 2008, FCEL Research reported.

Galadari Cement CEO, Badruddin Fakhri told The News that low domestic cement demand in the country is due to the political uncertainty. He said cement exports from Pakistan would remain buoyant in coming future despite the world economic downturn and global financial crisis as Middle East has still huge demand of cement. Oil producing countries of the Middle East would require massive housing and construction works in years to come hence, a huge demand of cement is still present.Segregating the data, weight of sea based cement exports during the month was recorded at 66 per cent in overall cement exports if compared with 52 per cent in November 2007. Furthermore, cement exports to India during the month were recorded at 67,000 tonnes, which is lower when compared with the previous monthly average of 100,000 tonnes.

However, following the recent terror attacks in Mumbai, the Indian cement industry is now sensing an opportunity to demand a curb on Pakistan cement imports. In this regard, Indian cement industry is now approaching Indian government to review its trade talks with Pakistan with respect to cement, which could probably lead to a decline in Pakistan cement exports to India.

According to the provisional cement data, overall industry dispatches are likely to witness a decline of 3 per cent during the month of Nov 2008 at 2.5 million tonnes versus the same month last year.

On cumulative basis, cement dispatches during the first five months of FY09 (Jul-Nov 2008) is estimated to depict 2 per cent nominal increase at 12.3 million tonnes as compared to 12 million tonnes during the same period of last year.

The rise in cumulative cement dispatches is solely attributable to rising export volumes as domestic demand has remained depressed. Increasing regional cement demand from countries like Afghanistan, Middle East and African countries fuelled the export demand growth during the period. Utilisation level dropped to 80 per cent of the capacity In November 2008, cement plants of the country operated at 80 per cent capacity utilisation level as compared to 83 per cent in the same month of last year. While, overall utilisation levels for Jul-Nov 2008 recorded at 79 per cent as against 78 per cent in the corresponding period of previous year.

Local demand recovered in Nov on MoM basis: Local demand is likely to record higher volumetric sales as compared to the previous month. The local cement dispatches registered an increase of 4 per cent at 1.6 million tonnes during November 2008 versus 1.5 million tonnes in the previous month. On YoY basis this represents a heavy decline of 21 per cent.

In aggregate, the domestic cement dispatches for 5MFY09 were recorded at 7.9 million tonnes, depicting a decline of 16 per cent YoY. Segregating the data, Northern cement manufacturers led local dispatches with 1.3 million tonnes as compared to 232,000 tonnes for the southern zone during the period under review.

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## Neo

*Cellular sector growth falls by 40pc: PTA ​* 
Tuesday, December 09, 2008

KARACHI: Cellular Mobile segment of the industry is considered an engine of growth for telecom sector in Pakistan. Cellular mobile operators continue their marketing and expansion with competition among operators that became intensive with entry of CMPak, a China Mobile subsidiary in Pakistan.

According to Pakistan Telecommunication Authority (PTA) Annual Report 2007-08, Cellular Mobile sector continued to add 2.1 million subscribers per month during the year 2007-08. CMPak with their brand Zong and Telenor have added significant subscribers very rapidly. Several cellular operators offered various Value Added Services at lower rates to attract more customers.

The sector exhibited slow growth than year before. Cellular mobile teledensity jumped from 39 per cent in 2006-07 to 54.7 per cent in 2007-08. Collective revenues of the sector have grown by 35 per cent in the year 2007-08 against a record growth of 48 per cent in the year 2006-07.

Cellular subscribers grew by about 40 per cent in the year 2007-08, as against 82 per cent in 2006-07 and more than 100 per cent during 2005-06. Main reason for its slow growth could be the rising inflation which affects the affordability, higher taxes, saturation of the urban markets and low tariffs.

Cellular mobile sector has shown an impressive growth over the years. Pakistan has been one of the fastest growing mobile markets among the emerging telecom markets. Subscription of subscribers remained impressive for another year and all companies together added more than 25 million subscribers to their networks.

Total subscribers crossed 88 million at the end of 2007-08. During the year 2007-08 Telenor added about 7.4 million subscribers as compared to 7.1 million in 2006-07. Mobilink comes second with the addition of 5.7 million subscribers during the same period. Warid telecom succeeded to add another 4.8 million subscribers this year. Ufone added 4 million subscribers in 2007-08 as compared to its addition of 6.5 million in previous one year. CMPak entered the cellular market with aggressive marketing and infrastructure roll out. Its growth was negative previous year but this year it added 2.9 million subscribers in last few months. Cellular mobile penetration in Pakistan reached 54.7 per cent at the end of 2007-08, which is 15.3 percentage points higher than the last year.

Despite impressive addition of cellular subscribers by operators during 2007-08, cellular mobile markets could not maintain their growth patterns of last 3-4 years.

Growth of cellular subscribers has declined in all major companies. Mobilink growth declined from 53 per cent to 22 per cent while Telenor growth has declined from 199 per cent in 2006-07 to 69 per cent in 2007-08. CMPak has entered the market recently and has shown positive growth.

However during the year 2007-08, Telenor has emerged as fastest growing operator who has improved its market share from 17 per cent in 2006-07 to above 21per cent slightly higher than Ufone who has also got a 21 per cent market share.

The leading mobile operator Mobilink is loosing its Significant Marker Power place rapidly and its share has declined by about 5 percentage points and reached 36 per cent in 2007-08 compared to 41 per cent in 2006-07.

Financial health of the cellular mobile industry seems to be volatile and most of the operators are operating in loss though their revenues have increased significantly over the last few years. The only operator Ufone has reported a profit of Rs1.3 billion in 2006-07, who is not dependent on off shore loans and rapid infrastructure roll out. Most of the operators are engaged in rolling out infrastructure and operators have to spend a huge amount on import of machinery and equipments.

Depreciation of Pakistani currency has further exacerbated the financial position of the industry. Particularly those operators who are engaged in rapid infrastructure rollout and dependent on foreign loans from off shore sources have to bear loss due to the depreciation of currency.

In this competitive market, operators are bound to increase the investment to get more shares of subscribers. In last 5 years, cellular mobile operators have invested over $8.4 billion in Pakistan which has created large number of employment opportunities all across the country. During 2007-08, cellular players invested over $2.3 billion, which is 12 per cent lower than the previous year.

During the year 2007-08, Mobilink invested over $919 million while Telenor invested over $565 million. CMPak is another operator who started expanding lately and invested over $200 million in last few months. Warid and Ufone invested $480 and $232 million respectively during the year 2007-08.

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## Neo

*Cellular sector growth falls by 40pc: PTA ​* 
Tuesday, December 09, 2008

KARACHI: Cellular Mobile segment of the industry is considered an engine of growth for telecom sector in Pakistan. Cellular mobile operators continue their marketing and expansion with competition among operators that became intensive with entry of CMPak, a China Mobile subsidiary in Pakistan.

According to Pakistan Telecommunication Authority (PTA) Annual Report 2007-08, Cellular Mobile sector continued to add 2.1 million subscribers per month during the year 2007-08. CMPak with their brand Zong and Telenor have added significant subscribers very rapidly. Several cellular operators offered various Value Added Services at lower rates to attract more customers.

The sector exhibited slow growth than year before. Cellular mobile teledensity jumped from 39 per cent in 2006-07 to 54.7 per cent in 2007-08. Collective revenues of the sector have grown by 35 per cent in the year 2007-08 against a record growth of 48 per cent in the year 2006-07.

Cellular subscribers grew by about 40 per cent in the year 2007-08, as against 82 per cent in 2006-07 and more than 100 per cent during 2005-06. Main reason for its slow growth could be the rising inflation which affects the affordability, higher taxes, saturation of the urban markets and low tariffs.

Cellular mobile sector has shown an impressive growth over the years. Pakistan has been one of the fastest growing mobile markets among the emerging telecom markets. Subscription of subscribers remained impressive for another year and all companies together added more than 25 million subscribers to their networks.

Total subscribers crossed 88 million at the end of 2007-08. During the year 2007-08 Telenor added about 7.4 million subscribers as compared to 7.1 million in 2006-07. Mobilink comes second with the addition of 5.7 million subscribers during the same period. Warid telecom succeeded to add another 4.8 million subscribers this year. Ufone added 4 million subscribers in 2007-08 as compared to its addition of 6.5 million in previous one year. CMPak entered the cellular market with aggressive marketing and infrastructure roll out. Its growth was negative previous year but this year it added 2.9 million subscribers in last few months. Cellular mobile penetration in Pakistan reached 54.7 per cent at the end of 2007-08, which is 15.3 percentage points higher than the last year.

Despite impressive addition of cellular subscribers by operators during 2007-08, cellular mobile markets could not maintain their growth patterns of last 3-4 years.

Growth of cellular subscribers has declined in all major companies. Mobilink growth declined from 53 per cent to 22 per cent while Telenor growth has declined from 199 per cent in 2006-07 to 69 per cent in 2007-08. CMPak has entered the market recently and has shown positive growth.

However during the year 2007-08, Telenor has emerged as fastest growing operator who has improved its market share from 17 per cent in 2006-07 to above 21per cent slightly higher than Ufone who has also got a 21 per cent market share.

The leading mobile operator Mobilink is loosing its Significant Marker Power place rapidly and its share has declined by about 5 percentage points and reached 36 per cent in 2007-08 compared to 41 per cent in 2006-07.

Financial health of the cellular mobile industry seems to be volatile and most of the operators are operating in loss though their revenues have increased significantly over the last few years. The only operator Ufone has reported a profit of Rs1.3 billion in 2006-07, who is not dependent on off shore loans and rapid infrastructure roll out. Most of the operators are engaged in rolling out infrastructure and operators have to spend a huge amount on import of machinery and equipments.

Depreciation of Pakistani currency has further exacerbated the financial position of the industry. Particularly those operators who are engaged in rapid infrastructure rollout and dependent on foreign loans from off shore sources have to bear loss due to the depreciation of currency.

In this competitive market, operators are bound to increase the investment to get more shares of subscribers. In last 5 years, cellular mobile operators have invested over $8.4 billion in Pakistan which has created large number of employment opportunities all across the country. During 2007-08, cellular players invested over $2.3 billion, which is 12 per cent lower than the previous year.

During the year 2007-08, Mobilink invested over $919 million while Telenor invested over $565 million. CMPak is another operator who started expanding lately and invested over $200 million in last few months. Warid and Ufone invested $480 and $232 million respectively during the year 2007-08.


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## Neo

*Pak economy needs reality check as ranking on global standards tumble ​* 
Tuesday, December 09, 2008

LAHORE: The periodic hiccups that the Pakistans economy faces calls for a reality check so that remedial measures regarding its institutions, security, gender equality, competitiveness are taken as the country is ranked extremely lower than global and regional standards in all spheres.

In-depth study on Pakistan is included when creditable global institutions release their reports to rank countries on corruption, economic freedom, political freedom, and gender affairs. These institutions include Transparency International, World Economic Forum, Freedom House, Foreign Policy Magazine, The Heritage Foundation etc.

Poor ranking of Pakistan by all these organizations reveals that its successive governments have failed to remove the bottlenecks that place the country among the worst performers in all spheres. Other countries in the region have been constantly improving their status.

The Transparency International for instance evaluates the corruption in a country on the basis of score attained by a country on a scale of 0-10. A score of zero means total corruption and 10 indicate full transparency.

Pakistan for instance has failed to improve its transparency score during the past one decade despite the much applauded reforms by the successive governments during this period. Pakistans score of 2.5 points in fact is lower than 2.7 points it attained in 1998. India that was at lower level a decade back score 3.4 points and China 3.6 points.

Heritage Foundation ranks the country on economic freedom based on business freedom, trade freedom, fiscal freedom, government size, monetary freedom, investment freedom, financial freedom, property rights, freedom from corruption and labor freedom. Pakistan obtained 56.8 per cent points in 2008 to be ranked 93 among 157 states evaluated. It secured 1.7 per cent more points in the previous year. Hong Kong score of 90.4 per cent places it as the top country in economic freedom.

Pakistan is ranked 101 out of 134 economies in the Global Competitiveness Index 2008-09 by the World Economic Forum. Its position a year earlier was 92 out of 131 economies evaluated. Indias position is 50 and China is placed at 30th position GCI. Both these countries have improved their ranking from previous year. The index is based on the status of institutions, infrastructure, macroeconomic stability and health and primary education.

The Enabling Trade Index of World Economic Forum ranks countries on the basis of market access, border administration, business environment and transport and communication infrastructure. Pakistans rank is 84 out of 118 economies while China, Sri Lanka and India are at number 48, 70 and 71 respectively.

In the Gender Gap Index 2008 of World Economic Forum Pakistan is ranked 127th out of 130 countries evaluated even below Iran that is ranked 116 while India was ranked 113. The gender gap evaluation is based on economic and participation opportunities for women, their education attainment, health and survival and political empowerment. In Network Readiness Index 2007-08 of World Economic Forum Pakistan is ranked 89 out of 127 countries while India is a 50th position, China at 57 and Sri Lanka at 79.

Pakistan was declared not free in the Freedom of the World Index 2008 prepared by Freedom House of United States. India was declared free while Bangladesh and even Afghanistan were placed among partially free countries. The evaluation was done on the basis of political rights including electoral process, political pluralism and participation, and functioning of the government. The civil liberties like freedom of expression and belief, associational and organizational rights, rule of law and personal autonomy and individual right were also part of this evaluation.

The Foreign Policy Magazine issues list of countries on the basis of risks to its survival under the banner of Failed Country index. The evaluation is based on demographic pressures, refugees and displaced persons, group grievance, human flight, uneven development, economy, de-legitimisation of state, public service, human rights, security status, factionalised elites, and external intervention. Pakistan is ranked 12th most vulnerable state in the world in the failed state index for 2008.

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## Neo

To be contined *here.*


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## Neo

*BoI and Chinese companies to meet on monthly basis​* 
LAHORE (December 08 2008): Chairman Board of Investment Saleem H. Mandviwalla and representatives of Chinese Companies will meet every month to review progress of Chinese investment in Pakistan and remove any bureaucratic bottlenecks, red tapism, misgivings or difficulties in implementing of their projects.

It may be recalled that the Chiense Ambassador in Islamabad Luo Zhaohui met President Asif Ali Zardari and briefed him about the difficulties Chinese investors were facing in enhancing economic, technological and trade relations between the two friendly countries.

The President had directed Chairman BOI to have a meeting with the association of the Chinese companies and assure them of the ggovernment's full co-operation In the follow up meeting here on Friday, Chairman of the Association Li Hong complained that Chinese Dongfang Electric Corporation , a State owned company, had won an open bid to supply 75 locomotives to Pakistan Railway at half the price of its competitors, yet the formal ceremony for signing of the contract was not being held. Mandviwalla said that a special committee was examining the matter. The Chinese representatives also expressed concern about security of their employees.

It may be added that China's investment in Pakistan has jumped to an all-time high of $4 billion. Its companies make up 12 per cent - 60 of 500 - of all the foreign firms operating in Pakistan.

Chinese presence in Pakistan has grown drastically since the US invasion of Afghanistan, which brought Beijing and Islamabad together to build a naval-cum-commercial port at Gwader, in Balochistan. There are more than ten thousand Chinese engineers, technicians, managers, businessmen working in Pakistan. In October 2008 during President Zardari's visit to Beijing, Pakistan and China signed 11 agreements, memorandums of understanding and protocols to enhance bilateral co-operation in trade, energy, infrastructure, agriculture, industry, mining, telecommunication, disaster relief and space technology.

Chinese EXIM Bank has already an investment of over $2 billion in Pakistan and has expressed willingness to work for further strengthening trade and economic co-operation between the two countries.

Chinese investment companies and industrial firms have offered to invest $5 billion in Pakistan's defence, banking, oil exploration and mining sectors as well as the Thar Coal and Bhasha Dam projects.

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## Neo

*Attracting investment in hydro power generation​*
Pakistans hydro potential is estimated at more than 40,000 MW out of which only 6,827 megawatts are tapped. Thanks to 33 per cent portion of inexpensive hydro power in Wapdas total mix of installed generation capacity, consumers are still able to foot their bills.

All major hydro projects except Ghazi Barotha and Chashma are generating electricity at less than a rupee per unit.

Since the early 1990s the succeeding governments are relying on private sector for induction of new power generating capacity.

The first power policy document was issued in 1994 and that attracted a lot of interest from international investors. But that interest remained confined to thermal technology, although the policy provided relatively better incentives to hydro Independent Power Producers. Whereas it provided 18 per cent returns to thermal based IPPs, it promised a 25 per cent return on equity to investors interested in hydro projects. Some investors interested in hydro projects did indicate their interest and obtained letters of intent (LoIs). However, the projects for which LoIs were issued did not materialise. Structure of bulk power tariff promised under the policy was predominantly a thermal based tariff. Furthermore, the other incentives related to protection against force majeure, pass through concept of fuel, availability of premium (equal to 0.25 US cents per unit sold to Wapda) for projects commissioned before end 1997, were all pro

Keeping in view the longer gestation period for a hydro based power project, it was nearly impossible for them to be commissioned before 1997 and qualify for the premium. Additionally, the incentives such as protection against hydrological risk i.e. water unavailability was also missing. On the top of it, a typical hydro IPP embodies a project full of uncertainties which neither an investor likes nor the lenders feel comfortable in approving loans for it.

The government was quick to note the deficiencies and in May 1995 it brought out a hydro specific power policy that recognised the importance of feasibility studies, concept of water use charges at cents 0.233 per unit and provincial role. Besides, the policy provided for three different tiers of indicative Bulk Power Tariff i.e. 5.57 cents per unit for 25 years for projects up to 20 MW, 4.7 cents per unit for 21 to 300 MW and a case-to-case basis tariff for projects above 300 MW.

As regards feasibility study, a definite criteria was given which required that (i) installed capacity of the power house based upon hydrology would be established at 50 per cent minimum annual plant factor, (ii) a minimum of 40 per cent of the annual energy be produced during the low water months (January to June), and (iii) transmission line up to the nearest grid be considered part of power complex.

Earlier, issuance of LoI and letter of support (LoS) was the prerogative of the federal government, whereas in hydro policy the provinces were given the right to issue these letters. Nonetheless, further processing of hydro proposals remained with federal agencies, and it was specifically clarified that LoI or LoS would not bind federal government to enter into agreements until it is satisfied that the feasibility study met the criteria provided in the policy.

The Bulk Power Tariff was indicatively based on minimum 50 per cent plant factor and was to be adjusted as per the hydrological parameters based on historical data. Initially, it was believed that the hydro policy had succeeded in attracting private investors, but no hydro project got commissioned mainly owing to surplus power availability from IPPs pursuant to the 1994 policy.

In 2006, the Economic Coordination Committee (ECC) of the Cabinet revived the original Bulk Power Tariff of 4.7 cents per unit for the four surviving projects pursuant to hydro policy, and then enhanced it to 5.89 cents per unit in 2007. In the meanwhile a new Power Generation Policy had already been in place.

In contrast to the concept of Bulk Power Tariff, the 2002 policy provides for tariff determination by power regulator  Nepra  on the basis of cost justification plus reasonable returns. Furthermore, the policy provides for a protection against the hydrological risk which was missing in earlier policies. Additionally, in tariff determinations Nepra is currently allowing floating interest rates (based on Kibor fluctuations) to IPPs. The policy has already received a very good response from investors and Private Power and Infrastructure Board is already processing over dozen hydro projects with total capacity of 4,262 MW.

But as a matter of fact, one must understand that mere response from investors is not the only ingredient for the success recipe. Yet no application from hydro IPPs has been filed with Nepra for tariff determination.

In fact, hydro projects are a bit difficult from their inception to end. They are quite different from their thermal projects, which can be started with only superficial due diligence. Whereas, hydro projects cannot be conceptualised without first completing a pre-feasibility study and subsequently a proper feasibility study acceptable to lending institutions.

Furthermore, owing to Pakistans topography, hydro projects can be developed mainly in mountainous region which not only made them costly but also physically difficult to complete. Besides, their engineering designs, work scope and estimates may be subject to major changes during construction phase. We must hope that the stakeholders will develop legal instruments and financial models for development of hydro IPPs, and within two three years these projects may move ahead from paper to ground.

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## Neo

*Attracting investment in hydro power generation​*
Pakistans hydro potential is estimated at more than 40,000 MW out of which only 6,827 megawatts are tapped. Thanks to 33 per cent portion of inexpensive hydro power in Wapdas total mix of installed generation capacity, consumers are still able to foot their bills.

All major hydro projects except Ghazi Barotha and Chashma are generating electricity at less than a rupee per unit.

Since the early 1990s the succeeding governments are relying on private sector for induction of new power generating capacity.

The first power policy document was issued in 1994 and that attracted a lot of interest from international investors. But that interest remained confined to thermal technology, although the policy provided relatively better incentives to hydro Independent Power Producers. Whereas it provided 18 per cent returns to thermal based IPPs, it promised a 25 per cent return on equity to investors interested in hydro projects. Some investors interested in hydro projects did indicate their interest and obtained letters of intent (LoIs). However, the projects for which LoIs were issued did not materialise. Structure of bulk power tariff promised under the policy was predominantly a thermal based tariff. Furthermore, the other incentives related to protection against force majeure, pass through concept of fuel, availability of premium (equal to 0.25 US cents per unit sold to Wapda) for projects commissioned before end 1997, were all pro

Keeping in view the longer gestation period for a hydro based power project, it was nearly impossible for them to be commissioned before 1997 and qualify for the premium. Additionally, the incentives such as protection against hydrological risk i.e. water unavailability was also missing. On the top of it, a typical hydro IPP embodies a project full of uncertainties which neither an investor likes nor the lenders feel comfortable in approving loans for it.

The government was quick to note the deficiencies and in May 1995 it brought out a hydro specific power policy that recognised the importance of feasibility studies, concept of water use charges at cents 0.233 per unit and provincial role. Besides, the policy provided for three different tiers of indicative Bulk Power Tariff i.e. 5.57 cents per unit for 25 years for projects up to 20 MW, 4.7 cents per unit for 21 to 300 MW and a case-to-case basis tariff for projects above 300 MW.

As regards feasibility study, a definite criteria was given which required that (i) installed capacity of the power house based upon hydrology would be established at 50 per cent minimum annual plant factor, (ii) a minimum of 40 per cent of the annual energy be produced during the low water months (January to June), and (iii) transmission line up to the nearest grid be considered part of power complex.

Earlier, issuance of LoI and letter of support (LoS) was the prerogative of the federal government, whereas in hydro policy the provinces were given the right to issue these letters. Nonetheless, further processing of hydro proposals remained with federal agencies, and it was specifically clarified that LoI or LoS would not bind federal government to enter into agreements until it is satisfied that the feasibility study met the criteria provided in the policy.

The Bulk Power Tariff was indicatively based on minimum 50 per cent plant factor and was to be adjusted as per the hydrological parameters based on historical data. Initially, it was believed that the hydro policy had succeeded in attracting private investors, but no hydro project got commissioned mainly owing to surplus power availability from IPPs pursuant to the 1994 policy.

In 2006, the Economic Coordination Committee (ECC) of the Cabinet revived the original Bulk Power Tariff of 4.7 cents per unit for the four surviving projects pursuant to hydro policy, and then enhanced it to 5.89 cents per unit in 2007. In the meanwhile a new Power Generation Policy had already been in place.

In contrast to the concept of Bulk Power Tariff, the 2002 policy provides for tariff determination by power regulator  Nepra  on the basis of cost justification plus reasonable returns. Furthermore, the policy provides for a protection against the hydrological risk which was missing in earlier policies. Additionally, in tariff determinations Nepra is currently allowing floating interest rates (based on Kibor fluctuations) to IPPs. The policy has already received a very good response from investors and Private Power and Infrastructure Board is already processing over dozen hydro projects with total capacity of 4,262 MW.

But as a matter of fact, one must understand that mere response from investors is not the only ingredient for the success recipe. Yet no application from hydro IPPs has been filed with Nepra for tariff determination.

In fact, hydro projects are a bit difficult from their inception to end. They are quite different from their thermal projects, which can be started with only superficial due diligence. Whereas, hydro projects cannot be conceptualised without first completing a pre-feasibility study and subsequently a proper feasibility study acceptable to lending institutions.

Furthermore, owing to Pakistans topography, hydro projects can be developed mainly in mountainous region which not only made them costly but also physically difficult to complete. Besides, their engineering designs, work scope and estimates may be subject to major changes during construction phase. We must hope that the stakeholders will develop legal instruments and financial models for development of hydro IPPs, and within two three years these projects may move ahead from paper to ground.

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## Neo

*Govt plans capacity building programme for power sector​*
ISLAMABAD: In order to meet the current energy shortfall and devise proper planning for future power requirements, the government has planned institutional capacity building of National Transmission & Dispatch Company (NTDC), Pakistan Electric Power Company (PEPCO) and Ministry of Water and Power.

The World Bank will provide technical assistance for this vital training programme. The present state of Pakistans power sector has assumed a crises situation that is largely considered due to absence of power planning process owing to dearth of trained professionals. Such situation has necessitated the need of proper planning for power generation, power transmission and distribution system and expansion and rehabilitation by capacity building of power sector organisations of country i.e. Ministry of Water and power, PEPCO, NTDC and DISCOS.

The capacity building scheme will cost the government Rs 295.55 million including Rs 236.44 million as foreign exchange component. Sources in the Ministry of Water and Power told Daily Times that under this programme, human resource capacity-building would be undertaken.

Acquisition of hardware and software to strengthen the analytical capacity of power related institution is the other objective of the planning. Capacity building of the PEPCO including specialised studies, which consists of organisational development, human resource management and improving organisations internal environment and facilities would also be carried out under this programme, the sources added. .

Capacity building of ministry of water and power including strengthening of information technology capacity and for long-term sector planning, training in fields of planning including IPP policy, rural electrification policy and financial evaluation.

In order to cope with the energy shortfall, it was strongly felt that the strengthening and capacity building of water and power and its associated organisations was highly desirable, the official maintained. In this regard for additional power generation requirement, emphasis is laid on the development of indigenous resources i.e. hydro, coal, natural gas and nuclear as well on transmission and distribution enhancement.

The power sector is one of the fundamental infrastructure sectors in the country, which requires immediate enhancement in capacity to meet the economic growth targets.

Main objectives of this scheme are to help borrowing entities develop their capacities to implement the investment programme effectively and derive their maximum benefits from these investments through sustained operations. The project would be financed through WBs Adaptable Programme Loan (APL) and the government of Pakistan. The share of the donor agency and Pakistan comes to 80 percent and 20 percent, respectively.

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## Pk_Thunder

*Afghan trade team to import Pak-made diesel engine *​

LAHORE, Dec 8 (APP): A high level private sector trade delegation from Afghanistan will visit Lahore after Eid ul Azha to import Pakistan made diesel engines for agricultural purpose.

Chief executive officer KAM Engineering, Khalid Saeed Khan told APP here Monday that the Pakistan made KAM diesel engines have become very popular in Afghanistan, compared to all brands of those made in India, and are being successfully used for agricultural purposes.

He said the Afghan team will visit the state of the art plant and see the engine assembly process, using indigenous technical know-how and expertise, which has helped to control the price of the product with minimum overhead expenses.

In their war torn country, the Afghanis are now inclined to bring maximum area under cultivation to meet the ever increasing need of foodgrains. For this purpose, they need quality agri inputs and implements, and Pakistan made products offer the guarantee to compete in terms of quality and price, said the firms Director Marketing, Sh Muhammad Amin.

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## Pk_Thunder

*Plan worth Rs1.7 billion for advancement of industrial sector ​* 

SIALKOT, December 7 APP: - Punjab government has formulated a well-knitted plan costing Rs.1.70 billion for advancement of industrial sector and development of cottage industries in of the Province, official sources told APP here on Sunday.

Out of this total Rs.1.30 billion would be spent on the development of industrial sector while Rs.400 million would be mobilized on cottage industry for further accelerating the pace of economic activities with the concept of increasing the export-volume in the Punjab.

Under the programme special attention would be accorded on the establishment of maximum industries in private sector for creating wide employment opportunities for jobless educated and skilled persons in the Punjab. The setting up of industrial states would also help in mitigating chances of rapid rural migration towards urban areas of the Province. 

The government aims to extend full cooperation and facilities to the foreign and overseas Pakistanis investors aimed at ensuring maximum Direct Foreign Investment (***) in the Punjab. While exporters and manufacturers were being motivated for bringing innovation and diversification in their products cope with global market more easily sources added.

In order to facilitate the SMEs the Punjab government would soon initiate a Micro Finance loaning scheme with an amount of Rs.1 billion during current fiscal period for the development of cottage industries and creating self-employment opportunities in the Province.


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## Pk_Thunder

*100 percent surge recorded in 2007-08 fiscal deficit*​
RIZWAN BHATTI
KARACHI (December 09 2008): All balance indicators of fiscal performance depicted sudden deterioration in last fiscal year 2007-08, resulting in record increase of over 100 percent fiscal deficit, to Rs 777 billion, highest during last ten years. Overall fiscal deficit surged by 105 percent from Rs 377.5 billion in fiscal year 2007 to Rs 777.2 billion in fiscal year 2008.

The State Bank of Pakistan said in its annual report for 2007-08 that deceleration in revenue growth, coupled with a strong rise in total expenditures, driven by exceptionally large interest payments and current subsidies, caused serious deterioration in all key fiscal performance indicators during FY08.

The year saw the fiscal deficit as a percentage of GDP rise to 7.4 percent, highest level of budget deficit since FY99 and against the budget target of 4.0 percent of GDP for the year and compared to 4.3 percent of GDP witnessed in the preceding year.

The report said the growth of deficit reflected a fall in revenue growth and acceleration in total expenditures. Revenue balance moved firmly into deficit during FY08, reaching 3.4 percent of GDP, against the budgeted surplus of 1.0 percent of GDP. "This is truly troubling since the Fiscal Responsibility and Debt Limitation (FRDL) Act requires the revenue balance to be at least zero, as a percent of GDP, by FY08 and beyond", the report said.

Primary balance, as share of GDP, recorded a deficit of 2.7 percent in FY08 compared to a deficit of 0.1 percent in FY07. Despite large amount of interest payments, the worsening of primary balance was mainly attributable to high current expenditures.

Also, primary and revenue balances, measured as percentage of GDP, moved solidly into deficit during FY08, after hovering around zero in the preceding years. The report said that a quarter-by-quarter accumulation of budget deficit showed a particularly large imbalance in Q4-FY08. However, a substantial part of this oversized addition to fiscal deficit in Q4-FY08 represented the recognition of the liability accrued during all three preceding quarters of FY08 on account of unpaid price differential claims.

Even though tax revenues increased by a respectable 18.1 percent during FY08, as compared to the growth recorded in FY07, the rise lagged behind 23.1 percent growth budgeted for the year, it said.

This was mainly caused by a substantial shortfall in collection under direct taxes. Also, collection of surcharges on oil and gas witnessed considerable declines, (due to non-adjustment of domestic energy prices with rises in international oil prices) leading to significant deceleration in non-tax receipts.

Consequently, total revenues rose to Rs 1,499.4 billion during FY08, up by 15.5 percent compared to 20.6 percent growth realised in FY07, the report said.

The deceleration in total revenues, combined with a rise of 35.9 percent in total expenditures dictated a large jump in fiscal deficit during FY08. The increase in total expenditure during FY08 was fuelled by excessive current spending owing to interest payments, subsidies and defence expenditures.

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## Pk_Thunder

*China motorcycle parts customs valuation revised*​
SOHAIL SARFRAZ
ISLAMABAD (December 09 2008): The Directorate-General of Customs Valuation, Karachi, has issued revised customs values of motorcycle components and parts imported from China for accurate assessment of customs duty at the import stage. In this regard, the Directorate has issued a ''valuation ruling'' to the collectors of customs for implementation within the jurisdiction of their respective collectorates.

The ruling has been issued by the DV Valuation taking into account the viewpoint of local manufacturers and assemblers of Chinese motorcycles and importers of motor parts/components from China.

According to the ''valuation ruling'', the customs value of the motorcycle part/component Carburettor would be US$6.85/pc; motorcycle part/component Piston US$1.55/pc; motorcycle part/component Magneto Assy US$6.70/pc; motorcycle part/component CDI US$0.88/pc; and customs value on the import of motorcycle part/component Key Lock Set (of 5 pcs) would be US$2.86 per piece.

According to the ruling of DG Valuation, High Courts of Lahore and Sindh, had set aside DG Valuation orders regarding determination of customs value of motorcycle parts and components imported from China, decided under section 25A of the Customs Act, 1969. It was further ordered by the courts that value of the goods should be re-determined under section 25-A of the Act, within a period of two months strictly in accordance with the sequential order provided under section 25 of the Customs Act.

In compliance with the orders of High Courts, the valuation of parts/components of China origin motorcycle 70 cc was taken up in terms of section 25A of the Act and meetings were held with all stakeholders on, in sequel to the meetings earlier in the matter. The aforesaid meetings were attended by three types of stake holders, ie the importers, local assemblers and local manufacturers. During the meeting, it was decided with mutual consent of all the stake holders that, in the first instance, the valuation of the five items be taken up carburettor, piston, Magneto Assy, C.D.I. and Key Lock Set.

The three categories of stakeholders presented their detailed viewpoints on the valuation issue.

Local Manufacturers and Vendors:

The Local Manufacturers vehemently pleaded that the import values mentioned in the previous rulings may be enhanced for the following reasons. Firstly, prices of motorcycle parts depend largely on the weight thereof. Therefore, the valuation/assessment should be done on per piece and weight basis.

Secondly, the proceedings should be finalised in the light of data of past clearances instead of market enquiry: the provisions of sub-sections (5) and (6), and not sub-section (7), of the Act may be applied. Local manufacturers also handed in few sheets which, according to them, contained actual declared values of the above mentioned five items cleared from Customs House Karachi in the past.

Thirdly, the argument advanced by irrelevant persons and unregistered associations should not be entertained; only the genuine importers should be allowed to participate in the proceedings.

Fourthly, prices of motorcycle parts/components (particularly Carburettor) of China and Japan origin is the same as there is no difference in function and quality of the goods of the aforesaid two origins, though production cost of China origin goods is slightly lower. Fifthly, items like CDI unit and lock key set (of 5 pcs) are high technology items, and manufacturing cost of the same in the local vendor market was quite high. Therefore, the price of similar China origin goods has also to be quite high. They suggested import value of US$ 14.31, US$ 3.60, US$ 7.00, US$ 1.60 and US$ 4.31 for Carburettor, Piston, Magneto Assy, C.D.I. and Key Lock Set respectively.

The Assemblers of Chinese Motorcycles:

The second stakeholders in the matter were local assemblers of motorcycles of various Chinese brands. They have mainly submitted that the local manufacturers, manufacturing motorcycles under various Japanese brands under franchise arrangements have only one target and that target is to create monopoly in the market by way of driving other competitors out of the market.

In the past (ie before the assemblers of Chinese origin motorcycles had entered the market, they had literally fleeced the consumers by charging prices of their choice as there was no competition in the market. However, with the arrival of assemblers of Chinese origin motorcycles in the market the prices of even Japan origin motorcyc1e had significantly come down which meant that previously the local manufacturers were over-charging. Therefore, it was in the interest of the consumers that the assemblers of Chinese motorcycles should be allowed to survive in the market through creating a truly competitive atmosphere.

High Courts had clearly ordered that value of motorcycle parts/components be determined strictly in accordance with the provisions of section 25 of the Act and in light of the documentary evidence available on record.

The import price of Carburettor produced by Honda Japan is $11.00/pc while the price of same Carburettor produced in China is not over $4.00/pc. Therefore, the quality factor of Chinese and Japanese goods needs to be kept in consideration while determining value of Chinese origin Carburettor.

In any case, there is no justification for putting the value of US$13.00 on China origin Carburettor - whereas the same value is taken of Japan origin Carburettor which is totally unjustified: either the value of Japan origin Carburettor should by over US$24.00 or that of China origin should be US$6.00 as there was huge difference of quality and production costs in both countries besides the freight difference for Pakistani importers for importing goods from China and Japan; and they added that there could be no comparison between the cost of parts produced in China and Pakistan because raw material/scrap is imported in China from all sources of the world in greatest quantity at best prices, which results in cheaper cost of production, which is 10 percent against 90 percent in Pakistan. This is further supported with subsidies provided by the Chinese government to the tune of 38 percent.

The importers of motorcycle parts/components from China (MSPIDA):

The association stated that prices of motorcycle parts in China are factually low due to various reasons including low incidental charges/landed cost. For example, the actual market price of CDI unit, Lock Set and Carburettor in China is as low around Rs 120, 100 and 300 respectively arid the best quality Carburettor in China is available at $6.00/pc. They contended that the values previously notified by the Directorate General in the impugned orders were unjustified and contrary to the aforesaid ground reality. They emphasised that the business of the local manufacturers should not be supported by government departments at the cost of the importer and that the courts had viewed this aspect of the matter adversely, they added.

According to the DG Valuation, the local manufacturers pleaded that the values already notified may be enhanced instead of bringing down; the assemblers pleaded for downward revision of the impugned values, particularly that of carburettor which, they, should not be more than US$ 600 in any case and, the importers pleaded that import value of carburettor be determined @US$ 3.00.

The rival arguments have been duly considered in light of the orders of High Courts arid manner of valuation provided under section 25 of the Act. The transaction values declared by the importers in respect of the impugned five items have not been accepted by the clearance collectorates due to applicability of the previous valuation rulings issued by this Directorate General as well as due to incorrect declaration of particulars of the goods in the import documents.

For the same reasons, test values in terms of sub-section (5) and (6) of section 25 of the Act are not applicable in this ease. The purported evidences of past clearances provided by the representative of Atlas Honda have been examined at length. It has been found that shipments in most of those cases were made from Singapore and there is no evidence on record to the effect that the goods were of China origin. Therefore, keeping in view the aforesaid situation, the valuation method prescribed section 25 (7) of the Act has been applied in this case and findings of the market survey been relied upon.

The market survey has shown that there is a vast difference between the selling prices of China and Japan origin goods. Even the same brand goods manufactured in China are significantly low priced compared to the one produced in Japan. It has been further found that China origin parts are much inferior in quality appearance and weight compared to the Japan origin parts/components, though both perform the same function in 70 cc motorcycles, DG Valuation maintained.

For example, Japan origin Honda brand carburettor for 70 cc motorcycle is available in the local market @ Rs 1850/pc whereas China origin carburettor, supposedly performing the same function, is available at, as low a price as Rs 310/pc. Obviously, the aforesaid two items are not at par with each other in terms of qua1ity, durability appearance, guarantee etc. This is precisely the reason why value of China origin goods has been historically determined by this Directorate General in the region of 1/3rd of the Japan origin goods meant for the same function. For example, a difference of 66 percent m the valuation of automotive vehicle parts and engine bearing bushes has been maintained vide Valuation Ruling dated May 29 2008 and July 25, 2008 in China and Japan origin goods.

It is an established fact that the local manufacturers are themselves importing branded Japan origin carburettors in the range of US$ 13.00 and US$14.00 and they plead that unbranded and low quality carburettors imported by the assemblers from China should be assessed to duty/taxes at the same value. Clearly, such a plea is neither in consonance with the market realities nor the standards of valuation historically followed m this Directorate General.

Keeping in view the findings of market survey and the observations made above, the customs values of motorcycle components/parts are re-determined and revised, DG Valuation added.


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## Pk_Thunder

*Luxury cars 'sale permissions' sent to foreign office for verification*​
SOHAIL SARFRAZ
ISLAMABAD (December 08 2008): In a major development in the diplomatic cars scam, the Model Customs Collectorate (MCC), Rawalpindi, has provided all "sale permissions" of luxurious vehicles to the Ministry of Foreign Affairs for verification of documents.

Sources told Business Recorder on Sunday that the collectorate has taken up the matter with the Ministry of Foreign Affairs to check the authenticity of the sale permissions of Foreign Office used to clear diplomatic vehicles without payment of duties and taxes.

According to sources, the FBR special committee, headed by Dr Zubair Yousfani, Additional Collector of Customs, MCC, Rawalpindi, had made some major breakthrough while probing diplomatic cars scam where such luxurious vehicles were sold on fake documents.

The valuable data on diplomatic vehicles has been collected from various departments and embassies.

Now, all sales permissions issued by the Foreign Office would be verified, and action would soon be initiated against the owners of the luxurious vehicles.

Around 60 diplomatic luxurious vehicles have been illegally cleared by an organised gang on fake documents/NOC for availing exemption of duties and taxes causing a massive loss to national exchequer.

Under the relevant notification, the Ministry of Foreign Affairs has to issue authorisation for local sale, on payment of customs duty and taxes as per relevant schedule of the relevant notification depending upon the category of the country of origin of the diplomat based on reciprocity as determined by the Ministry of Foreign Affairs. The document has to be approved by Foreign Affairs Secretary with copy of each to FBR.

In view of the notification, the customs department would check the genuineness of the sales permissions with the help of Ministry of Foreign Affairs. Details showed that the FBR had constituted a committee to thoroughly probe the diplomatic cars scam where such luxurious vehicles were sold on fake documents in August 2008.

In October 2008, 5-6 vehicles were confiscated by the MCC, Rawalpindi, on the basis of confirmation made by the embassies, and FIRs were registered against the involved persons under section 32 of the Customs Act, 1969.

In November 2008, the customs department managed to collect relevant information from embassies and government departments to check registration of these vehicles. Sources said that once the Ministry of Foreign Affairs would verify all the sales permissions, confiscation of more vehicles is expected after verification in coming days.

The scrutiny of record showed that these 60 diplomatic vehicles were sold on fake NOCs for availing inadmissible exemption of duties and taxes. The embassies would also verify the actual names and addresses of the purchasers of these vehicles in question.


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## Pk_Thunder

*Prime Minister approves Rs 21.4 million for uplift schemes*​
BUREWALA (December 08 2008): Prime Minister, Yousaf Raza Gilani has accorded approval for the construction of soling and drainage schemes in NA-167 worth of Rs 21.4 million. MNA Chaudhary Nazir Ahmad Jatt disclosed this while talking to media personnel here on Sunday.

He further said that prime minister in his directive no. 347 dated 26-11-2008 has ordered Ministry of Finance in a Letter No JS (P) Elec/NA-167/D-463/47/SP-I/08 to release Rs 21.4 million during the current financial year out PWP-II 2008-2009 to the government of Punjab for onward transfer to district government of Vehari for the execution of the schemes.

He said that provincial government would ensure distribution of funds to executing agency by 8th December 2008 after completion of all formalities. He said that federal government has already released Rs 9.5 million under Peoples Works Programme-I (PWP 2008-09) on the instructions of President for 25 sanitation and road sector schemes proposed by the MNA Chaudhary Nazir Ahmad Jatt.

These schemes will be for the 25 cities and village areas of NA-167. While expressing his apprehension he said that some political elements wanted to sabotage the development process and eager to take advantage of the situation, but he would not allow anyone ruin his efforts. He further reconfirmed his commitment that whole city and its adjoining areas would be get provision of sui gas in the upcoming days.


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## Pk_Thunder

*Six development projects completed*​
KARACHI (December 08 2008): Six development projects have been completed while four are under progress in Sindh Health Department during the tenure of the present government. This was stated by Sindh Health Minister, Dr Sagheer Ahmed, while talking to people from different walks of life during his visit to Civil Hospital Hyderabad.

A statement issued here on Sunday said that he further pointed out that the schemes completed during the last eight months are renovation of CCU department at Civil Hospital Karachi, equipment for cancer center at SlUT Karachi, renovation of existing building of Chest Diseases Hospital Kotri, expansion and improvement of Services Hospital Hyderabad with addition of casualty ward and 10-bed maternity/paediatrics ward, up gradation of THQ Hospital Ghotki to the level of Civil Hospital by providing coronary care and dialysis unit and digital telephone exchange with underground cable wires at Chandka Medical College Larkana.

The Provincial Minister said that besides above complete projects, four development schemes are also under progress and include the renovation and improvement of Sindh Government Hospital Karachi, construction of 400-bed Hospital Karachi, safe blood transfusion reforms in Sindh and basic development needs programme in Sindh.

He further said that in addition, up-gradation of Taluka Headquarter Hospitals to the level of District Headquarter Hospital in seven districts are also under way which include Kamber, Tando Muhammad Khan, Tando Allahyar, Jamshoro, Kashmore, Matiari and Umerkot, besides establishment of Medical College at Mirpurkhas, expansion and improvement of 12 DHQ Hospital in Sindh, establishment of TB Sanitorium at Bado Jabal in District Dadu, revitalisation of teaching hospital and medical colleges in Sindh.

The minister said that the government is committed to provide basic health facilities to common people at their doorstep and taking revolutionary steps to achieve the desired goals.


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## Pk_Thunder

*Hiring of foreign experts for Diamer-Bhasha dam: Wapda accused of violating rules*​
MUSHTAQ GHUMMAN
ISLAMABAD (December 09 2008): The Water and Power Development Authority (Wapda) has been accused of violating World Bank and Pakistan Procurement Regulatory Authority (PPRA) rules in hiring International Panel of Experts (IPoE) for Diamer-Bhasha dam consultancy, official sources told Business Recorder.

The cause of dispute between Wapda and Finance Ministry was payment of foreign exchange to the international experts who visited Pakistan from time to time to review the detailed engineering design of the project.

These visits are included in the PC-II of the project, which had been approved by the Executive Committee of the National Economic Council (Ecnec) on September 27, 2003 at a cost of Rs 567.842 million, including foreign exchange component of Rs 170.714 million. So far, the experts have undertaken three visits.

Sources said that Wapda had approached the Ministry of Finance for release of foreign currency to meet the expenditure of two subsequent visits, in reply to which the Finance Ministry suggested that ex post facto approval of Ecnec should be sought to the agreement of all three visits of IPoE, so that the required foreign exchange could be released, as the consultancy agreement was not cleared by the Finance Ministry.

The Ministry of Water and Power had submitted following suggestions for consideration of the Ecnec:

Ex post facto approval by Ecnec may be granted to the agreements of three visits of experts of Daimer-Basha dam project, enabling Wapda to regularise the foreign currency payment for the second and third visits.

A special waiver may be granted to the consultancy and other agreements of large dams for prior clearance by Finance Ministry subject to observance of all codal formalities and requisite budgetary provision in local as well as foreign currency.

Sources said that Finance Division did not support the proposal of waiver from prior clearance, whereas it supported the proposal of grant of ex post facto approval of the agreement.

Sources said that original PC-II for detailed engineering design of Diamer-Bhasha dam was approved by Ecnec in its meeting in September 2003 at a cost of Rs 567.842 million including foreign exchange component of Rs 170.714 million. The PC-II was, however, revised due to inclusion of some leftover essential works which were approved by Ecnec in its meeting held on March 7, 2007 at a cost of Rs 1677.424 million including foreign exchange component of Rs 98.230 million.

They said that Wapda prior to the first visit of IPoE had approached Finance Division for release of $ 73,319, which was accordingly released. However, on May 13, 2006 the Finance Division wrote to Wapda that the consultancy agreement had not been cleared by Finance Division as per the decision of Ecnec of December 17, 1996. Therefore, ex post facto approval of Ecnec be sought.

Wapda replied that funds for the visits of IPoE were a part of the approved cost of the PC-II. Therefore, it was assumed that no further clearance/approval in respect of the visits of IPoE would be required.

The matter remained under correspondence with the Finance Division and, in the meantime, experts undertook second and third visits. These visits of experts were inevitable for technical review of the detailed engineering design as without them the overall work of the engineering design would have come to a halt, sources quoted Wapda Chairman as saying in the Ecnec meeting.

Sources said that Wapda also claimed that it was in the process of constructing large dams, which envisage a number of consultancy and other agreements involving foreign exchange components.

There is every possibility that processing of agreements for prior clearance of Finance Division would result in unnecessary delays which would directly affect the implementation of the projects of national importance, to be completed by year 2016. It is pertinent to point out that contracts in Wapda are awarded with the approval of the authority under Wapda Act, provision and a whole time Member (Finance) has been appointed by the GoP as member of the authority.

Wapda was of the view that requisite financial controls are thus inbuilt in the working of the Authority, requesting that a special waiver may be granted to the agreements of large dams for prior clearance by Finance Division, subject to observance of all codal formalities and requisite budgetary provision in local as well as foreign currency.


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## Pk_Thunder

*EU vows to boost political, trade ties with Pakistan*​
BRUSSELS (December 09 2008): The European Union vowed Monday to boost political and trade ties with Pakistan, a day after insurgents there torched nearly 200 vehicles destined to supply Nato forces in Afghanistan.

The EU "acknowledges the complex and urgent challenges Pakistan is facing, especially regarding the overall security situation and economic crisis," the bloc's 27 foreign ministers said in a statement after talks in Brussels.

"The European Union stands ready to strengthen bilateral relations with Pakistan and to look for possible ways of increasing its financial assistance to the country," it added. The raid came a day after about 250 heavily armed militants attacked two major terminals in Peshawar to destroy supplies bound for the Nato-led force in neighbouring Afghanistan.

And just hours before the EU statement Monday, a second raid near Peshawar destroyed nearly 100 more vehicles bound for Afghanistan. On the political front, an EU troika of senior officials will visit Islamabad soon, which French Foreign Minister Bernard Kouchner said could lead to an EU-Pakistan summit in the first half of 2009.

"There is a need to visit our Pakistani friends, through this troika, as quickly as possible," said Kouchner, whose country holds the EU's rotating presidency until the end of the month.

Cooperation would be boost in "trade and development, intercultural exchange, non-proliferation, human rights, migration, counterterrorism and radicalisation and education," said the ministers. Pakistan's battle against extremists, who have taken their war against Nato-led troops in Afghanistan on to their territory, has become a major concern. The EU's anti-terror co-ordinator Gilles de Kerchove is set to travel there in January. "The need for urgency is clear. The need to help the Pakistanis, under President (Asif Ali) Zardari, in their fight against terrorism is just as clear," Kouchner said.

The ministers also urged Islamabad to cooperate fully with investigations into the attacks in Mumbai last week, in which gunmen struck multiple targets, killing 163 people and wounding another 300.

The EU has sent some 500 million euros in aid to Pakistan since 1976, according to the European Commission, and has quadrupled its funding for the 2007-2010 period, with 50 million euros (65 million dollars) earmarked so far.

Brussels wants to target Pakistan's lawless border areas with Afghanistan with its aid, focusing on rural development, natural resources management, education and the development of human resources. "We will particularly be there in this frontline between Pakistan and Afghanistan because this is the poorest area," EU External Relations Commissioner Benita Ferrero-Waldner told reporters.


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## Neo

*100 percent surge recorded in 2007-08 fiscal deficit ​* 
KARACHI (December 09 2008): All balance indicators of fiscal performance depicted sudden deterioration in last fiscal year 2007-08, resulting in record increase of over 100 percent fiscal deficit, to Rs 777 billion, highest during last ten years. Overall fiscal deficit surged by 105 percent from Rs 377.5 billion in fiscal year 2007 to Rs 777.2 billion in fiscal year 2008.

The State Bank of Pakistan said in its annual report for 2007-08 that deceleration in revenue growth, coupled with a strong rise in total expenditures, driven by exceptionally large interest payments and current subsidies, caused serious deterioration in all key fiscal performance indicators during FY08.

The year saw the fiscal deficit as a percentage of GDP rise to 7.4 percent, highest level of budget deficit since FY99 and against the budget target of 4.0 percent of GDP for the year and compared to 4.3 percent of GDP witnessed in the preceding year.

The report said the growth of deficit reflected a fall in revenue growth and acceleration in total expenditures. Revenue balance moved firmly into deficit during FY08, reaching 3.4 percent of GDP, against the budgeted surplus of 1.0 percent of GDP. "This is truly troubling since the Fiscal Responsibility and Debt Limitation (FRDL) Act requires the revenue balance to be at least zero, as a percent of GDP, by FY08 and beyond", the report said.

Primary balance, as share of GDP, recorded a deficit of 2.7 percent in FY08 compared to a deficit of 0.1 percent in FY07. Despite large amount of interest payments, the worsening of primary balance was mainly attributable to high current expenditures.

Also, primary and revenue balances, measured as percentage of GDP, moved solidly into deficit during FY08, after hovering around zero in the preceding years. The report said that a quarter-by-quarter accumulation of budget deficit showed a particularly large imbalance in Q4-FY08. However, a substantial part of this oversized addition to fiscal deficit in Q4-FY08 represented the recognition of the liability accrued during all three preceding quarters of FY08 on account of unpaid price differential claims.

Even though tax revenues increased by a respectable 18.1 percent during FY08, as compared to the growth recorded in FY07, the rise lagged behind 23.1 percent growth budgeted for the year, it said.

This was mainly caused by a substantial shortfall in collection under direct taxes. Also, collection of surcharges on oil and gas witnessed considerable declines, (due to non-adjustment of domestic energy prices with rises in international oil prices) leading to significant deceleration in non-tax receipts.

Consequently, total revenues rose to Rs 1,499.4 billion during FY08, up by 15.5 percent compared to 20.6 percent growth realised in FY07, the report said.

The deceleration in total revenues, combined with a rise of 35.9 percent in total expenditures dictated a large jump in fiscal deficit during FY08. The increase in total expenditure during FY08 was fuelled by excessive current spending owing to interest payments, subsidies and defence expenditures.


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## Neo

*Afghan trade team to discuss Pak-made diesel engine import for agricultural purpose ​*
LAHORE (December 09 2008): A high level private sector trade delegation from Afghanistan will visit Lahore after Eid-ul-Azha to import Pakistan made diesel engines for agricultural purpose.

Chief executive officer KAM Engineering, Khalid Saeed Khan told APP here on Monday that the Pakistan made KAM diesel engines have become very popular in Afghanistan, compared to all brands of those made in India, and are being successfully used for agricultural purposes.

He further said the Afghan team will visit the state of the art plant and see the engine assembly process, using indigenous technical know-how and expertise, which has helped to control the price of the product with minimum overhead expenses.

In their war torn country, the Afghanis are now inclined to bring maximum area under cultivation to meet the ever increasing need of foodgrains. For this purpose, they need quality agri inputs and implements, and Pakistan made products offer the guarantee to compete in terms of quality and price, said the firm's Director Marketing, Sh Muhammad Amin.


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## Neo

*Trends showing declining importance of agriculture sector: ADB ​* 
FAISALABAD (December 09 2008): Pakistan's economy is showing trends of declining importance of the agriculture sector and the increasing importance of the services, industry and manufacturing sectors. However, the pace of structural change has been extremely slow (more than half a century) and growth rates showed a boom-bust cycle.

Though only recently the growth rates of the economy had been on a modest upward trend, the next few years may again show a downtrend. Inequality is still highly skewed and poverty has not decreased significantly.

A Report on 'National Agriculture Sector Strategy' (NASS) revealed this. The report is prepared by Lourdes Adriano, assisted by Ma Adora Deguito and Ma Roanna Santos of the Asian Development Bank (ADB) based on a consultant report for the NASS formulation unit of the Ministry of Food, Agriculture and Livestock in collaboration with the ADB through a Technical Assistance grant.

The ADB report suggested that the strategy and the five-year action plan for laying the groundwork to invigorating the rural economy so that it can contribute to a sustained and inclusive industrial growth road for Pakistan.

It said that like all developing countries, Pakistan is striving to become an industrialised economy. The road to industrialisation is indicated by decreasing share of agriculture to gross domestic product (GDP), labour force, export revenues and correspondingly higher shares of manufacturing, industry and service sectors in GDP.

A geographic movement of human and capital resources will also accompany shifting of the focus of economic sector from rural to urban areas. While there is a tendency for income inequality to become more skewed as the economy shifts gear from agriculture-dependency to industrial and service sector focus, per capita incomes will eventually rise, poverty will decline and a more egalitarian society will evolve.

The ADB report contended that the turtle pace feature of the structural transformation of Pakistan 's economy has a lot to do with the nature and quality of growth in the rural economy. Rural economy pertains to the economy of the rural area, which would include population concentrations in farms, villages and towns below a threshold of 40,000 people. Essentially the rural economy consists of farm and non-farm activities.

Farm or agriculture sector consists of crops, livestock, agro-forestry and fishery and aquaculture. Non-farm activities include all rural economic activities outside farm agriculture. It includes self-employment, wage employment and non-farm production.

Although non-farm activities are increasing in relative size and significance as employer of labour force in the rural economy, agriculture remains the major source of income in rural areas and is the driver of rural economic growth. However, the agriculture sub-sector's performance in the past half century has been mediocre, averaging at 2.8percent annual growth rate and dependent on a few commodities like wheat, cotton, rice, and sugarcane.

Further, diversification to other commodities has been slow and integration to value-adding supply chains and the global markets, have been weak. Where supply chain networks exist, integration has not stimulated further growth and multiplier effects in the manufacturing and service sectors in the rural non-farm sub-sectors. The rural non-farm sub-sector is characterised by micro and small to medium economic activities involving a numerous number of geographically dispersed and low-capital using intermediaries.

However, the report presents a disappointing conclusion saying that the end-result is a virtuous circle of slow growth in the rural economy, lagging expansion of the service and industrial sectors, concentration of urban growth in a few large metropolis centres. Additionally, a slow rise of per capita incomes (mainly in urban areas), leaving the majority of the rural populace still impoverished.


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## Neo

*Sialkot exporters to set up 200 megawatts power plant ​* 
LAHORE (December 09 2008): After having a self-funded airport and Dry Port projects, the exporters' community in Sialkot is now heading seriously towards setting up 200MW power plant on self support basis.

Sources in the Sialkot exporters community informed the Business Recorder that a meeting was held recently in this connection where representatives from Sialkot Chamber of Commerce and Industry and different trade bodies considered seriously of putting up a power plant in private sector with a generation capacity ranging between 150 MW to 200MW.

"Contacts are made with one leading electric company in Lahore to have back-up information on the project and a delegation of Sialkot exporters is due to visit it after Eid holidays," said sources.

The power consumption of Sialkot's export-led industry ranges between 250 - 300MW at present and the exporters are thinking seriously to install a power generation plant through self-funding like they did earlier in the case of Rs2.5 billion Sialkot International Airport project as well as the Sialkot Dry Port project.

Sources in the Sialkot exporters' community said concerns of this export-oriented city are mounting with everyday increase in power shortages. These circles further believe that the government would not be able to meet a power shortage of 5000MW by December 2009, as claimed by the PPP-led government. Therefore, they said, the Sialkot exporters have decided to build their own power generation resources instead of relying upon fragile government claims.

Important developments are expected to take place on the project after Eid when the Sialkot city exporters would be negotiating with a leading electric appliances company in Lahore. Sources have further pointed out that the concerned company may also be ready to have a joint venture with Sialkot exporters in the project. However, no estimates of setting up 200MW power generation plants were available with the exporters and they pointed out that a meeting with electrical company would be helpful in this regard.


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## Pk_Thunder

Neo tu agaya mere dost

Bro i have updated the thread yesterday,you are posting the old ones

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## Neo

*$1 billion needed to build underground storage for imported gas ​* 
ISLAMABAD (December 07 2008): Pakistan will require one billion dollars to build underground storage to store gas to be imported from Iran and Turkmenistan. Sources in Petroleum Ministry revealed to Business Recorder on Saturday that Asian Development Bank (ADB), in a joint study with Sui Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL), had disclosed that the proposed underground storage would cost one billion dollars to store gas imported from Iran and Turkmenistan.

The ADB has also noted that Sindh is the most suitable province as far as geographic, political and law and order situation is concerned. However, the work on the underground gas storages, sources added, would be initiated after gas import deals with Iran and Turkmenistan matured.

According to the sources, the government has already reconstituted a sub-committee of the Economic Co-ordination Committee (ECC) of the Cabinet that has a mandate to oversee Iran-Pakistan-India (IPI) gas pipeline and Turkmenistan-Afghanistan-Pakistan-India (TAPI).The committee will also monitor the underground gas storages project.

Sources said that SNGPL, SSGCL and ISGCL would be involved in building three to four underground gas storages to store imported gas from Iran and Turkmenistan. Pakistan will import 2.2 billion cubic feet gas from Iran, out of which Pakistani share stands at 1.05 billion cubic feet. If India does not join the project, Pakistan would consume the entire amount, i.e. 2.2 billion cubic feet.

Pakistan will import 3.2 billion cubic feet gas from Turkmenistan and this gas would be shared equally by Pakistan and India. Sources said that Pakistan would also need underground storages for gas reserves and the gas would be supplied to different areas of the country from these underground gas storages.

Pakistan and Iran have currently entered a dispute over the gas price that is the big hurdle to make further progress on the IPI gas pipeline project. The sources further said that Pakistani and Iranian officials were expected to meet soon in Tehran to resume dialogue on the gas price issue.

Iran has demanded an increase in price according to a new pricing formula; the earlier gas sales purchase agreement (GSPA) had been agreed between Pakistan and Iran.

Sources said that the steering committee on TAPI gas pipeline project was scheduled to meet in New Delhi during the current month, but the Mumbai carnage had caused a delay. Turkmenistan, during the meeting, was expected to present certification on its gas reserves, a demand made by Pakistan and India several times. Turkmenistan has failed so far to provide the gas reserves certification.


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## Neo

*Our hydropower scorecard ​*
Pakistan has been able to add only 6,463 megawatts of hydropower to its energy mix over the past 60 years, as against an untapped potential of 41,000 megawatts, including 15,000 megawatts from Northern Areas alone, according to experts. As a result, the national economy has had to pay a steep price for this neglect.

Ironically enough, after 60 years the hydel sector is still not being given the degree of primacy it ought to have received by now, because under the Vision 2025 programme, only 769 megawatts of hydropower is planned to be added to the national grid by the year 2010.

The "go-slow" has widened the gap between power supply and demand to around 5,000 megawatts, with the country's average annual power growth rate standing at about eight percent. This means experts said, that we need to develop an additional annual generation capacity of at least 2,000 megawatts. Meanwhile, most of the hydropower projects unveiled under the Vision 2025 programme are behind schedule, and confined only to pre-feasibility or feasibility stage.

One of the main causes of the crippling delay, as quoted in a Recorder Report, is that our technocrats have mixed up priorities of power generation from "big multi-purpose water reservoir dams" to the "run of the river" power generation.

The main purpose of the dams is irrigation, with power generation being only a by-product, while the latter category is meant purely for power generation. We have given priority to Kalabagh, Bhasha and Akhori dams, which became hostage to political wrangling, at the cost of non-controversial "run of the river" projects.

The technical distinction pointed out by the experts should serve as a useful parameter for the government in future. The "run of the river" projects are relatively easier to execute, and the power obtained from them is inexpensive. According to experts, the government should prioritise power projects, with shorter-duration schemes being taken up first.

They have said that Pattan, Thankot and Dasu projects should be given priority over Bhasha, for instance, because the latter's cost would be over 15 billion dollars, with the execution period extending to 10-12 years. A look at the country's power generation capacity will help us put things in perspective.

According to available data, the country's total installed capacity stands at 20,456 megawatts, while its dependable generation has been worked out at 18,000 megawatts. However, firm power supply stands at 16,000 megawatts in summer and only 13,000 megawatts in winter after taking into account power theft, line losses, reduced gas supply and lean spells of hydel generation.

The total peak demand has been calculated at 17,800 megawatts at the national level which was projected to go up to about 19,000 megawatts by the end of 2008. According to analysts, the necessary policy tools have been in place for many years to ensure sustainable addition to our power generation capacity, but "non-professional" considerations of some of those who have traditionally dominated the water and power sector have stymied timely execution of projects.

This has landed us in our current energy predicament. Secondly, a major cause of the crisis is lack (non-implementation?) of a foolproof mechanism at the national level for predicting with accuracy the quantum of energy the country will need at a given point in time, to be able to attain the growth rate set by the government. In fact, things seem to be as dismal in assessment of energy requirements as in the crop production assessment.

Thirdly, although spells of accountability have been witnessed from time to time to set things right, to our knowledge there has been no major effort to hold to account those who have been in charge of our water and power sector over decades. Although attempts have lately been mounted to set things right, but there are unfortunately no signs of success in hydropower or coal sector generation, which appears to have been a victim of callous neglect.

In order to loosen the stranglehold of the energy squeeze we are caught in, we can now at best launch only additional oil-based thermal projects - an option for which there may be many takers. As experts in our report have suggested, the government should re-prioritise the power projects, by taking up the short duration projects first.

In fact, there is an urgent need for the government to undertake fast-track execution of projects across the entire power spectrum, to tide over the deficit that is threatening to bring the economy to a grinding halt. We do not agree with the experts quoted in our report that Kalabagh dam, etc, should be given priority, because it has a vast diversionary and divisive potential.

There is even a cynical perception that Kalabagh has at times been used by those at the helm for its divisive potential, to put the hydel option on the backburner, in preference to the easily implementable (and lucrative) thermal option. We would strongly advise against using this red herring, yet again. Secondly, fast-tract implementation of projects across the power spectrum needs to be launched immediately, under high-level political oversight.

Thirdly, the in-built system of accountability and supervision too should be activated to see to it that there is no foot-dragging any more. We believe that only by adopting a sincere and holistic approach to the issue can we rid the economy of the millstone of devious delays.


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## Neo

*Enhancing Pak-China relations ​*
The Pakistan Embassy in China has revealed that the two countries have successfully concluded negotiations on carrying out a joint study for comprehensive economic co-operation. According to the embassy, the study is expected to further strengthen co-operation in all sectors, including service, trade and investment.

One would hope that this would also include the banking sector, whereby Pakistani banks can provide their Chinese counterparts with access to the Western markets. The agreement to launch a joint study comes in the wake of the Chinese pledge to release around 500 million dollars for balance of payments support for Pakistan, a form of assistance that China normally does not extend to any country.

In addition, it has been reported in the Business Recorder that China is going to provide two nuclear plants to Pakistan, with a generation capacity of 320 MW. This deal was ostensibly struck during President Asif Ali Zardari's recent visit to Beijing and is seen as a follow up of the deal originally struck between Musharraf and the Chinese government.

There is no doubt that Pakistan-China friendship is legendary within the annals of Pakistan's bilateral relations with other countries. The US in particular and other Western countries in general have extended assistance to Pakistan only when they perceived that Pakistan had a strategic geo-political importance for them. At times when Pakistan did not have such importance, as evident during the time when the Taliban were in power in Afghanistan, co-operation was minimal.

More disturbing has been the fact that historically the US has forged relations with Pakistani leadership even at the cost of democracy. This was patently apparent during Musharraf's last days in power and it was only when there was overwhelming domestic demand for change in leadership that the US was forced to abandon its support for Musharraf. In marked contrast, China has been a friend to this country since independence, a friendship between the peoples of the two countries that is not dependent on the orientation of our leadership.

In spite of sustained friendship between the two countries, it is relevant to note that there is room for further improvement.

At present bilateral trade between the two countries is estimated at around 6.8 billion dollars, with the potential to more than double to 15 billion dollars in the foreseeable future. To-date trade is in China's favour, but this can change, when transit trade and route facilities through the Gwadar Deep Sea Port are operational. In addition, the India-Pakistan-Iran gas pipeline project can also benefit China if and when the modalities of a deal are worked out.

There is also tremendous scope for expanding relations with China at a regional level. The forums with which the two countries have been involved are Shanghai Co-operation Organisation (SCO), the ASEAN-Regional Forum (ARF) from East Asia to Eurasia, and Central Asia Regional Economic Co-operation (Carec).

Discussions in these forums have ranged from co-operation against extremism and terrorism to an energy corridor that would supply the energy starved sub-continent with electricity from the energy surplus Central Asian Republics. Thus the potential of operating within a larger regional context which provides opportunities for win-win situations to all member countries has also opened up with these forums. In this context, it is extremely helpful for Pakistan to have a 'genuine' friend at these forums.

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## dr.umer

*Ovex Tech awarded IBMs Tier-1 Business Partnership​*
12 Dec 2008

ISLAMABAD: Ovex Technolo-gies, Pakistan's premier Business Process Outsourcing (BPO) service provider, was recently rewarded with a 'TIER-1 Business Partnership by IBM', (The Global IT Giant).

Speaking at the occasion, CEO of Ovex Technologies, Faisal S Khan said, "Our clients have expectations from their technology investments. Partnerships with the world's IT leaders, pave the way and turn those expectations into accomplishments. It can help mitigate the risks inherent in technology deployments and ensure smoother implementations".

As a Tier-1 IBM Business Partner, Ovex intends to further fortify its solutions portfolio, particularly the IT Solutions aspect of its offerings and add value to businesses in the domestic marketplace. Ovex will now utilise IBM's advancements in scalability, service reliability and performance," Khan added. staff report


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## Pk_Thunder

*Pakistan's foreign exchange reserves rise to $9.095 billion*​
KARACHI (December 12 2008): Foreign exchange reserves of the country rose $14 million to $9.095 billion in the week that ended on December 6, the central bank said on Thursday. The State Bank of Pakistan's reserves fell to $5.916 billion from $5.942 billion a week earlier, and reserves held by commercial banks were $3.179 billion as compared with $3.139 billion.


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## Pk_Thunder

*Negroponte appreciates government's economic measures*​
ISHFAQULLAH SHAWL
ISLAMABAD (December 12 2008): US Deputy Secretary of State John D Negroponte on Thursday appreciated the measures taken by the government for economic uplift and assured Pakistan of continued US support for its economic revival and development agenda.

The US will continue its co-operation with Pakistan to bail out it from economic problems and execution of the development projects, Negroponte said while talking to Shaukat Tarin, advisor to the Prime Minister on Finance and Economic Affairs. Negroponte said that the US government will continue to support and assist in the continuation of economic assistance to Pakistan through the Friends of Pakistan Forum.

The advisor shared with US Deputy Secretary the economic agenda and policies of the government to stabilise the economy and address the challenges faced by Pakistan on account of international fuel and food prices. Tarin while appreciating the US support, highlighted that it needs to consider enhancement of market access for Pakistan's exports to the USA.

Negroponte acknowledged Tarin's views and suggested that bilateral investment treaty would go a long way in enhancing trade and investment between the two countries. The two leaders agreed to continue bilateral interaction to ensure increase in pace of co-operation between the two count


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## Pk_Thunder

*ADB extending $300 million loan to three provinces*​
RECORDER REPORT
FAISALABAD (December 12 2008): The Asian Development Bank (ADB) is extending three loans totalling $300 million to three provinces of Pakistan in support of local government programs to boost sustainable growth, reduce poverty, and improve the health of women and infants.

ADB is providing $100 million for the Second Balochistan Resource Management Program, $100 million for the Punjab Millennium Development Goals (MDG) Program, and $100 million for the Sindh Growth and Rural Revitalisation Program. The Balochistan and Sindh programs will also receive technical assistance grants.

The loans are helping the provincial governments address key constraints that hinder growth, poverty reduction and health gains. In the case of Punjab - which has the largest provincial population and economy in the country - funding for improving health care services will help it meet the MDGs for reducing maternal and infant mortality rates.

"The Program could potentially save the lives of up to 11,000 women and 235,000 infants by 2015 compared to a scenario without such support. It will also help Punjab improve public financial management in the health sector," said Rie Hiraoka, Senior Social Sectors Specialist for ADB's Central and West Asia Department.

The loan to the Sindh provincial government will help improve management of public spending and boost investment in rural areas, where poverty levels are high and economic opportunities are low. It will also promote private sector participation and public-private partnerships (PPPs) that can increase investment in much-needed infrastructure and social services. Technical assistance of $800,000 will be used to conduct studies and draw up options for PPPs. "The large rural-urban divide is a serious concern. Accelerating growth and improving the income of the rural poor are essential for economic and social stability in Sindh," said Xiaoqin Fan, Senior Public Resource Management Specialist at ADB's Pakistan Resident Mission.

In Balochistan - the country's largest but sparsely populated province - the loan will strengthen the provincial government's management of public finances, create a more sustainable and affordable civil service pension system, and help improve governance in the lucrative but largely-untapped mineral resources sector. A technical assistance grant of $800,000 will help the provincial government implement the Program.

"The Program will address some of the binding constraints on economic growth by allowing for more efficient use of public resources, while paving the way for greater private investment especially in the minerals sector," said Jose Antonio Tan III, Public Finance Economist in the Central and West Asia Department. The three loans will cover funding requirements for the first phase of each of the provincial programs, with ADB likely to provide further substantial funding for subsequent stages.


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## Pk_Thunder

*Jobs to workers/professionals: Italy approaches ministry for accord on migration*​
MUSHTAQ GHUMMAN
ISLAMABAD (December 12 2008): The Federal Cabinet has been informed that the Italian government has approached Labour and Manpower Division for signing an agreement to strengthen co-operation in migration matters regarding provision of jobs to migrant workers/professionals.

The agreement would not only take care of the security concerns of the government of Italy, but would also help in resolving the issue of exploitation of migrant workers by unscrupulous agents.

During discussion, it was observed that the sponsoring division had not met the requirement of rules of business of 1973 negotiations with Italy. The meeting took exception to the conduct of Community Welfare Attache in Milan (Italy), who transgressed the Cabinet domain by initiating negotiations for memorandum of understanding (MoU) without prior approval of the Cabinet.

This was evident from bullet points 1 and 2 of para 2 of the summary and minutes of inter-ministerial meeting in Annex-Il, which confirmed that negotiations had been started without prior approval of the Cabinet.

It was emphasised that faithful observance of the rules of business of 1973 must be ensured. Moreover, some lacunae were pointed out in the draft agreement. The omission to seek prior approval of the Cabinet was regretted by the sponsoring division, which also advised to consult the Law and Justice Division for vetting of text as required under the rules of business of 1973.

The Prime Minister noted that this was an opportune time for such an initiative to exploit the existing excellent relations with Italy, which would assume the chairmanship of G-8 countries next year.

The Cabinet considered the summary, dated November 3 2008 submitted by the Labour and Manpower Division on "Permission in Principle to start negotiations with the government of Itay for entering into an agreement in order to strengthen the co-operation in migration matters" and accorded ex-post-facto approval to the proposal in para 4 thereof to start formal negotiations between Pakistan and Italy on an agreement in order to strengthen co-operation in migration matters.

The Law and Justice Division be consulted by the sponsoring division for removal of lacunae in the draft agreement. A directive would be issued to all ministries/divisions to strictly comply with the requirement of rules of business to seek prior approval of the Cabinet to start negotiations with the foreign governments and to ensure that such incidents involving transgression of the Cabinet domain do not recur.


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## Pk_Thunder

*Pakistan ranks 34th in World Economic Forums Financial Development Report*​ 

ISLAMABAD, Dec 11 (APP): Pakistan ranked 34th in the World Economic Forums first Financial Development Report which was released in Pakistan through the Competitiveness Support Fund (CSF) on Thursday. CSF is a world Economic Partner Institute.

The report is a comprehensive analysis of financial systems and capital markets in 52 countries that explores key drivers of financial system development and economic growth in developing and developed countries and serves as a tool by which countries can benchmark themselves and establish priorities for financial system improvement.

Chief Executive of the Competitiveness Support, Arthur Bayhan, said: I am very happy to see that financial system in Pakistan is well reformed and competitive vis--vis Asia and Europe. At 34th, Pakistan is ranked ahead of the Russian Federation which is ranked at 35, Indonesia 38, Turkey 39, Poland 41, Brazil 40, Philippines 48 and Kazakhstan 45. 

The United States narrowly edged the United Kingdom to take the top position in the Financial Development Index. The United Kingdom was second while China ranked 24th and India 31st.

The rankings are based on over 120 variables spanning institutional and business environments, financial stability, and size and depth of capital markets, among other factors, in assessing the complex financial systems of the 52 countries studied.

An important and unique measure captured by the Index includes the degree to which businesses feel they can easily access capital.

The Financial Development Index is based on three main pillars - Factors, Policies and Institutions, Financial Intermediation and Capital Availability and Access. These are further divided into sub - pillars.

Under Factors, Policies and Institutions pillar, Pakistan ranks 49th in institutional environment, 50th in business environment and 37th in Financial Stability. In the Financial Intermediation Pillar Pakistan ranks 25th in banks, 42nd in non banks and 17th in Financial Markets. Under Capital Availability and Access, Pakistan ranks 33rd.

Indicators showed that in Business environment Pakistan had development advantage in Cost to Export, ranking 6th, Cost of closing business 5th.

In Financial Stability Change in Rreal Effective Exchange rate ranked 20th, External debt to GDP 10th, Frequency of banking crises 1st, stability index 15th.

In corporate governance Pakistan ranked at the very top in shareholder rights index, 14th in strength of investor protection.

In the Non banks pillar, Pakistan ranked 9th in the Real growth of direct insurance premiums. In equity market movement Pakistan ranked at the top again in equity market turnover.

The report draws on data taken from a variety of publicly available sources as well as the World Economic Forums Executive Opinion Survey, a comprehensive annual survey conducted by the World Economic Forum with its network of Partner Institutes (leading research institutes and business organizations).


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## Neo

*CPI inflation at 24.68pc as compared with 8.67pc last year ​* 
*Fuel and lighting charges up by 31.91pc, food by 30.44pc,transport and communication by 28.62pc​*
Friday, December 12, 2008

ISLAMABAD: Fuelled by unbearable high food inflation, Pakistans Consumer Price Index (CPI) during November 2008 stood at 24.68 per cent decreased by 0.12 per cent in October 2008, when it stood at 25 per cent. Last year, in November 2007, CPI-based inflation was recorded at 8.67 per cent, the Federal Bureau of Statistics (FBS) reported on Thursday.

According to the latest CPI snapshot of the FBS, food inflation during November 2008 stood at 30.44 per cent, in which non-perishable food items price increased by 31.95 per cent and perishable food items by 21.29 per cent over November 2007.

Further more, five-month (July-November 2008-09) average inflation stood at 24.65 per cent while Wholesale Price Index (WPI) stood at 30.12 per cent last year during the same period, CPI stood at 7.85 per cent and WPI at 9.88 per cent. Huge increase in WPI-based inflation indicating further increase in retail prices of essential commodities. The rising inflation is also making it more difficult for pensioners and low income masses living on a very nominal fixed income a month in the country.

It is worth mentioning that the dwindling value of the Pakistani rupee, which is touching its lowest as a result of huge current account deficit, is pushing up prices of essential commodities on one hand, and on the another hand making imports costlier.

CPI covers the retail prices of 374 items in 35 major cities and reflects roughly the changes in the cost of living of urban areas. According to it, in November 2008, fuel and lighting charges were up by 31.91 per cent, food and beverages by 30.44 per cent, transport and communication by 28.62 per cent, clearing laundry and personnel appearances by 20.36 per cent, house rent by 16.80 per cent, education by 16.33 per cent, apparel textile and footwear by 15.85 per cent, household furniture and equipments by 15.02 per cent, recreation and entertainment by 12.48 per cent and medical expenses increased by 12.55 per cent over November 2007.

Economic pundits believe that imported inflation, which is expected to weaken as a result of declining crude oil prices, would also help in minimising the pressure of cost push inflation in the coming months.

They believe that for each one per cent increase in inflation, more and more Pakistanis fall in to poverty indicating that inflation was hitting poor Pakistani consumers harder than the more affluent ones. Specifically, the poor are highly sensitive to the price changes in food, particularly staple food items.

It is interesting to note that high inflation trend in food has been noticed since the start of the last fiscal (July 2007), when food inflation stood at 8.47 per cent, in August 8.62 per cent, September 12.97 per cent, October 14.67 per cent, November 12.47 per cent, December 12.21 per cent, January, 2008 it stood at 18.25 per cent, February 16.05 per cent, March 20.61 per cent, April 25.5 per cent, May 28.48 per cent, June 32.05 per cent, July 33.81 per cent, August 34.09 per cent, September 29.91 per cent, October 31.67 per cent and now during the month under review (November 2008), it stood at 30.44 per cent.

Despite the adverse impact on the low-income groups, no effective steps are being taken by the government to reverse the trend. The government seems to be indifferent to the plight of the poor and the lower middle class, who find it increasingly difficult to make both ends meet with the soaring prices of food stuff and medical expenses.


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## Neo

*Pakistanis worried about UAE investments ​* 
Friday, December 12, 2008

KARACHI: Pakistani real estate investors in the United Arab Emirates (UAE) are not the only ones to have lost out heavily on their investments, for many well-off Pakistani families looking towards owning a home in the pearl of the desert are now in a lurch as construction for several projects has stopped due to the financial crunch the Arab country is facing.

One Pakistani investor, Waleed Mughal who had invested in a residential project is worried to death over what would happen now as he had made plans to move out of his rented villa and take up residence in his own home once completed.

He expressed that the freehold developers had promised to complete the project by early 2010 and he had invested heavily in owning an apartment. Now the project is 80 per cent complete but the future of the remaining 20 per cent is uncertain. Despite repeated queries, I havent received any response on what is likely to happen next, he articulated.

Many others like Waleed are in the same dilemma as the freehold properties of UAE promised world class luxuries and were priced for the same. Not being professional investors, and digging in to their savings to make their dreams come true, these families are now completely distressed.

According to a real estate experts analysis, the UAE real estate market has already declined by 22 per cent and a further 17 per cent of the downfall is expected before the year ends.

While local investors have been left severely wounded by the losses they experienced there, which run in millions and billions of rupees, many families dreaming of Dubai as their second home and having permanent residency are now pale with fear over their investments.

Though the UAE government continues to decline the fact, several projects in the country have come to a standstill informs a real estate expert from UAE. He shares that the Arab country claims that the projects have simply slowed down and all will be well by the beginning of the new year, but the reality is far from it.

Take projects such as Burj Dubai, Palm Deira and Jumeirah Gardens as examples or real estate giants Emaar and Al Nakeel he continued. All of these have either backed out completely or are now reviewing their launched plans he said.

The expert further shared that UAE officials were now taking action against anyone being verbal about the recession in the local real estate market. He went on to say that some had tried to bribe Pakistani investors to continue investing while offering them facilities such as free visa, travel and living expenses in the UAE.

The problem with our people is that they invest without thoroughly analysing the market Senior Vice President of FPCCI Sub committee on Housing and Construction, Munir Sultan commented. Our people saw that everyone is rushing towards the UAE market and they decided to head for it too he voiced.

We want short cuts and quick money without an ounce of hard work and thats why our investors faced losses that have left them worse-off than from where they started. And unfortunately some honest families got caught in the middle of it too Sultan added.


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## Neo

*Housing sector may see $2bn investment from ME ​* 
Friday, December 12, 2008

KARACHI: The construction and housing industry is likely to attract a fresh inflow of foreign investment amounting to around two billion dollars, developers said.

Talks are underway with foreign investors for investing more than $2 billion in the housing and construction industry, Chief Executive of Rufi group, Manzoor Ahmed Rufi said addressing a press briefing on Thursday.

In this regards the group has convinced the Maqaseeb Group of Saudi Arabia, Theses of Abu Dhabi Housing Authority and Bilvadi of Dubai to invest this amount in the next two years in projects such as shopping complexes, hotels and residential and trading projects in Karachi, Lahore and Islamabad.

Manzoor Rufi said that overseas Pakistanis are grieved on the present economic situation of Pakistan and therefore in the current scenario, Pakistans housing and construction sector can play an important role.

All they need is the governments support because with its help we can launch constructions projects similar to Dubai which will also help activate more than 72 industries and create hundreds of jobs, he further commented.

Ramiz Rufi said soon an agreement between Hassham Abdul Ghania of Maqaseeb group, Saidul Moossa of Theses group and Anthon Sari of Bilvadi group Abu Dhabi, will be signed.


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## Neo

*Heavy loadshedding to continue into New Year ​* 
Friday, December 12, 2008

ISLAMABAD: With the recent rains contributing nothing to the water levels in Tarbela and Mangla Dams and the power generation falling sharply, heavy loadshedding may continue well into the New Year, officials warned on Thursday.

The daily water discharge from the Tarbela Dam would decrease from the present 48,000 to just 8,500 cusecs, they said, adding the release from the Mangla Dam would slump from 24,000 cusecs to zero by January 1, 2009  a New Year gift for consumers already hit by power outages.

As the hydropower generation is set to see a fall of 3,000 megawatts (MW), the Indus River System Authority (Irsa) and the Pakistan Electric Power Company (Pepco) have confirmed reduced water discharge plan from Jan 1. Sources acknowledged the recent widespread rains did have a positive impact in terms of irrigating the standing crops and controlling a variety of diseases but hastened to explain that the wet spell failed either to jack up the water levels or help overcome the shortfall in electricity generation.

Water levels go up both in Mangla and Tarbela dams when rains fall in catchment areas or when there is a rise in glacier temperature. You can assess the problem that water releases from both the main reservoirs would be cut down to merely 8,500 cusecs daily from the present 72,000 cusecs, a Pepco official told The News.

At the same time, the Irsa has whittled down the daily water releases from Tarbela to a mere 3,500 cusecs from the previous 48,000 cusecs and from Mangla to 22,000 from 24,000 cusecs, adding to reduction in power generation.

All these reductions are taking place in consultation with the provinces, Pepco and Wapda, as the use of water for irrigation has decreased considerably, forcing us to slash the discharges, an Isra spokesman said.

The official, confirming the plan to further cut the water discharges, verified the release from Tarbela Dam  70,000 cusecs a month back  had come down to 48,000 cusecs. By the same token, water releases from Mangla have also plummeted. The provinces have every right to stop drawing water as the reservoirs are built primarily for irrigation purposes and electricity generation is a by-product, he argued. Pepco official Tahir Basharat Cheema also confirmed the plan to reduce the water discharges and said the company had chalked out a strategy to deal with the situation, particularly when the releases would be at their lowest ebb from January onwards.

Cheema said Pepco would daily carry out load-shedding of up to four hours in urban stations and six hours in rural areas due to reduced water discharges from dams. As power demand came down almost by 3,000-4,000 MW in winter, the official pointed out it was 11,200 MWs before Eid, falling to 10,500 MWs on the day one of the festival and 10,800 MWs on the day two. Today, we have a demand of 10,500 MW but the actual power availability is just 10,000 MW, so there is a shortfall of 500 MW on the third day of Eid. The reason is a cut of 24,000 cusecs in water releases from today (Dec 11). I fear a power shortage of 2,000-2,500 MW from January when the Mangla Dam discharge will be zero and Tarbela at only 8,500 cusecs, Tahir Basharat Cheema concluded.


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## Neo

*Trade deficit widens by 20% in Jul-Nov​*
ISLAMABAD: Trade deficit of the country has further widened to $8.74 billion in July-November period (5 months) of the current fiscal year 2008-09 as compared to $7.26 billion in the same period last fiscal year, depicting an increase of 20.38 percent.

According to the official sources, Pakistan's exports amounted to $8.27 billion in Jul-Nov period of current fiscal year 2008-09 as compared to the exports of $7.34 billion in the same period last fiscal year projecting an increase of 12.67 percent. Despite the depreciation of Pak-Rupee in the recent months country's major export oriented sectors like textile, leather, carpets, surgical goods, sports goods and carpets have failed to cash in on this.

Imports of the country jumped to $17.01 billion during first five months of current fiscal year as against the imports of $14.6 billion in the same period last fiscal year indicating a growth of 16.50 percent.

On the other hand governments efforts to control surge in imports have not yielded encouraging results and imports of the country are still on the rise putting additional burden on limited foreign exchange reserves. The government had imposed regulatory duty ranging between 15 to 50 percent on the import of luxury and non-essential items.

However, this effort of the government has not shown required results and economic managers at Ministry of Finance are again considering the possibility of imposing regulatory duty on a few more items and are also examining the possibility to cover luxury items included in lists of FTA and PTA's that Pakistan have already signed. 

According to the trade performance during the month of November 2008 the country's exports stood at $1.53 billion and imports at $2.72 billion resulting in trade deficit to $1.2 billion.

The exports are projected to grow to $21.3 billion and imports to reach $35 billion in the current fiscal year 2008-09, however, the exports performance during the first five months predicts higher than expected trade deficit.

According to the Macro-economic Framework prepared by Panel of Economist headed by Dr Hafiz Pasha, balance of payments gap would be reduced to $ 4.5 billion in 2008-09 (from US $ 6.2 billion in 2007-08) and be largely eliminated in 2009-10. Growth of exports will take exports to $23.5 billion by 2009-10 whereas imports are expected to decline to $31.4 billion in 2008-09 from target of $35.4 billion in 2008-09. sajid chaudhry


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## Neo

*Islamabad seen getting up to $2 billion from Saudi and UAE ​*
KARACHI (December 12 2008): Saudi Arabia and the United Arab Emirates (UAE) plan to pledge up to $2 billion to help Pakistan overcome a balance of payments crisis, a former International Monetary Fund (IMF) official said. "It is expected that the UAE ($1 billion) and Saudi Arabia ($500 million-$1 billion) will offer additional financing," said Mohsin Khan, former IMF director for the Middle East and Central Asia, in an e-mail response to Reuters received on Thursday.

Khan was part of the IMF team which negotiated an emergency support package for Pakistan that was agreed to last month. He retired in November. Khan, who is due to join the Peterson Institute for International Economics in Washington, said China is likely to offer Pakistan $500 million as well.

He said Saudi Arabia and the UAE were expected to pledge the funds at the next meeting of a donor conference. A date for the "Friends of Pakistan" donor conference has not been set but it will probably take place in January, he said. Pakistan agreed with the IMF on a $7.6 billion loan in November out of which Pakistan has already received the first tranche of $3.1 billion.

Khan said external financing will also be provided by multi-lateral organisations such as the Asian Development Bank (ADB) and World Bank. The ADB has already given $500 million of an expected $2.2 billion, and the World Bank is expected to come through with $1.4 billion, while the Islamic Development Bank will provide a smaller sum, Khan said.

Pakistan's gross external financing requirement for the 2008/09 (July-June) fiscal year is $13.4 billion, a senior IMF official said late last month. The IMF will provide $4.7 billion of that total, Juan Carlos di Tata, senior adviser in the IMF's Middle East and Central Asia Department said last month.

Khan said Pakistan's gross domestic product (GDP) growth will probably be 2 to 3 percent, far slower than the official forecasts for the 2008/09 fiscal year ending June 30.

"Nothing points to a more optimistic projection, unless agriculture booms," Khan said. "But 2-3 percent for Pakistan is a recession and that has to be accepted." Pakistan's central bank said on Saturday in its annual report that the country's GDP is expected to grow between 3.5 percent and 4.5 percent in current fiscal year ending June 30, slowing from 5.8 percent growth in the previous years.

The IMF has projected GDP at 3.4 percent for fiscal year of 2008/09. Khan said for the next fiscal year, 2009/10, there should be some pick up but "growth will at best be in the 4-5 percent range, but probably no more than 4 percent." He also added that Pakistan's economic crisis is a very serious one this time and it would take several years for its economy to recover.


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## Neo

*'Pakistan's IT industry can survive global financial crisis' ​* 
LAHORE (December 12 2008): The Chairman Federal Task Force on Information and Communication Technologies (ICT) Salim Ghauri has said the Pakistan's IT industry is mature enough to survive, and even benefits from the current global financial crisis.

"Pakistan was now poised to do what India achieved in the aftermath of the 2002 IT industry crisis. India's IT based service business was set to suffer in the global financial crisis, and Pakistan could benefit from this situation," he said, adding: "It should, however, try to capitalise on the opportunities to capture the business that India was set to lose," he added.

While presiding over a meeting of the working group on software development and exports, he assured the participants to take up with the government the tax holiday demand for the IT industry which is going to expire in 2011. He asked the participants of the meeting to review the current IT policy independently with the view of identifying key areas for driving the growth of the software industry and its export competitiveness.

While emphasising the need of an urgent study to estimate the size of the software industry and its export competitiveness in Pakistan, he assigned a task to recognised local IT university for undertaking a revenue and employment estimation study for the IT industry.

He also requested the Pakistan Software Exports Board to arrange necessary funds in this regard. The Managing Director Pakistan Software Exports Board Talib Baluch has agreed with the proposal of Chairman ICT and assured him of PSEB's full support in this respect. Meanwhile, Chairman ICT has also urged the Pakistan Software Houses Association (Pasha) to share a 30-page guidelines document, properly vetted by the PSEB, for the study proposes.

However, he mentioned that surveys and censuses conducted so far to assess IT industry's size had not been effective. An effective estimation model needed to be worked out. He also demanded of the Statistics Division to recognise IT and ensure proper data collection using international codes.

He said special incentives or exemption could be extended to all such companies, to the extent of their reported export revenue, as a complete picture of industry's revenues would be in a better positioning of IT industry in the eyes of government as well as general public. The international research is of the view that the basic fundamentals for Pakistan's IT industry were in place. The key areas that needed attention were HR promotion, infrastructure, IT security and funding, he added.


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## Neo

*Government to overcome power crisis by 2009: minister ​*
KALAT (December 12 2008): Minister of State for Industries and Production, Dr Ayatullah Durrani said on Thursday that the government would overcome power shortage crisis by 2009 across the country. "The electricity crisis is inherited to the incumbent government which is direct outcome of the flawed policies of the previous government as it had not formulated any comprehensive strategy for power production in the country," he said.

While talking to tribal notables after offering Fateha for late-Dr Fazal Rehman Shah here at his residence. On complaints of residents of Kalat about non-availability of flour in utility stores, Dr Ayatullah directed the concerned officials of utility stores corporation to ensure provision of flour at fair price to the people in the district.


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## Neo

*1,000 megawatts power shortage likely ​* 
LAHORE (December 12 2008): Pakistan Electric Power Company (PEPCO) fears a possible power shortage of 1000 MW in the country soon after business activity resumed after weeklong Eid holidays across the country. The independent power experts are however expecting an alarming power shortage of 7000 MW with the closure of canals for de-silting purposes.

The PEPCO as well as the Disco officials' have started pulling long faces after spending an ideal current week of weeklong Eid holidays, when both of industry and trade activities remained closed altogether since last Monday.

In the absence of any business activity, the Pepco and Disco officials were in a comfortable position, as they were not bound to manage the available load, already depleting with every passing day. It is interesting to note that the Pepco had tried to take the credit by announcing at the start of Eid holidays that there would be no load shedding during the period without disclosing the fact there was no need of any such action with the closing of business activity in general.

Especially, when a large number of industrial units, particularly those in the textile sector, had already opted for closing down business activity due to the non-availability of gas to their power units.

It is interesting to note that the Pepco fears a power shortage of 1000 MW in a situation when the canals are not closed yet for de-silting purposes, delayed until end of December or early January because of a change in crop pattern. Earlier, it was presumed that canals would be closed by the middle of December for de-silting purposes, which had paled the faces of electricity management companies.

However, a disconnection of gas to the thermal power producing units hanged the fact of consumers into balance, as the Pepco announced a power shortage of two to four hours last week with the disconnection of gas to thermal units. Another interesting development took place last week when the Discos sent notices to the industrial units that no electricity would be available for them during peak hours ie in between 5:00 pm to 9:00 pm.

So, in general, the PEPCO had planned a load shedding of two to four hours for domestic and four to six hours for commercial consumers. However, the industrial sources told this scribe that they were already facing an unannounced load shedding of six to eight hours daily. The independent observers of the view that the power distribution companies would be left with a meager amount of electricity say 5000 MW only, against a consumption need of 12,000 MW.

The PEPCO Director General Energy Management & Conservation Tahir Basharat Cheema, however, was adamant by the middle of November that PEPCO is likely to retain 10,700 MW electricity against a consumer demand of 11,000 - 12,000 MW in December. According to his approach, the IPPs, producing 5,200 MW electricity at present, would remain operational during December against the last December when all of them were closed down for maintenance purposes.

Besides, the DG Pepco had added that Wapda has launched an aggressive campaign on electricity conservation and about 1000 MW is being conserved through it. The Wapda thermal units will also keep on adding 3,500 MW electricity to the system besides another 500 - 1000 MW through hydel projects like Ghazi Barotha, Tarbela and Rasool hydel power resources. However, the federal government sources are constantly pointing out a power shortage of 4000 MW from December onwards on account of canal de-silting and Sui gas shortage, which is proving correct in present scenario.

The independent observers strongly believe that the failure of Pepco on the one hand in ensuring sufficient stock of electricity ahead of crisis period and false claims of the Minister of Water and Power regarding overcoming the power shortage by next December are proving fatal to the economic growth of the country. They have urged the government to bring the responsible ones to the task and do not let the follies of inefficient power managers unnoticed any further.


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## Neo

*Tough times for banking industry ​*
EDITORIAL (December 12 2008): Banking industry of Pakistan, after enjoying robust health for a number of years, finds itself under pressure these days. The problem of extreme liquidity crunch was not yet over when another affliction appears to be raising its ugly head.

According to the latest data released by the State Bank, the amount of non-performing loans (NPLs) has registered a sharp increase of Rs 37.3 billion during July-September, 2008 to reach close to Rs 290 billion despite heavy provisioning made by the banks against NPLs in the recent past.

It is generally believed that the problem is going to get much worse in the coming months due to the very low recovery rate of consumer financing and high interest rates. The recent Stand-By Agreement with the IMF is likely to exacerbate the problem further. The State Bank of Pakistan had to raise the policy discount rate to 15 percent which was a prior condition for agreement with the Fund for the approval of 7.6 billion dollars loan.

As the letter of intent, just issued, has revealed, Pakistan is committed to considering another increase in bank rate in the next few weeks. Final decision would of course depend on the trend in the rate of inflation, level of foreign exchange reserves etc, but the possibility of further tightening of monetary policy cannot be ruled out.

The commercial banks/DFIs could have managed the situation without much disruption in their activities if their liquidity position was comfortable. Since they are now operating in a very tight market, they are forced to pay high deposit rates to attract liquidity and remain in business. Although the State Bank has reduced the Cash Reserve Requirement and also given some temporary relaxation in CAR, it has helped matters only partly.

All these factors have combined to set a stage where lending rates are going to stay at high levels for quite some time and burden the balance sheets of the banks with fresh NPLs. The experience with consumer financing has also added to the woes of the banking industry. The increasing asset quality concerns would force the banks to book heavy provisions for NPLs. According to the SBP, total provisions of the banking sector rose to Rs 44 billion by November 22, 2008.

These are expected to reach Rs 50 billion during 2008 compared to Rs 32 billion in 2007. As against the frenzy of last few years, profits of Pakistan's banking sector are also projected to slide by three percent during 2008 due to decline in capital gains and higher administrative expenses because of the adverse combination of inflationary pressures and network expansion cost.

Thanks to the stringent policy of the State Bank with regard to loan provisioning and higher immunity of the banking sector from global financial crisis due to various factors, the problems of the banking industry have not assumed critical proportions as yet, but monetary authorities in Pakistan need to be vigilant.

Cash-starved banks cannot afford to have a high and continuously rising rate of loan defaults for long without destabilising the system which could be very damaging for the economy. Continued tight monetary policy with rising interest rates seems essential to fight the current inflationary pressures and is a condition for the Sate Bank which it must follow to satisfy the Fund authorities and attain key macroeconomic objectives.

This policy is not going to be short-lived. It is, therefore, time for the banks to accept the ground reality and, instead of linking higher level of NPLs with the rising interest rates and wailing about it, to be more prudent in their lending policies. They need to restructure their asset portfolios and restrict credit facilities only to genuine and credible borrowers to improve their recovery rates.

In fact, containment of credit and money supply within reasonable limits with a view to stabilising the price level is the real purpose of tight monetary policy. At the same time, banks need to avoid the temptation to join the race for attracting higher level of deposits in a tight market by offering unaffordable deposit rates and preserve the market share at all costs.

In the last few years, competition in the banking industry has been very intense due to very high profitability in the sector, but now is the time for deeper analysis and reflection. Probably, the industry, given the size of the market, has reached a saturation point where consolidation and mergers may be a preferred policy option. It is good to see that banks are now avoiding the misguided policy of raising the level of consumer financing.

The Shaukat Aziz government tried to showcase the idea as a great achievement, but such a strategy does not suit our economic environment where saving and investment needs to be enhanced and consumption to be curbed for a sustained growth of the economy and lowering the accelerating level of imports. Also, the users of consumer finance are generally not mature enough to see the full implications of the new facilities.

We are not averse to the idea of consumer finance as such, but the country should have the right priorities in place. Anyhow, the impact of consumer lending in the past would continue to be felt for some time in the form of higher level of NPLs and more provisioning by the banking industry.

Overall, what we want to emphasise is the fact that our banking industry is nowhere near the crisis as is being felt in the industrialised countries nor is it facing insolvency threat, but there are certain warning signals which need to be heeded to keep it in good shape.


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## Neo

*WB lowers Pak GDP growth projections to 3 per cent ​* 
Saturday, December 13, 2008

ISLAMABAD: The World Bank (WB) has lowered the GDP growth projections for Pakistan to 3 per cent and the current account deficit to 4.6 per cent of the GDP for the current fiscal year 2008-09, states the Global Economic Prospects 2009 released by the WB. 

The current account deficit stood at 8.1 per cent of the GDP in the previous fiscal year 2007-08, which would be brought down to 4.6 per cent of the GDP by end June 2009. The WB forecasts Pakistans GDP growth to 4.5 per cent by the next financial year 2009-2010.

According to the WB report, the slowdown in growth during 2008 reflected increasing weakness in the regions two largest economies, India and Pakistan. 

In India, growth slowed across all sectors, with tighter monetary policy, rising inflationary pressures, and mounting fiscal and current account deficits weighing down economic activity.

The more recent onset of the global financial crisis resulted in sharp losses in Indias equity markets and drove down the value of the Indian rupee. Foreign institutional investors pulled out of India to cover losses in high-income countries and as risk aversion heightened across the globe.

In Pakistan, the economy deteriorated sharply over the course of 2008, as headline inflation surged, and the current account and fiscal deficits jumped on the back of the rising oil and food prices.

Political turmoil and the ongoing security concerns have also taken a toll on Pakistans economy, while the global financial crisis added substantial downward pressures on its financial markets.

Prior to reaching an agreement with the IMF for standby credit in mid-November, Pakistan came close to a full-blown balance of payments crisis. In neighbouring Afghanistan, the economy has been hurt by a decline in agricultural output caused by poor precipitation, a sharp rise in international food prices, and the wheat export restrictions imposed by Pakistan, in addition to the disruptive effects of the spreading insurgency.

The initial effects of the global financial crisis in South Asia were sharp corrections in regional equity markets. 

Bourses in India, Pakistan, and Sri Lanka dropped 57 percent, 39 percent, and 35 percent, respectively, over the year through mid-November (and 66, 50, and 39 percent, when measured in U.S. dollars).

Notably in Pakistan, curbs on the sale of equities were imposed in August, effectively preventing the exit of existing investors and discouraging potential new investors.

The general deterioration in regional trade balances has been offset by large remittance inflows, which represent a sizable, and generally increasing share of GDP: during 2007, 14 percent in Nepal, 8 percent in Bangladesh and Sri Lanka, 4 percent in Pakistan, and 3 percent in India.

Foreign Direct Investment (FDI) inflows remained strong through the first half of 2008, helping to ease external financing requirements. In India, FDI surged to 3 percent of GDP in 2008, up from 1.4 percent in 2007.

The FDI inflows to Pakistan remained relatively steady through the summer of 2008-on course to match the 3.7 percent of GDP recorded in 2007-but the extreme financial and economic difficulties encountered during the second half of the year were likely to have changed that for the worse.


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## Neo

*Trade deficit at $8.74bn in 5 months ​* 
Saturday, December 13, 2008

ISLAMABAD: Pakistans economy racked up $8.74 billion in trade deficit during the first five months (July-November) of fiscal year 2008-09, which is 20.27 per cent (or $1.47 billion) more than what was recorded in the corresponding month of the last fiscal ($7.26 billion), the Federal Bureau of Statistics (FBS) reported on Friday.

According to statistical bureaus latest snapshot of trade activity, during the period under review, the economy pulled in imports worth $17 billion which were more than double its exports of $8.27 billion. 

During the same period of the last fiscal 2007-08, imports stood at $14.60 billion and exports at $7.34 billion. 

This depicts a 16.47 per cent growth in imports and 12.70 per cent growth in exports.

One of the most interesting and encouraging aspects of the data was that during November 2008, although trade gap widened to $1.196 billion, yet it was 38.59 per cent less than the trade shortfall of $1.95 billion that was recorded in October 2008. During the month under review, imports dipped by 21.44 per cent to $2.72 billion and exports went up by 0.54 per cent to $1.53 billion over the previous month (October 2008).

Besides, comparing trade figures of the month under review with the corresponding month of the last fiscal, in November 2008 trade gap declined by 26.24 per cent from $1.62 billion recorded in same month of the last fiscal. Exports declined by 0.76 per cent from $1.54 billion documented in November 2007 while imports were down by 13.83 per cent from what was recorded in the corresponding month of the last fiscal ($3.16 billion).

Trend of trade activities during November of the current fiscal year eggs on the prospect of slowing down the pace of burgeoning deficit as imports reduced sizably against previous months. If the current trend persists and Pakistani economic planners are able to take reasonable measures for bridging the gap, it would be one of the major winning points to celebrate.

As for the last several years, the Pakistani economy is persistently confronted with the trade deficit gap that ultimately pushed up current account deficit, which is a potential threat to the economic health of the country. Ballooning trade deficit has also confronted the government with the dilemma of balancing its financial accounts.

Depreciating Pakistani rupee and record high inflation are the other two big monsters that have badly confused the governments economic policymakers.

The government in its trade policy for the current fiscal year (2008-09) has projected an export target of $22.1 billion. Although the policy has not formally announced any import target, however, the commerce ministrys officials revealed it would touch a $37 billion mark, indicating a $15 billion trade deficit by the end of June 2009.


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## Neo

*South Korea to invest $300m in drinking water project ​* 
Saturday, December 13, 2008

ISLAMABAD: The Korean government on Friday expressed interest in investing $300 million in the development of drinking water supply pipeline from Tarbela dam to the twin cities of Islamabad and Rawalpindi on built-own-operate and transfer (BOOT) basis. The projects total cost is estimated at $800 million.

To this effect, the Capital Development Authority (CDA) and Korean Water Resource Corporation signed a Memorandum of Understanding (MOU) here at the Ministry of Investment, Board of Investment in the presence of H E Shin Un, Ambassador of South Korea in Islamabad.

Korean Water Resource Corporation (KWRC) is in consortium with Sambu Construction Co Ltd and both Korean companies are to invest the amount in the project. The KWRC is a Korean state-owned water company that was incorporated in 1967. The firms annual turnover is $1.8 billion while the value of its assets is recorded at $12 billion.

The KWRC will raise loans through the Korean Exim Bank and through other loaning agencies, while the World Bank will facilitate CDA in meeting its financial requirements of the project. A detailed engineering design of the project would be made after a complete survey of the site which will take approximately 6 months to complete.

The Minister for Investment, Senator Waqar Ahmad Khan, Minister of State for Investment/Chairman Board of Investment, Saleem Mandviwalla, Secretary Investment/BOI Ashraf Hayat along with other BOI officials were also present during the MOU signing ceremony. 

We will hand-carry KWRC in fulfilling requirements needed for the implementation of this project, stated Secretary Investment. Tahir Shamshad, Member Engineering CDA and Kim Kuen-Ho President & CEO KWRC were the signatories of the MOU, while Abdus Samad Khan Head of Treasury, CDA and Cho Nam-Won Vice Chairman Sambu Construction Co Lt signed the MOU as witnesses.

It was further informed that upon completion of 25 years of diplomatic relations between Pakistan and South Korea, the ministry of investment/BOI is organising an investment conference in South Korea on February 10, 2009.

There are 24 Korean Companies in Pakistan engaged in construction and development of infrastructure projects.


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## dr.umer

*ADB to loan Pakistan $300 million​*
12 Dec 2008

The Asian Development Bank (ADB) is extending three loans totaling $300 million to three provinces of Pakistan in support of local government programs to boost sustainable growth, reduce poverty, and improve the health of women and infants.

ADB is providing $100 million for the Second Balochistan Resource Management Program, $100 million for the Punjab Millennium Development Goals (MDG) Program, and $100 million for the Sindh Growth and Rural Revitalization Program. 

The loans are assisting the provincial governments address key constraints that hinder growth, poverty reduction, and health gains. In the case of Punjab  which has the largest provincial population and economy in the country  funding for improving health care services will help it meet the MDGs for reducing maternal and infant mortality rates.

The Program could potentially save the lives of up to 11,000 women and 235,000 infants by 2015 compared to a scenario without such support. It will also help Punjab improve public financial management in the health sector, said Rie Hiraoka, Senior Social Sectors Specialist for ADBs Central and West Asia Department.

The loan to the Sindh provincial government will help improve management of public spending and boost investment in rural areas, where poverty levels are high and economic opportunities are low. It will also promote private sector participation and public-private partnerships (PPPs) that can increase investment in much-needed infrastructure and social services. Technical assistance of $800,000 will be used to conduct studies and draw up options for PPPs.

The large rural-urban divide is a serious concern. Accelerating growth and improving the income of the rural poor are essential for economic and social stability in Sindh, said Xiaoqin Fan, Senior Public Resource Management Specialist at ADBs Pakistan Resident Mission.

In Balochistan  the countrys largest but sparsely populated province  the loan will strengthen the provincial governments management of public finances, create a more sustainable and affordable civil service pension system, and help improve governance in the lucrative but largely-untapped mineral resources sector. A technical assistance grant of $800,000 will help the provincial government implement the Program.

The Program will address some of the binding constraints on economic growth by allowing for more efficient use of public resources, while paving the way for greater private investment especially in the minerals sector, said Jose Antonio Tan III, Public Finance Economist in the Central and West Asia Department.


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## dr.umer

*EU helping Pakistan in improving health & education facilities ​*
ISLAMABAD, Dec 12 (APP): The European Union and Pakistan have been engaged in an ongoing political dialogue to promote understanding and cooperation to improve health, education and basic needs of life for the people especially in the remote areas. 

This was stated by French Ambassador to Pakistan Daniel Jou Anneau and Head of Delegation of the European Commission to Pakistan Jan De Kok while addressing a joint press conference at French Embassy here to launch Blue Book 2008 comprising details and assistance of EU to Pakistan in different sectors. 

Both the ambassadors appreciated commitment and dedication of Pakistans present political government for strengthening Pak-EU relations in different fields. 

They said, The EU is fully engaged in the international efforts to increase aid effectiveness for a better coordination and harmonisation of development cooperation with other donor agencies working in Pakistan. 

The French Ambassador said the Blue Book 2008, comprising details of Pak-EU cooperation has been presented to Prime Minister Syed Yousuf Raza Gilani recently. 

He said, EU is satisfied with the progress of its projects in Pakistan during the last four years. He expressed the hope that there could be more positive progress in the next few years due to EU assistance in Pakistan in different fields. 

The French Ambassador said EU is Pakistans largest trading partner and it is the worlds largest provider of Official Development Assistance (ODA) to Pakistan. 

He said during 2005-7, the EU committed more than Euro 900 million to Pakistan and 60 per cent was invested in education, energy generation, housing and construction. 

The French Ambassador while referring to meeting of EU envoys with Advisor to Prime Minister on Finance Shaukat Tareen on Friday said the EU members were convinced about the financial and economic programme prepared by Pakistan to cope with the present financial crisis. 

He said an important meeting of EU-Pakistan Troika, comprising Foreign Ministers of Pakistan, EU, current EU President France and next EU President Czech Republic will be held early next year to further enhance and promote Pak-EU relations. 

About Pakistans export problems to EU countries, EU Commission Ambassador Jan De Kok said due to lack of implementation of strict food safety regulations in Pakistan, there is a ban on the export of food items to EU. 

The EU ambassador said due to anti-dumping duty issue, there has been limited access of Pakistani products to EU markets. The issue will be discussed in the meeting being held in March next, he added. 

He said about giving status of Free Trade Agreement (FTA) to Pakistan, Ambassador Kok said, Pakistan is the 52nd trading partner to EU while EU is the first trading partner to Pakistan. He however said negotiations on this issue would be held at political level in the next meetings of the EU-Pakistan ministerial group. 

Replying to a question about Pak-India tension and role of EU, the French ambassador said there has been no official statement or reaction from Indian side about any war threat following the Mumbai incident and there were only press statements. 

He said,We have not seen any declaration from Indian side officially of any threat of war against Pakistan. He said there have been very cautious statements from Indian side. 

The ambassador said India has accused non-state elements which was also referred by Pakistan. 

He appreciated President Asif Ali Zardaris statement in this regard and said it showed commitment from Pakistans side for improving good and peaceful relations with India. 

The ambassador said cooperation was the only way as both the countries have said they could not afford war. 

He said there is need to create and improve confidence among the people of the two countries, for putting pressure on the political leaders to find solutions to problems between the two countries. 

The French Ambassador said political engagement and extra steps being taken in this regard would be taken to solve the problems between the two countries. 

He said beyond official, political and trade relations, the EU and Pakistan have a long history of people to people contacts. 

About providing financial assistance to Pakistan from EU, he said, EU has been involved in various projects as partner and it will continue in future.


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## fatman17

*UK gives aid package to Pakistan * 

Douglas Alexander has been meeting people of Pakistani origin 
The UK is giving a &#163;480m support package to Pakistan to help increase security on the Afghanistan border. 

Douglas Alexander, the UK international development secretary, said the money would also be focused on education and health projects. 

The MP launched the plan at Glasgow Central Mosque, at the end of a UK tour to meet people of Pakistani origin. 

The UK wanted to "help ease the suffering of the 36 million poor people living in Pakistan", he added. 

*More than &#163;250m has been earmarked to increase training for young people and get five million children into school.* 

Mr Alexander said: "We are brought together by a shared history and strong cultural and economic ties. 

"We need community groups, the private sector and civil society to work together, to work with the international community, and to work with us to fight poverty through development. 

"Our aim is to continue to help improve poor people's lives in key areas, making sure they have access to better healthcare, schools and employment opportunities." 

*Other plans for the money include helping reduce the incidence of diseases such as TB and polio, and assisting with earthquake reconstruction. *


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## Neo

*Flawed projections ​* 
*Private sector credit estimated to jump by Rs332bn in current fiscal​*
Sunday, December 14, 2008

ISLAMABAD: Pakistans economic team has accepted flawed projections related to money supply growth (M2) for obtaining bailout package of $7.6 billion from the IMF, official sources warned.

According to projections laid out in the package the private sector credit is estimated to go up to Rs732 billion in the current fiscal from Rs400 billion last financial year, although such an upsurge was never witnessed in the countrys last 60 year history, sources pointed out.

The country is already facing threat of a recession for the next couple of years if agriculture sector remains unable to rescue the ailing economy in fiscal year 2008-09 for achieving a modest growth of 3 per cent.

Real GDP growth may witness an overall negative growth again after 1952 the last time Pakistans economy never achieved overall negative growth.

The private sector credit would go beyond its capacity in accordance with the IMF and Pakistan deal, which was basically aimed at matching money supply growth number of 10.8 per cent for the current fiscal year that was revised downward from earlier envisaged target of 14 per cent. 

The private sector credit was projected to increase up to Rs732 billion at a time when discount rate and overall investment climate is altogether moving towards the opposite direction.

The M2 growth target of 10.8 per cent cannot be achieved therefore there are strong indications for persistent recessionary period for the economy of this country for next two to three years, said the official.

The private sector credit stood at around Rs400 billion during the last financial year 2007-08 and it is beyond imaginations how the private sector credit would witnessed such a peak when everyone is looking forward for lower growth rate.

The private sector credit was agreed to jack up to Rs732 billion in order to project M2 (money supply growth) in the range of 10.8 per cent during the current fiscal year, said the official sources and added that the M2 would not go beyond 4 to 5 per cent by the end of the current fiscal year owing to higher discount rates and investors shyness to expand their businesses.

Till November 22, 2008, the M2 growth was negative Rs58.338 billion against surplus of Rs87.896 billion on the same date of the previous fiscal year.

The Net Foreign Assets (NFA) stood at negative Rs342.447 billion while Net Domestic Assets (NDA) of banks were Rs283.709 billion.

The nominal growth is projected at 27 per cent for the current fiscal year and how M2 growth in the range of 4 to 5% will be able to fuel the economic activities, is still beyond imagination, the sources questioned?

At a time of Net Foreign Assets (NFA) are in negative mode and the IMF also slapped condition to achieve zero borrowing from the central bank, the NDA requirements would touch Rs 1006 billion for the current fiscal year. 

Total stock of money supply stood at Rs 4,689 billion in the last fiscal year and with 14 per cent target of M2 growth, it would touch Rs5345 billion in the current fiscal year.

If presume that the loan of private sector would remain in the range of Rs450 billion, provision for public sector enterprises Rs50 billion, commodity operations Rs50 billion and remaining Rs10 billion, there will be additional Rs350 to Rs450 billion lying unutilised.


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## Neo

*Power deficit to increase to over 3,000MW in January ​* 
Sunday, December 14, 2008

ISLAMABAD: The ongoing power deficit of 1,500MW is to swell to over 3,000MW in next month wing to which, the authorities concerned have decided to extend zero power supply to all steel melting units for 8 hours with immediate effect from January 1, 2009, a senior official told The News. The power deficit of 3,000MW that is to hit country next month has also promoted authorities to increase the load-shedding duration to 6 to 8 hours across the country from existing 4 to 6 hours power outages.

Yes, we have decided to pull the plug on the power supply to 80 to 100 steel melting units with consultation across the country in the wake of massive power shortage. We will make the zero power supply for one shift working spanning 8 hours duration from January 1, 2009. This decision will help save 250MW of electricity, Tahir Basharat Cheema spokesman of Pakistan Electric Power Company confirmed to The News saying that PEPCO is left with no option but to take this decision because of the canal closure period that is to start from December 26 and end by January 31. 

To a question, Cheema said The PEPCO is also in consultation process with All Pakistan Textile Mills Association (APTMA) with regard to power outages duration for Mills to cope with the power crisis. Through conservation, this time PEPCO will be able to save about 1,000MW from January 1 to ease out electricity situation. 

In addition, all the thermal units of 1,000MW which are right now on an annual maintenance would come on stream by December 25 except one unit of Jamshoro power house of 200MW as it will be operational in the month of January. 

Cheema said Chashma Nuclear Power Plant of 300MW which is non-operational for the last months because of fuel replenishment as change of fuel rods take five to six months, will also come on stream on January 17. During the period from December 26, 2008 to January 31, 2009 the existing hydro generation of 2,500MW will come down to its lowest ebb in the wake of the complete closure of canals by all federating units for annual de-silting. 

During the period, there will be no water demand from province to cater to irrigational requirements and almost negligible water releases from Terbela and zero releases from Mangla will reduce the hydro generation up to 500MW. Because of the massive reduction in water releases, the hydro generation has tumbled to 2,000MW from 6,500 MW in August-September this year.

Another reason of the current power deficit which why the country is experiencing the load-shedding is nominal supply of gas to power houses which is around 8.5 million cubic feet gas per day. The three rental power houses which only run on gas is producing zero electricity because of non-availability of gas. 

Cheema said Pikhi and Sheikhupura rental power houses of 285MW and GTPS Faisalabad of 210MW have become non-functional as not alternate fuel other than gas can be used in the said rental power houses. 

This has deprived the country of 495MW of electricity. This has actually worsened the ongoing power deficit. However, the country would have 81MW of Malakand-3 and 165MW of Attock Power and KESC and PEPCO system in the currant month. Besides this, 350MW of AES Pak Gen which is at annual maintenance would come on stream by December 13, 180MW of Muzafarabad to start generating electricity by December 15, 200MW of Jamshoro power house by December 25 and two units of Guddu power houses of 150MW would also be operational in the current month after annual maintenance. 

This would help PEPCO minimize the impact of canal closures on power deficit to some extent, he said.


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## Neo

*Remittances up 14.7pc in July-November ​* 
Sunday, December 14, 2008

KARACHI: Remittances sent home by overseas Pakistanis increased $379.44 million or 14.67 percent to $2.966 billion during July-November 2008 over the same period of the last year. 

In November 2008, an amount of $620.52m was sent home that is the second-highest amount received in the current fiscal year 2008-09. 

In July last, an amount of $627.21m was received as workers remittances.

During the first five months, remittances from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $767.12m, $600.25m, $534.25m, $496.21m, $188.95m and $81.02m respectively as compared to $733.76m, $481.81m, $423m, $380m, $197.41m and $76.09m respectively in the July-November, 2007 period. 

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries this year amounted to $298.39m as against last years $294.03m.

The monthly average remittances for the period July-November, 2008 comes out to $593.30m as compared to $517.41m during the corresponding period of the last fiscal year, registering an increase of 14.67 percent.

During November 2008 remittances from UAE, USA, Saudi Arabia, GCC countries, UK and EU countries amounted to $146.16m, $140.19m, $105.45m, $100.74m, $39.18m and $15.87m as compared to $88.18mn, $142.95m, $90.90m, $77.86m, $32.91m and $15.41m in November 2007. 

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during November, 2008 amounted to $72.77m.

The amount of $2,966bn includes $0.32m received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).


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## Neo

*Pakistan, China ready for FTA on services ​* 
*Deal to be effective after ratification of accords​*
Sunday, December 14, 2008

ISLAMABAD: Pakistan and China have managed to seal Free Trade Agreement on services, which will help the country in meeting skilled human resource deficit, a senior official told The News.

This will really help translate the time tested political ties with China into economic relations, he said.

The technical experts of both the countries have sealed the agreement on services on December 3 under which Beijing would come up with huge investment in the Human Resources Development that would actually lead the country to a place where the developed countries are, the official said. 

Pakistan delegation headed by Shahid Bashir, Senior Joint Secretary of Commerce Ministry took part in the most crucial talks with the Chinese experts.

However, both sides will get the ratification of the deal on services sector from their respective cabinets and then top leadership of both the countries would formally ink the deal on services sector at appropriate time and then the FTA on services will be operational.

Ministry of Commerce is set to announce the salient features of the deal on services with China on Monday.

The Chinese were interested to open fully owned subsidiaries in Pakistan, but Pakistan managed to make them understand that Chinese should embark upon huge investment in services sector in the shape of joint ventures as ventures will help increase the capacity of Pakistani people to deliver services and this will also give the opportunity to harness the technology in excelling in the area of services sector.

Under FTA on services both the countries would trade in banking, communication, medical, education, labour and construction sectors. 

The official said that China and Pakistan would recognize the degrees of each other institutions particularly in medical field. China would also come up with massive investment in area of Research and Development (R&D) as this area in the past has been miserably neglected and no country has come forwarded to investment in Research and Development. 

Both countries would open banks branches also and make trade through each other banking facilities. The official said that China has shown interest in Islamic banking also. 

In the communication sector, China would also invest a lot in various projects as it is already engaged in making vital projects of the country too. China will also transfer the technology to Pakistan in organizing the sports event, as the way China has managed to hold the Olympics is really tremendous.

Pakistan has also included a special protocol in the earlier FTA on goods, which is very much in place. Under special protocol Pak-china special investment zones would be established. All the products, which will be manufactured in the special investment zone would have access in China markets on zero duty. The official said that China would also come up Greenfield Investment in Pakistan meaning by that China would bring massive fresh investment in various sectors of economy.

Under the FTA on goods, the bilateral trade has swelled up to over $6 billion out of which Pakistans exports to China stands at over $1 billion and imports from China to Pakistan stands over $5 billion as per the statistics compiled by Chinese concerned department. However, as afar as Federal Bureau Statistics Division is concerned, Pakistans exports to China stand at $600 to $700 million, while imports from China hovers around $ 4.5 billion.


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## Neo

*Senate body for improving education ​* 
*standard at grass-root level​*
Sunday, December 14, 2008

ISLAMABAD: The Senate Standing Committee on Education, Science and Technology on Saturday discussed the education programmes launched by the National Commission for Human Development (NCHD).

The committee members were of the view that a holistic approach was required to improve the literacy rate in the country and should work jointly for improving the standard of education at the grass-root level.

The committee, met under the chair of Senator Razina Alam Khan, observed that close coordination with the provinces and other stakeholders was required to achieve better results.

The Senate body hoped that the review of the NCHD programmes would help in identifying the areas which had not been heeded so far to chalk out the future course of action to achieve the MDGs.

The committee chairperson said that it would also give recommendations to the NCHD in formulating policies for improving the literacy rate in the country.

Earlier, Begum Shahnaz Wazir Ali, special assistant to the prime minister, informed the committee that a review of the education and health programmes launched by the NCHD was underway. It was informed that the NCHD was a track support organisation and was mandated to fill gaps at lower level in social sectors to achieve the MDGs.

The committee assured its all-out support in overcoming various problems being faced in the implementation of the literacy-related programmes in the country and vowed to contribute positively to bring improvement in the system.

The meeting was attended by Senators Tahira Latif, Dr Abdul Khaliq Pirzada, Rehana Yahya Baloch, Dr Muhammad Said, Liaqat Ali Bangalzai and Prof Muhammad Ibrahim Khan.


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## Neo

*Remittances to Pakistan soar ​*
KARACHI: Remittances sent home by overseas Pakistanis continued to show a rising trend as an amount of $2,966.51 million was received in the first five months (July-November, 2008) of the current fiscal year 2008-09, showing an increase of $ 379.44 million or 14.67 percent over the same period of the last fiscal year. 

The amount of $2,966.51 million includes $0.32 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

In November 2008, an amount of $620.52 million was sent home by overseas Pakistanis, which is the second-highest amount received in the current fiscal year. In July 2008 an amount of $627.21 million was received as workers remittances.

The inflow of remittances in the July-November, 2008 period from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $767.12 million, $600.25 million, $534.25 million, $496.21 million, $188.95 million and $81.02 million respectively as compared to $733.76 million, $481.81 million, $423.00 million, $380.00 million, $197.41 million and $76.09 million respectively in the July-November, 2007 period. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the first five months of the current fiscal year 2008-09 amounted to $298.39 million as against $294.03 million in the same period last year.

The monthly average remittances for the period July-November, 2008 comes out to $593.30 million as compared to $517.41 million during the same corresponding period of the last fiscal year, registering an increase of 14.67 percent.

During last month i.e. November 2008 remittances from UAE, USA, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $146.16 million, $140.19 million, $105.45 million, $100.74 million, $39.18 million and $15.87 million respectively during November, 2008 as compared to $88.18 million, $142.95 million, $90.90 million, $77.86 million, $32.91 million and $15.41 million in November 2007. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during November, 2008 amounted to $72.77 million.


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## Neo

*Government targets $20 billion foreign investment next year ​* 
ISLAMABAD (December 14 2008): Federal Investment Minister Senator Waqar Ahmad Khan has said that the government has fixed 20 billion-dollar target for foreign investment in 2009 to bring the country out of the current economic crisis. Pakistan needed over 40 billion-dollar investment and the government was optimistic to achieve the 20 billion-dollar target fixed for 2009, he stated this while talking to reporters here on Saturday.

Pakistan, he said, was open for investment in any sector. But the priority sectors of the government were oil and gas, energy, food, agriculture, information technology and infrastructure, he added. Senator Waqar said that 100 percent repatriation of money had been ensured to the investors, while special commercial zones had also been set up for them.

"We have also announced a five-year tax holiday, besides 10-year tax exemption for investors who help us set up a commercial zone", he said. He also disclosed that the government had finalised its plans to offer ownership of agricultural lands to investors for farming. "We are extremely enthusiastic in providing areas for farming with great incentives. Investors could own the land, cultivate it and export 100 percent of its crop", he added.

President Asif Ali Zardari had a vision to give a corporate image to Pakistan and he himself would go abroad to gain the lost confidence of foreign investors. "We have a plan to constitute a special task force for protection of foreign investors," he said, adding the task force would comprise officials from the ministries of Interior, Defence, Investment and Finance, which would protect investors' interests.

The Minister said that the government was well aware of the security concerns of foreign investors and this was the reason for constitutions of special task force to protect investors and their investments. The task force would be an invisible mode of security, which would provide ultimate comfort and sense of security to investors, he said, adding that the task force would be in place later this month.

He said that the present government was not seeking any financial relief directly and this was not the thrust of President Zardari's visits to different countries. "We are immediately looking at deferred oil payments from Saudi Arabia and the UAE to get some economic relief," he added.


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## Neo

*'Pakistan fully committed to achieve SDGs' ​*
ISLAMABAD (December 14 2008): Pakistan is fully committed to achieve the Saarc Development Goals (SDGs), said chief economist, Planning and Development Division, Dr Rashid Amjad here on Saturday. Addressing the concluding session of two-day workshop on Saarc Development Goals, he said that even in these difficult financial circumstances.

The Prime Minister had given clear instruction that public sector expenditures in the social sectors especially health and education will be fully protected. The participants of the Workshop after intensive consultations identified benchmarks along with targets for SDGs indicators ie livelihood, health, education and environment for the next five year as per requirement of the decisions of 14th and 15th Saarc Summits to develop country specific targets and benchmarks in this regard, says a statement issued by the Planning and Development Division here.

The team leaders of the respective groups made presentations discussing challenges and modalities as to how to achieve benchmarks and recommended targets. The SDGs targets for 2012 have been aligned with the MDGs and have been incorporated in the manifesto of the present government, as the present government is determined to reduce suffering of millions of people living in absolute poverty in Pakistan.

The government has taken bold initiatives to restore macroeconomic stability and reduce poverty and vulnerability through direct and indirect support. Allocations for social sector including education, health, population welfare, water supply and sanitation have increased manifold to create and develop social assets of the poor.-PR


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## Neo

*Tarin seeks public, private sectors' help to bring down inflation ​* 
ISLAMABAD (December 15 2008): Advisor to Prime Minister on Finance and Economic Affairs Shaukat Tarin has sought the help of federal Secretaries, provincial governments, and private sector to bring down inflation, after the failure of IMF-dictated tight monetary policy, sources told Business Recorder.

"Inflationary pressure is not likely to ease, at least, in the next few months owing to gradual removal of fuel and power subsidies agreed with the IMF, weaker rupee, higher import prices and monetary overhang from the unprecedented government borrowing from the State Bank of Pakistan (SBP) for budgetary financing," sources quoted Finance Ministry as having briefed the Economic Co-ordination Committee (ECC) of the Cabinet in its meeting on December 2.

According to recently released statistics, Consumer Price Index (CPI) inflation has surged by 24.65 percent during five months (July-November) of current fiscal year over the same period of last year. Top of contributors are eight essential food items, ie wheat, flour, rice, pulses, meat, milk, ghee/cooking oil, vegetables and fruits, which contributed significantly to food inflation--almost 75 percent of the total inflation.

"Inflationary pressure is not likely to ease at least in the next few months because of gradual removal of fuel and power subsidies and worsened financial position," Finance Ministry brief added.

Tarin, however, expressed concern that prices of food commodities, particularly wheat, flour and ghee/cooking oil had not come down in spite of substantial reduction in their prices in international market. Sources said that ECC in its meeting was informed that this upward trend in the prices of these commodities was witnessed in the northern parts of the country primarily because the imported wheat could not be transported to those areas due to non-availability of transport.

To resolve this issue, a committee had been constituted under the chairmanship of Finance Secretary with Secretaries of Commerce, Industry and Minfal as members to look into the problems and devise measures for reduction in prices of food items in consultation with the provincial governments and stakeholders including the private sector, sources added.

The committee would ensure that benefits in reduction in prices are passed on to the common man. According to the official documents, wheat stock as on November 27, 2008 stood at 2.613 million tons, against 2.956 million tons in the same period last year, showing a drop of about 0.342 million tons (13.2 percent).

The provincial governments and Passco together procured 3.918 million tons wheat against the target of 5 million tons. The procurement of last year was 4.4 million tons. Trading Corporation of Pakistan (TCP) has imported 1.75 million tons wheat so far on instructions of ECC.

According to IMF, the key economic and financial downside risks to the program include lower than expected private capital inflows, a reversal of the current trend of declining oil prices and a more severe than anticipated economic slow down in trading partner countries. "If these risks materialise, the government will stand ready to adjust its policies in close consultation with IMF staff to ensure achievement of a sustainable external position by the end of the program period," sources added.

They said the committee has been asked to submit its recommendations to the ECC in its meeting on December 16, but it was still not sure if the committee would be able to implement the directives of the Advisor for Finance.


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## Neo

*Government may allow urgent import of 0.4 million tons of raw sugar ​* 
ISLAMABAD (December 15 2008): The government within a couple of days is likely to allow import of 0.4 million tons raw sugar as current sugar stocks can meet requirements of only one month, sources in Industries Ministry told Business Recorder. On the other hand, sugar millers are of the view that there is a glut in the market, and mills are facing difficulties in payment to the farmers.

The Industries Ministry had advised the policy makers, especially the Finance Ministry, that the government should immediately decide about import of sugar to meet next year's requirements as the Pakistan Sugar Mills Association (PSMA) has already indicated shortage of sugar.

Sources said that Finance Ministry did not approve the proposal but asked the Industries Ministry to bring the proposal back in December. "Total stock of sugar is sufficient for only up to January 15, 2009, while the stock with the Trading Corporation of Pakistan (TCP) would also deplete during this period as it would be supplying sugar to the Utility Stores Corporation and the armed forces," sources added.

Some officials in the government believe that the country would face shortage of 1.5 million tons sugar, which has to be imported and, if the government goes for raw sugar, it can save a reasonable amount of foreign exchange besides value-addition in sugar mills.

Last year, PSMA had claimed that 1.2 million tons sugar would be surplus, but at the end of the season this claim proved wrong. About 0.6 million tons sugar had been exported, or smuggled, which is said to be one of the reasons of shortage in 2009, sources said.

The country's monthly consumption of sugar is around 0.35 million tons and the Finance Ministry, in its report to the Economic Co-ordination Committee (ECC) some three weeks ago, had stated that the country might face sugar crisis from November onward. However, new forecasts suggest that crisis may have started from mid-October. However, Finance Ministry's apprehensions proved to be wrong and the stocks are only enough till the middle of January. The government has already imposed duty on sugar export, and removed duty on refined sugar import.


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## Neo

*Offshore investors withdraw $9.828 million from equity market ​* 
KARACHI (December 15 2008): A massive outflow of foreign portfolio investment was witnessed as $9.828 million were withdrawn by offshore investors in single-day trading on Friday. According to National Clearing Company of Pakistan Limited (NCCPL) data the cumulative outflow of this mode of investment reduced to $8.625 million during the current month from December 1 to December 12.

The cumulative figure of foreign portfolio investment was recorded at negative $366.854 million during the current year from January 01, 2008 to date. "The decision to drop Pakistan from MSCI Emerging Markets Index, attacks on Nato supplies and across the eastern border tension aftermath of Mumbai terrorists strikes are expected to further dampen foreign investors sentiment and expedite their exit", analysts said.

However, some analysts were expecting fresh inflow of foreign investment in the country's equity market after starting normal trading activity at the share market following the removal of floor. They were of the view that very attractive levels at the share market could invite fresh foreign investment at the equity market in days to come.


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## Neo

*To bring down trade deficit: ICCI chief for reduction in imports, boost in exports ​*
ISLAMABAD (December 15 2008): President Islamabad Chamber of Commerce and Industry (ICCI) Mian Shaukat Masud on Sunday urged the government to reduce import of luxury items, bring down interest rates for industrial sector and reduce cost of doing business.

In a statement, he said, "the best option for the government to deal with this situation is to drastically reduce or put a ban on the import of all luxury items and also bring down mark up on loans for industrial sector to give a boost to exports."

He said high cost of doing business and frequent power disruptions are hampering the growth of exports. He said the business community is concerned over Pakistan's rising trade deficit which has swelled to 8.736 billion dollars in the first five months (July to November, 2008) of current fiscal year as compared to 7.264 billion dollars of the same period of last year, showing an increase of 20.27 percent.

He called upon the government to boost the production of agricultural and industrial sectors for enhancing exports to cope with the trend of rising trade deficit. He said the soaring trade deficit, with no parity in imports and exports will create further troubles for the already difficult economic situation.

Running a high trade deficit throughout the year with imports twice the exports remains a big challenge for the economic managers as the country faces immense pressure on foreign exchange reserves already touching alarmingly low position, he added.

He said that another way out is that government should adopt a strategy to boost industrial and agriculture production and reduce non-development expenditure. He said for this purpose, the government should take steps to encourage massive investment in agriculture and industrial sectors by involving domestic and multinational entrepreneurs to add value addition in both the sectors and to meet aggregate demand for domestic consumption of food and other products.

Mian Shaukat Masud said the government needs to initiate necessary measures to boost the production of all major and minor agricultural crops and vegetables etc.

A significant increase in agricultural production would raise the country's GDP growth and the revenue collection would also increase. Besides, he said, sufficient production of the major and minor agricultural crops would help in bringing down food inflation provided that the government is able to check hoarding, profiteering and smuggling of edible items. He said self-sufficiency in agricultural production would help in reducing the imports and raising the exports of agricultural products. He said that agricultural products such as cotton and sugarcane are used by our industrial sector and thus good performance of the agriculture sector should lead to good performance of the industrial sector as well.

These measures will lessen our dependence on imports ultimately bringing down the rising trade deficit and will bridge import-export gap that might hover around 14 billion dollars despite decrease in prices of oil, commodities and metal products in international market, Mian Shaukat added.

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*Poverty rate soars in Pakistan: Shaukat Tareen​*
ISLAMABAD: Advisor to Prime Minster on Finance, Shaukat Tareen said on Tuesday that poverty rate in Pakistan has climbed to 28 percent.

Addressing a seminar here, Tareen said governments top priority, at the moment, is to bring rate of inflation down to 9 percent. The seminar was held in collaboration with International Monetary Fund (IMF) and Pakistan Institute of Development Economics (PIDE).

Shaukat Tareen said previous governments ignored important sectors of agriculture, production, human resource development, education and health which are key to progress. 

Speaking on the occasion, State Bank Governor, Dr. Shamshad Akhtar said that growing rate of unemployment and poverty posed greater challenge to the country which need to be addressed.


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*Provisions for bad debts surge to alarming Rs228bn: SBP ​* 
Tuesday, December 16, 2008

ISLAMABAD: The provisioning for bad loans in the countrys banking sector, which ultimately qualifies for write-off, has alarmingly gone up to Rs228 billion till the first quarter of the current fiscal year ended on September 30, official data of State Bank of Pakistan (SBP) exclusively available with The News revealed.

Banks put a certain amount into the clause of provisioning for bad loans in order to achieve clean balance sheets and most of the time loans are written off allegedly to please political cronies and their close kith and kin by ignoring outlined merits and guidance of the central bank.

The overall gross Non Performing Loans (NPLs) also shot up to Rs288.372 billion on September 30, 2008 from Rs251.113 billion on June 30, 2008, registering an increase in NPLs by Rs37 billion in a period of just three months of the PPP-led government from July to September 2008.

One major factor for the increase in NPLs is the hike in interest rates by the central bank to tame inflation on agreed conditions of the IMF under the Standby Arrangement (SBA). But officials in Ministry of Finance say that the central bank made prudent regulations last year, which bound the banks not to adjust the amount in accordance with guarantees attached, which basically resulted in increased amount of provisioning. It is not a bad thing for the banking sector, they added.

According to official data compiled by the SBP on NPLs, a copy of which is available with this scribe, the NPLs of all banks have increased up to Rs278.151 billion on September 30, 2008 from Rs241.853 billion on June 30, 2008. The NPLs of public sector banks went up to Rs70.745 billion on Sept 30, 2008 against Rs57.657 billion, up by Rs13 billion in first three months from July to September in fiscal year 2008-09.

The net NPLs of public sector banks stood at Rs13.366 billion on Sep 30, 2008 against Rs8.515 billion on June 30, 2008. The NPLs of local private banks shot up to Rs172.643 billion on Sept 30, 2008 against Rs153.631 billion on June 30, 2008, witnessing an increase by Rs19 billion in the three month period. The net NPLs of local private banks increased up to Rs33.145 billion on Sept 30, 2008 against Rs23.416 billion on June 30, 2008.

The NPLs in foreign banks slightly increased and touched Rs1.698 billion on Sept 30, 2008 against Rs1.597 billion on June 30, 2008. The net NPLs of foreign banks were only Rs442 million on Sept 30, 2008 against Rs540 million on June 30, 2008, showing improvements on this account.

The NPLs of specialised banks, official data showed, increased up to Rs33.065 billion on Sept 30, 2008 against Rs28.969 billion on June 30, 2008. The net NPLs of specialised banks increased to Rs12.161 billion on Sept 30, 2008 against Rs7.554 billion on June 30, 2008.

The NPLs of DFIs increased to Rs10.221 billion on Sept 30, 2008 against Rs9.259 billion on June 30, 2008. The net NPLs were Rs2.703 billion on Sept 30, 2008 against Rs1.969 billion on June 30, 2008.

This correspondent sent three questions to the official spokesman of SBP, the response to which is being reproduced here without any change. What are the reasons for increasing provisioning of bad loans despite clear instructions given by the central bank last year?

In 2007, SBP made provisioning criterion more stringent and prudent by removing the benefit of Forced Sale Value (FSV) of collateral. Consequently, banks will now have to create more provisions against their non-performing loans as compared to what they were doing in the start of 2007. Provisioning has also increased due to rise in gross NPLs, which rose to Rs288,372 million by end Sept 2008. In terms of ratio, Gross NPLs to Gross Loans ratio was 8.6pc, while Net NPLs to Net Loan ratio was 1.89pc by end Sept 2008.

The provisioning of bad loans has gone up to Rs228 billion till Sept 30, 2008. Is SBP considering taking more steps to control this situation?

SBP already has in place a number of regulations on credit exposure limits, margin requirement, and loan provisioning, which aim to improve the quality of loan portfolios of the banks. SBP has also set up e-CIB which is a comprehensive credit bureau to facilitate banks to obtain credit information on borrowers.

Moreover, SBP also carries out inspection of banks and in case irregularities are found in loan disbursement, etc, substantial penalties are imposed, the statement added. All provisioning and bad loan write-off must be off set against the income of the bank. In rare cases if the capital of a bank starts to erode, SBP instructs the owners of the bank to immediately replenish the capital.

The key measure of a banks solvency is the capital adequacy and the international benchmark of Capital Adequacy Ratio (CAR) is 8pc. The Pakistani banking system CAR is at 11.8pc as of end September 2008 well over the benchmark. A number of banks have CAR of more than 15pc. As such the provisioning is not threatening the solvency of the banking system.

More recently SBP has introduced an ADR (Advance to Deposit Ratio) limit on banks to ensure that advances are not excessive as compared to their deposit base.

The provisioning of bad loans is increasing especially in the public sector and private sector local banks. What steps are you taking to save depositors who ultimately become victims in terms of increasing spread, as banks recovered their losses owing to provisioning mainly from depositors?

As regulator, the key concern for SBP is to protect depositors funds. In this regard nearly all policies are aimed, directly or indirectly, to ensure that deposits are not lost due to any banks poor functioning. It is a fact that Pakistani banks have never defaulted on payment to their depositors, and even under liquidity pressures, SBP has taken prompt measures to make liquidity available for deposit withdrawals.

With regard to profit paid to depositors, SBP imposed a minimum floor of 5pc in May 2008 (effective from June 1, 2008). 

With a rise in interest rates, the banks are now offering considerably high rates of returns to their depositors on time deposits, and even on PLS deposits.

It needs to be understood that PLS deposits are funds that can be withdrawn at any time by the depositor, this feature necessitates that the bank carry considerable liquidity at all times so that no depositor is refused payment. As such PLS deposits carry relatively lower rates of return.

SBP has given incentives to banks to encourage them to mobilize time deposits and offer good rates to customers. Presently no CRR or SLR is required against time deposits of one year or more. Profit rates on these deposits will further improve, the SBP concluded.


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*Pakistan, IMF to review targets in Feb ​* 
Tuesday, December 16, 2008

ISLAMABAD: Pakistan and the International Monetary Fund (IMF) will review envisaged macroeconomic targets including Rs1,360 billion tax collection, flexible exchange rate, monetary and budgetary matters by mid-February next year, it is learnt.

A review mission of the Fund will visit Pakistan for holding talks with authorities which may lead to some changes in various macroeconomic targets keeping in view ground realities after the end of first two quarters of the current financial year.

Pakistans authorities will strive hard to convince the IMFs review mission to revise downward the tax collection target of Rs1,360 billion because the basis of increasing the target from Rs1,250 billion to Rs1,360 billion had drastically changed mainly on account of a massive fall in prices of crude oil in the international market.

Pakistan and the IMF had also agreed on a flexible exchange rate under which the State Bank of Pakistan would phase out the facility of providing dollars for import of petroleum products, meaning the rupee may further depreciate in coming months.

Currently, the IMFs newly-appointed Director of the Middle East and Central Asia, Masood Ahmed, is visiting Islamabad for holding meetings with economic managers. He has already met Adviser to PM on Finance Shaukat Tarin and other high-ups of the finance ministry. Masood Ahmed will also attend FBR and Planning Commissions seminars in the next few days.

Policy level discussions are not among main agenda items during the current visit of IMF high-ups, but they are urging the authorities to stick to the agreed programme implementation in letter and spirit.

When the first half (July-Dec) of the current fiscal year ends, the IMFs review mission will hold talks with Pakistani authorities to adjust envisaged targets, an official source in Ministry of Finance told The News on Monday.

When Secretary Finance Dr Waqar Masood was contacted for comments, he confirmed the Funds review mission would visit Pakistan by mid-Feb in order to discuss readjustment in the agreed programme. Todays meeting was just exchange of views while programme-specific discussions will be held by mid-Feb, Masood said.


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*IMF asks Pakistan to achieve targets ​* 
Tuesday, December 16, 2008

ISLAMABAD: Newly-appointed IMF Director of the Middle East and Central Asia, Masood Ahmed, has asked Pakistan to ensure the achievement of the targets set under the $7.6 billion bailout package, saying that implementation is key to the success of the programme.

Ahmed came up with this piece of advice in a meeting here on Monday with Adviser to Prime Minister on Finance and Economic Affairs Division Shaukat Tarin. During the meeting, top officials of the finance ministry were also present.

In the meeting, Ahmed was given comprehensive briefing on the countrys economic situation and the measures being taken to achieve the targets set under the bailout package.

When contacted, Shaukat Tarin said after assuming the office as IMFs director, he made a courtesy call to Ahmed. However, he said Ahmed was not given a formal briefing on the measures for meeting the targets set by the government for implementing the homegrown package, as after getting the IMF loan, the first quarter would end in December. After that, IMF officials would be given a briefing sometime in January or February about the progress on meeting the targets.

Ahmed is scheduled to meet President Asif Ali Zardari and Prime Minister Syed Yousuf Raza Gilani today (Tuesday). He will also be attending a three-day seminar being arranged by the Federal Board of Revenue (FBR) in Lahore to devise a future plan of action about widening the tax base.

Ahmed replaced Mohsin S Khan, who recently retired from the IMF. Mohsin is reportedly among the potential contestants eyeing the coveted slot of governor of State Bank of Pakistan.


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*Industries can be set up without NOC: minister ​* 
Tuesday, December 16, 2008

KARACHI: Sindh Government has chalked out a most simplified industrial policy whereby industries could be setup without any permission or NOC.

This policy has been framed to boost investment and to help prospective industrialists setup an industry at their own will and capacity, disclosed Sindh Minister for Industries and Commerce, Rauf Siddiqi, while addressing a press conference here on Monday.

He informed that a long-term heavy industrial infrastructure scheme is being launched at a cost of Rs205.161 million. The scheme has been worked out by SITE Ltd for medium and large size industries, while a similar programme has been launched by the Sindh Small Industries

Corporation for small industries, involving an expenditure of Rs25.7 million. The Minister pointed out that he had suggested to President Asif Ali Zardari to provide 10-year tax exemption to agro-based industries in the interior of Sindh and is thankful to him for accepting the same in principle.

He said this will bring an industrial revolution in Sindh and particularly help remove poverty from rural areas. He noted that the President has asked Salman Farooqui to examine the proposal and give it a final shape.


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*P&G coming up with investment of $100 million​*
KARACHI: Proctor and Gamble (P&G) is coming up with an investment of about $100 million. An announcement to this effect was made in a statement issued here on Monday. It said that the P&G is establishing a large-scale state of the art manufacturing facility at Port Qasim bringing in FDI of approximately $100 million being the P&Gs largest fixed investment in Pakistan. The statement pointed out that the P&G is a leading consumer goods company based in Cincinnati Ohio with operations in over 90 countries. It said that in Pakistan P&G has grown to one of the leading consumer product companies marketing 12 quality brands.


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*Over Rs 2.19bn to be spent on FATA road projects​*
PESHAWAR: Out of Rs 7616 million total outlay for 2008-09, Rs 2193.622 million will be spent on implementation of 177 road schemes in the Federally Administered Tribal Areas (FATA) to make it more accessible, said an official release issued here on Monday. 

The government has allocated Rs 1650.605 million for 151 ongoing and Rs 543.017 million for 26 new schemes in the annual development programme (ADP). 

The lions share of Rs 352.343 million goes to South Waziristan Agency while North Waziristan gets the second highest allocation of Rs 288.637 million. 

A sum of Rs 250.884 million has been set apart for 12 road schemes in Khyber Agency. These include construction of a 10 kilometre long blacktopped road from Bagh (Tirah Valley) to Oblan up to Orakzai border and construction of five RCC bridges in Bara, Jamrud and Landikotal sub divisions. 

Most of the schemes in communication sector in North and South Waziristan agencies and other parts of the tribal belt pertain to construction of new roads, improvement, widening and rehabilitation of the existing roads and construction of bridges to facilitate traffic and connect far-flung areas. 

Attention has also been focused on improvement of road infrastructure in Kurram, Orakzai, Mohmand and Bajaur agencies and Rs 259.105, Rs 134.638, Rs 218.053 and Rs 218.493 million are being spent respectively in these agencies during the current fiscal year. 

The ongoing road schemes, when completed, would help bring FATA closer to rest of the country, provide it access to markets and accelerate pace of development there. 

According to available figures, the road network in FATA extends to over 4,900 kilometre, including more than three thousand kilometre blacktopped and 1,900 kilometre shingled roads.


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*Increase in agricultural production: a lot can be learnt from the Chinese model: Zardari ​* 
ISLAMABAD (December 16 2008): President Asif Ali Zardari has said that if people are harnessed properly by introducing modern technologies, Pakistan will not only meet its own food requirements but would also become an exporter of grain.

"We have a capability to enhance agriculture growth manifold and, by utilising modern techniques and equipments, we will not only feed our people but also earn foreign exchange, and produce indigenous fuel", he said while presiding over a meeting here on Monday on food and agriculture situation in the country. Nazar Muhammad Gondal, Minister for Food, Agriculture and Livestock briefed the President.

The President stressed the importance of the food and agriculture sector and called for greater focus on the agri sector to make the country self-sufficient and to enable it to export food. "Technology for boosting agriculture growth and production of food is easily available and can be obtained to get better yield," he added.

He said that the government should enable access of the farmers to mechanised farming and consider import of re-conditioned tractors. This would inject an element of competition in the local tractor manufacturing industry, besides helping the farmers to increase their capability, he added. He said a lot could be learnt from the Chinese model to increase food and agriculture production both qualitatively and quantitatively.

He advised the government to consider the possibility of enhancing foods grains storage capacity through private-public partnership. He said that one such model could be for the private sector to build additional storage capacity with guarantees from public sector to rent out the storage space built by the private sector.

The President also advised the government to consider special projects for upgradation of ginning factories with focus on meeting their power requirements. He said that all requirements for seeds and fertilisers should be worked out in advance, and arrangements put in place well ahead of the season to avoid any disruption in availability of these critical inputs.

Minister for Food briefed the participants of the meeting about current situation of agriculture sector in the country. He said that out of 3 million tons wheat, 1.7 million tons had already been imported, while import of rest was in the pipeline.

Nearly 1.4 million tons imported wheat had already been dispatched to far-flung areas of the country, besides 5000 tons flour to Frontier and 1000 tons to Balochistan was also being sent from Punjab, the Minister said.

He briefed the President about the steps taken to empower the small farmers by improving their access to mechanised farming through availability of tractors on subsidised rates under the Benazir Tractors Scheme Programme. Under the scheme, 20,000 tractors are to be provided over a period of two years, with a subsidy of Rs 0.2 million per tractor, he added.

He also briefed the President about Benazir Zarai Card Scheme (BZCS) under which farmers can get loan of up to Rs 500,000 from banks. The schemes will be test-launched early next year for which one district will be selected in each province.

Zardari observed that rice is consuming huge quantities of water and the government should develop a special project on minimising water use, or re-using the water used for rice crop. About urea situation, the Minister said that 65,000 tons urea had already been imported in November, and another 186,000 tons would be imported this month.

The briefing was also attended by Sherry Rehman, Minister for Information, Salman Faruqui Secretary General to President, Shaukat Tarin, advisor to the Prime Minister for Finance, Asif Ahmed Ali, deputy chairman Planning Commission, Shamshad Akhtar Governor State Bank of Pakistan and senior officials of relevant ministries.


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*Moody's revises four Pakistani banks outlook to negative ​*
SINGAPORE (December 16 2008): Moody's Investors Service on Monday confirmed, with a negative outlook, the B3 long-term foreign currency deposit ratings of four Pakistani banks. The following Pakistani banks are affected by this rating action.

-- National Bank of Pakistan (B3 Neg/Not-Prime/D BFSR)

-- Habib Bank Ltd (B3 Neg/ Not-Prime /D- BFSR)

-- United Bank Ltd (B3 Neg/ Not-Prime /D- BFSR)

-- MCB Bank Ltd (B3 Neg/ Not-Prime /D BFSR)

This concludes the review for possible downgrade for these banks initiated by Moody's on October 29, 2008. "Today's rating action is in response to the recent announcement by Moody's sovereign risk group that it has changed the outlook on Pakistan's B3 foreign currency bank deposit ceiling to negative," explains Nondas Nicolaides, Vice President - Senior Analyst in Moody's Financial Institutions Group.

The outlook change for the country ceiling concluded Moody's review for possible downgrade, further to the recent finalisation of a two-year, $7.6 billion standby financing agreement with the IMF, which will avert a near-term sovereign debt default.

The foreign currency deposit ratings of the four above-named banks remain constrained by this country ceiling. The outlook on the bank financial strength rating (BFSR) of each of the four Pakistani institutions remains stable.

However, Moody's cautions that downward rating pressure could develop in the event of a deterioration in Pakistan's economy above current expectations, while security threats could challenge the country's political and economic stability. "For the time being, however, Moody's continues to believe that the rated banks display satisfactory financial fundamentals overall and solid franchises," says Nicolaides.

Despite challenging market conditions and a deterioration in the macro-economic environment, the banks' performance remains adequate for now in terms of both business growth and profitability. As all four banks' short-term foreign currency ratings are already at Not-Prime, the outlook on these ratings remains stable.

Moody's previous rating action on the four Pakistani banks was implemented on 29 October 2008, when the rating agency downgraded the long-term local currency deposit ratings to Ba2 following the downgrade of the country's local currency deposit ceiling to Ba2 from Baa2.

The short-term local currency deposit ratings for National Bank of Pakistan and MCB Bank were also downgraded to Not-Prime from Prime-3. In the same rating action, Moody's also placed the B3 long-term foreign currency deposit ratings of the four banks on review for possible downgrade, in line with a similar rating action on Pakistan's B3 foreign currency deposit ceiling, as this ceiling acts as a constraint on these deposit ratings.

The principal methodologies used in rating the above-named Pakistani banks are "Bank Financial Strength Ratings: Global Methodology" and "Incorporation of Joint-Default Analysis into Moody's Bank Ratings: A Refined Methodology".

Headquartered in Karachi, National Bank of Pakistan reported total assets of Rs 740.4 billion ($9.5 billion) at the end of September 2008. Headquartered in Karachi, Habib Bank Ltd reported total assets of Rs 742.7 billion ($9.5 billion) at the end of September 2008. Headquartered in Karachi, United Bank Ltd reported total assets of Rs 618.1 billion ($7.9 billion) at the end of September 2008. Headquartered in Lahore, MCB Bank Ltd reported total assets of Rs 456.3 billion ($5.8 billion) at the end of September 2008.


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*40 mmcfd gas supply approved for 'favoured' power projects ​* 
ISLAMABAD (December 16 2008): The reconstituted Economic Co-ordination Committee (ECC) of the Cabinet in its first meeting on December 2, 2008, presided over by Advisor to Prime Minister on Finance Shaukat Tarin, had approved 40 mmcfd gas for two rental power projects, despite the fact that their credentials were doubtful, sources in PPIB told Business Recorder.

However, one project has not been given clear signal yet, as some ECC members were not satisfied with the documents provided by the PPIB through the Ministry of Water and Power, sources said. They said that both ' favoured projects' had been processed by the Private Power Infrastructure Board (PPIB) with extraordinary speed never seen before.

The 'efficiency' of the PPIB can be gauged from the fact that the company had written a letter to PPIB on August 19, 2008, showing interest in establishing a 'rental power' project which, supposedly, would start commercial operations by June 2009, premised on securing a three-year agreement with the purchaser, Pepco. The PPIB, showing its 'efficiency', forwarded the copy of the proposal to Petroleum and Natural Resources Secretary for allocation of gas, who in turn sent the summary to ECC for approval of gas for the project.

However, the ECC in September had also constituted a committee under the chairmanship of Minister for Water and Power (who is also chairman of the PPIB) with Secretaries of Petroleum, Water and Power and Chairman National Reconstruction Bureau (now Prime Minister's Advisor on Petroleum too) as members to look into prices of gas with different British Thermal Unit (BTU) values, and possibility of allocation of gas to some other IPPs for fast track power projects.

The committee recommended that (i) 20 mmcfd gas, from Zamzama, be allocated to Aiden Ventures (Pvt) Ltd for setting up a fast tract 100 mw rental power project at Nooriabad in Dadu district and firm commercial proposal be submitted for negotiations with Pepco as soon as possible; (ii) 20 mmcfd gas, from Zamzama, be allocated to First Tri-star Modaraba for setting up a 110 mw IPP at either Nawabshah, Site Karachi or in the vicinity of Madinatul Hikmat, Karachi, and all formalities be completed under fast track initiative with the PPIB. Earlier, the company had shown interest in setting up a rental power plant at Hawkes Bay in Karachi.

Sources said that when the issue came under consideration in the ECC , it was observed that during the period December-February, demand of gas increases manifold, and it would not be possible to make available 40 mmcfd gas to IPPs during this period.

However, it was suggested that the gas can be made available to IPPs for setting up fast track power projects, after March 2009. The ECC also decided that financial viability of the proposal of First Tri-star Modaraba for setting up 110 mw power plant be also examined by the Ministry of Water and Power.

Information about First Tri-star Modaraba is available on internet, according to which it was primarily engaged in the leasing of plant and machinery, commercial and private motor vehicles and computers; providing finance on Morabaha and Musharika arrangements; purchasing and sale of marketable securities and trading in various items.

However, when Business Recorder searched the site of the other company on the internet it was found that no such company was registered. When this scribe called the listed telephone for the company, no one attended the phone. This company was not even listed in the SECP's list of registered companies.


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*TDAP to conduct aggressive marketing in four new zones ​* 
KARACHI (December 16 2008): In a bid to avoid negative impact on the country's exports in the wake of US economic recession, the Trade Development Authority of Pakistan (TDAP) will send its delegations to four huge new markets, including Africa, East Asia, Australia and Russia, to do aggressive marketing for various items.

In an exclusive interview, TDAP Chief Executive Mohibullah Shah told Business Recorder on Monday that the Authority has its primary focus on these markets under its 'new export strategy' (NES) to protect the country's exports from possible slowdown. "Search for new markets comes under the short-term plan and includes those markets which have not so far been visited eg African, East Asian, Australian, and Russian markets where Pakistan can make huge rise in exports, he said.

He said: "To compensate the loss of demand in the US market we have an understanding of foreign markets that we can go quickly through aggressive marketing in these new spheres." He added that for this plan there had been intense deliberations with the industries and other concerned stakeholders. About the markets of Latin America, he said that Brazil is a huge market for Pakistani products, but is located at a distant which would increase transportation cost. Besides, there are obstacles, like language and understanding, for the demand of products.

However, he suggested that these markets have free trade agreements with the US and could be used for exporting products in the US markets with some value-addition that would help the country's exports grow. It will also increase the country's access to US market on preferential tariffs.

"There is a nine percent import duty on Pakistan textile exports in the US market," he added. He said that TDAP would extend its all-out support to exporters intending to reach these new distant markets, and would help them in completing the process. For reaching the Brazilian market, he reckoned that exporters have the opportunity to use the Macao route--a territory of Portuguese language located in the south of China, to utilise the preferential tariff incentive.

In line with the medium-term plan, he said, the Authority was working on developing new "investable and profitable products" for boosting exports. He said that the plan is to create several products out of a raw product.

In this connection, a portfolio of each sector is being made, and the Authority has set up an investment wing that, along with the production division, would interact with the chambers, trade bodies and private sector to encourage the investors. "TDAP will help in getting the government's support for initiating these projects," the TDAP chief added. He said that the Authority has sketched a clear objective to develop skilled labour to cater to the local industrial demand and needs.

Regarding the research and development (R&D) subsidy to the textile sector, Mohibullah said that it should not be confined to only one sector, and should be provided to other exporting sectors, "but on the value-added production and exports only".

However, he made it clear that the provision of R&D facility to other sectors primarily depends on the volume of exports, and it should continue to all exporting sectors. He said that the government is considering to continue R&D facility to the textile sector and it was hoped that it would be resumed.

Under its 'new export strategy', the Authority is working out to increase the country's overall exports. However, the already thriving sectors would be put on top of the priority list to save time and energy, while other sectors will be provided help to grow.


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*Crash programme to expedite mineral exploration​*
ISLAMABAD (December 16 2008): A crash programme has been prepared by mineral department of Balochistan to expedite mineral exploration in the province aimed at providing equitable jobs to locals in a bid to eradicate poverty from the province. Director Mines and Minerals department Government of Balochistan Dr Muhammad Saeed Baloch on Monday told a TV channel that the per annum mineral royalty of the province would be enhanced to over Rs 750 million by next year.

He said the royalty money from minerals was persistently on the raise. A couple of years ago royalty was Rs 120 million and this year it was Rs 600 million. Every possible measures are being taken to explore minerals from the province as according to an authentic survey 305 minerals are present in the Balochistan out of a total of 315 minerals, he added.

Additionally three more skill development institutions would be set up in Nowshki, Chaghi and Quetta to enhance skill of the labours. One each marble cities are working excellently in Hub and Loralai. Planning has already been finalised to establish another marble city in Khuzdar, he said.


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*New water reservoirs on Chenab: Punjab to conduct special feasibility study ​*
LAHORE (December 16 2008): Punjab Irrigation Department has decided to conduct a special feasibility study in collaboration with Wapda for the construction of new water reservoirs on River Chenab at Marala and Chiniot. The Senior Punjab Minister, Raja Riaz Ahmed said this to a delegation of students from Agriculture University Faisalabad on Monday.

According to a handout, Wapda Chairman will give the Irrigation Minister and senior officers of the department a briefing on this project on December 22 near old bridge in Chiniot. The minister said that Irrigation department has decided to undertake computerised monitoring of water channels for fair distribution of Irrigation water.

He said that Punjab Information Technology Board is developing a special software is being developed for the purpose at a cost of Rs 207 million. The project would be launched in 2009-10. Riaz said that instructions have been issued to farmer organisations to seek police help to prevent water theft.

Irrigation Minister said that GIS system is also being developed to monitor canals. 'It is being developed by the Programme Management and Implementation Unit of the Irrigation department,' he added. Canals reforms are vitally linked to agriculture output therefore practical measures are being taken for their success, stressed the minister.


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*This whole meltdown is avoidable ​*
EDITORIAL (December 16 2008): The Governor of State Bank of Pakistan, Dr Shamshad Akhtar, has been repeatedly arguing that world financial trouble has not impacted Pakistan. It has certainly not impacted our banks, thanks to a conservative SBP approach as the central bank did not allow Pakistani banks to invest abroad aggressively because our forex reserves position did not allow the banking sector this luxury, available to some other developing countries.

In fact, SBP was not very favourably disposed to the government taking on more forex liabilities through dollar bond floatations to meet its fiscal deficit target. SBP's conservative approach was viewed as "bureaucratic" by banks wanting to invest abroad or to copycat the financial instruments such as 'Derivatives' since SBP required them to obtain its permission for every deal.

In hindsight, SBP has earned kudos for protecting the forex side, but unfortunately the performance on the rupee side is not up to the same mark. Despite its commitment, the SBP could not deliver on replacing its Continuous Funding System (CFS) - 'Badla' in local parlance. The relationship of SBP with the other regulator, Securities and Exchange Commission of Pakistan (SECP), has also been less than cordial.

In fact, it has grown more tense with a battle over turf between them. Non-bank financial institutions sided with the SECP when SBP wanted them to come under its ambit. In return when the liquidity crisis erupted and SBP pumped up the credit market, it did not appreciate the crisis in the capital market for it was not its prime responsibility.

SECP also has done an even shoddier job. Although it cannot be solely blamed for the "floor rule" on KSE for 103 days, the Ministry of Finance needs to shoulder responsibility for this trouble. The legal wrangle in the courts between the broker community and the lenders (banks, DFIs, NBFIs and Mutual Funds) is a regulatory failure in the first place.

SECP was bound to fail as the main lenders, who are not their regulatees (are under SBP) could not be successfully persuaded by SECP to resolve the differences over CFS Mark-II contracts. Unfortunately, even the regulatees under the ambit of SECP could not agree to any proposal emanating from it. The broker community leaders believe that the SECP proposals are drafted in the offices of MUFAP, Mutual Funds association.

The MUFAP leadership is of the opinion that SECP circulars are drawn up keeping the broker community's interest paramount. This is indeed a sad reflection on SECP. But the story does not there. Even the frontline regulator, ie the Board of Directors of the KSE, has failed to address the key issues. The experiment of bringing non-broker directors on KSE Board has not proved successful.

The objective of the exercise was to be the first step towards complete demutualisation of the exchange so that vested interests do not hold sway over investor interests. The broker directors are considered more knowledgeable about the technical working of the exchange than the non-broker Chairman and Directors and have by and large taken the decisions for the protection of brokers in the board meetings. The placement of the floor on August 27th is said to have been a highly controversial development.

Being one man short, the non-broker directors were outvoted. At the last Board meeting (on December 13th), there was a split in the Board over the directive of SECP to withdraw the floor and suspend the Board's powers for 90 days on this issue. The Chairman's casting vote was used to block the resolution to seek legal opinion on the SECP circular of December 12, 2008. The Lahore High Court decision on Monday shows who is more conversant with the law, rules and regulations of SECP.

While blaming the regulators we do not absolve either the broker community or the financial institutions. Pig headedness from both sides has landed the issue in court. Both sides know fully well that this issue cannot be resolved quickly in courts and it is clear to both that they need each other to stay in business. The brokers need credit to conduct business and settle their daily transactions.

The lenders know that the brokers do not have the cash to provide additional margins on account of the expected steep fall of the KSE index. Brokers have invested, besides shares, in properties and in the current economic conditions they cannot sell these properties to raise cash as there are hardly any buyers for them.

After all, banks exposed to financing against shares have had to accept properties as additional collateral, while rolling over the financing against shares into one-year term loans instead of cash and shares. Similarly, CFS is a structured product. The terms of default are clearly defined.

Is it in the interest of Mutual Funds to have 25 odd brokers default first and later agree to work out modalities to salvage them? On the other hand, it is highly unfair for brokers to walk away from CFS contracts (declaring them null and void) - leaving the shares held by the lenders as margins, as the full and final payment under the CFS contract.

After all, the brokers are servicing their loans against shares. Banks need not take a position: why should we bail out the big boys? Well, some of these big boys not only own brokerage houses, but also Mutual Funds as banks. The blame for this lies squarely on past SECP Chairman Khalid Mirza and SBP Governor Ishrat Husain.

But all this is the past. It is the present situation that needs to be addressed. Unfortunately, however, the situation is evolving every hour, every day. The Advisor on Finance Shaukat Tarin needs to get the two regulators to sit with him and ask all the major regulatees to sit across the table and come up with a fair and amicable solution that both sides can live up to.

For the future, a solution to stop pumping up the capital market through excessive leveraging needs to be put in place. It is the reversal, ie fall which always causes the crisis of liquidity. We have been able to avoid the US subprime crisis affecting us. Now we need to resolve the KSE crisis as it could otherwise lead to a meltdown.


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## asaad-ul-islam

^^haha... I was right, the global financial crisis has barely anything to do with Pakistan, our problems are all home-made.

"EDITORIAL (December 16 2008): The Governor of State Bank of Pakistan, Dr Shamshad Akhtar, has been repeatedly arguing that world financial trouble has not impacted Pakistan. It has certainly not impacted our banks, thanks to a conservative SBP approach as the central bank did not allow Pakistani banks to invest abroad aggressively because our forex reserves position did not allow the banking sector this luxury, available to some other developing countries."


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## Neo

*IMF asks Pakistan to stop SBP intervention ​* 
Wednesday, December 17, 2008

ISLAMABAD: The International Monetary Fund (IMF) has asked Pakistan to adopt a market-based approach in exchange rate policy by stopping intervention of the State Bank of Pakistan (SBP), curtail fiscal deficit and increase tax-to-GDP ratio up to 15 per cent, the IMFs Director of Middle East and Central Asia Development, Masood Ahmed said on Tuesday.

In an exclusive chat with The News after attending a seminar jointly organised by the Pakistan Institute of Development Economics and IMF here, Masood Ahmed said that Pakistans oil import bill decreased by $1.3 billion per annum after a fall of $10 per barrel in prices of crude oil in the international market. It will help reduce the financing gap in the current fiscal, which was earlier estimated by the IMF at $4.5 billion, he added.

He did not rule out the possibility of revising downward the FBRs tax collection target of Rs1,360 billion due to the changing scenario in the wake of a massive fall in crude oil prices in the international market. Yes, a substantial revenue is generated at the import stage and fallout for revenue collection can be discussed with Pakistani authorities, he added.

He said Pakistan could jack up its fiscal deficit target to 4.7 per cent from 4.2 per cent if it was able to generate additional $2 billion from donors.

On flexible exchange rate, he said it should reflect macroeconomic indicators by adopting a market-based approach depending upon the demand of the rupee against the dollar in the market. The IMF viewed that efforts should be made to avoid keeping the rupee artificially strong, he maintained.

To another query about possible sectors which can be brought into the tax net, he said that there are a lot of sectors and it depends on the government how it moves to bring new taxpayers into the tax net. Around one per cent population in the whole country is under the tax net and there is a lot of potential, which can be tapped to increase the tax to GDP ratio from 10 per cent to 15 per cent, he added.

When Ahmed was asked about GDP growths projection of 3.5 per cent for the current fiscal mainly relying upon the performance of the agriculture sector, he conceded that the GDP growth target depends upon the performance of agriculture and exports sectors of the economy.

Earlier, in his address during the seminar, the Funds Director Middle East and Eastern Department said that it was the projection of the IMF that the real GDP growth would remain zero after 1940 in developed countries like USA, UK, Japan, Germany and others during 2009 owing to severe financial crisis witnessed by the economies after September 2008. 

The GDP growth of China would be cut down from 9.5 per cent to below 5 per cent, he said.

He said that there might be some economic recovery by 2010 but it mainly depends upon US treasury market. There is a need of $1.2 trillion stimulus to avoid recession in the economies, he maintained. Citing an example, he said the oil producing countries estimated a surplus by $450 billion but now they expected only a $4 billion surplus after the financial crisis that resulted in a steep decline in the prices of crude oil from $140 per barrel to $40 per barrel.

On this occasion, Juan Carlos Di Tata Deputy Director, Middle East & Central Asian Development of the IMF said the tightening of monetary policy was inevitable to achieve macroeconomic stability in Pakistan. The fiscal deficit target will be brought down from 7.4 per cent of the GDP to 4.2 per cent of the GDP in 2008-09 and further lowered down to 3.3 per cent by 2009-2010, he observed.

To achieve the fiscal deficit target, he said, Pakistan would focus more on enhancing tax to GDP ratio which is quite low compared to other regional states. He said that the expenditures on social safety nets would be increased from 0.3 per cent of the GDP to 0.9 per cent of the GDP in the current fiscal year. The Government of Pakistan agreed to eliminate borrowing from the central and continuation of tightening monetary policy.

We have estimated that the finance gap will be hovering around $4.5 billion for the current fiscal which will further come down to $3.5 billion by 2009-2010, he added.

Talking about projected Current Account Deficit (CAD), he said that there might be some need of adjustments owing to weaker remittances mainly from the Gulf and USA, lower exports and foreign direct investment, which would offset substantial reduction in prices of crude oil in international market.


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## Neo

*Pakistans IT sector as good as Indias: ICT task force ​* 
Wednesday, December 17, 2008

LAHORE: Pakistans IT infrastructure by and large is comparable to India, except for a few pockets in Bangalore and other areas.

This was pointed out in a meeting of the Task Force on Information & Communication Technologies (ICT) with Salim Ghauri in the chair.

He supported the idea of encouraging the industry to take part in more international events and present its young faces to paint a soft image of Pakistan worldwide. The chairman appreciated the proposal of producing multi-media content and short films on Pakistan as well as its IT industry to promote its soft image abroad.

It was also suggested in the meeting that revenue estimation study of the IT sector in Pakistan will not only discover the industry structure, major players, etc, but will also try to project how the industry will evolve over time in the next 5-10 years. For example, he said, the technician that fixes ATM machines for banks is in all probability not included in any revenue estimation exercise currently. That ought to change.

Building on the revenue estimation study, added the participants, further steps would be taken in collaboration with Pakistan Software Export Board (PSEB) to conduct an HR study to assess the skill set and number of students that should be graduating to match the needs of the industry. These studies will help the government in the allocation of appropriate budgets for certain segments of ICT education, launching programmes and encouraging private sector by offering incentives in certain segments of ICT.

The Chairman ICT Task Force also agreed with the participants that a grand IT conference at convention centres in Islamabad, Karachi, etc, with everyone connected to the IT industry may also be organised with invitees including consumers of IT (banks, multinationals, govt departments), producers of IT and intellectual property (companies in PSEB, P@SHA and others) and academic institutions.


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## Neo

*GoP finalises plan to offer ownership of agri lands to investors​*
ISLAMABAD: The government has finalised plans to offer ownership of agricultural lands to investors for farming to achieve self-sufficiency in agriculture produce, Federal Minister for Investment, Senator Waqar Ahmad Khan told Daily Times.

We are extremely enthusiastic in providing areas for farming with great incentives, he added. Under the plan the investors can own the land, cultivate it and export 100 percent of the produce. In this regard we are specially targeting investors from the UAE and other Gulf countries, as it would help these countries to have their own food resources, he informed. 

Pakistan needs more than $40 billion of foreign direct investment and our target is to attract $20 billion by the end of 2009, Khan told. 

The agriculture sector is still the largest employer of the workforce and around 70 percent of Pakistans population lives in rural areas.

Khan said that leasing and transfer of land would be facilitated by the ministry, which is now working in close association with the law ministry to finalise the modalities. Once an investor shows his interest, we will have draft agreements ready for him, he assured. 

Pakistan is creating a special task force to protect investment and provide security to potential investors in the country. The task force would be comprised of officials from the ministries of interior, defence, investment and finance, he revealed. We are aware of the security concerns and that is why we are creating a special task force to protect investors and their investment, added Waqar Ahmad Khan. 

Pakistan is open to investments in any field, he added.

The priority areas are oil and gas, energy, food, agriculture, information technology and infrastructure. Due to past experiences, the investors are uncertain regarding the continuation of policies. The present democratic government has proposed legislation to ensure continuation of projects even if there is a change of government, the minister said. The government has launched a multi pronged strategy to attract investors, which includes: 100 percent repatriation of money; five tax exemption for investors and ten years of tax exemption to those investors who set up a commercial zone; customs duty and general sales tax exemptions on certain items. 

Pakistan is also looking for investors who are able to enhance our existing infrastructure requirements. Pakistan is the fifth largest milk producer in the world but 70 percent of the milk is auto consumed or wasted and does not reach the market. We need people to exploit this huge market, which employs around 8 million people in rural areas. The modernisation of dairy sector can have huge impacts on poverty alleviation, which has risen to an alarming level of 28 percent. 

The ministry plans to launch a media campaign to attract investors to Pakistan.

We will ensure one-window operation and all problems an investor faces will be solved by this ministry, he said.

Waqar Ahmad Khan concluded with the resolve that in future no investor will face any problem.


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## Neo

*Pakistan will fulfil IMF requirements​*
** Zardari says govt to ensure self-sufficiency in fuel, edible oil​*
ISLAMABAD: Pakistan will stand on its own feet and achieve its goal of self-sustained high economic growth, President Asif Ali Zardari said during a meeting with a delegation of the International Monetary Fund (IMF) on Tuesday.

The delegation, led by Masood Ahmad, the director of Middle East and Central Asia development, also met Prime Minister Yousuf Raza Gilani.

Zardari and Gilani assured the IMF that Pakistan would implement the measures it had agreed on with the IMF authorities as conditions for a $7.6 billion bailout loan.

Ahmad apprised the president of the details of the IMF programme which he said was Pakistans homegrown. 

Fuel and edible oil: The president said his government had also planned to achieve self-sufficiency in fuel and edible oils. The government had decided to accord a very high priority to the agriculture sector for this purpose, he said, adding that it would take measures to reduce the import bill of edible oil and explore the use of ethanol as fuel.

In his meeting with the delegation, Prime Minister Gilani expressed the governments commitment to economic welfare of the people through infrastructure development and an increase in economic opportunities.

He told the visiting delegation about his governments approach to addressing problems such as poverty, limited access to public services, and extremism through a combination of administrative, political and security measures. 

He underlined the importance of economic development in the long-term to tackle these problems.

Officials privy to the meeting told Daily Times the IMF delegation also discussed problems that Pakistans economy is facing, and measures to improve the tax-to-GDP ratio. 

The delegation was told the government had been considering various mid-year options in the customs and federal excise areas to generate additional revenue and discourage the import of luxury and non-essential goods. 

The delegation was also told the Pakistani government wanted to take new income tax and general sales tax measures in the next fiscal budget (for the year 2009-10). 

The IMF delegation stressed need for measures to decrease inflation, which they said had already been affecting common people and the local industry. 

The visiting delegation also included Juan Carlos Di Tata, the deputy director for Middle East, Dr Jaffer Mojarrad, the executive director, and Paul Ross, the senior resident representative of the IMF in Pakistan.


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## nitesh

This particular measure needs to be taken in war footing, I don't see you guys in large. In my experience the ration 1:4 in terms of participation from Pakistan vis a vis India



> He supported the idea of encouraging the industry to take part in more international events and present its young faces to paint a soft image of Pakistan worldwide. The chairman appreciated the proposal of producing multi-media content and short films on Pakistan as well as its IT industry to promote its soft image abroad.


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## Neo

*Steps suggested to improve tax-to-GDP ratio ​*
ISLAMABAD (December 17 2008): A delegation of International Monetary Fund (IMF) headed by its director for Middle East and Central Asia Development (MECAD), Masood Ahmad on Tuesday called on the Prime Minister, Syed Yusaf Raza Gilani. The Prime Minister expressed the government's commitment to economic well-being of the people through infrastructure development and increasing economic opportunities.

He also told the delegation about government's approach to address fundamental problems like poverty, limited access to public services, and extremism through a combination of administrative, political and security measures. He underlined that economic development is an essential component in the long-term perspective. The delegation discussed the economic challenges being faced by Pakistan's economy and suggested measures for improving the tax-GDP ratio.

The meeting was attended by Shaukat Tareen, Advisor to PM on Finance, Hina Rabbani Khar, MOS for Finance, Dr Shamshad Akhtar, Governor State Bank, Juan Carlos Di Tata Deputy Director, Middle East & Central Asian Development, IMF, Paul Ross, Senior Resident Representative, IMF Pakistan and Dr Jaffer Mojarrad.-


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## Neo

*PC chief gives higher poverty figure than Tarin's ​* 
ISLAMABAD (December 17 2008): The Deputy Chairman of Planning Commission, Asif Ahmad Ali, while summing up a seminar jointly organised by PIDE and IMF on global financial crisis, estimated that poverty had reached 40 percent because of the flawed policies of the previous regime. In marked contrast, the Advisor to the Prime Minister on Finance gave the poverty figure as 28 percent.

"To the best of my understanding, poverty is 40 percent in the country," Asif stated categorically. This revelation, in the aftermath of Tarin's speech wherein he indicated the figure of 28 percent, led to visible discomfort among Finance Advisor Shaukat Tarin, State Bank of Pakistan (SBP) Governor Dr Shamshad Akhtar, and IMF Director for Middle East and Central Asia, Masood Ahmed.

The PC Deputy Chairman's statistics were calculated by Planning Commission's panel of Economists comprising well regarded economists from the public and private sectors. Interestingly, Finance Ministry in its recent Poverty Reduction Strategy Paper (PRSP) had stated that poverty was about 22.3 percent, which would be nearly half of the figure claimed by PC Deputy Chairman.

In defence of Finance Ministry's poverty figure, an official told Business Recorder that the poverty figure of the Panel of Economists was faulty because they used household consumption expenditure data of 2005-06. "The Panel of Economists did not adjust poverty line upward, keeping in view the CPI-based inflation for the fiscal years 2006-07 and 2007-08," he said.

In other words, poverty line has been adjusted upward, but consumption and expenditure remained at 2005-06 level, which show that the poverty figures prepared by the Panel of Economists were faulty. "I feel the Panel of Economists compared oranges with apples," he remarked. Another official said that the World Bank had also rejected the poverty figures calculated by the Panel of Economists, saying that the economists used wrong methodology.

In the absence of household income expenditure survey, they should have raised 2005-06 household consumption expenditure by using the growth rate of private consumption and expenditure of fiscal years 2006-07 and 2007-08 to make the poverty figures comparable with alleviated poverty line. Asif expressed appreciation for Shaukat Tarin for his reform agenda, but did not talk of SBP Governor.


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## Neo

*GSP plus scheme: Pakistan asks for greater access to EU market​*
ISLAMABAD (December 17 2008): Prime Minister Syed Yusuf Raza Gilani has called upon Sweden, which will assume the EU Presidency in July 2009, to assist Pakistan gain greater access for its products to EU markets through Pakistan inclusion in European Union's GSP plus scheme, as helping Pakistan economically would serve their common counter terrorism agenda.

The Prime Minister was talking to the visiting Swedish Foreign Minister Carl Bildt, who called on him here on Tuesday. While expressing his gratitude for Sweden's strong support all along for restoration of democracy in Pakistan, the Prime Minister termed Sweden as a very important partner of his country, both at the EU platform and bilaterally.

He hoped that with the installation of democratic government in Pakistan, their countries would undertake concerted efforts to reinvigorate their ties through increased high level exchanges, people to people contacts and substantive co-operation in the spheres of trade, investment and technology transfer.

Carl Bildt, who had served as Swedish Prime Minister from 1991-1994, thanked the Prime Minister for his sentiments about his country and commended Pakistan's balanced and restrained reaction in the aftermath of Mumbai terrorist attacks. He underscored the need of Pakistan and India working together to defuse the present crisis and bring the perpetrators of the heinous crimes committed in Mumbai, to justice.

The Swedish Foreign Minister acknowledged the fact that no other country had suffered more by terrorism than Pakistan and assured the Prime Minister of Swedish support in the EU to enable Pakistan overcome its economic difficulties and adequately equip its law enforcing agencies to face the challenges of extremism and terrorism.-PR


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## Neo

*Businessmen seek government support for musical instruments industry​* 
SIALKOT (December 17 2008): Business community engaged with musical instruments industry seeks government special attention and support for the modernisation and upgradation of the industry and demanded special incentives and concessions for enhancing export. According to Sialkot Dry Port sources the exports of musical instruments during 2006-07 was Rs 816 million while in 2007-08 exports were of merely Rs 165 million which indicate a sharp decline in the export.

Some leading manufacturer and exporter of musical instruments when contacted to ascertain the causes of decline in export said that it was due to the hard-hitting competition in international market. Despite of lack of modern technology and techniques the local industry was competing with the competitors in the global market and considerably contributing to the national exchequer, the said.

The obtaining of modern technology has become more imperative at this juncture for producing quality musical instruments in accordance with the changing global trends and to enhance the exports as well as to stay in international market.

More than hundred-year-old musical instruments industry was producing various musical instruments without government support and with stereotyped techniques and exporting to USA and European countries. The local musical instrument manufacturers are producing Western type of musical instruments, which are much popular in the world.

The manufacturers were of the opinion that government should take special steps for obtaining "Technology" for tracking the industry on modern production lines. The attaining of cheap technology has become more imperative at this juncture to cope with the global requirements and demands easily because the trend of the musical instruments has totally been changed. Keeping in view the rapid and sharp change in trends, the government should help exporters and manufacturers in getting "Electronic Techniques" from different countries for ensuring the manufacturing of electronic musical instruments, which are in great demand in the world market.

Some other manufacturers and exporters were of the opinion that musical industry of Sialkot was totally ignored by the concerned authorities as a result of which the industry was not modernised and the business community engaged with the industry was still using the old and stereotyped manufacturing techniques in this modern era. The government should allow duty-free import of raw material like ebony wood, brass and copper rod used in manufacturing of musical instruments, they demanded.

It may be mentioned that the ebony-wood was being imported from Africa, Kenya and Tanzania at very high cost with imported duty. The musical instruments industry has great potential and able to increase the export volume, if government announced the special incentives and concessions for the industry.


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## Neo

*Railways strive to achieve over Rs 29 billion revenue target ​* 
ISLAMABAD (December 17 2008): Pakistan Railways is making all-out efforts to achieve the revenue target of Rs 29,600 million fixed for 2008-09. The PR has failed to attain the target of Rs 28,992.629 million fixed for last fiscal year.

Informed sources in the Railways ministry told Business Recorder on Tuesday that Rs 28,992.629 million was fixed as revenue target for 2007-08, but Railways could achieve Rs 20,219.215 million revenue during the year, reflecting a shortfall of Rs 8773.414 million.

Sources revealed that Railways has fixed Rs 14,500 million for 2008-09 as passenger revenue against Rs 13,200 million for 2007-08, but it could achieve Rs 10060.265 million during 2007-08, which was Rs 3139.735 million short of the target.

Source said that Rs 1000 million has been fixed for 2008-09 as other coaches' revenue. Railways has estimated Rs 8300 million for 2008-09 as goods revenue against Rs 8400 million for 2007-08. It failed to achieve the estimated budget and secured only Rs 5882.856 million, which was short of Rs 2517.144 million, sources revealed.

Sources said that Rs 800 million has been estimated as Military Traffic revenue for 2008-09 which is less than Rs 870 million estimated for the same period of last year. Railways achieved only Rs 693.040 million, which was short of Rs 176 million of the estimated budget.

Similarly, Rs 5000 million has been estimated for the 2008-09 as sundry revenue which is less than Rs 5367.629 estimated for the same period of last fiscal year. Railways succeeded in achieving Rs 2507 million, which is short of Rs 2860.142 million of the estimated budget, sources concluded.


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## Neo

*IMF go-ahead for Rs20bn bourse support fund​*
ISLAMABAD, Dec 16: The International Monetary Fund has given a go-ahead to Pakistan to provide Rs20 billion fund to support its sinking bourses.

After the removal of the floor on Monday, the Karachi Stock Exchange nosedived to a two-and-half-year low amid growing economic uncertainty, Pakistan-India tension and an earlier IMF warning against using public funds to support the market.

We have reached an understanding on the issue. Modalities of the support fund will be released in two to three days and shares worth Rs20 billion will be sold out to overseas Pakistanis, Adviser to Prime Minister on Finance Shaukat Tarin told reporters after addressing a seminar organised by the IMF and Pakistan Institute of Development Economics (PIDE) here on Tuesday.

IMFs Middle East and Central Asia Director Masood Ahmad also spoke at the seminar.

Later, an IMF delegation led by Mr Ahmad met President Asif Ali Zardari and Prime Minister Yousuf Raza Gilani.

Mr Tarin said the government was assessing the market to determine the actual price of shares. He ruled out capital flight during the crisis in the stock market.

A senior official of the finance ministry told Dawn that the IMF had rejected a governments request for a Rs30 billion 12-month put option to prevent a stock price decline.

He said the Rs20 billion fund would be set up by four state-owned institutions  NBP, EOBI, State Life and NIT  with borrowing guarantee from the government.

Mr Tarin said that poverty rate in the country had climbed to 28 per cent, adding that the government was trying to bring down inflation to nine per cent over the next two years.He said the IMF would review Pakistans economy in February before releasing the next tranche of $1.5 billion.

He said a law to stop transfer of money through the hundi system would soon be presented in parliament.

State Bank Governor Dr Shamshad Akhtar said that rising unemployment and poverty posed a great challenge which needed to be addressed.

President Zardari told the IMF delegation that his government had decided to achieve the goal of self-sustaining high economic growth and self-sufficiency in fuel and edible oils. The government accords high priority to the agriculture sector so that the import bill of edible oil is brought down and possibilities are explored for use of ethanol as fuel, he added.

Mr Ahmad said the IMF programme was in fact Pakistans own home-grown programme.

Prime Minister Gilani apprised the IMF delegation of his governments approach to address problems like poverty, limited access to public services and extremism through a combination of administrative, political and security measures.

The delegation suggested measures for improving the tax-to-GDP ratio.

The IMF delegation included Juan Carlos Di Tata, deputy director for Middle East; Dr Jaffer Mojarrad, executive director; and Paul Ross, senior resident representative in Pakistan.


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## Neo

*Move in US to get Pakistan aid stopped​*
WASHINGTON, Dec 16: US politicians with close links to India have quietly launched a campaign to persuade the incoming Obama administration to stop US aid to Pakistan.

I do not believe in aiding countries that aid terrorism, said US Senator Robert Menendez, a Democrat from New Jersey.

Declaring Pakistan a failed State Congressman Frank Pallone, another Democrat, said he opposed giving billions of dollars in aid to Pakistan because he believed it would be used against India.

Gary Ackerman, a pro-Indian Democratic Congressman from New York who has long advocated stopping US military aid to Pakistan, urged Washington to review its policy towards Islamabad after the Mumbai attacks.

The implication for us is that there are bad guys still out there, and were going to have to learn how to deal with them, because our friends are getting sucked into this big-time, said Mr Ackerman, who chairs the House subcommittee on the Middle East and South Asia.

Some of these lawmakers may move a resolution in the US Congress after the inauguration of the new president on Jan 20, strongly condemning Mumbai attacks and urging lawmakers to stop military assistance to Pakistan.

A $15 billion, 10-year aid package already proposes to attach US military assistance to Pakistan to its performance in the war against terror, authorising the US administration to stop the aid if it finds that Islamabad was not doing enough to fight terrorism.

One of the primary movers of the bill, Senator Joseph Biden, is now the vice-president-elect. He chaired the Senates powerful Foreign Relations Committee before the November election. A former Democratic presidential candidate, Senator John Kerry, will replace him as chairman of the committee and is also expected to back the bill to provide generous economic assistance to Pakistan.

But the move by pro-Indian American politicians can harm this effort. Diplomatic observers in Washington feel that while it may not be possible to stop US aid to Pakistan because of the countrys strategic importance, the lawmakers may succeed in attaching unfavourable conditions.

Even some of these pro-Indian lawmakers realise Pakistans strategic importance. Senator Menendez, while emphasising the need to attach US aid to Islamabads performance in the war against terror, also cautioned a gathering of Indian-Americans in New Jersey this week not to stir an India-Pakistan war because such a conflict might lead to drastic consequences.

He urged India to come out with all the evidence it had to link Mumbai attacks to Pakistan.We have an obligation to bring terrorists to justice. Lashkar-e-Taiba must be brought to justice, he said.

Congressman Pallone, however, went over the top while condemning Pakistan.

Pakistan is essentially a failed state. I do not believe the central government controls most of the territory of the country, he declared.


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## Neo

*Pakistan seeking Swedens help for greater EU market access​*
** Prime minister urges Stockholms increased participation in food processing, energy, infrastructure development sectors​*
ISLAMABAD: Prime Minister Yousuf Raza Gilani called upon Sweden to assist Pakistan in gaining greater access for its products to the European Union (EU) market. Gilani told visiting Swedish Foreign Minister Carl Bildt that Sweden, which assumes the EU Presidency in July next year, could assist Pakistan by facilitating its inclusion in the EUs Generalised System of Preference Plus scheme.

Helping Pakistan overcome financial troubles would also serve the two countries anti-terrorism agenda, he said. While expressing his gratitude for Swedens strong support for the restoration of democracy in Pakistan, the prime minister termed Sweden an important partner of Pakistan.

Gilani said with the restoration of democracy in Pakistan, the two countries could work towards enhancing bilateral ties through increased high-level exchanges, people to people contacts and co-operation in the trade, investment and technology transfer sectors.

Participation: He said the groundwork laid during the Pakistani commerce ministers visit to Sweden must pave the way for increased participation of Swedish multinationals in the food processing, energy and infrastructure development sectors in Pakistan. Commenting on the current South Asian security situation, Gilani said Pakistan had assured India of its complete support for the investigation of the Mumbai attacks.

He said Pakistan had initiated action upon the United Nations resolution but was still awaiting the Indian governments response to its sincere offers of forming a joint commission for probing the attacks. Carl Bildt, who served as the Swedish prime minister from 1991-1994, praised Pakistans reaction following the Mumbai terrorist attacks. He stressed the need of Pakistan and India working together to defuse the tension and bring the perpetrators of the Mumbai attacks to justice.

Bildt acknowledged no other country had suffered from terrorism than Pakistan and assured the prime minister of his countrys support in the EU. He said the Swedish corporate sector would be urged to consider Pakistan for investments and agreed to regular high-level exchanges for bringing the two countries closer. Foreign Minister Shah Mehmood Qureshi and the Swedish ambassador to Pakistan were also present.


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## Imran Khan

*Reviving Pakistans economy *


Masood Ahmed 

More financing is urgently needed to strengthen Pakistans resilience to potential shocks, help finance the expanded social safety net, and allow for higher spending on development programmes

Pakistans economy is at a critical juncture. Inflation has doubled and is now running at 25 percent, the value of the rupee has fallen by a third since March, and foreign exchange reserves are down to worrying levels. All this is occurring against the backdrop of the worst international economic crisis in sixty years.

These are precisely the type of circumstances in which member countries look for support from the IMF. And so did Pakistan  resulting in the approval on November 24 by the IMFs Board of Directors of a $7.6 billion loan in support of the authorities economic stabilisation programme.

The content and conditionality of the IMFs financing is fully set out in the public eye. All the loan documentation is available on the IMFs website. Here, let us examine how the IMF sees the economic and financial challenges facing Pakistan, and the contribution it can make to help address them.

The first point to stress is that given the difficult international economic situation and the weaknesses inherent in Pakistans own economy, overcoming the current economic crisis will require hard choices and sustained action over the coming year. And no doubt this will entail some economic hardship  albeit much less severe than the disruption and job losses that would have come from a full-blown economic crisis. Fortunately, the strategy set out by the Government, on which the IMFs support is based, provides a sound basis for addressing the challenges.

The objectives are clear: first, restore overall economic stability and confidence by acting on key macroeconomic imbalances, and second, do so in a manner that ensures social stability and adequate support for the poor during the adjustment process.

Translating these objectives into concrete policy decisions will entail difficult tradeoffs within the Governments programme. For example, it is clear that the fiscal deficit, which has risen to the unsustainable level of 7.4 percent of GDP in 2007-08, will have to be brought down to a more manageable 4.2 percent in 2008/09  in line with what it was two years ago.

Fiscal consolidation is essential to put public finances on a sustainable path and eliminate State Bank of Pakistan (SBP) financing of the government. But achieving this will require implementation of policies to phase out energy subsidies, prioritise government spending, and strengthen revenue mobilisation through tax policy and administration measures.

Even with these changes on the fiscal side, there will be a continued need for financing the government deficit. Over the past two years, much of this financing has come from money creation by the SBP, in turn fuelling inflation and the dramatic loss of foreign exchange reserves. The Governments programme commits to switch deficit financing from the SBP to commercial banks, but this will require an increase in interest rates, which has its own cost to the private sector. Again, there is a hard choice between controlling inflation, which hurts the poor, and raising interest rates, which affects borrowers.

A second point is that while the necessary macroeconomic tightening will clearly involve some pain, it is important that the burden of adjustment should fall least on the most vulnerable members of Pakistani society. And that is why for the IMF it was crucial that the Governments programme includes key social protection measures. Expenditure on the social safety net will be increased to protect the poor through both cash transfers and targeted electricity subsidies. And to draw upon the best international experience in using safety nets to reach the needy, Pakistan is working with the World Bank to prepare a more comprehensive and better-targeted social safety net programme.

Third, it is important to point out that the programme  and its conditionality  is based on the targets and measures that the authorities have themselves set for the next two years. And all the conditions associated with the IMFs loan are transparently set out in the public domain. The IMF is convinced that the best-implemented programmes are the ones that are home grown and fully owned by the country.

Fourth, the success of the programme hinges on sustained and forceful implementation. IMF financial support will help relieve Pakistans immediate balance-of-payments needs, but strong and determined implementation of the reforms included in the programme will allow the country to get its economy back on a sustainable path. Strengthening public sector institutions and governance will need to be a key dimension of this effort. In this respect, building domestic consensus around the measures included in the authorities package constitutes a key factor in the period ahead.

Finally, while the key to success lies in the hands of the Government and people of Pakistan, the international community also needs to support these efforts. To this end, the financing from the IMF will help to ease the path of adjustment and will provide a strong signal of support to the international community. Of the $7.6 billion loan, $3.1 billion has already been made available by the IMF to strengthen the reserve position. And the regular monitoring of the economy by the IMF will show how the macroeconomic objectives set by the Government are being met and whether they need to be adjusted in the light of changing circumstances.

Alongside the IMFs financial support, other international agencies and bilateral donors are also providing support, but more financing is urgently needed to strengthen Pakistans resilience to potential shocks, help finance the expanded social safety net, and allow for higher spending on development programmes. The IMF stands ready to participate in any donor meeting to provide the economic and financial analysis that could underpin this expanded support. Working together, we can help Pakistan revitalise its economy and protect the poor during these difficult times. 

The writer is Director, Middle East and Central Asia Department of the International Monetary Fund. This article was written exclusively for Daily Times

Home | Editorial


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## Imran Khan

Gwadar Port fully operational, six ships to dock this month: NA told 



ISLAMABAD, Dec 17 (APP): Minister for Ports and Shipping Nabeel Gabol told the National Assembly on Wednesday that the Gwadar Port was fully functional and six ships carrying urea would dock at the port this month. 

Responding to a question by Sheikh Salahuddin during the Question Hour he said that an amount of Rs 400 million allocated for Gwadar Deep Water Port Project, Phase&#8209;I including deepening of channel from PSDP 2007&#8209;08 had been released to Gwadar Port Authority.
To a question he said that major works of the project had been completed and the sanctioned amount was utilized during the financial year 2007&#8209;08. Remaining minor works were likely to be completed by June 2009. 

Responding to another question by Abdul Qadir Patel, he said that no compensation had been paid to the fishermen for the losses suffered by them after grounding of Tasman Spirit in July 2003 as the matter was sub judice. 

Answering a question from Belum Hasnain, Minister for Environment Hameedullh Jan Afridi told the House his ministry had taken several steps to control air pollution in the country. 

He said the powers to implement Pakistan Environment Protection Act 1997 had delegated to provincial EPAs for effective monitoring of air pollution. 

Four environmental tribunals under section 20 of the of the act had been notified for trying cases of violation through emission caused by the factories, the Minister said. 

He told the House that customs duty on import of anti&#8209;pollution equipment had been completely abolished. The EPAs were monitoring the major air polluting industries on regular basis. These industries included sugar,cement,iron and steel sector. 

To a question from Nafisa Shah, Hameedullah Jan Afridi said that Pakistan was one of the 12 countries where snow leopards were found and there estimated population here was 200 to 300. 

To a question from Rana Mehmoodul Hassan he said that his ministry does not allocate special funds for National Tree Planting Campaign. Rather the provincial forest departments utilized their respective allocated budgets to implement the Spring and Monsoon Tree Plantation campaigns.


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## dr.umer

*US to provide 50,000 tons of white wheat under FAP​*
December 18 2008

ISLAMABAD :The United States of America (USA) pledged on Wednesday to provide 50,000 tons soft white wheat, worth $11 million in shape of grant under Food Aid Programme. Economic Affairs Division Secretary Farrukh Qayyum and US Ambassador Anne Patterson signed the agreement on behalf of their respective governments here on Wednesday.

Food and Agriculture Secretary Zia-ur-Rehman was also present in the signing ceremony. According to the agreement, USA government will bear total transportation charges, of $7 million, for wheat provision to Pakistan. The wheat provision of 50,000 tons is the part of the Food Aid Programme worth $115 million for Pakistan.

Talking to media persons, Zia said that USA would provide General Sales Manager (GSM) credit facility amounting to $100 million and Pakistan and US officials are expected to finalise the deal on Friday. He said that USA would provide the facility in two traunches of $50 million each.

He said that USA was going to provide the wheat under Food Aid Programme of $115 million for Pakistan. Farrukh said that USA was partner of Pakistan, providing assistance for many welfare projects including health and education. He said that Pakistan and USA had a long history of economic co-operation and USA was the major investor in Pakistan and strong trade partner.


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## Neo

*Govt sees further fall in inflation ​* 
*Tarin says mark-up may be reduced next year​*
Thursday, December 18, 2008

LAHORE: Adviser to the Prime Minister on Finance Shaukat Tarin on Wednesday said the government had honoured its commitment by creating a market support fund and now it depends on the stock market how it responds. 

The government will not take the pressure of big players and has planned to buy major shares, he said, adding once the government bought shares it would support the stock market which would protect small investors automatically. 

The adviser hoped that the mark-up rate would come down at the end of the first quarter of next year as monthly comparison of inflation figures showed a reasonable decline. The government has been expecting a further decline in Consumer Price Index (CPI), Sensitive Price Index (SPI) and Wholesale Price Index (WPI) in the coming months which would be helpful in bringing down the mark-up rate. 

The government has announced a reduction in the mark-up rate but core inflation has crossed the figure of 18 per cent which compelled the government to increase the mark-up rate in order to tame the escalating inflation, the adviser said while talking to newsmen after the first session of a Conference on Tax Policy Options for Pakistan. 

To a question despite the decline in CPI, SPI and WPI the prices of edibles and other items are not decreasing, Tarin termed it failure of the provincial governments. 

The provincial governments should enforce the prices of items and it is their failure so the prices are not coming down, he said, adding the ministry has constituted secretaries committee and given task to the committee to scale down the prices. 

Earlier speaking at the conference, Tarin said the public sector plays a central role in providing key social sector and infrastructure services to meet the needs of a growing economy. However, the most desirable way of meeting the cost of such services is through an equitable system of taxation. 

Generally, countries with comparable level of development mobilize taxes that are about 18 per cent of GDP. Pakistan mobilized only 9.6 per cent of GDP in taxes. This is not an acceptable level of tax effort. 

He said the country must evolve a simpler tax regime that would ease taxpayers problems that find it difficult to meet the requirements of multiple taxes and authorities. He pointed out the desired tax regime in which he asserted there should be only two taxes in the country, namely an income tax and a consumption tax, in value added mode. This would hugely simplify the tax regime besides moving the tax system toward direct taxes. All collections must be based on assessment and use of presumptive taxes or withholding taxes, as full and final settlement should be eliminate, he remarked. 

Income is simply income, irrespective of its origin, either in the form of salary, interest, rent or profit. This has to be a very basic premise of reform. Once granted, tax treatment of income must be uniform and non-discriminatory. Except for income of charitable trusts or consumption of foodstuff, there should be no exemptions in the taxation of income and consumption. There should be a single tax identifier number applicable across both taxes. 

Speaking on the occasion Chairman Federal Board of Revenue (FBR) Ahmed Waqar said the Pakistan still have a long way to go in increasing Tax-to-GDP ratio which is around 10 per cent and amongst the lowest in the world, to around 15 per cent within the timeframe of the next 5 years and expanding the almost static tax base. 

He pointed out the FBR is in the midst of an ongoing Tax Administration Reform Programme (TARP) being sponsored by the World Bank and DFID. The main focus of the TARP has been on promoting voluntary tax compliance through an enhanced level of tax payers facilitation. He said all manual processes, in the meanwhile, have been substituted with fully automated or semi-automated environment. 

He mentioned the board was able to cross the one trillion rupees mark in tax collection last year. The FBR has achieved the revised targets of Rs430 billion during the period July to November, 2008. But the present economic slowdown has created a situation where achieving the revenue targets for the year appear to be dauntingly challenging if not formidable. 

We will have to tap new sources and undertake enforcement and audit in an open, fair and transparent manner without creating harassment for achieving the target, he added. 

Hafiz Pasha has suggested the Provincial Taxation of Real Capital gains on properties (based on updated valuation tables) should be imposed while withdraw Federal CVT. 

He said after a missed opportunity during the last five years of rapid growth, Pakistan has to raise the Tax-to-GDP ratio when the growth process is faltering. The extent to which the Tax-to-GDP ratio can be raised will depend upon political will, improvements in tax administration and laws which enable extension of the tax to hard-to-tax sectors, rational tax policies, incentives for fiscal effort and development of a tax culture. 

Secretary Finance Waqar Masood, Director Middle East Department, IMF Masood Ahmad also spoke on this occasion.


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## Neo

*ADB, Pakistan sign accords for $300m loans ​* 
Thursday, December 18, 2008

ISLAMABAD: The Asian Development Bank (ADB) and Pakistan on Wednesday signed agreements for three loans totaling $300 million for Balochistan, Sindh and Punjab aimed at supporting economic growth, poverty reduction and improved health of women and infants.

Out of $300 million, $100 million would go to the Punjab Millennium Development Goals (MDG) programme, $100 million for the second Balochistan Resource Management programme and $100 million for the Sindh Growth and Rural Revitalisation programme. The Balochistan and Sindh programmes will also receive technical assistance grants.

The loans will help the provincial governments in dealing with pressing challenges in economic development, fight poverty and meet MDGs for minimising maternal and infant mortality, said Rune Stroem, Country Director of ADB in Pakistan.

Punjab, Pakistans most populous province, is facing massive challenges in providing healthcare services to a growing population. The programme is expected to contribute to improving health facilities for women and infants.

The Sindh provincial government will invest the $100 million loan in improving public resource management and boosting investment in rural areas in order to reduce poverty and enhance economic opportunities, thus helping relieve pressure on urban areas.

The programme promotes public-private partnership (PPP) to stimulate investment in much-needed infrastructure and social services in rural areas. The ADB will provide technical assistance of $800,000 which will be used to conduct studies and draw up options for PPPs.

Balochistan will spend the loan on strengthening the provincial governments management of public finances, and also to create a more sustainable and affordable civil service pension system and help improve governance in the lucrative but largely-untapped mineral resources sector.

To this end, the ADB will provide an additional $800,000 as a technical assistance grant to help the provincial government implement the programme effectively.

The agreements signed by ADB Pakistan Resident Missions Country Director Rune Stroem and Pakistans Secretary of Economic Affairs Farrakh Qayyum, covered funding requirements for the first phase of each of the provincial programmes, with ADB likely to provide further substantial funding for subsequent stages. 

ADB, based in Manila was established in 1966 and is owned by 67 members ñ 48 from the region. In 2007, it approved $10.1 billion of loans, $673 million of grant projects, and technical assistance amounting to $243 million.


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## Neo

*BoI invites Brazil to invest in infrastructure ​* 
Thursday, December 18, 2008

ISLAMABAD: Board of Investment Chairman Saleem Mandviwalla on Wednesday invited Brazilian government to participate in infrastructure projects such as mass transit programme in various big cities of Pakistan, railways, port development, telecommunications, electronics, processed food like fruits and vegetables and sugar distilleries.

He was speaking to the Brazilian Ambassador in Islamabad Carlos Eduardo Sette Camara Da Faonseca Costa, who called on him to discuss bilateral relations between the two countries.

The ambassador assured Mandviwalla of extending maximum support and cooperation for the promotion of bilateral relations and investment in both countries.

The minister of state appraised the Brazilian envoy of various joint venture opportunities for Pakistan and Brazil, particularly in the area of high technology, which would include agriculture, manufacturing, mining, etc.

Separately, Ambassador of China Luo Zhaohui, in Islamabad called on the BOI chairman. In the meeting, the Chinese ambassador voiced concerns of Chinese investors in Pakistan.

The ambassador highlighted concerns of Chinese locomotive supplier, Dongfang, saying the company met all required international standards and received a contract for 69 locomotives in 2001. Technical problems come everywhere whenever locomotives are made operational in a new environment, the same happened in the case of Dongfang. The Chinese company rectified the faults and engines are working efficiently now, he said.

For the second batch of 75 engines, the Ministry of Railways has rejected thrice the proposal of Dongfang on the basis of technical deficiencies. US Company General Electric has also offered a bid for the same contract but its price is way higher than the Chinese and apparently it has become a favourite to win the contract.

The ambassador also referred to the recent approval of the cabinet to issuing a Long Distance International (LDI) licence to China Mobile Pakistan, which is the largest mobile operator both in China and the international market and has now acquired 100 per cent shares in Paktel. He added that since China Mobile is not a new entrant as it acquired Paktel in Pakistan, any further delay in the issuance of LDI licence to CM Pak would send a negative message to Chinese companies and investors.

The minister of state assured the Chinese ambassador that he would consult with the Ministry of IT and PTCL for speedy resolution of CM Pak longstanding issue.


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## Neo

*Gwadar Port fully operational, NA told ​* 
*Another forex dealer found involved in flight of dollar​*
Thursday, December 18, 2008

ISLAMABAD: Minister for Ports and Shipping Nabeel Gabol told the National Assembly on Wednesday that the Gwadar Port was fully functional and six ships carrying urea would dock at the port this month.

Responding to a question by Sheikh Salahuddin during the question hour, he said that an amount of Rs 400 million allocated for the Gwadar Deep Water Port project, Phase-I. To a question, he said that major works of the project had been completed and the sanctioned amount was utilized during the financial year 2007-08. Remaining minor works were likely to be completed by June 2009.

Responding to another question by Abdul Qadir Patel, he said that no compensation had been paid to the fishermen for the losses suffered by them after grounding of Tasman Spirit in July 2003 as the matter was sub judice.

Meanwhile, National Assembly Speaker Dr Fehmida Mirza urged print and electronic media to keep national interest supreme in reporting on sensitive matters. We need to ensure responsible reporting. Let us be careful that national interest remains supreme and our interests are not hurt, the speaker said, in response to a point of order by MQM MNA Waseem Akhter. 

MNA Waseem Akhter had raised a point regarding media reporting and talk shows in connection with Mumbai incident and Indias alleged involvement of Ajmal Qasab in the incident. Waseem Akhter had claimed that certain newspapers and news channels tried to establish Ajmal Qasabs connection with Pakistan, at a time when no solid evidence was available yet about his any link. This situation is very serious, Waseem said and demanded an inquiry into what he claimed irresponsible reporting and demanded to send the matter to National Assembly Standing Committee on Information.

In response to the member, Minister for Parliamentary Affairs, Dr Babar Awan said, there has been one stance since Mumbai incident that State of Pakistan, the government and the Pakistani nation was not involved in this incident.

If somebody has tried to concoct the matter and presumed something, it is not correct, he said. I hope correct and accurate stance of Pakistan would be highlighted in media. He said as far as inquiry report does not surface, reporting in that matter would not be favourable.

He said on such issues a national bottom line is drawn. We have a clear stance and cannot compromise on national security. We also need to be careful about our national interests in reporting.

Commenting on the matter, Minister of State for Information and Broadcasting, Sumsam Ali Bokhari said, it is our collective responsibility to protect national interests. I have already requested everybody to dispense with our national duties and avoid anything that may harm our interests, he said. The minister said, he had no objection if the matter needs to be sent to the committee.

Besides, Fazlur Rehman urged the governments of Pakistan and India to unmask the elements marring bilateral relations between Pakistan and India and creating tensions in the region. Bilateral relations are usually undermined when both the countries strive for peaceful relations through dialogue and strengthening people-to-people contact. Indeed, there are some factors which do not want to see the neighbouring states having friendly ties, said Maulana Fazlur Rehman while speaking in the National Assembly during a debate on the Pak-India tension.

Advisor to the Prime Minister on Interior Rehman Malik informed the National Assembly that another forex dealer has been found involved in flight of dollars. I want to inform the house that the Federal Investigation Agency on Tuesday raided another forex agent and recovered important record, he informed the house. The FIA found important record showing that the forex agent had sent US$ 835 million out of the country, Malik added. He said the FIA has already recovered the information from data of the computers of forex dealers that more than Rs. 200 billion have been sent abroad. We are effectively dealing with this issue and the information available is being provided to the House, he said.


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## Neo

*Micro-insurance receiving encouraging response in Pakistan​*
ISLAMABAD: Micro-insurance is a financial service for the poor, which provides risk coverage, and if properly designed and delivered, it would help in reducing the vulnerability of low-income households, Secretary Planning and Development Division, Suhail Safdar expressed these views while addressing inaugural session on first micro-insurance conference held here on Wednesday.

Micro-insurance was initiated in 2005 within the country and within 3 years, it has expanded to include over one million clients. This incredible growth of micro-finance is extremely heartening, especially when compared to micro-credit, which had been on offer in the country for a long time.

The secretary said that micro-insurance is a contributor to the poverty reduction and social protection objectives of the government. It has also become an important risk management tool for the poor of the country who have been hit hard by recent economic woes. This workshop, he said, is therefore a timely initiative taken by the Rural Support Programme Network in collaboration with Department for International Development (DFID-UK), ADB, Pakistan Micro-finance Finance Network (PMN) and Adamjee Insurance.

For the welfare of poor people government is implementing nationwide Benazir Income Support Programme (BISP), under which monthly support of Rs 1000 to 3.5 million women would be provided. It would help shield them against the food and fuel prices shocks, he maintained. In the second phase, the secretary said that the programme would be enhanced to cover about 7 million households.

Kazi Abdul Muktadir, MD, National Institute of Banking and Finance stressed the need for agriculture insurance. In case of natural calamities farmers have to bear loss of crop and also face default on bank credit. He expressed that the need to cover risks and investment of marginalised farmers is of paramount importance.

A cross section of participants including experts and practitioners from rural support programs (RSPs), national and international NGOs, insurance companies, donors, State Bank of Pakistan and various government agencies attended the conference.

Presentations on insurance schemes and case studies were made by insurance companies and the role of delivery channel organizations, such as Rural Support Programs (RSPs) and Micro-finance Institutions (MFIs) was discussed.

A panel discussion addressing challenges and future course of the micro-insurance sector in Pakistan was also a part of the agenda. Shoaib Sultan Khan, Chairman RSP concluded the conference with a note of thanks and insight from his years of experience in rural development.

RSP and its members work with a mission to alleviate poverty and increase the standard of living of the poor. In pursuit of this goal, RSPN, in October 2005, partnered with Adamjee Insurance to initiate the first health insurance scheme covering hospitalisation and accident for rural residents in 87 districts of Pakistan. Within the first year, the scheme was able to provide health insurance cover to over 185,000 low-income individuals. It appears that the first year enrolment in this scheme was greater than any other health insurance programme in the country at that time. As of June 2008 there were more than 600,000 rural households actively insured by RSPN.

In order to understand the demand side of micro-insurance, members from community also shared their first hand experiences of using micro-insurance. A regional perspective was also brought into focus through exhaustive presentations from India and Sri Lanka. Considering micro-insurance was still at its early stages in Pakistan, the deliberations in the conference offered opportunity for mutual learning regarding the nature and nuances of micro-insurance, its implementation and long-term sustainability.


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## Neo

*Rs 1.36 trillion revenue target seems unachievable ​* 
ISLAMABAD (December 18 2008): The over ambitious revenue target of Rs 1.36 trillion for fiscal year 2009 seems unachievable in the current economic scenario where key indicators are showing negative trend. Experts on tax policy told Business Recorder on Wednesday that the revenue target is over ambitious. There is general consensus among experts that this target might not be achieved in view of current economic situation.

According to sources, the revenue collection target should be brought down in view of current downward trends in import values, large scale manufacturing and other sectors of the economy. Apparently, it is a huge target which seemed to be not achievable. The current fiscal year has seen industrial activity slowing down due to law and order situation, political unrest, prolonged power outages and declining international demand. At the same time, the value addition in the manufacturing sector shows decrease.

During the tenure of former President Musharraf, the then government had approved Federal Board of Revenue's ten-year taxation plan, "Vision-2016" taking total revenue collection to Rs 4.3 trillion and tax-to-GDP ratio to (14.5-15 percent) by 2016-2017. The "Vision-2016," was a 10-year programme for raising revenue collection through broadening of the tax-base and raising tax-GDP ratio. "Vision-2016", envisages 10-year revenue projections which started from 2007-2008 to 2016-2017 and a strategy to meet these targets. Under the programme, the FBR has to achieve 5 percent growth in tax-GDP ratio by tapping potential sectors in next 10 years.

The board had collected Rs 1.02 trillion during July-June (2007-2008) against Rs 847.236 billion in the corresponding period of last fiscal year, reflecting an overall growth of 18.3 percent.

Initially, the government had fixed Rs 1.250 trillion revenue target for financial year 2008-2009, which was Rs 35 billion higher as compared to the revised target of Rs 990 billion for 2007-2008. Later, the present regime considerably enhanced the target for 2008-2009 to generate maximum revenue. Sources said that the issue of tax policy is not so simple, as there is need of political will to tax major potential sectors.


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## Neo

*Sweden to help get access to EU markets ​* 
ISLAMABAD (December 18 2008): Swedish Foreign Minister Carl Bildt on Tuesday said his country would play an important role for the economic and trade development of Pakistan, particularly access of Pak goods to European Union markets. He was addressing a joint press conference along with his Pakistani counterpart Makhdoom Shah Mehmood Qureshi after a meeting of the respective delegations led by their ministers.

The Swedish minister said his country wants to see the new democratic Pakistan as prosperous and in this regard Sweden would play an important role for access of Pakistani goods to EU market. The assurance came at a time when Sweden is going to assume the charge as head of the EU country next year. He said the issue of greater market access of Pakistani goods to EU was also discussed in the meeting.

The Swedish minister said next troika meeting of EU would also discuss further ways and means for Pakistan's trade and economic development. He mentioned that Sweden has supported the IMF programme for Pakistan to bail out its economy. He said Sweden has been trying to make an effective contribution to democratic Pakistan forum following the revival of democracy.

Talking about the recent terrorist act in Mumbai, he said there is need for effective and rapid co-operation among all the countries to fight terrorism. Foreign Minister Carl Bildt said all incidents of terrorism should be condemned and perpetrators involved in them must be brought to book. The minister underlined the need that co-operation between Pakistan, India and Afghanistan is critical to defeat the menace of terrorism effectively.

On the occasion, Shah Mehmood Qureshi said Pakistan has very good relations with Sweden and with the visit of Swedish Foreign Minister these relations will be further strengthened. He said during the discussion, he briefed his Swedish counterpart about multi-pronged strategy adopted by Pakistan to fight terrorism.

Qureshi reiterated Pakistan's resolve to combat the menace of terrorism and urged the international community to help Pakistan in this regard. He reiterated Pakistan's co-operation to India for joint investigation in Mumbai attacks. "I offered joint investigation to build confidence and even prepared to visit India along with a delegation to rebuild the confidence between the two countries," Qureshi maintained.

To a question, he said that Pakistan has not received any solid evidence from India through diplomatic channels so far, but the Indian media has aired such allegations against Pakistan.

Pakistan would take more actions against the responsible elements if India provides solid evidence. He said Pakistan is not hostile to India and still wanted to improve its relations. "Pakistan doesn't not want to see repetition of such incidents anywhere in the world as happened in Mumbai," he added.

The minister said Pakistan has been making sincere efforts and trying to bridge the gap between the two countries. "Terrorism is a common challenge and let's fight it together instead of blame game. Levelling allegations against each other would be counter-productive as far as the real issues are concerned," he added.

Replying to a question, Swedish minister said that India has not blamed Pakistan for Mumbai attacks but just identified that some of the militant groups might be linked with these attacks and the government should take action against such elements. About the resolution adopted by the UN Security Council, he said, there were plenty of proofs to adopt such resolution to ban some of the organisations and individuals present in Pakistan linked with terrorism.


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## Neo

*ADB stresses need to attract FDI in commodity-producing sector ​* 
FAISALABAD (December 18 2008): The external shocks have put Pakistan in a very difficult situation. However, inducing a reduction in aggregate demand through recessionary policies to cure problems that have strong supply-side causes (ie the oil and food price shocks and poor infrastructure) will not help Pakistan. This was stated in Asian Development Bank paper titled 'Analysis of Pakistan's Macroeconomic Situation and Prospects' published recently.

Authors of the analysis, Jesus Felipe and Joseph Lim, observed that Pakistan's latest growth experience during 2003-2007 was the result of short-sighted policies, driven by high remittances of overseas workers, FDI, 'hot money' and loan inflows, as well as some government pump-priming.

While initially this led to high growth, it has now become clear that this growth model failed to address the main problems afflicting the Pakistani economy: (i) a crisis of confidence in the political order and a strong perception of a weak government, unable to undertake strong economic measures, such as improving revenue collection, switching from price subsidies to income subsidies, and solving the power and water shortages; (ii) a neglect of the supply side of the economy (ie, productive capacity, technological upgrade of the economy); and (iii) inability to address the increasing fiscal and current account deficits.

Like other developing countries that have implemented questionable domestic policies, external shocks put Pakistan in a very difficult situation, However, inducing a reduction in aggregate demand through recessionary policies to cure problems that have strong supply-side causes (ie, the oil and food price shocks and poor infrastructure) will not help Pakistan.

Often international institutions have been excessively preoccupied with fears of inflation. Excessive austerity has forced countries to cut unnecessarily on high-return public investments, and has led to higher unemployment and to larger gaps between actual and potential output. All this has ended up harming the growth.

The very painful lessons of the East Asian crisis (although it had different roots), and of the subsequent Turkish and Argentine economic collapses (as a result of the "shock treatment" approach) have led some economists to recommend more heterodox economic policies in periods of crises.

Achieving political stability is a key piece of the solution. Austerity measures in the monetary and fiscal fronts will not bring back, on their own, the much-needed confidence. Likewise, the situation requires a co-ordinated effort at the international level, they added. With this in mind, they suggested, any sensible solution to Pakistan's problems will have to consider:

(i) A coherent economic program that tackles macroeconomic imbalances, as well as a long-term program that leads to the modernisation of the economy.

(ii) On the fiscal front, the government must have enough political muscle to: (a) implement progressive direct taxes to generate more revenue; (b) switch from price subsidies to income subsidies with clear targeting mechanisms for poor households; (c) protect vital social and economic services when poverty is increasing; and (d) allot funds to address the power and water shortages.

(iii) To address the external deficit and the fall in international reserves, it will be unavoidable to look for grants and concessional loans. But over and beyond this, the government should be aggressive in upgrading and diversifying the country's export basket.

(iv) To address the increase in prices, a combination of moderate monetary policies, elimination in the budget of the programs with a strong inflationary bias, and a program of incomes policies to prevent inflation expectations should be put in place.

Jesus Felipe and Joseph Lim said that Pakistan's fiscal deficit is the result of a low revenue-generating capacity, more than fiscal profligacy. Nevertheless, the government has to analyse the structure of spending, eliminate all superfluous categories (including subsidies) and projects with questionable benefits, and get rid of unprofitable state-owned enterprises. They said that these measures will also help address the inflation problem. Likewise, the law should limit (eg, through the Fiscal Responsibility and Debt Limitation Act 2005) the maximum amount that the government can borrow from the SBP.

It is important to note that budget deficits are not sins, if they are well understood, and adequately managed. Moreover, they need not always reflect loose fiscal stance, but may signal stagnation in a destabilised economy. Government expenditure and fiscal policy in general should be seen from the point of view of how to keep the total spending in the economy at the rate that would buy all the goods that is possible to produce.

Fiscal policy should be conceived as a mechanism that balances the system, exogenously increasing aggregate demand (eg, by injecting expenditures) whenever private sector spending falls short of a full employment level of effective demand.

Studies for the Organisation for Economic Co-operation and Development (OECD) countries show that fiscal tightening achieved by increasing taxes and cutting public investment tends to be contractionary and unsustainable. In the case of developing countries, the empirical evidence indicates that expenditure composition is critical.

While increases in spending on government wages and salaries tend to have a negative impact on growth, expenditures on other goods and services and capital projects tend to raise the growth rate significantly. Therefore, fiscal policy has to be tailored to country-specific conditions to foster growth. On other words, the "quality" of the fiscal deficit (ie, the use of expenditures) is a key issue. Fiscal responsibility is not about permanent balanced budgets but about the quality of the deficits, and whether the public debt accumulated is sustainable.

Revenue collection should be enhanced by, for example, introducing a tax on real estate transactions. Likewise, the tax base should widen so that direct taxes, rather than indirect, contribute more to government revenues. Also, a higher share of taxes should be extracted from the service sector, given that it represents over 50 percent of GDP but contributes only a quarter to total tax revenue.

How to reduce the current account deficit poses another dilemma (the government envisages import growth in the range of 6.5 percent and export growth at around 15 percent for 2008/09). Reduction in growth will lead to a decline in import growth. However, oil imports will remain high if the price of oil does not decline.

On the other hand, export growth may not pick up in the short term, given the current international scenario. For this reason, the 2008/09 exports target, set at $22.1 billion, may not be achieved. It is crucial, therefore, to put in place policies to improve export growth. Diversification and quality improvement are essential to make Pakistan less dependent on exports of textiles. Likewise, efforts must be made to attract FDI in the commodity-producing sectors of the economy.


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## Neo

*Current account deficit up 44 percent ​* 
KARACHI (December 18 2008): The country's worrying current account deficit has further widened by 44 percent to $6.8 billion during first five months of current fiscal year mainly due to rising trade deficit, huge outflow and slow inflows. The country is facing current account payment difficulties since January 2008, which compelled the government to utilise foreign exchange reserves for current account payments.

As a result, the country's foreign exchange reserves declined to the lowest level of $6.5 billion by mid November 2008 as compared to some $16.35 billion in November 2007. The continuing downward trend in the foreign exchange reserves also forced the government to approach the international financial institutions to build up its reserves and avoid default.

On Pakistan's request, the International Monetary Fund approved some 7.6 billion stand-by loan for Pakistan and the first tranche of $3.1 billion has arrived three weeks ago to make the country's current account payments. The State Bank of Pakistan on Wednesday revealed that the country's current account deficit has widened by some 44.46 percent during the July-November of FY09 as compared to same period of last fiscal year.

The country registered a current account deficit of $6.855 billion during the first five months of current fiscal year against $4.745 billion during the corresponding period of last fiscal year, depicting an increase of $2.71 billion in first five months of current fiscal year.

Economists have shown deep concern over the rising trend of current account deficit saying this would cast further negative impact on the depleting foreign exchange reserves. The country's economy is already facing worrying situation for last one year and need to reduce the current account deficit to improve it, they added.

"With the continuing upward trend in the current account deficit, the government is likely to get new foreign loan to meet the requirement of the increasing foreign payments," they said. The government has taken several steps to control the booming imports by imposing 100 percent cash margin on some imported goods and regulatory duty on the import of luxury items, however still there is no positive result of these steps has been witnessed, economists said.

Statistics also indicate that chief factors responsible for the widening of current account deficit include a widening trade deficit and transfer of income that surged by 37 percent and 20 percent respectively. Services deficit registered negative growth of 28 percent in the July-November of FY09.

The country's overall goods imports stood at $15.233 billion and exports at $8.631 billion, registering a trade deficit of $6.602 billion during the first five months of current fiscal year. Earlier it stood at $4.807 billion in same period of last fiscal year.

Services trade deficit with $1.533 billion exports and $3.594 billion imports stood at $2.061 billion in July-November of FY09, over $2.844 billion in same period of last fiscal year, depicting a decline of 28 percent. Income deficit has also witnessed a slight increase of 20 percent to $2.051 billion from $1.705 billion. As during the first two months, the country's income from abroad stood at $464 million as compared to payments of $2.515 billion.

Overall deficit including trade, services and income stood at $10.714 billion against the current account transfers of $3.922 billion. Statistics show current account deficit, without official transfers, climbed to $6.959 billion during the first five months of FY09 as compared to $4.778 billion during same period of FY08.


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## Neo

*Chinese firms keen on participating in privatisation programme ​*
ISLAMABAD (December 18 2008): The Chinese companies are keen to participate in the privatisation programme of Pakistan, which will give impetus to the efforts being made by the President Asif Ali Zardari to bring both the countries closer and to further strengthen the existing bonds of friendship.

Luo Zhao Hui, Ambassador of People's Republic of China, to Pakistan expressed these views during a meeting with Syed Naveed Qamar, Federal Minister for Privatisation here on Wednesday, says a press release issued here.

Syed Naveed Qamar briefed the Chinese envoy regarding the privatisation programme, process, various methods and modes and said that instead of selling the Public sector entities through strategic sale Pakistan was actively considering for public-private partnership for the expansion in these entities through bringing in fresh investment, improving the quality and efficiency of services, increasing production, transfer of latest technology and generating job opportunities.

Moreover, the minister said that Pakistan has historical and deep rooted relations with China having strong foundations laid by the founder of Pakistan Peoples Party, Zulfiqar Ali Bhutto and the present PPP led government would further deepen these relations while in the past public sector collaborated with China in Kamra, Saindak, Ghazi Brotha, HMC Taxila, Sports Complex and Gawadar Deep sea Port projects reflected our close friendly bonds.

He further said that there existed vast potential for Chinese companies to invest in various sectors of Pakistan's economy. He stressed upon the investors of both the countries to work together to explore new avenues and opportunities to enhance the existing bilateral trade and investment relations while ensuring the transfer of technology.

The interest being shown by the Chinese companies in the privatisation programme was also an encouraging sign for the development of economic relations between the two friendly countries, which speaks for Pakistan's very liberal and friendly privatisation, investment and trade policies, he added.

Syed Naveed Qamar said that the Chinese people were very close to the hearts of Pakistani people and investment from China was always welcomed. The government of Pakistan was taking all steps to encourage and attract foreign and local investors through an open, fair and transparent privatisation process by providing level playing field to all, he expressed.

Luo Zhao Hui lauded the Pakistan's efforts made towards privatisation of public sector entities and assured to cooperate further in this direction, while currently 20 Chinese companies were actively engaged in ongoing projects, including steel and mines projects whereas 70 companies have already successfully completed their projects.

The Chinese investors are also interested in the banking, finance and power sectors. Both the countries needed to bring closer the business and investors groups to develop public-private partnership in various areas, he said. The Chinese Economic & Commercial Counsellor Zhou Zhencheng and the Secretary Privatisation Mr Ahmed Jawad were also present during the meeting.


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## Neo

*Used car imports further tightened ​* 
ISLAMABAD (December 18 2008): The government has further tightened import of used vehicles under 'transfer of baggage' scheme, by allowing one percent monthly depreciation from the existing 2 percent, sources in Industries Ministry told Business Recorder. The decision was taken by the Economic Co-ordination Committee (ECC) of the Cabinet in its last meeting.

The reduction in depreciation was reportedly not been supported by the Ministries of Finance, and Commerce and the Federal Board of Revenue (FBR) sources added. This decision would double the tax on import of used cars--a policy that is expected to hit the overseas Pakistanis hard. Officials alleged that halving of depreciation had roots in strong political links of local auto manufacturers.

Sources said that Industries Ministry had informed the ECC that the automobile industry had not been able to sustain growth in production of cars and buses, which declined by 6.4 percent from 176,016 in 2006-07 to 164,710 in 2007-08, while during 2007-08 production of buses was only 1221. In a meeting with the representatives of auto assemblers and auto manufacturers following factors were identified for this decline:

i. Increase in prices of components and raw materials due to depreciation of rupee vis-a-vis Japanese yen.

ii. Increase in interest rate for auto financing due to tight monetary policy, thus decreasing the consumer demand for automobiles.

iii. Levy of 5 percent Federal Excise Duty (FED), increase in Sales Tax from 15 percent to 16 percent and imposition of Withholding Tax at the time of first registration of vehicle in the Federal Budget 2008-09. Additional burden in case of Corolla cars is around Rs 90,000 per unit.

iv. Imposition of 35 percent cash margin on Letter of Credit (L/C) for import of raw material end automobile components.

v. Reduction of duty from 15 percent to zero percent on import of CNG buses had affected the local bus assembling industry, already facing under-utilisation of capacity.

Sources said that to arrest the declining trend, the ministry had proposed (i) withdrawal of 5 percent Federal Excise Duty and 5 percent withholding tax at registration stage for the industry; (ii) exemption from 35 percent cash margin on letters of credit on the remaining non-focalised components for the auto manufacturers/assemblers and raw materials for the vendor industry as done for other segments of the industrial sector; (iii) auto financing be made affordable by fixing the average interest rates near 2006-07 level ie 16 percent.

The Industries Ministry had also proposed restrictions on import of used cars by reducing depreciation from 2 percent to 1 percent up to a maximum of 25 percent. It had also been recommended that registration must remain in the name of Pakistani national for 1 year after returning from abroad besides reduction in used vehicle life from 3 years to 2 years.

According to official documents, Federal Board of Revenue, and Ministries of Commerce and Finance did not support the proposals, except grant of exemption from 35 percent cash margin on Letters of Credit. However, it was opined that other recommendations could further be examined and deliberated by the Ministries of Industries and Finance and FBR.

After detailed discussion, the ECC granted exemption from 35 percent cash margin on LCs on the remaining non-localised components for the auto manufacturers/assemblers and raw materials for the vendor industry in line with other segments of the industrial sector, in addition to allowing one percent depreciation from existing 2 percent per month on the import of used cars. Sources said Ministries of Industries and Finance and FBR would also thoroughly examine other recommendations to save the auto industry from total collapse.


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## Neo

Neo said:


> *GoP finalises plan to offer ownership of agri lands to investors​*
> ISLAMABAD: The government has finalised plans to offer ownership of agricultural lands to investors for farming to achieve self-sufficiency in agriculture produce, Federal Minister for Investment, Senator Waqar Ahmad Khan told Daily Times.
> 
> We are extremely enthusiastic in providing areas for farming with great incentives, he added. Under the plan the investors can own the land, cultivate it and export 100 percent of the produce. In this regard we are specially targeting investors from the UAE and other Gulf countries, as it would help these countries to have their own food resources, he informed.
> 
> Pakistan needs more than $40 billion of foreign direct investment and our target is to attract $20 billion by the end of 2009, Khan told.
> 
> The agriculture sector is still the largest employer of the workforce and around 70 percent of Pakistans population lives in rural areas.
> 
> Khan said that leasing and transfer of land would be facilitated by the ministry, which is now working in close association with the law ministry to finalise the modalities. Once an investor shows his interest, we will have draft agreements ready for him, he assured.
> 
> Pakistan is creating a special task force to protect investment and provide security to potential investors in the country. The task force would be comprised of officials from the ministries of interior, defence, investment and finance, he revealed. We are aware of the security concerns and that is why we are creating a special task force to protect investors and their investment, added Waqar Ahmad Khan.
> 
> Pakistan is open to investments in any field, he added.
> 
> The priority areas are oil and gas, energy, food, agriculture, information technology and infrastructure. Due to past experiences, the investors are uncertain regarding the continuation of policies. The present democratic government has proposed legislation to ensure continuation of projects even if there is a change of government, the minister said. The government has launched a multi pronged strategy to attract investors, which includes: 100 percent repatriation of money; five tax exemption for investors and ten years of tax exemption to those investors who set up a commercial zone; customs duty and general sales tax exemptions on certain items.
> 
> Pakistan is also looking for investors who are able to enhance our existing infrastructure requirements. Pakistan is the fifth largest milk producer in the world but 70 percent of the milk is auto consumed or wasted and does not reach the market. We need people to exploit this huge market, which employs around 8 million people in rural areas. The modernisation of dairy sector can have huge impacts on poverty alleviation, which has risen to an alarming level of 28 percent.
> 
> The ministry plans to launch a media campaign to attract investors to Pakistan.
> 
> We will ensure one-window operation and all problems an investor faces will be solved by this ministry, he said.
> 
> Waqar Ahmad Khan concluded with the resolve that in future no investor will face any problem.



*Agriculture land ownership plan for investors approved ​* 
MULTAN (December 18 2008): Prime Minister Yousaf Raza Gilani has approved the plan to offer ownership of agricultural lands to investors for farming to achieve self-sufficiency in agriculture produce, Federal Minister for Investment Waqar Ahmad told newsmen.

He said that his ministry has finalised plans to offer ownership of agricultural lands to investors for farming to attract both foreign and local investor in agriculture sector to multiply the existing per acre production. "We are extremely enthusiastic in providing areas for farming with great incentives," he said. Under the plan, the investors can own the land, cultivate it, and export 100 percent of the produce.

"In this regard, we are specially targeting investors from the UAE and other Persian Gulf countries, as it would help these countries to have their own food resources," he added. "Pakistan needs more than $40 billion of foreign direct investment, and our target is to attract $20 billion by the end of 2009," the minister said. Agriculture sector is still the largest employer of the workforce, and around 70 percent of Pakistan's population lives in rural areas.

Waqar said that leasing and transfer of land would be facilitated by the ministry, which is now working in close association with the law ministry to finalise the modalities. "Once an investor shows his interest, we will have draft agreements ready for him," he said.

Pakistan is creating a special task force to protect investment and provide security to potential investors in the country. The task force would comprise officials from the ministries of interior, defence, investment and finance, he revealed. "We are aware of the security concerns and that is why we are creating a special task force to protect investors and their investment," the minister said. "Pakistan is open to investments in any field," he added. The priority areas are oil and gas, energy, food, agriculture, information technology and infrastructure. Due to past experiences, the investors are uncertain regarding the continuation of policies.

"The present democratic government has proposed legislation to ensure continuation of projects even if there is a change of government, he said. The government has launched a multi-pronged strategy to attract investors, which includes: 100 percent repatriation of money; five-year tax exemption for investors and ten-year of tax exemption to those investors who set up a commercial zone; customs duty and general sales tax exemptions on certain items.

Pakistan is also looking for investors who are able to enhance the existing infrastructure requirements. Pakistan is the fifth largest milk producer in the world but 70 percent of the milk is auto consumed or wasted and does not reach the market.

"We need people to exploit this huge market, which employs around 8 million people in rural areas." The modernisation of dairy sector can have huge impacts on poverty alleviation, which has risen to an alarming level of 28 percent. The ministry plans to launch a media campaign to attract investors to Pakistan. "We will ensure one-window operation and all problems an investor faces will be solved by this ministry," he said.


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## Neo

*Tax to GDP ratio must be raised ​*
EDITORIAL (December 18 2008): During a meeting between the International Monetary Fund Director (IMF) for Middle East, Masood Ahmad, and Prime Minister Yousuf Raza Gilani, the need to raise the tax to Gross Domestic Product (GDP) ratio was, yet again, highlighted. It is unfortunate that Pakistan's tax to GDP ratio remains abysmally inadequate, and is at least 4 percentage points, reflecting around 350 billion rupees, lower than other countries in the region.

Former Central Board of Revenue Member (Fiscal Research and Statistics) Dr Ather Maqsood revealed some disturbing findings of a study undertaken by the Board earlier this year. First, 83 percent of all indirect taxes (including VAT) are sourced to 18 commodities. Fifty-three percent of indirect taxes are generated from five commodities, including petroleum products, automobiles, telecom, machinery, and cigarettes.

POL including LPG, contributes 26.2 percent of total indirect taxes collected. Sugar industry pays 3 percent of the indirect taxes and the contribution of textile sector is one percent in gross terms and minus 1.9 percent in net terms. Secondly, the services sector, inclusive of the retail sector, transport, construction, hotels/restaurants and commission agents, is a major non-compliant sector as its contribution to the GDP does not match its tax contribution.

Thirdly, contribution of banking, insurance and telecommunication is also below potential. And finally Dr Maqsood pointed out that 63 percent of the return filers relating to corporate sector have declared either nil income or business losses. More appalling, he noted, was the fact that nearly 32 percent of those declaring business income did so up to 200,000 rupees only.

These revelations reflect the numerous inadequacies that beset our tax system ranging from under-reporting to evasion, to outright corruption, and to distortions within the system that allow private and government entities to evade taxes. There is thus an acknowledgement by FBR of the main problems that exist in the tax system which should automatically provide recommendations for remedial measures.

And yet this low tax to GDP ratio is not a new phenomenon and therefore Pakistan's lack of past success in this regard must be attributed to pervasive corruption, distortions within the tax system, inadequate documentation and proactive resistance by the 'sacred cows' that undermines any significant increase in tax collection or indeed in some instances, imposition of a tax commensurate to their income.

To assess what the government is committed to, it is relevant to refer to the Letter of Intent (LoI) consisting of agreed policy actions between the government and the IMF which led to the release of the 7.6 billion dollar standby facility in November.

The LoI states that "consistent with the government's objective of substantially increasing tax revenue a number of tax policy and administrative measures are envisaged during the programme period." These include (i) integrated tax administration on a functional basis to be established at the FBR that will embrace both the income and sales tax administration.

This would imply that sales would also determine income tax to be levied and vice versa and reduce exemptions for both taxes. (ii) Audits will be reintroduced from end of 2008 following a planned seminar that is currently underway in Lahore. The fear of an audit is expected to deter under-reporting on sales or income.

(iii) Following the seminar, legislative amendments will be submitted to parliament by end June 2009 and draft legislation to implement full VAT with minimal exemptions is scheduled to be ready for debate by end of next year. And, finally, (iv) excise tax will be raised on tobacco in the context of the 2009/10 budget - the only specific rise in any tax committed to by the government for next year.

There is little doubt that the potential to raise taxes through these measures is significant. However, one would have hoped that the sacred cows would be brought into the tax net at this stage. In addition it is hoped that the audit reintroduction is implemented on the same pattern as that undertaken by the dreaded Internal Revenue Service of the US which has held even the wealthy and the influential accountable for evasion.


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## Neo

*High economic growth during previous regime ​* 
*Pakistan followed misguided policies: ADB​*
Friday, December 19, 2008

ISLAMABAD: Multilateral creditors, especially the Asian Development Bank (ADB), for the first time in a decade have come down hard on the consumption-led growth model pursued by the Musharraf regime, saying Pakistans high-growth episode of 2004ñ2007 was the result of a growth model based on misguided policies.

The ADB pointed out that the government also violated the Fiscal Responsibility and Debt Limitation Act in financial year 2007-08.

An ADB report titled An Analysis of Pakistans Macroeconomic Situation and Prospects states that during fiscal year ended June 30, 2008, about 70pc of the increase in domestic public debt came from borrowing from the central bank. This increase led to breach of two provisions of the Fiscal Responsibility and Debt Limitation Act.

On flawed growth strategy, the ADB report states that both inflows of capital and workers remittances, together with the government pump-priming not matched by an increase in the tax effort (which led to fiscal deficit), led to high growth rates.

However, these were not accompanied by a concomitant increase in the productive capacity of the economy. High growth prompted an increase in imports (which led to trade deficit) and in consumption, the report added.

The current account deficit, the report says, resulted from imports increasing faster than exports (where the latter suffers from a structural competitiveness problem), which led to dependence on inflows of overseas remittances, FDI, portfolio investment and loans. Increased government spending, together with an increase in business confidence, crowded in the private sector, with investment running ahead of savings.

This growth model could perhaps have been sustained longer, as long as capital inflows exceeded the current account deficit (leading also to a build-up of foreign exchange reserves). But as the external deficit has continued to increase, the situation has become riskier. This is indeed what we observe in 2008 as inflows of capital have started decelerating.

Moreover, as a model of long-run growth and sustainable development, it poses a number of questions.

It is difficult to ascertain whether the measures contained in the new budget result in the stabilisation of the economy and can deal with the effects of the increase in food and fuel prices, as now the macroeconomic imbalances and the inflation problem reinforce each other.

Our view is that the government will not be able to achieve its budget deficit target unless it cuts drastically spending on social services (education, health, etc) and development expenditures, it maintained. However, if this is done, it will have a serious repercussion for Pakistans future.

A better strategy would be to negotiate with the multilateral agencies a programme that would allow the country to reduce the deficit at a slower pace until it reaches a more manageable level. During this time, the structure of spending should be analysed, and a realistic programme to increase direct taxation should be devised.

It will be difficult for the government to achieve the target investment-to-GDP ratio of 21.5pc collapse, provided sensible economic policies are put in place right away, and the political bickering stops. While serious measures must be taken, this does not imply that the country has to be subjected to an austerity programme that leads to a recession. Fiscal discipline acts as a deflationary force as it induces excess capacity and unemployment.

The experience of the Asian financial crisis from a decade ago proved that this is not the way to solve the problems afflicting Pakistan. Monetary and fiscal policies affect both short and long run trends in unemployment.

The fundamental reason that explains Pakistans growing trade and current account deficits, especially during high-growth years, is its poor export performance.

Pakistans performance is clearly sub-standard, with only Afghanistan, Kyrgyz Republic, Mongolia, Sri Lanka, Turkmenistan, and Uzbekistan having lower export growth rates. In 2006 and 2007 Pakistans export growth collapsed to below 5pc.

Analysis at a highly disaggregated level indicates that key exports shrank. For example, in 2007, Pakistans largest single export product (representing over 20pc of total exports), Linens and other furnishings art (of textile), suffered a decline of 7.45pc.

In terms of export to GDP ratio, in 2006, only Afghanistan, Georgia and Nepal had lower export-to-GDP ratios than Pakistan. It is also worth noting that even if Pakistan has a similar export-to-GDP ratio as a country like India, the latter is a much larger economy, and its export-to-GDP ratio has improved considerably over the years, while Pakistans has remained stagnant.

What explains Pakistans poor export performance? One possible reason is the overvaluation of the exchange rate. Figure 9 in the report shows the real effective exchange rate of selected countries since 2000. The figure shows that Pakistans rupee is the weakest among the countries. Therefore, currency overvaluation has to be ruled out as the main reason underlying Pakistans weak export performance.

A more plausible reason that explains Pakistans weak export performance is the lack of export sophistication. Throughout the years, the country has not been able to upgrade its export structure, heavily concentrated on the low end of textiles and garments.

The elasticity of Pakistans exports with respect to the GDP of the industrial countries (ie, by what percentage Pakistans exports change when the GDP of the industrial countries increases by one percentage point) since the fourth quarter of 1985.

This variable is a proxy for the non-price competitiveness of Pakistans exports (ie, the quality attribute). This elasticity is low, taking an average value of the whole period. Upgrading the export package will take time but measures in the form of a coherent plan must be taken as soon as possible.

While external and domestic sources contributed about the same to the financing of the deficit in fiscal year 2007/08, the government estimates that about 90pc of the deficit will be financed through external sources in fiscal year 2008/09. This will be very difficult and will depend on donors disbursements.


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## Neo

*Cotton production to touch 12.1m bales ​* 
Friday, December 19, 2008

ISLAMABAD: About 12.1 million cotton bales are estimated to produce during the current financial year as against the set target of 14 million bales in the country.

The shortfall in the projected yield is stated to be growing trend of growers toward price and oil seeds cultivation for their higher market prices. This was informed in a meeting of the Cotton Crop Assessment Committee on Thursday. The meeting was chaired by the Minster of the State for Food and Agriculture, Rafique Jamali.

Provincial heads of the Agriculture departments and high officials of MINFAL were also presented in the meeting. Officials of the Punjab province informed that according to the second estimate, cotton crop was cultivated on 2.24 million hectare land while, 9.51 million bales have been produced as compared to last year production of 9.06 million bales.

They said that area under cotton crop was reduced by 7.3 per cent as compared to last year while, the crop production was increased by 1.4 per cent during the current year. Average production during current year remains 21.20 mounds per acre as compared to 19.45 mounds per acre during last year, they said.


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## Neo

*KSE drops below 8,000 points to hit 39-month low ​* 
Friday, December 19, 2008

KARACHI: The everyday falling Karachi stocks market saw benchmark KSE 100 share Index falling below 8,000 points threshold on Thursday after staying above this level for 39 months.

With the fresh decline of 3.95 per cent in this session, the market has fallen by over 15 per cent since the end of floor rule on last Monday.

The KSE 100-share Index posted another decline of 320.37 points or 3.95 per cent on the fourth consecutive bear-run session and concluded at 7,785.26 points. The day closing level is the lowest one since Sep 01, 2005.

Market has crashed by over 1,400 points (i.e. 1,401.84 points) in the last four consecutive sessions or has declined by 15.25 per cent since floor removal on Monday, Dec 15.

The slump has deepened by over 50 per cent in the market since 100-Index closed at all time high of 15,676 points on April 18, this year.

The KSE 30-Index shed another 434.12 points or 5.11 per cent and ended at 8,068.88 points this session.

Overseas investors also offloaded holdings worth $1.157 million in this session at local bourses, according to NCPPL.

The day turnover, however, shrank by 12 per cent to 50.766 million shares as compared to 57.820 million shares changed hands a day earlier. Turnover in the future market further was only 1,000 shares against 1,500 shares traded yesterday.

The situation at market remained the same as the last three sessions. Low tier stocks continued to extend their support to keep market functioning, while a few deals were seen in blue chips.

A leading analyst said that the High Court of Sindh (SHC) proceedings on outstanding CFS Contracts, Moodys negative outlook on Pakistani banks, Pak-India relations and border incursions remained some major concerns for retail & institutional investors.

He added that selling activity continued as liquidity crunch prevailed and bailout funds for capital market was yet to be made functional.

Another analyst said that low tier stocks continued to generate turnover, while constant price erosion in the main board stocks added misery to the gloomy market.

The CFS position holders were the worst affected investors in market, as they continued to search for buyers to offloading their holding in main boards. Buyers remained reluctance in main boards as they foresee further decline in their share prices in the week to come, he added.

Penny stocks continued to generate activities, as they offer an opportunity of free swap with other portfolio investors owing to their 

Spillover of CFS can further erode the values. Fundamental facts should dominate investors mind since they suggest the best way for investment or disinvestment.

While making decisions at bourses, investors should keep in their mind the high interest rate, rupee-dollar parity, revised rating of banks and currency by international agencies, next year federal budget, and the outcome of the legal battle on CFS, he suggested.

Minus sign continued to dominate market heavily, as 126 securities out of total 177 actives fell in red against 45 stocks managed to maintain in green territory. The remaining six stocks closed unchanged.

Highest volumes were witnessed in Pakistan Cement at 10.774 million closing at Rs2.03 with a gain of 13 paisa, followed by TRG Pakistan at 9.188 million closing at Rs1.65 with a gain of 35 paisa, Fauji Cement at 4.938 million closing at Rs3.89 with a loss of one paisa, Zeal Pakistan at 4.505 million closing at 65 paisa with a gain of two paisa, and Pak Premier Fund at 3.956 million closing at Rs2.28 with a loss of 78 paisa.


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## Neo

*More than half of economy undocumented, tax moot told ​* 
Friday, December 19, 2008

LAHORE: The government has revealed to international economic experts that more than 50 per cent of the countrys economy is undocumented, which could be used for any kind of criminal activity, besides evading taxes.

The poor monitoring system of governance is responsible for this scourge, said the Adviser to Prime Minister on Finance Shaukat Tareen while giving the opening speech at a two-day tax conference convened to acquire expert opinion on how to plug holes and make the taxation system vibrant.

More than 52 per cent Pakistanis are living below the poverty line and their number is increasing due to double-digit food & fuel inflation, the moot was informed.

The conference opened on Wednesday with an agenda to discuss the taxation system problems on the administration, policy and collection sides.

The government expects suitable advise in this respect, and sources revealed to The News that it would be the first conference of its kind in Pakistan.

Statistics prepared for submission and for seeking corrective measures relate to almost all spheres of the economy, including the percentage of income taxpayers which were more than 1.8 million but paid only 20 percent of the total taxes deposited in the country.

The government expects proposals for expanding the income tax net at this conference. Two million people out of a population of 170 million have National Tax Number (NTN) but only one-twentieth pay GST, as the documentation system is too poor to monitor imports, production lines and distribution mechanism efficiently.

The conference will propose as to how the tax-to-GDP ratio could be raised from the present 10 percent to 15 per cent, without inviting hostile response from trade and industry, and without further burdening the consumers with indirect taxation. 

Indirect taxation is 80 per cent of the total deposits, excluding the withholding taxes.

The submissions would mention the increase in tax revenues from Rs500 billion 10 years ago to Rs1 trillion expected this year (June 30, 2009).

Such proposals are being sought to meet international donors demand for relying more on the internal financing to meet the budgetary gap, which stands at Rs1 trillion come June 30 2009. The tax revenues would be Rs1 trillion whereas the total expenditures incurred would be more than Rs2 trillion.

The IMF has also stressed on cutting budgetary gap by increasing the toll-tax on transport and prices of gas, electricity and petroleum products that might make production lines and exports dysfunctional, spur inflation, unemployment and push more people in poverty trap.

The government seeks increasing tax revenue by distributing the burden on all income slabs, businesses and distribution lines in the economy. For this purpose inclusion of retail lines, agriculture-income and services sector in tax net is being proposed. However, there are political and technical snags, which the government expects of the international experts to help remove.


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## Neo

*A 60 billion housing scam in the making ​* 
Friday, December 19, 2008

ISLAMABAD: A Rs 60 billion project under Prime Ministers Housing Programme is being awarded to a UK based company, known for shoe making, and the extremely hush-hush tactics being used without securing the interest of end consumers, may turn it into one of the biggest government-sponsored housing scams.

What is really strange is the fact that the agreement was signed between the Imperial Houses (Pvt) Limited (IHL) and the Pakistan Housing Authority (PHA) without inviting open bids. The bureaucrats admit that the agreement signed was faulty and concluded in an indecent haste without consultations with all the official stakeholders due to political pressures.

When contacted, both Secretary Housing Samiul Haq Khilji and MD PHA Raja Muhammad Abbas said there were serious shortcomings in the JV agreement, which need to be resolved before the government moves forward. Khilji said the disbursement of funds should be made in accordance with the government rules and regulations.

Asked about the political pressure for awarding the project to the IHL, he said: As regards pressure, the haste in which it was all done speaks volume for itself.Abbas also said the PHA, too, was under tremendous pressure to sign the agreement with the understanding that the Law Ministry had taken care of everything. 

While Abbas said if foolproof system was not developed, it might lead to yet another major financial scam in the country, Khilji remarked: It has potential to become a financial scam and create great embarrassment for the government.

But circles close to the housing minister say these two objecting bureaucrats may soon be fired from their jobs as they were creating hurdles in a planned scheme of things.Housing Minister Rahmatullah Kakar also confirmed that the above two officers were creating hurdles in the implementation of the project and causing unnecessary delays. 

The minister said such officers were attempting to sabotage the project as well as the government. The minister said after the Law Ministrys vetting, there was no need for a fresh examination of the agreement by different experts. 

Kakar said he had nothing to do with the IHL and insisted that his foremost concern was the interest of the people and safeguarding the public money. The minister said his secretary and the MD PHA were creating problems from the day one and he was even told by a government official that the secretary Housing and MD PHA had asked him to find hitches in the agreement. The minister also hinted at some controversial allotments of government plots in Islamabad by the duo.

IHL owner Shaukat Saleem, when contacted, also endorsed the ministers viewpoint thatbureaucratic hurdles were causing unnecessary delays. He refuted the impression that he was a mere shoe maker and insisted that besides being in tiles and textile business, he was also a property developer and had constructed about 200 flats in the UK. Dispelling the impression that he was exerting pressure on the government and the Housing Ministry for early execution of the JV agreement on his terms, he assured that he would not touch the project if he felt that he could not complete it. 

The project started off on a fast forward note but later the bureaucracy in the Housing Ministry, instead of implementing the agreement, referred it to the relevant government agencies, including the Infrastructure Project Development Facility (IPDF), which clearly found the agreement faulty and harmful for the government as well as the end consumers.

In view of some serious objections, a draft addendum agreement was prepared but that too was referred to the Ministry of Law without seeking the comments of the concerned agencies, particularly that of the IPDF. The bureaucracy is still reluctant to sign it unless the ECC, the Planning Commission and other concerned stakeholders approve the same. Indications are that the Secretary Housing Samiul Haq Khilji and MD PHA Raja Muhammad Abbas may be removed from their present positions sooner than later as the Minister for Housing Rahmatullah Kakar sees the two creating usual bureaucratic hurdles. Rahmatullah said the agreement once signed would be placed before the cabinet for umbrella approval.

Documentary evidence available with The News reveals that following the government decision to launch PMs Housing Programme to provide low cost housing in Pakistan, the PHA issued advertisements and issued letter of intents to the interested parties for projects based on private public partnership (PPP) as per the IPDF guidelines.

Over 20 companies showed interest and MoUs were signed with 12-13 companies. The IHL was included amongst these interested parties. An MoU between the IHL and the PHA was signed on 18th September, 2008. Subsequent to the signing of the MoU, the IHL submitted its proposal for low cost housing development in Pakistan on Oct 17, 2008. After this, the Housing Ministry requested the Ministry of Finance for issuance of Sovereign Guarantee to the IHL. While the MoF response was awaited, the draft agreement was also forwarded to the Ministry of Law for scrutiny, which after vetting the draft agreement sent it back to the Housing Ministry.

A day later on Oct 31, the Minister for Housing wrote on the file that the agreement be signed with the IHL as vetted by the Ministry of Law despite the fact the MD PHA clearly reflected on the file that not only the Finance Ministrys response was still awaited but also technical and financial analysis of the JV proposal was under way and the case had already been sent to consultants for necessary action. It was also noted that the land ownership documents (of the IHL) had been forwarded to revenue authorities concerned for verification. 

The case file was put up for consideration and decision of the minister, who noted, Approved. Agreement to be signed as vetted by Law Division and report compliance. The same day the agreement was signed between the two with an official source insisting that the signing ceremony was held at the residence of the minister but both Rahmatullah Kakar and the IHL owner Shaukat Saleem, a British Pakistani, denied this.

The agreement not only includes the provision of GoPs sovereign guarantee to the IHL but also includes clause whereby the PHA would pay 15% of the total project cost i.e. Rs 60 billion to IHL in advance. The agreement also envisaged that the land would be provided by the IHL for construction while the PHA would be responsible for marketing and sale of housing units to the government employees and general public. 

Three days after the signing of the agreement, the Finance Ministry wrote to the Housing Ministry on the subject and said that the proposed JV arrangement to be concluded between the PHA and the IHL does not involve issuance of guarantee for foreign currency loan. 

Without knowing that the agreement has already been signed, the finance ministry added, The Finance Division does not issue sovereign guarantee to ensure the successful completion of the project under the joint venture. We understand that these provisions should be covered in the appropriate section of the concern joint venture agreement. Subsequently, the joint venture agreement if required may be got cleared from the competent authority. Later, the Finance Ministry set up a five-member committee to look into the issue of sovereign guarantee for implementation of the IHL project. However, the said committee has yet to hold its first meeting.

Meanwhile, on Nov 1, a day after the signing of the agreement, the PHA referred the IHLs proposals to the IPDF, informing the latter that the agreement had already been signed based on PPP model with the IHL. It added that the PHAs technical wing is in the process of finalisation of technical and financial details through concerned consultants. Through the same letter, the PHA sought from the IPDF its expert opinion on the agreement, clearly mentioning, The enclosed JV could not be discussed with IPDF team due to acute shortage of time at the time of its signing, which is regarding a housing project under PMs Housing Programme.

On Nov 13th, the IPDF wrote back to the PHA and pointed out a number of serious drawbacks in the agreement and rather termed it a nullity, void and unenforceable for want of equity of PHA. The IPDF said that as per international best practice, an advertisement soliciting EOI from investors is published in order to evaluate the level of interest of private sector in the project and not to pre-qualify them. 

The pre-qualified parties are invited to submit competitive proposals covering technical, financial and legal aspects. After comparing the competing bids with each other and with the feasibility conducted by the institution itself, to select the private party who has submitted best proposal. We are not aware whether our Procurement Guidelines have been followed, the IPDF wrote and the Housing Ministry, including the minister confirmed, that no such bidding was done to offer the project to the IHL.

In its opinion about the JV agreement, the IPDF said it had observed certain major defects in the form and content of the agreement, which includes that despite being a JV agreement as an equity joint venture, the equity of the IHL and PHA are 0 per cent and 100 per cent, respectively, which makes the agreement a nullity, void and unenforceable for want of equity of PHA.

It added that there was a wide gulf of unequal distribution of responsibilities between the IHL, JV company and the PHA. For instance, the cost incurring responsibilities including inter alia, booking of flats, sale of flats, obtaining key permissions, utilities, tax exemptions, payment to JV Escrow Account etc have also not been duly imposed under a structured mechanism.

While the sources insist that the Law Ministry was also under pressure to vet the agreement without giving it a serious thought, the IPDF confirmed, The JV Agreement has not been exhaustively drafted. Some basic and fundamental clauses are completely missing in the JV Agreement or defectively embedded, causing the JV Agreement to be substantially lacking in prescribing manifest and unequivocal extent of existence and operation of the rights and liabilities accruing upon the parties. 

It added that some missing clauses include Entirety Clause, Termination Clause, Force Majeure Clause, Disclosure Clause, Warranties Clause, and Exclusion Clause for Implied terms; Escrow Agreement Clause; Monitoring Clause and Delay in Performance.

It also pointed out that the total cost of the IHL land was around Rs 15 crores against which it secures 100% participating interest in the JV Company whereas 15% of the selling prices of 2,840 housing units (the first phase of the project) comes to at least Rs 85 crores against which the PHA enjoys 0% of participating interest. It is quite surprising as to how this arrangement is acceptable to the PHA.

It added that the entire revenue stream in the agreement was based upon the upfront investment of the PHA and successive guaranteed commitments by PHA at regular intervals for the subsequent phases of the project. Committing such huge amounts of money at regular intervals by PHA to a private party without following standard contractual terms and without a proper project structure, may give rise to litigation against the PHA and the GoP if the subsequent huge sums of monies are not made at the scheduled dates.

The minimum selling price of one unit of this so-called low-cost housing project would be Rs 2 million. The IPDH warned the PHA that the authority would be exposed for increase in costs due to any unforeseen events as the PHA would be under obligation to buy all the housing units at increased costs because of which it would be at a complete disadvantage.

Additionally, according to the JV agreement, the board of director (BoD) of the JV Company would have thee members of the IHL (father and his two sons) and two members of the PHA with the CEO from the IHL, which means that effectively IHL would be controlling the JV Company. The JV Company BoD would even be empowered to amend the JV Agreement, which unjustly empowers IHL to solely operate the JV Company accounts.

Further that the IHL shall sell the completed housing units to PHA no matter if these units are bought by the public or not. The IPDH pointed out many other objections and said that minimum risks were transferred to the IHL while most of the risks were retained by the PHA. 

Financing risks, design risk, operation risk, inflation and marker risk all belong to the PHA alone.

The IPDH, however, pointed out that the only positive thing that does not give any legal authority to this agreement is one of its clauses that says that the agreement would be effective from the date when the amount equalling 15% of selling price of housing units is extended by the PHA to the JV Company.

After the highly alarming report of the IPDH, the housing secretary and MD PHA re-negotiated a draft addendum agreement but they remained under pressure to send it to the law ministry for vetting and re-signing. But the bureaucracy noted on the file, Due to shortage of time, the Addendum as well Memorandum of Articles has not been gone through thoroughly keeping in view a new concept of JVs and involvement of Company of SECP laws etc., and even this could not be sent back for want of their further input.

The MD PHA wrote that the members of the authority are of the opinion that inputs from finance, the IPDF and technical consultant can be of vital importance for the execution of the Agreement. 

The secretary housing in his detailed comment besides seeking strict adherence to the IPDHs guidelines said that there must be foolproof arrangement to safeguard the interest of end consumers/allottees. Besides the IPDH, he said, the Finance Ministry and the Planning Commission, who are the stakeholders in the PMs Housing Programme, must be consulted before moving forward in this project. 

The project cost is more than Rs 60 billion, therefore, its final approval needs to be taken by 

the ECC through the Planning Commission and Finance Division.


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## Pk_Thunder

I was about to Update this thread


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## theonlyone

Neo said:


> *More than half of economy undocumented, tax moot told ​*
> Friday, December 19, 2008
> 
> LAHORE: The government has revealed to international economic experts that more than 50 per cent of the countrys economy is undocumented, which could be used for any kind of criminal activity, besides evading taxes.
> 
> The poor monitoring system of governance is responsible for this scourge, said the Adviser to Prime Minister on Finance Shaukat Tareen while giving the opening speech at a two-day tax conference convened to acquire expert opinion on how to plug holes and make the taxation system vibrant.
> 
> More than 52 per cent Pakistanis are living below the poverty line and their number is increasing due to double-digit food & fuel inflation, the moot was informed.
> 
> The conference opened on Wednesday with an agenda to discuss the taxation system problems on the administration, policy and collection sides.
> 
> The government expects suitable advise in this respect, and sources revealed to The News that it would be the first conference of its kind in Pakistan.
> 
> Statistics prepared for submission and for seeking corrective measures relate to almost all spheres of the economy, including the percentage of income taxpayers which were more than 1.8 million but paid only 20 percent of the total taxes deposited in the country.
> 
> The government expects proposals for expanding the income tax net at this conference. Two million people out of a population of 170 million have National Tax Number (NTN) but only one-twentieth pay GST, as the documentation system is too poor to monitor imports, production lines and distribution mechanism efficiently.
> 
> The conference will propose as to how the tax-to-GDP ratio could be raised from the present 10 percent to 15 per cent, without inviting hostile response from trade and industry, and without further burdening the consumers with indirect taxation.
> 
> Indirect taxation is 80 per cent of the total deposits, excluding the withholding taxes.
> 
> The submissions would mention the increase in tax revenues from Rs500 billion 10 years ago to Rs1 trillion expected this year (June 30, 2009).
> 
> Such proposals are being sought to meet international donors demand for relying more on the internal financing to meet the budgetary gap, which stands at Rs1 trillion come June 30 2009. The tax revenues would be Rs1 trillion whereas the total expenditures incurred would be more than Rs2 trillion.
> 
> The IMF has also stressed on cutting budgetary gap by increasing the toll-tax on transport and prices of gas, electricity and petroleum products that might make production lines and exports dysfunctional, spur inflation, unemployment and push more people in poverty trap.
> 
> The government seeks increasing tax revenue by distributing the burden on all income slabs, businesses and distribution lines in the economy. For this purpose inclusion of retail lines, agriculture-income and services sector in tax net is being proposed. However, there are political and technical snags, which the government expects of the international experts to help remove.


what is the poverty rate of pakistan , in the last month i heard numbers from 23 percent to 42percent. now this new no. of 52&#37;.


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## Pk_Thunder

*
High economic growth during previous regime*​
Pakistan followed misguided policies: ADB

Friday, December 19, 2008
By Mehtab Haider

ISLAMABAD: Multilateral creditors, especially the Asian Development Bank (ADB), for the first time in a decade have come down hard on the consumption-led growth model pursued by the Musharraf regime, saying Pakistans high-growth episode of 2004ñ2007 was the result of a growth model based on misguided policies.

The ADB pointed out that the government also violated the Fiscal Responsibility and Debt Limitation Act in financial year 2007-08.

An ADB report titled An Analysis of Pakistans Macroeconomic Situation and Prospects states that during fiscal year ended June 30, 2008, about 70pc of the increase in domestic public debt came from borrowing from the central bank. This increase led to breach of two provisions of the Fiscal Responsibility and Debt Limitation Act.

On flawed growth strategy, the ADB report states that both inflows of capital and workers remittances, together with the government pump-priming not matched by an increase in the tax effort (which led to fiscal deficit), led to high growth rates.

However, these were not accompanied by a concomitant increase in the productive capacity of the economy. High growth prompted an increase in imports (which led to trade deficit) and in consumption, the report added.

The current account deficit, the report says, resulted from imports increasing faster than exports (where the latter suffers from a structural competitiveness problem), which led to dependence on inflows of overseas remittances, FDI, portfolio investment and loans. Increased government spending, together with an increase in business confidence, crowded in the private sector, with investment running ahead of savings.

This growth model could perhaps have been sustained longer, as long as capital inflows exceeded the current account deficit (leading also to a build-up of foreign exchange reserves). But as the external deficit has continued to increase, the situation has become riskier. This is indeed what we observe in 2008 as inflows of capital have started decelerating.

Moreover, as a model of long-run growth and sustainable development, it poses a number of questions.

It is difficult to ascertain whether the measures contained in the new budget result in the stabilisation of the economy and can deal with the effects of the increase in food and fuel prices, as now the macroeconomic imbalances and the inflation problem reinforce each other.

Our view is that the government will not be able to achieve its budget deficit target unless it cuts drastically spending on social services (education, health, etc) and development expenditures, it maintained. However, if this is done, it will have a serious repercussion for Pakistans future.

A better strategy would be to negotiate with the multilateral agencies a programme that would allow the country to reduce the deficit at a slower pace until it reaches a more manageable level. During this time, the structure of spending should be analysed, and a realistic programme to increase direct taxation should be devised.

It will be difficult for the government to achieve the target investment-to-GDP ratio of 21.5pc collapse, provided sensible economic policies are put in place right away, and the political bickering stops. While serious measures must be taken, this does not imply that the country has to be subjected to an austerity programme that leads to a recession. Fiscal discipline acts as a deflationary force as it induces excess capacity and unemployment.

The experience of the Asian financial crisis from a decade ago proved that this is not the way to solve the problems afflicting Pakistan. Monetary and fiscal policies affect both short and long run trends in unemployment.

The fundamental reason that explains Pakistans growing trade and current account deficits, especially during high-growth years, is its poor export performance.

Pakistans performance is clearly sub-standard, with only Afghanistan, Kyrgyz Republic, Mongolia, Sri Lanka, Turkmenistan, and Uzbekistan having lower export growth rates. In 2006 and 2007 Pakistans export growth collapsed to below 5pc.

Analysis at a highly disaggregated level indicates that key exports shrank. For example, in 2007, Pakistans largest single export product (representing over 20pc of total exports), Linens and other furnishings art (of textile), suffered a decline of 7.45pc.

In terms of export to GDP ratio, in 2006, only Afghanistan, Georgia and Nepal had lower export-to-GDP ratios than Pakistan. It is also worth noting that even if Pakistan has a similar export-to-GDP ratio as a country like India, the latter is a much larger economy, and its export-to-GDP ratio has improved considerably over the years, while Pakistans has remained stagnant.

What explains Pakistans poor export performance? One possible reason is the overvaluation of the exchange rate. Figure 9 in the report shows the real effective exchange rate of selected countries since 2000. The figure shows that Pakistans rupee is the weakest among the countries. Therefore, currency overvaluation has to be ruled out as the main reason underlying Pakistans weak export performance.

A more plausible reason that explains Pakistans weak export performance is the lack of export sophistication. Throughout the years, the country has not been able to upgrade its export structure, heavily concentrated on the low end of textiles and garments.

The elasticity of Pakistans exports with respect to the GDP of the industrial countries (ie, by what percentage Pakistans exports change when the GDP of the industrial countries increases by one percentage point) since the fourth quarter of 1985.

This variable is a proxy for the non-price competitiveness of Pakistans exports (ie, the quality attribute). This elasticity is low, taking an average value of the whole period. Upgrading the export package will take time but measures in the form of a coherent plan must be taken as soon as possible.

While external and domestic sources contributed about the same to the financing of the deficit in fiscal year 2007/08, the government estimates that about 90pc of the deficit will be financed through external sources in fiscal year 2008/09. This will be very difficult and will depend on donors disbursements.


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## Pk_Thunder

*Govt sees further fall in inflation*​
Thursday, December 18, 2008
By By Jawwad Rizvi

LAHORE: Adviser to the Prime Minister on Finance Shaukat Tarin on Wednesday said the government had honoured its commitment by creating a market support fund and now it depends on the stock market how it responds.

The government will not take the pressure of big players and has planned to buy major shares, he said, adding once the government bought shares it would support the stock market which would protect small investors automatically.

The adviser hoped that the mark-up rate would come down at the end of the first quarter of next year as monthly comparison of inflation figures showed a reasonable decline. The government has been expecting a further decline in Consumer Price Index (CPI), Sensitive Price Index (SPI) and Wholesale Price Index (WPI) in the coming months which would be helpful in bringing down the mark-up rate.

The government has announced a reduction in the mark-up rate but core inflation has crossed the figure of 18 per cent which compelled the government to increase the mark-up rate in order to tame the escalating inflation, the adviser said while talking to newsmen after the first session of a Conference on Tax Policy Options for Pakistan.

To a question despite the decline in CPI, SPI and WPI the prices of edibles and other items are not decreasing, Tarin termed it failure of the provincial governments.

The provincial governments should enforce the prices of items and it is their failure so the prices are not coming down, he said, adding the ministry has constituted secretaries committee and given task to the committee to scale down the prices.

Earlier speaking at the conference, Tarin said the public sector plays a central role in providing key social sector and infrastructure services to meet the needs of a growing economy. However, the most desirable way of meeting the cost of such services is through an equitable system of taxation.

Generally, countries with comparable level of development mobilize taxes that are about 18 per cent of GDP. Pakistan mobilized only 9.6 per cent of GDP in taxes. This is not an acceptable level of tax effort.

He said the country must evolve a simpler tax regime that would ease taxpayers problems that find it difficult to meet the requirements of multiple taxes and authorities. He pointed out the desired tax regime in which he asserted there should be only two taxes in the country, namely an income tax and a consumption tax, in value added mode. This would hugely simplify the tax regime besides moving the tax system toward direct taxes. All collections must be based on assessment and use of presumptive taxes or withholding taxes, as full and final settlement should be eliminate, he remarked.

Income is simply income, irrespective of its origin, either in the form of salary, interest, rent or profit. This has to be a very basic premise of reform. Once granted, tax treatment of income must be uniform and non-discriminatory. Except for income of charitable trusts or consumption of foodstuff, there should be no exemptions in the taxation of income and consumption. There should be a single tax identifier number applicable across both taxes.

Speaking on the occasion Chairman Federal Board of Revenue (FBR) Ahmed Waqar said the Pakistan still have a long way to go in increasing Tax-to-GDP ratio which is around 10 per cent and amongst the lowest in the world, to around 15 per cent within the timeframe of the next 5 years and expanding the almost static tax base.

He pointed out the FBR is in the midst of an ongoing Tax Administration Reform Programme (TARP) being sponsored by the World Bank and DFID. The main focus of the TARP has been on promoting voluntary tax compliance through an enhanced level of tax payers facilitation. He said all manual processes, in the meanwhile, have been substituted with fully automated or semi-automated environment.

He mentioned the board was able to cross the one trillion rupees mark in tax collection last year. The FBR has achieved the revised targets of Rs430 billion during the period July to November, 2008. But the present economic slowdown has created a situation where achieving the revenue targets for the year appear to be dauntingly challenging if not formidable.

We will have to tap new sources and undertake enforcement and audit in an open, fair and transparent manner without creating harassment for achieving the target, he added.

Hafiz Pasha has suggested the Provincial Taxation of Real Capital gains on properties (based on updated valuation tables) should be imposed while withdraw Federal CVT.

He said after a missed opportunity during the last five years of rapid growth, Pakistan has to raise the Tax-to-GDP ratio when the growth process is faltering. The extent to which the Tax-to-GDP ratio can be raised will depend upon political will, improvements in tax administration and laws which enable extension of the tax to hard-to-tax sectors, rational tax policies, incentives for fiscal effort and development of a tax culture.

Secretary Finance Waqar Masood, Director Middle East Department, IMF Masood Ahmad also spoke on this occasion.


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## Neo

*Foreign investment down by 21 percent in five months ​* 
KARACHI (December 19 2008): Net foreign investment has declined by 21 percent during the first five months of the current fiscal year mainly due to poor economic and law and order situation, besides uncertainty on the political front.

Economists said that domestic shocks including worst law and order situation, negative economic indication and political uncertainty from the last on year have badly hurt the foreign investment, therefore, despite the establishment of political government it is on the decline. They said that major reason behind this dip is decline in the portfolio inflows, as the foreign investors are reluctant to invest in the equity market due to negative reports regarding country's stock markets.

While, huge outflow of portfolio investment has also been witnessed since March and foreign investors have adopted a wait and see policy till the situation is not cleared, they added. Economists, however, believed that the country's stock markets would again improve in the next two months, as economic situation is improving and political battle has already ended.

State Bank of Pakistan (SBP) on Thursday revealed that net foreign investment comprising foreign direct investment (FDI) and portfolio investment are constantly on decline. The net foreign investment has registered a decline of some $387.01 million during the July-November of current fiscal year 2009.

After the current decline, overall net foreign investment stood at $1.44 billion during the first five months of the fiscal year 2009 as compared to $1.818 billion in the same period of last fiscal year 2008.

The central bank statistics showed that both FDI and Portfolio investments have presented a negative trend during the July-November of current fiscal year. FDI has showed a slight decline of 6.38 percent, while the massive outflow from the country's equity market has posted a significant decline of 254 percent in portfolio investment.

The major decline in portfolio investment has also played a vital role in the overall decline in the net foreign investment. FDI stood at $1.603 billion during the first five months of fiscal year 2009 as compared to $1.712 billion in corresponding period of last fiscal, depicting a decrease of $109 million during July-November of current fiscal year.

Portfolio investment stood at a negative position of $162.85 million during the first five months of current fiscal as compared to an investment of $105.98 million in the same period of last fiscal year. Including privatisation proceeds, total private investment showed a decline of 17.34 percent to $1.457 billion during July-November of current fiscal, which previously stood at $1.762 billion.


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## Neo

*US sanctions $48 million to import wheat on deferred payment ​* 
ISLAMABAD (December 19 2008): United States of America (USA) on Thursday sanctioned 48 million dollars to provide 200,000-250,000 tons of wheat to Pakistan on deferred payment. Trading Corporation of Pakistan (TCP) will float tender on Friday to import the said wheat from the USA on deferred payment at the rate prevailing in American market.

Addressing a joint press conference, Federal Minister for Food and Agriculture Nazar Muhammad Gondal along with Minister for Industry Mian Manzoor Ahmed Wattoo also announced the decision of fixing Rs 660 per bag of urea to break the cartels and end black marketing of urea. Gondal said that USA had sanctioned 48 million dollars to provide 200,000-250,000 tons wheat to Pakistan on the deferred payment under GSM scheme.

He said that TCP would float tender on Friday to import the wheat from USA. He said that government had fixed the urea price at Rs 660 per bag after a meeting with fertiliser manufacturers here on Thursday. He said that government would offload 290,000 tons urea fertiliser in the market by December 31 to break the cartel of the market players. Private sector will offload 100,000 tons urea fertiliser in the local market to maintain balance between supply and demand.

During the meeting with manufacturers, government has decided to purchase 50 percent urea from the manufacturers during the coming months. He said that total production of fertiliser manufacturers would be 0.7 million tons urea and government would purchase 450,000 tons from them in the coming months. Government would procure 100,000 tons urea from fertiliser manufacturers in the current month whereas 350,000 tons urea would be purchased during January-February 2009. Government would get the urea from the fertiliser manufacturers at Rs 660 per bag whereas the imported wheat price is Rs 650 per bag. The minister said that government would charge Rs 10 per bag additionally on the imported wheat to land at Gwadar.

He said that government would import 390,000 tons urea by January 15 and 190,000 tons urea would reach Pakistan by December 31 to distribute among the farmers. The minister noted that government would float another tender of 350,000 tons urea import on January 15 to ensure the availability for farmers. He warned the black marketers that they will be dealt high-handedly if involved in creating shortage. He said that provincial governments had been directed to lodge FIR against the black marketers.

Manzoor Wattoo said that government was taking different measures to make Pakistan self-sufficient in the wheat. He said that government had spent Rs 64 billion on the wheat import, which could save Pakistan to go to IMF.

He said that government had allocated Rs 32 billion subsidy for the fertiliser during the current year and had given Rs 27 billion subsidy to the fertiliser manufacturers and importers of DAP after capping the price at Rs 3,050 per bag.

Wattoo said that it was decided that government would take action against the dealers who would force the farmers to buy DAP for urea bag. He said that industry department and National Fertiliser Company (NFC) would purchase 50 percent urea production from the fertiliser manufacturers as per decision taken here in the meeting.

He said that local urea production would be seven million tons and government would receive 450,000 tons from them to meet the farmers' requirements. He said that dealers were providing urea at Rs 850 to Rs 950 per bag due to black marketing and now government would provide urea bag at Rs 660. He said that a committee headed by federal minister for industry would determine fertiliser prices in future.


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## Neo

*Pakistan's foreign exchange reserves up by $244 million ​* 
KARACHI (December 19 2008): The country's liquid foreign exchange reserves rose by over 244 million dollars during last week. The State Bank of Pakistan statistics show that overall foreign exchange reserves registered an increase of 244.6 million dollars during the week that ended on December 13, 2008.

With current upsurge, the country's foreign exchange reserves have mounted to 9.3396 billion dollars on December 13, as compared to some 9.095 billion dollars a week earlier. The major increase has been witnessed in the reserves held by the central bank, which moved up by 214 million dollars to 6.1299 billion dollars during the last week from 5.9159 billion dollars a week earlier.

Reserves held by banks also showed an increase of 30.6 million dollars during last week as banks' overall reserves reached 3.2097 billion dollars on December 13 as compared to 3.1791 billion dollars on December 6, 2008.


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## Neo

*GDP growth rate reaches over 50 percent ​* 
MULTAN (December 19 2008): Punjab's contribution in the overall GDP growth of the country increased to over 50 per cent, in which the share of agriculture sector contributed significantly, an official report revealed. Punjab contributes more than 50 per cent of Pakistan's GDP and is home to 56 per cent of its total population. Punjab's GDP growth rate for FY2007 was estimated at 7.8pc, said the report.

The slowdown of the national economy is likely to impact Punjab's economy as well. The report says although reliable data on GDP growth projections are not available, revised budget figures for FY2008 and budget estimates for FY2009 provide some insights as to the effects of the economic slowdown on the provincial economy.

This points to a widening budget deficit mostly caused by shrinking revenue receipts as general revenue receipts have decreased by 11pc because of lower tax (ñ18pc) and non-tax (ñ30pc) revenues and lower federal transfers (ñ3pc) and grants (ñ34pc) during FY2008. Total expenditures have been lower than budgeted (ñ8pc), mainly because of lower development spending (ñ13pc).

The provincial budget for FY2009 contains a subsidy package of Rs 13 billion in the form of cash transfers to the poorest, to compensate for higher food prices and maintain affordability of health services. For FY2009, Punjab's share of the national financial commission award will be 25pc higher than in FY2008 because of the federal government's decision to increase general sales tax on consumer goods and services from 15pc to 16pc, which may help meet the additional expenditures.

Provincial tax revenues will increase by 8pc, while total spending will also rise by 8pc. The overall financing gap is expected to be lower than the (revised) figure for FY2008. Against this backdrop of fiscal constraints, Punjab has been able to preserve health sector spending from drastic cuts.

Although starting from a low base, per capita health spending by the public sector has been increasing in recent years. It was $4.4 in FY2007, $5.77 in FY2008 (revised estimates), and $6.38 in FY2009 (budget estimates). Yet, this is far less than the resource allocation in comparable South Asian countries.

Meanwhile, the Asian Development Bank (ADB) report also states that Punjab is the most populous province of Pakistan, with 56pc of the total population. It has the largest provincial economic base in the country, accounting for over 50pc of Pakistan's gross domestic product (GDP). While the province has achieved robust economic growth in recent years, its social indicators have lagged behind those of the other South Asian countries.

The Government of Punjab (GoPb) has placed high priority on the attainment of MDGs, and has recently increased budget allocations to social sectors. The province is likely to achieve all MDGs except reduction of the infant mortality rate (MDG4) from 77 to 40 per 1000 live births, and the maternal mortality ratio (MDG5) from 300 to 140 per 100,000 live births.

More serious efforts are needed to attain these two essential health MDGs. If they are achieved, Punjab can potentially save the lives of at least 11,000 women and 235,000 children by 2015.Recognising the critical need, GoPb has developed a health sector reform framework, and has sought support from the ADB to accelerate attainment of the two health MDGs. At a broader level, it has initiated service delivery reforms as part of the ADB-supported Public Resource Management Programme and the Punjab Devolved Social Services Programme.

The former aims to improve the operational efficiency of the provincial government and thereby create fiscal space for social service delivery, while the latter aims to strengthen district systems and develop necessary service delivery standards for devolved social services, including health, education, water supply, and sanitation.


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## Neo

*Italian CNG kit maker to establish assembly line ​*
KARACHI (December 19 2008): The Italian manufacturer of CNG kit, Landi Renzo (LR) S.P.A. will establish a new assembly line in Pakistan to produce 15,000 CNG kits per month exclusively for export purposes. This was stated by outgoing head of business development LR Pak Ltd Francesco Grillo here on Thursday.

He said the assembly line would be operational in next three months at a cost of Rs 270 million. He said the existing assembly plant of LR Pak Ltd costing 60 million euros or Rs 1.7 billion was producing more than 180,000 kits per annum, catering to the demands of original equipment manufacturers (OEMs) and the market.

"Besides, we are exporting CNG kits assembled in our existing LR Pak plant to China, Myanmar, Bangladesh." The addition of new assembly line will help in expanding CNG kit exports from Pakistan, he observed. He said his company had a market share of 95 percent in CNG kits in Pakistan. "We are meeting 100 percent requirements of OEM for CNG kits", he added.

Grillo said his company had 40 percent market share in CNG and LPG kits world-wide. He pointed out that Pakistan was very important market for Landi Renzo. "We have sold 170,000 kits last year - our second year of operation in Pakistan," he opined.

"Our negotiations are continued with Indus Motor Company, the assemblers of Toyota car to supply dedicated CNG kits for their Corolla model in Pakistan. Meanwhile, we are already selling CNG kits to private CNG conversion workshops for new Toyota cars in Pakistan, which comply Euro II standards."

Grillo said Landi Renzo was also providing free-of-cost training to CNG conversion workshops to enhance their technical expertise and has, so far, trained more than 600 of them in last two years in Karachi, Lahore, Peshawar, Islamabad, Hyderabad.

"We have developed a user friendly testing computerised equipment called "Palm Tester" which locates the problem with the help of ECUs and guide the mechanics to fix it in a prescribed way. He pointed out that an Italian technical manager would be visiting Pakistan next month to set up authorised workshops in Pakistan with "triple S" (sales, spare parts and service) facilities to provide high quality repair facilities.

To a question, he said 2009 would be a tough year for his company due to economic slow down and reduction in auto production in Pakistan, but that would be a temporary phenomenon. Grillo was of the opinion that the government must reduce gas prices after oil price plunge so that CNG sector was continued to get incentives for further expansion.

L R Pak Ltd Chief Executive Mohsin Ali Khan said that a new plant set up in January this year was solely supplying CNG kits to all car assemblers in Pakistan. He said that was a very important market for his company as this country had a big market for CNG kits in the world.


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## Neo

*Analysis of Pakistans macroeconomic situation and prospects​*
*ADB warns of a balance of payment crisis​*
ISLAMABAD: Asian Development Bank (ADB) has warned that desperately defending the Pakistani rupee may lead to the depletion of international reserves, and the situation may worsen to a full-fledged balance of payment crisis. 

The rupee is not overvalued and currency depreciation may aggravate inflation and lead to further loss in confidence, so there are reasons to try to moderate it, states "An Analysis of Pakistan's Macroeconomic Situation and Prospects" report released by ADB on Thursday. 

Exchange rate: As mentioned earlier, monetary tightening may help contain the depreciation of the rupee, which is facing tremendous pressures as a result of the macroeconomic and political instability. The rupee is not overvalued. Currency depreciation may aggravate inflation and lead to further loss in confidence, so there are reasons to try to moderate it. The government has tried to do this by intervening in the foreign exchange market and increasing interest rates and reserve ratios and monetary tightening. However, the lessons of the Asian crisis a decade ago are such that desperately defending the currency may lead to the depletion of international reserves, and the situation may worsen leading to a full-fledged balance of payments crisis. Increasing interest rates and unduly reducing money and credit may deteriorate firms' balance sheets and lead to financial defaults and a financial crisis (as happened during the East Asian crisis of 1997-1998). In the current situation, the best way to tame pressures for currency depreciation is to lower political instability. Without a return of political confidence and certainty, using monetary tightening in excess may prove futile and ultimately damaging to the economy. 

Maintaining a competitive exchange rate is fundamental for Pakistan and is a desirable target policy. Real exchange rate overvaluation is bad for growth, while undervaluation is good. Moreover, a competitive real exchange rate contributes to employment generation through a number of channels. The first is through its impact on the level of aggregate demand (the macroeconomic channel). The second is through its impact on the cost of labor relative to other goods and, thereby, affecting the amount of labor hired per unit of output (the labor intensity channel). The third one is through its impact on investment and growth (the development channel). In an economy characterised by vastly underutilised resources, there are growth-related externalities derived from a policy of maintaining a competitive exchange rate, as the higher demand for exports, as well as the increasing production of import-competitive goods, can spill over into demand for non-tradables as a result of higher income in sectors that produce tradables. 

Subsidies: The new government needs to analyse the impact of the subsidy burden on the budget and decide what is crucial to guarantee a minimum living standard to the disadvantaged groups (this calls for well-designed targeted programmes); and what has to be passed on to consumers. 

Budget deficit: Pakistan's fiscal deficit is the result of a low revenue-generating capacity, more than fiscal profligacy. Nevertheless, the government has to analyse the structure of spending, eliminate all superfluous categories (including subsidies) and projects with questionable benefits, and get rid of unprofitable state-owned enterprises. These measures will also help address the inflation problem. Likewise, the law should limit (through the Fiscal Responsibility and Debt Limitation Act 2005) the maximum amount that the government can borrow from the SBP. 

It is important to note that budget deficits are not sins if they are well understood and adequately managed. More over, they need not always reflect loose fiscal stance, but may signal stagnation in a destabilised economy. Government expenditure and fiscal policy in general should be seen from the point of view of how to keep the total spending in the economy at the rate that would buy all the goods that is possible to produce. Fiscal policy should be conceived as a mechanism that balances the system, exogenously increasing aggregate demand (e.g., by injecting expenditures) whenever private sector spending falls short of a full employment level of effective demand.


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## Neo

*Pakistan expecting over $40 billion investment​*
KARACHI: Pakistan is expecting over $40 billion investment with at least half expected soon, said Minister of State and Chairman Board of Investment Salim Mandiwala.
 
BoI has been revamped to become pro-active in all aspects and is fully committed to attract, encourage and protect foreign investment. The government has ensured that BoI becomes a functional one-window operation so that new and existing foreign investors are provided total support in their ventures across the country, he said while speaking at dinner hosted by Pakistan-Japan Business Forum here.

He said in spite of few negative perceptions among foreign investors, the fact is that BoI received a lot of favourable enquiries from foreign investors, which bodes well for future investment in the country.

Salim Mandiwala assured that proposed industrial and commercial enclave would be set up in Karachi by PJBF soon. He felt Japanese investors should also look into possibility of establising such estates in other provinces too. 

PJBF Chairman, Abdul Kader Jaffer, said interim government had promised 2500 acres land for industrial and commercial enclave and Japanese are very serious in making sure it becomes functional soon. 

PJBF senior vice chairman, M Domichi, said automotive sector in Pakistan is facing lot of problems and called for favorable policies and removing irritants. ppi


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## Neo

*Cement exports increased 72% during July-November 2008​*
KARACHI: Cement exports continued to show increasing trend, rising by a considerable 72 percent Year-on-Year (YoY) in 5 months FY09 amounting to 4.5 million tonnes.

This increase has changed the sales composition, as exports now comprise 36 percent of the total dispatches. Exports performance can be attributed to depreciating rupee, and global demand-supply gap. However, exports declined by 4 percent Month-on-Month (MoM) in November 2008.

Exports are expected to register decelerating growth, as the global economic slowdown deepens. On the supply front, the demand-supply gap in the international market is expected to narrow down further as other countries gear up with more capacity, thus reducing export demand, analyst said. "Declining freight charges are also eroding the edge Pakistan possessed due to geographical proximity," analysts believe. Moreover, the downward slide in local demand is also expected to prevail as a result of tightening fiscal policies, particularly after entry into the IMF SBA. 

Local demand continued its downward slide, declining by 16 percent YoY in 5 months FY09. However, it is noteworthy that the local dispatches registered a 7 percent increase. "Pressure is being exerted on local demand, primarily due to macro-economic slowdown, high interest rate environment, sky high cement prices, which leaped by 65 percent YoY in 5 months FY09, currently hovering around an average retail price of Rs 367 per 50kg bag (Rs 7,340 per tonne) and a retention price of Rs 255 per 50 kg bag (Rs 5,109 per tonne), inflationary pressures and unfavorable economic conditions effecting commercial projects," Rommesa Mirza, analyst at Invest Capital said. 

Local dispatches in North zone, constituting 83 percent of the local demand in 5 months FY09, fell by 20 percent YoY. In addition to the above reasons, the dispatches in the North zone declined because of unstable law and order situation, and winter season hindering construction activity.

In the short-term, the onset of winter is likely to aggravate the situation. These factors, coupled with the prevailing financial risks, have led to a rating downgrade by PACRA, of 4 cement companies (Pioneer cement company limited, maple leaf cement, Kohat Cement Company Limited and Dewan cement). However, GMs are still expected to get a breather, primarily due to fall in coal prices (61 percent FY09). 

Capacity utilisation of the industry was slightly down by 1 percentage point, to settle at 77 percent, while local capacity utilisation fell to 49 percent down by 12 percentage points YoY, as the demand surge fails to match the levels of incremental rated capacity. Lucky prevailed as the market leader, with a share of 18 percent, followed by DGKC (13 percent). Lucky also makes it mark on the export front, with a share of 27 percent, followed by Maple Leaf Cement (13 percent) and DG Khan Cement (12 percent). The 5 cement magnates, (Best way cement, Lucky cement, DG Khan Cement, maple leaf cement and Pioneer cement company limited) cumulatively accounted for 59 percent of the market share (58 percent in 5 months FY08).


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## Neo

*Bad loan recovery drops 100pc ​* 
Saturday, December 20, 2008

ISLAMABAD: Owing to higher interest rates and sharp slowdown in economic activities, cash recovery against non-performing loans (NPLs) dropped by over 100 per cent in the first quarter (July-Sept) of the current fiscal year 2008-09 compared to the last quarter (April-June) of previous fiscal, The News has learnt.

An official document of the State Bank of Pakistan (SBP), a copy of which is available with the correspondent, reveals that cash recovery against bad loans in public sector banks fell massively by around 500 per cent during the first quarter of the current fiscal year compared to the last quarter of the previous year.

Cash recovery against NPLs in public sector banks stands at Rs290 million during July to Sept compared to Rs1.33 billion in April-June period, the document shows. Loan recovery by local private banks also recorded a sharp decrease in the first quarter of 2008-09 compared to the last quarter of previous year.

Private banks recovered Rs4.97 billion in the first quarter compared to Rs6.66 billion during April to June, registering a decline of around Rs2 billion. The document further shows that cash recovery by all banks and Development Finance Institutions (DFIs) against NPLs stood at Rs6.97 billion in the first quarter of the current year compared to Rs12.29 billion in the April-June period of 2007-08, showing a drop of around 100 per cent.

The recovery of all banks against bad loans was Rs6.66 billion during July to Sept against Rs11.91 billion in the previous quarter. All commercial banks recovered Rs5.44 billion against bad loans in the first quarter compared to Rs8.2 billion during April to June.

Cash recovery by foreign banks against bad loans stood at Rs17 million in the first quarter of the current year compared to recovery of Rs201 million in the last quarter of previous fiscal.

The performance of specialised banks also witnessed steep decline in cash recovery of bad loans in the current fiscal year as it stood at Rs1.22 billion in July-Sept period of FY 2008-09 compared to Rs3.71 billion in April-June period of previous FY 2007-08.

The cash recovery done by the DFIs against bad loans was Rs301 million in the first quarter of the ongoing fiscal year compared to Rs379 million in April-June period of previous financial year 2007-08.

When State Bank of Pakistan Governor, Dr Shamshad Akhtar was asked about factors behind this massive decline in cash recovery against bad loans few days back when she was visiting Islamabad, she said that the financial and banking sector showed great resilience in Pakistan when the economic meltdown could be witnessed all around the world even in the developed world. She further said that when overall economic situation would be stabilised then the cash recovery against NPLs would be improved. It is a temporary phenomenon which will be improved in the coming months, she concluded.


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## Neo

*Textile exports dip by 2.3 percent in five months​* 
ISLAMABAD (December 20 2008): Textile exports of the country has dipped by 2.3 per cent during the first five months of current fiscal over the same period of previous year due to negative growth in seven out of the total 13 exporting sectors, reveals Federal Bureau of Statistics ((FBS) on Friday.

Official trade figures released by the FBS for July-November, 2008 showed that export growth fell to $4.377 as compared to $4.477 billion for the same period of last year, because growth in cotton yarn, cotton carded and comb and yarn other than cotton have declined by 17.72, 10.04 and 41.68 per cents respectively during the period under review.

Also negative growth of 10.70 per cent was registered by bed wear, 27.57 per cent by canvas, tarpaulin and other, 13.54 per cent readymade garments, and 13.58 per cent by other textile materials.

The sectors that have shown positive growth are raw cotton by 181.22 percent, cotton cloth by 8.39 percent, knitwear by 1.71 percent, towels by 24.58 per cent, art silk, synthetic textile by 16.15 percent and made up articles, towels and bed wear by 4.26 percent.

The exports of raw cotton have increased to $48.943 million from $17.404 million for the same period of last year, cotton cloth to $842 million from 777 million, knitwear to $826 million from $812 million, towels to $292 million from $235 million, art silk and synthetic textile to $243 million from $209 million and made up articles to 225 million from 216 million for the same period of last year.

After a substantial decline, export of cotton yarn exports decreased to $483.943 million from $587.037 million, whereas exports of cotton carded and comb have declined to $3.550 million from $4.279 million for the same period of last year.

Similarly, the data released showed that exports of yarn other than cotton have declined to $12.823 million as compared to $21.989 million of last year, and bed wear went declined to $740.800 million from $829.597 million, tenants, canvas and tarpaulin to $25.878 million from $35.728million. The readymade garments and others textile exports have declined to $524.134 and 106 millions respectively against $606 and 123 million of last year.

A marginal increase of 0.58 per cent was recorded in textile export in November, 2008 over previous month with total exports going up by $10 million. The exports in November have increased to 838.122 million against $828.029 million of October 2008. The growth was seen in raw cotton, knitwear, bed wear, caravans and tarpaulin, readymade garments.


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## Neo

*India an unreliable source of raw material ​* 
Saturday, December 20, 2008

LAHORE: Every time when tension mounts between India and Pakistan, the former loses its credibility as a reliable supplier of industrial raw material putting an effective brake on bilateral trade between the two countries.

Pakistan and India have a history of erratic trade relationship. India, in fact, was Pakistans main raw material supplier till 1965. But the Indians suspended all supplies immediately after the start of 1965 war between the two countries.

Sudden stoppage of trade by India severely impacts Pakistani industries dependent on Indian raw material, said Sheikh Saleem Ali, former president of Lahore Chamber of Commerce and Industry.

He said it took Pakistans industries a few months to find alternative and reliable sources of raw material from other parts of the world.

The unilateral action by India in 1965 almost eliminated any meaningful trade between the two countries for almost three decades, though successive governments from both sides tried to revive trade links. The trade ties starting improving gradually in the mid-90s when Pakistan and India supplied sugar to each other in times of shortage. Pakistan also imported cement from India in the 90s to overcome domestic shortage.

However, the progress in trade got another setback during the Kargil episode when Indian suppliers stopped export of certain raw materials citing war-like situation between the two sides. Reliance Industries of India, for instance, stopped supply of plastic granules despite a written long-term commitment, though the actual reason was a sudden increase in prices of all petroleum-based products in the global market.

Other supplies where the Indians had an advantage continued unabated. That created more doubts in the minds of Pakistani buyers about the reliability of Indian suppliers.

Economic experts pointed out that India due to its developed industrial base and proximity to Pakistan was its most suitable and competitive supplier of industrial raw materials which its western neighbour imported from Europe, America and the Far East. The situation suits both countries but is more advantageous for India which could increase its exports 10-fold if its government and entrepreneurs succeed in creating confidence among Pakistani importers about their ability to continue supplies irrespective of political tensions.

Economists pointed out that the trade between the two countries picked up sharply after 2003-04 as Pakistan gradually enlarged the list of items that could be imported from India. However, they added the actual potential of trade could not be exploited because the two countries were in the process of formulating an agreement to allow free conduct of trade through land route which would have reduced the transportation cost drastically.

Pakistan is currently not benefiting much from these imports because most of the raw material produced in central India is imported through sea route and has to be transported from Karachi to the upcountry at an unnecessary additional cost instead of direct delivery through road link between the two sides.

After 1999, local entrepreneurs have avoided depending completely on Indian raw materials. Former senior vice president of Lahore Chamber of Commerce and Industry said industries now do not depend solely on Indian raw materials, adding they kept a non-Indian supplier as well to be able to revert back in case of any disruption of supplies from India. 

However, he said when trade between India and Pakistan started picking up the local industrialists gradually increased raw material imports from India. Had the situation remained smooth, they would have completely stopped import of raw materials from other countries in the next three years.

He said unpredictability of relations between the two countries has now forced them to keep other options open.

Out of total bilateral trade of $2,225.4 million between India and Pakistan in 2007-08, Pakistans exports amounted to $287.80 million, a decline of 10 per cent over previous year. Indian exports totalled $1,999.17 million, a surge of over 44 per cent over previous year. Indian exports are expected to jump by $1,500-2,000 million in the current fiscal year after further openings provided to them in the budget.

However, the expected jump in Indian exports would be impacted after the tension over recent Mumbai attack.


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## Neo

*Foreign investors may get legal cover ​* 
*Waqar says UAE, S Arabia to initiate corporate farming with 100pc repatriation of yield​*
Saturday, December 20, 2008

ISLAMABAD: The government is all set to provide legal cover through parliament to protect foreign investors and their investment in all sectors particularly agriculture.

We are in talks with investors from Gulf states, particularly Saudi Arabia, for investment in corporate farming. Investors will be ensured repatriation of 100 per cent crop yield to their countries even in case Pakistan faces food deficit, Federal Investment Minister Waqar Ahmad Khan unveiled this while painting future investment landscape of the country.

To ensure maximum investment in the country, the government is also planning to extend life insurance facility to foreign investors in the wake of law and order situation that has worsened because of suicide attacks and militants other activities.

Following the recent global food commodities crisis, the policy-makers of Gulf countries have started thinking about food security. Since Gulf countries are devoid of any agriculture land, they want to initiate corporate farming in any Muslim country having fertile land such as Pakistan.

We have plenty of government land in provinces and to this effect the central and provincial governments are vigorously working to identify government land that will be allotted on lease to foreign investors.

Foreign investors would cultivate hybrid seeds in addition to utilising modern and innovative technologies for corporate farming, the minister said. 

They will be extended the facilities of tax holidays for 10 years period also. Moreover, they will be allowed to take back their full crops to their countries. This will have nothing to do with Pakistan food yields, Waqar said. 

The farmers will be given lucrative incentives to enhance the productivity, he said 

Regarding the Bilateral Investment Treaty with USA which is running into snags for the last many years, the minister also disclosed that both the countries are set to ink the BIT once the new administration headed by Barak Obama gets installed in White House.

Right now the fast track work on BIT draft has been kicked off. The draft is lying with Ministry of Law for ratification before formal approval of the government. 

To a question on arbitration clause of the BIT, the minister said that in case of any dispute, a body comprising International Chamber of Commerce and one member each from Pakistan and USA will decide the dispute that both countries would be bound to honour the verdict of the august body. However, none of the any country either USA or Pakistan will be allowed to play or influence the decision of the arbitrator. He said that the decision would be made exclusively on commercial ground not on political grounds by the arbitration body. The BIT will help make Pakistan investment destination country.

Talking about the investment of Friends of Pakistan, the minister said that next meeting of Friends of Pakistan is to be held in Islamabad on January 11-13 where in the projects with feasibility and detailed engineering would be identified by Friendly countries for their investment. For this proper presentation would be made before the FoPs.


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## rubyjackass

Neo said:


> *Bad loan recovery drops 100pc ​*



How can something fall by more than 100 percent?


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## Neo

*Rs 150 billion set as January-June withholding tax target​* 
ISLAMABAD (December 20 2008): One of the major revenue generation measures would be the ambitious target of over and above Rs 150 billion for withholding tax (WHT) during the remaining months of the current fiscal year. Sources told Business Recorder on Friday that WHT would be used as an effective tool to generate additional revenue in the remaining months of current year.

The actual projections of WHT for January-June (2008-09) would be set in view of collection in first six months of current fiscal year. The WHT collection in July-June (2008-09) would determine the realistic position for setting target for the remaining months of current fiscal year. The position would be clear in the first week of January when figure would be compiled pertaining to WHT.

Sources said that the department needs at least Rs 150 billion as WHT for meeting the annual target of revenue collection in 2008-09. The projection for WHT could range between Rs 150 billion and Rs 160 billion, depending upon the collection during the first six months.

Sources said that the estimates of Rs 150 billion would help in generating additional revenue. In the remaining months of current fiscal year, WHT collection is expected from Public Sector Development Projects (PSDP), sales and supplies of goods.

The board had collected a record amount of around Rs 206 billion from withholding taxes (WHT) during 2007-08, against Rs 116 billion in 2005-06. An additional amount of Rs 90 billion was collected from withholding taxes during previous fiscal year. Directorate General DG WHT has prioritised important sectors in view of their contribution in the form of WHT.

The sectors are banks/financial institutions; national saving schemes; Public Sector Development projects (PSDPs); importers/exporters, government departments; oil exploration and marketing companies; cement; textile; developers and contractors (construction sector); real estate; rental property ie domestic and foreign missions; motor vehicles and other potential sectors. The department would also take measures to generate WHT from the sales and supplies made within the manufacturing sector. This sector would be given top priority for which action plan is ready to be implemented.


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## Neo

*Global recession is an opportunity to attract investment​*
ISLAMABAD: The current global economic recession provides great opportunity to Pakistan for attracting investment as the country provides better chances of returns as compared to the Western and other countries of the world, Federal Minister for Investment Senator Waqar Ahmad Khan said.

"Due to financial recession, there is a negative trend in returns all over the world but very positive in Pakistan. This trend has enabled Pakistan to emerge as strong profit provider in terms of returns," the federal minister for investment said in a panel interview on Friday. Senator Waqar said that Pakistan provides 35 to 40 percent profit returns besides offering a conducive atmosphere to invest in various sectors of economy. He said that investors are in search of safe and profitable markets and are afraid to invest in the countries facing financial recession, however, Pakistan was not directly hit by the recession, hence offering a promising opportunity for them. Economic experts believe that although the increasing prices of oil and edible commodities at international market affected Pakistan negatively, however, it was not directly hit by the financial recession as the other countries experienced. However, the investment minister stressed the need for taking comprehensive strategic measures to exploit this opportunity for the betterment of the country's sustainable economy.

He said that government realised this favourable situation and was engaged in preparing strategies and policies to attract more and more investment. "The government has a vision to promote investment and that was why it has upgraded the Board of Investment into a full-fledged Ministry of Investment for facilitating and safeguarding investors' interests," he remarked.

He said that government would bring legislation through Parliament soon for the protection of investments for next 10 years and would ensure continuation of investment policies to build investors' confidence. In addition, a special task force, comprising officials from ministries of interior, defence, investment and finance, would be formed to protect investment and providing security to potential investors in the country. app


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## Neo

*Asking government for construction authority: Production from Marble City to start in 2010​*
KARACHI: The federal government has already sanctioned funds for the development of Marble City, but due to red tapism, the project has been in the doldrums.

All Pakistan Marble Mining Processing Industry and Exporters Association (APMMPIEA) said Friday the PC one of these projects was approved last year by the former government in June 2007. Former chairman APMMPIEA, Sanaullah Khan said that around $260 billion construction projects are about to start in new cities in Saudi Arabia and they are interested in Pakistans fine marble.

He said, If the government gives us full-flash authority for the construction of the Marble City then we will make investments on our own behalf and within a short period of time till 2010 production will initiate.

He said the government has approved Karachi Marble City proposal submitted from APMMPIEA and around 350 acres of land on Northern Bypass has already been allocated for this project.

He said this during a meeting with Sindh Minister for Commerce and Industry, Rauf Siddiqui. The minister assured him of an early resolution of the issue and start of Marble City project on war footing basis.

He said during July to October 2008, the marble sectors export stood at around $13.30 million as compared to $7.5 million during the same period last year.

He said the export target for 2008-09 was fixed at $35 million and under such situation the need of Marble City was imminent.

He said after setting up of Marble City, the marble exports would enhance to $2.5 billion in the next 10 years.

Under vision 2016, in Marble City the number of industrial units would be increased up to 5,000.

Pakistan has great chance of marble export as Saudi Arabia is also one of the top 10 globally competitive investment destinations and has initiated the development of complete and new cities in the Kingdom.

He said Saudi Arabia is to build worlds tallest building at around 1,000 metres, new town in Jeddah, Emaar developing a $7 billion Saudi project and $120 million for Saudi port improvement. More than 285 civil construction projects worth $260 billion are currently underway or in design in Saudi Arabia, according to the latest analysis.

The database of active civil projects under construction or in design illustrates the extent of the continuing boom in Saudi Arabias property development industry with the top 10 alone valued at over $200 billion.

King Abdullah Economic City with $93 billion is under construction by Emaar Economic City Company.

Prince Abdulaziz Bin Mousaed Economic City with $53 billion is under construction. The project includes a logistics centre, airport, an agricultural and entertainment zones, a mining city, a petrochemical zone, a business centre, an educational zone and a residential area. The project is expected to be completed by 2025.

Jizan Economic City worth $30 billion, Jeddah Project Mile High Tower with $10 billion and the Kingdom Holding Company is designing a 1,600 metres skyscraper to form part of the Jeddah project, north of the city.

Shamieh project includes Makkah project worth $9.3 billion and includes residential apartments, commercial centres, hotels, schools, mosques, hospitals and related facilities, car parks and transport corridors to carry pilgrims. razi syed


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## Neo

*No investment in tribal areas till clean-up of miscreants: Boucher tells Iftikhar Malik​* 
LAHORE (December 20 2008): Setting up of Reconstruction Opportunity Zones (ROZs) is not possible before a total cleanup of miscreants in tribal areas, the Assistant Secretary of State on South and Central Asian Affairs, Richard Boucher told to the former President, Federation of Pakistan Chambers of Commerce & Industry (FPCCI), Iftikhar Malik.

Malik expressed his deep concerns about the US policy on Pakistan western borders while disclosing his dialogue with the US official in a recently held meeting at the Lahore Chamber of Commerce and Industry (LCCI).

The former FPCCI President told the LCCI Executive Committee members in presence of the Federal Advisor on Textile, Dr Mirza Ikhtiar Baig that in his recent past meeting with Boucher, the issue of ROZs was discussed in detail. Malik said Boucher asked him whether he understands the meaning of 'reconstruction' and then added that it means a proper cleanup before investment.

Further, Malik said that Boucher also pointed out that the US wouldn't think of investing in tribal areas to invite bomb blasts against its investment. 'We need proper cleanup before investing in tribal areas,' Boucher the former FPCCI President quoted Boucher.

Malik drew the attention of the Federal Textile Advisor towards the US approach while expressing his deep concerns. But the Federal Textile Advisor made no comments. It may be noted that the President, Asif Ali Zardari in his December 17 meeting with parliamentarians from Fata had stated that use of force was the only option against 'power-hungry militants' trying to impose their political agenda on the masses by waging violence.

Islamabad press quoted Zardari saying that 'There is no alternative but to fight the militancy in the country, as they want to seize political power through the use of force.' During the meeting, which is a part of the President's series of dialogue with politicians on the situation in the tribal areas, Zardari said his government would not allow anyone to hold the nation hostage.'

The President told the legislators that the government had decided to lift a hiring ban to fill all vacant positions in Fata development projects. It is worth mentioning that the Frontier Corps (FC) Inspector General, Major General Tariq Khan told Zardari in a meeting on December 18 that large areas of Bajaur and Mohmand agencies have been cleared of miscreants and the government's control would be established there by the end of December.

American Senator, Christopher Bond had also discussed a number of recommendations including ROZs in the northern areas during his December 15 meeting with the NWFP Governor, Owais Ghani for social development in the troubled areas of Pakistan.

The US President, George W Bush, floated ROZs idea during his March 2006 visit to Pakistan, when he proposed setting up of ROZs at border areas between Pakistan and Afghanistan to minimise terrorist activities in tribal areas. ROZs legislation is presently with the US Congress to create industrial zones in order to produce and export textiles and other items to the US duty-free, helping to integrate the Afghan and Pakistani economies.


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## Neo

*July-October marble export up by 79.7 percent​* 
KARACHI (December 20 2008): The commencement of mega construction projects in Middle East countries has drastically escalated Pakistan's marble export by 79.7 percent during first four months of current fiscal year 2008-09.

According to statistics made available to Business Recorder on Friday, the marble sector has exported marbles worth $13.264 million mostly to Middle East during July to October of current fiscal year 2009 as compared to $7.387 million marbles export made in corresponding period of last fiscal year.

Sanaullah Khan, former chairman, All Pakistan Marble Mining Processing Industry and Exporters Association (APMMPIEA) told Business Recorder that the marble sector has surpassed corresponding period export of last fiscal year by $5.96 million, which is a positive stroke for economic growth of the country. This will also pave the way to achieve annual marble export target of $35 million, fixed for current fiscal year, he added.

To a question, he said the sector had increased marble export without any governmental favour. "The government has completely ignored the sector in its policies, however, the sector has privately taken some positive measures for its survival," he said.

Lack of technical expertise in mining processing, outdated equipment and poor law and order situation are affecting the marble export to European countries and America, which has considerably declined during the last few years, Khan observed.

He further said that the marble export to European countries has become more costly as compared to Middle East countries because of high under invoicing. However, the freight charges of marble export to Middle East countries is more reasonable than any other marble exporting countries, he said adding that ME countries are importing marbles in bulk without maintaining quality, which helps all marble processors to export their products.

He feared that if mining process stopped for a long time due to heavy rainfall in Balochistan, it would be very difficult for the sector to meet current fiscal year's marble export target. He urged the government to take positive measures to facilitate marble sector. He demanded of the government to provide gas for the sector. Khan expected that marble export to Middle East countries would further increase because of the ongoing construction projects there.


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## Neo

*Beijing-based bank declines to finance power projects​* 
ISLAMABAD (December 20 2008): Beijing-based BNP Paribas office, an internationally reputed French bank, has refused to finance those power sector projects which are not part of the list that was presented by Pakistan government to the Chinese government, official sources told Business Recorder.

The two much-talked about projects--Nandipur and Chichokimallian--have already been awarded to the Chinese company, Dongfeng, but the company cannot move forward without the formal backing of the Chinese government. "At present, approval of those projects is being considered, which are included in the list of projects handed over by Islamabad to Beijing," sources added.

Last month, Wapda had sent a delegation to Beijing, led by Abdul Qadeer, Member, Finance, to discuss financing for Guddu thermal power project and on progress of Nandipur and Chichokimallian projects, which have already been awarded to the Chinese firm. Deliberations were held between Didier Lietaer, Global Head of Organisation (Export Finance), Ms Li Hong, Vice President, Export Finance, Zhan Lei, Proposal Manager of Harbin Power Engineering of China and the Pakistani delegation, including Pakistan embassy officials.

Sources said that Dr Naeem, an official in Pakistan embassy in China, however, stunned the concerned officials of Water and Power Development Authority (Wapda) in a telephonic conversation that Guddu, Nandipur and Chichokimallian projects were not included in the list given to the Chinese government. They said that the Pakistan delegation briefed the Bank's team regarding Guddu thermal power project. BNP Paribas indicated the possibility of US Exim Bank providing the remaining financing for the Guddu project.

In another meeting with HSBC, China, Ms Iris Ren, Manager Project and Export Finance, Pepco inquired regarding progress of approval of Nandipur and Chichokimallian projects, and prospects of partnership in the consortium of Guddu project.

Regarding Nandipur, HSBC said that the project had been approved by Sinosure, but this approval was not enough as there were certain other approvals that were left, including the approvals of Chinese Ministries of Commerce and Finance. This process may take three to six months further. Sinosure, China's first wholly state-owned policy insurer, can insure both China's overseas investments and overseas investments in China, guaranteeing either shares or loans.

With regard to Chichkimalian project, HSBC told the Pakistan delegation that the application was pending at Sinosure Chengdu office and would be processed by Sinosure Beijing office after receiving approval from Chengdu office. After final approval of Sinosure, the project would take up to six months for clearance from other ministries.

According to sources, the bank had intimated to the delegation that the process was slow nowadays. Moreover, Finance Ministry may ask the possible impact of global financial crisis on the project. "Since Pakistan and China are already enjoying good relations, it will be better and will expedite if matters are taken up at government level," sources quoted HSBC officials as advising the Pakistan delegation.

In deliberations, Pakistan team tasked Harbin power to pursue the Chinese government regarding Guddu power project, whereas Dongfeng was asked to follow up with the government for early process of Nandipur and Chichokimallian projects. Moreover, Pepco will seek help of Pakistan embassy in Beijing, sources added.


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## Neo

*Pakistan seeks US$9b aid from IMF​*
ISLAMABAD: Pakistan has asked the International Monetary Fund (IMF) for a US$9 billion (US$1 = R3.59) bailout along with help from other lenders to avert a balance of payments crisis, a finance ministry official said on Friday.

Credit ratings agency Standard & Poor's cited Pakistan's tardiness in securing foreign assistance for a decision yesterday to lower its rating on the nation's sovereign debt deeper into junk bond territory.

"We are asking US$9 billion from the IMF, they are talking about US$7.4 billion. IMF can give us up to US$7.6 billion," a finance ministry official told Reuters on condition of anonymity.

An official said yesterday that a letter of intent would probably be sent to the IMF before Monday, when potential donors are due to gather in Abu Dhabi for a "Friends of Pakistan" conference.

Pakistan's foreign currency reserves are barely enough to cover nine weeks of imports. - Reuters


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## Neo

*2008 a disappointing year for agriculture ​* 
Sunday, December 21, 2008

KARACHI: Agriculture, the largest provider of livelihood to the poor, faced unbearable losses due to wrong planning and high input costs in the outgoing calendar year.

The year 2008 disappointed the growers despite announcement of an agriculture package by the government in the budget for the current fiscal year. Growers say they did not get benefits of the relief package.

Pakistans economy in general failed to achieve its growth target, but agriculture, the major contributor, particularly failed. In financial year 2008 the agriculture sector grew by only 1.5 per cent against a target of 4.8 per cent. Its total contribution to the GDP remained at 20.9 per cent. Out of this, 10.9 per cent came from livestock.

Every two persons out of five work in the agriculture sector, whereas it provides livelihood to every two out of the three. It contributes significantly to the countrys exports. 

It also provides raw material to major industries such as textile, sugar, dairy, leather and other agro-based industries as well as market for industrial products.

The growth of major crops was negative three points against 8.3 percent increase last year. Water shortage at the peak season, increase in the fertilizer rates and use of substandard pesticides affected the crops badly. Minor crops showed an increase, but that does not count towards the major growth rate. The contribution of commodity production sector to overall GDP growth in FY08 was lowest in the last six years, said the annual report of the State Bank of Pakistan.

Though sugarcane production was above the target, it did not pay much to the growers, as majority of them are still waiting for the payments from the sugar mills.

A bumper crop of paddy was produced this year, but the government failed to ensure the support price. Rice exporters oppose the government agencies entrance in rice trade.

The report said delays in harvesting of cotton and sugarcane (mainly due to pricing issues), and lack of clear incentive signals (as government could not announce its pricing policy before sowing time) also resulted in area deficit for wheat crop. 

A significant 25.3 percent rise in agri-credit during FY08 helped farmers to partly compensate the impact of high fertilizer prices. But, growers complained about the corruption in disbursement of agri-credit through the Zarai Tarqiati Bank that charges the lowest mark up. 

The percentage charged by its staff makes the mark up equivalent to that of the scheduled banks. The State Bank suggested that Pakistan should focus on modernising agriculture sector with greater emphasis on crop diversification and its value chains. The need is to improve price transmission mechanism to ensure that the benefits reach the farmers, said the apex bank.

The government has announced Rs32 billion subsidies for the farming sector against Rs25 billions last fiscal year. This years budget increased subsidy on DAP by 113 percent or by Rs530 to Rs1,000 per bag. Again, growers complain they were not provided that subsidy. DAP rates in the international market are equivalent to Rs2,600 and after deduction of Rs1,000 subsidy it should come down to Rs1,600 per bag, but the DAP bag was available for not less then Rs3,000. This would result in decline in the yield despite of governments increase of support price of wheat to Rs950 per 40-kg.

This years budget also announced exemption of 15 percent GST on urea and other fertilizer. That benefit is not passed to the growers instead, said Abdul Majeed Nizamani, President Sindh Abadgar Board.

The State Bank said if the agricultural package announced in the federal budget was fully implemented it would, help increase production, export, boost economy and reduce poverty in rural economy. The fisheries sector recorded improvement though export to the European Union (EU) member countries remained suspended.

Total fish catch in FY reached 640,000 tonnes against 578,000 tonnes last year. Value of the catch was recorded at Rs18.43 million against Rs16.60 million. Value of the inland fish paid around five times higher than the marine catch that shows low prices in the other market than the EU.

Increased use of fertiliser in Pakistan has increased the yields. The country increased its fertiliser use from 20 kg per hectare in early 1970s to 162.5 kg/ha in FY08. Still it remains low compared to 250kg /ha in Northern Europe and 170 kg in India.

Pakistan is the seventh largest wheat-producer but remains at the 13th number in yields. India is at number eight and China at seven. Pakistans wheat yield per hectare is 2.37 metric tonnes; India grew 2.62, where the UK has the highest output of wheat with 7.78 metric tonnes per hectare. 

Similarly, Pakistan is the fourth largest cotton producer in the world but holds eighth position in its yield, 12th largest rice producer but remains at no.18 in yield with 2.96 metric tonnes per hectare. India is one number forward to us. Egypt with the top yield of rice remains at the top with 9.52 metric tonnes per hectare. 

Pakistan can learn lessons from other countries to increase its yield, as water shortages would not allow more land cultivation. 

Increase of the value-addition in agricultural crops, on the basis of cotton, have potential to double countrys exports in next five years, said Syed Mohibullah Shah, Chief Executive Trade Development Authority of Pakistan.


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## Neo

*2,851MW power to be added by next year ​* 
Sunday, December 21, 2008

ISLAMABAD: Minister for Water and Power Raja Pervez Ashraf on Saturday said a total of 2,851 MW electricity will be added to the system by next year with the help of private sector.

Chairing the 79th meeting of the Board of Private Power and Infrastructure Board (PPIB) here, the minister said by subsequent additions into the system each year will accumulate to around 9,500 MW electricity in the next five years.

He said the government is committed to achieve its targets for inducting more power capacity into the national grid to get rid of the menace of load shedding by next year. He congratulated that the 165 MW Attock Gen Power Project has already been synchronized which will shortly be inaugurated by the President. The power plant is due to start supplying power to the system very soon.

The Managing Director PPIB briefed the Board that the rental power projects being processed by PPIB are showing good progress and their contracts have been concluded, while PPIB will solicit additional rental power projects on fast track basis through press, in the coming week, he added.

He said while the projects are being processed on a fast track basis, at the same time an exercise is being carried out to establish realistic power demand supply scenario for all future projects. For future projects, an optimum fuel mix is being considered, and imported coal projects may also be further encouraged in the future, due to the declining cost of coal in the international markets, in addition to the efforts of developing countrys domestic coal and hydel resources.

Ashraf lauded the efforts of the PPIB team for attracting the investor community for establishing power plants in the country, and processing project proposals. It was decided that in order to improve the performance of PPIB, it should be given a statutory status and after due inputs of concerned ministries, a summary will be moved for an act of parliament to provide such a status to PPIB.


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## Neo

*L/C for only 150MW rental plant opened ​* 
*Power outages may increase​*
Sunday, December 21, 2008

LAHORE: Electricity loadshedding is likely to increase in 2009 as out of the proposed addition of 1,400-megawatt rental plants to the national network, letter of credit for only 150MW plant has been opened.

The News has learnt that the governments plan to eliminate loadshedding by the end of 2009 has suffered a big setback as the Pakistan Electric Power Company (PEPCO) has been unable to open L/Cs for a majority of rental power plants which were to be imported and installed by June next year. The import of even the 150MW rental plant for which the L/C has been opened is in jeopardy as sellers have sought guarantee of a foreign bank before supplying the plant.

There seems to be no possibility of adding to the capacity of independent power producers before the first quarter of 2010. PEPCO is constructing two thermal power plants of 500MW each and electricity from these would be available in the first quarter of 2010 if the projects at Nandipur and Chichuki Malian are commissioned on schedule. All other IPPs would be operational after these two projects.

PEPCO might also be able to generate 160MW of electricity from the Mangla raising project which has almost been completed. However, much would depend on availability of water in summer. Mangla could not be filled to capacity this year due to water shortage while its storage capacity has been enhanced by 2.9 million acre feet.

This means that electricity distribution would have to be managed through the currently installed capacities for at least another 15 months.

It has been learnt that PEPCOs financial problems are the main reason for its failure to open L/Cs for rental power plants. Its miseries have been compounded by the failure of the KESC to pay its outstanding amount which has accumulated to over Rs75 billion. This figure is more than double what the KESC owed PEPCO a year ago.

Presently, PEPCO has installed thermal power generation capacity of 4,464MW, though actual production varies from 2,300 to 3,800MW. Gross electricity generation capacity of independent power producers is 6,296MW, but actual power produced is 5,674MW.

Thermal power available to PEPCO would remain stagnant at 9,274-9,474MW if plants perform with maximum efficiency. Thermal generation capacity of units managed by Water and Power Development Authority (WAPDA) deteriorated in the past as they were being privatised and their maintenance was ignored. Since privatisation did not take place, WAPDA would now try to reclaim lost capacity through further investment, which is not available at present.

Maximum hydropower generation capacity is around 6,400MW while Chashma power station provides 350MW nuclear electricity. Hydropower production is inconsistent and is subject to release of water from dams according to the indents issued by irrigation authorities. Presently, PEPCO is producing less than 1,500MW of hydro-electricity, which dips to near zero when canals are closed every year in winter for one month.

During summer this year, PEPCO resorted to 8-12 hours of loadshedding due to shortage of electricity. Keeping in view normal growth in power consumption and stagnant production, duration of outages is likely to increase next summer. It is pertinent to note that power outages would have increased last year had the industrial sector been fully operative.


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## Neo

*Govt borrows Rs205bn in four months ​* 
Sunday, December 21, 2008

ISLAMABAD: The governments net domestic borrowing during July-October stood at Rs205 billion, increasing total outstanding debt to Rs3.471 trillion.

During the last fiscal year ended June 2008, total domestic debt stood at Rs3.26 trillion and on June 2007, it was at Rs2.6 trillion. In absolute terms, the debt is increasing substantially due to large trade deficit, savings-investment gap, slow revenue growth and rapid increase in public expenditure.

In the current political and economic situation, these factors make it difficult to contain debt.

Provisional data released by the State Bank of Pakistan (SBP) showed that the increase in domestic debt during the four months was mostly due to a rise in floating debt. Unfunded debt also jacked up total debt but permanent debt declined slightly.

During these four months, floating debt went up by Rs179.2 billion, un-funded debt increased by Rs33.8 billion while permanent debt declined by Rs8.1 billion.

Floating domestic debt, mainly comprising short-term debt instruments and market treasury bills, maintained a rising trend and stood at Rs1.637 trillion at the end of June 2008. During the following four months, it went up to Rs1.816 trillion.

Permanent domestic debt comprising medium and long-term market loans, federal government loans, special government loans, federal instruments and prize bonds, stood at Rs600.3 billion, which was at Rs608.4 billion at the end of fiscal year 2007-08.

Unfunded domestic debt, comprising National Savings Schemes (NSS), at the end of last fiscal year stood at Rs1.02 trillion, which was at Rs1.054 billion in October 2008.

Data reveals that net mobilisation under all instruments of NSS was on the rise during the period under review, against the corresponding period of last fiscal year. The reason for this was the attractive interest rate extended by the government on these instruments.

Investment in saving instruments such as Bahbood Saving Certificates, Defence Savings Certificates, Pensioners Benefit Accounts, Special Savings Accounts, Special Savings Certificates, Regular Income Certificates increased, while deposits in savings accounts, Mahana Amadani Accounts and GP Fund accounts declined.


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## Neo

*FDI in telecom sector falls by $0.4bn in FY08, revenues rise by 21pc ​* 
Sunday, December 21, 2008

KARACHI: In many aspects, FY08 proved to be an important year for the local telecom industry.

Implementation of various important regulatory measures took place this year along with many other developments.

In this regard, Pakistan Telecommunication Authority has recently released its annual report for FY08 that encompasses the state of telecommunications industry during the year.

On regulatory front, during the year, PTA promulgated/enforced many notable measures and determinations. As a regulator, measures to complete migration of mobile subscriber numbers to eight digits, issuance of fixed line licences for AJ&K and NA region and implementation of Mobile Number Portability system are worth mentioning.

Furthermore, revision in APC (Access Promotion Contribution)/settlement charges and reduction in MTR (Mobile Termination Rates) were the noteworthy determinations. As far as MTR is concerned, it is important to mention here that this new announcement of interconnection rate determination is based on Long-Run Incremental Costs (LRIC) model. Pakistan is the first country in the region to achieve this regulatory milestone.

Last but not the least, the authority has also mentioned submission of its policy reviews on telecom deregulation and mobile cellular policies, which are scheduled to complete their five-year term of implementation in 2008 and 2009, respectively.

Key highlights of the telecom industry in Pakistan.

Telecom Economy Sector: The teledensity of the country reached to a level of 58.8 percent in FY08 as against 45 percent during the preceding year. However, the rate of increase remained slower than last years due to a host of factors like deceleration in cellular growth, increase in taxes and higher inflation. 

The sectors contribution to the Exchequer remained at Rs112 billion, almost Rs10 billion higher than FY07. On segregated bases, the major contribution was from GST at Rs44 billion, 4pps higher contribution to the overall telecom tax pie than FY07. 

The telecom imports for the fiscal stood at $1.33 billion, slightly lower than FY07, while these imports were almost 4 percent of the overall imports of the country as against 4.4 percent during FY07. 

Investment in the sector also remained lower than last year at $3.1 billion as against $4 billion during FY07 with major contribution from cellular segment at $2.3 billion.

On segregated bases, Telecom FDI stood at $1.4 billion (28 percent of total FDI) as against $1.8 billion (36 percent of total FDI) in FY07. 

In FY08, the sectors contribution to the countrys total FDI stood second highest which remained highest in the preceding three years (FY04-07). 

Of the total telecom FDI, the privatisation proceeds were $133.2 million, almost 50 percent lower than FY07. 

The sector generated revenues worth Rs278 billion in FY08 with 21 percent growth over FY07. Cellular segment remained the major contributor with 65 percent share to the overall revenue as against 56pc in FY07.

Cellular Segment: Cellular density stood at 54.7pct in FY08, 15.7 notches above the mark of FY07 while the growth in subscribers remained at 40pc at 88m subscribers. 

In the regional context, Pakistans cellular density stands at fourth position, higher than India, Sri Lanka, Bangladesh, Nepal and lower than Hong Kong, Singapore, Malaysia. 

Infrastructure expansion gauged by the cellular cell sites expanded by a whopping 57 percent to 21,518 sites.

Total Revenues of the segment grew by 37 percent to Rs182 billion as against Rs133bn in FY07. Average Revenue Per User (ARPU) of the segment stood at $3.1, slightly lower than FY07. 

Total Cellular Traffic stood at 43bn minutes, 31 percent higher than last year. 

Long Distance International (Carrier Services): In FY08, total Point of Presence (PoP) of the segment increased by 40 percent to 178 as against 127 in FY07.

The revenues of the new LDI operators excluding PTCL increased by 42 percent to Rs22 billion versus Rs15 billion in FY07.

The LDI investment stood at $390 million, 35 percent lower than FY07 and with almost 77 percent contribution from Link Direct at $300 million. 

The outgoing LDI traffic was 1.66bn minutes - 31pc higher than FY07. The incoming LDI traffic increased by 163pc to 5.5bn minutes against 2bn minutes handled in FY07, most of it routed from the UK (37pc) and the USA (28pc).

The significant growth in the incoming and outgoing traffic was the result of various regulatory measures by the authority like grey traffic curbing measures (Technical Facility to Monitor IP Bandwidth and International Traffic Monitoring System) and stiff competition that lowered the tariffs notably. 

Local Loop, Value-added and Broadband Services: The decline in fixed line penetration continued with FL density further squeezing by 34bps to 2.7 percent versus 3.04 percent in FY07. Furthermore, Rural and Urban densities turned out to be at 1.2 percent and 1.5 percent, respectively. 

The WLL subscriber growth also seems to be losing the subscriber addition growth with the total standing at 2.2 million in FY08 compared to 1.7 million in FY07. PTCL remained the market leader with 53 percent share and 33 percent y-o-y growth. The penetration of the segment also increased to 1.4 percent as against 1.1 percent in FY08. 

The WLL infrastructure expansion gauged by Cell sites increased by 49 percent to 2,897 sites versus 1,946 sites in FY07. 

Card Payphones also increased by 16 percent to 449,000 while Telecard remained the leader with 40 percent market share followed by PTCL with 30 percent share. WLL based PCOs dominated the segment with 59 percent share in the total PCOs.

At the end of July 2008, broadband subscribers of the country reached to the level of 170,000 that is 150 per cent higher than the subscribers in the same month last year. 

The DSL - digital subscriber line - remained the leading technology in the country with almost 65 percent subscriber being served through this medium which followed by HFC (Hybrid Fiber-Coaxial) at 25 percent.


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## Neo

* Pakistan is good for investment, tourism​*
LAHORE: Pakistan is a very attractive country for investment and tourism where the profit becomes double in a very short time period.

Head of Hyatts Global Technical Services Department (Vice President, Technical Services) Malcom G Turner said this on Saturday while addressing a press conference organised by the Pace Circles, which was also attended by CEO Pace Pakistan Moeed Rehman, Director Aamna Taseer, Group Director Finance Sardar Ali Watto and General Manager Raza Ahmed Khan.

Hyatt Regency has constructed its first hotel in Hong Kong in 1961 and after that a number of hotels were established across the world, he said adding that currently the management is planning to establish 96 branches across the world out of which 20 will be constructed in China.

He further said that in Pakistan, the contraction of hotel is going in Lahores biggest shopping mall named Pace Circle and it will take around two and a half year in completion after which the people of Lahore will get new advantage to refresh and enjoy them.

The hotel will provide apartments, shopping centre, banquet hall, gym, health and fitness centre, social centre, guest rooms and all need of life, he added.

On this occasion, Rehman said that one of the projects is Pace Circle which includes Hyatt Hotel, a shopping mall and apartment complex, while a number of leading architects, interior designers other consultants including Creative Kitchen Planners, KROLL Security Group, ACVIRON Acoustics Consultants, Bo-Steiber Lighting Design and Green Architects are working with the local construction company.

Pace Circle will be a landmark complex comprising of Hyatt 5-star luxury Hotel with 300 rooms and state-of-art Hyatt-serviced and Pace managed apartments. A number of giant companies have invested for it including Hyatts Global Technical Services, Hyatt International Hotels, he added.

He said that currently there are six Pace Shopping Malls in three big cities of the country including Lahore, Gujranwala and Gujrat. After the terrorist attack on Marriott Hotel, Islamabad the investors were not interested in investing in the country but when the management of Pace Circle Pakistan has contacted with Hyatt Global, they assured for their full cooperation and possible help in investing in the country. The total cost of the hotel is $150 million, he added.


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## Neo

*ADB finalising Country Partnership Strategy for Pakistan​*
ISLAMABAD: Asian Development Bank (ADB) is finalising a new five year Country Partnership Strategy (CPS) 200812 for Pakistan, official sources at Economic Affairs Division told Daily Times on Saturday. 

Country Partnership Strategy 200812 would focus on financial assistance for reforms, development of major infrastructure sectors, second generation reforms to strengthen governance and services to promote structural change, development of the urban and rural economy for balanced development, and effective implementation for development effectiveness and results, the official added. 

Banks annual lending to Pakistan during 2008-09 is expected to be around $1.8 billion and it is also hoped that ADBs new Pakistan CPS would offer substantial financial resources to Pakistan to execute its development agenda as well as reforms. 

Existing CSP for Pakistan was prepared by ADB in May 2002 that identified good governance, sustainable pro-poor growth, and inclusive social development as the focal areas. A CSP Update (CSPU) for 2006-2008 was prepared and endorsed by the ADB Board in 2005 for a total lending of $3.72 billion. Under the CSPU (2006-2008), the emphasis was on lending for economic infrastructure, which was in consistent with the high priority attached to it by the Governments Medium Term Development Framework (MTDF).

ADB and Pakistan in June 2008 had agreed that a mechanism would be evolved for careful evaluation and formulation of projects in water, energy and communication and after their approval and the criteria fixed for their implementation would be strictly followed.

Both sides discussed the scope of financial requirements and the assistance being provided by ADB for the various ongoing projects as well as the projects to be implemented in future.

Pakistan is situated at the confluence of Central Asia, Western Asia and South Asia and wants to build up logistics and networks of road and rail to Afghanistan and communications links to the Central Asian region. Pakistan had on many occasions emphasised the need for developing a sound and strong infrastructure and ADB could extend its support for better communication and connectivity as well as for exploitation of its energy and water resources so that the country could initiate projects and programme for the uplift of the country and welfare of the poor. 

Ministry of Communications is focusing on the requirements for the expansion of communication networks including Trans Indus connectivity, National Trade Corridor, Asian Highway Routes, North-South corridor connecting Central Asian States, dualization of Torkham-Jalalabad road, rehabilitation of Karakoram Highway, extension of Gawadar linkages and expansion of existing network.


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## Neo

*IMF conditions 2nd installment of loan for Pakistan​*
LAHORE: The International Monetary Fund (IMF) has conditioned the remaining portion of a loan to bail out Pakistan on a Rs 100 billion reduction in the development budget and the complete withdrawal of the subsidy on electricity by December 31, a private TV channel reported. 

According to the channel, Pakistan has to give the IMF a performance report for the first six months of the current fiscal year by January 15. 

The channel said that the condition  which came at a meeting between an IMF delegation and government officials  has been linked to the second instalment of the loan. 

The channel said that a Rs 115 billion subsidy had been given on electricity over the last five months, but an increase in prices was now likely by December 15. 

Separately, Finance Adviser Shaukat Tareen said that tax rate would not be increased further, but steps would be taken to increase the number of taxpayers. His comments came at a seminar of the Federal Board of Revenue in Lahore. 

He said a change in tax policies was now necessary. He said that the increase in the rate of interest was a result of soaring inflation.


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## Neo

*Investors to be invited for rental power projects ​* 
ISLAMABAD (December 21 2008): The Private Power and Infrastructure Board will invite investors to set up additional rental power projects of 500MW on fast track basis next week. It was informed during the 79th meeting of the Board of PPIB held on Saturday. Water and Power Minister Raja Parvez Ashraf chaired the meeting.

Sources privy to the meeting revealed to Business Recorder that the PPIB is working out setting up of additional 500MW rental power projects to bridge power shortfall. The PPIB will solicit additional rental power projects on fast track basis through press in the coming week.

It was decided during the meeting that the PPIB should be given a statutory status and after due inputs of concerned ministries, a summary should be moved for an Act of parliament to provide such status to the PPIB. The PPIB is currently working under an executive order.

The meeting was informed that a total of 2,851MW would be added to the system by next year, which by subsequent additions into the system each year will accumulate to around 9,500MW in the next five years through the private sector. The minister said the government is committed to achieving its targets for inducting more power into the national grid and get rid of the menace of load shedding by the next year.

The minister congratulated that the 165MW Attock Gen Power Project has already been synchronised which will shortly be inaugurated by the President of Pakistan. The power plant is due to start supplying power to the system very soon. The Managing Director of PPIB briefed the Board that the rental power projects being processed by the PPIB are showing good progress and their contracts have been concluded.

He conveyed to the Board that while the projects are being processed on a fast track basis, at the same time an exercise is being carried out to establish realistic power demand supply scenario for all future projects. Raja Parvez Ashraf lauded the efforts of the PPIB team for attracting the investor community for establishing power plants and processing project proposals.

The meeting was attended by Water and Power Secretary Ismail Qureshi, Planning Commission Secretary Suhail Safdar, Petroleum and Natural Resources Additional Secretary G A Sabri and PPIB Managing Director Fayyaz Elahi, besides other senior government officials and private members of the Board.


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## Neo

*Germany allows 19 percent VAT refund to Pakistani businessmen​* 
ISLAMABAD (December 21 2008): As a result of concerted efforts by Pakistan Embassy in Berlin, the German government has concurred to include Pakistan in the list of countries whose business entities can claim refund for Value Added Tax (VAT) from July 1 2008. Resultantly, Pakistani businessmen have been allowed to claim refund of 19 percent VAT in Germany.

The decision of the German government will help further boost trade relations between the two countries by the increased participation in trade related activities. According to the notification of the German Ministry of Finance, the administrative formalities in order to benefit from VAT exemption had been completed.

Under The German VAT regime, the rate of the levy is 19 percent as compared to lower rate of general sales tax (GST) at the rate of 16 percent. German VAT law would provide refund facility on payment of VAT during procurement of goods and services during exhibitions in Germany. Pakistani entrepreneurs will now be able to claim refund of VAT paid by them at the time of purchase of goods and services during their visit to Germany for business purposes including participation in exhibitions and trade fairs. Claims can now be lodged for VAT paid after July 1, 2008.

The business community of Pakistan and various trade promotion bodies working under the government of Pakistan including the Trade Development Authority of Pakistan and the Engineering Development Board will be able to make enormous saving. Henceforth, the amount that will be refunded will be significant as a large number of Pakistani businessmen visit Germany every year and Pakistan has large participation in various German trade fairs and exhibitions.

Refund of VAT paid by Pakistan business community and various trade bodies for purchase of goods and service, especially during participation in exhibitions/fairs held in Germany, was a long standing demand of all the chambers and other trade associations in Pakistan. Pakistani business community is now not required to pay VAT for purchase of goods and services during their stay in Germany for business purposes.


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## Pk_Thunder

*Purchase of 75 locomotives: award of contract to Chinese firm evokes controversy*​
RECORDER REPORT
ISLAMABAD (December 22 2008): A glaring lack of transparency or fair play perceptibly bordering on infighting, bickering and squabbles among the senior officials of the Railways and the Railways Ministry has led to cause a highly unfortunate situation.

The deal that the ministry has struck with a Chinese firm for the purchase of 75 locomotives has been termed by its competitors-General Electric USA- "unfair" and in violation of procurement rules while the Chinese firm not only contests these charges, it claims that it has been facing unfair delay in the convening of a contract signing ceremony.

Inquiries conducted by Business Recorder show that the Chinese firm did eventually pass the pre-qualification and technical evaluation stages to qualify for financial bid process amid some highly controversial circumstances, or through an overnight change in the composition of the tender committee at a later stage with a view to giving favour to this company as alleged by its competitors.

These inquiries, however, strongly suggest that the Chinese firm, Dongfang Electric Corporation, turned out to be the successful bidder for the Rs 8 billion locomotives purchase mainly on the basis of the price that the Chinese firm quoted for the deal which was not only substantially less than the one quoted by its competitor-General Electric USA-it was even lower than the PC-I estimated cost.

The other main reason, or perhaps the overriding factor, behind the success of the Chinese firm could be the unique importance and significance of the friendship between China and Pakistan, although the company has been carrying a controversial image because of a badly flawed deal that it struck with PR for the supply of over 50 locomotives a few years ago.

Documents available with Business Recorder show that technical proposals were opened on 25-09-2007 and as many as four bidders submitted their proposals. The technical committee consisting of Sher Ayaz Khan Managing Director/Locomotive Works, Behzad Mehmood Chief Mechanical Engineer/Loco and Habib-Ur Rehman Project Director/Loco Rehabilitation, evaluated the proposals two times and recommended the following conclusions for tender committee's consideration:

i) Dallian Rolling Works-China declared unsuitable for 3000HP, suitable or 2000HP with many reservations and 1500HP 5 locos on trial basis.

ii) General Electric-USA fully qualified suitable for all 3 types of locomotives as a package.

Prior to the review of technical evaluation, the remaining two bidders were disqualified. On 29th July 2008, Technical Committee again disqualified Dallian Rolling Works-China for 3000Hp.

Subsequently, however, the ministry issued letter of intent to Dallian Rolling Works-China around 09-06-2008.

The Chinese firm's competitors have alleged that the Tender Committee ignored several tender conditions and opened the financial proposal of Dallian-China which, according to them, is against PPRA guidelines for two envelops tender on package basis.

The competitors have also alleged that Dallian/Chinese diesel engine has not been standardised by PR because the number of monthly failures is on very high side comparing with any other class of locomotives. That is why Pakistan Railways has not yet issued any performance certificate for 69 locomotives (3000HP and 2000HP) procured from China in 2001 because the performance is not up to the mark.

According to them, fuel consumption of Dallian diesel engine is extremely high as compared to General Electric locomotives equipped with Electric Fuel Injection (EFI) that could further reduce the fuel consumption, and that Axle weight of Dallian locomotives for all 3 classes is much higher than required. It will adversely affect the Pakistan Railways track (Technically it's not possible to reduce the axle weight without removal of certain major assemblies and that Pakistan Railways should have declared Dallian proposal as Non Responsive when they failed to extend the offer validity in July 2008.

Later, the Farooq Aziz tender committee was reshuffled overnight and a new committee was formed headed by Asad Saeed as GM M&S, consisting Naim Mailk AGM mechanical, Tariq Yaseen AGM infrastructure.

Although the Railways Secretary Kashif Murtuza has reportedly defended the action on grounds that the reshuffling or transfers were as a matter of routine and in accordance with rules and that the tender committee is the final authority to award the tender and that those sitting on the technical committee are junior to those in the tender committee, the Chinese firm's competitors believe that the tender committee's unanimous decision in favour of Dongfang was in total disregard of Farooq Aziz Committee, PPRA guidelines and tender specifications. The letter of intent (LOI) was issued to Dongfang without prior approval from the PM in the absence of Federal Minister of Railways, according to them.

Not only has the Chinese firm denied these charges quite vehemently, it has also claimed that its contract was never cancelled even for a single time because it fulfilled all the requirements of the international bid.

It says that the contract document for the purchase of 75 Chinese locomotives was prepared in November this year. Each page of this contract had been signed and stamped by representatives of Pakistan Railways and the Chinese company on November 11 while the signing ceremony was to take place on November15, 2008, in the presence of Prime Minister.

The Chinese firm has alleged that the US Embassy officials had exerted pressure on the Railways for the cancellation of the contract with the Chinese in favour of the US bidder.

It further claimed that the Chinese firm had also offered transfer of technology for the PR Locomotive Factory at Risalpur. About 54 locomotives were manufactured at Risalpur in June this year, while an ordinate delay in execution of the project has also halted production work at the factory. The DongFang Electric Corporation had already trained officials of railways working at Risalpur.

The Chinese firm argues that the price of Chinese locomotive is within the price range given in the PC-1 of the project, whereas the price quoted by the US bidder is much higher than the estimated cost.

Comparative figures are given below for each 3000 HP Completely Built Up (CBU) locomotive:

PC-1 estimated cost: US $1.79 million, Chinese locomotive: US $1.41 million, US locomotive: US $2.80 million.

According to it, the price offered by the US firm exceeds PC-1 estimate by 56 percent, while price offered by the Chinese firm is 21 percent lower than PC-1 estimate. As per the Planning Commission rules, the price of the project cannot exceed the PC-1 estimated price by more than 15 percent. In terms of delivery of locomotives, the Chinese bidder has offered delivery time of 11 months while the US firm had given 22 months period for the delivery of locomotives after the finalisation of the contract.

The chief executive of the Chinese company, DongFang Electric Corporation, told Business Recorder that "our contract was not cancelled even a single time because we fulfilled all the requirements of the international bid, and there was a proper procedure for the approval of the bid, he added.

He further claimed that first the Financial Evaluation Committee of the Pakistan Railways approved the prerequisite of the tender, then the Technical Evaluation Committee approved the bid after removal of objections.

It may be mentioned here that during his recent visit to China, Prime Minister Yousuf Raza Gilani had said he wanted to be present at the formal signing ceremony. However, the Federal Minister of Railways, Haji Ghulam Ahmad Bilour, who took charge of his office on November 14, reportedly raised some objections over the contract and delayed the signing ceremony. He did not forward the file to the Prime Minister for the signing ceremony. Safdar Rasheed contributed to this report from Lahore.


----------



## Pk_Thunder

*Move to give statutory status to PPIB*​
RECORDER REPORT
ISLAMABAD (December 22 2008): The government has decided to give statutory status to the Private Power and Infrastructure Board (PPIB) through an Act of Parliament, in a bid to improve its performance. The decision was taken at the 79th meeting of PPIB, with Federal Minister for Water and Power Pervez Ashraf in the chair here on Sunday.

According to a handout issued here, the meeting decided that to improve the performance of PPIB, it should be given a statutory status and, after due inputs of concerned ministries, a summary would be moved for an act of parliament to provide such status to PPIB.

Besides, the Minister said, 2,851 mw electricity would be added into the system by the next year with the help of the private sector. He said that by subsequent additions into the system each year it would accumulate around 9,500 mw electricity in the next five years.

He said the government was committed to achieve its targets for inducting more power capacity into the national grid to get rid of load shedding by next year. He appreciated that the 165 MW Attock Gen Power Project has already synchronised, which would shortly be inaugurated by the President. The power plant is due to start supplying power to the system very soon.

PPIB Managing Director told the Board that the rental power projects, being processed by PPIB, were showing good progress, and their contracts had been concluded, while PPIB will solicit additional rental power projects on fast track basis through press in the coming week.

He said that while the projects were being processed on fast track basis, at the same time an exercise was being carried out to establish realistic power demand-supply scenario for all future projects.

"For future projects, an optimum fuel mix is being considered, and imported coal projects may also be further encouraged in future due to the declining cost of coal in the international markets, in addition to the efforts of developing country's domestic coal and hydel resources," he said. The minister lauded the efforts of PPIB team in attracting the investor community for establishing power plants in the country and processing the projects proposals.

It was decided that to improve the performance of PPIB, it should be given statutory status and, after due inputs of concerned ministries, a summary would be moved for an act of parliament to provide such status to PPIB.

The meeting was attended by Secretary Water and Power Ismail Qureshi, Secretary Planning Commission, Additional Secretary Petroleum and Natural Resources G.A Sabri, and Managing Director PPIB Fayyaz Elahi, besides other senior government officials, and private members of the Board.


----------



## Pk_Thunder

*India labelled as unreliable trade partner*​
RECORDER REPORT
MULTAN (December 22 2008): 'Whenever tension mounts between India and Pakistan, the neighbour loses its credibility as a reliable supplier of industrial raw material putting an effective break in the bilateral trade between the two countries,' former President, Multan Chamber of Commerce and Industry (MCCI), Khawaja Muhammad Jalaluddin Roomi said.

Pakistan and India have a history of erratic trade relationship. India, in fact, was Pakistan's main raw material supplier till 1965. But, the Indians suspended all supplies immediately after the start of 1965 war between the two countries.

'Sudden trade blockade by India severely impacts Pakistan's industries dependent on Indian raw material and Pakistan's industries take a few months to find alternative and reliable sources of raw material from other parts of the world.,' he said in a statement issued on Saturday.

The unilateral action by India in 1965 almost eliminated any meaningful trade between the two countries for almost three decades, though successive governments from both sides tried to revive trade links.

Trade ties started improving gradually in the mid-90s when Pakistan and India supplied sugar to each other in times of shortage. Pakistan also imported cement from India in the 90s to overcome the domestic shortage.

However, the progress in trade faced another setback during the Kargil episode, when Indian suppliers stopped exporting certain raw materials citing war-like situation between the two sides.

Reliance Industries of India, for instance, stopped supply of plastic granules despite a written long-term commitment, though the actual reason was a sudden increase in prices of all petroleum-based products in the global market.

Other supplies, where the Indians had an advantage, continued unabated creating more doubts in the minds of Pakistani buyers about the reliability of Indian suppliers.

Roomi pointed out that India, due to its developed industrial base and proximity to Pakistan, was its most suitable and competitive supplier of industrial raw materials, which its western neighbour imported from Europe, America and the Far East.

The situation suits both countries but is more advantageous for India, which could increase its exports 10-fold, if its government and entrepreneurs succeed in creating confidence among Pakistani importers about their ability to continue supplies irrespective of political tensions.

Further, he pointed out that the trade link between the two countries picked up sharply after 2003-04 as Pakistan gradually enlarged the list of items that could be imported from India. However, Roomi added, the actual potential of trade could not be exploited because, the two countries were in the process of formulating an agreement to allow free conduct of trade through land route, which would have reduced the transportation cost drastically.

Pakistan is currently not benefiting much from these imports, because most of the raw material produced in central India is imported through sea route and has to be transported from Karachi to the upcountry at an unnecessary additional cost, instead of direct delivery through road link between the two sides.

After 1999, local entrepreneurs have avoided depending completely on Indian raw materials. Former MCCI president said, 'Industries now do not depend solely on Indian raw materials,' adding that they kept standby non-Indian suppliers as well to be able to revert back in case of any disruption of supplies from India. However, when trade between India and Pakistan started picking up, local industrialists gradually increased imports of raw material from India and if the situation would have remained smooth, they would have completely stopped import of raw materials from other countries in the next three years, he said.

Furthermore, 'Unpredictability of relations between the two countries has now forced them to keep other options open,' Roomi said.

Out of total bilateral trade of $2,225.4 million between India and Pakistan in 2007-08, Pakistan's exports amounted to $287.80 million with a decline of 10 percent over previous year. Indian exports totalled $1,999.17 million, a surge of over 44 percent over previous year. Indian exports are expected to jump by $1,500-2,000 million in the current fiscal year after further openings provided to them in the budget, however the tension following the recent Mumbai attack will largely impact the expected jump in Indian exports, he stated.


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## Pk_Thunder

*EPZA to set up seven new zones*​
RECORDER REPORT
SIALKOT (December 22 2008): The Export Processing Zone Authority (EPZA) will set up seven more export processing zones across the country and in Azad Kashmir in near future to accelerate business activities, the General Manager, EPZA, Muhammad Ashraf Wahla said.

Wahla informally told Business Recorder late Saturday evening at Sialkot Chamber of Commerce and Industry (SCCI) that the proposed EPZs would be established at potential sites like Larkana, Multan, Sukkur, Faisalabad, Gowadar, Gilgit and Mirpur Azad Kashmir to boost export-oriented industries of these areas.

Special attention has been accorded to speed up the construction of Gowadar Export Processing Zone (GEPZ) aimed at providing infrastructure facilities enabling domestic and foreign investors to set up their industrial units in the zone he said.

At present he said there are EPZs in Sialkot, Gujranwala, Risalpur and Karachi while some foreign investors had already established EPZs like Sandik Export Processing Zone, Recodek Export Processing Zone (Balochistan) Al-Twarqi Steel export processing zone and Khalifah oil refinery (Sindh) providing employment opportunities to the large number of people.

Wahla further revealed that private sector was willing to establish four to five export processing zones, which indicates the utility and benefits of EPZs in the country.

The EPZA has already announced the highly attractive incentives and concessions for the business community for setting up their industrial units in the EPZs of the country to further accelerate the pace of export activities aimed at enhancing the export volume of the country.


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## Pk_Thunder

*WTO regime: importance of pre-shipment inspection certificate urged*​
RECORDER REPORT
MULTAN (December 22 2008): Speakers at a seminar highlighted WTO requirements regarding pre-shipment inspection certificate and highlighted its significance. The seminar chaired by President Multan MCCI Anis Ahmed Sheikh, was addressed by Dr Adnan Ahmed,(animal Certification) Malik Nazar Hussain (Plant certification) Mateen Alam Deputy Collector Customs, Ikram-ullah and Alamgir Deputy Director TDAP.

They said Pakistan can earn more foreign exchange by taking measures in the light of WTO regime and exporters can obtain pre-shipment certificate from TDAP through MCCI.

They said that main task and focus of TDAP was to develop trade and exports while the mission of MCCI is also to facilitate the optimum growth of business activities ultimately aiming to enhance the exports of the country by exploring more business opportunities in world markets.

They underlined the need of close collaboration between TDAP and MCCI to meet this end. Anis Ahmed Sheikh urged TDAP to give proper representation to business community in meetings, workshops, seminars, exhibitions being arranged by it so that businessmen could be able to get first hand knowledge and information about exports potential in world markets for enhancing their business prospects.

He said that TDAP should arrange direct interaction of business community with their foreign counterparts during their visits to Pakistan using MCCI platform so that they could exchange views and learn from each other about opportunities to enhance reciprocal business.

He suggested that TDAP should hold exhibitions and other trade developing events in collaboration with MCCI. He said MCCI plans to arrange tours of business delegations to different countries during 2009 and urged TDAP to sponsor these visits so that our businessmen could interact with and convince their counterparts in these countries about business opportunities in Pakistan and invite them to enhance their investment in our country.


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## Pk_Thunder

*FPCCI demands import and export trades from Gwadar port*​
QUETTA (December 22 2008): The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has welcomed making Gwadar port functional by berthing of the first vessel in Gwadar port and demanded of the government to allow traders for import and export in order to make the port a success.

The demand was made by Vice Chairman FPCCI, Nasibullah Tareen while talking to APP here on Sunday. He lauded the efforts of Balochistan Chief Minister Nawab Muhammad Aslam Raisani for taking initiatives for making the port functional and demanded of him to allow the traders for import and export in order to make his efforts fruitful. He deplored that Trading Corporation of Pakistan (TCP) had contracted the unloading of urea imported from Qatar with a foreign company, which deprived the local labourers, and added that the transportation of the urea was to be contracted with NLC which would deprive local transporters.

He said that making Gwadar port functional in real sense would not only revolutionise the economy of Balochistan, but it would also revolutionise the economy of the country. He said that functioning of the port would generate employment opportunities to jobless youths of Balochistan and increase the economic activities in the province. He expressed the hope that the government would take steps for bolstering the Gwadar port in consultation with traders' community of the country.


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## Nafees

*Source: The Associated Press: Glaxo to buy Bristol-Myers Squibb Pakistan*


*Glaxo to buy Bristol-Myers Squibb Pakistan​*

LONDON (AP)  GlaxoSmithKline said Monday it has agreed to buy Bristol-Myers Squibb Pakistan Ltd. and certain associated trademarks for around $36.5 million, bolstering its emerging markets business.

Glaxo will acquire from Bristol-Myers Squibb a portfolio of over 30 well-established pharmaceutical brands, many of which occupy leading market positions in key therapeutic disease areas in Pakistan.

The London-based drug maker said that BMS Pakistan's product portfolio, which includes antibiotics, vitamins and dermatology products is complementary to its existing portfolio and will also provide opportunities in the fast-growing therapeutic areas of cardiovascular and oncology.

Total sales of the BMS Pakistan's product portfolio in 2007 were PKR1.5 billion ($19 million).

"We are continuing to make investments in emerging markets, to grow and diversify GSK's business," said Abbas Hussain, president of emerging markets at Glaxo. "This acquisition reinforces our commitment to Pakistan, broadening our product portfolio and helping us to meet the needs of patients."

Glaxo expects to complete the acquisition by early next year.

The company's shares were barely changed in afternoon trade, up just 0.08 percent at 1,244.5 pence.


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## Pk_Thunder

*Pakistan to pay loans worth $22 billion, National Assembly told*​
ZAHEER ABBASI & ASMA RAZAQ
ISLAMABAD (December 23 2008): The Minister of State for Economic Affairs and Statistics, Hina Rabbani Khar on Monday informed the National Assembly that government has to pay 433 loans worth 22 billion dollars to World Bank (WB), Asian Development Bank (ADB), Islamic Development Bank (IDB) and IFAD.

She also informed the House that the total volume of domestic borrowing of government as on 30-09-2008 is Rs 3373.8 billion. "This amount of money, the government borrowed from SBP, commercial banks and national saving schemes while the interest rate ranges from three percent to 16.8 percent", she added.

Hina said that the interest paid on the said borrowing during 2004-05, 2005-06 and 2006-07 is Rs 176.3 billion, Rs 202.5 billion and Rs 326.9 billion, respectively.

In a written reply, she said that the profit earned by the commercial banks during January-December 2007 and January-June 30, 2008 is Rs 33,159.8 million and added that the total loans worth Rs 2.7 billion have been sanctioned for promotion of livestock.

While responding to a question, she told the Lower House that IMF programme is a short-term stand-by arrangement (SBA) with tenure of 23 months for an amount of 7.6 billion dollars. She said that the programme does not cause any adverse impact on taxpayers in the country.

"In 5-7 years, tax to GDP ratio will be raised to 15 percent through improved collection, strict enforcement and tax compliance, broadening of the base of existing taxes and simplification in assessment procedures", Hina disclosed.

In a written reply, she said that the amount of foreign exchange remitted by the overseas Pakistanis during FY 2007-08 was 6,451 million dollars denoting an increase of 17.4 percent over the same period of last fiscal.

Parliamentary Secretary for Ministry of Commerce, Noor Alam Khan, while responding to a question said that Pakistan exported 9.066 MT of shrimps in 2007-08 for 40.8 billion dollars. The quantity of shrimps landing at the harbours in Pakistan is estimated at 25,000 MT annually.

"As the international trade in shrimp is estimated at 14.5 billion dollars and production at six million MT, Pakistan has the potential of increasing shrimps export provided the supply chain is brought in conformity with internationally acceptable sanitary and safety standards."

He said that no regular import of milk products has been made from China during the last four months. Only dry milk powder of 5,800 kg was imported during the said period from China.

In a written reply, Syed Naveed Qamar, Minister for Privatisation said that the total foreign exchange earned through privatisation of government assets during 2006-07 was 1.5 billion dollars while the total amount of money earned from 2004 to 2006 was 3.4 billion dollars.


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## Pk_Thunder

*TDAP uses market diversification for export growth*​
KARACHI (December 23 2008): "Diversifying markets for Pakistani products is an urgent need to accelerate the export growth of our products especially in view of the financial crunch in the traditional markets of US and Europe", said Syed Mohibullah Shah, Chief Executive Trade Development Authority of Pakistan (TDAP).

TDAP has identified new products and markets and has prepared briefs on increasing market share in diversified markets as part of its New Export Strategy. After its reorganisation TDAP is better equipped to follow up on measures for increasing market share of Pakistani products in new markets.

Starting next week Chief Executive TDAP will be conducting meetings with top exporting companies of Pakistan in all major sectors to discuss the strategy for taking delegations to these markets like Russia, East Asia, Australia, Africa and Canada.

It is encouraging that the export performance of last five months (July - November, 2008), shows an increase of 12.7 percent over the export figures of the same period of preceding year. However, these meetings are meant to keep up the momentum and compensate with higher market share in new markets for any slack in the upcoming months.-PR


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## Pk_Thunder

*Glaxo to buy BMS Pakistan for $36.5 million*​
LONDON (December 23 2008): GlaxoSmithKline, the world's second biggest drugmaker, said on Monday it was buying Bristol-Myers Squibb Pakistan for $36.5 million, adding to recent acquisitions made in emerging markets. In October Glaxo bought Bristol-Myers Squibb Co's Egyptian mature products for $210 million. The deal includes Veslosef, a popular branded antibiotic in Pakistan, along with products in cancer and cardiovascular drugs.


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## Pk_Thunder

*Government urged to send business leaders abroad to undo India's propaganda*​
RECORDER REPORT
LAHORE (December 23 2008): The business leaders should immediately be sent to foreign countries to counter undo propaganda against Pakistan. This was stated by Pakistan Industrial and Traders Associations Front (Piaf) Chairman Irfan Qaiser Sheikh in statement issued on Monday.

He said that India was trying to tarnish the image of Pakistan by issuing baseless statements and the Pakistani business community should be sent to foreign countries so that it could apprise the foreign businessmen of the nefarious Indian designs.

He also made it clear that Pakistan could not be intimidated by hurling threats as its people in general and the business community in particular was standing behind its armed forces and any adventurism by India would be replied with full force.


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## Pk_Thunder

*IMF only viable option: Gilani*​
KARACHI (December 23 2008): Prime Minister Yousuf Raza Gilani said here on Monday that the IMF facility was the only viable option at the moment to acquire economic stability, contain inflation, build forex reserves and arrest budgetary deficit. He was speaking at the award distribution ceremony of 32nd Export Trophy Awards of FPCCI.

Sindh Governor Dr Ishratul Ibab Khan, Chief Minister Qaim Ali Shah, Commerce Minister Amin Fahim, and Minister for Textile Industry Mohammad Farooq Saeed were also present on the occasion. Gilani said that the government had been able to convince the IMF with great efforts to provide an emergency loan to restore investors' confidence in the country.

He said that the government had inherited economic crisis, mounting fiscal and trade deficit and dwindling foreign exchange reserves. He said that the government was developing a long-term strategy to address the economic challenges through focus on education, vocational skills, healthcare, infrastructural development, energy sector and efficiently handling of water shortage.

"We are making concerted efforts to secure economic stability, strengthening institutions, empowering the weaker segments of the society, gender development and decision making process to ensure better living standards of the people", he said.

The Prime Minister said that Pakistan is located at the hub of vital regions--South Asia, Central Asia and West Asia--providing shortest access to the sea for landlocked countries of Central Asia and Central China. He suggested to business community to tap these potential markets to enhance trade, ultimately helping the country to gain economic stability.


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## Pk_Thunder

*Proposal to reduce duty, taxes on LPG import deferred*​
ZAFAR BHUTTA
ISLAMABAD (December 23 2008): Government has deferred approval of the proposal to reduce duties and taxes on the import of Liquefied Petroleum Gas (LPG) due to decline in global LPG prices. Sources in Petroleum Ministry revealed exclusively to the Business Recorder that the government deferred the proposal to cut duties and taxes imposed on the LPG import due to decline in its prices in the international market.

Sources said that earlier the government had planned to slash the duties and taxes on the import of LPG to encourage its import so that black-marketing of the locally produced LPG could be abolished.

The LPG price in the international market has come down to $340 per metric ton from $490 per metric ton earlier and the price of imported LPG is 40,150 per ton that includes landed cost. The locally produced LPG price is Rs 31, 687 per metric ton. The importers here are of the view that there is still a difference between local and imported LPG prices in the country.

Government is currently charging 16 percent general sales tax and Rs 87 per metric ton Federal Excise Duty (FED) on the local as well as imported LPG. Sources said that during the caretaker government Pakistan de-linked the LPG price with Saudi Aramco Upper Cap to provide LPG at affordable rates to domestic consumers. Sources lamented that after de-linking the price, local producers and marketing companies wiped out the importers from the market by setting prices through cartelisation thereby making windfall profits.

Oil and Gas Regulatory Authority (Ogra) has fixed maximum consumer price of LPG at Rs 50 per kilogram and 11.8 kg cylinder at Rs 591 fixing it at Rs 31, 687 per metric ton effective from December 3, 2008. Ogra, through its letter No OGRA-LPG-17 (210)/08-Vol-1, dated December 4, 2008, had asked marketing companies to comply with the orders and any violation could result in cancellation of license and imposition of fine of Rs 0.5 million to LPG marketing companies.

Market sources said that market players were still not following the strictures imposed by Oil and Gas Regulatory Authority (Ogra) and consumers were being charged more than the maximum price fixed by the authority.

The retail price of LPG is ranging from Rs 55-60 per kg in the local market that is still higher than the fixed price of LPG. Ogra has already allowed the setting up of Liquefied Petroleum Gas (LPG) auto filling stations. Oil Marketing Companies (OMCs) are targeting to set up 300 to 400 Liquefied Petroleum Gas (LPG) auto filling stations during the next three years.


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## slugger

*China announces $500 million in aid to Pakistan: Tarin*


> Adviser to the Prime Minister on Financial Affairs, Shaukat Tareen has said that China has announced to provide $500 million in aid to Pakistan. Talking to newsmen outside the Parliament House on Thursday, he said that the government is expecting five to six billion dollars at the lowest interest rate in the next month. He said that IMF could offer loan on four per cent interest rate. Tarin further said, &#8220;We need to undertake some difficult decisions to improve the economic situation of the country.&#8221;


*Source*


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## slugger

*Pakistan: Conditions attached to IMF &#8220;bailout&#8221; will exacerbate slump and poverty*


> The International Monetary Fund (IMF), in its first "bailout" of an Asian country during the current world financial crisis, approved a 23-month, US $7.6 billion loan to Pakistan last month in order to avert a current accounts crisis and Pakistan's default on foreign loans. On November 27, the IMF released to Islamabad a first installment of $3.1 billion.
> 
> Under its emergency financing mechanism, the IMF has approved more than $40 billion in loans in recent weeks to countries such as the Ukraine, Serbia, and Iceland.
> 
> The conditions the IMF is attaching to its *loan to Pakistan will severely impact the country's workers and toilers.* They include: eliminating all subsidies on energy, petroleum products, and fertilizer; slashing government spending, including "non-priority" development spending; and raising taxes.
> 
> In order to pave the way for the IMF loan, Pakistan's central bank raised its bank lending rate in early November by 2 percentage points to 15 percent and the government has let it be known that a further 1.5 percentage point hike will be implemented in January.
> 
> The high-interest rate policy the IMF is imposing on the *State Bank of Pakistan has caused consternation among large sections of Pakistan's business elite, including various trade and industrial lobby groups.* According to an Asia Times Online report, Anjum Nisar, the president of the Karachi Chamber of Commerce and Industry, has said, *"Pakistan's industrial landscape may soon be marked with dead and sick units and there will be massive unemployment because of the devastating impact on businesses of the higher cost of bank loans arising from the interest rate increase."*
> 
> The IMF's November 24 press release announcing its executive board's decision to approve the $7 billion plus loan to Pakistan said that Islamabad has committed to an economic stabilization package that calls for the government's annual budget deficit to "be reduced from 7.4 percent of GDP in 2007/2008 (July-June) to 4.2 percent in 2008/2009 and 3.3 percent in 2009/2010." The IMF added, "This fiscal adjustment will be achieved primarily by phasing out energy subsidies, better prioritizing development spending, and implementing strong tax policy and administration measures."
> 
> The achievement of these targets will require dramatic spending and tax cuts&#8212;all the more so given that *economic growth in Pakistan has already fallen off sharply and is expected to continue to contract in 2009* due to the world recession. The IMF and World Bank are themselves forecasting that *Pakistan's economy will grow by only 3 percent in 2009* as compared with 6 percent in each of 2007 and 2008.
> 
> The IMF is reportedly pressing, as part of a scheme to raise the Pakistan state's income from the present 10 percent of gross domestic product (GDP) to 15 percent by 2013, for the introduction of a tax on agricultural income. *Pakistan's large landowners have tenaciously resisted such proposals in the past.* Should Islamabad ultimately impose a tax on agricultural income, it will only be after a bitter struggle within the Pakistani bourgeoisie over how to fashion it so small producers bear a disproportionate share of the tax burden.
> 
> The *IMF, which is controlled by the US and other western powers, made no demands for cuts to Pakistan's massive military budget.* Juan Carlos Di Tata, IMF senior special advisor for the Middle East and Central Asia, expressed concern about the rise in Pakistan's defence spending, but then added that the question of Pakistan's military expenditure had been excluded from the bank's negotiations with the country's Pakistan People's Party-led coalition government. "The issue of defence spending was not discussed during the programme negotiations," said Di Tata. "Defence spending is basically an item that was determined by the government and included in the budget projections for this fiscal year. There was no discussion of this topic."
> 
> For years the *US has had a close partnership with the Pakistani military, using it as an instrument of its predatory foreign policy, first again the USSR and now in expanding US influence in oil-rich Central Asia.* This has included support for a succession of Pakistani military dictatorships. *At Washington's prodding, the Pakistani military has dramatically stepped up its efforts over the past five months to crush support within Pakistan's Federally Administered Tribal Area (FATA) for the anti-US insurgency in Afghanistan,* mounting an offensive involving tens of thousands of troops, tanks, and fighter planes.
> 
> In last summer's budget the government officially listed defence expenditure at 290 billion rupees ($4.4 billion). But this figure is a gross underestimation, as much military spending is included in other departments' budgets and the military budget does not include the *$1.5 billion per year Washington has been funneling to the Pakistani military* in payments for services rendered in the so-called war on terror.
> 
> The Pakistan Daily News reports Di Tata as observing "*Pakistan's defence spending* ... clubbed with administrative expenditure, has reached the alarming figure of *10 percent of GDP*, compared with 4 percent three years ago."
> 
> *The Pakistani economy was already mired in crisis before the eruption in September of what is conceded to be the worst financial crisis since the Great Depression.* In the first eight months of the year, Pakistan was roiled by rising oil and food prices, *a sharp decline in the value of the rupee, a chronic shortage of electricity and recurring brownouts and blackouts, and a slowdown in Pakistan's real-estate and services-led economic expansion.*
> 
> The financial crisis and continuing political instability dealt the economy a further bodyblow. Not only foreign investors, but also *large swathes of the Pakistani elite, pulled their money, or at least much of it, out of the country.* By November the country's foreign reserves had fallen by 75 percent to just $3.45 billion.
> 
> 
> *Pakistanis have bitter memories of the IMF austerity programs implemented by the PPP and Pakistan Muslim League (Nawaz) governments in the late 1980s and 1990s.* Fearing a hostile public reaction and not wanting to countenance a further loss of Pakistani "sovereignty" under conditions where the US is routinely carrying out military operations within Pakistan, the PPP-led government long hesitated in contracting a loan with the IMF.
> 
> *But the deteriorating economic situation left it no choice. Under conditions of a global credit crunch, its closest allies&#8212;the US, China, Saudi Arabia and the EU&#8212;rebuffed Islamabad's request for emergency financial aid*, insisting that any aid would be conditional on Pakistan first obtaining IMF support.
> 
> According to the IMF itself, *even after last month's IMF loan, Pakistan will need another $20 billion "to get control over its imbalances."* It is far from clear from whence these funds will come. The so-called *"Friends of Pakistan"&#8212;an inter-state group recently founded on the initiative of the US, Britain and Saudi Arabia and including Germany, France, and China&#8212;met on November 16, but failed to commit any funds to Pakistan*. The "Friends" are scheduled to meet again January 13-16.
> 
> In recent weeks, *inflation, which in September was approaching 30 percent, has abated somewhat due to falling world prices for oil, edible oil, steel, and other goods. But this is being offset by stagnating Pakistani exports*. Pakistan's export trade, as that of other Asian countries, is being hit by the drying up of credit and plummetting demand from the advanced capitalist countries.
> 
> In its press release, the IMF said, "The IMF-supported program has two key objectives: to restore macroeconomic stability and confidence through a tightening of macroeconomic policies; and to ensure social stability and adequate support for the poor and vulnerable in Pakistan." It went on to promise support to Pakistani authorities in putting "in place a comprehensive and effectively-targeted social safety net in close cooperation with the World Bank." As a first step "spending on the social safety net will be increased by 0.6 percentage point of GDP, to 0.9 percent of GDP in 2008/2009."
> 
> The reality is that *Pakistan's IMF-approved stabilization program is aimed at making the country a better source of profit for international and domestic capital.* Indeed, the IMF's own statement bluntly says, "The programme aims to restore the confidence of domestic and foreign investors with a tightening of fiscal and monetary policies."
> 
> As for the claims of a "targeted social safety net," not only would .9 percent of GDP, even if achieved, constitute a pittance in a country where *more than 40 million people are living in dire poverty*, the other policies being imposed by the PPP-government, its pro-poor rhetoric notwithstanding, and *the IMF will have a devastating impact on the economy as a whole, and especially the most vulnerable layers of society*. Already there have been significant popular protests against the subsidy cuts.
> 
> Just as importantly, the interest rates increases and government spending *cuts will lead to widespread job losses, thus further swelling the ranks of the poor.*
> 
> *Sakeeb Sherani* of the Royal Bank of Scotland, told a meeting organized by Pakistan's Centre for Research and Security Studies that the *IMF package will "cause up to three million job cuts in deferment sectors and push another 5.6 million to 7.5 million Pakistanis into poverty* over the next two years."
> 
> *Shahid Javed Burki*, himself a former World Bank vice-president and ex-Pakistani finance minister has *strongly criticized the IMF/PPP-led government's "stabilization" program saying that it will deflate the economy at a time when demand threatens to fall dramatically due to world recession.* "While other Asian countries," said Burki, *have introduced stimulation packages to generate growth, Pakistan has done no such thing*. Pakistan is being advised, in fact, to cut expenditure when it needs to invest in employment generating projects. ... *At the present rate, only high growth in poverty can be expected."*



*Source*


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## Neo

*Pakistan withdraws $1.7bn invested in US capital market​* 
Tuesday, December 23, 2008

ISLAMABAD: Pakistan has withdrawn around $1.7 billion invested with selected fund managers out of total $3.2 billion largely put into various tools of the US Treasury and the US capital market, The News has learnt.

Now around $1.5 billion foreign currency reserves are lying with the fund managers, market sources said and added that the reserves management had raised several questions in the past during the tenure of Musharraf-Aziz regime because the country got minimum return compared to giving huge profits to those foreign investors who purchased Pakistani papers such as eurobond and others.

However, the State Bank of Pakistan confirms that it did not pay any penalty for withdrawal of its investment funds.Anticipating such a situation, the SBP had included terminal clauses in all investment management agreements. Therefore, the central bank can call back funds from fund managers without any notice period and without incurring any penalty. All transactions are conducted on prevailing market prices, the SBP categorically said.

In a written reply, the SBP also confirmed that during the last four fiscal years, $1.73 billion has been accumulated through a focused investment strategy that contributed as investment income on the part of forex reserves held by the SBP.

These returns were achieved on an overall average investment portfolio of $9.71bn during the last four years, despite holding a conservative and risk adverse portfolio in turbulent global markets, it added.

However, sources say that the State Bank had decided to withdraw its foreign currency reserves from the US Treasury (treasury bonds, treasury bills and treasury notes) and the US capital market before the International Monetary Funds loan of $7.6 billion under a standby arrangement at a time when foreign currency reserves were depleting rapidly and the country was in dire need to meet its import requirements and other obligations.

We cannot confirm any figure related to withdrawal of foreign currency reserves from selected fund managers, SBP spokesman Syed Wasimuddin said when asked in that regard on telephone on Monday after receiving his written reply.

This correspondent also sent written questions to spokesman of the SBP, which were replied largely. The written reply neither confirmed nor denied the withdrawal figure of $1.7 billion from fund managers 

During the previous Musharraf regime in 2004, the government selected fund managers for reserves management and ultimately they parked this money by investing into capital market, bonds as well as US Treasury. This correspondent sent three questions to SBP for getting official response reproduced here without any change.

Q-1: Has the SBP withdrawn $1.7 billion from the fund managers out of total $3.2 billion and currently there is only $1.5 billion remaining with these fund managers (such as the Citibank, ABN Amro, Deutsche Bank etc)?

A-1: SBP had engaged services of few reputed fund managers since 2004, to manage a portion of its foreign exchange reserve as part of an overall Reserve Management Strategy duly approved by the Central Board. It is a regular part of the reserve management activity that investments are made and funds withdrawn as determined by investment scenario and liquidity needs requirements. Therefore, it wouldnt be pertinent to state specifically with which managers we conduct such operations at any point in time. However, it wouldnt be out of place to mention that of the institutions listed in the above question none of them are part of our approved fund managers, though we have not exited any such relationships in the recent past.

Q-2: How much the SBP is charging from the fund managers?

A-2: SBP earns a competitive return on its investments given the investment & risk guidelines as approved by the Central Board. During the last four fiscal years, $1.73bln has been accumulated through focused investment strategy and contributed as investment income to the FX Reserves on the portion held by SBP. These returns were achieved on an overall average investment portfolio size of $9.71bln during last four years, despite holding a conservative and risk adverse portfolio in turbulent global markets.

Q-3: Have we paid any amount in shape of penalty for withdrawal of our funds prior to the agreed timeframe?

A-3: As already explained above withdrawing and investing funds through fund manager is a part of reserve management activity so penalties are not charged for withdrawal of funds. Anticipating such situations SBP had included terminal clauses in all our Investment Management Agreements. Therefore SBP can call back funds from fund managers without any notice period and without incurring any additional penalty. All transactions are conducted on prevailing market prices.


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## Neo

*No sign of rupee stability ​* 
Tuesday, December 23, 2008

LAHORE: The stability of rupee will be crucial for attracting foreign investment but the government has not yet come up with a viable economic plan after getting an IMF loan facility.

The Adviser to the Prime Minister on Finance Shaukat Tarin has admitted that economic growth would not pick up without foreign direct investment. All economists agree that current economic conditions in the country are not conducive for foreign investment.

The Consumer Price Index (CPI) is a major factor that affects the value of rupee. The rule of thumb is that the difference in the inflation levels between two countries is the level of devaluation the country with higher inflation would face. Pakistans rupee has declined against all major currencies and India on this basis.

The inflation in most of the countries has remained much below Pakistans level. Currently, it ranges from 2 to 3 per cent in developed economies and China while it is in single digit in India. Inflation in Pakistan is over 24 per cent and is targeted to come down to 18 per cent by the end of this fiscal.

On this basis alone, the rupee is expected to depreciate by 10 to 15 per cent against major currencies in next six months if the targeted inflation level is achieved. Economists point out that other factors that determine the strength or weakness of a currency include its GDP growth forecast for a fiscal year by the government and any subsequent downward or upward revision in the growth rate. GDP is considered the broadest measure of a countrys economy and it represents the total market value of all goods and services produced in a country during a given year.

The government had announced a growth target of around six per cent in the budget for 2008-09. The target was revised downward in the next six months gradually and now the central bank expects GDP growth rate to decline to 3.5 per cent while multilateral agencies see growth slowing down to 3 per cent.

The Economist Investigation Unit predicts GDP growth rate of 2.9 per cent for the current fiscal. The reason that investors give importance to GDP is because it is somewhat analogous to the gross profit margin of a publicly traded company in that they are both measures of internal growth.

Industrial growth is another important factor that impacts the currency value of a country. The statistics of industrial production reveal the change in the production of factories, mines and utilities within a nation. It also reports their capacity utilisation, the degree to which the capacity of each of these factories is being used.

It is ideal for a nation to see an increase in production while being at its maximum or near maximum capacity utilisation. The industrial production in Pakistan is likely to decline by more than 75 per cent of the productivity achieved last fiscal. Current large-scale industrial production is around 3 per cent only while most of the small and medium sized industries are reporting negative growth.


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## Neo

*Five hydropower projects worth $65 million to be constructed​* 
LAHORE (December 23 2008): Punjab Irrigation and Power Department will construct five hydropower projects with the financial assistance of Asian Development Bank (ADB) worth 65 million dollars in the public sector. The total annual power generation of these five projects would be 24.8 MW, it has been learnt.

Sources told Business Recorder that the Asian Development Bank sanctioned this amount as soft loan for the power projects, but unfortunately it could not be utilised because neither Planning Development Department hired the consultant nor prepared any feasibility report in this regard.

Taking notice of the matter, Chief Minister Punjab Mian Shahbaz Sharif asked the irrigation department to finalise the projects after preparing the feasibility reports of the projects. He also directed that if proper utilisation of the ADB's soft loan is not possible for the irrigation and power department, the loan amount be returned to the bank.

Sources claimed that the Punjab government had agreed to contribute 20 percent ie, 13 million dollars for these projects. Under the "Punjab Power Generation Policy, 2006", the Punjab government planned to develop hydel power projects, both in public and private sectors, on 'raw' and 'solicited sites' with minimum equity required by private sponsors is 20 percent. Mode of investment for hydel power projects is Build-Own-Operate-Transfer (BOOT) basis.

The sources said that there were 48 preferred sites having potential of a total of 350 MW electricity generation. Hydel power potential of barrages could help produce 246 MW electricity and non-perennial canals could produce 105 MW electricity annually.

The sources said that Rs 462 million Pakpattan project would produce 3.2 MW, Rs 692 million Okara project would produce 4.0 MW, Rs 676 million Deg Outfall project would produce 5 MW, Rs 827 million Chianwalli project would produce 5.4 MW and Rs 1,064 million Marala project would produce 7.2 MW electricity. Total annual power generation of these five projects would be 24.8MW.


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## Neo

*Revenue raising, expenditure must be in conformity with budgetary decisions​*
EDITORIAL (December 23 2008): At a three-day moot arranged by the Federal Board of Revenue (FBR) on "Tax Policy Options for Pakistan", lots of sensible proposals were made to improve fiscal position of the country. Stressing the need for an increase in revenue generation, Advisor to the Prime Minister on Finance Shaukat Tarin said that such a policy thrust was essential to ensure a sustainable growth.

So far as tax policy was concerned, Pakistan needs to have an equitable, simple and transparent tax system executed in a professional manner. It should also be broad-based and devised in a manner that each and every Pakistani should share the burden instead of burdening some people "who will ultimately find ways of not paying those taxes."

The Advisor admitted that revenue target for the current year was high but added that there were many people in the country who were not paying taxes and if the FBR could tap only 10 to 20 percent of these people, there would be no difficulty in meeting the target.

The country had to move in the direction in which most of the other countries had moved and learn from their experience. Being an autonomous body, the FBR should put in more efforts and a part of the collected amount could be utilised for improving the administration of the department and compensating its employees.

Some of the other speakers also urged upon the need to increase tax revenues. FBR Chairman Ahmad Waqar noted that his department needs to be more vibrant and effective in compliance issues. He also said that there was a consensus for integration of domestic taxes ie GST and income tax and certain other reforms. Ehtisham Ahmad of the IMF observed that revenue generation over the past 20 years was inadequate which led to vulnerability.

Some of the other proposals included excise duty on services, reinforcement of Self Assessment Scheme (SAC) with random audit mechanism and improvement in compliance in corporate income tax. We feel that statements and proposals made by various speakers at the conference are relevant to our situation. The urgency to raise tax revenues in our context is all the more important in view of the recent deteriorating trend in the fiscal balance.

At 7.4 percent of GDP, fiscal deficit during FY08 was much more than the budget target of 4.0 percent and 4.3 percent witnessed in the previous year. Notable was the fact that even revenue balance moved into deficit, reaching 3.4 percent of GDP during FY08 against a budgeted surplus of 1.0 percent of GDP.

This is highly troubling since the FRDL Act 2005 requires the revenue balance to be at least zero, as a percentage of GDP by FY08 and beyond. Deceleration in revenue growth coupled with a strong rise in expenditures caused a serious deterioration in fiscal indicators during FY08.

The situation can only be improved by making concerted efforts to enhance substantially the level of revenues and by taking stringent measures to control expenditures. We are in complete agreement with Shaukat Tarin and other speakers that a higher level of tax revenues needs to be attained and the tax system should be equitable, simple, transparent and broad-based, but the problem is that mere intentions can't translate into concrete actions and produce desired results.

The situation on ground is that tax revenues as a percentage of GDP continue to hover at around nine percent of GDP despite a number of reforms in the FBR as some of the sectors still continue to be outside the tax net. Large-scale tax evasion and existence of a large informal sector are some of the other problems.

Looking at the past experience, we are afraid that observations at the moot would not make much difference for revenue generation at the practical level due to the influence of powerful lobbies that always have a vested interest in maintaining the status quo. A high level of political commitment is needed to effect the necessary change.

A very serious problem with our fiscal policy is that we don't give enough consideration to containment of expenditures which is as important as revenue generation. Every government has its own agenda for poverty alleviation and other expenditures with a view to winning popular support.

For instance, we fully understand and appreciate the fact that Benazir Income Support Fund is targeted at most vulnerable sections of society, but the scope of this programme must not be misunderstood and extended to the purchase of tractors or construction of houses. In the past, schemes like yellow cabs and YIPs have failed miserably and the same experience should not be repeated this time, especially in the absence of any fiscal space.

Also, the country is earning lots of windfall profits by not decreasing the domestic prices of oil in proportion to the continuing reduction in international prices. Such earnings need to be kept in a separate pool to clear the outstanding dues and minimise the size of circular debt. Besides, white elephants such as PIA and railways need to be disciplined to help reduce burden on the exchequer.

These kinds of PSEs are meant to provide public services at a minimum of cost without serving as agencies for employment creation. Bold initiatives, in our view, are needed to be taken in the area of expenditure control even if these are not a requirement under Stand-By Arrangement with the Fund. The government is also required to ensure that revenue raising and expenditure must be in conformity with budgetary decisions.


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## Neo

*Chinese model and Pak constraints​*
EDITORIAL (December 21 2008): President Asif Ali Zardari has observed that the introduction of mechanised farming cannot only help meet Pakistan's own food requirements; it can also make the country a major exporter of foodgrain. The government should therefore ensure farmers' access to mechanized farming, and consider importing re-conditioned tractors, which will also inject an element of competition in the country's tractor manufacturing industry, besides helping the farmers increase their crop production capability.

A lot can indeed be learnt from the Chinese model, if there is sufficient political will on our part. Of course, Pakistan cannot follow the Chinese model in entirety, but it can adapt the Chinese model to suit its socio-economic conditions. Heilongjing, China's largest grain producing province, has taken effective measures for increasing grain production since 1997, and the rate of success has been simply spectacular.

The province supplies nearly 20 million tons of grain to the country's grain market annually. As compared to a steep downturn in Pakistan's agriculture sector since 1949-1950s when its contribution to the GDP stood at as high as 53 percent, China's agriculture sector has achieved phenomenal growth.

Pakistan's agricultural growth performance has by and large been of a volatile nature, which has proved detrimental to the income growth of land tillers, though large landholders have been reaping huge profits. Another noteworthy factor in Pakistan's agriculture sector has been the decline in the share of labour force from 65 percent in 1950-51 to around 48 percent at present.

This has spawned increased rural unemployment and poverty, which in turn has triggered rural-urban migration, with all its attending socio-economic consequences for the country. China has experienced one of the fastest rates of agricultural and economic growth over the last decade.

With a population of well over 1.2 billion, China's agricultural growth of 6% and industrial growth of 8% per capita from 1978 to 1997 was remarkable for its speed and duration. Further, China has lifted its 200 million people out of poverty, in which its robust agriculture sector has played a key role. In 2006, China had fixed its grain production target at 500 million tonnes.

The increase in China's grain production has been attributed to the increase in area under cultivation. Although China's agricultural production is the largest in the world, only about 15 percent of its total land area is cultivable. Its arable land, which represents 10 percent of the world's total arable land, supports over 20 percent of the world's population, which is reflective of the success of the Chinese model.

China's major agriculture producing regions are close to the urban markets, and are connected through a vast network of farm-to-market roads, of which there is an acute paucity in Pakistan. Above all, China has traditionally implemented policies that have encouraged grain production at the expense of cash crops, to ensure food security of its population, in sharp contrast to the practice followed in Pakistan.

As a result China has experienced one of the fastest rates of agricultural and economic growth. Community farming and smaller landholdings have helped China achieve the miracle. It is said that a novel hydropower strategy has been adopted for modern agricultural farms in China, which not only ensures water supply and electricity to farms. Tubewells pump water up to the huge elevated tanks built at four corners of the farm, which, when released, runs turbines to produce electricity for use on the farm.

The mechanism not only ensures steady supply of water, but also of power. Pakistan, on the other hand, has failed to develop its immense hydropower potential, which has restricted growth of both these key sectors of the economy. Almost all our water and power projects are behind schedule, while the country is caught up in a severe water and energy crisis.

The double-digit food inflation of nearly 15 percent in Pakistan has contributed to the erosion of gains, if any, achieved in poverty alleviation, which has generated social unrest and popular discontent. The president has done well to advocate pursuit of the Chinese model of farming, but do we have the financial and technological wherewithal as well as the political will to implement the Chinese model?

Will the IMF, which is going to keep us on a tight monetary leash, allow implementation of the Chinese model? Why not nudge the water and power bureaucracy to undertake fast-track implementation of the Vision 2025 programme? Above all, can we muster the political will and sincerity of purpose of the Chinese leaders? We only wish we could. There is an urgent need for us not to resort to kite flying any more, because the crisis the country is caught in today needs serious and sincere action.


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## Neo

*Purchase of urea on deferred payment: Saudi Arabia refuses $400 million credit facility​* 
ISLAMABAD (December 22 2008): Saudi Arabia has refused to provide $400 million additional credit facility to Pakistan for the purchase of urea on deferred payment, well-placed sources told Business Recorder here on Sunday. According to sources, at present the country is facing Urea shortage.

At the very beginning of wheat sowing season, the prices of Urea have gone up due to black-marketing and smuggling of the commodity. Keeping this thing in view, the government had directed the Economic Affairs Division (EAD) to make a deal with Saudi Arabian government but it was turned down, sources revealed.

The Saudi Arabia agreed in September 2008 to provide a credit facility of $258 million to Pakistan on deferred payment. But the increasing demand of Urea in domestic market once again forced the government to ask for an additional credit facility worth $400 million.

Sources said that the reluctance of Saudi Arabia to provide additional credit facility of $400 million and its earlier negative response to provide financial assistance to Pakistan to overcome its balance of payment crisis before going to IMF clearly indicate that the Saudis no more trust our present government.

An official of the Food Ministry, requesting anonymity told Business Recorder that most of the countries of the world are suffering from financial crunch and Saudi Arabia is no exception to it. That is why, Pakistan's request for additional credit facility was turned down. Federal Minister for Food, Agriculture and Livestock (Minfal), Nazar Muhammad Gondal, while defending the refusal of Saudi Arabia in this regard said: "After getting loan from International Monetary Fund (IMF), there is no need of additional credit facility from Saudi Arabia. So, the government has, therefore, withdrawn its own proposal".

The minister noted that government would float another tender of 350,000 tons import on January 15 to ensure the availability of the fertiliser to farmers. The government would also offload 290,000 tons Urea fertilizer in the market by December 31 to break the cartel of the market players.

IMF has approved a 23-month stand-by arrangement for Pakistan equivalent to SDRs5.169 billion (about 7.6 million dollars) to support the country's economic stabilisation programme. Considering the current ongoing global financial market crisis, Pakistan has already succeeded in securing third place in terms of amount of loan accessed from IMF.

Sources disclosed that the government has started importing Urea fertiliser from other sources after getting loan from IMF. They said that the government would import 390,000 tons Urea by January 15 and 190,000 tons Urea would reach Pakistan by December 31.


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## Neo

*DFIs for economic development in Pakistan​* 
ARTICLE (December 21 2008): Besides high balance of payments deficit, the country is at present facing a number of challenges, such as:

(a) low foreign exchange reserves; (b) impending huge debt servicing; (c) shortfall in power generation capacity, resultantly electricity loadshedding; (d) poor physical infrastructure in terms of ports, railways and roads; (e) heavy dependence on imported industrial raw materials, consumer durables and plant and machinery; (f) fast rising population, urbanisation, poverty and unemployment; (g) deplorable conditions in health and education sector; (h) severe supply gap in housing availability; and (i) lack of properly-funded and functional development financial institutions (DFIs).

To ease foreign exchange availability and reserves situation, the government has already obtained from IMF $7.60 billion stand-by loan (of which $3.10 billion has been already disbursed) while more funds are from the Friends of Pakistan (FOP).

The government is in the process of preparing a dossier on projects for consideration by the FOP. Besides, a number of public sector enterprises, including privatisation of SME Bank etc are under consideration. It is not considered imperative that the plans are first discussed among the stakeholders including the provincial governments and the local DFIs.

Like other developing countries in the region, DFIs were established in Pakistan during l950s and 1960s for fostering economic development with assistance from international Financial Institutions (IFIs) as well as a number of friendly countries particularly, the USA.

These DFIs were major channels for routing development funds to the private manufacturing sector and achieving the desired socio-economic objectives, such as encouraging new entrepreneurs, promoting industries in less developed areas and wider diffusion of industrial ownership.

The DFIs were also assisting the Government in screening new development projects, framing economic development plans or policies, rehabilitating sick or problem projects, administering or supervising special loans provided by the government or foreign institutions and participating in the promotion of other DFIs for achieving related socio-economic objectives.

Besides promoting establishment of import-substitution industries, the DFIs encouraged capital formation by directly investing or underwriting shares and debentures issued by the local companies. They also assisted Pakistani entrepreneurs in obtaining suitable foreign investment, attracting foreign investors in formation of joint ventures with local partners and assisting in obtaining technical / managerial advice for businesses and industries.

Many industries were made operational, enormous jobs were created both in the operational and service sectors and the country was on the road to economic and social progress.

In the 1980s and 1990s many DFIs ran into problems stemming basically from poor management, excessive had loans, withdrawal of incentives or resource constraints. The stakeholders did not opt to) get problems of DFIs probed or their functions reoriented to the then prevalent realities with the help of reputed independent experts. Unlike the cases of certain commercial banks, neither there were efforts to inject fresh equity or soft loans into problem DFIs, nor there was a serious attempt to restructure them.

The problem DFIs, under, presumably, a faulty approach, were merged into other DFIs/commercial banks or were liquidated. The Youth Investment Promotion Society (YIPS) was merged into) Regional Development Finance Corporation (RDFC) which in turn was merged into Small Business Finance Corporation (SBFC), subsequently renamed as SME Bank Limited.

PICIC, the premier *** was merged with NIB Bank. Before that NDFC was merged into NBP and Bankers Equity (BE) liquidated. IDBP and SME Bank - both DFIs holding commercial banking license, are reportedly on the privatisation list.

The people's government is committed to provide jobs to the millions of jobless and poor. Jobs can help reduce poverty and stop migration from interior to the cities. More jobs can be created through promotion of economic activities, particularly in less-developed areas of Balochistan, FATA, Waziristan, NWFP Sindh and the Southern Punjab.

Promotion of agriculture, agro-based industries, export-oriented handicrafts, provision of housing, construction of health and education infrastructure, development of mining and mineral based industries etc can provide jobs besides improving import-exports trade balance.

Implementation of these measures can be facilitated with appropriate financing by the DFIs such as SME Bank, ZTBL, HBFC and IDBP, SME Bank and IDBP, when restructured are considered to have the potential for rejuvenating business and industry at this critical juncture. These need to he taken off the privatisation list.

The task ahead is larger than the capabilities or scope of existing DFIs. Therefore apart from strengthening existing DFIs; the government should look into the proposition of creating new sector-specific DFIs. Malaysia, economically and technologically more advanced than Pakistan, still has operative a number of development finance institutions (DFIs), set up under the Development Financial Institution Act 2002.

DFIA defines a *** as: "an institution which carries on any activity, whether for profit or otherwise, with or without any Government funding, with the purpose of promoting development in the industrial, agricultural, commercial or other economic sector, including the provision of capital or other credit facility.

For the purposes of this definition, "development" includes the commencement of any new industrial, agricultural, commercial or other economic venture or the expansion or improvement of any such existing venture.

Moreover in Malaysia, the DFIs roles as outlined under the Financial Sector Master Plan (2001-2010) are: (a) develop and promote strategic sectors of the economy and achieve social goals as mandated by the Government; (b) to fill the gaps in the supply of financial services that are not normally provided by banking institutions; and (c) offer value added advisory services and technical assistance supported by strong research capabilities.

***'s role in changing economic situations in Malaysia is acknowledged for: (a) continued support as financier; (b) assistance for business development; (c) enhance effectiveness of role as implementer of developmental programs; and (d) role to facilitate development. (Source: Presentations in a recent ADFIAP Seminar in Malaysia).

Pakistan, still a low income, developing country, badly needs the services and facilities offered by the DFIs for achieving socio-economic objectives and well-being of the people, particularly in the underdeveloped areas, also on political consideration.

Unlike private institutions or commercial banks that are motivated solely by profit, the public-sector DFIs are tuned to finance socio-economic projects also. Their basic motive is the welfare of the people. In every developing country, as a minimum there are DFIs for financing of Small and Medium Enterprises (SMEs), housing, municipal services, effluent and waste disposal, physical infrastructure and export promotion.

There are DFIs even in. the developed countries eg Germany, Canada, European Union, etc. Growth and stability in a country, like Pakistan, can come through financing by the local DFIs and not through profit-centred activities of the foreign controlled commercial banks, is the view widely held in Pakistan, particularly after the recent debacles in the financial sectors of Europe and USA.

In India, IDBI and ICICI were two premier DFIs at a time when we in Pakistan had DFIs like PICIC and NDFC. Unlike Pakistan, the role of these two institutions have been substantially enlarged over the period. In order to further enforce their role, to supplement their low cost funding sources and enhance their profitability they were granted licenses for commercial banking business.

Both the institutions were restructured to keep them in line with changing market conditions. IDBI Bank and ICICI Bank are profitably financing infrastructure and other development projects in India whereas we have allowed PICIC and NDFC to whither away.

In this context, we may also borrow a leaf from the history of the World Bank, which has been restructured many times over the years. Conceived during World War II at Bretton Woods, New Hampshire, the World Bank initially helped rebuild Europe after the war. Its first loan of $250 million was to France in 1947 for post-war reconstruction.

Reconstruction has remained an important focus of the Bank's work - given the natural disasters, humanitarian emergencies, and post-conflict rehabilitation needs that affect developing and transition economies. The Bank borrows at low cost and offers clients good borrowing terms.

Today it has sharpened its focus on poverty reduction in middle-income and creditworthy poorer countries by promoting sustainable development through loans, guarantees, risk management products, and analytical and advisory services.

The World Bank today has a multidisciplinary and diverse staff, including economists, public policy experts, sectoral experts, and social scientists. Forty percent of staff is now based in its country offices. The Bank has become a Financial Sector Group, encompassing five closely associated development institutions: the IBRD, the IDA, the IFC, the MIGA, and the ICSID. (Source World Bank's web site)

With new developments, new areas of interest are appearing on the economic scene. For profitable exploitation of which the country needs services and support from the DFIs, which may also be encouraged to adapt to face the emerging situations. Effluent disposal and solid waste management are assuming importance for health and export exigencies and such projects may be financed on priority basis.

It may be appreciated that the DFIs in Pakistan are relevant for financing such projects. These DFIs are badly needed at least until the country is dependent on the IFIs for finances, technical assistance and advice on its various socio-economic development projects.

The local DFIs would be catering the requirements of relatively smaller customers or projects for finances and technical services now provided by the IFIs to the government-sponsored large projects or institutions. DFIs would also be needed for the specialised 'think tanks' offering suggestions to the government on different policy issues and options. As such, the government may reactivate its policy of economic development through promotion and funding of local DFIs.

Long Term Credit Fund (LTCF), established by the Government for financing private sector power generation projects, for the last many years has remained, almost dormant as for as financing of new power generation capacity is concerned although throughout this period the country has suffered power shortages and has been seen no increase in power generation capacity.

LTCF, originally known as Private Sector Energy Development Fund (PSEDF), was administered by NDFC on behalf of the government. It has played an important role in promotion of Independent Power Producers (IPPs) - such as Hub Power project in the private sector in Pakistan.

LTFC now administered by NBP, with suitable revamp and upgrading, has the potential to play a much bigger role for the establishment of additional power generation capacity and infrastructure projects in the country, through finances mobilised locally as well as foreign credit lines from friendly foreign countries and IFIs.

Infrastructure and municipal projects need specialised DFIs as the existing financial sector (with the exception of LTCF) generally lacks the expertise to appraise, finance and monitor such projects. The LTCF, can play a decisive role in overcoming power shortages, may be allowed full service commercial banking licence with a view to facilitate mobilisation of local savings and thus have the flexibility for sustaining ifs operations without support from the Government.

Economic growth and stabilisation with a human face is possible only through local DFIs, which need to he nurtured. In the past, the DFIs had played substantial role along with the commercial banks' in the consortia for project financing. Once the local DFIs are strengthened, they can play even bigger role in the financing of large infrastructure projects.

There is talk of relocation of existing industries away from the cities and built up areas. In the corning days when the provincial governments are better aware of environment pollution problems due to industries operating within populated areas The movement is expected to) gain momentum. The DFIs only would be able to satisfactorily handle the industrial relocation process as well as the setting up and financing of effluent treatment plants in various parts of the country.

Food security is of tremendous importance for a country. Development of agriculture on modern lines cannot only help achieve food self-sufficiency but also) yield exportable surplus to eat-n foreign exchange. The operations of ZTBL (earlier ADBP) thus need to be strengthened.

In Pakistan, large infrastructure or other socio-economic projects are financed by the IFIs like the World Bank, ADB, IFC or the Islamic Development Bank. Properly revamped local DFIs may appropriately collaborate with the IFIs in financing as well as monitoring of such projects or program.

Moreover, relatively smaller projects in these very sectors are presently not catered by the IFI by way of technical assistance or loan funds. This gap in tile provision of technical advice, research studies and financial Support could easily he filled by the local DFIs.

(The writer is President of First Credit and Investment Bank Limited (FCIB). The views expressed are of the author, not necessarily representing the Bank)


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## Neo

*Flow of goods from India continues ​* 
Wednesday, December 24, 2008

LAHORE: The flow of goods from India to Pakistan has continued uninterrupted through different routes despite the war hysteria created by New Delhi after the Mumbai attacks last month.

No slowdown has been noticed in imports of different products from India, however exports of Pakistani goods to India have plunged due to non-serious behaviour of traders and government of the neighbouring country.

A study conducted by The News has found no major impact on imports from India by the Mumbai incident. But on the export side, downtrend has begun. Pakistan mainly exports cement to India through rail and sea routes and its exports has sharply declined due to non-tariff barriers.

Annual trade between India and Pakistan currently stands at $2.3 billion with balance heavily tilted in favour of Delhi. Pakistan imports some $1.95 billion worth of products from India including fruits, vegetables, seeds, spices, maize, soybean, mushroom, medicines, chemicals, cotton and others. On the other hand, its exports are worth only $400 million.

The high trade surplus for India means if it stops trade with Pakistan, it would lose a good market of its products. Sea trade has a huge share in total trade between the two neighbours.

In 2004-05, trade between the two sides totalled $835 million only, which has now increased two times. These days, Indian vegetables are coming from Wagah border regularly and the Mumbai attacks have not hampered the flow of commodities. Around 70 to 80 trucks loaded with Indian tomato, potato, cotton and other items are arriving daily.

India has suspended land trade through Muzaffarabad-Srinagar route after the Mumbai incident and has also threatened to stop trade from other routes. However, facts indicate it will not take an extreme step of stopping trade with Pakistan when it is massively in favour of it.

The business community of both sides is against war and says the two governments should resort to dialogue instead of indulging in war talk.

Talking to The News, Vishal Malhotra, a Mumbai businessman doing business with Pakistan, slammed the Indian government for giving sweeping statements and said war has never been a solution to any problem.

He said business with Pakistanis was good, but now the Indian government is taking cosmetic measures to hinder trade. It will spoil the whole trade between the two countries and a third country will benefit.

HK Bhatia, an exporter based in New Delhi, said his sales had sharply increased since bilateral trade between the two countries through land route started. He was of the view that politicians should not destroy trade for their politics.

We want other land routes opened, he said, adding the Indian government should not initiate war.

Mehfooz Ahmed, a Karachi-based exporter, said his Indian counterpart had cancelled orders for lead and cement owing to difficulties created by Delhi government. 

He pointed out that Indian traders were ready to do business but their government was not giving them any room and not showing flexibility, ignoring the fact the balance of trade was in its favour.

Jamil Magoon, a veteran leader of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), said the leadership of both countries should boost confidence of the business community in order to stabilise the region. War will take both the nations 100 years back, he remarked.


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## Neo

*Economists stress industrial revival plan ​* 
Wednesday, December 24, 2008

LAHORE: Slowdown in industrial activities has hot only eliminated new job opportunities but has also added to the unemployment pool as a fall in production causes layoff of workers.

Economists have no sympathy for the entrepreneurs that have failed to prepare themselves for hard times due to incompetence and inefficiency but they are extremely concerned about the increased slashing of jobs in the productive sector.

They say that instead of brooding over past mistakes, the government should formulate a comprehensive industrial policy that should facilitate producers by reducing their cost of doing business and improving their efficiency.

They regret that the government has so far not unveiled an industrial revival plan. The exercise would require input from the industry, economists and bureaucracy. This would require some time. In the meantime, they urge the government to take some urgent measures to ensure sustainable growth and increase in employment opportunities.

Commenting on the issue, senior economist Naveed Anwar Khan, FCA, said that the electricity and energy cost of the industry has increased substantially, but reducing tariffs might not be feasible for the government.

He said energy wastages in most of the industries range from 10 to 25 per cent due to improper factory layout, inefficient motors and absence of proper ventilation. Many textile spinning mills, he added, have now saved 5 to 7 per cent energy cost without spending a single penny by shifting the location of their machines and providing better ventilation outlets.

He said mills that got their energy audit conducted and invested Rs1-10 million managed savings of up to Rs1.8 million per month (Rs60,000 per day), adding these savings returned their entire investment in one to six months. Similar savings, he said, were achieved when some industries replaced their inefficient gas appliances with global standard burners.

He said these facts are not known to most of the productive sector and the government should come up with detailed programmes in this regard on the electronic media to create awareness among industrialists. Small and medium entrepreneurs would particularly benefit from this awareness and informative campaign that should be broadcast two to three times a day, he suggested.

Dubai-based Chartered Accountant Faisal Qamar said that a large number of small export units have closed down as they could not afford to install water treatment plants, which is a precondition of foreign buyers under the social compliance concept. He said the federal and provincial governments should install common effluent treatment plants in all industrial estates and recover the cost by charging the industries monthly usage rent that all exporters could afford.

The installation, he added, should be quick, as over a decade has been wasted in this regard by various governments by paying only lip service to the issue.

This would revive a large number of closed export units.

Canada-based Certified Public Accountant Asif Ali Shahid said that the high mark-up is eating into the competitiveness of the local industry.

He said the government had finally withdrawn the research and development grant it was providing to a few textile sector importers.

He said the money for this purpose was earmarked in the budget and the amount should now be utilised to reduce the burden of mark-up on all industrial loans availed by manufacturers.

He said India and China that have a much lower interest rate regime are facilitating their industrial sectors through by subsidising bank mark-up. Pakistan he added should do so in order to boost employment opportunities.


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## Neo

*Iran, Pakistan discuss cooperation in power ​* 
Wednesday, December 24, 2008

ISLAMABAD: Ambassador of Iran to Pakistan, Masha allah Shakeri, called on the Minister for Water and Power, Raja Pervez Ashraf, here on Tuesday.

Both discussed matters of mutual interest and bilateral relations to further boost economic ties between the two countries and to explore possibilities of cooperation in the power sector of Pakistan.

The minister, welcoming the Iranian envoy, said that Pakistan had close brotherly relations with Iran. Pakistan valued the help and support of Iran and was desirous of expanding bilateral relations in all sectors.

The minister and the ambassador discussed the forthcoming visit of the Iranian Minister for Energy, Parviz Fattah, who will visit Pakistan from Dec 29 to 31 with a high-level delegation of Iranian investors and heads of major power sector manufacturing companies.

The energy minister, during his visit along with the delegation, will meet the Minister for Water and Power, representatives of BOI, PPIB, WAPDA, Pepco, and Nespak to discuss the possibilities of cooperation in power and other sectors particularly among private sector investors of both the countries.

The minister will also discuss their investment proposals in the power projects, ongoing process of construction of transmission line between the two countries and import of 1000 MW by Pakistan from Iran.

Iranian companies are also interested in upgradation projects of transmission lines, investment in hydel, thermal and alternative energy projects and manufacturing of power transformers and switchgears equipment along with transfer of technology the ambassador said.

The minister said the government is taking necessary measures in generating electricity to bridge the demand and supply gap through fast track projects. The government has planned to bring 35,000 MW by the year 2016 and steps are being taken in this regard, the minister added.

He lauded the offer of the Iranian and said that Pakistan has already signed a MoU to import 1000 MW from Iran.

The minister hoped that during the visit of Iranian Energy Minister, both the countries will explore new opportunities of cooperation in the power sector and will further strengthen bilateral relations between the two countries.

He also assured his full support and assistance to facilitate the Iranian investors to invest in water and power sectors.


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## Neo

*Packages to sell Tetra Pak shares to Swiss firm for $115 million​*
KARACHI: Packages Limited has announced that it has decided to sell its shareholding in Tetra Pak Pakistan Limited to Tetra Laval of Switzerland for $115 million.

This amount includes $15 million already received against the Call Option Agreement signed in June 2008, said Packages Limited in a letter sent to the Karachi Stock Exchange.

Packages said that the agreement by virtue of which TL had a right to exercise Call Options between 3 and 10 years now stood terminated.

Tetra Pak, in order to secure the continuous support of Packages, has agreed to issue shares to it with rights only to dividends in that company for the next 10 years.

The letter did not include the details about the number of shares being sold to the Swiss firm. It also did not mention any timeframe for the completion of the transaction.

Packages principal activities are to manufacture and market paper, paperboard, packaging material and tissue products. The Group also manufactures and markets finished and semi-finished inks. Tetra Pak Pakistan is a food processing and packaging company.


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## Neo

*Iran to give 30,000 barrels oil/day on deferred payment​*
ISLAMABAD: Pakistan and Iran have entered an arrangement under which Iran would provide 30,000 barrel crude oil per day to Pakistan on 90-day deferred payment, a well-placed source in the Ministry of Petroleum confided to Daily Times here on Tuesday.

At present, Iran is providing Pakistan 10,000 barrel crude oil per day on 30-day deferred payment to help Pakistan meet its energy needs.

The facility would be available to Pakistan at a time when the countrys foreign exchange reserves are under severe pressure.

Pakistan Refinery Limited (PRL) is the only refinery, which would refine the Iranian crude oil. With the passage of time when import of Iranian crude oil is increased, the refining capacity of the PRL and other companies would need enhancement, source maintained.

Adviser to the Prime Minister on Petroleum and Natural Resources, Dr Asim Hussain on Tuesday said Pakistan was vigorously pursuing Iran  Pakistan  India (IPI) gas pipeline project to meet the growing energy demands. The advisor expressed these views during a meeting with Iranian Ambassador in Pakistan Mashallah Shakari.

The two sides expressed satisfaction with the progress in IPI gas pipeline project and maintained that its early implementation would also serve to strengthen and expand the economic and trade relations among the regional countries.

Pakistans delegation, led by Dr Asim Hussain, would visit Tehran on 29 December 2008 to sort out the issue of price revision in the signing of GSPA of the IPI project. It merits mentioning here that President Asif Ali Zardari also instructed the Ministry of Petroleum to speed up work on the IPI gas pipeline project.

Talking to the Iranian Ambassador, the advisor said that IPI is an important component of Pakistans long-term energy plan and the government is therefore fully committed to complete the project as early as possible.

The adviser said Pakistan and Iran have a long history of friendship and enjoy excellent brotherly relations in diversified fields, which were growing and s strengthening with the passage of time.

Asim said that oil and gas co-operation between the two countries would further open up new vistas for their mutual advantage. He invited Iranian investors to avail the investment opportunities in Pakistans oil and gas sector.


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## Neo

*Listed debt market grows by Rs 24.8 billion in 2008​*
KARACHI: The listed debt market grew by Rs 24.8 billion in 2008, as seven TFCs were offered at local bourses.

In 2007, the number of TFCs issued was the same, but the amount offered was just Rs 10.2 billion, 57 percent lower than amounts raised this year.

With an addition of Rs 24.8 billion, total outstanding TFC market is estimated to have reached Rs 65 billion to date.

The size of TFCs listed at the market represents only 2.9 percent of KSE market capitalisation. This ratio ranged between 1.2 percent and 1.6 percent in last few years, but due to a long bearish spell at KSE this year the ratio has improved.

TFCs represent only 2.1 percent of total banks advances as on 13December 2008. Credit penetration in Pakistan is 29 percent of GDP whereas listed TFCs penetration is only 0.6 percent of GDP.

Out of seven TFCs issued in 2008 two were sold by banks. TFCs are counted in the calculation of Tier 2 capital of the banks. The size of banking sector TFCs was Rs 9 billion in 2008. These banking sector TFCs will continue to become the part of corporate debt market in years to come owing to increased capital adequacy ratio requirement by the central bank, said the analyst. We expect banking sector TFCs to occupy the major chunk of corporate debt market in 2009 and 2010, said the analyst.

Listed corporate debt market, known as Term Finance Certificate (TFC) is currently at an infancy stage in Pakistan, Muhammad Imran Khan, an analyst at First Capital Equities Limited said.

A very big hurdle in the development of an efficient corporate bond market in Pakistan is the fact that the government securities and the corporate securities both compete for the same pool of resources, says a research report. The government has the advantage of being the risk free. Government attracts savings from the retail investors through NSS while from the institutional buyers through PIBs and MTBs.

Since the government securities are risk-free so their rates should be less than the TFCs, which have more risk than the government securities, but the TFCs are priced very close to the Defence Saving Certificates, which are another type of government securities with 10-year maturity and government guarantee. So this very small difference of returns between a riskless investment (DSCs) & risky investment (TFCs) make the latter less attractive for the investor. So there is a lack of a level-playing field between the government securities and that of corporate sector, says the paper.


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## Pk_Thunder

*Transportation of containers and cargo: revised ATTA draft suggests setting up of monitoring body*​
SOHAIL SARFRAZ
ISLAMABAD (December 24 2008): The draft of the revised Afghan Transit Trade Agreement (ATTA) has proposed establishment of a Transit Co-ordination Authority for monitoring and facilitation of transportation of containers and cargo under the transit trade between the two countries.

Sources told Business Recorder on Tuesday that the Federal Board of Revenue (FBR) is examining draft of the revised ATTA along with relevant Protocol received from the Afghan government to finalise issues pertaining to duties, taxes, charges and payment arrangement between the two countries. The FBR is reviewing the customs clearance procedure, sealing and de-sealing of containers procedure; transit documents and other issues in view of the proposed ATTA.

It is expected that Afghanistan and Pakistan would review the draft of the new agreement in January 2009. This draft has been initially agreed by the Afghan authorities, which is presently under review by the FBR, Commerce Ministry and other stakeholders.

One of the major features of the proposed ATTA is the transportation of bonded carriers from one country to another without de-sealing of containers. The movement of transit containers would be allowed till reaching destinations under the draft ATTA. It has been proposed to improve railway lines for providing warehousing facilities at the border stations of Pakistan and Afghanistan.

Presently, no customs duty, toll tax, transit fee or any other federal or provincial taxes were being charged on the transit of goods between Pakistan and Afghanistan. The Ministry of Commerce has recently dispatched the latest draft of the ATTA to the FBR for examination of customs related issues during transit of consignments between Pakistan and Afghanistan.

For regulation of transit traffic through the two countries, a transit co-ordination authority known as the "Afghanistan Pakistan Transit Co-ordination Authority (APTCA) would be established under the proposed agreement. The APTCA would be responsible monitoring and facilitating the implementation of the APTA and recommend policy and operational measures related to transit trade and transport activities.

The APTCA would comprise Deputy Ministers of Commerce from Pakistan and Afghanistan, who would act as joint presidents responsible for taking decisions under the agreement. A consultative and advisory board of the APTCA would cover senior officials of Ministries of Foreign Affairs; Finance; Public Work, Transport, Interior and Commerce from both each country. The representatives of Central Banks of Afghanistan and Pakistan; chambers of commerce and industry and fright forwarders/road transporters of both the sides would be part of the advisory board.

According to the latest version of the ATTA, renamed as Afghanistan Pakistan Transit Agreement (APTA), Pakistan and Afghanistan would not levy customs duty, taxes, dues or charges of any kind whether national, provincial or municipal on goods in transit regardless of their destination.

As per proposed agreement, the ATTA of 1965 is outdated and does not take into account the current economic realities of the two countries and the new international transit requirements. The new convention would effective administration of transit transport, avoiding unnecessary delays in the movement of goods and commercial vehicles between Pakistan and Afghanistan.

Through proposed agreement, Pakistan and Afghanistan would allow transit of right hand and left hand vehicle under the requirements for the admittance of road vehicles. Both the countries would establish Inland Clearance Depot (ICD) ie common used facility with public authority status, which would offer services for handling and temporary storage of containers carried under customs control and with customs and other agencies competent to clear goods for home consumption, warehousing, temporary admissions, re-export, temporary storage for onward transit and outright export.

Under section-VI of the proposed agreement, Pakistan and Afghanistan shall recognise domestic driving licenses, vehicle registration documents and vehicle license plates, which are issued by he competent authorities of both the countries. The proposed agreement has also designated international transit transport corridors with Ports of Entry/Exit at both maritime land border stations with approved customs offices for carrying out customs transit regime.

Under dispute settlement clause, any dispute, controversy or claim regarding the interpretation or application of the agreement shall be settled directly or by amicable negotiation through the APTCA. In case of arbitration, the joint presidents of the APTCA shall nominate one arbitrator, who shall not be a national of Pakistan/Afghanistan. The dispute would be settled in accordance with the rules of arbitration of the United Nations Commission on International Trade Law.

According to the draft agreement, Pakistan and Afghanistan may restrict or prohibit traffic in transit on certain routes for the duration of repair work or for the duration of a danger to public safety including traffic safety or public emergency. Before traffic in transit is restricted or prohibited for reasons other than emergencies, country imposing restrictions or prohibitions shall notify the competent authorities of the other country well in advance of taking action.


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## Neo

*Services sector posts $2 billion deficit in five months​* 
KARACHI (December 24 2008): The country registered a deficit of some 2 billion dollars in services sector during the first five months of the current fiscal year, mainly due to huge payments on account of transportation, travel and government services.

The State Bank of Pakistan on Tuesday said the country's services sector trade performance is improving as overall imports and the deficit have declined by 8 percent and 27 percent, respectively, during July-November of FY09.

Services sector exports in first five months stood at 1.533 billion dollars against imports of 3.59 billion dollars, depicting a deficit of 2.061 billion dollars during July-November of current fiscal year. However, the deficit in the first five months is less than that of the last fiscal year, in which services sector deficit stood at 2.844 billion dollars.

"Heavy payments on account of transportation, travel services, insurance, technical fee, royalties and government sector are the major contributor in the services trade deficit," economists said. However, they said that declining imports of services sector and increasing trend in exports helped reduce the services sector deficit to a great extent.

Export of services sector surged by 42 percent to 1.533 billion dollars during the first five months of FY09 against exports of 1.079 billion dollars during the same period of FY08. Services sector imports dipped by 8.38 percent to 3.594 billion dollars during July-November of FY09 over imports of 3.923 billion dollars during July-November of FY08.

Huge payments of transport sector is the major contributor in overall deficit, as only the transportation sector deficit stood at 1.157 billion dollars against the overall deficit of some 2.061 billion dollars. The country's transportation imports stood at 1.644 billion dollars against exports of some 487 million dollars during first five months of current fiscal year. Meanwhile, services deficit in November stood at 235 million dollars with 562 million dollars imports and some 227 million dollars exports.

The country earned 88 million dollars on account of travel, some 36 million dollars in communication, 31 million dollars in insurance and 27 million dollars from financial sector during July-November period. On the other hand, travel payment stood at 697 million dollars, communication 50 million dollars, construction 34 million dollars, insurance 49 million dollars, financial sector 75 million dollars, computer and information sector payments 44 million dollars. Similarly, royalties and licence fee payments reached 34 million dollars and the government services 128 million dollars.


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## Pk_Thunder

*10 equities worth Rs 7.4 billion offered to public in 2008*​
RECORDER REPORT
KARACHI (December 24 2008): Despite record fall in equity values and slowdown in overall economy, the Karachi stock market witnessed 10 IPOs in 2008, worth Rs 7.4 billion as compared with 9 IPOs worth Rs 15.5 billion in 2007. Interestingly, 9 out of 10 offerings in 2008 occurred before the imposition of price floor rule.

A total amount of Rs 17.4 billion was received from investors in 2008 (excluding Media Times Limited) against these offerings, resulting in value-wise over-subscription of 2.4 times. In 2007, total amount subscribed was Rs 27.2 billion--over-subscribed by 1.8 times.

However, the smaller size (in terms of value) of IPO compared to previous year could be linked to the nonappearance of government offerings in 2008, Muhammad Sohail, analyst at JS Global Capital said. Out of 10 IPOs, 6 companies represented the financial sector, of which 3 were stockbrokers as shown in the table. Others include, one from cement, two from chemicals, and one from technology and communication sector.

"Though the offered size was relatively smaller, huge investor interest was witnessed in IPOs of two brokerage houses, which took place during first quarter of 2008, when no one thought that brokers will face problems in future", Sohail said.

However, later due to depressed market sentiment, share offering of another stockbroker was under-subscribed. Thus, during 2008, seven offerings were over-subscribed and two were not fully subscribed. The result of recently issued IPO by Media Times is still awaited.

He said that the outgoing year may be the worst year for the local stock markets. With only 5 trading sessions remaining, the KSE 100 Index is down 51 percent (61 percent in $), its worst performance since the introduction of the index way back in 1991 when Pakistan's market was opened for foreigners as part of financial sector liberalisation.


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## Pk_Thunder

*Export of textile, food items increases *​

ISLAMABAD, Dec 24 (APP): Textile exports during the month of November 2008 witnessed increase of 1.22 percent as compared to exports of October 2008.

Textile exports during November were recorded at $838 million as against exports $828 million registered in October 2008, according to data released by Federal Bureau of Statistics.

However, as compared to the textile exports of the same month of last financial year, exports during November 2008&#8209;09 witnessed decrease of 7.2 percent. Textile exports during November (2007&#8209;08) were recorded at $903 million.

As compared to October 2008, the export of raw cotton during the month under review was increased by 23.15 percent however, cotton yarn witnessed decrease of 11.02 percent while export of cotton cloth witnessed decline of 3.57 percent.

Export of carded cotton was decreased by 56.03 percent, yarn other than cotton yarn by 23.65 percent, towels by 8.77 percent and madeup articles export declined by 8.30 percent.

However, export of readymade garments increased by 21.67 percent, knitwear by 4.63 percent during the month under review as compared to month of October.

Similarly, bed wear export was increased by 4.76 percent, tents, canvas and tarpaulin by 68.24 percent, art silk and synthetic textile by 0.06 percent.

On the other hand, food export from the country was increased by 10.71 percent during the month of November 2008 as compared to month of October.

Among food items, export of rice was increased by 18.17 percent. However, export of basmati rice was decreased by 13.06 percent while the export of other rice items increased by 49.32 percent.

Export of fruits increased by 54.66 percent, vegetables by 86.37 percent, spices by 47.80 percent and oil seeds, nuts and kernels by 231.12 percent.

However, export of fish and fish preparations was declined by 19.35 percent, leguminous vegetables (pulses) by 33.54 percent while meat and meat preparations export declined by 1.26 percent.


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## Neo

*'Pakistan offers host of economy areas to investors'​*
ISLAMABAD (December 24 2008): Senator Waqar Ahmad Khan Minister for Investment has said that Pakistan is open for business and offers host of areas of economy to the local and foreign investors including agriculture and Livestock, oil and gas exploration and energy sector. The Minister said this While talking to ambassador of Bahrain, H E Muhammad Ibrahim Muhammad Abdul Qadir who called on him in his office on Tuesday.

The Minister said that the government is ensuring level playing field to the local and foreign investors and will welcome the investors from Bahrain to benefit from the business friendly atmosphere in Pakistan. He said that the rates of return in business are quite high in Pakistan, whereas in developed countries the profits have been drastically reduced.

He said to materialise the vision of President Asif Ali Zardari, a new Ministry has been created which will act as facilitators/trouble shooter and this Ministry will bridge the gap between investors and various government departments. The Minister while highlighting the various steps taken by the government said that the government is addressing investors concerns regarding security and the creation of Task Force on Security headed by Minister of State for Interior is under process.

He said that the government has decided to establish special business/economic zones for investors with the tax exemption on machinery, equipment as well 100 percent repatriation of the profits to their native countries. The ambassador of Bahrain said that their government and the people highly value their relations with Pakistan and said that they are keen to invest in Pakistan.


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## Neo

*Growth slowed down, inflation rose during January-June 2008: survey​* 
ISLAMABAD (December 24 2008): A survey of large business firms and companies of Karachi during January-June 2008 confirmed overall slowdown of economic growth and rise in inflation, reflecting growing inflationary pressure on big firms during the period under review.

The Pakistan Institute of Development Economics (Pide) on Tuesday released 'Business Barometer' to share with people the results of business survey of financial sector covering textile, sugar and allied industries, cement, oil and gas exploration companies, engineering, automobile assemblers, automobile parts and accessories, fertilisers, pharmaceuticals, chemicals, banaspati and allied industries, food/personal care products and glass/ceramics.

The findings of the survey are based on the data collected from 61 selected firms listed at Karachi Stock Exchange (KSE). The survey results showed that there would be further decline in the economic growth during second half of 2008.

Despite sluggishness in business activity during 2008, the PIDE survey results showed increase in production, investment and sales in domestic market. The report shows that during first half of 2008, economic growth declined as compared to the second half of 2007. Majority of firms, 68.3 percent, saw slow economic growth, followed by 18.3 percent firms indicating the same level of growth. However, only 13.3 percent of the respondents indicated a faster growth in economy.

According to majority of the firms, input prices had increased during the study period. The increase in input prices ultimately forced the business firms to raise their own final goods prices. Only 2.1 percent of the respondents reported decrease in the prices of their inputs.

A large number of them, 95.7 percent, indicated that their input prices increased in the first half of 2008 while 2.1 percent reported no change. For the current half of the year 2008, 93.5 percent expect a rise in the prices of their inputs, while 4.3 percent expect it to stay the same. Only 2.2 percent of the firms said they expected a fall in the prices of their inputs.

The business sector noted that the level of growth of economy during first half of 2008 had declined as compared to the growth level during the previous six months. The difference in the assessment of the financial and non-financial sectors of the country diminished for the year 2008. The financial sector had joined non-financial sector in comprehending slower pace of growth for the first half of the year 2008.

The expectations of the business sector, about the pace of growth of the economy in last six months of 2008 were pessimistic. The net balance remained consistently negative, as in the case of previous two assessments. Therefore, decline in the economic growth was expected for the second half of 2008. The overall net balance of the growth was negative, meaning thereby that majority of firms were anticipating lower growth. Even the financial sector, which was initially showing positive net balance, had moved into the negative zone, as its optimism resided.

In the survey, all the firms unanimously experienced higher prices in the first half of 2008. Their expectations were also higher for the second half of 2008. The analysis showed that both financial and non-financial sectors, neither of them experienced nor anticipated any fall in the general price level for the year 2008. With 100 percent respondents reporting higher prices, the net balance remained consistently positive for the general price level.

Moreover, there was increase in input prices, output prices, rate of interest on deposits, interest rate on advances and wages. This upward assessment of business sector was in line with high inflationary expectations. The financial sector was expecting increase in the rate of interest on deposits, interest rate on advances and reserves which would be in line with the tight monetary policy adopted by the State Bank of Pakistan. Its future expectations about its activities were also high. Business sector was expecting the level of investment to be higher in the second half of 2008. The higher investment expectations were driven by the visibly higher expectations of the financial sector.

As far as the other economic variables were concerned, majority of the firms was reporting increase in production, investment and sales in domestic market. This was mainly driven by the higher expectations of the rise in the final product prices. At the same time, the firms' expectations of an increase in the input prices and wage pressure was leading to the piling up of the inventories. The employment levels were reported to be stable as the firms continued to operate at below capacity level. The financial sector optimism about employment indicated that more jobs would be created. The leading constraints affecting firms' production were the regulatory environment and the insufficient demand. The insufficiency of

The crux of the survey was that growth has slowed down and inflation had risen up during Jan-June 2008. Further decline in the gr demand, particularly in the international market, could be attributed to the rising global inflation.

The crux of the survey was that growth had slowed down and inflation had risen up during Jan-June 2008. Further decline in the growth level and rise in the rate of inflation was expected during the second half of the year, thus implying an urgent need of a comprehensive macroeconomic policy framework for the control of inflation by the authorities.

As pointed out in the last edition of 'Business Barometer', the problems of declining expected growth and rising inflationary expectations were demanding co-ordinated efforts by the State Bank and the Federal Government.

About the constraints faced by the non-financial sector of the economy, 50 percent of the firms reported that their production was constrained by different factors. Out of the constrained firms, 50 percent of firms thought that improper regulatory environment was the most important constraint, followed by insufficient demand (ie 38.5 percent) and insufficient skilled workforce (ie 18.8 percent), while 16.7 percent of firms thought that insufficient access to credit created hurdles in business growth while insufficient access to imports and insufficient capital was felt by 9.1 and 7.7 percent of business firms respectively.

Interestingly, 50 percent of the respondents reported increase in their activities (Deposits, Advances, Investments) in the international market during Jan-June 2008, as compared to the second half of 2007; 50 percent reported no significant change.

Regarding future activities, the evidence showed that financial institutions were optimistic about the international market, as 50 percent of the institutions hoped that their activity would increase, and 50 percent expected that there would be no change in the size of their international market activity. None of institutions expected decline in activity.

Looking at the interest rate, 91.7 percent of the respondents said they experienced increase in interest on deposits during the first six months of 2008, while only 8.3 percent respondents reported that interest on deposits remained the same. None of the respondents report that interest was lower in the first half of 2008. For the next six months, only 8.3 percent reported that the interest rate on deposits would stay the same, and 91.7 percent expected that the interest rate would increase, while none expected fall in the rate of interest.

The financial sector was feeling upward pressure on the interest rate on advances due to increase in the deposit rate, wages, and other expenditure, forcing it to raise the prices of their advances. None of the respondents reported decrease in the interest rate on advances, whereas 83.3 percent indicated that interest on advances increased during the first half of 2008 as compared to the second half of 2007.

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## Neo

*AJK industrial zone: over 20,000 kanal of land reserved for site​*
MIRPUR (December 24 2008): Site for a new grand industrial zone over an area of 20,000 kanal of land in Mirpur, Azad Jammu Kashmir has been reserved to promote the industrial development in AJK. Chaudhry Muhammad Yousaf, AJK Minister for Commerce and Industry, disclosed here, official sources said.

The sources close to AJK Department of Commerce and Industry told APP here on Tuesday that the industrial units of various products including marble, electrical appliances, decorative tiles, chemicals, food testing labs, plywood, wood works, mineral water, steel re-rolling and dairy products are proposed to be established in the new mega industrial zone.

The sources continued that besides the local investors, foreign investors will be given all possible facilities and incentives for encouraging the establishment of maximum industrial units in the new zone. "It would lead to the investment of billions of rupees in the industrial sector in Mirpur alone strengthening the economy of the area to a greater extent," the sources said.

They said that a grand international investment conference will soon be held in Mirpur to invite maximum investment, both from home and abroad, in the industrial sector in AJK where the most conducive atmosphere coupled with required infrastructure was already available. The sources said that the government was already extending required facilities including attractive incentives in the form of tax holidays for five years period in small industrial estate Mirpur and industrial estate in Kotli, AJK.


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## Neo

*'Pakistan vigorously pursuing IPI gas pipeline project'​*
ISLAMABAD (December 24 2008): Advisor to Prime Minister on petroleum and natural resources, Dr Asim Hussain, has highlighted that Pakistan is vigorously pursuing Iran-Pakistan-India (IPI) gas pipeline project to meet the growing energy demands and possibility of increasing import of crude and petroleum products. Pakistan's delegation, led by Dr Asim will visit Tehran on December 29 to sort out the issue of price revision for the signing of GSPA of the IPI project, he said.

He was talking to Mashallah Shakari, Iranian Ambassador in Pakistan, who called on him in his office here on Tuesday. They expressed satisfaction with the progress in IPI gas pipeline project and desired that its early implementation would also serve to strengthening and expanding the economic and trade relations among the regional countries. The advisor told the envoy that IPI is an important component of Pakistan's long-term energy plan, "and we are fully committed to its early completion.

Asim said that oil and gas co-operation between the two countries would open up new vistas for their mutual advantage. He invited Iranian investors to avail the investment opportunities existing in Pakistan's oil and gas sector. Pakistan imports 10,000 bpd Iranian light crude and is working on crude oil import arrangements from Iran on deferred payment, the advisor said. The meeting was also attended by Petroleum Secretary Mahmood Saleem Mahmood and other officers of the ministry.


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## Neo

*ADB study underlines: new development strategy paradigm imperative for agriculture growth​* 
FAISALABAD (December 24 2008): Asian Development Bank (ADB) emphasised the need for a new development strategy paradigm for sustainable growth of agriculture in Pakistan, which will have to be based on moving into higher technological orbits, reformation of marketing systems, and moving towards value addition through processing and branding of agri-based products for export viability.

This was disclosed by a study of Asian Development Bank's consultants and experts. According to ADB study, the sources of agriculture growth in the past were mainly due to area expansion, extensive use of water resources, and technological improvements.

Growth through area expansion and extensive use of water has reached its point of diminishing marginal returns. Relying on expansion of these physical resources as drivers of growth will not be a technically viable option in the future.

With a growing population, limited land use intensive based technologies that are being developed, increasing areas of degraded land, and a skewed land ownership structure, there is hardly any cultivable land that would be available for agriculture.

While there is about 8 million has of culturable wasteland or farm area that at present are unfit for cultivation, a huge investment will be required to turn these into productive farmland.

Further, current agronomic practices and other factors, which are discussed in the next chapter impede the prevention of existing quality land from deteriorating and from investing in the conversion of culturable wasteland into usable land base.

ADB report pointed out that depending on extensive extraction of water resources as a means to improve or maintain production levels is also not a viable route in the future. Both ground and freshwater are becoming a scarce commodity, as demand for this resource to satisfy competing uses continue to intensify. Like land, water has been allocated irrationally and inefficiently, resulting to the lowering of water levels and deterioration of its quality.

Studies have shown that even under a low demand scenario and with an assumption of increasing water use efficiency by the year 2024/25, there would be a shortfall of around 23% under the existing supply scenario. Clearly, overall water availability will be a serious constraint on future agriculture crop growth.

ADB study mentioned that the increased cropping intensity through intensive use of land and water resources was another growth source factor until the 1980s, after which the growth of multiple cropping levelled off.

It said that water shortage and land degradation are the basic factors for the variation in cropping intensities. Extrapolations based on the past cropping intensity trends do not reflect much potential for the cropping intensity to increase markedly in the future, it added.

This may change with the development of relevant technologies but as discussed in the next chapter, the present approach to research and extension coupled with the limited access to credit, appropriate market infrastructure, and markets, if continued, will not ensure sustained production and dissemination of appropriate technologies for improved crop productivity, ADB study revealed.

ADB study said that the use of green revolution technologies and the appropriate agronomic practices served as the major impetus for yield growth especially for the major crops. With limited technological breakthroughs (particularly for the potential minor crops) and unchanging technical practices, growth from yield improvements has also stagnated.

ADB experts observed that the productivity growth from genetic breakthroughs combined with appropriate agronomic practices will not be available nor will these be easily accessible especially to the major smallholders unless major reforms are taken in research and extension, and rural finance, it added.

ADB study said a confluence of factors will be needed to expand the production frontiers of the crop sub-sector; the major bottlenecks impeding the growth potentials of the sector are identified and discussed in the next chapter.

In essence, ADB report stated that the lesson learned from the past experience is that doing "more of the same" to unleash the growth potentials of the agriculture/farm sector will not likely yield as much results. A new development strategy paradigm is required for sustainable growth.

The new Agriculture Strategy will have to be based on moving into higher technological orbits, reformation of marketing systems, and moving towards value addition through processing and branding of agri-based products for export viability.


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## Pk_Thunder

*'Pakistan needs more technical institutes'*​
RECORDER REPORT
KARACHI (December 25 2008): Speakers at a seminar on Wednesday observed that there is an acute dearth of technical institutes in the country which is putting negative impact on the small and medium industrial growth.

SME sector is providing over 70 percent employment as a non-agriculture sector in the country, they said at the seminar on "SMEs under the era of globalisation" organised jointly by Japan External Trade Organisation (JETRO), FPCCI and KCCI at a local hotel.

Speaking on the occasion, JETRO expert at FPCCI, Haruki Shimzu, highlighted the Pak-Japan trade, saying that in 2005 Japan's exports to Pakistan were $1.5 billion and imports from it were $140 million, a trade balance of $1.3 billion tilting in Japan's favour.

In 2006, imports from Pakistan increased to $210 million and exports to it exceeded $1.7 billion, with a trade balance of 1.5 billion again in favour of Japan, he said, adding that during the same period, Foreign Direct Investment from Japan was 57 million and 47 million respectively. Japan exported transport machines and general machinery and metal and metal products, and imported textiles, mineral fuels and raw materials from Pakistan.

In the context of employment through SMEs in both the countries, he said that employment in Pakistan is 78 percent and in Japan it is 70 percent. The number of enterprises is 90 percent in Pakistan and 99.7 percent in Japan. Contribution to Gross Domestic Product in Pakistan is 30 percent and 51 percent in Japan. He observed that SMEs create new business and jobs, promote entrepreneurship and it is the primary mover of the economy. However, there is a need for further consultation for its development.

He said at present Japan is facing problems in its recovery. He said that more manufacturing units have moved to other countries along with technologies and management expertise. Similarly, jobs also moved with them. There is less difference of Japan's manufacturing with the overseas factories as the common technologies have already been exported.

The new generation has less interest in working at the manufacturing sector, resulting in discontinuation of technical skills. While closure-rate is higher than the start-up rate, that needs improvement, Haruki Shimzu pointed out. Zubair Tufail, Vice President of FPCCI and President of KCCI Anjum Nisar also spoke on the occasion.


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## Pk_Thunder

*181 percent surge in cotton export*​
RIZWAN BHATTI
KARACHI (December 25 2008): The country's cotton exports registered a healthy growth of 181 percent during the five months of the current fiscal year mainly due to better quality and low prices, market sources said. They said that exporters are getting export orders of huge quantities on the back of on-time availability of cotton, low prices, slow demand by millers and expected better cotton crop as compared to last year.

Following international market rates, cotton prices in the country have also reduced by some 35 percent during last few months and at present average quality cotton prices stand at around Rs 3,100 per maund as compared to Rs 4,200 per maund in August.

As per crop assessment committee projection, the country is likely to get a cotton crop of over 12 million bales during current fiscal year as compared to 11.6 million bales in last fiscal year. Official statistics show that cotton export has increased by 181.32 percent during the July-November period of current fiscal year, exporters said.

During July-November of current fiscal year, the country has exported cotton worth $48.943 million as compared to $17.404 million during the same period of 2007-08, depicting an increase of 31.539 million dollars during the first five months of the current fiscal 2008.

Month on month basis, cotton export increased by some 94 percent during the last month. With current surge cotton export has reached 12.8 million dollars November 2008 as against the exports of some 6.594 million dollars during November 2007, depicting an increase of 6.206 million dollar in single month.

"We are offering better quality cotton at low price of 48-54 cents per pound, which is lowest in the international market," exporters said, adding that same quality cotton is being offered for 60-65 cents per pound by Indian traders.

At present Pakistani exporters and traders are market leader by offering lowest cotton price in the region and getting huge export orders from Brazil, Malaysia, India and other countries, they said. Exporters said that local textile miller are reluctant to procure huge quantity of cotton due to declining trend in the textile export and liquidity shortage, which is also a major reason of decline in the cotton price in the local market.


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## Pk_Thunder

*Government won't allow shipment of imported wheat after February 15*​
MUSHTAQ GHUMMAN
ISLAMABAD (December 25 2008): The federal government has decided not to allow shipment of imported wheat after February 15 because any further delay would hurt farmers, well-informed sources told Business Recorder.

The Economic Co-ordination Committee (ECC) of the Cabinet, in its meeting on December 2, 2008, presided over by the Prime Minister's Advisor on Finance, Shaukat Tarin, had decided to import additional 0.75 million tons red wheat with better specifications.

The ECC was informed that the existing wheat stocks were sufficient enough and could run up to February 15, 2008 but these stocks need to be jacked up. The Ministry of Food, Agriculture and Livestock (Minfal) had suggested that it should be allowed to import one million tons of additional red wheat with better specifications.

The sources said the Minfal had been authorised to import 3.5 million tons wheat, out of which import of 1.76 million tons was completed by the TCP before December 2, 2008. According to sources, the ministries of Finance and Minfal have imposed restrictions on import of wheat in containers, which effectively would bar small investors from participating in wheat import.

This decision was read by Shaukat Tarin at the Daily Economic Monitoring Committee meeting from a chit, given to him, despite opposition by some of the stakeholders present in the meeting. "The new decision will encourage big parties who always want to keep the small importers out of competition," commented one of the federal government officials on condition of anonymity.

Minfal, which submitted the summary to the ECC, however, did not consult Pakistan Flour Mills Association for the changes made in imported wheat specifications. "We have to grind the imported wheat and the government must consult us before taking any decision for change in specifications," said one of the millers.

The sources said the ECC had allowed import of additional red wheat with better specification, besides instructing the Minfal that after finalisation of negotiations with the US for 0.05 million tons of white wheat, matter must be resubmitted to the ECC for review.

On December 18, USA and GOP signed an agreement, according to which the US will provide 200,000 to 300,000 tons of wheat at a cost of $48 million to Pakistan on deferred payment. Trading Corporation of Pakistan has floated a tender to import US wheat.

According to reports, the government has already exempted the US wheat from pre-shipment inspection without providing justification after Washington opposed any such condition. Minfal had approached the Economic Affairs Division (EAD) to obtain No Objection Certificate for the deal with the US. According to the prescribed procedure, inspection of wheat before shipment is necessary for the safety of Pakistan's own wheat produce. But in this case, the government has requested an exemption.

Agriculture experts fear that transportation of the US wheat to upcountry might cause spread of kernel bunt, which could harm Pakistan's wheat seed, which, in turn, would negatively impact wheat yield. One of the experts proposed that the US wheat should not only be shipped to Gwadar Port but its grinding arrangements also be made near Gwadar. The government, however, is of the view that the US wheat would be stored in Karachi and after grinding, the flour would be transported to other parts of the country.


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## Pk_Thunder

*Big entities/groups may have separate sales tax number for each unit*​
SOHAIL SARFRAZ
ISLAMABAD (December 25 2008): The Federal Board of Revenue (FBR) has decided to allow big entities/groups, engaged in multiple business activities, to obtain separate sales tax registration numbers for their manufacturing units located in jurisdiction of different collectorates or regional tax offices (RTOs).

This is subject to the condition that the Board would have the powers to allow or reject applications for obtaining multiple sales tax registration numbers. If the FBR deems appropriate, only then multiple sales tax registration would be permitted to any big business group.

The board on Wednesday amended Sales Tax Rules 2006 through SRO 1289(I)/2008 to resolve this major problem of the taxpayers. The decision might facilitate top hotel chains and army organisations engaged in different business activities.

According to the new amendment, the board may, subject to such conditions as it may deem appropriate, allow or allocate a person separate registration for manufacturing units located in different collectorates or the RTOs.

Sources said that the amendment would allow leading companies, engaged in multiple business activities, to apply to the board for obtaining different sales tax registration numbers for separate manufacturing units. If the board feels satisfied that the business group is facing genuine problem due to single registration number, it might issue multiple numbers for different units.

In the 2008-09 budget, rule 10 of the Sales Tax Rules, 2006 was substituted by SRO 530(I)/2008 of June 11, 2008. Under the rule (Cancellation of multiple registrations), in case a person holds multiple sales tax registrations, he shall retain only one registration and surrender all other registrations under intimation to central registration office (CRO). Alternatively, such registered persons shall file only one return for the tax period July 2008, and onwards, against the registration number they wish to retain and all other registration numbers shall be cancelled by CRO.

The tax liabilities against the registrations cancelled in the aforesaid manner shall be transferred against the registration retained and in case of such registrations being in different Collectorates, the Collector having jurisdiction over cancelled registrations shall ensure that tax arrear files are transferred to the Collectorate having jurisdiction over the registration so retained, the rule added.

Subsequently, a number of business groups had approached the board for retention of multiple sales tax registration numbers. To resolve the genuine problems of taxpayers, the FBR has amended the Sales Tax Rules to introduce a provision for allowing multiple sales tax registration numbers.


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## Pk_Thunder

*NIT ordered to intervene in bourse activity from Monday*​
RECORDER REPORT
KARACHI (December 25 2008): The Advisor on Finance to the Prime Minister Shaukat Tarin has asked both the finances and financiers to resolve the Rs 9.8 billion of transactions conducted under the Continuous Funding System (CFS) or 'Badla' in an amicable manner and ordered the National Investment Trust (NIT) to intervene in the bourse activity from Monday December 29, 2008.

At a meeting held at his residence in Karachi, the Advisor asked the Financiers (lenders) to accept to partly adjust and carry forward the transactions to avoid sale of shares held in CFS so that market does not come under more pressure on Friday. He formed a committee under the Chairmanship of Mutual Funds Association of Pakistan Najam Ali.

The finances agreed to meet later in the night and come up with a formula acceptable to the Finances (borrowers) ie the brokers giving relief from additional margins to leverage investors. According to reliable sources, the formula under discussion was to give a waiver of 30 percent to borrowers of up to Rs 50 million; 20 percent for borrowing up to Rs 100 million; 10 percent and five percent for borrowing limit of Rs 250 million and Rs 500 million and above respectively.

The Advisor on Finance had to intervene after the Securities and Exchange Commission of Pakistan (SECP) could not resolve the issue of CFS funding. While the borrowers were in favour of another forced roll over directive and SECP did propose two options based on this premise - the lenders rejected the proposal feeling it was too one-sided.

Even in yesterday's meeting the Chairman SECP Razi-ur-Rahman Khan and the President of Abamco, Najam Ali exchanged hot words and blamed each other for the fiasco at the KSE and in the Sindh High Court.

The Advisor had to intervene due to the looming systemic risk since the removal of floor on December 15th, 2008 the whole universe of equity based investment is in suspended animation and there is still no price discovery at the stock market.

The major eight public sector scrips have declined by nearly 25 percent on the ready board and by 40 percent in off-market transactions. Even in illiquid stocks (called side items) there has been some side activity, however, in all major liquid stocks values have declined without any buying or on buying 100 shares per scrip.

CFS settlement has further aggravated the problem. Around 140 brokers were being affected. 54 brokers were issued notices by NCCPL upon removal of the stay order by the SHC. Now around 14 brokers are in suspension against claim of Rs 4 billion. Only two brokerage firms (having common ownership) reportedly account for Rs 1.4 billion in CFS borrowing.

The banking sector lending against shares is four times the outstanding CFS amount. Due to decline in market values banks are also inclined to sell in the market to meet margin requirements. The banks are forced to sell as borrowers are short of money or liquidity.

Second, the properties held by banks as collateral cannot be sold as there are no buyers in the property market. Since there are reports of rising non-performing loans eroding the profitability of banks - banking scrips which along with oil are market leaders and revenue spinners - and inventory losses of OMCs is adding to selling pressure.

Various sectors including automobile and cement are also adding to the selling pressure. Since corporate sector profits are declining and liquidity is still short in satisfying the appetite of trade and industry, the banks are not allowing borrowing against approved limits thereby creating a risk for the financial sector.

The Advisor on Finance Shaukat Tarin after proper evaluation reportedly asked National Bank, EOBI, State Life and a consortium of banks to provide a fund of Rs 20 billion - against a guarantee of the Government to purchase eight eligible PSE stocks from both CFS system held by banks towards financing against shares. These scrips bought at cut-throat values will be sold to overseas Pakistanis as a package to hold on for 24 months and earn both dividend and capital gains.


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## Pk_Thunder

*Eight-member task force on maritime industry constituted*​
RECORDER REPORT
ISLAMABAD (December 25 2008): The Planning commission has constituted an eight-member task force on maritime industry and it has been entrusted to propose appropriate amendments to the Merchant Shipping Ordinance-2001 and other relevant legislation. According to a notification, issued by the Planning Commission here on Wednesday, Deputy Chairman of Planning Commission Sardar Aseff Ahmad Ali has constituted a task force on maritime industry, headed by Naeem Sarfraz.

The task force has been entrusted with the tasks to propose appropriate amendments in the Merchant Shipping Ordinance 2001 and any other relevant legislation to make it suitable for the future maritime industry. It would make recommendations on procurement of ships in the private sector to substantially reduce foreign exchange freight bill, said the notification.

It also aims to build capacity of all sectors, supporting ship activities in ports, deepen navigable channels, develop private terminals, ship-building, ship repair, manufacture and repair of container, survey facilities, etc at all ports in Pakistan.

THE TERMS OF REFERENCE OF THE TASK FORCE ARE AS UNDER:

-- To propose appropriate amendments to the Merchant Shipping Ordinance 2001 and any other relevant legislation to make it suitable for the 21st century maritime industry. The draft bill should be prepared within 90 days for putting up to Parliament.

-- Procure ships in the private sector, which will substantially reduce foreign exchange freight bill by approximately four billion dollars annually.

-- Deepen navigable channels in all ports to 16.5 metres or more to handle modern vessels.

-- Build capacity of all sectors supporting ship activities in ports, including navigational aids, tugs, dredgers, shore cranes, bunkers, water, power, manpower, customs, immigration, security, environment issues etc.

-- Develop private terminals, shipbuilding, ship repair, container manufacture and repair, survey facilities, etc in all three ports.

-- Create an enabling environment in Gwadar for handling transhipment and transit cargos to realise the full potential of this national asset.

-- Expand the capacity of Karachi and Port Qasim in keeping with national economic goals of the 21st century.

-- Develop three pilot projects of inland waterways in co-operation with the provincial governments.

-- Encourage direct foreign investment (FDI), private-public partnership and commercial financing instead of enhancing foreign loans.

-- Propose a Federal Maritime Commission for sustained development of the sector.

-- Promote the tapping of natural resources along the coast and in Pakistan's maritime exclusive economic zone. The task force may induct additional members, as it considers appropriate, and keep the Planning Commission on the progress of its deliberations. The Planning Commission would be the Secretariat of the task force.

The task force comprises Naeem Sarfraz: Chairman; and former Justice Shaiq Usmani, Dr Zia Rizvi, Mohammed A Rajpar, Captain Changez Khan Niazi and Rear Admiral Arshad Munir: members; and ex officious are Secretary, Ministry of Ports and Shipping and Chief of Transport and Communications of Planning Commission.


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## Pk_Thunder

*Iran agrees to provide oil on deferred payment*​
ZAFAR BHUTTA
ISLAMABAD (December 25 2008): Iran has agreed to provide either furnace or light crude oil on deferred payment to Pakistan for a two-year period and a Memorandum of Understanding (MoU) in this regard is likely to be signed between the two countries by end of current month in Tehran.

Well-informed sources revealed to Business Recorder that it would depend on Pakistan to get either furnace oil or light crude oil on deferred payment for two-year period from Iran. Sources said that a delegation to be led by Advisor to Prime Minister on Petroleum and Natural Resources Dr Asim will visit Teheran from December 29-30 to finalise the technical modalities of MoU regarding the provision of Iranian oil.

They said government is considering whether to opt for the facility of crude or furnace oil on deferred payment for two years. As Pakistan consumes more crude oil relative to furnace oil and opting for the former will reduce the oil import bill.

The total requirement of Iranian Light Crude Oil for processing in Pakistan refineries is about 67,000 barrels per day and Pakistan Refinery Limited (PRL) is importing 10,000 barrel crude oil per day from Iran under contract on 30-day credit basis. However, Iran has revised the contract to provide 30,000 barrels crude oil per day on 90-day deferred payment effective from January 1, 2009.

Pakistan had requested 50,000 barrels crude oil per day for PRL on deferred payment, however, Iran agreed to provide 30,000 barrels per day, sources said.

Sources further said that Pakistan would negotiate the modalities for the provision of 67,000 barrel per day light crude oil on deferred payment for two years period.

Pakistan crude oil requirement is around 202,000 barrel per day (BPD). Pak Arab Refinery Limited (Parco) and National Refinery Limited (NRL) import 110,000 barrels per day (Arab Light) from Saudi Arabia. Parco and NRL import 52,000 barrels per day oil from Abu Dhabi, 10,000 barrels per day by PRL from Iran and 30,000 barrels per day by Biscor under Terms contract agreements with refineries on commercial basis.

Total consumption of high speed diesel (HSD) was 8.25 million tons during the financial year 2007-08.The country requirement was met by locally refined 3.56 million tons HSD whereas 4.51 million tons HSD was imported. The country total consumption of gasoline was 1.34 million tons and local oil refineries produced 2.33 million tons gasoline. The surplus naphtha of 0.94 million tons was exported. The Iranian oil facility on deferred payment would help continue smooth supply of fuel in Pakistan.


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## Neo

*Pak-India conflict to add to ranks of poor ​* 
*Already half of worlds poor live in South Asia​*
Thursday, December 25, 2008

KARACHI: The escalating tension between India and Pakistan over Mumbai attacks is likely to compound miseries of poor, increasing their number in a region already having half of the worlds hungry people, analysts say.

Commenting on South Asian politics, the World Bank in a recent report said corruption, confrontational politics and conflict threatened to derail the process of economic development.

The News talked to a number of analysts with expertise in South Asian affairs to get their views on the current tension. They said an increase in defence budget and cut in development expenditure would lead to a rise in poverty.

Due to the conflict in NWFP, the defence budget was increased by 4 per cent to 28 per cent compared to 24pc announced earlier, said Syed Qasim Ali Shah, an independent analyst monitoring development and poverty in South Asia.

Tension between the two countries would further push up defence spending at the cost of development budget, and in case of a war, the development budget would be slashed by 30 to 40 per cent.

Shah said ongoing war of words would affect many development programmes and donor agencies would ask for return of their loans.

South Asia, with a combined population of 1.4 billion, is home to more than 400 million poor. This accounts for around half of the worlds hungry people.

Pakistan and India have the largest community of hungry people in the world, said Aftab Alam Khan, Head of Trade Policy, Action Aid International.

A cut in development budget and increase in defence expenditure would create armies on two fronts; a combat army and an army of poor.

Abdul Karim Palijo, a resident of Gharo, Thatta, stole bread (naan) from a tandoor this Monday. He was caught, beaten and held at a police station for eight hours. He did not know he was not alone. More than 850 million people go hungry every night, according to a World Bank report, and some 1.2 billion people around the world live on less than one dollar a day.

The World Bank data shows that 47 per cent children are underweight and 71 million live under constant threat of violence. Nearly 1.6 billion people of the world have no access to electricity, of which 45 per cent live in South Asia alone.

Stories of auctioning some children to feed the rest of family got prime spaces and time in Pakistani newspapers and satellite channels a few months ago. One such person succeeded in selling two children in Khairpur while several others failed.

Handover of more than a dozen children to the Edhi Centre, a charity organisation, in Karachi was another example of absolute poverty.

In India, home to around 400 million poor farmers, during nine years from 1997 to 2005, more than 150,000 poor peasants committed suicide.

According to the World Bank, growth in South Asia eased to 6.3 per cent in 2008 from 8.4 per cent in 2007 and is expected to slip to 5.4 per cent in 2009. High food and fuel prices, tighter credit conditions and weaker foreign demand have led to worsening external accounts and slower investment growth. The downturn is more apparent in India and Pakistan, where industrial production has fallen sharply.

In its annual report, the World Bank observed that economic growth had been accompanied by rising inequality and the region was continuously suffering from worst levels of human deprivation in the world.

Aftab Alam, Action Aids Head of Trade Policy, said if war broke out, it would damage development infrastructure, affect market, damage financial resources and increase poverty.

In food production, Pakistan is not self-sufficient. Around 80 per cent of its urban districts are food insecure, said Alam, and around 62 per cent of rural districts were food insecure.

He said the conflict between the two countries would further aggravate the situation, leading to food hoarding.

India and Pakistan could be forced into a vicious circle of poverty and both would lose their micro and macro economic development. The important thing, he said, was that Pakistan and India should start a peace process and deal with the Mumbai attack issue through bilateral talks.

Syed Qasim Ali Shah said, India and Pakistan both cant afford (the conflict), adding its after-effects would also be felt in Bangladesh, Sri Lanka and Nepal.

Dr Abid Qayum Suleri, an expert on South Asian affairs and Executive Director of Sustainable Policy Development Institute, said before the tension arose an environment was developing for a cut in the defence budget, but now it will be affected.

He said foreign direct investment (FDI) would slow down which would raise poverty level in the two countries.


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## Neo

*FMFB ranked 7th among top 100 MFIs of world ​* 
Thursday, December 25, 2008

KARACHI: The First Micro Finance Bank Limited (FMFB) has been ranked 7th in the 2008 MIX Global 100 Composite Rankings of Microfinance Institutions (MFIs).

An announcement to this effect was made in a statement of the bank issued here on Wednesday. It said that the rankings issued by the Microfinance Information Exchange, Inc highlighted the performance of well rounded; leading MFIs that boost outreach and lower costs to serve clients in a transparent manner.

The statement further said that according to the report made available on the mix website MIX ? Microfinance Information Exchange, Inc. on December 22, FMFB with the 7th position was the only MFI from Pakistan to make it to the top 25 MFIs of the world.

It said that the Aga Khan Agency for Microfinance as a global network was represented twice in the list of top 100 MFIs with FMFB, Tajikistan ranking in the top 100.

Based on data from MIX Market, the worlds most comprehensive public database on MFIs, the MIX Global highlights the leading performers in each of seven categories within outreach, scale, profitability, efficiency, productivity and portfolio quality.

The 2008 MIX Global surveyed 971 institutions for FY 2007, an increase of over 20 per cent over last year. And leading performers were drawn from a diverse sample of MFIs that served over 67 million borrowers with over $35 billion in loans and held $15 billion in deposits from 65 million micro-finance clients from all regions of the globe.

Overall, FMFB - Pakistan scored 80.58 per cent while the number one ranked MFI, MBK Ventura of Indonesia scored 87.18 per cent. 

FMFBs outreach was ranked relatively higher at 80.20 per cent with an exponential growth in borrowers of about 93.8 per cent as compared to the averaged borrower growth rates of 56 per cent by the leading 100 MFIs.

FMFB attained a 100 per cent score on transparency, meaning that it maintained at least three years of standard performance results on MIX market, with the last two verified by audit reports.

The statement further pointed out that the FMFB scored a 61.55 per cent as against the industry average of 56.42 per cent on efficiency, which was highlighted as a challenge for the overall industry.

The First Micro Finance Bank, a part of the Aga Khan Development Network, has played an instrumental role in reaching out to the poor segments of society by enabling individuals to strengthen their entrepreneurial base and build financial, physical and human capital for a sound and secure future.

The bank strives to alleviate poverty through sustainable economic development by offering credit, savings and life insurance services along with an efficient and low cost funds transfer service to its target populations.

With over 89 automated branches all over Pakistan and access to 4,000 Pakistan Post outlets, FMFB has disbursed over 380,000 loans in a short span of six years.


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## Neo

*Mega projects in Chitral soon ​* 
Thursday, December 25, 2008

CHITRAL: The government will launch two mega projects to improve lifestyle of local people, especially womenfolk, stated Chitral Tehsil Nazim Sartaj Ahmad Khan here on Wednesday.

Briefing local journalists at his office, Sartaj Khan said a marble handicraft training centre would be set up to promote mosaic and handicraft sector. The centre would also provide livelihood opportunities to womenfolk, he said.

A management board comprising representatives of Small & Medium Enterprise Development Authority and the All Pakistan Marble Industries Association would maintain the centre. A marble mining and processing unit, a joint venture of local and foreign investors, would also be set up in Chitral at the total cost of Rs 275 million, Sartaj said, adding that the project would be completed in two years.


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## Neo

*Target for december: Govt needs to collect Rs 65bn more tax to meet IMF's benchmark​*
ISLAMABAD: The government is faced with a tough target of Rs 150 billion tax collection in the month of December 2008, which is Rs 65 billion more than normal per month tax collection. This is to meet the performance benchmark to limit the budget deficit agreed with the International Monetary Fund (IMF), a high placed source in Ministry of Finance told Daily Times.

The tax collection before the increase in the target from Rs 1.250 trillion to Rs 1.360 trillion was at comfortable level, however, the overall collection has been reportedly facing a shortfall and any deficiency in collection for the month of December 2008 would lead to a failure to meet IMF's benchmark, the official explained.

According to performance benchmark agreed with IMF, the government is required to collect Rs 150 billion in the month of December 2008 so that budget deficit is kept under control. "This enhanced tax collection target is the outcome of the increase in the tax collection target," explained the official sources.

The tax authorities have been tasked with enhanced revenue collection target of Rs 1.360 trillion as against the budgetary target of Rs 1.250 trillion projecting an increase of Rs.110 billion additional collections till June 30, 2008.

The Federal Board of Revenue (FBR) collected Rs 84.82 billion per month during July-November period of the current fiscal year 2008-09.

However, with the increased load shedding, slowdown in imports, massive decrease in oil prices in the international market and current tense situation with India would be the factors that are expected to impact the revenue collection in December 2008 onwards, the official added.

Massive reduction in oil prices in the international market from $147 per barrel to less than $40 per barrel and major decrease in edible oil prices have impacted the revenue collection at import stage in the month of November 2008. Due to decrease in oil prices and edible oil prices in international market local prices have been reduced which has also decreased the revenue collection on these products domestically. During the last fiscal year, when the oil prices were on the higher side, the government was able to collect over Rs150 billion, but scenario in this fiscal has totally changed leaving negative impact on tax collection both at import stage as well as domestic collection.

This trend is set to continue in the December as well as early 2009 and tax collection is set to face slowdown in the remaining months January-June of the current fiscal year 2008-09.

The government introduced Investment tax Scheme in the budget for legalising undeclared assets on the payment of 2 percent tax on fair market value of the asset. But this scheme is not yielded required results in the first half of the current fiscal year 2008-09. The government is expected to extend the deadline for scheme from 31 December 2008 to June 2009 to allow existing as well as new taxpayers to avail this opportunity.

On the other hand, the tax collection along with income tax returns and numbers of income tax returns during July-December is below expectations and requires tax authorities to bridge this gap in the second half of current fiscal year.

July-November: The Federal Board of Revenue (FBR) has collected Rs. 424.1 billion (net) during the first five months (July-November) of the current fiscal year (2008-09) as compared with Rs 340 billion in July- November 2007 - posting a healthy increase of 24.7 percent. In the month of November 2008 alone, FBR collected Rs. 69.8 billion, which was bolstered by a substantial collection of Rs. 50.5 billion from indirect taxes.

Breakdown of the consolidated FBR collection for the first five months of the current fiscal year (2008-09) show that all components of tax have registered stellar growth. Direct taxes, which account for 31.3 percent of total tax collection of the FBR have registered growth of 16.6 percent while indirect taxes exhibited impressive growth of 28.3 percent.

The contribution of indirect taxes in total tax collection of the FBR has increased from 66.6 percent in July-Nov, 2007 to 68.6 percent in July-Nov of this year. Within indirect taxes, sales tax, which accounts for roughly 64 percent of indirect taxes and 43.6 percent of total taxes, grew by 28.5 percent (Rs. 185.1 billion). Sales tax collected from domestic economic activity is up by a healthy 52.2 percent while sales tax collected at import stage grew by 11.1 percent. The custom duty collection is up by 20.9 percent and the collection of federal excise duty (FED) has recorded a note worthy increase of 39.2 percent during the period under review.


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## Neo

*PC forms task force on maritime industry​*
ISLAMABAD: The Planning Commission has constituted a task force with Naeem Sarfraz as its Chairman, for the development of maritime industry.

The task force has been entrusted to propose appropriate amendments in the Merchant Shipping Ordinance 2001 and any other relevant legislation to make it suitable for the maritime industry. It would make recommendations on procurement of ships in the private sector in order to substantially reduce foreign exchange freight bill. It also aims to build capacity of all sectors supporting ship activities in ports, deepen navigable channels, develop private terminals, ship building, ship repair, container manufacture and repair, survey facilities at all ports in Pakistan.

The draft bill should be prepared within 90 days for putting up to Parliament.

Procurement of ships in the private sector can substantially reduce foreign exchange freight bill by approximately $4 billion annually.

The task force will also take measures to create an enabling environment in Gawadar for handling transshipment and transit cargos to realise the full potential of this national asset. It will also recommend on the expansion of capacity of Karachi and Port Qasim and would develop three pilot projects of inland waterways in cooperation with provincial governments.

The task force will also propose measures of the establishment of a Federal Maritime Commission for sustained development of the sector, encourage direct foreign investment, private-public partnership and commercial financing instead of enhancing foreign loans.


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## Kumar

Pakistan's economic problem escalate

Business-Videos-The Times of India

IMF - 3.1b$ , China -500m $ , US - 44m$


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## Omar1984

^^^ Any Indian source on anything that has to do with Pakistan is false propaganda.


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## Moin91

*FBR may increase WHT on imports and exports: rate of withholding tax on cash withdrawal may also be enhanced*

SOHAIL SARFRAZ
ISLAMABAD (December 26 2008): It is learnt here on Thursday that the FBR is exploring possibility to enhance rate of withholding tax on cash withdrawal, imports and exports. The proposal is part of the FBR strategy on the "impact of withholding taxes collection for the year ending June 2009".

Some of the major taxation measures may include increase in withholding tax on the imports, exports and withdrawal of cash from banks to generate additional revenue in the remaining months of the current fiscal (2008-2009). One of the possibilities is to raise withholding tax on cash withdrawals from banks from 0.3 percent to 0.6 percent; on imports 2 to 5 or 6 percent exports from 1 to 2 percent.

The issue of increase in withholding tax rates is likely to be taken up in the next board-in-Council meeting chaired by FBR Chairman Ahmed Waqar. The FBR is collecting comprehensive data on withholding tax collection from the field formations to ascertain the revenue implications of possible increase in withholding taxes, source added.

When contacted, tax experts opined that the income tax officials are legally empowered under section 159 of the Income Tax Ordinance 2001 to revise the rate of withholding tax. Legally, there is no requirement to go to the Parliament for revision of withholding tax rates. Under section 159, Board may, from time to time, by notification in the official Gazette, amend the rates of withholding tax.

In last budget, a uniform rate of 2 percent withholding tax was made applicable to commercial as well as manufacturer importers to ensure a level playing field to all stakeholders. If the board wanted to generate additional revenue, the authorities have to restore the original rate of 6 percent at the import stage. Another option could be raising rate from 2 percent to 5 percent at the import stage.

Experts said that the withholding tax on all export proceeds has been charged at the rate of one percent as final tax to remove distortion and provide level playing field to the export sector. If the Board wanted to rationalise withholding tax on exports, the department has two options. Firstly, the board has the authority to double withholding tax rate on exports for increasing revenue collection.

Secondly, if the board does not want to increase withholding tax on exports, it could end the final tax regime for exporters. The final discharge of tax liability could be abolished for the exporters. However, it is at the board's discretion either to raise withholding tax on exports or abolish final tax regime.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

Local investors as much capable as foreigners 



*Experts suggest privatisation of only loss-making firms​*
Friday, December 26, 2008

LAHORE: The government needs to revisit its privatisation policy by facilitating formation of local consortia and ensuring that only loss-making public enterprises are handed over to foreign investors who start repatriating profits immediately after taking over running units.

Economists and industrialists point out that a flawed privatisation policy of the previous government has effectively stopped foreign direct investment in green projects in the country. All foreign investors are eying public sector companies at throw-away prices, they say and add they do so to squeeze out profits without going through the hassle of planning and developing a project and then wait for two to three years before going into profit.

During the past 18 years, they say, the government has privatised national assets worth Rs476 billion. Out of these, major profit-making enterprises have been sold to foreign buyers. These include Pakistan Telecommunications Company sold to Etisalat for Rs156.32 billion (since the payment was in dollars as on July 5 and full payment has not yet been received the amount would exceed in rupee terms), Kot Addu Power Company for Rs11 billion and Habib Bank for Rs22.4 billion.

The foreign investors did buy some banks and other companies which were revamped and were on the verge of turnaround like the United Bank and Bank Alfalah. In fact, a local bank was the highest bidder of the UBL but the then government rejected its bid and resorted to a non-transparent method for its sale to a foreign buyer.

There was no need to hand over liquefied petroleum gas businesses of Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipelines Ltd (SNGPL) to foreign oil companies. These could have been handed over to domestic investors through better marketing, convincing and awareness.

Experts point out that outflow of huge capital during the past one decade shows that local investors have money but they do not have confidence in their government. Foreign investment is fully protected while local investors are prone to blackmail by authorities.

The argument that foreign investors bring in better technology or boost productivity has been proved wrong if the performance of companies acquired by foreign investors or local entrepreneurs is compared. Allied Bank has made all its branches online much earlier than the banks taken over by foreign investors. MCB Bank has made handsome progress after being handed over to a local investor.

Al-Ghazi Tractor was acquired by a foreign investor and Millet Tractor was taken over by the Employees Management Group. The performance of both companies is open to all. No doubt Al-Ghazi has made good progress but Millat has taken equivalent or better leaps.

The cement sector acquired mostly by local investors has reached new heights and is on way to become a major source of bringing in foreign exchange in coming years. The experts say that public sector companies earmarked for privatisation still include lucrative profit-making enterprises like Oil and Gas Development Company, Pakistan Petroleum Ltd, Pakistan State Oil, Sui Northern and Sui Southern gas companies. Though share prices of all these companies have declined to unrealistically low levels, these companies are performing excellently.

It would be a folly, the experts warn, to privatise these companies until their share prices in stock markets rebound to actual values. The foreign investors would willingly take over these companies at current low values and local investors would also take a keen interest, they say, adding it would be a crime to hand over these high profit-making firms to foreigners.


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## Neo

*Private sector begins wheat import: first consignment arrives ​* 
KARACHI (December 26 2008): After three years, the first imported wheat consignment booked by the private sector reached Karachi on Thursday, which is aimed at lowering the prices of the commodity in domestic markets by bridging the rising gap between wheat's demand and supply, sources said.

Vessel M/V Tourloti carrying around 33,000 tonnes of red wheat has arrived at Port Qasim, and unloading of the commodity has started, they said. A private trader, who imported the red wheat at 190-dollar (cost and freight) per tonne from Russia, would directly supply the commodity to the millers at around Rs 17 per kilogram, sources said.

Private sector has imported milling wheat, the quality of which is better than the TCP-imported wheat which, the source said, was the "feed wheat". They said the samples of imported wheat were also positive, proving that it would certainly reduce the cost of commodity for the millers. This is the first consignment of wheat after three years imported by private sector in the wake of its shortage across the country.

Earlier, in 2005 private sector imported some one million tonnes of wheat from Australia and other countries due to shortage of the commodity, however in 2006 the country's wheat production was satisfactory, therefore wheat was not imported.

In 2007, despite the bumper crop of 23.5 million tonnes, the federal government was compelled to import the commodity from international market, amid wheat crisis due to smuggling and hoarding.

However, the federal government gave the task to Trading Corporation of Pakistan (TCP) to import wheat for meet local demands and in the last two years, the TCP importer some over 3 million tonnes of wheat. Later, the federal government waved the regulatory duty imposed on the wheat import and allowed private sector to import the commodity.

The private sector in November 2008 decided to import wheat, taking the advantage of government's move and declining prices of the commodity in world markets, sources said. They said that private importers have finalised contracts for the import of some 0.15 million tonnes of wheat.

However, the first imported wheat consignment has reached Karachi and the second one of some 35,000 tonnes will likely reach in the first or second week of January 2009, they added. "Department of plant protection has also issued Non Objection Certificate (NOC) for unloading of the imported wheat, " they apprised.

However, it interesting to note that the private sector is importing wheat at $185-190 per tonne and TCP has imported wheat at $300-400 per tonne during the last few months. Recently, the TCP awarded another wheat import contract at $213 per tonne.

Sources said that the import of wheat by the private sector is a joint venture of flour millers and importers. They added the milers have already booked imported wheat due to its low price. At present, the government is providing imported wheat at a rate of some Rs 19 per kilogram and local wheat price is Rs 27/kilogram, therefore it is expected that the import of wheat by private sector would reduce the price of flour.


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## Neo

*No dredging at Gwadar Port since its construction ​* 
KARACHI (December 26 2008): The government, which has persistently been pressing for full operationality of Gwadar Port, has not carried out maintenance dredging at the deep-sea port since its construction early 2006. According to well-placed sources a sizeable siltation, ranging from 0.6 to 0.7 meter, has reduced draft in the 4.8-kilometer-long navigational channel of the newly constructed port at different points.

They said the 14.1-meter outer and 13.8-meter inner channel of Gwadar Port, which was fast clogging up with huge inflows of silt every year, was in dire need for maintenance dredging. In this regard, the sources said, Gwadar Port Authority (GPA) had floated tenders twice, one last year and the second one this year.

Siltation at the 13.8-meter-deep turning basin and the 14.5-meter-deep pocket area was making the Balochistan based deep-sea port unusable for the deeper-draft mother vessels, which as per transshipment vision of Islamabad, would soon be arriving at Gwadar, they added. The sources claimed that GPA had to cancel last year's tender under pressure.

They said the Authority had again floated a tender and was evaluating documents filed by the national and international dredging companies. They said siltation had reduced the draft at "alongside" to 12.5 meter last year, when M/v PS Glory, the first deep-draft ship carrying over 70,000 tonnes of wheat, was due at Gwadar Port. GPA had to rush to Karachi Port Trust for its dredgers for clearing the channel, said the sources. According to the sources maintenance dredging on yearly basis was required at Gwadar Port to avoid problems.


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## Neo

*India halts exports through Wagha ​*
ISLAMABAD (December 26 2008): India has stopped exports to Pakistan through Wagha border on Thursday. According to private TV channel, India halted export of tomato, potato, onion, meat and other commodities through Wagha border. Pakistan, in response, has also halted exports to India.


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## Neo

*Rice export through Torkham exceeds 0.5 million tonnes ​* 
ISLAMABAD (December 26 2008): Rice export through Torkham border has exceeded 0.5 million tonnes, registering 80 per cent increase as compare to last year, well-placed sources told Business Recorder on Thursday. During the last fiscal year, 0.1 million tonnes of rice was exported through the border, which has now increased to 0.5 million tonnes.

Sources said that after lifting of the ban on rice imports by Russian Federation, every month almost 40,000 to 50,000 tonnes of rice is being exported via Torkham (Pak-Afghan Border) to Russia and the Central Asian States. According to the sources, traders from Kabul are purchasing rice from Pakistani rice exporters and selling it to Russia and the Central Asian States.

They said that the rice exports may even exceed 0.6 million tonnes till the end of this fiscal year. In May 2008 Russia decided to lift the ban on rice import from Pakistan. Russia used to import about 0.5 million tonnes rice per year from Pakistan. In 2007, from November 21 to December 26, a Russian delegation visited Pakistan to review the sanitary and phyto-sanitary conditions regarding the packing and processing of the citrus fruits and mangoes to lift the ban on import of the fruits imposed by Russia two years ago. Consequently, the ban was lifted.

Similarly, the officials of Russian Federal Veterinary and Phytosanitary Surveillance Services (VPSS) recently visited Pakistan on April 23 to discuss plant protection and Phyto-sanitary issues with Rice Exporters Association of Pakistan (Reap).

"During the visit, the Russian delegation was told by Reap representatives that Pakistan's rice is now free of 'Khapra' beetle and asked them to conduct a survey of the processing factories to ensure that the country has observed the sanitary and phyto-sanitary conditions and the import of any commodity from Pakistan does not involve any risk at all", sources explained.


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## Neo

*Pakistan's weather ideal for solar energy: US expert ​*
KARACHI (December 26 2008): Chief Executive Officer, eSolar Company of United States, Asif Ansari has underlined the need for due exploitation of Pakistan's big potential of solar energy. "Pakistan having mostly sunny days is an ideal of solar energy," he remarked during his presentation on solar energy as viable alternative source of energy, the related issues and the possible solutions to members of Federation of Pakistan Chambers of Commerce and Industry, late on Wednesday here at Federation House.

Among other senior businessmen, FPCCI Vice Presidents Zubair Tufail and Khursheed Ahmed Gogezai, Chairman, FPCCI Standing Committee on Alternative Energy Development, Khurram Sayeed, FPCCI Secretary General, MA Lodhi, Media Manager Shoab Ansari were present.

The solar energy, which is targeting market potential, will change global dynamics of energy. He noted that Pakistan has very good weather, with very sunny days. The people here should take advantage from this great natural gift.

"Solar energy will become a reality even in Pakistan," he asserted. Pakistan can afford to install even 20 MW power generation plants due to availability of labour at lower cost. In the developed countries, solar plant below 46 MW capacity is considered viable due to cost effect, he said.

Project Director, Al-Tawargi Steel Mills of a Saudi Group, Zaigham Rizvi informed the CEO eSolar Asif Ansari that the Mills needs 45 MW electricity for the second phase of its operation and that they would welcome eSolar's initiative in this regard. The Mills first phase of its operation is based on gas-fired power generation, he said.

Ansari showed his interest and decided to have a detailed meeting with Al-Tawarqi Mills authorities for possible agreement on this project. He deliberated upon the unique features of the technology used by eSolar, the US-based alternative energy development company operating in various countries. FPCCI leadership underlined the need for more interactive sessions between the private sector people here and eSolar officials for initiating certain projects.


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## Neo

*Marriott set to reopen three months after bombing ​*
ISLAMABAD (December 26 2008): Pakistan will Sunday see the re-opening of the luxury Marriott Hotel in Islamabad, just three months after it was ripped apart by a truck bomb that killed 60 people and wounded another 260. The attack, by a suicide bomber whose vehicle was packed with 600 kilogrammes of explosives, was the worst in the besieged country this year and reduced the hotel to a charred shell on September 20.

The blast sent shudders through Islamabad, causing damage to hundreds of other buildings when the bomber rammed the truck into the outer gates of the Marriott, near presidential palace and key government facilities. The city's expatriate community was left reeling by the bombing, which killed the Czech ambassador, two Americans and a Vietnamese woman.

Peter Alex, the chief operating officer of the Hashoo group which owns the 289-room hotel, says "new concepts of security and safety" have been used in the extensive renovation work to ensure guests can check in without fear.

"It will be the Fort Knox of Pakistan," Alex told AFP, referring to the site where the United States stores most of its official gold reserves. Alex said 60 rooms would be available from Sunday for the Marriott's "soft re-opening", with the entire hotel due to be open for business by March. He said the re-opening would "bring back to life a hotel which has been the centre of activity in Islamabad for more than 30 years."

There is little sign that the hotel suffered a major attack, following months of hectic work by about 2,000 labourers. Alex showed AFP a new bombproof wall - which is 14 feet high and 15 feet thick - erected in front of the freshly repainted building.

The new blast wall has been designed to absorb the shock of even a massive explosion outside, like the one in September. Visitors will have to pass through a bombproof room within the wall in order to gain access to the hotel, which will feature sophisticated scanning equipment, Alex said. "All the restaurants - Chinese, Lebanese, Thai, Japanese, American steak house and the main Nadia cafe - are ready to serve our guests," he added.

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## Neo

*'We must build a corporate image of Pakistan' ​*
ARTICLE (December 25 2008): Saudi Arabia has shown keen interest in investing around half a billion dollars on floating liquefied natural gas (LNG) storage facility at Karachi for which a mother ship would transport 50,000 metric tons of LNG to Port Qasim. It is high time that security concerns are appropriately addressed and a corporate culture to build confidence of foreign investors is developed with a view to attracting more and more FDI.

This was stated by Waqar Ahmed Khan, Federal Minister for Investment, in a panel interview with Business Recorder at Islamabad. The panel comprised Raja Aqeel, Mushtaq Ghumman, Sohail Sarfraz and Fida Hussain.

THE FOLLOWING ARE EXCERPTS FROM THE INTERVIEW: 

BUSINESS RECORDER: What has been the outcome of last month's visit of one hundred Pakistani investors to Saudi Arabia with the objective of attracting investment?

WAQAR AHMED KHAN: I was not the minister at that time, but I had an interesting meeting with the Ambassador of Saudi Arabia the other day. M/s Al-Tuwariqi Group of Saudi Arabia has initiated steel mill project at Port Qasim, Karachi in 2004 and $350 million has been invested in the first phase. They committed to spend another $700 million to enhance the capacity of the plant in the second and third phases.

They also showed interest in spending about half a billion dollars on floating LNG storage facility to bring gas from Saudi Arabia to Pakistan and indicated that all they have to do is to bring a mother ship to transport 50,000 metric tons of gas to Port Qasim as there is no facility there. The Petroleum Ministry, after my meeting, asked for the proposal and they are pursuing it.

BUSINESS RECORDER: What steps have been taken to meet the security concerns of foreign investors?

WAQAR AHMED KHAN: We are extremely conscious of security problems faced by the foreign investors. My interaction with multinationals shows that they do not dwell on the security issues but on what we are doing to ease their concerns. We have proposed establishing a task force to be headed by the Minister of State for Interior, in which the four provincial home secretaries, secretary investment, secretary interior and foreign secretary would also participate.

The idea is that the task force will set up 'response teams' who would co-ordinate meetings of foreign investors according to their requirements. This would entail making appointments and travel arrangements of foreign investors prior to their landing on Pakistani soil.

The second important concern of foreign investors was the current travel advisory for Pakistan and they are proposing life insurance cover during their stay in Pakistan as a means to deal with this.

There is also a need for continuation of investment policies. A proposal for this will be tabled in the cabinet as we believe investment policy and development projects must continue in the larger national interest. And transparency to facilitate foreign investors is also critical. We are working on resolving all these concerns.

BUSINESS RECORDER: Is there any progress on Bilateral Investment Treaty (BIT) with the US?

WAQAR AHMED KHAN: We are working on it in co-ordination with the Law Ministry. We have an independent council providing input on it. The US wants it under International Chamber of Commerce and Industry (ICCI) jurisdiction and we have no problem with that. But historically things don't go quite the way they should. So we are putting a clause that when the matter is subjudice in case of arbitration neither side should be able to exert political pressure till the matter is decided. In the last two years we have an evolutionary process in the judiciary but international process will be taken on board so that in case of arbitration our companies should be handled on the basis of equality.

BUSINESS RECORDER: Do you think arbitration with US will be successful?

WAQAR AHMED KHAN: In my talks with Senator Kerry I've asked for Free Trade Agreement (FTA) and we would like FTA to be signed within six months to a year. If FTA is not signed within this period then we will go for BIT. We have to look for our own interest to achieve greater access to US market.

BUSINESS RECORDER: Is there any progress on Reconstruction Opportunity Zones (ROZs) in FATA?

WAQAR AHMED KHAN: The (ROZs) will not be limited to FATA. Settled areas will also have such zones as many living in tribal areas have been displaced and have taken refuge in settled areas. They will receive training in these zones. The bill for the ROZs is lying with US Congress for approval.

BUSINESS RECORDER: Would you support Indian investment in Pakistan?

WAQAR AHMED KHAN: Right now there is status quo on this issue. I am not averse to Indian investment but investment depends on the relationship between the two countries.

BUSINESS RECORDER: Given the global financial crisis what is our position with respect to foreign investment inflow?

WAQAR AHMED KHAN: There is recession in the US and Europe. Recession has affected their banking sector and they are grappling with a return on investment which is negative. In contrast oil rich states and China are sitting on huge cash reserves.

The global meltdown has not affected Pakistan much - we are not a debt-based economy as we mostly deal in cash. The rate of return on investment here is over 30 percent. So we need to provide the right incentives to attract investment from oil rich countries and China.

BUSINESS RECORDER: Which sectors are identified as an investment priority?

WAQAR AHMED KHAN: Basically we need infrastructure projects. We have shortage of three to five thousands MWs electricity presently and will have 15,000 to 20,000 MWs shortage in the next 10 years; we need oil and gas exploration and need two, three dimensional off and on shore drilling. We also need investment in agriculture. We are an agro-based economy and yet we are not self-sufficient in majority of food products due to limited farm to market access.

We are the fifth largest milk producing country but 70 percent of our milk goes waste and right now there is tremendous need for investors from Gulf countries to enter the agro-based sector here. They will set up one milk pasteurisation plant for the time being but it will be replicated. Moreover, a local feed production plant with the assistance of Saudi government is being discussed which will triple milk production.

BUSINESS RECORDER: What measures have been taken to streamline expatriates remittances sent through Hawala/Hundi?

WAQAR AHMED KHAN: I believe that the same incentives must be given to our expatriates as given to foreign investors.

BUSINESS RECORDER: Is there any variation in tax holiday depending on the location of the project?

WAQAR AHMED KHAN: There is no variation on geographical basis. We want to develop a corporate image of Pakistan, tell the world that we are ready to do business.

BUSINESS RECORDER: What steps have been taken to remove hurdles identified in the perception survey of Overseas Investors' Chamber of Commerce and Industry?

WAQAR AHMED KHAN: To overcome hurdles every sector of the economy will interact with BOI. Concept of e-government will be introduced vigorously to make management efficient. MoUs for the projects will be signed only after fulfilling all the requirements.

In the past, a lot of MoUs were signed but not implemented in the absence of feasibility studies, financial analysis, etc. What we are trying to do is that before signing MOUs we will prepare a list of say five prioritised projects from each ministry with complete information, documentation and feasibility studies conducted by our experts. For these projects the source of raw material, local or imported, will also be identified and its impact on our GDP assessed. Priority will be given to value-added exports.

BUSINESS RECORDER: What is the progress on seventy-one projects worth $60billion presented to Friends of Pakistan in Dubai?

WAQAR AHMED KHAN: These were identified prior to my joining the ministry, but they are packaged very well. To streamline the working of this Ministry we will set up a data bank and anyone will be able to access information on specific areas where investment opportunities exist in abundance. With data bank in place one would be able to access information on investment opportunities in his sector of interest where ever he is sitting ie in Washington, Cairo or in Indonesia.

BUSINESS RECORDER: Do you envisage a role for our missions abroad?

WAQAR AHMED KHAN: We are communicating with all of our missions, we have asked them to provide information on all probable foreign investors and we have asked the Planning Commission and all the relevant ministries to give us a list of all the prioritised projects.

BUSINESS RECORDER: How much foreign investment has Pakistan received during this year?

WAQAR AHMED KHAN: About $6 billion this year and we are expecting about $10 billion in the next calendar year.

BUSINESS RECORDER: Is the government doing something to bring back politicians' money banked abroad, estimated roughly at 30 percent of investment in the country?

WAQAR AHMED KHAN: It is more than 30 percent, but we are trying to encourage everyone to invest in the country whether he is a politician or expatriate with business interests abroad. They all should bring back their money to help the country develop the economy on sound footing.

BUSINESS RECORDER: Is one window facility for investors being implemented?

WAQAR AHMED KHAN: The question is no longer of allowing one-window operation. We are at a juncture when we need to re-evaluate our position and our stance. We can't make any further mistakes on how to move forward. We are in a situation where we really want to progress and we must move forward in tandem be it politicians, civil or military bureaucracy.

BUSINESS RECORDER: What is your vision with respect to attracting investment?

WAQAR AHMED KHAN: We must build a corporate image of Pakistan with the support of all the sectors of the economy. IMF package has given credibility to our economic policies. It has been a perception builder. We are now working on our investment policy diligently. A ten-year investment policy is in the offing. We must come out with a transparent mechanism of corporate governance.

BUSINESS RECORDER: Is the government going to revisit the agreement with Singapore Port Authority?

WAQAR AHMED KHAN: We will ensure that no changes are made in the original agreement and it will be followed in letter and spirit. I think the continuation of policy is of utmost importance.

BUSINESS RECORDER: Will PPIB merge with BOI?

WAQAR AHMED KHAN: The government is considering this, but there is nothing concrete as yet.

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## Pk_Thunder

*China keen to help propel Pakistanis economy *​ 

BEIJING, Dec 26 (APP): China is keen to help boost Pakistans economy with closer cooperation in the fields of hydro power generation, hybrid seed development, irrigation and water conservancy. Pakistans Ambassador to China Masood Khan who visited Wuhan, the capital city of Hubei province at the invitation of its Governor Li Hong Zhong and Yichan where the largest Hydro power project. Three Gorges Dam is situated told APP about prospects of such cooperation in an interview on Friday.

Hubei province is the industrial hub of China. It specializes in areas of automobile manufacturing, steel, construction and fiber optics.

The Director General of the Agricultural Chen Binhuai in a meeting with

Ambassador Khan said that Hubei province will like to work closer with Pakistan

in the field of agriculture to enhance per acre yield so that Pakistan could meet

its growing agriculture demand.

He said that by setting up joint ventures the agriculture products could also be exported to various countries from Pakistan.

Ambassador Khan was also invited to visit the Three Gorges Dam, where

the General Manager of the project Li An Yong said that China is ready in sharing

technology and expertise for setting up large scale Hydro electric generation projects in Pakistan.

Three Georges Dam is the world largest hydro power generation project with installed capacity of 22000 MW.

Over 40 Pakistani students studying in Wuhan University and Wuhan Science & Technology University also met with Ambassador Khan.

Over 90 students were enrolled for under graduate and Post graduate disciplines, ranging from medicine to agricultural research, science and technology and R&D.

The potential for cooperation between Pakistan and Hubei in industrial, agricultural and educational fields is immense. We will work consistently to tap this potential, Ambassador Khan said.

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## Pk_Thunder

*KSE attracts $0.3815 million fresh foreign investment*​
RECORDER REPORT
KARACHI (December 28 2008): After witnessing a heavy outflow of foreign portfolio investment from the country's equity market during last few months, a fresh inflow of $0.3815 million was seen during the outgoing week that ended on December 26, 2008. "The foreign investors opted to take fresh positions on the existing attracted levels in the oversold market," analysts said.

A significant increase of foreign investment was seen in the previous fiscal year, however, due to political uncertainty, weakening economic indicators and geo-political situation, the foreign investors preferred to offload their holdings. The cumulative data shows a decline of $12.077 million in the current month from December 1, 2008 till date.

According to National Clearing Company of Pakistan Limited (NCCPL) data, the cumulative figure of this mode of investment stood at negative 370.307 million in the current year from January 1, 2008 to December 26, 2008. The data shows that the week started on a positive note as an inflow of $3,187,462 was witnessed on Monday.

This trend continued and $356,228 came in on Tuesday and $86,998 on Wednesday. The market remained closed on Thursday due to Quaid's birth anniversary and Christmas holiday. However, the trend couldn't continue on Friday and an outflow of $3,249,158 was witnessed on the last trading session of the week.


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## Pk_Thunder

*SPI inflation surges to 23.61 percent*​
ZAHEER ABBASI
ISLAMABAD (December 28 2008): The inflation measured through SPI surged to 23.61 percent during the week ended on December 24 over the same period of last year. However, it declined by 1.15 percent during the week, according to the Federal Bureau of Statistics (FBS). Official figures released by FBS on Saturday showed a slight decline in the SPI inflation during the week and came down to 23.61 percent.

The inflation was recorded 24.76 percent during last week. Further analysis of the data showed that dearness for low income group increased by 23.36 percent over the same period of last year, followed by 23.89 percent of Rs 3001-5000 income group and 24.63 percent for Rs 5001-12000 income group. The dearness above Rs 12000 was recorded 23.61 percent.

The SPI bulletin, based on data of 53 items collected from 17 urban centres showed increase in the prices of 14 essential commodities, decline in 11, while the prices of 28 commodities remained stable during the week, but were higher as compared to last year.

The prices of per kg tomatoes increased to Rs 27.71 from Rs 24.48, LPG (11 kg cylinder) each to Rs 707.59 from Rs 682.06, mustard oil kg to Rs 141.22 from Rs 139.28, electric bulb 60 watts each to Rs 14.31 from Rs 14.25, bananas doz to Rs 33.55 from Rs 33.41, wheat average quality kg to Rs 24.75 from Rs 24.66, masoor pulse washed kg to Rs 128.01 from Rs 127.62, gur kg to Rs 38.59 from Rs 38.52, gram pulse washed kg to Rs 57.37 from Rs 57.31, garlic kg to Rs 43.52 from Rs 43.48, mutton kg to Rs 257.94 from Rs 257.72, firewood 40 kg to Rs 268.05 from Rs 267.90, beef kg to Rs 142.58 from Rs 142.53, mash pulse washed kg Rs 75.59 from Rs 75.58.

The prices of following commodities declined during the week: potatoes kg to Rs 17.56 from Rs 19.71, egg hen (farm) doz to Rs 71.42 from Rs 74.96, chicken (farm) kg to Rs 86.73 from Rs 90.40, rice Irri-6 kg to Rs 36.70 from Rs 37.30, sugar kg to Rs 34.68 from Rs 35.17, wheat flour average quality kg to Rs 26.01 from Rs 26.37, rice basmati broken kg to Rs 45.33 from Rs 45.94, onions kg to Rs 27.27 from Rs 27.52, red chillies kg to Rs 137.73 from Rs 138.54, moong pulse washed kg to Rs 48.41 from Rs 48.54, and vegetable ghee loose kg to Rs 90.36 from Rs 90.51.


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## Pk_Thunder

*ST on subsidy on oil products: FBR seeks data from Petroleum Ministry*​
SOHAIL SARFRAZ
ISLAMABAD (December 28 2008): The Federal Board of Revenue (FBR) has decided to approach the Ministry of Petroleum to verify data pertaining to subsidy on POL products to ascertain actual sales tax collection from the petroleum sector. Sources told Business Recorder on Saturday that FBR has directed the ST Wing to thoroughly examine the subsidy claimed on petroleum products and report whether the amount includes sales tax or not.

In this regard, the Sales Tax Wing should verify the necessary information from Director General, Oil, Ministry of Petroleum, the FBR instructions said. In the past, sales tax was paid on subsidised rate of POL products. However, the levy was not collected on the subsidy given on petroleum products. The exercise would verify the impact of subsidy on sales tax collection from the petroleum products.

The analysis of sales tax collection from petroleum sector is also an attempt to improve overall sales tax collection in 2008-09. Due to substantial share of POL products in indirect taxes, any fluctuation in the tax receipts from this source, for whatever reason, seriously affects the overall collection of taxes.

Sources said that the government had paid Rs 165 billion subsidy on POL products during last fiscal year. The government had given this subsidy on kerosene oil and diesel when the prices were higher in the international market. The subsidy on POL products was abolished on October 15, 2008 due to decline in POL prices globally. According to one estimate, so far around Rs 280 billion subsidy has been paid on POL products.

When contacted, tax experts opined that the standard rate of 15 percent is applicable on petroleum products, either imported or domestically supplied, on all items described in customs duties tax base. The crude oil was zero-rated through SRO 1164(I)/2007 of November 30, 2007 to avoid refunds. As a special tax incentive, the Price Differential Claim (PDC) was excluded from the value of import and supply of high speed diesel (HSD) for the purpose of sales tax.

Similarly, zero-rated sales tax was granted to exploration and production (E&P) companies on import of machinery, equipment, specialised vehicles/vessels, etc. Analysts are of the view that the single factor which reduces the incidence of sales tax per litre on POL products was PDC which is a form of adjustment allowed by the Pricing Formula to keep the sale price low.

This component was actually deducted from the purchase price for the purpose of calculation of sales tax. This subtraction virtually resulted in negative value-addition, thereby decreasing the incidence of tax, as the difference between sale and purchase price gets narrowed, they added.


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## Pk_Thunder

*Pepco, PPR in row over Multan rental power plant*​
MUSHTAQ GHUMMAN
ISLAMABAD (December 28 2008): Pakistan Power Resources, LLC (PPR) and Pakistan Electric Power Company (Pepco) have developed a serious row over what the former says breach of contract by the latter towards Multan rental power plant, well-informed sources told Business Recorder.

The sources said the PPR has written a strong worded letter to Pepco Managing Director Fazal Ahmad Khan and threatened to re-negotiate the tariff if payments are not cleared immediately. "Despite a lapse of 6 months, Pepco continues to be in default on its contractual obligations with regard to the Multan rental power project," it said in the letter.

The sources allege that the award of this project is in serious dispute, as the incumbent Wapda Chairman never wanted to give the project to PPR due to variety of reasons. Despite submission of a bank guarantee on June 4, 2008 and a lapse of over 6 months, neither mobilisation amount has been paid nor mobilisation bank guarantee returned, PPR said.

"This is in violation of the rental contract, under which Pepco was to pay mobilisation advance within 10 days of the submission of the bank guarantee. We will claim interest for the delayed period from Pepco," the letter added.

It said Pepco has also failed to establish a confirmed Stand By Letter of Credit (SBLC) for the rental value despite a lapse of over 6 months. This may mean that the company may not be able to access the original equipment earmarked for the project with resultant project cost over-run and increase in tariff.

"We repeat that the mobilisation advance and a confirmed SBLC under the rental contract for the Piranghaib Multan Power Project be paid and SBLC delivered to us by Saturday, December 20, 2008, failing which we reserve the right to re-negotiate tariff and also to claim interest on delayed mobilisation advance payment and damages and reimbursement of costs incurred," PPR said. Both Pepco and PPR have already confronted each other over interest rate on loans of the project.

A couple of months ago, PPR had written a letter to the PPIB Managing Director, stating it was indicated by the Pepco MD that increase of interest cost by 11 percent would be difficult to factor into the contract by Pepco.

In order to resolve the issue PPR had proposed an alternative arrangement, ie, to extend the validity of the contract for five years instead of three years on existing terms and conditions except that (i) SBLC will be for 50 percent of the rental value for 3 years; and (ii) The securitisation/escrow arrangements between Bank Islami Consortium will be for five years instead of 3 years; and (iii) additional cost of interest will he borne by PPR.

It had further stated that the project has already been delayed and its economics is affected. "We reserve the right to claim interest and loss of profit owing to breach of contract by Pepco," the sources concluded.


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## Pk_Thunder

*Pakistan's foreign exchange reserves rise to $9.44 billion*​
KARACHI (December 27 2008): Foreign exchange reserves rose $100 million to $9.44 billion in the week that ended on December 20, the central bank said on Friday. The State Bank of Pakistan's reserves rose to $6.15 billion from $6.13 billion a week earlier while reserves held by commercial banks were $3.29 billion compared with $3.21 billion.


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## Pk_Thunder

*Basmati trademark*​
India moves SHC against Pak farmers

Sunday, December 28, 2008
By Shahid Shah

KARACHI: Basmati trademark registration issue has remained unresolved for a long time and in a latest twist an Indian agriculture development body has approached Sindh High court asking it not to allow only Pakistans basmati rice growers to use the trademark.

Besides the Indian body called Agricultural and Processed Food Products Export Development Authority (APEDA), Rice Exporters Association of Pakistan (REAP) has also appealed in the Sindh High Court against a trademark registrars decision permitting only the basmati growers to use the trademark. Hearing would start in January.

Basmati Growers Association (BGA), the farmers body, has its reservations too and has moved the high court. Earlier the case was decided in our favour, but some points of the decision were against us, so we are also in the high court, said BGA President Hamid Malhi.

He said negotiations with the Indian authority were going on in a joint working group. There is difference between India and Pakistan on the definition of basmati rice. They dont have contiguous area of basmati and they dont produce much of it, he added.

In order to comply with Trade-related Intellectual Property Rights (TRIPs) regime of the World Trade Organisation, the Ministry of Commerce has asked the stakeholders in rice trade to resolve the trademark registration issue, which has pitted REAP and BGA against each other.

REAP Chairman Abdul Rahim Janoo in a TV programme earlier this week alleged that BGA had seven members only who formed the association at home. But BGA claims it has membership of 1,400 growers. We have provided a list of 1,150 members to the trademark registrar, Malhi said.

Zahid Khwaja, a senior REAP member talking to The News, said with trademark rights in their hands, rice growers would regulate the exporters trade. There should be no single ownership and the government of Pakistan should control it, he suggested.

Basmati is one of the oldest and finest varieties of rice cultivated in the sub-continent. Great Punjabi poet Waris Shah also mentioned basmati in his poetry while writing about Heer and Ranjha.

In India, first the matter of rice certification was handed over to All India Rice Exporters Association but later on the demand of all stakeholders it was given to APEDA.

Basmati growers and exporters differ not only on the issue of trademark registration, but they also have dispute over paddy procurement.

Hamid Malhi alleged REAP wanted to depress the market, causing loss to the growers. When REAP was exporting basmati at $780 per tonne in May, Malhi said the government announced a minimum export price (MEP) of $1,500 per tonne and after that they sold it for $1,580. Consequently, rice exports increased by 20 per cent.

Malhi said rice exporters instead of fetching high prices for exports wanted to buy the commodity from farmers at lowest rates. They (REAP) have monopoly in rice trade, he alleged.

REAP Chairman Abdul Rahim Janoo said, rice exporters are commercial entities and not charitable organisations to pay farmers above market prices.


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## Pk_Thunder

*Global financial crunch hits real estate sector*​
Sunday, December 28, 2008
By Faryal Najeeb

KARACHI: Year 2008 has proved to be a rather rollercoaster ride for the real estate sector.

It started off dismally in January, following massive flight of investment after former premier Benazir Bhuttos assassination and then underwent global financial crunch.

However, it ended on a positive note as many new projects for the middle income group were introduced.

Meanwhile, local investors, though severely wounded by heavy losses, also returned to Pakistani market from United Arab Emirates by October. Nevertheless, market experts were of the opinion that the year could not be considered positive for the sector as the damage done was far more than what was recovered in the past two months.

Interestingly, though the commencement of the year promised little following the tragic incident on December 27, 2007 and it seemed to be the worst period in the history of Pakistan, average price of properties remained higher than what they had been when real estate recession started back in 2005, stated Head of Real Estate Research at PakrealEstate.com, Shahbaz Mukhtar. Mukhtar said that property prices in Lahore, Karachi, Islamabad and Rawalpindi were in fact 20 to 25 per cent higher compared to 2005 when the real estate sector recorded its first downward slide. Citing examples, he shared that in 2005, a 500sq yard plot in F7 area of Islamabad cost approximately Rs30 million whereas in 2008 the same was estimated at around Rs45 million.

Mukhtar went on to say that apart from natural appreciation over time, the development that took place in an area also mattered greatly for property evaluation.

He gave the example of DHA phase VIII Karachi where a little development over months led to prices actually dipping in 2008. Going over a period of five years, Mukhtar said that a 500 square yard plot in phase VIII cost Rs1-1.5 million in 2002, which soared to Rs10-12 million at its peak in 2005.

He said as the DHA failed to maintain the development progress, today the same property is valued at Rs6-7 million only. The real estate researcher also enunciated the Islamabad rental market stood humble in 2008 as the demand by foreigners reduced as most moved away to the Diplomatic Enclave established for them.

He said acts of terrorism in the year had also compelled many of them to move away from the country leaving the houses empty behind them.

The rupee-dollar parity also affected the rental market of Islamabad as the rents were in fact decided in dollars only, he elucidated.

On the other hand, FPCCI Sub Committee on Housing and Construction Vice President Munir Sultan voiced that the global financial crunch which had been the worst in over hundred years had led to a massive decline in the housing and construction sector of Pakistan along with other countries in the world.

He articulated initially rising prices of steel and cement had led to a sluggish period in the construction sector and then the liquidity crunch affected the sector in the 3rd quarter of the financial year.

Fourth quarters onwards, prices begin to fall and a plethora of housing projects were also launched for the middle income group. As the UAE market crashed and investors returned heavily defeated with losses to Pakistan, many small and big developers launched new schemes all over the country.

According to the experts, the responses to these projects have been tremendous mainly because earlier the ventures which were being announced in Pakistan were for the elite class which is less than 2 per cent of the society and these housing developments were finally within the budget of the popular class of the society.

Sultan expressed housing projects in Karachi, Islamabad, Lahore, Hyderabad, Rawalpindi, Sialkot and Faisalabad proved to be massive hits and got excellent response from the buyers. During the second quarter, Real Estate Investment Trusts (REITs) were also introduced in Pakistan and many hoped that finally the real estate sector of the country would be better documented than at present.

However, no project ever got initiated in this regards and flaws in the governments laws also led to REITs failure. In the opinion of the experts, the future also does not seem to cast any light on potential projects involving REITs.


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## Pk_Thunder

*PQA approves lowest bid for dredging work*​
Sunday, December 28, 2008
By our correspondent

KARACHI: Port Qasim Authority board has approved the lowest bid offered by Dredging International for channel maintenance and dredging work during the year 2008-09.

The PQA board decided in its meeting on August 30, 2008 held that tender documents be prepared for maintenance and dredging work in 2008-09, so that immediate tenders can be invited in case of non-implementation of capital dredging work. Subsequently, the issue was further substantiated by the technical committee of the board which decided in a meeting held on November 18 that if capital dredging work is not awarded, maintenance and dredging be undertaken through a fresh gallop tender as early as possible.

Accordingly, tenders were invited from five dredging companies which were pre-qualified for the work of capital dredging including maintenance dredging for the year 2008-09.

All five dredging companies including Van Oord, Dredging International, Jan De Nul, Boskals International and China Harbour Eng Co collected tender documents.

Bids were received and opened on Dec 20 in front of the dredging committee and representatives of the bidders.

Following bids were received. Dredging Internationals bid amounted to Rs1.416 billion; Van Oord Rs1.516 billion; Jan De Nul Rs1.520 billion and China Harbour & Eng Co Rs2.020billion. However, Boskals International did not participate in the bidding. After evaluating all the bids the committee had sent recommendations to the board for the approval.


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## Pk_Thunder

*Preferring China to India in trade*​
Sunday, December 28, 2008
By Mansoor Ahmad

LAHORE: Pakistan should take a unilateral decision and sever trade links with India as it is not in its interest to strengthen Indian economy by opening its border when almost every item produced by Delhi could be arranged from China.

Pakistan must understand that bilateral trade between the two countries is not feasible and it would remain one-way traffic where India has some advantage. Both the countries export and develop capacities to ship similar items like textiles, light engineering goods, auto parts, carpets and information technology services. That India has overtaken Pakistan in these fields is another matter, but Islamabads potential for exports in many of these fields is as big as that of Delhi.

Even in agriculture we compete with India in exports of basmati rice, mangoes and citrus fruits. Vegetables we are trying to export are the same as those being exported by India. In handicrafts, though India has overtaken us due to better marketing and planning, export items have great similarities.

India produces industrial raw material that Pakistan does not produce but is required by its industries. Prices of Indian raw material look cheap because of low transportation cost, however, it does not produce best quality products, particularly chemicals. So we lose the quality of end-product by using Indian chemicals.

Quality control standards in India might be slightly better than Pakistan but corruption level there is still extremely high allowing marketing of substandard products.

Moreover, India has proved itself as an unreliable supplier of industrial raw material. Pakistans entrepreneurs and economic planners should consider whether it is feasible to risk raw material supplies to our industries on an advantage of only 2-3 per cent in prices.

Other suppliers like China, South Korea and Japan could be persuaded to match or even lower rates compared to Indian raw material provided trade associations of different industries join hands and import major raw material in bulk. The government should be involved in the process in order to ensure export of best quality material from China.

Discouraging trade with India looks against the principle of free market economy.

However, even the most outspoken proponents of free trade in the US continue to favour a ban on trade with neighbouring Cuba and also with Iran due to political differences. It even penalises some countries that conduct trade with these states.

Pakistan also has political differences with India. The Indians discourage imports from Pakistan through technical trade barriers while Pakistan continues to open its markets for their products.

India, for instance, allows its spinning industries established in special export zones to import yarn duty-free from anywhere in the world except for Pakistan. India has imposed 10 per cent duty on import of fabric but with the condition that minimum duty would be Rs120 per kg that effectively increases the duty on Pakistani low-cost fabric to over 120 per cent.

The Indians desperately need cement for growing construction activities. Pakistan is the cheapest source of cement yet Delhi has restricted imports by not allowing its supply through road link. Despite that, Indian cotton exporters want Pakistan to allow imports of cotton through trucks.

Ever since trade with India has been liberalised, Pakistans exports have remained stagnant while Indian exports have leaped by several hundred per cent. It is high time that planners here take rational decisions on trade with the neighbour.

One-way traffic should be discouraged and importers should be facilitated to import same items from other sources.

Exporters should also target all global markets penetrated by India and make collective efforts to introduce similar Pakistani products.


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## Pk_Thunder

*Pakistan financial position improving: Wajid Shamsul Hassan *​ 
ISLAMABAD, Dec 28 (APP): Pakistan High Commission to United Kingdom Wajid Shamsul Hassan said on Sunday that Pakistan financial position is improving despite international economic crunch which eroded foreign reserves of the country. Talking to BBC, he said the country was on road to recovery from the international economic crunch with foreign investment coming and oil prices going down.

Replying to a question, he said the government was trying its best to address all issues like economic problems, law and order situation and war on terrorism.

He said Prime Minister was committed and all provinces were cooperating and stands united, so hopefully the country would overcome all problems soon.

Wajid Shamsul Hassan said Shaheed Benazir Bhutto wanted to fulfil Muhammad Ali Jinnahs vision of Pakistan which was liberal, progressive and secular and for achieving these goals she gave her life.


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## Neo

*January-June bank advances up by Rs 228 billion​* 
KARACHI (December 27 2008): Advances of the banking system posted a robust growth of Rs 228 billion to new peak level of Rs 2.9 trillion during first half of current calendar year 2008. During the first quarter (Jan-March) advances grew by Rs 116 billion, while during the second quarter (Apr-June) advances grew by Rs 112 billion, or 4 percent, to Rs 2.9165 trillion.

However, due to higher increase in cash and bank balances, share of advances in overall asset base slightly receded to 53.0 percent by the end of June from some 53.8 percent in March.

The State Bank of Pakistan has issued quarterly performance review of banking system, in which it has shown that advances of banking system in fact showed a dull demand during the first three quarters of the last year and it was only in the last quarter that the advances, following the seasonal pattern, rose at strong pace. This increase in demand for bank credit, in line with established seasonal trend, subsisted during the first two quarters of the outgoing year, the SBP said.

Detailed composition of the advances shows that mainly the corporate and commodity finance increased their usage of bank credit. However, there was a slight increase in advances to agriculture sector, while other two major sectors viz Small and Medium Enterprises (SME) and Consumer Sector reduced their borrowing from banks.

Both these sectors reduced their bank borrowings during Mar-08 quarter as well. The corporate sector, the largest user of bank credit, borrowed additional advances of Rs 84 billion to during the second quarter.

This increase coupled with an increase of Rs 29 billion to Rs 210.8 billion in commodity financing, while a reductions of Rs 16 billion in lending to SME sector and Rs 11 billion has witnessed in consumers financing. Accordingly, corporate sector further inched up its share in overall advances of the banking system. SME and consumer sector that are the second and third largest users of bank credit, respectively, shed their share in the overall advances of the banking sector.

There was only a slight shift in the end use of advances. Working capital registered a slight inch-up in its share, while trade finance showed a minor reduction. In overall advances corporate sector had a share of 59.5 percent, SMEs 13.5 percent, consumer financing 12.1 percent, commodity financing 7.2 percent, agriculture 5.3 percent, staff loan 2 percent and other business have a share of 0.5 percent.


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## Neo

*Private sector investment to be sought for NHA projects​* 
ISLAMABAD (December 27 2008): The government has decided to seek private sector investment for roads and other projects, to be executed by National Highway Authority (NHA)/Infrastructure Project Development Facility (IPDF), official sources told Business Recorder.

The decision was taken by the Executive Committee of the National Economic Council (Ecnec), partly presided over by Advisor on Finance to Prime Minister Shaukat Tarin, while considering construction of high level bridge over Chenab river at Head Muhammad Wala, Multan, construction of a new bridge over Sutlej river at Emanwala, and upgradation of 45 km Jalalpur Pirwala-Uch section of the Multan-Trinda Muhammad Pannah road.

The Ecnec was informed that the scheme of construction of high level bridge over Chenab River at Head Muhammad Wala, Multan would provide construction of a 1,010 metres long bridge across river Chenab at Muhammadwala in Multan, and would include construction of 10 km long approach roads on both sides of the bridge. The scheme is integral part of the program for development of southern Punjab. The cost of the project is Rs 2,376.75 million.

After detailed discussion, the Ecnec decided that the road should be federalised for implementation by NHA. Simultaneously, NHA/IPDF should make efforts to explore private sector financing for the road. In case the road is not federalised, one of the following options may be adopted: (a) the provincial government should approve and forward project's PC-I based on 50:50 cost sharing by the federal and provincial governments, to be executed at by provincial government; (b) alternatively, the provincial government may get the project executed by NHA, as deposit work, with 50:50 cost sharing between Punjab government and NHA. The project after completion will be returned to provincial government for maintenance and upkeep.

With regard to construction of new bridge over Sutlej River at Emanwala, the Ecnec was informed that the project envisages construction of a 2-lane (8.5 metre) 600 metre long bridge across the river which will have one km long approach road on either side. The project is part of Multan development package and has been proposed to be constructed by NHA. Total cost of the project is Rs 1,147.77 million.

The Ecnec while considering a project regarding widening and improvement of National Highway (N-5) from Bahawalpur Chowk (929 metre) to Chowk Kumharn (937 metre), observed that being a small urban road its maintenance/widening should have been the responsibility of provincial and district governments and not of the federal government.

In case of scarcity of funds being faced by these governments, federal government could provide funds for such projects, but implementation should be the responsibility of the province or district administration, sources said.

They said that Ecnec also directed the Planning Commission for formulation of clear and comprehensive policy guidelines pertaining to the provision of funds by the federal government for such projects to the provincial and district governments. It was further suggested that this issue can be assigned to the Ministry of Inter-Provincial Co-ordination in consultation with all relevant ministries/divisions to formulate their recommendations and re-submission to Ecnec.


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## Neo

*China keen to help boost Pakistan's economy​*
BEIJING (December 27 2008): China is keen to help boost Pakistan's economy with closer co-operation in the fields of hydropower generation, hybrid seed development, irrigation and water conservancy.

Pakistan's Ambassador to China Masood Khan, who visited Wuhan - the capital city of Hubei province - at the invitation of its Governor Li Hong Zhong and Yichan where the largest hydropower project Three Gorges Dam is situated, told newsmen about prospects of such co-operation in an interview on Friday.

Hubei province is the industrial hub of China. It specialises in areas of automobile manufacturing, steel, construction and fibre optics. Director General of the Agricultural Chen Binhuai in a meeting with Ambassador Khan said Hubei province would like to work closer with Pakistan in the field of agriculture to enhance per acre yield so that Pakistan could meet its growing agriculture demand.

He said that by setting up joint ventures the agriculture products could also be exported to various countries from Pakistan. Ambassador Khan was also invited to visit the Three Gorges Dam, where the General Manager of the project Li An Yong said that China was ready in sharing technology and expertise for setting up large scale Hydro electric generation projects in Pakistan.

Three Georges Dam is the world largest hydropower generation project with installed capacity of 22000 MW. Over 40 Pakistani students studying in Wuhan University and Wuhan Science and Technology University also met with Ambassador Khan.

Over 90 students were enrolled for undergraduate and postgraduate disciplines, ranging from medicine to agricultural research, science and technology and R&D. "The potential for co-operation between Pakistan and Hubei in industrial, agricultural and educational fields is immense. We will work consistently to tap this potential", Ambassador Khan said.


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## Neo

*FPCCI concerned over mining industry decline​*
KARACHI (December 27 2008): Khursheed Ahmed Jogezai, Vice President, Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has expressed serious concern over the dying industry of mining in the country. In Balochistan coal mining is the major industry and besides vast-scale indirect employment, it provides direct employment to more than one hundred thousand people, he told APP here.

He said that in Balochistan the coal deposits have gone very low to un-economical level of mining and that no new area for the mining has been opened in the province. This has caused low production of coal and high input cost making the local mining industry in-competitive which darkens the future of this industry and other coal-based industries. He suggested that certain percentage of duties be levied on the coal imported from various countries to promote the local industry.

He stressed for providing maximum facilities and incentives to local and foreign investors interested in mining in the country especially in Balochistan. Till now, there are only two foreign companies involved in mining in Balochistan-Chinese company working on Sandak copper field and Canadian company is busy in mining gold and copper from other site.

He said industrialisation in the province cannot take off unless there is a strong roads network and other infrastructure along with peace and security to life and property. Jogezai called for maximum participation of Pakistan's private sector in exploring and supplying petroleum products in the country for the good of national economy and the people.


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## Neo

*'Government committed to develop marble, granite sector'​*
ISLAMABAD (December 27 2008): The Speaker of NWFP Assembly, Karamat Ullah Khan Chagarmatti has said that the despite huge resources of natural stone like marble and granite; unfortunately the country is not benefiting properly from these resources due to lack of modern quarrying and processing practices.

He expressed these views during a presentation given by Pakistan Stone Development Company (Pasdec) at their Head Office in Islamabad. He said that the government was fully aware about the importance of marble and granite sector and President Asif All Zardari is also committed to develop this sector on revolutionary basis as it has great potential.

"We could use the sector to strengthen our national economy through its exports." Chagarmatti added. He appreciated the efforts of Federal Minister for Industries and Production, Mian Manzoor Ahmad Watto and Pasdec team for developing modern quarrying to enhance the marble and granite production.-


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## Neo

*IMF condition not met: Govt borrowing from SBP Rs 153bn higher than target​*
ISLAMABAD: The government borrowed Rs 411 billion from State Bank for budgetary support from July 1 to December 13, although the International Monetary Fund (IMF) had asked it to limit the budgetary borrowing at Rs 258 billion for the full fiscal year.

Sources in Ministry of Finance told Daily Times, IMF Stand-By-Arrangement (SBA) target to limit State Bank of Pakistan financing of the budget at the level of Rs 258 billion till June 2009 has been exceeded by Rs 153 billion. 

The government may find it difficult to keep its borrowing from SBP at the level decided by IMF, source said on Saturday.

The government had agreed with the IMF authorities that SBP financing of the budget would be kept at the level of Rs 258 billion. 

This is the sad beginning of the IMF programme as the government has failed to achieve the most important target, said an analyst based in Karachi. If government wants to meet the IMF target then by December 31 it has to retire Rs 153 billion to SBP, which appears to be an impossible task.

Meeting the key targets is important, as this would determine countrys future relations with IMF and other multilateral financial institutions. This is also important for the credit rating of the country. Pakistan is expecting few hundred million dollars assistance from a donor country by 31 December 2008. If this assistance is used for financing government expenditure, then the IMF target could be met, otherwise, it would be missed. 

The government has an opportunity to reduce this gap between Rs 258 billion to Rs 411 billion to meet performance target by arranging required financing from other options, the sources added. 

According to the Letter of Intent (LOI) of the IMF, the targeted reduction in the fiscal deficit in 2008-09 will help eliminate SBP financing of the budget. The government is committed to limiting SBP financing of the budget to zero on a cumulative basis during 1 October 2008 to 30 June 2009. During this period, the fiscal deficit will be fully financed by available external disbursements (which have already been committed), the acceleration of the privatisation process, the issuance of treasury bills, and other domestic financing instruments, including Pakistan Investment Bonds, Ijara Sukuk, and National Savings Scheme (NSS) instruments.

Pakistans privatisation programme is moving ahead at a snail pace with no major achievement during July-December period of current fiscal year. Similarly, due to the strong opposition from workers and opposition parties the privatisation of major entities like OGDCL, PSO, PPL and electricity distribution companies would be difficult in second half of the fiscal year, the sources explained. The government is continuously increasing the profit margins on the investment to be made in National Saving Schemes (NSS), but these schemes would not be instrumental in generation of required non-inflationary financing within stipulated period. Other options like treasury bills, Pakistan Investment Bonds, Ijara Sukuk have not been fully availed. 

According to LOI, the fiscal deficit (excluding grants) is targeted to decline to 4.2 percent of GDP (Rs 562 billion) in 2008-09, from 7.4 percent in 2007-08. This fiscal effort is necessary to help reduce the external current account deficit, move toward a sustainable fiscal position, and eliminate SBP financing of the government. To achieve the 2008-09 target, the government will increase tax revenue by 0.6 percentage points of GDP and reduce non-interest current expenditure by about 1.5 percentage points of GDP, mainly through the elimination of oil subsidies by December 2008 and electricity subsidies by June 2009. At the same time, domestically financed development spending will be reduced by about one percentage point of GDP through better project prioritisation.


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## Neo

*Rupee depreciated by 27 percent during 2008​*
KARACHI: The sharp depletion of countrys foreign exchange reserves and widening trade deficit caused the rupee to depreciate by 27 percent against the dollar during 2008.

The dollar was being sold at Rs 62.04 against rupee on 1 January 2008. During the year it lost Rs 16.86. It closed at Rs 78.50 on December 26.

The greenback touched its highest-ever level of Rs 84 in inter-bank and Rs 87 in open market during this year.

According to analyst the major factor that caused rupee depreciation was the depleting reserves throughout the year. Before the recent IMF aid of $3.1 billion the foreign exchange reserves were declining continuously and were down by more than 50 percent from this year peak of $15.5491 billion on 05 January 2008 to $6.596 billion on 22 November. The country had been losing, on average, $400 million every week for past few months owing to extremely high trade and current account deficits.

The $3.1 billion inflow was part of the $7.6 billion loan approved by IMF for Pakistan as a 23-month standby arrangement. Pakistan would be receiving the remaining amounts in quarterly installments and the amount is to be repaid with an interest of 3.51 percent to 4.51 percent between 2011 and 2016. 

This inflow helped the central bank restrict the depletion in foreign exchange reserves and the national currency to recover. The national currency lost 0.31 percent during the 2007 financial year, however, the rupee depreciation by 27 percent during the year showed a mixed trend vis-à-vis US dollar. The rupee depreciated heavily in first three quarters of the year but showed little recovery in the last quarter of 2008. 

In the first half, the widening trade deficit drove the rupee depreciation, while in the last quarter, improved market related inflows helped the rupee to regain some of its lost ground.

Analysts believe that the national currency could further regain its strength in future if some of friendly countries of Pakistan would provide aid. 

The depreciation of rupee against dollar during the year has already bogged down the business class, which seems perturbed about future prospects and now all hopes are pinned on the government to unveil some bailout package to stabilise the economy. 

The depreciation of the currency has also multiplied the cost of doing business and badly affected the industrial, manufacturing and agriculture sectors as Pakistan has to import fertilizers, food items and industrial raw material.


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## Neo

*PIA suffers $182.33m loss as other airlines mint profit​*
ISLAMABAD: Despite other airlines of the industry minting record profits during the year 2007, the Pakistan International Airlines (PIA) suffered a massive loss of $182.33 million, due to high number of employees per aircraft, and absence of implementation of any financial improvement plan.

This was revealed in the Auditor General of Pakistan Audit Report 2006-07, tabled at National Assembly.

It is pertinent to mention here that almost all airlines operating in the region earned good profits.

Air Blue, which is considered the main domestic competitor of PIA, earned a profit of $1.28 million, whereas the competitors on international routes; Emirates Airlines, earned profit of $941 million, Royal Jordanian Airline $28 million, Malaysian Air Lines $265 million, Egypt Air Lines $1,143 million, which is a record. 

The Auditor General report rejected PIA pleas for blaming increased fuel prices and other challenges the airline industry faced during the year 2006-07 for the losses. 

All the airlines were exposed to rising fuel prices and other challenges, however, they managed to earn profit, but on the other hand PIA could not even manage to break-even and sustained a loss of $182.33 million in year 2007, the report said.

The number of employees in the national airline has always been criticised. 

A large number of employees have been inducted in the PIA on political basis moreover, the airline has also been experimented by adopting different management models on ad-hoc basis, the PIA sources says.

The report pointed out this over staffing and said that the ideal employee to aircraft ratio ranges between, 1:130to 170, whereas in PIA, the employee to aircraft is 1: 418.

It further explained that as compare to the number of employee to air craft ratio in the region, PIA has highest number of employees. There are 17,966 employees in PIA for the fleet of 43, whereas, in Japan Airlines, there are 17,925 employees for a fleet of 241, with a ratio, 1: 74, In US airways, the number of employees are 37,675 for a fleet of 357, with a ratio, 1:106, and in Indian Airlines the number of employees are 18, 492, for a fleet of 67, with a ratio, 1:276.

The AGP observed that the analysis shows that other airlines are able to achieve better output from minimal workforce, whereas PIA has over employed for its current fleet strength, resulting in an increase in overheads

The report also observed that financial improvement plans were not prepared in PIA, on regular basis. However, it said, a structure plan of PIA was first prepared on June 06, 2001, where in PIA had succeeded to borrow Rs 20 billion against Government of Pakistan (GoP) guarantee to settle its liabilities and repayment installments amounting to Rs 4.863 billion and payment of purchase of Boeing 777-ER, and 777-200 LR. The report also said that PIA committed to the GoP that with the help of this financial assistance they would become profitable.

The report also pointed out that the corporation has been continuously sustaining losses after 2004. At the close of year on 31 December 2006, the accumulated losses stand at Rs 24.563 billion.


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## Pk_Thunder

*'Fuel Ethanol Policy' ready: failed petrol blending project to be revived*​
MUSHTAQ GHUMMAN
ISLAMABAD (December 29 2008): The government has prepared a new 'Fuel Ethanol Policy', according to which the Oil and Gas Regulatory Authority (Ogra) will be assigned the task of regulating market-based pricing mechanism, in consultation with all stakeholders, for blending ethanol with motor gasoline, sources in Planning Division told Business Recorder.

This project is being revived after Pakistan Sugar mills Association (PSMA) was reported to have convinced President Asif Ali Zardari that the use of the by-product of sugar fermentation, ethanol, with petrol would help the government reduce its oil import bill, besides benefiting sugar industry.

The Shaukat Aziz government had launched a pilot project of mixing ethanol with petrol. However, the price of petrol at the time was lower than ethanol, and the pilot project failed after six months. The PSMA is now reportedly working closely with the Presidency to revive the project.

Sources said that the Planning Division has prepared a summary for approval by the Cabinet, likely to be considered in the next meeting.

There were reports that Petroleum Ministry and one of PSMA's representative, Haroon Akhtar, had developed serious differences over the fixation of compressed natural gas (CNG) price after initiation of ethanol blending with petrol, said an official who witnessed this development at a meeting in the ZTBL headquarters.

The Planning Division has proposed (a) retail price of E-10 at 15-20 percent less than motor gasoline consumer price, (b) provide for calorific value of fuel ethanol (motor gasoline 1100 mmbtu and E-10 700 MMBTU); (c) fuel ethanol purchase price for oil marketing companies (OMCs) to be determined to prevent windfall profits due to international market price volatility; (d) the price for fuel ethanol will be indexed to free on board (fob) price of molasses, where the floor and ceiling may be determined; (e) producers of fuel ethanol dedicating their production to enable E-I0 will be guaranteed 15 percent rate of return on investment in case of additional investment on distilleries for production of fuel ethanol; and (f) indexation mechanism will involve allocating weights to the parameters for which a specific economic formula willbe structured by Ogra, in consultation with the Planning Commission, Ministries of Finance, Petroleum , Industries and Federal Board of Revenue (FBR).

Sources said that Ogra will be directed to develop a mechanism to ensure quality, standard, and safety measures, and initiate action to obtain advantages of carbon credits and shall ensure to pass on these advantages to the retailers and consumers.

According to the summary, initially, the Pakistan State Oil (PSO) will be given the task to act as the lead player to develop blending facilities at its depots located in proximity of fuel ethanol distilleries to achieve fast track outcome.

This facility will be provided to the consumers within three months, without any additional investment by the government. PSO will meet the cost of ethanol blending out of its existing distribution margin of 4 percent allowed to OMCs for the purpose.

They said that PS0 will launch a sustained media campaign to create public awareness of E-10, and communication in national and regional languages will be ensured.

OMCs will be encouraged to participate in the initiative led by PS0. However, after one year of implementation of the scheme by PSO, it will be mandatory, under the policy, for OMCs to market E-10 at their outlets as well, sources added.

They said that a five-year duty exemption will be allowed on import of machinery and equipment for ethanol production dedicated for fuel and will be exempted for local manufacturing of equipments which will be reviewed after five years.

Sources said that the Ministry of Industries, in collaboration with Alternative Energy Development Board (AEDB) and Ministry of Petroleum, will make best efforts to develop a strategic plan for fuel ethanol whereby E-l00 (100°6 fuel as ethanol) is introduced during the MTDF plan period 2010-15. This would entail encouraging automotive manufacturers (cars and buses) to match the enhanced market demand of production to ethanol-fired engines by 2030.

The facilitation package for automotive manufacturer ie exemptions from import duties on dedicated engines and ancillary automotive components and income/corporate tax relief will also be considered.

Sources said that fuel grade ethanol will be declared as blending component with petroleum products. Ogra will amend necessary rules at federal and provincial levels by taking into confidence all stakeholders for the ethanol component only, which is used in blending as fuel.

Distilleries will transport de-natured ethanol to the designated depots of OMCs transportation cost of which will be payable to distilleries out of OMCs' existing distribution margin (4 percent).

Experts, however, are of the view that the economics of ethanol blending would have a negative impact at this time, when Pakistan is shifting from costly petrol to cheaper alternative motor fuels, such as CNG, LPG and LNG. Petroleum Ministry, which is now being run by Dr Asim and HDIP, had earlier contested sugar industry's arguments during Cabinet meetings, saying that PSMA's idea was not workable.


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## Pk_Thunder

*7-20 percent increase in drug prices allowed*​
RECORDER REPORT
MULTAN (December 29 2008): The Federal Health Ministry, after a gap of 7 years, granted permission to local pharmaceutical companies to make an upward revision in the prices from 7 to 20 percent on 240 locally manufactured drugs. The increase came into affect after persistence appeal by the Pakistan Pharmaceutical Manufacturers Association (PPMA).

An official of the PPMA informed that increase in rates of 240 locally manufactured medicines out of total 47,000 produced in the country was necessary, as their cost of manufacturing had exceeded, prices making it virtually impossible for the related pharmaceutical companies to produce them. As a result, shortage of these medicines caused immense hardship for a large number of patients.

Federal Secretary Health and DG Health also attended the meeting besides other high officials of the health department. Members of the delegation informed the minister about static rates of medicines during the last 7 years despite steep rise in inflation, devaluation of the Pakistani rupee and increase in the input price of the pharmaceutical sector, which forced the industry to face worst ever crises.

Massive increase in raw and packaging material rates, majority of which was imported from abroad for catering to the requirement of indigenous industry was also brought to the notice of the minister.

However, despite presentation of all facts and figures, response of the Federal Minister was unfavourable as he failed to give patient hearing to the problems faced by the pharmaceutical industry in the country. He told them plainly that the government would not hesitate importing medicines from India if the local pharmaceutical industry shuts down their businesses.


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## Pk_Thunder

*SPI inflation surges to 23.61 percent*​
ZAHEER ABBASI
ISLAMABAD (December 28 2008): The inflation measured through SPI surged to 23.61 percent during the week ended on December 24 over the same period of last year. However, it declined by 1.15 percent during the week, according to the Federal Bureau of Statistics (FBS). Official figures released by FBS on Saturday showed a slight decline in the SPI inflation during the week and came down to 23.61 percent.

The inflation was recorded 24.76 percent during last week. Further analysis of the data showed that dearness for low income group increased by 23.36 percent over the same period of last year, followed by 23.89 percent of Rs 3001-5000 income group and 24.63 percent for Rs 5001-12000 income group. The dearness above Rs 12000 was recorded 23.61 percent.

The SPI bulletin, based on data of 53 items collected from 17 urban centres showed increase in the prices of 14 essential commodities, decline in 11, while the prices of 28 commodities remained stable during the week, but were higher as compared to last year.

The prices of per kg tomatoes increased to Rs 27.71 from Rs 24.48, LPG (11 kg cylinder) each to Rs 707.59 from Rs 682.06, mustard oil kg to Rs 141.22 from Rs 139.28, electric bulb 60 watts each to Rs 14.31 from Rs 14.25, bananas doz to Rs 33.55 from Rs 33.41, wheat average quality kg to Rs 24.75 from Rs 24.66, masoor pulse washed kg to Rs 128.01 from Rs 127.62, gur kg to Rs 38.59 from Rs 38.52, gram pulse washed kg to Rs 57.37 from Rs 57.31, garlic kg to Rs 43.52 from Rs 43.48, mutton kg to Rs 257.94 from Rs 257.72, firewood 40 kg to Rs 268.05 from Rs 267.90, beef kg to Rs 142.58 from Rs 142.53, mash pulse washed kg Rs 75.59 from Rs 75.58.

The prices of following commodities declined during the week: potatoes kg to Rs 17.56 from Rs 19.71, egg hen (farm) doz to Rs 71.42 from Rs 74.96, chicken (farm) kg to Rs 86.73 from Rs 90.40, rice Irri-6 kg to Rs 36.70 from Rs 37.30, sugar kg to Rs 34.68 from Rs 35.17, wheat flour average quality kg to Rs 26.01 from Rs 26.37, rice basmati broken kg to Rs 45.33 from Rs 45.94, onions kg to Rs 27.27 from Rs 27.52, red chillies kg to Rs 137.73 from Rs 138.54, moong pulse washed kg to Rs 48.41 from Rs 48.54, and vegetable ghee loose kg to Rs 90.36 from Rs 90.51.


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## Pk_Thunder

*SSIC spending Rs 257 million on uplift schemes*​
KARACHI (December 28 2008): Sindh Small Industries Corporation (SSIC) will spend Rs 257 million on various development schemes during 2008-09. Sindh Small Industrial Estate Karachi has been set up on 100 acres of land and total cost of its development has been estimated at Rs 462 million out of which Rs 299 million have been spent so far and ballotting of plots already done on May 10 this year.

According to SSIC sources, payments for supply of gas and electricity has been made to concerned organisations and some amount also paid to KWSB in advance for water supply, while remaining would be paid during the year. This year Rs 160 million are being spent on development and the project is expected to be completed during 2008.

Sindh Minister for Industries and Commerce Rauf Siddiqi has already announced that desirous persons, who wish to set up units immediately, can get possession of plot by making full payment. According to the Minister, an industrial estate is being developed on 50 acres of land under expansion plan of Hyderabad Small Industrial Estate which is estimated to cost Rs 82.80 million and so far Rs 50 million have been spent.

He said development work is going on apace and the scheme will be completed during 2008 and applications for allotment of plots already received through banks and sent to Nadra in few days for computerised ballotting. He said a 15 percent quota of plots has been kept for local people of Hyderabad.

Rauf Siddiqi said an another industrial estate on 50 acres land also being set up under expansion plan of Sukkur Small Industrial Estate at a cost of Rs 23.60 million and so far Rs 21.60 million have been spent. He said development work has completed and applications for allotment of plots will soon be invited.

According to him new industrial estates are also being established in Ghotki, Mithi and Naushehro Feroz on which cost of Rs 14.80 million, 23.50 million and Rs 23.50 million will be incurred respectively.

Minister said that a new scheme has been approved to promote power loom industry in Hyderabad on 500 acres of land and will cost Rs 200 million. He said efforts are underway for acquiring land and once it is acquired, development work will be taken up immediately.

Rauf Siddiqi has announced that investors desiring to set up factories in Thatta, Badin and Sanghar would be handed immediate possession of plot on payment of 20 percent of price and remaining amount would be recovered on easy instalments in 10 years. He said these plots would be non-transferrable.

He made it clear that people benefitting from this scheme will have to start work on the plot within one month of handing over of possession and show industrial production within 2 years.

He said in case of non-fulfilment of these conditions, the plot allotment will be cancelled. He has asked people whom plot was allotted more than 5 years back and have not yet set up factory or unit, should start work within one month or else otherwise, their allotment will be cancelled.


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## Pk_Thunder

*Traders launch movement against lawlessness, kidnapping and price hike*​
ABDUL QADOOS
PESHAWAR (December 28 2008): The trading community of Peshawar has started protest movement against lawlessness, and particularly the growing incidents of kidnapping for ransom in the city, and price hike and massive power load shedding. The campaign would be formally launched under the banner of Traders' Alliance--an amalgam of three different trade organisations--with the staging of a two-day protest camp at Chowk Yadgar.

The camp would be attended by all organisations of the trading community and activists of civil society. In this connection, All Pakistan Clerks Association (APCA) had already announced support to the trading community.

The two-day protest camp at Chowk Yadgar would be followed by such camps on University Road, Saddar Road, Charsadda Road and other important junctions of the city. Before the formal launching, all components of the alliance were due to hold meetings of their bodies.

The meeting of Anjuman-e-Tajiran was due at Sarafa Bazaar, while the action committee of the traders was scheduled to meet at Haleem Tower on G T Road in Nishterabad. The deteriorating law and order and particularly the growing trend of kidnapping for ransom has become a matter of great concern not only for the trading community, but also for the general public.

"We had waited for the measures of the government for last four months, but no practical step was taken so far to arrest the menace," said Mohammad Afzal, a leader of Anjuman-e-Tajiran, at Peshawar Press Club on Saturday.

He said that the government had announced giving free hand to police in dealing with the incidents of the kidnapping for ransom, but people were still awaiting practical step in this regard.

Although the kidnapping for ransom has been going on since long as a booming industry in the province, the kidnapping of a 32-year old woman along with her three-year old minor daughter had sent the waves of shocks and concern among all residents of the city and its adjoining rural areas.

"The new trend adopted to kidnap daughters and sisters of people has no precedent in our tradition and the trading community has come out to tackle it with the support of the people of all walks of life," announced Haleem Jan, president of Traders Action Committee, Peshawar.

About negotiations with the government, he said that so far they had neither been invited by any functionary of the provincial government nor they were in mood for it. However, he said he was hopeful that visit of a senior functionary of the government in the protest camp may prove seriousness of the government. The trading community also sought co-operation and participation of the journalist community in the war against kidnapping for ransom. The journalist community, who themselves are victims of the menace, extended full support to them. Those who visited the press club were Zahid Hussein, Ghufran Ahmad and Mujeeb-ur-Rehman.


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## Pk_Thunder

*Deal signed for Rs 20 billion 'Market Opportunity Fund'*​
AHMED MALIK
KARACHI (December 29 2008): An agreement was signed on Sunday among the participants for creating a Rs 20 billion 'Market Opportunity Fund' (MOF) regarding government guarantee, it is learnt. The fund will be managed by National Investment Trust (NIT).

Sources said that the fund would be used to start buying shares at the Karachi stock market in the next few days, after settlement of outstanding CFS shares issue.

Sources said that National Bank of Pakistan (NBP), State Life Insurance Corporation of Pakistan (SLICP), Employees Oldage Benefit Institutions (EOBI) and a consortium of six banks will provide Rs 5 billion each in the proposed fund.

In the consortium of banks, HBL, MCB, UBL and ABL will contribute Rs one billion each, while Bank Al Falah will provide Rs 750 million and the Royal Bank of Scotland Rs 250 million in the said fund. They said that the consortium will provide the amount at the rate of KIBOR+1.

Sources said that the fund will be buying the shares of only eight government owned listed companies including Oil and Gas Development Company (OGDC), Kot Addu Power Company (Kapco), Pakistan Petroleum Limited (PPL), Sui Southern Gas Company (SSGC), Sui Northern Gas Pipelines (SNGPL), Pakistan State Oil Company (PSO), National Bank of Pakistan (NBP) and Pakistan Telecommunication Company (PTCL).


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## Pk_Thunder

*FBR mulling to replace GST with VAT*​
MUHAMMAD ALI
KARACHI (December 29 2008): The Federal Board of Revenue (FBR) is mulling to completely replace the general sales tax (GST) with the Value Added Tax (VAT), likely by the end of 2009. Sources in the Regional Tax Office (RTO) told Business Recorder on Saturday that this was suggested by a member of IMF delegation led by Masood Ahmad, Director, Middle East department, in his speech.

They said that tax offices were presently collecting the General Sales Tax (GST) at flat rate of 16percent in general and added that GST was not in the mode of VAT, which had to be moved towards it for substantial increase in the revenue collection.

They said that there was ample need of complete adoption of VAT regime to enhance the revenue collection because in GST-based system, the revenue collection could only be increased after imposing special tax or increasing GST rate, which were not beneficial.

Therefore, the government of Pakistan has fully agreed to implement VAT law with minor exemptions of sales tax and income tax for sufficient revenue generation, they maintained.

Furthermore, they said the tax was deducted on the basis of value in VAT law however, in GST, it had been fixed, no matter what was the actual value of a product. They said that VAT regime would improve the tax reform progress and hoped that it would increase tax revenue by over 3 points of GDP.

Expert expected that board has intended to abolish special rules notified for different sectors. He said the government could further enhance its revenue collection, if zero-rating was removed and termed it as a major hurdle in VAT effective implementation. He said the FBR has zero-rated major export sectors including textile, leather, carpets, sports, surgical, dairy, stationary, poultry etc.


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## Pk_Thunder

*Immediate recovery of arrears of all taxes directed*​
SOHAIL SARFRAZ
ISLAMABAD (December 29 2008): The Federal Board of Revenue (FBR) has ordered immediate recovery of arreares of sales tax, federal excise duty, income tax and customs duty from the registered persons, for improving revenue collection in the second half (January-Jun 2009) of 2008-09.

In cases where recovery is pending due to disputes involving legal interpertion of tax laws, expert opinion of FBR Legal Wing would be taken to devise viable strategy for pursuing the case at the judicial fora.

Sources told Business Recorder on Sunday that the decision was taken in the last board-in-council meeting for recovery of pending tax arrears. The council had directed that the pending recoveries should be expedited by Member Sales Tax, Member Income Tax and Member Customs without delay. These Members should also consult FBR Member Legal to expedite disposal of cases in which recovery was held up due to litigation proceedings, the directive said.

Explaining the nature of pending recoveries, tax experts opined that the collectors of customs have to check whether there is any accumulation of customs duty arrears at the newly established reformed Model Customs Collectorates or not. The board had already issued instructions to the collectors of customs to pursue recovery of arrears. Similarly, the board had empowered the customs officials to write off irrecoverable arrears under SRO 1070(I)/2007. Through this procedure, business community can obtain waiver of irrecoverable arrears pertaining to customs duty, surcharge/fee, service charges, fine, and amount under bonds/guarantees over Rs 10 million.

In case of sales tax and federal excise duty, if demands have been raised against the taxpayers through order-in-origional during adjudication proceedings, it would also result in recovery of taxes. The recovery of pending sales tax and federal excise duty under the relevant provisions of Sales Tax Act, 1990 and Federal Excise Act would also be done.

In case of income tax , pending recoveries also include assessment orders; appeal orders and ractification orders pertaining to previous fiscals. If the Directorate General of Inspection and Internal Audit has detected negligence on the part of tax officials, the recovery could be made from the concerned unit for recovery of un-paid tax. As far as detections made by the DG Inspection and Internal Audit are concerned, no action is taken against the involved tax officials, but recovery proceedings are to be made against the concerned unit, experts said.


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## Pk_Thunder

*Marriott reopens with better facilities*​
RECORDER REPORT
ISLAMABAD (December 29 2008): The luxury Marriott hotel in Islamabad was reopened on Sunday, 98 days after it was destroyed in a devastating suicide truck bombing, one of the worst attacks in Pakistan. In the reopening ceremony, besides local people from different walks of life, US ambassador to Pakistan Anne Patterson, ambassador of Saudi Arabia, ambassador of Lebanon and officials from different embassies were present in the newly furnished luxurious hotel.

However, there was no presence of any government high ups. The re-furnished hotel surrounded by a bomb proof wall, was operational with more modern technology, extra service facilities, bullet proof rooms and new search rooms with modern devices to detect any explosive.

Sadruddin Hashwani, the owner of the Marriott and chairman of Hashoo Foundation had committed immediately after the attack for rebuilding the 289-room hotel within three months, making it even better place than it was before.

The hotel has been made functional with the re-opening of all eight restaurants, coffee shops and the conference rooms. At present, 60 rooms, which have been readied for guests would be functional from January 2, 2009, as hotel management has decided to test all the fixtures before allowing guests to stay.

Talking to media on the occasion, Sadruddin Hashwani was thankful to media for its co-operation and support. He said that the new hotel has been built like a fortress making it even stronger than before. The hotel's new bombproof wall, which is 14 feet high and 15 feet thick is capable of absorbing the shock of even a massive explosion like the one in September, he added.

Visitors will have to pass through a bombproof room within the wall in order to gain access to the hotel, which will feature sophisticated scanning equipment, he said.

Except head of the state, there will however be no parking at the hotel even vehicles carrying VIPs to the Marriott will have to deposit guests at the front gate and drive on. To a question, Hashwani said that he was neither supported by the government nor any insurance company and the hotel was furnished with his own resources.

He regretted that he had requested the government for allotting the adjacent plot for parking of the guests, but the government did not respond so far.

He said that he has full sympathy for those who sacrificed their lives while saving Marriott and he would support the widows and children of all the Marriott employees, who lost their lives. For the purpose, he said, his daughter Sara Hashwani has established Sahara fund for the support of 560 dependants of Marriott employees who either lost their lives or received injuries in the bomb blasts.

He said that he had rebuilt the hotel as per his commitment and his commitment was unconditional. "I am the son of this soil and would continue serve for this", he added.

Zulfiqar Malik GM Marriott said that the hotel was rebuilt by spending Rs 1 billion and the cost would increase after full completion of the reconstruction. He added that the security staffs of Marriott have been fully trained during last two moths by imparting them with professional training.


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## Pk_Thunder

*Saleem Raza to become SBP governor*​
RECORDER REPORT
ISLAMABAD (December 29 2008): The Chief Executive of Pakistan Business Council (PBC) Sayed Saleem Raza is scheduled to meet the prime minister Syed Yousaf Raza Gilani on Monday upon his appointment as Governor State Bank of Pakistan, it is reliably learnt.

Raza played a long inning in Citigroup and retired in a couple of year back to take up the assignment in Pakistan. He is a member of Economic Advisory Council to the prime minister and was associated with the Advisor on Finance Shaukat Tarin to draw proposals seeking to pull out Pakistan from the financial crisis due to abnormal rise in food and oil prices internationally.


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## Neo

*Economy needs effective policies, reforms to regain stability: SBP report​* 
KARACHI: December 29, 2008: Pakistan needs effective policies and implementation of reforms in fiscal year 2008-09 (FY09) to regain macroeconomic stability and meet economic challenges, says SBP report.

SBP first Quarterly Report for FY09 released, here on Monday, however pointed out that the sense of crisis gripping the country's economy in the initial months of FY09 has visibly eased by November 2008, as the Government moved to address the most immediate risks, and entered into a macroeconomic stabilization program to support medium-term reforms under the aegis of the International Monetary Fund.

said the disbursement of the first tranche of dollars 3 billion by end of November 2008 under the program meant that any immediate risk of default on external obligations receded, with a substantial improvement in foreign exchange reserve adequacy indicators. Also, export growth has strengthened and import growth moderated somewhat. This lent strength to the rupee, reducing the impact of an important generator of inflationary pressures, it added.

The Report said the gain on the external account was helped by a sharp decline in international commodity prices that is expected to substantially lower the country's import bill, offering the possibility of a decline in the country's very large current account deficit, and lower inflation.

This supply-side improvement has been reinforced by the reasonably good performance of crops during kharif FY09 cropping season, it said and added these factors appear to have already halted the persistent uptrend in inflationary pressures in the economy. Together, they could also help support a very modest improvement in the growth outlook for FY09.

There is also substantial progress on containing fiscal imbalances, with the government moving bravely to reduce subsidies, contain growth in other spending and increase revenues, the Report said. The result has been an encouraging improvement in some fiscal indicators, including a sharp fall in the fiscal deficit from 1.5 percent of GDP during first quarter of FY08 to 1 percent of GDP in Q1-FY09. This figure appears consistent with the annual target embedded in the macroeconomic stabilization program framework.

However, it added ,notwithstanding the relative positives, there is no room for complacency, the report asserted. While many of the country's macroeconomic indicators may no longer be worsening, the imbalances are nonetheless still quite large. Resolving them will require disciplined efforts over an extended timeframe.

This challenge is all the greater because of the difficult international economic environment, which has restricted the country's ability to tap international capital markets and carries risks for other external receipts (exports, remittances, FDI, etc.), it said.

The Report said that real Gross Domestic Product growth is likely to be significantly lower than the annual target and inflation will breach its target with a wide margin. On a positive note, however, both fiscal and current account deficits are estimated to improve iin FY09, it added.


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## Neo

*Chinese companies may set up plants for cell-phone sets ​* 
ISLAMABAD (December 25 2008): Government is negotiating with Chinese companies to set up manufacturing plants for cell-phone sets in Pakistan. Federal Secretary for Information and Technology Hifz-ur-Rehman informed the media persons after workshop conducted by SAS here on Tuesday.

He said that government is negotiating Chinese cell-phone companies including Zong, China Mobile and Hawavay to set up manufacturing plants of handset in Pakistan.

He said that President Asif Ali Zardari during his visit to China had taken up the issue of setting up manufacturing plants of cell-phone handsets in Pakistan. He said that Pakistan was spending $500 million to $800 million annually on the import of mobile sets and manufacturing plants in Pakistan could result in saving valuable foreign exchange. He said that duties on mobile sets had been imposed to enhance revenues.

Mazhar Hussain, Country Manager, SAS Pakistan delivering a keynote address said that SAS had the programmes that could help identify the terrorists and patrolling borders of the country. He said that its programmes could also help forecast the requirements of country regarding oil, gas and electricity based upon past data. He said that SAS has also developed software that could enable the banks to prevent robberies. Achieving these goals requires faster and improved decision-making ability across the entire organisation, he said. He noted that unfortunately in many organisations, departments continue to operate in information isolation. Existing enterprise systems are often not linked and software packages are not integrated. Decision-makers have difficulty getting consistent and accurate information that they need to make informed decisions quickly", said Mazhar Hussain.

SAS, the leader in business analytics and the largest independent vendor in the business intelligence market, helps executives at 45,000 sites make better decisions faster. SAS has shown significant growth over a short span of time in Pakistan by serving leading Banks, Telecoms, educational and government institutions. SAS's innovative business applications supported by an enterprise intelligence platform, have given customers an ability to increase their market share, reduce operational costs and enhance performance.


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## Neo

*Timely provision of quality seeds to boost agriculture production: Zafar ​* 
ISLAMABAD (December 28 2008): Chairman Pakistan Agricultural Research Council (PARC) Dr Zafar Altaf has said that timely provision of quality seed to growers will enhance production, which would play a significant role for strengthening the economy on sound footing and ensure food security.

He expressed these views while addressing one-day workshop on "Enhancing the Quality, Production and Access to Seed in Sindh", at Karachi University. The workshop was organised by PARC in collaboration with Asian Development Bank and Sindh government. Dr Zafar Altaf stressed the key stakeholders of the workshop that their joint efforts could bring radical changes for promotion of seed industry and provision of quality seed to growers.

He said that public and private sector partnership is a real force which has a capacity for developing/organised seed industry, markets for sales of agricultural produce and distribution of seed and other inputs to growers according to their zoning that is the mechanism which will make dent on our economy.

The participants of the workshops highlighted various issues and appreciated the role of PARC for arranging two workshops on the subject "Strengthening the Sale and Marketing of Agricultural Produce" and "Enhancing the Quality, Production and Access to Seeds in Sindh".

The workshops were attended by representatives of seed industry, sales and marketing experts, agricultural scientists from Punjab, Balochistan, NWFP, Sindh, representatives of government/semi government organisations, Smeda, Rural Support Programme, farmers organisations, Women Agricultural Development Organisations, Chamber of Agriculture, representatives of Asian Development Bank, Agribusiness Support Fund, Competitive Support Fund, Senior Breeders, Progressive farmers NGOs and Federal Seed Certification and Registration Department (FSC&RD).


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## Neo

*Whose responsibility is it to control inflation? ​* 
ARTICLE (December 29 2008): What exactly does the State Bank do is a question that crops up repeatedly, especially during times when prices are high and the exchange rate appears to be in a freefall. In Pakistan these days, unfortunately, the rate of inflation on a weekly basis is above 20 percent while the rupee has fallen from 62 to a dollar in the first quarter of 2008 to around 80 rupees to a dollar by the end of the calendar year. Some one is not doing their job.

In the words of its latest report the State Bank of Pakistan (SBP) states that "price stability, the primary objective of all central banks, was threatened by one and a half year's developments in world's financial and commodity markets."

The question is what are the tools available to central banks to deal with the rate of inflation? First, open market operations which are defined as buying and selling previously issued government securities or IOUs. If controlling inflationary pressures is the objective then the central bank would opt to sell treasury securities to a firm that deals in them - an amount that is debited from the dealer's account held at his bank. This implies that the banking system has fewer funds to lend which, in turn, leads to a rise in interest rates or accessing credit becomes more expensive. The economy slows down and curbs the rate of inflation.

The second tool available to the central bank is manipulating the reserve requirement which is defined as the percentage of deposits that the bank must keep in its own vaults or with the central bank - a percentage that cannot be onlent. Raising the reserve requirement would therefore reduce lending - an anti-inflationary policy.

And finally the central bank can manipulate the discount rate or the interest it charges banks for short term loans. If the discount rate is raised then inflationary pressures are checked. So what monetary policy tools did the State Bank of Pakistan use as inflationary pressures began to rise in the country from mid 2007 when the international price of oil and commodities skyrocketed to the present when both oil and commodity prices have declined dramatically?

In the first round, according to the State Bank report, policy discount rate was raised by 50 basis points to 10 percent effective 1 August 2007. This, so claims the SBP, "neutralised the impact of monetary overhang created in June 2007 as evident from deceleration in M2 growth during July-October fiscal year 2007."

The report adds that during November to December 2007, the time of the Caretakers and the continuation of Salman Shah as the economic manager supremo of the Musharraf regime, the federal government borrowed 1.78 billion rupees which 'led to a softening of interest rate and acceleration of M2 growth.' In short the Musharraf regime and his economic managers (Shaukat Aziz did not leave the post of prime minister till November 15, 2007) have much explaining to do for the rate of inflation during this time period.

By February 1, 2008 the SBP raised the discount rate by another 50 basis points to 10.5 percent. At this point the SBP also adjusted the cash reserve requirement, another policy tool available to it and increased it by 100 basis points to 8 percent for demand liabilities. The SBP comments that subsidies continued which were funded through 'magnetisation which diluted the desirable impact of monetary tightening.' This too took place when the former regime's Salman Shah was still in his job, which he left on 25 March 2008.

The third round took place during the tenure of the current government on 23 May 2008 and the SBP used all the three monetary policy tools at this time to check inflation: discount rate was raised by 150 basis points to 12 percent, cash reserve requirement was increased by 100 basis points to 9 percent for demand liabilities and the statutory liquidity requirement was raised by 100 basis point to 19 percent. The SBP adds by way of justification of its failure to control inflation that 'government's heavy reliance on borrowing from SBP continued unabated with additional 149.8 billion rupees during May 25 to June 30, 2008.'

And finally the fourth round, this time under International Monetary Fund dictation, as a pre-standby arrangement approval, the SBP, on November 12, 2008 raised discount rate by a hefty 200 basis points to 15 percent.

However the Governor of the SBP also announced that 319 billion rupees would be pumped into the economy to meet exceptional liquidity requirements of the banking system. What were these liquidity requirements?

According to the Governor in her widely reported Press conference at the time "the SBP's new move would not only help in aligning aggregate demand with supply but would also provide room to accommodate the government's financing requirements from commercial banks."

The latter is disturbing because this implies a substantial money injection into the economy to fund government expenditure which will, needless to say, have inflationary implications. Or, in effect, money has been withdrawn from the system with the raising of the basis points, an anti-inflationary measure, while 319 billion rupees is to be released into the economy with obvious inflationary implications.

A further increase in the discount rate, according to the Letter of Intent submitted by the government to the IMF board and a reflection of already agreed conditionalities with the Fund, "will be considered at the time of the monetary policy statement scheduled for end January 2009."

There is no doubt about the fact that both the previous government as well as the present one have been guilty of borrowing amounts from the SBP that were simply not sustainable. It took going on the IMF programme for the government to commit to zero borrowing from the SBP till the next fiscal year. It is also evident that the SBP acted four times this year to contain inflation and that the last action, which essentially was much more contractionary on the one hand than previous actions put together, was expansionary in terms of liquidity injection, on the other hand.

The question that comes to mind is: if the SBP had undertaken more stringent measures to effectively deal with the rate of inflation would we have as high a rate of inflation? The answer is unfortunately in the affirmative: inflation is not only a function of government borrowing but the fact that production declined due to massive loadshedding, cartelization by suppliers of key kitchen items, for example wheat, and dwindling foreign exchange reserves due to high oil import bill and failure of our exports to keep pace with imports. But one thing is certain - it may not have been as high. This lends credence to critics of the SBP who allege it was too little too late.


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## Neo

*Pakistani GDP growth seen lower than target: SBP ​*
Monday, 29 Dec, 2008

KARACHI: Pakistan's gross domestic product (GDP) is likely to be significantly lower than a target of 5.5 per cent in the 2008/09 (July-June) fiscal year, the central bank said on Monday.
The State Bank of Pakistan said in a report on the first quarter, that ended on Sept 30, inflation would also exceed a target of 12 per cent by a wide margin.
The central bank projected GDP growth to range from 3.5 per cent to 4.5 per cent and inflation from 20 per cent to 22 per cent this fiscal year.
The fiscal and current account deficits were expected to improve in the year to June 30, it said.
The central bank estimated that the current account deficit would fall to between 6.2 per cent and 6.8 per cent of GDP, compared with 8.4 per cent in the fiscal year of 2007/08.
The fiscal deficit was projected to be 4.7 per cent of GDP, compared with 7.4 per cent in the previous year, it said.
However, it said Pakistan still had many challenges even though there had been a fall in global commodity prices and the country entered an International Monetary Fund (IMF) programme last month.
'While many of the country's macroeconomic indicators may no longer be worsening, the imbalances are nonetheless still quite large,' the bank said in its report, said adding that there was no room for complacency.


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## Neo

*Economy: the worst nearing its end? ​*By Afshan Subohi 

Monday, 29 Dec, 2008

Experts predict the next year to be difficult for the world economy. For Pakistan, it seems, the worst is nearing an end as 2008 closes. The year 2009 may be comparatively more productive for the businesses and the people. It is, however, imperative that war mongers are kept at bay by the people of the region.

The current government can use the democratic dividends to negotiate a turnaround and make 2009 a year of economic renewal. This would generate goodwill among the multitude, necessary for the success of an elected government. The economic development that benefits the majority nurtures democratic dispensation.

While the humbled world is bracing to contain the fallouts of the most serious financial crisis since the Great Crash of 1929, like many other developing countries that were relatively immune, Pakistan did not receive a direct hit.

The international financial crisis that originated from the US subprime mortgage market spread to London, to Berlin, to Paris, to Iceland, to Russia, to China, to Japan, and to Dubai among others, and brought many corporate giants to their knees. It had a direct relation to the size of the economy and the level of integration in the global market. The relatively small economies and marginal integration proved to be a bliss in disguise for the developing world.

There are reasons to believe that for Pakistan the FY2009 may actually prove to be better than FY08 at the macro level. The balance of payment position, inflation situation and the value of currency may all improve. After hitting rock bottom, the capital market and real estate may get stabilised. Inflation may fall and trade deficit shrink gradually over the year.

The investment levels may not improve unless the internal law and order and relations with India and Afghanistan begin to normalise. The political stability, to a great extent, depends on the internal and external security.

The domestic and the foreign investment will pick up when stability is achieved. However, if innovative schemes to channel idle resources are initiated to close the investment gap in industry and agriculture, economic indicators may start improving from the second quarter of FY2009.

With the easing out of harsh external factors, the performance of the economy in FY2009 will depend on the collective wisdom of the countrys team of economists. The team has been entrusted with the task of devising a workable economic plan for broad based development. The issue is not just stabilisation but also expansion and higher capital formation.

Some positive signals emanated when economists, in and outside the government, were inducted in the planning process in mid-FY2008. The measures taken so far to tackle the economic slow down, however, are not enough.

If a plan to prevent the slow down in the economy is not evolved and the pace of investment in the real sector does not improve, unemployment may become the single most important problem with multiple social and political implications.

More than the pace of growth, it would be the composition of the contributing sectors that may undergo a change over the year 2009. The share of agriculture is set to improve because of higher procurement prices for agriculture produce and improved availability of agricultural inputs.

There is a possibility of an increase in inter-provincial disparity gaining momentum with Punjab forging ahead under stewardship of its Chief Minister Shehbaz Sharif on the growth path while other provinces are bogged down by mismanagement and lack of ownership of development programmes in their fragmented societies.

There is little hope about the government delivering much on the social sector front, keeping resource constraints in view. The diversion of direct support funds (Zakat, Ushr and others) for the poor towards Benazir Support Programme and its distribution to the needy households through members of the Parliament may generate more controversies than goodwill for the government.

Besides, doles cannot compensate for the human resources being utilised in productive undertakings. A security net is absolutely necessary to save the poor from free fall but the thrust must be on helping them to earn their livelihoods.

The inflationary pressure is expected to ease as oil and commodity prices fall in the international market. The tight monetary policy and improvement in the supply situation of the essential commodities from the increased farm output will curb the price spiral and could bring prices of edibles down to, perhaps, tolerable levels.

The pressure on the current account may also ease somewhat because of reduction in the import bill. The import bill may fall because of cheaper oil and raw materials in the international market. Besides, higher duties on import of luxury items may suppress domestic demand.

According to an estimate, an average 50 per cent fall in the prices may lead to the reduction from high $20 billion in FY2008 to $11 billion in FY2009, assuming all other things remain the same.

If exporters succeed in relocating their exportable surplus to new markets in Afro-Asian region, the deficit can come down to a single digit. If the government succeeds in negotiating better market access in the EU and US markets, it could give the impetus needed to the textiles exports.

The hope for higher resource mobilisation through taxes looks too optimistic in the wake of the economic slow down. The collection from custom duty because of lower and cheaper imports will fall. Lack of inclination of the government to tax the agriculture income or the service sector will leave little manoeuvring space for the tax collection machinery to turn in more revenue. The tax-to-GDP ratio is not likely to improve in the immediate future.

After entering the IMF programme, confidence of global investors in the economy has improved. With macroeconomic stability, the country could qualify for more credit and grants from friendly countries.

To conclude, it is certainly not an easy situation as the impact of deepening world financial turmoil continues to unfold worldwide.

In Pakistan the weak institutions require that not just the government but the civil society must try to channel resources to productive sectors for accelerated capital formation, development and quality growth.

However, if the current stabilisation concerns continue to overshadow the imperatives of a robust economic growth, the situation is likely to worsen.


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## Neo

*Transit trade up, exports tumble ​*By Mohammad Ali Khan 

Monday, 29 Dec, 2008

THE goods in transit facility extended to Afghanistan (GITA), a major source of supply to local Bara markets is being misused to smuggle industrial raw material and consumer goods.

Some manufacturers told Dawn in Peshawar that the levy of regulatory duties on imports of luxury items has proved to be counter productive, as the Afghan transit trade facility has replaced the legal channels to bring consumer goods and raw materials. Pakistan has imposed regulatory duties on imports of more than 300 luxury goods, to cut trade deficit.

The regulatory duty on imports is proving to be a two-edged sword, said Sharafat Ali Mubarik, president Sarhad Chamber of Commerce and Industry adding, not only the government is losing revenue which it collects on imports, but it has also damaged the industrial sector in the face of growing volume of smuggled goods from Afghanistan.

Sources said, raw materials and finished products imported under Afghan Transit Trade Agreement (ATTA) are sent back to Pakistan from Jalalabad, the bordering town of Afghanistan. Organised bands of smugglers ensure safe delivery of consignments to any destination in Pakistan.

A manufacturer in Peshawar told Dawn that a container load of stainless steel, imported through legal channels costs 800,000 whereas the same costs Rs300,000 if smuggled from Afghanistan through ATTA.

Consumer goods cost less if smuggled from Afghanistan. I have to pay 35 per cent extra for many edible items if I import through legal channels compared to those being smuggled from Afghanistan, said a trader in Karkhano market, famous for smuggled goods located on the fringes of Peshawar.

The negative list consisting 60 different items banned under ATTA to protect the local industry has been reduced to two items; now only cigarettes and automobile are under the ban.

With the present economic slow down, the volume of transit trade is on increase whereas the volume of Pakistans export is decreasing, said a Peshawar-based custom official.

Pakistans exports to Afghanistan dropped to $600 million last year from $1.8 billion two years ago, whereas the size of transit business swelled to Rs85 billion in the same period from the Rs35 billion which clearly indicates that the facility is being misused greatly, the official said. Currently the consumption of a number of items such as steel products, electronics, cloth, readymade garments and toilet-paper across the border is very limited, but their supply has increased considerably, he added.

Nauman Wazir, the president of the Industrial Association Peshawar, said: The ATTA is responsible for the poverty and unemployment, particularly in the NWFP. If cheap smuggled goods are freely available, the local industries cannot flourish. All transactions in this business are done through Hundi and illegal money transfers are also a serious issue of capital flight from here, he added while suggesting that the ATTA should be amended to facilitate the cross border trade in a way that it would not hurt the local industry.

The ATTA was signed on March 2, 1965 in Kabul to facilitate Afghan transit goods via land routes initially for a period of five years. Unless a notice of termination is given in writing by either contracting party to the other six months before the expiration of the five-year period, the agreement is automatically renewed for another period of five years. It can be terminated by either party at any time provided six months notice of termination is given by either party.

But the contracting parties are required to review the working of the agreement once a year. The agreement has not been revised for almost four decades, said the custom official. The revision of ATTA is currently under discussion on both the sides and a consensus has been developed on re-designing it.

Manzoor Elahi, a leading exporter and manufacturer, opined that ATTA is a two-way pact but practically it is unilateral, benefiting only Afghanistan. He said, bilateral accord is the need of the hour, adding that, Pakistan has done enough to facilitate Afghan transit trade and now we expect the same from the other side.

Apart from revising the ATTA, measures should be taken to counter smuggling of consumer goods from Afghanistan, said Mr Wazir, president IAP. Fencing of border is the only solution to counter the smuggling from Afghanistan, the major threat to our industries, he added.

The growing volume of transit trade is also worrying the authorities responsible for checking re-entry of these goods into local markets, as measures are being taken to counter this trend, said Raja Sikandar, Director General Custom Intelligence, when approached by Dawn.

Curbing the smuggling is an uphill task because of the porous border, he concluded.


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## Neo

*Trading volumes signal a return towards normalcy ​*
Monday, 29 Dec, 2008

THE benchmark KSE 100-share index last week demonstrated that it was close to its last resistance level around 6,000 points as the current spate of nervous selling seemed to have overrun its course followed by revival of selective buying at the terribly lower levels. The KSE 100-share index suffered fresh sharp fall of 1,026.90 points at 6,487.52 during the week.

The out-of-the-court settlement of CFS MK-II positions of Rs7 billion at 12.5 per cent discount of rate prevailing on Dec 24, 2008, had positive impact on the market as a good number of shares managed to finish modestly recovered under the lead of mutual funds, modarabas, leasing and some leading shares on other counters.

Under the agreed formula, financers would lift shares worth Rs3.05 billion and the public sector institutions the identical amount to settle the longstanding dispute among the parties.

It is too early, however, to predict about the new year trading on capital market as much would depend on the positive news from the political front but some analysts are optimistic that beginning could be better on technical ground alone.

Although the fourth consecutive week suffered a fall of over 1,000 points or 13 per cent making the total to about 60 per cent in December 2008 indications are that some of the leading investors have decided to return to the market.

The outgoing calendar year witnessed many ups and downs both in term of lows and highs, the index level of 15,622.30 of all-time high may not be bettered in the near future. Its lowest of the year was noted at 6,400 points. Its single session rise of 960 points after the extension of the capital gains tax by two years was another all-time record.

But the market also witnessed a number of official steps to put it back on the rails including floor under the KSE 100-share index. Although it did more damage to the trading pattern than good as after its lifting on December 15, after about four months, continued to inspire fresh selling by the foreign investors who were out to unload their long positions at a discount of well over 30 per cent.

The year witnessed many crucial phases both in terms of lowest ever daily volume and massive price fall notably in oil, banking and on the blue chip counters owing to persistent liquidation.

The market remained depressed through out the last week as liquidity crunch continued to haunt investors in the backdrop of increasing tension with India.

Threatening statements by the Indian leaders in the aftermath of Mumbai incident seemed to have created pre-war hysteria on the stock market as some of the leading investors hastened to liquidate their positions at the falling prices but without finding any willing buyer.

War with India may not be imminent but persistent threats from across the borders has made political situation look like as was reflected by steep fall in the daily volume, analyst Hasnain Asghar Ali said.

And added to it was various interpretations of Sindh High Court ruling on the outstanding positions on the badla market and talk of revision petition in the Supreme Court and out-of-the-court settlement on the issue, said a analyst Ahshan Mehanti.

According to market sources meetings were being held between the brokerage houses to resolve the issue out of the court to give a breathing space for the unprecedented fall in the trading history of the KSE.

Another analyst Ashraf Zakaria says positive news on market support fund of Rs20 billion after the IMF approval should have created a sense of security among the investors but delay in its launching is also taking its toll.

He says there are more sellers than the buyers as no one is inclined to make fresh commitments even at the lower levels on all the bluechip counters despite the fact that they provide an attractive bait for the future capital gains after the recovery process is initiated.

Minus signs again dominated the list, under the lead of bank, insurance and oil sectors as leading among them ended the week with sharp fall and so did blue chips on the other counters.

FORWARD COUNTER: Leading shares on this counter also followed the lead of their counterparts in the ready section without any transaction as no one was inclined to make fresh commitments.


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## Neo

*RPT-Iran ready for gas deal with Pakistan, without India ​*Mon Dec 29, 2008

TEHRAN, Dec 29 (Reuters) - Iran will sign a deal with Pakistan to sell gas to the neighbouring country, even if India, a third party to the deal, walked out, student news agency ISNA reported Iran's oil minister as saying on Monday.

India stayed away from talks in Tehran on a proposed $7 billion pipeline in September, saying it wanted to agree transit costs through Pakistan on a bilateral basis first.

Iran Oil Minister Gholamhossein Nozari said a delegation from Pakistan had arrived in Tehran for two days.

"Iran will sign a deal with Pakistan, if India does not take part in the project," ISNA quoted Nozari as saying.

In July, Iran said India and Pakistan had accepted Iran's demand for gas price reviews based on market changes, denying reports by some Indian newspapers that the pipeline talks had failed after Iran demanded a review every three years.

The pipeline would initially carry 60 million cubic metres of gas daily to Pakistan and India, half for each country. The pipeline's capacity would later rise to 150 million cu metres.

Iran says it has completed 18 percent of the work for the pipeline to bring gas from its South Pars field to the Iran-Pakistan border.

Pakistan has yet to begin work on a 1,000 km (625 mile) stretch of the pipeline to link Iran with India.

Iran has the world's second-largest gas reserves after Russia. But sanctions, politics and construction delays have slowed its gas development, and analysts say Iran is unlikely to become a major exporter for a decade. (Writing by Parisa Hafezi, Editing by Sue Thomas)


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## Neo

*Pakistan Wants To Buy Indian Share in IPI​*
29.12.2008 

The IPI pipeline was conceptualized in 1989. Negotiations over pricing mechanisms and concerns over the Pakistani leg of the planned 1,724-mile pipeline from the Iranian South Pars field have hampered progress.

Asim Hussein, a Pakistani energy adviser, will travel to Iran Dec. 29 to meet with his Iranian counterparts to discuss purchasing the Indian shares in the project, Pakistani daily The Dawn reported.

India expressed repeated concerns over the Pakistani leg of the pipeline that will travel through volatile tribal regions.

Iran said terrorism and other concerns over the security of IPI should not drive decisions for the proposed pipeline.

"Terrorists should not dictate policy," said Iranian Deputy Foreign Minister Muhammad Mahdi Akhoundzadeh.

New Delhi seemingly has backed away from IPI negotiations somewhat following a civilian nuclear energy deal with Washington.


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## Neo

*Global environment carries risks for external receipts: economy improving through entering programme under IMF aegis: SBP​* 
KARACHI (December 30 2008): The country's ailing economy is witnessing improvement and has started to ease from the crisis since November, that had circumscribed it during the early months of the current fiscal year. However, despite some improvement, the country needs effective policies and implementation of reforms in the fiscal year FY09 to regain the macroeconomic stability and meet economic challenges, says the (SBP) First Quarterly Report (July-September) FY09, released on Monday.

The report said that healthy economic signs emerged after the government addressed the most immediate risks to the country's falling economy through entering the macroeconomic stabilisation programme to support medium-term reforms under the aegis of IMF.

It said that among the biggest challenges for the government would be to ensure the passthrough of the decline in international commodity prices to consumers. In this background, while recent downward adjustments in the administered prices of key fuels is appreciable, transport fares and goods transportation charges were "either not adjusted downwards or saw small changes", it added.

However, notwithstanding the relative positives, there is no room for complacency, the Report asserted. "While many of the country's macroeconomic indicators may no longer be worsening, the imbalances are nonetheless still quite large," it said, and added that resolving them will require disciplined efforts over an extended timeframe.

"This challenge is all the greater because of the difficult international economic environment, which has restricted the country's ability to tap international capital markets and carries risks for other external receipts like exports, remittances, FDI, etc," it said.

The central bank has estimated that the country is likely to miss the GDP growth, inflation, and export targets, while foreign direct investment would be lower than recent years. However, on a positive note, both fiscal and current account deficits are estimated to improve in FY09, the SBP said. As per report, real GDP growth is likely to be significantly lower, around at 3.5-4.5 percent, than the annual target of 5.5 percent and inflation will breach its target of 11 percent to 20 percent by the end of FY09 with a wide margin of 9 percent.

While fiscal and current account deficits are expected to be under control and would be close to the targets, fiscal deficit is likely to stand at 4.3-4.8 percent of GDP against the target of 4.7, and current account deficit would be 6.2-6.8 percent against the target of 7.2 percent by the end of current fiscal year.

The SBP has estimated that imports and exports have been revised downward, with a more pronounced effect on imports. At the same time, in the event of shortfall of external financing, the burden of financing fiscal deficit will disproportionately fall on the domestic commercial banks, since the government has committed not to borrow incrementally from the central bank.

In addition, FDI inflows may be substantially lower than in recent years, in which case, pressures on forex reserves could remain strong. Both possible developments indicate continuing risk on interest rates and exchange rate, and thus the need for continued vigilance by policymakers. The Report maintained that global recession and risk averse behaviour of investor would likely severely impact international trade and level of foreign exchange inflows in the economy.

"SBP estimates for both imports and exports have been revised downwards, with a more pronounced effect on imports," it said, and added that at the same time, in the event of shortfall of external financing, the burden of financing fiscal deficit will disproportionately fall on domestic commercial banks, since the government has committed not to borrow incrementally from the central bank.

It said the disbursement of the first tranche of $3.0 billion by end-November 2008 under the program meant that any immediate risk of default on external obligations receded, with a substantial improvement in foreign exchange reserve adequacy indicators. Also, export growth has strengthened and import growth moderated somewhat. "This lent strength to the rupee, reducing the impact of an important generator of inflationary pressures," it added.

The Report said the gain on the external account was helped by a sharp decline in international commodity prices that is expected to substantially lower the country's import bill, offering the possibility of a decline in the country's very large current account deficit, and lower inflation. This supply side improvement has been reinforced by the reasonably good performance of crops during kharif FY09 cropping season, it said.

There is also substantial progress on containing fiscal imbalances, with the government moving bravely to reduce subsidies, contain growth in other spending and increase revenues, the report said. It added that the result has been an encouraging improvement in some fiscal indicators, including a sharp fall in the fiscal deficit from 1.5 percent of GDP during first quarter of FY08 to 1 percent of GDP in Q1-FY09.

"This figure appears consistent with the annual target embedded in the macroeconomic stabilisation program framework," it said. According to SBP's Report, agricultural growth in the current fiscal year could be significantly better than in FY08, notwithstanding a sharp fall in sugarcane harvest.

"This expectation is based on a record rice harvest of 6.5 million tons, a small improvement in cotton production during Kharif FY09, supported by the possibility of a record wheat harvest," it said, and added that initial information also raises the possibility of a very good showing by minor crops and reasonable growth in the livestock sub-sectors.

However, large scale manufacturing (LSM) continued to decline during the first quarter due to energy shortages, deterioration in domestic law & order situation, impact of pass through of international oil prices, sharp depreciation in rupee parity and most importantly, weak external demand on the back of global recession and slowdown in domestic demand.

LSM registered a negative growth of 6.2 percent in Q1-FY09 against a reasonable growth of 7.3 percent in Q1-FY08. This decline in LSM production is broad-based, as seven sub-sectors (having 72.4 percent weight) out of fifteen registered a decline, while three (having 15.3 percent weight) registered a growth of less than one percent, it said.

Referring to services sector, the report said that the sector exhibited resilience to fluctuations in economic activity in recent years. "This is also evident in continued growth in FDI in the services sector, despite slowdown in overall economic activities in the country," it added.

The Report said that the State Bank undertook aggressive monetary tightening during FY09, further increasing the policy rate by 300 bps in two rounds. On cumulative basis, this means a 550 bps increase during the last 18 months. It said in terms of monetary aggregates, the YoY growth in M2 decelerated steeply to 10.7 percent by end-November 2008 - the lowest growth seen during the last seven years. Indeed, an extraordinarily strong contraction in net foreign assets (NFA) of the banking system more than offset a sharp rise in budgetary borrowings from the central bank and continued strong demand for credit both from public sector enterprise and private sector, it added.

Referring to fiscal developments, the Report said that the Q1-FY09 fiscal performance improved consequent to the policy shift, with the overall fiscal deficit estimated to have dropped to 1 percent of annual GDP. "This is consistent with the annual fiscal deficit target set under the IMF stabilisation program. The reduction in fiscal deficit in Q1-FY09 was brought about mainly by a drastic cut in development expenditures," it added.

The Report said Pakistan's external account remained under stress through July-November FY09, as acceleration in the growth of the current account deficit, and sharply reduced financial & capital account inflows drew the country's foreign currency reserves to perilously low levels.

Not surprisingly, the rupee also weakened substantially in the period, depreciating by as much as 17.5 percent against the US dollar by end-October 2008, before recovering, somewhat, after Pakistan gained IMF support for a macroeconomic stabilisation program.

The Report said that during July-November period of FY09, strong growth in imports, mainly due to higher import prices, outpaced the otherwise substantial improvement in export growth causing the trade deficit for the period to widen by $1.4 billion compared to the same period last year. However, the combined impact of lower commodity prices and easing of domestic demand pressure are likely to reduce the trade deficit going forward, it added.


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## Neo

*High inflation rate persists​* 
KARACHI (December 30 2008): Inflationary pressure remained strong in the economy during the first five months of fiscal year 2008-09, despite some decline in it globally. The State Bank of Pakistan in its first quarterly report for FY09 said that strength of domestic inflation reflected the cumulative impact of strong aggregate demand, weakness of the rupee and other factors that limited the passthrough of lower international prices to domestic consumers.

The report said that consumer price index (CPI) and the sensitive price indicator (SPI) have seen strong YoY increases in FY09 in Pakistan so far. However, after recording strong growth (YoY) during the first two months of FY09, a significant decline in Wholesale Price Index (WPI) inflation has been observed during the later months.

WPI inflation dropped to 19.9 percent in November 2008 from its peak of 35.7 percent in August 2008, mainly due to a decline in international fuel and commodity prices, the report said. This also suggested that the passthrough of declining fuel and commodity prices to the wholesale prices had been quicker as compared to the retail prices. If the declining trend in wholesale prices continued, it might also help bring down retail prices in coming months, the report said.

Core inflation, measured by both non-food non-energy (NFNE) and 20 percent trimmed mean, strengthened during the first five months of FY09. Strength in core inflation is indicating the persistence of inflationary pressures, it added.

The SBP said it undertook aggressive monetary tightening during FY09 to arrest the inflation and further increase the policy rate by 300 bps in two rounds. On cumulative basis, this means a 550 bps increase during the last 18 months.

Similar to CPI inflation, core inflation measured by both indicators, non-food non-energy (NFNE) and 20 percent trimmed mean, continued to accelerate during the first five months of FY09.

"After touching record highs, international commodity prices retreated sharply since June 2008 primarily due to global recession", the report said. Other factors that led to the easing of commodity prices in international markets included (a) appreciation of US dollar against almost all major currencies, (b) improved outlook for food commodity supplies, (c) significant reduction in shipment costs, as well as, (d) removal of trade barriers by some countries imposed earlier to shield their domestic economies from rising commodity prices.

Core inflation (YoY) measured by NFNE increased to 18.9 percent during November 2008 compared to only 6.9 percent in November 2007.

Similarly, 20 percent trimmed mean core inflation (YoY) also remained strong as it increased to 21.3 percent in November 2008 from 8.6 percent in the same month of last year.

The report said that strength in core inflation indicated the persistence of inflationary pressures. Keeping in view stubbornly high inflation, uncomfortably high government borrowings from the central bank and almost about 100 percent increase in the current account deficit during July-October FY09, SBP tightened monetary policy during November 2008. Nevertheless, it should be kept in mind that the desired macroeconomic stability cannot be achieved solely by monetary policy measures. Co-ordination of fiscal policy is also needed. In this background, recent fiscal constraint, under IMF program, is likely to supplement monetary policy actions. Thus, inflationary pressures are expected to steadily ease going forward. Despite easing of inflationary pressures, average CPI inflation for FY09 is likely to be in the range of 20 - 22 percent, compared with 12 percent in FY08.

The persistence of inflationary pressures requires sustained macroeconomic discipline. In particular, reduction in fiscal and external deficits is necessary to achieve conducive macroeconomic environment.


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## Neo

*FBR surpasses revenue target of Rs 413.2 billion for July-November fiscal year 2009​* 
KARACHI (December 30 2008): The Federal Board of Revenue (FBR) has surpassed its revenue target of Rs 413.2 billion for July-November FY09, despite a shortfall of Rs 12.3 billion in direct tax collections, says State Bank of Pakistan's first quarterly report released on Monday.

It said that this was made possible by above-target collection for all three components of indirect taxes. As a result, indirect taxes reached Rs 290.8 billion during July-November FY09 up by 28.3 percent YoY compared to a 13.4 percent YoY rise in the corresponding period last year.

Though welcome, the strong growth in indirect taxes should not be taken as an indication of higher tax buoyancy since a significant part of this increase was contributed by a rise in international commodity prices and steep depreciation of the Pakistani rupee, the report said.

With recent decline in POL product prices and presence of considerable scope of further downward adjustment, the tax base, and consequently, the tax receipts, could decelerate in remaining months of FY09. Furthermore, the deceleration in direct tax collection could intensify with possible declines in withholding tax receipts from contracts as a result of large cuts in development expenditures, it added. First-quarter total revenues posted an impressive YoY growth for the second consecutive year.

Specifically, total revenues rose to Rs 385.0 billion, registering YoY growth of 23.1 percent during Q1-FY09 as compared to 22.3 percent growth in Q1-FY08, the report informed. However, the contribution to growth in total revenues in Q1-FY09 saw a reversal from that of Q1-FY08. In particular, the strong rise in total revenues during Q1-FY09 is mainly due to substantial rise in tax revenues, which offset the impact of a deceleration in the growth of non-tax revenues.


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## Neo

*Power import from Iran: transmission line pact not signed due to absence of bank representative​* 
ISLAMABAD (December 30 2008): Pakistan and Iran on Monday discussed avenues of more electricity trade between the two countries, but postponed signing of an agreement on transmission line-specific credit facility of $55 million to be provided by Iran for laying 70 km transmission line, official sources told Business Recorder.

During two rounds of ministerial level talks, ie one in the Ministry of Water and Power's committee room, and second in the Marriott Hotel reopened a day before, Iran was represented by Energy Minister Engineer Parviz Fattah, and Pakistan team was led by Minister for Water and Power Pervaiz Ashraf.

Iran has agreed to extend $55 million credit facility to Pakistan for laying transmission line for supplying 1000 mw electricity. Both countries had also signed a Memorandum of Understanding (MoU) according to which Tehran will provide 1000 mw electricity to Pakistan via Balochistan.

Pakistan is currently importing 40 mw from Iran for coastal areas of Balochistan. The import of power is being enhanced by additional 100 mw for Gwadar port, for which an agreement has already been signed. However, progress on the project has been too slow and both parties were accusing each other for not proceeding at the required pace.

Sources said that Pakistan has made its documents ready for signing of credit facility agreement in the presence of Iranian Energy Minister, but signing did not materialise because the official of Iran Export Development Bank was not accompanying the Minister. "We hope that the agreement will be inked shortly between Iran and National Transmission and Dispatch Company (NTDC)," sources said.

According to an official statement, both sides discussed bilateral co-operation on existing power sector projects related to import of electricity from Iran and future investment prospects in the power sector of Pakistan.

Iranian delegation was briefed by the Ministry of Water and Power authorities on the current power situation, short, medium and long term measures being taken by the Pakistan to bridge the gap between demand and supply, future plans to inject more electricity in the national grid to end the energy crisis and the potential projects being offered to the investors in the coal, hydro and renewable energy sectors. The salient features of the power policy and liberal incentives for private investors were also highlighted in the briefing.

Export Development Bank of Iran will be extending credit of $55 million to NTDC/Pepco for construction of transmission line in Pakistan (70 km). The balance 50 km on the Iranian side will be constructed by Iran, which will be made part of the tariff. In addition to the above, consultants have been engaged to carry out feasibility study for import of additional 1,000 mw from Iran for which an MOU has already been signed. Both sides expressed keenness to accelerate progress on these projects.

The Iranian Minister, stressing the need for enhancing bilateral co-operation, offered supply of more power from Iran. He offered to export electricity from its port at Chabahar, which is nearest to Gwadar port where a power plant of 500 mw is being constructed by Iran and will be ready within the next six months, the statement said.

Meanwhile, the Iranian delegation also met Prime Minister Yousaf Raza Gilani and discussed regional situation. The Prime Minister reiterated Pakistan's stance for not allowing its soil to be used against other countries for any terrorist activities.

Expressing satisfaction over the bilateral relations between the two countries, he underscored the need for further promoting co-operation, especially in the energy sector. He expressed hope that the MoU signed between the two countries for the import of 1000 mw of electricity from Iran would soon materialise.


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## Neo

*Pakistan stocks almost cheapest in Asian markets​* 
KARACHI (December 30 2008): Pakistan stock market, after the recent fall, ranks as one the cheapest in Asia and trades at 35 percent discount of average Asian PE, analysts said. This is mainly on account of deteriorating economic fundamentals, rating downgrade, exclusion from MSCI and due to loss in investors' confidence after the unwarranted price floor for more than three months, Muhammad Sohail, senior analyst at JS Global Capital said.

Though 16-year average PE of Pakistan is slightly over 10x with a range of 4-22x. However in FY02 Pakistan PE was 4.4x due to geopolitical tensions post 9/11 and Pakistan's own political tension with India that raised risk premium.

Except for Malaysian and Chinese markets, all other Asian emerging markets are trading at single digit forward PE multiple. This is due to earnings revisions and a fall of 56 percent in MSCI EM Asia and 55 percent in MSCI Asia Ex-Japan in 2008.

Share prices in Pakistan are now coming closer where the shares may be seen changing hand and volumes to pick up. This has occurred after a fall of 29 percent in benchmark KSE Index since the removal of price floor on December 15, 2008 after a gap of three-and-a-half-months. Pakistan bourse now trades at a discount of 35 percent versus other Asian emerging markets compared to the historical average discount of 30 percent.


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## Neo

*CDWP approves three important uplift projects​* 
ISLAMABAD (December 30 2008): A special meeting of the Central Development Working Party (CDWP) held here on Monday to consider three important development projects costing Rs 173 billion, sources told Business Recorder. The three projects included Benazir Income Support Programme (BISP) Rs 34 billion and setting up two nuclear power plants CHASHNUP III and CHASHNUP IV at a cost of Rs 139 billion.

According to the sources, the three projects were cleared in principle. The Planning Commission (PC), however, gave some observations on BISP stating that the government must make special allocation for the pro-poor project as it cannot be included in the over all development plan for the current fiscal. The PC high ups gave no detail of the meeting. This was an in-camera meeting. We cannot give any detail to the media, said a high PC official when he was contacted.

Sources said that the three projects were important and the concerned ministries had requested for the special meeting of the CDWP to consider them on priority basis. Due to power shortage, there is a need to start projects in power generation sector to help government reduce the power demand and supply gap that reached over 3,300 MW even when the electricity demand is not that high due to winter.


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## Neo

*Iran ready for gas deal with Pakistan without India​*
TEHRAN (December 30 2008): Iran will sign a deal with Pakistan to sell gas to the neighbouring country, even if India, a third party to the deal, walked out, student news agency ISNA reported Iran's oil minister as saying on Monday. India stayed away from talks in Tehran on a proposed $7 billion pipeline in September, saying it wanted to agree transit costs through Pakistan on a bilateral basis first.

Iran Oil Minister Gholamhossein Nozari said a delegation from Pakistan had arrived in Tehran for two days. "Iran will sign a deal with Pakistan, if India does not take part in the project," ISNA quoted Nozari as saying. In July, Iran said India and Pakistan had accepted Iran's demand for gas price reviews based on market changes, denying reports by some Indian newspapers that the pipeline talks had failed after Iran demanded a review every three years.

The pipeline would initially carry 60 million cubic metres of gas daily to Pakistan and India, half for each country. The pipeline's capacity would later rise to 150 million cu metres. Iran says it has completed 18 per cent of the work for the pipeline to bring gas from its South Pars field to the Iran-Pakistan border.

Pakistan has yet to begin work on a 1,000 km (625 mile) stretch of the pipeline to link Iran with India. Iran has the world's second-largest gas reserves after Russia. But sanctions, politics and construction delays have slowed its gas development, and analysts say Iran is unlikely to become a major exporter for a decade.


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## Neo

*PSAA for effective marketing of Gwadar Port by PSA​*
KARACHI (December 30 2008): Pakistan Ship's Agents Association (PSAA) is pleased to learn about activation of Gwadar Port on 21st December with arrival of the first of several urea vessels. So far the port has seen cargoes diverted by government entities with attendant subsidies, a PSAA statement said on Monday.

It said Port of Singapore Authority (PSA) needs to actively market the port as envisioned in the Concession Agreement. If there are any impediments in this regard, both sides need to sit down and discuss/resolve the same, it added. The PSAA urging the government to complete the Ratodero link road, which will connect Gwadar to the national highway, said training facilities should be established to ensure local availability of required skilled labour.

Proposing a trigger industry eg oil refinery, cement factory, shipyard, etc should be established to boost the port's cargo throughput, PSAA demanded that facilities for ancillary industries eg ship's agents, stevedores, ship repairers, survey firms, etc should be established and provided on easy terms. Gwadar airport should be completed as soon as possible, it added.


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## Neo

*State banks first quarterly report 2008-09​*
*Agri sector to perform better in 2008-09: SBP​*
KARACHI: The governments sustained efforts to boost the agriculture sector are bearing fruits and the growth in the agriculture sector can be significantly better as compared with last year owing to a record rice harvest coupled with a small improvement in cotton production during Kharif FY09 and the possibility of record wheat harvest, says the first quarterly report for FY09 released by the State bank of Pakistan on Monday.

Rice: The rice production touched 6.5 million tonnes on the back of record high prices at the sowing time. Besides this, higher monsoon rains, efficient use of inputs and employing yield-boosting technology like plantation of hybrid rice also contributed to this growth.

Encouragingly, cotton harvest, which declined during the last three years rose by 3.5 percent to 12.1 million bales.

However, this is still substantially lower than the target of 14.1 million bales. Cotton production suffered more due to decrease in planted area and water scarcity at the sowing time than due to damages caused by pest and CLCV. Unabated fall in cotton area is the reflection of lower earnings from this crop, as prices have remained subdued and cost of production has increased manifold.

Sugarcane: The report says sugarcane crop suffered because of gross disappointment of farmers in the preceding season. Not only realised prices were lower than the anticipated prices (as per announced procurement prices), delays in the beginning of crushing season and payments also placed them at a disadvantageous position. As a result, for the FY09 cropping season, growers switched from sugarcane to other crops.

Consequently, area under sugarcane fell by 16.0 percent, which is also mirrored in the decline in its harvest during FY09. The lower sugarcane production is expected to be reflected in a decline in sugar production (implying decline in LSM growth), import of sugar (implies pressures on trade deficit) as well as higher sugar prices (greater inflationary pressures). In view of all these dynamics, effective government intervention is required to resolve basic issues of price setting, commencement of the crushing season and early settlement of payments.

Wheat: Early winter rains and snowfall raised hopes for better plantation of wheat, the production target for which has been fixed at 25.0 million tonnes for FY09 season. By mid-November 2008, wheat plantation registered 9.3 percent rise over the same period last year.

According to the report, wheat plantation is in full pace and a significant increase in output is expected over the last year, principally due to policy measures including: increase in support price and announced before sowing time, availability of adequate institutional credit, launching of crop insurance scheme from Rabi FY09 crops, launching of media campaigns for promotion of production-enhancing technology, increase in supply of certified seeds, promoting use of herbicides, ensuring sufficient availability of DAP, and assurance by the government for wheat procurement of available stock from Rabi FY09 crop.


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## Neo

*CPI inflation likely to remain between 20-22% in 2009​*
KARACHI: The average Consumer Price Index (CPI) inflation for FY09 is likely to remain in the range of 20 to 22 percent, compared with 12 percent in FY08, SBP's first quarterly report for FY09 revealed on Monday.

Inflationary pressures remain strong in the domestic economy, as the CPI and Sensitive Price Indicator (SPI) have seen year-on-year increase in FY09 so far.

This in contrast to decline in global inflationary pressures where the price of crude oil has plummeted from a monthly peak of $132.5 per barrel in July 2008 to $54 per barrel in November 2008. Similarly, the prices of other major food items and metals have witnessed a significant fall from their recent peak levels.

The strength of domestic inflation reflects the cumulative impact of strong aggregate demand, weakness of the rupee as well as other factors that limited the pass-through of lower international prices to domestic consumers. The latter is suggested by the fact that CPI inflation has not, as yet, followed the abrupt slide in Wholesale Price Index (WPI) inflation.

Encouragingly, after recording strong growth during the first two months of FY09, a significant decline in WPI inflation was seen during the later months. WPI inflation dropped to 19.9 percent in November 2008 from its peak of 35.7 percent in August 2008, mainly due to a decline in international fuel and commodity prices. This also suggests that the pass through of declining fuel and commodity prices to the wholesale prices has been quicker as compared to the retail prices. This pass through of the substantial ease in international commodity prices is however likely to be considerably slow in the domestic economy as businesses seek to improve margins, as well as due to market structure issues. Acceleration of the anticipated downtrend may therefore require increased consumer awareness; the role of media in reporting wholesale and retail prices as well as support from effective monitoring by the government of the prices of essential items will be important here.

Nominal prices are downward sticky as downward adjustment in wages, profit margins and rents can be painful for businesses. For example, while the fixation of wheat support price at Rs 950 per 40 kg was encouraging for the farmers when international prices were high, the latter have since declined sharply, with the risk of substantial negative consequences. However, a downward adjustment in domestic wheat prices will be challenging. Similarly, while transport costs rose with the rise in fuel prices, there is little evidence of a corresponding downward revision when fuel prices declined.

In the case of rice, similar disconnect was witnessed between local and international price levels. It may be noted that domestic rice prices started to increase sharply earlier than surge in international prices, however, ease in domestic prices was delayed and weaker than international prices. Similarly, domestic prices of ghee and cooking oil rose in tandem with international prices of edible oil. However, downtrend in domestic ghee/cooking oil prices is relatively weaker relative to a sharp fall in international prices of key inputs.


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## Neo

*Global investors behaviour to hurt forex inflows​*
KARACHI: The global recession and risk averse behavior of investor would likely severely impact international trade and level of foreign exchange inflows in the economy, the quarterly report of SBP said here on Monday.

It points out that the biggest challenges for the government will be to ensure the pass through of the decline in international commodity prices to consumers.

In this background, while recent downward adjustments in the administered prices of key fuels is appreciable, transport fares and goods transportation charges were "either not adjusted downwards or saw small changes", it says.

The report maintained that "SBP estimates for both imports and exports have been revised downwards, with a more pronounced effect on imports," it says and adds that at the same time, in the event of shortfall of external financing, the burden of financing fiscal deficit will disproportionately fall on the domestic commercial banks, since government has committed not to borrow incrementally from the central bank.

In addition, foreign direct investment inflows may be substantially lower than in recent years, in which case, pressures on foreign exchange reserves could remain strong.

"Both possible developments indicate continuing risk on interest rates and exchange rate, and thus the need for continued vigilance by policymakers," it adds.


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## Neo

*Scarce Resource: India cannot stop water flow to Pakistan: PARC​*
ISLAMABAD: Chairman Pakistan Agricultural Research Council (PARC) Dr Zafar Altaf on Monday said that India could not stop the flow of water to Pakistan.

No body could stop the flow of water and Pakistan would get its due share in water from Indian, he added while chairing a National Roundtable Conference, organised by the Pakistan Water Partnership at a local hotel to discuss Pakistan's water issues in the IWRM (Integrated Water Resources Management) framework on Monday.

During discussion trans-boundary issues and water efficiency plan for the country also came under discussion where the seriousness of situation with India regarding Pakistan's water rights was highlighted and options for appropriate actions were considered.

The discussion covered a broad range of issues ranging from water degradation, pollution, disposal, scarcity to ageing infrastructure and more that were impeding country's economic growth and sustainability of this vital resource. Added to this was the complexity of climate change and its affect on irrigated agriculture in the country, which it was feared would seriously affect the future way of life in this part of the world.

It was said that at a time when the country was approaching the limits of its water resources availability, and its water use infrastructure was rapidly ageing, the previous approach of adding more infrastructure alone (supply side) was not realistic but a more wholesome and integrated approach was needed. It was suggested that future strategy should be IWRM oriented, that would seek better integration between irrigation, hydropower, agricultural and other water use sectors through modernised institutional and governance arrangements with clear focus on demand management. The future socio economic and environmental framework was also to be participative and transparent to create ownership and make the best of limited water resources.

It was pointed out that in the planning process the past practice where federal and provincial water agencies invariably proposed projects from their un-financed portfolios as per their own priorities, irrespective of their strategic importance for collective benefit of the whole country was not the best way forward in the given situation of a resource constrained economy.


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## Neo

*Iran to give $55m for construction of transmission line at Gwadar​*
ISLAMABAD: A high level delegation of Iran headed by Iranian Minister for Energy Parvaiz Fattah on Monday informed that Iran would provide $55 million for construction of transmission line of 70 kilometres in Pakistan.

The Iranian delegation held a meeting in the Ministry of Water and Power and discussed bilateral co-operation on existing power sector projects related to import of electricity from Iran and future investment prospects in the power sector of Pakistan.

Pakistan was currently importing 40 MW from Iran for coastal areas of Balochisan. The import of power was being enhanced by additional 100 MW for Gwadar port for which an agreement had already been signed. It was informed that M/s SUNIR of Iran would construct the transmission line on both sides of the border for which negotiations on award of contract were in progress. Export Development Bank of Iran would be extending credit of $55 million to NTDC/PEPCO for construction of transmission line.

The balance 50 km on the Iranian side would be constructed by Iran. In addition to the above, consultants have been engaged to carry out the feasibility study for import of additional 1,000 MW from Iran for which an MoU had already been signed. Both sides expressed keen interest to accelerate progress on these projects.

The Iranian delegation was briefed by the Ministry of Water and Power authorities on the current power situation, short, medium and long-term measures being taken by the Pakistan to bridge the gap between demand and supply, future plans to inject more electricity in the national grid to end the energy crisis and the potential projects being offered to the investors in the coal, hydro and renewable energy sectors. The salient features of the power policy and liberal incentives for private investors were also highlighted in the briefing.

The Iranian minister while stressing the need for enhancing bilateral co-operation, offered supply of more power from Iran. He offered to export electricity from its port at Chabahar, which was nearest to Gwadar port where a power plant of 500 MW was being constructed by Iran and would be ready within the next six months.

He said that Iran was already supplying power to Syria, Tajikistan, Iraq etc and was also keen to export the required electricity to Pakistan. Iran had also expressed its interest to build a dedicated 1,000 MW Gas Power Plant at Zahidan near Pakistan border for export of power to Pakistan.

The Minister for Water and Power Raja Pervez Ashraf said that Pakistan would welcome such an initiative and should extend full co-operation and workout the modalities. The minister also stated that Pakistan was interested to purchase more power transformers of various capacities from Iran with speedy delivery.


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## Neo

*Pakistan  a wonderful destination for adventure tourism​*
​
ISLAMABAD: Those who think that Pakistan is all about historical sites, great cuisine, exciting cities and bustling bazaars may be not be aware that Pakistan is also an excellent destination to enjoy adventure sports.

There are a number of adventure sport destinations in Pakistan, which one can travel to. And the range of the adventure sports in the country is immense.

From jeep safari to mountaineering, from fishing to river rafting, from skiing to trekking, Pakistan is endowed with such geographical features that make it excellent tourist destination for adventure sports.

Pakistan is home to some tailor made destinations for adventure sports be it jeep safari, river rafting, mountaineering or trekking. The country is home to five of fourteen peaks above 8,000 metres - K-2, Nangaparbat, G-I & II and Broadpeak. Besides, 70 percent of mountain peaks above 7,000 metres are also located in Pakistan.

The northern areas offer wonderful opportunities for various adventure sports. Its rivers tumbling down from the snow capped mountains and glaciers are great for water sports like river rafting, canoeing, sailing and kayaking. There are mountains that offer wonderful trekking trails that lead to some beautiful spots.

Rivers Chitral, Indus, Gilgit, Swat, Hunza, Kunar and the Neelum offer exciting opportunities for water sports.

Pakistan also offers beautiful spots for skiing. Malam Jabba is one of the best skiing resort. If jeep safari is what gives one thrill, perhaps there is hardly any destination as exciting as the Northern Areas. There are various destinations in northern Pakistan that provide wonderful opportunities for jeep safaris. Some of the destinations that can be visited for jeep safari include Gilgit, Hunza, Shandur, Sust and Skardu. Horse and camel safaris are other two exciting activities that one can enjoy on adventure tours to Pakistan. Tour to Pakistan brings complete information on various tourist destinations in Pakistan. It promises to offer all the help to make the trip an exciting and memorable affair.


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## Neo

*GDP growth seen lower than target​*
** SBP report says government cut development expenses to control fiscal deficit​*
KARACHI: The State Bank of Pakistan (SBP) on Monday said the real gross domestic product (GDP) growth was likely to be lower than the annual target and inflation in the country would breach its target.

It said that countrys GDP growth would fall between 3.5 percent and 4.5 percent this year from last years 5.8 percent, and would miss the targeted growth of 5.5 percent.

Projecting the major economic indicators of FY08-09 in its first quarterly report, the SBP said the average inflation, measured through the consumer price index, would stay between 20-22 percent during the year.

It said the exports target of $22.9 billion would be missed, and the exports might fetch only $20.5 billion to $22 billion. However, import growth was expected to be curtailed to $33.5 billion to $35 billion compared to an earlier estimate of $37.2 billion, the report said.

Deficit: Both fiscal and current account deficits were, however, estimated to improve in the current fiscal year, it said.

The reduction in fiscal deficit in the first quarter was brought about by a drastic cut in development expenditures, the report said.

The report said large-scale manufacturing (LSM) continued to decline, as it registered a negative growth of 6.2 percent in the first quarter against 7.3 percent in the same period last year.

The SBP said agricultural growth in the current fiscal year could be significantly better than in the last, but a sharp fall in sugarcane harvest would be seen.

This expectation is based on a record rice harvest of 6.5 million tonnes, a small improvement in cotton production, supported by the possibility of a record wheat harvest, it said.


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## Neo

*Manufacturing slows down on energy shortages ​* 
Tuesday, December 30, 2008

KARACHI: Industrial production, especially large-scale manufacturing (LSM), continued to decline during the first quarter of fiscal year 2008-09, registering a negative growth of 6.2 per cent against growth of 7.3 per cent in the same period last year, the State Bank said in its first quarter report on Monday.

Severe energy shortages, deterioration in law & order situation, high international oil prices and rupee depreciation were major impediments for all kinds of manufacturing. Power shortages have been haunting all manufacturing sub-groups in FY08-09.

The decline in LSM production has been broad-based. Seven sub-sectors (having 72.4 per cent weightage) out of 15, registered a decline in production, while three (having 15.3 per cent weightage) grew less than one per cent.

Textile sector, in particular, was jolted by other multiple shocks firstly because it is an export-driven sector and impact of weak external demand fell disproportionately on it. Secondly, poor law and order situation diverted importers of Pakistani products to search for new suppliers. Thirdly, rising cost of raw materials, and fourthly as imported inputs go into textile production process, a high degree of volatility in domestic currency value created problems of costing and pricing.

Classification of data according to dependence of LSM sub-sectors on agriculture sector reveals that while both agro-based and other industries registered a decline in production, the fall in production in the latter was more pronounced during Q1 FY08-09.

This classification also highlights the fact that LSM sector has been unable to achieve significant growth without good performance of these two sections of industry, even with high growth in the recent past.

Within the non-agri based industries section, consumer durables (cars & jeeps, motorcycles, refrigerators, deep freezers, TV sets, air conditioners, etc) registered a decline of 31.2 per cent in production during Q1 FY08-09. But when the decline in consumer durables is excluded, the negative growth in LSM production reduces to only 0.8 per cent. Not only has the increase in interest rate on consumer financing hit the production of consumer durables, but a sharp rise in their prices has also led to a drop in the demand.

Growth in electronics, in particular, suffered due to increased electricity tariff and power shortages in the country.

In addition, demand for consumer durables eased as increase in international prices of steel products and rupee depreciation compelled manufacturers to increase the prices of durables, while the surge in inflation eroded the purchasing power of middle class consumers (major market segment of durables).

The impact of easing demand for durables is most evident in the sale of local brands of cars and jeeps. This sector registered the highest decline in LSM growth.

It is important to note that impact of an ease in international commodity prices such as of oil and metals was overshadowed by exchange rate depreciation. Nonetheless, delivery lags and existence of premium on immediate delivery indicate that the domestic car sales can be improved by reduction in prices and eliminating delivery lags.

A slowdown in the food, beverages and tobacco sub-sector (agri-based) contributed to the LSM decline. The inability of vegetable ghee and oil industry in the formal sector to adjust prices in competition with the informal players of the industry, and resulting substitution and income effects on consumers, resulted in substantial decline in production.

In addition to this, beverages industry which has performed exceptionally well since FY05 (recording production growth of more than 20 per cent) registered a decline of 17.8 per cent. Wheat and grain milling also registered a decline of double digits (10.4 per cent).

The fall in production in this sub-sector is largely attributed to a substantial increase in the prices of food items in the country.

Another sub-sector that remained a source of decline in LSM production is metal. This sub-sector registered a production decline of 16.6 per cent during Q1-FY08-09.

Higher international prices coupled with slowdown in construction activity owing to reduction in Public Sector Development Programme (PSDP) and unattractive prospects in real estate for private sector were the principal causes of decline in metal production.

A substantial decline in construction activities is also evident from a sharp slump in local cement dispatches, which dropped by 16 per cent YoY in Q1 FY08-09. This sharp decline in local cement demand offset the impact of strong increase of 71 per cent in export demand during this period, as cement production dropped to a mere 0.7 per cent in Q1 FY08-09 as against a healthy growth of 23 per cent in the same period last year.

It is pertinent to note that a part of sluggishness in private construction activities is also attributed to substantially high domestic cement prices, besides the rise in prices of other construction materials.

On the contrary, fertilisers, engineering, wood and chemicals sub-sectors registered positive growth in their production. Production of fertilisers, both Nitrogenous and Phosphoric fertilisers, increased, principally reflecting an improvement in capacity after BMR in the preceding year.

Engineering sub-sector registered considerable growth on the basis of higher production in safety razor blades, diesel engines (multiple uses of diesel engines in agri sector) and wheat threshers (thresher demand rose expecting bumper wheat crop).


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## Neo

*Low cane output to widen trade deficit ​* 
Tuesday, December 30, 2008
KARACHI: The sugarcane production fell in FY09 that is likely to put pressure on trade deficit and inflation in the shape of sugar import, warned a State Bank of Pakistan report.

The State Bank of Pakistan in its first quarterly report for FY09, however, said that a record 6.5 million tonnes rice production and a little improvement in cotton production suggested that agricultural growth in the current fiscal year would be better than previous year.

In the preceding season, the sugarcane growers were disappointed by lower prices and delayed crushing season as well as payments. As a result, for FY09 cropping season the growers switched from sugarcane to other crops, said the report. Consequently, the area under sugarcane fell by 16 per cent and decline in its harvest during FY09.

Lower sugarcane production would reflect in import of sugar as well as higher sugar prices. Effective government intervention is required to resolve basic issues of price setting, commencement of crushing season and early settlement of payments, suggested the State Bank.

The central bank said that the growth is supported by the possibility of a record wheat harvest against the production target of 25 million tonnes. By mid-November 2008, the wheat plantation registered a 9.3 per cent rise over the same period of last year. Initial information also raises the possibility of a very good showing by minor crops and reasonable growth in the livestock sub-sectors, said the report.

Out of total 6.5 million tonnes of rice production, approximately 4 million tonnes will be available for exports. Cotton harvest, which declined during the last three years, rose by 3.5 per cent to 12.1 million bales during FY09. It is still lower than the target of 14.1 million bales.

The central bank noted that the area as well as yield of cotton has declined from a peak of 760 kg per hectare in FY05 to an average of 700 kg per hectare between FY06-FY09. Appropriate policy and effective implementation are needed to support the cultivation of this important crop in the country, said the report.

The fertilizers off-take decreased during Jul-Nov FY09 due to higher prices. The urea off-take decreased by 16.1 percent YoY during this period and DAP by 11.7 percent during Jul-Nov FY09.

The lower off-take reflected cautious purchases by the farmers in anticipation of a reduction in price following the collapse of international DAP prices. The prices in the international market declined but the benefit was not passed to the farmer. Some benefits of falling international prices need to be passed on to farmers as well, suggested the central bank.

The agricultural credit target for FY09 set at Rs250 billion compared with Rs211.6 billion actual disbursements during FY08 was up by 18.1 percent. During Jul-Oct FY09, agri-credit disbursements increased by 16.2 percent.

The break-up between the farm and non-farm borrowing showed increase in the share of non-farm sector, which rose to 34.3pc in Jul-Oct FY09 from 27.9pc in Jul-Oct FY08.


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## Neo

*KSE market capitalisation falls below Rs2 trillion ​* 
Tuesday, December 30, 2008

KARACHI: The continuously eroding share prices pushed the overall market capitalisation below Rs2 trillion on the Karachi bourse on Monday.

The benchmark KSE 100-share Index fell 192.85 points or 2.97 per cent and closed at 6,294.67 points, the four years low level.

Though authorities have addressed the core issue of leveraging at the local bourses and the Continuous Funding System (CFS) issue would eventually settle down by Jan 5, the market shall lose a little more weight before setting back on rails, analysts said.

With a fresh decline of Rs52 billion in this session, the overall market capitalisation slipped from Rs2 trillion level after maintaining above it for the last four years. It was first quarter of calendar year 2005 when market capitalisation surpassed Rs2 trillion mark and has now fell below the said mark, said a dealer.

So far, market has lost about 59 per cent or Rs2.810 trillion capitalisation to date since it touched record high Rs4.791 trillion on April 18, this year.

On the other hand, the parallel running junior 30-Index declined by 270.33 points or 4.30 per cent and concluded at 6,014.39 points.

The turnover on ready market was down drastically to 61.406 million shares as compared to 106.231 million shares on last weekend - showing a decline of 42 per cent on day-to-day basis. While no trading was recorded in future market.

Fawad Khan at KASB Securities said: We believe the likely settlement of CFS leverage financing issue this week removes the possibility of system wide default, one of the key risks at the KSE. After 59 per cent drop in KSE-100 index from its peak (30 per cent since removal of four month long price floor), current market P/E multiple is just 17 per cent higher than trough multiple of 4.3x. While we still expect the market to lose some more weight given expected foreign sell off and broader macro risks.

Foreign portfolio investors disinvested about $3 million from local bourses in this session, according to NCCPL.

Ahsan Mehanti at Shahzad Chamdia Securities said that selling activity continued as deal signed for Rs20 billion Market Opportunity Fund (MOF) to bailout the capital market failed to improve investors sentiment.

Kashif Mustafa at ECL Research said that the positive response towards CFS settlement and the Rs20 billion NIT managed fund may provide some stability to the market for the time being. However, fragile liquidity issues and law and order tensions may make the move of the index lacklustre. Sentiments are expected to gradually regain momentum, but in longer turn. Attractive values of blue-chip and dividend yields would make the buying imminent for the long term investors and institutions, he added.

Among the 201 active issues 113 fell in red, 83 closed positive and five stocks closed unchanged.

Highest volumes were witnessed in NIB Bank at 5.851 million closing at Rs4.99 with a gain of 73 paisa, followed by Zeal Pak at 3.608 million closing at 58 paisa with a gain of four paisa, Nishat Mills at 3.443 million closing at Rs23.69 a with a loss of 16 paisa, Hub Power at 3.440 million closing at Rs14.55 with a gain of 17 paisa, and TRG Pakistan at 3.218 million closing at Rs2.25 with a gain of nine paisa.


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## Neo

*Rs49bn allocated for rehabilitation of Mangla Dam affectees ​* 
Tuesday, December 30, 2008

MIRPUR: The Mangla Dam Resettlement Organisation is actively engaged in the resettlement and rehabilitation of the affected population due to Mangla Dam upraising project and Rs49 billion have been allocated for this purpose, official sources said on Monday.

They said the construction work for the establishment of New Mirpur city and four other towns, one each at Islamgarh, Chakswari, Dadayal and Siakh, was in progress to achieve the rehabilitation task.

Under the broad-based agreement, the AJK government has started receiving annual royalty of Mangla Dam after the upraising project. The Government of the AJK has also received fishery rights through the package and the pact that reached under the project, the sources added. Referring to the implementation of other decisions, the sources said it has been decided to lift and utilise water from the reservoir for drinking and irrigation purposes and the people of Mirpur and Bhimbher districts would enjoy this facility.


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## ejaz007

*Salim Raza to be next SBP governor *

KARACHI: Dr Shamshad Akhtar, the first woman governor of the State Bank of Pakistan (SBP), will step down at the beginning of 2009 when her three-year term ends, a spokesman said. Dr Shamshad Akhtar has informed the government of her decision to step down effective January 1, 2009, on completion of her three-year term, SBP spokesman Syed Wasimuddin said. Although the SBP press release said she had decided to step down, it was widely believed she was not being offered another term. Salim Raza, a former banker, now serving at the Pakistan Business Council, would replace her. staff report

Daily Times - Leading News Resource of Pakistan


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## Pk_Thunder

* LSE volume improves*​

By our correspondent

LAHORE: The Lahore stock market is slowly moving towards normal trading as volume continued to increase along with active shares. However, the index further shed some value in a bid to reach its realistic levels after removal of floor mechanism.

The LSE 25-share index closed lower by 73.43 points at 1,652.08. Trading volume rose to a four-month high at 4.6 million shares, though it was still low compared with volumes of 30 to 50 million before the imposition of floor on August 28. NIB was the volume leader with a turnover of slightly less than one million shares. Like previous weeks, no blue-chip company was among top 10 volume leaders.

The encouraging aspect of trading was that out of 45 active companies, only three recorded no change while 20 increased and 34 declined. It was in sharp contrast to the trading pattern of recent past when companies with no change were dominating.

Again blue chips were under bearish spell while second-tier companies saw some increase in their values. All major banks traded during the day ended lower. Cement sector depicted mixed trend. Among refineries, National Refinery fell Rs5.54 at Rs105.43 while Bosicor inched up Rs0.50 at Rs5.09. The entire oil and gas exploration sector was in red zone.


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## Pk_Thunder

*Tarin discusses financial issues with US envoy*​

Staff Reporter

IslamabadShaukat Tarin, Adviser to PM on Finance and Economic Affairs held a meeting with US Ambassador to Pakistan, Ms. Anne W. Patterson here today. Both the sides exchanged views on on-going global financial crisis and its implications for the developed and the developing states. It was agreed that all progressing states must pool their human and material resources to fight out international financial crisis through dedicated efforts in sync with their multi-lateral institutional support system. Adviser to PM on Finance stressed the need to harmonize global efforts to find a solution to the current economic intricacies affecting inter-state relations.

Both the sides discussed US-wheat shipment of 2,50,000 tones to Pakistan according to pre-agreed commodity financing terms  that comes to transportation of five ships by end March, 2009. GOP shall ensure its distribution to deficit areas of the country. Government shall maintain enough stock in storage for distribution to provinces. Federal Government shall act as equalizer in consideration for the needs of deficit areas, Adviser said.

Mr. Shaukat Tarin informed the Ambassador about GOPs transparent policy framework concerning implementation of BISP to provide social safety net to the poor and needy sections of society. Human and material resources of all stakeholders have been put together to ensure its effective and transparent execution according to best national and international standards  he added. It was agreed to create a mechanism to channel US economic support to targeted areas that meets end-results of sectoral development, and people genuinely reap its social benefits.


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## Pk_Thunder

*Economy needs effective policies and reforms to regain stability: SBP
Declining international prices a challenge to Government
*​
Amanullah Khan

KarachiAmongst the biggest challenges for the Government will be to ensure the pass through of the decline in international commodity prices to consumers.

In this background, while recent downward adjustments in the administered prices of key fuels is appreciable, transport fares and goods transportation charges were either not adjusted downwards or saw small changes.

According to SBP report for the first quarter of financial year 2009, Pakistan needs effective policies and implementation of reforms in fiscal year 2008-09 to regain macroeconomic stability and meet economic challenges. According to State Bank of Pakistans First Quarterly Report for FY09 released today.

The report, however, pointed out that the sense of crisis gripping the countrys economy in the initial months of FY09 has visibly eased by November 2008, as the Government moved to address the most immediate risks, and entered into a macroeconomic stabilization programme to support medium-term reforms under the aegis of the International Monetary Fund.

It said the disbursement of the first tranche of $3.0 billion by end-November 2008 under the programme meant that any immediate risk of default on external obligations receded, with a substantial improvement in foreign exchange reserve adequacy indicators.

Also, export growth has strengthened and import growth moderated somewhat. This lent strength to the rupee, reducing the impact of an important generator of inflationary pressures, it added.

The gain on the external account was helped by a sharp decline in international commodity prices that is expected to substantially lower the countrys import bill, offering the possibility of a decline in the countrys very large current account deficit, and lower inflation.

This supply-side improvement has been reinforced by the reasonably good performance of crops during kharif FY09 cropping season, it said and added these factors appear to have already halted the persistent uptrend in inflationary pressures in the economy. Together, they could also help support a very modest improvement in the growth outlook for FY09.

There is also substantial progress on containing fiscal imbalances, with the government moving bravely to reduce subsidies, contain growth in other spending and increase revenues, the report said and added the result has been an encouraging improvement in some fiscal indicators, including a sharp fall in the fiscal deficit from 1.5 percent of GDP during Q1-FY08 to 1 percent of GDP in Q1-FY09. This figure appears consistent with the annual target embedded in the macroeconomic stabilization programme framework, it added.

However, notwithstanding the relative positives, there is no room for complacency, the report asserted. While many of the countrys macroeconomic indicators may no longer be worsening, the imbalances are nonetheless still quite large, it said and added resolving them will require disciplined efforts over an extended timeframe.

This challenge is all the greater because of the difficult international economic environment, which has restricted the countrys ability to tap international capital markets and carries risks for other external receipts (exports, remittances, FDI, etc.), it said.

The real Gross Domestic Product growth is likely to be significantly lower than the annual target and inflation will breach its target with a wide margin. On a positive note, however, both fiscal and current account deficits are estimated to improve in FY09, it added. Global recession and risk averse behaviour of investor would likely to severely impact international trade and level of foreign exchange inflows in the economy.

SBP estimates for both imports and exports have been revised downwards, with a more pronounced effect on imports, it said and added at the same time, in the event of shortfall of external financing, the burden of financing fiscal deficit will disproportionately fall on the domestic commercial banks, since government has committed not to borrow incrementally from the central bank.

In addition, foreign direct investment inflows may be substantially lower than in recent years, in which case, pressures on foreign exchange reserves could remain strong.

Both possible developments indicate continuing risk on interest rates and exchange rate, and thus the need for continued vigilance by policymakers, the report said Agricultural growth in the current fiscal year could be significantly better than in FY08, notwithstanding a sharp fall in sugarcane harvest.

This expectation is based on a record rice harvest of 6.5 million tonnes, a small improvement in cotton production during Kharif FY09, supported by the possibility of a record wheat harvest, it said and added initial information also raises the possibility of a very good showing by minor crops and reasonable growth in the livestock sub-sectors. However, large scale manufacturing (LSM) continued to decline, as it registered a negative growth of 6.2 percent in Q1-FY09 as against a reasonable growth of 7.3 percent in Q1-FY08. This decline in LSM production is broad-based, as seven sub-sectors (having 72.4 percent weight) out of fifteen registered a decline, while three (having 15.3 percent weight) registered a growth of less than one percent, it said.

This disappointing outcome is a result of a number of factors including severe energy shortages, deterioration in domestic law & order situation, impact of pass through of international oil prices, sharp depreciation in rupee parity and most importantly, weak external demand on the back of global recession and slowdown in domestic demand, it pointed out. Inflationary pressures remained strong in the economy during the first five months of FY09. In particular, consumer price index (CPI) and the sensitive price indicator (SPI) have seen strong YoY increases in the period.

However, after recording strong growth (YoY) during the first two months of FY09, a significant decline in wholesale price index inflation has been observed during the later months, it said.

The State Bank undertook aggressive monetary tightening during FY09, further increasing the policy rate by 300 bps in two rounds. On a cumulative basis, this means a 550 bps increase during the last 18 months.

It said in terms of monetary aggregates, the YoY growth in M2 decelerated steeply to 10.7 percent by end-November 2008, the lowest growth seen during the last seven years.

Indeed, an extraordinarily strong contraction in net foreign assets (NFA) of the banking system more than offset a sharp rise in budgetary borrowings from the central bank and continued strong demand for credit both from public sector enterprise and private sector, it added.

During July-November period of FY09, strong growth in imports, mainly due to higher import prices, outpaced the otherwise substantial improvement in export growth causing the trade deficit for the period to widen by $1.4 billion compared to the same period last year.

However, the combined impact of lower commodity prices and easing of domestic demand pressure are likely to reduce the trade deficit going forward, the report concluded.


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## Pk_Thunder

*Iran agrees to provide oil on deferred payment*​
Updated at: 2030 PST, Tuesday, December 30, 2008 
ISLAMABAD: Iran has agreed to provide oil to Pakistan on deferred payment. Iranian Minister for Energy Parviz Fattah called on President Asif Ali Zardari here on Tuesday and discussed with him matters pertaining to the region and bilateral ties. He was accompanied by Dy. Minister for Energy Abbas Aliabadi and Iranian Ambassador to Pakistan.

Minister for Water and Power, Raja Pervaiz Ashraf and senior officials of the relevant ministries were also present during the call.

The Iranian Energy Minister said that Iran was keen to go ahead with projects of providing 1000 MW for Gwadar and adjoining areas for which MoU had already been signed. He said that Iran would provide oil to Pakistan on deferred payment. The President appreciated the Iranian assistance in this regard.

Parviz Fattah said that Iran and Pakistan had close bilateral ties and were tied by the bonds of history, culture and geography. He said Iran was ready to play its role in defusing tension in the region.

He also renewed the invitation by Iranian President Mahmood Ahmedinijad to President Asif Ali Zardari to visit Iran.


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## Pk_Thunder

*Iran to build 1000 MW power plant near Pakistan border*​
Updated at: 2320 PST, Tuesday, December 30, 2008 
ISLAMABAD: Minister for Water and Power Raja Pervez Ashraf on Tuesday said that Iran will build a dedicated gas based power plant of 1000 MW capacity near Pakistan border to export electricity to Pakistan.

Talking to journalists here, the minister said the plant to be built by Iranian private sector near Zahidan can be made available for export of power to Pakistan in addition to the earlier agreed 1000 MW project.

He said an Iranian company would complete transmission line of 50 km in Iran side and 70 km in Pakistan side. He said that both sides agreed for early completion of transmission line.

Pervez Ashraf said both sides held a serious of meetings and showed keen desire for strengthening the bilateral cooperation between the two countries in the power sector.

He said during visit of Iranian delegation headed by Engr. Parviz Fatah, Minister of Energy, Iran the status of existing projects in power sector was reviewed and it was agreed to expedite and speed up the implementation and to remove the impediments if any.

He said both sides agreed that while carrying out the feasibility study for the transmission line of 1000 MW, a provision for transmission of an additional 1000 MW would also be kept in view.

It was also agreed to execute an implementation plan and fix the time lines for completion of the projects and a mechanism will be established for monitoring and for taking remedial measures in this regard.

Similarly, in addition to the existing technical working committee, a high level monitoring committee at ministerial level will be established. These committees will hold regular meetings at least once in two months or more often as required. The implementation plan was also prepared and agreed jointly.

Pakistan also pointed out projects for investment included coal power projects with a total capacity of about 6000 MW by 2015 requiring an investment of $7 billion, projects of alternate energy for generation of about 1000 MW by 2015 and rehabilitation and reinforcement of T&D system and system for dispersal of power of new generating plants requiring an investment of about $4.7 billion.

The Iranian side showed keen interest in all projects and assured Pakistan side to look into the prospects of investment in the projects by the Iranian companies both in public and private sector.


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## Neo

*Export proceeds: SBP relaxes rules for repatriation​* 
KARACHI (December 31 2008): The State Bank of Pakistan on Tuesday announced one-time waiver for those exporters, who have failed to repatriate their export proceeds in 90 days, and instructed banks to give them Export Refinance Facility. The central bank has received complaints from various exporters' associations that banks are not allowing export refinance facilities under the scheme to exporters due to non-realisation of export proceeds keeping in view the SBP's instructions.

Therefore, the central bank has announced some relaxation to redress the exporters' problems with a view to make them eligible for financing under the EFS. However, the SBP has made it clear that one-time waiver for 90 days shall be allowed for the purpose of availing financing under EFS to all exporters whose export proceeds are overdue till date of issuance of this Circular letter (December 30, 2008).

After expiry of 90 days period, export refinance facility under the scheme will not be allowed to those exporters who failed to arrange repatriation of export overdue bills, the SBP said. However, the facility will be restored, automatically by banks, if otherwise in order, as and when exporter subsequently realises export overdue bills.

In addition banks may allow financing facility under EFS to exporters who could not arrange repatriation of export overdue bills due to bankruptcy/liquidation and litigation involving foreign buyer, provided that the respective bank confirms having received all the supporting documents and is satisfied with the same.

Where possible the financing bank may like to seek feedback from its correspondent banks in the country of importers, especially in cases where both volume of export is overdue and the financing request are for large amounts. While, allowing the facilities in such cases the financing bank will be under obligation to record the reasons for continuation of the EFS facilities to the exporter concerned, SBP said.

The information relied upon by the bank for continuation of the export finance facilities shall be verified/examined by the verification teams of the SBP BSC as also our Banking Inspection Department as usual.

The SBP said that the exemption of 90 days will not be available in case the exporter has subsequently shipped additional consignment to the same importer or its associated company, or where the payment in respect of shipments has been stuck up on account of discrepant documents, or failure of the exporter to ship goods in accordance with the requirements of the importer, provided shipments so made and discrepant documents so sent have been accepted by the importer abroad. The central bank has instructed banks to provide information of all such cases to the Finance Department.

Further in case the SBP or SBP BSC concludes that the facility of 90 days exemption or the financing facilities under EFS were provided without complying to above parameters or in contravention to instructions issued under the Export Finance Scheme, a fine @ paisa 37 per day per Rs 1000 or part thereof will be imposed on the finances availed under EFS.

The SBP BSC would recover these fines from the account of the bank maintained with them. However, in case the information relied upon by the bank in allowing facilities under the scheme were incorrectly provided by the exporter the bank will have right to recover fine so imposed by the SBP or SBP BSC (Bank) from the exporter concerned.

"It may be clarified that the method and payment of export proceeds has been defined in Para 6 of Chapter XII of F.E. Manual, 2002, which also provides a reasonable room for relaxation in period of realisation of export proceeds", SBP said.

Accordingly, where the terms of sale provide for payment earlier than six months, Authorised Dealers may allow extension in the realisation period if they are satisfied with the explanation given for delay in realisation, provided such extension does not extend the period beyond six months from the date of shipment. In addition, in order to facilitate exporters, Exchange Policy Department of SBP also considers such requests for extension on case to case basis in case of valid reasons for delay in repatriation of export proceeds.


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## Neo

*Industrial production down 5.05 percent in four months​* 
ISLAMABAD (December 31 2008): The industrial production has declined by 5.05 percent in the first four months of current fiscal year over the same period of last year on the back of high input cost of energy crisis. Official figures released by the Federal Bureau of Statistics (FBS) on Tuesday show that production in all the three major sectors contributing to the Large Scale Manufacturing (LSM) declined.

The Oil Companies Advisory Committee (OCAC) reported a negative growth of 5.95 in petroleum products, the Ministry of Industries 5.42 percent and Provincial Bureau of Statistics accounted 4.31 percent decline in production.

Many sub-sectors of LSM did not perform well and the industrial output was in negative zone for last few years that indicates that the government may not be able to achieve 6.1 percent growth target set for 2008-09. The cost of production as well as energy crisis have affected the industrial sector most as all the major sub-sectors reported decline in output.

The FBS figures show that production of cotton yarn declined by 0.42 percent and cotton cloth by 0.67 percent during the period under review. The production of petroleum products except high speed diesel has declined.

In the petroleum sector, the production of jet fuel oil dipped by 13.13 percent, kerosene oil 7.07 percent, motor spirit 6.44 percent, diesel oil n.o.s. 25 percent, furnace oil 7.39 percent, lubricating oil 2.28 percent, jute batching oil 9.15 percent, salvant naptha 6.98 percent, LPG 20.33 percent, and petroleum products n.o.s. 14.43 percent.

In the electrical sector, production of deep freezers declined by 27.15 pc, air-conditioners 14.62 pc, electric tubes 16.55 pc, electric motors 29.11 pc, electric meters 14.50 pc, switchgears 17.57 pc, T.V sets 17.53 pc, and bicycles 10.92 pc during July-October 2008-09.

In steel sector, the production of pig iron declined by 12.31 percent, billet and ingots 44.31 percent and H/CR sheet/strips/coils/plates, etc declined by 25.80 percent. The production of buses in auto sector declined by 41/53 percent, jeeps and cars 42.49 pc and motorcycles 9.24 pc.

The industrial growth was dismal from past couple of years. The growth that stood at 19.9 percent in 2004-05, dropped to 5.4 percent in 2007-08 because of high cost of doing business and energy crisis that led to closure of a large number of units.


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## Neo

*Inter-corporate debt rises to over Rs 300 billion​* 
ISLAMABAD (December 31 2008): The inter-corporate circular debt has risen to over Rs 300 billion in November against Rs 175 billion in June, State Bank quarterly report based on data available till end December 2008 revealed. This, argue experts in the Ministry of Finance on condition of anonymity, will severely compromise the government's ability to formulate a plan that envisages elimination of the debt by the end of 2009.

The Letter of Intent submitted to the International Monetary Fund, agrees to formulate a plan with a timeframe by March 2009 to eliminate inter-corporate circular debt. Inter-corporate debt has risen by over 71 percent in spite of the decline in the international price of oil. The circular debt is a three-edged phenomenon that has led to severe energy shortages even during the winter months when demand is considerably lower.

The SBP said that the issue of inter-corporate debt, which emerged in financial year 2008, became large and more complex during the initial months of the current fiscal because the information collected from selected corporate entities showed that it sharply increased during the first five months of current fiscal and rose to over Rs 300 billion.

The issue of inter-corporate debt, according to the SBP rose mainly as the government was providing subsidy on fuel prices to domestic consumers and power utilities faced losses. The oil prices have come down sharply during the last few months while subsidy on electricity is restricted to the life line consumers. The resolution of inter-corporate debt is critical otherwise the energy crisis will remain.

The delays in the settlement of oil price differential claims by the government and the utilities forced a few OMCs to borrow from banking system against the government guarantee in 2008. During the initial months of FY09, circular debt situation worsened despite the fact the government has phased out subsidy on fuel prices.


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## Neo

*US cooperation in Pakistan Industrial development discussed​*
ISLAMABAD (December 31 2008): US ambassador to Pakistan Anne W Patterson has said that support of Friends of Pakistan was in the offing and some European friends were also interested to invest in Pakistan. She stated this while talking to Minister for Industries and Production, Mian Manzoor Ahmad Wattoo during a meeting here on Tuesday.

They discussed US co-operation in the industrial development of Pakistan. Wattoo hoped that under the newly elected administration of Obama US would adopt policies, which will promote global peace and co-operation. He reiterated the devastating impact of war against terrorism on the Pakistan's economy and its socio-political consequences on the country.

He informed the ambassador that Pakistan produces world class textile, leather, gemstone and marble but our products have limited access to the US market. The ambassador agreed to this assertion and said that she will take up this matter with the new government in the US once it was in the office.

On the issue of establishment of Reconstruction Opportunity Zone (ROZ) the minister said that the issue had been delayed for quite some time. He requested for extending this facility to all the Export Processing Zones (EPZs) and National Industrial Parks (NIPs) along with Risalpur, established by Industries Ministry.

He further said that US Government should cooperate in development initiatives in Fata region by developing skill to divert the local youth towards productive life. Patterson showed keenness in the energy sector and informed that a workshop on this issue was already scheduled in the second week of January at Karachi. She assured that all the industry related issues would be taken up with the new government in USA.

Wattoo suggested the Ambassador to ease visa processing for the Pakistani businessmen and there should be a fast mode visa processing for them. The Ambassador responded that due to recent security issues visa processing for young Pakistani males takes more time and they were considering opening business visa window at Karachi consulate.-PR


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## Neo

*FJA chief calls for developing Punjab as manufacturing hub​* 
LAHORE (December 31 2008): The Punjab province could be developed as manufacturing hub of the country wherein large industrial complexes could be built with export potential to India, Middle East, Iran and landlocked Central Asian States. The Chinese Media Chief and President Foreign Journalists Association (FJA) in Islamabad Professor Zhou Rong said this while talking to the LCCI President Mian Muzaffar Ali, here on Tuesday.

Professor Zhou Rong stressed the need for highlighting the province of Punjab as a safer place for joint ventures with foreign investors and developing Punjab as manufacturing hub. The LCCI former president Shahid Hassan Sheikh, former vice-president Aftab Ahmad Vohra and LCCI Executive Committee Member Siddiq-ur Rehman Rana were also present on the occasion.

Zhou Rong maintained that globalisation had provided Chinese investors an opportunity to relocate their large scale industry to Pakistan to reap the benefits of its most conducive business policies as compared to other regional countries. He asked the Pakistani businessmen to convince their Chinese counterparts to make investment in Pakistan for being a resource-rich country.

Highlighting the Chinese economic condition, he said China with GDP of two trillion dollars, Foreign Direct Investment of 52.4 billion dollars and Overseas Investment of 25.7 billion dollars could help Pakistan get an economic boost. He added that China could extend a lot of co-operation to Pakistan's agriculture sector that was not up-to-the-mark on account of multiple reasons.

The LCCI President Mian Muzaffar Ali said on the occasion that free trade agreement (FTA) between China and Pakistan would help increase the level of bilateral trade to 15 billion dollars in next five years. He said the balance of trade between two countries is heavily in favour of China, which requires to be turned into a win-win situation for both the countries.

Major imports of Pakistan from China include iron, steel products, tyres, tubes, chemical, medical, pharma products, fertilisers, yarn and thread of synthetic fibre, railway locomotives, spare parts hand tools and hardware products etc, he added.

He said that specific areas for investment/joint ventures could be coal mining, power generation, machinery, chemicals, building materials especially cement production, textiles, synthetic fabrics, electronics, leather, paper and paper products and foodstuffs. The possibilities of joint ventures for Halal meat production and export to Muslim countries would be one of the most promising propositions for the Chinese investors, he opined.

The LCCI chief said that the government has evolved a special incentive package for the Chinese companies under Special Economic Zone, which offers exemption of custom duties (on import of machinery/equipment) income tax and sales tax to attract foreign investment from China. Siddiq-ur-Rehman Rana suggested developing integration with Chinese economy to benefit from Chinese market potential and experiences for capacity building of Pakistan economy.


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## Neo

*'Agricultural growth may be better than previous year'​* 
MULTAN (December 31 2008): Ministry of food and agriculture and Livestock has estimated that a record 6.5 million tonnes rice production and a little improvement in cotton production suggested that agricultural growth in the current fiscal year would be better than previous year. In the preceding season, the sugarcane growers were disappointed by lower prices and delayed crushing season as well as payments.

"As a result, for FY09 cropping season the growers switched from sugarcane to other crops". The sugarcane production fell in FY09 that is likely to put pressure on trade deficit and inflation in the shape of sugar import. Consequently, the area under sugarcane cultivation fell by 16 per cent showing decline in its harvest during FY09. Lower sugarcane production would result in import of sugar as well as higher sugar prices.

"Effective government intervention is required to resolve basic issues of price setting, commencement of crushing season and early settlement of payments," suggested the State Bank. A Minfal report said that the growth is supported by the possibility of a record wheat harvest against the production target of 25 million tonnes. By mid-November 2008, the wheat plantation registered a 9.3 per cent rise over the same period of last year.

"Initial information also raises the possibility of a very good showing by minor crops and reasonable growth in the livestock sub-sectors," said the report. Out of total 6.5 million tonnes of rice production, approximately 4 million tonnes will be available for exports.

Cotton harvest, which declined during the last three years, rose by 3.5 per cent to 12.1 million bales during FY09. It is still lower than the target of 14.1 million bales. The Ministry noted that the area as well as yield of cotton has declined from a peak of 760 kg per hectare in FY05 to an average of 700 kg per hectare between FY06-FY09.

"Appropriate policy and effective implementation are needed to support the cultivation of this important crop in the country," said the report. The fertilisers off-take decreased during July-November FY09 due to higher prices. The urea off-take decreased by 16.1 percent YoY basis during this period and DAP by 11.7 percent during July-November FY09.

The lower off-take reflected cautious purchases by the farmers in anticipation of a reduction in price following the collapse of international DAP prices. The price in the international market declined but the benefit was not passed on to the farmer. "Some benefits of falling international prices need to be passed on to farmers as well," suggested the experts.

The agricultural credit target for FY09 set at Rs 250 billion compared with Rs 211.6 billion actual disbursements during FY08 was up by 18.1 percent. During July-October FY09, agri-credit disbursements increased by 16.2 percent. The break-up between the farm and non-farm borrowing showed increase in the share of non-farm sector, which rose to 34.3pc in July-October FY09 from 27.9pc in July-October FY08.


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## Neo

*Cattle dung can run 38MW power plant ​* 
Karachi has 0.5m cattle heads producing 5,000 tonnes manure daily that can be used to produce biogas to run power plants, vehicles, steam boilers

Wednesday, December 31, 2008
By Fasahat Mohiuddin

KARACHI: The mega-polis of Karachi is facing its worst power crisis that could be partially allayed with the help of buffalo dung.

Dung from 200,000 buffaloes housed in the Landhi Cattle Colony can power a 38MW electricity generation plant running on biogas.

Amanullah Khan an alternate energy expert and consultant for ATCO a firm based in Texas USA in his feasibility study of a biogas plant in Landhi Cattle Colony says that a 38MW power plant can be installed by using dung from cattle pens of Landhi.

The plant would be capable of supplying power to 50,000 houses and run on waste material that would be converted into energy making the area a pollution free environment.

This biogas plant will be able to supply natural gas to ten filling stations at half the price. These stations will generate their own CNG independent of utility services. Carbon credit available through the United Nations Organisation will cut cost to half.

Another advantage of this plant is that presently when the 200,000 cattle are washed all the water mixed with dung goes in to the sea polluting the coastline and destroying the seafood of Pakistan.

Amanullah Khan says the biogas plant would collect this dung contaminated water recycle it to recover gas and send back clean water to the cattle colony.

Clean water is an expensive commodity in the cattle colony and at present CDGK is supplying water to Landhi Cattle Colony on subsidized rate so that cost of the milk does not go high.

Amanullah Khan had given a presentation to the City Nazim Syed Mustafa Kamal and asked only for the land to set up plant and the buffalo dung for the American firm. Kamal gave him the green signal. It seems that the red tape blocked this vital project.

The city needs alternative energy sources such as biogas, wind power and solar energy to substitute natural gas.

Of the above sources mentioned the most appropriate one, which can be easily substituted in place of natural gas is biogas. This source can be generated from a variety of biomass material easily available around us.

Primary among the sources of biogas is buffalo dung, municipal solid waste and sewage sludge. The process of biogas conversion is simple and yields a gaseous product having 55-60 per cent methane and the balance is carbon dioxide.

The heating value of biogas is approximately 600-800 Btu/ft3. Biogas of this quality can be used to generate electricity; it may be used as fuel for a steam boiler, space heater, or refrigeration equipment; it can also be directly combusted as a cooking and lighting fuel. It can be used in vehicles using CNG as fuel. Biogas can be produced in every city and village of the country.

Electricity from Biogas can be generated for on-farm use or for sale to the local electric power grid. The most common technology for generating electricity is an internal combustion engine with a generator.

Landhi Cattle Colony houses around 200,000 cattle heads the total cattle population of Karachi is more than 500,000 heads producing 5,000 tonnes of dung daily.

This buffalo manure emits into atmosphere large quantities of methane, carbon dioxide and hydrogen sulphide, which pollute the surrounding air and the Atmosphere in the vicinity of Cattle Colony has exceeded the pollutants levels laid down by NEQS (National Environmental Quality Standards).

Urgent Action is needed to attend to this matter because Pakistan being one of the Earliest Signatories to the Kyoto Protocol, under which it is necessary to decrease the quantum of Green House Gases generated in our Country to the levels laid down by Kyoto Protocol.

How Biogas is made: Bio Gas is produced by anaerobic (in absence of oxygen) decomposition of Organic Matter (cattle dung). Decomposition of cattle dung is carried out by bacteria in two phases. In first phase the bacteria decompose the Organic matter i.e. proteins and fats to form acidic compounds thereafter in the second phase Methane-forming bacteria further decompose these acidic compounds to produce Methane (CH4), Carbon Dioxide (CO2) Water Vapors (H2O), Ammonia (NH3) and Hydrogen Sulfide (H2S) the last three components in trace quantities.

The smell and odour, which we feel in animal dung is due to the emissions of ammonia and hydrogen sulphide gases while all other components of biogas i.e. methane and carbon dioxide are absolutely odourless and tasteless.

Methane produced from cattle dung can be recovered in a biogas plant and used for power generation. This not only helps to meet the power shortage but also reduces the Green House Gas emissions.


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## Neo

*Sugar crisis looms as ECC defers import of raw sugar​*
ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Tuesday deferred the proposal to allow duty free import of 0.4 million tonnes raw sugar, official sources told Daily Times on Tuesday.

ECC, which met under the chairmanship of Adviser to PM on Finance and Economic Affairs, Shaukat Tarin here at the Prime Minister's Secretariat reviewed Key Economic Indicators and overall pricing situation in the country.

ECC was informed that the sugar cane production in the country is expected to fell short by 6 million tonnes resulting in 0.7 to 0.8 million tonnes lesser sugar production than required. Keeping in view these figures, a proposal was considered in the ECC meeting to allow duty free import of 0.7 million tonnes and 0.4 million tonnes be imported in first phase so that sugar mills are able to produce required quantity within the country. However, due to the strong opposition by some federal ministers, especially from the sugar cane growing areas. The ministers argued if sugar is imported than it would have negative effects on the demand of sugar cane. The ECC had to defer the proposal till the estimation of sugar production from locally produced sugar cane is finalised, the official sources informed.

"Time is running out and if the ECC fails to react quickly, it can result in shortage of sugar and a possibility of sugar crisis from March onwards," said the sources.

ECC directed Ministry of Industries and Production to review sugar's national and international harvest and recommend an action plan regarding import of raw/refined sugar taking into consideration domestic farmers' interests.

ECC reviewed TCP's rice procurement and capacity besides considering export policy in view of bumper rice crop.

While considering Ministry of Petroleum's recommendations for seeking ECC approval of the guidelines to monitor furnace oil pricing by OGRA, it directed Ministry of Petroleum and OGRA to jointly deliberate on the subject and resubmit fresh recommendations whether furnace oil should be regulated by OGRA. The proposal considered in the meeting also sought to shift the burden of inland freight margin of furnace oil directly to its consumers. It also seeks to increase petroleum dealers margin to some extent to encourage them to sell petrol to the consumers.

The ECC noted that inflationary pressures were registering gradual deceleration owing to sharp decline in commodity pricing in international market particularly POL and Palm Oil. ECC observed that the benefit of decrease in price of petroleum products was not evident in the commensurate decrease of local commodity pricing, and directed that steps be taken to provide relief to the common man.

ECC, however, expressed satisfaction that key prices of essential commodities were registering a decline. ECC deferred Ministry of Industries and Production's proposal for issuing Revised Letter of Intent (LOI) to M/s Trans Polymer Limited for setting up Polyethylene Plant in Karachi till next meeting. It, however, directed Ministry of Industries and Production to complete its technical homework.

ECC directed MINFAL to use Gwadar port for enhanced transportation of wheat from ports to upcountry. ECC further directed MINFAL to ensure adequate wheat supply to deficit provinces and also keep a watch on stabilising nationwide wheat prices for the benefit of common man.

ECC decided to disband an earlier specially constituted committee under the chair of Finance Minister, represented by four Provincial Chief Ministers in consideration of its decision making mandate having been transferred to Daily Economic Monitoring Committee (DEMC). It was decided that in future DEMC should act as an extension of ECC.


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## Neo

*European friends keen to invest in Pakistan​*
ISLAMABAD: The support from friends of Pakistan is in the offing but some European friends are interested to invest in Pakistan.

US Ambassador to Pakistan Anne W Patterson expressed these views during a meeting with Federal Minister for Industry and Production Mian Manzoor Ahmed Wattoo in his office to discuss the US co-operation in the industrial development of Pakistan. During the meeting the ambassador also assured that all Pakistans industry related issues would be taken up with the new government in the USA. The US might also like to assist Pakistan in the newly emerging sectors such as furniture, sports goods, agriculture implements and leather goods, she maintained.

She also showed keen interest in the energy sector and informed that a workshop on this issue was already scheduled in the second week of January at Karachi. Wattoo suggested the ambassador to ease visa processing for the Pakistani businessmen and there should be a fast mode visa processing for them. The ambassador responded that due to recent security issues visa processing for young Pakistani males takes more time and they were considering to open business visa window at Karachi consulate. Welcoming the visiting ambassador Wattoo hoped that under the newly elected administration of Barak Obama US would adopt policies, which would promote global peace and co-operation. He informed the ambassador about the devastating impact of war against terrorism on Pakistans economy and its socio-political consequences on the country. He assured the US ambassador that the elected leadership of the country was fully committed and dedicated to its war against terrorism. Wattoo told the ambassador that Pakistan produces world-class textile, leather, gemstone and marble but Pakistani products had limited access to the US market. The ambassador agreed to this assertion and said that she would take up this matter with the new government in the US once it was in the office.

On the issue of establishment of Reconstruction Opportunity Zone (ROZ) in Pakistan the minister said that the issue had been delayed for quite some time. He requested for extending this facility to all the Export Processing Zones (EPZs) and National Industrial Parks (NIPs) along with Risalpur, established by this ministry. The minister further said that the US government should co-operate in development initiatives in Federally Administered Tribal Areas (FATA) region by developing skill and entrepreneur initiatives to divert the local youth towards productive life.


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## Neo

*Financial Stability Review: Pakistans banking sector remarkably resilient despite challenging environment​*
KARACHI: Pakistans banking sector has remained remarkably strong and resilient, despite facing pressures emanating from weakening macroeconomic environment since late 2007, according to the assessment of the State Bank of Pakistan Financial Stability Review 2007-08 released Tuesday.

The report said that given its bank-centric nature, the stability of the financial system is derived essentially from the banking system. An assessment of the performance of the banking sector from January 2007 to June 2008 shows that Pakistans banking system has over the years nurtured itself such that it is able to withstand some of the shocks it has faced in the last 18 months or so.

The banking system is on strong footing and has long term potential  a feature which has served to attract a substantial amount of FDI in the sector, it said. The sector has been efficiently managed in private hands under professional management and has witnessed outstanding financial performance during the last few years.

The report states that with strong regulatory oversight, there has been a significant enhancement of capital and risk-weighted capital adequacy, supported by high provisioning requirements, which were tightened in 2007. Stringent loan provisioning requirement has built sufficient reserves against the NPLs portfolio. In contrast to the liberalised financial system in the west, which took its toll in the form of the current global financial crisis, there are stringent regulations and adequate policies in place to help the banking system manage its risks.

It pointed out that aggregate financial soundness indicators have improved since early 2000, and continue to exhibit strong performance. Tighter provisioning requirements may have reduced profits, but have positioned banks well, it said and added ongoing consolidation and mergers have enabled a number of banks to position themselves better.

Having observed the experiences of the global economy, the way forward for the financial sector is to maintain both the simplicity and transparency of product structures and a gradual pace of financial liberalisation to enable the financial sector in expanding further in a more sound, healthy and efficient manner, the Report said, and added that effective regulation is the preferred route for central banks responsible for safeguarding both monetary and financial stability.

Capital adequacy of the banking system is strong, 12.1 percent at end-June 2008, well above the internationally acceptable minimum requirement of 8.0 percent, it said and added core capital constitutes about 80.0 percent of the total capital, and Tier 1 to risk weighted assets ratio of the banking system is at 9.7 percent.

This strong capital base is accompanied by adequate reserves on the back of stringent provisioning requirements against classified assets  the net NPLs to net loans ratio is reasonably well-contained i.e. at 1.3 percent in June 2008, comparable to international best standards, the Report pointed out. Profitability of the banking system continues to be impressive, largely emanating from the persistent growth in high-yield earning assets and expanded business volumes. Before-tax Return On Assets of the banking system remains strong at 2.3 percent in June 2008. The strengths built up over the years are now coming in handy in managing the recent financial strains.


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## Neo

*IT industry can benefit from across the globe​*
** Task Force on ICT chairman says Pakistans IT industry possesses potential​*
LAHORE: Chairman Task Force on Information and Communication Technologies (ICT) Salim Ghauri said that the Pakistans IT industry possesses the potential of benefiting from the unavoidable challenges to be faced by neighbouring countries in 2009.

In a statement on IT business situation in 2009, he said the IT companies in neighbouring countries have grown out of proportion and the sustainability in growth is becoming a Herculean task there with every passing day. They have no option but to cut current expenditures heavily that would affect their business ventures, he added. He said, in an emergency situation in 2009, the Western IT managers would be looking for new vendors and new places to outsource their projects, as the new vendors are always keen to provide better services at much lower cost with quality assurance. We had witnessed this trend back in the 2001 IT industry crash and we should be ready for it in 2009, he added.

He said it is important for the Pakistan IT industry to move quickly in early 2009 and get its share of business from across the globe.

We have always been complaining about Pakistans image abroad while terming it a major hurdle in getting business from the outside world but the time has come to put such approach aside, as this is a reality which will continue to stay with us for near future, he said. We will have to face the reality and dig opportunities out of the adverse circumstances to sustain the recession hit economies of the world.

According to him, the year 2009 will also demand a change in attitude from the IT professionals from carefree and take it easy, man style to a more professional approach. Now only the fittest will survive, he warned and added in the same breath that there will be room for people to join IT industry but this year will require longer hours and more hard work from the professionals to sustain and survive.

The financial packages will in fact decrease rather than increase. Little increments in salaries will be offered, which have been inflating in previous years, as the IT industry will either have to cut the workforce or offer decreased packages, he said, and added that the IT professionals should settle for smaller packages than losing a job.


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## ejaz007

*Iran ready for gas deal with Pakistan, without India *
Updated at: 0400 PST, Wednesday, December 31, 2008 

TEHRAN: Iran will sign a deal with Pakistan to sell gas to the neighbouring country, even if India, a third party to the deal, walked out, a news agency reported Iran's oil minister as saying on Monday.

India stayed away from talks in Tehran on a proposed $7 billion pipeline in September, saying it wanted to agree transit costs through Pakistan on a bilateral basis first.

Iran Oil Minister Gholamhossein Nozari said a delegation from Pakistan had arrived in Tehran for two days.

"Iran will sign a deal with Pakistan, if India does not take part in the project," agency quoted Nozari as saying.

In July, Iran said India and Pakistan had accepted Iran's demand for gas price reviews based on market changes, denying reports by some Indian newspapers that the pipeline talks had failed after Iran demanded a review every three years.

The pipeline would initially carry 60 million cubic metres of gas daily to Pakistan and India, half for each country. The pipeline's capacity would later rise to 150 million cu metres.

Iran said it has completed 18 percent of the work for the pipeline to bring gas from its South Pars field to the Iran-Pakistan border.

Pakistan has yet to begin work on a 1,000 km (625 mile) stretch of the pipeline to link Iran with India.

Iran has the world's second-largest gas reserves after Russia. But sanctions, politics and construction delays have slowed its gas development, and analysts say Iran is unlikely to become a major exporter for a decade. 

Iran ready for gas deal with Pakistan, without India


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## Rajkumar

good for Pakistan.

i guess,it will take time due to instability in Pakistan


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## Pk_Thunder

* New US govt to take up market access issue*​
Wednesday, December 31, 2008
By our correspondent

ISLAMABAD: US Ambassador Anne W Patterson on Tuesday expressed keen interest in Pakistans energy sector and assured Islamabad that she would take up all issues related to the industry and access of its products to the American market with the new US government.

She stated this during a meeting with Mian Manzoor Ahmed Wattoo, Minister of Industries and Production, held here to discuss US cooperation in industrial development of Pakistan.

During the meeting, the federal minister hoped that under the new administration of Obama, US would adopt policies which would promote global peace and cooperation. He reiterated the devastating impact of the war against terrorism on Pakistans economy and its socio-political consequences.

Wattoo assured the US ambassador that the government was fully committed and dedicated to the war against terrorism.

He informed the ambassador that Pakistan produces world-class textiles, leather, gemstones and marble but the products have limited access to the US market. The envoy said that she would take up the matter with the new US government once it was in office.

On the establishment of Reconstruction Opportunity Zones (ROZ) in Pakistan, the minister said the issue had been delayed for quite some time and requested for extending this facility to all Export Processing Zones (EPZs) and National Industrial Parks (NIPs).

Wattoo said the US government should cooperate in development initiatives in the FATA region by taking skilled and entrepreneurial initiatives to encourage local youth to lead a productive life.

The US may also like to assist Pakistan in the newly emerging sectors such as furniture, sports goods, agriculture implements and leather goods.

The minister also emphasised that US entrepreneurs should invest in the field of alternative energy resources like solar energy and windmills to meet energy shortage.

Wattoo suggested to the Ambassador to ease visa processing for Pakistani businessmen and create a fast mode for them. The Ambassador responded that due to recent security issues visa processing for young Pakistani males takes more time and they were considering opening a business visa window at the Karachi consulate.

Regarding the support of Friends of Pakistan the Ambassador stated that the support was in the offing and some European friends were also interested to invest in Pakistan.


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## Pk_Thunder

*Banks allowed to reclassify investments*​
Wednesday, December 31, 2008
By our correspondent

KARACHI: As financial year comes to an end, banks have been allowed to reclassify investment in Islamic bonds and shares to avoid the impact of falling stock market and economic downturn on their profit and loss accounts.

Banks and development financial institutions may reclassify their investments in equities, term finance certificates and Sukuks, categorised as held for trading (HFT) to available for sale (AFS) or held to maturity (HTM), State Bank of Pakistan (SBP) said on Tuesday.

The decision has been taken in view of negative market conditions and exceptional circumstances.

By declaring these investments as AFS, banks and DFIs would not need to revalue or include them in net income statement.

Farhan Rizvi, a banking analyst, said the move would not help significantly improve financial outlook of banks as exposure of securities and other investments was limited.


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## Pk_Thunder

*Companies scramble to cut expenses*​
Wednesday, December 31, 2008
By Mansoor Ahmad

LAHORE: The stark reality of economic downturn has started taking its toll on the productive and services sectors as companies scramble to slash expenses and weigh options like job cut, salary freeze or reduction all in a bid to stay afloat.

The News has found that production has fallen in almost all manufacturing and services sectors during the past one year and even the boom in construction is on the decline, leaving employees in surplus. Companies generally are trying to keep the workforce that worked with them during the period of high economic growth, but economic realities force them to consider options like sacking workers or taking other measures to cut employment cost.

We have already curtailed our expenses in other heads, said Nabeel Hashmi, head of an auto parts export company. After achieving maximum possible efficiency, he said, the only additional cost that most of the industries were bearing was retention of surplus staff after the production fall ranging from 40 to 60 per cent.

The difficulty faced by local companies is that that they have grown in a culture where firing employees is not accepted by society.

One of the biggest challenges organisations face in a period of downturn is managing employee morale, said human resource expert Amina Asif. Anxiety and discontent are bound to rise at such times. Strong employee-engagement initiatives including robust communications mechanisms, open channels between managers, their teams and human resource, and training programmes to keep employees up-to-date are some of the measures organisations can take to address this, she added.

Many multinationals are reportedly striving to get lay-off mindset among their employees and there are high fears that jobs can be terminated at any time. However, employees do not really believe it can happen. It is still seen as just a clause in their appointment letters and wherever terminations do take place, they cause tremendous discomfort among managers too.

We must recognise that a large percentage of our population is first generation in the workforce from agriculture. There is, therefore, an underlying expectation of loyalty, Amina said.

Other big issue is social stigma attached to losing a job. It causes more than just financial implications because people work long hours at workplaces, are paid very well and their families tend to believe that they play a crucial role within the organisations. If they suddenly lose their jobs, it is reflected on their competence. The society does not understand that one can be asked to leave a job because there is an economic downturn.

Tightening belts is certainly a preferable option to cutting jobs, says Mohsin Syed, who persuaded his workforce of 500 to accept a 40 per cent pay cut instead of job loss by the same percentage.

Cutting jobs leaves a bitter taste, he said and added entrepreneurs did understand that in Pakistan majority of the households had a single breadwinner, so lay-offs hit them very hard.

If organisational culture is good, employees will understand that these are difficult times and will be willing to accept these cuts, added Mohsin. There is willingness to fight bad times together. Companies will look at rationalising salaries, slash wage increases and perks like travel and hotel privileges and try to cut expenses wherever possible, he said.

Slashing of jobs is more painful in Pakistan than developed economies because there is no social safety net for the unemployed.


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## Pk_Thunder

*UBL signs contract with HESCO for ebilling system *​ 

KARACHI, Dec 31 (APP): The United Bank Limited (UBL), one of the largest private sector banks in Pakistan, signed a contract with Hyderabad Electric Supply Corporation (HESCO) for e&#8209;billing.

An announcement here on Wednesday said that Guftar Anjum, CEO, HESCO and Aurangzaib Alamgir, VP Business Head E&#8209;Commerce Group UBL, were present at the occasion to ink the agreement through which HESCO customers can pay their utility bills on&#8209;line. 

Sharing his insight on the newly launched facility Guftar Anjum, said that it is our foremost priority to provide our customers with the best facilities and this contract shows our commitment towards achieving this goal.

He further stated that consumers will be able to pay their HESCO bills through UBLs website and toll&#8209;free customer help&#8209;line.

Highlighting the benefits of this scheme, Aurangzaib Alamgir said, The e&#8209;billing system is in line with UBLs commitment of putting its customers first and finding new and innovative ways to make their life easier. This facility will help consumers save time by avoiding waiting in long queues in order to pay their bills, making it a very useful service for them, Aurangzaib also pointed out that non UBL customers can also avail this facility using UBL Orion (Mobile Banking Service), while there are plans to introduce cards in order to facilitate customers further.


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## Pk_Thunder

*Privatization to be carried out through consultation: Zardari *​ 


ISLAMABAD, Dec 31 (APP): President Asif Ali Zardari Wednesday called for carrying out the privatization process through a consultative process with all stakeholders especially the workers and labor unions. He made the remarks during a briefing by the Privatization Commission in the Presidency.

The President said the privatization policy introduced by Shaheed Mohtarma Benazir Bhutto had become bipartisan state policy.

He said privatization needed to be carried out through a consultative process with all stakeholders especially the workers and labour unions.

Briefing the meeting, Minister for Privatization said the government was pursuing privatization in an open, fair and transparent manner, for the benefit of the people of Pakistan.

The meeting was informed that there was a clear need for private sector to be inducted to enhance the overall image through capital injection and use of modern technology.

He said today private public partnership instead of unchecked privatization was the norm. He said Pakistan Peoples Party and their allies adhere to new dimension of privatization to face the challenges of the future.

He also said that labor friendly policies will be introduced to cater to the needs of laborers and to safeguard their interests.

The briefing was attended by Minister for Privatisation Syed Naveed Qamar, Minister for Industries & Production Mian Manzoor Ahmed Wattoo, Minister for Investment Waqar Ahmed Khan, Minister for Law & Justice Farooq H. Naik, Sardar Assef Ali, Deputy Chairman Planning Commission, Advisor to the Prime Minister for Finance Shaukat Tareen and officials.


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## opinion786

> The President said the privatization policy introduced by Shaheed Mohtarma Benazir Bhutto had become bipartisan state policy.



I'm glad he accepted this. Otherwise Musharraf's government was solely being blamed & labelled for the process cursed as 'privitization'.


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## ejaz007

*Iran, Pakistan agree on new gas price formula*

TEHRAN: Tehran and Islamabad have agreed on a revised price formula and a new price review mechanism for Iranian gas that will be piped to Pakistan, a senior Iranian official said on Wednesday.

The new formula and review mechanism update terms reached in 2006 during the long-running negotiations on the project that are part of Irans effort to become a major gas exporter.

Hojjatollah Ghanimifard, the oil ministers special representative to the pipeline talks, said both sides agreed to amend terms because of changes in the energy market since 2006. He said agreement was reached after two days of talks in Tehran. We agreed that the formula should be changed, he said, adding that the price review formula was also amended.

One of the changes (to the review formula) was that a year before the commencement of delivery of the gas we are going to have a price review. Of course, this can be an option that either side can use, said Ghanimifard. reuters

Daily Times - Leading News Resource of Pakistan


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## AliFarooq

* Pakistan receives $3.1 billion IMF loan*
Updated at: 1756 PST, Thursday, January 01, 2009

ISLAMABAD: Pakistan has so far received an amount of 3.1 billion dollars from the International Monetary Fund (IMF) out of total loan package of US $ 7.6 billion agreed mutually.

&#8220;We have received US $ 3.1 billion from the IMF on November 26, 2008 out of the total agreed loan package of US $ 7.6 billion while remaining amount will be received in phases after quarterly reviews in 23 months period&#8221; a senior official of the Ministry of Finance told reporters here on Thursday.

He said that FBR has set a revenue target of Rs.1.360 trillion for the current financial year and expressed the hope that government would be able to achieve the target.

Similarly, he added exports from the country also registered an increase of 17.1 percent in July-November 2008 when compared to 13.2 percent increase registered in the same period of last fiscal year adding that exports during the time under review were registered at US $ 8269.8 million.

He added that during the period July-November 2008, Pakistan received worker remittance of US $ 2966.5 million.

Commenting on the foreign investment, the official said that up to November 2008 an amount of 1603.3 million Foreign Direct Investment (FDI) inflows were attracted into the country.

Besides, he added, Pakistan signed a loan agreement of US $ 300 million with Asian Development Bank (ADB) with the objective of achieving sustainable high economic growth, poverty reduction and improving health services.

He said that another US $ 900 million loan agreement was signed with ADB to improve the transportation system under the National Trade Corridor (NTC) programme.


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## Pk_Thunder

*Inflation should ease as world prices fall*​
Thursday, January 01, 2009
By Shahid Shah

KARACHI: Food inflation may come down to 25 per cent if the benefit of decline in international commodities market is passed on to consumers, market sources told The News.

Prices of commodities such as fuel have fallen, said Anis Majeed, Chairman Karachi Wholesale Grocers Association.

Looking at the declining trend in the international market, cooking oil as well as ghee prices should come to Rs80 per kg from Rs130, said Farid Qureshi, Secretary General Karachi Wholesale Grocers Association. He said the past practice of local companies showed that they would take six months to pass on the benefit to the customer, as in a couple of months the price of cooking oil was only cut to Rs130 from Rs165.

Edible oil companies say they cannot cut prices sharply as electricity tariff had increased besides depreciation of the rupee.

Among other commodities, pulses are a daily-use item for the low and middle income class, but there is no decline in their prices. In the international market, the price of fair average quality (FAQ) black matpe (mash) fell to $450 per metric tonne from $650 while special quality (SQ) dropped to $550 from $750.

Anis Majeed said due to liquidity crunch faced by importers after imposition of 35 per cent LC cash margin, they were unable to buy in bulk quantity.

When the rupee started slipping against the dollar this August, the government imposed 35 per cent LC cash margin on all imported items. It exempted food items from the cash margin, but pulses remained under the barrier. Majeed said if cash margin was not imposed, prices of commodities could decline up to 25 per cent.

Pakistans total consumption of pulses is around 1.5 million tonnes, of which nearly 50 per cent is imported. Mainly, black matpe (mash), qabli chickpeas (qabli channa), lentil (masoor), red kidney beans and yellow peas are imported from Canada, Australia, China and Burma.

Contrary to the international declining trend, lentil is available at Rs125/kg against Rs143/kg in October. Rates of other pulses remain at the peak of the year. Black matpe is available at Rs75/kg, qabli chickpeas at Rs90/kg and kidney beans at Rs90/kg.

LC cash margin was waived from several other items including some textile goods but remains on pulses, essential items of daily usage. It has wedged millions of rupees of importers.

Importers say pulses are items of daily use of the poor and the waiver of LC cash margin deposit can bring prices down in the market, as they will have more money to buy them. They are not luxurious items like cigars or mercedes, said Anis Majeed.


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## Pk_Thunder

*Petrol shortage attributed to low refineries output*​
Thursday, January 01, 2009
By Saad Hasan

KARACHI: The shortage of petrol in Punjab and the NWFP due to a drop in production by cash-starved refineries has been compounded by gas load-shedding, industry people told The News on Wednesday.

Petrol, which has till recently been a surplus product in the country, became scarce in Lahore and Peshawar after refineries were forced to slash production, they added.

Refineries cannot operate at the required capacity because of cash shortfall, an official close to the development said. Circular debt is still hovering around Rs80 billion.

Petrol supply is expected to improve in the next 2-3 days, he said, adding that consignments were on their way to Lahore. Oil marketing companies keep stocks as per their demand assessment. The hike in demand was unexpected.

The issue of rising circular debt between the government, power producers, oil marketing companies (OMCs), refineries and banks had worsened earlier in the year when international oil prices were moving up every day.

Though oil prices have dropped to four-year lows, the issue of circular debt could not be settled as refineries await payments from Pakistan State Oil (PSO), which in turn is looking at the government to help power generation companies clear its dues.

Oil industry people say the government was informed time and again about the impending crisis which was bound to occur considering diminishing supply of the countrys main fuel source ie natural gas.

As soon as CNG (compressed natural gas) stations closed due to a drop in gas pressure, petrol consumption increased, said another official. We had informed the government on different forums that this was to happen.

Gas demand has continued to outstrip supply in the last couple of years with mushroom growth of CNG stations and heavy reliance of power plants and industry on gas.

Pakistan Peoples Party (PPP) government has tried to fix the problem by doing away with electricity subsidies, industry people said, but it has not been able to place its priorities right vis-a-vis energy requirements.

What is the need to discuss blending of ethanol with petrol and all these new regulations for petroleum product prices, when the industry is trembling due to dropping margins? questioned the official.

Withdrawal of subsidies was supposed to make WAPDAs power distribution companies financially independent, which would have enabled them to timely clear the bills of power purchases.Present situation is the result of tight fiscal position and some policy decisions, which should have been taken much earlier, an energy expert said.


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## Pk_Thunder

*FBR collected Rs518bn in July-Dec*​
Thursday, January 01, 2009
By our correspondent

ISLAMABAD: The Federal Board of Revenue (FBR) has collected Rs518 billion in the first half (July-Dec) of the current fiscal year, latest provisional tax collection figures reveal.

The FBR will be facing an uphill task to collect Rs842 billion in the second half (January-June 2009) in order to meet annual target of Rs1,360 billion.

Without an effective move to apprehend non-filers, it will not be possible to achieve this ambitious tax collection target on June 30, 2009, an official source said and added it required political will on the part of the incumbent regime to face pressure from vested interests.

We expect to reach Rs530-535 billion in July-Dec period of 2008-09 in the next few days because the figure of Rs518 billion does not incorporate revenue collection on December 31, a high-level official of the FBR disclosed while talking to The News.

When FBRs Member Fiscal Policy, Mumtaz Haider Rizvi, was contacted for comments, he said the FBR would make all-out efforts to achieve the stiff tax collection target of Rs1,360 billion by end-June 2009.

We do not consider it as impossible task but it will be certainly a stiff target for us, he added. On insistence of the IMF, the FBR decided to jack up its annual tax target up to Rs1,360 billion from earlier envisaged target of Rs1,250 billion, making commitment to generate additional revenues by Rs110 billion for displaying the desired number in a bid to control ballooning fiscal deficit.

The FBR, the sources said, collected Rs90 billion in December 2008 and tax authorities expected to get Rs17 billion more along with corporate returns.

The FBRs collection stood at Rs428 billion in the first five months (July-Nov) period of the current fiscal year and by adding Rs90 billion more the total tax revenue rose to Rs518 billion in the first six months of the ongoing financial year. The IMFs revenue projections for the FBR are based upon higher inflationary pressure up to 23 per cent and steep depreciation of rupee against dollar, which would help generating additional tax revenues in the ongoing fiscal year without imposing any new taxes.

But the steep decline in prices of crude oil in the international market is negatively impacting the FBRs efforts to generate additional revenue thus the target of Rs1,360 billion seems to be a difficult task for the tax authorities in the existing circumstances.


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## Pk_Thunder

*Government urged to follow homegrown economic policies*​
RECORDER REPORT
LAHORE (January 01 2009): Member British parliament Sarwar Chaudhry has urged the Government to follow homegrown economic policies instead of IMF's dual policies that dictates Pakistan increase interest rates and advise US to decrease rates.

He was addressing to a function organised by Pervaiz A. Butt President of Lahore Industrialists and Traders Associations and Chairman Zonal committee on law and order in Federation Pakistan Chamber of Commerce & Industry at his Model Town residence yesterday. He said the IMF policies were not benefiting Pakistan because these policies would increase poverty, unemployment and inflation.


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## Pk_Thunder

*Prolonged power outages irk industrialists*​
RECORDER REPORT
FAISALABAD (January 01 2009): The severe loadshedding of electricity has reached up to 22 hours in most parts of the Industrial City, which irked industrialists, powerloom owners and workers, civil society members to come on the streets and protest against Fesco and Ministry of Power.

Angry protestors blocked the roads in Ghulam Muhammadabad Colony, Faizabad, Abdullahpur, Dijkot Road and Factory areas to protest against continuous power outages. Protestors burnt old tyres and raised slogan against PPP ruling party.

The major protest procession was taken out from Ghulam Muhammabad Colony, which led by ex-MPA and leader of JI Faisalabad Malik Muhammad Din and other labour leaders. Prolonged power outages continue in different parts of Jhang, Toba Tek Singh and other towns of the Division.

Meanwhile, Industrial production, especially cloth manufacturing, continued to decline during the last month of December, registering a negative growth, said the leaders of All Pakistan Cotton powerlooms Association (APCPA).

Khalid Mehmood Cheema, Chairman, and Muhammad Akram Ghouri, Vice Chairman, APCPA said that the severe energy shortages, deterioration in law & order situation, high international oil prices and rupee depreciation were major impediments for all kinds of manufacturing. Power shortages have been haunting all Textile export oriented manufacturing units.

Textile sector, in particular, was jolted by other multiple shocks firstly because it is an export-driven sector and impact of weak external demand fell disproportionately on it.

Secondly, poor law and order situation diverted importers of Pakistani products to search for new suppliers. Thirdly, rising cost of raw materials, and fourthly as imported inputs go into textile production process, a high degree of volatility in domestic currency value created problems of costing and pricing, they added.


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## Pk_Thunder

*Credit guarantee agency soon for small enterprises*​
RECORDER REPORT
KARACHI (January 01 2009): Provincial Chief, Small and Medium Enterprise Development Authority (SMEDA), Muslim Raza, has said Credit Guarantee Agency (CGA) for small and medium enterprises (SMEs) is under likely to start soon. Speaking at establishing Third Party Facilitation Center (TPFC) at Korangi Association of Trade and Industry (KATI) on Wednesday, he said that banks are an important source of external credit but they are reluctant to lend to SMEs due to the high credit risk.

He said that CGA would assist SMEs to secure loans from financial institutions in Pakistan. He said that the authority has identified six areas, including leather, marble, furniture, dairy farming, gem and jewellery and livestock for immediate attention and support. He said that the authority has established five companies including marble, furniture, gem and jewellery, dairy and livestock development company. Work on establishing leather development company is in progress.

The provincial chief said that the authority addresses the needs and problems of SMEs in the form of SME cluster - a concentration of largely homogeneous enterprises within a certain geographical area. Cluster development initiatives aim at achieving results in a short time by getting involved with stakeholders and improving the support systems at the micro level. He said that the first TPFC was established at Sarhad Chamber of Commerce and Industry (SCCI) about a year back and is operating successfully.

He said that TPFC facilitates SMEs in resolving their legal problems through experts advices and opinions with the assistance of a network of lawyers, in addition to raising awareness of legal rights and creating understanding through training courses.

He said TPFC provides free of cost legal services for SMEs in taxation, labour, corporate/mercantile, intellectual property rights, environment, local government, regulations related to utility connections, banking etc. A legal expert on SMEDA will be available at the TPFC once in a week to facilitate members of KATI and others. President Income Tax Bar Association (ITBA) A.K. Memon emphasised the need of development SME sector which creates more employment than any other sector.

He pointed out that there was nothing in Taiwan before 1993. After that 400 companies had initiated work on a very small scale and now they are very big companies. Pakistan also has potential to develop SMEs. He said that the government is providing best facility through free legal advices.

President, Sales Tax Bar Association (STBA), K.A. Khan, said that pubic sector organisation, SMEDA is providing best legal services to general public in relation to SMEs. He said that an expert on sales tax and federal excise duty will be available at TPFC to guide SME sector. President, Small and Medium Business Alliance, Zafar Iqbal, said that every government official and political leaders had emphasised the importance of SME sector, but had practically made no move for its development.

He said that small traders and entrepreneurs did not get a loan until and unless they furnish security of Rs 8 lakh for a loan of Rs 5 lakh. In this scenario small and medium enterprises cannot flourish, as they did not have finances to furnish securities. Chairman KATI, Mian Zahid Hussain, emphasised the need for encouraging people to establish more and more SMEs. He said that the government must introduce businesses friendly policies for boosting business and industrial activities in the country.


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## Pk_Thunder

*Pakistan announces five percent tariff cut for Saarc nations on 4,803 items*​
RECORDER REPORT
ISLAMABAD (January 01 2009): Pakistan has announced 5 percent tariff reduction in the existing customs duty on import of around 4803 items from Saarc member countries--Sri Lanka, Bangladesh, Bhutan, Nepal and Maldives under Trade Liberalisation Programme (TLP) agreed in South Asia Free Trade Area (Safta) agreement.

The Federal Board of Revenue (FBR) has issued SRO 1297(I) 2008 here on Wednesday which would be effective from December 31, 2008. Pakistan has not accorded 'Most Favoured Nation' status to India till date; despite signing Safta agreement. The trade with India is governed under the Positive List of the Import Policy Order. Under this arrangement, Safta customs tariff reduction benefits to India would be available on import of 1926 items.

The benefits of Safta would only be available on items allowed under the Positive List of Pakistan. The FBR has also issued tariff reduction road map from December 2008 to December 31, 2011 under the notification for the benefit of trade and industry of the Saarc member countries.

Under Article 7 of the Agreement, tariff reduction modality is defined as TLP which started from July 1, 2006 under which non-LDCs countries of Safta, including Pakistan, India, Sri Lanka, shall reduce tariff to 0-5 percent for LDCs (Bangladesh, Bhutan, Nepal, Maldives) within three years or by end of 2009.

According to the tariff reduction modalities agreed under Safta, tariff reduction by Pakistan, India, Sri Lanka being non-least developed countries (non-LDCs) for Least Developed Countries (LDCs) including Bangladesh, Bhutan, Maldives and Nepal being LDCs to be completed in two phases.

Under Phase-I (2006-08), the existing tariff rates above 20 percent is to be reduced to 20 percent within two years and import tariff below 20 percent to be reduced on margin of preference basis of 10 percent per year. As agreed, Phase-II (2008-13) tariff is to be reduced to 0-5 percent within 5 years.

Tariff reduction by least developed countries (LDCs), including Bangladesh, Bhutan, Maldives and Nepal is to be completed in two phases for all Saarc members. Under Phase-I (2006-08), existing tariff rates above 30 percent is to be reduced to 30 percent within two years and import tariff below 30 percent is to be reduced on margin of preference basis of 5 percent per year. According to the agreed Phase-II (2008-16), the imports tariff is to be reduced to 0-5 percent within 8 years. All members have maintained sensitive lists and they have decided not to offer any tariff reduction on items in the Sensitive List.


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## Pk_Thunder

*Pakistan to receive $500 million each from China and World Bank: Tarin*​
AHMED MUKHTAR
ISLAMABAD (January 01 2009): Pakistan will receive $500 million from China by January 4 or 5, and would also avail $500 million tranche during this quarter (January-March), says Advisor to PM on Finance Shaukat Tarin. He said that the government stock market fund would start buying in market from next week.

Talking to media after addressing National Assembly standing committee on finance and rushing to Presidency, he confessed that economy this year would take a nose-dive, at 3-3.5 percent GDP growth, aiming to a roaring recovery next year.

Balance of payments is improving, CPI inflation is likely to dip a bit as SPI data of last four weeks is down indicating a supportive omen for December data. These things show that by the end of this fiscal year the country would be heading towards a better performing year ahead, Tarin said. This fall in inflation would also close the doors for further tightening of monetary policy.

He defended the banks, saying that some big banks were not paying better returns, but others were offering 15-17 percent return which leaves no room for any criticism on them. Spread for banking cost is 2.5 percent, 1.5 percent is credit cost, and remaining is paid for the 15-17percent, he said.

"That is the only sector which is performing in most difficult conditions and hopes to improve in recovery too", he added. He censured previous policies of pursuing growth in high inflation scenario which led to hyper-inflation, as happened in Turkey, Brazil, Mexico and somewhat in Philippines.

Tarin said that Pakistan's market is out of Morgan Stanley Capital International Emerging Market Index because of this floor, restricting free market operations. "Previously, a few brokers earned. When they did, nothing was shared with anyone, and now they are down and are asking for government's SOS. No one in the world had rescued any broker", he remarked on criticism of government's lacklustre role over market fall. "Do not ask me to deleverage anyone; I am watching reprimand from brokers on various media. They are behind all such protest. They are blaming me", he asserted.

He said that the market has agreed to get rid of 12.5 percent discount, which would end soon, as the market was earlier falling 5 percent and now at 2 and 2.5 percent, it would have a soft landing soon. Tarin called for removing CFS from the market. "There are a few instruments in our market which are misused and cause speculation. I have asked SECP chief to eliminate CFS from the market after this discount issue is resolved", he said.


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## Pk_Thunder

*Rs20bn stock market bailout fund launched*​
Friday, January 02, 2009
By Salman Siddiqui

KARACHI: The much-awaited Rs20 billion equity fund, which would be injected into local bourses with a view to preventing excessive losses, was formally launched here on Thursday.

However, the funds launch came with much delay which was evident from over 63 per cent fall in the leading 100-share index of the Karachi Stock Exchange from an all-time high reached in April last year.

National Investment Trust (NIT), the manager of the fund, announced its launch at a press conference here. The fund called NIT-State Enterprises Fund (NIT-SEF) will be used for purchase of only eight state-owned securities including (1) Oil & Gas Development Company (OGDC); (2) Pakistan State Oil (PSO); (3) Pak Petroleum Ltd (PPL); (4) Sui Northern Gas Pipelines Ltd (SNGPL); (5) Sui Southern Gas Company (SSGC); (6) Kot Addu Power Company (KAPCO); (7) National Bank of Pakistan (NBP); and (8) Pakistan Telecommunication Company Ltd (PTCL).

When asked at what time the fund would start buying above securities, NIT Chairman Tariq Iqbal Khan kept his words reserved. But when a journalist shared the information that the adviser to PM on finance has said the fund would be activated next week, he replied: Whatever the adviser has said will be implemented.

The government has provided sovereign guarantee to the moneylenders in NIT-SEF, as if the Trust fails to return the received amount of Rs20 billion to the lenders at the completion of a three-year term then it (the government) will compensate the lenders, said the NIT chairman. Lenders have provided Rs20 billion at KIBOR plus one per cent rate.

Accordingly, National Bank of Pakistan (NBP) has provided Rs7 billion; Employees Old Age Benefits Institution (EOBI) Rs5 billion; State Life Insurance Corporation (SLIC) Rs2.5 billion and the rest Rs5.5 billion in a syndicate of eight to 10 banks. Lenders cannot ask NIT-SEF to pay back their amount before the agreed three-year period, but NIT has the right to pay off the debt at any time during the said period, Khan said.

Lenders will have nothing to do with the profit and/or loss accounts of NIT-SEF, as whatever will be the result of the fund injection into the market it will be of NIT-SEF and its unit holders, he said.

This fund intends to sell units to non-resident Pakistanis after initial operation and after the market stabilises, said a written statement of NIT. As far as the sale of units to the resident Pakistanis is concerned then I see in this matter in future and I will have to know the consent of trustee of the deed in this regard as well, the NIT chairman said.

On another query, the NIT chairman said details of the fund have been sent to International Monetary Fund (IMF), as they had asked for. This fund was, however, provided by the lenders from their authorised limits of playing at the equity markets, he answered.

We very strongly feel that the fund due to these stocks with strong fundamentals would perform well and provide the necessary security to the financers of the fund and send strong signals to the market which is depressed at this point of time, said in a statement.

The legal work which retains a lot of details and paper work including the registration and approval of the fund, financing agreements, guarantees etc. has been completed, the statement added.

The chairman clarified that NIT-SEF is a separate fund in all respects from the existing other three funds being managed by NIT.


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## Pk_Thunder

*FBR collects Rs1.54bn under amnesty scheme*​
Friday, January 02, 2009
By our correspondent

ISLAMABAD: Some 10,828 people declared Rs77 billion worth of assets in response to a tax amnesty scheme for whitening black money by paying 2 per cent tax.

Under the scheme, the Federal Board of Revenue netted Rs1.54 billion till December 31, 2008, the FBR announced here on Thursday.

Most of the assets were declared in Lahore as the Large Taxpayer Unit and Regional Taxpayer Office there dealt with 4,117 cases under which the tax paid totalled Rs788 million.

We will take strong action under the law against those who did not avail of this opportunity by declaring their assets, FBR Chairman Ahmed Waqar said in an exclusive talk with The News here on Thursday. He said the FBR would launch action against those who did not declare their assets and it could not be termed harassment on the part of tax authorities.

The law of land gives us authority to act against non-filers, he added. He said on Thursday was a bank holiday so the FBR would come up with exact figures of declared assets on Friday as there are reports that a number of taxpayers availed this opportunity on the last date i.e. December 31, 2008.

According to the FBR, the board has collected Rs1.54 billion through the tax investment scheme announced in July this year. According to details, some 10,828 cases seeking to benefit from the scheme were received by FBR until December 31, 2008, the last day of the scheme, and were settled after netting Rs1,542 million as tax equaling two per cent of the fair market value of their assets. The scheme was run by the 16 regional tax offices and large tax payers units of the FBR and received a record 4,114 cases from the RTO Lahore followed by 1,861 cases received in RTO Karachi.

The break-up of the collection shows that an individual in the jurisdiction of Large Taxpayers Unit (LTU) Karachi paid Rs25 million by availing this Tax Amnesty Scheme. Regional Taxpayers Office (RTO) Karachi received 1,861 cases under which Rs288 million tax was deposited into the national kitty.

There is only one case in jurisdiction of LTU, Islamabad in which the taxpayer paid Rs0.4 million tax. RTO Rawalpindi received 979 cases with paid tax of Rs86 million while RTO Islamabad dealt 9 cases and paid Rs6 million into the national kitty. The RTO Multan received 101 cases and paid tax stood at Rs15 million, RTO Faisalabad dealt with 925 cases with paid tax of Rs93 million, RTO Peshawar got 246 cases with paid tax of Rs43 million and RTO Sialkot dealt with 522 cases with paid tax of Rs47 million.

The RTO Hyderabad received 868 cases for declaring assets with paid taxes of Rs44 million; RTO Quetta 48 cases with paid taxes of Rs12 million; RTO Gujranwala 572 cases with paid taxes of Rs65 million; RTO Sukkar 495 cases with paid taxes of Rs23 million and RTO Abbottabad 83 cases with paid taxes of Rs7 million.


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## Pk_Thunder

*Separate tariff for CNG industry sought*​
Friday, January 02, 2009
KARACHI/ISLAMABAD: The CNG Stations Owners Association of Pakistan (CSOAP) has urged the government to introduce a separate tariff for CNG industry to protect investment by CNG station owners and middle & lower middle class vehicle owners who have already spent in billions.

In a statement after a meeting of CSOAP executive committee members here on Thursday, President Malik Khuda Buksh said that the recent steps by the government to increase gas price would damage the CNG industry and would put additional burden on the common man who is already burdened by huge inflation.

The investments of more than 60 billion of middle and lower middle class people who converted their vehicles to use cheap and environment friendly CNG would go waste if the government does not revert the recent increase of gas price immediately.

This 10 per cent rise in gas prices is unjustified and uncalled for when the fuel prices all over the world have gone down considerably, he added.

Malik Khuda Buksh said that it would force the CNG vehicle owners to buy CNG at a higher rate and would force CNG stations to close down their businesses leaving 2.1 million households (vehicle owners) including rickshaws and taxis to come to a halt. He said the association has urged the Ministry of Petroleum and OGRA to keep the CNG policy 1992 enforced as any unwanted change in the said policy could really be damaging for CNG industry in particular and the economy as a whole.

He pointed out that CNG Policy had provided a cover to millions of vehicle owners who had made investments to use the environment friendly fuel, which is very cost effective and provides a cheaper fuel for them.

Any change in the said CNG policy would discourage investment and result in political turmoil since it would force the middle and lower middle class to use higher priced fuel, either petrol or diesel, which have extremely harmful effects on our environment as well, he added.

CSOAP president claimed that CNG has resulted in savings of more than $250 million per annum of foreign exchange for Pakistan. CNG sector as a whole consumes less than 6 per cent of total gas output from SSGCL and SNGPL.

They refuted the claims by some industrialists and government officials that load shedding at CNG stations would help industry and household consumers to get uninterrupted gas supply and said it was contrary to the facts. In fact, load shedding for CNG stations would bring more than 2.1 million vehicles to a halt and would aggravate the situation, he noted.

CSOAP demanded that in order to promote use of CNG in vehicles, a minimum price differential of 50 per cent needs to be maintained at all times so as to discourage people to use environmentally harmful and hazardous fuel ie diesel in vehicles.

He said that the participants of the meeting have affirmed that if their genuine demands were not met by the government, they will be forced to shut down their businesses and would not be able to pay their leasing payments and other loans.

Price hike opposed: All Pakistan CNG Association on Thursday denounced CNGs price increase and demanded the government to withdraw it by Jan 5.

Price increase of CNG is highly detrimental to industrial growth, said Tariq Kundan, the President of All Pakistan CNG Association in a briefing to the media persons.

Around 2800 CNG stations would shut their business if government couldnt withdraw the proposed increase. Till January 5, CNGs owners would not charge increased price.


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## Pk_Thunder

*First ever private sector CFC inaugurated*​
PESHAWAR (January 02 2009): General Manager Smeda, Syed Iqbal Kidwai on Thursday inaugurated a Common Facility Center (CFC) at Takhtbhai Mardan, first ever CFC established by private sector through Anjuman-e-Loharan Takhtbhai with support of Smeda. A simple ceremony was held in the presence of stakeholders where it was resolved that SMEs of the cluster and Smeda would work hand-in-hand to make this center a huge success story for the industrial clusters, said a press release issued here.

Haji Amir Sani President of the Association appreciated efforts of Smeda team. He specially thanked Kidwai for embracing the occasion by his presence and he thanked Provincial Chief Javed Khattak, Manager Sarmad H Khan and other team members of Smeda for their untiring efforts to make this dream a reality.

Syed Iqbal Kidwai congratulated members of the Association on this landmark achievement that would benefit SMEs of the region in a long way. He asked representatives from other industrial clusters to follow this model to get advantage from joint purchases and utilisation of common facilities that will result reduction in cost of production.

Javed Khattak shared the whole process of establishing the CFC starting from idea generation till execution of the idea. He informed that the project in its soft launch period of two months resulted in a monetary benefit of around Rs 200,000 to the SMEs. On full production of CFC, it is expected that monetary benefit of SMEs would go up to Rs 2 million in month basis.

Khattak praised unity and teamwork displayed by entrepreneurs of the cluster in the whole exercise and he stated that there is no doubt that this CFC would become a role model for the whole industry if the same devotion and determination is continued by the stakeholders. Samad H Khan highlighted future plans of CFC expansion and support of Smeda in future initiatives in the cluster.


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## Pk_Thunder

*Fast track development of Fata top priority*​
PESHAWAR (January 02 2009): The fast track development of Fata is the top priority of the government and all out efforts are being made to provide maximum healthcare facilities to the tribesmen.

An allocation of Rs 829.694 million has been made in the current financial year for implementation of 129 development schemes in health sector embracing projects like control of communicable diseases and aids, improvement and rehabilitation of the existing health institutions, strengthening of mobile hospital programme to provide medical facilities to the tribesmen of the far-flung areas at their door steps and a feasibility study for construction of a Medical College in Fata.

According to a handout of Fata Media Cell issued here on Thursday, a total of sixteen Civil Hospitals, Rural Health Centers (RHC) and Basic Health Units (BHU) are being upgraded to type 'D' hospitals at a cost of Rs 1162.972 million. Out of this Rs 423.375 million have already been spent while Rs 204.573 million are being spent during the current fiscal year.

The health institutions being upgraded to type 'D' hospitals include Civil Hospital Nawagai and RHC Pashat (Bajaur Agency), BHU Had Kore Ambar and BHU Momad Gat (Mohammad Agency), BHU Dogar (Kurram Agency), Civil Hosptial Kalaya and RHC Dabori (Orakzai Agency), Civil Hospitals Datta Khel and Razmak (North Waziristan Agency) and Civil Hospital Darazinda (FR DI Khan).

Moreover, type 'D' hospitals at Makin and Sarwakai (South Waziristan Agency) and Dara Adam Khel (FR Kohat) have been established, reconstruction of Civil Hospital Jandola (FR Tank) and its up-gradation to type 'D' hospital. Conversion of BHU Shin Dand and into type 'D' hospital is also included in the scheme of up-gradation while Tehsil Headquarters Hospitals Saddah (Kurram Agency) and Mir Ali (North Waziristan Agency) are being upgraded to type 'C' hospitals.

All these development schemes in health sector, Fata are designed to provide best possible treatment facilities to the tribesmen. A sum of Rs 7.560 million has been earmarked for establishment of an emergency center in Dara Adam Khel (FR Kohat) to provide immediate medical relief to coal miners in case of an accident.


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## Pk_Thunder

*Malaysia tops FDI list in Pakistan*​
M RAFIQUE GORAYA
LAHORE (January 02 2009): Malaysia tops the list of investors making direct foreign investment (FDI) in Pakistan during the first six month of current financial year (July-December, 2008) with Maybank making the biggest investment of 907 million dollars in banking sector followed by Saudi Arabia with an investment of 750 million dollars in steel sector and United Arab Emirates (UAE) with an investment of 500 million dollars in power sector.

In an e-mail message to Business Recorder, Pakistan High Commission in Kuala Lumpur said the current global economic meltdown had not deterred the foreign investors, including Malaysia, to invest in Pakistan, as the Pakistan's economy had shown resilience and had defied the economic recession with registering growth in the FDIs.

According to latest data, released by the Ministry of Foreign Affair recently, the FDI during the first five months of the current financial year reached 1.8 billion dollars, registering an increase of 1.5 percent, export reached 8.2 billion dollars, registering a growth of 20 percent and foreign remittance at 2.9 billion dollars, registering an impressive increase of 15 percent.

According to the data, another Asean-member country, Singapore, has made an investment of 147 million dollars in banking sector and 30 million dollars in power sector and as such trails far beyond Malaysia. Other countries, which are rushing to Pakistan for FDI in banking sector are Switzerland with an investment of 200 million dollars, United Kingdom 125 million dollars and Saudi Arabia 200 million dollars.

The countries making investment in hypermarkets in Pakistan are Germany with an investment of 100 million dollars, Holland with an investment of 100 million dollars and France with an investment of 40 million dollars, whereas countries making investment in power sector are the UAE with an investment of 500 million dollars, Opec with an investment of 30 million dollars and Turkey with an investment of 130 million dollars.

The Information, released by the Ministry of Foreign Affairs, says that China, UAE and Korea have also announced additional investment in telecom, banking and power sectors.

China has announced 800 million dollars in telecom sector, UAE has committed an investment of two billion dollars in banking sector and Republic of Korea has announced investment of 300 million dollars in hydropower sector.

In addition, Chinese companies have further announced FDI to Pakistan at five billion dollars and UAE/Saudi Arabian companies have assured FDI of three billion dollars during the current financial year of 2008-09. The data further suggests that foreign investors, who have burnt their fingers elsewhere, are finally beginning to look at Pakistan as safe haven for long term sustainable and profitable partnership.


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## Pk_Thunder

*Pakistan's foreign exchange reserves up by $227 million*​
RECORDER REPORT
KARACHI (January 02 2009): The country's liquid foreign exchange reserves surged by some 227 million dollars during the last week. The total liquid foreign exchange reserves held by the country stood at 9.662 billion dollars on December 27, 2008 as compared to 9.435 billion dollars on December 20, 2008.

Foreign exchange reserves held by the State Bank of Pakistan stood at 6.369 billion dollars from 6.148 billion dollars, depicting an increase of 221 million dollars. In addition, foreign exchange reserves held by banks also witnessed a surge of some 5.1 million dollars to 3.292 billion dollars during the last week.


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## Pk_Thunder

*Purchase of 75 locomotives: Zardari's intervention helps Chinese firm win Rs four billion contract*​
SAFDAR RASHEED
LAHORE (January 02 2009): On the intervention of President Asif Ali Zardari, Pakistan Railways has finally awarded contract worth rupees four billion to Chinese state-owned Donfang Electric Corporation (DEC) for the purchase of 75 locomotives, The Business Recorder has learnt. The contract award ceremony was held in Islamabad in the presence of Federal Minister for Railways.

The Pakistan Railways authorities and DEC officials signed the contract. Director of Procurement Nisar Mehmon and Member, Finance, Pakistan Railways, Jehangir Aziz signed the paper, and on the behalf of Chinese company Hoo Weidong, Vice-President of Donfang Electric Corporation (DEC) and Mli Depuo, General Manager Import and Export of Dillian Locomotives of China, signed on the contract documents.

It may be mentioned here that the Chinese company had offered to provide 75 engines at the cost of 107 million dollars as against the US company's tender of 227 million dollars. The cash starved Pakistan Railways had entered into several agreements with Chinese railway companies for its development and modernisation of its outdated system.

In 2001, Pakistan Railways signed a 91.89 million-dollar contract with China National Machinery Import and Export Corp for the manufacture of 175 new high-speed passenger coaches. The project was funded by Exim Bank China on a supplier credit basis.

Under an agreement, signed with China in 2003, Pakistan Railways purchased 69 locomotives of which 15 were delivered as completely built units, while the remaining 54 were built at Pakistan Railways' locomotive factory. The locomotives were purchased on suppliers' credit basis with funding provided by Exim Bank of China through the Dongfang Electric Corporation.

However, the quality of Chinese engines has come under severe criticism. There are circles that claim that the Chinese railway engines are not up to the mark, therefore, Pakistan should not buy additional railway coaches and engines from China.

Nevertheless, a senior Railway official remarked that the coaches and locomotives, provided by China on credit, were being successfully used on Pakistan's mail and express trains from Rawalpindi-Lahore-Karachi, Lahore-Faisalabad and Rawalpindi-Quetta.

He said: "Pakistan Railways is already facing an annual deficit of Rs 42 billion. Therefore, we have to keep in mind the price tag of each locomotive engine. A man, who could afford only a Suzuki car should not dream of a Mercedes or BMW car," he emphasised.

He said the technical and the tender committee had not unduly favoured Dongfang in awarding the contract as it had fulfilled all required technical requirements and standards. Under another project, the Chinese companies are rehabilitating 450 passenger coaches at an estimated cost of Rs 2.14 billion. The project also included the conversion of 40 coaches into air-conditioned cars and the conversion of 10 power vans.

Furthermore, there was a provision of 100 new high-speed bogies, 30 of which were imported from China, while 70 were manufactured locally on a transfer-of-technology basis. It may also be mentioned that President Asif Ali Zardari has intervened to resolve the thorny issue of purchase of 75 locomotives by Pakistan Railways, and directed the government to decide the matter on merit.

Chinese Ambassador Luo Zhaohui met the President at the Aiwan-e-Sadr, and briefed him about pressures on the Pakistan Railways to cancel the 107 million-dollar deal with the Chinese state locomotive manufacturing company, Dongfang (DEC), for the purchase of 75 railway engines.

It is pertinent to recall that Chinese firm was the lowest bidder in the international tender and the Pakistan Railways had accordingly awarded the contract to it in July. The contract document has already been finalised, the Ministry of Law has vetted it and each has been stamped.

Sources said the only reason for the delay in signing was the availability of the Prime Minister of Pakistan to grace the signing ceremony for which reason the Chinese extended the validity of their bid from October 31, 2008 to November 30, 2008. After the President's intervention and directives to the Railways Ministry, Dongfang has further extended the validity of its bid till December 31, 2008.

Contract of 75 locomotives was awarded to Dongfang Electric Company (DEC) on July 31, 2008 subsequently Pakistan Railways confirmed this vide letter issued dated September 22, 2008. The draft contract agreement was finalised on September 29, 2008 and forwarded to the Law Division, government of Pakistan for vetting the agreement.

A high official in the Pakistan Railways told Business Recorder that it was admirable that as a responsible company, despite changing economical situation and other difficulties, the Chinese state-owned company was maintaining its prices of more than 14 months ago as a good gesture of co-operation towards Pakistan.

DEC Chief Executive officer Li Hong had also appreciated the role of Federal Minister for Railways Haji Gulam Ahmad Bilour in finalising the contract on merit. He said this decision would further strengthen the bilateral as well as business and friendly relation between Pakistan and China.


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## Pk_Thunder

*Agreements of exchange companies with foreign entities: State Bank develops new guidelines*​
RECORDER REPORT
KARACHI (January 02 2009): State Bank of Pakistan has issued new guidelines for home remittances related agreements of Exchange Companies with Foreign Entities. SBP said that over a period of time, while reviewing agency arrangements of Exchange Companies, certain structural weaknesses have been identified which could impair Exchange Companies ability to effectively mobilise funds from overseas.

Therefore, in order to facilitate Exchange Companies in their diligence process and bring uniformity & discipline in agency arrangements of exchange companies, it is considered necessary to provide fundamental structure of agency arrangements.

In the above backdrop, SBP has developed some guidelines and it is mandatory for Exchange Companies to follow them in true spirit. These guidelines do not supersede other directives issued by State Bank of Pakistan in respect of areas not covered therein. Please note that overall responsibility of safeguarding interest of the company and avoidance of all related legal, regulatory and commercial risks would rest with the company.

GUIDELINES:

SELECTION OF FOREIGN ENTITIES:

1. Only those foreign entities that have effective customer acceptance and KYC policies and are effectively supervised by the relevant authorities should be selected for agency arrangements

2. No arrangements should be entered into or continued with a correspondent entity incorporated in a jurisdiction in which it has no physical presence and which is unaffiliated with a regulated financial group.

3. Particular attention should be paid when continuing relationships with entity located in jurisdictions that have poor KYC standards or have been identified by Financial Action Task Force as being "non-co-operative" in the fight against money laundering.

PRE-AGREEMENT STAGE:

1. The Exchange Companies should develop a general understanding of legal & regulatory framework of the jurisdiction involved with respect to the following:-

i. Rules related to licensing requirements.

ii. Rules regarding opening/closing/shifting of business locations.

iii. Rules governing remittances transactions.

iv. Anti Money Laundering & KYC requirements.

v. Laws & regulations related to overseas agency arrangements.

2. The copy of license issued by concerned regulatory body to the foreign entity should be obtained and to confirm that the entity has power to enter into or execute such arrangements.

3. The Exchange Company should obtain brief introduction of sponsors of the foreign entity and thoroughly investigate their credentials and market repute.

4. The details of network of the foreign entity should be in the possession of Exchange Company.

5. The list of existing agency arrangements of the foreign entity should be obtained.

6. All agreement should be made with the principal company and not with any of its agent/subagent. Further, all negotiations/communications should be made/addressed to authorised person of the counter- party.

ESSENTIALS OF THE AGREEMENT:

1. The agreement should be for payment of home remittances in PKR only.

2. All funds against home remittances should be received in advance in Exchange Company's FCY Accounts maintained with banks in Pakistan. In this regard, attention is also invited to Circular letter No 13 dated August 04, 2006.

3. For transactions greater than USD 1,000 the agreement should require foreign entity to provide address of senders in addition to his/her name. However, address may be substituted with any unique Identification Number/ National Identity Number/Customer Identification Number/Date & Place of Birth.

4. The agreement should be non exclusive meaning thereby that it should not restrict Exchange Company, directly or indirectly, from offering similar competing services under other arrangements.

5. The agreement should give ownership rights of all related accounting/book-keeping and other record to Exchange Company and the same is be maintained for at least five years.

6. The agreement should not contain clauses which give blanket approval to foreign entity to assign or transfer their part of the agreement or any right or duty thereof, to any third party without prior approval of SBP.

7. The agreement should be in compliance with all the regulations, instructions, directives, circulars and other communications issued by the State Bank and contains provision of incorporating any amendments made therein from time to time.

8. The agreement should ensure compliance of prudent practices and standard policies related to Internal Controls, Information Technology, Anti Money Laundering and Know Your Customer etc.

9. The agreement should not compromise State Bank right to terminate the agreement at any time.

POST-AGREEMENT FOLLOW UP:

1. The Exchange Companies should continuously monitor market repute and financial condition of the foreign entity to ensure that all the time during validity of the agreement, foreign entity is capable to meet its financial obligations under the agreement.

2. Foreign entity should be bound to immediately bring into notice of the company any change in laws, rules and regulations, which may effect business arrangements.

3. For any subsequent amendment in the agreement, prior approval of SBP should be ensured.

4. Foreign entity should also be required to keep EC updated about any change in its network. SBP has advised all Exchange Companies to review their existing arrangements with foreign entities and submit to SBP a copy of the revised agreements in light of the above guidelines latest by March 31, 2009.


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## Pk_Thunder

*NIT launches Rs 20 billion State Enterprise Fund*​
RECORDER REPORT
KARACHI (January 02 2009): The National Investment Trust (NIT) has formally launched the much awaited Rs 20 billion NIT State Enterprise Fund (NIT-SEF) on Thursday. This is an open-end fund and is a separate fund in all respects from the existing funds being managed by NIT, Tariq Iqbal Khan, Chairman and MD, NIT said at press conference here.

"NIT is now in a position to launch the NIT-SEF without any delay and NIT has completed all the necessary legal work, which includes signing of the agreement with the financing institutions and the approval of guarantee by the government of Pakistan", he said.

The legal work which entailed a lot of details and paper work, including the registration and approval of the fund, financing agreements, guarantee, etc has been completed. He said that the fund will starts buying soon. However, the fund will invest in only eight eligible stocks, which are OGDC, PSO, PPL, SNGPL, SSGC, KAPCO, NBP and PTCL.

He pointed out that the four institutions provided financing for the said fund. Among these financing institutions, NBP contributed Rs 7 billion, EOBI provided Rs 5 billion, State Life Corporation of Pakistan invested Rs 2.5 billion while the remaining Rs 5.5 billion were given by a banking syndicate.

He said that these financing institutions invested this amount at the rate of KIBOR+1 for three years and they are bound to not withdraw their money before the given three years time. However, NIT has the right to return their money before three years period. The government of Pakistan has given a guarantee to these financial institutions to compensate their losses, if recorded within the three years period.

He made it clear that the said financial institutions provided funds on a fix rate of KIBOR+1, and all the earnings will go to NIT. "We are bound to payback to the financing institutions on the agreed rate of KIBOR+1 on their investments in the said fund. However, all the earnings and profit on the investment of the said fund will go to the NIT", he said. Tariq Iqbal said that this fund intends to sell units to the non-resident Pakistanis after the initial operation and after the market stabilises.

"We very strongly feel that the fund, due to these stocks with strong fundamentals, would perform well and provide the necessary security to the financiers of the fund and send strong signals to the market, which is overly depressed at this point of time", he added. He said that this is the fourth fund managed by NIT. However, the NIT-SEF is a separate fund in all respects from the existing funds being managed by NIT.


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## Neo

*Govt to prefer public-private partnership in privatisation ​* 
Saturday, January 03, 2009

ISLAMABAD: The government, in its policy of privatising major enterprises, would prefer pubic-private partnership rather than selling whole units, a senior government official told The News on Friday.

The government in a major U-turn on privatisation of public units has decided to enhance workers share in privatisation and rather than selling whole units, only their managements will be sold, said the official who participated in Wednesdays briefing on privatisation to President Asif Ali Zardari.

In the privatisation drive of the previous Aziz government, workers were offered 10 per cent shares in units, but now workers shares will be enhanced to their satisfaction and also with the consent of management.

A committee has been set up to assess the exact quantity of shares to be offered to the workers, however, the official was of the view that their shares would range from 10 to 20 per cent.

About the two major companies on the privatisation list ie Qadirpur gas field and Pakistan Steel Mills, the official said they would not be sold without consultation with the management, union representatives and other stakeholders.

The government would also hold a briefing for parliamentarians on the privatisation list and with their input, the policy would be formulated, said the official.

To a question about flotation of Global Depository Receipts (GDRs) of public listed companies, the official said market conditions both internationally and domestically were not favourable and the GDRs would be issued at an appropriate time.


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## Neo

*Water, power projects for Balochistan planned ​* 
Saturday, January 03, 2009

ISLAMABAD: The PPP-led government is taking all possible steps to provide basic amenities to the people and for the development of Balochistan.

Federal Minister for Water and Power, Raja Pervez Ashraf stated this while talking to the Chief Minister of Balochistan, Nawab Muhammad Aslam Khan Raisani who called on him at his office here on Friday. Provincial Minister for Finance and Revenue, Asim Kurd Gillo and Adviser Ministry of Water and Power, Riaz Ahmed Khan were also present.

The minister said that different water and power projects with special allocations have been planned in various parts of Balochistan to meet its electricity and water requirements.

Ashraf said a rental power project of 200 megawatts is being set up at Quetta while feasibility study of four dams namely Hingol, Winder, Sukleji and Naolong has been completed by Water and Power Development Authority (WAPDA).

Construction work on the Hingol dam will start soon and after completion of the proposed four dams, plenty of water would be available for irrigation of land for cultivation, he said.

Both the minister and chief minister discussed the current power situation, future water and power projects and progress on the import of power from Iran. The minister asked the chief minister to use his good offices for recovery of long outstanding dues both from the public and private sectors.

The chief minister also discussed political, social and other matters of mutual interest for the development of Balochistan. He expressed hope that due to the allocation of special funds by the federal government, the people of Balochistan would get all the basic facilities.


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## Neo

*Clearance of power-related circular debt: President directs ministries to work out plan​* 
ISLAMABAD (January 03 2009): President Asif Ali Zardari on Friday directed the concerned ministries to devise a workable plan to clear the whole circular debt and huge money owed to private power producers by June this year. Following the direction by the President, Finance Ministry released Rs 7.5 billion for partially meeting the fuel cost for power generation.

Water and Power Minister Pervaiz Ashraf said this at a press conference along with Minister for Information Sherry Rehman after a meeting on energy crisis, chaired by President Asif Ali Zardari and Prime Minister Yousuf Raza Gilani in President House here on Friday.

The meeting was also attended by Advisor on Finance Shaukat Tarin, Advisor to PM on Petroleum Dr Asim Hussain and representative of Wapda and public sector corporations related to oil and gas, and Irsa and KESC.

Ashraf said that it was also decided to arrange 30,000 tons fuel supply per day for power generation purposes. He said that it was decided to provide 50 million cubic feet additional gas and 8,000 tons fuel oil to KESC to increase its power generation capacity. This would lift the burden from Wapda which would thus be able to inject several hundred megawatts in the national grid supplies to KESC.

The meeting decided that, subject to the agreement of Punjab government, Indus River System Authority (Irsa) should immediately release additional quantities of water to augment hydroelectric generation.

Ashraf said that circular debt worth Rs 400 billion was the main bottleneck that had resulted in bulk of problems, and added that the government was still providing Rs 10-12 billion per month subsidy for power consumers. He said that Pakistan Electric Power Company (Pepco) was to receive Rs 70 billion dues from Federally Administered Tribal Areas (FATA) and Rs 80 billion from Karachi Electric Supply Company (KESC). Pepco provides 700 mw per day electricity to KESC.

The Minister said that former government had capped the prices for political gains which resulted in huge circular debt. He said that when the present government had the pending dues of Rs 158 billion that were to pay for power generation. He said that former government had not produced even a single power unit.

He said that at present the country has 6500 mw power from all sources against the national demand of 11000 mw with a shortfall of 4500 mw followed by decline in water flow, slump in oil and gas supplies needed for thermal generation, forcing load shedding in the country. He pledged to add 3500 mw power in the national grid station by December 2009 that would help eliminate the load shedding in the country.

He said that water inflow was historically low as it was 36 percent less than the flow during the corresponding period of last year causing a huge drop in hydro generation, and added that the decrease in fuel supplies had caused a shortfall of 2700 mw of power. In January last year there was a shortfall of 3600 mw of power which had now aggravated to 4500 mw.

The Minister said that during the meeting the President directed to end load shedding of natural gas for domestic consumers, besides adopting short and long term measures to meet energy shortfall in electricity. The President said it was imperative that problems of the people are not compounded by resorting to gas load shedding.

During the meeting, convened by the President to discuss the situation arising out of shortage of petrol, gas and electricity in the country, the President called for taking innovative steps to meet power shortage on long term basis as was done by the PPP government in mid-90s, the minister said.

He said that the President advised the government to convene another meeting this week for working out a long term solution to the problem. The President said the meeting should also examine the proposed petroleum policy to provide incentives to entrepreneurs to explore oil and gas.

Sherry Rehman said that during the meeting a formula was chalked out to tackle the problem of energy crisis, and added that 2000 mw electricity would be added to the existing national power grid station. She said that due to water shortage and canal closure in Punjab the hydropower generation had dropped, leading to a series of load shedding. She said that the meeting decided that there would be no gas load shedding for the domestic consumers across the country.

The President said that a number of Chinese companies had shown interest in oil and gas exploration and could be approached for this purpose. He said that measures agreed upon would provide a short term immediate solution but there was a need for devising strategy for the mid and long term solution of the problem.

According to her, the President said that special meeting on energy would be convened this week, which should also address the issue of circular debt in the power sector and recommend ways to address it.

The minister for water and power informed the meeting that nearly 158 billion rupees debt was left unpaid by the previous government, which it owed to power producers and oil companies.

The Advisor to the Prime Minister on Finance said that his ministry would devise plans within the stipulated time. The meeting was informed that these measures will result in immediate improvement in the power supply situation, at least in the short term.


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## Neo

*FPI outflow of $37.872 million witnessed​* 
KARACHI (January 03 2009): A fresh outflow of 37.872 million dollars of foreign portfolio investment (FPI) from the country's equity market was witnessed during the outgoing week ended January 02, 2009. According to the National Clearing Company of Pakistan Limited (NCCPL) data, a massive outflow of 23.474 million dollars of this mode of investment was witnessed only on the last day of the week.

The data shows that the foreign investors withdrew 2.977 million dollars on Monday, 6.973 million dollars on Tuesday, 3.533 million dollars on Wednesday, 0.915 million dollars on Thursday and 23.474 million dollars on Friday.


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## Neo

*SPI inflation surges by 21.08 percent​* 
ISLAMABAD (January 03 2009): The SPI inflation surged by 21.08 percent on week ending on January 1 over the same period of last year, but it has declined by 0.58 percent during the week, according to statistics released by the Federal Bureau of Statistics (FBS) here on Friday.

The weekly inflation measured through SPI has declined marginally during the week with official figures, showing it decreasing from 23.61 percent previous week to 21.08 percent on week ending on January 1.

With 0.58 percent decline, the combined SPI has come down from 205.68 percent to 204.49 percent during the week. The dearness for the lowest income group up to Rs 3,000 was recorded 20.52 percent during the week followed by 21 percent for group ranging between Rs 3,001 and Rs 5,000 and 21.81 percent for families bracketed in Rs 5001 to Rs 12, 000 income group.

The SPI was recorded 21.03 percent for the families above Rs 12, 000 monthly income group. The SPI bulletin, based on data of 53 items collected from 17 urban centres showed increase in prices of 17 essential commodities, decline in 13, while the prices of 23 commodities remained stable during the week.

The price of 11-kilogram cylinder of liquefied petroleum gas (LPG) has increased from Rs 707.509 to Rs 788.38 during the week; sugar from Rs 34.68 to Rs 36.10; chicken (farm) from Rs 86.73 to Rs 89.97; gur from Rs 38.59 to Rs 39.84; gram pulse (washed) from Rs 57.37 to Rs 59.10; vegetable ghee (loose) per kilogram from Rs 90.36 to Rs 91.96; bananas (dozen) from Rs 33.55 to Rs 34.02; kerosene (liter) from Rs 63.62 to Rs 64.18; tea (prepared) per cup from Rs 8.38 to Rs 8.44, electricity bulb (60 wats) each from Rs 14.31 to Rs 14.40, firewood (40 kilograms) from Rs 268.05 to Rs 269.52; mash pulse (washed) per kilogram from Rs 75.59 to Rs 75.92; masoor pulse (washed) from Rs 128.01 to Rs 128.47; mustard oil per kilogram from Rs 141.22 to Rs 141.69.

Average prices of the following 13 items that registered decrease included onions per kilogram: Rs 24.18 from Rs 27.27; tomatoes per kilogram: Rs 25.41 from Rs 27.71; tea packet 250 gm: Rs 100 from Rs 107.65; egg hen (farm) per dozen: Rs 66.54 from Rs 71.42; vegetable ghee (2.5 kilogram tin): Rs 331.47 from Rs 355; cooking oil (2.5 litre tin): Rs 351.47 from Rs 375.00; potatoes per kilogram: Rs 17.24 from Rs 17.56; wheat average quality per kilogram: Rs 24.55 from Rs 24.75; Red chillies per kilogram: Rs 136.61 from Rs 137.73; moong pulse washed per kilogram: Rs 48.05 from Rs 48.41; rice basmati broken per kilogram: Rs 45.03 from Rs 45.33; rice irri-6 per kilogram: Rs 36.50 from Rs 36.70; and wheat flour average quality per kilogram: Rs 25.92 from Rs 26.01.


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## Neo

*Load shedding adversely affecting investment: Nasreen​*
KARACHI (January 03 2009): Acting City Nazim Nasreen Jalil on Friday said that Nazim Karachi Syed Mustafa Kamal had worked day and night to create better and conducive environment for investment opportunities in Karachi but the continuous load shedding of electricity and gas was adversely affecting the investment activities in the city.

She expressed these views while addressing a 82-member delegation of National Security College/University Islamabad at Civic Center here on Friday. The acting Nazim said the present local government system has proved beneficial for Karachi.

The middle class leadership has shown excellent performance in the resolution of citizens problems. Not only the World Economic Forum acknowledged Karachi as a fast emerging mega city but City Nazim Syed Mustafa Kamal was also declared as among worlds best mayors at the moment.

Nasreen Jalil said the people in Karachi have felt positive and refreshing change due to the development works carried out over the last three years. However, she added the city is being controlled by 13 different organisations and City Nazim has only 31 percent of total city area under his control. She said that being a most important city of the country, Karachi must not be deprived of its funds at any level.

She said Haq Parast leadership has worked in city's every area without any discrimination and for the first time in the history, potable water was supplied to those areas, which were always deprived of such a basic need of life. The city government, she said, has paid special attention on education and health sectors and upgraded CDGK-run hospitals. She said Nazim Karachi introduced a 24-hour working culture in Karachi.

Nasreen Jalil pointed out that due to having control on only 31 percent of Karachi, the city government was presently facing many challenges and therefore all the civic agencies must be brought under one command.

Speaking on the occasion, leader of the delegation Rear Admiral Tayyab Ali Dogar said acknowledged that city government has rendered exemplary performance and the transport problems were solved rapidly in Karachi. He said that a visible change has been felt in Karachi due to the development works performed by Haq Parast leadership in last three years. DCO Karachi Javed Hanif thanked the delegation for visiting City Government Karachi.


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## Neo

*'Pakistan's vending industry making auto parts of highest world standard'​*
M RAFIQUE GORAYA

LAHORE (January 03 2009): Pakistan's vending industry is highly developed and modernised as it manufactures automotive parts and accessories of international standard. This was disclosed by former Chairman of Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) M. A. Malik while talking to Business Recorder here on Friday.

He said that the quality and the standard of parts and accessories, manufactured by Pakistani vendors, was monitored and approved by the international licensees and principals. Malik said it was a matter of pride and prestige for Pakistan that the local tractor parts were being exported to European and American countries because of their high quality and standard.

He lamented that some elements were undermining the quality of Pakistani manufactured products for their petty motives and benefits. "The industrialists have invested billions of rupees in over 800 vending units to make Pakistan self-sufficient and exporter of tractors, cars and trucks," he added. About the reported short supply of tractors in the local market, Malik said the tractor manufacturers had already contradicted such malicious reports.

"In their meeting with Federal Industries Minister Manzoor Wattoo recently, tractor manufacturers made it clear that anybody could buy any number of tractors from the market," he added. Malik said the local manufacturers and vendors had the capacity to assemble at least 80,000 to 100,000 tractors of the highest quality per annum, and if someone wanted to buy 100 locally manufactured tractors, he should contact him.

Malik said that the price of the Pakistan-made tractor was the lowest in the region and the industry was saving millions of dollars in the foreign exchange. He said after huge investments in the local automotive parts and accessories manufacturing units, they were in a position to provide auto parts to 0.5 million cars, trucks, tractors etc per annum.

He said the import of tractors at almost double the price of the locally manufactured tractors in foreign exchange, hence it would be a disservice to the local industry and hundreds of thousands of skilled, semi-skilled and other workers who get their livelihood from this essential industry. He said instead of relying on imports, the government should implement a plan for hundred percent deletion and transfer of technology of auto industry.


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## Neo

*200 megawatts rental power project to be set up in Balochistan: minister​*
ISLAMABAD (January 03 2009): Federal Minister for Water and Power, Raja Pervez Ashraf has said that federal government is taking all possible steps to provide basic amenities to the people and development of Balochistan. He said this while talking to Chief Minister of Balochistan, Nawab Muhammad Aslam Khan Raisani who called on him here on Friday in his office.

The Provincial Minister for Finance and Revenue, Asim Kurd Gillo and Adviser Ministry of Water and Power, Riaz Ahmed Khan were also present. The minister said that different water and power sector projects with special allocations have been planned in various parts of Balochistan to meet electricity and water requirements. Raja Pervez Ashraf said a rental power project of 200 MW is being set up at Quetta while the feasibility study of four dams namely Hingol, Winder, Sukleji and Naolong has been completed by Wapda.

Construction work on Hingol dam will be started soon. He said that after completion of proposed four dams, plenty of water will be available for irrigation purpose. The minister and the Chief Minister discussed the current power situation, future water and power projects and progress of import of power from Iran.

The minister also asked the Chief Minister to use his good offices for recovery of long outstanding dues from public and private sectors. The Chief Minister also discussed political, social and other matters of mutual interest for development of Balochistan with the minister.

He expressed the hope that with allocation of special funds by the federal government, the people of Balochistan will get all basic facilities. He thanked the minister for setting up of rental power projects and early construction of dams.


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## Neo

*Earthquake-hit zone: 617 high power transformers handed over to AJK​*
MIRPUR (January 03 2009): A sum of Rs 110 million 617 high power transformers imported from China, were handed over to AJK Electricity Department for installation in earthquake-hit zone in AJK under the ongoing reconstruction and rehabilitation program in the affected areas.

The transformers having strength of 50, 100 and 200 kilowatt were delivered to the state Electricity department under the Earthquake Emergency Assistance Programme at a ceremony held here on Thursday evening, says a press release issued by the State earthquake Reconstruction and Rehabilitation Agency.

The transformers will be supplied to earthquake hit districts including Muzaffarabad, Bagh, Rawalakot and Sudhanoti for installation to ensure the smooth supply of electricity to the consumers. Head of State Earthquake Reconstruction and Rehabilitation Authority (SERA) Dr Sayed Asif Hussain and other officials of the AJK Electricity Department were present on this occasion. Speaking on the occasion the SERA Chief Dr Sayed Asif Hussain said that it was the first-ever arrival of the latest imported power equipment in such a big quantity in Azad Jammu and Kashmir.


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## Neo

*Power situation likely to improve by end of January​*
ISLAMABAD (January 02 2009): Director General Pakistan Electric Power Company (Pepco) Tahir Basharat Cheema on Thursday said that the power situation is likely to improve in the country by the end of January when the present canal closure is expected to end.

Around 2,000 MW electricity would be sustained within month, which would ease the power position and expressed the hope that load shedding hours would also be decreased from the mid of this month, DG Pepco said while talking to APP. He said 300MW Chashnup Power Plant at Chashma is also expected to join in and would commence generation from January 17, which was closed due to maintenance work.

He said the company is in the process of adding fast track power to the system in addition to the up-coming new power generation projects for 2009 and 2010. He said now the canal closure has taken place, all efforts are underway to compensate for the loss of hydro generation through full use of Pepco's own Generation Companies (GENCOs) and the Independent Power Producers (IPPs), which are moving ahead at full steam.

Additionally, Pepco has to arrange alternate power against 550MW of lost power due to continued non-availability of gas to the two rental plants of 250MW capacity located at Bhiki and Sheikhupura (near Lahore), the 210MW Gas Turbine Power Station (GTPS) at Faisalabad and 90 MW machines of the Kotri Power Station near Hyderabad.

He said in order to resolve the power crises 546 MW electricity has been added with system during 2008, which includes 300MW on account of efficiency enhancement of existing Pepco GENCO plants, 81MW Malakand-III hydro project and 165MW Attock power and others which have already achieved financial close etc. The hydro generation with an installed capacity of 6500MW has plummeted sharply from the last two week due to canal closure and reduction of water releases from Tarbela and Mangla reservoirs.

Commenting on the situation, the DG Pepco said that the situation has led to a power shortage of 1500MW during early day time, nearly 2500MW in the mid day and early evening and 3300MW during the peak hours of 1700 to 2300 hours. He appealed electricity customers to conserve energy in order to reduce the quantum of power deficits thereby reducing load shedding. He also appealed the customers to use power sparingly and to ensure that not even one light point or bulb is being unnecessarily used.


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## Neo

*Fog will have positive impact on wheat crop​* 
MULTAN (January 03 2009): The current foggy weather would have a positive impact on the wheat crops, agriculturists told here on Friday. They said that the fog would not only have a positive impact on the wheat crop but it would also help in getting better yield. However, they feared that unavailability of water could affect the crop.

Director and Chief Co-ordinator Farmers Associates Pakistan Dr Muhammad Tariq Buccha said that to observe the affects of fog, it is very necessary that one should know about the early and late sowing of wheat. He said that in such weather, late sowing of wheat helps, as the colder the temperature is, the better the yield would be.

"Fortunately, this year wheat was sowed late and current weather is better for the crop," Bucha said adding besides good weather, other factors are very negative. "The fuel is getting scarce and running tube wells and watering crop is difficult," he said. Bucha said that the current weather impacts the vegetables negatively. "The potato and other vegetables could spoil from the intense cold," he added.

President of Kissan Board Punjab Khurshid Kanju said that tillering (grow shoots in the form of stools or tillers) of wheat would get better. He said that the government should concentrate on other factors like availability of water and fertilisers. The government has fixed wheat target at 25 million tonnes with a support price of Rs 950 per maund. The wheat was sowed late in majority of areas of Punjab due to later crushing of sugarcane crop and delay in picking of cotton.


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## Neo

*Pakistan explores new seafood markets​* 
KARACHI (January 03 2009): After failing to mend fences with EU, Pakistan has now explored new substantial markets - Egypt, Lebanon, South Africa and Turkey, for seafood export. As a result, exports rose by over 16 percent during July-November period of the current fiscal year, as compared to exports during the same period last fiscal year 2007-08, exporters told Business Recorder on Friday.

Middle East also has emerged as a potential seafood market that has enhanced the country's seafood export, they said and added that if this tempo also continued for EU, the export could touch $250 million. With a view to halt the falling trend in the fisheries sector, search of new markets has become imperative.

"Ban on the country's seafood export is unlikely to be lifted for some more years because the concerned government authorities are not taking interest, they said. Pakistan exported $21.558 million, worth of sea food in November 2008 as compared to export of $19.870 million worth in November 2007, depicting a rise of 1.688 million or 8.50 percent.

Similarly, the country registered a robust growth of $11.56 million or 16.18 percent during the July-November period of the current fiscal year. The country exported seafood worth $83.001 million during the July-November 2008 period as compared to export of $71.441 million during July-November period of the last fiscal year, 2007-08.

But, on a monthly basis, the country's seafood export was reduced by $5.172 million or 19.35 percent in November 2008 as compared to exports in October 2008 ($26.730 million), according to the Federal Bureau of Statistics. Talking to Business Recorder, former Chairman of Pakistan Seafood Industries Association (PSIA) Sardar Muhammad Hanif Khan said that Pakistani seafood products are cheaper than that of other exporting countries to EU.

But, more expensive than seafood items of China and Japan. He said that these newly explored markets are good for Pakistan and efforts are under way to make it more lucrative to scale down the losses incurred after the EU put its ban.

"If these new export venues -Egypt, Lebanon, South Africa and Turkey become stable for us then there would be no loss from losing the bigger market, EU," he said. Pakistan is benefiting from the other aspect as seafood sent to these new markets is re-exported to EU and other developed countries.

Hanif Khan said that the prospects are dim for the removal of EU ban, as the government's concerned agencies, like Karachi Fish Harbour Authority and Marine Fisheries Department are lacking in expertise and planning and the will to complete the assignments of modifications. Almost a decade has passed that there is no progress on the modification project, although the government has announced huge amounts for the relief of local fishermen, he added.


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## Neo

*Tarin must also focus on microeconomic policy​*
The Advisor to the Prime Minister on Finance, Shaukat Tarin, has revealed that the government expects one billion dollars within the month - half a billion dollars from China by the 4th or 5th of January and another half a billion dollars from the World Bank.

This inflow, after the release of the first tranche of the International Monetary Fund's (IMF) standby facility agreed last month is expected to further ease the pressure on the balance of payments position as well as the country's foreign exchange reserves. And, as part of the IMF conditionalities, the government of Pakistan is concurrently on a reform agenda, which includes no borrowing from the State Bank of Pakistan till the end of the current fiscal year, eliminating the inter-corporate debt which would ease the pressure on the supply of electricity somewhat and other monetary policy steps designed to reduce the impact of inflationary pressures and oil the wheels of production at the same time.

Revenue generation has been handsomely assisted by the government charging a hefty petroleum development levy as well as general sales tax on oil and products that had allowed it to generate billions of rupees by not passing on the over 70 percent decline in the international price of oil to domestic consumers. This, in turn, would bring the budget deficit to sustainable levels which would translate into improved macroeconomic indicators in the coming months. One would hope that the government would focus on reducing non-development expenditure as opposed to development expenditure to further reduce the budget deficit.

Be that as it may, the economy is likely to be out of the woods within the next year and half and with the IMF monitoring the process it is likely that macroeconomic indicators will further improve. Therefore, it is imperative at this stage for the Special Advisor on Finance to turn his attention to microeconomic aspects of the economy that require his immediate attention.

First and foremost, Tarin must focus on promoting private sector activity both in the industrial as well as the agriculture sectors. The government, civilian and military, needs to accept an obvious fact: that private sector can engage in the same activity more profitably and therefore for the good of the economy they need to get out of the business of production. In this context, it is necessary to be patient with privatisation, which maybe deferred till such time as there is a vibrant global financial market, or transfer management to the private sector in order to improve productivity.

Tarin needs to consult with all the stakeholders and formulate a policy plan that would remove the impediments to private sector activity thereby not only providing greater employment opportunities but also the capacity to minimise the impact of halving of output that is forecast for Pakistan in the coming year. To raise productivity it is critical to provide energy and to achieve this objective the government has to act on a war footing. As matters stand today, the India-Pakistan-Iran gas pipeline has, once again, been held hostage to a failure to agree on pricing while accessing energy from Central Asia remains dicey given that Afghanistan continues to be in the throes of a civil war.

In this context it is necessary for Tarin to focus on reducing the burgeoning inter-corporate debt. This, in itself, would ease some of the short-term supply issues. Medium and long term plans shall also to be shared with the people of this country so that they are aware that action in this regard is imminent.

Social safety nets as provided by the Benazir Income Support Programme are not likely to be adequate given the high rate of inflation. At the same time, 2008 was marked by burning of schools in Taliban areas coupled with failure to immunise children against polio and other diseases.

It is, therefore, imperative for Tarin to provide large chunks of public money for education and health - with the objective of providing education and health care to all within the next ten to fifteen years. This would not only resolve many health related issues associated with illiteracy but also help ease the significant law and order problems in the area. In addition, micro finance must be supported as much as possible in an effort to ensure that the unemployed, have recourse to assistance that can be translated into higher productivity.


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## Neo

*Power from Iran​*
As Pakistan struggles to grapple with a severe power crisis, the visiting Iranian Deputy Minister for Energy, Abbas Aliababi, and a representative of our Ministry of Water and Power signed an agreement on Wednesday to increase co-operation in the power sector and to expedite implementation work on the existing projects.

As per the agreement, an Iranian company will complete the transmission line for the import of 1000MW electricity into Pakistan by the end of 2009 and also carry out feasibility study for another transmission line for a 1000 MW project. Notably, Iran is to send to this side electricity generated at its gas-based 1000 MW plant close to Pakistani border near Zahidan. Possessing one of the world's largest gas reserves, Iran is expected to sell this electricity at a considerable cheap rate.

A particularly noteworthy aspect of the agreement is a sense of urgency to make progress, and Iran's interest in investing in different areas of the power sector. To ensure that the agreed projects move forward expeditiously, a ministerial level committee is to fix timelines for the projects' completion and remove any impediments. Towards that end, the two sides also named their respective nominees who would act as focal persons to oversee implementation work. In a further show of its commitment to increase co-operation with Pakistan, the Iranian government undertook to support the 130MW Sehra Hydropower project, being developed by a private Iranian company.

As important as these projects are for this country, they are but a small fraction of the possibilities that remain to be explored. It needs to be recalled here that two years ago ie, in January 2007, when an Iranian delegation led by the chief of Iran's Foreign Investments Company visited Pakistan, there was some talk of starting joint ventures. The then minister for privatisation and investment, Zahid Hamid, had vowed to open a new era of strong economic relations between Pakistan and Iran.

That being a time when the government claimed the economy to be growing at an unprecedented fast rate of 7-8 percent, the Iranian visitors evinced interest in the power sector, petrochemicals and some other areas as well. But nothing much followed, probably, because of the government's short-sightedness, inflated confidence, and over reliance on the US, which was working overtime to isolate Iran both politically and economically.

Much has changed since then. There is an elected government in place that faces a serious economic crisis, while foreign investments are at the lowest ebb. It is good to note, therefore, that this time the Iranian officials' hosts tried to attract their interest with liberal incentives for investments in hydropower projects having a total capacity of about 16000 MW requiring financing to the tune of some $26 billion by 2025.

The proposed projects include coal-fired power plants of 6000MW capacity scheduled for completion by 2015 at a cost of $7 billion, and an unspecified amount for another 1000 MW from alternate energy generation sources by the same date. An additional $4.7 billion is needed for rehabilitation and reinforcement of related systems for new germination plants. Iran said it was interested in all these projects, and that it would see what the Iranian companies, both in the private and public sectors, could do to avail the investment opportunities that have become available. Islamabad must do whatever is necessary to keep that interest alive and to translate it into fruitful economic co-operation with Iran. For building and strengthening such co-operation will bring us long term economic as well as political gains, and may lead to better and bigger things in terms of regional co-operation.


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## Neo

*A way out of IPI 'dilemma'​*
January 01 2009: Iran will sign a gas deal with Pakistan even if India - the third party to the IPI pipeline project - walks out, Iranian Oil Minister Gholamhossein Nozari has been quoted by an Iranian news agency as saying. Nozari's remarks come against the backdrop of arrival in Tehran of a Pakistani delegation for two-day talks on the issue.

The pipeline project has suffered lengthy delays, largely due either to differences over tariff or because of endless foot-dragging by India, apparently under pressure from the US not to sign any such pact with Iran. (India has since been rewarded by the US with a civilian nuclear pact.) A second factor in India's dilly-dallying has been its ingrained wish to block any benefit, financial or otherwise, from accruing to the energy-starved Pakistan. It will be recalled that India had stayed away from the pipeline talks held in Tehran in September this year on the plea that it wished to settle the transit fee issue with Pakistan on a bilateral basis first, which was clearly an attempt to further delay the project.

According to available details, the IPI pipeline would initially carry 60 million cubic meters of gas daily to Pakistan and India, to be equally divided among them. The pipeline's capacity would be later increased to 150 million cubic meters. Iran says it has completed 18 percent of the work for the pipeline to bring gas from its South Pars gas-field to Pak-Iran border, while Pakistan has yet to initiate work on the 1,000-km stretch to link Iran with India.

The project has been kept in the limbo of procrastination by India for so long that Iran has finally signalled its readiness to go ahead without India's participation, which we believe is a propitious development because it will obviate any chance of India playing its old obstructionist tricks. The estimated cost of the mega project has meanwhile escalated to $7.5 billion, which will be an additional burden to be shared by the contracting parties. Originally conceived as the Iran-Pakistan project way back in 1993, the pipeline was later proposed to be extended to India, which has since become the main stumbling block in progress of the pipeline.

The initial capacity of the pipeline will be 22 billion cubic meters of natural gas per annum, which is expected to be increased later to 55 billion cubic meters. As per the original timeframe, starting in 2009 the project was scheduled to be completed by 2012. But now with India practically out of the loop if Iran goes ahead with its resolve, the completion date of the project too will have to be considerably extended. The euphoria the project had initially generated in the region can be gauged from the fact that it was dubbed by many as a "peace pipeline" because it would have created shared stakes in maintaining peace in the region, which would have helped ease tensions.

Natural gas has meanwhile come to play a critical role in the region's industrial sector, as most of the industries which were previously using fuel oil have gradually converted to natural gas. In Pakistan the major consumers of gas now include cement, power and fertiliser industries, which are the key sectors of the economy. The widening industrial application of gas and its growing availability crunch in Pakistan has made it absolutely essential for the government not only to undertake new gas exploration projects, but also to popularise gas conservation methodologies in the country.

If Iran finally goes ahead with the pipeline project without India's participation, and if India decides at some future date to join the project, Pakistan will obviously be the common denominator, which will put it in a dominant position. From Pakistan's perspective, the pipeline project has vital significance because apart from helping it meet its own energy requirements it will bring in handsome financial dividends in the shape of annual royalty.

However, India is said to have reservations over the project because of the security situation in Balochistan through which it will pass. (Incidentally, the plan to lay Turkmenistan-Afghanistan-Pakistan (TAP) pipeline too could not materialise because of the tenuous security situation in Afghanistan.) As one analyst has put it, Iran, being South Asia's immediate neighbour, has an edge in terms of natural gas reserves, while Pakistan is ideally located to benefit from these reserves. As India has become a major obstacle in implementation of the IPI project, Pakistan should team up with Iran to complete the Iran-Pakistan segment on a priority basis. This will help Pakistan meet its immediate energy requirements.


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## Neo

*No gas load shedding for domestic users: Zardari​*
** President sanctions Rs 7.5bn for fuel to produce more thermal power
* Asks IRSA to release more water from dams
* Seeks end to energy sector circular debts by June​*
ISLAMABAD: President Asif Ali Zardari ordered an end to gas load shedding for domestic consumers on Friday, during a meeting to review the prevailing energy shortage.

Zardari, who chaired the meeting along with Prime Minister Yousuf Raza Gilani, said gas load shedding would compound the publics problems. He called for innovative measures to meet the energy shortage.

Water and Power Minister Raja Pervez Ashraf, Economic Adviser Shaukat Tareen, Petroleum Adviser Dr Asim Hussain, Information Minister Sherry Rehman and representatives from WAPDA, IRSA, KESC and public sector energy corporations attended the meeting.

Raja Pervez Ashraf told the participants Pakistan was facing a net shortage of 4,500 megawatts of power after a decrease in the outflow of water from dams and a slump in the oil and gas supplies.

As part of immediate measures to lessen the impact of the shortage, the government decided to increase the outflow of water from dams subject to approval from Punjab, to provide 50 million metric cubic feet of additional gas and 8,000 tonnes of oil to the KESC, and immediately release Rs 7.5 billion to pay for the additional fuel, Information Minister Sherry Rehman said after the meeting.

Increased power production by the KESC will lessen the burden on WAPDA, which has been supplying Karachi with several hundred megawatts of power from the national grid.

Ashraf said the immediate crisis would subside after January 22, when the irrigation canals re-open.

Sources privy to the meeting said the power companies had placed a Rs 15 billion requirement for the next two months, but were told excessive borrowing could have a negative impact on the ongoing $7.6 billion Stand-By Arrangement agreed with the International Monetary Fund (IMF).

A proposal for subsidising the January 1 gas tariff increase was rejected because the policy framework agreed with the IMF requires the government end to all energy-related subsidies by June 2009.

Zardari asked the economic adviser to put together a plan to repay the Rs 160 billion debts that the government owed to independent power producers and oil companies and end the circular debts in the sector by June.

He convened another meeting on January 5 to discuss long-term solutions to the crisis, arranging finances for debt repayments and fuel, and examining a proposed policy to provide incentives to entrepreneurs to explore oil and gas in the country.

A number of Chinese companies had shown interest in exploring oil and gas in Pakistan, he said.


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## Neo

*Rs 20bn bailout fund sparks hope in stock market​*
KARACHI: A ray of hope for good times was sparked after a long and chaotic period in the Karachi Stock Exchange (KSE) on Friday when it was finally able to settle in the positive territory.

Stock analysts attributed the bullish sentiment in the market to the launching of NIT-SEF worth Rs 20 billion aimed at investing in the blue chips.

After losing 35 percent since the removal of floor on December 15 2008, the benchmark KSE-100 index was up by 40.39 percent over the last trading session.

Also the trading volumes, which dropped to a few thousands during the floor period, were substantially higher as 210 millions shares were traded. This is three times more than last trading session, when 75 million shares were traded.

"It was quite encouraging and heartening to see the surfacing of bullish activity in the market, which went through its worst times in the history," a stock investor commented.

Investors and brokers were jubilant on the recovery of the market, which lost more than 10,000 points since its peak level of 15,676 some eight months back.

"We are hopeful that the positive trend in the market will prevail in the coming sessions as all the disputes and issues concerning the stock business have been settled," according a number of brokers and directors of KSE.

"We hope that the harsh and jittery times of 2008, which was the worst year for the stock market, are over and the market would gain its lost momentum again."

Only the news of the said fund has pumped in some energy in the market and analysts believe as soon as the fund starts investing in the market the gains would be much higher.

Although, NIT has not given a specific date for investing in the stock market, the general consensus was that it would most probably coming into action by the next trading session on Monday.

"Since the issues have been settled and the levels are quite attractive, buying spree could be seen in the market during the next week," Dawood Jan Mohammad, former director KSE noted.

Analysts, however didn't rule out some correction in the coming sessions, but that would not be a source of concern and it is expected that the market would absorb this loss in the future.

Among the top volume leaders, significant buying activity was seen in the scrips, which are included in the list of companies, for which Rs 20 billion NIT-SEF would be utilised.

OGDCL, being the heavyweight of the stock market was the most-sought after scrip in today's session as it's 28 million shares changed hands during the day.


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## Neo

*Govt to get additional 1,000MW power from Iran: Ashraf​*
ISLAMABAD: The government is trying to obtain another 1,000MW power from Iran as soon as possible, as the existing power generation capacity of the country is not sufficient enough to meet the domestic requirements.

Federal Minister for Water and Power Raja Pervez Ashraf expressed these views on Friday during a chat with journalists after holding a meeting with Balochistan Chief Minister Nawab Muhammad Aslam Khan Raisani here in the Ministry of Water and Power. The minister said that electricity was not a commodity to import, but needs to be produced domestically. About the current ongoing frequent power break down, he said it was due to shortfall in hydel power generation. The flow of water from Tarbela and Mongla dams had been stopped due to desilting process initiated by the government so as to improve water availability for irrigation purposes. The current power break down in the country would be totally removed by the end of January after completing the desilting process. However, during peak times in summer season, the minister said the country would again witness power shortfall problems.

The power shortfall would be overcome after December 2009.

The government also finalised the import of 1,000MW from Iran and for another 1,000MW negotiations were in progress with Iran. About the cost of imported power from Iran the minister said that it would be equivalent to the existing electricity prices. He said the government also succeeded in importing 40MW from Iran for Gwadar Port.

Earlier, the minister said that the federal government was taking all possible steps to provide basic amenities to the people and for development of Balochistan.

He said this while talking to the chief minister of Balochistan who called on him in his office. Provincial Minister for Finance and Revenue Asim Kurd Gillo and the Adviser to the Ministry of Water and Power, Riaz Ahmed Khan were also present. The minister said that different water and power sector projects with special allocations had been planned in various parts of Balochistan province to meet the electricity and water requirements.

He said that a rental power project of 200MW was being set up in Quetta while the feasibility study of four dams Hingol, Winder, Sukleji and Naolong had been completed by Wapda. Construction work on Hingol dam would be started soon.


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## Neo

*Manufacturing shrinks again​*
MUMBAI: Indian manufacturing activity contracted for the second consecutive month in December to its lowest in more than 3-½ years as the impact of the global slowdown on Asias third-largest economy deepened, a survey showed on Friday. The ABN AMRO Bank purchasing managers index (PMI), based on a survey of 500 companies, fell to a seasonally adjusted 44.4 in December, falling for the fourth consecutive month to its lowest since the survey began in April 2005 and below Novembers 45.8. A reading above 50 signals economic expansion while a figure below 50 suggests contraction. Manufacturing makes up about 16 percent of Indias gross domestic product.


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## Neo

*Farmers to get 0.4m tons urea at cheaper rates ​*By Mubarak Zeb Khan 

Friday, 02 Jan, 2009

ISLAMABAD: The government will distribute 400,000 tons of subsidised urea among the farmers in the next couple of weeks for maintaining prices at the current level so as to avoid the impact of fertiliser shortage on agricultural output.

A source in the ministry of industry and production told Dawn on Thursday that six ships carrying urea fertiliser have already reached at Karachi and Gwadar ports, while the remaining ships will arrive soon.

The total urea to be imported stood at 300,000 tons for distribution among farmers at subsidised rate besides local procurement of 350,000 tons from domestic urea producing companies.

According to the source, so far only 100,000 tons of urea from domestic manufacturers has been procured leaving a large quantity of 250,000 still waiting to be procured from the local manufacturers. The payment for the local purchase has also been allocated and the total procurement is expected to be completed by early next February, the source added.

Minister for Industries and Production Mian Manzoor Ahmad Wattoo convened an emergency meeting on the distribution and import of urea here on Thursday. It was also attended by Federal Minister for Food and Agriculture Nazar Mohammad Gondal.

Punjab Agriculture Minister Malik Ahmed Ali Aolak and parliamentary secretary, ministry of industry and production Pir Haider Ali Shah, besides the owners of fertiliser producing companies were also present at the meeting.

An official statement issued after the meeting said that up to January 15, the 300,000 tons imported urea would be transported into the country for distribution among the local farmers.

While for the local procurement of 350,000 tons of urea the National Fertiliser Corporation (NFC) and Utility Stores Corporation (USC) have arranged transportation and warehousing.

Mr Wattoo directed the concerned officials that transportation of urea should be enhanced so that demand of farmers should be met in time. He said black marketing of urea would not be tolerated if anybody found in this game would be penalised.

He directed the chairman NFC and MD Utility Store Corporation to work day and night to ensure supply of urea at the doorsteps of the farmers. He also directed the NFC management to obtain 350,000 tons (50 per cent local urea production) from the local manufacturers up to Jan 15 for which orders and payment be released immediately.

He further said to monitor the entire system of distribution, transportation and import of urea a committee has been formed at the federal level. Additional secretary industries will head the committee with members, including additional secretary agriculture, Punjab and Sindh secretaries of agriculture departments, MD USC and chairman, NFC and the parliamentary secretary.

A tehsil level committee has also been formed to monitor distribution of Urea in tehsils and districts. He described that MNA, MPA, and USC area manager, NFC representatives, local tehsildar and officers of provincial agriculture departments will be members of these tehsil level committees, which will ensure proper distribution of urea among farmers on control prices.

Mr Wattoo said that the provincial governments should also ensure obtaining remaining 50 per cent of urea from the local manufactures for distribution among farmers through private dealers. Stern action would be taken if any dealer found involved in black marketing, he added.


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## Neo

*Pakistan Starts $250 Million Fund to Prop Up Stock Market  ​*
Jan. 2 (Bloomberg) -- National Investment Trust, Pakistans biggest state-owned investment company, plans to buy stocks through a 20 billion rupee ($250 million) fund to stabilize the market. The Karachi 100 Index posted its first gain in 14 days.

The fund is ready now and will start activity very soon, Tariq Iqbal Khan, managing director of National Investment, also Pakistans biggest investor, said in a phone interview today. Our responsibility is to protect our investors interest first, and as consequence, it is expected to support the market.

The fund will invest in eight stocks including Oil & Gas Development Co., Pakistans biggest exploration company, Pakistan State Oil Ltd., the largest fuel supplier, and Pakistan Petroleum Ltd., the No. 1 gas producer.

Pakistans stocks fell for 13 days after the exchange lifted the trading limit last month that had prevented the key index from falling below its Aug. 27 level. The index has slumped 36 percent since the restriction was removed. The measure gained 1.5 percent today.

National Bank of Pakistan, the countrys biggest lender by assets, Employees Old&#8209;Age Benefits Institution and State Life Corp. of Pakistan are among investors of the fund.

The so-called State Enterprise Fund may also invest in Sui Northern Gas Co. and Sui Southern Gas Co., the countrys two- largest gas distributors, Kot Addu Power Co., Pakistans biggest non-state electricity producer, Pakistan Telecommunication Co., the nations main fixed-line operator, as well as National Bank.

Pakistans newspapers including the Daily Times and the Business Recorder reported the story earlier, citing Khan at a press conference yesterday.


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## slugger

*PTA opposes ECC&#8217;s decision to export live animals*


> By Razi Syed
> 
> KARACHI: Pakistan Tanners Association (PTA) has strongly opposed on Friday the decision of Economic Coordination Committee (ECC) to allow export of live animals.
> 
> Talking to Daily Times, the chairman PTA, Agha Saiddain, said, &#8220;the decision has been taken without any consultation with the stakeholders&#8212; meat, leather and woollen industry.&#8221;
> 
> He said ECC&#8217;s decision is based on the recommendations of the Ministry of Livestock and Dairy Development (MLDD) and the Ministry of Food, Agriculture and Livestock (MINFAL).
> 
> Pakistan is a protein deficient nation and per capita consumption of meat and beef is very low due to higher prices. The government has allowed export of live animals to earn Rs 500 per animal without considering that they already get much higher amount if meat and beef is exported instead of live animals.
> 
> The export of leather increased by 21 percent during the year 2007-08. The major source of raw material of our leather industry is indigenous hides and skins. Now with this decision the export of leather is also expected to decline. He said the export of live animals from Pakistan would have serious set back for tanning, footwear, leather garments and gloves industry. This would also affect our woollen and carpet industry.
> 
> Saiddain informed that industry is already operating at 55 percent capacity due to shortage of hides, skins and tanners. &#8220;We have recommended the government to discourage export of wet blue leather from Pakistan as being done by India, Iran, Bangladesh and China,&#8221; he added.
> 
> *The tanning industry alone provides jobs to more than one million people*&#8212; directly and indirectly.
> 
> He said the prices of beef and meat, which are already out of reach of low-income group, would increase further making it a rare commodity for the consumers.
> 
> &#8220;The decision of ECC will leave many workers of woollen, carpet and leather industry unemployed.&#8221;
> 
> He further demanded that modern slaughterhouses should be set up in the country to encourage export of beef and meet rather than selling our live animals. &#8220;This decision will have similar consequences as the decision to export wheat had on the economy during 2007-08.&#8221;


*Source*


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## Neo

*Country meets all IMF targets: Tarin ​* 
KARACHI (January 03, 2009): Advisor to PM on Finance Shaukat Tarin said Saturday that the country has met all the targets set by International Monetary Fund (IMF).

He was talking to media after holding meeting with the management of Pak-Oman Investment Company Ltd at FTC building. He said that the government borrowing was restricted to Rs 242 billion during the year which is below the target of Rs 258 billion.

"Our borrowings are below the target. We are meeting all the targets of IMF and I have no worries about it", he added.

Responding to a question, the Advisor said the government will consider lowering discount rates when core inflation starts coming down. The current rate of inflation is 24 percent in the country while the core inflation was hovering at 18.9 percent, he added and hoped that core inflation will come down soon.

Talking of oil prices, he said that the government has lowered petrol prices by Rs 30 per litre or more than 40 percent since international oil prices have started slipping.

"We have reduced petrol price from Rs 87 to about Rs 57 a litre On the contrary, our neighbour India has reduced petrol price by only Rs 5 per litre", he opined.

Tarin said that the government will fully pass on the reduction in oil prices at a suitable time. Presently, we cannot fully pass on the benefit of oil price cut keeping in view the situation on the borders and pressure on the revenue collection, he noted.

Replying to a question about the meeting at Pak-Oman Investment Ltd, he said that it was in connection to have a review of financial sector in the country specially state-owned entities.

The government had invested billions of rupees in these organisations and we want to see whether the private sector is benefitted with this money or not. What is the return and what are the benefits, he maintained.

"I am hopeful that this review will bring in improvement in the performance of financial sector", he observed.

To another question, the Advisor said that the inflow of foreign direct investment (FDI) in the first five months of current fiscal is up by at least 1 to 2 percent over last year's (2007-08) figure of $ 1.7 billion.

Referring to steps for strengthening the capital market, he pointed out that energy, telecom and banking sectors were going strong and investment inflow will increase in the country.

Tarin said that Treasury Stock Ordinance will be promulgated in next two days to allow public sector corporate sector to buy their own shares at low prices and sell them when they are up.

At the same time we have provided a soft lending in stock market to provide sufficient funding. This will certainly support the market, he added.

To a question about the privatisation of Qadirpur gas field, he said the Prime Minister Yousuf Raza Gilani has already made it clear on the floor it will be done after due consultation.

He said that only 10 to 15 percent employees of Pakistan Steel Mills will be privatized.

Tarin said that he will also meet private sector people to get their input on the economy and also about their problems. We will also solve their problems, he added.

Responding to a question about the Friends of Pakistan, he said that time was right to have a meeting with them because the United States was in a transition period. Let the new government take over in USA. Meanwhile we are holding individual meetings with member countries. I am going to Saudi Arabia to hold meeting with its finance minister, he pointed out.

Earlier, CEO Pak-Oman Investment Company Ltd Zafar Iqbal briefed the Advisor on the performance of the investment company.


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## Neo

*Electricity deficit reduces, power situation improves by 1000 MW ​* 
ISLAMABAD (January 03, 2009): As a result of immediate decisions taken by the President Asif Ali Zardari and the Prime Minister, Syed Yousuf Raza Gilani, overall power situation has improved on Saturday by 1000 MW at peak, reducing the power deficit.

Further improvement is expected in next two days when full supply of oil is restored to the Independent Power Producers (IPPs) and WAPDA's Generation Companies (GENCOs), the spokesman of Ministry of Water and Power said on Saturday.

According to him, the overall impact of these measures will result in stabilization of power supply and substantial reduction in the announced schedule of load shedding.

He said that the Minister for Water and Power Raja Pervez Ashraf is monitoring the power situation and on his direction the ministry's offices and related major field offices of Pakistan Electric Power Company (PEPCO) and power distribution companies (DISCOs) will remain open on Sunday.


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## maximus

^^ I don't believe a word. If we were to believe the media, the situation has only deteriorated to an extent that riots are taking place in broad daylight.

*Faisalabad bursts into protest against load shedding of power, gas*

Updated at: 1340 PST, Saturday, January 03, 2009 
FAISALABAD: The citizens here loosing their tempers have burst into fierce protest against continued load shedding of electricity and gas.

The angry demonstrators went on torching tyres, pelting stones on the police vehicles, rampaged Wapda office and torched one vehicle besides one motorcycle, while the police resorted to baton charge, which let loose a reign of terror in the town. Large crowds of vexed citizens at different vintage points of the town angrily demonstrating do not seem to be getting under control by the contingents of police, who appeared outnumbered by the people making a beeline for demonstration.

Numerous trade and businessmen organizations besides the labour unions have also joined in the people&#8217;s protests, which suddenly has intensified and overtaken the whole town sending the routine life paralyzed.

No large-scale arrests reported although police detained some persons, while scores of people on either sides reported to have sustained injuries. 

Source: http://thenews.jang.com.pk/updates.asp?id=63958


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## Neo

Only time will tell...lets see if they reduce the amount of loadshedding in major cities. Faisalabad is an industrial hub severely hit by power crisis, there will be more protests...but it doesn't mean that governement isn't doing anything to solve the crisis.


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## Neo

*Complete shutterdown observed in Faisalabad​* 
FAISALABAD (January 04 2009): Complete shutter down was observed in industrial area and all shopping centres on Saturday against unscheduled prolonged load shedding and new high prices of gas and its non-availability. All shopping centres and markets at Satiana Road, Susan Road, Eight Bazars, around Clock Tower, and Circular Road remained closed.

The local Yarn Market, Cloth Market, Timber Market and Hosiery Units, Paint manufacturers and powerloom units also suspended their business. Not a single procession was taken out nor any protest meeting was held because of Muharram. However, a number of small processions in Ghulam Muhammadabad, Jhang Road and Millat Road were taken out, but the precisionists dispersed before the arrival of the police.

In many parts of the city, the factory workers split in groups. They burnt tyres on roads, disrupting vehicular traffic for a while. On Millat Road, a group of workers tried to damage a bank, but firing in the air by the bank guard, forced them to dispersed. However, in Gulistan Colony, the angry mob forcibly entered the Fesco offices and set the office record on fire.

Before dispersing, they set three motorcycles and one car on fire. At some other places, the police resorted to lathicharge, teargas shelling and firing in the air to disperse the mob and reportedly hauled up over 60 workers.

Meanwhile, Chairman of Pakistan Yarn Merchants Association Muhammad Asghar Gandhi and Vice-Chairman of All-Pakistan Small Units Powerlooms Association Mehmood Alam Jatt told newsmen that due to severe load shedding of power and gas in Faisalabad, a large number of industrial units had either been completely closed or operating partially, thus rendering thousands of workers jobless. They demanded of the government to take immediate steps for restoration of power and gas to the industrial units, especially to the export-oriented Units to save them from total collapse.


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## Neo

*Pakistan to receive $900 million loan from World Bank​* 
ISLAMABAD (January 04 2009): Pakistan will receive a $900 million loan from World Bank to carry out different development projects by the end of current financial year. Sources revealed to the Business Recorder that World Bank will extend $500 million to Pakistan under "Poverty Reduction Support Credit," which has a pragmatic approach, ie a series of credit with timing linked to annual budget cycle, in the current quarter and an additional $400 million for different development projects in the last quarter of the current financial year.

Pakistan will get budgetary support of $500 million from China during the second week of the current month. Sources noted that the said amount would help ease pressure on the balance of payment. Support from China and the World Bank is seen as an outcome of the International Monetary Fund's 7.6 billion dollars stand by arrangement agreed last month.

Sources said that Economic Affairs Division Secretary Farrukh Qayyum would leave for a two-day visit to China on Sunday (today) to finalise the modalities of the support with the Chinese authorities. Pakistan has also requested the Chinese government to provide assistance for the construction of Diamer Basha dam and nuclear power plants Chashma 111-1V.

The EAD Secretary will also hold technical discussions on the financing programme for different development projects with Chinese authorities. The government has also submitted a feasibility study of Basha dam, estimated to generate 4500 MW electricity per day, conducted by German firm Lehmar Company to the Chinese in order to facilitate them to evaluate the volume of lending required. Lehmar has indicated a cost of over $8 billion for the construction of Basha dam.

Pakistan is set to establish two more nuclear power plants, Chashma 3-4, with the generating capacity of 640 MW, costing Rs 137.3 billion that can be completed in 8 years.

The government has estimated the cost of each project at Rs 68.6 billion in the Public Sector Development Programme (PSDP) 2008-09. Pakistan and China will finalise the modalities of the deal by January 15. President Asif Ali Zardari had requested nuclear power plants during his visit to China and received a favourable response. After President Zardari's visit, the concerned authorities of the two countries began work on maturing the deal.


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## Neo

*Gilani seeks Iranian oil on one year deferred payment ​* 
ISLAMABAD (January 04 2009): Prime Minister Syed Yousuf Raza Gilani on Saturday requested Iran to extend oil facility on deferred payment to Pakistan for one year. The Prime Minister made this request during a meeting with Iranian Petroleum Minister and special envoy to President Gholamhossein Nowzari, who called on him here.

Gilani also hoped that Iran would set up power plants in Pakistan to help overcome the present severe electricity shortage in the country. Iran has agreed to provide 50,000 barrel crude oil daily to Pakistan for 90 days on deferred payment during advisor to Prime Minister on Petroleum Dr Asim Hussain's recent visit to Iran. The advisor had also requested Iranian President to extend the facility for a period of two years instead of 90 days.

Gilani expressed his satisfaction that the two brotherly countries had made progress on the prospects of signing the gas pipeline and supply of electricity from Iran to Pakistan agreements.

The Prime Minister said that Pakistan strongly condemned the Israeli aggression against Palestinians in Gaza and is deeply concerned at the continuity of unbridled atrocities of Israel despite international calls for restraint. Pakistan had always stood by their Palestinian brothers and hence is desirous of complete unity among their ranks, he added.

He said that Pakistan has consistently and unequivocally offered unreserved support to the Palestinian cause and supports the establishment of an independent state of Palestine with Al-Quds Sharif as its capital.

The Prime Minister said that the world should shun its double standard by ignoring Israeli atrocities and act resolutely to stop its aggression against the innocent Palestinian in Gaza. He hoped that the executive committee of the OIC, meeting in Jeddah, would come up with a constructive and consensus decision in this regard in line with the sentiments all over the Muslim world. He lauded Iranian President Mahmoud Ahmedinejad's role in defusing the tensions between India and Pakistan in the wake of Mumbai blasts.

The Iranian Minister for Petroleum stated that Pakistan was a very important Islamic country and hence should assume a leading role in OIC for the resolution of the present Gaza crisis. He said Iran was mustering support of the Muslim world in this regard and needed Pakistan's assistance for taking a united stance of the Muslim Ummah on the Palestinian issue.

Underscoring the critical situation in Gaza, he said that role of Muslim countries at this juncture would be recorded by the history. They should, therefore, forget their petty differences for countering the Israeli aggression.

He termed Pakistan as his second home, saying that he considered Pakistan's difficulties as Iran's difficulties and Pakistan's progress as Iran's progress. He agreed with the Prime Minister that there is an urgent need for finalisation of gas pipeline project between the two countries.

He promised to convey Pakistan's request for extension in the period of deferred payment of oil facility to the Iranian government. He was also of the opinion that bilateral trade between the two countries needed to be enhanced and called for both sides to take concerted efforts to achieve the goal.


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## Neo

*No more unannounced outage from Saturday night: Pepco ​*
ISLAMABAD (January 04 2009): There will be no more unannounced power load-shedding across the country from Saturday night, Spokesman of Pakistan Electric Power Company (Pepco) Tahir Basharat Cheema assured on Saturday. Talking to a private TV channel, he said the company has made scheduled load management as its top priority on the directives of President Asif Ali Zardari.


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## Neo

*'Pakistan's IT industry possesses potential for benefiting from challenges' ​* 
LAHORE: Chairman Federal Task Force on Information & Communication Technologies (ICT) Salim Ghauri said on Monday that Pakistan IT industry possesses the potential of benefiting from the unavoidable challenges being faced by neighbouring countries in 2009.

He said the IT companies in neighbouring countries have grown out of proportion and the sustainability in growth is becoming a Herculean task there with every passing day. They have no option but to cut current expenditures heavily that would affect their business ventures, he added.

Also, said Salim Ghauri, in an emergency situation in 2009, the Western IT managers would be looking for new vendors and new places to outsource their projects, as the new vendors are always keen to provide better services at much lower cost with quality assurance. We had witnessed this trend back in the 2001 when IT industry crash and we should be ready for it ahead in 2009, he added. He said it is important for the Pakistan IT industry to move quickly in early 2009 and get its share of business from across the globe.

"We have always been complaining about Pakistan's image abroad while terming it a major hurdle in getting business from the outside world but the time has come to put such approach aside, as this is a reality which will continue to stay with us for near future," he said. "We will have to face the reality and dig opportunities out of the adverse circumstances to sustain the recession hit economies of the world." According to him, the year 2009 will also demand a change in attitude from the IT professionals from carefree and "take it easy man" style to a more professional approach. Now only the fittest will survive, he warned and added that in the same breath that there will be room for people to join IT industry but this year will require longer hours and more hard work from the professionals to sustain and survive.

"The financial packages will in fact decrease rather than increase. Little increments in salaries will be offered, which have been inflating in previous years, as the IT industry will either have to cut the workforce or offer decreased packages," he said, and added that the IT professionals should settle for smaller packages then losing a job.

So far as setting up a new IT business in 2009 is concerned, Ghauri said there's always opportunity for new entrepreneurs as they come up with new ideas and creativity. Many IT companies started their businesses in early 90s and wrote success stories in the years to come, simply because they relied upon innovative ideas and approaches, he added.

According to him, the IT industry will be the most important segment of Pakistan's economy and it will earn precious foreign exchange for the country in the years to come. He stressed the education institutions to be more focused in their curriculum and lectures to discuss ongoing global changes in world economies and its impact on IT industry. The industry will be cutting costs throughout 2009, but it will be working on better software simultaneously that will open new windows of opportunity for young professionals, he said.

Ghauri also urged the government to revisit tax policy towards the IT sector, as the tax holiday for IT sector is expiring in 2011 and any failure in extending it for another 10 years would cripple the industry from generating hundreds and thousands of jobs in the years to come. We have already seen that a good number of IT companies had shifted their businesses from tax-burdened regimes to tax free regimes in the past. The government of Pakistan needs to move fast on this front, he asserted.


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## Neo

*Urea import: refusal of $400 million credit facility by Saudi Arabia contradicted ​*
ISLAMABAD (January 04 2009): Owing to one-forth decline in Urea fertiliser prices, the government withdrew its request to seek credit facility of $400 million for Urea import from Saudi Arabia, official sources said here on Saturday. "The request for the credit facility was made when the Urea prices were very high, however, as the prices came down in the international market, the government opted to buy fertilisers from the open market," the sources told APP.

The sources contradicted the news that appeared in a section of press claiming that Saudi Arabia has refused to grant $400 million credit facility to Pakistan. "The Saudi government has not refused extending an additional US $400 million to Pakistan for the purchase of urea on deferred payments", sources added. They said that Pakistan was in need of importing fertilisers of $400 million, however the urea prices declined and the same quantity value reduced to $90 to 100 million, leading the government to withdrew the credit request.


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## Neo

*MSW power projects ​*
Punjab Chief Minister Mian Shahbaz Sharif has said that negotiations are in progress with China and France for generation of energy from solid waste, and that a solid waste energy project would soon be started at Faisalabad. This is indeed a good news for our mismanaged and cash-strapped energy sector. Such projects should in fact be started in all the provinces to ease the growing energy crunch.

Municipal solid waste has come to be increasingly employed as a handy raw material for producing inexpensive power, and many advanced countries of the world are currently engaged in developing new techniques and technologies to tap this rich source of energy.

Municipal solid waste or MSW includes trash or garbage produced by households, commercial establishments, industries and institutions, which would ensure its abundant availability. The waste consists of everyday items such as discarded packing material, furniture, clothing, plastic bottles, food scraps, newspapers etc. It is managed through a combination of disposal in landfill sites, recycling as well as incineration processes.

Scientists believe that the most environmentally sound management of MSW can be achieved through the use of three-tier process involving source reduction, recycling and disposal in landfills or waste combustors, in which the burning of waste converts water into steam, which drives turbines connected to power generators.

The pre-combustion process varies from facility to facility, though it generally involves shredding of solid waste and removal of metals etc. The shredded MSW is then used as fuel in the same manner as at mass burn plants. MSW is categorised as a renewable source of energy because it is abundant, and contains significant amounts of biomass.

It has been estimated that the burning of MSW can generate energy while reducing the volume of waste by up to 90 percent, which represents an additional environmental benefit. As MSW contains different waste materials, with some of them benign and others highly toxic, meticulous separation of the two is of critical importance.

Effective environmental management of MSW plants aims at excluding toxic from MSW-fuel and to control emissions of air pollutants from waste-to-energy (WTE) plants. Secondly, the burning of WTE plants produces comparatively high carbon dioxide emissions. However, the impact of these emissions is reduced because a major part of the trash is wood, paper or food waste, which would decompose anyway, if not burned.

If left to decompose in a solid waste landfill, the material produces methane, a toxic gas. As far as the quantum of air pollution is concerned, the on-site land use impacts are generally equal to those of coal or oil-fired plants. Incineration converts municipal solid waste into incinerator bottom ash, particles and heat, which can in turn be used to generate power.

Pelletization of municipal waste, an important pre-incarceration process, involves segregation, crushing, mixing high and low heat volume organic waste material, and solidifying it to produce fuel pellets. The process is essentially a method that condenses waste or changes its physical form and enriches its organic content through removal of inorganic materials and moisture.

According to one estimate, on an average about 15-20 tons of fuel pellets can be produced after treatment of 100 tons of raw garbage. Since pelletization enriches the organic content of the waste through removal of inorganic materials and moisture, it can be a very effective method for preparing enriched fuel.

We have discussed here the broad outlines of some of the MSW management techniques employed in advanced countries of the world for producing inexpensive energy. There is a need for the government to generate public awareness that solid waste can be used as an inexpensive source of energy.

We propose that the scope of talks being held with China and France should be enlarged to include all the provinces. After success of the project, energy obtained from MSW can be made a part of the overall national energy mix. Power co-generation is another option, along with numerous other alternative energy sources, which the government must expeditiously tap to keep the widening gap between power supply and demand within manageable limits.

While all these diverse methodologies need to be employed to ensure energy security in the country, long-term benefit to the country can only come from tapping our immense hydropower and coal energy potential. (It is said that the share of coal in the US energy mix is as high as 50 percent.) The government should simultaneously undertake fast-track implementation of water and power projects to rid the economy of the crippling power shortages.


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## Neo

*Car production to fall further in 2009 ​* 
Sunday, January 04, 2009

LAHORE: The automobile industry has started the New Year in extreme gloom as production of cars, motorcycles and tractors are expected to drop substantially.

The News has found that the country produced 120,000 cars in 2008 compared to 165,000 in 2007, showing a decline of 45,000. In 2009, the production is projected to fall further to 70,000 units.

Production schedule of Original Equipment Manufacturers (OEMs) for the first quarter of the new calendar year depicts a gloomy picture. 

For instance, Pak Suzuki, which accounted for over 60 per cent of total car production in the country, plans to produce 1,200 cars per month or 14,400 units in a year. Toyota plans to produce 2,400 cars per month or 28,800 a year.

Together these two enjoy over 80 per cent market share and would assemble only 43,200 cars. Rest of the manufacturers, even if they are able to maintain their volumes at last years levels, which looks unlikely, would add another 27,000 units.

Another alarming aspect that has emerged after the economic downturn is that the share of small cars, popular in the middle class, has rapidly vanished. However, demand of luxury cars used by the richer segment of society has not declined much. Some experts argue that high interest rates, which make borrowing expensive, are the main reason for the weakening sales of low-end cars.

They point out that prices of smaller cars have risen beyond reasonable limits and this came at a time when rates of raw material, used in car production, are falling. In fact, the OEMs are squeezing local auto-vendors to reduce prices but they themselves continue to maintain high car prices.

The auto-vending industry is now operating at 40 per cent capacity and its cost of production has increased due to low volume of orders. However, they have no choice but to reduce prices as the OEMs are the only customers of auto parts they produce.

Some experts urge the regulators to take notice of extremely high car prices and force the assemblers to bring them to reasonable levels. However, the car manufacturers, while justifying the increase in prices of their brands, say the rupee has depreciated against the Japanese yen from Rs0.65 to Rs0.80.

Experts say the currency weakness comes to around 20 per cent and foreign exchange component in car manufacturing is 70 per cent. This means the impact on the production cost should not be more than 15 per cent, but car prices have been raised by 33 to 50 per cent.

They say Suzuki Mehran VX 800cc price has risen by Rs82,000 since January last year while Mehran VXR CNG is priced at Rs504,000 against Rs408,000 last year. Cultus 1,000cc VXR CNG is priced at Rs814,000 against Rs632,000 and Cultus VXL CNG is available at Rs884,000 as compared to Rs689,000.

Toyota Corolla XLI and GLI prices rose over Rs345,000 to Rs1.26 million and Rs1.38 million respectively. Its recently introduced Corolla 2.OD is priced at Rs1.71 million against Rs1.16 million earlier.

The economic downturn and high car prices have dented hopes of the automobile sector to produce by 2012 half a million cars, 1.5 million motorcycles, 600,000 three-wheelers and 800,000 tractors.


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## Neo

*KSE edges towards recovery after historic plunge ​* 
Sunday, January 04, 2009

KARACHI: The bulls made their presence felt this week on Karachi bourse, but they still need more time to come out of depression, regain their strength, turn stable and lead the show.

It was weekend twin-sessions when a modest short covering of 40.39 points helped market closing on positive note after recording massive plunge of about 37 per cent in the last 13 consecutive bears-run sessions since floor removal. This session also witnessed notable trade in blue-chips led the volume leaders.

Moreover, the Thursday session also witnessed a mild recovery in the index from the day intra-day low. This little intra-day regain helped index reducing the day cumulative losses.

The KSE 100-share Index fell below 6,000 points level during the week to four years-low. This benchmark lost another 694 points or 10.69 per cent on weekly basis and closed at 5,793.57 points.

Analysts said that the out-of-court settlement of disputed open position on Continuous Funding System (CFS) after producing much heat between the CFS lenders and borrowers, and the launch of much awaited Rs20 billion NIT-State Enterprises Fund (NIT-SEF) with an aim to prevent incurring massive losses altogether helped changing investors mindset to positive.

The fund will, however, invest only in eight government-owned stocks, which are OGDC, PPL, NBP, PTCL, SNGPL, SSGC, PSO and KAPCO.

Analysts maintained that the much delayed launch of NIT-SEF had given undue time to the speculators, who did not miss the opportunity of exploiting financially weak investors and brokers at full length.

This is evident with 63 per cent slump in index since all time high closing in last April and 58 per cent on year-to-year basis.

The parallel running junior 30-Index deprived of 943.50 points or 15 per cent this week and ended at 5,341.22 points.

Volumes in the ready market showed improvement over the week, however, they remain relatively low compared to average volumes before the price floor mechanism was imposed.

Average daily volumes in the ready market were recorded at 108.99 million shares compared to 55 million shares - showing an increase of 98 per cent on week-on-week basis. On the last day of the week, volume hit more than four month high and was recorded at 210.8 million shares.

Off market volumes was seen coming down gradually last week, as average daily volumes in this market in the outgoing week were standing at 13.1 million shares, reported Atif Zafar at JS Research.

He maintained, taking advantage of increasing volumes, foreigners bought shares worth $9.7 million and sold $ 47.5 million, resulting in net selling of $37.8 million this week. While last year a record selling of $442.8 million was witnessed, according to NCCPL data.

Gul-e-Zehra Jafri at KASB Securities said barring any last minute surprise, the NIT State Enterprise Fund was expected to become active from next week. With the systematic risk at the KSE potentially under control, market focus is expected to remain firmly on price discovery in the week ahead. 

Her brokerage house reported that Arif Habib Bank, JS Bank, Samba Bank, Kot Addu Power and NIB Bank were major gainers while Altern Energy, Bank of Punjab, Adamjee Insurance, Pakistan State Oil and Arif Hahib Securities were major losers at the KSE this week.

Movement in Weekly Volume Leaders

Symbols Open on Close on Difference 

Monday (Rs.) Friday (Rs.) (Rs)

Fauji Fertilizer 63.27 64.74 1.47

FF Bin Qasim 13.81 13.69 -0.12

Hub Power 14.38 15.45 1.16

NIB Bank 4.26 5.30 1.04

Pak Prem Fund 2.50 2.66 0.16

Pak PTA 1.89 1.95 0.06

TRG Pakistan 2.16 2.28 0.12

Zeal Pak 0.54 0.58 0.04


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## Neo

*9.7m bales reach ginneries, 6.9pc increase recorded ​* 
Sunday, January 04, 2009

MULTAN: Ginneries across Pakistan have received 9.7 million (9,744,546) cotton bales by January 1, 2009 this season, some 6.91 per cent up than the cotton arrivals recorded during the corresponding period of the previous season.

According to a fortnightly report issued by Pakistan Cotton Ginners Association (PCGA) detailing cotton arrival figures till Jan 1, 2009, last seasons cotton arrival figures of 9.1 million bales stands elevated to 9.74 million cotton bales this season and of them, total 9.25 million (9,256,974) bales have been pressed into bales.

Cotton arrivals at Punjab ginneries recorded at 7 million (7,064,126) bales with a percentage increase of 2.89 per cent, showing a marked recovery after last seasons shortfall of 23.18 per cent. Total 6.7 million (6,728,383) bales have been pressed into bales in Punjab.

Cotton arrivals at Sindh ginneries recorded at 2.68 million (2,680,420) bales showing a percentage increase of 19.19 per cent which was recorded at 4.84 per cent during the previous season. The number of bales which have undergone ginning process in Sindh were calculated at 2.52 million (2,528,591) bales. Out of the total 9.7 million cotton arrivals, 7.7 million (7,784,374) bales have been sold out.

Trading Corporation of Pakistan (TCP) has purchased 97,400 bales, exporters have bought 254,431 bales while textile mills have purchased 7.4 million (7,432,543), leaving 1.9 million (1,960,172) bales as unsold stock.


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## maximus

Neo said:


> Only time will tell...lets see if they reduce the amount of loadshedding in major cities. Faisalabad is an industrial hub severely hit by power crisis, there will be more protests...*but it doesn't mean that governement isn't doing anything to solve the crisis.*



That's actually the whole crux of the problem. Hardly anything has been done in the past few decades to meet the future requirements. They can do all they want now. It will take considerable time before this crisis is solved. Being optimistic is positive, but we have to remain realistic as well. The problem with our nation is that we never learn from our mistakes. The politicians have always been too preoccupied with stealing and corrupt practices. The people couldn't care any less about the future of this country.


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## pkpatriotic

*Pakistan to seek waiver from IMF* 
*By Mehtab Haider
Monday, January 05, 2009*

*ISLAMABAD: Pakistan will have to seek a waiver from the IMF for missing an ambitious tax collection target of Rs 1,360 billion and achieving net zero borrowing from the central bank in order to receive the second tranche of a loan worth $750 million by the end of March of the current fiscal year, The News has learnt.*

Highly credible sources in the Ministry of Finance also believe that the government is all set to place its request for waiver before the IMF on the envisaged fiscal deficit target as well in the wake of substantial revenue shortfall on one side and ballooning expenditures on the other side.

The government is making last ditch efforts to bridge the deficit by not passing on benefits of reduction in POL prices in the international market to domestic consumers. But it seems that the envisaged fiscal deficit target, which was to be brought down to 4.2% of the GDP for the current fiscal from 7.4% of the GDP in the last fiscal year, is likely to be missed, a high-level official in the Ministry of Finance said while talking to The News here on Sunday.

The government, the sources said, also made commitments with the IMF to achieve zero borrowing from the central bank, But when Net Foreign Assets (NFA) are in the deficit mode, it will be very difficult for the government to achieve this target, they added.

On the substantial tax revenues shortfall, the sources said that the Pakistani side and the IMF jacked up the annual tax target from Rs 1,250 billion to Rs 1,360 billion on the projections of higher POL prices in the international market and depreciation of the rupee against the dollar by around 30 per cent. The POL prices in the international market have witnessed steep decline, touching $34 per barrel from the earlier price of over $140 per barrel and the rupee has also slightly appreciated against the dollar, the sources said and added that all this resulted in a nosedive on the tax collection side.

The government had collected Rs 154 billion on taxes levied on POL products in the last financial year 2007-08 and its share in indirect taxes was 23 per cent.

When Chairman FBR, Ahmed Waqar, was contacted for comments, he said that the tax collection target of Rs 1,360 billion was estimated on the basis of nominal growth in the range of 28 per cent and POL prices in the range of $85 to $90 per barrel. Our target was increasing tax to GDP ratio to 10.2%, which is equivalent to Rs 1,360 billion at the time of our agreement with the IMF, he added.

Now the projection of inflation, he said, has been reduced from average 24% to 20-22% while real GDP growth has been estimated hovering around 3.5% to 4%. It means that the nominal growth will come down to around 24% from earlier estimates of 28%, he said and added that the annual tax collection target would also be re-adjusted to the lower side from the earlier envisaged target of Rs 1,360 billion.

Without sharing any exact revenue figures, he said that the tax target would certainly come down but they would strive hard for collecting maximum revenues in order to give enough fiscal space for meeting the social sector needs of the country.

For improving tax revenues, the Chairman FBR said that the board finalised parameters to hold random audit in order to detect tax evaders. Now effective enforcement will detect under-filers and especially non-filers, he added.

I cannot share the parameters for holding audit because the Income Tax Ordinance prohibits us but one thing is clear that the FBR will hold a transparent audit which will be free of harassment of taxpayers, he said and added that the audit would be launched very soon.

The FBR has collected Rs 543 billion in the July-Dec period of the current fiscal year and it needs to collect Rs 817 billion in the remaining six months (Jan-June) in order to reach its desired target of Rs 1,360 billion by June 30, 2009.

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## Neo

*Monetary overhang from government borrowing to persist ​* 
ISLAMABAD (January 05 2009): Finance Ministry has conceded that monetary overhang from the unprecedented government borrowing from the State Bank of Pakistan (SBP) for budgetary support would continue to frustrate the decline in imported inflation.

"Inflationary pressure was likely to ease in the next few months because of sharp decline in the prices of commodities in international market particularly POL and palm oil, however, the impact of budgetary borrowing will not let the imported inflation come down easily," Finance Ministry briefed the Economic Co-ordination Committee (ECC) of the cabinet which met on December 30, with Prime Minister's Advisor on Finance, Shaukat Tarin in the chair.

The sources said, ECC observed that despite sharp decline in the prices of POL and palm oil, over all benefits of decrease in prices of these commodities was not evident commensurate to decrease in local commodities pricing. This was responsible for the common man not getting relief.

The sources said, former Governor SBP, Dr Shamshad Akhtar also presented an overview of economy and highlighted the major areas which required attention. She was of the view that with the International Monetary Fund (IMF) support foreign exchange reserves have improved and economy attained stability. However, Large Scale Manufacturing (LSM) showed negative growth of 6.2 per cent and it was the main area of concern which affected all sectors of the economy.

According to Dr Akhtar, money supply witnessed mixed trends and cash flow in domestic credit (net) has risen to 30 per cent. Dr Shamshad who was present in the last ECC meeting as Governor SBP also expressed concern over massive borrowing by the federal government for budgetary support.

"Another area requiring attention is borrowing from the SBP by the government for its budgetary financing," the sources quoted her as commenting.

According to the conditions agreed to in the Letter of Intent(LoI) signed by Shaukat Tarin, Prime Minister's Advisor on Finance and Dr Shamshad Akhtar, former Governor, SBP, the government had committed to limiting SBP financing of the budget to zero on a cumulative basis during October 1, 2008 to June 30, 2009. During this period, fiscal deficit will be fully financed by available external disbursements( which have already been committed), the acceleration of the privatisation process, the issuance of treasury bills and domestic financing instruments including Pakistan Investment Bonds(PIBs), Ijara Sukuk and National Savings Scheme(NSS) instruments. Dr Shamshad further stated that a major break through achieved by the economy was enhancement in the deposit rate from 5.5 per cent to 10 per cent whereas lending rates were also manageable.

Dr Shamshad took credit in taking timely measures to provide liquidity to the banks. "Banking system did not experience 'liquidity crunch' due to timely measures' taken by the SBP," the sources quoted her as saying.

Sources present in the meeting, on condition of anonymity, stated that while Dr Akhtar was highlighting her achievements there was a general lack of interest. One cabinet member wanted to change the subject but was told to let the Governor finish her statement. After the meeting views were exchanged about the poor performance of SBP with respect to the eroding rupee value as well as the lack of liquidity in the market till such a time as the IMF came on board.

Finance Ministry, in a presentation to the ECC, indicated that overall CPI-based inflation registered marginal decline in November 2008 as against October 2008.

Inflation stood at 24.7 per cent in November as against 25 per cent in October. Food inflation also decreased from 34.7 per cent in October 2008 to 30.4 per cent in November 2008 and non-food inflation registered an increase of 20.2 per cent during this period. Overall contribution of five non-food items and four food items towards overall inflation was 57.1 per cent.

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## Neo

*Power and gas load shedding: SBP report confirms industrialists' difficulties: MCCI ​* 
MULTAN (January 05 2009): President of Multan Chamber of Commerce and Industry (MCCI) Anis Ahmed Sheikh has said that state bank quarterly report had confirmed that industrialists were rightly making hue and cry on the grim industrial situation due to power load shedding, suspension of natural gas, high mark-up, severe energy shortages, deterioration in law and order situation and rupee depreciation and less demand of exportables from foreign buyers.

He said that production, especially large-scale manufacturing (LSM), continued to decline during the first quarter of fiscal year 2008-09, registering a negative growth of 6.2 percent against growth of 7.3 percent in the same period last year, power shortages have been haunting all manufacturing sub-groups in FY08-09.

He said that textile sector, in particular, was jolted by other multiple shocks firstly because it is an export-driven sector and impact of weak external demand fell disproportionately on it. Secondly, poor law and order situation diverted importers of Pakistani products to search for new suppliers. Thirdly, rising cost of raw materials, and fourthly as imported inputs go into textile production process, a high degree of volatility in domestic currency value created problems of costing and pricing.

Anis Sheikh said that report further reveals that both agro-based and other industries registered a decline in production. This classification also highlights the fact that LSM sector has been unable to achieve significant growth without good performance of these two sections of industry, even with high growth in the recent past. Within the non-agri based industries section, consumer durables (cars and jeeps, motorcycles, refrigerators, deep freezers, TV sets, air conditioners, etc) registered a decline of 31.2 percent in production. But when the decline in consumer durables is excluded, the negative growth in LSM production reduces to only 0.8 percent. Not only has the increase in interest rate on consumer financing hit the production of consumer durables, but a sharp rise in their prices has also led to a drop in the demand. Growth in electronics, in particular, suffered due to increased electricity tariff and power shortages in the country.

In addition, demand for consumer durables eased as increase in international prices of steel products and rupee depreciation compelled manufacturers to increase the prices of durables, while the surge in inflation eroded the purchasing power of middle class consumers (major market segment of durables). Engineering sub-sector registered considerable growth on the basis of higher production in safety razor blades, diesel engines (multiple uses of diesel engines in agri sector) and wheat threshers (thresher demand rose expecting bumper wheat crop), he said.


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## Neo

*Wheat crop prospects ​*
(January 05 2009): To gain self-sufficiency in food items has always been an important objective of government policy in Pakistan. However, the matter seems to have assumed greater urgency after acute shortage of wheat and sharp increase in its prices in the recent past.

Wheat, it may be stated, is the main food item of Pakistani people and its availability and cost are, therefore, important determinants of the popularity of the government and welfare of the public at a particular point of time.

The main reason for wheat scarcity during FY08 was a sharp reduction in its output to 21.8 million tons as compared to 23.3 million tons a year earlier due to both decline in acreage and drop in the yield per hectare. Delayed start of sugarcane crushing season and cotton picking caused reduction in the area under wheat crop while insufficient availability of irrigation water at sowing time, uncertainty about returns (due to non-announcement of a support price for FY08 crop) and higher fertiliser prices also discouraged wheat farmers. This was particularly evident in Punjab, which contributes over 75 percent of the total wheat production in the country. In order to overcome shortages of wheat in the country, the government had to spend $852.3 million on the import of the commodity in FY08 as compared to only $41.5 million in the preceding year.

In order to avoid the bitter experience of frequent shortages and soaring prices, the government took a number of steps to increase the output of wheat crop during FY09. Incentive signals were boldly activated by increasing the support price of wheat by 52.0 percent to Rs 950 per 40 kg for FY09 crop, much before the sowing season and a target of 25.0 million tons was fixed for the year. Also, efforts were made to supply the necessary fertilisers at subsidised rates. However, initial reports are not very encouraging. According to the State Bank's estimates, wheat harvest is likely to fall in the range of 23-24 million tons due to the shortage of 39 percent in irrigation water for rabi crops.

The farming community is also not optimistic about achieving the target. Ibrahim Mughal, the Chairman of Agri Forum, Pakistan, is of the view that the government should start a campaign for increasing the use of weedicides and micro-nutrients immediately and announce an increase in procurement target for the final production to be close to 25 million tons. Another official of the Forum, Rana Majid Zafar has said that the government fixed the high target without turning the factors of production positive. No better wheat variety was introduced to ensure higher yields and sowing of certified seed was not increased. The sowing of the crop stood at only 28 percent on 20th November, 2008 which means that over 70 percent sowing would fall under the late category.

Some other Forum officials have stated that usage of fertilisers has dropped steeply due to skyrocketing prices. Credit crunch has also adversely affected the use of inputs. The import of 250,000 tons of wheat by the TCP at the time of local harvest also looks like a disincentive to the farmers.

Although it is too early to make a definitive assessment of the size of wheat crop during the current year, early indications coming from diverse sources are certainly inauspicious and we would like to highlight this negative view because price stability and ample availability of wheat the year-round is too important in our context and at least some of the factors impeding the achievement of the target could still be taken care of at this initial stage. Weeds, for instance, often reduce crop production as they compete with the crop for nutrients, water, light, gases and space and the use of weedicides could be increased from the current 10 percent of the cropped area to a reasonable level through effective involvement of the provincial agricultural departments in the exercise.

The government could also announce that it was committed to buying surplus wheat at official rates through its own agencies like Passco and would not leave the farmers at the mercy of exploitative market forces. Financial institutions engaged in providing agricultural credit could also be persuaded to provide adequate credit for the wheat crop.

Overall, however, there is no doubt that Pakistan needs to change its policy orientation and address certain structural issues on a priority basis in the agricultural sector like poor crop management skills of the farmers, lack of agricultural infrastructure, higher post-harvest losses, limited research as well as the gap between available research and practical applications. Needless to mention that adequate availability of energy is also quite important to supplement water resources and increase overall efficiency in the agricultural sector.

Also important for the government is to resolve to never repeat the mistake of the past year of allowing export of wheat due to the incorrect assessment of a bumper wheat crop. We don't want to say anything about last year's bad experience because so much has been said already but would like to advise the government that it should continue to monitor the crop position very closely and then base its judgement on the conservative side. If needed, sufficient quantity of import should be arranged from the international market well in time to discourage unnecessary speculation in the domestic market.

Adequate availability of wheat at reasonable prices throughout the year would definitely be comforting for the ordinary people who see no end to the flurry of bad news in their lives these days. The perils of empty stomachs are too severe to even contemplate.


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## Neo

*Stocks up by 2.14 per cent with bailout on way ​*

Monday, 05 Jan, 2009

KARACHI: Shares in Pakistan gained for a second straight trading session on Monday, adding 2.14 per cent as investors eagerly await the launch of a government market bailout fund, dealers said.
The Karachi Stock Exchanges benchmark KSE-100 index gained 123.83 points to close at 5,917.4. At mid-session, the index had gained 162 points before dropping back.
Volume was 210.11 million shares, almost on par with Fridays level and near the average 250 million shares that changed hands daily in 2007, when the market was tipped as one to watch among developing economies.
Shares have rebounded since Thursdays close. At that point, the market had lost 37 per cent of its value since December 15, when regulators removed a floor imposed in August.
Investor confidence has been on the rise since the government announced last week that the state-owned National Investment Trust-State Enterprise Fund (NIT-SEF) would soon be launched, perhaps as soon as this week.
The entity, funded by state institutions and a consortium of banks, will invest 20 billion rupees in eight selected stocks, and then resell them to overseas Pakistanis, in a bid to prop up the market.
Analysts said the package could be launched at any time this week, but dealers were already in high spirits.
The fund will be launched any time this week but it has immensely encouraged local investors, who are on a buying spree, analyst Mohammad Sohail told AFP.
But he added: Foreign investors still prefer to sell and it could take some time to get them to reinvest in Pakistani stocks.
Foreign investors withdrew 440 million dollars of a total of 1.8 billion dollars in holdings from the KSE in 2008, he said.


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## pkpatriotic

Neo said:


> *Monetary overhang from government borrowing to persist ​*
> ISLAMABAD (January 05 2009): *Finance Ministry has conceded that monetary overhang from the unprecedented government borrowing from the State Bank of Pakistan (SBP) for budgetary support would continue to frustrate the decline in imported inflation.*
> "Inflationary pressure was likely to ease in the next few months because of sharp decline in the prices of commodities in international market particularly POL and palm oil, however, the impact of budgetary borrowing will not let the imported inflation come down easily," Finance Ministry briefed the Economic Co-ordination Committee (ECC) of the cabinet which met on December 30, with Prime Minister's Advisor on Finance, Shaukat Tarin in the chair.
> 
> The sources said, ECC observed that despite sharp decline in the prices of POL and palm oil, over all benefits of decrease in prices of these commodities was not evident commensurate to decrease in local commodities pricing. *This was responsible for the common man not getting relief.*
> 
> The sources said, former Governor SBP, Dr Shamshad Akhtar also presented an overview of economy and highlighted the major areas which required attention. She was of the view that with the International Monetary Fund (IMF) support foreign exchange reserves have improved and economy attained stability. *However, Large Scale Manufacturing (LSM) showed negative growth of 6.2 per cent and it was the main area of concern which affected all sectors of the economy.*
> 
> According to Dr Akhtar, money supply witnessed mixed trends and cash flow in domestic credit (net) has risen to 30 per cent. *Dr Shamshad who was present in the last ECC meeting as Governor SBP also expressed concern over massive borrowing by the federal government for budgetary support.*
> 
> *"Another area requiring attention is borrowing from the SBP by the government for its budgetary financing," the sources quoted her as commenting.*
> 
> According to the conditions agreed to in the Letter of Intent(LoI) signed by Shaukat Tarin, Prime Minister's Advisor on Finance and Dr Shamshad Akhtar, former Governor, SBP, the government had committed to limiting SBP financing of the budget to zero on a cumulative basis during October 1, 2008 to June 30, 2009. During this period, fiscal deficit will be fully financed by available external disbursements( which have already been committed), the acceleration of the privatisation process, the issuance of treasury bills and domestic financing instruments including Pakistan Investment Bonds(PIBs), Ijara Sukuk and National Savings Scheme(NSS) instruments. Dr Shamshad further stated that a major break through achieved by the economy was enhancement in the deposit rate from 5.5 per cent to 10 per cent whereas lending rates were also manageable.
> 
> Dr Shamshad took credit in taking timely measures to provide liquidity to the banks. "Banking system did not experience 'liquidity crunch' due to timely measures' taken by the SBP," the sources quoted her as saying.
> 
> *Sources present in the meeting, on condition of anonymity, stated that while Dr Akhtar was highlighting her achievements there was a general lack of interest. One cabinet member wanted to change the subject but was told to let the Governor finish her statement. *After the meeting views were exchanged about the poor performance of SBP with respect to the eroding rupee value as well as the lack of liquidity in the market till such a time as the IMF came on board.
> 
> Finance Ministry, in a presentation to the ECC, indicated that overall CPI-based inflation registered marginal decline in November 2008 as against October 2008.
> 
> Inflation stood at 24.7 per cent in November as against 25 per cent in October. Food inflation also decreased from 34.7 per cent in October 2008 to 30.4 per cent in November 2008 and non-food inflation registered an increase of 20.2 per cent during this period. Overall contribution of five non-food items and four food items towards overall inflation was 57.1 per cent.



^^^^ Thanks Neo for sharing such fact.... off-course its bitter but unfortunately very true, .....as I have stated during debate session held on "export furture" that, at present what we now watching the position of our financial standings is just due to the recently injected money through IMF loan, and it is a dire need to manage these funds in most sophisticated professional way to enjoy real long terms benefits otherwise mismanagment of funds can back fire on our economy. 
I have serious concerns that our exports may further markably decline rather, due to bad governance based on continue ignorance, lack of interest & capabilities, on financial matters, and ill-intended personal motives of state's management. 
Despite of sevreral reminders with proposals from exporters associations and intellectuals sourcing & buying houses, there is no positive response and seriousness observed at any level of state's managment to address even a single issue, as yet. ..... Anyway I wish to talk in detail on the topic and want to exchange views with the forum members later but soon, as right now i am engaged in 3 development projects simultaneously which may a break through to our economic boost, InshaAllah!!!


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## Neo

*KSE up 124 points on across-the-board rally ​* 
Tuesday, January 06, 2009

KARACHI: The bulls took control of the Karachi stock market on Monday after hibernation of about six months, while active trading was seen in blue chips. The KSE 100-share Index gained 124.33 points or 2.15 per cent to close at 5,917.90 points.

The bazaar opened on a strong positive note and the market stayed in this territory throughout the session. This full-fledged bull-run was seen on KSE after a gap of about six months, said a dealer.

However, a little intra-day correction of 37.04 points was noted in the closing hours from intra-day high of 5,954.94 points. 

Interestingly, the number of actives increased to 269 stocks with gainers outnumbering losers 194 to 75 with none closing unchanged. Moreover, the day session generated a handsome turnover of over 210 million shares in ready market, consecutively.

Abdul Shakoor at InvestCap said that the buying recommendation by the foreign brokerage houses in the blue chips, in which foreign selling was expected, has changed the scenario to positive and that is why the Oil and Gas Development Company (OGDC) and Pakistan Telecommunication Company Limited (PTCL) managed to maintain in the green territory in this session after long.

The news of buying by NIT-State Enterprises Fund from this week, in eight government-own specific securities, made the investors tension-free and rather restored their confidence level of extending their stay at markets, he added.

The NIT-SEF will inject Rs20 billion funds in OGDCL, NBP, PTCL, SSGC, SNGPL, KAPCO, PPL and PSO, Chairman-NIT Tariq Iqbal Khan announced last week.

Furthermore, the contribution of penny stocks also remained visible in this session too, Shakoor added.

The parallel running junior 30-Index rose by another 98.55 points or 1.85 per cent to 5,439.77 points.

The day turnover in ready market stayed at four-month high level, as it was produced at 210.111 million shares against 210.763 million shares changed hands on the weekend.

Activities in future market remained nil in this session too, while NCCPL has demanded 50 per cent additional cash margins on fresh leveraging in the market on Continuous Funding System (CFS) MK-II transactions.

However, an inflow of Rs37 billion was witnessed in overall market capitalisation, which enhanced to Rs1.879 trillion.

M Fawad Khan at KASB Securities reported that favourable news flow like resolution of leveraged financing issue and market support fund and current near-trough valuations have allowed the market reasons to cheer after over 37 per cent correction since Dec 15 (63 per cent from its peak).

We believe a sustainable re-rating from current multiples rests on how three key risks unfold in the coming few months (1) next move on policy rate expected in late January (2) extent of political noise leading up to election/nomination of senate chairman and Chief Justice in Mar 09 and (3) Pakistans compliance with IMF conditions.

While 2008 expected market price-to-earning (P/E) of 4.5 multiples is 30 per cent below implied theoretical levels, we believe the market may trade well below its theoretical bottom for now, he added.

Ahsan Mehanti at Shahzad Chamdia Securities said that with December result announcement was set to continue bullish activity in oversold market.

TRG Pakistan led the volume leaders with 16.083 million shares closed at Rs2.85 with a gain of 57 paisa, followed by OGDC with 15.282 million shares closed at Rs49.27 with a gain of Rs2.33, NIB Bank with 12.772 million shares closed at Rs6.01 with a gain of 71 paisa, Zeal Pak with 12.647 million shares closed at 71 paisa with a gain of 13 paisa and PTCL with 8.880 million shares closed at Rs15.61 with a gain of 10 paisa.


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## Neo

*Pak economy approaching depression from constant recession ​* 
Tuesday, January 06, 2009

LAHORE: The incapability of the economic planners to act discreetly in time is pushing the Pakistans economy from recession to depression calling for out of book strategy to keep the economy moving.

Economists point out that both the government and central bank have been ineffectively fighting to hold the inflation for the last 15 months by raising the interest rates. They point out that the country suffered from stagflation and required altogether diverse approach to keep the economy sailing.

The simple description of stagflation is a sluggish economy coupled with price inflation says senior economist Naveed Anwar Khan, FCA. He said in stagflation the prices go up while the economy goes down. He said under normal circumstances inflation heats up the economy, adding that in a heated economy the central banks are warranted to increase interest rates to cool it down to rational level but in stagflation the usual method of raising interest rates do not help the situation. The only reason it helps in times of high economic activity is because it slows the velocity of money or the speed at which it changes hands, he added.

Naveed pointed out that when the economy is sluggish inflation usually is also low and standard remedy overseen by the central banks is to lower the interest rates to stimulate the economy. Regrettably he added it is unfeasible to stimulate the economy by lowering rates while concurrently fighting inflation.

He said the plan for economy during stagflation is different. He said during course of stagflation the government and central banks know that interest rates are not the problem but it is the money supply that keeps inflation high in slow economy. It has to decrease the money supply and get the economy back on a firm footing. He said the central bank unfortunately failed to force the government to reduce its borrowing to contain money supply.

The inflationary pressure created during the decline in economic activity was partly due to high borrowing of the government from the State Bank of Pakistan and partly due to unbridled money creation, and rupee devaluation compared to the other currencies, says Asif Ali Shahid, Canada based charted accountant. 

This he added has caused prices for food and energy to skyrocket. He said on the deflationary side we have the industrial downturn, energy and power crisis which is plummeting liquidity for banks as well as causing real estate prices to fall.

There is no doubt that Pakistans economy is in depression since the start of 2008 says Faisal Qamar a Dubai based chartered accountant. He said the recession has now got out of hands and by all counts Pakistan is now facing economic depression. He said technically a country is in depression when the decline in its real GDP exceeds 10 per cent or a recession that lasts for more than three years.

He said Pakistan is close to its third year of recession calling for evolving depression specific economic policies. He said non-depression economics shuns fiscal policy, on the grounds that central banks tools are powerful enough and their decision-making more effectual and technocratic than that by legislatures. But in todays customary conditions, we cannot afford this perception. The economy needs fiscal incentive that could be provided by first taming inflation by curtailing huge government borrowing.


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## Neo

*Countrys economy capable of meeting defence needs: Tareen ​* 
Tuesday, January 06, 2009

ISLAMABAD: Adviser to the Prime Minister on Finance Shaukat Tareen said on Monday that the Pakistani economy was fully capable of meeting the defence requirements of the country.

Talking to a private TV channel, he said the Defence Ministry had not put any undue burden on finance despite tension on the eastern border and movement of troops. Replying to a question, he said that the government would make all-out efforts to meet the defence requirements.

He said the Finance Ministry had chalked out a nine-point economic agenda to achieve short, medium and long-term goals. He said: Our agenda is to bring micro-economic stability, increasing revenues, reducing fiscal deficit, rationalisation of developmental budget and reduction in poverty.

Tareen said that besides disbursement of cash amount among the poor, the government also wanted to give them health insurance.He said that despite tough challenges, the Pakistani economy was showing signs of improvement, adding that, due to the international financial crunch, stock markets of all the countries suffered. 

The adviser said inflation was reducing and hoped that the government would succeed in bringing it to a single digit by next year. He added that inflation would drop by three per cent in the next two months.

Replying to a question, he said that he had no intention to increase the interest rate if core inflation dropped.When the interest rate reduces, it will give confidence to markets to perform well, he said.

Tareen said the government had reduced oil prices by 40 per cent just in 45 days to give quick relief to the common man and the next decrease in petroleum products would be made after thorough deliberations.

The adviser said circular debt was due to Pepco which stood at Rs 170 billion, adding that, the Finance Ministry had released the first installment of Rs 7 billion to the IPP to improve their cash flow. He said directives had been issued to ministries to reduce non-essential expenditure, like telephone and petroleum, to overcome the fiscal deficit.


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## Neo

*IMF condition of zero borrowing: Federal government retires Rs 98 billion debt to SBP ​* 
KARACHI (January 06 2009): Complying with the IMF's one of the primary conditions, the Federal Government has not only restrained from borrowings but also retired some Rs 98 billion to the central bank. The federal government was constantly borrowing from the banking system including the State Bank of Pakistan (SBP) and other banks since last one and a half years to meet its budgetary deficit, sources said on Monday.

While in October, when Pakistan approached International Monetary Fund for a standby loan, it set a condition of zero borrowing from central bank in October 1, 2008 to June 30, 2009 period. "Although Pakistan agreed to IMF condition, the slow foreign inflows made the government continue borrowings from the central bank to meet its deficit," they said.

The federal government has borrowed Rs 411 billion from SBP for budgetary support from July 1 to December 13, 2008 despite the IMF had asked it to limit the budgetary borrowing to Rs 258 billion for the whole fiscal year. However, SBP on Monday revealed that government has retired Rs 98 billion during second week of December 2008.

The government borrowing for budgetary support has declined to Rs 313 billion on December 20, 2008 previously stood at Rs 411 billion on December 13, 2008, depicting a decline of some 24 per cent. Sources said that the federal government has further retired debts during third and last weeks of December 2008, which would be reflected in the next Broad Money report. "The retirement of central bank borrowing shows the seriousness of government regarding the IMF programme", economists said.

They said that it's a good sign for the economy and would help easily get the second tranche of IMF loan. Adding, "the retirement statistics depicting that government is likely to meet IMF's condition of net zero borrowing since October 2008, in January 2009".

They informed that at present government is focusing other instrument like market treasury bills, National Savings Scheme (NSS), Pakistan Investment Bonds and recently issued Ijara Sukuk to meet its deficit.


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## Neo

*Interest rate will not be increased: all IMF targets met, says Tarin ​* 
ISLAMABAD (January 06 2009): Finance Ministry has achieved all IMF targets, including 2 percent fiscal deficit by the end of December 2008, and tax collection likely to touch 10.5 percent of GDP as discussed and agreed, said Advisor to PM on Finance, Shaukat Tarin.

He also said that interest rate would not be increased now. "I am not in a mood to increase interest now as inflation rate would start falling now". He said that CPI inflation as of December is likely to fall by 1.5 percent and in the next two months it would reduce by 2 percent, as initial data is indicating. By end-June inflation would be below 20 percent.

Talking in Aaj TV program Islamabad on Monday night he said that Rs 700 billion was stuck in bank accounts of unspent development spending, which should first be used, then asking for new allocation, even which we are ready to do as government has more fiscal space.

IMF delegation is due in February, which would review end-December targets, where the government seems comfortable now, he said. Increase in defence expenditures has not put the spending under pressure, and these are manageable.

He said that circular debt is Rs 169.7 billion and is likely to be settled by end-January, and ministries have spent their last two days in resolving these issues. Initial payment of Rs 7.5 billion has gone and other payments would come in due course of time.

This would have cut electricity shortage from 4500 mw to 2000 mw and would reduce load shedding substantially. OMCs margins and dealers margins are being reviewed in the petroleum policy, to be taken up by ECC on January 9.

The government is also planning to review oil and gas payments on monthly basis. On expenditure side, Tarin said that he had asked the ministries to reduce their travelling, petrol, telephone and other spendings to match revenue capacity.

State Bank's profit with other government owned commercial organisations would provide some resources for managing fiscal deficit. He admitted that that poverty rate has increased in last two years and a World Bank-based survey with independent third-party evaluation was underway, which would be completed by end of this year. Overdraft of SBP has reduced by Rs 36 billion from Rs 258 billion to Rs 222 billion, which would also help reduce other monetary targets.

NFA (net foreign assets) and other targets are also on track. He also assured no bank failure and government is ready to issue any guarantee to any bank in case it shows any problem, say Tarin.

He said that falling trade deficit has helped in managing foreign exchange reserves. In next 18 months oil payments would be shifted from interbank rate market. "We have crossed problem time and now we are sailing through for a better future where I am seeing light at the end of the tunnel", Tarin remarked.


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## Neo

*Rice exports cross $1.18 billion mark in six months​* 
KARACHI (January 06 2009): Pakistan's rice exports have crossed $1.18 billion mark in the first six months of the current fiscal year. "This is the first time in the country's history that rice exports have crossed $1 billion mark in six months period", Abdul Rahim Janoo, Chairman of Rice Exporters Association of Pakistan (Reap) told Business Recorder on Monday.

He said that this year's total rice exports are expected to exceed the target of $2.30 billion. He said that export of basmati variety would start in March 2009 and it was expected that total rice exports would touch $2.40 billion this year.

He said that rice exporters were receiving attractive orders from various countries for Pakistani rice. "Despite economic crisis and various other difficulties, the country's rice exports are increasing tremendously mainly due to untiring efforts of the private sector", Janoo said. "We are not able to understand why the government wants TCP and Passco to enter the rice trade, when the private sector is doing well in this regard," he added.

He said that it was the private sector that introduced the Pakistani rice in various markets of the world and invested millions of dollars to establish the brands of rice in different markets.

He said that the Rice Exporters Association of Pakistan (Reap) has once again started efforts to capture potential markets to export Pakistani rice. In this regard, Reap has decided to send three delegations to Saudi Arabia, South Africa and Senegal. These delegations will be led by Janoo.

The decision was taken at a meeting of Janoo with Secretary Trade Development Authority of Pakistan (TDAP) Naveed Arif here on Monday. Various issues regarding rice trade were discussed in the meeting. The meeting observed that the country has a bumper rice crop this year with the total production of 6.2 million tons.

The meeting observed that Saudi Arabia is a market of over 9 million tons rice. Some eight years back, Pakistan's share in total rice exports to Saudi Arabia was 54 percent, which has now declined to only eight percent due to various reasons. The meeting noted that the Saudi potential market can be easily re-captured to export Pakistani rice with some efforts.

South Africa is a market of over 10 million tons rice, in which Pakistan's share is only three percent. Naveed Arif suggested that Senegal is also another potential market for Pakistan's Irri broken rice, and Reap should also send its delegation to that country. The meeting decided that Reap will send its delegation to Senegal in March 2009.

Javeed assured the rice exporters that TDAP would provide every possible facility and co-operation to increase Pakistan's rice exports to different markets.


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## Neo

*Gilani directs elimination of load shedding by year end ​* 
ISLAMABAD (January 06, 2009): Prime Minister Syed Yousuf Raza Gilani has directed the Ministry of Petroleum and Natural Resources to arrange uninterrupted supply of oil and gas to the IPPs to ensure optimal supply of power.

He further directed the Ministry of Water and Power to ensure elimination of load shedding by end of this year.

The Prime Minister here on Tuesday was chairing a high level meeting on energy situation and to review the implementation of the decisions taken on January 2 meeting co-chaired by the President and the Prime Minister to address the energy situation in the country.

Gilani emphasized the importance of integrated energy plan so as to meet the future energy needs on sustainable basis.

He also desired to hold a meeting to finalize integrated energy plan.

He further directed that the fast track power projects should be established on priority.

Gilani was informed that during the last three days additional generation of 1800 MW was brought about.

This was due to increased availability of oil and gas and another 1100 MW will be added within this week. Resultantly the power deficit will be further reduced to about 2000 MW.

The Prime Minister was briefed on the financial situation of the power sector.

He directed Ministry of Finance to provide the requisite funds to optimize power generation and ensure payments to the fuel suppliers and IPPs as a special measure despite the financial constraints.

The meeting was attended by Minister for Water and Power Raja Pervez Ashraf, Minister of State for Economic Affairs Hina Rabbani Khar, Adviser to the Prime Minister on Petroleum Dr. Asim Hussain, Adviser to the Prime Minister on Finance Shaukat Tarin, Secretary General to the President Salman Farooqi, Secretary Finance, Secretary Petroleum, Secretary Water and Power, Managing Director PEPCO, Managing Director SNGPL and Managing Director SSGCL.


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## Neo

*Power shortfall reduced to 2,200 megawatts a day: minister ​* 
ISLAMABAD (January 06 2009): The power shortfall, which had surged to 4500 MW, has been reduced to 2200 MW per day after the measures taken on the directives of the President and Prime Minister. Addressing a seminar held on "Public-private partnership and its role in management of water resources" at a local hotel on Monday, Federal Minister for Water and Power Raja Pervez Ashraf said that government had covered the power shortfall of 1500-2000 MW after the measures taken on the direction of the President and Prime Minister.

Executive Director of Infrastructure Management Unit Lieutenant General Muhammad Zubair; Advisor to the Ministry of Water and Power Riaz Ahmad Khan; Project Director/Additional Secretary, Ministry of Water and Power Zarar Aslam, representatives of Asian Development Bank (ADB) and representatives of the World Bank also attended the seminar. The Minister said that the country was currently facing the power shortfall of 2000 to 2200 MW and due to circular debt, the energy crisis had been worsened.

The President and Prime Minister had taken the notice of the energy crisis and hold the meeting on the said issue. He said that the country had faced more power shortfall of 4200 MW in the corresponding period of the last year that was more than the power shortfall prevailing in the current situation.

He urged the people to be patient regarding the load shedding, and said that some times unscheduled load shedding occurred due to some technical problems. He said that Kalabagh dam was the controversial project as three provinces had passed resolutions against its construction.

The government would not initiate such projects that were controversial, he added. He held the former government responsible for the power crisis, as it had not inducted/introduced even a single unit/plant to generate electricity. He said that the situation would start improving after January 31 after the opening of the canals.

"The government is working on some power projects that will result in storing 20 million acre feet water, generating 10,000 MW hydro power," the Minister said. The minister said that the seminar had been arranged with the assistance of Asian Development Bank under the capacity building project. The ADB was a major donor, helping Pakistan in many sectors besides massive support in water and power sectors. He said: "We appreciate the keen interest and support by the ADB in our development efforts."

The minister maintained that the theme of the seminar was Public-Private Partnership (PPP) to meet the financial outlay of the mega water sector projects. "This is an appropriate subject to sensitise both the public and private sectors as how to co1laborate under varying arrangements to meet the dire needs of investment in this sector, " the minister said, adding this was an area which constituted the lifeline of the economic and social needs of the citizens of Pakistan.

The minister noted that whatever the mode of participation whether, the public sector or the private sector taking the lead role, investment was to be brought in these sectors to implement projects of gigantic size, which were so vital for our economy and social uplift of the masses.

"We are not left with any time and space, for allegations and counter allegations as to why we failed to construct large dams and hydropower projects over the past many decades," minister added.

"We must try to pool all resources to move forward for implementation of these vital projects in the shortest possible time," he said, and added that Water and Power Development Authority (Wapda) had done the pioneering work of identifying the potential sites for dams and hydropower projects.

Work on as many as 12 sites to construct dams and hydropower projects could be started in the next five years, he said, and added some very useful projects like Mirani Dam, Sabakzai Dam and Satpara Dam had been recently completed. These dams would address the needs of those isolated areas bringing prosperity to deprived segments of the society.

However, construction of mega dames and hydropower projects to address the needs of the main Indus Basin System was of utmost urgency in view of dwindling per capita water availability, which was as low as 1100 cubic metres almost touching the limits of being a water scarce country, he added.

The Minister said that Mangla Dam raising project was near completion and construction work on Neelum-Jhelum hydropower project had been started. The design and feasibility study of Diamer Basha Dam had been completed and it was now being offered for open international competitive bidding, he said.


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## Neo

*Suggestions to overcome gas shortage ​* 
KARACHI (January 06 2009): Central Chairman All Pakistan CNG Association (APCNGA), M.A. Tariq Kandaan, has urged the government to connect Tal and Bhurburi gas fields with the national gas grid station to overcome gas shortage in the country. Speaking at a meeting of Karachi Chamber of Commerce and Industry (KCCI) on Monday, he said that Tal and Bhurburi gas fields are developed and they can produce more than 3000 MMCFD gas.

However, this resources remained unutilised due to disputes between gas field developers. He said that the government must call a meeting of gas field developers and resolve their disputes so that these resources could be fully utilised. He pointed out that total gas shortage is around 400 MMCFD out of which these two gas fields can meet 300 MMCFD and there would only be a shortage of 100 MMCFD.

Criticising government policy of closing down CNG stations in the country to save gas for industrial, commercial and domestic consumers, he said the closure of CNG stations will make no difference as 70 percent CNG stations are already closed in Punjab due to low gas pressure. He pointed that during the winter season domestic gas consumption increases from 22 percent to 60 percent of the total gas supply every year.

He suggested that a separate gas pipeline should be installed from national gas grid station for Faisalabad textile industry to increase gas pressure. The chairman said that the closure of CNG stations will render more than 400,000 people jobless will shake confidence of investors in government policies, ruin President's Rozgar scheme under which people have purchased CNG auto rickshaws on instalments from the National Bank, and the bank will face serious financial crises due to non payment of instalments by the scheme' beneficiaries. He said CNG policy was framed in 1992 and it was implemented in 1994. In the policy it was decided that there will be a difference of 40 to 50 percent between CNG and petrol prices so that people could start utilising CNG and conserve petrol and save huge foreign exchange.

He said that gas prices were also linked with international oil prices to attract foreign and local investors to invest in gas and oil exploration. When oil prices were increasing in international market gas price was also increased in the country. Now when oil prices have dipped from 147 dollars per barrel to 40 dollars per barrel, gas prices should also be reduced. He said that use of gas should be encouraged as it is environment friendly and helps in reducing environment pollution. He suggested that the government should frame a new gas consumption policy to know what will be its requirements in winter and summer.

President KCCI, Anjum Nisar assured APCNGA members that the chamber would arrange a meeting of the association with advisor to Prime Minister on finance and take up the issue with him to get it resolved. He agreed that once a policy is decided it should be implemented and there should be no change as frequent changes change the confidence of investors. He said that CNG stations should not be closed and they must be allowed to work to their full capacity.


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## Neo

*Govt needs $30bn for mega water and power projects​*
** Minister says hydro generation to improve by month-end when present canal closure will end​*
ISLAMABAD: The government needs an investment of about $30 billion for completion of various mega water sector and hydropower projects that would help in provision of power at affordable prices.

The government resources were limited to match the requirement of such huge investment therefore, soliciting support of the donor agencies, the multinational and the private sector for joint ventures was the only way forward. 

Federal Minister for Water and Power Raja Pervaiz Ashraf expressed these views in a seminar on Public-Private Partnership (PPP) and its role in management of water resources on Monday.

The PPP was an alternative way of procurement for the public sector involving a medium to long-term relationship between the public and the private sector thereby mobilising private sector capital and management to plan, implement and operate infrastructure projects, he maintained.

The minister said that Mangla Dam raising project was near completion and construction work on Neelum Jhelum hydropower project had been initiated. The design and feasibility study of Diamer Basha Dam had been completed, it was now being offered for open international competitive bidding.

Kurram Tangi Dam construction in southern NWFP was moving forward and after a long turbulent period was proceeding satisfactory. The minister said government had determined to start construction of large and small dams in the country on priority basis. The minister claimed that these dams would make available 18 to 20 MAF additional water to the system, which would generate more than 10,000MW cheap hydropower.

Later talking to journalists, the minister said that countrys hydro generation would improve by end of January when the present canal closure was expected to end. This is totally a technical matter however, some elements are trying to politicise this issue which is not fair. 

He said as canal closure had taken place, all efforts were underway to compensate for the loss of hydro generation through different means as hydro generation had plummeted sharply due to canal closure and reduction of water releases from Tarbela and Mangla reservoirs.

He said taking notice of increasing power crises in the country the president and prime minister had issued various instructions, which were being followed to improve power situation in the country. He said following the directions additional electricity of 1,500MW to 2,000MW power has been added in the system however, he said still the country was facing power deficit of around 3,000MW. 

Replying to a question about construction of Kalabagh Dam, the minister said, We will not go to constructing any such dam which is controversial and the government is planning several other mega projects in this sector like Diamir-Bhasha Dam. He said the country was facing acute power shortage due to gap between demand and supply as power consumption was increasing. However, the minister assured that by December 2009 the government would include 3,500MW electricity in the system. He assured that there will be no load shedding after December 2009 and the government would overcome power deficiency.


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## Neo

*Gas shortage to worsen as LNG imports not expected before Oct 2011a ​* 
Wednesday, January 07, 2009

KARACHI: The gas shortfall in Pakistan has widened to 700 million cubic feet per day (mmcfd) and first cargo of imported gas is not expected before October, 2011, parliamentarians and industry officials said on Tuesday.

The gap in supply and demand of country main fuel, which meets 49 per cent of its energy needs, will be bridged through LNG imports from Qatar, said Senator Dilawar Abbas, Chairman Senates Standing Committee on Petroleum and Natural Resources. In the first phase, 500mmcfd will be imported, hopefully by October 2011, he said at a press conference after committee met Sui Southern Gas Company (SSGC) officials. But that would be like a drop in the ocean considering the severe energy shortage.

These imports are imperative since gas reserves will start to exhaust in next two years as indigenous production of oil and gas is limited, he said, explaining that another 500mmcfd will be imported in the second phase by 2013. We came here to see the advancement on the project, which was started three years back. There are some complications in its way and those will be removed, he said, without specifying the obstacles delaying the project.

He also did not say if second phase of imports will too come from Qatar. But SSGCs Deputy Managing Director, Azeem Siddiqui, said Shell was one of the two companies interested in the project that can arrange supplies from numerous sources.

The Mashal LNG project, which was started back in 2005, is being facilitated by SSGC. Shell and a consortium of 4gas were two parties short listed for the project. Pakistan government has issued a letter of support to 4gas after Qatar sought official assurance, he said, signifying that key details like price of gas remains to be finalised.

He also disclosed that a floating ship will be used for the project opposing to the original plan of constructing a regasification plant and storage facilities on land. LNG is short around the world. Our main concern should be to secure adequate supplies at reasonable prices, he said, insisting that project structure was same as was initially determined.

Gas load shedding which hit part of Punjab and NWFP in recent weeks has promoted violent protests by industrial workers and citizens perturbed by incessant power outages as most of the power plants in the country run on gas. 

Total production of natural gas is close to 4000mmcfd and mounting deficit in its supply that has now touched 17.5 per cent has made imports imperative, analysts say.


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## Neo

*Pakistan can use coal as substitute for gas: expert ​* 
Wednesday, January 07, 2009

KARACHI: There is an acute gas shortage all over the country besides power, and we have to use our indigenous coal reserves to convert into natural gas to overcome the shortage instead of importing gas at very higher rates.

The natural gas reserves in Pakistan will be exhausted in the next six years against the high demand, while the government claims that reserves are for the next 20 to 25 years, which is not a factual position.

This was stated by alternate energy expert, Manaullah Khan, consultant of an American firm ATCO based in Houston, Texas, USA. Khan these days is working in the Middle East for oil companies.

Natural gas plays an important role in Pakistans economy, as it contributes around 50 per cent of the total commercial energy supply in the country.

Pakistans total remaining gas reserves are estimated at 29.80 trillion cubic feet (2008) which are adequate for meeting the gas requirement of Pakistan for 6 years at the current rate of production.

The present constrained demand of gas for 2008-09 is 5.28 trillion cubic feet. Pakistans gas demand and supply projections indicate a widening gap of approximately 600 MMCFD by the year 2010-11. The gap starts to emerge in 2007-08 and builds up to 1000 MMCFD by 2010-11, as the current gas fields gradually go off plateau.

It should be noted that the present international rate of natural gas is around $6.00 per 1000 cubic feet. When the cost of import plus the cost of transportation and distribution is added, it will cost 5 times higher than the present gas price in the country.

Unless we start using coal directly as a substitute for gas consumption in the power plant and other related industries, we may not be able reduce the growing demand of our natural gas.

Coal gasification and coal-to-liquid are some proven technologies available which can be successfully employed in Pakistan to reduce dependence on imported oil and natural gas.

In addition to coal, there are many waste materials like cow dung, municipal solid waste, industrial waste, rice husk, wheat and rice straw and other composite materials which can be used to produce bio gas, which can be used a substitute of natural gas for winter heating and CNG filling stations for vehicle fuels. If this waste-to-energy technology is adopted in Pakistan on a fast track basis, then the problem of gas shortage can be overcome within a few years.

Coal gasification offers one of the most versatile and cleanest ways to convert the energy content of coal into electricity, hydrogen, and other energy forms.

Rather than burning coal directly, gasification breaks down coal, or virtually any carbon-based feedstock, into its basic chemical constituents.

In a modern gasifier, coal is typically exposed to hot steam and carefully controlled amounts of air or oxygen under high temperatures and pressures. Under these conditions, carbon molecules in coal break apart, setting into motion chemical reactions that typically produce a mixture of carbon monoxide, hydrogen and other gaseous compounds.

Gasification, in fact, may be one of the best ways to produce clean-burning hydrogen for tomorrows automobiles and power-generating fuel cells. Hydrogen and other coal gases can also be used to fuel power-generating turbines or as chemical building blocks for a wide range of commercial products.

The pioneering coal gasification electric power plants are now operating commercially in the United States and in other nations, and many experts predict that coal gasification will be at the heart of future generations of clean coal technology plants for several decades into the future.

A coal gasification power plant, however, typically gets dual duty from the gases it produces. First, the coal gases, cleaned of their impurities, are fired in a gas turbine, much like natural gas, to generate one source of electricity. The hot exhaust of the gas turbine is then used to generate steam for a more conventional steam turbine-generator. This dual source of electric power, called a combined cycle, converts much more of coals inherent energy value into useable electricity. The fuel efficiency of a coal gasification power plant can be boosted to 50 per cent or more.

As early as the 1890s, lamplighters once made their rounds down the streets of many of Americas largest cities lighting street lights fuel with town gas, the product of early and relatively crude forms of coal gasification (town gas is still used extensively in some parts of the world, such as China and other Asian countries). Once the vast fields of natural gas were discovered and pipelines were built to transport the gas to consumers in the 1940s and 50s, the use of town gas phased out.

Coal gasification-based power concepts got their biggest boost in the 1990s when the US Department of Energys Clean Coal Technology Programme provided federal cost-sharing for the first true commercial-scale IGCC plants in the United States. Pakistan must take a similar initiative if it wants to solve the energy shortage problem.

Coal plays a major part in the worlds energy system and hence in global economic and social development. Coal currently supplies over 38 per cent of the worlds electricity and 23 per cent of global primary energy needs. Coal-fired electricity drives the economies of the two most populous and fastest growing countries in the world today, China and India, as well as a number of key industrial economies, such as the USA and Germany. Coal consumption is expected to grow by around 1.4 per cent per year over the next thirty years.

Another important local fuel which can be used is fuel grade ethanol which is a by-product of sugar mills. Brazil, India and other countries are using 20 to 30 per cent fuel grade ethanol with petrol to reduce the dependence of important fuel. 

If we reduce the cost of petrol by using fuel grade ethanol, then it will reduce the use of CNG in motor vehicles. The cost of production of fuel grade ethanol can be reduced by using bio gas as fuel in place of natural gas or fuel in their boilers. The bio gas can be produced from the process waste of fuel grade ethanol plant, thereby reducing the cost of production.


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## Neo

*MoF revises GDP growth at 3.4 percent​*
ISLAMABAD: Given the domestic and international economic pressures the Gross Domestic Product (GDP) growth has been envisaged at 3.4 percent against the budgetary target of 5.5 percent and downward revised projection of 3.5 percent, according to a economic analysis prepared in the Ministry of Finance.

3.4 percent GDP growth is to be contributed by sectoral growth rate of agriculture 3 percent, manufacturing 1.5 percent and services sector by 4.2 percent in 2008-09.

According to the analysis, Pakistan is facing mounting pressure from ever rising inflation, food prices, acute power shortages, bewildering stock market, perceptible slowdown in manufacturing and services sectors and a sharp increase in interest rates and widening current account deficit. 

External Sector: Countrys exports staged a recovery by 11.8 percent in July-November with $1 billion addition in exports compared with last fiscal. Imports added $2.7 billion more with a growth of 21.6 percent in Jul-Nov. Merchandise trade balance widened to $6.6 billion with a growth of 37.3 percent. Workers remittances totaled at $3 billion in Jul-Nov as compared with $2.6 billion last fiscal. 

Current Account Deficit: Current account deficit expanded by 44.5 percent in Jul-Nov, which amounted to $6.9 billion against $4.7 billion last fiscal. 

Exchange Rate: After remaining stable for more than 4 years, Rupee lost significant value against US dollar and depreciated by 21 percent during March-November 2008. It is expected that with increased inflows from abroad the exchange rate will remain stable. 

External Debt Liabilities: EDLs as compared with foreign exchange earnings of the country decreased 125.3 percent to 112.2 percent. EDLs as percentage of GDP increased from 27.6 percent in end June 2008 to 27.9 percent by end September. 

Domestic Debt: Domestic debt witnessed an increase of Rs 248.5 billion in first quarter and stock stood at Rs 3465.7 billion by end September. This implies an increase of 7.7 percent in debt stock in one quarter, however, in percentage of GDP domestic debt has declined from 30.7 percent to 25.9 percent. 

Foreign Direct Investment: FDI has reached $1.602 billion in Jul-Nov 2008 as compared with $1.712 billion same period last fiscal depicting a decline of 6.4 percent. 

Foreign Exchange Reserves: Reserves, which were $11.4 billion at end June 2008 declined to $6.4 billion by November 25, 2008. With the addition of $3.1 billion IMF package, import coverage ratio that declined to uncomfortable level of 9.1 weeks by end of October 2008 improved to 12.3 weeks by end November 2008. 

Fiscal Policy: The faster growth of 23.1 percent in total revenues is more than off-set by even faster growth of 25.5 percent in current expenditures. Despite decline in fiscal deficit in first quarter, the growth in domestic debt accelerated reflecting non-availability of finances through external resources. The stock of domestic debt grew by 6.3 percent since beginning of the fiscal year as against the growth of 4.6 percent same period last fiscal. The financing patterns of fiscal deficit remained dominated by the banking system, which financed 75 percent of the fiscal deficit and only 25 percent through non-bank sources. 

Tax Revenues: Some Rs 543.3 billion taxes were collected during the first half (July-December) of the current fiscal year 2008-09 as compared to the Rs 431.1 billion in the same period last fiscal year 2007-08 showing a growth of 24.9 percent. 

Monetary Policy: The SBP has kept its tight monetary policy stance in July-November period and policy rate was adjusted upwards to shave off some aggregate demand from the economy. 

Money Supply (M2) contracted by 0.2 percent against the target of expansion of 10.6 percent for the year. Net Domestic Assets (NDA) have increased by Rs 345.5 billion as compared with increase of Rs 264 billion in last year, projecting an increase of 8.6 percent. 

Net Foreign Assets (NFA) recorded a contraction of Rs 356.3 billion as against contraction of Rs 102.1 billion in comparable period last fiscal year. Credit to private sector witnessed an increase of Rs 145.9 billion in Jul-Nov as compared to Rs 133.9 billion in same period last fiscal year. Weighted average lending rates and deposit rates increased to 15.1 percent and 9.5 percent respectively by October 2008 while weighted average yield on 6-months t-bills increased to 14.2 percent in October.

Agriculture: The agriculture has been facing acute shortage 32 to 39 percent of irrigation water and sugarcane crop is estimated to fall short of the target, however, rice and cotton yield is expected to be higher than target. Wheat is expected to record highest ever harvest in 2008-09. 

Services Sector: This sector has exhibited resilience to fluctuation in the economic activity and Foreign Direct Investment in services sector increased by 2.5 percent in first quarter (Jul-Sep) period of 2008-09. 

Inflation: In sheer contrast to significant abatement in the inflationary pressures across the globe, the inflation rate as measured by changes in consumer price index (CPI) stood at 24.6 percent during July-November as against 7.9 percent in comparable period last fiscal year.


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## Neo

*Gilani orders uninterrupted gas and oil supply to IPPs ​* 
ISLAMABAD (January 07 2009): Prime Minister Syed Yusuf Raza Gilani has directed the Ministry of Petroleum and Natural Resources to arrange uninterrupted supply of oil and gas to the IPPs for optimal supply of power. He was chairing a high level meeting here Tuesday on energy situation and to review implementation of the decisions taken in the earlier meeting held with President Asif Ali Zardari on January 02.

This is the second high level meeting within a week to resolve the power crisis that has led to riots and protests in different parts of the country. Gilani directed the Water and Power ministry to ensure elimination of load-shedding by the end of this year and underlined the need of an integrated energy plan to meet the future energy needs on sustainable basis. The Prime Minister said that the fast track power projects both solicited and unsolicited should be established on priority.

The meeting was informed that during the last three days additional generation of 1800MW at peak was brought about. This was due to increased availability of oil and gas and that the generation of another 1100MW will be added within this week. Resultantly the deficit of power will be further reduced to about 2000MW.

The Prime Minister was briefed on the financial situation of the power sector. He directed Ministry of Finance to provide the requisite funds to optimise power generation and ensure payments to the fuel suppliers and IPPs as a special measure despite the financial constraints.

Those who attended the meeting included Minister for Water and Power Raja Pervez Ashraf, Minister of State for Economic Affairs Hina Rabbani Khar, Adviser to the Prime Minister on Petroleum Dr Asim Hussain, Adviser to the Prime Minister on Finance Shaukat Tarin, Secretary General to the President Salman Farooqi, Secretary Finance, Secretary Petroleum, Secretary Water and Power, Managing Director, Pepco, Managing Director SNGPL and Managing Director SSGCL.


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## Neo

*India takes steps to curb cement import from Pakistan ​* 
KARACHI (January 07 2009): The Indian government has imposed some 12 per cent duties on cement import, which a primary aim to curb cement import from Pakistan, industry sources said. Sources told Business Recorder that the Indian government for the last one-month had been taking measures to reduce cement import, particularly from Pakistan.

In a such move, it reduced excise duty on the domestically manufactured cement by Indian rupees 8 per bag on December 8, 2008 to enable the local product compete the imported cement. Although the Indian government has imposed duty on import of several items, the duty on cement imports is seen as a deliberate hedge against the Pakistani cement flooding its markets.

"India has restored certain duties on import of cement, such as TMT bars, zinc and Ferro-alloys, which were removed earlier to overcome inflation. It claims that the duties have been restored only to protect domestic companies," they added.

Indian government imposed eight per cent countervailing duty and four per cent customs duty on import of cement, which is largely imported from Pakistan. Sources said that Pakistani exporters were exporting cement to India at lowest cost and with the imposition of cumulatively 12 per cent duties on cement export to Indian will become inviable.

The newly imposed duty is some eight per cent higher than the previous one, as earlier only four per cent import duty was on cement import, which has been removed on April 3, 2007 to fulfil local demand through import from neighbouring countries including Pakistan.

Sources said that Pakistani cement exporters are already paying some Indian Rs 2 per tonnes BIS fees on the export of cement and at present some 12 Pakistani cement manufacturers were exporting cement to India. With recent duties, Pakistani cement price in the Indian markets will surge by Indian Rs 24 per bag to Rs 220-230.

Whereas, the locally produced cement is already available at Indian Rs 220-230 per bag. Earlier, Pakistani cement was available at Indian Rs 210-215 per bag, they added. At present India is facing enormous cement shortage, which has provided a huge advantage to Pakistani cement companies to export in bulk with large buying orders in hands, they said.

According to the statistics of All Pakistan Cement Manufacturers Association (APCMA), the country has exported 786,672 tonnes of cement to the India during the last fiscal year.

Until now, cement export to India was gradually increasing with a growth of some 206 per cent during the first four months of current fiscal year 2008-09. Pakistan has exported some 294,120 tonnes of cement during July-November 2009 as compared to some 96,236 tonnes in the same period of the last fiscal year 2008, showing a rise of 197,884 tonnes.

Pakistani exporters explored the Indian market in 2007 and met all conditions to begin export cement to India. However, later Pakistani exporters found difficulties of quality certification, a primary condition the Indian authorities laid down, which they consequently obtained from Bureau of Indian Standard by paying huge fee.


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## Neo

*Foreign real estate projects in Pakistan feel the heat of the UAE market downfall ​* 
Thursday, January 08, 2009

KARACHI: The super-luxurious residential and commercial projects that had been initiated by foreign developers of United Arab Emirates (UAE) are rumored to be under a cloud as the construction work on some such projects had to be rescheduled following the impact on the real estate crises in the region. But the Gulf builders contend that everything is on track and their project will proceed as per plan.

While the local real estate market is booming with the popularity of small housing projects initiated by local developers, investors in projects by property giants like Emaar Pakistan Pvt Ltd and Al Ghurair Giga Pakistan Pvt Ltd are worried about the status of their investments in both Islamabad and Karachi.

One investor, requesting to remain anonymous shared that he had repeatedly visited the project site, only to see barren land with a lot of machinery and work force carrying out tasks at a snails pace. I have repeatedly inquired on the status of the venture and I am always assured that it would be completed on time. But I fail to understand how they would manage when my eyes tell me otherwise, he expressed.

On the other hand, an insider of the real estate industry informed that the UAE market is predicted to slump further and this will impact local projects taken up by these Gulf-based giants. He said more projects would be cancelled and abandoned in the months to come and these are directly going to affect the projects in Pakistan too.

Referring to the UAE market, the source further stated that Emaar requires billions of Dirhams to complete their existing projects which they had planned to borrow from Abu Dhabi who have in turn asked for shares in the Emaar projects instead.

Similarly, other big developers such as Nakheel, Damac and Ruwad have laid off staff in massive numbers while shares of the real estate sector of UAE have plunged from as high as Dhs11 per share to a mere Dhs3 per share, he informed.

The UAE developers that are here have been rumored to be planning to also lay off people or worse abandon projects and flee with the investors money he continued. The best bet in these times is caution, as the market is highly speculative right now.

When The News contacted Chief Executive Officer of Emaar Pakistan, Dr Dia Malaeb, he denied any such news and said that they continue to believe in the Pakistani real estate markets potential as the global financial meltdown had not affected this country as severely as the UAE market. He said that the projects that had already been launched would go ahead as planned and Emaar Pakistan would ensure that they are delivered to their investors on time and according to their agenda.

Malaeb informed that their project Canyon Views in Islamabad is all set to be handed over to its investors in a few months time, whereas the work on The Highlands, also in Islamabad and Crescent Bay in Karachi continues to be completed as per the schedule.

However, the CEO did say that their sales were affected slightly and some new projects that they had been planning to introduce in Pakistan in Karachi, Lahore and Islamabad have been put on hold for the time being.

Malaeb expressed that these new projects may now be launched by the 2nd quarter of this year and have in no way been abandoned. We are studying the market for our other projects and would launch them when the time is right, he said.

Al Ghurair Giga Pakistan Pvt Ltd, on the other hand, when contacted, commented that they were an independent private limited company and therefore they were not answerable to their parent company in the UAE, and hence, did not have to follow any orders from them either. 

They said that some rescheduling had been done as they had indeed been affected by the Gulf situation. However, they said that they were in no way abandoning their projects as they were in earnest over their projects in Pakistan.

The representative of Al Ghurair Giga further stated that since they had been officially granted the license for the World Trade Center to be constructed in Islamabad, they had to deliver as there was much at stake.

Adjustments are made according to the economic situation, be it increasing prices or the global recession but we take everything in our stride optimistically. In fact, we actually benefited from the real estate recession in the UAE as local investors came back into the country and invested in our local ventures and therefore we gained more than we lost, the representative said.


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## Neo

*Friends of Pakistan term $60bn requirement for development projects a wish list ​* 
Thursday, January 08, 2009

ISLAMABAD: Many developed countries in the Friends of Pakistan (FOP)
forum have termed Pakistans request for obtaining $60 billion financing for 71 development projects as a wish list or a long shopping list, recommending that each donor country may be assigned one or two projects so that some concrete commitment is obtained.

When contacted, Federal Finance Secretary, Dr Waqar Masood, told The News on Wednesday that the next expert level meeting of the FOP, which was scheduled to be held by January 13, 2009, was delayed till the third week of January.

It is relevant to mention here that Islamabad will have to deliberate upon its strategy keeping in view the received feedback from donors capitals in order to fine tune its future course of action.

A detailed feedback obtained by Pakistans Foreign Office as well as Economic Ministries in the aftermath of the last FOP meeting held on November 17, 2008 at Abu Dhabi spells out in details the prevailing thinking of the developed world, which clearly states that if Islamabad did not prioritise its list, the member countries would remain non-committal to come forward to undertake these projects owing to the worldwide financial crisis, the burn of which was being felt by all the developed countries.

The donors are also suggesting Pakistan formulate short term, medium term and long term strategies in accordance with the importance of each projects. The best way should be to adopt an incremental approach because it would not be possible for the member countries to commit everything on the long demand list immediately.

Official documents exclusively available with The News state that the donor countries appreciated these efforts for undertaking this initiative in order to meet two major challenges which Pakistan is confronting, namely security issues and economic crisis.

The participants, according to the feedback, supported the ideas and plans of the Government of Pakistan. The success of this will now depend upon the hot pursuit by Pakistan.

The donor countries also raised objections on duplication of work, saying that the Friends of Pakistan and Pakistan Development Forum (PDF) are more or less the same. 

The donor countries in PDF are also similar so either these two forums should be merged together or the existing PDF should be reactivated. The PDF meetings are an annual event but no such meetings have taken place for the last two years, the donors response further stated.

The bilateral donors also asked Islamabad to utilise the expertise of international financial institutions (IFIs) such as the IMF, WB and ADB. Therefore, it was recommended that the WB may be invited in the next Experts Level Meetings to be held in January 2009, they added.

The donors also proposed to Islamabad to establish a FATA Trust Fund under the umbrella of the World Bank so that necessary trust and confidence of members is strengthened. It was also suggested that each component of FATA Development Program such as construction, publication and distribution of books and training of teachers may be assigned to each country separately for effective implementation.

It was pointed out that since Pakistan needs long term development assistance, it is necessary to highlight the economic, political and administrative constraints for devising strategies. There is no credible data or any necessary factsheet available for the international community on Pakistans economic situation, they added.

The donor countries during the meeting were not briefed about the possible impact of the IMF program on the economy and its impact on the general masses of Pakistan. Pakistan may request the IMF to circulate amongst all concerned countries, the necessary data and factsheet about the country, highlighting the likely impact of the IMF package on the overall economy of Pakistan. The report may also recommend additional funding to Pakistan, it stated.

The donors are also stressing upon Pakistan to establish a close collaboration between USA and itself in all areas of mutual interest. The lukewarm attitude of USA would make other member countries of the FOP give a cold shoulder to Pakistans economic assistance requirements, they concluded.


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## Neo

*Govt plans 16 projects for generating 25,270MW power​*
ISLAMABAD: In order to boost the GDP growth to 8 percent in the medium term, the government has planned 16 hydropower projects worth $46.2 billion, which would be completed by 2016, sources in the Ministry of Water and Power told Daily Times.

After completion of all these projects the government would be able to generate 25,270MW power. Some of these projects like Diamer-Basha dam, Golen Gol dam are ready for construction while the remaining 14 are still under consideration by Water and Power Development Authority (WAPDA).

The sources claimed that after completion of these projects, the government would be able to provide power a affordable prices to general consumers as compared to expensive electricity produced by thermal and gas.

Cumulatively, the cost of these 16 hydropower projects will be $46.2 billion and these projects would be completed till 2016. The sources informed that around seven projects would be completed in next five years (2009-2013) and would generate about 20,000 MW power. These projects are: Diamer Basha Dam, Golen Gol, Kohala, Dasu Buinji, Munda Pattan and some others.

These 16 projects are: Diamer-Basha Dam with cost of $12.6 billion and installed capacity 4500MW, Golen Gol with cost of $130 million and installed capacity of 106MW. The remaining under study projects are: Palas Valley with cost of $700 million and installed capacity of 621MW, Spat Gah with cost of $700 million and installed capacity 610MW, Kohala dam with cost of 2.16 billion and installed capacity 1100MW.

Dasu dam with total installed capacity of 4000 MW, Bunji hydro-project with cost of $6.5 billion and installed capacity 5400MW, Phandar project with total cost of $6 billion and installed capacity 80MW, Basho with cost of $65 million and installed capacity 28MW, Keyal Khwar hydro project with cost of $30 million and installed capacity 122MW, Lawi project on river Shishi with cost of $160 million with installed capacity 70MW. Others hyro power projects are: Harpo project with cost of $40 million and installed capacity 33MW, Thakot HPP on river Indus at Thakot with cost of $5 billion and installed capacity 2800MW, Pattan project with total installed capacity 2800MW, Yulb project on river Indus at Skardu with total cost of $6 billion and installed capacity 3000MW and the last project is Yugo on river Shyok at Skardu with total cost of $1 billion and installed capacity 600MW.

Sources said that land and water resources could assure water supply for irrigated agriculture development for ensuring food security of ever increasing population. It would also assure energy supply for industry at cheaper rates. The water resources could also assure flood mitigation to avoid huge flood losses during flood seasons. Proper utilisation of water resources can help in poverty alleviation and improvement in the standard of living.

If these projects were not properly funded, the country would confront severe economic consequences. Scarcity of public sector funding would delay development of water resources, which would delay benefits of the projects to the project area's population. The delay would also enhance food and energy crisis, increase unemployment along with dilapidation of socio economic conditions and living standards.

For achieving objectives of development of water projects, the sources said, private investment could be attracted. The problem with the private investors is that they are only interested in development of lucrative components of the project, the sources added. Thus it is feared that full potential of the project might be left undeveloped and cause loss to the nation.


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## Neo

*Pakistan likely to get massive help from Friends this month​*
** Govt likely to revise proposals list
* Finance Ministry calls for more access to markets​*
ISLAMABAD: Donor and friendly countries are expected to lend maximum financial and technical assistance to Pakistan at the Donors Conference on Pakistan and a meeting of the Friends of Pakistan (FoP) forum in Washington towards the end of this month, official sources said.

Keeping the keenness of donor countries in view, the government was revising its list of projects that require international assistance, they said.

Projects: The sources said many new projects were likely to be added to a proposed list, which includes those aimed at enhancing the capacity of troops and law enforcement agencies in the war against terror.

The government had earlier tabled ventures worth $60 billion in the FoPs last meeting in Abu Dhabi on November 17 last year, however, after the donors feedback, the list was being amended, they said.

The government had directed various ministries for reviewing their proposals, and a recent high-level meeting at the Presidency evaluated the changes in the projects list, especially those forwarded by the Interior Ministry, they added.

The Donors Conference, which was to be held in Beijing earlier, will include participants from international financial institutions and development funds operated by various affluent nations.

The meeting of the FoP was also rescheduled for the months end due to unexplained reasons, the sources said.

Access: However, they said, the Finance Ministry wanted more access to markets in the developed countries instead of financial assistance for government projects.

It said market access through free trade agreements with the United States and the European Union would benefit the country more, the sources said.

They said the names of the leaders who would represent the country in the two meetings would also be announced soon.

Following the FoPs first meeting in Abu Dhabi, Pakistans Additional Foreign Secretary for South Asia Aizaz Ahmad Chaudhry had termed the meeting successful. People are interested in finding ways to help, he had said, adding the gathering had put together a framework for cooperation in the fields of development, security, energy and institution building.

But Pakistans Ambassador At Large Javaid Malik had said the FoP is not a donors club meeting, this is for galvanising broader support to Pakistan. The forums last meeting had deliberated upon building institutions in Pakistan, supporting the democratic government and battling extremism.


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## Neo

*British MPs express confidence over Pakistan's investment policy ​* 
ISLAMABAD (January 08 2009): British Parliamentarians on Tuesday expressed confidence over Pak investment policy and assured their full support in gaining the confidence of foreign investors. Salim Mandviwala, Minister of State for Investment & Chairman Board of Investment briefed the delegation led by Pakistan's ambassador at large, Javed Malik about the investment policy of Pakistan and the ongoing projects.

The parliamentarians included James Devine, Mark Fisher, James McGovern and Mohammad Sarwar. Mohammad Sarwar, first Muslim parliamentarian of UK said that overseas Pakistanis were very important in bringing more foreign investment into Pakistan. He stressed the need to focus on them to boost foreign investment in the country.

Mandviwala said Pakistan wanted to boost good investment relations with UK and EU states. He said Pakistani businessmen needed more market access to UK and EU countries. James McGovern said he was impressed of the growth and development of Pakistan and assured UK government's full co-operation to improve Pakistan's image abroad.

Meanwhile, the visiting delegation also visited Nadra headquarters and praised the efforts being made for transparency in Benazir Income Support Programme (BISP). Nadra Deputy Chairman Tariq Malik briefed the delegation about the functioning of the institution.

They appreciated the efforts of the government for transparent documentation of the data of every Pakistani. Javed Malik said the event was part of public diplomacy initiatives being launched at the Foreign Office with a view to galvanising the support for Pakistan. On behalf of British delegation, Muhammad Sarwar thanked the government for taking the initiative to reach out to the world community.


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## Neo

*Gwadar an ideal destination for local, foreign investors ​* 
Saturday, January 10, 2009

ISLAMABAD: With strategic and economic significance, Gwadar is well poised to unleash constructive opportunities for local as well as foreign investment in diverse fields.

Development work and business activities are gaining impetus at a fast pace with the Gwadar site getting transformed into an ideal destination for potential investors.

Gwadar has better potential and investment opportunities. The port has been constructed and recently one ship carrying 60,000 tonnes of wheat has docked. Once this port becomes fully operational, it will have more advantages. Pakistani entrepreneurs along with foreign investors can make joint ventures at Gwadar, which is not only flanked by planned location but is also a vital corridor to rich oil and mineral resources with close immediacy to Central Asian States, observed Chief Executive of Gwadar Business Associates, Col (R) Fazal-e-Maqbool Afridi.

As far as its geographical location is concerned in comparison to the Gulf ports, especially Dubai, it gives more facilities and will handle more cargo and trade because Gwadar is a deep-sea port and is located on a main shipping route. For Dubai, ships have to wait for days for route clearance due to Strait of Hormuz. The landlocked Central Asian States are also dependent on Gwadar, expressed Col Afridi.

China and other countries shall have short route to the world market maintained through Gwadar. The location of Gwadar Deep Sea Port is such that the whole world businesses converge and diverges at this place.

The whole region can also avail trans-shipment facility as the transit cargo (liquid and dry both) can easily be undertaken from Gwadar and transported to any part of the world in short span of time in comparison to other ports, he viewed. Due to trans-shipment there will be lots of requirements of warehousing and container yards, he stated adding, being a deep sea port on a main shipping route it will facilitate the movement of cargo.

The trade and business activities of all kinds and quantity, from needle to ship, will also flourish at Gwadar irrespective of the cost. Import and export of all items and magnitude is possible, because the means of transportation like sea, road, railway line (in near future) are available and linked with all important countries, he maintained.

Being a deep sea port and facilities for transportation available, industry of any kind is feasible, both of raw materials and finished products, the chief executive said continuing, the mineral deposits of Central Asia have no shorter route to transport them to the world markets, than Gwadar.

Similarly, the developed world can also reap these benefits only from Gwadar.

The transport industry will have to import all kinds of vehicles, especially heavy ones for fast delivering of goods at remote destinations as well as in the city limits. Gwadar Port will also be termed as an energy port. The gas and oil deposit of CIS will find their new storage destination in Gwadar because of its natural flow direction. Even Iran can benefit from Gwadar by having opening to the world market for its gas and oil.

The Pacific states and all those countries which are short of energy can easily be supplied Liquid Natural Gas (LNG) from Gwadar. Fishery is one of the most important economic activities in the Gwadar district, in which a vast majority of population is engaged. The district has a 600 kilometres long coast line which provides residents not only the means of income but also the food to subsist.

About one fourth of the total catch of different varieties in Pakistan is found in district Gwadar. On an annual basis there is potential for an additional catch of at least thousands of tonnes. Real-estate is a vibrant industry, he observed adding, there are plenty of chances available starting from construction as every thing new has to be developed and built. It has lot of potential for prices to rise and any investment made will fetch a handsome amount for investors.

The construction industry will also have a boom at Gwadar as there is a dearth of place to live or open an office. Every thing new has to be constructed.

Manufacturing industries will develop, especially automobile, steel re-rolling mills, ship building, refineries, fertiliser and electronic industry, he added.


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## Neo

*Canada seeks manpower from Pakistan ​* 
Saturday, January 10, 2009

ISLAMABAD: Pakistan and Canada are enjoying friendly relations and share a common of perception on important international issues of mutual interest.

This was stated by Federal Minister for Labour and Manpower, Syed Khursheed Ahmad Shah in a meeting with a Canadian Minister for Citizenship, Immigration and Multiculturalism, Jason Kenny who called on him here on Friday.

The minister said both countries have the resources, the technological ability, the infrastructure and the manpower to bring about a transformation. There is a need to give substance to bilateral economic relations to fulfill the hopes and aspirations of our people for prosperity.

During the meeting, the Canadian Minister, Jason Kenny said that the purpose of his visit to Pakistan is to explore the possibility of development of more close and cordial relations between both the countries for taking skilled and semi-skilled labour, for the development of agriculture, construction and industrial sectors in some provinces of Canada and discussed with the labour minister to find avenues for employment of different categories of workforce from Pakistan.

The labour minister said that Pakistan attaches importance to its relationship with Canada as it was among the first countries to establish diplomatic relations with Pakistan.

The presence of more than 350,000 expatriate communities from Pakistan plays a constructive role in the socio-economic development of the society, integrating the multicultural society of Canada, he added.

He further said Pakistan has an immense potential for labour force and skilled workers and assured the Canadian minister that the country would try its best to meet their demand for manpower.


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## Neo

*Energy-saving methods underlined ​* 
Saturday, January 10, 2009

LAHORE: Economists suggest that it would be a futile effort on the part of government if it concentrates on building gas and electricity generation capacities and wastages in the energy sector are not simultaneously plugged through public sector investment.

They point out that a preliminary survey of basic textile industry reveals that there was unnecessary high power utilisation by 15 to 20 per cent just because entrepreneurs had installed low-rated motors or had not provided proper ventilation in manufacturing processes. In some cases, it was found that slight changes in the process of installation of machines could save substantial power. For instance, a machine needing cool temperature if installed besides a machine that needs high heat would result in more power consumption by both.

According to studies conducted by credible global agencies, these big basic textile units numbering over 370 need investment of Rs1 to 5 million to become power efficient and save on an average 20 per cent electricity. In other words, these units after attaining full efficiency could save power for at least 75 new large textile units. In monetary terms, saving in expenses of efficient mills would range from Rs6 to 8 million annually.

It is true that these private sector mills should have gone for energy audit much earlier when things had been rosy and making investment had not been a problem. The current situation, however, is that all these units and industrial units in other sectors are facing a huge liquidity crunch. Most of them are not in a position to pay even salaries to their staff on time. It would be prudent on the part of government to arrange finances for making these and other industrial units power-efficient.

The amount spent on energy audit and modification could be recovered by charging five per cent higher than monthly energy bill or through tax collectors in manageable installments equal to 5 per cent of their energy bills.

It would be a win-win situation for both the government and the industry. The industry would save around 20 per cent in electricity bills after achieving power efficiency and the government would get additional electricity. At present, the government is investing to produce 100 megawatts but it is consumed by the industry needing only 80MW.

In the same way, gas appliances both in the domestic sector and industry generally have very low energy efficiency ranging from 30 to 40 per cent. The government knows it, but has made no efforts to ensure marketing of standard and efficient gas appliances. Punjab and NWFP face gas shortage of 20 to 25 per cent during winter because we waste most of the gas due to inefficient appliances. It increases the cost of consumers as well as results in unnecessary wastage of precious natural resource of the country.

Replacing inefficient domestic gas appliances with efficient ones would require a long period of time even if the government imposes strict standards for producers. Again an easy way out is to replace gas burners used in kitchens with quality appliances. The cost could then be deducted from the consumers bill in easy installments.

Water geysers could be replaced with instant water geysers on an application to the gas distribution company and the cost could be recovered at the rate of Rs500 per month. 

This again would save consumers thousands in additional bills and conserve enough gas to feed the industrial sector.

If these investments, which are recoverable, are not made Pakistan would remain a power and energy-starved country for a long time. The cost of power and energy would also escalate both for domestic and industrial consumers.


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## Neo

*Foreign reserves rise to $10bn​*
Saturday, January 10, 2009

KARACHI: Pakistans total liquid foreign reserves have increased to $10.0046 billion from $9.6619 billion on December 27, says a statement issued by the State Bank of Pakistan here on Friday. On January 3 foreign reserves held by the State Bank amounted to $6,601.3 million whereas the net foreign reserves held by commercial banks were $3,403.3 million.


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## Neo

*Rs 548 billion revenue collection target achieved​* 
ISLAMABAD (January 10 2009): The Federal Board of Revenue (FBR) has met the over-ambitious revenue collection target of Rs 548 billion during July-December (2008-09), showing 100 percent achievement. According to the latest data, compiled on Tuesday, the FBR managed to collect around Rs 548 billion in the first six months of 2008-2009 against target of Rs 548 billion, indicating the possibility of meeting the annual target of Rs 1.360 trillion by the end of current fiscal.

The achievement of target for the first two quarters of 2008-09 reflected that the tax machinery is plugging the loopholes and improving collection from short-filers, non-filers and potential sectors, including telecom, oil/gas and banks.

The board collected Rs 548 billion in the first six months of current fiscal (2008-09) against Rs 435.1 billion in the corresponding period of last fiscal, reflecting a growth of 26 percent. The monthly collection in December 2008 has crossed the figure of Rs 119 billion against Rs 95 billion in the same period last fiscal, showing an increase of Rs 24 billion.

Sources said that FBR Chairman Ahmed Waqar had directed the tax collectors to ensure 44 percent increase in revenue collection in January-June (2008-09) against the corresponding period last fiscal, reflecting an over-ambitious target for current fiscal.

Tax authorities have issued instructions to the collectors of customs and sales tax for showing an increase of 44 percent in the remaining months of current fiscal against the same period of last fiscal. According to the sources, the FBR Chairman issued letters to the tax collectors to take enforcement measures for amassing 44 percent increase in revenue collection during the period under review. The policy guidelines have also been communicated to the tax collectors. The purpose of the whole exercise is to meet enhanced revenue collection target of Rs 1.36 trillion for the 2009 fiscal year.

Through these letters, the FBR also directed the collectors to launch special enforcement measures for generating maximum revenue in (July-June) 2008-09. Tax authorities have asked the collectors to motivate the tax officials for generating revenue through recovery of arrears and other measures.

Sources said that the minimum benchmark set for the collectors, to judge their performance is 44 percent increase in revenue during January-June (2008-09). Sources said that the FBR also referred to the special pay packages and double pay structure, enjoyed by the collectors, and the board expects that the field formations would take all measures for meeting the enhanced target for 2008-09.


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## Neo

*Cement export to India comes to a halt​* 
KARACHI (January 10 2009): Cement export to India has come to a complete halt following the imposition of 12 per cent duties on its import by the Indian government, industry sources said on Friday. With the final shipment by a leading cement manufacturer on January 6, cement export to India has stopped, as the importers has refused to import cement from Pakistan due to high duties, they added.

The Indian cement importers have also sent requests to Pakistani exporters for the stoppage of already booked cement import orders, seeking not to dispatch the cement consignment till the settlement of duty issue.

"The Indian government has imposed 12 per cent duties on cement import: four per cent import duty and some eight per cent countervailing duty to primarily curb the cement import from Pakistan," they said. Sources said that Indian government implemented the duties immediately, which were applicable on imported cement consignment after January 5, 2008.

"Although, we have dispatched our cement export consignment before the imposition of duties, however our consignment reached after the announcement and Indian authorities imposed 12 per cent duty on the sad consignment," a leading cement exporter said. He said that Indian authorities are charging some Rs 28 per 50-kg bag under the head of various duties on the import of cement from Pakistan.

With the imposition of new duties Pakistani cement has become more costly than the local cement, therefore on the request of importers Pakistani exporters has stopped export process. "With recent duties, Pakistani cement price in the Indian markets has surged by Indian Rs 25-30 per bag to Rs 225-235 from Rs 210-215 per bag. Whereas, the locally produced cement is available at Indian Rs 220-230 per bag", he informed.

They said Indian government for the last one month has been taking measures to curb cement import particularly from Pakistan and after reducing excise duty on the cement manufactured domestically by Indian Rs 8 per bag on December 8, 2008, they have imposed new duties on the import of cement, which is largely imported from Pakistan.

Chairman All Pakistan Cement Manufacturers Association (APCMA) Major General Rehmat Khan (Retd) confirmed on Friday that cement export to Indian has come to stand still after imposition of the duties. He alleged that Indian authorities have taken the step after the current escalation in tension between the two countries, which would definitely hurt the cement export.

"We are considering the whole situation and would announce our strategy very soon, however at present we are unable to continue cement export to India", he said. He said that cement exporters are already paying some Indian Rs 2 per tonnes BIS fees on the export of cement and at present some 12 Pakistani cement manufacturers were exporting cement to India.


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## Neo

*Power projects: Chinese company seeks security assurance, repayment guarantee​* 
ISLAMABAD (January 10 2009): Chinese insurance company, Sinosure, has sought security assurance and Government of Pakistan (GoP) guarantee of repayment for the power projects to be established with Chinese investment, official sources told Business Recorder.

Presently, four projects ie Neelum -Jehlum hydropower project, Nandipur, Chichokimalian and Guddu thermal power projects are in different stages of approval. The sources said a high level team of Pakistan Electric Power Company (Pepco) is scheduled to visit Beijing shortly to finalise financing arrangements with the Chinese companies.

Expor-Import (Exim) Bank of China, HSBC Bank, BNP Paribas (China) and Harbin Power Engineering (HPE) China are the main stakeholders, which will provide financial and insurance facility for the projects under process, the sources added.

The sources said Exim Bank has agreed to finance 85 per cent of project cost,k which constitutes equipment to be imported from China. The bank is also willing to work as co-arranger for the balance required to purchase equipment, which will likely be imported from the GE (USA) or France.

However, the Exim Bank has set a tough condition: it would only provide finance for the project if Pepco first provides 10 per cent advance payment and the remaining five per cent before the Bank starts disbursement, the sources added. Another surprising development for Pakistan was that the Sinosure (China Export and Credit Insurance Corporation) has clearly indicated that it would provide insurance cover for only Chinese content and GE USA/ France gas turbines will not be covered.

" We can provide insurance cover for three to nine years' period as we can cover up to 10 year repayment period," the sources quoted Zhang Hui, project underwriting department, Sinosure, as saying during the last meeting held between Pepco and Chinese officials in Beijing. The sources said Beijing-based BNP Paribas office, an internationally reputed French bank, was not willing to finance those power sector projects which are not part of the list that was presented by Pakistan government to the Chinese government.

The sources said Guddu, Nandipur and Chichokimallian projects were not included in the list given to the Chinese government.

Regarding Nandipur, HSBC was of the view that the project had been approved by Sinosure, but this approval was not enough as there were certain other approvals needed, including the approvals of Chinese Ministries of Commerce and Finance. This process may take three to six months further. Sinosure, China's first wholly state-owned policy insurer can insure both China's overseas investments and overseas investments in China, guaranteeing either shares or loans. The sources said all the confronted issues have been discussed with the Chinese officials who recently visited Pakistan and the government was very much hopeful that the bottlenecks in the way of Chinese investment would be removed very soon.

Prime Minister, Syed Yousaf Raza Gilani has also approved a summary of the Ministry of Water and Power regarding to dispatch a team to Beijing to finalise financing arrangements with the Chinese companies.


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## Neo

*Potential of Chinese investment highlighted​*
ISLAMABAD (January 10 2009): Senator Waqar Ahmed Khan, Minister for Investment, Raja Pervez Ashraf, Minister for Water and Power and Dr Asim Hussain Advisor to Prime Minister on Petroleum and Natural Resources held a meeting with the Chinese Ambassador Luo Zhaohui, who was accompanied by the Economic Counsellor, Embassy of China.

Siddiq ur Rehman Rana and Li Hong, CEO China Dong Fang Electric Company made the presentation highlighting the potential of Chinese investment in the power and energy and industrial sector. Zhou Zhencheng apprised about the problems/issues being faced by the Chinese companies, ie China Mobile, China Petroleum Engineering & Construction Corporation, Sichuan Electric Imp & Exp, and trade disputes of four Chinese entrepreneurs.

Advisor to Prime Minister for petroleum and natural resources advised the representatives of the companies of early resolution. The advisor will also look into the security concerns of the investors.-PR


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## Neo

*Canada urged to enhance manpower recruitment​*
ISLAMABAD (January 10 2009): Prime Minister Syed Yusuf Raza Gilani has called for enhanced recruitment of Pakistan's manpower by the Canadian entrepreneurs involved in development of the new agricultural lands in Canada's labour scarce provinces.

The Prime Minister also took up the issue of inordinate delay in the processing of immigration cases of Pakistani nationals by the Canadian authorities and urged that they should be treated at par with the immigrants from other countries. The Prime Minister was talking to the Canadian Minister for Citizenship, Immigration and Multiculturalism, Jason Kenney, who called on him on Friday at Prime Minister's House, Islamabad.

The Prime Minister expressed his gratitude to the Canadian government for doubling its economic assistance to Pakistan from 30 million dollars to 60 million dollars and hoped that Canada would also provide Pakistan with technical and financial assistance for upgrading the universities and vocational training institutions to train Pakistani manpower in order to bring their capabilities up to the required standard of Canadian employers.

The Prime Minister while expressing his condolences for more than 100 casualties of Canadian Armed Forces deployed in Kandahar, in the past five years, underlined the need for Canada's continued engagement with Nato/ISAF forces in Afghanistan.

He pointed out that Pakistan is still hosting millions of Afghan refugees while the international community seems to have forgotten them. He said that restoration of peace in Afghanistan will not only enable the refugees to return to their homeland but will also open new vistas of bilateral and multilateral trade and economic co-operation between Pakistan and Afghanistan as well as between Central Asian states and South Asian countries.

The Canadian Minister for Citizenship, Immigration and Multiculturalism termed Pakistan as a significant source of immigrant workers for Canada. He agreed that there had been prolonged delays in processing the immigration cases of Pakistanis in the past but promised that the Canadian government henceforth will try to reduce the processing period of these cases.

Terming Pakistan's diaspora in Canada as a natural bridge between the two countries, he undertook to consider increasing the number of recruitment of Pakistan's manpower for Canada. He commended Prime Minister's decision to appoint, for the first time in Pakistan's history, a representative of minorities as the federal minister of minorities and the role of its government in protection of minorities' rights.

The Canadian minister requested assistance of the government of Pakistan in grant of regulatory provision to a Canadian company's bidding to explore copper and gold in Balochistan and stated that the Canadian corporate sector would be encouraged to consider Pakistan's market for joint ventures and investments.

Dilating on bilateral relations between the two countries, the Canadian minister noted that Pakistan was amongst the first few countries visited by his Prime Minister Harper after assuming his office in 2006. He agreed with the Prime Minister on the need for increased exchanges at government and peoples to people level to further strengthen the existing ties.-PR


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## Neo

*Volume of trade with Italy not up to full potential: MCCI​* 
MULTAN (January 10 2009): The volume of trade between Pakistan and Italy, Mexico, Kenya, Brazil, Malaysia and other countries is not up to full potential while these countries present offer plenty of opportunities to enhance bilateral trade. This was stated by Anis Ahmed Sheikh, President, Multan Chamber of Commerce and Industry (MCCI) while talking to newsmen here on Friday.

The MCCI President said our bilateral trade is limited to certain areas, however, these countries are blessed with lot of natural resources and offer good opportunities to enhance their business relations by tapping different sectors of the economies of these states and Pakistan. He called upon the businessmen of different countries to look for entering joint ventures in different sectors as well as hold trade fairs in each other country for further boosting bilateral trade.

He further said presently volume of bilateral trade is tilted heavily in favour of Kenya, which needs to be made balanced by enhancing Pakistan's exports to Kenya. He said MCCI is building an Export Display Centre where foreign companies will also be given space to display their products and invited foreign businessmen and investors to take advantage of this opportunity. Anis Ahmed Sheikh said that Pakistan and Iran, Afghanistan, Turkey, Malaysia, United States, France, and Central Asian states (CAS) has historic bilateral trade as well as friendly relations.


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## Neo

*'New agricultural policies being followed to strengthen sector'​* 
FAISALABAD (January 10 2009): Punjab Minister for Agriculture Malik Ahmad Ali Olakh has said that the Punjab government is following multi-dimensional new agricultural policies for the strengthening of agricultural sector under the able guidance of Punjab CM Shahbaz Sharif.

He stated this while inspecting the green, grain markets and office of the market committee here on Friday. He said that comprehensive solid lines of action are being implemented for the development of the markets and especially with reference to facilitate the growers. He directed the market committee officials to mend their attitude and improve their departmental performance for raising the income of market committee and warned that there was no room for the lethargic, negligent, careless and inefficient officials in the Agriculture Department. He advised that all relevant records should be maintained properly and measuring machines should be working accurately.

The minister also inspected the local office of Agriculture Engineering Department and directed the officials to carry out their duties with high responsibilities for the protection and operational of agriculture machinery. He cautioned that misappropriation and embezzlement of POL and machinery parts would not be tolerated and department would be purged from the dishonest and fraudulent officials.

Later, the minister while talking to the mediamen at Circuit House, informed that the Punjab Chief Minister had given attractive incentives for the competition of 'Grow More Wheat' among the growers and announced prizes of 100, 75 and 50 Tractors to the first, second and third place wheat growers respectively. He said that 10,000 tractors were being distributed among the tillers on subsidised rates under the Punjab government Green Tractor Scheme and subsidy of Rs 2 lac was being given on each tractor besides providing other latest agricultural tools to the farmers on half price.

The minister said that the resources were also being mobilised for the rehabilitation of barren land in Punjab. Adding that 300 bulldozers of Agriculture Engineering Department had been repaired and rent of the bulldozers been reduced for the facility of land owners in addition with free diesel provided by the Punjab government.


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## Neo

*SECP unveils road map for demutualisation of stock exchanges​*
ISLAMABAD: Securities and Exchange Commission of Pakistan here on Friday unveiled the structure and road map for demutualisation of stock exchanges under which foreign stock exchange; investment bank or Central Depository Company could acquire management of any stock exchange.

National Assembly Standing Committee on Finance and Revenues met in the parliament house under the chair of Fauzia wahab. Secretary Finance, Dr Waqar Masood Khan and SECP Chairman, Razi-ur-Rehman Khan were present on the occasion.

Chairman, SECP, briefed the committee on salient features of the proposal and said that demutualized stock exchange shall comprised of strategic investor with 40 percent shares, general public with 20 percent shares and existing brokers with the remaining 40 percent. Explaining the term of strategic investor, chairman SECP said that it can be stock exchange of foreign country having capital and latest technology, investment bank and central depository company. The strategic investor would be allowed to obtain 40 percent shares with total neutral management control.

Local institutions will be getting shares from the remaining after sale of shares to strategic investor and general public. However, strategic investor may acquire more shares from general public by not exceeding its holding from 51 percent of paid up capital(further acquisition not before 3 years of acquisition), Razi explained. Trading Rights Entitlement (TRE) certificate holder and their connected persons shall not hold majority on the board of any stock exchange. Chairman of the board of any stock exchange shall not be a director who represents TRE certificate holder.

The commission may direct divestment of shares by initial shareholders, a member of public or TRE certificate holder if the holding exceeding 1 percent shares of a stock exchange. The same is applicable for any financial institution whose holding period exceeds 5 percent. The shares of stock exchanges shall be listed on any stock exchange and within time, as may be prescribed by the SECP and consultation with board of directors of stock exchanges. Stock exchanges shall not issue any new TRE certificate to any person until June 30, 2010 unless two third of TRE certificate holders decide otherwise. Thereafter 15 TRE certificates shall be offered for issuance from July 1, 2010 to December 31, 2019.

The SECP would have powers to order for integration of two or more stock exchanges after their submission of scheme of integration and compliance with procedures.

Offence & Penalties: The Commission would have powers to suspend the privilege and or hold a stock exchange liable to a penalty of Rs 20 million, in case offence is committed by it under the act. The same is applicable for any director, shareholder, TE certificate holder, and committee member to the limit of Rs 1 million.

Stock exchanges shall not make any amendment in Memorandum and Articles of Association, commence any proceeding of winding up, or sell immoveable asset, without approval of the SECP.

Time Lines: Within 30 days of promulgation of the bill stock exchanges would be required to constitute demutualisation committees fully authorised to approve valuation of stock exchanges, enter into negotiations with strategic investor and determine offer price for offer of sale of shares to general public.

Within 45 days of promulgation of the bill every stock exchange shall submit its valuation, revaluation. Propose authorised paid up capital, name of the proposed members and director, proposed plan for segregation of commercial and regulatory functions, draft memorandum, article of association and five year development plan.

Within 30 days of the receipt of the aforementioned information, the SECP shall approve the aforementioned and nominate six directors for each stock exchange.

Within 30 days of receipt of the aforementioned approval, a stock exchange shall adopt memorandum and article of association, allot shares to initial members, and deposit 60 percent of shares in block account, issue certificate and TRE to share holders.

Within 7 days of adoption, a stock exchange shall submit copy of resolution, certificates from auditors and CDC for allotment and deposit, respectively, of shares to initial shareholders. And within 7 days of receipt of aforementioned information, the registrar shall issue a certificate of re-registration, first directors shall replace the previous directors from such date and stock exchange shall stand demutualised.


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## Neo

*Inflation likely to ease off during 09​*
KARACHI: The consumer price based inflation is likely to ease off during 2009 after touching 30-year high during the 1QFY09, triggering a cut in interest rate.

The high inflation syndrome has left a crippling effect on the economy in general and particularly the common man, who was the worst victim of record inflation.

This expected downward trend in the inflation may trigger interest rate cut  though not immediate in the monetary policy statement at the end of the current month  in the coming months, believe the analysts.

Albeit inflation will be receding a bit but it would be still much higher from the official target of 12 percent set at the time of the federal budget.

Analysts were predicting it to settle around 20 percent since the start of current financial year.

Higher base effect, oil prices reduction and declining commodity prices will be reflecting the receding trend in the inflationary pressures during the coming months, analyst Muhammad Imran at First Capital Equities Ltd (FCEL) said.

In this regard, first indication of softening in inflationary numbers has already been observed in November 2008 when CPI was 12 basis points down on MoM basis and settled at 24.7 percent, he said and added that In December 2008 the inflation woul decline by 130 basis points MoM basis. Yearly growth is likely to be 22.3 percent.

A pleasant surprise may be witnessed in June or July 2009 when the CPI could plunge to single digit, Imran said.

Nonetheless, the very next Monetary Policy Statement (to be announced at the end of January 2009) may skip any announcement for cut in interest rate. However, general interest rate scenario is expected to show a sign of reduction.

Moreover, an interim cut in key policy rate (between Jan-Jul 2009) cannot be ruled out, Imran added.


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## Neo

*Forex reserves increase by $343 million​*
KARACHI: The country's liquid foreign exchange reserves rose by over $343 million during last week.

The State Bank of Pakistan's statistics show that overall foreign exchange reserves registered an increase of $343 millions during the week that ended on January 03, 2009.

With the current upsurge, the country's foreign exchange reserves have mounted to $10.004 billion on 03 January 2009 as compared to $9.661 billion a week earlier. The major increase has been witnessed in the reserves held by the central bank as it showed an increase of $232 million during last week. The central bank reserves reached $6.601 billion on 03 January as compared to $6.369 billion on December 27, 2008.

Reserves held by the banks (other than SBP) also showed an increase of $111 million to $3.403 billion during the last week from $3.292 billion a week earlier.


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## Neo

*Abu Dhabis IPIC delays Pakistan refinery plans ​*
Saturday, 10 Jan, 2009

​
ABU DHABI: Abu Dhabi's government-owned International Petroleum Investment Co (IPIC) has delayed plans to set up a refinery in Pakistan, its CEO said on Saturday.

Khadem al-Qubaisi told reporters the planned project was delayed due to various problems, according to FReuters.

The board of IPIC had approved last year plans to build a $5 billion refinery with a capacity of 250,000 barrels per day in Pakistan.
IPIC invests in oil-related projects for the government of Abu Dhabi, the capital of the United Arab Emirates, which is the world's fifth-largest oil exporter.
Qubaisi said IPIC plans to increase its stakes in Austrian energy firm OMV and Spain's Cepsa after his company finalised a deal to acquire 70 percent of industrial services firm MAN Ferrostaal AG, part of German group.

IPIC also plans to invest $20 billion in the petrochemical industry of Abu Dhabi, Qubaisi said.


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## Neo

*New oil policy envisages incentives for exploration ​*
Saturday, 10 Jan, 2009

ISLAMABAD: The new petroleum policy approved by the Economic Coordination Committee (ECC) of the cabinet on Friday envisages an increase in tax exemptions and fiscal incentives to spur oil and gas exploration and a reduction in bureaucratic hurdles in the award of contracts for exploration.

During the ECC meeting, it was also decided to increase dealers and marketing companies profit margins on the sale of petroleum products and also to revise oil prices on a monthly basis instead of fortnightly review.

Under the Petroleum Exploration Policy, consumers will have to pay up to 38 cents per million British Thermal Units (BTUs), amounting to 10 per cent price increase, for new gas discoveries in different zones.

In zone-I, the gas price has been raised to $5.03 a unit from $4.65, while in zone-IV from $4.10 to $4.38.

Presided over by Adviser to the Prime Minister on Finance and Revenue Shaukat Tarin, the ECC increased the profit margins of dealers on the sale of all petroleum products, except diesel, from four to five per cent. It also enabled oil marketing companies (OMCs) to earn a four per cent profit instead of the previous 3.5 per cent.

On diesel, the dealers margin has been increased to Rs1.50 a litre from Rs1.14. OMCs, however, will now earn Rs1.35 per litre of diesel, increased from Rs1.3 a litre.

The government is ethically bound to raise the margins of OMCs and dealers after the decline in international crude oil prices, the additional secretary of the ministry of petroleum, G.A. Sabri, said at a press conference after the ECC meeting.

The government has pocketed over Rs50 billion through the imposition of Petroleum Development Levy (PDL) and sales tax on petroleum products over the past six weeks and there are no signs that the government will reduce prices in the near future despite a sharp fall in international oil prices.

When the secretary was asked why the government was not passing on the benefit of decline in world prices, Mr Sabri said the government owed the OMCs Rs12 billion in price differential claims when it had asked the companies to sell oil at lower than market prices, and it had to pay them back to recover the subsidies paid to domestic consumers.

When asked whether there was any limit to PDL as it constituted more than 50 per cent of petrol and HOBC prices, Mr Sabri said: There is no law under which PDL is levied. PDL itself is a law. And, law has no limits.

OIL PRICE: Mr Sabri said next price revision would take place by the end of this month, because from now on petroleum prices will not be reviewed fortnightly but on a monthly basis from Jan 16..

Mr Sabri said various stakeholders, including transporters, were not ready to reduce fares to match the decline in domestic prices of petrol and diesel. He also said diesel and petrol prices could not be decreased further to save the compressed natural gas (CNG) industry.

The ECC also set aside a proposal to empower the Oil and Gas Regulatory Authority (Ogra) to monitor the furnace oil price, which is so far unregulated. The committee turned down the proposal because it amounted to controlling the prices of furnace oil, a task that did not come under the purview of the government.

The ECC also rejected a proposal under which there should be a two-tier prices of Liquefied Petroleum Gas (LPG) on domestically-produced and imported LPG.


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## Neo

*Pakistan July-Dec Trade Deficit Widens 15% To $9.559 Billion​*
KARACHI -(Dow Jones)- Pakistan's trade deficit in the first six months of the current fiscal year widened by 15% on year to $9.559 billion, an official of the Federal Bureau of Statistics said.

Pakistan's exports in the six months to Dec. 31 rose by 11% to $9.573 billion compared with $8.658 billion a year ago.

Imports recorded an increase of 13% to $19.133 billion, compared with $16.951 billion, the official said.

Pakistan's trade deficit in December alone narrowed to $816 million compared with $1.029 billion in the same month last year. Exports showed a marginal decline in December, amounting to $1.31 billion, compared with $1.32 billion, while imports dropped 9% to $2.127 billion.

The government set a target of $39 billion for imports and $20 billion for exports in the current fiscal year ending June 30, 2009


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## TopCat

> *The government had earlier tabled ventures worth $60 billion in the FoP&#8217;s last meeting in Abu Dhabi on November 17 last year, however, after the donors&#8217; feedback, the list was being amended, they said.*


Wow its a lot of money!!!!!!!!!!!!
Why would those country give Pakistan that kind of money? Also I dont understand, how Pakistan could ask that? Its kinda awe full though


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## Neo

*US tries to muster another $4b for Pakistan​*
WashingtonKeen to help Pakistan straighten out things,America is trying to muster another US $ 4 billion from Friends of Pakistan consortium expected to meet in Islamabad early next month authenti soures here revealed.It simultanesouly has been playing a key role in helping ease india-Pakistan tension and was awaiting eagerly last Monday about the outcome of the meeting the Indian Foreign Secretary Menon had with Pakistan Envoy Shahid Malik.

We have been actively engaged with India and pursuading to avoid conflict with Pakistan, give up idea of troops movement and resume the dialogue process,hurt badly by the Mumbai blasts of last November. said an official on condition of anonynimity.

Sympathy is generally found here for the not-too-old democracy,although certain amount of disillusionment about government performance can also be felt but opinion leaders conede that problems were far too accentuated to have easy soloutions.

In conversation with official agencies, intellectuals and legislators during my three days of stay here, it was candidly clear that some result has atleast been achieved by the IMF loan of $ 3.6 billion,first tranche of a total of $ 7.6 billion pledged for two years.Experts here concede that rupee has been stabilised, and eonomy has shown signs of improvement.

However. policy makers here seem to agree that the new government which took over last year in March, needs to be much more active in its policy framing and exeutions than it has been so far. These Amerians do not however comment on the internal situation in Pakistan, showing great interest though in NWFP situation. When reminded that the newly formed friends of Pakistan consortium has been a major disappointment so far, and that nothing has ome out as yet despite two meetings in New York and Dubai they replied that it takes time to process requests,but the coming meeting will be fruitful.

Pakistan needs more than 13 billion dollars to bail itself out from the morass it has been in for more than a year, but such a huge amount apppears a distant dream. Islamabad foreign policy experts have been naive enough to evoke a negative reply for cash even from a brotherly country like Saudi Arabia.

There seems a deep distrust in governments ability to invest in projects because of corruption stories about Pakistan. However many countries are ready to finance projets provided their feasibiity is good. It is not a very happy situation but bitter facts sometime need to be accepted as reality and swallowed.

Similarly, the government apathy towards multitude of problems, absence of poliy framework so far too is causing anxiety here and in some other major capitals of the world.


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## Neo

*CPI inflation stood at 23.34pc in December ​* 
Sunday, January 11, 2009

ISLAMABAD: The Consumer Price Index (CPI) inflation during December 2008 stood at 23.34 per cent that decreased by 0.50 per cent from November 2008, when it stood at 24.68 per cent. 

Last year, in December 2007, CPI-based inflation was recorded at 8.79 per cent, the Federal Bureau of Statistics' (FBS) latest CPI snapshot available with The News showed on Saturday. 

Furthermore, during the first-half (July-December 2008-09), average inflation stood at 24.43 per cent while Wholesale Price Index (WPI) stood at 27.98 per cent. Last year during the same period, CPI stood at 8.01 per cent and WPI at 10.26 per cent. 

Huge increase in WPI-based inflation indicated further hike in retail prices of essential commodities. The rising inflation is also making it more difficult for pensioners and low-income masses to live on their nominal fixed income. 

The most depressing aspect of CPI bulletin was that, food inflation during December 2008 stood at 27.92 over December 2007. Another factor responsible for worsening the situation is the dwindling value of Pakistani rupee that touched the lowest as a result of huge current account deficit. 

It is worth mentioning that during the last six months rupee depreciated by about 32 per cent and is now trading in the open market at about Rs80 a US dollar. 

This also has pushed up prices of essential commodities and made imports costlieróanother contributing factor for inflation. At the moment, the government looks helpless to rein in the spiraling inflation and save rupee from free fall. Huge price pressure of necessary kitchen items compelled households to struggle for meeting the minimum standards of living and they might have no choice but to cut down their expenditures on health and childrens education. 

CPI that covers the retail prices of 374 items in 35 major cities reflects roughly the changes in the cost of living of urban areas. 

According to it, in December 2008, fuel and lighting charges went up by 29.53 per cent, food and beverages by 27.92 per cent, transport and communication 25.71 per cent, clearing laundry and personnel appearances 19.77 per cent, house rent 17.56 per cent, education 17.01 per cent, apparel textile and footwear by 15.72 per cent, household furniture and equipments 14.61 per cent.

Medical expenses increased by 12.67 per cent and entertainment by 12.58 per cent over December 2007. Interestingly, the government has reduced oil prices about 40 per cent in the local market but unfortunately due to the governments lousy governance, it was not translated into lowering transportation cost. Transporters have not reduced its fares and are making unlawful profits. Communication charges are almost the same as were in the period when the oil prices were at the highest ebb. 

Independent economists believe that declining prices of crude oil in the international market would help decrease cost in the coming months unless its impact was passed on to the consumers. It is interesting to mention that for each one per cent increase in inflation, more and more Pakistanis fall into poverty indicating that inflation was hitting poor Pakistani consumers harder than the more affluent ones. 

Specifically, the poor are highly sensitive to the price changes in food, particularly staple food items. Despite their adverse impact on the low-income group, no effective steps are being taken by the government to reverse the trend. 

The government seems to be indifferent to the plight of the poor and the lower middle class who find it increasingly difficult to make both ends meet with soaring prices of foodstuff and medical expenses. 

It is interesting to note that high inflation trend in food has been noticed since the start of the last fiscal (July 2007), food inflation stood at 8.47 per cent, August 8.62 per cent, September 12.97 per cent, October 14.67 per cent, November 12.47 per cent, December 12.21 per cent.

In January, 2008 it stood at 18.25 per cent, February 16.05 per cent, March 20.61 per cent, April 25.5 per cent, May 28.48 per cent, June 32.05 per cent, July 33.81 per cent, August 34.09, September 29.91 per cent, October 31.67 per cent, November 30.44 per cent and now during the month under review (December 2008), it stood at 27.92 per cent.


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## Neo

*Trade deficit rises to $9.56bn in first half ​* 
Sunday, January 11, 2009

ISLAMABAD: The countrys trade deficit rose to $9.56 billion in the first half (July-December) of 2008-09, up 15.27 per cent (or $1.26 billion) from $8.29 billion recorded in the corresponding period of last fiscal, the Federal Bureau of Statistics (FBS) reported on Saturday.

According to the latest snapshot of trade activity, imports were recorded at $19.13 billion in the six months, more than double the exports worth $9.57 billion. During the same period in 2007-08, imports stood at $16.95 billion and exports at $8.66 billion. That depicted 12.87 per cent growth in imports and 10.57 per cent in exports.

One interesting and encouraging aspect of the data was that during December 2008 the trade gap, though widened to $815.93 million, was 31.8 per cent less than the shortfall of $1.196 billion in November 2008. During the month, imports dipped 21.92 per cent to $2.126 billion and exports fell 14.18 per cent to $1.53 billion over the previous month (November 2008).

In December 2008, the trade gap dropped 20.67 per cent from $1.028 billion recorded in the same month last fiscal. Exports were down 0.70 per cent from $1.32 billion in December 2007 while imports fell 9.45 per cent from $2.35 billion.

The trend of trade activities during December raised the prospect of a slow-down in the pace of runaway deficit as imports fell appreciably. If the current scenario stays and economic planners are able to take reasonable measures for bridging the gap, it would be one of the major winning points to celebrate.

For the last many years, the country had been confronted with the trade deficit which pushed up the current account deficit. Depreciating rupee and record high inflation are other big factors which have worried economic policy-makers.

The government in its trade policy for the current fiscal year has set export target at $22.1 billion. Although it has not formally announced any import target, commerce ministrys officials say it will touch $37 billion, leaving a gap of $15 billion by June-end.


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## Neo

*FPCCI urges Joe Biden for free market access ​* 
Sunday, January 11, 2009

LAHORE: Federation of Pakistan Chamber of Commerce and Industry, a top body of chambers in the country Saturday urged the visiting US Vice President elect Joe Biden to proclaim lifting of all economic sanctions to provide direct free market access to Pakistani exporters, especially in textile and garment sectors.

President FPCCI Tanvir Ahmad Sheikh, all federation VPs and founder Chairman Pak-US Business Council and Vice President SAARC CCI Pakistan Chapter Iftikhar Ali Malik said in a statement issued on behalf of the business and traders community of Pakistan.

Tanvir said that President Asif Ali Zardari and Prime Minister Syed Yousaf Raza Gilani had always attached great significance to further developing strong and tough affable friendly relations with USA. He said Joe Biden should also reciprocate these sentiments by lifting the economic sanctions. He said Pakistan is suffering from $6 billions loss annually in its economy due to the war on terror.

He said the United States Chamber of Commerce (USCC) has always been urging for augmented and sturdy business relations with Pakistan. He said the USCC is the most vital channel for contacts in the US for the promotion of trade ties between the two countries.

He said Pakistan is a budding market, rich in opportunities for US investments as the US is one of Pakistans important trading partners. Tanvir said Pakistan in prevailing scenario will persist to fight against terrorism world over, as Pakistan itself had been the victim of terrorist activities. He said western countries and media must understand that the religion Islam is a widespread religion which tightly believes in peace, international brotherhood and equal rights for all human beings irrespective of their cast, creed and colour and sturdily condemns the acts of terrorism.

Iftikhar Ali said there was a need for presenting Islam in its true viewpoint in the US and appealed to President elect Barack Obama to disperse wrong philosophies credited to religion which has vitiated the atmosphere and spread fright and distrust.

This he said was essential to reinstate the relationship to the level of pre 9/11 days. He said the establishment of good working relations between the US and the Muslim Ummah would direct to attaining world peace and bring back mutual confidence.

He said Islam is being distorted and portrayed in a way wholly divergent to its teachings. He said now South Asia is becoming the hub of international economic activities and it is time the US President elect and VP elect Joe Biden to implement their sphere of authority to help restore peace in South Asia which would have an optimistic impact on the world peace.

He said peace can be restored with ruling an enduring solution to two long positioning issues of Kashmir and Palestine. 

He said that Prime Minister has been reiterating that Pakistan is a peace loving country and wants to live in peace with all its neighbours. It also wants resolutions to all issues through dialogues.

Iftikhar Ali said the lifting of economic sanctions would result in direct access to US market and help enhance economic ties between the private sectors of two countries.


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## Neo

*Positive economic news take KSE to 24-week high ​* 
Sunday, January 11, 2009

KARACHI: The Karachi stock market turned positive this week on the back of investment-friendly news, which helped revive interest and put to an end a long period of depression.

The benchmark KSE 100-share index continued its upward momentum throughout the week and crossed 6,000 points. The index rose 6 per cent from the previous week to close at 6,143.81 points, a 24-week high.

The free-float market capitalisation-based 30-share index surged 437.39 points or over 8 per cent to 5,778.61 at the end of trading week on Friday.

Volume in the ready market showed a substantial improvement over the week as strong activity was seen in top-tier stocks as well, after thin trading in most of these shares since the lifting of index floor on Dec 15 last year, said Atif Zafar of JS Research.

Average daily volume in the ready market was recorded at 173.6 million shares compared to 108.99 million, showing a handsome increase of 59.3 per cent from the previous week.

Market capitalisation rose Rs94 billion to Rs1.936 trillion. Foreign portfolio investors, however, withdrew over $25 million during the week.

Energy stocks led the rally with exploration and production (E&P) sector up 14.5 per cent, independent power producers (IPPs) 12.2 per cent and refineries 10.5 per cent. It was driven by value-hunters seeking double-digit dividend yield and renewed government commitment to end the thorny issue of inter-corporate debt, said Muhammad Saqib Sajjad of KASB Securities.

Although oil marketing companies (OMCs) were among laggards, Fridays news about upward revision in marketing margin from 3.5 per cent to 4 per cent provided much-needed boost. On the macroeconomic front, a high-level meeting to improve energy supply remained the focus of attention. The government also approved Petroleum Exploration and Production Policy 2009 on Friday. Moreover, the finance advisers statement ruling out further hike in discount rate also enthused investors, he added.

He advised investors to work in E&P, IPP and fertiliser sectors as they had strong balance sheets, offered double-digit dividend yield and had less exposure to cyclicality.

He expected that higher oil marketing margin coupled with positive moves to tackle inter-corporate debt should revive inventor interest in OMCs as well.

The economy has started showing some signs of stability on both fiscal and external fronts, supported by a fall in inflation based on the Sensitive Price Index (SPI). However, political developments both on the domestic and international fronts would continue to haunt the government as well as the private sector. Key external events would be the visit of US Vice President-elect Joseph Biden to Pakistan and developments in Pak-India relationship, he added.

During the week under review, PICIC Growth Fund, Standard Chartered Bank, Faysal Bank, KESC and WorldCall Telecom were major gainers while Mybank, Pakistan Services, Shell Pakistan, Dawood Hercules and Al-Ghazi Tractor were major losers at the Karachi bourse.


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## Neo

*AEDB to help set up 10MW renewable energy plant ​* 
Sunday, January 11, 2009

ISLAMABAD: An American firm Sheladia would undertake a viability study for generation of up to 10 megawatts (MW) of electricity from solid waste in Karachi under a US-funded project.

Funds for the study would be channelled through Alternative Energy Development Board (AEDB), the focal point for promotion of renewable energy resources in the country. An agreement to this effect would be formally inked next week between Sheladia and AEDB.

The firm plans to commence the $325,000 project shortly, which would be concluded in about five months. It has been asked to complete the waste management study, defining the best options for converting it to energy and preparing required tender documents for the power plant. The plant will then be set up under public-private partnership.

AEDB Chief Executive Officer Arif Alauddin, speaking after a briefing held in connection with the feasibility study, said all efforts would be made to get it completed on a fast track.

It is really encouraging to note that an agreement between AEDB and Sheladia would be signed in a weeks time for conducting the study for producing 5-10MW through solid waste, which will not only expand electricity production sources, but would also make modest contribution to reducing the energy deficit facing the country, said Richard OShea, representing the US Consulate General and USTDA.

Alauddin said it will be the first study of its kind and the project when implemented will become a model waste to energy project for other cities to follow. Not only such a project will administer local waste, it will also add to power generation, lessen load-shedding and utilise renewable energy resources for increasing the security of energy supply.

The CEO said AEDB was working on expeditious development of renewable energy resources in the country and the First commercial wind farm established by M/s Zorlu would be inaugurated in about two weeks. Karachi City Nazim, Syed Mustafa Kamal welcomed the AEDB initiative and called it appropriate. He guaranteed AEDB of absolute support of his office to certify that the study is completed in time and is of the topmost eminence.

Mustafa Kamal stated that he considers Solid Waste Management an imperative bustle for Karachi and has been functioning on fast tract on this for some time. He stated that he had set up 8 stations to ensure that the waste is collected in these centres during the day and is transported to the dumping site in the night, where the traffic is thin. Karachi having a population of 18 million produces 10,000 tonnes of solid waste daily. Power generation through waste would not only facilitate cut down the electricity deficit, but would also help in addressing the issues of pollution.


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## Neo

*Countrys tea imports decline by 19.8 percent​*
KARACHI: Pakistan imported 5332.46 metric tonnes (MT) black tea at a value of $10.0 million during the month of December 2008, as compared to 7982.43 metric tonnes imported in December 2007 at a value of $14.1 million.

According to the numbers provided by Pakistan Tea Association (PTA), the country registered a decline of 19.8 percent in the imports during the said period.

Pakistan imports tea from 21 countries and the major portion is imported from Kenya. During the said month 60.60 percent of the total quantity of tea was imported from Kenya as compared to 62.60 percent imported in the corresponding period last year.

Total 51.80 MT green tea was imported at a value of $7.7 million as compared with 51.27 MT imported at a value of $6.7 million in the same period of 2007.

Pakistan meets its green tea requirement from five countries in which Indonesia and Vietnam take the lion's share. This year 62.16 percent and 37.84 percent of the total quantity of green tea was imported from Indonesia and Vietnam respectively. Chairman Pakistan Tea Association (PTA) Hanif Janoo giving his comment on the cut in tea import, said that despite a decline in tea import, consumption of tea has increased.

According to PTA, there is a natural increase of about 4 percent in tea consumption but traders and importers have attributed the increase mainly to the aggressive market strategy adopted by the tea companies by targeting new markets, which has also given a boost to the business of unbranded tea.

He said that now the country uses about 170 million kg of tea annually as Pakistan is the third largest importer of tea in the world, but around 70 million kg tea is also being smuggled into the country through Afghan Transit Trade, that is not only hurting the official import but also creating difficulties to fulfil local demand. In this situation, the ratio between tea imports through legal and illegal channels is said to be equal.

The government is annually losing $50 million to $80 million revenue due to tea smuggling through Afghanistan, he added.

The price of imported one kg tea bag, depending on grade, was $1.75 in the last fiscal year, while the same now is available at $2.75. The main reason of this increase is that the importers have to pay 16 percent general sales tax along with income tax and customs duty as well, sources said, adding that the illegal tea traders pay nothing to the government.


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## Neo

*Pakistan lobbying for new avenues to gain EU access: Baig​*
KARACHI: Following the failure of the country to qualify for the Generalised System of Preference (GSP) Plus scheme for market access to the European Union, a new schemeGSP Democracyis under consideration for securing market access to the 27-member EU block.

Adviser to Prime Minister on Textile, Dr Ikhtiar Baig told Daily Times on Saturday that since the democracy is restored in the country, market access should be given as a democracy dividend.

Dr Baig said that extensive lobbying for the success of this venture is being done.  I held meetings with EU Trade Commissioner in Pakistan a couple of days ago and advocated for duty free market access to the EU.

Further, I would be leading a delegation to Brussels in the first week of next month to hold meetings with the concerned quarter in the EU capital for this purpose, he said. Also, the ambassadors of Netherlands, France, Italy, Turkey, Germany and UK in Pakistan assured their full cooperation to help Pakistan for accomplishment of this objective, he revealed.

It is pertinent to mention that European Commission has denied Pakistan the duty-free access for thousands of products under the GSP Plus scheme 2009-2011. Textile, leather and carpet industries are the worst affected by this barrier to entry in the EU markets.

The European Commission has granted GSP Plus status to Armenia, Azerbaijan, Bolivia, Colombia, Costa Rica, Ecuador, El Salvador, Georgia, Guatemala, Honduras, Mongolia, Nicaragua, Paraguay, Peru, Sri Lanka and Venezuela.

Pakistan lost the case of GSP Plus qualification owing to its failure to meet the criterion despite the fact that for the past couple of years, intense efforts at diplomatic level were carried out. This has been termed the trade diplomacy failure of the country in convincing the EU for grating this status to Pakistan. Pakistan lost the access by a narrow margin-with only one vote- when Germany opposed Pakistan for this scheme, advisor pointed out. However, he said that positive signals are emanating from the EU side and hoped that country would be able to receive some good on this front.

Pakistan is front line state of the west in its war on terror, however, the western capitals seem to be least interested to grant the country any sort of concession on trade front despite Pakistans effort for market access.

At the friends of Pakistan forum, this proposal will also be advocated. We need the long-term benefits for the country in the shape of market access rather than merely receiving the cash, which could is short-lived, Dr Baig maintained.


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## linkinpark

*Friends of Pakistan meeting postponed
Some friends critical of Islamabads ill-preparedness
*
Shah Hasan

IslamabadThe much-trumpeted meeting of Friends of Pakistan, earlier scheduled for January 12-13 here has been postponed and now it will take place some time in early next month.

*According to a senior official in one of the economic ministries that the FoPs meeting has been postponed as Pakistan was not still prepared and needed to do some homework in detail as Islamabad wants to include new projects of paramount importance from social sector, education and health in the next meeting.
*
With a view to finalizing the projects, Planning Commission is currently in consultation with various ministries and the objective would achieve in the inter-ministerial meetings some time the last week of January.

*Pakistan earlier in Abu Dhabi meeting on November 17 had placed about 71 projects of $ 60 billion, which drew a lot of criticism from some of the member countries in Friends of Pakistans forum. Japan took stern notice in Abu Dhabi meeting of ill preparedness of the officials of Pakistan, clad in precious dresses with costly wristwatches in their, who poorly presented the case of the country in the meeting seeking help to steer Pakistan out of economic morass. *

According to a letter communicated to Finance Ministry, Tokyo through the economic minister in Pakistans embassy expressed its reservations about the Abu Dhabi meeting saying it seemed that Islamabad came with shopping list as it marketed about 71 projects without any preparation. 

*Japan also noted that top officials in Pakistan delegation did not come up with preparedness and there was no presentation made in the meeting which should be based on figure and facts. Tokyo also noticed that Pakistan floated some projects on which Japan is already working. *

Keeping in view the reaction of Japan and other member countries with regard to poor homework, now Pakistan authorities have decided to take more time and the projects, which are to be flouted other than the early 71 projects should be presented in the meeting along with feasibilities and detailed engineering. 

Pakistan earlier sought cooperation from FoP in the field of alternate & renewable energy sources, petroleum and oil exploring industry, heavy mechanical industry, electronics, E- governance and E-commerce, Oceanography, Biotechnology and information technology and telecommunication.

For establishment of universities of Engineering, Sciences and Technology Pakistan needs financial assistance of $ 542 million from China, $ 543 million from Germany, $ 519 million from Austria and $469 million from Italy. 

Pakistan had also placed the demand seeking investment in projects of national importance that mainly include Thar Coal Project, Munda Dam, Hingol Dam, National Trade Corridor, Gharo-Keti Bandra Road, Connectivity of Gawadar Port, Up gradation of KKH (Mensehra-Sazin section of 258 km), Realignment of KKH (Bhasha Dam site-Railkot Section of 141 km), Bhasha-Diamer Dam. Pakistan also sought investment for 30 small and medium dam across the country. 

In agriculture sector, Friends were briefed that Pakistan needed $ 2 billion investment in various initiatives which include the value addition in horticulture and dairy, strengthening agriculture research, rain harvesting, drip irrigation, farm forestry, farm mechanism, food grain storages and social sciences research in agriculture sector, crop monitoring and forecasting. 

Pakistan placed the demand in Abdu Dhabi of $ 750 million assistance from Friends of Pakistan for implementing Madarasa Reforms as a part of the drive to erase the extremist tendencies in the seminaries students.

World Bank Trust Fund for FATA has also been established basically to help enhance the capacity of Pakistans security forces to combat terrorism and extremism.


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## Neo

*Work on $4 billion refinery at Lasbela likely to start soon​*
KARACHI (January 11 2009): Board of Investment Chairman Saleem H Mandviwala on Saturday informed the business community that work on setting up of a refinery at Lasbela at an estimated cost of four billion dollars is likely to start soon. Speaking at a meeting of Lasbela Chamber of Commerce and Industry at the chamber here, he said that during his visit to the UAE along with the Prime Minister, the issue was taken up with the interested parties.

He said the government has already allotted 1200 acres land for the proposed refinery. The investors are asking for more land for the refinery. He said that during his stay in UAE, the issue of cement plant also came under discussion with investors and they agreed to restart it during 2009.

The chairman recalled his visit to Italy and said that the Italian companies have shown interest in developing 'Marble City' and marble training institute in Lasbela.

Referring to a demand of setting up of 'Seafood City,' he said that the possibilities could be examined. The chairman said that Japanese investors have shown interest in introducing corporate farming in Pakistan. The issue will be discussed with the government of Balochistan for allotment of land for this purpose.

He said that the government is examining possibilities of reducing taxes. Replying to a question during a chat with newsmen after the meeting, he said that a number of units are closed in Hub industrial estate owing to variety of reasons. The government is ready to provide all possible facilities to revive these units, he added.

Replying to a question about electricity crisis, the chairman said that efforts are under way to overcome energy crisis and hoped that the government will succeed in achieving its targets in shortest possible time. He said the government is expecting around 30 billion dollars investment in energy sector in next 10 years.

The chairman said that a firm has proposed setting up of a shipyard at Gwadar. The chairman did not agree with questions of having another port at Sonmiani and saying that due to shallow seabed, it may not be possible. About tourism, he said that tourism is a different area. This area also has perception problem. However, this is an area where investment can be made attracted.

Representative of Hub Power Company, Aziz said that the company is facing serious finical problems due to non-payment of Rs 52 billion by different organisations. He said that 1200 MW power may go out of the system if these organisations failed to make payments.

Saleem H Mandviwala assured the representative that he would arrange a meeting of the company with the Prime Minister's Advisor on Finance to resolve the issue. Lasbela Chamber President Dr Muhammad Aslam suggested that in order to facilitate the industrial investment in the region, the import of plant, machinery, accessories and raw material be declared as zero-rated which will help boost the industrialisation. He suggested that Hub Town is the most suitable place for setting up of Japanese Investment Zone.


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## Neo

*Canada to double C$60 million Cida assistance to Pakistan​* 
ISLAMABAD (January 11 2009): The Canadian government has decided to double Canadian International Development Agency (Cida) assistance for Pakistan to 60 million Canadian dollars, mainly for local government, basic healthcare for girls and primary education. In addition, Canada will also support projects under the Friends of Pakistan Forum.

This was stated by Canadian Federal Minister for Citizenship, Immigration and Multiculturalism Jason Kenney during a meeting with Foreign Minister Shah Mahmood Qureshi here on Saturday. The escalating tension between Pakistan and India aroused after the Mumbai attacks also came under discussion.

The Canadian Minister expressed the hope that both Pakistan and India would be able to overcome the current tensions and resolve their differences peacefully. Besides, the two ministers also discussed various aspects of Pakistan-Canada bilateral relations with particular reference to immigration issues, employment of Pakistani manpower in Canada, investment in Pakistan, the role of Pakistani community in Canada, regional situation and other issues of mutual interest.

Qureshi appreciated the continued Canadian assistance to Pakistan for human resource development and capacity building. He also appreciated co-operation between the two countries for improving border management between Pakistan and Afghanistan.


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## Neo

*Pak-US talks on energy start in Washington on January 12​* 
ISLAMABAD (January 11 2009): Pakistan and the United States of America (USA) will hold a two-day energy dialogue on January 12-13 in Washington in which Advisor to Prime Minister on Petroleum and Natural Resources Dr Asim Hussain will give presentation to the US investors on new Petroleum Policy 2009.

Sources said that Pakistan wants to explore the indigenous oil and gas resources, and the government has offered incentives in the new approved Petroleum Policy to attract investors. Asim will brief US investors about the incentives announced in the oil industry.

Under the new policy, all local and foreign companies presently operating in Pakistan will be eligible to acquire exploration rights. Foreign companies not operating in Pakistan, but having operated concessions in other geographical areas of the world, will also be eligible to acquire petroleum exploration rights subject to demonstration of technical and the financial capability.

The government has simplified bidding and pre-qualification process, and the processing period has been reduced. Bids evaluation process has also been simplified to attract investors.

Pakistan has huge oil and gas reserves but there is no new activity for the last many years. Balochistan has also huge reserves of copper and gold whereas Sindh province has huge reserves of coal also. Government is working on the use of coal reserves for power generation purposes and US investors would also be invited during the energy dialogue to make investment for exploring mineral reserves and involve the oil and gas exploration activities.

Sources said that during talks in Tehran on Iran-Pakistan-India (IPI) gas pipeline project on December 29-30, Iran had sought the gas price which is not affordable for Pakistan. Now the government is making efforts to explore indigenous oil and gas reserves so that the country's energy needs could be met.

Government estimates of unexplored oil and gas reserves are 9 billion barrels oil and 80 trillion cubic feet gas in Balochistan province. Balochistan is of the view that these oil and gas resources should be explored to enhance its share of royalty.

"If only 5 percent of the said oil and gas reserves would be explored, Balochistan would receive additional royalty of Rs 25 billion on both oil and gas per annum. The province would have an additional royalty of Rs 11 billion on oil and Rs 14 billion on gas reserves per annum. Balochistan government is of the view that gas production in Balochistan has been reduced to 23 percent of total production which was 53 percent in 1990. Sindh province is producing 70 percent gas, Punjab 5 percent and North-West Frontier Province (NWFP) 2 percent. The incentives announced by the government would encourage the investors to come forward for investment in oil and gas sector in Pakistan, sources added.


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## Neo

*$25.058 million outflow recorded on equity market ​* 
KARACHI (January 12 2009): A massive outflow of $25.058 million of foreign portfolio investment from the country's equity market was witnessed during the week ended on January 10, 2009. According to National Clearing Company of Pakistan Limited (NCCPL) data, the cumulative outflow of this mode of investment had increased to $49.557 million from January 1 to date.

"The foreign portfolio investment has been witnessing a declining trend since the beginning of 2008, as a cumulative figure of this mode of investment has recorded negative $432.458 million from January 1, 2008 to January 9, 2009", an analyst said.

The outflow of foreign investment in the country's equity market started mainly due to political uncertainty and geo political situation. The NCCPL data shows that the week started with a negative trend a net outflow of $4,359,388 was witnessed on Monday. This trend continued as the offshore investors withdrew another $1,166,368 on Tuesday. The market remained closed on Wednesday and Thursday. A massive outflow of this mode of investment was witnessed on Friday as the foreign investors withdrew $19,532,490 on the last day of the week.


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## Neo

*Over Rs 5.5 billion uplift projects launched in Mirpur​*
MIRPUR (January 12 2009): Under an extensive development package to ameliorate the living standard of the common man, development projects worth over Rs 5.50 billion have been launched in Mirpur district under the spirit to raise the living standard of the people through providing latest means of communications and civic amenities close to their doorsteps, official sources said.

The sources told APP here on Sunday that development targets relating to various projects launched by Mangla Dam Resettlement Organisation, local government, public health engineering, highway, building division, electricity departments and the civic institutions in the division will be completed within stipulated period set separately for each project.

An effective and comprehensive system was also being introduced to monitor the pace of development works in Azad Jammu and Kashmir. The AJK government has recently directed the officials of the nation building departments to focus for ensuring the quality of the development works side by side pace of their execution. The AJK administration has particularly advised the departments that the public exchequer should be spent on the national and public interest-oriented projects coupled with the quality development work which could always be remembered to the coming generations.

According to the official sources, funds were available for the development projects in Azad Kashmir. The sources said that under a policy determined by the newly formed AJK government of Prime Minister Sardar Yaqoob Ahmed Khan, the accountability system in AJK would be further improved.

They said that under the proposed monitoring system to assess the pace of the construction work on the development projects, the divisional commissioners and the deputy commissioners, who have been given the additional charge as heads of the civic and development institutions in all eight AJK districts, would undertake inspections of the work in progress in their respective divisions. They would submit their development reports to the government regularly. The AJK government has also directed the officers to monitor the pace and quality of the development works by making frequent visits of the projects in the field launched by their respective departments.


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## Neo

*Increased water discharge to boost power generation ​* 
Monday, January 12, 2009

ISLAMABAD: Water discharge from the Tarbela Dam has been substantially increased, helping generate the much-needed power for the energy-starved country, thanks to Sindh for taking a lead in re-opening its canals after a countrywide closure.

The daily discharge from Tarbela has increased from 8,000 to 12,000 cusecs, which means the availability of 4,000 cusecs of water for hydropower generation, officials in the Sindh Irrigation Department told The News.

Sindh Irrigation Secretary Shuja Junejo, when contacted, said the Sukkur Barrage would be opened from January 21, 2008, for which the province required a water discharge with gradual enhancements.

We have not formally presented our calculations to the water regulator but definitely we need it as the travel time of water is almost 8-10 days from the Tarbela Dam, Junejo added. The irrigation secretary said his department would formally notify the increase in its indents. Exactly, was his response to a query if the province required around four to five thousand cusecs of water immediately and then a gradual increase on a day-to-day basis in its share from Tarbela.

The 12,000 cusecs, sources in the Ministry of Water and Power said, were enough to help alleviate the ongoing loadshedding, as the Pakistan Electric Power Company (Pepco) said the total shortage stood at 1,700 megawatts on Friday. The water releases would continue to be increased from now onward.

After smooth oil supplies, the power generation was recorded at 8,800 megawatt against the requirement of almost 10,500 megawatt, bringing the shortfall down to 1,700 from 4,500 megawatt, Pepco official Tahir Basharat Cheema explained.

The Sindh government, the sources disclosed, had conveyed to the Indus River System Authority (Irsa) its water indent of 12,000 cusecs a day for canals that had reopened after the de-silting work and that it would start receiving water at the Sukkur Barrage.

In real terms, the Water and Power Development Authority (Wapda) can supply electricity to the Pepco according to its requirements, provided this water is utilised without a single drop being wasted, a Water and Power Ministry official remarked.

In accordance with the Sindh indent, the water discharge has been accepted with immediate effect. The water takes a week to 10 days for flowing from Tarbela to the Sindh province.The entire Tarbela water discharge (12,000 cusecs a day) would be available to Sindh, which will get another 8,000 cusecs daily from the Kabul River and its tributaries system.

Sindh has placed an indent of 20 thousand cusecs daily. In a day or two, the Thal and Chashma-Jhelum link canals would be closed by the Punjab to divert water to the low-riparian province.


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## Neo

*Coal-fired power plants may be close at hand ​*By Sabihuddin Ghausi 

Sunday, 11 Jan, 2009

​
KARACHI: The Sindh Coal Energy Board, headed by Chief Minister Syed Qaim Ali Shah, is holding its crucial meeting on Tuesday (January 13) to consider three investment proposals for coal-mining and setting up of coal-fired electric power generation plants.

Well-placed sources revealed that investment proposals were given by Jehangir Siddiqui, Engro and Al-Tuwairaqi that were processed and scrutinised by a four-member committee, headed by Syed Asad Ali Shah, and have been recommended for a further follow up consideration.

The board had received six investment proposals, and three were apparently discarded after each of the three sponsors was unable to find a suitable technical partner.

Sources in the Sindh government are not certain as to how many of four federal government nominees on the board will turn up on Tuesdays meeting. The four members are deputy chairman of Planning Commission, federal law minister and federal minister of power and natural resources and federal secretary of power and natural resources.

The meeting of the board has been convened after media reports that the Punjab government is moving swiftly to attract foreign and local investors for setting up coal-fired electric generation projects.

With hardly 265 million tons of coal reserves, the Punjab Chief Minister, Mian Shahbaz Sharif, has managed to attract established investors in Hong Kong to visit his province to explore setting up of coal-fired projects.

Only this week, the Punjab government announced setting up of four coal-fired electric generation projects of 50 MW each at four different places.

Under the policy, the provinces have been empowered to sanction and implement 50 MW power stations in their territory.

In another development, a four-member World Bank mission reached Karachi on Saturday for a two-week visit to assist the government in technical evaluation of investment proposals. Headed by Mr Michael Stanley, the World Bank team will be joined by three Pakistani consultants.

On Jan 15, the Sindh government is organising an international seminar on investment opportunities in Sindh minerals. One full session will be devoted to coal reserves in the province.


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## Neo

*65,000 tons of Iranian crude arrive on deferred payment ​*By Aamir Shafaat Khan 

Sunday, 11 Jan, 2009

KARACHI: A ship carrying 65,000 tons of crude oil from Iran arrived at the port on Friday under the deferred payment facility.

Pakistan Refinery Limited (PRL) had signed an agreement last month with National Iranian Oil Company (NIOC), which had extended the credit facility for the payment of crude oil to 90 days from 30 days.

Bosicor Refinery Limited (BRL) had also signed the agreement.

General manager Supply and Planning of PRL Aftab Husain, who accompanied the government delegation which recently visited Iran, said that the refinery would now import up to 30,000 barrels per day of Iranian light crude instead of 10,000 barrels.

Every month the PRL would at least import two cargoes of 65,000 tons each. The value of each cargo ranges between $22-23 million, he said.

When asked whether there was any difference between Iranian crude and the Light Arab crude, which is mainly imported by Pakistan, Mr Aftab said there was no major difference as both were competing crude in the world and their characteristics were almost same.

PRL had also signed an agreement with Economic Cooperation Organisation Bank (ECO Bank) in Turkey for the loan of $50 million to facilitate the import of crude oil from Iran.

The PRL managing director and chief financial officer had signed the agreement in Istanbul on Thursday, he added.

Under this agreement, the issue of opening of letters of credit (LCs) would minimise with the help of central banks of the two countries, he said.

The PRL also imports crude oil from Abu Dhabi National Oil Company apart from processing local crude, he said.

Bosicor Refinery Limited managing director Mohammad Wasi Khan told Dawn that the next cargo of 65,000 tons for the refinery would be coming in a weeks time.

He said that the agreement on deferred payment with Iran would help building foreign exchange reserves of the country by extending the payment period to 90 days.

He added that since the company had entered into an agreement first time and it can import Iranian crude up to 25,000 barrels per day.


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## Neo

*President says Pakistan will produce indigenous fuels ​*By Syed Irfan Raza 

Tuesday, 13 Jan, 2009

ISLAMABAD: President Asif Ali Zardari on Monday said the government will provide complete secure environment for the foreign investors intending to start different projects in Pakistan.

Talking to a German delegation at President House, the president said economic reforms of the country were creating an enabling environment for the private sector to become an engine of growth. The delegation of a leading industrial group of Germany was led by Dr. Olaf Berlien.

This region is more conducive for investment and Pakistan provides link to Central Asia and other important Asian countries, he said and appreciated interest of the group for investment in Pakistan. 

In a separate briefing on Fuel Ethanol Policy at President House, the president said reducing reliance on imported fuels was critical for the country's economic stability and called for adopting measures on war footing to achieve self reliance by producing indigenous fuels during the term of the government.

He said that the recent volatility in oil prices shooting up to over $150 a barrel and environmental concerns had further enhanced the need for developing alternate fuels such as ethanol and biodiesel. 

The world is moving fast towards developing new fuel technologies and Pakistan could not afford to lag behind, he said. 

The President said indigenously produced ethanol and biodiesel could help in achieving import substitution and also enable us escape the hazards of oil price volatility. 

He, however, cautioned so that food production was not adversely impacted. The briefing was attended by Shaukat Tarin, Finance Advisor, Manzoor Ahmad Wattoo, Federal Minister for Industries and Production and Secretaries and senior officials of Finance and Petroleum Ministries and members of the Planning Commission, Chairman PARC and President ZTBL.

Giving briefing on the subject Member (Energy) of the Planning Commission Pervez Butt highlighted strategic priorities for replacing domestic gasoline use with biofuels over the next few years requiring substantial increase in mandatory biofuel use. 

He said that ethanol is environmentally friendly. It was pointed out in the meeting that although corn is a renewable resource it had lower energy yield than either biodiesel (such as soybean oil) or ethanol from many other plants.


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## Neo

*Industrial group of Germany keen to invest in joint venture projects in Pakistan ​*Monday January 12, 2009

ISLAMABAD: A delegation of a leading industrial group of Germany led by Dr. Olaf Berlien, which called on President Asif Ali Zardari in Presidency on Monday, expressed its keen interest to invest in joint venture projects in Pakistan and bring direct foreign investment in the country in a number of areas. 
Dr. Olaf Berlien informed the President that their industrial group was one of the worlds largest steel producers and operated worldwide in steel, capital goods, and services. 

The President appreciated interest for investment in Pakistan and said that the economic reforms of the country were creating an enabling environment for the private sector to become an engine of growth. 

He said that Pakistan has become one of the attractive destinations for investment due to its liberal and investment-friendly policies. He said that this region is more conducive for investment and Pakistan provides link to Central Asia and other important Asian countries. 

Mian Manzoor Ahmad Wattoo, Federal Minister for Industries and Production and Secretaries of Petroleum and Industries Ministries were also present in the meeting.


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## Neo

*Pakistan studies waste-to-energy project​*
ISLAMABAD, Pakistan, Jan. 12 (UPI) -- Pakistan is working with U.S.-based company Sheladia on a viability study for a waste-to-energy plant.

The proposed plant would be built in Karachi and would generate up to 10 megawatts of power. The project is being funded by the United States through Pakistan's Alternative Energy Development Board, the News International reports.

The study is expected to take about five months and cost about $325,000. If the plant is found to be a beneficial project, plans would be set up under a public-private partnership.

"Not only such a project will administer local waste, it will also add to power generation, lessen load-shedding and use renewable energy resources for increasing the security of energy supply," said AEDB Chief Executive Officer Arif Alauddin.

He noted the project will be the first of its kind for Pakistan.

"It is really encouraging to note that an agreement between AEDB and Sheladia would be signed in a week's time, which will not only expand electricity production sources but would also make a modest contribution to reducing the energy deficit facing the country," said Richard O'Shea, representing the U.S. Consulate General in Karachi.


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## Neo

*Pakistans Inflation Slows After Four Rate Increases ​*
Jan. 12 (Bloomberg) -- Pakistans inflation eased from near a three-decade high in December after the central bank raised its benchmark interest rate four times in 2008. 

Consumer prices in South Asias second-largest economy increased 23.34 percent from a year earlier after gaining 24.68 percent in November, the Federal Bureau of Statistics said in Islamabad today. Analysts were expecting a 22.6 percent increase. 

Slower inflation may allow the State Bank of Pakistan to refrain from another rate increase in its next policy statement later this month, economists said. The central bank promised the International Monetary Fund as part of a $7.6 billion bailout to raise borrowing costs if foreign reserves drop too low. 

Given our declining inflationary numbers and stable exchange rate outlook, we expect interest rates to decline in coming months, said Muhammad Imran Khan, an analyst at First Capital Securities Ltd. in Karachi. An interim cut in the key policy rate between January and July cannot be ruled out. 

Former Governor Shamshad Akhtar on Nov. 12 raised the central banks key rate by 2 percentage points to 15 percent, describing the move as the toughest decision of my life. The bank pledged to the IMF to increase the rate again if foreign reserves fell below $1.165 billion at the end of December. 

Pakistan was forced to turn to the IMF for a rescue package after its reserves shrunk 75 percent in a year to $3.45 billion. The rupee declined as much as 26 percent last year. 

Pakistans economy may miss this years growth targets and inflation may remain as high as 22 percent, the central bank said in annual report on Dec. 6. The pace of expansion in the fiscal year to June 30 may slow to between 3.5 percent and 4.5 percent, compared with a target of 5.8 percent, it said. 

Consumer prices increased an average 24.43 percent in the July to December period, compared with 8.01 percent a year earlier, according to the governments agency.


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## Neo

*Zero outflow from Mangla to widen power deficit ​* 
Tuesday, January 13, 2009

ISLAMABAD: Zero water outflows from Mangla from Tuesday would compound the miseries of Pakistan Electric Power Company (PEPCO) as it would increase hydel shortfall at a time when the whole country is facing prolonged power outages.

At present, PEPCO is getting 500 megawatts of electricity for five hours through the release of 12,000 cusecs of water from Terbela and 5,000 cusecs from Mangla. However, the power deficit would widen to about 300MW by stoppage of outflows from Mangla. PEPCO is exerting pressure on the Indus River System Authority (IRSA) not to stop water releases, as it would cause more pain to it, a senior official told The News.

When contacted, IRSA spokesman Rana Khalid said that IRSA acts as per the demand of the federating units. Punjab has closed all its barrages and canals and has placed zero indent for water, both from Tarbela and Mangla reservoirs.

By releasing 12,000 cusecs per day and 8,000 cusecs from Kabul river, we are catering to the water needs of Sindh, the low riparian province of the country, he said. Both dams currently have 1.8 million acre feet of water and storage is expected to improve in the days to come as IRSA is expecting an effective rain spell in the next three days. This spell will help improve the water storage in the country and will reduce demand of the four federating units too, he hoped.

When contacted, Tahir Basharat Cheema, spokesman for PEPCO, said that from Tuesday water outflows from Mangla will halt, which would affect hydropower generation. To a question, he said that power shortfall is 1,700MW as power generation stands at 9,300MW against demand of 11,000MW.

Right now we are getting electricity through IPPs, Wapda thermal houses and hydel. However from January 17 we will be having round the clock 300MW nuclear power, as Chashma Nuclear Power Plant which was closed some 5 months back for annual maintenance would come on stream, Cheema said.


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## Neo

*Germany keen to set up wind turbine industry ​* 
Tuesday, January 13, 2009

ISLAMABAD: Germany has shown interest in joining hands with Pakistan in setting up wind turbine industries and negotiations are under way. Islamabad has also asked Berlin to invest in Pakistans fertiliser sector in order to meet the requirement of the commodity.

Federal Minister for Industries and Production, Mian Manzoor Ahmed Wattoo during a meeting with the members of a German trade delegation, headed by Dr Olaf Berlien, Chairman Thyssen Krupp Technology said here on Monday, Developing wind turbine technology is the need of our farmers and our rural areas in which the German government was rich and showed interest.

The government would encourage foreign and local investment in setting up fertiliser plants in the country besides other fields as there was immense potential available for investment due to the governments policy, he said.

Wattoo said agro-based industries were also very beneficial for investment. The government would encourage public-private partnership and joint ventures in setting up agro-based industries.

The minister said Pakistan Steel Mills expansion plan was under consideration of the government due to the demand of steel in the country. "The government will provide all possible help to the sector for development.

Dr Olaf Berlien said Germany was keen on investing in Pakistan in various sectors and wants to establish industries in joint ventures in many fields especially agro-based industry, automobile industry and the steel sector. He said on the next visit to Pakistan they will visit rural areas to review the possibility of investment in this field.


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## Neo

*Chinese firm starts survey for power project ​* 
Tuesday, January 13, 2009

KARACHI: A Chinese firm on Monday said it has started underground hydrological surveys in Sindh as part of a coal-mining and power generation project.

China National Machinery Import and Export Corporation (CMC) has entered concluding stages of evaluation process of its leased area of 57 sq km in Sonda Jerruk coal field of District Thatta, a company official said.

As a large-scale state-owned company in China, CMC has effectively urbanized coal mines in countries such as Bangladesh and Vietnam, with rich international experience accrued in this field, it said in a press release.

Sonda-Jherruk coal mine and power plant project is expected at generating around 405 megawatts of electricity using coal. The hydrological survey will assist ascertain the amount of underground water, essential for power generation purpose. The tariff is still to be determined and definite work on mining is expected to start by middle of this year, the company official said, adding that an earlier study has established availability of 1.8 million tonnes of coal per year.


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## Neo

*President for self-reliance in fuel ​* 
Tuesday, January 13, 2009

ISLAMABAD: President Asif Ali Zardari on Monday urged measures on war-footing to achieve self-reliance in indigenous fuel, as oil imports impacted the countrys economic stability.

During a briefing on Fuel Ethanol Policy at the President House, President Zardari said recent volatility in oil prices to over $147 a barrel and environmental concerns had pointed to the need for developing alternative fuels such as ethanol and bio-diesel. The world was moving rapidly towards developing new fuel technologies and Pakistan cannot afford to lag behind.

The President said indigenously produced ethanol and bio-diesel could help achieve import substitution besides avoiding oil price volatility. However, the President said caution must also be exercised so that food production was not adversely impacted. The briefing was attended by Finance Advisor Shaukat Tarin, Minister for Industries and Production Manzoor Ahmad Wattoo, Secretaries and senior officials of Finance and Petroleum Ministries, members of Planning Commission, Chairman PARC and President ZTBL.

Member (Energy) Planning Commission Pervez Butt highlighted strategic priorities for replacing domestic gasoline use with bio-fuel over the next few years requiring substantial increase in its mandatory use.

He said ethanol was environmentally friendly. It was pointed that corn was a renewable resource and had lower energy yield than either bio-diesel (such as soybean oil) or ethanol from many other plants.

During the presentation it was informed that Pakistan like many other major sugarcane-producing nations enjoyed significant advantages in producing ethanol, including ample agricultural land, warm climates amenable to vast sugarcane plantations, and on-site distilleries that can process cane immediately after harvest.

It was pointed that Ethanol was being mixed in different proportions in motor gasoline in many countries and a 10 per cent mix was referred to as E-10. He said the government was considering various measures to promote the use of E-10.


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## Neo

*Gems industry neglected despite trade potential ​* 
Tuesday, January 13, 2009

KARACHI: Lack of documented trading in the gems and jewellery sector has led to the industry being neglected despite having tremendous potential for foreign trade, especially with US markets.

This non-traditional sector, as of June 2007, was worth US$210 million with over a million people directly associated with it, and yet these figures do not represent the true picture as most of the transactions go unrecorded.

CEO of Pakistan Gems and Jewellery Development Company (PGJDC), Fawad Khan in an interview with The News shared that negligence on part of the government had caused great harm to the gems industry until some years ago when it finally decided to identify the non-traditional sectors which could contribute to the GDP and the economy.

Khan said that until two years ago, the gems sector did not even have a proper gem lab where gems could be identified and rated. Citing an incident, he said even the hub of gems industry, Peshawar, lacked a gem lab and anyone wanting gems tested had to travel to Dubai.

Khan stated that some gems and jewellery dealers in Pakistan have small gem labs in their shops but their usage was limited and the stakeholders, buyers and sometimes even sellers, had no access to a common lab which anyone could make use of.

He informed that it was PGJDC which introduced the first common gem lab in Pakistan along with a gem exchange where all sorts of facilities were available for gem trading. Khan said that PGJDC was formed in June 2006 but started their operations in April 2007.

He added that their initial task was to identify five essential projects and over a period of two years they established three Common Facility Training and Manufacturing Centres in Karachi, Lahore, Gilgit and two gem exchanges in Peshawar and Quetta.

Khan informed that while the Quetta gem exchange is yet to begin its operations, which is expected to be within a months time, the Peshawar gem exchange had already received a tremendous response and was fully operational.

We have started charging a small fee this month onwards, though earlier the facilities were free as we wanted to develop the culture of documented trading in a gem exchange, he said. He continued, People come to trade there, test their gems in the gem lab established within the exchange, buy and sell, etc. In fact, Habib Bank Ltd agreed to record all financial transactions taking place in the exchange as we do not have a proper bank outlet set up as yet.

We also got approval from the Federal Board of Revenue to deal with exporters who want to export their gems. An FBR representative would come to the exchange, examine the items to be exported and then seal them, hence, facilitating that aspect of the trading too, he added.

Khan further said that PGJDC also helped introduce pattern making in wax for the first time in Pakistan which led to lesser time being consumed, less wastage of precious metals and eventually lower costs towards making the final product.

He said that earlier, designers carved out patterns directly on the metal (gold or silver) itself and if the slightest mistake was made, then the process had to be started all over again. With wax patterns, the entire process became simpler and contributed immensely towards the gems and jewelry sector, he articulated.

Have security issues in the tribal areas affected the gems industry in any way? Khan doesnt seem to think so. He maintained that the acts of terrorism and other security issues did cause hindrance in the business but had not damaged the industry in any significant manner.

Both the customers and buyers know each other and find ways to interact. Many even come down to Karachi and conduct their dealings here. Similarly, the mining process has not been affected in recent weeks as weather plays a great role. 

It is cold out there and those are areas which witness snowfall, so there isnt a great deal of mining being done right now anyway, he said. Moving on, Khan also shared that Pakistan is still exempted from the 6 per cent import duty on gems import in the US, which India has now implemented on it. Now India is trying to re-label its products and send them through our channels and make Pakistan its base he expressed. However, we dont want that. We would like India to bring its gems industry to Pakistan but at the same time, set up manufacturing plants so that it creates jobs for our people and contributes towards our economy, he added.

He said that this process would also bring in the neighboring countrys skills and designs into Pakistan. PGJDC is also making constant efforts to conduct trainings all over Pakistan to upgrade the skills of our gem dealers, he stated.

Khan informed that PGJDC has already conducted over 80 workshops in Karachi, Peshawar, Lahore, Abbotabad and Quetta and these trainings are given in the field and on the sites rather than in fancy hotel rooms.

The CEO shared that these efforts were being made as the government had set targets for the company which they were keen to achieve. Our target is to take the sector to $500 million by 2011 and $1.5 billion by 2017 and that is only possible by improving the skills of our gems dealers and providing incentives, which would encourage them to deal under the official grounds, which would help towards documentation of the industry.


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## Neo

*ILO to aid Balochistans development programme​* 
Tuesday, January 13, 2009

ISLAMABAD: International Labour Organistaion (ILO) will provide a technical assistance to development initiative 2009-2013 planned by the government of Balochistan while focusing on promotion of overseas youth employment (50,000 in 5 years) and child labour free Balochistan. 

This was highlighted by Donglin Li, Country Director, ILO office for Pakistan. Li together with an ILO delegation held a meeting with Sardar Muhammad Aslam Khan Raisani, Chief Minister of Balochistan to discuss this development initiative, says a statement issued by the ILO office here on Monday. 

The ILO delegation was visiting Quetta on the special invitation of the CM to initiate formal discussions for the design of a medium term programme and strategy to mobilize a donor support. 

At the request of the CM, ILO will also give a technical support to the government of Balochistans planned development partners conference to be organised in Islamabad later this year. The objective of this conference is to mobilize the donor support for the Balochistans development initiative focusing on overseas youth employment and eradication of child labour. 

In the past, ILO has been working in the close collaboration with the provincial labour department, other government agencies, employers and workers organizations, and other development partners in the fields of occupational safety and health in the mining industry, institutional capacity development, non-formal education to rehabilitate child labourers, and interventions related to the emergency response. 

The ILO has also helped train poor women in selected trades, carried out leadership training programmes for women trade unions leaders, sensitized provincial parliamentarians on the women employment concerns, and given research grants to university students to conduct research. 

Another pipeline project, with the funding from the European Commission (10 million euro), will support Pakistans efforts to implement its national skills strategy and by strengthening the national skills development system.


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## Neo

* Punjab working on hydel, coal power generation projects: Shahbaz ​* 
*Says country facing serious energy crisis​*
Tuesday, January 13, 2009

LAHORE: Punjab Chief Minister Shahbaz Sharif has said Pakistan is facing serious energy crisis and the government is taking measures to solve this problem.

He expressed these views while addressing a meeting held at the Chief Ministers Secretariat on Monday to review the Punjab Power Generation Policy, 2006. He said the Punjab government was working on a number of projects, including electricity generation from hydel power and coal.

He added that negotiations were being held with China in this regard while the Independent Power Producer Forum had also visited the Punjab and expressed keen interest in investing in the energy sector.

Shahbaz said that at present, Pakistan was facing a power deficit of more than 4,500 MW and there was a dire need for investing in the energy sector in the interest of the agriculture and industrial sectors.

He said power shortage was also affecting exports besides leaving a negative impact on various sectors.He said that though heavy borrowing was made in the past but instead of using this money on public welfare and power-generation projects, it was wasted on luxurious living, which was a great disservice to the nation.

He said that efforts had been made for capacity-building and activating the Punjab Power Development Board. Experts have also been included in the exercise, he added.Shahbaz lauded the services of the Punjab senior minister for comprehensive amendments in the Punjab Power General Policy.

He added that the amendments were being sent to the Punjab cabinet for approval.Earlier, the irrigation secretary briefed the meeting on amendments in the Punjab Power General Policy, 2006.

He said a special committee had been set up under the chairmanship of Raja Riaz. The committee had given a final shape to these amendments after detailed deliberations, he added.Shahbaz said the Punjab Power Development Company Limited, headed by Nadeem Babar, had also been constituted which would undertake various power-generation projects in the province.

He directed the committee, set up under the chairmanship of Senior Adviser Sardar Zulfiqar Ali Khan Khosa regarding the PIDA, to submit its recommendations as soon as possible.The planning and development chairman, secretaries of finance, mines, irrigation and power and others were also present on the occasion.


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## Neo

*Educationists discuss USAID $75m project ​* 
Tuesday, January 13, 2009

LAHORE: The Punjab University on Monday organised a meeting of the educationists, who deliberated upon $ 75 million project Pre-Service Teachers Education Programme of the United States Agency for International Development (USAID). 

Vice Chancellor Dr Mujahid Kamran chaired the meeting attended by renowned educationists from all over Pakistan including University of Educations VC Dr Munawar Mirza, Fatima Jinnah Women Universitys VC Prof Dr Saeeda Asadullah Khan, Bahauddin Zakariya University Multan VC Prof Dr Muhammad Zafarullah. 

The USAID team was headed by Programme Chief Doran Bernard, while Deputy Chief Phillip Butterfield and Project Coordinator (Peshawar) Kamran Iftikhar Lone were also present. 

Briefing the meeting on the USAID programme, Dr Doran Bernard said the project would be implemented in Pakistan in five years and as many as 15 universities and 75 government colleges have been selected for this project. He said the objectives of this project are: To improve system and policies that support teachers and education managers; to support HEC and the Ministry of Education, teachers institutes to develop/revise, evaluate and finalise elements of pre-service teachers education degrees; development of a plan to implement new curriculum for new and existing teachers. USAID Project Deputy Chief Phillip Butterfield said the agency would also run a project to develop financial resources for higher education. 

Dr Mujahid said the PU was meeting its 60 per cent expenses from its own resources and striving for financial independence. He hoped that the USAID programme would help uplift education standard of the selected educational universities of the country. Dr Munawar Mirza, Dr Hafiz Iqbal and other participants also spoke and gave their suggestions to make the project a success.


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## Neo

*40% decrease in wheat production expected in Pakistan ​*
ISLAMABAD: We are expecting 40 percent decrease in wheat production in Pakistan, as 72 districts are deficient in wheat availability, says Dr Pervez Ameer, Member Technical Advisory Panel, Ministry of Environment. 

Dr Pervez said this while speaking at a workshop on climate change at LEAD House, Islamabad. 

Around 35 million acre feet of our water is being wasted out of the total water of 148 million acre feet, owing to inefficient use of our water resources. The need is for a united front and systematic struggle to cope with climate change challenge, said Ex-Minister of State on Environment, Malik Amin Aslam. 

Musharraf Zaidi, governance expert, discussed the issues of public policy impacts in Pakistan and elaborated hierarchal system involved in decision-making process. 

Climate Change is emerging as the most critical challenge of our times. Need is to look at and renegotiate environmental policies, in the light of ongoing and expected climate change impacts. Climate Change will increase poverty through droughts, floods, extreme events causing resettlement, disasters and diseases. Syed Ayub Qutub, CEO PIEDAR, said most of our problems are related to the climate change vulnerabilities with respect to five core issues: water security, food security, infrastructure, public policy and disaster management. 

LEAD believes that Pakistan needs to develop a plan of action on climate change like several other nations, including India and China. The national plan of action on climate change should address some of the most pressing issues that will confront Pakistan and outline areas of priority for investments and actions. This action plan should also serve as the basis for our revised energy, water, agriculture and forestry policies.


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## Neo

*CMC to invest $2m in coalfield ​*
KARACHI: A China National Machinery Import and Export Corporation (CMC) has planned to invest more than two million dollar for development of coal mines at Sonda-Jherruk field in District Thatta, Sindh. The Chinese company began its preliminary studies for mine construction work in May 2008 and it has almost started mining operation in the beginning of the calendar year. This is the second detailed exploration made by CMC at the coalfield that will contain detailed hydro geological testing and water resource investigation, shaft geological investigation and shaft drilling.


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## Neo

*Electricity shortage drops to 1700MW ​*
ISLAMABAD: The demand and supply gap of the electricity in the country has dropped to 1700 megawatt in the wake of increased power production which helped reduce the duration of the load shedding by 1 to 3 hours. PEPCO spokesman, Tahir Basharat Cheema said that now only gas-fired thermal power stations of 750MW were closed due to short supply of gas. He said oil supply has improved with fog spell waning out, which prompted further increase in power production by 2800 MW.


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## Neo

*WB puts $834.5m projects for Pakistan on hold​*
** Suspends programme loans due to poor macroeconomic conditions​*
ISLAMABAD: The World Banks (WB) monthly operational summary for revealed that two key projects for Pakistan worth $834.5 million are to be put on hold.

The report, released on Monday, said the WB had suspended the programme loans for Pakistan due to the countrys poor macroeconomic conditions. The suspension is likely to continue until the WBs Executive Board considers that Pakistans macroeconomic indicators are improving. Under this arrangement, the two projects are being put on hold and further action on them would depend on the WBs decision.

According to the summary, both sides may negotiate the projects purpose and cost in the months to come.

The report said the WB was suspending the International Bank for Reconstruction and Development (IBRD)-funded National Expressways project. The $634.5 million project is to provide an efficient, high-speed, safe and access-controlled expressway system, which would contribute to lowering transit costs and time.

The other project that the WB shelved temporarily was the National Trade Corridor Improvement Programme.

The $200 million project funded by the IBRD would work to enhance the countrys export competitiveness by reducing the cost of trade and transport logistics, and bringing the service quality to international standards.

Other WB-funded projects whose preparation is underway are: 

Higher Education Support Programme: The $100 million project is to support the government of Pakistans higher education medium-term development framework. It will work to foster public-private partnership in the higher education sector. The project also aims at providing substantial technical support in developing a reasonable financing plan, consistent with the macro-framework of the country.

Mineral Sector Technical Assistance: The objective of the $50 million project is to implement a strategy to accelerate sustainable mineral sector development by strengthening governance, transparency, and capacity in the management of mineral resources. 

Rural Telecommunications and e-Service: The project worth $124 million aims at accelerated access to communications in under-served areas by using targeted subsidies for rural expansion and strengthen legal, policy, regulatory and spectrum management.

Second Sindh Structural Adjustment: The project costing $100 million is to implement reforms to improve fiscal and financial management, governance, public service delivery, and the states regulatory framework. 

Support to Safety Nets: The $50 million project will support the effective strengthening of implementation and monitoring mechanisms for delivery of cash transfer programmes, including the Benazir Income Support Programme. 

Trade and Transport Facilitation-II: The project worth $25 million will facilitate the National Trade Corridor Implementation Plan and modernise Pakistans international trade procedures and practices.


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## Neo

*New growth strategies ​*Syed Mohammad Ali 

While trying to make energy use more efficient and more cost effective, it is vital that the issue of equitable access not be ignored. There is no significant trade-off between climate change mitigation and energy access for the poorest

It is said that necessity is the mother of all inventions. Thus the evident changes that are taking place now within the natural environment on which all life on our planet remains dependent may not only have inevitable consequences for all to bear, but should also offer the hope of finally altering the very behaviour that has been largely responsible for causing these changes.

The existing models of economic productivity have been pumping ever-increasing quantities of pollutants into an atmosphere that is already so contaminated that it has begun to usher in climate changes. These changes threaten to derail whatever modest progress has been achieved with regards to human development.

Unprecedented changes in global climate are evident from observations of increases in average air and ocean temperatures, the widespread melting of snow and ice, and rising sea levels. There is no dearth of projected increases in the frequency and intensity of heat waves, storms, floods and droughts. These will have major impacts on all life on the planet in the form of changes in water availability, land degradation, food insecurity, and loss of biodiversity.

In an effort to avert this self-perpetuating disaster, the World Bank has finally reacted by devising a new strategic framework for helping its client nations carve out a sustainable growth path. Some of the supposed win-win policies identified by the World Bank include removal of energy subsidies and promotion of end-user energy efficiency.

The World Bank is arguing that energy subsidies are expensive as they damage the climate, and disproportionately benefit the well-off who are in the business of energy generation. The benefits of energy subsidies are not only said to be skewed towards wealthier groups, this form of subsidisation is also considered to have a negative impact on the amount of public expenditure available to resource constrained developing countries to improve the lives of ordinary citizens.

There is also empirical data to support this argument given that fuel subsidies alone are 2 to 7.5 times as large as public spending on health in countries like Bangladesh, Ecuador, the Arab Republic of Egypt, India, Indonesia, Morocco, Pakistan, Turkmenistan, Venezuela and Yemen.

Moreover, energy subsidies also encourage inefficient, carbon intensive use of energy. States that subsidise diesel prices, so that they are less than half the world market rate, emit about twice as much per capita as other countries with similar income levels, which do not offer such subsidisation.

Conversely, countries with long-standing fuel taxes, such as the United Kingdom, have evolved more energy-efficient transport and land use. It is thus being argued that reduction in government support in this regard will encourage energy efficiency, increase the attractiveness of renewable energy, and allow more resources to flow to poor people and even to investments in cleaner power.

On the other hand, end-user energy efficiency is being identified to have great potential for reducing emissions as well, which becomes increasingly attractive as the costs of constructing and fuelling power plants rise. Again it is the World Bank which is very keen to support supply-side energy efficiency and help overcome biases that favour electricity supply over efficiency, inadequate investments in learning, and inattention to energy systems in the wake of power sector reform.

It was the record levels of energy prices worldwide which provided an impetus for the World Bank to finally decide to promote more sustainable long-term trajectories of growth. To help developing countries cope with the burden of these prices, and take advantage of the signals they send for sustainability, the World Bank has finally made promotion of energy efficiency a priority. It wants to encourage efficiency investments and policies to adjust to higher prices and to facilitate the construction of more resilient economies.

While trying to assist countries to dismantle subsidies, the World Bank now seems keen to finance programmes that will protect the poor as well as other productive sectors of the economy to adjust to higher prices.

However, past attempts to promote efficiency have had limited success particularly because institutions like the World Bank have primarily chosen to engage with power utilities, which obviously have limited incentives to restrict electricity sales. Even internal World Bank compulsions have tended to neglect energy efficiency efforts given that such small-scale projects implying behavioural changes demand much staff effort and persistent engagement with a diverse number of stakeholders over years.

The World Bank has now decided to promote policies that catalyse private sector investments in renewable energy and energy efficiency. Whether profit-driven private sector interventions, which have an imperative to scale up very quickly in order to maximise profits, be able to secure sustainable, equitable and efficient energy use remains to be seen.

It is encouraging at least to see that national governments in developing countries themselves have begun to rethink their traditional positions with recent moves by China to drastically reduce its energy intensity.

Pakistan had also set up an Energy Conservation Centre within the Ministry of Environment. However, the Centre has received little policy attention, and resultantly its impact on relevant sectors like transport, industry and agriculture has thus remained miniscule. The huge energy crisis facing the country provides another opportunity for policy makers to rethink the long-term energy policy of the country based on principles of sustainable use and conservation instead of relying on the usual knee-jerk reactions of offering temporary solutions.

While trying to make energy use more efficient and more cost effective, it is vital that the issue of equitable access not be ignored. There is no significant trade-off between climate change mitigation and energy access for the poorest. Providing basic electricity services for the worlds unconnected households will add only a third of a percent to global emissions, and much less if renewable energy and efficient light bulbs are deployed. There is thus no excuse to keep denying the poor the basic benefits of energy production, which the well off have tended to over-consume, even if policy makers finally get serious about sustainable energy use.


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## Neo

*Shipbuilding industry to be developed on grand scale: Gilani launches 'tanker-cum-utility' ship project ​* 
KARACHI (January 13 2009): Prime Minister Yousuf Raza Gilani has said that the government has adopted a 'vision' for new shipyards and development of shipbuilding industry on a grand scale. He said that the government would move in this direction at a very fast pace, and added: "Together, we will ensure that Pakistan becomes a leading shipbuilding country in the region, in line with its true potential and ideal location".

He was speaking here on Monday at the launching ceremony of Stus No 1--first small 'Tanker-cum-Utility' ship, being built by Karachi Shipyard and Engineering Works (KSEW) for Pakistan Navy. Federal Minister for Defence Production Abdul Qayyum Jatoi, Naval Chief Admiral Noman Bashir, Sindh Governor Ishrat-ul Ibad Khan, Chief Minister Qaim Ali Shah and high officials of Pakistan Navy and KSEW were also present on this occasion.

The Prime Minister said that the shipbuilding is an industry which can act as a catalyst for overall industrial development, leading to economic development, large-scale employment generation and poverty alleviation. "This is a labour-intensive industry, and is best suited for developing countries like Pakistan," he added.

He said that Pakistan has a great commercially strategic location at the mouth of the Persian Gulf and abundance of hardworking manpower, best suited for shipbuilding industry. "We need to take advantage of these strengths", he said, and added that all people involved in the shipbuilding industry "have a great future and prospects" ahead of them.

He urged each and every individual, working in KSEW, or related with these activities, to work with dedication for the progress of KSEW and the shipbuilding industry in the country. The Prime Minister said that the KSEW is a national asset and is contributing tremendously in fulfilling the country's naval defence requirements as well as requirements of the country's maritime sector.

"It is a very important component of the Ministry of Defence Production and, with every event like the one today, the government feels ever more confident." Gilani, much impressed by the turnout of Karachi Shipyard in such a short span of time, said: "Today, the entire yard is buzzing with activity, and it proves that with will and dedication, challenging tasks can easily be achieved."

He congratulated Karachi Shipyard management for early achievement of launching milestone, and appreciated the efforts of its architects, engineers and workers involved to accomplish the prestigious task. He noted that the project was progressing ahead of planned schedule.

He said that this is a remarkable achievement and speaks volumes of the new vigour and zeal in KSEW. He expressed hope that with this speedy pace of construction, these new ships would join Pakistan Navy fleet earlier than the scheduled time and thus contribute in enhancing PN Fleet's capabilities. He said that it would go a long way in establishing credibility of Karachi Shipyard as a reliable builder with assured timely deliveries of cost-effective and quality ships.

The Prime Minister also appreciated Pakistan Navy in supporting and reposing trust in indigenous construction of ships and submarines at Karachi Shipyard. He urged the country's maritime sector, including ports, to do the same and have their ships built here, as a matter of preference, and contribute in strengthening the country's shipbuilding sector, rather than seeking foreign options.

Karachi Shipyard and Engineering Works Managing Director Vice Admiral Iftikhar Ahmed Rao briefed the Prime Minister about the significance of the first Small Tanker Cum Utility ship.

He said that two ships of this type were being built by KSEW for Pakistan Navy at a cost of $11 million each. The first ship of this series was launched on Monday, while both ships would be completed by February, 2010. It was the first shipbuilding project at KSEW after 1993, when Prime Minister Benazir Bhutto inaugurated a ship built by KSEW for China.

Adm Iftikhar said that the KSEW was becoming a sick industry. "However, this important shipbuilding organisation is once again reviving, and its performance is increasing to play its due role in the shipbuilding sector".

He said that replenishment to ships at anchor and in the harbour, logistic support and transfer of personnel to and from coastal stations, act as an attendant vessel during diving operations, towed array transportation, mine laying, mine recovery and torpedo recovery are the primary roles of these ships.

About secondary roles of these ships, he said that these are target towing vessels for surface practice by ships, and salvage operations. These are attendant vessels and for training, search and rescue, and port operations.

The KSEW is the only heavy engineering industry of the country that is catering for shipbuilding, ship repairing and heavy/general engineering requirements. It has played a historical role in transferring of technology and broadening the industrial base of the country. KSEW was established in mid-fifties as a project of PIDC, and was incorporated as a public limited company in 1957.

This company is entirely owned by the government of Pakistan, and is managed by a Board of Directors, headed by Chief of the Naval Staff. Situated on West Wharf, Karachi, and spread over an area of 29 hectares (71 acres,. KSEW has large shipbuilding halls, three shipbuilding berths, two dry docks, fabrication shop, a well-equipped machine shop, and other supporting facilities like carpentry, pipe fitting and light steel fabrication, etc. KSEW is working as an autonomous commercial organisation under the Ministry of Defence Production.


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## Neo

*More fertiliser plants to be established, says Wattoo ​*
ISLAMABAD (January 13 2009): Federal Minister for Industries and Production, Mian Manzoor Ahmed Wattoo has said that more fertiliser plants would be established to meet the requirement of fertiliser and in this regard foreign investment will be welcomed.

He was talking with the members of German trade delegation headed by Dr Olaf Berlien, Chairman, Thyssen Krupp Technology met him in Islamabad today. Secretary Industries and Production, Shahab Khawaja was also present in the meeting. Minister said government will encourage foreign and local investment in setting up of fertiliser plants.

He said our Agro base industries are also very beneficial for investment. Government will encourage public and private partnership and joint ventures in setting up of Agro base industries in Pakistan. He said Pakistan is interested in setting up of wind turbine industries in joint venture with Germany for which negotiation with German government is under process.

He said wind turbine technology is need of our farmers and our rural areas in which German government is rich and shown its interest. On the occasion, minister disclosed that expansion plan for Pakistan Steel Mills is under consideration of the government due to the demand of steel. He said our steel sector is needed special attention of the government as this is need of the hours. Government will provide all possible help to this sector for its development.

Olaf Berlien said that Germany is keen to investment in Pakistan in various sectors and wants to establish industries in joint ventures in many field especially in Agro base industries, automobile industry and steel sector. He said in next visit to Pakistan we will visit rural areas to review the possibility of investment in this field.-PR


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## ejaz007

*Pak gets $673.50m remittances in Dec*
Source: Our staff reporter submitted 9 hours 16 minutes ago 


KARACHI - Pakistani overseas workers sent the highest-ever amount of dollars 673.50 million as remittances in December 2008, beating the previous record of dollars 660.35 million received in September 2008.

A statement issued by State Bank of Pakistan here on Tuesday said the amount of dollars 673.50 million received in December 2008 showed an increase of $ 194.24 million, or 40.53 percent, when compared with $ 479.26 million received in Dec 2007.


Pak gets $673.50m remittances in Dec | Pakistan | News | Newspaper | Daily | English | Online


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## ejaz007

*Pakistan's foreign exchange reserves rise *
RECORDER REPORT 

ISLAMABAD (January 14 2009): Foreign exchange reserves rose by $3.6 billion on January 9, 2009 as compared to November 25, 2008. At present, reserves are estimated at $10 billion. The additional amount can be mainly attributed to the $3.1 billion first tranche released by IMF on November 26. The remaining $500m are referred to as 'other positive inflows' in the ECC summary.


Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Integrated energy plan in the offing ​* 
*Aims at increasing share of coal, hydro and renewable resources; self-reliance in energy supplies by 2022​*
Wednesday, January 14, 2009

KARACHI: Work on Pakistans first Integrated Energy Plan is in final stages amid the worst power crisis which has sparked violent protests in recent months, leader of the Economic Advisory Committees energy task force told The News.

The long overdue plan is being prepared with feedback from experts belonging to different energy sectors, said Farooq Rehmatullah.

It will be a broad outline for the government to form future energy policies, he said, adding suggestions have been incorporated with a view to making the country self-sufficient in energy supplies by year 2022.

The plan, he said, seeks to increase the share of coal, hydro and renewable sources in the future energy mix, which at present is heavily relied on natural gas and oil.

Share of hydro, coal and renewable sources has been envisioned at 20 per cent, 13pc and 14pc respectively. There is a lot of potential for coal and renewable energy resources like wind power, Rehmatullah said.

All efforts to use proven coal reserves in Sindh have been bogged down by inter-governmental differences over priorities. The country produces not a single megawatt of wind power while the issue of feasible electricity tariff persists.

The projected share of oil and gas at 20pc and 21pc in the energy mix in the next 13 years entails the desire to increase dependence on indigenous production of hydrocarbons.

It is assumed that 7pc energy needs will be met from imported gas while nuclear power plants and liquefied petroleum gas (LPG) will have share of 2pc and 3pc respectively.

Experts have long called for a concrete energy plan which can work as a guideline for all energy policies and initiatives of the government. Misplaced priorities of the past like allowing CNG in vehicles and not increasing gas production has led to the present crisis, they opine.

Still some members of the committee, which is working on the energy plan, are skeptical about it making any significant impact. I wont even call it a plan. It is more like a roadmap for the government, said one member. A thorough plan includes cost evaluation of all the projects and determines if they are feasible.

Nevertheless, a senior Planning Commission official said database will be established to ascertain energy supply and demand projections in light of the given plan.

Vital suggestions: Farooq Rehmatullah said the plan also includes suggestions pertaining to gas pricing issues and steps needed to bring stability in prospective areas of Balochistan.

We have asked the government to link gas prices to at least 70pc cost of imported crude oil, he said, recalling that the 1997 Petroleum Policy was the most successful because it gave similar incentives.

He said the government has also been made to realise that people of Balochistan must be shareholders in energy production from there. 

Balochistan has been a no-go area for exploration companies, he said, we are saying make locals stakeholders, let them enjoy the benefit of taxes, royalties and profits.

In the present energy mix, gas has a 49pc share, oil 29pc, hydro 13pc, coal 7pc and nuclear 1pc.


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## Neo

*December remittances up 40pc ​* 
Wednesday, January 14, 2009

KARACHI: Pakistans overseas workers sent home the highest-ever amount of $673.50 million as remittances in December 2008, beating the previous record of $660.35 million received in September 2008.

The amount received in December 2008 showed an increase of $194.24 million or 40.53 per cent when compared with $479.26 million in the same month of 2007, said State Bank of Pakistan (SBP) on Tuesday.

Overall, in the first half (July-December 2008) of the current 2008-09 fiscal year, the country received $3.64 billion as workers remittances as against $3 billion during the same period of the previous fiscal year, showing an increase of 18.71 per cent.

The amount of $3.6 billion includes $0.37 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

The monthly average of remittances for July to December 2008 period comes to $606.67 million, up 18.71 per cent when compared with the corresponding period of the previous year.

The inflow of remittances in the July-December 2008 period from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $903.49 million, $714.90 million, $699.43 million, $596.54 million, $239.82 million and $111.41 million respectively as compared to $874.21 million, $563.06 million, $500.33 million, $457.21 million, $227.23 million and $88.99 million respectively in the July-December, 2007 period.

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the first half of the current fiscal year 2008-09 amounted to $374.05 million as against $354.18 million in the same period last year.


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## Neo

* Pakistan seeks Canadian investment in water, power ​* 
Wednesday, January 14, 2009

ISLAMABAD: Canadian High Commissioner to Pakistan, Randolph Mank on Tuesday called on Federal Minister for Water and Power, Raja Pervez Ashraf in his office and discussed bilateral relations, economic collaboration and investment opportunities in water and power sector of Pakistan.

The minister said that Pakistan has close relations with Canada and is desirous of expanding bilateral ties in all sectors, says a press release. He said the power sector has immense potential and investors are getting elevated returns due to an incentive-based liberal policy. He invited Canadian investment in the sector and guaranteed his full support and backing to the investors.

The minister said the government attached high precedence to foreign investment and an investor-friendly environment is being provided to the investors. He also briefed him on the existing power situation and said the government is taking obligatory measures to generate power to viaduct the demand and supply gap through fast track and rental power projects by December 2009. The government has intended to generate additional 35,000 megawatts by year 2016 and required steps are being taken in this regard, he added.

The high commissioner said Canadian companies are working in Pakistan on different projects and are devoted to enlarge their investments. Canada has expertise in hydel power generation and he said that Canadian companies are willing to invest in this sector. He said that Canada has always supported Pakistan and will prolong its assistance for the people of Pakistan. A large number of Pakistanis are visiting Canada every year for education, business and tourism purposes. He remained with the Minister for some time and also discussed other matters of mutual interests.


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## Neo

*Undocumented sector exacerbates economic woes ​* 
Wednesday, January 14, 2009

LAHORE: Current economic crisis has persisted because most of the business activities are controlled by the undocumented sector and the governments failure to establish its writ has compounded the problem.

A study by The News reveals the trade and industry has not played its due role in guiding the economy towards a sustainable growth path. Credible global institutions in fact praise the previous regime for introducing economic reforms that were staunchly resisted by the private sector. This resistance resulted in lopsided implementation of reforms. In contrast, the same institutions point out, reforms in India were led by the private sector and its willingness to improve the system facilitated the government.

This difference in the mindset of businessmen of Pakistan and India reflects the leap taken by the Indian economy outpacing that of Pakistan. Indian tax collectors, for instance, have the authority to search even residences of businessmen to find out any hidden wealth. However, Pakistans tax authorities cannot even dare to prepare a list of stocks displayed openly by shopkeepers. Indian regulators could confiscate any smuggled item found in markets while Pakistani regulators ignore it as almost all its markets are flooded with smuggled goods.

Under-invoicing in India is not possible as the local industry jealously protects its interests and frustrates all such efforts. Indian customs authorities have no option but to confiscate under-invoiced goods. In Pakistan even after proven under-invoicing of over 200 per cent the importer is let off by paying the duty according to actual assessed value. He thus is not a loser even if caught.

The government has been trying to impose general sales tax on traders since 1987 and all attempts by Nawaz Sharif, Benazir Bhutto and Pervez Musharraf since then have failed as traders strongly oppose it. The Indian government introduced value added tax in most of its states last year and compliance by traders has been remarkable.

All the four provincial governments under the Shops Act have approved a law under which shopping centres should close after sunset. If this law is implemented, the nation would save 200 megawatts of electricity during peak demand period, which would reduce the impact of loadshedding. Shops in India close according to the schedule mentioned in the law.

The import of banned items in India is not possible and if any such item is imported it is seized by the government. However, import of banned items is possible in Pakistan. Used auto-parts are a glaring example whose import has been banned since 1950. These parts are imported dirt cheap from foreign junkyards and are cleared after payment of a penalty up to 150 per cent (which is practically nominal in view of very low import prices). The rules here allow this practice. Brand new engines are imported under the garb of being used by immersing them in dirty diesel and oil. These are then cleaned after clearance and sold at very high rates.

The only industries that are flourishing in Pakistan are those which are based on local raw material but they are limited in number and operated by a few individuals or families. Cement and sugar industries are two examples in this regard. Now even edible oil manufacturers have started operating with some collective understanding that helps them keep prices unreasonably high.


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## Neo

*Ukraine offers technology transfer​*
ISLAMABAD: Ukraine has offered technology transfer in the fields of mineral, gas and health diagnostic system to Pakistan.

Ambassador of Ukraine Igor Pasco called on the Federal Minister for Commerce Makhdoom Amin Fahim in his office on Tuesday. The federal minister said, Ukraine is a big market for semi-finished goods and asked for strengthened trade relations with them. 

There exists a big scope of cooperation, because both the countries are members of WTO. Pasco wished of technology transfer in the fields of mineral, gas and health diagnostic system. 

The health diagnostic system could be used in backward areas of the country where hospitals are short. The health diagnostic system could overcome the dearth of dispensaries in the far-flung areas of the country up to a larger extent. Ukraine could use the Gwadar Port via Tajikistan for an easy access to the Gulf countries, the federal minister said. 

Makhdoom Amin Fahim asked Trade Development Authority of Pakistan to start level playing field with Ukraine government for better trade links and commercial ties by starting initial meetings.


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## Neo

*Canadian investment in power sector urged​*
** Govt plans to bring 35,000MW by 2016​*
ISLAMABAD: Federal Minister for Water and Power, Raja Pervez Ashraf on Tuesday claimed that the power sector has great potential and invited Canadian investors to invest in this sector. 

The minister assured the government of full support and assistance to facilitate the Canadian investors to invest in water and power sectors. The minister expressed these views during a meeting with Canadian High Commissioner to Pakistan, Randolph Mank. They discussed matters of bilateral relations, economic cooperation between the two countries and to explore the investment opportunities in the water and power sectors of Pakistan.

The minister told the envoy that power sector has great potential and the investors in this sector were getting high returns due to incentive based liberal policy. The water and power minister said that Pakistan had close relations with Canada. Pakistan values the help and support of Canada and was desirous of expanding bilateral relations in all sectors. 

Ashraf said the government attached high priority to foreign investment and an investor friendly environment was being provided to the investors. He also briefed him on the current power situation and said that the government was taking necessary measures to generate electricity to bridge the demand and supply gap through fast track and rental power projects by December 2009. The government has planned to bring 35,000 MW by the year 2016 and necessary steps were being taken in this regard, he added. 

Mank said that the Canadian companies were working in Pakistan in different projects and were keen to expand their investment plan. Canada has expertise in hydel power generation and said that the Canadian companies were willing to invest in this sector. 

He said that Canada has always supported Pakistan and will continue its assistance for the people of Pakistan. A large number of Pakistanis are visiting Canada every year for education, business and tourism purposes. Senior Trade Commissioner of Canadian High Commission, Marilyn MacLean Denton was also present.


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## Neo

*GDP growth reduction, high interest rates will cause unemployment: ILO ​* 
LAHORE (January 14 2009): The representative of the Geneva based International Labour Organisation (ILO) for Policy Integration Dr Muazzam Mahmood has warned that reduction in annual GDP growth rate from six percent to three percent and higher bank interest rates would cause unemployment and discourage investment in industry and agriculture sectors in Pakistan.

He was addressing the two-day tripartite national seminar on the subject "International financial crisis & its impact and policy responses in Pakistan," organised by Pakistan Workers Federation (PWF) here on Tuesday.

The ILO representative called upon the international financial institutions like International Monetary Fund (IMF), World Bank (WB) and the Asian Development Bank (ADB) to help the developing countries to overcome the ill effects of the current financial crisis.

He said the rich countries and the financial institutions should extend assistance to the poor countries for job creation and poverty alleviation through significant increase in GDP growth rate.

Addressing the inaugural session, ILO Director for Pakistan Doinglin Li said that ILO promotes "decent work" for the workers in a state of equity, freedom, dignity and security. "It is extending technical assistance for skill development and elimination of child and bonded labour in close co-operation with the United Nations and its specialised agencies" he added.

Earlier, president Employers Federation of Pakistan, Punjab region, Mian Tajamal Hussain stated that the ongoing electricity and gas load shedding has seriously affected the local industries and export, forcing lay off of millions of workers and closure of thousands of industrial units in the country. He called upon the government to take immediate measures for overcoming the energy crisis and uninterrupted running of the industrial units.

Veteran labour leader Khurshid Ahmad and president Pakistan Workers Federation (PWF) Chaudhry Talib Nawaz said the work force has been greatly hit by the global financial crisis and law and order situation in the country. They argued that bankruptcy of some USA financial institutions had exposed the capitalist system of free market economy, based on unchecked greed of profit in the absence of any international financial regulatory framework.

They warned that if the government did not overcome the load-shedding of electricity and gas and did not adopted policies to control unemployment, then there would be devastating social upheavals in the country. Secretary Labour and Human Resources Punjab Abdul Rauf said the government had raised minimum wages for the semi-skilled and skilled workers. "The government would ensure implementation of labour laws and elimination of abuse of child and bonded labour in the province" he added.

Prominent economist Dr Amkal Hussain, Shahid Kardar, Dr Sabur Ghayur, Chairman Planning Cell, Ministry of Labour and Manpower will address the participants of the seminar at the Bakhtiar Labour Hall on Wednesday (today).


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## Neo

*WB interested in Thar coal project: Qaim ​* 
Thursday, January 15, 2009

KARACHI: Chief Minister of Sindh, Qaim Ali Shah, has said eight blocks of Thar coal have already been developed and now the World Bank is also interested in two blocks of the Thar coal project. In this regard, it has already held two high-level meetings in Washington.

The CM said China was also very enthusiastic to be associated with the project and the government was in talks with it regarding the matter. 

Shah added that both small and big investments worth over $2 billion were in the books and would be announced once they were finalized. 

Shah visited the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Wednesday to meet businessmen and discuss issues related to the economy with them. 

The CM clarified that the Sindh Energy Board would decide the power tariff that would be produced by Thar coal, NEPRA and OGRA disputes regarding the subject were directionless. 

He further said the government would be holding a high level meeting in two days to discuss several issues and the matter of Thar coal would also be taken up there. The Thar coal issue has been in question for over a decade as it had been initiated by the late Benazir Bhutto back in 1994. He said the then president had also realized the potential of the project. Shah also said the agricultural sector retains great potential especially in terms of crop development and land development and there were foreign investors looking towards investing in that direction as well.

He stated Pakistan wasnt facing severe economic crises as some of other countries like Dubai and USA where Pakistani investors had been crippled by losses. He said all the issues that were being faced by the business community were in the knowledge of the top officials of the country, however, problems such as rising unemployment was not the issue of the government alone and the private sector also had its share in it as it is the mainstream force that creates employment opportunities. 

The CM expressed that the government would do its best to strengthen the foundations of the private sector. To bolster the economy, active participation of the business community is essential he stressed. 

The CM stated though the confidence of the investors had been shaken for a while, confidence building measures were being taken ardently and already the political side of the country was positive and constructive. Shah also said the government was concentrating on the primary education in the country and already 2,500 schools had been established. 

He said the World Bank had also pledged $300 million for the primary school education enhancement in the country. He added that 7,000 teachers had already been employed and an additional 15,000 teachers were to be added to the list including universities. 

He said the state was planning to establish an education city for which he had personally visited a few sites. The CM further articulated that if the private sector was interested in setting up a university, then the government would facilitate it.


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## Neo

*Rs6bn approved for gas network expansion schemes ​* 
Thursday, January 15, 2009

KARACHI: Sui Southern Gas Company (SSGC) on Wednesday said that the Prime Minister Secretariat has approved Rs6 billion for 111 gas network expansion schemes for fiscal year 2008-09.

From 2002-08, SSGC spent Rs93 million on 61 gas expansion schemes for far-flung areas, the company told Senate Standing Committee on Local Government and Rural Development.

Under the first phase of the Peoples Work Program (PWP), 64 schemes were started in Balochistan and Sindh, a press release quoted Muhammad Arif, senior general manager customer services, as saying.

With regards to PWP-II, a total of 501 gas network expansion schemes were identified with 248 and 253 for Balochistan and Sindh respectively, he said.

The schemes which are identified by MNAs, senators and other notables are jointly funded by the government and SSGC. The committee was told that 13 schemes have been shelved by the government.

Arif said the government has been given a cost-benefit analysis on the individual costs of pipes gas and LPG air mix for Balochistan towns of Surab and Noshki. 

For the said project Rs500 million were released by the government while the balance is being borne by SSGC.

The committee was also informed on the status of schemes being implemented in collaboration with the Sindh government.


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## Neo

*Govt seeks foreign capital in Balochistan ​* 
Thursday, January 15, 2009

ISLAMABAD: State Minister for Industries and Production, Dr Ayatullah Durrani, has said the government has invited foreign investors to invest in Balochistan, which provides many opportunities of investment, particularly in the field of mines and minerals.

Investment and modern technology are needed for its development, he said while talking to the Vice Chancellor of Balochistan University, Prof Dr Masoom Yaseen Zai, at his office here on Wednesday. They also discussed the Universitys problems and its development.

Besides the education sector, he said, various development schemes had been launched in Balochistan and Gwadar port was one of them. After the start of the port, he said, business activities had increased in the province, which is a good sign for the people of Balochistan.

Many people and families were getting benefits from port activities including jobs and business, he added.

He said an expansion plan for the Balochistan University should be prepared to meet the requirement of students of the province. The government, he said, was very keen to develop Balochistan for which various plans were under consideration including development of educational institutions.

Huge funds had been allocated for the development of education sector of the province, he said, adding expansion of Balochistan University is the need of the hour because of interest of people.


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## Neo

*Proposals for economic boost to be prepared ​* 
Thursday, January 15, 2009

LAHORE: In a bid to boost economic activities in the country, the Punjab Economic Forum has decided to prepare a set of proposals to be forwarded to the government for their implementation. 

The decision was taken at an emergent meeting of Punjab Economic Forum chaired by its President Sohail Lashari and attended by Prof Khawaja Amjad Saeed, Mian Anjum Nisar, Sikandar M Khan, Siddiqueur Rehman Rana, Husnain RazaMirza, Mohammad Tariq Bucha, Ch Hamid Malhi, Yaqoob Tahir Izhar among others. 

All participants, who are considered to be experts of their respective area of business, were of the firm opinion that the government in consultation with the private sector should concentrate on enhancement of both the agriculture yield and industrial production and for the purpose it would have to reset its priorities particularly with reference to provision of energy. 

They expressed thought that the country has no dearth of resources and if all the available resources are channelised in right manner, even the ongoing financial recession could do no harm to the people. It was also suggested in the meeting that if the government ensures provision of diesel to the farming sector at discounted rates and the concept of mechanized farming is implemented in true letter and spirit, nothing could stop green revolution in this area. 

They also urged the government to start projects other than Kalabagh Dam to ensure ample electricity to the industry as the issue of Kalabagh Dam has been politicized to the extent. They said all the issues being faced by the economy should be identified and both long-term and short-term strategies should be evolved as the short-term plans would wear off the intensity of the crisis while the long-term would help put economy back on rails. 

The participants were of the view that as there is no short cut to progress and prosperity therefore everybody would have to play his role in the larger interest of the country. 

Speaking on the occasion, president of Punjab Economic Forum, Sohail Lashari, informed the meeting that invitations to all the chambers in Punjab were being extended for having their input over the economic meltdown that would be incorporated in the proposals to be forwarded to the government.


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## Neo

*President exempts Balochistan from PSDP cut ​* 
Thursday, January 15, 2009

ISLAMABAD: President Asif Ali Zardari has exempted Balochistans funds being provided under the Public Sector Development Programme (PSDP) from any cut during the current financial year, The News has learnt.

The president announced the exemption in a recent high-level meeting, which was also attended by Prime Minister Syed Yousuf Raza Gilani. The PSDP faces an overall cut of one percent of GDP, ie Rs 110 billion, under the directive of the IMF in order to achieve a fiscal deficit target of 4.2 per cent of GDP or Rs 562 billion in the current financial year.

The overall cut in the PSDP clearly means that throw forward is bound to increase in years ahead and all is happening at a time when politicians are seen moving around the P Block having endorsement letters from all powerful quarters to get their development schemes included in the next PSDP for 2009-10.

According to the minutes of the meeting, which was presided over by President Asif Ali Zardari, the president exempted Balochistan from any budgetary cut in order to avoid delays in completion of the ongoing projects.

The government has blacklisted one contractor of the National Highway Authority (NHA) owing to a variety of reasons, the minutes of the meeting said. The federal government, the sources said, was financing Rs 43 billion worth of projects under the PSDP in Balochistan during the current year. Owing to financial crisis, almost all projects falling under the PSDP are facing a cut in terms of money in the remaining three provinces ie the Punjab, Sindh and the NWFP.

The meeting was also informed that Qila Abdullah-Chaman road would be completed within the stipulated timeframe. The president and prime ministers decision to exempt Balochistan from a cut in PSDP allocation will help the neglected province to complete projects well on time, a source commented.

When official spokesman for the Planning Commission, Asif Sheikh, was contacted for comments, he confirmed that both the president and prime minister have taken this decision in order to avoid delays in completion of ongoing projects.

However, the sources said that the ministry of finance had promised to release 15 percent financial resources against cash plan tabled by the respective ministries/division but actual releases were even much less than the envisaged allocations keeping in view received responses from all ministries/divisions and attached departments.

We have not yet done review meetings of PSDP for the second quarter (Oct-Dec) period of the current fiscal year which will actually enable the Planning Commission to get any clearer picture about releases and spending of PSDP amount, said the official and added that they received numerous complaints about reduction in releases in the second quarter of the ongoing financial year.

We can assume that the actual releases done by the finance ministry to all ministries/divisions and attached departments will not be more than 5 to 7 per cent against promised allocation of 15 per cent, the official sources added.

The case of Balochistan, according to the official, is exception and special one and the incumbent regime wants to accomplish projects without any delays. Balochistans financial condition is not much smooth but the governments recent decision to inject few billion rupees as well as the SBPs decision to restructure its overdraft helped the provincial government to run its day-to-day affairs.

Prime Minister Syed Yousuf Raza Gilani provided Rs 3 billion from its own grant while another Rs3 billion would be provided to the province as royalty from Uch Power Ltd. Balochistans government told the center that Islamabad has blocked Rs 128 billion due share of the province under the head of the Gas Development Surcharge (GDS). The Sindh government owes Rs 28 billion of Balochistan on account of GDS share, a high-level official of Balochistan government claimed while talking to this scribe.


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## Neo

*Pakistan losing rice export markets due to govt intervention​*
KARACHI: Pakistan may export rice worth $3.4 billion in the current fiscal year owing to the bumper crop of all varieties if the governments machineries stop intervention in the market, the traders and exporters said.

The country had exported rice worth $2.5 billion in 2008.

If the intervention of the Trading Corporation of Pakistan (TCP) and PASSCO were not stopped, it would be impossible to achieve the export target. a trader said.

Pakistan is losing its share in international rice exports and may not meet its export target for the current financial year, Abdul Rahim Janoo, chairman Rice Exporters Association of Pakistan (REAP) told Daily Times. 

TCP has quoted its rates at Rs 32.90 per kilogram on January 14 for the purchase of 25,000 metric tonnes, while its market price are in the range of Rs 25.77 per kg. The corporation is paying an extra amount of Rs 178 million.

The prices of basmati and non-basmati rice have increased by around 23 and 30 percent respectively, owing to government intervention in rice purchase. 

Iraq, Philippine and Mauritius were the regular customers of Pakistani rice, but owing to the higher prices quoted by Pakistani traders, we have lost the market in these countries. So far these countries had officially announced tenders of 0.75 million tonnes.

REAP continues its opposition to government buying of rice via Passco and TCP Tenders, as owing to these tenders, Pakistani rice can no more compete with other origins and has lost major tenders in Iraq, Philippines and Mauritius during last week. These three countries have been buyers of Pakistani rice markets for last several years. 

The association has called for cancellation of these high priced tenders as so far inaction from government has already lead to complete halt in new orders to rice exporters. This situation has lead to the closure of 70 rice export processing units in Punjab and a similar fate is expected in Sindh.

Nine basmati rice buyers in the Middle East have reneged on deals with India recently and this situation could go in Pakistans favor if the government play its due role by not intervening in the rice sector, he added. 

The prices have dropped 28.5 percent to $1000 per tonne in the past one month owing to the global financial turmoil and good crops in India and Pakistan.


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## Neo

*Fauji Cement to install countrys largest cement plant​*
ISLAMABAD: Fauji Cement Company Limited is setting up the largest cement plant ever built in Pakistan, says Company Secretary, Shabir Ahmed. The company had entered into contract with a world-renowned cement plant manufacturing firm Polysius AG (Germany) to supply state of the art plant and machinery to produce 7200 tonnes per day of clinker, he said in a press release issued here Wednesday. In order to witness the progress of the project, chairman Polysius AG, Dr Detlev Rose along with his team members visited the project site and witnessed the on-going construction activities. The team showed satisfaction over the progress of the Project. DESCON Engineering Limited (Pakistan) is responsible for completion of civil works, mechanical/electrical fabrication and erection. Abdul Razak Dawood, Chairman DESCON Engineering Limited represented the commission of the plant. Additional production of quality cement by Fauji Cement Company will help stabilise the cement prices in the local market.


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## Neo

*Bidens package and our response​*
The bill that seeks to triple American aid to Pakistan, to make it $1.5 billion annually, is likely to become law after it is passed by the US Senate. The incoming chairman of the Senate Foreign Relations Committee, Senator John Kerry, said on Tuesday that he would push it because Pakistan has a huge economic crisis. If anything winds up being one of the triggers for chaos in the country, its going to be the economic implosion, as much as anything else.

The Pakistan aid bill that Senator Joseph Biden authored last year with Republican Senator Richard Lugar would give Pakistan non-military aid for five years, extendable for another five, making clear that the countrys real need was economic and not military. Mr Biden, who was recently in Pakistan and Afghanistan, will spearhead President Barack Obamas foreign policy as a powerful vice president. The money will help improve schools, build clinics, drill wells and reform police services in Pakistan. Senator Obama too had signed the Pakistan bill before being elected as President of the United States.

Pakistan is in the grip of passions emphasising sovereignty and defiance but the logic of economic development has to dawn here sooner or later. There are two possible strands to the American package. The first is to be looked for in President-elect Obamas statements in the past. The lowest point was when he thought he could allow attacks into Pakistan if Pakistan was unable to cope with Al Qaeda on its territory. He plans to reduce Americas troops in Iraq and bring more of them to Afghanistan to face up to Al Qaeda. However, after his visit to Afghanistan he has abstained from making categorical statements about attacking inside Pakistan.

The second strand is Mr Bidens and that is the one more likely to be adopted by the realists in Washington. According to Pakistans leading economist Mr Shahid Javed Burki, Mr Biden has focused on the need to economically stabilise the second largest Muslim country in the world. The money will be spent in such a way as to take economic growth to the poorer segments of the population and poorer regions of the country. According to Burki: Economic deprivation is a major reason for growing extremism in the Muslim world, and Pakistan is central to the problem of Islamic extremism, and Pakistan does not have resources of its own to get the countrys economy moving in the right direction.

There will hopefully be little opposition in Pakistan to this approach to the problem of terrorism. In a moment of rage, most people tend to forget about the economy. They want radical changes of policy without making it clear how replacements for old dependencies can be found. It is known to everyone that the people and the industries in Pakistan are suffering because of the governments inability to pay for power production. Pakistan has run from pillar to post asking for cash to bail out a clearly collapsing economy but has not found many donors even after going under an IMF programme for confidence-building.

It is easy to ordain in a fiery column that Pakistan should look for other friends but no one points out where to go to find someone willing to part with the kind of money America is willing to spend on Pakistan. The crux of the problem is our refusal to grasp the danger extremism and terrorism pose to us and the world. If the Biden-Lugar money is tainted in our minds because it will force us to fight our own people, let us not forget that the entire world including China supports Americas war against terrorism without the willingness to give us the money we need.

We will, of course, be brought under pressure on fighting terrorism and possibly on the AQ Khan issue, but that is not the problem we should worry about. We should start worrying about our ability to spend the money we get for development. The state is at the bottom of its capacity of service-delivery. The money we got during the Musharraf era  which gave us the biggest provincial development outlays in history  was not well spent. Education and health remained mired and, in the case of some projects, the funds had to be returned to the lending multilaterals.

Even if the attainment of national honour is the priority, it cant be realised without economic development at rates that give us the extra cash to spend on the army. Islamabad is being angrily reprimanded by the TV channels for decorating US Assistant Secretary of State Richard Boucher and Vice President-elect Joseph Biden while Gaza burns, but the fact is that Pakistan has to survive economically in order to have the capacity to face up to any challenges, including the one in Gaza.


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## Neo

*Canada to increase annual aid for Pakistan from Canadian $20m to $50m​* 
ISLAMABAD (January 15, 2009): Prime Minister Syed Yousuf Raza Gilani has urged the Friends of Pakistan to help build the capacity of law enforcing agencies of Pakistan and participate in the development projects particularly in FATA and NWFP.

The Prime Minister was talking to Randolph Mank, new High Commissioner of Canada here at Prime Minister House Thursday.

He said the projects in tribal areas will generate economic activity in order to help reducing the unemployment which was the main reason of growing extremism.

The Prime Minister said that Pakistan attached high importance to its relationship with Canada.

He stated that Pakistan wanted to further strengthen these relations by adding substance to them and expressed the hope that during his tenure in Pakistan, he would focus on reinvigorating bilateral trade, investment and development assistance ties between the two countries.

The Prime Minister told the High Commissioner about his government's efforts to combat terrorism and his three pronged policy to wean away the peace loving majority of the FATA population from the extremists.

He regretted that continuing drone attacks by US and ISAF forces had impeded the success of that policy and called for their immediate halt.

He also dilated on endeavors undertaken by his government for improvement of relations with Afghanistan as well as for defusing tensions and Pakistan's offer of cooperation to India in the investigation of the Mumbai attacks.

He underscored that the leadership of Pakistan had been repeatedly reiterating its desire to have good neighbourly relations with India and for resolution of all the outstanding issues between the two countries through composite dialogue.

He hoped that the Indian side would respond to these sentiments in the same spirit.

Randolph Mank, the new High Commissioner stated that Canada considered peace and stability of Pakistan pivotal for a peaceful South Asia and particularly Afghanistan.

He said that Pakistan's expatriate community of around 400,000 was serving as a bridge between the two countries and was playing a constructive role in the socio-economic development of the multi- cultural society of Canada.

While assuring the Prime Minister that he would devote all his energies for promoting economic cooperation between the two countries during his stay here, the High Commissioner informed him that Canada's International Development Agency had decided to increase its annual aid for Pakistan from Canadian $ 20 million per year to around $ 50 million.

He said that the Canadian firms were taking keen interest in Pakistan's market and Barrick Gold was planning the largest single investment in mining, copper and gold in Balochistan. If that could materialize, it would offer employment to tens of thousands of local workers.

He sought Prime Minister's assistance for early finalization of Barrick Gold's investment by signing its agreement with the federal government.

The Prime Minister said that he has directed the concerned authorities to report the progress on this project to him.


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## Neo

*EFPs may unblock credit for Pakistan, India coal trade ​*
LONDON (January 15 2009): A new trading tool may help unblock a growing spot coal market between India or Pakistan and major European traders and utilities - which has been hobbled by the freezing of credit lines across global markets. Exchanges For Physical (EFP) trades via trading platform globalCOAL have made trade between counterparties easier, dealers said.

India will import over 35 million tonnes of coal in 2009 and Pakistan around 3.5 million tonnes as part of world-wide coal trade of around 650 million tonnes. Producers said they have mostly found the credit problems too difficult to deal directly with buyers in the sub-continent, preferring to deal via traders. Indian and Pakistani traders who account for the bulk of spot import buying have been struggling to open letters of credit (LCs).

Some have even resorted to using their personal cash accounts to pay for cargoes. "Credit problems are killing the market," a Pakistan-based trader said. "It's extremely hard to get LCs." "The problem recently has not been the appetite to trade between the European and Indian counterparties but the recent doubling in the cost of credit," said Clive Murray, director of London Commodities Brokers (LCB).

"But our Indian customers are still willing and able to open LCs," he added. The first globalCOAL EFP took place on January 5 with a physical fixed-price trade at $85.00/T DES ARA. "The response to globalCOAL's EFPs has been tremendous," said globalCOAL Chief Executive Office Eoghan Cunningham.

The product was easy to handle and has been long established on the physical oil market, he said. "There is certainly a need to make it easier for counterparties to trade where credit is an issue," Cunningham added. "There are companies among our members who have said they will deal with each other exclusively on an EFP basis through globalCOAL and Intercontinental Exchange (ICE)."

Using EFPs via globalCOAL and ICE could eliminate financial risk by 90 percent to the point of delivery, he said, adding that delivery risk could not be completely eliminated. GlobalCOAL plans to launch a physically-settled DES ARA coal contract in Q2 and is also looking at possible over the counter (OTC) physical trade clearing with ICE.

Traders welcomed another tool for their business. "It's another option, definitely a good idea to see if it can be made to work," one major Europe-based coal trader said. "The globalCOAL plan is a step in the right direction, but it remains to be seen how it will work in practice." "There is a real need to make it easier to trade with India," said a large European utility/trader. "It doesn't remove all risk though. At the end of the day, the buyers still need to be able to open LCs."

Companies have been able to manage risk using index-linked physical trades and OTC coal swaps for several years. Credit-sleeving - where a bank acts as a fiduciary between counterparties - has also been available via London Commodity Brokers.

European companies have been able to deal with Indian counterparties for the past five months via LCB, with trades cleared by a bank with long experience of the Indian markets, LCB founder and director Clive Murray said. "LCB has traded deals with a floating physical leg and fixed price swap, traded at the same time, same volume, for some time now," Murray said. "The difference between this and globalCOAL's EFPs is that the swap is cleared through ICE."

EFPs using physically-deliverable futures could in the future leave players unable to make delivery vulnerable to squeezes by bigger players who can, he cautioned. The majority of Indian and Pakistani counterparties cannot trade derivatives or participate in margining arrangements with a clearing member requiring internationally recognised standardised contracts, he said.


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## Neo

*Productivity may be raised 50 percent by employing right persons: IBA director ​*
KARACHI (January 15 2009): Dr Ishrat Hussain, former governor State Bank of Pakistan and Institute of Business Administration (IBA) Director, has said the local entrepreneurs and industrialists can increase their productivity by 50 percent if they employ the right person for the right job as is being done by the multinationals.

This he said while delivering his keynote address at the National Industrial Relations Conference organised by the Employers' Federation of Pakistan (EFP) in collaboration with International Labour Organisation (ILO) here on Wednesday. Dr Ishrat emphasised on the need of strong development of Human Resource Management in all sectors through which proper evaluation of the right person for the right job could be made.

Dr Ishrat advocated for the establishment of vibrant economic relationship with China and said, "our Qibla should not be towards western countries, instead we should look towards the eastern economy, which is the engine of growth." He appreciated the vital role being played by the expatriates in building the economy of the country by sending the foreign remittances, which showed their confidence on Pakistan economy.

He said Pakistan had great potential and businessmen and industrialist had the ability to do the best by running their businesses in a truly professional manner. Federal Secretary Labour and Manpower Malik Asif Hayat, who was the chief guest at the conference, said that in February 2009 the government would hold a Tripartite Labour Conference to discuss various issues relating to industrial relations and laws by inviting all the stakeholders.

He said the Prime Minister in his first address to the National Assembly stated that all Labour Laws of the country would be made in conformity with the International Labour Conventions. He said the government had developed a strategy for the revival of national economy with the objective of generating economic activity in the country, which would help in uplifting the economic conditions of the workers.

He further said that harmonious working relationship between workers and employers was for prompting productivity, competitiveness and growth of industry at well as guaranties decent wages and job security. Speaking on the occasion, Country Director ILO-Islamabad Donglin Li said ILO believed on the importance of dialogue between the government, the employers and the workers' organisations, which could not be denied, because it was instrumental in fostering social and economic progress of a country.

Dialogue among and between the governments and the two "social partners" on issues of common interest, plays a vital role in promoting social justice and social welfare. "We believe that the employers and workers' representative could also play a crucial role in guiding labour related policies and programmes."

In Pakistan, ILO has been implementing its Decent Work Country Programme in close collaboration with our tripartite constituents. "Presently, there are around 100 staff members working with ILO Office and district offices. We have 15 ongoing projects with a combined budget of 33 million dollars," he said.

EFP Vice President Khawaja Muhammad Nauman delivered the welcome address and Member of EFP Managing Committee Fasih-ul-Karim Siddiqui also spoke on the occasion. On this occasion, Industrial Relations Awards were also distributed among the three best companies by chief guest Malik Asit Hayat, Secretary Labour and Manpower. The first award was given to BASF Pakistan Ltd, second to Hinopak Motors (Pvt) Ltd, and the third was given to Shell Pakistan.-PR


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## Neo

*Government will provide all facilities to Irani industrialists: Taseer ​*
LAHORE (January 15 2009): Governor General of Khorasan-e-Rizvi province of Iran Muhammad Javad Mohammadi Zadeh along with 34-member delegation called on Governor Punjab Salmaan Taseer at Governor's House here on Wednesday.

Both the leaders discussed matters of mutual interests, especially political ties between the two Islamic countries.

Speaking on the occasion, Salmaan Taseer stressed the need for improving co-operation in industrial, cultural and other sectors. He said that the government would provide all facilities to Irani industrialists who want to invest in Pakistan especially in Punjab. "Pakistan always gives due importance to enhance relations with Muslim brotherly country (Iran)," he said adding that Pakistan and Iran had supported each other in any time of difficulty.

Governor Punjab appreciated the firm stand of Iranian government for supporting people of Palestine struggling against the atrocities of Israel. The Khorasan's Governor stressed the need for getting guidance from the teachings and philosophy of Dr Allama Muhammad Iqbal, who advised the Muslims to unite against the evil forces.

He hailed the steps taken by the Pakistan government for the elimination of terrorism in the region and assured that Iran would provide all help to enhance ties with Pakistan in every sector. The 34-members delegation included Iranian officials, leading investors and Vice Chancellors of the different universities. Governor Punjab Salman Taseer also hosted a dinner for the delegation.


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## Neo

*China, World Bank keen to invest in Thar coal project: Qaim ​* 
KARACHI (January 15 2009): Sindh Chief Minister Syed Qaim Ali Shah on Wednesday said that China and the World Bank are keen to invest in Thar coal project for energy generation and the business community be assured that the electricity crisis will end in a year.

Federation of Pakistan Chambers of Commerce & Industry members voiced their concern over the worsening law and order situation and ongoing energy crisis during a meeting with the Chief Minister as he visited the Federation House here. This situation has reduced the industrial growth phenomenally, due to which unemployment peaked and gave rise to street crimes, the members said.

The CM while replying to the volley of questions said that the government is working on a two-tier policy - political and economic - to create social and economic stability in the country. He acknowledged that the law and order situation has deteriorated in the wake of massive unemployment that escalated from the decline in industrial growth after sheer energy shortage.

Commenting on the issues raised by FPCCI President Tanvir Ahmed Sheikh, Qaim said that the economic crisis in Pakistan has fortunately not reached the level that is being faced by other greater world economies including the US. The problems are still there and need resolution, he added. He apprised the business community that the government has recently held a conference in Washington, attended by around 35 countries.

This conference has raised hopes for investment in the energy sector, he added. He maintained that keeping in view the World Bank's interest in Thar coal, the government is likely to give the bank two of eight developed blocks. He said that there is Thar Energy Board headed by the CM himself offering one-window operation to investors.

Now the investors need not run from pillar to post for getting their jobs done. The board is backed by the federal and provincial governments. The previous Thar Coal Authority failed to play its due role and remained almost inactive, the CM observed.

There is Rs two billion investment offer for Thar coal project, he said, adding that the project will not only enable the country produce electricity but also gas and water. He said that President Asif Ali Zardari is in touch with the business community on the overall economic situation of the country.

He termed the increasing unemployment as a "major challenge" not only for the government but also the business community. He urged industrialists to generate employment, as it is their prime responsibility. He said that the jobs should be given on merit to serve the purpose.

Inviting the attention of investors, Qaim said that in the present day economies, food production has attained great importance and has great potential to grow. Investment in the agriculture sector will also be encouraged, he added. He pointed out that various countries are eyeing the agriculture sector.

Qaim assured the FPCCI members of settling their claims of compensation for losses in the wake of December 27 hooliganism. Regarding land provision to business community willing to establish a university, he said a scrutiny committee has been set up with two members from the businessmen side.

He said the Sindh government is committed to ensure quality education and has reopened some 2500 closed schools. The World Bank is also assisting the Sindh government in developing the education sector. He said that some 7,000 teachers have been appointed while the Sindh government plans to appoint another 15,000 for universities and higher academic institutions.


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## Neo

*Hydroponic technology may help boost crops yield ​* 
FAISALABAD (January 15 2009): Pakistan may enhance vegetable and fruit crops yield with hydroponic farming technology to overcome the food shortages and price hike tendency. According to the Ministry of Agriculture sources, this technology would not only raise yield, but would also enhance nutrition abilities of plants. A hydroponic pilot project has recently been started in Rawat (Islamabad) under the name bio-blitz over just five acres of land.

The state-of-the-art five-acre Green House facility is producing hydroponic tomatoes of all varieties, including tangy, elegant, cherry and others. If hydroponics farming technology is introduced properly, then country can triple the revenues earned on agriculture exports.

According to agriculture scientists, there are two main types of hydroponics culture, namely solution culture and medium culture. The solution culture excludes roots as source of nutrition, while the medium culture is based on roots as part of the process.

The solution culture method is further divided into three types - static solution culture, continuous flow solution culture, and aeroponics. The medium culture, on the other hand, is based on medium through which the root is routed - sand culture, gravel culture or rock wool culture. These media of nutrition are again sub-divided into two categories - sub-irrigation and top irrigation.

In all these techniques, mostly plastic is used for hydroponic reservoirs, though other materials have also been used, which include concrete, glass, metal, vegetable solids and wood. Experts advise that the containers should block light to prevent algae growth in the nutrient solution. Hydroponics is a method of growing plants, using mineral nutrient solutions without soil. Terrestrial plants may be grown with their roots in the mineral nutrient solution only or in an inert medium, such as perlite, gravel, or mineral wool.

This technology was discovered in the 19th century. In this technology plants absorb essential mineral nutrients as inorganic ions in water. In natural conditions, soil acts as a mineral nutrient reservoir, but the soil itself is not essential to plant growth.

When the mineral nutrients in the soil dissolve in water, plant roots are able to absorb them. When the required mineral nutrients are introduced into a plant's water supply artificially, soil is no longer required for the plant to thrive. Almost any terrestrial plant will grow with hydroponics.

Hydroponics is also a standard technique in biology research and teaching. In recent decades, Nasa has done extensive hydroponics research for their Controlled Ecological Life Support System or CELSS. Hydroponics, intended to take place on Mars, are using LED lighting to grow in different colour spectrum with much less heat.

Researchers have obtained groundbreaking results in various countries, however the process has proved it to be thoroughly practical, having an edge over conventional methods of horticulture.

The two major merits of the soilless cultivation of plants are: (1) higher yield, and (2) hydroponics may be helpful in places where ordinary agriculture is impossible. That has removed constraints of cultivable land.

THE FOLLOWING ARE OTHER BENEFITS: 

-- It saves water - it uses as little as 1/20 the amount at a regular farm to produce the same amount of produce.

-- Faster growth.

-- Freedom from soil diseases and weeds.

-- Very consistent crops mean uniform quality.

-- Less labour needed and cost effective. Scientists agreed that hydroponics fruits and vegetables are sweeter and more luscious than those grown in ordinary soil are. The technology is being utilised around the globe, including the US, European Union (EU) and African countries.


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## Neo

*Pakistan misses opportunity to export $300 million rice ​* 
KARACHI (January 14 2009): Pakistan has missed an opportunity to export rice worth $300 million as it could not participate in three different tenders of 0.750 million tons rice in international markets due to high prices, sources said. Pakistani rice was offered higher by $29 to $55 per ton as compared to others, sources added.

Sources said Pakistani rice exporters missed the opportunity to export 0.5 million tons rice to Philippine for their prices were much higher than the other participants. In the same way they missed another opportunity to export 175,000 tons rice to Iraq and 75,000 tons rice to Mauritius due to the same reason in last five days. Rice exporters from Thailand and Vietnam offered much lower prices and grabbed the opportunity to export the said quantity of rice to three different countries.

Pakistani rice exporters blamed the intervention of the government institutions in rice trade for the recent price hike of this commodity. They said that the price of coarse rice has increased by 30 percent in the local market. They were of the view that the country's rice export could affect negatively due to price hike.

Thailand and Vietnam are the major competitors as they are offering much lower prices in the international market. On the other hand, India, after having a bumper crop this year, can also affect the Pakistani rice export, they added. India is considering to abolish $200 per ton export duty on Basmati rice imposed last year, while the Indian farmers and exporters are asking their government for lifting ban on export of non-Basmati rice.

Pakistani rice exporters demanded of the government to take immediate supportive steps to promote the export of this commodity. They said that the private sector has played an important role in increasing rice exports from $300 million to $1.2 billion. They demanded that they should be allowed level playing field without intervention of the government-owned organisations to achieve the target of $2.3 billion rice export for this fiscal year.


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## asaad-ul-islam

*[URL="http://www.dawn.net/wps/wcm/connect/Dawn&#37;20Content%20Library/dawn/news/pakistan/govt-appreciates-economic-policies-of-musharraf-regime-aah]Govt appreciates economic policies of Musharraf regime[/URL]​*
ISLAMABAD: *While publicly it criticizes former President Musharraf for the present economic mess, the government in its official documents has appreciated the economic policies of the previous regime that became a strong base for seeking loans from multilateral donors and friends of Pakistan.*

The PPP-led coalition partners have been blaming Musharraf regime in public speeches for fudging economic figures to paint a rosy picture, while its overall policies pushed the country into economic crisis.

The letter of intent (LoI), on the basis of which, Pakistan sought the much-needed $7.6 billion bailout package from the International Monitory Fund (IMF), has bit by bit appreciated the Musharraf policies since 2000. 

During the past one decade (1999-2007), the LoI says Pakistan&#8217;s economy witnessed a major economic transformation from substantial increase in the volume of gross domestic product (GDP) to greater international trade.

Talking to Dawn on Thursday former Finance Minister Ishaq Dar said whatever he said about the health of economy was based on the balance sheet existed on March 31, 2008. He said the balance sheet was dully approved by the then cabinet headed by Prime Minister Syed Yousuf Raza Gilani.

He said no body denied the contents of the balance sheet. The focus of the previous economic policy was on promotion of consumerism without supporting the industrial base. 

Apparently not willing to agree with the LoI contents, he said though he has a different view of the past economic growth but quickly added the same was destroyed in the last 15 months of the military led dictator. 

An official source requesting not to be named said the economic wizards in the finance ministry are not politicians to make only speeches but they have to look into ground realities. &#8216;We reported to IMF whatever is factual and based on evidence,&#8217; the official added. 

The LoI said the country&#8217;s real GDP increased from $60 billion in 2000-01 to $170 billion in 2007-08 with per capital income rising from under $500 to over $1000. During the same period, the volume of international trade increased to nearly $60 billion from $20 billion. 

For most of this period, real GDP grew at more than 7 per cent a year with relative price stability. The improved macroeconomic performance enabled Pakistan to re-enter the international capital markets in the mid-2000s. Buoyant output growth, low inflation, and the government&#8217;s social policies contributed to a reduction in poverty and an improvement in many social indicators.

Former Finance Minister Dr Salman Shah told this scribe the government has made the 170 million people fool while telling them pack of lies in the past nine months about the economic policies of the Mushrraf regime. 

He said that as the present government acknowledged in black and white, the impressive past growth made their way easier to make access to the new facility of the IMF for emerging markets hit by the crisis to support the balance of payment problems. 

Had growth not been achieved, Pakistan would have to apply for other long term IMF financing facilities like poverty reduction, structural adjustments etc, Shah said adding government should tell truth to the nation if they have confidence. 

&#8216;The recruitment made so far for running the finances of this country is very depressing. This shows this government has neither commitment nor capabilities to take the country out of the current crisis,&#8217; Dr Salman said.

He said the government admitted in the LoI, the current crisis was because of price shocks, global financial turmoil and policy inaction during the political transition to the new government. He blamed the current government for blocking inward movement of $5 billion by suspending privatization of major transactions.

The short term liquidity facility established by IMF was for those countries that have a good track record of sound policies, access to capital markets and sustainable debt burdens with a size of loan up to 500 percent of quota with a three month maturity.


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## Neo

*SBP scales up export refinance by Rs3bn ​* 
Friday, January 16, 2009

KARACHI: The State Bank of Pakistan has increased the amount of export refinance by Rs3 billion to Rs182 billion. 

In a meeting with Dr Mirza Ikhtiar Baig, Adviser on Textiles, SBP Governor Saleem Raza confirmed the surge in the present ceiling export finance for banks and said there were still Rs27 billion available with banks. Unutilised export refinance amount has been transferred to needy banks, he further said. 

In a statement, Dr Baig said he explained to the SBP governor the crisis in the textile industry, decline in exports, closure of textile units, impact of global recession, high cost of doing business due to increase in mark-up, power-cum-gas rates and prevailing load-shedding. 

He strongly advocated a write-down in the mark-up of banks by at least 2 per cent by reducing CRR (Cash Reserve Requirement) of banks with the SBP that would improve liquidity as the banks interest free funds with the central bank would be released. 

The SBP governor promised to knuckle down some serious work on reducing CRR, which would cut the cost of funds of banks enabling them to decrease their lending rates. Dr Baig requested the governor to allow a one-year moratorium to textile industries on payment of their principal amount as the mills were unable to service debt. 

Raza assured he would hold a meeting with heads of banks to finalise its modalities. He agreed that the textile industry must be given some breathing space. 

Dr Baig requested payment of 3 per cent interest differential that amounts to Rs1.2 billion for the spinning sector as approved in the cabinet meeting on Nov 5, 2008. 

In a response, the governor promised to solve it on the top priority basis and said funds would be released as soon as a letter in this regard is received from the ministry of finance. 

Research and development (R&D) claims have not been paid to the exporters from June 25 to 30, 2008. Dr Baig also suggested to Raza to form an advisory committee of the stakeholders, bankers and SBP officials to quarterly meet in a bid to address problems of the industry. Talking to The News, Dr Baig said he was positive about the meeting with the SBP governor.


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## Neo

* PIA sees Rs600m profit in 2009 ​* 
Friday, January 16, 2009

KARACHI: Pakistan International Airlines (PIA) is finally set to make profit in 2009 after four years of substantial losses which have marred growth and nearly made it bankrupt.

Sinking fuel prices have emboldened the airline to hope for an after-tax profit of Rs600 million and revenues at a whopping Rs121 billion, Managing Director Capt Aijaz Haroon told PIAs board of directors on Thursday.

PIA could have posted profit in the last quarter (October-December) of 2008 had it not been for the pension issues settled out of airlines accounts, he later told The News. We cannot do much about carryover losses but we will reverse the trend this year.

Despite a decent growth in revenues, financial losses climbed to a record high of Rs38bn between January-September 2008 as surge in fuel cost took its toll. Full-year results are still awaited.

Haroon stressed that governments support will be imperative for the national airlines comeback. We need to stop the Gulf carriers from taking away our market. The incumbent MD, who is also a pilot of Boeing-777, has been vocal about the onslaught of Gulf carriers on the Pakistani market. He has even proposed some bold steps to discourage Pakistani transit passengers from using those airlines.

Aviation authorities should at least stop giving them more capacity, he said, adding that the national airline needs some protection similar to the anti-dumping duty imposed on goods which harm the nations industry.

But besides this and high expenditure related problems, PIA has seen severe management crisis in the last few years as managing directors succumbed to political interference and employees revolt one after another.

Corruption and dilapidated condition of most of PIAs 42 fuel-guzzling aircraft have made any recovery all the more challenging.

Haroon, who was appointed by the Pakistan Peoples Party (PPP) government last year, has played a key role in soothing the grievances of employees who were not happy with contractual status of their jobs and pay scale.

Around 4,000 contractual workers have been regularised since his takeover. Issues pertaining to basic pension of the employees had been resolved, he said. Now minimum pension will be Rs2,000 and widows of our employees could avail it all their lives.

While he has already indicated that PIA will be inducting 10 new aircraft into its fleet by 2010, the present managements failure to profitably manage the routes has time and again surfaced.

This year we will target high-yielding routes and cut down unprofitable ones, Haroon said about his recovery plan. Bigger aircraft will be used for destinations in Middle East region while new destinations like Barcelona will be added to network.


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## Neo

*Pakistan seeks US investment in oil & gas sector ​* 
Friday, January 16, 2009

ISLAMABAD: US Ambassador to Pakistan Anne W Patterson called on the Advisor to Prime Minister on Petroleum and Natural Resources Dr Asim Hussain here on Thursday and discussed with him matters pertaining to promoting energy cooperation between the two countries.

While talking to the ambassador, Dr Hussain said that the new government is taking concerted steps to exploit the untapped hydrocarbon resources in onshore and offshore areas to meet the growing energy needs of the country, said a press release.

The advisor informed the envoy about the steps being taken by the government for the utilisation of 185 billion tons of coal deposits of the country. He sought US cooperation and investment in utilising the huge coal deposits for gasification and power generation.

Coal can be converted into oil and gas by use of advance technology, the advisor added. Highlighting the investment opportunities in Pakistan Dr Hussain said that the government has announced enormous incentives and packages in the new petroleum policy for foreign investors.

The bidding process for issuance of exploration license to the aspirant companies has been cut short to attract foreign direct investment in Pakistans energy sector.

The government is pursuing fast track exploration policies as we want to be self sufficient in indigenous gas production in the coming three years, the advisor informed the envoy. The US ambassador said that the US wanted to build long-term and multi-faceted strong relations with Pakistan.


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## Neo

*Govt to drop over 100 projects from PSDP ​* 
Friday, January 16, 2009

ISLAMABAD: In a bid to meet the International Monetary Funds conditionality to contain fiscal deficit to 4.2 per cent of GDP, the government has decided to remove over 100 development projects costing billions of rupees from the list of Public Sector Development Programme (PSDP), it is learnt. The government has convened a two-day meeting of ministries/divisions on January 20 and 21 at the Planning Commission in order to get the input for identification of projects which would altogether be deleted from the PSDP list. 

Almost one-third of the PSDP allocation will be cut in the current fiscal year, sources said. 

This exercise is aimed at reducing throw forward, which has already gone to Rs1.8 trillion for around 1,800-1,900 development projects, an official said while talking to The News here on Thursday. 

In an official communication sent by the federal government to the ministries/divisions, the Planning Commission has given four options to all the ministries to identify those development projects which are showing satisfactory progress, categorise projects which could be delayed for a few years, point out projects which could be deleted completely and those projects which could be transferred to the mode of Public-Private Partnership (PPP) under the umbrella of Infrastructure Project Development Facility (IPDF). 

The government, the sources said, wants to categorise development projects in consultation with relevant ministries and there will be no compromise on those projects which are showing satisfactory progress. 

Problematic projects, where there is no progress owing to a variety of reasons, should be deleted from the PSDP list and hundreds of projects will fall in this category, said the official. The ministries were also asked to come up with identification of those projects which could be delayed for two to three years. There is also an option available to ministries to transfer certain number of projects on the mode of PPP where private sector investment can be lured.

But the sources pointed out the governments idea about success of the IPDF seems unviable equation because its former CEO remained unable to get any breakthrough and how political appointees at highest level can move forward the idea for promoting private investment in crucial development projects is beyond imaginations. 

Under the directives of the IMF, the government is axing expenditures and the easiest way is to reduce public investment, which is bound to result into further slowing down the economic activities. The PC and the ministry of finance possessed divergent views on this issue. The finance ministry officials are of the view that there was no direct link between PSDP allocation and higher GDP growth but the PC high-ups say that there is empirical evidence that when there were higher PSDP allocations the countrys GDP growth witnessed improvements. 

The sources in the ministry said that this level of fund releases would continue in the same range in the remaining months of the current fiscal year in order to achieve the envisaged fiscal deficit target for the ongoing fiscal year. 

The sources said the government would make all-out efforts to avoid any practice where funds remained unutilized in accounts of ministries on which the federal government paid interest cost. We have told the ministries and provinces to get releases when they will be able to spend it, added the sources.


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## Neo

*FDI surged by 45 percent​* 
KARACHI (January 16 2009): The Foreign Direct Investment (FDI) has witnessed a raise of some 45 percent during December despite the looming clouds of war between Pakistan and India. The central bank on Thursday revealed that FDI has also crossed the mark of 2 billion dollars during December 2008 with a highest investment of 724 million dollars in a single month during the current fiscal year 2008-09.

"The surged in the FDI is a positive indication and reflected that confidence of foreign investors on Pakistan economy is still retained despite the tensions on Eastern boarders after Mombai attacks," economists said. They said that increasing FDI reflects that country's economic fundamentals are still strong despite several internal and external shocks and have ability to attract foreign investors.

Other economic indicators like foreign reserves and exports are also improving and would attract more investment in the future, they said. "With the current trend we are expecting that country's FDI would be around four billion dollars by the end of current fiscal year 2009", they added.

With an increase of some 260.95 million dollars, FDI has reached 2.2327 billion dollars during the first half of current fiscal year 2008-09 (July-December), as compared to 2.0663 billion dollars during the same period of last fiscal year 2008. Month-on-month basis the country has witnessed highest FDI in December as compared to other first five months of the current fiscal year, as foreign investors have invested some 724.28 million dollars in December 2008.

FDI has surged by some 45.18 percent to 2.32 billion dollars in December 2008, previously was stood at 1.603 billion dollars end of November 2008. Previously some 340.7 million dollars FDI registered in July 2008, 413.36 million dollars in August, 356 million dollars in September, 211 million dollars in October and some 282 million dollars in November 2008.

Although the FDI has presented a positive growth, however the portfolio investment has declined by 282 percent during the first half of 2009. Therefore, net foreign investment including FDI and portfolio investment (PI) depicting a slight decline of 1.43 percent.

Net foreign investment stood at 2.138 billion dollars during the July-December of the current fiscal year over the investment of some 2.1699 billion dollars at the same period of last fiscal year, depicting a dip of some 3.1 million dollars.

In addition, portfolio investment has declined to negative position of some 188.31 million dollars during the first half as against 103.66 million dollars in corresponding period of last fiscal year 2008. "The political uncertainty and instability in the country and negative reports regarding world stock markets are the major reasons of declining trend in the portfolio investment", economists said. They also hoped that after the end of tension between Pakistan and India foreign investors would further invest in Pakistan especially in equity market.


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## Neo

*New investment policy for next 10 years on cards: minister​*
ISLAMABAD (January 16 2009): Federal Minister for Investment, Senator Waqar Ahmad Khan, here on Thursday stressed the need for capitalising friendly relations between United Arab Emirates (UAE) and Pakistan by enhancing partnership in mutual business and trade. "Pakistan and United Arab Emirates enjoy close brotherly relations and share commonality of views on host of issues and there is need to capitalise these friendly relations," he said while talking to UAE Ambassador, Saif Sultan Al-Awani at his office.

Senator Waqar said that the new investment policy for the next 10 years is on cards, which would be prepared with the consultation of private sector. He said that the local and foreign investors are welcome to benefit from investment friendly policies adding that the government was extending all possible facilities to investors.

He expressed the hope that Investment Ministry would be able to fetch unprecedented foreign investment in various sectors of the economy. Pakistan has become a destination of choice for foreign investment and the government is committed to provide full legal cover to the investment, he said adding that the government was also providing tax exemption and facility of duty free import of machinery.

Senator Waqar said that the Investment Ministry was operating as one window facility for the investors and acts as trouble-shooter and facilitator. He said the government has opened up a number of areas especially oil and gas, energy, power, agriculture and livestock for local and foreign investors.

Ali Saif Sultan Al-Awani told the minister that people and the government of UAE highly value their relations with Pakistan, adding that government and the private sectors of UAE were eager to start joint ventures with Pakistani companies. The Ambassador also appreciated government's decision of announcing new investment policy, ensuring continuity of policies, adding that it will help foreign investors to benefit from friendly atmosphere.


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## Neo

*US senator for long-term economic support for Pakistan​*
WASHINGTON (January 16 2009): Calling the return of democracy in Pakistan 'historic', a key Republican Senator Lindsey Graham who visited Islamabad as part of a bipartisan delegation last week, has voiced his full support for bolstering US economic assistance for the country over the long-term.

Graham, who is being drafted as counsellor on foreign policy by President-elect Barack Obama told newsmen along with Vice President-elect Joseph Biden that the United States must assist Pakistan economically through Biden-Lugar legislation as the country's help is vital to anti-terrorism success in Afghanistan.

"As to Pakistan, (there's been) historic change in Pakistan. We have a civilian government duly elected by its people, taking over from what has been in the past a dictatorship," said the senator, an important Republican voice on the Hill and a top supporter of former presidential candidate Senator John McCain.

Sitting next to president-elect, Lindsey Graham said he found tremendous goodwill for Obama in Pakistan. "I cannot tell you how much enthusiasm we saw in Pakistan for this new president." "There is a moment in time here for this country (US) to re-engage the international community, to make sure that we have international support to stabilise Afghanistan, Pakistan and Iraq."

The South Carolina lawmaker said the Biden-Lugar legislation "pending before the (US) Senate would create economic aid in a variety of fashions to Pakistan over a ten-year period, is a must." He argued strongly that the US must enhance economic aid for Pakistan, despite facing economic hardships at home.

"And I know people at home in South Carolina have lost their jobs. We are about to encourage a trillion dollars of debt here soon to stabilise a weakened economy never seen since the great depression". But to those American taxpayers, the money is needed in Pakistan because we cannot succeed in Afghanistan without Pakistan. "So I support expenditures of public treasure into Pakistan under the Biden-Lugar legislation. I think it will go a long way toward helping us correct some of the problems we have in Pakistan and Afghanistan."


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## Neo

*Aggressive marketing for Pakistani manpower promotion advised​*
ISLAMABAD (January 16 2009): The 46th meeting of the board of director of the Overseas Employment Corporation (OEC) was held here on Thursday, followed by its annual general meeting under the chairmanship of Khursheed Ahmad Shah, Federal Minister for Labour, Manpower & Overseas Pakistanis.

The federal minister advised the MD OEC that aggressive marketing need to be done in the labour importing countries for the promotion of Pakistani manpower. He assured that for this purpose MD will have his full support and support of his ministry and the board of directors. The board approved annual budget showing a target of 2,300 workers.

Besides budget, the annual accounts of the corporation for the years ending 30th June, 2007 and 30th June 2008 also came under consideration. The federal minister also approved 20 percent increase in the salary of the employees of the OEC with effect from 1st July 2008.

The board also approved conversion of GSA of the PIA into PSA and appointment of the arbitrator in Jubail Project case in Saudi Arabia and visit of the MD of OEC to Saudi Arabia for the purpose of meeting with the arbitrator. Secretary Labour, Manpower & Overseas Pakistanis, Malik Asif Hayat, Managing Director, Overseas Employees Corporation, Jehangir Alam Chohan and other high officials of the ministry of labour & manpower also attended the meeting.-PR


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## Neo

*Minister for reducing import of non-essential luxury items​*
ISLAMABAD (January 16 2009): Ministry of Commerce and Chambers of Commerce and Industry have an important role to play for the development of national economy. Therefore, frequent interaction and close co-ordination between Ministry of Commerce and Chambers of Commerce is the need of the hour to facilitate the fast growth of business and economic activities in the country.

This was stated by Makhdoom Amin Fahim, Federal Minister for Commerce at a meeting with a delegation of Islamabad Chamber of Commerce and Industry here on Thursday. The delegation was led by its President Mian Shaukat Masud. Amin Fahim said businessmen are playing a crucial role in the development of the country and added that every effort will be made to provide maximum facilities to the business community so that they could be facilitated to further promote business activities in the country and steer the economy out of recessionary trend.

Federal Minister for Commerce emphasised for creating a teamwork spirit between public and private sectors so that government and business community could understand each other's problems and could find out optimum solutions with joint efforts.

He said that with government efforts to control the import of luxury items, import bill has come down during the last two months and stressed for further reducing the import of non-essential luxury items so that country may not face balance of payment problems and other difficulties entailed by rise in import bill.

He also underlined the need of passing on the benefit of substantial reduction in crude oil prices in international market to the public because they deserve relief to ease pressure of high inflation on them. The minister said government will take into confidence traders and industrialists on load shedding problem so that a better solution could be worked out of this issue to minimise damage to industry on this account.

Speaking on the occasion, Mian Shaukat Masud, President, Islamabad Chamber of Commerce and Industry maintained that high interest rates and hike in electricity and gas prices have affected the production of trade and industry due to which Pakistan is losing exports to competitors. He said foreign markets have nothing to do with our production cost and they only demand quality products at affordable rates.

Mian Shaukat Masud said textile industry is the main pillar of exports contributing 57 percent share in it while 80 percent people are connected with this industry directly or indirectly. He urged the government should come up with firm strategy to support textile industry to cope with these challenges.

He said that load shedding for textile industry should be minimised because power outages are cutting into its productivity. Shaban Khalid and Muhammad Ishtiaq Qureshi, Vice Presidents ICCI, former ICCI Presidents and other senior members accompanied Mian Shaukat Masud.


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## Neo

*British Kashmiris keen to invest in AJK​*
ISLAMABAD (January 16 2009): Renowned social and entrepreneur figures of British Kashmiris Tanvir Naz and Raja Haider Abbas called on President Azad Jammu and Kashmir Raja Zulqarnain Khan and expressed their interest to invest in hotel industry and other industrial sectors.

Tanvir Naz, a UK businessman of Kashmiri origin, while showing interest in establishing a five-star hotel and industry in AJK told the AJK President that a number of expatriates intended to invest back home provided they were given patronage by the government and positive co-operation by the concerned departments.

"This could result in an economic revolution." He said expatriates living every nook and corner of the world would not hesitate to render any sacrifice in case India carried out its aggressive designs against Pakistan. President AJK said over the last 61 years India was following malicious designs against Pakistan and Kashmir. India, he said, had disrupted peace of entire south Asian region by occupying Kashmir.

He urged the Kashmiri people living abroad to raise voice in print and electronic media against the tyrannical Indian rule in the held valley, where innocent people were subjected to brutal treatment, subjugation, suppression and torture at the hands of over 800,000 Indian troops.


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## Neo

*Foreign currency accounts serve our interests​*
January 16 2009: There is a proposal from the World Bank to extend cash withholding tax on withdrawals from foreign currency accounts. This suggestion has been, reportedly, laid at the doorstep of the Federal Board of Revenue (FBR). The rationale behind this move is fairly evident. As FBR comes under increasing pressure from the government to generate revenue commensurate to the economic activity in the country, FBR should begin to look at short-term measures to raise tax revenues.

A 2004 International Monetary Fund study on Foreign Currency Deposits (FCDs) in Pakistan argued that "the policy makers thought that the FCDs might be the answer to the low level of savings and investment in the economy, because these deposits could help mobilise both domestic and external savings.

However, the increase in potential savings from the FCDs did not result in a boom in investment, but instead these short-term foreign liabilities helped finance large fiscal and external account deficits for a somewhat longer period than would have been possible otherwise. The end result was that the country was saddled with a debt overhang problem, which severely constrained long term growth prospects."

The report adds that Pakistan's experience demonstrates the importance of public debt sustainability for maintaining economic stability and growth and underlines the problems borrowing governments face in assessing the appropriate debt levels. Regulations that governed the FCDs required commercial banks to surrender it to the State Bank, which provided rupees at the prevailing rate. The commercial banks used the rupees to lend to private and public sector, and meeting their own reserve and liquidity requirements.

The IMF report states that "the commercial banks closed their open forex positions by purchasing forward cover from the State Bank, which was sold at subsidised rates (the rate of depreciation of the rupee exceeded the cost of forward cover) for almost all years...thus the FCDs were a highly profitable proposition for the commercial banks that were more interested in mobilising FCDs than deposits denominated in rupees."

It is rumoured that in response to the severe foreign exchange reserve crisis that was faced last year the SBP was continuing to implement this regulation. FCDs from non-resident and resident Pakistanis peaked in 1996-97 (4.35 million dollars and 5.49 million dollars respectively.) FCDs plummeted as a consequence of the decision taken in the post nuclear blast scenario by the Nawaz Sharif government to freeze all foreign currency accounts and never ever reached the same highs.

In 2003-04 the total foreign currency accounts were only 221 million dollars, a tiny percentage of the pre-nuclear blast position. It is heartening to learn that the FBR has convinced the World Bank, for the time being at least, that such taxation would be counter productive to the economic objectives as these accounts serve to boost the dwindling foreign currency reserves of the country.

It is, however, pertinent to note that the protection given by the Sharif government to such accounts pre-nuclear blast, which overrode all other related legislation, continues to be debated, off and on, by the State Bank and the FBR as a prelude to generating revenue from these accounts. With a burgeoning budget deficit what policy options must the government consider with respect to the FCDs?

IMF argues that international reserve targets must be set in relation to variations in the volumes of foreign trade as well as growth in the short-term liabilities like FCDs. It also urges the government to enact measures to enhance international liquidity, including measures that would make domestic currency denominated assets more attractive to hold.

Lower inflation, adequate rates of return on domestic currency deposits, or in other words with a positive real rate of return, would lead to sustained lowering of reliance on FCDs and the dollarisation of the economy. Be that as it may, these conditions do not apply to the economy today; however, one would hope that the government would follow prudent policies in this regard by seeking to attract FCDs without taxing them and at the same time not use these accounts to strengthen its external account position.


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## Neo

*IPI pipeline project: Iran reduces gas price to 78 percent of crude oil tariff​* 
ISLAMABAD (January 16 2009): Iran has scaled down its earlier demand to link the price of gas from 85 percent to 78 percent of crude oil price under the still to be approved Iran-Pakistan-India (IPI) gas pipeline deal. The steering committee on IPI gas pipeline project, which is a sub-committee of the Economic Co-ordination Committee (ECC) of the Cabinet, was informed that it had decided to recommend to the Cabinet to show greater flexibility on the gas price on offer by Iran.

The steering committee on IPI held its eighth meeting, chaired by Advisor to the Prime Minister on Petroleum and Natural Resources Dr Asim Hussain here to review the current status of the project. The steering committee reviewed the current status on IPI gas pipeline project, and decided to further negotiate with Iran the clauses related to gas price.

The committee, however, took positive note of the deliberations held so far between Pakistan and Iran on the project. The steering committees recommendations will be placed before the Cabinet for approval. Advisor to the Prime Minister on Finance Shaukat Tarin, Chief Minister of Balochistan Aslam Raisani, Special Assistant to the Prime Minister on Finance, Economic affairs and statistics Hina Rabbani Khar, Petroleum Secretary Mehmood Saleem Mehmood, Managing Director of ISGS Hassan Nawab Khan and other officials attended the meeting.

Sources revealed to the Business Recorder on Thursday that Tehran had shown more flexibility on the gas price as the meeting was informed that Iran had now placed a request to link the gas price to 78 percent of crude oil price. Earlier during the bilateral talks on IPI held in Tehran on December 29-30, 2008, Iran sought linking the gas price to 85 percent of crude oil price.

Pakistan had offered to link gas price to 60 percent of crude oil price. Sources said that the steering committee decided to present the fresh demand of Iran to link the gas price to 78 percent of crude oil price before the Cabinet for guidelines to resume the talks on IPI. The meeting observed that the country would generate 5000 MW electricity from one billion cubic feet gas per day (bcfd) imported from Iran.

It was noted that thermal power plants required gas to generate power. The current power shortfall is 3000 MW that would rise to 10,000 MW per day by 2020. Sources said that the committee noticed that the country was also facing 700 million cubic feet per day shortfall that would shoot up to two billion cubic feet per day by 2010. It also reviewed the electricity, generated from solar and wind project, was costlier than electricity generated from thermal plants to be operated on imported gas from Iran.

Addressing the meeting, Advisor to Prime Minister on Finance Shaukat Tarin said that economy of the country would have the capacity to consume more gas in the near future.

He said that the industrial units were facing gas shortfall that was causing reduction in the production. He said that industry required energy and gas on an emergent basis, which must be imported from Iran to bridge the gap between the demand and energy deficit.

Special Assistant to the Prime Minister on Finance, Economic Affairs and Statistics Hina Rabbani Khar said that it was time to make a final decision on the IPI gas pipeline project, and added that there should be no more delay on the deal with Iran.

The IPI project will have a 2,775-kilometre-long pipeline to carry Iran's natural gas to Pakistan and India. The project, estimated to be completed in three to five years time, is expected to benefit energy-starved Pakistan. The pipeline would be supplied from South Pars field. The construction operation was to start in 2009 and the pipeline was expected to be completed in 2013, the committee was told.


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## pkpatriotic

*Agri credit cards under consideration* 
*By Khalid Mustafa 
Saturday, January 17, 2009*

*ISLAMABAD: The government is studying a plan to introduce Agri Swipe Cards in a bid to stimulate the agriculture industry, which is the mainstay of the countrys economy and contributes 22 per cent to the gross domestic product (GDP).*

*In that regard, the Planning commission was vigorously working on the agri credit cards for farmers, a senior official told The News.*

When contacted Planning Commission Secretary Sohail Safdar confirmed that the government was preparing a strategy to concentrate more on the agriculture sector and the introduction of swipe cards was part of that plan.

However, the official source explained the credit card would have a limit of Rs500,000 and the farmers would not be allowed to draw cash. They would only use the cards for purchasing fertilisers, tractors and other tools and appliances for the farm industry.

To a question, the official said the State Bank of Pakistan had given a green signal for introducing the cards. 

Basically, the government is busy in chalking out a plan to provide relief for the masses in such a way that the impact of harsh political and economic conditions is reduced.

The Planning Commission, headed by Sardar Aseff Ali, under the proposed strategy is working on some measures to be taken in the social sector for reducing poverty, the official said.

After formulating the strategy, the official said, the Planning Commission would submit it to the federal government for implementation.

Keeping in view the fact that 70 per cent population lives in rural areas, the Planning Commission will come up with a plan to offer insurance schemes for crops, which would provide a massive relief for the farmers. In addition, the Planning commission is also examining life insurance for small farmers and businessmen which would give confidence, enabling them to launch their farm-related business independently.

*Besides all these, some 200,000 to 250,000 young people would be given technical training on war footing so that they could earn a reasonable livelihood.*

*Pakistan has a huge young population totalling 100 million who are below the age of 26 years. If all of them are given technical training, Pakistan can provide biggest workshop for the whole world.*


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## pkpatriotic

*Weekly inflation up more than 20pc* 
*By Israr Khan 
Saturday, January 17, 2009*

*ISLAMABAD: The Federal Bureau of Statistics (FBS) on Friday reported that weekly inflation, measured by the Sensitive Price Index (SPI) of 53 daily-use kitchen items for the week ended on January 15, has increased by 20.50 per cent as compared to the corresponding week of the last fiscal year.*

The figures showed a slight increase in inflation percentage during the week and went up from 19.25 per cent in the previous week to 20.50 per cent. The bulletin, based on data collected from 17 urban centres, showed increase in prices of 12 essential commodities, decline in 12, while prices of 29 items remained stable.

The most depressing aspect was that in a span of one week various kitchen and other necessary items became very costlier.

SPI inflation was recorded at 19.67 per cent for low income families belonging to the Rs3000 income group during the week, followed by 20.27 per cent for families falling in the Rs3001 to Rs5000 income group, and 21.20 per cent for Rs5001 to Rs12000 income group. Inflation during the week under review was recorded at 20.57 per cent for families earning above Rs12000 monthly income.

According to the price trend during the week under review, price of per kilogram loose vegetable ghee increased to Rs104.24 from Rs100.09, LPG (11 kg cylinder) to Rs859.12 from Rs831.06, gur per kg to Rs42.20 from Rs40.91, mustard oil per kg to Rs143.47 from Rs141.52, garlic per kg to Rs44.03 from Rs43.57, chicken (farm) per kg to Rs90.35 from Rs89.50, gram pulse washed per kg to Rs60.09 from Rs59.66, washing soap nylon cake to Rs12.65 from Rs12.56, tea (prepared) cup to Rs8.50 from Rs8.44, masoor pulse washed per kg to Rs129.26 from Rs128.51 0.58, wheat average quality per kg to Rs24.70 from Rs24.58, bread plain mid size each to Rs24.15 from Rs24.09, cooked beef plate each to Rs40.40 from Rs40.30, fresh milk per liter to Rs36.19 from Rs36.16, mutton per kg to Rs258.38 from Rs258.23, curd per kg to Rs43.07 from Rs43.05, beef per kg to Rs143.02 from Rs142.97.

Average prices of the following items declined during the week, ie tomatoes per kg to Rs22.17 from Rs25.40, potatoes per kg to Rs16.03 from Rs16.85, egg hen (farm) per dozen to Rs56.22 from Rs59.02, cooking oil (tin) per 2.5 liter to Rs338.88 from Rs351.47, onions per kg to Rs21.54 from Rs22.25, firewood per 40 kg to Rs267.21 from Rs271.03, rice basmati broken per kg to Rs44.52 from Rs45.05, vegetable ghee (tin) per 2.5 kg to Rs329.71 from Rs331.47, red chillies per kg to Rs135.76 from Rs136.35, rice irri-6 per kg to Rs36.36 from Rs36.47, wheat flour average quality per kg to Rs25.23 from Rs25.30, mash pulse washed per kg to Rs75.88 from Rs75.92, bananas per dozen to Rs34.43 from Rs34.44, moong pulse washed per kg to Rs48.16 from Rs48.17.


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## pkpatriotic

*NEPRA revises power tariffs for distribution companies* 
*Saturday, January 17, 2009*

*ISLAMABAD: The National Electric Power Authority (NEPRA) on Friday announced different power tariffs for eight electricity distribution companies based on monthly power purchase price (PPP) keeping in view fluctuations in fuel prices in November 2008.* 

*The power watchdog actually reviewed prices on the request of the government and came up with modified tariffs according to which the authority has reduced power tariffs of Islamabad Electric Supply Company (Iesco) by 12 paisa per unit, Peshawar Electric Supply Company (Pesco) by 11 paisa per unit, Quetta Electric Supply Company (Quesco) by Rs2.11 per unit and Gujranwala Electric Power Company (Gepco) by 17 paisa per unit.* 

However, NEPRA increased power tariff of Multan Electric Power Company by 1 paisa per unit, Hyderabad Electric Supply Company by 7 paisa per unit, Lahore Electric Supply Company by 1 paisa per unit and Peshawar Electric Supply Company by 11 paisa per unit. 

The power regulator now adjusts tariffs of distribution companies keeping in view fuel price fluctuations every month, as earlier it was used to review the power tariff on fortnightly basis under an automatic fuel adjustment formula. 

When contacted one of the top officials in the Ministry of Water and Power said that keeping in view the recommendations of NEPRA, the government takes the tariff of IESCO as a baseline for decision to implement across the country, except Karachi. 

However, the government would not scale down the price of 12 paisa as the government did not pass on the increase in tariff as earlier recommended by the regulator. 

However, the government ensures the unified tariff for end consumers by extending the huge subsidy under the head of the inter-tariff differential. KM


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## pkpatriotic

*Cellphone firms seek increase in call rates*
*Saturday, January 17, 2009
By Jawwad Rizvi*

*LAHORE: Two major cellular operators of the country have proposed increase in call rates, saying revenues of the telecom industry have been declining which in turn affects investment in the sector.

The News has learnt that the proposal was floated in a meeting held at Pakistan Telecommunication Authority (PTA) headquarters on Wednesday, January 14, 2009 in the morning session and continued till lunch time.*

*Chairman PTA, Dr Yasin chaired the meeting, which was attended by the Chief Executive Officers (CEOs) of all cellular operators of Pakistan and member finance to evaluate the financial situation of the cellular industry.*

Sources privy to the meeting revealed that various issues of the telecom industry were discussed in the meeting. The meeting also talked about the impact of the current global financial crunch and national issues for the telecom industry.

Cellular operators representatives stated that their revenue had registered a declining trend. Representatives of the two operators, of which one has the countrys largest customer base and the other is a sister organisation of the national telecommunication company, had proposed to increase call rates in order to attract further investments and maintain the quality of their services.

They said the sector had received the highest Foreign Direct Investment (FDI) during the last couple of years and in the current scenario no further investments are expected.

Cellular operators said the revenue of the telecom industry dropped due to an increase in taxes. The Average Revenue Per User (ARPU) has been reduced to $2.7 per consumer, as compared to last years $4 per consumer in the same period. They proposed the burden should be shifted on to the consumers by increasing call rates.

Of the two operators representatives, one is based in China while the other is UAE-based. The UAE-based representative opposed the idea of increasing call rates, saying that it would reduce the consumer base. They also opposed the idea as the customers are already affected with the current high tax rates and imposition of new 5 per cent surcharge on every easy load has also put extra burden on the customers. They said the ARPU was declining due to many other reasons, not only due to taxes. On the other hand the Norway based cellular operator representative remained indifferent to this issue.

A spokesman of the sister organisation of National Telecommunication Company confirmed to The News that the meeting of all mobile company CEOs, PTA Chairman, Member Finance PTA. However, he said that the meeting was not for increasing mobile tariffs, but rather to evaluate the financial situation of the cellular industry in the country. He said various suggestions were discussed for the betterment of the industry and consumers. This meeting was called in by the PTA.

Other issues which were also discussed in the meeting included UAN, SMS interconnection, infrastructure sharing. The meeting also discussed different competitive and aggressive call rates. It mentioned that the telecom industry was still in its growing phase, although the pace of growth was slower compared to previous years. This is understandable given the global financial crisis, rising costs in Pakistan, as well as the maturity phase, which the industry is now experiencing.


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## pkpatriotic

*Textile package within days: Tarin*
*Saturday, January 17, 2009
By our correspondent*

*LAHORE: Adviser to Prime Minister on Finance, Shaukat Tarin, has assured the All Pakistan Textile Mills Association that the government is fully aware of issues faced by the sector and promised a facilitation package within days rather than weeks.*

An APTMA delegation, led by Chairman Tariq Mehmood, met with the adviser on Friday. Textile Minister Rana Farooq Saeed, secretary finance and secretary textiles were also present.

The APTMA chairman gave a presentation on the deepening crisis for the textile industry and called for an urgent need for remedial measures. The meeting focused on the extreme hardships being faced by the industry due to the current financial turmoil.

The issues included banking problems, severe disruption in energy supply coupled with a steep rise in tariffs, spiraling inflation and lack of appropriate incentives compared with regional competitors.

The textile minister also emphasised the need for timely resolution of the problems mentioned by the industry.


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## pkpatriotic

*SECP appoints four directors*
*Saturday, January 17, 2009
By our correspondent*

*ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has appointed four non-member directors on the board of the Islamabad Stock Exchange (ISE) and a director on the board of National Clearing Company of Pakistan Ltd (NCCPL). Muhammad Aliuddin Ansari, Chief Executive Officer of Dewan Drilling, has been appointed director on the board of NCCP.* 

In terms of requirements of the articles of association of the exchange, Reckitt Benckiser Pakistan Ltd Chairman Aslam Khaliq has been re-nominated to serve the ISE for the year 2009. 

In addition, R A Chughtai, President of SME Bank, M Afzal Khan, Chairman of Biafo Industries and Muhammad Shahid Sadiq, Partner of A F Ferguson & Co have been nominated/appointed as non-member directors on the ISE board. 

It is expected that the board of directors will greatly benefit from the extensive knowledge and experience of the above professionals and promote principles of good governance.


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## Introvert

*Pakistan, Iran agree to reduces taxes on 300 items: Zadeh *

Jan 16 (APP)&#8209; Pakistan and Iran have agreed to reduce taxes and custom duty on 300 items to give boost to bilateral trade.

Mohammad Javad Mohammadi Zadeh, Governor General of Khorasan&#8209;e&#8209;Rizvi province of Iran, disclosed this in a press briefing at Governor House here on Friday. Punjab Governor Salman Taseer was also present.

Responding to reporters&#8217; queries, Zadeh said that Punjab&#8209;Khorasan Chamber of Commerce would soon be established to facilitate the investors and traders from both sides.

The Chamber, he added, would endeavour to ensure an organized banking system between the two brotherly Muslim countries, besides help making easier the visa acquisition for investors, traders and industrialists from Pakistan and Iran.

The Governor General said that current bilateral annual trade volume of $ 600 million is not enough, adding that it should initially be expanded up to $ 2 billion per year, for which leadership of both sides could play an important role.

To a question, he said Iran has already ensured some eases to Pakistan with regard to provision of petroleum on credit.

While Iran&#8209;Pakistan&#8209;India gas pipeline, which he termed Peace Pipeline, would soon be finalized among the three stakeholders, he said, adding that Iran is eagre to finalize this vital project.

To another question about current Pak&#8209;India tension, he said that Iran advocated the geographical sovereignty of Pakistan and wanted regional peace.

During his visit, he said, both the governments signed six MoUs and private sectors also inked six agreements, adding that these included academic and university level cooperation, trade and economy, tourism, agriculture, livestock, industry, infrastructure, energy and power sector etc.

Zadeh termed his visit to Punjab as a rock solid step towards expanding bilateral trade volume. He also thanked the public and private sectors of Punjab and Iranian consulate in Lahore for making his visit a roaring success.

On this occasion, Punjab Governor Salman Taseer observed that there is no difference between people of Punjab and Khorasan, as they are like brothers. He said Pakistan and Iran have historic, cultural, religious and deep&#8209;rooted ties, and always supported each other in any time of difficulty.

http://www.app.com.pk/en_/index.php?option=com_content&task=view&id=65176&Itemid=2


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## pkpatriotic

*Buying rice at higher than market price: investigation to be initiated against TCP*
*MUSHTAQ GHUMMAN *

*ISLAMABAD (January 17 2009): The government is reportedly initiating an investigation against the Trading Corporation of Pakistan (TCP) for procuring rice at above the market price, sources told Business Recorder. They said that the Economic Co-ordination Committee (ECC) of the Cabinet had directed the TCP to procure500,000 tons processed rice, made up of 300,000 tons non-basmati rice (Irri-6 & KS-282), and 200,000 tons Super Basmati rice, on the basis of open tenders.*

It had also been directed to float tenders immediately, on December 6, 2008, for purchase of 20,000 tons Irri and 100,000 tons Super Basmati rice. Tenders for the remaining 200,000 tons were to be floated, by TCP, on the subsequent, written, advice of Ministry of Food and Agriculture.

Sources said that TCP was reported to have procured both varieties of rice from the market, as Reap had refused to give the price. The ECC was apprised on December 30 about a meeting presided over by Prime Minister Yousaf Raza Gilani regarding procurement of rice by TCP as a price support initiative.

*IN THE MEETING, FOLLOWING DECISIONS WERE TAKEN:* 

(i) TCP will vacate its storage godowns at Pipri , Karachi which have a storage facility of 0.5 million to 0.6 million tons by the second week of December 2008, to make space for stocking rice, which it would procure from the open market;

(ii) TCP will, on availability of sufficient stocks, find export markets for this rice, and do so in a transparent manner through international tenders;

(iii) Minfal will set up a committee comprising its own experts to inspect the rice to be purchased by TCP, and certify its quality. Only then will TCP allow such purchased rice to be stored in its godowns.

Sources said that a committee, headed by Minister for Food and Agriculture, had been constituted to supervise the process of export of rice stocked by TCP. They said that TCP had been directed not to offload any rice into the local market or into the international market till written advice was received from the Ministry of Food and Agriculture.

When the Commerce Ministry sought ex post facto approval of the Prime Minister's decisions from the ECC headed by Finance Advisor Shaukat Tarin on December 30, 2008, some ECC members were reported to have pointed out that in the recent past, due to scarcity of fertiliser, rice crop was also partly affected.

It was suggested that the support price of rice should be fixed before harvesting stage so that the small farmers should reap benefit. In case the support price was fixed after harvesting it would benefit the middleman only.

In this regard it was suggested that a task force under the chairmanship of Minister for Food and Agriculture and Ministers for Industries & Production and Privatisation, Deputy Chairman Planning Commission, Secretary Finance as its members be constituted and Secretary Food and Agriculture will act as its Secretary.

The task force would develop coherent strategy on four major crops ie wheat, cotton, rice and sugarcane, evolve a rational support price mechanism for the aforesaid crops and recommend measures to ensure need based availability of the items throughout the year with equitable benefit to the small farmers and consumers.


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## fatman17

Transportation 

*Pakistan to be gas sufficient in 3 years*

By an OGJ correspondent

KARACHI, Jan. 16 -- Pakistan cannot afford to import gas from Iran and has formulated a government policy to be self-sufficient in gas within 3 years, said Asim Hussain, oil and gas advisor to the prime minister. 

Speaking in the National Assembly, Pakistan's Lower House, Asim said Iranian gas would cost $500 million/month. 

The government has formulated a policy under which it would be self-sufficient in gas within 3 years, he added. 

Asim said Pakistan now has a shortfall of 700 MMcfd of gas, up from 500 MMcfd last year. He criticized the previous administration for not exploring indigenous gas during the last 7 years as the demand for gas increased. He said 235,000 consumers, 770 CNG stations, and 4,700 commercial connections were added last year. But there was no increase in the gas production.


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## fatman17

*&#8216;Iran-Pak increase trade by $1.4bn&#8217;*

* Iranian governor general says Ahmadinejad keen to strengthen ties between countries

Staff Report 

LAHORE: The Iran and Pakistan governments will reduce taxes on at least 300 products, while Iran will increase its business with Pakistan from $600 million to $2 billion per annum, Governor General of Iran Khurasaan Muhammad Jawad said on Friday.

He was talking to the media during a farewell reception organised by Punjab Governor Salmaan Taseer. Responding to the question of whether Iran could provide Pakistan with oil on credit to cope with the ongoing energy crisis, he said his government was already considering different options to facilitate Pakistanis, including the gas pipeline project and provision of other petroleum products. 

He said he had visited several cities in Punjab and was amazed to see so much enthusiasm and love from the Pakistanis towards their Iranian brothers. He signed a number of memorandums of understanding with private and public sector institutions. He also invited the Punjab governor, Chief Minister Shahbaz Sharif, businessmen, and people from other walks of life to visit Iran.

Ties: He said Iranian President Mahmood Ahmadinejad was keen to strengthen ties between Iran and Pakistan. While responding to a question regarding Iran&#8217;s perspective of Pakistan-India relations, he said Iran wanted sovereignty of Pakistan, adding that it also wanted peace in the region. He announced the start of a joint chamber of commerce between Punjab and Khurasaan, a flexible banking system, and reduction of taxes on goods, including rice. 

He said he had signed at least 12 different documents during his stay in Pakistan regarding the mutual cooperation in trade, industry, education, agriculture, livestock, power and energy. Taseer said Iran and Pakistan shared a lot of cultural and historic values. He also thanked the Punjab chief minister, Lahore Nazim Mian Amir Mehmood, and the council general of Iran for facilitating his Iranian counterpart, and providing him with so much support during his stay in the country.


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## ju87

fatman17 said:


> Transportation
> 
> *Pakistan to be gas sufficient in 3 years*
> 
> By an OGJ correspondent
> 
> KARACHI, Jan. 16 -- Pakistan cannot afford to import gas from Iran and has formulated a government policy to be self-sufficient in gas within 3 years, said Asim Hussain, oil and gas advisor to the prime minister.
> 
> Speaking in the National Assembly, Pakistan's Lower House, Asim said Iranian gas would cost $500 million/month.
> 
> The government has formulated a policy under which it would be self-sufficient in gas within 3 years, he added.
> 
> Asim said Pakistan now has a shortfall of 700 MMcfd of gas, up from 500 MMcfd last year. He criticized the previous administration for not exploring indigenous gas during the last 7 years as the demand for gas increased. He said 235,000 consumers, 770 CNG stations, and 4,700 commercial connections were added last year. But there was no increase in the gas production.



Are these the gas reserves in Sui that will supply the gas? Or have deposits been discovered elsewhere?


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## jamal18

fatman17 said:


> Transportation
> 
> *Pakistan to be gas sufficient in 3 years*
> 
> By an OGJ correspondent
> 
> KARACHI, Jan. 16 -- Pakistan cannot afford to import gas from Iran and has formulated a government policy to be self-sufficient in gas within 3 years, said Asim Hussain, oil and gas advisor to the prime minister.
> 
> Speaking in the National Assembly, Pakistan's Lower House, Asim said Iranian gas would cost $500 million/month.
> 
> The government has formulated a policy under which it would be self-sufficient in gas within 3 years, he added.
> 
> Asim said Pakistan now has a shortfall of 700 MMcfd of gas, up from 500 MMcfd last year. He criticized the previous administration for not exploring indigenous gas during the last 7 years as the demand for gas increased. He said 235,000 consumers, 770 CNG stations, and 4,700 commercial connections were added last year. But there was no increase in the gas production.



Pakistan has low reserves of gas; increasing production with no extra reserves being discovered will reduce the time the gas will last. For strategic reasons it is important to have some in reserve, ie in the ground.


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## Neo

*Tarin for enhancing tax-to-GDP ratio ​* 
Sunday, January 18, 2009

KARACHI: Advisor to PM on Finance Shaukat Tareen on Saturday underlined the need for enhancing tax to GDP ratio to 18 to 20 per cent to achieve 7 to 8 per cent growth in the economy.

He was speaking at an excellence awards ceremony for top taxpayers of Large Taxpayers Unit (LTU) here on Saturday.

Chairman Federal Board of Revenue (FBR), Ahmad Waqar, Governor State Bank of Pakistan (SBP) Salim Raza, Fauzia Wahab MNA and Senator Ahmed Ali were also present on the occasion.

Tareen said that other rising economies like China, Turkey and India have enhanced their tax to GDP ratio beyond 20 per cent to maintain higher GDP growth. He said China has maintained a tax to GDP ratio of 21 per cent in the past several years while Turkey is maintaining it at 28 per cent to accomplish higher economic growth.

He pointed out that despite higher revenue collection rising from Rs300 billion to Rs1.3 trillion, tax to GDP ratio has declined from 13.9 per cent in 1996 to 9.6 per cent in 2007-08.

He said that the government, which collects higher revenue, can look after the welfare of its people far better. On the contrary, revenue collection in Pakistan has fallen short, forcing the economic managers to resort to bank borrowing and thus fueling inflation and crowding out the private sector, he added.

He said the government was following a nine-point agenda to stabilise the macro economic indicators and on top of the list is to increase tax to GDP ratio in the next five to seven years. I have asked FBR to sit with their stakeholders and analyse the needs of the customers (taxpayers) and also their employees so that tax payment becomes a hassle free job, he noted.

The Advisor praised the tax payers as well as tax collectors at the LTU for doing a wonderful job for the country.

Later, while talking to the media, he said that profiteers were responsible for price hike in the country. He said the government was trying to decrease prices in the country, adding that petrol prices have been lowered and CPI has also come down.

He pointed out that he has convened another meeting of the local government to seek what else the magistrate wants to check the prices on. FBR chairman said that the merger of direct taxes with sales tax and federal excise into Inland Revenue Services was a major initiative of the present government to enhance tax collection. DG LTU Faiyaz Khan in his welcome address highlighted the performance of the LTU in tax collection.

Later, the Advisor distributed the excellence awards among major taxpayers including PPL, PSO, Lakson Tobacco, NBP, Unilever Pakistan, National Insurance Company, CAA, Pak Suzuki, Pakistan Steel, Pakistan Beverage Ltd, Glaxosmithkline Pakistan Ltd, etc.


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## Neo

*http://www.dailytimes.com.pk/default.asp?page=2009\01\17\story_17-1-2009_pg5_2​*
** Drop in inflation caused by plunge in international crude and commodities prices​*
ISLAMABAD: Ministry of Finance has projected that due to the different measures taken by the government and State Bank of Pakistan inflation in the country would come down to 9.5 percent by the end of June 2009, according to the 'Inflation Outlook 2008-09' prepared by the ministry. 

Based on the Inflation Outlook 2008-09 projection the interest rate is expected to remain stable and would come down when the core inflation comes down to 15 percent that stood at the end of December at 18.8 percent. Ministry of Finance on last Friday had informed the National Assembly Standing Committee of Finance that incase core inflation drops to a level of 15 percent from 18 percent there might be reduction in interest rate. 

According to a projection presented Economic Coordination Committee (ECC) of the Cabinet meeting held on January 13, 2009, inflation was measured at 24.3 percent at the start of July of the current fiscal year 2008 as compared to inflation of 6.4 percent in July 2007. In the month of August 2008, inflation was at 25.3 percent as against 6.5 percent in August 2007. It was 23.9 percent in September 2008 as compared with 8.4 percent in the same month of 2007. Inflation was measured at 25 percent in October 2008 as against 9.3 percent during the same month of last year. In the month of November 2008, inflation stood at 24.7 percent as compared to 8.7 percent in the same month of 2007 and in the month of December 2008, inflation was seen at 23.3 percent as compared with 8.8 percent in the same month of 2007.

According to the Inflation Outlook covering the period of January-June of 2009, the inflation is expected to be in the range of 21.3 percent in the current month of January 2009 as against 11.9 percent in January 2008. The authorities expect that inflation would come down to 20.9 percent in the month of February 2009 as compared with 11.3 percent of February 2008. In the month of March 2009 inflation would further come down to 17.5 percent as against the inflation of 14.1 percent during the same month of last year. Inflation would further decrease to 14.3 percent in the month of April 2009 as against inflation measured at 17.2 percent in April 2008. In the month of May 2009 inflation is expected to come down further to 11.5 percent as compared to 19.3 percent in May 2008 and finally inflation would be settling at 9.5 percent in the month of June 2009 as against 21.5 percent in June 2008. 

In the month of December 2008, inflation based on Consumer Price Index (CPI) was recorded at 23.3 percent, Wholesale Price Index (WPI) at 17.6 percent, Sensitive Price Index (SPI) at 25.8 percent and Core Inflation at 18.8 percent. 

The CPI based inflation, after hitting 25 percent in the first quarter of current financial year, eased during the month of December as it was up 24.43 percent during the month over the corresponding period of previous year.

After peaking to 25 percent in the first quarter of the current financial year, the highest in three decades, the drop in the growth of inflation has been caused by the plunge in the international crude and commodities prices, which impacted the domestic prices.


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## Neo

*US to provide $30m for tech assistance projects ​*
ISLAMABAD: The US ambassador, Anne Patterson Friday said the US government had earmarked $30 million in technical assistance projects for Pakistan starting from next year. The US envoy expressed these views during a meeting with Federal Minister for Planning and Development, Makhdoom Shahabuddin.

She said the bilateral relation between Pakistan and the US would be further improved while both the leaders discussed Pak-US relations including economic cooperation, situation in the region and other issues of mutual interest. The minister apprised the ambassador about the policies being framed and the projects undertaken by the government to achieve socio-economic progress and prosperity. About counter-terrorism, he said that terrorism is our foremost concern, and root causes must be identified and addressed in order to eradicate terrorism.


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## Neo

*Pakistan's current account deficit narrows to $6.053 billion​*
KARACHI: Pakistan's current account deficit narrowed in the six months from July-December to $6.053 billion, compared to $7.269 billion in the same period last year, the central bank said on Friday. Analysts said it was mainly due to the decrease in international oil prices. Oil was trading at $36 a barrel on Friday compared to a record high of $147 in July last year. Analysts said this would ease pressure on the central bank to raise the discount rate in the near term. A six-month monetary policy meeting is due to be announced on January 31, the central bank said on Friday. The consumer price index in December was down 0.50 percent from November. The index, a key indicator of inflation, rose to 23.4 percent in December from previous levels, and was down from a 24.68 percent year-on-year rise in November.


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## ejaz007

*UAE walks out of $5 billion Coastal Refinery project *
Monday, January 19, 2009
By Khalid Mustafa

ISLAMABAD: The United Arab Emirates (UAE) government has backed out of an agreement to install a $5 billion Coastal Refinery at Khalifa Point near Hub in Balochistan.

While walking out of the agreement on the project, with the capacity to refine 250,000 barrels of crude oil a day, the UAE has linked the establishment of the giant plant to taking charge of the countrys strategic asset of Parco (Pak-Arab Refinery Company), a senior official confided to The News on Sunday.

An accord on implementation of the Khalifa Coastal Refinery Project had been signed at the Prime Minister House in Islamabad on November 13, 2007. The UAE minister of energy, senior officials from the International Petroleum Investment Company (IPIC), Ministry of Petroleum and Natural Resources and Parco had attended the signing ceremony.

Abandonment of the project has obviously shocked the government, which enjoys robust and cordial relations with the UAE. The development, which took place some three months back, is apparently a knee-jerk reaction to Pakistans refusal to hand over Parco to the UAE and offer more shares to the IPIC (International Petroleum Investment Company).

Pakistan has 60 percent equity and the UAE 30 percent in PARCO  located in Mehmood Kot area of Multan. The $886 million countrys largest refinery, capable of purifying 100,000 barrels of oil a day, was commissioned well within its budget and a month ahead of schedule in September 2000. The White Oil Pipeline transports imported oil from Port Qasim to the Pak-Arab Refinery.

The official disclosed the UAE government had sought management and charge of the most strategic asset of the country while evincing keen interest in purchasing more shares of the company. But Pakistan refused to do so. Following the refusal, crude oil prices hit new highs some three months back.

Pakistans negative response annoyed the UAE leadership, which later communicated to the government that it would not initiate setting up the $5 billion refinery at Khalifa Point near Hub.

It is pertinent to recall the Abu Dhabi government-owned International Petroleum Investment Company had announced on January 10, 2009 that it had delayed plans to set up a refinery in Pakistan and was reviewing its Fujairah refinery project. The CEO of IPIC told newsmen its board had approved last year plans to build in Pakistan a $5 billion refinery with capacity of refining 250,000 barrels of oil per day (bpd). 

Without elaborating, the CEO had said: We are facing problems in Pakistan. For any decision on the Khalifa Point refinery, both the governments need to sit together to take action. We are delaying the project till we sort out the fundamental issues.

An investigation by The News of the fundamental issues that triggered differences between the two governments revealed the UAE wanted to grab Parco, threatening to pull out of the refinery at Khalifa Point.

Aware of the projects importance and keeping in view the annoyance of the UAE government, a high-powered Pakistani delegation, headed by Adviser to Prime Minister on Petroleum Dr Asim Hussain, dashed to Abu Dhabi on Sunday to persuade the UAE government not to abandon the plan just because of a dispute over Parco handover. The three-member team includes Additional Secretary GA Sabri and new acting MD of Parco Feroz. 

Asked if the UAE government had tied the establishment of refinery to taking full charge of Parco, Secretary Petroleum Mehmood Saleem Mehmood kept mum. But another official said on condition of anonymity that the IPIC had also demanded an extension for Parco Managing Director Mohammad Rasheed Jung.

The PPP government is learnt to have denied a three-year extension to Jung, who has already been given two extensions, each of three years, after his retirement. Now he has been replaced with a dedicated and nationalist official to ensure the countrys interests in Parco.

In response to a question, the official said Jung was no more MD, as the government appointed Dr Asim Hussain, Adviser to the Prime Minister on Petroleum, as Parco chairman on Saturday  a day before the team left for Abu Dhabi to negotiate the issue.

UAE walks out of $5 billion Coastal Refinery project


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## Omar1984

^^^^^^^^ UAE is jealous of Gwadar Port because Gwadar is supposed to be biger and more successful than Dubai because of its strategic location.


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## Skywalker

The reason is very simple.......China purchases most of her crude oil from Abu dhabi and it takes atleast 14 to 21 days to deliver in one of their far east posts.

I could not find the article which I had but according to that article this was one of the strategic reasons for China plans to invest around 50bln dollars in order to improve the infrastructure at Gwader port in next 10 years.

As mentioned earlier they buy most of their crude oil from abu dhabi where they also have a storage facility.

Previous Pakistani Government offered China a unique proposal as why not to have a storage faicility in Gwader and whenever they are in need it can be transported to them via KKH within 24 hrs.(Thats why both the countries are investing more than 300 mln dollars in convertibg KKH in double raod).

Imagine from Abu dhabi to Gwader 7 days plus one more day via haulage(by road) altogether 8 days at the max as compared to 21 days.

See the startegic advantages. Thats wgy uncle sheikh is angry with us.


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## Skywalker

pkpatriotic said:


> *Buying rice at higher than market price: investigation to be initiated against TCP*
> *MUSHTAQ GHUMMAN *
> 
> *ISLAMABAD (January 17 2009): The government is reportedly initiating an investigation against the Trading Corporation of Pakistan (TCP) for procuring rice at above the market price, sources told Business Recorder. They said that the Economic Co-ordination Committee (ECC) of the Cabinet had directed the TCP to procure500,000 tons processed rice, made up of 300,000 tons non-basmati rice (Irri-6 & KS-282), and 200,000 tons Super Basmati rice, on the basis of open tenders.*
> 
> It had also been directed to float tenders immediately, on December 6, 2008, for purchase of 20,000 tons Irri and 100,000 tons Super Basmati rice. Tenders for the remaining 200,000 tons were to be floated, by TCP, on the subsequent, written, advice of Ministry of Food and Agriculture.
> 
> Sources said that TCP was reported to have procured both varieties of rice from the market, as Reap had refused to give the price. The ECC was apprised on December 30 about a meeting presided over by Prime Minister Yousaf Raza Gilani regarding procurement of rice by TCP as a price support initiative.
> 
> *IN THE MEETING, FOLLOWING DECISIONS WERE TAKEN:*
> 
> (i) TCP will vacate its storage godowns at Pipri , Karachi which have a storage facility of 0.5 million to 0.6 million tons by the second week of December 2008, to make space for stocking rice, which it would procure from the open market;
> 
> (ii) TCP will, on availability of sufficient stocks, find export markets for this rice, and do so in a transparent manner through international tenders;
> 
> (iii) Minfal will set up a committee comprising its own experts to inspect the rice to be purchased by TCP, and certify its quality. Only then will TCP allow such purchased rice to be stored in its godowns.
> 
> Sources said that a committee, headed by Minister for Food and Agriculture, had been constituted to supervise the process of export of rice stocked by TCP. They said that TCP had been directed not to offload any rice into the local market or into the international market till written advice was received from the Ministry of Food and Agriculture.
> 
> When the Commerce Ministry sought ex post facto approval of the Prime Minister's decisions from the ECC headed by Finance Advisor Shaukat Tarin on December 30, 2008, some ECC members were reported to have pointed out that in the recent past, due to scarcity of fertiliser, rice crop was also partly affected.
> 
> It was suggested that the support price of rice should be fixed before harvesting stage so that the small farmers should reap benefit. In case the support price was fixed after harvesting it would benefit the middleman only.
> 
> In this regard it was suggested that a task force under the chairmanship of Minister for Food and Agriculture and Ministers for Industries & Production and Privatisation, Deputy Chairman Planning Commission, Secretary Finance as its members be constituted and Secretary Food and Agriculture will act as its Secretary.
> 
> The task force would develop coherent strategy on four major crops ie wheat, cotton, rice and sugarcane, evolve a rational support price mechanism for the aforesaid crops and recommend measures to ensure need based availability of the items throughout the year with equitable benefit to the small farmers and consumers.



I thought TCP has been dismantled as this organization is full of crooks and corruption. This rice trading in Pakistan is full of corruption imagine even if you are making just 5 paisas per kilo how much the money these crooks would be making in purchasing thousands of tons, that is what the game is all about, this is not the end alongwith the rice they also trade in jute or polly propalene bags which are being used as the rice packing materials.


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## Neo

*Govt to generate $2.8bn for MDGs ​* 
Tuesday, January 20, 2009

ISLAMABAD: A document of the finance ministry reveals that Pakistan will have to generate around $2.8 billion or Rs219 billion through loans from donors as well as mobilising additional domestic revenue resources in the next three years (2008-09 to 2010-11) for achieving its envisaged MDG targets related to education, health, clean drinking water and sanitation.

According to the finalised Poverty Reduction Strategy Paper (PRSP-II) released by the Finance Division in which cost of Millennium Development Goals (MDGs) was incorporated with the help of UNDP consultants, the PRSP allocation for education stands at Rs167.251 billion compared to the MDGs cost of Rs247.910 billion, indicating a financing gap of Rs80.659 billion for 2008-09.

The proposed PRSP allocation for education would be Rs251.632 billion for 2009-2010 compared to MDGs requirement of Rs291.043 billion, pointing out the financing gap of Rs39 billion.

The PRSP allocation for education would be at Rs359.611 billion for 2010-11 against MDGs cost of Rs341.308 billion, showing a surplus amount in terms of allocating resources for education. According to the PRSP-II document, the country has allocated Rs67.084bn for health in fiscal year 2008-09 against MDGs cost of Rs86.323bn, indicating a gap of Rs19bn.

The PRSP allocation for health would be at Rs93.126 billion for 2009-10 against MDGs cost requirement of Rs101.084 billion. The PRSP allocation would be Rs122.996 billion for health in 2010-11 against MDGs cost of Rs118.352 billion. For water and sanitation, the PRSP allocation stands at Rs21.197 billion against Rs52.323 billion in 2008-09.

The PRSP allocation for 2009-2010 for water and sanitation would be Rs25.905 billion against Rs56.823 billion. The allocation for water and sanitation would be Rs30.120bn in terms of PRSP while the MDGs cost would be standing at Rs63.122bn for 2010-11.

The grand PRSP allocation for education during 2007-08 to 2010-11 would be Rs778.494bn compared to MDGs costing requirement of Rs880.261bn. The PRSP allocation for health during 2007-08 to 2010-11 would be Rs283.206bn against MDGs requirement of Rs305.759bn.

The PRSP allocation for water and sanitation during 2007-08 to 2010-11 would be Rs77.222 billion against Rs172.628 billion.

According to the PRSP-II document, gaps for each activity have been reported for the entire country. Whereas the PRSP projected expenditures show a sharp increase in the health and education expenditure as a percentage of GDP, the expenditure on water supply and sanitation as percentage of GDP reflects a steadily increasing trend. In view of the fact that most of the diseases in Pakistan are waterborne, the expenditure on water and sanitation must be increased substantially. Therefore, readjustment targets over time, user charges especially in case of water and sanitation as per past practice (but keeping in view the proportion of usage by the poor), and the surge in share of expenditure on water and sanitation as done in the case of education and health will be required. Total allocations for the three sectors during the PRSP-II period reflect a gap of Rs219.4bn.


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## Neo

*Govt to procure 6.5m tonnes wheat this year ​* 
Tuesday, January 20, 2009

LAHORE: The federal government has fixed a wheat procurement target of 6.5 million tonnes for the current year, expecting a good crop following an aggressive wheat sowing campaign across the country.

The News has learnt that for the first time the federal government has assigned a wheat procurement target of 300,000 tonnes to NWFP and 200,000 tonnes to Balochistan. It has directed Punjab to procure 3.5 million tonnes while Pakistan Agricultural Storage and Supplies Corporation (PASSCO) would procure 1.5 million tonnes and Sindh one million tonnes.

The targets were assigned in a meeting held at Islamabad. The meeting was chaired by Federal Minister for Food and Agriculture Nazar Muhammad Gondal and attended by representatives of the four provinces, Ministry of Food, Agriculture and Livestock (MINFAL) and finance ministry.

The meeting discussed methods of wheat procurement at the price announced by the government before crop cultivation. Prime Minister Yousuf Raza Gilani had announced a procurement price of Rs950 per 40 kg for the next season.

Following the announcement of the attractive price which is now almost equal to the regional wheat price, the farmers cultivated more wheat sparking hopes of a bumper crop this year. The government has fixed a target of 25 million tonnes for wheat production this year.

The meeting also asked the finance ministry to prepare a plan to ensure availability of financial resources at the time of procurement. It also asked PASSCO official to prepare a wheat procurement plan including funds needed for the drive. It was decided that the government would continue buying the commodity from farmers till the last grains from fields were lifted.

The meeting noted that necessary arrangements for wheat procurement were crucial as if the government failed to buy from the farmers at the prescribed rate, it would negatively affect production in future. It was also pointed out that if government agencies succeeded in procuring wheat at Rs950 per 40 kg, the country would not face food security problems like those it encountered during the last few years and spent huge foreign exchange on wheat import.

The meeting participants were of the view that wheat procurement at the set price would also open a window for export of the commodity in coming years when surplus stocks would be available.

Recently, rice farmers suffered a lot as the government failed to ensure the commoditys purchase at the set price. If the same mistake is repeated in the case of wheat procurement, its production would be affected. The government always has figures from all districts and it can easily devise a plan to purchase every grain.


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## Neo

*BoI to introduce electronic visas for business community ​* 
Tuesday, January 20, 2009

KARACHI: The Board of Investment (BoI) is going to introduce electronic visas for the world business community and it is also working on the issue of providing visas upon their arrival.

Minister of State for Investment and Chairman BoI, Saleem H Mandviwalla announced this at the first annual dinner of the Swiss Business Council (SBC) held the other day at the Consulate General of Switzerland. The SBC was formed in May 2008.

He said that the issuance of electronic visa or visa on arrival would be done to address the chronic complaints of the world business community and to promote foreign investment in the country.

Foreign companies have been complaining since a long time that their visitors face problems in obtaining visas and also in getting visas on arrival, he added. Mandviwalla said that the Board of Investment was about to come up with BoI Cards for investors and businessmen. These cards will offer various privileges like preferential treatment at all international airports in the country, access to BoI lounges and many more.

The BoI is also going to establish a special desk at every airport with an aim to facilitate all businessmen and each one of them will receive VIP treatment there. Obtaining a visa on arrival would be very simple at places such as the Dubai airport. Under the process, visitors would receive visas on their arrival, proceed to the immigration desk and get it stamped, he explained.

The minister also pointed out that the BoI has also met a 20-year-old demand of issuing business visas from Karachi to the visitors of foreign and multinational companies (MNCs) recently.

Regretting the massive energy crisis inherited from the previous government, which he described as a hindrance in the way of attracting foreign investment up to the mark, the minister invited Swiss experts on the subject to tackle this menace. Switzerland produces 56 per cent of its electricity from hydroelectric stations, he underlined.

Besides, he assured resolving a six-year-old pricing issue of pharmaceutical companies in the next two months; announced to establish special economic zones with 10-year holidays, and five-years for industries in these zones all over the country; and said Pakistan was still offering a handsome return with a likely 4-4.5 per cent GDP growth against negative growth in some Western countries.


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## Neo

*Plan to set up nine engg varsities dropped, NA told ​* 
*Members concerned over price hike, urge relief to masses​*
Wednesday, January 21, 2009

ISLAMABAD: Adviser to the Prime Minister and Chairperson of the Higher Education Commission Begum Shehnaz Wazir Ali informed the National Assembly on Tuesday that the government had suspended the establishment of nine engineering universities due to financial constraints.

Responding to a point raised by Abdul Qadar Khanzada of the MQM during discussion on price hike, she said the plan to set up the universities was made in a hurry and nobody considered its financial impact on the national economy as each university, if established, would cost Rs 45 billion.

The opposition members, while taking part in the discussion, criticised the government for failing to control the price hike. The parliamentarians also condemned unannounced increase in the prices of commodities at the Utility Stores.

During discussion, Abdul Qadar Khanzada, while referring to the education sector, looked dissatisfied with the qualification of certain members of the cabinet committee constituted to keep a watch on the affairs of universities and improve facilities in the higher education sector.

Shehnaz Wazir Ali said the prime minister, under a decision of the cabinet, had constituted a cabinet committee that consisted of highly educated persons to review the programme for setting up these universities besides improvement of education standard.

She said all members of the committee, including Deputy Chairman Planning Commission, were highly qualified. Shahnaz Wazir Ali said she herself had two Masters degrees and a diploma from the Harvard University.

She said the government did not want to utilise the national exchequer on merely grandiose education schemes. She said instead of spending huge amount on these universities, the government had decided to strengthen the existing universities and degree-awarding institutions in the country to improve the education standard. 

She said keeping in view the difficult financial position, the government intended to concentrate on upgrading and improvement of higher educational institutions, as it wanted to spend each penny on public welfare. 

Earlier, the members participating in the discussion urged the government to take visible steps to overcome the price hike so that people could get essential commodities at reasonable rates.

Those who spoke included Abdul Qadir Patel, Khushbakht Shujaat, Rana Tanwir Hussain, Akram Masih Gill and Abdul Qadar Khanzada. Abdul Qadar Patel of the PPP called upon the cabinet members to take serious steps and adopt a strategy to control the price hike of essential commodities and provide relief to the masses.

Khushbakht Shujaat and Abdul Qadar Khanzada of the MQM criticised the performance of the Utility Stores, saying not only the prices of various items had been increased but quality of commodities was also poor.

Khushbakht Shujaat said the price hike had broken the back of poor masses, saying the parliamentarians should give suggestions and proposals to bring down the soaring prices. She said that merit was the only solution to all problems. We should also look into the fact whether those appointed at responsible places are selected on merit or not, she said. 

Khanzada criticised the government for raising the support price of wheat to Rs 950 per 40 kilogram. Responding to the point of Khanzada Khan, Minister for Agriculture Nazar Muhammad Gondal informed the house that the government had increased the wheat support price with an objective to enhancing productivity besides increasing the income of small growers. He said this increase would benefit small growers who were 96% percent of the agriculture community.

Minority member Akram Masih said minimum wage of Rs 6,000 for workers was not sufficient to meet the expenses of a person who was the head of a family. Rana Tanvir said the prices of commodities at the Utility Stores had been increased without announcement of any policy by the government. 

Meanwhile, Minister for Religious Affairs Hamid Saeed Kazmi informed the house that the Saudi Arabian government had been requested to enhance the Haj quota for Pakistan to accommodate the maximum number of people. He said various complaints had been received against the Haj operators and assured the House that after proper investigations, action would be taken against those found guilty. 

The minister said that due to demolition of buildings around the Masjid-al-Haram, the Haj pilgrims, especially the aged, faced serious difficulties, including the transport problem. He said the Saudi government had also assured that it would remove difficulties regarding the provision of transport to the Haj pilgrims in Makkah next year. 

Minister for Commerce Makhdoom Amin Fahim informed the House that the country was expecting a bumper rice crop this year that would definitely result in reduction in its prices. Responding to a call attention notice regarding procurement of rice at high rates by the Trading Corporation, he said the government was making concerted efforts to enhance the agricultural yield, particularly food items, to provide relief to the common man. 

Regarding the high rates of rice, he informed the House that a committee had been formed to probe the matter and promised that appropriate action would be taken against those found guilty in this regard.


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## Neo

*Rs 11 bn allocated for Balochistan uplift ​* 
Wednesday, January 21, 2009

ISLAMABAD: The federal government has allocated a sum of Rs 11 billion for providing basic amenities to various areas of Balochistan, provincial Communication Minister Mir Sadiq Umrani said on Tuesday.

Talking to a TV channel, he said the federal government had also agreed to pay Rs 15 billion loan to Balochistan as during the last era, an overdraft of Rs 22 billion was taken. He said this would help end the sense of deprivation among the people of Balochistan. The cases against Sardar Akhtar Mengal and Nawab Khair Bukhsh Marri have already been withdrawn. Scores of people incarcerated during the Musharraf-led government have also been released from Balochistan jails, he said. He said 50 per cent share of income from all mega projects, including SANDAK, Mirani dam, Gwadar Port, Hubco Power Plant, Uch Power Plant, etc must be given to the Balochistan government.

The amount would be used to provide basic amenities to the people of Balochistan, he added.Terming Gwadar the gateway to the Central Asia, he said 11 ships, loaded with fertiliser, anchored at the Gwadar Port in only one week. As many as 700 trucks are moving daily to transport goods from the Gwadar Port to their destinations, he added


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## Neo

*Cellular subscribers growth reduces sharply in 1HFY09​*
KARACHI: Subscriber growth of cellular phone companies witnessed a sharp decline in the first half of current fiscal year 2008-09 compared with the corresponding period of previous fiscal.

This is an indication of saturation in the cellular phone market, as despite offering different attractive packages the operators have failed to attract customers.

The latest data released by Pakistan Telecom Authority (PTA) revealed that cellular firms have added only 0.581 million connections on their network during 1HFY09 against a growth of 11.2 million in 1HFY08.

The number of subscribers has reached 89.9 million by end of half fiscal year whereas it was 89.3 million at the beginning of the fiscal year in July 2008.

In the last two months, cellular phone user base has started shrinking in the country, posting negative growth despite falling calls rates and services. Around 0.618 million subscribers have become inactive by getting rid of their connections from the network of five cellular phone companies.

The mobile phone subscriber number was at its all time high in October 2008 with 90.52 million subscribers. The subscriber's rate is now witnessing a decreasing trend as the number of connections has reduced to 89.90 million by the end of December 2008, showing 0.7 percent decline in last two months.

Telecom analysts believe that cellular phone companies have captured the active chunk of Pakistani market that slightly slowed down their penetration in the big cities. However, companies have chalked out unique strategies to expand their service in small cities and villages of the country in order to attract more customers in their networks.

They added that economic slowdown, inflation coupled with the heavy tax burden on the services has diminished the affordability of using mobile services in the country.

In view of the country's population of around 160 million, the mobile phone teledensity has reached 55.80 by the end of December 2008, which was 56.20 in November 2008.

According to PTA, Mobilink was leading the market share with 28.47 million subscribers, followed by Telenor with 19.38 million subscribers just an edge up from Ufone having the preference of 19.30 million people.

Similarly, 16.91 million people are using the service of the UAE-based Warid by December 2008. Chinese mobile phone company, Zong posted healthy sales growth to reach a subscriber base of 5.5 million in the country.

Officials told Daily Times that the operators have regulated their sales and marketing of the product following strict actions taken by the authorities to raid the illegal franchises and sales centre.

The cellular operators have also blocked hundred thousand unverified and unregistered connections on the directives of regulators.


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## Neo

*Brainstorming continues for signing of Pak-US BIT​*
ISLAMABAD: Government of Pakistan has hired the services of a Swiss consultancy firm for analysing the Pak-US Bilateral Investment Treaty (BIT), Federal Minister for Investment, Waqar Ahmed Khan told Daily Times.

The Pakistan Peoples Party led coalition government has decided to obtain legal as well as expert opinion on the draft of the BIT. In this regard the draft has been handed over to Ministry of Law and Justice and private legal consultants (Swiss consultancy firm) so that its clauses are analysed keeping in view the international best practices, said the minister.

An effort was made to conclude BIT with outgoing Bush administration before January 20, 2009 but this effort did not matreialsed. Now Pakistan would negotiate BIT agreement with, Obama led US administration and a round of negotiation would be held between the two governments on an appropriate time in the near future, the minister said.

He dispelled the impression that signing of BIT with United States would be harmful for the economy and said that after settlement of few issues, this agreement would be beneficial for Pakistan.

Waqar Ahmed Khan informed that issues relating to arbitration and transparency clause needs to be resolved. In this regards, Pakistan has sought final comments from the United States so that the agreement is finalised by mutual consent. In a recent meeting with US Ambassador and US Commercial Attaché, the Ministry of Investment has also sought final opinion of US authorities. The present government wants BIT to be equally beneficial for both the countries, as this would be crucial for further negotiation regarding the Free Trade Agreement (FTA) with United States, the minister added.

Pakistan is of the view that signatory countries to BIT do not use any political influence or media campaign if any matter is referred for arbitration, the minister explained. Once the comments are received from US, this matter would be placed before the federal cabinet for formal approval, said Waqar Ahmed Khan.

It is pertinent to mention here that during the tenure of former President General Parvez Musharraf, there were some apprehensions in the government ministries over the signing of BIT with US due to which signing of this crucual agreement was cancelled during the visit of President Jorge W Bush to Pakistan.


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## Neo

*USAID interested in modernising agri sector​*
ISLAMABAD: USAID is interested in modernising the agriculture sector, as it has the potential to uplift the economy of Pakistan, country head of USAID, Ms Anne Aareson said on Monday. She expressed these views during a meeting with Federal Food and Agriculture Minister, Nazar Muhammad Gondal in his office. USAID is successfully working in Balochistan with the Ministry and in food deficient districts of FATA and NWFP with World Food Programme (WFO), Anne added.


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## Neo

*Security, circular debt critical issues: Zardari​* 
ISLAMABAD (January 20 2009): President Asif Ali Zardari on Monday asked the advisory panel of economists to chalk out economic policies for dealing with key issues of foreign investors' protection, circular debt and power shortage, ensuring optimum utilisation of domestic resources to meet short and long term economic goals.

The President, while describing the issue of hundreds of billion in circular debt and security for investors as critical issues, called for resolving these on priority basis for economic turnaround. Zardari was chairing a meeting here with the advisory panel of economists of the Planning Commission at the President House.

Advisory Panel Chairman Dr Hafeez A Pasha briefed the President on economic stabilisation of the country that was also attended by Finance Minister Shaukat Tarin, Minister for Commerce Makhdoom Amin Fahim, Minister for Food and Agriculture Nazar Muhammad Gondal, Minister for Investment Waqar Ahmad Khan, Minister for Information and Broadcasting Sherry Rehman and senior officials of relevant ministries besides members of the advisory panel.

Sources said that the panel suggested early end to the military operation in tribal areas to provide a favourable environment for investment, reduce dependency on foreign debt and explore indigenous revenue sources to achieve targets with accelerating efforts to market access to the developed countries for boosting the country's export.

Sources further said that the panel of economists also proposed to the President that the government should expedite implementation of the economic stabilisation plan for recovery of the economy. The Panel informed the President about the measures to cut down financing gap in the balance of payments in 2008-9.

The President said the first priority of the government was to fight militants to restore the writ of the government and also assure the investors that their investment would be safe and bring them high dividend. The President said stability of microeconomic indicators, overcoming energy shortage and providing social safety network to the country's poorest were major economic goals for ensuring national growth with a human face. The President asked the panel to suggest practical measures to generate employment in the country.

About energy situation, the President said fossil fuels were fast dwindling and there was need to develop alternate sources of energy to meet the growing demand. He said optimum utilisation of human resources was also important for steady growth and asked the panel to recommend both short and long term measures in this regard.

The President said he would like to get briefings on the macroeconomic stability framework more often from the advisory panel. Briefing the meeting, Dr Hafiz A Pasha outlined the principles of proposed stabilisation package. These principles, he said, emphasised mobilisation of domestic resources, protection to the poor, optimal utilisation of resources and adoption of an integrated strategy. He said the two-year stabilisation programme basically had to be a home-grown package, based on a strong social protection programme and independent of the quantum of external assistance.


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## Neo

*Easing budget deficit: World Bank wants government to collect Rs 30 billion revenue through PDL​* 
ISLAMABAD (January 20 2009): World Bank has asked the government to collect at least Rs 30 billion revenue through petroleum development levy (PDL) on petroleum products during the quarter (January-March) to achieve the revenue target and ease budget deficit.

Sources revealed to the Business Recorder on Monday that a meeting was held in the Finance Ministry on Saturday that was attended by the officials of the ministries of Finance and Petroleum and the World Bank. During the meeting, the World Bank argued that the price differential claims (PDC) should not be accumulated in future as they could cause circular debt problems.

Sources noted that the government was, at present, collecting Rs 15 billion per month PDL on petroleum products and if the current trend in oil prices continued in the coming months, the government would collect Rs 45 billion revenue through PDL from January-March 2009. The government, backed by the World Bank, had changed the oil pricing review mechanism from fortnight basis to monthly basis to enhance revenue collection through PDL on petroleum products, the sources added.

After the decline in the global oil prices, the government had imposed PDL for enhancing revenue collection on petroleum products. The PDL collection on petroleum products stood at Rs 18 billion during July-November 15, 2008.the government received Rs 33 billion PDL from November 15 to December 31 in line with record level reduction in global oil prices.

The government is currently charging Rs 28.15 per litre PDL on petrol, Rs 38.35 per litre on HOBC, Rs 12.95 per litre on kerosene oil and Rs 12.10 per litre PDL on light diesel oil. In addition to PDL collection, the government is charging Rs 7.95 per litre general sales tax (GST) on petrol, Rs 9.94 per litre on HOBC, Rs 7.15 per litre on kerosene oil and Rs 6.62 per litre GST on light diesel oil (LDO).

The present government paid Rs 165 billion PDC to the Oil Marketing Companies (OMCs) on the petroleum products that were pending. Such huge payment resulted in problems for the current government. These pending dues also caused the escalation of circular debt between the OMCs and oil refineries that created hurdles in smooth supply of fuel in the country. Sources said that the OMCs and oil refineries had also pressed the government that there should be no price differential claims in future.


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## Neo

*Netherlands to reinforce trade ties with Pakistan​* 
SIALKOT (January 20 2009): 'Strenuous efforts would be made for reinforcement of bilateral trade between Netherlands and Pakistan as both are enjoying very friendly and cordial relations since long and with the passage of time these ties would be further cemented.'

The Ambassador of the Kingdom of Netherlands to Pakistan, T Jeerd De Zwaan said. Addressing the members of Sialkot Chamber of Commerce and Industry (SCCI) on Monday, he said that Netherlands under the Co-operation Plan 2008-2011, would invest in the fields of education, water, sanitation and environment in Pakistan. The Netherlands was the third largest investor after the United Kingdom and United States of America in Pakistan, he revealed.

The Netherlands Ambassador further stated that buyers had become more conscious about the quality control and issues pertaining to labour and it is high time that business community of Pakistan should concentrate on these issues and ensure hurdle free exports to their foreign buyers.

The President SCCI, Hassan Ali Bhatti in his welcome address urged the need of further strengthening the bilateral trade ties between the two friendly countries. He also invited Dutch business tycoons to invest in the second biggest Export Processing Zone of Pakistan adding that the zone provides extraordinary facilities and benefits to both foreign and local investors.

Bhatti pointed out that there was unlimited scope of expanding trade ties between Pakistan and Netherlands and suggested active involvement of Netherlands Chambers, which could serve as resource for exchanging information about trade. He also viewed that exchange of trade delegations and holding of joint trade exhibitions would further help in promoting bilateral trade.

The SCCI Chief proposed that Centre for the Promotion of Import (CBI) should hold training course on export marketing at SCCI for providing tailorised training for the exporters. 'The SCCI would provide all necessary help and support for holding the training course,' he added. Earlier, the Ambassador visited surgical and sports industrial units of Sialkot.


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## Neo

*Rs 20 billion uplift projects for Islamabad planned: Babar​* 
ISLAMABAD (January 20 2009): Federal Government has planned mega development projects costing Rs 20 billion for infrastructure development in capital and its rural areas, said Baber Awan, Federal Minister for Parliamentary Affairs, here on Monday. The objectives of the projects are to facilitate people of Islamabad and adjacent rural areas by providing them high standard health, education, water, sanitation and other recreational facilities, he added.

He was addressing a public rally after inaugurating a bridge at Golra Sharif, a sub-urban area of the federal capital. He said that the government is ready to execute these mega projects this year and people will get benefits of these soon. He said that mega projects including hospitals and schools would start this year to facilitate the people of Islamabad and of the adjacent urban areas. He said that Golrra Sharif is an historic place and to maintain its glory, more developmental projects for health and education would be started very soon.

He said that there is full harmony and unanimity of views between President Asif Ali Zardari and Prime Minister Yusuf Raza Gillani on all matters. "People talking about any differences between these two top leaders are living in fools' paradise", he added. Regarding repealing 17th amendment, he said PPP is committed to uphold supremacy of constitution and rule of law and it will support the bills moved in Parliament to repeal the 17th Amendment.


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## Neo

*Denmark can help enhance Pakistan's energy capability: Envoy​*
KARACHI (January 20 2009): Denmark can help enhance the energy capabilities of Pakistan. The Ambassador of Denmark to Pakistan, Anders C Hougaard stated this. He was talking to APP at the Pakistan Institute of International Affairs (PIIA) on Monday. The Envoy said that Denmark has a very strong system of windmills and environmental technology called Green Tech and that they can help Pakistan enhance energy capabilities.

He further said that the Danish specialised companies could find agents in Pakistan to work directly towards enhancing Pakistan's energy capabilities. Hougaard further stated that ties between Denmark and Pakistan are excellent. 'We are very happy about the democratic development in Pakistan and happy that the February 2008 general elections took place in a dignified manner and also we are looking forward to co-operate with the democratic Pakistan in the years to come,' he remarked.

The Envoy pointed out that Denmark has strengthened its Embassy in Pakistan by upgrading it to ambassador level in September last year. The staff would be enhanced this year, he added.

Hougaard emphasised the need of enhancing the bilateral trade between Denmark and Pakistan saying that the existing trade figures are low. He said that he would focus on improving the trade ties between the two countries. Earlier, in an interactive session with the members of the PIIA, the Danish Envoy discussed international and regional issues and also explained the point of view of his government. The Consul of the Royal Danish Consulate General in Karachi, Naheed Irshaduddin was also present on the occasion.


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## Neo

*Can we defend our past economic performance?​* 
ARTICLE (January 19 2009): Is the Musharraf government responsible for much of the ills that plague Pakistan both in the field of economics as well as security today? And if so why, given the advent of democracy in the country, in however nascent a form, are key decision-making members of that era not being held accountable?

These are critical questions plaguing the people of this country as we struggle with high inflationary pressures, massive unscheduled load shedding of gas and electricity and last, but not least, the rise in suicide attacks with its prohibitive economic cost both in terms of human and asset destruction and its impact on foreign and local investment levels.

Musharraf defended his government's performance when he was allowed to come on state television to announce his resignation, a defence that left few convinced. He was strangely reticent about a well known fact, accepted by his numerous detractors that would have done much to absolve him of some of the blame: the unilateral decision he took to fully support the US led war on terror was not unconditional as is being alleged by his numerous detractors. But, instead, was conditional on unprecedented levels of foreign monetary support over the nine year period of his rule.

Much of this assistance was not subject to scrutiny. Take the case of the United States where half of the new money was provided through a post-9/11 Defense Department program known as Coalition Support Funds (CSF), that were not closely tracked by Congress. Pakistan's flood of CSF money made it the third largest recipient of all U.S. military aid and assistance in the three years after 9/11; and we trailed only Israel and Egypt. Before 9/11, Pakistan received less military aid and assistance from the U.S. than Estonia or Panama, largely because of punitive U.S. sanctions imposed as punishment for Pakistan's covert pursuit of a nuclear weapons program that culminated in the test in 1998 as well as the democracy deficit as a consequence of Musharraf's military coup. But unfortunately these massive amounts were not available for development purposes.

The US perceptions began to change by 2006. Senator Jack Reed, Democrat from Rhode Island, after his return from Pakistan in October 2006, noted in a report to fellow lawmakers that officials at the American embassy in Pakistan recommended changing the program "to paying for specific objectives that are planned and executed, rather than simply paying what the country bills." The trust hitherto extended to Pakistan under Musharraf had begun to erode.

Be that as it may post 9/11 Pakistan also witnessed a significant increase in the financial inflow for non-military sectors in comparison to previous years. This accounted for unprecedented growth levels in the country and, so allege critics, not to any major economic policy that was devised by Musharraf's factotum, commercial banker Shaukat Aziz, or, in turn, Aziz's gofer, Salman Shah.

As proof of their contention these critics allege that the former government ignored investing in the physical infrastructure of this country, notably energy that is the root cause of current public discontent as well as a significant decline in the country's manufacturing productivity. In this context Salman Shah's statement in a recently released article, reportedly much used by Shaukat Aziz in defence of his government's economic performance, that "while we should be on the right side of the world in the war on terror, the world should seriously help us in our endeavour to build a better economic future for our people" is inexplicable.

While supporting President Zardari's hectic foreign tours prior to going on the IMF programme with the stipulated objective of getting money from anywhere but the IMF, Shah writes that what Pakistan needs is a 'positive brand image' - spoken like an advertising man rather than a de facto finance minister of the former regime. He also maintains that during the former regime Pakistan had a strong brand image.

As proof positive he writes "investors favourably compared Pakistan to India, China and Vietnam. Every time we did a road show we were highly successful in our endeavours whether it was the OGDC flotation of UBL, GDR and Euro bonds or large privatizations, investors flocked to our offerings." He conveniently ignores three facts. One that the privatisation he boasts of was suspect in a number of cases and few, including the superior judiciary, believed that everything was above board. It is also relevant to note that with increasing US trust deficit in our commitment to the war on terror more money was generated through privatisation. Second there was no global recession then as at present which militates against privatising at present.

And finally he must also be aware of another disquieting fact: that portfolio investment is quick to make short term profit though it no way implies that one has sold a brand image successfully; and these speculators are just as quick to exit the country. This was the main grouse of South East Asian countries against speculators who they held responsible for the Asian financial crisis that left thousands homeless and destitute in its wake.

What is also disquieting is that Shah ignores the fact that the international financial institutions were supporting reforms in Vietnam, thereby increasing the share of concessional funding to the country - lending linked to performance - while Pakistan's share of concessional funding declined. He also ignores the fact that India has reached a level of development, unlike Pakistan, where it is no longer eligible for concessional funding from the IFIs.

The Musharraf era thus was marked by India and Pakistan no longer being comparable at any level and this was epitomised by George Bush's reference to different historic realities of the two countries when he refused to extend a nuclear deal similar to what he had offered the Indians. It is extremely unfortunate that our bureaucrats turned politicians refuse to admit mistakes and thereby learn lessons from the past.

Shah's ten point programme released after he left office is symptomatic of our past economic pundits: giving advice to their successors which they themselves did not follow.

These include (i) jump starting Kalabagh Dam, and if a dictator could not jump start it because of a lack of political consensus one wonders how he thinks a democratically elected government with no overall majority in the centre will succeed; he also proposes building dams to access cheap hydel electricity but fails to identify source of funding; (ii) the IMF prescription of tight fiscal policy and lower deficit even though Shah must be held accountable for large subsidies to the oil sector leading to the huge deficit; (iii) deregulate agricultural prices based on his assessment that agriculture commodity prices have moved in favour of farmers but, if followed, this would lead to higher inflationary pressure to be borne by the poor; (iv) he adds we should stop cribbing about the consumer economy thereby showing ignorance of basic economic theory namely that high domestic savings fuelling domestic investment are preferable to borrowing from abroad to invest as was evident during the Musharraf era; (v) he insists FBR must generate more revenue and he like his successors did not have the courage to take on the sacred cows; (vi) we must privatise to create a vibrant economy and continue to grow at 7 to 8 percent - amazing words given the global recession; (vii) development projects must be completed but with a depleted treasury that Shah must be held accountable for development expenditure had to be curtailed; (viii) deregulation and privatisation must continue, bold words that are not being followed by even the capitalist giants of our world due to recession; (ix) social safety nets must be made foolproof to protect the poor - also an IMF prescription; and (x) our bankers are second to none he maintains and urges that we must further increase the reach and competitiveness of the financial sector with microfinance playing a major role - a prescription much supported by development institutions.

Be that as it may Shah argued correctly in the article that inflation would begin to come down and that the oil bill will decline lessening pressure on our balance of payment position. In Shah's defence one has to stipulate that the article is dated and hence some of its conclusions not based on the current global and domestic economic scenario. Secondly he may also argue that there were several decisions he was forced to undertake by Musharraf.

That maybe true but the fact remains that he always had the option of resigning if he did not support coercive policy measures including heavy subsidisation of oil and products. His failure to do so reflects the fact that he gave greater weight to sustaining his own position than to the country.

Half a year down the line and almost a year since the time Musharraf had a vise like grip on all economic activity the government is continuing to struggle against the ills that plague the country. The question people are now beginning to ask is whether one must continue to blame these ills on the Musharraf era or can we reasonably hold the new government responsible? Prime Minister Gilani's statement delivered on the floor of the House categorically stated that he and his government must take full responsibility for what is happening in the country today.

With Asif Zardari's popularity rating at as low as 19 percent, lower than that of George Bush, the answer is that Pakistanis have begun to hold him personally responsible for the ills that beset us. Perhaps the factor most responsible for President Zardari's rating is that at least 40 percent of the energy crisis is attributed to a doubling of the inter-corporate debt during the current dispensation. Add this to the perception that nepotism and cronyism continues and one has the ingredients of disillusionment. It is time for a change from the past that must be made manifest through statements as well as not protecting the past managers.


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## Neo

*Per capita healthcare spending​*
EDITORIAL (January 19 2009): The State of the World's Children Report 2009, launched by Unicef's representative in Pakistan, Martin Nogwanja, provides a disturbing peep into the per capita healthcare spending in Pakistan, i.e. only $18 per annum, of which only $4 is spent by public sector.

While launching the report, Nogwanja has called on Pakistan to raise the per capita allocation to at least 45 dollars. However, according to Mogwanja, even the existing meagre allocation is not being properly utilised. Lack of equipment, absenteeism among the staff, and inadequate training have created a vicious circle which has further handicapped the system.

According to Nogwanja, mothers and children have been badly affected due to the worsening law and order situation in the country, which has further restricted their access to medical services, especially in NWFP and Fata. The statistical data provided in the Report portrays a very dismal picture of the state of the country's healthcare system. For instance, an estimated 216,000 new-born babies die annually in Pakistan before they reach the first month of their age, which represents 58 percent of deaths of children under five.

This means that there should be greater focus on post-natal specialised care. Pakistan has the eighth highest rate of new-born deaths, which makes it rank below only Afghanistan and Iraq among the Asian countries. Of every 1,000 live births, 53 infants would not survive their first month of life. Further, 94 out of every 1,000 Pakistani children die before the age of five years, while 78 of these children die before they are one year old. About 38 percent of the children under five in Balochistan are moderately or severely underweight and about 59 percent of rural Pakistanis do not have access to adequate sanitation facilities. Pakistan is one of the four countries where polio cases are still found.

Most of the deaths can be prevented through adoption of an integrated approach to mother and child healthcare, hygiene, nutrition and protection. Among the major reasons for death of new-borns is that mothers are not given proper medical care during pregnancy and childbirth, with lack of literacy, restricted access to medical services and low status of women in Pakistani society making things much worse. Early marriage of girls is said to be a major cause of premature births. A survey has shown that although there has been a decline in the number of teenage marriages in Pakistan, one out of six women, aged 15-19 is already married. Further, women in rural areas run twice the risk of dying of maternity-related complications than their urban counterparts.

Economic Survey for 2005-06 had acknowledged that Pakistan lagged far behind other countries in the region with regard to indicators on children, while Save the Children had reported that approximately one-third of the population lived in poverty in Pakistan, 70 million did not have access to healthcare, with children being the worst victims of this social sector disaster. The government policy of shifting healthcare responsibility to the private sector has meanwhile made healthcare increasingly expensive, thereby putting it out of financial reach of a majority of the Pakistanis, particularly women and children.

This is clearly a grave infringement of the rights of the child, as guaranteed under the UN Charter. Unicef's 2007 report on the State of the World's Children had ranked Pakistan 47th among 157 countries in terms of basic indicators for child welfare.

Incidentally, Pakistan had ratified the UN Convention on the Rights of the Child that includes access to quality healthcare, way back in 1990, and was one of the six initiators for holding the World Summit for Children the same year. It is also a signatory to such important international instruments as the Stockholm Declaration and Agenda for Action, the UN Millennium Development Goals, 2000 and various ILO conventions. Further, Articles 11(3), 379(e) and 3(1) of the Constitution of Pakistan have set specific parameters concerning welfare and protection of children, that includes provision of proper healthcare.

Pakistan should increase the per capita health spending to at least $45 per annum, as proposed by Unicef country representative Martin Nogwanja. Although the proposed increase does not amount to much, it will certainly make a big difference in provision of public sector healthcare. Secondly, the government should ensure that the funding is spent only on actual provision of healthcare, and is not diverted to meeting administrative expenditure etc. The government should ensure that the benefit of raise in per capita healthcare spending is translated into provision of better health services to the common citizens.


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## Neo

*Pakistan's textile sector crisis​*
EDITORIAL (January 18 2009): The president of Pakistan Economy Watch (PEW) has said in a statement that Pakistan's textile sector is fast losing its ability to compete in international market due to the prevailing energy crisis, which has resulted in closure of a record number of manufacturing units. The data quoted by him is indeed quite disturbing.

Volatile international cotton rates and the rising interest rates have delivered a hard blow to our textile sector, which accounts for 46 percent of the country's manufacturing sector, 11 percent of the GDP and generates 60 percent of Pakistan's foreign exchange earnings. Further, Pakistan's textile sector lags far behind in the growth as well.

The average annual growth of India's textile sector, for instance, is 11.6 percent, but in Pakistan it has averaged 3 to 3.5 percent. According to PEW chief, despite being the world's fourth largest producer of cotton, Pakistan has yet to introduce insect-resistant cotton varieties and take other measures for strengthening the textile sector.

For instance, Pakistan's primitive ginning units have the capacity to produce only 10 to 12 bales per hour, against the international standard of 60 to 65 bales. The PEW president has urged the government to provide the textile sector immediate "oxygen" of direct subsidies to enable it to survive in the highly competitive global environment.

Incidentally, the global demand for textiles, which stands at around $19 trillion, is growing at a rate of 2.5 percent per annum, in which Pakistan's share stands at less than one percent! This provides a measure of Pakistan's place in the global textile market.

Viewed in perspective, it is also reflective of the "performance" of our textile sector over the decades despite hefty subsidies and bailouts advanced to it by various governments. What has made things worse has been the phasing out in 2005 of special protection granted under WTO to textile and clothing sector, which had resulted in the opening up of export markets internationally, thereby further sharpening competition for our textile exports.

A closer look at the structural composition of Pakistan's textile sector will help put things in proper perspective with regard to PEW chief's demand for "oxygen" of more subsidies. The textile industry comprises a large-scale organised sector, and a highly fragmented small-scale (or cottage) sector.

The organized sector has integrated textile mills, ie, spinning units with shuttle-less looms etc. while the downstream industry comprising weaving, finishing, garment, and hosiery units, etc, fall in the unorganised sector. The country's textile sector is indeed facing numerous problems, including lack of adequate investment in R&D, the export houses' shortage of capacity to meet bulk orders, and the levy of high protective tariffs with a pronounced anti-export bias.

Its other handicaps include absence of a strategic plan, shortage of professional manpower, use of old plants and equipment, the high cost of operations, the multiplicity and a high rate of taxes, the high cost of financing, inferior quality and low productivity, lack of adequate marketing expertise and inadequate infrastructure.

All these factors have discouraged investment in this export-oriented industry, for which the industry magnates should share the blame, because they have traditionally demanded (and been provided) the cocoon of protectionism, which has seriously eroded the sector's competitiveness in international market.

Lack of requisite competitiveness in terms of adherence to the contracted product quality, largely driven by the profit motive, and their general failure to stick to delivery schedules are the other major reasons that have dented our textile exports.

(It will be recalled that Japan's ambassador in Pakistan had told business leaders at a Rawalpindi Chamber of Commerce and Industry meeting in 2006 that "Pakistani textile products have failed to compete with those of India and China. Hence India has been able to capture some of the textile market in Japan, which was previously held by Pakistan.")

As trade and industrial sectors are undergoing rapid transformation in compliance with the WTO guidelines, there is an urgent need for Pakistan to improve the quality of its textiles. Despite establishment of a separate Ministry of Textile, and the proposed "textile cities" the loss suffered by the sector is not only reflective of poor quality control, but also of the high input cost, and the exorbitant profit margin exacted by a majority of our textile exporters.

Two additional factors, ie, the current slump in international market and the Pakistani rupee slide have hit our textile exports. A third factor that has restricted growth of textile value addition is lack of adequate focus on fashion garments, which has become a multi-billion industry in the world. Pakistan has hitherto been mostly engaged in toll manufacturing for foreign buyers, which has restricted growth of the value-added in its textile sector.

This has also been responsible for our failure to develop our own brands, instead of copying foreign brands. Fortunately, Pakistan's textile sector still has the potential to increase its share in the global market if it concentrates not only on modernisation of infrastructure and machinery, but also on developing a skilled workforce.

The PEW president's call for immediate and proper government intervention to salvage this key sector of the economy will make sense only when the textile industry tycoons too come half way through to demonstrate their commitment to improving the sector's lot.

We propose that instead of extending more subsidies, the government should advance soft-term or interest-free conditional loans to the affected units, to allow them to develop greater sustainability. But first of all, the government should initiate urgent measures to ensure uninterrupted supply of power not only to textile sector, but also to all other sectors of the economy.


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## PakForce Unlimited

Talking about Denmark and Pakistan on wind energy few posts above.

*Pakistan, Turkey to work together on wind​*
ISLAMABAD, Pakistan, Jan. 20 (UPI) -- Longstanding allies Pakistan and Turkey will work together on wind power development.

Raja Pervaiz Ashraf, Pakistan's federal minister for water and power, and Murat Sungar Bursa, president of Turkish company Zorlu Enerji Ltd., signed the energy deal in Islamabad, Xinhua reports.

Zorlu Enerji Ltd. will establish a 50-megawatt wind farm in Pakistan, worth an estimated $120 million. The wind farm later will be expanded to 250 megawatts.

Ashraf said Pakistan and Turkey historically have enjoyed cooperative relations, and he expressed confidence that the agreement will pave the way for more foreign and private investment in the power sector.

Link: Pakistan, Turkey to work together on wind - UPI.com

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## Neo

*Pakistan-China Investment Zones, Special Industrial Zones: FBR notifies zero rated duty on capital equipment import​*
ISLAMABAD: The Federal Board of Revenue (FBR) here on Tuesday allowed sales tax and customs duty free import of capital equipment including plant, machinery, equipment and accessories for setting up industrial units in Pakistan-China Investment Zones and Special Industrial and Economic Zones.

Pakistan-China Investment Zones means special industrial zones located in the territory of Pakistan notified by the Board of Investment having not less than forty percent by approved Chinese investors.

Earlier the government was charging minimum import duty of 5 percent on the import of capital equipment including plant, machinery, equipment and accessories imported in industrial zones. From now onwards the import of capital equipment including plant, machinery, equipment and accessories would have zero percent sales tax and duty for these zones.

This decision has been taken due to the efforts made by the Federal Minister for Investment, Waqar Ahmed Khan who had approached the Economic Coordination Committee (ECC) of the Cabinet for formal approval of this incentive. Ministry of Investment hopes that with these incentives and other initiatives taken at federal and provincial levels the country would attract $20 billion foreign direct investment in next two fiscal years.

Pakistan-China Investment Zones: The Federal Government is pleased to direct that capital equipment shall be exempt from the whole of customs duty and sales tax if imported for the development of Pakistan-China Investment Zones and for establishing projects in these Zones, subject to the following conditions: locations and perimeters shall be notified by the Board of Investment of Investment Division; only such projects or joint ventures would be entitled to this exemption as are certified by the Board of Investment to have at least forty percent foreign equity from Chinese Companies; capital equipment imported for the zones will not be removed from the zones without the permission of the FBR within five years of their importation.

Special Industrial and Economic Zones: Capital equipment if not manufactured locally, shall be exempt from the whole of customs-duty and sales tax if imported for the development of projects in the Special Industrial and Economic Zones and for establishing projects in these Zones, subject to the following conditions: Locations and perimeters shall be notified by the Board of Investment of Investment Division; the benefit of this notification shall be admissible only for capital equipment and not for raw materials; in case of partial shipments of machinery and equipment for setting up a plant, the importer shall, at the time of arrival of first partial shipment, furnish complete details of the machinery, equipment and components required for the complete plant, duly supported by the contract, lay out plan and drawings.


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## Neo

*Short-term renewable energy policy extended​*
ISLAMABAD: Alternative Energy Development Board (AEDB) on Tuesday approved the extension of short-term renewable energy policy till December this year; this was decided in a meeting of AEDB Board of Directors chaired by Minister for Water and Power, Raja Pervez Ashraf.

The short-term policy was to be replaced by a more comprehensive medium-term policy, which is under the process of formulation.

The short term policy approved by the federal cabinet in December 2006 was meant for successful business and technology demonstration, appropriate regulatory framework, market and resource assessment, rural energy programme design, pilot testing of decentralised energy provision.

The board decided to approach provincial governments for provision of wasteland for bio-diesel plantation. Several private sector organisations have shown interest in bio-diesel production and have sought land for plantations. Bio-diesel can be extracted from sunflower, Canola, Mustard, Rapeseed, Soybean, Pongame (Sukh-Chaien) and Castor Seed.

It is estimated that the country can cut its import bill by Rs 80 billion if only 10 percent of the diesel consumed in the country (0.8 million tons) is switched to bio-diesel. The board also reviewed the progress on wind energy projects and directed that all bottlenecks in the expeditious completion of the projects be removed.

It was also decided that AEDB would carry out a survey in the areas proposed by the parliamentarians for rural electrification through solar energy. These schemes will be implemented on the criteria defined for rural electrification projects. The feasibility study will be submitted to the sponsors for arrangements of funds.


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## Neo

*France, Punjab to cooperate in agriculture sector: Shahbaz​*
** French ambassador offers technical assistance in environment, water treatment, solid waste management, livestock and dairy development​*
LAHORE: There is a wide scope of mutual interest between France and Punjab in livestock, dairy development, agriculture, and other sectors, Chief Minister (CM) Shahbaz Sharif said on Tuesday.

He was talking to French Ambassador to Pakistan Daniel Jouaneau during a meeting that was held to discuss matters of mutual interests and cooperation in various sectors.

Shahbaz said the Punjab government was paying full attention to waste management and the recycling of waste materials for energy generation. Negotiations were being held with a number of local and foreign companies in this regard, he added.

Agreement: Sharif said an agreement had been signed between the Punjab government and Beijing Environment Sanitation Engineering Group, under which the latter would provide advisory services regarding waste management and energy generation. The Chinese company would also provide experts, equipment and other facilities.

He said negotiations were underway with a French company for a water treatment plant. He said the Punjab government has provided a favourable atmosphere for foreign investment and possible facilities were being extended to entrepreneurs. He said local engineers could also be sent to France for joint ventures.

Jouaneau said he recently returned from France and the investors there had shown keen interest to invest in Pakistan. He said concrete steps would be taken for cooperation among various sectors between both the countries. He said Punjab was the biggest province of Pakistan and offered a wide range of investment opportunities.

Technical assistance: The ambassador also offered technical assistance in the sectors of environment, water treatment, solid waste management, livestock and dairy development. He said France was an agricultural country and had rich expertise in these sectors.

He said he had also visited and urged concerned universities to introduce farm management training courses in the province.

He said joint ventures launched between France and the Punjab government could promote trade and economic relations. Honorary Counsel General of France in Pakistan Ashiq Hussain Qureshi, Task Force Chairman Haroon Khawaja, former MNA Pervez Malik and his wife, Planning and Development chairman, LDA director general, Housing secretary and Commerce secretary were also present at the meeting.


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## Neo

*Japan to provide Pakistan $480m financial assistance ​* 
ISLAMABAD (January 21, 2009): Pakistan will receive $480 million in financial assistance from Japan during current fiscal year 2008-09.

Finance Advisor Shaukat Tarin lauded Japanese assistance in a meeting with Japan Ambassador Chihiro Atsumi. Tarin said Japan wants to assist Pakistan in major development projects.

He discussed economic stability and development projects with Atsumi. The economy has improved after loan given by International Monetary Fund, Tarin added.


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## Neo

*World Bank blocks assistance on low Pakistan's ratings​* 
ISLAMABAD (January 21 2009): The World Bank has blocked lending for two key loans, of at least $834 million, market-based loans due to the country's low credit ratings, an official said. "This project will be placed on hold until further notice", says a WB document about the national expressway project.

And, about $200 million National Trade Corridor (NTC) Improvement Program, the Bank document says: "Pending improvement of the macro-economic situation, this project will be put on hold until further notice". The WB is processing 12 loans of $1258 million for Pakistan, of which, most are of IBRD (WB) or market based, and only around $200 million is concessional credit from IDA--a subsidiary of WB.

"After Pakistan's rating went too low, there was no option with the bank to block its aid, which is based on costly market based IBRD loans, and these two loans suffered it directly", said the official. Another $300 million IDA facility of Poverty Reduction Strategy Credit (PRSC) is under process, which is likely to be approved before June 2009. Advisor to PM on Finance Shaukat Tarin is hopeful to get this credit during the current quarter.

Standard & Poor's had fixed Pakistan's sovereign rating at CCC-plus in December 2008, and Moody's set B2 negative rating in September 2008. The two direct loans, hit by this low ratings, are National Expressway $634 million IBRD loan, and NTC program loan.

The list of World Bank's projects in pipeline for Pakistan includes $100 million IBRD Higher Education Support Program; $50 IDA million Mineral Sector Technical Assistance; $26 million IDA Thar Coal and Power Technical Assistance; $124 million IBRD Rural Telecommunications and e-Service; $100 million IDA Second Sindh Structural Adjustment; $50 million IDA Support to Safety Nets; $634 million IBRD National Expressways; $25 million IDA Trade and Transport Facilitation II; $200 million IBRD National Trade Corridor Improvement Program; $100 million Punjab Large Cities Development Policy; $120 million Second Punjab Barrages Rehabilitation and Modernisation.


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## Neo

*Services sector faces deficit of $2.3 billion​* 
KARACHI (January 21 2009): The country has faced a deficit of 2.3 billion dollars in services sector mainly due to high payments of transportation, travel and finance during the first half of the current fiscal year 2009. Although, the deficit is some 30 percent less than the deficit faced in same period of last fiscal year 2008, in which services sector deficit stood at 3.29 billion dollars.

Central bank statistics revealed that overall Pakistan has earned 1.847 billion dollars on account of services sector exports against the imports of some 4.15 billion dollars during the first half of the current fiscal year, depicting a deficit of 2.303 billion dollars.

The imports went down whereas exports registered a positive growth during the first half. Imports of services sector have declined by 11 percent to 4.15 billion dollars in July-December of the current fiscal year as compared to imports of 4.687 billion dollars during the corresponding period of last fiscal year 2008.

Services sector exports have surged by 33 percent to 1.847 billion dollars in the first half of 2009 over the exports of 1.391 billion dollars in the same period of fiscal year 2008. Major contributor in services trade deficit was witnessed by transportation, travel, and financial services, as only transportation sector has contributed around 50 percent share in overall deficit faced by services sector during the first half.

Transportation sector has witnessed a deficit of some 1.3 billion dollars with import of 1.927 billion dollars and exports of some 590 million dollars during the July-December of fiscal year 2009. Similarly, some 633 million dollars deficit has been recorded in the travel services, as its imports stood at 745 million dollars against the export of 112 million dollars during the period.

Economists said that with government's efforts the services sector deficit is on the decline, which would also help to reduce the current account deficit. The declining trend in services sector deficit would also save the country's foreign reserves, they added. Economists said the country does not have any shipping line except the one flag carrier Pakistan National Shipping Corporation (PNSC).

Therefore exporters and importers are compelled to hire and pay to the international shipping lines, which resulted in the transportation deficit increasing gradually. However, they hoped that during current fiscal country's services deficit might be lower than last fiscal due to decline in imports and increase in exports.


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## Neo

*Government to facilitate investors: minister​*
ISLAMABAD (January 21 2009): The government is committed to support and facilitate domestic and foreign investors in all sectors and is endeavouring to resolve all sorts of bottlenecks. Syed Naveed Qamar Federal Minister for Privatisation stated this during a meeting with Abdul Rahim Al-Nooryani Chairman & Chief Executive Officer ETISALAT International Pakistan here Tuesday.

Syed Naveed Qamar said that Pakistan accorded equal treatment and level playing field for both local and foreign investors without any discrimination. Liberal investment policy included 100% foreign equity in all economic sectors, with attractive incentives, he added.

The Minister assured the Chairman Etisalat that all out efforts were being made on fast track basis to resolve the outstanding issues relating to Pakistan Telecommunication Company Limited (PTCL) The interest being shown by UAE investors in Pakistan economy and the privatisation activity reflected the close ties between the two brotherly countries, he stated.

Al-Nooryani appreciated the government's efforts in resolving the outstanding issues and expressed his satisfaction over the progress being made by PTCL after its privatisation He assured the Minister that PTCL would continue to further progress and contribute to the economy of Pakistan.


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## Neo

* 'Japan to continue supporting economic stabilisation'​*
ISLAMABAD (January 21 2009): Ambassador of Japan, Chihiro Atsumi called on the Advisor to the Prime Minister on Finance, Revenue, Economic Affairs and Statistics on Tuesday. He conveyed that the government of Japan will continue to support the economic stabilisation and development programme of the government of Pakistan.

The adviser shared with the ambassador the governments home grown economic policies and steps taken to mitigate the economic and budgetary challenges, which it inherited. He informed that the agreement with IMF was based on the home grown economic programme, fundamentals of which were laid down in the government's fiscal and monetary policies.

The adviser also appreciated the economic assistance equivalent to 480 million dollars during the previous year ie 2008 and also its willingness to provide funding for major infrastructure projects. The ambassador welcomed the scheduled visit of adviser to Japan next month, which will provide an opportunity to discuss increased economic assistance and business relations between the two governments


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## Neo

*ICCI President for attracting maximum Japanese investment​*
ISLAMABAD (January 21 2009): Pakistan is strategically located at a regional hub with abundant land and natural resources, strong human resources, large and growing domestic market which offers tremendous investment opportunities to countries like Japan. ICCI President Mian Shaukat Masud said this while talking to Pakistan Ambassador-designate to Japan Noor Muhammad Jadmani, who called on him at Islamabad Chamber of Commerce and Industry (ICCI).

"Therefore, Pakistan Embassy in Japan should gear up its efforts for luring Japanese investors to invest in different sectors of Pakistan's economy to reap tremendous benefits", he said. He added that current US $2 billion trade volume between Pakistan and Japan is much lower than it should be. He said Japan is still an unexplored territory for majority of our businessmen and Pakistan Embassy in Japan should play its due role in facilitating frequent exchange of business delegations between the two countries.

Mian Shaukat Masud stressed for the need of improving the approach of our embassy staff in Japan because experience shows that when our businessmen visit Japan on business tours, they don't get satisfactory response from our embassy staff in Japan.

He said that a one-window facility should be established in our embassy in Japan to facilitate Pakistanis in Japan. He hoped that new Ambassador designate to Japan would bring positive change in the behaviour of our staff.

He said that our trade commissions and embassy in Japan also lacks proper information about Pakistan, its economy, infrastructure, investment potential and Pakistani products. "Therefore, efforts should be made to update all information about Pakistan", he said adding that, Pakistani chambers and Pakistani products in Japan would greatly help to improve the trade volume.

He said a lot of the trade is happening indirectly between the two countries and emphasised for enhancing direct trade between Pakistan and Japan to get good benefits. He said many Japanese companies have established assembly plants in Malaysia, Vietnam and other places. He said our embassy in Japan should make efforts to attract these companies to Pakistan as Pakistan offers cheap labour and good investment opportunities.

Speaking on the occasion, Noor Muhammad Jadmani, Ambassador designate to Japan thanked ICCI President and other businessmen for giving useful suggestions to improve the working of Pakistan Embassy in Japan and to enhance trade relations with Japan.

He assured them that he would take all possible steps to facilitate Pakistani businessmen in enhancing bilateral trade with Japan. He said his purpose of meeting with businessmen before going to Japan was to get their input for improving Pak-Japan business relations.

He said efforts were already afoot by Pak-Japan Business Council to enhance trade relations. He said Pakistan Embassy in Japan will also take all necessary measures to enhance direct interaction between the business communities of the two countries so that they could explore areas of common interest to boost business ties. He assured local business community of his full co-operation on their business visits to Japan.


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## Neo

*PCA censures government for neglecting IT sector​*
ISLAMABAD: Pakistan Computer Association (PCA) has expressed serious concern over government's attitude towards the Ministry of Information Technology where ministry is working without portfolio of IT minister. The issue came to the light during a meeting of PCA, which was shocked over the new government polices on IT sector, reflecting serious negative implications for the entire IT industry.

According to an announcement made by the PCA here on Wednesday, Munwar Iqbal, President PCA has regretted that IT sector in Pakistan was being neglected despite the fact that its importance as the backbone of economy is being acknowledged at universal level. He termed the fact highly ironical that none among huge Federal Cabinet has been assigned for the portfolio of IT ministry.


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## Neo

*Export duty removal by India to hit Pakistani basmati exports​* 
KARACHI (January 21 2009): Pakistan's rice exports could be affected badly as India on Tuesday abolished $200 per ton export duty on basmati rice, imposed last year, local exporters said. They said the Indian government took this decision under pressure of its exporters and to promote its rice exports.

"Actually, it is a move of our biggest competitor to capture major international markets of this commodity", they added. They said that after this decision, Indian basmati rice would be available at much lower prices, and Pakistani exporters would not be able to compete in the international market.

Abdul Rahim Janoo, Chairman of Rice Exporters Association of Pakistan (Reap), told Business Recorder on Tuesday that the Indian basmati rice was being traded at $1250 per ton in international market against $1200 per ton of Pakistani rice.

He said that after this decision, Indian basmati rice would be available at $1050 per ton, $150 per ton lower than Pakistani rice price in international market. He said that the recent increase in rice prices in the local market was mainly due to intervention of public sector institutions, including TCP and Passco in the rice trade.

He said that the private sector of the country had played a major role in increasing rice exports from $300 million in 1989 to $2.2 billion last year. Now, Pakistan has become third largest rice exporter in the world, after Thailand and Vietnam, during last six months' period with record exports of $1.18 billion.

On the other hand, Janoo said, rice exports declined by 23 percent in December 2008 afterintervention of public sector institutions in this trade. He said that the price of basmati rice has increased by 20 percent while the price of non-basmati variety has increased by 30 percent in the local market.

He demanded that the government should take immediate supportive measures to promote the country's second largest foreign exchange earning export. "At least the government should listen to our point of view to save the country's rice exports", he added.


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## Neo

*Early signs of improvement in current account deficit​*
EDITORIAL (January 21 2009): The deteriorating trend in the country's current account deficit witnessed for the last few years seems to have been finally arrested. According to the latest data released by the State Bank, Pakistan's current account deficit declined significantly by 43 percent during December, 2008 due mainly to reduction in global commodity prices.

In dollar terms, it fell from dollar 800 million in November, 2008 to dollar 458 million in the subsequent month, indicating a fall of dollar 342 million. However, overall current account deficit during the first half of FY09 amounted to dollar 7.269 billion compared to dollar 6.053 billion in the same period of 2007-08, showing an increase of 20 percent due to comparatively higher deficit in the earlier months of the current fiscal year.

With export receipts of dollar 10.04 billion and import payments of dollar 17.65 billion, the country's merchandise account deficit widened to dollar 7.613 billion compared with dollar 6.23 billion in the corresponding period of last year while services sector showed a significant improvement, with its deficit narrowing to dollar 2.303 billion from dollar 3.296 billion during July-December, 2007.

Income deficit stood at dollar 2.365 billion, as income from abroad stood at dollar 569 million as compared to payments of dollar 2.934 million during the first half of 2008-09. However, it needs to be noted that trade data released by the FBR is generally at variance with the merchandise account statistics compiled by the State Bank due to difference in timing, coverage etc and current account of the country does not include capital and certain other receipts.

That is why, despite a deficit of dollar 458 million in current account, dollar 708 million were added to foreign exchange reserves of the country in December, 2008 as against the utilisation of dollar 492 million in the previous month.

A positive turn in the current account deficit during December, 2008 is a welcome development and would indeed provide a great deal of relief to the policy makers of the country. The current account position of the country, it may be recalled, had slipped into red in 2004-05 after posting a surplus in the previous three years and was worsening continuously since then.

The situation was so bad in 2007-08 that current account deficit widened to about $14 billion or 8.5 percent of GDP which, by all indications, was unsustainable. The initial months of 2008-09 witnessed accentuation of this trend with the result that the country started losing its foreign exchange reserves very rapidly and the rupee rate came under intense pressure.

Realising that the country could default on its foreign exchange payment obligations, Pakistani authorities were finally forced to seek assistance from the IMF by entering into a Stand-By Arrangement in November, 2008. The programme with the Fund envisages the current account deficit to narrow to $10.6 billion or about 6.5 percent of GDP during 2008-09. If the latest trend continues, the country could expect to achieve this target comfortably.

Although exogenous factors like a sharp decline in international oil prices have certainly helped to reduce the import bill, consistent efforts by the Pakistani authorities to restrain import demand through tightening of monetary policy and imposing of 100 percent of cash margin on non-essential imports have also slowed down the flow of imports into the country. Nonetheless, it needs to be noted that the latest reduction in external sector deficit is attributable mainly to the reduction in imports rather than the expansion in exports.

The recent slowdown in exports is a cause of concern due to its negative impact on business activity and employment situation in the country. Be that as it may, the latest improvement in current account deficit could go a long way in stabilising the rupee rate, bolstering the foreign exchange reserves and eliminating the insolvency threat to the country. Besides, it could indirectly contribute to enhance the confidence level of foreign investors and soften the inflationary pressures in the economy by augmenting supplies of various commodities in the country.


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## Neo

*Pakistans food, oil import bill balloons to $8.09bn ​*Mubarak Zeb Khan 

Wednesday, 21 Jan, 2009

ISLAMABAD: Pakistans food and oil import bill ballooned to a record $8.099 billion in the first half of the current fiscal year, a 38.5 per cent increase over last years $5.847 billion, despite a decline in prices of oil and foodgrains in the international market.
The crude price dipped by more than 70 per cent to under $40 per barrel recently, after hitting an all-time high of over $146 in July last year, but Pakistans oil import bill still rose because of a massive depreciation of rupee.
With the increased cost of imports of food and oil, the share of these products edged up to 42.3 per cent of the total import bill during the July-December period of the current fiscal year from 34.4 per cent last year, putting more pressure on the countrys balance of payment.
Official figures compiled by the Federal Bureau of Statistics (FBS) show that the import value of oil increased to $5.881 billion in July-Dec from $4.242 billion over the same period last year, an increase of 38.62 per cent.Though the overall oil bill increased but a drop of 14.38 per cent was noticed in December last year, the third straight monthly decline.
The figures show that the reduction in oil import bill in December followed steep cuts in the import of petroleum products which may be attributed to a dip in demand because of economic slowdown. However, the crude import edged up by 104 per cent during the months under review.
The second biggest component in the import bill was food commodities which reached $2.218 billion in the first half of the current fiscal year, an increase of 38.19 per cent over last years $1.605 billion.
This increase has been attributed to massive import of wheat worth $734.015 million, followed by $721.267 million of palm oil and $427.649 million of other goods.
The depreciation of rupee and imposition of additional customs duty have lowered the imports only of the transport group by more than 46.35 per cent. This decline has been recorded across the board in both complete built units (CBU) and CKD/SKD vehicles.
Another sector which recorded a decline in import bill because of the government measures was telecommunication (mobile phones and machinery). In this sector, the value of import declined by 45 per cent.
A trend of increase in the import bill of machinery and agricultural products was witnessed during the months under review. The machinery import was up by 6.19 per cent to $3.449 billion against last years $3.248 billion.
The machinery import bill was up because of 108 per cent increase in the import cost of power generating machinery followed by 51.61 per cent in construction machinery and 22.89 per cent in electrical machinery.
Similarly, the import bill of agriculture sector was up by 3.90 per cent to $2.838 billion against $2.731 billion last year.


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## Neo

*SBP to provide 1-year moratorium on loans ​* 
Thursday, January 22, 2009

KARACHI: The State Bank of Pakistan (SBP) has agreed to provide a 12-month moratorium on long-term loans to textile industrialists.

This will allow the industrialists breathing space without paying principal amount of loans to banks for one year at the time of global recession.

State Bank governor assured the federal adviser on textiles that banks were ready for a loan moratorium, and the adviser was in a meeting with Prime Minister Yousuf Raza Gilani in Islamabad on Wednesday.

Adviser to the PM on Textile Industry Dr Mirza Ikhtiar Baig told The News that the 12-month moratorium would help the industrialists, who were facing big problems after an increase in mark-up. The meeting continued for half an hour.

Dr Baig said he requested the prime minister for some immediate relief for the textile sector, especially a moratorium on payment of principal amount of long-term loans and reduction in mark-up.

He also apprised the prime minister of his meeting with the State Bank governor on these issues.

During the meeting, the prime minister called the SBP governor, who after conversation with the PM informed the textile adviser that he had met with presidents of major banks regarding moratorium on payment of long-term loans for one year.

The governor told Dr Baig that banks were willing to ease long-term loan installments. We asked for a moratorium for 18 months but the governor agreed on 12 months, the adviser said.

The governor did not give any statement to cut the mark-up but said that due to substantial inflow of funds the liquidity of banks had improved considerably which would bring down mark-up automatically in the near future.

Dr Baig asked the governor to take up the matter with Secretary Finance, Islamabad, regarding payment of R&D claims on shipments made up to June 30, 2008 and three per cent interest disbursement to the spinning sector by the SBP and the finance ministry had assured it would send instructions for payment on both accounts within three to four days.

Talking to The News, he said that the prime minister wanted to bail out the textile industry and said that the problems of the industry would be taken on priority basis.


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## Neo

*Industrialists seek infrastructure ​* 
Thursday, January 22, 2009

KARACHI: Industrialists from different parts of the country have welcomed Punjab governments plan to establish an industrial estate on the motorway in Faisalabad.

However, they demand the government to provide basic infrastructure to the present industrial estates as well.

The Punjab government recently launched the first industrial project on a motorway at Sahianwala Interchange M3 Faisalabad, and claimed it is the largest industrial estate of the country. It is a project of Faisalabad Industrial Estate Development and Management Company (FIEDMC).

SITE Association of Industry (SAI), Karachi, Chairman, Engg M A Jabbar, commented on the Faisalabad industrial estate, we take this decision positively for the industry, as this would help increase competition between provincial governments for industrialisation, adding that industrialisation always creates employment.

Though Punjab is a little late in launching industrial projects like Sunder and others, it is commendable that it is pursuing industrialisation and setting an example for other provincial governments. It is also a learning opportunity for the Sindh government, he said.

It is beyond any doubt that the industry in Pakistan is in severe crisis and is desperately waiting for the government to take immediate steps, he added.

At the same time, some industrialists have different views on the Faisalabad Industrial Estate. All Pakistan Textile Association (APTA) Chairman, Adil Mehmood, said that there were plenty of industrial estates in the country and it is better to improve them first instead of making new industrial zones.

He was of the view that new industrial zones require a healthy amount for infrastructure which should be used on the present industrial zones that needed infrastructural development so that we increase our industrial output immediately.

Another industrialist said, Our industrial production is badly shattered by the present energy crisis and industries are closing down throughout the country, for which the government has to do something immediately before it is too late.

Haji Muhammad Asaf, Ex-President, Sharhad Chamber of Commerce and Industry told The News from Peshawar that Faisalabad Industrial Estate is good news for the business community of the country. We welcome this because this would help the economy of Pakistan grow, and we want to see a progressive Pakistan, he said.

As a matter of fact, he said, industrialists are moving from NWFP to Punjab because of better prospects. Overall the industry in Pakistan is in problems, but the nature and intensity of problems are different. For instance, the biggest hurdle for businesses in NWFP unlike Punjab is not the power crisis, but the law and order situation.

In Karachi the situation is similar to Peshawar, which is deteriorating law and order. The problem we see is that new investment is not coming in this part of the country, surely an alarming picture for the government.

Fortunately, the present Chief Minister of Punjab, Shahbaz Sharif is himself a businessman and he knows the importance of an industry for a strong economy, he observed.

Korangi Association of Trade and Industry (KATI), Karachi, Chairman, Mian Zahid Hussain, said that industry in the country is badly hit by the energy crisis.

He said that in the first six months of the current fiscal year, our export and revenue targets have been met, but it seems difficult in the second half because of a variety of reasons including power shortage, high mark-up rates and cost of production and deteriorating law and order.


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## Neo

*Govt to conduct door to door survey to identify poor ​* 
Thursday, January 22, 2009

ISLAMABAD: In order to remove objections raised by the IMF and World Bank, the government has approved the launch of a Poverty Score Card pilot survey in poorest 25 districts of the country from next month for identifying deserving people to get Rs1,000 instalment under the Benazir Income Support Programme, it is learnt.

For the first time in the countrys history, the government is going to launch such a survey for identifying the poor by going door to door. Earlier, the previous governments had done sample surveys only to get an idea about people living below the poverty line.

Under the approved Poverty Score Card survey, various kinds of questions would be asked such as qualification, assets, employment, having passports or identity cards, childrens education, etc and no one would be able to assess himself or herself whether he or she would qualify for the BISP or not.

This is a scientific method to identify poor, said the sources ad added that the BISP would bear the cost of that exercise all over the country.

This pilot survey will be rolled out throughout Pakistan which will enable the government to select 3.4 million households living below the poverty line. The roll out exercise will be done probably by the next financial year in consultation with the Federal Bureau of Statistics (FBS) and it will cover over 6,000 union councils of the country. 

The targeted household number will be jacked up to 6 to 7 million household from the next financial year, added the sources.

The WB, the sources said, has asked Pakistan to come up with transparent targeted group for providing assistance under the BISP. There were some concerns expressed by the donors when the government decided to involve MNAs into the BISP as they objected on getting any political mileage out of this program which should be meant to help out real poor.

When Chairperson of the BISP, Farzana Raja was contacted by this scribe to get her comments, she confirmed that that the Prime Minister Syed Yousuf Raza Gilani has formally approved the pilot project for launching Poverty Score Card survey by the next months in poorest 15 to 25 districts of the country, having representation of all four provinces as well as AJK and Northern Areas.

This is internationally recognized way to select the targeted poorest of the poor segments of the society for which the donors such as WB, UK based DFID and local stakeholders PPAF, NRSP are fully providing their expertise to complete this gigantic task, she added.

She concluded that when the BISP was launched the most difficult thing before us was identification of poor and this survey would help to get accurate data about poor, which would be done first time in history of Pakistan.


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## Neo

*Korean investors interested in power sector​*
ISLAMABAD: A consortium of Korean Investors comprising major power generation companies namely Bin Daen, kepco, doosan, pedco and deloitte called on Prime Minister, Syed Yusuf Raza Gilani at his chamber at the Parliament House on Wednesday. 

Welcoming the Korean delegation the Prime Minister said that Pakistans coal deposits exceeds 180 billion tonnes and the government is taking concrete steps to exploit them at fast pace in order to meet the growing energy needs of the country. He said that the government of Pakistan is laying great emphasis on the speedy development of power sector and offers lucrative incentives to foreign investors through one-window operations. He especially referred to the 1994 Private Sector Policy and said that more than half of the current IPPs are the result of that policy, which was formulated during the second tenure of the Peoples Party Government. 

The delegation expressed keen interest to invest in coal mining and coal based power generation in Sonda Jherrak and Thar coal field in Pakistan.

The Korean delegation informed the Prime Minister that they are deeply interested in setting up 1000MW power plant each at Sonda and Thar. They also apprised that they would make this investment based on 100 percent equity with no borrowing from banks or financial institutions. 

The Prime Minister thanked the delegation for showing keen interest in making investment in Pakistans power sector and assured them of the governments full support and assistance in this regard.

The Korean delegation intends to meet the Chief Minister Sindh in the coming days.


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## Neo

*World Bank to provide $2.1bn by FY09 end ​*
ISLAMABAD: The World Bank and government of Pakistan are jointly working to finalise commitment of the World Bank for development projects in the country amounting $2.107 billion by the end of the current financial year. 

This includes an amount of $800 million in the shape of budgetary support to be provided for three programmesPoverty Reduction Support Credit (PRSC), Higher Education Support Programme (HESP) and Social Protection/ Safety Net Development Policy Credit. An amount of $1.307 billion is proposed to be committed for different projects for education, safety nets, governance, health and National Trade Corridor Improvement Programme. 

World Banks missions on PRSC and Social Protection are currently visiting Pakistan and were holding discussions with different ministries and departments of the Government of Pakistan for the preparation of these programmes. Another mission of the bank on the HESP would visit Pakistan in the next week to discuss the modalities of the programme. The funding for all these support programmes is scheduled for disbursement in the last quarter of the current financial year. 

The Bank and the Government of Pakistan would also be finalising the country assistance strategy for the next three years for carrying out development programmes and projects in the country. The proposed projects of National Expressways and National Trade Corridor Improvement Programme would be funded by the bank once the preparation formalities are carried out in different ministries and departments of the government. Both the programmes are part of the overall National Trade Corridor Improvement Programme in which the ADB has committed assistance of $900 million.

The National Trade Corridor Improvement Programme is a comprehensive initiative of the Government of Pakistan to reduce the cost of trade by improving National Transport Logistics and Services. The programme envisages improvements in various sectors like highways, railways, customs trucking and road freight industry. The Bank would be providing $25 million to the government of Pakistan during the current financial year, as technical assistance for the implementation of National Trade Corridor Improvement Programme once the process of the project formulation was completed within the Bank. The impression in the media that the National Trade Corridor Improvement Programme and the National Expressways projects are on hold or blocked by the Bank is not based on complete information.


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## Neo

*Performance during July-November 08: Industrial growth paints worrying picture, declines by 5.57 percent​*
KARACHI: The industrial growth remained gloomy during the first five months of current fiscal year as it declined 5.57 percent over the corresponding period of previous year.

During the month of November of current fiscal, it fell by 7.53 percent over the same period of previous year, Federal Bureau of Statistics reported on Wednesday.

The falling industrial output has been caused by a host of factors. Most obvious ones are frequent power outages, deteriorating law and order situation, depreciation of rupee against the dollar and high interest rates during the period under review.

The global financial meltdown also left its scars on the local industrial sector to some extent, as the export sector is the worst hit by the slackening demand in the western countries. Production in the seven sub-sectors, which include auto, textile, and metal industries, contributing 72.4 percent of weight to the LSM, remained under pressure. 

The LSM sector had shown robust growth during the last four financial years (FY04-08), when it grew by an annual average of 12 percent. However, growth in 2007-08 tapered off significantly, dropping by 380 basis points YoY to settle at 4.8 percent. Structural issues like energy shortage, poor performance of agri sector particularly the cotton crop (9.3 percent YoY drop in production to 11.7 million bales) hit the textile sector's performance. Overall slackening of demand on both the export front and domestic consumption amid global slowdown and high inflation contributed significantly to the decline in industrial growth.

Analysts said that industrial growth would remain subdued in the short-term due to high interest rates, slowdown in domestic as well as export growth, political haziness on both the international and domestic front, and structural issues especially due to the ongoing power crisis.

However, with decline in the interest rates LSM growth may regain momentum, they believed.

In petroleum sector, production of Jet fuel oil declined by 12.59 percent, kerosene oil 5.67 percent, diesel oil 29.09 percent, LPG 18.36 percent, High-speed diesel 1.71 percent, furnace oil 10.32 percent, lubricating oil 8.64 percent while motor spirits production remained flat during the first five month of current fiscal. 

In the food sector, vegetable ghee production declined by 13.83 percent, cooking oil 4.05 percent, wheat and grain milling 11.19 percent, beverage 7.73 percent, tea blended and starch & its products rose by 6.49 and 17.08 percent, respectively. Among the electrical items, refrigerators recorded a negative growth of 0.23 percent, deep freezers 26.02 percent, electric bulb 22.91 percent, electric tubes 16.68 percent, electric motors 24.00 percent, electric meters 17.93 percent and transformers 0.14 percent.

Production of air-conditioners went down by 10.52 percent, electric fans 2.63 percent, switch-gears 3.59 percent, TV sets 30.53 percent and bicycles 12.25 percent. Production of paper and board also dropped by 2.70 whereas production of cement remained flat. The production of coke (Pakistan Steel) increased 48.23 percent. Production of jeep and cars were down by 44.37 percent, motorcycles 13.74 percent, and trucks 11.62 percent during July-November of this fiscal.


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## Neo

*Marble exports rise to $17.6m in Jul-Nov 2008​*
** Great potential to achieve exports worth $1 billion in 5 years​*
KARACHI: The exports of marble sector registered an increase of $8 million during July-November 2008, All Pakistan Marble Mining Processing Industry and Exporters Association (APMMPIEA) said Wednesday.

The exports touched $17.6 million during July-November 2008 as compared with $9.6 million during the same period last year.

Former chairman APMMPIEA, Sanaullah Khan said the export target for 2008-09 has been fixed at $35 million and under such a situation the need of Marble City was imminent.

He said during a meeting with Sindh Minister for Commerce and Industry, Rauf Siddiqui, the minister assured him of an early resolution of the issue and start of Marble City project on war footing basis.

He said after setting up of Marble City, the marble exports would enhance to $2.5 billion in the next 10 years.

Under vision 2016, in Marble City the number of industrial units would be increased up to 5,000, he added. 

Pakistan has a great chance of marble export as Saudi Arabia is also one of the top 10 globally competitive investment destinations and has initiated the development of major new cities in the Kingdom.

He said around $260 billion is the total estimate of the new cities project in Saudi Arabia, which is expected to start by the year-end and they are interested in Pakistans fine marble.

He said the government has approved Karachi Marble Citys proposal submitted by APMMPIEA and around 350 acres of land on Northern Bypass has already been allocated for this project.

Khan said federal government has already sanctioned funds for the development of Marble City, but due to delay on one pretext to another, the project has been in the doldrums.

He said the PC-1 of this project has already been approved in June 2007.

To compete with world marble industry, he said the stakeholders demanded of the government to facilitate the marble and granite sector. Such facilities would also help the government in achieving full benefits from the available potential of the marble and granite sector. 

Pakistani marble is of excellent quality and its products could compete with any other countys products. 

He said the global trade in marble and granite was estimated at $43 billion a year while Pakistan remained a marginal market player and with improvement in its infrastructure and technology, this sector had the potential to play a far more important role in increasing exports. 

He said there was no problem of quantity but Pakistan was facing problems of quality and value addition as the country has poor infrastructure and no modern machinery and technology to cater the demand.

He said frequent load shedding and power outages were proving the biggest hurdle in the smooth performance of marble industry and emphasised that government should provide a favourable load shedding schedule to marble industry so that they could adjust their production without facing much problems. 

He said Saudi Arabia is to build worlds tallest building at around 1,000 metres, new town planned for Jeddah, Emaar in venture to develop $7 billion Saudi project, besides $120 million for Saudi port improvement and start date set for new $40 billion Saudi city. 

More than 285 civil construction projects worth in excess of $260 billion are currently underway or in design in Saudi Arabia, the sleeping giant of the Arabian Gulf real estate market, according to the latest analysis.


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## Neo

*UAE agrees to initiate Khalifa Point refinery project ​* 
ISLAMABAD (January 22 2009): The United Arab Emirates (UAE) government has agreed to initiate $5 billion Khalifa Point oil refinery project in Balochistan. This positive note to initiate the project from the UAE government came during dialogue on Monday in UAE between UAE government officials and a delegation led by Advisor to Prime Minister on Petroleum and Natural Resources Dr Asim Hussain.

The Abu Dhabi government-owned International Petroleum Investment Company (IPIC) Chief Executive Officer (CEO) had announced on January 10 that it had delayed plans to set up the refinery in Pakistan and was reviewing its Fujairah refinery project. He told newsmen that its board had approved last year plans to build a 4 5 billion refinery in Pakistan with refining capacity of 250,000 barrels of oil per day (bpd).

Dr Asim told Business Recorder that IPIC had agreed, in principle, to initiate the project, and its board of directors would hold a meeting next month. The issue of establishing Khalifa Point oil refinery would be tabled before the board. He said that a delegation would again visit UAE after the meeting of board of directors next month.


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## Al-zakir

Pakistans first parking plaza to go operational in one month: Nazim 

This news caught me off guard and little surprise by this but congratulation to Nazim and people of pakistan.

Updated at: 2109 PST, Thursday, January 22, 2009
KARACHI: The country's first parking plaza in Saddar here would start operation within a month's time.

This was announced in a statement of the City District Government Karachi (CDGK) here on Thursday.

It further stated that the CDGK has completed the arrangements for the parking.

The seven storey facility has been constructed at a cost of Rs.700 million. It has a capacity of 800 cars and 300 motorcycles.

The Nazim of Karachi, Syed Mustafa Kamal, visited the parking plaza on Thursday and said that this is the first parking plaza in the country.

Apart from parking this plaza has offices as well as the shopping centre.

The Nazim Karachi said that scanning machines and latest cameras have been installed at the parking plaza for monitoring.

Pakistans first parking plaza to go operational in one month: Nazim - GEO.tv


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## Neo

*11 percent decline in foreign investors' repatriation of profit​* 
KARACHI (January 22 2009): Repatriation of profit and dividend by foreign investors has begun to move downward due to slackness in the economy and it registered significantly decline of 11 percent during first half of the current fiscal year. "The huge dip in repatriation of profit showed that the earnings of local and foreign companies operating in Pakistan were declining due to global economic slowdown," analysts said.

They said that Pakistan government has allowed 100 percent repatriation of profit to foreign investors. Therefore, they are enjoying fully the government policy by transferring their profit back. However, at present it is showing a negative trend due to global financial crisis, they added. Repatriation of profit by foreign investors witnessed a decline of $46 million during the July-December.

With this decline, the overall repatriation amount stood at $445.1 million during first half of current fiscal year as compared to $501.1 million of last year, depicting a decrease of 11.2 percent. During this period foreign investors sent $354.3 million on account of return on foreign direct investment (FDI) and $90.8 million on account of return on foreign private investment (FPI).

Out of 36 sectors, only nine sectors showed increase in repatriation amount, while remaining depicted downward trend. Major part of repatriation amount was $114.9 million in power sector, against $101.8 million of last year, depicting an increase of 13 percent.

Petroleum refining sector was second, where foreign investors sent $67 million as compared to $48.2 million of 2007-08, showing an increase of 39 percent. Repatriation from communication sector declined by 72 percent to $23.8 million from $84.3 million. Three sectors--food packing, leather and heavy transport--presented 100 percent decline in repatriation amount during the period under review.

State Bank statistics show that foreign investors sent profit worth $32.9 million from financial sector, $33.5 million from trade sector, $18.3 million from food and $9.8 million from chemicals sector. Beverages sector sent $24.4 million profit, tobacco & cigarettes sector sent $15.1 million and fertiliser sector sent $3.9 million.


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## Neo

*'Pakistan needs to project true image among foreign investors'​* 
LAHORE (January 22 2009): 'Pakistan would have to take concrete and result-oriented measures to project itself as a stable economy and a peaceful country if it wants to attract foreign investment.' The Ambassador of the Netherlands, Tjreed F de Zwaan said on Wednesday.

Speaking to the office bearers of the Lahore Chamber of Commerce and Industry (LCCI) the Dutch envoy said that Pakistan could benefit from its ideal strategic location provided it improves its image and the government gives impression to foreign investors that it has the ability to tackle the issues prudently. The honorary consul of the Netherlands in Lahore, Tariq Rehman was also present on the occasion.

Zwaan said that that both the governments and the private sector would have to work hand in hand to stabilise the economy of this resource-rich country. He also highlighted the salient features of the Netherlands economy saying that both the sides should exchange delegations, which is a prerequisite of creating durable bilateral trade relations.

He also urged Pakistani business community to start joint ventures with their Dutch counterparts. Addressing the occasion, the LCCI President, Mian Muzaffar Ali said that trade volume between the two countries, is not so encouraging mainly because of lacking marketing exercise from both the sides. Such deficiencies require immediate attention while both the countries should adopt techniques to identify more tradable items, he said and stressed the need for maintaining a liaison between the business communities of the two countries.

Dutch Ambassador further said the Netherlands has the expertise in dairy sector and could guide Pakistan that needs collaboration to bring this sector in the mainstream of economy. This is now more important in the wake of WTO regulations that calls for more hygienic and preservation along with changing tastes and preferences of the consumers around the globe, he added.

The food processing industry is the largest branch of Dutch industry where food production has been automated to a large extent, he said and urged to provide assistance in mechanised farming, floriculture, and horticulture and poultry development.

The LCCI Chief also said that there are ample of opportunities that exist in various mutually beneficial areas to increase trade, joint ventures and commercial activities between the Netherlands and Pakistan. 'The LCCI could play an imperative role in the revival of trade and business between the two countries through frequent exchange of delegations,' he stated.


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## Neo

*Cost of doing business in country increasing alarmingly​* 
MULTAN (January 22 2009): President Board of Management, Multan Industrial Estate, Mian Iqbal Hassan has said that if Mohtarma Benazir Bhutto would have been alive, she would not have allowed importing tractors under the prevailing economic situation of the country. The government has planned to import 20,000 tractors at a cost of over $180 million in foreign exchange.

While talking to Business Recorder, Hassan said that local industry is geared to produce over 60,000 tractors a year. This year the tractor industry has extended their production facilities from 50,000 to 60,000 tractors a year. The locally produced tractors are superior in quality and cheaper in price in this region, he added.

He said that tractor industry is supported by over 280 vending industries. The overall employment in tractor industry is over 50,000. The Pakistani exporters are exporting tractors at 20 percent premium that of the local price in international competition.

He said that automobile industries are in serious crisis all over the world. The USA giant manufacturers like General Motors, Ford, Chryslers and many others Japanese and European companies are closing down their units because of serious recession. Their governments are trying hard and spending billions of dollars to revive their industries. It is also to be noted that their bank interest rate is 0.50 percent to 0.75 percent per annum, he stated.

Hassan further said that the cost of doing business in Pakistan is alarmingly increasing. It is impossible for Pakistani investors to pay 21 to 22 percent bank interest without insurance cost. It has become very difficult to survive for Pakistani tractor industry. If the same situation continues, the unemployment will increase to an alarming stage.

He further said that the government of Pakistan is subsidising the import of tractors to the tune of Rs 4 billion and also providing exemption on import duty, excise duty and sales tax on import of tractors. The policy of the government to import tractors has badly affected particularly the vending industry.

Hassan demanded of the government that the import of tractors may be banned or allowed to import without any concessionary duties. The subsidy should be directly given to farmers on their discretion to purchase tractors locally or import from abroad.


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## Neo

*Oil exploration: ECC seeks details of contracts given to foreign companies​* 
ISLAMABAD (January 22 2009): The Economic Co-ordination Committee (ECC) of the Cabinet has sought details of exploration contracts awarded to multinational companies by the Oil and Gas Development Company Limited (OGDCL) for different blocks in different parts of the country, particularly in Balochistan, during the past two decades, official sources told Business Recorder on Wednesday.

The sources said the ECC was of the view that to dig out the exact position of wells, a study should be conducted on the issue as to how much work had actually been completed by these companies during the last two decades. In response, the Ministry of Petroleum agreed that complete details of contracts awarded to large multinational companies during the last 20 years would be placed before the ECC.

The ECC, which met on January 9 with Prime Minister's Advisor on Finance Shaukat Tarin in the chair, did not approve the 2009 Petroleum Policy, drafted and submitted by the Ministry, due to serious reservations on the proposed bid evaluation process, gas pricing formula and evolving a mechanism for involvement of indigenous people in exploration activities.

The ECC decided to constitute a committee to review and amend the draft policy, which would comprise Adviser to the Prime Minister on Petroleum, Ministers for Kashmir Affairs, Privatisation, Livestock and Dairy Development, Water and Power, Law and Justice and Deputy Chairman of Planning Commission as its members. The Secretary, Ministry of Petroleum, will act as its member/Secretary.

"Although multinational companies were awarded exploration contracts for different blocks in the past, no tangible work on the ground has been evident," the sources quoted the ECC as observing. Main objectives of the controversial Petroleum Exploration and Production Policy 2009 were acceleration in exploration and production activities by improving incentives and gas pricing terms to maximise production, promote local and foreign investment in oil and gas and provision of clarity in process and procedures.

The ECC was informed that 2007 Petroleum Exploration and Production Policy could not be implemented, mainly owing to tremendous hike in the price of oil in the international market. The type of incentives offered to the exploration companies in the 2007 policy were not found satisfactory by the exploration companies, urging its review in accordance with the price in the international market.

The ECC was assured that revised 2009 Petroleum Exploration and Production Policy was expected to be instrumental in promoting exploration on fast track basis and attract local and foreign exploration and production companies, the sources added. The ECC was also apprised of the various changes/variations proposed in the policy from the previous policy of 2007, which are:

-- The previous policy criteria for companies, entitled to acquire petroleum rights, are being changed, made flexible and simple. The main objective is to create more competition among companies (local and foreign) and to develop local technical base to reduce dependence on foreign companies.

-- The smaller local Pakistani companies will be allowed as new entrants to join consortia of other companies as non-operators to gain requisite experience to handle the operator-ship independently.

-- Concept of "call for nomination" is being done away with to reduce the time in award of the blocks.

-- To complete bidding process expeditiously, period for new bidder is being reduced to 60 from 90 days.

-- Bid evaluation procedure has been simplified by eliminating the factor of biddable gas price gradient (GPG).

-- In wind fall levy (off shore and on shore), no change is proposed except that a capping of 100 dollars per barrel is introduced to safeguard the government interest against the high international crude oil prices.

-- In the extended well testing (EWT) (off shore and on shore), reduction in discount in gas prices from 15 percent to 10 percent during the EWT phase is proposed. It would encourage companies for early production of gas.

-- For the grant of lease after expiry of lease term (off shore and on shore) the existing leaseholder is being given first right to match the highest bid.

-- Gas pricing formula (GPF) is simplified and a cap of 100 dollars/bbl has been proposed to protect government interest against high prices.

-- In the conversion policy, changes are made as a concept of GPG and gas pricing mechanism is proposed to be changed.

The sources said the ECC further directed the ministry to review the safeguards being given by the exploration companies to local population, particularly to look into the possibility of raising their remuneration.

The ECC directed that comprehensive guidelines be prepared keeping in view the participation of local population and tribes in the exploration activities and procedures, fixing their shares in the proceeds and also to look into the possibility of expanding of certain average of income proceeds in that particular area. These guidelines will be made part of the 2009 policy.

According to the sources, the Planning Commission pointed out that they, which should be taken care of and be incorporated in the policy, raised certain observations on policy. This was endorsed by the committee.

As regards the proposal of grant of lease to the existing leaseholder after expiry of lease term, it was decided that the existing leaseholder, on expiry of the lease term, be granted right of refusal if he offered 25 percent increase on the highest bid of the zone.

"Serious observations on the proposed bid evaluation process, gas pricing formula and for evolving of mechanism for involvement of local population tribes in exploration activities were raised by the ECC members," the sources said.

To resolve these issues, it was proposed that a ministerial committee be constituted, which would take decisions on behalf of the ECC on these issues for their incorporation in the 2009 Petroleum Exploration and Production Policy. The ECC agreed with the proposal.

On the issue of sale of natural gas within Pakistan, it was agreed that first right of refusal be assigned to the government of Pakistan. The ECC also directed Petroleum Ministry to (a) consider observations of the Planning Commission and also incorporate them in the policy; (b) right of refusal should be allowed to the existing lease-holder if the bidder offered 25 percent more than the highest bid of that zone. According to official documents, the ECC approved the policy in principle, but there was no agreement on some of the proposals.


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## Neo

*PCPA Friends transferring latest technology to farmers​* 
MULTAN (January 22 2009): Pakistan is an agricultural based country and its major future is connected with agriculture sector. Wheat is an important crop of our country and nowadays we are in dire need to have a bumper crop of wheat. Pakistan Crop Protection Association (PCPA) Friends Group is playing a pivotal role to transfer the latest technology to farmers and to increase the production.

'Padawari Pack' is a chain of this series that helps farmers to increase their production by using this in their fields. PCPA Friends hold a draw to distribute solar tube wells, laser land leveller, drip irrigation and seed grader in Multan Arts Council. The purpose to distribute these latest agriculture equipment was to give awareness to farmers about the latest technology, so that the dream to get bumper crop could be fulfilled.


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## Neo

*Industrial output down 5pc July-Nov 2008 ​*By Mubarak Zeb Khan 

Thursday, 22 Jan, 2009

​
ISLAMABAD: Pakistan&#8217;s industrial output declined by over five per cent in the first five months of the current fiscal year in the wake of international financial crisis, sparking fears of massive layoffs, particularly in the electronic and textile industries, officials told Dawn on Friday.

The fall out of the global crisis coupled with the home-grown policies - including highest-ever interest rates and lack of energy availability - slowed down the manufacturing in the current fiscal year which may also ultimately affect the economic growth.

Due to the slump in the industrial sector, particularly in the large-scale manufacturing (LSM), the government has already witnessed decline in revenue collection and slowing down in exports proceeds, which registered negative growth in the month of December 2008.

Many sub-sectors of the LSM did not perform well during July-Nov, particularly electronic goods, textile related goods indicating that the 6.1 per cent LSM growth target set for 2008-09 is unlikely to be achieved.

The World Bank and IMF have already said that Pakistan&#8217;s economy is facing difficulties which will be aggravated by the global crisis. Massive layoffs in textile and electronic industries are feared in the next few months.

Statistics showed that textile exports already dropped by around two per cent during the first half year of the current fiscal year over last year. Any drop in production or exports is signaling massive layoffs, particularly those people who are working on daily wages to feed the families.

Data compiled by the federal bureau of statistics showed that production of cotton yarn declined by 0.31 pc, cotton cloth 0.49 pc and power-looms 48.03 per cent during the first five months of the current fiscal year over last year.

All major electrical production witnessed negative growth as refrigerators recorded a negative growth of 0.23 pc, deep-freezers 26.02pc, air-conditioners 10.52pc, electric bulbs 22.91pc, electric tubes 16.68 pc, electric fans 2.63 pc, electric motors 24 pc, electric meters 19.93 pc, switch gears 3.59pc, electric transformers 0.14pc, TV sets 30.53pc and bicycles 12.25 pc during the period under review.

An official in the industry ministry said industrial production has been adversely affected by the crisis through both price effects that increase the cost of production and income effects that decrease the demand for products in the markets.

The severe power shortage and highest-ever increase in energy prices also further fuel the crisis, which led to cuts in production, particularly in the textile based industries resulting into lower exports.

Federal Minister for Industries Mian Manzoor Wattoo on Thursday informed the Senate standing committee that his government was committed to revive the industrial sector by addressing the core issues plaguing the industry.

However, he did not mention the measures to arrest the decline in the manufacturing sector and a possibility of coming up with an industrial policy in the near future. 
Secretary industries Shahab Khawaja meanwhile attributed the fall in the industrial output to highest ever interest rates, high input cost, power and gas outages. 

In the food group, the production of vegetable ghee dipped by 13.83 per cent during the first five months of the current fiscal year followed by cooking oil 4.05 pc, wheat and grilling 11.19 per cent during the period under review.

It is feared that as a result of decline in industrial output, the import bill of consumer and electronic goods swelled during the period under review, which would also put pressure on the balance of payment.

The industrial growth had been shrinking for the last three years as it grew by 5.4 per cent in the year 2007-08 down from 19.9 pc growth recorded in the year 2004-05 owing to capacity constraints and high cost of doing business that resulted into closure of many units.


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## Neo

*Services exports posts impressive growth ​*
Thursday, 22 Jan, 2009

​
ISLAMABAD: Services sector export up by 42.01 per cent in the first five months (July-Nov) of the current fiscal year over the same months last year.
Federal Bureau of Statistics data issued here on Thursday showed that proceeds from services export totaled $1.533 billion against $1.079 billion over last year. 

The upward trend in the services exports has followed greater market access for financial, telecom and tourism etc. 

The import of services, meanwhile, recorded a decline by 8.40 per cent to $3.935 billion during July-Nov against $3.923 billion last year.

However, the services imports witnessed a deeper cut of more than 40 per cent in the month of November 2008 over last year month. But the exports of services recorded a marginal growth of 6.07 per cent over the same month last year.


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## Neo

*Afghan transit trade soars to Rs25.7 billion ​*By Parvaiz Ishfaq Rana 

Thursday, 22 Jan, 2009

KARACHI: Afghan Transit Trade (ATT) has recorded 71.45 per cent growth at Rs25.763 billion during first six months (July-Dec) of the current fiscal year over the corresponding period last year when it stood at Rs15.026 billion.

According to official figures, there had been an increase of Rs10.737 billion in imports of goods through ATT during this period. Much of the growth was noted in items which have little or no demand in the Afghan market, prompting concerns of smuggling.

Import of machinery and electronic items registered the highest growth of up to 192.31 per cent at Rs4.027 billion against Rs1.377 billion over last year.

An underdeveloped and war-torn country having no demand for modern electronic gadgets, there is a sustained growth in import of such goods. Similarly, Afghanistan having no basic infrastructure facilities and road networks could not import machinery where industry is almost non-existence.

As far as import of electronic items is concerned refrigerators, air-conditioners, vacuum cleaners, TV sets, DVD players etc are being largely imported and one cannot understand who their customers are in a country, which has no electricity.

Similarly, there is a tremendous growth of 39.99 per cent in import of iron and steel and other metals under ATT at Rs746.56 million from Rs533.28 million recorded in the same period last year.

Import of fabrics under ATT also increased by 28.90 per cent at Rs5.143 billion during July-Dec period as against Rs3.990 billion recorded in the same period last fiscal. Such a large quantity of fabrics imports under ATT is not justified because Afghan culture is still far away from modern exposure and has no such market demand.

Foodstuff imports under ATT increased by 32.31 per cent during first six months of current fiscal at Rs6.227 billion compared to Rs4.706 billion last year.

During July-Dec period vehicles worth Rs933.70 million were imported compared to Rs433.12 million earlier registering a growth of 78.37 per cent.

Other items, including household goods, tiles, paper, chemicals, plastic etc worth Rs9.684 billion were imported during period under review as against Rs3.985 billion during last fiscal.

Official sources disclosed that a new agreement on ATT is going to be negotiated next month. The present agreement only allows up to 10 per cent of ATT cargo examination but it is being suggested that the same should be increased to 50 per cent to discourage smuggling under its cover.

Secondly, it is also being recommended by trade and industry that the ATT should be put up before the National Assembly prior to its approval, because the last ATT agreement was signed under pressure and it created lot of problems for the domestic industry.

The customs intelligence wing, which was made ineffective by the Shaukat Aziz government should be reactivated to curtail rampant smuggling under the ATT cover. Inside sources disclosed that presently the Appraisement Intelligence Branch is poorly equipped and the government should pump in some funds to improve their working by giving them proper equipments.

The reward system to customs officials on tracing out mis-declaration or under-invoicing was also done away by the previous government. This used to be a boon for honest officers, who avoided illegal gratifications.

Even today a large number of ATT consignments in containers do not leave city jurisdiction, customs sources told Dawn. They further said there were yards where such containers are taken and after removing goods are held back for a week to show that a box has traveled up to Pak-Afghan border.

But some smart players, who do not want tamper with the seals of containers, only remove nuts and bolts of its doors and after removing goods fix them back and allow it to be taken (empty) up to Pak-Afghan border.

Customs sources requesting anonymity disclosed that it is an open secret that ATT official seals are prepared in a narrow lane opposite Customs House and are also being openly used by unscrupulous people involved in such illegal trade or smuggling.

To prevent such cases it is being suggested that the examination of ATT goods should be done at Karachi and not at Pak-Afghan border.


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## Neo

*Pakistan Forex Reserves Down To $9.949 Billion For Week Ended Jan 17​*
KARACHI-(Dow Jones)- Pakistan's foreign exchange reserves fell to $9.949 billion in the week ended Jan. 17 from $10.002 billion the previous week, the State Bank of Pakistan said Thursday.

Of the total reserves, holdings of foreign exchange reserves by the central bank were $6.585 billion, compared with $6.656 billion in the previous week.

Foreign exchange deposits held by commercial banks were $3.364 billion, compared with $3.346 billion in the week ended Jan. 10, the central bank said.


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## Neo

*Govt to seek $60bn FOP help in four areas ​* 
*Tarin says assistance sought for economy, security, energy and development projects​*
Friday, January 23, 2009

ISLAMABAD: In a major policy shift, Pakistan has decided to seek $50 to $60 billion assistance from the Friends of Pakistan (FOP) forum for four major areas including economic and financial issues, terrorism-related matters, energy sector and mega development projects, it is learnt.

Instead of asking the FOP forum to provide funds only for 71 development projects, Islamabad has now decided to broaden its strategy to include all kinds of areas liked by donors in its wish list rather than restricting them to investment in mega development projects.

A stumbling block in attracting investment as well as financial assistance from the donors is confusion in Islamabad whether to pursue donors from the FOP forum or Pakistan Development Forum (PDF) or donors conference because all multilateral as well as bilateral donors on these three forums are similar. It does not seem feasible to approach all these forums simultaneously, added the sources.

When Adviser to Prime Minister on Finance Shaukat Tarin was contacted for comments on Thursday, he said that the government has identified four areas for seeking assistance from the FOP forum. These four areas are economic and financial assistance, security-related assistance, energy cooperation and undertaking of development projects, he added.

The finance adviser also said that a technical-level meeting of the FOP forum would be held by the end of January or early Feb in Islamabad. But the ministerial level meeting of the FOP will be held by March probably in Tokyo, he added. 

Earlier, Pakistan had tabled 71 development projects before the Friends of Pakistan forum meeting held in Dubai but the donors response was lukewarm as they termed it a wish list or a long shopping list. Keeping in view the response, Islamabad has transformed its strategy to give an opportunity to various donors to help Pakistan in areas where they desire to invest in years ahead.

However, the sources admitted that it was not a right approach to table 71 development projects before the donors on which huge investment in terms of money as well as time is required. It was the decision of the Planning Commission to seek assistance for 71 projects but now the input of finance ministry was also taken, resulting in expansion of Islamabads strategy for the FOP forum.

A detailed feedback obtained by Pakistans Foreign Office as well as Economic Ministries in the aftermath of last FOP meeting held on November 17, 2008 at Abu Dhabi spells out in details about the prevailing thinking of developed world, which clearly states that if Islamabad did not prioritise its list, the member countries would remain non-committal to come forward to undertake these projects owing to worldwide financial crisis, whose brunt was feeling by all the developed countries.

The donors are also suggesting Pakistan to formulate short-term, medium-term and long-term strategies in accordance with importance of the projects. 

The best way should be to adopt an incremental approach because it would not be possible for the member countries to commit everything on the long demand list immediately. 

Official documents state that the donor countries appreciated the initiative to meet two major challenges Pakistan is confronting namely security issues and economic crisis.

The donor countries also raised objections on duplication of work, saying that the Friends of Pakistan and Pakistan Development Forum (PDF) are more or less the same. The donor countries in PDF are also similar so either these two forums are merged together or existing PDF may be reactivated. 

The PDF meetings are an annual event but no such meetings have taken place for the last two years, the donors response further stated.

It was pointed out that since Pakistan needs long term development assistance, it is necessary to highlight economic, political and administrative constraints for devising strategies. There are no credible data available on necessary facts sheet is available to the international community on Pakistans economic situation, they added.

The donors countries during the meeting were not briefed about the possible impact of the IMF program on the economy and its impact on the general masses of Pakistan. 

Pakistan may request the IMF to circulate all concerned countries, along with necessary data and fact sheet about Pakistan, highlighting the likely impact of IMF package on overall economy of Pakistan as well as the report may also recommend an additional funding to Pakistan, it concluded.


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## Neo

*President, PM want to bail out textile industry ​* 
Friday, January 23, 2009

KARACHI: Textile ministry is working on the national textile policy, and recommendations on the draft policy have been invited from all stakeholders to give this very important document a final shape at the earliest.

This was stated by Federal Minister for Textile Rana Muhammad Farooq Saeed Khan during his visit to Karachi Chamber of Commerce and Industry (KCCI) on Thursday.

He informed members of KCCI that his ministry was seriously pursuing the formulation of the much demanded textile policy to strengthen this leading exports sector the country.

President KCCI Anjum Nisar, Advisor to Sindh Chief Minister on Provincial Investment and former president KCCI, M Zubair Motiwala, Senior Vice President KCCI, Muhammad Jawed Bilwani and Vice President KCCI, Mohammad Ali along with other senior leaders of KCCI welcomed the minister.

The federal minister assured the business community that he had already taken up the issues of the textile industry relating to Ministries of Finance, and Petroleum and Electricity with the concerned authorities besides initiating various revolutionary steps in the Ministry of Textile to ensure its very dynamic role in economic prosperity of the country. He said he was pursuing the Federal Ministry of Finance and State Bank of Pakistan to pay Research and Development (R&D) claims of textile exporters amounting to around 10 billion rupees as soon as possible.

We want to make the textile ministry a strong force to bring a revolution in this sector, which is the main contributor to foreign exchange earnings of the country, he asserted adding that the last government did nothing on these grounds.

He said President Asif Ali Zardari and Prime Minister Yousuf Raza Gilani are also very much concerned over the problems/irritants facing the vital industry of textile ie, high electricity and gas tariffs and their shortage and high bank mark-ups, and wanted the earliest solution for its bail out.

He said that he would be striving with all sincerity and seriousness for boosting the textile industry, an economic sector of the country holding great potential.

Rana Farooq said that unlike the past, he would take all stakeholders of the textile industry on board to make the ministrys role very objective and target-oriented. He said cultivation of cotton crop would be encouraged through various incentives as cotton is the only crop to boost foreign exchange.

To a question, the minister said the growers had been given a green signal for BT cotton cultivation as they would be the main beneficiary.

He criticised the last government for replacing cotton crop with sugarcane crop. Cotton is our only crop for boosting foreign exchange earning, he remarked.

He underlined the need for close liaison between Ministry of Textile and private sector players in the textile sector.

Leading industrialist and Advisor to Sindh Chief Minister on Private Investment, M Zubair Motiwala emphasised on the need to declare the textile industry a special sector and provide it with an enabling environment to make it competitive in the regional and international markets. We demand nothing but an enabling environment to beat regional competitors, he said.

He regretted that Pakistan has been mainly exporting textile raw materials like yarn and grey cloth instead of value-added goods. He mentioned that till today there was no national strategy for the textile industry.

President KCCI, Anjum Nisar briefed the minister about various problems/irritants confronting the private sector, especially the textile sector in Karachi.

Earlier, the textile minister visited the office of the textile commissioner where he was given a briefing on the working of the department and future plans to enhance its role for promotion of the textile industry, which included skill development in different sectors of the industry.


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## Neo

*National survey on poverty to be started soon: Farzana ​* 
*MKRMS organises seminar on Current Situation and Our Economy​*
Friday, January 23, 2009

ISLAMABAD: Benazir Income Support Programme (BISP) Chairperson Farzana Raja said that the government had decided to hold the door-to-door national survey on poverty soon.

We will organise the survey in collaboration with the BISP across the country, including Fata, Azad Jammu and Kashmir and Northern Areas, she said while speaking at a seminar on Current Situation and Our Economy, organised by the Mir Khalil-ur-Rehman Memorial Society (MKRMS) of the Jang Group of newspapers in collaboration with the Centurus Pak-Gulf Construction Company.

Those who spoke among others on the occasion were Adviser to the Prime Minister on Interior Rehman Malik, PML-N Information Secretary Ashan Iqbal, Shahid Khaqan Abbasi, Adviser Pak-Gulf Construction Company Abdul Aziz Mirza, PML-Q leader Ms Kashmala Tariq, Sardar Illyas Khan, Syed Kokab Mohiuddin, Prof Dr Ahsan Malik, MA Rauf, Kazi Abdul Hamid Mughul and Anjum Aqeel.

Farzana Raja said that the government was taking measures for improving the living conditions of the people and it had taken a number of steps, including the introduction of the BISP, for the social protection of the poorest section of the society. She added that the PPP government wanted the prosperity of the country and its people and working hard at the top political level to achieve this objective.

Farzana Raja called for reaching a consensus among all the political forces in the country for the socio-economic prosperity of the country and the welfare of the people. She said that the objective and mission of every political party was to serve the people and work for the solidarity and prosperity of the country.

She attributed the current economic situation to the wrong policies of the previous government and called for the coalition partners to support the government efforts for improving the economy.

She added that the government wanted to take along all the political forces on the issues of national importance. Farzana Raja said that the government was taking measures for improving the law and order situation in the country and it had taken a number of steps in this regard.

She recalled the sacrifices rendered by the leadership and workers of the PPP for the cause of democracy in the country.She lauded the efforts and services of the MKRMS for organising seminars on the issues of national importance.

Speaking on the occasion, PML-N leader Ashan Iqbal called for making collective efforts for the economic well-being of the people and the prosperity of the country.He strongly criticised the policies, including the economic policy, devised by former president Pervez Musharraf which caused damage to the economy of the country.

He claimed that during the eight-year period of the former government, about Rs 80 billion had come to Pakistan, but regretted that no major development project, like the Diamer-Basha Dam, was initiated from that money.

He added that the agriculture sector was ignored during the period. He said that during the period, the former government focused on the consumer-led growth, instead of the export-led growth.

He called for promoting knowledge-based economy with a special focus on the skill development of the youth for the prosperity of the country.Speaking on the occasion, Ms Kashmala Tariq highlighted the major achievement of the PML-Q government.

She accepted the fact that the energy sector was ignored during the period. She called for making collective efforts to steer the country out of the current economic crisis. The other speakers also called for improving the law and order situation in the country for attracting foreign investments.


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## Neo

*State Bank of Pakistan announces bailout package​*
*1-year deferment in repayment of loans for industrial sector​*
KARACHI: The State Bank of Pakistan (SBP) has announced relief package for the industrial sector by allowing the banks and DFIs to provide deferment of one year in repayment of principal outstanding under Export Oriented Projects including Debt Swap Facility under and Long Term Financing Facility (LTFF) scheme.

On the representation of industry associations, it has been decided to allow banks/DFIs to provide grace period to their deserving borrowers having availed financing under LTF-EOP and LTFF scheme, a circular of SBP stated on Thursday.

Accordingly banks and DFIs may provide deferment of one year in repayment of principal outstanding under the above schemes as of December 31, 2008, it added.

The industrialist community has been lobbing intensely to secure this relief, which has been welcomed by the industry representatives. It is positive development and will give breathing space to industry, Zubair Motiwala, textile exporter and former President Karachi Chamber of Commerce & Industry (KCCI) commented.

Central bank announced that under this facility the repayment dates for all installments of principal amounts falling due during the period from January 1 to December 31 2009 may be re-fixed after a period of one year from the respective due date.

SBP directed banks/DFIs to carry out their due diligence of the individual borrowers on case to case basis. This is a one-time facility effective from the date of issuance of the circular and will remain valid only up to March 31 2009. Any request received after March 31 2009 shall not be considered by banks/DFIs, it said.

SBP also spelled out the criteria for availing this facility and states: Banks/DFIs shall take into account the track record, conduct of account, underlying collateral, financial condition and future outlook, volume of exports and overall risk profile of the borrowers in evaluating their requests for availing this facility.

In case the banks/DFIs are satisfied with the borrower and the underlying credit risk is acceptable to them, they can provide the grace period of one year under this facility.

In case a loan has already been rescheduled by a bank/*** as per its policy or in case a borrower has defaulted in repayment of installment(s) fallen due, as per original repayment schedule, and/or payment of mark-up on due dates, such cases would not be eligible for the benefit under these instructions.

The concerned bank/*** will also evaluate the general behavior of the borrowers concerned in all other financing facilities extended to them by the bank/***. No benefit under this circular should be given to the borrowers having non-performing loans, classified under SBP Prudential Regulations.

While preparing revised repayment schedule banks/DFIs will adhere to the original terms of repayment schedule already agreed at the time of grant of refinance (i.e. the original grace period and principal amount of installments shall remain the same and only dates of repayment will be changed). The offices shall, however, check the accuracy of such revised repayment schedules as per their record to ensure that no grace period is granted for a period exceeding one year.

The borrowers who have already repaid LTF-EOP/LTFF loans shall not be eligible for reimbursement of the same. Similarly in case a loan is not payable during 2009 as per its original repayment schedule, it shall not qualify for the benefit under these arrangements. Only loans outstanding as of December 31 008 shall qualify for the benefit of grace period. As such, the loans disbursed on or after January 1, 2009 shall not qualify for said benefit. The borrowers interested in availing the benefit under this circular shall approach to the concerned banks/DFIs which shall process their requests in line with parameters prescribed in the circular and as per their respective policies.

In case of consortium financing, head offices of member banks/DFIs will forward their recommendations to lead bank/*** for final approval.

The concerned office of SBP BSC (Bank) will also adjust repayment of its refinance accordingly from the concerned banks/DFIs only in respect of such borrowers to whom grace period facility shall be granted by the financing banks/DFIs or a lead bank/***, in case of consortium financing.

After approval from Head Office the concerned branches of banks/DFIs shall approach the concerned offices of SBP-BSC along-with copies of revised repayment schedules to defer the principal amount of installments for one year. staff report


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## Neo

*Domestic debt rises to Rs 3.55 trillion​*
KARACHI: Pakistans domestic debt has soared by 8.8 percent to Rs 3.555 trillion in last five months, according to the data released by the State Bank of Pakistan (SBP) on Thursday. The domestic debt of the country stood at Rs 3.266 trillion on June 30, 2008.

The net borrowing of the country increased by Rs 336.8 billion in the current fiscal year, which is up by 53 percent.

Large amounts were borrowed through MTBs for replenishment, showing increase of Rs 309.1 billion in the first five months.

The floating debt soared by 15.6 percent or Rs 256.9 billion in the first five months, reaching to Rs 1.894 trillion.

The government borrowed Rs 484.8 billion through market treasury bills for replenishments. It repaid Rs 52.2 billion borrowed earlier through treasury bills.

The permanent debt has reached Rs 600.6 billion in the same period. Rs 7.7 billion were retired through Rs 12.5 billion purchase of Pakistan Investment Bonds and Rs 1.7 billion through sale of prize bonds.

The unfunded debt of the country surged by Rs 1.06 trillion.Defense Saving Certificates stood at Rs 284.3 billion whereas Bahbood Saving Certificate attracted Rs 24.9 billion to Rs 253.9 billion in the said period. An inflow of Rs 8.8 billion was witnessed in the Special Saving Certificates, which stood at Rs 169.1 billion.

Besides, Pensioners Benefits Accounts increased to Rs 94.4 billion in this period.

The net major outflow of Rs 8.4 billion has been recorded in Saving Accounts, which decreased to Rs 19.4 billion. Besides, Defense Saving Certificates, and GP Fund recorded some minor withdrawals.

However, the countrys burden of external debt and liabilities has shown a slight decline in this period, which shows some positive signs for the economy. However, Pakistans total external liabilities are down to $45.540 billion at the end of November 2008 from $46.284 billion at June 30, 2008.


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## asaad-ul-islam

^^that's funny, the current PPP govt. kept on talking about 'musharraf not doing enough for the textile and agriculture industry'. now the agriculture industry is at risk thanks to the tax imposed by the IMF loans, and textile industry is facing decline. yet, there is no one to report this garbage that was being fed to us the past year.


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## Neo

*Former IMF negotiator recommends Pakistan hike rates​*
** Former IMF negotiator advocates rate rise
* Sees rupee fluctuating around 80 per dollar​*
KARACHI: Pakistan needs to hike interest rates further to build foreign exchange reserves and dampen inflation despite facing recession, according to the economist who led IMF negotiations with Pakistan two months ago.

Mohsin Khan retired as director of the IMF's Middle East and Central Asia Department at the end of November immediately after concluding the $7.6 billion emergency stand-by credit agreement to rescue Pakistan from a balance of payments crisis and looming default on its international debt.

Pakistan entered a 23-month standby credit facility to correct external and fiscal imbalances, bring down inflation running over 25 percent and alleviate poverty.

The first tranche of $3.1 billion credit was released on November 26. The next tranche of $850 million is due to be released subject to an IMF review that should be completed by March 15. The government should meet its first review targets, as it has largely set the targets itself, though achieving zero net government borrowing from the central bank will be difficult. The central bank ramped up interest rates by 2 percentage points to 15 percent in November, and many analysts in Pakistan believe interest rates should be reduced quickly because of an alarming economic slowdown.

The central bank has forecast growth slowing to 3.5 percent to 4.5 percent in the 2008-09 fiscal year ending June 30, its weakest pace since 2001-02.

Now a senior fellow at the Peterson Institute for International Economics in Washington, Khan gave his views on the outlook for Pakistan in an email response to questions ahead of the State Bank of Pakistan's half year monetary policy review, due to be announced on January 31.

The following is a transcript of Khan's answers:

*Q: Do you expect an increase in interest rates, given inflation has begun moderating and the trade deficit has started to narrow?*

A: The case for raising interest rates further is that core inflation is still too high, so you can't blame inflation on energy (oil) and food prices, both of which have come down quite sharply in the last few months. Therefore, based on the core inflation numbers, another 100 to 150 basis points would seem to make sense. This is an orthodox prescription. However, the monetary tightening already done in November (raising the rediscount rate by 200 basis points to 15 percent), and any further tightening to come will not have a significant impact on inflation (headline and/or core) for a while. So one should not expect too much from higher interest rates on inflation in the next few months. But, I think there is a stronger case to raise interest rates, which is to strengthen the international reserves position of the State Bank of Pakistan. For some reason this point has not been stressed as much as it should have -- the focus has been too much on the monetary policy-inflation link. The effect of interest rates on international reserves can be quite quick (and certainly much quicker than the effect on inflation). The usual channel is capital inflows, but in Pakistan remittances are also influenced by interest rates (and the exchange rate). See how remittances jumped after the increase in interest rates in November. With a relatively stable exchange rate (around 80 rupees per dollar), Pakistani interest rates should be quite attractive, particularly for overseas Pakistanis.

*Q: How do you see Pakistan's economy faring?*

A: With the world in recession, I don't expect the Pakistan economy to grow by more than 2 percent or so this fiscal year. And this too depends on how agriculture does. For Pakistan a 2 percent growth of real GDP is a recession. Moreover, it's difficult to see where higher growth in 2009-2010 is going to come from with the world recession worsening. Lower oil prices are a mixed blessing for Pakistan. Yes, import costs are lower, but the demand for Pakistani labour in the Gulf and foreign direct investment from the Gulf are also lower.

*Q: What is your outlook for the rupee?*

A: I think the rupee will fluctuate around 80 per dollar. Barring any other external shock, the worst is behind the country. If remittances do as well as they are doing, and there are some capital inflows, State Bank of Pakistan's international reserves and the amount of dollars in the open market should increase. This may actually lead to pressures for the rupee to appreciate against the dollar, i.e., become stronger. My own view is that the rate is about right and that the SBP should, if needed, buy dollars to keep it there (and add to its international reserves). It is always better for a country to have an undervalued exchange rate than an overvalued one. reuters


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## Neo

*Gilani writes off Rs 17.5 billion Balochistan overdraft​*
** Centre assures Balochistan new NFC award will be finalised before next budget​*
ISLAMABAD: Prime Minister Yousuf Raza Gilani directed the authorities on Thursday to immediately freeze the payment of a Rs 17.5 billion State Bank overdraft payable by the Balochistan government and then write it off after six months as the Centre assured the province that a new five-year National Finance Commission (NFC) Award would be finalised before the announcement of the 2009-10 budget.

Addressing a high-level meeting to look into Balochistans financial difficulties at Prime Ministers House  Gilani said the federal government would now be responsible for the payment of the overdraft. Moreover, from the next year, the Federal Public Sector Development Programme (PSDP) for Balochistan will be expanded considerably, he said.

NFC: Talking to Daily Times, the Balochistan finance minister confirmed that Adviser to Prime Minister on Finance Shaukat Tareen had assured us that a new NFC award would be finalised before the budget of 2009-10, at the meeting.

According to official sources, the federal government is consulting provinces to develop a political-level consensus on a revenue-sharing formula for the federal government and the provincial governments. Similarly, the basis for revenue sharing among the four provinces is also being negotiated with the chief ministers.

Punjab has already proposed that 20 percent revenue be shared among the provinces on the basis of multiple factors, while the remaining 80 percent be shared on the basis of population to boost the share of smaller provinces.

Sindh, NWFP and Balochistan are likely to make final comments on the proposal during negotiations to be held over the next three months.

The three provinces have been demanding that revenue be shared among provinces on the basis of multiple factors instead of population alone. The new NFC award, if agreed before the announcement of the budget, would be based on new projections agreed between the Centre and the federating units, said the official sources. The Centre has already re-constituted the National Finance Commission to finalise the next NFC award.

The NFC would also finalise a new mechanism for provincial borrowing from the federal government and interest payments with revised terms and conditions. NFC would also facilitate the provinces to agree on a distribution mechanism for royalty on crude oil production and surcharge on gas production.


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## Neo

*Key Chinese entrepreneur keen to participate in various projects​*
BEIJING (January 23 2009): A prominent Chinese entrepreneur has expressed keenness for co-operative partnership with Pakistani counterparts to develop infrastructure, tourism, culture, mining, housing and power generation and also to contribute a portion of profit to bring improvement in social sector.

"If your country has incentives, investment-friendly policies and top level support, we believe we can participate and implement various projects", Chairman of China World Peace Foundation and heading a number of Chinese companies and institutions Li Ruo Hong said in interview with APP.

Li, who plays active role in social activities and also runs a hospital, said that he intended to spend some portion of the profit generated through business activities in the social welfare sector with the co-operation of Pakistani NGOs to ensure provide better health and education facilities.

Li Ruo Hong, also the Vice-Chairman of Beijing Association of Enterprises with Foreign Investment, has immense experience under his belt to accomplish international plan, their design, and implementation. The people and governments of Pakistan and China had traditional friendship and wide co-operative future, Li said and added that projects' accomplishment needed sincere co-ordination from both sides.

He informed that he would not only intend to make investment by himself but also encourage other companies to invest, develop and build up projects in their respective fields in Pakistan. Also Professor at University of Alberta, Li said his companies and institutions had made investments and accomplished projects in the fields of petroleum, telecommunication, automobile, real estate, business, culture, tourism and medical within and outside China.

The areas of large power station, harbour, mining, airport, TV station, investment, public welfare establishments, etc were focused recently, he said. Based on friendly co-operative relations between China and Tunisia, Li at the invitation of President Ben Ali last year visited Tunisia and signed an agreement on developing Tunis Zembra Island. The development work on the project spreading over 400 hectares is now being implemented.


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## Neo

*Access to EU markets: Pakistan continues to enjoy GSP preferences​*
ISLAMABAD (January 23 2009): Under the European Union's new GSP scheme for 2009-11, Pakistan continues to benefit from important preferential access to the market of 27 member states of the European Union (EU). The GSP preferences allow Pakistan to export more than 3,000 tariff lines duty-free to Europe.

While enjoying reduced duties on another 3,000 tariff lines, including textiles and clothing, says a press release issued by European Commission (EC) mission here on Thursday. In 2007, the EU imported Euro 2.6 billion worth of goods from Pakistan under the scheme, making Pakistan the eighth most important user of the scheme accounting for 4.5 percent of the EU's total imports under the GSP.

However, Pakistan's application for even better preferential market access to the European Union (EU) from 2009 through the so-called GSP+ scheme could not be approved.

The GSP+ offers additional preferences as an incentive to vulnerable countries to ratify and effectively implement a broadly defined set of international standards in the fields of human rights, core labour standards, sustainable development and good governance.

There are two reasons why Pakistan did not qualify for GSP+. First, Pakistan does not fulfil the requirement provided in Article 8(1)(c) of Regulation (EC) No 732/2008 to be considered a vulnerable country.

Vulnerable countries are those not classified by the World Bank as high income countries and whose GSP exports to the EU show both relatively high product concentration (the five most important product sections must represent more than 75 percent of the total GSP imports) and a relatively low volume (less than one percent) in comparison to total the GSP imports from all beneficiaries.

This is not the case for Pakistan as official Eurostat statistics confirm.

Second, Pakistan has not yet ratified the United Nations International Covenant on Civil and Political Rights, the Convention Against Torture and the Cartagena Protocol on Biosafety. These conventions are listed as core conventions in Annex III to the GSP regulation. Article 8 of this Regulation provides that GSP+ may only be granted to a country, which has ratified and effectively implemented all the conventions listed in Annex III.

Hence, the European Commission had no choice but to conclude that Pakistan does not meet the GSP+ eligibility criteria. The European Commission was, therefore, unable to include Pakistan in the list of GSP+ beneficiaries in 2009-11. Countries, which do not yet meet the GSP+ qualifying criteria, will have an additional opportunity for applications in mid-2010, halfway through the life of the GSP Regulation 2009-11.

The European Commission against the eligibility criteria set in the GSP Regulation examined all applications received before the deadline of October 31, 2008. As a result of this examination, the Commission has established a list of beneficiary countries, which fulfil the relevant eligibility criteria. The list was approved through a commission's decision on December 9, 2008. Pakistan's preferential access to the EU market under the GSP remains effective.


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## Neo

*Exporters get one-year grace for loan payment​*Shahid Iqbal 

Friday, 23 Jan, 2009

​
KARACHI: The State Bank announced on Thursday a Rs12 billion plan to help borrowers of the export financing scheme, deferring payment of their loans for one year.

However, the borrowers having non-performing loans would not be able to avail the facility.

Exporters have been demanding extension of payment, saying a slowdown in business activities and a liquidity crunch had put them in a difficult situation.
In a circular, the SBP said it had been decided to allow banks and development finance institutions (DFIs) to provide grace period to borrowers who have availed financing under the Long Term Financing for Export Oriented Projects (LTF-EOP), including Debt Swap Facility under LTF-EOP scheme and Long Term Financing Facility (LTFF) scheme.

The borrowers, who have already repaid LTF-EOP or LTFF loans, will not be eligible for reimbursement. Similarly, in case a loan is not payable during 2009 as per its original schedule, it will not qualify for the benefit under these arrangements.

'Only loans outstanding as of Dec 31, 2008, will qualify for the benefit of grace period. As such, the loans disbursed on or after Jan 1, 2009, will not qualify for the benefit,' said the circular.

Banking sources said that the exporters would get an accumulated facility of around Rs12 billion under the scheme.

This is a one-time facility effective from the date of issuance of the circular and will remain valid only up to March 31. 'Any request received after March 31 will not be considered by banks or DFIs,' said the SBP.

Banks and DFIs may provide deferment of one year in repayment of the principal outstanding under the above schemes as of Dec 31, 2008. Under this facility repayment dates for all installments of principal amounts falling due between Jan 1 and Dec 31, 2009, may be re-fixed after a passage of one year from the due date. 'For this purpose, banks or DFIs will carry out their due diligence of the individual borrowers on case-to-case basis.'

No benefit under the circular should be given to the borrowers having non-performing loans, classified under SBP prudential regulations.

In case a loan has already been rescheduled by a bank or *** as per its policy or in case a borrower has defaulted on loans, such cases would not be eligible for the benefit under these instructions.

The borrowers, who have already repaid LTF-EOP/LTFF loans, will not be eligible for reimbursement.

Similarly, in case a loan is not payable during 2009 as per its original repayment schedule, it will not qualify for the benefit under these arrangements.

'Only loans outstanding as of Dec 31, 2008, will qualify for the benefit of grace period. As such, the loans disbursed on or after Jan 1, 2009, will not qualify for the said benefit,' said the circular.

The banks and DFIs will keep on record the basis for grant of said benefit to the borrowers concerned, which will be checked by the Banking Inspection Department during inspection of banks and DFIs to ensure that this has been allowed as per laid-down criteria.

Banks and DFIs will take into account the track record, conduct of account, underlying collateral, financial condition and future outlook, volume of exports and overall risk profile of the borrowers in evaluating their requests.


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## Omar1984

Neo said:


> *Services exports posts impressive growth ​*
> Thursday, 22 Jan, 2009
> 
> ​



Wow is this really Pakistan? I'm impressed


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## Neo

Yes, this is Chundrigarh Road, Sadar Area in Karachi. Tall building on the left is the Habib Bank Plaza, used to be Karachi's tallest building till late seventies.

Reactions: Like Like:
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## Al-zakir

China provides $500 million aid to Pakistan 



Updated at: 1950 PST, Saturday, January 24, 2009 

ISLAMABAD: China has provided an aid of $500 million to Pakistan for improving its foreign exchange reserves.

The finance ministry sources said this amount will be repaid in one-and-a-half year and interest rate will be determined at the rate of soft loans.

This loan was announced when President Asif Ali Zardari visited china.

The amount has been provided to Pakistan under term deposit support

China provides $500 million aid to Pakistan

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## Skywalker

Omar1984 said:


> Wow is this really Pakistan? I'm impressed



So what do you think, are we living in stone age.


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## RabzonKhan

*Govt aiming to accelerate GDP growth rate*

* Policy matrix for PRSP-II proposes zero percent revenue deficit in 2009-10

By Sajid Chaudhry
January 25, 2009

*ISLAMABAD: The government is aiming to alleviate poverty by accelerating the gross domestic product (GDP) growth rate from 3.4 percent in the current fiscal year to 5.5 percent by 2010-11, according to the policy matrix of a proposed Poverty Reduction Strategy Paper-II (PRSP-II).*

*According to the PRSP-II policy matrix released on Saturday by the Ministry of Finance, the fiscal deficit and debt will be reduced to a sustainable level *and expenditures relating to poverty reduction initiatives will be protected.

*Agriculture loans will be increased from Rs 432 billion to Rs 522 billion, credit for small and medium enterprises (SMEs) will be enhanced from Rs 250 billion to Rs 390 billion and the number of clients of micro-finance will be increased from 2,138,750 to 3,133,202 by the year 2010-11.*

The provinces share in proceeds of federal taxes and duties will be increased from 43.75 percent to 46.25 percent by the year 2011.

*Deficit: Revenue deficit would be brought to zero percent in the next fiscal year and public guarantees annually will be kept at or below 2 percent of the GDP.*

Savings as a percentage of the GDP will be increased from 13.4 percent to 19.2 percent, and investments as a percentage of the GDP will be increased from 19.9 percent to 23.8 percent by the year 2010-11.

*Pro-poor interventions under the PRSP-II will be increased from Rs 34 billion to Rs 50 billion by the year 2010-11 and the Benazir Income Support Programme coverage will be increased from 3.4 million households to 7 million households.*

The paper says around Rs 32.250 billion will be spent on the provision of self-employment opportunities to 154,000 people in 2009. The Employees Old Age Benefit Institution pension will be increased from Rs 1,500 to Rs 2,000 per month and total allocations will be increased from Rs 7.464 billion to Rs 11.059 billion.


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## keeninterest

^^^

that i believe is a realistic target given the present global meltdown, and the political instability that pakistan faces as of date.

the primary focus for the present day government has to be to contain inflation which if not handled properly could clearly go out of hand but then with imf around that now looks highly unlikely. 



> Savings as a percentage of the GDP will be increased from 13.4 percent to 19.2 percent, and *investments as a percentage of the GDP will be increased from 19.9 percent to 23.8 percent by the year 2010-11.*



the priorities of the government seem to be clear and these are basics if done properly will bring back the possibility of sustained growth for pakistan in the long run, though with all the basics right the utmost important thing would still be political stability. if that political bit can happen and be sustained then the biggest of the hurdles can be dwarfed.


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## macintosh

'Pak has petroleum reserves for only six days' 

1/26/2009 7:29:40 PM 


Pakistan is reeling under acute shortage of oil reserves as its petroleum products will last only six days while the furnace oil stock has fallen substantially which can fulfill only nine-day requirements of the country. 

Existing petroleum reserves were sufficient for only six days, but there would be a considerable boost to country's oil reserves after it gets new shipment of oil today, Petroleum Ministry Additional Secretary G A Sabri was quoted as saying by the Geo TV. 

Sabri said the government was vigilant about the petroleum products' reserves. "We are currently importing petroleum products based on 10 days' inventory keeping in view the dollar constraints." 

According to data available with GEO TV, in the corresponding period of the last year, the country had petrol reserves for 20 days' consumption and furnace oil for 21 days. 

Pakistan, which is dependent on gulf countries for its oil need, annually requires some 60 million tonnes of oil, two-thirds of which is imported.


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## asaad-ul-islam

and yet, again democracy delivers the finishing blows to the country...

*Foreign debt to swell to $51.5 bn*​
Monday, January 26, 2009

By Khalid Mustafa

ISLAMABAD: Pakistan&#8217;s external debt is to alarmingly swell to $51.5 billion by the end of the ongoing fiscal year 2008-09 with rise in debt of 16 per cent if compared with foreign debt of $46.5 billion in the last fiscal year.

The public debt of the country will climb by 20.5 per cent to Rs1.3 trillion in toto that includes Rs900 billion foreign debt and Rs400 billion domestic debt, a senior official in the Ministry of Finance told The News.

The country *headed by President Asif Ali Zardari will witness the 16 per cent rise in external debt only in fiscal year 2008-09*, which the country experienced in the last eight years. The major factor in 16 per cent rise in foreign debt is moving the International Monetary Fund (IMF) for a bailout package of $7.6 billion. &#8220;*This has virtually reversed the declining trend in debt to GDP ratio*,&#8221; the official said. During this fiscal year, the country will get $4.6 billion from the IMF in three instalments by June 2009, $1 billion and $500 million from the World Bank and $500 million from the Asian Development Bank, and $400 from other IFIs, meaning Pakistan will get $7 billion in the current financial year. Pakistan will have to pay $3.1 billion as debt servicing this year, which will increase to $3.5 billion in the next fiscal year. 

*Prior to moving the IMF, the sharp downslide of rupee against the US dollar has made an alarmingly whopping addition of around Rs900 billion to public debts without any additional borrowing of even a single penny.*

&#8220;*Depreciation of the currency by just one rupee against US dollar enhances the public debt by Rs46 billion*,&#8221; the official said. *In Musharraf regime dollar-rupee parity was at 1:60, but when the PPP took the driving seat, rupee started sliding down because of the poor foreign exchange reserves and at one time dollar-rupee parity reached at 1:84. Owing to this factor the government&#8217;s national debt swelled by Rs900 billion.*

To a question the official said that the GDP growth is expected to be at 2 per cent keeping in view the bumper crop of wheat and in case agriculture does not perform for any reason, the country&#8217;s GDP would be in negative zone. 

*This will hurt the capacity of the country to retire the huge debt. With high discount rates in the country, most of the businesses have gone into the red zone.* With 2 per cent GDP performance, FBR will not be able to increase the tax to GDP ratio, which right now stands at 10 percent. *It means that the country&#8217;s revenue would not be able to maintain the debt servicing. &#8220;This may lead to an embarrassing situation in the years to come for the country*,&#8221; the official opined.


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## Pk_Thunder

*Pakistan asked to attract overseas investments*​
KARACHI (January 28 2009): Consul General of France, Pierre Seillan has said that Pakistan should market the name for attracting investment and should build image to give confidence to attract overseas investments.

Speaking at a meeting of Site Association of Industry (SAI) on Tuesday, he said that few years back he used to receive inquiries from French Investors for investment in Pakistan but with the passage of time, it appears that French investors are losing interest, considering Pakistan not investment conducive due to shrinking trend of receiving inquiries of investment in Pakistan from France.

Pierre said that France had made investments in Pakistan. The French agro business giant had a joint venture, which produces the world-class biscuits.

There is now more scope for joint ventures in the fields of telecommunications, chemicals, automobiles, shipbuilding etc. There is room for improvement and volume of the trade could be increased through regular and sustained exchange of information, he added.

The Consul General was of the view that with development of infra structure, the possibilities of investment may increase and French entrepreneurs may be attracted to make investment in different sectors in the near future in a big market of 170 Million people.

He said that his country would extend all possible help and assistance towards Alternate Energy Projects in Pakistan, which is prime need of the hour. Covering the education side, the Consul General said that the French government is continuing to extend all possible help in the field of Science & Technology for benefit of both the countries and so many institutions are operating under the auspices of French Government in Karachi, Faislabad and Lahore and are imparting training in latest technology.

Commercial Counsellor of France, Francis Widmer said we should not expect any relaxation from the European Union in GSP and anti dumping duties as alone France cannot help in this matter because it is the unified policy of European Union which drives the trade within and from EU.

On market access to France directly, he said that it is a difficult task but not impossible because we are part of the EU club and have to be under the policy making of EC.

He advised that Pakistan diplomatic core posted in the EU should persuade at Brussels and as well as all the member countries of EU. Influencing all member countries of EU may pave the way for a policy which will also market access for Pakistani goods in Europe at a comfortable level for competing with the goods received by EU from other countries in the region.

Chairman SAI, Engr. M.A. Jabbar said that Pakistan and France have history of co-operation and cordial relationship in economical arena and defence production and its need. Engr. M. A. Jabbar expressed anxiety of Pakistan 's limited trade with France The trade of less than a billion euro a year, which is less than 2% of total imports and exports of Pakistan, which need to be reviewed. France offers the excellence of consumer products and as well as telecommunication and electrical equipment which has made in France name to sale trust in the market. Possible investment in this sector by French counterparts for a market of 170 million people may be market demand and profit driven.

The meeting expressed its desire from the participant members of association that the CG of France may consider lobbying to help to mitigate the effect of GSP and GSP, available to other countries in the region. Participants of the meeting thought that the desire of increasing business by France could play a vital role in strengthening the share of France in Pakistan in the shape of manufactured merchandise, investments and exporting services required by Pakistan. Those who attended the meeting include Suleman Chawla, Sr. Vice Chairman and others.-PR


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## Pk_Thunder

*Regulatory duty abolished on imports: FBR concession to investors in chain stores*​
RECORDER REPORT
ISLAMABAD (January 28 2009): The Federal Board of Revenue (FBR) has abolished regulatory duty (RD), ranging between 15 to 30 percent, on import of 19 types of capital goods used for establishment of wholesale trade centres or retail chain stores. This is subject to the condition that the companies have to import the goods for their own utilisation and not for sale.

The FBR has amended SRO.896(I)/2008 through a notification issued here on Tuesday. The decision has been taken to facilitate the investors, intending to make investment in chain stores across the country. It would also be instrumental in expansion of the existing network of the retail chain stores operating in the country.

According to the notification, regulatory duty would not be applicable on the capital goods if imported for establishing wholesale or retail chain stores under Serial No 17 of the S.R.O.575 (I)/2006, June 5,2006, upon fulfilment of conditions mentioned therein and subject to the condition that these companies import the same for their own utilisation and not for sale. The following are the names of items and rate of RD, which would not be applicable at the import stage:

-Pad locks: five percent ad valorem; exhaust fans: 15 percent ad valorem; window or wall type: 15 percent ad valorem; self-contained or split type comprising inner and outer unit whether or not imported separately: 15 percent ad valorem; other: 15 percent ad valorem; incorporating a refrigerating unit and a valve for reversal of the cooling/heat cycle (reversible heat pumps): 15 percent ad valorem; incorporating a refrigerating unit: 15 percent ad valorem; not incorporating a refrigerating unit: 15 percent ad valorem; combined refrigerator freezers, fitted with separate external doors: 15 percent ad valorem; compression type: 15 percent ad valorem; other: 15 percent ad valorem; Freezers of the chest type, not exceeding 800 l capacity: 15 percent ad valorem; Other furniture (chests, cabinets, display counters, show cases and the like) for storage and display, incorporating refrigerating or freezing equipment: 15 percent ad valorem; Line telephone sets with cordless handsets: 30 percent ad valorem; Other Apparatus combined with sound recording or reproducing apparatus: 20 percent ad valorem; metal furniture of a kind used in offices: 15 percent ad valorem; other metal furniture: 15 percent ad valorem; 9403.5030 other: 15 percent ad valorem; chandeliers and other: 15 percent ad valorem.


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## Pk_Thunder

*Pakistan should switch from stabilisation mode: poverty rate may be 40 percent by year-end, says Pasha*​
AHMED MUKHTAR
ISLAMABAD (January 28 2009): Pakistan should switch from stabilisation mode to recovery mode in next few months to avoid a recession becoming a depression and poverty level hitting so high that it starts creating law and order problems, says former finance minister Hafeez A Pasha.

Talking in Aaj TV's programme Islamabad Tonight, Pasha said that stabilisation and recovery need a subtle balance and the government should be very watchful on not focusing more on stabilisation than on recovery by cutting development spending and other measures.

Pakistan should take advantage of falling international commodity price, which has relieved its fuel and edible oil prices, that adjustment should start, visible in facts, post-March April.

As inflation falls, it should start cutting interest rates. He said that in last two years poverty incidence substantially increased and it is now around 36 percent because of very high food prices. Still higher inflation and growing unemployment are keeping fears alive to push poverty rate further high and the country may hit 40 percent of poverty by end of this fiscal year.

At that level poverty becomes a crisis point which can start creating a law and order situation, like people snatching eatables from others and suicide rates rising, because of hunger, becomes visible in society. Dr Pasha said that policymakers should liquidate inter-corporate debt by any means.

He said that the government has utilised only 16 percent of development budget, which casts very negative results on construction related sectors causing upsurge in unemployment and poverty. Development spending should be protected carefully. He remarked that negative balance of payment grew rapidly in last 6 years, without changing a point in tax to GDP ratio at 10.5 percent which merits a careful policy watch.

Pasha invoked policymakers' focus on banking sector saying that in first quarter increase in non-performing loans is 15 percent, which shows real estate sector has started showing problems when its growth rate has already gone into negative in first five months of this fiscal year.

Moreover, spread of banking sector increased from 4.5 percent to 7 percent in last 10-15 years, which has artificially increased cost of capital and thus industrial growth. Saqib Sheerani Lead Economist of RBS Bank said that many loans were misused and would be cleared in next one-and-half years and keep showing in banking balance sheets.

Sheerani said that reserve level is very difficult to maintain as no inflows are expected in next two years. He said that there are few black holes in the stock market and this is in the form of costs created as loans taken for other sectors and used in asset markets. He said that millennium development goals (MDGs) should have a very clear focus for the government.


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## Pk_Thunder

*Allowing resident Pakistani companies to invest abroad: SBP governor explains position*​
MUSHTAQ GHUMMAN
ISLAMABAD (January 28 2009): Governor State Bank of Pakistan (SBP) Saleem Raza on Tuesday failed to satisfy the Economic Co-ordination Committee (ECC) of the cabinet regarding selection of resident Pakistani companies being allowed for investment outside Pakistan, well-informed sources told Business Recorder.

When a summary of the SBP on equity based investment by the private companies in fourth quarter of 2008-09 came under discussion , some of the ECC members reportedly termed the approved cases as ' flight of capital', sources said. SBP has allowed eight private sector companies for equity based investment abroad in fourth quarter of 2008-09 in accordance with approved policy of the federal government.

The sources said, SBP granted the permission to M/s Zafa Pharmaceutical Laboratories (Pvt) Limited (ZPL), M/s Jaffer Brothers (Pvt) Limited, M/s Fauji Foundation, M/s Azgard Nine Limited, M/s Wavetech (Pvt) Limited, M/s BP Pakistan Exploration and Production Inc, M/s Roche Pakistan Limited and M/s Deutsche Bank AG, Pakistan. The total amount remitted to the companies was $48,595,939.

According to the details obtained by Business Recorder, M/s ZPL was earlier allowed to undertake investment in M/s Balsam Pharmaceutical Laboratories Co Limited, Sudan (BPL) in June 2004 and August 2005. Under these permissions, ZPL acquired equity stake to the tune of 55 per cent in BPL against remittances of $1 million and $454,525 respectively.

Resultantly, ZPL holds 77 per cent shares in BPL. M/s ZPL approached SBP seeking approval to remit Euro 318,104 (approximately $502,649) or equivalent in UAE Dirhams on account of equity based investment in M/s Balsam Pharmaceutical Laboratories Co Limited, Sudan. ZPL had stated that at the time of acquisition, financial institutions in Sudan had assured them to provide financial facilities/ assistance for capital expenditure and working capital needs once the company is in operations.

Initially the banks provided them facilities on very higher rates (up to a maximum 48 per cent per annum) and then later on they turned down most of their request due to the fact that the policies of the Central Bank of Sudan were not consistent and frequent changes were continuously being introduced in prudential regulations whereby financial facilities to foreign companies holding majority shares was discouraged/denied.

ZPL had also stated that since they have acquired the company, $1.4 million have been invested and according to a valuation of land and building carried out in June 2006, the value of land and building is approximately $2.4 million. The valuation of plant and machinery carried out by Tadamon Real Estate Company was approximately $6 million.

As reported by ZPL, the prime objective of ZPL is to bring the name of Pakistan in the Sudan, at the top of all the countries in the pharmaceutical and health care related products. The secondary objective is to promote exports of Pakistan origin pharmaceutical and health care related products. ZPL's exports for the year, 2007 were $600,000- approximately amongst which 26 per cent ($156,000) were exported to Sudan.

In current year, ZPL foresees an increase of 40 per cent over the last year's exports and ZPL's yearly exports to Sudan will go up to $350,000. Keeping in view the above and to provide financial resources to save the already made investment and seeing potential growth in exports, M/s ZAFA Pharmaceutical was allowed to remit Euro 318,104 to Sudan to acquire additional 17.5 per cent shares in M/s. Balsam Pharmaceutical Laboratories Co Ltd Sudan.

The sources said, M/s Jaffar Brothers (Pvt) Limited had approached SBP seeking its approval to allow them to remit $650,000 as set up cost to establish their branch office in Tokyo, Japan.

The principal activity of the M/s Jaffar Brothers (Pvt) Limited (JBL) is trading, indenting and performing services in the areas of information technology projects and heavy machinery, fertilisers, agriculture and household hygiene and decorative. The goods and services provided by JBL have led to improve productivity in the agro sector, information management field, transportation, telecommunication, power generation and transmission projects.

JBL intended to expand its business activities related to Japan's Overseas Development Assistance (ODA) by opening its branch office in Tokyo, Japan. This initiation not only allows JBL to expand its base to foreign countries, but will also bring recognition in many countries of a Pakistani organisation executing project aimed for poverty alleviation through Japanese Grant Aid Projects. JBL, through the co-operation of its Japanese partners, has successfully taken on numerous ODA projects in Pakistan as their local agent.

In the past, Japanese authorities restricted the participation in its tenders to companies based in Japan and the origin of the goods to be supplies were also tied to Japan. However, in recent years in order to enhance the competition in the tenders the rules have been relaxed allowing organisations having their parent company in a foreign country and a local representative office in Japan to participate in its tenders.

To facilitate JBL to participate in tenders, they were allowed to remit $650,000 by SBP to Japan to set up a branch office in Tokyo. The sources said, Fauji Foundation (FF) has commenced constructing a 175 MW gas based electrical power complex at Dharki, Sindh.

The said project is being implemented through Foundation Power Company (Dharki) Limited (FPCDL), a Pakistani company pursuant to and in accordance with the requirements of the Power Generation Policy-2002. The Dharki project has been licenced by Nepra, which has also provided a tariff determination approving the financial structure under the Nepra legal regime.

The tariff determination requires the project sponsors to invest at least 25 per cent of project cost (estimated at approximately $200 million) by way of equity ie $50 million to be invested by project sponsors. Fauji Foundation has agreed to jointly invest in the Dharki project with the ADB such that 80 per cent of equity investment will be made by FF and the remaining 20 per cent equity investment will be made by ADB. ADB's participation and the transaction structure have been approved by the Economic Affairs Division (EAD.

Fauji Foundation and ADB intended to route their equity investment for the Dharki project through an offshore company (Special Purpose Vehicle), which in turn, will hold 100 per cent of the shares of FPDCL. The equity structure of the offshore company will be as Fauji Foundation, up to $12.00 million and ADB up to $2.75 million.

M/s Fauji Foundation (FE) had approached SBP seeking approval to allow them to remit US $12 million to set up an offshore company in British Virgin Island. This equity investment in an offshore company will be invested back in FPDCL. The proposal of Fauji Foundation was approved by ECC in its meeting held on April 22, 2008.

According to sources, M/s Azgard Nine Limited (ANL) had approached SBP seeking approval to allow them to remit Euro 23.758 million to (approximately equiv. $34.421 million) set up a 'Special Purpose Vehicle/ holding company namely Farital AB, Slagthuset, Carlagatan 12 A, 211 2- Malmo to be incorporated in Sweden. Farital AB will acquire 100 per cent stake of Montebello New Company (target company), a company incorporated under the laws of Italy with their offices located in Verona, Italy.

The information provided by ANL reveals that the company is business adventure of the Bonazzi Group founded in 1956. In early 60's, the group entered into textile industry and focused on nylon clothes dyeing and finishing activities. The group started denim production within Montebello S.r.l. in 1973.

As per ANL, the target company is a specialist in the global denim space supplying different types of special denim such as dobby deni, over dyed denim, blumako and stretch denim. The target company has a global distribution network through own sales force and brand with 85 per cent of the sales are in the PAN European market.

The rationale given by ANL to incorporate a company in Sweden is the liberal tax policies of Sweden for foreign controlled companies. The Swedish tax laws offer complete exemption from tax on dividends, capital gains, withholding deductions from remittances on account of dividends, royalties etc. The proposal was approved by ECC in its meeting held on April 22, 2008. The sources said M/s Wavetech (Pvt) Limited had approached SBP seeking approval to allow them to remit $46,800 as set up cost to establish their branch office in China.

Giving rationale for opening of branch office in China, Wavetech (Pvt) Limited (WPL) had stated that with respect to latest technology and timely delivery. It is subcontracting most of its display and queue management system hardware in China. As the business is increasing, this set up required more follow up and quality assurance. Therefore, they need to open their branch office in China to make sure the hardware manufactured by the subcontractor are according to their standard and the quality control according to their need.

The mandate of branch office includes (i) quality assurance (ii) timely delivery (iii) research for new subcontractor and (iv) help in bringing new business. The SBP allowed the company to remit $46,800 to China to set up their branch office.

BP Pakistan Exploration & Production Inc, (BP Pakistan) was allowed to remit GBP 228,069.00 (+/5%) approximately $453,016 from FE 25 account for participation in share option plan ie Employees Share Match Scheme -2008 on behalf of their 507 employees. Roche Pakistan Limited was allowed to remit Rs 30,349,926 (approximately $451,044) for the period from June, 2008 to May, 2009 on behalf of its employees to Roche Holding AG under "Roche Connect" Plan viz. Global Share Purchase Scheme.

Deutsche Bank AG (DB) was allowed to remit Rs 4,789,761 (approximately $71,430/-) on account of shares allocated to the eligible employees under the Deutsche Bank AG's Global Share Plan-2006. Consequently, SBP allowed a total remittance approximately equivalent to $975,490 under above plans. However, actual remittances will be made in future as and when options are exercised by employees.


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## Pk_Thunder

*Zardari for increasing Pak-China trade*​
RECORDER REPORT
ISLAMABAD (January 28 2009): There is a urgent need to translate Pak-China strategic partnership into robust trade and investment relationship, said President Asif Ali Zardari, here Tuesday. He expressed these remarks during a briefing on Pak-China relations at the Presidency to review the progress made on various co-operative projects between the two countries and ways and means to speed up the process.

The Chinese Ambassador in Islamabad, Lue Zhaohui also attended the meeting by special invitation. The President said that the present level of trade which stood between five to six billion dollars did not fully reflect the deep ties between Pakistan and China and that there was a need to quadruple it in the next few years.

He said that the joint statement issued at the end of his visit to China in October had rightly stressed the need for economic co-operation as an integral part of the strategic partnership between the two countries and advised the government to take steps to translate the joint statement into practice.

Giving briefing on the subject Pakistan's Ambassador to China, Masood Ahmad dilated upon the wide range of strategic and existing economic co-operation and relationship between Pakistan and China in security and defence, agriculture, power generation and finance and banking fields.

The meeting was informed that China Coal Technology and Engineering Corporation Group (CCTEC) was positively interested in Thar Coal Project and that a team of the Group was ready to visit Pakistan for this purpose soon. The ambassador said that areas in agricultural co-operation had been identified and the two sides were moving towards formalising co-operative agreements.

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## Pk_Thunder

*IDA to provide $25 million for Trade, Transport Facilitation Project*​
KHALID ABBAS SAIF
FAISALABAD (January 28 2009): International Development Association (IDA) will provide US $25 million for "Trade and Transport Facilitation Project - II" to improve performance of trade and transport logistics by facilitating the implementation of the NTCIP; and the simplification and modernisation of Pakistan's international trade procedures and practices.

In a project update report, Jean Noel Guillossou, Senior Transport. Economist of World Bank said that Pakistan has faced both external and internal shocks during the past 12 months resulting in a deteriorating macro-economic situation. The government is now determined to regain and maintain macroeconomic stability and has been discussing with the IMF and the World Bank measures to put the economy back to a path of high sustainable growth.

Jean Noel Guillossou mentioned that the economic growth accelerated from the average of 4.6 percent during the 1990's to an average of 7.2 percent during the five years preceding the recent crisis, driven by solid performances in the services and industrial sectors, with contribution from agriculture. With the support of the community of development partners and implementation of measures to improve macro-economic performance which is underway showing positive results, the GOP aims to realise its goal of sustained 7 to 8 percent economic growth to achieve middle income country status by 2030.

WB report observed that the Pakistan Government recognises that transport and trade logistics efficiencies are necessary for economic stabilisation, sustained growth and international competitiveness. Supportive transport infrastructure remains one of the pre-requisites for sustained high economic growth. This was identified by the Government as a priority in the 2003-06 Poverty Reduction Strategy Paper (PRSP-I) and confirmed in the PRSP-II for 2008-11 under preparation by the Government where the objective of removing infrastructure bottlenecks through public-private partnership is one of the seven pillars of the Government's strategy. The Government intends to achieve this objective by continuing implementing the National Trade Corridor Improvement Program (NTCIP) adopted in 2005.

WB report pointed out that the main weaknesses of the Pakistan transport system in relation to what might be termed "international norms" can be summarised as follows:

-- High port costs and high port profits, resulting in higher charges to users than might be considered as desirable in terms of overall economic policy, increasing openness to the world economy and stimulating trade.

-- Long dwell times for inbound containers, resulting in congested terminals and the need to construct additional facilities. Ports with relatively shallow draft, which will increasingly limit shipping connections as the size of container vessels on direct service increase.

-- A fragmented approach towards trade facilitation with improvements to be made in the National Trade and Transport Facilitation Committee (NTTFC), the public private forum on trade facilitation issues. A weak, fragmented and relatively under-developed freight forwarding/ logistics sector, which has yet to provide the breadth of services and levels of vertical integration which are increasingly found elsewhere.

-- A rail system with the haul distances and engineering standards which should provide the potential for rail to take a substantial share of the long distance freight market but carries insignificant levels of freight traffic and has been largely abandoned by the private sector.

-- A main road infrastructure which requires major investment to provide the accessibility, capacity and quality required for rapid and reliable road services.

-- A trucking sector, operating old and technologically outdated trucks, which offers low freight rates but long transit times and unreliable service quality unless shippers are prepared to introduce additional and costly measures. Import regulations and tariff structures that inhibit the modernisation of the trucking fleet. A trucking sector which has low private costs but high external costs in terms of vehicle overloading, leading to road damage and high accident rates, and congestion.

World Bank report revealed that the development objectives of the NTCIP are to reduce the cost of trade and transport logistics and bring services' quality to international standards in order to reduce the cost of doing business in Pakistan and ultimately enhance export competitiveness and accelerate industrialisation.

The NTCIP is a holistic and integrated approach which encompasses the public and the private sector, services and infrastructure, reforms and investments, and the various sectors which are responsible for the level of performance of the National Trade Corridor (NTC).

The sectors include highways, road transport, ports and shipping, civil aviation, railways, and customs and trade logistics. NTC serves domestic needs and links the main industrial centres in Punjab and neighbouring countries in the north-west (Afghanistan) and north (China) with international markets through the southern Karachi area ports and the Gwadar port.

Most of Pakistan's external and internal trade transits through NTC - together the ports, roads and railways along the NTC handle 95% of external trade, 65% of total land freight and serve the regions of the country which contribute 80 to 85 percent of GDP. With a strong reform agenda supplemented by a comprehensive investment program, NTCIP has become essentially the medium term transport master plan for the country.

WB projected report mentioned that the strategic thrust of the program involves an extensive consultation and consensus building process with all public and private sector stakeholders, focusing on: (i) quick results through policy interventions, systemic and procedural improvements; and (ii) deep rooted institutional reforms to ensure sustainability.

The key policy areas targeted by NTCIP include policies that would: (a) lead to modern and streamlined trade and transport logistics practices; (b) improve port efficiency, reduce the costs for port users and enhance port management accountability; (c) create a commercial and accountable environment in Pakistan Railways and increase private sector participation in operation of rail services; (d) modernise the trucking industry and reduce the cost of externalities for the country; (e) sustain delivery of an efficient, safe and reliable National Highways system; and (f) promote and ensure safe, secure, economical and efficient civil aviation operations and boost air trade.

The proposed operation is fully consistent with the strategic objective of the FY 06-09 Country Assistance Strategy (CAS) to remove infrastructure bottlenecks supports sustained economic growth and improves competitiveness.

The CAS identifies the need for significant investment in Pakistan's infrastructure, in particular for the modernisation of the National Trade Corridor, to support Pakistan's growth and service delivery goals. The second Poverty Reduction Strategy Paper under preparation by the Government of Pakistan for the period 2009-2011 is based on ten pillars with pillar 7 "Removing Infrastructure Bottlenecks through Public-Private Partnerships" providing the objective to which the transport sector is expected to contribute


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## Pk_Thunder

*Over Rs 42 billion loans written off during last five years: Tarin*​
FIDA HUSSAIN
ISLAMABAD (January 28 2009): Advisor to the Prime Minister on Finance Shaukat Tarin has disclosed here on Tuesday that loans worth over Rs 42 billion had been written off during the last five years. The advisor told the Senate that the government was ready for any probe into this issue by finance committee of the Senate or the National Assembly.

The advisor fell short of saying in clear terms that loans were written off in transparent manner according to the State Bank of Pakistan's laid down procedure. This he said during the question hour as the house proceedings witnessed some heated debate between the opposition and parliamentary affairs minister Dr Babar Awan over the appointment of advisors without having expertise in the relevant fields.

Leader of the House in the Senate Mian Raza Rabbani defended the appointment of the advisors in an indirect manner and said that under the 17th Amendment, the Prime Minister's consultation or advice is not binding on the President. "Everybody knows here who had supported the 17th Amendment and who had opposed it. The PPP is against this amendment even today," Rabbani said.

The details of the loans, which were written off, were placed on the table of one senator. The library was closed that hindered the ascertainment of details as to who were the real beneficiaries. There was no detail that the previous government used any influence to get the loans written off benefiting specific segment of the society.

Replying to a question, Tarin said that all the loans were written off under the State Bank of Pakistan (SBP) circular 29. This was between the banks and their customers, he added. Tarin's observation, forced the JI senator Professor Khurshid Ahmad to disclose that he personally knew some cases when the Bank of Khyber was under tremendous pressure to write off the loans of certain people.

He also enquired that is there any amount which has been written off under any rule of SBP other than circular 29. Tarin replied he would check it and reply to the house within due course of time.

On a question of Senator Wasim Sajjad regarding loans advanced to the textile industry, Tarin said the textile industry had been given one-year moratorium. Meanwhile, Babar Awan defended the appointment of the advisors saying that the constitutional provisions do not bar any person from being appointed as an advisor due to lack of expertise in the concerned field.

The constitution says that any qualified person can be appointed and he can remain in the service with the pleasure of the Prime Minister/President, he added.


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## Pk_Thunder

*Cabinet approves MTBF 2009-2012*​
SOHAIL SARFRAZ
ISLAMABAD (January 29 2009): Federal Cabinet has approved Medium Term Budgetary Framework (MTBF) 2009-2012 for all the federal ministries under which ministries would be required to bid for allocation of funds for their projects by convincing Cabinet or Prime Minister on usefulness/viability of the project for Pakistan.

This was stated by Dr Waqar Masood Khan, Secretary Finance during meeting of the Senate Standing Committee on Finance and Revenue on Wednesday held in the chairmanship of Senator Ahmed Ali. Salim Raza, Governor State Bank of Pakistan (SBP) was also present in the meeting.

Secretary Finance said that due to limited fiscal space, ministries would have to convince government for obtaining funds for their respective projects under the MTBF.

He said that the debt path has increased and under the MTBF the government has debt reforms under which debt burden to be reduced from 53 percent of the Gross Domestic Product (GDP) in 2008-2009 to 50 percent of the GDP by 2011-12, he added.

He said that the "Pakistan is loosing fiscal space for carrying out development projects and there would be Rs 40 billion available with the federal government for development in next fiscal 2009-10," he added. Pakistan would be able create fiscal space up to Rs 250 billion by third fiscal year 2011-12 for development projects under MTBF.

The cabinet has also approved top to down ceilings for the current expenditures of the federal ministries for the next three years under MTBF to limit such expenditures to a sustainable level.

According to him, government has not placed any cut on Public Sector Development Programme till date, however, releases for the development projects have been witnessed slowdown due to fiscal difficulties in first half of the current fiscal year, he opined.

He also informed the committee that public sector entities of the federal government were holding in banks Rs 255 billion PSDP allocations that were made to them in last few years. Now they have started utilising these funds for their development projects.

Dr Waqar said that the government has increased the revenue target from Rs 1.250 trillion to Rs 1.360 trillion to meet budgetary obligations. The Federal Board of Revenue has achieved 95 percent of the revenue collection target fixed for July-December (2008-2009) period by collecting Rs 560 billion against the upward revised target of Rs 581 billion.

Budget deficit would remain at the projected level of 4.2 percent of the GDP and other main projections to remain at the same level as approved by the parliament except inflation projection, he added.

In his first interaction with Parliamentarians, Salim Raza, Governor SBP said that presently foreign exchange reserves stand at $10.6 billion, which include $7.3 billion with SBP and $3.3 billion in bank deposits. He said that foreign exchange reserves with SBP would be increased to $10 billion and overall reserves to increase to over $13 billion by June 30, 2009.

He was of the view that National Saving Schemes (NSS), apart from schemes for widows and pensioners, could be converted into tradable bonds. Explaining this proposal, he said that it would help the government to develop bond market with good risk-free interest for the investors. These bonds would be reliable source of government financing as well as beneficial for the investors.

The government should allocate from the budget subsidy for the saving schemes for pensioners and widows for better return to them and curtail undue benefit taken by other investors through these markets, Governor also proposed.

He seemed to be agreed with the viewpoint of Senator Haroon Akhter Khan who was of the view that core inflation is not coming down as the government is not reducing POL prices and increasing gas and power tariff giving less benefit of decrease in oil prices to the consumers. Senator Haroon Akhter was of the view that aggregated demand in the economy has came down to a level where monetary stance should be changed and interest rates should be brought down to help revive the manufacturing sector.

Governor SBP assured the banks should not afraid of lending to private sector. The SBP would relax its regulations and would provide regulatory space to banks to lend private sector. He said that presently profit rates of the banks are on the higher side and the central bank is also keeping watch on this phenomenon.

He said that SBP has announced relief package for the textile sector and is examining similar packages for the other sectors like manufacturing sector for revival of economy.

He said that being Governor, he would help manufacturing sector to revive and help supplement government''''s agenda of enhancing exports and job opportunities. He assured the committee that SBP would extend full help to the government and private sector for revival of economy and meeting challenges due to the economic slowdown in developed countries.


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## Pk_Thunder

*Prime Minister for equitable economic rules for developing countries*​
DAVOS (January 29 2009): Prime Minister Yousuf Raza Gilani has called upon the world leaders to renew their commitment to introduce equitable global rules and ensure participation of developing countries including Pakistan in economic decision-making.

In his message on the World Economic Forum's (WEF) annual meeting, the Prime Minister said at Davos 2009 that " we should renew our commitment to equitable global rules and institutions, and participation of all developing countries in international economic decision-making and norm setting."

Prime Minister Gilani said the case for a regulated world economy and multilateral governance is made forcefully by the financial crisis, adding that countries like Pakistan, because of their strategic location, size and trained manpower can make significant contributions to restart the global economy.

He stressed the need for linking the regions for a catalysed growth, and said Pakistan had the full potential of becoming regional hub of economic activity. "Doing business in Pakistan allows doing business with a region with immense economic potential, " the Prime Minister said.

On Wednesday morning, the Prime Minister gave interviews to leading media organisations including CNN and Reuters, where he focused upon various issues including Pakistan's role in the global community and the government's efforts to promote peace in the region.

Prime Minister Gilani will on Thursday address an important session dubbed 'Pakistan and its neighbours' where he will highlight Pakistan's pivotal role for security, stability and co-operation in the region. The Prime Minister is also expected to hold bilateral meetings with British Prime Minister Gordon Brown, Russian Prime Minister Vladimir Putin and President Klaus of the Czech Republic on the sidelines of WEF meeting.

The Prime Minister will host a working lunch for selected business leaders, and will brief them on the trade and investment opportunities available in Pakistan. The WEF annual meeting will provide Prime Minister Gilani an opportunity, not only to interact with a host of world leaders bilaterally but also to seek assistance from international business community for enhanced investment in Pakistan.


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## Pk_Thunder

*Pakistani among six selected to attend WEF at Davos*​
KARACHI (January 29 2009): Six young community activists including one from Pakistan has been selected to attend a panel with Kofi Annan at the 39th World Economic Forum (WEF) Annual Meeting in Davos, Switzerland, which has started in Davos.

A British Council statement issued here on Wednesday said that the six youngest panel members at the WEF comprise of Meeran Karim (18) from Pakistan, James Chatepa (16) from Malawi, Charlie Young (16) from the UK, Sarah Nkhoma (19), from Malawi, Ohm Gore (19) from the USA, and Elsabe van Vuuren (17) from Namibia.

It said that as part of the British Council's pioneering initiative, Global Changemakers, will represent the voice of their generation in a major panel debate on January 29 where they will share the floor with Kofi Annan, the President of the Global Humanitarian Forum, Geneva, and former Secretary-General of the United Nations.

On the panel 'Shaping the Post-Crisis World: Views from the Next Generation' they will discuss the challenges that their communities face on issues such as climate change, education, intercultural conflict and poverty.

Last week, sixty Global Changemakers from more than thirty countries, including Pakistan, Afghanistan, Iraq and Burma, met in Guildford, UK, for a week of intensive workshops to shape their call to action to world leaders at the World Economic Forum.

Following a democratic selection process, the Changemakers elected six of their peers who will now take their message to the highest level at Davos. These Global Changemakers are young people aged between 16 and 19, who are active in their communities working on projects ranging from community work and environmental campaigns to education initiatives and political engagement.

Upon their return to their home countries, they will continue to be supported by the British Council in the community action projects they will work on with their peers. Using this strategy, Global Changemakers multiplies its potential for change, not only involving the direct participants but many more through the participants' networks.


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## Pk_Thunder

*Tarin assures early payment of R&D claims to exporters*​
By Parvaiz Ishfaq Rana
KARACHI: Adviser to Prime Minister on Finance Shaukat Tarin said on Wednesday that instructions had already been issued to the State Bank to pay research and development (R&D) support claims for shipments made up to June 30, 2008.

In a meeting with the leaders of the apparel industry in Islamabad the adviser assured the exporters that he would follow up the matter with the State Bank for early payment of such claims. Minister for Textile Industry Rana Farooq Saeed Khan was also present in the meeting.The details of the meeting were provided to Dawn on telephone by M Naqi Bari, chairman Pakistan Apparel Forum.

He informed the meeting that the then minister for finance Syed Naveed Qamar had assured the continuation of R&D support to the apparel sector up to June 30, 2009. Upon this assurance the exporters made their export commitments by taking into consideration the R&D support but are still waiting for payment of their claims.

Mr Bari pointed out that as a result a large number of export houses have suffered huge losses and are now unable to meet their export commitments due to liquidity crunch.

Mr Tarin assured to look into the issue and find out as to what could be done to save such exporters from huge financial losses. Regarding multiple collection of taxes from apparel exporters the prime minister adviser on finance told the representatives of member associations of apparel forum that he would be holding a meeting with all the stakeholders of the textile sector, including spinning, weaving, processing, home textile and apparels in the first week of next month in Karachi and after consultation a decision will be taken there.

Shaukat Tarin agreed with the exporters that the higher cost of export financing up to 7.5 per cent was rendering products uncompetitive in the world market.

He said that the value-added textile exporters, who are not defaulters of short-term export refinance for the last three years should be rewarded.

He further said that such exporters should be entitled for long-term financing equal to the extent of the amount of export refinance Part-II at the rate of 3 per cent per annum to enable them to upgrade their manufacturing facilities on the pattern of technology upgrading programme of India.

However, he said all these issues are already under consideration of the government, which may also include used machinery to be financed against Long Term Finance facility. The government, he said, will also consider special arrangements for the apparel sector with trickle down benefits to the whole chain of textile.

The adviser assured the apparel leaders that the textile industry would be given priority while considering reduction in gas and power charges in future and will be provided gas and power at competitive rates.

Mr Tarin said that the government had given the highest priority to the duty-free market access to US, EU and Canada and these efforts will surely pay dividend.


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## Pk_Thunder

*Multinationals keen on investing amid security concerns*​
LONDON (January 29 2009): Experts at a seminar on investment opportunities in Pakistan have said that irrespective of security conditions in the country, multinationals continue to take their business to this part of the world. The speakers included former Attorney General of Pakistan Makhdoom Ali Khan and risk management specialist John Higgs.

The title of the event was 'Investment in Pakistan' managing the risks-due diligence and the litigation landscape organised on Tuesday evening by the leading UK legal and financial company SJ Berwin on behalf of the Pakistan Private Equity and Venture Capital Association of Europe (PVCAE).

The experts examined the particular challenges faced by the investors in Pakistan and the way of managing the risks. They noted that the country attracted a growing amount of investor interest over the past decade and continues to show resilience as an emerging market.

Higgs said the past year saw great challenges in the form of political change and economic turbulence as well as more recent tensions with its neighbours as it deals with continuing security threats both inside and outside its borders.

The subjects he covered during the course of his talk included investigative due diligence, political and security analysis, fraud investigations, problem solving, crisis management and business continuity planning and security support.

He said the current energy crisis and deficiencies in the supporting infrastructure were also a hindrance to investment. Nevertheless, according to Higgs multinationals were not pulling out of Pakistan and continued to have faith in the long-term future of the country, which offer better returns on their investments.


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## Pk_Thunder

*Pakistan appears to have met initial targets: IMF*​
By Anwar Iqbal
Thursday, 29 Jan, 2009 | 11:47 PM PST |
WASHINGTON: The International Monetary Fund said on Thursday that data indicates Pakistan has met its end-December targets under its 23-month IMF funding programme, suggesting the government is making some headway in its balance of payments crisis.
Initial developments under the program have been positive, IMF spokesman David Hawley told a regular news briefing.

The foreign exchange rate has appreciated somewhat and preliminary information suggests that end-December targets for net international reserves and net domestic assets at the State Bank of Pakistan were met, he added.

Earlier Thursday, the State Bank of Pakistan announced that its foreign exchange reserves rose $260 million to $10.21 billion in the week ending Jan. 24. This, however, includes $500 million from China to help rebuild reserves, which had declined to dangerously low levels last year.

Responding to another question, the IMF spokesman said no date had yet been fixed for sending an IMF mission to Pakistan for reviewing the programme. The next assessment will take place in the first programme review which is scheduled to be completed by March, he added.

Earlier media reports, however, suggested that IMF and Pakistan officials may meet in Dubai between Feb. 14 and 24.

Pakistan and the IMF agreed on a $7.6 billion loan deal in November to steady the country's finances and stave off a balance of payments crisis and possible default on its foreign debt.

At the time, the Pakistani rupee had fallen sharply against the dollar and the country's stock market dived after foreign investors took flight amid a global credit crisis that had heightened Pakistan's economic woes.

The next talks with the IMF will focus on the second tranche of $775 million. Pakistan has already received $3.1 billion from the IMF bailout package.

The spokesmans assessment that Pakistan has met its end-December targets indicates that Pakistan will qualify for the next tranche.

The final decision, however, will be taken by the IMF executive board, which is expected to meet in March.

The third tranche of $750 million will be released in June but to qualify Pakistan has to raise the power tariff by about 22 percent. This would strengthen the fiscal health of Pakistan Electric Power Company.

For the fourth tranche, the government will have to end the subsidy of Rs 77 billion it gives to the power sector.

The elimination of the subsidy will lead to an increase in power tariff, which may cause violent protests by the consumers already agitated by long power blackouts known as the load-shedding.


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## ejaz007

*Forex reserves cross $10bn mark*

KARACHI: The countrys liquid foreign exchange reserves appreciated by $259 million during the last week. 

The State Bank of Pakistan statistics on Thursday showed that overall foreign exchange reserves registered an increase of $259 million during the week ended on January 24, 2009. The countrys foreign exchange reserves have crossed $10 billion mark to reach $10.207 billion on 24 January. The reserves held by the central bank showed an increase of $288 million during the last week. The central bank reserves reached to $6.872 billion as compared to $6.584 billion last week. Reserves held by banks (other than SBP), however, witnessed a decline of $29 million to reach $3.335 as compared to $3.364 during the last week. staff report

Daily Times - Leading News Resource of Pakistan


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## Pk_Thunder

*Tarin hints at special industrial package for NWFP soon*​
ISLAMABAD (January 30 2009): Prime Minister's Advisor on Finance, Shaukat Tarin on Thursday indicated that the government would shortly introduce a special industrial package for war-ravaged areas of NWFP, which might also include moratorium where needed. He said this while talking to a delegation of Sarhad Chamber of Commerce and Industry (SCCI), led by its President Sharafat Ali met the Adviser in his office here.

The delegation discussed with the Adviser multiple problems, confronting the trade and industry of NWFP in the wake of global war on terrorism in tribal areas. The delegates suggested that the Federal government, in view of geo-strategic importance of NWFP, should utilise foreign non-military assistance to bail out NWFP industry, focusing on speedy industrialisation to maximise the development process in the province.

The delegation briefed the Adviser about recent cases of exodus from various parts of the province to the provincial capital, exerting immense pressure on the infrastructure of Peshawar city. The business community of the province was facing liquidity problems and the banks were reluctant to provide credit line for the working capital, said the delegation.

The demanded that to boost exports to Afghanistan and minimise refund claims, the tariff structure on finished products should be modified and exports from the export processing zone (EPZ) areas be encouraged through providing security and related-infrastructure support.

It said the pharmaceutical industry was an upcoming industry in the NWFP, and needed special fiscal encouragement package to upgrade production of domestic needs and export to regional states. The Adviser to Prime Minister assured the SCCI delegation that the government would take into consideration the NWFP's pharma industry's problems, concerning duties-related reforms/modification in a way that it contributed to widen the country's export base that finally would scale up the country's economy.

He said the Federal government would speed up its efforts to get international market access via NWFP and Balochistan, enabling the country's industrial areas to develop into a wider industrial base to the benefit of investors and entrepreneurs.

Both the sides agreed that all stakeholders would put in their best efforts to transform existing economic adversity into future prosperity. The government currently was working on establishing a National Business Council (NBC), comprising 40 plus enterprising entrepreneurs, to contribute to the nation-wide economic regeneration, he concluded.-PR


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## Pk_Thunder

*'Efforts on to move toward focused economic direction'*​
RECORDER REPORT
ISLAMABAD (January 30 2009): Advisor to Prime Minister on Finance Shaukat Tarin has said that the government was making all-out efforts to move towards a focused economic direction by developing human resources. The advisor expressed these views at a meeting with UN Assistant Secretary on Political Affairs, Jean Arnult.

Both the sides discussed global economic crisis, its impact on UN member states and Friends of Pakistan's efforts to help support government of Pakistan in tackling domestic economic reforms agenda.

Shaukat Tarin briefed the UN Assistant Secretary General on GOP's ongoing efforts to restore peace in Federally Administered Tribal Areas (Fata) region that is supported by infrastructural development, social sector development, establishment of ROZs, poverty alleviation through BISP and a package of all-embracing development to bring undeveloped areas at par with urban centers.

Jean Arnault briefed the adviser on current global political scene and UN peace efforts to help various nationalities and states to create environment of peace and security for their citizens. Jean assured the adviser of UN support in GOP's efforts to reintroduce peace in Fata region, support FOPs' efforts to pick up development projects from GOP, and build an economy that ensures maximum economic opportunities to the people of Pakistan.

He appreciated GOP's 9-Point Economic Reforms Agenda that takes along all stakeholders on board for a long-term economic progress. GOP has placed special emphasis on getting its development projects audited by the companies of international repute to ensure transparency and fruition of objectives. Tarin explained to the visiting UN Assistant Secretary General that present coalition-based democratic government in Pakistan is making all-out efforts to move into a focused economic direction that fairly is targeted to develop the human resources, dovetail them into financial resources and move to an economic turn around. Present economic managers' team is doing its best to implement GOP's Economic Stabilisation Programme that foresees putting macroeconomic indicators on a track of stability.

Jean Aranult assured Shaukat Tarin that UN looks forward to Pakistan's all-encompassing political and economic success in its efforts to restore peace and economic stability. UN world continue to support Government of Pakistan in all sectors of development that finally lead to peace and political stability in the region, Arnault added.


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## Pk_Thunder

*Tremendous investment opportunities exist in Pakistan: Soomro*​
ISLAMABAD (January 30 2009): Chairman Senate, Mohammadmian Soomro on Thursday said Pakistan offers tremendous investment opportunities to foreign businessmen and entrepreneurs as the country has the potential to emerge as a major regional hub of transit trade.

Talking to High Commissioner of Canada and Ambassador of Japan, who called on him separately here, he said Pakistan is a country of nearly 170 million people with a strategic location having advantages of easy availability of hardworking and inexpensive labour. The middle class is expanding and purchasing power increasing, he said and added, similarly the banking sector is strong and robust to support expanding business operations.

He said power generation, infrastructure development, oil and gas exploration, housing and real estate are some of the areas, which hold great promise for any prospective investors. The Canadian High Commissioner said his country could help Pakistan in Hydro-Electric power generation as it has significant expertise in this field.

He also informed that the number of Canadians of Pakistani origin is increasing steadily and added "we attach great importance to our relations with Pakistan, which are expected to grow further in a number of areas." He hoped that Canadian assistance for social sector, which is presently about $10 million per annum would be increased gradually.

Matters relating to enhancing parliamentary linkage and exchanges also came under discussion and it was observed that the training of legislators is very essential to enable them undertake legislation. The Chairman said Senate is a very important national institution, which ensures equal representation to all the federating units. The purpose of the Upper House is to provide a second or Revision Chamber and its atmosphere is sober and solemn.

He said state institutions will have to be strong and stable to deliver and thanked the High Commissioner for valuable Canadian assistance for social sector development in Pakistan and its support for rehabilitation of affectees of October 2005 earthquake.

During the meeting with Japanese Ambassador, Chihiro Atsumi, the Chairman emphasised the need to further expand and consolidate business and economic relations. He said these relations are based on solid foundation and there is a need to build them further. The Chairman said lately a global slowdown is being witnessed, which is also affecting Pakistan, but it is hoped that things would improve within a reasonable time.

He also expressed the resolve that the country would continue its efforts for combating the scourge of terrorism and called for more technical support to knock out the insurgents.

The Chairman while renewing the resolve to take on the terrorists, called for addressing the root causes of terrorism and extremism, principally poverty and injustice. "The world community must appreciate the country's firm resolve and commitment to contain and eradicate terror despite heavy odds it is facing," the Chairman observed.

The Japanese Ambassador called for activating the Pak-Japan business forum urgently to the mutual advantage of both the countries. He said the Japanese businessmen are keen to work with their Pakistani counterparts and commended the efforts being made for economic development of the country.


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## Pk_Thunder

*Private sector participation in industrial sector growth urged*​
ISLAMABAD (January 30 2009): Federal Minister for Industries and Production, Mian Mazoor Ahmed Wattoo has urged the business community to enhance their participation in industrial growth for the development of the sector. He was talking to the delegation of Saarc Chamber of Commerce and Industry, which headed by its President, Iftikhar Ali Malik called on him here on Thursday.

Wattoo said that government is working to strengthen the national economy for which industrial growth is important adding that private sector can play a vital role to promote industrial activities in the country. He said government is working on a policy to promote public-private partnership in all economical activities especially in industrial sector development.

Problems face by the business community in this field would be solved on priority basis, he added. The minister said that business community should establish their contacts with Saarc country's business community and make efforts to develop joint ventures, as there are good potential for them in industrial sector's investment.

He said government is encouraging foreign investment in the country for which private sector should play their due role for economic uplift of the country. He asked that Gwadar Industrial Zone is a tax free zone and having attraction for Saarc member's countries while other industrial zone are also available for them.

He said that representation would be given to members of chambers and commerce in board of directors of all state enterprises, as consultation with business community will provide a boost in their development. President Saarc Chamber of Commerce and Industry, Iftikhar Ali Malik has said private sector is active in setting up of new industries and in this regard many joint venture have been signed with Saarc members countries. He said government should considered on our request about grant of incentives for the investors as this will help in promoting the investment.


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## Pk_Thunder

*Gilani invites investors to explore country's economic potential*​
DAVOS (January 30 2009): Prime Minister Syed Yousuf Raza Gilani on Thursday invited the foreign businessmen to invest in Pakistan and said a successful elected government was in place to ensure safe business environment for the investors. "Investing in Pakistan is investing in future," the Prime Minister said while addressing a lunch he hosted for the leading businessmen here on the sidelines of the World Economic Forum.

The Prime Minister said Pakistan's sound fundamentals offered the investors an opportunity to explore the country's economic potential in diverse fields. Gilani emphasised the need for more foreign investment coming into Pakistan and benefit from its investor-friendly economic policies.

He said Pakistan's liberal economic regime with zero import duty on raw material provided equal opportunities for the local and foreign businessmen. He said Pakistan was though confronting with a number of challenges including economic crisis, however the democratic government was struggling to improve the situation.

"Despite all the challenges, economy continues to be buoyant and vibrant in Pakistan," the Prime Minister said, adding the country's mineral and work-force resources had the great potential to be fully tapped. He said the government had converged its focus upon the development of agriculture sector to utilise it particularly during the recession phase. "It will be just a matter of time that Pakistan will become a regional hub of economic activity," the Prime Minister said.

Gilani said the government was taking a number of strategic measures, and mentioned increased trade with Afghanistan and improved regional mechanism with the Saarc countries. He said a deep seaport at Gwadar had been established for greater economic activity among the Central Asian and Asian states.

He said the improved economic plan for civil aviation, customs and logistics would substantially enhance the country's trade activities. The Prime Minister said Pakistan had the capacity to join hands with partners in food security, being a major food producing and also the fourth largest milk producer in the world. He said the government was endeavouring to use the trade policy prudently by pursuing the ongoing growth.

"Our economic strategy rests on strengthening the trade dividends and ensuring a business-friendly environment in the country," he said. Prime Minister Gilani said in WTO context, Pakistan would support substantial reduction on tariffs in the developing countries.


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## Pk_Thunder

*Pakistan's foreign exchange reserves rise to $10.21 billion*​
KARACHI (January 30 2009): Pakistan's foreign exchange reserves rose $260 million to $10.21 billion in the week that ended on January 24, the central bank said on Thursday. This included $500 million Pakistan received from China to help build foreign reserves, said Syed Wasimuddin, chief spokesman for the State Bank of Pakistan.

The State Bank of Pakistan's reserves rose to $6.87 billion from $6.59 billion a week earlier, while reserves held by commercial banks were $3.34 billion, down from $3.36 billion, the bank said.

Pakistan's foreign reserves hit a record high of $16.5 billion in October 2007 but fell to $6.6 billion in November, largely because of a soaring import bill. Pakistan signed a $7.6 billion loan agreement with the International Monetary Fund in November to stave off a balance of payments crisis. It received its first tranche of $3.1 billion that month.


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## Pk_Thunder

*Textile exports to help economy grow by 4pc*​
By Dawn Special Correspondent
Friday, 30 Jan, 2009 | 02:14 PM PST |
Prime Minister Gilani addressing an audience at Davos - Reuters photo.
Prime Minister Gilani addressing an audience at Davos - Reuters photo.

LONDON: Exports of Pakistani textile goods to the US market are said to have held up, making it possible for the overall economy to grow by 3.5 to 4 per cent in the year ending June 2009, despite global downturn.

The Financial Times in a despatch Pakistan defies global downturn on Wednesday quoted countrys top financial officials as saying the growth figure would be down from seven per cent in the previous fiscal year, but respectable given the political and security challenges facing the country which was driven to seek a $7.6bn rescue package from the IMF at the end of last year.

Shipments by Pakistans textile industry, which account for more than half of the countrys exports, have held up despite the downturn in the US economy.

The official said the sector was facing severe price pressures, but that retailers in the US and Europe were favouring low-cost Pakistani home furnishings over more expensive products from competitors, such as Egypt.

The official estimated textile shipments grew 7-8 per cent in the second half of 2008. Analysts have expressed concern about Pakistans textiles industry. Earlier this month, chronic power cuts badly affected production.

A downturn in textiles could increase the possibility of job losses and social unrest to Punjab. The sector employs about 3m people.

The official also noted that Pakistan had yet to see any mass return of migrant workers from Gulf states, a hopeful sign that remittance flows may be sustained.

Pakistans economy has weakened significantly over the past year. As part of fiscal and monetary tightening, interest rates surged to 15 per cent in an effort to curb inflation that hit a peak of 25 per cent in October.

I had to tighten our belts economically, we stopped borrowing, we had to put right the fiscal policy and we withdrew all subsidies. There was a lot of hue and cry from the people of Pakistan. For a new government, it was extremely difficult but somebody had to do it, said Yousuf Raza Gilani, the prime minister, in an recent interview with the Financial Times.

But Mr Gilani said terror was sapping the economy.

With one suicidal bomb blast, there is flight of capital. With one suicide bomb blast, there is no investment in the country.

Pakistans central bank on Tuesday reduced the amount lenders need to set aside against bad loans to spur lending. Banks may now use 30 per cent of the value of assets provided as collateral as provisions against delinquent loans for three years, according to a statement on Tuesday from the State Bank of Pakistan. Previously banks had to set aside cash against the full amount owed. The rule is effective retrospectively from Dec 31.

The central bank, under the leadership of newly appointed governor Saleem Raza, aims to bring inflation down sharply to 10-11 per cent by June. It has set about rebuilding the countrys depleted foreign reserves to $10bn by June from a current $7.3bn.

Pakistans industrialists have complained about high interest rates, saying they have increased the cost of borrowing and dried up liquidity in the banking system.

The Lahore Chamber of Commerce and Industry this week called for a rate cut, warning of the extremely negative impact on the industrial sector of current levels, including the risk of factory closures. It said urgent steps needed to be taken by the government to avert mass redundancies in Pakistans manufacturing sector.


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## Pk_Thunder

*Govt targets 100 exploration wells for 2008-9*​
By Mubarak Zeb Khan
Friday, 30 Jan, 2009 | 11:24 PM PST |

ISLAMABAD: The government will achieve the drilling target of 100 new oil and gas exploration wells in the year 2008-09 ending on June next, said Advisor to Prime Minister on Petroleum and Natural Resources Dr. Asim Hussain here Friday.
We would make utmost effort to achieve this target. The government has already envisaged a plan to provide security at the oil and gas exploration sites to attract foreign investment in this field, the advisor said while replying to a question at a press conference.
Pakistan has so far drilled 725 exploratory wells till to date. Of these only 66 existed before the partition of the sub-continent. All these drills produced 219 wells, 54 of oil and 165 of condensate oil and gas.
The country has so far 960 appraisal wells. This indicates how much potential of oil and gas existed in the country, the advisor said and adding his ministry has so far awarded 119 exploration licences to public and private sector exploration companies.
Mr Hussain claimed success rate in oil and gas exploration was very high in Pakistan as compared to other discoveries at international level. This figure shows that after almost every three to four drillings there was a result, while at international level discovery comes after eight to 10 attempts, he added.
He said that in Balochistan alone drilling activities were now opened at 16 places, which had been closed down owing to security reasons. He said at the remaining nine places, the activities will be resumed shortly.
Currently, gas production was 4 billion cubic feet per day (bcfd) and the oil production was 37,000 barrels per day (bpd) against the demand of 9-10 bcfd of gas and 77,000 bpd of oil. Presently, the country has about 45 rigs from where oil and gas is being produced and supplied to meet day to day demands of the country, he said.
Answering a question, the advisor said the new petroleum policy had almost been finalized, and would be announced soon. A social work programme was being considered under the new policy, he added.
The advisor said that government has decided to trickle down production bonus to respective provinces directly for further disbursement to districts under the new policy. Currently, it was not allowed to those areas from where discoveries were made.
To make the country self-sufficient in oil and gas sector the network of OGDCL and PPL was being expanded to other countries like Yemen, Iraq, Nigeria and Sudan. We have taken a concession in Yemen from the oil company named OMB and further negotiations are underway, he added.
Commenting on present status of Iran-Pakistan-India (IPI) gas pipeline project, he said all modalities with regard to the project have been finalized except gas pricing formula.
Iran is demanding very high price for its gas, which is not affordable for the domestic consumers of Pakistan. Its very expensive. He was of the view that all modalities of the project would be put before the parliament for its approval before finalising the deal with Iran, he said.
Mr Hussain said the government has asked exploration companies to create a special security fund to involve locals in Balochistan. He said the government has planned to expedite oil and gas exploration to reduce reliance on imports.
Answering a question, the adviser said petroleum prices were expected to remain unchanged for a month as prices in international market was moving upward. The freezing of oil price for the past one and half month help the government raised billions of rupees to bridge budget deficit.


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## Pk_Thunder

*
$149.965 million withdrawn from foreign portfolio in January*​
AHMED MALIK
KARACHI (January 31 2009): A massive outflow of $149.965 million from foreign portfolio was witnessed during the current month while the offshore investors withdrew $50.845 million of this mode of investment in the week ended on January 30, 2009. According to National Clearing Company of Pakistan (NCCP) data the foreign investors remained net sellers of $532.380 million in the period from January 1, 2008 to date.

"The continuous outflow of foreign portfolio investment from the country's equity market is being witnessed since 2008 due to global recession and a heavy decline in almost all international markets", Khurram Schehzad, analyst at Invest Capital & Securities said.

He said that after a heavy decline in all international markets, the foreign investors were preferring to withdraw their investments from the emerging markets to invest in their own countries. Despite low returns, the foreign investors are preferring to invest in western markets, mainly due to low risk, he said.

On the other hand, depreciation in the local currency and liquidity crunch were also major reasons which forced the foreign investors to withdraw their investments from the Pakistan's equity market. Some other policy and regulatory issues including imposition of price floor, geo-political and law and order situation also forced the foreign investors to pull out their investment from the country.

The foreign investors remained net sellers throughout the week, as an outflow of $6,682,907 was witnessed on Mondayy and $15,445,190 on Tuesday. The negative trend continued as the offshore investors withdrew another 15,911,714 on Wednesday, $4,060,986 on Thursday and $8,744,697 on Friday.


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## Pk_Thunder

*BMA releases Economic Strategy Report*​
KARACHI (January 31 2009): Pakistan's Premier Investment Firm, BMA Capital, has released its Economic Strategy Report for 2009 entitled "Slowing Down, U-turn Ahead", which encapsulates BMA's economic review of 2008 and forecast for 2009, advising on specific opportunities for investors in the coming year.

The report has been released in the context of the unusually challenging year that 2008 has been economically for Pakistan, the region, and the world. The global downturn and volatility has challenged the business models of financial services firms the world over, with many firms not surviving.

Aided by a strong corporate culture, talented team, and excellent client relationships, BMA has endured with a clear determination to succeed and to continue to deliver value for our clients with integrity.

The report explains that 2008 witnessed a 58 per cent decline in the Karachi Stock Exchange's KSE-100 index which is currently at a five year low and trading at its historical bear market price to earnings (P/E) multiple of four and one half times (4.5x). The good news in this for investors is that stock valuations are now extremely cheap, potentially representing rare opportunities for astute investors.

An upswing in business activity towards the end of the year on improved macroeconomic fundamentals could well see the index close higher on a Year-on-Year (YoY) basis by December 2009. Key factors, which will determine whether a sustained upswing is imminent, include monetary easing by the summer of 2009 and the subsequent return of liquidity, stronger earnings growth in Fiscal 2010, and stability in global markets.

Macroeconomic indicators are already improving on the domestic front. IMF support for Pakistan has boosted the foreign exchange reserve position to over US $10bn, while remittance inflows have reached new highs. BMA forecasts Pakistan's trade deficit to shrink (YoY) by June 2009 as a result of lower commodity prices. Inflation has been registering a decline since November 2008 and BMA Research expects it to continue to do so rapidly over the next six months.

BMA's top trading ideas for 2009 include FFC, OGDC, PPL, HUBCO, PTC and NBP, which represent our preference for defensive plays. These stocks are expected to post positive earnings growth over FY09, are cheap on both trailing and forward multiples, offer strong dividend yields and possess other strengths such as low gearing. The complete report can be retrieved from BMA's website.-PR


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## Pk_Thunder

*Over 1,600 Malaysian products exempted from import duties*​
RECORDER REPORT
ISLAMABAD (January 31 2009): Pakistan has eliminated import duties on over 1,600 Malaysian products as of January this year. This was announced by Ministry of International Trade and Industry (MITI) of Malaysia here on Friday in a statement adding that it was part of Malaysia-Pakistan Close Economic Partnership Agreement. The MITI has also urged the Malaysian business community to take advantage of the duty elimination, as the potential to supply the Pakistan market was considerable.

"These duty elimination will give Malaysian exporters to Pakistan an edge over their competitors, who still to pay duties from five to 35 percent," said the statement. nAmong Malaysian exports to Pakistan that will benefit from the duty elimination are parts and accessories for machinery, digital processing units, natural rubber, sawn wood, industrial chemical products, fruits and nuts, insecticides as well as butter, other fats and oil.

The MPCEPA was singed on November 8, 2007 between Malaysia and Pakistan and came into force on January first last year. Under MPCEPA, both Malaysia and Pakistan, will progressively reduce and eliminate tariffs on most agricultural and industrial products by 2014.

The Free Trade Agreement, already singed between the two countries, also offers opportunities in the service sector. Pakistan has allowed 60 per cent foreign ownership for Malaysian service supplies setting up business in Pakistan. Malaysia has gained now, exclusive and more liberalised market access than what other countries are able to get through the World Trade Organisation.

Malaysia''s trade with Pakistan from January to November 2008 was amounted to Rs 125.4 billion, comprising exports of Rs 116.6 billion and imports totalling equal to Rs 8.7 billion. The FTA with Pakistan provides a greater opportunity for business community of both countries to further expand their bilateral trade and investment linkages and enable the Malaysian business community to use Pakistan as the base to expand their business in South Asian region.

Commercial Council for Pakistan High Commission in Kaula Lumpur, Majid Qureshi while commenting on the statement said like Malaysian companies who are benefiting from the preference duty treatment due to MPCEPA, the Pakistani companies should also exploit immense opportunities of trade being opened up not only to Malaysia but also in Asian region.


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## Pk_Thunder

*Pakistan and Canada to enhance cooperation in vital sectors*​
ISLAMABAD (January 31 2009): Pakistan and Canada on Friday reiterated their desire to further intensify and broaden bilateral co-operation in the areas of trade, economy and defence. At a meeting held between Minister for Defence Chaudhry Ahmad Mukhtar and Canadian High Commissioner to Pakistan Randolph Mank who called on him, they stressed the importance for enhancing engagement in bilateral relationship.

Besides exchanging of delegations at military level so as to promote military-to-military relationship. The minister briefed the ambassador about the counter-insurgency and anti-terror efforts made by Pakistan. He told the envoy that terrorism was posing a great challenge to world peace and security, which needed international efforts to eradicate it.

He reaffirmed the government's resolve to weed out the menace of terrorism and extremism so as to make the world a safer place. He said that terrorists were bent upon to destabilise the country but they would not be allowed to succeed in their evil designs.

The minister informed the envoy that Pakistan had suffered a lot at the hands of terrorists as the suicide and bomb attacks had badly affected the economic health of the country. He also expressed concern over drone attacks and said the attacks were proving counter-productive as they were uniting the terrorists.

The Pak-Afghan border security situation also figured at the meeting. The minister told the envoy that Pakistan wanted a stable and peaceful Afghanistan because a stable Afghanistan was in the interest of the whole region. The Canadian High Commissioner told the minister that his country wanted to further promote and expand bilateral ties with Pakistan in all areas of common interests. He said that the Canadian investors were interested to invest in copper mines in Balochistan.

He informed the minister that his country was working on certain projects to support the Internally Displaced Persons (IDPs) of the disturbed areas. He also appreciated Pakistan's co-operation for providing logistic support to ISAF forces in Afghanistan.


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## Pk_Thunder

*Shahbaz for reduction in markup to boost economy*​
MULTAN (January 31 2009): Chief Minister Mian Muhammad Shehbaz Sharif on Friday advocated reduction in mark up on loans pleading that reducing the cost of production is the need of the hour to develop industry, agriculture and to enhance export earnings.

While addressing a meeting of Multan Chamber of Commerce and Industry (MCCI) on Friday night, CM said that mark up rates in industrialised countries were low and suggested that changes be brought about in policies to give a phenomenal boost to the national economy. He said, contrary to 22 percent mark up rate in Pakistan, it was only 1 to 1.5 percent in Europe, 2 to 2.5 percent in USA, and just one percent in Japan. He expressed the hope that federal government will pay attention to the matter.

Shahbaz said that country's economic situation demands enhanced support and personal attention of industrialists and business community and added that they need to strengthen their export based businesses and industrial operations to contribute to the goals set for economic uplift. He acknowledged that industry was facing numerous problems including power shortage to survive and suggested an integrated approach to solve them.

He said that our neighbouring countries which used to import textile products were now one of the major exporters. Citing example of Bangladesh, CM said that it imports cotton lint and exports finished textile products. He said that China was making exciting strides in cotton production while India's cotton production has also increased three times the production it used to get in past.

He promised to develop industry and export-oriented agro-industrial operations and added that government will not hesitate in providing funds if needed. Shehbaz Sharif said that federal government has promised to begin the process of installing water filtration plants in Punjab from March next to ensure availability of clean drinking water to the people at union council level.

He instructed CMIT to launch inquiry on complaints from MPAs that substandard material was used in water filtration plants in Multan. He ordered DG Anti-Corruption to launch inquiry on allegations of embezzlement in the affairs of Shah Rukn-e-Alam town.

He gave approval to many development schemes in Multan. He instructed to redesign southern bypass project to link it to Chowk Naag Shah instead of Bahawalpur bypass and promised to release fund of Punjab government within a week. He also ordered that a feasibility report be got prepared from an expert consultant firm for construction of elevation road from Chungi No 9 to Bahauddin Zakariya University (BZU).

He ordered to revive programme to provide treatment facilities to cancer patients at Nishtar hospital. CM said that a sum of Rs 1.5 billion has been released to highway department and ordered that this funding be utilised to complete road schemes from Makhdoom Rasheed to Tibba Sultanpur and Peerowal to Katcha Khoh.

Shahbaz formed a steering committee comprising elected representatives and officials to prepare recommendations for construction of fly-over from Kalma Chowk to Chowk Kumharaanwala. He directed officials to prepare plan to rehabilitate Alang ie the circular road adjacent to the fort wall around the walled city, to preserve the heritage.

He ordered to upgrade inter college at Shujabad road as degree college. He also agreed to speed up work on nine centres of excellence schools. He said that agreement will be signed with some Chinese firm to generate electricity from solid waste on the pattern of projects in Lahore and Rawalpindi. He ordered officials to pay compensation to the legal heirs of those who had died in a roof collapse incident in the city within 24 hours.

He sought detailed report on damage caused by the fire incident in food grain market Multan so that affected people can be compensated. Earlier, Commissioner Multan division Syed Muhammad Ali Gardezi gave detailed briefing to the CM. PML-N leader Makhdoom Javed Hashmi, provincial Auqaf minister Haji Ehsaanuddin Qureshi, MNA Rana Mehmoodul Hassan, MNA Abdul Qadir Gilani, Chief Secretary Punjab Javed Mehmood, IGP Shoukat Javed, chairman planning and development Sami Saeed and other officials attended the meeting.


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## Pk_Thunder

*State Bank to issue monetary policy statement on quarterly basis: SBP Governor*​ 
KARACHI, Jan 31 (APP): Governor, State Bank of Pakistan, Syed Salim Raza disclosed on Saturday that the SBP Central Board of Directors has decided that the Central Bank will issue monetary policy statement on quarterly basis.

Unveiling the Monetary Policy Statement, at a press conference at State Banks Head Office here, Syed Salim Raza said that the next monetary policy statement will be issued by the end April 2009.

He said that extent of risks and vulnerabilities, which the economy had faced during 2008, have moderated to but we would need to remain watchful of the emerging risks and challenges.

He pointed out that factors such as the vulnerability of the external sector due to high oil and other commodity prices; persistence of high imports and weak prospects of foreign investment, have all moderated considerably owing to improvements related to each area.

Raza said that progress has been made with inflation, over the last four months, but it is very stubborn in the core inflation (i.e. non&#8209;food and non&#8209;energy). The slow improvement in core inflation, while it has a structural element, is primarily owing to the fact that non fuel and non food items, such as wages and rents and fares etc.

continue rising after the supply side shocks recede.

This more entrenched trend is because inflationary expectations remain; for the good reason that we have had 12 months of high inflation and several preceding years during which the potential for inflation breaking out in a substantial way was being developed, he added.

He said that by the end of FY09 there will be some reduction in both the fiscal and external current account deficits relative to FY08. However, not only is the expected magnitude of these deficits high but also there are risks of slippages. This signifies that the demand pressures have not completely dissipated despite a slowdown in economic activity, he said and added that the high expected average CPI inflation of 20 percent for FY09 (significantly higher than the FY09 target of 11 percent) and its persistence, reflected by core inflation measures, clearly reflect the risk on this front.

To mitigate the implications of these risks it is important to continue with the current monetary policy stance, he said and added, therefore, the SBP has decided to keep the policy discount rate unchanged at 15 percent. 

While elaborating on the more recent liquidity issues, he said that the present pressure on interest rates would have come irrespective of the discount rate as we have seen an unprecedented fall in banking liquidity post June, between July 1 and Jan 10, deposits have shrunk by 3.4%, or Rs 128 billion, while total credit has grown by 11% or Rs 500 billion, putting a strain of 628 on the system, or shrinking available liquidity by about 14%. 

This was the simple counterpart of the CA deficit, and this level of contraction of liquidity would have raised interest rates in and of itself, regardless of where the discount rate was.


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## Pk_Thunder

*Interest rates to go down in March: Dr Asim *​ 

KARACHI, Jan. 31 (APP): Advisor to PM on Petroleum and Natural Resources Dr Asim Hussain said that interest rates will go down in the month of March, 2009.

He was addressing the members of Karachi Chamber of Commerce and Industry (KCCI) here Saturday. He pointed out that the government has met all the deadlines of IMF in the last quarter of 2008.

Responding to the demand of KCCI, he said that trade bodies will be provided representation on the boards of NEPRA and OGRA. The file for providing representation on the board of NEPRA and OGRA was with the Prime Minister for signing, he added.

He said the government was debating whether we need OGRA, NEPRA or not.

Underlining the need for tapping more energy resources, he said that at least 100 wells will be drilled every year in the country to meet the domestic demand.

Although, it will take four years to reach such a level, there is no way than this to become self sufficient in energy, he added.

The Advisor pointed out that the country needed 10 billion cubic feet of gas while the production was 4 billion cubic feet of gas.

He said that government was not in a position to lower petroleum prices as it was still absorbing Rs 5 billion under petroleum development levy (PDL).

Dr Asim said that he has requested the government to remove the present DDGM because he is the corrupt man.

Minister for Ports and Shipping Babar Khan Ghauri, while criticising the role of new KESC management, said that the sponsors of utility company has not invested the promised $ 400 million.

He vowed to undertake more development work than his previous tenure.

Ghauri said that more vehicles will be provided to police despite opposition to improve their performance.

He also opposed the illegal occupation of trade bodies and said inquiry will be held into the alleged reports. We believe that businessmen should not be indulged into such activities and run their bodies in a democratic way, he added.

Minister for Overseas Pakistanis, Dr Farooq Sattar underlined the need for a better coordination between the policy makers in the north and the industrial and financial hub in the south.

He was of the opinion that foreign remittances can be increased from $ 7 billion to $ 15 billion by 2010 if overseas Pakistanis are provided incentives including removal of fee on the transfer of remittances.

He said overseas Pakistanis can come back and invest in Pakistan as has been seen in neighbouring India.

Dr Sattar said that organisations like NEPRA, OGRA and PEMRA have to act with responsibility.

Chairman Trade Development Authority of Pakistan (TDAP) Senator Ahmed Ali said that high mark up has harmed industrial sector, but things will improve soon.

He criticised the role of former Governor SBP and said she was treating the inflation with the help of wrong medication.

He said that all the stakeholders will be consulted before making any policy. I will have several committees for on&#8209;the&#8209;spot solution of problems facing exporters, he added.

Earlier, KCCI president Anjum Nisar in his welcome address said that cost of doing was very high due to high mark up, costly utilities and it was hurting the industrial sector specially export oriented sectors.

He demanded that gas prices should be lowered while SME must be supported by the government and called for setting up new SME industrial zones to boost industrial production and exports.


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## Pk_Thunder

*Banks to fund flour mills for buying indigenous wheat*​
Saturday, January 31, 2009
By our correspondent

KARACHI: To ensure participation of private sector in wheat procurement during 2008-09 season, it has been decided that banks will continue to provide financing to eligible borrowers for procuring indigenous and fresh wheat.

Only the licensed and functional flour mills would be considered eligible borrowers under this scheme. Fresh financing will be available to them at minimum 10 per cent cash margin of the value of wheat stocks.

The disbursement of the financing would begin with the start of wheat procurement season 2008-09 in each respective province and will not be available after June 30, 2009. These loans will be repayable on or before January 31, 2010.

The State Bank of Pakistan (SBP) in its policy statement announced on Friday said the banks would ensure that the financing facilities extended to their borrowers are strictly utilised for the purpose for which they have been granted.

Special efforts may be made to ensure that the facilities availed for purposes other than wheat procurement are not utilised for financing of wheat stocks.

The central bank stated that the loans provided to the private sector would be for the procurement of fresh indigenous wheat only.

These loans will be repayable on or before January 31, 2010. Non-compliance of the requirement of MFD Circular No.01 dated 11-03-2008 regarding adjustment of loans disbursed during the year 2008 would make the prospective borrowers disentitled to avail financing for procurement of wheat during 2009.

Fresh financing to the eligible borrowers for procurement of wheat during 2009 shall start from commencement of wheat procurement season 2009 in respective provinces.

This financing will be subject to minimum cash margin requirement of 10 per cent of the value of the wheat stock. Banks shall not provide any financial facilities (funded or non- funded) to enable borrowers to meet the margin requirements, the central bank said.

Banks will provide financing facilities against pledge of fresh wheat stock only and shall not extend funds to the private sector for procurement of wheat against hypothecation / charge of moveable or immovable property.

Banks will determine the rate of mark-up on lending to the private sector for the purposes of wheat procurement depending upon the risk profile of each borrower. As lending to the government agencies for wheat procurement is secured against government guarantee, it is expected that the related mark-up rate would be competitive in comparison to the rate charged to the borrower in private sector, SBP stated.

Banks will not entertain any application for grant of fresh loans after June 30, 2009 for procurement of wheat. However, banks may provide financing facility to functional flourmills for purchase of indigenous wheat from the licensed wheat traders, who have procured wheat during the procurement season 2009 and respective Food Department against supply of wheat by them.

Quantum of such loan shall not be more than the value of wheat to be supplied by the respective Food Department or actual purchase from wheat traders, commensurate to the milling capacity of each mill.

Banks will also monitor that existing stock of wheat purchased by the concerned functional flourmill, has been grinded and that the by-products of wheat viz. flour, meada, sujee etc, (financed against bank loan) have also been released to the market gradually to repay the loans so obtained. Financing against by products of wheat shall also be subject to the cash margin of 10 per cent.

Banks are also allowed to provide facilities for wheat procurement by the seed processing plants, in line with their lending policies and the capacity/production plans of the seed processing plants.

However banks may ensure that such stock of wheat will be used for processing purposes, said the central bank.

Banks will ensure that no revaluation of the pledged stock is considered for release of any differential amount to the borrowers against stock of wheat pledged with the banks.

The banks shall be under obligation to immediately recall the advances allowed to the private sector in case of hoarding of wheat by the functional flour mills.

Therefore, while executing financing agreement by the banks with their borrowers, banks will clearly spell out that loans can be recalled before agreed repayment / due date, upon receipt of directives from the State Bank as and when it is deemed necessary to curb hoarding. Banks will also ensure that no financing is allowed by them to the flour mills for retirement of the loans availed from other banks.

Banks will ensure that weekly stock report for the wheat held by functional flour mills and pledged with the bank is inspected periodically.

Report on the inspection should be submitted regularly to this department, within seven days from the close of the month to which it relates, indicating the name of the party, location of its godown etc as per prescribed format.

The SBP would also verify the authenticity/genuineness of such inspection reports through its Banking Inspection Department. Banks will also ensure that the wheat stock is gradually released to generate cash resources for the purpose of repayment of bank loan.

Banks will continue to submit a weekly statement in respect of financing to private sector for wheat procurement as per prescribed format within seven days from the close of the relevant week. Delay in submission and / or misreporting of data to SBP will attract penal action under BCO, 1962.

The lending shall be in compliance with the Prudential Regulations and other instructions of SBP issued from time to time. Any violation of SBP instructions would attract penal provisions under BCO, 1962.


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## Pk_Thunder

*FBR to outsource income tax audits*​
By Sajid Gondal
Sunday, 01 Feb, 2009 | 08:30 PM PST |
ISLAMABAD: In a bid to create transparency and further facilitate tax payers, the Federal Board of Revenue (FBR) has decided to outsource income tax audits.
Chairman Federal Board of Revenue Ahmed Waqar announced this on Sunday while addressing the businessmen at the Islamabad Chamber of Commerce an Industry (ICCI).
Waqar said that the FBR was hiring services of reputed Charter Accountancy firms to for conducting total income tax audit of tax payers.
He said the private audit firm would select the cases for total audit on a random basis. 
The audit out-sourcing would further facilitate the tax payers and would end the complaints of disturbance and harassment.
Ahmed Waqar also rejected the business communitys demand to re-launch tax amnesty scheme. He was of the view that there should be penalty for non-compliance of taxes instead of any amnesty scheme. Tax amnesty schemes discourage the genuine tax payers and encourage tax evasion, he added.
Responding to complaints regarding the delay in refunds payments, Ahmed Waqar announced that the revenue board was considering a proposal to compensate the taxpayers. He said the e-filing of tax-statements and refunds claims had sped up the procedures and FBR was targeting to clear the refunds payment with in 45 days after the issuance of tax refund order.
Regarding the levy of 10 per cent withholding tax on power bills exceeding the monthly amount of Rs 20,000, Ahmed Waqar said that he considered it a serious problem that would create working capital problems. The FBR would seriously consider abolishing the said tax in next finance bill, he added.
Mr Waqar said that the tax facilitation and tax compliance should go side by side. The revenue board would provide every possible facility to tax payers but FBR would take strictly reaction for non compliance of taxes.
He said that the tax to GDP ratio in Pakistan is lowest in the region but revenue board was making all efforts to extend the tax base. He said the all sectors currently escaped from tax net would but brought into tax net in shortest possible time.
However, he mentioned that the agriculture tax in a provincial subject and FBR could not directly involve itself in the matter.
Earlier, the Chairman ICCI, Main Shaukat in his welcome address said that the business entities were facing tough time due to global recession, high tariffs, power outages and bleak law and order scenario.
He said that the universal tax assessment system has reduced the interaction between the tax payer and the tax machinery that has built the confidence of tax payers on the tax department.
Main Shaukat pointed out that the process of harassment of tax payers has been initiated again, and created great panic among business community. He said that once again the Income Tax Officers have started issuing notices to harass the business community.
Chairman FBR has constituted a committee comprising representatives of ICCI and FBR officers from sales tax, Income Tax and Customs department to resolve all the problems of businessmen. The committee would meet on quarterly bases.


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## Pk_Thunder

*All resources being used for mega projects: minister*​
ISLAMABAD (February 01 2009): The Minister for Water and Power, Pervez Ashraf, on Saturday said that all resources were being utilised for mega development projects, and funds were being provided on priority basis. He said this while presiding over a meeting to review the development projects here in the Ministry. Representatives of all concerned provincial and federal departments attended the meeting.

He reviewed all development projects in the Rawalpindi region and asked the government officials to ensure quality of work and timely completion of all projects. He was briefed on the construction of 'Railway Underpass' at Gujar Khan. The project will be completed at a cost of Rs 300 million within shortest possible timeframe of four months.

The underpass will be opened for public by June 30, 2009. The minister said that Prime Minister Yousaf Raza Gilani has allocated special funds on his request for this project. He said that he would inaugurate the project on February 22.

There will be no interruption, and the traffic will move smoothly between Punjab and AJK from this underpass, he said. The minister directed that all concerned departments should co-ordinate with each other and there should be no delay in this project. He also directed Wapda to make alternative arrangements of power supply during construction of the underpass.-PR


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## Pk_Thunder

*Inflation eases Considerably*​
RECORDER REPORT
ISLAMABAD (February 01 2009): The SPI inflation has eased considerably during the last three months as it declined from 29.41 percent on November 27 to 22.56 percent on January 27, according to Federal Bureau of Statistics. Federal Bureau of Statistics figures show a continuous decline in the weekly inflation during the last 10 weeks in the SPI, based on prices of 53 essential items from 17 urban areas which is released at the end of every week.

The figures showed that SPI inflation was 29.41 percent on November 27 and came down to 27.75 percent on subsequent week ending on December 4, 2008. On December 11 it declined to 26.88 per cent and 24.76 per cent on December 18. The weekly inflation was decelerated to 23.61 per cent on December 24 and came down to 21.08 per cent on January 1.

On the week ending January 6, the SPI inflation was recorded 19.25 per cent. However in the next two weeks it slightly increased and surged to 22.93 per cent on week ended January 22 over the same period of last year. Again it eased to 22.56 per cent on week ended on January 29 from 22.93 per cent of previous week following decline in the prices of vegetable, LPG, rice, cooking oil etc during the week.

The SPI bulletin revealed increasing trend in the prices of 17 commodities, declining in 14 whereas the prices of 22 commodities remained stable during the week. The price of chicken, eggs, gur, salt powdered, tomatoes, bread plain mid size, sugar, bananas, onion, tea prepared, electric bulb 60 watts, beef, cooked beef plate, moong pulse washed, gram pulse washed, milk fresh and mash pulse increased during the week while the price of potatoes, wheat flour average quality, vegetable ghee loose, garlic, LPG cylinder 11 kg, masoor pulse washed, wheat average quality, vegetable ghee tin, red chillies, kerosene, rice irr-6, rice basmati broken, mustard oil and cooking oil tine declined.

The price of mutton, milk powdered NIDO, curd, tea packet, cooked dal plate, cigarette K-2, coarse latha, lawn, voil printed, shirting, sandal gents Bata, sandal ladies Bata, firewood, match box, washing soap nylon, bath soap lifebuoy, gas charges up to 3.3719 MMBTU, electric charges 1-100 units, petrol diesel and telephone local call remained unchanged during the week.


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## TopCat

Pk_Thunder said:


> *Inflation eases Considerably*​
> RECORDER REPORT
> ISLAMABAD (February 01 2009): The SPI inflation has eased considerably during the last three months as it declined from 29.41 percent on November 27 to 22.56 percent on January 27, according to Federal Bureau of Statistics. Federal Bureau of Statistics figures show a continuous decline in the weekly inflation during the last 10 weeks in the SPI, based on prices of 53 essential items from 17 urban areas which is released at the end of every week.
> 
> The figures showed that SPI inflation was 29.41 percent on November 27 and came down to 27.75 percent on subsequent week ending on December 4, 2008. On December 11 it declined to 26.88 per cent and 24.76 per cent on December 18. The weekly inflation was decelerated to 23.61 per cent on December 24 and came down to 21.08 per cent on January 1.
> 
> On the week ending January 6, the SPI inflation was recorded 19.25 per cent. However in the next two weeks it slightly increased and surged to 22.93 per cent on week ended January 22 over the same period of last year. Again it eased to 22.56 per cent on week ended on January 29 from 22.93 per cent of previous week following decline in the prices of vegetable, LPG, rice, cooking oil etc during the week.
> 
> The SPI bulletin revealed increasing trend in the prices of 17 commodities, declining in 14 whereas the prices of 22 commodities remained stable during the week. The price of chicken, eggs, gur, salt powdered, tomatoes, bread plain mid size, sugar, bananas, onion, tea prepared, electric bulb 60 watts, beef, cooked beef plate, moong pulse washed, gram pulse washed, milk fresh and mash pulse increased during the week while the price of potatoes, wheat flour average quality, vegetable ghee loose, garlic, LPG cylinder 11 kg, masoor pulse washed, wheat average quality, vegetable ghee tin, red chillies, kerosene, rice irr-6, rice basmati broken, mustard oil and cooking oil tine declined.
> 
> The price of mutton, milk powdered NIDO, curd, tea packet, cooked dal plate, cigarette K-2, coarse latha, lawn, voil printed, shirting, sandal gents Bata, sandal ladies Bata, firewood, match box, washing soap nylon, bath soap lifebuoy, gas charges up to 3.3719 MMBTU, electric charges 1-100 units, petrol diesel and telephone local call remained unchanged during the week.



22% inflation is still way too high for any normal living.. I am surprised PK people have not revolted against the  govt yet...


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## acer

iajdani said:


> 22% inflation is still way too high for any normal living.. I am surprised PK people have not revolted against the  govt yet...


how is inflation in bangladesh sir.?


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## notorious_eagle

You are right my friend, inflation above 10&#37; is simply too much. The reason why many poor people are surviving is simply because of generosity of others. These are just temporary measures, once the price of fuel goes up the inflation is going to go up too. The government needs to address this problem correctly, but as Asif Ali Zardari as their chair i have simply no hope.


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## macintosh

22&#37; INFLATION with crude prices at 45$ a barrel is quite worrisome and if the foreign currency problem remains then i believe Pak GOV. is going to increase petrol prices which will further escalate the Inflation.Also i read somewhere that Pak gov. has imposed heavy import duty on potato from India.So in short term it will remain high.


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## Pk_Thunder

*Revolutionary steps for revival of postal services*​
ISLAMABAD (February 02 2009): Pakistan Postal Services has bounced back with offering modern facilities to customers, who otherwise had lost hope for the country's once popular service.

As part of these facilities, sources said motorbike-service had been introduced of ordinary mail in Rawalpindi, Islamabad, Lahore, Karachi, Peshawar, Abbottabad, Gujranwala, Jhelum, Multan, Sukkur, Faisalabad, Hyderabad, Kohat and Sukkur.

For this purpose, the sources added 1,032 motorbikes had been provided to the delivery staff at these stations. They said that counter automation system had been put in place, which provided state-of-the-art point of sale terminals equipped with computers, electronic weighing scales, barcode scanners and printers.

Specially designed software, with complex business logic embedded in it, ensures integrated service provision at each counter. Over 100 GPOs including renovated post offices throughout Pakistan have been provided with this facility, the sources added.

Express Mail Track and Trace System (EMTTS) had been introduced, the minister said, which enabled Pakistan Post to track the Express Mail items from end-to-end within the country, providing both customers and management with valuable information relating to the location of items.

In order to expand the network, all 46 District mail Offices (DMOs) have also being linked to the system, the sources informed. Other measures included Electronic Money Transfer system, which was fully computerised and transferred money from over 200 countries and territories to Pakistan within minutes.

Moreover, the sources that surveillance cameras had been installed to monitor the working of operational staff as well as to minimise the cases of abstraction of contents from the postal articles.


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## Pk_Thunder

*Rs 14,224 million being spent on construction, upgradation of various airports*​
ISLAMABAD (February 02 2009): The Civil Aviation Authority (CAA) has awarded contracts of Rs 14,224 million during 2008-09 for construction and upgradation of various airports in the country.

According to official sources, Rs 11,825 million will be spent on airside infrastructure of New Benazir Bhutto International Airport Islamabad, Rs 1,719 million on airside pavement and upgradation of Multan Airport and Rs 680 million on site protection work at New Gwadar International Airport.

In addition to commitment of funds on these projects, the expenditure incurred on major Civil Aviation Schemes during 2008-09 include Rs 1,600 million works schemes and Rs 562 million equipment procurement (for Air Traffic Control system of the airports).

According to the sources, the authority completed major projects besides procurement, technical equipment including flight information system at Karachi airport, runway visibility equipment for Lahore airport, air to ground communication system for various projects, ATC recorders for various airports, repair and upgradation of radar, partial, implementation at Karachi and Lahore airports and electro mechanical equipment for various airports.

They said that air field lighting at Sukkur and Peshawar, improvement of terminal buildings Quetta and D.G. Khan and reactivation/uplifting of Nawabshah, Hyderabad and Sukkar airports were the other projects completed by the Civil Aviation Authority.


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## Pk_Thunder

*IDA to provide $300 million for poverty alleviation project*​
RECORDER REPORT
FAISALABAD (February 02 2009): International Development Association (IDA) will provide $300 million for "Third Pakistan Poverty Alleviation Fund Project", which will be designed to reduce poverty and empower both the poor and poorest of the poor by providing savings support, financial and physical assets, information, skills and opportunities for development, and strengthen inclusive and accountable community organisations.

According to project update report of World Bank, the Third Pakistan Poverty Alleviation Fund Project will focus on increased inclusion of the poorest of the poor and women in community organisations and their heightened participation in all community and civic decision making processes.

World Bank report revealed that a significant addition for the proposed PPAF III project will be a stronger focus than previous operations on the most vulnerable and the poorest households.

This will be achieved by the adoption of a more participatory and integrated approach that combines strong targeting mechanisms that effectively identifies the extreme poor; and the building of inclusive institutions of the poor with enhanced investments in sustainable livelihood opportunities. These investments will range from skill enhancement, micro-credit, improved access and linkages to markets and local government, community managed grants for social & productive infrastructure.

WB report revealed that the proposed "Third Pakistan Poverty Alleviation Fund Project" concept is based on PPAF's experience and learning of eight years of multi-sector service delivery to the poor. During these eight years, PPAF has adhered to the basic principles of prudence, transparency, efficiency and effectiveness and maintaining its role as an apex institution. Innovation and flexibility will remain PPAF's underlying approach in the next phase.


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## Pk_Thunder

*Pakistan's economy to turn around: Wajid*​
LONDON (February 02 2009): Pakistan's High Commissioner to the United Kingdom, Wajid Shamsul Hasan is optimistic about a quick turnaround of Pakistan's economy by the year's end despite the global downward trend.

The wide-ranging interview with the APP among many other issues-covered Pakistan's economy, post-Mumbai developments, advent of new administration in the United States, greater realisation of Pakistan's overly constructive role in the war on terror and growing understanding of the core issue of Kashmir as a nuclear flash-point.

Intensive interaction with important British functionaries, leaders in trade and industry and enthusiastic entrepreneurs have reassured Hasan of immense keenness in the United Kingdom to help his country develop economically and to strengthen its democratic institutions.

Despite backlog of piled up economic problems inherited by the new democratic government and slow growth in the recent past Hasan feels confident that Pakistan's economy will grow more than 4 per cent by the end of 2009. The High Commissioner referred to the launching of the Friends of Pakistan Club on the initiative of President Asif Ali Zardari and the United Kingdom to provide economic support and offset the huge expenditure being incurred on the war on terror and overcome economic difficulties intensified by the global financial crunch.

"We have been aggressively pursuing a policy of trade and investment diplomacy to pursue British business community to invest in Pakistan", he said. He mentioned about the enthusiastic participation of British trade delegation at the Expo 2008 held in October last year in Karachi and termed the visit as 'very fruitful' in generating interest among the participants in food items, power generation, alternative power resources, textiles, sport goods and surgical instruments.

Responding to a question, the High Commissioner said the British businessmen have been assured the protection of their investments and have been asked to invest 'fearlessly' in Pakistan.

"As a matter of fact, in our exchanges with them, they agreed that the ratio of profit offered by Pakistan and guarantees to their investments are very encouraging to attract investment and they are looking at various fields, carrying on negotiations with Pakistani entrepreneurs as well and government to invest British money in different businesses in Pakistan".

Hasan disclosed that later in March a delegation of Pakistan-Britain Trade Investment (PBTIF) led by its Chairman Sir Thomas Harris will be visiting Pakistan to explore possibilities of newer economic ventures, to consolidate and expand existing business.

Besides, PBTIF delegation's visit to Pakistan, there is going to be equally important participation from Pakistan in the International Spring Fair being held in Birmingham from February 5. So far eight major Pakistani business houses/entrepreneurs have registered for the participation of their companies in the Spring Fair.


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## Pk_Thunder

*Pak-Lanka trade to be increased to 1 bln dollars*​

KARACHI, Feb 2 (APP): There exists a potential to enhance the bilateral trade between Sri Lanka and Pakistan to one billion dollars mark.

This was stated by the Consul General of Sri Lanka in Karachi, Sidath Kumar, here on Monday.

He announced that a Sri Lankan food and dance festival will be organized in the metropolis from February 5 to 8 in connection with the 61st anniversary of the independence of Sri Lanka.

The Consul General pointed out that the existing bilateral trade between Sri Lanka and Pakistan is to the tune of 250 million dollars and that it would be enhanced to one billion dollars in near future.

He pointed out that the two countries have already signed the free trade agreement (FTA).

Sidath Kumar said that there also exists a great deal of potential to promote tourism between the two countries in view of our deep friendly ties which are increasing further with the passage of time.

He also pointed out that the growth rate of Sri Lanka remained 6.8 last year. The per capital income was 2,000 US dollars and the literacy rate was 94 percent.


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## Pk_Thunder

*ECC may raise duty on hundreds of luxury items: mini-budget likely today*​
MUSHTAQ GHUMMAN
ISLAMABAD (February 03 2009): The Economic Co-ordination Committee (ECC) of the Cabinet, scheduled to meet on Tuesday under the chairmanship of the Advisor to Prime Minister on Finance, Shaukat Tarin, is expected to approve a mini-budget, revising duties on hundreds of items which the government believes are luxury items and non-essential, sources in Federal Board of Revenue (FBR) told Business Recorder.

The main purpose of revision in duties is to achieve the revenue target set in the agreement with International Monetary Fund (IMF). The ECC is also expected to impose regulatory duty (RD) on dozens of new items, the list of which has been kept secret, and would be circulated before the start of the meeting.

Sources said the list had been finalised on Monday at an inter-ministerial meeting, attended also by Secretaries of different ministries who gave their viewpoint on the proposal. They said that the Commerce Ministry had received representation from FBR in which it had been proposed that duty on different items should be changed to RD. The FBR is facing an uphill task in achieving the enhanced revenue collection target of Rs 1,360 billion in 2008-09.

The revised target envisages growth of 60.57 percent over 2006-07collection of Rs 847.2 billion. This enhanced target of Rs 1.36 trillion is extremely challenging for the tax machinery. The overall collection might be lower than the revised target, which could be around Rs 1.31 to Rs 1.32 trillion, sources added.

The revenue target has been increased from Rs 1.250 trillion to Rs 1.360 trillion under IMF programme, based on projected GDP growth of 5.5 percent and inflation at 23.2 percent, and the combined effect to be 28.7 percent. However, overall average annual inflation is expected to be 20 percent, and GDP growth to remain at 3.5 percent.

The FBR would generate additional amount of customs duty by levying RD on import of various kinds of luxury goods, including some iron and steel items, sources said. Recently, the Advisor to Prime Minister on Finance had stated that the government would not impose any new tax before the next budget, but had admitted that certain measures would have to be taken to increase revenue, that would include an upward revision of duty on luxury and non-essential items.

The government had imposed regulatory duty, ranging from 15 to 50 percent, on import of around 379 luxury items, including vehicles and mobile phones, with effect from August 28, 2008. The Cabinet had also enhanced customs duty on a number of items, including foreign food items/perfumes, etc, to discourage import of non-essential and luxury items.

There is a possibility that withholding tax rate may be enhanced on all luxury items specified in the customs notification relating to regulatory duty. In this way, the FBR would raise withholding tax on all non-essential items already liable to higher rate of customs and regulatory duties.

A wide range of items was subjected to additional customs duty to discourage imports. Vehicles of 1801 cc to 3000 cc capacity would be subjected to 50 percent RD. Mobile phones were subjected to regulatory duty at the rate of Rs 250 per set, and 30 percent RD has been imposed on import of landline telephone sets.


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## Pk_Thunder

*New housing schemes for Overseas Pakistanis to be launched: Sattar*​
ISLAMABAD (February 03 2009): Federal Minister for Overseas Pakistanis, Dr Farooq Sattar has said that new housing schemes will be launched and educational network will be expanded for the overseas Pakistanis. Their problems will be solved on priority basis and maximum welfare projects will be started for them.

The Minister expressed these views while talking to a meeting held here on Monday to brief him about the activities, projects and performance of the Overseas Pakistanis Foundation (OPF). The briefing was given by the Managing Director, OPF, Nayer Hasnain Haider.

Commenting on launching new housing schemes for the overseas Pakistanis, the Minister said that District Governments in all the provinces would be asked to launch new housing scheme while the Ministry will facilitate them. The data of universities in private sector will be collected to make contacts with them for getting 50 per cent concession in fee for the children of overseas Pakistanis. He said land will be get allocated in the new industrial zones being set up in different cities for Overseas Pakistanis so they can also invest their money.

Earlier briefing the Minister, the MD, OPF said 7 housing schemes for overseas Pakistanis in Lahore, Gujrat, Larkana, Dadu, Peshawar, AJK (Phase-I, II) and Turbat have already been completed, while 2 schemes namely OPF Valley Zone-V, Islamabad and Mirpur (AJK) Phase-III are under development and added the work on Zone-V in Islamabad has been started after the lapse of 14 years.

Frontier Works Organisation (FWO) has been awarded the contract, which has completed 10 per cent work on the project. The work on housing scheme in Mirpur has completed 70 per cent. Housing Schemes on Raiwind, Lahore, Phase-I & II and Rawat, Rawalpindi being planned to launch soon.-PR


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## Pk_Thunder

*Provision of level playing field for development of entrepreneurship proposed*​
RECORDER REPORT
KARACHI (February 03 2009): Participants at a business policy roundtable on Monday suggested that the government should provide level playing field and ensure the rule of law to augment the efforts in the area of entrepreneurship development. It was also suggested that promotion of mentorship culture was also required.

The roundtable was jointly organised by the Centre for International Private Enterprise (a nonprofit affiliate of US Chamber of Commerce), MIT Enterprise Forum, and Karachi Chamber of Commerce and Industry (KCCI) at a local, where issues and opportunities in the area of entrepreneurship in Pakistan were discussed.

Dr Ishrat Hussain, Director, Institute of Business Administration, briefed the meeting about IBA's initiative for development of a specialised Centre for Entrepreneurship Development at the institute. He said that the centre would provide a unique opportunity to graduates by exposing them to highly challenging entrepreneurial skills and research.

Advisor to Sindh Chief Minister Zubair Motiwala said that the KCCI is the right platform for collaboration with IBA, MIT Enterprise Forum and CIPE to jointly promote the skill-set required for entrepreneurship development in the country.

Farrok Captain, chairperson of MIT Enterprise Forum, said that the organisation was actively involved in developing a network of potential entrepreneurs and angle funds. He suggested that the sustainability of its efforts could only be ensured if enabling environment was created for developing consistent funding streams through venture capital, private equity and banking system.

Mohammad Azam Roomi, an international expert on entrepreneurship development, in his presentation said that research shows that there is a strong co-relation between the economic growth and entrepreneurship development and, in the era of globalisation, entrepreneurship becomes vitally important to challenge the ever-growing competition.

He suggested that a cohesive approach by the stakeholders ie, the government, business support organisations, academic institutions, media and the civil society was required to reap the benefits of entrepreneurship development in Pakistan.

Citing a recent example of Sateyam case in India, Mohammed Jaffer, chairman of CIPE Pakistan Project Advisory Committee, emphasised the integrity and personal values being the two most important ingredients of entrepreneurship. CIPE's Country Director Moin M Fudda briefed the audience about his organisation and said that its main focus is institutional capacity building and promotion of market-oriented reforms.

He said that since its inception in Pakistan in early 2006, CIPE with its international expertise of working in over 100 countries has been supporting the private sector policy advocacy initiatives in the area of chambers and association development, economic journalism, corporate governance and women entrepreneurship development.

Additionally, in the last three years, CIPE had provided financial grants to ten chambers and associations for specific project initiatives. Ms Shahida Saleem, Member, CIPE Pakistan Project Advisory Committee, and Hammad Siddiqui, Senior Program Manager, CIPE, presented recommendations to the audience.


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## Pk_Thunder

*FBR tax collections exceed Rs.628 bln *​ 

ISLAMABAD, Feb 3 (APP): Federal Board of Revenue (FBR) collected Rs.628.22 billion of revenues during first seven months of the current fiscal year, showing an increase of 22.6 per cent over the corresponding period of the last year.

The tax collections during July&#8209;January of financial year 2007&#8209;08

were recorded at Rs. 512.616 billion.

According to the provisional figures, FBR collected Rs.234.595

billion as direct tax during these seven months as against Rs.191.665 billion collected during the last year, showing an increase of 22.6

percent.

The Indirect Taxes registered increase of 22.5 percent during the

time under review by increasing from 320.951 billion during July&#8209;January (2007&#8209;08) to 393.226 billion in July&#8209;January (2008&#8209;09).

Sales tax collection witnessed 25.1 percent increase by increasing

from Rs.199.222 billion in 2007&#8209;08 to Rs.249.161 billion in 2008&#8209;09.

FBR collected Rs.69.515 billion as Federal Excise Duty during

July&#8209;January (2008&#8209;09) as compared to collection of Rs.44.396 billion collected during the corresponding period of last year, showing an

increase of 30.7 percent.

The customs collection also witnessed increase of 10.8 percent as

the FBR collected Rs.83.551 billion customs duties in first seven months

of current financial year against the collection of Rs.75.423 billion

during the same period of last financial year.

During the month of January FBR collected revenue of Rs.74.39

billion, including Rs.24.65 billion direct taxes and Rs.49.731 billion indirect taxes.

During the month under review, FBR collected Rs.31.982 billion as

Sales Tax, Rs. 6.955 billion as Federal Excise Duty and Rs. 10.791 as Customs Duty, according to FBR figures.


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## Pk_Thunder

*SBP issues guidelines on Islamic financing for agriculture *​ 

KARACHI, Feb. 03 (APP): State Bank of Pakistan on Tuesday issued the guidelines on Islamic financing for agriculture to help banks develop specific Shariah compliant products in order to meet the financing needs of the farming community.

These Guidelines have been developed in consultation with stakeholders while keeping in view the potential and demand for Islamic banking products in the field of agriculture, says SBP statement here.

The Guidelines broadly cover Islamic modes of financing like Murabaha, Ijara, Musawamah, Salam, Istisna, Musharaka, Diminishing Musharaka, Mudaraba, MuzaraÆa, Musaqat, and Mugharasa that can be used for meeting the financing requirements of farm and non farm sector activities including livestock, fisheries, poultry, orchards etc. In addition to these financing needs, IBIs may also refer to SBP guidelines and instructions for crop and non crop sector activities like guidelines on livestock, fisheries, poultry, horticulture, etc to make further progress on this front. Moreover, the Guidelines have also explained the application and procedure of the Islamic modes of financing.

The State Bank has advised all the banks to use these guidelines for developing their own Shariah compliant products for extending finance to agriculture sector according to their policy and operational and market requirements, subject to compliance with SBP regulations and approval from their Shariah Advisor.

The Guidelines will facilitate Islamic Banking Institutions (IBIs), particularly those who are extending their branch network and outreach in the rural areas, to develop their own products to meet the financing needs of agri/rural community in a Shariah compliant manner. The conventional banks with Islamic Banking Branches may offer these products through Islamic Banking Windows by using their conventional branch network.

Under the Guidelines, individuals/ partnership concerns and all types of legal entities engaged in agriculture related activities, having sufficient knowledge and relevant experience are eligible to get financing under the Islamic financing scheme. As per Prudential Regulations for agriculture financing, these guidelines shall not include financing to traders and intermediaries engaged in trading/ processing/ grading/packaging/marketing of agricultural commodities. Such financing

will fall under Corporate/ Commercial or SME financing and will be

subjected to compliance of corporate/ commercial/ SME regulations.

However, financing under the guidelines can be extended to entities

(including corporate firms, partnerships, and individuals) engaged in farming activities as well as processing, grading, packaging and marketing of

mainly 75% of their own horticulture produce. Financing facilities may be extended, provided IBI is satisfied with the capacity of the customer /sponsor to manage and run the horticulture activities subject to the following conditions:&#8209; 

· Customer should be a holder of computerized NIC while usual requirements for corporate clients would apply.

· Customer should not be a defaulter of any IBI / financial institution. This condition may be relaxed in case the IBI is satisfied with creditworthiness of the customer and that earlier default was

circumstantial and not willful.

· IBI is satisfied and feels comfortable with the farmer and guarantors (where applicable) identity character, reputation and creditworthiness.

It is advisable that IBI should have detailed understanding and

information about the customer, his/her capacity to effectively use and repay the debt from the projected cash flow, and/ or any other possible income streams, according to the Guidelines.


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## Pk_Thunder

*Innovation must to set up knowledge based economy: ICCI President *​ 

ISLAMABAD, Feb 3 (APP): President Islamabad Chamber of Commerce and Industry (ICCI), Mian Shaukat Masud here on Tuesday stressed the need for adopting innovation to compete effectively in the competitive global environment.

Addressing at national workshop on Innovation Survey oaf the

Industry, he said that research and development play a vital role in adopting innovatory approach.

The one day workshop was organized by Directorate of Science and

Technology (DST) NWFP in collaboration with ICCI, said a press release

here on Tuesday.

Mian Shaukat stressed upon the government to support the research

and development, arguing that the world was heading towards

knowledge&#8209;based economies and innovation was the first step for moving towards this goal.

He was of the view that adopting innovation in industrial sector

would enable the country to get multiple benefits as innovation was often seen an important factor in boosting economic growth besides contributing towards productivity, market share, value adding and employment

generation.

Technology is changing fast, new products are coming up from new

competitors, products lifetimes are shortening while customers have become more sophisticated and demanding, he remarked. 

He said that Industrial sector would have to double its efforts to

adopt the concept of innovation and spend more on research and development to cope with all these challenges.

He lauded NWFP DoST for undertaking innovation survey of the

industry and expressed the hope that the survey results would contribute positively to raising innovation activities in industrial sector by

creating better awareness about the importance of this approach.

Speaking on the occasion, chief guest, Ghulam Dastgir, Chairman

Sarhad Development Authority, Peshawar stressed the need for employing

more scientists in industrial sector for promoting innovation in business processes and products.

Earlier, representatives of DoST gave a detailed presentation on

Innovation survey on Industry in NWFP.


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## Pk_Thunder

*FDI in Pak showing postive trend *​

LAHORE, Feb 3 (APP)&#8209; Foreign Direct Investment (FDI) in Pakistan is showing a very positive trend and the investment situation is not as hopeless as being painted some elements.

This was stated by Secretary Board of Investment (BoI)

Tariq Iqbal Puri while briefing the LCCI President Mian

Muzaffar Ali on investment scenario in Pakistan on Tuesday.

LCCI Senior Vice President Tahir Javaid Malik, Vice President

Irfan Iqbal Sheikh, former Presidents Tariq Hameed, Mian

mohammad Ashraf, Mian Misbahur Rehman, former Senior Vice

Presidents Abdul Basit, Yaqoob Tahir Izhar and former Vice

President Sheikh Mohammad Arshad were also present on the

occasion.

The BoI Secretary said that only because of huge

undiscovered potentials in Pakistan and for having a unique

food basket, a number of foreign investors are ready to come

to Pakistan.

Tariq Iqbal Puri said that business community needs to

understand that economic issues being faced by the country

were not going to stay for long and hopefully the situation

would take a positive turn in next eight to nine months.

He said that the BoI, in collaboration with the government,

is finding out sustainable and economically viable solutions

to the challenges being faced by the business community.

The Secretary said that special attention was being given

to law and order and smooth supply of electricity. The restoration

of confidence of the business community is another area which is

on the priority list of the government, he added.

He said that special economic zones were being carved out

to attract direct foreign investment.

Speaking on the occasion, the LCCI President Mian

Muzaffar Ali said that drastic cut in government expenditures

and enhanced productivity were the answers to the liquidity

crunch.

He said that deteriorating law and order situation was

not only spoiling Pakistans perception but was also

discouraging much&#8209;needed foreign investment and calls for well

directed measures to control the situation which was getting

out of hand with every passing day.

Mian Muzaffar Ali said that government should focus on

increasing production on sustainable basis besides exploiting

fully the renewable energy resources to cope with the shortage

of energy.

The LCCI Senior Vice President Tahir Javaid Malik informed

the Secretary BoI that the automotive sector was in bad shape

and the local businessmen attached with this sector should be

given protection.


----------



## Pk_Thunder

* Pakistan, Jordan agree to sign FTA*​
Updated at: 2135 PST, Tuesday, February 03, 2009 
ISLAMABAD: Pakistan and Jordan have agreed to sign Free Trade Agreement (FTA) to deepen their existing economic and trade relations.

A Pakistan delegation will visit Jordan in March this year to formally start negotiation to this effect. This reflects the strong desire of their respective governments, bringing their economic ties at par with excellent diplomatic partnership.

The two countries are moving ahead on a fast track to broaden their multi-dimensional strategic partnership, particularly in defence production and business sectors, said Ambassador of Jordan Dr. Saleh Ahmad Al-Jawarneh who called on President Asif Ali Zardari here.

He told that President Zardari has accepted the invitation for participating in the meeting of World Economic Forum (WEF), scheduled to take place in Jordan from May 15 to 17, and expressed his desire to bringing their ties to a new height, meeting the common aspirations of their people.

The invitation was extended to him on behalf of King Abdullah bin Al-Hussain. The Ambassador said that WEF moot will offer a fresh outlook at new economic opportunities and on the evolving political challenges in the region.


----------



## TopCat

acer said:


> how is inflation in bangladesh sir.?



I think its 6.5% now but we had hit highest 11% once for few months.. Man that was really painfull for the poor people..


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## Omar1984

Local real estate unaffected by global recession 

Friday, January 30, 2009
By Faryal Najeeb

KARACHI: The local real estate market remains untouched by the global recession, which shows no sign of easing and in fact has further threatened the world economy, because Pakistan does not practice house-building loans. 

An expert in the housing and construction industry commented that the whole world, especially the west and UAE, was badly affected after the real estate sector collapsed. 

KK Builders Chairman Munir Sultan said every fourth house in the west was at default mainly because banks had failed to secure loans and customers had failed to pay debts. 

However in Pakistan, loans are granted only for house purchase or renovation of houses and then again they are secured and guaranteed, he added. 

The House Building Finance Corporation (HBFC) grants loans only to buy a project that has already been made. Where will a borrower go if the house is already standing and it can be auctioned off in case a customer turns into a defaulter? he points out. 

Sultan also stated the real estate meltdown had taken place in the west and the UAE as projects were being made purely on investment basis due to which there had been more of supply than demand. In Pakistan, we already have a backlog of 8.8 million houses at the lower and middle income level, so if housing projects are introduced here, then usually there is a tremendous response to them too, he enunciated. 

He said: Despite the fact that we bristle with the highest interest rates and lending rates, the shortage of houses always create a healthy demand in the market.

He expatiated on the country had in some ways actually benefited from the global recession as the downfall in UAE markets had helped local investors and builders to return to the Pakistani market. 

Yet, Sultan is cautious about the future of the local real estate market as the government was making no attempts to cash in on the available opportunities and continued to ignore the gold mine they have.

He said a housing policy had been made in 2001 but any implementation had not yet been made and neither had the policy been changed according to changing times. He said the government could aid to uplift the real estate sector but appeared to remain uninterested. 

On the other hand, Head of Research at Pak real estate, Shahbaz Mukhtar said the real estate sector had slightly been affected by the recession. 

He said developed residential areas had witnessed a minor change of up to 10 per cent whereas the developing areas had been affected by 15-20 per cent. 

He stated: This is rather insignificant for the real estate sector but nevertheless an adverse figure. 

He explained that the recession had led to prices remaining either stagnant or reducing as demand for properties also dipped. He voiced that many overseas Pakistanis had been affected by the recession and they had also not invested into the country. 

Mukhtar said overall the country had also been hit by the recession which led to people either losing jobs or their spending power being limited and this consequently led to their taking out less money for property purchasing, thereby adversely influencing property prices. 

Local real estate unaffected by global recession


----------



## Neo

*GDP growth rate may drop below 1pc: official ​* 
Thursday, February 05, 2009

ISLAMABAD: Pakistan is feared to experience negative growth this year in all sectors of economy except the agriculture sector, a senior official at Ministry of Finance confided to The News.

Growth in agriculture sector is expected around 4.5 per cent depending on wheat production, if this target was missed the Gross Domestic Product growth rate would be even less than one percent, he said.

Pakistan experienced negative growth in 1952 and if the agriculture sector does not perform up to expectations, then once again the country would be exposed to negative growth of 0.3 per cent.

In the last fiscal year, the agriculture growth was 1.5 per cent and now the country is expecting 4 to 4.5 per cent growth, which is to be the only factor that would take the GDP growth into positive zone.

We are expecting negative growth by the end of the ongoing fiscal in all sectors of economy except agriculture. The massive negative growth is to hit Large Scale Manufacturing (LSM) and Construction, the official said keeping in view the preliminary estimates worked out with regard to the expected GDP growth by the end of ongoing fiscal.

Electricity & and gas distribution, Transport And Communication, Wholesale and Retail Trade, Finance and Banking, Public Administration and Defence and Social and Community Services are also not likely to perform, but the Agriculture sector would be in the positive zone with no major positive impact on overall GDP growth, he said.

The government is alarmed over the performance in the said sectors of economy and is all set to revise the targets of GDP growth, tax revenue, inflation and exports with International Monetary Fund (IMF) which has extended to Pakistan the 23 months $7.6 billion bailout package under Stand By Arrangement (SBA).

For the ongoing fiscal, the official said, IMF had earlier fixed the target of 3.4 percent GDP growth, 21 percent average inflation, 12 percent growth in export and Rs1,360 billion tax revenue.

Pakistan and IMF would revise the targets during the appraisal process by IMF review mission that is to be held in Dubai during February 14 to 24 period.

Pakistan and IMF would revise downward the target of GDP to about less than one percent, as the global economic outlook has entirely changed from the world scenario during the October-September 2008 period because of the massive decline in oil and commodity prices in the international market. 

The official said that Large Scale Manufacturing has 19 per cent weight in GDP growth and it is expected to experience negative 6.5pc growth in this fiscal.

Construction sector with 2.7pc weight on GDP would witness six per cent negative growth against 15pc growth in 2007-08.

Electricity and gas distribution has 1.6pc weight in GDP and its growth is likely to decline 5.5pc from 14.7pc in last fiscal. Mining and Quarrying has 2.5pc in GDP growth and it is likely to experience 3pc growth in this financial year. This means the overall growth in industrial sector would be in negative zone, the official said.

Transport and communication sector growth dropped to 1.5pc from 4.4pc in last financial year. Likewise zero growth in wholesale and retail trade is likely to decline to zero per cent from 6.4pc in 2007-08. This particular sector owns the weight of 17 percent in GDP growth of the country.

Finance and banking sector depicting 17pc growth in last fiscal is expected to show negative growth of 4.5pc. The weight of this vital sector stands at 6.5pc in GDP.

The government is expecting status quo in growth of 3.5 percent in ownership of dwellings sector. This sector carries the weight of 2.6 percent in GDP growth. Public Administration and Defence, which has weight of 6.5pc in GDP is likely to witness 5pc growth against 10.9pc in last fiscal year.


----------



## Neo

*UAE gifts 320MW power plant to Pakistan ​* 
Thursday, February 05, 2009

ABU DHABI: The United Arab Emirates on Wednesday inked a Memorandum of Understanding to hand over a 320MW gas-fired power plant to Pakistan to help meet its immediate energy needs.

The signing ceremony was witnessed by President Asif Ali Zardari who was here on a private visit. Minister for Water and Power Raja Pervez Ashraf inked the agreement with his counterpart from UAE Sheikh Dhiyab bin Zayed AlNahyan, who is also the Chairman of the Abu Dhabi Electricity and Water Authority (ADEWA).

UAE President Shaikh Khalifa bin Zayed Al Nahyan in his meeting with President Asif Ali Zardari in November last year offered the power plant to Pakistan as a gift, keeping in view the serious energy shortage the country was facing. The plant comprises 13 units, five of 16MW capacity and 8 of 30MW to produce 320MW of power and the government of United Arab Emirates will pay for the dismantling, packing and shifting of the plant to Pakistan.

Pakistan and UAE enjoy wide ranging ties and their leaders frequently interact to further strengthen their relations. The two leaders in their several meetings have agreed to enhance cooperation in all fields and open new avenues for mutual cooperation and partnership in different sectors.

After the signing ceremony President Zardari said the gift of the power plant was a goodwill gesture of UAE for the people of Pakistan and said it would greatly help Pakistan meet its energy needs. He said the people of Pakistan will always remember this precious gift and termed it a symbol of love and sincerity from the people and government of UAE.

He said the Pak-UAE relations will further boost and both the brotherly countries will help each other in energy sector in near future.


----------



## Neo

*Economic indicators falling, planners seem unfazed ​* 
Thursday, February 05, 2009

LAHORE: Economic planners are acting like an ostrich feeling secure while all macro-economic indicators are on the decline including employment, current account balance, foreign exchange reserves, trade balance, industrial production, consumer price index and exports.

Experts are dismayed as economic policies are moving in opposite direction to those pursued by governments in competing economies while taking into account current global recession. The policies in place are meant to curtail growth when the economy is already in a deep recession.

Indian and Chinese central banks have cut policy rate to 5.5 per cent and 5.75 per cent respectively, showing a significant decline in the past six months. However, the State Bank of Pakistan has increased its policy rate to 15 per cent. Economic experts question how high policy rate would help overcome recession in the country.

Economic managers are living in a fools paradise, said senior economist Naveed Anwar Khan. He said the Board of Investment was happy that foreign direct investment had slightly improved from last year when political uncertainty was at its peak.

However, none of the new investment has gone into green projects meaning no increase in productivity or employment. Moreover, there is a huge outflow of portfolio investment which depicts low confidence of investors in Pakistans economy, he said.

He said the Adviser to Prime Minister on Finance, Shaukat Tarin, only two months ago was extremely satisfied with revenue generation. In fact, he added, he was anticipating an increase in revenues, but tax collection was below target and would likely fall further.

With crude and edible oil at one-third of the prices prevalent at the time of presentation of budget in June 2008, the import bill should have come down by $3.5 billion, he said, adding the State Bank governor seemed elated when in the monetary policy he predicted the import bill would drop by $1 billion this year. This would not even cover the advantage obtained from the two commodities.

Dubai-based chartered accountant Faisal Qamar said the government had weakened regulatory institutions which could have brought down inflation in accordance with ground realities. For instance, he said, the Competition Commission of Pakistan had been denied funds to run its day-to-day affairs. Instead of using its energies to check cartels, the CCP is fighting for its survival as it does not have resources to work till March.

The Securities and Exchange Commission of Pakistan, he added, had lost its grip on the capital market as stock prices were at lowest levels in the past five years but still there were no buyers.

He said there was internal dispute in the Federal Board of Revenue after the formation of Inland Revenue Department which merged the direct taxes department with the customs, sales tax and excise department. These experiments should have been left for some other time when economic conditions would be better, he suggested.

Canada-based certified public accountant Asif Ali Shahid said the high policy rate of 15 per cent had assured that small and medium enterprises did not get bank financing, adding it would mean almost no creation of jobs and further closure of SMEs which would leave the existing workforce jobless.

He said job opportunities for Pakistanis around the globe were also very bleak. 

The United Nations had already warned that in the best case scenario 20 million jobs would be lost around the world in 2009 and in the worst case the figure would go up to 50 million. 

Jobs would have to be created within the country by giving a boost to productivity, he suggested.


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## Neo

*KSE crosses 5,500 points on investment-friendly news ​* 
Thursday, February 05, 2009

KARACHI: Investment-friendly news helped the Karachi bourse benchmark KSE 100-share Index breach through 5,500 points mark on Wednesday.

The KSE 100-share Index gained 149.38 points or 2.77 per cent to end at 5,534.25 points. The parallel running junior 30-Index rose by another 210.76 points or 3.99 per cent and closed at 5,494.04 points.

The bazaar opened in green zone and stayed there throughout the session. The step-by-step rising up stocks market hit intra day high of 5,542.26 points. A little profit-booking in the closing moments, however, adjusted market to the closing level.

Day traders and margin hunters were active in almost all the favourite sectors including energy, banking, insurance, fertilizer, cement and telecom on upper levels. About two-dozen stocks hit their upper circuit breaker of five per cent of Re1, which ever is higher. The upper locks were mainly seen in the banking, insurance and energy stocks.

Analysts said that the continuous relaxation to the financial sector from its regulator i.e. State Bank of Pakistan (SBP) kept inviting banking an insurance loving investors to the main arena.

Following a 30 per cent benefit of Force Sale Value (FSC) on Non-performing Loans (NPLs) to banks last week, the SBP and Securities & Exchange Commission of Pakistan (SECP) have reportedly agreed to give another benefit to financial institution and that is to gradually write-off deficit on revaluation of listed equity investment, TFCs and Sukuk for over two years period, said Ahsan Mehanti at Shahad Chamdia Securities.

According to another analyst the lowering of rate of return on 10-years Pakistan Investment Bond (PIBs), from 16.5 per cent to 14.75 per cent, shows that the financial system holds sufficient liquidity. Moreover, the reduction in PIBs rate would encourage liquated investors to invest in equity market, he added.

Hasnain Asghar Ali at Aziz Fidahusein says that the forthcoming petroleum policy, which is likely to carry more aggressive targets and incentives for prevailing and new investors, provoked energy investors to take his part in the on-going bullish rally.

But these days buying euphoria might prove of short-term nature, as these days investors are mostly speculators, who are mainly focusing on short-term capital gains and dividend yields, he foresaw.

Turnover in ready market enhanced to 205.563 million shares from 140.966 million shares traded a day earlier - showing a growth of approximately 46 per cent on day-to-day basis.

Future market also experienced a change of hands of 5,000 shares in this session.

The overall market capitalistaion rose by another Rs43 billion to stand at Rs1,746 billion.

The plus signed snatched the ruling power on board, as 178 stocks advanced into green territory, 101 stocks fell in red region, while the value of nine stocks closed unchanged.

Highest volumes were witnessed in NIB Bank at 17.605 million closing at Rs5.51 with a gain of six paisa, followed by DS Industries at 13.603 million closing at Rs3.52 with a gain of Re1, TRG Pakistan at 13.043 million closing at Rs1.54 with a loss of 14 paisa, Pakistan Telecommunication Company at 10.746 million closing at Rs15.46 with a gain of 17 paisa, and Oil and Gas Development company at 9.926 million closing at Rs14.78 with a gain of 27 paisa.

HOLIDAY NOTIFICATION: The Karachi Stock Exchange (KSE) will remain clsoed on Thursday, Feb 05, on account of Kashmir Day. The Exchange will reopen on Friday, Feb 06.


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## Neo

*alarming situation: Country to confront 0.507bcfd gas shortfall in 2010​*
ISLAMABAD: The energy experts forecast that gas shortfall would increase to 0.507 billion cubic feet per day (bcfd) in 2010 from the current year shortage of 0.192 bcfd with the shortfall further aggravating with the passage of time.

The gas shortfall would reach to about 10.340 bcfd by 2025 from 0.192 bcfd shortfall in 2009, sources told Daily Times here on Thursday. The total availability of natural gas for the year 2009 was forecasted at 4.346 bcfd and the total demand for natural gas was 4.538 bcfd in the same period. The indigenous supply of gas in 2010 was predicted as 4.309 bcfd and projected demand for gas would be 4.816 bcfd in the same year and the total shortfall would rise to 0.507 bcfd.

The projections further revealed that the indigenous gas production in 2015 would reach 3.671 bcfd and the demand would rise to 6.383 bcfd. By the year 2020, the estimated gas production would be 2.522 bcfd and the projected demand for gas would be 8.320 bcfd.

Similarly, by 2025, the projected indigenous gas supplies would be 2.167 bcfd and the estimated demand for gas would rises to 12.507 bcfd, showing a net shortfall of 10.340 bcfd.

The projections are based on fact that the supply of gas would decline gradually due to depletion in the existing resource base and no new discovery. The demand for gas would increase due to increase in its usage, increase in population, and expansion in gas utility connections to other parts of the country.

If proper action is not taken in time for increase in supply of gas either by increase in local discovery or through import like materialisation of IPI gas pipeline project the situation would become grave for both the domestic and industrial users. To meet higher demand for oil and gas, the government has to update the technology so that more exploration and production of gas could be made possible.

Sources further said that keeping in view gas shortage, finalisation of Iran-Pakistan-India (IPI) gas pipeline is of crucial importance. The IPI pipeline might be optimally used for power generation as it can produce 15 percent cheaper power than power generation through furnace oil. The use of IPI gas for domestic use would be costly, the sources added.

For increase in local oil and gas production, the Ministry of Petroleum and Natural Resources has set a drilling target of 100 wells for current year to increase local production of oil and gas. "We can double the oil and gas exploration by adopting the modern techniques."

Other main problem for drilling of more oil and gas are security concerns because most of the resources are available in provinces of NWFP and Balochistan where local and foreign investors are shy to invest, the sources added. The imported natural gas, even at Iran's latest increased price, remains economically the most feasible option as compared to other imported fuels such as furnace oil, LNG and coal, analyst opined.


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## Neo

*Kuwait extends oil credit facility for one year​* 
ISLAMABAD (February 05 2009): The government of Kuwait has given extension to Pakistan in credit facility to import oil on deferred payment for 60 days for one more year, effective from January-December 2009. Earlier during the caretaker government, Kuwait had extended the credit oil facility from 30 days to 60 days, facilitating Pakistan to import oil on deferred payment effective from January 1, 2008 to December 31, 2008.

During the caretaker set-up, Pakistan petroleum minister Ahsanullah Khan had requested Kuwait to provide oil for 60 days instead of 30 days on deferred payment in a letter addressed on December 11, 2007. Petroleum Minister of Kuwait and chairman of Kuwait Petroleum Corporation, Mohammad A.Al-Aleem had responded to Pakistan government on December 25, 2007 and said that Kuwait government had granted the credit facility of additional 30 days to import oil on deferred payments.

Sources said that the present government had requested the Kuwait government to give extension of the said credit oil facility for two more years. However, the government of Kuwait approved extension for one year effective from January-December 2009. The government of Kuwait has formally informed the government of Pakistan about the extension in the said facility for one year.

Sources noted that the present government had also sought extension in credit oil facility from 60 to 90 days on deferred payment. But the government of Kuwait has restricted itself to 60 days credit oil facility for one year. The extension in said facility will help ensure uninterrupted oil supply to the country. Pakistan State Oil (PSO) under an agreement with Kuwait Petroleum gets the supply of diesel.


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## Neo

*Pakistan calls for Japan's continued aid ​* 
TOKYO (February 05, 2009): A financial adviser to Pakistan's Prime Minister Yousuf Raza Gilani called on Japan Thursday to continue giving aid to Pakistan despite the global financial crisis, a press report said.

The adviser, Shaukat Fayaz Ahmed Tarin, explained his country's economic reform efforts during a meeting here with Japanese Finance Minister Shoichi Nakagawa, Kyodo News said.

Last November, Pakistan reached an accord with the International Monetary Fund that saw it receive a 7.6 billion dollar emergency financing package to help it deal with serious balance of payments difficulties.

Tarin told Nakagawa that his country's fiscal position had seriously worsened due to a delay in passing higher energy and food prices on to consumers, Kyodo said.

But he added Islamabad has implemented various reforms to tighten fiscal and monetary policies with support from the IMF, the report added.

He said conditions have since improved with lower inflation rates and a normalized stock market, but expressed concerns about expected declines in the country's exports and remittances from Pakistani workers abroad.

Nakagawa told Tarin that Japan plans to continue to help developing countries hit hard by the economic crisis through the IMF and World Bank, the report said.

Bilaterally, Japan extended yen-denominated loans worth about 500 million dollars to Pakistan in the year to March 2009.

Tarin unveiled a plan to set up a special economic zone in Karachi, which will possibly serve as a gateway to Central Asian and Middle Eastern markets for Japanese firms, the report said.

He also proposed the two countries jointly develop gas, coal and copper in Pakistan, Kyodo added.

Tarin is scheduled to meet with Prime Minister Taro Aso on Friday.

The Nikkei business newspaper reported earlier this week that Japan was inviting more than 10 countries to a meeting in late March or early April in Tokyo and that it would drum up billions of dollars in aid pledges.

"The Japanese government has this in mind. But its schedule and other details are not yet decided," Jun Matsumoto, the deputy chief cabinet secretary, said.

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## Neo

*State of the economy​*
EDITORIAL (February 04 2009): It was only a few months ago that Pakistan's economy was in a deep crisis. The twin deficits in the external sector and fiscal accounts were reaching unsustainable levels, inflation rate was at an alarmingly high level, foreign exchange reserves of the country were depleting rapidly and exchange rate of the rupee was almost in a free-fall.

The immediate insolvency threat appeared to be so real that the country had to chalk out a stabilisation programme and seek assistance from the International Monetary Fund in November, 2008. Although dark clouds on the horizon have not vanished altogether as yet but intensity of pressures in certain key areas of the economy have certainly eased and economic managers of the country are now showing greater confidence.

Talking to the media the other day after launching the ceremony of Pakistan micro-financing network (PMFN), Advisor to Prime Minister on Finance, Shaukat Tarin said that fiscal deficit during the first half of the current financial year was recorded at 1.9 percent as against the target of 2.0 percent due to increase in revenues and reduction in expenditures.

For Public Sector Development Programme, Rs 100 billion were disbursed up to December, 2008, around Rs 200 billion would be released in the second half of the current fiscal year and development funds amounting to about Rs 400 billion were still lying with the federal and provincial governments. Lack of capacity utilisation was the main reason for lower PSDP allocation.

The CPI had gone down by 1.34 percent during December as compared to the previous month and was expected to decline further in January, 2009. If the present price trends continue, the State Bank may not tighten the monetary policy further. The government would pass on the impact of decline in global prices to the consumers and would consider reduction in oil prices next month.

However, the government was bound to eliminate subsidy on electricity and there would be only a minimal increase in the electricity prices on this account due to drop in furnace oil prices in the international market. Foreign exchange reserves of the country had exceeded dollar 10 billion after inflow of dollar 500 million from China and dollar 101 million logistic support from the US, better placing the country to achieve exchange rate stability and meet current account deficit.

Although these gains would appear to be small or even insignificant to an ordinary person, but, comparing them with highly negative trends in the recent past, the turnaround in certain key areas of the economy had certainly reduced the chances of an economic meltdown and inspire the hope that the country would be able to overcome major challenges with the passage of time.

The positive turn of events could be attributed to certain favourable exogenous developments and the resolve of the authorities to stabilise the economy without caring much about political consequences of unpleasant decisions. A sharp decline in international prices of oil, steel and food products has eased pressure on the external sector of the economy. Consistent hike in oil prices was particularly proving to be disastrous for the economy.

On the domestic front, policy makers, first of all, reduced subsidies on major items substantially and then, very wisely, proceeded to negotiate a Stand-By Arrangement with the Fund to eliminate the insolvency threat. This calmed down the nerves of investors and other stakeholders to a certain extent. Monetary policy was tightened further to control emerging inflationary pressures.

All of these steps were difficult to implement at a time when most of the people were expecting relief from the government through provision of higher level of subsidies, the IMF was, by and large, seen with disfavour and the business class was asking for lowering the lending rates. While the government has been able to steady the ship to a certain extent, there are still too many problems to be confronted.

According to the latest estimates of the IMF, the recession was deepening and the world economy was expected to grow by only 0.5 percent in 2009, the weakest since World War Two. This would definitely have negative consequences for exports of the country but the worst hit could be home remittances that are a major source of our foreign exchange receipts.

The security situation in the country is far from satisfactory and the problem of circular debt is too severe to be resolved easily. Long-term political stability is still a dream despite the induction of a political government. These kinds of problems could greatly retard the stabilisation process if not resolved soon. In our view, political forces of the country and other stakeholders need to be aware of the risks involved and decide to be partners in building the economy for the welfare of the people.


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## Neo

*Government urges Pakistani women to emigrate ​*By Sajid Gondal 

Thursday, 05 Feb, 2009

ISLAMABAD: The Countrys first ever emigration policy talks about the feminization of migration trends, and aims to substantially increase the prospects of emigration in the female workforce.


The Policy Planning Cell of the ministry of Labour and Manpower has finalised the draft of the National Emigration Policy 2009, coming up for approval by the cabinet. 

The emigration policy is mainly focusing on regularization of recruitment processes, elimination of unsafe, exploitative and abusive emigration practices, welfare mechanism for emigrants and expansion of labour share in the traditional Gulf and European countries. 

The policy draft says the share of Pakistani female workers in very low in the overall emigration, and it has to be substantially increased especially in occupations considered safe. 

It has been explained in the policy draft that the non-availability of information was one of the major constraint which has restricted the women workforce to avail the available employment opportunities abroad. 

Emigration policy has recommended establishment of task force Market Research, Facilitation and Information Centre to focus on female employment abroad. The task force would design special programs for skill development in the areas widely demanded in world labor markets. 

Chairman Policy Planning Cell Sabur Ghayur told Dawn that tapping work opportunities and promoting safe emigration along with protecting the rights of emigrants was the main objective of the policy. 

Dr Ghayur said that the emigration flows from Pakistan recorded at 4.50 million during 1971-2008 have been mostly in the oil rich Middle Eastern countries. In the current decade, the number of workers going abroad was averaged 223,000 a year and the emigration exceeded 280,000 in 2007 and 430,000 in 2008, he added. 

The emigration policy has been divided into 15 priority areas. The first priority area was emigration on the agenda of overseas visits of president, prime ministers and cabinet members. They high-ups would keep the promotion of overseas employment in their top agenda while visiting friendly countries. 


The policy suggested organization of road shows to show-casing the qualities, education, skills of Pakistani workforce in the destination countries. Job fairs would also be organized to attract foreign companies to seek employees in Pakistan, it added. 

Emigration policy also talked about country-specific strategies for each of the labour hosting country; initially for Saudi Arabia, UAE, Kuwait, Oman and Malaysia with active involvement of Pakistanis missions in the concerned countries. 

The policy also suggests upward revision of the legal fee of the Overseas Employment Promoters (OEPs) and also imposition of strict penalties for those found over charging from their clients. It also suggested for increasing the security money of OEPs that could be utilized to compensate the overseas employees, incase of exile from host country by the fault of an OEP. 

Emigration policy draft also asked for development of a mechanism that provides cost effective and easily accessible low cost remittance service for the Pakistani emigrants abroad. 

It suggests simplification of procedure and one-stop services to facilitate the emigration of workforce. To do that one window operation facilities would be established in five major cities to speedily complete the emigration process of workforce. Policy said. Similarly, technical training centers  largely under public-private partnership, some exclusively for women, to impart skill development on trades in demand overseas. 

The policy draft suggested forming a deportee-friendly mechanism for deported persons possessing valid documents. By involving the ministry of interior, the overseas employment board would assist the worker in claiming his lawful dues from the employer as well as disposal of his belongings. 

According to new policy the intending emigrants would be provided orientation and briefing before departure to destination countries. In these orientation sessions, they would be given briefing on their rights, working conditions, terms and conditions of employment, health related issues including HIV/AIDS and traditions and labour regulations of the host country.

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## Neo

*$22.10 billion export target may not be realized​*
Thursday, 05 Feb, 2009 
By Sabihuddin Ghausi

​
KARACHI: Trade analysts and exporters are doubtful of achieving government fixed export target of $22.10 billion during 2008-09 as in first half actual export proceeds during July-December 2008 are almost one billion dollars less than proportionate projection amounting to $10.54 billion.

Pakistan&#8217;s exporters would have to fetch about $2 billion plus every month for next six consecutive months to achieve $22.10 billion target.

An analysis of last six months shows that highest export earning of $1.87 billion was achieved in the first month of July which was almost 28 per cent higher than exports in July of 2007.

&#8216;Fall in value of Pakistan&#8217;s rupee caused a rise in exports during July after which export proceeds showed a fall every month in the last five consecutive months. The total accumulated shortfall in target is close to one billion dollars and exporters would have to earn $12.5 billion in the next six months which seems to be an impossible task. The task is impossible because production cost has gone up manifold rendering us uncompetitive in world market,&#8217; explained Shabbir Ahmad, a leader of textile industry, and the second reason he gave is because of erosion of purchasing power in Europe and US because of severe recession.

&#8216;Never before in the last 61 years, Pakistan&#8217;s business was so hard-pressed as it is now and it is being ignored by the elected decision makers,&#8217; a well known senior garment exporter remarked angrily who wondered how and why people, like Makhdoom Amin Fahim and Rana Farooq Khan, have been given the job to look after commerce and textiles when none of the two has any understanding of basic issues of their jobs.

No businessman in Karachi said whether Makhdoom Amin Fahim met any of them individually or in group, the Textiles Minister is said to have held a few meetings with textile exporters in Karachi, Lahore and other places.

But his response to the issues was rhetoric that lacked substance.
While the political leadership assigned to take care of business issues is found wanting in job orientation, frequent changes at bureaucratic level has shaken confidence of workforce in the business service institutions.

Frequent top-level changes in ministries of finance, commerce, textiles, industries and institutions, like Trade Development Authority (TDAP), have shaken confidence of lower cadre officials who are left guessing who and what next?

&#8216;No one in the government understands the serious implications of 10.5 per cent fall in export earnings and a six per cent drop in industrial production,&#8217; a banker said as according to him a six per cent fall in industrial production will impact agriculture as well.

Rising cost of doing business and severe energy crisis have crippled textile industry to the extent that a reasonably good cotton crop is not being consumed locally.

&#8216;More than 65,000 metric tons of raw cotton has been exported in the first half of 2008-09 to Pakistan&#8217;s competitors in the world at almost 10 per cent less than the average unit price,&#8217; the banker said.

Fabrics is one textile product that has fetched more than one billion dollars in export during July to December and an over 12 per cent growth because Pakistan&#8217;s competitors in home textiles, Bangladesh, Turkey and a few other countries are on a buying spree.
Leather and leather goods which have been Pakistan&#8217;s traditional products for exports have come under pressure and showed over 12 per cent decline in export earnings than last year.

As against more than $600 million export earnings in the first half of the last fiscal year, leather goods export in the first half of 2008-09 amounts $526.35 million.
The only encouraging factor on the export front is small increases in a variety of items -- molasses, fruits, chemicals and pharmaceuticals, marble and granite, jewelery, meat and cement. But cement export to India is coming under problems following change in relationship between Pakistan and India and slump in construction business in Dubai.
&#8216;If we manage to export $20 billion at the end of day, it won&#8217;t be too bad,&#8217; said a business leader. But he expects a balance of trade in 2008-09 less than 2007-08 because import bill will shrink.

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## Neo

* Investment in Pakistan difficult ​* 
Friday, February 06, 2009

KARACHI: Commercial Counselor of Embassy of the United States in Pakistan, William Center has said that it was very hard to prioritize Pakistan as an investment destination in the current law & order scenario.

He stated this at his visit to SITE Association of Industry on Wednesday.

He maintained, The situation requires correction and positive changes in the perception of the country which does not sell a viable enough image to comfort the investor to direct his/her investment in the humongous available market of 170 million people.

He said development means the general welfare of the common man who should be provided all the means and tools necessary for a reasonable living.

The responsibility of state and the civil society should be to manage development in such a way that the trickle down effects are transmitted to the needful, so that he does not resort to actions not allowed by the framework of the laws of the land.

He said that Pakistan faces the alleged position of a terrible law & order state, often contributed by disgruntled elements of the civil society feeling deprived of their rights and the share they feel they must have in the developments.

William Center, however, said that investment in infrastructure and insurance sectors in Pakistan can be considered to develop its economy for the welfare of its citizens.

While welcoming William, SITE Association of Industry Chairman Engr M A Jabbar stressed upon him to increase the volume of US investment here in Pakistan.

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## Neo

*Global economic crisis impact: Value of textile exports plunge during 1HFY09​*
By Tanveer Ahmed 

KARACHI: The value of local textile products fell sharply in the first half of current fiscal year primarily because of economic slowdown in the world particularly in USA and Europethe top export markets of Pakistan.

During July-December 2008-09, the volume of the textile products export rose substantially, however, due to the eroding purchasing power of the consumers in the west, the value of these products nose-dived compared to the corresponding period of previous year.

The financial crisis in USA and Europe has a spiral impact and Pakistani textile products are no exception to this global issue, Federal Textile Commissioner, Mohammad Idris remarked and said that even India and China saw the value of their products plunging during the period under review.

However, it is heartening to note that domestic products were able to keep their share in these market, he pointed out and stated: It is now more about keeping the share in these markets intact than the value because of the gloomy situation, which appears to continue for the next two years.

On the other hand, exporters also blame the economic crisis in the western world as the prime factor for fetching less unit price of these products. However, the rupee depreciation helped the local exporters to make-up for the losses.

A glance on the values of the textile products showed that almost all the categories suffered in terms of a fall in their values.

The value of raw cotton plunged by 9.25 percent by fetching $975.4 per metric tonne during first six months of current fiscal compared to $1074.71 per metric tonne in the corresponding period previous year.

A decline of 4.04 percent was recoded in the value of cotton fabrics at $0.95 per square metre over $0.99 previously. Knitted fabrics value is down by 6.98 percent.

Readymade garmentss value fell by 3.46 percent during the period under review. Value of knitwear (hosiery) was down by 10.65 percent. The value of bedwear declined by 11.48 percent and towels by 5.16 percent. The value of tents and canvas fell by 13.80 percent, Art, silk & synthetic down by almost 11 percent.

Only value of made-ups (excluding towels & bedwear) registered an increase of 2.71 percent whereas the cotton yarns value remained flat.

The textile exports were down by 1.79 percent during the first six months of current year, which would make it hard to achieve the export target of over $22 billion set for the current fiscal.

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## slugger

Yahoo! News - *Pakistan needs international financial help, advisor tells Japan*



> *A key Pakistan government adviser* told Japanese Prime Minister Taro Aso Friday *his country needs huge international help to overcome its financial difficulties*, the Japanese foreign ministry said.
> 
> Shaukat Fayaz Ahmed Tarin, finance advisor to Pakistan's prime minister, also thanked Japan for extending its naval mission to provide fuel to US-led operations in Afghanistan during a meeting here with Aso, the ministry said in a statement.
> 
> *Pakistan's precarious financial situation* has caused worldwide alarm due to its role as a key ally in the US-led "war on terror" and its position as the Islamic world's only nuclear power.
> 
> Aso told Tarin securing stability in Pakistan was important for the international community, and received assurances Islamabad would continue to take measures against terrorism, the statement said.
> 
> 
> The IMF in November approved a credit line of 7.6 billion dollars for Pakistan over 23 months, the fund's first rescue in Asia since the global financial crisis began.
> 
> *But experts estimate more than a billion dollars in additional funding is needed to stabilise Pakistan's economy.*
> 
> Tarin also expressed hope Japanese businesses would invest in infrastructure and energy projects in the country, the statement said.


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## slugger

* GDP growth rate may drop below 1pc: official*



> * Pakistan is feared to experience negative growth this year* in all sectors of economy *except the agriculture sector*, a senior official at Ministry of Finance confided to The News.
> 
> *Growth in agriculture sector is expected around 4.5 per cent* depending on wheat production, if this target was missed the Gross Domestic Product growth rate would be even less than one percent, he said.
> 
> Pakistan experienced negative growth in 1952 and *if the agriculture sector does not perform up to expectations, then once again the country would be exposed to negative growth of 0.3 per cent.*
> 
> In the last fiscal year, the agriculture growth was 1.5 per cent and now the country is expecting 4 to 4.5 per cent growth, which is to be *the only factor that would take the GDP growth into positive zone.*
> 
> *&#8220;We are expecting negative growth by the end of the ongoing fiscal in all sectors* of economy *except agriculture*. The massive negative growth is to hit Large Scale Manufacturing (LSM) and Construction,&#8221; the official said keeping in view the preliminary estimates worked out with regard to the expected GDP growth by the end of ongoing fiscal.
> 
> *&#8220;Electricity & and gas distribution, Transport And Communication, Wholesale and Retail Trade, Finance and Banking, Public Administration and Defence and Social and Community Services are also not likely to perform*, but the Agriculture sector would be in the positive zone with no major positive impact on overall GDP growth,&#8221; he said.
> 
> The government is alarmed over the performance in the said sectors of economy and is all set to revise the targets of GDP growth, tax revenue, inflation and exports with International Monetary Fund (IMF) which has extended to Pakistan the 23 months $7.6 billion bailout package under Stand By Arrangement (SBA).
> 
> For the ongoing fiscal, the official said, IMF had earlier fixed the target of 3.4 percent GDP growth, 21 percent average inflation, 12 percent growth in export and Rs1,360 billion tax revenue.
> 
> Pakistan and IMF would revise the targets during the appraisal process by IMF review mission that is to be held in Dubai during February 14 to 24 period.
> 
> *Pakistan and IMF would revise downward the target of GDP to about less than one percent*, as the global economic outlook has entirely changed from the world scenario during the October-September 2008 period because of the massive decline in oil and commodity prices in the international market.
> 
> The official said that *Large Scale Manufacturing* has 19 per cent weight in GDP growth and it *is expected to experience negative 6.5pc* growth in this fiscal.
> 
> *Construction sector with 2.7pc weight on GDP would witness six per cent negative growth* against 15pc growth in 2007-08.
> 
> *Electricity and gas distribution* has 1.6pc weight in GDP and its *growth is likely to decline 5.5pc from 14.7pc in last fiscal. Mining and Quarrying* has 2.5pc in GDP growth and it is likely to *experience 3pc growth in this financial year*. &#8220;This means the *overall growth in industrial sector would be in negative zone*,&#8221; the official said.
> 
> Transport and communication sector growth dropped to 1.5pc from 4.4pc in last financial year. Likewise *zero growth in wholesale and retail trade is likely to decline to zero per cent* from 6.4pc in 2007-08. This particular sector owns the weight of 17 percent in GDP growth of the country.
> 
> *Finance and banking sector* depicting 17pc growth in last fiscal is expected to *show negative growth of 4.5pc*. The weight of this vital sector stands at 6.5pc in GDP.
> 
> The government is expecting *status quo in growth of 3.5 percent in ownership of dwellings sector*. This sector carries the weight of 2.6 percent in GDP growth. Public Administration and *Defence, which has weight of 6.5pc in GDP is likely to witness 5pc growth against 10.9pc in last fiscal year.*


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## Neo

*ADB releases $200 million for Sindh and Punjab projects​* 
ISLAMABAD (February 06 2009): Asian Development Bank (ADB) has released 200 million dollars to Pakistan for two projects - 100 million dollars for Sindh Growth and Rural Revitalisation Programme and another 100 million dollars for Punjab Millennium Development Goals. Another 100 million dollars, earmarked for Balochistan Resource Management Programme, is likely to be released soon.

Sources said that State Bank of Pakistan (SBP) had received 200 million-dollar loan for the two projects and funds for the Balochistan programme were still awaited.

The three agreements were signed by Economic Affairs Division (EAD) Farrukh Qayyum from the Centre as well as the relevant representatives from the provincial governments. Punjab, the most populous province, is facing massive challenges in providing healthcare services to a growing population. The Programme is expected to contribute towards improving health facilities for women and infants.

Sources said that that under the programme, Punjab will create better health management systems by adopting comprehensive strategy patient care and focusing more on preventive healthcare, particularly in the rural areas. Community hospitals and trauma centres will be set up in Punjab to provide healthcare facilities, especially to women and infants.

The poor women and children as well as other vulnerable population groups will be targeted under the programme and capacity for planning, costing and budgeting will be enhanced through medium-term budgetary framework exercises.

Under "Sindh Growth and Rural Revitalisation Programme" the Sindh government will invest 100 million dollars to improve public resource management and boost investment in rural areas to reduce poverty and enhance economic opportunities to relieve pressure on urban areas. The programme will promote public-private partnerships (PPPs) in an effort to mobilise investment in the much-needed infrastructure and social services sectors in the rural areas.


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## slugger

* Economic indicators falling, planners seem unfazed*



> Economic planners are acting like an ostrich feeling secure while *all macro-economic indicators are on the decline including employment, current account balance, foreign exchange reserves, trade balance, industrial production, consumer price index and exports.*
> 
> Experts are dismayed as *economic policies are moving in opposite direction to those pursued by governments in competing economies while taking into account current global recession*. The *policies in place are meant to curtail growth* when the economy is already in a deep recession.
> 
> *Indian and Chinese central banks have cut policy rate to 5.5 per cent and 5.75 per cent* respectively, showing a significant decline in the past six months. However, the *State Bank of Pakistan has increased its policy rate to 15 per cent*. Economic experts question how high policy rate would help overcome recession in the country.
> 
> &#8220;Economic managers are living in a fool&#8217;s paradise,&#8221; said senior economist Naveed Anwar Khan. He said the Board of Investment was happy that *foreign direct investment had slightly improved from last year* when political uncertainty was at its peak.
> 
> However, *&#8220;none of the new investment has gone into green projects meaning no increase in productivity or employment*. Moreover, there is a huge outflow of portfolio investment which depicts *low confidence of investors in Pakistan&#8217;s economy*,&#8221; he said.
> 
> He said the Adviser to Prime Minister on Finance, Shaukat Tarin, only two months ago was extremely satisfied with revenue generation. In fact, he added, he was anticipating an increase in revenues, but *tax collection was below target and would likely fall further.*
> 
> With crude and edible oil at one-third of the prices prevalent at the time of presentation of budget in June 2008, *the import bill should have come down by $3.5 billion, he said, adding the State Bank governor seemed elated when in the monetary policy he predicted the import bill would drop by $1 billion *this year. &#8220;This would not even cover the advantage obtained from the two commodities.&#8221;
> 
> Dubai-based chartered accountant Faisal Qamar said *the government had weakened regulatory institutions* which could have brought down inflation in accordance with ground realities. For instance, he said, *the Competition Commission of Pakistan had been denied funds to run its day-to-day affairs.* &#8220;Instead of using its energies to check cartels, the CCP is fighting for its survival as it does not have resources to work till March.&#8221;
> 
> *The Securities and Exchange Commission of Pakistan, he added, had lost its grip on the capital market as stock prices were at lowest levels in the past five years but still there were no buyers.*
> 
> He said there was internal dispute in the Federal Board of Revenue after the formation of Inland Revenue Department which merged the direct taxes department with the customs, sales tax and excise department. These experiments should have been left for some other time when economic conditions would be better, he suggested.
> 
> Canada-based certified public accountant Asif Ali Shahid said *the high policy rate of 15 per cent had assured that small and medium enterprises did not get bank financing, adding it would mean almost no creation of jobs and further closure of SMEs which would leave the existing workforce jobless.*
> 
> He said *job opportunities for Pakistanis around the globe were also very bleak. *
> 
> The United Nations had already warned that in the best case scenario 20 million jobs would be lost around the world in 2009 and in the worst case the figure would go up to 50 million.
> 
> *&#8220;Jobs would have to be created within the country by giving a boost to productivity*,&#8221; he suggested.


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## keeninterest

> Indian and Chinese central banks have cut policy rate to 5.5 per cent and 5.75 per cent respectively, showing a significant decline in the past six months. However, the State Bank of Pakistan has increased its policy rate to 15 per cent. Economic experts question how high policy rate would help overcome recession in the country.
> 
> Canada-based certified public accountant Asif Ali Shahid said the high policy rate of 15 per cent had assured that small and medium enterprises did not get bank financing, adding it would mean almost no creation of jobs and further closure of SMEs which would leave the existing workforce jobless.



the difference is where india and china have lower end, single digit inflation that is not quite the case with pakistan. the inflation has been caused by both demand pressure, and cost pressure as the supply is on the lower end and with the existing huge inflation there are huge cost pressures which further fuel higher rate of inflation. what imf forced pakistan to do today, that is to increase the discount rates/interest rates that should have happened way back when shaukat aziz was getting all the accolade for good growth rate figures, even when the inflation was hitting the roof at double digits, but that never happened and then comes a time when some one has to pay the price and the present government is paying the price for misgivings of certain people who are still seen as heroes in certain section of pakistani society. pakistan as of date can ill afford to flush the market with money be it for the aam awam or the corporate at large, or they would soon face hyper inflation, and so there will be no let up in the cash reserve ratio, or the discount rates/ interest rates, till inflation drops to single digit figures. 

with the the aid/loans they are taking right now has to do more with meeting the huge foreign debts they face and to some how run the day today affairs/expenses which would be like paying off the salaries, make adequate arrangements of daily needs like adequate supply of food items and others and this has to be no way confused with the cash in hand with aam awam of pakistan. people in pakistan have to be patient as this will take time, but could be back walking and soon running if the basics are done correctly this time round. 

overheating is generally a recipe of disaster so its best not ignored even if that means giving away gdp growth rate for a few quarters, which would not be as per the liking of certain sections in the society or economic experts.


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## Al-zakir

'Pak, Jordan free trade agreement likely

Updated at: 1455 PST, Saturday, February 07, 2009






Pak, Jordan free trade agreement likely AMMAN: Pakistan and Jordan would likely sign free trade agreement during current year.

Pakistans ambassador to Jordan Muhammad Akhter Tufail stated this while talking to media here.

He said negotiations to finalize the pact will be held in March and Pakistani trade secretary would visit Jordan next month. The current volume of trade between the two countries is $50 million annually, he added.

Pak, Jordan free trade agreement likely - GEO.tv


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## slugger

*World Bank to lend $2bn to Pakistan in 2009*



> The World Bank plans to lend Pakistan $2 billion this year, the bank said in a statement on Saturday, as the South Asian country struggles to combat inflation and prop up sagging economic growth.
> 
> &#8220;The bank plans to provide up to $2 billion in credits during this fiscal year to support economic growth and the government&#8217;s poverty-focussed programmes,&#8221; the statement quoted the country&#8217;s director for Pakistan, Yusupha Crookes, as saying.
> 
> The statement came at the end of an official visit to Pakistan by the bank&#8217;s Managing Director, Ngozi Okonjo-Iweala, who praised the government&#8217;s efforts to correct macroeconomic imbalances.
> 
> *&#8220;Pakistan is now moving in the right direction,&#8221; Okonjo-Iweala said.*
> 
> After years of healthy growth, Pakistan&#8217;s economy was hit by surging oil and food prices in 2008, while investment dried up because of political uncertainty and security challenges posed by Islamist militancy.
> 
> The State Bank of Pakistan is expecting about 3.7 per cent gross domestic product (GDP) growth in the 2008/09 fiscal year to June 30, down from 5.8 per cent in the previous year.
> 
> Pakistan is also faced with the worst inflationary pressure since the 1970s. The consumer price index rose 23.34 per cent year-on-year in December.
> 
> The International Monetary Fund approved a $7.6 billion package for Pakistan in November to help it avert a balance-of-payment crisis and support its dwindling foreign exchange reserves.
> 
> Pakistan has also been trying to drum up support from other donors and international lending agencies to expand its social safety net and boost development spending.


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## slugger

*343 knitwear exporting units have shut down since &#8217;05*



> The knitwear industry is in dire trouble as *the number of knitwear exporting units has declined from 1,183 in 2005 to 840 in 2009 and the closed units include some of the most efficient high tech larger factories in this sector.*
> 
> This was revealed in the presentation on the state of knitwear industry in Pakistan given by Pakistan Hosiery Manufacturers Association to the Lahore Economic Journalist Association. The presenters stated that *Pakistan has the most efficient and high tech knitwear industry in the region that produces better quality clothing than its competitors* and closure of over 30 percent of the industry should be an eye opener for the economic planners.
> 
> They attributed the decline to flawed government policies. They said that government withdrew the R&D facility although its own statistics revealed that after grant of this facility the knitwear exports increased at a high pace.
> 
> Highlighting the importance of clothing sector former chairman PHMA Shahzad Azam said that clothing sector provides the highest number of jobs in textiles and adds highest value to exports as well. He said one bale of cotton earns foreign exchange worth $238 only while knitwear exported from one bale of cotton fetches $1,600. He said $1 million additional investment in spinning or weaving creates 34 new jobs with additional exports of $270,000. He said $1 million additional investment in apparel sector generates 460 jobs and additional exports of $3.2 million.
> 
> Vice chairman PHMA Adil Butt deplored that the government continued to levy 3.36 percent taxes on exports despite claiming that export duty is zero-rated. In addition it deducts 0.58 percent of the export value as workers welfare levies, he added. Besides enormous increase in utility rates, the inflation has increase from 4.2 percent to over 20 percent and minimum wages from Rs 2,500 to Rs 6,000, he concluded.
> 
> Comparing the facilitation provided by the competing economies leading exporter M I Khurram said *China increased its rebate on exports from 13 percent to 15 percent from February 1, 2009. India gives 9.5 percent rebate to its apparel exporters.* The export rebate in Pakistan he added is only 0.6 percent. staff report


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## Neo

* Friends of Pakistan to provide funds for rehabilitation in Swat ​* 
Sunday, February 08, 2009

PESHAWAR: Chief Minister Ameer Haidar Khan Hoti said on Saturday that internal and external Friends of Pakistan would provide funds for reconstruction and rehabilitation of the people affected by the operation in Swat.

The arrangements to this effect has been finalised by President Asif Ali Zardari with the Friends of Pakistan, Hoti said this while talking to local reporters after performing the ground breaking ceremony of Khan Abdul Wali Khan Multiplex at the Civil Secretariat.

The chief minister also named the Poverty Reduction Program in the province after Baacha Khan besides starting uplift projects named after Baacha Khan and Khan Abdul Wali Khan in all districts of the province.

He said that the president was briefed in detail about the internal security situation during his two-day visit to the city and told about the requirements of the Fata and the province with focus on beefing up the law enforcing agencies, poverty reduction plans and relief activities.

Hoti said the president was also told about the mega power project in hydel sector in the province. He said: The president promised to give No Limit Package to the province as we are fighting a war for survival. 

He recalled that Baacha Khan had dubbed the Afghan war against Russia as Fasad instead of Jihad as it paved the way for destruction of the Pukhtoons, which was still continuing.

He reiterated that political and administration reforms in tribal regions were necessary so that common tribesman could be brought in the mainstream of national development. We want their representation in the provincial assembly of the NWFP he maintained.

The chief minister feared spill over of the fire to the rest of the country. It is our collective duty to extinguish it here. 

Hoti said: The previous government had closed its eyes over the fire in Swat, which has today reached Peshawar. But we cannot sit silent over the matter and we have taken some bitter decisions to stop this fire. We inked a peace pact with the Swat Taliban by following the philosophy of non-violence of Baacha Khan and not at the behest of the US. 

The use of force had become necessary there as they were continuously burning schools in Swat, he said. 

Earlier, Col Ghulam Husain briefed the chief minister about salient features of the Khan Abdul Wali Khan Multiplex project.


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*Only cement sector uses coal to generate energy​*
KARACHI: The use of coal for energy generation has been in the range of 33 percent to 60 percent worldwide, while in Pakistan only the cement sector uses this method.

Chairman 12-member Standing Committee on Mineral Development Sindh, Rana Abdus Sattar talking to Daily Times Saturday hoped that Thar coalmines would start giving production within 4 years subject to the speedy work and developing of infrastructure on modern mining system.

He said large quantity of coal is used in bricks kiln while some 10 percent of the production is used domestically. He was optimistic that the present row on the matter of reviewing the upfront tariff for coal-based between National Electric Power Regulatory Authority (NEPRA) and Sindh Coal Authority (SCA) would be resolved amicably.

NEPRA had proposed 7.65 cents indicative upfront tariff for coal-based power plants while SCA was demanding to fix 9.5 cents upfront indicative tariff for the electricity generated through coal power plants in Thar. However, NEPRA has said that 7.65 cents/Kwh upfront indicative tariff for coal power plants was reasonable and it should be announced.

In the proposed tariff by NEPRA the cost of fuel, coal and water availability is not included and if the cost of fuel, coal and water availability is included in indicative upfront tariff then it would reach 9 to 10 cents/Kwh. 

He informed that the World Bank (WB) is helping the federal and Sindh governments on policy, legal and regulatory frameworks conducive to new investment in the coal-to-energy sector. The WB officials from technical and administrative sides in November 2008 also helped to resolve the issues between the federation and province.

The WB is working on Thar Coal and Power Technical Assistance Project to strengthen institutions, develop sector policy framework and legislation at both federal and provincial levels.

In light of the WB meetings with officials of Federal Ministry of Petroleum and Natural Resources and Sindh Mines and Mineral Department, the committee will strive to ensure smooth working on different projects. The committee will watch the provision of $26 million funds for the selecting foreign firms in Sindh, which would carryout technical assistance to all coal-based power projects in the future.


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*Coal issue between federation and province: WB boosts efforts to help govts on Thar coal project​*
KARACHI: The World Bank (WB) has geared up its efforts to help the Federal and Sindh governments on policy, legal and regulatory frameworks conducive to new investment in the coal-to-energy sector.

According to the evaluation report prepared by federal government on coal development projects, the WB is working on Thar Coal and Power Technical Assistance Project to strengthen institutions, develop and appropriate sector policy framework and legislation at both federal and provincial levels.

The project will also assist in bidding and negotiations leading to financial close on new investment into at least one coalmine and at least one independent power producer in Thar. It will ensure the coal-to-power sector development responds to the needs of Pakistan's long-term energy strategy, the federal government report further explains.

The mission comprising various officials from technical and administrative sides arrived in November 2008 to resolve the contentious issued between the center and federation, it is learnt.

The WB officials held meetings with officials of Federal Ministry of Petroleum and Natural Resources and Sindh Mines and Mineral Department. Officials of other possible stakeholders who would be a part of the coal-based projects such as WAPDA and IPPs are scheduled to meet the international funding agency.

The financial institution has pledged to provide $26 million funds to the selected foreign firms in Sindh, which would carry out technical assistance to all coal-based power projects in the future, it is also learnt.

The report said that coal sector reform with concurrent transaction advisory service is being proposed to assist Sindh government on the fuel development and the federal government on the power production with ongoing development initiatives and to rebalance Pakistan' fossil-energy portfolio.

Under this project, it will assist the government to attract qualified private investors for developing Thar coal deposits and build new capacity for coal thermal power generation, guided by high standards of environmental and social sustainability.

The Government of Pakistan claimed it places a high priority on the rapid development of the coal resources of Sindh, particularly in Thar region, for power generation in order to meet the country's requirement.

Sindh government has allocated Rs 3.41 billion for various ongoing and new mining projects in its Annual Development Programme (ADP) for the fiscal
year 2008-09.

The federal government has formed Thar Coal Authority last year to ensure the settlement of all issues between the two governments.

In its report, it has been pointed out that the results have been modest on the reform of mining sector through National Mineral Policy 1995 due to slow implement of the policy and uncertainty created by inadequacies of regulatory framework at the provincial level.

At present CMC and Oracle mining company are carrying out mining activities in Thar coalfield.


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*World Bank likely to finance infrastructure, energy projects​*
ISLAMABAD: The World Bank here on Friday indicated IBRD financing for development projects in infrastructure and energy sector and informed that administration would start working on modalities of financing to meet Pakistans needs.

Managing Director World Bank, Ngozi Okonjo-Iweala along with the World Bank team deliberated with Ms Hina Rabbani Khar on the funding from the World Bank for National Corridor Programme and energy sectors.

Pakistans proposed development projects under IBRD arrangement include National Trade Corridor Improvement Program $300 million, National Expressways $500 million IBRD loan, Rural Telecommunications and e-Service $ 24 million (IBRD) loan, Punjab Large Cities Development Policy $100 million loan and Second Punjab Barrages Rehabilitation and Modernisation $120 million (IBRD).

Ngozi also assured Pakistans economic managers of WB support for its agenda for social development and programmes like Benazir Income Support Programme.

The meeting took stock of the economic situation of the country and reviewed joint initiatives for fostering development partnership. The managing director World Bank while appreciating governments nine point agenda indicated that the Bank will like to see GOP working beyond achievement of economic stabilisation, as this is only a means to an end.

Managing director appreciated government of Pakistans efforts for revenue collection and meeting the revenue targets. She added Pakistan needs to capitalise on new initiatives from institutions like IFC and other multilateral and bilateral donors. She under-pinned Pakistans geo-strategic position which can be leveraged as regional logistic giant by positioning itself through trade and infrastructure corridors for the South and Central Asia.

Ms Ngozi informed GOPs team about the Banks support for organising a donors conference in order to mobilise multilateral and bilateral donors in a structured process to meet the countrys financing gaps.

The minister of state informed about the steps taken by the government to tackle the challenges on the economic front and appreciated the support of the WB in the socio economic development of Pakistan. She reiterated the continued commitment of the present government to the economic agenda and explained that the government has made tough decisions to implement the economic reform programme.

Hina informed that Pakistan expects WB support for financing in infrastructure and energy sectors. She highlighted the National Trade Corridor Improvement Programme as very vital for Pakistans infrastructure and economic needs. She underscored the need for Public Private Partnership initiatives and requested Banks assistance in this regard. The Managing Director World Bank informed that the Bank will be looking into these opportunities through its private sector armInternational Finance Corporation.


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*Govt and ADB ink $38m loan for Sindh​*
** 570,000 families to benefit directly from investment programme
* EAD secretary says loan to be repaid in five years​*
ISLAMABAD: The Asian Development Bank (ADB) and the government on Friday inked a $38 million loan agreement of a multi-tranche financing facility (MFF) for improving the water, waste management and sanitation services in Sindh.

The total value of the agreement is $300 million, with the $38 million as its first tranche.

Economic Affairs Division (EAD) Secretary Farrukh Qayyum and ADB Country Director Rune Stroem signed the documents. Sindh Additional Secretary Nazar Meher was also present on the occasion.

Speaking on the occasion, Stroem said the ADB had approved funds of $1.5 billion for the year 2009, and had disbursed $1.87 billion during the last year. He said that according to the banks new policy, funds were released on the basis of performance.

The investment will help the provincial government of Sindh cope with mounting challenges in providing basic urban services to an estimated 4 million residents of Sindhs secondary cities over the next several years, Stroem said.

[The] ADB's support to secondary cities will improve the quality of life of urban citizens and help these urban centres unleash their full economic potential. We believe that revitalising Sindhs small and medium-size towns is important to foster balanced urban and rural development, he added.

The agreement would focus on institutional change and priority infrastructure for the northern Sindh cities of Sukkur, New Sukkur, Rohri, Khairpur, Shikarpur and Larkana.

The MFF is the ADBs first comprehensive support for Sindh's secondary cities, which demonstrates a strategic and long-term commitment to Sindhs urban development.

As Pakistan's second most populous province, Sindh faces rising population growth, a severe deficit of basic urban infrastructure and services, and growing urban poverty.

Direct benefit: The programme aims at ensuring quality, continuity, reliability and coverage of basic urban services through improved utility management coupled with carefully targeted infrastructure investments, including funding for systems operations and maintenance, the ADB country director said.

An estimated 570,000 families in participating cities would directly benefit from the investment programme. The MFF would finance physical investment in water supply, wastewater, and solid waste management infrastructure, including piped water supply networks, covered drains, sewage treatment, waste collection vehicles and sanitary landfills.

Stroem said the bank had signed a $500 million agreement with the Pakistani government for the Benazir Income Support Programme (BISP) and assured that further funding would be provided to the government for the social network programme.

Repaying: Farrukh Qayyum told journalists the Sindh government would repay the loan in five years. He said the project would help Sindh to improve basic amenities of life at the tehsil municipal administration level.


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*Oil & gas exploration: Govt sets drilling target at 100 wells​*
ISLAMABAD: Adviser to the Prime Minister on Petroleum and Natural Resources on Friday announced the target of drilling wells for current year to increase local production of oil and gas in the country.

Addressing media persons at OGDCL headquarters, the Adviser said no sincere efforts were made regarding exploration and production of oil and gas in the country during the previous governments tenure. Such a pathetic situation always created problems for national exchequer in the form of higher import bill and shortage of gas, which badly affects industrial growth.

The work on exploration and production of oil and gas was initiated in the country in 1963. Till date, about 725 total exploration drilling were carried out. The average drilling per year stand at 12 wells, he informed.

Tareen expressed dissatisfaction over drilling of 12 wells and announced that the present government would increase the number of drilling to 100 per year. The neglect of the Ministry of Petroleum and Natural Resources can be gauged from the fact that the ministers heading the ministry were graduates of arts. He assured that the present Minister would give a new vision to the ministry and would provide a paradigm shift.

At the end of 2009 government would succeed in drilling of 90 wells and the number of drilling with be increased gradually. The work on 925 appraisal wells were carried out in the country out of which discovery was made in 219 wells. Oil was discovered in 54 wells and oil and gas in 165 wells.

According to new policy production bonus would be offered to those areas from where gas is discovered. First, the facility would be extended to local areas, then to the province where gas discovered. The Adviser said that the drilling companies would deposit the amount of production bonus in concerned account of the province where E&P is being carried out.

Answering a question, the Adviser said that the government had given nothing to OGDCL and PPL for their E&P activities rather these companies are treated as a source of income for the government.

We have asked the foreign companies involved in drilling of 16 wells in Balochistan to arrange proper security arrangement there, he added. According to the Adviser, security was main hurdle in E&P of oil and gas, particularly in NWFP and Balochistan.

We can double the oil and gas exploration by adopting the modern techniques, he added. He informed that at present 40 rigs are working in exploration sector but the demand of the country is about 150 rigs.

He informed that there is some disagreement on the determination of gas price between Pakistan and Iran, as a result of which the IPI pipeline is being delayed. The gas from IPI is very expensive if used for domestic purposes. We plan to use the gas for power generation only, he added.

About shortage of oil and gas, the Adviser said that local production of oil was 77,000 barrel per day while the required oil is 370,000 barrel per day. Similarly, local gas production was 3.9 billion cubic feet per day and about 9 billion cubic feet is required to cater to the local demand.


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*Mid-Year Economic Review July-December: MoF estimates GDP growth at around 3.7% in 2008-09​*
ISLAMABAD: The Ministry of Finance said on Friday that better growth prospects in the agriculture and services sector will keep up the hope of real GDP growth at around 3.7 percent in 2008-09.

The negative large-scale manufacturing (LSM) growth and falling credit to the private sector are indications of falling real economic activity. According to the Mid-Year Economic Review Jul-Dec released by the ministry, the fiscal deficit target of 4.2 percent of GDP and the current account deficit of 6.5 percent of the GDP is achievable. The economy growth is likely to be at around 3.7 percent and inflation for the year is likely to average at 20 percent with end-year inflation around 10 percent.

Agriculture: The agriculture has been facing acute irrigation water shortages and the water intensive crops sugarcane and maize fell short of the target and depicted negative growths of 18.5 percent and 7.5 percent in 2008-09. However, other two major crops cotton and rice have registered positive growths of 7.3 percent and 13.5 percent, respectively.

Manufacturing sector: LSM registered a negative growth of 5.6 percent in July-November 2008 as against a reasonable growth of 6.9 percent in the comparable period of last year. Services sector has exhibited resilience to fluctuations in the economic activity and Foreign Direct Investment in the services sector witnessed healthy increases.

Fiscal policy: The faster growth of 35.5 percent in the total revenues is more than off-set by even faster growth of 25.2 percent in the current expenditure.

The financing patterns of fiscal deficit remained dominated by the banking system, which financed 66 percent of the fiscal deficit and only 29 percent were financed by the non-bank sources.

Trade balance: The merchandise trade deficit widened to $9.6 billion in July-December 2008 as against $8.3 billion in the comparable period last year on shipment data basis. The substantial increase of 12.9 percent in imports outstripped otherwise healthy export growth of 10.6 percent and the trade deficit grew by 15.3 percent. Exports grew 10.6 percent in July-December 2008 and stood at $9.6 billion as against $8.7 billion in the corresponding period of last year.

Imports reached to $19.1 billion as against $17.0 billion in the comparable period of last year, thereby, depicting a growth of 12.9 percent.

Current account balance: Pakistans current account deficit expanded by 20.1 percent to $7.3 billion during July-December 2008 as against $6.1 billion last year.

Foreign exchange reserves declined substantially in the initial months of FY09 dropping from $11.4 billion at end-June 2008 to a low of $6.4 billion by November 25, 2008. After the inflow of $3.1 billion from the International Monetary Fund following Pakistans entry into a macroeconomic stabilisation programme, the foreign exchange reserves stood at $10.2 billion on January 23, 2009. The import coverage ratio declined to an uncomfortable level of nine weeks as of end-October 2008 from 17 weeks of imports as of end-June 2008, but improved to 14 weeks of imports by end-December 2008.

Capital market: The period under review (July-December 2008) has witnessed global economy meltdown and less than satisfactory security environment increasing investors anxiety. The floor imposition on KSE-100 index for about four months (August 27 - December 12, 2008) resulted in a virtual halt of the stock market and shattered the confidence of local and foreign investors badly. These gloomy events have had an adverse impact on the performance of Pakistans equity market.


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## Neo

*Forex reserves cross $10bn mark​*
KARACHI: The countrys liquid foreign exchange reserves appreciated by $259 million during the last week.

The State Bank of Pakistan statistics on Thursday showed that overall foreign exchange reserves registered an increase of $259 million during the week ended on January 24, 2009. The countrys foreign exchange reserves have crossed $10 billion mark to reach $10.207 billion on 24 January. The reserves held by the central bank showed an increase of $288 million during the last week. The central bank reserves reached to $6.872 billion as compared to $6.584 billion last week. Reserves held by banks (other than SBP), however, witnessed a decline of $29 million to reach $3.335 as compared to $3.364 during the last week.


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*World Bank to lend $2 billion this year​*
ISLAMABAD (February 08 2009): World Bank Group Managing Director Ngozi Okonjo-Iweala concluded an official visit to Pakistan on Saturday recognising the government of Pakistan for moving swiftly to start correcting macroeconomic imbalances, particularly in the light of the global financial crisis. She commended government's efforts in launching an ambitious safety net program, the Benazir Income Support Program, to support the poorest.

She also emphasised the need to focus on the long-term development agenda. "Pakistan is now moving in the right direction, and its reform program will lay the foundation for inclusive and sustainable growth," she said. "The World Bank Group is committed to supporting Pakistan in line with its vision for equitable progress and rapid development.

We are committed to working with the government during this difficult time, protecting the most vulnerable groups and carrying out critical reforms that will set the basis for higher, inclusive and sustainable economic growth."

During her visit, Okonjo-Iweala met with President Asif Zardari, Prime Minister Yousuf Gilani and government economic team to discuss the current macroeconomic situation and focused on long-term issues, including infrastructure development, expanding power production, social protection, and education, particularly for girls. She also participated in roundtable discussions on infrastructure, NWFP, and implementation challenges. In discussions with the private sector, she noted the importance of public-private partnerships and using the infrastructure gap as an opportunity to build regional linkages.

With civil society and community leaders from NWFP, she expressed sympathy with those who are struggling to cope in an increasingly difficult environment, and emphasised the need for improving conditions and providing livelihood opportunities.

Okonjo-Iweala praised the government's stabilisation program and signalled the Bank Group's strong support to the economic team. Economic stabilisation, she noted, should only be a means for sustainable development, focusing on new efforts to enhance human capital formation, create jobs and improve the standard of living of the poor.

Comprehensive and innovative approaches to skills development and equitable education access are particularly important. She also cautioned that the global economic situation poses continued challenges and the Government would need to maintain its strong reform program. In this regard, revenue mobilisation would be key to underpinning growth.

She emphasised that the long-term vision is vitally important and continued investment in infrastructure, expanding the export base, enhanced regional co-operation, agriculture development and results-based education development would be critical for realising growth and poverty reduction.

"The Bank Group plans to provide up to $2 billion in credits during this fiscal year to support economic growth and the Government's poverty-focused programs," said Yusupha Crookes, World Bank Country Director for Pakistan. "These projects will support the immediate challenges in education, health, safety nets and community-led development, while laying the foundation for investment in infrastructure to foster long term growth and job creation, As the macroeconomic situation improves, additional forms of financing will also become available."

During her meetings with authorities, Okonjo-Iweala stressed the importance of ensuring that well-targeted safety nets are in place, especially in times of economic crisis. She commended the Government of Pakistan for launching the Benazir Income Support Program, a government initiative designed to provide financial support to the poorest families. Drawing on the World Bank Group's experience elsewhere, notably in Latin America, Okonjo-Iweala underscored that these programs can be particularly effective when well targeted and transparently managed.-PR


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*Militant attacks' victims: Zardari announces Rs 280 million compensation package​*
PESHAWAR (February 08 2009): President Asif Ali Zardari on Saturday announced a huge compensation package of Rs 280 million for those killed and wounded in the tribal areas due to militants' attacks. He also vowed to upkeep the promises made by the late premier Zulfikar Ali Bhutto and Shaheed Mohtarma Benazir Bhutto with the valiant tribesmen, the true defenders of the country's frontiers.

He was addressing a grand tribal Jirga, comprising all the seven tribal agencies and six Frontier regions at the Governor House here. The President said he was not oblivious to the problems facing the tribal people and was working from day one to mitigate their sufferings.

To achieve the goals of uplift in the hitherto neglected and backward areas of the tribal belt, the President announced immediate increase in the development outlay of the Fata by rupees three billion for the current fiscal, taking it to Rs 11 billion from rupees eight billion. He also announced to double the development programme for the Fata from the present annual development programme (ADP) of rupees eight billion to Rs 16 billion during the next two years.

A total of 610 people had been killed and over 1,000 injured in tribal areas due to the militant attacks, he said, adding: "I am myself a tribesman and knows what is misery. I have passed through all such traumas for 11 years in the jail despite the fact I had the keys of the jail with me, but I never compromised on principles and never succumbed to a dictator."

He urged the tribesmen to demonstrate patience and tolerance in their ranks and files and avoid getting involved in violent acts, which would benefit the opponents. The present regime was determined to save the country and its people from any danger, he added.

He thanked the tribal representatives for reposing confidence in him by voting in his favour in the presidential elections, and promised to honour all the pledges made by Shaheed Benazir Bhutto with the tribal people. The President agreed that the militants had misused our soil to launch attacks on the institutions of our country.

However, he said that he would hold dialogue with the international community for elimination of terrorism and they would be assured to have confidence in Pakistan's initiatives against extremism and terrorism. The government of Pakistan and its people had all the potential to fight against terror in an effective manner, he added.

He regretted that no serious effort was made during the last 10 years to extinguish the fire of militancy and terrorism in the Fata and there was total lack of decision-making among the policy-makers at that time resultantly today the settled parts of the country also came under pressure of the terrorism.

"We will advance our arguments with the world community, the United Nations with logic and convinced them that drone attacks were counter productive and the day was not far away when these attacks would be stopped," he said. He said a new thinking was being developed in the US administration about the tribal regions of Pakistan.

The President said the government of Pakistan would plead its case about the attacks on our soils with intellect and convinced them that both sides were at loss. The US was withdrawing forces from Iraq, which was a big development in the region and set a new direction among their think tanks.

"We will also tell them that the solution to the problems in our region could be best settled through our own process. They need only assurances, which was lacking in the country for the last eight to 10 years. We will assure them that the problems of militancy would be resolved," he added.

"We don't believe in wars, today is the era of brain fighting and we have removed a dictator through the same war after 10 years in power and compelled him on double march," he told the Jirga members. "So the same would be applied to the world community in restoring peace in our tribal regions, we have the grounds and logic to defend our case at the international fora and they will listen to us," he said.

President Zardari said the time had come to change the world opinion against the prevalent terrorism in the Fata and the NWFP, and assured them that "we have all the potential and capabilities to face these challenges." He agreed that in drone attacks, scores of innocent people were killed along with terrorists, adding that soon after coming into power "we have taken up this problem seriously with the world community and established links with friendly countries to seek their support."

The President on this occasion referred to Friends of Pakistan, which helped us in making clear our point of view to the world. He said that the world community had now started realising our stance and the new administration in the US had close contacts with the present government in Pakistan.

The President said he was well aware of the tribal traditions and customs, as he was himself a tribesman. "Tribal people are peace-loving and hate terrorism and want to see their areas developed and prosper," he added. The Fata was an important part of the country, he said, adding when any part of a body was bleeding, the pain was felt in the entire body.

He said it was an historic fact that problems in Fata could not be resolved through foreign interference and the only option available was the traditional system enforced in the tribal agencies. He said that the US had appointed its special envoy for the region to settle the problems in the area with mutual consultation and understanding amongst the stakeholders.

"It will give us an opportunity to present our case in most effective manner, the President said, and added: "We will tell them fighting is no solution to the imbroglio and let us allow to handle it in our own way as we know better then them as to how best the issue can be tackled."

He reiterated that "we will emerge victorious in fighting out militancy with full might and making the country strong and stable among the comity of nations. We will not let the nation down in this regard," Zardari pledged. NWFP Governor Owais Ahmed Ghani, in his brief address, briefed the President about the sacrifices rendered by the tribesmen for the cause of the country, and added they were true and loyal defenders of the country's frontiers.

He said they had always stood side by side with the government whenever the country was threatened by the aggressors. He said over 800 tribal elders, maliks and tribesmen had lost their lives in the present war against terror. He confessed that war against terror could not be won without their active support and co-operation, and sought their role in flushing out militants from the tribal regions.

Parliamentary leader of MNAs and Senators from Fata Haji Munir Aurakzai called for immediate end to the drone attacks in the tribal areas and tribal elders and Masharan should be allowed to work for the establishment of peace in their areas in accordance with the tribal traditions.

"This is the only option to face the present challenges," he argued. He said it was a matter of regret that the Fata situation was not taken as a national issue in the past, and added that he always took up the matter in the previous assembly for five years but of no use.

"It is a matter to be taken seriously before it was too late," he warned, and added the government writ in the Fata was today fragile and activities of the government officials were restricted to their offices. Malik Waris Khan Afridi, in his welcome address, also called for an early end to the attacks in the tribal belt, and demanded hefty package for the neglected tribal areas to remove their backwardness.

He told the President that this gathering in front of him comprised responsible people, who did not want any change in their independent status. He declared that tribesmen would not allow any foreigner to use their soil for subversive activities. He suggested mobilising the local Jirga system in overcoming the problem. National Assembly member from North Waziristan Dr Kamran Khan also addressed the Jirga, and urged the President to fulfill the dream of Shaheed Benazir Bhutto which she had dreamt for the progress and prosperity of the tribal areas.

Earlier, tribal elders from Kurram Agency, Aurakzai Agency, Mohamand Agency, Bajaur Agency, North and South Waziristan Agencies presented traditional tribal gifts to the President. The gifts included traditional gun, Kulla, turban, carpets etc. Federal Minister for SAFRON Najumddin Khan, Senators, MNAs from Fata, tribal elders, Masharan, Chief Secretary Sahibzada Riaz Noor, IGP Malik Naveed, ACS Fata Habibullah Khan, and political agents of all the tribal agencies were present on the occasion.


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*Malaysia to help Pakistan in edible oil refining​* 
KARACHI (February 08 2009): The Malaysian Palm Oil Board (MPOB) has agreed to extend technical co-operation to Pakistan's edible oil refiners during next five years to help the 'infant' industry maximise its yield by 94 percent. In this regard, a Memorandum of Understanding (MoU) was signed between Pakistan Edible Oil Refiners Association (PEORA) and MPOB at a local hotel on Saturday.

The deal, under which the Malaysian Board would send its technical experts every year, in May or June, to train Pakistani 'Process Engineers' in the edible oil refineries, was signed by PEORA Chairman Muhammad Hanif and MPOB Country Manager Esa Bin Mansoor.

With Port Qasim Authority (PQA) Chairman Afsar Din Talpur as chief guest, the MoU signing ceremony was attended by Malaysian Consul-General Khalid Abbasi, Ports and Shipping Director General Vice Admiral Asad Qureshi and officials from KPT, PQA and executive members of PEORA.

According to PEORA Vice Chairman A Rasheed Janmohammad, the agreement would help the refiners in Pakistan, which imports 2.5 million tons raw palm oil/refined palm oil/olien/crude soyabean oil, and produces a meagre 0.5 million tons locally to meet its 3 million tons demand, to improve their yield and ensure that their losses could not exceed from 1 percent. He said Pakistan also imports about one million ton oilseeds, which gives about 0.4 million tons soft oil.

He said since the concept of continuous edible oil refinery plant is relatively new, such technical support from Malaysia would be very instrumental in efficiently running the refinery plant in Pakistan.

Under the MoU, Rashid said, MPOB would organise a technical seminar in Pakistan, which is the world's third largest but unrecognised importer of edible oil every year, on the subject of value-addition in the field of edible oil refining. This, he said, would help Pakistan get international recognition/exposure as an important and prominent part of the edible oil market world-wide.

The PEORA vice chairman said as raw palm oil was relatively cheaper than the refined product, and the country's nine working edible oil refineries were saving a considerable amount of foreign exchange for Pakistan.

He said the refineries were producing fresh quality of RBD palm oil, which caters to the need of the country's ghee industry. He expressed his Association's willingness to set up a fruits crushing mill to enhance the local production of the essential food item.

PQA chairman said the deal would boost to trade ties between the two countries. He gave the refiners a "good news" that PQA had finally removed the four long-awaited naval moorings, which were a hurdle in the way of establishing liquid cargo terminal at Port Qasim.

Earlier, Muhammad Hanif welcomed the guests and highlighted various problems faced by the refiners. Esa Bin Mansoor said the development would make Pak-Malaysian relationship "better, stronger and more lasting". He also expressed optimism that in future Pakistan would purchase more palm oil from his country.


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*Power shortage down to 1,000 megawatts from 4,500 megawatts​* 
LAHORE (February 07 2009): Power shortage has come down to 1000 MW from 4,500 mw on February 4, but chances of further reduction in power shortage are bleak ahead until new plants are in place. Sources in Pakistan Electric Power Company (Pepco) said that power shortage of 1000 mw would stay throughout the year ahead until new power generation resources are functional.

They said that chances of new induction to the power generation system were not possible before the start of next calendar year. The country has experienced worst ever power shortage during last few months. It touched the highest level of 4,500 mw in January that affected the industrial growth badly, resulting in large-scale unemployment and machinery closures in production units.

The government noticed the situation fast when both the industrialists and the labourers came out on the streets and took the law into their hands in Faisalabad. The government, though, blamed PML-N for sponsoring the riots in Faisalabad but still it instructed the power sector to change its priority on supplying power. As per new arrangement, the industry was given priority against domestic consumers, resulting in improvement in power supply to industrial sector.

Pepco sources said that reduction in power shortage from 4,500 mw to 1000 mw was possible only due to the release of 25,000 cusecs water at Mangla and Tarbela dams each. They added that the independent power producers (IPPs) were also fully operational with minor closures, producing around 4000 mw electricity at present. Also, the oil supply issue has also been resolved and all power plants are operational fully.

According to Pepco sources, the duration of power outage has also reduced by two to three hours for domestic consumers with improvement in power supply. They said the system was supplying 10,000 mw electricity against the demand of 11,000 mw. Meanwhile, Pepco officials expressed hope that power supply to industrial sectors, particularly the textile sector, would stay on priority against domestic consumers.


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*The electricity fiasco​* 
ARTICLE (February 08 2009): Our approach in dealing with the electricity crisis has been to follow a policy of denial. The steps that are being taken to overcome the crisis will provide some relief but will not result in easy access to electricity for the majority of the population nor will they generate enough electricity to support significant economic growth. The sort of growth that will produce exportable surpluses and increase our foreign exchange reserves.

To come to grips with the prevailing fiasco we need to look beyond the half truths we have been fed. Our planning pundits claim that the shortfall in supply is merely a few thousand megawatts. This is an eyewash. As matters stand, only a small percentage of the total population has access to electricity. By some estimates this number is as low as 30%. It follows that a staggering 70% of the population does not have access to electricity and the actual shortfall in supply runs into the tens of thousands of megawatts.

As a result the utilities are forced to resort to mandatory management mechanisms, mainly, loadshedding. In all parts of the country, during most of the year, rationing or loadshedding has become the modus operandi. Ideally, loadshedding should be fairly applied and should lead to achieving self-sufficiency at some point in time.

The problem is further aggravated by the massive amounts of electricity theft that takes place. According to some estimates, between 40-50% of total electricity generated is stolen. Additionally, the revenue collection systems of the utility companies are inefficient. It is estimated that demand is growing between 8 to 10 percent per annum.

This suggests that if the current gap of approximately 2000-3000 megawatts is plugged and if this is followed by a yearly addition of approximately 1000 megawatts then we will find equilibrium between demand and supply. Wrong. These numbers do not take into account the suppressed demand scenario highlighted in the preceding paragraph and hence they will not close the ever widening demand supply gap.

The consumption pattern of electricity is heavily skewed in favour of residential and agricultural consumers. According to some estimates, these sectors consume about 85% of the total electricity generated and demand in these sectors is growing at a galloping rate of over 10% per annum. Thereby, leaving only 15% of the total electricity generated for the industrial and commercial sectors.

As a consequence, these sectors have been forced to self generate electricity by setting up captive power plants. This has raised their cost of production, eroded profit margins and made them less competitive internationally. Many of these captive plants have the ability to provide significant amounts of electrical output to the national grid but are not encouraged to do so by the low tariffs offered to them.

Energy conservation is a must but it is delusional to believe that a practical conservation strategy can be implemented in the prevailing bleak scenario. The concept of conservation is similar to that of savings. One can only save if one has excess income. In the absence of excess income all available resources are used to satisfy basic needs. The same applies to energy conservation.

When there is not enough energy to meet basic needs it will not be conserved. Undoubtedly, conservation programmes are a good idea. But are we ready for them? Elaborate programmes developed in Islamabad which require the general public's co-operation are mostly impractical and therefore worthless. As a nation have we ever conserved anything? Are we educated enough to understand the benefits of conservation? Is our elite setting an example of conserving electricity?

With very little new supply coming on stream in the last half a dozen years or so can conservation be seen as an effective defence against eroding electricity availability? We live in a hot country which is getting hotter all the time. Can we expect folks to turn off their air-conditioners when they can bribe the meter readers and have their bills reduced to a fraction of the actual amounts billed? Or have we been able to stop the ordinary people from tampering with their meters to reduce their bills?

The answer is a resounding no to all of the above questions. We are living in a fool's paradise if we believe that conservation will help us achieve some sort of harmony in the electricity demand-supply gap. Our electricity supply and demand scenario continues to worsen every year. Why is this so? The fundamental problem is incorrect pricing of electricity.

Simply put the electricity utility companies are not recovering their cost of production at the tariffs at which they are being forced to sell electricity. Thus, the utilities cannot add capacity to meet future growth requirements from internally generated funds and are forced to borrow or rely on government subsidies to undertake development projects and pay their bills. These sources of funds are expensive and unreliable.

This leads to huge financial pressures which push the utilities towards insolvency and bankruptcy. As matters stand, both Wapda and KESC are bankrupt entities as they cannot meet their maturing financial obligations without being bailed out by the government. Regrettably, Wapda bears the brunt of the responsibility for the current electricity debacle. Although, theoretically, the government should be held accountable for the debacle, specifically, the MOWP and the Planning Division for not synchronising economic growth with electricity supply.

However, the larger part of the blame falls on Wapda because over the years wittingly or unwittingly it took over the power planning role from the MOWP. And WAPDA is not a properly managed organisation. As a consequence the power planning process has been badly botched up. In part because it wanted to safeguard its own turf, over the years Wapda impeded the implementation of the IPP initiative, the privatisation initiative, plans for its own re-organisation and other initiatives that would have alleviated the electricity situation confronting us today.

One way that was employed to stop Wapda's privatisation was to recommend that KESC should be first privatised as a test case. Anticipating that KESC's privatisation would be done under close media scrutiny and would therefore lead to negative publicity especially as it would immediately pit the privatised KESC against formidable political and social forces. And if any hiccups were to develop it would attract enormous media attention.

The difficulties encountered in the privatisation of KESC have worked out well for Wapda. It is now being said that the government's privatisation policy in general and especially vis-à-vis the electricity sector is a dismal failure. Voices demanding Wapda's privatisation have been silenced and Wapda is going along its merry way as the great power provider and planner of Pakistan.

However, WAPDA's track record makes it clear that it lacks the vision and capability to take Pakistan towards self sufficiency in electricity generation. Some examples will make this clear. Back in the day, Hubco was originally planned to be set up at a cost of approximately $670 million. Wapda's officials and the other super bright zealots managing the electricity affairs at the time started howling that this was highway robbery and that the British East India Company had returned in the form of Hubco.

They claimed that with their superior negotiating skills they could bring down the cost of Hubco. After much delay and negotiations Hubco was set up at a cost of approximately $1.6 billion. An increase of almost a 150 percent over the original cost estimate. Now we find Wapda saying that the Neelum Jhelum project is heavily over invoiced.

This is a critical project and if it is delayed much longer we might lose the use of these waters to India once and for all. If this were to happen we will have lost a great opportunity to generate a substantial amount of relatively cheap electricity. The Lakhra coal field's project has been simmering under our planning process for decades.

A huge amount of electricity can be produced from the coal reserves at Lakhra. The Chinese organisations that worked on the project were told by Wapda that the project cost estimated by them was too high. Understandably, the Chinese pulled away and the project became dormant. The current electricity crisis facing us is likely to become even more intense in the years to come. Such was not always the case.

From 2000 to 2003 a relative balance was achieved between supply and demand because of the coming on line of the IPPs. This window of opportunity could have been utilised to develop new sources of generation. Earlier, a hue and cry was raised regarding unwanted surplus power and how to dispose it of. There was talk to sell the surplus electricity to India and the view was established that we had achieved self-sufficiency in power generation.

The result was that future plans to grow electricity capacity were shelved. Power planning is a dynamic process. One which demands continuous evaluation and preparation for anticipated demand growth. In terms of policy and government initiatives first priority should be given to focussing on resolving the circular debt issue plaguing Pepco and its associated companies on the one hand and the IPPs and the OMCs on the other.

Closely followed by rationalising electricity tariffs both in terms of pricing and sectoral allocation. Priority must also be given to addressing power theft and revenue/bill collection matters. Budgetary support for the utilities in the federal and provincial budgets must be ensured. In terms of improving the electricity system we need to consider refurbishing old power plants to generate more power than they are currently producing.

Similarly, we may consider reconditioning older transmission and distribution networks. However, for this approach to yield positive results a very careful cost benefit analysis needs to be conducted to assess the real economic advantage of squeezing out a few hundred more megawatts from an old plant or an old grid system for a few more years. Alternate energy sources can be utilised to plug the electricity demand and supply gap.

Alternate energy sources are environmentally friendly and renewable. These are their two major advantages. We need to study as to how they can be incorporated into our power system. But the question is whether we will be able to undertake their development on a commercially viable basis. Probably not, given their high implementation costs and low efficiency levels. Alternate energy systems are typically set up in far off locations and need to be interconnected with the main grid. This adds to their set up costs.

Even in the leading industrial countries they still provide only a tiny fraction of the total electricity energy generated. Nuclear energy is a good option and Pakistan has successfully set up several nuclear power plants with the help of China in the recent past and with that of Canada some decades ago. But it remains to be seen whether going forward we will be able to add more nuclear capacity to our power grid given the position the West has taken in regard to Iran and generally with regards to the disposal of nuclear waste.

While we should continue to establish run of the river hydel, fuel oil and diesel based power projects, our focus should be on developing high head hydel projects whose untapped potential is massive and translates into thousands of megawatts and coal based power projects whose potential is also vast. Pakistan has the fourth largest coal reserves in the world, albeit, a large part of the reserves are of low quality coal.

However, technology is now available to convert inferior quality coal reserves into electricity at relatively efficient conversion rates. For now coal contributes under 5% in our total energy mix, whereas, in India it represents about 50% and in China about 80%.

In conclusion it is clear that if we are to ever become self sufficient in energy generation than we will have to focus on developing our high head hydel resources and our abundant coal reserves. We have the natural resources to not only overcome the present electricity crisis but to provide for future growth. What we need to make sure is that we harness them properly and manage them effectively.

(The writer is SEVP Group Head IBG Dawood Islamic Bank Limited)


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## Neo

*Friends of Pakistan conference​*
EDITORIAL (February 08 2009): The Nikkei business newspaper has stated that Japan is in the process of inviting more than ten countries to a meeting to be held late March early April with a one point agenda: get financial commitment from bilaterals, referred to here as Friends of Pakistan, to support development and thereby strengthen the Government's hand to fight terrorism and extremism.

Friends of Pakistan as a name was popularised by the present PPP government last year as it began the arduous and unsuccessful task of generating support from those it considered friendly countries. In this context it is pertinent to recall that President Zardari visited several friendly countries within a short span of time seeking a 10 to 15 billion dollar bailout package from them that would, at best, be in the form of a grant or, at worst, at a concessional lending rate.

The newly appointed Finance Minister Shaukat Tarin, the third this government has appointed in under one year, had stated at the time that going on the International Monetary Fund (IMF), with its harsh conditions, would be the last option ie option C. Nonetheless option C was the only one available.

Once option C was operational the government began the task of convincing the people of the country that this was the best possible option to take as it would not only enable the country to achieve fiscal and monetary discipline but would, as a consequence, also generate assistance from Friends of Pakistan at a later date.

This is precisely the stage Pakistan is at, at present, with recent IMF statements indicating that Pakistan has met all the first quarter conditions of the 7.6 billion dollar stand-by arrangement; it is, therefore, time to seek assistance from other friendly countries. The Friends of Pakistan concept is neither new nor indeed unique to Pakistan.

As far back as in 1960 the World Bank organised Aid to Pakistan consortium in an effort to facilitate co-ordination amongst the major providers of assistance to Pakistan as well as for other debtor countries. By 1991 the consortium held about 92 percent of Pakistan's outstanding disbursed debt. The Aid to Pakistan consortium's members include the United States, Canada, Japan, Britain, Germany, France, and international organisations such as the World Bank and the Asian Development Bank.

The World Bank accounted for 26 percent of the outstanding debt, and the ADB, which was the largest lender in the early 1990s, accounted for 15 percent. Most non-consortium funding came from Saudi Arabia and other oil-producing Middle Eastern countries. The Friends of Pakistan however do include the erstwhile non-consortium members like Saudi Arabia and United Arab Emirates.

Rising extremism and insurgencies in various parts of the country is generally acknowledged to be rooted in illiteracy and lack of economic opportunities; dealing with such socio-economic factors has long been considered as the only way to effectively deal with rising militancy in the restive border areas with Afghanistan as well as settled areas like Swat. Pakistan simply does not have enough resources to make a difference in the Northern areas and requires external assistance or such was the mantra of not only Musharraf's government but also of the present government.

Thus any assistance in this regard that is being provided by the Japanese government must be appreciated. Be that as it may one would have hoped that the government would not equate financial assistance at OCR rates with diplomatic success; and acknowledges that it is imperative that it first takes appropriate political and military steps to end the insurgency in northern areas prior to injecting development assistance.


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## Neo

*Final negotiations for $500mln WB loan start ​*
ISLAMABAD: The final round of negotiations between Pakistan and the World Bank (WB) for a soft loan facility of $500 million will be held today (Friday) here at the Economic Affairs Division. 

The WB team would be led by its Managing Director Ngozi Okonjo while Minister of State for Finance and Economic Affairs Hina Rabbani Khar will lead the Finance Division team.

The $500 million would be transferred to Pakistan in a single tranche after the approval of World Bank Board. The WB Board meeting has scheduled to held on February 15.

Official sources told Dawn that for the said loan was carrying the same conditions that the country has agreed with the International Monetary Fund (IMF) for $7.2 billion loan.

The loan provided to Pakistan on nominal service charges would be mature in 35 years period, with a grace period time of 10-years.

As part of the package, Pakistan must end all subsidies to the Power sector in June 2009.
Separately, a signing ceremony would also be held at the Economic Affairs Division for an Asian Development Bank loan for the improvement of social investment program in Sindh province.


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## Neo

*ADB and Pakistan Sign $300 million agreement ​*
Friday, 06 Feb, 2009



The Multi-tranche Financing Facility (MFF) is ADBs first comprehensive support for Sindhs secondary cities and demonstrates a strategic, long-term commitment to urban development of the province. - File​
ISLAMABAD: The Asian Development Bank (ADB) and Pakistan Friday signed an agreement to invest $300 million in improvement of water and sanitation services in secondary cities of the Sindh province.

The Agreement for the Sindh Cities Improvement Investment Program (SCIP) was signed by Rune Stroem, ADBs Country Director for Pakistan and Farrakh Qayyum, Secretary of the Economic Affairs Division.

The investment will help the provincial government of Sindh cope with mounting challenges in providing basic urban services to an estimated four million residents of Sindh secondary cities over the next several years, Stroem told PPI.

ADB support to secondary cities will improve the quality of life of urban citizens and help these urban centers unleash their full economic potential. We believe that revitalizing Sindhs small and medium-size towns is important to foster balanced urban and rural development, he added.

The first tranche of $38 million (2009-2012) of ADB's multi-tranche financing facility (MFF) for the Sindh Cities Improvement Investment Program will focus on institutional change and priority infrastructure for the northern Sindh cities of Sukkur, New Sukkur, Rohri, Khairpur, Shikarpur and Larkana.

The MFF is ADBs first comprehensive support for Sindhs secondary cities and demonstrates a strategic, long-term commitment to urban development of the province.

As Pakistans second most populous province, Sindh is faced with rising population growth, a severe deficit of basic urban infrastructure and services, and growing urban poverty. The core challenge that Sindh cities face is inadequate basic urban services delivery in water supply, wastewater and solid waste management. Limited access to and poor quality of water supply, together with poor sanitation, is causing spread of diseases and chronic illness such as diarrhea, especially among children.

The Program aims at ensuring quality, continuity, reliability and coverage of basic urban services through improved utility management coupled with carefully targeted infrastructure investments, including funding for systems operations and maintenance, said Kathie M. Julian, Principal Urban Development Specialist of ADB.

The Program introduces local government-organized urban services corporations, staffed by professional managers and skilled technicians and tasked to deliver water supply, wastewater and solid waste management services to participating urban areas.

This approach is innovative as it brings together key elements necessary to improve service delivery - clear roles and responsibilities, skilled people, including private sector expertise, performance incentives, and increased accountability to consumers.

An estimated 570,000 households in participating cities will directly benefit from the investment program. The MFF will finance physical investment in water supply, wastewater, and solid waste management infrastructure, including piped water supply networks targeting 24/7 supply of potable water, covered drains, sewage treatment, waste collection vehicles and sanitary landfills.

The Program will also support Sindh to establish a provincial focal point for championing urban sector management reforms.


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## Neo

*$2.26 billion paid in debt servicing ​*By Shahid Iqbal 

Friday, 06 Feb, 2009

KARACHI: Pakistans foreign debt servicing bill has inflated with an accelerated pace during the last six months creating a serious problem for the dollar-starved country as it could barely meet the current account gap with the help of IMF.

The country is eagerly looking for more loans to meet its ever-increasing current account deficit but the piling up of loans means larger share of debt servicing as reflected by the data during the last two quarters.
The official data shows that the country paid $2.260 billion as debt servicing during the six months against the full year (2007-08) payment of $2.923 billion.

If the payment for liabilities servicing is included the total debt and liabilities services will go further higher to $2.426 billion.

It shows that the country will spend about $5 billion as debt and liabilities servicing during the current fiscal 2008-09.

Analysts feel that the situation is depressing as the country had to accept harsh IMF conditions, which were also a compromise over the economic growth for a total $7.6 billion loan, which will be receivable in 23 months.
Experts and analysts have been raising voices against the IMF loan as the repayment would bring more severe economic penalties for the country. They said that rising debt would force the government to borrow more and then pay more.

There is no sign or any strategy that the country could even pay back its entire foreign debt, which will be over $51 billion after the inflow $7.6 billion IMF loan.

The current rise in the debt serving was mainly because of heavy payback to Islamic Development Bank. The loan is short-term but the official figures do not show the rate of interest on the IDB loan.

The country paid $612 million as debt service to IDB during the last two quarters, while a total payment of $33 million was paid during entire 2007-08.
The pressure on foreign exchange started mounting since October 2007 when oil and other commodity prices went up to record level and the countrys foreign exchange reserves depleted sharply. It also forced the local currency to lose 23 per cent against the dollar during the calendar year 2008.

Pakistan paid heavily for the record high oil prices that siphoned off most of its reserves forcing it to accept IMF conditions to avoid default.

The IMF assessed recently that the country needed $20 billion to come out of the current difficult economic situation.

Pakistan hopes to get aid from Tokyo conference, which the Japanese government will hold to collect international help for the country massively involved in the war on terror.

Pakistan also hopes to get US help for the services it has been providing for the logistics required for American and NATO forces and the huge amount of money being spent to fight terrorism in Northern Areas of the country.


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## Omar1984

Pakistan's key stock index rises for second week 

Bloomberg
Published: February 06, 2009, 23:13


Islamabad: Pakistan's stock index rose for a second week, on expectations of better earnings by banks after the central bank eased rules on provisions for bad debts to promote lending.

MCB Bank Ltd., the biggest by market value, gained 5 per cent to Rs114.84 after the State Bank of Pakistan said lenders would no longer have to put aside cash for the full value of delinquent loans.

The Karachi 100 Index climbed 4.1 per cent this week, to 5,597.44. The gauge advanced, 63.19 points, or 1.1 per cent on Friday.

"The banks were the main contributor to the rise this week," said Imran Khan, head of research at First Capital Equities Ltd., in Karachi. "The change of rules for provisioning will help banks improve their profit." 

For the next three years, a bank's provision for a delinquent loan may include 30 per cent of the value of the assets pledged as collateral by the borrower, the Karachi-based central bank said last week. The bank must set aside cash for the balance of the outstanding amount. Previously, banks had to set aside cash against the full amount owed.

Banks' cash provisions against delinquent loans may decline as a result of the rule change, boosting profit, Khan said. The government is trying to encourage banks to lend after raising interest rates in return for an International Monetary Fund bailout.

National Bank of Pakistan, the biggest by assets, rose 4.3 per cent to Rs65.70. Habib Bank Ltd., the lender with the most branches, climbed 5 per cent to Rs75.48.

Gulfnews: Pakistan&#39;s key stock index rises for second week


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## Omar1984

Islamabad stocks gain 68 points

ISLAMABAD: The Islamabad stock market faced active buying activities during the outgoing week while the volumes declined, experts said on Saturday. The Islamabad Stock Exchange (ISE) 10-share index increased by 68.03 points to close at 1,224.50 points as against the previous weeks close of 1,156.47 points. The ISE 10-share index remained negative just for one day (February 2) and remained positive for the remaining three days (Feb 3, 4 and 6), while on February 5 the ISE was closed due to Kashmir Solidarity Day. Total volume of transactions stood at 8.077 million shares and it was 9.760 million shares last week, showing a net decrease of 1.68 million shares or 17 percent. The minimum transaction in the outgoing week was recorded on February 6 when the market reached 1.903 million shares and the index increased by 27.84 points to close at 1,224.50 points from the previous level of 1,033.89 points. The maximum transaction in the outgoing week was 2.709 million shares while last week it was 2.655 million shares. The maximum decrease in the share price of a company was observed in Unilever Pakistan, the price of which decreased by Rs 75.99 on February 2 when the index lost 22.72 points. The maximum price increase in the share of a company was of Unilever Pakistan, which increased by Rs 77.49 on February 4 when the index gained 46.50 points. staff report


Daily Times - Leading News Resource of Pakistan


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## Neo

*Free markets access to EU and US: inconclusive Doha round dashes Pakistan hopes​* 
KARACHI (February 09 2009): Despite Pakistan's efforts to seek free market access to EU and US for its primary products mainly textile under the Non-agricultural Market Access (NAMA), the inconclusive Doha round has dashed its hopes for until now.

Officials of the Trade Development Authority of Pakistan told Business Recorder about the status of the talks, saying that NAMA negotiation had to take place in 2008 after its postponement in late 2007. The talks were first launched in 2001 in Doha.

Although the talks were expected by early 2009 by the WTO member countries, the indecision by the new US administration under the Obama presidency is delaying them. Pakistan although does not have bright prospects for any immediate breakthrough, it still pins hopes on WTO's initiation in the near future. Officials said that EU will also follow the Obama's policy in connection with WTO talks, because the former is the sole stimulator to keep stirring them up under its globalisation policy.

Efforts from a small group of countries to agree on agriculture and NAMA deals failed in December 2008. Pakistan is doing its homework for the technical negotiations. The Ministry of Commerce, Ministry of Textile Industry, and Trade Development Authority of Pakistan have intensified efforts to consult with the local trade bodies on different issues of WTO negotiations on Industrial tariffs (NAMA), they added.

Turkey has also communicated that it will support Pakistan on the WTO platform for its objectives. The ministerial meeting of the WTO member countries had been postponed in December last year till January this year which also could not take place, they added.

Pakistan advocates for its commodities a duty-free access to the developed world markets to augment its exports. Basically, WTO members have to reduce customs duties in nine gradual steps to bring it to zero. Whereas, Pakistan insists on reducing these duties in six steps for its exports to the member countries, they maintained.

Cut in import duties in the developed countries will enable the exports of the developing countries to reach there either on low or no duties. The move will as a result help the weak economies grow, officials said.

EU and US intends to bring the import duty structure on zero-duty in a span of nine years with a view to facilitate the developing countries. But, Pakistan raised reservation and said that this will have a negative impact on its trade with the developed countries.

The Trade Development Authority of Pakistan (TDAP) is pursuing the case and officials said that the authority was also consulting with the private sector that has expressed satisfaction over the authority's role and WTO agenda. Initially, the WTO cell of the TDAP has prepared the NAMA proposal for EU market and will also initiate it for US. Proposed products for free market access include:

1. "Men's or boys' trousers and breeches of cotton, excluding denim, cut corduroy, knitted or crocheted, industrial and occupational, bib and brace overalls and underpants.

2. Women's or girls trousers of cotton, not of cut corduroy, of denim or knitted or crocheted, and excluding industrial and occupational, bib and brace overalls, briefs and tracksuits bottoms.

3. Men's or boys' shirts of cotton, knitted or crocheted (excluding night-shirts, T-shirts, singlets and other vests). 4. Men's or boys' jerseys, pullovers, cardigans, waistcoats and similar articles, of cotton, knitted, or crocheted (excluding lightweight fine knit roll, polo or turtleneck jumpers and pullovers and wadded waistcoats.

To a question, TDAP officials said that India is also hoping WTO may conclude a new global free-trade deal in the near future, although such statements are usually politically motivated.


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## Neo

*Pakistan has a viable economy, says Noble laureate Professor Sen​*
KARACHI (February 09 2009): The auto industry in Pakistan needs a long term and consistent policy to achieve the 500,000 units target. This will go a long way since engineering is the springboard of industrial development.

Pakistan has a viable economy, blessed with right entrepreneurship, right professionalism and right workmanship. Since 1951 to 2008, the average GDP growth has been 5.14 per cent higher up to 7 per cent.

The Noble prize laureate Professor Sen while addressing a gathering in his honour in India shared his vision about globalization in the presence of Indian prime minister and said that - globalization - economic liberalism, de-regularization and privatization - has led to higher deficit finance, trade imbalances and inflation all over the world and particularly the developing economies: to Benazir Bhutto, he said, that solution of poverty alleviation lies in glocalization for the developing countries like Pakistan. The Glocalization in fact - is Honda way - ie localisation of investment, production, QCD (based on quality, cost and delivery) and export. This is being generally also followed by some developing countries notably by India, Malaysia and China with tariff and non-tariff barriers. Incidentally, in that also lies increased investment, GDP growth and employment leading to alleviation of poverty - roti, kapra aur makan - of the ruling People's Party's motto.

Honda Atlas will play its part, among others. It will continue to live up to its commitment in offering products that change the landscape of the auto industry in the country.-


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## Neo

*Pakistan expected to get $750m IMF loan in March​*
ISLAMABAD: Pakistan is likely to receive a $750 million loan from the International Monetary Fund (IMF) by the end of March, after the successful completion of the first review of the two parties standby agreement.

Sources in the Finance Ministry told Daily Times the first review of the standby agreement with the IMF would be conducted in Dubai between February 14 and 24.

They said the key performance benchmark was a budget deficit at or below 4.2 percent of the Gross Domestic Product (GDP) during the current fiscal year.

The other important benchmark, they added, was to maintain State Bank borrowing at Rs 258 billion at the end of each quarter.

They said Pakistans budget deficit had been estimated at around two percent of the GDP, much less than the target agreed upon with the IMF. Similarly, they added, the State Bank borrowing had been maintained at the agreed upon level so both conditions had been met successfully.

According to the sources, the review of Islamabads economy would cover economic performance and economic data relating to the second quarter (October-December 2008) of the current fiscal. They said the IMF authorities would place their findings before their executive board for formal approval of the second instalment of $750 million to Pakistan after completion of the review.

The government finalised a $7.6 billion loan arrangement spanning a 23-month period to avert a potential economic crisis. Thus far, it has received $3.1 billion of the first tranche. The second instalment will be of $750 million.


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## Neo

*ECC to approve 6.5m tonnes wheat purchase​*
*Govt agencies to procure wheat at 40pc higher price which will mainly benefit big landlords​*
Tuesday, February 10, 2009

ISLAMABAD: The Economic Coordination Committee of the cabinet, in its meeting on Tuesday, is likely to approve purchase of 6.5 million tonnes of wheat out of expected crop of 23.5 to 24 million tonnes.

Under the proposed Wheat Procurement Policy 2009, the government would purchase 6.5 million tonnes at a price of Rs950 per 40 kg, 40 per cent higher than the price of the commodity in the international market.

Under this campaign, no other than influential wheat growers sitting on the treasury and opposition benches would be able to sell their produce at the high price.

To a question, an official said the government would have to spend a massive amount of Rs154 billion in taxpayers money for purchasing wheat.

However, medium and small growers would have no choice, but to sell their produce at much lower prices in the open market as flour mill owners have indicated that they will not buy the commodity from the growers at the support price of Rs950. Rather, the millers say, they would buy at a price which would be not more than Rs750 per 40 kg as landed cost of imported wheat, if any, will be Rs650 per 40 kg.

It means that the wheat policy for 2009 will only benefit the influential growers and hurt medium and small growers, the official said.

He said the countrys storage capacity was 4.5 million tonnes, but the government had decided to procure 6.5 million tonnes. This meant the government would face a big challenge in storing the commodity. It is believed two million tonnes of wheat would be kept in the open with covering of waterproof sheets, exposing the commodity to damage.

The official said under the proposed wheat policy Pakistan Agriculture Storage and Supplies Corporation (PASSCO) would procure 1.50 million tonnes, Punjab 3.5 million tonnes, Sindh 1.2 million tonnes, North West Frontier Province 0.30 million tonnes and Balochistan 0.05 million tonnes.

The government would also ensure that no restrictions are placed on inter-district and inter-provincial movement of wheat in the country. 

The government will also ask commercial banks to give loans to the flour mills.

The official said the ECC was also likely to approve supply of 12 million cubic feet of gas per day to Walters Power Company for installing a rental power house at Naudero, Sindh. Sui Southern Gas Company has agreed to supply the required gas. KM


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## Neo

*Trade deficit at $10.72bn​*
Tuesday, February 10, 2009

ISLAMABAD: Pakistan&#8217;s trade deficit was recorded at $10.72 billion in the first seven months of the current financial year, Geo News reported on Monday. According to the figures released by the Federal Bureau of Statistics, the country&#8217;s exports increased by eight per cent to 10.95 billion dollars compared with the same period last year. Imports were recorded at 21.66 billion dollars which is 5.77 per cent higher than the previous year. The government has set an export target of 22 billion dollars for the current fiscal year while imports are expected to remain around 34bn dollars.


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## Neo

*CPI drops significantly to 20.52 percent​*
KARACHI: Consumer Price Index (CPI) based inflation eased off during month of January as it dropped substantially to 20.52 percent from 24.43 percent observed during the month of December 2008-09.

The decline in CPI inflation during the month under review has been attributed to a fall in the commodities prices as well as the domestic petroleum price, whose downward revision in December started impacting the inflation in January.

During July-January of current fiscal, it stood at 23.52 percent over the same months of previous year, Federal Bureau of Statistics (FBS) reported on Monday. The inflation number of January over the preceding month of December was even more encouraging as it decreased by 0.42 percent.

These are quite encouraging inflation numbers, which are likely to drop as the year passes on, Mohammad Imran, Head of Research at First Capital Equities Limited (FCEL) believed.

He predicted substantial decline in inflation number during the month of March and forecasted that if the current trends persists, inflation might end up in single digits in month of May or June of the year on month-on-month basis.

Imran held that the core inflation is the key factor to be watched for any interest cut by central bank.

The core inflation numbers are intact for the last couple of months and if they go down or even remain constant, a downward revision in the discount rate could not be ruled out, he noted.

The inflation number for the whole year could fell to 19 percent, which would be below the revised target of 20 percent.

It is pertinent to mention that high commodities and petroleum prices pushed up the inflation to its highest level to 25 percent in first quarter of the current fiscal.

The CPI basket shows that food inflation, having over 40.24 percent wieghtage in the CPI basket also surged 21.61 percent in January of current fiscal over the preceding year. Fuel and lighting index kept rising during the month and is up by almost 27 percent followed by transport and communication, which rose by 25.22 percent.

The education is still costly with its index rising by 17.06 percent and Medicares cost was up by 14.36 percent during January. During first six months of 2008-09, Wholesale Price Index (WPI) and Sensitive Price Index (SPI) rose by 26.15 and 29.42 percent, respectively.


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## Neo

*Trade deficit balloons to $10.727 billion​*
ISLAMABAD: Countrys trade deficit has widened to $10.727 billion during first seven months July-January period of current fiscal year 2008-09 as compared with a deficit of $10.357 billion in the same period last fiscal year, indicating an increase of 3.5 percent. 

This is a major decline in the growth rate of trade deficit as the deficit growth was in double-digit during Jul-Dec period.

Comparison July-January: According to the official data released by Federal Bureau of Statistics (FBS) revealed that countrys exports amounted to $10.934 billion in July-Jan period of current fiscal year as compared with the exports of $10.122 billion in the same period of last fiscal year, an increase of 8.02 percent. Some 83.5 percent contribution to exports during first half came from exports of rice, cement and chemicals. On the other hand, around 95 percent contribution to imports during first half came from petroleum, fertlizer and wheat imports. 

The exports of the country have been targeted to grow by 16.5 percent in the current fiscal year to meet the annual exports target of $21.2 billion, however, a slump is seen in months to come. 

However, due to the unprecedented power and gas load shedding, depreciation of Pak Rupee, increase in cost of capital as well as production and capacity constraints are proving to be instrumental in low growth of countrys exports during the first half, said an official at Ministry of Commerce. 

Countrys imports have witnessed a surge by 5.77 percent and amounted to $21.661 billion in first seven months period against the total imports of $20.479 billion in same period last fiscal year. 

Drop in aggregate demand in economy can be witnessed by decrease in imports from 12.8 percent growth in first six months to a growth of 5.77 percent in Jul-January. This clearly shows that State Bank of Pakistan and governments steps are now yielding results and it is hoped that demand in economy would go down further in months to come, an official said. 

Comparison January 2009 over January 2008: Country has exported goods worth $1.360 billion in January 2009 as compared to exports of $1.464 billion in January 2008, showing negative 7.07 percent growth. This was due to closure of textile units as well as other major industries owing to gas and power shortages in the month under review, which stalled the production, explained the official. 

Imports amounted to $2.528 billion in January 2009 against imports of $3.529 billion in January 2008 indicating a decrease of 28.35 percent. Trade deficit was at $1.167 billion in January 2009 against deficit of $2.064 billion indicating a major decline of 43.44 percent. 

Comparison January 2009-December 2008: Exports of the country registered a growth of 3.79 percent in January 2009 with total exports of $1.360 billion as against exports of $1.310 billion in December 2008. Imports of the country witnessed a growth of 18.88 percent in January 2009 with total imports at $2.528 billion as against the imports of $2.126 billion in December 2008. Trade deficit in January 2009 surged by 43.13 percent with total deficit at $1.167 billion as against the deficit of $815.9 million in December 2008.


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## Neo

*Pakistan may miss fiscal deficit target ​* 
ISLAMABAD (February 10 2009): Pakistan might miss its fiscal deficit target unless it takes strong corrective actions, says Fiscal Policy Statement 2008-09 released a few days back by Finance Ministry.

It said: "The revenue balance for the first quarter is in deficit by Rs 42.8 billion while the primary balance is in deficit by Rs 24.5 billion. If the current trends persist, and strong corrective measures are not undertaken promptly, the annual fiscal deficit target of 4.2 percent of GDP for 2008-09 may not be met."

The statement stresses on implementing rules-based fiscal policy rather than discretionary measures based policy, which proves ad hoc to cope with day to day economic issues.

It is very crucial that the government makes an effort to achieve the fiscal deficit target as this would send a strong signal of the government's commitment to fiscal discipline and macroeconomic stability, adds the statement. Pakistan failed to fulfil two elements of the 'Fiscal Responsibility and Debt Limitation Act 2005 in fiscal year 2007-08.

Under the Act, the government was required to achieve zero revenue deficit by the end of the fiscal year 2007-08. Instead of achieving, it jumped to an 18-year high (with the exception of 1998-99), increasing by Rs 359 billion, or 3.4 percent of GDP.

The Act also required to reduce public debt at least 2.5 percentage points of GDP every year. Public debt, instead of declining by 2.5 percentage points of GDP, in fact increased by 1.1 percentage points. The Statement does not doubt the government's efforts.

It says: "The government is making serious efforts to reduce imbalances in the shortest possible time because it believes that the longer the imbalances persist, the greater will be the adjustment requirement and more will be the associated pain for the common man."

It expects that the government will return to a rule-based fiscal policy (rather than discretionary measures which prove normally ad hoc to cope with day to day issues) and will adhere to the principles as laid down in the FRDL Act 2005, in the next two years, that is, by the end of the fiscal year 2009-10.

The Statement says that there is increasing evidence that the present tax system can no longer serve the needs of the country. Pakistan's tax system faces several structural weaknesses that resulted in the stagnation of tax-to-GDP ratio at around 10 to 12 percent over the last many years.

"It is time to take a fresh look at Pakistan's tax system and tax administration which require far-reaching reforms. Widening the tax base by reducing exemptions, incentives and concessions is one of the guiding principles of an efficient tax system.

"No country can develop on a sustained basis with tax-to-GDP ratio at 10 percent. Broadening the tax bases by bringing sectors which are either un-taxed or under-taxed into the tax net is the only way forward in achieving a tax-to-GDP ratio at 16 to 17 percent which is the average tax effort of developing countries.

"Going forward, Pakistan will be needing large resources to build and strengthen the country's physical and human infrastructure. With current limited tax bases, it will be next to impossible to generate adequate resources to fund these infrastructure programs. This would lead to increasing debt burden."


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## Neo

*'Oilseed production can be enhanced through technical support' ​* 
LAHORE (February 10 2009): The oilseed production in Pakistan could be enhanced through technical support and creation of strong linkages in this vital sector. This was resolved in a meeting of the US Agricultural Counsellor, USDA with the stakeholders of oilseed sector in Pakistan.

The meeting was arranged by the Pakistan Oilseed Development Board (PODB) provincial directorate in order to strengthen the oilseed sector with the technical/financial collaboration of USDA. PODB Provincial Director, Syed Nasir Ali Shah in the meeting threw light on the activities of the Board for the promotion of oilseed crops and oil-bearing trees, sources in the PODB Punjab Directorate told Business Recorder, here on Monday.

He said that wild olive (Kahu) was available in abundance (3.5 million plants approximately) in Potohar & Khushab areas of the Punjab province. It provides vast scope for the conversion of this natural plantation in to oil bearing species and establishment of olive orchards on marginal lands through saplings to supplement the local oilseed production, he added.

Representatives of solvent industries, sources said, discussed in detail about the production and procurement of indigenous oilseed crops- sunflower, canola and soybean; their crushing, marketing and use of bye-products. They also discussed the available paraphernalia of crushing industry helpful in handling the import of huge quantity of oilseeds in Pakistan.

They shared that the import of these oilseeds was very much linked with the availability and prices of palm oil and the freight charges. Discussing the current situation of oilseeds cultivation, the Provincial Director PODB said that low priority policy to oilseed crops and announcement of attractive wheat price by the government was likely to have negative impact on cultivation of canola and sunflower being the non-traditional crops.

He suggested an early announcement of sunflower support price and its procurement arrangement through Passco as immediate remedy to restore the confidence of the growers. Joseph M. Carroll, US Agricultural Counsellor briefed the participants of the meeting about USDA ongoing activities and future plans in Pakistan. He showed his interest for the enhancement of local oilseed production through technical support and development of strong linkages helpful in the promotion of bilateral trade in this sector.

The meeting also discussed the prospects of cultivation of soybean in Pakistan and US support in this regard. It was proposed that American Soybean Association (ASA) should be asked to conduct technical study for soybean cultivation in different ecological zones of Pakistan in collaboration with PODB.

Summing up the discussion, PODB officials requested the participants to initiate proposals, identifying the fields of common interest, where the US technical/financial assistance is desired to enhance the local oilseed crop production for achieving self-sufficiency in edible oils, the sources concluded.


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## Neo

*Reforms in the budget process ​*
EDITORIAL (February 10 2009): It has been revealed exclusively to the Business Recorder that the Ministry of Finance is undertaking reforms in the budget preparation process that include top down and bottom up components - the former prescribing indicative budget ceiling and the latter providing for output based budgeting by ministries.

The objective is to curtail the current practice of seeking as much allocation as possible by each ministry at the start of the budgetary year, which would account for the ceiling, while leaving large sums unspent at the end, an obviously wasteful use of scarce resources, which accounts for an output based budgeting. In other words, the budget allocations would henceforth be linked to performance of individual ministries.

By definition, performance based allocations are easier to evaluate where there is a quantifiable output. Thus development expenditure, which has a clearly defined component of quantifiable outputs, would be the main if not the sole target of this reform. It is pertinent to note in this context that the present government, in response to a burgeoning budget deficit, had already started trimming development expenditure by the middle of last year by prioritising according to completion date.

Development expenditure, unfortunately, has invariably been the first casualty in the process of dealing with government profligacy of the past as well as present. Be that as it may there is a critical need for each ministry to ensure that funds earmarked for development for the year are used effectively. And this measure would go some way in ensuring precisely that.

However, the major problem with respect to poor utilisation of scarce resources in this country has always been more closely linked with rising current expenditure, inclusive of defence expenditure. Current expenditure continues to rise unchecked and there is little evidence to suggest that the present government is focused on rationalising it.

Civil service reforms which would allow the government to trim its large bureaucracy not only in terms of reducing the number of superfluous state employees but also ensuring that those who are left can be given salaries commensurate with the private sector in an effort to boost their performance as well as reduce the existing high corruption levels are urgently required.

Numerous studies have been done in this regard which have identified specific measures that need to be taken but have gone largely ignored by our governments. In addition, the present size of the Cabinet (83 members), is not economically justified in a country where poverty levels are so high.

While government supporters would argue that political compulsions forced the coalition government into having an unprecedented large cabinet yet one would have hoped that these compulsions would have taken a back seat to the economy at least till the country is out of the current economic morass which is causing untold misery to the people.

While economists would no doubt lament the fact that defence will be exempted from performance based allocations yet a close look at the military's engagements may preclude such a linkage. Democracy's compulsion however is to debate defence expenditure in the Parliament more rigorously and the onus for that falls not only on the government but also members of the Opposition.


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## Omar1984

Balochistan seafood to be introduced in world markets 

Wednesday, February 11, 2009

QUETTA: Chief Minister Balochistan Nawab Aslam Khan Raisani on Tuesday said measures would be taken to introduce seafood obtained from Balochistan seas in the international markets. Addressing a high-level meeting, the chief minister said the government would take all possible measures in order to promote fishing, which would not only benefit fishermen but also strengthen the province financially. Earlier, a non-governmental organisation working on dredging and other facilities at the fish harbours briefed the chief minister on the problems and prospects of promoting fishing in Balochistan. The chief minister said experts must keep space for any future amendment or expansion before launching any new project in order to save funds and labour from wastage. He directed concerted efforts for modernising fishing harbours at Pashkan, Sar Bandar, Jiwani and other areas. 

Balochistan seafood to be introduced in world markets


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## Omar1984

Rain raises wheat crop prospects 

Wednesday, February 11, 2009
By By Jawwad Rizvi 
LAHORE

The ongoing rains will bring positive impact on the Rabi crops and help get a bumper wheat crop. 

Timely rains have also compensated for urea fertilizer shortage and would minimise its impact on crop production and also save money for the farmers. 

The Rabi crops across the country are at growing stage and the rains from this western spell is expected to have a good impact on the agriculture of the country. 

During this period, the daily temperature had slightly moved towards higher side. However, there will be no significant shortfall of water requirement for the standing crops. All these signs bring positive impact on the wheat crop as well as other Rabi crops which are at pre-maturing stage; the wheat crop is at shooting stage. The water requirement of Rabi crops is not as high as mature crops. The recent rains will also improve per acreage yield as well as crop health.

Similarly, the rains will also boost other Rabi crops including gram, maize, sugarcane, sunflower and other minor crops. Rain in March could bring negative impact on gram crops when it will at maturing stage. The rain would also be helpful for crops to be cultivated in next couple of weeks. 

The government has set wheat-sowing area for Punjab at 6.460 million hectares and covered 6.606 million hectares (2.26 per cent more than target). For Sindh, the government has set a target of 0.992 million hectares and covered around 1.027 million hectares (3.52 per cent more than the target). For NWFP, the government has set the target of 0.75 million hectares and covered 0.745 million hectares (0.67 per cent less than the target). Similarly, for Balochistan the government has set the target of 0.41 million hectares but achieved 0.371 million hectares, which is ten per cent less than the target. 

Hamid Malhi, a progressive farmer said increase in the wheat sowing area as well as timely rain would help increase the wheat production this year as compared to the last year. He further said the country might achieve a bumper wheat crop. 

Agriculture experts of the Punjab Agriculture Extension Wing said the timely rain during the whole Rabi season was a blessing. They said the current rainy season was a indeed a good omen for wheat growers. After current rain, the standing wheat crop will quickly shoot up and it will grow in a better way. 

They said wheat-growing areas of the province had received widespread rains during December 6 to December 11 and December 19 to December 20 2008. Similarly, the rains during first and third week of January 2009 also left positive impact on the wheat crop. The experts of the Agriculture Extension department said if the temperature remained below 27 centigrade during February and March 2009 a bumper wheat crop could be achieved.

Rain raises wheat crop prospects


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## Omar1984

Remittances to Pakistan 'can double' to $15bn  

Remittances to Pakistan will double to $15 billion (Dh55bn) annually if the government removes the service charges imposed on these flows, a federal minister said in Dubai yesterday. 

The Pakistan Government has been considering the abolition of these charges, said Dr Farooq Sattar, Federal Minister for Overseas Pakistanis.

Sattar urged Pakistanis living abroad to invest in their homeland. "If you (overseas Pakistanis) invest in the country, foreign investors will follow suit," he said at the 40th anniversary celebrations of the Chapal Group.

The ministry will create special investment zones where overseas Pakistanis can invest and establish manufacturing units, Sattar said. Overseas Pakistani investors would be attracted through incentives to invest in the housing and textile sectors in metropolitan cities such as Karachi and Lahore, he said.

Foreign investment fell to $5.19 billion in the financial year ended June 30, from a record $8.43bn, government data show. Standard Chartered bank said in a report that the Pakistani rupee, which plunged to a record low in October, may slide three per cent by year-end as the global economic slump reduces inflows of investment and remittances.

Remittances in first five months of the current financial year increased 15 per cent to $3bn. The country expects remittances will total more than $7bn by the end of current financial year.

Sattar said Pakistan has proposed an initiative to ensure the participation of overseas Pakistanis in the country's parliamentary process by giving them a means to vote in elections from their country of residence. Pakistanis living abroad have been playing a "pivotal role in the country's socio-economic development and they should have a voice in the democratic process, he added. Quotas in various housing schemes to be launched by the government would also be expanded to accommodate more overseas Pakistanis, he said.

http://www.business24-7.ae/articles/2009/2/pages/02112009_9775ff4000c6419b884aa8b2b736999e.aspx


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## Neo

*Czech company keen to invest in power ​* 
Wednesday, February 11, 2009

ISLAMABAD: A Czech company has shown keen interest in power sector development in the country and gave a detailed briefing about its products, including turbines and generators.

A two-member delegation of CKD Group of companies of the Czech Republic called on Chief Executive Officer Engineering Development Board (EDB) Asad Elahi here on Tuesday.

The delegation comprised Frantisck Vladar, CEO CKD Export and Jan Musil, Chairman Board of Directors CKD Group. The company specialises in the production of power plants, electricity and gas compressors and motors. Other areas of cooperation were also identified.

CEO EDB gave a detailed briefing to the delegation about the working and future plans of the Board. He assured the delegation that the Board will bring into contact Pakistani companies for possible future technical agreements with CKD Group.

Asad Elahi informed the delegation that EDB was in touch with WAPDA in order to fulfill their medium and long-term requirements. He said that the Board had formulated two policies, auto and trucking, in the last few years and was currently working on the formulation of a steel policy. The Board has also formed working groups for the development of electronic industry and foundry sector, he said.


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## Neo

*Exports to Bangladesh to reach $500m ​* 
Wednesday, February 11, 2009

HYDERABAD: Trade volume between Pakistan and Bangladesh is $350 million, which could be increased and Pakistans exports to Bangladesh are expected to reach $500m, said the Deputy High Commissioner of Bangladesh Saqib Ali.

He was addressing a ceremony organised by the Sindh Historical, Educational and Cultural Society in Kohsar area as chief guest at a reception given in honour of office-bearers of the Hyderabad Chamber of Commerce and Industry (HCCI) on Monday night.

He said that he is expecting that Pakistan exports hit the target of $500 million, of which most exports include textile products, and asked the industrialists of Hyderabad to come up with proposals with regard to the bangle and motorbike industries.

He proposed that a working paper should be formed and invited industrialists of Hyderabad to Karachi in a couple of weeks to discuss and devise a paper in this regard for cooperation in different sectors between the two countries.

We should have a course of action and we should coordinate with each other, the envoy said, adding that he is also ready to support the formation of an organisation aimed at improving trade ties between Pakistan and Bangladesh with its office in Hyderabad.

Saqib Ali said that Bangladeshs economy is growing. Our exports to other countries have reached $6.5 billion and we are having a surplus current account despite recession.


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## Neo

*Rs490m Benazir University to be set up soon in Dir ​* 
*Minister says PPP-led govt successful in improving law and order situation in Fata, Kurram Agency​*
Wednesday, February 11, 2009

ISLAMABAD: Federal Minister for States and Frontier Regions (SAFRON) Najamuddin Khan here on Tuesday said the government would soon establish the Benazir Science & Technology University in Dir and the proposal had been sent to the Planning Division for necessary action.

He said the university would be established in Shringal (Dir) with an amount of Rs490 million. In an exclusive interview with APP, the minister said the government had taken parliamentarians and tribal elders from Fata on board for legislation and abolishing the Frontier Crimes Regulation (FCR) in collaboration with the Law Ministry. 

He said due to the personal interest of President Asif Ali Zardari, ties between Afghanistan and Pakistan had improved and were now cordial and warm, adding that both the nations had also strengthened mutual confidence. 

He said the PPP-led government was successful in improving the law and order situation in Fata and the Kurram Agency, adding that talks were held with the tribal elders in Swat, Dir and Malakand Divisions and breakthrough had been achieved vis-a-vis the demand for the enforcement of Shariah laws in the region. 

The SAFRON Ministry has provided 10 ambulances to hospitals for the people living in the slum areas of Upper and Lower Dir. Moreover, the vaccination facility has been made available to the victims of Hepatitis C under the Benazir Relief Fund, he added. 

The minister said that more than 10,000 people daily crossed the Torkham Border without any checking due to its length, stretching more than 1,200 kilometres.

Najamuddin said Pakistan had been providing every facility to Afghan refugees for the past three decades and the government was spending billions of rupees on providing wheat, electricity and other amenities of life to them. He said 1.5 million refugees had been registered and the remaining will soon be enlisted.

Pakistan enjoys good ties with the Afghan government and a committee has been constituted by the prime minister for Afghan refugees living in Pakistan.Najamuddin Khan also urged the world community and donors to come forward and help provide facilities to the refugees.


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## Neo

*'Political uncertainty, worsening law, order pose risk to economy'​* 
KARACHI (February 11 2009): While indicators such as rising reserves and slowing inflation point to greater stability, political uncertainty and deteriorating law and order condition pose risks for the economic growth. Economists have expressed these concerns over the increasing political noise due to the coming Senate elections and the lawyers' 'long march'.

They said that political uncertainty was rising ahead of Senate elections scheduled for March 2009, as two leading political parties in coalition have not been able to come to terms.

"People's Party (PPP) and Muslim League-N (PML-N), the two political heavyweights and former coalition partners, have been unable to resolve their differences on policy matters related to the war on terror, restoration of deposed judges, and abolition of President Musharraf's 17th amendment", said Sayam Ali, economist at Standard Chartered Bank.

He said that PML-N decision to support street protests by lawyers against the PPP-led government would raise the political temperature and could potentially destabilise the already weak situation. The security environment has also continued to deteriorate, especially in the troubled NWFP, which also has 10 percent share in the overall GDP, he said.

He said: "The uncertain political environment and security threats pose a challenge to the government's efforts to maintain fiscal discipline, and meet the targets set under the IMF programme". In addition, he said, the global financial crisis and recession would have negative consequences for the domestic economy.

"Weak external demand in Pakistan's main export markets, including the US, EU, and Japan, will negatively impact exports, particularly the textile sector, which accounts for 60 percent of export receipts," Sayam said. Besides, he said, private inflows, including remittances and FDIs, are expected to slow down in 2009, given the turmoil in global financial markets.

Talking about the monetary policy, he said that key message of the latest MPS is that the interest rate cycle has peaked and the central bank will cut rates, as inflationary pressures subside. A stable rupee has helped to transfer lower international commodity prices to domestic consumers.

Zero net fiscal deficit financing by the central bank during Q2-FY09 (October-December 2008) had helped to arrest growth in the money supply, which would reduce demand-side inflationary pressures, going forward, he added. The economy is grinding to a halt, as data for the manufacturing sector indicates that output declined by 5.6 percent year on year during the first five months of the current fiscal year (July-November 2008), he said.

Exogenous price shocks (oil and food), debilitating power cuts, and the deteriorating security environment in the NWFP, which contributes 10 percent of national GDP, have led to falling domestic output, he added.

The central bank has projected that growth will slow down sharply for the full fiscal year to 3.5 percent, the lowest level in eight years. However, total investment in the economy has continued to decline and is projected to fall to 20 percent of GDP in FY09 from 21.3 percent in FY08, Sayam said.

Banks will remain reluctant to lend to the private sector amid concerns over rising non-performing loans and until interest rates are reduced, he added. The stabilisation programme envisaged a significant tightening of fiscal and monetary policy to bring down inflation and reduce the external current account deficit to a more sustainable level, he said.


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## Neo

*Remittances rise by 18 percent ​*

Remittances rise over 18 percent to $4.277 Billion during first seven months of FY09. - File​
Wednesday, 11 Feb, 2009

KARACHI: Remittances sent home by overseas Pakistanis continued to show a rising trend as an amount of dollars 4,277.31 million was received in the first seven months (July-January) of the current fiscal year 2008 and 2009, showing an increase of dollars 653.91 million or 18.05 percent over the same period of the last fiscal year.

The amount of dollars 4,277.31 million includes $0.39 million received through encashment and profit earned on Foreign Exchange Bearer Certificates and Foreign Currency Bearer Certificates, said an SBP statement.

In January 2009, an amount of $637.30 million was sent home by overseas Pakistanis, up 14.40 percent or $80.23 million, when compared with $557.07 million received in the same month last year.

The inflow of remittances in the July-January, 2009 period from USA, UAE, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $1,029.03 million, $868.93 million, $838.66 million, $690.30 million, $289.96 million and $131.74 million respectively as compared to $1,025.71 million, $593.57 million, $663.67 million, $539.88 million, $262.88 million and $103.18 million respectively in the July-January, 2008 period. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the first seven months of the current fiscal year 2008 and 2009 amounted to $428.30 million as against $432.80 million in the same period last year.

The monthly average remittances for the period July-January period comes out to $611.04 million as compared to $517.63 million during the same corresponding period of the last fiscal year, registering an increase of 18.05 percent.

During last month i.e. January 2009 remittances from UAE, USA, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $169.50 million, $124.54 million, $123.76 million, $93.76 million, $50.14 million and $20.33 million respectively as compared to $93.24 million, $151.50 million, $100.61 million, $82.67 million, $35.65 million and $14.19 million in January 2008. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during January 2009 amounted to $54.25 million.


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## Neo

*Japanese team completes KCR feasibility report​*
KARACHI (February 11 2009): The Japanese survey team has concluded its feasibility report of the $872.316 million project for revival of Karachi Circular Railway, paving the way for grant of loan by Japan in May 2009. Another Japanese survey team, which was busy with making further study about the project aimed to mitigate traffic problems in the metropolis, sources told Business Recorder on Tuesday.

The 10-member Japanese team, they said, would come back to Pakistan again in March this year, and the governments of Pakistan and Japan are likely to sign the loan agreement in May 2009. After the release of funds, the project is to be completed in three to four years.

According to the agreement with Pakistan, Japan External Trade Organisation (Jetro), commissioned by the ministry of economy, trade and industry, Government of Japan, would provide 100 percent funding for the project under Japanese STEP loan at 0.2 percent mark-up rate for a 40-year payback time, including a 10-year grace period.

Currently, the project had been undergoing different assessment studies, like Environmental Impact Assessment (EIA), Special Assistance for Project Formation (Saprof), etc, led by a group of Jetro, which were likely to be completed in the current month, said the sources.

They said that Karachi was facing tremendous growth in traffic at 7.2 percent annually, beside its disproportionate yearly growth of buses of 17 percent causing congestion and accidents, increasing in travelling time. Therefore, railway-based transport system was the need of the hour. They said the railway based mass transit system was only the solution to cater the public demand in the over populated metropolis.

However, they said that for completion of the project in time, government's attention and seriousness were needed to get the mega project on fast track by requesting the Japanese government for the immediate release of funds it sanctioned for the project.


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## Neo

*Pakistan to ask IMF for slash in revenue target ​*
Wednesday, 11 Feb, 2009

ISLAMABAD: Pakistan is expected to make a formal request to International Monetary Fund next week to re-revise the revenue target downward to Rs1,250 billion in the wake of facing more than Rs45 billion revenue shortfall in the first seven months of the current fiscal year, Dawn has learnt.

The revenue shortfall would be one of the major concerns for the Fund managers to be raised during the first review of the economic indicators of Pakistan scheduled for February 14 to 24 in Dubai as part of the $7.6 billion stand by arrangement agreement.

The IMF officials declined to visit Islamabad for meeting Pakistani economic wizards citing law and order situation. The review would lead to the release of the second tranche of $750 million after the first installment of $3.1 billion for funding balance of payment of Pakistan.

Pakistan has met most economic targets like inflation and fiscal deficit but the revenue target will be hard to achieve owing to drastic decline in imports value and volume, a senior official in the FBR, requesting not to be named, told Dawn. 

The FBR has collected Rs628.221 billion in the first seven months of the current fiscal year as against the target of Rs673 billion set for the same period. For reaching the re-revised target of Rs1,250 billion, the FBR will have to raise more than Rs621.8 billion in the next five months.

This means that an average of Rs124 billion revenue will have to be raised each month for reaching the revised target, which seemed to be a far cry, the official added. The statistics showed that FBR collected Rs75 billion in the month of January as against the target of Rs93.5 billion leaving a wide margin of Rs18.5 billion shortfall. 

A source in the finance ministry said that it was expected that the Funds managers would be convinced to revise the target. However, the revenue shortfall would not be an issue that may create problems in the releasing of next tranche as Pakistan was committed with IMF on the performance of budget deficit.

According to the source, the decline in revenue collection occurred mainly due to lowering of oil prices, edible oil price, and steel products in the intentional market. The slow down in the telecom sector was also one of the major reasons for the shortfall. 

The large-scale manufacturing industries, one of the main contributors in revenue also witnessed a negative growth of six percent in the first six months of the current fiscal year. Other potential sectors, which could contribute to revenue collection, were also facing sluggish growth, such as the wholesale and retail sectors. While two sectors agriculture and stock market  were exempted from taxes.

This decline in revenue has compelled the government to cut development expenditure and take other measures to meet the budget deficit target of 4.2 per cent by the end of June, as agreed with the IMF. The government recently asked all ministries, division and departments to cut all non-salary expenditures by 20 per cent.

According to the source, the government rather than cutting the defence budget might have to allocate more funds for the purpose because of tension on the eastern and western borders. The country is also facing problems in receiving funds from the US against expenses incurred on the war on terror, which amount to $1 billion.

The privatisation programme is also moving at a snails pace with no major achievement having been made during the period.

Because of these reasons, the official said, the government was forced to raise the levy on petroleum products and keep their prices unchanged despite a massive decline in crude prices in the international market.

The government was getting Rs14-15 billion from PDL and duty and taxes on petroleum products and the revenue on this account was expected to reach Rs100 billion by the end of June, the official said.


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## Neo

*Six percent increase in wheat sowing area​*By Sher Baz Khan 

Wednesday, 11 Feb, 2009

ISLAMABAD: Wheat sowing area this season has witnessed a six per cent increase compared to last year as the government looks confident to achieve this seasons over ambitious 25 million tons wheat production target.
According to the first estimates released by the provincial crop reporting services, wheat crop has been sown on 9.053 million hectares compared to last years wheat sowing area of 8.54million hectares.

This years wheat sowing target was 8.61 million hectares, which has been surpassed as farmers took interest in the crop after the announcement of Rs950 per 40 kg procurement price by the government for the new crop.
This is a success, said Federal Minister for Food and Agriculture Nazar Mohammad Gondal in a statement that expressed hope that the country was well-positioned to achieve the wheat production target this year.

Mr Gondal said the government was committed to achieve the highest-ever official wheat procurement target of 6.5million tons. In the past, the government had been unable to achieve the official target of procuring wheat from farmers that hovered around 5 million tons.

But this year, Mr Gondal said provinces were being taken on board and a strategy was being prepared to launch a speedy countrywide procurement process and to encourage farmers to sell their wheat on the highest-ever fixed support price to the government agencies.

The minister said the government had provided Rs32billion subsidy to cap the price of DAP fertiliser at Rs3,059 per 40 kg which had encouraged wheat sowing. 

He said 1.5million tons of wheat will be procured by Pakistan Agricultural Storage and Supplies Corporation (PASSCO), 3.05 million tons by the Punjab government, 1.2 million tons in Sindh, 0.25million tons in NWFP and 0.05 million tons in Balochistan. He said cooperation between the provinces and the federal government was must to achieve the procurement target well on time.


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## Neo

*'High rice production expected this year'​*
LAHORE (February 11 2009): Ahmed Ali Aulak Minister for Agriculture said that this year production of rice in Punjab would be 13 to 15 percent higher than that of last year, which would greatly help reduce the prices of the commodity. He expressed his views during the 11th session of Punjab Assembly here on Tuesday.

He further said that in November 2006 in different markets of Punjab the wholesale rate of Super Colonel, type of rice, was Rs 26.92 to Rs 32.08 per kilogram, while the rate increased to Rs 43.85 to Rs 55.00 per kilo in November 2007, and the prices of rice reached at Rs 73.95 to Rs 94.85 per kilo in May 2008.

Talking about the fluctuation in the price of rice, he maintained that in 2005-06 there was a minor decrease in the production of rice here. While in 2006-07 due to uneven climatic condition, the decline in the production of rice in India and some other countries caused massive export of rice and domestic demand was neglected, however, Pakistan earned $1.88 billion through export of rice in 2007. While in the year 2007-08 high inflation rate affected the prices of inputs of production, which led to price hike of the commodity.

Answering to a query, he averred that the government was giving subsidy to the farmers under different heads. Mentioning of 'Green Tractor Scheme', the minister averred that government was giving subsidy of Rs 2,00,000 per tractor.

While under the head of fertiliser no subsidy was offered, however subsidy was given on phosphorus, and Potash fertiliser. He said in the budget 2008-09, the subsidy on DPA fertiliser was increased from Rs 470 to Rs 1,000 per pack. He said a lot of subsidy was given on urea. He said urea was a de-controlled item.

Mian Mujtaba Shuja-u-Rehman Minister for Excise on an Adjournment Motion said that government was computerising the property tax. The Law Minister added that some difficulty was faced because of assessment that would be corrected. The Motion was kept in pending.

On a Point of Order regarding counterfeit drugs by an MPA, the Speaker kept the matter pending until Monday. On another Point of Order, Dr Asid Ashraf informed that comprehensive improvement in the health sector has been made with 761 medicines now available, moreover, he ensured that in the next budget the allocation for the health sector would be made double. During the session 'The Punjab Consumer Protection (Amendment) Bill 2009 was kept in pending. Two resolutions one by MPA Amina Ulfat on increasing rent allowance was passed on the occasion.

Another Resolution that Government of Punjab may take immediate steps to develop and promote Islamic modes of banking in line with the policies, instruction and criteria as laid down by the State Bank of Pakistan for promotion of Islamic Banking was passed on the occasion.


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## Neo

*Jewellery production: experts for focus on alternative metals​* 
LAHORE (February 11 2009): Pakistani jewellery industry should concentrate on alternative metals for jewellery production, as the rising prices of gold and gold made jewellery may affect the gold jewellery business. This was the crux of a seminar titled, 'alternative metals for jewellery' organised by Pakistan Gems and Jewellery Development Company (PGJDC) at its Gems and Jewellery Training and Manufacturing Centre (GJTMC) in Lahore on Tuesday.

Dr Shahzad Alam, Project Director PITMAEM-PCSIR said that apart from using gold, jewellery industry can also work on semi-precious metals such as silver, alpaca, copper, brass, bronze, titanium and precious metal clay for making the jewellery. He said that such jewellery is in great demand world-wide due to its low price and better quality.

He informed the audience how different metals can be combined to create favourable combinations for better quality jewellery. He said that as we have witnessed a steep rise in gold prices and subsequent down trend in gold jewellery consumption world-wide as well as at domestic front, its imperative for Pakistani jewellery industry to consider the alternative metals for producing the jewellery because this way they would not only avoid the possible slow down in their business but would continue to expand their business by producing jewellery in other low-priced metals.

He said that there is huge demand of artificial jewellery world-wide and Pakistani jewellery exporters can tap the huge potential and establish their brands in artificial jewellery as well.

Pakistan Gems and Jewellery Development Company (PGJDC) also organised a Seminar on Monday in Lahore titled "Latest Trends in Assaying and Refining" in which experts said that Pakistani Jewellery Industry must equip itself with the latest techniques and trends being used in gold refining and assaying world-wide to make its products competitive and attractive for foreign markets.

Abdul Sattar, Chief Executive ROOP NIKHAR and precious metals refining consultant was the key note speaker. Abdul Sattar informed that currently several methods of refining gold are being used in the industry, but two methods are most commonly used in our trade. He described both the process in detail to the audience belonging to Gems and Jewellery Industry of Pakistan. He also discussed the process of Assaying and said that Assaying is an accurate determination of an element in a given sample.

In the case of jewellery, assaying is an accurate determination of the precious metal content in an alloy. There are three main methods of assaying the jewellery samples: first is Cupellation (used for gold determination), second Titration (used for silver determination) and third is inductively coupled plasma Optical emission spectrometry.

He informed the audience that hallmarking is used to indicate the fineness (purity) of jewellery or ornamental article made of platinum, gold or silver. The hallmarks are small markings stamped on gold, silver and platinum articles.


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## Neo

*External debt as percentage of forex earnings balloons to 127pc​*
ISLAMABAD: Pakistans external debt and liabilities (EDL) as a percentage of foreign exchange earnings rose to 127.2 per cent by end-June 2008, from 124.1 per cent at end June 2007, suggesting that external debt and liabilities are growing at a faster rate than its foreign exchange earnings.

According to the Debt Policy Statement 2008-09, tabled by the finance ministrys Debt Office before parliament, Pakistans EDL as a percentage of forex reserves stood at 297.2 per cent by the end of 1999-2000, and witnessed a sustained decline till end June 2006 when it reached 121.6 per cent, a reduction of 60 percentage points in six years.

The previous two years ie 2006-07 and 2007-08 have been a setback to this declining trend with EDL as a percentage of FEE increasing to 124.1 per cent by end June 2007 and further up to 127.2 per cent by end June 2008.

At the end of the first quarter of the current fiscal year 2008-09, total public debt amounted to Rs6,572 billion, showing a massive addition of Rs671 billion in just three months since the start of current fiscal year in July 2008.

Falling from a high of 79.8 per cent of GDP in 2001-02, total public debt had reduced to 55.2 per cent of GDP by the end of 2006-07. However, due to a combination of negative factors, public debt increased to 56.3 per cent in 2007-08, making it the first time in seven years that the country has seen a reversal in declining trends. The ratio in percentage terms declined to 49.1 per cent till September 2008.

As a percentage of government revenues, total public debt saw a steady decline from 589 per cent in 1999-2000, to 371 per cent by the end of 2006-07, an average decline of 31.1 percentage points per year.

However in 2007-08, growth of public debt outpaced that of government revenues, leading to an increase in public debt as a percentage of government revenues to 394 per cent. This ratio has declined to 329 per cent of the projected revenue for the first quarter of the current fiscal year.

The unprecedented oil and commodity price shocks and no or inadequate policy response to address the challenges resulted in a surge in fiscal and current account deficits. The situation has been further exacerbated by a sharp depreciation of the Pakistani Rupee vis-a-vis US Dollar.

The value of the rupee has depreciated from 60.63 at the end of 2006-07 to 66.10 by end June 2008, ie, by 8.3 per cent.The depreciation of the rupee against the dollar has had a translational impact of Rs224 billion. In other words, Pakistans public debt increased by Rs224 billion in 2007-08 only on account of Pak Rupee depreciation vs the US dollar.

Further depreciation of the rupee in the first quarter of 2008-09 has had a translational impact of Rs447 billion on the stock of total public debt. The significance of this depreciation effect is highlighted by the fact that even though the stock of foreign currency debt has gone down in dollar terms, there has been an increase in rupee terms of Rs414 billion in the first quarter of 2008-09.

Out of an increase in total public debt of Rs1087 billion, Rs609 billion or 56 per cent is due to increased domestic borrowing, whereas the increase in foreign currency debt of Rs479 billion accounts for 44 per cent of the increase in total public debt.It is important to note that out of Rs479 billion increase in foreign currency denominated debt, Rs224 billion or 47 per cent was entirely on account of exchange rate depreciation.


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## slugger

*Pakistan recovery fragile at best*



> *The severe deterioration of Pakistan's economy in 2008 has moderated since the turn of the year*. Yet political uncertainty, high inflation and social instability still threaten to undo what little progress has been made.
> 
> Improvements are visible in terms of inflation, foreign exchange reserves, import growth and the exchange rate. That will help the country's argument for receiving a second, US$750 million, installment of a hard-fought $7.6 billion deal reached with the International Monetary Fund (IMF) last November to stave off a balance-of-payments crisis.
> 
> A review of the IMF standby agreement, reached after Pakistan's foreign-exchange reserves had shrunk 75% and donor countries declined to provide funds, is to be conducted in Dubai in the United Arab Emirates between February 14 and 24, before the second installment is paid, probably by next month, according to a report in the Daily Times.
> 
> The review is expected to give positive findings after covering economic performance and economic data relating to the second quarter (October-December 2008) of the country's financial year.
> 
> Key performance benchmarks include maintenance of a budget deficit at or below 4.2% of gross domestic product (GDP) during the current fiscal year and central bank borrowing at 258 billion rupees (US$3.24 billion) at the end of each quarter. Pakistan's budget deficit had been estimated at around 2% of GDP, much less than the target agreed on with the IMF, while central bank borrowing has been maintained at the agreed level.
> 
> But the continuing uncertain political environment and security threats pose a challenge to the government's efforts to maintain fiscal discipline, according to a Business Recorder report.
> 
> "Exogenous price shocks (oil and food), debilitating power cuts and the deteriorating security environment in the NWFP [North-West Frontier Province], which contributes 10% of national GDP, have led to falling domestic output," the Recorder quoted Sayam Ali, economist at Standard Chartered Bank, as saying.
> 
> A range of issues has kept Pakistan in a state of instability since February 18 polls last year, ranging from restoration of deposed Supreme Court judges to frequent tussles between the coalition government. After the exit of then-president Pervez Musharraf late in 2007, the differences between the Pakistan People's Party (PPP) and the Pakistan Muslim League-Nawaz (PML-N), the two major political parties of the ruling coalition ultimately widened to the split of the alliance and an open fight between the two parties.
> The two parties have differences on policy matters related to the "war on terror", restoration of the deposed judges, and abolition of Musharraf's 17th amendment to the constitution, which concerns the head of state also being the army chief. Senate elections to be held next month are also likely to raise the political temperature.
> 
> The Taliban-led militancy is seen as the gravest threat to efforts to stabilize the economy. The country has suffered a series of suicide attacks in different areas in the past two months.
> 
> The World Bank plans to provide up to $2 billion in credit to Pakistan this fiscal year to support economic growth and the government's poverty-focused programs.
> 
> "Pakistan is now moving in the right direction, and its reform program will lay the foundation for inclusive and sustainable growth," the Business Recorder quoted Ngozi Okonjo-Iweala, the World Bank Group managing director, as saying after he concluded a visit to Pakistan last week.
> 
> Taming inflation
> Inflation, though declining, remains high at 20.5% in January, as measured by the Consumer Price Index, compared with a three-decade high of 25% last October, and according to the latest government forecast may decline to only a 20% annual rate by the end June 2009, against an earlier projected target of 12%. Core inflation slightly increased to 18.9% in January from 18.8% in December.
> 
> The central bank in its monetary-policy statement on January 31 kept its benchmark interest rate unchanged at 15%.
> 
> "The decline in oil prices and stable food prices have had a positive impact," Bloomberg reported, citing Imran Khan, the head of research at First Capital Equities Ltd in Karachi. "In its next review, there's a bright chance of an interest-rate cut by the central bank," Khan said.
> 
> The central bank has increased its benchmark interest rate five times in the past 18 months to tame core inflation (that is, excluding food and energy), but the decision to maintain present high rates clearly indicated that this policy had not yielded the required results, according to a report published in the daily Dawn newspaper.
> 
> Businessmen also criticized the bank's stance. "The government's stance not to reduce the interest rate was illogical, whereas lack of new developments in the policy also did not help fight the economic woes in any way," The News reported, citing, S M Muneer, chairman of Businessmen Panel, a group of NWFP traders and industrialists.
> 
> "Never before in the last 61 years have Pakistan's business been so hard-pressed as it is now and it is being ignored by the elected decision-makers," Dawn reported, citing a senior garment exporter.
> 
> Trade deficit
> Improvements in the country's trade deficit also look fragile. The deficit narrowed to $1.17 billion in January from $2.05 billion a year earlier, but widened from $815.92 million in December, according to the Federal Bureau of Statistics (FBS).
> 
> The deficit has increased 3.5% to $10.727 billion in seven months (July-January) of 2008-09 from the corresponding period a year earlier, mainly due to costly imports of oil, fertilizer, wheat and other essentials and a decline in the textile sector's dyeing exports.
> 
> While exports in the first seven months rose 8% to $10.93 billion compared with $10.12 billion in the same period last year, the $22.10 billion export target for the fiscal year ending in June seems beyond reach.
> 
> "The task is impossible because production cost has gone up manifold, rendering us uncompetitive in the world market," Dawn quoted textile industry leader Shabbir Ahmad as saying.
> 
> Foreign exchange reserves
> The country's foreign exchange reserves meanwhile continue to decline, falling by $44 million to $10.163 billion during the week ended on January 31. Central bank reserves dropped to $6.792 billion on January 31, compared with $6.872 billion a week earlier. Reserves held by commercial banks nevertheless increased $35 million to $3.370 billion on January 31, compared with a week earlier.
> 
> Pakistan this month began phasing out use of central bank foreign exchange reserves to pay for oil imports, whose cost rose 38.6% to $5.88 billion during the first half of this fiscal year compared with a year earlier.
> 
> "The move was made to comply with an undertaking to the IMF in November," according to a report published in The News. From February 1, the central bank no longer provided dollars to pay for imports of furnace oil, used to fuel power stations, and from August 1 it will stop providing the currency for imports of diesel and other refined products. The central bank will carry on providing currency for crude oil imports until February 1 next year.
> 
> Fiscal deficit
> The country is likely to miss its annual fiscal deficit target of 4.2% of GDP set for the current fiscal year ending June 2009. "If the current trends persist, and strong corrective measures are not undertaken promptly, the annual fiscal deficit target of 4.2% of GDP for 2008-09 may not be met," according to the Fiscal Policy Statement 2008-09 recently released by the Finance Ministry.
> 
> The statement stressed that a rules-based fiscal policy should be implemented rather than the government, which depends on a relatively narrow tax base, relying on discretionary measures to cope with day-to-day economic issues.
> 
> The government has cut spending on subsidizing petroleum products, cooking oil, petrol, diesel and kerosene oil, helped by a sharp fall in the international price of crude oil in the past six months, and has withdrawn subsidies on wheat.
> 
> Even so, its spending continues to rise and it has been unable to raise funds from the international market. Domestic debt rose by 9.27% during the first half of the current financial year.
> 
> Critics have called for reform of the tax system to bring in more income. The tax-to-GDP ratio stands at around 10% to 12%, and broadening the tax base by bringing into the net sectors which are either untaxed or under-taxed would help to increase the ratio to between 16% and 17%. This could be done by reducing exemptions, incentives and concessions.
> 
> Syed Fazl-e-Haider, sfazlehaider05@yahoo.com, is a Quetta-based development analyst in Pakistan. He is the author of six books, including The Economic Development of Balochistan, published in May 2004.


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## Omar1984

Textile Asia to be held from April 5

KARACHI: The sixth Textile Asia, the official event of the Ministry of Textile Industry, will be held from April 5 to April 8, 2009 at Karachi Expo Centre.

Pakistan is striving to increase its textile and garment exports and there is a huge potential for textile and garment machinery manufacturers to tap this market, which is at the lookout for replacement and up gradation of existing machineries, a spokesman of event management committee said. 

Textile Asia Exhibition is the only UFI approved textile and garment machinery show in Pakistan, declared by the Global Association of Exhibition Industry, Paris, France. Textile Asia 2009 exhibition will encompass textile machinery, garment machinery, weaving machinery, embroidery machinery, knitwear machinery and accessories. 

The invitees profile consisting of leading textile industries that are coming from all over the world to witness and be a part of this mega extravaganza, major participation is anticipated.

Daily Times - Leading News Resource of Pakistan


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## Omar1984

Model quarries to get Rs 12 billion annually

By Ijaz Kakakhel

ISLAMABAD: The government will complete the establishment of 10 model quarries in 18 months, which would generate about Rs12 billion annually and would also help in generating employment opportunities across the country. 

Federal Minister for Industries and Production, Manzoor Ahmad Watto expressed these views in a press conference here on Wednesday. Giving the details of the quarries, he informed that three quarries each would be established in Balochistan, NWFP, FATA while one would be established in Northern Areas. 

Since the present government came to power, Pakistan Stone Development Company (PSDEC) have shown good progress and made Khuzdar Model Quarry operational in Balochistan. Latest machinery was imported from Italy with a cost of Rs 90 million. The installation of this state-of-the-art technology would help the government to extract the marbles without any wasting. By employing manual or blasting method about 80 percent of marble is wasted, however, through the model quarry, the value of marble would be increased from Rs 1500 per tonne to Rs 7000 per tonne. 

The minister said that government would also establish Marble Cities in Momand Agency in FATA, Risalpur in NWFP, Chitral, Gaddani and Loralai in Balochistan. In this regard, the minister said that the Economic Coordination Committee of the cabinet has approved the allocation of Rs 400 million funds to PASDEC. Commercial banks will provide this amount and the government would pay the mark-up on these amount while the principal amount would be paid back by PASDEC in seven years. 

The minister for industry and production said that plots in Marble cities would be provided in installments. The Risalpur Marble City would be established on 185 acres of land and would generate 10,000 direct and 25,000 indirect jobs and about 121 industrial units would be establish there. 

The Momand Agency Marble City would cover an area of 361 acres and about 250 industrial units would be established there. From Loralai Marble City the government would be able to bet 100 million square feet production. The Chitral Marble City would be spread over an area of 50 acre of land and 40 industrial units would be established there. After completion, about 120 million square feel annual production would be achieved from this marble city, the minister maintained. 

The marble obtained from these marble cities and quarries would be of fine quality and mainly for export purpose, which would also helped the government to earn the much needed foreign exchange earning.

Daily Times - Leading News Resource of Pakistan


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## Omar1984

PM asks food minister to ensure farmers get minimum guarantee price of rice, wheat 

ISLAMABAD, Feb 12 (APP): Minister for Food and Agriculture Nazar Mohammad Gondal Thursday called on Prime Minister Syed Yusuf Raza Gilani and discussed with him the progress on procuring 6.5 million tons of wheat worth 160 billion from the farmers through PASSCO and Provincial Food Departments in order to meet strategic and operational requirements of the country. The Prime Minister asked the minister to ensure that the farmers must get minimum guarantee price as pledged by the government while procuring wheat and rice from them. 

He asked the minister to personally monitor the setting up of mobile inspection teams to check and to ensure that no violation is being committed in this regard. 

He also asked him for early convening of meeting on food situation which need to be attended by all stakeholders including the Chief Ministers of all the four provinces. 

The Minister informed the Prime Minister that 30,000 tons of wheat which has already arrived at the Gwadar port will soon be transported to Sindh and other parts of the country. 

The other vessels containing 600,000 tons of wheat are also arriving soon at Gwadar port, he added. The minister expressed the hope that the import of this additional quantity of wheat will help in improving the availability of wheat in the country. 

The rice situation was also reviewed during the meeting and it was observed that due to timely announcement of incentives by the government, this year yield of rice has touched 6.5 million tons which is 4 million tons more than the local consumption. 

They also reviewed the progress on the earlier decision regarding export of surplus 4 million tons of rice. 

Availability of sugar in the country was also discussed. The Minister informed the Prime Minister about the availability of sugar in the country which at present is sufficient to fulfill the local requirement. 

The Prime Minister said that in order to meet the strategic reserves of sugar, the decision to import sugar would be taken at an appropriate time. 

Earlier the Prime Minister held a meeting with the secretaries of the concerned ministries who apprised him of the current status of availability of basic food commodities.

Associated Press Of Pakistan ( Pakistan's Premier NEWS Agency ) - PM asks food minister to ensure farmers get minimum guarantee price of rice, wheat


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## Neo

*Spending on development projects nosedives to Rs65bn in FY08-09 ​* 
Thursday, February 12, 2009

ISLAMABAD: A mid-year review of the first half of the ongoing fiscal 2008-09 reveals that the spending on development projects nosedived to Rs65 billion including foreign aid, resulting in cost overrun in almost all 1900 projects with only a few exceptions, it is learnt reliably.

The most affected sectors include Higher Education Commission (HEC) as depreciation of rupee against dollar increased the miseries of PhD scholars, who are currently studying in universities abroad. The funds scarcity also resulted in closing down construction of nine universities, no funds for sending fresh scholars abroad, creating financial difficulties for universities even for paying salaries to their staff.

We are trying to protect the allocation of those few strategic projects which are crucial for us, a high-level official in the Planning Commission said on Wednesday and added that the development activities actually halted in almost all projects underway in the country with the few selected exceptions.

Against the projections of releasing Rs150 to Rs185 billion in the first six months of 2008-09 compared to an overall allocation of the PSDP at the federal level of Rs371 billion, the government tightened its releases and curtailed it at Rs65 billion including the foreign aid of Rs12 billion in a bid to scale down the fiscal deficit within the agreed limit of the International Monetary Fund (IMF).

There is no possibility of expecting a spending of the entire allocated amount of Rs371 billion by the end of June 2009. According to conservative estimates, it may hardly touch Rs150 billion in the whole financial year and at the maximum, it can go up to Rs175 billion.

Against spending of Rs118 billion during the first six months of the previous fiscal year 2007-08, the spending on Public Sector Development Programme (PSDP) related projects reduced to only Rs65 billion. The spending on PSDP projects stood at Rs88 billion in FY 2006-07. It shows that the development spending nosedived to the lowest compared to last five to six years.

Ministry of Finance cut down releases and only provided Rs53 billion to ministries/division and attached departments in the first six months of the current financial year. The foreign component contributed in PSDP related projects consumed Rs12 billion in the first half of the ongoing financial year.

According to the Ministry of Finances viewpoint, the ministries/divisions put around Rs400 billion into the accounts of the banks which are lying unutilised, and hence, they should spend that amount first and then seek further funding from the government.

According to the mid year review of the economy, the government successfully demonstrated achieving its fiscal deficit target at 1.9 per cent of the GDP against the envisaged target of 2.1 per cent of the GDP for July-December period of 2008-09.

The numbers of projects falling in the PSDP were on the rise after each passing year as there were 950 development schemes in FY 2003-04 with Rs86 billion as federal shares in the PSDP.

This amount jacked up to Rs148 billion with the number of projects touching 1,279 in FY 2004-05 while the number reached 1,503 with allocated money at Rs204 billion in FY 2005-06. In 2007-08 fiscal years the PSDP share at the federal level touched the Rs270 billion mark with 1,922 projects.

The number of projects was reduced to around 1900 for the current fiscal year 2008-09. The Finance Ministry high-ups argue that the number of projects should be reduced to less than 1000, as the previous regime started politically motivated projects without keeping in view the development requirements of the country.

The previous government, the official said, made all out efforts to please the Musharraf-Aziz regime that the PSDP was increasing projects and that around Rs100 billion was added to the list every year during the last five years.

On the other hand, an exercise is underway to abolish hundreds of development projects from the list of the PSDP and now the Planning Commission high-ups are awaiting approval from Prime Minister Syed Yousuf Raza Gilani to delete projects.


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## Neo

*Economy to suffer if foreign investors move out due to lack of IPR lawsa​*
Thursday, February 12, 2009

KARACHI: The Overseas Investors Chamber of Commerce and Industry (OICCI) IPR Sub Committee Chairwoman Ameena Saiyid stated that counterfeit products affect the brand names that they are imitating, as a majority of people in Pakistan are illiterate and depend on the look of the product to make their purchases.

When such people are duped into buying counterfeits, they blame the original brand for its poor quality and the side effects, which hurts the image of the company and also leads them to suffer losses at the hands of these fake products, she further commented.

The OICCI held a media briefing on The Importance of Intellectual Property Rights in Pakistan at its head office in Karachi on Tuesday.

Saiyid continued to say that foreign investors make up for one- third of the total tax revenue collected in Pakistan and if they move out of the country due to the menace of counterfeit products then the local economy would suffer direct impact.

She also said that the laws in Pakistan to deal with fake products are weak and even the maximum sentenced punishment was equivalent to being nothing. She voiced that poorly implemented laws was the core reason of piracy and counterfeiting being a major industry in Pakistan.

The chairwoman shared that they had approached the government at different levels to address the issue and highlight it in the country for public awareness, however, the government failed to treat violation of IPR as their top priority.

Co chairman of the OICCI Sub Committee, Amar Naseer informed that Pakistan is amongst the top countries counterfeiting medicines. He shared that in 2005 global sales of counterfeit medicines had totalled $39 billion.

He further expressed that labels of medicines are also fake and manufactured within the country itself but read misleading statements like Made in UK to give the impression to the consumers that they are imported products.

People end up paying more for counterfeit medicines in the name of imported products which not only cheat them of their money but also are a hazard for the health, Naseer added. 

He further pointed out that people involved in manufacturing these fake products do so in stealth and hiding and therefore the labour force they employ are also deprived of legal working rights like old age benefits and minimum wages and that is another crime that these manufacturers commit.

He stressed that the government lost billions of rupees annually in evasion of duties, taxes and levies while famous consumer brands goodwill, reputation and creditability are also harmed significantly.

Naseer voiced that this leads to brain drain in the country as talented Pakistanis also do not want that their work be copied or not given due recognition. 

The lack of respect for data exclusivity, confidentiality and copyrights result in hampering growth and development in the various industries and discourages writers, artists, performers and IT industry to develop and further excel in their fields, he further expressed.


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## Neo

*WB seeks proposals for local plans of nutrition support ​* 
*Says 39pc Pakistani children malnourished​*
Thursday, February 12, 2009

ISLAMABAD: The World Bank (WB) says that 39 per cent children of Pakistan are moderately or severely malnourished and in this regard the country has made no significant progress over the last two decades.

The WB warned Islamabad authorities that the global increase in food prices is affecting Pakistan threatening the nutrition of young children and women of childbearing age particularly among the poor.

The World Bank on Wednesday launched a competitive Development Marketplace for Nutrition aimed at finding and funding innovative ideas that will change the lives of thousands of pregnant women, infants, and young children in South Asia. 

Titled Family and Community Approaches to Improving Infant and Young Child Nutrition, the Development Marketplace is looking for entrepreneurial organisations across South Asia to submit proposals for local, small-scale projects with potential to be scaled up and replicated. 

The winners will be selected by an international jury of development and nutrition experts at the Development Marketplace event in August, 2009 in Dhaka, Bangladesh and will receive funding to implement their proposals. 

Malnutrition affects the lives of millions of infants and young children in South Asia, said Isabel Guerrero, World Bank Vice President for the South Asia region. It saps a childs growth potential, delays enrolment in school, limits school achievements, and lowers lifetime earnings. 

This competition offers a unique opportunity to channel small grants directly to community organizations and NGOs who present innovative ways to address this devastating problem. 

Malnutrition is the single biggest contributor to child mortality in the world. In South Asia child malnutrition rates are among the highest in the world. Both child underweight and stunting rates in the region are nearly double those in Africa. 

In Pakistan childhood malnutrition is 39 per cent. The global increase in food prices poses serious threat to the nutrition of young children and women of childbearing age, particularly among the poor.

Recent evidence clearly shows that there are proven effective interventions to improve nutrition, said Andrea Vermehren, World Bank team leader for the Development Marketplace. However, effectively implementing these interventions - and implementing them at scale is a major challenge. We believe this effort will help find new ways of providing innovative solutions to malnutrition.

The South Asia Regional Development Marketplace is implemented in partnership with the Deutsche Gesellschaft fur Technische Zusammenarbeit (GTZ), Micronutrient Initiative, UNICEF, and the World Food Program. 

The competition is open to civil society groups, social entrepreneurs, youth organizations, private foundations, academia, and private sector corporations in Afghanistan, Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka. The maximum award will be $40,000 per proposal. Proposals will be accepted until March 31, 2009. 

For eligibility criteria, details on the competition and to submit proposals online, please visit South Asia - 2009 South Asia Marketplace on Nutrition the South Asia Regional Development Marketplace website. MH


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## Neo

*Three oil, gas exploration firms to launch work in Balochistan​*
Thursday, February 12, 2009

QUETTA: Chairman Senate Committee on Petroleum and Natural Resources Syed Dilawar Abbas on Wednesday announced that exploration of oil and gas would soon be launched at three sites in Balochistan as the provincial government had given security clearance in this regard.

Addressing a press conference flanked by the committee members Senators Mir Mohabbat Marri, Pari Gul Agha, Nasir Mengal and others here, he said three out of five firms who had been granted oil and gas exploration licenses would soon start work in Shan, Shahan and Jhal Magsi as the provincial government has assured complete security to these firms.

A total of 28 oil and gas wells would be excavated within a period of three months and each well would cost USD 17 million to these firms. Besides, sufficient amount would also be spent on the welfare of the people living along these sites, he said.

Explaining the status of his committee, he said the body is not part of the government at all. Rather, it is formed to monitor government performance and has upheld Balochistans interests during its meeting.

Urging the population of the areas where oil and gas exploration operation would take place for extending cooperation to these firms, he said it would not only create innumerable job opportunities for local population but also help improve civic infrastructure in these areas.

To a question, he said the committee had recommenced that five per cent revenue of the project should be directly spent on the development of local social infrastructure.

The government, agreeing with the recommendation, made it a part of its petroleum policy, he said, adding that revenue under gas royalty would also be increased under the new formula by the federal government in this regard.

Referring to the disparity between the supply and demand of natural gas in the country, he said the country needs about 3500 million cubic feet gas while the available gas supply is a mere 900 million cubic feet. He said that gas reserves in Balochistan are rapidly depleting and the government would have to draw a plan on war footings to cope with the situation.

Managing Director Pakistan Petroleum Limited Khalid Rehman, and Managing Director Oil and Gas Development Limited Syed Tahir Hussain, were also present at the occasion.


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## Neo

*WB may restore IBRD loans for Pakistan after performance review​*
ISLAMABAD: World Bank has informed the government of Pakistan that it would consider restoration of IBRD loans (Programme Loans) facility after the forthcoming first review of $7.6 billion International Monetary Fund (IMF) Stand By Arrangement (SBA), a senior official at Ministry of Finance informed Daily Times on Wednesday.

Restoration of IBRD loan facility would not only help government carryout reforms but also help restore the confidence of investors in Pakistans economy, as this restoration would mean that Pakistans economic indicators have improved and economy is out turmoil.

First review of the $7.6 billion SBA is scheduled at Dubai during February 14-24, where senior officials from economic ministries and IMF authorities would review Pakistans performance.

Due to high ranking in vulnerability index of IMF, World Bank had changed its lending arrangements with Pakistan from programme loans to just project loans last year resulting in releases of funds in periodical installments instead of release of full funding of the programme. Prime Minister, Yousuf Raza Gilani during a meeting with Ms Ngozi Okonjo-Iweala, Managing Director of the World Bank Group has urged the Bank to resume the IBRD lending for Pakistan.

Pakistan is expected to get $750 million by the end of March, after its successful completion of first review of stand by arrangement agreed with the IMF.

The official further informed that the key performance benchmark was to keep the budget deficit at 4.2 percent of the Gross Domestic Product (GDP) during the current fiscal year and budget deficit has been estimated at 2 percent of the GDP in first half Jul-Dec period of this fiscal year 2008-09.

The other important performance benchmark was to keep the State Bank borrowing at Rs 258 billion at the end of each quarter and the government is strictly keeping its SBP borrowing at the agreed target.

The official said that the review of Pakistans economy would be covering economic performance and economic data relating to second quarter (October-December) 2008. After the completion of first review, the IMF authorities would place their findings before their executive board that will formally approve the second installment for Pakistan worth $750 million by the end of March.

Vulnerability index comprises of many factors like different economic indicators i.e. fiscal situation, economic growth, current account deficit and inflation. The countries having their important economic indicators in negative zone face difficulties in getting new programme loans.

Although the present government has taken bold decisions and initiatives, but it has failed to please the high ups in the IFIs. PPP led coalition government has taken unpopular decisions like increase in gas tariff, increase in POL product price, and increase in electricity prices.


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## Neo

*IFC provides $121m trade support ​* 
Friday, February 13, 2009

ISLAMABAD: The IFC, rthe private sector wing of the World Bank Group, announced on Thursday that it provided Pakistani banks with $ 121 million (Rs.9.5 billion), in trade finance guarantees, over the past seven months.

The finance guarantees helped Pakistan increase cross-border trade during the recent economic downturn, besides benefiting many of its important business sectors.

Due to support from the IFCs Global Trade Finance Programme, Pakistani banks executed trade transactions worth roughly $ 121 million between July, 2008 and January, 2009.

Sectors and products that benefited from this support include, agricultural products and machinery equipment while the IFC supported trade volume of iron and steel increased by $ 20 million compared with last year and Pakistani hospitals imported about $ 6 million of medical equipment this year with the IFCs` support.

We are pleased to be part of this programme. This initiative is especially vital in times of international financial crisis and it is enabling us to provide greater services to our clients and expand Pakistans trade activities Zakir Mahmood, CEO of Habib Bank, said.

Irfan Siddiqui, CEO of Meezan Bank, said, The IFC has helped us increase our reach and coverage of confirming banks. 

IFC came at a time when the global financial crisis was knocking on the doors of emerging markets.


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## Neo

*Pakistan Energy Yearbook FY08: Dependence on imported energy products increasing​*
KARACHI: The countrys dependence on imported energy products has risen by five percent in the last four fiscal years on its growing demand by power plants and transport sector.

The Pakistan Energy Year Book FY08, released by Hydro Carbon Development Institute, showed that the share of imported energy has risen to 35 percent in FY08 against 30 percent in FY04. This is mainly due to higher import of refined petroleum products, crude oil and Liquefied Petroleum Gas (LPG) for meeting the local demands of various sectors. During last four fiscal years (FY04-08), the energy consumption grew by 8 percent according to Compound Annual Growth Rate (CAGR), whereas energy supplies have risen by 5 percent with significant shift in energy supply mix from gas to oil.

According to the report, the energy consumption of the country stood at 39.4 million tonnes with gas and oils share in energy consumption at 40.3 percent and 29.3 percent, while that of, electricity, coal and LPG at 15.2 percent, 13.7 percent and 1.5 percent respectively.

The oil contribution doubled during the last 4 years with consumption reaching 44.7 percent. In FY04, gas share in thermal power generation was 77.5 percent , whereas oil had a share of 21.9 percent. Owing to rising gas shortage and availability of alternative fuel like furnace oil (FO), gas supply to power plants declined annually by 3 percent during the said period. Besides these factors, phenomenal increase in CNG consumption (43 percent CAGR) during this period also confined gas supplies to power sector. In terms of fuel mix, gas remains the primary contributor to thermal power generation with consumption of 8.5 million tonnes (54.9 percent share).

The report said the countrys primary energy supplies posted 23.8 percent growth in FY08 and stood at 62.9 millon tonnes (tons of oil equivalents) versus 50.8 million tonnes in FY04. In FY04-FY08, the average growth of supplies stood at 5 percent with 3.8 percent growth posted in FY07, 9.31 percent growth in FY05 and 8.06 percent in FY04.

The indigenous gas remains the major contributor of the energy supplies in this period. However, its share in overall supplies has declined to 47.5 percent from 48.4 percent last year and stood at 29.9 million tonnes. Whereas, oil supply during the period surged by 5.6 percent to 19.2 million tonnes thus increasing oils share to 30.5 percent against 30 percent in FY04. Out of total supplies which include gas, oil, LPG, coal, hydro-and nuclear electricity, indigenous production contributed 68.5 percent in FY08 as compared to 70.6 percent share in FY07 and 72.3 percent in FY04. Therefore imports of petroleum products grew by a CAGR of 14 percent during last 4 years on the rising local demand.

Energy experts told the countrys reliance of imported energy will increase with the same pace on the constant surging demand of natural gas and furnace oil particularly for electricity generation. Also, the reliance of transport is shifting back to petrol and diesel on the shortage of natural gas in north part of the country during winter. The cash-starved refineries are operating under capacity, so the country has to be dependent on imported petroleum products in the future, they added.

The total refinery output fell by 6.1 percent in year-on-year terms during July-January as their production capacity shrank significantly with low stocks of crude oil due to piling up of circular debt. The sales of Furnace Oil and High Speed Diesel decreased by 9.5 percent and 4.8 percent YoY in 7MFY09. The Motor Spirit off take has improved by 4.4 percent YoY. On the other hand, the local production of energy products is growing with a stable rate, keeping its share constant at 18 percent in the local consumption. Oil and LPG production of the country fell by 5.9 percent and 9.3 percent YoY respectively to 68,184 bpd and 1,403 tpd, respectively. Gas production, on the other hand, increased by 1.2 percent YoY to 4,023mmcfd.


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## Neo

*Personal loan, credit card limit fixed at Rs one million​* 
KARACHI (February 12 2009): The increasing number of default cases in consumer financing and credit cards have compelled the State Bank to take some preventive steps. Therefore, the State Bank of Pakistan on Wednesday amended the regulations and fixed the personal loan and credit card limit at Rs 1,000,000 for a single person and asked the banks to obtain consumer credit report from CIB before allowing any consumer facility.

The SBP said that based on the review of prudential regulations and feedback from banks and DFIs, following amendments in the regulations for consumer financing have been made with immediate effect. As per amendment at the time of granting facility under various modes of consumer financing, banks/DFIs shall obtain a written declaration on the prescribed format (Annexure-CF 1) from the borrower divulging details of various facilities already obtained from other banks/financial institutions.

Before allowing any facility, the banks/DFIs shall obtain a consumer credit report from the Credit Information Bureau of State Bank of Pakistan, or from any consumer Credit Information Bureau of which they are member.

Under regulation R-3, while determining the credit worthiness and repayment capacity of the prospective borrower, the banks/DFIs shall ensure that total monthly amortisation payments of consumer loans should not exceed 50 percent of the net disposable income of the prospective borrower. Bank/*** may issue credit card to one person with a maximum unsecured limit not exceeding Rs 1,000,000 subject to mandatory credit check and prescribed debt burden and condition that total unsecured credit card limits availed by that person from all banks/DFIs does not exceed Rs 1,000,000, the SBP circular said.

It said that as a result of above upward revision in clean limit for credit card, regulation concerning prime customers mentioned in R-7 stands withdrawn.

Under house financing regulation (R-17), banks/DFIs may extend mortgage loans for housing up to any tenure defined in the bank's/***'s duly approved credit policy and keeping in view the maturities' profile of their assets and liabilities.

SBP, amending regulation for personal loan including loans for the purchase of consumer durables, said that banks/DFIs may assign personal loan limits to one person with a maximum unsecured limit not exceeding Rs 1,000,000, subject to mandatory credit check and prescribed debt burden and condition that total unsecured personal loans limits availed by that person from all banks/DFIs does not exceed Rs 1,000,000.

As a result of above upward revision in clean limit for personal loans, regulation concerning prime customers mentioned in R-23 stands withdrawn, SBP said. Other instructions on the subject will remain the same.


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## Neo

*Pakistan wants more from US​*
** WP report says Gilani emphasised the need to expedite new US aid package after meeting with Holbrooke
* Kayani likely to press requests for increased military aid​*
LAHORE: Pakistan warned US special envoy Richard Holbrooke on Tuesday it expected more from the United States in return for its cooperation against Al Qaeda and the Taliban, a Washington Post report says.

Statements issued by President Asif Zardari and Prime Minister Yousuf Raza Gilani, after meeting with the envoy, emphasised the need to expedite a new US aid package, and the importance of enhanced cooperation in defence and intelligence sharing. Holbrooke only said that he was there to listen and learn the ground realities.

In Washington, US officials said that while a revised strategy would acknowledge Pakistans crucial role, developing a new relationship was likely to be a long process. Not having patience makes all the sense in the world in terms of the Afghanistan threat, Joint Chiefs of Staff Chairman Admiral Michael Mullen said in a recent interview. But in Pakistan, he said there is not a quick answer, and any new US strategy would have to recognise the tension between the short- and long-term objectives.

The next step, the officials said, would be a visit to the US later this month by Chief of Army Staff General Ashfaq Kayani, whom Mullen credited with a number of positive steps including: replacing the former head of Pakistans intelligence service, who was widely mistrusted by the CIA; appointing a new chief for the Frontier Corps; and doubling Frontier Corps salaries.

Increased aid: Gen Kayani is likely to press requests for increased military aid in several categories, including Cobra attack helicopters, night-vision equipment, and equipment to jam extremist radio transmissions, intercept satellite telephone communications, and improve communication among Pakistani military units in the Federally Administered Tribal Areas (FATA).

Pakistan would also like at least to be in the room when targeting decisions for CIA aerial drone attacks in the FATA are made, a senior Pakistani official said. Pakistan also wanted more funding stability, he added. In the news conference following a meeting with Holbrooke, Foreign Minister Shah Mehmood Qureshi said Pakistan and the US would have to sit together to understand the implications of a planned doubling of US troops in Afghanistan this year, and there would have to be an accompanying civilian surge in Pakistan. By civilian surge, he said, I mean greater focus on socio-economic development and greater political engagement with the reconcilable elements among extremists.

The Senate Foreign Relations Committee is reformulating a massive US development assistance programme for Pakistan, including at least $1.5 billion annually for the next five years. Committee chairman Sen John F Kerry said the amount of aid might be increased in legislation that he said was likely to be completed in a matter of days. The legislation will include benchmarks allowing Congress to judge Pakistans performance. We have no problems with greater transparency and accountability, a Pakistani official told the Washington Post. But the funding cannot stop.


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## Neo

*Pakistan to pay $516 million against Eurobond maturity on February 19​* 
ISLAMABAD (February 12 2009): Pakistan would pay 516 million dollars against 500 million dollars Eurobond on February 19 after its maturity, which was issued in 2004. "Pakistan resumed getting finances from international financial market and issued a Eurobond, which is maturing now in February," says a Finance Ministry officials requesting not to be named.

The payment of 16 dollars is of interest and other expenditures associated with the bond, says the official. The Finance Ministry has completed its arrangements to make the payment on maturity of the bond, says the official. The government is not focusing on issuing any bond now, rather it is waiting international market to rebound so that it can have space for junk bonds.

As market can have funds for such bonds, Pakistan would start looking at those markets. On February 12, 2004, Pakistan successfully issued 500 million dollars after a hiatus of over five years. It was Regulation-S Euro Bond lead managed by J P Morgan, Deutsche Bank and ABN Amro Bank.


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## Neo

*Defaults touch Rs 320 billion mark: textile industry may bring banking sector down​* 
LAHORE (February 12 2009): Textile industry may bring the banking sector down with a string of defaults, occurring all around the sector. Sources in textile sector confided to the Business Recorder on Wednesday that a leading textile group had recently defaulted Rs 5.6 billion of a bank, whose paid-up capital is rupees six billion.

Sources added that the concerned bank had extended a moratorium of three years, besides arranging a Rs 2.5 billion credit line for the group. Similarly, said the sources, the default of a bank in Punjab had touched Rs 50 billion mark. The textile industry owns about 22 percent loan portfolio of the banking sector and its default has reached Rs 320 billion at present.

It is also observed that many single spinning units have closed their operations since the last few months due to heavy operational losses, particularly because of the worst electricity and gas shortage in the country. The management of all leading banks is sending reminders to the sector but all in vein, as the defaulters are not bothering even to throw them to the dustbin.

Interestingly, everyone is disclosing secretly about the closure of his neighbour unit while waiting for a relief package from the government. "The industry would lose ground soon in case the government failed to respond to its call to survive," said one former office-bearer of All Pakistan Textile Mills Association (APTMA).

The spinning sector started feeling the pinch back in 2006-07 when double digit mark up rate played havoc with their viability. However, majority of the sufferers was those who owned single units, as the groups were able to survive the mark up increase. However, once the power crisis jumbled up the cost of production, the big groups also started feeling the heat.

"Majority of the big houses are surviving by arranging alternate defaults and they pay the bank instalment for one unit while defaulting for other and so on," said one senior spinner, who is not operating his unit over the last eight months.

It may be noted that the Advisor to the Prime Minister on Finance Shaukat Tarin had assured the textile industry to ensure a relief package for textile sector "within days and not weeks" in his January 16 meeting with the APTMA leadership.

Two consecutive meetings of Pakistan Banks Association (PBA) with a stress followed it from the chair for early relief to the industry. However, sources privy to the meetings, suggested that the banks were not serious over extension of a helping hand to the industry.

According to the sources, the textile industry believed that the banking sector would be facing a crisis like situation in three months ahead in case no early review of loans to the industry took place. These opined that the textile industry's working was calculated on the basis of 365 days operations, but heavy power and gas shortages had put the operation plans upside down.

It may be noted that Tarin has also hinted at termination of six percent research and development (R&D) fund to apparel sector, which was heavily pampered by the Musharraf regime. The industry circles are of the view that situation might even take a worst turn in case the investments in apparel sector also reversed the feasibility plans.


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## Neo

*Forex reserves rise to $10.29bn ​* 
KARACHI (February 12, 2009): Pakistan's foreign exchange reserves rose by $130 million to $10.29 billion in the week that ended on Feb. 7, the State Bank of Pakistan said on Thursday.

The State Bank of Pakistan's reserves rose to $6.92 billion from $6.79 billion a week earlier, while reserves held by commercial banks were flat at $3.37 billion, the bank said.

Pakistan's foreign reserves hit a record high of $16.5 billion in October 2007 but fell to $6.6 billion in November, largely because of a soaring import bill.


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## Neo

*PEW stresses need for plan to control inflation ​*
ISLAMABAD (February 12 2009): The Pakistan Economy Watch (PEW) has stressed the need of a systematic plan of action to bring inflation under control as it is threatening some most critical sectors of the economy, said Dr Murtaza Mughal, President of PEW, here on Wednesday.

Talking to a delegation of industrialists, he said that the State Bank of Pakistan seems very concerned about inflation, as everything has become more "valuable", except rupee, and it seems that efforts to bring down inflation are increasing unemployment as industrial, manufacturing, exports and other sectors are making downsizing.

"The survival of manufacturers, exporters and millions of employees is at stake due to cost of credit," he said, adding that industrial units are closing down in large numbers, which is sending wrong signals.

He said that many industrial units are not viable anymore, but the owners are running them to remain in business, keep presence in international market or preserve family honour. "There must be some missing links in the monetary policy; everything cannot be compromised just because some policymakers feel strongly about progressive price increase", he added.

"Suppressing inflation is not the only obligation of the regulators", he said. "Who will frame policies to boost or at least maintain domestic production which is sliding at a fast pace threatening whole system?" Dr Mughal asked. He said: "We have developed the habit of obeying every demand of the international lenders, except for taxing the sacred cows," he said, adding that the tendency was an obstacle in achieving the tax-to-GDP ratio.

He stressed the need for concrete plans to revive the ailing economy, saying that one of the highest interest rates, widening trust deficit and uncertainty touching skies, "we should have a strategy to bail out the country". Inflation, he said, "is not the only threat to economy; we should also take sliding savings and revenue collections into account. Consumer finance conditions or banks needs to be made stringent to block unplanned expansion and avoid any crisis".


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## Neo

*Economy suffers over $35 billion loss due to Afghan turmoil ​*
LAHORE (February 12 2009): Business community on Wednesday urged Obama's special representative, Richard Holbrooke who is currently visiting Pakistan, to help provide direct access to Pak products in US markets as Pak economy has so far suffered irreparable huge loss of $35 billion direct and indirect due to turmoil in Afghanistan.

Founder chairman Pak-US Business Council and VP Saarc Chamber of Commerce and Industry, Iftikhar Ali Malik while talking to APP here, said that "we entire business community welcome Richard on exploratory visit to Pakistan". He said it is on record that Pakistan is the only country in the world which has not only suffered tremendous economic loss but also huge human loss in war against terror.

Iftikhar said that more than three million Afghan refugees in Pakistan were also posing security risk. He said that entire Pakistani nation including business community, all political parties under the dynamic leadership of President Asif Ali Zardari and guidance of Prime Minister Syed Yousuf Raza Gilani, people from all strata of the society stand united against the menace of terror and fully committed to defeat it as Pakistan has always been an active US associate against the menace of terror.

He said due to war on terror, Pakistan's national economy is exclusively suffering a net loss of $6 billion annually as a fallout of the war against terror, which has displaced thousands of people and endangered security in the country.

In the prevailing scenario, United States must provide direct market access to Pak products on zero rate duty to help stabilise the country's bleak economy in the wake of the war against terror.

Iftikhar who is also co-chairman businessman panel, the largest alliance of chambers in the country and ruling group in FPCCI on behalf of entire business community again urged for US assistance to Pakistan to help overcome the economic crisis, by restoring the quota for Pakistan at par with all other under developed countries.

"The US should buy back products from industrial zones in Pakistan and help strengthen the existing industrial zones with the provision of modern infrastructure", he said, adding that proper and timely American assistance will help ensure durable peace and stamp out terrorism, besides strengthening the democratic government in Pakistan.

Observing that due to the unrest and turmoil in a neighbouring country, he said a major chunk of Pak food stock is smuggled to Afghanistan, which ultimately leads to acute foodgrain scarcity within Pakistan. The current economic crisis looming world-wide has especially impacted the poor countries, he added.

He said there is vast scope for US private sector investors in every sphere of life, particularly in the agro power and IT sectors, adding that the US Chamber of Commerce (USCC) can play a pivotal role in promoting bilateral trade relations.

"Pakistan is an emerging market rich in opportunities for American investment, while the US is already an important trading partner" he said. Malik urged the need to restore relations to the pre-9/11 level, adding that good relations between the US and Pakistan, and the Muslim ummah will help restore confidence and attain world peace. "With South Asia becoming the hub of international economic activity, restoration of peace in the region is all the more necessary," he observed.


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## Neo

*South Asia fair: China to provide 300 stalls to Pakistani exhibitors ​*
KUNMING (February 12 2009): China is ready to provide 300 stalls to Pakistani exhibitors in the upcoming South Asian Countries Commodity exhibition to be held here in mid 2009, said a senior official. "Chinese government attaches great importance to south Asian countries in bilateral trade, especially with Pakistan", the Director of Foreign Trade Division of Department of Commerce of Yunnan province Cheng Yongliu told APP here in an interview.

The interview was arranged on the sidelines of the week-long plenary session of the 11th People's Congress of Standing Committee of Yunnan province that was kicked off on February 7 with the address of provincial Governor Qin Guangrong in, which he presented 2008 annual report and his government plan for 2009. It was for the first time that the foreign media had been invited to cover the provincial session of the People's Congress.

The objective of holding the fair is to provide opportunities to the south Asian countries to introduce their products in Chinese markets to help improve their trade imbalance, which is at present in favour of China. As a host city of the trade fair, Chen said that we are remained in contact with Pakistani side to ensure their maximum participation.

The 2009 edition of the exhibition will be concurrently held with famous Kunming Trade Fair from June 6-10. Our trade is based on three dimensions, the -- Foreign trade, Foreign Economy and Foreign Capital, he observed. He said that Yunnan province has long history of co-operation in diverse areas including trade as well as development of infrastructure in Pakistan.

In this connection he mentioned construction of water supply scheme in Karachi and Jinnah Highway Project. He said that negotiations were underway for well-equipped professional hospital in Islamabad. Cheng said that Yunnan exports chemical, industrial goods, raw material of laundry powder, agriculture products, tea, cooking oil, pharmaceutical products, etc to Pakistan.

A food-processing unit from private sector from Pakistan is functioning in Dali since 1990, he said. The bilateral trade, he pointed out has however witnessed an up and down trend, in this regard he stated that in 1996, it was $3 million, that jumped to $138 million in 2007, however the bilateral trade registered a decline last year as it was only $62 million.

Emphasising the need to enhance trade from Pakistan to his country, Cheng said that out of 9.6 per cent trade of south Asian countries with Yunnan province, Pakistan contributed just 0.6 per cent, so there is urgent need to improve. He said that Yunnan province has strong desire to help bring the trade ties with Pakistan as par with our deep bilateral relations.


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## Neo

*Industrial zones to be set up in all districts of Sindh: Khuhro ​* 
KARACHI (February 12 2009): The Acting Governor and Speaker, Sindh Assembly, Nisar Ahmed Khuhro has said that the government has planned to establish industrial zones in all district of the province Speaking at a meeting of the Karachi Chamber of Commerce and Industry (KCCI) on Wednesday, he said that the government has already allocated land for industrial zone in Larkana district.

He advised business community to come forward and establish industrial units, hotels at archaeological sites and in Sukkur, Larkana and other places and make efforts to revive closed units. Referring to the issue of interest rates, power and gas tariffs and inflation, the acting governor said that the government is well aware of these issues and assured that comprehensive strategy has to be developed to provide business community some relief.

Blaming the previous government for creating electricity mess in the country, Khuhro recalled that late Banazir Bhutto during her tenure, initiated IPP and added that lot of hue and cry was made at that time on six cents power tariff now negation were going on at 18 cents. However, if these IPP projects were not initiated at that time, present electricity supply situation might have been more serious, he claimed.

Further, he pointed out that during the last ten years, no efforts were made to utilise Thar coal for power generation. There are 14 points through river, where power plants can be established but no attention was paid to utilise this opportunity. Another opportunity, which the government has failed to utilise, is wind power generation. India is generating 3000 MW power from wind in its coastal belt near Pakistan. Whereas, Pakistan has so for managed to build a small wind power-generating unit at Jhmpir.

'Cost of lost opportunities is very high and we have to sustain it,' he added Referring to the National Finance Commission (NFC) award, the acting governor pointed out that the NFC is an issue of all the four provinces. Khuhro further recalled that when the PPP was sitting in the opposition in Sindh Assembly, it moved a resolution, which was supported by the MQM and was also adopted by the house for change in the NFC formula.

He said that new NFC award was due since long. However it is still not announced. The acting governor was of the view that Sindh sustained a loss of Rs 50 billion annually due to NFC award. He said that the PPP and its collation partner, MQM are working carefully and jointly to resolve all issues related to the province and national interest.

Former President, KCCI, Siraj Kassam Teli said that the business community is of the view that the NFC award should be based on revenue generation. 'The Sindh government must take NFC issue with the federal government to change the NFC award formula,' Khuhro added and assured that business community would support the provincial government on the issue.

The President KCCI, Anjum Nisar said that law allows the provincial government to establish up to 50 MW power units. He said that taking advantage of the law, Punjab government has allowed to establish three units of 49.5 MW and urged the Sindh government that it should also allow establishment of 49.5 MW units in the province and Karachi.


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## Neo

*First half of fiscal year 2009: oil production down 5.9 percent, gas up 1.2 percent ​* 
KARACHI (February 12 2009): The total hydrocarbon production in the country increased by 0.4 percent in the first half of FY09. The oil and LPG production of the country fell by 5.9 percent and 9.3 percent in this period to 68,184bpd and 1,403tpd respectively. The gas production on the other hand, increased by 1.2 percent to 4,023mmcfd.

Total production of OGDC, PPL and POL fell by 0.7 percent, 3.3 percent and 19.3 percent respectively during this period. Oil production of OGDC fell 5 percent mainly because of production falls in JV operated fields of 20.2 percent whereas the company's own operated fields registered a modest fall of 2.3 percent, Saad Arshad, an analyst at Invest Capital & Securities said.

The major contribution to the fall in oil production came from the Bobi, Chanda and Sono fields, while improved production was observed from the Kunar, Pasakhi and Mela fields, Saad added. The oil production of PPL inched up by 0.1 percent mainly due to its share from oil production of Mela. However, cumulative gas production for the first half of FY09 fell 3.5 percent to 977mmcfd owing to natural decline in Sui production.

POL's oil and gas production maintained its downtrend as it fell by 27 percent and 14 percent respectively. Oil production from the POL's own operated fields fell by 33 percent with the main contributor being the Pindori field (falling by 67 percent) while Pariwali 22 percent during this period.


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## Neo

*Establishing CNG stations: Argentina to provide technical assistance ​*
ISLAMABAD (February 12 2009): Argentina would provide technical assistance for establishing high pressure CNG stations and running the CNG bus service in mega cities of the country. This was decided in a meeting of Argentina Ambassador Rodolfo Martin Saravia and the Vice President Galileo Argentina CNG Company Juan Ojanguren with the Federal Minister for Environment, Hameed Ullah Jan Afridi here on Wednesday.

Secretary Ministry Environment, Khushnood Akhtar Lashari was also present in the meeting. The minister apprised the visiting Ambassador that the government of Pakistan has planned to run 8000 CNG buses in 9 mega cities of the country. He said that deliberations in this regard are in advance stage and modalities for financing import and running the buses as well as setting up high pressure CNG stations are being worked out.

He said that Hydro Carbon Development Institute has been asked to establish a high pressure CNG stations as a pilot project. The minister said that the promotion of CNG culture in the country would not only provide cheap transportation to the commuters but also help control the air pollution.

The visitors told the minister that their country is very rich in the CNG station and busses technology and they are ready to provide technical assistance to Pakistan for such ventures. They said that the representative of the Argentina CNG Company would interact with the Ministry of Environment to work out the details for co-operation-PR


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## Omar1984

Gilani says growers must get official wheat support price

By Sher Baz Khan

ISLAMABAD, Feb 12: Prime Minister Yousuf Raza Gilani has asked the Ministry of Food and Agriculture to set up monitoring teams to ensure that growers received the official wheat price of Rs950 per 40kg for their new crop.

The government will spend Rs160 billion on procurement of 6.5 million tons of wheat from farmers this season. Last years procurement target of five million tons could not be achieved.

During a meeting here on Thursday, the prime minister asked Food and Agriculture Minister Nazar Mohammad Gondal to personally monitor the situation and ensure timely procurement and transparency in the process.

Mr Gilani said the ministry should convene a meeting on food security. It should be attended by all stakeholders and chief ministers of the four provinces.

Mr Gondal briefed the prime minister on efforts to achieve this years wheat procurement target through the Pakistan Agricultural Storage and Supplies Corporation (Passco) and provincial food departments. He said that cooperation of the food departments was needed to achieve the target.

He said that 300,000 tons of imported wheat had arrived at the Gwadar port and it would soon be transported to Sindh and other parts of the country. He said other consignments of about 600,000 tons of wheat would soon arrive.

They also discussed the rice situation. Mr Gondal said that because of timely announcement of incentives by the government, production of rice this year had reached 6.5 million tons. The local demand was 2.5 million tons and the remaining four million tons were being exported, he added.

The wheat sowing area has registered a six per cent increase this season and the government hopes to achieve the production target of 25 million tons.

According to provincial crop reporting services, wheat was cultivated on 9.053 million hectares, up from last years 8.54 million hectares, and surpassing this years target of 8.61 million hectares.

Gilani says growers must get official wheat support price -DAWN - Top Stories; February 13, 2009


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## Neo

*Car sales drop 44pc year-on-year ​* Friday, February 13, 2009 

KARACHI: Passenger car sales surged 190 per cent to 6,441 units in January compared to 2,221 units sold in the previous month, data released by Pakistan Automotive Manufacturers Association (PAMA) showed.

However year-on-year, car sales fell 44 per cent in Jan 2009 compared to 11,588 units in Jan 2008. Cumulatively, in seven months (July 2008 to January 2009) of the current financial year, car sales plunged 48pc at 42,520 units against 81,546 units in the corresponding period of last year.

Kamran Rehmani, an analyst at FCEL Research, said the present situation is quite worrisome for local car manufacturers. While demand for new vehicles has dropped considerably, there has been a persistent increase in input cost amid depreciating rupee against Japanese yen. The real dilemma for the auto industry is to raise prices at a time when demand is down.

After depicting a gloomy picture in December 2008, car sales increased by 190pc in Jan 2009 to 6,441 units compared to the previous month, when sales hit the lowest since August 2000 owing to relatively fewer working days and year-end impact.

Almost all major auto assemblers recorded an increase in sales in Jan because of peoples inclination towards buying a car and get it registered in the New Year.

Pak Suzuki Motor Co registered the largest increase of 257pc at 2,573 cars against 720 units in Dec 2008. Indus Motor and Honda Atlas Car sales soared 153pc and 219pc at 3,388 units and 478 units respectively. In Jan, market share of Pak Suzuki expanded by 7.5pc at 40 per cent while Indus Motor lost 7.7pc share at 53pc.

Nonetheless, year-on-year sales fell in Jan 2009 with each assembler posting a double-digit decline. Indus registered the lowest decline of 11pc and became the market leader with a share of 53pc, an increase of 20pc. Pak Suzukis market share dropped 15pc with 59pc fall in unit sales.

From July 2008 to Jan 2009, cumulative sales of passenger cars were 48pc lower as compared to the same period last year. Pak Suzuki posted the largest decline of 56pc and sold 20,529 cars during the period. Car sales by Indus and Honda Atlas plunged 36pc and 26pc at 16,099 and 5,763 units.


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## Neo

*Demand for automobiles to decline sharply this year ​* Friday, February 13, 2009 

KARACHI: The ongoing economic downturn has taken its toll on the automobile industry with demand for vehicles decreasing steadily, analysts told The News.

According to an auto analyst, the current fiscal year ending June 2009 will turn out to be much worse for local car assemblers. With weakening economic fundamentals and the credit crunch, automobile demand is expected to go down even further in the coming months.

Political and economic instability, an increase in car financing rates, precautionary measures being taken by banks with regard to auto financing and, most importantly, rising car prices are some of the main reasons for the declining demand. Despite the steady decline in sales and a cut in production of all manufacturers except two, local auto assemblers continued to launch new cars, case in point, Honda and Ghandhara Nissan Limited (GNL). In fact, Nissan Motor Co Ltd recently announced that GNL has restarted production of the Sunny compact sedan at their plant in Karachi. The cars production was halted in 2001 as a result of which GNL sold imported vehicles from Japan.

Nauman Muhammad Khan, Senior Marketing and Sales Manager, Ghandhara Nissan Ltd, said that the launch of the locally assembled Nissan Sunny, scheduled to take place in March 2008, was delayed owing to the law and order situation, unstable political climate and the economic crisis. This project had been in the pipeline for the last four years, he said.

Talking to The News, Khan admitted that the timing of the launch could have been better especially since the demand for automobiles has seen a sharp decline.

Even so, the price of the new Sunny is quite high. The 1.3L EXSM/T costs Rs1,340,000 while the other three versions of 1.6L EXS M/T cost Rs1,380,000, 1.6L SSM/T costs Rs1,560,000 and 1.6L SS A/T costs 1,650,000. CNG models are available in all four versions which means doling out an extra Rs80,000.

Meanwhile, the analyst pointed out that consumer response to this car would fall below expectations. It can capture the market if its prices are reasonable, he said. However, since the prices are pretty much the same as other brands that already have a loyal customer base, the new Sunny will face tough competition. Similarly, Honda also launched the Honda City I-VTEC 1300 CC in manual and automatic transmissions. According to a market survey, customer response to this car is reasonable so far, despite the fact that a premium is being charged on the model.

The newly launched Honda City manual version costs Rs1,319,000, while the automatic costs Rs1,439,000. Interestingly enough, in January 2008, the same car cost Rs8,49,000 while on January 31, 2009 the car was priced at Rs1,319,000. This indicates a 55 per cent increase in a years time.

A similar situation occurred when Toyota launched its 10th generation Corolla. This trend continues to date, even though a decline in the sales has been noticed of late.


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## Neo

*All conditions met to get IMF second tranche: Waqar ​* Friday, February 13, 2009 

ISLAMABAD: The federal government on Thursday informed the National Assembly Standing Committee on Finance that it has met all performance criteria of the International Monetary Fund (IMF) for getting a second tranche worth $750 million under the 23-month standby arrangement.

Briefing parliamentarians in the NA committee, Finance Secretary Dr Waqar Masood said Pakistan and Ukraine got the IMF programme at the same time but Ukraine had failed to meet its envisaged targets and the Fund was unlikely to release its next tranche for them.

Unlike Ukraine, we have met all of our envisaged targets, he said and hoped Pakistan would be able to get the second tranche of IMF loan without getting any waiver on the performance criteria.

Against fiscal deficit target of Rs262 billion equivalent to 2 per cent of gross domestic product (GDP) for the first half of the current fiscal year, Dr Waqar said, the deficit stood at Rs251 billion, which is 1.9pc of GDP.

He said the IMF had frozen borrowing from the central bank at Rs258 billion, which had been brought down to Rs205 billion on December 31, 2008. It meant that the government paid back Rs53 billion to the State Bank.

Pakistan and the IMF are scheduled to hold talks in Dubai from Feb 14 to 26. After deliberations, the Fund will seek approval of its board of directors for releasing second tranche of $750 million by March.

The finance secretary openly admitted in the NA committee meeting that all development partners including the World Bank, Asian Development Bank and others had advised the government to get an IMF programme in order to restore confidence of international financial institutions (IFIs).

Terming the last fiscal 2007-08 as the most difficult year for economy, he said oil and commodity shocks hurt the macroeconomic situation and budget deficit hiked to 7.7pc of GDP against the target of 4.4pc. Foreign currency reserves depleted rapidly and owing to non-availability of foreign funds, the reserves had to be utilised, leading to them coming down from $16 billion in October 2007 to $6.6 billion by October 2008. Government borrowing from the central bank also touched new heights in 2007-08.

In these circumstances, he said, the government presented federal budget for 2008-09 with fiscal deficit target of 4.2pc of GDP or Rs562 billion. It actually meant to cut expenditures by Rs400 billion compared to the previous fiscal year and all was to be done by abolishing subsidy on petroleum products, electricity and others.

Despite presenting this kind of budget, our development partners did not express their confidence mainly because of lack of trust, he said and added it resulted in non-availability of foreign funds in the first few months of the current fiscal year.

The countrys credit rating was also downgraded, making it impossible to borrow from the international market, he said and added the macroeconomic instability also paved the way for a massive depreciation of the rupee against the dollar and on October 8, 2008 the rupee touched 86 to one dollar.

In this situation, all the donors advised us to go for the IMF programme, he said. Pakistan and the IMF signed a deal on November 24, 2008 for $7.6 billion loan package out of which Islamabad had received its first tranche of $3.1 billion.

He said there was no liquidity crunch being faced by banks. Citing an example, he said against the target of Rs130 billion for auction of treasury bills, the government received offers of around Rs380 billion from banks.

On the expenditure side, he admitted that development expenditures were curtailed in the first two quarters of the current fiscal year. For the federal PSDP, the government released Rs91 billion for the first seven months (July-Jan) of 2008-09.


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## Neo

*EU garment-makers eye Pakistan for joint ventures ​* Friday, February 13, 2009 

KARACHI: Federal Textile Adviser Dr Mirza Ikhtiar Baig, on his return from European Union countries, has said EU garment manufacturers are seriously looking to Pakistan to form joint ventures for supplying products to their chain of stores. The interest was prompted by current recession and increasing cost and wages, he said.

According to a spokesman for the adviser, during the visit Baig met Senior Executive Werner International Nice (France) Nicola Monti. It was one of the largest and renowned textile consultants of the world having more than 40 years of experience in dealing with textile and apparel industry of Pakistan, India, China and 65 other countries.

Monti told Baig that EU garment units were moving from the US and Europe to China and India and brand manufacturers were looking for more routes for supplies and were interested to have joint ventures in Pakistan.

Baig said Pakistan had achieved high growth in textiles and apparels but had a low share in the international market. China topped the US market with a share of 36 per cent followed by Bangladesh 21 per cent, India 18 per cent, Morocco 19 per cent and Pakistan 13 per cent. South Korea has lost 20 per cent of the US market.

In the European market, China topped again with a share of 29 per cent, Vietnam 28 per cent, India 19 per cent and Pakistan only 1.5 per cent while the Philippines had lost 11 per cent of the market.

Monti informed Baig that Pakistani garment manufacturers could cut their cost up to 45 per cent in sewing by improving efficiency.

Labour productivity is very low, said Baig. Our regional competitors take 75 minutes to complete and produce one piece of cloth whereas we take 133 minutes for the same work. We also waste 30 per cent in finishing and 12 per cent in washing.

According to a study of Pakistani textile and apparel sector conducted by Werner International, some of the garment units were over-staffed by 57 per cent. That was an internal negative factor whereas external factors included no duty-free market access to the EU and negative image and perception of Pakistan abroad.

Baig requested Werner to submit a proposal for presenting a better image of the textile industry to global brands for achieving collaboration with them. In that regard, Werner is working on a three-year plan to be submitted shortly.


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## Neo

*ADB, industry discuss economic transformation ​* Friday, February 13, 2009 

LAHORE: The Small and Medium Enterprises Development Authority (SMEDA), on behalf of the Federal Ministry of Industries and Production, arranged a series of meetings between a five-member mission of the Asian Development Bank (ADB) and stakeholders from various potential sectors of the industry to discuss the accelerated economic transformation programme (AETP).

The ADB mission comprised principal economist Jesus Felipe, economist on financial sector Joao Farinha Fernandes, economist on pubic finance Asadullah Khan Sumbal and economic officer of financial sector, public management and trade division for Central and West Asia Department Lyle N Raquipiso.

Shahid Rashid, CEO SMEDA presided over the meetings. Syed Iqbal Anwar Kidwai, GM outreach and a few other officials of SMEDA were also present.

The meetings discussed various proposals to increase productivity and growth by exploring structural transformation of selected industry sub-sectors with a view to promoting value added exports.

Three separate group discussions were held with various stakeholders. The first group included stakeholders from medicinal, pharmaceutical, veterinary, and meat industry. The second group had key representatives from mineral, wood and household equipment industry. Group three comprised of stakeholders from the paper, board and pulp industry.

The ADBs consultative mission is currently on a visit to Pakistan to initiate discussions with the government for identifying possible reform areas for inclusion in the second phase of the AETP. Based upon the discussions and feedback obtained during the visit, the mission would sketch out a rough roadmap for reforms.


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## Neo

*IFC provides $121m trade support ​* Friday, February 13, 2009 

ISLAMABAD: The IFC, rthe private sector wing of the World Bank Group, announced on Thursday that it provided Pakistani banks with $ 121 million (Rs.9.5 billion), in trade finance guarantees, over the past seven months.

The finance guarantees helped Pakistan increase cross-border trade during the recent economic downturn, besides benefiting many of its important business sectors.

Due to support from the IFCs Global Trade Finance Programme, Pakistani banks executed trade transactions worth roughly $ 121 million between July, 2008 and January, 2009.

Sectors and products that benefited from this support include, agricultural products and machinery equipment while the IFC supported trade volume of iron and steel increased by $ 20 million compared with last year and Pakistani hospitals imported about $ 6 million of medical equipment this year with the IFCs` support.

We are pleased to be part of this programme. This initiative is especially vital in times of international financial crisis and it is enabling us to provide greater services to our clients and expand Pakistans trade activities Zakir Mahmood, CEO of Habib Bank, said.

Irfan Siddiqui, CEO of Meezan Bank, said, The IFC has helped us increase our reach and coverage of confirming banks. 

IFC came at a time when the global financial crisis was knocking on the doors of emerging markets.


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## Neo

*Agreement fulfilled with IMF under SBA​*
*Pakistan will not seek any waiver​*
ISLAMABAD: Ministry of Finance said on Thursday that Pakistan would not seek any waiver in any condition as it has already met all the performance benchmarks agreed with International Monetary Fund (IMF) under $7.6 billion Stand By Arrangement (SBA).

A six member Pakistani delegation would leave today for Dubai for participation in the first review of the $7.6 billion SBA scheduled from February 14-24, Secretary Finance told National Assembly Standing Committee on Finance and Revenue here on Thursday at Parliament House. He said that $3.1 billion IMF support was used to increase foreign exchange reserves of the country and this could not be used by the government for any other purpose. By the end of December, Pakistans foreign exchange reserves were over and above the benchmark agreed with the IMF. NA committee met under the chairmanship of MNA Fouzia Wahab, which was given a comprehensive briefing on revenue collection and state of the economy, where Secretary Finance and Chairman Federal Board of Revenue (FBR) Dr Waqar Masood Khan briefed the committee.

Dr Khan told the committee that the State Bank of Pakistans board that met on January 31 decided not increase interest rate further as the economy has stabilised and there was no need to further increase interest rate. He also informed the committee that against the governments target of Rs 130 billion, banks have offered investment to the tune of Rs 380 billion against the last Treasury bills offer. This offer was three times oversubscribed and banks have not only offered investment in 3 months and 6 months but also in 12 months T-bills on 120 basis point less than the prevailing interest rates. 

He told the committee that the government has been able to cut its expenditures by Rs 47 billion during first half of July to December period to bridge the gap of revenue shortfall witnessed during this period. The government has not increased its expenditures and development expenditures has remained at Rs 125 billion against the target of Rs 135 billion during first half to stabilise the fiscal position, but, now the government has been able to spend more on development and releases for development would improve in the second half. He said that it was for the first time in the history of the country that IMF programme was discussed and approved by the federal cabinet. He also showed willingness to brief the parliament on this programme agreed with IMF. 

He also said that the Ministry of Finance has also asked the ministries to cut at least by 20 percent non-development expenditures but this was not obligatory for them. At the end of this fiscal it would be examined that which ministry has reduced its current expenditures. State Minister for Finance and Revenue Hina Rabbani Khar told the committee that the government was taking price issue seriously and is in consultation with provincial departments and provincial transport authorities for reduction in prices of essential items and public as well as goods transport fares. She also informed that proposed US Kerry-Lugar Bill has bipartisan support in US Senate and Pakistan would get support from the new US administration. She also informed that the government is pushing the ROZs issue with US and FTA issue with European Union.


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## Neo

*Foreign reserves increase by $125 million​*
KARACHI: The countrys liquid foreign exchange reserves increased by $125 million during the last week. The State Bank of Pakistans statistics on Thursday revealed that overall foreign exchange reserves increased to $10.288 billion on February 7 as compared with $10.163 billion last week. The reserves held by the central bank witnessed a major increase of $124 million to reach $6.916 billion as compared to $6.792 billion during the last week. Reserves held by banks (other than SBP), however, witnessed an increase of just $1 million to reach $3.371 billion as compared with $3.370 billion last week.

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## Neo

*ADBs presentation on Pak economic stabilisation plan​*
ISLAMABAD: The Asian Development Banks (ADB) fact-finding mission led by Jesus Felipe on Thursday gave a presentation on policy implications of structural transformation in Pakistan, to the Planning Commission with the purpose of the consultation being accelerating economic transformation programme in Pakistan in the context of countrys fiscal and external problems compounded by the international economic situation. 

The delegation explained that the ADBs role was to contribute to the development of a programme that led to upgrading and diversification like structural transformation of economic base in partnership with the countrys public and private sector. The delegation focused on the need of structural transformation, particularly in the industrial and export sectors. He emphasised that Pakistan should pay attention to increasing the level of sophistication of exports particularly in textiles. 

The deputy chairman Planning Commission has called for better alternatives to debt to ease Pakistan s fiscal problems and meeting macroeconomic challenges being faced by the country. He expressed these views while chairing the meeting of ADB representatives, and government officials of the Planning Commission and other relevant ministries.


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## Neo

*Pakistan hopes to attract $5bn investment by expats​*
** Law to protect investments by overseas Pakistanis soon​*
LAHORE: A new law protecting investments by overseas Pakistanis may attract as much as $5 billion, Federal Minister Farooq Sattar said on Wednesday.

The minister said in an interview, If the international corporate sector can get sovereign guarantees, then why not overseas Pakistanis. Once we introduce legislation  within the next four months  it will give them confidence. 

The minister said the investment was needed to revive the economy that had slumped last year after seven years of high growth. Last year, overseas investment dropped by a steep 38 percent.

Waqar Ahmed Khan, the minister for investments, had said in an interview last month, the government planned to raise $10 billion in foreign direct investment by December. 

Sattar said the Pakistan government had also planned to reserve four seats for expatriates in the 342-seat National Assembly and a seat each in the four provincial assemblies to ensure direct policy-making input from overseas Pakistanis.

Sattar said Pakistan aimed to double the remittances by overseas residents next year from an estimated $7.5 billion in the 12 months ending June 30, by simplifying banking procedures and allowing cell phone transfers. Overseas investment fell to $5.2 billion in the year ended June 30 from a record $8.4 billion a year ago, he added. 

Overseas investors fled the Karachi Stock Exchange after it imposed four-month-long trading curbs to prevent the index from falling below its August 27 level. The index has fallen 42 percent since the curbs were lifted on December 15.


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## Omar1984

LSE rises 84 points 

Saturday, February 14, 2009
By our correspondent

LAHORE: The Lahore stock market rose above the 1,600-point barrier for the second time in the current week as it added 84 points to close at 1,631 amid a handsome trading volume on Friday.

Out of 111 active shares, prices of 58 increased, two declined and 51 remained unchanged. Earlier, the market opened on a positive note and was still moving up at the time of closure for weekend recess.

Trading volume was 20.8 million shares which was 11.5 million shares higher than Thursday. NIB Bank regained its position as the volume leader recording a turnover of five million shares. All top 10 volume leaders ended the day on a positive note.

Shares of mutual funds rose except for Invest Mutual Fund. Majority of investment banks and securities also gained value. Commercial banks after a long time were under the complete grip of bulls and all large banks added handsome value to their shares.

Except for Dandot Cement, all other cement companies remained positive. The refinery sector was under the complete control of bulls. All companies traded in the oil and gas marketing and exploration sectors closed higher. Heavyweight OGDC rose Rs2.44 to close at Rs51.38.

LSE rises 84 points


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## Omar1984

Remittances may help meet dollar demand 

Saturday, February 14, 2009
By Saad Hasan

KARACHI: There will no immediate negative implication of the governments decision to stop State Bank of Pakistan (SBP) from providing dollars for oil imports as remittances by overseas Pakistanis have improved, industry people told The News.

Commercial banks will easily meet the requirement as stability in the rupee-dollar parity has dimmed prospects for speculation which led to a shortage of dollar in the recent past, foreign exchange dealers said.

We will have to wait and see how the market (banks) manages the dollar supply, said an oil industry executive. But I dont think there will be any severe repercussion.

The State Bank of Pakistan discontinued provision of dollars for furnace oil imports from Feb 1 as part of an IMF loan requirement which says the market should meet the foreign exchange needs for trade.

The central bank will stop dollar supplies for import of diesel and other refined products from August 1 and by next year payments for crude oil imports will also be the business of commercial banks. This has raised concern that the inter-bank market could come under pressure and the dollar might go up against the rupee, creating problems for oil importers.

The government had assigned the responsibility of making payments to the SBP last year after the market started facing a crunch. Haji Haroon, a foreign exchange dealer said, there is little chance of that happening again. There is no panic in the open market now and we dont expect to see that either.

He said that the dismal performance of the stock market and property sector has made investors skeptical about investing in foreign exchange. Economic indicators have also been improving and the flow of foreign direct investment and remittances will help stabilise the countrys foreign exchange reserves further.

The central bank projects that the current account deficit will shrink to $3.9 billion in six months (Jan-June 2009) from $7.3 billion in the first half. This will help foreign exchange reserves exceed $13 billion by the end of June, compared to $10.2 billion at the end of January, a Standard Chartered report said.


Remittances may help meet dollar demand


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## Neo

*Japan extends $27mln grant to Pakistan ​*
ISLAMABAD: The government of Japan has extended an amount of Japanese Yen 2.5 billion or approximately US $ 27 million, as Non Project Grant Aid to Pakistan for support and contribution to the promotion of the economic structural adjustment efforts by the government as well as mitigation of Pakistan's economic difficulties including indebtedness and balance of payments, APP reported.


The official Exchange of Notes (E/N) to this effect were signed by Ambassador of Japan to Pakistan, Chihiro Atsumi on behalf of his country and Farrukh Qayyum, Secretary Economic Affairs Division (EAD) signed the agreement on behalf of the Government of Pakistan.

According to the agreement the grant shall be used by the government of Pakistan for the purchase of products from eligible source countries to be mutually agreed upon between the authorities of the governments and services incidental to such products.

It was agreed that the government of Pakistan and Japan shall consult each other about the details of the utilization of the funds.

The Non Project Grant Aid (NPGA) is an important assistance that can be delivered quickly and is representing the long term commitment of Japanese government for the development of Pakistan as well as to the stability of the region.

Speaking on the occasion Secretary EAD thanked the government of Japan for their timely assistance to the development of Pakistan.


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## Neo

*Tarin says economic problems easing ​*
Friday, 13 Feb, 2009

ISLAMABAD: Economic woes complicating Pakistans struggle against militancy are easing owing to a tough rescue plan backed by the International Monetary Fund, but the program needs more than a year to succeed, Tarin said.

The perilous state of Pakistans economy - which faced trouble even before the global economic crisis - is raising concern that unemployment and inflation will destabilize the nuclear-armed nations pro-Western government and fan Islamist violence.

Tarin told reporters the countrys budget and trade deficits have already narrowed considerably.

The governments budget deficit will decline from 7.4 percent of gross domestic product in the past fiscal year, to between 4 and 4.2 percent in the current year, Tarin said.

In addition, the nations current account deficit will decline from 8.4 percent to 6.5 percent, he said.

The current account deficit had driven Pakistan to the brink of a currency crash and debt default until the IMF stepped in with a $7.6 billion bailout last November.

Inflation, which touched an annual rate of 25 percent in October, is also declining, Tarin said. The cost of imported fuel has dropped sharply in recent months.

If you see all the indicators, we have achieved an improvement, Tarin said, but added: If you think that turning it around would happen in three months, it will not be in three months. Such turnarounds take 18 months.
Tarin made no forecast for economic growth, which fell from 6.8 percent in fiscal 2007 to 5.8 percent last year and is expected to decline further this year.

The IMF granted Pakistan the emergency loan only after endorsing drastic government reforms. The government has taken a raft of unpopular steps, including slashing subsidies on food and fuel and raising sales taxes to try to balance its books.

Pakistan has more than 160 million people, most of whom are desperately poor.


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## Omar1984

Govt mulls ending cross-subsidy on gas 

Step to help reduce cost of doing business for textile

Saturday, February 14, 2009
By Shahid Shah

KARACHI: In order to cut the cost of doing business for the textile sector, the federal government is considering a proposal to end 12.5 per cent cross-subsidy on gas given to the fertiliser sector, an official said.

Dr Mirza Ikhtiar Baig, Federal Adviser on Textile Industry told The News that the federal government had agreed to waive the cross-subsidy, which would provide benefit to the textile industry as well. Government has to provide a level-playing field to the textile industry. Cross-subsidy of 12.5 per cent would be removed. Thus, gas prices for the textile industry would come down, he said.

The cross-subsidy is provided to the fertiliser sector, while the cost of gas is distributed among other sectors, which increase their utility bills.

Dr Baig said the textile industrys cost of doing business had increased manifold over a period of several years with an increase in mark-up rates, energy prices, raw material and wages.

Pakistans textile sector was nearly 10 to 15 per cent behind other regional competitors including India, Bangladesh and China, he said, who provided research and development (R&D) support to the sector.

Pakistans government rolled back the R&D support this financial year, which increased the cost of doing business here. 

Feroze Alam Lari, Chairman Towel Manufacturers Association of Pakistan said the cost of doing business has also increased because of increase in utility charges manifold in spite of the act that prices of oil are declining in international markets day by day which needed immediate transfer.

He said that R&D claims shipped up to June 30, 2008 be released immediately, pending sales tax refunds be released, duty drawback claims be released and financial issues relating to commercial banks and state bank of Pakistan be resolved to make the business easy for the sector.

The textile and allied industry, in the present political and economical scenario of present Government, is passing through its worst age, particularly after withdrawal of Research and Development (R&D) support. In the absence of this support, at least 30 percent Textile and made-up industry has faced closure leaving behind a large number of workers jobless, said Lari.

He said 90 percent of industry was already operating in one shift instead of three shifts previously which could be easily verified from energy consumption. 

Due to this situation, thousands of workers either have been laid off or are in a queue of lay off, he added.

Pakistan has the most efficient and high technology textile industry, particularly home textile, in South Asia and places its better quality products before the world market compared to neighboring competitors and surrounding region but on the contrary withdrawal of R&D support after 25th June last year, it is crawling and if serious action is not taken from the Government in the context of release of R&D, it would die its own death, which would be the death of countrys exports since textile industry and its export is not only our major foreign exchange earner, but also a labour intensive industry, Lari said.

Although the Government claims that exports are zero rated in the country, but fact is that there is 9 percent indirect, direct and other levies on exports resultantly the cost of doing business is now increasing day by day subsequently in the scenario of international economic crisis.

Govt mulls ending cross-subsidy on gas


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## Neo

*Pakistan seeking increased aid from IMF​*
(RTTNews) - Pakistan is seeking an enhancement in the International Monetary Fund's (IMF) already approved loan of $7.6 billion.

The Pakistan Prime Minister's finance advisor Shaukat Tarin disclosed this on the eve of talks between Islamabad and IMF in Dubai.

"Keeping in view our good performance where we have achieved all targets set by the IMF, Pakistan deserves an increased aid," he told reporters in Islamabad on Friday. However, he added that it's up to the IMF to accept the request for increasing it to $12.1 billion."

The IMF approved a loan of $7.6 billion in November to save the South Asian country from a default on external payments, disbursing $3.1 billion immediately.

The global monetary agency stipulated a set of conditions for the release of the rest of the loan. It requires Islamabad to fulfill the IMF's envisioned targets of reducing the deficit and State Bank of Pakistan's financing of the government, among other tight fiscal and monetary measures.

In Dubai, officials of Pakistani government and the IMF will review financial targets set for the country to qualify for the second installment of $775 million.

Tarin said that the fiscal deficit was controlled at 1.9 per cent of the gross domestic product (GDP) against the set target of two per cent for the first half period of the fiscal year 2008-09.


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## Omar1984

SECP relaxes condition 

Saturday, February 14, 2009
ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has granted relaxation in accounting treatment for equity securities held by the companies under the head Available for Sale as required under International Accounting Standard Financial Instrument: Recognition and Measurement (IAS 39). 

This step has been taken by the commission, in exercise of powers conferred under the Companies Ordinance, 1984 and Securities and Exchange Commission of Pakistan Act, 1997 through SRO 150 (I) 2009 dated February 13, 2009, has granted relaxation, says a statement issued here on Friday. 

This relaxation is valid till December 31, 2009 and has been granted in the light of representations from various stakeholders including the Mutual Funds Association of Pakistan (MUFAP), Insurance Association of Pakistan (IAP), Pakistan Banking Association (PBA), Leasing Association of Pakistan, Modaraba Association of Pakistan, Karachi Stock Exchange and the corporate sector.


SECP relaxes condition


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## Omar1984

KSE recovers following SECPs relaxation in accounting treatment 


Saturday, February 14, 2009
By Salman Siddiqui

KARACHI: Relaxation from market regulators on accounting standards in accordance with the local demand helped the Karachi bourse bounce back on Friday.

KSE 100-share index posted a notable recovery of 226.54 points or 4.20 per cent and closed at 5,625.90 points. Its junior partner, the 30-share index, rose by 283.26 points or 5.25 per cent and concluded at 5,681.89 points. 

Analysts said the notifications from the Securities & Exchange Commission of Pakistan (SECP) and the State Bank of Pakistan (SBP) to allow companies listed at the local bourses to show impairment-losses on bourses in equity held for sale instead of showing them in net profit & loss accounts for one year period revived positive sentiments. 

The notification helped turn the stock market indicators into positive, as the day turnover, positive closing stocks, market capitalisation and indices-points; all turned higher. Trading activity jumped up by 81 per cent to 162.430 million shares on the ready market as compared to 89.798 million shares changed hands a day earlier. However, no activity was seen in the future market as usual. The overall market capitalisation increased by Rs66 billion and stands at Rs1,766 billion as compared to Rs1,700 billion yesterday. Moreover, out of total 267 actives, the number of positive closing companies stands at 203 against 43 fell in red regions, while the value of 21 stocks closed unchanged. 

Ahsan Mehanti at Shahzad Chamdia Securities said intense buying was witnessed following the SECP relaxed treatment for impairment of capital losses & its direct change to equity instead of profit & loss account. Investors sentiment remained positive throughout the trading session as the improved profitability is likely to be witnessed after amendment made by the SECP, he added. 

Hasnain Asghar Ali at Aziz Fidahusein said in a response to the Competition Commission of Pakistan (CCP) reservations regarding International Accounting Standards-39 (IAS-39) by the SECP and a positive response by India and other international countries over investigations of the last Mumbai attack all of these factor invited a fresh wave of confidence; local and corporate participants actively accumulated main board stocks of almost all the sectors. 

Technical recovery after four bearish sessions found support from the news regarding acceptance of amendments proposed by the financial institutions regarding routing of impairments, and the index managed to breach the psychological 5,500 points, quite comfortably, he added. Confirmation of the development did invite celebration, the main board stocks made it towards the upper locks, as the relaxation forced the sellers to go on back foot. Issues of liquidity however led to profit-taking, change in sentiment however made possible change of hands on strength. Further development on initiative by the SECP regarding activation of the ready market leverage tool, positive response by annoyed neighbour(easing of ties with India), can certainly allow the local players to actively participate in the discounted local bourses. 

Bank Al-Falah was the day volume leader with 21.484 million shares closed at Rs13.15 with a gain of 94 paisa followed by NIB Bank with 16.926 million shares closed at Rs5.43 with a gain of 61 paisa, JS Company with 11.032 million shares closed at Rs32.19 with a gain of Rs1.53, Oil & Gas Development Company with 10.050 million shares closed at Rs51.38 with a gain of Rs2.44 and Pakistan Telecommunication Company with 8.454 million shares closed at Rs15.76 with a gain of 73 paisa. 

KSE recovers following SECPs relaxation in accounting treatment


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## Omar1984

Govt suggested to stop LPG wastage 

Experts oppose tax concessions on gas import

Saturday, February 14, 2009
By Mansoor Ahmad

LAHORE: Petroleum experts have suggested to the government to stop wastage of 800 tons of liquefied petroleum gas daily and opposed tax relief for gas import.

They have expressed concern over governments intention to facilitate import of LPG through tax concessions or levy of more taxes on local producers instead of securing 800 tons of gas being wasted daily by burning it into the air.

Experts inform The News that the natural gas supplied by the two distribution companies of the country is pure methane gas. The gas extracted from different fields contains traces of vapours of other combustible gases which have to be separated from methane gas before pumping it into the gas distribution network. The LPG, they say, is a mixture of these gases.

The News has found that the country currently produces 1,500-1,600 tons of LPG daily. During summer, this gas is usually sufficient for local needs while in winter it is in short supply which is bridged through imports.

Some importers allege that local LPG producers manipulate prices to discourage imports. LPG imports have never exceeded 4,500 tons.

The experts point out that the natural gas produced from different gas fields is purified to make pure methane either by producing LPG or burning the vapours of other gases in the air. Unfortunately, the successive governments have let the precious LPG gases burn. Gas vapours of Badin oil field were allowed to burn for 12 years before Jamshoro Joint Venture Limited established an LPG plant which produces 500 tons daily. The plant is operating at 98 per cent efficiency.

The plants being run by state-controlled Oil and Gas Development Company operates at 65 per cent efficiency. They say the OGDC currently produces 1,000 tons of LPG daily and by improving its efficiency it could add another 330 tons from its existing plants.

Moreover, they say there are still many gas fields where instead of converting gas vapours into LPG they are being burnt so that pure methane is injected into the natural gas distribution system. The experts suggest the government should invite applications for establishing plants at these gas fields through a transparent process as it would lead to additional production of 500 tons of LPG.

The JJVL plant became operational only 11 months after the award of licence to establish an LPG production unit. The new LPG producing plants could be established in a year or so if the government moves with right speed and then there would be no need to import LPG, they say.

The News has learnt that the government is mulling over ways to facilitate import of LPG either by increasing the price of local gas through additional levies or by waiving general sales tax on imported LPG. This step, if implemented, would perhaps be the first instance where importers would have an advantage over local producers. The experts point out that even if the government wants to increase use of LPG, it should first exploit its production potential before facilitating imports.

Many investors are eager to invest in LPG plants. In fact, when the OGDC invited tenders for establishing an LPG plant on one of its gas fields the response was so strong that the successful bidder paid the company a non-refundable amount of Rs250 million. More LPG producing plants could be established in the same manner instead of supporting imports.

Govt suggested to stop LPG wastage


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## s90

*Economic indicators improving: PM* 

ISLAMABAD: Prime Minister Yousuf Raza Gilani said on Friday that despite global recession, economic indicators in Pakistan were showing signs of improvement and this would help the government to provide relief to the masses.
Talking to reporters after attending a briefing on economic situation and development at the Planning Commission, Gilani said the global economic meltdown had affected Pakistan, but it had managed to meet IMF&#8217;s targets.


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## opinion786

One more Economic website with facts: Economic Pakistan 

Pls give suggestions how to improve it. Regards!

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## opinion786

This is a wonderful page and I really thank NEO for maintaining it! Best Wishes!

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## Neo

*Remittances may help meet dollar demand ​* 
Saturday, February 14, 2009

KARACHI: There will no immediate negative implication of the governments decision to stop State Bank of Pakistan (SBP) from providing dollars for oil imports as remittances by overseas Pakistanis have improved, industry people told The News.

Commercial banks will easily meet the requirement as stability in the rupee-dollar parity has dimmed prospects for speculation which led to a shortage of dollar in the recent past, foreign exchange dealers said.

We will have to wait and see how the market (banks) manages the dollar supply, said an oil industry executive. But I dont think there will be any severe repercussion.

The State Bank of Pakistan discontinued provision of dollars for furnace oil imports from Feb 1 as part of an IMF loan requirement which says the market should meet the foreign exchange needs for trade.

The central bank will stop dollar supplies for import of diesel and other refined products from August 1 and by next year payments for crude oil imports will also be the business of commercial banks. This has raised concern that the inter-bank market could come under pressure and the dollar might go up against the rupee, creating problems for oil importers.

The government had assigned the responsibility of making payments to the SBP last year after the market started facing a crunch. Haji Haroon, a foreign exchange dealer said, there is little chance of that happening again. There is no panic in the open market now and we dont expect to see that either.

He said that the dismal performance of the stock market and property sector has made investors skeptical about investing in foreign exchange. Economic indicators have also been improving and the flow of foreign direct investment and remittances will help stabilise the countrys foreign exchange reserves further.

The central bank projects that the current account deficit will shrink to $3.9 billion in six months (Jan-June 2009) from $7.3 billion in the first half. This will help foreign exchange reserves exceed $13 billion by the end of June, compared to $10.2 billion at the end of January, a Standard Chartered report said.


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## Neo

*Philippines may become major buyer of Pak rice ​* 
Saturday, February 14, 2009

LAHORE: Philippines Ambassador Jaime J Yambao has said his country, with a dynamic consumer market, has unlimited scope for Pakistani businessmen dealing in pharmaceuticals, rice, textile yarn, leather and fresh fruits particularly oranges.

Speaking at the Lahore Chamber of Commerce and Industry on Friday, the ambassador said the Philippines would continue to be a heavy importer of these products. It could be a major buyer of rice from Pakistan in near future as it does not have an enormous natural irrigation system.

He said opportunity areas for business with the Philippines were based on upward trend in exports including electronics, construction material, marine products, organic and natural products, home furniture, giftware, auto parts and components, IT and IT-enabled services.

Yambao said there was a need to activate a framework of agreements on trade and economic ties, adding the great potential for expansion in trade and economic relations could be successfully tapped through increased contacts between the business sectors. The Philippines embassy is committed to facilitating these contacts.

He said the Philippines was an open economy and allowed 100 per cent foreign ownership in all sectors. Government corporations were being privatised and banking, insurance, shipping, telecommunications and power industries had been deregulated.

The envoy said there was a dire need for business communities of the two sides to join hands for joint ventures as Manilas trade with Islamabad constituted less than 10 per cent of its trade with the world.

Speaking on the occasion, LCCI President Mian Muzaffar Ali assured the ambassador of full cooperation in increasing the volume of two-way trade. Despite an increase of 169 per cent in trade between the two countries over the last four years, he said, both had a lot of potential to expand trade.

He said Pakistans major exports to the Philippines included cotton, cereals and pharmaceutical products, but these formed a very little segment of the Philippines total imports of these commodities from the rest of the world.

Pakistan is one of the largest producers of cotton and rice in the world. The aroma and quality of rice is superb. He said Pakistan could increase its imports of vehicles, machinery, electrical and electronic equipment and mineral fuels from the Philippines.

The LCCI president said being an agrarian economy, ample opportunities were available in the food processing sector. Pakistan is deficient in post-harvest technology and would welcome transfer of technology from Manila through joint ventures, he added.


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## Neo

*Iran to provide 1,100 MW to Balochistan industrial estates ​* 
Saturday, February 14, 2009

QUETTA: Minister of State for Industries and Production Dr Ataullah Durrani on Friday said that Iran had agreed to provide 1,100 megawatt power to six industrial estates being set up in Balochistan.

Addressing a press conference here, he said the Iranian assistance would greatly help flourish industrial culture in the province, which would, on the one hand, attract private investment to various sectors while, on the other hand, eliminate unemployment in the province to a considerable extent.

He said the federal government was determined that Balochistan should be the chief beneficiary of the Gwadar Port and in this regard, it might withdraw all the agreements reached by the previous government wherein in the provinces interests regarding the port had been undermined.

He said the PPP government was fully conscious of the injustices done to the province in the past and committed to its compensation by extending maximum financial assistance to the province, so that it could overcome its backwardness.

Expressing gratitude to President Asif Ali Zardari and his team for writing off all the State Bank loans against the province, he said those loans had been obtained by the previous provincial governments, and the incumbent federal government, keeping in view the financial hardships of the province, had waived off all the loans in order to empower the province financially.

A huge amount of the provincial budget used to go under debt servicing to the State Bank, disabling the provincial government to implement several public service schemes. He, however, said the step would certainly end the financial crisis of the province, enabling it to expand its public sector development programme, so that no human settlement across the province remained deprived of fruits of development.

The minister rejected the impression of shortage of wheat and fertiliser in the province and said the department concerned had ensured sufficient fertiliser stock at all its utility stores and agriculture centres across the province.

Farmers could purchase the urea they needed from these stores on subsidised rates, he said, adding that the provincial Food Department had sufficient reserves of wheat, which could cater for the need of the province.

He said the federal government would ensure the availability of urea to the province in accordance with its needs. To a question regarding the smuggling of wheat and urea to Afghanistan from the province, the minister called for the people to help the government overcome smuggling from the province.


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## Neo

*Compliance with IMF targets: MoF keeps budget deficit at 1.9 percent of GDP​*
ISLAMABAD: To ensure strict compliance with International Monetary Fund (IMF) targets, the Ministry of Finance (MoF) has been able to keep the budget deficit at Rs 259 billion or 1.9 percent of the Gross Domestic Product (GDP) during the first half (July-December period) of the current fiscal year 2008-09, official sources told Daily Times on Friday.

MoF had projected to keep the budget deficit at 2 percent of the GDP during the first half of current fiscal year 2008-09 and actual deficit has been estimated at 1.9 percent of the GDP, the limit agreed with IMF.

Budget deficit has witnessed a decline by 27.24 percent during first half of the current fiscal year with a total deficit at Rs 259 billion as against the deficit of Rs 356 billion recorded during same period of last fiscal year 2007-08. 

The government has decided in the Economic Stabilisation Programme to adhere to the fiscal deficit target reverently and during the first half the fiscal deficit hovered around 1.9 percent of the projected GDP for 2008-09, which is consistent with the annual fiscal deficit target of 4.2 percent. 

The fiscal improvement in the first half is largely based on reduction of oil subsidies and a cut in development spending. All meaningful efforts to expand revenues particularly by broadening the tax base will only work in the medium-term. The faster growth of 35.5 percent in the total revenues is more than off-set by even faster growth of 25.2 percent in the current expenditure.

The financing patterns of fiscal deficit remained dominated by the banking system, which financed 66 percent of the fiscal deficit and only 29 percent were financed by the non-bank sources. The government remained well ahead of the SBP financing limit allowed by the Economic Stabilisation Programme. On the external inflows to finance, the deficit remained negligible at Rs 12 billion only.

According to the IMF Stand By Arrangement (SBA) Letter of Intent, fiscal deficit would be brought down to 4.2 percent of the GDP as against the budgetary target of 4.7 percent of the GDP in the current fiscal year 2008-09; similarly, the deficit would be further reduced to 3.3 percent of the GDP in next fiscal year 2009-10.

At the time of the announcement of the budget, budget deficit was projected at Rs 582 billion and later this projection was changed to Rs 562 billion for the full fiscal year 2008-09. The budget deficit was projected at Rs 262 billion for the first half (July to December period) of this fiscal year and actual deficit was registered at Rs 259 billion, the official added. 

The MoF has estimated that the growth in GDP on current market price basis would decelerate and end up at $163.2 billion against the target of $186.1 billion fixed for the current fiscal year 2008-09. 

Current Account Balance: Pakistans current account deficit expanded by 20.1 percent during July-December 2008. Current account deficit widened to $7.3 billion as against $6.1 billion last year.


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## Neo

*Poverty rate jumps to 37.5 percent from 23.9 percent in three years ​* 
ISLAMABAD (February 14 2009): Pakistan's poverty rate jumped from 23.9 percent to 37.5 percent in the course of three years after severe economic shocks hit Pakistan, Planning Commission officials told Prime Minister Yousuf Raza Gilani in a briefing on Friday. It said that Pakistan needs aggressive development plan focusing on food security, poverty and supply side challenges.

*Officials said that over 64 million people, out of 160 million population, has plunged into the poverty pool. Sharp increase in unemployment has led to vulnerability of poor households. The presentation made by Planning Commission said, "Slow economic growth, sudden external shocks resulted in high inflation and shortages impacting on cost of doing business, and plunged 64 million population bellow the poverty line from 35.5 million people in 2005".*

According to the presentation, 40 percent of the urban population lives in Kachi-Abadies/slum areas. Slashing social sector spending is increasing poverty and has reduced the standard of living in the country. Pakistan's position in human development index is 136 out of 177 countries--even below Maldives and Bhutan in South Asian region.

During first six months of current fiscal year the government spent only 19 percent from total allocation of Rs 371 billion of federal public social development program, lowest until 2005. This federal level PSDP has already been slashed by Rs 100 billion in addition to envisaged operational shortfall at Rs 77 billion.

In the first half of last fiscal year the government had released Rs 132.6 billion, which is 39.6 percent of total allocation of Rs 371 billion. Break-up of PSDP releases shows Rs 166 billion (45 percent) for infrastructure development, the social sector has been given highest priority with an allocation of Rs 188 billion and or 51 percent of the fund. Other departments (Agriculture, Industry, Minerals) have been allocated Rs 17 billion.

After six months social sector suffered a major cut as out of Rs 100 billion cut in development spending Rs 79.5 billion was 'through forward' from social sector projects, while 'through forward' for education sector is Rs 20 billion and for health Rs 39.7 billion for next year.

To meet IMF 4.2 percent fiscal deficit condition, major cut came on development budget. In addition to this, Planning Commission has already asked ministries to prioritise their project in A, B & C categories. The Planning Commission document said that achieving IMF conditions ultimately would lead to ignoring social sector spending. This would land Pakistan in a situation where it would be missing most of the UN Millennium Development Goals (MDGs).


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## Neo

*Economic indicators showing positive trend: Prime Minister​* 
ISLAMABAD (February 14 2009): Prime Minister Yousuf Raza Gilani has said that economic indicators are showing positive trend, and pledge to provide relief to the masses. He was talking to newsmen after taking a briefing from the Planning Commission (PC) about its strategy towards overall development in the country. He said that the financial meltdown had hit the entire globe and not only Pakistan.

About reduction in petroleum products prices, he said that the government for the first time in Pakistan's history had reduced the prices. About Swat situation he said that military action alone was not the solution to the problem. Pakistan has met International Monetary Fund (IMF) targets, he added. Meanwhile, a statement said that the Prime Minister underlined the need for all-out efforts to ensure merit and transparency in every area of national development.

He said that no country could make progress without good governance as this is the key to success and without observing these norms it is not possible to achieve the desired results. He said the people have given the party the mandate for change and there is huge responsibility lying on it to come up to their expectations.

The Prime Minister said this while chairing a meeting to review the performance of the Planning Commission and progress of various projects at the planning commission. The Prime Minister directed the Planning Commission to incorporate nine-point economic agenda in the planning fold which had already been approved by the Cabinet taking all the stakeholders on board for ensuring better co-ordination and implementation.

He said that he would hold a quarterly meeting to review the status of the projects. He also directed that all future planning should focus on areas which could bring about positive change in the lives of the people through socio-economic development. The Prime Minister also directed the Planning Commission to adopt proactive approach while envisaging various projects for securing more FDIs for infrastructure development with a view to alleviating poverty from the country.

He further directed for close co-ordination with all ministries while monitoring of the GOP projects and underscored the need to avoid duplication and overlapping of work as it would not only prove counter-productive but would also cause waste of public money.

He directed the Planning Commission to induct a woman as member in the task force to ensure representation of this important segment comprising over 50 percent of the population. The Prime Minister said that foremost priority areas before the government are to address law and order situation and the economic crisis as both are interrelated.

He said that more funding was being earmarked for infrastructural development and poverty alleviation in the country. He also asked the Planning Commission that it should formulate policies which have the capacity to absorb both internal and external shocks at the time of crisis. He said despite global economic recession, Pakistan's economy has now started showing positive results. He said that not only the inflation has reduced but other economic indicators were also showing improvement. He said that this became possible only due to prudent economic policies introduced by the present government.

Adviser to PM on Finance Shaukat Tareen told the media that the government had taken some tough decisions for betterment of the economic situation. These measures would take some time to bring about improvement in the economy, he added.

Deputy Chairman of Planning Commission Assef Ahmed Ali later told reporters that the Prime Minister was briefed about the Rs 600 million National Human Resource Development program aiming at training around 0.25 million highly skilled technicians annually. He replied in the negative about any cut in the Public Sector Development Program and said that projects worth Rs 100 billion would be thrown forward under the rationalisation program.


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## Neo

*23.66 percent rise in SPI recorded ​* 
ISLAMABAD (February 14 2009): Inflation has been swelling as Sensitive Price Indicators (SPI) surged by 23.66 percent on February 12 over the same week of last year, said Federal Bureau of Statistics (FBS) on Friday. Official figures released by the FBS showed rise in inflation during the week as it went up from 23.11 percent of previous week to 23.66 percent.

An increase of 0.65 percent in SPI inflation was recorded during the week following rise in the prices of 20 essential commodities. With this rise in inflation, the dearness for the low-income group with Rs 3000 monthly income increased to 23.38 percent during the week, followed by 23.98 percent for Rs 3000 to Rs 5000 income group.

Inflation was recorded 24.85 percent for families falling in Rs 5001 to Rs 12000 income range, and 23.38 percent for above Rs 12,000. The combined SPI indices for all income groups went up from 204.79 last week to 206.12 this week. The SPI bulletin showed that prices of 20 essential commodities increased during the week, declined in 13, and prices of 20 essential commodities remained stable.

The price of per kg onions increased to Rs 26.98 from Rs 22.95, egg hen (farm) dozen to Rs 59.88 from Rs 53.44, chicken (farm) kg to Rs 112.98 from Rs 102.67, tomatoes kg to Rs 28.06 from Rs 26.70, electric bulb 60 watts each to Rs 15.03 from Rs 14.75, bananas dozen to Rs 35.81 from Rs 35.15, tea (prepared) cup to Rs 8.68 from Rs 8.56, mutton kg to Rs 261.48 from Rs 258.63, firewood 40 kg to Rs 270.93 from Rs 268.28, LPG (11 kg cylinder) each to Rs 844.65 from Rs 837.59, rice Irri-6 kg to Rs 36.49 from Rs 36.32, washing soap nylon cake to Rs 12.71 from Rs 12.65, vegetable ghee loose kg to Rs 99.02 from Rs 98.60, beef kg to Rs 144.00 from Rs 143.41, cooked beef plate each to Rs 40.77 from Rs 40.65, wheat average quality kg to Rs 24.48 from Rs 24.42, cooked dal plate each to Rs 25.87 from Rs 25.82, wheat flour average quality kg to Rs 24.56 from Rs 24.54, curd kg to Rs 43.28 from Rs 43.25, milk fresh litre to Rs 36.54 from Rs 36.53.

However, price of per kg potatoes during the week declined to Rs 13.22 from Rs 13.98, gram pulse washed kg to Rs 59.38 from Rs 60.55, garlic kg to Rs 41.74 from Rs 42.49, sugar kg to Rs 42.07 from Rs 42.71, gur kg to Rs 46.07 from Rs 46.46, masoor pulse washed kg to Rs 126.57 from Rs 127.43, rice basmati broken kg to Rs 44.45 from Rs 44.67, kerosene liter to Rs 63.71 from Rs 64.01, red chillies kg to Rs 132.95 from Rs 133.51, mustard oil kg to Rs 141.28 from Rs 141.62, cooking oil (tin) 2.5 liter to Rs 351.15 from Rs 351.44, moong pulse washed kg to Rs 48.14 from Rs 48.16, mash pulse washed kg to Rs 76.19 from Rs 76.21.


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## Neo

*Islamabad to ask IMF to raise loan to $12.1 billion ​*
ISLAMABAD (February 14 2009): Pakistan is to ask the International Monetary Fund (IMF) to raise its approved loan of 7.6 billion dollars to 12.1 billion dollars during talks with the organisation opening in Dubai on Saturday, a official said on Friday.

"Keeping in view our good performance where we have achieved all targets set by the IMF, Pakistan deserves an increase," the prime minister's finance advisor Shaukat Tarin told reporters in Islamabad. "But it's up to the IMF whether they accept our request or not." Officials and the IMF authorities will review financial targets set for the country to qualify for the second tranche of 775 million dollars of the 7.6-billon-dollar programme that was approved in November 2008 to save the country from a default on external payments.

The 23-month standby loan gave Islamabad 3.1 billion dollars immediately, with the rest to be phased in over the course of the period if Islamabad manages to fulfil the IMF's envisioned targets of reducing the deficit and State Bank of Pakistan's financing of the government, among other tight fiscal and monetary measures.

Tarin said that the fiscal deficit was curtailed at 1.9 per cent of the gross domestic product (GDP) against the set target of two per cent for the first half (July-December) period of the fiscal year 2008-09. The current account deficit, which stands at 2 billion dollars per month, is now reduced to 500 million dollars as a result of various measures. The borrowing from the central bank, has been reduced from 258 billion rupees (3.26 billion dollars) to 204 billion rupees (2.59 billion dollars) until the end of December 2008.

"The stabilisation of the economy has slowed down the economic activities and turnaround cannot be achieved overnight. But were doing well and that is why we expect an increase from IMF," Tarin said. Pakistan, a key ally of the West in the war against terrorism, is witnessing deteriorated law and order with growing militancy in its volatile tribal areas, affecting foreign investment. The country approached the IMF last year for a rescue package as it grappled with a 30-year high inflation rate and fast-depleting reserves that held barely enough to cover nine weeks of import bills.


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## Neo

*EU likely to lift anti-dumping duty from Pakistan's bed linen​* 
KARACHI (February 14 2009): European Union (EU) is likely to lift the anti-dumping duty on Pakistan's cotton bed linen (cotton type) from March 5 this year, which it had imposed after finding dumped imports of the product in its markets in 2004.

Well-placed sources in Trade Development Authority of Pakistan (TDAP) told Business Recorder that EU had imposed a definitive anti-dumping duty on imports of bed linen originating in Pakistan in line with the council regulations (EC) No 384/96 on March 2, 2004.

The date of anti-dumping duty is expiring on March 5 this year, which is expected to take place, as there are no such objections the EU has so far raised, they said. When contacted the advisor to Chief Minister Sindh on Investment Zubair Motiwala said there are hopes that the duty would on Pakistani bed-linen products would be removed. He said that if the duty is removed the annual exports of home-textile products would increase by some $400-500 million to EU.

He was of the view that EU has erected non-tariff barriers to impede Pakistani products to its markets like the countervailing duty, which is unjustified. He elaborated that the EU had done this to protect its local industries producing the same products from injuries and carried out an audit on every company's product retail price.

Consequently it slapped different scales of penalties on those Pakistani exporting units which it found involved in dumping of products, he added. Motiwala pointed out that import duty is scaling between 13 per cent and 17 per cent in the EU markets, the additional duty from 1 per cent to 13 per cent was a penalty for dumping of the products, which is now likely to be removed from March 5.

The only country of the region Bangladesh is not having such barriers for its exports in the EU because it bears a status of the least developing country (LDC), he added. TDAP sources said that the EU had invited further objections prior to expiry of the date, but so far none of the members of EU has raised any objections to have the EU review its decision.

The EU undertook proceeding on a complaint lodged in November 2002 by the committee of the cotton and allied textile industries of the European Communities on behalf of producers representing a major proportion of the total community production of cotton-type bed linen.

It contained prima facie evidence of dumping of the said product and material injury resulting therefrom, which was considered sufficient to justify the initiation of an anti-dumping proceeding, they said as quoting the EU report. Motiwala said that difference in retail price of the same product in its originating country and the EU markets could not be held justifiable for imposing such harsh duties.


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## Neo

*Trade volume with UK registers 17 percent increase: Gibson​* 
SIALKOT (February 14 2009): British Deputy High Commissioner to Pakistan Robert Gibson has said that the trade volume between Britain and Pakistan has increased by 17 percent despite certain hindrances, which is an encouraging sign. Speaking to the members of Sialkot Chamber of Commerce and Industry (SCCI) on Thursday evening here he expressed the confidence that trade between both the countries would be increased further.

The "Trusted Partner Visa" has temporarily been suspended which would hopefully be restored in due course of time to facilitate the visa seekers Robert Gibson revealed. The Deputy High Commissioner further informed the house that we had also reviewed the travel advisory under which Northern areas are still sensitive while other regions of Pakistan are safe. The "Visa Hubs" have been established in various areas to minimise the expenditures as well as to facilitate visa applicants he disclosed.

President SCCI Hassan Ali Bhatti in his address of welcome said that Pakistan and United Kingdom are enjoying highly cordial and friendly relations, which would be further cemented with the passage of time. Bhatti further said that Pakistan's strategic location offers immense potential for Foreign Direct Investment (FDI) adding that Pakistan is a key market having a population of 160 million.

Pakistan has close diplomatic and economic relations with United Kingdom and these ties exist in several socio-economic fields he said. Hassan Bhatti pointed out that British High Commission has changed the system of visa application and under the new system the applicants have to get appointments on telephone which is time consuming and expensive. The SCCI president underscored the need of increasing telephone lines and cost factor calls be taken into account to facilitate especially the business visa applications in getting appointments.


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## Neo

*'Bilateral trade should not be interlinked with disputes'​* 
LAHORE (February 14 2009): The President Punjab Economic Forum Engr. Sohail Lashari has said the Indian should not link bilateral trade with the Mumbai attacks. Lashari, in a statement issued here on Friday, said that whenever Pakistan termed the Kashmir dispute as a core issue between the two countries and stressed for its solution according to the UN Resolutions for sustainable bilateral relations and trade, "the Indian authorities rejected the Pakistani stance, saying that Kashmir and bilateral trade should not be inter linked."

In line with the similar approach, the Indian should not link the trade with the Mumbai attacks, he added. He urged the Indian government to consider the common interest of the local as well as regional development and said that bilateral trade should not be inter linked with the disputes rather it should take measures to root out causes of such attacks and mistrust it follows.

The PEF President said the Indian government should realise the ground realities and resume comprehensive dialogue with Pakistan for peace and prosperity of the world as both countries have lot to share to uproot poverty and to provide food for every citizen, which is basic human right and a major challenge. No nation could prosper without having good relationship with its neighbours, he said.


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## Omar1984

Buyers remain active at cotton market

KARACHI: The Karachi cotton market witnessed a moderate trading sessions during the week, as buyers remained active in the ring despite higher spot rate and strong physical prices, traders said on Saturday. The local cotton market absorbed the international decline in the commodity price without shaking its posture and witnessed the unabated buying even on slightly higher rates above spot price during the trading session. A senior member of KCA, Ghulam Rabbani said leading buyers purchased lint of all qualities while fine lint fetched slightly higher price around Rs 3,460 per maund and private sector commercial exporters consolidated their long positions during trading sessions. He said a local ginning unit in Shahdadpur made history for selling more than 100,000 bales during June-January 2009. It shows the market stability and buying spree despite influence of international recession on all commodities. He said, The main feature circulating in cotton circles is when the global consumption will eventually bottom. The weak US economic data continued with falling US equity markets gives little indication of any stabilisation in cotton off-take in the near-term. Rabbani said 2008-09 world mill use is estimated at 112.6 million bales, down 2.6 million bales from January. Similarly, 2008-09 world production is estimated at 109.5 million bales, down 330,000 bales from January. Her said 2008-09 US mill use is at 3.9 million bales, down 300,000 bales from January and down 710,000 bales from the 2007-08 crop. He said 2008-09 China mill use is estimated at 47.0 million bales, down 1.5 million bales from January and 2008-09 China imports are estimated at 6.5 million bales, down 1.0 million bales from January. On Saturday, the spot rate at KCA remained firm and the settlement was declared at Rs 3,400 per maund with fine lint in focus. Trading Corporation of Pakistan is still engaged as the second player in the buying market, but slowed down its buying. 

International market: Demand for cotton yarn from Pakistan is relatively low on the international market. A weak level of interest is being reported from the Far East and Europe. Yarn exporters are now being asked to lower their prices although confronted with higher cotton prices on Pakistans domestic market. According to USDA, the US exports net sales of 3,000 bales for delivery in 2009-10 were for Mexico (2,100) and South Korea (900). Exports of 162,000 bales were down 17 percent from the previous week and 6 percent from the prior 4-week average. The primary destinations were China (59,00), Mexico (16,400), Indonesia (13,500), Bangladesh (12,600), Pakistan (10,600) and Chile (9,100). Net American PIMA sales of 14,400 bales, a marketing-year high were mainly for India (9,300), China (2,600) and Turkey (900). Exports of 4,900 bales were mainly to Indonesia (2,000) and India (1,800). staff report

Daily Times - Leading News Resource of Pakistan


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## Omar1984

SECPs positive stance keeps KSE buoyant

KARACHI: The Karachi stock market managed to close the week in the positive territory amid intense buying activities as the Securities and Exchange Commission of Pakistan (SECP) relaxed treatment for impairment of capital losses and its direct charge to equity instead of profit and loss account, analysts said on Saturday.

Another major factor that influenced the market was investors positive sentiment on the last trading day of the week as improved profitability is likely to be witnessed after amendment made by SECP.

The Karachi Stock Exchange (KSE) 100-share index gained 20.48 points or 0.5 percent to close at 5,625.90 points as compared to 5,597.42 points of the previous week. The average turnover was recorded at 144 million shares as compared with previous weeks 177 million shares, recording a decline of 19 percent. 

Analysts said activity at the KSE remained dull during most days of the week as the IAS-39 regulation requiring companies to write down their AFS investment to current market value led to confusion amongst the investors concerning the possible decline in their investment returns. The confusion eased when SECP finally issued a circular granting relaxation in the accounting treatment for AFS securities held by the companies.

Investors sentiment remained mostly perplexed as negative news regarding decline in refineries off-take and the countrys oil production as well as the uncertainties regarding IAS-39, clouded the market. 

Moreover, increase in the trade deficit of 43 percent led to confusion regarding Pakistans ability to meet the targets set by the IMF. On the positive side, inflation eased off by a massive 280 bps in Jan-09 coming down to 20.52 percent.

Analyst at JS Research said Pakistans benchmark 100-share index recovered on Friday amid release of SECPs circular granting relaxation on IAS-39. The market, which had remained largely in the red zone during the week, recovered 227 points on Friday to close at 5,626 points. 

Selling pressure from off-shore investors continued during the week as foreigners bought shares worth $14.0 million and sold worth $23.6 million, resulting in net selling of $9.6 million. After a gap of a month, net buying was recorded on Wednesday amounting to $0.4 million. The cumulative net selling after lifting of the price floor has now reached $189 million. 

Result announcement of MCB Bank has been deferred to the coming week as clarification of IAS-39 was sought. Along with MCB Bank, HBL and AKBL are other banking announcements next week. Moreover PSO, ICI and Fauji Cement would be announcing their results in the coming week.

Analysts said reduced foreign selling and discounted scrip prices changed investors sentiment positively whereby investors took positions in oversold scrips. staff report


Daily Times - Leading News Resource of Pakistan


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## Omar1984

R&D support improved textiles quality,but efficiency remains low 

Ikhtiar Baig says 30pc material wasted in finishing

Sunday, February 15, 2009
By Shahid Shah

KARACHI: Pakistani textile sectors efficiency remains low in the region despite Rs20 billion annual Research and Development (R&D) support by the government. The R&D facility was withdrawn in financial year 2008-09, but the support could not achieve its goals set earlier.

The R&D support covered product development, skill development and training, upgrading of information technology and professional consultancy.

In 2005, the government decided to provide Research and Development support to units manufacturing and exporting textile garments at the rate of 6 per cent of the value of the exports to EU and USA.

In June last year, the government decided to withdraw this support. No claims have been approved after June 25, 2008. But the exporters demand it till June 30, 2008 as they say it was according to the legal orders.

The R&D support was given to the sector under agreement in the WTO regime that required high standard of Pakistani goods.

The support was given to textile as well as leather manufacturers and exporters. It was given 6 per cent on the value of export to the US and European Union on garments and 3 percent on fabric export. 

The R&D support of Rs12 billion was given to textile garments, Rs8 billion on home textile bed linen and Rs0.7 billion on denim. 

Earlier this week, Federal Minister on Textile Industry Rana Muhammad Farooq Saeed Khan told textile exporters that government had agreed to provide claims from June 25 to June 30, 2008, which becomes around Rs4.5 billion. However, the Pakistan Peoples Party responsible people remain divided over the role the textile sector has played. Some of them place allegations against the textile exporters that they filed fake claims under R&D and actually no proper research and development took place. 

Taj Haider, PPP leader and former senator said that Pakistani textile owners should improve on standards. They sell one T-shirt for a dollar, at the same level some people from Lahore are selling it for 8 dollars, he said. 

Several shipments return because of the low quality.

Dr Mirza Ikthiar Baig, advisor to federal government on textile industry, said the R&D support was made available for research and to some extent to cut down high cost of doing business, which had increased over the years due to increase in bank mark ups, utility bills and raw material. 

Pakistans regional competitors Bangladesh, India and China are providing R&D to their industry leaving Pakistan a lead of around 15 percent in the cost of doing business.

After R&D support, quality of Pakistans products has improved, but efficiency remains low. Quality is not issue, efficiency is low - waste percentage has increased, said Dr Baig.

Worlds top brands Nike, Levis, Wal-Mart, Target, JC-Penny, VF, H&M and Marks & Spencer are working in Pakistan for several years. This shows their trust over Pakistans textile and apparel industry. 

Dr Baig said labour productivity was very low in Pakistan. Our regional competitors took 75 minutes to complete and produce one piece whereas we took 133 minutes for the same work, he said. We also waste 30 percent in finishing and 12 percent in washing. 

The countries with more support from their governments have been able to give tough time to their competitors. China topped the US market with a share of 36 percent followed by Bangladesh 21 percent, India 18 percent, Morocco 19 percent, and Pakistan 13 percent. Korea, on the other hand, lost 20 percent USA market share. Similarly, in the European market, China topped to gain 29 percent with Vietnam 28 percent, India 19 percent and Pakistan only 1.5 percent whereas Philippines lost 11 percent.

People in the textile industry say that it was passing through the worst times especially after withdrawal of R&D support. At least 30 percent Textile and made-up industry has faced closure leaving behind a large number of workers jobless. 90 percent of industry is already operating in one shift instead of three shifts previously.

Thousands of workers either have been laid off or are in a queue of lay off. If serious action is not taken from the Government in the context of release of R&D, it (the textile sector) would die its own death, said Feroze Alam Lari, Chairman Towel Manufacturers Association of Pakistan.

R&D support improved textiles quality,but efficiency remains low


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## Neo

*Rs75bn fund in offing to bail out PSO: FBR ​* 
Sunday, February 15, 2009

KARACHI: Chairman Federal Board of Revenue (FBR) Ahmed Waqar has said that a fund worth Rs75 billion is being set up to bail out Pakistan State Oil (PSO) from the financial crunch.

He was speaking to members of Korangi Association of Trade and Industry (KATI) at a luncheon meeting on Saturday at KATI office.

Chairman FBR said that the fund would be constituted by the end of this month, which would help PSO pay its debts and further make payments to refineries.

Waqar said that efforts are being made to bring wholesale, retail and service sectors into tax net, adding the FBR would be able to collect revenue of Rs1,300 to Rs1,360 billion by the end of this fiscal year.

He said that those who are in the tax net and paying their taxes should not be worried about any of the FBR initiatives. He said the FBR is considering paying surcharge along with sales tax refund if it fails to pay the refund on time.

He announced to establish an FBR help desk on the premises of KATI to help its members. He said that the business community is the most important faction for the FBR as it is paying the precious revenues to run the country and the FBR is all out to help and assist the trade and industry.

Responding to the welcome address by the KATI Chairman, Mian Zahid Husain, the FBR chief said that various measures are being taken in the next federal budget to be announced in June. 

The KATI Chief, Mian Zahid Husain while highlighting business communitys woes said that tax slab on turnover for small industries should be levied at the uniform rate of 25 per cent. 

He also appealed chairman FBR to withdraw withholding tax on electricity bills with the rate of 10 per cent. He said that this tax is unjustified as business community is already over-burdened due to ever-increasing power rates and unbearable load-shedding.

Hussain said that the tax on rental income should be revised downward at the rate of five per cent. He suggested declaring all areas out of the limits of Municipal Corporation as rural and un-developed areas and allowing depreciation on setting up industries there. He demanded of the FBR chief to empower income tax commissioners to issue exemption certificates on imports as practiced in the past. 

He also suggested to reduce deduction of tax on cash withdrawal from bank to 0.1 per cent from 0.3 percent, e-filing of Mandatory NIFT Certificates should be continued through Pin Code, Pass-word and User ID. 

He said that Sales Tax department has once again started audit while FBR has suspended the audit of registered persons through a circular, this should also be discontinued. He said that sales tax refund claims should be refunded without delay and revenue collection should be improved through enhancing tax net.

The Patron In-chief, KATI, S M Muneer in his address urged the need of a better relationship between the FBR and the business community so that the taxmen would able to meet the revenue target.


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## Neo

*Pakistan, IMF start talks in Dubai ​* 
*Macroeconomic targets may be revised​*
Sunday, February 15, 2009

ISLAMABAD: Pakistan and the International Monetary Fund (IMF) on Saturday started talks at Dubai for releasing the second tranche worth $775 million for Islamabad, it is learnt. 

The macroeconomic targets including the GDP growth rate, inflation, tax collection, foreign direct investment, privatisation proceeds and export and import targets could be re-adjusted downward in the talks keeping in view the changed ground realities.

Yes, various macroeconomic targets will be part of our discussion because these targets can be adjusted with the changing realities, said a senior official at the finance ministry while talking to The News here on Saturday night.

Pakistan is all set to seek additional funding of $4.5 billion from the IMF by requesting the fund authorities to increase its quota from five to eight times enabling Islamabad to keep more foreign inflows on track.

Other donors especially the WB is so far not forthcoming for meeting the financing needs of the country by generously providing programme loans. 

Pakistans delegation comprised Joint Secretary External Wing Mumtaz Malik, Additional Secretary Asif Bajwa and representatives from the SBP as well as from the FBR. 

The IMFs delegation is headed by its head of Middle East and Central Asia Department Masood Ahmed, Assistant Director Middle East and Central Asia Department Adnan Mazarei, IMFs Resident head in Pakistan Paul Ross and others. 

Secretary Finance Dr Waqar Masood is scheduled to leave for Dubai today (Sunday) and he will head Pakistani delegation from tomorrow (Monday), official sources confirmed while talking to The News here on Saturday. 

Adviser to the PM on Finance Shaukat Tarin is scheduled to visit Dubai on Feb 25 and 26 for holding final round of talks with the fund authorities. 

Pakistan and the IMF have the schedule to hold talks from Feb 14 to Feb 26 in Dubai for reviewing second tranche for which the final approval was expected to be granted by the executive board of the fund by March. 

Pakistan achieved all envisaged target including fiscal deficit as well as freezing borrowing from the central bank, said the official at finance ministry. The fiscal deficit stands at 1.9 per cent of the GDP for July-Dec period of 2008-09 against envisaged target of 2 per cent. On central bank borrowing, he said, the government had agreed to freeze it at Rs258 billion but they achieved it successfully and it stood at Rs203 billion by Dec 31, 2008. 

However, according to another high-level official at the finance ministry, Pakistan and the IMF will discuss revision in envisaged macroeconomic targets including GDP growth rate for the current fiscal year. They (Pakistan and the IMF) have projected the real GDP growth rate of 3.5 per cent for 2008-09. Keeping in view negative growth of 6.5 per cent for manufacturing sector for the first half (July-Dec) period of 2008-09, the countrys growth rate is solely depending upon the performance of agriculture and it is expected to hover around 2 per cent by end June 2009. 

Federal Board of Revenue agreed to collect Rs1,362 billion for the ongoing fiscal year on the basis of nominal growth rate of 28 per cent. 

But now the nominal growth rate declines as the GDP growth rate is likely to remain around 3 per cent while inflation is coming down to the annual range of 20 per cent, so our projections for the FBRs target has also revised downward to Rs1,300 billion approximately, added the sources.


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## Neo

*CDNS plan to generate Rs300bn put on hold: official​* 
Sunday, February 15, 2009

ISLAMABAD: A plan to generate liquidity amounting to Rs250 to Rs300 billion through three products of National Savings Scheme has run into snags because of conflict of interest in the Ministry of Finance, a senior official told The News.

The CDNS two months back when there was a liquidity crunch, had proposed launching papers of three, six and twelve months maturity offering interest rates at par with treasury bills to persons converting their current account deposits into investment in these papers.

Through the said products, Central Directorate of National Savings (CDNS) could easily generate huge liquidity amounting to Rs250 to Rs300 billion, the official said.

The proposed plan is still pending as Adviser to Prime Minister on Finance Shaukat Tarin, who is basically a banker, has not taken the action fearing banks would be deprived of the capital on which banks are not giving any incentive to its depositors.

It is pertinent to note that commercial banks do not offer any interest to its consumers on the amounts deposited in the current accounts. Basically the idea was that the three papers would be launched offering incentives of reasonable interest rates to those depositors who will withdraw their amount from the current accounts of the commercial banks and purchase the said products under the National Saving Schemes.

If the chief economic manager of the country gives a nod to the plan, the country would have generated a sizable amount enabling the government not to borrow any penny from the central bank.

The official said that the conflict of interest has actually ruined the economy of the country either it is agriculture, large-scale manufacturing or banking sector. Now the time has come that economic policies should be formulated in the supreme interests of the country and its masses not in the interest of any cartel.

The plan to launch scheme for expatriates in foreign currency is also in doldrums as no required action has taken by the top economic management of the country so far. Under the proposal the expatriates living in UK and Middle East were to be offered the papers in return government of Pakistan would extend them sizable interest as compared to the interests, which they get hardly 2 to 3 percent on their deposits in foreign banks. 

To a question the interest rate were proposed in Pak rupees. In this way the country could have strengthened its foreign reserves a lot, which may provide breathing space to the government. It could also help the government in avoiding the IMF program even.


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## Neo

*UK foresees better economic outlook for Pakistan ​* 
*British deputy high commissioner says UK government is encouraging its companies to invest in Pakistan​*
Sunday, February 15, 2009

LAHORE: British Deputy High Commissioner and Director UK Trade and Investment in Pakistan Robert W Gibson has said the UK government is foreseeing better economic and investment outlook in Pakistan and encouraging its companies to make investments here.

Pakistan has great investment potential and the British government is not issuing strict travel advisory for Pakistan to its nationals as compared to other western countries.

British investors can travel to Pakistan comfortably except a few troubled areas, Gibson said adding, keeping the importance of Pakistans economic and investment outlook in mind the UK government is likely to announce an investment package for Pakistan.

In an interview with The News after a reception hosted by Moody International to the elite of the business community of Pakistan on fostering trade and investment and to acknowledge contribution of British companies in Pakistan, Gibson pointed out that British entrepreneurs working in Pakistan were having continued interest to work and safeguard their businesses and were looking forward to opportunities to further increase their operations by expanding existing projects and explore new avenues for investment.

Responding to a question of future credit rating of Pakistan Gibson said, It is not my duty to tell about the credit rating of the country but existing economic scenario is showing a positive outlook of Pakistan, he said adding that so British government recommending the Britain companies for making investments in Pakistan. 

Gibson said Pakistan has excellent regulatory regime for investors and Im identifying these opportunities for British companies. He further said that the Britain is determined to retain liberal trade markets. He added that a good number of UK companies are keen to invest in Pakistan in different sectors. Responding to a question on market access for Pakistan in the West, the Director of UK Trade and Investment said the Britain would certainly want to have such an arrangement with Islamabad. However, being part of the European Union (EU), Britain is bound to the decisions of Brussels on any such facility, he added in the same breath.

British envoy proudly disclosed that 100 British companies with an investment portfolio of 1.7 billion dollars are operational in Pakistan over the last four years. According to him, Pakistan, with a population of 170 million, is a market with huge potential and the UK is keen to invest further here.

Similarly, the Britain will provide some 480 million pounds for social uplift with a focus on poverty alleviation in Pakistan during the next three years, Gibson said adding that there is no problem for making investments in Pakistan. There are only some areas of Pakistan where law and order is a problem while in the rest of the country there is no issue, he said. The British government has been motivating their business people to make investments in Pakistan, said Robert W Gibson. 

Talking about the economic recession, he said a global solution is needed to overcome global recession.


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## Neo

*PC claims poverty at 37.5pc with no reference to current data ​* 
Sunday, February 15, 2009

ISLAMABAD: The Planning Commissions briefing to Prime Minister Syed Yousuf Raza Gilani about increase in poverty up to 37.5 per cent or 66 million people living below the poverty line out of 160 million has raised many eyebrows within official circles because no fresh analysis on poverty has been done to come up with this revelation at the highest level, it is learnt.

The poverty figures remained controversial in the past but the PCs new disclosure has literally added fuel to the fire. The donors such as the World Bank, Asian Development Bank, Department for International Development, CIDA and others have always asked the government to stick to the methodology for poverty analysis and avoid changing goal posts in order to come up with consistent results on poverty figures.

Official documents such as the Poverty Reduction Strategy Paper (PRSP-II), which was recently released by the Finance Ministry, clearly states by quoting the Planning Commission that the data of Household Income Expenditure Survey (HIES) for 2007-08 would be available for poverty analysis by end-Feb or early March.

This scribe contacted high-ups in the Federal Bureau of Statistics (FBS) on Saturday and they confirmed that they have not yet provided the data of HIES to the PCs Centre for Poverty Reduction and Social Policy Department (CPRSPD) that is responsible for conducting poverty analysis on the basis of this data.

When PC Member Social Sector Shaukat Hameed was asked about the HIES data for 2007-08, he also confirmed that they would send the data to the PC by March. To a query about capacity of the CPRSPD for conducting poverty analysis when all of its researchers have left the organisation owing to variety of reasons, the PC member conceded that they would have to enhance capacity of the poverty centre.

In the PRSP-II document states in the meantime, a Panel of Economists set up by the Planning Commission has provided a preliminary estimate of poverty (based on informed judgment) for FY 2008/09, indicating an, addition of 6 percentage points to poverty incidence since FY 2004/05. It means that the poverty level is over 30 per cent.

The Panel of Economist actually used the data of 2005-06 but did their analysis on the basis of the existing inflation in order to come up with the poverty level estimates of 30 per cent.

How the PC has come up with 37.5 per cent poverty figures, is beyond our imagination, a high-level official questioned?

Now the PC has informed the Prime Minister in briefing that the poverty level went up to 37.5 per cent. The claim was made without referring to any data or poverty analysis on the basis of which the PC reached this conclusion.

The official said as long as the growth in private consumption expenditure in nominal terms is higher by the rate of inflation, the poverty by definition is bound to decline.

The inflation stood at 7.8 per cent in 2006-07 and 12 per cent in 2007-08, calculating overall inflation in the range of 19.8 per cent in last two financial years. The private consumption expenditure stood at 27.4 per cent in the last financial year 2007-08. 

So by definition, in the absence of HIES data, the poverty is bound to decline in 2007-08 as well instead of increasing from 23 per cent to 37.5 per cent, added the official.

But now the Planning Commission has decided to go public on the controversy of poverty figures and come up by distancing itself from both the survey done in 2004-05 and 2005-06.


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## Omar1984

Pakistan can attract SWF: ex-WB adviser 

KARACHI: Pakistan should try to attract sovereign wealth funds (SWFs), which are grappling to find new investment avenues after financial meltdown in the developed countries, a former advisor of the World Bank (WB) said Saturday. 

Chief executive officer of Mecasa Advisory, a US based financial consultancy firm, Adnan Hassan was speaking at the launching ceremony of his book A practical guide to Sovereign Wealth Funds. He said Pakistan was in a much better position compared with other developing countries. Most states with SWFs are Pakistans friends, he added.

The SWFs have an estimated $3.3 trillion under their portfolio and Pakistans agricultural sector could attract that money. SWFs are looking for sustained cash flows and the local agriculture sector can offer that, he said.

He sought to dispel the impression that investment in strategic sectors by a foreign government could compromise security of a country. He said SWFs made direct investments and, therefore, countries like Pakistan did not need to worry about their international credit ratings. Deputy Governor State Bank of Pakistan, Yaseen Anwar expressed concerns over growing protectionism in developed countries following the financial crisis. staff report

Daily Times - Leading News Resource of Pakistan


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## Omar1984

Rebound on Pakistan's main index offers hope for new investors 

By Farhan Bokhari, Special to Gulf News
Published: February 14, 2009, 23:12


Islamabad: Friday was a day equity investors battered by the market mayhem of the past few months had long been waiting for in Pakistan. 

The Karachi stock exchange (KSE) finally saw a hint of a recovery and hectic activity followed, with the benchmark KSE-100 index rising over four per cent on the day. 

The underlying factor behind the optimism was an announcement by the Securities and Exchange Commission of Pakistan (SECP), relaxing some of the standards laid down earlier for accounting practices at the KSE. 

Some of the KSE's most sought-after stocks took the cue. Shares in listed stocks such as Bank Alfalah, NIB Bank, Oil and Gas Development Company and Pakistan Telecommunication, all recorded significant gains. 


There are other factors driving the optimism at the KSE. The first sign of a possible thaw in tense relations with India has been widely welcomed by equity investors. 

Pakistan finally came out with parts of its investigation into the Mumbai terror attacks of November and accepted for the first time that at least part of the plot had been thrashed out on its soil. For India, this marked the honest assessment from Islamabad that it had long been looking for.

There have also been improvements on the domestic political front. 

President Asif Ali Zardari's successful handling of the process by which nominations for the forthcoming elections to Pakistan's senate - the upper house of parliament - has won him approval across the political spectrum. 

For investors in the stock market, a trouble-free process leading to the senate elections marks a tick mark on the check-list of issues that periodically bedevil them.

Tomorrow, the positive undertone to the KSE index is likely to continue. There might be some adjustments brought about by quick profit-taking, but the positive trend is likely to stay awhile.

For investors, other comforting factors include the relative stability of the Pakistani Rupee against the currencies of the country's major trading partners, notably the US, UK and the Middle East. 

After depreciating rapidly during the first ten months of 2008, the Rupee has stabilised and even slightly appreciated. 

This followed the successful conclusion of negotiations between Pakistan and the International Monetary Fund (IMF) to clinch a $7.6-billion loan programme to stave off what appeared to be a looming crisis on foreign debt payment defaults.

On the face of it, the environment in Pakistan is gradually but firmly showing some elements of stability for equity investors. For now, the main missing element is the absence of foreign equity investors who once dominated the Karachi scene. They are essentially gone because of market conditions not just in Pakistan but worldwide, too. For the moment, the KSE is likely to remain in positive territory or range-ound. 

With the KSE-100 index trading just above its 5,600 level, some equity investors are likely to be disappointed. 

They are probably still looking at the KSE's historical peak of over 16,000, achieved in April last year. 

Realistically, the KSE is unlikely to return to its historical high, any time soon. However, the trends surrounding the KSE today are far from disappointing, especially for prospective new entrants. 

Historical experience has more than once demonstrated the medium to long-term benefits of risk-taking. 

In this case, the most likely risk is that of a delayed return to an era of high profits. But then, in a world where market conditions are likely to remain far from easy in 2009 and possibly beyond, the question for investors would be a simple one; how many markets beyond Karachi offer alternatives that are certain to be more attractive. 



The writer is a journalist based in Pakistan.

Gulfnews: Rebound on Pakistan's main index offers hope for new investors


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## Omar1984

Pakistan urged for reforms in industrial, export sector: ADB 

ISLAMABAD: Asian Development Bank (ADB) has stressed upon Pakistan for introducing reforms in the industrial and export sectors for boosting its exports. ADB fact-finding mission in a meeting with the Planning Commission, Deputy Chairman here, underlined the need of Pakistan undertaking extensive reforms in the industrial and export sectors. The mission said that special measures would have to be taken for booting exports from all sectors including textile products for strengthening the country economically. Planning Commission Deputy Chairman, Sardar Asif Ali on this occasion said that Pakistan needs grants more than donors loans. He underscored the need of taking recourse to alternative sources instead of taking loans for improving the economy and rescuing the country from financial crisis.Agency

Welcome to Daily Regional Times Online Newspaper


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## Neo

*Rs 75bn fund to help PSO pay debts​*
KARACHI: A Rs 75 billion fund is being set up to bail out Pakistan State Oil (PSO). The Chairman Federal Board of Revenue (FBR) Ahmed Waqar said this while addressing the members of Korangi Association of Trade and Industry (KATI) at a luncheon meeting on Saturday. He said that the fund would be established by the end of this month to help PSO pay its debts and to make payments to refineries. 

Waqar said that efforts were being made to bring wholesale, retail and services sectors into the tax net. He said that revenue collection would remain between Rs 1.3 trillion and Rs 1.36 trillion in the current year. 

He said that FBR was considering paying surcharge along with sales tax refund on failing to pay refund in time. He announced establishing a FBR helpdesk at the premises of KATI. Chief KATI Mian Zahid Husain said that tax slab on turnover of small industries should be levied at a uniform rate of 25 percent. He appealed to the FBR chief to withdraw withholding tax on electricity bills. He said that this tax was unjustified as business community was already overburdened because of ever-increasing power rates and unbearable load shedding.

He said the tax on rental income should be revised downward to 5 percent. He suggested declaring all areas out of the limits of the Municipal Corporation as rural and un-developed areas and allowing depreciation on setting up industries there. He demanded the FBR to empower income tax commissioners to issue exemption certificates on imports as was practiced in the past. 

He also suggested reduction in tax on cash withdrawal from banks to 0.1 percent from 0.3 percent. He said e-filing of Mandatory NIFT Certificates should be continued through pin code, password and user ID. He said that sales tax department had once again started audit, which should be discontinued. He said that sales tax refund claims should be settled without delay and revenue collection should be improved through enhancing the tax net.


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## Neo

*Industrial output plunges by 4.72% in July-December​*
KARACHI: The countrys industrial production slumped by 4.72 percent in the first half of the current financial year due to the downfall in the productions of auto, electronics and petroleum sectors.

A continuous slow down in large-scale manufacturing (LSM) sector is indicating a massive lay-off and shutting down of industrial units.

Analysts attributed the fall in the industrial output partly to global financial crisis and more with the domestic issues such as prolonged power outages, high cost of utilities and raw materials coupled with the high interest rates in the country.

With the reported layoffs in the auto and textile sectors, which already became the headlines, more job cuts are in the pipelines if the situation does not change in the coming months.

Data released by the Federal Bureau of Statistics on Saturday showed that petroleum sector was affected the most during the period under review, as the OCAC index  having petroleum products data plunged by 8.05 percent.

The Ministry of Industries index was down by 4.79 percent followed by provincial bureau of statistics index, which fell by 4.04 percent during July-December of the current fiscal.

Global financing crunch, which sent shock waves around the globe has also been hurting Pakistan in the shape of depressed demand for local exportable products. The demand shrunk due to eroding purchasing power of the customers in the west.

However, the industry people said slow down in the industrial production is only because of domestic problems, which can be easily solved. They said current situation demands immediate attention of the government to arrest the decline in the industrial production.

For instance, the countries, facing decrease in their industrial output are taking various measures such as the interest rate cut. But Pakistan upheld its interest rates despite improving economic indicators.

State Bank of Pakistan (SBP) in its last monetary policy kept the policy discount rate unchanged at 15 percent, which business community believed is too high to be absorbed by the industry.

The sector-wise production indicated that production of jet fuel was down by 9.56 percent, kerosene oil 12.59 percent, high-speed diesel 3.53 percent, furnace oil 9.63 percent, LPG 19.09 percent etc.

In food sector, the production of vegetable ghee declined by 13.07 percent, cooking oil 4.79 percent, wheat and grain milling 10.62 percent, beverages 4.30 percent etc.

In auto sector, truck production was down by 15.74 percent, buses 45.76 percent, jeeps and cars 45.37 percent, motorcycles 15.66 percent etc.

Production of refrigerators dropped by 1.18 percent, deep-freezers 23.90 percent, air-conditioners 13.75 percent, electric bulbs 24.44 percent, electric tubes 19.56 percent, fans 9.24 percent, motors 23.48 percent, electric meters 12.30 percent, switchgears 11.30 percent, transformers 4.36 percent, TV sets 33.99 percent and bicycles 12.67 percent.


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## Neo

*Spending on PSDP declines by 64.8 percent in first half ​*
** Non-development expenditure up by 25.1% over last year​*
ISLAMABAD: Current expenditure during the first half of current fiscal year rose by 25.1 percent over the same period of last year, but development expenditure fell by 64.8 percent, according to figures obtained from Ministry of Finance. 

Thus, the government has failed to meet its target of keeping its non-development expenditure at the level where it was in the last financial year. According to an official, actual current expenditure has been recorded at Rs 970 billion, which is higher by Rs 195 billion or 25.1% than last years current expenditure of Rs 775 billion. During a recent meeting of members of the National Assembly Standing Committee on Finance at parliament house was of the view that route cause of increase in non-development spending was due to gigantic size of federal cabinet.

On the other hand, Public Sector Development Programme (PSDP) has faced a major cut and total spending on development programme has been recorded at Rs 125 billion in Jul-Dec period as against PSDP expenditures of Rs 206 billion in same period of last fiscal year, indicating a decline of 64.8%.

Development expenditures from PSDP and out of the PSDP were estimated at Rs 438 billion for 2008-09 and were revised downwards at Rs 399 billion afterwards. The target was to spend Rs 135 billion on development during first half of the current fiscal year, but actual development spending has been recorded at Rs 125 billion only. 

According to the official, the government without having sufficient financial resources announced highest ever public sector development programme worth Rs 541 billion for this fiscal year with federal PSDP at Rs 371 billion. However, during the first quarter finance ministry decided to cut PSDP by Rs 100 billion to so that its size matched available financial resources. The government is now aiming at accelerating releases for development programme in second half (January-June) period of current fiscal year as it claims that financial resource availability has improved. 

Mid Term Economic Review of finance ministry states that the fiscal improvement in the first half has largely based on reduction of oil subsidies and a cut in development spending. All meaningful efforts to expand revenues, particularly by broadening the tax base, will only work in the medium-term. 

The faster growth of 35.5 percent in the total revenues is more than offset by even faster growth of 25.2 percent in the current expenditure. The financing patterns of fiscal deficit remained dominated by the banking system that financed 66 percent of the fiscal deficit. Only 29 percent was financed by non-bank sources. A small amount of Rs 12 billion that the government had received from external sources was also used to finance the deficit.


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## Neo

*China to provide $449m as supplier's credit for Neelum-Jhelum project​*
** WAPDA chairman says project to inject 969MW power into national grid​*
ISLAMABAD: A meeting presided over by President Asif Ali Zardari was informed on Saturday that China has agreed to provide $449 million as suppliers credit for the Neelum Jhelum hydroelectric project and an agreement to this affect will be inked by May this year.

The meeting was held to review the progress on various developmental initiatives between Pakistan and China ahead of the president's forthcoming visit to China on February 20. The initiatives reviewed at the meeting pertained to the energy and power; agriculture; information technology and telecommunications; petroleum and natural resources; commerce; defence; and the banking sectors. During the meeting, representatives of various ministries and organisations presented detailed reports on the status of ongoing cooperative development projects and the initiatives undertaken between the two countries during the presidents visit to China in October 2008. 

More power: WAPDA Chairman Shakeel Durrani said the Neelum-Jhelum Hydroelectric project would inject 969MW power into the national grid. He said a letter of intent had been issued to a Chinese company to build the over-$2 billion 1,100MW Kohala power project on build, operate and transfer (BOT) basis. He said a detailed feasibility and engineering drawing for the Kohala power project would be ready by August.

Following the briefings, the president emphasised the need for stepping up efforts to utilise Chinese experience regarding power generation; agriculture; and water usage. He said water and power shortage issues would continue to haunt countries like Pakistan for the near future, saying efforts must be increased to reduce this. He said the water shortage issue would likely have a profound impact on inter-state and intra-state relations.

In addition to the president and the WAPDA chairman, Defence Minister Chaudhry Ahmed Mukhtar; Special Adviser to the Prime Minister on Water Resources Kamal Majidullah; Special Envoy to China Khalil Ahmed; secretaries and senior officers of Foreign Affairs, Industries, IT and Telecom; and chairmen of the Board of Investment and PARC attended the meeting. Ambassador of China to Pakistan Luo Zhaohui also attended the meeting by special invitation.


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## Neo

*UK to provide 480 million pounds for social uplift ​* 
LAHORE (February 15 2009): Britain will provide 480 million Pounds for social uplift with a focus on poverty alleviation in Pakistan during the next three years, said British Deputy High Commissioner Robert W. Gibson on Saturday. He was talking to Business Recorder at a function organised by Moody's International on fostering trade and investment and to acknowledge contribution of British companies in Pakistan.

Robert, who is also Director of UK Trade and Investment in Pakistan, said a global solution was needed to overcome global recession. On much-needed market access for Pakistan in the West, the British envoy said Britain would certainly want to have such an arrangement with Islamabad. However, being part of the European Union (EU), Britain was bound to the decisions of Brussels on any such facility, he added.

Robert shared proudly that 100 British companies, with an investment portfolio of 1.7 billion dollars, were operational in Pakistan for the last four years. According to him, Pakistan, with a population of 170 million, is a market with huge potential and the UK is keen to invest further here. "Pakistan has excellent regulatory regime for investors," he said, adding: "My job is to identify opportunities."

He further said that Britain was determined to retain liberal trade markets, and added that a good number of UK companies were keen to invest in different sectors in Pakistan. On travel advisory, the UK Deputy High Commissioner said the British investors could travel to Pakistan comfortably, except a few troubled areas.

Earlier addressing the gathering, Robert said the British government through the UK Trade and Investment (UKTI) was keen to discuss new business ideas and opportunities for both British companies and Pakistani companies. For this purpose, Moody's International had stepped forward to facilitate an elite business gathering to facilitate discussion about new opportunities and ideas among business comrades, he added.

Speaking on the occasion, Chief Executive Officer (CEO) of Moody's, Pakistan, Rashid Mehr insisted upon the UKTI to work in three key areas - public and private partnership between British and local companies, encourage key British businessmen to explore the hidden potential of Pakistan in the areas of oil and gas, power, textile, pharmaceutical, food and agriculture and information technology sectors.

He also said the UKTI should find out ways to facilitate and make genuine businessmen visa application process faster. He said: "It is indeed not a secret that the recent collapse of national economy and global recession has forced many of us to find ways to battle it out."

It may be mentioned that Moody's International is a Global British firm, established in 1911, presently operating in more than 80 countries and is a symbol of financial discipline and strength. Moody International is the premier certification body and inspection company in Pakistan and world-wide. Moody's has the credit of assisting and certifying over 1,200 Pakistani companies against various certification standards.


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## Neo

*Exclusive economic zones ​*
Prime Minister's Adviser on Finance Shaukat Tarin in his talks in Tokyo has requested Japanese Prime Minister Taro Aso to establish Japanese exclusive economic zones in Karachi and Gwadar, in preference to any monetary help Japan may extend to Pakistan to overcome its financial crisis, according to a message received in Islamabad from Tokyo. He has further informed the Japanese authorities that Pakistan wishes to develop its agriculture, manufacturing and energy sectors with Japanese assistance.

He has also discussed with them Pakistan's strategic needs such as development of water resources, roads, railways and poverty reduction. Tarin has said that as Pakistan's status as a frontline state in the war against terrorism has badly affected its economy, it is in need of annual aid of five billion dollars for approximately three to five years.

Answering a question, Tarin said Pakistan's total local and foreign loan was 46 billion dollars, and efforts were being made to reduce the current budgetary deficit, as well as to bring down inflation. The growth rate for the current year would be 3.5 percent, though during the next financial year it could reach up to five percent. The wide-ranging agenda of development Pakistan plans to undertake mirrors the government's resolve to put the economy back on the path of rapid progress.

However, of immediate concern to the country is Tarin's offer to Tokyo to set up exclusive Japanese economic zones in Karachi and Gwadar. It will be recalled that Pakistan had last year offered to Japan to set up a special economic zone for Japanese business companies, on the pattern of a similar facility established for the Chinese entrepreneurs at Lahore. The proposed site for the offer was Karachi, to which Tarin has now added Gwadar, in an astute move to attract Japanese investment.

The two locations are obviously ideal for both local and foreign investment. Being the fourth largest investment partner of Pakistan, Japan has always been given special attention by Pakistani authorities, though a delegation of Pakistan-Japan business forum had informed the government last year that the volume of Japanese investment primarily depended on Islamabad's quick and friendly response in ensuring fruition of all bilateral investment and trade agreements.

This was an indication of paucity of investor confidence due largely to procedural bottlenecks, which need to be speedily removed by the government through well-targeted measures. Secondly, there is a need to devote special attention to infrastructure and HR-based skill development in the country. In fact these are the major causes of our being left behind in the race for economic development. The plan to make Gwadar port a vibrant hub of regional energy and trade corridor is a move in the right direction.

Tarin's offer to set up an exclusive Japanese economic zone in Gwadar has the potential to help the mega project's full operationalization, which can yield rich dividends for the economy. He has claimed that Pakistan's economy is stabilising after the shock of high oil and food prices, though we believe that the crisis has not receded to such an extent as to inspire hope of an early recovery. This will continue to make negative impact on the economy.

Many analysts believe that Pakistan should attach short-term priority to attracting investment to foreign exchange earning sector, or at least to both the foreign exchange-earning sector and other sectors simultaneously. This is particularly important because there have been many impediments to foreign investment in Pakistan, including a precarious law and order situation, lack of political and social stability, the crippling energy crisis, and the high cost of doing business in Pakistan.

There is clearly a need to improve the business environment significantly for Pakistan to be able to attract a larger share of FDI. If the law and order situation is not improved early it will make a highly negative impact on the future inflows of FDI. There is, therefore, a need to adopt a multi-faceted strategy to create a peaceful environment, which is an essential prerequisite to attract FDI.

Japan's initiative to invite the "Friends of Pakistan" to a meeting in March or early April to get financial commitment from them to support development, and thereby strengthen Pakistan government's hands in its fight against terrorism, needs to be appreciated. Tarin's offer to Japan to establish exclusive economic zones in Karachi and Gwadar is a reciprocal move, which should further cement the bilateral bonds of friendship between the two countries. The government should back up the offer with solid initiatives to facilitate the prospective investors.


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## Omar1984

Surplus wheat may lead to collapse of prices


By Sajid Gondal

ISLAMABAD, Feb 14: Availability of surplus wheat in the country could lead to collapse of prices in local markets this year.

The government has approved a plan to procure 6.5 million tons of wheat at Rs950 per 40kg, or Rs23,750 (nearly $300) per ton, which is about $100 higher than the rates prevailing in the international market.

In the London commodity market, French and Russian wheat was offered on Saturday at $198 to $203 per ton while the US soft red winter wheat was sold at $202 to $206.88 per ton. The prices are likely to fall further after beginning of harvesting in most wheat-producing countries in March.

The governments wheat stock position is good enough to meet local demand till April. As of Friday, Punjab had 1.1 million tons of wheat, Sindh 50,000 tons, the NWFP 184,000 tons and Balochistan 65,000 tons. These quantities didnt include stocks with the private sector.

Some 590,000 tons of imported wheat began arriving at the Gwadar port on Friday. This process would continue until March 5.

The Trading Corporation of Pakistan would complete import of another 272,000 tons of wheat by March 31. The World Food Programme would also provide 30,000 tons of wheat it had borrowed from Pakistan last year.

Thus, a total of 892,000 tons of wheat is due to arrive by March. The government has already completed import of 1.7 million tons of wheat while the private sector had imported 250,000 tons of wheat in January.

The government will have 2.29 million tons of wheat in its stock for consumption in March and April whereas the harvest of new crop will begin in Sindh on March 1 and in Punjab on April 1.

Ibrahim Mughal, the Chairman of the Agri-Forum Pakistan, has called for an increase in procurement target from 6.5 million tons to eight million tons so that small growers could also sell wheat to the government.

He suggested that Punjab should buy four million tons of wheat, Sindh 1.5 million tons and Passco 2.5 million tons.

Tariq Sadiq of the Flour Mills Association said the government had announced the wheat procurement price in haste, without taking international prices and local stock position into consideration.

Additional Secretary of the Ministry of Food and Agriculture Shahid Hussain Raja agreed that price in the local wheat market could decline sharply, but said this would not affect the governments procurement drive.

He said a high procurement price had been fixed by the government to ensure that the growers got a good return on their crop this year.

Surplus wheat may lead to collapse of prices -DAWN - Top Stories; February 15, 2009

*With this much wheat being produced in Pakistan and also being imported into Pakistan, no one in Pakistan should go hungry*.


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## Omar1984

Railways in financial crisis


By Zaheer Mahmood Siddiqui

LAHORE, Feb 14: The Pakistan Railways (PR) does not have enough funds to buy fuel to keep trains running beyond Sunday, officials told Dawn on Saturday.

We only have Rs869.38 million for payment to the Pakistan State Oil for procuring high-speed diesel and TBN-13, but this amount will not be sufficient even for trains operations on Sunday, a senior railways official said.

The PR had been allocated Rs7.2 billion for fuel purchase.

Our estimate (submitted to the finance ministry) was prepared on the basis of the prevailing price for diesel in May and June in 2008. The fuel price increased exorbitantly in September and subsequent months. We prepared a revised demand along with justifications to the ministry during November last year and have since sent at least two reminders, the official said.

The revised demand of Rs12,151.836 million included Rs4,951.836 million for fuel purchases.

The official said the ministry had allowed the railways to spend up to Rs1,000 million a month.

Meanwhile, the railways financial adviser and chief accounts officer (FA&CAO) asked all accounts and finance officers not to entertain any bill or payments except salary and allowances, pensions, utility bills or buying fuel and lubricants.

This amount is not even sufficient to ensure a smooth supply of fuel for rail operations. There is a need to allow railways officials to clear PSO bills beyond allocated funds without interruption till additional funds, amounting to Rs4,951.836 million under the operational fuel head, were released upon receipt of funds from the finance division to avoid any interruption in train operations, he said.

However, a senior audit officer argued that the increase in fuel price was not the only factor affecting railways finances.

Irregular and/or extra consumption of fuel is a major factor, which is why fuel remained second highest component of operating expenses. The railways spent Rs6.567 billion or 32.45 per cent of the total operating expenses for 2006-07.

Unnecessary delays cost a lot of fuel: Locomotives held up at stations needlessly burn fuel, besides causing train delays. Locomotives stalled in yards and train delays resulted in the loss of 770,700 minutes between May 2007 and April 2008, causing a loss of Rs776,865,600 because of staff negligence.

When passenger or freight trains are configured in yards, they are left unattended for hours; Operating mismanagement causes unnecessary fuel consumption of 338,680 litres of fuel, valuing Rs13,547,200 at the rate of Rs40 per litre from Jan 1 to June 9 this year, said the audit officer.

Railways in financial crisis -DAWN - Top Stories; February 15, 2009


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## Omar1984

Islamabad stocks gain 15.36 points

ISLAMABAD: Investors at the Islamabad stock market went for across-the-board scrips during the week, analysts said on Saturday. The Islamabad Stock Exchange (ISE) 10-share index increased by 15.36 points to close at 1,239.86 points as against the previous weeks close of 1,224.50 points. The ISE index remained negative for three days (February 9, 10 and 12) and remained positive for two days (February 11 and 13). Total volume of transactions stood at 7.51 million shares while it was 8.077 million shares last week, showing a net decrease of 0.56 million shares or 6 percent. The minimum transaction in the outgoing week was recorded on Feb 12 when the market reached 0.939 million shares and the index decreased by 2.66 points to close at 1,181.33 points from the previous level of 1,183.99 points. The maximum transaction in the outgoing week was 1.714 million shares while last week it was 2.709 million shares. The maximum decrease in share price of a company was observed in Unilever Pakistan, the price of which decreased by Rs 39 on Feb 9 when the index decreased by 4.74 points. The maximum price increase in share of a company was of Pakistan Petroleum, which increased by Rs 7.50 on Feb 13 when the Index increased by 58.52 points. staff report

Daily Times - Leading News Resource of Pakistan


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## Omar1984

FPCCI concerned over trade imbalances 

KARACHI: The main reason for imbalances in the trade deficit is due to the sharp increase of import bills of wheat and power generating machinery, President Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Sultan Ahmed Chawla said Saturday. He said due to the sharp decline in the world crude oil prices, the countrys oil import bill has come down from its higher level. It helped in bringing down the ballooning trade deficit but the government should try to reduce the trade deficit by boosting exports and cutting the import bills through import substitution and higher tariffs on luxury imports. The trade imbalance for July-January 2008-09 stood at $10.7 billion as compared to $10.3 billion recorded for the corresponding period previous year. Whereas, the target deficit was $7.0 billion. staff report

Daily Times - Leading News Resource of Pakistan


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## Omar1984

Gems industry a precious asset of Pakistan F.P.Report 

PESHAWAR: Pakistan can earn million of dollars by exporting its precious gemstone after value addition. This was stated by Shaukat Khan, Town Nazim Peshawar after formally inaugurating the 4th Gem Bazaar organized by Pakistan Gems and Jewelry Development Company (PGJDC) at its Gems Exchange at Khayal Arcade, Namak Mandi here on Sunday. The Gem Bazaar was the fourth of its kind in city, which has provided an opportunity and platform for the traders in the business of gemstones and mineral specimen. Around 60 exhibitors have displayed their gemstones and mineral specimen for the interested buyers in the Bazaar. A variety of gemstones and mineral specimen were displayed under one roof, where buyers had the maximum exposure to a wide range of quality display. Fawad H. Khan, Chief Executive Officer, PDJDC in his press statement issued here on Sunday has said that Gem Bazaar was organized in a professional manner, which has left the impression of ensuring high security and transparency in precious stones trading. The Gem Bazaar would be a regular feature which will contribute immensity to the continuous efforts that PGJDC is putting in for the development of Gems and Jewelry industry of Pakistan, he added. He said such initiatives by the Company will boost confidence, motivation and trust on PGJDCs for the development of the gemstones industry. It will further enhance the value chain productivity of the sector, which will also enable the miners to rise above unnecessary exploitation and deprivation from direct trading he said and adding that the interested buyers will be exposed to quality products on competitive prices, which will add tangible value to their business endeavors.

The Frontier Post


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## Omar1984

Pakistan sells three-month treasury bills worth $1.95b 
Bloomberg
Published: February 11, 2009, 22:55

Karachi: State Bank of Pakistan sold Rs155.2 billion ($1.95 billion, Dh7.28 billion) of treasury bills as part of the country's borrowing program.

The central bank sold Rs50.8 billion of three-month bills at 13.62 per cent and Rs51.9 billion of six-month bills at 13.87 per cent, according to a statement today by the Karachi- based State Bank of Pakistan. The bank also sold Rs52.5 billion of 12-month bills at 13.9 per cent.

Treasury-bill auctions indicate the central bank's stance on the lending rate to commercial banks. The State Bank auctions treasury bills twice a month.

Pakistan's rupee rose for the first time in five days against the US dollar after the government said the trade deficit narrowed by almost half in January. Bonds were unchanged. 


The currency strengthened 0.3 per cent to 79.05 per dollar in Karachi. The benchmark 9.6 per cent bond due August 2017 yielded 15.70 per cent.

Pakistan's trade deficit shrank 43 per cent as imports fell faster than exports. The trade gap dropped to $1.17 billion from $2.06 billion a year ago, according to data from the Federal Bureau of Statistics in Islamabad.

Gulfnews: Pakistan sells three&#45;month treasury bills worth &#36;1&#46;95b


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## slugger

*Some bottled water makers playing with masses health: PEW*



> The Pakistan Economy Watch (PEW) has said that some local and multinational manufacturers of bottled water were marketing substandard products playing with the health of millions of people.
> 
> Its demand is growing by 22 per cent (200 billion liters last year) that has made it the most profitable sector *luring many and pushing some manufacturers to set aside quality control procedures to speed up production and boost profits.*
> 
> Speaking at a meeting regarding water scarcity and corporate practices here on Sunday, President PEW Dr. Murtaza Mughal said that there is a need for effective drinking water disaster management system. Cancellation of licenses and slapping heavy fines to discourage substandard production may help.
> 
> *The government or private sector has no plans for recycling of used plastic bottles which is adding to environmental hazards.
> *
> He said government can also initiate a massive program to provide safe drinking water to masse. It will save them from corporate clutches.
> 
> On the occasion, PEW Vice Chairman Muhammad Akram Shahid said that many take *bottled water as status symbol* while majority view it as safe for consumption. *Parents are mixing the so-called &#8216;mineral water&#8217; in baby formula exposing their newborns to great risks*. 80 per cent of all infectious diseases are water related and over 200000 children die every year due to it in Pakistan.
> 
> *Dust, fungus and plastic particles have become part of supplies and arsenic level is going unchecked. Ignoring corporate social responsibility is hurting health of masses and the limping hospitality industry.
> *
> The idea of privatization of drinking water is inconsistent with common sense but it is thriving due to scarcity of clean drinking water in Pakistan. Our *water quality has been ranked 80th in the world as over 70 per cent of water supplied is insufficient for drinking.*
> 
> Pakistan is a big market for multinational and national companies but questions are being raised about quality and impact of this business on subsoil water and environment. Unfortunately, these issues are yet to catch the eye of officials concerned, said Muhammad Akram Shahid.
> 
> In 2005, the Standards and Quality Control Authority declared that *only 27 out of 200 companies selling bottled water maintain stipulated standards*. A UNESCO research carried out in Sindh says groundwater extraction is exceeding the renewable volume creating serious problems.
> 
> Government should immediately frame effective laws and initiate a detailed study. It should enforce and monitor stringent quality control measures.


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## Omar1984

KSE market capitalization up Rs1 bln this week 

Updated at: 1820 PST, Saturday, February 14, 2009







KARACHI: Market capitalization at Karachi Stock Exchange recorded Rs1 billion surge during this week.

According to figures released by KSE, the valuation of listed companies increased 0.1 percent to Rs1.766 trillion compared to Rs1.765 trillion last week.

KSE market capitalization up Rs1 bln this week - GEO.tv


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## ejaz007

*Gas discovery at Qadirpur*

KARACHI: Oil and Gas Development Company Limited (OGDCL) has made another gas discovery at Qadirpur deep well no 1 in district Ghotki. According to a notice issued by Karachi Stock Exchange (KSE) on Monday, the initial gas production has been gauged at 4.28mmcfd. The company has made 84 discoveries so far. With this discovery, the gas production of OGDC will increase further. At the end of January, OGDCs production of gas stood at 972 mmcfd. staff report

Daily Times - Leading News Resource of Pakistan

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## ejaz007

*Big jumps in profits of Lucky Cement, Attock Cement*
By Tanveer Ahmed 

KARACHI: A number of listed companies announced their financial results on Monday including a few that had withheld their earnings reports because of controversy about the treatment of available for sale investments.

Two major cement companies showed great leaps in their profits, but a large bank reported negligible growth in profit. A refinery reported huge losses. 

Lucky Cement: Lucky Cement posted 43.66 percent growth in its profit after tax (PAT) to Rs 1.938 billion in the first half of current financial year from Rs 1.349 billion in the corresponding period of previous year. 

Its earnings per share (EPS) rose to Rs 5.99 in the period under review from Rs 5.12 in the same period of previous year. Profit before tax surged to Rs 2.212 billion from Rs 1.043 billion in the first half of previous year. 

Sales shot up to Rs 5.269 billion during the period compared with Rs 3.587 billion last year, as both local and export demand moved up.

Attock Cement: Attock Cement posted a phenomenal 200 percent growth in PAT to Rs 720 million in the first half of current fiscal year, rising from Rs 240 million in the corresponding period of last year. 

Its EPS jumped to Rs 9.98 during this period from Rs 3.34 in the same period of last year. Profit before tax rose to Rs 933 million from Rs 377 million.

Sales of the company witnessed almost 100 percent growth during the period under review to Rs 3.983 billion from Rs 2.012 billion in the same period of last year.

Daily Times - Leading News Resource of Pakistan

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## Omar1984

ejaz007 said:


> *Gas discovery at Qadirpur*
> 
> KARACHI: Oil and Gas Development Company Limited (OGDCL) has made another gas discovery at Qadirpur deep well no 1 in district Ghotki. According to a notice issued by Karachi Stock Exchange (KSE) on Monday, the initial gas production has been gauged at 4.28mmcfd. The company has made 84 discoveries so far. With this discovery, the gas production of OGDC will increase further. At the end of January, OGDCs production of gas stood at 972 mmcfd. staff report
> 
> Daily Times - Leading News Resource of Pakistan



Great news. Pakistan needs these natural resources now more than ever. 
I hope the Government of Pakistan can make good use of them for the benefit of Pakistan and its people


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## ejaz007

*Two thermal power plants to be leased out *
MUSHTAQ GHUMMAN 


ISLAMABAD (February 17 2009): The government will lease out two thermal power plants, of 1054 MW capacity, in Jamshoro and Kotri, for 15 years, after the Privatisation Commission failed to make any tangible achievement in almost seven years, official sources told Business Recorder.

The Jamshoro Power Company Limited (JPCL) was incorporated in March 1998 as a public limited company under the Companies Ordinance 1984, and is one of the four generation companies (Gencos) established in the unbundling process of the integrated power wing of Water and Power Development Authority (Wapda).

JPCL operates two electricity generation facilities --TPS-Jamshoro is an 880 mw power plant, fired by gas and furnace oil, comprising four units; TPS-Kotri facility comprises seven units with 174 mw capacity. JPCL sell-off process was started in April 2002 with the appointment of Price Waterhouse Cooper (PWC) as Financial Advisor. The government approved the transaction structure for the sale of 51 percent of its shareholding in the company, along with transfer of management.

The Expressions of Interest (EoIs) for privatisation of JPCL were initially invited in February 2003. Eight parties submitted EoIs; three parties shared interest. However, all parties lost interest due to delay in tariff determination by Nepra.

Second time, EoIs were invited on August 25, 2004. Twelve parties submitted EoIs but only four submitted Statement of Qualifications (SoQs) by the due date. However, the transaction could not be carried forward as Nepra had not determined the appropriate tariff and there were problems on the mutation of two out of three land lots held by JPCL.

Jamshoro Thermal Power Station (TPS) of JPCL is built on 485-10 acres and 19-01 acres lands respectively but their titles are yet to be transferred in the name of JPCL. Wapda took possession of the lands from Sindh government in September 1985 after paying Rs 10, 614,604 for 485-10 acres land in June 1985 at Rs 5 per square yard. Sindh government subsequently fixed the price of the land at Rs 46,972,200 in July 1994 at Rs 20 per square yard. Wapda disputed the rate and price of land fixed by the provincial government, and did not pay the balance amount.

Sources said that the GoP initiated the privatisation of JPCL in 2002 and in view of the importance of its privatisation the PC made the balance payment of Rs 36,357,596 to the Government of Sindh (GoS) in April 2006 on behalf of Wapda/JPCL. However, GoS did not transfer the land in the name of JPCL after the payment, and claimed a surcharge of 10 percent per annum from possession of the land.

The PC agreed to this and requested the GoS to issue a challan of Rs 43, 326,135 as the surcharge payment for resolution of outstanding land issues in the name of JPCL. GoS has not yet issued the challan despite Privatisation Commission's repeated requests.

Meanwhile, Ministry of Water and Power was informed on January 21, 2009 that the Private Power Infrastructure Board (PPIB) has submitted an option to lease out, rehabilitate, and operate TPS-Jamshoro for 15 years, whereafter the asset can be privatised after value-addition/upgradation.

Since the initiation of the privatisation process, the Privatisation Commission has incurred the following expenses for JPCL transaction, which have to be recovered by the Privatisation Commission from the privatisation, or lease, proceeds:

Milestone fee and out-of-pocket expenditures to FA $1,557, 163 and payment of cost of land to Sindh government on Rs 39,325,496 on behalf of Wapda. The matter was discussed in the PC Board meeting on January 26, 2009. The Board recommended that a joint inter-ministerial transaction committee, comprising members from Ministry of Water and Power, Ministry of Finance, PPIB, Pepco and PC under the chairmanship of Secretary, PC, be constituted in order to conduct the transaction and formulate the modalities to lease, rehabilitate and operate the TPS-Jamshoro and Kotri. A meeting of the said committee was held on February 4, 2009.

Sources said that CCoP had approved the privatisation of JPCL in its meeting on October 1, 2001. It is now proposed to lease TPS, Jamshoro and Kotri, instead of strategic sale.

THE FOLLOWING PROPOSAL HAS BEEN SUBMITTED FOR APPROVAL OF THE CCOP: "The PC has exclusive jurisdiction over lease transactions in terms of section 25 of the Privatisation Commission Ordinance 2000. The Privatisation Commission may, therefore, conduct the lease transaction. The lease transaction may be conducted as a joint transaction by the Privatisation Commission, Ministry of Water & Power, Ministry of Finance, PPIB and Pepco who will all be represented on the transaction committee." Sources said the proposal is likely to be cleared by the CCoP in its meeting on Tuesday.


Business Recorder [Pakistan's First Financial Daily]


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## ajpirzada

*Pakistani Banks continue to post large profits* 
By Shahid Iqbal 
Tuesday, 17 Feb, 2009 | 01:10 PM PST | Things are still bright on I. I. Chundrigarh road - APP/File photo. Pakistani Banks continue to post large profits 
Pakistani Banks continue to post large profits KARACHI: The banking sector in Pakistan appears to have absorbed global shocks well as banks continue to perform well, with profits beating expectations.

Bankers and analysts having inside information about banking performance during the first three quarters of 2008 said most of the banks would come out successfully from the global financial meltdown.

Unlike the banking sector in most of the countries hit by global recession and facing slowdown of economic growth, the annual results of the strongest MCB Bank released on Monday demonstrated the trend in Pakistan.

The bank reported gross profit of Rs21.9 billion for the year ended Dec 31, 2008. It announced a 25 per cent cash dividend and 10 per cent bonus shares which pushed earnings per share (eps) to Rs24.47.

Bankers said that the net interest income of most of the banks increased because of high interest rate and higher banking spread.

&#8216;The net interest income of the MCB Bank was recorded at Rs28.5 billion which is significant as it is 19 per cent more than Rs23.9 billion recorded in 2007, mainly due to high interest margins,&#8217; said Farhan Rizvi, a researcher at the JS Securities. In contrast, non-interest income of the bank declined by 10 per cent to Rs5.8 billion from Rs6.5 billion in the same period last year.

In a statement, the bank said that its profit-after-tax for 2008 came to Rs15.4 billion (than Rs15.3 billion in 2007), deposits grew by 13 per cent which closed at Rs330 billion whereas gross advances increased by 19 per cent and ended with Rs273 billion.&#8217;Advance of the banking industry grew by 18 per cent during last year which helped banks earn profits despite slowdown in economic growth,&#8217; said Mohammad Imran, head of research at the First Capital Equities.

Advances of banks were higher because public sector entities borrowed heavily. Public sector borrowings were at Rs58 billion in 2008.

He said, like MCB, Habib Bank, is also expected to announce net earnings of Rs12.8 billion (eps Rs16.9) in full year 2008, an overwhelming growth of 60 per cent over last year.

Last year the bank&#8217;s earnings were lower by 33 per cent due to abnormal provisions of Rs8.2 billion on account of non- performing loans in the aftermath of State Bank&#8217;s withdrawal of benefits of forced sales value (FSV) of assets on collateral of loan.

The reason behind the growth would be the expected absence of huge provisioning expense in the books of the bank.

Farhan Rizvi sighted higher administrative expenses of the MCB Bank.

&#8216;Despite showing net interest income, the earnings growth suffered due to a combination of higher administrative expenses and rising provisions for non-performing loans,&#8217; said Mr Rizvi.

He said due to lower gains on pension fund, the bank&#8217;s administrative expenses rose by massive 40 per cent to Rs8.4 billion as against Rs6.0 billion recorded in 2007.

Moreover, provisions and write-offs surged by 32 per cent to Rs4 billion versus Rs3.1 billion previously.

The meltdown of the financial system in developed economies is still not over and giant banks, like Citibank, Barclays, RBS, etc., were the target of the failing system for which US and European governments either injected billions of dollars or bought toxic assets. Even governments bought majority stakes in banks, like RBS, to support the failing banking system.
http://www.dawn.net/wps/wcm/connect...tani-banks-continue-to-post-large-profits--il

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## Neo

*Debt servicing to reach Rs700bn: official ​* 
Tuesday, February 17, 2009

ISLAMABAD: The plan of the government to go for borrowing of over $12 billion just from the International Monetary Fund (IMF) will expose the country to huge debt servicing that will eat up 44 per cent of tax collection leaving meagre resources for defence expenditures and for paying salaries of employees, a senior official at Ministry of Finance told The News.

Pakistan is to utilise its resources of Rs700 billion on just debt servicing in the current financial year. This year the government is likely to collect tax revenue of Rs1,260 billion and if Rs700 billion is consumed on just debt servicing and 2.9 per cent of GDP which is Rs300 billion on defence expenditure and the remaining amount is utilised on salaries and pensions of government employees, then the country would have nothing for development except loans.

Pakistan is already in agreement with IMF under 23 months period bailout package of $7.6 billion under Stand By Arrangement and now the Advisor to Prime Minister on Finance Shaukat Tarin has unveiled plan to seek more loan of $4.5 billion from the Fund which will lead to total loan of $12.1 billion that the country would collect, the official said.

There is no economic activity in the country because of the high discount rates of 15 percent, the economic growth is being feared at 1 to 1.5 percent provided the country witness the 4.5 percent growth in agriculture depending upon the wheat crops production which is not likely to meet the target of 25 million tonnes, he pointed out. 

If the massive slow down in growth continues in the next two to three years, the countrys debt sustainability capacity would deteriorate to alarming levels, the official said. This will leave no fiscal space for any development.

Pakistans external debt would swell to $51.5 billion by the end of ongoing fiscal 2008-09 up 16 per cent if compared with foreign debt of $46.5 billion in last fiscal.

The public debt of the country will climb by 20.5 per cent to Rs1.3 trillion including Rs900 billion foreign debt and Rs400 billion domestic debt. And if the additional loan of $4.5bilion, which Pakistan would seek from IMF is included, the country will have additional debt of Rs360 billion.

The county headed by President Asif Ali Zardari will witness 16 per cent growth in external debt only in fiscal 08-09, which the country experienced in the last 8 years.

The major factor in 16 per cent growth in foreign debt is moving the International Monetary Fund for bailout package of $7.6 billion. This has virtually reversed the declining trend in debt to GDP ratio.

When contacted by The News, former advisor to Prime Minister on Finance and Revenue Dr Salman Shah blasted the government policy for reckless borrowing arguing that it would lead the country into financial miseries.

He said that the government should concentrate on non-debt creating inflows, which can only be ensured if the maximum foreign investment is lured to the country. 

The external debt to GDP ratio was at 27 to 28 per cent during their tenure and it has now swelled to 45 per cent of the GDP, Dr Salman said. To a question he said to maintain the fiscal deficit say at 4 percent the country needs $8 billion every year and for this the current government has opted for reckless borrowing.

The Finance Ministry official said that during the current fiscal the country will $7bn including $4.6bn from IMF, $1bn and $500 million from World Bank and $500m from Asian Development Bank, and $400m from other IFIs. Pakistan will have to pay $3.1bn as debt servicing this year that will rise to $3.5bn in next fiscal of 2009-10. 

Prior to moving IMF, the sharp downslide of Rupee against the US dollar added Rs900bn to Public debts without borrowing of a single penny, he said.

Depreciation of the currency by just one rupee against a US dollar enhances the public debt by Rs46 billion, the Finance Ministry official said. In Musharraf regime Dollar-Rupee parity was at 1: 60, but when the Pakistan Peoples Party took the driving seat, Rupee started sliding down because of the poor foreign exchange reserves and at one time dollar-rupee parity reached at 1:84. Owing to this fact the national debt swelled by Rs900bn. To a question the official said that the GDP growth is expected to be at 2 per cent. FBR will not be able to increase the tax to GDP ratio, which right now stands at 10 per cent. It means that the countrys revenue would not be able to maintain the debt servicing. This may lead the country to an embarrassing situation in the years to come, the Finance Minstry official said.


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## Neo

*China to bear 85pc cost of Chashma power projects ​* 
Tuesday, February 17, 2009

ISLAMABAD: China will provide 85 per cent cost for construction of Chashma Nuclear Power Projects (C3 and C4) by extending suppliers credit, paving the way for generating additional electricity up to 680 megawatt over the next seven years to overcome energy shortages in Pakistan, it is learnt.

According to highly placed official sources, Pakistan and China are going to finalise the modalities of the supplier credit for two more nuclear power reactors (Chashma 3 and Chashma 4) in the upcoming visit of President Asif Ali Zardari, who is visiting Beijing from Feb 20.

During the last visit of President Zardari, China and Pakistan had signed a deal for C3 and C4 and now finalisation of related modalities will be on the agenda of the upcoming highest level visit of Pakistani authorities during this ongoing week.

In the Public Sector Development Program (PSDP) for 2008-09, the government had estimated the cost of C3 and C4 worth Rs129.905 billion, with foreign currency component of Rs80.360 billion. The government has allocated Rs220 million for the C3 and C4 in the current fiscal year 2008-09. The cost of the C3 and C4 has already gone up from Rs129 billion to over Rs140 billion mainly because of depreciation of rupee against dollar in the ongoing fiscal year, a high-level official in the Planning Commission confirmed while talking to The News here on Monday.

China has already installed a 325-megawatt reactor at Chashma and is currently working on another with the same capacity that is expected to begin producing by 2009-10. Pakistan is facing a deficit of 4,000 to 5,000 megawatts, resulting in torturous load-shedding for hours in a day.

According to Energy Security Plan up to 2030, the energy mix is quite crucial for Pakistan and in the future the energy share from nuclear will be increased from 400 MW to 8800 MW till 2030.

The official also confirmed that Islamabad will table its formal proposal before the Chinese authorities for finalising the provision of supplier credit. Supplier credit means that the Government of Pakistan would give a guarantee to the Chinese government and Beijing authorities would extend its guarantee to its official bank for repayment of the amount. The Chinese companies will complete the work on C3 and C4 and the Chinese official bank will repay the amount when the company will submit the bills after completion of various phases of the project.

The official said that although the government had allocated a nominal amount for C3 and C4 in the current fiscal years PSDP, but keeping in view the importance of this project, the government could provide Rs3 to 4 billion before June 30, 2009 in a bid to make this project operational.

Earlier, China had provided financial and technical assistance to Pakistan for the construction of Chashma 1 and Chashma 2 having a capacity of 340 megawatts each. Chashma 2 has not yet been completed and it is expected to start providing 340 megawatts electricity by the end of the next fiscal year.

These two new units will increase electricity production by 680 megawatts, which will have a positive effect on the Pakistani economy, added the official. Both plants are expected to be built at Chashma, about 300 kilometers south-west of Islamabad, in the eastern province of Punjab.

When Deputy Chairman Planning Commission, Sardar Asif Ahmed Ali was contacted for comments, without going into details, he said that the government was committed to start work on C3 and C4 within the ongoing year 2009. He also confirmed that China had agreed to extend its supplier credit but he refused to share further details on the subject.


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## Neo

*Bids for 1,191MW rental projects opened​*
ISLAMABAD: The Private Power and Infrastructure Board (PPIB) Monday received ten bids for 1,191 MW of cumulative capacity, translating to around $1.42 billion of investment.

Managing director PPIB, Fayyaz Elahi said fast track rental power projects for 2009 were being considered, which would hopefully be the last exercise for soliciting rental projects under the current fast track initiatives so as to plug the current supply demand gap. He said, We would not like to commit too many rentals beyond the need to eliminate the load shedding presently being experienced in the system.

Senior officials of the PPIB, WPPO, NEPRA and Ministry of Finance attended the opening ceremony. A two-envelope approach has been adopted for bidding the first envelope of the bids containing Qualifications i.e. Technical and Financial were opened, while the tariff bids (envelope-II) will be opened after evaluation of Qualifications.

The bid opening ceremony is a continuation of Fast Track Private Power Projects initiative of the government, the initial phase of which has already resulted in project solicitations of 780 MWs of rentals expected to come on line by end 2009 and a fast track IPP of 172 MW expected by mid 2010, while another three IPP proposals of 964 MW were under evaluation which are expected to be commissioned in 2010/11.

A healthy response has been received, despite the worldwide economic crunch. A total of fifteen (15) parties procured the Request for Proposals (RFP) and ten parties have submitted bids which include 57.81 MW Premier Energy proposed at Pasrur, 110 MW coal fired New Park Energy proposed near Nooriabad, 170 MW Ruba Energy proposed at Batapur near Lahore, 73.92 MW Tapal Group Project proposed at Kamoki, 220 MW Reshma Power proposed at Narwala near Faisalabad, 100 MW Trimax Power proposed near Chakwal, 85 MW Sialkot Rental Power proposed at Sialkot, 170 MW MHK Energy proposed near Gujrat, 138 MW Radian Energy proposed at Pasrur and 66 MW Grid Power Generation proposed at Mirpurkhas.

The qualifying bidders are expected to be issued Letters of Award (LoA) by end March 2009 and the projects are expected to be commissioned by end 2009.


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## Neo

*FDI to surpass target this year​*
ISLAMABAD: Foreign Direct Investment (FDI) will surpass last years figures, the Board of Investment (BoI) Monday informed the Prime Minister. PM, Yousaf Raza Gillani on the occasion said due to countrys geo-strategic location, availability of skilled manpower, better infrastructure, provision of raw material and low manufacturing cost, Pakistan has become a destination of choice for foreign investments. The Prime Minister was talking to the chairman of Board of Investment, Saleem H Mandviwala, who called on him. He underscored the need for persuading the foreign investors to take full advantage of the investment friendly atmosphere present in Pakistan.


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## Neo

*Two thermal power plants to be leased out​* 
ISLAMABAD (February 17 2009): The government will lease out two thermal power plants, of 1054 MW capacity, in Jamshoro and Kotri, for 15 years, after the Privatisation Commission failed to make any tangible achievement in almost seven years, official sources told Business Recorder.

The Jamshoro Power Company Limited (JPCL) was incorporated in March 1998 as a public limited company under the Companies Ordinance 1984, and is one of the four generation companies (Gencos) established in the unbundling process of the integrated power wing of Water and Power Development Authority (Wapda).

JPCL operates two electricity generation facilities --TPS-Jamshoro is an 880 mw power plant, fired by gas and furnace oil, comprising four units; TPS-Kotri facility comprises seven units with 174 mw capacity. JPCL sell-off process was started in April 2002 with the appointment of Price Waterhouse Cooper (PWC) as Financial Advisor. The government approved the transaction structure for the sale of 51 percent of its shareholding in the company, along with transfer of management.

The Expressions of Interest (EoIs) for privatisation of JPCL were initially invited in February 2003. Eight parties submitted EoIs; three parties shared interest. However, all parties lost interest due to delay in tariff determination by Nepra.

Second time, EoIs were invited on August 25, 2004. Twelve parties submitted EoIs but only four submitted Statement of Qualifications (SoQs) by the due date. However, the transaction could not be carried forward as Nepra had not determined the appropriate tariff and there were problems on the mutation of two out of three land lots held by JPCL.

Jamshoro Thermal Power Station (TPS) of JPCL is built on 485-10 acres and 19-01 acres lands respectively but their titles are yet to be transferred in the name of JPCL. Wapda took possession of the lands from Sindh government in September 1985 after paying Rs 10, 614,604 for 485-10 acres land in June 1985 at Rs 5 per square yard. Sindh government subsequently fixed the price of the land at Rs 46,972,200 in July 1994 at Rs 20 per square yard. Wapda disputed the rate and price of land fixed by the provincial government, and did not pay the balance amount.

Sources said that the GoP initiated the privatisation of JPCL in 2002 and in view of the importance of its privatisation the PC made the balance payment of Rs 36,357,596 to the Government of Sindh (GoS) in April 2006 on behalf of Wapda/JPCL. However, GoS did not transfer the land in the name of JPCL after the payment, and claimed a surcharge of 10 percent per annum from possession of the land.

The PC agreed to this and requested the GoS to issue a challan of Rs 43, 326,135 as the surcharge payment for resolution of outstanding land issues in the name of JPCL. GoS has not yet issued the challan despite Privatisation Commission's repeated requests.

Meanwhile, Ministry of Water and Power was informed on January 21, 2009 that the Private Power Infrastructure Board (PPIB) has submitted an option to lease out, rehabilitate, and operate TPS-Jamshoro for 15 years, whereafter the asset can be privatised after value-addition/upgradation.

Since the initiation of the privatisation process, the Privatisation Commission has incurred the following expenses for JPCL transaction, which have to be recovered by the Privatisation Commission from the privatisation, or lease, proceeds:

Milestone fee and out-of-pocket expenditures to FA $1,557, 163 and payment of cost of land to Sindh government on Rs 39,325,496 on behalf of Wapda. The matter was discussed in the PC Board meeting on January 26, 2009. The Board recommended that a joint inter-ministerial transaction committee, comprising members from Ministry of Water and Power, Ministry of Finance, PPIB, Pepco and PC under the chairmanship of Secretary, PC, be constituted in order to conduct the transaction and formulate the modalities to lease, rehabilitate and operate the TPS-Jamshoro and Kotri. A meeting of the said committee was held on February 4, 2009.

Sources said that CCoP had approved the privatisation of JPCL in its meeting on October 1, 2001. It is now proposed to lease TPS, Jamshoro and Kotri, instead of strategic sale.

THE FOLLOWING PROPOSAL HAS BEEN SUBMITTED FOR APPROVAL OF THE CCOP: "The PC has exclusive jurisdiction over lease transactions in terms of section 25 of the Privatisation Commission Ordinance 2000. The Privatisation Commission may, therefore, conduct the lease transaction. The lease transaction may be conducted as a joint transaction by the Privatisation Commission, Ministry of Water & Power, Ministry of Finance, PPIB and Pepco who will all be represented on the transaction committee." Sources said the proposal is likely to be cleared by the CCoP in its meeting on Tuesday.


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## Neo

*PPIB gets 10 bids for rental power projects​*
ISLAMABAD (February 17 2009): Private Power and Infrastructure Board (PPIB) on Monday received 10 bids for 1,191 MW of cumulative capacity, translating to around $1.42 billion of investment. This was stated by the Managing Director PPIB Fayyaz Elahi in the bid opening ceremony held on Monday at PPIB.

The Ceremony was also attended by senior officials of PPIB, WPPO, Nepra and Ministry of Finance. A two-envelope approach has been adopted for bidding, and on Monday, the first envelope of the bids containing Qualifications, ie Technical and Financial were opened, while the Tariff Bids (Envelope-II) will be opened after evaluation of Qualifications.

The bid opening ceremony held on Monday is a continuation of the "Fast Track Private Power Projects" initiative of the government of Pakistan. The initial phase of which has already resulted in project solicitations of 780 MWs of rentals expected to come on line by end 2009, and a fast track IPP of 172 MW expected by mid 2010, while another three IPP proposals of 964 MW are under evaluation which are expected to be commissioned in 2010/11.

The Managing Director PPIB said that fast track rental power projects for 2009 are being considered which would hopefully be the last exercise for soliciting rental projects under the current fast track initiatives so as to plug the current supply demand gap, he continued, we would not like to commit too many rentals beyond the need to eliminate the load shedding presently being experienced in the system.

A healthy response has been received, despite the world-wide economic crunch. A total of fifteen parties procured the Request for Proposals (RFP) and on Monday 10 parties have submitted bids which include 57.81 MW Premier Energy proposed at Pasrur, 110 MW coal fired New Park Energy proposed near Nooriabad, 170 MW Ruba Energy proposed at Batapur near Lahore, 73.92 MW Tapal Group Project proposed at Kamoki, 220 MW Reshma Power proposed at Narwala near Faisalabad, 100 MW Trimax Power proposed near Chakwal, 85 MW Sialkot Rental Power proposed at Sialkot, 170 MW MHK Energy proposed near Gujrat, 138 MW Radian Energy proposed at Pasrur, and 66 MW Grid Power Generation proposed at Mirpur Khas. The qualifying bidders are expected to be issued Letters of Award (LoA) by end March, 2009, and the projects are expected to be commissioned by end 2009.-PR


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## Neo

*Pakistan becomes destination of choice for FDI: Prime Minister​*
ISLAMABAD (February 17 2009): Prime Minister, Syed Yusaf Raza Gilani has said that due to country's geo-strategic location, availability of skilled manpower, better infrastructure, provision of raw material and low manufacturing cost, Pakistan has become a destination of choice for foreign investments. The Prime Minister was talking to the Chairman, Board of Investment (BOI), Saleem H Mandviwala, who called on him here the PM's House on Monday.

During the meeting the prime minister expressed the hope that BOI under the leadership of Mandviwala would work vigorously towards bringing more foreign direct investment in the country as he underscores the need for persuading the foreign investors to take full advantage of the investment friendly atmosphere present in the country.

Meanwhile, Mandviwala informed the prime minister that the BOI has already started prioritising its goals and targets keeping in view the specific instructions given by the government, adding that various initiatives for bringing more FDI into the country are under way and expressed the hope that this year investment would surpass last year's figures.-PR


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## Neo

*Pakistan assured of greater access to Australian market​* 
ISLAMABAD (February 17 2009): Australian Foreign Minister Stephen Smith on Monday assured Pakistan of boost in trade and economic co-operation and greater access to Pakistani goods in Australian market. Stephen also agreed to enhance at least four times the number of army personnel to be imparted capacity building training in his country in a bid to improve the efficiency of the Pakistani forces to combat terrorism and militancy.

The decision was taken at a meeting between Foreign Minister Shah Mehmood Qureshi with Stephen Smith, who arrived here on Monday. It was the first visit of an Australian Foreign Minister since 1998. Both sides also agreed to work on two Memorandum of Understanding - firstly to enhance co-operation between Australian Federal Police and Pakistan Anti-Narcotics Forces, secondly, to enhance co-operation between Pakistani Federal Investigation Agency (FIA) and Australian Federal Police (AFP) to check smuggling and crimes. These MoUs would be signed soon.

Addressing a joint press conference, Australian Foreign Minister Stephen Smith said that only military enforcement is not the solution to address militancy and socio-economic development. Political dialogue should be promoted to overcome the menace of terrorism and extremism.

The Australian Foreign Minister termed the enforcement of Nizam-e-Adl Regulation in Malakand Division a positive move of the Pakistani government. However, he pointed out that such agreements never proved fruitful in the past.

To a question, he said that steps taken by Pakistan in the aftermath of the Mumbai incident are also appreciable, saying that India should also play its positive role to maintain peace in the region. "Australia would appreciate if the composite dialogue process between India and Pakistan resumes," he added.

Stephen said that Pakistan and Australia could do more for enhancing co-operation in a various areas including agriculture, horticulture and trade. Besides, he said, the two countries would also enhance relations in the field of defence, promotion of civil society and strengthening democracy.

He further said that Australia would enhance the quota to impart training to the Pakistani military personnel to enable them for combating militancy in the region. He said that the two countries would also sign a MoU to check money laundering and narcotics.

Foreign Minister Shah Mehmood Qureshi said that Pakistan values its relations with Australia which are characterised by cordiality and friendship and desires to further deepen these ties through consistent engagement at the highest level. We have noted that the initiation of Defence Strategic Dialogue, Annual Bilateral Consultations between the two Foreign Offices as well as the formation of Joint Trade Committee would auger well for our bilateral relations.

He said that it is also gratifying to note that the two-way bilateral trade, (Australian $650 million approximately) though far below its existing potential, has increased. Australian companies have a significant presence in Pakistan and they are doing good business. He said that we are also happy that Australia has associated itself with the Friends of Democratic Pakistan Forum.

Qureshi said that he briefed Stephen Smith and his team on the internal situation in Pakistan especially the new government agenda and vision for the country for which the Australian Minister expressed his government's strong support.

"Within the context of bilateral trade, I made a case for enhanced market access for Pakistan which would enable us to generate more employment opportunities and root out poverty and extremism," he said. He said that both sides also held detailed deliberations on regional and international issues including the situation in Afghanistan, the constructive and positive steps taken by the government of Pakistan in the aftermath of Mumbai attacks and counter terrorism. Qureshi said that his Australian counterpart also praised our helping hand in Afghanistan's reconstruction and development, adding that he also reiterated that the war against terror could not be won by military means alone and that a multi-pronged strategy was required to root out the causes of terrorism and win the hearts and minds of the people.

Australia recognises that Pakistan is playing a pivotal role in the region and its security, stability and prosperity is vital for regional and international peace and security. Our efforts in addressing the challengers of extremism and terrorism and to promote national economic development require the support of the international community. We appreciate the understanding and support shown by Australia to our endeavours.


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## Neo

*Pakistan to seek 4.5 billion dollars from IMF​*
KARACHI (AFP) &#8212; Pakistan is to ask for an additional loan of 4.5 billion dollars from the International Monetary Fund to patch up an economy wilting under a widening trade deficit, an official said Tuesday.

The request will be on top of a 7.6 billion dollar advance already agreed with the IMF, and comes as Pakistani officials meet creditors to review how the cash is being spent.

At the talks in Dubai, which are due to last until February 26, Pakistani and IMF officials will assess financial targets set for the country to qualify for the second installment of the loan, a finance ministry official said.

"During that meeting, Pakistan will ask for an additional loan of 4.5 billion dollars," the official told AFP on condition of anonymity as he was not authorised by the government to release the information.

It was not immediately clear whether the IMF would grant the request.

Pakistan got 3.1 billion dollars in the first tranche of a 23-month standby IMF loan last November, with subsequent payments dependent on Islamabad fulfilling targets set by the Fund.

Among other tight demands, the IMF wants a reduction in Pakistan's deficit and its huge borrowing from the central State Bank of Pakistan.

"The IMF had given us a target of controlling the budget deficit at two percent, which we achieved at 1.9 percent by the end of the first half of this fiscal year," the finance ministry official said.

Pakistan's financial year ends on June 30.

"There has been a noticeable decline in the volume of government borrowing from the State Bank for budgetary support," the official said.

"Such borrowings reduced by 220 billion rupees (2.7 billion dollars) in the second quarter of this fiscal year," he added.

The central bank's recent decision to leave its discount rate unchanged at 15 percent for the remainder of the fiscal year was also in line with the Fund's preconditions, the official said.

The State Bank of Pakistan raised interest rates by two percentage points to 15 percent in November, the same month it received the IMF loan to stave off a balance of payments crisis.

Islamabad approached the IMF last year for a rescue package as it grappled with a 30-year high inflation rate and fast-depleting reserves that held barely enough to cover nine weeks of import bills.

Pakistan's economic growth is expected to fall to between 3.5 percent and 4.5 percent this fiscal year, the central bank said Saturday, slowed by domestic turmoil and the global economic crisis.

Analysts said loans were unavoidable until Pakistan reduces its trade deficit, which is 21.5 billion dollars this fiscal year.

"The government will have to make revolutionary changes in its export policy to get the trade deficit narrowed but that will take a few years," Kaiser Bengali, an independent economist, told AFP.

"Until then we'll have look for money from outside."

Pakistan's precarious financial situation had caused worldwide alarm due to its role as a key ally in the US-led "war on terror" and its position as the world's only nuclear armed Islamic power.


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## Jihad

When will we have to pay all this money back to them..?
How much more will our government need or seek from the IMF?
How bad is the situation actually regarding our economy?


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## Omar1984

Tajikistan offers to export electricity to Pakistan 

ISLAMABAD: Tajikistan has offered Pakistan to export electricity according to its needs aimed to meet recent energy crisis in the country effectively. 

Ambassador of Tajikistan in Pakistan, Zubayadulla Zybaydov has made this offer during his meeting with Federal Minister for Water and Power, Raja Pervaiz Ashraf held here on Tuesday. 

The Tajik ambassador said that Tajikistan not only self-sufficient in the production of electricity but is ready to export electricity to Pakistan. 

Raja Pervaiz Ashraf while talking on this occasion said that Pakistan would welcome investment from Tajikistan in several hydel power projects to produce 25,000 megawatt electricity. The minister assured that special incentives would be given to Tajik investors. 

The federal minister informed that Pakistan would host Pak-Tajik Ministerial Commission to be held in the mid of current year which would discuss to enhance cooperation between two countries in trade, economic and social relations specially to enhance cooperation in water and electricity sectors. 

It was agreed in the meeting that two people would be appointed for the preparation of Joint Ministerial Commission from ministry of water and power and Tajik embassy while it was also agreed to speedup the pace of implementation of decisions taken in the previous ministerial commission.

ONLINE - International News Network


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## Omar1984

Gold hits record level of Rs 28,330/tola
* Reaches highest level of Rs 24,285/10 grams 

By Moonis Ahmed 

KARACHI: The prices of gold faced an upward trend making a new record level of Rs 24,285 per 10 grams, reflecting an increase of Rs 500 per 10 grams and by Rs 580 to Rs 28,330 per tola.

In the international market the yellow metal was also up by $22 to reach $966 an ounce as compared to $944 last day. Following the rising trend in its price the precious metal has surged by Rs 1,314 per 10 grams during the last 10 days, attracting a large number of investors. 

President All-Pakistan Supreme Council of Jewellers Association, Alhaj Haroon Rashid Chand said after recent global recession most investors have turned up with their investments to this yellow metal and now this precious metal is regaining interest in the country with rising prices. 

Haroon said that after collapsing of real state business all over the world and due to the increasing prices of commodity, investors are coming towards the yellow metal. 

He said that many investors were hoping that gold would fall in value but on the contrary, the precious yellow metals continuous rise has investors thinking again and many may eventually return to gold trading, a practice that had been cold for several months. 

On the contrary, the frequent price hike is giving a negative impression to the consumers as being more expensive in value the gold is going out from the range of middle class man, he said. Local bullion market has been showing an increasing trend in prices that is keeping the consumers away from the market and now despite the ongoing marriage season only 30-40 percent sale is being witnessed, he added.

People who used to buy 22-20 carat gold, now are buying only 16-12 carat gold. In a society where the disparity between rich and poor is on the rise, for middle class families about 80 percent of the total 20 million population of Karachi, a daughters marriage has become a big financial challenge and most of the people have changed their lavish lifestyles, he said. The rising cost of living due to inflation and other pressures of paying high utility bills leave most of them groaning.

Mrs Kamal, a mother of four children and school teacher said that there was a ritual of giving good quality and most expensive gold to our daughters in our family, but as the high level of inflation has broken the back of a common man, now we are compelled to give normal gold to our daughters, she lamented.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Circular debt clearance: Rs 98 billion TFCs to be floated by month-end​* 
ISLAMABAD (February 18 2009): The government has decided to float term finance certificates (TFCs) of Rs 98 billion to resolve the outstanding circular debt issue. The TFCs will be available on kibor plus margin of 1.75 percent. Under the Securities and Exchange Commission of Pakistan (SECP) regulations, the 'Term Finance Certificate' is a debt instrument issued for the purpose of raising funds as redeemable capital.

Sources in Finance Ministry told Business Recorder that the TFCs would help the Pakistan Electric Power Company (Pepco) to retire the circular debt. The government is expected to float TFCs by the end of the current month, sources added.

Earlier, the government had planned to generate Rs 75-80 billion through floating TFCs but now the amount has been raised to Rs 98 billion to retire circular the debt of Rs 159 billion. The current amount of circular debt is Rs 180 billion. Banks had demanded kibor plus margin of 4-5 percent, but the settlement has been made between government and banks at Kibor plus margin of 1.75 percent.

The TFCs will be floated for four years, plus one year grace period, to be securitised on receivable of Pepco at Rs 270 billion from Karachi Electric Supply Company (KESC), Federally Administered Tribal Areas (FATA) and other departments. Sources said that Pepco would pay to banks what it would receive from its clients. Advisor to Prime Minister on Finance Shaukat Tarin has directed to expedite the campaign of recoveries to retire the circular debt.

Pepco is to give Rs 31 billion to Water and Power Development Authority (Wapda) and the said amount would be paid from the money generated from the sale of TFCs. Pakistan State Oil (PSO) claims Rs 68 billion from power producers. Remaining amount of Rs 67 billion will be paid to PSO through independent power producers (IPPs) to ensure the smooth supply of furnace oil for power generation purposes. PSO is also to pay Rs 63 billion to oil refineries.


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## Omar1984

Wheat donation by Punjab CM slashes its rates

By Tanveer Sher 

KARACHI: The recent wheat donation announced by the Punjab Chief Minister Shahbaz Sharif to Sindh has declined its rate in the open market. 

The Punjab CM, taking cognizance of shortage of wheat problem in Sindh during his recent visit, had announced a donation of some 50,000 metric tonnes of the commodity to replenish its fast depleting stocks in the godowns of the provincial food department.

While the new Sindh wheat crop was anticipated to reach the market by the first week of next month, Provincial Food Minister, Mir Nadir Ali Magsi had recently admitted at the floor of the Sindh Assembly that the province was facing an acute shortage of the commodity. Consequently wheat rate in the open market started plunging during the last two days from previous rate of Rs 2,650 per 100 kg bag to current Rs 2,450 for the same weight.

Following the declining wheat price, ex-flour mills rate also went down to Rs 280 per 10 kg bag as compared to previous the price of Rs 300 for the same weight.

An official of the Sindh Food Department informed that the current wheat crop in Sindh is expected to be a bumper one following upward revision in the wheat support price as announced previous year by Prime Minister, Yousuf Raza Gillani. 

New wheat procurement rate has been revised by the government which is now Rs 2,400 per 100 kg bag as compared with old price of around Rs 1,700 for the same weight. He did not rule out further decline in the wheat rate in the open market in view of expected arrival of its bumper crop within 20 days from Mirpurkhas, Jhaddo, Dadu, Thatta and Sakru areas of interior Sindh.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Current account deficit narrows in January​* 
KARACHI (February 18 2009): The country's current account deficit reduced by 25 percent during January 2009 due to the rise in services exports and decline in global commodity prices. State Bank of Pakistan statistics on Tuesday showed that current account deficit reduced to $411 million in January 2009 against $551 million in December 2008, depicting a decline of $140 million in a single month.

However, overall current account deficit increased by 1.58 percent to $7.758 billion during seven months of current fiscal year as compared to $7.633 billion of last fiscal year. SBP figures showed that despite a deficit of $411 million in January, the overall balance was positive as $565 million had been inducted in foreign exchange reserves. Services sector presented a significant improvement and contributed major share in the depleting current account deficit, while there is upward trend in goods and income deficit.

Services sector deficit decline by 38 percent to $2.471 billion with $2.161 billion exports and $4.632 billion imports in July-January of current fiscal year as compared to $3.968 billion, with $5.58 billion imports and $1.614 billion export in corresponding period of last fiscal year.

"The improving current account situation also indicates overall economic stability, and we are expecting further stability in the near future", economists said. With the current declining trend, the IMF's target of current account deficit would be easily met and declining trend would also help to get second instalment of IMF standby loan of $7.1 billion on time, they said.

Overall deficit including goods, services and income stood at $13.635 billion against current account transfers of $5.961 billion during July-January of fiscal year 2008-09. Goods imports stood at around $20 billion and exports at $11.465 billion with a trade deficit of $8.533 billion against $7.955 billion of same period of last fiscal year.

Income deficit surged by 21 percent, to $2.631 billion as compared to $2.180 billion of last fiscal year. Income from abroad stood at 4 678 million in July-January period as compared to payments of $3.309 billion. Statistics show current account deficit without official transfers climbed to $7.867 billion as compared to $7.668 billion during last fiscal year.


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## Neo

*Two power projects insurance: negative response received from French company​* 
ISLAMABAD (February 18 2009): The Pakistan Electric Power Company (Pepco) is reported to have received a negative response from Compagnie Francaise D'assurance Pour Le Commerce Exterieur (Coface) for insuring two vital power sector projects ie Chichoki Mallian and Nandipur, sources in Private Power Infrastructure Board (PPIB) told Business Recorder.

'Coface', established in 1946 and later privatised, is a world leader in trade credit information and protection (trade credit insurance) and serves around 85,000 clients in 93 countries. It has expanded in related fields of trade finance, including factoring, and accounts receivable management.

"Pakistan's low credit rating is one of the reasons for Coface's concern and they are waiting for the end of the current fiscal year to see if Pakistan gets an improved rating," sources said.

The contract for Chichoki Mallian and Nandipur projects was awarded to a Chinese company, Dong Fong Electric Company (DEC), which failed to generate the requisite funds. A few months ago, Beijing office of BNP Paribas office, an internationally reputed French bank, refused to finance these power sector projects which were not on the list of those presented by Pakistan government to the Chinese government. More recently, BNP Paribas had agreed to finance Nandipur power project, but its insurance is still an issue as Coface is unwilling to insure the project, sources added.

Pakistan Embassy in Paris has been trying to convince the relevant officials to allow the company to ensure the project, but nothing has materialised so far, sources said. "Pepco should not link Coface guarantee of Chichoki Mallian power project with Nandipur, as any such insistence may adversely affect the decision already taken by the French in the case of Nandipur power project," an official in Pepco told this scribe.

In November, 2008, Pepco had sent a delegation to Beijing, led by Abdul Qadeer, Member, Finance, to discuss financing for Guddu thermal power project, and to assess progress on Nandipur and Chichoki Mallian projects, which had already been awarded to the Chinese firm. Deliberations were held between Didier Lietaer, Global Head of Organisation (Export Finance), and Ms Li Hong, Vice President, Export Finance, Zhan Lei, Proposal Manager of Harbin Power Engineering of China and Pakistan delegation, including Pakistan Embassy officials.

According to sources, Pakistan Embassy in Paris has also advised Pepco to pursue the case with Exim Bank/Sinsore to take a lead role and provide the necessary insurance in Chichoki Mallian power project. This may lead to the French considering the case more favourably, they added.

Regarding Nandipur, HSBC said that the project had been approved by Sinosure, but this approval was not enough as there were certain other approvals that were pending, including approvals of Chinese Ministries of Commerce and Finance.

This process may take further three to six months. Sinosure, China's first wholly state-owned policy insurer, can insure both China's overseas investments and overseas investments in China, guaranteeing either shares or loans. Sources said that President Asif Ali Zardari would take up the power sector issues with the Chinese leadership during his forthcoming visit to Beijing.


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## Neo

*July-December repayment stands at $1.8 billion​* 
ISLAMABAD (February 18 2009): Pakistan has made $1.8 billion loan repayment to international financiers and countries during the first six months (July-December) of current fiscal year, Sources told Business Recorder that Pakistan makes repayment to international financiers and countries twice in a year and the government made repayment of $1.8 billion loan during the first six months of 2008-09.

Auditor General of Pakistan had pointed out in the meeting of Public Accounts Committee (PAC) on Monday that the loan figures of EAD did not match with the loan figures of the ADB and the World Bank. Sources said that the EAD is using the Debt Management and Financial Analysis System (DMFAS) software that is being used around the world.

The government debt stood at $39.7 billion on September 30, 2008. Multilateral debt was $21.458 billion that included ADB $9.910 billion, IBRD $1.919 billion, IDA $9.192 billion. The others financiers include EIB $70 million, IDB $139 million, Ifad $174 million, NORD. DEV. FUND $18 million, NORD I BANK $10 million and Opec Fund $26 million. Bilateral debt stood at $14.892 billion.

The external debt from Paris Club countries stood at $13. 687 billion including Australia $78 million, Belgium $38 million, Canada $523 million, Finland $6 million, France $2.352 billion, Germany $2.004 billion, Italy $111 million, Japan $5.912 billion, Korea $489 million, Netherlands $127 million, Norway $25 million, Russia $125 million, Spain $80 million, Sweden $157 million, Switzerland $105 million, United Kingdom $12 million and the United States $1.542 billion.

The government debt other than non-Paris Club countries stood at $1.205 billion, Bahrain $12 million, China $940 million, Kuwait $86 million, Libya $5 million, Saudi Arabia $96 million and United Arab Emirates $66 million. Eurobond/Sukuk/global bonds $2.650 billion, local currency bonds (T-Bills & PIBs) $15 million and short-term debt - IBD $540 million.


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## Neo

*Market access for Pakistani products: US seeks unified idea to help evolve strategy​* 
LAHORE (February 18 2009): The United States Administration is evolving a strategy that would ensure greater market access to the Pakistani products, but the Pakistani businessmen should strengthen bilateral trade between the two countries. Principal Officer in US Consulate Bryan D Hunt stated this while addressing the business community at the Lahore Chamber of Commerce and Industry (LCCI) here on Tuesday.

He asked the business community to come up with a unified idea to promote bilateral trade between Pakistan and the United States that could be made part of the new strategy, being evolved by the US Administration. He said that there was a policy shift in the United States as the security was top on the agenda of the Bush Administration, but President Barak Obama wanted more resources to be allocated for education, social and economic sectors.

The United States wanted to play a constructive role in this part of the region and was focusing on ending the mistrust between Pakistan, India and Afghanistan, he said. Hunt said the United States was shifting its focus from military action to basic law-enforcement, particularly in NWFP and Fata as law-enforcement in Pakistan direly needed significant support from international community.

LCCI President Mian Muzaffar Ali, speaking on the occasion, told the US official that the US drone attacks in Tribal Areas were not only tarnishing the image of the United States, but also creating unrest in the whole country, therefore, the drone attacks should immediately be stopped. "Pakistani people have attached high hopes with the new administration of President Barak Obama and consider the drone attacks a violation of Pakistan's sovereignty and territorial integrity," he added.

Pakistan and the United States had enjoyed pleasant relations for a fairer, freer, and peaceful world for more than six decades. The two countries have been strategic partners in the region from the days of cold war, he said, adding that in the war against terrorism after 9/11, Pakistan had stood firm as a frontline state in times of regional and global challenges.

As a frontline ally, he said, Pakistan had paid a heavy price by going against the will of its people. More than 5,000 members of Pakistan armed forces, including para-military forces, and a much larger number of civilians had lost their lives in the war, he added.

He stressed the need for ensuring a common stance on how the two countries could cooperate not only in fighting against terrorism, but also in the fields of education, health, trade, infrastructure and capacity building.

The LCCI President said the United States must also ensure a duty-free access to Pakistani products in the US markets, which would certainly provide a key to normalising our long-lasting bilateral relations. Senior Vice-President of LCCI Tahir Javaid Malik said the Business delegations composed of sector-specific participants or product-specific group of entrepreneurs should be organised regularly while the business houses and diplomatic mission should be encouraged to play their role for tangible results.


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## Neo

*Pak-India trade through Wagah rises to $31m from $20m ​* 
Wednesday, February 18, 2009

LAHORE: Trade with India through Wagha border substantially increased in the first seven months (July 2008 to January 2009) of the current fiscal year as Pakistan imported around $31 million worth of goods compared to last years $20 million.

According to official figures available with The News, a quantum jump has been recorded in import of different items from India through Wagha border this fiscal year. During the whole last fiscal, Pakistan imported goods worth $48.51 million through the route.

Pakistan is importing tomato, potato, onion, meat, garlic, cotton, maize and animals from Wagha land route but exports nothing to India through land due to non-tariff barriers imposed by Delhi.

The data depicted Pakistan had imported about $6 million worth of tomato with quantity of 31,354 tonnes. Besides that, 322 tonnes of meat, 88,485 tonnes of potato, 6,997 tonnes of cotton and 1,745 tonnes of maize had been imported.

Compared to those, during the last fiscal year tomato import totaled 110,038 tonnes, onion 12,651 tonnes, meat 4,570 tonnes, potato 1,243 tonnes, cotton 1,921 tonnes, maize 7,100 tonnes and 3,791 animals.

No import of onion took place in December and January while last year traders had imported 12,651 tonnes of onion on in these two months due to scarcity and lower price offered by Indian traders. However, this year no major shortage of onion has occurred but it is expected that traders would import the commodity in the coming days following its shortage in the local market.

Imran, an importer of vegetables from India, said trade in vegetables with Delhi was only seasonal. Pakistani traders import some seasonal vegetables through India when these are scarce as they get good price during scarcity while in crop season import of vegetables through India is not a viable business, he said.

Currently, only tomato was a major item being imported from India. Import of potato had sharply come down and almost ended in February after the government imposed import duty in order to protect local farmers, he said.

Meanwhile, porters and customs officials deputed at Wagha border said tensions with India after Mumbai attacks in Nov last year had no major impact on Wagha trade. The Indians are wise enough and know that they are gaining from this route. That is why they have not imposed any restrictions on their exporters, one commented.


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## Neo

*Pak Steel, PIA dropped from privatisation list ​* 
*New policy with PPP model approved​*
Wednesday, February 18, 2009

ISLAMABAD: The federal government while dropping Pakistan Steel and PIA from the privatisation list has placed a new list under the Public-Private Partnership (PPP) model to make it a win-win policy.

The government on Tuesday approved a new privatisation policy with primary model of 26 per cent share with management control of public entities to interested parties, said the Federal Minister for Privatisation, Syed Naveed Qamar.

The list includes SME Bank Limited, Peshawar Electric Supply Company (PESCO), National Power Construction Company (NPCC) with 51 per cent divestment, Faisalabad Electric Supply Company (FESCO), Jamshoro Power Company (JPCL) on lease, Heavy Electrical Complex (HEC), Pakistan Machine Tool Factory, Pakistan Mineral Development Corporation (PMDC), Morafco Industries, Pakistan Railways (PR), PTDC motels and restaurants, Utility Stores Corporation (USC), Pakistan Post, Kot Addu Power Company (KAPCO), National Insurance Company (NIC), Pakistan Reinsurance Company, State Life Insurance Corporation (SLIC), Printing Corporation of Pakistan, Services International Hotels, Sindh Engineering Limited and Republic Motors Limited.

Giving details of the PPP model, the federal minister said workers share will also be enhanced from 10 per cent to 12 per cent and it would also be de-linked with the privatisation process.

The remaining shares of privatised entities would be kept by the government and after turnaround of the units, the minister said, the sale of such units would be considered by the government and the regulators would also be strengthened to protect the interest of consumers.

For the right of ownership of privatised units, the minister said that technical advisers would be appointed. New sectors would also be studied for privatisation, he added.

Responding to various queries, the minister said that the various aspects like unbundling, regulation and other technical issues of upcoming privatisation units will be dealt with.

To a question about budgeted proceeds of Rs39 billion, the minister said that policies of the previous regimes were only to widen the budget deficit and they would not be followed. The current PPP model pursued by the PPP government will be further improved by addressing legislative issues.

To a question about continuation in privatisation proceeds, the minister said that the government had no commitment with multilateral agencies to raise money from privatisation. However, the revamping policy will continue.

About PSM and Qadirpur field, the minister said that both entities would not be on the active list of privatisation. To a question about probing previous privatised units, the minister said that the government is conducting an audit and it would be placed before the Public Accounts Committee of the National Assembly.

The minister further said that the government will devise such a model of privatisation that valuation of entities would be increased and the government will reap dividends of such benefits.


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## Neo

*IT industry could touch $10bn export in next 5 years ​* 
Wednesday, February 18, 2009
By M Farhan Zaheer

KARACHI: Adnan H Lawai, who came to Pakistan after working in Silicon Valley, San Francisco, United States for 12 years in the field of Information Technology (IT), is now running a fast growing IT company in Pakistan that he set up with his friend three years back. 

Adnan H Lawai, CEO of folio3 is a Karachi-based IT company, said I and my partner Umair (who is in USA) started folio3 three years ago with most of our customers from USA. 

After completing my college education there, I worked as an IT professional for 12 years in Silicon Valley. We both had some good contacts in US especially in the field of technology because we have been working with some prestigious companies there. The company grew at a tremendous speed and expanded its operations more than three times in last 3 years. 

In late 90s, there was a boom in the field of technology all over the world and people thronged this field, the same was the phenomenon in Pakistan. But in 2001 and 2002, it collapsed and the same results were also felt here in Pakistan. We took this as an opportunity in disguise and started our operation in Pakistan. We could afford to hire people and could get very good talent, so we accepted that challenge. We were among the very few of IT companies that started hiring in that difficult time. 

The year 2005 brought positive signs for the countrys IT sector and it again started booming and this time we went to universities and hired best talent directly. Later in 2006 when we started this company, we faced a very tough competition. But fortunately by then, we had established a very good reputation in the market, the environment was good and fresh university graduates were coming to us. 

In Karachi, we retain some 90 employees. Another branch of our company is in Sofia, Bulgaria where we have one dozen Bulgarian employees because if you look for experienced people you will not find here in Pakistan. But there you will find specific field experts unlike Pakistan. Second reason, why we went to Bulgaria, is that we have a trusted friend in Bulgaria who established all in Sofia. Karachi is home to many IT companies but these companies are relatively smaller to those that are working in Lahore. From 2002 up to date, IT industry has witnessed massive growth and our software exports are growing at a rate of 50 per cent. 

Many of our companies are small and if we desire sustainable software growth in our exports, we would need to establish big companies. 

We are in early stages of IT industry development, even the largest company in Pakistan System Limited has got 600 to 700 employees, which is just a good mid size company. In terms of quality, we could compete any where else in the world. For example, if you look at India, a preferred IT offshore destination, when ever we 

compete against Indian companies we have always won, Adnan said. 

If you take any good IT company in Pakistan, you will find that all is doing higher quality work as compared to India. When asked are you satisfied with our IT universities, he replied, Our universities can be better a lot, they have very good raw talent but they do not groom that talent appropriately. I mean students are naturally brilliant, and what they just need is a good training, We hire only top 3 to 4 per cent students from top three universities in Karachi such as Karachi University, NED and FAST, though they also need training but get all the pre-requisites easily. 

IT industry unfortunately does not have good examples. In IT we do not have too many good companies so a few experienced people stay in Pakistan. Though, here we have many including more than 7 years of experience, earning handsome salary, and doing very interesting work. 

When asked what happened in late 2002 that IT industry had grown phenomenally without solid grounds, that is why it had to face a tough period in west, it had the same crippling effects in Pakistan. 

But this time growth in IT has strong credentials. Look at the last 3-4 years growth and compared it to what we had 10 years ago, he said hopefully. 

The enrolment of students in IT institutes had started declining after the bubble burst of 2002, now in the last 1 or 2 years it is rising again because of the growing salaries and expanding the industry. 

Now, we have some solid companies run by the professional Pakistanis who have been working abroad and they know what to do in order to work sustainably, which is a big change. 

Replying to a question that where do you see local IT industry in next 5 years he said It will continue to grow, our export will certainly match Pakistan Software Export Board (PSEB) estimates and we would touch $10 billion export in next 5 years. Here, we have political instability which creates economic problems and it really hampers our growth.


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## Neo

* Pakistan should turn crisis into opportunity: Ebad ​* 
*10-year tax exemption for agro-based industries under consideration​*
Wednesday, February 18, 2009

KARACHI: Sindh Governor Dr Ishtratul Ebad has said the international financial crisis has brought Pakistan at the crossroads where it has only two options: to turn this crisis into an opportunity or to miss it.

He said, Pakistan is not directly affected by the international financial crisis, we are affected indirectly. It is time to find ways to turn this crisis into an opportunity.

Speaking to businessmen at a luncheon meeting at the Korangi Association of Trade and Industry (KATI) on Tuesday, he said problems being faced by the trade and industry would be taken up with the president and prime minister so that they could be solved on a fast track basis.

He said, Global economy is in shambles now, but it did not affect Pakistans economy to the extent that it affected many other countries.

He directed the police department to make arrangements to improve security in the Korangi Industrial Area as per demands of businessmen. He instructed Town Nazim of Korangi, Arif Khan, to look into the problems pertaining to out-of-order telephone lines in the area. He said most of the problems in industrial areas like road network and law and order situation have eased during his tenure in the last six years.

Minister for Industries Abdul Rauf Siddiqi, on the occasion, announced that tax exemption for agro-based industries in interior Sindh for 10 years is being considered and a formal decision would be made soon. He informed that in order to improve the law and order situation in industrial zones at Super Highway, boundary walls are being constructed with the help of industrialists in the area.

He further announced that water supply schemes to Nooriabad Industrial Area would be completed within seven months. He also said that the private sector would be allowed to set up to 200 megawatts power plants instead of 50 megawatts.

Mian Zahid Husain, Chairman KATI in his welcome address spelled out the details of various problems being faced by the trade and industry. He said that due to the current economic crisis, 150 industries have been closed down besides the 10,000 weaving units that were shut-down due to the situation, rendering 300,000 workers unemployed.

He warned that if the situation prevails further, severe threat to the law and order will arise. He demanded of the power corridors to reduce mark-up rates especially for the industrial sector to bring it to the level of at least 12 per cent. He also demanded to exempt industries from load-shedding of power and gas and announce compensation to the affectees of the December 27 tragedy.

He said that the government should extend moratorium of one to one and a half year on the repayment of principal amount of loans provided by banks to industries along with mark-up thereon. He lauded the efforts of the Sindh Industry Minister for his services for the execution of water supply scheme to the Nooriabad Industrial area.

He thanked the MQM leadership for electing a business representative Abdul Haseeb Khan as Senator.

The Patron in Chief, KATI, S M Muneer in his address lamented the high rates of interest in the country which are prevailing at the rate of 18 per cent.


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## Omar1984

Six projects of Information Ministry discontinued 

By Zulfiqar Ghuman 

ISLAMABAD: As many as six ongoing development projects, with a value of Rs 1.56 billion, of the Information and Broadcasting Ministry have been discontinued at least for the current fiscal year because of the prevailing financial crunch, Daily Times has learnt. 

These projects of the Information and Broadcasting Ministry have been discontinued for the ongoing fiscal year, and will not be provided any funds during this period. The government had allocated Rs 96.6 million in the Public Sector Development Programme (PSDP) for the current year for these schemes, but no releases were made because of the economic crisis, said sources. 

According to documents available with Daily Times, the following projects have been discontinued: the installation of a TV booster in Shangla area of Swat; the establishment of 47 FM radio stations across the country; the installation of a transmitter in Gwadar; the establishment of up-linking stations in Islamabad, Lahore, Karachi, Peshawar and Quetta; the expansion of educational TV channels (phase-II); and the establishment of the 100 KW MWB T/R Parachinar (FATA). 

As per the breakdown of these projects, the government had allocated Rs 187.2 million to the planned 47 radio stations in the country with the total cost of the project estimated to be Rs 475.5 million, while Rs 12.9 million were allocated for the installation of a TV booster in Shangla with the total cost of this scheme projected at Rs 52.9 million. 

Similarly, the government had allocated Rs 66.3 million for the current year to the Rs 139.8 million value project of a 100 KW/MW transmitter in Gwadar and Rs 2 million to the project for the establishment of up-linking stations. 

The expansion of educational TV channel (phase-II) is estimated to cost Rs 722.3 million, with a foreign component of Rs 698.7. The government allocation for this project was only Rs 3 million.

Daily Times - Leading News Resource of Pakistan


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## ajpirzada

*Pakistan&#8217;s current account deficit for Jan narrows 25 pc *
Wednesday, 18 Feb, 2009 | 01:44 PM PST | The State Bank of Pakistan's latest bulletain showed positive signs for the economy - File photo. KARACHI: Pakistan&#8217;s current account deficit for January narrowed 25.4 percent to $411 million, compared with $551 million in December, the State Bank of Pakistan said on its website.

Analysts said this was due to lower international oil and commodity prices along with higher remittances from overseas Pakistanis, Reuters reported.

However, the current account deficit widened in the first seven months of the fiscal year of 2008/09 (July-June) to $7.754 billion, compared with $7.633 billion for the same period last year, the SBP said on Wednesday.

&#8216;*Full year forecasts for the deficit should be around $9.2 billion to $9.5 billion compared with last year&#8217;s current account deficit of $14.036 billion,&#8217; said Asif Qureshi, head of research at Invisor Securities Ltd.*

*The deficit would be well within the target of 6.5 percent of gross domestic product set by the International Monetary Fund, he added.*

Pakistan entered into a 23-month stand-by arrangement of $7.6 billion from the IMF in Nov. The IMF team is meeting with the Pakistani delegation in Dubai from Feb. 14 to Feb. 26 for its review of the first quarter ended Dec. 31.

However analysts said Pakistan needs long term structural reforms to increase exports and decrease dependency on imports.

&#8216;Without long term structural reforms to address the inherent weakeness in the country&#8217;s trade account, the balance of payments will remain exposed to exogenous supply/demand side shocks, said Asad Farid, economist at AKD Securities Ltd.

http://www.dawn.net/wps/wcm/connect...ent-account-deficit-for-jan-narrows-25-pc--il


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## Omar1984

Kazak companies keen to invest in Pakistan 

Updated at: 0730 PST, Wednesday, February 18, 2009 

ISLAMABAD: A delegation from Southern Companies Group Kazakhstan here on Tuesday visited Board of Investment to discuss issues related to investment in various sectors of economy. 

The delegation, led by Igor Tomas, President of the Group, is visiting Pakistan to explore investment opportunities in power, oil and gas as well as energy conservation sectors. 

The delegation members included Companies General Manager, Ms. Natalya Badenova and its Director Marketing, Yedge Yessen Kuov. 

The delegation interacted with BOI senior officials, including Iqbal Ahmad and Riaz Ul Haq Executive Director Generals as well as with the senior representatives of Ministry of Petroleum and Natural Resources, PPIB, Alternative Energy Development Board and National Energy Conservation Centre. 

The delegation was apprised about tremendous potential in the energy sector due to the seriously worsening gap between energy supply and demand, non-sustainability of fossil fuels (limited oil and gas reserves), unpredictability of oil prices, lack of energy conservation culture and huge renewable hydel and wind potential. 

It was further informed by ENERCON that estimated saving potential for Pakistan through energy efficiency is US $ 2 billion annually. 

While referring to the opportunities in hydel and coal for private sector, PPIB representative informed the delegates that so far only around 6,000 MW has been tapped from an estimated potential of 45,000 MW for the development of small, medium and mega Hydropower projects. 

Also Pakistans Thar Coal Reserve are estimated at about 175 billion tons, which are still untapped. 

The delegation members expressed their keen interest to invest in all major areas related to energy sector as there is huge potential and committed to visit in March this year to have basic assessment of opportunities and research completed in consultation and collaboration with the concerned ministries and departments.

Kazak companies keen to invest in Pakistan


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## Omar1984

Cotton sector to bear the brunt of cut in PSDP

By Razi Syed

KARACHI: Out of 16 agri projects discontinued by the federal government five projects are in cotton related sector, the stakeholders said Wedensday.

"Inadequate policies forced the government to discontinue the PSDP programmes, which were not only of great importance for the growth of agriculture but also for boosting country's cotton sector," Executive member of KCA and PYMA, Ghulam Rabbani said.

"Pakistan once again will not be able to achieve cotton crop target this season".

The federal government and Central Cotton Committee has failed to set the target of crop for this season, because of non-professional approach, biased data and ignoring real stakeholders in the field.

Rabbani said the construction of office building for Pakistan Central Cotton Committee (PCCC) at Karachi worth Rs 101.4 million is halted and will be included in PSDP 2009-10.

He said around Rs 50 million were allocated in PSDP and it was claimed the financial crisis compelled the government to discontinue funding for this project.

Another discontinued project from public financing was Managing Burewala Strain of Cotton Virus worth Rs 149.1 million. This was one of the prime projects to monitor and read virus on cotton.

Rabbani said around Rs 0.7 million were invested in the project till December 2008 while the government allocated Rs 4.9 million for 2008-09 but the financial constraints could not allowed the government to finance this project and it was forwarded in 2009-10 PSDP. 

He said another discontinued project is 'Adaptation of Integrated Pest Management Approach for Cotton Crop in Sindh' worth Rs 75.5 million. It included a Reconstruction of Test House at Karachi worth Rs 71.3 million. 

He said the growers were eyeing for the completion of this facility for their convenience.

The provisions of departmental facility, livestock production, marketing and grading of the products remained prime in any developing sector and the deferred programe will definitely have negative impacts, he added.

Similarly the project Research and Development of Cotton Programme (PC-II) revised worth Rs 9.8 million ahs also been discontinued. Adopting modern agricultural practices to improve and upgrade the cropping standards in Pakistan is the need of the hour. 

He said the country is already facing a lack of expertise in fighting cotton virus and minimising crop from heavy rainfall in the interior Sindh. "The discontinuation of development projects will affect the sector and the target." 

He said the crop in Digri, Naukot, Sukkur, Khairpur and Nawabshah remained prone to attack of mealy bug and reddening of leaf, where 90 percent of BT cotton crop is sown.

He said we were still lacking to fight against mealy bug and Cotton Leaf Curl Virus (CLCV) attack and reddening of leaf.

Daily Times - Leading News Resource of Pakistan


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## Omar1984

Pakistan clears $517m Eurobond payment 

Thursday, February 19, 2009
By By Mehtab Haider 

ISLAMABAD: Pakistan has paid back $517 million to investors of Eurobond on its due maturity date of Feb 18, 2009, indicating Islamabads ability to meet its external liabilities without fear of default after obtaining $7.6 billion loan package from the International Monetary Fund (IMF), a senior official of government confirmed on Wednesday night.

Pakistan had launched Eurobond $500 million in Feb 2004 during the Musharraf regime.

After maturity of five years, the Eurobond payment including its principle amount of $500 million was due on Wednesday and Islamabad successfully fulfilled this obligations.

We have paid back Eurobond payments including its principle amount and interest worth $517 million to its subscribers on Wednesday, State Bank of Pakistans spokesman, Syed Wassimussin confirmed while talking to this scribe here on Wednesday. 

The Detusche Bank out of three Lead Managers appointed by Islamabad for Eurobond deal was the agent for making payments to subscribers of this paper. Yes we received letter from the Economic Affairs Division (EAD) for making payments to Eurobond subscribers and we transferred the amount of $517 million into the accounts of our Agent bank for this deal, official sources also confirmed on Wednesday night.

Before getting $7.6 billion loan package from the International Monetary Fund (IMF) on November 2008, there was risk of default because of rapidly depleting foreign currency reserves.

The foreign currency reserves held by the central had fallen around $3 billion. 

Now our foreign currency reserves are over $10.2 billion and there is no problem for making this substantial repayment, the spokesman of the central bank further said.

Pakistani officials and the IMF authorities are currently holding talks in Dubai to qualify for the second tranche worth $775 million of $7.6 billon programme approved in November 2008 to save the country from a default on external payments.

Pakistan is also set to seek additional $4.5 billion from the IMF, jacking up the loan amount from $7.6 billion to $12.1 billion in a bid to improve its foreign currency reserves.

The government should make efforts to generate more revenues as well as curtail expenditures side rather than seeking more foreign inflows, said an independent economist and added that the debt sustainability would become a major issue if Islamabad continued to get foreign loans without well thought out strategy.

The 23-month stand-by loan gave Islamabad $3.1 billion immediately and the rest of the money is to be phased in over the course of the period if Islamabad manages to fulfil IMFs envisioned targets of reducing the deficit and State Bank of Pakistans financing of the government, among other tight fiscal and monetary measures.

Pakistan clears $517m Eurobond payment


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## Omar1984

Microsoft expands access to affordable PCs 

Thursday, February 19, 2009
By our correspondent

KARACHI: Microsoft has initiated the countrys first Registered Refurbishing programme with the support of 20 partner computer refurbishers to expand the affordable and safe channels through which local businesses, households and schools can obtain high-quality used PCs in Pakistan.

Under this initiative, Microsofts registered partners will be able to sell refurbished PCs with genuine Microsoft software pre-installed at a price starting from Rs8900.

Microsoft Registered Refurbisher programme creates economic opportunities for both our partners and our customers, said Ali Hoballah, Middle East and Africa regional general manager of the Microsoft Unlimited Potential Group.

Microsoft Registered Refurbishers provide refurbished PCs starting from Rs9000 with genuine Microsoft software, access to future Microsoft software updates and downloads and the peace of mind that comes with after-sales support from authorised partners and a six-month warranty.

In addition, the program will aim to cut down on environmental impact of e-waste by providing customers with the option to recycle the PCs when they reach the end of their useful life.

Microsoft expands access to affordable PCs


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## Omar1984

Sialkot surgical instrument sector reports $255m export 

It irritates local customers to buy products at high rates and without discount

Thursday, February 19, 2009
By Asadullah

KARACHI: The slumping export of the quality life-saving surgical instruments improved by the end of last financial year, when the Sialkot-based surgical instrument sector posted a $255 million export, but this development has flooded the local market with quality-compromised items at higher rates. 

A group of medicos were seen negotiating the prices of different dental instruments and accessories at Ansa Surgicals in Saddar they selected to buy but all their pleas were in vain and they had to foot the bill without any discount. 

Were trading at 5 to 6 per cent profit margin, the salesman told the customers. According to the surgical instrument manufacturers, the rising cost of utilities and even of raw materials, coupled with high banking service charges and high export refinance rates of central bank, are some of the hindrances to the spiraling consumption of surgical instruments at home and even abroad. 

Prices of surgical items made from stainless steel have come to stay, eliminating the bargaining margin for both hospitals and individuals such as medicos. Only a pair of scissors, a widely used instrument, is produced in 40 different kinds and in hundreds of sizes. We order instruments of varied quality having our clientele in mind, said another trader. 

The export of surgical instruments suffered a sharp slump, calculated to be around $7 million during July-May 2007, as it stood $183 million during the same period last year. But the last financial year 2007-2008 witnessed exports of surgical instruments worth $255 million.

This means the surgical instrument sector has shown growth of 34 per cent as compared to preceding years exports of $191 million. 

This also means that we have been consuming more stainless steel, the trader expatiated. We are already facing scarcity of scrapped steel, which has been a great source of stainless steel.

Aamir Riaz, former chairman of Surgical Instrument Manufacturers Association of Pakistan (SIMAP), believed that the leakage of production technology, rise in production costs and the export of steel scrap are playing havoc with the metal-dependent industries.

Scrap has been a major source of stainless steel, which fulfils approximately 30 per cent of the requirement. 

The SIMAP retains more than 2,300 members, engaged in manufacturing of surgical instruments to meet the export commitments to the international buyers. The value of exports of surgical instruments for the financial year 2007-2008 was $255 million, said a SIMAP spokesman. 

As the local manufacturers of surgical instruments struggle with the concept of indigenous branding of their products, parallel export of surgical forgings, coupled with semi and un-finished products, have started causing detrimental effects on the exports of surgical instruments.

Domestic and overseas consumption of a huge variety of surgical instruments is directly linked to the branding at the retailers end. The only difference is of quality. The local market by virtue of its buyers purse is naturally filled with medium quality instruments as the traders described it. 

We buy instruments from Sialkot prior to their eventual sale, Mujahid of Ansa Surgicals explained. It is very much the same what Boots, for instance, does with Made in Pakistan instruments. It makes attractive jackets for most of items to own the products in a plain commercial manner. 

According to the SIMAP, the surgical instrument industry manufactures about 100 million disposable and reusable instruments annually. 

Disposable instruments constitute 60 per cent of our exports while the rest of the 40 per cent is indebted to reusable surgical instruments, said the SIMAP spokesman.

Sialkot surgical instrument sector reports $255m export


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## Neo

*LSM registers 4.7pc negative growth ​* 
Thursday, February 19, 2009

ISLAMABAD: Large-scale Manufacturing (LSM) in the first six months has recorded an overall negative growth of 4.72 per cent, the Federal Bureau of Statistics (FBS) data states.

Overall indices for July-Dec 2008-09 (1HFY09) depict a decrease of 4.72 per cent over July-Dec 2007-08 (1HFY08). 

The index for December 2008 shows decrease of 1.64 per cent over December 2007, said the FBS data.

The analysts attribute the consecutive decline in LSM to increase in interest rate and power outages that multiply the cost of production making the business costly.

The LSM negative growth would force the financial managers of the country to further revise growth targets for this fiscal to around one to one and half per cent, analysts opined.

The OCAC compiled data for petroleum products shows negative growth of 8.05 per cent. Except motor sprit (1.51), all the petroleum products including jet fuel (9.56), kerosene (12.59), high speed diesel (3.53), diesel oil (31.66), furnace (9.63), lubricating oil (10.07), jut batching oil (11.34), solvent naphtha (18.51), petroleum products (19.82) and LPG (19.09) registered a negative growth when compared with the corresponding period, said the FBS data.

Ministry of Industry index registered a negative growth of 4.79 percent comprising 35 main industries in the quantum index numbers of large scale manufacturing, it added.

The industries showing positive growth include, cigarette (13.29), jute goods (4.55), sacking (34.29), nitrogenous fertilizer (1.03) and phosphatic fertilizer (36.38), glass plates and sheets (19.23), cement (2.31), coke and Pakistan Steel (55.54), tractors (6.98) and light commercial vehicles (11.58).

Industries on negative side are sugar (6.6), cotton yarn (0.51), cotton cloth (0.30), hessian (31.71), paper board (1.44), soda ash (1.74), caustic soda (2.85), pig iron (14.93), billets/ingots (47.88), C R sheets/strips/coils/plates (28.68), trucks (15.74), buses (45.76), jeeps and cars (45.37), motorcycles (15.66) and others (43.10), figures say.

According to FBS data, the industries showed a negative growth include vegetable ghee (13.07), cooking oil (4.79), wheat and grain milling (10.62), beverages (4.30), woolen & carpet yarn (15.43), knitting wool (9.54), upper leather (3.63), sole leather (3.77), tablets (0.15), galenicals (100), toilet soaps (17.42), sulphuric acid (6.67), chlorine (10.74), synthetic resins (7.2), cycle tyres (42.90), cycle tubes (38.68), chaff cutter (13.50), sugarcane machine (48.56), power looms (41.38), bobbin & shuttle (19.23), sewing machines (2.9), refrigerators (1.18), deep freezers (23.90), air conditioner (13.75), electric bulbs (24.44), electric tubes (19.56), electric fans (9.24), electric motors (23.48), electric meters (12.3), switch guns (11.3), electric transformers (4.36), tv sets (33.99) and bicycles (12.67).

Similarly the industries in FBS data showed positive growth include tea blended (6.33), starch and its products (14.11), footwear (17.43), cotton (ginned) (3.56), plywood (41.25), liquids/syrups (2.02), capsules (1.05), injections (3.9), ointment (3.38), soaps & detergents (6.02), paints & varnishes (S) (18.83), paints & varnishes (L) (17.33), hydrochloric acid (6.36), polishes & creams (1), matches (3.94), motor tyres (3.4), motor tubes (32.36), safety razer blades (14.47), diesel engines (7.55) and wheat thrashers (37.59). 

The provisional QIM has been computed in FBS on the basis of latest production data of 100 items received from sources i.e. OCAC, Ministry of Industries & Production and Provincial Bureaus of Statistics. OCAC supplied the data of 11 items, Ministry of Industries supplied the data of 35 items and Provincial Bureaus of Statistics provided data for 54 items.


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## ajpirzada

*FDI increases despite global crisis* 
By Shahid Iqbal 
Thursday, 19 Feb, 2009 | 05:52 AM PST | 
KARACHI: Pakistan attracted higher foreign investment despite severe global financial crisis during the first seven months of the current fiscal year. 

The inflows reached $2.588 billion and were slightly higher by 1.3 per cent as compared to the corresponding period of last year. 

However, portfolio investment remained negative and an outflow of $356 million was recorded during the seven months and it was much higher than the outflow of $0.4 million in same period last year. 

Details showed that foreign direct inflows came from various regions and countries. The trend of inflows did not change except that inflows from the North America witnessed a sharp fall. 

Foreign investment dried up in most of the countries as liquidity crunch in the banking industry of the developed economies left no option for flow of credit across the globe. 

Most of the large scale industries were getting help from government in the form of funds to continue their operation or minimise their losses. 

However, in case of Pakistan foreign investment continued to land in focused areas, like telecommunications, oil and gas exploration, power sectors and financial business. 

The State Bank reported that foreign investment without privatisation proceeds increased by 6.1 per cent during the first seven months. Till last year, $133 million were coming in as privatisation proceeds of the PTCL. 

The telecommunications sector attracted a total of $708.5 million compared to $665.8 million during the period. 

Oil and gas exploration sector attracted a total of $418 million which was 14 per cent higher than the investment made during the same period of the preceding year. 

FDI was 112 per cent higher in power sector as inflows reached $80 million compared to about $38 million in this period last year. 

It may be surprising for many financial experts that while the financial meltdown engulfed highly developed economies, Pakistan attracted $635 million in financial sector during the seven months. 

This inflow was seven per cent less than the same period of last year, but showed the potential in this sector. 

Latest reports showed that Pakistani financial system performed well during the calendar year 2008 despite mounting pressure on global financial system prevailing since 2007. Most of banks booked profit during 2008. 

One more attraction was witnessed in the packaging sector where over $100 million FDI landed during the seven months. 

The region-wise FDI shows that inflows from North America fell by 46 per cent to $524.5 million during the period while it was $970 million in the same period of last year. 

Investment from other regions, like Middle East, Europe and others, remained almost same with slight variation in the amount of investment.
http://www.dawn.net/wps/wcm/connect...iness/fdi-increases-despite-global-crisis--za


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## Neo

*Pakistan, Iran yet to utilise trade potential: FPCCI ​* 
Thursday, February 19, 2009

KARACHI: President Federation of Pakistan Chambers of Commerce & Industry (FPCCI) Sultan Ahmed Chawla has said that though Pakistan and Iran share common borders and religious values, the volume of trade between the two countries is insignificant as compared to the potential available.

The volume of trade is just $573 million, he said while talking to Pakistani Ambassador to Iran M B Abbasi who visited the FPCCI to discuss matters of mutual interest, especially those related to the promotion of trade and investment relations.

Chawla emphasised, We need to set priorities and the government must provide facilities and incentives to bring down the cost of doing business to be competitive in the international market.

Chawla appreciated Irans gesture to supply 30 barrels of crude oil per day to Pakistan on deferred payment for 90 days, and thus the volume of trade is expected to cross $2 billion by the end of the current fiscal year.

Tariq Sayeed, President SAARC Chamber of Commerce and Industry (SCCI) and Chairman Pak-Iran Business Council said that the government should give attention and put priorities in its policy to boost regional trade.

What we could not achieve through bilateral trade with countries such as Iran and India, we could penetrate these markets for successful economic and trade cooperation with our active role and participation in regional economic blocs such as SAARC, OIC and ECO, he stressed.

FTA is intended to act as a catalyst for increased regional integration and to facilitate trade and investment flows within the region, Sayeed added. He emphasised that for enhancing bilateral trade, adding that we must do target mapping and set short term goals.

In this respect, he suggested that both Pakistan and Iran should use all the four economical and traditional modes of transportation in an efficient manner, cross-border trade should be supported and promoted, services of buying agents should be availed to work as a bridge between an importer and exporter to smoothen their sourcing/buying process from Pakistan.

He further said that periodical evaluation should be done to ascertain the problems and progress on trade and economic development between the two countries.

President, Indo-Pak Chamber of Commerce & Industry, S M Munir suggested that concrete and result-oriented measures should be taken by the government by facilitating cross border trade and infrastructure development for easy transportation of goods to improve and enhance bilateral trade relations.

Zubair F Tufail, Former VP, FPCCI said that the main hurdle in the way of bilateral trade is Pakistani Banks, which are not opening LCs in view of the sanction to Iran. He inquired how India, Turkey and some EU countries are carrying out trade and business with Iran under the sanction if their banks are not opening LCs. He therefore underscored the importance of opening a banking channel for smooth business transactions.


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## Neo

*Govt revises major budget projections ​*
ISLAMABAD: Major projections of the federal budget 2008-09 have been revised upwards keeping in view the targets agreed with International Monetary Fund (IMF), official sources told Daily Times on Wednesday. 

According to actual and revised figures of the budget, total revenues had been estimated at Rs 1.809 trillion at the time of the announcement of the budget, however, it has been projected that revenues would be Rs 1.995 trillion for the current fiscal year, showing an increase of 10.28 percent. 

Realisation of total revenues during first half (July-December) period of current fiscal year was targeted at Rs 871 billion and revenue realised during this period has been at Rs 847 billion. 

Tax revenues were estimated in budget at Rs 1.307 trillion and now it has been projected that tax revenues would be around Rs 1.419 trillion for the ongoing fiscal year, projecting an increase of 8.56 percent. 

A target was fixed at Rs 608 billion for tax revenue collection for the Jul-Dec period and it has now been estimated that tax revenue collection would be Rs 586 billion by December 31, 2008. 

Non-tax revenues were projected at Rs 502 billion at the time of the announcement of the budget and now these have been projected at Rs 576 billion with an increase of 14.74 percent in the current fiscal year. 

Target for collection of non-tax revenue during first half (Jul-Dec) period of current fiscal was set at Rs 263 billion and projected collection has been reported at Rs 261 billion. 

Total expenditure for the current fiscal year was budgeted at Rs 2.391 trillion and such have been projected at Rs 2.557 trillion showing an increase of Rs 166 billion or 6.94 percent. 

The government had estimated current expenditures at Rs 1.953 trillion at the time of the announcement of the budget 2008-09. However, during the fiscal year, the estimates for current expenditures have been revised upwards to Rs 2.147 trillion for July-June period of this fiscal year. It had been projected that current expenditure will remain Rs 987 billion during Jul-Dec period, however, current expenditures have been recorded at Rs 970 billion registering a decrease of Rs 17 billion or 1.75 percent. 

Development expenditures from PSDP and out of the PSDP were estimated at Rs 438 billion for this fiscal year 2008-09 and were revised downwards to Rs 399 billion. The target was to spend Rs 135 billion on development during the first half of the current fiscal year and actual development spending has been recorded at Rs 125 billion only. 

At the time of the announcement of the budget, budget deficit was projected at Rs 582 billion and later this projection was changed to Rs 562 billion for the full fiscal year 2008-09. The budget deficit was projected at Rs 262 billion for the first half (Jul-Dec period) of this fiscal year and actual deficit was registered at Rs 259 billion. 

The government had estimated finances availability at Rs 582 billion from external as well as internal borrowing, however, this has been estimated at Rs 562 billion for the ongoing fiscal year. Against the target of Rs 262 billion financing has been estimated at Rs 259 billion during Jul-Dec period of ongoing fiscal year. 

Availability of external financing (borrowing) was projected at Rs 190 billion in the budget and target for external borrowing was upward revised at Rs 351 billion for the fiscal year. Total external borrowing target for the first half was set at Rs 57 billion and actual borrowing is estimated at Rs 12 billion. 

Domestic borrowing was projected at Rs 392 billion in the budget and now this has been revised downwards to Rs 212 billion for the current fiscal year. Domestic borrowing target was set at Rs 206 billion for the first half (Jul-Dec) period and estimates show that domestic borrowing is at Rs 247 billion. 

Government's borrowing from State Bank of Pakistan was zero at the time of the announcement of the budget, however, it has been projected that government's SBP borrowing for the ongoing fiscal year will be Rs 166 billion. The government had set target of Rs 258 billion borrowing from SBP in Jul-Dec period and actual borrowing was estimated at Rs 205 billion. It is expected that SBP borrowing till June 30 would be brought down to Rs 166 billion by retiring Rs 39 billion.


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## Omar1984

Pakistan Can Help Malaysia Develop Halal Hub


KUALA LUMPUR, Feb 19 (Bernama) -- Pakistan with its vast expertise and experience in the agriculture sector can assist Malaysia in developing a halal food hub, its High Commissioner Lt-Gen (Rtd) Tahir Mahmud Qazi said Thursday.

Pakistan is also willing to provide land to Malaysian investors to set up cattle farms to ensure regular supply of halal meat, he told Bernama.

He said Pakistan could also provide qualified veterinary doctors and abundant farm workers for developing livestock, poultry and fisheries sectors.

Tahir said both countries were already cooperating in manufacturing fertilizers and animal feed and are in the process of setting up a seed bank.

This would also be the focus of the upcoming D8 Ministers' Conference on Food Security beginning here on Wednesday.

Besides Pakistan and Malaysia, other member countries of the Group of D8 are Indonesia, Iran, Egypt, Turkey, Nigeria and Bangladesh.

Tahir said Pakistan and Malaysia were enjoying excellent relations in trade, economic, social and other fields.

Bilateral trade was growing fast, especially in the past two years, with two-way trade surging from US$834 million (RM3.048 billion) in 2006 to almost US$1.8 billion (RM6.5 billion) last year.

Fourteen Malaysian companies were actively engaged in the development of infrastructures, housing, roads, energy and solid waste management in Pakistan.

There was also frequent exchange of delegations between both countries.

Pakistan appreciated Malaysia's role in D8 and would give its full cooperation in achieving the objectives of the grouping which was to improve the member country's economy and ultimately the living standards of its people.

BERNAMA - Pakistan Can Help Malaysia Develop Halal Hub


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## Neo

*13 percent fall in foreign investment​* 
KARACHI (February 19 2009): Net foreign investment has declined by 13 percent during the first seven months of the current fiscal year mainly due to massive outflow from portfolio investment due to of poor law and order situation and political instability.

Central bank statistics on Wednesday showed net foreign investment comprising foreign direct investment (FDI) and portfolio investment constantly on decline and net foreign investment registering a decline of some $324 million during the first seven months (July-January) of current fiscal year 2009.

With current decline, overall net foreign investment stood at 2.2317 billion dollars during the July-January of the current fiscal year as compared to 2.5557 billion dollars in the same period of last fiscal year. "Major reason behind this dip is decline in the portfolio inflows, as the foreign investors are reluctant to invest in the equity market due to political uncertainty," economists said.

However, the increase in the foreign direct investment is a positive indication and it is expected that after the successful negotiation with IMF, foreign investors would also invest in the equity market, they added.

They said that over 2.2 billion dollars net foreign investment is an encouraging figure in a situation when political uncertainty and poor law and order are prevailing in the country. They also stressed for the political stability for the breakdown of outflow from the portfolio investment.

The SBP statistics indicated that Foreign Direct Investment (FDI) during the July-January increased by 1.3 percent, while the massive outflow posted a decline of 99,412 percent in the portfolio investment. Therefore, the major decline in portfolio investment has also played a vital role in the overall decline in the net foreign investment.

FDI reached 2.587 billion dollars during the first seven months of fiscal year 2009 as compared to 2.555 billion dollars in corresponding period of last fiscal 2008, depicting an increase of 32 million dollars during July-January of current fiscal year.

Portfolio investment stood in a negative position of 356 million dollars during the period as compared to an investment of 0.4 million dollars in same period of last fiscal year 2008. Including privatisation proceeds, total private investment shows a decline of 10.6 percent to 2.266 billion dollars during seven months, which previously stood at 2.534 billion dollars.


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## Neo

*Purchase of fertiliser from South Korea: government decides to turn down $30 million soft loan offer​*
ISLAMABAD (February 19 2009): Pakistan has decided to turn down the offer of 30 million-dollar soft loan facility for the purchase of fertiliser from South Korea due to limited supply as well as high price quoted by the Koreans, sources revealed to Business Recorder on Wednesday.

According to the sources, Korea had agreed to provide 30 million-dollar soft loan facility to Pakistan due to its shortage of the commodity in the market. The Koreans have a limited capacity to export estimated at just 8,000 tonnes of urea. Pakistan's basic requirement is considerably more than what was offered by the Korean government.

"We were being offered DAP at 650 dollars per tonne and urea at 450 dollars per tonne, while Pakistan is already getting DAP at 284.9 dollars per tonne and urea at 385 dollars per tonne from Saudi Arabia", a senior official of the Ministry of Food, Agriculture and Livestock (Minfal) told Business Recorder, while requesting anonymity.

He said: "These prices are much higher than what is available internationally. We need to import 10 million tonnes of urea to fulfill the basic requirements of the farming community during the current calendar year." The official revealed that the government had already imported 0.4 million tonnes of urea, while 0.260 million tonnes of urea would be imported during the current month.

In the domestic market, urea shortage has led to hike in its price to Rs 900 per 50-kilogram bag as against the government announced price of Rs 670 per 50-kilogram bag. "It is true that farmers are facing difficulties to get even a single bag of urea, but it is also a fact that the basic requirement of the wheat crop for this commodity has decreased. That is why urea is being imported by the government that may be stored for use in the next season's crops," the official added.

Use of urea in most parts of the world has increased over the past few years. The consumption of urea in India and China has increased considerably. Pakistan produces 4.8 million tonnes of urea, while the country's requirement is around 5.6 million tonnes, thus leaving a gap of 0.8 million tonnes in supply and demand.

Delay in announcement of a fertiliser policy and the installation of additional fertiliser plants can be attributed to the failure in achieving self-sufficiency in fertiliser production.

Lack of financial resources and delay in opening of letters of credit (L/Cs) account for the existing shortage of urea in the domestic market - a delay attributed to the financial crunch that led the country to seek the 7.6 billion-dollar standby arrangement from the International Monetary Fund (IMF).


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## Neo

*Turkey for exploring trade potentials with Pakistan​*
KARACHI (February 19 2009): Consul General of the Republic of Turkey, Fethi Etem has said that bilateral trade potential is not properly utilised and now its time to explore the enormous trade potential.

Speaking at a meeting of Karachi Chamber of Commerce and Industry (KCCI) on Wednesday, he briefed about the huge demand of Iron & Steel, construction & building materials, chemicals & healthcare products etc which European countries purchase from Turkey and sell in the Middle East & Asian countries. He also appreciated joint ventures between business community of Pakistan & Turkey for trade & industry.

He welcomed Pakistani trade promotional exhibitions in Turkey. He also focused on the need of Pak-Turkey joint ventures for trading of halal food. President, KCCI invited Consul General for participation of Turkish Trade & Industrial sector in the forthcoming annual trade fair, "My Karachi Expo 2009".

Anjum Nisar said that Pakistan-Turkey bilateral trade must be enhanced due to huge potential market He stated that Pakistani business community in general & Karachi Business Community in particular is very keen in development of bilateral trade. He said that being a Muslim friendly country, Turkey has same religious and cultural values. He urged to enhance the trade of value-added textile products to Turkey.


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## Neo

*Over 50.93 mllion tons of sugarcane production expected this year​*
ISLAMABAD (February 19 2009): About 50.93 million tons of sugarcane crop is estimated to be produced this year to fulfil the domestic consumption requirements. An official in the Ministry of Food, Agriculture and Livestock (Minfal) told APP here on Wednesday that sugarcane crop was cultivated over 1.03 million hectare of land this year as compared to cultivation area of over 1.24 million during 2007-08.

The sugarcane was cultivate in all four provinces of the country, the official said adding that in Punjab the crop was cultivated on 674 thousand hectare of land to produce 31,844 thousand tons of sugarcane. In Sindh, NWFP the sugarcane was grown on about 264 and 104 thousand hectare of land respectively to get 31,844 and 14,302 thousand tons of crop respectively during the current year, he added.

In Balochistan, 1000 hectare of land was set to produce 41 thousand tons of the crop output during recent year, he said. He said that about 3.5 million tons of sugar was estimated to be produce during the current financial year as the country consumed about 4.3 million tons of sugar annually.

About 1.1 million tons of sugar was available as carry forward stock to tackle the domestic market demand while a total of 4.6 million tons sugar would be available as against its consumption, he added. The official said that 84 sugarcane crushing mills were fully operational all across the country to start timely crushing of sugarcane to avoid shortage of the commodity and for smooth supply of sugar in the market.

The installed sugarcane crushing units were able to produce about 6 million tons of sugar per annum, he added. He said that during the current financial the indicative price of sugarcane has been set as Rs 80 per 40 kilogram in Punjab and NWFP provinces, while in Sindh province the price would be Rs 81 per 40 kg.

Minfal was endeavouring to provide the farmers maximum benefits for their output to encourage them to produce more crops to make the country self-sufficient in food production as well as to alleviate the poverty in the country, he added. The millers also paid all the outstanding dues of the farmers, the official said adding that this was the result of governments campaign, directing millers to make timely payments to farmers.


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## Neo

*Power shortage will stay at 4,500 megawatts in January 2010​* 
LAHORE (February 19 2009): The government's dilly-dallying political will to overcome power shortage by December 2009 is being translated into reality on a hope and a prayer, as the power sector experts and analysts believe that any such government plan is not worth the paper it is written on.

According to the independent power sector experts, the power shortage in the country would stay at 4,500 MW in January 2010 as it was on January 4 this year. They mentioned that the official website of power sector itself reveal that the country would be facing a power shortage of 2000 MW at end of 2009, despite addition of a few new power generation projects both on hydel and thermal fronts.

In actual, they pointed out, the power shortage would be over 4000 MW on an average as it was at the outset of current calendar year. It may be noted that the installed capacity of Water and Power Development Authority (WAPDA) is 11,374 MW (59 percent) electricity besides 462 MW (2 percent) electricity of Pakistan Atomic Energy Commission (PAEC).

The total power generation capacity in public sector stands at 11,836 MW (61 percent). In private sector, the Independent Power Producers (IPPs) have generation capacity of 5,808 MW (30 percent) besides 1,756 MW (9 percent) of Karachi Electricity Power Supply Company (KESC) and the total generation in private sector stands at 7,564 MW (39 percent).

And the grand total of power generation capacity in the country is 19,400 MW (100 percent). The private sector experts have pointed out that demand for electricity is 17,868 MW against generation capacity of 15,427 MW both in public and private sectors.

These circles fear that the government would never be able to overcome power crisis in a situation where country's dependence on thermal is 64 percent against a dependence of 36 percent on hydel.

The independent power sector analysts have lamented that the government's incorrect focus on the issue is proving a real stumbling block in early resolution of power crisis in the country. It may be noted that the government was relying heavily on rental power plants, which the power sector experts believe that it is nothing but wastage of gas in the country. According to them, the six rental power plants in the country would be generating only 600 MW, which would play a meagre role in doing away with the power crisis.


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## Neo

*Living with greatest debt deflation ever: Pakistan poised for V-shaped recovery ​* 
ARTICLE (February 19 2009): An estimated US $1.4 trillion has been wiped out from global banking capital, implying that around US $17.5 trillion of lending capacity has evaporated. This is equivalent to one-third of Global GDP of US $55 trillion. No wonder the IMF and World Bank are sounding alarm bells. We expect global real GDP growth to be below 2&#37; for the next three years.

As the international financial and economic order undergoes a tectonic shift it would be na&#239;ve to assume that the global political order will remain the same once the dust settles. With significant structural weaknesses in fiscal and external account arenas, the near-term prognosis for Pakistan's economic growth is weak. That is the bad news.

The good news is that Pakistan's "fall from grace" for investors was much earlier than other emerging markets and the country was forced to adopt, via IMF-deal, a more disciplined economic policy. Early indicators are very positive regarding policy traction but Pakistan is not out of the woods yet. Continued austerity is likely throughout 2009, which should form the basis of a V-shaped recovery in 2010 rather than a prolonged U-shaped trajectory in the absence of fiscal and monetary discipline.

We forecast 3.5% plus real GDP growth in FY09 rising to near 4.6% in FY10. The aggregate demand compression policies will keep interest rates high and general liquidity tight until 2H2009. Thus, the Pakistan stock market is likely to remain range bound between 4,500-6,000 levels for the next quarter or so. However, this 30% range provides opportunities for stock picking and active investment strategies.

*GLOBAL RECESSION:* In order to understand the nature and severity of the global financial and now, economic crisis, we just need to see what has happened to the international banking system and then assess its consequences. By IMF estimates, over US $2.2 trillion capital has been wiped out from the international banking system in just over a year.

We estimate that US $1.2-1.5 trillion is linked with direct and indirect losses due to exposure to US mortgage derivatives (sub prime) and general real estate linked financing/securities. Given an average Tier-1 Capital Asset Ratio (CAR) of banks as per BIS guidelines of 8% (itself a conservative estimate!), this implies that around US $27.5 trillion lending capacity of the international banking system was wiped out.

We estimate that OECD Governments, via unprecedented bailouts, have pumped in US $800 billion of new capital into their banks. That still leaves a capitalisation gap of US $1.4 trillion or reduction in lending of US $17.5 trillion. To put this into context, note that global GDP is estimated at US $55 trillion. The evaporation of US $17.5 trillion lending is equivalent to a third of global GDP (32%).

No wonder the IMF and World Bank are sounding alarm bells regarding the global economic outlook. IMF expects global GDP to grow by a meager 0.5% in 2009 against 3.4% in 2008 - this is the lowest growth since World War II. To be sure we are rather intrigued by the IMF's 3.0% global GDP growth forecast for 2010. In our view, the world will be lucky to achieve even 1.5% GDP growth in 2010. As they say, "You ain't seen nothing yet!"

With the collapse of US real estate values, the American consumer - mainstay of global demand for quite a while, thanks to Greenspan - has been highly affected. And with adverse effects of the banking system's systematic clog-up, loans to normally healthy businesses are being affected. Forget long term financing; simple working capital loans are not available.

Global trade is shrinking rapidly and not simply due to a crash in demand in OECD but also because importers' banks are simply not opening Letters of Credit (LCs). Smaller banks which are still opening LCs are finding difficulties in having them confirmed by the bigger international banks. This is not all; with the US consumers facing large-scale job losses the credit card lifestyle is suddenly pushing them towards economic despair.

==========================================================================
Potential Outperforming Sectors in 2009
==========================================================================
Sector Comments
==========================================================================
1.TELECOM (PTCL) Significantly below
estimated intrinsic value
2.FERTILIZER (FFC, ENGRO) High yield, strong fundamentals
3.POWER GENERATION (HUBCO) High yield, strong fundamentals
4.SELECTED BANKING (NBP, MCB, HBL) Significantly below
estimated intrinsic value
5.PAPER/PACKAGING (PAKAGES) Non recurring event,
Long term positive
==========================================================================

Source: Alpha Beta Research

Between car-lease securitization and credit card securitization there is another couple of hundred billion dollars of financing that is rapidly becoming infected.

*CRISIS HAS SPREAD:* At the same time, with OECD imports falling rapidly, Asian exporters are now facing gale-force winds. It has been estimated that each 1 ppt reduction of US GDP growth leads to over 6 ppt reduction in China's exports.

As a group, the so-called next economic powerhouse block of BRIC countries (Brazil, Russia, India and China) is expected to fare poorly over the next 2 to 3 years relative to their past decade's economic performance. Already, Chinese officials estimate that 20million people have become unemployed.

China's case, in particular, is important because as China became the workshop of the world it also became the key export destination for many Asian component manufacturers whose components were packaged into the final product in China. So there is a domino effect that these Asian economies will have to contend with. Finally, going up the supply chain, raw material/commodity producers are seeing sharp fall in demand and their export prices are collapsing.

Opec's much touted huge foreign currency reserves will shrink more rapidly than consensus estimates. Russia has just spent US $200bn of its reserves to try to create an orderly depreciation of the Ruble which has effectively collapsed. The US is pressing Arab members of Opec to give the IMF US $300-400 billion to cushion the global lender's tightening liquidity despite Japanese pledge to provide US $100 billion support.

*THE WORLD:* All in all, the global financial order is undergoing a tectonic shift. Underlying it is the global economic order, beneath which lies the global political order. It would be na&#239;ve to suppose that the underlying realities will remain intact as before, once the dust settles on this crisis. In Europe, the law and order crisis in Greece and industrial unrest in France and Spain are probably the first manifestations of frustrations that are building up in the world's second largest economic bloc.

Even Russia has not been immune to public protests against the ruling administration. While we do not agree with those who predict dramatic shift in global political power soon, we do expect gradual but persistent move away from the US Centric World seen in the first decade of the new millennium.

This will involve not just economic consequences of regional economic blocks becoming more important, it will also provide a test of will for dominant global political powers to retain their unchallenged supremacy. In other words, we are likely to live in an even more volatile international political environment than previously and that means global co-ordinated economic policy making will become all the more difficult as each economic block attempts to protect its own interest.

*ENTER THE RANGE BOUND EQUITY MARKETS:* At the same time, in the near term, OECD Policy initiatives, including another phase of bailouts of the banking systems and specific industries, are coming thick and fast. With average interest rates in OECD at historic lows, the classic Keynesian "liquidity trap" appears to be in force where monetary policy has literally lost all traction.

Hence so much focus on recapitalizing the banking system and initiating massively expansive fiscal policies in the OECD. Yet, it remains to be seen whether all this stimulus will create positive economic momentum in the near term. We believe it will not. Wealth destruction has occurred on an unprecedented scale, and now income destruction is accelerating.

The "bottoming-out" of the global economy will take perhaps two to three years, what to speak about a pick-up. Investors are realising that bull market of the "goldilocks era" is now gone and unlikely to be seen for a very long time. Investors need to attune themselves quickly in successfully navigating the bear market in the short term and find opportunities in a largely range bound equity market environment well into the medium term.

*IMPLICATIONS OF THE GLOBAL RECESSION FOR PAKISTAN:* As a country with significant structural weaknesses in the fiscal arena as well as external accounts, the near-term prognosis for Pakistan's economic growth is relatively weak. In that light international rating agencies' low country rating is understandable. That is the bad news.

The good news is that the rating agencies' record has consistently been extremely poor in predictive terms. Invariably, their calls appear to be near term (last 3-6 months) backward looking rather than medium term (12months) forward looking. Our perspective on Pakistan's economy is somewhat different. As a result, our risk perception is much lower than one based on rating agencies' views because in our assessment Pakistan is more poised for a V-shaped recovery than many emerging economies.

An analogy would be about 'fall from grace'. The high flying poster-child countries of the emerging markets universe have had the largest fall from "investor perception grace" which, we believe, is still to continue for some while yet. Pakistan's political turmoil, starting in mid-2007, led to its falling from grace much earlier. The only other country in a similar predicament has been Thailand.

And precisely because of this reason, in Pakistan at least, the crisis created necessary conditions for IMF support and more importantly, its imposed discipline which was missing in the political government.

*STRUCTURAL IMBALANCES:* We assess that the fiscal discipline now in place in Pakistan will start showing itself in key indicators by 2Q2009.

Already, there are clear signs of improvement in the fiscal balance and current account position, while core inflation is definitely on a deceleration trend as seen over the last six weeks' figures.

The challenge for financial policy makers now is how to balance the CROWDING OUT of the private sector that has occurred and is occurring due to demand compression policies now in place. Upto 1HFY09 (July-December 2008), private sector credit expansion was negative 27.6% versus 1HFY08 (PKR 178bn versus PKR 246bn). In terms of growth in FY08-09 (ending June2009) we expect real GDP growth to come out near 3.5%, driven largely by a robust agricultural sector and decent showing by the services sector.

Industrial sector is bearing the brunt of economic slowdown and is likely to post one of the highest declines in recent history in excess of 8%. This reality is now dawning upon our economic managers, who have begun looking at sector specific relief packages via bank loan restructurings and easing security valuation requirements.

In our view the new Governor of the central bank has taken the appropriate approach of keeping general liquidity tight but providing industry specific relief focusing on productive and export oriented sectors. However, we also feel that the quantum of support has to be substantially higher in order to make any real difference in the face of enormous pressures on key exporting sectors.

By our estimates the non-inflationary GDP growth capacity of the Pakistan economy is in the 5.0-5.5% region. With private sector demand significantly curtailed there is need for public sector to take up the slack. However, the government's fiscal space is very constrained over the next six months due to support programs for lowest (and hardest hit) income groups and high cost of war against extremists.

As such, bilateral (govt. to govt.) and multi-lateral (IMF, World Bank, ADB, IDB) lending is likely to drive public sector funding in the foreseeable future (next 12-24 months). Many analysts and commentators are very skeptical regarding significant inflows from foreign governments in the near term, such as the Friends of Pakistan Forum, or the now defunct Biden-Lugar Bill in the US Congress and the cancelled US $5.0 billion UAE refinery project in Pakistan.

In our assessment, the current delays have more to do with management of the financial and economic crisis in donor countries rather than any strategic shift. We therefore feel that international strategic imperatives, combined with demonstrated better housekeeping by Pakistan will result in significant development oriented funding for Pakistan over the next three years. In that context, we believe that Investors should focus beyond the media headlines towards regional and global mega-trends to assess the probability of governmental and multi- lateral fund flows to Pakistan.

========================================================================
Macroeconomic Environment in 2009
========================================================================
GDP growth Below trend
========================================================================
Fiscal deficit Significant improvement
Trade deficit Import reduction led narrowing
C/A deficit Improving with remittances support
Core inflation Decelerating
Forex reserves Stable
Exchange rate 3-5% depreciation in CY09
Interest rates Peaking out, lower in 2H09
Private sector demand Subdued
Development spending Sharply lower
Aggregate demand growth Decelerating
Tax revenue collection Near target levels
========================================================================
OVERALL PROGNOSIS On the mend, but not out of the woods yet
========================================================================
Source: Alpha Beta Research

*POLICY CHOICES:* Some of the key structural changes necessary to provide sustainable revenue are related to taxation and governance. In the former, it is imperative to significantly improve documentation of the retail and service sectors, while bringing agriculture, real estate and capital markets under the tax net to start with. 70% of Pakistan's population is rural.

As a result, the major constituency of parliamentarians is agricultural. It remains to be seen how the finance ministry can make real headway in agricultural taxation in such a situation. The second area is governance. Various sources estimate that anywhere between 30-50% of development expenditure is leaked via mismanagement, poor planning and outright corruption. If any progress - even small steps - is made on this front, the proportionate impact on availability of fiscal space will be large.

Skeptics say that one should not have any expectation from the government on the above fronts as we have all seen the economic "non-performance" of both the PPP and PML in the "nineties-decade" when the productive capacity of the country was significantly reduced. We cannot argue with facts.

What is said was indeed the case. Yet we are believers in democracy and feel that once the democratic process gets established the electorate will, overtime, put more representative parliamentarians in the assemblies. The press is also hugely free now than in the 1990's. It has already acted as a source of checks and accountabilities in a host of cases related to governance and public sector management.

This is a good tradition and with time it will also become more effective. In conclusion, our take is that while the global economic turmoil is a significant challenge for Pakistan, given that (a) exports comprises only 14% of GDP and (b) the country's external funding has been and remains largely in the bilateral and multi-lateral domain, Pakistan economy will likely bounce back to 5% - 6% over the next two fiscal years.

With per capita GDP at nearly US $1,000/-, even this growth should be sufficient to allow corporate sector revenue growth to bounce back from FY08-09 shock of policy driven demand compression.

*STOCK MARKET OUTLOOK:* The stock market as a whole is likely to remain range-bound between 4,500-6,000 in 1H2009, due to continued liquidity constraints and political uncertainty caused by law and order situation as well as upcoming Senate elections in March 2009.

Specific segments and sectors of the stock market should however begin to reflect greater visibility of FY10 earnings by mid 2009. That is when we believe the market - helped by reasonable likelihood of reduction in interest rates - is likely to show sustainable direction.

In the meanwhile, even the KSE-100 range of 4,500-6,000 implies 33% volatility band - good enough in a range-bound market for trading oriented investors who have done their homework on fundamentals of specific companies. So which companies; What entry levels; What target prices? These are the questions on investors' minds. For the purposes of this report, in our opinion, potentially outperforming sectors (in terms of total return) with below average risks, between now and December 2009, are likely to be:


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## Neo

*Pakistan Forex Reserves $10.371 Billion In Week Ended Feb 14​*
KARACHI -(Dow Jones)- Pakistan's foreign exchange reserves rose to $10.371 billion in the week ended Feb. 14 from $10.288 billion in the previous week, the State Bank of Pakistan said Thursday.

Holdings of foreign exchange reserves by the central bank were $6.908 billion, compared with $6.916 billion in the previous week.

Foreign exchange deposits held by commercial banks were $3.463 billion, compared with $3.372 billion in the week ended Feb. 7, the central bank said in a statement.


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## ajpirzada

*Export of non-textile goods up by 24.5pc *

By Mubarak Zeb Khan 







ISLAMABAD, Feb 19: Export of non-textile products soared by 24.5 per cent in the first seven months (July-Jan) of the current fiscal year to $5.062 billion as against $4.066 billion over corresponding period of last year, according to the Federal Bureau of Statistics data issued here on Thursday. 
The upward trend indicates a natural diversification of export base, which concentrated in a few textile products, owing to highestever depreciation of the rupee. 

The data revealed that textile and clothing exports dipped by 3.79 pc to $5.827 billion in JulyJanuary this year as against $6.056 billion over last year despite depreciation of rupee, which should have made Pakistan&#8217;s textile and clothing products more competitive. 

It is also clear from the fact that import of textile machinery also dropped by over 41 per cent during the period under review over last year showing that textile tycoons were not making any investment to improve competitiveness of their products. 

The government had doled out more than Rs42 billion in the past few years as subsidy to the sector for kicking off exports but it seems that money was mostly misused owing to safeguard measures. 

A similar kind of package is being under considered for the sector. Details of the traditional products showed that export of food group inched up by 58.38 per cent. Of these, export of rice went up by 90.80 per cent during JulyJan 2008-09 to $1.256bn as against $0.658bn over last year. 

In the rice group, export of basmati rice was up by 72 per cent, and others 117 per cent, respectively, during the period under review. 

Export of fish products was up by 21.84 per cent, wheat 100 per cent, sugar 73.71 per cent, meat 48.19 per cent, spices 19.54 per cent and other food items seven per cent during the period under review over last year. 

Export of sports goods was up by 6.24 per cent, footwear 15.85 per cent, surgical instruments 2.21 per cent, engineering goods 72.80 per cent, cement 84 per cent, molasses 285 per cent during the period under review. 

Among the textile group, export of raw cotton was up by 215.22 per cent, cotton cloth 8.90 per cent, towels 14.31 per cent and made-up articles 1.26 per cent during the first seven months of the current fiscal year over last year. 

However, export of cotton-carded declined by 1.65 per cent, knitwear 0.37 per cent, cotton yarn 15.73 per cent followed by yarn 56.5 per cent, bed ware 9.64 per cent, tents 24.56 per cent, readymade garments 11.93 per cent, art-silk synthetic textile 15 per cent and other textile products 16.7 per cent during the period under review.

islamabad, feb 19: export of non-textile products soared by 24.5 per cent in the first seven months (july-jan) of the current fiscal year to $5.062 billion as against $4.066 billion over corre- sponding period of last year, ac- cording to the federal bureau of statistics data issued here on thursday. the upward trend indicates a natural diversification of export base, which concentrated in a few textile products, owing to highest- ever depreciation of the rupee. the data revealed that textile and clothing exports dipped by 3.79 pc to $5.827 billion in july- january this year as against $6.056 billion over last year de- spite depreciation of rupee, which should have made pakistan&#8217;s textile and clothing products more competitive. it is also clear from the fact that import of textile machinery also dropped by over 41 per cent during the period under review over last year showing that textile tycoons were not making any in- vestment to improve competitive- ness of their products. the government had doled out more than rs42 billion in the past few years as subsidy to the sector for kicking off exports but it seems that money was mostly misused owing to safeguard measures. a similar kind of package is be- ing under considered for the sec- tor. details of the traditional products showed that export of food group inched up by 58.38 per cent. of these, export of rice went up by 90.80 per cent during july- jan 2008-09 to $1.256bn as against $0.658bn over last year. in the rice group, export of bas- mati rice was up by 72 per cent, and others 117 per cent, respec- tively, during the period under re- view. export of fish products was up by 21.84 per cent, wheat 100 per cent, sugar 73.71 per cent, meat 48.19 per cent, spices 19.54 per cent and other food items seven per cent during the period under review over last year. export of sports goods was up by 6.24 per cent, footwear 15.85 per cent, surgical instruments 2.21 per cent, engineering goods 72.80 per cent, cement 84 per cent, molasses 285 per cent dur- ing the period under review. among the textile group, ex- port of raw cotton was up by 215.22 per cent, cotton cloth 8.90 per cent, towels 14.31 per cent and made-up articles 1.26 per cent during the first seven months of the current fiscal year over last year. however, export of cotton-car- ded declined by 1.65 per cent, knitwear 0.37 per cent, cotton yarn 15.73 per cent followed by yarn 56.5 per cent, bed ware 9.64 per cent, tents 24.56 per cent, readymade garments 11.93 per cent, art-silk synthetic textile 15 per cent and other textile prod- ucts 16.7 per cent during the peri- od under review. 


Export of non-textile goods up by 24.5pc


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## ajpirzada

*Circular debt to be settled by month-end* 

By Our Staff Report 







LAHORE, Feb 19: The government plans to clear the circular debt of Rs400 billion by the end of the current month and the Independent Power Producers (IPPs) and other power generating units have been directed to pull their socks up for the coming summer. 
This was stated by Federal Water and Power Minister Raja Pervez Ashraf while addressing a press conference at the Lahore Electric Supply Company (Lesco) headquarters on Thursday. 

He expected a difficult summer due to increase in demand but promised to set things right by the end of this year. 

Around 1,000 megawatts would be added to the system by June and another 2,000 megawatts by December, which would help end the menace of loadshedding from the country, he hoped. 

&#8220;Every year power demand grows by 8 to 10 per cent and to meet this demand installation of new power projects is very important. 

Independent Power Producers (IPPs) and other power units have been directed to prepare for the summer season to meet the demand.&#8221; The minister said the government was also working on various hydel projects, including Neelum-Jhelum for which Chinese engineers had arrived at the site. Work on Kohala, Dasu and Bunji was also going on and these projects would soon be commissioned. 

&#8220;The government has allocated funds for Bhasha Dam and work on it will also start shortly,&#8221; he said. 

In addition to thermal and hydel power generation, he said, the government was also exploring the possibility of power generation from coal and the country would soon start getting 1,000 to 3,000 megawatts from coal, he added. 

&#8220;Wind energy is another area being focused by the government and the first windmill will start working soon at Jhampir in Sindh and import of 1,100 megawatts electricity from Iran will also provide relief to the nation,&#8221; he concluded.

lahore, feb 19: the govern- ment plans to clear the circular debt of rs400 billion by the end of the current month and the independent power producers (ipps) and other power generat- ing units have been directed to pull their socks up for the coming summer. this was stated by federal water and power minister raja pervez ashraf while addressing a press conference at the lahore electric supply company (lesco) headquarters on thursday. he expected a difficult sum- mer due to increase in demand but promised to set things right by the end of this year. around 1,000 megawatts would be added to the system by june and another 2,000 mega- watts by december, which would help end the menace of load- shedding from the country, he ho- ped. &#8220;every year power demand grows by 8 to 10 per cent and to meet this demand installation of new power projects is very im- portant. independent power producers (ipps) and other power units have been directed to prepare for the summer season to meet the demand.&#8221; the minister said the govern- ment was also working on various hydel projects, including neelum-jhelum for which chinese engineers had arrived at the site. work on kohala, dasu and bunji was also going on and these projects would soon be commissioned. &#8220;the government has alloca- ted funds for bhasha dam and work on it will also start shortly,&#8221; he said. in addition to thermal and hy- del power generation, he said, the government was also explor- ing the possibility of power gen- eration from coal and the country would soon start getting 1,000 to 3,000 megawatts from coal, he added. &#8220;wind energy is another area being focused by the government and the first windmill will start working soon at jhampir in sindh and import of 1,100 mega- watts electricity from iran will al- so provide relief to the nation,&#8221; he concluded. 

Circular debt to be settled by month-end


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## Neo

* Efforts on to enhance remittances ​* 
Friday, February 20, 2009

KARACHI: Federal Minister for Overseas Pakistanis, Dr Farooq Sattar has said that the federal government wants to enhance home remittances from $7 billion per annum to $15 billion.

He said: We are trying to utilise latest technology for fast and on-time delivery of remittances sent by Pakistanis living abroad and in this regard a high-level meeting would be held in the last week of February at Karachi in which representatives of local and foreign banks, mobile phone companies and information technology experts would participate.

Addressing a ceremony held in honour of S M Muneer, President Indo-Pak Chamber of Commerce, by Munir Sultan, Chairman KK Builders, Sattar further said that with some measures it is possible to enhance remittances up to $15 billion in the next one to two years and then Pakistan will not be compelled to turn to the IMF in the future. Sattar said a fast and proper channel with some new facilities was needed to encourage overseas Pakistanis to use banking and legal means to remit their valued amount.


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## Neo

*Pak manpower export continues despite global recession ​* 
Friday, February 20, 2009

ISLAMABAD: Contrary to international trends, the manpower export from Pakistan continues at an old pace despite closure of hundreds of mega projects in the labour-intensive Gulf market because of severe recession, officials have claimed.

However, Pakistan has no mechanism in place to gauge exodus of its workers from different countries, including the UAE and Saudi Arabia, one official told The News. He said the Bureau of Immigration recorded that a total of 37,515 Pakistanis departed for the Gulf Cooperation Council (GCC) countries in November, 28,814 in December and 33,817 in January this year for employment as per the contracts signed by them with different companies.

There has been no significant reduction in manpower export from Pakistan despite a difficult situation that has hit the market where most of the Pakistanis go for jobs, the official said. But there are reports indicating that several Pakistanis who recently went to the Gulf countries after signing agreements with various employers had to come back after finding the projects for which they were hired closed.

Such people suffered double losses  they paid huge amount to recruitment agents and got no jobs. I went to Dubai two weeks back to work as an excavator operator but came back after a few days as the employer told me he had no job to offer, said Nadeem Hamid.

The official said the impact of any large-scale arrivals of Pakistani expatriates back to the country had not been felt so far. He said this would happen only after the contract periods, ranging from two to three years, of the overseas workers would expire and the agreements would not be extended.

He said the government had received reports of closure of a large number of projects in Dubai where hundreds of thousands of Pakistanis were working. An official of the Overseas Employment Corporation said a small number of workers sent to South Korea and Malaysia continued to remain in these countries.

Notwithstanding the Pakistani governments optimistic view, low-paid Asian workers who toil long days to build the skyscrapers of Dubai have become the latest victims of the global financial crisis, as companies are running short of business and money, said a report. 

For many years, the Gulf emirate was a magnet for South Asian workers who fed the booming economy with cheap manpower  from cleaners and gardeners to skilled and unskilled builders.

Another report spoke about severe financial crisis being faced by several projects in Saudi Arabia where workers were in deep trouble. Yet another recent report said a large number of foreign nationals from among those who had got resident visas in Dubai were cancelling them everyday.

People are abandoning hundreds of cars in the Dubai airport parking lot every day before flying back to their native countries as they cant afford to live there and cant pay their instalments, A Jamal, who recently returned from Dubai, told this correspondent. He said leasing companies and banks were getting possession of the abandoned vehicles, which they would sell in the near future after completing necessary procedural formalities.


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## Neo

*Foreign exchange reserves increase by $83 million​*
KARACHI: The countrys liquid foreign exchange reserves surged by $83 million during the last week. The State Bank of Pakistans statistics showed on Thursday that overall foreign reserves increased to $10.371 billion on February 14, 2009, as compared with $10.288 billion last week. According to the released figures the reserves held by banks other than SBP witnessed an increase of $92 million to reach $3.463 billion as compared to $3.371 billion during the last week. However, the reserves held by the central bank showed a decline, as they dipped to $3.908 billion as compared with $3.916 billion last week.


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## Neo

*Government-UN ink agreement to implement $384.7m health plan​*
ISLAMABAD: The government and 14 United Nations agencies working in Pakistan on Thursday signed a $384.7-million agreement for improvements in the health and population sectors in the country.

The government and the UN agencies have planned and developed a two-year joint programme in this regard, which is expected to be completed in 2010. The agreement was signed here by the federal secretaries of health and population welfare -- Suleman Ghani and Nayyar Agha  World Health organisation (WHO) representative Dr Khalife Bile and officer in-charge UNICEF Luc Chauvin.

Federal Secretary Farukkh Qayyum and the heads of various UN agencies were present.

Fourteen UN agencies involved in this programme include FAO, ILO, IOM, The World Bank, UNAID, UNDP, UNESCO, UNFPA, UNHCR, UNICEF, UNIFEM, UNODC, WFP and WHO, while the programme is being co-chaired by WHO and UNICEF. The main areas of intervention are mother and child care health (MNCH) and primary health care (PHC), communicable disease control, nutrition, health promotion, health systems development, HIV and AIDS. The vision of the programme was based on the Health for All approach, through five well-targeted components, which would be treated in a holistic manner to ensure linkages and common concerns were well articulated.

Issues of maternal health were linked to family planning and reproductive health, which were further reinforced by interventions of health promotion and nutrition; communicable disease management and control including HIV and AIDS; attitudinal changes in a health life style to bring about better health behaviours. Finally, support to the health sector was encapsulated in credible health systems, including capacities for human resource development, financing, quality control and effective governance. The programme would be implemented over a period of two years, with emphasis on initiatives that would address the priority areas of the government.


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## Neo

*China visit: Zardari to explore avenues of cooperation in agriculture, energy sectors ​*
WUHAN (February 20 2009): President Asif Ali Zardari, who arrives here on Friday on his second visit to China in four months, will explore avenues for co-operation with China in the fields of energy and agriculture resources. The President will visit the world's largest dam in Wuhan called Three Gorges Dam having a capacity to produce 22500 MW of electricity.

Construction on the dam started in 1994 and at present there are 26 generators operating at the site. By 2011, six more generators will be added. Wuhan is the capital of Hubei province and is one of China's biggest cities. Chinese and Pakistani officials are attaching great importance to the President's visit as FTA in services sector between the two sides is also expected to be concluded. Pakistan's ambassador to China Masood Khan has said that negotiations for FTA in services sector had already been concluded.

"The time is ripe to ink the agreement during President Zardari's visit," he added.

The year 2008 saw frequent high level visits and robust growth of bilateral relations as President Zardari chose to pay his first state visit to China in October 2008 and held very successful talks with President Hu Jintao, Premier Wen Jiabao and other top Chinese leaders.

Prime Minister Yousuf Raza Gilani came here twice, once to attend the opening Ceremony of 2008 Beijing Olympics and then to represent his country in 7th ASEM summit. Pakistan's Army Chief, and Chairman Joint Chiefs of staff, besides Chief Minister of Punjab, Speaker Sindh Assembly, and young parliamentarians also visited China.

Many high and ministerial level delegations from China visited Pakistan. During visit of President Zardari last year, Pakistan and China signed 12 agreements for co-operation in agriculture, trade, science and technology, radio and television, telecommunications satellite, sports (cricket) etc and now both sides were engaged to translate these into reality.

State and provincial leaders will greet the President in Hubei and Shanghai. Besides, Wuhan, President Zardari will also visit Yichang and Shanghai, the regions that are industrial hubs of China to observe country's development in agriculture, use of hybrid seeds, science and technology. Pakistan and China are closely and successfully co-operating with each other in counter terrorism and have achieved very positive results to fight this menace.

The bilateral co-operation in this field will continue. In view of the importance of President Zardari's visit, the Chinese media has made a number of requests for his interviews during which he will dilate upon the relations between the two countries. He will also tell the Chinese media about the importance, which Pakistan attaches to its friendship with China whose foundation was laid by late Zulfikar Ali Bhutto.


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## Neo

*First half of current fiscal year: Rs 369.814 billion budgetary allocation spent on poverty reduction ​*
ISLAMABAD (February 20 2009): Federal and provincial governments have spent Rs 369.814 billion budgetary allocations during the first half of current fiscal to reduce poverty, according to Finance Ministry. According details of expenditure released by the Finance Ministry during the first half of 2008-09 for pro-poor sectors under Poverty Reduction Special Programme, the federal government has spent Rs 179.087 billion on social sector projects.

The expenditures involved both the current and development for projects on infrastructure, health, education population planning, natural calamities, agriculture, and rural development besides law and order, low cost housing, subsidies, food support programme and people works programme. Analysis of the figures showed that Punjab government has spent Rs 97.776 billion, Sindh Rs 43.824 billion, NWFP Rs 35.654 billion and Balochistan Rs 13.473 billion during the first half of current fiscal.

Of the total Rs 179 billion expenditures by the federal government, Rs 15 billion were spent on different projects under People's Works Programme, Rs 13.241 billion on agriculture, Rs 12 billion on law and order, Rs 10 billion on education, Rs 5 billion on health, Rs 2.055 billion on food support programme, Rs 1.366 billion on roads, highways and bridges, Rs 1.426 billion on population planning, Rs 2.716 billion on health facilities and preventive measures.

Punjab government has spent Rs 40.119 billion on education, Rs 18.640 billion on primary education, Rs 9.862 billion on secondary education, Rs 3.121 billion on general universities, colleges and institutions, Rs 11.997 billion on infrastructures related projects, Rs 5.002 billion on health, Rs 9.468 billion on agriculture, Rs 1.557 on others, Rs 15,962 billion on law and order and Rs 2.028 billion on justice.

Sindh government has spent Rs 16.281 billion on education, Rs 5.717 billion on primary education, Rs 1.811 billion on general universities, colleges and institutions, Rs 4.699 billion on health, Rs 2.612 billion on social security and social welfare and Rs 8.101 billion on law and order.

NWFP government expenditures included Rs 1.672 billion on roads, highways and bridges, Rs 13.561 billion on education, Rs 5.717 billion on primary education, Rs 1.020 billion on general universities, colleges and institutes, 903 million on professional and technical projects in colleges, Rs 4.900 billion on health, Rs 3.040 billion on general hospitals and clinics, Rs 1.879 billion on agricultures and Rs 3.225 billion and 7.328 billion for food support programme.

The expenditures of Balochistan government during the first half of current fiscal included Rs 1.771 billion for roads, highways and bridges related projects, Rs 729 million for water supply and sanitation, Rs 3.245 billion on education, Rs 1.140 billion on primary education, Rs 984 million on secondary education, Rs 1.011 billion on health, Rs 1.186 natural calamities and other disasters, Rs 2.425 billion on agriculture and Rs 2.142 billion on law and order.

Rs 116.958 billion were spent on subsidies by the federal, Punjab Sindh and NWFP governments. No amount was spent by the Balochistan government on providing subsidies, showed Ministry of Finance figures on six month expenditures.


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## Neo

* Pak-China economic relations
​*
Sardar Aminullah Khan

ARTICLE (February 20 2009): The world of rapid economic globalisation and regionalization continues to intensify since the last decade involving phenomenal change in the international economic spectrum, particularly after establishment of WTO. Countries are looking for the business opportunities abroad. Free trade and investment agreements have become almost the need of the hour.

While international trade has been there throughout much of the history, its economic, social, and political importance has also increased. Industrialisation, ICT revolution, advanced transportation, globalisation, growth of MNCs' and outsourcing etc had major impact on it. Trade is regarded as a major source of economic revenue, investment and modern technology. Pakistan and China are two friendly countries and partners in international trade and investment. Consistent growth in economic relations amplifies the strength off their relationship.

*THE STRUCTURE OF TRADE:* There is high demand for Chinese goods in Pakistani market. Their experience of growth in trade is positive due to convenient trade flows and openness measures. Trade and investment policies are liberal since 80s' and generally WTO compliant. The pattern has merchandise bias but with high volume of manufactured items.

China has become one of the top five import sources of Pakistan. Major imports from China are machinery, chemicals, garments and other textile products, stationery, construction materials like tiles, sanitary wares and crockery, etc. Machinery and electrical appliances are the major parts of overall exports. Bilateral trade had reached around dollar 7 billion in 2008. The balance is, however, in favour of China due to lesser exports by Pakistan. Efforts are under way for correction of this situation.

Trends of trade are very positive as volume of bilateral trade has increased exponentially during the last seven years. Pakistan enjoys huge export potential to China due to advantages in agriculture, mineral, chemical, textile and leather products. Besides, Pakistan has comparative advantage in oil seeds, fruits, base metals, plastic goods and perfumery etc. China has static advantage over Pakistan in machinery, transport equipments, chemical products, precious instruments, stone and plastic articles, home appliances, pearls, precious/semi-precious stones etc. Man-made filaments, space crafts and aircrafts provide dynamic comparative advantage to China.

Under the 5 years programme launched in 2006 for strengthening of economic relations, the existing trade is to be enhanced to 15(b) US$ by 2012. Besides, different projects have been identified in the programme for co-operation and investment in various economic fields. Permanent and enduring factors that may prove effective and successful in the demand and supply dynamics need to be enforced through mutual co-operation. Some restrictions on free movement of goods and services are occasionally reported and are often discussed for removal to further enhance the volume of trade and significant increase in investment. Both countries can benefit greatly from further expansion in economic and trade relations under this 5year programme.

*INVESTMENT:* China and Pakistan have witnessed steady growth in mutual investments in recent years. In the last few years, investment of more than 1.3 billion USD was made by China in Pakistan. A large number of Chinese companies are working in Pakistan in oil and gas, IT and telecom, power generation, engineering, automobiles, infrastructure and mining sectors. These include names like, ZTE, Huawei Technologies Co Ltd, China National Machinery Imp/Exp Corporation, Metallurgical Construction Corporation of China, China International Water and Electric Corporation, China Petroleum, and Haier.

*OTHER INVESTMENT OPPORTUNITIES:* There are possibilities of active co-operation in the sectors like oil and gas, mining, financial sector, infrastructure, power (coal, hydel, gas based) IT and telecom, chemicals, fertiliser, glass, polymers, textile manufacture (value added), engineering goods, textile machinery, assembling of automobiles, electronics, automotives, agricultural implements, agricultural and agro-based industry, food and fruit processing and packaging, livestock and dairy farming and pesticides.

Relocation/mergers in a large number of complementary units are also possible. A few most ambitious projects for the future are the high altitude railway link, energy corridor, trade corridor by using KKH as alternate trade route and collaboration in major infra structure projects like development/processing of coal on a large-scale and construction of big dams etc.

*MEMBERSHIP OF ECONOMIC FOR A:* On account of the familiarity and common understandings, developed over a long period of economic co-operation, China and Pakistan have signed many bilateral agreements, like Free Trade Agreement, Bilateral Investment Treaty, Double Taxation Agreements, Customs related agreements/procedures, Pak-China Joint Investment Company, bilateral contracts, 5-Year Framework, MOUs in various fields/ministries/divisions and other agreements.

China and Pakistan have recently concluded an agreement on trade in Services. This involves a wider impact than the other trade and investment agreements. The volume is going to increase after the implementation of this agreement, particularly in financial and technical services.

Simultaneously, they have been participating actively in regional as well as multilateral organizations and supported the reforms for regional and multilateral liberalisation and expansion of trade. Both maintain good co-operative relations and play active role in multilateral contexts in capacity of members of important international and regional economic clubs like WTO, SCO, ECO, SAFTA, ASEAN, WIPO and APTA etc.

*SHARING OF EXPERIENCES:* China's impressive economic achievements over the past two decades have made its development experiences quite distinct from those of many other economies and even the conventional development models.

Important areas are creation of social safety nets, subsidy distribution mechanism, disaster management, regional development, management of Forex reserves, integrated agricultural development promotion of Foreign Direct Investment and Economic Zones.

Since there are considerable similarities in the composition of the poor-rich /rural-urban populations in Pakistan and China and on account of other economic similarities, Pakistan can utilise the Chinese experience to its economic benefit.

Challenges in the process include infrastructure, communication and co-ordination, trade related visible/invisible barriers, understanding the new trends/global realities, exchange of information on exports, documentation of informal trade, implementation and monitoring of progress, visa related problems, timely implementation of decisions/ agreements, professional approach and enlargement of the trade basket.

*CONCLUSION AND RECOMMENDATIONS:* The aforementioned challenges are certainly impeding the speedy growth of investment and trade as per the potential. They can effectively be turned into opportunities through comprehensive medium and long-term collaborative joint efforts.

The measures that may facilitate the achievement of desirable goals include timely implementation of the agreements, creation of enabling environment, person-to-person contacts to provide confidence and encourage the potential investors, operationalization of Transit Trade Agreement, regular exchange of information to enable the stakeholders to realise the ground realities, co-operation in business laws and procedures between the businessmen of the two countries and a dispute resolution mechanism to avoid any trade disputes and misgivings, improvement of security environment, engaging the Chinese private sector on long-term basis for sustainable economic relations, revamping the processing technologies with mutual co-operation in potential sectors like seafood and leather products, value addition in cotton yarn and fabric, chrome and copper ores and other industrial minerals and precious stones, relocation of industries through restructuring, improvement of institutional frameworks for better communication and co-ordination between the government agencies and representative trade and industry bodies, which is essential for better understanding of business houses.

*EPILOGUE:* China and Pakistan are close and friendly neighbours. Pakistan has treated China as its most important economic partners. Rapid economic development in China and consequent inter-regional activity has caused increased demand for raw materials, exchange of parts, components, intermediate products and development of cross-country production networks/processes.

Such outward linkages are beneficial for resource rich Pakistan in the Chinese context. It can be supplanted by policy of diversification of risk through investment in Pakistan. It will increase trade and spur investment through deepening of all-round co-operation for mutual prosperity.

The economy of Pakistan is deeply linked to the Chinese economy. Pakistan highly appreciates the assistance that China had provided for infrastructure development/other projects. The development must be carefully synchronised and we must share information to facilitate and assure the investors of the good returns and results.

They need to very actively and forcefully promote and facilitate economic co-operation with high zeal and spirit. The measures undertaken include the aggressive economic diplomacy. Many companies have signed agreements and MOUs worth millions of dollars to cooperate and undertake joint ventures in various sectors, such as infrastructure, mass transit, communication network, finances, chemical, fertiliser, automobile energy, and agro-based industries.

A few other agreements are likely to be signed during the upcoming visit of the President of Pakistan to China. Prospects of further consolidation of economic relations are bright as the two sides have a lot of potential for further developments in a number of fields. Moreover, as active supporters of regional economic integration, both countries can help establish an open and integrated regional market also through regional economic fora.

(The author is Economic Minister in the Embassy of Pakistan, Beijing and can be contacted on Sardar.ameen@gmail.com)


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## Neo

*Jump in poverty level​*
The news that Pakistan's poverty rate has jumped from 23.9 percent to 37.5 percent in the course of three years due to severe economic shocks can only be described as devastating. According to a presentation made by the Planning Commission to the Prime Minister, the latest estimates indicate that 64 million people were living below the poverty line in 2008 as against 35.5 million people in 2005.

The main factors for such a plunge were slow economic growth, sudden external shocks, high inflation and shortages in certain cases. Pakistan's position in human development index was 136 out of 177 countries and 40 percent of the urban population was living in kachi abadis/slum areas. The Planning Commission was also not optimistic about future trends in this regard.

The condition to reduce the fiscal deficit to 4.2 percent of GDP during the current year had forced the government to slash the development programme which could lead to further unemployment and accentuate the present poverty trends. The PSDP has already been slashed by Rs 100 billion and the government could spend only 19 percent during the first six months of the current fiscal year out of a total allocation of Rs 371 billion for Public Sector Development Programme.

It was feared that achieving IMF conditions would ultimately force the authorities to ignore social sector spending and make it impossible for Pakistan to meet the UN Millennium Development Goals (MDGs). Although a rise in poverty level was expected between 2005 and 2008, the scale of increase as reported by the Planning Commission is simply baffling.

Intriguing is the fact that the previous government had been boasting about economic success and imparting resilience to the economy during this period, claiming that poverty level had been contained due to improved economic management.

Such a sharp deviation between the claims of the then government and the ground realities underlines the importance of following a consistent methodology to measure poverty in the country and avoiding political considerations in the compilation of data. Giving complete autonomy to the Federal Bureau of Statistics and other relevant statistical agencies is very crucial in this respect otherwise the statistics released by the government would continue to be suspect.

Coming to the present poverty level in Pakistan, the figures presented by the Planning Commission are highly disturbing and call for complete overhaul of policies to arrest the deteriorating trend. More worrying is the fact that spreading global economic crisis is going to make this task of the government much more difficult than under the ordinary circumstances.

According to the latest estimates of the World Bank, almost 40 percent of 107 developing countries were highly exposed to the poverty effects of the crisis, less than 10 percent faced little risk and the remainder were moderately exposed. Unfortunately, Pakistan was ranked among the 43 countries most exposed to poverty risks.

This high level of exposure is compounded by the current Stand-By Arrangement with the IMF which, though essential under the prevailing conditions, stipulates a rapid reduction in budget deficit, necessitating a cut in development expenditures which could contribute to further increase in unemployment and poverty level in the country.

Although, under the present conditions, it looks difficult but a way must be found to reduce poverty level in the country and ensure that people on the fringes continue to get at least basic necessities of life like food and medical care at affordable rates during this difficult period.

Continuing with the present trend will not only be perilous but such approach will reflect lack of pity or compassion. It is, therefore, critical to finance job creation, delivery of essential services and infrastructure and safety net programmes for the most vulnerable groups of society. To achieve these objectives, it is essential to redesign fiscal strategy boldly and imaginatively.

The restoration of investor confidence is another area which needs to be given high priority in our context. A higher level of investment would automatically create more jobs, reduce poverty level and promote economic growth. There is no dearth of advice on the subject but a meticulous planning and a committed leadership is needed to get out of the present crisis without indulging in statistical trickery.


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## Neo

*Textile exports drop creating fear of big layoffs​*By Mubarak Zeb Khan
Friday, 20 Feb, 2009

ISLAMABAD: The export of non-textile products soared by 24.5 per cent in the first seven months of the current fiscal year to $5.062 billion as against $4.066 billion over the last year mainly on the back of massive export of rice.

Though the export of these traditional products are on the higher side but exports on the whole decelerated sharply owing to decline in export of carpets and leather products during the period under review, suggested data of federal bureau of statistics.

The upward trend in the export of non-textile products has been witnessed since July 2008 indicating a natural diversification of the export base, owing to the highest ever depreciation of Pak rupee, which was highly concentrated in a few textile-based products.

But the export proceeds of carpets and leather products have witnessed a declining trend since December 2008 owing to higher cost of doing business and high competition from Chinese and Indian exporters.

The data released here revealed that the textile and clothing exports dipped by 3.79 per cent to $5.827 billion in July-January this year as against $6.056 billion over last year despite depreciation of rupee, which should have made Pakistans textile and clothing products more competitive.

It is also clear (from the fact that the import of textile machinery also dropped by over 41 per cent during the period under review over last year) that textile tycoons were not making any investment to improve the competitiveness of their products.

The government had dolled out more than Rs42 billion in the past few years as subsidy to the sector for kicking off exports from the sector but it seemed that the money was mostly misused owing to safeguard measures.

A similar kind of package is under consideration for the sector but it is not clear whether the cash starved country can afford to set aside money for the sector from tax revenue.

Details of the traditional products showed that export of food group shot up by 58.38 per cent. Of these export of rice went up by 90.80 per cent during July-Jan 2008-09 to $1.256 billion as against $0.658 billion over last year.

The export of fish products was up by 21.84 per cent, wheat 100 per cent, sugar 73.71 per cent, meat 48.19 per cent, spices 19.54 per cent, and other food items 7 per cent during the period under review over the last year.

Export of sports goods was up by 6.24 per cent, footwear 15.85 per cent, surgical instruments 2.21 per cent, engineering goods 72.80 per cent, cement 84 per cent, and molasses 285 per cent during the period under review.

Among the textile group, the export of raw cotton went up by 215.22 percent, cotton cloth 8.90 percent, towels 14.31 percent and made up articles 1.26 percent during the first seven months of the current fiscal year over last year.

However, the export of cotton carded declined by 1.65 per cent, knitwear 0.37 percent, cotton yarn 15.73 percent followed by yarn 56.5 percent, bed wear 9.64 percent, tents 24.56 percent, readymade garments 11.93 percent, art, silk synthetic textile 15 percent and other textile products 16.7 percent during the period under review.


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## Neo

*Oil import bill soars by 26 per cent​*Friday, 20 Feb, 2009 


The food import bill is up by 20.52 per cent to $2.468 billion, whereas the oil import bill increased by 28.9 per cent to $6.436 billion. - File photo.​
ISLAMABAD: Pakistans oil and food import bill ballooned to an all time high of $8.904 billion in the first seven months of the current fiscal up by 26 per cent from $7.043 billion over the corresponding period last year owing to massive depreciation of rupee that is increasing cost of imports.

Oil and food prices witnessed drastic cuts in the past few months in the international market but Pakistan could not get the benefits owing to currency depreciation. The oil prices dropped by more than 70 per cent to around $30 per barrel since hitting an all time high above $147 per barrel.

Official figures compiled by the federal bureau of statistics (FBS) showed the oil import bill increased by 28.9 per cent to $6.436 billion in July-January period of the current fiscal against $4.995 billion over the corresponding period of last year.

This shows that Pakistan is not in a position to curtail the rising import bill of oil, which last year had crossed the $11 billion mark exposing the country to severe balance of payment problems.

An official said that with the rising oil import bill, Pakistan may again approach the IMF next month for another over $4 billion loan to pile up forex reserves of the country, which should rather have been built up through export proceeds.

Analysts said more than 30 per cent depreciation of rupee since July last will increase the import bill of the oil group (crude oil and petroleum products) because there will be no let up in the demand so the quantity of the group will see no drop in the months ahead.

A similar impact has been witnessed in the import bill of food items and agricultural products during the months under review. The food import bill is up by 20.52 per cent to $2.468 billion in July-Jan period this year against $2.048 billion over the last year.

Of these, import of wheat increased by 266 per cent, tea 19.5 per cent, pulses 4.38 per cent and spices 2.84 per cent during the period under review over last year.

Analysts said that Pakistan could have accrued benefits of the steep fall in prices of edible oil, raw materials, and food items in international market during the current fiscal year if the rupee had not shed its value to such a great extent.

Machinery imports rose to $3.993 billion during the period under review as against $3.921 billion over last year, showing an increase of 1.82 percent.
But the impact of depreciation of rupee and imposition of additional duty has been reflected in the import bill of vehicles and mobile phones. A drastic cut of over 41.72 per cent was recorded in import of transportation group (build units and CKD/SKD) during the first seven months of the current fiscal year over the last year.

A reduction of 47.7 percent has been witnessed in the telecom sector during the July-January of the current fiscal year over last year. Of these, imports of both mobile phones and machinery declined.


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## Neo

*4.28mmcfd gas discovered at Qadirpur deep well ​* 
Saturday, February 21, 2009

ISLAMABAD: Oil and Gas Development Company Limited (OGDCL) has discovered 4.28 million cubic feet of gas per day from its exploratory well at Qadirpur in district Ghotki of Sindh.

According to a company spokesman here on Friday, the deep well was drilled to a total depth of 4,703 meters. Based on electric, geological and drilling data, production testing was carried out to test the potential of the well, he added.

He said a total of five Drill Stem Tests (DSTs) were conducted, out of which three were conducted in Sembar formation and two in Lower Goru formation.

Out of these five DSTs, only one in Sembar formation was productive which produced 4.28 million cubic feet per day of gas at well head flowing pressure of 770 Psi on 32/64 choke, he said.

It may be mentioned here that after assuming charge, Advisor to Prime Minister on Petroleum and Natural Resources, Dr Asim Hussain had directed OGDCL to expedite exploration activities to double oil and gas production in the next 16 months.

He had directed to start work on Kunar, Pasakhi, Tando Allah Yar and Sinjhoro development projects on fast track basis and complete them within the stipulated time.

Officials of the company were asked to double gas production with a competitive mechanism and also bring a significant increase in oil production aimed at generating investment for the company and the national exchequer.

Dr Asim had also directed to complete Qadirpur Expansion Project to enhance the capacity of 100 mmcfd gas by March-April, for which eight new wells were in the process of drilling at Qadirpur.

The present success is a result of the efforts being made to increase production as desired by the advisor, he added. He said that present gas production is 4 billion cubic feet per day (bcfd) against the demand of 9-10 bcfd.


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## Neo

*Excavation work for hydropower project starts ​* 
Saturday, February 21, 2009

LAHORE: Excavation of a 47km-long network of tunnels, one of the main works for the 969-megawatt Neelum Jhelum Hydroelectric Project (NJHEP), has started at the project site near Muzaffarabad in Azad Jammu and Kashmir.

The tunnel network is meant for diversion of Neelem river water to outfall into the Jhelum river near Chattar Kalas. A statement issued here said NJHEP General Manager Hasnain Afzal and a representative of Islamic Development Bank witnessed the blasting of rocks for excavation.

The Neelum Jhelum Hydroelectric Project is of immense importance as it would inject low-cost hydel electricity into the national grid. The IDB and other Middle Eastern donors have already agreed to finance the project.

The contract for the hydropower project was awarded to a Chinese consortium comprising China Gezhouba Group Company and China Machinery Import & Export Corporation. Preparatory works like access roads, offices and colonies for contractors and consultants started last year while main works have begun with the tunnel activity. Total cost of the project has been estimated at Rs130 billion. On its completion, the project will contribute 5.15 billion electricity units annually to the national grid.


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## Neo

*SBP measures generate Rs 360bn liquidity in banking system​*
KARACHI: The central bank has taken several measures to ease liquidity crunch in the banking system, which have resulted in the creation of an additional Rs 360 billion indirect and direct liquidity, Syed Salim Raza, Governor State Bank of Pakistan said.

Presiding over a meeting of the Private Sector Credit Advisory Council (PSCAC) held at State Bank, Raza said that to ease tight liquidity conditions arising from extraordinary outflows from the banking system during October 2008, the State Bank took a series of measures including liquidity injection through OMOs, reduction in cash reserve requirement, exemption of time deposits (i.e. deposits of above one-year tenor) from statutory liquidity requirement, enhancement of list of eligible securities for SLR and provision of 100 percent refinance to banks against Export Finance Scheme, he added.

These measures helped pump in direct and indirect liquidity of around Rs 360 billion in the banking system at present compared with just Rs 79 billion in September 2008, he said. Raza said that sufficient liquidity is available in the banking system and urged upon the commercial banks to increase lending to productive sectors of the economy which will help the country to stage a quick economic recovery. 

He noted with concern that private sector credit, after recording an average growth of 19 percent during FY06 to FY08, witnessed deceleration in the first seven months of FY09 (July 08 to January 09) mainly due to slowdown in the economic activity coupled with global recession. He said overall credit disbursement to the private sector expanded by Rs 158.4 billion during July 2008 to January 2009 and recorded a growth of 5.5 percent compared to Rs 260.3 billion or 10.5 percent last year. On annualised basis, however, growth is 11.2 percent, which is lower than 17 percent last year, he added. During FY09, private sector credit expanded substantially till October 2008 as private sector availed credit of Rs 125.6 billion during the period 1st July-1st November 2008 compared to Rs 60.5 billion in the same period last year. Thereafter, the credit- take-off started to decelerate and it increased by only Rs 32.8 billion during 1st November 2008  31st January 2009 as compared with Rs 199.8 billion in corresponding period last year. 

SBP Governor told the participants that weak demand, high mark-up rates, rising non-performing loans and past liquidity constraints are some of the important factors behind decelearation in private sector credit disbursement.

He informed the meeting that credit disbursement to the agriculture sector through banking system in first half of FY09 remained at Rs 99.4 billion, up 10 percent over the disbursement of Rs 90.3 billion in the same period last year, against an annual target of Rs 250 billion. 

However, he pointed out that credit disbursement to SMEs has declined to Rs 372.1 billion from Rs 433.2 billion as of December, 2007. Out of which, around 75 percent was for working capital, 17 percent for fixed investments, while 8 percent extended for other finances. The highest share of SME credit was obtained by Manufacturing sector at 40 percent followed by commerce and trade at 33 percent, real estate and renting at 8 percent and other private business at 5 percent as of December 2008.


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## Neo

*External debt surges to $50.85 billion​*
KARACHI: Pakistans external debt and liabilities surged to $50.85 billion during the second quarter of current fiscal year from $45.50 billion, according to official data. 

The main contributor to this rise in foreign debt was $3.1 billion obtained from International Monetary Fund in November. 

Debt owed to IMF rose from $1.239 billion to $4.352 billion during this period. 

Foreign debt and liabilities have risen by $15.01 billion during last three and a half years from $35.834 billion at the end of June 2005. 

Economists say the annual debt payments would increase as a result of this surge in external debt and liabilities. They say the actual cause of concern would be the annual debt payments that the country would have to make. 

This sharp increase in external debt and liabilities shows that the country has failed to get rid of the whooping debt trap despite the favourable conditions that it had following the 9/11 incidents in the United States and despite the assistance it has extended to the US in its war on terror. 

Pakistans foreign debt servicing bill has inflated during the first two quarters of current fiscal year, creating serious problem for the dollar-starved country. 

From July to December 2008 the country has already paid bills for debt servicing equal to 77 per cent of what it paid in all four quarters of 2007-08. 

The official data shows that the country paid $2.260 billion as debt servicing during the six months. If the payment for liabilities servicing is included the total debt and liabilities services will go further higher to $2.426 billion. During 2007-08, Pakistans debt repayment had stood at $2.923 billion. 

The country is eagerly looking for more loans to meet its ever-increasing current account deficit but the piling up of loans means larger share of debt servicing as reflected by the data during the last two quarters. 

Advisor to government on finance Shaukat Tareen recently stated that government would be seeking $4.5 billion more funds from IMF in near future. This would push the foreign debt further up.


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## Neo

*Cash-strapped HEC to get $100m loan from World Bank​*
** WB asks the commission to increase transparency in higher education infrastructure to avoid financial mismanagement​*
KARACHI: The World Bank (WB) will provide a loan of 100 million dollars in 2009 to help the financially strapped Higher Education Commission (HEC) in a bid to allow HEC to overcome its deepening crisis.

The provision of loan to the HEC is aimed at strengthening its ability to carry on with the uplift work in higher education institutes, officials of the commission said. The loan would be awarded under the title of Higher Education Development Policy to bring the education and administrative affairs at par with international standards besides warding off the fiscal crisis. 

The amount will help out HEC as at present is not releasing funds to universities across the country. The gravity of the crisis could be assessed by the fact that it has compelled universities to borrow money from banks in order to pay the staff salaries. A case in point is the Federal Urdu University for Arts, Science and Technology (FUUAST) that borrowed Rs 10 million from a bank to pay its employees. 

Likewise, development projects in many universities have been halted by the HEC due to insufficient funds. HEC officials said that the project funding would be made through the International Bank for Reconstruction and Development (IBRD), which is one of five institutions that comprise the WB. 

Responding to a query, HEC officials viewed that the WB had also asked to increase transparency in higher education infrastructure to avoid financial mismanagement. If the amount is properly utilized, another $ 100 million would be provided in 2010 for the development of additional areas, however, all this depends on the programs performance, they revealed.


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## Neo

*$5 billion FDI expected by end of current fiscal: BoI ​* 
ISLAMABAD (February 21 2009): The government is expecting to receive five billion-dollar foreign direct investment (FDI) by the end of the current fiscal year, Board of Investment (BoI) Secretary Tariq Puri told Business Recorder here on Friday. He said that despite recession in the international market, the country had already received 2.5 billion dollars FDI during the first seven months of the current fiscal.

There were concerns that Pakistan would be unable to attract five billion dollars due to poor law and order situation and the global financial crisis, he said, adding: "If we succeed in realising this figure, it would be greater than what was posted during 2007-08."

The FDI was 5.13 billion dollars in 2006-07 financial year; in 2005-06: 3.51 billion dollars; in 2004-05: 1.524 billion dollars; in 2003-04: 949.4 million dollars; in 2002-03: 798 million dollars; and in 2001-02: 484.7 million dollars. The bulk of this FDI was in the telecom sector.

Investment in textile sector was 24.4 million dollars during July-January 2008-09 as against 17.6 million dollars during the corresponding period of last fiscal, posting an increase of 38.4 percent.

The BoI Secretary admitted: "It is true that the textile sector is facing problems regarding the cost of doing business in Pakistan and its retail sales in the markets of the US and Europe have declined due to the economic recession." He said the textile sector had requested the government to reduce the interest rate in support of industry.

Responding to a question about high interest rates, he said that inflation was the raison d'etre of the ongoing tight monetary policy. However, he stated that the impact of reduced prices of petroleum products would result in a decline in inflation that might eventually ease monetary policy. Puri said that the inflation rate in foreign countries was lower as compared to Pakistan. The lower inflation rate had allowed the foreign countries to follow an expansionary monetary policy that had low interest rates as an integral component.

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## Neo

*Weekly SPI inflation swells to 24.19 percent ​* 
ISLAMABAD (February 21 2009): Weekly SPI inflation swelled to 24.19 percent on February 19, 2009 over the same period of last year on the back of steep increase in the prices of kitchen commodities, particularly vegetables, according to data released by Federal Bureau of Statistics (FBS) on Friday. Figures on weekly inflation, measured through Sensitive Price Indicators, showed a steep increase in the prices of chicken, onion and tomatoes.

The price of per kg chicken went up to Rs 120 during the week from previous month's Rs 112, onion to Rs 33 per kg from Rs 27, and tomatoes to Rs 32 from Rs 28. Increase in the prices of mutton, wheat average quality, beef, vegetable ghee loose, milk fresh and cigarettes was also recorded during the week.

With this increase the dearness for the families with monthly income of Rs 3000 went to over 23.66 percent, for Rs 3001 to Rs 5000 24.32 percent, Rs 5001 to Rs 12000 to 25.33 percent and the dearness for the families of Rs 12000 monthly and over monthly income was recorded 23.96 percent during the week.

During the week, an increase of 0.65 percent in combined SPI was recorded. The SPI bulletin showed that prices of 9 essential commodities increased during the week, 18 declined, and the prices of 26 essential commodities remained stable.

According to FBS, the price of K-2 10 cigarettes increased to Rs 9.38 from Rs 8.94, mutton kg to Rs 262.88 from Rs 261.48, wheat average quality kg to Rs 24.55 from Rs 24.48, beef kg to Rs 144.30 from Rs 144.00, vegetable ghee loose kg to Rs 99.14 from Rs 99.02, milk fresh litre to Rs 36.56 from Rs 36.54.

The average prices LPG (11 kg cylinder) eased to Rs 824.00 from Rs 844.65, potatoes kg to Rs 12.93 from Rs 13.22, egg hen (farm) dozen to Rs 58.74 from Rs 59.88, gram pulse washed kg to Rs 58.32 from Rs 59.38, sugar kg to Rs 41.50 from Rs 42.07, moong pulse washed kg to Rs 47.79 from Rs 48.14, masoor pulse washed kg to Rs 125.77 from Rs 126.57, gur kg to Rs 45.79 from Rs 46.07, bananas dozen to Rs 35.65 from Rs 35.81, garlic kg to Rs 41.56 from Rs 41.74, red chillies kg to Rs 132.61 from Rs 132.95, kerosene litre to Rs 63.59 from Rs 63.71, rice basmati broken kg to Rs 44.38 from Rs 44.45, rice Irri-6 kg to Rs 36.43 from Rs 36.49, firewood 40 kg to Rs 270.49 from Rs 270.93, mash pulse washed kg to Rs 76.08 from Rs 76.19, mustard oil kg to Rs 141.12 from Rs 141.28, wheat flour av qlt kg to Rs 24.54 from Rs 24.56.


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## Neo

*$2.4 billion services trade deficit recorded during July-January ​* 
KARACHI (February 21 2009): Deficit of $2.4 billion in service trade has been recorded during seven months of current fiscal year mainly due to larger payments on account of transportation, construction, financial and royalties. However, overall services sector performance improved, as decline in deficit was seen, and exports were rising, when compared with the same period of last fiscal year.

Overall, Pakistan's services sector exports stood at 2.161 billion dollars against imports of 4.632 billion dollars, depicting a deficit of 2.471 billion dollars during the July-January. Rising trend in exports and slowdown in imports helped in slashing services deficit by 1.49 billion dollars, or 38 percent, during seven months as compared to the same period of last fiscal year, in which services deficit amounted to 3.968 billion dollars.

Services sector imports declined by 950 million dollars, or 17 percent, to 4.632 billion dollars during July-January of current fiscal year against imports of 5.582 billion dollars in corresponding period of last year. Services sector exports, with an increase of 34 percent, mounted to 2.161 billion dollars as against 1.614 billion dollars in same period of last year.

Major contribution in services trade deficit was witnessed in transportation services, travel services, and royalties, as only transportation sector contributed over 50 percent share in overall deficit. The country faced a deficit of 1.486 billion dollars in transportation services, as its transportation earnings stood at 691million dollars against the payments of 2.177 billion dollars during the July-January of current fiscal year.

Similarly, some 659 million dollars deficit was registered in travel services, as its imports stood at 791 million dollars over the export of 132 million dollars. The country paid 56 million dollars on account of royalties, 38 million dollars for construction, 76 million dollars on account of insurance and 121 million dollars of financial services import.


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## Neo

*'Economic indicators show Pakistan enters reflation cycle' ​* 
KARACHI (February 20 2009): The recent economic indicators such as inflation, current account, LSM data and PIB auction reflect that Pakistan has entered a reflation cycle, economist said. However, economist sees sluggish growth following weak microeconomic fundamentals and the absence of fiscal policy impetus in addition to falling inflation in the next 12 months.

"The policy rate is likely to cut by some 400 bps to 11 percent during 2009 due to the large decline in inflation," said KASB economist Muzammil Aslam in Merrill Lynch report.

Muzammil said that key equity sectors that would benefit from a steep cut in the discount rate are defensive dividend plays, consumer and financials. The Federal Bureau of Statistics has reported headline CPI at 20.52 percent YoY in January, down 2.82 percent from 23.34 percent during December, he said. The drop is primarily due to the decline in food price inflation, which came in at 21.61 percent down from 27.9 percent during December, he added.

"We are expecting the price reversal trend to continue in coming months on the back of retail and wholesale price differential, falling commodity prices and slackening output gap. Inflation would be single digit in June compared to 20.58 percent currently," he said.

He said that the FBS reported dismal negative growth of 4.72 percent for Large Scale Manufacturing (LSM) during July-December 2008 as compared to growth of 4.8 percent a year earlier. Although, the manufacturing data improved to -1.6 percent during Dec-08 from -6.2 percent YoY during July-November '08, we still expect weak manufacturing fundamentals on the back of global recessionary woes, higher interest rates and the absence of a fiscal stimulus plan, Muzammil said. "We expect flat LSM growth during FY09 and GDP at 3.0-3.5 percent," he added.

He said that overall, participation in PIBs remained broad-based and the ministry of finance opted to mop up Rs 20.33 billion through 3-, 5-, 7-, 10-, 15-, 20-, and 30-year bonds.

However, cut-off yields came in below market expectations, which sparked a rally post auction. The government is targeting to raise Rs 60 billion by June 2009 and we are expecting a bullish bond market, Muzammil said.

He said that in reflation, GDP growth would be sluggish and excess capacity and falling commodity prices drive inflation lower. However, he said that profits are weak and real yields would drop. The yield curves shift downward and steepen as the central bank cut short rates in an attempt to get the economy back onto a sustainable growth path.


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## Omar1984

Pakistan, China sign agreement on trade in services  

WUHAN, China Feb 21 (APP): Pakistan and China on Saturday signed a Memorandum of Understanding in trade in services to attract investment in services sector. The agreement will enhance the capacity of services providers in the two countries and create new jobs in various sectors including IT. 

The agreement also envisages development of efficient services infrastructure and will ensure transfer of technology in all sectors. 

Under this agreement, China has increased its commitment to Pakistan in several sectors and sub-sectors and liberalized its trade regime. 

China will give market access in the services sector beyond any other member country of WTO or bilaterally. 

Ambassador of Pakistan to China Masood Khan said that the two countries signed Free Trade Agreement in November 2006 and under the agreement signed Saturday the two countries will be able to trade in the services of professionals from each others country. 

The agreement was signed by Pakistan Ambassador to China Masood Khan and Chinese Vice Minister for Commerce Chen Jian. President Asif Ali Zardari and State Councillor Dai Bingguo also witnessed the signing ceremony.


Associated Press Of Pakistan ( Pakistan&#039;s Premier NEWS Agency ) - Pakistan, China sign agreement on trade in services


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## Neo

* KSE gains 343 points on positive developments ​* 
Sunday, February 22, 2009

KARACHI: The announcement of attractive payouts in the on-going corporate result season, and news about reinstatement of Pakistan on the Morgan Stanley Capital International (MSCI) Frontier Index helped Karachi bourse cross 6,000 points on Thursday, but profit booking on strength ended the week slightly lower than this psychological level.

The KSE 100-share Index gained more 343.19 points or 6.10 per cent on week-on-week basis and concluded at 5,956.09 points on weekend.

Now that the benchmark KSE-100 Index has increased by 26 per cent from its bottom of 4,815 points, we see some profit taking coming into play during the next week, predicted KASB Securities.

The free-float market capitalisation based 30-Index surged by another 450.61 points or 7.93 per cent on weekly basis and ended at 6,132.50 points.

Analysts said that buying euphoria was already there in the market owing to disbursement of higher dividends and bonuses by cash rich top companies, therefore, news about the re-inclusion of Pakistan in MSCI Frontier Index restored investors confidence to higher.

The slightly lowering of current account deficit in January 2009, maintaining of countrys foreign exchange reserves higher (above Rs10 billion), discovery of new gas reserves by Oil & Gas Development Company, praise from World Bank on improvement in macro economy indicators of Pakistan and the reported active-buying by NIT-State Enterprise Fund helped market cross 6,000 points on Thursday. It (market), however, failed to sustain the level owing to profit booking on the available margins. The overseas investors, however, took no inspirations from MSCI Barra statement and remained determinant of getting exit from the local bourse. They cumulatively sold shares worth US$11.6 million this week. During they week, therefore, they (foreigners) bought shares worth US$7.8 million and sold US$19.4 million.

Cumulative net foreign selling since the removal of floor-price mechanism has now reached to US$201 million. Moreover, foreigners who held shares worth US$1.3 billion at the beginning of 2009, now hold Pakistan equities estimated around US$1.1 billion on account of eroding share values and offloading of shares, JS Research calculated.

Average daily volumes in the ready market stood at 203 million shares versus 144 million shares, showing an increase of 41 per cent on week-on-week basis. The overall market capitalisation improved by Rs51 billion to Rs1,859 billion this week.

Muhammad Saqib Sajjad at KASB Securities said that apart from attractive valuations, the on-going earnings season also added to investors excitement. Going forward, the next week might remain range-bound where continuation of boom bust results shall keep excitement alive in select stocks. 

Next week, the market will be looking at results of Pakistan Telecommunication Company, Oil & Gas Development Company, Pak Oilfields, Hub Power, Kot Addu Power Company and United Bank Limited.

We expect more clarity on the resolution of inter-corporate debt through issuance of Rs75-98bn TFC. This could boost excitement in IPPs (Hubco and KAPCO), refineries and OMCs (PSO). However, growing asset quality concerns may keep the banks at bay. On the macro front, successful negotiations with IMF to increase financing by US$4-4.5 billion and relaxation of interest rates can also prove to be a sentiment booster, he added.

Habib Bank, EFU General Insurance, United Bank, Allied Bank and Agriauto Industries were major gainers while First Capital Securities, Ibrahim Fibre, Bestway Cement, JS Global Capital and Azgard Nine were major losers at the KSE this week.


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## Neo

*US to help boost Pak economy ​* 
Sunday, February 22, 2009

KARACHI: US Mission Deputy Chief Gerald Feierstein has said that the future of Pakistan is bright and prosperous and the positive assessment would certainly give a green signal to the international business community.

A six-member delegation of the US mission, led by Gerald Feierstein, visited the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Saturday on a courtesy call and met its President Sultan Ahmed Chawla and others.

As part of a strategic review to support Pakistan, he said, the priorities of the US government were to provide special equipment and training to Pakistani counterparts to enhance their capabilities to meet the challenges of law and order.

Sultan Ahmed Chawla said due to US financial meltdown and international recession, Pakistans economy also faced several challenges which had sternly hit its industrial competitiveness besides hampering the achievement of export target. He said there were many core areas where the US could assist Pakistan, especially education, energy, etc. 

Gerald Feierstein said the US had a number of programmes for Pakistan to boost its economy and growth and it could play an important role in laying the foundation, which included projects related to infrastructure development, energy, education, vocational training, etc.

He said the US mission had also planned to take a business delegation to the US as the most important component was to attract American business people to Pakistan for establishing business ties.

He said the FPCCI could play a pivotal role in convincing the American business people that there were good opportunities in Pakistan with conducive environment.

FPCCI Vice President Zakaria Usman said the US should give similar tariff facilities to Pakistan as given to its neighbour. Another FPCCI Vice President Mansha Churra said the US should honestly portray Pakistans real picture in a positive manner and issue a positive travel advisory to its citizens intending to visit Pakistan.

Pakistan-US Business Council former chairman Arshad Alam pointed out that tariff rates in the US for Pakistani products were high ranging between 13 per cent and 17 per cent. It is important that the US brings down the tariff rates for Pakistani products to be competitive in the US market, he said.


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## Neo

* Russian trade team to arrive next week ​* 
Sunday, February 22, 2009

KARACHI: A high-level Russian trade delegation will visit Pakistan next week for the first time in 30 years, Chief Executive Trade Development Authority of Pakistan Syed Mohibullah Shah announced on Saturday.

Speaking to the media at the TDAP office, he said Pakistan was on the path to enhance relationship with several countries and was finding new markets. Shah said that Russia was a huge market, which imported goods and services worth $190 billion annually, but Pakistan had a meagre share of $100 million only.

Pakistan had the potential to increase that share, especially in textile and clothing. Meetings were conducted with textile manufacturers, he said, who gave a positive response.

The Russian trade delegation will arrive on February 25 in Karachi and later it would visit Faisalabad. Pakistan had the potential to double its exports in five years, Shah said, adding the TDAP was working on involving value addition in agricultural crops like wheat, rice, fruits as well as livestock and fisheries.

He spoke about several steps for restructuring the organisation for facilitating the trade and said Pakistan was working to establish trade and investment linkages with the Central Asian Republics, including energy corridors (gas from Turkmenistan and electricity from Kyrgyzstan) within the context of the CAREC regional programme sponsored by the Asian Development Bank.

While most of the imports to the Kyrgyz Republic were related to agricultural products, the major share of agriculture products in Kazakhstan, including fruits, vegetables and seafood was imported from Russia, Turkey and Europe. A Pakistani trade delegation would soon visit these countries, he said.

Answering questions, the TDAP chief said though Pakistans seafood export to the European Union member countries had been suspended for two years, the country had found new markets in Russia and South East Asian countries, which were out of recession compared to Europe and the US.

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## Neo

*PSM on the path of recovery​*
KARACHI: Despite being affected by global economic recession and incurring losses, the Pakistan Steel Mills will regain its lost sales and will reach the mark of expected sales by July 2009, Chairman, PSM, Mueen Aftab Sheikh said while addressing a press conference in Pakistan Steel Mills Saturday.

The steel mills sales are going up as it recorded Rs 1.5 billion in November 2008, Rs 2.8 billion in December 2008 and in January 2009 the sales were recorded at Rs 3.8 billion. 

He said we are making efforts to incorporate clause in PPRA rules authorising any government department committee to negotiate with suppliers to adjust the contracted prices equivalent to difference of current international prices of raw material and other consumables.

Aftab said: We have initiated a project for making briquettes of coke dust 0-15 mm, as in the past around 40,000 tonnes of coke dust was wasted every year, but the coke briquette made from this dust would be worth $20 million per annum. PSM has also started using local Sharrigh coking coal to the tune of 5 percent in the plant. The price difference between local and imported coal is $275 per MT. To cut down the surplus contents PSM is also procuring a desulfurization plant to use more local coal as substitute of expensive imported coal, chairman informed. 

The PSM management has also approached FBR for imposition of regulatory and antidumping duty because EU has imposed 85 percent duty on import of steel products from China. USA has imposed 153 percent dumping duty on Indian steel products and India has imposed 30 percent duty on import of steel products. Due to the global recession, the PSM is operating at 75 percent capacity instead of 90 percent. Market share of PSM prior to recession was 20 to 45 percent for long and flat steel products and the rest of demand was being met through imports in case of flat products, whereas, long products were being produced locally through re-meltable scrap or ship breaking, he said.


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## Neo

*Development expenditure exceeds Rs 125bn​*
ISLAMABAD: The development expenditure of the government has exceeded Rs 125.450 billion in the first 6 months of the current fiscal year 2008-09, officials sources told Daily Times here on Saturday.

The expenditures of Rs 369.8114 billion carry Rs 247.632 billion on development and Rs 122.182 billion on non-developmental expenditure during the first half of the current fiscal year 2008-09. 

Classification of these sectors is: development expenditure on roads, highways and bridges Rs 3.395 billion while non-development expenditure is Rs 3.395 billion. Development expenditure on water supply and sanitation is Rs 3.792 billion while non-development expenditure is Rs 2.766 billion. Development expenditure on education is Rs 5.985 billion while non-developmental expenditure on it is Rs 77.958 billion. 

Out of a total expenditure of Development expenditure of Rs 2.255 billion on population planning, development expenditure is Rs 2.163 billion and non-developmental expenditure is Rs 0.092 billion. Development expenditure on social security and social welfare in the current half fiscal year is Rs 2.616 billion while non-developmental expenditure is Rs 0.870 billion. 

Developmental expenditure on agriculture is Rs 17.291 billion and non-development expenditure on it is Rs 13.878 billion. Total development expenditure on rural development is Rs 1.742 billion and non-development expenditure on this sector is Rs 0.377 billion. 

There are some sectors on which the expenditures is treated as developmental, these sectors are: natural calamities and other disasters worth Rs 2.791 billion, spending on Law and Order Rs 42.175 billion, spending on Low cost housing Rs 0.128 billion, expenditure on Justice Administration Rs 4.020 billion, spending on Subsidies worth Rs 116.958 billion, expenses on Food Support Programme worth Rs 9.383 billion, spending on Peoples Works Programme-I worth Rs 0.407 billion and expenditures on Peoples Works Program-II wroth Rs 15.183 billion. 

Federal spending: Total expenditure of at Federal level in current half fiscal year 2008-09 is Rs 179.087 billion. At federal level the classification of 6 months spending are; Roads, Highways, and Bridges is Rs 1.366 billion, Water Supply and Sanitation is Rs 75 million, Education is Rs 10.737 billion, Health is Rs 5.002 billion, Population Planning is Rs 1.426 billion, Social Security and Social Welfare is Rs 0.291 billion. 

Punjab: Total expenditure of Punjab province in current half fiscal year 2008-09 is Rs 97.776 billion. Provincial spending on different sectors are; Roads, Highways, and Bridges is Rs 11.997 billion, Water Supply and Sanitation is Rs 3.396 billion, Education is Rs 40.119 billion, Health is Rs 11.226 billion, Population Planning is Rs 0.544 billion, Social Security and Social Welfare is Rs 0.421 billion.

Sindh: Total expenditure of Sindh province in current half fiscal year 2008-09 is Rs 43.824 billion. Provincial spending on different sectors are; Roads, Highways, and Bridges is Rs 4.645 billion, Water Supply and Sanitation is Rs 1.502 billion, Education is Rs 16.281 billion, Health is Rs 4.699 billion, Population Planning is Rs 26 million, Social Security and Social Welfare is Rs 2.612 billion.

NWFP: Total expenditure of NWFP province in half fiscal year 2008-09 is Rs 35.654 billion. Provincial spending on different sectors are; Roads, Highways, and Bridges is Rs 1.672 billion, Water Supply and Sanitation is Rs 0.775 billion, Education is Rs 13.561 billion, Health is Rs 4.900 billion, Population Planning is Rs 200 million, Social Security and Social Welfare is Rs 74 million. 

Balochistan: Total expenditure of Balochistan province in half fiscal year 2008-09 is Rs 13.473 billion. Provincial spending on different sectors are; Roads, Highways, and Bridges Rs 1.773 billion, Water Supply and Sanitation Rs 0.729 billion, Education Rs 3.245 billion, Health Rs 1.011 billion, Population Planning Rs 59 million, Social Security and Social Welfare Rs 88 million.


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## Neo

*Gwadar Port: Accord with Singapore firm needs revision​*
KARACHI: The agreement signed with Singapore firm on Gwadar Port needs to be revised.

State Minister for Ports and Shipping, Sardar Nabil Ahmed Gabol said this on Saturday.

The Minister said making Gwadar Port operational is a big success of the present democratic government and this port would soon emerge as one of the best ports in the world, says an official statement here. He said Gwadar Port would prove as an instrument for strengthening the countrys economy, promotion of regional trade and socio-economic uplift of the people.

Gabol said that more ships carrying wheat and urea are scheduled to arrive at Gwadar Port. Labourers and traders would be provided maximum facilities at the port along with creating more job opportunities for the people of Balochistan at Gwadar Port and other associated facilities.


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## Neo

*Direct taxes on rich people proposed: Dr Ishrat sees 3-4 percent growth over next two years​* 
KARACHI (February 22 2009): Pakistan can manage to achieve 3 to 4 percent growth rate over next two years and would return to the long-term average of 5 percent after 2010. This was stated by former Governor of State Bank of Pakistan and Dean and Director Institute of Business Administration Dr Ishrat Hussain while addressing Pakistan Belgium Business Forum (PBBF) on "Survival of Pakistan's Economy" at a local hotel on Saturday.

The gathering was attended by Francis Widmir, Commercial Counsellor, Embassy of France in Pakistan and Head of Economic Department in Pakistan, Takreem-ul-Haque, Honorary Vice Consul Belgium, President PBBF Mohammad A Rajpar and members of PBBF.

Dr Hussain said Pakistan for a long time had achieved the rare distinction of having 5 percent per annum GDP growth rate, hence a pessimistic view of the alarmist 'experts', who are talking down the economy, was not justified, as the capitalist system entails boom and bust cycles alike.

Pakistan should change its traditional view of looking at the West for economic reforms, now Islamabad should look at the fast growing future economies of East like China, South Korea, Vietnam, etc, he added. He said though the short-term issues, such as power, water etc, were there but in the long-term Pakistan should learn from China and induct incentives for industrial production, innovation, education, culture of hard work, transparency in corporate working, etc.

Dwelling on the prospect, he said since July 2008, the government had taken tough decisions with subsidies being eliminated to reduce fiscal deficit, IMF programme has begun plus reduction in world oil and commodity prices were easing pressure on the economy. He said 2009 would be a tough year though.

The former SBP chief said the country's banking system had insulated from global liquidity crisis due to earlier reforms, whilst the central bank was injecting needed liquidity into the banking system.

Terming the tax ratio as "not enough", Dr Hussain said rich people needed to pay more and the emphasis should be on direct taxes instead of the indirect ones that affect the poor more. He said the recession-hit world growth was expected to be zero or negative over next two years with developed countries to be the most affected ones.

The economic recession would affect Pakistan's exports and investment inflows, but perhaps the demand would not be hurt as much since Pakistan was the producer of lower value goods.

Terming investment a must in energy supply to industrial, social and infrastructure sectors, Dr Hussain said Islamabad should diversify out of textiles into higher value addition activities, like engineering and manufactured goods. He said the current crisis was not first in the history of Pakistan, which had recovered well from previous ones, like in 1999.

The ex-SBP chief cited three reasons for the current crisis. First, the previous government had not responded in time to increase in global oil and commodity prices ie impact not passed on to consumers for political reasons, he said, adding that instead, government had borrowed Rs 600 billion from the SBP causing inflation and attacking on the exchange rate.

Secondly, he said political crisis and extended transition to new government left the economy without effective stewardship. Finally, the previous government had not planned for energy shortage despite good growth rates. This was a mistake (or policy failure) which had impaired current industrial production and future industrial investment.

Earlier, PBBF President Mohammad A Rajpar in his address of welcome highlighted various aspects of PBBF saying that the Forum was enjoying good reputation among the official and business circles. He said the 80-member Forum was promoting business ties and mutual understanding between the two friendly countries and was engaged in activities such as shipping and freight forwarding, textiles, oil and gas, manufacturing of building materials, cement and glass, etc.


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## Neo

*Shadows over large scale manufacturing sector ​* 
ARTICLE (February 22 2009): In a latest move, the ECC of the Cabinet has exempted, on January 13, imposition of the Regulatory Duty on import of capital goods required for various projects. The decision is termed as another blow to the crippling Large Scale Manufacturing (LSM) Sector, of which capital goods industry is an important constituent.

This negates the government's declared policy of facilitating local industry for the reasons of promoting import substitution and value addition and adapting export-led strategy. The Large Scale Manufacturing (LSM), which accounts for 70% of overall manufacturing, has witnessed steady deceleration for the third consecutive year, resultantly increasing import burden on national economy on one hand, and, on the other, having disturbed export targets.

The LSM sector suffered negative growth of 4.8% during fiscal year 2007-08 in relation to 2006-07. A variety of factors are responsible for lackluster performance of the sector, including political instability, massive power and gas load-shedding, higher input costs and other constraints, or, to sum up, structural weaknesses in the economy, to quote State Bank of Pakistan annual report for 2007-08.

The declining trend continues during the current fiscal year too. The sector witnessed a decline of 4% during the month of July 2008, 5% during July-August 2008 and 6.2% in the first quarter of the year (July-September 2008), over the corresponding periods of previous year. There was an overall 5.05% negative growth recorded in the LSM sector during the first 4-month period of the current fiscal year (July-October 2008).

The situation is reflected in the fact that trade deficit during the first half of 2008-09 year (July-December 2008) registered an all-time high level of $9.55 billion. In the past, the correlation of GDP growth was highest with capital goods manufacturing compared with that of the production of consumer and intermediate goods. During the recent years, however, capital goods contribution in total LSM has declined, from 6% share until the 1980s to nominal 3% since the 1990s.

No wonder Pakistan has lost its global competitiveness in 2008-09, as the country is now ranked at 101 out of 134 countries. In comparison, Pakistan was ranked at 82 out of 122 countries in 2006-07, according to a report. In this context, it is rather criminal that the need for reviving the LSM sector is being overlooked by the government. Textile manufacturing units have suffered largely, and are being closed down in record numbers.

Steel industry is in a shambles and there has been no investment in engineering industry for many years. Indeed, the government needs to adopt prudent approach and consistency in policies to improve performance of the LSM sector, on priority. This will be in line with the government's announced measures as per 2008-09 Budget, having set a target of 6%-7% growth for the LSM sector.

The "Asian Development Outlook 2008 Update" of the ADB has forecast that the economic growth in 2008-09 was expected to remain subdued at 4.5%, with a continued slowdown in manufacturing sector. More disturbing are the recent findings of the Commission on Growth and Development in its latest "Growth Report" that Pakistan needs 159 years to catch up with industrialized (OECD) countries, assuming it grows at the highest rate registered in the last ten years.


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## Neo

*Generators import soars by 87pc By Aamir Shafaat Khan ​*Sunday, 22 Feb, 2009

KARACHI: Anticipating huge demand for generators in view of intense load-shedding in upcoming summer, dealers have expedited the imports to pile up stocks for the season. 

The power generating gadgets have already become costlier by 10-30 per cent in view of appreciation of yen against the rupee coupled with rupee devaluation against the dollar in 2008. 

Imports of power generators in July-Jan 2008-09 had swelled by 87 per cent to $992 million as compared to $531 million in the same period of last fiscal year. 

In January 2009, imports stood at $138 million as compared to $122 million in Jan 2008. Imports in December 2008 were recorded at $130 million. 

Already hit by load-shedding in the winter, many consumers fear more nerve- wrecking experience in upcoming scorching heat. 

Not only the importers but the consumers are now certain that the load- shedding will be severe in summer as nothing serious has been done to control it, chairman Karachi Machinery Merchant Group (KMMG), Sikandar Shahzada said. 

He said that the demand of generators had been thriving as the power cuts had been more acute in the last two to three years. 

Prices of generators of US, Japan and Chinese origin have gone up by 25-30 per cent due to change in currency parities, making imports costlier. However, the price of Chinese generators had surged by 10 per cent. Mr Sikandar claimed that the prices of generators in these countries had not declined. 

The buying season of generators gets underway usually from February and lasts till August. To meet the demand, importers place huge orders from October to January. It takes at least eight month for local delivery of Japanese generators, while imports from China and the US land in 20 days. 

He said an anomaly at the Customs stage has been going on for the last two years under which petrol and gas generators are cleared at five per cent duty at the Lahore Dry Port but the same is cleared at 10 per cent at the Karachi Port. There is no change in the import duty of diesel generators at the two ports. 

The import duty on diesel generators up to 60KV is 20 per cent, while on 100KV and above the duty is 15 per cent. There has been no sales tax on its imports for the last two years. The Punjab consumes more than 60 per cent of the total imports because of intense load-shedding in the last one and a half years. 

Mr Sikandar pointed out that he had been discussing the anomaly issue with the Customs and other government officials, who assured to rectify the same but so far no practical step had been taken. 

There is also a difference in generators prices available in Punjab as compared to Karachi due to five per cent difference in the import duty on two different ports, he added. 

After substantial price cut in petrol, the sale of petrol generators has picked up slightly but 90 per cent of gas generators are sold in the markets. 

Some people are now installing a local device made of Chinese parts at Rs35,000 for making the generator auto-start when power goes off and switch it off when power supply resumes. 

He said the original gas generators of US and Japanese from five to 25KV are now available, which do not require a device for running into gas. For example a 25KV sound proof gas generator of Japan is priced at Rs900,000, while a 17KV American generator sells at Rs450,000. A 10KV US-made generator is available at Rs330,000, while a five KV ordinary Japanese generator is priced at Rs150,000. 

There are two varieties available in Chinese types (branded and unbranded). For example, a branded 2KV generator is available at Rs18,000, while unbranded is priced at Rs12,000. An unbranded 5KV sells at Rs30,000 while branded one sells at Rs45,000. A Japanese 2KV generator is available at Rs52,000, while one of 5KV costs Rs120,000 and 10KV is selling at Rs250,000.


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## Neo

*China signed power generation accord with Pakistan ​*Sunday February 22, 2009

Pakistan and China on signed an agreement for cooperation in hydel power generation. Chairman Wapda Shakeel Durrani and President of China Three Gorges Project Corporation Li Yong`an signed the agreement which was also witnessed by President Asif Ali Zardari. 
Under the agreement, China will provide technical assistance to Pakistan in the field of hydel power generation. 

Earlier, the President had a meeting with Li Yong`an in which he expressed his desire for cooperation in the field of hydel power generation. 

President Zardari said the basic purpose of his visit here is to study the Chinese model of power generation and development in agriculture sector. 

Li Yong`an said the corporation was ready to extend all possible assistance to Pakistan to overcome its energy challenges. 

He also briefed President Zardari about the salient features of the dam which is the world`s largest having a capacity of 22500 megawatt. 

Later, President Zardari visited to the site of the dam.


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## Neo

*PAKISTAN OFFERS DEDICATED ECONOMIC ZONE FOR MALAYSIANS​*
On trade ties between the two countries, Tahir said Malaysian exports to Pakistan recorded US$1.7 billion last year compared to US$1.07 billion in 2007, registering a 59 percent increase.

Malaysian imports from Pakistan also rose by 27 percent to US$103.8 million last year from US84.4 million the previous year.

Tahir was confident that the Malaysian Pakistan Closer Economic Participation Agreement, which came into effect on Jan 1 last year, would immensely benefit trade between both countries.

Under the agreement, both countries will gradually reduce tariff on each others goods, making them competitive in the world market.

Last month, Pakistan announced customs duties reduction schedule for 5,912 Malaysian goods from now until 2014


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## Neo

*Govt likely to pocket Rs100bn from low crude prices ​* 
Tuesday, February 24, 2009

ISLAMABAD: The government is all set to break the record of last 60 years by earning substantial revenues of over Rs100 billion by not passing on full benefits of reduced prices of crude oil in the international market to domestic consumers, it is learnt. 

The government is reluctant to cut prices because it wants to meet the fiscal deficit target of 4.2 per cent of gross domestic product (GDP), equivalent to Rs562 billion. In the remaining four months (March to June) of the current fiscal year, the government has no plan to pass on benefits of reduced prices in POL products to the consumers due to a substantial revenue shortfall being faced by the Federal Board of Revenue (FBR). 

The Nawaz Sharif government in 1998-99 had collected Rs72 billion by not passing on low prices of crude oil in the international market to the local consumers when prices had tumbled to $10 to $15 per barrel. 

So far the government has earned Rs55 billion by pocketing around Rs15 billion per month, a high-level official in the finance ministry said while talking to The News here on Monday. According to the official data obtained by The News, the monthly oil import bill stood at $1.319 billion in September 2008, which declined to $403.6 million in Dec 2008. 

The government is saving around $900 million a month because of reduced POL prices in the international market. According to Adviser to the Prime Minister on Finance Shaukat Tarin there was a need to keep in focus the whole picture of economy as defence expenditures have gone up and FBR revenues have fallen. 

Keeping in view the current inflationary rate, Shaukat Tarin said the annual tax collection was expected to be around Rs1,327 billion from the earlier target of Rs1,360 billion. We are trying our best to evolve a consensus to further reduce the FBRs tax collection target for the current fiscal year in our ongoing talks with the International Monetary Fund, he concluded. 

There is also a view among official circles that prices of gas should also be reviewed after one month or fortnightly basis. It seems that there will be no solace for the voiceless consumers because the government is finding it easy solution to continue with higher prices of POL products in order to bridge its fiscal deficit. 

There is no possibility of reduction in prices of POL products for the domestic consumers in near future because Islamabads economic managers consider it easy as well as appropriate way for meeting the envisaged fiscal deficit target of 4.2 per cent of the GDP. 

The FBR is facing revenue shortfall of Rs21 billion in Jan 2009. The FBR has collected Rs628 billion in the first seven months (July-Jan) period for the current fiscal year. If the annual tax target is fixed at Rs1,300 billion, the FBR will have to collect Rs672 billion in the remaining five months (Feb-June) of FY 2008-09. When FBRs spokesman Mahmood Alam was asked about revenue collection trends, he said that in the past the FBR used to collect 45 per cent of the annual target in the first six months and the remaining 55 per cent was collected in the second half of the fiscal year.


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## Neo

*WAPDA plans to construct 32 dams ​* 
Tuesday, February 24, 2009

LAHORE: The Water and Power Development Authority (WAPDA) has planned to construct 32 small and medium dams in all four provinces of the country in addition to implementing mega projects in water and hydropower sectors.

WAPDA Adviser on Diamer-Basha Dam project Dr Izhar-ul-Haq, in a briefing to a SAARC Energy Centre delegation at the WAPDA House, said the construction of eight small and medium dams, two in each province, would be undertaken in the first phase.

These included Hingol and Naulong dams in Balochistan, Nai Gaj and Khadeji dams in Sindh, Bara and Chudwan Zam dams in NWFP and Ghabir Dam and Dera Ghazi Khan hill ******** in Punjab. These dams had been planned to tap the local water and power resources, he added.

The WAPDA adviser told the delegation the Authority was constructing five hydropower projects under Vision 2025. Four of them with accumulative power generation capacity of 323 megawatts would come on line in 2010 and 2011, while the 969MW Neelum Jhelum Hydroelectric project would be completed in 2016, he added. Earlier, WAPDA member (finance) said WAPDA was fully focused on optimal utilisation of water and power resources for sustainable economic growth in the country.

SAARC Energy Centre programmes leader on technology transfer Dr M Pervaiz said the centre was meant for fostering cooperation in the energy sector among SAARC members. He said Pakistan might have access to the Clean Development Mechanism (CDM) funds due to its hydropower potential.


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## Neo

*SAP APJ posts 23% software revenue growth​*
KARACHI: SAP Asia Pacific Japan (APJ) posted 23 percent Software revenue growth, to 594 million. Software and related services grew at 24 percent for the year, to 1.192 billion. All revenue figures in this release are expressed in non-GAAP constant currency terms and all growth is measured against the previous comparable period. While SAP APJ experienced difficult market conditions in the fourth quarter, growing software and software related Services at 5 percent, total revenue for the full year grew at 20 percent, to 1.532 billion. I am extremely proud of the way our team in SAP Pakistan handled market conditions we experienced during the last quarter of 2008, said Sajjad Syed, Managing Director, SAP Pakistan.


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## Neo

*EDF massively misused ​* 
ISLAMABAD (February 24 2009): The Export Development Fund (EDF), established in 1991 to support export-oriented industries, has allegedly been massively abused, and distributed to some blue-eyed organisations and individuals under the head 'miscellaneous expenditures', sources told Business Recorder.

The Federal Cabinet, in its meeting on May 30, 1991, had decided that an 'Export Development surcharge (EDS), equivalent to 0.254 percent of the export value of exports will be levied with effect from July 1, 1991 and that the proceeds of the surcharge should be transferred by the government to EDF for distribution among the various export associations for export development. Commerce Minister Amin Fahim has acknowledged that some cases have been brought to his notice of misuse of EDF by successive governments.

"Some wrong things have happened with regard to utilisation of EDF, and we should learn lesson from the past," he said while talking to this newspaper on Monday. When his attention was drawn towards utilisation of exporters' money for medical treatment of one former president of the Federation of Pakistan Chamber of Commerce and Industry (FPCCI) in London, he said that he would investigate the matter.

The EDF Board has sanctioned Rs 11549.025 million so far, of which Rs 10367.161 million has been released, whereas Rs 1181.864 million is balance, one official in TDAP told this newspaper.

The government has forked out millions of dollars on (i) hiring of foreign law firm by All Pakistan Textile Manufacturers Association (Aptma) to defend imposition of safeguard duty measures by Turkey on import of cotton yarn, (ii) study for preparing a perspective plan for Pakistan's textile and clothing industry by Gherzi Textile Organisation, Switzerland, (iii) filing of a suit in the Indian court, (iv) benchmarking of various sectors of Pakistan textile and apparel industry, and (v) studies by Werner International, (USA), Some companies listed which received payment but there was no corresponding service rendered include Stanbrook &Hooper S.C, Brussels (Belgium), Sandler, Travis & Rosenberg, P.A., USA, Sidley Austin Brown & Wood LLP Brussels for Generalised System of Preference(GSP) and Thompson Cobb, Bazilio & Associates.

Sources said that Commerce Ministry had also hired international consultants to prepare trade policies. However, like other studies, these were also gathering dust in a cupboard. Around Rs 50 million was released to Sialkot International Airport Limited (SIAL), out of sanctioned amount of Rs 180 million, for construction of cargo complex at Sialkot airport.

Sources said that Commerce Ministry also approved Rs 432.250 million for Trade Policy 2007-08 initiatives, out of which Rs 390 million has been released, whereas Rs 42.250 million is yet to be paid. According to sources, Commerce Ministry also released Rs 300 million to Civil Aviation Authority (CAA) as cost of land for Dazzle Park, Karachi.

Some other beneficiaries of this fund are: Textile Institute of Karachi, Pakistan Institute of Fashion and Design, Lahore, Karachi and Islamabad campuses, SMA, Rizvi Textile Institute, Karachi, Institute of Handloom/Home Textile Technologies, Fan Development Institute Gujrat, Cutlery Institute of Pakistan, Institute of Jewellery Development, Lahore (closed), Fashion Design Technology Centre for Women, Karachi (not established), Research and Training Centre for Weaving, Gujranwala (not established). The Ministry has released about Rs 30 million for these institutes.

Sources said that Commerce Ministry had also used this money on hiring services of some retired employees who had retired from their Ministry, besides bridge financing for consultants for restructuring of Trade Development Authority of Pakistan (TDAP).

They said that Finance Ministry was not providing EDS collected by the federal government to EDF. Only a portion of EDS was provided to EDF through annual budgetary grant.

In Trade Policy 2002-03, the Cabinet approved the proposal to amend the EDF Act, 1999 to make it mandatory for all EDS receipts to be automatically transferred to the EDF, but directed that the matter be finalised in consultation with the Auditor General and Finance Division.

Accordingly, the process was followed and the EDF Act, 1999 was amended by the Parliament through EDF (Amendment) Act, 2005, enabling transfer of whole EDS receipts collected in the preceding year to EDF in the following year.

However, the position has still not changed. The Finance Division has not provided the entire receipts of EDS collected in 2005-06, 2006-07 and 2007-08 in the following years 2006-07, 2007-08 and 2008-09 respectively even after amendment in the Act. Sources said that Commerce Ministry would take up this issue with Prime Minister Yousaf Raza Gilani during his visit to the Ministry on February 25.


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## Neo

*Neelum-Jhelum hydropower project: Pakistan may get $948 million loan ​* 
ISLAMABAD (February 24 2009): Pakistan may get a loan amounting to $948 million from China, Saudi Fund for Development and Islamic Development Bank (IDB) which would be adequate to meet 58 percent of the total cost of the 969MW Neelum-Jhelum Hydropower Project. Sources told Business Recorder that Pakistan would receive $448 million from China under Pak-China co-operation in hydel power generation agreement recently signed between the two countries during President Asif Ali Zardari visit.

The other two financiers IDB and Saudi Fund for Development have also committed $300 million and $200 million respectively. Pakistani and IDB officials are expected to hold meetings by end of Feb 2009 to finalise the modalities of the deal. The construction contract of the project has already been awarded to a Chinese company and the work is in progress.

The project cost is Rs 128.4 billion and Pakistan is seeking assistance from different countries to meet the cost of the project, sources added. Sources said the government has also requested Kuwait Fund for Development and Abu Dhabi Fund for Development to provide financing to carry out Neelum-Jhelum Project.

The government recently arranged the visit of representatives of these funds to visit the site of the project. The Water and Power Development Authority chairman also visited the site along with the delegation. The project is located in the vicinity of Muzaffarabad in Azad Jammu and Kashmir. It envisages the diversion of water of Neelum River through a tunnel into Jhelum River. The government had also imposed 10 paisa per unit surcharge during last year to be charged to electricity consumers to generate financing for the project. The project would be completed with Chinese assistance in eight years and officials described it as another symbol of Pak-China friendship.

The representatives of Funds were informed that Pakistan was currently facing power shortfall and the Neelum Jhelum Project would help meet the shortfall. The Pakistani authorities said that a power project would greatly help the government to meet its energy requirements, badly needed for economic development of the country.

The construction of Neelum-Jhelum Project would enable Pakistan to get water usage rights and any further delay in construction of the said project would allow India to use water for power generation under the Indus Water Treaty brokered between the two countries by the World Bank.


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## Neo

*Second $750 million tranche: Pakistan and IMF officials to meet in Dubai ​* 
KARACHI (February 24 2009): The country's top financial officials will shortly meet International Monetary Fund (IMF) officials in Dubai as time for handing over of second $750 million tranche of the Fund's standby loan for Islamabad is fast approaching. According to sources, Pakistan's officials would also discuss the country's economic targets set for the next six months, besides the handing over of the loan in March.

They said tat State Bank of Pakistan (SBP) Governor Saleem Raza went to Dubai on Monday to meet the IMF officials, while Advisor to Prime Minister on Finance Shaukat Tarin would leave on Tuesday. Several SBP and Finance Ministry officials are already there. Tarin, according to sources, is confident that Pakistan would get the second tranche without any difficulty.

"The country's overall economic situation is improving and Pakistan would get some 750 million dollars next month on account of second tranche of IMF standby loan", Tarin told Business Recorder.

He said that that economic indicators are reflecting that Pakistan is now almost out of crisis situation. "I am confident that Pakistan will get the second tranche on time and after the improvement in the economic indicators like current account deficit at present there is no more hurdle in the second instalment," he added. He said that he would negotiate with IMF officials along with other Pakistani officials for the next six months' targets.

About budgetary borrowing he said that Pakistan would achieve the IMF target of Rs 258 billion borrowing for the current year. However, sometimes it might go up due to some liquidity shortage, he added. Sources said that the SBP and ministry of finance officials have been in touch with IMF officials for last one week and they have briefed them about the performance of Pakistan's economy.


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## Neo

*Prospects of greater market access discussed: EU team meets Sahibzada Malik ​*
ISLAMABAD (February 24 2009): A five-member European Union's South Asia delegation headed by Robert Evans held a luncheon meeting with the Minister of State for Foreign Affairs, Sahibzada Malik Amad Khan in the foreign office here on Monday. According to foreign office press release the EU delegation is on its visit to Pakistan from February 22-25.

Evans, who earlier visited Pakistan in February 2008, conveyed to the Minister of State the EU's satisfaction on progress Pakistan has achieved in strengthening democratic institutions. During the meeting, both sides discussed bilateral issues including greater market access for Pakistan, forthcoming Joint Commission and Ministerial Troika meetings in March, and the first Pakistan-EU summit meeting by mid 2009.

They also discussed regional and international issues including Pakistan-India relations in the aftermath of Mumbai attacks, situation in Afghanistan and counter-terrorism. Earlier in the morning, the delegation called on Acting Speaker National Assembly and Chief Election Commissioner. The delegation will also call on the Prime Minister and hold meetings with the Minister for Information and Broadcasting, Interior Advisor, Chief Minister, Punjab and Speaker Punjab Assembly.-PR


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## Neo

*'Russian and Central Asian markets explored for Pakistani exports' ​* 
KARACHI (February 24 2009): Trade Development Authority of Pakistan (TDAP) has explored new Russian and Central Asian markets recently to export products. A 12-member Russian delegation is visiting Pakistan to discuss trade with the local traders and industrialists on February 25, said Chief Executive TDAP Syed Mohibullah Shah at a press conference held at the authority's main office the other day.

He was of the considered view that the Russian and the Central Asian markets have great potential for Pakistani products, which have not so far been exploited properly. Pakistan could only export 100 million dollars products to Russia in the past. Shah said that there are products like textile and clothing, fruits and vegetable, surgical instruments, footwear, meat and poultry, cutlery etc, which could be exported to Russia with their large demand there.

About the Central Asian markets, he said that particularly Tajikistan, Kyrgyzstan and Kazakhstan are lucrative venues for their contiguity with Pakistan, which reduces transportation passage and time as compared to their import of such items from Turkey, Ukraine and other Eastern European states.

He said that a "Trade Caravan" will be leaving in summer 2009 for these states through Sust border located at Pakistan-China border making passage via Chinese province Xinjiang. The caravan will display a wide range of local products.

Shah said that Pakistan has comparative advantages in these markets as compared to the other competitors besides a competitive edge in products' range, which could easily flood these markets. The global economic recession has least hit the Russia and the Central Asian countries, he believed, saying that the demand for Pakistani products is still at large. TDAP will also establish its office in Gilgit. CE TDAP further said that PIA flights will also be started for major Central Asian countries.


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## Neo

*'Only knowledge-based economies will have a place in global market' ​*
LAHORE (February 23 2009): The Vice President Saarc Chamber of Commerce and Industry Iftikhar Ali Malik has urged the students to concentrate on their studies as the 21st century is of knowledge based products and only knowledge based economies would have a place in the global market.

Malik was speaking at Annual Day function of Customs Public School here. He said youngsters are our future and valuable asset, they must work with determination, courage and consistency and this would make them leaders of tomorrow. "All professions are respectable; select agriculture, trade, industry or any service; do not opt only for government service" he added.

He said to create awareness among the young students, school management should arrange visits to animal farms, fish farms, orchards, fruit processing plants, industrial units instead of emphasising on excursion only.

He told the students that all the national heroes were young like them. But all of them had a goal in their mind. They just focused their attention towards the achievement of their goal. He advised the students to set a goal of life in their mind and then make small plans to achieve that goal. Concentrate on education to be creative. Manual work has lost its charm. Knowledge based products will dominate 21st century.

He said the students should work hard to get education, training, and develop expertise and skill. Future is for the fittest, get inspiration from your leaders, teachers and elders. Be healthy in physique and morality - these both are the ladders of future prosperity. Try to make name in spirits, games, like our renowned players, he added.-PR


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## Neo

*About 104,630 tons of chillis produced in 2008-09 ​*
ISLAMABAD (February 23 2009): About 104.63 thousand tons of green chillis were produced during the year 2008-09 to fulfil the domestic consumption. An official of the Ministry of Food, Agriculture and livestock told APP here on Sunday that chillis were cultivated over 48.81 thousand hectares land during current financial year.

He said that 56.30 thousand hectares land was set as target to produce 104.50 thousand tons chillis during 2008-09. The area under chillis' production was decreased as compared to the area under green chillis production during the same period last year, he added.

He said that despite the decrease in total area under production, the crop output was increased. The official said that Sindh was the largest chili producing province where 38.10 thousand hectares land was put utilised for the purpose, saying that 88.51 thousand tons of crop was achieved, he added. He further said in Punjab about 5.61 thousand hectares land was set to cultivate green chillis while, 8.92 million tons of crop output was obtained during 2008-09.

In Balochistan and NWFP provinces green chillis were grown over 4.5, 0.60, thousand hectares land while 6.50 and 0.70 thousand tons chilli was produced respectively, he added. During the year average 2143 .62 kg per hectare green chillis was produced, he added.


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## Neo

*Sino-Pak cooperation: four MoUs signed on agriculture ​*
WUHAN (February 22 2009): Pakistan and China on Saturday inked four memorandums of Understandings (MoUs) for co-operation between the agriculture sectors of the two countries. President Asif Ali Zardari and Governor of Hubei Lihong Zhong witnessed the signing. The MoU between the government of Sindh and Hubei Seed Group aims at joint development of rice hybrid seed and its commercial production in Pakistan.

The joint breeding programme between the government of Sindh and Hubei Seed Group will be through germplasm technology transfer to achieve maximum productivity of hybrid rice. Another MoU between Pakistan Agriculture and Research Council and Hubei Research Group focuses on establishment of joint breeding in Pakistan.

According to the MoU, the two sides will work for development and transfer of germplasm technology and oilseeds to Pakistan, which will yield high production. Under the MoU, Pakistan's scientists will also be trained in breeding agronomy and oilseed production. Another MoU was inked for expansion of co-operation through exchange of high profile visits and promotional events to enhance mutual understanding and friendly relations between Sindh and Hubei province.

The fourth MoU was inked between National Dredging Company (NDC) for establishment of dredging works at Karachi Port, Port Qasim and Gwadar Port, canals, rivers, barrages in Pakistan.

China Harbour Engineering will help National Dredging Corporation of Pakistan in getting support and necessary assistance of the government of China for its dredging work. The agreements were signed by Sindh Chief Minister Qaim Ali Shah, Parc Chairman Dr Zafar Altaf and Hubei Seed Group Chairman Guobao Yuan. Meanwhile, President Asif Ali Zardari also visited China's largest optical fibre company, Fibrehome, and lauded its role in the development of China.

On his arrival, company General Manager Li Gaung Chaung received President Zardari, and briefed him about the company's various departments and production units. He said that the company produced electronic devices, transmission systems and various other equipment, which were exported world-wide. The President was taken around various units and departments of Fibrehome, and evinced keen interest in the equipment that it produces. He said like other sectors of industry, the company was playing a very positive role towards Chinese economy and development.


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## Neo

*Accord with China over hydel power co-operation ​*
EDITORIAL (February 24 2009): President Asif Zardari attended the signing ceremony between China and Pakistan in Yichang for co-operation in the field of hydel power generation. The signatories were the Wapda Chairman and the President of China's Three Gorges Project Corporation. Pakistan can draw a number of good lessons from the history of water and power management in China.

Three Gorges was originally envisaged by Sun Yat-sen in 1919. In 1932 Chiang Kai Shek began preliminary work on it. Mao Zedong also supported the project but the Gezhouba dam was begun first and the economic problems of China at the time militated against further work on the construction of the Three Gorges Dam. In the 1980s, plans for its construction were revived, and, in 1992 the National Peoples Congress approved the project.

The Three Gorges is the largest hydel dam in the world. In China, construction delays were attributed to its high cost and the inability of the Chinese government to fund the dam from its own resources.

Eventually the dam's costs were met through: Three Gorges Dam Construction Fund, profits from the Gezhouba Dam, policy loans from the China Development Bank, loans from domestic and foreign commercial banks, corporate bonds, and revenue from Three Gorges Dam before and after it becomes fully operational, with additional charges for electricity contributing to the Three Gorges Construction Fund.

Pakistan, at present, is suffering from a severe economic crisis which forced the economic managers to negotiate the 7.6 billion dollar stand-by arrangement with the International Monetary Fund. Even during times when Pakistan was not on an IMF programme the cost of any dam was considered so high as to be simply not doable without support from the international lending agencies.

These agencies have to meet their own safeguard criteria and it is doubtful if these safeguards in terms of environment and displaced persons would be met in the case of mega dams. Incidentally there was intense international criticism of the Three Gorges dam. Thus in this context support from China would be critical not only to start construction of dams but also to complete them.

Be that as it may the heavy load-shedding schedule imposed by Wapda for the past ten months or so in its efforts to manage demand to bring it at par with supply has left the people of all provinces acutely aware of the need to increase supply. It is unfortunate and patently evident that Pakistan no longer has the luxury of time before it decides what to construct where.

The World Bank brokered Indus Water Treaty with India has been used by New Delhi to its advantage and it is expected to continue with its policy to complete construction of dams that would negatively impact on water flows to Pakistan, the lower riparian. The federal government must bridge the trust gap between provinces on the construction of dams - irrespective of their size and depth - without any further loss of time.


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## Omar1984

AJK PM seeks investment in minerals 

Wednesday, February 25, 2009
By our correspondent

KARACHI: Prime Minister of Azad Jammu and Kashmir Sardar Mohammad Yaqoob Khan has said that the minerals industry has tremendous investment potential in the region as it has confirmed reserves worth Rs40.16 billion in the districts of Muzaffarabad, Mirpur and Kotli.

He said that the government had conducted a survey of these three regions recently following which they discovered that the region had 19 million tons of marble, 26 million tons of rubies and 70 million tons of limestone.

Khan was speaking at the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) the other day. Accompanied by his cabinet, he highlighted the investment opportunities in Azad Jammu & Kashmir and believed that the relationship between the business community of Pakistan and Azad Jammu and Kashmir is important and needs to blossom.

Khan urged investors and businessmen to concentrate on the minerals sector and said that there were four to five other sectors in which Pakistani businessmen could invest. He said that Muzaffarabad had a Reconstruction Opportunity Zone whereas Mirpur had established an export processing zone other than eight industrial estates in various other areas of AJK.

Khan informed the businessmen that there were empty plots in the eight industrial estates which could be purchased from the government at 25 per cent down payment with the remaining payment being adjusted over a period of 20 years.

He further stated that AJK can meet the electricity demand of Pakistan as there is 600 MW to 8000 MW hydel-generation potentials which have not been utilised as yet. 

The PM shared that about 10-15 years ago, some companies had been given the letter of intent to start work towards this sector which had not yet been implemented. Khan warned that these companies should commence with their work soon otherwise their licenses would be cancelled.

AJK PM seeks investment in minerals


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## Omar1984

ICI posts 16pc growth despite effects of global recession 

Wednesday, February 25, 2009
By By our correspondent 

KARACHI: The calendar year 2009 might prove to be the most difficult year for corporate sector since World War-II across the world, where ICI Pakistan might also feel the heat of world economic recession and slowdown in local economy ahead.

This was stated by Director & Chief Financial Officer (CFO) ICI Pakistan, Feroz Rizvi, while briefing media on ICI annual report of 2008 here on Tuesday.

We remained immune to recession somehow in the first three quarters of 2008 but in the last (fourth) quarter it filtered down affecting us, he said adding, After World War-II, this is the first time that western world went into recession.

The growing energy deficit; higher interest rates, inflation and slowdown in domestic economic growth; rise of counterfeiting products; non-availability of gas in winter months to plants; and capping on pharmaceutical products prices would remain major challenges to ICI Pakistan in the year ahead.

Despite of facing some financial challenges in the last quarter, the ICI Pakistan posted a 16 per cent growth in its bottom line profits on year-on-year basis. The net earning for the year 2008 surged to Rs2.063 billion from Rs1.785 billion recorded in calendar year 2007. With this the earning per share stands at Rs14.91 for the under review period.The net sales income of Company grew by 21.5 per cent to Rs27.964 billion on year-on-year basis from Rs23.024 billion recorded in the corresponding lat year, said CFO-ICI. 

Despite of some major challenges on economic front, the ICI Pakistan is determined to expand its Soda Ash business and would be producing about 350 thousand tons of Soda Ash by April 2009. The plant in progress of Soda Ash, which would become functional, would add another 65 thousand tons of the product, he added.

Responding to a query, he said that his company was exporting paints to Afghanistan; chemicals to Sri Lanka and Bangladesh and Soda Ash to Bangladesh. The Company has an aggressive plan to enhance its exports in the year to come.

The inflation is hovering around 25 per cent; the rupee has depreciated by 28 per cent versus greenback and GDP growth is likely to drop to 3.5 per cent in fiscal year 2009. Despite of this all, the ICI would keep its focus on manufacturing to remain leader in the market and might change its strategy ahead of next monetary policy of the State Bank.

Giving details of 2008 accounts, he said that operating results of Soda Ash increased by 41 per cent and Life Science increased by 21 per cent. These are the ever highest operating result in the history, he said and added, the polyester was up by 12 per cent over 2007.

He said that Financial Charges went up by 50 per cent. He added that salary, advertising and promotion expenses also went up. He said that on the cash side we have Rs2 billion in 2008 while in 2007 we had Rs3.6 billion.

The ICI has spent 7.6 billion on capital expenditure from 2003 till 2008, which is a substantial amount of money and shows companys faith in the country, he said. The Company has achieved double digits growth in all the diversified sectors, he added.


ICI posts 16pc growth despite effects of global recession


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## Neo

*Tarin pins hope on US reimbursing $1bn war on terror bill ​* 
Wednesday, February 25, 2009

ISLAMABAD: Pakistans budget deficit target of 4.2 per cent of GDP relies on Obama administrations initiative for reimbursing $1 billion bill before June 30 for rendering military services against the Taliban and Al Qaeda supporters in tribal areas.

We hope that the US will reimburse $1 billion military services bill before June 30, 2009 which will help Islamabad in achieving its envisaged fiscal deficit target of 4.2pc of GDP for ongoing fiscal year, the Adviser to PM on Finance Shaukat Tarin said while talking to reporters after attending a meeting of the National Assembly Standing Committee on Finance here on Tuesday.

If the US does not provide the due $1 billion amount within this fiscal, it can result in hiking fiscal deficit target from 4.2pc of the GDP, equivalent to Rs562 billion for 2008-09 that was agreed by Islamabad with the International Monetary Fund (IMF).

Earlier, during the proceedings of the National Assembly Standing Committee on Finance, when parliamentarians asked how the government would manage its envisaged fiscal deficit target, Tarin replied the government would achieve its envisaged fiscal deficit target by obtaining $1 billion reimbursement bill from the US and collecting Rs100 billion through the Petroleum Development Levy during the current fiscal year.

It clearly shows that the government has no plan to provide relief to voiceless consumers by not passing on benefits of reduced prices of crude oil in international market to domestic consumers.

Shaukat Tarin, who is scheduled to hold two day policy level talks with the IMF authorities in Dubai from today (Wednesday), was of the view that the democratically elected government would not accept any proposal of the IMF, which would negatively impact the poor man of the country.

He hoped that Pakistan would achieve 3.5 per cent of the GDP growth target during the current fiscal year with improved performance of agriculture sector. However, the IMF authorities as well as independent economist believe that Islamabads GDP growth will remain hovering around 2.5 per cent of the GDP for 2008-09.

The Advisor gave clear hints for not having any plan to cut down POL products prices by the next month saying that the FBRs target was facing shortfall by Rs20 billion per month and it could only be bridged through continuation of PDL in the remaining period of the ongoing fiscal year.

Referring to growing defence requirements, he said the border situation needed more resources and the government would make decision on it in due course of time.

He said that the FBRs target of Rs1,360 billion did not seem feasible and it would be revised downward keeping in view various indicators of the economy especially inflationary pressure.

Tarin conceded that the rice growers remain unable to get their due prices and there was apprehension that the wheat growers could face the same situation owing to lack of storage capacity.

He said that the government would ensure Rs950 per 40/kg support price for farming community. He termed ensuring wheat support price to the farming community essential to encourage them grow more and make the country self-sufficient.

During the NA Standing Committee on Finance meeting, the Advisor said that the subsidy through Utility Stores Corporation (USC) was not targeting the poor of the country and desired results could not be achieved. 

The Committee was of the view that the government has not so far taken sufficient measures to control inflation.

Tarin admitted before the committee that the government machinery failed to respond to the price hike. He said a proposal to the Federal Cabinet will be submitted under which district magistrates to get police assistance so that they can carryout raids on hoarders and profiteers, in this regards provinces would present their proposals soon. 

A proposal is also being submitted to the federal Cabinet for creating buffer stocks of all major items in the country so that government is able to intervene in the open market for price stabilization. The Ministry of Finance was of the view that the government would continue to implement free market economy but cartelization would not be allowed to penetrate in order to bring down inflationary pressure.


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## Neo

* No roadmap for economic drive ​* 
*Businessmen say over $5bn foreign loans received, $2bn spent, yet no improvement in economic fundamentals, productivity, exports​*
Wednesday, February 25, 2009

LAHORE: Businessmen are dismayed at the absence of any roadmap from the government to increase exports and widen the tax base that is the only way to narrow the current account and budget deficit without compromising development expenditure.

They appreciate the government effort to obtain foreign assistance to resolve immediate foreign currency issues in the form of loans from multilateral agencies like IMF, Asian Development Bank and the World Bank. However they are deeply concerned that influx of over $5 billion in the last three months has failed to improve economic fundamentals.

Leading engineering entrepreneur Almas Hyder regretted that the run on the foreign exchange reserves has not stopped. He said, we have consumed over $2 billion of the foreign exchange we obtained from the donor agencies during past two months.

He said this amount was not spent on increasing productivity or for establishing new industries, rather it was consumed to honour the repayment commitments of the government that we were unable to generate from our own resources. He said the foreign assistance would go down the drain if we continued to operate without a prudent economic plan.

A leading investor in value added textiles and construction Adil Butt said that the current account deficit could only be addressed by increasing exports and reducing all unnecessary imports.

He said the import regime is liberal beyond the WTO mandate. He said the government should revisit the import regimes of its competing economies like India, China, Bangladesh and Sri Lanka that have contained their imports with prudent regulations as protection against competitors. He said the Indians for instance allow import of fabric at 10 per cent duty or Rs120 per kg of fabric which ever is higher. 

He said fabric from Pakistan, China, Bangladesh and Sri Lanka is priced at a dollar or little above per kg. The import duty on these fabrics would be over 250 per cent while for high cost fabrics from the US or Europe the Indians would charge 10 per cent duty. He said this way the imports from competing economies are effectively checked.

He said Pakistan charges 20 per cent duty of fabric and garments and its markets are flooded with imported textile items. He said similar clever measures have been incorporated in the Indian import regime to save their local industries from cheap imports. Pakistan should do the same he concluded.

An auto-parts exporter Syed Nabeel Hashmi said that all the provinces, cities and towns in the developed countries generate their own resources of income to perform their civic duties. He said property tax alone accounts for 10 per cent of the total tax collection in these countries. In Pakistan he regretted the property tax collection is less than one per cent of total tax revenues. He said all districts, towns and union councils would attain financial self sufficiency if only the property tax is collected honestly.

Leading knitwear export MI Khurram said it is a matter of great concern that only 2 per cent of the total population in Pakistan is under tax net. He said the entire society has been forced to resort to corrupt practices as the government tries to squeeze the tax compliant sector by levying more taxes.

He said the high cost of doing business in Pakistan has made the entire manufacturing sector of the country globally non-competitive. He said the country would have to go to IMF after brief periods if we fail to bring the tax avoiding sectors in to tax net. The government had should also come out with a viable strategy to increase exports.


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## Neo

*Pakistan urgently needs $4-5bn​*
** Senator John Kerry says Senate bill for $7.5bn non-military aid to be tabled soon​*
WASHINGTON: The United States and Europe must give Pakistan four to five billion dollars in urgent aid or risk seeing the nuclear-armed country slip into chaos, Democratic Senator John Kerry and Republican former senator Chuck Hagel said on Tuesday.

The senators, now chair of Atlantic Council think tank, were to release a formal report on Wednesday appealing for international help to stabilise Pakistan.

If we fail, we face a truly frightening prospect: terrorist sanctuary, economic meltdown, and spiralling radicalism, all in a nation with 170 million inhabitants and a full arsenal of nuclear weapons, Kerry said in a statement released by the council.

Kerry said he and Republican Senator Richard Lugar would soon introduce legislation aiming to provide Pakistan with $7.5 billion in non-military aid over five years.

The legislation, known as the Enhanced Partnership with Pakistan Act, would advocate the same amount  which would be triple current US levels of non-military aid  over the next five years, aides said.

The bill would make the aid available on the condition that the US secretary of state certifies that Pakistans security forces are making concerted efforts to prevent Al Qaeda, associated terrorist groups, and the Taliban, from operating from Pakistani territory.

The report entitled Needed: A Comprehensive US Policy Towards Pakistan, calls for an additional $4-5 billion of immediate financial aid for Pakistan to avert an economic meltdown, according to a statement from the council.

Given the tools and the financing, Pakistan can turn back from the brink. But for that to happen, it needs help now, according to the council.

The report will assist the Obama administration as it develops and implements a comprehensive and strategic policy toward Pakistan and this combustible corner of the world, according to Hagel. afp


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## Neo

*Scope for Pakistan rate cuts if inflation falls: IMF ​* 
WASHINGTON ( February 25, 2009): Pakistan's monetary policy is appropriate but there would be room to lower interest rates if inflation declined, the International Monetary Fund said on Wednesday.

In a statement following a 12-day staff mission to review a $7.6 billion stand-by lending program, the IMF said it was "impressed" by Pakistan's resolve to sustain prudent policies, strengthen the social safety net and pursue reform.

But it also said the global economic turmoil was taking a toll on Pakistan's economy, hurting demand for exports and curbing remittances from workers abroad, so economic policies needed to be recalibrated.

The IMF said Pakistan's current monetary policy stance was "appropriate and will continue to promote domestic and external stability."

"Looking ahead ... if both headline and core inflation decline, there should be scope for lower rates," the IMF said.


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## Neo

*New growth target to be negotiated with IMF: Tarin​* 
ISLAMABAD (February 25 2009): Pakistan would finalise next six months' economic strategy with the IMF mission in Dubai with plan to ease monetary policy, scaling down tax revenues and negotiate new growth target. This was stated by advisor to Prime Minister on Finance Shaukat Tarin just before leaving for Dubai. The Fund believes that 3.4 percent GDP growth target is not achievable now.

"The Fund is pressing to bring down GDP growth target from 3.4 percent, and we want to take a pragmatic view on everything", he said on his way to airport. He said he would also push the Fund staff to start easing monetary policy in the coming months as inflation data was coming down.

"Pakistan plans to ease tight monetary policy as part of next review in April", he said. Tarin said that tax target was also out of range now because of the changing economic conditions. "Off course, the tax target of Rs 1327 billion is not achievable, and we have to adjust it around Rs 1300 billion", he added.

Pakistan delegation, led by Dr Waqar Masood, is already in Dubai. Ut was joined by FBR Chairman Ahmed Waqar later. Tarin said: "We hope to secure IMF's second release of $750 million after the talks." "We will meet all other targets including budget deficit of 4.2 percent", he added.

This review would also be helpful in asking IMF to extend further $4.1 billion in addition to already given $7.6 billion standby arrangement. To achieve overall fiscal deficit target the government will continue to collect non-tax revenue through PDL (petroleum development levy) on POL products in the months to come. This means the government would not reduce the POL product prices at par with international prices.


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## Neo

*Pakistan urgently needs 4-5 billion dollars: Kerry​*
WASHINGTON (February 25 2009): The United States and Europe must give Pakistan 4-5 billion dollars in urgent aid or risk seeing the nuclear-armed country slip into chaos, two leading US foreign policy voices warned Tuesday. Democratic Senator John Kerry and Republican former senator Chuck Hagel, now chair of the Atlantic Council think tank, were to release a formal report on Wednesday appealing for international help to stabilise Pakistan.

"If we fail, we face a truly frightening prospect: Terrorist sanctuary, economic meltdown, and spiralling radicalism, all in a nation with 170 million inhabitants and a full arsenal of nuclear weapons," Kerry said in a statement released by the council.

Kerry, who chairs the Senate Foreign Relations Committee, said he and Republican Senator Richard Lugar would soon introduce legislation aiming to provide Pakistan with 7.5 billion dollars in non-military aid over five years. The legislation, known as the Enhanced Partnership with Pakistan Act, would advocate the same amount - which would be triple current US levels of non-military aid - over the next five years, aides said.

The bill would make the aid available on the condition that the US secretary of state certifies that Pakistan's security forces are making concerted efforts to prevent al Qaeda, associated terrorist groups, and the Taliban, from operating from Pakistani territory. The report entitled Needed: A Comprehensive US Policy Towards Pakistan, "calls for an additional 4-5 billion dollars of immediate financial aid for Pakistan to avert an economic meltdown," according to a statement from the council.

"Given the tools and the financing, Pakistan can turn back from the brink. But for that to happen, it needs help now," according to the council. The report "will assist the Obama administration as it develops and implements a comprehensive and strategic policy toward Pakistan and this combustible corner of the world," according to Hagel.


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## Neo

*US to release $1 billion from accumulated Coalition Fund​* 
ISLAMABAD (February 25 2009): Advisor to Prime Minister on Finance, Shaukat Tarin on Tuesday said that the United State will soon release $1 billion from piled up Coalition Support Fund created for war on terrorism. Talking to mediamen after the meeting of National Assembly Standing Committee on Finance, Tarin said that one billion dollars from Coalition Support Fund will be received by June and that would help in reducing the budget deficit.

The US had not paid anything to Pakistan for last nine months for its services as coalition partner in war on terror, he added. The meeting was scheduled to take up the issue of essentials price hike. The meeting was told that wheat production could be in the vicinity of 25 million tons this year but the country lacked storage capacity.

The advisor blamed both the international market as well as weak domestic market mechanism for high prices of food commodities. He said that the revival of magistrate system is needed to control prices at wholesale and retail level. The ministry of finance estimates that inflation will be 20 percent by June this year, currently it is more than 23 percent.

Replying to a questions, Tarin said that interest rate would be reduced once the inflation is under control. We are trying to bring down the inflation to a single digit by the year-end, he added. He referred to some positive signs in this connection particularly the Consumer Price Index (CPI) which he said was moving downwards for last couple of months.

The advisor said he would be leaving for Dubai to attend the International Monetary Fund review meeting. Pakistan, he said would also take up the matter for enhancing of loan quota from 5 to 8 percent in the IMF board meeting in Washington this year.

Earlier, in the meeting the government admitted that farmers are not getting the agreed price of Rs 1500 for the paddy. The advisor said corruption in the offices was increasing financial woes of farmers. Rice farmers mainly in Punjab are being paid less for super Basmati paddy.

He feared that if the measures are not taken, wheat growers might face the same situation as the country expects bumper wheat crop this year. Tarin expressed dissatisfaction over the performance of Passco and TCP and said that these departments need revamping. He said that the government is following the policy of deregulation, but the official monitoring of prices is needed to control cartelisation.

The advisor vowed to bring down the core inflation to single digit by December this year from prevailing 18 percent. However, he said that growth rate of 3.4 percent can be achieved this year due to higher agriculture production, but said it may not be possible to achieve revenue target of Rs 1.36 trillion.

The revenue collection is declining and this may increase the budget deficit. Responding to a question by Fauzia Wahab, chairperson of the committee, as to why the government was not passing on the benefit of low oil prices to consumers, Tarin said it was because of revenue shortfall.

He said that collection in terms of Petroleum Development Levy (PDL) was Rs 12 billion whereas shortfall in revenue is Rs 20 billion. This does not give the window of opportunity to the government to reduce oil prices, he added. The Ministry of Food and Agriculture underlined the need of a well-defined strategy for all the crops during its presentation.


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## Neo

*'Average growth in exports is 10 percent'​* 
ISLAMABAD (February 25 2009): Commerce Secretary Suleman Ghani said on Tuesday that export target fixed in Trade Policy 2008-09 was ambitious and average growth in exports is 10 percent. The Commerce ministry had set $22.1 billion export target for the current fiscal year envisaging 15 percent growth.

"Export target for the current fiscal year is ambitious but even then we have achieved 49.3 percent of the target during the first seven months (July-January)," he told Business Recorder. Exports achieved 52 percent of their target during the same period of last financial year.

He stated that when the US and European Union, which are major trade partners of Pakistan, are facing the worst recession in recent history, how can Pakistan achieve its targets? "We are in a better position as compared to our competitors," Suleman added. Replying to a question, he said that the European Union is lifting anti-dumping duty on Pakistan from March 1, 2009 which Pakistan's bed linen industry would benefit from.

"I cannot project percentage of growth in bed linen exports after the removal of anti-dumping duty. It is up to the exporters to maximise their share in the EU market," he said. Replying to a question with regard to his recent visit to New Delhi to attend a two-day meeting of the Saarc Committee of Economic Co-operation (Saarc CEC), he said it was very fruitful.

He said that Saarc states have agreed to increase trade by 25 percent within two years through reduction in negative list and removal of non-tariff barriers under South Asian Free Trade Agreement (Safta). The meeting discussed issues such as progress in Safta, non-tariff barriers and permitting transit routes for trade with third party.

At the last summit, leaders had set up an expert group to undertake a detailed study on Safta progress and to look at the possibility of including service sectors such as insurance and banking in the system. So far, Safta has been applicable to goods only.

Commerce secretaries gave their opinion on the recommendations of the expert committee, which would be considered further at the Saarc Foreign Ministers in Colombo on February 26. India had also sought transit through Pakistan to Afghanistan, which is now a member of Saarc but this issue remained unresolved, said another official who was part of the delegation. Answering a question, Suleman said he did not discuss bilateral trade with India on the sidelines of the Saarc CEC.


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## Neo

*10.4 percent decline in profits repatriation by foreign investors​* 
KARACHI (February 25 2009): Due to slackness in the economy, repatriation of profit and dividend by foreign investors declined by 54.55 million dollars, or 10.4 percent, to 471.85 million dollars during July-January of the current fiscal year 2008-09 against 526.40 million dollars of same period of last year. During the current fiscal year of the companies, which resulted in decline in the repatriation of profit.

During this period foreign investors sent 367.35 million dollars on account of return on foreign direct investment (FDI) and 104.51 million dollars on account of return on foreign private investment (FPI). During July-January of current fiscal year overall FDI stood at 2.587 billion dollars.

Only 12 sectors out of 36 sectors showed increase in the repatriation of profit, while remaining sectors depicted downtrend. Major share of repatriation of 114.9 million dollars was registered in power sector against 101.8 million dollars of last fiscal year, depicting an increase of 13 percent.

Petroleum refining was second with 71.3 million dollars against 51.4 million dollars of last year, showing an increase of 39 percent. Food packaging, leather and leather products, machinery, construction and social services sectors showed 100 percent decline in the repatriation.

Repatriation from communication declined by 70 percent to 24.9 million dollars. State Bank statistics show that foreign investors repatriated 60.1 million dollars from oil, gas and exploration sector, 45 million dollars from trade, 32 million dollars from financial sector and 24.4 million dollars from the beverages sector. In addition, 18.3 million dollars were sent from food, 15.1 million dollars from tobacco and cigarettes, 10 million dollars from chemical sector and about 6 million dollars from fertiliser.


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## Neo

*OGDCL saves $4.850m by controlling flow of well at Dhokak ​* 
ISLAMABAD (February 25,2009): Oil and Gas Development Company Limited (OGDCL) effectively succeeded to trap uncontrolled flow of a deep well at Dhodak occurred during drilling operation at 819 meter.

The professionals of the Company controlled the deep well no.2 within two weeks period and set a precedent and made history that such high risk job could be performed by using indigenous resources, a spokesman said here on Wednesday.

He said the company consequently saved millions of foreign exchange by deploying its expertise to control the flow.

Giving details, he said drilling operation was in progress at Dhodak Deep Well No. 2 when mud loss was observed and uncontrolled flow occurred.

Immediate arrangements were made to save the human life property and no body was reported hurt injured at site. The public and private properties also remained safe in the vicinity.

The Head Office immediately called an emergency meeting of Senior Management for taking appropriate actions to control the Well and in this regard, a report was forwarded to Director General Petroleum Concession (DGPC), Chief Inspector Mines and other concerned departments.

The Managing Director and CEO of OGDCL constituted a task force at Head Office and team for well control at Dhodak Deep Well No. 2 to respond the emergency situation.

The Taskforce started work to acquire Well Control Services from abroad. OGDCL's team proceeded to Well location immediately. Various well control companies were contacted for initial assessment of the situation and to advise the operation and services required with the cost estimates, assessment were made by the experts at Dhodak Field.

The OGDCL team prepared a plan for Well Control and its capping meanwhile bidding process was initiated and subsequently three companies forwarded their bid proposals.

A foreign company quoted lump sum US$ 4.850 million utilizing hundred percent contract resources and three weeks time period after arrival of their equipments at the field from different destinations abroad.

The OGDCL resources for well killing operations were mobilized to Dhodak Deep-2 from other locations.

The Company's team did cementing services successfully executed the well control and cementing job.

The well has been controlled and cemented without any minor injury report. It is indeed matter of great satisfaction that Operator and Contractor Companies have observed all the obligations to claim adequate amount of loss adjustments in this particular case.


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## Neo

*British investors to stay in Pakistan: Brinkley​* 
KARACHI (February 25 2009): The United Kingdom on Tuesday assured that over 100 British companies operating in Pakistan would not pull out their investment from the country, which sees the flight of capital as one of its major concerns in the backdrop of global economic recession.

Moreover, a British business delegation, led by Chairman, Pakistan British Trade and Investment Forum and Pakistani High Commissioner to UK, is due in Islamabad this year to evaluate the trade and investment climate here and facilitate and promote Foreign Direct Investment into the country.

The assurance came from British High Commissioner to Pakistan Robert Edwards Brinkley CMG in his address on "Trade and Investment: The New Context" to the English Speaking Union (ESU) at a local hotel.

"One of the major concerns expressed to us is the flight of capital from Pakistan as some investors realised their profits and left the market," but "our investment figures and our overall involvement demonstrate that this is not the case with British investors," he added.

Brinkley said: "we are here for long term and are confident that Pakistan remains a profitable place to do business. Pakistan has great future with much to offer. In particular the possibility of harnessing the country's links with Central Asia is under-developed," he said adding that his side would do its best to assist Pakistan in this effort.

The British official said his government would keep encouraging new UK firms to enter the Pakistani market, especially in areas, such as financial services, power, sources of alternative energy, IT and telecom, textiles, infrastructure development, education and training.

"We would ensure that UK companies and London Stock Exchange are aware and take advantage of the continuing privatisation process and private sector expansion," in Pakistan, he added.

Terming his country one of Pakistan's major partners in trade and investment, Brinkley said his side would work towards a financial services seminar in London later this year to follow up to the Lord Mayor of London's visit to Islamabad in 2007. Also, the Chairman of Alternative Energy Board and at least 12 Pakistani firms would visit Britain sometime this year to see how London was addressing the issue of alternative energy sources, besides finding ways for mutual trade and investment, he said.

Brinkley said a roundtable and business seminar, to be jointly organised by Britain and Pakistani High Commission in UK would bring the Pakistani and British companies together in Manchester in March.

He also assured Islamabad that despite pressures on public expenditure, his government had no intention to reduce the promised £480 million development assistance to Pakistan over the next three years. "With over 100 British Companies operating in Pakistan, the UK is and will likely to remain one of Pakistan's major partners in trade and investment," said the British official.

Dwelling upon various features of the ongoing global economic slowdown and London's resilient response to financial crisis, Brinkley warned against protectionism, which he said, was a short-term measure and may not be favourable in the long run. A plaque was also presented to the British High Commissioner by ESU President Naveed A Khan.


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## Neo

*Zardari's China visit a milestone for development​*
ISLAMABAD (February 25 2009): Minister for State for Parliamentary Affairs, Mehreen Anwar Raja has termed the visit of President Asif Ali Zardari to China a milestone for the socio-economic development of Pakistan. In a press release she said that the agreement signed between the two countries for the co-operation in Hydle Power Generation would help Pakistan to overcome energy crisis in the country.

The Minister of State said Pakistan Peoples Party has always served for the development and prosperity of Pakistan. The founder Chairman of Pakistan Peoples Party, Shaheed Zulfiqar Ali Bhutto and his daughter Mohtarma Benazir Bhutto Shaheed built such a historic ties with China which resulted visible change in various fields, particularly in the field of power generation in Pakistan. She said China has been our time tested friend and visit of President Asif Ali Zardri will further enhance the already cordial and friendly relationship between the two countries.-


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## Neo

*Businessmen invited to set up industrial units in AJK​* 
KARACHI (February 25 2009): Prime Minister of Azad Kashmir, Sardar Muhammad Yaqoob Khan has invited business community to visit Kashmir to see the existing investment opportunities and make plan to establish industrial units. Addressing members of Karachi Chamber of Commerce and Industry (KCCI) on Tuesday.

He said that Kashmir is the most peaceful area in the region and offers lucrative investment opportunities in power generation and tourism in particular and other areas in general. He said that the government of Azad Kashmir has established industrial zone, which have all basic infrastructure. Referring to electric power shortage and prolonged power outage in Pakistan, the Prime Minister said that Azad Kashmir could produce 10,000 MW and is ready to supply electricity to Pakistan. Work on establishing 1000 MW power plant is in progress, he added.

He offered business community to participate in infrastructure development on BOT bases. Yaqoob informed that he will soon visit various countries of the world and persue Kashmiris, working abroad to invest in Azad Kashmir and establish industrial units

The Prime Minister said that the government of Azad Kashmir intends to develop the state as model state in collaboration with Pakistan. Replying to a question , he assured that compete audit will be conducted of relief goods and amounts receive for earthquake victims. He thanked president Asif Ali Zardar for releasing of long stuck Rs 25 billion, allocated for Muzaffarabad University. Work on university project is in progress in collaboration with a Chinese company, he informed

Acting President of KCCI, Muhammad Jawed Bilwani emphasised the need for encouraging investors to establish forest-based industry in Azad Kashmir. He said that opportunities exist for establishing match industries, paper units, furniture and handicraft units in Azad Kashmir.


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## Neo

*IMF, Pakistan revise downwards macroeconomic targets ​* 
Thursday, February 26, 2009

ISLAMABAD: The International Monetary Fund (IMF) and Pakistan on Wednesday revised downward all macroeconomic targets including GDP growth rate to 2.5 per cent from earlier envisaged target of 3.5 per cent for the ongoing fiscal year to approve the second tranche of $800 million for Islamabad under Standby Arrangement (SBA) programme.

Both sides also agreed to revise downward inflation target to 20 per cent from earlier set target of 23 per cent, FBRs tax collection to Rs1,300 billion from earlier envisaged target of Rs1,360 billion for 2008-09.

Secretary Finance Dr Waqar Masood, while talking to The News from Dubai on Wednesday night, confirmed that the IMFs executive Board would approve its second tranche for Pakistan by end March 2009 after both sides agreed on all major issues.

The successful completion of first review of the IMF for gauging the economy of Pakistan till Dec 31, 2008 and envisaging targets for the next two quarters will pave the way for convincing the Bretton Wood Institution to provide an additional $4.5 billion to Pakistan in its bid to further build up its foreign currency reserves that have already gone up to $10.2 billion. 

However, the sources told this scribe that the Fund authorities linked decrease in discount rates with reduction in core inflation, which means that the central bank is unlikely to scale down discount rates in near future.

During the policy level talks held at Dubai on Wednesday, Pakistani side was led by Advisor to Prime Minister on Finance Shaukat Tarin while the IMF delegation was led by Masood Ahmed, head of its Middle Eastern Department of the IMF.

The GDP growth target was scaled down from 3.5 per cent to 2.5 per cent for the ongoing fiscal year 2008-09. The GDP growth target was envisaged at 4 per cent for the next budget 2009-2010.

The IMF prescriptions described as, one shoe fit for all, approach will result into lower GDP growth for the ailing economy of Pakistan in the context of tight fiscal and monetary policies for the next fiscal year as well, said an independent economist while talking to this scribe here on Wednesday.

The inflation, the official said, would be aimed at bringing down from 23 per cent to 20 per cent by June 2009. For the next fiscal year 2009-2010, the inflation target was envisaged at 6 per cent.

Both the IMF and Pakistan also evolved consensus for revising downward the FBRs tax collection target from Rs1,360 billion to Rs1,300 billion for the ongoing fiscal year. Pakistani side explained to the IMF that the FBR was facing revenue shortfall by Rs20 billion alone in January 2009 and the same trend persisted in Feb 2009, leaving no other option to scale down the annual tax collection target.

The IMF agreed to reduce the tax collection target by Rs60 billion keeping in view shortfall being faced by the FBR, said the official sources.

The adjustment in nominal GDP growth by scaling down the real GDP as well as inflation paved the way for reduction in overall FBRs tax target from Rs1,360 billion to Rs1,300 billion, which will be equivalent to 10 per cent of the GDP.

The IMF and Pakistan also agreed to set 10.6 per cent of the GDP for tax collection target of the FBR for the next budget 2009-2010, said the official.

The IMF had approved $7.6 billion loan under 23 month SBA program on November 2008 and provided front loaded $3.1 billion to Islamabad. The second tranche of $800 million by end March will help Islamabad to build up reserves position in months ahead.


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## Neo

*Gwadar may lose business to Iranian port of Chabahar ​* 
Thursday, February 26, 2009

KARACHI: The Gwadar Port that was envisioned to become a trans-shipment port and shipping hub for the landlocked Central Asian States (CAS), Afghanistan and Western China may lose this opportunity to the fast developing Iranian port of Chabahar, a Gwadar Port official said.

The Gwadar Port is yet to become fully operational. The running of the port affairs was given to Port of Singapore Authority (PSA), one of the biggest port operators, so that it will fetch considerable business for making Gwadar Port a success.

The PSA has not fulfilled its business plan of making the port fully operational by 2008. The PSA says the government has failed to provide basic infrastructure including road and rail links that are the main impediments in Gwadar Port development.

To ensure that the port stays a viable destination the Gwadar Port official suggested resuming container business immediately even if in small amount through PSA or if they fail through own resources.

The government should bear the cost of road transportation to resume export activity from Gwadar Port, he said.

The official suggested restricting PSA to the present terminal and the areas adjacent to the terminal handed over to them may be retrieved and handed over to Gwadar Port Authority.

The official further said that master plan of Gwadar Port need to be approved, presently it is approved in principle but nothing so far has been done. Master Plan will protect the entire east bay and coastline east of Surbandar. By securing Master Plan, the basic theme of converting Gwadar Port into a hub port will be secured.

In order to attract sustainable business like Afghan Transit Trade or container cargo at Gwadar Port, one of the viable options is to complete road connectivity of the Port with Chaman and Afghanistan followed by shifting total or part of Afghan transit trade to Gwadar Port.

The land required for Free Zone has been dropped due to its high cost (Rs6.7 billion). It is suggested that the concerned agency at the Federal Government level may be requested to remand the case to the District Government authorities for review and submission of a workable plan, the official said.

The construction of East Bay Expressway may be undertaken on a fast track as the present arrangement for passage of the cargo truck within town has lot of repercussions. The concerned agency may be directed to execute the development work on priority.

According to government official it is justified to extend Rs.585million subsidy to the Gwadar Port to make it viable. Government supported Port Qasim for ten years to make port fully functional, he reminded. Similarly this will help the Gwadar Port to operate and serve the basic purpose of the port and generate revenues and job opportunities for the people.

He further stated that Stevedoring/Clearing/Ship Agency License to be given to locals and training should be given to the locals in cargo handling to reduce their grievances.

It is learnt that Port of Singapore Authority is trying to attract Afghan Transit Trade and get mining sector to export copper and chrome from Gwadar Port. In this regard PSA is briefing the government of Balochistan to work on connectivity.

It is also said that PSA is pursuing the government to add Gwadar Port in Afghan Trade Notification so that some trade should be started from Gwadar as well. 

However ports and shipping industry shows reservation on PSAs role and said that PSA submitted plan for 40 years specifying business in Gwadar.

According to the PSA business plan the port was to be operational by 50 percent in 2007 and 100 percent in 2008 and had indicated business comprising of coal and container cargo.

The plan also indicated approximate revenue generation for Gwadar Port Authority during the period 2007 and 2008. But PSA, so far relied totally on TCP to have business and lucrative subsidies. It has totally failed in bringing in business to Gwadar Port specially containers.

However PSA says that ports are not run in isolation, port are catalyst for trade and in the absence of basic infrastructures, free zone industrial areas and most importantly the connectivity links to the ports which are major hurdles in running the ports. PSA has fulfilled all agreed requirement but government so far has failed to fulfil the agreed requirements of the ports.


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## Neo

*IDB to recommend funds for power project ​* 
Thursday, February 26, 2009

LAHORE: Islamic Development Bank Country Director Farrukh Mahmood has said the banks technical mission will recommend to its board and other Middle Eastern donors to provide funds of around $458 million for 969-megawatt Neelum-Jhelum hydroelectric project.

He stated this during a wrap-up meeting at the WAPDA House here on Wednesday. A four-member IDB technical mission is visiting Pakistan for finalising technical and financial details, various financing options and the extent and mechanism for funding the Neelum-Jhelum hydroelectric project.

WAPDA Member (Water) Syed Raghib Abbas Shah, while welcoming the IDB for taking an initiative to help Pakistan in hydropower development, especially the construction of Neelum-Jhelum project, requested the bank to come forward and provide funds for Diamer-Basha dam also.

Briefing the delegation about the project, he said besides generating 4,500 MW low-cost hydel electricity and storing 8.1 million acre feet of water, the Diamer-Basha dam, when completed, would also help enhance the life of Tarbela reservoir by another 35 years and generate additional 1.1 billion units of electricity from existing Tarbela Power House.

Dilating upon the current status of Diamer-Basha dam, the member (water) said evaluation process for pre-qualification of contractors for lot one, two and three was under way and would be completed in March. 

After the approval of PC-I amounting to Rs60bn for resettlement by the Executive Committee of National Economic Council in November last, land acquisition for construction of the project had already started, he added.


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## Neo

*Folio3 CEO promises IT outsourcing wont sink ​* 
Thursday, February 26, 2009

KARACHI: There are not many businesses that have prospered during the present economic recession, but software outsourcing has proved to be the exception to the rule. 

Over the past three months, we have felt the brunt of the recession, but offshore businesses have an edge, said Adnan H Lawai, Chief Executive Officer Folio3, an export-based software house in Karachi. There is a simple reason for it: when companies in developed countries like the United States try to cut their operational costs, they automatically think of offshore options. According to Lawai, an increasing number of IT companies in the West are looking towards outsourcing companies. If the outsourcing ratio was 30 per cent sometime ago, it is more than 50 per cent now, which shows good prospects, he said, but stressed that overall, the financial climate had left people confused and hesitant about making decisions. 

This will continue for two or three months, but some time in the summer, things will start getting back to normal, he said. Folio3 has grown rapidly over the past three years, and has remained stable over the past three turbulant months, a trend Lawai hopes will continue. 

He added, however, that as a fast-progressing company, there were still challenges to be faced, such as finding employees who were well qualified. Our local IT institutes should be a lot better and can be help improve the quality of the average student, said Lawai, although he also acknowledged that the IT industry in Pakistan had progressed outstandingly, especially during the last couple of years. 

Lawai himself has ample experience in the industry, having worked at Silicon Valley for 12 years. Experts have predicted that the present crisis will continue to hamper business all over the world for the next two to three years, but Lawai is adamant that the trend does not apply to IT outsourcing. 

There are certain businesses that do well in recession, and we are one of them, he reiterated, and went on to cite the example of Folio3, which started operation in Pakistan in late 2002, a time of crisis for the IT industry all over the world. We did well then and hope we can do well this time, too, said Lawai. When everything was going up, so were we, and now when everything is going down, we are still doing fine.


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## Neo

*AEDB asked to speed up work on wind, solar energy projects ​* 
Thursday, February 26, 2009

ISLAMABAD: Federal Minister for Water and Power Raja Pervez Ashraf has said that the government is focusing on alternative and indigenous resources to produce electricity at affordable prices.

He asked the Alternative Energy Development Board (AEDB) to expedite their work and complete the wind and solar energy projects as early as possible.

He further asked the Board to prepare comprehensive short and long-term plans to utilise all the renewable energy resources available in the country and to attract the private sector for investing in the sector, says a press release.

The minister made these observations while presiding over the 17th Board meeting of the AEDB held on Wednesday.

The Board reviewed progress of the ongoing projects and considered various proposals to generate electricity from wind and solar projects.

The Board approved the formation of a Policy Review Committee to review the recommendations proposed by the AEDB for Mid Term Renewable Energy Policy.

The committee would submit its report by September 2009. The Board also approved land for a 50MW Wind Power Project at Gharo, Sindh.

The project, being set up by SUNEC would start commercial operation in 18 months time.

Earlier, the meeting was informed that the AEDB has started spade work on 50MW Hawks Bay Wind Farm, 50MW Gharo Wind Farm and 50MW Solar Thermal Power projects to be executed by the public sector.

A total of 2266 homes have been electrified by Solar Homes System programme under Rural Electrification Programme in various villages of Sindh while three projects of same nature are being started in Balochistan, the meeting was further informed.


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## Neo

*Scope for Pakistan rate cuts if inflation falls, says IMF​*
WASHINGTON: Pakistans monetary policy is appropriate but there would be room to lower interest rates if inflation declined, the International Monetary Fund said on Wednesday. In a statement following a 12-day staff mission to review a $7.6 billion stand-by lending programme, the IMF said it was impressed by Pakistans resolve to sustain prudent policies, strengthen the social safety net and pursue reforms. But it also said the global economic turmoil was taking a toll on Pakistans economy, hurting demand for exports and curbing remittances from workers abroad, so economic policies needed to be recalibrated. The IMF said Pakistans current monetary policy stance was appropriate and will continue to promote domestic and external stability Looking ahead ... if both headline and core inflation decline, there should be scope for lower rates, the IMF said.


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## Neo

*Experts say Pakistan is on trajectory to failure​*
** Private foreign affairs group says Pakistan can turn back from brink if given tools and finances​*
WASHINGTON: Pakistan is on a rapid trajectory to failure as a stable, democratic state and needs a boost of $4 billion in US aid and loans each year to begin turning around, a private foreign affairs group has concluded.

Time is running out, said the Atlantic Council, which urged more training and deployment of 15,000 Pakistani police within six months to bring order to the country.

Chance: Given the tools and the financing, Pakistan can turn back from the brink, the report said. But for that to happen, it needs help now.

The Pakistan government has six to 12 months to implement economic and security policies, or face the very real prospect of considerable domestic and political turbulence, said the report.

The US has given Pakistan about $12.3 billion in military and economic aid. The US Government Accountability Office says the US lacks a coordinated strategy in disbursing the aid and warns that Al Qaeda continues to operate freely in Pakistans un-policed Tribal Areas.

Vice President Joe Biden, former chairman of the Senate Foreign Relations Committee, and Republican Senator Richard Lugar, the panels senior Republican, proposed last summer authorising $7.5 billion over five years in non-military aid for Pakistan. Similar legislation sponsored by Lugar and the new committee chairman, Democratic Senator John Kerry, is expected this year.

Kerry and Republican former Sen Chuck Hagel are the Atlantic Councils honorary chairmen. Hagel, having left the Senate, is now council chairman.

The Obama administration, meanwhile, began a policy review this week with senior officials from Pakistan and Afghanistan.

Here for the talks, Pakistani foreign minister Shah Mehmood Qureshi said on Wednesday he was pleased with moves to increase US assistance to his country. We need economic stability, said Qureshi in an interview with The Associated Press. Until we have economic stability we will not be able to get political stability. He would not put a price tag on Pakistans needs.

The report itself said it was sounding an alarm that we are running out of time to help Pakistan change its present course toward increasing economic and political instability, and even ultimate failure. The situation has grown even more urgent, it said, with the November terror attacks in Mumbai. The report urged Pakistan to show it is serious in pursuing the perpetrators and other terrorists and terror organisations.

The Mumbai crisis has yet to run its course, said the report. The use of military force or other coercive action must be avoided.

Another concern in the report is that Pakistan might feel forced to enter negotiations with the Taliban and other insurgent groups and grant further freedom of movement to insurgents.

The report warned that Al Qaeda and other radical groups could be emboldened with frightening consequences for vulnerable targets in Britain, Europe and even the United States. Compared with the hundreds of billions of dollars poured into Iraq and the many billions into Afghanistan, aid to Pakistan has been relatively miserly, said the report. And the stakes in Pakistan are far larger and more important to long-term US interests, the report said. ap


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## Neo

*IMF scales down growth rate to 2.5 percent: everything went well, says Tarin ​* 
ISLAMABAD (February 26 2009): IMF has scaled down Pakistan's growth rate at 2.5 percent and tax revenue at Rs 1300 billion, Shaukat Tarin told Business Recorder on Wednesday on concluding his discussions with IMF. "We were hoping to take more time, but everything went well, and they (IMF officials) were very positive", Tarin said from Dubai over phone.

Fiscal deficit target has also been relaxed a bit, he added. "We have got Fund's consent that fiscal deficit would be 4.3 percent, rather than 4.2 percent, and maintain Rs 562 billion deficit, that would help us maintain same expenditure level", said the advisor to PM on Finance. He said that the IMF had also agreed to reduce interest rate, as inflation falls down.

Tarin's view was corroborated by an IMF statement issued later. "The authorities and the IMF staff team agreed that the current monetary policy stance was appropriate and will continue to promote domestic and external stability. Looking ahead, they agreed that, if both headline and core inflation decline, there should be scope for lower rates, provided that the international reserves position continues to improve and the government avoids resorting to SBP financing", said the statement issued after completion of Annual Article IV consultations.

An International Monetary Fund (IMF) staff mission, led by Adnan Mazarei, visited Islamabad and Dubai over the past 12 days to conduct the 2009 Article IV consultation, and the first review under Pakistan's Standby Arrangement (SBA), said the statement.

The mission was impressed by the authorities' strong resolve to sustain prudent macroeconomic policies, strengthen and broaden the social safety net, and pursue reforms to enhance Pakistan's medium-term growth prospects, said the statement.

The authorities' program remains on track. Initial developments since the approval of Pakistan's IMF-supported program have been generally positive, and all the program's quantitative performance criteria for end-December 2008 were observed.

The exchange rate has remained broadly stable and the international reserves position has strengthened significantly (the State Bank of Pakistan's (SBP) gross foreign exchange reserves exceeded US $6.8 billion at end-January, excluding reserves of commercial banks).

The statement said that there had also been a strong positive response from the T-bill market to the 200-basis point increase in the central bank discount rate in mid-November, allowing the government to retire some of its debt to the SBP.

Recently, however, the global economic environment deteriorated markedly, which is having an impact on Pakistan's economy. While the external current account deficit has started to narrow and inflation has declined, the decline in the demand for exports and uncertainty regarding the prospects for workers' remittances constitute risks to the external outlook.

In this context, while recognising the need for flexibility, the authorities and the staff agree that the continued implementation of sound policies is crucial to reduce inflation and lay the basis for sustained growth. The deterioration in the global economic environment and weaker economic activity call for an update of the economic framework and a re-calibration of economic policies.

In particular, discussions focused on the fiscal program and the monetary policy stance. On the fiscal side, the discussions resulted in understandings on measures to assure the achievement of the program's fiscal targets for 2008/09 (July-June) and 2009/10 through mobilisation of revenue and some expenditure rationalisation.

Structural reforms have progressed broadly as envisaged. A contingency plan for handling problem banks has been prepared and is being strengthened; an action plan to reform tax policy and administration has been adopted and will be implemented with technical assistance from the IMF and World Bank; electricity subsidies will be fully eliminated by the end of the current fiscal year; and a plan has been designed to address the circular debt issue.

Social protection is a key element of the authorities' program. Improvements in targeting of the social safety net are in train and the IMF staff team welcomed these improvements as well as increased social safety net spending. The resolve of the Pakistani authorities as well as the initial success in stabilising the economy augurs well for the future, despite the risks associated with the deterioration in the global economy.

Mobilisation of additional external budget assistance is particularly crucial now in order to support the broadening of the social safety net and a higher level of development expenditure.

The Donor Meeting, that is expected to take place in March/April, provides an important opportunity for the international community to support Pakistan's efforts in stabilising its economy, mobilising more resources for social protection, and laying the basis for a high and sustainable growth.

The IMF mission staff will prepare a report for the IMF Executive Board on the first review under Pakistan's SBA and the 2009 Article IV consultation that is scheduled for consideration in late-March, the statement said.

These discussions focused on Pakistan's recent economic performance, the main challenges lying ahead, and the policies needed to build and consolidate macroeconomic stability in light of the uncertain and deteriorating global economic environment, the statement added.


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## Neo

*Pakistan, IMF revise targets; next tranche in March ​* 
KARACHI (February 26, 2009): Pakistan and the International Monetary Fund (IMF) have agreed to lower the target for gross domestic product growth this fiscal year to 2.5 percent from 3.5 percent, a Finance Ministry official said on Thursday.

"As six months of the current year have passed, and with all the data available, it was decided that the best estimate for GDP growth would be 2.5 percent," Finance Secretary Waqar Masood told Reuters.

Pakistan's fiscal year runs from July 1 to June 30.

GDP growth last fiscal year was 5.8 percent.

Pakistani and IMF officials wound up on Thursday nearly two weeks of talks in Dubai on their first review of a $7.6 billion emergency IMF loan approved in November.

Pakistan received a first tranche of $3.1 billion in late November.

Masood said the next tranche would be "slightly over $800 million" and it was expected by the end of March when the IMF Executive Board meets.

State Bannk of Pakistan chief spokesman Syed Wasimuddin said the exact figure due in late March was 568.535 million SDR (special drawing rights), which according to Thursday's exchange rate, amounts to $840 million.

The IMF said on Wednesday monetary policy was appropriate and there would be room to lower interest rates if inflation declined.

It said it was "impressed" by Pakistan's resolve to sustain prudent policies, strengthen the social safety net and pursue reform.

Masood also said inflation had been revised to an average of 20 percent for this fiscal year, compared with an earlier target of 23 percent. Year-end inflation was revised to 10 percent compared with an expected 20 percent earlier, he said.


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## Neo

*Government advised to implement Rs 25 billion Fata development package ​*
ISLAMABAD (February 26 2009): The President, Asif Ali Zardari on Wednesday advised the government to immediately undertake implementation of over Rs 25 billion development package for Frontier province and Fata finalised recently as an important element of the strategy to fight militancy in the affected areas.

In a statement today spokesman, Farhatullah Babar said that the President during his recent visit to Frontier province announced that a heavy development package for Frontier and Fata would soon be launched. After his announcement, the government cleared the development proposals and gave go-ahead signal. A Monitoring Committee was constituted to ensure speedy completion of the formalities to undertake the projects, he said.

Further, he said that the development package for Frontier province comprises of construction of Tank Zam Dam, building of additional 1,000 primary schools including 700 for girls, a new hospital known as Shaheed Benazir Bhutto hospital, greater Water Supply Scheme for Peshawar, a children hospital, infrastructure development including up-gradation and remodelling of Southern Bypass and construction of a new road link to the Southern districts bypassing the Kohat tunnel.

Besides, the package includes provision of medical equipment and ambulances for all district hospitals and construction of a Trauma Centre in Peshawar. The package sets aside one billion rupees for the rehabilitation and development of Swat recently ravaged by militant activities.

Babar said that the President advised that special attention should be paid to the implementation of the development package for Swat at a cost of Rs 1 billion and the construction of primary schools in the province costing Rs 3.5 billion. The President also advised that special emphasis should be placed on rebuilding the schools in Swat and other areas that were damaged during recent operations.

The President also called for the reopening of all closed schools. The spokesman also said that the Rs 1 billion development package for Swat is meant for rehabilitation of the affected areas due to militancy and implementation of poverty reduction and economic growth programmes in Swat.

The proposed Shaheed Benazir Bhutto Hospital in Peshawar costing Rs 2 billion had been announced by the former Prime Minister, Shaheed Mohtarma Benazir Bhutto during her tenure but remained unimplemented so far. The Tank Zam Dam project in District Tank, which will be built at a cost of Rs 6 billion, will irrigate 45000 acres of land beside, generating 25 mega watt of electric power, he said.

Explaining the significance of various development projects, the spokesperson said that over Rs 3 billion up-gradation of the Southern Bypass is part of the Ring Road master plan, which was pending for resource constraints when completed will reduce one third of the traffic congestion in Peshawar city.

In addition, the greater water supply scheme at a cost of Rs 3 billion will provide portable drinking water to those areas of District Peshawar, where the facility is not adequately available, he said. The development package also includes a strategically important Nowshera-Nizampur Kohat alternate road link to maintain road access to southern districts of the province and Balochistan from Peshawar.

Babar also said that unrest in Fata and Frontier regions recently forced the closure of Kohat Tunnel and blocking road access to the southern districts from Peshawar necessitating the development of an alternate route. A burns and trauma centre is also included in the package, as the incidents of burns patients had increased in the recent past due to terrorist activities, but there is no facility for treating burns victims in Peshawar.

The government has already set up a Monitoring Committee to oversee the implementation of Frontier Development Package. The Committee comprises of Secretary, Planning and Development Division as the Chairman and includes Secretary, Finance Division, Chief Secretary, NWFP, Additional Chief Secretary, NWFP and Additional Chief Secretary, Fata as members.

The spokesperson stated that on the advice of the President, the government has already released Rs 340 million for payment of compensation to the families of the victims of suicide bombing and militant attacks and another Rs 280 million to be disbursed amongst heirs of victims of militancy in the tribal areas. The President has also directed that the process of payment of compensation should be effected immediately and the Presidency should be kept informed on a daily basis. -PR


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## Neo

*SAP APJ grows 23 percent software revenue in 2008 ​*
LAHORE (February 24 2009): Managing Director, SAP, Pakistan, Sajjad Syed said Asia Pacific Japan (APJ) continued to outperform the business software market across the region in 2008. In a statement issued here on Monday, he said he was extremely proud of the way their team in SAP Pakistan handled market conditions they experienced during the last quarter of 2008.

"In spite of the circumstances, we secured a number of strategic deals, running contrary to the trend we are seeing for the industry as a whole." "Many of our customers in emerging markets like Pakistan are continuing to embrace newer technologies to strengthen their operations and processes, all striving to be more competitive despite the economic slowdown. Increasingly, they are also seeing the value that SAP solutions have to offer," added Sajjad.

On a full year basis, SAP Asia Pacific Japan remains SAP AG's fastest growing region with 23 per cent Software Revenue growth, to 594 million. Software and Software Related Services grew at 24 per cent for the year, to 1.192 billion. All revenue figures in this release are expressed in non-GAAP constant currency terms and all growth is measured against the previous comparable period.

While SAP APJ experienced difficult market conditions in the fourth quarter, growing Software and Software Related Services at 5 per cent, Total Revenue for the full year grew at 20 per cent, to 1.532 billion.

SAP continued to fair well in South East Asia, achieving a 20 per cent growth in Software Revenue and 19 per cent growth in Software and Software Related services for the full year of 2008. Emerging markets like Vietnam, Cambodia and Pakistan especially showed strong results, with 89 per cent growth in both Software, and Software and Software Related Services revenue.

SAP reacted swiftly to the economic crisis by introducing 'Best-Run Now' value packages. These comprehensive new packages assemble offerings from existing SAP and partner solutions, combined with services, which offer speedy implementation of ready-to-run software packages, targeted at specific business processes.-PR


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## Neo

*Construction of Suki Kinari hydro project: NWFP minister expresses reservations ​* 
PESHAWAR (February 26 2009): NWFP Minister for Information and Inter-Provincial Co-ordination, Mian Iftikhar Hussain, has expressed reservations over the construction of Suki Kinari Hydro-Power Project Kaghan in District Mansehra. In a statement here on Wednesday, he termed the construction as injustice with the people of the province and clear violation of provincial autonomy and the decision would not be accepted.

It may be recalled that the provincial government filed a petition in the Islamabad High Court (IHC), pleading that the provincial government should be empowered to execute the project whether from its own resources or as private venture.

The minister said that the provincial government would not withdraw from the demand of net-profit on hydropower generation located in the province either it was Turbella, Warsak or any other project including the Suki Kinari Project.

He continued that the provincial government should execute the said project through its own resources so that it could increase its resources and strengthen its economy as the provincial government has the capability of completing such type of projects and Malakand-III Hydro Power Project was a recent example of it.

Mian Iftikhar said that the government and its people had the legal and constitutional right over royalty from any power generation unit located in the province and no body could deprive from it any way.

He added that such type of decisions without taking into confidence the provincial government were the conspiracy to disturb the cordial and pleasant relations between the federal and provincial governments, which would not be tolerated any further.

He furthered that even after 30 years of completion of the project, keeping the NWFP province deprived of its legal and constitutional right was beyond comprehension taking over the said project after 30 years by Wapda was also illegal, the minister maintained


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## Neo

*Neelum-Jhelum hydroelectric project: IDB intends to fund $458 million ​* 
LAHORE (February 26 2009): The technical mission of the Islamic Development Bank (IDB) would recommend to its Board and other Middle East donors to provide a funding amounting to $458 million approximately for 969-MW Neelum-Jhelum Hydroelectric Project. This was disclosed by the IDB Country Director, Farrukh Mahmood, during a wrap up meeting held here on Wednesday at Wapda House.

The four-member IDB technical mission is visiting Pakistan for finalising the technical and financial details and various financing options, including the extent and mechanism for Neelum-Jhelum Hydroelectric Project. The meeting was attended by the Wapda member (Water), Syed Raghib Abbas Shah and Wapda Secretary, Advisor to the Authority on Diamer-Basha Dam Project and other officials were also present on the occasion.

Dilating upon the current status of Diamer-Basha Dam Project, the Syed Raghib said the evaluation for pre-qualification of contractors for lot 1, 2 and 3 is under process and would be completed in March 2009. Consequent upon the approval of PC-I amounting to Rs 60 billion for resettlement by ECNEC in November last, the land acquisition for construction of the project has already been started, he added.


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## Neo

*Power generation: 'government focusing on indigenous resources' ​*
ISLAMABAD (February 26 2009): Federal Minister for Water and Power, Raja Pervez Ashraf has said that the government is focusing on alternative and indigenous resources to produce electricity on affordable prices. He asked the Alternative Energy Development Board (AEDB) to expedite their work and complete the wind and solar energy projects as early as possible.

He further asked the Board to prepare comprehensive short and long-term plans to utilise all the renewable energy resources available in the country and to attract the private sector for investing in this sector.

The Minister made these observations while presiding over the 17th Board meeting of the AEDB held here on Wednesday, The Board reviewed the progress of the ongoing projects and considered various proposals to generate electricity from wind and solar projects. The Board approved the formation of a Policy Review Committee to review the recommendations proposed by the AEDB lot Mid-term Renewable Energy Policy.-PR


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## ejaz007

*OGDCLs profit up, SNGPLs down*

KARACHI: As the corporate results season is in full swing a major number of listed companies announced their results on Thursday.

OGDCL: Oil & Gas Development Company Limited (OGDCL) has registered 33.61 percent growth in its profit after tax in the first half of current fiscal on the back of higher oil and gas prices.

Companys profit after tax jumped to Rs 32.069 billion in the period under review against Rs 24.002 billion in the same period of previous year, a notice of KSE stated on Thursday. OGDCL also annou-nced an interim cash dividend of Rs 1.75 per share i.e.17.50 percent for the quarter ended on December 31, 2008. This is in addition to interim dividends already paid at Rs 2.00 per share i.e.20 percent.

The earnings per share (eps) rose to Rs 7.46 in the said period against Rs 5.58 in the corresponding period of previous year. The net sales of the company shot up to Rs 71.718 billion over Rs 56.567 billion in the previous year. The exploration and prospecting expenditures fell to Rs 3.502 billion in the period compared to Rs 4.082 billion in a year ago period.

SNGPL: Sui Northern Gas Pipelines Limited (SNGPL) profit after tax declined to Rs 650 million in the half year ended on December 31, 2008 compared to Rs 1.427 billion in the corresponding period of previous year. The earnings per share (eps) dipped to Rs 1.18 in the period under review to Rs 2.60 in the same period of previous year.

The net gas sales jumped to Rs 81.034 billion in the said period over Rs 58.577 billion in the previous year. The growth in the sales was washed away by the high cost of sales, which rose to Rs 72.033 billion against Rs 51.071 billion in the last year.

Bosicar: Bosicar posted heavy losses in the first half of current financial year and its loss after tax came to Rs 7.918 billion compared to profit after tax of Rs 143 million in the previous year. staff report

Daily Times - Leading News Resource of Pakistan


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## ejaz007

*Pakistans progress on track: Waqar*

ISLAMABAD: Secretary Finance, Dr Waqar Masood Khan said on Thursday that International Monetary Fund (IMF) review meeting in Dubai has consented that Pakistans progress on funds programme is on track.

The IMF has expressed its satisfaction over the progress of Pakistans economic performance in first quarter of the year and also agreed the projected economic targets in the next six months of the current financial year and consented that the progress of Pakistans IMF programme is on track, Dr Waqar Masood Khan told APP on phone from Dubai here this morning. Waqar Masood Khan, who is currently leading Pakistan in the IMF review meeting in Dubai, expressed the hope that Pakistan would get second tranche of $800 million by the end of March due to the countrys progress on economic front.

According to a statement issued by the IMF Staff Mission on Pakistan said that an International Monetary Fund (IMF) staff mission, led by Adnan Mazarei, visited Islamabad and Dubai over the past 12 days to conduct the 2009 Article IV consultation and the first review under Pakistans Stand-By Arrangement (SBA). The SDR 5.169 billion (about $7.6 billion) SBA was approved by the Executive Board of the IMF on November 24, 2008 and a first disbursement of SDR 2.067 billion (about $3.1 billion) was made on November 26, 2008. staff report

Daily Times - Leading News Resource of Pakistan

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## Neo

*IMF allows interest rate cut if inflation declines ​* 
Friday, February 27, 2009

ISLAMABAD: In a major development, the IMF has allowed the government of Pakistan to reduce discount rate in the next quarters monetary policy to be announced by the end of April, provided core inflation continues to fall.

Pakistan had sought an agreement with the IMF during Dubai talks to cut the discount rate so that economic activities in the country could revive.

The objectives of a tight monetary policy have been achieved following collapse of oil and food commodities prices due to which the import bill had entered the negative zone.

The government had increased the discount rate by 2 per cent last year as a condition before moving the IMF for a bailout package.

Usually, the Fund, does not allow any country, which comes under its programme to decrease the discount rates, rather, it always religiously pursues tight monetary policy, but in case of Pakistan, the official said, because of the performance of the government imports have entered negative zone and the Fund has conditionally agreed to reduce the discount rates. The Fund has linked relief in interest rates with the reduction in core inflation.

The core inflation has started going down as per the figures available in the month of January and if this trend keeps declining in the month of February, March and April, the State Bank of Pakistan can reduce the interest rates accordingly, a senior official who was part of the delegation of Pakistan which recently held talks with IMF in Dubai.

There has been a consistent demand from the business community that the government needs to reduce to interest rates otherwise the economic activities would not trigger.

However, the IMFs decision to this effect would have good impact on Pakistans economy as after April, the economic activities in the country would kick off meaning by that in next fiscal Pakistan would experience more GDP growth than the 2.5 percent which has now been fixed for the ongoing fiscal.

The economic growth is the only tool, which can enhance the debt sustainability capacity of the country, which is on way to deterioration because of massive slow down in the economic growth. The debt servicing would be the major issue in the future for country.

Pakistan is to utilize its resources of Rs700 billion for debt servicing only in the current financial year. This year the government is likely to collect tax revenue of Rs1,300 billion and if Rs700 billion is consumed on just debt servicing and 2.9 percent of the GDP which is to be Rs300 billion on defence expenditures and the remaining amount for the salaries and pensions of the government employees, the country would have nothing for development except loans.

In the case the central bank reduces the interest rates by end April, Pakistan might come into a position after certain period to increase its debt paying capacity.


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## Neo

*ADB team experiences Pak political instability ​* 
Friday, February 27, 2009

ISLAMABAD: The disqualification of Sharif brothers on Wednesday created an awkward situation for the Asian Development Bank (ADB) delegation when its vice president reached the Chief Minister House for a scheduled meeting with Shahbaz Sharif only to find out that the chief minister has been removed from his office.

It was a coincidence that the apex court decision was announced exactly at the time when Shahbaz Sharif was supposed to meet the ADB delegation, headed by its Vice President Xiaoyu Zhao on Wednesday noon.

Sources in multilateral donor agencies as well as in the Economic Affairs Division confirmed to The News on Thursday that ADB Vice President reached the Chief Minister office on Wednesday noon for a meeting with Shahbaz Sharif.

At that moment, the apex court decision had been announced and the ADB team found panic in the Chief Ministers Secretariat. 

The former CM cancelled all his scheduled meetings and the visiting ADB mission was also unable to hold meeting with the former chief minister Punjab.

It was very awkward situation where we were completely clueless what to do for a while, said one of the officials of a donor agency and added, this kind of political instability would damage the economy of Pakistan.

The finance ministry officials conceded that no investor or donor would risk investments in politically instable environment that paves the way for inconsistent economic policies resulting in financial and economic predicament.

It is a joke with this country where political instability will disallow economic prosperity, said an independent economist while talking to this scribe. MH


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## Neo

*ADB to double assistance up to $3bn To finance Diamer-Basha dam​* 
Friday, February 27, 2009
By Mehtab Haider

ISLAMABAD: The Asian Development Bank (ADB) has offered to double its annual assistance to Pakistan from earlier planned $1.5 billion up to $3 billion in order to help it improve infrastructure and overcome budgetary difficulties. 

We can double our annual assistance to Pakistan for the next three years provided funds availability with the Bank increases, ADB Vice President Xiaoyu Zhao told reporters after holding a meeting with a Pakistani delegation, led by Minister of State for Economic Affairs Hina Rabbani Khar, on Thursday. 

The ADB is currently preparing a three-year Country Partnership Strategy (CPS) for 2009-10 to 2012-13 under which assistance to Pakistan could be jacked up to $9 billion from earlier planned $4.5 billion. The ADB on Thursday offered Pakistan to double its annual assistance up to $3 billion from earlier envisaged $1.5 billion from 2009, a senior official of the ADB said. 

An ADB delegation, headed by its Vice President Xiaoyu Zhao, called on Prime Minister Syed Yusuf Raza Gilani here at the PM House on Thursday afternoon, and agreed in principle to finance Diamer-Basha dam project. 

We can double Pakistans assistance up to $3 billion per annum provided Islamabad makes a request in this regard as well as funds with the ADB increases, the Banks vice president told reporters. On the most critical issue of tight monetary policy, he said the inflation was showing a declining trend and easing of monetary and fiscal policies could be done to give an impetus to sluggish economic activities. 

It is relevant to mention here that under the IMF prescription the government is reluctant to decrease discount rates that have resulted into choking the whole economic activities and slowed economic growth. 

Pakistan and the IMF during recently concluded talks at Dubai agreed to review the monetary policy in future line of Pakistan but the central bank will not ease down its monetary stance unless the core inflation comes down. 

When the ADB Vice president was asked about financing facility of the bank for mega water projects, he said the ADB was ready to extend its financing facility for construction of mega water projects in the country. 

The PPP-led government is making plans to construct over $12 billion Basha dam on which the work will be started within the ongoing calendar year 2009. 

He said the major challenge for Pakistans economy is lack of state of the art infrastructure, resulting into creating difficulties for achieving sustained growth. 

On this occasion, the minister of state for economic affairs hoped that the ADB would extend its $500 million budgetary support under Economic Transformation Programme before June 2009. However, during the meeting with the prime minister, the premier expressed the hope that this cooperation would continue for helping the country to overcome the shortage of energy, water and food through construction of new dams and other related projects. He said construction of farm to market road network, development of urban and rural areas, provision of equitable economic opportunities as well as improving the social sector particularly the health and education facilities are the foremost agenda before the government. 

The premier said the government is fully committed to reducing poverty, increasing per capita income, generating more jobs and improving the living standard of the people. He said owing to prudent economic policies undertaken by the government, the economy is now started showing positive results.


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## Neo

*Pak share in world cotton output falls ​* 
Friday, February 27, 2009

LAHORE: Pakistans share in world cotton production has dropped by 10 per cent since 2004, making it an importer while India has boosted its cotton output by 25 per cent to become a leading exporter of the commodity.

Data received from the United States Development Agency reveal Pakistan continued to boost its share in world cotton production for three decades, increasing it from 4.8 per cent during 1970-74 to 8.8 per cent in 2000-03. Its growth in cotton crop was much higher than that of India during these three decades as Delhi, which produced 8.5 per cent of global cotton, could enhance its share to only 11.6 per cent.

Agricultural planners in Pakistan then lost the way as after achieving a share of 9.1 per cent in global cotton production the decline started which they could not stop. That took the countrys cotton production share to 8.2 per cent.

Indian agricultural planners, in contrast, gave their country a giant leap and the country now produces 19.6 per cent of the total cotton produced globally. Availability of local cotton has provided the Indian textile industry with a huge price advantage as their share in world exports has increased from 0.6 per cent during 1970-74 to 12.2 per cent now.

Pakistans share in global cotton exports has fallen from 2.9 per cent during 1970-74 to merely 0.6 per cent. Even this cotton is exported to keep its rates high in Pakistan.

Pakistan, in fact, remained self-sufficient in cotton till the period from 1985 to 1989 and then cotton imports started increasing and currently 5.8 per cent of world cotton exports are destined for Pakistan.

Cotton imports in India are only 1 per cent of total global cotton trade. India consumed 11 per cent of the cotton produced in the world during 1990-94 against 8 per cent by Pakistan. Currently, cotton use in India accounts for 15 per cent of total global consumption against 10 per cent in Pakistan.

Shortage of local cotton is one of the major factors which has kept the textile industry of the country under pressure, said All Pakistan Textile Mills Association (Punjab) Chairman Akber Sheikh.

He said cotton farmers might not be getting a right price due to control of middlemen but spinners got their basic raw material above global cotton rates due to production shortfall. Mills get cotton at import substitution price (global price of cotton plus import cost). The ideal price should be export parity price that Indian farmers get, he added.

APTMA former chairman Abid Farooq said frequent change of governments had hampered efforts to introduce BT cotton technology which sparked revolution in the Indian textile industry. He said negotiations with global BT cotton suppliers should remain continue by successive governments so vital interests of the country were not compromised.

Pakistan had to sign an agreement with a leading BT cottonseed producer in the US the day army toppled the government in 1999, he said, adding the issue was not taken up by the next government which had adversely impacted the textile sector.


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*Forex reserves down to $10.166bn​*
KARACHI: Pakistans total liquid foreign exchange reserves have fallen by $205.1 million to $10.166 billion this week. According to the weekly report of State Bank of Pakistan on Thursday, the foreign exchange reserves held by SBP were estimated at $6.734 billion on February 21, 2009, while reserves held by the banks, other than SBP, stood at about $3.432 billion.


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*Pak-Iran gas pipeline deal in final stages​*
PESHAWAR: Talks on Pak-Iran gas pipeline are in their final stages, Iranian Consul General Muhammad Iqbal Asghari said on Thursday. Talking to reporters at his residence, Asghari said the Iranian government was aware that Pakistan needed gas and had chosen to supply it to Pakistan, rejecting Swiss and Bulgarian proposals. Answering a question about an Iranian diplomat kidnapped from Peshawar four months ago, he said those behind the kidnapping wanted to damage Pak-Iran ties. Asghari said the Pakistani government should ensure safe recovery of the diplomat, adding no group had yet contacted the Iranian embassy regarding the kidnapping.


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*Pakistan seeks more trade with US to overcome economic issues​*
NEW YORK: Pakistan is keen to expand trade with the United States (US) to overcome its economic problems, Ambassador Abdullah Haroon said on Tuesday, hoping the Obama administration would consider giving more market access to Pakistani goods. Speaking to a group of members of World Youth Institute, a United Nations-affiliated body, at the Pakistan Mission, Pakistans envoy to the UN hoped the US government, which is currently reviewing is Afghan policy, would devise a plan to not only deal with terrorism along the Pak-Afghan border but also to solve Pakistans economic problems. 

Pakistan's main exports  cotton and textile products  amounted to $7 billion, which had the potential of increasing to $15 billion. Other countries that have enhanced trade with the US bought raw cotton from Pakistan, and shipped finished textiles to the US. Haroon said Pakistan's economic difficulties went back to the 1979 Soviet invasion of Afghanistan when Pakistan had been burdened with over three million Afghan refugees, adding Pakistans government had spent $150 billion in 20 years on providing food and shelter to the refugees. The current economic situation, he said, was due to the political and economic backlash Pakistan had suffered for supporting the Afghan mujahideen to oust the Soviet Army.


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*ADB assistance could double to $9bn​*
** ADB vice president meets Gilani, agrees to finance Basha dam project​*
ISLAMABAD: The economic assistance from the Asian Development Bank (ADB) under its Country Partnership Strategy (CPS) 2009-13 may be hiked to $9 billion from the existing proposition of $4.5 billion.

The ADB has offered Islamabad to double the annual economic assistance to $3 billion from the proposed $1.5 billion to help Pakistan improve its infrastructure and overcome its economic challenges. "The ADB can double its annual assistance for Pakistan for the next three years, provided that the funding availability of the bank is increased," visiting ADB Vice President Xiaoyu Zhao told reporters on Thursday. "We can double Pakistan's assistance up to $3 billion per annum provided Islamabad makes a request in this regard as well as the funding available to ADB also increases," the ADB vice president said. He earlier led an ADB delegation in a meeting with a Pakistani economic team, which was led by Minister of State for Economic Affairs Hina Rabbani Khar.

Zhao said during the meeting that the major challenge for Pakistan's economy was lack of proper infrastructure, which created hurdles for achieving sustained growth. The minister hoped the ADB would extend its $500 million budgetary support under the Economic Transformation Programme before June 2009. The ADB is currently planning a three-year CPS from 2009-2010 to 2012-13, under which Islamabad could receive as much as $9 billion in assistance.

Dam project: Later, the ADB delegation also met Prime Minister Yousuf Raza Gilani at the Prime Ministers House and agreed to finance the $8.5-billion Basha-Diamer Dam project. The government is planning to start the dams construction in the current year.

The prime minister hoped the ADB would continue its cooperation for helping Islamabad construct new dams to overcome the shortage of energy, food and water. Gilani said construction of a farm-to-market road network, the development of urban and rural areas, provision of equitable economic opportunities and improved social sector facilities were the governments top priorities.

The prime minister said the government was fully committed to reducing poverty, increasing per capita income, creating employment opportunities and improving the peoples living standards.

While assuring the ADB's complete support for Pakistan, Zhao briefed the prime minister on the development activities undertaken by the bank in various sector of the countrys economy.


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*US provides $22.4m grant in food aid to Pakistan ​* 
ISLAMABAD (February 27, 2009): The United States Agency for International Development (USAID) and the United Nations World Food Program announced the signing of an agreement valued at $22.4 million to help ease Pakistan's food crisis.

USAID/Pakistan Deputy Mission Director Joseph Williams speaking at the signing ceremony said that "this Food Security Relief Program will benefit thousands of Pakistanis who are affected by the rising price of basic food items.

I am particularly pleased that many of those who will benefit from this food aid are Pakistani school children."

The United States will grant $22.4 to the World Food Program (WFP) to provide approximately 33,731 metric tons (MT) of wheat and 4,825 metric tons (MT) of edible oil to over 2,710,000 Pakistanis, including 405,000 primary school students. WFP will distribute this food aid in 20 districts in the North-West Frontier Province (NWFP), Balochistan, and arid zones of Sindh.

Flanked by Pakistan's Additional Secretary of Food, Agriculture and Livestock, Tauqir Ahmad Faiq, WFP Representative in Pakistan Wolfgang Herbinger said: "This grant comes at a very critical time and will help WFP continue its assistance to more than three million needy people hit hard by the surge in food prices. We appreciate the role of USAID as a development partner in addressing the hardships faced by poor Pakistanis, he added."

WFP, UNESCO, the federal government, provincial education departments and schools will work together to organize special Parent-Teachers-Students Days ("School Days") on which food staples, including wheat rations of 50 kg per bag, will be distributed to families four times between now and April of 2010. These "take home" rations will serve as an incentive to encourage families to keep children in school and out of work.

Under the WFP School Food Program, families that keep their children enrolled in school will receive four liters of edible oil.

In addition, WFP and UNESCO will add wheat distribution to this program. On "School Days" parents will go to the selected schools, receive training in basic health practices and the effective use of the food rations, and be encouraged to keep their children enrolled in school.


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*54 mega projects: Friends of Pakistan help sought ​* 
ISLAMABAD (February 27 2009): Pakistan has sought assistance from Friends of Pakistan (FoP) for 54 mega development projects, including 8.4 billion-dollar Diamer Bhasha dam, and Neelum Jhelum hydropower project. According to the sources here on Thursday, a formal announcement for assistance may come in the next ministerial meeting of the FoP that the Japanese government has offered to host.

"Friends of Pakistan" forum, considered to be President Asif Ali Zardari's brainchild, was launched in New York on September 26, 2008 on the sidelines of the 63rd United Nations General Assembly meeting held in New York. The FoP membership consists of countries that are also members of the aid-to-Pakistan consortium, which was constituted in 1960 by the World Bank in an effort to facilitate co-ordination amongst the major assistance providers to Pakistan as well as for other debtor countries.

By 1991, the consortium held about 92 percent of Pakistan's outstanding disbursed debt. The aid-to-Pakistan consortium's members include the United States, Canada, Japan, Britain, Germany, France, and international organisations such as the World Bank and the Asian Development Bank. The FoP has four additional members, namely China, United Arab Emirates (UAE), Turkey and Saudi Arabia.

The second meeting of the FoP was held in Dubai on November 17, 2008 with Pakistan and the UAE joint hosts. At that time, the Pakistan government had submitted proposals for 71 projects, costing a total of 60 billion dollars, which was labelled by several "friends" of Pakistan as a wish list.

The government has since scaled down its expectations and has sent a list of 54 projects to the FoP, though the exact cost of these projects has not been made known. However, the Planning Commission is also working on identifying projects near completion for which funding is not available from the domestic resources due to paucity of funds.

This is in spite of the fact that Public Sector Development Programme (PSDP) was slashed by Rs 100 billion with an ongoing exercise to cut another Rs 70 billion. An important meeting was held in the Planning Commission on Thursday last and concerned ministries have been directed to prepare a list of the projects that are on the verge of completion.

The Planning Commission will soon hold a conference of concerned ministries to finalise the list of ongoing projects to seek assistance from the FOP, the sources added. The government has released only Rs 71 billion - 19 percent of the total allocation for PSDP - in the first six months of the current financial year due to financial constraints.

In a meeting held last Thursday, it was decided to seek assistance for Kachhi canal (phase11) and Rs 5.3 billion Khan-Khawar hydropower project from the FOP. The estimated cost of former project is Rs 3.12 billion and the government had allocated Rs 500 million in PSDP, whereas the PSDP allocation for the latter is Rs 1.1 billion.

The government has sought assistance for 8.4 billion dollars for Diamer Bhasha dam with an estimated capacity of 4500 MW power generation to Japan International Co-operation Agency (Jica).

The government has allocated Rs 200 million in the current year PSDP and is also seeking financing from other donors, including International development Bank (IDB)), China and Asian Development Bank (ADB). The sources said the government was focusing on the energy projects that could bail out the economy of the country. The energy crisis has hit the economy that could lead to reduction in growth rate.

According to the sources, Pakistan is also seeking assistance for Neelum Jhelum hydropower project from Saudi Arabia, UAE and China. The other main energy projects include 800 MW Gudu steam power project; 330 MW combined cycle Dadu power project; Golan Gol hydropower project and Munda dam.


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*ADB agrees to finance Bhasha-Diamer Dam project ​*
ISLAMABAD (February 27 2009): Asian Development Bank (ADB) delegation headed by its vice President Xiaoyu Zhao, called on Prime Minister Syed Yusuf Raza Gilani at the Prime Minister's house on Thursday and agreed in principle to finance Bhasha-Diamer Dam project. During the meeting, the Prime Minister said that Pakistan greatly values its partnership with development institutions particularly the ADB, which is a trusted partner and wants to have even better relations in future.

Appreciating the active support of ADB to Pakistan in the past, the Prime Minister expressed the hope that this co-operation would continue for helping the country to overcome the shortage of energy, water and food through construction of new dams and other related projects. He said that construction of farm to market road network, development of urban and rural areas, provision of equitable economic opportunities as well as improving the social sector particularly the health and education facilities are the foremost agenda before the government.

The Prime Minister said that the government is fully committed towards reducing poverty, increasing per capita income, generating more jobs and improving the living standard of the people. While assuring ADB's support to the democratic government, Xiaoyu Zhao informed the Prime Minister on the development activities undertaken by the bank in various sectors of the economy. He also commended the measures undertaken by the Pakistan's government for the improvement of economy. Minister of State for Economic Affairs, Hina Rabbani Khar was also present in the meeting.-

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*Senator describes President's visit to China successful ​*
KARACHI (February 27 2009): The Senate member-elect from Sindh and former Advisor to Chief Minister, Gul Mohammed Lot has described the recent visit of President Asif Ali Zardari to China as of great significance in view of regional political situation and Pakistan's economic difficulties. He said the agreements reached for co-operation in various sectors during the visit would be of far reaching importance.

Talking to a delegation here Wednesday, he said that provision of technical and training assistance by China for wind power would prove helpful in overcoming prevailing power shortage in Pakistan. He feared that if ongoing power crisis were not averted, then thousands of people would be rendered jobless with closure of industrial units besides posing threat to further worsening of Pakistan's economic situation.

Besides wind power projects, Senator-elect Lot pointed out that co-operation in the field of agriculture and China's wholehearted assistance for improving Pakistan's food conditions would be of immense help. He informed that during the visit, in which Sindh Chief Minister was also a member of President's entourage, Sindh Province and Huan Province of China were declared "twin provinces"

He was of the view that Pakistan can attain further improvement by adopting Chinese technology in various sectors. He told the delegation that Thar Coal project will change the very fortunes of not only Sindh Province but also entire country and strengthen the economy and when economy will be strengthened many of the problems will automatically be solved.


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*Speedy development of AJK and Northern Areas top priority: Kaira​ *

MIRPUR (February 27 2009): Federal Minister for Kashmir Affairs and Northern Areas Qamar-uz-Zaman Kaira has said that speedy development and progress of Azad Jammu & Kashmir and Northern Areas was the top priority of the government of Pakistan. In an exclusive interview to APP during his brief visit to an under-construction private-sector Muhi-ud-din Islamic Medical College in Mirpur late Wednesday.

The Minister said that the government of Pakistan was actively engaged, on priority basis, to ensure speedy progress of AJK and Northern areas. He said the completion of ongoing and upcoming development projects of public welfare in NA and AJK were the first priority of the federal government.

Kaira, who was accompanied by AJK Prime Minister Sardar Muhammad Yaqoob Khan during his visit to the town, said that the AJK Premier could better apprise of the tremendous measures being taken by the government of Pakistan for the speedy development of AJK aimed at to ameliorate the life style of the common man in the liberated territory. He said that Sardar Yaqoob could better apprise of the federal government's liberal contribution to ensure the speedy progress of AJK.

To a question about the execution of the construction work of already approved and federal government sponsored Benazir Bhutto Shaheed OPF Medical College in Mirpur, Qamar-uz-Zaman Kaira said that the OPF Medical college will soon be launched since it was the commitment of our Shaheed Quaid BB.

Kaira said that site for the OPF Medical College has yet been reserved and the building for the college has also been made available by the AJK government. He said that initial process for the construction of new blocks and renovation of existing building for the OPF Medical College has been started. He said that Overseas Pakistanis Foundation would bear all the expenditures of the construction work of this mega project which, he added, would start soon.

The federal minister said that at the first leg of the plan, it would be priority to kick off the curricular activities in Benazir Bhutto Shaheed Medical college through the renovation of the existing building.

Earlier, the minister visited the under-construction private sector Muhi-ud-din Islamic Medical College in Mirpur. He went round various blocks of the medical college and the boys and girls hostels constructed separately on huge area of land. Management of the college apprised the minister of the plan about the formal beginning of the academic activities in the college soon after the grant of accreditation by Pakistan Medical and Dental Council.

Chancellor of Muhi-ud-din Islamic University and Chief executive of Muhi-ud-din Islamic Medical college, renowned religious scholar and spiritual leader Allama Allah ud din Siddique also apprised the minister of the academic activities of all the campuses of Muhi-ud-din Islamic University in various parts of AJK including Mirpur.


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*Pakistan to file claim for extension of EEZ ​* 
Saturday, February 28, 2009

KARACHI: Pakistan will file its claim regarding extension of its Exclusive Economic Zone (EEZ) by 150 nautical miles beyond the current 200 nautical miles limit in May this year.

This was stated by the Chief of Naval Staff (CNS), Admiral Noman Bashir. He was addressing a news conference here on Friday in connection with the Exercise Aman 2009 to be held in Pakistani waters from March 5 to 14.

The CNS pointed out that the survey of the area has already been executed and a summary in this connection has been agreed to by our law ministry. He said that according to his information the prime minister has also permitted the summary.

Admiral Noman said that he is in contact with Pakistans Ambassador to the United Nations, Hussain Haroon. He pointed out that the requirement at the United Nations is that this extension of EEZ by 150 nautical miles is for those countries that have demarcated their sea boundary.

The CNS stated that the demarcation of Pakistani water boundary at south east with India has not been done. Therefore, it would now depend on the UN to approve the extension of EEZ by 150 miles for Pakistan or for India.


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*Drip irrigation, solar energy is future of Pakistan ​* 
Saturday, February 28, 2009

Mithi, (Trarparkar): In village Wandhanjo Wandu, Nagarparkar, one is amazed to find that a local farmer Mohabat is cultivating his 6-acre land with solar energy and is earning Rs300 daily through the sale of vegetables alone.

I had this piece of land since long but it was lying barren for non-availability of water, he told The News. I used to work as a hari (peasant) in Thatta district and was barely able to meet my ends meet. Now I am self-employed person and earn pretty well, he said.

Mohabat has gown tomatoes, eggplants, onions, chillies and sunflower on his field. He fetched Rs20,000 from the sale of tomatoes alone this year and yield in sunflower was 40 maunds per acre that he sold for Rs1,800 per maund. Similarly, the yield in onion was 60 maund per acre. He fetched Rs250 for every maund of that commodity.

I use drip irrigation to conserve water and am a happy man now, he said with a smile.

Known as Lift Irrigation, the project on which Mohabat works was initiated by Thardeep Rural Development Programme (TRDP) and is supported by Pakistan Poverty Alleviation Fund. The total cost of the project is Rs8,81,526 with a TRDP share of Rs1,78,926 and PPAF share of Rs7,02,600. 

Had I used a motor to lift water I would have needed at least 10 litres of diesel that would have been very expensive, he said. 

Similarly, in a village called Singharo, some 55km from district headquarter Mithi; poor villagers are fulfilling their requirements of drinking water through seven solar panels powering pumps that lift underground water. At least 60 houses of the small village of 2000 people are not only getting their thirst quenched courtesy to solar energy but are also making money through sale of tomato, brinjal, cumin and other vegetables. 

Again the project has been a collaboration of TRDP and PPAF. The solar pumps work for 10 hours between 10am and 4pm every day and women are seen collecting water from the water tank. 

The well is 170 feet deep. Previously village women would fetch water from the deep well through camels and donkeys and it was a tedious job. Now solar energy is being used to do the job.

Apparently, installing solar panels for the impoverished people of Tharparkar appears to be a costly affair but if one keeps in view that the great desert of Pakistan bordering the Great Indian Desert always has a blazing sun, one is bound to agree with enthusiasts relying on non-exhaustible sources of energy. 

Drip irrigation is the future of Pakistan. It means we have to learn water conservation and this can improve the lot of poor farmers, said Dr. Sono Khangharani, Chief Executive Officer TRDP.

In 90 per cent areas in Tharparkar we can avail solar energy and the later can play a vital role not only in provision of electricity, cultivation but can also help in job creation, poverty alleviation and in giving a boost to local economy, said Dr. Khangharani.

The use of solar energy in Tharparkar will also result in reverse migration, he said.

In the wake of high cost of oil, developed as well as the developing countries are vying to meet their needs through solar and other sources of alternative energy. An article in SciDev.Net a prestigious scientific Web paper, quoted two German research reports saying that deserts in the Middle East and North Africa could generate vast quantities of electricity to sell to Europe. 

The studies found that concentrated solar power plants, occupying less than 0.3 per cent of the desert area in the region, could provide 15 per cent of Europes electricity needs by 2050, the article said. 

Tharparkar desert sprawls over an area of 20,000 square km. Its residents, Tharis, are the inheritors of a rich culture. This can be gauged from the fact that out of 56 most popular folk songs of Sindh, 45 are in Thari dialect. Forty per cent of the Tharis are from the Hindu and schedule castes. There are a number of ancient temples and remains of Buddhist and Jain religion present in the area as well. 

Surprisingly, despite the fact that about 40 per cent population hails from the minority communities, there has never been any sectarian strife in Thar, perhaps, due to the strong influence of Sufism in the area. Who knows Tharparkar is poised to emerge as a role model in Pakistan?


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*France offers food processing technology ​* 
Saturday, February 28, 2009

KARACHI: French Ambassador to Pakistan Daniel Jouanneau has said that Pakistan as the worlds fifth largest milk-producing country can benefit from French technology in milk processing. France can provide technology for food processing in which it has expertise.

He said this while speaking at Shaheed Zulfikar Ali Bhutto Institute of Science and Technology (SZABIST) on Friday.

France is closely working with Pakistan and partnering for democracy, peace, stability, security, education, environment and bilateral trade, he said. France and Pakistan shared common challenges of population, food, education, health, poverty and environment, he added.

After 1945, he said European countries decided to make efforts to avoid war as damages were greater than benefits. The European Union was an economic alliance initially but changed into a political alliance later. Now all decisions including security and sovereignty are made by ministers of the blocs 27 member countries.

France believes in collective decision-making as a member of the European Union. We believe in social stability, free market and human rights, he elaborated.

Daniel Jouanneau said, Islam is part of our history and geography. There are over five million Muslims in France, which is the largest among European countries. There are two grand mosques and a large number of small prayer places and over more 200 more mosques are being built, he informed.

Commenting on Pakistan, he said Pakistan is a great country and is strategically located in an important part of the region. No one can engage in dialogue with Muslims without Pakistan, he added. In response to a question, he said, shortage of food and water may cause wars and challenges like these are challenging for France and Pakistan.

Riots in November 2005 in France were not religious but it was in frustration owing to unemployment, health and poverty, he said while responding to a query. The ban of wearing scarf in schools was imposed due to large number of requests by Muslim girls as their parents were forcing them to wear scarf.

However, girls can put on their scarves as soon as they leave school premises. Muslim students can wear scarves at college/university level and there is no ban, he said in response to a question.


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*Connecting Karachi with Kalabagh: Zardari seeks ADB help for navigation project ​*
ISLAMABAD (February 28 2009): President Zardari on Friday asked the Asian Development Bank to consider assistance in the development of a navigation project to connect Karachi with Kalabagh for cheap transportation of goods from the Port in Karachi to the north. He said this when a delegation of the ADB led by its Vice President Xiaoyu Zhao called on him here.

The President thanked ADB Vice President for continued support of the Bank by providing short term and medium term assistance to the country through its various programmes. The President remarked with one of the areas which needed special attention and in which the Bank could be a great assistance was setting up of a Research centres for the optimum utilisation of irrigation water and development of hybrid seed of cotton, rice and sugarcane, which were not only highly yielding but also disease resistant.

The President said that the government of Pakistan was already engaged with China in this matter and that he planned to visit China every three months to monitor progress on the collaborative projects between the two countries in these areas.

President also drew the attention of the ADB delegation towards the need for building agricultural storage capacity and oil storage capacity in Pakistan through public private partnership model in which the private entrepreneur is encouraged to invest in building the storage capacity while the government rent the storage capacity on terms for mutual benefit.

The Vice President of the ADB showed keen interest in the idea and said that the Banks team in Pakistan will give it a serious thought. He said that there was distinct possibility of the increasing economic assistance to Pakistan due to the success it had achieved in the macro economic stability programme.

Xiaoyu Zhao said that the Bank was encouraged by the progress made by the government of Pakistan in its macro economic stability programme, which he said would further help in boosting economic assistance to the country. He said that the ADB was part of Pakistan's development programme and was committed to work with it to bring about positive changes for the benefit of the people of Pakistan.

Zhao said that he looked forward to continued and enhanced co-operation with the government of Pakistan and expressed the confidence that Pakistan's economy will grow faster in the days to come.

Salman Faruqi, Secretary General to the President, Sardar Asef Ahmed Ali, Deputy Chairman Planning Commission, Hina Rabbani Khar, Minister of State for EAD, Shakil Durrani, Chairman Wapda, Farrakh Qayyum, Secretary Economic Affairs Division, Shahid Rafi, Secretary Water & Power, Sibtain Fazl Haleem, Secretary Health, Farhatullah Babar, Spokesman of the President, Muhammad Shahzad Arbab, Additional Secretary and Zafar Hasan Raza, Joint Secretary Economic Affairs also attended the meeting.-PR


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*Marble exports surge by 75.01 percent ​* 
KARACHI (February 28 2009): Marble export have surged by 75.01 percent during July to January of current fiscal year 2008-09 due to mega construction projects in Middle East countries. According to statistics made available to Daily Business Recorder on Friday, marble sector has exported US $21.433million worth marbles, majority to Middle East during July to January as compare to US $12.247million marbles export made in previous corresponding period.

Commenting on it, Sanaullah Khan, former chairman, All Pakistan Marble Mining Processing Industry and Exporters Association (PMMPIEA) told Business Recorder that marble sector has surpassed last corresponding period export by US $9.186million, which is a positive stroke for economical growth of the country and would help sector achieve annual target fixed for current fiscal year.

To a question, he said that the sector had increased marbles export without any governmental favour and added the government had not even planned to give any incentive to marble exporters in this connection. "The government has completely ignored the sector in its policies, however the sector has privately taken some positive measures for its survival", he said.

Lack of technical expertise in mining processing, outdated equipment and poor law and order condition are creating negative impact on the marble export to European countries and America, which has considerably declined during recent years, Khan said. He added that marble exports to these countries have declined by 30 percent.

He further said the marbles export to European countries and America had become more costly as compared to Middle East countries because of under invoicing export, which was very high in these countries. However, the freight charges of marble export to Middle East countries are more reasonable. He said that Middle East countries are importing marbles in bulk without maintaining quality, which helps all marble processors to expand its exports at large.

He urged the government to take positive measures to facilitate marble sector, saying the government should take serious efforts for marble city and demanded the government to provide gas for the sector. He expected that marble export to Middle East countries would further increase because of multibillion dollars construction projects, being started in Saudi Arabia.


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*Wind energy to provide lighting for some main streets in Karachi ​* 
KARACHI (February 28 2009): Federal Minister for Water and Power, Raja Pervez Ashraf has said that some main streets in Karachi would be electrified by the wind energy soon, as some projects of renewable energy have been completed in the city. According to sources the Minister made these observations while presiding over the 17th meeting of the Alternative Energy Development Board (AEDB) held in Islamabad on February 25.

The Minister, they said, appreciated UNDP for their support in the installation of 11 wind masts across Pakistan worth over one million dollar, which would help identify wind corridors in the four provinces, opening new avenues of investment and power production.

The Federal Minister said that the government is focusing on alternative and indigenous resources to produce electricity at affordable prices, they added. They said that Pervez Ashraf had also asked the AEDB to expedite their work and complete the wind and solar energy projects as early as possible. He further asked the Board to prepare comprehensive short and long term plans to utilise all the renewable energy resources available in the country and to attract the private sector for investing in this sector on fast track basis.

The Minister, in his concluding remarks said to cater to the severe energy crisis the government has to move forward fast to generate electricity from renewable resources, as God has blessed us with plenty of indigenous resources, which need proper utilisation.

AEDB later approved the formation of a Policy Review Committee to review the recommendations proposed by the AEDB for "Mid Term Renewable Energy Policy" and the committee would submit its report by September 2009.

According to the sources the Board has also approved land for a 50 MW Wind Power Project at Gharo, Sindh. The project, being set up by M/s SUNEC, would start commercial operation in 18 months' time. One-megawatt hydro project in NWFP and a 34 MW waste to energy project have also been completed recently. They said AEDB had earlier started spade work on 50 MW Hawksbay Wind Farm, 50 MW Gharo Wind Farm and 50 MW Solar Thermal Power projects, to be executed by the public sector.

They said over 3000 homes have been electrified by solar energy system under the rural Electrification Programme in various villages of Sindh while three projects of the same nature are being started in Balochistan. The sources also said that at least 40 wind turbines of 10 to 250 kW in different areas of Karachi would start electricity generation in the summer this year.


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*AJK plans to produce and sell excess electricity ​*
MIRPUR (February 28 2009): Azad Jammu Kashmir government has evolved an integrated phased plan to utilise vast natural resources for generation of hydel power to meet power needs, official sources said. The sources told APP here Friday that only 300 megawatt of power was the requirement of entire Azad Jammu Kashmir and the state government had executed construction work on various projects under the plan to meet the shortage.

The sources said that AJK government not only intended to utilise maximum hydel power generation resources to meet its own requirement but also to sell additional power.


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*Pathetic throttling of export effort ​*
EDITORIAL (February 28 2009): Shocking, indeed, will be the disgusting disclosure of massive misuse of Export Development Fund (EDF) by successive governments for nearly two decades, as revealed in an exclusive Recorder Report appearing on Tuesday.

It will be recalled that although created in 1991, ostensibly, to provide export-oriented industrial units with additional support, the Fund seems to have somehow deviated from the chosen path, hence proving of little avail in mitigating the plight of variously disgruntled exporters.

This should be all the more so in view of the novel scheme, having incorporated in its measures to guard against unforeseen eventualities. First thing first, the cost of the novel scheme was sought to be met from an ingeniously devised levy of Export Development Surcharge (EDS), equivalent to 0.254 percent of the value of goods exported. Moreover, proceeds of the surcharge were to be transferred by the government to EDF for onward distribution among the export associations for purposes of export development.

As for its allegedly massive abuse, reference has been made to a number of instances of maladministration, in its wide and variegated meaning. Mention, in this context, has been made of nepotism by way of discriminatory distribution of EDS among favourite organisations and individuals under 'miscellaneous expenditures' head.

It will also be noted, with dismay though, that while thus far the EDF Board has sanctioned a total of Rs 11,549.025 million, of which Rs 10,367.161 million has been released, thus still leaving a balance of Rs 1,181.864 million, with little indication of its purposeful spending.

For, as now revealed, the government has irrelatively disbursed millions of dollars on matters, such as hiring foreign law firm by All Pakistan Textile Manufacturers Association (Aptma) to defend imposition of safeguard duty measures by Turkey on import of cotton yarn; study for preparation of perspective plan for Pakistan's textile and clothing industry by a Swiss organisation; benchmarking certain sectors of the textile and apparel industry, so on and so forth.

Worse, while certain companies are on record to have received payment, with little evidence of rendering the assigned services. Among other such instances, mention has been made of hiring of international consultants for preparation of trade policies, the end document, like other studies, was simply left to gather dust in a storeroom. As for now, though heartening it may be to learn, the cause of the predicament had been identified in 1999, nothing tangible could be done to bring the malaise to its logical conclusion.

It was then discovered that Finance Ministry was not providing EDS collected by the federal government to EDF, except for a small portion of it, through annual budgetary grant. Even then, much later, in Trade Policy 2002-03, the Cabinet had accorded approval to the proposal to amend the EDF Act, 1999, thus making it mandatory for all EDS receipts to be automatically transferred to the EDF, but as ill-luck would have it, the matter was left to be finalised in consultation with the Auditor General and Finance Division.

Small wonder, the matter seems to be resting there. Nevertheless, the process was followed and the EDF Act, 1999 was amended by the Parliament through EDF (Amendment) Act, 2005, enabling transfer of whole EDS receipts collected in the preceding year to EDF in the following year. However, the position still remains unchanged. For the Finance Division has not provided the entire receipts of EDS collected in 2005-06, 2006-07 and 2007-08 in the following years 2006-07, 2007-08 and 2008-09 respectively even after amendment in the Act.


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## Neo

*Obama administration seeks more aid for Pakistan​*Anwar Iqbal
Saturday, 28 Feb, 2009


Two top US defence officials  Secretary of Defence Robert Gates and Chairman Joint Chiefs of Staff Admiral Mike Mullen  held extensive talks with Army Chief Gen. Ashfaq Kayani in Washington.AP​
WASHINGTON: The Obama administrations budget for 2010 includes an unspecified amount of military and civilian aid for Pakistan.

Although Pakistan has asked for drone aircraft, helicopters and other equipment, the US administration has not yet said what equipment it was willing to provide.

Two top US defence officials  Secretary of Defence Robert Gates and Chairman Joint Chiefs of Staff Admiral Mike Mullen  held extensive talks with Army Chief Gen. Ashfaq Kayani in Washington earlier this week.

Mr Gates also met a Pakistani delegation, which included the ISI chief and was headed by the foreign minister.

Well, I think one of the themes that, certainly, in my meetings with Pakistanis have been, how can we work more closely together? How can we help them be effective? How can we help ourselves by helping them? said Secretary Gates explaining what Pakistan expected from the United States.

Clearly, more intelligence is an important aspect of that. In terms of the drones specifically, that hasn't come up in my talks, but figuring out ways to help them have better intelligence to guide their operations, I think, is a positive thing and we ought to do as much as we can, he added.

Admiral Mullen also stressed the need to help Pakistan, saying: It's very important that we help resource them and develop this comprehensive strategy with Pakistan over a number of years. And I'm delighted to see that kind of support in the 10 budget.

Explaining what he believes Pakistan needs to fight terrorists, Admiral Mullen said: The kind of capabilities not just drones but other military capabilities support more precision, faster reaction, better operations, which is one of the things we focus on to try to assist the Pakistani military for a long time certainly, newer new capabilities, as we learn lessons.

Pakistan, he said, has asked for equipment that would allow enhancing its defence capabilities and I think we need to be mindful of that in trying to help them get better.

Asked what kind of capabilities he was looking at, Admiral Mullen said: In this case, it's the full spectrum of intelligence, surveillance, reconnaissance, but it's what we've learned and used and how can we best, in the future, assist them in their operations with those kinds of capabilities.

The fiscal year 2010 budget, sought by the Obama Administration, refocuses US resources to increase economic and military assistance for both Pakistan and Afghanistan.

According to the State Department, the budgetary request made to Congress in the new fiscal year, beginning October 1, 2009, increases non-military aid to Afghanistan and Pakistan to revitalise economic development and confront the resurgence of the Taliban.

The budget increases non-military assistance to both countries, providing additional funding for governance, reconstruction, counter-narcotics, and other development activities that will help counter extremists.

The budget expands the number of civilian personnel in Afghanistan and Pakistan in an effort to stabilise these countries, build government capacity, and successfully manage expanded assistance programs.

The administrations request provides $533.7 billion for the Department of Defence base budget in 2010, a four-per cent increase over 2009, which includes appropriating resources on achieving the US objectives in Afghanistan.

Pakistan has been recognised as a keystone for regional stability. In addition, we must leverage allied support to help struggling states such as Pakistan, which are the keystone for regional stability, a Defence Department budget request overview said.


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## Neo

*Agreement to enhance SME performance ​* 
Sunday, March 01, 2009

ISLAMABAD: Human Capital Management Institute (HCMI) on Saturday signed a partnership agreement with International Finance Corporation (IFC) to enhance the performance and competitiveness of small and medium enterprises (SME) through IFC-initiated corporate value chain (CVC) deals under the Business Edge Programme.

The IFC, a member of the World Bank Group, promotes sustainable private sector investment in developing countries, which helps reduce poverty and improve peoples lives. Business Edge is a suit of specialised training products and services developed by the IFC which will be combined flexibly to create a management training programme.

The Business Edge training programme will focus on those aspects of management which concerns the private sector. The IFC will use the expertise of HCMI in delivering innovative training programmes to enhance management skills of the SME sector in Pakistan.


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## Neo

*Experts blame policy flaws for persistent high inflation ​* 
Sunday, March 01, 2009

LAHORE: The government seems helpless in controlling inflation which remains perched at a high level compared to other countries of the region where inflation has fallen sharply.

Though Adviser to Prime Minister on Finance Shaukat Tarin claimed two days ago that inflation was going down, official statistics showed that inflation this week in fact increased to 23.4 per cent compared to the corresponding period of last year.

Monthly inflation will be above 20 per cent, but it has eased from the peak of 25 per cent in October 2008. The decline may look good to economic managers, but is not in line with other countries of the region which faced similar high inflation in 2008.

Inflation in Sri Lanka has fallen from 27.5 per cent in August 2008 to 7.6 per cent in February 2009. Indias inflation rate has dropped from 12.91 per cent in August 2008 to 3.36 per cent in February 2009. Inflation in Bangladesh is down to manageable 5 per cent from the peak of over 12 per cent in November 2008. Chinas inflation rate has declined from 9 per cent in February 2008 to only 1 per cent in February this year.

Economic experts point out that there are flaws in economic management in Pakistan, which deny consumers the benefit of enjoying low prices of goods and commodities. This tendency, pursued both by the state and the private sector, stems from weak governance, absence of governments writ, inability of state to control corruption and generate adequate revenues.

Senior economist Naveed Anwer Khan, FCA, said the finance adviser had openly admitted that the federal government planned to earn Rs100 billion this fiscal year by capping prices of petroleum products at present levels. This indirect tax on consumers is one reason for high inflation.

Chartered Accountant Yunus Kamran said though petroleum prices were still very high, the government did reduce them by 25-30 per cent during the past six months. However, he added transport fares had remained almost the same as at peak rates of petrol and diesel, which he termed an administrative failure. Fares of public transport and goods carriers should have come down by 25-30 per cent, he suggested.

Faisal Qamar, ACA, said edible oil prices should have gone down by at least 30 per cent even after accounting for rupee depreciation. But the federal government after prolonged negotiations could achieve a reduction of only four per cent in edible oil rates.

He said cement prices had increased despite a decline in demand while car rates were extraordinarily high due to government protection. These factors were keeping inflation high and the government lacked the writ and mechanism to force producers to market their products at reasonable prices, he added.

Citing an example of China, Certified Public Accountant Asif Ali Shahid said despite expanding at an annual rate of nearly 9 per cent, Chinas economy had exhibited a marked cyclical pattern. Periods of rapid growth accompanied by accelerating inflation were followed by contractions during which both growth and inflation fell.

In Chinese policies, he said, things worth watching were economic decentralisation, governments commitment to the state sector, its credit plan and credit control.


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## Neo

*Gwadar Port faces sea of problems ​* 
Sunday, March 01, 2009
By Hina Mahgul Rind

KARACHI: Since coming into operation in December 2008, it has been learnt that the Gwadar Port has been plagued with a host of problems such as transportation of goods into the area.

Transportation became a problem in particular after the arrival of ships carrying urea. There is no shortage of transport, but a few contractors have monopoly in the area, which in turn is causing a price hike, among other things, said an official.

In addition to the price hike, the official explained that in Gwadar trucks carrying cargo have no stand to park in, which has resulted in heavy traffic congestion in the city.

Because there is no truck stand anywhere, heavy vehicles are parked on the roads, leading to congested traffic, he said. The safety and security of pedestrians as well as of local traffic is compromised.

It has been learnt that a truck stand is being planned by the Gwadar Development Authority, but so far progress has been very slow. 

As well as being without a truck stand, the port lacks direct access to the Coastal Highway. The East Bay Expressway, a project of the Gwadar Port Authority, aims to remedy the situation, but even here there has been little progress. If successful, the East Bay Expressway will aid a smooth flow of vehicles not only in the port area, but also further inside the city.

Currently, the Coastal Highway itself is burdened with additional problems. While many of the heavy vehicles approaching Gwadar are without cargo, a large number of vehicles are overloaded. Officials say that overloading is not a problem with urea, but it is with wheat, which has 50 per cent more weight in the same volume as urea.

Allegedly, the Coastal Highway was built in a hurry with builders compromising on quality. Those involved in the business warn that if the trend of overloading continues, the highway may not be able to sustain the traffic for much longer.


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## Neo

*Salman says growth will be less than 2pc ​* 
Sunday, March 01, 2009

LAHORE: The gross domestic product would be less than 2 per cent this year, which will be the lowest in the past one decade, as growth has been strangulated by high interest rates and a tight monetary policy, said former finance minister Salman Shah.

He was speaking during discussions on the economic decline and remedial measures, organised by the Lahore Economic Journalists Association.

Elaborating his point, he said the Sensitive Price Index (SPI) had been on constant decline since October 2008 and there was no justification to keep the central bank policy rate at 15 per cent, which had stifled growth. Shah claimed that based on the current inflationary scenario, the State Banks policy rate should be 9-9.5 per cent.

After accounting for 3 to 5 per cent banking margin, he said, the industry would get loans at 13-14 per cent. Even this interest rate is high but the productive sector will be able to grow. He said current high interest rates had marginalised the manufacturing sector. No industry could grow if it gets credit at 20 per cent.

He said more than 54 per cent of the countrys population was under the age of 25. Every year about 4 million of them join the adult workforce. Pakistan needs to grow at 9-10 per cent to absorb about 4 million youth which join the workforce every year.

The former finance minister said economy was moving comfortably till the middle of 2007-08 fiscal year as economic managers of the previous regime knew that high oil prices would put pressure on foreign exchange reserves.

This government handed over a roadmap to the government elected last year. He said the plan was to offload small percentage of public sector companies like National Bank, Kot Addu Power Company, etc on the London Stock Exchange in April 2009.

At that time, he said, the stock market was at its peak at 15,800 points and share prices of these companies were very high. The government would have got $4-5 billion from these transactions.

However, he regretted the new government scrapped the programme of offloading these shares in the global market without considering pros and cons of its decision. He said high oil prices consumed most of the foreign exchange reserves and the government had to go with a begging bowl to the International Monetary Fund.

He said the rot had not stopped even after the IMF deal because growth had stagnated and revenue sources were drying up due to regular closure of industries. He said the option to offload stocks was not feasible as the stock market had lost $45 billion in the last around one year. He said the rupee which had remained stable from 2002 to June 2008 had lost 29 per cent of value, scaring away investors. The revival journey would now be hard, long and painful.


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## Neo

*Interest rate may be cut to 12pc ​* 
*BoI chairman says govt preparing industrial package​*
Sunday, March 01, 2009

KARACHI: Board of Investment Chairman Saleem H Mandviwalla has said interest rate may be cut to 12 per cent from 15 per cent after the government reviews the benchmark interest rate in March this year.

Besides that, the government is bringing an industrial package, including new laws for the gems and stone sector, he said.

He was speaking to industrialists at a seminar on Public-Private Partnership, organised by the Karachi Chamber of Commerce and Industry (KCCI) and its Infrastructure Management Unit (IMU) on Saturday.

He said the BoI was doing its best to include more and more private sector people in the public sector in order to make progress through public-private partnership.

He said the government had also made agreements for purchasing hybrid seed from China to improve per acre yield of crops and produce more food. Hybrid seed will increase our per acre yield up to three times, he added.

BoI Sindh Chairman and businessman Zubair Motiwala said the public-private partnership mechanism had always been productive all over the world whether they were developed or underdeveloped countries. He said the BoI would take all measures to exploit all possible areas of development including fish farming, corporate farming and agriculture in general.

A businessman invited the attention of BoI officials to smuggling of stationary and lubricant items from the Chinese border, to which Zubair Motiwala replied that the government should do something to control smuggling. There are a variety of goods being imported into Pakistan under the Afghan Transit Trade Agreement (ATTA), which never went to Afghanistan and damaged local industries.

Pakistan has the potential to go forward despite these critical problems. Invest in Pakistan and believe in Pakistan. 

We have to change our mindset because there is always a window of opportunity in times of crisis and we should try to observe these windows in the present crisis, he advised.

Heartfile President Dr Sania Nishtar, speaking on motivating private investment in social sector, issues and apprehensions, said Pakistan had not been affected so much by the present global crisis, yet the country was hurt by local problems.

However, in coming months and years Pakistan would face some tough challenges posed by the present global financial crisis, she warned.


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## Neo

*Downward revision in macro-economic targets: Forex reserves need to be beefed up​*
ISLAMABAD: Downward revisions in macro-economic targets would require the government to further increase the foreign exchange reserves agreed with International Monetary Fund. 

Reduction in discount rate by 200 basis points would be essential to provide relief to the ailing industry and trade and State Bank of Pakistan would be reviewing the situation next month. 

A senior official at Ministry of Finance who attended recent Pakistan-IMF talks at Dubai informed Daily Times that both sides have agreed to revise discount rate in line with the decline in inflation. Status quo or reduction by less than 200 basis points would be counter productive as the economy needs reduction at least by 200 basis points, he added. 

"Reduction in discount rate by 100 basis point or 150 basis points would not have positive impact on economy," the official explained. 

According to the finance ministry analysis, the interest rate could be brought down to a desired level if the core inflation comes down to 15 percent. 

Private sector strongly feels that core inflation is not coming down as the government is not reducing POL prices on the one hand and is increasing gas and power tariff on the other giving no benefit of decrease in oil prices to the consumers. Aggregate demand in the economy has came down to a level where monetary stance should be changed and discount rate be brought down to help revive the manufacturing sector. 

According to the official, despite downward revisions in Gross Domestic Product (GDP) growth target from 3.5 percent to 2.5 percent, the fiscal deficit target has remained remain unchanged at 4.3%of the GDP for 2008-09. 

Current account deficit (CAD) target has been lowered from 6.5 percent of GDP to 5.6 percent of GDP for the ongoing fiscal year 2008-09. But this would require the government to enhance its foreign exchange reserves further as compared with earlier target agreed with the IMF authorities for the end June 2009, the official said. 

Ahmed Waqar, Chairman Federal Board of Revenue (FBR), during a brief chat with Daily Times at Planning Commission told that tax collection target has been revised from Rs 1.360 trillion to Rs 1.3 trillion for the ongoing fiscal year 2008-09. 

He was of the view that without initiating any study it would be difficult for the FBR to access the revenue loss due to the current political situation. However, he said that FBR would be striving hard to achieve the target assigned by the government.


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## Neo

*$1.833 million withdrawn from share market by foreign investors ​* 
KARACHI (March 01 2009): The offshore investors withdrew $1.833 million from the country's equity market during the week ended on February 27, 2009. "The quantum of outflow of foreign portfolio investment from the country's equity market has been reduced as compared with previous days, mainly due to available attractive levels", analysts said.

Interestingly, two trading sessions of the week witnessed a net inflow of foreign investment, despite heavy selling pressure by local investors. Although an outflow of this mode of investment was witnessed in the remaining days, the quantum of outflow was low as compared to the previous levels.

According to National Clearing Company of Pakistan (NCCPL) data the cumulative outflow of this mode of investment was recorded at $48.630 million in February 2009, while this figure increased to $563.744 million in the period from January 1, 2008 to date.

The week opened on a positive note as a fresh inflow of $966,984 was recorded on Monday. However, the offshore investors withdrew $506,518 on Tuesday. On Wednesday, once again, a fresh inflow of $86,584 was witnessed despite heavy selling pressure at the share market due to political uncertainty in the country. However, a negative trend prevailed during the remaining two days as the foreign investors withdrew $1,704,251 on Thursday and $675,800 on Friday.


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## Neo

*SBP tight monetary policy holding back GDP growth: Salman ​* 
LAHORE (March 01 2009): Former finance minister, Dr Salman Shah, has said that this year Pakistan's GDP growth is expected to be less than 2 percent, lowest in 10 years, as irrationally high interest rates and tight monetary policy of the State Bank of Pakistan was holding back the growth.

He expressed these views at a discussion on economic decline and remedial measures, organised by Lahore Economic Journalists Association (Leja) here on Saturday. Later oath taking ceremony of newly elected Leja members was also held on this occasion. Salman said that the sensitive price index (SPI) had been on constant decline since October last year and hence there was no justification for the State Bank to keep discount rate at 15 percent, "which is slowing the economic growth".

He observed that in the backdrop of current inflation scenario, the Kibor should not be more than 2 percent, and the discount rate of the State Bank of Pakistan should be between 9 percent and 9.5 percent. "After accounting for three to five percent banking margins, the industry should get credit at 13 to 14 percent mark-up rate. Even this interest rate is high, but the productive sector would be able to grow. Unfortunately, the current interest rate has marginalised the manufacturing sector and no industry could grow when credit is available at 20 percent" he added.

He said that Pakistan's economy had been moving comfortably up to the middle of 2007-08 fiscal year, and the economic managers of previous regime knew that high oil prices would put pressure on foreign exchange reserves. "Hence, in order to meet the challenge, we had handed over a roadmap to the new government last year, in which it was suggested to offload small percentage of public sector companies, like National Bank, Kapco, etc in the London Stock Exchange in April 2009. At that time the stock market was at its peak of 15,800 points and the share prices of these companies were very high. Through such a step, the government would have obtained between $4 billion and $5 billion from these transactions," he said.

However, he regretted that the new government scrapped the idea of offloading these shares in the global market, without giving due consideration, or making any backup of generating cash flow. "Under these circumstances, oil price hike tapped a major chunk of foreign exchange reserves, which forced the government to know the doors of the International Monetary Fund (IMF) to boost its foreign exchange reserves, which had come to alarming level," he said.

He pointed out that even the IMF financial assistance could not put brakes on the deterioration of Pakistan's economy, as the present government's ill-conceived policies had stagnated the growth and consequently closure of industries was drying up government revenue.

The former finance minister was of the view that the option of offloading stocks was no longer feasible, as the stock market has lost $45 billion under this government. "Also, the rupee, that remained stable from 2002 to June 2008, had lost 29 percent of it value. These factors painted a bad picture for investors and hence lost confidence in the Pakistan's markets," he added.

In his opinion, journey of recovery from the prevailing situation was very hard, painful and long. He said he saw revival of industries not possible without promotion of domestic consumerism. "Exports are, of course, important and their success depends on competitiveness, which could only be achieved if the local industries attained economies of scale through promotion of domestic consumerism," he added.

According to him, more that 54 percent of Pakistan's population is under the age of 25. Every year about 4 million of them join workforce and Pakistan needs to grow at 9 to 10 percent annually in order to create jobs for them.

Shah stressed for uniformity and consistent economic policy and should reflect consensus of all political parties on the pattern of foreign policy where all parties, including the opposition, follow the same line. He said that the engineering, electronics and construction industries "are the sectors which can generate the required employment and economic activities".


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## Neo

*Task force on private sector development: six groups set up for recommendation to attract investment ​* 
ISLAMABAD (March 01 2009): Task Force on Private Sector Development constituted by deputy chairman, Planning Commission on Saturday formed six groups to prepare recommendations for attracting investment in different sectors. These recommendations will become benchmark for the next annual plan and budget 2009-10.

Sources revealed to the Business Recorder that these groups are expected to submit initial recommendations by the end of March. The major task of these six groups is to prepare recommendations for the improvement of Small firms, large firms, trade, technology, human resource development and macro economic indicators. The groups were formed on the conclusion of two-day meeting of the Task Force on Saturday in Planning Commission.

Shahid Javed Burki, former Finance Minister and Chairman Task Force headed the working sessions. The representatives of different economic ministries and private sector stakeholders gave presentations on the economic problems being faced by the country. The Task Force consists of a number of leading businessmen, including president of the Federation of the Chamber of Commerce and Industries, renowned economists, bankers, and the experts on private sector development.

Federal secretaries of key economic Ministries are ex-officio members. The preliminary report of the Task Force will be circulated for soliciting comments from the general public and for generating debate. The Report will be finalised after incorporating the concerns of the public and experts. The recommendations of the Task Force will form the basis of policy making, particularly the Annual Plan 2009-10 and the Medium-Term Economic Development Plan 2010-15.


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## Neo

*Billions lost as a result of power shortages: Zardari ​*Saturday, 28 Feb, 2009

ISLAMABAD, Feb 28: President Asif Ali Zardari on Saturday said the country had suffered losses worth billions of rupees due to a drop in industrial production as a result of power shortages.

While holding a meeting with the Task Force on Private Sector Development (TFPSD, the president said had the country not reversed the 1990s energy policy of the Pakistan Peoples Party (PPP), the situation now would have been different and the country would have not only avoided economic losses but would have the potential to even export power.

The Task Force on Private Sector Development has been constituted by the Deputy Chairman, Planning Commission, Sardar Aseff Ahmad Ali and consists of a number of leading businessmen of the country, president of the federation of the chamber of commerce and industries, renowned economists, bankers, and the experts on private sector development. Federal secretaries of finance, agriculture, industries and production, commerce are ex-officio members.

Zardari told officials of the task force that half of the countrys population was below 17 years of age and that the manpower could be turned into a vehicle of growth by engaging them in fruitful economic development activities through appropriate policy framework.

'Unemployed youth with high expectations could also be potentially destabilising,' he warned.

He said the government was following a strategy for the development of private sector in the country that was directed to help the government define its strategic thrust and to address the constraints which restricted growth and competitiveness of the private sector. The policy, he said, was aimed at utilising untapped potential of the private sector.

The president said that in future the role of the public sector would be that of a catalyst for creating and maintaining a favorable business climate and developing skilled labour force. The private sector would have to assume greater importance in development in the current global environment. 

A former finance minister and vice president of the World Bank, Shahid Javed Burki, who is the chairman of the task force, told the president the task force was pursuing an action plan for generating business opportunities for the private sector through enhancing its accessibility to undertake public sector services like water, energy, transport and communications. It would also be working towards trade promotion, industrial development, agro-based industry and increase in access to finances and to new financial instruments.


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## Neo

*Pakistan to get $840m 2nd IMF tranche in March: Tarin ​* 
ISLAMABAD (March 02, 2009): Advisor to Prime Minister on Finance and Economic Affairs Shaukat Tarin said on Monday that the International Monetary Fund (IMF) review meeting in Dubai has appreciated Pakistans home grown economic stabilization policies and the country would get second tranche of $840 million by the end of the current month.

He stated this at a news conference here at the Media Centre of the Press Information Department, which was also attended by Secretary Finance Dr.Waqar Masood Khan and Principal Information Officer (PIO) Shabbir Anwar.

Shaukat Tarin said that IMF under Standby Arrangements has approved $7.6 billion for Pakistan out of which the first tranche of $3.1 billion was received in November, 2008 while after the successful quarterly review meetings held in Dubai recently Pakistan would now get second tranche of $840 million.

He said that Pakistan would negotiate and lobby for enhancing IMF funding quota from 5 times to 8 in the IMF Executive board meeting to be held in April this year.

Shaukat Tarin while linking economic stability to political stability called upon all the political forces to play their role in the achievement of the objective for the socio-economic prosperity of the country.

He said when there would be political stability in the country huge investments in different sectors would come, generate economic activities and create job opportunities.

The Advisor to the Prime Minister on Finance however said that Pakistans political situation did not come under the discussion of IMF review meeting.

Shaukat Tarin said that Pakistan plans to attract investments of Pakistanis living abroad by giving them incentives in the country for their investments.

He added that due to governments economic stabilization programme the macro economic indicators are improving and investors are bringing back their investments and capital in Pakistan.

Workers remittances are also increasing at the rate of 18 percent, he remarked.

Terming inflation the biggest enemy for the people, especially the poor he said efforts are being made to bring it down to 10 percent by end of the current fiscal year.


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## Neo

*Government planning to reduce mark-up in March: BoI​* 
KARACHI (March 01 2009): The Chairman of the Board of Investment (BOI), Saleem H Mandviwala, has said that the government is planning to reduce mark-up rates in March 2009. Speaking at a seminar on 'Public-Private Partnership' (PPP), organised jointly by Karachi Chamber of Commerce and Industry (KCCI) and the government of Pakistan, he said that the future interest rates were likely to be reduced by 12 percent by June 2009.

He said that the government has awarded a contract of garbage and solid waste management to a Chinese company. He said that on success of the waste management project, similar projects would be initiated in other cities of the country. The BOI chairman said that the government has also planned for technology transfer for development in agriculture sector from China, especially the seed development technology.

Referring to public-private partnership (PPP), he said that it was focussing more on infrastructure development due to scarcity of funds. Advisor to Chief Minister for provincial investment, Zubair Motiwala said that the government welcomed private sector to participate with pubic sector in different projects.

He said window of opportunities was available and only hurdle is negative attitude of bureaucrats. Member (Implementation and Monitoring) executive director, IMU, Planning Commission, Muhammad Zubair said that poverty challenges can only be met through sustainable partnerships between the public and private sectors. This would create a win-win situation for all, he added. He said that the government was encouraging PPP in major social sectors as well as on infrastructure.


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## Neo

*Tarin confident about interest rate cut ​* 
*IMF condition for reducing discount rate if core inflation falls will be met​*
Tuesday, March 03, 2009

ISLAMABAD: The International Monetary Fund has agreed to allow reduction in the State Bank of Pakistans discount rate that would lead to overall downward revision of interest rates by the banking and finance sector.

Top economic manager of the country on Monday said that the International Monetary Fund has agreed on discount rate cut in the next quarters monetary policy to be unveiled in April provided core inflation continues to decline.

There still exists a four per cent gap between the discount rate, which stands at 15 percent, and core inflation which hovers at 19 per cent. However, if the decline in core inflation on monthly basis continues, then in April the government would reduce the discount rate accordingly, said Adviser to Prime Minister on Finance Shaukat Tarin at a press briefing after holding talks with the IMF in Dubai.

The Fund always pursues a policy to raise the discount rate under its programme, but Pakistan has managed to convince the IMF for a cut in the rate keeping in view the reduction in core inflation on monthly basis.

In the month of June, he said, inflation would be brought to 10 per cent on month-on-month basis. The average inflation target has been revised to 20 per cent from 23 per cent, which the government would achieve by the end of current fiscal year in June.

Tarin said, now we are looking at reducing interest rates which will help generate economic activities in the country.

When asked about the impact of ongoing war against terrorism, he said that according to unconfirmed estimates annual cost of war hovers between $7 billion and $8 billion. However, I have no confirmed estimates about the impact of the war on Pakistans economy.

About the economic target revised in Dubai talks, the Adviser said that tax revenue target has been fixed at Rs1,300 billion, which was earlier set at Rs1,360 billion. However, he said that Rs1,300 billion target, is still difficult to achieve keeping in view a massive slowdown in economic growth and little time to widen the tax base.

In the last fiscal year, the tax to GDP target was 9.6 per cent which was fixed with the IMF at 10.2 per cent under $7.6 billion loan programme, but, now both the IMF and Pakistan has revised the tax to GDP ratio to 10 per cent for the current fiscal. The tax to GDP ratio for the next fiscal has been agreed at 10.6 per cent.

He said that GDP target, which was 5.6 per cent in the last fiscal, was fixed under the IMF programme at 3.4 per cent and now under the economic scenario of the world the growth target has been fixed at 2.5 per cent for the current fiscal.

To a question, he said that inflation target for next year has been agreed at single digit of 6 per cent. This is to ensure the low inflationary environment which will be benefiting the country on long-term basis.

The current account deficit target has now been revised to below 6 percent from 6.5 percent and for next fiscal, it has been agreed at 4 percent.

However, the country would attain the fiscal deficit target of 4.2 percent, as the government would collect ample non-tax revenue mainly through petroleum development levy on POL products. The fiscal deficit target for next year has been fixed at 3.3 percent.

To a question he said that heavy amount of $ 1.1 is due from USA against the expenditures which Pakistan has borne to carryout war against militants during May, 2008 to January 2009.

To a question, Tarin disclosed that Pakistan is all set to get second tranche of $ 840 million from International Monetary Fund (IMF) in current month under 23 month $ 7.6 billion bailout package that will furtherer strengthen the foreign reserves.

We were expecting the $750 million, but now would receive $840 million because of the upward fluctuations in exchange rates against the special drawing rights (SDR).

IMF under Standby Arrangements had accorded approval to US $ 7.6 billion for out of which Pakistan received first tranche of $3.1 billion in November, last year. 

Pakistan would start negotiating and lobbying seeking enhancement of IMF funding quota from five times to eight in the IMF Executive board meeting to be held in April this year. In case the IMF increases Pakistans quota to 8 times then it would be having additional 4.5 billion dollars in foreign reserves under the Stand By Arrangement.

He argued that Ukraine and Iceland had been given the 8 times quota funding so Pakistan would follow the suit to this effect. 

To a question about the impact on Pakistans economy in the wake ongoing political turmoil, Tarin said that economic and political stability goes hand in hand. However, the economic indicators are right on way to improvement. When asked if IMF has expressed its concern on political mess in Pakistan, he said that development in Punjab political scenario took place when all the issues were finalized with IMF. However, he said that IMF has no political agenda rather it has economic agenda.

The government is planning to allure investments of Pakistanis living abroad by giving them incentives in the country for their investments. About massive increase in sugar prices Tarin said since the sugarcane production has decreased. 

Last year sugar growers could not get reasonable prices the bumper crop, which is why the price of the said commodity has increased to Rs 48 to Rs 50 per kg. He said that the government is going to import the sugar to meet the deficit. However, the government is to ensure the sale of sugar at utility stores at the cost of Rs 38 per kg.


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## Neo

*Govt transfers Rs250.58bn from FDP to provinces ​* 
Tuesday, March 03, 2009

ISLAMABAD: The federal government transferred Rs250.580 billion from the federal divisible pool (FDP) to the four federating units in the first half (July-Dec) of 2008-09 compared to Rs210.073 billion in the same period of previous fiscal year, indicating an increase of Rs40 billion. 

According to the provincial governments fiscal operation for July-Dec 2008-09 released by the finance ministry on Monday, total revenues including provincial share in the federal revenue, provincial taxes, non-tax revenues and federal loans and grants were at Rs326.448 billion against total expenditures of Rs294.367 billion. 

The provinces obtained net loans worth Rs1.792 billion in the current fiscal year. Current grants from the federal government to provinces went up to Rs19.184 billion and development grants Rs8.181 billion. Interest payments to the federal government consumed Rs8.500 billion in the first half of the current fiscal year. Development expenditures in all four provinces were Rs49.401 billion. The biggest province Punjabs total revenue was Rs159.769 billion and the provincial share in the federal revenue stood at Rs123.962 billion. 

The share of provincial taxes was Rs10.197 billion while non-tax revenue brought Rs19.656 billion into the provincial kitty. Federal loans and grants for Punjab stood at Rs5.954 billion including loans (net) Rs3.063 billion, current grants Rs2.156 billion and development grants Rs735 million. 

Total expenditures of Punjab stood at Rs148.925 billion out of which current expenditures ate up Rs120.249 billion. Out of current expenditures, interest payments to the federal government consumed Rs4.975 billion; other current expenditures Rs115.274 billion while development expenditures Rs28.676 billion. Sindhs total revenue was Rs89.816 billion against expenditures of Rs94.033 billion in the first half of the current fiscal year 2008-09. The provincial share in the federal revenue was Rs76.722 billion in the first six months of the current fiscal year. 

The provincial taxes collection was at Rs10.421 billion; non-tax revenue Rs1.769 billion and federal loans and grants Rs1.004 billion. Interestingly, the loans (net) in shape of federal loans remained negative at Rs3.768 billion, while current grants stood at Rs4.063 billion and development grants Rs709 million. 

Total expenditures of Sindh stood at Rs94.033 billion out of which current expenditures were Rs83.079 billion. The interest payments to the federal government consumed Rs1.787 billion, other current expenditure Rs81.293 billion while development expenditures of Rs10.954 billion. Total revenue of NWFP stood at Rs44.035 billion against expenditures of Rs29.090 billion in the first half of the current fiscal year. The provincial share in the federal revenue stands at Rs31.364 billion. 

The provincial taxes fetched Rs1.069 billion, non-tax revenue Rs2.309 billion and federal loans and grants Rs9.239 billion. Out of total expenditures of Rs29.090 billion, the current expenditures were at Rs23.455 billion. 

The interest payments to the federal government consumed Rs1.338 billion and other current expenditures Rs22.117 billion. The development expenditures in NWFP stood at Rs5.635 billion. Balochistans total revenue was Rs32.728 billion against expenditures of Rs22.319 billion in July-Dec period of 2008-09. The provincial share in federal revenue stands at Rs18.532 billion. The provincial taxes fetched Rs280 million and non-tax revenue of Rs1.010 billion. 

The federal loans and grants to Balochistan scaled up to Rs12.906 billion. Out of total expenditures of Rs22.319 billion, the current expenditures were Rs18.183 billion; interest payment to the federal government Rs401 million and other current expenditures Rs17.782 billion. The development expenditures of the PSDP stand at Rs4.136 billion.


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## Neo

*US Pak assistance bill may include one-time $5bn ​* 
Tuesday, March 03, 2009

WASHINGTON: US lawmakers will soon introduce a measure on expanding socio-economic assistance for Pakistan to $1.5 billion annually that is likely to include an additional one-time $5 billion in support of the democratic governments efforts to pull the key South Asian country out of its economic troubles.

According to a prominent American newspaper on Monday the economic support initiative is part of the policy shift Washington is in the process of making in its relationship with the anti-terrorism ally in the region, considered critical to the US security interests.

The assistance will be geared towards enabling the elected government to combat violent extremism more comprehensively, particularly in its tribal border areas along Afghanistan, where thousands of US troops are batting a spreading Taliban insurgency.

Two influential senators are expected to file legislation in the coming days that would triple non-military US aid to Pakistan to $1.5 billion a year and include $5 billion to stave off an imminent economic crisis, The Christian Science Monitor reported.

The report came days after the Obama Administration held review consultations with Pakistani and Afghan officials on evolving future the US policy toward the militancy-hit border region.

Citing some of the pressing challenges facing the nuclear-armed country including its economic woes, the report said the shift is part of an increasing awareness of Pakistans precarious position - and that more than military operations will be needed to build a stable state capable of beating back extremism in the long term. Senator John Kerry, chairman of the influential Foreign Relations Committee and Ranking Republican member Senator Richard Lugar are lead supporters of the expected new legislation on Pakistan, to be known as Kerry-Lugar Act.

Kerry made a pitch for the much-needed additional $ 5 billion aid for Pakistan in the light of a new Atlantic Council report on US relations with Pakistan last week, cautioning that the time was running out.

The legislative measure mirrors a plan that Vice President Joseph Biden proposed last year when he was still a senator. Meanwhile, the Pakistani diplomats, led by Ambassador Husain Haqqani, have been meeting with leaders on the Capital Hill to underscore the importance of economic support for Pakistan.

Experts say the shift is admission that the former Bush administrations over reliance on security aspects of the anti-terror fight did not work. Last week, the Pakistani Foreign Minister Shah Mehmood Qureshi, also highlighted the importance of a holistic approach to addressing the problem of extremism in the long-term perspective.

The Monitor also reported that the Pentagon is also on board with regard to latest efforts to aid the democratically elected Pakistani government as part of a comprehensive plan to stabilize the restive Pak-Afghan border region.

In this respect, the report refers to Pentagon officials who last week met with Pakistan army chief Gen Ashfaq Parvez Kayani. The Pentagon officials support, a more comprehensive relationship, with Pakistan, that also includes smarter and more effective military assistance, the report added.

Secretary of State Hillary Clinton also sounded a similar note when she met with top Pakistani and Afghan diplomats last week. Defense Secretary Robert Gates underlined the need for wide-ranging Pakistan support in an interview Sunday. I will just say that I think that the key here is our being able to cooperate with and enable the Pakistanis to be able to deal with this problem on their own sovereign territory. 

I believe, based on my talks with the Pakistanis here in Washington this week, this past week, that, they have  they clearly now understand that whats going on up there in that border area is as big a risk to the stability of Pakistan as it is a problem for us in Afghanistan.


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## Neo

*Sindh govt to introduce fish in European market ​* 
Tuesday, March 03, 2009

KHAIRPUR: The Sindh government has determined to introduce Sindh fish in the European market. Provincial Minster for Fisheries Zahid Hussain Burgri said in the Khairpur circuit house the government has allocated Rs560 million for purchasing modern boats for Sindh fishermen with a view to promoting the fisheries department.

At the circuit house speaking at a public meeting he said the government has decided to focus on the fish market in Europe and other countries. He said there are 1,209 ponds of sweat water. The government has determined to provide 180 boats to the people of Bubak and construct 100 houses for them as they earn money and they promote the fisheries department.

He said at the zero point of Badin there was also a scheme of residential houses. He said positions of trainees of the Shaheed Benazir Bhutto Youth Programme will be regularized in different departments and in this regard he will move a motion in the Sindh assembly.

He said the government had restored services of a number of employees who had been sacked by the PML-N government. He said 350 vacant posts in the fisheries department will be filled. He said that PPP-led government inherited crises but it would resolve them. He said trainees who were getting training at Mando Dero, now will get training in Khairpur and he announced to provide relief to them.


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## Neo

*Consolidated budget deficit crosses Rs 250 billion in 1HFY09​*
ISLAMABAD: The consolidated budget deficit of the federal and four provincial governments has reached Rs 250.5 billion during first half period of current fiscal year 2008-09.

Total revenues of the government stood at Rs 834.47 billion and the total expenditures were Rs 1.085 trillion during first half. The defence expenditures were Rs 147.78 billion during the first half.

The federal government has transferred Rs 250.58 billion to the four federating units Punjab, Sindh, NWFP and Balochistan as provincial share in federal revenues under interim National Finance Commission (NFC) Award, during first half of current fiscal year.

According to a report of Finance Ministry released on Monday, out of the total revenues during the first half, federal and provincial tax collection stood at Rs 577.99 billion. In non-tax revenues Rs 69.128 billion were collected from petroleum and gas sector that included Rs 28.839 billion as petroleum development surcharge and Rs 8.510 billion from gas development surcharge, discount rate on crude oil Rs 5.967 billion and royalty on oil and gas amounted to Rs 25.812 billion. Total non-tax revenues stood at Rs 256.48 billion during the July-December period of current fiscal year.

According to the details of the expenditures of the federal government during July-December period of current fiscal year, the government has spent a total sum of Rs 1.085 trillion that include, Rs 916.7 billion were the non-development expenditures. The details of the current expenditures (Non-Development) are: Rs 299.855 billion as interest on local and foreign loans, Rs 265.934 billion were spent on servicing of domestic debt and Rs 33.921 billion were spent on servicing of foreign debt. Total defence expenditures were Rs 147.7 billion, the development expenditure and net lending during the first half stood at Rs 132.979 billion.

The budget deficit during the first quarter July-December stood at Rs 250.56 billion that was financed through Rs 36.991 billion from external resources and Rs 213.577 billion from domestic resources. Total non-bank borrowing amounted to Rs 31.309 billion, bank borrowing at Rs 180.97 billion and privatisation proceeds were Rs 1.290 billion.

Punjab: The provincial revenues of government of Punjab amounted to Rs 159.769 billion against the expenditures of Rs 148.9 billion during the first half of current fiscal year, leaving a surplus of Rs 10.844 billion. Punjab received Rs 123.962 billion as revenue share from federal taxes as NFC Award share. Punjab received grants worth Rs 2.156 billion and loans Rs 3.063 billion from federal government. Development expenditures of the province amounted to Rs 28.676 billion and non-development expenditures were 120.249 billion.

Sindh: The total revenues of government of Sindh stood at Rs 89.916 billion and the total expenditures of the province remained Rs 94.033 billion during the first half of current fiscal year 2008-09 resulting in budget deficit of Rs 4.117 billion. Sindh received Rs 76.722 billion as NFC award share of the federal taxes from the federal government. Non-development expenditures of the provincial government stood at Rs 83.079 billion and development spending remained Rs 10.954 billion in said period.

NWFP: The total revenues amounted to Rs 44.035 billion and total expenditures of the province stood at Rs 29.090 billion during the first half leaving a budget surplus of Rs 14.945 billion. The NWFP government received Rs 31.364 billion as NFC Award shares from the federal government during the said period. Development expenditures were Rs 5.635 billion and non-development expenditures were Rs 23.455 billion.

Balochistan: The total revenues stood at Rs 32.728 billion and the total expenditures of the province remained at Rs 22.319 billion during the first half of the current fiscal year. The provincial government received a sum of Rs18.532 billion as NFC Award share from the federal government during the said period. Province received loans of Rs 1.078 billion, current grants at Rs 6.281 billion and Rs 5.547 billion as development grants.


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## Neo

*Pakistan had no industrial policy for last 30 years: Kaiser Bengali​*
** Says state had to revert to its role as a protectionist and interventionist state to create environment for creation of capital assets​*
ISLAMABAD: There had been no industrial policy for the last 30 years after the country was transformed from development state to a security state defined in a very narrow military perspective, senior economist, Dr Kaiser Bengali said.

He urged that the state had to revert to its role as a protectionist and interventionist state to create environment for the creation of capital assets.

Dr Bengali was peaking at a seminar on re-locating the state: industrial policy for growth and poverty reduction organised by Sustainable Development Policy Institute here Monday. Zubair Faisal Abbasi, research associate at SDPI presented the findings of his research study while Faisal Gorchani from SDPI conducted the proceedings and urged that the citizens of the country either force the state or help it to revert to its pre-1977 role and provide a context for economic change before its too late.

Dr Bengali said that during the last fiscal year the country collected Rs 1 trillion revenues while it spent Rs 1.16 trillion on defense, debt servicing and civil administration. About development history of Pakistan, he deplored that the state took a shift from being a development state to security state after 30 years of its existence in 1977 and whatever policies made thereafter were mostly bureaucratic exercises lacking political commitment to implement. He said that the GDP growth rate during Bhutto period was 4.5 percent, development expenditure was 21 percent and military growth rate was 2 percent of the GDP.

During Zia period, GDP growth rate reached to 6.7 percentage, development expenditure was 2.7 percent and defence budget growth rate at 9 percentage of the GDP. The past investment began to mature therefore the GDP growth during Zia era went so high, he added.

Bengali sought revival of Pakistan Industrial Development Corporation (PIDC) as the county had reached to a situation where private sector would not invest if state remains passive.

He suggested reducing costs of manufacturing, end to corruption, reduction in export duty, discouraging speculative business of land, besides developing an infrastructure to bring back the economic crises to its right track. Zubair Faisal Abbasi, in his presentation importance of industrial policy for growth and poverty reduction, said that the public and private sector should not be taken as opposite forces rather they should cooperate under a well-coordinated industrial development design. He said the state should assume responsibilities of creating right kind of incentive structures to stop decline of manufacturing output in Pakistan. We should move away from being neo-liberal and security state to a developmental state while focusing on human capital formation and technological capability acquisition for increase in industrial development of Pakistan he added.

He said history of Pakistan revealed that successful industrialisation could take place when the state became pro-poor and pro-growth. Failing in bringing the state back in he industrialisation strategies, Pakistan would fast de-industrialise with increasing poverty, growth erosion, and inequality. While giving examples of India and China, he argued that poverty had substantially been reduced in China and India with the help of industrial sector growth while the state had played a pivotal role in the development of both the public and private sector enterprises.


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## Neo

*Exports of pharma products surge 10%​*
KARACHI: Exports of Pakistans pharmaceutical products has registered a 10 percent increase during the previous calendar year of 2008 mainly on account of better marketing approach by the local pharmaceutical companies and their sustained efforts to enhance the quality.

The export of Pakistani medicines to some 50 to 55 countries across the globe stands at $110 million as compared to $100 million achieved during the corresponding period of previous year.

Although total exports of 2007 stood at $125 million but the substantial amount was generated through the sales of medical equipments and tools, which are highly popular across the globe.

Ironically, Pakistani is ranked far below in the list of major medicine exporting countries, despite enhancing export goals as multifarious factors could be blamed for impediments hampering fast track progress of the pharmaceutical industry during several decades.

Former Chairman, Pakistan Pharmaceutical Manufacturer Association (PPMA) Dr Qaiser Waheed in response to a query of Daily Times claimed that over the years, Indian pharmaceutical companies, with full backing by the government, have managed to create a big demand of their products world over and consequently previous year their total annual export volumes stood around $7 billion.

The massive volume of exported medicine speaks the volume of quality of Indian products specially the raw material required for production of medicines. Citing instances of official support to the Indian pharmaceutical Industry, Dr Waheed said that the government has established a separate Pharma Excel Council with an aim to handle affairs of this sector and remove impediments that may hinder their smooth functioning. He claimed that owing to sincere and devoted endeavours of Pakistani pharma industry during last many years, the country has been able to enhance export volume of medicines to substantial level helping the country in the process to earn invaluable foreign currency. Earlier, export of the pharmaceutical products stood in disarray, due to which the countrys export volume remained stagnant for long period of time.

Currently bulks of medicines are exported to African countries, Central Asian States, Philippines, Vietnam, Myanmar and Sri Lanka. Citing major problems faced by the pharma industry, Dr Waheed said the potential of this sector was never recognised by the officials in Federal Health Ministry mainly on account of their lack of knowledge relating to the needs of this enormous sector.

Unlike all other industries in the country, which fall under the administrative control of the Ministry of Industry, affairs of the health industry is managed by the Federal Health Ministry which has squarely failed to promote this sector effectively. Suggesting measures for drastic progress of pharma sector, he said the government in consultation with the stakeholders should evolve a comprehensive policy for promotion of the pharma sector for at least five years period.

Such policy, after securing the legal cover, would remain unaffected even with the change of the government in centre or provinces, which would spell positive impact for the pharma industry. He demanded the government to remove all taxes on packaging material and raw material needed for manufacturing medicines as currently, heavy taxation is adding to the manufacturing cost of medicines and its packing process. tanveer sher


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## Neo

*US to move rapidly to stabilise Pakistani economy​*By Anwar Iqbal
Monday, 02 Mar, 2009

​
*US Senator John Kerry, designated head of the US Senate Foreign Relations Committee, talks with Pakistan's Foreign Minister Shah Mehmood Qureshi. -Reuters File Photo*

WASHINGTON: Providing economic assistance to Pakistan is high on the priority list of the US administration and lawmakers are also considering a proposal to give a one-time assistance of $5 billion to help stabilise the Pakistani economy, diplomatic sources told Dawn.

The additional aid  according to these sources  will be attached to a package proposing an annual assistance of $1.5 billion for Pakistan over the next five years. The package can be extended for five more years with congressional approval.

The sources said that the Pakistan aid package can be introduced in Congress later this month.

Another bill to set up reconstruction opportunity zones along the Pak-Afghan border my also be introduced sometime this month.

Senator John Kerry, who co-sponsored the aid package, released a report last week proposing an immediate injection of about $5 billion into the Pakistani economy to prevent an imminent meltdown.

The report warned that the Pakistan government has between 6 -12 months to put in place and implement security and economic policies or face the very real prospect of considerable domestic and political turbulence.

Apparently, the Obama administration agrees with this assessment and wants to move rapidly to protect the Pakistani economy from a possible collapse. It is also working with the Pakistani government to bring political stability to the country.

The proposed $5 billion, however, will not go directly into the government of Pakistan funds. The money will be spent on projects supervised by the US Agency for International Development.

The supervision will ensure that the money is spent for the purpose it is given and will reduce the chances of corruption and misappropriation. But this will also increase the overhead expenses to 25 to 30 per cent, running into hundreds of millions.

The USAID is required to hire US contractors who then can hire Pakistani sub-contractors to work on the proposed projects.

The entire aid package, which may go up to $15 billion if extended for 10 years, will focus on the economy and social sectors.

The ROZ bill is likely to be adopted before the aid package. Once the bill is adopted, the US administration will work with the Pakistani and Afghan governments for designating the zones.

The government of Pakistan will then be required to announce an incentives package for the tribal areas.

The ROZs can be established in Fata and up to 100 miles into the Balochistan border area. ROZs can also be set up in the areas hit by the last earthquake,

Both the aid package and the ROZ bills were originally presented in the previous Congress, which completed its tenure before passing them. The new Congress had planned an early hearing on the two bills but both got delayed because of Congresss heavy domestic agenda.

Although the new Congress has already approved the US economic stimulus plan, it is still working on the financial stability plan and the omnibus budget tax for 2009. Once the two plans are adopted, Congress is likely to take up the Pakistan aid package and the ROZ bills later this month.


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## Neo

*Circular debt swells to Rs 180 billion​* 
ISLAMABAD (March 03 2009): The circular debt rose from Rs 159 billion in January 2009 to Rs 180 billion by the end of February, belying the claims by the government that it was focusing on reducing the debt. However this is not a violation of the Letter of Intent (LoI) submitted to the International Monetary Fund. The public sector entities in petroleum and gas sectors are facing financial crunch due to rising circular debt.

Sources told Business Recorder that Oil and Gas Development Company Limited (OGDC) is owed Rs 48.254 billion, Sui Southern Gas Company (SSGC) Rs 24.670 billion, Sui Northern Gas Pipeline Limited (SNGPL) Rs 7.955 billion, Pakistan Petroleum Limited (PPL) Rs 9.332 billion, and Rs 5.400 billion is owed to Mari Gas Company Limited (MGCL).

PSO is the major fuel supplier that is facing circular debt problems. It is to recover Rs 84.2 billion including Rs 77.1 billion from different clients and Rs 7.088 as price differential claims (PDC) from the government on petroleum products. PSO is also to pay Rs 73.717 billion dues to oil refineries. The major clients of these public sector entities are the independent power producers (IPPs), Water and Power Development Authority (Wapda) and Pakistan Electric Power Company (Pepco). The government is set to clear the circular debt by June this year as per the LoI.

PSO is to receive Rs 8.354 billion from Pepco, Rs 44.3 billion from Hubco, Rs 21.210 billion from Kapco, and Rs 3.302 billion from PIA. PSO is to pay Rs 40.072 billion to Parco, Rs 10.845 billion to PRL, Rs 8.7 billion to NRL, Rs 13.2 billion to ARL and Rs 900 million to Bosicor.

Due to financial crunch, PSO is mainly depending on direct oil imports rather than on oil refineries which are keeping all funds as past payments. PSO is providing oil to Pakistan International Airlines (PIA) on cash payment, sources said.

They said that the two gas utilities--SNGPL and SSGC--are facing problems in paying dues to gas production companies followed by non-payment of dues from the power sector. These companies have approached the Petroleum Ministry for intervention to make payment by the power sector. In return, Petroleum Ministry has raised the issue with Finance Ministry. These utilities have served several notices for disconnection of gas supply to their clients but power sector has failed so far to make payment due to circular debt problems.

The government has planned to float term finance certificates (TFCs) of Rs 98 billion to help Pepco to retire circular debt. The government was to issue TFCs by the end of February but it is still awaited. The issuance of TFCs was supposed to clear 50 percent of the circular debt by the end of last month. The delay in issuance of TFCs is resulting in further accumulation of circular debt, sources added.


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## Neo

*Six-month consolidated budget deficit rises to Rs 250.5 billion​* 
ISLAMABAD (March 03 2009): The consolidated budget deficit of the federal and four provincial governments has accumulated to Rs 250.5 billion during first half (July-December) of 2008-09 fiscal year. According to a Fiscal Operations Report of Finance Ministry issued here on Monday?, total revenues of the government stood at Rs 834.47 billion and expenditures at Rs 1.085 trillion during first half of 2008-09.

Breakup of current expenditure shows that Defence expenditures stood at Rs 147.78 billion during the period under review. The federal government transferred Rs 250.58 billion to Punjab, Sindh, NWFP and Balochistan as provincial share in federal revenues under interim National Finance Commission (NFC) Award, during this period.

The summary of consolidated federal and provincial budgetary operations showed out of total revenues of federal and provincial tax collection stood at Rs 577.99 billion. In non-tax revenues Rs 69.128 billion were collected from petroleum and gas sector that include Rs 28.839 billion as petroleum development surcharge and Rs 8.510 from gas development surcharge, discount rate on crude oil Rs 5.967 billion and royalty on oil and gas stood at Rs 25.812 billion. Total non-tax revenues stood at Rs 256.48 billion during the July-December period of current fiscal year.

The details of the expenditures of the federal government during July-December period revealed that the government spent Rs 1.085 trillion, which included Rs 916.7 billion as non-development expenditures. The details of the current expenditures (Non-Development) in first half the government paid Rs 299.855 billion as interest on local and foreign loans, Rs 265.934 billion were spent on servicing of domestic debt and Rs 33.921 billion were spent on servicing of foreign debt. Total defence expenditures were Rs 147.7 billion, the development expenditure and net lending during the first half stood at Rs 132.979 billion.

The budget deficit stood at Rs 250.56 billion that was financed through Rs 36.991 billion from external resources and Rs 213.577 billion from domestic resources. Total non-bank borrowing amounted to Rs 31.309 billion, bank borrowing at Rs 180.97 billion and privatisation proceeds were Rs 1.290 billion.

Breakup showed that provincial revenues of Punjab amounted to Rs 159.769 billion against expenditures of Rs 148.9 billion during the first half of current fiscal leaving a surplus of Rs 10.844 billion. Punjab received Rs 123.962 billion as revenue share from federal taxes as NFC Award share. Punjab received grants worth Rs 2.156 billion and loan of Rs 3.063 billion from federal government. Development expenditures of the province stood at Rs 28.676 billion and non-development expenditures were 120.249 billion during this period.

Total revenues of Sindh Province stood at Rs 89.916 billion and total expenditures of the province remained at Rs 94.033 billion, resulting in budget deficit of Rs 4.117 billion. Sindh received Rs 76.722 billion as NFC award share of the federal taxes from the federal government. Non-development expenditures of the provincial government stood at Rs 83.079 billion and development spending remained at Rs 10.954 billion in said period.

Revenues of the NWFP amounted to Rs 44.035 billion and total expenditures of the province stood at Rs 29.090 billion during the first half leaving a budget surplus of Rs 14.945 billion. The NWFP government received Rs 31.364 billion as NFC Award shares from the federal government during the said period. Development expenditures were Rs 5.635 billion and non-development expenditures were Rs 23.455 billion.

Revenues of Balochistan stood at Rs 32.728 billion, whereas expenditures remained at Rs 22.319 billion, leaving a budget surplus of Rs 10.40 billion. The provincial government received a sum of Rs 18.532 billion as NFC Award share from the federal government during the period under review. Province received loans of Rs 1.078 billion, current grants at Rs 6.281 billion and Rs 5.547 billion as development grants.


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## Neo

*Cement exports up by 60 percent​* 
KARACHI (March 03 2009): Cement exports grew by 60 percent to 6.83 million tons during eight months (Jul-Feb) of current 2008-09 fiscal year against 4.26 million tons of last year due to easy and cheapest availability of raw material and rising international demand, industry sources said. They said that rising regional cement demand pushed the country's cement export to this level.

However, they said that overall cement exports growth witnessed slight decline, as export to India had almost halted due to imposition of 12 percent duty by Indian authorities. Cement export growth was 65 percent during the first seven months of current fiscal year, they added.

Cement exports during February 2009 increased by 19 percent to 0.937 million tons against 0.645 million tons of February 2008. However, domestic slow construction activity disturbed local sales of cement, which is constantly on decline.

Local cement sales declined by 15 percent to 12.27 million tons during the first eight months of current fiscal year as compared to 14.43 million tons of the corresponding period of last fiscal year, showing a decline of 2.16 million tons. Month-wise local cement dispatches declined by 19 percent to 1.49 million tons during February 2009 over the dispatches of 1.84 million tons in February 2008.

The declining trend in local dispatches is also hurting the overall growth of cement, which declined to 2.16 percent during the first eight months. Overall dispatches, including export and local sales, stood at 19.1 million tons during July-February 2009 as against 18.7 million tons during the corresponding period of last fiscal year.


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## Neo

*Pakistan ranks 127th in global IT​*
GENEVA (March 03 2009): North European countries and South Korea have the most advanced telecoms and computer development in the world, the UN's telecommunications agency said Monday. Sweden came on top of the International Telecommunications Union's latest five yearly index on computer development, followed by South Korea, which gained two places, Denmark, the Netherlands, Iceland and Norway.

All of the 154 countries managed to improve their rating in 2007 - the most recent year for which statistics for all communications categories are available - with the exception of 117th placed Myanmar, the table showed. The improvements were largely down to greater access - the availability of technology and infrastructure.

But use, which is often tied to education or skills and individual wealth, was progressing at a much slower rate, the ITU said. The top 20 was dominated by high income countries in Europe, North America and Asia in a largely unchanged pattern over 2002.

Poor countries remain at the lower end of the table with limited access to infrastructure for fixed or mobile telecoms networks, Internet and broadband, according to the ITU. But they are the world's biggest cellphone users.

Several developing or emerging countries, including Pakistan, Saudi Arabia, China and Vietnam, were among the most dynamic areas of overall IT growth. Pakistan in 127th place was the fastest growing after it registered almost no computer access or usage five years earlier, the ITU said. By 2007, eight percent of households had computers and Internet penetration reached 10.7 percent.


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## Neo

*Road linkages to boost Pakistan, Kazakhstan economies: minister​* 
ISLAMABAD (March 03 2009): Federal Minister for Communication, Dr Arbab Alamgir Khan, has said that establishing road linkages between Pakistan and Kazakhstan would immensely benefit the economy of both the countries. He said this in his meeting with the Ambassador of Kazakhstan H E Bakhytbek Shabarbaye where they discussed the ways to enhance trade and transport relations between the two countries.

He further said that the present government wanted to establish a more close and cordial relationship with Kazakhstan. He said that Benazir Bhutto was the first Pakistani leader who visited Kazakhstan. He said that the present government wanted to take the vision of the great leader forward and expand the trade activities between Pakistan and Kazakhstan.

He said that the government was working on a plan to establish a world class road infrastructure. He said that our aim was to link the Gawadar and Karachi ports with the neighbouring countries through Highways and Motorways. He informed that Lowari Tunnel project was near to completion, which would give Pakistan a short and easy access with Tajikistan and other Central Asia republics.

He said that under Chairman National Highway Authority (NHA), a delegation would soon visit Kazakhstan and hoped that people related to road and transport industry in Kazakhstan could come here and explore new possibilities of investment in Pakistan.

He said that visa rules between two countries needed to be made more relaxed to give people a chance to have greater interaction with each other that would ultimately result in greater understanding between the two governments. The Ambassador thanked and said that his government shared Pakistan's efforts for better relationship between the two countries. He formally invited the minister for the first ACD Ministerial Transport Forum to be held in Astana in April, which was happily accepted.

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## s90

*FBR reports 21 pc increase in 8-month tax collection *

ISLAMABAD: The Federal Bureau of Revenue (FBR) in a statement said tax collection in the eight months ended Feb. 28, climbed by 21 per cent to Rs706.4 billion compared with Rs585.3 billion in the corresponding period last year.


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## UnitedPak

Neo said:


> *Road linkages to boost Pakistan, Kazakhstan economies: minister​*
> ISLAMABAD (March 03 2009): Federal Minister for Communication, Dr Arbab Alamgir Khan, has said that establishing road linkages between Pakistan and Kazakhstan would immensely benefit the economy of both the countries. He said this in his meeting with the Ambassador of Kazakhstan H E Bakhytbek Shabarbaye where they discussed the ways to enhance trade and transport relations between the two countries.
> 
> He further said that the present government wanted to establish a more close and cordial relationship with Kazakhstan. He said that Benazir Bhutto was the first Pakistani leader who visited Kazakhstan. He said that the present government wanted to take the vision of the great leader forward and expand the trade activities between Pakistan and Kazakhstan.
> 
> He said that the government was working on a plan to establish a world class road infrastructure. He said that our aim was to link the Gawadar and Karachi ports with the neighbouring countries through Highways and Motorways. He informed that Lowari Tunnel project was near to completion, which would give Pakistan a short and easy access with Tajikistan and other Central Asia republics.
> 
> He said that under Chairman National Highway Authority (NHA), a delegation would soon visit Kazakhstan and hoped that people related to road and transport industry in Kazakhstan could come here and explore new possibilities of investment in Pakistan.
> 
> He said that visa rules between two countries needed to be made more relaxed to give people a chance to have greater interaction with each other that would ultimately result in greater understanding between the two governments. The Ambassador thanked and said that his government shared Pakistan's efforts for better relationship between the two countries. He formally invited the minister for the first ACD Ministerial Transport Forum to be held in Astana in April, which was happily accepted.






> *Encouraging Support: Kyrgyzstan to build power transmission infrastructure
> *
> ISLAMABAD: Ambassador of Kyrgyzstan, Nurlan Aitmurzaev has requested Pakistan&#8217;s corporate sector participation in building power transmission infrastructure between Kyrgyzstan and Pakistan to facilitate the export of power to Pakistan.
> 
> Prime Minister Syed Yusuf Raza Gilani met the outgoing ambassador of Kyrgyzstan here on Tuesday to give a farewell call. PM said that Pakistan desires to enhance its bilateral ties with Kyrgyzstan particularly in trade, economics and cultural fields.
> 
> The PM said Pakistan would consider importing electricity from Kyrgyzstan through Afghanistan in collaboration with the World Bank under Central Asia &#8211; South Asia Regional Electricity Market (CASAREM) initiative.
> 
> He hoped that the ongoing negotiations in this regard would soon reach fruition. The prime minister called on Kyrgyzstan for better implementation at the quadrilateral Pakistan-China-Kyrgystan agreement for traffic in transit to raise the present volume of bilateral trade between the two countries. He told the Kyrgyz envoy that the government of Pakistan was examining his country&#8217;s requests for dedicated facilities at Gwadar and allotment of a plot in Islamabad for the construction of embassy premises.
> 
> The Kyrgyz ambassador thanked the prime minister for government of Pakistan&#8217;s support to him in discharge of his duties during his tenure in Islamabad and briefed him on his efforts to bring the two countries closer. He requested that Pakistan&#8217;s corporate sector should be encouraged to participate in joint ventures and invest particularly in power generation and transmission sectors of Kyrgyzstan. The Kyrgyz envoy informed the PM that out of the two hydro-electric generation projects, one will be completed in December this year whereas the second one being constructed with 50 percent Russian equity needs participation of investors from other countries for its early completion. On completion of these projects Kyrgyzstan would be able to supply power to Pakistan. staff report


Daily Times - Leading News Resource of Pakistan

Ties with CARs are growing, and these nations are increasingly showing interest in Gwadar. More transport and energy links should be top priority.

So far Uzbekistan, Kazakhstan and Kyrgyzstan are looking favourable towards Gwadar. Tajikistan will most certainly join our list because of geographic location.
Turkmenistan might be leaning towards Chabahar but we cant be sure until they say for certain. It should be noted that American think tanks interested in the resources in Caspian sea always show Turkmenistan using the Pakistani port for exports. They might even use both.

We also have Western China

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## TOPGUN

Inshallah may Pakistan grow & may Allah look down upon us & save us from the prob's and hardships we have been facing and are facing ! may the future be more peaceful with the name of Allah & his guidence!

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## Neo

*Rs706bn revenue netted in 8 months ​* 
Wednesday, March 04, 2009

ISLAMABAD: The Federal Board of Revenue collected Rs75.98 billion in February, facing a shortfall of Rs11 billion compared to a target of Rs87 billion, shows the boards official data.

In the first eight months (July-Feb) of fiscal year 2008-09, the FBR collected Rs706 billion and the Board would have to collect Rs594 billion in the last four months for achieving the target of Rs1,300 billion. This meant the FBR will have to collect around Rs150 billion each month from March to June to meet the target.

In February, tax collection stood at Rs75.985 billion compared to Rs72.766 billion in the same month last year, registering a growth of 4.4 per cent.

Earlier, the government had revised upward tax collection target to Rs1,360 billion in November 2008 while finalising an agreement with the International Monetary Fund for a $7.6 billion Standby Arrangement (SBA). Now the revenue collection target has been revised downward to Rs1,300 billion.

Interestingly, two press releases were issued on Tuesday giving different figures for tax collection in eight months. After a meeting of the Economic Coordination Committee, the finance ministry issued a press release giving tax collection figure of Rs702 billion for July-Feb 2008-09. However, data released by the FBR put tax collection at Rs706 billion.

When FBR Member Fiscal Research Mumtaz Rizvi was contacted for comments, he explained that revenue collection figures were presented to the finance ministrys Advisory Wing two days ago which were tabled before the ECC. You know that provisional figures increase after every passing day and today the collection stands at Rs706 billion, he said.

To another query about the possibility of achieving the target of Rs1,300 billion, he said the revenue target is still achievable if we made wholehearted efforts.

Referring to adverse circumstances like load-shedding, massive decline in prices of petroleum products, import of other goods and declining nominal growth, he said the performance of the FBR was not much bad in the current scenario.

According to provisional revenue collection figures released by the FBR, it collected Rs706.46 billion in the first eight months of the current fiscal year, an increase of 20.7 per cent compared to collection of Rs585.3 billion in the corresponding period of last year.

In Feb, collection of direct taxes came to Rs25 billion compared to Rs25.018 billion in the same month last year, indicating a negative growth of 0.1 per cent.

Sales tax collection went up to Rs33.385 billion in Feb compared to Rs28.839 billion last year, an increase of 15.8 per cent. Collection of excise duty increased 5.1 per cent to Rs8.100 billion in Feb compared to Rs7.710 billion.

Customs duty collection in Feb stood at Rs9.500 billion compared to Rs11 billion last year, falling by 15.2 per cent. MH


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## Neo

*WAPDA aims to produce 20,000MW hydropower ​* 
Wednesday, March 04, 2009

LAHORE: The Water and Power Development Authority is on target to increase hydro-electric power generation three times from current 6,500 megawatts to over 20,000MW by 2017 which would bring hydropower generation on a par with thermal electricity.

WAPDA Chairman Shakeel Durrani stated this in an exclusive talk with The News. He said the projects which would be completed during that period included 969MW Neelum-Jhelum project, 4,500MW Diamer-Basha, 4,710MW Bunji and 3,700MW Dasu. Barring Neelum-Jhelum, he added, all these projects would be located on different sites of River Indus. In addition, about 1,000MW would be added to Tarbela by installing new turbines on one of its tunnels.

It is imperative for Pakistan to exploit its hydro-electric power generation potential as it is the cheapest source of power. WAPDA has speeded up this process which will go a long way in bringing cost of electricity to a reasonable level.

He hoped hydro-electric generation, if accompanied with expected exploitation of coal potential, would substantially reduce dependence on gas and furnace oil and bring down power generation cost.

Arranging finances for hydro-electric generation is relatively easy as multilateral agencies give positive signals to hydro-electric projects because they are environment-friendly and commercially viable. Investment in these projects can be recovered in a short period, he said.

Durrani said financial resources required for $2.1bn Neelum-Jhelum hydropower project had been arranged. WAPDA would generate $1 billion from 10 paisa per unit surcharge on consumers which has been allowed to it for seven years. Besides that, $750 million financing has been promised by the Islamic Development Bank, Kuwait, Saudi Arabia and Abu Dhabi funds and the Organisation of Petroleum Exporting Countries. China would arrange the balance of $448 million in the form of supplier credit.

He said a residential colony and offices for the contractor and consultants of Neelum-Jhelum project were almost complete, adding work on two tunnels had started. The Chinese are also imparting on-job training for constructing tunnels to Pakistani engineers.

Durrani said WAPDA would need $11.3 billion for construction of Diamer-Basha dam, including $3.5 billion mark-up which would accumulate during the construction of the project. The amount, he added, would be payable in installments after the dam became operational. 

The payments would pose no problem as the dam would generate its own resources. Actual amount needed to complete the dam is $8 billion.

The WAPDA chairman said the Asian Development Bank had agreed in principle to be the major financier of the project, adding the Islamic Development Bank and financial institutions in the Middle East had shown interest to provide the balance amount. Pakistan government and WAPDA, he added, would provide funds worth $1 billion for land acquisition, establishment of nine model villages for displaced people and for construction of new highways as some part of the present highway would come under water. Moreover, $3 billion would be arranged as supplier credit.

The response of financiers of hydro-electric projects is encouraging. 

WAPDA was undertaking one mega hydro-electric project every year, he said, adding work on Neelum-Jhelum project started last year. 

Construction work on Basha dam would begin this year while Tarbela extension project would start next year.


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## Neo

*Exports could hit $40bn: minister ​* 
Wednesday, March 04, 2009

KARACHI: Minister for Textile Industry Farooq Saeed Khan is confident that in near future the countrys cotton crop would be utilised in value addition and exports would reach $40 billion. 

Khan inaugurated the seventh edition of the International Machinery Exhibition of Garment & Textile Technology, Megatech Pakistan 2009, at the Karachi Expo Centre on Tuesday. 

He said the government is trying to keep up the textile industry and introducing new technology for it. Khan said the government is aware of the issues being faced by the industry. The government would cooperate in every way possible to revamp the troubled industry including sectors such as spinning, weaving, processing and value addition. Khan said the government had already started work to rectify the issues in these sectors. He further said the economy is totally dependent on the textile industry as exports from this sector make up 60 per cent of total shipments from the country. 

The minister said of the total $17 billion worth of exports, the textile sector contributes more than $10 billion. Khan said the textile sector contributes 10 per cent to the total GDP whereas it is also employing 39 per cent of the labour force being connected to the textile industry in one way or the other. The minister reminded that during the period of textile quota, the country mostly exported thread-cum-cloth and the exports had not exceeded $4 billion. Khan voiced that after the quota system got over with, the country had the chance to concentrate more on the value addition and keeping this in mind, the government had decided to establish a garment city in Karachi, Lahore and Faisalabad. 

He admitted that the industry is facing many problems such as frequent power outages, gas load- shedding, inflation and lack of technology and infrastructure but assured that all these problems would be controlled soon. 

Khan shared that the government had initiated a programme in which 40,000 unskilled labours would be trained. 

In this regard, the training has already commenced in Karachi, Lahore and Faisalabad and even sectors like weaving and processing have been taken into consideration, he expressed. 

Regarding R&D subsidies, the minister commented that Pakistans main competitors were India, Bangladesh and China and the government had taken steps to increase the exports by providing higher R&D support. He stated Rs40 billion had already been given to the textile industry. 

He further said the State Bank of Pakistan had also been issued orders to accept R&D claims till June 30, 2009 from all those applicants who had failed to apply for these claims earlier. 

Khan said all the local banks had also been issued circulars in this regard. He requested all the businessmen to submit their R&D claim applications as soon as possible for them to be processed. Textile Commissioner Idrees Ahmed explained that induction of modern machinery and technology is essential for manufacturers to maintain a competitive edge in the current economic turmoil. Director Textile Research and Innovation Centre and Chairman ATC, Abdul Majeed stressed the increasing role of technical textiles in the international arena.

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## Neo

*Encouraging Support: Kyrgyzstan to build power transmission infrastructure​*
ISLAMABAD: Ambassador of Kyrgyzstan, Nurlan Aitmurzaev has requested Pakistans corporate sector participation in building power transmission infrastructure between Kyrgyzstan and Pakistan to facilitate the export of power to Pakistan.

Prime Minister Syed Yusuf Raza Gilani met the outgoing ambassador of Kyrgyzstan here on Tuesday to give a farewell call. PM said that Pakistan desires to enhance its bilateral ties with Kyrgyzstan particularly in trade, economics and cultural fields.

The PM said Pakistan would consider importing electricity from Kyrgyzstan through Afghanistan in collaboration with the World Bank under Central Asia  South Asia Regional Electricity Market (CASAREM) initiative.

He hoped that the ongoing negotiations in this regard would soon reach fruition. The prime minister called on Kyrgyzstan for better implementation at the quadrilateral Pakistan-China-Kyrgystan agreement for traffic in transit to raise the present volume of bilateral trade between the two countries. He told the Kyrgyz envoy that the government of Pakistan was examining his countrys requests for dedicated facilities at Gwadar and allotment of a plot in Islamabad for the construction of embassy premises.

The Kyrgyz ambassador thanked the prime minister for government of Pakistans support to him in discharge of his duties during his tenure in Islamabad and briefed him on his efforts to bring the two countries closer. He requested that Pakistans corporate sector should be encouraged to participate in joint ventures and invest particularly in power generation and transmission sectors of Kyrgyzstan. The Kyrgyz envoy informed the PM that out of the two hydro-electric generation projects, one will be completed in December this year whereas the second one being constructed with 50 percent Russian equity needs participation of investors from other countries for its early completion. On completion of these projects Kyrgyzstan would be able to supply power to Pakistan.


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## Neo

*Circular debt swells to Rs 180 billion​* 
ISLAMABAD (March 03 2009): The circular debt rose from Rs 159 billion in January 2009 to Rs 180 billion by the end of February, belying the claims by the government that it was focusing on reducing the debt. However this is not a violation of the Letter of Intent (LoI) submitted to the International Monetary Fund. The public sector entities in petroleum and gas sectors are facing financial crunch due to rising circular debt.

Sources told Business Recorder that Oil and Gas Development Company Limited (OGDC) is owed Rs 48.254 billion, Sui Southern Gas Company (SSGC) Rs 24.670 billion, Sui Northern Gas Pipeline Limited (SNGPL) Rs 7.955 billion, Pakistan Petroleum Limited (PPL) Rs 9.332 billion, and Rs 5.400 billion is owed to Mari Gas Company Limited (MGCL).

PSO is the major fuel supplier that is facing circular debt problems. It is to recover Rs 84.2 billion including Rs 77.1 billion from different clients and Rs 7.088 as price differential claims (PDC) from the government on petroleum products. PSO is also to pay Rs 73.717 billion dues to oil refineries. The major clients of these public sector entities are the independent power producers (IPPs), Water and Power Development Authority (Wapda) and Pakistan Electric Power Company (Pepco). The government is set to clear the circular debt by June this year as per the LoI.

PSO is to receive Rs 8.354 billion from Pepco, Rs 44.3 billion from Hubco, Rs 21.210 billion from Kapco, and Rs 3.302 billion from PIA. PSO is to pay Rs 40.072 billion to Parco, Rs 10.845 billion to PRL, Rs 8.7 billion to NRL, Rs 13.2 billion to ARL and Rs 900 million to Bosicor.

Due to financial crunch, PSO is mainly depending on direct oil imports rather than on oil refineries which are keeping all funds as past payments. PSO is providing oil to Pakistan International Airlines (PIA) on cash payment, sources said.

They said that the two gas utilities--SNGPL and SSGC--are facing problems in paying dues to gas production companies followed by non-payment of dues from the power sector. These companies have approached the Petroleum Ministry for intervention to make payment by the power sector. In return, Petroleum Ministry has raised the issue with Finance Ministry. These utilities have served several notices for disconnection of gas supply to their clients but power sector has failed so far to make payment due to circular debt problems.

The government has planned to float term finance certificates (TFCs) of Rs 98 billion to help Pepco to retire circular debt. The government was to issue TFCs by the end of February but it is still awaited. The issuance of TFCs was supposed to clear 50 percent of the circular debt by the end of last month. The delay in issuance of TFCs is resulting in further accumulation of circular debt, sources added.


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## Neo

*Pakistan wants to enhance ties with Kyrgyzstan​*
ISLAMABAD (March 04 2009): Prime Minister Syed Yousuf Raza Gilani has said that Pakistan desires to enhance its bilateral ties with Kyrgyzstan particularly in the trade, economics and cultural fields. He was talking to the outgoing Ambassador of the Kyrgyzstan, Nurlan Aitmurzaev who paid a farewell call on him at the Prime Minister House on Tuesday.

The Prime Minister said that Pakistan would consider importing electricity from Kyrgyzstan through Afghanistan in collaboration with the World Bank under Central Asia - South Asia Regional Electricity Market (CASAREM) initiative. He told the Kyrgyz envoy that the government of Pakistan was examining his country's requests for dedicated facilities at Gwadar and allotment of a plot in Islamabad for the construction of Embassy premises. The Kyrgyz Ambassador thanked the Prime Minister for Government of Pakistan's support for him in discharge of his duties during his tenure in Islamabad.-PR


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## Neo

*Work resumes on $5bn refinery in Balochistan​*Thursday, 05 Mar, 2009



*The $5 billion refinery with 250,000 barrels per day capacity was originally planned for Balochistans port town of Gwadar. However, apparently due to political reasons, the project was later moved to Hub. - Reuters/File photo.*​
RIYADH: The Abu Dhabi/Pakistan joint venture partners on the Baluchistan refinery have returned to work on the $5 billion project after it was temporarily put on hold in January 2009, the reliable Middle East Economic Digest (MEED) reported.

A source close to the project told MEED that the project, in which Abu Dhabis International Petroleum Investment Company (Ipic) holds a 74 per cent stake and Pakistan-Arab Refinery Company the other 36 per cent, is back on track but that there is no certainty that progress will be sustained due to issues in Pakistan.

Once complete, the plant will have capacity of 200,000-300,000 barrels a day. At least three companies submitted bids in early October to Ipic for the front-end engineering and design (FEED) contract on the project, including Veco, Stone & Webster, and Australias WorleyParsons.

The joint venture has yet to award a contract with any of these firms. The joint venture is unsure when a winning bidder will be announced.

Earlier in January Abu Dhabis International Petroleum Investment Company (Ipic) said it will delay or postpone an investment plan for the construction of a refinery in insurgency-hit Balochistan province of Pakistan, one of its mega projects widely publicized, citing procedural anomaly. The project was announced several years ago with its inauguration set for 2007, but has been delayed for various technical reasons.

While announcing the delay, the Ipic Managing Director Khadem Al Qubaisi then had told the press: Unfortunately what happened was that many actions that came from Pakistan really disappointed us as shareholders. Because of that we are little bit delaying or postponing this project until we sort out major and fundamental issues. However, at least some of the things appear to have been sorted out in the meantime.

The $5 billion refinery with 250,000 barrels per day capacity was originally planned for Balochistans port town of Gwadar. However, apparently due to political reasons, the project was later moved to Hub.


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## ejaz007

*Oil, gas exploration sites in Bannu, Tank and DI Khan*

PESHAWAR: NWFP Governor Owais Ahmed Ghani was informed on Wednesday that a number of potential sites had been identified for oil and gas exploration in Bannu, Tank and DI Khan Frontier Regions (FRs) under a Source Rock Mapping and Investigation Project, costing Rs 39.852 million, said an official release issued here. 

The governor was given a presentation on the project at Governors House here. The project is aimed at having a technical and professional approach for conducting systematic oil and gas exploration in tribal areas. National Centre for Excellence in Geology, University of Peshawar is executing the project in collaboration with FATA Development Authority (FDA) under an agreement signed between them in August 2008. Principal coordinator of the project Dr Fazal Rabbi Khan gave the presentation attended by governor and FDA officials. The meeting was informed that in the first year of the project, data collection and compilation would be carried out. staff report

Daily Times - Leading News Resource of Pakistan


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## Omar1984

^ I dont know if its a rumor or if its actually true but a friend of mine told me that FATA and neighboring Afghanistan are believed to be rich in gas but its unexplored....he said thats one of the reasons US is in Afghanistan.


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## Neo

Omar1984 said:


> ^ I dont know if its a rumor or if its actually true but a friend of mine told me that FATA and neighboring Afghanistan are believed to be rich in gas but its unexplored....he said thats one of the reasons US is in Afghanistan.



Thats true, the area has huge potential in gas and oil. There are extensive proven reserves on both side of the border, further exploration may result in new findings. Also neighboring Tajikistan and Turkmenistan hold huge reserves.


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## Neo

*Pakistan ranks 113 in WEF tourism report ​* 
Thursday, March 05, 2009

ISLAMABAD: The World Economic Forum on Wednesday launched the Travel and Tourism Competitiveness Report 2009 unveiling that Pakistan ranked 113 out of 130 countries.

The ranking underlines the countrys frail travel and tourism regulatory framework, low prioritisation by the government, low effectiveness of marketing and branding and a constricted perception of travel and tourism.

Last year, Pakistan ranked 111 out of 124 countries, so in reality the ranking remains stagnant. India ranked 11th in the Asian region and 62nd in the world.

The report provides a cross-country analysis of the drivers of competitiveness in travel and tourism, providing useful comparative information for making business decisions and additional value to governments wishing to improve their travel and tourism environment.

Some of the other competitive disadvantages for Pakistan include a poor tourism infrastructure such as competitive hotel rooms (119 compared to 110 last year); available ATMs accepting visa cards (111 compared to 110 last year) and prevailing security situation (132 compared to 106 last year).

Further indications that all is not fine with Pakistans tourism and travel industry can be highlighted by the fact that last year, despite many competitive disadvantages, Pakistan ranked 40th for air travel and 39th in ground transport structure, but slipped to 99th and 73rd this year.

On the flip side, Pakistan ranked well in price competitiveness in the industry mainly because of low fuel prices (36) purchasing power parity (13) and the extent of effect of taxation (42). Pakistan also ranked well in the number of heritage and cultural sites (33) and creative industries exports (27). Pakistan will, however, continue to need to focus on the sustainability of its natural environment.

The data for the Pakistan has been prepared through a combination of data from publicly available sources, international travel and tourism institutions and experts as well as results of the Executive Opinion Survey 2008 which was carried out by the Competitiveness Support Fund (CSF), the WEFs partner institution in Pakistan.

The Competitiveness Support Fund is a joint venture of the Ministry of Finance, Government of Pakistan, and the United States Agency for International Development (USAID), established to reposition Pakistans economy on a more global footing.

The Chief Executive Officer of the Competitiveness Support Fund (CSF), Arthur Bayhan, said CSF was deeply engaged in issues of competitiveness and is working with the public and private sectors as well as the academia in Pakistan to improve the competitiveness global ranking of the Pakistani economy.

Bayhan, said the Executive Opinion Survey, is a major component of the Global Competitive Report that is published annually by the WEF. The survey provides the key component, which turns the report into a representative annual measure of Pakistans economic environment and its ability to achieve sustained growth. 

Top executives operating in Pakistan are surveyed and their opinion is taken on Pakistans business environment in which they operate. The 2009 Executive Opinion Survey in Pakistan was launched two weeks ago and is ongoing with top executives being surveyed in seven cities in Pakistan.

According to this years Travel and Tourism Report, Switzerland, Austria and Germany retained their top rankings respectively, further consolidating the fact that they have the most attractive environments for developing the travel and tourism industry. France jumped six places to 4th and Canada went from 9th to 5th. Singapore was Asias top destination, ranking 10th. In the Middle East and Africa, the United Arab Emirates ranked first in the region and 33rd in the world, up seven places from last year.


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## Neo

*Tareens visit to Saudi Arabia: Govt seeking oil and fertilizer import on deferred payments​*
ISLAMABAD: Pakistan will discuss import of oil and fertilizer on deferred payments and securitization of workers remittances during the upcoming visit of Adviser to PM on Finance, Shaukat Tareen, which is scheduled to start from March 7.

After attending high powered Wheat Procurement Supervisory committee at Ministry of Agriculture, Shaukat Tareen told Daily Times that during his visit the import of oil, fertilizer as well as securitization of workers remittances would be discussed with Saudi Authorities.

Saudi Arabia is the key donor among Friends of Pakistan and the visit of the Adviser to would help gain maximum support from Saudia during Friends of Pakistan ministerial meeting scheduled at Tokyo.

During his stay, Tareen would hold meetings with his counterpart, governor central bank and other key officials of Saudi government. Tareen would also meet President Islamic Development (ISDB), an official at finance ministry informed.

Pakistan Peoples Party led coalition government is expecting an overall $2.5 billion to $4 billion Saudi economic package including oil and fertilizer imports on deffered payments and a new agenda has been added which is securitization of workers remittances.

Pakistan is trying its level best for restoration of Saudi Oil Facility based on deferred payment arrangement to relieve pressure on foreign exchange reserves.

Under International Monetary Fund (IMF) 23 months $7.6 billion Stand By Arrangement (SBA), the government of Pakistan plans to securitize workers remittances to the tune of $800 million to boost up its foreign exchange reserves.

Pakistan, in the recent past has sought $400 million Saudi Credit facility for import of urea fertilizer from Saudi Arabia. Before the start of Rabbi 2008-09 season, the government is expecting shortfall of urea fertilizer in the country.

The hectic efforts by the Ministry of Food and Agriculture (MINFA) and Economic Affairs Division to get $400 million credit facility for import of urea from Saudi Fund for Development have not yet materialised.

However, after having no response from Saudi Arabia, the government diverted its energies of getting the same facility from Kuwait.

Wheat meeting: Indicating expected production level at 23 million tonnes, Tareen informed that 12 million tonnes to 13 million tonnes would be retained for consumption by the farmers themselves and some 11 million tonnes to 12 millions would be left for procurement.

He also hinted that wheat procurement target may be jacked up if found necessary to facilitate farmers.

Explaining the financing arrangement for the Wheat crop, he hinted that financing arrangement could be increased to Rs 160 billion against earlier estimates of Rs 154 billion.

He said because of fresh fiscal management measures KIBOR has come down from 16 percent to 12 percent that would help strengthen industrial units.


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## Neo

*Pakistan, Turkey and Iran : Container train service to start from Aug 14​*
KARACHI: Pakistan, Turkey and Iran have agreed in principle to operate container train service from Istanbul to Islamabad via Tehran, Iran, in the first phase and a passenger train service in the second phase.

The technical details of the first phase container train service were discussed at a meeting of senior railway officials of three countries held in Tehran with Pakistan represented by General Manager Railway (Operation) Saeed Akhtar.

On return here Wednesday morning from Tehran, the Railways operation chief Saeed Akhtar told APP that tentatively it has been agreed to start this container train service from August 14.

The train, he pointed out will either start from Islamabad on August 14 or arrive Islamabad from Istanbul on the day of Independence of Pakistan.

We want to make it a ceremonial occasion to launch the container train service from Islamabad on August 14 while Turkey is pressing its launch from their end, said GM railway.

However, GM Railway said, even if it starts from Istanbul we have told them that the train should reach Islamabad on August 14.

Saeed Akhtar said that during the meeting various issues cropped up, particularly the Customs related formalities and since there was no Custom representative present in the meeting, it was decided to sort out this issue in the next meeting to be held in April in which representatives of Customs from three countries would also be invited.

Replying a question, the Railway operational chief said that Tehran has completed the track between Zahidan and Kirman and the same has been linked up with Pakistan side of railway network.

He pointed out that Turkey and Iran already have railway link up at their borders and both have freight and passenger train services.

To another question, he said, that prior to launch of the container train service, there could be problems of technical, administrative and security and these would be discussed in the April meeting.

Replying a question, he said the size of the train would depend on the availability of container business. However, he hoped that the first train would carry about 40 containers.

Saeed Akhtar pointed out that the service would be of great advantage to the business community of Pakistan, Turkey and Iran because earlier the containers used to be sent to Karachi by ship and after unloading them here used to be sent forward to respective destinations in the country either by road or rail and this was costing them quite high. app


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## Neo

*Travel and Tourism Competitiveness Report 2009: Pakistan ranks 113 out of 130 countries​*
By Tanveer Ahmed 

KARACHI: Pakistan ranked 113 out of 130 countries in Travel and Tourism Competitiveness Report 2009 released by World Economic Forum on Wednesday.

Last year Pakistan ranked 111 out of 124 countries, so in reality Pakistans ranking remains stagnant, report mentioned.

Countrys low ranking in the index underlined its frail travel and tourism regulatory framework, low prioritisation of the travel and tourism industry by the government, low effectiveness of marketing and branding and a constricted tourism perception.

Some of the other competitive disadvantages for Pakistan include a poor tourism infrastructure such as hotel rooms (119 compared to 110 last year); available ATMs accepting visa cards (111 compared to 110 last year) and the prevailing security situation (132 compared to 106 last year).

Further indications that all is not well with Pakistans tourism and travel industry can be highlighted by the fact that last year, despite many competitive disadvantages, Pakistan ranked 40th for air travel and 39th in ground transport structure, but slipped to 99th and 73rd this year respectively.

The report provides a cross-country analysis of the drivers of competitiveness in travel and tourism, providing useful comparative information for making business decisions and additional value to governments wishing to improve their travel and tourism environments.

On the flip side, Pakistan ranked well in price competitiveness in the industry mainly because of low fuel prices (36) purchasing power parity (13) and the extent of effect of taxation (42). Pakistan also ranked well in the number of heritage and cultural sites (33) and creative industries exports (27). Pakistan will, however, continue to need to focus on the sustainability of its natural environment, WEF pointed out.

According to this years Travel and Tourism Report, Switzerland, Austria and Germany retained their top rankings respectively, further consolidating the fact that they have the most attractive environments for developing the travel and tourism industry.

France jumped six places to 4th and Canada went from 9th to 5th. Singapore was Asias top destination, ranking 10th. In the Middle East and Africa, the United Arab Emirates ranked first in the region and 33rd in the world overall, up seven places from last year. India ranked 11th in the Asian region and 62nd in the world overall.

The data for the Pakistan has been prepared through a combination of data from publicly available sources, international travel and tourism institutions and experts as well as results of the Executive Opinion Survey 2008 which was carried out by the Competitiveness Support Fund (CSF), the WEFs partner institution in Pakistan.

The Chief Executive Officer of the Competitiveness Support Fund (CSF), Arthur Bayhan, said CSF was deeply engaged in issues of competitiveness and is working with the public and private sectors as well as the academia in Pakistan to improve the global competitiveness ranking of the country.


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## Neo

*Pakistan formally demands Chenab water from India​*
LAHORE: Pakistan on Wednesday reclaimed 1.2 million acre feet (MAF) of water of River Chenab, which was stopped by India during the construction of Baglihar dam, a private TV channel reported. According to the channel, Federal Water and Power Minister Raja Pervez Ashraf had presented a report in the parliament in this regard. According to the report, during the last three years Pakistan had faced an acute shortage of water due to the construction of dams by India. Pakistan demanded that India either compensate for the losses or provide the water. daily times monitor


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## Neo

*IPI project: Iran reluctant to scale down gas price​* 
ISLAMABAD (March 05 2009): Iran is reluctant to scale down the gas price from 78 to 70 percent of the crude oil price in the international market under Iran-Pakistan-India (IPI) gas pipeline project. Sources told Business Recorder that Pakistan in a letter addressed to Iran had requested a reduction in its offered gas price from 78 percent of crude oil price to 70 percent to make it economically feasible for Pakistan.

But Iran has shown no flexibility in its stance on the price and now the Petroleum Ministry has moved a summary to the Prime Minister for holding dialogue with Iran on the price. The dates of dialogue and venue are still to be determined, sources said.

The Advisor to Prime Minister on Petroleum and Natural Resources, Dr Asim Hussain on Wednesday informed the Prime Minister about the current status of IPI saying that the project was being delayed due to gas price issue. He informed the Premier that Iran had not shown flexibility on the gas price issue.

The advisor informed the Prime Minister that gas imported from Iran would be cheaper than furnace oil. He said that Pakistan could generate 5000 MW electricity from one billion cubic feet gas per day that could help overcome the power shortfall. However, this price will be expensive for domestic and commercial consumers of gas.

According to an analysis of pricing carried out by the Petroleum Ministry, thermal power would cost 3.51 cents/kWh generated by Iranian gas at $40 per barrel crude oil price. Whereas the furnace based power generation would cost 4.24 cents/kWh, LNG 3.51 cents/kWh, coal 4.3 cents/kWh and solar 11 cents/kWh.

The Steering Committee of the Economic Co-ordination Committee (ECC) of the Cabinet on IPI gas pipeline project has already given mandate to the Petroleum Ministry to negotiate a formula linking price to 70 percent of global crude oil. Sources said that some members of the Steering Committee on IPI have even recommended signing a deal on the proposed gas price of 78 percent of crude oil as the country would be in dire need of energy in coming years.

The advisor also briefed the Prime Minister on matters relating to his ministry particularly the projects being undertaken for oil and gas exploration in various parts of the country. He said that Petroleum Ministry was taking measures to explore the indigenous oil and gas reserves to meet the rising demand of energy in coming years.

In the national grid system, the country is facing 3500 MW power shortage. The power shortfall will rise to 10,000 MW per day by 2020 if no addition is made to the grid. The country is currently facing 700 million cubic feet per day gas shortfall that would shoot up to two billion cubic feet per day by 2010.


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## Neo

*Investment in Pakistan - not worth dying for​*
KARACHI (March 05 2009): The dwindling number of foreign investors left in Pakistan must wonder whether it's worth it after militants targeted the Sri Lankan cricket team in Lahore. "No legal return on capital is compelling enough to risk your life," said Asad Iqbal, director of the Karachi Stock Exchange.

While Westerners know they could be targeted any time by militant groups, the attack in Lahore on sportsmen from a country regarded as a friend of Pakistan, has sent a chilling message. "The blatant audacity of this attack has shown that no-one is safe any longer in Pakistan," said Mikaeel Habib, a 31-year-old businessman in the southern city of Karachi.

"It's made me rethink about my future in Pakistan for myself and my family." Eight members of the Sri Lankan squad were wounded, but six policemen and the driver of a coach carrying match officials were killed in an attack that reaffirmed Pakistan's reputation as one of the most dangerous countries in the world.

Nuclear-armed, with a history of political instability, Pakistan is home to 170 million people, most of them Muslim, with close to a third living close to the poverty line or below. Even International Monetary Fund officials refuse to come to Pakistan to review how the government is meeting targets set when it agreed to a $7.6-billion emergency loan programme in November to stave off a balance of payments crisis.

Consultations are held in Dubai, instead. IMF officials stopped coming to Pakistan after a suicide truck bomber killed 55 people at Islamabad's Marriott hotel last September. The first tranche of $3.1 billion was released in November, and another $840 million is expected by the end of March.

Pakistan's foreign exchange reserves now stand above $10 billion, but Shaukat Tarin, adviser to the prime minister on finance, sees shortfalls ahead and the government is looking for another $4.5 billion from the IMF. In the seven months through to the end of January, net foreign investment inflow to Pakistan was $2.23 billion, nearly 13 percent below the year-ago level. Since January 1, almost $185 million of foreign portfolio investment has flowed out of the country.

POLITICAL CRISIS: Tarin gave a slightly encouraging assessment last week, predicting economic growth would recover from 2.5 percent in the fiscal year ending on June 30, a rate equivalent to full blown recession in Pakistan, and rise to 4 percent next year. He also expected inflation to average just 6 percent in 2009/10, compared with over 20 percent this year.

That raised hopes among businessmen and share market investors that the central bank could cut its discount rate from 15 percent as early as April. But the stock market is uneasy over a political crisis that has added to the woes of President Asif Ali Zardari's civilian government less than a year after it was formed.

Arch rival former prime minister Nawaz Sharif has urged street agitation after Zardari last week opted to impose central rule in Punjab, taking control of the provincial government away from Sharif's party.

"Any continuing political unease ... is going to roll back the pace of reform and response," said Zainab Jabbar, investment strategist at IGI Securities. The KSE-index is down 0.84 percent this year after a 58.3 percent fall in 2008 while the rupee has lost 1.4 percent against the dollar this year after weakening 22.1 percent last year.

Thanks to the IMF loan and falling world oil prices, Pakistan's sovereign rating was raised to CCC-plus from CCC by Standard & Poor's Rating Services in December, but that is still well into junk bond territory.

"Pakistan has a triple C rating, so one has to come to terms with the fact that we are already on the fringes on the investment spectrum," said Jabbar from IGI. "Whether we can come back to the middle tier is at present a long shot - simply because what was assumed to be a regional problem is very much an internal issue now," said Jabbar, referring to recent acts of terror.


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## Neo

*'Reliance on indigenous resources key for economic uplift' ​*
ISLAMABAD (March 04 2009): Chairman Pakistan Agricultural Research Council (PARC), Dr Zafar Altaf, has said that the cardinal factors of China's rise amongst the comity of nations were its reliance on indigenous resources, paradigm shift of its policies, sense of devotion and hard work on the part of leadership as well as the masses.

He was sharing his views and experiences about the Chinese model with the agricultural scientists at National Agricultural Research Centre (NARC) after his recent visit to China. Dr Zafar Altaf accompanied the President of Pakistan during his recent visit to China from February 18 to 25 where the President had signed a number of memoranda of understanding on behalf of the Pakistan government with the concerned Chinese organisations.

The chairman PAARC said that the Chinese economy, especially the agriculture sector has witnessed remarkable changes over the past few decades, owing to peoples participation at all levels. Dr Zafar Altaf made a detailed analysis of the Chinese economy, its breakthrough in science and technology, agriculture and industrial sectors.

He cited a number of examples where he found every one equally responsive and accountable whether a policy-maker or a layman, in China. The chairman PARC referred the Three Gorges Dam, which was in the initial stages of construction when he had visited China last.


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## Neo

*Need for steps to raise cement production ​* 
ARTICLE (March 05 2009): Currently, cement is a 2.50 billion tons global business, and its consumption is expected to increase to 3.13 billion tons by 2015. Many countries are therefore engaged in expanding their respective cement producing capacity in a big way. For the reason of optimising economies of scale, large-size Greenfield cement plants are being installed.

World's largest cement plant located in Missouri, USA, with a capacity of producing 12,000 tons of clinker per day, or 4 million tons of cement annually, is scheduled to be commissioned in the third quarter of 2009. Following the international trend, the Pakistan Board of Investment (BOI) is promoting investments in setting up large-size cement plants, of the capacity of 10,000 ton per day capacity, a Greenfield project costing around $234 million.

Whether or not it is economically viable under local conditions the policy is being implemented by major cement producers in Pakistan, without proactive planning. The large-scale capacity expansion is being undertaken by many cement companies to capitalise on projections of high cement demand, particularly in export markets. Fauji Cement Co Ltd has recently announced construction of a new plant of 7,200 tons of clinker per day, in parallel with the existing production line.

The plant, for which state-of-the-art plant machinery is being supplied by Polysius of Germany, is scheduled to go on stream by early 2010. This will increase Fauji Cement's annual installed capacity by about three times - from existing 1.165 million tons to 3.27 million tons of cement. Lucky Cement has recently emerged as the largest cement producer in the country, with an installed capacity of 6.55 million tons of cement per annum, having recently added two cement plants of 8,400 ton per day capacity each.

DG Khan Cement, now ranked second largest, has 4.21 million tons annual capacity. The company, which operates a 10,000 ton per day cement plant, is currently implementing another capacity expansion plan, which will further enhance total installed capacity in the range of 6.32 to 7.99 million tons of cement annually by the year 2010. The third largest producer Maple Leaf Cement has an installed capacity of 3.69 million tons of cement annually.

During the last four years cement industry has witnessed remarkable increase in installed capacity-from 16.93 million tons per annum in 2003-04 to 37.16 million tons in 2007-08. Additional capacity to the level of 6% was created in 2004-05, followed by 17% in 2005-06, another 44% in 2006-07 and 23% in 2007-08. By the year 2010 total annual cement capacity is planned to be around 51 million tons.

Per capita annual consumption of cement in Pakistan is 131 kg, in comparison to world average of 273 kg. Thus, there appears to be promising potential for increased cement consumption in future, justifying the planned large capacity expansion. But the ground realities are different. Domestic cement demand remained erratic in the last five years and registered a maximum growth of 24% in 2006-07, total dispatches being 21.05 million tons.

The annual projected growth was therefore taken by the industry as 20%-30% annually. However, during the year 2007-08 there has been nominal growth of 6.47% in domestic demand, which is projected to decline further in 2008-09. The major driver for cement consumption is infrastructure and real estate development. The situation is not optimistic due to economic slowdown, drastic cut in the Public Sector Development Program (PSDP) and recession in construction activities.

Thus even the 2007-08 target, of dispatching 31.2 million tons cement, could not be met, though highest ever export of cement was made during the period. This is also reflected in the fact that overall capacity utilisation was around 81% during the last three years, compared to 91% achieved in 2004-05.

Again, demand during 2008-09 is projected to be 40.6 million tons that may not be possible to achieve. During the first five months of the current fiscal year (July-November 2008) there has been a nominal growth of 3%. Total dispatches during the period were 12.40 million tons, including 7.94 million tons local dispatches registering a negative growth of 16%. Thus, capacity utilisation of industry during the period further reduced to 77%.

Likewise, future demand projections of 52.7, 60.5 and 71.1 million tons during financial years 2010, 2011 and 2012, respectively, may not prove to be realistic. Basically, these ambitious demand projections, and resultantly large capacity expansion programs, are designed to meet increasing export deficit in the region. Exports jumped from 1.51 million tons in 2005-06 to 3.19 million tons in 2006-07 and record 7.72 million tons in 2007-08.

But the surge in export market may be short-lived for Pakistani cement. Achieving export target of 10 million tons in 2008-09 does not seem to be realistic. Pakistan could export 4.733 million tons cement during the first six months of current fiscal year (July-December 2008). India has recently cancelled import orders for 25,000 tons of Pakistani cement. Indeed the demand in the region will be very strong in the wake of planned massive-scale construction.

The UAE, for example, will require around 26.2 million tons by 2011. But, at present there is slump in construction industry and real estate business in the UAE due to global recession. Will Pakistan continue to enjoy increasing market share in the UAE? Most likely, it will not be in such a momentum, as the global competitive dynamics present the scenario.

Now India, the second largest cement producer in the world, will not only meet its domestic demand fully, but regain its dominating role in regional markets too. Recently, the Indian government has imposed 12% duties on import of cement to support its indigenous industry.

India has added 30 million tons of capacity during 2007-08, at present having total annual installed capacity of 200 million tons. As the cement industry in Pakistan faces constraints of high fuel and financial costs, its product may not remain competitive in neighbouring countries, such as Afghanistan, Sri Lanka and Nepal, and African countries.

During the last two years Iran and Saudi Arabia have implemented cement capacity expansion projects and are reckoned as main source of cement supply to the Middle East in future. The local cement industry therefore needs to take corrective measures for its sustainable development, on an emergency basis, focusing on domestic market. (The writer is former Chairman of the State Engineering Corporation and member on the Board of Directors of the State Cement Corporation of Pakistan)


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## Neo

*Factors behind EU seafood ban ​*
EDITORIAL (March 05 2009): Karachi Fish Harbour Authority (KFHA) has issued notices to the owners of seafood processing plants to build septic tanks - the first step towards ensuring compliance with European Union specifications for resumption of seafood imports from Pakistan which have been banned by EU thrice since 1999, interestingly for the same reasons. The total seafood export loss sustained by Pakistan since then runs into millions of dollars which could have been avoided by timely action by the departments concerned.

While talking to Business Recorder, the Director of Engineering Department of KFHA has identified non-construction of septic tanks at these plants as the major cause of the whole trouble, which has caused blockage of the fish harbour's overall sewerage system, resulting in extremely unhygienic conditions.

The spilling over of sewerage lines over berths of the harbour and into the channel is not only contaminating the water and endangering the marine creatures; it has also generated stink in the whole of the harbour, which has made the catch unhygienic. The KFHA has now threatened the owners of processing units that in case they fail to build septic tanks their factories will be sealed.

It will be recalled that all 11 seafood processing units were de-listed in April 2007 in the wake of a series of inspections of the Karachi Fish Harbour and processing plants by EU experts, who had identified deficiencies in the handling of EU-bound seafood exports. Further, Pakistan had voluntarily banned its seafood exports to EU in 2005 after the EU experts had pointed out lack of internationally recognised facilities, and had offered guarantees that it would improve conditions at the harbour.

But the pledge made with EU inspectors remains to be honoured, and there has been steep decline in our seafood exports, causing a huge loss to the exchequer. According to exporters, the main reason of continued EU ban is the failure of Sindh government officials, who administer the Karachi Fish Harbour, to maintain hygienic standards at par with specifications prescribed by the European Union.

The fact that the European Union has banned our seafood exports thrice since 1999, and the problem still remains un-addressed shows that there may well be more to it than meets the eye. There is clearly a need for the government to investigate the matter thoroughly in order to identify the real causes behind the prolonged foot-dragging.

The World Bank has on a number of occasions raised with the Pakistan government the issue of poor quality of its exportable food items, and warned the authorities that such slackness in maintaining the required level of hygienic standards would damage Pakistan's exports. The Bank has attributed this sad state of affairs to the absence of a coherent strategy for quality control and strong sanitary and phytosanitary (SPS) management mechanisms required for maintaining the internationally accepted hygienic standards.

In fact, most of the Pakistani seafood firms are pursuing their own independent strategies in the absence of a coherent national strategy, and are in most cases adopting defensive postures to limit the damage resulting from non-compliance with the required EU standards. According to the World Bank, improving food/meat/livestock quality should be a high priority area for Pakistan in order to make its exports competitive.

The Bank has often called for evolving a regulatory framework to support Pakistan's trade objectives and obligations. However, despite effort to meet the requirements the government has been unable to resume seafood exports to the European Union, and is suffering an annual loss of about $47 million. Pakistan exported seafood worth $188 million in FY2006-07 which was down by almost 4 percent from $196 million in FY2005-06.

According to an official quoted in one of our reports, Minfa plays the role of a regulator while the objections raised by the EU relate to the government of Sindh, and the private sector stakeholders. The processing units and harbours are the responsibility of the Sindh government and the boats are privately owned. It will be recalled that the EU had also raised complaints against fishing vessels, auction halls and processing units, which still remain un-addressed.

The government should investigate the matter, fix responsibility and take the officials responsible for this huge loss to the national exchequer to task. It should also institute regulatory mechanisms with a view to preventing repetition of such slackness in maintaining seafood-processing facilities in future. Compared to the huge annual loss sustained by the national exchequer, the amount of investment required to rectify the flaws pointed by EU is negligible. Lastly, there is a need to speed up implementation of the improvement plan, KFHA has chalked out.


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## Neo

*White House backs Pakistan, Afghanistan aid proposal ​* 
Friday, March 06, 2009

WASHINGTON: The Obama administration is backing a proposal initiated under former president George W Bush that would allow poor tribal regions in Pakistan and Afghanistan to sell their clothing and similar goods to US buyers tax free.

A group of lawmakers in the House of Representatives, led by Rep Chris Van Hollen, reintroduced legislation on Wednesday that would enable the president to designate Reconstruction Opportunity Zones inside the two countries from which goods could be imported duty free into the United States.

We truly share the goal of this legislation to fuel sustainable economic development and provide legitimate employment opportunities for the peoples of Afghanistan and Pakistan, said White House adviser Paul Jones at a Capitol Hill news conference.

Achieving that would send a strong message of our long-term commitment to the peace, security and prosperity of the region, said Jones, a deputy to Richard Holbrooke, the US special envoy to Afghanistan and Pakistan.

The endorsement is the first of several actions the new administration is expected to take to increase stability in the region, which in recent months has seen an uptick in violence and resurgence of Taliban strongholds.

President Barack Obama already has announced that he will send 17,000 additional US troops to Afghanistan, a likely down payment on the request by ground commanders to double the US force to 60,000. The administration also is expected to back legislation by Sens John Kerry, a Democrat, and Republican Richard Lugar that would substantially increase humanitarian aid for Pakistan.

Van Hollen, an assistant to House Speaker Nancy Pelosi, could not say when a vote might happen but said there was strong support among Democratic leaders to pass the bill this year.

Ambassadors from Pakistan and Afghanistan also were on hand Wednesday to lend their support.

The young people of Pakistan and Afghanistans tribal areas need to be given a choice other than employment by the Taliban, said Pakistans ambassador to the United States Husain Haqqani.

Last week, the administration led a round of intensive talks with leaders from the two countries. At the State Department, Secretary Hillary Rodham Clinton, Holbrooke and other senior US officials met separately with a Pakistani delegation led by Foreign Minister Makhdoom Shah Mehmood Qureshi and an Afghan delegation led by Foreign Minister Rangin Dadfar Spanta.

The State Department also hosted trilateral talks with both delegations. Clinton said the three sides would continue to meet on a regular basis.


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## Neo

*APCMA seeks govt incentives for $1bn cement export ​* 
Friday, March 06, 2009

ISLAMABAD: With projection of negative growth in the construction sector during this fiscal, the cement industry can achieve export earnings of $1 billion to strengthen foreign reserves of the country, Chairman of All Pakistan Cement Manufactures Association (APCMA) Rehmat Khan, told The News in an exclusive talk.

The potential of exporting cement amounting to $1 billion when the world is facing recession can be exploited if the government extends some concession to the cement industry.

The government is too much cooperative with the industry, as it has removed 15 per cent regulatory duty on sack craft. Sack craft is used in making cement bags.

Rehmat Khan suggested withdrawing 5 per cent regulatory duty on pet coke that the industry uses as fuel. The price of pet coke, a by-product of crude oil, is less than furnace oil. However, calorific value of pet coke is better than furnace oil. If the 5 per cent duty on pet coke is withdrawn, the input cost would drop making prices of cement in the international market more competitive. Owing to this factor cement exports may swell to more than $1 billion.

Khan said: The government also needs to provide infrastructure for cement export through sea as the industry finds it difficult to get berths at the Port Qasim.

To a question, he said that the growth in cement exports during seven months of the current fiscal stands at $500 million and if the incumbent regime facilities the industry, the exports can exceed to over $1 billion in the remaining months of the fiscal.

He said even in absence of any special facilities, the cement export would be at $300 million for the remaining period of current financial year, and the total cement export would be of $800 million during 2008-09.

Rehmat Khan said that Pakistan exports two million tonnes of cement to Afghanistan, one million tonnes to Iraq, 2.9 million tonnes to Gulf countries, 1.5 million tonnes to Sudan and other African countries and some Central Asian States. He said that Afghanistan is a captive market of Pakistan. 

Khan said that the domestic consumption of the cement has been 8.1 million tonnes in first seven months of the ongoing fiscal while Pakistan has exported 5.9 million tonnes to various countries including India.

Local cement off-take has plummeted as the government has abandoned at least 258 public sector development programmes.

We are banking on exports to survive, the PCMA chief said. The cement industry would overcome the losses because of drastic cut in domestic consumption if the government offers some concessions. 

He pointed out that enhanced cost of bank borrowing, high taxation, shortage of electricity and gas has all combined to spell disaster for the industry. 

Khan also emphasized the government to play a role to ensure that the cement export to India should not be disrupted at any cost as to whether there lies a tension between the two countries or not. 

He mentioned that India has imposed non-tariff barriers on export of cement soon after the Bombay attack. The non-tariff barriers are extremely in violation of SAARC agreement.


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## Neo

*TDAP moves to improve software exports ​* 
Friday, March 06, 2009

KARACHI: The Trade Development Authority of Pakistan (TDAP) along with other stakeholders is finding ways to boost software exports.

A meeting on Thursday about fact-finding and strategy to boost the IT sector in Pakistan organised by the Services Export Development Cell (SEDC), a newly formed division at TDAP observed that IT had tremendous scope globally for which joint efforts between the public and the private sector should be made to eliminate the gaps.

Pakistan Software Export Board Managing Director Talib Baloch said, Pakistan can take its due market share only after eliminating the core obstacles which include lack of a proper legal and logistic framework, security issues, financing to the local companies and means to develop and retain quality human resource.

He said the academia should be in line with the requirement and expertise needed by IT industry. In order to achieve the export target of $6 billion by 2013, he said, the country must produce half a million trained IT graduates for which curriculum development, teachers training and student orientation to the new concepts of IT is of crucial importance.

Pakistan Software Houses Association (PASHA) President Jehan Ara, said the IT companies suffered due to the global economic crunch. She expressed the need for a National Policy to drive IT at this point in time, to get rid of the hurdles.

TDAP WTO Cell Head Mujeeb Khan, elaborated the role of Services Export Development Cell, one of its major tasks being to support the IT sector in Pakistan and create market access for the local IT industry. In order to explore the potential of IT industry, TDAP Services Export Development Cell Director General Asif Ali Sheikh, elaborated the need of coordinated efforts between the government and private sector.

Participants suggested that since TDAP could facilitate exposure of the local IT industry by allocating space to position the local IT services in exhibitions both local and abroad.

Few members pointed out the need to increase the domestic consumption of IT enabled products which would in turn open avenues to increase market access globally also.


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## Neo

*UN donors to provide $12.2 million for Pak population census ​* 
Friday, March 06, 2009

ISLAMABAD: The United Nations and donors would provide US$12.2 million to Pakistan for conducting an accurate housing and population census to begin in March this year.

The Federal Secretary, Statistics Division, Tariq Shafiq Khan, and the heads of the UNFPA, the Unifem, the Unicef, the UN Habitat, the ILO and the Unesco jointly signed the joint program component document on population census here on Thursday.

Martin Mogwanja, representative of the Unicef, Daniel B Baker of the UNFPA, Dongli Lin, country director ILO, Ms Alice Ahackelford, country program director, Unifem, Maurice Robson of the Unesco, Alvaro Rodriguez, country director, UNDP, Siamak Moghaddam, country program manager, UN Habitat, senior officials of the UN and the population welfare ministry, were also present on the occasion. 

The main objective of the joint program is to assist the Government of Pakistan in adopting new technologies and approaches to conduct an accurate housing and population census in 2009. 

The government and all development partners  to formulate policies and program at the federal, provincial and district levels in support of poverty reduction and economic development  will use the data generated. 

The joint program is for a period of three years from March 1, 2009 to December 31, 2011.On this occasion, the Federal Secretary, Tariq Shafiq Khan, said: Learning from the past experiences is essential to introduce new technologies in the census process to ensure complete accuracy of data. It is this data that will help us help the people of Pakistan in an effective manner. He thanked the donor organisations for their support to Pakistan in this regard.

The UNFPA representatives, Daniel B. Baker, added: This joint Program component for the year 2009 census in Pakistan will enable the UN to provide multi-faceted assistance to the proposed activities in a coordinated manner. Baker said that the UNFPA would be contributing US$1,330,000 from its own resources for this important initiative.

The Government of Pakistan has prepared a comprehensive plan and budget for the 2009 census. The total cost of the census 2009 is US$62.1 million, $49.8 million of which is financed by government resources. 

The United Nations has already pledged US$1,629,000 and is working to mobilise an additional US$10,657,440 from multi-and bilateral donors. At the request of the government, through this program, the UN has come forward to provide assistance in areas such as equipment, technical capacity building and support, and gendering of the census. 

The UN joint program component for the census has been designed on the basis of experiences learned from the pervious census in Pakistan in 1998, taking into account the factors that might impede or catalyse its implementation. The UNs contribution to the government for the census will be one of the first tangible results of the UNs delivering as one strategy, for which Pakistan is one of the eight pilot countries. 

Implementation of the census is the key element of the One Program strategies. The Untied Nations agencies, by working together, bring forward their comparative advantages to ensure that the census addresses all aspects of the millennium development goals.

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## Neo

*Understanding between Pakistan and IMF for 2009-10 budget​*
*0.2% CVT agreed on withdrawal of Rs 25,000 from FCAs​*
ISLAMABAD: An understanding between the government of Pakistan and International Monetary Fund (IMF) has reached for imposition of 0.2 percent capital value tax (CVT) on withdrawal of equivalent amount of Rs 25,000 from foreign currency accounts (FCAs) in the budget 2009-10, a senior official at the Ministry of Finance told Daily Times on Thursday.

This has been agreed during Pakistans economic managers recent policy level talks with IMF authorities held at Dubai where not only macro-economic targets for the current fiscal year were revised but both sides have also agreed on macro-economic targets for the next fiscal year, the official sources said. 

Withholding tax at 0.3 percent is applicable on the cash withdrawal from rupee accounts if the amount exceeds Rs 25,000 in the country. There is also a proposal under consideration at higher level to increase the rate of withholding tax on cash withdrawal from banks from 3 percent to 6 percent for those account holders who are not registered with sales tax and income tax departments and are not filing income tax returns. 

Proposed tax on withdrawal from foreign currency accounts is meant to provide a level playing field and to encourage the document of banking transactions through cheques instead of cash payments. 

Although the FBR authorities, present during Pakistan-IMF talks at Dubai, have shown ignorance about any such understanding but officials at the Ministry of Finance have confirmed that this proposal has been included in the proposed measures to be taken in the budget 2009-10. 

Pakistans economic managers have discussed many other proposals as proposed revenue measures to be proposed in the budget for rapid increase in tax-to-GDP ratio from 10 percent in 2008-09 to 12.5 percent in the next three years as against the existing pace of increase in tax-to-GDP ratio, which is 0.2 percent per annum to be increased to 0.6 percent per annum so that revenue collection targets to be agreed with IMF authorities are met. 

In this scenario, the government may propose the National Assembly tax collection target at Rs 1.5 trillion for the next fiscal year 2009-10 as against the revised target of Rs 1.3 trillion for the ongoing fiscal year 2008-09 keeping in view inflation, normal growth, FBR efforts and through proposed revenue measures to be taken in the next budget, explained the official. 

The law should be further enhanced to apply to the withdrawals of foreign currency as well as rupee, stated the joint report of the IMF and the World Bank and added an increase in the rate to 0.6 percent would entice more taxpayers to file income tax returns to claim credit for the amount of tax paid and bring forward payment of tax, said the official. 

Withholding tax on cash withdrawal was levied to discourage cash transactions and promote documentation of economy in the country. The tax authorities have been successful in their efforts of taxing money deposited in undeclared additional bank accounts from declared accounts to the tax departments.


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## Neo

*Less Local Production: HSFO imports increase by 87% in Feb​*
KARACHI: The oil industry imports of High Sulphur Fuel Oil (HSFO), to meet the demands of power sector, has increased significantly by 87 percent in February as compare to the same month last year.

According to the Oil Companies Advisory Committee (OCAC), the HSFO imports have reached 459,277 metric tonnes in February 2009 as compared 245,510 metric tonnes in February 2008. Industry people said that oil-marketing firms have imported HSFO in high quantity as the local oil refining companies have produced less HSFO to meet the growing domestic demand of power generating companies. As a matter of fact, the industrys crude oil imports have also fallen by 19 percent to stand at 587,062 metric tonnes in February versus 708,240 metric tonnes a year-ago. Industry experts were of the view that the cash-starved oil refining companies have reduced their crude oil imports that led to curtail its output of various petroleum products in the previous month. Rising consumption of petrol or mogas during the last few months have led Oil Marketing Companies (OMCs) to import this fuel in February, which is 10 percent higher than January. Petrol demand has increased as the disparity in its alternate fuel Compress Natural Gas (CNG) prices has narrowed down since January 2009. Besides, natural gas load shedding also drove to jack up petrol consumption in the northern part of the country.

Oil refining firms used to produce petrol more than the domestic needs and exported it to various countries, however, the oil industry has not been exporting petrol since April 2008 as the domestic demand stretched in this period. Also, the local refineries petrol production was also seen decreasing. Imports of jet fuel (JP-1) was also recorded on the rise and posted 120 percent growth with 22,681 metric tonnes in February as compared to 10,286 metric tonnes in February last year. The demand of JP-1 has been growing in the national airlines on their increasing domestic and international traffic particularly for the last two months. On the other hand, aircraft exports to Afghanistan have also been growing handsomely. High Speed Diesel (HSD) imports also increased by 10.6 percent with 385,364 metric tonnes last month as compared to 348,273 metric tonnes during the same period last year.

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## Neo

*Expiry of EU anti-dumping duty paves way for Pakistans export​*
KARACHI: The European Union (EU)s anti-dumping duty on bedlinen import from Pakistan expired on Thursday paving the way for its export to member countries on normal duty structures enjoyed by its competitors.

The EUs economic journal notified the expiry of this duty after it received no request for reviewing it from the member states in the stipulated time period. The European Commission is responsible for investigating complaints and assessing whether they are justified. 

According to the EC policy if a written request for review is not received in the stipulated time period, the anti-dumping measures will automatically expire on the next review date. The Pakistani bedlinen products were subjected to 5.8 percent anti-dumping duty along with the normal custom duty, which made the products costly compared to its competitors like India and China, which grabbed the major share of Pakistans export. 

Pakistan lost $250 to $300 million annually in bedlinen export due to this duty and its benefit went to China and India and by some extent to Indonesia during this period.

EU slapped an anti-dumping duty of 13.1 percent in early 2004, but following the protest of Pakistani exporters, the European Commission immediately announced a partial review. European Community rules to deal with dumping date back to the organisations earliest days. They are targeted at dumped imports, which cause significant injury to Community producers. If left unchallenged, dumping gives the third country exporter an unfair competitive advantage, which could be exploited with considerable negative consequences for the Community industry. 

In the 1st closure of the review, the duty was brought down to 9.9 percent, which was further cut down to 7.6 percent in second review. While in May 2006, the EC further brought it down to 5.8 percent. Textile exporters hailing the latest development for the bedwear industry of the country said that it would help this sector to make up the losses, which it incurred after undergoing this punitive duty five years back.

Zubair Motiwal, a well-known figure in textile circle said that although, the removal of this duty brought some hope for the home textile export, however, the severe recession in Europe would obstruct our products to gain deeper ground in the EU market.

WE suffered immensely at the hands of this anti-dumping duty and biggest one is the loss of a lucrative market, Motiwala noted and added that regaining of this market completely would take a long time.

He also ruled out the greater market access in the EU under its GSP Plus scheme as country didnt meet the required criteria. This status is granted to Least Developed Countries (LDCs) and Pakistan is not included in this category. 

Pakistan made untiring efforts in the past years to remove the anti-dumping duty and for greater market access contending that country paid a heavy price by joining the Western allies in their war on terror and deserved trade concessions from its trading partners in West.


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## Neo

*Pakistan seeks UAEs help for FTA with GCC​*
ISLAMABAD: Pakistan has sought market access from Canada and help from UAE for early completion of Free Trade Agreement (FTA) with Gulf Cooperation Council (GCC). 

The Ambassador of UAE, Ali Saif Sultan Al-Awani, and the High Commissioner of Canada Randolph Mank called on the Federal Minister for Commerce Makhdoom Amin Faheem in his office on Thursday. Secretary Commerce Salman Ghani was also present in the meeting.

Ambassador of UAE told the minister that they were like a family and they consider Pakistan as their second home. He expressed the desire to increase the number of flights from Pakistan to Dubai. The federal minister expressed that UAE has become the third largest trading partner of Pakistan and asked the ambassador to use their good offices for support to conclude FTA with GCC. The total trade volume with UAE is $5,483 million and exports from Pakistan amount to $2070 million. Main exports from Pakistan to UAE are apparels of fissile material, chemical materials, and construction material including cements, whereas chemical materials and products are the main imports from UAE.

Mank told the federal minister that they had long traditions of commercial and trade relations and the Canadian government is interested to help Pakistans economy.


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## rubyjackass

Hey Neo,
Can you give me some link about tax structure in Pakistan?
Unless you can explain it here.


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## Neo

*Five top foreign companies making huge investment: National Assembly informed​* 
ISLAMABAD (March 06 2009): Minister of Investment Waqar Ahmed Khan has informed the National Assembly that five top foreign companies are making huge investment in Pakistan for construction of hotels, shopping malls, international chain stores and real estate projects, costing billions of dollars.

In a written reply on Thursday, the minister said that presently various foreign companies are engaged in the business of shopping complexes (Malls), hotels and residential projects in Pakistan without collaboration of local companies.

M/s Metro Cash and Carry, Germany and M/s MAD Hypermarkets Pakistan, Dubai are establishing retail chain stores in Pakistan independently. Similarly, M/s Pak Gulf Construction Company, M/s Al-Ghurair-Giga Group and M/s Emmar Properties of UAE are foreign companies and have launched their residential, commercial and hotel projects here.

Details of investment made by foreign companies revealed that the estimated cost of M/s METRO Cash & Carry would be Euro 200 million for investment in trade/ services/consumer products. The company has planned to open at least 10 Cash & Carry wholesales centres in all major cities of Pakistan including Multan, Sialkot, Rawalpindi and Gujranwala. Currently, two stores in Lahore and one each in Karachi, Islamabad and Faisalabad are operational. Their second store in Karachi will be opened soon, the minister informed.

He further said that the estimated cost of Carrefour Store, Lahore, a project of M/s MAF Hypermarkets Pakistan (Pvt) Ltd, (Dubai), comes to $31.3 million. The company from Dubai is opening first ever store in Pakistan at Fortress Stadium, Lahore and is planning to open about 10 more stores in Karachi, Lahore, Islamabad, Multan and Faisalabad during next five years.

The estimated cost of Centaurs Blue Area, Islamabad being constructed by M/s Pak Gulf Construction Company (PGCL), is US $450 million. It is a joint venture between M/s Sardar Builders Holding (UAE) and Al-Tamimi Global Company (Saudi Arabia). The project is under construction and expected date of completion is 2011, he added.

The estimated cost/investment of World Trade Centre, Gold Crest, DHA Islamabad, a project of M/s Al Ghurair and the Giga Group, UAE, is US $1 billion. The project is under construction and to be completed by December 2010.

The projects of Highlands DHA-I, Islamabad, Canyon Views DHA-II, Islamabad and Crescent Bay, DHA-VIII, Karachi are being implemented by M/s Emaar Properties (Public Joint Stock Company) UAE. The estimated cost and investment of these projects is $2.4 billion. The projects are underway and to be completed by December 2014, he concluded.


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## Neo

rubyjackass said:


> Hey Neo,
> Can you give me some link about tax structure in Pakistan?
> Unless you can explain it here.



Sure...let me do some research and I'll explain in a new thread.


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## Neo

*$5m investments likely from Middle East, China ​* 
Saturday, March 07, 2009

LAHORE: Pakistan is expected to receive some $5 million worth of investments from China and the Middle East in the current financial year and a major share of that amount may go to the horticulture sector.

Federal Investment Secretary Tariq Iqbal Puri disclosed this in a meeting held at the Pakistan Horticulture Development & Export Board (PHDEB) head office on Friday. Federal Investment Minister Waqar Ali Khan was also due to attend the meeting but he cancelled the visit at last moment on security concerns.

Puri urged investors to avail tremendous investment opportunities in Pakistan where highly professional, qualified, competent and hard-working workforce is also available. Giving salient features of the governments incentive-based, investor-friendly policies, he said Pakistans investment policy is the most liberal in the region.

Most of our economic sectors are open to foreign direct investment where foreign investors can receive 100 per cent equity. Safety of investment is assured and we have signed Bilateral Investment Treaties (BIT) with many countries worldwide.

He further said that government processes and procedures are being streamlined and a number of incentives and facilitating measures are being taken for promoting business activities. These included the network of industrial estates and export processing zones, economic zones with tax holidays, concession in customs duty on import of plant & machinery and unrestricted outward remittance of capital, profits, royalty, technical & franchise fees etc. Special Economic Zones are proposed to be set up in different parts of the country.

Earlier, PHDEB Chief Executive Officer Shamoon Sadiq said in his presentation that the horticulture sector possesses a great potential for development. However, its growth is inhibited by multitude of constraints. Per hectare yield is very low compared to the international benchmarks. Products are perishable by nature and therefore require proper handling after harvesting to keep them in good condition till they reach consumers and export destinations.

In the existing scenario, a high percentage of horticulture produce is wasted due to ineffective post-harvest practices. As per the estimates, about 25 to 30 per cent of the total production of fruits and vegetables is wasted due to the lack of proper post-harvest handling. This wastage can be reduced by adopting methods that can improve the shelf life of the products after harvesting. High post-harvest losses are mainly on account of insufficient packing/grading and cold storage facilities along with the absence of refrigerated transport/containers. All such constrains can be eliminated through the foreign investment.

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## Neo

*IDB to finance Pak projects ​* 
Saturday, March 07, 2009

LAHORE: Islamic Development Bank (IDB) is ready to finance up to 65 per cent cost of Pak projects in textile, agriculture, energy, food, hosiery and garment sectors in order to foster economic development and social progress.

IDB President Dr Ahmed Mohamed Ali assured deputy leader of a 10-member Pakistan private sector delegation, Iftikhar Ali Malik, during their visit to the 5th World Islamic Economic Forum, concluded a couple of days ago at Jakarta. The forum was attended by high-profile delegates from 57 Muslim states.

Malik, who returned home on Friday after attending the three-day World Islamic Economic Forum which concluded on March 4, told media persons that he held a productive meeting with the IDB chief who assured him that the bank is ready to finance projects in Pakistan up to 65 per cent.

He said that Pakistani businessmen dealing in textile, agriculture, energy, food, garments and hosiery sector must avail this opportunity. He said IDB chief explained to him that prime object of bank is to foster economic development and social progress of the member countries and Muslim states in accordance with the principles of Shariah.

He said that all delegates from 57 Muslim countries who attended the WIEF session expressed their keen interest to establish and promote trade links with Pakistani counterpart in different sectors.

He said that IDB is also ready for investment in joint ventures with Pak private sector provided the projects must be genuine. He said Pak exporters and traders in order to capture Muslim market must adopt modern techniques of marketing only through promotion of branding trade mark of their international standard products.

He said Pak traders must bear in mind the importance of better quality of products, excellent finishing and outstanding design etc. Malik said he is advising the Pak traders on the basis of his 45 years of experience and added that international quality of their branded products will help capture the European Union and Muslim countries markets.


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## Neo

*Pak team to seek UAE investment ​* 
Saturday, March 07, 2009

KARACHI: A top level business delegation of FPCCI and Board of Investment (BOI) will visit United Arab Emirates (UAE) from March 23 to 26, 2009, to attract investment in agriculture sector.

PMs Advisor on Textile and Chairman Pakistan UAE Joint Business Council Dr Mirza Ikhtiar Baig said here on Friday that the delegation comprising FPCCI President Sultan Chawla and leading businessmen will hold meetings with UAE ministers, top business groups of Emirates and leaders of business chambers.

He said that the delegation was visiting UAE on the instructions of President Asif Ali Zardari with the aim to attract investment from Gulf states in agriculture sector including agriculture insurance.

Pakistani delegation will hold meeting with UAE ministers for Finance and Foreign Trade on March 24, 2009 in Abu Dhabi and attend meetings at Federation of UAE Chambers of Commerce and Industry, Abu Dhabi Chamber of Commerce and Industry.

Later in the day, the delegation members will hold match making meeting with UAE businessmen and attend a lunch by Pakistan Business Council.

On March 25, Pak delegation will meet leaders of Dubai Chamber of Commerce and Industry, attend a seminar on investment and networking lunch.

On March 26, the delegation will hold meeting with Sharjah Chamber of Commerce and attend a networking lunch. Later, in the evening, Pakistani businessmen will attend a networking dinner of Pakistan Business Council Dubai.


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## Neo

* IDB ready to finance Pakistan textile sector​*
LAHORE: Islamic Development Bank (IDB) is ready to finance up to 65 percent of the total cost of Pakistans projects of textile. IDB is also ready to finance agriculture, energy, food, hosiery and garments sectors to foster economic development and social progress in Pakistan. President IDB, Dr Ahmed Mohamed Ali assured Deputy Leader of the 10-member Pakistan private sector delegation, Iftikhar Ali Malik during their visit to 5th World Islamic Economic Forum concluded at Jakarta. Iftikhar Malik told newsmen Pakistani businessmen dealing in textile, agriculture, energy, food, garments and hosiery sector should avail this opportunity.


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## Neo

*China willing to give $450m for Basha Dam​*
LAHORE: China has expressed its willingness to give Pakistan $450 million in aid for the construction of Basha dam, a private TV channel reported on Friday. The channel quoted unidentified sources as saying that Pakistan had requested China to lend it technical and financial support for construction of various dams.

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## Neo

*Suparco predicts 23 million tons of wheat production​* 
ISLAMABAD (March 07 2009): The Pakistan Space and Upper Atmosphere Research Commission (Suparco), national space agency, has predicted that total wheat production in the country would be around 23 million tons, two million tons less than the estimate of Ministry of Food and Agriculture (Minfa), official sources told Business Recorder here on Friday.

"Suparco has conducted an aerial photographic survey, and assessed that total production of wheat would not be more than 23 million tons," sources said. This disclosure came at a time when wheat harvesting season is about to start in Sindh, most probably from March 15.

In January 2009, the committee on agriculture, headed by Minister for Minfa Nazar Muhammad Gondal had observed that the country would be able to meet the wheat production target of 25 million tons despite a 50 percent shortfall in availability of urea fertiliser. Minfa still believes that Suparcos prediction is not credible, sources added.

A top government official has also cited some Minfa officials as saying that initially they would insist on 25 million tons of wheat production, but at a later stage it would be revised to 23 million tons. Sources said that the Economic Co-ordination Committee (ECC) of the Cabinet in its meeting on March 3, 2009 had also discussed the total estimated yield of wheat in the light of Suparcos aerial survey.

Minfa, however, vehemently negated Suparcos contention and assured the ECC meeting that crop position was good but it would approach the national space agency and collate with it, sources added. The ECC was also given a short briefing on the proposed Guaranteed Minimum Price (GPM) of wheat at Rs 950 per 40 kg which the private sector is unwilling to pay. There are reports in Sindh that private sector would not pay more than Rs 750 per 40 kg to the farmers.

This reporter interviewed some government officials and private sector individuals in 2006-07 who were unanimous that the actual wheat production was about 21 million tons but the government projected it at 23.5 million apparently to show GDP growth of 7.02 per cent in 2006-07. This year, the same exercise is expected to be repeated, rehearsal of which has already been started by the Minfa.

The government had approved Wheat Procurement Plan 2009, according to which Pakistan Agricultural Storage and Services Corporation (Passco) and provincial food departments would procure 6.55 million tons wheat at Rs 950 per 40 kg. For ensuring targeted procurement of wheat by the federal government, it will be proposed in the Cabinet that Passco should be allocated more areas so that it should be able to establish maximum number of centres in those areas, sources added.

The government also decided that banks would not lend against hypothecation of stocks, but on pledging of stocks. Sources said that to ensure that farmers get fair return for their produce during wheat harvest time in April/May 2009, Minfa convened a meeting of all stakeholders and proposed a comprehensive plan.

The Cabinet had accorded approval of a well thought out plan according to which procurement target had been increased from 5 million tons to 6.5 million tons. According to the plan, Passco will procure 1.5 million tons wheat; Punjab 3.5 million tons; Sindh 1.2 million tons; NWFP 0.3 million tons; and Balochistan 0.05 million tons.

Sources said that the provinces and Passco would establish maximum number of purchase centres where farmers would be offered Rs 950/40 kg along with transportation charges determined by the respective procurement agency. "There will be no restriction on inter-district or inter-provincial movement of wheat, and no coercive measures will be adopted by provincial food departments / Passco for procurement of wheat," sources added, quoting officials.


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## Neo

*Government committed to opening more cross-LoC trade routes​*
JAMMU (March 07 2009): The Jammu and Kashmir government is committed to work with the Central government to open more trade routes across the Line of Control (LoC), Chief Minister Omar Abdullah has said. He said his government wants to facilitate more meaningful trade between the two parts of the state by providing effective banking links, simplifying the procedures and easing restrictions on the movement of men and material.

However, opening up of more routes across the LoC will become possible only after the two countries sign an enabling agreement, Abdullah told the state legislative assembly in a written reply to a question by Nazir Gurezi of the National Conference (NC).

He said in pursuance of decisions taken in the round table conference convened by Prime Minister Manmohan Singh, a working group on "strengthening relations across the LoC" was constituted. The working group, among other things, recommended opening of additional routes across the LoC, which includes the Gurez-Astoor-Gilgit road, he said. At present, trade activities and bus services across the LoC have been established via Chakan-da-Bagh in Poonch district and Salamabad in Baramulla district, he said.

In reply to another question by Sofi Abdul Gaffar of PDP, the Chief Minister said that 2,603 and 3,410 persons have been granted LoC permits for the Poonch-Rawalkote and Uri-Muzaffarabad routes respectively. There are 1,277 applications pending with the passport offices in Jammu and Srinagar and 4,923 applications with *** authorities for grant of such permits, he said.

On the steps to be taken for grant of LoC permits to aspirants other than members of divided families, Abdullah said a decision on the matter would have to be mutually arrived at by the governments of India and Pakistan. Similar decisions have to be arrived by the governments of both countries on opening of Jammu-Sialkote, Jhangar-Mirpur and other routes to facilitate the movement of the members of divided families, he added.


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## Neo

*LSM 100 items growth rate declines by 4.72 percent during July-December​* 
ISLAMABAD (March 07 2009): Minister for Industries and Production Mian Manzoor Ahmad Wattoo has informed the National Assembly that the large scale manufacturing growth rate of 100 major items has shown decline of 4.72 percent during July-December (2008-2009) against 3.76 percent growth in the last fiscal (2007-2008).

In a written reply to the National Assembly here on Friday, Wattoo said that the LSM 100 items growth rate was minus 4.72 percent in the first six months of 2008-2009 whereas growth rate of 100 items was positive consistently during the last three years and growth of 3.76 percent was witnessed in 2007-2008; 8.6 percent growth in 2006-2007 and 8.3 percent growth was witnessed within the LSM during 2005-2006.

He said that the Ministries of Industries; Finance and Federal Board of Revenue (FBR) would thoroughly examine proposals for the development of manufacturing sector. Under the "Measures to Address Declining Trend in Automobile Sector", the government has granted exemption of 35% cash margin on Letter of Credits (LCs) on the non-localised components for the auto manufacturers/assemblers and raw material for the vendor industry as done for other segments for the industrial sector.

Moreover, 35% LC Margin on 218 items was also removed. He said that the government has also taken other measures for growth in the manufacturing sector. In this regard, Ministry of Industries had convened important meetings to devise price packages for revival of manufacturing sector. The meetings were convened with the major stakeholders of industry and Chambers of Commerce and Industry to facilitate local industry and diagnose the problems of the auto-sector.

Minister for Industries also specified the budgetary measures to develop manufacturing sector in Pakistan. It included discouraging import of non-essential and luxury items and minimising the cost of doing business. The pharmaceutical industry given specified active ingredients, chemicals and packing materials at 5% duty.

The manufacturers have been allowed to import samples duty free as per specified conditions in chapter 99 of Pakistan Custom Tariff (PCT). The exemption of sales tax on medical equipment, apparatus, reagents, disposables, spares and donations supplied to operating hospitals of 590 beds or more. He said that the supplies to Export Processing Zones (EPZs) were exempt from central excise duty vide SRO 333(I)/2002.

However, the entry relating to supplies to EPZs could not be given in Third Schedule of the Act at the time of promulgation of Federal Excise Act, 2005. To remove this adequacy, a new entry has been inserted in Table-1 of the Third Schedule of Federal Excise Act to exempt goods imported or purchased locally for use in further manufacturing of goods in export processing zones.

Under the investment /trade facilitative measures, the manufacturers and particularly soap manufacturers based in Azad Jammu and Kashmir have been extended concessionary duty regime in line with SRO 565(I)/2006, as available to Pakistan based manufacturers.

The specified industries/ projects have been de-linked from the local manufacturing condition for import of required machinery, equipments and raw materials etc. The Tariff based system (TBS) for auto sector has further been improved and release of held up indemnity bonds by the customs department has also facilitated the manufacturing sector, he added.


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## Neo

*Khalifa Coastal Oil Refinery project: Parco likely to support resumption of work​* 
ISLAMABAD (March 07 2009): The board of directors of Pak Arab Refinery (Parco) is expected to support resumption of work on Khalifa Coastal Oil Refinery project with a capacity of refining 250,000 barrels oil per day (bpd). It is learnt here on Friday that Advisor to the Prime Minister on Petroleum and Natural Resources Dr Asim Hussain would be attending a meeting, scheduled to be held on March 17 in Abu Dhabi.

Sources revealed to Business Recorder that the management of UAE state-run International Petroleum Investment Company (IPIC) had suspended the work on the Khalifa Oil Refinery project after the controversy with the Pakistan government over the extension of Parco Managing Director Rasheed Jung.

They said the Pakistan government fulfilled the demand of the IPIC management by giving extension to Rasheed Jung for one year and the IPIC was now expected to resume work on KCR. The IPIC management had sought two-year extension of Rasheed Jung.

An accord on implementation of the Khalifa Coastal Refinery project was signed at the Prime Ministers House here on November 13, 2007. The UAE is also the partner in Parco oil refinery. The UAE has 30 percent equity in the Parco, located in Mehmood Kot area of Multan.

The Parco oil refinery is the countrys biggest project with a capacity of processing 100,000 barrels of oil a day. The total refining capacity in Pakistan is over 200,000 barrels per day and the Parco is the major contributor to the crude oil refining requirement.

The Petroleum Advisor visited the UAE on the issue of Khalifa Oil Refinery project in January and the IPIC management had agreed in principle to resume work on 5-6 billion-dollar Khalifa Oil Refinery project in Balochistan province. According to a tentative schedule, the board of directors of Parco will meet in IPIC office in Abu Dhabi on March 17 and will also consider the Khalifa Oil Refinery project.

The Petroleum Advisor was told during his visit that the issue of KCR would be discussed in the board of directors meeting. The Pakistan government is seeking assurance from the IPIC management in writing to resume work on Khalifa Refinery project, the sources said.

The IPIC, in its letter to the Petroleum Ministry written on December 15, 2008, said that global crisis had exposed the Parco to substantial liquidity problems and the company was facing financial difficulties even with routine matters such as opening of letters of credits (LCs).

The company was of the view that it was not the right time for the management to make changes in the Parco. The IPIC had supported Jung fully and termed his removal not acceptable to it. The IPIC had warned it would immediately cease its involvement in the Khalifa Coastal Refinery project if the Pakistan government did not give extension to Jung.

The IPIC believed that the Parco was in process of implementing the 132 million-dollar diesel hydrodesulfurisation project (DHDS) and 5-6 billion-dollar KCR that might be delayed with the removal of Jung. In return, the Petroleum Ministry had responded in a letter written on December 23, 2008, arguing that Jung was superannuated on February 15, 2006 and there was no recommendation from the board of directors for continuation of Jung as Managing Director beyond December 8, 2008.

The Petroleum Ministry had also offered to create a suitable position in the KCR for Jung if approved by the board of directors. But the IPIC insisted on giving extension to him in the Parco. After giving extension to Jung in Parco, the Petroleum Ministry is now hopeful that the IPIC would resume work on the KCR that was suspended due to issue of extension of the Parco Managing Director.


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## Neo

*New trade policy will be for 3 years: commerce secretary ​* 
*Investment adviser says Afghan transit trade volume has doubled, affecting legal imports​*
Sunday, March 08, 2009

KARACHI: Federal Commerce Secretary Salman Ghani has announced that the new trade policy will be for a period of at least three years and will also be consistent.

Speaking to businessmen at the Karachi Chamber of Commerce and Industry (KCCI) on Saturday, Ghani asked the businessmen to provide their suggestions to improve the trade policy.

He also requested for a comprehensive session with the KCCI to share productive inputs for preparing the trade policy. Ghani said the Trade Development Authority of Pakistan (TDAP) would look into matters of declining trade and take measures to remove constraints.

Businessmen Group Chairman Siraj Kassam Teli was of the view at present the role of commercial counsellors in foreign countries is not very productive and they have to be appointed on merit with an ability to meet given targets to increase bilateral trade.

He also drew attention of the federal commerce secretary to the Trade Organisation Ordinance and urged that the chambers and associations having genuine representatives in compliance with TOO 2007 should only be allowed registration.

Adviser to Sindh Chief Minister for Investment Mohammad Zubair Motiwala, in his speech, focused on promoting import-substitute industry and finding out whether investors were getting adequate returns from the trade and industry. 

He highlighted the fact that the volume of Afghan Transit Trade had doubled, having a killing effect on legal imports and import-substitute industry. The government must review it and put restrictions on items which are affecting legal Pakistani imports, he said.

In order to revive the textile industry, he suggested zero-rated inputs for the textile and export-oriented industry. Textile exports will only increase when cost of utilities and inputs is reduced and brought down to the level of competing countries, he added.

KCCI Senior Vice President Mohammad Jawed Bilwani suggested that the government must suspend all provincial taxes and levies to give some relief to export-based industries, which would help them come out of the crisis and enhance exports. He said that the government must announce separate power and gas tariffs for textile and export-oriented industries and demanded duty-free import of accessories for textiles.

On Friday evening, Commerce Secretary Salman Ghani visited the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) to discuss the problems being faced by the business community.

FPCCI President Sultan Ahmed Chawla requested the Ministry of Commerce to set priorities in its policy in order to boost regional trade. It is high time that Pakistan penetrates new markets with new products for successful economic and trade cooperation, he suggested.

He said there was an urgent need for Pakistan to discuss and sign free trade agreements with regional countries and the Ministry of Commerce should play a pivotal role in that respect to achieve the targets.

It is important that periodical evaluation is done to ascertain the problems and progress on trade and economic development and the Ministry of Commerce should take aggressive measures to help improve Pakistans image as a stable economy by working out a strategy to enhance exports and market it as an investment-friendly country, he stressed.

Leading businessmen and industrialists from all over the country attended the meeting and apprised Ghani of problems they were facing in carrying on their business, with particular reference to trade and export of products to international markets.

Ghani assured them that from now onwards the FPCCI will work as a partner of the commerce ministry and not as a client in order to generate a knowledge-based market with sophistication so that our volume of trade and exports can be improved and we achieve the required target.


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## Neo

*Political instability may put economic targets in danger ​* 
Sunday, March 08, 2009

ISLAMABAD: Growing tension on the political horizon in the aftermath of disqualification of Sharif brothers and a sit-in call given by lawyers for reinstatement of deposed judges have put all envisaged macroeconomic targets agreed to the International Monetary Fund (IMF) in uncertainty. 

The targets include GDP growth of 2.5 per cent, inflation at 20 per cent and tax collection at Rs1,300 billion. Official sources in the finance ministry are expressing fears that the economy, which is already struggling, will be put on the backburner by the government as it will focus on dealing with political matters and survival rather than working hard to revive the slowing economy. If heated political temperature continues to mount, it will disrupt economic activities, creating shortage of commodities and putting overall economic targets at stake. 

The political confrontation has created doubts about macroeconomic targets recently revised downward by the IMF and Pakistan in talks held in Dubai, a high-level official who was also part of the Pak-IMF discussions told The News in an interview here on Saturday. 

On the issue of any possibility to bring down the discount rates, the official said the State Bank of Pakistan (SBP) would unveil its monetary policy by next month in which the interest rates will be brought by 150 to 200 basis points keeping in view the decline in core inflation. 

It is worrisome for the economic managers that the core inflation is not coming down as rapidly as it should be and there is need to look at the figures of the Federal Bureau of Statistics (FBS) related to inflation, he said. The last four months (March to June) are quite crucial for the countrys ailing economy in order to implement the IMFs bail-out package of $7.6 billion under the Standby Arrangement (SBA) programme. 

Pakistan and the IMF had revised downward the real GDP growth target to 2.5 per cent from earlier set target of 3.4 per cent for the current fiscal year. Although, the GDP growth target mainly relies upon the performance of agriculture sector but the political instability may plunge the economy into further stagnation in days to come. The load-shedding will also play its role as analysis shows the power disruption increased from July to Dec 2008 as compared to the same period of previous year 2007 despite the fact that the power usage did not increase in that period. The mismanagement and inaction may result into slowing down the economic activities as the government is striving hard to settle down the circular debt related issue of power sector but some banks are showing reluctance to participate in the upcoming Term Finance Certificate (TFC), said the official. 

The attention of the government to settle the political issues will actually help the profiteers and hoarders to earn colossal profits and no one in the ranks of the government will spare time to take care of these matters in the wake of growing confrontation on political arena among major political parties. 

The tax collection target of Rs1,300 billion for 2008-09 will also be in danger because if there will be stalled economic activities how the ambitious tax target will be achieved by the end of June 2009. The FBR has collected Rs706 billion in the first eight months (July-Feb) period of the current fiscal year and the board will have to collect Rs594 billion in the last four months from March to June for reaching its desired tax target of Rs1,300 billion agreed to the IMF. When major urban centers in Punjab will be closed down owing to protests and long march then the FBRs tax collection efforts would be negatively impacted in days to come.


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## Neo

*Pakistan, Jordan to enter into FTA ​* 
Sunday, March 08, 2009

ISLAMABAD: Pakistan and Jordan have decided to ink free trade agreement (FTA) on goods in meetings held on March 4-5 in Jordans capital Amman, a senior official at the commerce ministry told The News.

Jordan has a population of six million, with a whopping per capita income of $2,500. Trade volume between the two countries stands at just $60 million. Pakistan imports from Jordan about 80 to 100 tariff lines whereas exports from Pakistan hover around 400 tariff lines. When asked as to why Pakistan is keen to enter into FTA with a country of 6 million people, the official said that Pakistan wants to capture the market of Iraq and some important Middle Eastern countries.

Mentioning the importance of FTA with Amman, the official said that Jordan has already entered into FTA with the US, EU and Singapore and is in talks for trade agreements with Canada and GCC (Gulf Cooperation Council).

Jordan is a country which depends on imported agricultural products as it has very little land to be used for agriculture. So Pakistan has the potential to export agriculture products to Jordan other than textile products.

To a question the official said Pakistan could import phosphate, potash and shale oil from Jordan. Basically Pakistan wants to establish the linkage with Middle East countries by inking FTA on goods with Jordan. Once this linkage gets established then Pakistani products can easily make inroads into markets of the Middle East countries. This would substantially help in jacking up exports of Pakistan products in the markets of Middle East countries.

To a question the official said that next meeting is to be held between Pakistan and Jordan in Islamabad after 3 to 4 months period. 

In that particular meeting, the official said, both sides would exchange and discuss the wish list for tariff lines to be included for trade under bilateral trade deal.

Pakistan and Jordan are most likely to finalise the free trade agreement within this current year as both sides only need to hold two to three meeting to furnish the trade deal. Jordan uses its Aqaba Port to import and export of goods.


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## Neo

*Pakistan to approach Canada for BIT​*
ISLAMABAD: Pakistan is expected to approach Canada for entering into Pak-Canada Bilateral Investment Treaty (BIT), official sources told daily Times on Saturday. It has been proposed to the government that the Board of Investment (BoI) may be asked to negotiate BIT with Canada as Pakistan and Canada are enjoying good trade relations and Canadian companies are keen to invest in Pakistan. 

Canadian companies are keen to invest in mineral sector and a draft mineral agreement for exploration of copper and gold in Balochistan is yet to be finalised. Once this agreement is ready, the government would enter into partnership with the Canadian companies to start exploration in Balochistan. Official sources informed that Pakistan has imposed ban on imports of few Canadian products, which is the main irritant between the two countries in promotion of bilateral trade.

Red tape-ism at federal ministries level is the main reason behind this unjustified ban on Canadian products and lifting of such a ban can pave the way for increased bilateral trade as well as increased market access for Pakistan in Canadian markets. Pakistan has recently requested Canada for swift market access to its markets so that trade balance between two countries is made equitable.


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*MoI positive for completion of Pak-US BIT draft in April​*
ISLAMABAD: Ministry of Investment (MoI) is hopeful for the completion of mutually agreed final draft of Pak-US Bilateral Investment Treaty (BIT) by April this year, as bilateral consultations on unresolved issues have already started afresh.

Federal Minister for Investment Senator Waqar Ahmed Khan told Daily Times on Saturday that bilateral consultations at the level of United States Trade Representative (USTR) office and government of Pakistan have already started to settle the issues so that both sides could move fast for finalisation of this important agreement. 

He said that the government of Pakistan has hired the services of a Swiss consultancy firm for analysing suitability of Pak-US BIT to reach at final decision on its signing. Similarly, top officials at Ministry of Law and Justice are also analysing the provisions of the proposed BIT agreement forwarded by the US authorities, he added. 

Khan informed that issues pertaining to arbitration, transparency clause still require consultation and resolution. In this regard, Pakistan had sought final comments from the US so that things could be finalised by mutual consent. In a recent meeting with US Ambassador and US Commercial Attaché, the Ministry of Investment has also sought final opinion of US authorities in draft of the BIT.

Once the US reply, report of the Swiss consultancy firm and final view of the Ministry of Law and Justice is available with the Investment Division a detailed review would be initiated at highest level and final negotiations round would be held for completion of final draft acceptable to both countries. Incase final draft is ready by April 2009 then it would be placed before the federal cabinet for formal approval, said Khan.

An effort was made to conclude BIT with outgoing Bush administration before January 20, 2009 in the US but this effort could not yield desired results. Now Pakistan would negotiate and conclude BIT agreement with Barack Obama led US administration and a round of negotiation would be held between the two governments on appropriate time in near future, the minister said. 

He dispelled the impression that signing of BIT with US would be harmful for the economy as well as for the country and said that few issues require final settlement and this agreement would be beneficial for Pakistan, he added. 

The Pakistan Peoples Party led coalition government has decided to obtain legal as well as expert opinion on the draft of the BIT, in this regard, draft has been handed over to the Ministry of Law and Justice and private legal consultants (Swiss consultancy firm) so that its clauses could be analysed keeping in view the international best practices, said the minister. 

Pakistan is of the view that signatory countries to BIT do not use any political influence or any media campaign if any matter is referred for arbitration as well as transparency is upheld by both sides for mutual benefit, the minister explained. 

Its worth to mention here that during the tenure of former President General (R) Pervez Musharraf, there were some apprehensions in the government ministries over the signing of BIT with the US. Due to which signing of this crucial agreement was cancelled during the visit of President Bush to Pakistan.


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*Census of manufacturing industries 2005-06​*
*LSMs contribution stands at Rs 844 billion​*
​
ISLAMABAD: The contribution of Large-Scale Manufacturing at basic prices stand at Rs 844 billion as compared with Rs 264 billion in 2000-01, figures from the Census of Large-Scale Manufacturing Industries (CMI) 2005-06 show.

The basic price is the amount receivable by the producer from the purchaser for a unit of a good or service produced as output minus any tax payable, and plus any subsidy receivable.

Census of manufacturing industries 2005-06 shows value of production at Rs 2929 billion depicting an increase of 165 percent over Rs 1104 billion in CMI 2000-01. LSM contribution to GDP also called as Gross Value Added (GVA) at producers prices has been estimated at Rs 912 billion as compared with the previous Census 2000-01 amount of Rs 280 billion. Capital stock or value of fixed assets amounted to Rs 1147 billion at the end of fiscal year 2005-06 as compared with Rs 428 billion at the end of fiscal year 2000-01. 

The CMI is conducted after every five years using the frame of Provincial Labour Departments .It is conducted by Federal Bureau of Statistics (FBS) in collaboration with Provincial Directorates of Industries and Bureaus of Statistics (BoS) under the Industrial Statistics Act 1942. This enquiry has been conducted through mail questionnaires followed by field visits coordinated by provincial directorates of industries. Compilation of data for Punjab and Sindh has been carried out by their respective Provincial Bureaus of Statistics (BOS). Federal Bureau of Statistics played the role of planner and coordinator of different CMI activities including data processing and consolidation of this report. 

CMI 2005-06 frame was enhanced using industrial directories provided by provincial directorates of industries as well as results of Economic Census 2001 conducted by FBS. The total number of industries surveyed in CMI 2005-06 was 13,146 establishments. Out of these 6417 establishments supplied requisite data (compared to 4528 units in CMI 2000-01). 2364 establishments were found closed and 3213 establishments gave no response. 

CMI report emphasises on scope, coverage, concepts and methods of this census and explains its variables. The report contains detailed census results for Pakistan, its four provinces and Federal Capital Territory of Islamabad on value of input and output, gross value added capital stock (fixed assets), employment and employment cost, etc. The results of CMI would be cornerstone for the forthcoming revision of Pakistans National Accounts.


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*Foreign firm to invest $1bn in copper, gold mining in Balochistan​*
​
ISLAMABAD: The availability of proven 167 million tonnes copper ore reserve in Reko Dik Balochistan have attracted Tethayan Copper Company (TCC), which has decided to launch a mega project and invest over $1 billion by 2010, official sources in the Ministry of Petroleum and Natural Resources told Daily Times here on Saturday. 

The mega project would produce 250,000 tonnes of copper annually, thus bringing Pakistan for the first time on the copper-producing map of the world. 

The Australian company TCC finalised a feasibility study of the starter project aiming to produce 40,000 tonnes of pure copper with an investment of $200 million. As a result of extensive drilling in the area about 167 million tonnes copper ore reserves have been proved. Field studies to assess social and environmental impact of the project have also been completed. The sources further said that due to large size of the deposit M/s Antofagasta & Barrick Gold have taken over 100 percent Australian shares of the TCC. The new management has decided to launch a mega project with an investment of over $1 billion next year. 

By commencement of the mining activities in the area, job opportunities were expected for about 1200 locals of Balochistan, which would help in removing deprivations of the province. Moreover commencement of the project would give impetus to foreign investment in mineral sector of Pakistan, the sources maintained. 

As desired by M/s Antafagasta-Barrick Gold, Ministry of Petroleum and Natural Resources is working on the preparation of international mineral agreement to be signed between the company, government of Balochistan and the federal ministry. To solve the issues relating to the exploration/mining of Reko Dik copper-gold deposits on fast track, a high level steering committee has been constituted by the government of Pakistan having representation from all the stakeholders including the government of Balochistan. 

Reko Diq is a giant copper and gold project in Chaghi, containing 12.3 million tonnes of copper and 20.9 million ounces of gold in inferred and indicated resources. The copper-gold deposits at Reko Diq were believed to be even bigger than Sarcheshmeh in Iran and Escondida in Chile. The Reko Diq copper deposits, which are in the neighborhood of Saindak copper project, are four times larger in copper ore tonnage than Saindak. The most credible international surveys suggest that Reko Diq was one of the biggest undeveloped copper projects in the world with over 11 billion pounds of copper and nine million ounces of gold. 

The sources further said that potential of the country in this sector was widely recognised but the sector is not developed. The government made the development of the mining industry as priority sector in various five years plans, but none of these efforts were materialised. Adequate institutional, human, research and development and other relevant infrastructure have been established for improvement of this sector but they remain under-utilised.


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*Pakistan eyes $40bn aid from donors​*
** Zardari to attend Friends of Pakistan meeting, donors conference in Tokyo 
* Govt to seek help in security, infrastructure and energy​*
ISLAMABAD: Pakistan will seek $40 billion in aid and investment and $6 billion in annual budgetary support over five years during a meeting of the Friends of Pakistan forum and a donors conference scheduled in Tokyo on April 17, sources told Daily Times on Saturday.

President Asif Ali Zardari will represent Pakistan during the meetings. Bilateral and multilateral donors will make pledges the same day.

The decision was made in a meeting at the Presidents House on Saturday, officials privy to the meeting told Daily Times. 

The government would focus on seeking help from bilateral donors in the security, institution building, social development, infrastructure development, governance and energy sectors, the officials said. It will also seek market access for Pakistani goods, oil supplies on deferred payment, barter trade, a trust fund for the development of FATA and debt swaps from western countries, they added.

The participants of the meeting at the Presidents House discussed preparations for the events.

In a statement, Presidential spokesman Farhatullah Babar said that the 15-member Friends of Pakistan group was formed in September last year on the initiative of President Asif Zardari to garner international support for bolstering Pakistans security and economic situation.

The countries and international bodies included in the group are Australia, Canada, China, France, Germany, Italy, Japan, Saudi Arabia, Turkey, the UAE, the UK, the US, the European Union, the EC and the United Nations.

A number of other countries including Sweden, Norway, Spain and the Netherlands are also likely to join the initiative in the near future, Babar said.

Two meetings of the group have thus far been held, one in New York on September 26, 2008 and the other in the UAE on November 17, 2008.

The April meeting will be crucial as a clear affirmation of support of world powers to stand by Pakistan is considered invaluable for the countrys long-term security, stability and economic development. The donors conference on the same day in Tokyo will be attended by representatives of the World Bank and the Asian Development Bank among other bodies to address issues relating to Pakistans immediate financial problems.


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*KESC adds 50MW to citys grid​*
KARACHI: The Karachi Electric Supply Company (KESC) has started commercial operations of a 50MW new rental power project for the city. 

The project, which was completed in less than six months, provides additional capacity to Karachis grid and aims to give relief to consumers by minimising the power shortfall in the city. 

The power generation project was completed in two phases in which rental power plants of 25MW each were installed at two strategic sites of the city. The first plant was installed at the Haroonabad site and the second was installed at the West Wharf Industrial area.

KESC CEO Naveed Ismail stated that the hallmark of the utilitys management is to execute tasks with excellent project management, using its own skills and those of the global partners. 

The supply gap in the citys electricity needs tactical solution, alongside long-term capital investment. Our team has worked with great skill to complete this project and we must commend them in doing this for Karachis benefit, Ismail said.


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*Khalifa Coastal Oil Refinery project: Parco likely to support resumption of work​* 
ISLAMABAD (March 07 2009): The board of directors of Pak Arab Refinery (Parco) is expected to support resumption of work on Khalifa Coastal Oil Refinery project with a capacity of refining 250,000 barrels oil per day (bpd). It is learnt here on Friday that Advisor to the Prime Minister on Petroleum and Natural Resources Dr Asim Hussain would be attending a meeting, scheduled to be held on March 17 in Abu Dhabi.

Sources revealed to Business Recorder that the management of UAE state-run International Petroleum Investment Company (IPIC) had suspended the work on the Khalifa Oil Refinery project after the controversy with the Pakistan government over the extension of Parco Managing Director Rasheed Jung.

They said the Pakistan government fulfilled the demand of the IPIC management by giving extension to Rasheed Jung for one year and the IPIC was now expected to resume work on KCR. The IPIC management had sought two-year extension of Rasheed Jung.

An accord on implementation of the Khalifa Coastal Refinery project was signed at the Prime Ministers House here on November 13, 2007. The UAE is also the partner in Parco oil refinery. The UAE has 30 percent equity in the Parco, located in Mehmood Kot area of Multan.

The Parco oil refinery is the countrys biggest project with a capacity of processing 100,000 barrels of oil a day. The total refining capacity in Pakistan is over 200,000 barrels per day and the Parco is the major contributor to the crude oil refining requirement.

The Petroleum Advisor visited the UAE on the issue of Khalifa Oil Refinery project in January and the IPIC management had agreed in principle to resume work on 5-6 billion-dollar Khalifa Oil Refinery project in Balochistan province. According to a tentative schedule, the board of directors of Parco will meet in IPIC office in Abu Dhabi on March 17 and will also consider the Khalifa Oil Refinery project.

The Petroleum Advisor was told during his visit that the issue of KCR would be discussed in the board of directors meeting. The Pakistan government is seeking assurance from the IPIC management in writing to resume work on Khalifa Refinery project, the sources said.

The IPIC, in its letter to the Petroleum Ministry written on December 15, 2008, said that global crisis had exposed the Parco to substantial liquidity problems and the company was facing financial difficulties even with routine matters such as opening of letters of credits (LCs).

The company was of the view that it was not the right time for the management to make changes in the Parco. The IPIC had supported Jung fully and termed his removal not acceptable to it. The IPIC had warned it would immediately cease its involvement in the Khalifa Coastal Refinery project if the Pakistan government did not give extension to Jung.

The IPIC believed that the Parco was in process of implementing the 132 million-dollar diesel hydrodesulfurisation project (DHDS) and 5-6 billion-dollar KCR that might be delayed with the removal of Jung. In return, the Petroleum Ministry had responded in a letter written on December 23, 2008, arguing that Jung was superannuated on February 15, 2006 and there was no recommendation from the board of directors for continuation of Jung as Managing Director beyond December 8, 2008.

The Petroleum Ministry had also offered to create a suitable position in the KCR for Jung if approved by the board of directors. But the IPIC insisted on giving extension to him in the Parco. After giving extension to Jung in Parco, the Petroleum Ministry is now hopeful that the IPIC would resume work on the KCR that was suspended due to issue of extension of the Parco Managing Director.


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*Zardari for spending huge amount on uplift of Fata ​* 
ISLAMABAD (March 08 2009): President Asif Ali Zardari on Saturday stressed on the parliamentarians from Federally Administrative Tribal Areas (FATA) to spend huge amount on development to bring it at par with other parts of the country. He was talking to a delegation from Fata, comprising of ministers, senators and MNAs at Aiwan-e-Sadr.

He recalled that the government has already announced to double the funds for development programme for FATA from Rs 8 billion to Rs 16 billion during the next two years to bring the tribal areas at par with the other parts of the country. The President also discussed the current political situation of the country with the delegation and sought support of the parliamentarians from Fata to resolve the crisis through reconciliation.

According to sources, Fata parliamentarians expressed dissatisfaction over the role and attitude of governor NWFP Owais Ahmed Ghani and demanded his replacement. Zardari said that there was no other option but to impose governors rule in Punjab after the Supreme Courts verdict against the Sharif brothers. He said that governments first priority was to establish peace in the country, particularly in the troubled tribal areas.

The sources said that the President, however, hoped that the current political crisis would come to an end due to reconciliation efforts. The issue of electing new chairman and deputy chairman of Senate also came under discussion during the meeting. The sources said that the parliamentary leader of Fata MNA, Muneer Khan Orakzai assured complete support on behalf of the elected representatives to the PPP led government on all issues.

It is also learnt that some of the delegation members demanded of the President early lifting of the governors rule in Punjab, observing that the move, on one hand created political turmoil in the country and on the other, it diverted the attention of the government from the restive tribal areas. Some public representatives also sought a similar deal with the tribes in Fata in line with the one struck in Swat by the NWFP government.

According to the statement of Presidency, the President said that the government is endeavouring to bring the tribal areas at par with the other regions, and believed that development in Fata should be in line with the wishes of the tribal people.

The president emphasised that the present efforts of the government are aimed at bringing back stability, peace and tranquillity that was the characteristics of this area. We believe that development and creation of job opportunities for locals of this area would help achieve the desired objectives.

It may be recalled that President Asif Ali Zardari has already announced a huge compensation package of Rs 280 million for those killed and wounded in the tribal areas due to militants attacks, besides increase in the development outlay of FATA by Rs 3 billion taking it to Rs 11 billion. The delegation members thanked the President for his support and his keen interest in the development of this region. The delegation included among others, Federal minister for Environment, Hamid Ullah Jan Afridi and minister of State for KANA Abdul Raziq.


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*50 megawatts rental power project: KESC starts commercial operations ​*
KARACHI (March 08 2009): Karachi Electric Supply Company (KESC) has started commercial operations of 50MW rental power project for Karachi. The project was completed in less than six months after its announcement in September 2008, and provides additional capacity to Karachis grid, aimed at providing relief to the consumers by minimising power shortfall in the city.

According to a press release issued by KESC on Saturday the project, which marks the fastest ever addition of capacity to Karachis power grid, was completed in two phases of 25 MW each. Installations have been made at two strategic sites of the city, with the current addition having been made in the West Wharf industrial area, while the initial 25 MW has been added at Haroonabad site.-PR


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*Textile City in doldrums? ​*
EDITORIAL (March 08 2009): Addressing a news conference in Karachi on Wednesday, the CEO of the Pakistan Textile City (PTC), Zaheer Hussain, said the progress of the project has stalled due to shortage of funds and frequent changes in board members. PTC was launched nearly two years ago as a public-private venture with the objective of establishing a WTO and ISO compliant textile-processing zone over 1,250 acres of land in Port Qasims industrial area.

Another 500 acres of land is also being acquired near Gulshan-e-Hadeed for a workers colony. So far around Rs 1.4 billion have been spent on the acquisition and development of land and approval of the master plan. Also, contracts for development work, including hiring of technical advisor for 250MW power plant and setting up of a combined effluent treatment plant, have either been completed or are at an advanced stage of progress.

But further progress has been halted because the required funds are not forthcoming from the shareholders. The federal government, a major shareholder with up to 45.45 percent share, so far has contributed nothing except for two guarantees of Rs 250 million, each. The National Bank of Pakistan gave Rs 50 million and the Sindh government, holding 9.09 percent equity, has contributed a total of Rs 100 million. The estimated total cost of the project is around Rs 14-15 billion.

At the current rate of progress the cost is going to increase manifold by the time the project is completed. Then there is the problem of some people wanting to be part of the project simply to buy and sell land to make money rather than to set up textile units. It is pertinent to recall here that last August the Sindh government had taken a serious notice of speculators acquiring plots in various industrial zones in the province.

It had announced several measures to ensure that all those who apply for such plots would actually install industrial units on the land allotted to them. The same issue seems to be afflicting PTC as well, which is apparent from the project CEOs comments that diverse interests retard the pace of development and that some board members are keen to keep the cost of land low, while others want to cut expenditure by compromising on quality. In any case, with this kind of attitude, PTC cannot be expected to become a textile zone boasting world-class infrastructure facilities.

It is plain that as a major shareholder the federal government needs to act urgently to ensure that the project moves forward. To make that happen it must do two things. One, of course, would be for it to fulfil its part of the financial obligations. And the other would be to ensure that the PTCs board members are genuine stakeholders. Those who run its affairs or apply for industrial plots must furnish affidavits to the effect that they would set up textile units on these plots, and in the case of failure accept allotment cancellation.


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* Cotton target missed by three million bales​* 
KARACHI (March 09 2009): The country missed the 14.1 million bales cotton production target for 2008-09 by some 3 million bales due to various factors, including decline in the cultivated area, use of pirated Bt cotton seed, and mealy bug attack on standing crop, sources in agricultural sector told Business Recorder on Sunday.

They said that at present almost all fields of cotton have been cleared in Sindh and Punjab and only very few of areas have some cotton crop standing, from where about 0.1 to 0.2 million cotton bales are expected during this month.

The process of cotton arrivals in the ginneries has become slow and during last 15 days of February arrivals of cotton was less than 0.1 million bales--88,178 bales. The Pakistan Cotton Ginners Association (PCGA) would release its final report of phutti arrivals in the first week of April. It issued its last report on March 4, which showed that up to March 1, 2009 some 11.2 million bales had arrived in the ginneries.

Following PCGA report, traders believe that the country has missed its both original and revised cotton production targets by a huge margin. As per PCGA statistics, cotton production stood at 11,221,104 bales at the end of February 2009, while more 0.1-02 million bales are expected during this month to make total cotton production to about 11.4 million bales, sources said.

During the current season, some 0.29 million bales have been exported and 9.57 million bales sold to textile millers till February 28, while the unsold stock stands at 1.1 million bales including (11,53,279 pressed bales and 30,291 bales in shape of phutti), said PCGA report. Ginning factories of Punjab produced total 8,237,814 million bales, 2,983,290 million bales in Sindh, it added.

"The country has missed its actual and revised cotton production targets due to 7 percent decline in cotton cultivation area," said Dr Badar Ebad Siddique, a former vice president of Pakistan Central Cotton Committee (PCCC).

He said that due to attractive price of rice and sugarcane, the farmers in Sindh and Punjab switched over to other crops. However, he said that Sindh had achieved its cotton production target of 3 million bales.

"We were already expecting losses and target missing due to the sowing of cultivated Bt cotton," Ghulam Rabbani said. He said that uncertified seeds, low quality medicines and delayed availability of Dai Ammonia Phosphate (DAP) were some other reasons of missing the target of cotton production.

Bt cotton seed and crop medicines, which are available in the domestic markets, are not as per standard and some of them are expired, he added. Government should be ensured fertiliser availability on time and quality seeds and medicine to achieve next year cotton target, he added.


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*IMF report does not reflect ground realities​* 
ISLAMABAD (March 09 2009): An International Monetary Fund (IMF) report, titled, The Implications of Global Financial Crisis for Low-Income Countries, presents statistics that no longer reflect the changing ground realities because of the deepening global recession. This is manifest for the GDP growth estimates for Pakistan. The report shows a projected GDP growth rate of 2 percent in 2009.

However, during the quarterly review of the state of Pakistan economy in February 2009, a requirement for the release of the next tranche of the 7.6 billion dollars standby arrangement by the end of March, 2009, GDP growth was scaled down by IMF staff from the original 3.5 percent to 2.5 percent. This was stated by Shaukat Tarin, Advisor to Prime Minister on Finance, on his return from Dubai.

This figure remains at odds with those presented by the State Bank of Pakistan (SBP) in its detailed monetary policy statement, January-March 2009. The projected SBP growth rate was 3.7 percent, lowest in last six years.

The central bank said that poor law and order situation, besides structural weaknesses such as power shortages, etc, were responsible for slow economic growth during the current fiscal year.

"Precarious and unsustainable balance of payment position and heavy reliance of the government on borrowings from the SBP remained the major sources of macroeconomic instability in the initial months of FY09. High international commodity prices, global financial crisis, and slowing economic growth world-wide aggravated the domestic vulnerabilities " the SBP had said in its statement.

The global economy is in the midst of a deep downturn as an adverse feedback loop between the real and financial sectors is taking its toll both in advanced and in emerging and developing countries. As a result, commodity prices are unlikely to recover in the short run.

The IMF report says that the global financial crisis is expected to have a major impact on low-income countries (LICs). The crisis is projected to increase the financing needs of LICs by at least $25 billion in 2009.


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*19,000 poverty alleviation schemes progressing under PPAF​*
ISLAMABAD (March 09 2009): Chief Executive Pakistan Poverty Alleviation Funds (PPAF) Kamal Hayat said on Sunday that about 19,000 different poverty alleviation schemes are progressing in various parts of the country. Talking on state-owned tv channel, he said Pakistan Poverty Alleviation Funds is working in about 90 percent of the districts the country with aim to alleviate poverty from the areas.

He said about 75 partners are also with working PPAF. To a question he said PPAF is working in about 3,4000 villages throughout the country. He said the aim to establish PPAF was to provide help to the poor by enabling them to gain access to resources for their productive self-employment, to encourage them to undertake activities of income generation, poverty alleviation and for enhancing their quality of life. Kamal Hayat said the Pakistan Poverty Alleviation is sponsored by the government and funded by the World Bank.

To a question he said PPAF has a very effective monitoring system. Every three months a team visits different villages to review the performance of schemes, he added. He said donors also visit after six months to monitor the different schemes.


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*Poverty alleviation: IDB will double annual allocation of $500 million, says Tarin​*
ISLAMABAD (March 09 2009): Advisor to Prime Minister on Finance Shaukat Tarin has expressed the hope that Islamic Development Bank will double its existing annual allocation of $500 million for the poverty alleviation programme in Pakistan. He said a steering committee would be set up in this regard, wherein the donor agency would have membership for monitoring it, said a message received here from Jeddah.

Shaukat Tarin called on the President, Islamic Development Bank Dr Ahmad Muhammad Ali at the IDBs headquarters in Jeddah and discussed with him matters relating to the co-operation between the bank and Pakistan in various sectors. He briefed the Banks President about the present economic situation and Pakistans successful come out of the economic crisis.

Pakistan needs support of the true friends like Saudi Arabia for putting its ship on an even keel, he said. He said that Pakistan had made a breakthrough and succeeded in controlling the inflation, particularly the prices of the eatables.

We expect that inflation will come down to 10 per cent by the end of June, this year, he added.

Advisor to PM on Finance said that the stock Exchange had been restored and the index gone up to 600 points. The current account deficit and the fiscal deficit has considerably been lowered with satisfactory level of foreign exchange reserves, sufficient to cover a period of 4 to 5 months, he said.

He said that by enhancing the bank rate, inflation had come down, which he added had stabilised the economy and now it was moving in the right direction.

When apprised about the Presidents visit to ECOs headquarters, Tarin said that there was also a need of promoting trade between ECO and Saarc. Tarin appreciated IBDs assistance of $307 million for Neelum- Jehlum Project and also invited its participation in the 12 billion dollars energy project of the construction of Basha Dam.

Dr Ahmad Muhammad Ali appreciated the achievements of the present democratic set up. He assured to extend full co-operation to Pakistan government in overcoming the difficulties. He said the IDB would look into the possibility of financing mega projects in Pakistan.


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*Efforts to revive tourism in Kaghan and Swat underway​*
ISLAMABAD (March 09 2009): Efforts, though belated, are underway by both public and private sectors to revive tourism activities in earthquake hit areas of Kaghan as well militancy prone Swat, where tourism sector used to provide livelihood to one out of every ten persons.

Both of these fascinating valleys were visited every year by thousands of tourists not only from Pakistan, but also from around the globe. Pakistans spectacular tourism industry had suffered after 9/11 incident in the United Sates, however, it gradually improved in the ensuing years. Then came the devastating earthquake on October 8, 2005 followed by militancy in Swat and NWFP. This phenomenon ground the potential tourism industry to a lull.

Pakistans tour operators, Pakistan Tourism Development Corporation (PTDC) and many others linked to travel and tour sector bear witness to the this grim situation that made countrys tourism industry as principal victim. Realising the pressing need for reviving tourism upon which, rely most of the world economies, the Ministry of Tourism is making elaborate measures to extract benefits for Pakistan from this multi-billion dollar trade.

We have prioritised to boost our tourism, said Minister for Tourism, Maulana Atta ur Rahman, who has recently assumed charge as the minister, after the slot remained vacant for about one year.

Maulana Atta, who holds a Masters degree in Islamic Studies from Gomal University, DI Khan, is also ambitious to see improvement in law and order to elevate tourism activity in NWFP for the promotion of the industry. We need to let the world know that we are a peace loving country, progressive nation and hospitable people, the minister said stressed on drawing an end to militancy in the area.

He regretted that Pakistan is being negatively projected by the Western media, where certain countries have had issued negative travel advisories. It is a national obligation that we all should serve our country in our respective capacities, he said and urged national media to counter anti-Pakistan and anti-Islam propaganda in the West for the best interest of the country.

The minister is likely to embark upon a foreign tour to allay the fears of Western people about either Pakistan or Islam. The tour will also be used to learn from the expertise of such countries that have developed their tourism industry, he remarked.

Meanwhile, PTDC and Usaid jointly launched a project at Abbottabad that aimed at fostering public-private partnership to restore tourism linked with livelihoods in Kaghan Valley, devastated by earthquake in 2005. In this connection, PTDC and USAID-funded Improving Livelihoods and Enterprise Development (I-LED) programme implemented by CNFA, Tourist Facilitation Centre (TFC) at Abbottabad.

One out of ten persons in Kaghan Valley was linked with tourism industry that suffered massive setback in the October 8, 2005 devastating earthquake, depriving hundreds of thousands of people of livelihood.

MD PTDC Brigadier Amanullah (Retd) said the federal government was fully equipped with the latest multimedia and fixtures for the convenience of the tourist transiting to Kaghan Valley from all over Pakistan.

PTDC has already started a daily bus service to Kaghan from Rawalpindi and its hotels are operational in Kaghan Valley to facilitate tourists. A large number of people, who were affiliated with tourism industry in picturesque Kaghan Valley, were rendered jobless in the wake of deadly earthquake in 2005. We need to improve and promote our local tourism industry. Amanullah appreciated the efforts of US Agency for International Development efforts for promoting tourism in Pakistan, besides contributing to other sectors. He emphasised on improvement of the local tourism industry in Pakistan.

Programme Director USAIDs I-LED programme Mark Treacy who was the Chief Guest of the inauguration ceremony stated that USAIDs I-LED programme was helping the tourism sector by providing training to the local community in front office management, tour operations, housekeeping management, food and beverage operations, quality assurance and hotel management in terms of providing better facilities and quality services to tourists visiting the valley.

He said I-LED supported with grants scheme for renovation and upgrading of the hotels according to international standards of one-, two-, and three-star levels. So far nine hotels are upgraded in Kaghan Valley in Naran and Shogran, he said.


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*Government refuses to give six percent R&D support to apparel sector​* 
ISLAMABAD (March 10 2009): The government has refused to provide six percent research and development (R&D) support to the apparel sector due to lack of sufficient financial resources even after the issuance of the SRO, reliable sources in the Ministry of Textiles told Business Recorder here on Monday.

According to the sources, even after getting loan from the International Monetary Fund (IMF) the government is unable to pay a single penny to the textile sector in the name of R&D.

"We know that Syed Naveed Qamar, who was having the additional charge of the Ministry of Finance some time ago, had announced continuation of six percent R&D support to the apparel sector even after June 30, 2008, but now this promise cannot be entertained further," sources disclosed.

To make our textile sector more competitive and to attract foreign investors, the government had been continuously providing six percent subsidy to the textile sector prior to the 2007-08 fiscal, but due to the lack of financial resources, the former Governor of the State Bank of Pakistan (SBP) announced that the government would abolish the R&D support being provided to the textile sector from June 30, 2008 onwards.

The subsidy was withdrawn on June 25, 2008 without informing the textile exporters. This made the textile sector to face a loss of Rs 12 billion. A textile industrialist, speaking on the condition of anonymity, told this scribe that an SRO had been issued a week ago by the government in which the textile exporters were assured refund of 40 percent of the total shipment bill deposited by them in the SBP till June 30, 2008. "From where would we get the rest of 60 percent," the industrial said.

He said that the textile exporters were already facing strict competition in the international market. Bangladesh, India and China had reduced their cost of production by 12 percent as compared to Pakistan, he said, adding that China had increased its rebate from seven percent to 15 percent to protect its textile exporters.

Textile exports of the country during the first seven months of the current financial year decreased by 3.79 percent as compared to the corresponding period of 2007-08. Exports of textile products during January-July (2008-09) were recorded at 5.82 billion dollars as compared to exports of 6.05 billion dollars registered during July-January (2007-08).

Exports of cotton yarn increased by 215.22 percent during the period under review from 22.82 million dollars during the last fiscal year to 71.96 million dollars during the corresponding period of current financial year. During the first seven months of the current financial year, the exports of cotton cloth increased by 8.9 percent, towels by 14.31 percent and made up articles 1.26 percent.

However, the highest decrease of 56.51 percent was registered in the export of yarn other than cotton yarn. During the period under review, the exports of yarn other than cotton yarn were recorded at 13.12 million dollars as against exports of 30.17 million dollars registered during the last financial year.

Similarly, the textile exports during the month of January 2009 were decrease by 8.98 percent as compared to December 2008. Exports during January 2009 were of 753.9 million dollars as compared to exports of 720.3 million dollars recorded during December 2008.

The industrialist said that during the last month, gas supply to the industrial areas decreased by 50 percent. "We do need the continuous supply of gas to run the captive power plants as well as boiler. The shortage of gas and electricity has already discouraged the foreign investors, while most of the textile industrialists, by keeping this thing in view, are shifting their businesses to Bangladesh and India," said the industrialist.


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## Neo

*Trade deficit swells to $11.621 billion in July-February​* 
ISLAMABAD (March 10 2009): Pakistan trade deficit has swelled to $11.621 billion in the first eight months of current fiscal with $23.777 billion imports against $12.156 exports, according to Federal Bureau of Statistics (FBS). Provisional trade figures released by the FBS here on Monday, however, showed that trade deficit in July-February 2008-09 has declined by 6.86 per cent over the same period of last year.

As a result the trade deficit has come down from $12.477 billion of the same period of last year to $11.621 billion in the current fiscal. Detailed analysis of the data showed an increase of 4.25 per cent in exports in July-February 2008-09 as compared to the same period of last year. Exports increased to $12.156 billion during the period under review from $11.660 billion of last year.

Imports have also declined by 1.49 per cent from $24.137 billion last year to $23.777 billion during the first eight months of current fiscal. Monthly analysis of the data showed that exports in February declined by 6.94 per cent over the previous month and shrunk to $1.266 billion in February from $1.360 billion in January 2009.

A comparison between February current and last fiscal showed that exports registered a decline of 17.68 per cent in February 2009 over the same month of last year with total exports going down to $1.266 billion in February 2009 from $1.538 billion in the same month of last year.

The imports have also witnessed decline of 16.02 per cent in February 2009 over previous month. Imports of the country witnessed a decline of 41.95 per cent in February 2009 with total imports at $2.133 billion as against the imports of $3.657 billion in February 2008. With this decline in imports the trade deficit also declined in February 2009 by 59.56 per cent over the same month of last year. The trade gap in February 2009 was recorded $857.247 million against $1.167 billion for the pervious month indicating a decline of 26.59 per cent.


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## Neo

*Donors consortium to be set up for financing Basha Dam ​* 
Tuesday, March 10, 2009

ISLAMABAD: The government will establish a consortium of all major multilateral and bilateral donors led by the Asian Development Bank (ADB) before the next budget for arranging $12.1 billion funding for the construction of Diamer-Basha Dam, it is learnt.

The World Bank (WB) may become part of the consortium for the project but it will not assume the driving seat in terms of providing funding for the multibillion dollar Basha Dam. In rupee terms, the cost of Basha Dam has been jacked up to Rs1 trillion as depreciation of rupee against dollar by 30 per cent alone increased its cost by Rs280 billion during the current fiscal year, said the official sources.

When the rupee stood at 60 against a dollar, the cost of $12.1 billion translated into rupee was Rs720 billion, which was jacked up to around Rs1 trillion when the rupee touched 80 to a dollar, official sources explained. 

Although, the government has not yet made official request to the World Bank for becoming part of the consortium as it is believed that the multilateral donors are not in competition with each other. When the ADB is on the driving seat the WB will not be involved up to that extent, official sources, having knowledge about working of the multilateral donors, confirmed while talking to The News on Monday.

When Secretary Economic Affairs Division, Farukh Quayum was contacted for comments, he confirmed that the consortium of donors would be established by April 2009 in order to arrange financing for Diamer Basha Dam.

He said that the Islamic Development Bank (IDB) would also become part of the upcoming consortium for investing into Basha Dam. However, the sources said that it was understood that when the ADB would play major role in the construction of the Basha Dam other donors including the WB might become part of it but it would not play major role because these donors pursued projects in synchronization with each other.

The government, the sources said, is likely to establish donors consortium before the ministerial level meting of Friends of Pakistan in its scheduled meting of April 17, 2009 in Tokyo, enabling the donors to become part of the consortium.

The government is all set to divide Diamer-Basha Dam into two main categories for meeting financing requirements of $12.1 billion. 

The tentative project cost of Diamer Basha Dam, the official document states, would be $12.1 billion, with total installed capacity of 4500 MW. There will be 12 units having capacity of 375 MW and the average annual generation of the dam will be 19000 GWH.

The Diamer-Basha Dam project is located on Indus River about 315 km upstream of Tarbela dam, 165 km downstream of Northern Areas capital Gligit and 40 km downstream of Chilas.

On the main dam, the type of the Diamer-Basha Dam will be Roller Compacted Concrete (RCC). The maximum height of the dam will be 270 m (height of its type in the world). On diversion system, there will be 2 number Diversion Tunnel (right side) and 1 number Diversion Tunnel (right side).

Regarding main spillways, there will be 14 gates and the size of gate will be 11.0 x 16.5 m. On the reservoir side, the maximum operating level of Diamer Basha Dam will be EI. 1160 m and minimum operating level of EI.1060 m. The Gross Capacity of the dam will be 9.0 BCM (7.3 Million Acre Feet (MAF). The live capacity of the dam will be 7.9 BCM (6.4 MAF).

Regarding the outlets of the Basha Dam, the technical feasibility illustrates that there will be 7 low level outlets and five sluicing. On sluicing tunnels, the Diamer-Basha Dam will have one right bank (through conversion of one diversion tunnel) and on the left bank there will be one additional tunnel.


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## Neo

* Pakistan-Russia business forum to be established ​* 
Tuesday, March 10, 2009

KARACHI: Two-way trade between Pakistan and Russia is not balanced, though Pakistani companies and businessmen are making a significant contribution to expand the Pakistani portion of trade. However, there is still a persistent need to increase efforts for growth of current low volume of trade between the two countries.

A meeting in the presence of Vladimir V Seliverstov, Consul General of Russian Federation, was held under the convenership of Abdul Rauf Tabani recently. Realising the importance of enhancing trade and business relationship between Pakistan and Russia, it was resolved to establish a Pakistan-Russia Business Forum (PRBF) in Pakistan. Tabani has been appointed convener of PRBF till a proper body is elected later.

The PRBF will work under the blessing of the Embassy of Russian Federation in Pakistan, Office of the Trade Representative of Russian Federation, Islamabad, Consulate of Russian Federation, Karachi and Office of the Deputy Trade Representative of Russian Federation, Karachi and the assistance of Trade Development Authority of Pakistan.

The aims and objectives of the Forum shall be encouragement and promotion of business, mutual understanding and friendly relations between the industrial and business communities of Pakistan and Russia. The Forum shall be non-political, non-profit and non-partisan.


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## Neo

*Countrys trade deficit down by 5.68% in July-Feb​*
ISLAMABAD: The countrys trade deficit went down by 6.68 percent in July-Feb of the current fiscal year despite slowdown in the global economy, sliding trend in aggregate demand in economy and depreciation of Pak rupee.

Countrys trade deficit has been recorded at $11.621 billion in first eight months (July-February) of 2008-09 as compared to a deficit of $12.477 billion in the same period last fiscal year 2007-08, indicating a decline of 6.86 percent.

Export (July-February): According to the official data released by the Federal Bureau of Statistics (FBS) Monday has revealed Pakistans exports amounted to $12.156 billion in July-Feb period of current fiscal year as compared to the exports of $11.660 billion in the same period of last fiscal year, projecting an increase of 4.2 percent. 

According to the budgetary target, the exports of the country were targeted to grow by 16.5 percent in the current fiscal year to meet the annual exports target of $21.2 billion, however, recently revision in Macro-Economic targets exports growth has been projected at negative -5.5 percent, actually admitting failure in meeting export target. 

Import (July-February): However, due to the low import demand in advanced economies, unprecedented power and gas loadshedding, depreciation of Pak rupee, increase in cost of capital as well as production and capacity constraints are instrumental in low growth of countrys exports, said an official at Ministry of Commerce. Similarly, around 95 percent contribution to imports during first half came from petroleum, fertiliser and wheat imports.

Countrys imports have witnessed decline by 1.49 percent and amounted to $23.777 billion in eight months as against the total imports of $24.137 billion in same period last fiscal year. 

Drop in aggregate demand in economy can be witnessed by decrease in imports from 12.8 percent growth in first six months to a negative growth of 1.49 percent in Jul-February period. This clearly shows that State Bank of Pakistan and governments steps are now yielding results and it is hoped that demand in economy would go down further in months to come, an official said.

Comparison February 2009 over January 2009: Country has exported goods worth $1.266 billion in February 2009 as compared to exports of $1.360 billion in January 2009 showing decline of 6.94 percent. 

Imports amounted to $2.123 billion in February 2009 as against imports of $2.528 billion in January 2009 indicating a decrease of 16.02 percent. Trade deficit was at $857.247 million in February 2009 as against deficit of $1.167 billion indicating a major decline of 26.59 percent.

Comparison February 2009-February 2008: Exports of the country registered a decline of 17.68 percent in February 2009 with total exports of $1.266 billion as against exports of $1.538 billion in February 2008. 

Imports of the country witnessed a decline of 41.95 percent in February 2009 with total imports at $2.133 billion as against the imports of $3.657 billion in February 2008. 

Trade deficit in February 2009 declined by 59.56 percent with total deficit at $857.247 billion as against the deficit of $2.119 million in February 2008.


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## Neo

*Services export witnesses growth of 33.86% in July-Jan 2009 ​*
KARACHI: The services trade deficit narrowed down by almost 38 percent in the first seven months of current fiscal year over the same period of previous year. The services deficit came to $2.470 billion in the period under review against $3.967 billion in the corresponding period of last fiscal, Federal Board of Revenue (FBR) reported Monday. Services export registered 33.86 percent growth to $2.161 billion in July-January 2009 period over $ 1.614 billion in the same period 2007-08. The imports of services decreased by 17.02 percent to $4.632 billion in the said period against $5.582 billion in the last fiscal. In month of January current fiscal, the service trade deficit reduced even greater by 75.58 percent to $164.075 million against $671.805 million in the same month of previous year. The growth in export of services during this particular month was 40 percent while the imports decreased by 46.71 percent in the same month of last year. 

The service sector comprises government services, travel services, transportation services, financial services, communication services, construction services, computer and information services, royalties and licenses. Despite having enormous potential, the growth and development of services sector in Pakistan has been quite negligible. It is perceived as supplement to the exports in the goods sector. Lack of knowledge about the international regime on services export, capacity constraints, inadequate networking, poor marketing and politico administrative environment are the major factors for underperformance in this very important area of the economy. 

Government is currently working on the project to boost the export and for the purpose a special cell has been created in Trade Development Authority of Pakistan (TDAP). TDAP initially identified five high potential sectors including construction and architecture, health and medical, legal and accountancy, information technology and financial services including banking, insurance and financial management. The world market services valued more than $3 trillion in 1998 and believed to reach 50 percent of the world trade by 2020.


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## Neo

*World Bank and PSEB: National IT industry plan in the offing ​*
KARACHI: A joint plan of World Bank (WB) and Pakistan Software Export Board (PSEB) to prepare a roadmap for export-oriented national IT industry is likely to be accomplished within a month, a top official told Daily Times on Monday. 

The project, which has started few months ago, will chalk out strategies for the public and private sectors development programmes in the promotion of IT industry, which will be sent to the government for approval of funds.

The government will also endorse the PSEBs financial grant request to WB for the development of various IT industry projects to be designed under this plan. The global funding organisation is expected to provide financial aid and technical support to develop a comprehensive and export-oriented strategy for the IT industry, an official told.

Moreover, the joint framework will further be discussed with all the representatives of IT industry stakeholders particularly Pakistan Software Houses Association (PSHA) before the board forwarding it to the government for approval of funding. 

As per policy, PSEB will streamline the active support and efforts of Board of Investment and Trade Development Authority (TDAP) to pursue the governments back in the promotion of investment and service exports of IT industry.

Managing Director PSEB Talib Baluch told Daily Times that the national IT plan will obtain proposals from all the stakeholders of the industry so the joint plan would be framed to expedite industrys growth in a rapid pace.

He added that WB in collaboration with PSEB has been working on to sort out basic challenges for the national IT industry that includes advanced infrastructure, human resources education programmes, service and product marketing and logistic support.

Baloch further briefed that the main objective of the plan is to enhance countrys exports to various parts of the world through building and facilitation of IT industry with the high preference.

Pakistans exports of IT and IT-enabling services have registered 40 percent growth with $118 million in July-January as compared with the same period a year-ago, it was learnt. 

PSEB chief was of the view that Pakistan IT exports will not be hurt from the current global economic slowdown and sustain its growth in the developed economies of the world.

He further said that public sector departments are keen to develop IT industry through expansion of its exports of products and services to earn foreign exchange for the country. 

This industry can give them immediate returns as compared to any other industry of the country without any barriers protectionism and trade conditionality, he added.


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## Neo

*Pakistan to continue IPI project even if India quits: Zardari​*
LAHORE: Pakistan will purchase gas from Iran even if India pulls out of the project, President Asif Ali Zardari said on Monday, adding he would discuss the matter with Iranian officials. A private TV channel quoted him as telling an Iranian news agency the Iran-Pakistan-India gas pipeline project was in the best interest of Pakistan and Iran. He said the government had already proposed to Iranian President Mahmoud Ahmadinejad that it would continue with the project even if India pulled out. Zardari is due to leave for a two-day visit to Tehran today (Tuesday). Presidential spokesman Farhatullah Babar said the president attached great importance to the visit and had chaired a meeting at the Presidency to review the preparatory work by various ministries in connection with it. sajjad malik/daily times monitor


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## Neo

*Pakistani workers not keen on Malaysia, envoy says ​*
KUALA LUMPUR (March 10 2009): Pakistani nationals are generally not interested in working in Malaysia due to perceived lower wages and perks compared to the Middle East, a Pakistani envoy said Monday. Only 21,000 Pakistani workers came to Malaysia in the last six years, following a labour pact signed by both countries which was supposed to see 100,000 workers brought in, said Nadeem Ashraf, labour attache with the Pakistani High Commission in Kuala Lumpur.

"Pakistani workers prefer to work in the Middle East countries where wages are very attractive and work conditions better. "Moreover, it is also nearer home," Ashraf told the official Bernama news agency.

Under the labour pact, the 100,000 workers would have been placed in the construction, plantation, manufacturing and services sectors. Reports of Bangladesh and Pakistani workers - who can earn from 80 ringgit (22.85 dollars) per day - running away from their employers or lodging reports of alleged abuse, are common in local newspapers. Many claim that their employers withhold their wages or place them in deplorable living conditions.


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## Neo

*Saudis may provide multi-billion dollar aid package​* By Sher Baz Khan 
Monday, 09 Mar, 2009

ISLAMABAD: Saudi Arabia is expected to announce a multi-billion dollar aid package for Pakistan in the form of oil and fertiliser on deferred payment and securitisation against workers remittances during the March 27 meeting of the foreign ministers of the Friends of Pakistan group in Tokyo, informed sources told Dawn.

The Advisor to the Prime Minister on Finance, Shaukat Tarin, returned here on Monday from his two-day official visit to the kingdom. 

His visit marked the start of governments bid to lobby for getting financial assistance from friendly states as Pakistans macro economic indicators are witnessing a recovery and the International Monitory Fund (IMF) has already started providing its 23-month-long $7.6billion financial package to the country.

Mr Tarin held a meeting with the Saudi Minister for Finance, Dr Ibrahim bin Abdul Aziz Al Assaf in Riyadh. 

According to a Finance Ministry press release issued here, both the officials discussed issues relating to Pakistan's economic reforms and development, pace of economic stability in the country and the role of the Saudi Development Fund in support of development projects in Pakistan.

They exchanged views on existing turmoil in international capital markets and global economic recession and discussed ways and means for strengthening the regional economies of South Asian states with special emphasis on Muslim countries. It was held that in order to obtain sizeable and cost effective financing within the economic cooperation framework of Muslim countries, global investors could be invited to attractive investments in secured economic instruments. 

Matters relating to provision of crude oil from Saudi Arabia were bilaterally discussed. 

Mr Tarin, during his discussions with his Saudi counterpart covered various subjects like securitisation of workers remittances, alleviation of poverty and enhancing the volume of trade, especially the export of agricultural products to Saudi Arabia. Both sides also discussed the Kingdoms support for the supply of oil, promotion of investment and enlisting Pakistani firms in construction of mega projects in Saudi Arabia.

The advisor during his stay in the Kingdom also met the head of the IDB Dr Ahmed Ali in Jeddah. Both officials held mutually beneficial discussions to foster closer cooperation between the banking sectors of the two countries. It was agreed that financial institutions of the Muslim countries may harmonise their efforts to build stronger economies of Muslim states in South West Asian Region. 

Mr Tarins meeting with his Saudi counterpart in Riyadh was attended by the Governor of Saudi Arabia Monetary Agency (SAMA) and Pakistans Acting Ambassador to Saudi Arabia. 

Sources in the Finance Ministry say Japan believed the IMF package for Pakistan was not enough and that it was ready to help the country and to also show solidarity with the new US President Barack Obama who wanted to shift his focus proactively on Afghanistan and Pakistan.

US Secretary of State Hilary Clinton is also expected to attend the Tokyo meeting of the group. Britain, France, Germany, the United States, China, the United Arab Emirates, Canada, Turkey, Australia and Italy plus the United Nations and the European Union are the members of the Friends of Pakistan.

Pakistan has already invited Japan to set exclusive economic zones in Karachi and Gwadar and also develop the countrys agriculture, manufacturing and energy sectors. 

Pakistan is not expecting any immediate direct monetary help from Japan, but intends to present a list of projects which shall be financed by Tokyo. Japan may also assist Pakistan in meeting its strategic needs such as development of water resources, roads and railways.

When the Pakistan Peoples Party (PPP) came into government last year, it had made a plan of obtaining $60billion financing for 71 development projects from the Friends of Pakistan to stabalise the countrys sinking economy. But, it had been termed as a wish list by some partner countries at that time. Now, a year down the road and after improving its macro economic indicators, Pakistan is well placed to shake up its friends to contribute in various forms before the announcement of the new budget in June.


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## ajpirzada

*Country&#8217;s trade deficit down by 5.68&#37; in July-Feb*

By Sajid Chaudhry 

ISLAMABAD: The country&#8217;s trade deficit went down by 6.68 percent in July-Feb of the current fiscal year despite slowdown in the global economy, sliding trend in aggregate demand in economy and depreciation of Pak rupee.

Country&#8217;s trade deficit has been recorded at $11.621 billion in first eight months (July-February) of 2008-09 as compared to a deficit of $12.477 billion in the same period last fiscal year 2007-08, indicating a decline of 6.86 percent.

Export (July-February): According to the official data released by the Federal Bureau of Statistics (FBS) Monday has revealed Pakistan&#8217;s exports amounted to $12.156 billion in July-Feb period of current fiscal year as compared to the exports of $11.660 billion in the same period of last fiscal year, projecting an increase of 4.2 percent. 

According to the budgetary target, the exports of the country were targeted to grow by 16.5 percent in the current fiscal year to meet the annual exports target of $21.2 billion, however, recently revision in Macro-Economic targets exports growth has been projected at negative -5.5 percent, actually admitting failure in meeting export target. 

Import (July-February): However, due to the low import demand in advanced economies, unprecedented power and gas loadshedding, depreciation of Pak rupee, increase in cost of capital as well as production and capacity constraints are instrumental in low growth of country&#8217;s exports, said an official at Ministry of Commerce. Similarly, around 95 percent contribution to imports during first half came from petroleum, fertiliser and wheat imports.

Country&#8217;s imports have witnessed decline by 1.49 percent and amounted to $23.777 billion in eight months as against the total imports of $24.137 billion in same period last fiscal year. 

Drop in aggregate demand in economy can be witnessed by decrease in imports from 12.8 percent growth in first six months to a negative growth of 1.49 percent in Jul-February period. This clearly shows that State Bank of Pakistan and government&#8217;s steps are now yielding results and it is hoped that demand in economy would go down further in months to come, an official said.

Comparison February 2009 over January 2009: Country has exported goods worth $1.266 billion in February 2009 as compared to exports of $1.360 billion in January 2009 showing decline of 6.94 percent. 

Imports amounted to $2.123 billion in February 2009 as against imports of $2.528 billion in January 2009 indicating a decrease of 16.02 percent. Trade deficit was at $857.247 million in February 2009 as against deficit of $1.167 billion indicating a major decline of 26.59 percent.

Comparison February 2009-February 2008: Exports of the country registered a decline of 17.68 percent in February 2009 with total exports of $1.266 billion as against exports of $1.538 billion in February 2008. 

Imports of the country witnessed a decline of 41.95 percent in February 2009 with total imports at $2.133 billion as against the imports of $3.657 billion in February 2008. 

Trade deficit in February 2009 declined by 59.56 percent with total deficit at $857.247 billion as against the deficit of $2.119 million in February 2008.

Daily Times - Leading News Resource of Pakistan


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## RabzonKhan

*Country Partnership Strategy 2009-13: ADB announces $4.4 billion support for Pakistan*

By Sajid Chaudhry 
March 12, 2009

*ISLAMABAD: Asian Development Bank (ADB) here on Wednesday announced $4.4 billion Country Partnership Strategy 2009-13 to support Pakistans efforts to produce sustained economic growth and reduce poverty.* 

*Financial assistance for Diamer Basha dam and National Trade Corridor Programmeme would be over and above the assistance of $4.4 billion to be made available to Pakistan under CPS 2009-13. *

Rune Stroem, Country Director of ADB Pakistan, and Safdar Parvez, country economist in a media briefing outlined the strategic priorities agreed between Pakistan and ADB in five-year plan. 

*Rune Stroem said that ADB and GoP have designed a major new strategic partnership aimed at promoting inclusive and sustainable economic growth through structural reforms and investment in energy and infrastructure sectors. He informed that the proposed lending programme over the initial CPS period 2009-11 totals at $4.4 billion constituting an annual average lending of about $1.5 billion with technical assistance at $2.4 million per year.* 

The main strategic areas under future CPS have been identified as development of energy, Infrastructure, reforms, urban services. Investments to increase energy security and efficiency, investments to improve transport mainly the National Trade Corridor Programme and irrigation facilities, assistance to bring down market distortions and institutional bottlenecks, improve public financial resource management, develop the private sector and bring about structural transformation. Under the urban services, pivotal interventions in cities and secondary towns to be made to improve basic services such as water, wastewater, wastewater management and urban transport facilities, he explained. 

The objective of the CPS is to support Pakistans efforts to achieve sustained economic growth and reduce poverty. To catalyse structural change and transformation that is vital to guaranteeing Pakistans long-term economic and social development. ADBs support is geared to helping consolidating the growth and reduction in poverty gains in recent years and prevent reversal in reforms, Safdar Parvez, Country Economist ADB explained. 

The CPS will support Pakistans fight against poverty and its pursuit of prosperity by tackling binding constraints to inclusive economic growth. 

Supporting the governments reform agenda and improving the energy, transport, and urban infrastructure will help reduce the cost of doing business and strengthen the underlying competitiveness of the economy. 

The CPS outlines a second generation of economic reforms aimed at reducing distortions, accelerating market creation, eliminating governance and institutional bottlenecks, and strengthening public financial management reform. These reforms will help enhance private sector investment, support diversification of the economy, create jobs, and improve the efficiency of government functioning, added Rune Stroem. 

*In a country where crippling power outages increase the cost and challenges of doing business, the CPS aims to strengthen Pakistans energy supply chain. Measures include augmenting and expanding transmission stations and lines, strengthening distribution companies, and developing power generation facilities using renewable sources. These and other improvements aim to contribute to reducing electricity outages by a further 30 percent by 2012 and increasing the number of grid-connected electricity consumers from 60 percent in 2008 to 70 percent by 2013. *

*Pakistans transport infrastructure is another area of the CPSs strategic focus. Financial and technical assistance will be supplied to improve connectivity along the National Trade Corridor and other major highways. This will enable export firms to be more competitive by reducing transportation costs and travel time. *

Improving the quality of lives of citizens in cities and towns receives a major emphasis in the CPS. Strengthening water supply and sanitation services and urban transportation systems will not only lead to enhanced economic competitiveness but will also yield health and environment improvement dividends for the benefit of urban citizens. 

*Pakistan has received about $19.8 billion in loans since joining ADB in 1966, with about $14 billion disbursed as of the end of 2008. The lending programme in 2008 was a record that included $1.87 billion disbursement and $1.2 billion in newly approved assistance.*

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## Omar1984

^ That's great news. The money will certainly help Pakistan's economy and I hope Pakistani government is intelligent enough to use this money to help boost up the economy of Pakistan.


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## Omar1984

*Tourist plunge exacerbates Pakistan woes*


KARACHI (AFP) &#8212; Fida Hussain, 52, was once a frequent visitor to Pakistan's scenic northwest, driving north into the mountains every time he flew over from the United States. But not any more.

"I won't go to Swat or any other place in the area as the Taliban rule there now and no one is guaranteed safety," Hussain said.

Thousands of fighters loyal to firebrand Taliban commander Maulana Fazlullah have waged a blistering campaign to enforce sharia, or traditional religious law in Swat valley, once affectionately known as the Switzerland of Pakistan.

"I last went three years ago -- it was heaven on earth, with a beauty beyond imagination. Now all is doomed," Hussain said on a recent visit to relatives in Pakistan's financial capital of Karachi.

He is just one among many thousands who have scratched Pakistani resorts from their holiday wish-lists -- and in doing so ensuring that the tourism sector adds to the country's growing economic woes.

The bloody attack on touring Sri Lankan cricketers in Lahore this month was just the latest high-profile militant attack in an avalanche of violence that has killed more than 1,600 people since July 2007.

The World Economic Forum's Travel and Tourism Competitiveness Report 2009 put Pakistan at 113 out of 130 countries.

The decline has been slow but steady since the September 11, 2001 attacks on the United States but reached a crescendo last September when the Marriott hotel in Islamabad was bombed, with 60 people killed.

"Terrorism halved our receipts from tourism last year," tourism minister Ataur Rehman told AFP.

Pakistan earned 16 billion rupees (200 million dollars) from 800,000 visitors in 2007. Fewer than 400,000 visitors came in 2008, bringing in just eight billion rupees.

"People are not coming from the rest of the world as they have been advised by their governments not to go to Pakistan," Rehman said.

"Terrorism has affected investment in the country, made our beautiful places short of tourists and now forced sportsmen out of Pakistan."

Pakistan has diverse culture, a rich archeological heritage, ruins from the ancient Gandhara and Indus civilisations, serene valleys, pristine coastline and vast deserts.

K-2, the world's second highest mountain after Everest, sits atop a region of 120 other peaks that soar above 7,000 metres (22,950 feet).

But buffeted by bombings, insurgency and global financial turmoil, Pakistan was hit last year by 25 percent inflation and saw 10 billion dollars wiped off its international reserves in the year to October 2008.

The country only managed to stave off a looming balance-of-payments crisis when the International Monetary Fund approved a stand-by loan of 7.6 billion dollars and released an initial 3.1 billion dollars in November.

Hotel industry and tour operators have been hard hit. Global recession and militant attacks have forced investors to abandon projects.

"Plans for many new hotels have been shelved until the tourism industry improves," said Mustansar Zakir, chairman of Pakistan's Hotels Association.

He said nationwide hotel occupancy fell to 35 percent from 50 percent after the attack on the Sri Lankans, down from 70 percent before the Marriott blast.

Many Western countries have issued advisories against travel to Pakistan and European airlines such as British Airways and Lufthansa have suspended routes to the nuclear-armed Muslim nation.

There were hundreds of hotels and guest houses in Swat before Fazlullah rose up in July 2007. What few remain are deserted.

"Thousands of people associated with hotels and tourism in that area have lost their jobs," said Zahir Khan, head of the Swat hotels association.

Rehman believes that Sri Lanka, which has a healthy tourism market despite the civil war with Tamil separatists, could be the most pragmatic example.

"Is it the fault of our rivers, mountains, deserts and blossoming flowers that we are victims of terrorism? We should not stop attracting tourists and follow what Sri Lanka did," he said.

"Being a tourist in the 21st century requires some courage," he said.


AFP: Tourist plunge exacerbates Pakistan woes



Pakistan is blessed with so much beauty. Too bad the world wont get to experience Pakistan's scenic valleys in the north , Pakistan's beautiful coasts of the Arabian Sea in the south, or Pakistan's archeological sites of thousands of years old history.


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## Neo

*US may ease trade with Pakistan, Russia and Georgia ​* 
Thursday, March 12, 2009

WASHINGTON: Congress could act on legislation this year to establish permanent normal trade relations with both Russia and Kazakhstan and to eliminate tariffs on goods from Pakistan, Afghanistan and Georgia, a senior Democratic lawmaker said on Tuesday.

As you know, the administration has signaled that they want to try to review our relationship with Russia. Now exactly what that means isnt clear and its a controversial exercise, said Representative Sander Levin, chairman of the House of Representatives Ways and Means trade subcommittee.

Levin spoke at a meeting with other lawmakers to lay out the committees agenda for 2009. Congress has wrestled for years over whether to lift a mostly symbolic Cold War-era restriction on trade with Russia known as the Jackson-Vanik amendment.

The measure tied normal trade relations with the Soviet Union and other centrally planned economies to the rights of Jews and other religious minorities to emigrate freely.

Russia has been in compliance since 1994, but most US lawmakers have insisted Moscow finish negotiations to join the World Trade Organisation before Congress votes to lift the measure and establish permanent normal trade relations.

The United States and Russia intensified efforts in early 2008 to finish Moscows 15-year bid to join the WTO. But the political fallout from Russias short war with Georgia last year set those talks back. It also sparked interest in boosting US trade benefits for Georgia to help that country recover. Congress could act on that this year, Levin said.

Kazakhstan, a former Soviet republic in Central Asia, also has been negotiating to join the WTO and could finish in 2009. It also remains subject to the Jackson-Vanik amendment.

If either Russia or Kazakhstan were to finish their WTO bids, the United States would be required under the rules of that organisation to establish permanent normal trade relations to share in the benefits of either countrys accession.

Levins agenda also included a bill to waive US import duties on goods made in special zones in Afghanistan and Pakistan in an effort to combat extremism there.

That measure is sponsored in the House by Representative Chris Van Hollen, who told fellow lawmakers on Tuesday that the Obama administration strongly supported it.


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## Neo

* No further heavy investment in telecom likely ​* 
*PTA focusing on value-added services​*
Thursday, March 12, 2009

KARACHI: Chairman of Pakistan Telecommunication Authority (PTA) Dr Muhammad Yaseen has said that the telecom industry has received a tremendous foreign direct investment of $2 to $3 billion per annum, but expects no further heavy investment in the near future as infrastructure has already been put in place, and now only the services need to be improved and expanded.

Speaking at Mobile Commerce 2009, the second international conference on mobile banking, here on Wednesday, Yaseen said that PTA was concentrating on value added services rather than only on mobile calls as these services were the real market for mobile operators and innovation in the sector was pivotal.

He said that Pakistan had 90 million telecom subscribers, while 95 per cent of the population had signal coverage by all telecom operators and data transfer had also reached 12.5 gigabits.

Dr Aamir Malik, Director of PTA highlighted that in 2009, global mobile commerce (m-commerce) revenue had reached up to US$88 billion. He shared results of a recent survey which showed that 11 per cent of the population has a bank account whereas 56 per cent has mobile phone penetration in Pakistan.

He said that 87 per cent use m-services for location based search, 44 per cent use it for banking, whilst 61 per cent use it for shopping. Malik said that the survey proved that local consumers were ready for m-commerce in the country and therefore there was a lucrative market open for concerned stakeholders.

President of MCB Bank Limited, Atif Aslam Bajwa commented that the basic infrastructure for mobile banking was available. However, the willingness of financial institutions and mobile service providers to work together was a challenge in Pakistan.

Bajwa voiced that it is essential for both the financial institutions and mobile service operators to carry out collaborated efforts as mobile banking would only be successful that way and not in exclusivity. He further stated PTA has fuelled growth by fostering healthy competition while also concentrating on quality which is the core reason for the telecom sectors success.

Speaking to The News, Bajwa also commented that since KIBOR rates had declined, and inflation was also coming down, interest rates in Pakistan would also feel the pressure and banking spread would also reduce significantly in the coming months.

The President of MCB Ltd held that m-commerce was yet in its initial stages in the country and it was too soon to comment on whether it would be a success, but added that there was great potential for it.

Executive Director of State Bank of Pakistan (SBP), Jameel Ahmad welcomed the introduction of branchless banking in Pakistan and said that SBP had set regulators for it to operate successfully in the country.

Providing a detailed presentation of SBP regulations for mobile commerce, he said that SBP has attempted to incorporate products and services of international level into the emerging Pakistani market.

He said that banks would be at the forefront of all m-commerce activities and would hold all concerns and responsibilities of any transactions being carried out. Ahmad voiced that so far banks have shown a very enthusiastic and positive response towards mobile commerce.

The executive director of SBP also pointed out that even though India has four ATMs for every branch of a bank and Pakistan has only one ATM against 2.6 bank branches, in the past five years, the nation has succeeded in gradually transforming from a paper-based banking system to electronic banking.

He stated that five years ago, banks in the country operated 90 per cent on paper-based facilities and 10 per cent on electronic. Nevertheless, now one-third of the economy is based on electronic transactions and two-thirds on paper and yet, it is rapidly changing into an electronic based economy.

President and CEO of Telenor Pakistan, Jon Eddy Abdullah said, I am sure that with the support of regulators and collaboration between telecoms and banks, the industry will be able to provide consumers with what they need: easy, affordable access to financial services.

He commented that mobile banking brings with it facilities such as paper/plastic-free money transactions, bank account maintenance, money transfer, mobile sales, auctions, brokerage and much more.

He said that Pakistan has enormous potential for m-banking with over 80 million mobile users for the lack of a sound banking structure reaching out to only a selected class widens the play area for the mobile sector to explore.

Jon shared that by acquiring Tameer Microfinance Bank in the current economic crunch; Telenor Pakistan not only reassured its commitment to Pakistan and the industry but also projected its intentions to remain ahead of competition when it comes to product innovation.

CEO of A2Z E-payments, Shakir Ullah highlighted the problems in Pakistan due to which m-commerce had not gained popularity as rapidly as it should have. He said that there was no proper legal and regulatory framework for e-commerce and e-payments in Pakistan.

He articulated that social, bureaucratic and political issues had also discouraged the acceptance of e-commerce such as resistance to change, fear of risk and lack of awareness in the local community. He added that most Pakistanis were content with the existing systems and were resistant to new payment methods.


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## Neo

*Tariff bids for 970MW fast-track IPPs opened ​* 
Thursday, March 12, 2009

ISLAMABAD: Financial proposals for fast-track independent power producers (IPPs), which will be commissioned in 2010 and 2011, were opened on Wednesday in a meeting held at the Private Power and Infrastructure Board (PPIB).

PPIB Managing Director Fayyaz Elahi chaired the meeting, which was attended by all PPIB directors, bidders and members of evaluation committee as per 2005 tariff guidelines of the government.

The bid evaluation committee had earlier declared three bids ie 627-megawatt Engro Power Gen (Pvt) Limited, 171MW Saba Generation (Pvt) Ltd and 172MW Reshma Power Generation, as responsive after their evaluation with technical and financial qualification.

The proposed tariffs of Engro Power Gen, Reshma Power Gen and Saba Gen are $14.7 per kilowatt hour (kWh), $16.26/kWh and $15.13/kWh respectively. The bid evaluation committee will now inspect the tariffs and successful bidders will be notified after approval of tariffs by government.

In order to meet instantaneous power shortfall in the country, the government has launched the fast-track private power project initiative, which was advertised on September 26, 2008 on the basis of international competitive bidding. Three bids for establishing fast-track IPP projects having 970MW cumulative power generation capacity were received within the bid submission deadline and technical and financial qualification envelopes were opened on January 26 in the presence of all stakeholders and senior officials of PPIB.

During the meeting, Elahi said the government is taking all measures to bridge demand-supply gap in generation capacity and assured that all assistance would be provided to investors for establishing power plants in the country. He hoped investors would ensure completion of projects as per required deadlines.


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## Neo

*Pakistan to display hunting arms at German exhibition ​* 
Thursday, March 12, 2009

PESHAWAR: Pakistan Hunting and Sporting Arms Development Company (PHSADC) has finalised all arrangements for the display of locally manufactured small arms at an international exhibition (IWA) in Germany from March 13 to 16.

According to a press release issued here on Wednesday, Chairman PHSADC Nauman Wazir said they had planned to avail the opportunity of exhibiting locally manufactured hunting and sporting arms at the exhibition.

He said the PHSADC has collected artifacts prepared by the gunsmith of Darra Adam Khel, Peshawar, Wazirabad and Sialkot for displaying them in the show.

He went on to say that the company has already booked stalls in the exhibition and sent a team of its officials to Germany for proper arrangements for displaying the products.

Wazir said it was for the first time that PHSADC was taking an initiative to display the craft and skills of Pakistani gunsmith in the international exhibition.

He further said the artifacts including wall hangers, replicas and old vintage weapons made by artifacts of Darra Adam Khel have great demand in the international market.

The small arms industry has great potential and the country can earn millions of dollars by making way for the export of the product abroad, he added.

The IWA exhibition, he added, is the second largest event and representatives of international companies visit to get information on latest technology in sporting arms.


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## Neo

*Inflation spikes by 21.07 percent​*
KARACHI: The declining trend in Consumer Price Index (CPI) based inflation reversed in February as it surged by 21.07 percent year-on-year basis over the corresponding month of previous year.

The month-on-month increase in CPI was also substantially higher and increased by 0.95 percent in February over the preceding month of January this year, Federal Bureau of Statistics (FBR) reported on Wednesday.

The increase in CPI inflation offset the gains made in the previous months when month-on-month inflation number was heading downward. Analysts attribute this surge attributed to price hike in food items as well as high electricity rates in the country.

During July-February 2008-09, CPI soared by 23.49 percent over the same period of previous year on the back of high growth in food inflation, which rose by almost 23 percent during these months. The MoM increase of .59 percent in inflation was also substantially higher. The price of onion increased by 253.9 percent, sugar 66.2 percent and milk 19.4 percent YoY.

The fuel and lighting cost also increased by 29.77 percent during the period under review. Transport and communication cost was up by 21.47 percent, house rent 18.53 percent and education and medicare cost increased by 17.97 and 14.18 percent, respectively. Though, the decreasing trend in the inflation stopped during February, however the future outlook is not so bleak and it is expected to decline during the coming months, analyst 

Mohammad Imran Ahmed at First Capital Equities Limited (FCEL) believed. When asked about the affect of expected increase in the electricity rates in April and May, Imran pointed out that nonetheless, it would contribute to higher inflation, however, the base affect would help the inflation to come down.

Government is attempting to bring down inflation to single-digit in June this year, which according to analyst is very much possible. 

On the loosening of tight monetary policy stance of central bank in view of decreasing inflation, Imran said that still the core inflation is higher and the future trends in it would determine the change in monetary policy. 

Imran predicted that the full year inflation number is likely to be around 18 percent. Primary contributor has been house rent which increased by 18.5 percent year-on-year, 6 percent (MOM) gas price, third is the food items, said Sayem Ali, economist at the standard chartered bank. 

Wholesale Price Index (WPI) and Sensitive Price Index (SPI) rose by 15.03 and 2.42 percent, respectively in February this year over the same month of previous year.


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## Neo

*Horticulture sector: $5bn investment from China, ME likely: ASF​*
KARACHI: China and the Middle East countries will invest in horticulture sector of Pakistan to the tune of $5 billion during the current year 2009, an official of Agribusiness Support Fund (ASF) said Wednesday.

Saudi Arabia and China are interested to acquire land on lease besides to join hands with the private sector stakeholders in order to grow soft crops and vegetables, Chairman Sindh ASF, Mateen Siddiqui said. China and Middle East will be the key players of investment in horticulture sector as they are interested in rice, wheat and vegetable crops of the country, he added.

He said it was expected that after investment the country could save most of exports of agricultural produce as it was hampered by lack of modern storage facilities. High post harvest losses, insufficient packing and grading and cold storage facilities along with absence of refrigerated transport and containers can be eliminated through foreign investment.

He said due to the most liberal investment policy in the region, Pakistan is most suitable for investors. He said the exporters need a full-fledged packaging house, ripening chambers and blast chillers. He said the government was providing a number of incentives and facilitating measures were being taken for promoting business activities in Pakistan. Most of our economic sectors are open to FDI where the foreign investors can hold 100 percent equity. Safety of investment is assured and Pakistan has signed Bilateral Investment Treaties (BIT) with many countries worldwide. 

A high percentage of horticulture produce is wasted due to ineffective post-harvest practices and around 25-30 percent of total production of fruits and vegetables is wasted due to lack of proper post-harvest handling. 

These include the network of industrial estates and export processing zones, economic zones with tax holidays, concessional customs duty on import of plant and machinery and the unrestricted outward remittances of capital, profits, royalty, technical and franchise fees etc. Special Economic Zones have been proposed for set up in different parts of the country. Chief Executive Officer PHDEB, Shamoon Sadiq said Pakistan horticulture sector possesses a great potential for development. However, the growth of the sector is inhibited by a multitude of constraints. 

Per hectare yields are very low as compared with international benchmarks. The product is perishable by nature and therefore requires proper handling after harvesting to keep it in good condition till it reaches the consumer and export destinations. He said Ministry of Commerce in consultation with PHDEB, prepared proposals under National Trade Corridor Improvement Programme (NTCIP) for enhancing annual export of fruit and vegetables, and floriculture from existing $160 million to $500 million in the next 5 years. He said Pakistan is successfully involved in biotechnology, tissue culture, cutting of floriculture, and as a result we are now in a position to export flowers to the developed world.


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## Neo

*Cellular subscriber base grows again​*
KARACHI: The growth rate of cellular subscribers has been returning to upward trend after witnessing two-month contraction in overall users base. According to the Pakistan Telecommunication Authoritys (PTA) latest figures made available to Daily Times, the five cellular operators have posted a modest increase of 0.38 percent users in February this year despite the introduction of the new SIM verification system last month. The overall subscriber base has increased by 1.547 million in February 2009 as compared with 1.541 million growth in February 2008. However, the subscribers growth has witnessed 0.9 percent increase in January 2009. 

According to PTAs data, the overall base has crossed 90 million subscribers during the last two months. Subscribers growth has been witnessing negative growth during November and December 2008 with 0.1 and 0.6 percent, respectively. The cellular firms have added only 0.581 million connections on their network in the 1HFY09 against massive subscriber growth of 1.12 million in 1HFY08. 

Industry analysts were of the view that users addition on various networks of cell firms became visible as the cellular operators reduced their rates last month to attract customers. They added subscribers who lost their connections on non-registration and non-verification of SIMs. On the other hand, the number of users has been growing modestly in the rural areas of the country as the operators have been running their sales campaign in these areas. Last year, around 11.25 million connections were abandoned from the companies network.


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## Neo

*Zardari puts up proposals for economic growth ​*
TEHRAN (March 12 2009): President Asif Ali Zardari on Wednesday called for a regional approach to deal with the menace of terrorism and militancy, while taking into account the interests, capacity and aspirations of sovereign states and their peoples.

"A regional approach has to take into account the interest, the capacity and the aspirations of sovereign states and their people and has to build solid stakes in lasting peace", the President said while addressing the 10th ECO Summit, being held here. The President said that as terrorism does not have any faith and frontiers, it was important to focus on addressing and eliminating its root causes, which include injustice, deprivation, and dispossession.

"Terrorism knows neither faith, nor frontiers. It breeds on injustice, deprivation and dispossession. Terrorism has roots across the region and its root causes have to be addressed", he stressed.

He said that "the democratic government in Pakistan has made a promising beginning" with Afghanistan, and the two other brotherly countries are making steady progress in building a relationship of deeper trust and understanding. "We have revived the Jirga process and set the directions of future co-operation", he remarked. The President said the ECO family bears a special responsibility towards Afghanistan, and added that Pakistan has been at the forefront of ECOs efforts for the reconstruction of this brotherly country. "Let us give these efforts a strong impetus", Zardari said, and announced that Pakistan would shortly be remitting an additional $1 million to the ECO fund for Afghanistan.

The President said that, with the important strides being made across the world, the ECO has yet to realise its potential to the fullest measure. "We have to fashion ECO to the specifications of our region and the demands of our times", he said.

The President in this respect made some vital proposals which included the creation of ECO free trade area, development of an ECO energy ring of pipelines and electricity grids, solid win-win trans-regional economic partnership, greater connectivity through road, rail, air and sea links, and forging of closer links with adjoining regions, particularly SCO and Saarc. He called for increased co-operation and deeper integration among the ECO states for mutual benefit as well as for the global economic growth. "By ensuring deeper integration, and leveraging our economic complementarities, the ECO can become the engine of growth for the world," he added. The President said that with ECOs vast resource base and positive fundamentals, the region could contribute significantly to a global economic upsurge.

To realise this goal, he proposed various measures including activation of the ECO central bank to co-ordinate monetary policies and consider the development of a stimulus package for the region. "Trade barriers must be lowered, on priority. Currency swap arrangements be put in place", he suggested.

The President further said that mega projects of regional significance, such as IP and TAP gas pipeline projects, should be launched to stimulate demand, create jobs and generate momentum for growth and prosperity. He said that Pakistan welcomes the proposal of commissioning an experts panel to study the financial crisis and would make substantial contribution to the study. Highlighting the importance of connectivity as a cornerstone of the ECO agenda, President Zardari said the rich tapestry of this regions history and heritage was woven around the fabled Silk Route. "And, its future is premised on modern highways, physical and virtual, that create common space", he added.


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## Neo

*Global economic downturn affecting exports of Pakistan ​* 
KARACHI (March 12 2009): Chief Executive of Trade Development Authority of Pakistan (TDAP) Syed Mohibullah Shah on Wednesday said that the country is likely to miss the fiscal exports target of the current fiscal year, however overall exports may surpass the last fiscal years exports by two percent.

The global economic downturn is affecting the exports of Pakistan, although they have remained less affected as compared to the economies of the western world, he told newsmen at the inauguration ceremony of the Third Food Agri and Livestock Asia Exhibition 2009 being held at Expo Centre from March 11 to 13.

He said that keeping in view the exports statistics of the first eight months it could be predicted that the country is likely to surpass the exports of the last fiscal year. He pointed out that at present the countrys economic growth rate has declined by three percent and Indian economic recession shows a slump of six percent while other countries are faced with more severe economic recession.

Shah outlined that TDAP is along with textile making efforts to boost the exports of other and new products to new world markets. He added that the continued food agriculture and livestock exhibition is part of the overall export increase strategy. He vowed to increase the countrys share of halal food in the world market and aim to reach new markets of the world. TDAP is financing the stalls of women entrepreneurs in the exhibition to help them increase their share in the countrys overall economy, he said.


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## Neo

*Pakistan may use Jordan as springboard for exporting products ​* 
KARACHI (March 12 2009): Pakistan can use Jordan as springboard for exporting Pakistani products in general and textile products in particular to USA and other European countries, said Ambassador of Jordan Dr Saleh Ahmed Al-Jawarned. Addressing members of Karachi Chamber of Commerce and Industry (KCCI) on Wednesday, he said that there is no restriction on export of goods from Jordan to USA and other EU countries.

He said that Pakistan could export textile products, Halal food, surgical goods, sports goods etc to EU countries and USA through Jordan. The ambassador advised business community to survey Jordanian market for increasing two way trade. He said that Jordan is negotiation a Free Trade Agreement (FTA) with USA and hoped that the agreement would be signed in near future.

Referring to investment and businesses opportunities in Jordan, he said Jordan offer two type of business activities for foreign investors: First where foreign investors can invest in QIZ. In this sector there is no tax and foreign investors can establish industrial units in collaboration with locals.

The other area is operations in Jordan market. However in this area they have to pay all the taxes. The Ambassador invited Pakistan investors to establish fertiliser units in Jordan in joint venture with Jordanian counter parts. He said that Jordan has signed an agreement to import mangoes from Pakistan.

He invited Pakistan business community to visit Jordan to see the market and investment climate. A trade delegation of Jordan will visit Pakistan in next two months, he added President KCCI, Anjum Nisar said that Pakistan produces best quality of rice in the world and Jordan can import rice from Pakistan to meet its requirements.


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## ejaz007

*Remittances rise over 19pc to $4.919b in 8 months*
Published: March 13, 2009 


KARACHI - Remittances sent home by overseas Pakistanis continued to show a rising trend as an amount of $4,918.63 million was received in the first eight months (July-February) of the current fiscal year 2008-09, showing an increase of $792.47 million or 19.21 percent over the same period of the last fiscal year. The amount of $4,918.63 million includes $0.41 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).
In February 2009, an amount of $641.32 million was sent home by overseas Pakistanis, up 27.56 percent or $138.56 million, when compared with $502.76 million received in the same month last year.

The inflow of remittances in the July-February, 2009 period from USA, UAE, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $1,156.51 million, $1,035.55 million, $962.30 million, $783.39 million, $344.08 million and $150.05 million respectively as compared to $1,160.39 million, $681.88 million, $761.84 million, $618.83 million, $292.87 million and $116.12 million respectively in the July-February, 2008 period. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the first eight months of the current fiscal year 2008-09 amounted to $486.34 million as against $492.22 million in the same period last year.

The monthly average remittances for the period July-February 2008-09 comes out to $614.83 million as compared to $515.77 million during the same corresponding period of the last fiscal year, registering an increase of 19.21 percent.

During last month i.e. February 2009 remittances from UAE, USA, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $166.62 million, $127.48 million, $123.64 million, $93.09 million, $54.12 million and $18.31 million respectively as compared to $88.31 million, $134.68 million, $98.17 million, $78.95 million, $29.99 million and $12.94 million in February 2008. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during February 2009 amounted to $58.04 million.

Remittances rise over 19pc to $4.919b in 8 months | Pakistan | News | Newspaper | Daily | English | Online


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## Neo

*New foreign exchange reserves target fixed for June to be achieved: SBP chief​* 
ISLAMABAD (March 13 2009): State Bank of Pakistan Governor Saleem Raza said on Thursday that Pakistan would achieve the new target of foreign exchange reserves set by International Monetary Fund (IMF) for June 30. He told the reporters after attending the national round table workshop on the "State of microfinance in Pakistan and recommendations for the future" in Planning Commission here.

He said that increase in foreign exchange reserves was the prime target under the IMF programme, adding that after the first review, Pakistans foreign exchange reserves stood at 1.5 billion dollars over and above the target fixed by the IMF for end March.

He noted that Pakistans foreign exchange reserves were half million less than the target fixed for end June. "Pakistan is expected to receive 850 million dollars IMFs second tranche by end of March and finance flow from the World Bank and Asian Development Bank (ADB) is also in pipeline," he said, adding after release of the IMF tranche, Pakistans reserves position would further improve and surpass the IMF target.

He also hoped that Pakistan would achieve around 2.5 percent gross domestic product (GDP) growth during the current fiscal year of 2008-09 as per revised macro-economic targets agreed with the IMF. He said that inflation, based on Sensitive Price Index (SPI), Consumer Price Index (CPI) and Wholesale Price Index (WPI), had declined to a considerable level during last three to four months.

This month the CPI-based inflation had increased a little bit, but it would come down, he said, adding that overall inflation was witnessing downward trend in the country. On revision about discount rate, he said that the policy rate would be reviewed in a month or two, keeping in view the movement in core inflation rate.

He said that discount rate was for the banks and rate applicable to the borrowers was declining over the last few months. The SBP Governor noted that lending rate, based on Karachi Interbank Offered Rate (KIBOR), had recorded declined by 2.5 to three percent in the last two months and actually, the KIBOR-based borrowing cost for the borrowers had declined.

"Cost of borrowing has come down and KIBOR may witness further reduction in coming months that would benefit the economy," he said. About banking spreads rate, he said that this was determined on the losses and banks charged 0.5 to one percent form their prime borrowers where minimum risk was involved. Banks charged more on loans where lending risk was more like consumer financing and credit card, he added.

The SBP Governor ruled out that Pakistan would seek rescheduling of Euro Bonds in coming months, and said that it had met its Euro Bond debt obligation with full interest payment in February this year.

He highlighted the liquidity position of the banks, and said that banks reserves with State Bank were worth Rs 400 billion that were surplus and above the capital advocacy ratio and there was no issue of liquidity. He acknowledged that banks were facing pressure due to the bad loans mainly of textile and electronic sectors, but the operations of the banking sector were still smooth. He mentioned that ratio of non-performing loans ranged between 2.75 to three percent, which was not alarming.

He ruled out undue intervention of the Finance Ministry in determining interest rates, and said that the SBP and MoF worked together so that the interest rates were kept at reasonable level for the benefit of economy. He said that State Bank had increased the financing for machinery and export re-finance based on performance of exporters. Exporters performing well, would be getting more, he added.

He categorically rejected the reports of 50 percent decline in private sector lending. He also denied the reports that IMF authorities had shown concern on his appointment as Governor of State Bank of Pakistan, and asked the reporter concerned to produce the document where it had been mentioned.

Earlier speaking at the workshop, he assured full support of State Bank of Pakistan for development of microfinance sector, and informed the participants that during a meeting with micro-finance group, the SBP had recently approved foreign exchange risk cover for foreign lenders.

He stressed the need for helping borrowers to attain status of SMEs so that they were brought out of normal social safety net, and said that micro-finance sector was making a dent on poverty and it should continue playing its due role in the economy with diversification. He also emphasised the importance of sustainability as it led to innovation and ingenuity.

He underscored the need to focus on tapping deposits, leveraging technology and providing training. The SBP Governor also met several borrowers from the Bahawalpur rural areas, who were forced into near bankruptcy and distress, selling of their assets to meet repayment schedules.

He promised to look into the matter, and pointed out that a code of conduct must be brought in to protect the borrowers. He also suggested that the infrastructure of large banks might be used to set up micro-finance counters as these would reduce operating overheads.

Parc Chairman Dr Zafar Altaf said that impact of Rs 10,000 to Rs 15,000 per household micro credit by microfinance institutions was not economically useable for farmers due to high cost of inputs in agriculture sector. He said that credit agencies must provide technical assistance and cooperate with farmers for setting up markets.

He also raised the question on the role of Planning Commission, and requested to remove the hidden gaps for the improvement of farmers in rural areas. He said that according to survey conducted by the Parc in Bahawalpur and Khushab, micro credit schemes had not benefited the farmers.

Several key issues were identified as result of the deliberation. First, there is an inherent contradiction between "sustainability" of Micro Finance Institutions, which basically means profitability, and issues of social welfare and poverty reduction.

There was consensus that microfinance providers needed to offer products (such as technology), which would enable the borrowers to improve their income and hence move up from the poverty trap. It was also felt that if the MFIs were going work on purely commercial lines, then their funding should not be from public funds.

Special Assistant to the Prime Minister on Social Sectors Shehnaz Wazir Ali appreciated the presentation, and pointed out that a lot of misunderstanding existed about the role of micro credits between the microfinance institutions and the borrowers.

She further said that the borrowers must be informed before hand clearly about the difference between interest rates announced and interest rates that would actually be effective and that the gap needed to be reduced though allowing reasonable profit margins.

She also emphasised that indepth study of the issues at the level of policy making was essential to remove any ambiguity and misunderstanding about micro credit, and suggested that the Planning Commission should hold further meetings in smaller groups to develop a national microfinance policy. She said that capacity to utilise and repay micro credit might be limited in some cases landing some people land into problems.

Shehnaz Wazir Ali said that large scale financing by multinational agencies had not benefited Pakistan. "Mircofinance is the single tool for poverty reduction," she said, adding that a tradition must be set to re-examine and revisit the current microfinance policy to establish markets for agriculture sector.

She was surprised to know during the workshop that all the microfinance institutions had clutched the farmers in debts and there was no sharing data about the borrowers.

Some aggrieved farmers from Bahawalpur said that all the microfinance institutions had exploited them and due to high interest rates, they were not able to repay the loans. She said that a system must be put in place to address the problems of borrowers. She asked the aggrieved people to submit their suggestions to the Planning Commission for consideration, and added that ownership of assets was critical.

She directed the Planning Commission to form a team of researchers to review the microfinance policy that could help boost the local economy. President of Khushali Bank Ghalib Nishtar said that the bank had not the facility to provide loan for infrastructure. "The bank provides loan at maximum level of Rs 30,000," he added.

He said that credit bureau would be opened by July in Lahore to share the information about the borrowers. He remarked that microfianace sector had performed well for the last eight years. However, there was lack of clarity on policy level and there was a need to strengthen the safety net. Benazir Income Support Programme (BISP) was an alternative that would have pressure on the microfinance institutions, he added.

Earlier Dr Kaiser Bengali emphasised the difference between microfinance for households (ie poverty reduction and hence survival) and that for micro enterprises that would be for business expansion and hence employment generation.

*THE FOLLOWING ARE PARTICIPANTS RECOMMENDATIONS: *

-- Microfinance and development finance should be incorporated and there should be no different policy on these two sectors.

-- Credit borrowers in Pakistan should share the data.

-- Code of conduct should be implemented.

-- The interest rates should be changed and lowered to bring sustainability to encourage the competition.

-- The institutions should be set up for training of human resource.


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## Neo

*Pakistan not facing balance of payments difficulties: SBP governor ​* 
*Says IFIs to release loans soon​*
Friday, March 13, 2009

ISLAMABAD: State Bank of Pakistan Governor Saleem Raza said on Thursday Pakistan was not facing any balance of payments (BoP) difficulties during the current fiscal year as the IMF, World Bank and Asian Development Bank would soon release their loans for the country. 

He also said the central bank would review discount rates in the next couple of months as Karachi Interbank Offered Rates (KIBOR) witnessed 3 per cent decline and it was hoped that the interest rates would be reviewed downward if the core inflation decreased. There is no question of any rescheduling on paying foreign debt and liabilities as the country made payments on maturity of Eurobond well on time, the SBP governor said while talking to reporters after the day long roundtable conference on Microfinance Intuitions (MFI) arranged by the Planning Commission (PC), here on Thursday. 

To a question regarding the foreign currency reserves target for June 30 envisaged by the IMF, he said the countrys foreign currency reserves were $1.5 billion on higher side compared to the envisaged target till March 2009. 

We have almost half a billion dollar less than the envisaged target of foreign currency reserves till June 30, he added. According to the latest data of the SBP on Thursday, the foreign currency reserves stood at $10.052 billion on March 7. 

Without sharing the exact target for June 30, the SBP governor said the foreign currency reserves would be increased to over $10 billion.

Raza said in the same breath that the country would soon receive $840 million in the second tranche from the IMF after its board approval. The other multilateral agencies such as the WB and ADB would also extend their loans soon so there is no financing gap on external front for the ongoing fiscal year. 

When he was asked about any possibility for decreasing discount rates by the end of the current month, the SBP governor was non-committal on this issue and he stated that although the inflationary trend witnessed some declining trends in recent months but the CPI-based inflation pushed up because of escalation in prices of food items. The core inflation is not coming down but the SBP will review discount rates in next couple of months, he said. 

Referring to KIBOR, he said it witnessed 3 per cent decline and it was hoped that overall interest rates for borrowers would also be reduced. To another query about existing spread between lending and deposits rates, he said the banks used to charge more on those products where there was a risk of default such as credit card and consumer financing. 

He also said the banking sector was not facing any liquidity crunch as bad loans of consumer financing as well as the textile sector put some pressures but their overall situation was quite satisfactory. 

Regarding the finance ministrys intervention into the monetary stance and about autonomy of the central bank, the SBP governor said both the finance ministry and the central bank moved hand in hand and the finance ministry could express its viewpoint on monetary stance which could not be termed contrary to the SBP.


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## Neo

*July-February oil production, sales show negative growth​* 
KARACHI (March 13 2009): Both refined oil production and sales showed negative growth of 5 percent and 4 percent respectively in the first eight months of FY09 over the same period last year. The oil production and sales figures announced by Oil Companies Advisory Committee (OCAC) show that during the eight months of FY09.

Oil Marketing Companies (OMCs) sold 11.7 million tons of oil products (excluding non-energy products) - down 4 percent over the same period last year. "The reason for this decline is weak economic growth and persistent liquidity crunch within energy companies due to non-payment of dues by Wapda," Farhan Mahmood, an analyst at JS Global Capital said adding that out of 11.7 million tons, local refineries contributed 5.9 million tons - down 5 percent on year-on-year basis while the deficit was met through imports by OMCs.

Though the decline in local refined oil production has nothing to do with the recent economic meltdown since local refineries meet only 51 percent of domestic oil products demand, it is the liquidity which restricted the production, Farhan added.

As compared to last year, demand for furnace oil (FO) showed a marginal improvement of one percent to 5 million tons during eight months. Out of 5 million tons of FO sales, local refineries produced only 2.0 million tons (production down 8 percent on yearly basis). Thus, lower refinery output led to higher import of FO by OMCs, which stood at 3.0 million tons, up 10 percent on yearly basis.

Lower than anticipated growth in FO sales is due to cash shortage as Wapda owes more than Rs 150 billion to power sector, which restricted FO based electricity generation, thus increasing power shortages in the country. According to latest numbers, 32 percent of the electricity is generated through furnace oil.

PSO is the major oil importer and supplier of furnace oil with 86 percent market share. During eight months, where we saw one percent improvement in FO sales, PSO outperformed the market with 5 percent growth while other OMCs showed volume decline. Since diesel (HSD) is the major fuel being used for transportation (68 percent share as a fuel), slowdown in economic activity has resulted in 8 percent decline in its sales.

Thus, 4.9 million tons of HSD sales were recorded during the 8 months of FY09 out of which 2.2 million tons were produced by local refineries while 2.8 million tons were imported by OMCs. Sales of petrol (MS) stood at 0.94 million tons during 8 months of FY09, down 4 percent on yearly basis. Out of 0.98 million tons, local refineries contributed 0.88 million tons, while small quantity of petrol was imported during this period.


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## Neo

*Foreign reserves decrease by $86 million​*
KARACHI: The countrys liquid foreign exchange reserves decreased by $86 million during the last week ending on March 7, 2009, reveals State Bank of Pakistans statistics on Thursday. The countrys foreign exchange reserves reached $10.052 billion on March 7 as compared with $10.138 billion last week. The reserves held by the central bank witnessed a major decrease of $74 million to reach $6.613 billion as compared to $6.687 billion during last week. Reserves held by banks (other than SBP), similarly, witnessed a decline of $12 million to reach $3.439 billion as against $3.451 billion last week.


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## Neo

*Philips to help Pakistan overcome energy crisis​*
KARACHI: Philips Pakistan will not promote any lighting products, which do not comply with global sustainability standards and are not energy efficient. Chairman and Chief Executive Officer Philips Pakistan, Asad Jaffer at a briefing on energy efficient lighting said Thursday although this involves a huge cost and sacrifice, we have changed our entire business model to pursue this cause and find solutions to salvage Pakistan from the ever-deepening energy crisis. Jaffer said that Philips Pakistan would replace old lighting systems with the latest and more energy efficient solutions under its global campaign to conserve energy.


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## Neo

*New big industrial zone to be constructed in Mirpur​*
MIRPUR (March 13 2009): Azad Jammu Kashmir government is seriously contemplating to kick off a broad-based phased plan to establish a new mega industrial zone over an area of 26,000 kanals of land in Mirpur in the near future in order to give an impetus to the stagnant process of industrialisation in Azad Jammu Kashmir, official sources said.

The new industrial zone, the sources told APP here on Thursday, is proposed to be established at Moori on Mirpur-Jatlan road for which the required state-owned and private land was being acquired by the government to implement the plan.

The sources continued that the AJK government was giving due attention to promote the business and industrial activities in Azad Jammu Kashmir where a conducive atmosphere was already available. The state government intended to give due facilities to the existing and intending entrepreneurs at par with the neighbouring Punjab and NWFP provinces as well as in other parts of the country to ensure the speedy uplift of the industrial sector in the liberated territory in letter and spirit.

The sources said that the government also intended to give relief to those industrialists who have to face huge overhead freight charges of transportation of the raw material from various parts of Pakistan to their industrial units operating in AJK.

The industrialisation of AJK may prove to be helpful to overcome the unemployment, particularly among the educated youth besides to alleviate poverty in the area. The sources revealed that the government is also seriously contemplating to give 12 to 14 years tax holidays to the new industrial units to be established in Azad Jammu Kashmir. The amendments in existing five-year tax exemption law for the new comers in the AJK Industrial estates is also proposed to be made by the state legislature.

At the same time, the AJK government has taken serious notice of the increased trend of the misuse of existing five-year tax holidays by certain vested interest industrial concerns operating in the Industrial estates in Mirpur and Bhimbher districts in AJK through closing down their industrial units after enjoying the tax holidays for five years on one pretext or the other or through renaming their already-based industrial units with the ulterior motives to enjoy the tax holidays for another five-year period through using the same machinery and the same premises for their productions.


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## ejaz007

*2 private power projects to produce 420MW*
By: Khalid Aziz | Published: March 14, 2009 


ISLAMABAD - Two more private power projects have obtained financial closure for establishment of 420 megawatts electric power stations.
The two projects, Hubco-Narowal Power Project and Liberty Power Tech Project have achieved financial closure for 220 and 200 megawatts electric power stations and have gone into construction phase, announced Fayyaz Elahi, MD Private Power and Infrastructure Board (PPIB) during a ceremony here on Friday. 

The sponsor of HUBCO-Narowal project, located at Narowal, is the Hub Power Company Limited, while the lenders of project include Habib Bank Limited (HBL), National Bank Limited (NBP), Allied Bank Limited (ABL) and Bank Al-Falah.

The sponsors of Liberty Power Tech Project, located near Faisalabad, are Liberty Mills Limited and Mukaty Family, while lenders of project are Allied Bank Limited (ABL), Habib Bank Limited (HBL), National Bank Limited (NBP), Faysal Bank Limited (FBL), Meezan Bank Ltd and Bank Al-Falah Ltd, etc.
The estimated investment in HUBCO-Narowal project is approximately US$ 274 million while in Liberty Power Tech Project it is US$ 240 million, expected to be commissioned by March 2010 and December 2010, respectively.

With these two projects having started construction, a total of twelve (12) new IPPs are now under construction through governments power policy and will add a capacity of 2,539 megawatts by end of 2010, Elahi said. This is a major success in attracting private investment to eliminate the present load-shedding as per government commitment to the nation, he added. He said the projects would also increase investors confidence in the countrys power sector.


2 private power projects to produce 420MW | Pakistan | News | Newspaper | Daily | English | Online


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## Neo

*IMF may approve second $840m tranche by month-end ​* 
Saturday, March 14, 2009

ISLAMABAD: The Executive Board of the International Monetary Fund (IMF) is all set to approve the second tranche of $840 million for Pakistan under the Standby Arrangement (SBA) programme in its meeting to be held on March 30, it has been learnt. 

Tentative date for the executive board meeting is March 30 in which Pakistans second tranche will be tabled for approval under the SBA programme of $7.6 billion, an official source confirmed while talking to The News here on Friday. 

The governments economic managers have started lobbying members of the IMF executive board for approval of the second tranche of $840 million as well as obtaining their support for additional funding of $4.5 billion. 

Adviser to the PM on Finance Shaukat Tarin held a meeting with US Ambassador Anne W Patterson to convince her to achieve the desired results. Current political turmoil being faced by the country in the wake of a sit-in call given by the lawyers could become a potential threat and create hurdles in the way of the economic managers who are wooing major players of the world economy such as the US, the UK, European Union, Saudi Arabia and others. Sources close to the IMF officials based in Islamabad also reconfirmed that the tentative date for the board meeting was March 30 but it had not yet been formally announced by the IMF on its website. The IMF will disburse $840 million within 72 hours after the boards approval, said an official source and added that it would help the country further strengthen its foreign currency reserves. 

According to the latest data of the State Bank of Pakistan (SBP), foreign currency reserves stood at $10.052 billion on March 7 and the central bank aims to increase the reserves up to $10.5 billion by the end of June in accordance with the agreed target outlined by the IMF. 

Pakistan and the IMF had recently agreed to revise downward all macroeconomic targets including GDP to 2.5 per cent from earlier target of 3.4 per cent for the current fiscal year. Inflation will be brought down to 20 per cent and revenue target of the FBR was slashed to Rs1,300 billion for 2008-09. 

Pakistan had received $3.1 billion as upfront loaded first tranche soon after the IMFs approval of $7.6 billion for ailing economy of the country on November 24, 2008 in order to avoid risk of default by improving foreign currency reserves under 23 month SBA programme. 

For the second tranche of $840 million, Pakistan and the IMF delegation held talks in Dubai from Feb 14 to Feb 26, 2009 and the funds review mission would submit its findings before the board for considering the approval of the amount. According to the official sources, the IMF tranche worth $840 million under the SBA programme will be disbursed within two to three days of the boards approval and it will help the country to improve its foreign currency reserves. 

The programme funding from the World Bank, the sources said, would be resumed very soon and Pakistan would receive $500 million under the Poverty Reduction and Economic Stabilization Operation (PRESO) in order to improve budgetary situation. The availability of precious foreign inflows from the IMF and ADB was not facing any problem but the programme loan from the WB faced certain bottlenecks in the past and it was success of the economic managers to convince them for extending programme loans for Islamabad. 

The WB and ADB high-ups participated in recently concluded talks at Dubai between Pakistan and the IMF as observer and both the IFIs were completely on the board with regard to the envisaged targets of the national economy. The sources in the ADB are saying that the country will receive second tranche worth $500 million under Accelerating Economic Transformation Programme (AETP) before June 2009 and it will be processed for the boards approval by May 2009.


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## Neo

*US investors to take part in privatisation ​* 
Saturday, March 14, 2009

ISLAMABAD: The US investors will take part in the privatisation programme of Pakistan under new privatisation policy of Public Private Partnership (PPP).

US envoy to Pakistan, Anne Paterson expressed these views during a meeting with Privatisation Federal Minister Syed Naveed Qamar on Friday.

Qamar said that government was committed to the privatisation of public sector entities through a competitive and transparent process to improve efficiency, production, latest technology and fresh investments in larger interest of the nation. The new devised policy will be focused to bring in efficiency and improvement in the public sector entities to increase the value of national assets and not to go for out right sale. In this regard the minister discussed the possibility of involvement of USAID in the privatisation process. Qamar welcomed US investors indication to participate in Pakistans privatisation programme.


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## Neo

*Potential high for m-commerce in Pakistan ​* 
Saturday, March 14, 2009

KARACHI: Mobilink Head of M-Commerce, Aniqa Afzal Sandhu has said Pakistan is ready for m-commerce (mobile commerce) with 50 per cent cellular penetration and only 11 per cent banking penetration.

Due to low spread of banking infrastructure there is a huge untapped market. Currently Rs0.9 trillion are outside the banking industry and are transacted through informal channels. However, the relatively high penetration rate of cellular services offers a lucrative opportunity for all stakeholders to benefit from the services offered through mobile commerce, she said.

Having pioneered m-commerce in Pakistan, Mobilink shared its learning at the 2nd International Conference on Mobile Banking to encourage other players in banking and telecom sectors to follow its lead.

In developing countries, the practice has largely been operator-centric because there is a gap between bank/financial service infrastructure and cellular service availability/penetration, with cellular footprint surpassing banks significantly, she stated.

Though the cellular and banking customers are the natural target segment of such revolutionary services, the greater beneficiaries would be the untapped segment that neither has a cell phone nor a bank account. This segment will be a major driver for adoption of wireless technologies and services, she added.


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## Neo

*Wireless telephone users growth up 0.7% in Jan 09​*
KARACHI: The packages of cut in calling rates and free minutes have continued the connections growth of Wireless Local Loops (WLL) or wireless telephones in the country, posting a modest 0.7 percent increase in January as compared with the previous month of December 2008, Pakistan Telecommunication Authority (PTA) figures revealed on Friday.

The WLL subscribers base has widened to 2.36 million with the increase of 16,179 connections by the end of January 2009. The WLL tele-density maintained at 1.5 in the population of 160 million, PTAs data showed.

Telecommunication analysts said various companies of wireless telephone sets have come up with free minutes and lowest call rate packages in January as a result of growing competition among the operators. They have increased a quite good number of subscribers in the overall base despite the economic slowdown prevailing in the country, they added.

As far as companies revenues are concerned, analysts told that the short-term balance validity on the daily deduction of line-rent retained good returns to the operators despite the sliding of calling rates.

The firms of wireless telephone sets basically focus their business targets in the suburban and rural cities of the country where it is used for commercial purposes at Public Call Offices. The six active WLL operators have maintained their users growth in January after a fractional fall in its previous months subscribers numbers.

Pakistan Telecommunication Company Limited (PTCL) has held its larger share with 1.135 million customers in the country, followed by TeleCard, which shared 582,759 subscribers in tele-service market. Similarly, WorldCall subscribers reached 546,682.

The WLL have also indulged in the run of introducing value-added service (VAS) to their customers particularly the internet, SMS and call transfer and phonebook facility have increased the usage of wireless phone sets, it was learnt.

A PTA official told that WLL sectors have been improved with the investment in its infrastructure that not only improved their voice services but also increased customers facilitation through VAS.

The WLL operators will also offer more VAS on the lowest rates in order to grow the number of customers in urban areas as well, he added on the condition of anonymity. The authority is also facilitating this sector to improve their services like the cellular phone companies have, he further said.


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## Neo

*WB board to consider $500m poverty reduction programme​*
ISLAMABAD: Executive Board of the World Bank (WB) would consider much awaited $500 million poverty reduction and economic support operation programme for Pakistan in its meeting scheduled on March 26, 2009. 

According to the Monthly Operational summary for the month of March World Bank would hold consultation in first phase on the proposed programmes and projects and their approval is subject to the clearance by World Bank Pakistan office and Executive Board at final stage. 

Economic Management: Poverty reduction and economic support operation worth $500 million is to help Pakistan regain and maintain macroeconomic stability, enhancing competitiveness, and protection for the poor and vulnerable. 

Energy and Mining: Thar Coal and Power Technical Assistance worth $26 million is targeted to: help the Governments of Sindh and Pakistan strengthen the enabling policy, legal, and regulatory frameworks conducive to new investments in the coal-to-energy sector; and assist the Governments of Sindh and Pakistan to attract qualified private investors to develop Thar coal deposits and build new capacity for coal thermal power generation, guided by high standards of environmental and social sustainability. 

Mineral Sector Technical Assistance worth $50 million is for implementing a strategy to accelerate sustainable mineral sector development by strengthening governance, transparency, and capacity in the management of mineral resources.

Information and Commun-ication: Rural Telecommunications and e-Service project worth $124 million IBRD would accelerate access to communications in un-served and underserved areas by using targeted subsidies for rural expansion, strengthen legal policy, regulatory and spectrum management.

Law and Justice: Second Sindh Structural Adjustment project worth $100 million aims at implementing reforms to improve fiscal and financial management, governance, public service delivery, and the states regulatory framework.

Social Protection: Support to Safety Nets project worth $50 million is to support the effective strengthening of implementation and monitoring mechanisms for delivery of cash transfer programs. Project preparation is underway. 

Transportation: National expressways project worth $634.5 million IBRD is for the sustainable delivery of an efficient, high speed and safe access-controlled expressway system contributing to lower transit costs and time along the programme corridor. 

Trade and Transport Facilitation-II project with $25 million is to improve performance of trade and transport logistics by facilitating the implementation of the National Trade Corridor Improvement Programme and the simplification and modernisation of Pakistans international trade procedures and practices. 

Education: $100 million (IBRD) worth Higher Education Support Programme is in pipeline to support the Government of Pakistans higher education medium term development framework to foster public private partnership in the delivery of higher education and to provide substantial technical support to the client in developing a reasonable financing plan consistent with the macro-framework of the country. 

Urban Development: Punjab Large Cities Development Policy project worth $100 million (IBRD) is also in pipeline. The objective is to promote economic growth in the major cities through strategic planning, integrated infrastructure investments, and efficient urban service delivery.

Second Punjab Barrages Rehabilitation and Modernisation worth $120 million (IBRD) is under consideration. The objective is to prevent the occurrence of disastrous barrages failure and ensure their sustainable use, providing improved and reliable irrigation and drinking water supplies. Decision meeting scheduled for 1 June 2009.


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## Neo

*Obama Afghan plan focuses on Pakistan aid ​*
NEW YORK (March 14 2009): President Barack Obamas plan for Afghanistan includes proposals to shift more American efforts toward problems in neighbouring Pakistan and to seek some kind of political reconciliation with the vast majority of insurgents in the region, according to The New York Times on Friday.

Citing administration officials, the newspaper said the plan reflects in part a conclusion within the administration that most of the insurgent foot soldiers in Afghanistan and Pakistan are "reconcilable" and can be pried away from the hard-core organisations of the Taliban and al Qaeda.

At least 70 per cent of the insurgents, and possibly more, can be encouraged to lay down their arms with the proper incentives, they said. A strategic review nearing completion is being carried out by a team of high-ranking administration officials whose recommendations will be subject to Obamas approval. After seven years of a United States-led war effort in Afghanistan, officials involved in the review claim that the military to date has succeeded primarily in driving the most hard-core Taliban and other extremist militants out of Afghanistan and into western Pakistan.

To put more pressure on those Pakistani sanctuaries, the dispatch cited United States and Pakistani officials as saying they expected the plan to recommend at least a continuation of what amounts to a covert war carried out by the Central Intelligence Agency inside Pakistan, using drone aircraft for missile strikes on insurgent hide-outs. The plan will also call for an increase in military and financial aid to Pakistan, though there was still a debate on just how much additional aid should be provided, the dispatch said. One senior Obama official was cited as saying the military aid to Pakistan would be aimed at trying to get its army to focus more on counterinsurgency and less on its long-running feud with India.


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## Neo

*National Assembly body approves revised budget for 2008-09 ​*
ISLAMABAD (March 14 2009): The Finance Committee of the National Assembly approved the revised budget for 2008-2009 and budget estimate for 2009-2010. The meeting of the Finance Committee of the National Assembly was held under the chairpersonship of Speaker Dr Fehmida Mirza, in the Parliament House, on Friday. The Committee approved minutes of the previous meeting of the finance committee.

The committee also approved the figures of the revised budget of the National Assembly for the year 2008-09 and budget estimate for 2009-10. The committee was of the view that the country was facing difficult economic challenges, which can only be met when all organs of the state and sections of the society make sacrifices through economy and frugality in the expenditure.

The Speaker in her brief said that NA Secretariat through austerity measures saved Rs 38 crore during the years 2008-09. She said that the current budget was freezed at level of previous years budget and the NA expenditure has remained strictly within that limits. She said keeping in view the economic hardships in the country.

It was necessary to keep the expenditures within limits. She said that working at the secretariat and services to the parliamentarian are being improved through merit based recruitment and promotion and better training and capacity building of the secretariat staff. The Committee appreciated practising of the austerity measures and recommended to continue the same in future too.

The meeting was attended by Faisal Karim Kundi, Deputy Speaker National Assembly, MNAs, Fouzia Wahab, Azeem Daultana, Asma Arbab Alamgir, Nafisa Shah, Chaudhry Saud Majeed, Sardar Shahjehan Yousaf, Farkhanda Amjad, Bushra Rehman, Secretary Ministry of Finance and Secretary and Additional Secretary of the NA.-PR


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## Neo

*NWFP launches Rs three billion mega carbon sequestration project ​* 
PESHAWAR (March 14 2009): NWFP government with the financial assistance of federal government had launched a six-year Rs 3.03 billion mega carbon sequestration project in the province. For the current financial year, it had sanctioned an amount of Rs 191.00 million for the project.

This was stated by NWFP Minister for Forests and Environment, Wajid Ali Khan while planting a tree in connection with the Spring Plantation campaign here at Peshawar Press Club on Friday. Beside, the carbon sequestration project, an amount of Rs 113.209 million had been sanctioned for another federal government assisted project of WaterShed Management Project for the current year.

Under the project, he said the provincial government would carry plantation on a huge area of 5500 acres. He disclosed that under the project 7.750 million plants would be planted in the spring plantation campaign in the province. In the forest sector, the provincial government had included 42 projects for the preservation and development of the forests in its annual development programme.

The projects were included 22 ongoing and 20 new. The government, he said had sanctioned Rs 194.293 million for the completion of the 42 projects. The forests sector projects for the current year included growing of nurseries on an area of 150 acres, plantation on 35000 acres land and sowing of seeds on 5000 acres land.

The department will also plant trees on the sides of 1500 kilometres of roads and canals. The department will also distribute 10 million plants in the province. During the year, the government had also planned to achieve the targets of the delimitation of the forests on 0.1 million acres and 500,000 squares feet soil protection.

NWFP is head in forest-covered areas in Pakistan than other three provinces. Trees and forests, he said is national treasure playing important role in the strengthening of the national economy even in the present modern era and maintaining better environment.

During the monsoon tree plantation campaign of the current financial year a total of 9.154 million plants have already been planted in the province with the cooperation of different public and private sectors institute and general public. The government for the current year had planned plantation of 25 million plants through forests and other departments. The plants would be supplied on cheap prices to the people at all levels in the province.

Through rural development committees, the department will plant 0.277 million trees, 0.770 million with the cooperation of armed forces of Pakistan, 0.502 million through educational institutions and 2.090 million through farmers and general public. The non-governmental organisations and others will plant 1.289 trees and 20.822 million plants through the employees of the department of forests in the province.

The spring plantation campaign for the current financial year had been started in February, which urging us for the fulfilling this national and religious responsibilities. He urged on the people in general and farmers, governmental and semi-governmental institutions and education institutions for playing important role in bringing green revolution in the country.

"The objective will not be achieved through mere plantations, but their proper look after and protection are also included in our responsibilities for converting the provincial into a paradise," concluded Khan. Later, the provincial Minister for Forests, Wajid Ali Khan plants a tree in the lawn of the press club in the connection with plantation campaign.


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## Neo

*Need stressed for greater attention on scientific research ​* 
ISLAMABAD (March 13 2009): Pakistani industry will have to give proper attention to modern and scientific research for making its products compatibles in the international market and earn wider market space round the globe, said Syed Asad Haider Mashhadi, President Rawalpindi Chamber of Commerce and Industry (RCCI) here on Thursday.

Co-ordination between industrial sector and research institutions is imperative to go through to the latest research and adopt the modern methods of production and quality management, Mashhadi said while addressing a seminar at RCCI on the topic of "Value Addition in Industrial Activity through Scientific and Technological Information".

The seminar was jointly organised by RCCI and Pakistan Scientific and Technological Information Center (PASTIC), a subsidiary department of Pakistan Science Foundation. Vice President of the Chamber Imtiaz Chaudhary, former President, S. M. Azim, Director PASTIC Mrs Nageen Ain-ud-Din and Chief Scientific Officer of Pakistan Science Foundation Dr Manzoor Hussain Soomro along with a large number of business community was also present on the occasion.

President RCCI said that the quality of the product has become an important factor of marketing that without it no one even might think to market his product and for acquiring international standard, continuous scientific research is extremely imperative.

"We can grow every kind of fruit and crop by virtue of best climatic conditions in the world. Moreover we have lot of potential in natural as well as human resources but despite these facts Pakistan has been facing the problems of unemployment, poverty and illiteracy. Only due to lack of scientific research, we could get benefit from our capabilities in befitting manner", he added.

He said that scientific research on modern lines should be adopted not only for the development of industry but also betterment of common man. It is the duty of industry to support research institutions as it is the only way to develop a strong base for industry in the country on permanent basis.

Mashhadi was of the view that although whole world is passing through a recession now days but this temporary slump period would be over and soon the business would be boom once again but co-operation of research groups and industry should never be stopped at any stage.

Director Pakistan Scientific and Technological Information Center (PASTIC), Nageen Ain-ud-Din briefed thoroughly about the history and performance of the organisation. She told the audience that on one hand PASTIC is providing technical support to the researchers and students in different fields to carry out their research work and on other many important strategic and defence departments as well as private sector is taking full advantage from the expertise of the centre.

She suggested that industrialists should take initiative to start project relating to research and development in their industry and Pakistan Scientific and Technological Information Center would extend maximum support for improving quality of their product. On the occasion Chief Scientific Officer of Pakistan Science Foundation Dr Manzoor Hussain Soomro said that PSF is working on indigenous technology and it can help the industry to make Pakistan self reliant.


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## Neo

*Agriculture sector: proper planning will achieve total potential output ​* 
ARTICLE (March 14 2009): I have now seen most of the happenings in agriculture and I found that with the passage of time, we have deteriorated in our concepts and its application in the country. How is this explained? Very simply, the inflationary aspect did not keep in touch with the salary structure. The other aspect that came to the front was the connectivity required for the job.

Cronyism and caste system and other forms of ethnic considerations came to the fore. This had an adverse affect on the organisational force and at the moment no less than 79% of the foreign-trained personnel have left the research organisations for one reason or the other. Agricultural inflation, or agflation, as it is now called, has played havoc to the social system in the country.

The original sin is on the increase and the concept of social justice just does not appear to be corrected. Policies devised for a few as against the many have been put in place. How can exorbitant input costs in agricultural be reduced?

With nitrogen not available except in the black-market, there is no substitute for phosphate fertiliser and the effort not to find any is going on to apathy. What we then to do and say, as the West wants us to and take our comparative advantage to the pits of the world?

Pakistan will never be able to compete with the world, as we know it for the simple reason that the West will go on telling us how to raise tariffs on utilities till such time as our industries are unable to compete the globalised world that is becoming more and more poachers of what they had earlier preached.

The Bank of England is going to print money and increase its money supply and that is the answer to their highly paid CEOs in the corporate sector that take millions of dollars/or pounds as their salary. Well, that is the mean and rapacious end of the market and the mighty hidden hand of Adam Smith should come down heavily on them and these individuals taken to the logical place where they belong.

The western model of development and management has broken down because the governance there is not of the order that is required to have the kind of responsible social and corporate behaviour that is and was expected of them. A decadent society is indicated where the norms of decency are openly flouted and breakdown of taboos accepted as a way of life and one of normal behaviour.

On the social side, the indicator comes from the advertisements in the leading papers suggesting that temporary common law husband and wife relationship for these elites that have all the money and now want it to be used for destroying all those values and attitudes that their leaders speak off but never practice. What values do you allow when taboo behaviour becomes acceptable and when nuclear families breakdown due to heavy considerations of money? Money availability is for means to a decent end and that is all.

USAs in God we Trust has come to an end. Can social values be resurrected? It is not possible under the normal circumstances as the whip hand is no longer with the governments but with those who have enjoyed the benefit of these lapses of values and judgements at will in both time and space. Under conditions of uncertainty and that caused by the lack of decent management skills and the fetish about technological superiority there has to be some kind of give.

One never thought that it would be this kind of give in which the determinism of the globalised world would give way to the kind of economic debacle of the west? Is that the only model of development of a country and its society? Agricultural inputs can be reduced without jeopardising the food security of the country.

For Pakistan, the answer lies in the use of phosphate from the waste material of coal deposits in Pakistan, use of waste sugarcane sludge, use of leaf material from banana plants that have been discarded during pruning and that are lying waste by the road side. The advantages can be further driven home if all the manure from the animals including poultry is bagged and sold in granulated form. It is possible to do so and at a pittance of the original cost.

It has been done in the case of sugarcane waste and it can be done where the bulk of such material is available and let me take Landhi Cattle Colony as an example. You want sustainable agriculture that is what you have to do. Try something new our forefathers used and are not new technology but old ones packaged differently.

The cost of organic fertiliser that has been used in the research trials comes to about Rs 400 per bag and contains both nitrogen and phosphate and besides potash and the micro-nutrients. The game is an exciting one for in agriculture and life style nothing is wasted. The problem is with the collection process but that may be due to our inability to manage waste. Now we have CDA and the lot of commissioned people, who will go for obsolete waste managed technology just because they do not apply their mind.

That kind of cost will be never helpful for they are given to a living of ease and comfort. The waste recycling projects demand where it is done by a soil scientist of some repute is only 1,2 million rupees whereas if CDA is taken into consideration and some others then the cost would be in dollars and millions of it. These are innocent wonders of this world. For agriculture one can take the coal, refine it and get two acids that are used for such good affect that one wonders at the lack of our ability to cash in on it.

Humic acid costs Rs 50 per liter and is sued as a plant hormone and one has to use two kilograms of it per acre and the other is fulvic acid that is used for the clearing of sludge and metal impurities in city and town. Time to change the input strategy? You bet. At what cost? None? Instead of paying the MNCS the kind of money that one is paying and instead of touts of the WB and ADB [former employees] sending obscene signals in favour of more of the earlier systems why not trust our very own.

All kinds of fears are thrown at you and all kinds of harassment are carried out while posing as friends of Pakistan. Once the input strategy is worked out the output strategy would have to be taken into consideration. The sustainability of agriculture would not be in question. The cost would be reduced and it would mean that everyone is a gainer. Is that bad for the system?

The other input cost that has never been under consideration is the transaction cost developed as a result of fossil fuels. It is obvious that there is no control over the system and that the petrol and oil policy is dictated by other nations. So what is wrong with having your own bio-fuel policy? Want to try Salicornia and other bio-fuels grown on lands that are marginal and not being used for any other agriculture or for any purpose.

But what you do at the ignorance of the people that are to give a decision and that are located in places where a planning permission has to be taken. Life is like that in Pakistan where policemen on the beat are taking decisions for the rest of the country through their limited visions of what is required.

Having had a comfortable life of their own they have done what they have to mess up this country for lack of thinking and acting. I wish I could unleash the thought process of Paulo Fararie on their limited minds and shake them up to be and to be in the process of conscientisation. There is more to life than a 9 am to 3 pm office life and more to it than to sit before the TV and call it relaxing.

Try something different for your country for it has given you a lot and taken you from your bootstraps and developed you as a worthy member of this country and now it is up to us to take it to a nationhood situation. Try it for at the end of it all of us will be satisfied that we have played the game well and maybe, just maybe, build that bridge that gives us hope and resilience. Take care for the powerful in the world of economics do not want to lose and will try and win at all costs.


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## Neo

*OMV starts gas production at Latif-1 well ​*
SUKKUR (March 14 2009): OMV AG has started natural gas production from the extended Latif-1 well in Nara taluka of the Khairpur district. The fast-tracked project will produce 1,000 boe/d during the first three quarters of this year. Production will then rise to 4,000 boe/d when the Latif-2 well is drilled in the fourth quarter.

"The new Latif gas reserves is the result of continuous successful exploration efforts of OMV together with its [joint venture] partners in Pakistan to enhance domestic gas production in Pakistan," OMV Gas field officials told APP here on Friday.

Gas is transported through a 23-km pipeline to the OMV-operated Kadanwari gas plant. The company sells the gas to Karachi utility, Sui Southern Gas Co Ltd, which will distribute it in Sindh province. OMV and its partners, Eni SPA and Pakistan Petroleum Ltd (PPL), will submit a field development plan to Pakistans government with the intention of boosting Latif gas production beyond 2011.


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## Neo

*Carbon credit offers chance to earn billions ​* 
*Pak industries yet to seize on the opportunity​*
Sunday, March 15, 2009

LAHORE: Pakistans industrial sector has not benefitted from the carbon initiative under which developed nations having high pollution levels trade cleaner environment-friendly industrial technologies by providing cash credit.

Developed nations under the Kyoto Protocol are bound to bring their emission of gases, which has caused global warming, to 1992 level by 2012. They can do so either by replacing heavy gas-emitting technology in their industries with cleaner technology or by buying carbon credit (carbon dioxide being the main pollutant) from industries in developing economies which use cleaner technologies against cash payment.

The rate of one carbon unit is 15 euros. The entire process from registration of an industrial unit to disbursement of payment is overseen by a special United Nations cell established in all developing countries. A three-megawatt electricity generation plant installed by thousands of textile and other industrial units in Pakistan could net Rs5 million per year, according to Asim Mehmood, a carbon initiative consultant.

The News has found that barring Pak-Arab Fertilizer no other industry in the country has benefited from this facility. About a dozen have applied and some are in final stages of registration. Most of the industries using cleaner technologies, however, are unaware of this facility while those which have some idea do not know how to apply.

The carbon initiative provides a chance to environment-friendly industries in developing countries to earn billions of dollars by registering and claiming carbon credit. Currently, India is the leading beneficiary of carbon credit which according to UN statistics accounts for 31 per cent of all carbon credit that is currently disbursed. It is followed by China which has a 24 per cent share. Even Bangladesh is much ahead of Pakistan as four of its industries are availing of this facility.

Consultants point out that delayed government response to start the registration process is one reason for Pakistans poor performance. They say first the provincial environment protection departments examine the application for registration with the UN cell and then the federal department for cleaner development approves the application for submission to the UN agency. This process, according to the consultants, takes several months.

Another consultant apprehends that the presence of a strong Indian lobby in the UN agency is a drawback as it put hurdles in the way of registration. He says the objections are baseless as several Indian industries have been registered having similar minor flaws. However, on objections Pakistani consultants now cite the example of registered Indian industries to strengthen their case. Asim says the reluctance of industries to hire consultants is another reason which has deprived the industrial sector of benefits of this facility. The Kyoto Protocol was adopted in Kyoto, Japan, on December 11, 1997 and came into force on February 16, 2005. Some 183 parties have ratified the protocol to date. Detailed rules for implementation of the protocol were adopted in Marrakesh in 2001 and are called Marrakesh Accords.

Under the treaty, countries must meet their targets primarily through national measures. However, the Kyoto Protocol offers them additional means of meeting their targets by way of three market-based mechanisms which include emissions trading known as carbon market, clean development mechanism in their country and joint implementation under which a developed country provides credit for a clean project in a developing country and recover the debt through carbon credit.


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## Neo

*Rice exporters advised to focus on quality: Rs 40 billion of export refinance not utilised by banks: SBP​* 
KARACHI (March 15 2009): The State Bank of Pakistan (SBP) Governor, Salim Raza, has said that around Rs 40 billion in the account of is not being utilised by the commercial banks. Speaking at a luncheon meeting with members of Rice Exporters Association of Pakistan (Reap) here on Saturday, he said that some commercial banks had provided less financing than their ceiling under export refinance.

He assured the rice exporters that the central bank would look into the matter and would take steps for this amount to be utilised, mainly for the sectors which are in dire need of financing. He invited Reap members to hold a special meeting with him next week to discuss the issues regarding export refinance, banks financing, and others in detail.

He asked the rice exporters to pay attention on quality and value-addition of the commodity. The rice exporters should establish their brands in the international markets, he remarked. He emphasised on better warehousing facilities and good packaging of the commodity to minimise damage ratio and to earn more foreign exchange.

He said that the SBP had issued the United Nations guidelines to commercial banks regarding trade and banking with Iran. "The commercial banks can provide banking services to Pakistans exporters for their trade with Iran in the light of UN guidelines," he added.

He said that the SBP was ready to help in establishing a branch of any Iranian bank in the country. Earlier, Reap Chairman Abdul Rahim Janoo briefed the SBP Governor about the association and the rice trade.

He said that private sector had played a historic role in promoting the countrys rice exports since its privatisation in 1989. "We had achieved $2.2 billion rice export target last fiscal year from previous only $300 million, before its privatisation", he said, and added that Reap had set a target $2.4 billion for the current fiscal year.

He said that rice trade activities were going on smoothly by the private sector. However, some hurdles were created by the intervention of government institutions, like TCP and Passco, in rice trade. He said that the countrys rice exports would hit $4 billion mark under Reaps Vision 2010. However, he said, the government should provide level playing field to the private sector.

He said that Reap members had explored many markets in the world for Pakistans rice with their own efforts. They had established their own brands in the international markets and had made rice the second biggest foreign exchange earning commodity for the country.

He pointed out that Reap has planned to send its delegations to many countries to explore and establish new markets for Pakistans rice. The first delegation would be sent to Saudi Arabia in the last week of the current month, he added. He said that Reap has planned to set up a most modern rice laboratory in the country.

Reap vice chairman Haroon Rashid said that rice exporters to Iran were facing many difficulties as no Pakistani bank has presence in that country. He requested the SBP Governor to consider opening of at least one branch of any Pakistani bank in Iran. Some leading rice exporters also spoke on this occasion to discuss various issues and gave many suggestions.


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## Neo

*Benazir Income Support Programme: World Bank asked to increase technical assistance​* 
ISLAMABAD (March 15 2009): The government has asked the World Bank to increase the amount of Technical Assistance (TA) being provided for Benazir Income Support Programme (BISP) from $50 million to $60 million, said Farzana Raja, Chairperson of BISP in a press conference here on Saturday.

"It is true that no contract has been signed so far in this regard but the government is hopeful that the total amount of TA would be increased by the World Bank," she said. She said that Rs 34 billion were allocated for BISP in budget 2008-09 and this amount has now been increased to Rs 70 billion.

She said that the survey on poverty would soon be started and the President and the Prime Minister will announce the programmes package. She said: "Nawaz Sharif, PML-N chief is supporting provincialism and is looking for his own interests instead of national interest."

"Shahbaz-led provincial government initiated Rs 2 Roti (bread) scheme and it revealed that PML-N is not interested in the welfare of other provinces." She regretted that subsidised Roti was not available even in Lahore. She said that Nawaz Sharif was engaged in fanning provincialism and claimed that PPP was the only political force, which talked for unification of the federation.

Farzana Raja claimed that Pakistan Peoples Party was the largest political force in Punjab and the PPP government took the responsibility of development of the country. In protest rallies Nawaz Sharif always talked about vision of Benazir Bhutto, which shows that he doesnt have his own vision. She advised Nawaz Sharif to join Pakistan Peoples Party if he is inspired too much with the party.

She said those who had asked for mercy and had been meeting in the dark hours of night were still looking for another deal. They seemed willing to trade the lawyers protest. The government wanted to resolve the issues in the light of Charter of Democracy whereas Sharif brothers consent was to decide it on roads.

She said that Nawaz Sharif, Shahbaz Sharif, Aitzaz Ahsan and Iftikhar Chaudhry have no match. Nawaz Sharif and Shahbaz Sharif have only focused on Prime Ministership.

To lead their own agenda, they were having separate meetings with Prime Minister Yousuf Raza Gilani. She said the way PML (N) was behaving clearly shows that they want their favourite judiciary under their own rule. She said that why should they claim fighting for judiciary if they already had dishonoured it in the past. Slogans like "Jaag Punjabi Jaag, Teri Pagg Noo Lagg Gaya Daagh" would only fan provincialism.

She said that Nawaz Sharif and his party have not done anything historical. That was why they always quote Shaheed Mohtarma Benazir Bhutto. If they had got such an inspiration from Shaheed Bibi, they should join PPP. She said that PML (N) announced leading the lawyers protest on receiving the Supreme Court verdict regarding their disqualification, which highlighted their personal agenda.

She said that protest was a democratic right of all but no one could be allowed to challenge the writ of the government. Those who do not believe in the supremacy of law should not advocate it. Peoples Party is an ideological political party and it has a long profile of sacrifices. No matter whether it was restoration of judiciary or freedom of expression, Peoples Party has always been in forefront.

About her UK visit, she said that the British government had admired Benazir Income Support Programme for its well-managed and systematic aspect and assured manifold assistance for this programme. She said that the process of disbursement of money at the doorsteps of more than 1.5 million deserving families has been started whereas more than 2.7 million applications have been submitted to Nadra for verification.

Farzana Raja, during her UK visit, addressed important think tanks and British Pakistani Forum. She also met high profile British officials and representatives of various political organisations.


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## Neo

Continued from *here*


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## Neo

To Be Continued *here...*


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## Neo

* UAE, South Korea to set up coal-based power plant​*
KARACHI (March 15 2009): Sindh Chief Minister Syed Qaim Ali Shah Saturday held a meeting with a 8-member delegation of UAEs Bin Din Group and PEDCO of South Korea, working on development blocks of Thar Coal Project and considered the details of Letter of Intent.

According to details, the Korean Firm would work for three years in Blocks 4 and 8, and start drilling and boring for coal mining, where-after power generation will start. The Korean group will set-up Mine-mouth Thermal Power Plant of 1000 MW, by using Thar coal reserves.

The meeting was informed that Mines and mineral development dept, Law dept, Thar Coal and Energy Board and Chief Ministers Secretariat would examine the details of the agreement, being prepared for the proposed project. The Thar Coal Energy Board is going to have an important meeting on Tuesday and signing of the agreement is expected on Thursday.

The Chief Minister assured of all possible assistance and co-operation of Sindh Government to the delegation. The PEDCOs representative informed that theres is a major power company of the world and will soon start coal mining. He said the Mine-Mound power plant would cast a positive and soothing impact in Pakistans economy.

He said the plant, after completion, would be Pakistans first and biggest thermal plant which would make energy available to two million households and six lac industrial units. It will generate job opportunities for 90,000 skilled and non-skilled workforce.


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## Neo

*Pakistan not facing balance of payments difficulties: SBP governor ​* 
*Says IFIs to release loans soon​*
Friday, March 13, 2009

ISLAMABAD: State Bank of Pakistan Governor Saleem Raza said on Thursday Pakistan was not facing any balance of payments (BoP) difficulties during the current fiscal year as the IMF, World Bank and Asian Development Bank would soon release their loans for the country. 

He also said the central bank would review discount rates in the next couple of months as Karachi Interbank Offered Rates (KIBOR) witnessed 3 per cent decline and it was hoped that the interest rates would be reviewed downward if the core inflation decreased. There is no question of any rescheduling on paying foreign debt and liabilities as the country made payments on maturity of Eurobond well on time, the SBP governor said while talking to reporters after the day long roundtable conference on Microfinance Intuitions (MFI) arranged by the Planning Commission (PC), here on Thursday. 

To a question regarding the foreign currency reserves target for June 30 envisaged by the IMF, he said the countrys foreign currency reserves were $1.5 billion on higher side compared to the envisaged target till March 2009. 

We have almost half a billion dollar less than the envisaged target of foreign currency reserves till June 30, he added. According to the latest data of the SBP on Thursday, the foreign currency reserves stood at $10.052 billion on March 7. 

Without sharing the exact target for June 30, the SBP governor said the foreign currency reserves would be increased to over $10 billion.

Raza said in the same breath that the country would soon receive $840 million in the second tranche from the IMF after its board approval. The other multilateral agencies such as the WB and ADB would also extend their loans soon so there is no financing gap on external front for the ongoing fiscal year. 

When he was asked about any possibility for decreasing discount rates by the end of the current month, the SBP governor was non-committal on this issue and he stated that although the inflationary trend witnessed some declining trends in recent months but the CPI-based inflation pushed up because of escalation in prices of food items. The core inflation is not coming down but the SBP will review discount rates in next couple of months, he said. 

Referring to KIBOR, he said it witnessed 3 per cent decline and it was hoped that overall interest rates for borrowers would also be reduced. To another query about existing spread between lending and deposits rates, he said the banks used to charge more on those products where there was a risk of default such as credit card and consumer financing. 

He also said the banking sector was not facing any liquidity crunch as bad loans of consumer financing as well as the textile sector put some pressures but their overall situation was quite satisfactory. 

Regarding the finance ministrys intervention into the monetary stance and about autonomy of the central bank, the SBP governor said both the finance ministry and the central bank moved hand in hand and the finance ministry could express its viewpoint on monetary stance which could not be termed contrary to the SBP.


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## Neo

*Horticulture sector: $5bn investment from China, ME likely: ASF​*
KARACHI: China and the Middle East countries will invest in horticulture sector of Pakistan to the tune of $5 billion during the current year 2009, an official of Agribusiness Support Fund (ASF) said Wednesday.

Saudi Arabia and China are interested to acquire land on lease besides to join hands with the private sector stakeholders in order to grow soft crops and vegetables, Chairman Sindh ASF, Mateen Siddiqui said. China and Middle East will be the key players of investment in horticulture sector as they are interested in rice, wheat and vegetable crops of the country, he added.

He said it was expected that after investment the country could save most of exports of agricultural produce as it was hampered by lack of modern storage facilities. High post harvest losses, insufficient packing and grading and cold storage facilities along with absence of refrigerated transport and containers can be eliminated through foreign investment.

He said due to the most liberal investment policy in the region, Pakistan is most suitable for investors. He said the exporters need a full-fledged packaging house, ripening chambers and blast chillers. He said the government was providing a number of incentives and facilitating measures were being taken for promoting business activities in Pakistan. Most of our economic sectors are open to FDI where the foreign investors can hold 100 percent equity. Safety of investment is assured and Pakistan has signed Bilateral Investment Treaties (BIT) with many countries worldwide. 

A high percentage of horticulture produce is wasted due to ineffective post-harvest practices and around 25-30 percent of total production of fruits and vegetables is wasted due to lack of proper post-harvest handling. 

These include the network of industrial estates and export processing zones, economic zones with tax holidays, concessional customs duty on import of plant and machinery and the unrestricted outward remittances of capital, profits, royalty, technical and franchise fees etc. Special Economic Zones have been proposed for set up in different parts of the country. Chief Executive Officer PHDEB, Shamoon Sadiq said Pakistan horticulture sector possesses a great potential for development. However, the growth of the sector is inhibited by a multitude of constraints. 

Per hectare yields are very low as compared with international benchmarks. The product is perishable by nature and therefore requires proper handling after harvesting to keep it in good condition till it reaches the consumer and export destinations. He said Ministry of Commerce in consultation with PHDEB, prepared proposals under National Trade Corridor Improvement Programme (NTCIP) for enhancing annual export of fruit and vegetables, and floriculture from existing $160 million to $500 million in the next 5 years. He said Pakistan is successfully involved in biotechnology, tissue culture, cutting of floriculture, and as a result we are now in a position to export flowers to the developed world.


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## Neo

*Alternative energy: AEDB initiates projects for introduction​*
ISLAMABAD (March 15 2009): Minister for Water and Power, Raja Pervaiz Ashraf told the National Assembly on Saturday that Alternative Energy Development Board (AEDB) has initiated many projects for introduction of alternative energy in the country.

Replying to a question from Abdul Qadir Patel, MNA during Question Hour session, he said that next month first commercial scale wind power plant in the countrys history will be ready for inauguration.

He also said that first public sector wind project of 50 MW has been signed with Karachi Port Trust. He added that 40 micro wind turbines have been installed in Karachi, while 125 KW wind turbine are already operational in Landhi, Karachi. He said that in solar energy sector, 3000 off grid, rural homes were electrified through solar energy in district Tharparkar, Sindh.

Raja Pervaiz Ashraf said that a solar energy project for 300 villages in Balochistan was waiting for funds. Pilot projects for PV water pumping and solar water heaters have been approved for World Bank financing, he added. He said that ECC has approved policy recommendations for use of bio-diesel as alternative fuel.


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## Neo

*IT revenue registering 50 percent growth per annum​*
ISLAMABAD (March 02 2009): Pakistan's global IT revenue, with an average growth of around 50 percent per annum, is expected to realise the targets by the end of financial year 2009-10. The country's IT sector, over the last few years, has been growing at a remarkable rate and, to meet the future objectives, Pakistan Software Export Board (PSEB) is focusing on the growth of skilled human resource.

Keeping in view its prime objective--development of future workforce--the Board has devised an open door policy for the provision of financial subsidies, technical support and partnerships not only for the IT companies but also for the educational institutions.

In this respect, the PSEB is working with the Higher Education Commission (HEC) to augment the influx of quality graduates into the industry, said an official at the Board. It had launched an Internship Programme to undertake match making between fresh IT graduates and IT companies and to provide grooming to graduates where necessary.

This programme is also aimed towards the development of confidence among Pakistan's IT business managers regarding output of IT-oriented educational institutions. So far, more than 3300 graduates from 220 universities and institutes across the country have been placed in 250 IT companies and IT departments of public and private sector organisations for a period of three months.

The retention rate by the IT companies has been more than 80 percent, and another 10-50 percent received job offers from other organisations because of their internship experience. This permanent retention rate is the highest of any Internship Program in the country. In Internships Phase-III, interns are being paid a revised stipend of Rs 6,000 per month for a period of 3 months.

Over 1,600 students will benefit from this revised programme in the next one year. A web portal will also be established to further streamline the process. According to officials, PSEB is also facilitating the graduates as well as the IT companies by acting as a liaison point for provision of quality graduates that match the companies' requirements.

It also provides ongoing training and industry-standard certifications to professionals, and undertakes research to benchmark IT professionals and graduates in the country. Officials said that to sustain and improve growth, IT companies in Pakistan need around 235,000 working professionals by the end of 2009-10. Currently, that number is a little above 100,000, and approximately 135,000 more professionals are needed in the next two years.


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## Neo

*ADB to restructure its investments in Pakistan ​*Saturday, 14 Mar, 2009

ISLAMABAD: The Asian Development Bank (ADB) would continue to restructure its portfolio in Pakistan during the implementation of its $4.4billion Country Partnership Strategy (CPS) 2009-2013 and will take its focus away from education sector and fund only selective projects on the governance side.

The 165-page CPS, which the bank unveiled few days ago, says that the banks restructuring exercise would continue over the next four years. ADBs ongoing active portfolio totaling to $5.2billion is being extensively restructured and the number of active projects reduced.

There were 80 ongoing ADB-assisted loans in Pakistan at the end of 2006. By August 31, last year, this had been reduced to 58 which also included the new approved assistance. The cleansing process would continue, the CPS shows.

On the recommendation of the banks country assistance programme evulation (CAPE), the CPS focuses on smaller number of sectors and sub-sectors. For instance, education will not be a focal area of ADB given the substantial amounts of external financing for the sector from other multilateral and bilateral donors.

The CPS has, however, not alluded to the fact that this year the social sector (education and health particularly) has been the main victim of the governments over Rs100billion cut in spending under the Public Sector Development Programme (PSDP) and squeezed funding for the higher education and science and technology.

ADBs support for the governance will remain limited with focus on only three sub-sectors: public resource management; economic transformation and private sector development.

In the agriculture sector, now the main focus of ADB will only be on irrigation and water management. Support for traditional rural development projects and stand-alone agriculture reform programmes is being phased out. 

The paper says overall progress of its multi-million dollars Access to Justice Programme (AJP) which sought reforms in the judicial sector and police services at the federal level in Pakistan remained uneven. The CSP says the project had achieved some goals, but there had been a serious dearth of timely investment for capacity building.

Citing the reasons for taking its focus away from education, the CPS says the implementation of a number of stand-alone education and health sector projects financed by the bank continued with mix results in the past. A Decentralised Elementary Education Projects in Sindh approved in 2002 ran into start-up delays and implementation snags and never left the ground. 

About the multisector Devolved Social Services Programmes (DSSP) in Sindh, Punjab and Balochistan in 2003, 2004 and 2005 respectively, the bank says the progress had been slow due to start-up delays despite the fact that the DSSP achieved many of their goals.

According to CPS, in order to get of the existing energy crisis, Pakistan needs over $60billion investment in the power generation sector over the next five years. On the energy side, the bank say Pakistan has severe policy bottlenecks and unmet capital investment in this sector.


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## Neo

*Going beyond the IMF ​*Sunday, 15 Mar, 2009



*As the IMF programme will be implemented in the next 18 months. we must prepare the ground for transition from the current stabilisation phase to the next growth-resumption phase. *​
In November 2008, Pakistan entered into a standby arrangement with the International Monetary Fund to support the country&#8217;s stabilisation programme and fill in the external financing gap. 

Pakistan has successfully drawn down the first two tranches of this loan. Most of the stabilisation indicators are showing an improvement. 

If present efforts to maintain fiscal discipline, curtail borrowings from the State Bank and build up foreign exchange reserves continue, it is likely that the IMF will be able to complete the forthcoming reviews successfully and the agreement reach an orderly termination point by June 2010. 

While the implementation of the IMF programme proceeds over the next 18 months we must prepare the ground for transition from the current stabilisation phase to the next growth-resumption phase. This will not take place automatically. It will require public policy measures of a different kind. Macroeconomic stability attained through the IMF programme will, of course, lubricate this transition by allowing the government some degree of freedom that it does not enjoy at present. But the biggest challenge is the restoration of confidence in the economy. 

The current year will be difficult for Pakistan. The international economic environment is far worse than anticipated. Global recession will certainly affect exports, workers&#8217; remittances and external capital flows. The present confrontation between the PPP and the PML-N will further add to unease among investors. Pakistan&#8217;s growing negative image, reinforced by the terrorist attacks on Sri Lankan cricketers in Lahore, will scare away even the most favourably inclined foreigners. 

This environment makes it extremely difficult to steer the course towards higher production, growth and employment. However, several measures initiated and sustained over the coming years can mitigate the adversity. 

First, the incentives provided to wheat farmers by paying them above world prices should indeed be translated into benefits for the widest segment of the rural population. Assuming that 6.5 million tonnes of wheat are procured by public agencies, the rural areas will witness a cash injection of Rs156bn this year. This boost in the purchasing power of rural households will have a multiplier effect on consumer-oriented manufactured goods produced domestically and arrest the declining trend in manufacturing sector. 

The demand from rural households is not leaked into imports; domestic labour-intensive goods and services create a positive impact on GDP and employment. The danger is that food department officials may misuse their huge discretionary powers in this state of glut to enrich themselves, buy from politically influential and well-to-do farmers and shortchange the small and poor farmers. It must be ensured that such corrupt practices do not occur. 

Second, export industries have been hit hard by energy shortages. As Pakistani exports have become relatively competitive due to 25 per cent depreciation in currency, production has been constrained because of the non-availability of power and gas supplies. There is an immediate need to reconsider the allocation of the shortages&#8217; policy. Political expediency dictates that household consumers be given preference but economic pru

dence demands that the manufacturing sector in general and export industries in particular be accorded priority. 

After all, they earn the foreign exchange for the country. Instead of approaching the donors for financial aid, the same amount can be raised by taking care of genuine problems faced by the exporters. 

Third, higher education and scientific research sectors were given some serious attention in the past six to seven years. These sectors take a much longer time to produce perceptible results. If there are weaknesses or shortcomings in their management these should be addressed. If there&#8217;s lack of trust in managers they can be replaced by competent and dedicated persons of the present government&#8217;s choice. But to interrupt the process of human capital formation midstream would enhance the costs and push back the benefits. 

In a globalised economy driven by knowledge, innovation and human ingenuity, deviating from the path of investment in higher education and scientific education cannot be accommodated. 

Fourth, as fiscal deficit targets are achieved, the cutback on development expenditures, while totally justified and understandable in the present stabilisation phase, has to be reversed with the 2010 budget. A modest increase in the energy, education and health sectors in the coming year followed by sizable allocations for the next three years is warranted so that the ministries can plan their investments ahead of time. 

Along with these allocations in the public sector, public-private partnerships should be intensified. There are many private investors who, scared of complex bureaucratic entanglements, would draw comfort from a partnership with the government. This is a win-win situation in which private capital and management are combined with public-sector facilitation and support. 

Fifth, social protection to the poor claims only a tiny fraction of the national income. The Benazir Income Support Programme, the Baitul Maal, the Zakat fund, etc are the right types of interventions. Poverty surveys will identify the poor, but there are two areas of concern that need to be addressed. The quantum of allocations for social protection programmes must be raised to reach out to the majority of households below the poverty line. The production capacity of the target groups must be raised to enable them to move away from the poverty line. 

Technical and vocational training, public works programmes, small rural infrastructure projects, guaranteed employment programmes and conditional cash transfer schemes are some instruments that have been successfully tested and tried elsewhere. 

Lastly, there is an urgent need to devolve financial and administrative powers to the provinces and the districts. Provincial autonomy, decentralisation and delegation of powers to local governments, transfer of law and order and revenue functions to civil servants from nazims form the agenda of governance reforms. These reforms will take a much longer span of time but initiating the process of their implementation will build confidence among provinces, reduce polarisation, improve law and order, and empower communities and people. 

These reforms have to be accompanied by early decisions on the allocation of financial resources between the federal and provincial governments by the National Finance Commission. Better enforcement and management of the 1991 Water Accord will also remove mistrust among the provinces. 

The above agenda may appear formidable but what needs to be done is clear. All that is required is political will and the implementation capacity to plan, manage and execute it in a steadfast manner.


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## Machoman

Nothing going to work for Pakistan as long as we have corrupt leaders sitting on our head. Nothing going towards Pakistan economy. All goes to corrupt leaders pocket. Simple !


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## Neo

Machoman said:


> Nothing going to work for Pakistan as long as we have corrupt leaders sitting on our head. Nothing going towards Pakistan economy. All goes to corrupt leaders pocket. Simple !



Thank you for sharing your optimism.


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## Neo

*Domestic debts cross Rs 3.6 trillion mark​* 
KARACHI (March 16 2009): Domestic debts surged by 10 percent to the record level of Rs 3.6071 trillion during seven months of the current fiscal year, from Rs 3.2661 trillion on June 30, 2008, due to a significant rise in fiscal deficit and slow foreign inflows.

The slow inflows on the back of slow privatisation process during the past one-and-a-half years and less than target revenue collection compelled the government to borrow more from the domestic market, economists said.

The rising fiscal deficit and high current expenditure also raised the government reliance on domestic debts as well as external debts to meet its financial requirements, they added.

The State Bank of Pakistan has said that the countrys overall stocks of domestic debts, including permanent debt, floating debt, and un-funded debt, have registered a growth of 10.44 percent during seven months of the current fiscal year.

With this upsurge, the outstanding amount of overall domestic debts mounted to a new peak of Rs 3.6071 trillion by the end of January 2009 as compared to Rs 3.2661 trillion as on June 30, 2008, depicting an increase of Rs 341 billion in July-January of 2008-09. Major increase was witnessed in the floating and un-funded debt, which amounted to 16 percent and 7.14 percent, respectively, while the permanent debt showed a less rise of 0.11 percent during this period.

Tremendous rise in overall debt stocks was driven by the healthy growth in the floating debt category, which includes three months treasury bills, market treasury bills and MTBs for replenishment.

The floating debt went up by Rs 267.3 billion during July-January as compared to Rs 235 billion in the same period of last fiscal year. The floating debts stocks touched the peak level of Rs 1.9047 trillion by the end of January 2009, from Rs 1.6374 trillion in June 2008. However, outright sale of MTBs to the commercial banks was not included in the stocks of floating debts.

Permanent debts, which include market loan, federal government bond, income tax bond, etc, went up by Rs 0.7 billion, to Rs 609.1 billion in January 2009 from Rs 608.4 billion in June 2008.

Un-funded debt, based on national saving, rose by Rs 72.9 billion to Rs 1.0933 trillion in January 2009 from Rs 1.0204 trillion in June 2008. "Higher fiscal deficit and low privatisation process pushed the domestic outstanding during seven months," economists said.

They said that presently the government was also increasing its borrowing from the saving schemes, as a result of which the overall stocks of un-funded debts were likely to further increase in the near future.


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## Neo

*Blockade of highways: export and import activities shrink alarmingly​* 
KARACHI (March 16 2009): The governments blockade of highways to foil lawyers attempt to march on Islamabad and stage sit-in on Constitutional Avenue for reinstatement of deposed judges caused billions of rupee losses to the national exchequer for all exports and imports activities scaled down during the last six days.

Long queues of containers of imported goods are waiting for transportation at Port Qasim and Karachi Port Trust (KPT) for last six days but hauliers are reluctant to transport these because of governments hostile maneuver.

Similarly, a large number of loaded and unloaded trucks, trailers are forcibly being used as road barriers by the law enforcers to block major highways aimed at containing lawyers convoys to reach Islamabad. When contacted President Karachi Goods Carriers Association (KGCA) , Noor Khan Niazi said that some 6000 trucks and trailers, containing goods for domestic consumption, exports, imports and raw material, have forcibly been detained to stymie the lawyers long march.

He said the loaded and unloaded vehicles have mostly been parked at Sukkar, Lodrah, Khanewal, Obaro, Parnawal, Rawaat and Texila. To a question, Niazi said that association has sent a complaint letter to Syed Qaim Ali Shah, chief minister, Sindh and has asked for intervention. But he said the provincial government has so far not responded positively hence transporters are reluctant to take goods to the Punjab.

He urged the government to provide security to the carriers in case of any untoward situation, saying that transporters are still deprived of getting compensation to their losses during December 27, 2008 pandemonium.

He expressed fear of commodity shortage and delay in the export consignments and added that the export shipments could be delayed, if impounded containers were not release. He said the country is passing through severe political and economic crisis, hence the association has called off its strike because it would further deepen the crisis.


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## Neo

*MONEY WEEK: monetary expansion swells by 2.26 percent​* 
KARACHI (March 16 2009): According to March 13 update of the State Bank of Pakistan, monetary accounts of the country showed an overall increase of over two percentage points (2.26 percentage points, to be exact) for the first time in the fiscal year FY09 on February 28 compared with an increase of only 1.48 percentage points on 21st February 2009.

The increase of about 0.8 percentage points in the countrys money supply (or Rs 36.2 billion) during the week was ascribed to a major increase in NDA of the banking system (which amounted to some Rs 26.7 billion, mainly representing a major reduction in the liability build-up under the systems OINs and a modest increase in the private sector credit) and an improvement in its NFA (which amounted to some Rs 9.5 billion). Incremental money supply, during the year so far, thus reached Rs 105.8 billion on February 28, 2009.

Composition of incremental money supply of Rs 36.2 billion during the week indicated that the entire increase occurred in deposit money (up Rs 47.8 billion, though compared with end-June 2008 still indicating a decline of Rs 43.6 billion) as currency in circulation actually declined (down Rs 11.7 billion) to Rs149.4 billion.

According to details, NDA of the banking system during the week surged by Rs 26.7 billion and comprised of a major reduction in net other liabilities of the system (which worked out to Rs 18.9 billion to minus Rs 160.7 billion on 28th February), an increase of Rs 6.1 billion in non-government borrowing (private sector up about Rs 4 billion, public sector enterprises (PSEs) up over Rs 2 billion) and an increase of Rs 1.7 billion in government borrowing (budgetary borrowing up Rs 0.7 billion to Rs 362.4 billion, government commodity operations up Rs 1 billion to Rs 13.3 billion).

In the comparable period last year, non-government borrowing had amounted to Rs 320.5 billion, divided in main among private sector (Rs 289.3 billion) and PSEs (Rs 31.6 billion), while government borrowing amounted to Rs 287.6 billion, shared between budgetary borrowing (Rs 306.4 billion) and commodity operations (minus Rs 18.2 billion).

Minor developments also occurred under other credit heads in both government and non-government sectors. Within budgetary borrowing, of total of Rs 362.4 billion borrowed so far during the year, Rs 299.6 billion were accounted for by indebtedness to the State Bank, while the remaining about Rs 62.9 billion were owed to the scheduled banks. The respective totals in the corresponding period last year were Rs 306.4 billion, Rs 359.3 billion (SBP) and minus Rs 52.9 billion (scheduled banks). From inflation point of view, composition of budgetary borrowing between the central bank and commercial banks is relatively healthier during the current year than in the previous year though considerable scope exits to achieve a still better composition.

According to other details, NFA of the banking system improved by Rs 9.5 billion from minus Rs 311.7 billion on 21st February to minus Rs 302.2 billion on 28th February 2009.

The detailed consolidation of the accounts of the State Bank of Pakistan showed that the entire improvement occurred in the balances held by the scheduled banks as balances held by the State Bank in fact declined by over Rs 3 billion.

In the meanwhile, the countrys liquid foreign exchange reserves, which declined to $10,166.0 million (SBP $6,734.3 million and Scheduled Banks $3,431.7 million) on February 20, continued declining in the subsequent weeks reaching $10,138.3 million (SBP $6,687.1 million and scheduled banks $3,451.2 million) on 27th February, and further to $10,052.6 million (SBP $6,613.0 million, scheduled banks $3,439.6 million) on 6th March 2009.

Following the trend in liquid foreign exchange reserves, weighted average customer exchange rate, which deteriorated to Rs 79.8511 and Rs 80.0345 for buying and selling on 3rd March, suffered further losses and stood at Rs 80.4924 and Rs 80.6796 on 7th March and Rs 80.3108 and Rs 80.4980 respectively on March 14, 2009.


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## Neo

*Rs 20 billion loss estimated due to long march in Multan​* 
SIALKOT (March 16 2009): Business activities have come to a standstill due to the recurrent public meetings, crackdown and lawyers rallies in this export-oriented and nucleus of cottage industry of the country, Multan. President Sialkot Chamber of Commerce and Industry (SCCI) Hassan Ali Bhatti said on Sunday that according to a rough estimate Multan has faced losses amounting to Rs 20 billion so far due to the long march and political tussle.

The exporters community of Sialkot despite various problems was struggling for fetching maximum foreign exchange for the country and we will continue the fight for strengthening the national exchequer, he further said. Sialkot which is known all over the world for exports of sports goods, surgical instruments, leather products, gloves of all sorts, sportswear, badges, musical instruments and martial uniforms and accessories through the city is earning one billion dollars, was suffering adversely due to the current upheaval in the country.

Bhatti added that business community particularly exporters of the area were facing multiple crisis due to the blockage of highways and seizing of containers loaded with exportable consignments which would delay the delivery of consignments at their ultimate destination.

SCCI President further said exporter community was making its hectic efforts for restoring the confidence of their annoyed foreign buyers because during past months exporters were unable to accomplish the foreign orders on time due to the prices of petroleum and load shedding of electricity and gas.

Hassan Bhatti said under the prevailing situation the exporters were paying 10 to 20 percent of the expenditures from its own packet for fulfilment of the international commitments, adding that how long the business community would spend from its pocket for handling foreign orders.


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## Neo

*$600 million BRTS projects fate hangs in balance​* 
KARACHI (March 16 2009): : The $600 million Bus Rapid Transit System (BRTS) project of City District Government Karachi (CDGK) is in doldrums due to a lingering dispute between the provincial and city governments on the domain of the important infrastructure development project.

According to CDGK sources the city government was to launch the project at least four years back in 2006 in collaboration with Asian Development Bank (ADB), which was to add $450 million to the $150 million funds allocated locally.

But, they said, Sindh Government had objected the supervision of the project by city government and wanted to get the project under the Sindh Mass Transit Authority (SMTA) despite the fact that Karachi Mass Transit Cell (KMTC) of CDGK had completed feasibility study of the project. They said the programme fate was hanging in balance since ADB had decided to change its decision of investing on such a project after the provincial government decided to take the programme into its hand and it remained as a disputed project.

The recent visit of Mass Transit Cell of CDGKs officials to Islamabad to further motivate the high ups in the government also failed to produce desired results, as the government did not show any interest to ponder over the issue.

The unnecessary interruption of Sindh Government as it has did not carry out study of the project, has stopped the project at such a time when every thing was to complete within months, they added.

They said, "the most unfortunate thing is the lack of consensus, between the two governments, which led the ADB to withdraw its investment on such a project of public importance." ADB Karachi Mega City Sustainable Development Project (KMCSDP) Program, the BRTS, was major project that aims to provide people transport services of the same quality that is available in Western countries. The project encompasses the construction of 11 corridors, which will be built in the four phases.

It is to mention here that in July 2008,on the request of Government of Pakistan, ADB had agreed for funding to the project of urban transport. The urban transport programme cost was $400-450 million including the sub-projects of Development of BRT System for the city, modernisation, linkage of Traffic Signal & Traffic Management System, light rail transit (LRT) preparatory study

Subsequently ADB had fielded a consultation mission to Pakistan from 10-14th November 2008 to finalise the re-packaged programme "Sindh Urban Mass Transit Development Program, (SUMTDP) Phase-I". Under the restructured package, the programme included urban transport studies for other cities such as Hyderabad and Sukkur to facilitate development of BRT System in those cities.

The mission submitted Aide Memoire, which reflected serious ADB concerns regarding execution and implementation of the program by SMTA, and stressed for implementation of the programme by Karachi Mass Transit Cell, CDGK.

Subsequently, Director General, ADB in her letter dated 11 December, 2008 to Joint Secretary, BAD, GOP informed that investment programme has been deferred in consideration of some continuous hindrance in this project like no consensus within the government to proceed with the programme, despite lapse of 4 years, major changes in focus, scope and direction of the programme. In the letter ADB had also presented the excuses as the programme was re-configured with new implementation arrangements, approval of PC-l and other status could not be achieved and also the scope of the programme could not be agreed.


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## Neo

*Thar Coal Power Project: over $20 billion foreign investment expected in six months​* 
KARACHI (March 16 2009): The Thar Coal Power Project (TCPP) would attract over $20 billion foreign investment within next six months, an official of Sindh Coal Authority Board (SCAB) told Business Recorder on Sunday. According to Sharjeel Memon, one of the SCABs governors, a host of interested companies from United States, China, Britain, Singapore, South Korea, Germany, Poland, Australia etc would invest over $20 billion in the Tharparkar-based energy project.

Memon, who is also the member of provincial assembly of Sindh, revealed that even the neighbouring India had shown interest in the attractive coal-based power generation project, TCPP. He, however, opined that tension at border and an ongoing blame-game between the two nuclear-armed South Asian neighbours were likely to keep New Delhi away from the project. The SCAB official also linked the expected investment with an early end to the ongoing political turmoil in the country.

"Lots of MoUs have been signed and a host of foreign firms keen to invest in the coal sector are visiting the Chief Minister on almost daily basis... work is underway on war footing basis," he added. Also, he said, President Asif Ali Zardari, during his recent visit to China, had inked different MoUs with the investors in Beijing.

He said a nine-member Korean delegation, which had held a "fruitful" meeting with Chief Minister Syed Qaim Ali Shah last Thursday, would soon start boring for mining in Blocks 4 and 8 of the site.

The coal exploration work would follow the power generation process that, the MPA said, was a federal subject and would be carried out by Islamabad.

According to Memon the TCPP would help Sindh province generate at least 7000-8000 MW electricity by 2012, which would not only cater to the countrys 3,500MW power shortage, but would also be exported to the neighbouring countries. He said the provincial government had undertaken a fast track infrastructure development in Thar, along with a coal based mine-mouth thermal power plant by a Korean firm at an estimate cost of $3 billion. According to Asad Ali Shah, another SCAB member, a coal-based power generation plant in Thar would help Pakistan save a huge sum of $8 billion it was presently paying for imports of oil to run its power generation units. A recent study has revealed that Tharparkar has 175 billion tons of coal reserves with a best power generation quality, he added.

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## Neo

*Inflationary trends in the economy​*
EDITORIAL (March 16 2009): Everybody was expecting inflationary trends in the economy to ease gradually but latest available data on price indices must have dampened such hopes. According to the Federal Bureau of Statistics, consumer price index (CPI), a key indicator of inflation, rose by 0.75 percent during February, 2009 over the previous month and was up by 21.07 percent over the same month last year.

Inflation as measured by CPI had been falling since it had hit a high of 25 percent in October, 2008 but the figures for February, 2009 indicate a reversal in the trend which is clearly disturbing. The sub-index for food and beverages, carrying a weightage of 40.34 percent in the overall index, was higher by 25.06 percent during February, 2009 over a year earlier. Other indices recording significant increases were fuel and lighting (+29.77 percent), transport and communication (+21.47 percent), house rent (+18.57 percent), cleaning, laundry and personal appearance (+18.27 percent), education (+17.97 percent) and apparel, textile and footwear (+15.37 percent).

Another indicator of very high inflation ruling throughout the year was a jump in the average of all the price indices during 2008-09. For instance, monthly average of CPI during July, 2008-February, 2009 rose by 23.49 percent as compared to only 8.90 percent in the same period a year earlier and 8.04 percent during 2006-07. The rise in WPI was also much higher at 24.70 percent compared to 11.68 percent in 2007-08 and 7.14 percent in 2006-07.

The latest data on inflation is a cause of concern due to a variety of reasons. The phenomenon of inflation, unlike certain other concepts, is not only in the abstract but affects the quality of human life in physical terms and is, therefore, really painful. The combination is worst when unemployment is rampant in the economy, ordinary people were already living on subsistence level and inflation is driven mainly by increase in the basic food items. Unfortunately, the simultaneous existence of all these elements in Pakistan has made the lives of ordinary people extremely miserable, threatening the social cohesion of the country.

In fact, increasing lawlessness and anarchy are some of the early manifestations of such a phenomenon. Also, the latest data suggests that inflationary targets fixed by the government may be hard to achieve. The authorities of the country were expecting the inflation rate to decelerate to 10 percent by June, 2009 and targeting average inflation rate at a single digit during 2009-10. Besides, a consistent fall in CPI from November, 2008 to January, 2009 had raised expectations of a substantial rate cut when quarterly monetary policy was to be announced in April, 2009.

In fact, the rates on treasury bills were already down in the last few auctions. Now, if the price data for March, 2009 also exhibits a rising trend, monetary authorities of the country would have to think very hard before announcing a rate cut and the IMF may also resist such a move. Some of the analysts may argue that the inflationary tendencies are persisting in the economy due to lower availabilities resulting from a lower growth rate and compression of imports during 2008-09. Also, monetary tightening takes a considerable time to show its impact.

Whatever the reasons, the reality cannot be denied that high inflation still appears to be entrenched in the economy and it may not be very wise to lower the guard at this stage. In other words, the expectations of an easy monetary and fiscal policy could be a little pre-mature. Those who argue for loosening these policies on the basis of present policy thrust in other countries conveniently forget the fact that there is no problem of inflation in those countries.


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## Neo

*Meat production rose by 47.5% in last 13 years​*
ISLAMABAD: The production of meat (mutton and beef) has been increased to 2.19 million tonnes in 2008-09 from 1.48 million tonnes in 1995-96 showing 47.5 percent increase, official sources told Daily Times here on Monday. The Livestock and Dairy Development sources said that the demand for livestock products including dairy and meat products would definitely rise in the coming years. The future demand would be even greater than the population growth rate and rapid urbanisation. They claimed that rise in income would be the second most important factor after population growth that would increase demand for livestock products. The sources claimed that the government had taken a number of initiatives for improvement in livestock production.


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## Neo

*Negotiations for Pakistans inclusion in EU GSP-plus begin​*
ISLAMABAD: Pakistan and European Union Joint Commission here on Monday started three-day deliberations to discuss possibility of including Pakistan in EU GSP-Plus arrangement 2009-2011 and initiations of Free Trade Agreement (FTA).

The sub-groups namely sub group on trade; sub group on development and economic cooperation, sub group on migration and civil issues and sub group of science and technology started their technical level negotiations to look into the possibilities of further strengthening of bilateral relations. The four sub-groups would present the recommendations to the commission meeting that is scheduled on March 18 at Economic Affair Divisions.

Sub-group on trade discussed important issues like Doha Development Agenda, GSP-Plus scheme for 2009, anti-dumping duty on Pakistani bed linen exports, de-listing of fishery export companies of Pakistan, technical assistance and listing of Pakistani Basmati as Pakistani variety.

However, during the GSP Plus arrangement review for 2009-2013 by European Commission, the EC was not able to include Pakistan in the beneficiary countries on technical grounds. Soon after, Pakistan demanded EC to review its decision on GSP + agreement and start Pak-EU FTA dialogue. A joint study has been conducted by the University of Sussex to assess the impact of free trade between Pakistan and the EU member countries. The current round of negotiations between Pakistan and EC findings of the said study would also be analysed to reach at a conclusion.

Pakistan EU bilateral trade volume has reached at $10.8 billion during the last fiscal year 2007-08 registering an increase of $1.4 billion as compared with previous fiscal year 2006-07. The EU has tripled development assistance to Pakistan to 200 million Euros for 2008-10 and is engaged in number of projects relating to education, health, environment and trade sector.

The main emphasis by Pakistan is to achieve durable, predictable and reciprocal trade relationship with the EU in the form of an FTA. This has also been stressed by the president of Pakistan, Prime Minister of Pakistan and Commerce Minister in their meetings with their counterparts and EC Commissioner, where need for institutional relationship was acknowledged.

The EC is of the view that its Global Europe Strategy focuses on multilateralism as the preferred option but FTAs are also negotiated based on two-fold criteria i.e. Market size and growth and the level of protection against EU exports. Pakistan argued that it satisfies the criterion of market size and growth of the EU and the current level of protection against EU exports are minimal, which may not be treated as a penalty for Pakistan.

Both sides are also exchanging views on further strengthening of trade relations and looked at options for future consideration and are in agreement that the Sub Group on Trade will monitor the impact of EUs trade policies in the region on Pakistans preferential access to EU markets and will identify possible options for improvement in bilateral trade. Pakistan has criticised European Unions tariff peaks and tariff escalations, especially in textile, clothing and leather products at World Trade Organisation while highlighting the dichotomy in the European trade regime.

During the Trade Policy Review of the European Commission Pakistan has questioned ECs trade regime. Pakistans viewpoint is that EC is Pakistans single largest trading partner, accounting for 26 percent of its total exports and 17 percent of its total imports. However, more recently its trade with EC has not been keeping pace with its international trade growth.


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## Neo

*Textile exporters may face Rs 4.8 billion loss: foreign firms refuse export consignments​* 
ISLAMABAD (March 17 2009): The textile exports may face loss of Rs 4.8 billion as the foreign companies of EU, Russia and US have refused to take the Pakistani textile products due to economic recession. According to the sources, 200 containers carrying textile consignment from Pakistan have stranded in Russia, EU and US. "Each container is carrying textile goods of worth $0.3 million and the textile sector has to face a loss of $60 million," an exporter said.

"Unfortunately, most of the foreign buyers of our textile products that belong to EU and US defaulted all of the sudden and they refused to receive our containers carrying the textile goods they had ordered. On the other hand, our textile exporters had to face a huge loss in Russia when suddenly, the Russian Ruble depreciated by 40 per cent as compared to Dollar", he said.

He said that already the textile industry was suffering from high cost of production due to constant increase in gas and electricity tariff while the average export target of textile products for current fiscal (2008-09) has been set at $11 billion or to an average $923 million per month by government.

Textile exports of the country during the first seven months of the current financial year decreased by 3.79 per cent as compared to the corresponding period of 2007-08. Exports of textile products during January-July (2008-09) were recorded at 5.82 billion dollars as compared to exports of 6.05 billion dollars registered during July-January (2007-08).

Similarly, the textile exports during the month of January 2009 decreased by 8.98 per cent as compared to December 2008. Exports during January 2009 were of $753.9 million as compared to exports of $720.3 million recorded during December 2008.

During the last month, gas supply to the industrial areas decreased by 50 per cent. The exporter said that the textile sector needs the continuous supply of gas to run the captive power plants as well as boiler. The shortage of gas and electricity has already discouraged the foreign investors, while most of the textile industrialists, by keeping this thing in view, are shifting their businesses to Bangladesh and India.

The exporter said, "Our textile exports are losing the competitiveness in the international market. That is why our foreign export orders have reduced by 20-25 per cent as compared to the last year. Due to decrease in foreign export orders, our industrialists have reduced the buying of cotton from the ginning factories. That is why the ginners have unsold stocks of almost one million cotton bales in the ginning factories."


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## Neo

*Ministry wants IPI gas only for power generation: Iran showed no flexibility on pricing​* 
ISLAMABAD (March 17 2009): The Petroleum Ministry is sending a proposal to the Economic Co-ordination Committee (ECC) of the Cabinet to import Iran gas only for power generation purpose, under Iran-Pakistan-India (IPI) gas pipeline project, as Iran has refused to scale down the price from 78 percent to 70 percent of crude oil.

Sources told Business Recorder that, during President Asif Ali Zaradris visit to Iran on March 10, Iran did not show any flexibility in its offered gas price to link to 78 percent of global crude oil. Pakistan had offered the price of 70 percent global crude oil.

The Petroleum Ministry summary, to be tabled in the next meeting of the ECC, will recommend import of Iranian gas only for power generation, and not for domestic, commercial and industrial consumers, due to its high cost. Sources said that gas from Iran for power generation would cost 8.8 cents/kwh, against 10 cents/kwh from furnace oil at $40 per barrel crude oil price.

According to comparison based on $40 crude oil price, the cost of nuclear-based power generation is 4.1 cents/kwh, from Thar coal 8.8 cents, 9 cents from imported coal, and 12 cents/kwh from wind sources. At present, Sui Northern Gas Pipeline (SNGPL) is providing gas at Rs 299.39 per mmbtu, or $3.7 per mmbtu (valued at 80 rupees per dollar) and Sui Southern Gas Company (SSGC) at Rs 288.22 per mmbtu, or around $3.6 per mmbtu.

However, if Pakistan signs accord linking gas price to 78 percent per mmbtu, its cost would be around $12 per mmbtu, or Rs 960 per mmbtu, which would be beyond the reach of domestic consumers. In the current scenario, Petroleum Ministry is going to propose gas to be imported from Iran, instead of furnace oil. According to an estimate, one billion cubic feet gas per day would generate 5,000 mw electricity that would result in relief regarding power shortage in the country.

Sources said that recent studies had indicated that Iran gas is the most economical option for power generation, against alternative fuels like furnace oil, liquefied natural gas (LNG) and coal. The Additional 2,937 MW generation is required by 2015, and 11,691 MW by 2020. The 1.05 bcfd phase one of IPI can generate 5,000 MW electricity.


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## Neo

*AJK Prime Minister lays foundation stone of hydel power project​* 
ISLAMABAD (March 17 2009): Azad Jammu Kashmir (AJK) Government has kicked off construction work on hydel power project of 1.7 megawatt worth Rs 300 million in a bid to explore the power potential in this Himalayan region. The Dhanna Khoi Ratta, Hydel Power Project is one of the projects of 5,594MW potential explored in AJK.

Prime Minister AJK, Sardar Muhammad Yaqoob Khan on Monday laid the foundation stone of the project, which will start power generation in 30 months and give AJK an income of Rs 40 million per annum. The project, being constructed by Alamdar Engineering, will be handed over to AJK Government in 2011, and will provide employment to 150 to 170 people during construction and after completion 35 to 40 people will get jobs on this project.

AJK Premier told the gathering that AJK government will start work on 969 MW Neelum-Jhelum Hydel Power Project soon, while feasibility studies of 1000 MW Kohala Hydel Project will be completed next year.

With completion of these two projects, AJK will be in a position to run the stalled wheel of industry and agriculture by providing it electricity. He said that besides these two projects, potential of more about 15,000 MW hydro power project was traced in AJK, which can change the ultimate socio economic scene of AJK and of Pakistan as well.

He said that AJK Government is in contact with WAPDA for utilising the hydro power potential of AJK. Wapda has offered AJK Government to help construct the power project below 50 MW capacities. "In next weeks meeting with WAPDA authorities, we will talk to them for initiation of other mega projects of hydel power generation", he added.

He asked the industrialist and investors of Pakistan invest in highly profitable hydro-power generation in AJK, as it will help in eradication of poverty, as AJK have the potential of over 15,000 MW hydro power generation. "We have almost completed the studies of projects of over 5,594 MW hydro power generation and if launched these projects will help end power crisis in Pakistan. "In my personal meetings with private sector, I told them that AJK was completely safe and secure for investors and law and order situation and public approach is ideal for investment", Yaqoob Khan said.

He said that Pakistan was facing a shortfall of about 4,000 MW electricity, which has badly affected the industrial and agriculture sectors and damaged economy. "If Pakistani investors will invest in this sector, it will help the country not only to run the stuck industrial wheel but also help eradication of poverty, unemployment and economic disorder", he said.

Giving details of the explored hydel power potential in AJK, the premier said that potential of 2,468 MW was explored in Muzaffarabad, 1,369 MW in Mirpur, 231 MW in Poonch, 645.4 MW in Kotli, 338.85 MW in Bagh and 541 MW in Neelum districts of AJK. At present AJK is generating just 37.65 MW electricity, while it needs 400 MW he said.

He said that the work in progress on hydel power generation projects include 3 MW Sharda, 3.2 MW Sharian, 1.7 MW Dhanan, 4.8 MW Batter, 0.6 MW Hallan, 0.6 MW Rangarr, 0.32 MW Halmatt and 3 MW Qadirabad power projects. The feasibility study of four projects of 63.80 MW hydro power generation has been completed and will be kicked off soon. These projects include 43.5 MW Kuttan Jagran-II, 14.4 MW Jheng, 3.2 MW Rerra and 3 megawatt Hajeera, he added.


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## Neo

*The hydropower generation agenda ​*By Engr Hussain Ahmad Siddiqui 
Monday, 16 Mar, 2009

​
UNDER an agreement signed on February 22, China will provide technical assistance to Pakistan for hydropower projects on the model of the Three Gorges Dam, which is one of the largest hydropower complexes in the world. 

Hydropower is globally recognised as a renewable, cheap and reliable resource of energy. It generates electricity with zero emission and produces no waste. There is no requirement of fuel, operating cost is much lower and hydropower plants have longer economic lives than thermal plants. 

While installed hydropower capacity remains 6,493 MW, enormous potential exists to exploit this hige indigenous resource of energy. According to estimates, it is economically possible to generate some 34,000 additional MW from hydropower, and 150 sites for projects of cumulative capacity of 20,000 MW have been identified. 

Pakistan has total installed power generation capacity of 20,456 MW. However, dependable or de-rated capacity is in the range of 14,000 to 16,000 MW during the year, due to a variety of factors, whereas demand for electricity is increasing at an average annual rate of over eight per cent. Thus, there is gross power shortage at national level, demand being projected to around 22,000 MW by the year 2010. 

To meet surging demand, an additional 4,000 MW generating capacity, all based on gas and oil, will be commissioned by December 2010, in both the private and public sector, besides another 325 MW nuclear power plant. In contrast, only 516 MW of hydropower is expected to be added to the system. 

In fact, the share of hydroelectric power generation in the overall energy mix is persistently decreasing  from 57 in the1980s to 42 in the1990s to current 32 per cent of the total installed capacity. The good news is that the government plans to increase it to the level of 20,000 MW by 2017. As a result of recent restructuring, the Pakistan Water and Power Development Authority (Wapda), re-named as Water Resources and Power Development Authority, is focusing on implementing multipurpose water projects, including medium and mega hydropower generation projects, either reservoir-based or run-of-the-river type. 

In addition to expediting various on-going hydropower projects and rehabilitating/modernising the operational power stations, WAPDA has recently embarked upon a series of new hydropower projects. Hydropower projects of cumulative capacity of 419 MW are scheduled to go on stream during the period 2009-2010. These are Allai Khwar 121 MW, Khan Khwar 72 MW, Duber Khwar 130 MW, all located in Kohistan area, and Jinnah 96 MW to be located on Jinnah Barrage. In addition, NWFP has commissioned Malakand III hydropower project, of 81 MW capacity, which is expected to achieve commercial operation shortly. 

There is a long list of the new projects being implemented or to be launched by WAPDA. The Chinese contractors have commenced construction of 47-km long network of tunnels for the 969-MW Neelum-Jhelum hydropower project, whereas tenders for various works of Diamer Basha Dam project, designed for an installed power generation capacity of 4,500 MW, have been invited. Also, Wapda has launched Golen Gol 106-MW hydropower project to be constructed in Chitral. Construction of Kurram Tangi Dam project (hydropower generation of 83 MW) is planned to re-commence soon. Construction of the Akhori Dam project is on cards, having a power generation capacity of 600 MW. Likewise, design and engineering work on Keyal Khwar project of 122 MW capacity has been undertaken. 

Feasibility studies related to another eight hydropower projects are in progress being conducted by the consultants appointed by Wapda. These projects, expected to complete by 2017, would have an installed capacity of about 12,000 MW and would require $16.7 billion to construct. It may take two years to finalise studies enabling Wapda to launch the projects 

Kohala hydropower project on the Jhelum River in the AJ&K will have a capacity of 1,100 MW, whereas Bunji hydropower project (Gilgit) will generate 5,400 MW on its completion. Dasu of 3,700 MW capacity is a run-of-the-river scheme, 69-km downstream Diamer Basha Dam. Lower Palas Valley of 621 MW and Lower Spat Gah hydropower project of 610 MW are proposed to be located at Patan, Kohistan. The remaining projects are Phander (Gilgit) 80 MW, Basho (Skardu) 28 MW and Lawi (Chitral) 70 MW. In addition, pre-feasibility or initial studies are being conducted for Thakot hydropower of 2,800 MW and Patan of 2,800 MW, both proposed on Indus River, and Harpo of 33 MW near Skardu. 

To resolve the p ower crisis in long-term and to sustain economic growth, the optimal development of hydropower is needed. There are however host of risks, constraints and specific issues linked to undertaking hydropower projects. These include geological risks, hydrological constraints, problems in water use, need for infrastructure, environmental issues and social problems. Thus the complexity and long lead-time inhibits private sector to invest in hydropower projects, in spite of various fiscal and non-fiscal incentives.. 

The fallout of these factors is reflected in the fact that not a single Independent Power Producer (IPPs) has started construction of hydropower project. Out of 41 Letters of Interest (LOIs) issued to the private sector under hydropower Policy 1995, only 13 Letters of Support (LOSs) for a total of 353 MW capacity could be obtained 

by the private sector. Among these, only one hydropower project, known as the New Bong Escape of 84 MW capacity downstream Mangla Dam, may materialise eventually, which has yet to achieve financial close,, even after more than a decade of its initiation. 

Again, the government has approved another 15 projects of cumulative capacity of over 3,000 MW under Power Policy 2002. Feasibility studies of two projects have been carried out, whereas other project sponsors have asked for extensions in time period as they experienced problem of law and order and other issues to access the site. 

In view of constraints faced by the private sector to developing hydropower projects, the government may be well advised to allow necessary funds to Wapda to implement all the hydropower projects, in pipeline as well as proposed, as scheduled. 

Foreign financing from international sources like the World Bank, Asian Development Bank (ADB), Islamic Development Bank (IDB), and from countries such as China, Kuwait, Saudi Arabia and Abu Dhabi will be forthcoming for development of these projects. 

Wapda has the requisite resources, experience and expertise in the field and the proposed technical cooperation with the Chinese will further augment WAPDAs capability to construct the hydropower projects in a cost-effective manner. To achieve the desired results, it is important that the Pakistan-China agreement on hydropower generation is implemented on priority basis. 

The writer, a former Chairman of State Engineering Corporation, is on the panel of experts of the Private Power and Infrastructure Board, Ministry of Water and Power

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## ejaz007

*To explore coal deposits, set up 1,000MW power plant: Thar coalfield block allotted to 2 foreign firms*
Staff Report

KARACHI: The Thar Coal and Energy Board decided on Tuesday to allot Block-8 of the Thar coalfield to UAEs Bin Daen Group Dubai and Koreas PEDCO for exploring the coal deposits and establishing a 1,000 MW mine-mouth thermal power plant in Tharparkar. 

The decision was taken at the third meeting of the board held at the Sindh Chief Ministers House, under the chairmanship of Sindh CM Qaim Ali Shah. Federal Minister for Water and Power Raja Pervez Ashraf and other concerned officials of the federal and provincial governments attended the meeting. 

According to an official handout, it was decided that a Memorandum of Understanding would be singed soon with the Dubai and Korean firms, with the signing ceremony likely to be held in Karachi. The board was informed that this will be the first and largest single thermal power plant in Pakistan, which will provide electricity to more than two million households and 600,000 factories, besides creating approximately 90,000 jobs for both skilled and unskilled labourers.

The board also decided that the approval of proposed addition of members would be presented at the next board meeting. It was also decided to appoint legal consultants for the board. The meeting discussed in detail the 11-point agenda, which included reviewing of the Letter of Intent for Bin Daen Group, Pan Energy Developing Company (PEDCO), Korean Electric Power Corporation (KEPCO) and Deloitte Anjin L.L.C to explore coal in Tharparkar district.

The chief minister said that the present government fully intends to utilise coal resources of the province and various internationally experienced groups are approaching for coal mining and power generation projects.

Daily Times - Leading News Resource of Pakistan


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## Neo

*War against terror bill Pakistan to seek release of $1.2bn ​* 
Tarin says the issue will be taken up with US authorities on sidelines of IMF executive board meeting in Washington next week

Wednesday, March 18, 2009

ISLAMABAD: Islamabad will take up with US authorities concerned the reimbursement of $1.2 billion war against terror bill borne during May, 2008 to March, 2009, on the sidelines of IMF Executive Board meeting due in Washington from March 25 to 27.

Advisor to Prime Minister on Finance Shaukat Tarin told The News in an exclusive talk: we will ask the US administration to immediately clear the dues amounting to $1.2 billion (Rs 95 billion).

Tarin said, Pakistan is experiencing financial constraints and if the said amount gets reimbursed, Pakistan would be at ease to achieve the target of 4.2 percent fiscal deficit set under the IMF bailout package.

Coming to IMF Executive Board meeting, he said: I would also place the formal request with Fund seeking the additional $4.5 billion other than $7.6 billion loan under the SBA (stand by arrangement).

To this effect, Pakistan would be seeking enhancement of IMF funding quota from five times to eight in the IMF Executive board meeting. And in case the IMF increases Pakistans quota to eight times, Islamabad would be having additional $4.5 billion in foreign reserves under the stand by arrangement.

Ukraine and Iceland had been given the eight times quota funding so Pakistan would follow the suit to this effect, said Tarin.

The executive board meeting will also approve the second tranche of $840 million from International Monetary Fund (IMF) under 23 months $7.6 billion loan. Pakistan was to get $750 million as second tranche, but now would receive $840 million because of the upward fluctuations in exchange rates against the special drawing rights (SDR).

To a question, Tarin said that the government and a consortium of major commercial banks would strike the deal by end of the current month for generating Rs98 billion in a bid to erase the circular debt that is affecting the smooth running of energy sector. He said that the government requires Rs80 billion net to resolve the circular debt in energy sector.

He disclosed that the whole details of the projects which are to be marketed in Friends of Pakistans meeting to be held in Tokyo on April 17, will be provided to the ambassadors of the member countries of FoP so that respective countries could have ample time to identify the areas in the projects on which they intend to provide funding.


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## Neo

*Industrialists plead for rental power plants​* 
Wednesday, March 18, 2009

KARACHI: Industrialists have urged the government to immediately install rental power plants in order to properly deal with the energy crisis, which is hampering industrial production in the country.

The government should immediately bring in rental power systems and provide electricity for the energy-starved industry, otherwise coming summer would be very fretful for both commercial and domestic consumers.

Naeem Ilyas Khanani, patron-in-chief and founder chairman of Port Qasim Association of Trade and Industry (PQATI), told The News that current shortfall of 500 megawatts in the city owing to the closure of Bin Qasim power plant, made the industry suffer a lot.

He said the Karachi Electric Supply Corporation (KESC) is not utilising its full production capacity despite a visible fall in international prices of furnace oil. 

Moreover, unscheduled load-shedding has severe fallout for industrial production which can easily be tackled. The government has been reiterating since last 12 months that rental power plants would be installed to deal with the energy problem in the short term but nothing has been done so far in that regard. 

&#8220;We request the government to instantaneously bring in rental power plants to feed the industry; if not, then this summer will be devastating for the industrial production,&#8221; he said. 

M A Jabbar, Chairman SITE Association of Industry (SAI), said load-shedding was the result of circular debt which has to be taken care of. Shaukat Tarin, Adviser to the PM on finance, had repeatedly mentioned tackling of energy crisis by resolving the problem of circular debt during his visit to Karachi. The KESC retains 1,200MW capacity, which shows that the KESC has enough installed capacity which is not being utilised. &#8220;The KESC intends to use gas instead of oil, one of many problems why power production falls short in Karachi. The government should pressurize the KESC to increase and deploy its full power production capacity,&#8221; he said. In addition, the government should notice that the KESC is violating its own commitments by not investing in power generation to scale up the current production capacity. Moreover, rental power plants are the only viable option for fast track process to grapple with current power crisis. Investment comes where investment is secure and infrastructure is sound; investors are very sensitive to the political instability in Pakistan; &#8220;our country is severely hit my terrorism, militancy, and various other problems.&#8221; 

The government should take concrete measures to stabilize its economy for short and medium terms, he urged. Industries in Pakistan are closing down owing to serious crises including high interest rates, power shortage and high cost of production. Moreover, today there are some 10 to 20 per cent industries only in SITE industrial zone which are on the verge of closure, he observed. 

Mian Zahid Hussain, Chairman, Korangi Association of Industry (KATI), said power shortage is a big issue for the industry. He said: &#8220;Tarin had taken us into confidence that the government would deal with the energy crisis on priority in his meetings with our association.&#8221;


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## Neo

*European SMEs ready to invest in Pakistan ​* 
Wednesday, March 18, 2009

LAHORE: A large number of Small and Medium Enterprises (SMEs) in Europe are ready to make investment in Pakistan provided the business community focuses on a new and innovative marketing strategy.

In a statement issued on Tuesday on his return from a 14-day European visit, Lahore Chamber of Commerce and Industry (LCCI) Senior Vice President, Tahir Javaid Malik said the large-scale manufacturing sector the world over, particularly in Europe, was in recession but the SMEs there were flourishing.

He said the middle class industry in Europe was growing only because it had no link with banking channels and was running units with their own resources and this was the only reason of their being on the path of growth.

The Europeans are seeing opportunities in developing countries, particularly in Pakistan, therefore they wanted to initiate joint ventures with their Pakistani counterparts, he claimed.

The LCCI official said Tahir Javed had a number of business meetings during his 14-day visit to Europe and almost all entrepreneurs showed their eagerness to visit Pakistan which is a positive sign for economy of the country. Auto part makers in Europe are on top of the list as they wanted to tap the potential available in Pakistan.

The LCCI Senior Vice President, meanwhile, said the government decision to reinstate Chief Justice, Iftikhar Mohammad Chaudhry had sent a very affirmative signal abroad, particularly to the potential foreign investors. 

The government decision would not only strengthen economic indicators but it would go a long way in improving Pakistans perception, he added.


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## Neo

* Economists hope govt will now attend to economy ​* 
Wednesday, March 18, 2009

LAHORE: Economists hope now that the political temperatures have cooled down the government would shift its attention to reviving economy. They say that the do nothing and hope for the best approach has put the economy in recession.

Factors including high interest rates, inflation, energy cost, falling exports, falling rupee value and rampant corruption need immediate government attention, economists say.

All these factors are inter-related. Reining in inflation, for instance, would lower interest rates and commodity rates. Boosting exports would stabilise the rupee and reduce current account deficit.

Senior economist Naveed Anwar Khan, FCA, says that the type of inflation prevailing in Pakistan could only be controlled through close cooperation with the provincial governments.

He said there is no effective check on prices. The rates of petroleum products, for instance, have declined locally by 30 per cent but the rates of lubricants like engine oil and transmission oil are still at their peak levels because there is no authority to regulate the rates of these items.

Naveed says the retail prices of fruits and vegetables are fixed 30-40 per cent higher than their auction price at the fruit and vegetable markets. The federal government, he added, would have to facilitate the provincial governments in eliminating the role of middlemen that engineer high commodity prices.

Certified Public Accountant Asif Ali Shahid says that the central bank has failed to force banks to give realistic interest rates to the depositors that resulted in a drastic reduction in national savings.

He says despite providing low interest rates to the depositors the banks charge high mark-up from the entrepreneurs who finally stopped borrowing resulting in low GDP growth.

He says the high banking spread benefited the financial institutions only while the labour-intensive industries caved in due to high cost of borrowing rendering large number of workers jobless. He says the banking spread of seven per cent is too high.

Dubai-based chartered accountant Faisal Qamar says that though the exports are suffering in other regional economies as well due to global recession, the textile exports from India, China and Bangladesh have increased by five, six and four per cent respectively while that of Pakistan have declined by over eight per cent during the past eight months.

Yunus Kamran, FCA, says that despite constant inflow of borrowed dollars the rupee is losing value. He said the foreign credits would not be available for an indefinite period. He said Pakistan would have to curb its imports and boost exports to ensure a stable currency vital to attract long-term foreign investment.


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## Neo

*Pakistan to raise $500m through ME bonds​*
KARACHI: Pakistan plans to raise $500 million over the next year through bonds aimed at Middle East investors, State Bank Governor Syed Salim Raza has said.

The credit-default swap rate for Pakistan is still high so to go to cold-nosed commercial markets wouldnt suit us, Raza told Bloomberg.

The state of global financial markets will decide whether Pakistan can tap them for a bond issue, but currently it looks very difficult, said Farid Khan, director at Credit Suisse Pakistan in Karachi. Indonesia [rated four levels above Pakistan] has just raised $3 billion at a prohibitive cost of 840 basis points [dpouble the premium it paid in June] over US Treasuries and Pakistans pricing will be worse.

But, Middle East investors too may be reluctant to buy Pakistan debt as their economies slow amid lower crude oil prices.

The economy of the Gulf Cooperation Council is forecast to contract by 2.4 percent in 2009, after expanding 5.2 percent in 2008, according to a report by the Kuwait-based Global Investment House.

It would be tough to find buyers given the political crisis there and the credit crisis around the world, including in the Gulf region, said Krishna Iyer Mohan, head of treasury at Safat-based Kuwait Financial Center, the nations second- largest investment bank that manages $5.5 billion of assets. Its not just the returns that investors look for, its the safety and liquidity of the assets thats most important in this environment.

Pakistans government debt is the riskiest in the world after Argentina and the Ukraine, according to credit-default swap prices from CMA Datavision. It costs $2.3 million annually to protect $10 million of the countrys debt from default for five years.

Still, the cost to investors of protecting Pakistan debt has more than halved since October.

The political turmoil is going to hit the economy from all sides, especially hurting foreign investment and consumer confidence, Credit Suisses Khan said. The timing of the political storm couldnt have been worse.

Uncertain domestic politics have also hurt the administrations efforts to raise investment and boost growth. The economy is forecast by the government to expand 2.5 percent this year, compared with 5.8 percent last year. Pakistan may not necessarily need to ask the IMF for an additional $4.5 billion, Raza said in the March 13 interview in Karachi. Finance Adviser Shaukat Tarin said last month the nation would seek the additional funding.

No matter how bitter politics get, as long as theyre not disrupting the flow of commerce, it doesnt really affect the economy much, said Raza.

Foreign investors are deterred by low ratings on Pakistan. Standard & Poors rates the nations debt CCC+, seven levels below investment grade.

If foreign investors see risk in Pakistan, their flows wont fall off more than now, said Raza. Domestic investors have seen periods of instability for so long that they look over the valley towards the hills. Overseas direct investment in Pakistan rose 1.3 percent to $2.59 billion in the seven months ended January 31.

I dont think rating agencies will be very quick to upgrade anyone, said Raza. But for Pakistan it looks better and better.

A break in fiscal discipline and a revival of inflation worry me the most, said Raza. The central bank plans to cut interest rates  highest in more than a decade in the next few months. The bank raised borrowing costs four times last year as inflation accelerated to a three-decade high.

The risk of too sharp a cut is to convey the feeling that the battle against inflation has been won and unfortunately, thats not true, Raza said. But with things going in the right direction, the stage is set within the next couple of months for an opportunity to lower the rate.

The central bank predicts inflation may slow to 11 percent by June from 21.07 percent last month. The biggest challenge for Pakistan is that we cannot afford fiscal stimulation. Foreign investment has slowed down and so stimulation has to come from banking, said Raza. daily times monitor


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## Neo

*Summary for Rs 127bn PSDP cut sent to PM​*
ISLAMABAD: Keeping in view the financial constraints, a summary of reduced Federal component of Public Sector Development Programme (PSDP) 2008-09 from Rs 337 billion to Rs 210 billion was sent to Prime Minster for approval, sources told Daily Times here on Tuesday.

The proposed cut in PSDP 2008-09 was Rs 127 billion, which is Rs 27 billion higher than the announced cut of Rs 100 billion at a time when the Prime Minister visited Planning Commission on February 13. The sources claimed that the financial constraints further compelled the government to cut PSDP.

The sources further said that allocations for all ministries and divisions would also be reduced accordingly. The government allocated Rs 62 billion for Water and Power Division (Water Sector) in the annual budget 2008-09, which would be reduced to Rs 31 billion. The allocation for Communication Division (including NHA) is reduced to Rs 18.86 billion from earlier allocation of Rs 37 billion.

According to the proposal, the allocation for Higher Education Commission would be reduce to Rs 12 billion from Rs 18 billion. The proposed reduction for Ministry of Food, Agriculture and Livestock would be Rs 14 billion from earlier annual budget allocation Rs 20 billion, the sources maintained.

Till approval of new PSDP 2008-09 by Prime Minister, the sources claimed that the Planning Commission would not take any new case of re-appropriation. As a routine the cost of majority of projects were increased and the Planning Commission made adjustment keeping in view higher cost construction materials.

The sources said the government has cut PSDP 2008-09 of the Social Sector by Rs 79.5 billion.

For the last several months the officials of Planning Commission had initiated rationalisation process with ministries/divisions and other departments.

However, the sources said that all these projects would not be scraped from the PSDP and some would be transferred to the Infrastructure Project Development Facility (IPDF) for execution with the private sector investment.

For total 65 different agriculture related development projects, the government has allocated Rs 20.015 billion in the PSDP 2008-09.

The demand of cement and steel are expected to decline as it is positively correlated with the PSDP.


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## Neo

*US aid for Pakistan will remain unaffected: Haqqani​*
** Ambassador to US says Washington legitimately concerned about domestic developments in Islamabad​*
WASHINGTON: Pakistans Ambassador to the United States Husain Haqqani expressed hope on Tuesday that US assistance for Pakistan would remain unaffected by domestic political developments, saying it is aimed at uplifting the people and stabilising the country.

He was commenting on a story in The Washington Post on Tuesday that claimed the recent political turmoil could upend the Obama administrations near-completion plan for expansion in economic and security aid for Pakistan. The United States support and aid should be for the Pakistani people and should remain unaffected by developments in domestic politics. We expect the relationship between Pakistan and the US to remain strong and stable, Ambassador Haqqani said in response to a question.

Legitimate concerns: The Post story said both the US administration and Congress intend to aid Pakistan in anti-terror efforts, saying they want to be certain about the efficacy of such efforts following last weeks protests on the streets. As an ally of Pakistan, the United States has legitimate concerns about domestic developments but it has no role in our domestic politics. Pakistans domestic politics are a matter for the Pakistanis alone, Haqqani told APP. He stressed the recent moves towards political reconciliation were a Pakistani solution to a Pakistani problem, adding, No one should exaggerate any American role in the outcome. He said Islamabad welcomes Washingtons support for the democratic process in Pakistan. The elected leaders would continue to be the interlocutors with the international community on behalf of Pakistan, he added. Democracy is not about the daily news cycle or monthly opinion polls but is based on the strength of institutions, he emphasised.

According to the Post, the Obama administration officials are putting the finishing touches on a plan to greatly increase economic and development assistance to Pakistan, and to expand its military partnership. It is aimed at breaking the extremist networks operating in the border region that are considered to contribute partly to sustaining the Taliban insurgency in Afghanistan. Final recommendations on the new strategy might go to President Barack Obama as early as Friday, the newspaper cited unnamed officials as saying.

The administration plans to send Congress a supplemental 2009 appropriation, including aid to Pakistan, in the coming days, and the Senate Foreign Relations Committee is formulating a plan on a long-term assistance proposal of $1.5 billion annually over 10 years, the report added. app


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## Neo

*To explore coal deposits, set up 1,000MW power plant: Thar coalfield block allotted to 2 foreign firms​*
KARACHI: The Thar Coal and Energy Board decided on Tuesday to allot Block-8 of the Thar coalfield to UAEs Bin Daen Group Dubai and Koreas PEDCO for exploring the coal deposits and establishing a 1,000 MW mine-mouth thermal power plant in Tharparkar.

The decision was taken at the third meeting of the board held at the Sindh Chief Ministers House, under the chairmanship of Sindh CM Qaim Ali Shah. Federal Minister for Water and Power Raja Pervez Ashraf and other concerned officials of the federal and provincial governments attended the meeting.

According to an official handout, it was decided that a Memorandum of Understanding would be singed soon with the Dubai and Korean firms, with the signing ceremony likely to be held in Karachi. The board was informed that this will be the first and largest single thermal power plant in Pakistan, which will provide electricity to more than two million households and 600,000 factories, besides creating approximately 90,000 jobs for both skilled and unskilled labourers.

The board also decided that the approval of proposed addition of members would be presented at the next board meeting. It was also decided to appoint legal consultants for the board. The meeting discussed in detail the 11-point agenda, which included reviewing of the Letter of Intent for Bin Daen Group, Pan Energy Developing Company (PEDCO), Korean Electric Power Corporation (KEPCO) and Deloitte Anjin L.L.C to explore coal in Tharparkar district.

The chief minister said that the present government fully intends to utilise coal resources of the province and various internationally experienced groups are approaching for coal mining and power generation projects.


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## Neo

*Review of $7.6 billion stand-by arrangement: IMF may release second tranche of $840 million on March 30​* 
ISLAMABAD (March 18 2009): The International Monetary Fund (IMF) will approve the first review of 7.6 billion-dollar stand-by arrangement on March 30 and may release the 840 million dollars within days of approval, says an official. "The tentative date set for the approval of first review for the IMF second tranche is March 30", says an official, requesting not to be named.

The second tranche of 850 million dollars would be released just after the approval, said the sources. The IMF held first review of end-December performance and Annual Article IV Consultations in Dubai from mid-February to February 27 and downgraded the countrys growth rate estimates at 2.5 percent for current fiscal year - 2008-09.

The IMF has already said that Pakistan met all its target set for end-December. For current year, growth target o 2.5 percent with average inflation of 20 percent, which would be brought to 10 percent in June with estimates of improvement with four percent GDP growth rate and six percent inflation rate.

Pakistan fixed GDP growth rate of four percent with inflation six percent and fiscal deficit of 3.3 percent for the next fiscal year of 2009-10, says Prime Minister Advisor on Finance Shaukat Tarin.

This approval would help improve public sentiments too as a political crisis had held up everything and some economic activity would pick up as the system gets stability. Current years fiscal deficit would be at 4.3 percent and would be reduced to 3.3 percent of the GDP for the next year.

Broad money growth is estimated to be eight percent as against 12 percent set earlier for the current fiscal year, the IMF staff agreed that current monetary stance was Suitable, but in coming weeks and months they were now looking at reduction in interest rates as core inflation comes down. The government expects to achieve economic stability within 24 months with four percent of current account deficit next fiscal, the signs of which are started emerging now.


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## Neo

*Rice worth $2.5 billion lying unsold​* 
LAHORE (March 18 2009): As the next season of rice crop planting is not far off, rice growers, traders and millers are in a state of gloom for, the present stock of exportable superior quality rice worth $2.5 billion is lying unsold and no one in the government is in mood to do anything to retrieve the agriculture economy from collapse.

Representatives of growers and millers told Business Recorder that instead of self-reliance and exploiting the indigenous resources for capital formation, the government has found an easy way out to get loans from the International Monetary Fund and other financial institutions such as the World Bank, the Asian Development Bank, etc.

Painting a very dismal picture of the countrys second major foreign exchange fetching cash crop - rice, President Basmati Growers Association Hamid Malhi said that rice production during 2008 season was 6.5 million tons for the first time in history. The harvested crop in Sindh was mostly damaged due to the unexpected rains in early December 2008. The rice crop in Punjab remained safe and the 3.0 million tons of production along with last years stocks today pose a big challenge for the whole stakeholder chain, he added.

He said the government inducted Passco to procure 0.5 million tons of Basmati paddy from Punjab and 0.5 million tons Irri-6 paddy from Sindh; later TCP also floated tenders for purchase of a few thousand tons of Basmati and Irri-6 rice of new and old crop (a target of 0.25 million tons each was set for Basmati and Irri-6 rice).

Malhi said the current situation in the rice sector is very precarious. Passco has wound up operations of Basmati paddy purchases since December 31, 2008 (with 50,000 tons less than target purchases of Basmati paddy) while it continues purchases of Irri-6 paddy/rice in Sindh.

He said the Basmati paddy purchase price of Rs 1500 per 40 kg announced by Minfa managed to keep the market at Rs 1300-Rs 1400 per 40 kg during November-December, 2008. The rates of paddy in the first half of January 2009 were supported by the news of TCP tenders but later TCP cancelled all tenders and only 2300 tons of Basmati rice have been purchased while there have been no purchases of Irri-6 rice.

He said Basmati paddy prices are at rock bottom @ Rs 1000 and Basmati rice prices are @ Rs 2000 per 40 kg now a days. "The big stockists and exporters are making a kill while the trade sits as a lame duck in the absence of a clear government intervention," he contended.

Malhi maintained that the surplus production of Basmati which is valued at $2.4 billion (2.0 million tons x 1200$/ton) needs export marketing as the existing pace is unable to cater for the required outflow. "Around 1 million tons of Basmati rice is consumed in the country and the remaining 2 million tons is available for export" he added.

He said most of the export during the last eight months (July 2008 to February 2009) was from the 2007-08 crop while the current crop lies unsold, whereas the cost of doing business is also higher as compared to last year. Malhi pointed out that in another eight months the new Basmati crop would be in the market with no buyers, therefore it is extremely essential that a strategy is evolved to deal with the current situation.

He said the country can earn around $2.5 billion (Rs 200 billion) just from the export of 2008s Basmati crop. "This would not only relieve the whole stakeholder chain from the extra burden of stocks but would also give a positive signal for increased production of the next crop thus further boosting export earnings.

Former President, Rice Exporters Association of Pakistan and a prominent rice mill owner Azhar Akhtar told this scribe that there is a total chaos and mismanagement in the rice trade and export business. He suggested that the government should immediately call a meeting of all stakeholders to take corrective measures for putting the rice export business on sound track.

"Rice is too precious a commodity to be left at the mercy maverick exporters." President of Pakistan Agri Forum Ibrahim Mughal stated that the rice growers have been able to sell only 75 percent of the 2008 crop whereas 25 percent paddy was still lying with them and there was no buyer of the left over commodity.

He said the rice millers and traders have not paid price of the sold paddy to the growers and according to his network information nearly Rs 50 billion of the poor farmers money was stuck up with the traders and millers. He warned that if the rice growers dues were not cleared off forthwith, they would be unable to make any fresh investment in the sowing of next rice and other crops.


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## Neo

*Government urged to cut manufacturing cost: Pakistan losing export market​* 
KARACHI (March 18 2009): Vice President of Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Haji Aftab Barlass has urged the government to take appropriate steps to reduce cost of manufacturing to survive in the export market. Talking to newsmen here on Tuesday, he said that Pakistan losing its export market while India, China, Malaysia and Indonesia are capturing Pakistans shares in the world market.

He said that export of sports goods, musical instruments, and other items have reduced considerably from Pakistan owing to high cost of production which reducing the demand of Pak goods. The vice president said that China is the major supplier of goods at very low price in export market. Holding government of Pakistan responsible for declining Pak exports, he said that the government has done nothing to reduce cost of doing business and providing level playing field to Pakistani manufacturers and exporters.

Replying to a question, he said that government has no option but to reduce power and gas tariffs, pass on benefit of oil prices reducing in international market to general public. He said that foreign buyers are already reluctant to visit Pakistan due to law and order situation and added that recent political turmoil and judges issues further pushed them to stay away from Pakistan.


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## Neo

*Judges restoration to take country towards economic uplift​* 
MULTAN (March 18 2009): Former Punjab minister for industries, ex-president of MCCI and ex-chairman of APBUMA, Khawaja Muhammad Jalal-uddin Roomi, said on Tuesday that political stability always leads to economic stability and Prime Minister has taken sensible decision at the crucial time by bridging the gap among politicians and lawyers that would help take the country towards the path of economic development, and would also help attract huge investment.

Roomi said this while referring to a decision of the government to reinstate the deposed judges including Chief Justice Iftikhar Mohammad Chaudhry. He suggested that the government should re-engineer the economy by shifting its focus to agriculture and manufacturing sectors from the next budget 2009-10. "Government should work on re-engineering the economy which should be reflected in the next budget," Room added.

Ailing economy of the country is facing a negative impact of global recession as well as Mismanagement in accumulating huge subsidies, misappropriation in funds and revenues in the past, moreover, global recession have caused sharp decline in GDP, export, investment on one hand, while rise of inflation, current account of deficit and import, he maintained.

Moreover, Jalal-uddin Roomi said that the government should provide a level-playing field to attract foreign and local investors in Pakistan. "But our first priority should be achieving macroeconomic stability that will pave the way for attracting investments," he added.

He said that government should introduce health insurance facility in months ahead as committed by the government." Roomi further said that GDP target was really in danger because the non-agriculture sector was severely affected owing to halt of all economic activities. The tax collection target of Rs 1, 300 billion is a headache for the incumbent regime because the recent political turmoil had negatively impact the system of tax collection. There is no possibility for achieving the tax collection target of Rs 1,300 billion by the end of June 2009.


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## Neo

*Export proceeds: better lose the saddle than the horse ​*
EDITORIAL (March 18 2009): Global recession has begun to bite the Pakistan economy, thereby ending speculation by local analysts that Third World countries in general and Pakistan in particular would remain largely unaffected by the recession.

While it is relevant to note that the impact of the global financial crisis on our economy has been limited due largely to the fact that our financial sector is not inextricably linked to the global financial sector; yet the fact that our exports are suffering as a consequence of a recession in the economies of our major buyers has finally been brought home.

According to a Business Recorder exclusive, 200 containers carrying Pakistani textiles with an estimated value of 0.3 million dollars per container, have been refused acceptance by the buyers in the European Union, the United States and Russia. That the orders have been rescinded due to the slowdown in demand, a direct consequence of the recession, is not in debate.

What is in debate is the impact of this 60 million dollar loss on the textile sector and its overall impact on our balance of trade. A recession is marked by a decline in productivity that almost invariably leads to rising unemployment levels which, in turn, impact on domestic demand.

Products whose purchase can be put off are the first ones to be affected by lower demand as a consequence of a recession. Given that Pakistani textile exports consist largely of cotton yarn and semi-finished grey cloth it was originally thought that they would be minimally affected.

However within our export categories those at the high end in terms of price such as: garments and home textiles (towels, drapes, bed sheets etc) are being affected due to slowdown in retail sales in the developed world. The State Bank of Pakistan has lent a helping hand by extending the repayment cycle of export refinance from 180 to 210 days.

The cost of the extended credit will be borne by SBP. However, the problem pointed out in the news item relates to fears of non-receipt of export proceeds from buyers of Pakistani goods.

In the case of Russia, for example, the devaluation of the Russian ruble from 24 to 35 to a dollar makes it difficult for the Russian companies to meet their commitments. Exports against confirmed letters of credit (LCs) are being delayed by raising frivolous objections.

Exports on documents against acceptance (D/A) or Documents at Sight (D/S) are more problematic. Buyers are required by SBP regulation to ensure that Bill of Lading must have the clause to have the Bills of Exchange endorsed by a bank before taking delivery of goods from shipping companies. This SBP rule is being flouted by some exporters.

SBP needs to enforce this regulation in order to ensure repatriation of export proceeds. As it is, there are $600-700 million of outstandings piled up from yester-years. SBP could see a blip in the $200-250 million in the pipeline from April onwards. It is better to lose an order than to lose money.

Ministry of Textiles, TDAP and SBP need to consult the stakeholders to reinforce this regulation to protect future receivables. What must be worrying the government is the fact that 70 percent of Pakistans total exports are accounted for by just three product categories: cotton manufacturers account for 54 percent of our overall exports, rice and leather 13 percent and synthetic textiles 3 percent.

What must be of further concern is that the bulk of our exports find their way into the US and the European Union - countries which account for a total of 36 percent of our total exports. Thus the impact of a recession in these countries on Pakistani exports will be considerable.


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## Neo

*Current account deficit narrows 14pc ​* 
Thursday, March 19, 2009

KARACHI: Pakistans current account deficit narrowed by 13.7 per cent between July and February 2008-09 over the same period of previous year after improvement in trade balance and overseas Pakistanis sent home more remittances.

In the first eight months of the current fiscal year, the deficit in current account balance shrank to $7.45 billion from $8.64bn in the same period of 2007-08, showed the State Bank of Pakistans data released on Wednesday.

Trade deficit came down to $8.8bn from $9.2bn as exports slightly improved while falling international commodity prices slowed import growth, it revealed.

A freefall in international prices of commodities like crude oil and edible oil, which Pakistan heavily imports, has helped improve a worsening trade balance, one of the reasons which compelled the country to seek International Monetary Funds loan to avert a balance of payments crisis.

Exports between July and Feb 2008-09 totalled $13bn against $12.4bn recorded in the corresponding period of previous year. In the same period, imports were $21.8bn against previous $21.7bn.

Even though imports are a little higher, their growth has been substantially controlled when compared with the first July-Sept quarter of 2008-09. Trade deficit almost doubled to $4.1bn in the first quarter compared to previous years $2.3bn.

Another factor which greatly contributed to improving the current account deficit was workers remittances, which went up to $4.9bn from $4.1bn in eight months.

Foreign investment drops: The SBP also released foreign investment figures, which showed that investment from abroad decreased by 34.2 per cent in July-Feb 2008-09. Foreign investment fell to $1.8 billion from previous years $2.8bn after a massive outflow of portfolio investment.

Approximately $902 million were pulled out by portfolio investors, something which overshadowed the resilient foreign direct investment of $2.79bn.


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## Neo

*LSM shows 5pc negative growth during July-Jan ​* 
Thursday, March 19, 2009

ISLAMABAD: Large-scale Manufacturing (LSM) in the first seven months of current fiscal has recorded an overall negative growth of 5.35 per cent, showed the Federal Bureau of Statistics (FBS) data released on Wednesday.

Overall indices for July-Jan 2008-09 depict a fall of 5.35 per cent over July-Jan 2007-08. The index for Jan 2009 shows decrease of 8.91 per cent over 1.64 per cent in Jan 2008, said the FBS data. 

Analysts attributed the consecutive decline in LSM growth to the governments increase in interest rate for the industry and power outages multiplying the cost of production, thus making business costly.

The LSM negative growth has forced financial managers to further revise growth targets for this fiscal year and it will hover between two and three per cent, they said.

The Oil Companies Advisory Committee (OCAC) compiled data for petroleum products showed a negative growth of 8.08 per cent. Except motor sprit (0.42), all the petroleum products including jet fuel (7.66), kerosene (14.38), high speed diesel (3.79), diesel oil (33.26), furnace oil (8.97), lubricating oil (10.44), jut batching oil (9.34), solvent naphtha (19.24), Petroleum products (20.6) and LPG (18.75) registered a negative growth when compared with the corresponding period, said the FBS data. 

The Ministry of Industry index registered a negative growth of 5.91 per cent comprising 35 main industries in the quantum index numbers of large scale manufacturing, it added. 

The industries showing positive growth include, cigarette (12.92), jute goods (5.92), sacking (34.80), paperboard (0.58) phosphatic fertiliser (36.37), glass plates and sheets (18.87), cement (5.03), coke and Pakistan steel (55.26), tractors (7.60) and Light Commercial Vehicles (2.20). 

Besides sugar which remained uncharged, the industries showing negative growth are cotton yarn (0.52), cotton cloth (0.46), nitrogenous fertilizer (0.30), hessian (31.10), soda ash (0.39), caustic soda (3.65), pig iron (12.08), billets/ingots (42.69), trucks (27.53), buses (51.89), jeeps and cars (46.32), motorcycles (17.65) and others (42.02), the figures said. 

The industries in FBS data showing positive growth include tea blended (4.22), starch and its products (9.30), sole leather (15.25), footwear (20.70), cotton (ginned) (3.56), plywood (42.84), injections (5.33), soaps & detergents (7.46), paints & varnishes (S) (19.72), paints & varnishes (L) (15.10), hydrochloric acid (9.18), polishes & creams (1), matches (3.87), motor tyres (4.08), motor tubes (37.74), safety razor blades (14.36), diesel engines (2.76) and wheat thrashers (79.86). 

Similarly, the industries showing negative growth include vegetable ghee (11.69), cooking oil (5.38), wheat and grain milling (10.16), beverages (5.32), woollen & carpet yarn (16.84), knitting wool (14.15), upper leather (2.10), tablets (0.19), galenicals (100), toilet soaps (19.61), synthetic resins (7.87), cycle tyres (39.80), cycle tubes (35.87), chaff cutter (11.44), sugarcane machine (43.10), power looms (36.86), bobbin & shuttle (20), refrigerators (6.90), deep freezers (21.70), air conditioner (16.46), electric bulbs (22.16), electric motors (22.34), electric meters (9.70), switch guns (16.02), television sets (38.28) and bicycles (27.52). 

The provisional quantum index numbers (QIN) has been computed in FBS on the basis of latest production data of 100 items received from OCAC, Ministry of Industries & Production and Provincial Bureaus of Statistics.


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## Neo

* Pakistan, Mexico to cooperate on energy ​* 
Thursday, March 19, 2009

ISLAMABAD: Ambassador of Mexico to Pakistan Arturo Hernandez-Basave called on the Water and Power Federal Minister, Raja Pervez Ashraf in his office on Wednesday.

The various matters of mutual interest to enhance economic ties between the two countries were discussed in the meeting, said a news release. Both the minister and ambassador agreed to exchange delegation of experts to explore the avenues for cooperation in energy sector.

Ashraf also said that Pakistan would get benefit of the new power generation technologies from Mexico and technical experts will be sent there in this regard.

The ambassador said that Mexico is generating electricity from different sources. He said that Mexico and Pakistan should cooperate with each other in energy sector. He also invited a delegation from Pakistan to participate in a conference in Mexico on energy in June this year.


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## Neo

*Environment degradation causing Rs 365 bn losses ​* 
Thursday, March 19, 2009

LAHORE: Minister for Environment Hameed Ullah Jan Afridi said that Pakistan was facing a number of environmental challenges due to accelerated economic and demographic changes. 

Inaugurating the Geography and Environment Carnival 2009 organised by the Department of Geography of the Forman Christian (FC) College, University here on Wednesday, he said that unsustainable rate of population growth, dependency on natural resources and lack of awareness was gradually leading to over-exploitation and environmental degradation. He said that the country was also facing negative consequences of climate change such as glacial retreat, glacial lake outburst, droughts, flash floods and other associated natural hazards, adding the environmental degradation is estimated to cause economics loss to the tune of Rs 365 billion per annum, which amounts to six per cent of GDP of the country. The main purpose of this carnival is to promote environmental awareness and conservation activities among students, staff and faculty members.

Pakistan is neither a major global polluter nor a large consumer of resources, yet our country is likely to suffer disproportionately from climate change and other global environmental problems, he said. Pakistan is today witnessing severe pressure on natural resources and the environment. The environmentalists have warned that climatic change is likely to exacerbate this trend, he said. 

He said water supply, already a serious concern in many parts of the country, would decline dramatically, affecting food production. Export industries such as fisheries will also be affected, while coastal areas risk being inundated, flooding the homes of millions of people living in low-lying areas, he said. 

The health of millions will also be affected as diarrhoeal diseases associated with floods and drought become more prevalent; intensifying rural poverty is likely to increase internal migration as well as migration to other countries, he said.

The minister said that the government had declared 2009 as the National Year of Environment to streamline the efforts for raising awareness and mitigating the effects of environmental degradation and climate change.

Appreciating the initiative of organising Geography and Environment Carnival as part of the activities of National Year of Environment 2009, the minister said that such events were important in creating awareness among our literate young generation about the sanctity of the environs that we live in. He said that it was our duty to preserve and maintain natural form of earth as was the one and only habitat for our living and substance.


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## Neo

* Italian energy group Eni signs deal with Pakistan ​* 
Thursday, March 19, 2009

ROME: Italian energy group Eni said on Wednesday it had signed a cooperation agreement with the government of Pakistan to develop new oil and gas projects. 

Eni managing director Paolo Scaroni told a press conference that the company, already the leading energy operator in Pakistan, had signed contracts with two Pakistani national companies... that will use our technology to promote the countrys industrial development. 

Enis target is to double output in Pakistan, currently 56,000 barrels a day, in the next five to six years through the investment of $ 50 to 70 million, Scaroni said. The offshore sector in Pakistan is very promising, he said, adding that Eni employees had never faced serious security problems in the country, although access to certain tribal areas remained difficult. Eni, 37 per cent owned by the Italian state, has been operating in Pakistan since 2000 at 21 sites. 

In Islamabad, a delegation headed by Paolo Scaroni, CEO/Chairman Eni, met Prime Minister Syed Yousuf Raza Gilani at the PM House on Wednesday. Gilani said Pakistan offers enormous investment opportunities, particularly in the field of hydrocarbons as there was a surge in demand in the energy and power sectors due to high economic growth and improvement in the living standard of the people. 

Terming energy exploration as one of the most under-explored sectors in Pakistan, the prime minister said the demand is increasing rapidly and the government is encouraging investment to enhance production in this field. 

The prime minister, while commending Eni for its exploration activities, said Pakistan desires that Eni may also expand their activities in the upstream sector. The company primarily focuses in areas of exploration and production, gas and power, refining and marketing, construction and petrochemicals.


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## Neo

*Foreign investment drops sharply by 34.2 percent​*
KARACHI: Net foreign investment in the country took a deep plunge of $981 million or 34.2 percent to $1.892 billion during the first eight months of the current financial year. The country had received foreign investment worth $2.873 billion in the last financial year.

The inflow of foreign investment into the country continues to decline in the current financial year mainly due to withdrawal of money by foreign portfolio managers. Foreign investors who had put their money in Pakistani stocks in the previous years when there was a boom in our markets pulled out large amounts this year owing to continuous decline in all three stock markets of the country.

According to SBPs data, foreign investors withdrew $902.3 million they had earlier invested in Pakistans securities including government bonds.

This resulted into a net decline in foreign investment although foreign direct investment rose by $5 million or 0.2 percent to $2.794 billion in July-February period of 2008-09. The country had received $2.789 billion in the same months of the last year.

The stock markets have been bearish since April 2008 owing to a multitude of factors including a slump in economy, political uncertainty and deteriorating law and order situation.

The Karachi Stock Exchange 100-share index is now down by 150 percent from its April 18 level of 15,676 points.

Inflow of investment from developed countries was down by 46.4 percent to $1.070 billion during the first eight months of current fiscal year from $1.998 billion in the same period of last fiscal year. But investment flows from developing economies made for the loss. They surged by 43.8 percent to $1.036 billion from $720.7 million last year.

The United States of America continued to be the largest source of foreign investment for Pakistan. We received $382.6 million worth of investment from the US. The second biggest investment came from Mauritius that stood at $295 million. Substantial investment was received from South East Asian countries with $213.7 million from Malaysia, $201.1 million from Singapore, and $52.9 million from Hong Kong. Countries in European Union were also major sources of foreign investment with $124.7 million coming from the UK, $66.5 million coming from Netherlands and $40.6 million coming from Germany. We also received $53.3 million from Japan and $47.6 million from Australia.


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## Neo

*Industrys woes continue as LSM declines by 8.91%​*
KARACHI: The most widely followed indicator of Industrial productionLarge scale manufacturingslumped by 8.91 percent in January of current fiscal year, reinforcing the fears of major layoffs and closing down of industrial units in the country.

The worst performance in the large-scale manufacturing was caused by downfall in auto, textile, electronic, petroleum and other key sectors.

Food, textiles and apparel, and leather industries to the extent of heavily dominate Pakistans manufacturing industry over 50 percent. Other major segments in manufacturing include chemicals and pharmaceuticals (15.2 percent), basic metal industry (7.7 percent), nonmetallic mineral products (5.1 percent), machinery (4.6 percent), cement (4.4 percent) and automobiles (4.4 percent).

In July-January of current fiscal, the industrial output was also in negative territory as it plunged by 5.35 percent over the corresponding period of previous year, Federal Board of Statistics (FBS) reported on Wednesday.

Analysts attributed the fall in the industrial output partly to global financial crisis and more with the domestic issues such as prolonged power outages, high cost of utilities and raw materials coupled with the high interest rates in the country.

The slump in the industrial sector, particularly large-scale manufacturing, has led to a decline in revenue collection as well as slowdown in exports proceeds.

Exporters said that fallout of the global financial crisis and effects of domestic policies, including the highest-ever interest rates and lack of energy availability had slowed down manufacturing. The economic recession in export markets of the country has dampened the demand, which is ultimately affecting the export-oriented sector.

Also, the higher interest rates, they pointed out is a big cause of concern and has negative implications for the industry. The other countries of the world are cutting down their discount rates to boost the economic growth, they said, but here the situation is vice versa in Pakistan as policy discount rates kept rising despite the negative growth in the industrial production.

They feared that situation might aggravate in the summer when the power outages became a routine, subsequently hurting the already fragile industry.

In view of the current situation, the growth target of 6.1 percent for the current fiscal appears impossible to be achieved and the final figures are likely to settle in the negative zone. Petroleum sector was the worst performer and its overall production fell 8.08 percent in first seven months of current fiscal. Jet fuel declined 7.66 percent, kerosene oil 14.38 percent, high-speed diesel 3.79 percent, furnace oil 8.97 percent, LPG 18.75 percent.

In food sector, production of vegetable ghee declined by 11.69 percent, cooking oil 5.38 percent, wheat and grain milling 10.16 percent, beverages 5.32 percent. The production of tea blended and starch and its production rose 4.22 and 9.30 percent, respectively.

Production of refrigerators dropped 6.99 percent, deep-freezers 21.70 percent, air-conditioners 16.46 percent, electric bulbs 22.16 percent, electric tubes 20.17 percent, fans 7.91 percent, motors 22.34 percent, electric meters 9.70 percent, switchgears 16.02 percent, transformers 8.10 percent, TV sets 38.28 percent and bicycles 27.52 percent. Production of cotton yarn and cotton cloth declined 0.52 and 0.46 percent, respectively.

The production of trucks decreased 27.53 percent, buses 51.89 percent, jeeps & cars 46.32 percent and motorcycles 17.65 percent.


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## Neo

*WB ranks Pakistan first in corporate governance​*
ISLAMABAD: World Bank Report Getting Finance in South Asia 2009 has ranked Pakistan first in the areas of corporate governance, performance and efficiency.

In the area of access to finance, Sri Lanka ranks first in South Asia, on capital market development and market concentration and competitiveness in the banking sector first slot is grabbed by India.

According to the detailed report on Pakistan the bond market is developing at a lesser pace. The domestic bond outstanding was 25.16 percent of the GDP, equivalent to $32.41 billion. This consists of mainly government bonds, as the corporate market is yet to develop.

The areas on which Pakistan needs to focus are access to finance capital market development, and market concentration.

Access to Finance: Pakistan needs to focus on improving financial outreach through its commercial banking sector. Demographic branch penetration is low with around five bank branches per 100,000 people during the six-year period. To promote branch openings in rural areas, the SBP has introduced the Annual Branch Licensing Policy, which requires commercial banks with 100 branches or more to open at least 20 percent of their branches outside big cities and set up branches in Tehsil Headquarters, where no branch of any bank exists.

Usage indicators showed mixed results. While deposit accounts dropped from 195.84 per 1,000 people in 2001 to 171.14 in 2006, loan accounts per 1,000 grew by almost 98 percent. One would have expected both ratios to grow, given the economic growth experienced by Pakistan over the last few years.

Pakistan is one of the few countries in the world that has a separate legal and regulatory framework for microfinance banking. Though in Pakistan the potential market size is huge (around 30 million), the penetration remains low. Despite a substantial increase in the number of borrowers (from 60,000 in 1999 to around a million in December 2006), huge portions of this potential market remain underserved.

Financial stability: Pakistani banks maintained the regulatory CAR well above 8 percent. Strong returns and fresh capital injections to several banks resulted in this positive trend.

Over the six-year period, the ratio increased to 13.33 percent in 2006. Leverage ratio almost doubled to 8.94 percent in 2006.

The gross NPL ratio reduced progressively from 19.6 percent in 2001 to 5.7 percent in 2006. The NPL position of the public bank should be monitored continually, however, because any adverse movements in this sector could have a negative impact on the entire banking industry, as public banks hold a significant share of the lending portfolio.

Banks liquidity position should be monitored carefully using measures such as maturity gap analysis, to find out the presence of any liquidity mismatches.

The SBP would adopt the Internal RatingsBased Approach from January 1, 2010, with banks and development finance institutions (DFIs) permitted to implement it sooner if the SBP approves their internal risk management systems.

The Pakistan bond market is still at its development stage and is dominated by government securities at around 97 percent. The lack of growth in the bond market should be a concern, however, as this deprives the market of an alternate funding source.

Corporate Governance: Pakistan leads the region in corporate governance scores. Some of the amendments would improve the self-governance; others, such as seeking SBP approval for 5 percent or more shares, need to be reviewed. Other areas to focus on include greater transparency and disclosure, greater accountability, further disclosures on beneficial ownership, safeguards on stakeholder rights, further improvements to responsibilities of the board, and further emphasis on self-governance for the institutions.

The SBP requires disclosure of beneficial ownership of shareholders, with the threshold set at 3 percent. However, this information is not available to the public.

Investor rights relating to voting and shareholder meetings appear to be in place. The government can appoint directors to government-controlled banks only by virtue of its shareholdings.

Provisions for transparency and disclosure have met the main criteria, but the internal audit function has room for further improvement. Disclosure of audit fees paid to external auditors is required.

To attract and retain qualified and competent staff, a review of compensation policies is needed. Banks are required to disclose the compensation of directors in detail.

Although the guidelines have been issued, the success of the governance procedure largely depends on commitment by the banks. Their approach to corporate governance should extend beyond simple compliance with legal requirements. This is an evolving process and cannot happen overnight. As such, the regulatory authority surveillance and enforcement is important. staff rpeort


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## Neo

*Budgetary support for 2009-10: EU to provide 200 million euros: Qureshi​* 
ISLAMABAD (March 19 2009): Foreign Minister Makhdoom Shah Mehmood Qureshi said on Wednesday that European Union (EU) would provide 200 million euros as budgetary support for 2009-10 and the United States has also assured to triple its assistance to Pakistan for socio-economic development.

Addressing a press conference at the Ministry of Foreign Affairs, the Minister briefed the media that he met the American leadership during his stay in Washington and he found commitment and seriousness of new US administration to extend help Pakistan for improving the situation in the region.

He said the Obama administration has shown its commitment and seriousness to extend full help and co-operation to improve capacity building of Pakistan to deal with extremism and terrorism while reviewing its policy towards Pakistan and Afghanistan on the issue of war against terrorism. Besides, the Minister said, the EU has also agreed to provide 50 million euros immediately for food security in Pakistan, besides the 200 million euros for budgetary support.

He said a joint ministerial commission meeting of Pakistan and EU will be held in Brussels for further enhancing trade activities. Regarding his visit to Prague for tri-lateral meeting, he said, the EU has agreed to lift anti-dumping duty imposed on bed linen, adding that it would help improve Pakistans export to Europe increasing them from 200 to 300 million euros.

Qureshi informed the media that the second round of talks among Pakistan, Afghanistan and US would be held on May 6 in Washington to make further progress in formulating the new policy for the war on terror. The foreign minister was of the view that Untied States is ready to listen to Pakistans point of view as far as the formulation of new policy regarding war on terror is concerned.

"US has agreed to review the policy of drone attacks and expressed the hope that the issue will be again discussed in his next visit to Washington. Pakistan has been able to convey to the US administration to look into the advantages and disadvantage of drone attacks," he added.

He said Pakistan made it clear to the US that the drone attacks in tribal areas causing collateral damage and would not help in controlling the militancy. Minister said new US administration is also committed to the project of Reconstruction Opportunity Zones in the Fata areas of Pakistan and required legislation on the issue has been started for early economic and social development in the area. Qureshi said that the US could not achieve the objectives of war on terror despite fighting a costly war during the last seven years.

Pakistan, he said, has advised the Untied States to focus on civilian search like political engagement and socio-economic development in the tribal areas to achieve the required results along with the military search.

To a question, the foreign minister said that the Standing committees of NA and Senate would also be engaged for getting inputs for the broad based policy to tackle the militancy to be formulated by the US in consultation with Pakistan and Afghanistan.

Regarding capacity enhancement and assistance required from US administration, the Foreign Minister said Pakistan had asked for finding a new mechanism for early transfer of coalition cost, as dollar one billion has been stuck up, capacity enhancement with provision of helicopters, effective night vision mechanism and other latest technical support.

"Pakistan has not given its bases for the Nato forces for the drone attacks" he said while responding to a question. About Dr Afia Siddiqui, he said that Pakistan has taken up the issue at every diplomatic forum and would continue its efforts in future.

He sought co-operation and unity of all the political forces to achieve what he said diplomatic targets, saying that political stability is key to success, progress and prosperity."

On the issue of Friends of Democratic Pakistan the Foreign Minister said US has also assured to extend its full support to Pakistan. He said US is waiting anxiously to attend the important meeting of FoP being held in Tokyo on April 16-17, he added.

Regarding his visit to Tehran for ECO summit, the Foreign Minister said during the meeting between President Asif Ali Zardari and his Iranian counterpart Ahmedinejad, the issue of Iran-Pakistan-India gas pipeline pricing has been discussed. He said Pakistan has conveyed a formula to Iran that will be discussed by the Iranian leadership to reach consensus. He said the issue will be discussed in the next trilateral summit.

He said that foreign ministers of Pakistan, Afghanistan and Iran would meet in Kabul to finalise modalities for the troika summit to be held in Tehran. The Foreign Minister said it has also been agreed in the trilateral summit, between Presidents of Pakistan, Iran and Afghanistan, that three foreign ministers will meet every month for further co-operation in various fields for the development, progress and prosperity in the region.


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## Neo

*Current account balance becomes surplus after 20 months​* 
KARACHI (March 19 2009): The countrys current account balance has become surplus after the 20 months gap primarily due to massive decline in trade and services deficit and rising trend in remittances. Current account balance was constantly showing deficit since June 2007 largely contributed by the high imports on the back of rising commodity prices in international market.

However, a major cut in the imports followed by slow trade activities has improved the situation and the current account balance has come in the surplus after a 20-month gap. The countrys current account balance has posted a surplus of 146 million dollars during February 2009 as compared to some 279 million dollars during January 2009.

During the February 2009, overall deficit of trade, services and income stood at 898 million dollars over the current account transfers of 1.044 billion dollars, showing a surplus of 146 million dollars in February 2009. With a surplus in the current account balance, the overall current account deficit has come down by 14 percent during the first eight months of the current fiscal year ie 2008-09.

The country has posted a current account deficit of some 7.455 billion dollars during July-February of current fiscal year as compared to 8.645 billion dollars in the same period of last fiscal year, depicting a decline of 1.190 billion dollars.

"Surplus in the current account deficit is a positive indication for the overall economy and the trend would continue," said Muzamil Aslam, an economist. He expected that the current account deficit for the remaining period of current fiscal year would also be on decline on the back of fall in imports. He said that surplus balance would increase the liquidity in the domestic market, which will definitely put pressure for cut in the policy rate.

Muzamil further expected that decline in the current account deficit would also help keep the exchange rate stable, besides strengthening the foreign exchange reserves. "The improving current account situation also indicates overall economic stability and we are expecting further stability in the near future, while with the current declining trend, the IMF target of current account balance would be easily meet," he added.

The State Bank of Pakistan statistics on Wednesday revealed that trade and services sector have presented a significant improvement and contributed major share in the depleting current account deficit, while income deficit is still witnessing upward trend. Services deficit has declined by some 360 percent during the first eight months of current fiscal year.

Services sector deficit stood at 2.713 billion dollars with 2.382 billion dollars exports and 5.095 billion dollars imports in July-February of current fiscal year as compared to a deficit of 4.237 billion dollars with 6.342 billion dollars imports and 2.105 billion dollars export in the corresponding period of last fiscal year.

Overall deficit including goods, services and income stood at 14.499 billion dollars against the current account transfers of 7.125 billion dollars during the July-February of FY09.

The countrys overall goods imports stood at around 21.878 billion dollars and exports at 13.015 billion dollars with a trade deficit of 8.863 billion dollars during first eight months of current fiscal year, which previously stood at 9.294 billion dollars during same period of FY08. Similarly, income deficit surged by 495 million dollars to 2.923 billion dollars with some 3.597 billion dollars outflows and 674 million dollars inflows during the first eight months of current fiscal year.


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## Neo

*Circular debt to be settled with issuance of Rs 80 billion TFCs​* 
KARACHI (March 19 2009): The problematic circular debt, afflicting the banking, oil and power sectors, may finally be settled with the issuance of Rs 80 billion Term Finance Certificates (TFCs). The acceptance of terms of offer for the five-year tenor paper at 1.75 percent above Kibor from 10 banks has reportedly been received - with some conditionalities.

There was reluctance on the part of some banks, as the return earned by them would come down from 2.25 percent to 1.75 percent above Kibor. Based on past experience, banks also fear that these TFCs would be forcibly rolled over up on maturity, due to the fiscal constraints, despite initial two years of grace period in the five-year term repayment.

The amount of Rs 80 billion, to be raised from 10 banks--National Bank, Bank Alfalah, ABL, HBL, UBL, Askari Bank, MCB Bank, Citibank, Standard Chartered Bank, and Bank Al-Habib--would settle the bank loans obtained by Pepco, Hubco, AES Colpir, AES Pakgem, SSGC, PSO, Shell, Parco, NRL, and PRL.

An exhaustive exercise was undertaken to net off which power generating companies owe to which OMC, and which OMC has outstanding against which refinery. This exercise reduced the circular debt of over Rs 250 billion to a net figure of Rs 80 billion.

On completion of this exercise, the Advisor to Prime Minister of Finance, Shaukat Tarin, held at least two meetings to persuade the banks to participate in the TFC offer. Reluctance of the bankers was reportedly overcome when State Bank of Pakistan Governor Salim Raza stressed upon the bankers that the other option would be withdrawal of government and public sector deposits--Banks reportedly hold Rs 600 billion plus in governmental deposits.

It may be recalled that withdrawal of Rs 40-50 billion of deposits in the last quarter of 2008 by government entities to retire the overdraft of SBP had sent the interbank overnight borrowing rate to soar above 20 percent. It was feared that a repeat of last year would be far more damaging for the banks. As a consequence, the TFC issuance is now near closure.


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## Neo

*Friends of Pakistan Conference: meeting reviews progress on preparatory work​* 
ISLAMABAD (March 19 2009): Pakistan will seek co-operation from the international community in areas of internal security, infrastructure development and poverty alleviation, with special attention on Pakhtoonkhwa and Balochistan provinces. This was decided in a meeting at the Presidency here Wednesday, which was jointly chaired by President Asif Ali Zardari and Prime Minister Syed Yousuf Raza Gilani.

It reviewed the progress on the preparatory work for the Friends of Democratic Pakistan conference to be held in Tokyo on April 17, in which President Zardari will represent Pakistan Those who participated in the meeting included Foreign Minister Shah Mehmood Qureshi, Advisor to PM on Finance Shaukat Tarin, Secretary General Salman Farooqi, Foreign Secretary Salman Bashir and Presidents spokesperson Farhatullah Babar.

It was emphasised in the meeting that to make the war against militancy a success it was necessary to comprehensively address the security and development issues in Pakhtoonkhwah and Balochistan provinces in the proposed package.

He said that Pakhtoonkhwah province bore the brunt of the war on terror and its development and security needs must be seriously addressed. He expressed the hope that the forthcoming meeting of Friends of Pakistan will view positively Pakistans requirements to successfully overcome the challenges posed by militancy.

The countries and international bodies included in the Friends of Pakistan group are US, UK, China, France, Germany, Italy, Japan, Australia, Canada, Saudi Arabia, Turkey, UAE, EU, EC and UN. The Friends of Democratic Pakistan provides a forum to friendly countries to build strategic partnership with Pakistan to foster peace and stability in the region, promote economic stability and address energy needs.


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## Neo

*Smeda invests Rs 932 million for development in NWFP​*
PESHAWAR (March 19 2009): Small and Medium Enterprises Development Authority (Smeda) has facilitated an investment of around Rs 932 million in NWFP besides training about 12,000 SME entrepreneurs in the province. The organisation, set up in 1998 to take up the challenge of developing Small and Medium Enterprises (SMEs), has also played an instrumental role in formation of sector development through establishment of companies, informed Provincial Chief of Smeda, Javed Khattak here on Wednesday.

Javed Khattak said Smeda has played an active role in setting up of Pakistan Stone Development Company (Pasdec), Pakistan Hunting and Sporting Arms Development Company (PHSADC) and Pakistan Gems and Jewellery Development Company (PGJDC).

These companies have been established with the objective of sector development through upgradation of skill of persons involved in these professions besides opening ways for export of the products. The organisation also made efforts for improvement of clusters of different artisans involved in the skill of weaving, furniture and leather shoes.

In this regard, he added, Smeda took measures for upgradation of handlooms to power looms for people making their livelihood through weaving of Khaddar (traditional fabric) in Charsadda district. Similarly lending facilities were provided to weavers through Bank of Khyber and SME. The market linkages of the stakeholders were developed besides addressing the problem causing health hazards and environmental issues.

For development of furniture cluster, a business development centre was set up in Tehkal (Peshawar). Similarly, work on setting up of a Furniture Village at Jalozai is in progress while Wood Seasoning Plant for Dir and Peshawar has been approved.

The organisation also took measures for development leather shoe manufacturers in Charsadda. There are more than 500 units operating in Charsadda and Smeda is providing input to the cluster and a footwear-training institute that was established by TDAP.


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## Neo

*Mines and minerals department to spend Rs 300 million on uplift schemes​* 
LAHORE (March 19 2009): Provincial Mines and Mineral Department is spending an amount of Rs 300 million on 20 different development schemes for the development of mineral resources in the province in the current fiscal year, spokesman of the department said this on Wednesday.

According to the spokesman, a sum of Rs 216 million was being spent on 13 ongoing schemes while Rs 83 million were provided for 7 fresh schemes. These schemes will not only enhance the development process of natural resources but will also help to improve the means of transportation to reach in the areas of natural resources, the spokesman told.

It will also be helpful to develop and improve the exploration of natural resources by widening existing roads and infrastructure through sustained provision of facilities in mineral rich areas. Spokesman further informed that special attention is focused to supply electricity, extending the roads and availability of other necessities.

Development of mineral resources to enhance the exploration, exploitation of mines and mineral resources in a safe and environmentally sound manner in order to support a more productive economy is the main aim of the department, concluded the spokesman.


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## ejaz007

*Pak forex reserves improve by $108.5 mln *
Updated at: 2250 PST, Thursday, March 19, 2009 


KARACHI: Pakistans foreign exchange reserves have recorded an increase of 108.5 million dollars and stood at 10.11 billion dollars on the week ended March 14.

According to State Bank of Pakistan, of the totals reserves SBP holds 6.68 billion dollars while 3.47 billion dollars are with commercial banks.

The experts attribute improvement in the countrys foreign exchange reserves to the reduction in exports and rise in foreign remittances. 

Pak forex reserves improve by $108.5 mln


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## ejaz007

*ECC approves gas import price for IPI project*
* Asks Ministry of Petroleum to seek cabinet ratification
By Sajid Chaudhry

ISLAMABAD: Economic Coordination Committee (ECC) of the cabinet approved a rationalised gas import price equivalent to 80 percent of the international crude oil price on Thursday, removing the final obstacle in the $7.8 billion gas pipeline project with Iran.

The decision was made in a meeting chaired by Finance Adviser Shaukat Tareen at the Prime Ministers Secretariat.

According to sources, Pakistan and Iran would soon sign the much-awaited Gas Sale and Purchase Agreement (GSPA) to enter the implementation phase of the project.

Earlier, Pakistan had asked Iran to lower the price to the equivalent of 70 percent of the price of crude oil in the international market. 

In the recent bilateral talks, Tehran declined to show flexibility on the price, asking Islamabad to take it or leave it, the sources said.

According to an official statement, the decision was made considering a Ministry of Petroleum summary seeking the approval to sign the GSPA at the offered price, envisaging import of one billion cubic feet per day of natural gas, constituting 25 percent of Pakistans current gas production in order to support 5,000 megawatts of power generation. 

The ECC advised the Ministry of Petroleum to seek approval from the cabinet before signing the GSPA with Iran. The committee also considered a Ministry of Commerce summary seeking permission for bilateral trade with India through the Wagah-Attari road link and approved the proposal for the development of the required infrastructure to facilitate the trade of 14 items initially. Subsequently, the route would facilitate the import of essentials as well as raw material for export-oriented industries. The decision has been made in the light of an agreement between the Pakistani president and the Indian prime minister in a 2008 meeting in New York to implement the project in a phased manner commensurate with parallel development of infrastructure on both sides of the border. The ECC also directed provincial governments to take action against hoarders of eatables and keep a constant check on food supply chain mechanisms in the markets to ensure availability of all essentials. Relief to the common man should be the primary focus of provincial governments, a statement quoted the committee members as saying. The ECC formed a surveillance committee consisting of federal, provincial and local government representatives to look into price control matters and submit actionable recommendations.

In other decisions, the ECC directed the Trading Corporation of Pakistan to meet wheat requirements of Sindh on priority, and empowered the Federal Board of Revenue (FBR) to give exemption on regulatory duty to franchised food chains for importing potato chips.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Producing high-yield cotton seed ​* 
*Local companies seek concessions​*
Friday, March 20, 2009

LAHORE: Seed companies have urged the government to provide them a level-playing field in line with concessions granted to multinationals, which would give them a chance to introduce high-yield and disease-resistant BT cotton hybrid seed by 2010.

Local seed companies point out that out of 250 registered companies in the country, which included multinationals also, only 10-12 domestic companies are actively involved in research work. All others including multinationals, they say, are simply importing hybrid seed varieties of various crops.

The News has found that Pakistan has been trying to introduce BT cotton seed developed by a renowned multinational company. However, annual royalty demanded by the company was very high effectively hampering its introduction. Some legal steps necessary for introducing biotech seeds have also not been taken by the government. The same multinational, in the meantime, has introduced BT cotton seed in India and transferred technology as well. The Indians have gone a step forward and developed BT cotton varieties from high-yielding hybrid cotton seeds.

Agricultural experts point out that in BT cotton seed some disease-resistant attributes are passed into genes of cotton seed, which ensures that the crop is not affected by pest attacks, the main factor which determines the output of the crop.

However, they say BT cotton generally only ensures that pest infestation causes no production loss but it does not improve cotton yield. Since cotton crops the world over are frequently affected by pest attacks and suffer heavy production losses, BT cotton is considered an insurance to achieve normal cotton output. In addition, BT cotton saves cost of pesticides which are sprayed during crop cultivation cycle.

The Indians, which were using hybrid seeds to improve cotton yield, has experimented BT genes in high-yielding cotton hybrid seeds. A similar research has also been going on in China which has also developed various BT cotton hybrid seed varieties.

Now besides protection against disease, these varieties also increase the cotton yield. India has doubled cotton production during the past six years. China, the largest producer of cotton but which still depends on imports to meet growing demand, is on its way to achieve self-sufficiency in cotton in the next five years through BT cotton hybrid varieties.

Pakistan has seen its cotton production from conventional seeds fall by over 30 per cent from the peak in 1999. It currently imports 3-5 million bales of cotton per year. Local seed companies capitalised on the opportunity created by the slow progress on reaching a deal between multinationals and the government for introducing BT cotton in the country.

One seed company has entered into a joint venture with a Chinese seed company to produce BT cotton hybrid seed in Pakistan. The company has conducted field trials for two years which are necessary for BT cotton hybrid seed. The company is ready to launch commercial sales of these seeds in 2010.

The News has found that in the meantime the multinational offering BT cotton has substantially reduced its royalty and is in final stages of finalising a deal for selling BT cotton it produces in India.

Local seed companies point out that they have been barred from importing cotton hybrids from India. They demand a level-playing field, saying if a multinational is allowed to import seeds from India they should also be given the same facility. The use of Chinese BT cotton technology with Indian hybrid cotton seed, they say, would reduce the cost of seed production and double cotton yield in the shortest possible time.


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## Neo

* Pakistan to get $700m inflows in March: Tarin ​* 
Friday, March 20, 2009

KARACHI: Pakistan expects to get $700 million in foreign inflows this month and that will further support its economy which had entered a safe territory, the countrys top economic official said on Thursday.

Pakistan is expected to receive $500 million from the World Bank and about $200 million from the Asian Development Bank this month, Finance Ministry chief Shaukat Tarin told Reuters.

In addition, Pakistan is also expected to get $840 million from the International Monetary Fund when its board meets later this month.

That would be the second tranche of the IMFs $7.6 billion 23-month emergency loan programme which was agreed in November to avert a balance of payments crisis. A first tranche of $3.1 billion was released that month.

Tarin said the Pakistani economy had entered safe territory as inflation was declining and the current account balance in February recorded a surplus.

Analysts attributed the surprise current account surplus of $146 million in February to lower global commodity prices.

The current account was last in surplus in June 2007.

Tarin said the currency was stabilising, inflation declining and the Karachi interbank rate had fallen by almost 320 basis points this year, allowing the government to focus on a nine-point agenda of priorities.

In the upcoming budget we will start the nine-point agenda which includes providing a safety net for poor people, focusing on agriculture and manufacturing, human resource development and an integrated energy plan, Tarin said.

Tarin said Pakistan may float a bond but it is still too early to say and that it was monitoring credit default swaps.

Once the CDS narrows then we will (issue a bond), Tarin said in response to reports that Pakistan would raise $500 million through bonds by December.

Five-year credit default swaps have fallen to about 2,600 basis points from 3,000 basis points in January but analysts said the spread are still at elevated levels.

Under current levels, it costs at least $2.6 million to insure $10 million worth of debt against default.

Tarin said the United States was trying its best to help Pakistan, an important ally seen as vital to US efforts to stabilise Afghanistan and defeat Al Qaeda.


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## Neo

*IT exports likely to miss target​*
KARACHI: The IT exports are likely to miss the 50 percent growth target set for the financial year 2008-09, as the global economic recession has affected the sector.

The countrys IT and computer services exports have registered 35 percent growth in the last eight months of the current financial year with $124 million as reported by State Bank of Pakistan (SBP). The IT industry has set its exports target at $255 million whereas last year the exports reached $169 million. On the contrary, Foreign Direct Investment (FDI) in Software Development has increased by 97 percent to 16.5 million during the Jul-Feb.

This is the lowest exports growth rate since 2004 because the exports have been witnessing 50 percent growth for the last five years. 

Industry people were of the view the world would be experiencing its worst-than-expected economic crisis this year and the business conditions would not be supportive for businesses.

They added IT industry has started feeling the pinch of global economic slowdown as offshore demand of our exports is evaporating. They said the countries exports can be rebound once the resilience appears in global economies when the billion-dollar bailout packages start to stimulate demand.

Managing Director Pakistan Software Export Board (PSEB), Talib Baluch said the global downturn has exerted its impacts on the countrys exports which is temporary in nature as the growth is going to rebound soon on the back of high demand of global IT industry.

He explains that IT exporters have been incurring losses for last three months as their buyers are mostly in banking and automobile sector. These companies will be provided financial leverage by their respective countries to rebuild their business, therefore, Pakistani exporters will also regain their demand, the PSEB chief said. The global IT market has capability to attract business worth $475 billion.

United State of America is the largest buyer of Pakistan IT-enable service with the share of 58 percent in countrys exports. It is followed by UK, having ten percent share in total exports. The pie of total exports shows 16 percent share to the other countries including Australia, Canada, Thailand, UAE and others.

Industry experts said that expatriate Pakistanis have shifted their business from their residential countries as they got better opportunities and potential in Pakistan in this sector. They added that IT infrastructure is being built up rapidly in the country owing to tax holidays and availability of cheap labour.


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## Neo

*FDI during July-January amounts to $2587.7 million​* 
ISLAMABAD (March 20 2009): The Economic Co-ordination Committee was informed on Thursday that foreign direct investment (FDI) during July-January, 2008-09 amounted to 2587.7 million dollars, registering a healthy growth of 1.3 percent compared with the last years period under review.

In marked contrast, the State Bank of Pakistan reported that the FDI declined by 34 percent between July-February 2009 in comparison to the corresponding period last year.


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## Neo

*Zardari not satisfied with Iranian gas price offer​* 
ISLAMABAD (March 20 2009): President Asif Ali Zardari has said that let the new parliament of Iran decides about gas price regarding the Iran-Pakistan-India (IPI) gas pipeline project. Sources revealed to the Business Recorder on Thursday that in a high level meeting held in Presidency on Wednesday, President Zardari expressed dissatisfaction over the gas price to 80 percent of crude oil offered by Iran.

The Iranian government has conveyed to Pakistan that its parliament had approved the gas price offered to Pakistan. Iran warned that it would be free to commit supplies reserved for Pakistan to its other buyers if no agreement reached between the two countries during the current Iranian year, ending on March 20.

"Let the new parliament of Iran decide about the gas price offered to Pakistan as current gas price was higher," sources quoting the President as saying in a meeting. The sources said that the Petroleum Ministry had moved a summary to the Prime Minister, who had directed the ministry to place the matter before Economic Co-ordination Committee (ECC) of the Cabinet that failed to reach any decision on gas price here on Thursday due to observations of some ECC members. They raised concern over the high price of gas offered to Pakistan.

The ECC decided to send the matter of gas price to the Cabinet for approval. The ECC okayed rationalised gas import proposal, and advised the Petroleum Ministry to seek ratification and approval from the Cabinet before signing of gas sales and purchase agreement (GSPA) with Iran.

The sources said that the ECC was informed that Iran had conveyed to Pakistan that it was exporting gas to Turkey at formula, linking gas price to 85 percent of crude oil. Earlier, Iran agreed to link gas price to 78 percent of crude oil, but now it was demanding 80 percent of crude oil. Iran claimed that the said gas price was still lower as compared to the gas price being paid by Turkey to Iran.

It was informed that Pakistan had offered gas price of 70 percent of crude oil that Iran had turned down. Advisor to Prime Minister on Finance Shuakat Tarin, who chaired the meeting, expressed concern over the payment of gas price to Iran as it would be a burden on the national exchequer. The proposal was also considered to import 500 million cubic feet gas per day instead of one billion cubic feet gas per day for power generation purpose only.

The issue of setting up new thermal power plants came under the discussion. The Advisor to the Prime Minister on Finance strongly objected for setting up new thermal power plants to utilise Iranian gas. He said that option of consumption of imported Iranian gas, as energy mix should be worked out in the existing thermal power plants.

The ECC also directed to work out the possibilities of power generation through other resources like wind and coal resources. Members of the committee stressed the need for utilising wind and coal reserves for power generation. The sources said that if the two countries reached an agreement, Pakistan would have to pay 1.5 billion dollars annually for one billion cubic feet gas per day to Iran if the price remained at five dollars per million British Thermal Unit (mmbtu) based on 50 dollars per barrel crude oil price.

After the completion of the project, the consumers will have to pay 17.5 percent return on the assets also that will further escalate the cost of the gas price. The ECC was informed that in January 2007, Pakistan and Iran had agreed on a gas price formula with a crude oil parity of 45 percent.

However, in September 2008, Iran informed that its parliament had not approved the agreed gas price formula, which directed that price of gas exported to Pakistan should be equal to its other exports, namely to Turkey, and accordingly proposed a revised gas price formula to link gas price to 85 percent of crude oil. Later, Iran offered a revised gas price proposal to link it to 80 percent of crude oil, which Iran claims is at a slight discount to the price of gas being sold to Turkey.


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## Neo

*Pakistan to get good news soon: Iranian envoy​* 
ISLAMABAD (March 20 2009): Iranian Ambassador to Pakistan Mashallah Shahkari on Thursday said that Pakistan would get good news on Iran-Pakistan-India (IPI) gas pipeline project soon. He said this while talking to media during his visit to the National Press Club here on Thursday.

However, he did not disclose the details of the development regarding the mega project. The Iranian Envoy also said that Pakistan should not allow its soil to be used for the terrorist activities, as terrorist outfit Jandollah, which operates in Iran allegedly have a base in Pakistani. Shahkari said that Iran would extend all out assistance to Pakistan for socio-economic development in every field.

He added that Iran would also help Pakistani exporters for dispatching their goods to Istanbul via Iran. To a question, the Iranian top diplomat said that Pakistani authorities should accelerate their efforts for safe recovery of the Iranian consulate official who went missing from Peshawar some time back.


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## Neo

*Investment opportunities with Chinese team discussed​*
ISLAMABAD (March 20 2009): A four-member delegation of China Mobile Communications Corporation (CMCC), led by its Vice Chairman called on federal minister for Investment Senator Waqar Ahmed Khan on Thursday, and discussed with him investment opportunities in Pakistan.

The Minister appreciated CMCCs investment in Pakistan and encouraged the brotherly relation between the two countries in terms of trade & Investment. He also emphasised on mutual co-operation on economic relations in all sectors of the economy. The minister ensured government of Pakistans support to Chinese investors in all sectors of the economy.

He further highlighted that the present goba1 recession has not affected Pakistan. Therefore, there is still a need for improvement in development of infrastructure, power, construction, telecom and agriculture sectors. The minister also explained the three issues ie law & order, political stability and good governance & transparency in Pakistan, for which the government is committed to improvement. A task force is also being established to address the security concern of the investors.

Waqar pointed out that the recent political decision of the government for the restoration of deposed judges has made major quantum lead in the political stability of the country. The Vice Chairman of China Mobile Communications Corporation shared two issues which ling for consideration with the government. Six percent reduction or import duties on telecom equipment, and the issue of LDI license etc.

He also highlighted that CMPak is a 100 percent subsidiary of China Mobile Communication Corp, the worlds biggest mobile phone carrier by users, acquired Pats Ltd; in 2007. Moreover, M/S CMPak, has invested more than US $700 million in the telecom sector in Pakistan and an additional US $800 million will be invested by the end of 2009.-PR


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## Neo

*Petroleum Policy-2009 announced; self-sufficiency to be achieved in oil, gas production ​* 
ISLAMABAD (March 20, 2009): Ministry of Petroleum and Natural Resources Friday announced Petroleum Policy-2009, focussing on accelerating exploration and production activities in the country.

The policy is aimed at achieving maximum self-sufficiency in energy by increasing oil and gas production, Ministry's spokesman G.A Sabri told APP.

He said the government was committed to accelerating exploration and development programme to reverse the decline in crude oil production and increase domestic gas production and supply.

Sabri expressed optimism that the programme would help reduce the burden of imported energy and improve the situation in balance of payments and trade.

Besides, promoting the involvement of Pakistani oil and gas companies in the country's upstream investment opportunities, the policy will promote direct foreign investment by increasing the competitiveness of its terms of investment in the upstream sector.

Under the new strategy, Pakistani professionals would be trained in exploration and production sector for bringing them at par with international standards and creating favourable conditions for their retaining within the country.

While special attention would be paid to promote increased exploration and production activity in the onshore frontier areas by providing globally competitive incentives.

Directorate General of Petroleum Concessions (DGPC) would be established to enable a more proactive management of resources.

The policy also stressed to undertake exploitation of oil and gas resources in a socially, economically and environmentally sustainable and responsible manner.

The petroleum policy has been announced after holding consultations with all stakeholders. Their suggestions and inputs were incorporated for making the policy more effective to achieve the set targets, the spokesman added.


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## Neo

*Lack of awareness: Pakistani products lack world recognition​* 
LAHORE (March 20 2009): Pakistani products enjoy quality-edge when they are compared with products of other countries but are falling short of getting a respectable place in the global market only because of lack of awareness about their branding and marketing.

The Lahore Chamber of Commerce and Industry (LCCI) President Mian Muzaffar stated this while speaking at one-day training workshop on "Capacity Building" jointly organised by LCCI Standing Committee on Women Entrepreneurs and Centre for International Private Enterprise (CIPE) at the LCCI here on Thursday. Aasia Saail Khan, Convenor LCCI Standing Committee on Women Entrepreneurs, Senior Programme Manager CIPE Hammad Siddiqui and renowned trainer Ashraf Chaudhry also spoke on the occasion.

The workshop discussed various learning experiences starting from idea generation to developing Marketing Plan and from creating brands to delivering experience. Mian Muzaffar Ali said that a little focus on the capacity building of entrepreneurs could do miracles on the both the branding and the marketing front.

He said that at individual level, the private sector was doing the needful for the capacity building of its workforce but to attain the desired goals, the government would have to play a role. Elaborating his point, he said that the government would have to join hands with the private sector to acquire the services of master trainers for the proper training of the workforce available in the country.

The LCCI would continue to conduct such workshops and seminars for creating awareness among the entrepreneurs, he added. Senior Programme Manager CIPE Hammad Siddiqui, while addressing the participants, said that the market reforms through private enterprise were one of the objectives of the CIPE.

He said that for the last over two decades, the CIPE has worked with business leaders and policymakers to build the civic institutions vital to a democratic society. CIPEs key program areas include anti-corruption, advocacy, business associations, corporate governance, democratic governance, access to information, the informal sector and property rights, and women and youth.

He said that the CIPE was launching a radio programme being developed to help women entrepreneurs. He said that the CIPE partners with business associations, think tanks, and other private sector organisations in countries where there is both a need for progress and an opportunity for reform. CIPEs institutional approach to development recognises that changes will not occur overnight and a long-term commitment is needed for reforms to succeed, he said.


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## Neo

*Decline in foreign investment​*
EDITORIAL (March 20 2009): Foreign investment declined by a hefty 34 percent during eight months of the current fiscal year, according to the State Bank of Pakistan. Overall net foreign investment stood at 1.8 billion dollars end February 2009, reflecting a total decline of 931 million dollars from the comparable period last year.

It is indeed unfortunate that the continuing law and order situation from July to February dampened the enthusiasm of even the most die-hard supporter of investing in Pakistan, resulting in a massive outflow of portfolio investment as well as direct foreign investment.

It is also relevant to note that last year, by end February, the election results were already out with Pakistan Peoples Party emerging as the single largest party with the PML (N) the second largest. Investors were convinced at the time that an era of political stability was at hand, a view strengthened by the then ongoing negotiations culminating in the Murree Declaration of 8 March 2008 between the two major parties.

Slowly and inexorably as many analysts would have us believe confrontation between the two major parties has dissipated all expectations of a possible power sharing deal that would allow the PPP to rule with equanimity in the centre with a similar deal for the PML (N) to rule in the Punjab. The fact that matters came to a head finally on 25 February 2009 is not in debate.

It is feared that the politics of confrontation of the 1990s for which the country as well as the two major parties have paid a huge price, is back. And one visible casualty of such politics is with us today: nearly a billion dollars have left the country. It is no wonder, therefore, that the State Bank ascribes political uncertainty as the reason behind the continued outflow of foreign investment.

That the government is fully cognisant of this state of affairs with respect to foreign investment was amply reflected in a recent statement that President Zardari made to visiting Chief Executive Officer of an Italian oil exploration company Paolo Scaroni: Pakistan offers a level playing field and attractive opportunities to foreign investors.

It is also relevant to note that Shah Mehmud Qureshi, Foreign Minister, in a recent press conference insisted that political stability is increasingly vital for improving our macroeconomic indicators in which foreign investment can play a critical role. Shaukat Tarin the Advisor to the Prime Minister on Finance has also repeatedly stated that political stability is an important ingredient for the success of an economic stabilisation programme that Pakistan is currently on under the guidance of the International Monetary Fund (IMF).

Be that as it may, there is evidence to suggest that political stability remains elusive in spite of restoration of deposed judges to 2 November 2007 position. It is to be hoped that in the larger national interest the two largest political parties seek rapprochement in an effort to ensure that the politically challenging economic programme that is under implementation today can have a chance of success


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## Durrani

*US preparing to announce massive aid, investment package for Pakistan*

_Published: March 21, 2009_ 

WASHINGTON (APP) - A high-level US panel reviewing Afghanistan and Pakistan strategy will recommend intense engagement with Pakistan, including a massive, long-term increase in economic aid and several helicopters to fight militants along the Afghan border. 

The Washington Times Friday reported citing a participant in the 60-day review of US policy that President Barack Obama would announce the policy before he leaves for Europe at the end of the month for a NATO summit. You will see intense engagement of Pakistan to keep civilian rule intact, to keep the economy from tanking and to increase assistance for counterinsurgency, especially helicopters, the review participant said on the condition he not be named to avoid pre-empting the president. 

The review participant said the Obama administration supports a bill introduced last year by the then Senator and now Vice-President Joseph R Biden, and Sen. Richard G Lugar of Indiana, the ranking Republican on the Senate Foreign Relations Committee. 

The legislation, now known as Kerry-Lugar measure, calls for expandling annual US nonmilitary aid to Pakistan to $1.5 billion and guaranteeing it for at least five and potentially 10 years. 

As well the Obama administration is also considering a one-time injection of $5 billion into the pakistani economy to prevent it from further deterioration.

The 10-year time frame is intended to address persistent Pakistani fear that the US is interested only in a short-term tactical relationship, said a statement provided by the foreign relations committee. 

Frederick Jones, a spokesman for the Foreign Relations Committee, told the Times that chairman of the committee Senator John Kerry, a Massachusetts Democrat, intends to reintroduce the legislation soon. 

Another element of the strategy is bolstering Pakistan's paramilitary forces. The participant in the Afghanistan-Pakistan review said it makes economic as well as political sense to build a bigger FC force because it costs about $ 12,000 a year to support one FC soldier compared with $ 250,000 a year for an American soldier. 

There is also a need for other types of infrastructure development, the official said, including health care, education and security, all of these factors will be taken into consideration when finalizing the bill

_The Nation | The Nation is the most credible of English Newspapers in Pakistan._


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## Neo

*China Mobile offers to lay fibre optic cable ​* 
Saturday, March 21, 2009

LAHORE: China Mobile Communication Corporation (CMCC) has offered to lay a fibre optic cable from Karakoram to Gwadar. 

The offer was made by a Chinese delegation which met Adviser to the PM on Interior Affairs Rehman Malik with a condition that it be provided conducive investment environment. 

Sources privy to the meeting held in Islamabad told The News that the Chinese delegation was led by Co-Chairman CMCC Zhang Chunjiang and comprised other members and Chinese Ambassador to Pakistan Luo Zhaohui. 

Sources further revealed the head of the delegation took up the long-standing LDI (long-distance international) licence issue with the adviser. 

Chunjiang pointed out that despite getting approval from the prime minister and the cabinet and clear directives from the ministry of information & technology, the PTA has refused to issue LDI licence to China Mobile. 

Such actions from the side of Pakistani authority of refusing could limit investment in this sector of the industry, they said. They further revealed that the delegation mentioned that due to non-issuance of LDI licence, Zong has been paying a huge amount for using other network for international roaming. 

CMCC Co-Chairman had also mentioned that one month back Federal Minister for Investment, Senator Waqar Ahmed Khan, also gave assurance for issuance of LDI licenses within two weeks but so far no action was made and the issue of getting LDI license remained unsolved. 

The meeting has also informed about the China Mobile future plans to invest another $500 million in the countrys economy during 2009 in the areas of building new network capacity of more than 20 million customer base and other infrastructure. The delegation had pointed out that the company had so far invested $1.66 billion in Pakistan and has generated more than 1,700 direct and over 40,000 indirect jobs in the country. Similarly, China mobile had paid $106 million in direct taxation and paid another $91.5 million under various heads to the government. The delegation asked the adviser for providing a level playing field to all the stakeholders of the cellular industry.


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## Neo

*Policy wont help raise power generation for five years: industry ​* 
Saturday, March 21, 2009

KARACHI: After months of delay, the government on Friday finally announced Petroleum Exploration and Production Policy 2009 in a desperate attempt to deal with severe energy crisis, which has angered the public and reduced industrial output.

The policy, which seeks to increase indigenous production of gas by offering better price to exploration and production companies, has come out at a time when countrywide power breakdowns have compounded the miseries of citizens, industry people said.

About 50 blocks will be auctioned under the new policy in the next few days but that will not increase much-needed fuel supplies for more electricity generation for at least five years, they said.

The continuing militant insurgency in Balochistan might also discourage companies from drilling in the risk-prone but the most prospective southern province, a senior government official said.

Widening gap in supply and demand of gas was in part responsible for the power crisis last year when the country had to spend billions of dollars to import fuel oil for running its thermal power plants.

Shortfall of gas has reached such a proportion that industry people say will be impossible to meet the existing and latent demand without import.

Deficit is so severe that exploration within the country alone will not be able to meet it, chief executive of one of the E&P firms told The News. Pakistan must aggressively pursue pipeline options to add around three to four billion cubic feet per day for its use.

No reliable figures are available to ascertain the exact shortage of gas but some estimates indicate that existing demand has exceeded supply of 3.9 bcfd by 20 per cent.

Natural gas meets over 47 per cent energy needs of the country, being the most used fuel in the industrial, power and domestic sectors but shrinking supply has now started to deprive even existing consumers.

The only initiative to secure additional supplies that has moved forward beyond closed-door official meetings is the Mashal LNG import project, launched by President Musharrafs government. 

Incumbent government needs to be very cautious in its approach to the LNG project as it is the only option left for meeting our energy needs in the short term, an official close to the project said. Hopefully, work on it will start by year-end.

A consortium led by 4gas is in the process of finalising technical details related to the project, which will supplement gas supply by 500mmcfd (1000mmcfd = 1BCFD) upon completion.

He said it was a wishful thinking on the part of politicians to believe that a gas pipeline project with Iran will materialise anytime soon. It is not even clear where the funding for the multi-billion-dollar pipeline will come from.

Incentives in 2009 policy: Notwithstanding the fact that the petroleum policy will not be able to address immediate energy needs of the country, it does offer incentives for the industry, aiming to enhance production in coming years.

Additional Secretary Petroleum G A Sabri said complicated and lengthy process of awarding lease areas for exploration work in previous policies has been done away with in the new one.

Producers will also get a better price for gas, he said, adding on average it will be approximately one dollar over existing price.


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## Neo

*Pak agro productivity better than Indias ​* 
Saturday, March 21, 2009

LAHORE: Though Pakistan lags far behind in crop productivity compared with global best, yet the impression about better agricultural performance by India is far from reality as credible statistics reveal that productivity of most crops including wheat is higher in Pakistan.

Statistics of the Food and Agriculture Organisation reveal that wheat yield in Pakistan is 2.76 tonnes per hectare compared with 2.67 tonnes per hectare in India. The data shows that in 1980 India was obtaining 1.43 tonnes of wheat per hectare while Pakistans wheat productivity per hectare was 1.56 tonnes.

During the green revolution in India in the 1990s, wheat productivity increased to 2.21 tonnes per hectare while Pakistans productivity was 1.82 tonnes. Indian wheat productivity increased to 2.77 tonnes per hectare in 2000 against Pakistans 2.49 tonnes. Thereafter, Pakistani farmers started catching up with the Indians and by 2007 their per hectare wheat production rose to 2.76 tonnes while Indian productivity fell to 2.67 tonnes.

Experts attribute the rise in wheat productivity mainly to the hard work of the farmers than government policies. In fact, state research institutes have failed to develop any new wheat variety during the past three decades.

The farmers braved soil erosion and scarcity of water through their own efforts and the government provided them no subsidy. Even the subsidy granted on fertiliser in the past two years has not been passed on to the farmers. The challenge to survive in open market economy forced the farmers to work hard and adopt techniques to increase production.

Agricultural experts point out that Indian farmers on the other hand performed well in the initial period of huge subsidies introduced in the 1990s but thereafter became lethargic as subsidies compensated for static production.

Experts, however, say that the relatively better performance of Pakistan in wheat production should not make the planners complacent.

Chinas wheat productivity of 1.89 tonnes per hectare was slightly better than Pakistans in 1980 but Chinese farmers had increased the productivity by 2.5 times to 4.78 tonnes per hectare by 2007.

The first goal of agricultural planners in Pakistan, the experts say, is to achieve what Chinese have done with improved varieties of wheat seed. Even by doing so, Pakistan could almost double its wheat production. The next aim should be to reach the best global productivity level. For example, Germany, France and the United Kingdom get 7.1, 6.2 and 7.3 tonnes per hectare respectively.

In other crops, India obtains 3.2 tonnes of paddy from one hectare compared to Pakistans 3.19 tonnes. China harvests 6.34 tonnes of paddy from the same area of land, which is two times that of both India and Pakistan. Australia is the global best as it obtains 8.1 tonnes of paddy per hectare.

Pakistani farmers obtain 3.34 tonnes of maize from one hectare, India gets 2.15 tonnes, China 5.41 per tonnes while the US, which is global leader in this crop, obtains 9.48 tonnes per hectare.

Garlic production in Pakistan from one hectare averages 8.28 tonnes per hectare while Indian farmers get only 4.38 tonnes. China harvests 17.4 tonnes of garlic per hectare while the global leader in this crop is United States that produces 18.39 tonnes garlic per hectare.

The onion production in Pakistan is 14 tonnes per hectare while it is 13.2 tonnes in India. China obtains 20.53 tonnes onions per hectare while the global best is United States that obtains 55.88 tonnes per hectare. 

The average yield of potatoes in Pakistan is 198.8 tonnes per hectare while it is 164.24 tonnes in India. France is the global best as it produces 423 tonnes potatoes per hectare. 

Experts point out that by controlling soil erosion, efficient use of water and zero tilling, laser levelling of farms Pakistan could achieve the global best agricultural productivity.


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## Neo

*Power deficit of 2,500MW: UPS sales increase by 30% ​*
KARACHI: The power supply deficit of around 2,500 megawatt during March 2009 has boosted the sales of Uninterrupted Power Supply (UPS) by 30 percent, traders said Friday.

Only during the 20 days of March 2009, an increase of 10 percent has been witnessed in the sales as compared with the same period last year in March 2008, they added.

Due to the proposed higher power tariff and long hours of load shedding the domestic and commercial consumers prefer UPS rather than power generators.

During May and November 2009, the power deficit will touch around 5000 megawatt, they added.

A wholesaler and member of M A Jinnah Road Electronics Market, A Aziz said the price of a UPS to light up two tube lights and two ceiling fans six hours, having 140 ampere per hour battery capacity now costs around Rs 19,500, while earlier it was available for Rs 15,500. 

Despite an increase in the prices of UPS and imposition of regulatory duty on imports, the customers still prefer to purchase according to size of the power requirement, he said.

The average price also witnessed an increase of around Rs 3,500 as the manufacturers have increased their price on the pretext of higher production cost due to higher imports of accessories. 

He said despite increase in prices, sales of UPS with a capacity of running two fans and two lights have gone up around 30 percent.

He said the commercial consumers prefer the locally manufactured UPS, but after an increase of Rs 4,000 to Rs 5,000 per unit on different ampere capacity, the sale of four fans and four lights has increased around 20 percent as compared to same period last year.

Aziz said the dealers also take fitting charges with a uniform rate of Rs 1,000 while the consumer has to arrange a battery depending on ampere power according to his energy needs. 

He said battery prices vary depending on its power from around Rs 9,500 to Rs 14,500, which was earlier available at Rs 8,500 and above.


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## Neo

*Balochistan, NWFP Trust Fund to be set up: issues for Friends of Pakistan conference considered ​* 
ISLAMABAD (March 21 2009): The government has decided to set up Balochistan and NWFP Trust Fund for which Pakistan would seek assistance from Friends of Pakistan group in its conference in Japan on April 17. The decision was taken in a meeting jointly chaired by President Asif Ali Zardari and Prime Minister Yousuf Raza Gilani in Presidency here on Friday.

The meeting reviewed progress on decisions taken in a previous meeting on the preparatory work for the Friends of Democratic Pakistan. Other areas in which the international assistance would be sought include poverty alleviation through social protection, improving the state of national security, human resource development in the areas of education, health and population welfare, food security, infrastructure development.

Foreign Minister Shah Mehmood Qureshi, Advisor Finance Shaukat Tarin, Rehman Malik, Advisor to Prime Minister on Interior, Kamal Majidullah, Advisor to PM for Water Resources, Secretary General Salman Farooqi, Hina Rabbani Khar, Foreign Secretary Salman Bashir, Senator Sughra Imam, Kamal Shah, Secretary, Interior, Shakil Durrani, Chairman, Wapda and other senior officials of the relevant ministries participated in the meeting.

Shaukat Tarin briefed the meeting about the areas that would be brought to the attention of the international community needing special attention of the Friends of Pakistan Group.

Both the President and the Prime Minister underlined the need for updating the brief on Pakistans need for international assistance to make Pakistan economically more vibrant which can ensure durable peace and stability in the region. The President appreciated the efforts made by the team in preparing the document and said that it was an important component in the strategy to fight militants.


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## Neo

* Services sector suffers $2.7 billion deficit ​*
KARACHI (March 21 2009): The country had to face a deficit of 2.7 billion dollars in services trade during eight months (July-Feb) of the current fiscal year (2008-09) mainly due to high payments on account of transportation, travels and government service. However, the deficit was about 36 percent less than in the same period of last fiscal year, mainly due to the high exports and low imports.

Economists said that declining services sector deficit would help to further curtail the current account deficit, which is a major challenge for the policy markers. They said that overall performance of services is better than previous years, as exports are rising and imports are on decline, and economy needs to continue same trend in the near future.

Due to the huge services imports, the government was also compelled to spend more foreign exchange. However, with some improvement in services trade, the exchange rate would be stable in the domestic market. The State Bank of Pakistan (SBP) on Friday said that the countrys services sector performance had become better, as overall services imports and deficit were on decline, while exports of service sector were on the rise during the current fiscal year.

Services sector exports in eight months stood at 2.382 billion dollars against imports of 5.095 billion dollars, depicting a deficit of 2.713 billion dollars during the period under review. However, this is much lower than 4.237 billion dollars of the same period of the last fiscal year.

Exports of services sector surged by 13.15 percent to 2.832 billion dollars over 2.105 billion dollars of the same period of last fiscal year. The services sector imports plunged by 20 percent to 5.095 billion dollars from 6.342 billion dollar of corresponding period of last fiscal year.

Transport sector largely contributed to overall deficit with 1.625 billion dollars from 794 million dollar exports and 2.419 billion dollar imports. Meanwhile, services deficit in February 2009 stood at 248 million dollars with 469 million dollars imports and 221 million dollars exports.

Pakistan earned 148 million dollars on account of travel services, 62 million dollars in communication, 23 million dollars in insurance, and 39 million dollar from financial sector eight months.

Travel payments stood at 823 million dollars, communication 93 million dollars, construction 47 million dollars, insurance 87 million dollars, financial sector 135 million dollars, and computer and information sector imports stood at 74 million dollars during this period. Similarly, royalties and licence fee payments reached 67 million dollars against earnings of 10 million dollars and government services payments stood at 204 million dollars over the receipts of 825 million dollars during eight months.


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## Neo

*Pakistan lobbying for three fold increase in IMF quota ​* 
ISLAMABAD (March 21 2009): In an effort to increase its quota three fold in the International Monetary Fund (IMF), Pakistan has started lobbying the IMF board and management with the support of the US and the European Union (EU). Reliable sources told Business Recorder here on Friday that Special Lending Facility under the Stand-By Arrangements from IMF was provided to Pakistan, Ukraine and Hungary.

"Hungary and Ukraine, after getting the first tranche of the loan from the IMF have failed to meet the requirements of the Fund for the second tranche. Now these two countries are not eligible to get further assistance from the IMF. So, the Fund can increase the quota for Pakistan from five to eight times, but this depends on the meeting of the Board of Governors of IMF that will be held in April," the sources disclosed.

They further said: "That is why Pakistan has started lobbying to increase quota with the support of America and the EU." In April, the IMF Board of Governors would decide whether to increase the quota of Pakistan from five to eight times or not.

The Board of Governors is the highest decision-making body of the IMF and consists of one governor and one alternate governor, appointed by each member country. A members quota determines its maximum financial commitment to the IMF and its voting power, and has a bearing on its access to the IMF financing. There are three ways to increase member quotas for the IMF - equi-proportional, ad hoc and selective quota increases.

An equi-proportional increases, as the name suggests, leaves the member quota relativity unchanged. The equi-proportional increase has been the most commonly used, accounting for over 70 percent of quota increases. An ad hoc increase involves increasing one members quota relative to all other members of the IMF. The ad hoc method has been used on special occasions such as the reunification of Hong Kong with Mainland China, to provide China with a larger quota.

A selective increase in quotas involves an absolute increase in quotas, but with a select group of members, having their quota shares increased at the expense of other members. For example, this method could be used to increase Asian countries quota shares, at the expense of European countries shares.

"The IMF has a special quota under the Poverty Reduction and Growth Facility (PRGF) that is the IMFs low-interest lending facility for low-income countries. "Loans under the PRGF carry an annual interest rate of 0.5 percent, while the special lending facility of 7.6 billion dollars, the one Pakistan received in November 2008 under Stand-By Arrangements, carry a relatively high interest rate", said the sources.

"Pakistan was forced to get loan under SDR arrangements because when the government decided to knock at the door of IMF, the quota of the Fund under PRGF for 2008 had been exhausted," the sources disclosed. Three-time increase in the Special Drawing Rights (SDR) quota means that Pakistan can get an additional 4.5 billion dollars from the IMF. Pakistans SDR in the IMF stands at 1.3 billion dollars and by translating into US dollars its value comes to 1.5 billion dollars.

Under the SBA programme, the IMF is already providing its maximum funding in the shape of five times of SDR quota that is equal to 7.6 billion dollars. According to a recent financial statement of IMF as at January 31, 2009, in descending order, Turkey, Hungary, Ukraine, Pakistan and Iceland are the five largest users of credit. The report shows that Pakistan has not been provided any loan under PRGF despite the fact that it is a low-income country with poor macroeconomic indicators.


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## Neo

*Pro-growth strategy, development agenda foresee major investments: ADB releases Country Environment Analysis​* 
FAISALABAD (March 21 2009): Pakistans overall record of dealing with the environmental issues, underlines several institutional and management gaps marred by capacity constraints in the public sector, the Asian Development Bank (ADB) experts said. According to Country Environment Analysis, released by the ADB on Friday.

Pakistans present pro-growth strategy and its development agenda foresee major investments in large infrastructure projects including the priority areas of urban development, energy, power, roads, water and irrigation. The potential environment challenges associated with the new policy accentuate the need to address the existing environmental issues at the outset to support the sustained growth in the long run.

Based on the assessment of the state of environment and in view of the future policy objectives of Pakistan, the study identifies some priority areas for investment. Commenting on the Access to basic sanitation and safe water for all, the ADB experts stated that the rapid urbanisation in Pakistan over the years, has resulted in a higher demand for water and sanitation services.

This can be addressed by developing capacities of the local water and sanitation agencies in major cities and supported by province-based regulatory frameworks, the analysis said. Promoting public-private partnerships for water supply and sanitation would help improve and maintain environmental quality.

Sector wide reforms need to be introduced to achieve required level of energy efficiency in the country by addressing weak public sector capacity to (i) implement energy conservation programmes, (ii) to integrate environmental considerations into sector plans, (ii) to establish and regulate urban mass transit systems and devise strategic regulations for the transport sector. In addition, advocacy programmes could help prioritise mass transit options, they added.

The ADB experts further said that urban air quality can be improved through reduction in vehicular emissions by developing national and city specific transport polices for improved traffic management, implementation of emission control regulations and monitoring. The implementation capacities of federal and provincial agencies need to be strengthened for operational enforcement of environmental quality standards (NEQS).

To improve agriculture productivity, ADB experts mentioned that specific measures to achieve improved agriculture productivity per unit of water needs (i) introduction of water conservation strategies; (ii) research programmes for developing crop varieties that are resilient to the looming heat stress factors associated with prospective climate change; and (ii) revival of institutional processes such as National Commission on Agriculture supported by wide-ranging consultations as an input to a national agriculture policy.

For Public-Private partnerships for cleaner production and the treatment of industrial effluents, the ADB experts said that the successful experience of selected industries in promoting cleaner production and effluent treatment needs to be scaled up and underscores the need for building public sector support to private sector-driven initiatives.

Further, high-priority measures should include demonstrating the economic returns to cleaner production, as well as above mentioned operationalisation of NEQS. In addition, investment is required for institutional development and organisational strengthening and human capacity building in the priority environment areas to fill existing gaps, the ADB analysis suggested.

According to ADB report, in recent years Pakistan has experienced impressive GDP growth accompanied by a sharp decline in poverty. However, human wellbeing is critically dependent on the continued availability of essential ecological services and natural resources.

Furthermore, Pakistans environment and natural resources are increasingly polluted and under stress. Pressing environmental concerns facing the country relate broadly to the management of scarce natural resources (green issues), pollution and waste management (brown) and issues pertaining to the potential vulnerabilities to natural hazards and climate change.

In addition, Pakistans natural resources are increasingly under stress due to a rapid population growth and environmentally unsustainable practices. Renewable fresh water resources are fast depleting pushing Pakistan into the category of water stressed countries, the report mentioned.


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## Durrani

*US, Japan, China pledge support for FoP meeting*

WASHINGTON: The United States, China and Japan have vowed their support for next months Friends of Pakistan (FoP) meeting in Tokyo, where major economic powers are expected to back the South Asian countrys economic development programmes.

In their separate meetings with Pakistans Ambassador to the US Hussain Haqqani, Chinese and Japanese envoys based in Washington and top US officials expressed their willingness to shore up Pakistans initiatives for its speedy economic progress. 

The meeting, scheduled to take place on April 17, would be attended by leaders and representatives from several Asian and Western industrialised and oil-rich Gulf nations.

Haqqani held meetings with US State Department officials, Chinese Ambassador to the US Zhou Wenzhong and Japans Ambassador to the US Ichiro Fujisaki to coordinate efforts towards a productive outcome of the conference. In addition, the Pakistani diplomat had met with US Special Representative Richard Holbrooke and visiting Japanese prime ministers special envoy over the last week. President Zardari and Prime Minister Yousuf Raza Gilani believed international assistance would not only help meet economic development needs of the people but also serve as a bulwark against violent extremism afflicting its border regions. app


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## Neo

*Savings schemes attract over Rs130bn ​* 
Sunday, March 22, 2009

ISLAMABAD: The Central Directorate of National Savings (CDNS) has crossed the Rs130 billion mark by luring investments in savings schemes till March 20 against a total target of Rs150 billion for financial year 2008-09.

Official sources confirmed to The News on Saturday that the finance ministry had set a target of Rs150 billion in investments in various schemes offered by the National Savings Scheme (NSS).

The target was set on the basis of introducing three new schemes including short-term financing certificate as well as a paper offering an attractive rate of profit to overseas Pakistanis sending remittances home.

CDNS has crossed the Rs130 billion mark and is expected to achieve s target of Rs150 billion by the first week of next month. The finance ministry expects CDNS to hit Rs170 to Rs180 billion by the end of June, an official source said.

When newly appointed Finance Secretary Salman Siddique was contacted for comments on Saturday, he said that the government was all set to launch much-needed restructuring of CDNS in order to equip it with latest technology. The finance ministry will take up the issue of CDNS restructuring by next week in a high-level meeting, he said.

However, official sources in the finance ministry said that the government has lured investments of over Rs130 billion in old schemes till March 20. The amount included investments from major public sector institutions as well as the corporate sector, which deposited their pension and other funds.

Citing examples, sources said that in the recent past some public sector institutions had invested various funds such as pensions and workers welfare fund with private banks but one such bank collapsed, causing loss of money to the employees.

Public sector institutions such as Oil and Gas Development Company, Pakistan Mineral Development Company and many others have invested billions of rupees in savings schemes being offered by the CDNS, the source added.

In CDNS schemes there is a government guarantee, which helps public sector institutions as well as corporate giants to confidently deposit their money with them, an official said.

On the restructuring process of CDNS, sources said that the finance ministry will submit PC-1 before the Planning Commission in order to achieve desired changes in the working of the NSS office located at every nook and corner of the country.

The main objective of the restructuring will be to introduce computerised technology by connecting all its offices with each other. It is expected that PC-1 will be approved by relevant forums of the PC within the current fiscal year, added the official.

When official sources were asked about undue delays in approving three new schemes for the NSS, they said that a conflict of interest definitely existed, because CDNS attracting more firms resulted into narrowing down the space of commercial banks and those who are at the helm of affairs are trying to protect the interests of the banking sector. MH


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## Neo

*Foreign banks sign 425MW power project deal ​* 
Sunday, March 22, 2009

BEIJING: A foreign banks consortium comprising BNP Paribas, HSBC Bank Plc and The Export-Import Bank of China signed a Sinosure Buyer Credit Facility Agreement of US$150.151 million with Northern Power Generation Company Ltd for the construction of 425 MW combined cycle power project at Nandipur, Ijaz A Babar, Finance Director of the company told APP on Saturday.

The CIC France is also a part of consortium through a participation agreement with BNP Paribas, France. Northern Power Generation Company Ltd (NPGCL) is the biggest thermal generation company operating under the overall management of PEPCO.

The agreement was signed with the consortium comprising world top class banks like The Export-Import Bank of China, BNP-Paribas France, HSBC Bank plc Paris Branch and CIC France on Thursday, he said.

NPGCL is constructing a 425 MW Combined Cycle Power Plant at Nandipur, near Gujranwala with EPC cost of $329 million. The main EPC contractor is a leading Chinese company, Dongfang Electric Corporation Ltd with sub-contractor G E, France. The Credit facility is covered by China Export and Credit Insurance Corporation.

Ijaz A. Babar talking to APP said that earlier, A 

Foreign Banks Consortium consisting of BNP-Paribas, France, HSBC Bank plc Paris branch and CIC France had signed a Euro 68.97 million Coface buyer credit facility agreement on October 3, last year for the project. BNP-Paribas by signing both the credit facilities has now also fulfilled its commitment as initial mandated lead arranger made for the project with the Government of Pakistan, Ijaz said.

Appreciating the financial deal, Ijaz said that despite the fact that the world is passing through grave economic crisis, these banks have fulfilled their commitments which exhibited confidence that they have reposed on the strong fundamentals of Pakistans economy.

Ijaz said that the agreement will go a long way in improving the financing arrangements for the other projects in the pipeline by WAPDA/PEPCOs corporatised entities namely 425 MW Chichokimallian, 700-800 MW Guddu Power Project and 969 MW Nelum Jehlum Hydro Power Project with due support from Chinese and European banks.

Muhammad Rafiq Butt, Chief Executive Officer and Ijaz A Babar, Finance Director, signed on behalf of Northern Power Generation Company, whereas Francois Cristofari, Chief Executive Officer and Gerard Lagouarde, Head of Export Finance (Middle East/Africa signed on behalf of BNP Paribas (China) Ltd. Amongst other signatories to the agreement were Zhu Li, Deputy General Manager of The Export-Import Bank of China and Simon Lee, Director Middle East and South Asia, of HSBC Bank plc. Jacques Vincent, First Vice President specially visited to sign the participation agreement with BNP Paribas.

The signing ceremony was attended by Abdul Salik Khan, Deputy Head of Mission, Sardar Aminullah Khan, Minister (Economic), and Naeem Khan, Commercial Counselor. 

On the occasion, Salik Khan while expressing his views, said that the financial close of such an important project at this point reflects the confidence of financial institutions on the strong economic indicators and policies of the present Government of Pakistan and congratulated all the participants for this success.


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## Neo

*Country to face power shortage of 2,500 MW till 31st ​* 
Sunday, March 22, 2009

ISLAMABAD: The country will face up to 2,500 MW power shortfall at least till March 31 owing to two reasons, substantial reduction in hydropower generation and highly increased demand with the start of the summer.

At present, the hydropower generation is 1,000 MW against the installed capacity of nearly 7,000 MW from Tarbela and Mangla dams and Ghazi Brotha Hydropower project,î well-placed official sources in the power sector revealed to The News on Saturday. 

The state of power suspension from six to eight hours every day, these sources confirmed, would continue in the whole month and a sigh of relief for people is expected in the next month when provincesí water requirement would increase with the start of the Kharif season. 

ìWhat we have planned is clear that the electricity situation would prevail in the month as current demand stands at 12,500 MW against the availability of 10,000 MW, a gap of 2,500 MW,î say Pakistan Electric Power Company (Pepco) officials. 

The MD (EM&C) Tahir Basharat Cheema, when contacted, confirmed that electricity shortage is close to 2,500 MW mainly due to state of water releases from dams and drop in their heights. 

As electricity demand is continuing to surge, the Indus River System Authority (Irsa) has accepted the Water and Power Development Authorityís (Wapda) request not to bring the water discharge from presently 5,000 cusecs per day to zero from Mangla dam. Tarbela dam is at the dead level position of 1,369 feet height whereas the Mangla damís level is at 1,085 feet against its dead level of 1,040 feet. The water discharge from Tarbela is 25,000 cusecs daily on the basis of run of the river and 5,000 cusecs per day from Mangla dam. ìThe power generation from Tarbela dam has come down considerably despite 25,000 cusecs per day water discharge as it is because of reduced speed in water outflow,î the sources said. The power breakdown in the peak hours is 2,500 MW and in the lean hours (night) 1,500 MW following Punjab and Sindhís decreased water withdrawal demands, according to the relevant officials. 

Cheema maintained that the cloudy weather enabled the Pepco to bring the demand and availability at the similar position last Thursday evening and no power suspension took place on that day. 

Irsa technical committee and advisory committee meetings are expected to be held on March 25 and March 31 to take decisions to chalk out Kharif 2009 water distribution plan according to provincial recommendations. 

Cheema, in response to a question, said the Pepco hopes that the target of ending load-shedding till December 2009 in on course. The projects of adding 3,500 MW power in the national grid are in the pipeline to complete within this calendar. Asked whether same position can prevail in peak summer (June-July), he admitted that the demand would increase in this period but the new projects would also come to cope with the situation.


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## Neo

*Fast track rental power projects: Tariff bids of 8 firms opened for 1,021 MW​*
ISLAMABAD: Eight bidders have shown keen interest in the fast track rental power projects of 1,021 megawatts (MW) and demanded of the government that the tariff should range from 14.624 US cents per kWh to 18.9655 cents per kWh.

The received tariff bids will now be placed before the Bids Evaluation Committee for formal decision and the qualified bidders would be notified after approval of the tariffs by the government.

The financial proposals of bids received for fast track rental power projects will be commissioned by December 2009. These bids had been opened in a meeting held at Private Power and Infrastructure Board (PPIB), chaired by the Managing Director PPIB Fayyaz Elahi. 

All directors of PPIB, the responsive bidders and members of the evaluation committee as per 2005 GoP Tariff Guidelines also attended the meeting. The bids evaluation committee had earlier declared eight bids: 73.92 MW AVS (Pvt) Ltd, a Tapal Group Project, 138 MW Intermash-Stolitsa of Russia, 170 MW MHK Energy (Pvt) Ltd, 63.81 MW Premier Energy (Pvt) Ltd, 220 MW Reshma Power Generation Ltd, 170 MW Ruba Energy Pakistan (Pvt) Ltd, 85 MW Sialkot Rental Power, and 100 MW Trimax Power (Pvt) Ltd, as responsive after evaluation of envelope-I (Technical/Financial qualification).

The readout tariff of AVS (Pvt) Ltd a Tapal Group Project is US cents 13.5878 cents per kWh, Intermash-Stolitsa of Russia is 18.9655 cents per kWh, MHK Energy (Pvt) Ltd is 13.9615 cents per kWh, Premier Energy (Pvt) Ltd is 13.264 cents per kWh, Reshma Power Generation Ltd is 13.7539 cents per kWh, Ruba Energy Pakistan (Pvt) Ltd is 13.8557 cents per kWh, Sialkot Rental Power is 13.423 cents per kWh and Trimax Power (Pvt) Ltd is 14.0276 cents per kWh. The term of the tariff for all these projects is 60-month each.
In order to address the immediate power shortfall in the country, the government approved its fast track rental power projects initiative, which was advertised on December 23, 2008 on the basis of international competitive bidding. Ten bids for establishing fast track rental power project of 1191 MW cumulative power generation capacity were received within the bids submission deadline, and the technical and financial qualifications envelopes were opened on February 16, 2009 in the presence of Bids Evaluation Committee, senior officials of the PPIB and bidders. The Bids Evaluation Committee has been mandated to process these bids in a timely manner so as to issue Letters of Award to the successful bidders by end April 2009. These rental power projects were expected to start their operation by end 2009.


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## Neo

*PC for slashing PSDP by Rs 108.9 billion​* 
ISLAMABAD (March 22 2009): All ministries may face a total cut of Rs 108.9 billion combined in Public Sector Development Programme (PSDP) 2008-09 due to financial constraints, well informed sources revealed to Business Recorder on Saturday.

The fiscal deficit was targeted to decline by nearly half in the current fiscal year - from a high of 7.4 percent last year to 4.2 percent of gross domestic product (GDP) in current financial year as stipulated in the letter of intent (LoI), submitted by the government of Pakistan to the International Monetary Fund (IMF) as a pre-requisite for the approval of the 7.6 billion-dollar standby arrangement.

However revised estimates place the deficit at 4.3 percent of the GDP that would be further reduced to 3.3 percent of the GDP during the next financial year 2009-10. The government has also committed to IMF in the LoI to reduce domestically-financed development spending by about one percent of the GDP through better project prioritisation.

The sources said that the Planning Commission (PC) had moved a summary to the Prime Minister Secretariat, seeking approval to slash the PSDP by Rs 108.9 billion under rationalisation programme. The said reduction also includes dropping 140 locally funded projects worth rupees seven billion in different sectors to reduce expenditures.

Earlier, the government had announced to make througforward adjustment of Rs 100 billion spending in the PSDP, but now the Planning Commission had moved a summary, proposing Rs 108.9 billion cut in the PSDP to the Prime Minister Secretariat due to financial crunch. Total PSDP volume for the current financial year is Rs 371 billion that will be reduced to Rs 262.1 billion if the Prime Minister accords his approval.

The government has already released Rs 71 billion in the first six months (July-December) of the current financial year against Rs 132.6 billion in corresponding period of last year. The sources said that the Finance Ministry had stopped releasing the funds for the development projects pending the decision of the Prime Minister regarding the rationalisation of the projects.

The Finance Ministry has also indicated its inability to fund ongoing projects and has been forced to slash 35 percent in funds releases during the second half of the current financial year. The concerned ministries have been directed to identify the projects for the purpose of reduction in funds releases. The sources said that the projects near completion would not face a freeze in release of funds.

The Planning Commission has monitored 513 projects so far and expects timely completion of only 44 projects, including five projects in infrastructure, nine projects in social sector and 30 other projects. The Planning Commission has assessed that 325 projects would face delay in implementation for more than one year that include 82 projects in infrastructure, 173 projects in social sector and 70 projects in other sectors.

As many as 102 projects would face one year delay. They include five projects in infrastructure, 34 in social sector and 63 projects in other sectors. As many as 42 projects are at initial stage.

As many as 170 projects are facing delay due to lack of management capacity and 73 projects for delay in fund releases. Contractors inefficiency is causing delay in implementation of 60 projects - 16 projects delay attributed to land acquisition problems, nine projects due to poor law and order situation, eight projects due to lack of co-ordination between the Federal and provincial governments and five projects are facing delay due to loan disbursement.

The Planning Commission has already excluded 120 projects from monitoring network and has revised monitoring targets from 705 projects to 580 projects for the current financial year. The Commission reduced projects from 205 to 150 for monitoring in infrastructure sector, 300 to 250 projects in social sector, and 300 to 250 projects in other sectors. The monitoring of the projects assists in facilitating implementation of the projects.


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## Neo

*EoIs invited for exploration licences​* 
ISLAMABAD (March 22 2009): The Ministry of Petroleum and Natural Resources has invited expressions of interest (EoIs) for grant of petroleum exploration rights (exploration licences) for 53 blocks in the country. After the unveiling of Petroleum (Exploration and Production) Policy 2009, the ministry has invited all the interested companies to submit EoIs for grant of exploration rights.

The blocks are: 2769-16 (Mari East), 3066-5 (Bostan), 3068-6 (Killa Saifaullah), 2771-3 (Khangarh West), 2967-3 (Quetta South), 2764-3 (Palantak), 3170-6 (DI Khan), 2568-19 (Digri), 3272-16 (Lilla), 3072-7 (Okara), 2564-3 (Parkini Block B), 2569-3 (Sanghar South), 2866-3 (Khuzdar North), 2763-4 (Kharan West), 3372-23 (Hisal), 3371-13 (Peshawar), 3270-7 (Zindan) and 3371-15 (Dhoke Sultan).


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## Neo

*US, China and Japan pledge support for Friends of Pakistan moot​*
WASHINGTON (March 22 2009): The United States, China and Japan have vowed their support for next months Friends of Pakistan meeting in Tokyo, where major economic powers are expected to back the South Asian countrys economic development programmes.

In their separate meetings with Pakistans Ambassador to the United States Husain Haqqani, the chief Chinese and Japanese envoys based in Washington and top US officials expressed their willingness to shore up Pakistans initiatives for its speedy economic progress.

The meeting, taking place on April 17 in Tokyo, would be attended by leaders and representatives from several Asian and Western industrialised and oil-rich Gulf nations. Haqqani held meetings with the US State Department officials, Chinese Ambassador to US Zhou Wenzhong and Japanese Ambassador to US Ichiro Fujisaki to co-ordinate efforts towards a productive outcome of the conference.

In addition, the Pakistani diplomat had meetings with US Special Representative Richard Holbrooke and visiting Japanese Prime Ministers special envoy over the last week. The US diplomats have also been meeting separately with envoys of other countries toward the objective. US Secretary of State Hillary Clinton is expected to represent Washington at the meeting, which is likely to be chaired by President Asif Ali Zardari.

Top Pakistani democratic leaders, President Zardari and Prime Minister Yusaf Raza Gilani believe that international assistance will not only help meet economic development of the people but also serve as a bulwark against violent extremism afflicting its border regions. The economic stability of Pakistan - the frontline partner against violent extremism - is considered key to regional peace and stability.


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## Neo

*Value-added products: TDAP develops 12 projects to augment export​* 
KARACHI (March 22 2009): The government has approved 12 new projects which the Trade Development Authority of Pakistan (TDAP) has developed with a view to augmenting the export of value-added products.

The Export Development Fund Board (EDFB) has approved all 12 projects of TDAP which include College of Fashion and Design-Karachi, Dazzle Park - Karachi, Pack House & Cold Storage - Multan and Nawabshah, Processing Institute - Khairpur, Carpet Training Institute - Quetta, Expansion & upgradation of Gems & Geological Institute of Pakistan - Peshawar, Agro food technology Institute - Lahore, Institute of Leather Technology - Lahore, Institute of Marble Technology - Karachi and Peshawar, Carpets & Crafts training institute - Hala, Expo Center - Multan, Pakistan Packaging Institute - Karachi.

This was stated by TDAP Chief Executive Syed Mohibullah Shah at a press conference held at the authoritys main office on Saturday. He said that EDFB has given approval of these projects in its 54th meeting held on March 20, 2009. He pointed out that these projects have been developed as part of new initiatives of the authority in pursuance of its new export strategy, which is aimed at increasing the countrys exports particularly the share of value-added products.

Shah said that these projects have been identified after an intense research and study carried out in the export-oriented sectors. About funding to establish these institutes, he said that initially EDF will be utilised to undertake work on them, however afterwards finance will be acquired from Public Sector Development Program (PSDP). He hoped that these projects will be functioning fully in next four to five years.


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## KaranArjun

*Tourist plunge exacerbates Pakistan woes*

Mar 11, 2009

KARACHI (AFP)  Fida Hussain, 52, was once a frequent visitor to Pakistan's scenic northwest, driving north into the mountains every time he flew over from the United States. But not any more.

"I won't go to Swat or any other place in the area as the Taliban rule there now and no one is guaranteed safety," Hussain said.

Thousands of fighters loyal to firebrand Taliban commander Maulana Fazlullah have waged a blistering campaign to enforce sharia, or traditional religious law in Swat valley, once affectionately known as the Switzerland of Pakistan.

"I last went three years ago -- it was heaven on earth, with a beauty beyond imagination. Now all is doomed," Hussain said on a recent visit to relatives in Pakistan's financial capital of Karachi.

He is just one among many thousands who have scratched Pakistani resorts from their holiday wish-lists -- and in doing so ensuring that the tourism sector adds to the country's growing economic woes.

The bloody attack on touring Sri Lankan cricketers in Lahore this month was just the latest high-profile militant attack in an avalanche of violence that has killed more than 1,600 people since July 2007.

The World Economic Forum's Travel and Tourism Competitiveness Report 2009 put Pakistan at 113 out of 130 countries.

The decline has been slow but steady since the September 11, 2001 attacks on the United States but reached a crescendo last September when the Marriott hotel in Islamabad was bombed, with 60 people killed.

"Terrorism halved our receipts from tourism last year," tourism minister Ataur Rehman told AFP.

Pakistan earned 16 billion rupees (200 million dollars) from 800,000 visitors in 2007. Fewer than 400,000 visitors came in 2008, bringing in just eight billion rupees.

"People are not coming from the rest of the world as they have been advised by their governments not to go to Pakistan," Rehman said.

"Terrorism has affected investment in the country, made our beautiful places short of tourists and now forced sportsmen out of Pakistan."

Pakistan has diverse culture, a rich archeological heritage, ruins from the ancient Gandhara and Indus civilisations, serene valleys, pristine coastline and vast deserts.

K-2, the world's second highest mountain after Everest, sits atop a region of 120 other peaks that soar above 7,000 metres (22,950 feet).

But buffeted by bombings, insurgency and global financial turmoil, Pakistan was hit last year by 25 percent inflation and saw 10 billion dollars wiped off its international reserves in the year to October 2008.

The country only managed to stave off a looming balance-of-payments crisis when the International Monetary Fund approved a stand-by loan of 7.6 billion dollars and released an initial 3.1 billion dollars in November.

Hotel industry and tour operators have been hard hit. Global recession and militant attacks have forced investors to abandon projects.

"Plans for many new hotels have been shelved until the tourism industry improves," said Mustansar Zakir, chairman of Pakistan's Hotels Association.

He said nationwide hotel occupancy fell to 35 percent from 50 percent after the attack on the Sri Lankans, down from 70 percent before the Marriott blast.

Many Western countries have issued advisories against travel to Pakistan and European airlines such as British Airways and Lufthansa have suspended routes to the nuclear-armed Muslim nation.

There were hundreds of hotels and guest houses in Swat before Fazlullah rose up in July 2007. What few remain are deserted.

"Thousands of people associated with hotels and tourism in that area have lost their jobs," said Zahir Khan, head of the Swat hotels association.

Rehman believes that Sri Lanka, which has a healthy tourism market despite the civil war with Tamil separatists, could be the most pragmatic example.

"Is it the fault of our rivers, mountains, deserts and blossoming flowers that we are victims of terrorism? We should not stop attracting tourists and follow what Sri Lanka did," he said.

"Being a tourist in the 21st century requires some courage," he said.


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## Neo

*Fresh water flow in Pakistani rivers reduced: ADB report​* 
FAISALABAD (March 21 2009): Asia development Banks (ADB) Country Environment Analysis disclosed that freshwater flows in Pakistan rivers have been substantially reduced by water diversion for agricultural irrigation in recent decades. Canal irrigation, due to low levels of efficiency has resulted in salinisation, thus adversely affecting crop yields.

According to report, an excessive and improper use of pesticides is destroying the natural biotic balance in agriculture soils and reducing the diversity of invertebrate fauna. The report said the decline in the area under the natural forest cover has implications for essential ecological services, irrigation, and for biodiversity. Mangroves, the traditional breeding grounds for commercially important sea life, have also declined.

Similarly, Pakistans arid and semi-arid rangelands are extensively degraded, due to large increase in livestock grazing. The trends and prospects for the future greatly depending on climatic conditions and social responses, the report added. According to the report, pollution due to a lack of effective management has emerged as a major environmental concern in Pakistan.

Over the years Pakistans growing energy consumption needs have resulted in its increased reliance on the imported fossil fuels. Its progress towards energy efficiency has been modest due to weak technical and institutional capacities. Measures such as conversion of vehicles to cleaner fuels (CNG), no lead gasoline and low sulphur diesel have been implemented but remain insufficient to prevent deteriorating in ambient air quality in the urban areas due to increasing vehicle numbers and their hazardous emissions.

Indoor air pollution is a major cause of widespread chronic bronchitis and other respiratory infections in rural households and poor urban households that depend on biomass for cooking particularly in winters. According to report, Pakistan also faces environmental challenges from natural hazards including floods, earthquakes, droughts, and cyclones. Pakistan is a flood prone country, while earthquakes and droughts are recurring phenomena in susceptible regions.

Cyclones cause significant damage in the coastal areas as well as destroy standing crops several hundred kilometers inland. Additional environment challenges due to climate change are expected to directly impact on Pakistans economy. A rise in temperatures can cause more droughts and reduce crop productivity while increased flooding can damage irrigation infrastructure.


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## Neo

*3,504 megawatts more power to be added to national grid by December​* 
LAHORE (March 21 2009): In view of the commitment made by the Federal government to end load shedding by the end of this year, 3504 MW of additional generating capacity will be added to the national grid by December. Dilating upon the multi-pronged strategy, the spokesman of Pakistan Electric Power Company (Pepco) said on Friday that two new power projects - Malakand-III of 81 MW and Attock Gen Power of 165 MW - had started contributing to the system.

Besides, an additional 300 MW capacity had also been arranged through efficiency enhancement programme of the Pepco-owned plants, he added. He said that 19 other projects would start operating commercially from May till December.

These include 225 MW Atlas Power, 225 MW Orient Power, 232 MW Karkey Rental, 150 MW Rental Plant at Faisalabad, 110 MW Rental Plant at Guddu, 202 MW Fauji Mari Power, 225 MW Sahiwal (Saif) Power, 205 MW Walters Rental, 150 MW Rental Plant at Sahuwala, Sialkot, 192 MW Rental Plant at Multan, 200 MW Rental Plant at Satiana Road, 72 MW Khan Khwar Hydropower, 200 MW Nishat Power, 225 MW Muridke (Sapphire) Power, 62 MW Gulf Power Rental, 200 MW Independent Power Rental, 227 MW Engro Power, 150 MW Bhikki Power and 107 MW Ruba Energy.

In addition, another 300 MW of electricity would also be included in the above tally by enhancing the efficiency level of the existing power houses of the Pepco, he said. He said this would lead to a stupendous increase of 600 MW to the existing Pepco capability and would be in addition to the new capacity of 3504 MW.

The spokesperson, giving details of various ways and means to stabilise the financial health of the Pepco, revealed that after successful negotiations with the financial institutions, the term finance certificates (TFCs) worth Rs 80 billion were being issued in a couple of days. This would help discharge a big chunk of the circular debt, one of the reasons of the ongoing power crisis, he further said.

The spokesperson maintained that owing to the hectic efforts, being made by the Ministry of Water and Power to bridge the gap between demand and supply of electricity, there was certainly an improvement in the situation if compared with the corresponding period last year.

Thanking media for creating awareness amongst the consumers regarding energy conservation, he said that a tangible shift was being observed in the non-productive growth of electricity demand, while the productive sectors had made significant gains.


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## Neo

*Green shadow for the textile sector​* 
ARTICLE (March 22 2009): The textile sector in Pakistan provides 58 per cent of our total exports and about 40 per cent of the prevalent industrial employment. Pakistan is also known to be the 4th largest cotton grower in the world. Although, people abroad and at home have repeatedly reiterated Pakistan having great potential for rapid industrial and monitorial growth in textiles, but there are major obstructions that hamper our exports.

Trade Development Authority of Pakistan (TDAP) has also recently taken a positive step by inviting the Russian delegation to Pakistan to look into the business prospects and has also lined up investors, large companies, small and medium enterprises and traders from Pakistan to visit Russia on government expenditure, to study their market and develop business relationship with their business communities and industries.

The world market is growing fast and the regional market, as well, while the government policies are not yet in line with the trend of these markets, which is likely to pull the countrys export further down. Making our export and industrial policies more consistent and realistic will allow us to be more relaxed and focused towards our endeavours and also attract foreign investors.

The industry humbly suggests that an effective committee be formed of like minded and well versed entrepreneurs from the concerning industry, and their consent be taken into consideration while approving a law or a policy. Export Oriented Unit (EOU) was introduced by customs for the exporters to enjoy duty draw backs, but that policy never moved on to the execution stage.

Duty & Taxes Remission for Export (DTRE) by Sales Tax is being exercised through FAST TRACK system again for exporters to enjoy the duty and taxes drawback on Imports, but the system is so lengthy, mind boggling and tedious that by the time all the formalities are met, the re-export date is already in jeopardy, resulting in cancellation of orders or heavy penalties in form of pre-paid air shipments and discounts by the customers.

Presently, our exposure is limited in terms of countries (USA, UK, Germany, Canada, UAE and etc) that we export to. Ministry of Textiles (MINTEX) and TDAP should make in roads into the untapped and virgin markets and countries which have a great potential to expand into. This can easily be done by taking up the task of promoting and encouraging entrepreneurs and industrialists to exhibit their products in various different parts of the world shows by subsidising the booths and overall package.

A training ground for Administration and Human Resource managers can be formed with the help of associations like Pakistan Hosiery Manufacturing Association (PHMA), which supervises and administers the Institute of Knitwear Technology Karachi (IKTK), to create a knowledge base study on social and environmental compliances and certificates like Documentation (ISO-9000), Social Compliances (SA-8000), Environment (ISO-14000), World-wide Responsible Apparel Product (WRAP) and Customs Trade Partnership Against Terrorism (CTPAT).

A country like China gained a market share in all major developed import markets despite restrictions introduced in 2005 along with India, Sri Lanka and Bangladesh. Some smaller suppliers like Egypt, Morocco and Cambodia who have also expanded their textiles and clothing exports even faster than China and the share of least-developed countries in imports of the US and the EU.

China has once again given some more subsidies to the textile sector to boost export eg 13% VAT refund to garment exporters. Bangladesh has the market access - EU/Canada GSP, they have backward integration, the labour cost is very low and there is financial support eg in local yarns is very aggressive. India has 5% interest rebate (TUF), capital subsidy, Export Duty Drawback, 10 years tax holiday in SEZ/EOU, 4.5% interest subsidy on pre/post shipment credit and government cluster promotion - SEZ/textile parks.

Textile City, Garment City and what not was announced few years back, but unfortunately, no deadlines were set for the project completion and operational date. Regrettably, even to this date no one is sure whether it will commence or not. In our line of trade, time is of the essence or else you loose the boat.

Before venturing into mega projects, the decision makers should neglect the funds to be disbursed off to our existing industrial parks, requiring additional expenditure to update the infrastructure, be it Korangi or Sind Industrial and Trade Estate (SITE).

We unfortunately have not been able to take the devaluation of our currency to our advantage due to the high cost of production and high duties paid by our customers. Zero Rated Duty Status is the need of the hour, which will help us to compete with countries like Bangladesh and India.

The Government must realise that if big buyers like Wal-Mart, J.C. Penney, K-Mart, Kohls and Target choose not to buy from Pakistan, then there is something wrong in our policies that are turning them away. The President of Pakistan has seen to have taken a stand in requesting associations to work hand in hand to find remedies in solving the existing detrimental scenario.

TDAP has further bifurcated its divisions in sub-divisions in order to provide more specialised services to different segments. This will not only allow Small Medium Enterprises (SME) to flourish but will also disallow the big fish to throw their weight around in terms of availing perks, incentives and also manipulating policies to their own advantage.

Government of Pakistan has continuously announced schemes whereby local brands can establish outlets outside Pakistan for which 50% investment will be borne by the government. With the efforts and recommendations of all the associations and Ministry of Textile, Ministry of Finance has finally allocated Rs 4 billion and advised State Bank of Pakistan (SBP) to disburse 40% of R&D claims of exporters of shipments up to 30 June 2008.

SBP vide Circular no.FEOD/6866/R&DS-103-09 dtd. 26 February has asked all banks to submit all claims by 26th March 2009. They should also disburse the 90 days time bar cases which have also been pending for years.

There is a major recession world over and especially in USA, companies are going towards bankruptcies (chapter 11 & chapter 7) and default in payments, our government needs to support our exporters in recovering the payment from the international markets whether it be through credit analysis, credit rating, factoring or by the help of international courts.

Pakistan Export Finance Guarantee (PEFG) was giving umbrella to exporters in pre shipment or post shipment basis, but due to lack of funds is not operational in lending. Government can revive this department so that the exporters can be secured. However, continuous up gradation is required in the modern economic system and educating the public with latest government developments in order for us to survive in the international market.

Capturing that extra share of the market is not simple in the current framework, but it is not impossible either. If we have the right vision, a practical, focused approach, the industry brought up to date, proper co-ordination, respect to time and deadlines, and then we the textile sector strongly believe that we can easily achieve any given target.


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## Neo

*Pakistan to seek oil facility from Saudi Arabia at FoP meeting: Tarin ​* 
Tuesday, March 24, 2009

ISLAMABAD: Pakistan is to seek oil facility from Saudi Arabia for 100,000 barrels per day on deferred payment of two year during the meeting of Friends of Pakistan due in Tokyo on April 16, said Advisor to Prime Minister on Finance Shaukat Tarin.

Tarin, who visited Saudi Arabia on March 7 and held vital meetings with authorities concerned dispelled the impression that the visit could not succeed saying that that Saudi Arabia has advised Pakistan to bring the issue of oil facility at the forum of Friends of Pakistan.

The kingdom has indicated that Saudi Arabia would consider the demand seeking oil facility once it is placed in FoPs meeting, Tarin said. He said that during the meetings with Saudi authorities, Islamabad asked for increasing the import of Pakistani labour force so that Pakistan would have maximum remittances from Kingdom. 

We also invited Saudi Arabia to come forward and invest in Pakistans agriculture sector and import agriculture products from their own agriculture farms in Pakistan to ensure their food security.

Pakistan has also sought permission to export animals to cater to eating needs of Saudi Arabia.Regarding urea facility, he said that Saudi Arabia would maintain revolving fund to urea facility for Pakistan. We also briefed governor central bank of Kingdom on securitisation of workers remittances.

When Pakistan got nuclear, it faced a lot of economic sanctions from USA and all donor countries, but it was Saudi Arabia, which helped Pakistan and extended the oil facility to wriggle the country out of morass. But when Pakistan started experiencing the fast deletion of the foreign reserves, Saudi Arabia refused to extend any oil facility to Pakistan asking Islamabad to first enter the IMF programme only then the Kingdom would consider about the oil facility.

But now Saudi Arabia asked Islamabad, even after getting IMF bailout package, to bring the demand particularly with regard to seeking oil facility in the meeting of Friends of Pakistan. However, Pakistan has managed to get oil facility from Iran to provide sustainability in foreign reserves. 

Although Pakistan has foreign reserves of over $10 billion mainly because of IMF programme, its sustainability can only be maintained if Pakistan manages more resources, which could ensure interest free inflows, some independent economic experts said.

This can only be possible by alluring maximum foreign direct investment for which the business and investment friendly climate had to be introduced by the government, which will trigger economic growth in the country too. This would basically help sustain Pakistans reserves at a reasonable level, economists say.

Tarin, mentioning the preparation for projects to be marketed in the FoP meeting, said the details will be provided to the ambassadors of the FoP member countries on March 24 so that respective countries have ample time to identify the projects they intend to fund.


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## Neo

*Cement exports may keep growing: company official ​* 
Tuesday, March 24, 2009

KARACHI: Cement exports are growing and the present momentum will likely be maintained in coming months, says Lucky Cement Chief Executive Officer M Ali Tabba.

However, analysts opinions are contrary to that projection, who said that though margins of many cement companies had recovered, cement demand would remain under pressure both in domestic and export markets.

Lucky Cement, the countrys largest manufacturer and exporter of cement, has recently started production from its new line with a capacity of 1.25 metric tons per annum, taking the companys total capacity to 7.75 metric tons.

It is an assumption that cement exports will decline in coming months, but what we see is that exports have been maintained and we are also hopeful for the future, said M Ali Tabba.However, cement companies, which have been expanding their production capacities, are now encountering difficulties owing to high interest rates and low demand.

M Rehan Khan of First Capital Equities said local cement companies had successfully met regional demand but now owing to slowdown in economic activities in countries dependent on oil revenues, cement exports are under pressure.

This year, he added, margins of cement companies had recovered to over 30 per cent from 15 per cent due to better market prices. A lot of cement companies went for expansion last year, and these will benefit in coming months owing to the likelihood of a cut in benchmark interest rates.

Increased cement prices in the local market coupled with better export prices due to depreciation of Pak rupee against US dollar had helped the commoditys exports.Officials of cement companies said that demand in the Gulf region would remain buoyant owing to huge housing requirements in many regional countries.

The cement companies cost of sales has increased owing to a rise in production cost. The cost rose despite a decline in international coal prices as old coal stocks purchased at higher prices were being consumed.

Cement companies use imported coal, which has a major share in the production cost. Fortunately, coal prices have come down from over $190 per tonne to around $130 per tonne in the last couple of months, which will help cement companies reduce production cost.

Though coal prices in the international market have declined considerably, their positive effect would be felt in the months to come because generally cement companies place import orders four months in advance.

Regional countries are trying to improve cement production in a bid to increase their share in exports. Besides, leading European cement companies are planning to park their excess capacity in this region as demand in Europe and the US has dropped sharply due to slowdown in construction activities.

This will probably result in a tough competition for Pakistani cement manufacturers because international cement prices are now under pressure in the wake of a price war between cement suppliers. 

Cement demand owing to liquidity crisis amid global recession and completion of pending expansions has started tapering off. Under these unfavourable circumstances, Pak cement exports are likely to take a major hit in fiscal year 2010.


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## Neo

* Economy suffered $68bn loss due to Afghan turmoil ​* 
Tuesday, March 24, 2009

LAHORE: Pakistans economy has so far suffered irreparable loss of $68 billion directly and indirectly due to turmoil in Afghanistan.

Speaking as a chief guest at a seminar on The Role of Economy Towards Survival of the Country in connection Pakistan Day, founder chairman Pak-US Business Council and VP SAARC CCI Iftikhar Ali Malik said it is on record that Pakistan is the only country in the world which has not only suffered tremendous economic loss but also huge human loss in the war against terrorism.

He said that more than three million Afghan refugees harbouring in Pakistan were also posing security risk. He said that entire Pakistani nation including business community and all political parties under the dynamic leadership of President Asif Ali Zardari and sagacious guidance of Prime Minister Syed Yousaf Raza Gilani are united against the menace of terrorism and committed to curb it once for all.

He said due to war on terror, Pakistans national economy is exclusively suffering a net loss of $7 billion annually as fallout of the war against terror, which has displaced thousands of people.

In the prevailing scenario, US must provide direct market access to Pak products on zero rate duty to help stabilise the countrys bleak economy in the wake of the war against terror. Iftikhar who is also co-chairman businessman panel, the largest alliance of chambers in the country and ruling group in FPCCI on behalf of entire business community again urged for US assistance to Pakistan to help overcome the economic crisis, by restoring the quota for Pakistan at par with all other under developed countries.He said there is vast scope for US private sector investors in every sphere of life, particularly in the agro, power and IT sectors.


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## Neo

*Countrys ports charging highest rates in the region.​*
KARACHI: The countrys ports not only charge the highest rates in the region but are also not equipped to meet the needs of modern maritime trade where competition, efficiency and fast turnaround of vessels are the hallmark, importers and exporters told Daily Times.

Similarly, container terminals of the country are much costlier than others in the region and are burden on trade as they enhance the cost of their end products. Recently, foreign shipping lines have raised the container handling charges by 15 percent.

The lines have enhanced the handling charges of 20 feet container to Rs 7550, up by Rs 1000 and on 40 feet container increased by Rs 1500 to Rs 11,350.

According to a comparative study of tariffs of the regional ports, the Karachi Port is the costliest port of South Asia followed by Port Qasim Authority (PQA), Jawahar Lal Nehru Port (JNP) in India and Sri Lanka Port.

The other regional ports such as Singapore and Dubai are even cheaper and they provide better cargo handling and quick cargo moving equipments.

The Pakistani port are unable to improve their working environments by inducing work culture and efficiency, which are necessary for success in this fast and modern era, traders complained.

The trade and industry had been asking the government to bring down port and terminal charges in line with regional ports but no worth mentioning steps have been taken so far, said Anjum Nisar, president, Karachi Chamber of Commerce and Industry (KCCI).

He said as the business community is already bearing the burnt of high cost of doing business we do not except the increased rates by the foreign shipping lines, but we are going to oppose it, as the rates have been increase without any justification and KCCI will call a meeting of all stakeholders, Pakistan Shipping Agents Association and customs during current week in this regard.

Anjum underlined the need to constitute a powerful regulatory authority from Pakistan Customs to regulate the shipping lines, agents and freight forwarders. He said the proposed regulator should have the authority to cancel the license.

The official figures with regard to tariffs of ports reveal that the KPT charges $27,190 per day on an average size container ship of 35,000 gross registered tonnage (GRT).

Against this, the port charges of PQA are $25,090, JNP $23,027, Dubai $2,890, Sri Lanka $7,192 and Singapore Port $2,975. Besides, these charges, Rs 10,000 to Rs 12,000 are charged under the head of handling.

There are three container terminals in the countrytwo at the Karachi Port and the other at Port Qasim.

There are two types of chargeswet and dry, which vary according to the size and the cargo the ship is carrying, a spokesperson of KPT said.

Both KPT and PQA do not handle trans-shipment cargo/containers and are thriving on captive cargo related to countrys external trade.

The shipping lines have increased the charges after a year and they are applicable to the imports from Far Eastern countries only, Muhammad Rajpar, chairman Pakistan Shipping Agents Association said.

The shipping lines have long been thinking of increasing the terminal handling charges due to a host of factors like the imposition of 16 percent general sales tax (GST) on the shipping companies.

He said that in our country there are two types of terminal handling charges, one which the shipping line charges and other one is taken by the terminal of the port that is called Receiving and Delivery (R&D) charges.


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## Neo

*July-February: Non-textile exports post 18.28% growth​*
KARACHI: The non-textile goods posted handsome growth of 18.28 percent in the first eights month of current fiscal year compared to textile products export which decreased 5.60 percent in the same period.

The non-textile export came to $5.685 billion in July-Feb of current financial year over $4.806 billion in the corresponding period of previous year.

The substantial gains in export of non-textile products also reflected the diversification of Pakistani export base, which remain restricted to mainly textile and clothing.

Textile goods export remained depressed during the current fiscal so far because of stiff competition in the international market. The ongoing global recession also contributed to the woes of textile sector in the shape of slackening demand in USA and European Union, the major market for local products.

Food group posted the heaviest gain by standing at $2.099 billon during the period under review as compared with $1.425 billion in the previous year, depicting 47.31 percent growth.

In this group, rice was the main commodity, which registered the biggest gain of 68.77 percent during this period. Fisheries and its products were also up by 22.45 percent. The meat and its preparations recorded 47 percent growth.

The other manufactures group reflected 9.48 percent growth during the first eight months of current fiscal over the previous year.

The export of footwear was up by 16.60 percent, sports goods 1.74 percent, chemical and pharma products 14.50 percent, plastic materials 16.67 percent, engineering goods 70.11 percent, jewellery and furniture 11.32 percent during this period.

The export of carpets, rugs and mats decreased 29.26 percent, leather manufacturers 13.52 percent, gems 59.36 percent, furniture 17.80 percent during this period.

Textile and clothing export totaled $6.470 billion in the said period against $6.583 billion in the same period of previous year, falling by 5.60 percent.

Raw cotton export shoot up by 154 percent during first eight months, cotton cloth 5.57 percent and towels 10.02 percent.

Cotton yarn declined by 15.28 percent, cotton carded or combed 13.81 percent, yarn other than cotton yarn 51.24 percent, knitwear 2.66 percent, bedwear 10.44 percent, tents, canvas and tarpulin 21.18 percent, readymade garments 12.43 percent, art silk and synthetic textiles 23.45 percent, made up articles excluding bedwear 0.30 percent and other textile materials 15.28 percent.

Textile export orders worth $5 billion were lost at Heimtextil Fair Germany this year while sixty thousand jobs are in danger as a result of the downfall in industrial production in Faisalabad region due to severe load shedding of electricity and gas.

Exporters demand that the units should be exempted from electricity and gas load shedding and the government should refund the duties and levies paid by exporters on raw material and inputs, in order to reduce the cost of doing business in the country.


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## Neo

*US, France & ADB to help implement Energy Efficiency Programme​*
ISLAMABAD: United States, France and Asian Development Bank have shown willingness to assist Pakistan in implementation of Energy Efficiency Programme to overcome energy crisis, official sources told Daily Times on Monday.

United States would extend financial help in implementation of The Empower Pakistan-Energy Efficiency and Capacity (EP-EEC) project. Agence Française de Développement (AFD) of France is considering providing Co-financing for Energy Efficiency Programme. Similarly, Asian Development Bank being major multi-lateral development partner is keen to extend Pakistan Multitranche Financing Facility (MFF) for 5 to 10 years.

Empower Pakistan: United States Agency for International Development (USAID) funded The Empower Pakistan project, which is to start in April 2009, to help Pakistan tackle growing energy demand and supply gap. In this regard, US technical assistance would cover four major areas i.e. completion of cost of service study of Lahore Electric Supply Company (LESCO) to determine minimum benchmark of cost service and set certain targets for loss reduction and service improvement in distribution companies of Pakistan.

A report of the Energy Efficiency and Conservation Consultative Group of the Planning and Development division revealed.

Other components of the USAID technical assistance are integration of grid code with renewable energy (wind projects), development of tariff model for renewable energy projects, and technical assistance to National Electric Power Regulatory Authority.

According to the report representative from AFD informed the consultative group meeting that French government is also considering providing co-financing facilities for the Asian Development Programme.

ADB: Bayanjargal Byam-basaikhan, Energy Specialist at Asian Development Bank said that ADB could provide project preparatory technical assistance as well as keen to extend Multitranche Financing Facility (MFF) for next 5 to 10 years. However, he said that the amount of MFF would depend on quantity and size of various projects and especially the interest, support of government of Pakistan in identifying and preparing various projects and plan to avail this financing facility. He informed that this project aims to help Pakistan to address the current energy crisis on short-, medium- and long-term basis particularly to improve supply of electricity and gas and overcome its shortages.

It was suggested in the meeting that a study should be initiated that may identify role and scope of work to be undertaken in various energy utility companies and may suggest type of framework required to be undertaken by these institutions to implement energy efficiency policy measure.


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## Neo

*530 bogie-wagons to be built locally: Ecnec likely to approve project on March 26​* 
ISLAMABAD (March 24 2009): The government has decided to manufacture 530 new high-capacity bogie-wagons locally to replace the existing 1890 four-wheeler wagons, sources in Railways Ministry told Business Recorder. They said that the government had planned, in 2005, to import or manufacture 530 new design wagons for railways at a cost of Rs 5.330 billion.

However, last year the cost was revised downward to Rs 4.589 billion. They said that the project would be financed from Public Sector Development Program (PSDP). Foreign exchange component (FEC) of the project has already been provided by the Islamic Development Bank (IDB). According to sources, the number of container flat bogie-wagons will be 156, high side open bogie-wagons will be 344, and brake vans 30.

The project was considered by Central Development Working Party (CDWP) in its meeting on November 11, 2008, which recommended it for approval of the Executive Committee of National Economic Council (Ecnec), subject to the condition that report on the issue of excess axle load is submitted by the Ministry of Railways to the Planning Commission, which would form part of the summary to the Ecnec.

The Railways Ministry has been directed to rationalise the project cost through a committee under the chairmanship of Planning Commission Member, Infrastructure, with representation at appropriate level from the Railways Ministry and Finance Division. In pursuance of the CDWP decision, the Railways Ministry has submitted a report on the issue of excess axle load.

The committee held detailed discussions on the matter and decided that all bogie-wagons would be manufactured locally, in CKD condition. "Pakistan Railways have developed indigenous expertise to manufacture such wagons" sources said.

They said that the cost of the project has also been slashed further, from Rs 4.589 billion to Rs 4.135 billion. The project is likely to be approved by Ecnec in its meeting scheduled to be held on March 26, under the chairmanship of Advisor to Prime Minister on Finance Shaukat Tarin.


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## Neo

*July-February 2008-09: export of non-textile products surges by 25.06 percent​* 
ISLAMABAD (March 24 2009): The export of non-textile products surged by 25.06 per cent in the first eight months of current fiscal to $5.095 billion as against $4.074 billion for the same period of last year mainly because of growth in food and food commodities exports.

The details of trade figures released by the Federal Bureau of Statistics (FBS) revealed that textile exports dipped by 5.60 per cent to $6.470 billion against $6.853 billion for the same period of last year. Except raw cotton, cotton comb and tents, canvas and tarpaulin the exports of all other products of textile have declined during July-February 2008-09.

The food products export soared by 47.31 per cent because of massive growth in export of rice. The export of rice surged by 68.77 per cent to $1.39 billion against $826 million for the period under review, fish and fish apparatus 22.46 per cent to $147 million as against $120 million. Fruits, vegetable and spices export surged by 8.41, 3.88 and 16 per cent respectively. Apart from sugar exports of all other food items showed an upward during the period.

The data showed that among textile group cotton yarn export dipped by 15.28 per cent during July February 2008-09 to $732.293 million from $864.359 million of same period of last year, cotton carded or combed by 13.81 per cent to $9.831 billion from $11.406 billion, yarn other than cotton yarn by 51.24 per cent to $17.419 million from $35.724 million, knitwear by 2.66 per cent to $1.203 billion from $1.236 billion, bed wear by 10.44 to $1.128 billion from $1.259 billion, tents, canvas and tarpulin by 21.18 per cent to $39.520 from $50.139, readymade garments by 12.43 per cent to $819.404 million from $935.689 million, art, silk & synthetic textile by 23.45 to $220.260 million from $287.721 million made up articles(excl.towels bedwear.) by 0.30 to $331.291 million from $332.282 million and other textile materials by 15.28 per cent to $150.587 million from $177.740 million.

The data revealed that the exports of textile products during the month of February went down by 13.42 per cent with raw cotton dipped by 26.82 per cent to $5.802 billion against $7.928 billion for previous month of January, cotton yarn by 0.81 to $78.151 million from $77.524 million cotton cloth by 6.32 to$116.226 million from $124.068 million, cotton carded or combed by 50 per cent to $76 million from $152 million.

Exports of knitwear dipped by 18.86 per cent to $113 million in February as against 139 million for previous month, bed wear by 21.71to $109.920 million from $140.405 million towels by 18.81 to $41.033 million from $50.540 million and tents, canvas & tarpulin to $4.380 billion from $5.146 billion. Export of sports goods showed a marginal growth with footwear going up by 16.60 per cent, surgical instruments.


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## Neo

*Korean firm signs coal mine deal with Pakistan​*
SEOUL (March 24 2009): A South Korean energy development firm has signed an agreement with the Pakistan government for a stake in a coal mine in the Thar desert region, the firm said on Monday. South Koreas Pan Energy Development Co (PEDCO), with UAEs Bin Din Group, had secured the stake in coal blocks in the area, which has about 2.56 billion tonnes of estimated reserves, about 40 times the amount of coal used each year by local generators in South Korea.

The Thar region, east of the Karachi, is reported to have the worlds largest coal reserves of about 100 billion tonnes or more. PEDCO said that the Pakistan government is requesting two coal power plants with 500,000 kilowatts capacity and the firm is closely in talks with state-power monopoly Korea Electric Power Corp (KEPCO) PEDCO expects coal production of 2 million tonnes by 2011 from the blocks, and 10 million tonnes from 2015.


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## Neo

*High poverty level in rural areas due to structural, institutional bottlenecks​* 
FAISALABAD (March 24 2009): A key finding of the "Poverty Assessment Update of Pakistan", released by Asian Development Bank, disclosed that structural and institutional bottlenecks including distortions in factor markets and market failures particularly land and labour markets, lack of diversified livelihood opportunities, and hierarchical social structures and social exclusion result in high poverty levels in country particularly in rural areas.

ADB assured to continue to focus on supporting necessary institutional, governance, and market reforms to promote improved efficiency and functioning of markets that result in creation of greater employment and livelihood opportunities for the poor. This will also lead to greater inclusiveness in society as empirical evidence has shown that economic empowerment is one of the most effective antidotes to social exclusion.

Strengthening the skill base of the labour force through technical education and vocational training will be important to ensure supply of trained labour that matches the needs of the market and promotes job generation. A focus on strengthening agriculture markets will result in creating greater opportunities in rural areas, and given the agriculture-industry linkages, will lead to more diversification in sources of livelihoods.

Improvement in infrastructure and services, particularly in secondary cities, will lead to improved competitiveness of these centres to support economic growth and job creation, while improving the quality of lives of the urban poor, ADB report added. The Poverty Assessment Report brings out several causes of persistent poverty in the country.

These include the lack of equitable economic and social opportunities that lead to inequality and dent the direct impact of economic growth on poverty. For example, despite some lowering of unemployment, greater job generation needs to accompany growth for it to result in reduced poverty. ADB should expand its focus on creation of new economic opportunities through direct interventions in key economic sectors including infrastructure development, and the financial and industrial sectors.

Supporting the role of the private sector development in strengthening the productive capacity of the economy and creating employment opportunities to absorb the growing labour force in the country will be key to promote inclusive growth in the country. ADB identified two major key issues with respect to poverty in Pakistan.

The first is whether the downward trend in poverty can be sustained at a time of threatened macroeconomic stability, which is manifested in the once again rising fiscal and current account deficits, high inflation averaging around 25 per cent, and squeezing fiscal space for maintaining high investments in pro-poor sectors.

With the deterioration in economic fundamentals, growth is expected to plunge in 2008/09 and cause poverty to rise, hence the reference to Pakistan having come full circle. The second is about the quantum and pace of poverty reduction: that is to say whether the recent improvements in themselves are substantive and fast enough to make a difference in poverty to the lives of those that need to benefit from these improvements the most.

On these two issues, there is a need for an objective assessment to identify the challenges ahead in sustaining poverty reduction and forcing its pace at a time when the living standards of the poor are severely threatened by major price spikes for food and oil commodities in an overall poor economic and social protection environment. Even if the massive 12.2 percentage points decline in poverty is accepted, 22.3 per cent of the population, which translates into roughly 35 million people, still lives below the poverty line.

This is higher than the number of absolute poor in Pakistan in 1996/97 and goes to confirm the insufficient decline in the percentage of the poor in the last 10 years. Further, poverty is inequitably distributed with levels of rural poverty being double to urban poverty.

In rural areas, skewed access to assets (land) and power, and the inability of the poor to mitigate income fluctuations, challenge their ability to emerge from poverty, and result in "poverty of opportunity". In the urban areas, the deteriorating living environment, inadequate access to basic amenities, problems of slum dwellings, and crippling infrastructure are some of the major issues that are still to be addressed.

One of the worrying aspects of the present situation is the growing economic inequality in the country. The Government in the latest Economic Survey for 2007/2008 has accepted this as a critical issue. According to available data, the gap between the rich and the poor between 2001 and 2006 has significantly widened, with the Gini coefficient having increased from 0.2752 to 0.3018 in this period.

As another testimony to growing inequality, the ratio of income of the richest 20 per cent to the poorest 20 per cent has gone up from 3.76 to 4.20. Despite some improvement, ADB report said that Pakistans progress on human and social development has not been commensurate with the surge of economic growth witnessed in recent years.

The 2005 Human Development Index (HDI) rating for Pakistan in the Human Development Reports for 2007-2008 gives it a very low rank of 136 out of 177 countries. Although Pakistans net primary enrolment ratio and adult literacy have increased during the last four years, accompanied by a reduction in infant and child mortality, progress in health and education is marked by the continuance of spatial (rural/urban, inter-provincial) variations.

Large gender disparities also continue to persist in literacy, primary enrolment, and educational attainment and labour market. The Pakistan Millennium Development Goal Report for 2005 has noted that even if the net primary enrolment continues to increase at the rate of 2.5 percentage points per annum, as observed in the last four years, it will only become 77 per cent by the year 2015, which is well below the MDG target of 100 per cent.

A similar shortfall exists for health-related MDG targets such as infant and maternal mortality. Imbalances in distribution also exist in the levels of nutrition among regions. Pakistans manifold challenges described above arise as a result of longstanding and interwoven economic, social and political inequalities in Pakistan.

These inequities are manifested in the type and nature of institutions and rules that then emerge through an endogenous process to govern society. The ways in which these institutions function and are sometimes hijacked by powerful vested groups affect opportunities of ordinary people and their ability to invest, advance, prosper, and benefit from high growth episodes in the country.

Quoting empirical evidence, ADB report mentioned that this poverty assessment update shows that different groups, depending on their location, socio-cultural status, and access to opportunity, experience poverty in Pakistan differently. Some groups, by virtue of their superior bargaining power as bestowed by the existing institutions, are able to prevail over other groups that have relatively weak power base and institutional support.

Thus the correlation between the unequal distribution of assets and opportunities and inequitable institutional support and bargaining power gives rise to a circular flow of mutually reinforcing adverse patterns of poverty and inequality. According to ADB report, traditional economics literature highlights growth constraints in terms of low savings, inadequate infrastructure, low human capital, poor macroeconomic management, and various types of market distortions and inefficiencies.

Recent literature, however, has cited weak institutions and poor governance as causes for the failure of conventional market-oriented policies in generating growth and reducing poverty. There are many examples from Pakistan on this failure.

Thus, for instance, market asymmetries whereby poor farmers pay more for inputs than richer ones due to the local and national institutional structures, not only result in a loss of income for the poor, but these structures of power also mediate access of farmers to markets that constrain their future economic opportunities. Similarly jobs in many cases, for example, are provided across ethnic biraderi lines.

A growing consensus in the development literature is that market-oriented reforms might not work without more serious attention to institutions. This is corroborated in the background field studies on poverty undertaken for this update. The report highlighted that the extent to which growth reduces poverty depends on growth being politically, geographically, socially, and economically more inclusive and equitable.

Creating a better understanding of the overall political economy and constraints to inclusiveness will contribute toward identifying initiatives for promoting the kind of growth that would have the greatest impact on reduction of poverty and inequity in society. In conclusion, ADB stated, high and sustained economic growth rates are important for overall reduction in poverty in Pakistan.

The non-economic institutional factors are, however, critical determinants of the "spread" of the benefits of growth and the relative access to opportunities of the different socio-economic groupings. Addressing such "social gaps" is, therefore, a matter of addressing the structural and institutional barriers to emerging from poverty.

The different spatial and social status-related experiences of poverty and growth (rural, urban, ethnic background, gender, and others) in Pakistan contribute in a significant way to first, the way in which poverty manifests itself; second, the ability to benefit from growth; and third, the development of contextually-appropriate and institutionally-enabling responses to address the needs of the poor.


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## Neo

*Leather exports fall by 20pc in eight months ​*Tuesday, 24 Mar, 2009 

ISLAMABAD: Leather and its products exports fell by 20 per cent during July-February 2008-2009.

Tanner Association vice-chairman, Sheikh Afzal Hussain told a local news channel that leather and its products exports in the previous fiscal year amounted to Rs1.24 billion, but in the current year during July-February leather exports fell by 20 per cent and in the backdrop of global slowdown further fall was feared.

He said that Turkey, Bangladesh and Indian governments as compared to Pakistan have given several incentives to their exporters, which has rendered Pakistan products uncompetitive.


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## Neo

*U.S. plans to boost civilian aid to Pakistan​*
*The assistance would rise to $1.5 billion or more as part of a new Afghanistan strategy aimed at curbing support for insurgents.​*
By Julian E. Barnes and Paul Richter
March 24, 2009

Reporting from Washington -- The Obama administration plans to dramatically increase civilian aid to Pakistan as part of its new strategy on Afghanistan and the surrounding region, hoping the overture will lead to more effective steps by the Pakistani military to shut down insurgent sanctuaries, U.S. officials said.

A threefold increase in civilian aid would come on top of more than $10 billion in mostly military assistance since 2001. In addition to the aid, the administration will seek similar contributions from other nations, the officials said, describing the conclusions of a strategy review on condition of anonymity because it has not been made public.

The administration is expected this week to unveil the new strategy on Afghanistan, where commanders have said that 70,000 U.S. and NATO troops are unable to prevent Taliban fighters and other extremists from expanding their influence.

Top administration aides have briefed European counterparts on the strategy, and Secretary of State Hillary Rodham Clinton will attend an international conference on the war next week in the Netherlands. President Obama, who will soon meet with NATO allies, has sketched a new approach that lowers U.S. objectives and fixes an exit strategy.

The focus on Pakistan in the administration's new strategy reflects both frustration over years of cross-border attacks against U.S. and allied forces in Afghanistan and the view that extremism, violence and instability have roots across the region.


It also underscores concerns among U.S. and allied officials about the stability of the government in Islamabad, the Pakistani capital. Clinton and other U.S. officials brokered a compromise this month to defuse a political standoff over the country's judiciary, but they remain fearful that the country is deeply unstable.

Under the plan, the administration would boost Pakistani civilian aid to $1.5 billion a year or more, a move first proposed by Vice President Joe Biden when he was chairman of the Senate Foreign Relations Committee.

In addition, the administration will seek major increases from China, Saudi Arabia and other Arab states in the Persian Gulf, according to an administration official.

A dramatic boost in aid could help stabilize the civilian government and improve governance, the justice system and, importantly, schools, the officials said.

Officials also believe an increase in civilian aid will help the administration gain greater influence over the Pakistani military and its operations against Al Qaeda and the Taliban in the border areas. The country's military now views any American threat to cut off military aid as empty, because the U.S. is so dependent on cooperation from Islamabad, officials said.

"All our military aid right now is unleveraged," said a government official. "Right now the Pakistan military thinks any threat to withdraw aid is a bluff."

Significant amounts of nonmilitary aid could encourage pro-Western public sentiment and increase pressure on the Pakistani military to act rather than risk a public backlash over the possible loss of the civilian aid, administration officials believe.

Besides sending aid to Pakistan, officials have said they will use the 17,000 new U.S. troops being sent to Afghanistan to undermine extremist leaders by strengthening local groups and district governments, and will expand the Afghan armed forces.

Some analysts doubt that enlarging the flow of U.S. aid would overcome deeply rooted anti-Americanism in Pakistan, but they agreed that a different approach is needed.

The new money might strengthen American influence with the Pakistani armed forces but is unlikely to curtail the military's focus on rival India, said Arif Rafiq of the New York-based Pakistan Policy Blog. Because of that, the new aid "is not a game changer in itself," he said.

Nonetheless, the West must find ways to encourage the Pakistani public to become enthusiastic about government action against extremists.

"Yes, we need to make the money flow, but it is not as if our money is the deciding factor," said Frederick Barton, a scholar at the Center for Strategic and International Studies. "What is really deciding is: Do we have relationships beyond the military? Are we showing we are in touch with what the Pakistani people need and want?"


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## Neo

*Govt likely to impose income tax on real estate ​* 
*Agriculture will remain exempt from tax for two years: Tarin​*
Wednesday, March 25, 2009

ISLAMABAD: Advisor to Prime Minister Shaukat Tarin on Tuesday indicated the imposition of income tax on real estate in the next budget in a bid to increase the tax to GDP ratio.

Although it is a provincial subject, the government would chalk out a modus operandi to levy tax on this very important sector.

However, he ruled out the inclusion of agriculture sector in the tax net for at least two years, advocating that the sector needs to stabilise first and then the government would not hesitate to levy tax on the sector. He said that in the past farmers were not given the right prices for their produce. We would first increase the farmers income, and then levy income tax.

After a meeting of the Standing Committee of National Assembly on Finance, which was given briefing over the Budget Making Process for 2009-10, Tarin while talking to media said that capital gain tax on stock exchange businesses would not be levied in the next budget for 2009-10, as bourses were given a two-year exemption from any sort of taxation by the government before making the budget for 2008-09.

He unveiled that Pakistan would also seek financial help from Friends of Pakistan to strengthen security forces such as Frontier Constabulary to effectively fight out militants, so that Pakistans territory can be purged from the menace of terrorism. On the issue of no progress on new NFC, Tarin said he would soon place a request with the prime minister, seeking power to chair the NFC meeting so that thorny issues pertaining to the future mechanism of sharing the divisible pool between provinces could be chalked out.

Earlier during the proceedings of the Standing Committee headed by Fauzia Wahab, Tarin lambasted the previous governments for not enhancing the tax to GDP ratio to a reasonable level for the last 60 years. He said: Tax to GDP ratio right now stands at 9.6 per cent which needs to increase to 15 to 17 per cent if we want GDP growth at 8 to 9 per cent. He stressed that at 9.6 per cent tax to GDP ration it is not possible for a country like Pakistan to grow at 8 per cent.

Tarin was visibly at pain disclosing the fact that FBR collects 60 to 64 per cent tax revenue from the manufacturing sector while it gathers 40 per cent on imports, meaning that there is huge room to expand the tax net.

There was a time when the manufacturing sector was growing at 13.5 per cent, which has now dropped to negative zone. Now it is sheer injustice to add more taxes on this sector. The time has come to impose taxes on sectors like agriculture, services, real estate and stock markets to broaden the tax base.

He said that under budget estimates the government would, other than IMF tranches, get inflows of $4.4 billion under which World Bank will extend $1.4 billion (for projects), ADB $1.7 billion (both for projects and Balance of Payments), IDB $500 million and DFID $235 million. There are also indications that World Bank would increase its loan. ADB is said to have indicated to double its loan to Pakistan, which may increase to $3 billion, Tarin mentioned.

During the meeting, Advisor to Prime Minister on Social Sector Shehnaz Wazir Ali took on the finance ministry saying that expenditure on education has alarmingly dropped to 1.2 per cent and on health to 0.57 per cent of GDP.

Tarin responded that he needed cooperation of the political leadership in enhancing the tax to GDP ratio so that the government has ample revenue, which can be used in education, health and improving infrastructure.

He mentioned that 2.2 million out of 160 million people posses NTN (national tax number), but out of them only 560,000 people file returns, which also includes 16000 companies. This state of taxation is much too alarming.

He also sought cooperation from the government to help him bring agriculture, real estate and stock exchange sectors under the tax net so that the country can be put on a track to development in the real sense.

He also objected to distortions in the taxation system and stressed to make it more simplified. Painting the future outlook of taxation, he advocated levying two taxes only, one being income tax and the other consumption tax.

Tarin disclosed that the government is going to revamp CDNS (Central Directorate of national Savings) as its present state is simply unacceptable. Right now CDNS is working with no automation, no services and no new products.

To make it successful, CDNS has to come up with a positive rate of return on its various schemes. He said that when inflation comes down, discount rates would also tumble and in this scenario CDNS would be able to come up with positive rate of returns to its clients.

Mentioning the appalling condition of the Planning Commission in terms of capacity issues, Tarin vowed to revamp the Planning Commission.

To a question, Tarin said that he and Planning Commission deputy chairman would monitor top 25 projects every month to ensure smooth running of the said projects. 

He said construction of the projects, which have got 40 to 50 per cent allocation, would continue.


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## Neo

*Govt likely to impose income tax on real estate ​* 
*Agriculture will remain exempt from tax for two years: Tarin​*
Wednesday, March 25, 2009

ISLAMABAD: Advisor to Prime Minister Shaukat Tarin on Tuesday indicated the imposition of income tax on real estate in the next budget in a bid to increase the tax to GDP ratio.

Although it is a provincial subject, the government would chalk out a modus operandi to levy tax on this very important sector.

However, he ruled out the inclusion of agriculture sector in the tax net for at least two years, advocating that the sector needs to stabilise first and then the government would not hesitate to levy tax on the sector. He said that in the past farmers were not given the right prices for their produce. We would first increase the farmers income, and then levy income tax.

After a meeting of the Standing Committee of National Assembly on Finance, which was given briefing over the Budget Making Process for 2009-10, Tarin while talking to media said that capital gain tax on stock exchange businesses would not be levied in the next budget for 2009-10, as bourses were given a two-year exemption from any sort of taxation by the government before making the budget for 2008-09.

He unveiled that Pakistan would also seek financial help from Friends of Pakistan to strengthen security forces such as Frontier Constabulary to effectively fight out militants, so that Pakistans territory can be purged from the menace of terrorism. On the issue of no progress on new NFC, Tarin said he would soon place a request with the prime minister, seeking power to chair the NFC meeting so that thorny issues pertaining to the future mechanism of sharing the divisible pool between provinces could be chalked out.

Earlier during the proceedings of the Standing Committee headed by Fauzia Wahab, Tarin lambasted the previous governments for not enhancing the tax to GDP ratio to a reasonable level for the last 60 years. He said: Tax to GDP ratio right now stands at 9.6 per cent which needs to increase to 15 to 17 per cent if we want GDP growth at 8 to 9 per cent. He stressed that at 9.6 per cent tax to GDP ration it is not possible for a country like Pakistan to grow at 8 per cent.

Tarin was visibly at pain disclosing the fact that FBR collects 60 to 64 per cent tax revenue from the manufacturing sector while it gathers 40 per cent on imports, meaning that there is huge room to expand the tax net.

There was a time when the manufacturing sector was growing at 13.5 per cent, which has now dropped to negative zone. Now it is sheer injustice to add more taxes on this sector. The time has come to impose taxes on sectors like agriculture, services, real estate and stock markets to broaden the tax base.

He said that under budget estimates the government would, other than IMF tranches, get inflows of $4.4 billion under which World Bank will extend $1.4 billion (for projects), ADB $1.7 billion (both for projects and Balance of Payments), IDB $500 million and DFID $235 million. There are also indications that World Bank would increase its loan. ADB is said to have indicated to double its loan to Pakistan, which may increase to $3 billion, Tarin mentioned.

During the meeting, Advisor to Prime Minister on Social Sector Shehnaz Wazir Ali took on the finance ministry saying that expenditure on education has alarmingly dropped to 1.2 per cent and on health to 0.57 per cent of GDP.

Tarin responded that he needed cooperation of the political leadership in enhancing the tax to GDP ratio so that the government has ample revenue, which can be used in education, health and improving infrastructure.

He mentioned that 2.2 million out of 160 million people posses NTN (national tax number), but out of them only 560,000 people file returns, which also includes 16000 companies. This state of taxation is much too alarming.

He also sought cooperation from the government to help him bring agriculture, real estate and stock exchange sectors under the tax net so that the country can be put on a track to development in the real sense.

He also objected to distortions in the taxation system and stressed to make it more simplified. Painting the future outlook of taxation, he advocated levying two taxes only, one being income tax and the other consumption tax.

Tarin disclosed that the government is going to revamp CDNS (Central Directorate of national Savings) as its present state is simply unacceptable. Right now CDNS is working with no automation, no services and no new products.

To make it successful, CDNS has to come up with a positive rate of return on its various schemes. He said that when inflation comes down, discount rates would also tumble and in this scenario CDNS would be able to come up with positive rate of returns to its clients.

Mentioning the appalling condition of the Planning Commission in terms of capacity issues, Tarin vowed to revamp the Planning Commission.

To a question, Tarin said that he and Planning Commission deputy chairman would monitor top 25 projects every month to ensure smooth running of the said projects. 

He said construction of the projects, which have got 40 to 50 per cent allocation, would continue.


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## Neo

*Pakistan to get more EU help ​* 
Wednesday, March 25, 2009

ISLAMABAD: European Commissions Director for Asia and DG External Relations, James Moran has said that EU countries would do more to mitigate adverse effects of financial crisis on Pakistan.

The economic and financial crisis being faced by Pakistan cant be ignored and EU and its members would like to do more to mitigate its adverse effects, Moran said during the second meeting of the EC-Pakistan Joint Economic Commission (JEC) held in Brussels. According to a press statement by Embassy of Pakistan in Brussels, received on Tuesday, the meeting was co-chaired by Secretary Economic Affairs Division, Farrukh Qayyum while James Moran led the EU side.

Pakistans Ambassador to EU, Shafkat Saeed and senior officials on both sides participated in the deliberations. The JEC noted that Pakistan was an important recipient of EC economic assistance to the tune of Euro 200 million for the period 2007-2010. By next year the same would be raised further to Euro 72 million on annualised basis. This assistance is in addition to Euro 50 million under EC Global Food Assistance to Pakistan.

In his opening remarks, Farrukh Qayyum urged the development partners in the EU to consider programme based financing on short and medium term basis. He also briefed the joint commission on recent political developments in the country and noted that these positive developments would have profound effect on governance and would strengthen the democratic institutions.

Moran said as democracy dividend the EU was committed to support and strengthen these institutions in any form and shape including training and capacity building of legislature and judicial reforms.

JEC addressed a wide range of issues including political and economic developments in Pakistan, bilateral trade and future cooperation in the fields of customs cooperation, higher education, science and technology, environment and energy policy.

Three working groups on governance, human rights and migration, trade and cooperation (including development assistance) submitted their recommendations to the joint commission. The joint commission discussed progress in electoral reforms in Pakistan in the context of recommendations put forward by an EU Election Observation Mission following the February 2008 preliminary elections.

In the field of human rights, issues related to womens and childrens rights, media freedom and protection of minorities were discussed. Representatives from Pakistan briefed the European Commission on a number of legislative and administrative measures taken in this context.

The Joint Commission reviewed bilateral trade and acknowledged EUs importance to Pakistan for trade ad Pakistans largest trading partner. The trade relationship was worth Euro 7.2 billion in 2007 and is growing. The meeting discussed suitable measures for further increasing Pakistans market access to the EU, including Pakistans request to negotiate a Free Trade Agreement. The joint commission also discussed regulatory issues, including intellectual property rights and competition.

The joint commission expressed satisfaction that the Civil Aviation Agreement between EU and Pakistan was signed in February and also noted with appreciation that the anti-dumping duty on bed linen. It was also noted that recent approval of EU 100 million by the European Investment Banks (EIB) Management Board to Pakistan would send positive signals to other international financial institutions besides bringing synergy into similar engagements especially during the forthcoming meeting of Friends of Pakistan to be held on April 17, in Tokyo. The JEC meeting was also preceded by Regional Economic Coordination Conference on Afghanistan preparatory meeting organised by the EU and attended by regional and donor countries and international organisations. Pakistan will host the next RECCA meeting while the first was held in India in 2006.


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## Neo

*Packages to issue right shares worth $50m to IFC​*
KARACHI: Packages Limited will issue preference shares of $50 million to International Finance Corporation at a subscription price of Rs 190 per share, the company said on Tuesday. In a letter it sent to the Karachi Stock Exchange, the company said the sale of shares to IFC represented approximately 20 percent of the company's shares on a fully diluted basis immediately following the investment. The preference dividend rate is agreed at 10 percent per annum in Pak rupees and is cumulative and deferrable up to year 2013, according to the letter. Thereafter it shall be paid each year till IFC exercises its right to convert the preference shares into common shares of the company. The company may, if offered by IFC, buyback the IFC convertible preference shares in cash instead of converting them into common shares.


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## Neo

*SBP has taken several initiatives to boost SME financing: Salim Raza​*
KARACHI: Syed Salim Raza, State Bank of Pakistan governor said on Tuesday that the central bank had taken a number of initiatives for the promotion of SME financing in the country. Addressing a press conference at the launching of a Pilot Programme for Training and Development of SMEs in Pakistan under the aegis of Standard Chartered Bank and International Finance Corporation of the World Bank at Lahore Chamber of Commerce and Industry, he stressed the need for enhancing access of credit to small and medium enterprises, especially the small entities.

He urged commercial banks to increase financing to SMEs, enabling them to play their due role in the economic development of the country.

If SMEs are broadly bifurcated into M and S categories, we find that entities under M have had easy access to finance as compared to [sic] those under S, he said and added the synopsis of SME finance also reflected that out of total SME portfolio of Rs 383 billion, only 38.3 percent was being channeled to entities having less than 20 employees.

This depicts that the focus of financial institutions has been on medium entities, he said and added the primary reason for this skewed distribution was the unorganised way of doing business of small entities.

Referring to major hurdles in the way of development of SMEs in Pakistan, Raza said that major issues faced by SMEs were lack of skilled labor, outdated technology, weak governance, lack of management hierarchy, absence of book keeping, taxation issues coupled with limited access to formal sources of finance.

He said the State Bank had allowed commercial banks to lend up to Rs 3 million to SMEs without collaterals and was encouraging them not only to introduce cash-flow based methodologies instead of relying on the tradition collateral-based lending, but also to come up with innovative products and cost-effective delivery channels to increase outreach to small enterprises.

He said the State Bank was also working for capacity-building of banks through launch of SME Finance Grass Root Cluster Training Programme for credit officers based in SME Clusters in Lahore, Sialkot, Gujranwala, Rawalpindi, Peshawar, Quetta and Karachi. Similarly, the central bank was also working on devising a Credit Guarantee Fund for Small and Rural Enterprises with the help of DFID, UK, he said.

Highlighting the importance of SMEs, he said globally SMEs had helped to achieve diversified economic growth, employment generation, reduction in income inequalities and poverty alleviation in developed and the emerging economies like USA, Japan, Malaysia, Thailand and South Korea. He said that focus on SMEs could help achieve the Millennium Development Goals of the UNO of ending poverty & hunger, universal education and gender equality in developing countries like Pakistan. He said the Pilot Programme, launched jointly by SCB and IFC, was a landmark attempt to develop the capacities of smaller entities. It would be helpful in developing innovative products such as hybrid financing models combining consumer and micro finance models, Raza said and added that it would encourage other banks to focus on this area.


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## Neo

*ADB loan re-lending to power sector: ECC refuses to change policy​* 
ISLAMABAD (March 25 2009): The Economic Co-ordination Committee (ECC) of the Cabinet has refused to change the on-lending policy for the Ministry of Water and Power, which intended to on-lend Asian Development Bank (ADB) loan at 12 percent, rather than at prevalent rate of 17 percent, sources close to Ministrys Additional Secretary, Zarar Aslam, told Business Recorder here on Tuesday.

Sources said: "Power Transmission Enhancement Project was approved by Executive Committee of the National Economic Council (Ecnec) on February 6, 2008, and an agreement was signed between GoP (borrower) and ADB on May 20, 2008 to seek financing for a Power Transmission Enhancement Investment Program (Ordinary Operations, tranche-II) as described in the schedule I (description of the project) of loan agreement.

Keeping in view the Ecnec decision, ADB agreed to lend to the GoP from ADB ordinary capital resources $220 million against Loan No 2396 - PK. The terms and conditions of the loan agreement envisaged payment of interest on the principal amount withdrawn and outstanding for each interest period equal to the sum of Libor and 0.60 percent as provided in section 3.02 of the loan regulations, less a credit of 0.40 percent as provided in section 3.03 of the loan regulations. The borrower will pay commitment charges at the rate of 0.15 percent per annum. The loan has a term of 20 years, including a grace period of three years, as provided in schedule 2 of the loan agreement.

Article 3.01 of the loan and project agreement provides that the "borrower shall re-lend the proceeds of the loan in rupee to National Transmission and Dispatch Company (NTDC) under an on-lending agreement upon terms and conditions satisfactory to ADB. The foreign exchange risk will be borne by the borrower.

The Ministry was of the view that since the ECC had already approved re-lending to NTDC at the interest rate of 12.0 percent per annum, in ADB loan No 2289-Pak, tranche-I for ordinary operation, ADBs loan No 2396-Pak, for tranche-II (ordinary operation) should also be approved on the same terms and conditions.

Sources said that when the issue came under discussion in the ECC meeting, most of the members opposed the proposal, which was consequently rejected. "The ECC did not accept the proposal, and directed that its earlier decision of March 3, 2009 regarding re-lending rates be followed," sources added.

Earlier, the ECC had decided that re-lending rates for the federal government entities, DFIs, autonomous bodies and corporations would be 17 percent, including exchange risk component. The Economic Affairs Division (EAD) had made following recommendations to the ECC in its meeting on March 3, 2009.

Old re-lending formula was "GoPs foreign borrowing cost (of last 28 years)+ ERC (weighted average yield of PIBs for 15, 20, 30 years, US Treasury rates)+ administrative charges) ie 4.5 percent +( 14.7 percent -3.0 percent)+ 0.75 percent = 16.96 percent or 17 percent.

Revised re-lending formula was " GoPs average foreign borrowing cost (of last 28 years)+ ERC (5 years moving weighted average yield of PIBs for 15, 20, 30 years-US Treasury rates + administrative charges) ie 4.5 percent +(11.56 percent-4.74 percent)+ 0.75 percent = 12.7 percent or 12 percent.

In the default cases of recovery of re-lent loans, late fee on the due instalment( principal + interest) @ 1 percent during the first year of default, 2 percent during second year of default, 3 percent during 3rd year of default be charged.

Sources said that the Ministry of Water and Power has been demanding since long that Pepco and NTDC should be provided re-lent loans on lower rate than other corporations or it should be allowed to take loans from the market on negotiated terms and conditions. This demand of the Ministry has not been met so far, sources added.


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## Neo

*Top economic managers for shelving IPI project​* 
ISLAMABAD (March 25 2009): Pakistans top economic managers are reported to have suggested to the government to shelve the multibillion-dollar Iran-Pakistan-India (IPI) gas pipeline project, and instead explore domestic resources to meet the energy requirements, official sources told Business Recorder. The Bush-time White House had strongly resisted the IPI, and had exerted considerable pressure on both India and Pakistan to abandon the project.

The Bush administration was, instead, supporting the purchase of energy from the energy-rich Central Asian Republics, contiguous to Afghanistan, to the energy starved South Asian nations. However, geopolitical considerations, as well as continuing security issues in Afghanistan, continue to militate against that deal from materialising. It is not yet clear how the Obama White House views the IPI.

"Alternative options for exploring domestic resources, such as coal, wind, water, etc, should be considered instead of making heavy investment in this project," sources quoted Advisor to Prime Minister on Finance Shaukat Tarin as saying in the Economic Co-ordination Committee (ECC) meeting on March 19. He said that IPI project should be contrasted with the comparative advantages of projects that could be initiated with coal, hydel and/or wind resources, sources said.

The ECC meeting was told that the Iranian government had asked Pakistan that the Gas Sale Purchase Agreement (GSPA) for the supply of one billion cubic feet daily of natural gas should be signed during the current year, ending on March 20, 2009. Iran had also warned that after the passage of the deadline of March 20, 2009, it would be free to sell gas to other buyers. Rise in gas price by 10 percent was also anticipated, sources added.

Both Pakistan and Iran negotiated the agreement and, after thorough deliberations, Iranian side finally offered gas price which resulted in a crude oil parity of 80 percent--a small discount to the price of Iranian gas being sold to Turkey--,sources said.

They said that when the IPI proposal came under consideration in the meting, the ECC discussed its advantages and disadvantages in detail along with project cost. It was said that the gas would be used for power generation only, to replace use of furnace oil, and would be available in five years. Some ECC members were of the view that even though the cost of Iranian gas was high, this could be offset by a firm supply of gas in the future to the country through the pipeline.

"Apprehensions were also raised with regard to termination of the contract after construction of the pipeline, uncertainty of arbitration forum, further increase in gas price on a billion dollar investment and Pakistans recourse," sources quoted Petroleum Ministrys technical personnel as commenting on the project.

However, another opinion was that the imported gas remained the cheapest mode of meeting energy requirements. After discussion, it was felt in the ECC that as approval of such a vital project did not fall in its jurisdiction, it suggested that it should be placed before the Cabinet.

According to the summary moved to ECC, a copy of which was made available to this newspaper, the Petroleum Ministry had recommended purchasing gas specifically for power generation that would be supplied to power generation units through the public sector gas utility companies under the administrative control of Petroleum Ministry.

A separate tariff had been recommended for those industrial consumers who would use imported gas. Petroleum Ministry has been proposed to be the administrative ministry in this regard. The project envisages import of one billion cubic feet daily (bcfd) of natural gas, which is nearly 25 percent of Pakistans current gas production.

The project will take at least 4 years to complete, and be able to generate 5,000 megawatts (mw) power. According to an analysis, imported Iranian gas would result in annual saving of $1 billion over import of furnace oil, (at crude oil price of $50 per barrel).

Similarly, there would be an annual saving of $735 million, if equivalent quantity of LNG would be imported. The saving will increase in line with the hike in global crude oil price. The IPI project would have immense economic benefits for the people of Pakistan. It is pertinent to note that President Asif Ali Zardari also reportedly stated at a meeting last week that the new parliament of Iran must decide about gas price regarding the IPI gas pipeline project.


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## Neo

*425 megawatts Nandipur power project: $150 million credit deal signed with foreign banks consortium​*
BEIJING (March 25 2009): A foreign banks consortium, comprising BNP Paribas, HSBC Bank plc, the Export-Import Bank of China, has signed a Sinosure buyer credit facility agreement of 150.151 million dollar with Northern Power Generation Company Limited for construction of 425 MW combined cycle power project at Nandipur, Finance Director of the company Ijaz A. Babar told APP.

The CIC France is also a part of consortium through a participation agreement with BNP Paribas, France, he said. Northern Power Generation Company Limited (NPGCL) is the biggest thermal generation company operating under the overall management of the Pakistan Electric Power Company (Pepco).

The agreement was signed with the consortium, comprising worlds top class banks like The Export-Import Bank of China, BNP-Paribas, France, HSBC Bank plc, Paris branch, and CIC France on Thursday, he said. NPGCL is constructing a 425 MW combined cycle power plant at Nandipur, near Gujranwala with the EPC cost of 329 million dollars.

The main EPC contractor is a leading Chinese company, Dongfang Electric Corporation Limited, with sub-contractor G.E. France. The credit facility is covered by China Export and Credit Insurance Corporation. Ijaz Babar said that earlier, a foreign banks consortium, consisting of BNP-Paribas, France, HSBC Bank plc, Paris branch, and CIC France had signed a Euro 68.97 million Coface Buyer Credit Facility Agreement on October 3, last year for the project.

BNP-Paribas, by signing both the credit facilities, has now also fulfilled its commitment as initial mandated lead arranger made for the project with the government of Pakistan, Ijaz said. Appreciating the financial deal, Ijaz said that in spite of the fact that the world was passing through grave economic crisis, these banks had fulfilled their commitment, which exhibited confidence they had on strong fundamentals of Pakistans economy.

Ijaz said that the agreement would help in a long way in improving the financing arrangements for the other projects in the pipeline by Wapda/Pepcos corporatised entities namely 425 MW Chichoki Mallian;

700-800 MW Guddu power project; and 969MW Nelum Jehlum hydropower project with due support from Chinese and European banks. Chief Executive Officer Muhammad Rafiq Butt and Finance Director Ijaz A. Babar signed on behalf of Northern Power Generation Company, whereas Chief Executive Officer Francois Cristofari and head of Export Finance (Middle East/Africa) Gerard Lagouarde, signed on behalf of BNP Paribas (China) Limited.

Amongst other signatories to the agreement was Deputy General Manager of the Export-Import Bank of China Zhu Li and Director of Middle East and South Asia of HSBC Bank plc Simon Lee. First Vice-President Jacques Vincent especially visited to sign the participation agreement with BNP Paribas.

The signing ceremony, held last week, was attended by Deputy head of Pakistan mission Abdul Salik Khan, Minister (Economic) Sardar Aminullah Khan and Commercial Counsellor Naeem Khan.

Abdul Salik Khan, expressing his views, said that financial close of such an important project at this point reflected a confidence of financial institutions on the strong economic indicators and policies of present government of Pakistan, and congratulated all the participants for this success. Signing ceremony was followed by a dinner, hosted by head of Export Finance, BNP Paribas (China) Limited Antoine Gustin.


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## Neo

*MSCI Barra to include Pakistan in frontier index ​*
KARACHI (March 25 2009): Index provider MSCI Barra said on Tuesday it will include Pakistan in its frontier market index as of the close of May 29. Pakistan was removed from the MSCI Emerging Markets Index at the end of December.


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## Neo

*Wrtsil to deliver another major power plant to Pakistan​*
HELSINKI (March 25 2009): Wrtsil company received another major order from Pakistan, by Liberty Power Tech Ltd, an independent power producer (IPP). The contract value is about euro 137 million. Total gross power output of the plant is 200 MWe, located near Faisalabad, Punjab, it is due to be commissioned in December 2010, and would supply electricity to the countrys national grid.

This order follows three other IPP projects signed by Wrtsil in 2007 and 2008. Including last four orders, total generating capacity delivered by Wrtsil to Pakistan, will exceed 1700 MWe.

Liberty Power Tech combined cycle solution is EPC (engineering, procurement and construction) order and comprises 11 Wrtsil 18V46 generating sets. In addition to equipment supply, Wrtsil will erect, test, commission plant, and provide local construction supervision.

An O&M contract to operate and maintain it is under negotiation between Wrtsil and the customer. "The need for power generation and energy production is growing rapidly in Pakistan. With Wrtsils support and advisory services, we have been able to arrange financing for power plant project," said Ashraf Mukaty, Sponsor-Director of Liberty Power Tech Ltd.

It will have notably high overall efficiency of 45 percent for lifetime of plant when running on heavy fuel oil at site conditions. This level of efficiency on low-cost fuel oil will enable generating costs to be very competitive.

"We look forward to serving Liberty Power Tech throughout its lifecycle. It endorses reputation of Wrtsil equipment and service capability we are able to provide," said Nomi Ahmad, Regional Director, Middle East, Wrtsil Power Plants. Liberty Power Tech signed Power Purchase Agreement with National Transmission & Despatch Company, and Implementation Agreement with Pakistan Government under 2002 Energy Policy.


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## Neo

*Pakistans need for more foreign assistance​*
EDITORIAL (March 25 2009): An exclusive Business Recorder report reveals that the government is considering requesting Kuwait to extend credit facility for oil imports on deferred payment from 60 to 360 days. The rationale for this request is evident: the massive circular debt is disabling the capacity of the country to import crude to meet our energy needs.

Considering that the trade deficit is also expected to worsen with Pakistans major trading partners cancelling their orders due to the global recession it is a foregone conclusion that our foreign exchange reserves position would also deteriorate in months to come. In this context any reprieve from our major importers in terms of deferred payment is likely to be welcomed.

Be that as it may, till end of last year the present government had not succeeded in generating the amount of foreign assistance it required to reverse the macroeconomic crisis it faced. That the scale of this crisis required immediate action is acknowledged in the Letter of Intent (LoI) submitted by the government to the Board of the International Monetary Fund on November 20, 2008: CPI 12-month inflation rose to 25 percent in October 2008.

The external current account deficit widened to about 14 billion dollars or 8.5 percent of GDP in 2007/08. Fiscal deficit is estimated to have risen to 7.4 percent of GDP. Liquidity problems have emerged. Financial market indicators have deteriorated. These disturbing indicators led to the approval of a 7.6 billion dollar stand-by arrangement (SBA) which was considered inadequate to meet the countrys needs at the time.

However, the government fully expected to generate its remaining requirements from multilateral donors as well as from Friends of Pakistan. While the multilaterals have extended assistance to Pakistan as promised and China has extended 500 million dollars for support yet the Friends of Pakistan have proved disappointing, in spite of hectic diplomatic efforts launched by the government and spearheaded by President Asif Ali Zardari himself.

It was argued late last year that putting the country on the IMF programme, which would be strictly monitored by the Fund staff to ensure that Pakistan was striving to meet clearly stipulated targets, would strengthen the friends confidence in our economy and thereby trigger further assistance from Friends of Pakistan.

That this has not happened to-date may partly be a reflection of the needs of our friends to mobilise their resources to meet their own needs that are apparent as a consequence of the global recession. In addition, it is being argued that governance continues to be perceived to be poor in this country even with the advent of a democratic dispensation - a fact that is militating against additional support for Pakistan at the present moment in time.

The Japanese government is to host the next Friends of Pakistan meeting in April and the Pakistani government in general, including the Advisor to the Prime Minister on Finance Shaukat Tarin, is hopeful that it would be able to generate 6 to 7 billion dollars worth of assistance money that is urgently required.

Analysts are sceptical that the government would succeed in these efforts in spite of being on the IMF programme for nearly four months. In this context it is hoped that the government does formulate an indigenous plan on an emergent basis that is based exclusively on generating resources domestically to meet domestic needs. This would require slashing expenditure and increasing revenue generation capacity.


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## Neo

*Pakistan to Seek $10 Billion From Friendly Nations ​*By Khaleeq Ahmed and Khalid Qayum

March 25 (Bloomberg) -- Pakistan will seek $10 billion over the next three years from the Friends of Democratic Pakistan group, which was established in September to help the nation stabilize its economy, a spokesman said.

We have identified priority projects for which we want funds from member countries, Foreign Ministry Spokesman Abdul Basit said by telephone from Islamabad today. The projects will help reduce poverty, meet security challenges and boost human resource development, health and education, he said.

President Asif Ali Zardari will head a meeting of the U.S.- led, 25-member group scheduled to be held on April 17 in Tokyo. Pakistani officials and representatives of member countries will meet in Abu Dhabi, a state of the United Arab Emirates, on April 1 and 2 to fine tune the details of projects, Basit said.

Pakistan needs financial support to revive an economy hurt by political instability and the fight against Taliban militants in the tribal areas bordering Afghanistan. South Asias second- biggest economy averted defaulting on its debt in November after it received the $3.1 billion first installment of the $7.6 billion bailout by the International Monetary Fund.

This is the time Pakistan could actually get this amount, said Suleman Akhtar, an economist at Foundation Securities Ltd. in Karachi. The world seems to understand the situation Pakistan is going through politically, economically and strategically.

The funds will be sought in the form of aid, Finance Adviser Shaukat Tarin said by telephone from Islamabad today. Pakistan will receive its second installment of $840 million from the IMF loan on March 30, he said.

Member Countries

Pakistani foreign ministry officials briefed the envoys of member countries in Islamabad yesterday about the proposed development projects, Basit said.

Pakistan revised its economic growth target in February for the fiscal year ending June 30 to 2.5 percent, from a previous estimate of 3.4 percent. The economy expanded an average 6.8 percent in the past five years. Inflation is forecast by the central bank to average 20 percent this fiscal year.

The countries in the group recognize the need for building strategic partnerships with the government of Pakistan to promote economic development and financial stability, address its energy needs, build institutions and bring peace and stability to the region, according to a statement on the Web site of the foreign ministry.

The group includes Australia, Canada, China, France, Germany, Italy, Japan, Saudi Arabia, the United Arab Emirates, the U.K., the U.S, the World Bank and the Asian Development Bank.


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## ejaz007

*Govt perusing TAPI, other gas projects seriously *

ISLAMABAD: Adviser to prime minister on Petroleum and Natural Resources, Dr Asim Hussain on Wednesday said the upcoming steering committee meeting on Turkmenistan-Afghanistan- Pakistan-India (TAPI) project would produce positive outcome in the negotiations on the project. He declared that this project would help promote political goodwill in the region. He highlighted that Pakistan was vigorously pursuing the TAPI gas pipeline projects and other gas import projects to meet the growing energy demands of the country. staff report

Daily Times - Leading News Resource of Pakistan


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## Neo

*WB to resume $500m programme loan today ​* 
Thursday, March 26, 2009

ISLAMABAD: The World Bank is all set to resume programme loan worth $500 million for Pakistan on Thursday under the Poverty Reduction and Economic Support Operation (PRESO) after a pause of almost one and a half years. 

An official document exclusively available with The News comprising details of proposed PRESO reveals that Pakistan has agreed to the WB withdrawal of power subsidies, automatic fuel price adjustments, reduction in carry forward of development spending and strengthening of public debt management as well as expanding targeted subsidy to 40 million or 25 per cent population living below the poverty line. 

The WB had suspended its programme loan for Pakistan during last fiscal year 2007-08 when Musharraf-Aziz government was unable to control political upheaval after March 9, 2007 and took crucial decisions on the economic front. 

However, the document states the PRESO proposed the government to introduce an automatic fuel price adjustment mechanism, which is likely to provide benefits to consumers during the current period of low crude prices. 

Interestingly, the WB assessment observes electricity tariff increases are unlikely to have any direct adverse impact on poor people. It further states fortunately, the recent decline in international commodity prices makes reduction in domestic food and fuel prices more likely than increases, which allays the earlier mentioned concerns. The proposed PRESO action on fuel is expected to benefit all households. 

The WB will provide Special Drawing Rights (SDR) of 321.3 million (equivalent to $500 million) on standard IDA terms with a 35-year maturity and 10-year grace period. 

The WB executive board is scheduled to take up the issue of $500 million loan in shape of single tranche policy development credit under PRESO for Pakistan on Thursday when it will meet in Washington. 

When contacted, Secretary Finance Salman Siddiq also confirmed on Wednesday night that the WB board will take up approval of PRESO for Pakistan on Thursday. Under this proposed loan agreement, Pakistan will undertake actions for regaining and maintaining macroeconomic stability through increased tax revenue mobilization, adjustment of fuel prices and power tariffs, improved efficiency of public spending, and strengthened government debt management, enhancing competitiveness through reduced barriers to business entry and exit, and strengthened financial sector, protecting the poor and vulnerable through improved targeting of safety nets and cash transfer programmes, and strengthened statistical systems. 

Improved access to social safety nets for the poorest 25 per cent of the population will be achieved during the next three year period, the document states. The PRESO aims to support the implementation of Pakistans recently adopted Second Poverty Reduction Strategy Paper (PRSP-II. The reform programme supported by PRESO is built on three pillars focusing on: (i) regaining and maintaining macroeconomic stability; (ii) enhancing competitiveness; and (iii) protecting the poor and vulnerable. The specific reforms to be supported in each area are detailed in the government and the State Bank of Pakistans letter of development policy. PRESO will focus on actions that are critical for economic stabilization and promotion of competitiveness, protection of the poor and vulnerable, as well as for achievement of the set outcome goals. 

The immediate task at hand for the authorities will be to re-stabilize the economy and narrow macroeconomic imbalances. 

The sharp increase in economic imbalances in 2007-08 was largely caused by government overspending-in particular on fuel and power subsidies-and under-forecasted domestic interest payments. Therefore, in addition to ensuring that energy subsidies remain within the limits of the budgeted amounts, it will be essential to reinstitute automatic price adjustment mechanisms for both fuel and power to avoid similar problems in the future. 

Bringing the power tariff to the cost recovery level will also be essential for putting the power sector on financially sustainable footing and attracting foreign investors to the sector, the PRESO document states. 

In addition, the document states, the proposed programme will support reforms to improve the efficiency and prioritization of public spending. The governments development programme portfolio has expanded to an unmanageable level with about 2,000 different schemes, a large annual throw forward and little sense o f prioritization of activities. Efficient cash management is also lacking, and public procurement remains relatively non-transparent, the document pointed out. 

In the current environment, it is imperative to raise the efficiency of public spending. Further, the governments debt management needs urgent attention. PRESO is proposed to support reforms in all these areas. A stable financial sector is also essential for development. The global financial crisis and the needed macroeconomic adjustment can be expected to put strain on the financial sector, threatening its stability. Thus, the proposed reform programme will support measures to improve the stability of the system. The reform programme would support the efforts of the authorities to improve the targeting of the existing social safety net system, and in particular the targeting of the Benazir Income Support Programme. 

The programme is also proposed to support statistical reform to enhance the reliability of economic and social data.


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## Neo

*US, Pakistan discuss ROZ bill ​* 
Thursday, March 26, 2009

ISLAMABAD: US Ambassador to Pakistan Anne W Patterson on Wednesday called on the Minister of State for Investment and Chairman Board of Investment, Saleem H Mandviwalla and discussed implementation and other important aspects of the bill related to the Reconstruction Opportunity Zones (ROZs) for NWFP.

According to a press release issued by the Ministry of Investment, the US Ambassador informed the minister that this measure has been introduced in the US Congress to launch a preferential trade programme through establishment of ROZs in Pakistan and Afghanistan.

This would give the people in impoverished areas a new economic hope and help curb violent extremism. The US ambassador and the minister expressed satisfaction over the steps taken by the NWFP government for restoration of peace in Swat, it added.

The minister assured the ambassador that the federal government would fully support the regions socio-economic welfare and early rehabilitation of internally displaced persons in the valley.

Referring to the Reconstruction Opportunity Zones, the minister said the passage of this bill would expedite socio-economic development in FATA. However, the minister of state also urged upon the US government to build and liaison directly with the people and business community in the province of NWFP for expediting their financial support.

He further said that economic development of people will be vital in rooting out the menace of extremism in the region through a holistic approach, including other components as well, the press release added.


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## Neo

*Pakistan pursuing TAPI pipeline project: adviser ​* 
Thursday, March 26, 2009

ISLAMABAD: Adviser to Prime Minister on Petroleum and Natural Resources Dr Asim Hussain on Wednesday said that Pakistan was vigorously pursuing the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project and other gas import projects to meet the growing energy demand of the country.

He was talking to Sapar Berdiniyazo, Ambassador of Turkmenistan in Pakistan, who called on him here at his office.

Referring to the economic and political significance of the TAPI gas pipeline project for the entire region, the adviser stressed the need for its early implementation, saying that it would help strengthen and expand economic and trade relations among regional countries. The adviser said that upcoming steering committee meeting on TAPI project would produce positive outcome and declared that the project would help promote political goodwill in the region.

The ambassador said that beyond the TAPI gas pipeline project, Turkmenistan desires to further deepen bilateral relations in different fields.


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## Neo

*Metro aims to expand business in Pakistan ​* 
Thursday, March 26, 2009

KARACHI: Metro has been successfully operating in Pakistan with its four centres despite tough economic conditions in the last six months and now with our first centre in Karachi we aim to open many more outlets in the financial hub of Pakistan, said James Scott, Regional Operating Officer Asia Pacific, Metro Cash and Carry. 

He was talking to The News on the sidelines of the opening ceremony of its first Metro Cash and Carry wholesale centre here on Wednesday. He said: We are already operating four centres in Pakistan, we have been successfully coping with the economic slowdown in the world economy, especially in the last six months. Our total investment in existing five centres is almost 100 million euros (Rs11.8 billion) with each centre 20 million euros (Rs2.3 billion). We are satisfied with our performance. 

When asked why two weekly wholesale bazaars have been shut down recently in the vicinity of new Metro centre, he said we are inaugurating this centre today and these bazaars have already been shut down so there is no possible connection between the two events, and we are open to all sorts of competition. 

Metro is already running four wholesale centres in Pakistan, two in Lahore, one in Islamabad and one in Faisalabad. It exclusively caters to professional customers like hotels, restaurants and small retailers like Kiryana stores. 

Scott said: We only deal with professional customers and do not sell products to private customers (in retail). 

Giovanni Soranzo, MD Metro Cash and Carry, Pakistan, said with the population of over 170 million people and more than a million residents in eight cities, Pakistan is a very attractive and important market for our company, adding that we see a vast prospect for our business, and will continue to invest in Pakistan to grow in coming years. 

Along with expansion, we aspire to contribute to economic growth of the country. He said the average capital investment for this new Metro Cash and Carry outlet is Rs2 billion.


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## Neo

*Key issues identified for improving competitiveness ​* 
Thursday, March 26, 2009

ISLAMABAD: The National Policy Platform for Competitiveness and Economic Growth (NPPCEG) formally started deliberations over the key policy issues to provide recommendations to the government for improving competitiveness of Pakistans economy.

The NPPCEG has been constituted to bring together research and public institutions and provide recommendations to the government for developing a competitive and sustainable economy.

The first meeting of NPPCEG was held here on Wednesday. State Minister for Finance and Economic Affairs, Hina Rabbani Khar inaugurated the meeting while Chairman of NPPCEG, Shahid Javed Burki chaired it.

In her inaugural address, Hina Rabbani Khar said that one of the key objectives of the platform would be to play the role of a learning platform to strengthen the capacity of the Pakistani research institutions and think-tanks to carry out applied research and economic and policy analysis.

These institutions would then be in a position to analyse the governments economic reform agenda and inform its policymaking decisions, she remarked.

She said that the other key objective of the platform would be to launch dialogue with the policy makers in the public and private sectors.

The meeting discussed key policy issues as identified by NPPCEG Chairman and Competitiveness Support Fund (CSF) for analytical work and policy advice to the government of Pakistan for improving the competitiveness of the countrys economy and bolstering the prospects of growth.

The issues identified included demographic asymmetry and demographic window of opportunity, human resource development, the construction industry, trade facilitation, retail trade, agriculture marketing, urbanisation, urban employment and urban services.

Besides, the platform also discussed the issue of fiscal decentralisation and the use of fiscal policy for influencing inter-personal and inter-regional income distributions, whereas private health insurance and pension funds also came up for discussion.

Later, addressing a press conference, Shahid Javed Burki said that the platform would be holding meetings after every three months, adding that the next meeting of the platform would be held in early May. He underlined the need for skill development of the youth, saying that there were about 80-85 million people less than 17 years old and this young generation could be capitalised for developing a sustainable economy by providing them with proper training.

He said that the construction industry has the potential to generate jobs to help overcome unemployment problems and stressed the need for agriculture marketing for proper utilisation of agricultural produce.

Speaking on the occasion, CSF Chief Executive Officer, Arthur Bayhan said that coordinated efforts across the board would help produce better outcome. He expressed hope that recommendations provided by the platform would help develop a sustainable economy and generate employment in the country.


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## Neo

*Obama Plan promises Pakistan the moon ​* 
*US backs stable and vibrant democracy in Pakistan, says embassy spokesman​*
Thursday, March 26, 2009
By Ansar Abbasi

ISLAMABAD: Those having faith in, what they call, Obama Plan for this region foresee remarkable changes in Pakistan to bring political stability, good governance and economic development in the country.

The recent resolution of the judicial crisis was said to be part of the same Obama Plan, which now envisages the return of PML-N in the federal government, return of PPP-PML-N government in Punjab, introduction of constitutional and judicial reforms in line with the Charter of Democracy, strengthening of the Office of prime minister, empowerment of the Parliament, and the unfolding of a countrywide programme of construction and development.

US embassy spokesman Jeremiah Knight when approached though did not confirm or deny the existence of any Obama Plan for this region including Pakistan, said that Washington is happy over the peaceful resolution of the judicial crisis in Pakistan.

When asked if there exists any Obama Plan for the region and for Pakistan and that it envisages the formation of national governments at the Centre and in Punjab, the implementation of Charter of Democracy, the repeal of 17th Amendment etc, he said, The US supports the creation of stable and vibrant democracy in Pakistan. He said that Washington is happy over how the major political parties in Pakistan have advanced in the recent past.

An informed source while quoting an Islamabad-based diplomat, who is said to be aware of the details of what he called the Obama Plan, said that a long-term solution to the problems associated with the Gwadar Port vis-a-vis the divergent strategic interests of US and China would also be explored in regional context, and in this regard all the concerned parties will be taken into confidence for seriously considering the following options. Regarding Pak-India relations, the proxy war between the two are being checked and controlled completely.

As reported earlier by The News, the same source had indicated that the judicial crisis would be resolved by March 16. The resolution of the crisis, it is said, would pave way for the PML-N to rejoin the PPP-led federal government and to jointly pursue the constitutional/judicial reforms under the Charter of Democracy.

The source claims that after the resolution of the judicial crisis, broad-based coalition governments at the federal and provincial levels are to be established thereby involving all major political parties (who matter) so as to give an outlook of a national government. Target date for it is said to be March 31, 2009.

The Office of prime minister and Parliament in Pakistan will be strengthened through certain constitutional amendments. Target date for this is said to be April 30, 2009. The coalition government of PPP, PML-N, ANP, etc will be encouraged to ensure good governance in Pakistan and to generate employment opportunities through a country-wide programme of construction & development thereby initiating infrastructure development projects, social & economic activities, health and education projects etc. 

Target date for this is said to be June 30, 2009. However, the USA and other countries in the group of Friends of Pakistan will only offer their respective financial and economic development assistance packages to Pakistan unless and until a stable coalition government presenting the outlook of a national government in Pakistan is ensured. Target date for such an understanding with the Friends of Pakistan is May 30, 2009.

Regarding long-term solution to the problems associated with the Gwadar Port and the divergent strategic interests of the US and China related thereto, it is said, would be explored in regional context, and in this regard all the concerned parties will be taken into confidence for seriously considering the following options: Let Pakistan declare the Gwadar Sea Port as an international open port; Let both the USA and China jointly invest into developing the Gwadar Port as a Deep Sea Port of international standards; Let the USA build a land route and oil/gas pipelines from the Gwadar Deep Sea Port to the Commonwealth of Independent States (CIS) of Central Asia through Afghanistan; Let China construct a land route and railways (if feasible) from the Gwadar Deep Sea Port to its Khunjerab Pass and onward through Balochistan, NWFP and Northern Areas; Let India construct a motorway from New Delhi to Lahore and then Pakistan constructs a motorway and railways (if feasible) from Peshawar to Jalalabad, city of Afghanistan, and at the same time, Afghanistan constructs a motorway and railways (if feasible) from Jalalabad to the American-sponsored land route extending to the CIS thereby providing India and Pakistan a joint access to Afghanistan and to the Central Asian States; Let Iran construct a motorway and railways (if feasible) to the American-sponsored land route in Afghanistan extending to the central Asian CIS member states thereby providing Iran a land access to Afghanistan and the Central Asian States, and also to China through Pakistan or through the CIS; and Let India, Pakistan and Iran jointly build a gas pipeline from Paras Gas Field of Iran to India through Pakistan for meeting the growing energy needs of both India and Pakistan.

The above solution, the source said, will provide a way forward to all the concerned countries thereby transforming into an economic inter-dependent region of peace and mutual cooperation to their respective benefits and prosperity.

Unlike his predecessor, the source said, President Barack Obama is bringing a paradigm shift in the US policy towards handling the present situation in Afghanistan and Pakistan. The source claimed that he has been duly warned by many think tanks in the USA and Europe that Washington has got only six to 12 months to save Pakistan falling into chaos of international consequences. Therefore, the US-administration under President Obama in collaboration with European Union and Pakistani authorities has to come up with a pragmatic plan for resolving the ongoing conflict and armed struggle in Afghanistan by the Afghan-Taliban (including al-Qaeda) and the insurgency in Fata and Swat by the TTP (including al-Qaeda, drug mafia and criminals), under which the following actions might take place in the very near future: To hold free & fair elections (under UN or a fair mechanism) in Afghanistan thereby openly allowing the Afghan-Taliban to participate in the upcoming elections so that Taliban (predominantly Pashtoons) should have a justification of quitting their armed struggle and joining the government in Afghanistan. Target date: September 30, 2009.

The US-led Nato forces, Afghanistan, Pakistan and India (and may be Iran too) will have jointly to stop heroin production in Afghanistan and its smuggling out of the country through Pakistan, Iran and the CIS.

The coalition forces and the Afghanistan government will not allow any poppy growing and production and processing the heroin in Afghanistan. India will stop supplying the chemicals for heroin processing into Afghanistan. The Pakistan government will stop heroin smuggling through its territory. It will result into stopping the money supply out of this drug trade to the Afghan-Taliban and the TTP as well as to criminals/insurgents on both sides of Afghanistan and Pakistan, and once this money supply is dried out they wont be able to continue their insurgent activities with empty stomach. Target date: December 31, 2009. To stop the ongoing proxy war between Pakistan and India, as soon as possible. In this regard, the USA, China, the UK, the European Union and Saudi Arabia will play a major role in order to ensure a permanent truce between the two warring parties.


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## Neo

*Three mega projects to be relaunched in Punjab ​* 
Thursday, March 26, 2009

LAHORE: Governor Punjab Salman Taseer presided over a high level meeting at Planning and Development Board Punjab on Wednesday which reviewed in detail the Annual Development Programme of the province.

The meeting decided to re-launch three mega projects of immense public welfare, including Lahore Rapid Mass Transit System, Lahore-Sialkot-Kharian Motorway and expressway on both flanks of Nullah Lai in Rawalpindi.

Speaking on the occasion, Governor Punjab Salman Taseer said the suspension of work by the former government on these projects, despite substantial technical progress, was unjustified. He said these public welfare projects were also important with regard to huge foreign investment on their completion.

The meeting was informed that Lahore Rapid Mass Transit System project, costing Rs. 40 billion, envisaged operating an elevated train system by magnetic energy from Shahdara to Ghazi Road through Ravi Road, Lower Mall and Ferozepur Road.

Tunnels will also be constructed at some places for this purpose. Salman Taseer also gave orders to resume the pending project of construction of motorway from Lahore to Kharian. The 157- km long project, costing Rs.51 billion, will start from Allama Iqbal Airport Terminal and terminate at Kharian via Kala Shah Kaku, Narowal, Daska, Sialkot, Sumberial and Wazirabad.

The governor also gave approval to the appointment of prominent construction engineer, Zubair Imran Khawaja, as Project Director of Lahore-Kharian Motorway project. It may be mentioned that Zubair Imran Khawaja has also served as Project Director of Lahore-Faisalabad Expressway project.

The meeting was informed that Lahore-Kharian Motorway Project would be completed in three phases during the next four years. The first package includes construction of the motorway from Kala Shah Kaku to Sumbrial, covering a distance of 88 km at a cost of Rs.32 billion. The second phase envisages construction of the motorway from Lahore Airport to Kala Shah Kaku, measuring 12 km at a cost of Rs. 5 billion.

Under the third phase of the project, 57 km long portion of the motorway from Sumbrial to Kharian will be constructed at a sum of Rs.14 billion. The governor issued instructions for sending the PC-1 of the first package of Lahore-Kharian Motorway to Provincial Development Working Party immediately for approval.

The meeting also decided to relaunch the project of construction of expressway on both flanks of Nallah Lai in Rawalpindi at a cost of Rs. 17 billion. The governor directed to link the project of remodeling of Nullah Lai and Expressway with Rawalpindi Environment Improvement Project which was being implemented with the cooperation of Asian Development Bank.

The governor was informed that the work of alignment of southern loop and northern loop of Lahore Ring Road project was being completed expeditiously. The governor directed to complete the entire process of price assessment of the land through Board of Revenue Punjab, transfer of funds to Land Acquisition Collector and Award Announcement within four months.

The meeting was informed that only 1500 development projects out of 3000 initiated by the former government under Annual Development Programme started in July 2008 would be completed by June 30, 2009 which was a clear proof of the failure of the former government.

The total volume of Annual Development Programme for Punjab is Rs.160 billion out of which only Rs.38 billions have been spent on various development projects by February 2009. The utilization rate, therefore, is only 23 per cent.

Governor Salman Taseer issued instructions for improving periodic monitoring mechanism and introducing third-party validation system for ensuring quality of construction work. The governor further directed to ensure completion of ongoing projects expeditiously so that people could avail the benefits of democracy.

He gave approval for increasing the budget for maintenance and repair of provincial highways from one billion 20 crore rupees to Rs. 3 billions. The meeting was attended by Additional Chief Secretary Taimur Azmat Osman, Chairman Planning & Development Sohail Ahmed, Members Planning & Development Board, heads of different sections of Planning & Development Department, Principal Secretary to Governor Punjab, Member Punjab Assembly

Tanveer Ashraf Kaira, Administrative Secretaries of Finance, Health, Education, Communication & Works, Public Health Engineering, Agriculture, Irrigation, Local Government departments as well as other senior officers.


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## Neo

*Pak, Kazakhstan agree to enhance economic ties​*
ISLAMABAD: Both Pakistan and Kazakhstan on Wednesday agreed to develop economic and trade cooperation. They also discussed various proposals for the next Joint Ministerial Commission (JMC) meeting and the implementation status of the decisions of the previous meetings. This was agreed during a meeting between Ambassador of Kazakhstan to Pakistan Bakhytbek Shabarbayev and Federal Minister for Water and Power, Raja Pervez Ashraf. Both the leaders discussed various matters of mutual interest and enhancing bilateral trade between both the countries.


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## Neo

*Pakistan to get $1.54 billion from donors​* 
ISLAMABAD (March 26 2009): World Bank is likely to approve $500 million for Poverty Reduction and Strategy Credit in next two days and Asian Development Bank is also gearing to give $200 million before the of March, sources told Business Recorder here Wednesday. These two approvals would add forex reserves up to $1.54 billion as IMF is most likely to approve $840 million on March 30.

Governor State Bank and PM Advisor on Finance would be happy to announce these additions in their kitty. ADB and World Banks money would also support Finance Ministry to spend over Rs 50 billion for budgetary purposes, while IMFs money is only meant for forex reserves.

ADBs money is for project loans and WBs PRSC-II is for broader reforms, to help meet macro economic stability, reducing poverty and pushing overall growth. World Bank has prepared a plan to support poor and is also working to assist in Benazir Income Support Program. A much awaited help from WB for direct cash transfer for poor.

The addition of Rs 50billion would increase in NFA of the country a bit, and would help meet some spending from the government, which has almost stalled its development expenditure in a hope to get cash from these donors. The last quarter as usual would give more releases for such projects and quick spending, leaving some room for better utilisation of funds.

IMF Board of Directors is also meeting on March 30 to approve the release of $840 million to Pakistan after receiving first tranche of $3.1 billion in November. A 23-month $7.6 billion Stand-By Arrangement was approved in the same month. State Banks accounts would swell within two to three days after the approval is announced after the Boards meeting.


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## Neo

*Pakistani products need to have brand names​* 
LAHORE (March 26 2009): Assistant Executive Director Hong Kong Trade Development Council Raymond Yip has said that Pakistani products needs to have brand names so that the Pakistani exports can compete with India and China. He expressed these views on Wednesday during his meeting with various businessmen along with Director Global Exhibitions and Marketing Asad Sajjad.

The businessmen present in the meeting were vice -chairman Pakistan Carpet Manufacturers and Exporters Association (PCMEA) Akhtar Niazi, former vice -chairman (PCMEA) Waqar Rashid, Director Skill Sports Sialkot Tariq Soni, Chairman The Surgical Instruments Manufacturers Association of Pakistan Sialkot, Chief Executive Officer Care and Cure Surgico Tariq Ashfaq and Chief Executive Combinations Rafiq Raja.

Raymond has urged the Pakistani businessmen to attain benefits from the Hong Kong business markets through exports of their items. He also appreciated the quality of Pakistani Handmade Carpets and Sports Goods adding that its time for the world to know about Pakistani capabilities.

He also said that Hong Kong is a free market and eleventh largest trading entity in the world and it is a gateway to the other markets. He further said that the purpose of his meeting was to provide them assistance regarding export opportunities in Hong Kong. The businesspersons informed Raymond about their export products, respectively and showed their interest in participating various exhibitions of different items scheduled to be held in Hong Kong in proceeding calendar year.

Director Trade Development Authority (TDAP) Lahore Yasmeen Kuraishi attended the meeting and dilated upon TDAPSS role in the boosting of countrys trade through different fairs and exhibitions abroad.


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## Neo

*UAE advises Pakistan to focus on export of services​*
ABU DHABI (March 26 2009): UAE Minister for Foreign Trade Sheikha Lubna Bin Khalid Al Qasmi has suggested Pakistan to focus on the export of services and technology to United Arab Emirates (UAE) for improving balance of trade between the two countries.

She was talking to the delegation of Pak UAE Business Council of FPCCI led by FPCCI President Sultan Chawla and PMs Advisor on Textiles Dr Mirza Ikhtiar Baig at the Ministry of Foreign Trade here on Wednesday. Pakistans Ambassador in UAE Shafqat Ali Shah Jamote was also present on the occasion.

She said that Pakistan has lot expertise in services sector, which included IT, medical services and other technologies that can be exported to UAE besides exporting merchandises. There is a great opportunity for Pakistan to export services. There is still high demand for knowledge workers from Pakistan whether in technology, medical field, research and development or renewable energy.

A science graduate, Sheikha Lubna said that other areas of interests can be ceramics, pharmaceutical, cement. She said that Pakistan has an excellent rice quality but the lack of proper storage and logistics damages the quality. Pakistani businessmen should invest in the storage and improve logistics to maintain the quality of its exports of food items to UAE and other countries.

She pointed out that UAE was also facing similar problems with its dates production and exports but it has handled this problems by development storage and logistic facilities. Pakistani companies can utilise the services of UAE logistics and storage companies to improve their storage and logistic capacities.


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## Neo

*Top US lobby for cut in tariffs on Pakistani textiles​*
WASHINGTON (March 26 2009): The top US business lobby Tuesday urged a cut in US tariffs on Pakistani textiles, saying that trade would be a valuable part of the new US strategy to bring stability to Pakistan. The US Chamber of Commerce and US-Pakistan Business Council issued a report welcoming President Barack Obamas focus on rooting out extremism in Pakistan and neighbouring Afghanistan and urging an emphasis on trade.

US Chamber of Commerce and US-Pakistan Business Council have issued a report welcoming President Obamas focus on rooting out extremism in Pakistan and Afghanistan and urging an emphasis on trade. "Stronger and more stable economic relations between the United States and Pakistan would help advance Americas overarching geopolitical goals in South Asia," the business groups said in the report.

The United States is the largest investor and market for Pakistan, which in November required a 7.6-billion-dollar emergency credit line from the International Monetary Fund as world economic crisis hit the nation. The business groups urged a review of US tariff policy on Pakistan, saying that the duties on Pakistani textiles were higher than those from other key producers.

The report also backed a proposal by two lawmakers - Senator Maria Cantwell and Congressman Chris Van Hollen - to make certain products made in the impoverished Afghan-Pakistan border regions duty-free. In the long term, the United States should consider entering negotiations on a free-trade agreement with Pakistan, the groups said.

"Although the United States stresses the importance of economic growth in Pakistan, American trade policy fails to provide increased market access for Pakistani products in the United States," the report said. The report supported early legislation on the initiative of establishing reconstruction opportunity zones in the Pakistani border regions with Afghanistan, saying the move would provide incentives for investment in the impoverished areas by allowing duty-free export to the United States.

The two organisations applauded Kerry-Lugar initiative in the Senate to triple economic assistance for Pakistan to 1.5 billion dollars annually. They also emphasised bolstering the availability of the US Export-Import Bank and other government financing and insurance to stimulate American private sector investment in Pakistans energy sector.

"In addition to its strategic elements, a broad-based relationship with Pakistan needs to include enhanced co-operation in the areas of trade and vestment and energy security," said Chambers Senior Vice-President of International Affairs and member of the board of directors of the USPBC Myron Brilliant.

"We are actively working with both governments to strengthen our economic ties." The United States is the largest trading partner of Pakistan. Pakistans port total exports in 2007-08 financial year totalled 19 billion dollars, of which 20 percent or 3.7 billion dollars went to the United States.

The US exports to Pakistan rose to nearly two billion dollars in 2008. "Our report also urges the US government officials to work with Pakistan to address bilateral trade and investment opportunities," said Chairman of the board of directors of the USPBC Jay Collins.

"Our members stand ready to contribute to efforts to expand commercial relations between the two countries." Also, the leaders of the two organisations urged the Department of Homeland Security to provide expeditious approval for non-stop flights to the United States from Pakistan as direct flights from Lahore to New York would facilitate trade and investment links. The following are the key recommendations for the Obama administration and members of Congress:

-- Obtain passage of the US foreign assistance legislation, showing that the United States is committed to ensuring Pakistans long-term prosperity.

-- Address trade and investment practices with Pakistan to ensure that American companies find a level playing field.

-- Approve legislation creating reconstruction opportunity zones (ROZs) to promote economic development in Pakistan.

-- Conclude a high-standard bilateral investment treaty with Pakistan to provide safeguards for the US investors.


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## ejaz007

*Forex reserves at $10.257bn*

KARACHI: The countrys liquid foreign exchange reserves have reached $10.257 billion on week ending at March 21, 2009 as compared to $10.161 billion last week, data released by State Bank of Pakistan, shows Thursday. The overall reserves witnessed an increase of $96 billion during the last week. The reserves held by the central bank witnessed a major increase of $101 million to reach $6.790 billion as compared to $6.689 billion during the last week. However, the reserves held by banks (other than SBP), witnessed a decline of $05 million, as it reached to $3.466 billion as compared to $3.471 billion. staff report

Daily Times - Leading News Resource of Pakistan


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## ejaz007

*Bank Al Habib declares 12.5% dividend*

KARACHI: Bank AL Habib announced 12.5 percent cash dividend (final) and the issue of 27.5 percent bonus shares at the Annual General Meeting on Thursday. According to a press release the shareholders approved the annual accounts for the year ended December 31, 2008. Deposits of the bank as on December 31, 2008 were Rs 144.4 billion and profit before tax was Rs 3.579 billion. The bank has a network of 229 branches, which include four Islamic banking branches spread across 70 cities and towns of Pakistan and a branch in the Kingdom of Bahrain. staff report

Daily Times - Leading News Resource of Pakistan


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## ejaz007

*Italy to press EU on Pakistan trade benefits*

* Italy wants GSP Plus status for Pakistan

ROME: Italy, current G8 president, will press EU states to launch free trade talks with Pakistan and to extend to Islamabad trade benefits from which it would normally be excluded, Foreign Minister Franco Frattini said on Thursday.

Frattini told Reuters in an interview that he would use a June G8 conference on stability in Afghanistan also to explore possibilities for Pakistan and that he wanted a European Union-Pakistan summit in the second half of 2009.

Sweden, which takes over the EU presidency in July, has told him of its strong interest in an EU-Pakistan meeting, said Frattini, who met his Swedish counterpart Carl Bildt on Wednesday.

We have to seek a consensus among member states about the importance of having negotiations on a free trade agreement, Frattini said.

I think its possible (even) in the difficult moment that we are facing now to get consensus, because all the member states agree on the importance of sending positive messages not only money  to Pakistan.

Economic initiatives to promote stability in Afghanistan and Pakistans tribal areas may be more attractive options for European states than sending more troops to Afghanistan, which many NATO allies including Italy have been reluctant to do.

We want to stabilise (that region) through the economy, through attraction of investment, through promoting trade, not first of all through sending more troops, Frattini said.

Pakistans ambassador to Italy, Tasnim Aslam, said her country wanted to start free trade talks and to qualify for preferential trade benefits under an EU programme targeting less developed nations, known as GSP Plus.

We dont need assistance. We dont need aid. We want trade. Because aid doesnt help sustain the development process, while trade does, Aslam told Reuters.

Pakistan had about 7.5 billion euros ($10.2 billion) worth of trade with the 27-nation EU in 2008, up more than 7 percent on 2005. Aslam said this could grow exponentially if Pakistan enjoyed GSP Plus trade privileges.

By extending this facility to Pakistan, the European Union would be helping itself also, said Aslam, who added that she appreciated Italys support on the issue.

The European Union would like to stabilise (the region), because they have their own strategic interests, their troops are present there. By helping Pakistan, they are helping themselves.

The European Commission has so far excluded Pakistan from GSP Plus status because its economy is too developed to qualify for a programme meant to help the least developed nations.

Islamabad has also not ratified all the necessary labour treaties, a Commission spokesman said.

Frattini said Pakistan was an exceptional case and required special treatment. Asked whether he favoured extending GSP Plus status to Pakistan, Frattini said it was important that EU nations try to find a way to do so.

If we stick to the current legislation ... of course the European Commission cannot offer Pakistan (GSP Plus), he said.

But we should do something more. We should deal with Pakistan in a political way, not in a bureaucratic way  dealing with a free trade agreement as if Pakistan were a country like Bangladesh.

Frattini said he would raise the idea of free trade talks with Pakistan at the conference on Afghanistan in June, which Iran has said it will attend.

When he discussed the idea with Swedens Bildt on Wednesday, Bildt told him a summit or other high-level meeting was timely and important, Frattini said.

Im suggesting a political summit because only through a political summit can we give the European Commission a special mandate, Frattini said. A special mandate is needed to enable the Commission to offer Pakistan special trade benefits, he said. reuters

Daily Times - Leading News Resource of Pakistan


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## Neo

*PIA loss exceeded Rs35bn in 2008 ​* 
Friday, March 27, 2009

KARACHI: Pakistan International Airlines (PIA) on Thursday said it incurred a mammoth loss of Rs35.88 billion in 2008 due to a substantial increase in price of fuel and a steep fall of rupee. 

This was announced through a press release after its board of directors approved the annual accounts earlier in the day. It said last year was exceptionally difficult as the airline took a severe hit from the extraordinary rise in fuel cost and a weaker rupee, which battered its financial position by increasing the cost of dollar-denominated loans. 

The rupee lost its value against the US dollar, contributing to a net exchange loss of Rs24.1 billion, it said, adding the surge in oil prices jacked up fuel expense by Rs15.5bn over previous year. The fall in the value of pound sterling and euro against the US dollar was also a source of revenue dilution which had depressed yields, it said and mentioned high inflation as another reason behind the record loss. 

Overall revenue was up 26.6 per cent to Rs89.2bn as passenger revenue increased by 28.7pc to Rs79.8bn due to higher passenger yields on scheduled services. But profit in 2009: Though the 2008 loss has pushed up accumulated losses of the national flag carrier to Rs72.4 billion, it aims to post profit this year. Encouraged by falling fuel price and a stable rupee, the PIA has set target to earn Rs598 million in 2009, airline officials told The News.


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## Neo

*Hong Kong gives $10.3m package to Pak SMEs ​* 
Friday, March 27, 2009

KARACHI: There exist a lot of opportunities to bolster trade between Pakistan and Hong Kong.

This was stated by a senior official of the Hong Kong Trade Development Council (HKTDC), Raymond Yip. Talking to reporters on Thursday, he pointed out that the HKTDC is organising six major international trade fairs in Hong Kong next month. These, Yip further pointed out, offer rewarding opportunities to the Pakistani businesses and that the businessmen from Pakistan should take advantage of these.

He said that these six trade fairs were: Electronics Fair, International ICT Expo, International Lighting Fair, Houseware Fair, Gifts and Premium Fair and International Printing and Packaging Fair. On the occasion, Yip announced a $10.3 million package for the SME sector in Pakistan.

He pointed out that focusing on emerging markets like Pakistan, this initiative offers various subsidised packages of air ticket and hotel stay for international buyers to the trade fairs in Hong Kong organised by the HKTDC throughout 2009.

Yip pointed out that as 43rd trading partner of Hong Kong, the total volume between Pakistan and Pakistan in the year 2008 stood at $613 million. 

The direct investment of Hong Kong in Pakistan was $340 million in the year 2007 and that it ranked fourth after the United States, United Arab Emirates and the United Kingdom.

Yip also pointed out that Hong Kong may export a number of products from Pakistan including food items such as fruits and vegetables, rice, consumer goods, textile and garments, raw material, jewellery, precious stones.

He said that during his visit to Pakistan, which is also the first one, he has held meetings with officials and trade bodies representatives in Islamabad, Lahore and Karachi. Yip also mentioned the presence of the 16,000 strong Pakistani community in Hong Kong.


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## Neo

*Pakistan may get $700m from WB, ADB ​*
ISLAMABAD: Pakistan is likely to get $700 million from the World Bank (WB) and the Asian Development Bank (ADB) by the end of March, a Finance Ministry official has said. Pakistan expects $500 million from the World Bank and the rest from the ADB, the official told Dow Jones on Wednesday. The IMF board is scheduled to meet on Monday in Washington to take its final decision on releasing the second instalment  $840 million  of a $7.6 billion standby arrangement loan to Pakistan. Pakistan received the first instalment of $3.1 billion in November 2008. daily times monitor


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## Neo

*President announces Rs46.6bn package for Balochistan ​* 
QUETTA (March 27, 2009): President Asif Ali Zardari Friday announced a Rs 46.6 billion development package for Balochistan and said the people and the parliament of Pakistan will ensure that the rights of the people of the underdeveloped province are not denied.

Addressing the elders and parliamentarians of Balochistan here at the provincial capital, the president urged the people of Balochistan to strengthen democracy. Otherwise, he cautioned, that those who do not do so will be strengthening those who were trying to break Pakistan or cause subversion in the province. 

The president who is on a two-day visit to the province announced four water storage reservoirs at a cost of Rs 36 billion, small delay-action dams at a cost of Rs 2.5 billion, package for Quetta city for Rs 3 billion and transmission lines for Rs 5 billion. 

He said the people of Balochistan have a long history of struggle and with the democracy in place all they would be able to avail all their rights. He said he remains fully in contact with the governor and chief minister of the province to find their problems and address the issues that crop up. 

The president said that political maturity was coming as he believed that the only way forward was through democracy. He said the Pakistan Peoples Party would ensure that the people of Balochistan get their rights. 

President said Balochistan was an important province and the future of the country was linked to it. He said Balochistans soil would not be allowed to be exploited for any subversive activity. He said some people were involved in exploiting people for their own political interests. 

Balochistan Governor Nawab Zulfiqar Ali Magsi, Chief Minister Nawab Muhammad Aslam Raisani, Federal Ministers Qamar Zaman Kaira, Hamayun Aziz Kurd, Hayatullah Durrani, Manzoor Ahmed Watto, Raja Pervez Ashraf, Nabil Gabol, Nazar Muhammad Gondal and PMs Adviser on Interior Rehman Malik, MNA Umar Gorgej, provincial president PPP senator Haji Lashkari Raisani and other members of the provincial cabinet were also present on the occasion.


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## Neo

*Pakistans GDP growth would be just 2.5 percent in fiscal year 2009: Escap​* 
ISLAMABAD (March 27 2009): Economic and Social Commission for Asia and Pacific (Escap) has projected that Pakistans growth rate would be just 2.5 percent in fiscal year 2008-09 while economists feared that it could be even lower than this. The Escap endorsed 2.5 percent growth rate revised by the IMF for Pakistan for 2008-09 from 3.5 percent estimated earlier for the year.

Dr Ashfaque Hasan, former advisor to the Ministry of Finance said that recently the growth rate was lowered to 2 percent for the ongoing fiscal year. In a presentation on factors responsible for macroeconomic difficulties, Ashfaque said that sudden rise in oil and food prices have been largely responsible for widening the current and trade accounts deficits.

Pakistan, he said paid $4 billion extra in terms of oil mainly on account of surge in prices. Ashfaque who has been one of those tasked to reshape Pakistans economy during last eight years admitted that incompetence at the level of decision making was also responsible for the economic mess. Hallmark was absence of adequate policy response to such threats, he added.

He said that commodity prices have come down to one-fourth in the global market but their impact in the local market was very little. The pace of reduction in inflation was very low in Pakistan as compared to the region in the wake of dwindling commodity prices, he said.

Ashfaque said the government should pursue tight monetary policy, increase tax to GDP ratio and ensure massive running of through forward of PSDP to reduce fiscal deficit. The focus, he said should be on enhancement of agriculture yield, which was never given importance during last many decades.

Dr Aynul Hassan who heads the macroeconomic policy and development division of Unescap said that Asia-pacific region faces a triple-threat to the development - financial crisis, volatile food and fuel prices and climate changes. He said that the Asian countries should increase inter-regional trade and investment as this would help move the region from crisis resilience to crisis resistant.

He said that volatile oil prices posed threat to the regions food security. These could result in trade imbalance, inflation and poverty and hunger, so the neighbouring countries need to strengthen trade ties to counter such threats. Dr Sarfraz Qureshi said that roughly 16 million people have slipped into poverty during last two years of global economic crisis and its impact on Pakistan.

The survey launched here at the United National Information Center noted that Pakistans economy suffered from political instability, law and order problems, supply shocks, a softening of external demand, turmoil in international financial markets and high prices of oil, food and other commodities.

Due to global economic slowdown and internal difficulties, GDP growth in Pakistan is expected to further reduce to 2.5 percent in 2009 while inflation in Pakistan rose steeply with food inflation going even higher. The situation was exacerbated by the weakness of the domestic currency, the gradual removal of fuel, food and power subsidies and the monetary overhang of excessive borrowing from the central bank to finance the large fiscal deficit.

The longer the inflationary pressure persists, the greater the chance for a wage-price spiral to gain hold. Tight monetary and fiscal policies are necessary to prevent such a spiral. If the budget deficit is not contained, tight monetary policy alone may not achieve the desired results.

With fall in oil and other commodity prices in international markets, inflation has started falling. Though overall revenue in Pakistan increased, but the increase in expenditure was much larger, mainly because of subsidies on oil, power, fertiliser, wheat and other food items.

Among long-term challenges, poverty remains a major problem for most countries in South Asia. Also, economic and social inequalities remain widespread. The main challenge for countries in the sub-region, therefore, is not only to improve growth rates on a sustained basis but also to make them more inclusive for a rapid reduction in poverty and inequality.

It underlined the need to strengthen the social safety nets for the poor and vulnerable who are unable to benefit from economic growth directly or indirectly. This support should be strengthened to provide a coping mechanism for the poor, especially in the event of macroeconomic shocks such as current global economic crisis.


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## Neo

*Pakistan to receive WB $500m before March 31 ​* 
WASHINGTON (March 27, 2009): Pakistan will receive $ 500 million interest-free credit approved on Thursday by World Bank before the end of March in an encouraging sign for the countrys economic stabilization effort.

The transfer will take place before March 31, bolstering Pakistans foreign exchange reserves as well as enhancing international investor confidence in the drive to put the economy back on high growth track, officials told APP here Friday. 

The targeted project - Poverty Reduction and Economic Support Operation - is designed to support the Pakistani governments policy measures that promote macroeconomic stability. It seeks to benefit the poor people and is also expected to strengthen Pakistans competitiveness by spurring the financial sector. 

Pakistans ambassador to the United States Husain Haqqani had an extensive meeting with World Bank President Robert Zoellick in Washington last week. During the meeting, Haqqani drew the WB leaders attention to the importance of backing the governments endeavours for economic uplift of the people, a Pakistan embassy spokesman said. 

The World Bank chief assured the top Pakistani diplomat of his support and the financial institutions stepped up participation in the economic development of the country, whose stability is considered key to South Asian peace and security. 

The agreement, inked Thursday on $ 500 million credit by Economic Minister at the Pakistani embassy in Washington Abdul Wajid Rana, comes about three weeks ahead of an important Friends of Pakistan meeting in Japan. 

Tokyo and the World Bank will co-host the April 17 meeting, which will be chaired by President Asif Ali Zardari and draw senior leaders from several Western industrialized countries, major Eastern economic powers and oil-rich Gulf nations. 

The Pakistani ambassador and the World Bank chief also discussed efforts toward success of the Friends of Pakistan moot, where backing for Islamabads development initiatives would provide a major push to the countrys economic recovery efforts. 

Pakistan, a key partner in the fight against terrorism, lost economic activity to the tune of billions of dollars due to unrest along the Afghan border and experienced severe external and internal shocks in the past year. 

The rise in international oil and food prices in the last two years also sharply inflated the countrys import bill and the subsequent slowdown in the global economy dampened external demand for Pakistans exports. 

Meanwhile, the United States that relies heavily on Pakistans cooperation in the fight against al Qaeda and Taliban on the Afghan border, is leading international efforts to help the country come out of its economic difficulties. 

On Friday, President Barack Obama is expected to reaffirm his administrations commitment to support Pakistans economic recovery efforts in a major speech on the way forward in Afghanistan, where American and international forces are struggling against insurgents. 

Among the initiatives being launched in Washington are a proposal to set up reconstruction opportunity zones, products from where would exported to the United States duty-free and a Congressional measure to extend $ 1.5 billion socio-economic assistance annually to the country for up to ten years.


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## Neo

*Turkish firm to invest $500 million in windmill project ​* 
KARACHI (March 27 2009): Turkish investors are keen to invest in alternative energy projects and a Turkish company, Zorlu Energi, will invest some $500 million in windmill project, said Fethi Etem, Consul General of Turkey.

Addressing the launching ceremony of advisory service of Escorts Investment Bank Limited of Turkey in Karachi, he said that Zorlu Energi Pakistan Ltd, a Turkish company, had already made $110 million investment in the windmill project and in the first phase five windmills were being installed in Jhimpir (Sindh) with a electricity generation capacity of 6 megawatt each.

He said that at present the Turkish company had obtained license from Alternative Energy Development Board for generating 50 MW electricity and was planing to extend its operation. "Zorlu Energi would expand windmill project up to 300 MW with further investment of some $500 million in the near future", Fethi added.

Consul General of Turkey said that Turkish companies are interested to invest in livestock, engineering, textile, leather, construction and other sectors with an aim to boost the bilateral trade, he said. Although Pakistan and Turkey are the two Muslim countries, but the trade volume is less than the one billion dollar and stood at 740 million dollar, he said, adding with some initiative we can boost it to one billion dollar annually.

Foreign Direct Investment in Turkey was $17.7 billion during the last year, he informed and offered Pakistani businessmen to invest in the Turkey, where a lot of opportunities are available for new business. Rashid Mansur, President and CEO of Escorts Bank, said that bank will provide advisory services to the businessmen of both countries for the mergers and acquisitions, joint ventures, imports, exports, brand promotions, distribution of products and services.

He said that Escorts Banks average return on equity stood at 20 per cent during the last five years and bank has also distributed some 20 per cent dividend. "We have introduced "Merhaba Turkey" country specific corporate advisory services, which help boost the bilateral trade between the two countries, besides opening new avenues of investment", Mansur said.


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## Neo

*Pakistan 98th in global ICT ranking ​*
ISLAMABAD (March 27 2009): The World Economic Forum on Thursday released its 8th annual Global Information Technology Report 2009. The report compares participating countries on a range of information and communication technology proxies and variables, which are considered to be the key enablers of economic and social progress, growth and productivity.

This year, Pakistan ranked 98th out of 134 countries, which is indicative of a weak information and communication technology base. This years report has in particular focused on how information and communication technology and networked readiness have fostered innovation. The Global Information Technology Report has followed the ICT revolution and evolution over the years.

ICT has encouraged transparency in government processes and improved countries efficiency and services to citizens. It was a drop of nine spots from last years ranking of 89 out of 127 countries. In order to improve its network connectedness, Pakistan should invest more in ICT infrastructure, related services and more broadly, innovation.

Some of Pakistans other competitive disadvantages identified by the report are the absence of adequate competition in the market place (112), unnecessarily long procedures to enforce a contract (119), extremely low expenditure on education (119) and equally low enrolment in tertiary education (114). Significant drops were seen in spending on R&D from 72nd spot to 86th this year, Government prioritisation of ICT from 38th to 57th, and a staggering drop in the quality of education system from 85th to 104th.

The reports rankings are based on the Networked Readiness Index which measures the likelihood that countries will exploit the opportunities offered by Information and Communication Technology services. It tries to comprehend the impact of ICT on the competitiveness of nations.

The NRI is a composite of three components; the environment of ICT offered by a countrys government; the readiness of governments, businesses and individuals to use ICT; finally, usage of ICT among these three stakeholders. Pakistan ranked 112 in the environment component, 101 in the readiness component and 92 in usage component indicating that although the environment and infrastructure are not properly delivered, but the usage is still pretty good.

According to this years report, Denmark, Sweden, and United States secured the top three ranks respectively, further consolidating the fact that they have the most solid information and communication technology base.

Switzerland dropped two spots to 5th, and was replaced by USA in the 3rd rank. Singapore climbed up to the 4th rank from 5th and Iceland climbed up one spot to 7th from 8th. This year, Canada entered the top ten slot ranking 10th, whereas last year it was at 13th. Norway dropped two spots to number 10th from 8th.-PR


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## Neo

*Pakistan seeking more UAE investments: Dubai daily ​*
ISLAMABAD (March 27 2009): Pakistan wants the United Arab Emirates (UAE) to invest in its renewable energy, textiles, agriculture, infrastructure and construction sectors, a Dubai-based English daily, "the Pakistan," reported. A delegation, representing the Pakistan Federation of Chamber of Commerce and Industry (FPCCI), held first round of meetings this week with firms such as Aldar and Masdar, the daily said.

"It is seeking investment in more than a dozen projects, ranging from hydro, wind and solar-thermal power generation, to corporate farming, textile and property ventures," the paper added. The daily further said the group met Minister of Foreign Trade Sheikh Lubna Al Qasimi in Abu Dhabi, and discussed options to enhance trade between the two countries.

"Issues relating to a free-trade agreement between Pakistan and the Gulf countries were also discussed," it added. Later, the delegation met representatives of property developers, Limitless and Nakheel, Emirates Investment Group, Dubai Islamic Bank and NBD Capital.

The delegation also met Sharjah and Ajman chambers of commerce and industry representatives, as well as officials from the Dubai Export Development Corporation and the Planning and Development Department in Dubai. "We have several attractive options for the UAE investors to invest in renewable energy," said Chairman of the FPCCIs Standing Committee on Alternative Energy Development Khurram Sayeed. "We will pitch several alternative energy projects to firms like Masdar here," he added.

The daily said that Pakistan would seek 10 billion dollars (Dh 36.73bn) over the next three years from the Friends of Democratic Pakistan group, set up in September to help the nation stabilise its economy. "We have identified priority projects for which we want funds from member countries," said spokesman for Pakistan Foreign Ministry Abdul Basit said.

Basit said the projects would help reduce poverty, meet security challenges and boost human resources development, health and education. The Pakistani officials and representatives of member countries and institutions would meet in Abu Dhabi next Wednesday and Thursday to "fine tune" the details of projects, Basit said. Between 2004 and last year, the UAE firms have invested about 3.74 billion dollars in Pakistan, most of it from the Abu Dhabi Group, an investment consortium.

The Abu Dhabi Group has stakes in the telecoms operators, Warid and Wateen, Bank Alfalah Limited and United Bank Limited. The government-owned Etisalat has a 26 per cent stake in the Pakistan Telecommunication Company Limited (PTCL) while private equity managers such as Abraaj Capital and Emirates Investment Group has their own initiatives in the country, the English daily reported.

Already, the property developers, Emaar and MAF Investments, are building several key projects in Pakistan. The UAEs Bin Din Group has already signed an agreement with Pakistan to develop the Thar Coal Project in Sindh province. The project, to be completed in three years, would include a mine-mouth thermal power plant with 1,000 megawatts of capacity, said Adviser on Textile and Chairman of the Pak-UAE Business Council Dr Mirza Ikhtiar Baig.

Dr Baig said the project was being developed as a joint venture between the UAE and South Korean firms, but he declined to reveal the size of the investment. "There is a lot of potential of investment in Pakistans energy sector, which is expected to grow 7.2 per cent until 2010 and 8.8 per cent thereafter," he said.

Most investments in Pakistan in the current fiscal year have come from the sale of large tracts of agricultural land to the UAE investors, the paper reported. "We have so far sold over 50,000 acres (20,234 hectares) of land in parcels to the UAE investors," Dr Baig said.

The investors had 100 per cent ownership rights, with subsidies in machinery imports and fertilisers, and permission to export 100 per cent of the proceeds to the UAE, he said. "Al Dafra, one of Abu Dhabi Group company, is very actively buying the agri land for corporate farming and cultivation of cattle feed, alfalfa," Dr Baig said, adding that different provincial governments had set aside land parcels between 404.6 hectares and 4,046 hectares for investors.

"At the end of this trip, I expect to bag more deals in agriculture sector than any other," he said. A group, including several UAE private and public firms, in October last year acquired about 16,187 hectares of land in Balochistan for an estimated cost of 40 million dollars to begin mechanised farming in the area as part of the strategy to lower food import costs, said the daily.


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## Neo

*100 more licenses to be issued for minerals exploration in Northern Areas ​*
ISLAMABAD (March 27 2009): More than one hundred licenses will be issued to national and international firms shortly by allocating of a vast area in different districts of Northern Areas for exploration of multi-billion dollars minerals including gold, copper, lead and coal besides precious stones.

Talking to APP about potential of mineral wealth of Northern Areas, Shahjehan, Deputy Director of Mines and Minerals Department said that Northern Areas are considered richest areas of the world regarding minerals and precious stones. Responding to a question, he said that more than seventy firms including foreign and local had already been issued licenses for the exploration of mines and further would be issued shortly after the finalisation of minor amendments in the existing rules.

To a question about identification of gold mines in Northern Areas, he said that more than 11 sites of gold mines had already been identified in various parts of the Northern Areas. About fifteen firms including local and foreign are already busy in mining gold and copper in various areas which have been allocated to them for this purpose, the Deputy Director told APP.


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## Neo

*Corporate sector Oct-Dec earnings down by 62pc ​* 
Saturday, March 28, 2009

KARACHI: Corporate profits in Pakistan have declined sharply in the last quarter (October-December) for the 2008 on the back of high interest rates and economic slowdown in businesses.

Economist S Akbar Zaidi says that the overall slowdown in the economy is affecting corporate profits, which have declined over the last couple of months.

He said that banking sector has faced the brunt as its profits have declined owing to high benchmark interest rates by State Bank of Pakistan (SBP), non-performing loans and decline in consumer financing. There is a credit squeeze in the market, he added.

Corporate result season for the 4Q2008 (Oct-Dec) has almost come to an end. The JS Research for the analysis of corporate earnings used companies that account for 75 per cent of the total market capitalisation of Karachi Stock Exchanges KSE 100-share Index. The sample companies posted profits of Rs17.9 billion ($223 million) against Rs47.7 billion ($782 million) in the corresponding quarter last year, depicting a decline of 62 per cent, JS Research reported on Friday.

Moreover, if we remove PSO, SHEL, ATRL, PRL and NRL as they suffered severely due to drastic fall in oil prices (more than $50 per barrel), the corporate earnings would have declined by only 34 per cent, the research report stated.

Cement, exploration and production companies (E&P) and fertilizer sectors were the major drivers of corporate earnings during 4Q 2008. Cement sector booked hefty profit growth of 181 per cent on the back of high local & export retention prices. 

Exploration and production sector profits grew by 15 per cent as a result of higher oil and gas well head prices along with 24 per cent devaluation of Pakistan rupee in the period. Fauji Fertilizer boosted fertilizer sector profitability, as the sector recorded a growth of nine per cent amid higher Di-Ammonium Phosphate (DAP) prices.

However, amid sharp decline in oil prices the refinery and the oil marketing companies (OMC) sectors incurred huge inventory losses. Moreover, they also faced exchange losses due to significant rupee depreciation plunging both sectors into losses, it said. 

Banks profits declined by a hefty amount of Rs11.82 billion ($147 million) as they recorded higher provisions amid increase in non performing loans due to a combination of higher interest rates and economic slowdown. Moreover, they recognized impairment losses on account of diminishing stock prices. 

Auto sector was the most disturbed sector as sectors gross margins squeezed further as Yen continued to strengthen against the Pak Rupee, resulting in 86 per cent decline in profitability.


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## Neo

*No push at home for free trade with EU ​* 
Saturday, March 28, 2009

KARACHI: Pakistani textile makers on Friday welcomed Italian Foreign Ministers desire to seek duty-free access for exports from the terrorism-hit South Asian country to European Union but they are yet to start lobbying for its attainment.

A day after Franco Frattini said EU should launch free-trade talks with Pakistan in recognition of its efforts to fight terrorism, the industrialists here were either unaware of the development or verifying the reports. 

None of the business lobbies including the apex trade body Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and the Karachi Chamber of Commerce and Industry issued any press release in this regard. 

Muhammad Azam Chairman All Pakistan Textile Mills Association (APTMA) refused to comment insisting it was too early to say anything about it. We have to review this statement carefully and I dont want to say something that could jeopardize the effort. 

Pakistan has been trying to seek GSP plus status for its exporters who have suffered at hands of their counterparts in Bangladesh and other least developed countries, which get preferential treatment in trade with EU states. 

Shabir Ahmed, Chairman, Pakistan Bed Wear Exporters Association, said it was about time that West helps to stabilize Pakistans economy, which has suffered from fallout of increasing terrorism. 

It is a significant development and government must leave no stone unturned to see it happens, he said, adding that diplomatic missions in European countries should start consultations immediately. 

Pakistani bed wear exports, which make up substantial part of overall textile exports, he said, have fallen from over $2 billion a few years back to just $1.8bn now. This happened after EU increased duty on imports from Pakistan.

He said US, which is leading the war against terrorism, must also give trade incentives to Pakistan rather than proposing reconstruction opportunity zones in tribal areas. Helping existing industry to strengthen and expand will address unemployment and poverty, which are believed to be the causes of terrorism.

Idea of establishing such industrial zones in war-torn border regions with Afghanistan has yet not materialized. And experts say it will take billions of dollars of investment and years of work to set up infrastructure for industries there. 

Textile products like knitwear, cotton cloth and readymade garments account for over half of the Pakistani exports. A tuff competition in international markets and falling industrial output at home have hammered down the exports this year. 

Exports of textile have dropped to $6.7bn between July-Feb 2008-09 from $6.89bn in same period of previous year despite a steep depreciation in value of rupee against dollar. 

But even free-trade agreements will not revive the poor industrial base of the country that is now crumbling after years of neglect, said M A Jabbar, Chairman Site Association of Industrial (SAI), largest industrial estate of Pakistan. 

Preferential trade might give us marginal benefit over competitors but we will need investment in human resource development and capital accumulation to increase exports in the long run.


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## Neo

*World Banks $500m soft loan to be released on 30th: Tarin ​* 
Saturday, March 28, 2009

ISLAMABAD: Adviser to the Prime Minister on Finance Shaukat Tarin has confirmed the approval of $500m soft loan for Pakistan and said the amount would be released on March 30. 

On Thursday, the World Bank approved a soft credit of $500 million under the Poverty Reduction and Economic Support Operation (PRESO) after one and a half years which will help Pakistan regain economic stability, affected by the judicial crisis. 

The World Bank (WB) had linked its funding to the International Monetary Fund (IMF) by asking Pakistan to approach the IMF first for balance of payments (BoP) support and then come to get a credit line for the budgetary support. Although project-related funding continued for Pakistan, the WB did not provide any soft loan to Pakistan after March 2007 because subsidies on power, fuel and commodities swelled the fiscal deficit to 7.4 per cent of the GDP. 

The WB approved a $500 million interest-free IDA credit to support the governments programme to regain and maintain economic stability and to bring the economy back to higher growth, the WB stated in its announcement here on Friday. According to the ministry of finance, Pakistan and the WB signed an agreement at Washington DC on March 26 for the International Development Association (IDA) credit of SDR 321.3 million ($500 million approximately) for the PRESO. 

The agreement was signed by Abdul Wajid Rana, Minister Economic, Embassy of Pakistan, Washington DC on behalf of the government and Yusupha B Crookes, Country Director, World Bank, Islamabad on behalf of the WB. 

The PRESO is a single-tranche development policy credit. The funds will be utilized by the government.

The PRESO is one of the three budgetary support credits that the WB will provide to the government during the current financial year, said Farrakh Qayyum, Secretary EAD. 

The other two, Higher Education DPL for an amount of $100 million and Social Protection/Safety Nets Programme for $200 million, will be finalized during the last Quarter of the FY 2008-09, he added. 

However, the WB states that Pakistan has experienced severe external and internal shocks in the past year and is confronting a very difficult macroeconomic situation. 

The rise in international oil and food prices sharply inflated the countrys import bill and the subsequent slowdown in the global economy dampened external demand for Pakistans exports. 

On the internal side, political turmoil and uncertainties affected investor confidence which, together with macroeconomic imbalances, led to capital outflows. 

The PRESO supports the governments policy measures that promote macroeconomic stability. The government has taken important policy steps to stabilize the economy, said Crookes. These polices have succeeded in reducing external imbalances, rebuilding foreign exchange reserves, narrowing fiscal overruns, and lowering inflation. However, the sharp deterioration of the global economy poses significant risks to exports, remittances, and external financing. This underlines the importance of Pakistan regaining economic stability and protecting its poorest citizens during the process. 

The operation also supports measures to ensure that poor and vulnerable people are shielded from major adverse impacts of the stabilization process. 

This entails improving the targeting of the governments cash transfer programmes, focusing especially on the Benazir Income Support Programme. 

Protecting the countrys poor and vulnerable people is essential during the stabilization process, said Satu Kahkonen, World Bank Lead Country Economist for Pakistan.


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## david23

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## Neo

*KSE jumps 195 points on better economic outlook ​* 
Saturday, March 28, 2009

KARACHI: Ignoring the terrible law & order situation in the country, the Karachi bourse jumped up by fresh three per cent and easily breached through 6,800 points level on Friday. 

The KSE 100-share Index posted a fresh increase of 2.95 per cent or 194.97 points and ended at 6,803.46 points.

After opening on a positive note, market continued to hover upside throughout the day and closed very much close to its intra-day high of 6,827.18 points.

The market could have slipped into the negative territory owing to a powerful suicide blast in Khyber Agency, taking more than 50 lives and injuring another about 150 people, who were offering Friday prayers in an area mosque. The investors, however, ignored this law & order development in the country and gave more importance to the economic events this time, analysts said.

They added that investors injected fresh funds in market, keeping in view the approval of $500 million interest free loan to Pakistan by the World Bank. Moreover, the joining of market by the sideline investors on strength encouraged the other dormant investors too to take their active part in the rising market.

Therefore, the day turnover surged to 229.616 millions shares as compared to 205.219 million shares changed hands a day earlier - showing an increase of approximately 12 per cent on day-to-day basis.

On the contrary, the turnover on future market declined by 99 per cent to mere 500 shares from 50,000 shares yesterday.

In line with the overall market performance, the overall market capitalisation enhanced by Rs57 billion and stands at Rs2,043 billion.

Hasnain Asghar Ali at Aziz Fidahusein said that news of confirmation of World Banks grant of $500 million interest free loan and the WB offer to convert $67.5 million loan into grant, allowed the local bourse to ignore the last day phobia.

Low turnover initially did not allow an excited run-up, accumulation at discounted levels, however, allowed index to stage a decent recovery. A mix of apprehension and rumours from Saturdays parliamentary address infused renewed buying interest in almost all the main board stocks, as materialization of the rumours, such as elimination of 58(2B) and restoration of Punjab government, will not only increase international support for the local democracy but will offer a healthy investment environment, he added.

Buying spree allowed the index to breach and sustain above major resistance of 6770-6773 as the whisper of increased foreign inflow, which proved wrong, invited the active corporate and retail participants with comparatively high energies, Asghar Ali said.

The foreigners, as usual, disinvested another total $56,560 in this session from three local bourses, according to NCCPL website.

Development that can move the local bourses either ways include the unveiling of US strategies regarding war against terror, financial and economic assistance to the supporting nations. These future developments might influence the local bourses, as the bourses are likely to stay sensitive to the situation linked with national and international developments.

Out of total 354 active stocks, 232 stocks closed in positive column, 107 stocks closed in negative column, while the value of remaining 15 stocks closed unchanged.

Highest volumes were witnessed in Bank Al-Falah at 17.115 million closing at Rs14.64 with a loss of 46 paisa, followed by Maple Leaf Cement at 15.802 million closing at Rs5 with a gain of 75 paisa, DG Khan Cement at 11.830 million closing at Rs22.64 with a gain of 64 paisa, National Bank at 11.202 million closing at Rs90.31 with a gain of 32 paisa, and Oil & Gas Development Company at 11.131 million closing at Rs68.94 with a gain of Rs3.08.


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## Neo

*Pakistan to lose $500m in sugar import this year ​* 
Saturday, March 28, 2009

ISLAMABAD: The country is set to lose $500 million on sugar imports this year, the largest amount spent on the commodity, despite a bumper local sugarcane crop in the current season, officials said on Friday. 

Prices are likely to soar due to smuggling of sugar out of the country and the refusal of the government to allow raw sugar imports for building up reserves to stabilise the market. 

Fearing a shortfall in sugar supply, the Pakistan Sugar Mills Association (PSMA) had requested the government to allow import of 400,000 tons of raw sugar through the Trading Corporation of Pakistan (TCP) for refining and supplying to the market. This was meant to build a buffer stock and stabilise the prices. 

They also demanded that a ban be imposed on export of raw sugar (gur) to ensure production of 50,000 tons in Peshawar, which could save consumers from short supply and price hike. The PSMA made the request in view of the looming crisis in the sugar market. 

But the Economic Coordination Committee of the cabinet did not allow the import of raw sugar. Last year (2007-08), mills produced 4.7 million tons of sugar. In September 2008, the TCP and mills had a joint stock of 1.2 million tons. This year (2008-09), sugar production is estimated to be three million tons. Competition among mills resulted in an increase in sugarcane price to Rs130 per 40kg compared to Rs80 set by the government for the season. Non-imposition of a ban on raw sugar exports resulted in production shortfall of 50,000 tons in NWFP. 

Furthermore, extremely high sugar prices in Afghanistan encouraged smuggling of the commodity under the guise of gur. According to rough estimates, over 200,000 tons of sugar were smuggled out of the country and till March, the trend continues. 

So far, the ministry of food and agriculture has failed to stop the smuggling. The governments refusal to allow import of raw sugar and ban on the export of gur plus rampant smuggling led to shortages. Stock on September 2008 stood at 1,200,000 tons; less consumption during the Oct-Nov period in 2008 amounted to 700,000 tons; production for 2008-2009 amounted to 3,200,000 tons; the available sugar weighed 3,700,000 tons; subtracted sugar smuggling at 200,000 tons; sugar availability stands at 3,500,000 tons; domestic consumption is estimated at 4,200,000 tons; net shortage of sugar in October-November 2009 would not be less than 700,000 tons. 

The export of raw sugar and smuggling of refined variety would cost the Federal Board of Revenue (FBR) Rs500 million in tax losses and the country would have to suffer foreign exchange loss of $115 million that could have been avoided. Sugar shortage would cost the country $322 million, provided the international prices remain stable at $400 per ton and freight is $60 per ton. 

Timely import of raw sugar and a ban on its export would have saved $262 million of the government, sources in relevant government departments said.


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## Neo

*Trade diversion towards region to save $1.5bn ​* 
Saturday, March 28, 2009

LAHORE: SAARC Chamber of Commerce and Industry (SAARC CCI) has appreciated the Pakistani governments decision to promote trade with neighbouring countries.

In a press statement on Friday, Tariq Sayeed, SAARC CCI president, said the decision is a positive step, and said that it would help increase the share of Pak trade within South Asia and affect the overall increase in intra-regional trade, which was less than 5 per cent before the formation of SAARC in 1985.

Referring to some studies, including that by Dr Hafiz Pasha, he said that trade diversion towards the region could save enormous amounts of $1.5 billion per annum, if essential products not made locally, were imported from the region, particularly from India.

He said Pakistan has to import raw material of steel and iron, machinery and engineering-based equipments, chemicals, and consumer goods from Australia, Brazil, Mexico, Europe and South East Asian countries, which are also available in India at a compatible quality and competitive rates. There is no harm if we buy these products from India, he maintained.

Iftikhar Ali Malik, VP SAARC CCI said that allowing trade through the Wagah-border and increase in importable items from India would help promote Pakistani trade with the largest market of the region and eventually have multiple impacts in terms of saving of huge foreign exchange of the country.

Sayeed stressed upon the need for promoting intra-regional investment, stating that investment has taken over trade strategy due to its multiplier effects, like innovation in technology, value addition, and surplus production for quantum leap in exports, etc. Citing the exemplary increase in Chinese exports, he said that FDI had a major role in increasing the size of exports from China, attracting more than $50 billion per annum FDI for the last one decade.


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## Neo

*Govt readies Energy Plan 2022​*
** Plan suggests hydrocarbon, petroleum products supply from Gulf, diesel import from India​*
ISLAMABAD: The government has prepared an Integrated Energy Plan 2022 with a vision to secure affordable energy supplies and focus on indigenous resources, sources told Daily Times on Friday.

The plan suggested that the subsidies on energy for the poorest and the vulnerable section of the society should continue, despite the fact that the government had already agreed with international funding institutions to abolish all such subsidies by June 30. 

The energy plan was drafted by the recently-formulated Energy Experts Group (EEG). Oil and Gas Development Company Chairman Farooq Rahmatullah heads the body, which has 14 other members and reports to the prime minister.

The proposal report would be formally presented to the prime minister and the top leadership by mid-April.

The report, seen by Daily Times, focused on developing the countrys indigenous resources and introducing an energy efficiency plan to conserve energy.

Proposals: The report also proposed a review of the energy plan every three years and suggested that the government must secure future supplies of hydrocarbon products and devise a contingency plan for regular supplies of petroleum products from the Gulf region.

The EEG report also said Pakistan should import diesel from India as it would be relatively inexpensive.

The report raised concern over the circular debt issue, saying it had affected oil-refining capacity in the country. It also discouraged the government from allowing import of used oil refining machinery unless they were accompanied by secondary processing facilities.

The EEG report projected that Pakistan could produce 9,000 megawatts of electricity through liquefied natural gas and imported gas by 2022.

It said that the country had the potential to produce around 18,000MW of hydro electricity by 2022.

It said 12,450MW of coal-based electricity could be generated by 2022. The report targeted generating 17,400MW of electricity from renewable energy sources.


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## Neo

*Pakistans exports to US dwindle owing to gas shortage​*
KARACHI: Pakistan lost considerable share of its export to United States of America (USA) during the current financial year owing to host of reasons, sources in the export sector told Daily Times.

Textile and clothing was the main sector, which lost its share in the USA market as according to exporters and officials, the share of export to USA fell below 20 percent in total export volume compared to 22 to 24 percent in the previous years.

The sliding export to USA market has been causing concerns in the export sector of the country for quite some time as high cost of production coupled with high tariff structure on Pakistani export has been depriving the country from this high priced and lucrative American market.

However, the report of USA chamber of commerce a couple of days to ease the tariff slabs and provide greater market access to Pakistani exports has been seen as an encouraging move, which if implemented would definitely help Pakistan to regain its lost share in this market.

Although, global economic recession, which hurt USA severely contributed in dwindling Pakistani export to this market, other factors too made the situation tough for the local exports.

Zubair Motiwala, a well-known figure in textile sector pointed out that uneven domestic situation for the export sector was the leading factor contributing to the downfall in exports to USA market.

For instance, during November and December of current fiscal year when major export of textile products to USA and European market take place just before Christmas and new year, the industry was grappling with gas shortage which hampered the production and significant quantity of export orders could not be honoured due to this issue.

It caused estimated one billion dollar shortfall in export to USA and European market due to this problem, Motiwala, who also holds Advisor to Sindh Chief Minister on Investment portfolio, revealed.

He also pointed out increased duty drawback by Chinese government from 11 to 15 percent on its textile exports, which made Chinese products more competitive compared to its Pakistani counterparts.

According to an official in Textile Ministry, Pakistans value-added textile products were affected adversely due to these issues and created a major dent in export.

About the latest USA Chamber report proposing easing the duties on Pakistani textile goods, Motiwala said that this is what we have been arguing since long that USA and EU should give preferential treatment to goods originating from Pakistan.

We dont need aid. We just want trade to keep the wheel of the industry moving and create more and more jobs, he said and added that realisation on part of USA business lobby is very heartening.

Referring to Italys call to extend trade benefits to Pakistan, advisor said that it is also a key development and urged that the EU summit should be held immediately on this issue instead in the second half of 2009 as proposed by Italy.


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## Neo

*Pakistan, WB sign agreement for poverty reduction​*
ISLAMABAD: The government of Pakistan and the World Bank signed an agreement at Washington for IDA credit of SDR 321.3 million (US$ 500 million approximately) for Poverty Reduction and Economic Support Operation (PRESO). According to an official statement issued here the credit would support government of Pakistans programme to regain and maintain economic stability, bring the economy back on track to a higher growth path while protecting the poor and the vulnerable from adverse shocks. PRESO is a single-tranche Development Policy Credit. The funds will be utilised by the Government of Pakistan for the following key policy areas: Regaining and maintaining macroeconomic stability through increased tax revenue mobilisation, adjustment of fuel prices and power tariffs, improved efficiency of public spending, and strengthened government debt management. Enhancing competitiveness through reduced barriers to business entry and exit, and strengthened financial sector; and protecting the poor and the vulnerable through improved targeting of safety nets and cash transfer programmes, and strengthened statistical system. PRESO is one of the three budgetary support credits that the World Bank will provide to the Government of Pakistan during the current financial year, said Farrakh Qayyum, Secretary EAD.


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## Neo

*Rs 46.6 billion package for Balochistan announced ​*
QUETTA (March 28 2009): President Asif Ali Zardari on Friday announced a Rs 46.6 billion development package for Balochistan, and said the people and the parliament of Pakistan would ensure that the rights of the people of the under-developed province were not denied. Addressing the elders and parliamentarians of Balochistan here, the President urged the people of Balochistan to strengthen democracy.

Otherwise, he cautioned, Those, who did not do so would be strengthening those who were trying to break Pakistan or cause subversion in the province. President Zardari, who is on a two-day visit to the province, announced four water storage reservoirs at a cost of Rs 36 billion, small delay-action dams at a cost of Rs 2.5 billion, package for Quetta city for rupees three billion and transmission lines for rupees five billion. He said the people of Balochistan had a long history of struggle and with the democracy in place, all they would be able to avail of all their rights.

He said he remained fully in contact with the Governor and Chief Minister of the province to find their problems and address the issues that cropped up. The President said that political maturity was coming, as he believed that the only way forward was through democracy. He said the Pakistan Peoples Party would ensure that the people of Balochistan got their rights.

President Zardari said Balochistan was an important province and the future of the country was linked to it. He said Balochistans soil would not be allowed to be exploited for any subversive activity.

He said some people were involved in exploiting people for their own political interests. Balochistan Governor Nawab Zulfiqar Ali Magsi, Chief Minister Nawab Muhammad Aslam Raisani, Federal Ministers Qamar Zaman Kaira, Hamayun Aziz Kurd, Hayatullah Durrani, Manzoor Ahmed Watto, Raja Pervez Ashraf, Nabil Gabole, Nazar Muhammad Gondal and Prime Ministers Adviser on Interior Rehman Malik, MNA Umar George, provincial President of PPP Senator Haji Lashkari Raisani and other members of the provincial Cabinet was also present on the occasion.


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## Neo

*Gwadar Port deal with SPA unlikely to be scrapped ​* 
ISLAMABAD (March 28 2009): The government is unlikely to scrap the Gwadar Port agreement with the Singapore Port Authority (SPA), fearing that the operators would drag it into international arbitration, and would claim reputation damages, sources in the Ministry of Ports and Shipping told Business Recorder here on Friday.

The Minister for Ports and Shipping, Nabeel Gabool, had announced a couple of days ago that the government would cancel Gwadars pact with SPA and hand over the port to the provincial government. "Ports are Federal territories are covered under Federal Legislative List, Fourth Schedule of the Constitution.

For giving Ports in provincial control, Constitutional Amendment is required, with 3/4 majority," said sources. If the government cancelled the contract agreement of PSA, it would effectively imply a default on the part of the GoP, which would incur compensation, to be paid to PSA, under the terms of contract agreement, as well as compensation claim for damages for reputation, which would be handled under international arbitration, they said.

According to the agreement, failing amicable settlement and/or settlement the dispute or differences or claims, as the case may be, shall be finally settled by binding Arbitration under the Rules of the Court of Arbitration of the International Chambers of Commerce by a sole arbitrator appointed in accordance with the said Rules. The place of arbitration will be London.

There are reports that Gwadar Port Authority (GPA) has also defaulted on its commitment to provide 926 hectares land for free zone area at Gwadar Rato Dero road, which is essential to start commercial operation of the port. "GPA has not protected 18,000 hectares land allotted to Gwadar Port free of cost in 1996, as was committed by the Prime Minister," sources added.

Another issue is that the previous Sindh government had demanded KPT and PQA to be handed over to Sindh government. KPT has 4,000 acres; Port Qasim has 10,000 acres and Gwadar needs 30,000 hectares. And, just like any other port, Gwadar needs road and rail connectivity.

Analysts are of the view that in the present case, it is also an attempt to seek political mileage and an attempt to pacify the angry Baloch nationalists who did not have a say in awarding contracts in the province. The Planning Commission, provincial government, and Gwadar District Nazim were fully involved from the stage of conception to construction of berths by Chinese contractors and subsequent award of contract to a world class port operator.

The Master Plan of Gwadar city, the terms of the contract with regard to it and tax holiday period were approved by the federal cabinet which was duly represented by provincial Chief Minister Jam Yousuf. It is pertinent to mention here that Prime Minister Benazir Bhutto had approved the construction of a deep-water port project at Gwadar on BOT terms for 50 years.

Other approved terms included (a) 18,000 hectares of land to be provided by the Government of Balochistan "free of cost"; (b) Wapda to provide electricity; (c) NHA to construct 895 kilometres Gwadar-Rato Dero Road and Gwadar-Karachi Coastal Highway; (d) free of cost (except development charges) land to be provided for establishing industrial ventures and warehouses and; (e) Offer of concessions comparable with those available to existing free zones in Far East to world class companies.

After military take-over in 1999, the project was, however, cancelled. While celebrating 50 years of Pak-China Friendship in 2002, China agreed to construct the port with $250 million loan on generous terms: phase-I of the project being construction of 600 meters of berths.

In 2006, tender was floated for operation of Gwadar Port, marine services and Free Zone on BOT for 40 years. After due competitive process, GPA signed an agreement with Port Singapore Authority. As per terms, PSA delegated the task to three joint venture companies: two local investors ie AKD and NLC are also the partners of PSA in Gwadar Port.

Analysts are of the view that the slow progress to get Gwadar fully functional has nothing to do with the agreements between GPA and PSA. They say that no port can function without a commercial hinterland attached to it with requisite infrastructure for domestic and transit cargo.

There are questions as to why the 2001 directive of the Prime Minister to freeze allotment of all land in Gwadar city area and transfer of all government land to the port was not implemented? Shaukat Aziz Cabinet, after due approval from President Musharraf had ordered Pakistan Navy to shift to a new location and have the earmarked contiguous area of the port transferred to GPA.

According to sources, operators are demanding, of the government, to make Gwadar port functional; that Pakistan Navy, Coast Guard lands should be handed to them; and Port Master Plan should be strictly adhered to. There are also unconfirmed reports that GPA Chairman (Adm) Saeed has caused GoP to default on Agreement terms. He refused to give Navy land to GPA, and guided Navy to build shipyard on that piece of land.


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## Neo

*Pakistan to get $300 million IDA loan during current fiscal ​*
ISLAMABAD (March 28 2009): Pakistan will get 300 million dollars from the International Development Association (IDA), the World Banks concessionary lending arm, during the last quarter of 2008-09. Of this amount, 100 million dollars will be used for higher education development policy and 200 million dollars for social protection/safety nets programme during the current fiscal year.

Pakistan has recently signed an agreement with the World Bank for IDA credit of SDR 321.3 million (500 million dollars) for poverty reduction and economic support operation (Presco). The agreement was targeted to retain economic stability, bring the economy back to as higher growth path while protecting the poor and vulnerable from adverse shocks.

The Presco is one of the three budgetary support credits that the World Bank will provide to Pakistan during the current fiscal. The IDA credit for the Presco will be repayable in 35 years with 10 years grace period. The credit will be interest-free, but only the service charges at a rate of 0.75 percent per annum on the withdrawn credit balance, and the commitment charges at a maximum rate of 0.50 percent per annum on the un-withdrawn balance, will be paid.

The Presco is a single-tranche development policy credit. The funds received under the Presco will be utilised for retaining and maintaining macroeconomic stability through increased tax revenue mobilisation, adjustment of fuel prices and power tariffs, improved efficiency of public spending, strengthening of government debt management, enhancing competitiveness through reduced barriers to business entry and exit, protecting the poor and vulnerable through improved targeting of safety nets and cash transfer programmes and strengthening of statistical system.

The reform programme, supported by this operation, is based on the governments recently adopted second poverty reduction strategy paper. Pakistan has experienced severe external and internal shocks in the past year and is confronting a very difficult macroeconomic situation. The rise in international oil and food prices sharply inflated the countrys import bill and the subsequent slowdown in the global economy dampened external demand for Pakistans exports.

On the internal side, political turmoil and uncertainties affected investors confidence which, together with macroeconomic imbalances, led to capital outflows. The World Bank has already said: "With dampened external demand for its exports, an inflated import bill and low investor confidence, Pakistan needs additional assistance from the international community to restore economic stability and bring its economy back to a higher growth path."-PR


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## Neo

*Pakistan to get aid as down payment on Americans future: US to give $1.5 billion in annual assistance for five years to build infrastructure ​*
WASHINGTON (March 28 2009): US President Barack Obama vowed to intensify the fight against the Taliban and al Qaeda in Afghanistan and Pakistan as he outlined a new strategy for a conflict that began more than seven years ago but has no end in sight. Obama announced Washington will increase development aid to both countries but will hold their governments accountable for its use and implement benchmarks to ensure the money is being spent effectively.

That will include 1.5 billion dollars in annual aid to Pakistan over the next five years to build schools, roads and hospital and strengthen democratic institutions. "The American people must understand that this is a down payment on our own future, because the security of America and Pakistan is shared," Obama said. "Pakistans government must be a stronger partner in destroying these safe havens, and we must isolate al Qaeda from the Pakistani people."

Obama said he was ordering an additional 4,000 soldiers to Afghanistan to increase the effort to build up Afghan security forces on top of the 17,000 already enroute to the country this year. "We have a clear and focused goal: to disrupt, dismantle and defeat al Qaeda in Pakistan and Afghanistan, and to prevent their return to either country in the future," Obama said.

Obamas speech came days before he heads to Germany and France for a Nato summit, where he will present his new approach and is expected to ask allies to contribute more to the conflict in Afghanistan. Secretary of State Hillary Clinton will attend an international conference on Afghanistan in The Hague on Tuesday.

Obama made it clear that al Qaedas leadership, including Osama bin Laden and his deputy, Ayman al-Zawahiri, is hiding in Pakistan and plotting terrorist attacks on the United States and other countries, and called on the government in Islamabad to do more to deny al Qaeda refuge.

"They have used this mountainous terrain as a safe haven to hide, to train terrorists, to communicate with followers, to plot attacks, and to send fighters to support the insurgency in Afghanistan," Obama said. "For the American people, this border region has become the most dangerous place in the world," he said. "But this is not simply an American problem; far from it. It is instead an international security challenge of the highest order."

Obama launched a strategic review of the situation in Afghanistan shortly after taking office in January, and has pledged to shift US resources out of Iraq and into the conflict with the Taliban. The United States will also send more diplomatic and civilian personnel to Afghanistan to help with reconstruction and strengthen President Hamid Karzais government, which Obama said has been plagued by corruption.

The United States has been conducting periodic attacks into the mountainous tribal region of Pakistan along the border, strikes that Islamabad publicly condemns as a violation of its sovereignty. Obama provided no indication he would rein in the attacks.

"After years of mixed results, we will not and cannot provide a blank check. Pakistan must demonstrate its commitment to rooting out al Qaeda and the violent extremists within its borders," he said. "And we will insist that action be taken, one way or another, when we have intelligence about high-level terrorist targets."

Obamas troop increase will take the US presence in Afghanistan to more than 50,000 soldiers. More than 700 American soldiers have died in the war in Afghanistan since October 2001, and the heaviest toll came last year as a resurgent Taliban stepped up attacks and the security environment sharply deteriorated.

Citing the success the US military had in Iraq by reaching out to former enemies to turn them against al Qaeda, Obama said a similar strategy could be adopted with moderate elements of the Taliban. "There is an uncompromising core of the Taliban. They must be met with force. And they must be defeated. But there are also those who have taken up arms because of coercion or simply for a price," he said. "These Afghans must have the option to choose a different course."


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## Neo

*SPI inflation 18.05 percent up over last year ​* 
ISLAMABAD (March 28 2009): The weekly inflation, measured through Sensitive Price Indicator (SPI) swelled to 18.05 percent on week ending March 26, 2009 over the same period of last year, according to Federal Bureau of Statistics (FBS). Figures released by FBS here on Friday showed a marginal reduction in inflation during the week.

The inflation significantly came down in the regional countries after decline in the commodity prices in the global market, but people in Pakistan could barely benefit from it owing to the prevailing market system. According to economists, people in Pakistan have least benefited from the falling prices in the global market mainly because of the market forces that never allow the market to move both ways.

The moves of the market in Pakistan, they believe, are unidirectional, which means that when the prices are on the rise in the global market their impact is immediately passed on to the consumers, but their relief in case of decline is never passed on.

They said that commodities prices declined to one-fourth in the global market, but the impact was not passed on in the domestic market. With this increase in the Sensitive Price Indicator (SPI), the dearness was recorded 19.15 percent for families having up to Rs 3000 monthly income, 19.60 percent to families bracketed in Rs 3001-5000 monthly income, and 20.12 percent for families in Rs 5001 to Rs 12000 group. The inflation was recorded 17.41 percent for families having monthly income over Rs 12,000.

The SPI bulletin, based on 53 essential commodities collected from 17 urban cities, showed that prices of 18 commodities increased during the week, 13 declined, while 22 remained stable.

The items which registered increase in their prices included chicken (farm), electricity bulb (60 watts), sugar, bananas, bread plain (middle size), lawn, voile (printed), wheat (average quality), mash pulse (washed), curd, gur, vegetable ghee (loose), mutton, cooked dal, wheat flour (average quality), cooked beef, milk (fresh) and beef.

The items which recorded decrease in their average prices during the week under review included onions, tomatoes, gram pulse (washed), garlic, potatoes, masoor pulse (washed), egg hen (farm), rice basmati (broken), rice (Irri-6), red chillies, moong pulse (washed), mustard oil and LPG (11 kg cylinder).

The items with no change in their average prices during the week under review included milk (powdered), vegetable ghee (tin), cooking oil (tin), salt (powdered), tea (packet), tea (prepared), cigarettes, coarse latha, shirting, sandal (gents), sandal (ladies), chappal, kerosene, firewood, match box, washing soap, bath soap, gas charges (up to 3.3719 mmbtu), electricity charges (1 100 units), petrol, diesel and telephone local call.


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## Neo

*Pakistans foreign exchange reserves rise to $10.26 billion ​*
KARACHI (March 28 2009): Pakistans foreign exchange reserves rose by $100 million to $10.26 billion in the week that ended on March 21, the central bank said on Thursday. The State Bank of Pakistans reserves rose to $6.79 billion from $6.69 billion a week earlier while reserves held by commercial banks were flat at $3.47 billion, SBP said.

Pakistans foreign reserves hit a record high of $16.5 billion in October 2007 but fell to $6.6 billion in November, largely because of a soaring import bill. Pakistan expects to get another $700 million in foreign inflows this month, Shaukat Tarin, the countrys top finance official, said last week.


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## Neo

*Economically stronger Pakistan would be in best interest of USA ​*
KARACHI (March 28 2009): Founder Chairman Pak-USA Business Council and Former President FPCCI, Iftikhar Ali Malik has appreciated the role of business counterparts in USA for lobbying with the government and convincing to cut tariff on Pakistan Textiles. Malik was of the firm opinion that stronger economic ties with Pakistan would help advance Americas geopolitical goals in South Asia.

"Economically stronger Pakistan would be in best interest of USA and the whole World" also due to strategic position. Malik had the opportunity to sign agreement of co-operation between US Pakistan Business Council Washington USA and Federation of Pakistan Chambers of Commerce and Industry.

The agreement was signed by Ahmet C. Bozar and Iftikhar Ali Malik in 2001 at US Chamber of Commerce at Washington. The purpose was to encourage and facilitate the co-operation in trade investment. As a result the trade between Pakistan and USA has increased manifold. During the past years a number of business delegations from said USA Chamber have visited Pakistan led by Dr Herbert J. Davis, Esperanza Gornez Jelalian.

Bryan D. Hunt, Principal Officer, US Consulate General in Lahore made consistent efforts through contacts with Business Community to promote trade. Visits of Richard Boucher, Assistant Secretary of State for South and Central Asian Affairs to Lahore further helped to develop trade between USA and Pakistan. He hoped that Textile Sector would avail maximum benefit.-PR


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## sohailbutt

*Oil refineries production sees over 4 per cent growth​*
ISLAMABAD: The total production of oil refineries has witnessed a growth of 4.14 percent during the corresponding fiscal year 2007-08. 

The total production (energy and non-energy) by the refineries during the year amounted to 11.10 million tons as compared to previous year&#8217;s 10.66 million tons, posting a growth of 4.14 percent, according to official sources. 

All the refineries, except National Refinery Limited (NRL) registered increase in production during the period, while the production by Bosicor refinery was significantly higher due to its increased production capacity resulting from revamping and de-bottle-necking of crude distillation unit. 

PARCO&#8217;s annual growth for the year under review stood at 3735.8 tons against the previous year&#8217;s 3586.2 tons, showing increase of 4.17 percent. 

NRL could not perform well in 2007-08 as its production fell to 2585.1 tons from last year&#8217;s 2664.5 tons, registering decrease by 2.98 percent. 

While, Attock Refinery Limited and Bosicor Pakistan Limited exhibited good performance by attaining 5.39 percent and 16.29 percent respectively.

Oil refineries production sees over 4 per cent growth - GEO.tv


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## sohailbutt

*Pakistani stocks up despite militant attack in Lahore*​
KARACHI: Despite a brazen militant attack on a police training centre in Lahore on Monday, Pakistani stocks rose 2.3 percent in early trade as investors took heart from moves by the government over the weekend to reconcile with the opposition.

Investors were also encouraged by the economic support promised by U.S. President Barack Obama on Friday in a strategy for countering militancy in Afghanistan and Pakistan, dealers said.

The Karachi Stock Exchange (KSE) benchmark 100-share index <.KSE> was up 2.06 percent, or 140.88 points, higher at 6,967.87 at 12.25 a.m. (0725 GMT).

Pakistan President Asif Ali Zardari said on Saturday he would recommend the ending of central rule in Punjab and support the return of a government led by rival Nawaz Sharif's party in the province. 
&#8216;Investors are hoping for political stability as President Zardari announced end of Governor's rule,&#8217; said Shuja Rizvi, director of broking operations at Capital One Equities Ltd.

The Pakistani rupee <PKR=> was firmer at 80.42/47 to the dollar, compared with Saturday's close of 80.46/53 due to some inflows.

DAWN.COM | Business | Pakistani stocks up despite militant attack in Lahore


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## sohailbutt

*SBP to raise Rs350bn*​
KARACHI: The State Bank of Pakistan on Friday announced that it would raise Rs350 billion through treasury bills auction from April eight to June 17, 2009. 

The cut-off yields on treasury bills have been slashed to below 12 per cent while the market expects further cut in the rate.

Market experts said the decline in the yields on bills would be visible after an expected cut in the policy interest rate in the monetary policy review next month.

Analysts said the local banking system had massive liquidity, which is quite surprising as banks the world over are facing liquidity crunch and the governments are pumping billions of dollars to improve liquidity.

Pakistan is facing a different situation. The private sectors borrowing has hit the bottom creating liquidity glut in the system, said an analyst.

DAWN.COM | Business | SBP to raise Rs350bn


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## sohailbutt

*Sindh reluctant to allow new sugar mills*​
KARACHI: Eight investors have applied for NOCs to set up sugar mills in Sindh. While the government seems reluctant to grant permissions as existing mills in the province are experiencing severe cane shortage.

The province has over 30 sugar mills and NOCs to another five had already been issued in 2006-07.

Secretary of Industries Ali Ahmed Lund told Dawn that the government wanted to promote the production of white sweetener from sugar beet, which has good recovery rate and its crop takes 3-4 months to mature and requires less water.

The cane crushing season in the province ended abruptly one month ahead of its schedule due to 30 to 35 per cent sugarcane shortage and many mills suffered temporary shutdowns and while several could not operate to their full capacity.

Badin Sugar Mills, Shahbaz Qalander Mills, Kuwait Sugar Mills, Sheikh Mohammad Rashid and Company, Ajmer Sugar Mill, Sardar Mohammad Tehsin Khan Mill, Sindh Punjab Sugar Mills and Orient International Pvt Ltd have submitted applications for NOCs.

The secretary said that the ministry had not yet taken a decision on the applications, but it felt that the new units should be encouraged to base their production on sugar beet. 

Sources in the ministry said that the sugarcane production could only meet requirements of 19 to 20 mills while around three dozen mills were currently operating in the province.

Meanwhile, Sindh Abadgar Board Chairman Majid Nizamani opposed the idea of setting up new sugarcane-fed mills and observed that the total capacity of the existing mills was over six million tons while the domestic consumption was below four million tons.

He said that the mills utilising total cane crop had been running at 72 per cent of their capacity and there was no need to set up new mills for 10 to 12 years.

Mr Nizamani said on experimental basis sugar beet was cultivated on 1,300 acres near Badin and it did not only give an extra ordinary high yield but it also had sugar recovery ratio of over 14 per cent. 

He said that a small unit based on beet crushing was set up in Badin Taluka, but the then government whose ministers had stakes in sugar mills refused to give NOC and resultantly the unit had to be scrapped by the owner.

He said the attempt by some big shots to set up new sugar mills was aimed at grabbing huge loans in the name of industry and using them on personal luxuries.

DAWN.COM | Business | Sindh reluctant to allow new sugar mills


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## sohailbutt

*KSE-100 Index surges beyond 7,000 level​*
KARACHI: Stocks prices at Karachi Stock Exchange (KSE) witnessed a significant gain on Monday with the benchmark KSE-100 Index advancing by 212 points to finish the day at 7,015.

The Index was seen at over 7,000 level for the first time since December 22, 2008.

The Presidents announcement regarding lifting of the Governor Rule in his address to the joint session of Parliament further restored the confidence of the investors who looked particularly interested in taking positions in energy and banking stocks.

Market turnover surged to 330 million shares.

Pak PTA recorded maximum activity which gained paisas 26 to Rs3.6.

Market experts say the major Index could cross the psychological barrier of 7,500 level in the coming sessions.

KSE-100 Index surges beyond 7,000 level - GEO.tv


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## sohailbutt

*Gawadar airport land acquisition likely to be approved today​*
ISLAMABAD: National Economic Councils executive committee is all poised to give an approval for the acquisition of the land for construction of Gawadar international airport.

Finance Advisor, Shaukat Tareen will preside over the committee meeting, where 25 key-projects will be presented for appraisal and approval. These projects were not deferred despite huge cut in the annual development program. 

The committee will also review 11 energy sectors projects, which included updating of the facilities in Faisalabad, Multan, Islamabad, Lahore, Quetta and Peshawar electric supply companies, besides private sectors six power houses linking with the national transmission system, electricity supply to the villages of Dera Bugti and the setting up 43.5MW and 14.4MW power houses at Muzaffarabad. Pakistan Railway project for acquiring 500 new bogies approval and water storage projects will also come under consideration for approval. 

Gawadar airport land acquisition likely to be approved today - GEO.tv


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## sohailbutt

*Weekly inflation decreases by 0.43 percent​*
ISLAMABAD: The Sensitive Price Indicator (SPI) for the week ended on March 26, for the lowest income group up to Rs3000 has registered decrease of 0.43 percent over the previous week. 

The SPI for the week under review in the above mentioned group was recorded at 215.61 as against 216.55 registered in the previous week, according to provisional figures of Federal Bureau of Statistics (FBS). 

The weekly SPI has been computed with base 2000-2001=100 covering 17 urban centers and 53 essential items for all income groups and combined. 

SPI for the combined group registered decrease of 0.34 percent by declining from 208.43 in the previous week to 207.73 in the week under review. As compared to the corresponding week of last year, the SPI for combined group in the week under review witnessed increase of18.05 percent. 

As compared to last week, the SPI for the group falling in the income brackets of 3001-5000, 5001-12000 and above 12000 decreased by 0.43 percent, 0.37 percent and 0.22 percent respectively.

During the week under review average prices of 13 items registered decrease, while that of 18 items increase with the remaining 22 items' prices unchanged. 

Weekly inflation decreases by 0.43 percent - GEO.tv


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## ejaz007

*IMF approves 2nd tranche of its aid to Pakistan *

LAHORE: The IMF has approved $840million in second tranche of its aid to Pakistan, a private TV channel reported. According to the channel, the approval was given in a meeting of the IMF Executive Board. The board reviewed the funds aid to Pakistan, expressed its satisfaction and approved the second tranche. The money would be transferred to Pakistan on Monday (today), the channel reported. Meanwhile, the World Bank also approved $500million interest-free loan to Pakistan for poverty eradication and tax reforms, the channel said. daily times monitor

Daily Times - Leading News Resource of Pakistan


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## ejaz007

*Pakistan losing $6 billion annually in war on terror: SCCI *


LAHORE (March 31 2009): Pakistans economy is losing $6billion a year to counter terrorism, while budgetary allocations for this purpose are affecting the pace of development. The VP, SAARC Chamber of Commerce and Industry (SCCI) Pakistan Chapter and founder Chairman, Pak-US Business Council, Iftikhar Ali Malik said.

Strongly condemning the terrorist attack on Police Training Centre, Manawan on Monday, he said Pakistan paid hugely in terms of human, social and economic cost for the war on terror and so far has suffered s tremendous financial loss of $68 billion, since the turmoil in Afghanistan.

He said that Pakistans participation in the war on terror has led to unemployment and displacement of people leading to an increase in the crime rate. Malik also said that FPCCI, other chambers and entire business community across the country stand united with the democratically elected government in the wake of Indian threats following Mumbai incident. Pakistan is a peace loving country and its democratically elected leadership, always condemned the menace of terrorism in the world, he said.

Further, Pakistan is still victim of terrorism and will continue its efforts to stamp out this menace, he said adding that Pakistani leadership is always ready to negotiate with India for the settlement of all outstanding disputes and issues through parleys. On behalf of the entire business community, he categorically assured the government that traders would place their resources at the disposal of the government against any threat and to purge the country of menace of terrorism.

Business Recorder [Pakistan's First Financial Daily]


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## ejaz007

*Pakistan to get $1.4b loan today*
Published: March 31, 2009 


WASHINGTON - Pakistan will receive a total of US $1.4 billion by Tuesday including US $500 million interest-free credit from the World Bank for Poverty Reduction and Economic Support Programme and $840 million from the IMF following the successful 1st review of the Standby Arrangements signed last Nov 2008 achieving all the targets.

"This is an encouraging sign for economic stabilisation efforts of the government and reflect increasing confidence of the international institutions", a Press release of the Pakistan Embassy said. "The transfer will bolster Pakistan's foreign exchange reserves and help Pakistan in having its credit rating revised upward as well as enhancing investors' confidence both at home and internationally".

In this regard, the embassy Press release stated, Ambassador Hussain Haqqani had an extensive meeting with WB Vice- President Isabelle Gueroro in Washington Monday and appreciated WB's support to Pakistan's endeavours for economic stabilisation and early recovery.

The WB VP assured Haqqani of the WB's continued support. The targeted project under World Bank credit, Poverty Reduction and Economic Support Operation, seeks to reforming the tax administration and is also expected to strengthen Pakistan's competitiveness.

Pakistan to get $1.4b loan today | Pakistan | News | Newspaper | Daily | English | Online


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## Neo

*$1bn to be sought from FoP to raise special force ​* 
Tuesday, March 31, 2009

ISLAMABAD: Pakistan will ask Friends of Pakistan (FoP) to provide $500 million to $1 billion assistance for establishing 80,000-men special force equipped with the latest arms to combat militants in various parts of the country especially in volatile tribal areas, it is learnt.

Pakistan will table a ten year strategic development framework before the FoP forum for seeking $26 billion for twenty crucial projects. It will also ask the donors to provide additional $4 to $6 billion for the budgetary support and to overcome balance of payments difficulties for the next two years.

Pakistan will seek $500 to $1 billion assistance for establishing a special force, which will be given full training only to control the insurgency, a high-level official of Gilani government confided to The News in a background interview on Monday.

The major projects included in the list are construction of the Diamer-Basha dam, skill development, establishing of a special force for fighting against militants and many other projects related to the social sector. The Basha dam will be unbundled into civil works and installation of power plants.

The experts level meeting of the FoP forum, which will be held tomorrow (Wednesday) in Dubai, will fine tune the proposed strategy for taking decisions that would be tabled during the ministerial level meeting going to be held in Tokyo on April 17.

The official said that there would be two sessions held in Tokyo, during the FoP forum, one would be related to establish strategic development partnership with donor countries and that session would not be meant for making pledges.

The second session will be meant for seeking budgetary as well as balance of payment support to the tune of $4 to $6 billion for the next two years, said the official and added that these were the main reasons for co-sponsoring of the event jointly by Japan and World Bank.

During the second session of the FoP, Islamabad will apprise the donors about financial needs owing to budgetary constraints as well as balance of payment difficulties being faced by the country over the next two years. We will seek $4 to $6 billion for budgetary support over the next couple of years, he added. The official was of the view that the world economy was already facing recession and its negative impacts would start appearing in the second half of the ongoing fiscal ending on June 30, 2009, in terms of affecting exports, remittances and foreign direct investments. We will ask the world to compensate us in the wake of ongoing war against terror that resulted in loosing $34 billion after 9/11, 2001 scenario when Islamabad decided to stand with the USA in its war, said the official. Pakistans economic managers, the official said, would also brief the donors about their plans to mobilise maximum tax revenues from domestic resources in a bid to decrease its dependence on foreign inflows in the future line of action. There is need to bring untapped sectors into the tax net in order to improve the tax to GDP ratio, said the officials and added that the services sector could be fully taxed in the next budget 2009-10. MH


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## Neo

*Pakistan seeks US budgetary support ​* 
Tuesday, March 31, 2009

ISLAMABAD: Pakistan has asked the Obama Administration to bifurcate $1.5 billion assistance per annum for Islamabad into the budgetary support as well as for the social sector projects, in order to extend its help both for the government and people of Pakistan, it is reliably learnt.

Pakistan has proposed to the US for providing $800 million as budgetary support while remaining $700 million for the projects, which will be executed through USAID, mainly for social sector out of total $1.5 billion per annum assistance package announced by the President Obama.

The last Bush administration had abandoned budgetary support for Islamabad in the last two years by restricting its annual assistance for the development projects through USAID. In the first three years, the Bush regime had extended its annual $600 million in shape of $300 million as budgetary support and remaining $300 million as Foreign Military Grants (FMG).

Now we are pursuing Washington to bifurcate its upcoming annual $1.5 billion assistance both for the budgetary support as well as for projects through USAID, a high-level official of Pakistans embassy in Washington told The News on Sunday.

The official said that the Foreign Relation Committee would start hearing about its upcoming assistance for Pakistan from Monday and procedural requirements would take one and half month to get through the legislation process. Pakistans assistance is expected to be received from the next financial year, starting from July 2009, added the official.

The official said that it was not yet known in which shape the US is going to extend its support for Pakistan. However, it is the desire of Islamabad to provide it the budgetary support of $800 million per annum from the next fiscal year, added the official.

Pakistans embassy in the US, the official said, is hardly pursuing Islamabads case before the Obama administration in order to convince them for providing support in accordance with the objectives outlined by the incumbent regime.

Sharing break-up of the total US assistance to the tune of over 10 billion to Islamabad in the aftermath of 9/11 scenario, the country was going to receive around $5 billion as reimbursement against expenditures already incurred by Islamabad for continuation of war in tribal areas, adjacent to the war torn Afghanistan.

Against a total bilateral assistance of $5 billion, Islamabad has so far received $297 million every year since 2003-04 to 2007-08 in shape of Foreign Military Grants (FMG). There are service charges being cut down by the US authorities to tune of $3 million every year. The total amount in shape of FMG received by Pakistan was around $1.3 billion till 2007-08.

The US had also promised to provide $3 billion in the shape of budgetary support to Pakistan out of which Islamabad received $300 million per annum. The budgetary support has been shifted towards projects going on under US from the current fiscal year.

The official said Pakistan is paying a heavy price after becoming the front line state in ongoing war against terror.


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## Neo

*ECNEC approves 29 projects worth Rs77.476bn ​* 
*Okays Rs22.5bn to improve power distribution​*
Tuesday, March 31, 2009

ISLAMABAD: The Executive Committee of National Economic Council (Ecnec) that met here on Monday with Advisor to Prime Minister, Shaukat Tarin, approved 29 projects of national importance valued at Rs77.476 billion.

The meeting, however, took up 32 projects in total, but accorded approval to 29 projects. The meeting approved Rs22.5 billion for enhancing power distribution of seven electric distribution companies (Discos), which will not only ensure the smooth supply of quality electricity, but will also reduce the line losses to a large extent.

The current power distribution systems has been dilapidated and not sound enough to sustain the power load which has increased manifold during the span of last eight years. The existing system gets tripped and chocked when the load demand increases, particularly in the summer season.

For this purpose, the meeting approved Rs1.8 billion for power distribution enhancement of Faisalabad Electric Supply Company (Fesco), Rs1.07 billion for Multan Electric Power Company, Rs3.4 billion for Islamabad Electric Power company, Rs4.1 billion for Hyderabad Electric Supply Company, Rs2.28 billion for Quetta Electric Supply Company, Rs4.1 billion for Lahore Electric Supply Company and Rs4 billion for Peshawar Electric Supply Company.

For the project, Asian Development Bank would provide 80 per cent financing, while 20 per cent would be arranged by seven power distribution companies on their own.

The meeting approved electrification of 86 villages in Dera Bugti by QESCO at a total cost of Rs717.71 million to be executed in 12 months through installation of transmission lines, transformers and other allied equipments and necessary civil work, stipulating that Government of Balochistan would form a Committee comprising local MNAs, MPAs and District Nazims who would identify the villages needing electrification, a list of which would be provided to ECNEC.

Ecnec approved the establishment of 43.5 MW Jagran-II Hydropower Project in the Muzaffarabad district, sponsored by the government of AJK at a total cost of Rs4631.02 million involving FEC. The project envisages construction of 43.5 MW Jagran-II Hydropower Station on the Neelum River, and is designed to provide an additional installed capacity in the system. ECNEC also approved the establishment of 14.4 MW Jhing Hydropower Project in Muzaffarabad district, sponsored by government of AJK at a total cost of Rs1813.85 million. It also envisages the construction of 14.4 MW of hydropower station planned at Jhing Nullah which is the right bank tributary of Neelum River.

Ecnec approved Higher Education Commissions Project titled Faculty Development Programme of Bahauddin Zakariya University, Multan for provision of 100 PhD foreign scholarships. ECNEC advised HEC to circulate a list of scholarships allocated to other universities of the country which must address no discrimination component, adding that the list explaining training disciplines be obtained and circulated. ECNEC held that projects falling under education and health development sectors may be presented before FOPs for support.

The meeting approved the Northern Area Health Development Project Phase-II at a total cost of Rs796.050 million that would provide basic health services to the under-served population and strengthen primary health care services besides improving secondary and tertiary health care services.

The meeting approved SUPARCO/Ministry of Defense Pakistan Communication Satellite System Project (PAKSAT-IR) which is designed to develop/manufacture and launch a Geo-Synchronous Orbit Communication Satellite replacing the existing Leased Satellite PAKSAT-I. It constituted an independent project management committee comprising representatives from SUPARCO, MOD (SPD), Ministry of IT and other stakeholders to oversee the implementation of defense as well as civil benefit related components.

Ecnec approved Government of Punjabs sewerage and water supply project in Multan City (Part-I) at a total cost of Rs2817,208 million which is designed to provide the basic facilities of sewerage and water supply in the un-served areas of Multan City.

The meeting approved the Ministry of Housing and Works project for construction of a new Secretariat Block at the Constitution Avenue, Islamabad, at a total cost of Rs3476.363 million, advising the ministry and the Planning Commission to incorporate a financial statement mentioning total savings accruing to GOP in terms of rentals saved.

Ecnec conditionally approved the Ministry of Railways project for procurement/manufacturing of 530 new design bogies/wagons including break vans at a total cost of Rs4134.732 million, directing that a Committee comprising ministers for privatisation, communication, finance and representatives of the Planning Commission and provincial governments be set up to finalise and recommend Pakistan Railways Strategic and Credible Business Plan that meets the business criteria laid down by ECNEC within one month where after ECNECs approval shall stand formalised.

The meeting advised the Ministry of Defense and Planning and Development Division to submit a background report on Aviation Divisions Project titled New Gawadar International Airport, acquisition of land project, explaining as to how an earlier budgetary outlay was released during FY-2005-06. The project was deferred for further consideration till filing of the report.

The meeting approved the withdrawal of Government of Punjabs project on widening and improvement of Gujranwala bypass on technical reasons. Ecnec also approved Government of Punjabs project for construction of the Multan Southern Bypass (dual carriage way) to Bahawalpur Chowk at a total cost of Rs1569.323 million.

The meeting approved Government of Balochistans construction of black-top road from Sui to Uch field (57 KM) in Dera Bugti Balochistan at a total cost of Rs797.711 million. The project would facilitate various oil and gas exploration companies engaged in the production of gas and minerals in the area, besides providing better transportation facilities to the local people through the shortest route from Balochistan to Sindh.

Ecnec approved CDAs construction of Cherah Dam project across the Soan River to be executed jointly by the Government of Punjab and CDA at a total cost of Rs5307.22 million. The project after completion shall provide an additional drinking water supply of 15 MGD to the twin cities of Rawalpindi and Islamabad.

The meeting approved the Ministry of Water and Power and Irrigation and Power Department and Government of Sindhs joint project for lining of distributaries and minors in Sindh Province covering Guddu, Sukkur and Kotri barrages area of the province of Sindh at a total cost of Rs13828.322 million.

ECNEC advised the Planning Commission to give details of the budget expenditure amount of each province for similar projects. The project is designed to control seepage losses from canal system to improve irrigation efficiency for provision of assured water supply to existing irrigated land under cultivation.

The meeting approved the Ministry of Water and Power and the Government of NWFPs joint project titled Bazai Irrigation Scheme, NWFP, located in the districts of Mardan and Malakand Agency of NWFP at a total cost of Rs1796.621 million for provision of better irrigation facilities to an area of about 20,200 acres through construction of 41.1 KM long canal system.

The meeting approved the Minister for Railways recommendations for replacement of old and obsolete signals gear project from Lodharan-Khanewal-Shahdara Bagh, main line section of Pakistan railways, at a total cost of $129,496,782 (Rs14.4 billion).

The meeting approved Ministry of Inter Provincial Coordinationís summary on finalisation of guidelines for funding of projects launched on the directives of the President/Prime Minister including vertical projects launched by the federal government in provinces and federal projects launched by the federal government in provinces according to a pre-set formula, advising that AJK, IPC representation be given in the Federal IPC.

Ecnec approved various transport and communications related projects of the Punjab government, titled Construction of Bosan Road in Multan city, at a total cost of Rs910.850 million, NHAs Project for rehabilitation of road from Gharo to Ketti Bunder at a total cost of Rs3036.466 million in the Thatta district and NHAs other project for rehabilitation of Kambar-Shahdadkot Road in the Khambar district, Shahdadkot, Sindh at a total cost of Rs966.00 million.

The meeting approved a project titled Training and Support of Levy Forces in FATA at a modified cost of Rs558.891 million. The objective of the project is to build essential infrastructure, training, transport and communication facility enabling law enforcing agencies to effectively discharge their law and order duties. Ecnec approved the Ministry of Special Initiatives Clean Drinking Water Initiatives (CDWI) Project, second revised PC-I at a total cost of Rs999.541 million, stipulating that payments to the contractors be made on verification from provincial governments and operation and maintenance cost be met by the federal government. The project covers installation of nation wide filtration plants at district and tehsil levels.

The meeting conditionally approved the Ministry of Interiors project titled Procurement/Installation of Non-intrusive Vehicle X-Ray Inspection System (NVIS) at a total cost of Rs1000.34 million including FEC. The project is designed for procurement/installation of non-intrusive x-ray inspection system to improve law enforcement agencies capabilities to scan high volumes of vehicles and detect contraband cargos in normal flow of traffic. It, however, advised the planning commission to undertake further technical study of project feasibility, FBR component for duties/taxes be incorporated, and it be sent to ECNEC for confirmation of its conditional approval by circulation.


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## Neo

*KSE crosses 7,000 points on institutional support ​* 
Tuesday, March 31, 2009

KARACHI: Ignoring the fast deteriorating law & order situation in the country again on Monday, the Karachi bourse easily breached through 7,000 points psychological level on Monday on aggressive institutional buying.

The KSE 100-share Index rose by another 3.11 per cent or 211.35 points and closed at 7,017.81 points.

This morning, market opened above 7,000 points level and managed to maintain above this psychological level successfully, it was observed.

Analysts said that the massive institutional buying amid strong stocks fundamentals managed to minimize the intensity of fast worsening law & order situation in the country.

The terrorist attack on police training centre in Lahore about 7:30 in the morning, which remained lasted till late noon hours, could have derailed market, but immense institutional buying on corrective measure in the local economy inflated stocks values to notable levels.

The trading was very much similar to the weekend session, as market moved aggressively up while operation against anti-terrorist activities in Lahore was in progress, which took over two-dozen lives and injured another 100 people too.

On last Friday also, marked had exhibited excellent performance despite of a powerful suicide blast in a mosque in Khyber Agency, which had taken more than 50 lives and injured another 150 peopled.

Ahsan Mehanti at Shahzad Chamdia Securities said that the news of arrangement of Rs80 billion Term Finance Certificates (TFCs) for Independent Power Projects (IPPs) and oil companies to address the threatening circular debt issue to the local economy; and President Obama announcement of giving $1.5 billion per annum assistance to Pakistan for the next five years together helped market recovering on fast pace.

Moreover, expectation of cut in discount rate, IMF disbursement of $840 million by the end of March and expectations of removal of United States traffic on textile exports from Pakistan played catalyst role for bullish activity in the market despite the terrorist activities in Lahore, he added.

On the political front, the lifting of governor rule in Punjab also played equally important role in restoring positive sentiments to this scale, said Hasnain Asghar Ali at Aziz Fidahusein.

The parallel running junior 30-Index gained another 3.09 per cent or 226.91 points and finished at 7,567.24 points.

The day turnover jumped up by 44 per cent to 330.190 million shares in ready market from 229.616 million shares changed hands on the weekend. Similarly, the future market also generated a turnover of 370 thousand as compared to mere 500 shares on last Friday.

Accordingly, the overall market capitalisation surged by Rs60 billion and stands at Rs2,103 billion.

The foreign portfolio investors, however, disinvested another $5.3 million from local bourses in this session too, according to NCCPL.

Ali added that positive political developments over the weekend were faced with extremely condemnable incident in Lahore, thus defusing many who were all prepared to enter the arena with a bang. 

The benchmark witnessed an altered bull run, as despite the act of terrorism the main board stocks attracted buying spree initiated mainly by the regular market participants, including corporate players.

Out of total 384 actives, 243 stocks advanced against 128 declined, while the value of 13 remained unchanged.

Highest volumes were witnessed in Pak.PTA at 31.802 million closing at Rs3.07 with a gain of 27 paisa, followed by WorldCall Telecom at 22.939 million closing at Rs3.06 with a gain of 45 paisa, National Bank at 13.939 million closing at Rs91.85 with a gain of Rs1.54, Maple Leaf Cement at 11.969 million closing at Rs5.01 with a gain of one paisa, and Fauji Fertilizer Bin Qasim at 11.869 million closing at Rs17.54 with a gain of 52 paisa.


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## Neo

*Remittances to be increased to $15 billion​*
KARACHI: Federal Minister for Overseas Pakistanis, Dr Farooq Sattar said on Monday that incentives would be offered to overseas Pakistanis for increasing remittances from $7 billion to $15 billion. The minister expressed these views while at launching ceremony of book Marhaba Musafir organised by Karachi Chamber of Commerce and Industry at a local hotel.

Dr Farooq Sattar said that $15 billion remittances target has been set for the fiscal year 2009-10, as compared to $ 7.5 billion in the year 2008-09. Despite, unfavorable environment and tough competition we are hopeful to achieve this target.

Minister said that a meeting with governor State Bank of Pakistan, Syed Saleem Raza will be held next month, in which a mechanism will be composed to achieve this increased remittance target. He said Overseas Pakistanis investors would be attracted through incentives to invest in housing and textile sectors in the big cities like Karachi and Lahore. The availability of ideal atmosphere is necessary for the foreign investment. District governments can play a vital role to create opportunities of investment in the housing sector.

Lamenting on the current worse business and weak economic condition of the country, he said that KESC has played havoc in making business environment worse and has been a major problem for the local people and in the way of progress and prosperity. He was of the view that decision of privatisation of the KESC was good, but the KESC according to its commitment did not focus on investment and kept its full attention to recover money from the people by enhancing electricity bills and frequently increasing power tariff.

After privatisation of the KESC the government had to regulate it but that did not happened and now its performance has become worst ever, the minister claimed. If people initiate any peaceful protest against the KESC management, MQM will surely support the peoples campaign, he claimed. Earlier, president KCCI, Anjum Nisar briefing minister said that due to unfavorable environment, Pakistan has been left behind many nations as Mexico, Bangladesh, Philippine and Vietnam have received more remittance yet than Pakistan.


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## Neo

*IMF approves $847.1 million loan for Pakistan​* 
KARACHI (March 31 2009): The International Monetary Fund said on Monday it approved the release of $847.1 million for Pakistan after completing a review of the countrys economic performance. The IMF said Pakistans economy was gradually recovering from the macroeconomic and external imbalances of 2007 and 2008, and a program aimed at restoring financial stability while protecting the poor was "firmly on track."

Pakistani ambassador to the United States Hussain Haqqani called on the vice president of World Bank and thanked WB support for Pakistan, the channel added.


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## Neo

*Pakistan losing $6 billion annually in war on terror: SCCI​*
LAHORE (March 31 2009): Pakistans economy is losing $6billion a year to counter terrorism, while budgetary allocations for this purpose are affecting the pace of development. The VP, SAARC Chamber of Commerce and Industry (SCCI) Pakistan Chapter and founder Chairman, Pak-US Business Council, Iftikhar Ali Malik said.

Strongly condemning the terrorist attack on Police Training Centre, Manawan on Monday, he said Pakistan paid hugely in terms of human, social and economic cost for the war on terror and so far has suffered s tremendous financial loss of $68 billion, since the turmoil in Afghanistan.

He said that Pakistans participation in the war on terror has led to unemployment and displacement of people leading to an increase in the crime rate. Malik also said that FPCCI, other chambers and entire business community across the country stand united with the democratically elected government in the wake of Indian threats following Mumbai incident. Pakistan is a peace loving country and its democratically elected leadership, always condemned the menace of terrorism in the world, he said.

Further, Pakistan is still victim of terrorism and will continue its efforts to stamp out this menace, he said adding that Pakistani leadership is always ready to negotiate with India for the settlement of all outstanding disputes and issues through parleys. On behalf of the entire business community, he categorically assured the government that traders would place their resources at the disposal of the government against any threat and to purge the country of menace of terrorism.


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## Neo

*Pakistan seeking $30 bln from friends ​* 
ISLAMABAD, March 31 (Xinhua) -- Pakistan will seek a total of 30 billion U.S. dollars from its friends at a meeting scheduled to be held in Tokyo, private TV channel DAWN NEWS reported on Tuesday. 

It will include 22 billions in aid and 8 billions in foreign direct investment, the DAWN NEWS quoted officials as saying. 

The meeting is slated to be held in Tokyo in April and would be attended by leaders and representatives from several Asian and Western countries, in a bid to secure their support for the economic development programs in Pakistan, according to official Associated Press of Pakistan.


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## ajpirzada

ADB estimates Pakistan&#8217;s growth at 2.8&#37; in 2008-09 

By Sajid Chaudhry 

islamabad: Asian Development Outlook (ADO) 2009 has projected Pakistan's economic growth at 2.8 percent for current fiscal year 2008-09 due to the impact of the global slowdown, tight demand management policies and the power deficit. 

ADB's Country Director, Rune Stroem has termed fall in growth as "warning bells on for Pakistan" and has said growth less than 3 percent is concern for us as well as any body else, growth less than 3 percent has its social implications as un-employment being major impact. 

Addressing a media briefing at Pakistan Resident Mission along with country economist Safdar Parvez, Rune Stroem said Pakistan has been fortunate being not affected, as it has not yet adopted such sophisticated financial instruments that had led to financial crisis in US and around the globe. 

However, he was of the view that global economic slowdown would definitely affect Pakistan's economy in terms of negative impact on exports, reduced foreign investment and remittances in months to come. Mr Stroem said its ripe time for Pakistan to learn the global financial crisis and prepare its own second generation capital and financial market reforms having effective checks on instruments to be introduced. 

Pakistan's economic growth is not expected to fall further as terrorist attacks, militancy, political instability as well as power and gas shortages have been kept in view while finalising the growth estimates, Safdar Parvez informed. 

ADB is extending financial help to Pakistan for finalising second generation financial sector reforms and would also help to put in place effective regulatory mechanism to save its financial sector from crisis similar to global crisis, Rune added. 

Growth in agriculture will improve with respect to that in the last fiscal year, but will remain moderate on account of high input costs including electricity, fertilizers, pesticides and pest attacks. 

The sugarcane crop has been disappointing and the cotton crop has been short of target. However, the wheat crop is projected to be very good because of improved water availability and a 52 percent increase in the support price for farmers, announced in September 2008.

Energy shortages, the law and order situation and capacity and input constraints caused by higher import prices from the large depreciation of the Pakistan rupee will lower industrial performance. 

Growth in services, too, will moderate because of the knock-on effect of the lower growth momentum in the commodity-producing sectors on wholesale and retail trade. The performance of the financial sub-sector could be affected by the increase in non-performing loans this year.

The fiscal deficit is expected to decline in FY2009, as the government removes or reduces subsidies and rationalises development expenditure. With the fiscal deficit targeted to fall to 4.3 percent of GDP, the government has already fully eliminated the subsidy on petroleum products, and is undertaking a phased reduction in the electricity subsidy, with the target to remove this subsidy too by the end of FY2009. 

A reprioritisation of projects is expected to lead to a slashing of the development budget by over Rs 100 billion for FY2009. The fiscal deficit in the first half of the fiscal year of 1.9 percent of GDP suggests that the authorities are on course on meeting the fiscal deficit target for the full year. The economy needs to develop infrastructure and invest in health and education. Deficit spending can be carried out judiciously and it need not be inflationary because the economy is very far from full employment. 

Although global food and oil prices are on the decline, the increase in the wheat support price and the reduction in subsidies, along with currency depreciation, will together keep up the inflationary pressure in FY2009, resulting in an average consumer price inflation of around 20.0 percent. Despite the fact that inflation pressure declined from November 2008 to January 2009, the consumer price index, food inflation and core inflation were still all over 20percent on a year-on-year basis. 

Despite growth in exports, the current account deficit jumped to $7.3 billion in first half of 2009 and came in 20 percent higher than in the same period in the previous fiscal year. A comparison of the first 7 months reveals that the current account deficit in FY2009 was only 1.5 percent above the level in FY2008. Imports would need to continue to compress significantly in the second half of FY2009 to improve the current account balance. The current account deficit is projected to go down to 6.0 percent of GDP in FY2009. Workers' remittances would need to be sustained to achieve the projected reduction in the current account imbalance. The current account gap remains a major challenge that was exacerbated by the deterioration in the financial account in the 7 months of FY2009. This imbalance imposes a balance-of-payments constraint to sustainable growth in Pakistan.

Daily Times - Leading News Resource of Pakistan


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## Neo

* Global slowdown, energy deficit push Pak growth down: ADB ​* 
Wednesday, April 01, 2009

ISLAMABAD: The Asian Development Bank (ADB) has projected lowered gross domestic product (GDP) growth of 2.8 per cent for Pakistan in the current fiscal year owing to the global downturn, tight fiscal and monetary policies, energy deficit as well as growing militancy in various parts of the country. 

The GDP growth rate below 3 per cent gives warning signals to Islamabad which will have direct and indirect negative consequences. Other aspects including growing militancy were also considered in the low GDP growth forecast, ADBs Country Director Rune Stroem said at the launch of Asian Development Outlook (ADO-2009) during a press conference, here on Tuesday. Flanked by ADBs Chief Economist, Safdar Pervez, the country director quoted a survey conducted by the bank, saying that it was found that GDP growth of over 5 per cent posed balance of payments difficulties for Pakistan after a period of four or five years. Pakistans economic vulnerability can increase owing to the global crisis for longer period, he said and added that the countrys heavy reliance on external inflows also pinpointed structural weaknesses in the economy. He stressed that the weaknesses of the economy need to be overcome to avoid cycles and dependence on external inflows be reduced. 

Answering a query about the impact of the global economic meltdown, he said Pakistans economy was not much sophisticated in terms of adopting new financial instruments which actually remained a positive thing for the country as it was largely saved from the negative impact of the global crisis. 

The ADO 2009 states that the fiscal deficit was envisaged to fall in the wake of elimination of subsidies on power and fuel as well as reprioritisation of development expenditures but there were concerns in terms of achieving revenue collection target of Rs1,300 billion. 

Inflation will remain around 20 per cent for 2008-09 while current account deficit will fall below 6 per cent of the GDP. Public debt to GDP ratio is bound to rise to 58.8 per cent mainly because of domestic debt in fiscal year 2008-09. Pakistan needs a careful planning to upgrade industrialisation and achieve export-led growth in order to overcome its woes on the external account as currently the country is depending on growing remittances, he added. 

When ADB officials were asked about higher estimates of GDP growth in the range of 2.8 per cent compared to IMFs projection of 2.5 per cent for the ongoing fiscal, Pervez replied that they inserted some new development while making projections as the circular debt related issue resolved which would help to increase economic activities and services sector would also show improvements in the fourth quarter of the ongoing fiscal year. 

To another query about the social sector spending, the ADB high-ups said the countrys allocation was much less on education and health compared to the international standards. In 2008, a sharp deterioration in current account and fiscal balances, amid escalating inflation, led to the depletion of foreign reserves. 

The immediate threat to the economic stability was overcome by a stabilization programme backed by the International Monetary Fund (IMF). 

Beyond the immediate fiscal and monetary steps, the country needs a long-term strategy and action plan to transform, upgrade, and diversify the economy, in particular the manufacturing sector. 

This is critical to sustain growth and generate jobs. Strengthening economic fundamentals, addressing the power and infrastructure gaps, and improving human development indicators are key components of a medium-term strategy to accelerate the process of structural change in the country. Reducing large imbalances is important, a responsive fiscal stance that addresses the need for building critical infrastructure and investing in health and education is also needed. 

South Asia, as a region, will remain vulnerable to balance of payments pressure in the current international environment. Countries such as Bangladesh, Pakistan, Nepal and Sri Lanka, and Maldives all rely heavily on workers remittance to offset large trade deficits while their exports are concentrated in garments and textiles. These sources of foreign exchange may emerge as constraints in the period ahead.


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## Neo

*Pakistan seeks $30bn FoP aid for development projects ​* 
Wednesday, April 01, 2009

ISLAMABAD: Planning Commission Deputy Chairman Sardar Aseff Ahmed Ali said on Tuesday that the government would ask the Friends of Pakistan (FoP) forum in its next meeting in Tokyo to provide $30 billion for development projects over the next five to ten years.

We will seek $22 billion in the shape of assistance, while $8 billion will be sought as foreign direct investment during the upcoming ministerial level meeting of FoP, in order to execute development projects, the PC Deputy Chairman said while talking to reporters here on the sidelines of a three-day conference of the Pakistan Institute of Development Economics (PIDE).

He said that most of the development projects would be completed over the next five years, while a few of them would be completed in 10 years, adding that out of the total $22 billion assistance, Islamabad wanted to receive 20 to 25 per cent in shape of grants from the FoP.

There is a connection between terrorism and the growing menace of poverty, and we are going to ask our western allies to provide us grants for combating poverty and improving social sector indicators, he added.

He said that the country is facing a severe energy crisis and the government has decided to seek assistance from the FoP forum for construction of Diamer-Basha dam with estimated cost of $11.7 billion.

The Basha dam will be unbundled into civil work and installation of power plants, and the government will seek $6 billion from donors to accomplish the civil work. The government will have to provide $200 to $300 million from budgetary resources to initiate work on the Diamer-Basha dam from the next fiscal year.

He also said that Pakistan would seek $600 million assistance for human resource development by establishing technical and vocation institutions all over the country.

He said that security related projects would be additional to the project aid from FoP. He said that they were introducing a new concept of Alternate Development Vehicle by involving the corporate sector in order to reduce the projects administration cost below 2 per cent, which might be the lowest all over the world.

To a query about securitization of remittances, he said that Pakistan would ask UAE and Saudi Arabia to provide $3.5 billion in advance in order to improve foreign currency reserves that will pave the way for upgrading credit ratings.

To another query about the governments plan to cut down development spending in order to achieve the deficit target set by IMF, he said that the government had allocated Rs372 billion for the public sector development programme for the ongoing fiscal, but spending would be around Rs200 billion by June 30, 2009. This means that development spending would be cut down by Rs172 billion against the envisaged allocation of Rs372 billion for the federal share of PSDP in the ongoing fiscal year.

However, during the first day of the PIDE conference, John W Mellor on the topic of Agriculture Development and Food Security, said that the global food crisis could be overcome by enhancing productivity of agriculture products. He also stressed upon the need to promote agriculture research and used extension services in order to achieve higher productivity.

Answering a query of Dr Talat about Pakistans government policy for subsidizing bio fuel, John W Mellor said that it could result into decreasing productivity because farmers would divert towards bio fuel at the cost of decreasing other agriculture products, resulting into food shortages in the country.


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## Neo

*IMF approves $847m after positive review ​* 
Wednesday, April 01, 2009

WASHINGTON: The International Monetary Fund (IMF) on Monday said it would lend roughly $847 million to Pakistan as part of an emergency loan to help support the countrys economic stabilisation programme.

The IMF said its board approved the payment after a first review of Pakistans economic performance under a programme supported by a $7.6 billion line of credit agreed late last year. 

The 23-month Stand-By Arrangement (SBA) announced on November 24 was approved under the IMFs fast-track Emergency Financing Mechanism procedures.

Pakistans economy is gradually recovering from the macroeconomic and external imbalances of 2007-2008, IMF deputy managing director Murilo Portugal, said in a statement. Policy steps taken by the authorities under the SBA-supported stabilisation programme, which aims at restoring financial stability while protecting the poor, have been instrumental in this regard, he said.

The IMF said the sharply deteriorating global economy had forced it to revise downward Pakistans near-term growth outlook. IMFs mission chief for Pakistan Adnan Mazarei, said in a conference call that for the 2008-2009 fiscal year that begins in June, the growth forecast was slashed to 2.5 per cent from a prior estimate of 3.5 per cent.


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## Neo

*Friends of Pakistan meeting on April 2: Govt to propose $30bn aid and investment package​*
ISLAMABAD: The government will propose a 10-year $30 billion aid and investment package at the experts level meeting of Friends of Pakistan scheduled to be held on April 2 in Abu Dhabi.

Experts level meeting would finalise agenda for the ministerial level meeting, scheduled at Tokyo on April 17 to be presided over by President of Pakistan.

Representatives from 22 donor countries and international development institutions to participate in the experts level meeting, hosted by Pakistan while Japan, USA, UK, France, Germany, Italy, Canada, Peoples Republic of China, Saudi Arabia, UAE, Turkey, EU (European Commission), Australia, Republic of Korea, Netherlands, Norway, Sweden, Spain, United Nations, World Bank, Asian Development Bank and Islamic Development.

Day One April 1, 2009: Dr Anwar Muhammad Gargash, UAE Minister of State for Foreign Affairs to be the chief guest at inaugural session of the meeting.

Salman Faruqui, co-chairman, Federal Minister and Secretary General to the President of Pakistan would brief the participants the about the development requirements of Pakistan.

Secretary, Planning Commission would brief the participants on Pakistans strategic perspective on the Friends of Pakistan-Clusters on development, security, energy and institution building.

Secretaries Finance and Economic Affairs Division to present Pakistans strategic perspective on the Tokyo Donors Conference and Trade and Finance.

Secretary Planning Commission to chair experts level discussion on FODP Clusters especially Development Cluster. Secretary Interior to brief the participants of FODP meeting proposals developed by the security cluster for enhancement of capacity of the Pakistans law enforcement agencies and forces to fight militancy and fight against terror.

Thursday April 2, 2009: Discussion on Clusters proposals to continues on second day.

Secretary, Water and Power and chairman WAPDA would present in the meeting proposals finalised by Energy Cluster.

Ambassador-at-Large Javed Malik would give presentation on Public Diplomacy. Presentation on institution building cluster to be given by Senator Sughra Imam, presentation on trade and finance to be delivered by secretaries Finance and EAD. At the conclusion of the meeting, agenda and report of the experts level meeting would be finalised.

Sardar Aseef Ahmed Ali, Deputy Chairman Planning Commission told reporters including $6 billion Basha Dam with two billion from other initiatives proposed package estimated at $30 billion for next 10 years.

However, excluding Basha Dam, aid ranging $22 billion have been proposed for the next 5 years, he added.

Some 25 percent of the $22 billion proposed aid package have been proposed as grants for poverty alleviation, human resource development and health as well as education sector uplift, being main components of the social sector, Sardar Aseef said.

Youth can be potential Bomb or Potential Opportunity, as human resource development is key to eliminate indulgence of youth in terrorist activities in Pakistan especially in FATA and other disadvantage areas of the country and this would help utilisation youth in the development of the country, he explained.

Mr Aseef was of the view that securitisation of remittances especially from Middle East is expected to make available $3.5 billion foreign exchange for reserves building purposes.

This would not only help for enhancing foreign exchange reserves to a comfortable level but would also help improve Pakistans credit rating and reduction in insurance premium.


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## Neo

*Govt to facilitate gems, jewellery sector​*
KARACHI: The government would continue to facilitate the gems and jewellery sector.

This was stated by Federal Minister for Industries and Production, Mian Manzoor Ahmad Wattoo on Tuesday. He said the government was striving to facilitate all developing export-oriented sectors to increase exports from the country.

He said gem and jewellery was among the sectors, which would perform its role in poverty alleviation, economic development and development of mining sector in the country.

While visiting the Gem Exchange and Gemstone Identification Laboratory of Pakistan Gems and Jewellery Development Company (PGJDC) in Quetta, the minister said Pakistan has huge potential of exporting gems and jewellery products. He said the government was fully committed to provide the needed resources to this sector to enable it for competition in the international market. Wattoo was briefed about PGJDCs activities and efforts for the development of the gems and jewellery industry of Pakistan and especially its efforts to up-bring the gemstone sector in Quetta.

He visited the facility and showed a lot of interest in the facilities provided by the PGJDC at Gem Exchange and Gemstone Identification Laboratory. He said, I am very impressed with the Gem Exchange and Gem Lab and the activities of PGJDC for the development of the gems and jewellery sector of Pakistan.

He was informed that Indians were keen to move further in doing business with gemstone sector and traditional stone studded jewellery of the country. Chairman PGJDC, Mutiullah Sheikh said having learnt about the great amount of efforts that PGJDC was putting in for the development of the gems and jewellery industry, especially in the areas of improving lapidary skills, mining and technology upgradation of gemstones, Indians have planned to further enhance their business with Pakistans gem and stone sector.

He said the exports of this sector which have stagnated at very low levels, just around $45 million, have grown manifold and would help achieve the ambitious target of $22 billion overall export target of the country for 2008-09. The provision of complete zero-rating to the gems and jewellery sector would increase export of value added products by the Small and Medium Enterprises (SMEs), he added. The sector is enjoying zero rate customs duty and sale tax on imports of gold, silver, platinum, palladium, diamonds and gemstones.

The PGJDC led the delegation, which regularly send Pakistani delegations to different international gems and jewellery exhibitions, including IIJS Mumbai and Goa. Pakistani Gems and Jewellery sectors 68-persons delegation visited India International Jewellery Show 2008 (IIJS Mumbai 2008), from August 7-11 2008, and explored a great demand for Pakistani gemstones, mineral specimen and traditional Pakistani stone studded jewellery in Indian market.


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## Neo

*US considering $2.8bn military aid to Pakistan​*
WASHINGTON: US President Barack Obama plans to propose nearly $2.8 billion in military assistance for Pakistan in addition to the $1.5 billion a year civilian aid, it was revealed on Monday. The money will be spent over five years. The first $400 million will be allocated to the supplemental request for war fighting in fiscal year 2009. Another $700 million will be given in 2010 base budget. Then $575 million will be spent a year from 2011-2013. daily times monitor


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## Neo

*GDP growth rate to increase to four percent by 2010: Asian Development Bank Outlook 2009​*ASMA RAZAQ
ISLAMABAD (April 01 2009): Asian Development Bank (ADB) has projected Pakistans gross domestic product (GDP) growth rate in 2009 financial year to be 2.8 percent that would increase to four percent in 2010, said ADBs Country Director for Pakistan Rune Stroem here on Tuesday.

The GDP growth rate forecast by the ADB is not in sync with those agreed between the government of Pakistan and the International Monetary Fund (IMF) team in Dubai last month for 2009 fiscal year - 2.5 percent which will automatically have repercussions on ADB forecast of other macroeconomic indicators, including domestic revenue generation.

The ADB Country Director was talking to the media on the launching ceremony of "Asian Development Outlook 2009." He said that the ADB had projected Pakistans inflation rate for 2009 financial year at 20 percent. "This rate is 40 percent higher than the last years 12 percent. The inflation rate of Pakistan for 2010 is projected to be six percent that is 70 percent less than that in 2009," Stroem stated.

He said that the external debt and liabilities of Pakistan had increased by 58 percent of the GDP due to high fiscal and current account deficits as well as scarcity of non-debt creating inflows.

According to the ADB report, in Pakistan during 2008 financial year, a sharp deterioration in current account and escalating inflation led to a depletion of foreign exchange reserves. This, in turn, triggered a balance-of-payments crisis. The immediate threat to economic stability and the servicing of international debt obligations was overcome through a stabilisation programme backed by the International Monetary Fund.

During 2008 financial year (ended on 30 June 2008), the economic situation deteriorated significantly after five years of respectable growth that averaged around seven percent. Aggravated by unprecedented oil and food price shocks in 2008 financial year, though the economy started having problems attracting inflows, and its economic fundamentals worsened.

The resulting steep drawdown of reserves led policy makers to turn to the International Monetary Fund (IMF) for support for its stabilisation programme. The report states that growth dropped to 5.8 percent in 2008 financial year in Pakistan. Significant factors constraining growth have been the sharp decline in the growth of private investment resulting from political uncertainty, the worsening security situation, and the impact of high international oil prices and frequent power shortages.

The contribution of investment to growth fell to only 0.7 percentage points in 2008 financial year as compared to 2.7 percentage points in the preceding fiscal year. Yet the saving-investment gap (private sector deficit) widened, as a result of a decline in the saving-to-GDP ratio.

"The Asian Development Outlook 2009" states that subsidies on oil, food, fertiliser and power contributed to the budget deficit in Pakistan, but failed to contain inflation as food prices soared and the price of fuel was adjusted upward in the last four months of 2008 financial year.

The steep depreciation of the Pakistan rupee stoked inflation pressures. The consumer price index on a year-on-year basis climbed to 21.5 percent in June 2008 and to 25.3 percent in August-the highest in 30 years.

With declining international commodity prices and a slowing domestic economy, the year-on-year consumer price index fell to 20.5 percent and food inflation to 21.6 percent in January 2009 in Pakistan. Domestic inflation would have fallen by more had the Pakistan rupee not depreciated by 15.9 percent against the United States dollar in the first seven months of 2009 financial year.

According to the report, growth in 2009 financial year is estimated to slow to 2.8 percent due to the impact of the global slowdown, tight demand management policies, and the power deficit year. Growth in agriculture will improve with respect to that in the last fiscal, but will remain moderate on account of high input costs, including electricity, fertilisers and pesticides, and pest attacks. The sugarcane crop has been disappointing, and the cotton crop has been short of target. However, the wheat crop is projected to be very good on account of improved water availability and a 52 percent increase in the support price for farmers, announced in September 2008.

The report says that the energy shortages, the law and order situation and capacity and input constraints caused by higher import prices from the large depreciation of the Pakistan rupee, will lower industrial performance. Large-scale manufacturing shrank by 5.6 percent in the first five months of 2009 financial year.

The GDP growth is expected to improve to 4.0 percent in 2010 financial year. The expansion will come from greater stability in economic fundamentals, improved financial inflows resulting from gradual easing of global credit conditions that will help revive investment. The report maintains that the fiscal deficit is expected to decline in 2009 financial year, as the government removes or reduces subsidies, and rationalises development expenditure while in 2010 financial year, the fiscal deficit is projected to go down further to 3.4 percent of GDP as ongoing tax administration and policy reforms start to make themselves felt in greater generation of revenue and as expenditure is streamlined. The economy needs to develop infrastructure and invest in health and education. Deficit spending can be carried out judiciously, and it need not be inflationary because the economy is very far from full employment.

Inflation is projected to fall to an average of 6.0 percent in 2010 financial year. Imports would need to continue to compress significantly in the second half of 2009 financial year to improve the current account balance, especially as exports will be hit harder by recession in the main importing economies.

On these assumptions, the current account deficit is projected to go down to 6.0 percent of GDP in 2009 financial year. According to the report, the current account gap remains a major challenge in Pakistan that was exacerbated by the deterioration in the financial account in the seven months of 2009 financial year. The IMF will provide much-needed balance-of payments support over the next two years, but such support cannot indefinitely sustain a large external imbalance. This imbalance imposes a balance-of-payments constraint to sustainable growth in Pakistan:

The GDP growth rate of Pakistan for 2009 and 2010 is projected to be 2.8 percent and 4.0 percent respectively, while the GDP growth rate of India for 2009 and 2010 is projected to be 5.0 percent and 6.5 percent respectively. The average GDP growth rate of Pakistan for the last five years, (from 2004 financial to 2008 financial year) is recorded to be 6.9 percent while that of Indias is 8.5 percent.

The report says that the GDP and the sectoral growth are projected to slow down in 2009 financial year in Pakistan due to the global crisis, tighter demand management policies and energy deficit. Also the inflation is projected to remain high in the current fiscal due to reduction in subsidies, increase in wheat support price and the currency depreciation. "The Asian Development Outlook 2009" says that economic growth in developing Asia will slide to just 3.4 percent in 2009, down from 6.3 percent last year and 9.5 percent in 2007.


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## Neo

*Mangla hydel power units resume production​* 
LAHORE (April 01 2009): The closed Mangla hydel power generation units resumed production of 250 megawatt, much needed electricity after Indus River System Authority (Irsa) released 25,000 cusecs water from the Mangla Dam on Tuesday. Director General, Pakistan Electric Power Company (Pepco), Tahir Basharat Cheema told Business Recorder that load-shedding situation has improved with enhanced water releases from Tarbela and Mangla dams.

Since the hydel power stations are generating about 2000 to 2500 MW, the current shortfall in the supply and demand has come down to manageable 1500 MW, he added. Pepco had started six to eight-hour countrywide load shedding on 21st March after Tarbela Dam touched its dead level and water releases from Mangla Dam on river Jhelum were stopped which forced closing down of Mangla hydel power generating unit. Cheema said that addition of about 800 MW electricity to the national grid, load shedding hours would be reduced now, bringing great relief of the industrial, commercial and domestic consumers.


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## Neo

*Gilani sees three percent economic growth this fiscal​* 
ISLAMABAD (April 01 2009): Prime Minister, Syed Yousuf Raza Gilani has expressed the hope that country would achieve positive economic growth of around 3 per cent this year, saying he expects it to increase to 4 per cent by the next fiscal year. Speaking at the opening session of 24th annual general meeting and conference of Pakistan Institute of Development Economics (PIDE) held under the theme of Economic sustainability in a globalised world here on Tuesday.

Gilani said despite global recession Pakistan economy has been showing resilience under tough conditions. We are hopeful of positive economic growth of around 3 per cent this year and expect it to increase to 4 percent next year. Inflation will come down to single digit in the second half of this year, he said. Gilani maintained that the Cabinet has approved a 9-point agenda that provides the overall framework for mid-term development strategy. It covers macroeconomic stability, emphasises on agriculture as a leading sector with increasing industrial competitiveness, human resources development and good governance, he added.

Furthermore, he said that the government was striving for a stable macroeconomic environment in the country and had taken effective measures to improve economic condition of a common man. He added that the government was framing the economic policies that would lead to more sustainable and equitable economic growth, adding that several steps have been taken to this effect, including reversing of anti-agricultural bias which was a hallmark of the previous regimes economic policies.

We have provided incentives to farmers through higher agricultural prices and timely provision of inputs to boost agricultural output and it is already having a positive impact," he said.

To improve economic conditions of poor people, he said, the government for the first time launched in countrys history a major income support programme for vulnerable people. He mentioned Benazir Income Support Programme, under which Rs 34 billion had been earmarked for the year 2008-09. He said the programme would benefit 3.4 million poor families and with better targeting, the programme would be expanded to cater for seven million poor households.

The prime minister said significant short and mid term measures had been taken to overcome energy and water shortages through fast track energy projects and building of small dams. "We have launched a major effort to raise resources through the Friends of Pakistan Forum to build the Bhasha Dam and other major infrastructure projects," he said.

Moreover, he said that the government was giving highest priority to accelerate development in Balochistan, Fata and other backward regions. In addition, he said that the world has witnessed a global financial meltdown, which started in the USA and spread to other parts of the world, both developed and developing.

For Pakistan, he said this crisis came at a critical juncture when the new democratic government had just taken over. Our government inherited a very fragile economy. The unprecedented hike in oil and food prices created severe macroeconomic imbalances.

Poor economic management and inaction by the previous government further worsened the situation. If immediate action had not been taken the country would have faced default, he added. Being aware of the financial crunch, Gilani said he had given clear instructions to the Finance and Planning ministries not to cut allocations of education and health sectors despite budget pressure.

Deputy Chairman Planning Commission, Sardar Asif Ahmed Ali, said that Planning process must be for the people and by the people. In the past as a consequence of the military government the infrastructure has deteriorated. We have inherited food deficit and wastefulness, he said adding that the country needs serious change in input consumption, infrastructure, export, import and planning. Minister for Planning and Development Makhdoom Shahbudin also spoke on the occasion.


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## Neo

*Trade development and export promotion: TDAP, USAID agree to develop common agenda​*
KARACHI (April 01 2009): Trade Development Authority of Pakistan (TDAP) and USAID will develop a common agenda for trade development and export promotion in line with the Governments decision, said a press release issued here on Tuesday. A USAID mission on Tuesday visited the TDAP Head Office to hold meeting with the Chief Executive TDAP, Syed Mohibullah Shah and Senior Officials.

During the meeting, the Chief Executive TDAP, highlighted TDAPs role and responsibilities as the premier trade development agency of Pakistan, which carries out various programmes and activities for broadening the export base of Pakistan and opening new opportunities for private sector development and employment generation.

Shah mentioned 12 TDAP projects approved by the government and invited investment and technology transfer as well as technical and other assistance from USAID for taking forward these projects.

USAID mission highlighted main features of their expanded programme of Economic Empowerment, which has been strongly supported by the recent statement from President Obama. A common agenda was identified in the meeting between the two sides. It was agreed that with increasing interaction between them in future, a larger agenda will be developed for implementation through this partnership that will help in opening new vistas for income generation, job creation and value addition in Pakistani exports.

The meeting decided that the heads of TDAP and USAID Project for Pakistan will hold monthly meetings to take forward the common agenda and ensure its smooth and timely implementation for trade and export promotion of value added exports, and widening scope of opportunities for private sector development in Pakistan.-PR


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## Neo

*Pakistan and China to cooperate in setting up automotive industry​*
CHENGDU (April 01 2009): An automotive assembly plant would be set up in Punjab with the help of a Chinese company at a cost of 30 million dollars. Agreement to this effect was signed in Chinese city, Mianyang, between Commerce and Sourcing House (CASH) a Pakistani company registered in Hong Kong and Shenzhen and Mianyang Huarui Automotive Co Ltd.

The signing ceremony was attended by Masood Akhtar, who is theConsul General of Pakistan in Chengdu and Liu Dong, who is the Mayor of Mianyan. Chengdu is the sister city of Lahore. Mianyang is the second largest city in Sichuan province. Mianyang Huarui Automotive Co Ltd is a part of Brilliance Jinbei Automotive Group.

The plant will be established in an area of 51 acres. The proposed company will have the capacity to build 50,000 vehicles per annum. Both parties will hold 50 percent share of the proposed company. Based upon preliminary data gathered here, the assembled vehicles will consist of 1.5 to two ton single and dual cab trucks, jeeps, single/dual cab pick-ups and mini-vans.


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## Neo

*UK investment sought in dams, renewable energy sector​* 
ISLAMABAD (April 01 2009): Federal Minister for Water and Power Raja Pervez Ashraf on Tuesday urged the investors of United Kingdom to invest in mega water reservoirs including Bhasha dam. Speaking at a luncheon reception hosted by Alternative Energy Development Board (AEDB) in honour of the visiting Pakistan-Britain Investment Forum (PBTIF), Ashraf said that Pakistan had potential of 25000 MW thermal power generation.

He said the government was working to build large dams and Bhasha dam was one of them that would be completed in eight years. PBTIF may be a great help in this regard, the minister said. He said that Pakistan had 195 million metric tons reserves in Thar and the government was also working to exploit these reserves for power generation.

He also invited British businessmen to invest in Pakistans renewable energy sector. He said that Pakistan was offering attractive incentives to investors willing to exploit this environment-friendly but largely unexplored sector especially for power generation.

Pakistans renewable energy sector, the minister said, would be reaching a milestone with the inauguration of the first wind farm in Jhimpir in the second week of April. The farm has been set up by a Turkish firm M/s Zorlu Enerji. Besides, he said, there was vast scope of investment in other areas of energy sector. UK and Pakistan, he said have strong trade ties that are growing.

"UK is Pakistans most important trading partner within the EU because of trade volume and large Pakistani Diaspora living there," he added. UK is Pakistans 4th largest destination for exports. Pakistan exported goods to the UK worth US $1,030 million last year, while imports from UK valued at $769 million.

Pakistan, the minister said, had signed Free Trade Agreement (FTA) with China and is establishing China-specific industrial zones. He urged British investors to benefit from these special zones by setting up industry there and exporting their products duty-free to China. Raja Pervez Ashraf suggested that PBTIF and its counterpart body in Pakistan - Pakistan Britain Business Advisory Group should chalk out a joint plan for further strengthening bilateral trade relations.

British High Commissioner Robert Brinkley, speaking on the occasion, said: "UK would like to further strengthen its trade relations with Pakistan through increased interaction of businessmen and the government officials of the two countries.

Exchange of trade related information and business delegation between the two countries would provide an opportunity to identify areas of mutual interest." Chief Executive Officer AEDB Arif Alauddin hoped that PBTIF, through innovative thinking, dynamic and proactive approach would help improve bilateral commercial relationship. He further expected that British investment would lead to strong growth of different renewable energy sources including bio energy, geothermal energy, hydropower, wind and solar energy.


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## ejaz007

*$500m investment expected from UAE *
Thursday, April 02, 2009
By our correspondent

KARACHI: FPCCI Pak-UAE Business Council Chairman Dr Mirza Ikhtiar Baig has said that investments worth $500 million are expected to come from UAE during the current year and a trade delegation from the emirate is also likely to visit Pakistan in November. 

A delegation of FPCCI Pak-UAE Business Council comprising 35 members visited the UAE from March 24 to 27. The main purpose of the visit was to attract investment, specifically in the Coastal Refinery Oil Terminal, agriculture, textile city and alternative energy resources, Baig announced while speaking at a press conference on Wednesday. Listing the successful meetings the delegation had conducted, Baig said the National Bank of Dubai SANA Capital had shown interest in investing $200 million in the country whereas Bosicor, a sub-company of UAEs Abraaj Group, also announced an investment of $10 million in projects of Khalifa Point Hub Coastal Refinery Oil Terminal. 

Baig said Dubai Export Development Corporation CEO Saeed Al Awadi had promised to introduce an export insurance scheme in Pakistan under it 90 per cent protection would be provided to companies for their shipment money. Baig said no such export insurance was available in Pakistan and this would be a pioneer move by the UAE-based corporation. 

He said an alternative energy company, Bin Din Group, had agreed to invest in the Thar coal project and produce 1,000 megawatts of energy and at the same time would provide employment to 90,000 labourers. 

Similarly, another company Mazdar had announced to work on the carbon credit project in the country besides working for a scheme which would provide 15 per cent guaranteed return on alternative energy investments. Baig further said the Sharjah Chamber of Commerce and Industry had allotted a plot of 20,000 yards for the Pakistan Trade and Display Centre in Sharjah for which construction would commence soon under the public-private partnership scheme. 

He further said Dubai Investment Bank had announced to open 60 branches in Pakistan. Meanwhile, Emirates Investment Group announced investments in livestock sector for importing 50 thousand superior quality breed cows. He also commented that an Abu Dhabi based company ALDAR had assigned a Pakistani company, Descon to construct the race tracks for the Formula One car race to be held in November this year. 

Baig said the cement for the project was being exported from Pakistan whereas 20,000 Pakistani labours were also working on the construction project. He said UAE is the largest investor in Pakistan among Gulf states and during 2004-2008 had invested $3.74 billion. He said about 800,000 Pakistanis are employed in UAE who send remittances to the country to the tune of $1 billion annually. 

$500m investment expected from UAE


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## Neo

*Economy suffered $6bn loss last fiscal: Hafeez Pasha ​* 
Thursday, April 02, 2009

ISLAMABAD: The head of high-profile Panel of Economists, Dr Hafeez A Pasha, said Wednesday that as per conservative estimates the economy was facing financial losses worth $6 billion for becoming part of the US-led war on terror.

Delivering AR Kemal Memorial Lecture, organised by the Pakistan Institute of Development Economics (PIDE) Dr Pasha said that the Obama administration had just announced $1.5 billion assistance per annum in order to compensate for the losses borne by Pakistan after joining the terror war. However, he said, the amount was much less than the conservative estimates of up to $6 billion during last fiscal year 2007-08.

He said that the government had failed to deliver on the promise of slashing current expenditures as element of charged expenditures of the ministries are not showing cut in their expenditures despite Prime Ministers clear instructions where he himself cut down PM Secretariat expenditures by almost 40 per cent.

The government has not done much to decrease its current expenditures rather it has axed development expenditures by 40 per cent across the board without considering any important areas of the economy.

The non-salary expenditures, he said, went up to Rs100 billion, showing a growth by 22 per cent during the current fiscal year.

He also said that the government did not take required measures on tax side and if the FBR collected Rs1,200 billion against the target of Rs1,300bn, it would be an achievement. Keeping in view tax slippages, the fiscal deficit target can go up to 5 per cent of the GDP, he said and added that the IMF was quite lenient on Pakistan and breach of fiscal deficit target would not harm Islamabad in terms of getting the next tranche from the Fund.

He also said that the downside risks to the economy were the growing cost of mis governance, which needs to be improved.

He also said the Musharraf regime in its first three years from 1999-2002 successfully implemented macroeconomic stabilization program under the IMF programme but at the cost of poverty taking 7.5 million people in its clutches and 1.2 million persons got unemployed after the IMF programme. The countrys growth was also compromised.

Citing an example about the cost paid by the people of Pakistan, he said, the operation was successful but the patient was need to die.

He claimed that the panel of economist prepared homegrown stabilisation programme under the dispensation of the incumbent regime, which was taken by the IMF for granting $7.6 billion package to Pakistan under the Stand-By Arrangement (SBA).

Talking about differences between the strategy recommended by the panel of economist and the programme approved by the IMF, Dr Pasha said that the panel recommended continuing Research and Development support to textile sector while the IMF asked to implement free exchange rate regime.

Pakistan moved so fast on trade liberalization that it required to reverse some of the policies because it resulted into import led consumption to please the rich. We should retreat on trade liberalisation, said Pasha. The government should impose regulatory duty on non essential imports. The model recommended nine policies including both fiscal and monetary policies. The report also recommended the mobilisation of domestic resources rather than depending too much on external sources and foreign debt. This will lead to debt un-sustainability, he added. 

Service sector tax and increase in excise duty and for the support of new emerging industries. 

India has depreciated its currency by 28 percent, Indonesia by 31 percent to maintain competitiveness. This is a challenging task for Pakistan to maintain its competitiveness in the world market.

He further said that for the last two to three years when the fiscal space was good and there was enough room for developmental expenditure the government blindly approved every project without looking to the outcome and important of these projects. 

We also suggested that SBP should increase the interest rate by 2 percent and not more than that. We also recommend increasing the return on national savings. We also advise the government for the regulation of public sector imports, broad based regulatory duty and for export rebate, said Pasha. 

IMF condition of increase in the tax rate is not rational. We should withdraw the exemptions and develop the provincial taxes, he concluded.


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## Neo

*British keen to invest in Pakistan ​* 
Thursday, April 02, 2009

KARACHI: Chairman of Pakistan Britain Trade & Investment Forum and Vice Chairman of Standard Chartered Capital Markets Plc, Sir Tom Harris, has said that British investors are keen to invest in Pakistan, which is a potentially significant emerging market.

He said that a significant number of British companies plan to expand their project-based investments in Pakistan and look forward to support from the government and other trade bodies to make the investments useful for both countries.

He was speaking during a visit of a delegation of Pakistan Britain Trade & Investment Forum (PBTIF) to the Overseas Investors Chamber of Commerce & Industry (OICCI) on Wednesday, which discussed issues hampering foreign direct investment (FDI).

He appreciated the overall investment climate in Pakistan despite the current law and order situation. The financial sector along with investments in training and education were the two areas they found especially attractive.

The main concerns include current economic situation, energy crisis, law and order and availability of specialised capital/receptive financial markets. This visit was in reference to a memorandum of understanding (MoU) signed in 2008 between OICCI and PBTIF to enhance Pakistans image in the UK in order to bring further investment into the country.

The delegation included Sir Tom Harris, High Commissioner for Pakistan in the UK, Wajid Shamsul Hasan and Deputy High Commissioner, Karachi, Robert W. Gibson along with representatives of British companies.

While addressing the delegation, Farhat Ali, President OICCI said, The chamber can play a significant role in increasing investment and economic growth despite the challenging times. The country has various positives to offer and sustained assistance from forums like PBTIF as well as the government can make the country an investment friendly destination.

KSE visit: The delegation of the Pakistan British Trade & Investment Forum (PBTIF) visited the Karachi Stock Exchange (KSE) on Wednesday and held a meeting with Adnan Afridi, MD KSE and other officials.

They exchanged views on investment opportunities and areas of mutual interest for the two countries.


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## Neo

*KSE recovers 17% during Jan-Mar period amid sluggish activity in regional markets​*
KARACHI: Karachi Stock Exchange (KSE) 100 Index witnessed a recovery of 17 percent in first quarter of 2009 at a time when the performance of regional markets remained sluggish. Moreover there were few stocks, which posted more than 70 percent returns, analyst Atif Zafar at JS Research said. Thanks to political stability and improving economic indicators, he said, Pakistan market posted handsome gain of 17 percent compared to MSCI EM Asia, MSCI World and MSCI EM return of 1.2, -11.3 and 0.5 percent, respectively. Though foreigners sold $238 million worth of shares during the period, local institutions and high net worth individuals provided support to the market. On the back of handsome earnings growth and attractive dividend yield, fertilizers and E&P outshined the market. Within these sectors, Fauji Fertilizer and Engro Chemicals on posted return of 91 percent each, while PPL and POL graced the market with 72 percent and 67 percent return, respectively. Amongst the individual scrips, Packages and Attock Petroleum were runaway leaders. Packages rose amid announcement of selling its stake in Tetra Pak for a consideration of $115 million while APL rallied at the back of lower risk of inventory losses. Amongst other sectors, banks despite concerns over NPLs and impairment on equity investments, posted handsome return. National Bank and Habib Bank outperformed the market with wider margin and posted return of 75 percent and 93 percent. Auto sector performed poorly as both the stocks, Pak Suzuki and Indus Motor under performed amid bleak near term future due to falling demand and rising cost pressures.


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## Neo

*Review of Economic Situation July-February 2008-09: Services sector to drive growth, fiscal & CAD targets would be met​*
ISLAMABAD: Growth in the services sector would drive the GDP growth in 2008-09 while fiscal deficit target of 4.2 percent of GDP and current account deficit of 5.9 percent would be achieved, stated Review of Economic Situation July-February 2008-09 released by Ministry of Finance here on Wednesday.

Recent global financial crisis and extremely vulnerable security environment added risks to the economy.

Real Sector: The growth outlook is not free of risks as industrial production has been badly affected by acute energy shortages, deterioration in law and order situation, and constricted access to finance by risk averse banks. For the year 2008-09, given

domestic and international economic pressures especially high inflation and macroeconomic imbalances, the GDP growth has been envisaged at 2.5% on the back of positive outlook of the agriculture sector where all indications are pointing at good growth.

Agriculture: The agriculture has been facing acute irrigation water shortages and the water intensive crops sugarcane and maize fell short of the target and depicted negative growth of 18.5 percent and 7.5 percent in 2008-09. However, other two major crops cotton and rice have registered positive growth of 7.3 percent and 13.5 percent, respectively. Wheat, with its 12.7 percent weight in overall agriculture, is estimated to post 19.0 percent growth over the last year.

The livestock sector is growing at normal pace and thus the target of 3.2 percent will be achieved.

Manufacturing Sector: Large-scale manufacturing registered a negative growth of 5.35 percent in July-January 2008-09 against reasonable positive growth of 5.7 percent in the comparable period of last year.

Services sector: Improved prospects in transportation and storage sub-sectors on the back of relatively better production in major crops, strong contribution by finance and insurance sector and augmented administrative and defence related spending will provide support to adequate level of growth in the services sector.

Inflation: All price indices like CPI, WPI and SPI witnessed a clear downtrend in recent months. On current trends and barring any adverse shocks, it is expected that the average inflation for the year (2008-09) as measured by CPI will be close to 20 percent. The month of February witnessed fractional decline in the core inflation.

Monetary Policy: Net domestic assets (NDA) have increased by Rs 418.2 billion as compared with increase of Rs 541.7 billion in last year, thereby showing an increase of 10.4 percent in this period whereas, last year the growth in the comparable period was 17.6 percent. Net foreign assets (NFA) have recorded a contraction of Rs 283.5 billion against the contraction of Rs 232.3 billion in the comparable of last year.

Weighted average lending rate have witnessed slight decline from 15.5 percent in October 2008 to 15.3 percent in January 2009. The weighted average yields on 6 months T-bill has declined by almost 100 basis points to 13.0 percent in February 2009 as against 14 percent in November and December2008.

Capital Market: The market breached 7,000 points psychological barrier on March 31, 2009 in anticipation of political stability and restoration of judiciary. The positive reports like possible inclusion of KSE in MSCI Frontier Index, expected incentive driven petroleum policy and encouraging prospects on aid front are the supporting factors that are guiding the KSE in the positive direction.

Fiscal Policy: The stock of domestic debt grew by Rs 341 billion by end-January 2009. This strong growth in the domestic debt reflects non-realisation of privatization proceeds and reduced availability of net external financing due to increase in external debt repayments on maturing stock of foreign currency bonds.

Foreign direct investment (FDI) has reached $ 2794.4 million during July-February 2008-09 as against $2789 million in the comparable period of last year, thereby, depicting a marginal increase of 0.2 percent. If privatisation proceeds of $133 million received in the comparable period of last year is excluded, then FDI inflows witness an increase of 5.2 percent.


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## Neo

*Kharif season: MINFA seeks $100m to cover urea shortfall​*
ISLAMABAD: For the coming Kharif season 2009 (April to September) the Ministry of Food and Agriculture (MINFA) will seek $100 million from the Ministry of Finance for import of urea fertilizer, which is likely to fell short by about 0.369 million tonnes in the season.

The request for $100 million would be forward soon to the ministry of finance for approval, the officials maintained.

They said that the estimated availability of urea fertilizer for Kharif Season was 2.656 million tonnes while the estimated demand would be 3.025 million tonnes, showing a net shortfall of 0.369 million tonnes.

Similarly, the country is likely to confront a shortfall of SOP/MOP types of urea in the season. Total demand for SOP/MOP is expected to be 17,000 tonnes and the total estimated availability was 10,000 tonnes.

However the situation of DAP was quite comfortable with total availability of 0.628 million tonnes against the total demand of 0.560 million tonnes. About 68,000 tonnes surplus quantity of DAP would be available even after the Kharif Season 2009, the officials claimed. Same is the case with phosphatic products (TSP/MAP), the availability of which was expected to be 0.102 million tonnes against the demand of only 9000 tonnes, showing a surplus quantity of 93,000 tonnes.

Sources claimed that the Ministry of Finance had reportedly refused to make subsidy claims payment of around Rs 1 billion including Rs 370 million imports of DAP and other phosphate.

All types of urea fertilizers were basic component of inputs, on which the agriculture production depends. Shortage of fertilizer lead to failure of the government to achieve targets of various agriculture crops including wheat.

The availability fertilizer would help the government in achieving production targets to be set in the high-powered Federal Committee on Agriculture on April 9. Main crops of the season are cotton, sugarcane, rice, maize, mung, mash and chillies.

Last week, the National Assembly Standing Committee on Local Government and Rural Development decided to provide subsidies to farmers on basic inputs for increasing agriculture production. Chairman of the committee was of the view that Pakistan was an agriculture country and farmers should be given subsidy on pesticides and other basic inputs. Such incentive would increase agriculture production which ultimately meet requirements and also to enable the agriculture sector to export the products.


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## Neo

*Cement exports increase by 52% during 9MFY09​*
KARACHI: The cement export witnessed a growth of 52 percent in first nine months of the current fiscal year to reach 7.9 million tonnes, while total dispatches on yearly basis in 9MFY09 registered a decrease of 0.4 percent, to reach 21.8 million tonnes.

According to the data released by the All Pakistan Cement Manufacturers Association (APCMA) on Wednesday, local cement dispatches in first nine months fell by 17 percent to stand at 13.9 million tonnes, though of pace of growth has slowed down in recent months.

However, on monthly basis local dispatches went up to 1.7 million tonnes as winter season has worn off and local projects have gradually started to gain momentum.

Exports also climbed by an encouraging 10 percent on monthly basis to 1,032,000 in March. Based on estimates, exports have crossed the 1 million mark first time ever.

On the export front, depreciation of rupee has rendered Pakistani cement as a highly attractive option. The north has primarily contributed to the impressive increase in exports.

The exports primarily increased due the demand pouring in from Afghanistan that accounts for 28 percent of the exports (36 percent in FY08). This is because the incremental exports have primarily been directed towards the cement thirsty UAE, the elaborate construction projects of which have yet to take a hit from the looming economic slowdown, an analyst said.

Uncertain political and economic conditions continue to hamper infrastructure as well as private sector development projects in the country causing local cement sales to face the brunt, Analyst at Jahangir Siddiqque Research Syed Atif Zafar said.

He said that on the export front, demand from Middle East and African countries continued to drive exports, though there is a risk that global economic downturn may affect future export orders. As a result, share of exports in total sales has risen to 36 percent in the first nine months of FY09 as against 24 percent in the corresponding period of last year.

Exports are expected to register a decelerating growth, as the global economic slowdown deepens further reducing demand for housing and construction activities. The demand and supply gap in the international market is expected to narrow down further as other countries gear up with more capacity, thus reducing export demand, analysts said.

Pressure is being exerted on local demand, primarily due to macro-economic slowdown, high interest rates, sky-high cement prices, which leaped by 65 percent during the said period. The local prices are currently hovering around an average retail price of Rs 355 per 50 kg bag (Rs 7,100 per tonne) and a retention price of Rs 255 per 50 kg bag (Rs 5,109 per tonne).

Studies have shown that cement demand is highly correlated with the growth rate of GDP. Recently, the ministry of finance has further revised the GDP growth target downward to 3.4 percent from 3.5 percent, which will further erode cement demand.


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## Neo

*FoP meeting expresses support for Pakistan​*
ISLAMABAD: Strong support for Pakistans development was expressed at the expert level meeting of Friends of Pakistan (FoP), inaugurated by the Minister of State for Foreign Affairs of the UAE, Mohammad Anwar Gargash at Abu Dhabi.

The development financial package required from FoP is $30 billion including $21 billion as grants and credit while $9 billion in the mode of Public Private Partnership (PPP) and Direct Foreign Investment (***) spread over 10 years.

Pakistan sees the FoP process aimed at enhancing Pakistans capacity and strengths as Pakistan is determined to convert challenges into opportunities, stated Salman Faruqui, Secretary General to the President, while addressing the FoP meeting.

Faruqui is leading the Pakistani delegation as well as co-chairing the experts meeting of the FoP which has been hosted by the Government of the UAE in Abu Dhabi. The Experts of 19 member countries and international institutions are meeting to prepare for the FoP ministerial meeting that is being hosted by the Government of Japan in Tokyo on 17 April 2009.


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## Neo

*Govt to issue 100 licenses for oil, gas exploration ​* 
ISLAMABAD (April 02, 2009): The government on Thursday announced new petroleum policy for the year 2009, Aaj TV reported.

Addressing a press conference here, Advisor to Prime Minister for Petroleum & Natural Resources, Dr. Asim Husain said that over 100 licenses would be issued for oil and gas exploration in the country. He said the new liberal policy will attract local and foreign investors and the government will provide them with all facilities in this regard.

Dr. Asim said the policy aims at enhancing Pakistans energy security and meeting countrys requirements for a period of three to four years. He said the country is producing 67000 barrels of oil per day.

The advisor further said that 40 percent income tax would be levied on oil and gas sector.


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## Neo

*July-December EDL surge to $50.9 billion: review of Economic Situation released​* 
ISLAMABAD (April 02 2009): Pakistans external debt and liabilities (EDL) surged to $50.9 billion in the first six months of current fiscal year (July-December) from $46.3 billion in end-June 2008, reveals Review of Economic Situation, released here on Wednesday by the Finance Ministry.

The EDL has gone up to 31.2 percent of projected Gross Domestic Products (GDP) of current fiscal year that was 27.6 percent by end-June 2008. According to the review, foreign investment saw a decline of 34.2 percent in first eight months (July-February) from $2.873 billion to $1.89 billion. A negative growth of 5.4 percent was recorded in the Large Scale Manufacturing (LSM) during the period under review against a positive growth of 5.2 percent for the same period of last year.

The LSM is victims of energy shortage along with rising cost of doing business and deteriorating law and order situation in the country. The review said that LSM growth was hit hard by sharp reduction in demand from both domestic and external sectors.

The further demand compression in the export sector is estimated at 5 percent. The inflation surged to 23.5 percent with food inflation touching as high as 28.9 percent during the period. The non-food inflation was recorded 19.3 percent and core inflation 17.8 percent.

An increase of 4.3 and 0.5 percent was witnessed both in exports and imports respectively. The exports went up from $12.482 billion a year ago to $13.015 billion while imports increased to $21.878 billion from $21.776 billion during the said period. Trade and current accounts deficits recorded a marginal decline. The current account deficit declined to $7.5 billion from $8.6 billion of July-February last year.

The review said that Pakistan witnessed major disruption in its normal economic activities as the fallout of the war on terror spread into settled areas of Pakistan. The outlook for economic growth more pessimistic, imports demand shrivelled, tax collection declined and inflow of foreign investment and privatisation dampened.

Pakistan economy still faces pressure from higher inflation, driven by spike in food prices, the acute power shortage, bewildering stock market, a perceptible slowdown in the manufacturing and services sectors; lower than anticipated inflows and growing financing requirements.


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## Neo

*Three primary IMF targets achieved​* 
KARACHI (April 02 2009): Pakistan has successfully achieved three primary IMF targets, including limit of budgetary borrowing from the State Bank, net foreign assets (NFA), and net domestic assets (NDA), set for the quarter ending on March 31, sources said on Wednesday.

The federal government by retiring budgetary borrowing achieved International Monetary Funds (IMF) one of the primary conditions to cap its budgetary borrowing from the central bank at Rs 1,274 billion on March 31, 2009, they said, adding that "the State Bank of Pakistan (SBP) has also comfortably met IMF two major targets of NFA and NDA by the end of March".

The Fund had given several quarterly targets for constant payment of loan tranches. The first tranche of 3.1 billion dollars of the standby loan was received in November 2008, while the Fund board of directors on March 30 also approved payment of second tranche of 847 million dollars after reviewing the overall economic situation.

Achievement of the target for December 2008 helped to get the second tranche on time, and it was expected that 847 million dollars would be transferred to Pakistan by Thursday, sources said.

The federal government achieved the target of net budgetary borrowing by retiring over Rs 100 billion during last month. The IMF had given a target to reduce the government budgetary borrowing stocks at a level of Rs 1,274 billion by the end of March 2009. However, the federal government reduced its borrowing stocks to a satisfactory level before time, sources said.

"Net stocks of government budgetary borrowing from SBP decreased to Rs 1,270 billion on March 29, which was less than the target of Rs 1,274 billion for the third quarter of current fiscal year 2008-09", they said.

The SBP also achieved its targets of NFA and NDA set by IMF targets for the quarter ending on March 31. "We have achieved IMFs NFA and NDA targets comfortably" confirmed Wasimuddin, chief spokesman of SBP. The Fund had set the target of minimum 671 million dollars for NFA and Rs 1,412 billion for NDA, he said, adding that the central bank had met both targets successfully.


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## Neo

*$5.668 billion foreign loans received during nine months​* 
ISLAMABAD (April 02 2009): Pakistan has received total $5.668 billion foreign loans during the nine months of the current fiscal year, against the requirement of around 14 billion dollars, according to some ministers and International Monetary Fund (IMF) sources. IMF has a big share in the total foreign assistance received by Pakistan in the current fiscal year.

An amount of $3.947 billion has been released by IMF so far--$3.1 billion as first tranche of the standby arrangement in November 2008, and $847 million on March 31 as the second tranche-- out of $7.6 billion loan approved for Pakistan in November 2008.

The remaining $1.721 billion was received other donors and Asian Development Bank (ADB) which occupies the leading position with $700 million contribution. The said loan disbursement also includes $500 million budgetary support from China and $500 million from World Bank.

Sources said that "ADB has provided $700 million to Pakistan so far while Pakistan has requested an additional $500 million under Accelerating Economic Transformation Program before the month of June, 2009".

They said that ADB was to provide $200 million under Private Participation Development Program during March, which is still awaited. "For on-going projects, $300 million from ADB will be received soon," they added.

Sources in the Economic Affairs Division (EAD) told Business Recorder here on Wednesday that by the end of June 2009, Pakistan is expecting additional inflows of foreign assistance to the tune of $3.5 billion. They said, "The government had requested ADB to provide $2 billion for the current fiscal year whereas it agreed to provide $1.7 billion".

Pakistan has already decided to formally request $10 billion at a meeting of representatives of donors, to be hosted by Japan in Tokyo on April 17.


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## Neo

*Wheat sales: US revokes $48 million credit guarantee to Pakistan​*
WASHINGTON (April 02 2009): The US Agriculture Department said on Tuesday it will extend more credit guarantees in fiscal 2009 for US farm exports to several regions, but cancelled a previously offered guarantee for wheat sales to Pakistan.

The USDA had announced on December 29 it would offer $48 million in credit guarantees for wheat export sales to Trading Corporation of Pakistan for fiscal 2009. The Commodity Credit Corps export credit guarantee program helps ensure credit is available to finance exports of US farm products to developing countries.

The raft of new announcements included: 

-- $300 million to South Korea, bringing total credit guarantees to the country to $900 million for 2009;

-- $200 million to Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama, $25 million of which was for cotton exports, bringing total credit guarantees to the region to $550 million for 2009;

-- $175 million to Argentina, Brazil, Chile, Colombia, Paraguay, Peru and Uruguay, bringing total credit guarantees to the South American region to $575 million for 2009;

-- $75 million to countries in the Caribbean region, bringing total credit guarantees to the region to $275 million for 2009;

-- $50 million for China and Hong Kong, bringing total credit guarantees to the region to $150 million for 2009;

-- $25 million to Mexico, bringing total credit guarantees to the region to $125 million for 2009;

-- $25 million to Jamaica.

The short-term guarantees are part of the USDAs GSM-102 program, which promotes sales of US farm goods by assuring lenders they will get paid even if a borrower defaults. Fiscal year 2009 began on October 1, 2008.


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## Neo

*Pakistan has potential for attracting foreign investment​* 
KARACHI (April 02 2009): Pakistan has great potential for alluring foreign investment in fields of oil, gas and coal exploration, alternative energy, education, IT, agriculture and financial sectors with business friendly regimes. However, incidents like Lahore should be combated with effective counter terrorism strategy to build investors confidence.

Speaking at a press conference at the British Deputy High Commission on Wednesday, Chairman Pakistan British Trade and Investment Forum (PBTIF) Sir Tom Harris described his visit to Pakistan as successful. He also represents Standard Chartered, said that his delegation will try to convince the British companies and investors to set aside the media reports on Pakistans law and order, and invest in all major sectors.

Delegations other members included British Deputy High Commissioner and Director Trade and Investment Pakistan, Robert W Gibson, Pakistans High Commissioner in UK, H. E Wajid Shamsul Hasan, besides Saira Ahmed from Pakistan High Commission, Zafar Iqbal Choudhry of Clyde & Co, Vince Harris of International Power, Rashid Iqbal of Media Integrated Learning Centre and Ikram Khan of Mediaworld.

Sir Harris reposed confidence on Pakistans return to political and economic situation under the civilian government, saying that the recent reforms and privatisation programme will help Pakistan achieve growth in access of six percent annually.

He said that PBTIF will make efforts to make Pakistani textile and other products accessible to the British consumers. He pointed out that trade between Pakistan and Britain stands at $2 billion at present, which should be increased with strengthening trade ties.

He pointed about delegations talks with President Zardari on quick resolution of commercial disputes, to which he gave a positive nod, saying the legal uncertainty is one of the impediments towards investment in Pakistan.

About the terror incidents in Pakistan, Sir Harris said that they are not only destabilising Pakistan but also disrupting the arrival of foreign investment. He also said that meeting of Friends of Pakistan is taking place in next three weeks in Japan to discuss new developments.

He said that about 54 branches of Standard Chartered Bank were opened last year in the country, while Barclay Bank has also set foot on Pakistan soil, showing that the foreign investors are still keen in business here. He also highlighted the objectives of the PBTIF.


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## Neo

*Pakistan has to sign international accords to get GSP status​* 
KARACHI (April 02 2009): Pakistan has to sign some international agreements to get Generalised System of Preferences (GSP) plus status and faculties for boosting its export to Germany and other European Union (EU) countries. The Consul General of Germany, Dr Christian Brecht said this while speaking at a meeting of Karachi Chamber of Commerce and Industry (KCCI) held on Wednesday.

Furthermore, the consul general said, I as consul general agree with KCCI that two-way rates should be increased. He said that a German company, Cash and Carry, is already engaged in business activities in Pakistan, while another company, working on a wind power project at Jhumpir, will start functioning soon, which will produce a total of 50 MW electricity, the project is likely to be inaugurated by Prime Minister of Pakistan.

He said that Pakistan-German business forum could play a major role in boosting two-way trade, as at present two-way trade has reached $2 billion, which can be increased to $5 billion in the next three years with little efforts.

Although, Dr Christian Brecht said that international economic crisis has also adversely hit German economy, political uncertainty in Pakistan and failure of foreign media to present a better perception of Pakistan have damaged the image of the country, therefore, in these conditions it is very difficult for German Chamber of Commerce (GCC) to advise business community to visit Pakistan. The consul general was of the view that Pakistan should concentrate of development of agriculture sector besides industries. Replying a question about anti-dumping duty, Dr Christian said that the issue is under consideration. Speaking on the occasion President KCCI, Anjum Nisar emphasised the need for increasing export of non-traditional items to Germany.


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## Neo

*ADBs forecast for countrys GDP growth​*
(April 02 2009): The Asian Development Banks GDP growth forecast for financial year 2008-09 for Pakistan is 2.8 percent. As ADB, like other multilaterals, does not have the requisite manpower to undertake independent calculation of key macroeconomic variables it is forced to rely on government data.

What is surprising about the growth figure for the current year released by the ADB is that it is not identical to the one that was agreed in negotiations between the International Monetary Fund (IMF) team and the government of Pakistan last month during the quarterly review of the IMF programme in Dubai where a 2.5 percent growth rate was forecast.

This rate is lower by one percentage point from that which was agreed in the third week of November 2008 prior to the approval of the 7.6 billion dollar stand-by arrangement with the Fund. This is reflected in the Letter of Intent (LoI) which notes that real GDP growth would slow further to 3-3.5 percent in 2008-09 in response to the tightening of macroeconomic policies and a deceleration of growth in Pakistans trading partners.

This lack of synchronicity in data between international donor agencies is difficult to justify because multilaterals routinely refer to harmonisation amongst themselves to ensure that there is no duplication of effort. GDP, by definition, includes only the formal economy. However, as is evident, Pakistan has a large parallel informal economy whose output is not a component of the GDP for the simple reason that there is no documentation available that would make this possible.

The difference between ADB and the IMF/government of Pakistans growth forecast of 0.3 percent therefore cannot be explained away by arguing that ADB has included the informal economy in its calculations as it is, without doubt, much larger. Thus one can only conclude that the ADB growth rate forecast is dated and needs revision as of the day it was announced by the ADB.

The same cannot be said about ADBs inflation forecast as the rate of 20 percent is identical to the one forecast by the government of Pakistan in the LoI. Critics of ADBs forecast capacity may well argue that if this rate is not achieved by the end of the current fiscal year the Bank can always argue that failure to achieve the target was due to other factors.

That one such factor is patently evident to all is the energy crisis that continues to act as a serious impediment to the countrys growth rate. Until and unless the government can meet the severe energy shortfall in the coming weeks and months, productivity would remain hostage to the energy crunch. To ensure that this is achieved, the government needs to devise an energy policy that is driven by gas exploration, as the country has proven gas reserves, and not oil driven, as our oil credentials have still to be proved.

The ADB report does refer correctly to the energy crunch as well as the law and order problems as mitigating circumstances to the achievement of macroeconomic stability. It is therefore urgently required that the government takes effective measures to provide large dosage to deal with the ailing economy effectively.

Be that as it may the ADB report failed to highlight one major reason for high inflation of kitchen items: the cartelisation of various sub-sectors including wheat, sugar and cement and the failure of successive Pakistani administrations to strengthen the Competition Commission of Pakistan to deal with these cartels appropriately and efficiently. An indigenous home-grown plan, much touted by our government, needs to include measures to deal with this issue.


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## Neo

*Pakistan needs up to $50b in aid: Report ​*
NEW YORK: Pakistan must be central to U.S. policy on Afghanistan and needs up to $50 billion over the next five years to avoid an economic meltdown that risks turning the country over to Islamic extremists, said a report released. 

The report by a think tank with close ties to the Obama administration said Washington must also act to strengthen civilian government in Pakistan and persuade Islamabad to stop using militant groups as an instrument of foreign policy.

The Asia Society, whose chairman was Richard Holbrooke until he was appointed U.S. special envoy on Afghanistan and Pakistan in January, convened a task force to compile the report: "Back from the Brink? A Strategy for Stabilizing Afghanistan-Pakistan." 

The report, made public on Thursday, was provided to President Barack Obama's administration before he unveiled his strategy on Afghanistan last week. It closely mirrors Obama's policy, while focusing more on politics than military issues. The report said the global economic crisis risked further weakening Pakistan's civilian government, which has little control over tribal areas that have become safe havens for al Qaeda, and which struggles to match the sway of the military.

"Perhaps the most urgent priority is to prevent economic collapse, which could undermine state authority even in major urban areas in the next few months," the report said.


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## Neo

*US Senate okays $4bn increase in aid to Pakistan​*
** Pentagon seeks $3bn in military aid over next five years
* Money will be used to train and equip Pakistan Army​*
WASHINGTON: The US Senate voted on Wednesday to boost aid to Pakistan by $4 billion next year.

As the US lawmakers continued work on a $3.5 trillion budget blueprint for the upcoming fiscal year, Senator John Kerry, a Democrat, won adoption of a $4 billion increase next year in aid to Pakistan, a key ally in the war on terror.

Earlier, the Associated Press had reported that the Obama administration plans to seek as much as $3 billion over the next five years to train and equip Pakistans military and is considering sending 10,000 more troops to battle the Taliban in Afghanistan.

In outlining the spending programme publicly for the first time, defence officials told the Senate Armed Services Committee it is critical to train and equip the Pakistanis so they have the skills and will to fight. 

With the administrations backing, their bill would provide $1.5 billion next year, linked to Pakistans counterterror and democracy-building efforts, officials said.

Defence and other administration officials spoke about the spending plans on condition of anonymity because the specific budget requests have not been released. 

Also on Wednesday, senators questioned Gen David Petraeus, who heads the US Central Command, and Undersecretary Michele Flournoy over the possible deployment of 10,000 more troops to Afghanistan.

Petraeus said he had forwarded the proposed increase to the Pentagon. That plan could mean stationing almost 80,000 American forces in the country by next year. Currently 38,000 US troops are in Afghanistan.

Lawmakers asked why the extra brigade and headquarters unit requested by Gen David McKiernan had not yet been approved by President Barack Obama.

Flournoy said Obama is aware of the request, but was told he does not have to consider it until late this year because the additional troops will not be needed until next year. agencies


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## Neo

*No need of IMF if FoDP help Pakistan: Tareen​*
ISLAMABAD: If Pakistan succeeds in getting sufficient assistance from Friends of Democratic Pakistan (FoDP), there would be no need to approach IMF for $4.5 billion additional loan, said adviser to Prime Minister on Finance, Shaukat Tareen here on Thursday. 

He hinted that Kerry-Lugar Bill would be passed in April and said that $1.5 billion US assistance would be given to Pakistan soon. Terming war against terrorism as Pakistans own war, the Adviser said that United States would start aid payment soon to upgrade Pakistans security apparatus for effectively countering the terrorism. 

Talking to reporters here after addressing the 24th annual general meeting and conference organised by Pakistan Society of development Economics, he said Pakistan is expected to get special aid package from FODP to revamp health, education and to alleviate poverty besides budgetary support. 

He also said that inflation would come down to single digit by July-August giving space to revise interest rates. Earlier, speaking at the conference, he said that real estate and other untaxed sectors as well as all individuals net earning over Rs 0.2 million have to be taxed to increase tax-to-GDP ratio and ensure sufficient allocations for making social sector more efficient. 

He said that about 60 percent tax contribution was made by the manufacturing sector and 40 percent come from imports. Both the sources of revenue have been suffering. He pointed out that agriculture sector contributes about 23 percent to the GDP, whereas its contribution to revenue is zero. To a question about taxing the agricultural income, adviser said the sector was not in good shape for the last four decades and before imposing tax on it, measures would be needed to increase farmers income. 

The problem is that in view of trade deficit, current account deficit and fiscal deficit, many governments of developing countries cannot invest desired amount of resources in human capital, he added. 

Pakistan lags behind in social sector as compared with other countries of the region, he said, adding that in these circumstances it is not possible to tackle the problems of illiteracy and health. 

In Pakistan, he said, macroeconomic development and stability has benefited only a small portion of population, and majority of the urban and rural poor have become economically poorer because of the failure of the system. 

If the government cares for the poor and disadvantaged sections of society, it should increase income tax and reduce tax on consumption, he said, adding that income tax is a direct tax on income and those who make more money pay more tax. But when rate of sales tax is increased or more items of daily use are brought under sales tax net, the prices will shoot up squeezing the purchasing power of common man drastically, he added. 

He lamented that countrys economic managers when not in corridors of power speak for the common man, but once they are in power they impose taxes on consumption, which adversely impacts the poor masses.


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## Neo

*Pak-US collaboration for $24 million energy project​*
ISLAMABAD: A joint statement of collaboration was signed between the United States government and the Ministry of Finance, Economic Affairs Revenue and Statistics, government of Pakistan. 

The signing marked the announcement of the United States Agency for International Developments (USAID) 3-year, $24 million Energy Efficiency and Capacity Building project, according to a US Embassy announcement made on Thursday. Energy conservation efforts are expanding in Pakistan, resulting in promotion of energy audits for commercial enterprises, consumer awareness campaigns to highlight the importance of efficiency in household appliances, introduction of low-energy applications in new building construction, and a renewed attention to power losses between transformers and household connections. Recurring power shortages have made energy conservation increasingly important. Some estimates indicate that 1,500 megawatts per year could be saved with an effective national campaign. The Energy Efficiency and Capacity Building project will implement improved demand-side management practices in Pakistans distribution companies, energy efficiency programmes; support Energy Service Companies working with Pakistani industries, and increase awareness of energy efficient practices among business and residential users. The project will also support the improvement of human resource management for the energy sector through coordinated training programmes and energy partnerships.


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## Neo

*Bosicor unfolds $500m projects​*
KARACHI: Bosicor Pakistan Limited has announced investing $500 million in the oil industry over the next two years as part of its expansion plan to be the leading market player of the country.

In a press conference held on Thursday, the groups Chairman Amir Abassciy revealed the investment projects of refinery unit, oil storage and petrochemical plants to be completed within the next couple of years.

Briefing the investment plans, the companys top brass said the group will invest on its oil-refining unit with the principal units that would be completed by June 2010. The 43 percent under-construction project will increase the generation capacity up to 115,000 barrels per day. It aims to produce 5.5 million metric tonnes of various petroleum products from the new plant that not only help the countrys demand but will also export internationally standard products to the world.

The group will build up the crude oil storage tank with the capacity of 144,000 metric tonnes by the next year. 

Besides, Bosicor will invest million dollars on the construction aromatic complex that will be made capable to generate 17,100 barrels per day.


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## Neo

*Pakistan may need $40-$50 billion to avoid economic collapse: report ​*
NEW YORK (April 03 2009): US policy on Afghanistan must focus on Pakistan, strengthening civilian government and ending the use of militant groups as an instrument of foreign policy, according to a report by a think tank with close ties to the Obama administration.

The Asia Society, whose chairman was Richard Holbrooke until he was appointed US special envoy on Afghanistan and Pakistan in January, convened a task force of former government officials and academics to compile the report titled "Back from the Brink? A Strategy for Stabilising Afghanistan-Pakistan."

The report, made public on Thursday, was provided to President Barack Obamas administration before he unveiled his new strategy on Afghanistan last week. Task force co-chair Barnett Rubin said the United States and its allies had for too long focused on Afghanistan while allowing problems to fester in Pakistan, where the weak civilian government has little control over tribal areas that have become safe havens for al Qaeda. "The regional center of gravity of the problem is not in Afghanistan," Rubin said. The report argues that there are no al Qaeda bases in Afghanistan, but many in Pakistan where a variety of other militant groups have long thrived on covert backing from the military and intelligence apparatus.

"Because it faces India, which it sees as an enemy ... Pakistan has adopted formally the use of Jihadi groups as instruments of their foreign policy," Rubin said at a panel discussion in New York on the report.

"One of the aims of our regional diplomacy should be to use all the resources we can to encourage, cajole, force, persuade Pakistan to change its policy away from using those Jihadis." Essential to that would be meeting Pakistans legitimate security concerns, the report said, and easing tensions with India. Relations between the nuclear-armed rivals were strained further by Novembers attacks in Mumbai, which India says were conducted with the involvement of Pakistani state agencies.

RISK OF ECONOMIC COLLAPSE The economic crisis risked further weakening Pakistans government, the report said. "Perhaps the most urgent priority is to prevent economic collapse which could undermine state authority even in major urban areas in the next few months."

It cited estimates that halting the economic decline in Pakistan might require a five-year package of $40 billion to $50 billion, a sum that dwarfs Pakistans existing $7.6 billion International Monetary Fund bailout. It urged Washington to work through the United Nations to mobilise donors to find the money. The report mirrors much of Obamas policy, while focusing more on politics than military issues.

British diplomat Paddy Ashdown, who was turned down by President Hamid Karzai as a UN envoy to Afghanistan last year, told the panel that resolving the problems of Pakistan might require a fundamental change of approach because help from Western powers would never be welcome. Drawing parallels to a Saudi initiative to reach out to the Taliban in Afghanistan, Ashdown said it might be time to consider "Islamicising" the approach to helping Pakistan regain control of all of its territory.


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## sohailbutt

*Pakistan economic indicators - April 3*​
====== DAILY INDICATORS ======

THURSDAY PREVIOUS

Floating Interbank Rate (Rs/$) 80.50/80.58 80.52/80.60

Rupee/US $ (kerb market) 80.40/80.70 80.40/80.60

Karachi 100-share index 7,191.09 6,931.90

Gold (Karachi) Rs/10 gm 24,175 24,260

======CENTRAL BANK AUCTIONS======

Treasury Bills Auction Results:

Cut-off Yield (pct) at auction on: Mar 25 Mar 11 

Three-months bills 11.7367 11.6908

Six-month bills 11,8970 11.7845

12-months bills 11,9522 11,8518

Pakistan Investment Bond (PIB) Auction Results:

Cut-off Yield (pct) at auction on: Feb 18 (2009) Aug 29

(2008)

11.25 pct coupon, three-Year PIB 13.9530 13.6973

11.50 pct coupon, five-Year PIB 14.3692 B/Rejected

11.75 pct coupon, seven-year PIB 14.7973 14.3398

12.00 pct coupon, 10-Year PIB 14.9444 14.5493

12.50 pct coupon, 15-Year PIB 15.4995 14.7500

13.00 pct coupon, 20-Year PIB 15.8998 No

B/Received

13.75 Pct coupon, 30-Year PIB 16.4496 14.9384

======WEEKLY INDICATORS======

Week ending Mar 21 Mar 14

Total liquid frx reserves $10.257 bln $10.161 bln

Forex held by central bank $ 6.791 bln $ 6.690 bln

Forex held by other banks $ 3.466 bln $ 3.471 bln

======MONTHLY INDICATORS======

LAST PVS Consumer

price index Feb 191.90 190.09 Change mth/mth

(pct) Feb -0.59 -0.42 Change Yr/Yr (pct) 

Feb 21.07 20.52 Wholesale price index Feb 

194.19 192.91 Change mth/mth (pct) Feb n/a 

n/a Change Yr/Yr (pct) Feb 15.03 15.69

Trade Balance Feb $-857 mln $-1.17 bln

Exports Feb $ 1.26 bln $ 1.36 bln

Imports Feb $ 2.12 bln $ 2.53 bln

======ANNUAL INDICATORS======

FISCAL YEAR 2007/08 2006/07

Population (millions) **160.9 156.77

Per capita income **$1085 $925

External debt (billion dlr) **45.0 $40.5

Total F.Debt as pct of GDP **24.7 27.1

Domestic debt (billion rupees) **3,020 2,610

Total domestic debt as pct of GDP **30.3 30.0

Gross domestic product growth **5.8 pct 6.8 pct

Manufacturing sector growth **5.4 pct 8.2 pct

Services sector growth **8.2 pct 9.6 pct

Agricultural sector growth **1.5 pct 3.7 pct

Commodity Producing sector growth **3.2 pct 6.0 pct

Average consumer price inflation 12 pct 7.77 pct

Fiscal deficit (pct of GDP) **7.0 pct 4.3 pct

Trade balance (FBS July-June) $-20.74 bln $-13.56 bln

Exports $19.22 bln $16.98 bln

Imports $39.96 bln $30.54 bln

Current a/c balance $-14.016 bln $-6.878 bln

* = revised

** = provisional

SBP= State (central) Bank of Pakistan

FBS= Federal Bureau of Statistics

.:: SAMAA - Pakistan economic indicators - April 3


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## Neo

*Karachi bourse re-emerges as best regional market ​* 
*Credit goes to excellent corporate earnings, political stability, improving economic indicators and reduction in risk​*
Saturday, April 04, 2009
By Salman Siddiqui

KARACHI: After witnessing hue and cry in 2008, the Karachi stock market turned again as the best performing regional market as it surged by 17 per cent in the first quarter of calendar year 2009.

Thanks to political stability and improving economic indicators, the Pakistani market posted a handsome gain of 17 per cent as compared to MSCI EM Asia, MSCI World and MSCI EM returns of 1.2 per cent, minus 11.3 per cent and 0.5 per cent respectively, noted Atif Zafar at JS Research.

In the quarter to March 31, the leading benchmark KSE 100-share index made a notable recovery of 17 per cent or around 1,000 points and closed at 6,860 points on March 31 compared to the pre-opening level of 5,865 points on January 1. During the quarter, overall market capitalisation recovered Rs200 billion and stood at Rs2,057 billion.

As a matter of record, the calendar year 2008 saw erosion of the sharp gains of the last four years for many reasons as the benchmark index crashed by over 58 per cent to a four-year low of December 2004. In the same year, Rs2,471 billion evaporated from the overall market capitalisation.

Prior to 2008, the KSE had been declared best performing market of the region and the world time and again. For the first time in its small history, the KSE was declared best performing stock market of the world in 2002, according to KSE documents.

International magazine Business Week said in 2006 that it (KSE) was well into its fourth year of being one of the best performing markets. Similarly, US newspaper USA Today also labelled the KSE one of the best performing bourses in the world in the same year, according to the KSE documents available with The News.

Noman Abid & Company Assistant Vice President Saqib Hussain observed that the reason behind the fast recovery of the local market in the January-March quarter was its no or little linkage with the recent world economic recession.

He said the issues that affected the market were internal and more of a local nature such as liquidity crunch and circular debt. Secondly, there was no huge foreign investment made in local bourses compared to other regional markets.

Moreover, a big part of total foreign investment in bourses was contributed by European countries and not by the US. Saqib Hussain explained that the financial crisis in Europe was the result of the US recession and Europe sustained the slowdown to some extent. Therefore, European investors were not withdrawing their portfolio investment in panic like US investors did.

He mentioned that Franklin Toplink, formed after the merger of two UK companies (one based in UK and the other in Singapore), held the biggest foreign portfolio investment in Pakistan and it never tried to cut short its massive holdings.

However, the foreigners sold $238 million worth of shares during the January-March 2009 quarter, while local institutions and high net worth individuals provided support to the market, Zafar of JS Research said.

Saqib Hussain was of the view that excellent corporate earnings helped the market achieve the status of being the best performing market in the region and in the world again. The launch of Initial Public Offerings (IPOs), new foreign investment in different sectors and expected resumption of privatisation process would help the market perform as the best in future, he hoped.

On the back of handsome earnings growth and attractive dividend yields, fertiliser and exploration & production stocks outshined the market, Zafar pointed out.

Stockbroker Aqeel Karim Dhedhi gave credit of re-emergence of the KSE as the best performing market to correcting economic indicators and an unprecedented fall in risk from 6,000 points to 1,500 points. The risk is evaluated by worlds leading assessment companies and ratings agencies. It is measured on the basis of ability of any country to pay back the amount at the time of maturity of bonds that the country had launched in the world markets.

Pakistan had launched euro bonds and Sukuk in world markets including Middle Eastern countries and when the countrys foreign exchange reserves slipped below $7 billion in November last year, our risk shot up to 6,000 points from 1,000 points, Dhedhi said.

He hoped that this risk would soon come down to the previous level of 1,000 points from 1,500 points at present and a further reduction in the risk would encourage international investors to flock back to Pakistan.


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## Neo

*Per capita income to fall in current fiscal: official ​* 
*Govt prefers stabilisation over growth, says Tarin​*
Saturday, April 04, 2009

ISLAMABAD: Whole Pakistani nation of 170 million will become poor during the current fiscal, as per capita income will fall owing to a slump in GDP growth and 30 per cent depreciation of the rupee against the dollar, a senior government official said on Friday.

The government has revised downward its annual Gross Domestic Product (GDP) growth target to 2.5 per cent from initial over 5 per cent for 2008-09.

The revised target of 2.5 per cent agreed with the IMF depends on the performance of agriculture sector, especially wheat production.

According to official estimates, the GDP growth rate target of 2.5 per cent will be missed owing to wheat production growing in the range of 22 to 23 million tons, showing a subdued growth compared to the previous fiscal year.

Pakistan is unlikely to achieve its revised downward Gross Domestic Product (GDP) target of 2.5 per cent, raising fears that it will trigger a negative growth in terms of real per capita income for the current financial year. Pakistan also witnessed unprecedented depreciation of rupee by 30 per cent falling from average Rs60 to Rs80 against one dollar within few months period.

Quoting the rule of thumb, the official says, if the rate of depreciation is greater than the growth in nominal GDP, the real per capita income in dollar terms is bound to decline. 

If the depreciation is 30 per cent while the GDP growth in nominal terms is 25 per cent, the per capita income in real terms will decline by 5 per cent, he added.

When Advisor to Prime Minister on Finance, Shaukat Tarin was contacted for comments on Friday night, he said that the government compromised growth of this year in order to achieve macroeconomic stabilisation with lower inflation.

When inflation will ease the discount rates will also be reduced, which will give jumpstart to manufacturing sector to grow on much faster pace. We are sticking to GDP growth rate of 2.5 per cent and lets us see what happens by the end of the day, he added.

He conceded that if the real GDP declined to below 1.9 per cent the per capita income would also show negative growth. But the incumbent wanted to achieve stabilization then stimulus can be given to achieve higher growth in years ahead, he concluded. 

However, the sources said that the per capita income that rose from $410 to $1085 from 1999 to 2007-08 would be put on reverse path if the GDP growth declined to below 1.9 per cent of the GDP for the ongoing financial year 2008-09. 

The country is registering a population growth of 1.9 per cent per annum and in case of GDP growth registering below 1.9 per cent, paving the way for achieving a negative per capita income growth in the current financial year.

Economist Intelligence Unit released in March estimate Pakistans GDP to grow by one per cent for the fiscal year 2008-09. It also states that the IMF funding has averted balance of payment crisis in short term but a range of domestic factors and worsening international environment will make it difficult to improve most of the economic indicators.

The independent economists say that the per capita income does not show well being of the whole populations but it is considered as important benchmark to determine the health of any economy of any part of the world.


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## Neo

*Pakistan seeks $1bn for Balochistan, FATA ​* 
Saturday, April 04, 2009

ISLAMABAD: Pakistan will float an idea before the Friends of Democratic Pakistan in Tokyo meeting on April 17 for establishing a $1 billion Trust Fund for development in Balochistan and FATA, Adviser to the Prime Minister on Finance Shaukat Tarin told media here on Friday.

He said that two sessions of FODP would be held in Tokyo. In the morning session, $30 billion project funds for five to 10 years would be discussed at length. In addition to it, political and security issues with regard to ongoing war on terror would also be brought under discussion in detail. 

In the evening session, Pakistan would seek $4-$6 billion for budgetary support in the next two years. He explained that $1 billion Trust Fund would be part of the $4-$6 billion budgetary support. 

He said that Pakistan would seek 50 per cent grants in the budgetary support; otherwise it will have to move the IMF again for an additional $4.5 billion.

Pakistan, which has entered into an IMF programme worth $7.6 billion, is still facing a financing gap of $4 to $6 billion in the next two years for which it needs support.

Tarin said that the World Bank would coordinate for $1 billion Trust Fund, which will be utilised for development of Balochistan and FATA areas. The fund will also be spent on development of settled areas other than non-settled areas.

To a question, Tarin said that he has written a letter recently to Saudi Arabia seeking oil facility. About remittances securitisation, Pakistan is in touch with Saudi Arabia and the Middle East, he added.


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## Neo

*PIA likely to go private: Tarin ​* 
Saturday, April 04, 2009

KARACHI: Shaukat Tarin, Advisor to Prime Minister on Finance on Friday said that government is considering the privatisation of Pakistan International Airlines (PIA).

PIA has accumulated financial losses of Rs72 billion in last few years though its balance sheet improved in the last quarter of 2008, he said.

We will give it a final review after the results of first (Jan-Mar 2009) quarter, he added. 

PIA has made some improvement in the last quarter of the year 2008 and government would analyse the first quarter results in next months in April before taking any decision on PIA. 

He was talking to journalists at the 3rd Pakistan Corporate Philanthropy Awards to public listed companies at the local hotel. The award distribution ceremony was organised by Pakistan Centre for Philanthropy (PCP). 

When asked that why government is not reviewing the petroleum prices, he said, It is being expected that world oil prices may surge again. We will definitely reduce prices when it is feasible and we do not want to change petroleum prices again and again to make a mess out of it.

He also said that government would soon make a policy board and pass the bill from National Assembly for the improving the efficiency of Federal Board of Revenue (FBR), which will comprise of 60 per cent members from private sector and 40 per cent from public sector. 

Board of Investment (BoI) will also be revamped and a different section will be made for overseas Pakistanis. Our meeting is scheduled with World Bank in mid April, however, government would not go to IMF if it gets $4 to $6 billion from Friends of Democratic Pakistan, he said. 

He stated that despite low ranking in the human development index, Pakistan is among the top philanthropic nations and corporate philanthropy is a shinning example of giving for public good. From 2000, philanthropic contributions by the corporate entities have increased from Rs228 million to Rs1.67 billion in 2007. 

Pakistan Petroleum Limited got the first award in the five top corporate entities based on their volume of donations. Oil and Gas Development Company Limited, Pakistan Services Limited, Nestle Pakistan Ltd and Jahangir Siddiqui and Services Limited received second, third, fourth and fifth awards respectively out of the list of the 25 public listed companies.

Similarly, Karam Ceramics got the first award in the second category of volume of donations as a percentage of profit before tax. Pakistan Services Limited, Shield Corporation Limited, Bestway cement Ltd and Gulistan Spinning Mills Ltd received the second, third, fourth and fifth awards respectively. 

Certificates of recognition were also awarded to the top 25 companies in both categories. 

Shamsh Kassim-Lakha, Chairman PCP Board of Directors informed the participants about the corporate philanthropy report and Give2Pakistan: Philanthropy Portal which was launched on the occasion.


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## Neo

*British companies to invest in power ​* 
Saturday, April 04, 2009

ISLAMABAD: British High Commissioner to Pakistan, Robert Brinkley, said here on Friday that British companies, in a joint venture with Pakistani companies, would invest in the power sector to help Pakistan overcome energy crisis.

He was talking to a delegation of Rawalpindi Chamber of Commerce and Industry (RCCI), which met him at his office under the leadership of its President Syed Asad Haider Mashhadi.

Other members of the delegation included ICCI Vice President Imtiaz Chaudhry, former president Abdul Rauf Chaudhry and Shakeel Ahmed Khan.

The meeting was held in a very cordial atmosphere in which matters relating to bilateral interest were discussed, said the RCCI press release.

Robert Brinkley said that representatives of British entrepreneurs would visit Pakistan in the next few days to discuss the modalities of joint ventures.

Mashhadi expressed deep concern over US drone attacks on Pakistans territory, saying that these attacks were badly affecting the countrys economy. 

He said that the UK was enjoying good terms with both Pakistan as well as the US and could play a role in making the Americans realise that these attacks would not serve the purpose.

He said that the US should understand the ground realties and review its policy. 

Mashhadi said that RCCI intends to organise a single country exhibition in UK in collaboration with the Ministry of Commerce and Pakistani High Commission in London.

Five top companies from every chamber would participate in the exhibition, which would not only introduce Pakistani products in UK but would also help in developing a soft image of Pakistan there, Mashadi added.


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## Neo

* Circular debt threatens manufacturing sector ​* 
Saturday, April 04, 2009

LAHORE: Industrialists have appealed to the government to take notice of circular debt being created in the manufacturing sector, which may cause a total collapse of the entire chain of suppliers, producers and vendors if corrective measures are not taken.

Elaborating their point of view, they cited the governments own experience in the power sector, where circular debt had a devastating impact on all institutions trapped under it.

They said WAPDA (now PEPCO) has been deprived of payments worth Rs190 billion mainly from KESC and FATA. WAPDA in turn withheld payments of IPPs. They said the IPPs that used to get fuel from PSO or gas distribution companies did not pay them their dues.

This has weakened the financial flow of fuel suppliers. Many IPPs had to bear the salaries of their workforce without producing any electricity. The country suffered from a chronic fuel shortage as PSO lacked finances to import the commodity.

They said ultimately the government had to arrange Rs80 billion bank loans to clear IPPs dues. Despite this laudable government effort, all the institutions affected by circular debt have considerably weakened.

Leading exporter M I Khurram said that the private sector has remained under immense pressure during the past two years due to high cost of doing business and has now finally come under the debt trap. He said this happened after the exhaustion of all resources and past savings of the production chain players. He said spinners, for instance, owe money to banks and suppliers of inputs other than cotton.

He said neither spinners nor any other manufacturer enjoy the benefit of withholding utility bills so that they are updated on their electricity and gas bills. However, they have gradually extended the duration of payment to private sector suppliers from the normal 15 days to 45 days and then 90 days.

He said now they are finding it difficult to make payments to their suppliers even after three months of receiving supplies. He said spinners in fact, are finding it hard to recover their dues in time from yarn buyers. He said most of the spinners have defaulted on their bank loans and are seeking rescheduling.

Pakistan Hosiery Manufacturers Association Vice Chairman Adil Butt said that the attitude of banks has further complicated the situation. He said banks are now tightening the screw on exporters and manufacturers.

Butt added that normal working capital credit lines are being denied. He said a dilemma for manufacturers is that they circulate credit they take from financial institutions by paying back their suppliers and then wait for cash flows from sales or exports to pay back to banks. He said when banks stop or squeeze credit it is impossible for manufacturers to make payment to their suppliers, who in turn withhold supplies disrupting the entire manufacturing process.

Senior economist Naveed Anwar Khan, FCA, said that banks should give some weight to the previous history of manufacturers they have been dealing with for decades. He said one wrong move by any of the stakeholders is likely to result in the crumbling of the entire industry along with financial institutions.

He said manufacturers get badly hurt if there is the slightest of disturbance in their cash flows, whether it is from banks or from buyers. He said it is in the national interest to facilitate the productive sector and provide them with ample breathing space till interest rates come down to a manageable level.


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## Neo

*Pakistan one of fastest growing in telecom: UN ​* 
Saturday, April 04, 2009

ISLAMABAD: As the number of Pakistani cell phone users reaches 91,008,042, the United Nations (UN) has rated Pakistan one of the fastest growing country across the globe in the telecommunications sector.

The Pakistan Telecommunication Authority (PTA) says that the tele-density in Pakistan is 56.50 per cent while Pakistan generated 763 million text messages during 2008/09 and stood fourth for SMS traffic in Asia Pacific.

According to the recently released UN report, more than 60 per cent of the worlds citizens have access to mobile phones; that is 4.1 billion cellular subscribers across the world.

The report adds that mobile phones help developing countries to improve their economy. That is a well established fact by now. However, a more relevant question is how the governments can either support this growth or cause it to slowdown.

Of course, political stability and lack of security is the overriding factor above all for the economy.


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## Neo

*Germany to help Pakistan in achieving MDGs​*
ISLAMABAD: Visiting German Minister for Economic Cooperation and Development, Heidemaire Wiegoreak Zeul said here on Friday that her country would extend all possible help to Pakistan achieve its Millennium Development Goals (MDGs) and combat confronting energy crisis.

A Euro 80 million financial assistance agreement was also signed by Secretary Economic Affairs Division (EAD) Farrukh Qayyum and Uweohis Senior Vice President KFW German on behalf of their respective countries.

I am visiting Pakistan to vet the financial needs of the country to be discussed in Friend of Democratic Pakistan(FODP) conference in Tokyo on April 17, German Minister for Economic Cooperation and Development, Heidemaire Wiegoreak Zeul said while addressing a joint press conference with Adviser to the Prime Minister on Finance and Economic Affairs Shaukat Tareen.

Speaking on the occasion Shaukat Tareen said that Germany was a strong supporter of Pakistan in the political and economic arena. He added that Germany, over a period, has given Pakistan financial and technical assistance in the fields of education, healthcare, skill development and development projects.

Now Germany is very closely working with Pakistan in developing projects in the provinces including the NWFP and providing technical as well as financial assistance to the country for providing education, health care, infrastructure development and capacity building. he remarked. We are greatful that Germany is also helping us in developing water and energy resources, Shaukat Tareen added.

He added that Pakistan was also looking towards Germanys help at the FODP meeting to be held on April 17 in Japan, adding that Germany has assured that it would assist Pakistan in four areas of health, education, poverty alleviation and infrastructure development.

Speaking on the occasion, the German Economic Minister said that her country has committed finances for the hydro power dam Keyl Khwar located in NWFP on river Indus at Dasu. She added that out of Euro 97 million, the last tranche of 20 million Euro was signed here today for the project.

The visiting minister said that she was specifically here to show friendship and cooperation with Pakistan. She added that this support was important for Pakistans development to stabilise the country and the region. The Germans minister said that FATA needed development and her country would cooperate Pakistan in this regard.


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## Neo

*Pakistan may have room for rate cuts in future: IMF​*
WASHINGTON (April 04 2009): Pakistans monetary policy stance is appropriate, but there may be scope for interest rate reductions if inflation declines further, the International Monetary Fund said on Friday. In a statement summarising its consultation with Pakistan. The IMF said the country had met performance criteria and benchmarks spelled out under a stabilisation program, but stressed that it needed more outside help and said an upcoming donor meeting would be important.

Pakistan plans to ask its allies for up to $30 billion in aid over the next 10 years at a conference in Japan this month. It received a $7.6 billion IMF loan in November to stave off a balance of payments crisis. The IMFs directors said monetary policy was appropriate and "agreed that interest rates should be kept on hold for the time being in order to avoid financial pressures and to further consolidate disinflation."

However, they also saw "some scope for lowering interest rates in the future, provided that inflation further declines and international reserves continue to strengthen." The IMF board also stressed the need to avoid central bank financing for the government. The funds staff said the rupee currency may be slightly overvalued. The IMF said Pakistans banks had weathered the financial crisis well thus far "but should be monitored carefully." Non-performing loans rose to 9.1 percent of total loans in December from 7.7 percent in June.


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## Neo

*SBP lowers GDP growth forecast to 2.5-3.5pc ​* 
KARACHI (April 04, 2009): The State Bank of Pakistan (SBP) cut its gross domestic product (GDP) growth forecast for the 2008/09 fiscal year to 2.5-3.5 percent from an earlier target of 3.5-4.5 percent, a move analysts blamed on political turmoil and lower local industrial output. The original target was 5.5 percent. Pakistan posted growth of 5.8 percent in the 2007/08 (July-June) fiscal year.

"The economy is likely to expand between 2.5 percent to 3.5 percent," the State Bank said in a report on the second quarter that ended on Dec. 31.

The State Bank also said inflation would slow sharply in the final quarter of this fiscal year.

The State Bank lowered its inflation target for this fiscal year to between 19.5 percent and 20.5 percent from an earlier forecast of between 20 percent and 22 percent.

It had originally forecast inflation at an average of 11 percent for this fiscal year but it had to revise that following a surge in international oil and commodities prices last year.

Inflation was 12 percent in the previous fiscal year.

The SBP said in the report it expected a current account deficit this year of between 5.8 percent and 6.2 percent, compared with 6.2 percent to 6.8 percent expected earlier.

At the beginning of this fiscal year, authorities expected a current account deficit of 7.2 percent. Last year it ballooned to 8.4 percent.

LOWERING INTEREST RATE 

Pakistan's interest rates, among the highest in Asia, are expected to ease.

"The realisation of the expected sustained fall in domestic inflation, and an increase in foreign exchange reserves would allow for easing of monetary policy," the bank said.

Monetary policy for the last quarter of this fiscal year, ending on June 30, is due to be reviewed this month and most analysts expect an interest rate cut.

The State Bank kept its discount rate unchanged at 15 percent in January after raising it by 500 basis points in 2008.

The International Monetary Fund (IMF) said on Friday Pakistan's monetary stance was appropriate, but there may be scope for interest rate reductions if inflation declined further.

Pakistan agreed in November to an IMF emergency loan package of $7.6 billion to avert a balance of payments crisis.

It got a first tranche of $3.1 billion that month and a second tranche of $848 million this week. Pakistan also got a $500 million interest-free World Bank loan this week.

"The need for greater external assistance for Pakistan is underscored by the fact that the sources of domestic financing are either not available or remain risky due to its vulnerable external account position," the SBP said.


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## Neo

*Around $4-6 billion pledges from Tokyo moot likely: Tarin​* 
ISLAMABAD (April 04 2009): Pakistan is expecting around $4 billion to $6 billion pledges from the participant states of Tokyo donors conference for two years budgetary support, said Advisor to Prime Minister on Finance, Shaukat Tarin here on Friday.

Talking to media at the Ministry of Finance, Tarin said Pakistan is also hoping to get $1.8 billion from the World Bank, $1.4 billion from the Asian Development Bank, $1 billion from Islamic Development Bank and $350 million from the DFID during the current fiscal year. Tarin said that Pakistan Development Forum (PDF) meeting would be held in May to consider assistance for Pakistan.

He said that Pakistan would give two plans - one with two years view and the other with 10 years programme to help support bringing it out of the prevailing economic mess. "We are looking for about 50 percent grants in both the plans. We could have loan from anywhere what precisely we are looking from these forums to help Pakistan in the form of grant, the advisor said, adding that Pakistan was fighting a war concerning the world.

The advisor said Pakistan would also seek $1 billion for Balochistan and NWFP Trust from donors. He said that the Trust would evolve district-wise short-term plans to provide basic amenities to the people of Balochistan and NWFP. Tarin said the Pakistan would float the idea of the Trust Fund to its friends in the upcoming meeting and would strive to ensure financial support to alleviate the problems of the people of Balochistan and NWFP.

To a question, the advisor said some four areas have been identified and Friends of Pakistan would be asked on April 17 to lend financial assistance for poverty reduction projects, improvement in health and education sectors as well as security and setting up of a Trust for NWFP and Balochistan with initial at least $1 billion funding. He said that the two meetings of the donors are scheduled for April 17 back-to-back, one in the morning to consider projects while the other in the evening that would pledge two years budgetary support for Pakistan.


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## Neo

*Pak-German talks on funding eight hydropower projects​* 
ISLAMABAD (April 04 2009): Pakistan and Germany on Friday discussed the possibilities of funding eight ongoing and new hydropower projects worth billions of dollars, official sources told Business Recorder on Friday. These projects came under consideration at a meeting between visiting German Minister for Economic Co-operation and Development Heidemaire Wiegoreak Zeul and Prime Ministers Advisor on Finance Shaukat Tarin.

The German Minister is visiting Pakistan to assess Pakistans financial needs to be discussed at the Friend of Democratic Pakistan (FoDP) conference in Tokyo on April 17. Pakistan and Germany also inked 80 million-Euro financial assistance agreement.

Replying to a question, Tarin said that an establishment of a trust fund for development of social and infrastructure in Balochistan and NWFP would also be discussed in the second session of the donors conference in Tokyo. The agreement was signed by EAD Secretary Farrukh Qayyum and President of KfW German Uweohis on behalf of their respective countries in the presence of media.

THE FOLLOWING ARE THE WATER SECTOR PROJECTS, WHICH WERE DISCUSSED: Spat Gah hydropower project, Palas hydropower project, Kurram Tangi Dam, Basho hydropower project, Harpo hydropower project, Lawi hydropower project, Naigaj hydropower project and Hingol hydropower project.

Speaking at the occasion, the German Minister said that her country would extend all possible help to Pakistan to achieve its Millennium Development Goals (MDGs) and combat confronting energy crisis. Shaukat Tarin appreciated Germanys role in supporting Pakistans stance in the boards of international financial institutions, including the World Bank and International Monetary Fund (IMF).

"Germany over a period of time has given Pakistan financial and technical assistance in the fields of education, healthcare, skill development and development projects," he added. He was of the view that now Germany was very closely working with Pakistan in developing projects in the provinces, including the NWFP, and providing technical as well as financial assistance to the country for providing education, healthcare, infrastructure development and capacity building.

Tarin, who will be visiting Japan, for the FoPD, told the journalists that Germany had assured that it would assist Pakistan in the four areas - health, education, poverty alleviation and infrastructure development. The German Economic Minister stated that her country had committed finances for a hydropower dam, Keyal Khwar hydropower project located in NWFP on river Indus at Dasu. The project would generate 130 MW power.

The sources said that KfW had offered to finance the project implementation under loan. The KfW indicated availability of 97 million Euros for the project against project cost of 179.9 million Euros. The loan agreement, amounting to 77.080 million Euros, was signed between the KfW and government of Pakistan on November 11, 2008.

A further amount of 20 million Euros was also offered by the KfW, which was signed on Friday. The German Minister was of the view that out of 97 million Euros, the last tranche of 20 million Euros was signed here on Friday for the project.

She said that Germany was part of Friends of Democratic Pakistan (FoDP) and she had come here for the assessment of the situation and development needs to be discussed at Tokyo in April 17 and then again at the end of April during the annual meeting of the World Bank and IMF. She added that this support was important for Pakistans development to stabilise the country and the region.

The Germans Economic Minister said that the Fata needed development and her country would cooperate with Pakistan. Answering another question, she reiterated her countrys support for the people of Pakistan, and added that there should be no doubt about Germanys commitment.

"We do not write things on paper, when we make a commitment we fulfil it," she added. In reply to another question, the German Minister said that she would also meet civil society for consultations because Germany gave importance to civil society. She was of the view that people of Fata needed development to deal with militancy because development would give them hope for a better future.


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## Neo

*US plans $3 billion military boost for Pakistan: New York Times​*
WASHINGTON (April 04 2009): The US Defence Department has a three billion dollar plan to train and equip Pakistans military over the next five years, US media reported Friday. The funds would pay for helicopters, night-vision goggles and other equipment and counterinsurgency training for Pakistans special operations forces and Frontier Corps paramilitary troops, the New York Times said.

It quoted Pentagon officials as saying up to 500 million dollars could come from a yearly emergency war budget that President Barack Obamas administration is to present to Congress next week. But with some legislators expressing concern over the Pakistan Counterinsurgency Capability Fund, the top US military officer acknowledged that the United States had not mandated enough accountability for the funds.

"There hasnt been an audit trail, and there havent been accountability measures put in place, and there needs to be for all the funds," Admiral Mike Mullen, the chairman of the Joint Chiefs of Staff, told the Timess editorial board. "So were going to do that. For this counterinsurgency money, which is important, it is critical that it goes for exactly that and nowhere else."

Mullen said the Pakistani military must change its focus from fighting arch-foe India to combating militants and insurgents within its borders. "Thats not going to change overnight," he said. Mullen said insurgents operating in safe havens in Pakistan were preparing attacks against Afghanistan and Pakistan. "The Taliban, in particular, are going both ways now," he said.

"They are coming toward Islamabad and they are actually going toward Kabul. Im completely convinced that the vast majority of the leaders in Pakistan understand the seriousness of the threat." With insurgents in Afghanistan led and backed by hard-line militants in tribal areas over the border in Pakistan, the United States has warned Islamabad that in return for economic and military aid it must crack down on Islamist groups.

Mullen said last month that aid to Pakistan needed to be linked to concrete action but expressed confidence that the countrys military grasped the nature of the threat within its borders. He said the Pakistani military leadership, including chief of staff General Ashfaq Kayani, understood that the militants posed a threat to Pakistan itself.

"I have great confidence in General Kayani and in the Pakistani military," said Mullen, who holds frequent talks with his Pakistani counterpart. Despite the deployment of more than 100,000 troops, Pakistan has been unable to stop a wave of attacks by Taliban and al Qaeda-linked militants that have killed 1,700 since July 2007.


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## Neo

*Surgical instruments export reaches $225 million​*
ISLAMABAD (April 04 2009): The export of surgical instruments witnessed an increase of about 34 percent during 2007-08. An official at the Engineering Development Board (EDB) told APP on Friday that during the year the export of surgical items from the country reached $225 million as against the export of $191 million during same period last year.

The export of surgical items suffered a sharp slump calculated to be around $7 million during May-July 2007, as it stood $183 million during the same period of last financial year, it said. He said that surgical instrument manufacturing industry in the country produces about 100 million disposable and reusable instruments annually.

Disposable instruments contain 60 percent of the total export, while the rest of 40 percent are reusable instrument, he added. The official informed that scissors, a widely used instrument is produced in 40 different kinds and hundreds of sizes in the country.

Surgical goods are the main component of countrys export list and this sector is playing a significant role for the promotion of export and also earns abundant foreign exchange for the country, he added. This sector has the potential to capture the global markets by introducing modern technology and adopting the cost-effective measures in the local market, he remarked.


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## Neo

*Mid year review of economic situation​*
(April 04 2009): The Economic Advisors Wing released a mid year review of the countrys economic situation (July-December 2008) that reveals that the economic stabilisation programme is on track. The review notes that signs of early recovery are becoming visible while fiscal and current account deficits have depicted improvement, exchange after depreciating in the period July-November 2008 has remained stable since inflation has started responding to the demand management, and foreign exchange reserves are starting building up.

Many maybe tempted to argue that the stabilisation programme is entirely the outcome of negotiations between the International Monetary Fund (IMF) staff and the government of Pakistan that culminated in the approval of the 7.6 billion dollar stand-by arrangement in November 2008.

There is obviously some truth to these assertions as negotiation between the IMF and the government was an ongoing process and did constitute a number of measures that were taken by the government as pre-loan conditions indicated in the Letter of Intent (LoI).

These included (i) the objective of increasing tax revenue to reach the target of 0.6 percent points of GDP by the end of the current fiscal year, (ii) reduction in non-interest current expenditure by 1.5 percent of GDP through elimination of oil subsidies by December 2008 (adjusted three times since June 2008) and electricity subsidies by June 2009 (adjusted by an average of 18 percent till September 20 2008), (iii) domestically financed development expenditure began to be reduced last year to reach an overall target of 1 percent of GDP by end of the current fiscal year, (iv) government committed to end SBP borrowing on a cumulative basis starting October 1, 2008 till June 30, 2009, (v) tax audits reintroduced as part of risk based audit strategy in December 2008, and (vi) SBP began its monetary tightening policy and increased discount rate by 200 basis points to 15 percent in October/November of last year.

These politically extremely unpopular measures have led to an improvement in key macroeconomic indicators, as noted in the mid year review, which are mainly responsible for the decision of the IMF to release the second tranche of the stand-by arrangement end-March 2009. However as is clearly evident from recent statements by senior officials dealing with finance as well as the major thrust of ministers and advisors media talks there is a need for the government to generate further resources from external sources.

It is in this context that the Friends of Democratic Pakistan (FODP) forum will meet in Tokyo on 17 April that would identify projects critical to strengthening the deficient infrastructure and social sectors in Pakistan. The FODP would be followed by the donors meeting where pledges are expected. The extent of the pledges required vary from 5 to 10 billion dollars and point to the need for generating further resources to meet the fiscal year end macroeconomic targets as identified in the LoI.

The IMF had noted post approval of the stand-by arrangement that the government expected to generate around 13 billion dollars from external resources, money that was already committed according to the Fund. Data reveals that to date the government has been able to attract only 5.66 billion dollars out of which 3.9 billion is the cumulative proceed from the IMF first and second tranches. Thus the urgency to generate more external resources before fiscal year end.

Analysts do not hold much hope for an injection of 10 billion dollars given the continuing global financial crisis as well as recession. However they are hopeful that a least three to four billion dollars may be forthcoming. Without this money the government will be unable to meet its other expenditures including defence that would make many Western capitals nervous.

That remains our trump card unfortunately in the short term. In the medium to long term it is hoped that the government formulates a home-grown reform agenda that relies on domestic as opposed to external sources to provide stability to our macroeconomic indicators.


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## Neo

*The sooner the better​*
(April 04 2009): In a much-needed move the government has indicated it will revise the scandalously high charges that the users of our two commercial ports in Karachi and the newly commissioned port at Gwadar have to bear. Talking to journalists in Karachi the other day Federal Minister for Ports and Shipping Babar Ghauri said that since our ports are "a bit costlier than our regional competitors, the government would soon revise port charges."

The first part of his assertion, though, easily qualifies to be termed a gross understatement. A Recorder Report quoting an independent study gives a very different account that shows port tariff for container ships of 21000 gross registered tonnage having 400 TEU capacity is 85 percent higher at our ports than in Dubai, Colombo and Mumbai.

A still better perspective can be had from the fact that ships calling at the Karachi and bin Qasim ports are charged $18,500 and $1,600, respectively, whereas they pay $2,800, $6,400 and $11,000, respectively, at Dubai, Colombo and Mumbai ports. By far, ours are the most expensive services.

Notably, this is not the first time that someone in government has promised to revise the port charges. In the past as well similar promises were made, yet nothing concrete followed. The problem has persisted despite having negative repercussions for the local trade as well as our much-cherished dream of making the Gwadar Port a regional hub of economic activity.

As international shipping companies find cheaper yet efficient alternatives in the UAE and Iran there is no reason why they would want to call at our ports and pay exorbitant tariffs. In fact, some of them are said to be reviewing their operational costs in Pakistan and pondering other options. At the root of this unsavoury situation is unchecked greed and corruption.

Those familiar with the scene say almost all elements from agents to cargo handling companies and shipping agencies are under a Mafia-like control. And hidden charges are a common ploy to hoodwink the users. Ghauris announcement that the tariff regime would soon be reviewed offers a fresh hope for betterment.

Chairman of Pakistan Shipping Agents Association (PSAA) has welcomed it, pointing out that the shipping liners are looking to cut their costs, which will invariably lead them to lean towards the use of less expensive facilities. A quick downward tariff revision, therefore, is needed.

The PSAA has suggested - reasonably so - that for a start at least 30 percent reduction be made in wet charges that include anchorage, pilotage and tugging fees and berth hire, etc. Nonetheless, a simple revision in charges will not do. The government must put in place a well-regulated foolproof system to run all aspects of port operations. Given the urgency of the issue, it must act sooner rather than later.


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## Neo

*SBP revises downward growth estimate to 2.5pc ​* 
Sunday, April 05, 2009

KARACHI: The State Bank of Pakistan (SBP) has revised down its estimate of countrys economic growth for fiscal 2008-09 to 2.5-3.5 per cent from previous 3.5-4.5 per cent after a slowdown in industrial and services sectors. 

In second (Oct-Dec 2008) quarterly review report of economy, it said large scale manufacturing witnessed a broad-based decline of 4.7 per cent during July-Dec 2008 due to severe energy shortages and slowdown in consumption in Pakistan and abroad. 

Surge in cost of inputs which was aggravated by depreciation of rupee has badly hammered industries. In its first quarterly report, SBP has envisaged growth of 3.5-4.5 per cent. 

Export-led industries also faced marketing problems due to security situation and country image, with attendant concerns over Pakistani producers ability to meet delivery deadlines, the central bank said.

Growth of services sector, which contributes biggest share of 53 per cent to GDP, slowed as wholesale and retail sub-sectors took the hit of economic slowdown, it said. Targeted growth of services sector is 6.1 per cent in fiscal 2009 down from 8.2 per cent of previous year. 

But the flagging economy will receive support from agricultural sector on back of a record wheat harvest. 

Importantly, the report noted that government policy of giving good price signals encouraged farmers and played a vital role in higher crop out.

Referring to the post-IMF assistance outlook, SBP said macroeconomic stabilization program is working as fiscal deficit has reduced and tight monetary policy has helped control inflation. 

While inflation is still very high (over 19 per cent), there is expectation that it will decelerate sharply in final (April-June) quarter, it said, adding fiscal deficit as percentage of GDP has come down to 1.9 per cent during Jul-Dec 2008 from 3.4 per cent in same period of previous year. 

Nevertheless, the central bank has cautioned government that cutting development spending to control fiscal deficit is not sustainable in the long-run considering the infrastructure-related investment needs of the country. 

There are significant rigidities in government expenditure, it said, adding that defence spending and interest costs on countrys rising debt absorb approximately three-fourths of revenues. 

The report also cautioned government that in its bid to control fiscal deficit by borrowing from banking sector rather than SBP, private sector could be left out. This is because of countrys sharply constrained access to international capital markets as well as slower deposit growth in banks. 

In light of these constraints, SBP said it is imperative for Pakistan to rely on concessional external assistance to finance development expenditure. Also, given the drying up of capital flows, official assistance seems to be the only option for countries like Pakistan to stimulate economy.

Despite improvement in foreign exchange reserves and current account deficit, there are reasons to worry about the external account, SBP said. 

Feared slowdown in export growth and remittances can prove to be a challenge at a time when global financial meltdown has dampened prospects of higher capital flows into the country, it said. This suggests that even a moderate external deficit could lead to direct impact on exchange rate.


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## Neo

*Agri sector to post good growth ​* 
Sunday, April 05, 2009

KARACHI: Agricultural sector of Pakistan is poised to post good growth in fiscal 2008-09 as a result of record rice and wheat harvests, the State Bank of Pakistan (SBP) said on Saturday. 

Despite 18.5 per cent decline in sugarcane output, anticipated record wheat harvest of 24 million tons will help jack up the figures for fiscal year that ends next June, it said in the second quarterly economic review report. 

Improvement in crop sub-sectors appears to be helped by significant gains to farmers in previous cropping season; amidst high commodity prices as well as supportive government policies, according to SBPs projections, cotton, sugar and rice output will be 12 million bales, 52 million tons and rice 6.5 million tons, respectively. 

It said rice harvest was significantly higher than estimated domestic consumption of 2.5 million tons as growers were encouraged by higher rice price in international market following imposition of ban on rice exports by competing countries. Cotton, which has lost its favored position among farmers in last few years because of falling price, increased in output by 3.5 per cent despite a decrease in its cultivated area. 

It was an improvement in cotton prices that encouraged farmers to put extra efforts, resulting in 10.9 per cent gain in cotton yield which more than offset decline in acreage. A sharp decline in sugarcane harvest this year, the SBP said, can be attributed to disappointment farmers faced last year when they did not get benefit of record 63.9m tons output. Not only purchase of sugarcane was delayed by mills it is alleged that payments to farmers were also not made in time. It asked the government to come up with an effective policy on sugarcane after taking all stakeholders onboard. One sustainable long-term solution to these problems lies in introduction of effective futures market with crop insurance and contract enforcement.


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## Neo

*Large-scale manufacturing falls by 4.7pc ​* 
Sunday, April 05, 2009

KARACHI: Large-scale manufacturing (LSM) has recorded a sharp decline of 4.7 per cent during July to December period for fiscal 2009 against 5.2 per cent growth in the same period last year, the State Bank of Pakistan said on Saturday.

Many factors including intensified energy shortages, rise in input cost and lower domestic and external demand are responsible for this decline, the central bank said in its second quarter report released here.

Electricity shortage has proved deadly along with upward adjustment in prices of electricity, gas and diesel which actually lowered the productivity and raised the cost of production in domestic industry.

Though international commodity prices started to ease somewhat from July 2008 onwards, domestic prices of many industrial inputs remained relatively higher. Similarly, depreciation of rupee with a greater volatility also increased the cost of imports that ultimately pushed the inputs costs up. 

Similarly, global recession has also taken its toll; export driven industries (particularly textiles) suffered due to weakening external demand. 

Export-led industries also faced marketing problems as foreign buyers are avoiding travel to Pakistan due to security situation and country image, with attendant concerns over Pakistani producers ability to meet delivery deadlines. 

Dampening domestic demand, particularly of consumer durables, also contributed to a lacklustre performance of the industry. 

The ease in consumer demand is attributed to both; high interest rates on consumer financing and commercial banks reluctance in providing consumer financing for consumer durables due to rising non-performing loans (NPLs) under this head, which has direct consequences for automobile and electronics industries.


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## Neo

*Survey planned in Balochistan, FATA ​* 
Sunday, April 05, 2009

ISLAMABAD: Pakistan has decided to conduct a need assessment survey in all districts of Balochistan and NWFP including the Federally Administered Tribal Areas (FATA), with third party validation to give credibility to its findings for obtaining $1 billion from the Friends of Democratic Pakistan (FoDP) forum under the proposed Trust Fund, it is learnt.

The need assessment survey will show the existing gaps in areas of education, health, infrastructure and security requirements, official papers reveal. The survey be completed within six months after the upcoming FoDP ministerial level meeting on April 17 in Tokyo accepts Pakistans proposal formally.

The World Bank would coordinate for the upcoming $1 billion Trust Fund for which the donors have agreed in principle at the expert level meeting held a couple of days ago in Dubai.

The Obama administration plans to provide $1.5 billion per annum through project aid probably to be undertaken by USAID out of which some portion will be for this proposed Trust Fund. The US authorities will place a monitoring mechanism in all districts of Balochistan and NWFP for achieving transparency in utilisation of funds.

Out of proposed $1 billion for Trust Fund, Pakistan may provide $100 to $200 million from its own budgetary resources for the first three years under the newly devised Medium Term Budgetary Framework. 

It will be a revolving Fund, which can be increased from earlier funding if the need arises in the future.

According to official papers that are to be presented before the upcoming FoDP meeting, in case both sides to agree to establish Trust Fund for undertaking development needs in Balochistan and NWFP in totality both in settled and non settled areas the need assessment survey will be done by the respective governments of these provinces with the help of the district administration to exactly know the existing gaps in areas of education, health, infrastructure and security requirements.

Pakistan will also envisage allocation from its own budgetary resource for Trust Fund to cater the needs in Balochistan and NWFP by inserting its proposed allocation into three year Medium Term Budgetary Framework (MTBF) for 2009-10 to 2011-12, a high-level official who participated in technical level meeting of FoP forum recently held at Dubai told The News here on Saturday.

After getting green signal from FoP meeting at Tokyo on April 17 the need assessment survey will be accomplished within three to six months period and third party validation will be acquired to give credibility to the estimates put up by the respective provincial administrations. A reputed firm having prior experience of such assignments will conduct the third party validation.

Pakistan wants resources from multiple avenues including its own budgetary resources, bilateral as well as multilateral creditors to meet social sector gaps in Balochistan and NWFP. Pakistan wants to get maximum funding from FoP forum in shape of grants from bilateral and multilateral creditors, added the sources.

The capacity building at districts level in two most neglected provinces will be headache for authorities to spend billions of rupees in their respective areas. There is need to undertake capacity building projects in all these districts which will ensure effective utilisation of huge funds.


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## Neo

*KSE gains 629 points on positive developments ​* 
Sunday, April 05, 2009

KARACHI: The achievement of IMF set targets, improvement in macroeconomic indicators, and the end of political disputes with the reinstatement of parliamentarian government in Punjab altogether pushed Karachi bourse up by another 9.25 per cent during the week ended on Friday, April 03.

The KSE 100-share Index took a quantum leap of 9.25 per cent or 629.42 points on week-on-week basis and settled at 7,432.88 points. Its junior partner the 30-Index also posted an unprecedented increase of 9.86 per cent or 723.83 points and finished at 8,064.16 points this week.

Analysts observed that the fixing of economic indicators like reduction in inflationary pressure; lowering of money demand in the system; squeezing trade deficit; reverse capital flight; and notable inflow of dollars from international financial institutions altogether made the local economy heading in the right direction.

The happening of all this good on economic front and the end of interim governor rule in Punjab amid the reinstatement parliamentary government there, on the other hand, provoked local financial institutions and big individual investors to inject billion of rupees at the local bourse this week.

Though selling pressure from offshore investors eased off slightly, foreigners still remained net sellers of $7.5 million during the week. They bought shares worth $14.2 million while shares amounting $21.7 million were offloaded during the week, said Atif Zafar at JS Research.

The local, however, alone injected Rs192 billion funds this week and inflated the overall market capitalisation to Rs2,235 billion.

The G20 London Summit announcement to inject over one trillion dollars in the financial sectors immediately to combat world economic recession and $1.5 billion per annum economic assistance from US to Pakistan for the next five years also kept local investors aggressive on buying font.

The lowering of National Savings Schemes (NSS) rates and foreign inflows from the IMF and World Bank drove the market upwards. Fertilizer and Cement sectors, in particular, outperformed during the week, Zafar further said. 

Fertilizer and cement sectors market capitalization were up 20 per cent and 13 per cent respectively as against 9.2 per cent rise in total market capitalization. Fertilizer sector rose on the back of attractive dividend yields while declining cost pressures boosted cement sector, he added.

Average daily volumes were up 18 per cent to stand at 295 million shares against 250 million shares last week. Moreover, CFS investment rose to Rs1.9 billion with an average rate of 18.8 per cent.

Gul-e-Zehra Jafri at KASB Securities commented that positive development on the political front, eight per cent increase WTI crude oil prices in the past four days, partial resolution of the inter-corporate debt and 70-140bp downward revision in NSS rates kept expectations and sentiments high.

The rally in region and the surge in international oil prices also supported the sentiment. Apart from resolution of Rs80 billion receivables with Hubco (Rs35.5 billion) and KAPCO (Rs32 billion); and eventually PSO (Rs30 billion); PPLs announcement on successful pre-qualification for the bidding of 11 exploration licenses in Iraq bode well for the two heavy-weight sectors.

Given that the market has rallied over nine per cent on weekly basis, we do not rule out a possibility of technical correction in the coming week as investors seek opportunities for profit taking and switching between sectors, she further said.

Investors should continuously monitor the political situation and any developments regarding the Friends of Democratic Pakistan (FoDP) meeting on 17th April. Any favorable announcement on the new gas prices for the Qadirpur field by the ECC could possibly trigger a rally in the E&P sector mainly OGDC having a 75 per cent stake in the field, she added.

PICIC Growth Fund, Wazir Ali Industries, Bestway Cement, KESC and Altern Energy were major gainers while Hinopak Motors, Bannu Woollen, Askari Leasing, Ibrahim Fibres and Siemens Engineering were major losers at the KSE this week.


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## Neo

*Rs 42bn available at banks for export financing: Salim​*
KARACHI: Governor State Bank of Pakistan Syed Salim Raza has said that Rs 42 billion is currently available with commercial banks under the Export Finance Scheme (EFS) to meet the credit requirements of the export-oriented sector.

Addressing the office bearers and members of the Federal B Area Association of Trade and Industry (FBAATI) during a luncheon meeting in Karachi on Saturday, Raza said that both the central bank and the federal government were fully aware of the issues faced by industrial sector and were making every effort to meet the needs of productive sectors for the growth of the economy.

He said that sufficient limits had been earmarked under the Export Finance Scheme & Long Term Financing Facility (LTFF) Scheme to meet the credit needs of exporters. "A cushion of approximately Rs 42 billion is available with the banks under EFS," he said and added that the actual disbursement target under EFS is Rs 203 billion during the current fiscal year.

Raza said that the central bank had extended the period of refinancing under EFS Part-I to 270 days to provide relief to exporters in paying off their liabilities. Similarly, he pointed out that the central bank had also granted a waiver of 90 days to exporters having overdue proceeds till December 30, 2008, enabling them to avail themselves of EFS facility. This period was further extended for additional 90 days from end March 2009 to June 30, 2009, he added.

The governor said that the central bank had also introduced performance-based lower mark-up rates for exporters under Part II of the Export Finance Schemes to give incentive to exporters who are performing well.

Referring to LTFF, Raza said that the SBP had allowed a grace period of one year in repayment of principal amounts on the outstanding financing under this scheme. Similarly, the scope of LTFF scheme had also been expanded by allowing refinance facility against import/purchase of second-hand machinery. In addition, industrial sectors relating to ethanol, furniture and pharmaceutical had also been included in the scheme, he added.

Apart from these incentives, Raza pointed out that the Federal Government had allocated Rs 4 billion for payment of R&D support claims.

SBP would accept claims of textile exporters against shipments made till June 30, 2008, and make payments of 40 percent of the individual claim's amount for the time being. He said that the Federal Government had also extended the period of 3 percent mark-up rate subsidy to the spinning sector from one year to two years from July 1, 2007 to June 30, 2009.


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## Neo

*SBP injects Rs 23.5bn in banking system​*
KARACHI: State Bank of Pakistan accepts bids of Rs 23,550 million during its Reverse Repo Open Market Operation (Injection) in Government of Pakistan Market Treasury Bills and Pakistan Investment Bonds.

The bids offered for 02-Days (injection) figured Rs 39,750 million, says SBP statement issued here on Saturday.


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## Neo

*2nd Quarterly report for the year 2008-2009​*
*Economy shows improvement as fiscal discipline improves​*
KARACHI: Pakistan's macroeconomic indicators have started to show improvement due to disciplined implementation of the macroeconomic stabilisation programme as a result of which aggregate demand has undergone a meaningful contraction, according to the Second Quarterly Report of the State Bank of Pakistan on the State of Economy released on Saturday.

The report pointed out that demand pressures in the economy are easing due to improvement in fiscal discipline, which has complemented a tight monetary policy. "This has improved prospects for low inflation; while inflation is still very high, there is an expectation that it will decelerate sharply in the final quarter of the fiscal year," it added.

The report further pointed out that there is a distinct improvement in the external sector, with a fall in the cumulative July-February period of 2008-09 fiscal year (FY09) trade deficit, which is the first reduction for this period in seven years. The narrowing trade deficit and robust remittances have also engineered a reduction in the current account deficit, allowing for a buildup of the country's foreign exchange reserves, it added.

The report said that it is hoped that a continued compression in the imports, principally attributed to weakness in domestic demand and lower import unit values, will reduce the current account deficit, allowing Pakistan to build-up foreign exchange reserves.

It projected that during the current FY09 fiscal year, the country's economy is likely to expand between 2.5 percent to 3.5 percent and annualized inflation is expected to be around 19.5 percent to 20.5 percent whereas overall fiscal and current account deficits are likely to be between 4.3 percent to 4.7 percent and 5.8 percent to 6.2 percent of the GDP, respectively.

The report said the fiscal consolidation has been a major priority under the macroeconomic stabilisation agenda for FY09, which seems to be having an impact as the fiscal deficit for the first half of FY09 is estimated to have dropped to 1.9 percent of projected annual GDP compared with 3.4 percent in H1-FY08. "The fiscal deficit for H1-FY09 thus appears to be in line with the annual target set in the budget FY09 as well as that agreed with IMF under the Stand-By Arrangement," it added. The fiscal improvement thus far has largely been brought about by elimination of oil subsidies and a cut in development spending.

Similarly, the report pointed out that after a sharp deterioration in July-October period of FY09, overall external account balance improved noticeably in the ensuing months, aided by a sharp fall in the current account deficit and a modest recovery in financial inflows. Consequently, foreign exchange reserves increased and the rupee also recovered part of the losses suffered during Jul-Oct FY09. Thus, the aggregate 68.6 percent growth in overall external account deficit during the first eight months of FY09 was accrued essentially during the first four months of the period.

However, going forward, the Report said that worsening outlook for the global economy, and drought in international capital markets mean that Pakistan's economic revival strategy must perforce focus on fostering domestic and regional demand. Moreover, lowering inflation and limiting the twin deficits, in particular, would be key to enabling a transition in macroeconomic policy from a stabilization framework to one focused on reviving growth, it said.

"In the short to medium-term, it would be imperative for Pakistan to rely on concessional external assistance to finance development expenditure," it said and added that the need for greater external assistance for Pakistan is underscored by the fact that the sources of domestic financing are either not available or remain risky due to its vulnerable external account position. Also, given the drying up of capital flows, official assistance seems to be the only option for countries like Pakistan.


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## Neo

*Germany keen to invest in Pakistan: German minister​*
ISLAMABAD: Germany is keen to invest in various sectors in Pakistan including trade and commerce, German Minister for Commerce and Economic Development Heidemaire Wiegoreak Zeul said on Saturday. Talking to Pakistan Muslim League-Nawaz chief Nawaz Sharif in the Punjab House, Zeul said Germany wanted to see Pakistan as a developed country and was ready to extend every possible cooperation in this regard. Germany has been working with Pakistan closely in various development projects particularly in health, education and skill development and both countries need to develop more economic ties to enhance their relationship in the development sector even in future, the German minister said. Meanwhile, Egyptian Ambassador in Islamabad Majdy Mehmood Helmy Amer also called on the PML-N chief. report


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## Neo

*Export target to be missed by wide margin: SBP​*
** Second quarterly report states sustained fall in domestic inflation to allow for easing of monetary policy
* Notes reduced pressures on economy due to improvement in fiscal discipline​*
KARACHI: Exports during the current fiscal year are expected to yield $18.5 billion to $19.5 billion, much lower than the target of $22.9 billion, the State Bank of Pakistan (SBP) revealed on Saturday in a report on Pakistans economy.

The second quarterly report released by the central bank, The State of Pakistans Economy, noted that the export earnings were down due to lower prices. It said large-scale manufacturing growth had also been reduced due to a decline in demand from both domestic and international factors.

According to the report, recent trends in most macroeconomic variables suggest that the disciplined implementation of the macroeconomic stabilisation programme is bearing fruit. The realisation of the expected, sustained fall in domestic inflation, and increase in foreign exchange reserves, would allow for the easing of monetary policy.

The report states that industry would remain constrained by other bottlenecks such as energy shortages, high-risk premiums on credit, etc.

The average consumer price index (CPI) inflation for FY09 is also likely to be around 20 percent, much higher than the 11 percent targeted in the beginning of the year, the central bank states. It says the GDP growth is likely to be between 2.5 and 3.5 percent against the target of 5.5 percent. The SBP expects that the government would manage to keep fiscal deficit at 4.3-4.7 percent of GDP as per its target. It said the current account deficit would be between 5.8 percent and 6.2 percent of GDP, down from an earlier estimate of 7.2 percent.

The report also predicted imports during the year to be $30 billion to $31 billion, sharply down from an earlier estimate of $37.2 billion.

Fiscal discipline: The report also pointed out that demand pressures in the economy are easing due to improvement in fiscal discipline, which has complemented a tight monetary policy, APP reported. However, going forward, the report said that worsening outlook for the global economy, and drought in international capital markets, mean that Pakistans economic revival strategy must perforce focus on fostering domestic and regional demand.


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## Neo

*Defence spending, interest on debt absorb three-fourths of revenues​* 
KARACHI (April 05 2009): Defence spending and interest costs on country's rising debt are absorbing three-fourth of the revenues, says the State Bank of Pakistan. The second quarterly report on the economy, issued by SBP, on Saturday also said that due to sharply constrained access to international capital markets as well as slower deposit growth in banks, the domestic interest rates will be more sensitive to government funding demands through the volume-based auctions of government paper.

-- SBP lowers GDP growth forecast to 2.5-3.5 percent

-- T-bill purchases to determine banks' interest rates

-- Inflation to decelerate sharply in the final quarter

-- C/A deficit expected between 5.8 percent and 6.2 percent

The sharp fall in private sector credit off-take (a mere 4.6 percent as against 11.7 percent July-February a year ago) SBP feels, was mainly due to slowing of economic activity, sharp fall in cost of raw materials, busting of asset-price bubbles in key markets, rising financing cost - due to high liquidity and credit risk premium as well as monetary tightening, etc.

SBP measures to increase the banking sector liquidity and loosening of capital requirements to support banks' ability to lend instead of seeing a rise in private sector credit allowed the government to increase its borrowings from scheduled banks, says the report.

INTEREST RATES: SBP forewarned that the expected sustained fall in inflation and increase in forex reserves would allow easing of monetary policy. However, this is not necessarily expected to herald a recovery in manufacturing activity as the real sector is constrained by other bottlenecks such as energy shortages and high risk premium.

Since monetary easing impacts the real sector by time lag, the real GDP growth will remain weak in FY09 despite a reasonably good showing by both agriculture and service sector. SBP warned the country will remain dependent for its financing needs on concessional external assistance as sources of domestic financing are either not available or remain risky due to vulnerable external account position.

With the drying up of capital flows, official assistance seems to be the only option for countries like Pakistan to stimulate its economy to put it back on sustainable path of growth and development. SBP report recalls that high growth rate, low inflation, low fiscal deficit and either surplus or negligible current account deficit during FY03-FY07 period were wiped out due to commodity price shocks.

Financial services outreach is still limited, says SBP. For raising the rate of savings and obtain sustained growth, SBP advocates the need for focusing and increasing the financial outreach to rural and far-flung areas, development of a long-term debt market, investment plans for pension funds, revitalisation of mutual fund industry and a corporate bond market for efficient allocation of resources. Another benefit of financial depth would be in the form of more effective monetary policy transmission, the report says.

================================================================
Projections of Major Economic Indicators
================================================================
FY09
================================================================
FY08 Annual plan
Projections
targets
================================================================
growth rates in percent
----------------------------------------------------------------
GDP 5.8 5.5 2.5-3.5
Average CPI Inflation 12.0 11.0 19.5-20.5
Monetary assets (M2) 15.3 14.0 7.0-9.0
----------------------------------------------------------------
billion US dollars
----------------------------------------------------------------
Workers' remittances 6.5 7.7 7.3
Exports (fob-BoP data) 20.1 22.9 18.5-19.5
Imports (fob- BoP data) 35.4 37.2 30.0-31.0
----------------------------------------------------------------
percent of GDP
----------------------------------------------------------------
Fiscal deficit 7.4 4.7 4.3-4.7
Current account deficit 8.4 7.2 5.8-6.2
================================================================
Note: Targets of fiscal and current account deficit to GDP ratios are based on Nominal GDP in the Budget document for FY09, while their projections are based on projected (higher) nominal GDP for the year.


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## Neo

*Result of disciplined implementation: macroeconomic indicators start showing improvement​* 
KARACHI (April 05 2009): Pakistan's macroeconomic indicators have started to show improvement due to disciplined implementation of the macroeconomic stabilisation program. However, the country will miss the chief economic targets like GDP, inflation, remittances, exports and large-scale manufacturing (LSM) in fiscal year 2008-09, according to the Second Quarterly Report of the State Bank of Pakistan on the State of Economy released on Saturday.

The report pointed out that in the short- to medium-term, it would be imperative for Pakistan to rely on concessional external assistance to finance development expenditure. It underscored the need for greater external assistance for Pakistan as sources of domestic financing are either not available or remain risky due to its vulnerable external accounts position.

It said that while the direct impact of the international financial crisis on Pakistan has been relatively limited so far, there are significant indirect implications. These include a sharp pullback in some domestic asset markets (real estate and equities), constrained investment flows, and a fall in business confidence.

As the global economic environment continues to deteriorate, access to international capital markets looks to become even more difficult, and risks to both exports and remittances have increased. The changing economic environment thus has serious medium-term implications, particularly for growth prospects, given the country's diminished ability to finance even moderate fiscal and external account deficits.

The Report has projected that during the current FY09 fiscal year, the GDP growth would be between 2.5 percent and 3.5 percent, against the annual target of 5.5 percent.

The report said that despite some decline the annualised inflation was expected to be around 19.5 percent to 20.5 percent over the target of 11 percent, whereas overall fiscal and current account deficits were likely to be between 4.3 percent and 4.7 percent and 5.8 percent and 6.2 percent of the GDP, respectively, against the target of 4.7 percent and 7.2 percent.

In addition, the SBP has projected less than target workers' remittances, which would be 7.3 billion dollars in FY 2009 over the target of 7.7 billion dollars. Exports would be 18.5-19.5 billion dollars over the target of 22.9 billion dollars.

However, there are some positive indications, as the fiscal deficit and current account deficit would be as per target. Fiscal deficit would be 4.3-4.7 percent of GDP, and current account deficit would be 5.8-6.2 percent of GDP in FY 2009, it added.

The Report said that all indications are that agricultural growth would be reasonably good during FY09, despite the drag from 18.5 percent decline in sugarcane output during kharif FY09. "This assessment is based on an anticipated record wheat harvest (that would significantly improve the contribution by major crops), above target performance of minor crops and a reasonably good out turn by the livestock sub-sector," it said.

Demand pressures in the economy are easing due to improvement in fiscal discipline, which has complemented a tight monetary policy. "This has improved prospects for low inflation; while inflation is still very high, there is an expectation that it will decelerate sharply in the final quarter of the fiscal year," it said. The Report pointed out that there is a distinct improvement in the external sector, with a fall in the cumulative July-February period of 2008-09 fiscal year (FY09) trade deficit. The narrowing trade deficit and robust remittances have also engineered a reduction in the current account deficit, allowing for a build-up of the country's foreign exchange reserves, it added.

Notwithstanding this improvement, the short-term growth outlook is still difficult, with LSM growth in particular being hit by sharp reduction in demand from both domestic and international factors, Domestic industrial production particularly has been badly affected by energy shortages, deterioration in the law and order situation, and constricted access to finance (as banks became increasingly risk-averse).

The government has already made significant reductions in the fiscal deficit, bringing it down to 1.9 percent of (estimated annual) GDP for H1-FY09 from 3.4 percent of GDP in H1-FY08. Equally important is the capping of the monetisation of the fiscal deficit at end-October 2008 level.

The Report said that it is hoped that a continued compression in the imports, principally attributed to weakness in domestic demand and lower import unit values, will reduce the current account deficit, allowing Pakistan to build up foreign exchange reserves.

The Report said the fiscal consolidation has been a major priority under the macroeconomic stabilisation agenda for FY09 which seems to be having an impact as the fiscal deficit for the first half of FY09 is estimated to have dropped to 1.9 percent of projected annual GDP compared to 3.4 percent in H1-FY08.

"The fiscal deficit for H1-FY09 thus appears to be in line with the annual target set in the budget FY09 as well as that agreed with IMF under the Stand-By Arrangement," it added. The fiscal improvement thus far has largely been brought about by elimination of oil subsidies and a cut in development spending.

Similarly, after a sharp deterioration in July-October period of FY09, overall external account balance improved noticeably in the ensuing months, aided by a sharp fall in the current account deficit and a modest recovery in financial inflows. Consequently, foreign exchange reserves increased and the rupee also recovered part of the losses suffered during July-October FY09. Thus, the aggregate 68.6 percent growth in overall external account deficit during the first eight months of FY09 was accrued essentially during the first four months of the period.

It said that all price indices ie CPI, WPI and SPI, witnessed a clear downtrend in recent months. After showing a continuous acceleration since March 2008, CPI inflation (YoY) started easing from November 2008. It fell to 21.1 percent in February 2009 as against a peak of 25.3 percent in August 2008. However, this inflation is higher compared to 20.5 percent in the preceding month, and 11.3 percent in the same month of last year.


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## Neo

*CPI inflation to remain above 20 percent​* 
KARACHI (April 05 2009): The State Bank of Pakistan has predicted that headline CPI inflation would be above 20 percent in FY 2009. "Although headline CPI inflation showed some signs of respite after reaching its three decades high level of 25.3 percent in August 2008, it has remained on the higher side," said the SBP second quarterly report on economy.

Headline inflation would be above 20 percent throughout FY09 against the set target of 11 percent, it added. The report pointed out that the disinflationary process in Pakistan is already slow, and an accelerated depreciation could potentially sustain this trend.

All price indices ie CPI, WPI and SPI witnessed a clear downtrend in recent months. After showing a continuous acceleration since March 2008, CPI inflation (YoY) started easing from November 2008, and it fell to 21.1 percent in February 2009 as against a peak of 25.3 percent in August 2008, it added. However, this inflation is higher compared to 20.5 percent in the preceding month and 11.3 percent in the same month last year.

The relative slowdown in domestic inflation since September 2008 was mainly driven by the deceleration in domestic food inflation as exhibited by the food groups of both CPI and WPI. While WPI non-food inflation dropped in tandem with international commodity prices, CPI non-food inflation showed stubbornness up to February 2009, it added.

Given that WPI non-food inflation has shown persistent downtrend, it is expected that it may also help bring down retail prices in the coming months. It is important to note that a continued tight monetary stance of the central bank helped contain CPI non-food inflation, which is also evident from a substantial gap between WPI and CPI non-food inflation during most of 2008, the report said.

The impact of continued tight monetary posture also yielded dividend in terms of a relative ease in core inflation numbers during recent months. Core inflation measured by 20 percent trimmed mean registered below 21 percent in January and February 2009 for the first time since July 2008, it added.

It indicates a relative ease in inflationary expectations in the economy. Similarly, core inflation measured by non-food non-energy (NFNE) is hovering around 18.8 percent since October 2008, showing resilience in inflationary pressures. The report pointed out that firmness in the NFNE measure of core inflation was supported by a continued rising house rent index (HRI) during the recent months.

Some key impediments to a deceleration in inflationary pressures were (1) second-round effects of increase in cost of living amidst persistent high inflation for over a year, (2) absence of weakness in the prices of some key staples during harvesting period in the current fiscal year due to government's policy decisions, (3) low passthrough of decline in international prices, as well as, (4) an offsetting impact of renewed increase in prices of a some key food staples (milk, meat, etc).


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## Neo

*Reasonable growth in agriculture sector hoped​* 
KARACHI (April 05 2009): Agricultural sector growth will be reasonably good during FY09 due an anticipated record wheat harvest above target performance of minor crops and a reasonably good out turn by the livestock sub-sector. According to the SBP second quarterly report, despite the drag from 18.5 percent decline in sugarcane output during kharif FY09, agricultural sector expects a healthy growth due to the bumper wheat crop.

The improvement in the crop sub-sector appears to be helped by the significant gains to farmers in the previous cropping season amid high commodity prices, and supportive government policies, the report said. The price signals were so clear in FY09 that farmers worked hard and invested to offset the impact of water shortages and non-availability of urea at controlled prices, it added.

These efforts were also supported by favourable weather conditions. This was particularly true for the Rabi crops, which were helped by timely winter rains. Consequently, despite lower estimated water availability and urea shortages, the improvement in the performance of crops sub-sector during FY09 was remarkable. A decline in urea off-take also led to deceleration in agri-credit disbursement during July-January FY09.

The report pointed out that despite many adversities in FY09, the country recorded its highest ever rice production, and wheat harvest is also expected to reach a record high. Both these bumper harvests resulted from increases in the area under cultivation and higher yields, amid expectations of higher prices. This effect was most visible in the wheat crop, where the government announced a 52 percent increase in the support price, well ahead of the sowing season.

The rice harvest surpassed 6 million tons mark for the first time during FY09. This output was significantly higher than estimated domestic rice consumption of about 2.5 million tons, the report said. A 6.7 percent fall in cultivated area had, initially, had raised expectations of a substantial decline in cotton output during FY09 cropping season, but the output, instead, rose by 3.5 percent.

"The wheat production target was revised upwards to 25.0 million tons for FY09 on the expectation that farmers would respond to a 52 percent increase in support price," the report said, adding that immediate impact of this was seen as, despite irrigation water shortages, wheat plantation target for the year was surpassed by 5.1 percent.

This change was also helped by (1) a switch from sugarcane crop to wheat, as price disputes between growers and sugar mills intensified last year, (2) early picking of cotton this year, and (3) the westerly rain-bearing systems encouraged farmers to sow more wheat in the major wheat producing districts of the country.

The report said that a sharp decline in the sugarcane harvest during FY09 was not surprising, given the disappointment of farmers in materialising benefits from a record 63.9 million tons output in FY08. Not only purchase of sugarcane was delayed by mills, it was alleged that payments to farmers were also not made in time. As a result, area under sugarcane dropped by 15.9 percent and production fell by 18.5 percent (to 52.1 million tons) in FY09.


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## Neo

*2009-10 Kharif season: government may fix rice target at six million tons, cotton at 13 million bales​* 
ISLAMABAD (April 05 2009): The government may fix six million tons rice production target and 13 million cotton bales for Kharif season 2009-10. The sources revealed to Business Recorder on Saturday that Federal Committee on Agriculture (FCA), scheduled to meet on April 9, would fix the target of crops, including cotton, sugarcane and maize, and review Rabi crops production.

The committee would review the situation of rice crop that had been recorded at 6.5 million tons as against the set target of 5.6 million tons in 2008-09 Kharif season. The committee is expected to set the target at six million tons rice production for the next Kharif season, sources added.

The agriculture sector has faced the acute water shortage during the 2008-09 Kharif season and the water intensive crops, sugarcane and maize, fell short of the target, depicting negative growth of 18.5 percent and 7.5 percent respectively. However, the other two major crops, including cotton and rice, have registered positive growth of 7.3 percent and 13.5 percent respectively.

The committee will also review the situation of cotton crop and is expected to set the new target of cotton crop that may be 13 million bales for the next season as against last year's target of 14.1 million bales. The country has missed the target of cotton that may be a little bit over 12.1 million bales. The sources in the ginning industry revealed that around 12 million cotton bales had reached so far and 25,000 to 30,000 more cotton bales were expected in the market.

During 2007-08, a total of 11.6 million cotton bales were produced against the target of 13.5 million cotton bales. Pakistan may miss the wheat production target by two million tons to 23 million tons against the set target of 25 million tons due to less use of fertiliser followed by higher price. A committee may also scale down the wheat crop target from 25 to 23 million tons.

According to initial provincial estimates, the sources are of the view that wheat production will be around 23 million tons. The country may achieve 23-24 million tons of wheat production, one source said. However, background interviews with different officials revealed that Pakistan would hardly achieve the 23 million tons of wheat production against the set target of 25 million tons during the current season.

Last year, the government set the wheat production target at 24 million tons and could achieve only 21 million tons. During the 2008-09 Rabbi season, the area under wheat has surpassed the target of 8.6 million hectors to nine million hectors. However, the sources said that in spite of wheat cultivation on more area, the country will achieve 23 million tons of wheat production due to less use of DAP as its price was Rs 3,050 per bag.

Its price in the international market was around Rs 5,000 per bag and the government provided subsidy of over Rs 2,000 per bag to facilitate the farmers. The provincial governments and Passco will procure 6.5 million tons of wheat, which is higher than 3.9 million tons of wheat procured from the farmers last year.


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## Neo

*Pakistan and Iran closer to sign electricity deal​* 
ISLAMABAD (April 05 2009): Pakistan and Iran are reportedly closer to an agreement over the much delayed electricity deal, envisaging export of 1000 MW electricity to Islamabad via Balochistan, official sources told Business Recorder on Saturday.

Both the countries explored avenues of electricity trade at ministerial level moot held on December 29, 2008 in Islamabad, but the signing of an expected pact had been postponed because the representative of Iran Export Development Bank failed to arrive due to unknown reasons.

According to the proposed agreement, deliberated between the Minister for Water and Power Raja Pervez Ashraf and Iranian Energy Minister Engineer Parviz Fattah, Iran will extend credit facility of 55 million dollars to lay 70-kilometre transmission line.

"One of the major hurdles was selection of arbitration place and rules and now we have agreed to follow Iranian arbitration rules rather than French rules," sources close to Economic Affairs Division (EAD) Secretary. Pakistan is currently importing 40 MW from Iran for coastal areas of Balochistan.

100 MW for Gwadar port, for which an agreement has already been signed, is enhancing the import of power. However, progress on the project has been too slow and both the parties were accusing each other of not proceeding at the required pace. "We have conveyed our consent to Iran and hope that the agreement will be inked shortly between Iran and National Transmission and Dispatch Company (NTDC)," the sources said.

Iranian delegation was briefed by the Ministry of Water and Power authorities on the current power situation, short, medium and long-term measures being taken by Pakistan to bridge the gap between demand and supply, future plans to inject more electricity in the national grid to end the energy crisis and the potential projects being offered to the investors in the coal, hydro and renewable energy sectors.

The salient features of the power policy and liberal incentives for private investors were also highlighted in the briefing. "Iran will be extending credit of 55 million dollars to NTDC/Pepco for construction of transmission line in Pakistan (70 kilometres). The remaining 50-kilometre on the Iranian side will be constructed by Iran, which will be made part of the tariff," the sources continued.


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## Neo

*FPCCI to prepare 25-year economic programme: Chawala​* 
LAHORE (April 05 2009): President Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Sultan Ahmad Chawala has said that the FPCCI would prepare a 25-year Economic Draft and would get it approved from the parliament to ensure consistency in the country's economic policies.

While addressing the managing committee meeting at the FPCCI zonal office here on Saturday, Chawala said that consensus would also be developed among the stakeholders, businessmen and the politicians. The 25-year economic outlines would be provided legal cover through parliament so that no government could deviate or change the economic policy, he said. Zonal Chairman and FPCCI Vice President Mian Muhammad Idress and a large number of businessmen were also present on the occasion.

He discussed in detailed the prevailing situation and problems confronted to the businessmen due to world-wide economic recession. He said the country's economy was passing through a crisis and the business environment was no more conducive on account of different kinds of problems including power and gas shortage. He stressed the need for announcing a relief package for the industry and suggested suspension of EOBI funds for two years so as the industry could get rid of its financial problem.

Talking about the refund claims, he said its procedure takes unnecessarily long time while the refunds perform as working capital for any businessmen. He urged the government to devise a procedure for swift payment of refunds so as enable the industrialists to deal with the liquidity crunch issue.

The FPCCI chief also urged the government to check irrational use of electricity on the occasion of marriage and other functions and the people should also realise their responsibility in this regard. He also criticised the bureaucracy and said that despite frequent assurance by the government, most of the departments did not extend their co-operation to business community.

If Pakistan imports electricity from Iran, the power shortage issue could be mitigated to some extend but the government is not as much sovereign as it could deal with Iran independently, he argued. He also said that videoconferences would be arranged to strengthen co-ordination among the FPCCI zonal offices, which would also be beneficial for the business community.


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## Neo

*'Development on mass transit system within six months'​*
ISLAMABAD (April 05 2009): Chief Commissioner Islamabad, Fazeel Asghar on Saturday said that Cabinet Division and Capital Development Authority (CDA) are working to introduce a mass transit system and significant progress is expected in this regard within six months.

He stated this while inaugurating new route (No 140) being started for providing best transport facilities to the citizens of Islamabad. A private company with the name of Islamabad urban transport system has started plying luxury buses also on this route which will start from Bari Imam to G-15 Golra mor.

Addressing the opening ceremony of new route at national university of science and technology Nust, Chief Commissioner said that Islamabad Capital Territory (ICT) administration is reviewing all the routes in Islamabad in order to provide maximum transport facilities to the citizens.

He also appreciated the efforts of ICTA for launching new modern and comfortable bus service on the new route. He said that citizens of twin cities will greatly benefit from the transport system which is being re-vamped and will address the transport problems in the city in most effective manner.

Earlier, Director General Administration of Nust University Brigadier Arif Siddiqui (Retd) in his address appreciated the efforts of ICT administration for solving the transport problems of the citizens and acknowledged the launching of new bus service on this new route.


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## Neo

*Pak-German talks on funding eight hydropower projects​* 
ISLAMABAD (April 04 2009): Pakistan and Germany on Friday discussed the possibilities of funding eight ongoing and new hydropower projects worth billions of dollars, official sources told Business Recorder on Friday. These projects came under consideration at a meeting between visiting German Minister for Economic Co-operation and Development Heidemaire Wiegoreak Zeul and Prime Ministers Advisor on Finance Shaukat Tarin.

The German Minister is visiting Pakistan to assess Pakistans financial needs to be discussed at the Friend of Democratic Pakistan (FoDP) conference in Tokyo on April 17. Pakistan and Germany also inked 80 million-Euro financial assistance agreement.

Replying to a question, Tarin said that an establishment of a trust fund for development of social and infrastructure in Balochistan and NWFP would also be discussed in the second session of the donors conference in Tokyo. The agreement was signed by EAD Secretary Farrukh Qayyum and President of KfW German Uweohis on behalf of their respective countries in the presence of media.

THE FOLLOWING ARE THE WATER SECTOR PROJECTS, WHICH WERE DISCUSSED: Spat Gah hydropower project, Palas hydropower project, Kurram Tangi Dam, Basho hydropower project, Harpo hydropower project, Lawi hydropower project, Naigaj hydropower project and Hingol hydropower project.

Speaking at the occasion, the German Minister said that her country would extend all possible help to Pakistan to achieve its Millennium Development Goals (MDGs) and combat confronting energy crisis. Shaukat Tarin appreciated Germanys role in supporting Pakistans stance in the boards of international financial institutions, including the World Bank and International Monetary Fund (IMF).

"Germany over a period of time has given Pakistan financial and technical assistance in the fields of education, healthcare, skill development and development projects," he added. He was of the view that now Germany was very closely working with Pakistan in developing projects in the provinces, including the NWFP, and providing technical as well as financial assistance to the country for providing education, healthcare, infrastructure development and capacity building.

Tarin, who will be visiting Japan, for the FoPD, told the journalists that Germany had assured that it would assist Pakistan in the four areas - health, education, poverty alleviation and infrastructure development. The German Economic Minister stated that her country had committed finances for a hydropower dam, Keyal Khwar hydropower project located in NWFP on river Indus at Dasu. The project would generate 130 MW power.

The sources said that KfW had offered to finance the project implementation under loan. The KfW indicated availability of 97 million Euros for the project against project cost of 179.9 million Euros. The loan agreement, amounting to 77.080 million Euros, was signed between the KfW and government of Pakistan on November 11, 2008.

A further amount of 20 million Euros was also offered by the KfW, which was signed on Friday. The German Minister was of the view that out of 97 million Euros, the last tranche of 20 million Euros was signed here on Friday for the project.

She said that Germany was part of Friends of Democratic Pakistan (FoDP) and she had come here for the assessment of the situation and development needs to be discussed at Tokyo in April 17 and then again at the end of April during the annual meeting of the World Bank and IMF. She added that this support was important for Pakistans development to stabilise the country and the region.

The Germans Economic Minister said that the Fata needed development and her country would cooperate with Pakistan. Answering another question, she reiterated her countrys support for the people of Pakistan, and added that there should be no doubt about Germanys commitment.

"We do not write things on paper, when we make a commitment we fulfil it," she added. In reply to another question, the German Minister said that she would also meet civil society for consultations because Germany gave importance to civil society. She was of the view that people of Fata needed development to deal with militancy because development would give them hope for a better future.


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## Neo

*British firms considering investing in Pakistan energy sector​* 
ISLAMABAD (April 04 2009): The private sector companies of Britain are considering to invest in high potential power generation sector in Pakistan to help overcome countrys energy crisis, British High Commissioner in Islamabad, Robert Brinkley said on Friday. British investors are also keen to have joint ventures with their Pakistani counterparts, Brinkley said while talking to a delegation of business leaders of Rawalpindi.

The delegation led by the President, Rawalpindi Chamber of Commerce and Industry (RCCI), Syed Asad Mashadi held a meeting with Brinkley in his office. The RCCI delegation included its executives, Imtiaz Chaudhary, Abdul Rauf Chaudhary and Shakeel Ahmed Khan. Brinkley said that in next few days, representatives of British entrepreneurs would visit Pakistan to discuss with their Pakistani counterparts the modalities of joint ventures in different sectors, particularly in power generation.

He said that Pakistan and the United Kingdom has a long history of mutual relationship and this could be further cemented by bringing the private sectors closer. Speaking on the occasion, the RCCI President expressed concern over increasing drone attacks on Pakistans territory by the USA. He said that these drone attacks should be stopped at once because on the one hand they are badly hurting countrys economy and on the other, creating anger among the general public for Americans at large. These attacks have proved counter-productive, he added.

He said that the UK has good terms both with Pakistan and the USA and it can play a role to make the US realise that these attacks would not serve the purpose, rather more controversy would be created in the area due to drones. Rawalpindi Chamber would organise a single country exhibition in UK in league with the Ministry of Commerce and Pakistani High Commission in London, Mashhadi said, adding that five top companies from every Chamber would participate in this single country exhibition. Further, he said that the exhibition would not only introduce Pakistani products to UK, but also help develop soft image of Pakistan.


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## Neo

*Recent trends in key macroeconomic variables quite encouraging​*
ARTICLE (April 05 2009): Recent trends in most macroeconomic variables suggest that the disciplined implementation of the macroeconomic stabilisation program is bearing fruit. With an improvement in fiscal discipline complementing the tightening of monetary policy, aggregate demand has seen a meaningful contraction.

This has improved prospects for low inflation; while inflation is still very high, there is an expectation that it will decelerate sharply in the final quarter of the fiscal year. Also, there is a distinct improvement in the external sector, with a fall in the cumulative July-February FY09 trade deficit - the first reduction for this period in seven years. The narrowing trade deficit and robust remittances have also engineered a reduction in the current account deficit, allowing for a build-up of the country's foreign exchange reserves.

-- Alongside is the text of the Overview of the State Bank of Pakistan's Second Quarterly Report for FY09

Notwithstanding this improvement, the short-term growth outlook is still difficult, with LSM growth in particular being hit by a sharp reduction in demand from both domestic and international factors. Domestic industrial production particularly, has been badly affected by energy shortages, deterioration in law and order situation, and constricted access to finance (as banks became increasingly risk averse).

At the same time, while the direct impact of the international financial crisis on Pakistan has been relatively limited so far, there were significant indirect implications. These include a sharp pull back in some domestic asset markets (real estate and equities), constrained investment flows, and a fall in business confidence. As the global economic environment continues to deteriorate, access to international capital markets looks to become even more difficult, and risks to both, exports and remittances, have increased.

The changing economic environment thus has serious medium term implications, particularly for growth prospects, given the country's diminished ability to finance even moderate fiscal and external account deficits. The government has already made significant reductions in the fiscal deficit, bringing it down to 1.9 percent of (estimated annual) GDP for H1-FY09 from 3.4 percent of GDP in H1-FY08.

Equally important is the capping of the monetization of the fiscal deficit at end-October 2008 level. This reduced an important source of inflationary pressures, rendering fiscal policy more consistent with the monetary stance. While certainly necessary in the short run, the reductions in the fiscal deficit seen so far are neither sustainable nor sufficient:

-- the sharp cut in development spending was probably justified and necessary in FY09. However, given the underdeveloped capital markets, the lack of a framework for public-private partnerships for infrastructure, and the country's growing investment needs, it is simply not desirable for the government to keep development spending at low levels;

-- there are significant rigidities in government expenditures. In particular, defence spending and interest costs on the country's rising debt absorb approximately three-fourths of revenues;

-- there is now a greater risk that even a lower fiscal deficit will crowd out private investment. This is because of the country's sharply constrained access to international capital markets as well as the slower deposit growth in banks. Moreover, the recent shift to volume-based auctions of government papers means that domestic interest rates will be more sensitive to the government's funding demands.

Thus far, the increased bank financing of the deficit has probably not impinged on the private sector's ability to borrow from the banking sector. While the net growth in private sector credit has certainly slowed sharply, to a mere 4.6 percent in July-February FY09, from a robust 11.7 percent in the corresponding period last year, the deceleration owes to factors other than "crowding out" by government.

These include a slowing economic activity, a sharp fall in cost of raw materials, bursting of asset-price bubbles in key markets, rising financing costs (stemming from high liquidity and credit risk premium as well as monetary tightening), etc. The slower growth in private sector credit, together with SBP measures to increase banking sector liquidity and support bank's ability to lend by loosening capital requirements, allowed the government to increase borrowings from scheduled banks.

The risks to the external account are just as great a concern. If the feared slowdown in export growth and remittances proves serious then the government's ability to implement counter-cyclical policies to support the domestic economy will be even more constrained.

(1) The country's ability to fund even short-term external deficits has already been hit by the severe depletion of FX reserves over the last 12 months; also, (2) despite meeting the targets under the Stand-By Arrangement, Pakistan is unlikely to received benefits at the same levels as in yester years.

Typically, successful implementation of IMF program leads to increase investor confidence, thus encouraging international capital flows to the country. Unfortunately, the size and scope of the present international financial crisis suggests that such flows to Pakistan are unlikely to reach even (the relatively low) levels achieved by the country in recent years.

To put this in perspective, the Institute of International Finance estimates that private capital flows to emerging markets are likely to fall to just US $165 billion in 2009, less than a fifth of the peak of US $929 billion recorded in 2007. This suggests that even a moderate external deficit could lead to a direct impact on the exchange rate. This would have negative consequences for inflation and growth.

It may be noted that the disinflationary process in Pakistan is already slow, and an accelerated depreciation could potentially sustain this trend. Though headline CPI inflation showed some signs of respite after reaching to its three decade high level of 25.3 percent in August 2008, it has remained above 20 percent throughout FY09. More importantly, core inflation has yet to see a meaningful decline.

*SOME KEY IMPEDIMENTS TO A DECELERATION IN INFLATIONARY PRESSURES ARE:* (1) second-round effects of increase in cost of living amidst persistent high inflation for over a year, (2) absence of weakness in the prices of some key staples during harvesting period in the current fiscal year due to government's policy decisions, (3) low pass-through of decline in international prices, as well as, (4) an offsetting impact of renewed increase in prices of a some key food staples (milk, meat, etc).

However, two important developments offer hope of significant relief late into FY09. The more supportive fiscal policy since November 2008, and lagged pass-through of the substantial decline in international commodity prices, is expected to contribute to a significant reduction in domestic inflation. This is already visible in a substantial decline in YoY WPI inflation from a peak of 35.7 percent in August 2008 to 15.0 percent in February 2009.

*LOOKING FORWARD *The worsening outlook for the global economy, and drought in international capital markets mean that Pakistan's economic revival strategy must perforce focus on fostering domestic and regional demand. Moreover, lowering inflation and limiting the twin deficits, in particular, would be key to enabling a transition in macroeconomic policy from a stabilisation framework to one focused on reviving growth.

The recent trends in key macroeconomic variables are therefore quite encouraging. On an year-on-year basis CPI inflation, in particular, is expected to fall sharply in the final quarter of FY09, even though the annual average is expect to be quite high.

Similarly, it is hoped that a continued compression in the imports, principally attributed to weakness in domestic demand, lower import unit values, as well as, depreciation of the rupee, will reduce the current account deficit, allowing Pakistan to build-up foreign exchange reserves. However, it is important to note that export earnings are also going down due to lower prices.

The realisation of the expected sustained fall in domestic inflation, and increase in foreign exchange reserves would allow for easing of monetary policy. However, this is not necessarily expected to herald a recovery in manufacturing activity.

Not only does monetary easing impact the real sector with a lag, industry will remain constrained by other bottlenecks such as energy shortages, high risk premiums on credit, etc. This means that real GDP growth will remain relatively weak in FY09, despite a reasonably good showing by both agriculture and the services sectors.

Any acceleration in growth in the following years too may require a supportive increase in development spending, as well as a targeted increase in spending on social safety nets. Unfortunately, this would not be possible without significant shifts in taxation and expenditure.

The most important area for the government is to implement reforms in the country's taxation system. As emphasised in the IMF SBA [Stand-By Arrangement], an increase in tax-to-GDP ratio is necessary for fiscal sustainability. A focus on expanding the tax base rather than raising the tax rate is required.

Most of the services (particularly trade, transport, professional services etc) and agriculture sectors need to be taxed commensurately with their share in GDP. As such reforms bear fruit with time, it is important that they be initiated forthwith.

On the financing side, it will be important to accelerate the development of domestic capital markets. Not only will this reduce the government's need to borrow from the banking system, a vibrant debt market could help ease credit access concerns, increase efficiency of the banks (as they would have to compete for funds), and help foster savings.

In the short to medium-term, it would be imperative for Pakistan to rely on concessional external assistance to finance development expenditure. The need for greater external assistance for Pakistan is underscored by the fact that the sources of domestic financing are either not available or remain risky due to its vulnerable external account position.

Also, given the drying up of capital flows, official assistance seems to be the only option for countries like Pakistan to stimulate its economy to put it back on sustainable path of growth and development. It should be remembered that the country achieved high growth, low inflation, low fiscal deficit and either surplus or a negligible current account deficit during FY03-FY07 period. All of these gains were wiped out mainly due to commodity price shock.

This rapid deterioration in domestic economy raises concerns and reminds that stagnated structural transformation needs policy intervention to sustain growth and increase the economy's ability to absorb shocks.

Early restoration of structural reforms and second generation reforms is required here. It is clear that outreach of financial services is still limited, despite some gains of earlier reforms in the sector. There is a dire need to develop financial sector and to increase intermediation, which is essential to raise rate of savings and sustained growth in the economy.

It does not only means require focusing on increasing financial outreach in rural and far flung areas, but also that the development of long-term debt market, investment plans for pension funds, revitalisation of mutual fund industry, and corporate bond markets are also necessary for efficient allocation of resources. Another benefit of financial depth would be in the form of more effective monetary policy transmission.

*EXECUTIVE SUMMARY *

a) *AGRICULTURE SECTOR:* All indications are that agricultural growth will be reasonably good during FY09, despite the drag from 18.5 percent decline in sugarcane output during kharif FY09. This assessment is based on an anticipated record wheat harvest (that would significantly improve the contribution by major crops), above target performance of minor crops and a reasonably good out turn by the livestock sub-sector.

The improvement in the crops sub-sector appears to be helped by the significant gains to farmers in the previous cropping season amidst high commodity prices, as well as supportive government policies. The price signals were so clear in FY09 that farmers worked hard and invested to offset the impact of water shortages and non-availability of urea at controlled prices.

These efforts were also supported by favourable weather conditions. This was particularly true for the rabi crops, which were helped by timely winter rains. Consequently, despite lower estimated water availability and urea shortages, the improvement in the performance of crops sub-sector during FY09 is remarkable. A decline in urea off-take also led to deceleration in agri-credit disbursement during July-January FY09.

b) *LARGE-SCALE MANUFACTURING:* Production in large-scale manufacturing (LSM) witnessed a broad-based decline of 4.7 percent during July-December FY09 as against a 5.2 percent rise during the same period last year.

In addition to greater energy shortages, a rise in input costs and lower domestic and external demand, the following factors were also responsible for production decline; (a) upward adjustment in the prices of electricity, gas and diesel (b) prices of most of the industrial inputs remained relatively higher although international commodity prices started to ease somewhat from July 2008, (c) depreciation of rupee with a greater volatility also increased cost of inputs for a number of industries, as well as (d) global recession has also taken its toll on export driven industries (including textiles).

Export-led industries also faced marketing problems due to security situation and country image, with attendant concerns over Pakistani producers' ability to meet delivery deadlines.

c) *SERVICES:* Initial data suggests that growth in services sector is likely to decelerate during FY09, though it would remain higher than the growth in the commodity producing sector. Upbeat growth prospects are supported by a sharp increase in foreign direct investment in services sector during H1-FY09 (a rise of 24 percent), despite global liquidity constraints.

Similarly, improved growth prospects for the transportation & storage sub-sector, reflect the relatively better production in major crops. For the remainder, a strong contribution by finance & insurance sector and augmented administrative & defence related fiscal spending will provide support to the growth outlook of the services sector during FY09.

However, this may be offset somewhat by a decline in LSM production, lower quantum of imports, and shrinking profits in telecommunication may drag growth in services sector during the year under review.

d) *PRICES:* All price indices ie CPI, WPI and SPI, witnessed a clear downtrend in recent months. After showing a continuous acceleration since March 2008, CPI inflation (YoY) started easing from November 2008; it fell to 21.1 percent in February 2009 as against a peak of 25.3 percent in August 2008.

However, this inflation is higher compared to 20.5 percent in the preceding month and 11.3 percent in the same month last year. The relative slowdown in domestic inflation since September 2008 was mainly driven by the deceleration in domestic food inflation as exhibited by the food groups of both CPI and WPI. While WPI non-food inflation dropped in tandem with international commodity prices, CPI non-food inflation showed stubbornness up to February 2009.

e) *MONEY AND BANKING:* SBP continued to maintain a tight monetary policy stance during FY09 under the macroeconomic stabilisation program. In fact, the discount rate was sharply raised by 200 bps on November 13, 2008, taking the FY09 cumulative increase to 300 bps. The monetary measure was supported by constraints on deficit monetization, which in turn increased the consistency of the fiscal policy and the monetary tightening.

Furthermore, monetary policy received substantial support from the sharp adjustments in the exchange rate during March-October 2008 period. These measures seem to be bearing fruit as the persistent demand pressures in the economy have finally started to ease somewhat in recent months.

This was obvious from (1) deceleration in domestic inflation as the YoY CPI inflation dropped to 20.5 percent in January 2009 from its peak of 25.3 percent in recorded August 2008; (2) a visible slowdown in import growth during November February FY09 which helped to lower the current account deficit.

This together with modest recovery in financial flows significantly reduced the pressure on country's forex reserves; (3) a deceleration in private sector credit to 5.5 percent during July-January FY09 from 9.9 percent in the corresponding period the of previous year.

While some of the banks were reluctant to lend to private sector due to concerns on credit quality, credit demand from the private sector is also slowing down; and (4) weakening of demand stimulus from fiscal policy as fiscal deficit reduced and pace of government borrowing from the central bank declined sharply since December 2008 onwards.

The ease in demand pressures together with lowering of inflation expectations also had implications for domestic liquidity; market interest rates have already started softening. This means that the effect of tight monetary policy has eased considerably.

The definitive easing of the monetary policy is however constrained by the developments on the external account and the stubbornly high core inflation. In monetary aggregate terms, the YoY growth in broad money (M2) decelerated sharply to 9.8 percent as on 21st February FY09 compared to 18.2 percent in the corresponding period last year.

The slowdown in M2 growth was essentially a reflection of strong contraction in net foreign assets (NFA) of the banking system. Net domestic assets (NDA) however increased by 23.2 percent on YoY basis on February 21, 2009.

The deposits mobilisation by banks remained notably weak during July-January FY09 as overall deposits of the banking system declined by 1.8 percent on cumulative basis. This was in sharp contrast to deposit growth of 3.4 percent during the corresponding period of the previous year. Encouragingly, the recent trends suggest that the steep fall in YoY deposit growth seems to have bottomed out.

The asset quality of the banking system has shown considerable deterioration during July-December 2008. At the same time, the provisioning made by banks was relatively low probably as SBP allowed banks to avail the benefit of 30 percent of Forced Sale Value (FSV) of collateral while calculating provisioning requirement. As a result, net NPLs more than doubled and the coverage ratio weakened sharply during July-December 2008.

f) *FISCAL DEVELOPMENTS:* Fiscal consolidation has been a major priority under the macroeconomic stabilisation agenda for FY09. This seems to be having an impact; the fiscal deficit for H1-FY09 is estimated to have dropped to 1.9 percent of projected annual GDP compared to 3.4 percent in H1-FY08.

The fiscal deficit for H1-FY09 thus appears to be in line with the annual target set in the budget FY09 as well as that agreed with IMF under the Stand-By Arrangement. Understandably, the fiscal improvement thus far has largely been brought about by elimination of oil subsidies and a cut in development spending.

Total revenues, as percent of GDP, recovered slightly during H1-FY09 after the sharp decline witnessed in H1-FY08. The marginal improvement came exclusively from increase in non-tax revenues. Stagnation of tax revenues, as a percent of GDP, yet again underscores the significance of fiscal prudence.

While there is need for a line-by-line review of government budget outlays, long term sustainability of fiscal accounts would require expansion of total revenues, particularly by broadening the tax base. Broadening the tax base is key to a sustainable macroeconomic framework, particularly as access to external financing is increasingly difficult.

This forces greater reliance on domestic financing, with a concomitant high risk of crowding out of private investment. The large drop in H1-FY09 fiscal deficit is clearly reflected in the negative growth of the sources of budgetary financing.

The government received Rs 141.1 billion in gross external inflows in H1-FY09. However, Rs 104.1 billion external outflows on account of repayment of external debt left only Rs 37.0 billion, in net terms, for financing of budget deficit. With lesser availability of budgetary financing through external sources, government's reliance on domestic financing increased sharply.

Within domestic sources of budgetary financing, non-bank's contribution also witnessed a strong contraction. Consequently, banking system had to meet much of the government's budgetary requirements during H1-FY09. Thus, despite a 20.8 percent YoY decline in H1-FY09, the share of banking system in domestic sources of financing rose to 85.2 percent compared to 80.9 percent in the corresponding period last year.

g) *BALANCE OF PAYMENTS:* After sharp deterioration in July-October FY09, overall external account balance improved noticeably in the ensuing months, aided by a sharp fall in the current account deficit and a modest recovery in financial inflows. Consequently, foreign exchange reserves increased and the rupee also recovered part of the losses suffered during July-October FY09.

Thus, the aggregate 68.6 percent growth in overall external account deficit during the first eight months of FY09 was accrued essentially during the first four months of the period. A significant part of the July-October FY09 deterioration in current account deficit owed to steep rise in import growth mainly on account of higher import price.

The subsequent improvement owed to both the lower quantum of imports (as demand was compressed by monetary tightening and weaker rupee) as well as large fall in import prices. This contraction in import bill complemented the rise in remittances to contain the current account deficit. Thus current account deficit during July-February FY09 was lower (13.8 percent) compared with the same period last year.

On the financing side, though surplus in financial account during July-February FY09 period is considerably lower (50.0 percent) than the corresponding period of last year, modest revival in financial inflows was registered following the introduction of an IMF supported macroeconomic stabilisation program in November 2008. In particular, foreign direct investment and the inflows categorised as other investment depicted considerable increase during November-February FY09 period.

h) *TRADE ACCOUNT:* For the first time in the last seven years, the trade deficit recorded YoY decline of 6.9 percent during the July-February FY09 period. This contraction was principally driven by imports compression, supported by fall in import prices and subsiding aggregate demand pressures.

A moderate, increase in exports also helped in narrowing the trade deficit during the period. Almost all of this improvement emanated from November FY09 onward, after having deteriorated sharply during July-October FY09. Expectation of continued decline in import prices and slowdown in aggregate demand pressures suggests further contraction in trade deficit in months ahead.

However, this contraction may be moderated by the further weakening in exports. In particular, fall in international demand in the wake of global recession and growing domestic problems eg energy crises pose downside risks to exports during the rest of FY09.

==========================================================================
Selected Economic Indicators
==========================================================================
FY07 FY08 FY09
==========================================================================
Growth rate (percent)
--------------------------------------------------------------------------
LSM Jul-Jan 8.3 5.6 -5.4
Exports (fob) Jul-Feb 3.4 7.4 4.3
Imports (cif) Jul-Feb 9.9 21.9 -1.5
Tax revenue (FBR)  Jul-Feb 22.8 13.6 20.4
CPI (12 month MA) Feb 7.7 8.4 21.7
Private sector credit Jul-Feb 11.2 11.7 4.6
Money supply (M2) Jul-Feb 8.4 7.4 2.3
--------------------------------------------------------------------------
billion US dollars
--------------------------------------------------------------------------
Total liquid reserves1 end-Feb 13.3 14.0 10.1
Home remittances Jul-Feb 3.4 4.1 4.9
Net foreign investment Jul-Feb 4.5 2.6 1.9
--------------------------------------------------------------------------
percent of GDP2
--------------------------------------------------------------------------
Fiscal deficit Jul-Dec 1.9 3.4 1.9
Trade deficit Jul-Feb 6.2 7.5 6.9
Current a/c deficit Jul-Feb 4.1 5.2 4.5
==========================================================================
1. With SBP & commercial banks.

2. Based on full-year GDP in the denominator. For FY09 estimated full-year GDP provided by MoF has been used.


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## Neo

*Gwadar Port - a question of control​*
(April 05 2009): According to a press report, representatives of the PPP and the MQM sharing the portfolio of ports and shipping as senior and junior ministers are on opposite sides over the question whether Islamabad or the Balochistan government should have control of the Gwadar Port.

The Minister of State Nabil Ahmed Gabol of the PPP is said to be working on a proposal to hand over administrative control of the port to the provincial government, which the Minister for Ports and Shipping, Babar Khan Ghauri is against.

The proposal is part of the PPP government's strategy to appease the Baloch nationalists who have a long list of grievances against the federal government, and are embroiled in a bloody conflict with the Federation for the realisation of what they see as their just economic rights. Ghauri is reported to be opposed to the move, citing the constitutional provision under which ports and shipping fall in the list of federal subject.

On the face of it, the PPP's is an admirable stance. No one can deny that the Baloch people have been given a raw deal by successive governments at the Centre, which is at the back of the ongoing insurgency in the province. In terms of natural resources it is Pakistan's richest province.

In fact, Islamabad's dream to become the Gateway to Central Asia and also to provide China with a shorter access route for its energy supplies is also linked to Balochistan via the newly constructed port at Gwadar. A huge section of the much-awaited Iranian gas pipeline is to pass, too, through the province. Indeed, Balochistan figures prominently in this country's plans for progress and prosperity.

Yet it remains the least developed unit of the federation. The nationalists see Gwadar as yet another attempt by the Centre to exploit its resources at the expense of local people. It goes without saying that the Baloch people have a genuine sense of deprivation, which must be addressed as urgently and effectively as possible. The appeasement of the Baloch people is highly desirable. But the issue of Gwadar Port's control is rather complicated.

First of all, as Ghauri is reported to have pointed out, it is a federal subject. That is why the two ports in Sindh are not under the provincial government's administrative authority. Some people, however, argue that this hitch can be removed through a constitutional amendment. In fact, the current political discourse includes strong demands for greater provincial autonomy, and a new social contract.

Baloch leaders are vociferous in saying they want control over their economic resources, including the port. The problem though is not only a constitutional impediment that is removable, but the need to strike a right balance between the federal and provincial powers. While the PPP must be supported in its efforts to give due recognition to Baloch rights, this must be done in a careful manner so as to avoid causing systemic distortions that might create new difficulties.


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## Neo

*Tarin hopes improvement in GDP growth rate ​* 
KARACHI (April 06, 2009): PMs Advisor on Finance Shaukat Tarin said Monday that GDP growth will be raised to 6 to 8 percent with the help of concerted efforts in next three years.

He was talking to media after addressing the members of OICCI. He said that the GDP has declined to 2.5 percent due to economic slow down following the tough monetary policy.

Now the economy has started seeing some recovery and we see the light at the end of the tunnel. We will see which areas needed to be financed to boost the growth in future, he added.

The Advisor said that GDP will be raised to 4 percent next year and 5 percent in the year after.

To a question, he said that the entire tax system needs an overhaul and there should be only two taxes in the country, i.e., income tax and consumption tax.

This approach will bring in buoyancy in tax system. This will be achieved in next 5 to 6 years, he noted.

Tarin said currently several taxes including withholding tax, turnover tax, etc were in place and these should be minimized to only two taxes.

To a question, he said that four areas of the economy will be brought in under tax net in the coming years. These are services, real estate, stock market and agriculture. We will do sequencing in this regard, he said.

The Advisor pointed out that the government will procure 6.5 million tons of wheat this year and takes it to deficit provinces to ensure the availability of the staple food at equal level.

He said that he will visit FPCCI and other chambers to get input on the economy in a regular intervals. This is an ongoing exchange of ideas and input.

Tarin said that the government will assess situation before approaching IMF for more financial assistance. We would not borrow further if did not need, he added.

Earlier, the Advisor, in his address to OICCI members, presented the outline of the economic strategy of the government on IMF, interest rate, tax system, budget deficit, etc.


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## Neo

*Goods from India via land route: ministry gets power to allow plea of importers​* 
ISLAMABAD (April 06 2009): Commerce Ministry has reportedly taken over the power to allow requests from importers desirous of importing different permissible goods from India via land route, well-informed sources told Business Recorder.

Earlier, such powers were vested with Prime Minister, who took decisions on case-to-case basis but were later delegated to the Commerce Ministry by the Economic Co-ordination Committee (ECC) of the cabinet in its meeting on 19 March 2009. Sources said that when the matter was put before the ECC in its meeting on March 3, 2009, a consensus emerged that due to prevalent political and security scenario, the composite dialogue under economic and commercial co-operation is not likely to be held in the near future, and the issue be deferred till the situation improves.

Interior Ministry did not want Pakistan to open trade with India in the present circumstances but Ministries of Foreign Affairs and Commerce did not agree.

Commerce Ministry, eager to have the power of No Objection Certificate (NoC) insisted on an urgent decision. However, the same day the Sri Lankan cricket team was attacked in Lahore and the Commerce Ministry insisted that the matter should only be deferred till the next meeting.

According to official documents, President Asif Zardari during a meeting with Indian Prime Minister in New York on September 24 2008 had decided to open the Wagah-Attari road link for all permissible items of trade. Ministry of Foreign Affairs had communicated the decision to all the concerned Ministries.

Commerce Ministry, in its proposal, had suggested that: (i) decision communicated by Ministry of Foreign Affairs may be implemented in a phased manner commensurate with parallel development of infrastructure on either side of the border to cater the potential spurt in bilateral trade;(ii) in principle concurrence of the Government of Pakistan to open Wagah-Attari for permissible items of trade to be fully operationalised after necessary infrastructure is developed on both sides of the border; and (iii) Minister for Commerce may be authorised to give permission of import of goods from India by road on the request of importers.

The documents further suggests that in order to facilitate trade across the Wagha-Attari road crossing, trucks of both countries are allowed to move within the respective territories of Pakistan and India for loading/unloading of cargo. This arrangement is operational since October 1, 2007.

As ascertained by the customs authorities of Pakistan at Wagha, statistics of trade with India via land since October, 2007 show that import from India amounted to Rs 3516.598 million, exports to India nil, and Afghan exports to India in transit from Pakistan amounted to Rs 2367.093 million. These statistics show that although there is no restriction on exports to India, there has been no export through this route even after facilitation of movement of trucks across the border.

A major reason, the Commerce Ministry stated, is lack of infrastructure for example godowns, weighing stations etc on Indian side of the border. In the composite dialogue, India has shared a proposal with Pakistan about the future projects to be developed to operationalise this route for bilateral trade. The project is likely to be completed in the short term, sources concluded.


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## Neo

*Deal inked with Iran for power supply to Balochistan: Raisani​*
QUETTA (April 06 2009): Balochistan Chief Minister Nawab Muhammad Aslam Raisani said on Sunday that the government had inked an agreement with Iran for providing electricity to Turbat, Panjgur, Dasht and Gwadar, and other coastal areas of Balochistan.

Raisani said this while talking to a delegation of notables of Turbat, Pak-Iran bordering district, led by provincial minister Asghar Ali Rind, who called on him here at the CM secretariat.

He said that development projects on various sectors were underway in all districts on equal footing without any discrimination in the province. He said that the government was committed to providing maximum job opportunities to the unemployed youths in the province. He directed the oil exploring and other companies to provide jobs to local people in their companies in the province. The delegation informed the CM about problems being faced by the people in Turbat district.


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## Neo

*Fish exports grow by 22.45 per cent ​*Monday, 06 Apr, 2009

ISLAMABAD: Fish and fish preparations from the country during the first eight months of current financial year witnessed increase of 22.45 per cent against the exports during the corresponding period of last financial year, APP reported.

Fish and fish preparations exports during July-February (2008- 09) were recorded at $147.497 million as against the exports of $120.451 million recorded during July-February (2008-09), according to figures provided by Federal Bureau of Statistics.

However, during February 2009 the fish exports were declined by 2.26 per cent as compared to the exports of January 2009.

Fish exports during the month under review were recorded at $18.4 million as against the exports of 18.8 million recorded in February 2009, the FBS figures revealed.

As compared to the same month of the last financial year, fish exports during February were increased by 27.4 per cent.


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## Neo

*Seven firms show interest in Jamshoro Power Co ​*Saturday, 04 Apr, 2009 

ISLAMABAD: The Privatization Commission has received expressions of interest (EoIs) from local and foreign investors for 15 years lease of Jamshoro Power Company.

Apart form Pakistan, interested companies belong to Kuwait, Korea, Europe, US and China.

The commission said that seven interested parties have submitted their expressions of interest along with the non-refundable processing fee of $5,000. The leasee would be responsible for rehabilitation, management, operation and maintenance of companys thermal power station at Jamshoro and Kotri.

The seven interested companies are Engro Power Gen Private Limited, Karachi, Noor Financial Investment, Kuwait, Pak Elektron Limited, Lahore, Consortium of Korea EastWest Power Company limited, LG International Corporation, Korea, Consortium of Sapphire Group and O & M Solution, Lahore, Consortium of New Park Energy Limited and PILZEN Tools, Europe and Phoenix Zeppelin Caterpillar, Europe and Consortium of Pakistan Power Resources limited, Lahore and Walters Power International, US and China National Machinery Corporation, China and Korea Plant Services and Engineering Company, Korea.

The interested parties would be provided preliminary information memorandum and request for statement of qualification (RSOQ) for determining their pre-qualification to proceed further. 

The RSOQ will, inter-alia, include details on eligibility criteria and basis of disqualification. The Privatization Commission will provide updated information relating to terms and conditions of the lease to all investors qualified in terms of the Privatisation Commissions RSOQ, prior to the bid date. 

The JPCL is a company of Pakistan Electric Power Company Limited (PEPCO) under the administrative control of Ministry of Water & Power. 

Jamshoro Power Company Limited (JPCL) operates two electricity generation facilities. Jamshoro is 880 MW gas & furnace oil fired power plant, comprising four units located at 165 km north east of Karachi and 18 km from Hyderabad. 

The Kotri facilities, comprising seven units, has 174MW capacity, and are in the vicinity of Hyderabad. 

The company has sales of about Rs22 billion and has total assets of Rs17.8 billion.


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## Neo

*Germany to support Pakistans $6bn aid request ​*Saturday, 04 Apr, 2009

ISLAMABAD: Germany will support Pakistans request for $6 billion assistance for two years from the Friends of Pakistan at the groups ministerial meeting scheduled for April 17 in Tokyo. It will also lobby for World Banks help to set up trust funds in NWFP, Fata and Balochistan.

Heidemarie Wieczorek-Zeul, the German Minister for International Economic Cooperation and Development, said at a press conference she addressed along with Prime Ministers Adviser on Finance Shaukat Tarin here on Friday that the purpose of her visit was to assess Pakistans financial needs to fight poverty and illiteracy and overcome other socio-economic problems and to support the countrys case at the Friends meeting.

Ms Heidemarie and Mr Tarin attended the signing ceremony of an agreement under which Germany released the last tranche of 20 million Euros for construction of the Keyl Khwar hydel power on the Indus at Dasu in the NWFP. Germany has provided 97 million Euros for the project.


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## ejaz007

*Minister for timely completion of power projects*
Staff Report 

ISLAMABAD: Federal Minister for Water and Power, Raja Pervez Ashraf on Monday directed PEPCO and the PPIB to timely complete fast track and rental power projects to end load shedding from the country by December 2009. He asked them to monitor the progress and submit update of the projects on weekly basis. 

He made these directions while presiding over a meeting to review the progress of water and power sector projects here on Monday. Secretary, Adviser and additional secretary of the ministry, Chairman Wapda, CEO, AEDB, MD, NPCC and other senior officials of ministry, WAPDA and PEPCO participated in the meeting. 

The minister also directed that there should be no need for shutdown in the summer due to maintenance and minor faults. He also asked PEPCO and IPPs to improve their oil stocks so that there should be maximum generation during the summer season. The minister said that the government was striving hard and taking all possible measures to end the menace of load shedding which is affecting all walks of lives. He said that the ongoing projects initiated by the present government last year would help to significantly improve the power generation system. 

The meeting noted that there was no unscheduled and forced load shedding and the shortfall as of today was less than 1845MW as compared to 2113MW same day last year. This improvement had been possible due to effective measures this year. The meeting decided to promote replacement of high consuming power equipments, currently being used in tube wells with new and efficient ones for better efficiency and less consumption of electricity. The minister stressed the need for energy conservation to save electricity for industrial and agriculture sectors. He also directed PEPCO to educate the masses on demand side management programme through media. 

Earlier, PEPCO and the PPIB informed the meeting that 800MW would be injected in the system by June this year and overall about 4000MW by December 2009. 

Later, talking to the media, the minister said that the target to bridge the gap between demand and supply would be achieved and there would be no load shedding by December 2009. He urged that the people should also cooperate and avoid unnecessary use of electricity in the offices, commercial centres and houses. He also asked the traders to close their shops early and switch off their 50 percent lights voluntarily. He advised the people to always switch off their television, microwave oven, mobile-charger after use instead of keeping them on stand by position as they consume power in the stand by mode as well. To a question, he said that a proposal was under consideration to move forward clocks by one hour to ensure maximum use of daylight. To another question about line losses, he replied that the Discos had been given targets to reduce line losses and to improve efficiency, as there was no room for inefficient.

Daily Times - Leading News Resource of Pakistan


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## ejaz007

*PM to inaugurate 165MW power plant today*

ISLAMABAD: Prime Minister, Syed Yousaf Raza Gilani would inaugurate the 165 MW Power Plant of Attock Gen Limited today (Tuesday). Being the first power sector venture of the Attock Group of Companies under Power Policy 2002, the plant has a vital significance at this crucial point in time when the country badly needs additional power supply to overcome the power shortage due to continuous rising demand of energy, officials press release issued here on Monday. The government was committed to meet the energy requirements of the country. The Prime Minister, in his first 100 days of government had announced to end load shedding by the end of 2009 as the power shortage was adversely affecting the day-to-day life and economy of Pakistan. The country was facing demand and supply gap of almost 3,500 MW. However, the government had resolved firmly to bridge the gap through additional generation and conservation measures. The recent series of Fast Track initiatives were likely to result in installation of power plants to the tune of 4000-5000 MW by the end 2009. Currently, PPIB had issued Letters of Interest to 36 power projects of more than 10,000MW of cumulative power generation capacity, while 14 projects totaling 2,759MW of cumulative power generation capacity have been issued Letters of Support, out of which 12 projects of 2,539MW of cumulative power generation capacity have already achieved Financial Close and were marching towards commissioning. The Attock Gen was the first power plant under 2002 Power Policy, which was based on indigenously produced environment friendly fuel. The plant, along with other power plants coming up in the near future, vindicate the confidence of the investors in investment-friendly policies of the present government. Governor Punjab, Federal Ministers, Secretary Water & Power, Managing Director Private Power and Infrastructure Board and a large number of government officials and other dignitaries from different walks of life will attend the inauguration of Attock Gen Power plant. staff report

Daily Times - Leading News Resource of Pakistan


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## Neo

*Tarin rules out cut in defence budget ​* 
Tuesday, April 07, 2009

KARACHI: The adviser to the Prime Minister on Finance Shaukat Tarin has ruled out any possibility of cutting the defence budget in the next fiscal year, and reiterated that everyone (including stock exchanges) would be brought into the tax net in the next two to three years.

He was talking to journalists on the sidelines of BMA Fund forum organised here on Monday. Replying to a question, Tarin said that Pakistan was facing security challenges on the eastern and western borders and no question arises, in this tough time, to slash the defence budget in the next fiscal year, 2009-10.

He maintained that the defence budget has rather come down in terms of GDP ratio and the overall budget amount in the last 10 years. He was asked about concerns expressed by the State Bank of Pakistan (SBP) over rising defence expenditures in its second quarterly report on economy unveiled on last Saturday.

When asked would the government levy any new tax on stock exchange e.g. capital gains tax, Tarin said everyone would be brought under tax net in the next two-to-three years - though he did not explicitly mentioned the word stock exchanges in his answer.

Earlier, there were some conflicting news in the media regarding levying some new taxes on local bourses from the next fiscal. As a matter of record, the renewed exemption of capital gain tax on securities transaction would come to end on June 30, 2010, which the exchanges were enjoying since 1974.

Addressing the BMA Fund forum, Advisor said that Pakistan would no more be a poor state in the next five to seven years time. Government is doing its best on the economic front and we would bring the inflation down in single digit by July-August 2009. Moreover, we would also bring the current account deficit under six per cent limit.

He was of the view that improvement in the countrys economic indicators was just the beginning and his team has to work harder to streamline the economy. He also talked about strengthening regulatory bodies i.e. Securities & Exchange Commission of Pakistan (SECP), State Bank of Pakistan (SBP) and Federal Board of Revenue (FBR) to provide level playing field and enable the economic environment here.

Talking about safety net and sustainable economic growth, he pointed out it must to take care of 50 million people living below the poverty line, and fix problems in agriculture and manufacturing sectors, to which the biggest part of countrys employees are connected.

Besides, he also stressed upon bring political stability and controlling law & order to keep economy growing in the future. On the occasion, Governor SBP Syed Salim Raza gave a comprehensive talk on countrys financial sector and urged upon exploiting debt and equity market for generating resources.

Morgan Stanley, Chief Investment Strategist, David Darst gave a detailed presentation on Global Market Outlook. He said that world markets were still bearish, but the financial and economic recessions would over in the next two-to-three years and would not prevail for 10-to-15 years this time, he believes.

While suggesting a strategy as what to do under in this time of recession, he urged people to remain patient and decisive these days. Mudassar M Malik, Chief Executive, BMA Funds and Farrukh H Khan, Director BMA Funds also spoke on the occasion.


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## Neo

*CARs offer Pakistan chance to revive economy ​* 
Tuesday, April 07, 2009

LAHORE: Pakistan, which provides the shortest and quickest access to the Central Asian Republics (CARs), has a huge opportunity to reposition its economy by tapping the potential available in these landlocked states.

This was the consensus among speakers at a seminar on Exploring Prospects of Exports to Central Asian Republics (CARs), jointly organised by the Lahore Chamber of Commerce and Industry and the Trade Development Authority of Pakistan here on Monday.

All the speakers stressed the need for exploring possibilities of increasing exports to the Central Asian Republics as the developed world had been facing financial constraints for the last many months.

They said the business community would have to go for diversification of exports. Pakistan is strategically located to export its products to these landlocked countries and there is a demand for grains, pulses, leather goods, textiles and general merchandise. Currently, it is very competitive because of low transportation cost due to lower prices of fuel and moreover in the presence of logistics.

They said the business community should aggressively market their products considering the scope and vast potential of CARs.

LCCI President Mian Muzaffar Ali said Pakistan needed to activate and develop beneficial collaboration with CARs in order to realise the great potential for trade and economic cooperation.

He said the situation demanded urgent sector-specific measures for the benefit of business community. There is a need to identify more tradable items in order to enhance mutual trade keeping in view the market demand, he said.

LCCI Senior Vice President Tahir Javaid Malik said Pakistans economic relations with the rest of the world, particularly external trade, were not as encouraging as they should be but the situation could be changed positively by focusing on the Central Asian Republics.

TDAP Chief Executive Officer Syed Mohibullah Shah said the Trade Development Authority had decided to establish a facilitation centre in Gilgit in order to promote business with CARs. The centre would cover China and other regional countries as well.

Dawood Sharif of the Competitiveness Support Fund said the Fund would extend maximum technical assistance to enhance two-way trade to ease the intensity of the global economic recession.

Pakistans Commercial Counsellor in Almaty, Kazakhstan, Shaukat Ali Khan said Pakistans location for trade with the Central Asian Republics had no match in the world but to materialise the idea, the businessmen would have to visit these states for having first-hand knowledge about available opportunities.


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*Hyundai expanding operations in Pakistan ​* 
Tuesday, April 07, 2009

KARACHI: The Hyundai announced it is expanding its operations in Pakistan, according to a statement issued here on Monday. 

It said the Hyundai Motor Corporation and Dewan Farooque Motors Ltd have signed a Memorandum of Understanding (MoU) for the progressive distribution of Hyundai commercial vehicles in Pakistan. 

Dewan Mohammad Yousuf Farooqui and Hang Young Choi inked the MoU on behalf of their respective companies. The statement further pointed out that Hyundai-Kia Automotive Group is the worlds fifth largest automobile manufacturer. It stated that Dewan is representing the Hyundai in Pakistan since 1998. The CDK product line of Dewan currently includes 1,000cc passenger car Hyundai Santro and Hyundai Shehzore pick-up. The Hyundai Shehzore has remained the market leader in its segment for 10 consecutive years since the launch in 1999.


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*GDP growth to be increased to 8 percent in three years​*
KARACHI: The GDP growth will be gradually improved to eight percent in the next three years, Adviser to Prime on Finance and Economic Affairs, Shaukat Tareen said here on Monday.

Talking to media at Overseas Chamber of Commerce & Industry (OCCI) and later at a seminar, he claimed that national economy is showing signs of improvement and a major indication is falling inflation.

Calling Railway, PIA and PEPCO white elephants, the adviser pointed out that these organisations are burdening the government exchequer by around Rs 200 billion.

Underlining the need for tax reforms in the country, he advocated the abolition of multiple taxes and proposed only two types of taxesincome and consumption tax.

We have recommended to tax real estate, agriculture and stock market as part of broadening the tax net, Tareen told newsmen.

In reply to query on high prices of commodities in the domestic market, he said that Economic Coordination Committee (ECC) has taken strong notice of controlling mechanism of prices. A monitoring cell is being formed to control the prices and stern action will be taken against profiteers, he added.

He ruled out the reduction in defence budget in the present hostile situation at Eastern and Western borders of the country. We cant risk the cut down in the national defence expenditures in such tense situation on borders, he categorically stated.

The government is taking measures to ensure smooth supply of wheat throughout the country, he said, and added that if any province faced the shortage, federal government would help in meeting its demand.

When asked about any plan to reduce the domestic oil prices, he acknowledged that international oil prices have come plunged over the months, however, he didnt explicitly replied about any reduction in the local market.

Government is considering steps for hedging of petrol in view of its low prices, he maintained.


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*Panel starts finalising five-year development plan​*
ISLAMABAD: The Panel of Economists of the Planning Commission on Monday started the finalisation of a 5-year medium-term development plan 2009-14 for the country and decided to consult in details the development needs of all the federating units for sustainable economic growth and poverty reduction through creation of jobs.

The panel will finalise its recommendations by early May 2009 and annual plan to be approved for the forthcoming budget 2009-10 would also include some of the key recommendations of the 5-year development plan.

In this regard, the panel headed by renowned economist Dr Hafiz Pasha bifurcated all of its 22 members into regional groups to hold consultations with Punjab, Sindh, NWFP, Balochistan, Federally Administered Tribal Area (FATA), Azad Jammu and Kashmir and Northern Areas.

Chief Economist at Planning Commission Dr Rashid Amjad told Daily Times that earlier the Panel of Economists had submitted to the government macro-economic stabilisation plan that was meant for the short-term needs of the economy. The plan was mainly related to the fiscal and monetary matters.

Now the panel has started finalisation of a 5-year development plan mainly relating to the development of the country for sustained economic growth by utilising all the comparative advantages available in different parts of the country as well as in four federating units. On Monday Deputy Chairman Planning Commission and Chairman of the Panel of Economists, Sardar Aseef Ahmed Ali heard the development priorities of all the four provinces.

According to the official sources, NWFP representative was of the view that provinces should have been consulted during the finalisation of the proposal for Friends of Democratic Pakistan. He asked the federal government that NWFP, being the frontline province against war on terror, should be the major recipient of foreign aid to be available from Friends of Democratic Pakistan.

He was of the view that NWFP had scarified the most and should benefit the most from the foreign aid as its infrastructure was destroyed and economy badly affected. The province has additional financial needs to strengthen its police force and other infrastructure to fight terrorism.

He informed the meeting that US authorities have conveyed to them that US Senate would pass the much-awaited ROZs legislation within next three months. In this regard, NWFP would develop as per international standard its two industrial estates to accommodate ROZs investors in the initial phase. The representative demanded the federal government that textile products of Pakistans interests should also be included in the proposed ROZs legislation otherwise US duty concessions would be of no value for Pakistan.

Representative from FATA was of the view that if the industrial estates located outside the FATA be allowed US duty concessions then no investor would opt for investing in FATA. He demanded that incentives should be limited to FATA so that the benefit of duty concession could attract investment in FATA for its sustained development as well as elimination of militancy and poverty. He also demanded the government to extend extra financial help to develop required infrastructure for generating economic activity in the areas for job creation.

According to the sources, Sindh representative complained that the provinces, including Sindh, were not consulted in the finalisation of $32 billion aid proposal that is to be tabled before the Friends of Pakistan meeting. He also outlined the development priorities and challenges faced by the province.

Representative from Punjab province also shared the development priorities of the province and identified areas where development can produce batter results and benefit all the provinces.


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*Expectations of good results push KSE above 7,500 pts level​*
KARACHI: Positive rally continued at the Karachi stock market as investors took positions in banking and insurance stocks on the first trading day of the week Monday on hopes of good result announcements for the January to March quarter 2009.

The Karachi Stock Exchange (KSE) 100-share index gained 86.05 points or 1.16 percent to close at 7,518.93 points as compared to 7,432.88 points traded in the previous session.

The KSE 30-share index also surged 106.29 points and closed at 8,170.45 points as compared with 8,064.16 points of the previous session. The KMI 30 index also increased by 55.01 points to close at 10,574.85 points as against 10,519.84 points of the previous session.

The market turnover rose 15.75 percent and traded 382.18 million shares as compared to previous sessions 330.15 million shares. The overall market capitalisation was up by 1.20 percent and closed at Rs 2.262 trillion as compared with Rs 2.235 trillion traded in the previous session. Out of total 388 companies, 254 closed in positive zone, 120 in negative while 14 remained unchanged.

Analysts said law and order situation in the country overshadowed the bullish sentiments at the market, although the market is still trading well below potential due to various internal curbs, the events over the weak-end and threats had a visible impact on the sentiment and the index made a visit to the red zone during the wee hours of trade.

The oil and gas exploration and fertilizer sectors faced off-loading while banking stocks staged a healthy recovery, which was good enough to support the benchmark, mainly on the apprehension of better then expected earnings of first quarter.

Since the banks have already swallowed a sour pill by booking portfolio losses as on December 31, 2008, massive recovery staged by the market in the quarter besides trading gains of the quarter can certainly not only off-set the impact of the economic slow down, but will also garnish the results.

Besides the banks, other companies that are likely to benefit from the market recovery invited renewed buying thereby disallowing the impact of off-loading and panic selling on closing basis and the benchmark closed above the psychological level of 7500 points, with clipped gains.

The KSE 100 index opened in the green zone with a gain of 19.36 points and at the end of the day closed at 7,518.93 points with a gain of 86.05 points. staff report


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*PM promises end of loadshedding by years end ​* 
RAWALPINDI (April 07, 2009): Prime Minister Syed Yousuf Raza Gilani on Tuesday vowed that the government through its effective policies, would eliminate loadshedding by the end of the year.

Inaugurating the US 160 million 165MW Attock power generation unit here at Morgah, the prime minister urged the nation to conserve energy for a sustainable development.

The country is currently facing a shortage of 3500 MW and several fast track initiatives are underway to add around 5000 MW by end of year.

I can guarantee that if they save 1000 MWs, there will be no loadshedding at all, he said and announced that measures are afoot to provide ten million energy saving bulbs at a reasonable price.

Gilani said overcoming power shortage was the top priority of his government and added that the pledges made to the people in this regard would be fulfilled.

The prime minister said the government was also trying to save another 500 MWs through load management and directed the ministry of water and power to launch an aggressive media awareness campaign, urging the masses to conserve energy.

Gilani recalled that it was the Pakistan Peoples Party government of Benazir Bhutto in 90s and 14 Independent Power Producers were established that are contributing 3000 MWs to the national grid.

He said his government inherited the problem of power shortage and was taking it as a challenge. He said the Private Power Infrastructure Board was setup to provide a one window facility and to attract Foreign Direct Investment.

The prime minister said the government was trying to create a stable political environment by pursuing a policy of national reconciliation.

He said the government was trying to correct the perception about Pakistan and desired that more foreign direct investment flows into the country.

He said the government also believes in private sector resource mobilisation and was utilising several modes of power generation including wind, solar and others. Gilani hoped that more local and international investors would endorse the governments policy by investing in the power sector of the country.

Earlier the prime minister unveiled the plaque to inaugurate the project. The work on the combined cycle highly efficient power plant began on May 12, 2007 and was completed in a record period.

The AGLs power project is the first oil based power plant built under the power policy 2002.


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*Inflation will fall to single digit by next fiscal year​* 
KARACHI (April 07 2009): The Advisor to the Prime Minister on Finance Shaukat Tarin on Monday said that Pakistan will no more be a poor state in next few years. Addressing the BMA Fund Forum here, Tarin said the government has taken many initiatives for the revival of the countrys economy. "We are doing our best on the economic front and the situation has started improving," he added.

He was optimistic that the inflation rate will fall to single digit in the beginning of next fiscal year. The current account deficit will also come down below six percent, he added. However, Tarin said that an improvement in the law and order situation and political stability would play an important role in the economic stability of the country.

Later talking to newsmen, Tarin said that there is no possibility of cutting the defence budget in the next fiscal year. He said that the prevailing security challenges on the Eastern and Western borders did not allow cutting down the countrys defence expenditures. He said that the defence budget has been reduced during the last 10 years.

On a query, Tarin said that all major sectors including stock exchange and agriculture would be brought under the tax net in next few years. State Bank of Pakistan Governor Syed Salim Raza speaking on the occasion gave a comprehensive talk on the countrys financial sector and called for exploiting debt and equity market for generating resources.

Morgan Stanley Chief Investment Strategist David Darst in his presentation on "Global Market Outlook said that world markets were still bearish. He said that the financial and economic recessions would be over in next two-to-three years. Muddassar Malik, Chief Executive, BMA Funds and Farrukh H Khan, Director BMA Funds also spoke on the occasion.


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*Daylight power saving may be approved by Cabinet​* 
ISLAMABAD (April 07 2009): To deal with power shortfall of nearly 4000 MW in the coming months, the Cabinet, in its meeting on Wednesday, is likely to approve advancement of clocks by one hour for six months ie till October 31, 2009, sources close to Additional Secretary, Water and Power, Zarar Aslam, told Business Recorder here on Monday.

"We believe that load shedding will not end in the country, given the measurers being taken by the present Minister for Water and Power, Pervez Ashraf, who is repeatedly claiming that there will be no load shedding in 2010," sources said.

The summary, made available to this newspaper by top officials, suggests that currently power system in the country has total installed capacity of 20,231 MW which has been de-rated due to aging power plants in public sector to a dependable capacity of 17,897 MW in summer and 13,215 MW in winter.

"Average shortfall of 1000 MW has been experienced during the current month, and this shortfall is expected to rise by end of May, 2009 due to reduction in the outflows from Tarbela and Mangla. We expect that shortfall will peak to 3600 MW in June, 2009 but this situation will ease by end of 2009," sources added.

The Pakistan Electric Power Company (Pepco) is reported to have apprised the federal government that to bridge the present supply-demand gap and to mitigate the present and expected level of load shedding it is undertaking supply side management through induction of additional generating capacity of 2500 MW (1519 MW IPPs + 1000 MW rental power plants) by December 2009 and demand side management through energy management and conservation measures like improvement of efficiency, awareness campaigns for prudent use of electricity and replacement of existing bulbs with energy saver bulbs.

"These demand side management measures are expected to save 500 MW," according to simmary. Sources said that last year the federal Cabinet in its meeting on May 14, 2008, had approved advancement of clocks by one hour, which was implemented in the country from June 1 to October 31, 2008 (five months) to effect daylight saving.

This measure is expected to lead to a saving in consumer loads by 250-300 MW daily for 5 months. This saving thus netted was exactly 250 MW in June 2008, while it waned to the bandwidth of 200-100 MW in October 2008. This enabled Pakistan Electric Power Company (Pepco) to reduce the load shedding in its area of jurisdiction by 1-2 hours daily (on the average), thus greatly helping the customers in their daily lives.

"We have proposed that watches/clocks should be moved forward immediately by one hour (GMT+6) till October 31, 2009 for conservation of 100-250 MW electricity at various time slots of the day," sources in the Ministry added. Private sector, especially sponsors of rental power projects, are also unanimous in saying that power load shedding would continue into 2010 despite tall claims by officials sitting in the Ministry, the PPIB and the Finance Ministry.


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## Neo

*Import of gas from Iran may also be okayed​* 
ISLAMABAD (April 07 2009): The Cabinet is likely to approve import of 500-750 mmcfd gas from Iran at the rate of 80 percent of crude oil price, in its meeting scheduled for Wednesday (April 8). Sources told Business Recorder that the Petroleum Ministry will move a summary to the Cabinet to approve 500-750 mmcfd gas from Iran at the rate of 80 percent of crude oil price.

Sources are of the view that after approval of the Cabinet, the proposed gas import plan may be tabled in the Parliament for discussion. The Economic Co-ordination Committee (ECC) of the Cabinet had proposed to import 500-mmcfd gas from Iran instead of one billion cubic feet gas per day due to higher price demanded by Iran. Iran had earlier demanded gas price linking to 78 percent of crude oil but now it was demanding 80 percent of crude oil.

In January 2007, Pakistan and Iran agreed on a gas price formula at 45 percent of crude oil. However, in September 2008, Iran informed Pakistan that its parliament did not approve the agreed gas price formula and accordingly proposed a revised gas price formula to link gas price to 85 percent of crude oil.

Later it scaled down its demand from 85 to 78 percent of crude oil but now it is demanding 80 percent of crude oil. When contacted, advisor to Prime Minister on Petroleum and Natural Resources, Dr Asim Hussain said that raw gas should not be used by households.

He said that countries such as Saudi Arabia and Qatar were using the Liquefied Petroleum Gas (LPG) for households and the same practice should be followed in Pakistan. He said that burning raw gas is like burning wood and it should be used for power generation, textile and fertiliser sector. He said that cheaper electricity could be an option to provide to households.

He said that use of gas for fertiliser, textile and power sector may boost the economy of the country. According to sources, the Petroleum Ministry wants to use Iranian imported gas for power generation only. It also wants separate tariff for industry that would use the Iranian imported gas due to its higher price.

If the two countries agreed to gas price of 80 percent of crude oil, Pakistan will have to spend $1.5 billion foreign exchange annually for one bcfd if the price remains at $5 per million British thermal unit (mmbtu) valuing it on $50 per barrel crude oil. The consumers will have to pay additional 17.5 percent return on the assets also that will further escalate the cost of the gas price.


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## Neo

*Pakistan has great prospects of exports to CARs​* 
LAHORE (April 07 2009): Pakistan, having the shortest and the quickest access to the Central Asian Republics (CARs), offers huge opportunity to reposition its economy by tapping potentials, available in these land-locked states. The speakers observed unanimously at a seminar on Exploring Prospects of Exports to CARs jointly organised by the Lahore Chamber of Commerce and Industry (LCCI) and Trade Development Authority of Pakistan (TDAP) on Monday.

The Chief Executive Officer, TDAP, Syed Mohibullah Shah, LCCI President, Mian Muzaffar Ali, Pakistans Commercial Consular to Kazakhstan, Shaukat Ali Khan. Dawood Sharif represented the Competitive Support Fund.

All the speakers stressed the need for exploring possibilities of increasing Pakistans exports to CARs, as the developed world had been facing financial constraints for the last many months. They said that Pakistani business community would have to go for diversification of exports.

Pakistan is strategically located to export its products to these land-locked countries and there is huge demand for grains, pulses, leather goods, textiles and general merchandise items and currently are very competitive due to low transportation cost, as fuel cost is lower and logistics is available.

They said the business community should pursue marketing their products aggressively considering the scope and vast potential of CARs. The TDAP Chief Executive Officer, Syed Mohibullah Shah said that his organisation has decided to conduct a series of seminars to promote land route to CARs via Karakoram Highway, as Pakistan is an ideal route for Central Asias international trade.

He said that the TDAP had decided to establish a facilitation centre in Gilgit in order to facilitate business with CARs. This centre would cover China and other regional countries including Central Asian Republics. Further, he said that the TDAP was arranging a delegation to CARs in the month of June, comprising industrialists and exporters.

The LCCI President said, Pakistan needs to activate and develop a mutually beneficial collaboration with CARs in order to realise the existing potential for trade and economic co-operation. He was of the view that the situation demands urgent sector-specific measures for the benefit of the business community.

There was a need to identify more tradable items in order to enhance the mutual trade to meet the market demands, he added. Dawood Sharif of CSF said that the Fund would extend maximum technical assistance to enhance the two-way trade to wear off the intensity of global economic recession. Pakistan Commercial Consular in Almatay, Kazakhstan Shaukat Ali Khan said that the seminar would help open new avenues to Pakistans business community and would bring both the sides further closer.

He said that Pakistans location for trade with Central Asian Republics, has no match in the world, but to materialise the idea, Pakistani businessmen should visit these states for having first-hand knowledge about the available opportunities The LCCI Senior Vice President, Tahir Javaid Malik said that Pakistans economic relations with rest of the world, particularly external trade, presently was not as encouraging as it should be, but the situation could be changed positively by focusing on CARs. He stressed the need for exploration of new markets saying that Pakistan would have to decrease its dependence on traditional markets of the US and the European Union.


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## Neo

*IDA to provide $200 million for Pakistan SSN DPC​* 
FAISALABAD (April 07 2009): International Development Association (IDA) will provide 200 million dollars for "Pakistan Social Safety Nets Development Policy Credit", while government will arrange 425 million dollars to establish an effective social safety net that provides the poor with basic income support both in times of social and economic stability and growth and in times of crisis and to provide access to opportunities for graduating out of poverty.

According to a Project Update Report of World Bank, the proposed Pakistan Social Safety Nets Development Policy Credit (SSN DPC) aims to support the implementation of Pakistans Second Poverty Reduction Strategy Paper (PRSP-2). In particular, the SSN DPC would provide support to the third pillar of the PRSP: Protecting the poor and vulnerable through improved targeting of safety nets and cash transfer programmes.

The proposed SSN DPC is also consistent with Pakistans National Social Protection Strategy that supports the development of an effective and financially sustainable safety net system to promote the re-distributive goals of society and protect those who are suffering from chronic or transient poverty, WB report added.

According to WB report, Pakistan faced both external and internal shocks in the past year. Externally, international oil and food commodity prices rose sharply and inflated Pakistans import bill. In parallel, the slowdown in the global economy dampened the external demand for Pakistans exports, and the deterioration in international credit markets affected the supply of funds. Internally, Pakistans political turmoil and uncertainties affected investor confidence. These concerns coupled with the rapid rise on macro-economic imbalances, led to capital outflow as well as downgrading of Pakistans rating by international rating agencies.

The government did not pass any of the international price increases to consumers until after the parliamentary elections in 2008. These price increases were financed through the government budget by increasing subsidies. As a result of the global external shocks and internal causes the fiscal and balance of payment imbalances widened substantially, inflation rose sharply, growth slowed, and governments macroeconomic programme was set off track, WB report added.

In March 2008, WB report highlighted that the authorities started to take some steps to stabilise the economy. These included passing on some of the international fuel price increases to consumers, restricting the size of the fiscal deficit in the 2008-09 budget, increasing the policy discount rate, and allowing greater flexibility in the exchange rate. However, these actions soon proved to be inadequate and too late.

Faced with the risk of an impending full-blown balance of payments crisis, the authorities in the fall 2008 decided to put in place adjustment measures that facilitate the resumption of inclusive growth with low inflation over the medium term. In November 2008, the government entered into a standby arrangement with the IMF to stabilise the economy.

In this context, the government also requested assistance from the Bank to support the structural adjustment process in a manner that would provide relief to the poorest households in Pakistan by putting in place an efficient and expanded social safety nets programme, WB report mentioned. WB report stated that the proposed Pakistan Social Safety Nets Development Policy Credit (SSN DPC) aims to support the implementation of Pakistans Second Poverty Reduction Strategy Paper (PRSP-2).

In particular, the SSN DPC would provide support to the third pillar of the PRSP: Protecting the poor and vulnerable through improved targeting of safety nets and cash transfer programmes. The proposed SSN DPC is also consistent with Pakistans National Social Protection Strategy that supports the development of an effective and financially sustainable safety net system to promote the re-distributive goals of society and protect those suffering from chronic or transient poverty.

*ACCORDING TO WB REPORT, THE PROPOSED SSN DPC SUPPORTS: *

-- Establishing a national targeting system through the launch of the national poverty-scorecard based targeting method by developing partnerships with institutions for data collection, and eligibility determination essential for its implementation and national rollout.

-- Establishing an effective institutional framework for programme implementation through the development of legal, institutional, administrative institutions for the safety net system and the development of graduation and exit strategies to facilitate households movement out of poverty.

-- Enhancing fiscal sustainability and strengthening the fiduciary environment through ensuring adequate budget allocation for benefit payment and programme administration and developing a reliable and transparent payment system, with strong fiduciary and social accountability controls.


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*PIAF presents three-point plan for economic revival​* 
LAHORE (April 07 2009): The Pakistan Industrial and Traders Associations Front (PIAF) on Monday presented a three-point plan for the economic revival that includes steps to ensure uninterrupted supply of electricity to industrial units, cut in mark-up and measures to improve law and order situation.

The State Bank of Pakistans quarterly report is an eye-opener and calls of urgent measures to increase exports and cut in fast widening trade deficit, said PIAF Acting Chairman Khawaja Shahzeb Akram in a statement. He said that exports could not achieve desired goal unless and until the industry gets enough energy to keep its wheel on the move. He said that high mark-up rate and deteriorating law and order situation were adding fuel to fire and needs a focused attention by the government.

He said that despite repeated government claims, no improvement had been witnessed in the regular provision of electricity to the industry and with every passing day the industrial production was going down thus heavily impacting upon the exports. He said that the government should launch a campaign for creating awareness among the business community for export diversification and identification of new international markets. Over the law and order situation, the PIAF Acting Chairman said that the enemies of the country wanted to portray Pakistan as a failed state but everybody would have to play its role to make Pakistan a safer place for potential investors.

Khawaja Shahzeb Akram said that the business community was ready to play its role for the implementation of policies and all the time policies were made but they fail to yield results for the want of proper implementation. He said that there is a dire need to focus on these three areas to put the economy back on rails as if the situation remains the same foe some more time the growth rate would further come down.


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*Pakistan possesses worlds largest salt mines​*
ISLAMABAD (April 07 2009): Pakistan is the only country for having the worlds largest salt mines with proven reserves of about 10 billion ton in three mines including more than 6.687 billion ton only in the Khewra rocky salt mine, located in the area of district Jhelum. Other two salt mines are Warcha and Kalabagh.

The main habitat of salt lies there in the Punjab province at Khewra in Tehsil Pind Dadan Khan, District Jhelum. The salt found here at Khewra salt mine is the best, finest and in natural state in the world. Salt was first worked out in Khewra which is at about 175 km and the history tells that long before the Alexander the great invaded the area, Salt was being mined at Khewra at that time.

At present the Khewra salt mine is being managed by Pakistan Mineral Development Corporation (PMDC). According to availability of data with PMDC, it is said that still large quantities of salt exist in its unexplored areas of the mines. The annual production of salt at Khewra is about 300,000 tonnes according to the data.

According to the available data there is still enough salt to last about 400 years to come in the existing mines. These reports reveal that about 534, 512 tonnes of fine rock Salt had been extracted up to 1850 and till March 1923 the production obtained from Khewra salt mine was 49,71,420 tonnes.

An agreement was signed with Imperial Chemical Industries (ICI) of England established its Soda Ash Plant at Khewra in 1938. The ICI predominately is based on the salt deposits obtained from the mine. The ICI industries have signed a lifetime agreement with PMDC for the mining of salt from Khewra.

Not only we meet our salt requirements from the Khewra salt mine, but Pakistan also exports salt to India to the tune of 10 thousand to 18 thousand tonnes annually. It is also a source of earning foreign exchange for the government.

Khewra salt mine has 1290 meters long tunnels. The mine is an open challenge to an adventurous spirit. It has 17 levels and there are 50 feet of rock salt between each level in which there are very large chambers, made when Salt was extracted. It is pertinent to mention here that Pakistan is a land of rich natural wealth including precious metals and fluids beneath it like iron, gold, silver, bronze, gas, gypsum and rubies.


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## Neo

*Coal-based power project in Tharparkar: Sindh fails to bring $12 billion investment​* 
KARACHI (April 07 2009): The Sindh government has failed to bring an expected investment of 12 billion dollars in the coal-based power generation project in Tharparkar district due to unavailability of permanent source of water, it is learnt reliably.

According to sources, Shenhua Group Corporation of China was the first to discard the 1.5 billion dollars Thar Coal Project because of a lethargic attitude of the federal and provincial governments. They said the decision was considered to be a major setback for the country, which was at present going through a serious power shortage.

The project, the source said, was expected to add 1,000MW to the national power grid in three years, but factors, like the unavailability of water in Thar coupled with a lower power tariff rate by Islamabad, kept the Chinese firm away from the project.

They said the Sindh government, after conducting a joint roundtable conference with World Bank (WB) in US, was expecting inflow of 12 billion dollars from Germany, Poland, Australia and US in the Thar Coal Power Project. But the said countries are now reluctant to invest for the same reasons.

They said the state-run Chinese company had also sought governments assurance to allow the use of water from underground aquifers.

In view of the rapidly mounting Pakistani energy deficit, there is an urgent need to exploit the countrys huge indigenous coal resources, turning the coal-mining sector into a modern mechanised industry, they opined. Presently, the country is facing a shortfall of 2,200MW and shortfall is likely to increase further in summer season, they pointed out.

To manage and arrange the substantial water for the industrial use and human consumption at Thar coalfield, they said that the Sindh government was now thinking seriously to ensure the availability of water at the site.

They said the provincial government had included the LBOD effluent to Thar coalfield in district Tharparkar in the annual development programme (ADP) 2009-10 with an estimated cost of Rs 7,000 million including Rs 90.625 million for conducting the feasibility study.

The scarcity of water at coalfield is the main hurdle for installation of power generation plants at Thar coalfield with a long 140-km distance. The feasibility report will provide the technical proposal for supplying 50 cusecs water to coalfield. Subsequently, the power generation plants (may be 10) would be installed, which would generate 3,000MW electricity equivalent to the Tarbella Dam.

The Sindh coal authority would supervise the feasibility study, while the same would be implemented through Sindh irrigation and power department. It would be funded by the government of Sindh through ADP 2009-10, they said.

About the financing break up, they said Rs 140 million would be spent in first year, Rs 4,200 million in second year, Rs 1,400 million in third year and Rs 1,260 million in fourth year. However, the sources did not mention years of utilisation of these funds.

The exploration of lignite resources of Thar coalfield area for electricity generation requires sufficient quantity of water resources for long-term sustainability of energy project. The availability of useable water in sufficient quantity is the essence of the development, they said.

Thar, being an arid zone is facing acute shortage of water due to scanty of rainfall. Even water for drinking and domestic use is not frequently available throughout the region, therefore the growth in development is adversely affected. However, the underground water in Thar region is brackish, highly saline and even after treatment that water too is not in plenty to suffice the entire project. Hence, there is a dire need to manage the unusable water at premises of coalfield both for proper power generation and human consumption, they said.

The sources further said the objective of Thar coal development could only be possible, when we can arrange substantial water for industrial use as well as potable water for workers, skilled labours and executors at site. For the purpose, we have to find out the ensured sources of coalfield areas from Naukot, LBOD and underground water, they said.

Furthermore, the WB has extended support for formation of proposed Thar Coal and Power Technical Assistance Project (TCAP) to accelerate the pace of work at Thar coal site.

In a letter, Country Director WB Yusupha Crookes has asked the Sindh government to finalise steps and bring full teams on board in advance appraisal (tentatively scheduled for mid-April, 2009). He said the preparation of the financial management and procurement manuals would need to be completed before the negotiations, scheduled for mid-May 2009.

He said the provincial PC-II will need to be submitted to the Planning Commission (PC) by the end of March 2009. For the project to proceed to negotiations in mid-May, the PC-II would need to be approved by Centre Development Working Party (CDWP) in early May 2009, he said, adding that the tentative date for the board presentation is June 30, 2009.

"We expect to receive Ecnec approval of the PC-II no later then June 8, 2009, as it is a standard condition for distribution of the package to the World Bank Board of Directors", he said.

The sources said that the TCAP would be implemented as a partnership between the province of Sindh (on coal mining side facilitation) and government of Pakistan (on coal-fired power development facilitation). The provincial part of the project is estimated at 25.8 million dollars and federal at 4.2 million dollars, they said.

They said the activities would be implemented with three components including overarching legal, regulatory and institutional strengthening, transaction advice for Thar Block number 11 and project management.


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## AliFarooq

*Govt establishing special investment zones: President - GEO.tv*

Updated at: 2211 PST, Tuesday, April 07, 2009
ISLAMABAD: President Asif Ali Zardari on Tuesday said the government is establishing special investment zones to attract foreign and domestic investment in the country.

The investors in those zones will be provided with special incentives including tax holidays, duty free exports and dedicated power plants, he added.

The President expressed these views while talking to Nasir Al-Mari of Al-Noor Investors, Kuwait, who called on him here at the Aiwan-e-Sadr.

Secretary General to the President M. Salman Faruqi, Advisor to Prime Minister on Petroleum and Natural Resources Dr. Asim Husain, Chairman BOI Saleem H. Mandiwala were also present during the meeting.

Highlighting the investment friendly environment in Pakistan the President underlined the need that foreign investors should enhance level of their investments in Pakistan in different sectors.

The President said that the government has also devised a new strategy of Public&#8209;Private Partnership whereby both the state and private entrepreneurs will benefit from the investment.

The government has also offered various incentives for private sector to invest in the establishment of food storage houses in Pakistan, he added.

Nasir Al-Mari said that Kuwaiti investors are keen to invest in Pakistan and that his group is exploring different avenues for investment in the country.

He further said that both Pakistan and Kuwait enjoy close and cordial relations.


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## Hasnain2009

*PR planning double track from Gwadar to Mastung*

_Saeed Ahmed_

*ISLAMABAD : The Pakistan Railways, which is already working on a double-track project connecting Multan, Raiwind, Khanewal and Lodharan, is planning to lay a 901-kilometre double track from Gwadar to Mastung to boost its revenues.*

Well-informed official sources told The News on Saturday that 50 per cent work on laying the double track connecting Multan with Raiwind, Khanewal and Lodharan had been completed.

The federal government has released 30 per cent funds for this project costing Rs8.436 billion. 

The completion of this project depends on the availability and the release of funds, said the sources. 

*The Pakistan Railways has prepared an effective plan to lay the double track from Gwadar to Mastung. In this connection, consultants have prepared a feasibility study according to which the project is not viable and is capital intensive, requiring a huge capital outlay of Rs107.345 billion.*

The internal rate of return of this project is 8.41 per cent and the financial internal rate of return is 6.90 per cent. According to the study, both are below the minimum required rate of 10 per cent.

*However, the sources said the project looked viable and would boost the revenue of the Pakistan Railways. It would also create a large number of jobs, besides opening new avenues in the social sector.*

While briefing the railways minister on the plan before the address of President Asif Zardari to the joint parliamentary session on March 28, the PR chairman said he had directed the consultant concerned to prepare the feasibility study again and find options, enabling the PR to launch the 901-kilometer double-track project.

The feasibility study will be completed in three months and its report will be submitted in the meeting of the PR Board of Directors for consideration, reviewing and approval. Later, it will be submitted to the Ecnec for final approval.

Praising the plan, the minister directed the officials concerned to chalk out effective and profitable schemes to cover the losses and clear dues worth billions of rupees.

The minister also directed the authorities concerned to improve the performance of the PR to restore the confidence of the people on this mode of transport, besides adopting all security measures to avert any incident of terrorism.

Spokesman for Railways Ministry Munawwar Shah said the ministry was working on this double-track project to link major parts of the country.

He said the work on double tracks in Multan, Khanewal and Lodharan would be completed by the end of the current year. 

The consultant concerned will prepare the feasibility study on the double track from Gwadar to Mastung on the directions of the minister, the spokesman added.


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## vkurian

Neo said:


> *GDP growth to be increased to 8 percent in three years​*
> 
> Underlining the need for tax reforms in the country, he advocated the abolition of multiple taxes and proposed only two types of taxesincome and consumption tax.
> 
> We have recommended to tax real estate, agriculture and *stock market *as part of broadening the tax net, Tareen told newsmen.



Income from stocks are not taxed in Pakistan.......is it true?


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## Hasnain2009

They pay very low tax!!
And govt is talking about new tax "Capital Gain Tax"!!


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## ajpirzada

vkurian said:


> Income from stocks are not taxed in Pakistan.......is it true?



yup. and they will not be taxed for another 2 yrs


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## Neo

*KSE gains 117 points on 18-month high turnover ​* 
Wednesday, April 08, 2009

KARACHI: The financial institutions and high net worth individual investors helped Karachi bourse generating 18 months high turnover with benchmark KSE 100-share Index crossing 7,600 points level on Tuesday.

The KSE 100-share Index posted another fresh rise of 1.56 per cent or 116.95 points and finished at 7,635.88 points. 

The ready market turnover at 478.944 million shares was highest after Oct 18, 2007 turnover of 485 million shares and 25 per cent higher than 382.185 million shares traded a day earlier.

Another interesting feature of this session was inflow of funds from foreign portfolio investors. They invested a sum of about $1.6 million at the three local bourses, according to NCCPL website.

Investors inflated their portfolio with banking, insurance, cement and telecom stocks and opted to book profits on fertilizer, oil and gas exploration, production and marketing.

Consequently, Oil & Gas Development Company, Pak Petroleum, Pak Petroleum, Pakistan State Oil, Habib Bank, United Bank Fauji Fertilizer Bin Qasim and Fauji Fertilizer Company closed in negative column.

Contrary to yesterday, notable buying interest in refinery sector was noted, as all four active refineries i.e. Attock Refinery, Bosicor Pakistan, National Refinery and Pak Refinery managed to close in green territory.

Therefore, the junior 30-Index recorded another gain of 1.33 per cent or 108.90 points and ended at 8,279.35 points.

Turnover in future market was registered at five thousand shares against zero shares changed hands yesterday.

While, the overall market capitalisation surged by another Rs38 billion to stand at Rs2,300 billion.

Analysts said that investors were inflating their portfolios on future outlook of local bourses. The resolution of majority of political disputes in the country has allowed government to shift its complete focus on complicated economic issues, which have also starting showing improvement in the indicators.

The partial resolution of circular debt; decline in rate of return on National Saving Scheme (NSS); and receive of more than a billion dollars recently from international financial institutions and donor agencies in different accounts altogether made the economy stimulus amid triggered buying here at the bourse, they added.

On the basis of above and healthy corporate results announced in quarter ended on Dec 2008, now investors were expecting to receive handsome payouts in the quarter ended with March 2009.

Recovery in Asian capital markets, capital gains expectations from banks and insurance sector, hopes for funds allocation from Friends of Pakistan meeting this month and expectations of favourable monetary policy announcements next week played catalyst role for positive activity, said Ahsan Mehanti.

Analyst Hasnain Asghar Ali observed that penny stocks led the turnover to the highest in recent times. Moreover, assembly session called by the President can be a trigger before the friends forum..

Out of total 392 actives on board, 268 stocks advanced, 109 stocks declined, while the value of remaining 15 stocks closed unchanged.

Highest volumes were witnessed in NIB Bank at 41.663 million closing at Rs6.81 with a gain of 56 paisa, followed by WorldCall Telecom at 33.407 million closing at Rs3.67 with a gain of 44 paisa, TRG Pakistan at 32.544 million closing at Rs1.93 with a gain of 44 paisa, Pakistan Telecommunication Company at 17.848 million closing at Rs19.44 with a gain of 18 paisa, and Pak.PTA at 14.257 million closing at Rs3.13 with a gain of 27 paisa.


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## Neo

*Govt establishing investment zones ​* 
Wednesday, April 08, 2009

ISLAMABAD: President Asif Ali Zardari on Tuesday said the government is establishing special investment zones to attract foreign and domestic investment in the country.

The investors in those zones will be provided with special incentives including tax holidays, duty free exports and dedicated power plants, he added.

The President expressed these views while talking to Nasir Al-Mari of Al-Noor Investors, Kuwait, who called on him at the Aiwan-e-Sadr. Secretary General to the President M Salman Faruqi, Advisor to Prime Minister on Petroleum and Natural Resources Dr Asim Husain, Chairman BOI Saleem H Mandiwala were also present during the meeting.

Highlighting the investment friendly environment in Pakistan the President underlined the need that foreign investors should enhance level of their investments in Pakistan in different sectors.

The President said that the government has also devised a new strategy of Public-Private Partnership whereby both the state and private entrepreneurs will benefit from the investment. 

The government has also offered various incentives for private sector to invest in the establishment of food storage houses in Pakistan, he added.

Nasir Al-Mari said that Kuwaiti investors are keen to invest in Pakistan and that his group is exploring different avenues for investment in the country. He further said that both Pakistan and Kuwait enjoy close and cordial relations.


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## Neo

*Plan underway to eliminate Rs 70 billion inter-corporate debt ​* 
ISLAMABAD (April 08 2009): The governments commitment to prepare a plan for eliminating the intercorporate circular debt, estimated at 70 billion rupees to-date, and to develop a strategy and a time-bound action plan for the adoption of specific measures to strengthen the social safety net are under way, according to the supplementary Letter of Intent (LOI) submitted by the government to the International Monetary Fund (IMF) on March 16, 2009.

The LoI of November 20 2008 had committed the government to: identify all debt owed and due among corporations, (ii) determine the validity of the claims, (iii) prepare a schedule by which respective entities will discharge liabilities to each other, and (iv) prepare a timeframe during which the Federal Adjuster will use his powers to make adjustments, and in case of failure adhere to the approved schedule.

The March 16, 2009 LoI states that the issue of government guaranteed Term Finance Certificates (TFCs) by Pakistan Electric Power Company (Pepco) to settle amounts owed to banks and suppliers has been prepared. This plan was put into effect on March 29, 2009 when the banking sector and the government agreed to issue government-guaranteed TFCs.

Total TFCs issued were worth Rs 80.15 billion. The government paid Rs 78.325 billion to four independent power producers (IPPs), namely Hubco Rs 35.458 billion, Kapco Rs 31.868 billion, AES Lalpir Rs 5.699 billion, and AES Pak Gen Rs 5.3 billion.

The IPPs, in turn, have paid Rs 44 billion to PSO, out of which, PSO has paid Rs 39 billion to oil refineries including PRL, NRL and Parco. PSO is still to recover Rs 55 billion from the power sector. The government has also paid Rs 1 billion to Sui Southern Gas Company, Rs 0.45 billion to Shell, and Rs 0.374 billion to Total (Parco).

Sources said that the government has planned to eliminate the remaining Rs 70 billion circular debt through sale of non-core assets, inclusive of land of power distribution companies. The government has also made a commitment to IMF in the LoI to address the ongoing losses on account of operational and collection losses of distribution companies, Pepco and IPPs. Under the plan, the government will upgrade transmission and distribution systems and IPPs.

Benazir Income Support Program (BISP) was a component of the November 20 LoI which envisaged an increase in social safety net spending of 0.6 percentage of GDP to 0.9 percent of GDP. However, the design of BISP, in particular the targeting of transfers and delivery mechanism, was to be reviewed in the first half of 2009 in consultation with the World Bank.

Newspaper reports of a few months ago showed that the World Bank was not satisfied with the selection and delivery mechanism proposed by the BISP Secretariat. This view was strengthened by the statement contained in the LoI of March 16, 2009 which stipulates that a poverty scorecard, proposed by the World Bank team, has been adopted to improve targeting of the Benazir Income Support Program (BISP).

The LoI further noted that the roll-out of the scorecard system for the selection of beneficiary families has started, and is expected to be completed in 16 districts as a pilot program by end-May 2009. The roll-out of the scorecard to all 130 districts is planned to be completed between December 2009 and June 2010.

As the roll-out of BISP turned out to be more complicated than originally envisaged, BISP disbursements did not take place in the first half of the fiscal year. However, the LoI said that the government has now approved 1.5 million beneficiary families using the pre-scorecard targeting system and it is expected to disburse the budgeted amount of Rs 34 billion.

In addition, the government is continuing the implement Bait-ul-Maal with a budget of Rs 6.7 billion and the province of Punjab has commenced its own cash transfer program with an envelope of Rs 17 billion in FY 2008/09 - the beneficiaries of which will not be eligible for BISP. The Small Public Works Programs of Rs 28 billion also provides a social safety net for the rural and urban poor through small-scale employment opportunities as per the 16 March 2009 LoI.


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## Neo

*Pakistan an attractive place for FDI despite global crunch ​* 
ISLAMABAD (April 08 2009): The secretary Board of Investment (BoI) Tariq Puri said that government is ensuring Pakistan as an attractive place for foreign direct investment (FDI) despite global downturn. He was addressing a workshop on FDI at the Planning Commission here on Tuesday.

He said that the impact of the global downturn is already being felt but FDI has so far been resilient and the government is ensuring that Pakistan remains an attractive place of FDI by special economic zones and proactive promotion of investment packages with support of BoI and other concerned quarters of government.

Dr Khalil Hamdani, visiting professor at the Pakistan Institute of Development Economics (PIDE) said that market-seeking FDI is viable in current global recession and it can modernise industry and better integrate the economy into international production. He said that measures should be taken to attract export-oriented FDI that can be a desirable medium term objective.

He urged the government to prioritise education, infrastructure and health sector that could help reduce the poverty in the country. He said that industrial policy should promote horizontal competitiveness. He further said that government should support services for domestic enterprises.

He said that SME sector should be provided financing and he added that 75 percent SMEs in Gujranwala have never been applied for bank loans. He also urged the government to tackle the issues of power outages. He said that 62 percent of Gujranwala manufacturing units did not have own power generation and shut their operations during power outages.

Pakistan would not escape the global downturn in world trade and investment but the impact on the flow of FDI to Pakistan should be less severe than for other countries. The Ministry of Investment and BoI should target investors from Asia, including the gulf countries and from China, he said.

Also important is to target existing investors, who should be encouraged to reinvest a greater share of their profits, which is otherwise repatriated outside Pakistan, he added. The vice-chancellor of PIDE, Dr Rashid Amjad, announced that the lecture was an effort by the Institute to encourage further research and policy discussion on foreign direct investment and its role in development.


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## Neo

*Special investment zones to be established, says Zardari ​* 
ISLAMABAD (April 08 2009): The government planning to establish special investment zones to attract foreign and domestic investment and they will be provided with special incentives including tax holidays, duty free exports and dedicated power plants. President Asif Ali Zardari expressed these views while talking to Nasir al-Mari of al-Noor investors, Kuwait, who called on him at presidency on Tuesday.

Highlighting the investment friendly environment in Pakistan, President underlined the need that foreign investors should enhance level of their investments in Pakistan in different sectors. He said that the government has also devised a new strategy of public-private partnership whereby both the state and private entrepreneurs will benefit from the investment.

"We have also offered various incentives for private sector to invest in the establishment of food storage houses in Pakistan", he added. Nasir Al-Mari said Kuwaiti investors are keen to invest in Pakistan and that his group is exploring different avenues for investment in Pakistan. He added that both Pakistan and Kuwait enjoy close and cordial relations.


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## Neo

*Pakistan and Bangladesh should enter joint ventures ​*
ISLAMABAD (April 08 2009): Pakistan and Bangladesh have tremendous opportunities of enhancing co-operation in Jute, IT, Energy, Tourism, Oil & Gas, Services and other sectors. However, to take full advantage of each others complementarities, Pakistan and Bangladesh should enter joint ventures and make investments in these sectors of economy of both the countries.

This was observed by High Commissioner of Bangladesh Yasmeen Murshed while addressing business community at Islamabad Chamber of Commerce and Industry during her visit to ICCI. She said Pakistani businessmen have shown much interest in Bangladeshi Jute sector while other areas of Bangladeshi economy also offer attractive trade and lucrative investment opportunities.

She said there was a need to enhance people-to-people and business-to-business level contacts to explore more areas of common interest in both the countries. She said experts of both countries involving public and private sectors should sit together to sort out the non-tariff trade barriers between the two countries.

Yasmeen Murshed said that new governments are in place in both the countries and they are very confident and interested to boost up trade and economic relations up to their full potential. Bangladesh has put in place number of institutions to handle business community problems, she added.

She said that a Joint Economic Committee meeting between Pakistan and Bangladesh was expected to be held in June 2009 to further enhance bilateral economic relations. She stressed for the need of governments interventions to settle the problems and issues which were proving bottlenecks in promoting bilateral trade.

She said both countries should revise shipping protocols to encourage and promote the role of private sector for establishing direct shipping lines between the two countries. She said Bangladesh desires immediate conclusion of Early Harvesting Program with Pakistan as a first step and its successful results would pave way for Free Trade Agreement (FTA) between the two countries.

In his welcome address, Mian Shaukat Masud, President, Islamabad Chamber of Commerce and Industry emphasised for enhanced exchange of trade delegations to explore business potential and hold B2B meetings which will eventually increase trade and investment between Pakistan and Bangladesh.

Highlighting issues being faced by Pakistan with Bangladesh, he said for Pre-shipment inspection of its goods, Pakistan should be waived off from inclusion in the block of countries for which the authorised agent was the Dubai based Bureau Veritas as it was discouraging Pakistani exporters and delaying shipments to Bangladesh.

He said Bangladesh should resolve Pakistani pharmaceutical companies problems regarding registration of their drugs in Bangladesh. He said both countries should open bank branches in each other to facilitate the business communities in promoting trade and investment while a Dispute Resolution Body should be formed at government level for speedy resolution of payment disputes.

He said that the two countries could also greatly benefit from each others experience in engineering, education, telecommunication and data communication sectors beside co-operation and collaboration in textile industry.-PR


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## Neo

*New mechanism to increase remittances ​*Tuesday, 07 Apr, 2009

KARACHI: The State Bank of Pakistan would devise a new mechanism with the help of all stakeholders, including overseas Pakistanis, to increase remittances.

This was stated by the SBP Governor Salim Raza while discussing banks future strategy with federal minister for overseas Pakistanis Dr Farooq Sattar on Monday. 

Dr Sattar urged commercial banks and other stakeholders to adopt various cost-effective and technologically advanced delivery channels that would help achieve two-fold increase in the quantum of home remittances within a year.

During the meeting, which was jointly chaired by Dr Sattar and Syed Salim Raza, at SBP Karachi, the minister said effective delivery channels would help in incremental growth of home remittances. 

It may be an ambitious target but not an impossible one, Dr Sattar added. He hoped that every stakeholder would work in a coordinated manner to achieve the goal.

The meeting discussed issues related to transmission of funds from overseas Pakistanis to their families back home. 

Both Salim Raza and Dr Sattar underscored the need for facilitating remitters so they could be encouraged to use official channels for transmission of remittances as movement of funds through informal channels represents both a loss of revenue and a welfare loss for remitters who are forced to send money home via undocumented channels. 

Raza said that the State Bank would take the initiative in consultation with the Ministry for Overseas Pakistani and other stakeholders in developing a mechanism to enhance flow of inward remittances and for better investment prospects. 

He said that special emphasis would be given to reduction in cost of sending remittances and delivery time involved, which are some of the major hurdles in mobilising remittances through formal channels.

The participants of the meeting were given a brief presentation by the State Bank on recent international efforts and practices being followed by banks in various developing countries to facilitate the flow of remittances. 

Heads of various commercial banks and other stakeholders apprised the meeting about their initiatives and products they are offering to their customers.

The meeting was attended, among others, by heads of commercial banks, representatives from Nadra, Central Directorate of National Savings and other stakeholders, besides senior officials of the State Bank and Ministry for Overseas Pakistanis.


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## Neo

*Pakistan-US economic ties ​*By Ishrat Husain 
Wednesday, 08 Apr, 2009

THE Obama administration has recently completed a review of Washingtons Pakistan strategy. The US Congress is considering a bill that will triple aid appropriations to Pakistan for non-military economic development and another bill to set up Reconstruction Opportunity Zones in Fata. 

Is US aid as envisaged in the Kerry-Lugar bill an appropriate tool for Pakistans long-term economic development? Is its disbursement through the existing channels the most preferred mode of assisting Pakistan in its endeavour to resume its journey to sustainable and equitable growth? Before we get overwhelmed by this act of generosity the issue needs to be explored. 

In my view, the proposed appropriation and mode of delivery with inherent political conditions built into the bill is the least desirable of all options to help Pakistan and improve the US image. Literature on the effectiveness of aid gives evidence that very few developing countries have made good use of this resource for the larger benefit of their populations. Government-to-government assistance results in the relaxation of domestic efforts to mobilise revenues through taxation, non-tax receipts, user charges, and induces wasteful and unproductive expenditures. 

Tied aid, in the form of procurement of goods and services sourced from the donor country, reduces the net benefits to the recipient country. USAID is particularly notorious in this respect as it is popularly believed that as many as 70 cents per aid dollar ends up in the hands of US-based private contractors, consultants, administrators and suppliers. This form of assistance hardly creates a significant number of jobs in the economy. 

There is a mistrust of government agencies in developing countries and these are often bypassed. This has created more distortions in the economy. Instead of strengthening the capacity of institutions responsible for delivering basic services to the people, NGOs are permitted to act as intermediaries in the execution of projects. They hire government officials or professionals at very high compensation packages. This tends to deplete the human resource reservoir available to the government and impairs its capacity. Aid flows also lead to Dutch disease where the appreciation of domestic currency discourages exports and exportable goods and makes non-tradable goods more attractive. 

The political dependence and loss of control over these aid resources are the most persuasive argument as far as public opinion is concerned. Pakistanis are convinced that their economy waxes and wanes with the rise and ebb of US assistance. As democratically elected governments, in contrast to military dispensations, may not always toe the US line they are more vulnerable to the abrupt suspension of aid and the consequent economic dislocation. The goal of building a stable civilian government thus remains at risk. 

Although there is no empirical evidence to substantiate it, there is a widespread feeling that exceptional US aid has been instrumental in boosting economic growth recorded under military governments. Despite huge losses suffered by the economy (an estimated Rs37bn) as a result of 9/11, most outsiders attribute Pakistans economic turnaround to the inflow of $10bn from the US. 

Although the proposed US aid of $1.5bn in the Kerry-Lugar bill would contribute only three to four per cent of Pakistans total foreign exchange earnings the psychological damage it will cause to Pakistanis and Americans far exceeds the benefits derived from this paltry sum. Pakistanis will resent their economic fortune being controlled by the US and strong anti-American sentiments would be reinforced as a result. 

There is no doubt that the Obama administration wishes to demonstrate through this aid bill that the US is a long-term friend of Pakistan. But there is the risk that Congress, think tanks, and the media will use this as a stick against Pakistan every time they perceive that it is not doing enough. Hundreds of Pakistani soldiers have been killed in the war on terror, many more have suffered crippling injuries. The country, which has captured hundreds of Al Qaeda and Taliban operatives, has seen infrastructure destroyed, hundreds of thousands of people internally displaced, its political leaders exposed to terrorist threats, millions among its population antagonised, and has spent large amounts from its resources on beefing up internal security.Yet the consistent theme from the other side is that Pakistan is providing sanctuary to the Al Qaeda leadership, nurturing the militants and that its intelligence agencies leak sensitive information to the other side. The possibility of the suspension of US aid, under pressure from American public opinion, will, therefore, always loom large, cause economic disruptions and sour relations between the two countries. The best way forward to strengthen US-Pakistan economic relations and create a vibrant economy is through the following measures. 

First, the US should finance only such infrastructure, education and health projects that are included in the governments development programme. It should commit the money by co-financing these projects with the World Bank and Asian Development Bank that have the required expertise and the experience of working with and strengthening the institutions responsible for project planning and execution. This would be the most effective use of the US taxpayers money. 

Second, the US Chamber of Commerce has rightly called for easing access for the countrys textiles to American markets. American tariffs on Pakistans leading exports average approximately 10 per cent, about four times the average US tariff rates on imports from other countries. A reduction in tariff rates would not confer any favour on Pakistani exporters but provide them with a level playing field. For a country that so strongly believes in marketplace competition this is a correction not a concession. 

Third, Pakistan needs foreign direct investment in power-generation, transmission and distribution, gas pipelines, oil and LNG terminals, refining capacity, petrochemical complex, etc. US investors should be encouraged through Export-Import Bank loans and Overseas Private Investment Corporation guarantees to participate in Pakistans energy development plans. 

Fourth, the US leads the world in higher education and scientific and technological research. They should resume their assistance in training our teachers and scientists in leading US institutions, forging links between Pakistani and American universities and strengthening the capacity of our research organisations in agriculture, water resources, renewable energy and low-cost building materials. 

These four channels of US assistance have a much better chance of achieving the goals shared by the US and Pakistan  a strong and prosperous Pakistan capable of safeguarding its territorial integrity  than direct US assistance administered through the existing traditional channels.

The writer is a former governor of the State Bank of Pakistan.


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## Hasnain2009

Thank u NEO for keeping us updated!!

:


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## sohailbutt

*Iraq offers to invest in Pakistan oil, gas sectors*​ISLAMABAD: Iraq has offered to invest in the re-construction of Pakistan besides the oil and gas sectors. 

Iraq ambassador to Pakistan told Geo News investors from all over the world coming to Iraq, while the projects on large-scale were underway. He said that Iraq could prove to be a better avenue of employments to the skilled Pakistanis.

He said that Iraq was a big market for Pakistani rice, cement and sugar. He said that a joint ministerial meeting of Pak-Iraq economic cooperation would be held in Baghdad in the third week of next month, after a lapse of long one decade.

Iraq offers to invest in Pakistan oil, gas sectors - GEO.tv


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## sohailbutt

*Pakistan economic slowdown could linger*​
LONDON: Pakistan economic slowdown could keep lingering in the wake of stringent monetary policy and global crisis.

Moody&#8217;s Services analyst Anand Mitra told this. He said that Pakistan economic recovery would hinge on long-term reforms, which could help pave the way for increase in saving, local investment and tax revenue. 

Anand Mitra said that the fallouts of the dwindling global demand could also affect Pakistan&#8217;s exports and foreign investment. He further said that Pakistan has made some positive headway for the achievement of targets, according to international financial institutions report.

Pakistan economic slowdown could linger - GEO.tv


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## sohailbutt

*When in knead, bread can't be a winner ​*KARACHI: It is difficult to explain to a poor man in Pakistan that he will have to fork out more for bread in ten days, but that this is a &#8216;good&#8217; thing.

Flour is going to be more expensive from April 15 because of a decision the government made four months ago. It decided to offer wheat farmers a higher price for their crop to encourage them to sow this staple instead of any other. The result? More wheat was grown in Pakistan for 2009 but the government will have to honour its price.

As promised, the government will buy wheat from farmers at 950 rupees per tonne up from 810 rupees last year. 

As a result, after the 15th, a 20kg bag of flour is likely to cost 65 rupees more. 

The government sells fixed amounts of wheat to the flour mills adding about five rupees as a storage charge. So from Rs 950 per tonne, flour mills are likely to buy it for Rs 955 per tonne from the government. 

The flour mills will then grind the wheat and sell flour to the retailers, wholesalers, food department and bakeries for a higher price. They told SAMAA they expect the price to up Rs 3.15 per kg. Retailers may have to pay Rs 535 instead of Rs 460. 

However, if the government manages to make Pakistan&#8217;s wheat just as expensive as wheat in the international market, there will be less smuggling. If there is less smuggling our supplies will not be tampered with. The good news is that Pakistani farmers will be encouraged to sow more wheat and Pakistan will produce enough to feed itself. It won&#8217;t need to then import wheat at the international rates as it did last year. The only downside is that the average person will have to pay more for bread but at least there will be enough to go around.

WHY THE GOVT MADE WHEAT MORE EXPENSIVE?

In 2008 there was an agonising shortage of wheat in Pakistan &#8211; but not because of a small harvest. There was an outcry as market pricing mechanisms kicked in and the price of naan and roti bread went up as demand outstripped supply.

Pakistani wheat was cheaper than wheat in the international market. Smugglers took advantage and tonnes of the staple quietly left Pakistan for Afghanistan and neighbouring countries. A shortage developed even though farmers had initially harvested enough. As the shortage got worse, the government tried to crack down on people who stashed big supplies of flour. It even banned the movement of wheat between the provinces.

HOW MUCH DOES PAKISTAN NEED?

An average person needs 125 kg of wheat per year in Pakistan. 

This means the country eats about 21 million tonnes a year. 

Last year, Pakistan produced 23.3 million tonnes &#8211; people in the countryside kept 13.5 million for themselves, one million tonnes was set aside as seed for next year&#8217;s crop and around 4.5 million tonnes was bought by the government. The rest was traded privately. 

PAKISTAN WHEAT PRICES, INTERNATIONAL WHEAT PRICES

Global trends in food prices are changing. Last year, the world price of wheat was trading close to US$450. Prices of wheat were rising rapidly in Pakistan&#8217;s region &#8212; they were 30&#37; to 35% higher in Afghanistan and Iran and more than 50% higher in Central Asian states.

International are likely to stay high in the future. Why?

Rising incomes in China and India mean more people are eating meat. This increases the demand for cereal to feed the animals. According to the Economist, since the 1980s, in developing countries demand for meat has more than doubled, and farmers are now feeding their animals about 200 to 250 million more tonnes of grain than they did twenty years ago. 

.:: SAMAA - When in knead, bread can't be a winner

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## sohailbutt

*CFS Mk-II to be eliminated in 66 days ​*ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has decided to discontinue the Continuous Funding System (CFS) Mk-II (&#8216;badla&#8217; or leveraged buying) and deliverable futures products after finding that these financial products had aggravated the recent capital market crisis in the country.

A press release issued by the SECP on Tuesday evening stated that the decision was taken after considering the recommendations of a committee formed to study the product. 

The SECP termed the decision as a move taken in the best interest of capital markets in Pakistan.

The CFS Mk-II will be phased out in three working cycles of 22 business days. 

Therefore, a complete phase-out would be completed in 66 working days. Starting from April 8, no fresh take-up in CFS Mk-II shall be allowed. 

Furthermore, no new contracts would be opened in the Deliverable Futures Market from April 20, 2009. 

The committee decided that the commission shall coordinate with the stock exchanges to develop effective futures products in line with international best practices.

The SECP, the committee said, shall also strive to implement alternative financing products to cater for the financing and leveraging needs of market participants.

The SECP press release stated that during the recent market turmoil and afterwards, a majority of market participants were of the view that the adverse situation faced by investors was, to a large extent, either attributable to the CFS Mk-II product or that the product had played a major role in aggravating the situation.

The boards of Karachi Stock Exchange (KSE), National Clearing Company Pakistan Limited (NCCPL) and a large number of brokers had requested to the commission that this product should be discontinued. 

In order to evaluate the situation, the commission constituted a committee, comprising prominent professionals and representatives of all three stock exchanges, NCCPL and capital market specialists, to review the product independently and give its recommendations.

The committee was headed by Shehzad Naqvi, the CEO of Royal Bank of Scotland (RBS), who is a career banker with vast experience in corporate finance and investment banking.

The committee, after due deliberation, formally recommended to the SECP that CFS Mk-II and Deliverable Futures products be discontinued in the best interest of the capital markets in Pakistan.

The committee further recommended that Cash Settled Futures products should be encouraged. These products would reduce strain on resources of the stock markets since settlement of price differentials does not involve delivery of the underlying shares.

The committee suggested that Cash Settled Futures should be offered both for single scrips as well as for the stock index and implementation of more stringent eligibility criteria for selection of shares for cash settled futures products. 

For the time being, cash settled futures shall be made available in the five most liquid majority government owned scrips.

The committee said the existing risk management framework for cash settled futures products should be further strengthened and recommended that client-level margin system should be introduced at all stock exchanges. 

Similarly, concentration margins should also be implemented. 

It suggested widening of scrip based circuit breakers and introduction of index based market halts.

The committee also said that a robust securities lending and borrowing system should be introduced. Implementation of real time surveillance mechanism at all stock exchanges to detect market manipulation and abuse has also been proposed.

The commission, in collaboration with all other stakeholders, will consider the implementation of these recommendations over the next few months.

DAWN.COM | Business | CFS Mk-II to be eliminated in 66 days


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## sohailbutt

*T-bills&#8217; rates may rise by up to 50 basis points ​*KARACHI: Treasury bills rates may experience another increase of up to 50 basis points due to shortage of liquidity in the market creating a conducing environment for keeping the interest rate high at the current level.

The cut-off yields were slashed largely in late February and in second week of March, which cumulatively reduced the yields by 220 basis points. It was taken as a sign that the State Bank was planning to reduce the policy interest rate from 15 per cent elevated in November, 2008 as part of the agreement with the International Monetary Fund.

In the last auction the yields on T-bills were increased by up to 11 basis points giving a sign of reversal like situation. &#8216;The T-bills cut-off yield on Wednesday may increase by 25 to 50 basis points due to liquidity shortage in the money market,&#8217; said Mohammad Sohail, a leading analyst. 

In the last auction held on March 25, the 12-month T-bills cut-off yield was increased to 10 basis points to11.95 per cent. Market dealers said this 12-month paper was traded at 12.25 to 12.40 per cent in the money market on Tuesday, which reflects clearly that the money market was short of liquidity.

The last auction also witnessed increase in the cut-off yield of benchmark 6-month paper by 11 basis points to 11.89 per cent. 

Until recently, the banking system was floating with the ample liquidity as the outflows to the corporate sector and the entire private sector fell sharply to just one third of what it was last year. 

However, the massive borrowing by the government and organisations under its umbrella sucked up the liquidity. 

The State Bank last week announced that it would raise Rs350 billion from the market through T-bills till the end of the current fiscal.

The liquidity shortage emerged due to massive government borrowing, higher lending to public sector enterprises and outflow of liquidity to National Saving Scheme.

In the first nine months, the government borrowed over Rs100 billion through commercial banks while during the same period of last year it retired Rs97 billion. 

The public sector enterprises borrowed over Rs63 billion against Rs22 billion of the last year. The government recently accumulated Rs80 billion through 10 commercial banks by selling Terms Finance Certificates to pay off the stuck-up circular debts of the oil marketing companies. 

The government has mobilised Rs75 billion through National Saving Scheme (NSS) in first seven months of the current fiscal while it gathered Rs86.6 billion during the same period last year. 

The shortage of liquidity provides an opportunity to the State Bank to carry on with the policy interest rate (discount rate) at current level of 15 per cent. 

This high interest rate has already crippled the industry and trade, which forced the economy to contract instead of growing. Demand for lowering of interest rate is strong but the IMF has recently suggested Pakistan not to change its policy interest rates &#8216;unless the inflation falls decisively.&#8217;

The advice came with the approval of second IMF tranche of $848 million, which made it significant. A senior banker doubted that the SBP was making ground to keep the interest rate at the present level or reduce it insignificantly.

DAWN.COM | Business | T-bills? rates may rise by up to 50 basis points


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## sohailbutt

*SECP registers 653 companies in first quarter​*ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) registered 653 companies during the first quarter of this calendar year.

With the new incorporations, the total number of registered companies with the SECP as on March 31, 2009, is now 53,211.

The newly registered 653 companies also include 53 companies having foreign investment. 

Foreign investors are mainly from the US having participation in nine companies followed by UK and China with investment in eight companies each, and Germany in four companies. 

An official announcement issued by the SECP here on Tuesday said other foreign investors who invested in the newly- registered entities belonged to Canada, Italy, Korea, Malaysia, Turkey having participation in two companies each and Austria, Australia, Bulgaria, Belgium, France, Hong Kong, Oman, Iran, Lebanon, Netherlands, Nigeria, South Africa, UAE. 

During the quarter, the numbers of companies registered during the months of January, February and March, 2009 were 237, 187 and 229, respectively. 

Out of the total 653 companies registered during the quarter, 647 companies were limited by shares, comprising seven public unlisted companies, 610 private companies and 30 single member companies. 

In addition, four associations are not-for-profit under section 42 of the Companies Ordinance, 1984 (the Ordinance), one company limited by guarantee under section 43 of the Ordinance and one trade organisation was also registered. 

Total authorised capital and paid-up capital of the 647 companies limited by shares amounted to Rs269 million and Rs12.73 million, respectively.

During the quarter, the number of new incorporation was the highest in Lahore whereby 210 companies have been registered with the Companies Registration Office (CRO) of SECP, followed by 156 companies in CRO Karachi and 182 in CRO Islamabad. 

The CROs of Peshawar and Quetta registered 28 companies each while CROs at Multan, Faisalabad, and Sukkur registered 27, 20 and two companies, respectively. 

The highest number of company incorporation was witnessed in the services sector, comprising 118 companies, followed by 112 in trading, 62 in tourism, 45 in construction, 40 in information technology, 28 in communications, 22 in power generation and 21 in textile sector.

DAWN.COM | Business | SECP registers 653 companies in first quarter


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## sohailbutt

*Cut in federal funds to hit mega projects​*PESHAWAR: The federal government has hinted at over 40 per cent cut in the size of Public Sector Development Programme (PSDP) owing to financial constraints, affecting implementation of a number of mega projects in Frontier province.

&#8216;The Planning Commission, which oversees execution of PSDP, has recently communicated to the provinces that the size of PSDP was going to be reduced by more than 40 per cent,&#8217; an official told Dawn here on Tuesday.

The official said that prime minister had already approved to cut the size of the Rs541 billion PSDP by Rs100 billion in the current fiscal year, however, further decrease in the allocation was also on the cards. 

The Planning Commission, the official said, had communicated to the provinces the expected decline in the funds availability along with a list of projects, which were going to be affected by the cut. 

The official said that the cut would mostly affect execution of new projects, as those ongoing projects, which were about to be completed or were in the middle of their implementation schedule would continue to get funds inflow as per the plan. 

The PSDP for current fiscal year carries 61 uplift projects, which are being implemented in NWFP with total estimated cost of Rs247.25 billion. The current year allocation for these projects was Rs8.094 billion. 

The sector-wise allocation for current year and number of PSDP schemes in NWFP include; health with Rs1.978 billion, education and training sector with Rs384.850 million, food, agriculture and livestock sector with Rs1.884 billion, environment sector with Rs335 million, finance sector with Rs161 million.

Similarly, industries with Rs300.558 million, planning and development sector with Rs203.100 million, water and power sector with Rs2.323 billion, population welfare with Rs21 million, narcotics control with Rs377.810 million and access to justice programme carries an allocation of Rs108.320 million in the current fiscal year.

The official said that as per the Planning Commission list, the projects in health, water and power, environment and education would be affected owing to non-availability of funds in the current fiscal year.

Development cycle, the official said, in NWFP was already hit because of paucity of resources and growing cost of security related expenditures in the current financial year.

DAWN.COM | - NWFP | Cut in federal funds to hit mega projects


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## sohailbutt

*Three licenses for oil exploration granted​*ISLAMABAD: After the approval of petroleum policy-09, the government has awarded three petroleum exploration licenses, which are the first concessions after more than two years.

All the three licenses have been awarded to the three joint venture companies of one group after open bidding. 

The first license has been awarded to Paige Limited & RDC International in the block no. 2972-2 (Cholistan), covering an area of 2478 square km in Bahawalpur and Bahawalnagar district of Punjab.

The second exploration license has been awarded to Nativus Resources Ltd and RDC International for block 3072-4 (Shakarganj West) covering an area of 2479 square km in Vehari, Pakpattan, Sahiwal and Bahawalnagar districts of Punjab. 

While the third one is obtained by the joint venture of RDC International (Pvt) Ltd & Paige Limited for block no 3073-3 (Punjab) covering an areas of 2410 square km in Pakpattan, Sahiwal and Okara districts. 

All the licenses have been awarded in non-traditional areas of Punjab in terms of oil and gas exploration.

The three companies will invest $1.3 million in the initial three years for satellite data processing, geophysics and geology studies and the two dimension seismic surveys.
All the three companies are already involved in E&P activities in blocks bordering Balochistan. 

The concessions were signed by G.A. Sabri, additional secretary petroleum ministry, and Javed Ahmed, chief executive officer RDC and Khawar Mahmood, director Paige & Nativus.

DAWN.COM | Business | 3 licenses for oil exploration granted


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## sohailbutt

*Cellular companies rule out downsizing​*KARACHI: Almost all cellular companies rule out any plan to shed permanent workers, and many have disclosed plans to increase investment in the current year. 

However, one company admitted to have offloaded contractual and some permanent workers. 

Currently, the companies are spending huge amounts on print and electronic media campaigns, on cut in call rates, besides offering various packages to lure customers. 

In view of 160-170 million population, the mobile phone subscriber base in Pakistan currently stands at 91 million. Many people prefer holding multiple SIMS. 

Dawn has solicited views from various cellular companies to review their investment plans in 2008 and 2009 and also job situation in view of the economic slowdown. 

MOBILINK: Director, Public Relations and Corporate Social Responsibility, Orascom Telecom (Mobilink), Omar Manzur, said as an Orascom Telecom Holding (OTH) subsidiary, Mobilink has invested $537 million in its infrastructure aimed at enhancing capacity, network quality and coverage. 

On investment plans in 2009, he said information would be made available by OTH in its first quarter results 2009. 

Having invested approximately $2.5 billion to-date in network rollout, infrastructure and a 6,500 km redundant fiber optic backbone and with a diverse product platter, including m-commerce and broadband, the company is well-poised to fulfill the communication needs of its consumers. 

&#8216;We plan to continue investing during 2009 as well, regardless of economic factors,&#8217; he said. 

On job scenario in 2008 and 2009, he said global economic crunch and overall inflationary trends have affected the entire economy and the telecom sector is no exception. 

As part of an overall cost-rationalisation exercise, there have been some adjustments in the portfolio of services sought through various agencies.

&#8216;No permanent employees have been laid-off in the past six months. We are hiring at the moment as well and have advertised 60 new openings in various departments,&#8217; Omar said.

In times of stiff competition and economic slowdown, Mobilink had registered a double digit growth in revenues during the year 2008 in local currency. However, he said, as a private sector organisation, this information remains privy to OTH and is reflected in OTH&#8217;s overall earnings results available on OTH website. 

Mobilink employs over 4,100 individuals directly and has a subscriber base of over 28 million. 

UFONE: Head of Public Relation, Pak Telecom Mobile Limited (Ufone), Moazzam Ali Khan, said the company invested over $250 million in 2008. 

A majority of this investment was directed towards network foot print in less developed and rural areas of Pakistan. In addition to direct investments in the network, Ufone has been busy in expanding its retail and franchise network in all parts of the country in view of tough economic conditions. 

&#8216;As of March 2009, Ufone has not let go off any employees neither planning to lay-off any employees in the near future,&#8217; Moazzam said. 

In fact, Ufone has been adding new employees to its family based on the continuously growing business requirements, he claimed. 

He did not give figures of earning or profit during 2008 compared to 2007 saying this is company confidential information and hence he won&#8217;t be able to share the same. Ufone has more than 19.5 million customers and 3,850 Ufone team members.

TELENOR: Director, Corporate Communication, Syed Hasnat Masood, said Telenor has made the largest European direct investment in Pakistan as yet, exceeding two billion dollars. Recently, Telenor Pakistan entered into an agreement to acquire 51 per cent of the shares in Tameer Microfinance Bank for a Foreign Direct Investment of $12.5 million through a direct rights issue. The acquisition is part of Telenor Pakistan&#8217;s strategy to offer financial services in Pakistan.

On new investment during the current year, he said as Telenor ASA of Norway, the parent company of Telenor Pakistan, is listed on the stock exchanges in Oslo and New York, we are legally bound not to disclose figures publicly before they are formally released. 

About future plans, Telenor Pakistan has set aggressive targets for itself, while exploring diverse business opportunities. 

&#8216;The company is here to stay and intends to play a vital role in further expansion,&#8217; he added.

However, there is a need for stability in policies, and investment-friendly climate, and reasonable taxation, he said.

The company has created some 2,500 direct and 25,000 plus indirect jobs. The company believes in prudent hiring and by keeping the long-term business in view. &#8216;We don&#8217;t have to lay off people,&#8217; he said, adding &#8216;Telenor Pakistan is not planning any job cuts.&#8217; The company has a subscriber base of 19.8 million.

ZONG: A spokesman for China Mobile Pakistan said that Zong would invest $500 million in the country&#8217;s economy during 2009 in the areas of building new network capacity of more than 20 million customer base and other infrastructure. 

He said the company had, so far, invested $1.66 billion and has generated more than 1700 direct and over 40,000 indirect jobs. ZONG is the first international brand of China Mobile which was launched on April 07, 2008 in Pakistan. Currently the company has over six million customers.

DAWN.COM | Business | Cellular companies rule out downsizing


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## sohailbutt

*End of turmoil means surge for Pakistan stocks​*KARACHI: Pakistan&#8217;s stock market has rebounded 27.5 per cent in three weeks, taking advantage of some welcome political stability, which dealers hope can propel the bourse to the heights seen last year, AFP reported.

In mid-March, the government ended a damaging political showdown with the opposition by reinstating the country&#8217;s sacked chief justice, bringing an end to mass protests and helping to restore investor confidence.

The benchmark index of the Karachi Stock Exchange, the KSE-100, has now recovered more than 58.5 per cent since hitting a four-year low of 4,815 points in late January. It closed at 7,635.88 on Tuesday.

&#8216;Political stability is the key that has created positive sentiments and made the market grow tremendously,&#8217; said Mohammad Sohail, an independent analyst formerly with market intelligence firm JS Research.

&#8216;It is the fastest recovery of our stock market in history,&#8217; he said.

The Karachi exchange has been seen as one of the most promising emerging markets in the world, but the global economic slowdown has compounded the woes caused by the political turmoil in the troubled country.

Last year, as the slowdown took hold, Pakistan was hit by almost incessant attacks by militants, which deterred foreign investment in this nation of more than 160 million people.

The result? The market lost 58 per cent of its value in 2008. Market capitalisation dropped from 75 billion dollars the previous year to 19 billion dollars.

It was the index&#8217;s first losing year since 2004.

The rapid turnaround so far in 2009 has been a welcome change, and many analysts stress that the political situation is key to that success at the exchange, which was founded in 1947, the same year Pakistan came into being.

&#8216;The market is expected to grow as long as political stability remains,&#8217; said Shuja Rizvi, an analyst formerly with brokerage house Capital One Equities. &#8216;A better law and order situation will strengthen them further.&#8217; Even though the market has rebounded dramatically, foreign investors remain skeptical, and are selling more shares each week than they buy &#8212; testament to the instability in a country where Al-Qaeda and the Taliban are active.

But analysts say foreign investors are getting more bullish on the country.
&#8216;Foreigners are still skeptical but their ratio of selling is slowing. This shows they are gaining confidence and it is not as chaotic as January to March when they sold 250 million dollars worth of shares,&#8217; Rizvi said.

Foreign investors were believed to be net sellers of about 7.5 million dollars in shares last week.

&#8216;Local investors have even disinvested their money from foreign countries and invested it here,&#8217; Rizvi said. &#8216;We call it the reversal of capital flight.&#8217; International financial institutions have also shown confidence in Pakistan, the world&#8217;s only nuclear-armed Islamic nation.

The International Monetary Fund (IMF) and the World Bank have respectively extended an 847 million dollar loan and 500 million dollars in interest-free credit &#8212; announced in late March after the political showdown came to an end.

The IMF also released 3.1 billion dollars last November as a first tranche of a 7.6-billion-dollar emergency loan to stave off a balance of payment crisis.
Analysts say the government&#8217;s economic measures are heading in the right direction through prudent macroeconomic polices and needed reforms.

Indeed the market has been doing so well, analysts say, that it&#8217;s on the verge of showing one of the ultimate signs of health &#8212; a correction.

&#8216;Shares will shed a few hundred points soon because it has gained heavily in a very short period,&#8217; Rizvi said. &#8216;Correction in the market is due.&#8217;

DAWN.COM | Business | End of turmoil means surge for Pakistan stocks


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## sohailbutt

*Pakistan-US economic ties​*THE Obama administration has recently completed a review of Washington&#8217;s Pakistan strategy. The US Congress is considering a bill that will triple aid appropriations to Pakistan for non-military economic development and another bill to set up Reconstruction Opportunity Zones in Fata. 

Is US aid as envisaged in the Kerry-Lugar bill an appropriate tool for Pakistan&#8217;s long-term economic development? Is its disbursement through the existing channels the most preferred mode of assisting Pakistan in its endeavour to resume its journey to sustainable and equitable growth? Before we get overwhelmed by this act of generosity the issue needs to be explored. 

In my view, the proposed appropriation and mode of delivery with inherent political conditions built into the bill is the least desirable of all options to help Pakistan and improve the US image. Literature on the effectiveness of aid gives evidence that very few developing countries have made good use of this resource for the larger benefit of their populations. Government-to-government assistance results in the relaxation of domestic efforts to mobilise revenues through taxation, non-tax receipts, user charges, and induces wasteful and unproductive expenditures. 

Tied aid, in the form of procurement of goods and services sourced from the donor country, reduces the net benefits to the recipient country. USAID is particularly notorious in this respect as it is popularly believed that as many as 70 cents per aid dollar ends up in the hands of US-based private contractors, consultants, administrators and suppliers. This form of assistance hardly creates a significant number of jobs in the economy. 

There is a mistrust of government agencies in developing countries and these are often bypassed. This has created more distortions in the economy. Instead of strengthening the capacity of institutions responsible for delivering basic services to the people, NGOs are permitted to act as intermediaries in the execution of projects. They hire government officials or professionals at very high compensation packages. This tends to deplete the human resource reservoir available to the government and impairs its capacity. Aid flows also lead to &#8216;Dutch disease&#8217; where the appreciation of domestic currency discourages exports and exportable goods and makes non-tradable goods more attractive. 

The political dependence and loss of control over these aid resources are the most persuasive argument as far as public opinion is concerned. Pakistanis are convinced that their economy waxes and wanes with the rise and ebb of US assistance. As democratically elected governments, in contrast to military dispensations, may not always toe the US line they are more vulnerable to the abrupt suspension of aid and the consequent economic dislocation. The goal of building a stable civilian government thus remains at risk. 

Although there is no empirical evidence to substantiate it, there is a widespread feeling that exceptional US aid has been instrumental in boosting economic growth recorded under military governments. Despite huge losses suffered by the economy (an estimated Rs37bn) as a result of 9/11, most outsiders attribute Pakistan&#8217;s economic turnaround to the inflow of $10bn from the US. 

Although the proposed US aid of $1.5bn in the Kerry-Lugar bill would contribute only three to four per cent of Pakistan&#8217;s total foreign exchange earnings the psychological damage it will cause to Pakistanis and Americans far exceeds the benefits derived from this paltry sum. Pakistanis will resent their economic fortune being controlled by the US and strong anti-American sentiments would be reinforced as a result. 

There is no doubt that the Obama administration wishes to demonstrate through this aid bill that the US is a long-term friend of Pakistan. But there is the risk that Congress, think tanks, and the media will use this as a stick against Pakistan every time they perceive that it is not doing enough. Hundreds of Pakistani soldiers have been killed in the war on terror, many more have suffered crippling injuries. The country, which has captured hundreds of Al Qaeda and Taliban operatives, has seen infrastructure destroyed, hundreds of thousands of people internally displaced, its political leaders exposed to terrorist threats, millions among its population antagonised, and has spent large amounts from its resources on beefing up internal security.Yet the consistent theme from the other side is that Pakistan is providing sanctuary to the Al Qaeda leadership, nurturing the militants and that its intelligence agencies leak sensitive information to the other side. The possibility of the suspension of US aid, under pressure from American public opinion, will, therefore, always loom large, cause economic disruptions and sour relations between the two countries. The best way forward to strengthen US-Pakistan economic relations and create a vibrant economy is through the following measures. 

First, the US should finance only such infrastructure, education and health projects that are included in the government&#8217;s development programme. It should commit the money by co-financing these projects with the World Bank and Asian Development Bank that have the required expertise and the experience of working with and strengthening the institutions responsible for project planning and execution. This would be the most effective use of the US taxpayers&#8217; money. 

Second, the US Chamber of Commerce has rightly called for easing access for the country&#8217;s textiles to American markets. American tariffs on Pakistan&#8217;s leading exports average approximately 10 per cent, about four times the average US tariff rates on imports from other countries. A reduction in tariff rates would not confer any favour on Pakistani exporters but provide them with a level playing field. For a country that so strongly believes in marketplace competition this is a correction not a concession. 

Third, Pakistan needs foreign direct investment in power-generation, transmission and distribution, gas pipelines, oil and LNG terminals, refining capacity, petrochemical complex, etc. US investors should be encouraged through Export-Import Bank loans and Overseas Private Investment Corporation guarantees to participate in Pakistan&#8217;s energy development plans. 

Fourth, the US leads the world in higher education and scientific and technological research. They should resume their assistance in training our teachers and scientists in leading US institutions, forging links between Pakistani and American universities and strengthening the capacity of our research organisations in agriculture, water resources, renewable energy and low-cost building materials. 

These four channels of US assistance have a much better chance of achieving the goals shared by the US and Pakistan &#8211; a strong and prosperous Pakistan capable of safeguarding its territorial integrity &#8211; than direct US assistance administered through the existing traditional channels.

DAWN.COM | Business | Pakistan-US economic ties


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## sohailbutt

*Government approves Iran gas pipeline​*ISLAMABAD: After years of delay and recent differences over the price of gas, the federal cabinet on Wednesday cleared the way for the $7.5 billion Iran-Pakistan-India (IPI) pipeline project by accepting price purchase formula offered by Iran.

The cabinet accepted the Iranian demand of offering one billion cubic feet per day of gas from the IPI at the rate of 80 per cent of the crude oil price in the international market. 

A sale-purchase agreement with Iran is likely to be signed this year.

The Economic Coordination Committee (ECC) of the cabinet had earlier rejected the Iranian price formula and asked the Ministry of Petroleum to make Tehran agree to 60 to 68 per cent of the crude oil price as the offered rate was too high.

However, when Tehran did not budge from its position, the ECC directed the ministry to lower its demand from the project by 50 per cent to 500,000 million cubic feet per day.

In its last bid to move Tehran, the government had offered a rate of 70 per cent of the crude price in the international market. Several official Pakistani delegations visited Iran over the last few months including multiple visits by Advisor to Prime Minister on Petroleum Dr Asim Hussain. 

Later, President Asif Ali Zardaru himself visited Iran and requested Iranian President Ahmedinejad to bring down the demanded price, but the president was told by his counterpart that any further concession was not possible from Tehran.

Now, the ECC has cleared the way for the project despite immense diplomatic efforts and pressure from the United States to make Islamabad opt for the somewhat costlier option of buying the Caspian Sea natural gas from Turkmenistan through Afghanistan by agreeing to the Trans-Afghanistan Pipeline (TAP).

The Asian Development Bank (ADB) has also agreed to provide loan for the TAP project from which India will also buy gas.

After the approval of the cabinet, a Pakistani delegation will now visit Tehran to sort out further differences over the design of the project because Iran also wants Islamabad to agree to the size of the pipeline through which India should also be provided almost a similar quantity of gas. 

India for the time being is staying away from the IPI project mainly because of its recent agreement with the US over nuclear energy for civilian use.

Pakistans domestic or industrial sector will not be able to afford IPI gas. But Pakistan, now faced with 3500 megawatt shortages of electricity, will be able to produce 5000MW with the Iranian gas, which even at the agreed rate will still be a cheaper option than using furnace oil.

When contacted PM Advisor on Petroleum Dr Asim Hussain said: The next step would be to sign an agreement with Iran and hire a consultant for the design of the project. 

Experts of the petroleum ministry and the Inter State Gas Systems (ISGS) would be heading for Tehran soon to finalise an agreement over the projects. Pakistans interest in the project is being looked after by the ISGS, a semi autonomous public sector body.

The imported gas would be supplied to power generation units through the public sector gas utility companies under the administrative control of the Petroleum Ministry and a separate tariff can be formulated for those industrial consumers who would use imported gas for their captive power plants.

The 1100-kilometer IPI is proposed to start from Asalouyeh, the South Pars field in Iran and will pass through Balochistan and Sindh. The initial capacity of the pipeline will be 22 bcm of natural gas per annum, which is expected to be raised later to 55 bcm.

The Iran -Pakistan -India gas pipeline project was conceived in 1995 and after almost 13 years of discussions, India finally decided to quit the project despite facing a severe energy crisis.

DAWN.COM | Business | Government approves Iran gas pipeline


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## sohailbutt

*Traders exchange goods worth Rs 1.7 million across LoC​*ISLAMABAD (April 09 2009): Traders of Azad Jammu and Kashmir and occupied Kashmir exchanged trade goods worth Rs 1,727,010 on Wednesday. According to Kashmir Media Service, for the first time since the trade started, the traders of both the sides exchanged goods in a single day, across the Line of control (LoC) via Poonch-Rawlakot road.

The LoC was opened at 9:00am and closed late in the evening. As many as ten trucks loaded with tradable goods, valuing Rs 1,159,670 were dispatched to the other side of LoC, which reached Ranger Nallah Trade Felicitation Centre (TFC).

These trucks returned at 5:30pm to Poonch after unloading the goods dispatched to Azad Jammu and Kashmir, across the LoC. Trader Bansi Lal Sharma of Occupied Kashmir dispatched tradable goods to Choudhary Mohammad Akbar proprietor of Datta Agencies Hazira in Azad Kashmir.

These goods included 200 boxes of banana (900 kg) worth Rs 63,000, 5 boxes of mango (75 kg), 305 bags of onion (45795 kg) worth Rs 51, 127 and three bags of lady finger (90 kg) worth Rs 5,69,662. Meanwhile, Anand Sales Corporation Poonch exported 115 bags of onion (6227 kg) and 200 boxes of banana (3400 kg), all valuing Rs 43,112 to Chaudhary Mohammad Rashid of Hazira.

Another trader Hazi Abdul Razaq dispatched fifteen pieces of blankets worth Rs 80,550 and twenty pieces of rugged sheets worth Rs 7,960 to Datta agencies Hazira. Ram Pal Sharma of Narwal Jammu sent 380 bags of onion (12940 kg) worth Rs 1,95,546 and samples of one box each of grapes and apples to Datta Agency. A trader Sat Pal of Narwal Jammu, occupied Kashmir, also forwarded trade goods.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Nine schemes of AJP underway in Balochistan​*ISLAMABAD (April 09 2009): Work on nine schemes in various districts of Balochistan is in progress under Access to Justice Programme (AJP) and a number of schemes under the same programme have already been completed. According to Access to Justice Programme Secretariat, in Balochistan, considerable progress has been shown in the province by completion of work on a number of schemes under Access to Justice Programme.

As part of the financial plan, Balochistan was entitled to a share of Rs 1140.8 million as per NFC Formulae. Out of this entitlement the cumulative budgetary allocation made so far is Rs 1056 million and up till now Rs 1008 million have been released by Access to Justice Programme for utilisation in the province.

Work on the Programme Loan schemes is in process while the majority of projects in various justice sector departments have been completed successfully. Cost distribution percentage of various departments indicates that major portion of the amount is being spent on reforms in judiciary (30%), prisons (31%) and police (27%).

Remaining 5 percent of cost has been allocated to complete some initiatives in Law Department, Prosecution Department and the office of the Ombudsman. In judiciary total number of eighteen schemes with an estimated amount of Rs 258 million are being spent on infrastructure and capacity building projects.

As part of this plan, 35 court rooms and buildings, 27 residences for judicial officers, 16 litigant sheds with amenities for litigants, one judicial complex, one bar room and land acquisition have been made possible.

Work on all the nine schemes has already completed with an expenditure of Rs 133 million. Estimated expenditure of Rs 125 million is being incurred on ongoing schemes in the province. The Police Department with its provision of Rs 282 million has focused on establishment of new Police Lines, barracks and residential complexes.

The projects worth Rs 165 million have been completed where as work on Rs 118 million projects are going on at various districts in Balochistan. In Prison Department Rs 247 million are separately reserved for the construction of 10 barracks and 12 death cells, 54 residences for jail staff. One facility for juvenile offender is also in the offing as part of AJP schemes.

Balochistan High Court has taken many steps to reduce the number of pending cases and to ensure that the legal system can dispense justice without undue delay. Availability of resources under the AJP will go a long way in removing the problem areas in dispensation of justice.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Stabilising border region: Pakistan urges $30 billion Marshal Plan​*WASHINGTON (April 09 2009): Pakistan has called for a $30 billion Marshal Plan to bolster socio-economic development of people as a way to wipe out al Qaeda threat in the Pak-Afghan border region and help win hearts and minds of the local population. The cost to the West for such a plan in the high-stakes region was negligible compared to that of rescuing failing banks and corporations, Pakistans ambassador to the United States told The Washington Times.

"Despite the economic issues that the world is facing, the cost of a Marshall Plan for Afghanistan and Pakistan is going to be minuscule (compared) to the bailouts being given to American car companies and AIG (American International Group)," Husain Haqqani said. The plan, he advocated, will help bring stability to the region as well as blunt anti-American sentiment.

"And the impact in terms of American security and in longer term stability of the world in a very precarious region will be far greater. Pakistan has the will to fight terrorists, it needs the means and the United States should provide those," he underlined.

Pakistan needs $5 billion a year for the next five years from the United States and its allies to build local law enforcement of about 100,000 men, strengthen counter-insurgency against the Taliban and al Qaeda and persuade average Pakistanis that the US-led war on extremism is Pakistans war and essential for the countrys survival, he argued.

The ambassador denied allegations against Pakistans intelligence organisation, ISI, that it was helping the Taliban. He said the US public diplomacy in the Muslim world had lagged under the Bush administration and praised Obamas efforts to reach out to Muslims.

"We are glad that President Obama has taken the initiative," Haqqani said. "The more President Obama and his team reach out, the easier it will be to mobilise people against the extremists and terrorists."

The envoy cautioned, however, that it would take time to change attitudes as many remember that the US supported Pakistan during the fight against Soviet occupation in Afghanistan, then deserted us. "This is not a switch that can be turned on and off," he said. "It takes a while for the counter-narrative to be accepted."

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Government to implement uniform power tariff for all consumers​*ISLAMABAD (April 09 2009): Advisor to Prime Minister on Finance Shaukat Tarin said on Wednesday that government would impose tax on stock market, real estate and agriculture sectors in the next three years to broaden the tax-base and raise tax to GDP ratio.

Addressing Islamabad Chamber of Commerce and Industry (ICCI) he said that government would end the power tariff difference between domestic, commercial and industrial consumers and implement uniformed power tariff for all types of consumers.

He said that why should be a difference in power tariff between different types of consumers. He said that government would also impose tax on stock market, real estate and agriculture sectors in the next three years to enhance the revenue collection. He also refused to resume amnesty scheme for the legalisation of the undocumented assets and income.

He said that inflation was at 25 percent in October last year that would be reduced to single digit by July and August. At present the inflation had been reduced to 17-18 percent that was the remarkable success of the current government. The banks are receiving liquidity and banking sector was stable despite the economic recession. He said that government was focusing on reducing the inflationary rate that would result in decreasing the interest rate.

The growth rate had been estimated to remain at 2.5 percent during the current fiscal year and if government had focused on growth rate by borrowing, the inflation had surged up to 35 percent from 25 percent. He said that inflation would further come down during the next year that would help increase in growth rate.

Government wanted to create low inflationary environment, he said adding that world is ready to lend money but government wanted to remove structural imbalances. He said that former government had shown high growth rate that was due to borrowing. It was due to policies of former government that present government had issued Term Financing Certificates (TFCs) worth Rs 80 billion.

"Our main focus is on increasing the revenue and main burden was on manufacturing sector, he said adding that government would bring all other sectors in tax net to enhance the revenue collection. He said that government would end the cross subsidy in the power sector and power tariff differences between different consumers would be abolished.

He further said that government would replace general sales tax with value added tax (VAT). Government intends to impose it on retail level excluding the food items.

Government will focus on manufacturing sector and was working on Corporate Rehabilitation Act for revival of sick industrial units and textile sector will be given incentives to enable it to compete the products of other countries of the world. Government can bring the foreign exchange two sources including exports and remittances. Government will set up export zones in the country. He admitted that power load shedding had affected the industry and assured to end load shedding by end of the current calendar year.

Government is focusing on hydel, coal and wind resources to generate the electricity. Government has formed integrated energy plan to exploit these resources. He informed that country had unexplored gas reserves of 150 trillion cubic feet and had explored only 30 TCF. Government had targeted drilling of 150 to 200 wells in one year. Pakistan had also coal reserves of 180 million tons and urged the federal and provincial government to end differences on the utilisation of coal.

He also rejected the bail out package for the industry and stressed on the restructuring on different industrial sector that could contribute to the economy on the long-term basis. Government had formed that textile group that would hold meeting every month to propose measures for the improvement of the textile industry. He said that government was collecting petroleum development levy (PDL) and there was spending on defence, debt servicing and development. Pakistan was also facing pressure on east and west. Government will reduce the price of diesel when it finds a space in this regard.

He also agreed with the ICCI to form 10-year industrial policy. He said that government would focus on agriculture sector that can grow the economy and he regretted that government imported 15 to 17 lac tons wheat last year. Government will improve the water resources and ensure market access to the farmers.

He regretted that farmers were not given the announced support price and government would procure 6.5 million tons wheat. Government will also maintain 1-1.5 million tons strategic reserves of wheat to intervene the market if private sector exploits the situation.

He further said that government would also launch a programme for the poor people. He said that five million people are living below the poverty line and Rs 1000 per family cash support is a lip service. Government will launch the training programmes for the poor to give vocational training enabling them to get employment. Government will also introduce medical insurance programme for the poor. President ICCI Mian Shaukat Masud said that power load shedding had hurt the industry and urged to take measures to overcome the load shedding in the country. He said that SME sector is constrained by financial and other resources due to which it had not developed its full potential.

He said that oil prices had declined almost by 70 percent but government had not passed on it to the consumers. He demanded to reduce the diesel price.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*SECP decision leads to panic selling​*KARACHI (April 09 2009): Panic selling was witnessed at Karachi share market after the SECPs decision to discontinue CFS MK-II and deliverable futures products and the benchmark KSE-100 index declined by 295.58 points (3.87 percent) to close at 7,340.30 points level on Wednesday, analysts said.

"The SECP decision created negativity at the share market, as the regulator announced to eliminate the CFS MK-II without introducing any alternate product to fill the gap as per the investors expectations", analysts said. On the other hand, a correction was also expected as the market had witnessed a continuous bull run during the last couple of weeks with healthy gains, they added.

After opening in the negative zone the index briefly visited the positive territory on support of dips. However the intense selling pressure dropped the index in the red again to hit 7,316.02 points intra-day low level.

The market witnessed healthy trading as the volumes at ready counter surged to 21-month high level of 493.090 million shares as compared to 478.944 million shares traded on Tuesday. The overall market capitalisation declined by Rs 86 billion to Rs 2.214 trillion. Out of the total 374 active scrips, 251 closed in the negative and 117 in the positive while the value of 6 scrips remained unchanged.

TRG Pakistan was the volume leader with 49.487 million shares and gained Re. 0.10 to close at Rs 2.03. BoP increased by Re. 0.77 to close at Rs 15.28 with 34.831 million shares.

Jahangir Siddiqui Co lost Rs 1.96 to close at Rs 37.24 with 27.018 million shares. Pakistan PTA Limited closed at Rs 3.14, up by Re. 0.01 with 22.515 million shares. Zeal Pak gained Re. 0.10 to close at Re. 0.61 with 22.023 million shares.

NIB Bank lost Re. 0.67 to close at Rs 6.14 with 21.767 million shares. Pervez Ahmed increased by Re. 0.98 to close at Rs 8.01 with 19.390 million shares. DS Industries Limited gained Re. 0.42 to close at Rs 5.61 with 16.620 million shares.

NBP declined by Rs 5.16 to close at Rs 98.08 with 15.829 million shares. DG Khan Cement lost Rs 1.38 to close at Rs 26.32 with 15.490 million shares. Bata (Pak) and Lakson Tobacco were the highest gainers and gained Rs 36.44 and Rs 10.66 to close at Rs 800.84 and Rs 224.04 respectively while Unilever Pakistan and Nestle Pakistan were the worst losers and lost Rs 64.67 and Rs 57.00 to close at Rs 1830.00 and Rs 1093.00 respectively.

Ahsan Mehanti at Shehzad Chamdia Securities said that intense selling was witnessed on the first day after the SECP decision to discontinue CFS MK II and deliverable future products from the stock exchange. The investors expectations of increase in T-bill cut off yields negatively affected retail and institutional investors interest in the market. Fall in oil prices in the international market also affected investors sentiment negatively, he added.

Khurram Schehzad at Invest Capital and Securities was of the view that the major correction at the share market was only because of rumours of increase in T-bill cut off yields. He said that the SECP decision to discontinue CFS MK-II was almost neutral for the market, as investment under CFS was already very low.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Textile sector earnings grew 23 percent in first half of fiscal year 2009​*KARACHI (April 09 2009): Textile sector of Pakistan depicted strong earnings growth of 23 percent in the first half of FY09 as compared to the corresponding period last year. The composite sector, which accounts for approximately 67 percent of the entire textile sector market capitalisation, posted remarkable earnings growth of 61 percent.

Moreover, weaving sector came back into profits whereas the spinning sector plunged into losses when compared to the corresponding period last year. In the analysis, 24 companies were taken from the composite sector - six weaving companies and 31 spinning units representing 92 percent, 95 percent and 80 percent market capitalisation of their respective sectors.

Amid rise in export-based revenue due to depreciating rupee (21 percent in the first half of FY09), net sales of the textile sector jumped by 22 percent to Rs 127 billion. This resulted in improved margins, which rose by 377bps despite high cotton prices (up 21 percent) during the period, Atif Zafar, an analyst at JS Global Capital said.

However, a 100 percent increase in financial cost to Rs 12.4 billion brought down earnings to Rs 3.4 billion, still up 23 percent on year-on-year basis. Financial cost rose on the back of higher borrowing rates as 6-month Kibor during the period averaged 14.59 percent up 458bps, Atif added.

The composite sectors impressive earnings growth of 61 percent was largely driven by improving gross margins, which increased by 451bps. Due to its export orientation, depreciating rupee boosted the rupee-based revenue of the sector, which increased by 26 percent to Rs 84 billion. Its impact on the bottomline was however impaired by 105 percent increase in finance cost to Rs 8.5 billion.

Weaving sector, which was in losses in the first half of FY08, recovered to post earnings of Rs 52 million. The sector was benefited the most from jump in gross margins, which rose by 538bps. Financial cost of Rs 485 million, up 43 percent from last year, however diluted the earnings of the weaving sector.

In the first half of FY09, spinning sector plunged into losses of Rs 783 million as against profits of Rs 343 million in the corresponding period last year. Though gross margins rose by 152bps, 102 percent rise in financial cost dragged the earnings of the spinning sector into the red zone, he said.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Rice exports increase to $1.55 billion​*KARACHI (April 09 2009): The countrys rice exports have increased to $1.55 billion in the current fiscal year from July 2008 to April 05, 2009. "Despite financial crisis, global economic recession and heavy competition in the international markets due to bumper crop in almost all rice growing countries, Pakistani rice exports showed a tremendous increase", local rice exporters said.

According to official figures, Pakistan exported a total of 20.816 million tons rice of different varieties to various countries across the globe in this period. Out of which, the export of non-basmati rice variety increased to 14.238 million tons worth $770 million, while 0.657 million basmati rice worth $780 million were exported in the first nine months of the current fiscal.

Abdul Rahim Janoo, Chairman Rice Exporters Association of Pakistan (Reap) told Business Recorder on Wednesday that the rice exports is expected to cross $2.2 billion mark by the end of June this year as the export of basmati variety has just started from March. Pakistani rice exporters have orders to export basmati rice in the remaining period of current fiscal.

"We will be able to achieve the landmark of $2.2 billion of rice exports this year", he added. He pointed out that the rice export is the only growing sector, as the countrys rice exports have tremendously increased to this level from a meagre exports of only $300 million before privatisation of rice trade in the country.

"We are working to explore new markets and to recapture our traditional markets to further increase our exports and to earn more foreign exchange for the country", he added. In this regard, Reap has planned to hold a "Biryani Festival" in major cities of Saudi Arabia to target Ramazan and Hajj season.

He said that the government wants to increase countrys exports to earn more foreign exchange, however, according to him some bureaucrats are not ready to cooperate with the exporters and usually create hurdles. "We will discuss this issue with the Federal Commerce Minister Makhdoom Amin Fahim in a meeting to be held in next two days", he added.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Pakistan to participate in fruit, vegetable show in London​*MULTAN (April 09 2009): Pakistan will be among a large number of countries participating in World Fruit and Vegetable Show taking place in the British capital in October this year, Syed Zahid Hussain Gardezi President of Mango Groweres Association (MGA) said here on Wednesday.

He said that two-day exhibition on October 21 and 22 at the Excel Centre in London Docks land will bring exhibitors of all types of fruit and vegetables from around the world, to meet buyers from retail, wholesale and food-service, predominantly from the UK market but also from Western Europe.

Pakistan participated in 2007 edition but the number of entries at the last years show was considerably less due to various factors including recessive trends. According to the organisers, Pakistan Horticulture Development and Export Board, is among several bodies and regions assisting the organisers with the creation of pavilions, or are available to help with language and communication. A heavy rain lashed the region here tonight, affecting standing wheat crop and mango orchards. Wheat is at a crucial stage of ripening and rain is very injurious to it, stated agri-experts and farmers.

Zahid Gardezi said the plants are bearing fruit these days and due to rains the fruit will be shed and the yield would lower. A landowner Saad Kanju said that he has two acres of wheat, which is ready for harvest. However, he said that due to rain the harvesting process is in difficulty.

He said rains would affect the size of yield as well as quality and colour of the grain. Mushtaq Ahmed, a cattle farmer, said that if rains fall these days the husk (Bhusa or Toori) which is an integral part of the cattle food will be blackened and its taste would also be affected, making it unpalatable for the animals.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Siemens rolls out first local transformer of 220KV​*KARACHI (April 09 2009): The first locally manufactured 220 KV transformer rolled out of Siemens Industrial complex in SITE on Wednesday. This was a landmark moment for the power industry not only in Pakistan, but the entire region, a senior official of Siemens Pakistan said.

He stated that the first transformer was dispatched to Wapda network after a simple ceremony attended by Wapda and Siemens officials. Saleem Arif, advisor to Pepco, speaking on the occasion congratulated Siemens on reaching this milestone.

He said that we expect power demand to rise substantially in the coming years and now we can depend on locally produced equipment, which was being imported from abroad. The Managing Director of Siemens Pakistan, Sohail Wajahat Siddiqui termed the roll out of this the first power transformer of 220 KV in the history of Pakistan, as a historic moment and a landmark in the industrial history of the country.

He said this roll out proved that the hard working people of Pakistan can achieve any target, if they are provided with the resources, know-how and positive working environment. He said that Siemens has always set landmarks like being the first to export substantial quantities of engineering goods from the country providing a stable backbone for exports from the country.

Further, he said the local manufacture of this huge transformer will not only save foreign exchange, but also earn huge amounts of foreign exchange for the country and help develop the power sector of the country. Sohail praised Wapda for its efforts to encourage local manufacturing and said that without such encouragement, it would not have been possible for the local power engineering industry to grow.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*ARL to build clean autofuel secondary units​*SINGAPORE (April 09 2009): Attock Refinery Ltd (ARL) will start erecting a new 12,400 barrels per day (bpd) diesel hydrotreater and an isomerization unit at its refinery before end-June to produce cleaner autofuels, an industry source said on Wednesday.

The hydrotreater is used for removing sulphur from diesel produced at the 40,000-bpd refinery in Rawalpindi, while the isomerization unit helps boost the octane level and reduces benzene and olefins in gasoline. This moves enable ARL to move to Euro II emission standards, which limit diesel sulphur content to 0.05 percent.

"It will take about 30 months before the new units can become fully operational," he said. The refinery is currently running at 37,500-bpd capacity as a 5,000-bpd crude unit has been shut for maintenance last month. "The unit is expected to start up on April 30 (2010)," he added.

The refinery is also expected to restart a gasoline-making unit on April 10, following a routine maintenance, which started on March 15. The three-week shutdown of the reformer has affected domestic supplies, causing Pakistan State Oil to continue sourcing for spot cargoes from the market to plug the production gap.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*THE RUPEE: dollar higher​*KARACHI (April 09 2009): Falling trend was seen on the currency market on Wednesday as the rupee failed to retain its overnight levels due to strong demand for dollars, dealers said. On the interbank market the rupee was down against dollar, losing seven paisa for buying at 80.60 and dropping 10 paisa for selling at 80.65, they added.

In the third Asian trading yen rose as falls in share prices and worries about upcoming earnings results for big US companies prompted investors to flock to its perceived safety. The yen showed limited reaction to news that Japans current account surplus halved in February from a year earlier as the global financial crisis took its toll on Japanese exports.

OPEN MARKET RATES: The rupee shed five paisa against dollar for buying at 80.60, it also lost 10 paisa for selling at 80.75, they said. The rupee maintained its recovery in terms of euro, gaining Rs 1.85 to Rs 105.35 and Rs 106.35 for buying and selling respectively, they said.

================================
Open Buying Rs 80.60
Open Selling Rs 80.75
================================

Interbank Closing Rates: Interbank Closing Rates For Dollar On Wednesday. 

==============================
Buying Rs 80.60
Selling Rs 80.65
==============================
=================================================================
Repo Rates (Yield p a)
-----------------------------------------------------------------
Tenor Low Bid High Bid Low Offer High Offer Average
=================================================================
Overnight 13.75 14.90 13.90 14.90 14.36
1-Week 13.25 13.50 13.50 13.75 13.50
2-Week 12.75 13.25 13.15 13.50 13.16
1-Month 12.50 13.00 12.90 13.20 12.90
2-Months 12.00 12.25 12.25 12.40 12.23
3-Months 11.90 12.25 12.30 12.50 12.24
4-Months 12.00 12.40 12.30 12.60 12.33
5-Months 12.00 12.40 12.30 12.60 12.33
6-Months 12.10 12.45 12.35 12.65 12.39
9-Months 12.20 12.50 12.40 12.75 12.46
1-Year 12.25 12.60 12.50 12.75 12.53
=================================================================
Call Rates (Yield p a)
-----------------------------------------------------------------
Tenor Low Bid High Bid Low Offer High Offer Average
=================================================================
Overnight 14.00 14.90 14.25 15.00 14.54
1-Week 13.50 14.00 13.75 14.50 13.94
2-Week 13.00 13.50 13.25 13.75 13.38
1-Month 13.00 13.50 13.40 13.75 13.41
2-Months 13.00 13.40 13.25 13.50 13.29
3-Months 13.00 13.40 13.25 13.60 13.31
4-Months 13.00 13.50 13.30 13.60 13.35
5-Months 13.00 13.50 13.40 13.60 13.38
6-Months 13.00 13.60 13.50 13.75 13.46
9-Months 13.20 13.75 13.50 14.00 13.61
1-Year 13.30 13.75 13.40 14.00 13.61
=================================================================
RUPEE IN LAHORE: The Pak rupee marginally improved its value by five paisa on buying side while it remained unchanged on the selling side in relation to the US dollar in the kerb market on Wednesday. According to the currency dealers, the dollar witnessed slight increase in its supply that helped rupee recovery.

The dollar was traded at Rs 80.80 and Rs 81.10 on buying and selling sides as compared to overnight closing of Rs 80.85 and Rs 81.10, respectively. However, the rupee remained under pressure and further depreciated its value against the pound sterling. The pound was purchased and sold at Rs 117.50 and Rs 119.00 against the Tuesday closing of Rs 116.50 and Rs 118.00, respectively.

RUPEE IN ISLAMABAD AND RAWALPINDI: The dollar further increased by 10 paisa against the rupee at the open currency markets of Islamabad and Rawalpindi on Wednesday. The dollar opened at Rs 80.60 (buying) and Rs 80.70 (selling) against the last rate of Rs 80.50 (buying) and Rs 80.60 (selling).

It did not observe further change in the evening session and closed at Rs 80.60 (buying) and Rs 80.70 (selling). Pound Sterling opened at Rs 116.80 (buying) and Rs 117.80 (selling) against the last rate of Rs 115.00 (buying) and Rs 116.00 (selling). It did not observe further change in the second session and closed at Rs 116.80 (buying) and Rs 117.80 (selling).

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Computer industry witnesses 50 percent decrease in business​*ISLAMABAD (April 09 2009): The computer industry has witnessed over 50 percent decrease in its retail/vendors business, following recent terrorist attacks in various parts of the country, says latest computer sector data issued here Wednesday.

The Pakistan Computer Association (PCA) on Wednesday convened a meeting here to discuss the negative implications of the current law and order situation on the computer business. The meeting shared the data compiled on national basis to ascertain the impact of law and order situation on the computer industry.

Yousaf Jamal, Senior Vice President of PCA Central while chairing a meeting informed the participants about the latest statistics that show a 50 percent decline in computer business after the recent spree of terror in the country. He said that computer industry, which was already confronting with a fragile business environment, was now struggling to survive for its very existence. The acts of terrorism in various parts of the country have badly hampered the business activities.

The SVP of PCA said that Pakistan has already lost sufficient chunk of foreign/domestic investment and business activities due to rising phenomenon of terrorism and bomb blasts is forcing many investors and businessmen to look for safe destination for their investment. He said that the agonising incidents will act as a demoralising factor for prospective investors who will desist from considering Pakistan for investment ventures.

Yousaf Jamal called upon the government to take all possible measures and equip security apparatus with better technology, equipment and tools to forestall such incidents effectively and control the law and order situation so that normal business activities in the country may be revived.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Hidden assets: FBR proposes new valuation benchmarks​*ISLAMABAD (April 09 2009): The Federal Board of Revenue (FBR) has proposed new valuation benchmarks for unexplained and undeclared immoveable property covering open plot, agricultural land and constructed immovable property for taxation purposes.

The FBR has proposed amendment in the Income Tax Rules 2002 through a notification issued here on Wednesday. The amendment has explained valuation procedure for undeclared immoveable property under section 111 of the Income tax Ordinance, 2001, which is related to the unexplained income or assets.

Under the proposed rules, agricultural land value will be determined according to the provincial revenue record and value of constructed immovable property will be determined at the fair market value or value fixed by the District Officer (Revenue), whichever is higher. Upon detection by the tax authorities, open plots would be valued according to the District Officer Revenue or provincial authority taking into account the authorised stamp duty rates.

According to the proposed rule 228 in the Income Tax Rules, the valuation of immovable property for the purposes of section 111 of the Income Tax Ordinance will be taken in the following manner: In the case of open plot, the value determined by the development authority or government agency on the basis of the auction price in respect of similar plots in the area where the plot in question is situated or in case where such value is not determined, the value fixed by the District Officer (Revenue) or provincial authority, authorised in this behalf for the purposes of stamp duty.

In the case of agricultural land, the value equal to the average sale price of the sales recorded in the revenue record of the estate in which the land is located for the relevant period or time; or in the case of constructed immovable property, value will be determined at the fair market value as defined in section 68 or the value fixed by the District Officer (Revenue) whichever is higher.

According to tax experts the government had allowed existing as well as new taxpayers to get legalised by paying 2 percent investment tax by declaring their unexplained or hidden assets by December 31, 2008. Now, it seemed that the government may launch a drive to detect hidden or unexplained immoveable property for realising due taxes from the defaulters according to the proposed amendments in the income tax rules.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Punjab expects record wheat yield​*LAHORE: The Punjab Agriculture Department expects 17.9 million tons of wheat production this year. But these are initial figures, and the department thinks they can go up to 18.3 to 18.5 million tons.

According to figures finalised by departments Crop Reporting Wing, the province will have a healthy, possibly record, crop if weather does not hit it at the final stage. The official optimism is based on early sowing, timely rain and extended use of pesticides.

Arif Nadeem, newly-inducted agriculture secretary, says for the first time 71 per cent crop was sown from Oct 25 to Nov 30 -- the ideal time for sowing which will have a positive impact on the yield.

Apart from early sowing, the official optimism is also generated from timely rains, which lessened the effects of water shortage throughout the wheat maturing season. 

Similarly, the use of pesticides also remained exceptionally high at 69 per cent, which has saved the crop from many diseases to bring it to a successful conclusion. Though urea crisis plagued the better part of the season, its final off-take did not show any substantial decrease -- keeping the hopes of a better crop alive. 

The only negative factor during the entire season was the low consumption of di-ammonium phosphate (DAP). But with so many positive factors, this single factor would not make much of the dent, he said.

Weather also remained by and large helpful, with a fog-free January and cool March. This year, there were no usual foggy weeks, and the crop grew up under the full sunlight. The temperature in the month of March also remained under 28 centigrade, which was also helpful for the crop, he said.

The latest rain spell has created some doubts in the minds of department officials, says another employee of the department. 

One could only hope that strong winds of March are not followed by hail storms in April. Next three to four days, with forecasts of more rains, will be crucial for the health of the crop. But, they would not be able to make any major dent in the crop if weather does not turn out to be wildly crazy. But till then, one could only pray for better weather and good results, said the optimist official.

Farmers doubt official claims

Farmers, on the other hand, hotly disputed official claims on wheat production, and said on Wednesday that it would not, in any case, go beyond 18 million tons  some 1.4 million tons less than the target.

They also claimed price crash of Rs60 to Rs90 per 40 kilogramme in the southern belt, and asked the Food Department to start procuring wheat rather than distributing gunny bags only and delaying actual procurement till mid-April in southern Punjab.

In a meeting of the central executive of the AgriForum, the participants said they had conducted a survey of 10 districts in the southern part where price ranged from Rs860 to Rs890, with no where price touching official Rs950 per 40kg.

With a drop of 75 per cent in di-ammonium phosphate (DAP), cut in urea consumption by 16 per cent, potash fertiliser by 40 per cent, water shortage of 35 per cent and diesel selling at Rs70 per litre, no one knows how the official sources can claim a record crop in the province, said Ibrahim Mughal from the AgriForum.

The forum survey of 10 districts also revealed that average 100 grain weight had gone down by seven to eight per cent in these districts, he said. Under these circumstances, only chronic optimism or ignorance could make claims of high yields, he said.

He said the Crop Reporting Wing of the Agriculture Department was in the habit of making tall claims till the end, received official praises, and furnished technical details of failing to achieve yield targets. The pattern has been too well-entrenched to leave any room for optimism, he said.

The country had set a target of 25 million tons, and Punjab, a producer of 80 per cent of the crop, had to produce over 19 million tons to meet the national target, says Rao Afsar from Rajanpur. But, Punjab could not go beyond 18 million tons, taking the national figure down to 23 million tons, he said. The country thus faced a shortfall of two million tons as far as its own target was concerned and at least one million tons as far as its national consumption was concerned, he said. 

The carry over stocks might save its from importing any wheat, but it is time for some SWOT (strength, weakness, opportunities and threats) analysis about how the country, even after sowing wheat on record 22 million acres, is going to miss the target, he demanded.

The pesticides consumption has actually gone down to eight per cent this year, and might be one of the reasons for low production, says Bilal Isreal  a wheat grower. The officials of the Crop Reporting Wing must have differentiated between fodder and wheat crop, he said. The lush green fields of fodder could be good for the country but not for wheat. Additional vegetative growth in wheat was counter-productive and would affect the final tally, he said.

Some of the rains were timely, but others were not  as is the case with current wet spell  and have not proven to the beneficial for the crop, he said and added: The farmers are not as optimistic as the Crop Reporting Wing.

The Food Department agreed to start providing gunny bags to farmers in southern Punjab but would start buying the wheat by mid-April, says Farooq Bajwa of the AgriForum. No doubt that mere distribution of bags would stabilise the price on higher side, but the department should start actual wheat procurement to send a strong message to market that it was there to keep the price at official level, he said.

DAWN.COM | - Punjab | Punjab expects record wheat yield


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## sohailbutt

*Pakistan still attractive for FDI, say experts​*ISLAMABAD: Experts believe that Pakistan remains an attractive place for foreign direct investment (FDI) despite the global downturn and the impact on FDI inflows to Pakistan would be less severe compared to other countries.

Pakistan will not escape the downturn in world trade and investments but measures should be taken to attract export-oriented FDI that can be a desirable medium-term objective. 

Pakistan attracts foreign direct investment in the natural resource and energy industries which are less vulnerable to the recession, says Special Adviser, South Asia Center and former director Investment Division, UNCTAD, Dr Khalil Hamdani.

Dr Hamdani, a visiting professor at the Pakistan Institute of Development Economics, was delivering a lecture on Foreign Direct Investment Prospects for Pakistan at the Planning Commission here.

He urged the government to prioritise education, infrastructure and health sector that could help reduce poverty in the country.

Dr Hamdani said the industrial policy should promote horizontal competitiveness and the government should support services for domestic enterprises.

The SME sector should be provided financing he said, adding that 75 per cent SMEs in Gujranwala have never been provided bank loans.

He urged upon the government to tackle the issues of power outages and said majority of manufacturing units did not have their own power generation capacity, so they shut operations during load shedding hours.

Dr Hamdani said Pakistans large domestic economy would also continue to be attractive to foreign investors, but added that the government should address investors confidence.

He was of the view that export base of Pakistan was very low and depended on one industry, saying there was a need to utilise modern technology to make products more competitive.

He suggested that the Ministry of Investment and Board of Investment should target investors from Asia, including the Gulf countries and China.

There were challenges as well as opportunities for Pakistan as far as the investment is concerned. There was need to change the mentality from project base investment to creating conditions for investments. He said the investors themselves could identify the avenues of investment.

The secretary, Board of Investment (BoI), Tariq Puri said the impact of global downturn was already being felt but foreign direct investment had so far been resilient and the government was ensuring that Pakistan remained attractive.

He said special economic zones were being established and proactive promotion of investment packages were being launched with the support of BoI and other quarters concerned.

The PIDE vice-chancellor, Dr Rashid Amjad, announced that the lecture was an effort by the institute to encourage further research and policy discussion on foreign direct investment and its role in development.

DAWN.COM | Business | Pakistan still attractive for FDI, say experts


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## ajpirzada

*WPP plans expansion into Pakistan*
By Lina Saigol and Martin Arnold in London 

Published: April 7 2009 19:34 | Last updated: April 7 2009 19:34

Pakistan, currently reeling from a run of deadly terror attacks, has received a strong endorsement of its economic prospects from one of the biggest names in the global advertising industry.

Sir Martin Sorrell, the chief executive of WPP, has said his company intends to expand its business in the south Asian country in spite of a growing Islamist insurgency and a fall in economic growth this year.

EDITOR&#8217;S CHOICE
Taliban flogging incident imperils peace deal - Apr-04Pakistan bomb near Afghan border kills 50 - Mar-27Pakistan seeks $10bn in foreign aid - Mar-24Guard killed in Pakistan suicide attack - Mar-24Opposition seeks to reduce Zardari&#8217;s powers - Mar-19Pakistan exchanges fined for trading curbs - Mar-20&#8220;Despite all the political and security issues ... our businesses in Pakistan continue to grow strongly,&#8221; said Sir Martin, chief executive of WPP. &#8220;We plan to continue to grow there and develop our industry leading position in the country.&#8221; 

Sir Martin is not alone. Public and private companies, including Antofagasta, the Chilean mining company, and Abraaj Capital, the Dubai-based private equity group, are seeking opportunities in Pakistan. Some small-scale investments, particularly in the energy and infrastructure sector, show companies taking a cautious approach, however.

Analysts claim that economic stabilisation has been one of the bright spots of a year of civilian rule. 

The International Monetary Fund gave Pakistan a $7.6bn (&#8364;5.7bn, &#163;5.2bn) rescue package at the end of 2008 to help it avoid a balance of payments crisis. The government responded to the IMF&#8217;s requests to implement prudent economic policy and cut spending over the first quarter &#8211; positive signs ahead of a donors meeting in Tokyo this month where Pakistan is seeking $10bn in assistance over three years.

Last year, a return to civilian rule in Pakistan saw the biggest rise in deals with foreign acquirers in five years. Cross-border activity totalled $8.1bn over these five years. Telecommunications and financials are the most targeted sectors by foreign investors. The two sectors account for 52 per cent and 35 per cent respectively.

Acquisitions by UAE, Singapore and Malaysian investors account for more than half the cross-border deals of the past five years. Abraaj Capital, the Middle East&#8217;s biggest private equity firm, agreed a $361m deal to buy half of KES Power, the holding company of Karachi Electric Supply Company. 

&#8220;Our focus in Pakistan is to purchase defensive assets, like power, infrastructure, distribution, or downstream oil and gas,&#8221; said Omar Lodhi, executive director of Abraaj Capital. &#8220;We work with them to develop them for sale to strategic groups.&#8221;

CDC Group, the UK state-owned private equity group, invested in Pakistan in 2006, putting $40m in the debut fund of Karachi-based JS Private Equity. &#8220;With its big and young population, and good commercial history, it is still an attractive investment,&#8221; said Richard Laing, chief executive of CDC. 

FT.com / Asia-Pacific / Pakistan - WPP plans expansion into Pakistan


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## Neo

*Pakistan, IMF set monthly tax collection targets ​* 
Thursday, April 09, 2009

ISLAMABAD: Pakistan and the International Monetary Fund (IMF) have envisaged monthly targets for the last quarter (April to June) of fiscal year 2008-09 for meeting the annual tax collection target of Rs1,300 billion, which will definitely be missed, it is learnt.

Both the sides had agreed on the revenue collection target of Rs147 billion in March but the FBR netted Rs103 billion. The FBR high-ups expect that the revenue collection for March will be around Rs110 billion when figures are finalised in the next few days.

The country and the IMF have agreed on the tax collection target of Rs98 billion for April, Rs119 billion for May and Rs227.9 billion for June. The FBR is facing a revenue shortfall of Rs43 billion in the first nine months (July-March) of 2008-09 as collection stood at Rs810 billion against the target of Rs853bn.

Sources said the FBR could at best reach Rs1,225 to Rs1,230 billion by the end June, meaning it would face a shortfall of Rs70 to Rs75 billion. But the FBR high-ups say that there was no need to put any revenue collection figure before the IMF, however it should be seen whether the tax authorities are making all-out efforts to reach close to the target.

The FBR needs to collect Rs490 billion in the last three months of FY09 in order to achieve the target of Rs1,300 billion. Even the original target of Rs1,250 billion announced by the government on the eve of the budget 2008-09 cannot be met and tax collection will be around Rs1,220 to Rs1,225 billion by June 30, official sources in the finance ministry said.

The FBR high-ups argue that reduced nominal growth (real GDP growth+ inflation) have resulted in lower tax collection in the current fiscal year. The imports also decreased due to unprecedented decline in prices of POL products as well as governments efforts to discourage import of luxury items. The FBR had collected over Rs1 trillion in the last fiscal year. 

The government had taken tax measures of Rs116bn in budget 2008-09 in order to get its initial annual target of Rs1,250bn. Keeping in view this entire situation, one can ask where are the efforts of the tax collection machinery to maximize its revenue by creating demand up to the desired level.


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## Neo

* Pakistanis lost heavily in Dubai real estate sector collapse ​* 
Thursday, April 09, 2009

KARACHI: A recent trip to Dubai has helped me understand the extent to which Pakistani investors have suffered in the country as prospects for the real estate sector not only remain bleak, but it also appears that worse is yet to come.

Having discussed the situation with some experts there during the visit, I was able to conclude that Pakistanis were stuck in the middle of the crisis given their lack of in-depth research on investment prospects, poor planning and greed to make quick profits.

I learnt that Pakistanis had invested up to Rs190 billion in the real estate sector of the United Arab Emirates within a span of a few months. Their aim was to act as middlemen between the developers of a project and ultimate buyers of the property, thereby buying it at the cost price and eventually selling it for hefty profits, as the value of the asset appreciated.

The problem began when recession hit the US and most European countries, leading to an increasing number of defaulters. Foreign investors lost interest in the UAEs real estate market and pulled out in a hurry. Moreover, those living in Dubai made a quick exit, packing their bags and returning to their countries which left scores of houses occupied by them deserted.

The prices of properties began to crash and the real estate sector faced a dilemma. On the one hand, there were projects which were 80 per cent complete but did not have the cash to move ahead, while on the other hand the 20 per cent complete projects had no buyers.

In fact, here is a little maths for you. One real estate agent informed me that one project had 200 flats in a cluster and the entire project had approximately 156 buildings. This is just one project that we are talking about. Dubai alone has over a hundred building projects, all of which are skyscrapers. And remember, there are other states too.

Pakistanis returned dejected to their homeland as they had invested millions of dirhams in properties in Ajman where freehold was more affordable as compared to Dubai. Also there was the potential of increase in demand.

No one had expected the global financial crunch to come along, destroy major economies and take the UAE along with it too. As Dubai real estate prices dipped by 25 per cent last year, with more drops expected this year, people are even less interested in Ajman, which is yet to develop when compared to Dubai.

The consequence is that there are thousands of super luxury flats waiting for buyers but no one is interested. Most of the money that Pakistanis invested there is probably lost forever as a piece of property worth Dhs3.2 million is now available for Dhs1.4 million. Yet, it has failed to spark interest.

The question is what will eventually happen to all that property? One observer said if the UAE government promised permanent residency visa once again and reassured investors about a concrete policy, then matters may take a turn for the better.

But till then no one can really predict the future, he commented. On the one hand, there are hundreds of flats waiting to be taken up and on the other, people are rapidly moving out of the country as a lack of job security and daily visa cancellations are compelling them to look elsewhere, he added.


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## Neo

*Pakistan to approach IMF after FoDP word: official ​* 
Thursday, April 09, 2009

ISLAMABAD: Pakistan requires additional funding in order to bridge its financing gap within two years and it is yet to see how much financial assistance the Friends of Democratic Pakistan (FoDP) extend in the upcoming meeting on April 17 at Tokyo, a senior official of the IMF said.

Pakistan has not yet formally approached the IMF for seeking additional funding. It largely depends on the FoDP forum how much the donors are going to fill the gap within a two-year period, a senior official of the International Monetary Fund (IMF) based in Islamabad said while talking to The News.

Pakistan will have to make fiscal adjustments by maximising its revenues to overcome the FBRs shortfall or by cutting its expenditures in order to achieve the fiscal deficit target of 4.3 per cent of the GDP.

He said that Pakistan required additional funding over the next fiscal year after obtaining the IMFs loan. It is yet to be seen how much the FoDP offers to Pakistan in its meeting.

To another query about IMFs view on reducing the discount rate in the upcoming monetary policy review of the central bank, the IMF says that there were expectations that the inflationary pressure would ease in the months ahead. When core inflation will ease, the discount rate will be reduced, he added.

Regarding FBRs shortfall in the current fiscal, he said that the revenue shortfall would be compensated through Petroleum Development Levy (PDL). Either the FBR will have to make extra efforts to maximize its revenues or expenditures will have to be cut down to achieve the envisaged fiscal deficit target of Rs562 billion, he concluded.

However, the sources said that Pakistan has estimated $4 to $6 billion financing gap till end of the next fiscal year 2009-10 that will be sought from the FoDP forum on April 17 at Tokyo in the second session of Donors Conference.

According to Pakistani authorities as well as IMFs projections for the ongoing fiscal year 2008-09 in accordance with the Funds document, Pakistan will receive a total $3.595 billion in shape of total budgetary support for the ongoing fiscal year from multilateral as well as bilateral donors. 

The World Bank is projected to provide total $800 million to Pakistan in the ongoing fiscal year. The WB had so far disbursed $500 million while remaining $300 million would be provided before June 30, 2009.

The ADB had so far provided $834 million to Pakistan during the first nine months (July-March) period while another $500 million would be provided in the last quarter (April-June), totaling its assistance up to $1.334 billion for the ongoing fiscal year 2008-09.

The Islamic Development Bank (IDB) is projected to provide $761 million to Pakistan during the ongoing financial year. So far the IDB provided $661 million and the remaining $100 million was expected to be given to Pakistan during the last quarter of the ongoing fiscal year.

Pakistan is projected to receive $500 million from bilateral support, which Islamabad has already received. Pakistan is expecting to receive total $200 million in shape of short-term commercial inflows, which have already been received by Islamabad.

There are projections of total $91 million budgetary grants for the ongoing fiscal year out of which Islamabad has so far received $71 million while remaining $21 million will be received during the last quarter of the ongoing fiscal year.

There are no projections estimated in shape of privatisation proceeds as well as Global Depository Receipts (GDRs) for the ongoing fiscal year, the IMF document states.


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## Neo

*Textile sector posts 23% growth in profits despite declining exports​*
KARACHI: Amid declining exports, textile sector posted handsome growth of 23 percent in its profits, which indicates the viability of the sector in current recessionary economic situation.

The growth in the profits of the textile industry has been attributed to substantial growth in the net sales, which reflected that domestic as well as export demand is still buoyant for textile products although economic crisis in the world hit USA and EU marketsmajor demand drivers of Pakistan textiles.

The depreciation of rupee helped rise in export based revenue. The rupee depreciated by around 21 percent in first quarter of current financial year.

The high financial cost increasing 100 percent in the period under review dented the earnings of the sector, however it managed to record 23 percent growth in the first half of current fiscal.

Financial cost rose on the back of higher borrowing rates as 6-month KIBOR during the period averaged 14.59 percent, up 458 basis points.

Textile exporters said that thought the situation for textile sector is aggravating with the each passing day due to rising cost of production. However, textile exports absorbed these shocks and were able to at least make some profits in such a critical situation.

However, they pointed out that this could not be sustained in the long-run if the rising cost of business persisted in the coming days. Moreover, the dampening demand in developed nations is not a good omen for the sector.

The performance of textile composite sector was impressive as its net profits grew by 61 percent in the period under review.

Due to its rupee orientation, the depreciating rupee boosted revenues of the sector, which reflected 26 percent increase.

However 105 percent growth in its financial cost dented its profits heavily, which could have been much higher.

The weaving sector posted profits in the period under review compared to same period of previous year, which incurred losses. The growth in net sales and gross margins helped the weaving sectors losses turn into profits.

Spinning sector performed poorly during first six months of current fiscal as it recorded losses during this period against the profits of previous year.

Though, it registered 13 percent growth in its sales, 102 percent increase in the financing cost dented the profitability of the sector.

Analyst pointed out that rupee depreciation made the difference between different sectors of the textile as composite one thrived mainly on account of its export revenue, which rose in rupee terms.


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## Neo

*Pakistan and Germany to boost bilateral trade​*
KARACHI: The government of Pakistan and Germany are maintaining talks on bi-lateral cooperation on mega projects of alternate energysolar, wind and hydel, Dr Christian Brecht, consul general of Federal Republic of Germany said here on Wednesday.

He expressed that bilateral trade potential between Pakistan and Germany had a better volume in the past, which has been declining since last few years and needs an uplift. He urged that political stability and better law and order situation are mandatory to enhance trade. While talking about travel advisory about Pakistan he stated that law and order situation in Pakistan is better however some foreign channel to some extent broadcast biased reports about law and order in Pakistan. German origin machinery and technology is being used in the Jhimpir Windmill power project, which is being constructed by a Turkish Company.

He focused that a great potential exists between two countries and Pakistan can import state-of-the-art machinery and technology from Germany from textile sector to auto-engineering and industrial equipments. Whereas, he added, Pakistan can export the value-added textile products and fruits to Germany. He invited KCCI to take a delegation and participate in the Annual Agriculture Fair to be held in Germany.

Anjum Nisar, president KCCI drew attention of Consul General of Germany towards exports potential in fruits, fresh juices and agro based products, surgical and sports items.

He asked the Consul General of Germany to motivate other German Companies to invest in the energy sector. He emphasized on joint ventures between German and Pakistan industrial concerns to explore the potential in the industrial sector. He said that removal of anti-dumping duty from European Union will increase the export activities.

He also proposed that German is the largest manufacturer of textile machinery in the world, and German companies may come forward in the value-added textile and outsource their orders from Pakistan as it is already exporting value-added quality textile products to Germany. staff report


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## Neo

*WPP chief endorses Pakistans prospects with expansion plans​*
LONDON: Pakistan, currently reeling from a run of deadly terror attacks, has received a strong endorsement of its economic prospects from one of the biggest names in the global advertising industry.

Sir Martin Sorrell, the chief executive of WPP, has said his company intends to expand its business in the south Asian country in spite of a growing Islamist insurgency and a fall in economic growth this year.

Despite all the political and security issues . . . our businesses in Pakistan continue to grow strongly, said Sir Martin, chief executive of WPP. We plan to continue to grow there and develop our industry leading position in the country.

Sir Martin is not alone. Public and private companies, including Antofagasta, the Chilean mining company, and Abraaj Capital, the Dubai-based private equity group, are seeking opportunities in Pakistan. Some small-scale investments, particularly in the energy and infrastructure sector, show companies taking a cautious approach, however.

Analysts claim that economic stabilisation has been one of the bright spots of a year of civilian rule.

The International Monetary Fund gave Pakistan a $7.6 billion rescue package at the end of 2008 to help it avoid a balance of payments crisis. The government responded to the IMFs requests to implement prudent economic policy and cut spending over the first quarter - positive signs ahead of a donors meeting in Tokyo this month where Pakistan is seeking $10 billion in assistance over three years.

Last year, a return to civilian rule in Pakistan saw the biggest rise in deals with foreign acquirers in five years. Cross-border activity totalled $8.1 billion over these five years. Telecommunications and financials are the most targeted sectors by foreign investors. The two sectors account for 52 per cent and 35 per cent respectively.

Acquisitions by UAE, Singapore and Malaysian investors account for more than half the cross-border deals of the past five years. Abraaj Capital, the Middle Easts biggest private equity firm, agreed a $361million deal to buy half of KES Power, the holding company of Karachi Electric Supply Company.

Our focus in Pakistan is to purchase defensive assets, like power, infrastructure, distribution, or downstream oil and gas, said Omar Lodhi, executive director of Abraaj Capital. We work with them to develop them for sale to strategic groups.

CDC Group, the UK state-owned private equity group, invested in Pakistan in 2006, putting $40 million in the debut fund of Karachi-based JS Private Equity. With its big and young population, and good commercial history, it is still an attractive investment, said Richard Laing, chief executive of CDC. daily times monitor


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## Neo

*Rising violence in Pakistan to dissuade foreign investment: Moodys​*
KARACHI: Growing political uncertainty and violence in Pakistan could hamper policymaking and hurt foreign investment, Moodys Investors Service said Wednesday. In any case, foreign investment is expected to be weak because of the global crisis, Aninda Mitra, sovereign analyst at Moodys Investors Service, told Dow Jones Newswires. But he noted that Pakistan has made progress in meeting the International Monetary Funds key performance criteria in the first review held in March. The policy framework is responding to the IMFs recommendations. However, political and business pressures for counter-cyclical policies are growing and social hardship remains high, he said. Pakistan received $848 million on April 2 in the second installment of a $7.6 billion loan from the International Monetary Fund. It has so far received $3.9 billion under the 23-month standby facility. 

Last week, the World Bank gave Pakistan a $500 million interest-free loan. From a sovereign ratings standpoint, we would like to see sustained progress in lowering inflation, market-based financing of the budget and retirement of treasury instruments from the State Bank of Pakistan and attainment of fiscal targets, Mitra said.


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## Neo

*US, Pakistan to collaborate in $24m energy project​*
ISLAMABAD: A joint statement of collaboration was signed between the United States Government and the Ministry of Finance of the Government of Pakistan. The signing marked the announcement of the United States Agency for International Developments 3-year, $24 million Energy Efficiency and Capacity Building project, according to a US Embassy announcement today.

Energy conservation efforts are expanding in Pakistan, resulting in the promotion of energy audits for commercial enterprises, consumer awareness campaigns to highlight the importance of efficiency in household appliances, the introduction of low-energy applications in new building construction, and renewed attention to power losses between transformers and household connections. Recurring power shortages have made energy conservation increasingly important. Some estimates indicate that 1,500MW per year could be saved with an effective national campaign.

The Energy Efficiency and Capacity Building project will improve demand-side management practices in Pakistans distribution companies; implement energy efficiency programs; support energy service companies working with Pakistani industries; and increase awareness of energy efficient practices among business and residential users. The project will also support the improvement of human resource management for the energy sector through coordinated training programs and energy partnerships.


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## Neo

*With India withdrawn, Pakistan to go ahead with gas project​* 
ISLAMABAD (April 09 2009): The Cabinet on Wednesday decided to go ahead with Iran-Pakistan gas pipeline, bilaterally, and accorded approval for signing of agreement for purchasing 500 to 750 million cubic feet gas from Iran for meeting domestic requirements. The Minister for Information, Qamar Zaman Kaira, giving details of the hours-long meeting, said that the Cabinet meeting, with a heavy agenda of over 32 items, was presided over by Prime Minister Yousaf Raza Gilani, and took important decisions.

He said that the Cabinet decided to go for constructing the pipeline for one billion cubic feet, instead of 2 billion cubic feet, since India, the third partner in the proposed gas pipeline, had withdrawn. The price of the Iran gas would be comparatively higher, but it would mainly be used for power generation by plants that are currently run on furnace oil, he added.

Kaira said that another important decision the Cabinet took was about Karachi Electric Supply Corporation (KESC) for resolving electricity crisis in Karachi and rid the city off load shedding. The Cabinet decided to own debt liability of Rs 31 billion of KESC from total Rs 40 billion, which was owed by KESC at the time of privatisation, he said.

He said that the new management of KESC has pledged an investment of $360 million in power generation and improvement of system in Karachi. A committee comprising Advisor on Finance, Minister for Water and Power, Advisor on Petroleum, and Minister for Overseas Pakistanis, has been constituted to look after KESCs performance, he added.

The meeting also decided to give special incentives to the Export Processing Zone (EPZ) at Gwadar to boost economic activities in Balochistan. A ministerial committee, under Minister for Industries, Advisor on Finance, and Minister for Port and Shipping, was constituted to recommend incentives. The Minister said the government was striving to bring the backward areas of Balochistan at par with other developed parts of the country.

The meeting also accorded approval to a proposal of the Minister of Water and Power to move forward the clocks by an hour from April 15 in a bid to make maximum use of daylight to save energy.

Kaira said the Cabinet decided to impose 25 percent regulatory duty on export of molasses to help meet the needs of the local industry. So far, he said, the export of molasses was over 400,000 tons and its further export would hurt the local industry as sugarcane crop was quite low this year. The meeting also discussed the new educational policy but delayed till next meeting with a decision for taking on board the provincial governments to ensure its implementation. However, it approved to set up a National University of Law and Social Sciences in Islamabad with its campuses in all the four provinces to cater to the higher education for law students.

The Minister said health and education issues were on top priority of the government agenda and the government would seek funding from Friends of Pakistan for the purpose, and would gradually raise the allocations for education and health to 10 percent of GDP.

The meeting also decided to streamline the education system in religious schools, without bringing them under any regulatory control. The education minister said: "We dont want to impose curbs on religious education, but want the Madaris to teach modern education so that the students of these institutions may also become part of other services."

The Cabinet also directed the Ministry of Finance for monthly briefing about economic indicators in the country. The meeting also decided to review Afghan transit trade with the view to meeting the requirements of Afghanistan and, at the same time, warding off any loss to Pakistan. The Minister said it was also decided that legislation would be made through bills and parliament, instead of ordinances.

Meanwhile, a statement said that the Cabinet approved ratification of agreement on co-operation in the field of transportation and transit of goods between the Government of Pakistan and Government of Uzbekistan. The agreement envisages free traffic in transit to the carriers of contracting parties through multi-modal transport system (land, rail, sea) in accordance with the existing national laws and regulations. The main objective is to provide Uzbekistan access for transshipment of its trade cargo to/from Gwadar port.

In pursuance of the International Road Transport Agreement signed between the Governments of Iran and Pakistan in June 2008, Cabinet gave approval for Instrument of Ratification concerning the agreement. This would facilitate international transport of passengers and goods by road between the two countries and in transit through their respective territories. By signing this Agreement, traffic/trucks from Pakistan and Turkey would be able to ply through Iran, while Iran will also have access to China via Pakistan. Besides boosting economic opportunities, the access to other Central Asian Republics and Europe through Iran and Turkey would be an added advantage to Pakistan.

The meeting gave go-ahead to start negotiations on draft agreement on defence co-operation with Hungary. Approval in principle was granted for negotiating an MoU between National Defence University and Institute des Hautes Etudes de Defence National of France. This will be helpful in enhancing the relationship and pave the way for research and co-operative activities. Approval was also granted for initiation of negotiations for signing MoU with Jordan on collaboration in defence equipment/research and development/joint production/sales.

To further cement socio-economic and political relations with Libya, the Cabinet gave ex post facto approval for initiation of negotiations for an MoU on bilateral political consultations. It will provide a forum to take stock of the trajectory of bilateral relations and share views on issues of mutual interest. Ex post facto approval was also granted for entering into negotiations for extradition treaty with Libya. Approval was also granted for an MoU for co-operation in the field of employment. Pakistan was one of the main suppliers of skilled and semi-skilled manpower to Libya during 1970s and 80s. However, due to stagnation in relations and absence of formal arrangements, Pakistans manpower in Libya declined from over 100,000 to 10,000. The proposed MoU would help enhance co-operation in the field of employment/manpower export to Libya.

In order to strengthen co-operation in the areas of labour and occupational training with Bahrain, The Cabinet gave approval to start negotiations for entering into an MoU. Pakistan is a signatory to the Agreement on establishment of South Asian Regional Standards Organisation (Sarso) that is mandated to remove technical barriers on trade to facilitate flow of goods and services in the Saarc region. The Cabinet ratified the Sarso agreement.

Ex post facto approval was also granted for initiation of negotiations and signing of MoU with the Government of Korea for establishing "Garment Technology Training Centre" in Karachi. The project aims to enhance competitiveness of textile and apparel industry by providing skilled work force.

In order to conserve energy and take advantage of the availability of sunlight during summer, the Cabinet approved to introduce daylight saving through advancement of clocks by one hour (GMT +6) from 15 April 2009. This will help to conserve 250-300 MW on average of daily electricity. The Cabinet also approved signing of agreements for abolition of visa for diplomatic and official/special passport holders with Libya, Indonesia, and Ireland. The Cabinet approved ratification of bilateral investment treaty with Kazakistan on reciprocal promotion and protection of investments.

The Cabinet approved Pakistans accession to the International Convention for the Suppression of the Financing of Terrorism. The convention requires parties to take steps to prevent and counteract the financing of terrorism whether direct or indirect through groups claiming to have charitable, social, or cultural goals or which engage in illicit activities.

The Cabinet granted approval to the draft of Pakistan Marine Insurance Bill 2009, draft of Law for Implementation of Convention of International Trade in Endangered Species of Wild Fauna and Flora Convention.

The Cabinet also gave approval, in principle, to start negotiations on MoU between Pakistan and Iran on Library Co-operation. The proposed MoU will provide exchange of books, periodicals and other library materials besides introduction and arrangement of training courses, digitalisation of library materials and exchange of technical information and services. Approval to the Bill to establish NFC Institute of Engineering and Technology at Multan was also granted.

The Cabinet also approved, in principle, the draft bill to provide for establishment of National University of Law and Social Sciences at Islamabad. The Cabinet also approved draft Anti-Money Laundering (Amendment) Bill, 2009. The proposed amendments are necessary to bring the various provisions of Anti-Money Laundering Ordinance 2007, in line with international standards. The cabinet approved to levy 25 percent regulatory duty on export of molasses, the statement said.


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## Neo

*Textile sector earnings grew 23 percent in first half of fiscal year 2009​* 
KARACHI (April 09 2009): Textile sector of Pakistan depicted strong earnings growth of 23 percent in the first half of FY09 as compared to the corresponding period last year. The composite sector, which accounts for approximately 67 percent of the entire textile sector market capitalisation, posted remarkable earnings growth of 61 percent.

Moreover, weaving sector came back into profits whereas the spinning sector plunged into losses when compared to the corresponding period last year. In the analysis, 24 companies were taken from the composite sector - six weaving companies and 31 spinning units representing 92 percent, 95 percent and 80 percent market capitalisation of their respective sectors.

Amid rise in export-based revenue due to depreciating rupee (21 percent in the first half of FY09), net sales of the textile sector jumped by 22 percent to Rs 127 billion. This resulted in improved margins, which rose by 377bps despite high cotton prices (up 21 percent) during the period, Atif Zafar, an analyst at JS Global Capital said.

However, a 100 percent increase in financial cost to Rs 12.4 billion brought down earnings to Rs 3.4 billion, still up 23 percent on year-on-year basis. Financial cost rose on the back of higher borrowing rates as 6-month Kibor during the period averaged 14.59 percent up 458bps, Atif added.

The composite sectors impressive earnings growth of 61 percent was largely driven by improving gross margins, which increased by 451bps. Due to its export orientation, depreciating rupee boosted the rupee-based revenue of the sector, which increased by 26 percent to Rs 84 billion. Its impact on the bottomline was however impaired by 105 percent increase in finance cost to Rs 8.5 billion.

Weaving sector, which was in losses in the first half of FY08, recovered to post earnings of Rs 52 million. The sector was benefited the most from jump in gross margins, which rose by 538bps. Financial cost of Rs 485 million, up 43 percent from last year, however diluted the earnings of the weaving sector.

In the first half of FY09, spinning sector plunged into losses of Rs 783 million as against profits of Rs 343 million in the corresponding period last year. Though gross margins rose by 152bps, 102 percent rise in financial cost dragged the earnings of the spinning sector into the red zone, he said.


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## Neo

*$500 million to combat poverty: friends to be asked for $10 billion​* 
ISLAMABAD (April 09 2009): Pakistan will request $500 million program loan from the Friends of Pakistan (FOP) to reduce poverty which has surged to over 40 percent, according to Planning Commission Deputy Chairman Aseff Ahmed Ali. Sources told Business Recorder here on Wednesday that the government would seek total $10 billion from the FOP and donors meeting scheduled for April 17 in Tokyo for the current fiscal year.

If the government failed to get this amount from FOP, it would have to seek IMF assistance again to make any shortfall, an official said. Sources told Business Recorder that the government was expected to request for $30 billion assistance from the FOP forum over the next five to ten years, with $20 billion targeted for development projects and $10 bn program loan.

According to data received from the Planning Commission, poverty in 2005 was recorded at 23.9 percent, which increased to 37.5 percent in 2008. In 2000, poverty was recorded at 34.5 percent of GDP, which declined to 23.9 percent in 2005, but again increased to over 40 percent in 2008. Pakistan intends to establish a $1 billion Trust Fund for development of FATA and Balochistan - considered as the most developmentally challenged provinces of Pakistan.

This idea would be floated before the forum of FOP. The Benazir Income Support Program (BISP) was an initiative of the government to strengthen the social safety net targeted to reduce poverty. The total budgetary support earmarked for 2008-09 was Rs 34 billion.

In supplementary LoI issued on March 16, 2009, government has committed to IMF to increase the number of families from 1.5 million to 5 million in 2009-10 using the new score card system implying budgetary expenditure of Rs 65 billion. The number of beneficiary households will be extended to 7 million in 2010-11. Pakistan is expected to increase the allocation for the program in collaboration with the World Bank.

The BISP secretariat has alleged that the money that was to be allocated by the World Bank for this purpose has not yet been released. A senior official of BISP told Business Recorder: "It is true that the World Bank has provided $500 million to the government of Pakistan but this amount would be used for budgetary support and BISP does not have its share in this amount at all".


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## Neo

*Stabilising border region: Pakistan urges $30 billion Marshal Plan ​*
WASHINGTON (April 09 2009): Pakistan has called for a $30 billion Marshal Plan to bolster socio-economic development of people as a way to wipe out al Qaeda threat in the Pak-Afghan border region and help win hearts and minds of the local population. The cost to the West for such a plan in the high-stakes region was negligible compared to that of rescuing failing banks and corporations, Pakistans ambassador to the United States told The Washington Times.

"Despite the economic issues that the world is facing, the cost of a Marshall Plan for Afghanistan and Pakistan is going to be minuscule (compared) to the bailouts being given to American car companies and AIG (American International Group)," Husain Haqqani said. The plan, he advocated, will help bring stability to the region as well as blunt anti-American sentiment.

"And the impact in terms of American security and in longer term stability of the world in a very precarious region will be far greater. Pakistan has the will to fight terrorists, it needs the means and the United States should provide those," he underlined.

Pakistan needs $5 billion a year for the next five years from the United States and its allies to build local law enforcement of about 100,000 men, strengthen counter-insurgency against the Taliban and al Qaeda and persuade average Pakistanis that the US-led war on extremism is Pakistans war and essential for the countrys survival, he argued.

The ambassador denied allegations against Pakistans intelligence organisation, ISI, that it was helping the Taliban. He said the US public diplomacy in the Muslim world had lagged under the Bush administration and praised Obamas efforts to reach out to Muslims.

"We are glad that President Obama has taken the initiative," Haqqani said. "The more President Obama and his team reach out, the easier it will be to mobilise people against the extremists and terrorists."

The envoy cautioned, however, that it would take time to change attitudes as many remember that the US supported Pakistan during the fight against Soviet occupation in Afghanistan, then deserted us. "This is not a switch that can be turned on and off," he said. "It takes a while for the counter-narrative to be accepted."


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## Neo

*Foreign exchange reserves rise to $11.17 billion ​*Thursday, 09 Apr, 2009

KARACHI: Pakistan's foreign exchange reserves rose by $1.08 billion to $11.17 billion in the week ended April 4, the central bank said on Thursday.

The State Bank of Pakistan's reserves rose to $7.80 billion from $6.63 billion a week earlier while reserves held by commercial banks fell to $3.37 billion from $3.46 billion, the bank said.

Pakistan has recently received $500 million from the World Bank and $848 million from the International Monetary Fund, which is reflected in the data this week, according to Reuters. 

Foreign reserves hit a record high of $16.5 billion in October 2007 but fell to $6.6 billion in November, largely because of a soaring import bill.

Pakistan agreed in November to an IMF emergency loan package of $7.6 billion to avert a balance of payments crisis week.


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## ejaz007

*Commodity Outlook: Rice exports increase to $1.55 billion*
By Moonis Ahmed 

KARACHI: The countrys rice exports have increased to $1.55 billion during July-April, 2009, Rice Exporters Association of Pakistan (REAP) informed Daily Times on Thursday.

According to the figures given by REAP, Pakistan exported a total of 20.816 million tonnes rice of different varieties to various countries across the globe in this period. 

The export of non-basmati rice variety increased to 14.238 million tonnes worth $770 million, while 0.657 million tonnes basmati rice worth $780 million were exported in the first nine months of the current fiscal.

Despite financial crisis, global economic recession and intense competition in the international markets due to bumper crop in almost all rice growing countries, Pakistans rice exports showed a tremendous increase, traders said. 

Pakistan, the worlds fifth-largest rice exporter, was hoping to export up to 4 million tonnes of rice after a bumper crop of 6.2 million tonnes to 6.5 million tonnes, as compared with 5.50 million tonnes the previous year.

Pakistans rice exports in the 2008-09 financial year could be less than 3 million tonnes as compared with 3.3 million tonnes last year because of high domestic prices, industry sources said. 

But, exports fell during the November-January period following a governments decision to buy rice from traders and enter the export market, according to exporters. Governments intervention made rice more expensive, hurting exports, they said.

We now hope to export approximately 2.8 million to 2.9 million tonnes of rice by the end of the fiscal year, said Chairman REAP Abdul Rahim Janoo. 

He said that the government wants to increase countrys exports to earn more foreign exchange but according to him some bureaucrats are not ready to cooperate with the exporters and usually create hurdles. We will discuss this issue with the Commerce Minister Makhdoom Amin Fahim in a meeting to be held within the next two days, he added

Rice accounts for about 8 percent of Pakistani exports and 12 percent of gross domestic product. The governments decision to buy rice and paddy was aimed at helping farmers and maintaining stability in domestic prices in the face of a bumper crop, but traders said that this move left Pakistan uncompetitive in the international market. 

Government data showed rice exports fell nearly 8 percent in the July-February period from a year earlier. Exports fell more than 50 percent in January from the same month in 2008.

Daily Times - Leading News Resource of Pakistan


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## Neo

*Major crops targets not achieved: FCA ​* 
Friday, April 10, 2009

ISLAMABAD: The Federal Committee on Agriculture (FCA) on Thursday admitted that the country has failed to achieve targets of main cash crops, indicating the need of wheat import and a fall in gross domestic product to below 2 per cent.

Except for rice, production targets of all major crops could not be achieved, but the food minister did not give any reason, reveals a press statement distributed among media persons.

It did not provide final figures of Kharif crops including cotton, rice and sugarcane. Also it did not mention the production of oilseed crops, a participant of the meeting told The News.

Briefing the media about Rabi crops for 2008-09 and targets of Kharif crops for 2009-10 at the PID centre, Federal Minister for Food and Agriculture Nazar Muhammad Gondal hoped there would be no need to import wheat to meet local demand. This came despite an estimated shortfall of 1.7 million tonnes compared to the target of 25 million tonnes.

Government estimates showed wheat production would be around 23.3 million tonnes, however there was optimism that the output would cross 24 million tonnes, the minister said.

About Rabi crops in 2008-09, the minister said that all crops including potato, onion, gram and lentils missed production targets. For Kharif crops in 2009-10, the committee, which meets twice a year, fixed ambitious production targets. Cotton production is expected to be 13.36 million bales, rice 6 million tonnes, sugarcane 52.5 million tonnes, maize 2.9 million tonnes, moong 150,000 tonnes, mash 16,000 tonnes and chillies 100,000 tonnes.

About water availability, the Indus River System Authority told the FCA that anticipated availability of water for the season was 70 million acre feet (MAF) against 67 MAF last year. However, it is 10 MAF short of total consumption for irrigation purposes, said the statement.

Similarly, fertiliser availability including urea and DAP would be enough to meet local demand and the State Bank of Pakistan had allocated Rs250 billion for the year, it added.

Replying to questions, the minister said the government would have a buffer stock of 200,000 tonnes of fertiliser in the Kharif season.

To a question about ban on wheat movement, Nazar Mohammad Gondal said there was no restriction on inter-district/inter-provincial movement of wheat.


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## Neo

*Telecom industry to take new shape ​* 
Friday, April 10, 2009

LAHORE: The telecom industry of the country will take a new shape by the end of 2009 as either a new foreign player will acquire at least one cellular network or one of the existing players will buy another operator. 

Zong Head of Marketing Salman Wassay, in an interview with The News, said as per free market dynamics, the market will always move towards the most efficient way. In such a scenario, merger or acquisition in the telecom sector is just round the corner and only four companies will remain in competition, he remarked. 

The company that will not be able to survive existing pressure will go out of the market but the most important thing is to see how much appetite the current foreign players have for investment. Owing to the widespread recession which has engulfed the global markets, the cash flow of companies is very weak, Wassay said. 

He, however, said it is early to comment which company will buy another company or which foreign operator will come to Pakistan to acquire any of the existing telecom companies. He confirmed that there have been discussions in China Mobile on the possibility of buying another operator in Pakistan and talks with a player in Pakistan will only be initiated by the parent China Mobile company in China. 

The Chinese give very high rating to Pakistan due to the Sino-Pak friendship and strategic relations. Therefore, China Mobile is interested in continuous investment in Pakistan. China Mobile has made a very strong impact since its launch and the company is here to stay and expand in the times to come, said Wassay. The telecom sector of Pakistan has performed extremely well during the last seven to eight years and those companies which grew rapidly have now, in times of recession, realised that their operating costs have increased substantially. 

This has led to a situation where they find it increasingly difficult to remain competitive with their relatively high operating cost. Wassay has over 19 years of experience in the telecom industry of Pakistan and is considered a specialist. He played a major role in shaping the telecom industry of the country while working with long distance players and GSM operators. Discussing key success factors of the Chinese companies, he said they always have a clear focus on cost efficiencies. Therefore, ZONG, since its launch has maintained at a very high cost efficiency besides focusing on building customer base. There is a consensus amongst the industry analysts that the market has matured and there is greater difficulty in adding new customers at a rapid rate, said Wassay. 

He admitted that it was really challenging to add new customers to the telecom sector of Pakistan at this point when the economic recession has reached alarming proportions. The time is ripe to focus on providing value-added services (VAS) which maintain the current profitability of the telecom players, said he. The revenue generated through VAS, globally, by telecom operators, averages around 20 per cent while in Pakistan. We need to increase demand for VAS by offering new and innovative products as services like mobile commerce will be the next big challenge and almost every telecom operator is working to cater to it. Disclosing the future strategy of ZONG, Wassay said the company has planned to become the largest network operator in the country and for that it has planned to install 20,000 sites across the country within the next two-and-half years. In just one year, ZONG has installed 4,500 sites across the country as now China Mobiles focus is entirely on Pakistan. 

Pakistan, with a population of 170 million people, has tremendous potential for growth and ZONG will capitalize upon that opportunity by bringing in new products which will focus on internet users, concluded Wassay.


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## Neo

*Forex reserves cross $11 billion​*
KARACHI: The countrys liquid foreign exchange reserves have reached $11.171 billion on week ending at April 04, 2009 as compared with $10.090 billion last week, data released by State Bank of Pakistan, shows Thursday. The overall reserves witnessed an increase of $1.081 billion during the last week. The reserves held by the central bank witnessed a major increase of $1.171 billion to reach $7.805 billion as compared with $6.634 billion during the last week. However, the reserves held by banks (other than SBP), witnessed a decrease of $0.091 million, as they fell to $3.365 billion as compared with $3.456 billion last week. Pakistan has recently received $500 million from the World Bank and $848 million from the International Monetary Fund, which is reflected in the data this week. Foreign reserves hit a record high of $16.5 billion in October 2007 but fell to $6.6 billion in November, largely because of a soaring import bill. Pakistan agreed in November to an IMF emergency loan package of $7.6 billion to avert a balance of payments crisis.


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## Neo

*Short of expectations: Wheat production at 23.3m tonnes vs 25m tonnes target ​*
ISLAMABAD: The Federal Committee on Agriculture (FCA) on Thursday revealed that initial estimates showed 23.3 million tonnes of wheat production as against the set target of 25 million tonnes. 

Province-wise wheat production is as follows: Punjab 17.9 million tonnes as against the target of 19.4 million tonnes, Sindh 3.4 million tonnes as compared to the production target of 3.5 million tonnes, NWFP 1.18 million tonnes as compared with the target of 1.20 million tonnes and Balochistan 0.876 million tonnes as against the target of 0.9 million tonnes. 

Federal Minister for Food and Agriculture Nazar Mohammad Gondal told journalists that it was the initial estimate and expressed the hope that production of wheat might increase when final estimates arrive after harvesting. Last years wheat output was revised to 21 million tonnes from 21.8 million tonnes, he said. If we achieve 23.3 million tonnes, we will not need to import more, he maintained. He said the government had spent Rs 80 billion over the import of commodity last year.

The minister informed that the government had set procurement target of 6.5 million tonnes and the process had already kicked off in Sindh province. Province-wise the wheat procurement targets are: Punjab 3.5 million tonnes, Sindh 1.2 million tonnes, NWFP 0.3 million tonnes, Balochistan 0.05 million tonnes and the Pakistan Agriculture Storage and Services Corporation 1.5 million tonnes. As of today (April 9) provincial food department of Sindh procured 40,000 tonnes of wheat as against last years procurement of 25,000 tonnes, the minister maintained. 

The minister said that rise in procurement price of wheat to Rs 950 per 40 kg was a manifestation of farmers friendly policy of the government and would help achieve food security and reduce poverty. The minister claimed that the FCA meeting reinforced that there would be no restriction on the inter-districts and inter-provincial movement of wheat. 

An official, who attended the FCA meeting, told Daily Times that the participants expressed dissatisfaction over ban on movement of wheat and its seed during sowing and procurement season by Punjab and Sindh provinces. The meeting informed that the Punjab government wasted wheat seeds but did not provide other provinces during sowing season. They said if the wheat seeds were provided to other provinces on time, then the wheat production might have increased more than what is achieved today (23.3 million tonnes). The participants stressed that there should be no ban on movement of wheat by Punjab government. 

Ministry of Food and Agriculture (MINFA) Secretary informed the meeting that the ban on wheat movement was totally against the procurement policy of the federal government. If this year, the ban was imposed on wheat movement, the growers would suffer greatly and they would be unable to get the announced price of Rs 950 per 40 kg. The ban will totally collapse the farmers hope to get fair return of their hard produce, he maintained. 

After FCA meeting Punjab Agriculture Minister Malik Ahmed Ali told Daily Times that movement of wheat would be properly monitored as to where it was going and who purchased it. However, he said that there would be no ban on movement of wheat. 

An official told Daily Times that the Privatisation Minister Naveed Qamar informed the meeting that ground reality was that growers were facing difficulties in getting empty wheat bags in some parts of Sindh province and growers were compelled to sell their produce on lower rates. The minister said that appropriate steps should be immediately taken to ensure that every grower would be the announced minimum granted price of Rs 950 per 40 kg. He also suggested that PASSCO be allowed to procure wheat from those areas where Sindh province had already completed its procurement target, the official maintained. 

Gondal said that the federal government would make procurement policy of wheat more effective so as to address the complaint quickly.


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## Neo

*Xinjiang seals deal on Pakistan trade​*
URUMQI: A vital trade and energy deal has been agreed between Xinjiang Uygur autonomous region and the bordering North West Frontier province of Pakistan, it was announced yesterday.

Both areas have vowed to further explore partnerships over oil and gas resources, trade, sustainable energy, agriculture and water-saving and irrigation technology, explained Nur Bekri, the chairman of the region.

As the closest province to Pakistan, Xinjiang is obliged to contribute to the firming up of relations between the two nations, he said after signing the deal in capital city Urumqi.

Masood Khan, Pakistani ambassador to China, added such cooperation was essential and that the long-awaited direct rail connection between the two will be put on top of both governments agendas.

He said Pakistan was also looking forward to working with Xinjiang on a currency settlement for cross-border businesses.

The Peoples Bank of China has already issued permission for Pakistans biggest international bank, Habib Bank Ltd, to open accounts in renminbi, while it has an existing strategic partnership with Urumqi Commercial Bank in share-holding and staff training.

Despite the global downturn, Sino-Pakistani cooperation still has profound potential, said Nur Bekri, adding the region will this year start its upgrade project on Hongqi Lapu, the land connecting China and Pakistan in the Tashi Kuergan Tajik autonomous county.

With strong government support and input, the project will be a success and will further boost trade and communication, he said.

To address concerns about safety, Masood told the local media that the Pakistani authority had made it a top priority to protect Chinese people in Pakistan, allocating multiple resources and security forces.

He reiterated that joint efforts should be made to oppress evils, maintain peace and stability, and promote harmony in both countries. To achieve that goal, China and Pakistan must deepen ties to oppose terrorism, extremism and separatism, he added. courtesy china daily

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## Neo

*$2.709 billion FDI made during July-February, National Assembly told ​* 
ISLAMABAD (April 10 2009): The National Assembly was informed on Thursday that $2.709 billion direct investment (FDI) was made during the first eight months of the ongoing fiscal year ie July-February 2008-09. This was stated by the Minister for Investment Waqar Ahmed Khan in a written reply to a question of Ms Shirin Arshad Khan.

The details given by the minister in the form of an annexure revealed that though the IT and telecom sector was highest recipient with $790.7 million FDI during the period under review, it was far less than $1.625 billion for the 12 months of last year. Giving details of other sectors, the minister said that FDI in oil and gas, textile was $471.1 million, $27.6 million and $121.5 million respectively during the period under review. The construction sector got $42.5 million FDI during July-February, 2008-09. The FDI in power sector was $79.8 million and in chemical and transport was $41 and $36.5 millions respectively during the period under review.

The Ministry of Finance in a written reply to a question informed the House that the government borrowed Rs 304 billion during the first six months of the current fiscal year.

With this borrowing, the total domestic debt has risen to Rs 3578 billion in the first half of current fiscal year from Rs 3274 billion at the end of 2007-08. During the same period, Pakistans external debt went up by $4.7 billion, which increased Pakistans total external debt from $44.5 billion at the end of 2007-08 to $49.2 billion by end-December 2008.

The House was apprised that total amount of interest paid on domestic loans during the same first six months of the 2008-09 was Rs 231 billion. Out of this total interest, Rs 26 billion was paid on permanent debt, while Rs 88 billion and Rs 116 billion were paid on floating and un-funded debt respectively. The ministry said that the total amount of interest paid on Pakistans external loans during the same period amounted to $588 million.


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## Neo

*95 percent jobs generate in small enterprise sector: ADB report ​* 
FAISALABAD (April 10 2009): The vast majority of jobs in the private sector of Pakistan are generated in the small enterprise sector. Update Asian Development Bank (ADB) studies shows that small enterprises, comprising 1-4 people, employ almost 95 percent of the total labour force. On the other hand, Pakistan has an insignificant "medium" sector that employs only five percent of the labour force.

In a report on "Employment and the Private Sector at the National Level," ADB experts revealed that the proliferation of small businesses that employ the bulk of the labour force in Pakistan and which in most cases do not graduate to the "middle" category indicates lack of economies of scale, difficulties in accessing finance to grow in size and complexity, and insufficient absorption of technology needed to scale up operations and generate greater employment opportunities possible in large sized companies.

The size of the labour force swelled to over 50.33 million in FY2007, up from 45 million in FY2004. The number of the employed increased to almost 47.7 million from 42 million during the same period. Employment increased in the construction sector, and only marginally in the agriculture and manufacturing sectors, but stagnated or fell in the transport, trade and community and social services sectors. Labour force participation rates have also demonstrated a small increase, rising from 30.4 percent in FY2004 to 31.8 percent in FY2007. Participation rates increased in both urban and rural areas and for both males and females, ADB report added.

According to ADB report, the private sector employs seven million workers in the formal sector, and 18.6 million in the informal sector. In the last five years, an estimated 8.6 million new jobs were created in the private sector.

With this increase in employment, the overall unemployment rate has decreased from 8.3 percent in FY2002 to 6.5 percent in FY2005-06. The informal sector is second only to the agriculture sector as the largest generator of jobs in the private sector.

The sectoral concentration of informal labour force employment shows the retail and personal service sectors as the leading employers in the informal sector, followed by manufacturing, and community and social services.

With increased diversification of the economy to service oriented sectors, ADB statistics indicates that most jobs are being created in the telecommunication sector, hospitality industry, IT and banking. At the same time, job generation is on the decline in public sector corporations, nationalised banks, the public education sector, ministries and their related departments.


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## BaburCM

*Way cleared for IPI pipeline as Iran price accepted*



By Ahmed Hassan and Kalbe Ali
Thursday, 09 Apr, 2009 | 07:14 AM PST |
President Asif Ali Zardari himself visited Iran and requested Iranian President Ahmedinejad to bring down the demanded price, but was told by his Iranian counterpart that any further concession was not possible from Tehran.&#8212;Reuters/File

ISLAMABAD: The cabinet cleared the way on Wednesday for the gas pipeline project with Iran by accepting price purchase formula offered by Tehran.

A cabinet meeting accepted Iran&#8217;s offer to export one billion cubic feet per day of gas at 80 per cent of the crude oil price in the international market. A sale-purchase agreement is likely to be signed this year.

Briefing newsmen after the meeting, Minister for Information and Broadcasting Qamar Zaman Kaira said Pakistan had decided to go ahead with the gas pipeline project in accordance with its needs without caring about &#8216;US pressure, that forced India to pull out of it&#8217;.

The cabinet decided that the government would own responsibility of paying Rs31 billion outstanding against the Karachi Electric Supply Company to help its management invest the promised amount of Rs28 billion on development projects to increase power generation.

It approved ratification of an agreement on cooperation in the field of transportation and transit of goods between Pakistan and Uzbekistan with the objective to provide the latter an access for transhipment of its trade cargo to and from Gwadar port.

The cabinet decided to set up a four-member committee to oversee Gwadar port operations. It would also propose incentives for the proposed export processing zone.

It ratified the Sarso accord as Pakistan is a signatory to the agreement on the establishment of South Asian Regional Standards Organisation (Sarso) which has a mandate to remove technical barriers to trade and to facilitate flow of goods and services in the Saarc region.

The cabinet decided to review the Pak-Afghan transit trade agreement to safeguard the country&#8217;s interests while facilitating the Afghan trade.

It decided to levy 25 per cent regulatory tax on export of molasses because its production had dropped after a decline in sugarcane production.

In pursuance of the International Road Transport Agreement signed with Iran in June last year, the cabinet gave its approval for instrument of ratification concerning the deal.

The cabinet decided to defer approval of a new national education policy after a couple of provinces expressed reservations.

The meeting approved negotiations on draft agreement on defence cooperation with Hungary.

It gave its approval in principle for negotiating an MoU between the National Defence University and Institute des Hautes Etudes de Defence National of France.

The cabinet granted ex-post facto approval to initiation of negotiations for an MoU on political consultations with Libya to provide a forum to take stock of the trajectory of bilateral relations and share views on issues of mutual interest.

Ex-post facto approval was also granted for entering into negotiations for an extradition treaty with Libya. Approval was also granted for an MoU for cooperation in the field of employment generation.

The cabinet also approved signing of agreements for abolition of visa for diplomatic and official/special passport-holders with Libya, Indonesia and Ireland.

It approved in principle a draft bill for the establishment of National University of Law and Social Sciences at Islamabad with its campuses in provincial capitals.

The cabinet also approved draft of Anti-Money Laundering (Amendment) Bill, 2009, to bring various provisions of Anti-Money Laundering Ordinance, 2007, in line with international standards.

It approved draft Anti-Money Laundering (Amendment) Bill, 2009. The proposed amendments are necessary to bring the various provisions of Anti-Money Laundering Ordinance, 2007, in line with international standards.

The cabinet approved Pakistan&#8217;s accession to the International Convention for the Suppression of the Financing of Terrorism which requires parties to take steps to prevent and counteract the financing of terrorism whether direct or indirect through groups claiming to have charitable, social, or cultural goals or which engage in illicit activities.

It granted approval to the Draft Pakistan Marine Insurance Bill, 2009 and draft Law for Implementation of Convention of International Trade in Endangered Species of Wild Fauna and Flora Convention.

Source: DAWN.COM | Business | Way cleared for IPI pipeline as Iran price accepted


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## BaburCM

*IPI without India *

Dawn Editorial
Friday, 10 Apr, 2009 | 08:21 AM PST 

The &#8216;peace pipeline&#8217;, as the Iran-Pakistan-India (IPI) gas pipeline project was dubbed, seems to be inching forward but without a vital partner on board. India appears to have stepped out of this trilateral project but no formal announcement has so far been made to that effect. Iran and Pakistan have now decided to go ahead without New Delhi to finalise the details of the deal that has been hanging in the balance since 1993 when it was first conceived.

On Wednesday another hurdle was cleared when Pakistan&#8217;s cabinet accepted the price purchase formula offered by Tehran. This is expected to enable the two governments to sign a sale-purchase agreement later this year. India&#8217;s absence from the past several meetings of the trilateral body that has been discussing various dimensions of the project has been interpreted as its reluctance to join hands with Pakistan and Iran.

While New Delhi has been at loggerheads with Islamabad on issues of regional security, it may not be too happy about entering into an energy project in defiance of Washington&#8217;s warnings to the international community to refrain from working with Iran.

Be that as it may, the IPI has significance for Pakistan. True, it is a costly project. But the $7.4bn pipeline linking Iran&#8217;s gas fields to Nawabshah in Sindh will enable Pakistan to import one billion cubic feet of gas per day. Given the growing shortfall of gas in the country &#8212; it is expected to be 700mmcfd in 2009 &#8212; the IPI pipeline will ease some of the pressure.

However, it will take several years to complete and the government will have to find alternative sources of fuel to meet the country&#8217;s energy needs. Another major factor that may pose problems for Pakistan in the long run is the cost of the gas to be supplied. The pricing formula has been under negotiation for years. What began as a reasonable rate has been revised upwards by Tehran repeatedly.

Under the new arrangement Pakistan will pay 80 per cent of the oil price in the international market that could work out to be a hefty amount. It will also be foregoing the transit fee of $200m India would have paid had it been a partner. There is also the additional cost of securing the pipeline from attacks by insurgents which is not unlikely. Given the law and order situation in Balochistan where installations are blown up regularly what safety will there be for this pipeline?

It is the foreign policy and security implications of IPI that carry great significance for Pakistan. At a time when it is in the grip of a grave security crisis Pakistan&#8217;s interest lies in working out a regional strategy. In this context an understanding with Iran, which the IPI would promote, will strengthen Pakistan&#8217;s hand.

Source: DAWN.COM | Business | IPI without India


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## ajpirzada

*Pakistan&#8217;s Trade Deficit Narrows 49.2&#37; as Imports Decline*
Share | Email | Print | A A A

By Farhan Sharif

April 10 (Bloomberg) -- Pakistan&#8217;s trade deficit narrowed by 49.2 percent in March as imports fell faster than exports.

The trade gap fell to $1.04 billion in the ninth month of the fiscal year ending June 30, from $2.05 billion a year earlier, according to data posted on the Web site of the Federal Bureau of Statistics in Islamabad.

Overseas sales fell 25.9 percent to $1.3 billion, while imports fell 38.4 percent to $2.4 billion, according to the data.

Pakistan is seeking to boost exports to increase growth in a country where the World Bank estimated two-thirds of the population of 170 million people, survive on less than $2 a day.

Exports in the nine months fell 0.13 percent to $13.4 billion and imports fell 6.6 percent to $26.1 billion. The nine- month trade gap narrowed 12.5 percent to $12.7 billion, according to the data.

To contact the reporter on this story: Farhan Sharif in Karachi, Pakistan fsharif2@bloomberg.net.
Last Updated: April 10, 2009 02:43 EDT 

Pakistan?s Trade Deficit Narrows 49.2% as Imports Decline - Bloomberg.com


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## sohailbutt

*Japan to give Pak $1b in aid​*TOKYO: Japan's government is finalising plans to provide Pakistan with up to $1 billion in economic aid over the next two years, the Nikkei business daily reported on Saturday.

The assistance would consist of yen loans and grant aid, and is aimed at helping poverty-stricken areas that could become breeding grounds for extremists, as well as finance infrastructure, education and job training, the Nikkei said.

Japan will announce the details on April 17 at a Pakistan donors conference in Tokyo that it is co-hosting with the World Bank, the paper said.

Pakistan has said it is seeking between $4 billion to $6 billion in aid pledges at the donors conference to fill a financing gap over the next two years.

The international community fears an economic meltdown in the nuclear-armed country could fan popular support for al Qaeda and other militant groups.

Participants at the conference are expected to agree to provide about $4 billion in aid to Pakistan over two years, the Nikkei said.

Japan had planned to chip in about 10 percent of that amount but will raise its contribution after the United States pledged annual aid of $1.5 billion, the paper said.

Pakistan has drawn up a list of projects worth $30 billion it would like to see implemented over the next 10 years.

The list includes hydro-lectric dams and roads projects aimed at improving security in its volence-plagued northwest on the Afghan border.

In November, Pakistan got an emergency $7.6 billion International Monetary Fund loan to stave off a balance of payments crisis.

.:: SAMAA - Japan to give Pak $1b in aid - Nikkei

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## sohailbutt

*IESCO to set up four new grid stations​*ISLAMABAD: Islamabad Electric Supply Company (IESCO) will set up four new grid stations, while the old ones would be repaired, financed by Asian development Bank (ADB) loan of $14 million.

IESCO CEO, Raja Abdul Ghafoor told Geo News that ISECO has obtained ADB loan of $36 million for its expansion projects, while from the World Bank $68 million, which would be utilized for setting up four new grid stations of 132 KV besides 33 KV and 66 KV grid stations would be upgraded. 

IESCO to set up four new grid stations - GEO.tv


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## sohailbutt

*Petro-products consumption in July-March fell by 2.4 pc​*KARACHI: Petroleum products consumption during July-March in the country recorded a decline by 2.4 percent.

Oil Companies Advisory Committee (OCAC) released data said that the consumption of petroleum products during July-March as compared to the same period previous year fell by 2.4 percent. Meanwhile, refineries production recorded fall by 6.4 percent, but the consumption of petroleum products in March as against February rose by 5 percent. Furnace oil consumption in March against February recorded rise by 17 percent in the wake of high demand of electricity in summer. 

Petro-products consumption in July-March fell by 2.4 pc - GEO.tv


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## sohailbutt

*Pakistani rice 20 pc share in Saudi market restored​*KARACHI: Pakistan has received big orders for rice exports, which is expected to restore its 20 percent share in the Saudi market.

Rice Exporters Association (REA) chairman, Rahim Janoo said that Saudi Arab traders have placed big orders for the purchase of sehla rice, but presently its volume and amount could not divulged. 

He further said that the export of Pakistani sehla rice would succeed in restoring 20 percent Saudi market share. Pakistans rice exports to Saudi Arab significantly fell, when the exporters had started shipping sehla rice instead of basmati. 

Pakistani rice 20 pc share in Saudi market restored - GEO.tv


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## sohailbutt

*Remittances soar to record levels in March​*KARACHI: Remittances in March amounted to a record $739.4 million, compared previous record of $673.5 million in December 2008, DawnNews quoted officials as saying. 

Remittances in the July to March period showed a 19.7 per cent increase to post $5.685 billion worth of inflows to the economy. 

The news comes despite a recent World Bank report which showed global remittances were likely to fall between five and eight per cent from an estimated $305 billion in 2008, in contrast to double-digit annual growth in recent times.

It might be that we will look overall at a decline of five per cent or something, Massimo Cirasino, head of the payment systems development group at the World Bank, told Reuters.

We dont know really how much this will decline... but we can conclude these flows are more resilient than any other flow.

If the crisis continues probably we will see more decline (but) as we all hope, we will soon recover globally, then we can expect these flows to continue, Cirasino said.

DAWN.COM | Business | Remittances soar to record levels in March


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## sohailbutt

*July-March trade deficit at $12.7 billion​*ISLAMABAD: Despite reduced imports the trade deficit remained at staggering $12.709 billion in the nine month of current fiscal year, said the official figures released by the Federal Bureau of Statistics (FBS) here on Friday.

The provisional figures showed that the trade deficit was due to a high import bill of $26.124 billion against total exports of $13.414 billion during July-March period of the current fiscal.

However, trade deficit during July-March 2008-09 witnessed a decline of 12.51 per cent compared to the same period last years owing to lower imports. 

The FBS figures show that the deficit in the first nine months of the current fiscal year amounted to $12.709 billion against $14.527 billion for the same period last year. 

Month-on-month

The monthly analysis of the data showed a marginal growth of 3.71 per cent in exports in March 2009 over previous month - exports in March were $1.313 billion compared to $1.226 billion in February. 

The FBS data showed that the imports grew faster in March and increased the bill to $2.355 billion from $2.123 billion a month ago, a 10.91 per cent increase. 

Comparison of March 2009 trade figures with the same month of last year showed a massive 25.88 and 38.38 per cent decline in exports and imports respectively. 

The exports declined to $1.313 billion in March 2009 compared to $1.771 billion in March 2008. The imports dropped to $2.355 billion in March 2009 against $3.821 billion in March last year.

As a result of massive decline in both exports and imports, trade deficit for March 2009 over March 2008 declined by 49.18 per cent.

DAWN.COM | Business | July-March trade deficit at $12.7 billion


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## sohailbutt

*Govt to hold talks on TAPI pipeline project​*ISLAMABAD: The Advisor to Prime Minister on Petroleum Dr Asim Hussain would be leaving for Turkmenistan later this month to hold talks over the Turkmenistan Afghanistan  Pakistan- India (TAPI) gas pipeline.

The government has decided that the talks over TAPI gas pipeline would continue parallel to the negotiations over Iran gas pipeline project.

Talking to Dawn, Dr Asim said that the TAPI project would not influence the Iran gas pipe line, adding that such talks would be beneficial for final negotiations with the Iranians over the price of gas.

Officials of the petroleum ministry said that Pakistan would also be floating a new business plan to Turkmenistan for a wheeling gas arrangement between Turkmenistan, Iran, Pakistan and if either Afghanistan and India would like to join it.

Officials said that Iran was already buying gas from Turkmenistan for its north eastern regions but at higher rates, and if Turkmenistan agrees to sell gas at attractive prices to Pakistan for the TAPI project, Pakistan would propose Iran to swap that gas for its pipeline project with Pakistan.

Such an arrangement would be beneficial for the whole region and there would not be any requirement to lay the TAPI pipeline, Dr Asim said adding If this formula did not work the talks on TAPI was always on table. 

During the two day visit to Turkmenistan, which is to stat from April 26th , the Pakistani delegation would be participating in an energy conference and hold extensive dialogue over the TAPI project, which is pending for almost one year.

TAPI is a long term project and the demand for energy is growing in the region, said Dr Asim adding that after 10 to 15 years the imported gas from Iran would not be sufficient to meet the demands.

The Turkmenistan-Afghanistan-Pakistan project was conceived in 2002, and India joined the project at later stages but no significant progress has been made over the project.

The last meeting of TAPI steering committee was held in Islamabad in April 2008 and it was agreed that Turkmenistan would soon provide proof that it has adequate reserves to supply gas for 30 years.

The cost of the project was estimated at around eight billion dollars, But the major concern for the investors was law and order situation in Afghanistan and the north western parts of Pakistan, sources in the Inter State Gas System told Dawn. 

The ISGS was responsible to look into the Pakistani interest in the project.

Sources in the ISGS said that apart from the TAPI gas pipeline, Pakistani delegation was expected to visit Iran in May for the final phase of negotiations over the pricing of gas and ask the Iranian authorities to reduce the price of gas.

Sources said that with the indications that the US opposition to economic ties with Iran is softening, it is likely that India too would join the project again.

However, the advisor to the PM on petroleum confirmed that a team of petroleum ministry and the ISGS would be travelling to Turkey in May before visit to Iran.
The negotiations between Turkey and Iran over sale of gas from South Pars fields have not ended in positive note, he said and added. The situation has now placed us in a more strong position to negotiate. 

Pakistan would be pressing the Iranians to accept the price of gas at 70 per cent of crude oil price instead of 80per cent of crude oil price as offered by them.

DAWN.COM | Business | Govt to hold talks on TAPI pipeline project


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## sohailbutt

*Pakistans year-on-year inflation falls to 19 pc in March​*ISLAMABAD: Pakistans year-on-year inflation slowed in March from a month earlier, and analysts said stable commodity prices are likely to bring it down further and should encourage interest rate cuts.

The consumer price index (CPI), a key indicator of inflation, rose 19.07 per cent in March from a year ago, the Federal Bureau of Statistics said on Friday.

In February, the CPI rose 21.07 per cent year-on-year. CPI in March was up 1.37 per cent over the previous month.

The CPI in February was up 0.95 from January.

In coming months, inflation will come down to single digits because of wheat crop arrivals and stable commodity prices, Muzammil Aslam, an economist at KASB Securities told Reuters. That should encourage policy makers to review monetary policy stance, he said.

Muzammil said he expected a 400 bps cut in the key discount rate in 2009, and did not rule out a 200 bps cut in a policy review this month.

Pakistan kept the key interest rate unchanged at 15 per cent in January after raising it by 200 basis points in November.

The State Bank of Pakistan, in a report issued last week, lowered its inflation forecast for the 2008/09 fiscal year (July-June) to between 19.5 per cent and 20.5 per cent from between 20 per cent and 22 per cent earlier.

It had originally forecast inflation at an average of 11 per cent for this fiscal year but it had to revise that following a surge in international oil and commodity prices last year.

Inflation was 12 per cent in the previous fiscal year.

The wholesale price index (WPI) rose 11.08 per cent in March from a year earlier, according to the data. The WPI was up 0.42 per cent over February.

Using 2000/01 as the base year, the CPI stood at 194.53 in March against 191.90 in February. The WPI index stood at 195.00 in March against 194.19 in February. 

DAWN.COM | Business | Pakistan?s year-on-year inflation falls to 19 pc in March


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## sohailbutt

*Atlas, Saudi-Pak announce merger​*KARACHI: The Atlas Bank and the Saudi-Pak Commercial Bank have decided to go for a merger after a formal approval by the State Bank.

Both the banks informed the shareholders that the boards of directors of the banks have agreed to the merger. 

The merger carries some interesting facts as both the banks failed to meet the minimum capital requirement (MCR) set by the State Bank, and both have been facing losses while the year 2008 was a serious dent for their balance sheets.

At the end of 2008, the Saudi-Pak Bank showed a total equity of Rs4.319 billion while Atlas had a total equity of Rs3.657 billion.

The State Bank, which revised the requirement of MCR, had set Rs5 billion minimum capital requirement till December 2008. Now after merger, this requirement could be met through combined equities. 

During 2008, banking sectors profitability dropped by 21 per cent compared to the preceding year which suggests that banks are also going to have a hard time. 

Experts believe it would not be easy to earn profits, especially for small of medium size banks in the country. 

This would be the first merger of the year and also an indication that existence of even medium-sized banks is difficult under the current banking scenario which has been receiving negative impacts from the collapse of giant banks in the developed countries.

The swap ratio for the merger would be determined based on valuation by a mutually agreed firm of chartered accountants and on the results of the due diligence.

Atlas Bank, KASB Bank and KASB Capital in 2008 announced the merger of their respective operations to form a KASB-Atlas Bank. 

However, despite the announcement, a deal could not materialise.

The Saudi-Pak Bank also went through many changes. On March 31, 2008, a consortium, comprising of the International Finance Corporation (a member of the World Bank Group), Bank Muscat, Nomura International and Sinthos Capital, acquired an 86.55 per cent stake in Saudi Pak Commercial Bank (SPCB) for around $213 million or $0.47 per share (PKR 29.3 equivalent per share). 

The consortium, led by senior bankers Shaukat Tarin and Sadeq Sayeed, had plans to make SPCB a significant player in the local market. 

This is also interesting that Shaukat Tarin who led the Consortium to acquire Saudi-Pak Bank, is now adviser to the Prime Minister on finance and the Governor of the State Bank Syed Salim Raza was one of the directors on the board of Atlas Bank in 2008

DAWN.COM | Business | Atlas, Saudi-Pak announce merger


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## sohailbutt

*A bumper wheat crop but...​*THE wheat harvest season is under way. Thanks to a high procurement price set by the government, a bumper crop of close to 25 million tonnes is expected.

This is considered sufficient to meet the consumption needs of Pakistan and partly of Afghanistan. Taking Afghanistans needs into account is prudent policy, given the difficulties of controlling the movement of goods across the porous border. The past policy of keeping wheat procurement price low led to low acreage and output, creating a supply deficit, which had to be met through costly imports. The new policy pays higher prices to Pakistani farmers than to farmers abroad.

The bumper wheat crop is, however, not likely to resolve the problems of wheat or wheat flour availability and price by itself. In fact, it is likely to generate new problems that will have to be attended to before they arise. Essentially, the wheat issue will need to be treated as part of a policy package and all elements of the package will need to be planned and executed accordingly.

The immediate problem the bumper wheat crop is likely to present is one of storage capacity. Without proper storage, there is a danger of a part of the wheat being spoilt, thus reducing supply despite the bumper harvest. Secondly, a decade of economic management under the neo-liberal paradigm has eroded the governments administrative capacity to operate the distribution system. Even today, flour price in remoter parts of the country is about twice that in the Karachi-Lahore-Peshawar belt.

The other problem is the rise in the consumer price of wheat flour. The raise in the procurement price of wheat to Rs950 per maund will provide improved prices to producers but cost consumers more as the retail price of wheat flour is likely to rise from an average of about Rs25 per kilogram currently to Rs40 per kilogram. In remote areas, the price could rise to shocking levels. The impact on the poor will be devastating.

Continuing to benefit the producer and at the same time protecting the poor will require de-linking producer and consumer prices. Managing the conflicting interests of producers and consumer is thus of critical importance.

Governments have traditionally attempted to keep wheat flour price low through the provision of subsidised wheat to flour mills with the expectation that wheat flour ground from government-supplied wheat will be sold at lower prices. However, the policy is conceptually flawed and has led to the subsidy element being absorbed as flour mills profit, rather than being passed on to consumers. The arrangement also has the effect of distorting the market.

Economic theory postulates that the success of an indirect input-level subsidy requires two conditions to be present for it to be passed on to consumers. One, the product must have high price elasticity of demand; two, it must be possible to segment the market. Neither of these conditions exists with respect to wheat. Wheat price elasticity is low on account of it being an essential commodity with the result that the price is largely determined by supply rather than demand factors. Moreover, since flour mills grind government-supplied as well as market-procured wheat, the necessary market segmentation does not exist. In any case, market segmentation for such a homogenous product as wheat or wheat flour is difficult.

Given that elasticity and market segmentation factors do not allow for the subsidy to be passed on to consumers, the policy of subsidising flour mills need to be discontinued forthwith and replaced with a subsidy mechanism that enables the transfer of the benefit to the consumer more directly. As with every commodity, there is a demand and a supply aspect. The supply aspect relates to the distribution network, which is available at utility stores.

Currently, however, utility stores present a host of problems. Coverage is limited, particularly in poorer areas. Procurement and financial management systems are flawed and there are pervasive complaints relating to the substandard quality of products and corruption at various levels, including the store level. All these will need to be and can be attended to. The Utility Stores Corporation is on the privatisation anvil. A traditional privatisation will see the end of the corporation, at least as far as the poor are concerned. Consideration needs to be given to retaining the corporation as a state-owned entity and privatising its management. The management technology for multi-store retail chains is fairly standard in the West and can easily be replicated. If necessary, foreign management consultants can be hired  at government expense  for the initial period.

The problem of coverage is currently being addressed by moves to increase the number of utility stores to 6,000  at one store per union council. That number too will need to be doubled to improve outreach to consumers in all areas including those of low-population density. The cost of operating stores at uneconomic locations can be met by the government.

The utility stores can purchase all items from the market at market prices, but sell wheat flour and other specified food items, like rice, pulses, cooking oil and sugar, at separate counters at subsidised prices in specific quantities per week per ration card. The purchase-sale price differential can be paid by the government to the corporation as subsidy. Unlike in the case of subsidising the flour mills, subsidising at the retail level will not be market-distorting. The subsidy payable to the Utility Stores Corporation on both counts will be based on measurable costs and can be adequately accounted for. The necessary operational efficiency and transparency with respect to government subsidy can be achieved.

The demand aspect in this case relates to identification of the poor and their targeting. Given that over two-thirds of the population are stated to be living under $2 a day and are under economic stress, the costs of excluding the non-poor are likely to exceed the benefits of identifying the poor. It may thus be advisable to extend the provision of subsidised flour to all households, with limitations on the quantity available to each household. In other words, all households can be provided with ration cards, albeit with limited quantities of food items supplied per card. Given that the share of food expenditure for richer households is significantly low, the benefit incidence of the subsidy is likely to remain progressive.

The economic pressure facing the vast majority of the population is severe. There is the concomitant threat of a social upheaval, especially in urban centres, which can be exploited by anti-democratic forces. Managing the wheat flour regime is thus important and urgent.

DAWN.COM | Business | A bumper wheat crop but...


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## sohailbutt

*Tax revenues​*NO one likes to pay taxes. That holds as true for Pakistan as for the rest of the world. But taxes are a necessary evil for running the state and generating resources for the common public good. A major cause of our current financial and economic squeeze is the extremely low domestic revenue collection contributing to less than 10 per cent of GDP. 

Even economies comparable to ours, like those of Bangladesh, Egypt and others, have a much higher tax-to-GDP ratio. Apart from the peoples dislike of taxes, inequitable and investment-unfriendly tax policies are blocking the generation of adequate revenues for the countrys development needs. That results in a gaping fiscal deficit, an unsustainable current account gap and distortions in the credit market as the government is forced to borrow from banks to finance its budget. Apparently, the government has realised this and is all set to remove distortions and exemptions in the tax system, albeit under IMF pressure, to make it transparent and equitable.

The first major steps towards achieving the goal of self-sufficiency in domestic financial resources crucial for poverty alleviation and social and economic infrastructure development would be to broaden the existing narrow tax base and to eliminate exemptions for powerful lobbies. That would take extra burden off the manufacturing sector, the single largest tax revenue contributor, and encourage fresh investment. The second step should be to simplify tax administration and reduce the number of existing taxes to two: income tax and consumption tax in value-added mode. A report in this newspaper suggests that the government plans to replace the general sales tax with a broad-based system of value-added tax from next year. If implemented, it should help document the economy and generate more revenues. But that alone will not solve the governments financial woes. In order to increase the tax-to-GDP ratio to 16 per cent over the next seven years, as agreed to with the IMF, it would have to ensure that all kinds of income, irrespective of origin, is taxed and all exemptions are done away with. That is where the governments resolve to increase its tax revenues will be tested.

DAWN.COM | Business | Tax revenues


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## sohailbutt

*Need for exploring alternative energy stressed​*KARACHI: Participants of a multi-topic international symposium have overwhelmingly demanded reversal of the privatisation of Karachi Electric Supply Company (KESC), observing that the private management has failed to enhance the utilitys power generation capacity and control line losses, which had risen to 46 per cent.

The two-day symposium held under the auspices of the Institution of Electrical and Electronics Engineers Pakistan (IEEEP) concluded on Thursday after deliberating upon various ideas for alternative energy sources.

The proposition was tabled after the chief guest, Taj Haider, a Pakistan Peoples Party (PPP) leader and former senator, said that the KESC is a major source of problems and something has to be done now to reverse its privatisation. 

Haider noted that the poor services being offered by the KESC had been causing huge losses in terms of industrial production for years. Its privatisation has rendered thousands of people unemployed and caused untold sufferings to the teeming millions of Pakistans major economic and industrial hub, he observed.

He warned that it was going to be a very hot and dreadful summer this year because the utility had not fulfilled its promise of making heavy investment in power generation and distribution. 

He emphasised the need for more public sector investment to meet national targets of power production, and said that the private sector should also be encouraged to come forward. He also called for making fresh legislation in this regard.

Haider was of the view that the problem with Pakistan was implementation of policies, and urged the government to take necessary measures to overcome the problem.

The symposium called for urgently establishing a 50MW biogas project in Karachi to support the WPP, a power plant to be established in the Gharo corridor. It also recommended that wind turbines could be utilised for lifting water and operating small submersible pump motors. All sources of renewable energy should also be encouraged, it said.

The conference recommended introduction of alternative energy and energy management disciplines in the curricula of all universities in collaboration with the IEEEP.

It called for a tariff scheme to cater incentives for energy utilisation via energy-efficient equipment. The disaster management infrastructure should trickle down to tehsil level from the federal level and the NDMA.

The forum demanded framing of regulations for measurement and monitoring and penalisation in respect of power quality at various buildings to save energy, besides harmonic distortions in power system. 

Among other things, it recommended that solar energy for water heating should be utilised on a massive scale in the textile sector and that efforts should be made to start progressive indigenous production of large wind turbines and PV solar system. It also asked the government to facilitate local power production by formulating entrepreneur-friendly policies.

Pepcos Basharat Cheema called for a holistic approach to energy sector problems and underlined the need for public sectors catalyst role in this regard.

He said there was a dire need for capacity building in power generation and transmission besides evolving energy conservation methods. In this context, he referred to the experiment of daylight saving policy and made mention of the installed and projected capacity of various sources in Pakistan, including the KESC.

Earlier, speakers dealt with the wind, solar, bio-energy and other alternative power sources which, they noted have suffered due to lack of governments whole-hearted backing attributed to political and law & order concerns. 

Alternative sources of energy, especially fuelled by urban solid waste, cow dung and other residuals of agricultural produce, were also considered necessary to meet the growing energy demand not only in urban settlements but also the neglected and far-flung rural areas, where more than 70 per cent of the countrys population was without electricity, potable water etc.

The need for urgently making use of coal deposits for power generation was also emphasised, arguing that the country cannot afford to foot the bill of furnace oil and depleting gas reserves.

DAWN.COM | Business | Need for exploring alternative energy stressed


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## Neo

*Pakistan gets Rs50m export orders for hunting arms​* 
Saturday, April 11, 2009

PESHAWAR: After successfully displaying arms during an international exhibition, the Pakistan Hunting and Sporting Arms Development Company (PHSADC) has got export orders worth around Rs50 million.

Talking to The News, PHSADC Chairman Nauman Wazir informed they had received orders from 11 international companies for around 5,000 guns and pistols. The development came after the company displayed arms at international exhibition IWA held in Germany in March.

We had made arrangements for display of guns produced by Pakistani artisans in the exhibition and got a positive response, Wazir said, adding in the three-day fair, which was the second biggest in the world after Shot Show in Florida (US), about 25 to 30 companies showed interest in the products.

He went on to say 11 companies had placed orders for purchase of 5,000 to 6,000 guns and pistols manufactured by gunsmiths of Peshawar and Darra Adam Khel arms cluster. Negotiations, he added, with some other companies were still continuing and more orders may be received.

For delivery, he said, the PHSADC had started an exercise to assess the potential of registered arms dealers in Peshawar and Darra Adam Khel. He said the PHSADC had circulated a letter asking the arms dealers to inform about their production capability to the technical experts of the company.

After that, he said, the technical experts would visit the production units to confirm the capacity of the arms manufacturers. Orders would then be given to potential dealers for the production and export of arms as demanded by the international companies.

Wazir added the company would facilitate the arms dealers in the whole process of manufacturing and exports so that foreign exchange could be earned and the gunsmiths could prosper.

He said the PHSADC was working to tap the potential of crafts and skills of the gunsmiths by opening ways for exports to international companies.


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## Neo

*Market ripe for 3G technology ​* 
Saturday, April 11, 2009

ISLAMABAD: The use of technology such as 3G will not go down owing to existing recession in world economy and Pakistans market is ripe for moving towards launching this service keeping in view experience of other competing economies, Strategy Marketing Manager of Nokia Siemens Network, Leslie Shannon, said here on Friday.

Briefing media persons on the use of 3G (Third Generation) technology, she shared experience of comparable economies such as Morocco and Indonesia and said that the latest technology got an overwhelming response in all developed as well as developing countries. India is also moving towards issuing a licence for 3G technologies, she added.

Regarding expected investment in Pakistan after 3G licensing, she said that it depends on the size of the country. Citing examples, Shanon said that Indonesia received an investment of almost $1 billion for issuing five licences while Morocco got investment of around $123 million for three licences.


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## Neo

*Country needs $110bn for infrastructure ​* 
Saturday, April 11, 2009

ISLAMABAD: Pakistan requires $110 billion in private sector investment for meeting infrastructure needs over the next five years.

Adviser on Public-Private Partnership (PPP) Ghulam Murtaza Satti said this during an investors forum organised by the Infrastructure Project Development Facility (IPDF) on Friday.

Talking to a group of investors, he said that the elected government is fully cognizant of the importance of PPP, for which the IPDF is a focal entity. He highlighted the key issues like employment generation, economic empowerment and additional use of existing infrastructure which are associated with the economic development of the country.

He said that the PPP has also got support of the international institutions like the World Bank and Asian Development Bank (ADB). Urging the investors, he assured that their concerns will be taken care of while drafting concession agreements for infrastructure projects in order to make them air tight so that these concessions should be workable and should not be affected by the change of government.

The investors appreciated the working of IPDF and observed that there should be consistency and continuity in the policies of the government and also legislation to cover loopholes. They quoted examples of the LahoreñFaisalabad road on BOT (build, operate and transfer) basis of Punjab Government and Lakpass tunnel project on BOT basis of NHA. In both the projects government backed out to abide by obligations of the government/public institutions stipulated in the concession agreements as the government changed.

The investors also quoted statement of the minister of ports and shipping regarding the cancellation of concession agreement signed between the government and Singapore Port Authorities which can affect business environment in the country.

Giving presentation to participants, the IPDF team informed about 11 projects of IPDF worth Rs200 billion that are at various stages of development and in front of investors for feedback to market these projects accordingly.


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## Neo

*Optimistic investors push KSE up by 322 points ​* 
Saturday, April 11, 2009

KARACHI: In a dramatic move, the Karachi stock market was set well-above 7,500 points level again with a notable surge of about 4.5 per cent. Almost all of the blue chips closed on their upper circuit breaker on Friday.

After two consecutive negative closings the KSE 100-share Index posted a healthy recovery of 4.41 per cent or 321.98 points and finished at 7,617.96 points. Its junior partner the 30-Index rose by 4.82 per cent or 378.82 points and concluded at 8,238.26 points.

Analysts said that fall in core inflation, though it was nominal of 40 basis points, made investors optimistic about a likely cut in central bank discount rate in its April 2009 quarterly monetary policy.

On this hope, investors injected Rs90 billion in the shares business, as the overall market capitalisation surged to Rs2,290 billion from Rs2,200 billion of yesterday.

Interestingly, the foreign portfolio investors invested another $135 thousand here in Pakistani equities, according to NCCPL.

Other analysts were of the view that the continuous come back of foreign capital flight made the local investors hopeful, as they might witness a great buying rally in the days to come.

There were rumours in the market that few monopolistic brokers have plans to take market up to 8,500 - 9,000 point levels and then pull it down to make windfall profits at the cost of optimistic investors, it was learnt.

About four-and-half dozen stocks closed on their upper circuit breaker of five per cent or Re1 - whichever is higher.

Circuit hitting stocks are included National Bank, Pakistan Telecommunication Company, DG Khan Cement, Lucky Cement, Adamjee Insurance, Engro Chemicals, Fauji Fertilizer Bin Qasim, Pak Oilfields, Pak Petroleum, MCB Bank, Oil & Gas Development Company, Pakistan State Oil, Attock Refinery, Habib Bank and many more.

The day turnover declined 27 per cent to 272.940 million shares from 372.240 million shares yesterday. No trading took place in future market against 50 thousand shares traded a day earlier.

As a matter or record, market continued to hover in the green territory throughout the day and concluded very much close to intra-day high of 7,622.13 points.

Analysts maintained that the intense buying was witnessed amid expectations about lifting of 58(2b) and 17th. While high hopes from Friend of Democratic Pakistan meeting on April 17, rising international oil prices, recovery in international equity markets also changed investor sentiments to positive.

They further said that the partial resolution of circular debt; improvement in other economic indicators e.g. over one billion dollar increase in foreign exchange reserves this week and ending of political disputes have altogether made stocks market outlook shining.

Out of total 351 actives on board, 290 stocks managed to maintain in positive column, 54 stocks fell in red, while the value of remaining seven stocks closed unchanged.

Highest volumes were witnessed in Karachi Electric Supply Company at 16.958 million closing at Rs3.73 with a gain of 11 paisa, followed by NIB Bank at 16.732 million closing at Rs6.53 with a gain of 60 paisa, National Bank at 13.416 million closing at Rs101.30 with a gain of Rs4.54, Bank of Punjab at 13.090 million closing at Rs15.75 with a gain of 99 paisa, and Pervez Ahmed at 12.766 million closing at Rs8.58 with a gain of 66 paisa.


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## Neo

*Decline in wheat production to lower GDP growth​*
KARACHI: The GDP growth rate of Pakistan is expected to decline further as the wheat production target would be missed by 6.8 percent, initial estimates of wheat production show.

Federal Committee on Agriculture (FCA) on Thursday informed that initial estimates showed 23.3 million tonnes wheat production against the target of 25 million tonnes.

Any change in the agricultural productivity sends a ripple effect throughout the economy

affecting the vital macroeconomic indicators.

This decline in production is in spite of the fact that the wheat sowing target was surpassed. The government had fixed the target of wheat sowing at 8.610 million hectares, while wheat is sown on 8.749 million hectares, an increase of 1.61 percent.

The GDP growth would further decline to 2 percent, which is the lowest in the past 38 years of Pakistans history, Dr Shahid Hassan Siddiqui said while talking to Daily Times.

There is a need of structural changes in the economy. Without introducing land reforms, one should not expect any substantial rise in productivity, he said.

The problem on the technological front is that the yield per acre is not increasing and there is a need to establish connection between the farmers and the agriculture scientists. Only increasing the wheat support price would not solve the problem, Dr Shahid maintained.

The use of conventional farming methods by the farmers seems to be the most important factor responsible for low yield of crops in Pakistan. The modern technology is capital intensive and can only be adopted if adequate capital is available for the investment in farming.

The alternative is to increase crop yield per unit area, which can be achieved through the adoption of proper technology by the farmers. Any improvement made in yield of this crop will be of great help to the people of Pakistan.

Since 2000, the per annum increase in wheat production is a paltry 0.44 percent. Besides the economic dimension, there is a more important Human dimension to this problem. Since our population growth rate is approximately 2.3 percent, the consequences for the food security can be grave given this dismal growth rate. Pakistan ranks 61 out of 85 countries in the 2008 Global Hunger Index.

The 2008 global hunger index report comes at a time of dramatic changes in World food markets, with high food prices threatening the food security of millions of vulnerable households.

Federal Minister for Food and Agriculture, Nazar Mohammad Gondal said that these are initial estimates and expressed the hope that production of wheat might be increased with final estimates arriving after harvesting.


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## Neo

*Trade deficit drops by 12.51%​*
ISLAMABAD: Pakistans trade deficit declined by 12.51 percent during first nine months July-March period of current fiscal year 2008-09 with total deficit at $12.709 billion against the deficit of $14.527 billion in same period of last fiscal year 2007-08.

According to provisional figures released by Federal Bureau of Statistics, Pakistans exports have registered a negative growth of 0.13 percent during July-March period of current fiscal year 2008-09 with total exports at $13.414 billion as compared with $13.432 billion in same period of last fiscal year.

Countrys imports also witnessed a decline of 6.56 percent during the July-March period of ongoing fiscal year with total imports at $26.124 billion as against the imports of $27.959 billion in same period last fiscal year.

March 2009 over March 2008: Countrys merchandise exports totaled $1.313 billion during March 2009 as against the exports of $1.771 billion in March 2008 projecting a decline of 25.88 percent. Similarly, imports of the country declined by 38.38 percent in March 2009 with total imports at $2.355 billion as compared with imports of $3.821 billion in March 2008. Trade deficit during March 2009 totaled at $1.041 billion as against the deficit of $2.049 billion in March 2008 indicating a decline of 49.18 percent.

March 2009 over February 2009: The exports of the country witnessed an increase of 3.71 percent in March 2009 with total exports at $1.313 billion as compared with exports of $1.266 billion in February 2009. Imports registered a growth of 10.91 percent in March 2009 with total imports at $2.355 billion as compared with imports of $2.123 billion in February 2009. Trade deficit amounted to $1.041 billion in March 2009 against the deficit of $857.247 million in February 2009 projecting an increase of 21.54 percent.

According to an official analysis, the textile industry, which has remained the major driver of the export growth once again, depicted sluggish performance and it registered negative growth. This downward trend in the textile sector is contributed by both significant fall in the unit value of almost all major textile items and supply constraints reflected through negative growth even in quantity terms. The share of textile sector has declined from 58.8 percent last year to 53.2 percent this year and it is persistently posting negative growth for some time. The product and market wise diversification is the need of the hour. Notwithstanding, good growth in non-traditional sector, country still needs to look into the structural problems of the textile industry. The January figure of exports is not representative as the pass through of global melt down is yet to be seen.

The growth in imports reflects impact of substantial fall in oil and food imports in monetary terms, and these two items were responsible for 80 percent of additional imports bill last year. Import compression measures coupled with massive fall in international oil prices have started paying dividends and imports witnessed marked slowdown during the last two months.

Notwithstanding the recent dramatic fall in the prices of crude oil in the international markets, the petroleum is still depicting positive growth of 9.2 percent and adding $581 million to the additional import bill over last years petroleum import. The monthly import bill on account of petroleum has lost one-third of its value. The additional import bill during the period July-February 2008-09 on account of petroleum and wheat was just above the $1.0 billion. This massive addition is neutralized by massive negative contributions from non-food and non-oil imports.


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## Neo

*Thar Coal and Power Technical Assistance: WB body to consider $26 million aid for Pakistan on 22nd​*
ISLAMABAD: The executive board of the World Bank (WB) will consider Thar Coal and Power Technical Assistance worth $26 million for Pakistan in its meeting scheduled for April 22, 2009.

According to the Monthly Operational Summary for the month of April based on status as of March 15 on proposed lending programme of the WB for Pakistan. WB would hold consultation in first phase on the proposed programmes and projects and their approval is subject to the clearance by WB Pakistan office and executive board at final stage.

Thar Coal and Power Technical Assistance worth $26 million will help Pakistan and the Sindh province strengthen the enabling policy, legal and regulatory frameworks conducive to new investments in the coal-to-energy sector.

The project also aims at assisting the governments of Sindh and Pakistan to attract qualified private investors to develop Thar coal deposits and build new capacity for coal thermal power generation, guided by high standards of environmental and social sustainability.

Education: Higher Education Support Programme worth $100 million from International Bank for Reconstruction and Development (IBRD) is also in the pipeline to support the government of Pakistans higher rducation medium-term development framework to foster public-private partnership in the delivery of higher education and to provide substantial technical support to the client in developing a reasonable financing plan consistent with the macro-framework of the country.

Sindh Education Reform: The objectives are to improve participation, retention and transition rates, reduce gender and regional disparities, and improve quality in elementary and secondary education (grades 1-10).

Energy and mining: Mineral Sector Technical Assistance worth $50 million is for implementing a strategy to accelerate sustainable mineral sector development by strengthening governance, transparency, and capacity in the management of mineral resources.

Information and communication: Rural Telecommunications and e-Service project worth $124 million from IBRD to: (a) accelerate access to communications in un-served and underserved areas by using targeted subsidies for rural expansion, (b) strengthen legal, policy, regulatory and spectrum management and (c) monitor functions and expansion of e-services. Project preparation is underway.

Law and justice: Second Sindh Structural Adjustment project worth $100 million aims at implementing reforms to improve fiscal and financial management, governance, public service delivery, and the states regulatory framework. Project preparation is underway.

Social protection: Support to Safety Nets project worth $50 million is to support the effective strengthening of implementation and monitoring mechanisms for delivery of cash transfer programmes. Project preparation is underway.

Transportation: National Trade Corridor Improvement Programme worth $200 million from IBRD is also under consideration aiming at enhancing export competitiveness by reducing the cost of trade and transport logistics and bringing service quality to international standards. Project preparation is underway.

Urban development: Punjab Large Cities Development Policy project worth $100 from IBRD is also in the pipeline. The objective is to promote economic growth in the major cities through strategic planning, integrated infrastructure investments, and efficient urban service delivery. Project preparation is underway.

Water and sanitation: Second Punjab Barrages Rehabilitation and Modernization worth $120 million from IBRD is under consideration. The objective is to prevent the occurrence of disastrous barrages failure and ensure their sustainable use, providing improved and reliable irrigation and drinking water supplies. Decision meeting scheduled for June 1, 2009. staff report


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## Neo

*Surgical exports can increase​*
ISLAMABAD: Exports of surgical instruments can be enhanced from existing $260 million to $1 billion in three years if the government resolves the problems with regard to certification and duty drawback. A six-member delegation of Surgical Instruments Association of Pakistan called on the Federal Minister for Commerce Makhdoom Amin Fahim Friday and discussed with him issues hindering the exports of value-added goods. President of the association, Amjad Ali Cheema led the delegation and assured the federal minister that the industry is currently exporting $260 million, which can go up to $1 billion in three years.


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## Neo

*White House asks Congress to approve $1.8 billion aid for Pakistan​*
WASHINGTON (April 11 2009): The White House has asked Congress to approve $1.8 billion to bolster Pakistans economic development and counter insurgency capability as well as support the US diplomatic operations in the key South Asian country. The amount is part of an $83.4 billion supplemental spending request for financial year 2009 that President Barack Obama Thursday sent to Congress to fund his administrations strategies in Iraq, Afghanistan and Pakistan through the summer.

According to White House Office of Management and Budget, $1.4 billion is for economic assistance for Pakistan, and to support additional civilian personnel, more secure infrastructure, and diplomatic operations under international assistance and stabilisation activities.

The document says $0.4 billion will be dedicated to building the counterinsurgency capabilities of the Pakistani security under support for coalition partners. Besides, some humanitarian assistance will also be allocated for Pakistan, according to the document.

"We face a security situation in Afghanistan and Pakistan that demands urgent attention. The Taliban is resurgent and al Qaeda threatens America from its safe haven along the Afghan-Pakistan border," President Obama wrote to Speaker of the House of Representative, Nancy Pelosi, in a letter while urging quick Congressional approval for the request.

"With that reality as my focus, today I send to the Congress a supplemental appropriations request totalling $83.4 billion that will fund our ongoing military, diplomatic, and intelligence operations."

Nearly 95 per cent of these funds will be used to support American ongoing operations in Iraq and Afghanistan where it seeks to disrupt, dismantle, and defeat al Qaeda along Pakistan-Afghanistan border. The rest of the money will fund a variety of defence and international efforts that will help to use all the elements of American power to confront security threats.


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## Neo

*Tabani calls for enhancing Pak-Russia trade ties​*
KARACHI (April 11 2009): There exists a lot of scope for enhancing trade ties between Pakistan and the Russian Federation. Pakistan-Russia Business Forums President Abdul Rauf Tabani pointed this out, while speaking at the dinner he had hosted for the visiting parliamentary delegation of the Russian Federation here on Thursday night. Tabani said the current trade volume between the two countries was a mere 600 million dollars, which was in favour of the Russian Federation.

Tabani was of the view that "we can expand our exports to Russia a lot as there is quite a demand for textile and light industries requirements there." He stated that Pakistani products were very much liked in the Russian Federation.

Tabani further pointed towards the Russian expertise in the oil and gas drilling, and stated that Russian Federation was very advanced in the field of metallurgy. He believed that the visit of the Russian parliamentary delegation would contribute towards enhancing its ties with Pakistan.

Leader of the visiting Russian parliamentary delegation, Sergey Pekpeev, speaking on the occasion thanked for the warm welcome that had been extended to the delegation during the visit to Pakistan. He was of the view that this visit would help enhance the ties between Russian and Pakistan in different spheres of development, including power supply and transportation system etc.


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## Neo

*Government to lessen price difference between Indian and Pakistani cars: Wattoo​* 
ISLAMABAD (April 11 2009): Minister for Industries and Production Mian Manzoor Ahmed Wattoo on Friday said that the quality of Pakistani cars was much better than the Indian cars, but if there was any huge price difference, the government would ensure to bring prices of local cars at a reasonable level.

He was responding to a supplementary question of MNA Abdul Qader Patel that the Indian Maruti Suzuki is available in the market at a very low price as compared to Pakistani Suzuki car. Why the Chinese and Indian cars are cheaper as compared to Pakistani cars, he questioned.

About the huge price difference between Indian and Pakistani vehicles Minister for Industries and Production said that, "There is a difference of quality between the Indian and Pakistani cars. The quality of Pakistani cars is better than the Indian vehicles", he added.

Minister for Industries said that presently the local car industry was in crises, which resulted in less production of locally manufactured vehicles. The leasing of new cars has been drastically reduced due to high mark up rate, which ultimately resulted in decrease in overall production of automobile in the country. People are reluctant to purchase new cars due to the said high mark-up rates.

He was of the view that the prices of the locally manufactured vehicles are reasonable however the government would look into the complaints of high prices raised by the members of the House. He said that the Ministry of Industries and Production had convened meetings with the local car assemblers/manufactures to ensure availability of cars to the masses at a reasonable level.

Responding to a question of Riaz Hussain Pirzada, Minister of Industries said that the prices of tractors at the international level had been increased, which was also being reflected in the domestic market. He referred to Russian tractors, whose prices had been increased. The ministry has convened meetings with the local tractors manufacturers to ensure availability of tractors at affordable price.

Meanwhile, Mian Manzoor Ahmed Wattoo in a written reply said that a total of 50,752 cars were manufactured in the country during 2008-2009. Make-wise break-up of cars manufactured during the period under review showed that the number of Hyundai (Santro Plus) manufactured locally was 102; Honda (Civic) 3984; Honda (City) 2909; Suzuki (Liana) 386; Suzuki (Cultus) 6536; Suzuki Alto 4674; Suzuki (Mehran) 8347; Suzuki (Bolan) 7010; Toyota Corolla 12711 and number of Daihatsu (Coure) locally manufactured stood at 4093.

He added that the prices of cars and other automobile were governed by market forces mechanism. However, the government keeps an eye on the car prices and intervenes through appropriate policy and administrative measures to check any unreasonable/abnormal increase in the prices.

About a question of Faiz Muhammad Khan on supply of Sittara Banaspati ghee to the Utility Stores, Minister of Industries said that it was not feasible to sell all the brands (about 100) of ghee at Utility Stories outlets. Therefore, selected popular brands were being sold, he added.


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## Neo

*Sugarcane production likely to fall by 10 percent​* 
KARACHI (April 11 2009): The sugarcane production is likely to fall by 10 percent next season, as the growers are intending to opt for other crops due to unnecessary delay in the governments announcement of support price for its output.

The growers are waiting federal governments announcement regarding support price on 40 kgs sugarcane to decide for changing production trend for next cultivation season from sugarcane to wheat and cotton to earn more in short time, sources at Pakistan Sugar Mills Association (PSMA) told Business Recorder on Friday.

They said this year cane production reduced upto 40 percent with maximum production of 3.5 million tones in fiscal year 2008-09, which is likely to reduce up to 10 percent and it is expected that cane production would remain 3.2 million tones in next fiscal year. "Fresh crises of sugar would hit country next year if government shows laziness in announcement of support price," they said.

They said that indifferent attitude of government during announcement, payment and delivery of support price from mills, forced cane growers shift production trend from sugarcane to other crops, which consumes low time and produce large revenue.

If government fails to announce support price in a month, it is expected country would face another massive shortfall next season, they said. They said that the government is already facing hardships due to delay in sugarcane crushing and low production and has finally decided to import 250,000 tones of white refined sugar from other countries, which has caused hike in sugar prices.

"If government fails paying heed to cane growers problems, there is a possibility that a country having capacity for producing surplus sugar, would face shortfall in future," they said. They said that sugarcane production is comparatively a long process, which needs extra water and time as compare to other crops due to which this year many sugar mills in the country could not start crushing season in October.

"This year growers refused to provide sugarcane owing to immature crop due to lack of water and fertiliser," they said. They warned if government fails to announce support price this month, then there are chances that next crushing season would also start late. "The government instead of focusing on import of refined sugar, should announce support price of sugarcane for next year to encourage growers and sugar industry," they said.

Sugarcane production would reduce upto 25 percent in next season due to indifferent attitude of government and mill owners towards growers, said Qurban Ali Shah, President Sugarcane Growers Association, Sindh Circle, adding that involvement of mills mafia in every decision of the government is discouraging growers.

He said the government would import sugar this year due to low prices of white refined sugar in international market but if international prices of sugar increase next season then anti-grower policies of government would bring serious sugar crises in the country. "If the government continues to follow mills mafias guidelines in fixing support price, then there are chances that change in production trend gain speed in next season," he predicted.

He said the recorded cultivation of sugarcane in Sindh province is much low as compare to 2007, when country produced bumper crop. He said the government should encourage growers and invite representatives from growers community during decision making process to avert sugar crises in the country.


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## Neo

*Poverty census: unpleasant facts​*
EDITORIAL (April 11 2009): Deputy Chairman of the Planning Commission Sardar Assef Ahmad Ali has said the government has started a poverty census to ensure benefits of the Rs 34 billion Benazir Income Support Programme (BISP) go to the target groups. He told an interviewer that the census drive is being undertaken on the urging of World Bank, which wants a comprehensive analysis of the incidence of poverty in Pakistan.

The Banks interest in the issue raises the hope that finally we can expect to have an authentic picture of the prevalence of poverty in accordance with internationally accepted standards. Unfortunately, so far successive governments have tried to downplay the problem to cover up their respective acts of omission or commission.

Not long ago, whilst those familiar with the situation insisted as many as 40 percent of the people lived below the poverty line, the then government claimed the figure to be around 30 percent, also directing the Federal Bureau of Statistics to use that statistic in its public documents. About two years ago, the same government made a downward revision in the number to put it at 26.5.

The magic wand it had used for the drastic reduction in poverty was the use of a new measurement formula that relied on caloric intake rather than per day income. Sardar Assef Ali now says poverty has risen to 40 percent whereas some of our economic managers claim it to be around 35 percent. Indeed, the economy has been on a nosedive for over a year now, pushing more and more people below the poverty line.

Even so, the difference in the numbers is too wide to be attributed to economic downturn alone. It is reflective of our economic managers inclination towards figure fudging. Assef Ahmad Ali deserves credit for having acknowledged that the problem is much more serious than it is recognised to be. Recognition of a problem, of course, is the first important step towards its redressal.

Once the poverty census drive is complete the government must focus on adopting a well thought-out strategy to combat poverty as well as income disparities. That it must do as part of its responsibility towards less fortunate members of society and to put the country on the road to sustainable development.

In our peculiar circumstances such a strategy is needed also to fight the menace of a violent militancy emanating from Fata that, at least in part, owes its existence to conditions of extreme poverty. It is good to note that the Planning Commission intends to use the present census, as its Deputy Chairman indicated, for designing different employment generation and human resource development projects and programmes with the help of Friends of Democratic Pakistan who are scheduled to meet at Tokyo on April 17.

The poverty census, in fact, has assumed a special significance at a time our friends want to help us with social sector development. That actually could be the reason why the government is willing to accept some unpleasant facts about the existing levels of poverty.


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## A1Kaid

Neo said:


> *Country needs $110bn for infrastructure ​*
> Saturday, April 11, 2009
> 
> ISLAMABAD: Pakistan requires $110 billion in private sector investment for meeting infrastructure needs over the next five years.
> 
> Adviser on Public-Private Partnership (PPP) Ghulam Murtaza Satti said this during an investors forum organised by the Infrastructure Project Development Facility (IPDF) on Friday.
> 
> Talking to a group of investors, he said that the elected government is fully cognizant of the importance of PPP, for which the IPDF is a focal entity. He highlighted the key issues like employment generation, economic empowerment and additional use of existing infrastructure which are associated with the economic development of the country.
> 
> *He said that the PPP has also got support of the international institutions like the World Bank* and Asian Development Bank (ADB). Urging the investors, he assured that their concerns will be taken care of while drafting concession agreements for infrastructure projects in order to make them air tight so that these concessions should be workable and should not be affected by the change of government.
> 
> The investors appreciated the working of IPDF and observed that there should be consistency and continuity in the policies of the government and also legislation to cover loopholes. They quoted examples of the LahoreñFaisalabad road on BOT (build, operate and transfer) basis of Punjab Government and Lakpass tunnel project on BOT basis of NHA. In both the projects government backed out to abide by obligations of the government/public institutions stipulated in the concession agreements as the government changed.
> 
> The investors also quoted statement of the minister of ports and shipping regarding the cancellation of concession agreement signed between the government and Singapore Port Authorities which can affect business environment in the country.
> 
> Giving presentation to participants, the IPDF team informed about 11 projects of IPDF worth Rs200 billion that are at various stages of development and in front of investors for feedback to market these projects accordingly.




It's good news that the country's infrastructure is expanding and the demands for larger scale projects is on the rise. However, I really hate to see Pakistan rely on the "World Bank" Pakistan should not take loans from there, these loans are snares with extremely high economic demands and interest rates that keep many countries in a financial trap and burden.

We should generate our own revenue to meet the demands of the country's "$110 billion" need as much as we can within the upcoming five years.

I recommend developing Gwadar Port, developing our commercial sectors in surgical and sports tools and equipment, and most importantly invest in R & D so we can create sophisticated technology on our own, and master the skills for domestic production.

I would like to see Pakistan avoid further borrowing from World Bank, period!


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## Contrarian

Neo said:


> *Government to lessen price difference between Indian and Pakistani cars: Wattoo​*
> ISLAMABAD (April 11 2009): Minister for Industries and Production Mian Manzoor Ahmed Wattoo on Friday said that the quality of Pakistani cars was much better than the Indian cars, but if there was any huge price difference, the government would ensure to bring prices of local cars at a reasonable level.
> 
> He was responding to a supplementary question of MNA Abdul Qader Patel that the Indian Maruti Suzuki is available in the market at a very low price as compared to Pakistani Suzuki car. Why the Chinese and Indian cars are cheaper as compared to Pakistani cars, he questioned.
> 
> About the huge price difference between Indian and Pakistani vehicles Minister for Industries and Production said that, "There is a difference of quality between the Indian and Pakistani cars. The quality of Pakistani cars is better than the Indian vehicles", he added.



Why 'O Why do they have to deride India to justify themselves?!

Has the Minister come here to check the quality of the Cars being manufactured? But no, when in doubt, blame India, and say Pakistan has better Quality. The people get satisfied!


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## ejaz007

*Record $739.43m remittances in March*

KARACHI: Pakistans overseas workers sent $739.43 million as remittances in March 2009, the highest-ever amount in a month. 

The previous high was $673.50 million recorded in December 2008. 

The amount of $739.43 million received in March 2009 showed an increase of $137.22 million or 22.79 percent when compared with $602.21 million received in March last year. 

Overall, in the first nine months (July-March 2009) of current fiscal year, the country received $5.658 billion as workers remittances as against $4.728 billion during the same period of the last fiscal year, showing an increase of $929.69 million or 19.66 percent. 

The amount of $5.658 billion includes $0.45 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs). 

The monthly average of remittances during the nine-month period stood at $628.67 million, up $103.30 million or 19.66 percent when compared with remittances in the same period of last year. 

The inflow of remittances from USA, UAE, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $1.291 billion, $1.210 billion, $1.113 billion, $893.19 million, $406.43 million and $175.67 million, respectively, as compared with $1.312 billion, $793.62 million, $881.95 million, $704.27 million, $334.85 million and $131.13 million, respectively, in the July-March period of last financial year. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the first nine months of the current fiscal year amounted to $567.12 million as against $568.06 million in the same period last year. 

During March 2009, remittances from UAE, Saudi Arabia, USA, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $174.60 million, $151.28 million, $134.96 million, $109.80 million, $62.35 million and $25.62 million, respectively, as compared with $111.74 million, $120.11 million, $151.95 million, $85.44 million, $41.98 million and $15.01 million in March 2008. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during March 2009 amounted to $80.78 million, up from $75.84 million received in the same month last year. staff report

Daily Times - Leading News Resource of Pakistan


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## Neo

*Record remittances signal disaster: govt ​* 
Sunday, April 12, 2009

KARACHI: A 23 per cent increase in remittances sent home by overseas Pakistanis during last month could actually be a sign of increasing joblessness amid a global economic recession, top government officials warned.

The State Bank of Pakistan (SBP) on Saturday reported that remittances had shot up to $739.43 million in March 2009 compared to $602.21m recorded in the same month of previous year.

This could lead to a tsunami of jobless people approaching us, Farooq Sattar, Federal Minister for Overseas Pakistanis, told The News. It seems people who have lost work abroad are moving their capital back home.

Even though, he said, there were no indications of any large number of expatriates returning but his ministry had already alerted the authorities about a possible storm. I have written to Foreign Minister Shah Mehmood Qureshi to apprise him in this regard.

In its second quarterly economic review report, the SBP has also cautioned the government against too much reliance on remittances to meet the current account deficit.

Finance Adviser Shaukat Tarin was also skeptical about the record increase in remittances during a single month. I fear these numbers indicate that people who have lost their jobs abroad might be transferring their belongings back to Pakistan, he told newsmen earlier in the day.

During July-March 2008-09, remittances swelled to $5.65 billion from $4.7bn in the same period of previous year. Highest amount of $1.29 billion was received from the US, the global powerhouse where hundreds of thousands of people have been sacked in the past few months.

According to a 2004 report of the Ministry of Overseas Pakistanis, the number of expatriates is four million but Farooq Sattar said the figure had crossed well over 5 million.

Abdullah Butt, who represents the Friends of Pakistan, a body of overseas Pakistanis, said people based in the US, UK and UAE were feeling very insecure about their future amid massive job cuts.

We held a convention in the US during February and there was strong urge among Pakistanis (to come back), he said, adding they now feel unprotected.

About substantial increase in remittances, he said, people were depositing their savings in Pakistani banks, which were offering better returns. Banks here are relatively better off.

He said higher remittances might be good for the country in the short-term but results could be negative in the months and years to come. It would be definitely devastating for the country in the long run.

Pakistan subscribed to a $7.6 billion IMF loan late last year to avert a balance of payments crisis, which was caused by a huge trade deficit and falling foreign inflows.


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## Neo

*Claim to cut inflation to single digit unrealistic ​* 
*Flour, sugar prices to shoot up, per capita income may fall to $990​*
Sunday, April 12, 2009

The governments claim that inflation will come down to single digit during July-August period in 2009-10 fiscal does not match the ground realities in the back drop of steep increase in prices of flour.

By July-August the domestic wheat crop with issue price of over Rs1,000 per 40 kg will hit the market and poor masses for the first time in Pakistan will consume the bomber crop of wheat that will be 40 percent more expensive than the international price.

The country will enter next fiscal with per capita income of about $990 for 2008-09 against $1,085 in 2007-08. It shows that real purchasing power will tumble manifold in next fiscal. 

Sugar at Rs45 per kg in the open market is also prone to increase further as the available stock are not enough to cater to countrys needs. The house rents in cities like Islamabad, Karachi and Lahore will not provide any ease to masses.

The transportation cost has not dwindled even by passing 35 to 40 percent relief in POL prices on to end consumers. The ex-mill price of flour has now increased to Rs450 per 20 kg bag in the current month from Rs410 per 20 kg bag in last month of March. The open market rate is around Rs470 per 20 kg.

Flour will be available in retail at Rs35 to Rs40 per kg when mills start grinding wheat purchased at issue price of over Rs1,000 per 40 kg. This will have adverse impact on the inflation particularly in food inflation.

The claim of chief economic manger Shaukat Tarin to bring down inflation to single digit in July-August period from existing 19.1 percent seems impossible as the ground realities at that time will be quite averse. 

Chances are bright that masses will challenge the government statistics and the government will not be able to defend its single digit inflation. The dispute over the inflation may trigger a controversy about the government controlled FBS inflation figure.

It is high time to come up with some rational steps to bail out the poor masses. Otherwise the pro-poor government with a mandate of Roti, Kapra Aur Makan (food, clothing, housing for every one) will have no right to rule the country. 

The government had increased the wheat support price to Rs950 per 40 kg from Rs625 per 40 kg to allure the farmers to cultivate maximum wheat and set the target of 25 million tones.

However, there are strong indications that achieving the target of 25 million tonnes of wheat has never been on radar screen of the government, which is dominated by feudal lobby. The powerful lobby has used the target to justify the Rs950 support price.

Under the plan, masses were fooled by saying that the government will not be able to achieve the wheat target of 25 million tonnes of wheat in the month of February. In the month of March, masses were told that the government would achieve the wheat target of 24 million tonnes and now in April, FCA (federal committee on agriculture) informed the masses that the target has decreased down 23.3 million tones. But when the crop would start entering the market, it is strongly believed that the government would say that actual wheat produced in the country would further be reduce to 22.5 million tonnes of wheat. Then question arises, was it justified to increase the support price to Rs950 per 40 kg to get the 22.2 million tonnes yield. This shows that the whole drama has been staged by feudal both in opposition and treasury benches to fleece the masses. 

Apart from the said expected miseries of the masses, next fiscal will be toughest year for Pakistan since its emergence as the horrifying monster of debt servicing will eat off Rs750 billion, 42 percent of projected revenue of FBR.

Pakistans external debt will alarmingly swell to $51.5 billion by the end of ongoing fiscal 2008-09 with growth in debt of 16 percent if compared with foreign debt of $46.5 billion in last fiscal. And next year Pakistan will have to spend huge amount of Rs750 billion just on debt servicing the loans.

The incumbent regime will have $8.078 billion loan in the current fiscal, which will be the highest one in Pakistans 60 years history.

Pakistan is to get $4.780 billion from IMF under the $ 7.6 billion bailout package, $ 1.8 billion from World Bank, ADB $ 1.2 billion, $ 0.5 billion from IDB and $0.5 billion from China. 

Getting the loan is not bad, but massively attaining the credits is beyond wisdom particularly when the country does not have the capacity to pay back the huge loans as the economic growth in the country is touching lowest ebb.

If 42 percent of the next years revenue is consumed in debt servicing, then Pakistan will have nothing to spend on development schemes, as the remaining 58 percent of the revenue will easily be consumed to cater to needs of defense expenditures which will be over Rs300 billion up to 2.9 percent of the GDP.

When there exists no economic activity in the country because of the high discount rates of 15 percent, the economic growth is being feared at 1.5 to 2 percent provided the country witness the 4.5 percent growth in agriculture depending upon the wheat crops production, which is not likely to meet the target of 25 million tones.

If the massive slow down in growth continues in the next two to three years, the countrys debt sustainability capacity would alarmingly deteriorate. 

Qaiser Bengali, an eminent economist says the government is recklessly borrowing only to provide ease to itself, as the future governments and people of Pakistan would have to suffer a lot for retiring the non-development loans. 

He said that next year remittances would fall sharply due to return of large number of expatriate Pakistanis that have lost jobs particularly in Middle East due to global recession.

The government should concentrate non-debt creating inflows, which can only be ensured if the maximum foreign investment is allured to the country.


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## Neo

*Countrys first wind farm to be opened by month-end ​* 
Sunday, April 12, 2009

ISLAMABAD: Renewable energy technologies would be an essential element in Pakistans energy future making major contributions to the diversity and security of energy supply and to economic development, said Water and Power Federal Minister and Alternative Energy Development Board (AEDB) Chairman Raja Pervez Ashraf on Saturday.

He was speaking to the media after a briefing at the AEDB headquarters in connection with the inauguration of the countrys first wind farm planned for later this month. The federal minister reiterated the governments commitment to ending load-shedding by December 31.

Ashraf said the inauguration of the first wind farm would be a landmark in the renewable energy sector as the government pursues the objective of a clean and competitive energy future for the country.

The wind farm established by the Turkish Firm Zorlu Enerji has a six-megawatt installed capacity in the first phase. Five turbines have been installed, each with a capacity to generate some 149,137 kwh of electricity.

The power generated in the first phase would be supplied to the Jhimpir grid station by the Hyderabad Electric Supply Company for electrifying 7,400 homes. The project will produce sufficient electricity to do away with the production of approximately 10,500 tons of carbon dioxide each year, compared to a conventional fossil fuel power project. The farm would be later expanded in the second phase to generate 50MW of electricity.

AEDB Chief Executive Officer Arif Alaudin said 2009 would be remembered as the year when Pakistan received it first megawatts from wind. He said in addition to the Gharo corridor that has been opened for exploitation, several other corridors are being explored by the AEDB. Renewable energy, Alaudin underscored, must realise its rightful and significant position if we are to ensure that development, energy security and climate resilience are to be attained.

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## Neo

*China includes Pakistan in investment guidebook ​* 
Sunday, April 12, 2009

BEIJING: China while unveiling an investment guidebook to help domestic firms make foreign investments has included in it the name of Pakistan also.

The first batch of the guide book released on Friday by the ministry of commerce covers 20 countries, such as Pakistan, Thailand, Malaysia and Japan.

The guidebook includes investment laws and regulations of the 20 countries and statistics about individual countries among other useful information such as advice on problems that firms may encounter.

The ministry said it would unveil more of the guidebook to cover as many as 160 countries and regions by the end of June, and it would update the guideline.

It can be a good time now for Chinese firms to invest overseas, said Li Ruogu, president of the Export-Import Bank of China (China Exim), as banks have been instructed to support overseas mergers and acquisitions of Chinese firms.

He said Chinese firms should increase their investment in developing countries such as Mongolia and those in Africa, Southeast Asia and Latin America. Li said such investment could be mutually beneficial for China and investment-receiving countries.


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## Neo

*Germany doubles development assistance ​* 
Sunday, April 12, 2009

KARACHI: Consul General of Germany in Karachi Dr Christian Brecht said on Friday night that his country would provide one million euros for displaced persons in Pakistan. 

Speaking at a dinner organised in honour of journalists, he said the stability in Pakistan was very important and Germany was very much concerned about what was going on here, and felt the situation needed to be closely monitored. 

He said there were still good prospects to explore trade relations between Pakistan and Germany. Pakistan-German relations were very good. The German diplomat said his country has a two-year agreement for development cooperation with many countries including Pakistan. 

He mentioned that in Pakistans case, the amount sanctioned in the development cooperation agreement had been doubled for the next term. He said the main focus of this cooperation would be education, alternative energy and eradication of poverty. 

He mentioned although Germany wanted to do more, it was not in a position to do so, as it was facing many difficulties due to the economic situation prevailing in the world. He said the German government longed to enhance trade relations with Pakistan, but could not force German businessmen to come here because of the law and order situation. 

Improving law and order would play a central role in attracting foreign investment here. However, he pointed out that despite the situation, German multinational giants like Siemens and BASF were operating in Pakistan, while another German multinational, Metro, has recently started a wholesaler hyper market chain in Pakistan. It planned to open five outlets in Karachi alone. 

He suggested Pakistan should diversify its exports and pay particular attention to agricultural products especially fruits. He said Pakistan had great potential in this sector and should explore it diligently.


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## Neo

*US company to invest $500m in power​*
Sunday, April 12, 2009

KARACHI: Minister for Ports and Shipping Babar Khan Ghauri announced that Matrix Group Consulting Ltd, a US-based company, would be investing $500 million in a power generation project to be set up at the Port Qasim (PQ) and the Karachi Port. Speaking at a Memorandum of Understanding (MoU) signing ceremony between the Matrix Group and PQ Authority on Saturday, Ghauri said the company would initially set up a 250-megawatt power plant which would further be expanded to 500MW in future. He said that electricity would be generated through wind turbines at the Karachi Port and through coal-based plants at the PQ. The electricity would be provided to the national grid, he added.


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## Neo

*PTA receives $20m in orders at HK fair​*
KARACHI: Pakistan Tanners Association (PTA) received orders for $20 million worth of leather products during 25th Asia Pacific Leather Fair (APLF) in Hong Kong besides winning award for best presentation of its products at the event. 

The association said on Saturday that major leather goods exporting countries including India, Turkey, Brazil, China, Italy and Argentina participated in the event which took place from March 31 to April 2. 

Chairman Pakistan Tanners Association (PTA) Agha Saiddain received the award from APLF chief executive officer Micheal Duck on the occasion. 

Agha said it was the first time that more than 50 exporters from Pakistan participated in the international event. They received a large number of visitors, he said.

He said Pakistan pavilion remained highly attractive thanks to quality gloves, leather bags, shoes, garments and other finished leather goods. 

He said export of leather during Jul-Feb 2008-09 stood at $204 million, showing a decline of 22.5 percent from $263 million during Jul-Feb 2007-08. 

He further said that export of leather goods stood at $670 million during Jul-Feb 2008-09 compared with $779 million during Jul-Feb 2007-08, showing a decline of 14 percent. 

He said that the countrys export of leather stood at $1.24 billion during 2007-08. 

Agha said Pakistani exporters needed to do aggressive marketing to regain their previous position in the global market. 

He lauded the support extended by Consul General of Pakistan in Hong Kong Dr Ahmad Belal. 

He demanded that State Bank of Pakistan (SBP) allow foreign exchange booking against imports of their inputs.


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## Neo

*Pakistan seeks $5.53bn from FODP for transport & communication sector​*
ISLAMABAD: Keeping in view the importance of transport and communication sector in the economic development of the country, the government has decided to table a demand of $5.535 billion before the Friends of Democratic Pakistan (FODP) for construction of roads, bridges, and rail network. 

The government has planned construction of various roads and bridges under six development projects worth $1.920 billion and expansion of rail network under five projects worth $2.998 billion. 

Besides, there are two projects worth $617 million in the ports and shipping sector. The total cost of these 13 projects is $5.535 billion. 

The Gwadar Linkages project will cost $455 million. It consists of National Highway N-85 (454 km), National Highway N-30 (110 km) and Expressway Gwadar Port to Coastal Highway (14 km). The project will complete in five years. 

The second project envisages construction of five bridges on River Indus, connecting national highways N-5 and N-55 at a cost of $320.50 million. The bridges will link Kotri with Sajjawal, Kandkot with Ghotki, Chachran with Mithankot, Taunsa with Leiah, and Mianwali with Isa Khel. The construction of these bridges will help accelerate development in these areas, the documents obtained by Daily Times revealed. 

A 470-km road is planned to connect Pakistan and Tajikistan via Afghanistan (Baroghil Pass) at an estimated cost of $725 million. The portion of the road in Pakistan (Chitral-Boni-Mastuj-Baroghil pass section) is 225 km long. The portion in Afghanistan is 110 km long and the portion in Tajikistan (Afghanistan border to Margob) is 135 km long. The estimated completion period of the project is eight years. 

The fourth project of road sector is up-gradation of 258 km long KKH road (Mansher-Sazin) to be executed at a cost of $256 million. Main objective of the project is to facilitate transportation of heavy machinery for construction of Bash Dam and to develop a safe communication link in an estimated period of three years. 

The fifth project is the Lowari Rail Tunnel project, which will be executed at an estimated cost of $125 million. The sixth project is the Rehabilitation of Gharo-Keti Bander Road (90 km) to be executed at an estimated cost of $37.5 million. Projects in the rail network sector are: up-gradation of Quetta-Kohi-I-taftan section at a cost of $438 million. It will complete in five years. Another project envisages connecting Gwadar Port with Mastung/Quetta at a cost of $1.342 billion. It will complete in nine years. 

Under the third project a direct rail link between Quetta and Peshawar via D.I. Khan (851 km) will be laid at a cost of $918 million. Feasibility study of the project has been completed and main design features finalized, the documents revealed. 

Another project will link Chaman to Qandhar (107 km) at a cost of $150 million. The objective of the project is to provide a new rail link for transportation between Pakistan and Afghanistan to boost economic activities in the neglected areas. 

The fifth project will link Peshawar with Jalalabad (100 km) at a cost of $150 million. The project will provide a new rail link for transportation between Pakistan and Afghanistan to boost economic activities in the neglected areas. 

In the ports and shipping sector, there is a Karachi Harbour Crossing  Port Bridge project to be completed at a cost of $417 million. It will link Deep Draught Container Terminal and Cargo Village at western backwaters through cable stay bridge.


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## Neo

*Government expecting $5.627 billion inflow through 13 projects ​* 
ISLAMABAD (April 12 2009): The government is expecting $5.627 billion inflow through 13 projects, which are in the pipeline. According to Board of Investment, the projects in the pipeline are of trade, construction, steel, infrastructure, automobile, telecom, power and banking sectors.

A project of Al-Tawarqui Group of Saudi Arabia for steel manufacturing in Al-Tawarqui Steel Mill is also in the pipeline with an investment of $1 billion. An investment of $200 million and $21 million is in the pipeline for projects in trade, services and consumers products from M/s Metro Cash & Carry and M/s MAF Hypermarkets Pakistan (Pvt) Limited (Dubai) respectively.

An investment of $1 billion is in the pipeline by M/s Al Ghurair and the Giga Group of UAE for World Trade Centre, Gold Crest in DHA Islamabad and $450 million from M/s Pak-Gulf Construction Company (PGCL) for residential towers and hotel in the Centaurs in Islamabad.

A project of Al-Tawarqui Group of Saudi Arabia for steel manufacturing in Al-Tawarqui Steel Mill is also in the pipeline with an investment of $1 billion. M/s Agility Logistics, Kuwait also invest $160 million in logistics centers Warehouses.

M/s Tianjin Renong Pesticide Industries Company and M/s Pak-China Chemical are planning $12 million investment in chemical sector. China National Machinery and Equipment Import Export Corporation have a project in the pipeline for investing $450 to $500 million in Sonda-Jherruk Integrated Coal Mine & Power Plant Project.

A project of M/s Haier to invest $200 million in infrastructure development at China-Pakistan Economic Zone is also in the pipeline. M/s King Long United Automotive Industry of China also wanted to invest $1.3 million in automobile sector. Telenor Norway will invest $1.8 billion in telecom sector. M/s Atlas Group would invest $250 million in power and $33 million in banking sector, according to BoI.


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## Neo

*Obama seeks $2 billion in aid to Pakistan ​* 
KARACHI (April 12 2009): US President Barack Obama has proposed over $2 billion in civilian and military aid to Pakistan under his emergency war funding request to Congress, apart from seeking millions of dollars for fortifying American diplomatic missions in the militancy-plagued country, according to Times of India.

The news item titled "Obama seeks $2billion in aid to Pakistan" on newspapers website also said the supplemental request sent to the Congress on Thursday is in tune with Obamas new Afghan-Pak policy that plans to expand the US fight against terrorism across the borders of Afghanistan into Pakistan as well.

Besides proposing $1.4 billion for economic assistance to Pakistan and to support additional civilian personnel, more secure infrastructure and diplomatic operations, Obama requested another $400 million to build the counter-insurgency capabilities of Pakistani security forces, says the news item datelined US capital Washington.

"As the threat to the US embassy in Pakistan has scaled up, mainly due to presence of al Qaeda and Taliban in that country, Obama also requested Congress to release millions of dollars in emergency war funds to increase security of American missions and diplomats in the Islamic nation," the newspaper said.

The newspaper also said that Obama proposed a separate $52.9 million for operating and security costs for the US missions in Pakistan. In addition to this, he requested $806.2 million to construct new secure and safe facilities in Pakistan, including a new US embassy building in Islamabad.


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## Neo

*Computer industry witnesses 50 percent decrease in business ​* 
ISLAMABAD (April 09 2009): The computer industry has witnessed over 50 percent decrease in its retail/vendors business, following recent terrorist attacks in various parts of the country, says latest computer sector data issued here Wednesday.

The Pakistan Computer Association (PCA) on Wednesday convened a meeting here to discuss the negative implications of the current law and order situation on the computer business. The meeting shared the data compiled on national basis to ascertain the impact of law and order situation on the computer industry.

Yousaf Jamal, Senior Vice President of PCA Central while chairing a meeting informed the participants about the latest statistics that show a 50 percent decline in computer business after the recent spree of terror in the country. He said that computer industry, which was already confronting with a fragile business environment, was now struggling to survive for its very existence. The acts of terrorism in various parts of the country have badly hampered the business activities.

The SVP of PCA said that Pakistan has already lost sufficient chunk of foreign/domestic investment and business activities due to rising phenomenon of terrorism and bomb blasts is forcing many investors and businessmen to look for safe destination for their investment. He said that the agonising incidents will act as a demoralising factor for prospective investors who will desist from considering Pakistan for investment ventures.

Yousaf Jamal called upon the government to take all possible measures and equip security apparatus with better technology, equipment and tools to forestall such incidents effectively and control the law and order situation so that normal business activities in the country may be revived.


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## Neo

*Two nuclear power plants approved by government: project to cost Rs 190 billion ​* 
ISLAMABAD (April 13 2009): The government has formally approved the much-awaited two more nuclear power plants, of 340 MW each (cumulative capacity 680 MW), at Chashma at a cost of Rs 190 billion ($2.374 billion) with foreign exchange component (FEC) of Rs 140 billion ($1.75 billion), sources told Business Recorder.

The projects have been cleared at a time when Friends of Pakistan (FoP) are meeting in Tokyo to help Pakistan out of current financial crisis. Pakistan is expecting $4-6 billion from its Friends.

Sources said that the proposal, which was not made part of the formal agenda of the Executive Committee of the National Economic Council (Ecnec), was distributed among the members and provincial officials at the end of the meeting, lacking necessary details. "Please do not seek any details and clarification about the project. Approve it in national interest," sources quoted one of the officials as saying loudly in the Ecnec meeting.

Pakistan had renewed its efforts to acquire more nuclear power plants from China In 2007 for meeting future energy needs. Beijing had, in principle, agreed to provide two nuclear power plants to help meet Pakistans growing electricity demand, and it was about to sign an agreement during the visit of Chinese President to Islamabad.

However, when the issue was magnified in the media, China shelved the project, arguing that it would not indulge in any controversy, sources said. Though the issue had been almost dead after 2007, but endeavour was made to streamline the negotiations to acquire the nuclear power plants, and then the Joint Chiefs of Staff Committee (JCSC) Chairman discussed the issue in detail with the Chinese leadership during his visit to Beijing.

Earlier, Pakistan was expecting nuclear power plants of 1000 MW and indigenous fabrication of 300 MW nuclear power plants with Chinese assistance. However, now the plants capacity has been reduced. "Ecnec considered the summary of Planning Division on Chashma Nuclear Power Project Unit-3 and 4 of 340 MW each, and approved the project at a cost of Rs 190 billion, with FEC of Rs 140 billion," official documents say.

The Central Development Working Party (CDWP), headed by former Planning Commission Deputy Chairman Dr Akram Sheikh, had approved setting up of Nuclear Fuel Enrichment Plant (NFEP) at a cost of Rs 13.708 billion, including Rs 8.136 billion FEC, so that necessary material could be made available easily for its on-going nuclear activities.

Earlier, China had promised to continue co-operation with Pakistan for building "some more nuclear power plants with the courage that it would not succumb to any pressure of West or the 45-member Nuclear Suppliers Group (NSG)". The 45-member NSG consists of nuclear supplier countries who seek to contribute to non-proliferation of nuclear weapons through implementation of guidelines they set for nuclear and nuclear related exports.

China has provided two nuclear power plants-Chashma I and II-each capable of generating 300 mw electricity. The CDWP has already approved Rs 150 million to prepare feasibility studies of six sites for erecting new power plants.

The Pakistan Atomic Energy Commission (PAEC) had selected these six sites to set up nuclear power plants (NPPs) to materialise a plan aimed at increasing the countrys capacity to generate 8,800 megawatt nuclear power by 2030.

PAEC had selected these sites at Qadirabad-Balloki (QB) link canal near Qadirabad head works, Dera Ghazi Khan canal near Tuansa barrage, Taunsa-Punjnad (TP) canal near Multan, Nara canal near Sukkur, Pat Feeder canal near Guddu, and Kabul River near Nowshera.

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## Neo

*Rejecting American aid?​*
Talking to the media at the State Bank of Pakistan Multan auditorium on Saturday, Prime Minister Yousaf Raza Gilani said that Pakistan would not accept any US aid that came with conditions that go against Pakistans interests. He said: Pakistan is a sovereign country and will not accept conditions that are against its interests and stature. Since the media knows that the Mullen-Holbrooke visit to Islamabad did not go well, the press has given the statement its top headline.

This is the first message to Washington after the US official duo had a rather icy reception in Islamabad, with Foreign Minister Shah Mehmood Qureshi throwing in his riposte to President Obamas reference to a blank cheque, and what Mr Holbrooke had to say later in New Delhi about India in the context of Afghanistan. If there is a foreign policy red rag for Pakistan, it is Indias presence in Afghanistan and what India is doing in Balochistan and the tribal areas and for which there is now mounting evidence.

The India factor again emerged when Capital City Police Officer (CCPO) Lahore, Pervaiz Rathor, said Saturday that India was involved in attacks on the Sri Lankan team and the Manawan Police Training Centre. If he is right then Baitullah Mehsud is in cahoots with India because the Manawan incident was owned by the Taliban warlord. Also, the terrorists who attacked the Sri Lankan team have been traced to a jihadi militia located in southern Punjab. However, there is some information that India may be indirectly funding these activities which could provide the piece in the puzzle.

The TV channels tended to see the visit of our army chief General Ashfaq Kayani in the same context. Are we about to spurn the crucial economic assistance coming to us from the IMF and the Friends of Pakistan group of countries, all of them being subject to an American veto? The Foreign Office has been upset over the bill being moved in the US Congress to facilitate assistance to Pakistan. Some of the displeasure characterising Foreign Minister Qureshis exchange with the Mullen-Holbrooke duo could indeed stem from a reading of the bill.

The Pakistan Enduring Assistance and Cooperation Enhancement (PEACE) Act of 2009, introduced by Representative Howard Berman on April 2 says in sub-clause J that Pakistan is not to support any person or group that conducts violence, sabotage, or other activities meant to instil fear or terror in India. Sub-clause K binds Pakistan to ensure access of United States investigators to individuals suspected of engaging in worldwide proliferation of nuclear materials, and restrict such individuals from travel or any other activity that could result in further proliferation.

The direct reference to India, despite the fact that Pakistan has bilaterally assured India that it will not allow any terrorism in India from its soil, may have offended Islamabad, but the next indirect reference to Dr AQ Khan is certainly going to create hurdles in the US-Pak cooperation in the coming days. Of course, the sub-clause will bite only after Washington has made a move on Dr Khan and Pakistan has thwarted it. Sub-clauses H and I ask Pakistan to get rid of the Taliban and Taliban-affiliated groups in Pakistan that support insurgents in Afghanistan.

If Pakistan sees these conditions as being hostile to its interests, it can turn the US assistance down, but others in the Friends of Pakistan group of countries may not favour this decision. Pakistans spurning of the money currently pivotal to its economic survival will also depend very much on some friends coming to its help and matching the dollars that Pakistan will stand to lose. That the money is a large sum compared to assistance in the past is quite clear; and it is being made available in times of global financial duress. We would assume therefore that Pakistan is in the process of formulating a nuanced response that helps it influence US thinking by informing Washington of the complexities involved in tackling terrorism and the danger of letting India dictate the terms of US-Pakistan alliance. *


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## sohailbutt

*Habib, MCB interested in RBS Pakistan unit​*KARACHI: Two of Pakistan's biggest banks, Habib Bank Ltd and MCB Bank, are competing to bid for Royal Bank of Scotland's local assets, which the market values at $266 million, Reuters reports. 

The sale is part of moves by part-nationalised, London-based RBS to sell assets globally as it tries to exit up to 36 countries and focus on its mainly UK core businesses.

Habib Bank, which is majority owned by the Aga Khan Fund for Economic Development, and MCB, which is 20 per cent-owned by Malaysia's Maybank, said separately they had expressed an interest to buy RBS's operations in RBS Pakistan.

The two Pakistan lenders may be interested in RBS's assets to gain clients from multinational companies, its consumer banking network and a few prized branches in main cities, analysts said.

But international banks or midsized domestic players, who have a smaller Pakistan exposure, could derive more value if they buy the local RBS assets than either MCB, Pakistan's most valuable bank, or HBL, the second-most valuable, they said.

The two Pakistani banks have more than 2,500 branches combined in the South Asian nation.

The two banks may be after RBS's multinational clients and its prized branch network, said Asif Qureshi, head of research at broker Invisor Securities. But if RBS (Pakistan) is bought by Chinese or Saudi players, it could create more synergy. 

The banks are seeking approval from the State Bank of Pakistan to start due diligence.

The attractive element for HBL and MCB would be RBS's consumer banking as it is a strong player in that, said Farhan Rizvi, analyst at JS Global Capital Ltd.

RBS said in February it intended to explore new ownership of its operations in Pakistan due to its capital constraints and the need for the bank to reduce the size of its balance sheet.

RBS bought into Pakistan last August through its acquisition of Dutch ABN Amro Ltd. It currently operates 79 branches. RBS Pakistan has a loan book of 68 billion rupees ($844 million), deposits of 79 billion rupees and assets of 108 billion rupees.

Analysts said if HBL wins the race for RBS Pakistan, it would become the largest bank in the country in terms of assets, deposits and branches.

RBS Pakistan was trading 8.9 per cent higher at 12.48 rupees on Monday afternoon. Both HBL and MCB gained 5 per cent, while the broader market was up 3.4 per cent.

DAWN.COM | Business | Habib, MCB interested in RBS Pakistan unit


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## sohailbutt

*Funding economic development​*Claiming 75 per cent of the total revenues generated, the defence expenditure and the interest cost on debt make a strong dent in development expenditures. 

The countrys development needs are critical, both in infrastructure and social sectors. According to one estimate, the total requirements for infrastructure development, over the next five years, are close to $40 billion, in addition to another $25 billion for planned large water dams. The government is facing severe problem of power shortages, with a shortfall of 5000 MW at peak hours, and analysts predict that power consumption is likely to go as high as 36,000 MW within the next few years. 

In the social sectors, indicators like primary enrollment rates and child immunisations are at modest levels and far from targets set under Millennium Development Goals (MDGs). Given the current security situation, with rampant suicide bombings and hostage-taking, it may not be possible to slash the defence expenditure. Similarly, the interest cost for debt is beyond governments immediate control. 

The increasing fiscal pressures would make it even more difficult for the government to invest sufficiently in infrastructure or social sector projects. Considering these factors, the government would need to increasingly rely on alternative funding sources for development and economic growth. 

Private capital can be one potential source to fund infrastructure or social sector development. However, to encourage such investment, the government needs to develop an effective public-private partnership framework, having robust regulatory, policy, institutional and financing components. 

Moreover, the private sector can play an instrumental role in economic growth through increased economic activity and employment generation. Efficient capital markets improve the general investment climate and are one of the key prerequisites for encouraging private investments. While the government introduced a number of capital market reforms in the last two decades, the transparency is still a sore point for general investors. 

Apart from introducing other relevant policy reforms such as allowing best efforts underwriting, the government must focus on creating a transparent and robust capital market governance regime to prevent manipulation of market by a few investors. Such a step is likely to attract a lot of investment towards capital markets and would encourage new initial public offerings (IPOs). By raising public equity, the businesses can fund their growth and contribute towards overall economic activity. 

More efficient capital markets and consequently higher number of IPOs in turn would attract private equity and venture capital firms in the long run, as these firms heavily rely on IPOs for exit strategies. Such flow of venture capital money will result in spurring innovation and value addition in domestic industry. In the absence of these reforms, however, both domestic and international investors are likely to stay away from these markets. 

Even some of the public owned funds, recently established at the provincial level for managing pension liabilities or endowment arrangements, are shying away from investing a substantial portion of their capital in public equity markets. 

The external assistance from multi-lateral and bilateral donors is another area to fund development needs. Besides IMFs fiscal support, a number of donors including Asian Development Bank (ADB), UNDP and USAID have been increasing their involvement in Pakistan. For instance, ADB recently announced its five year Country Partnership Strategy outlining support of $4.4 billion, in areas like energy, infrastructure, reforms and urban services. 

UNDP has also approved its One Programme to fund interventions in areas like agriculture rural development and poverty reduction, education, health and population, environment and disaster risk management. USAID is coming up with a broad-based economic growth program by the name of Empower Pakistan. Although the bulk of this USAID assistance cannot be spent on infrastructure, the programme is likely to address issues like trade liberalisation, competitiveness, agri-business development, etc. Similarly, the US also plans to create Reconstruction Opportunity Zones (ROZs) to facilitate preferential trade from tribal and border areas. 

The funding from donors however, has been often criticised in the past on account of its very little impact. To prevent such an experience in future and to capitalise on this funding effectively, the government needs to play a more pro-active and responsive role. Most of the inefficiencies in the donor-funded projects develop at the project conception stage, where the relevant government agencies make very little input. During the project implementation, the government counterpart departments often find it difficult to act swiftly, resulting in slow fund releases. On the reform side, the government officials often lack the requisite mindset and respond in a lukewarm fashion to these programmes. The government must develop adequate capacity in its implementing agencies to create counterpart responsiveness for effective project designing and seamless implementation. 

With the impact of global recession becoming clearer and worsening domestic economic scenario, a dent in development expenditure is likely to restrict and constrain future economic growth. Moreover, with a number of households just hovering above the poverty line, the reduced investments in social sectors can possibly result in significant increase in poverty. 

Under these circumstances, the government must act swiftly with a well thought out long and short-term economic management plan, thus raising private investments and capitalising on donor assistance. 

DAWN.COM | Business | Funding economic development


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## sohailbutt

*Contract farming: protecting growers stake​*THE changing pattern of marketing and increasing emphasis on farmers security have popularised the concept of contract farming, whereby a farmer enters into a contract with a processing/marketing firm to supply a pre-arranged quantity and quality of produce at a pre-arranged price. 

The contract gives the farmer an access to additional sources of capital, brings in new technology and ensures better price for his produce. The contract system benefits him because it makes smaller demand on scarce capital resources; is a substitute to costly and risky corporate farming, and often provides access to amateur family labour. 

Proponents of agribusiness argue that contract farming leads to big jumps in income and employment opportunities in backward and underdeveloped regions. It increases low levels of productivity and eliminates flux in production. Thus, overall, it puts the local economy on a dynamic path to growth and development. 

In terms of political economy though, contract farming is viewed as capitalist penetration of agriculture for capital growth. It is seen as a way for agribusiness companies to exploit the weak farming sector in order to maximise their profits. 

The production, marketing and distribution of agricultural products have all become gradually more complicated. Advances in technology have made it feasible for agricultural products to be produced to specification and preserved in a fresh condition for a longer time. The absolute scale of operations has also been increasing, and new selling methods have emerged, emphasising the need for a brand image based on consistent quality. 

Consumers too are becoming more discriminate in their tastes. They demand better quality and year supplies. All this has given an impetus to search ways for improving production, processing and distribution, especially with respect to timing and quality control. 

Contract farming is doing this job by providing inputs and production services to farmers. It introduces new technology to farmers and gives them opportunity to learn new skills. It also provides farmers with access to a wide range of managerial, technical and extension services that otherwise may be unobtainable. 

There are various types of contracts and to choose the right type is very important to materialise the real objective of contract farming. Since farmers are not always well informed, they could end up signing contracts that may exploit them. Companies can sign contracts with big farmers who use wage labour, with small peasant farmers who use family labour, and even with the landless who lease land for contract farming. 

Most agribusiness companies, however, favour big farmers who can deliver in bulk and are better equipped to withstand risk. Small farmers are favoured when they dominate a region, or when they benefit from government support. Various studies have shown unfavourable arguments against contract system like some agribusiness firms are involved in charging high prices for their services, providing low prices and delaying payments to producers. 

Some firms look at contracts only as a management tool and a strategy to overcome procurement and related business troubles. Contract farming tends to shift production in favour of exportoriented and cash crops at the cost of crucial food crops for the poor. This could lead to higher prices for food commodities and products, especially for nonfarmers. This contract system could also lead to over-exploitation of resources. 

Firms tend to move on to new growers and lands after exhausting local assets such as land and water. They will now have to compete with the multinational firms in terms of providing competitive prices and other incentives to preserve their producer- members. 

Only a few studies have been carried out to investigate the implication of contract farming. Studies on potato contract production in Punjab (Districts Okara, Sahiwal, Sialkot, Chiniot, Kasur, Gujranwala, Shiekhupura, and Khanewal) found that net returns from this crop under contract were much higher than from those under noncontract situations, though production costs were also higher. 

For local farmers, the potential problems associated with contract farming are increased risk of introducing new crops in the area, unsuitable technology and crop incompatibility, manipulation of quotas and quality specifications. Corruption occurs when staff responsible for issuing contracts and buying crops exploits its position. The monopoly of a single crop by a sponsor can also be a problem for farmers and indebtedness and over reliance on advances. 

The main potential advantages for farmers are provision of inputs and production services often provided by sponsors. Contract farming usually allows farmers access to some form of credit to finance production inputs. It usually offers technology more diligently than government agricultural extension services because it has a direct economic interest in improving farmers production. Farmers learn skills through contract farming like efficient use of farm resources and their price risk is often reduced as many contracts specify prices in advance, and it makes easy access to reliable market for farmers. 

For sponsors, the potential problems include that contracted farmers may face land constraints due to lack of security of tenure, thus jeopardising sustainable longoperations. Social and cultural constraints may affect farmers ability to produce to managers specifications. Poor management and lack of consultation with farmers may lead to their discontentment; they may sell outside the contract (extra-contractual marketing) thereby reducing processing factory output, and they may divert inputs supplied on credit to other purposes, thereby reducing yields. 

The main potential advantages for sponsors are contract with small farmers which is more politically acceptable, working with small farmers overcomes land constraints; production is more reliable than open market purchases and the sponsoring company faces less risk by not being responsible for production; more consistent quality can be obtained than if purchases were made on the open market; and promotion of farm inputs. 

The contract forming system is a useful tool to stabilise agricultural economy. In order to make it a valuable development tool, however, strong mechanisms must be in place to supervise contracts and ensure that growers, the more susceptible partners, are not exploited. 

One way of doing this is to encourage vigorous bargaining cooperatives or other agricultural producer organisations that can negotiate impartial contracts. Producer bargaining units and farmers markets are supplementary tools the farmer should be able to use. 

Non-governmental organisations can be involved, both to ensure that the contracts are fair and to provide knowledge inputs. However, the Punjab Agricultural Produce Markets Act 2005 contains some provisions to regulate contract farming. This would include setting out clearly what the parties must do and what they cannot do in the areas of delivery, payment, returning goods and price etc. 

The government should introduce insurance policies to provide comprehensive coverage of crops including loss of profit to farmers. They should develop suitable laws of contract, an efficient legal system and should create awareness of unintended consequences of regulation, for a registered contract farming programme. 

The government should abolish all fees, taxes, duties, levies on import of agricultural equipment and should eliminate red-tapism in import of varieties / hybrids and should make it mandatory for agricultural students to work on contract farming programmes as a part of their curriculum. 

Contract farming may be a good option to regulate agricultural economy, because it is a very useful tool for improving coordination in agriculture production, processing and distribution especially with respect to quality control. 

Farmers income is increased and food security is also assured. But at the same time there is a need for some practices like future trading in agricultural commodities, leasing of land, formation of land companies, allotment of homestead garden plots, direct procurement of farm commodities and setting up of special purchase centers, so that real benefits of contract farming may be realised.

DAWN.COM | Business | Contract farming: protecting growers? stake


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## sohailbutt

*Benazir Income Support program to be expanded​*RAWALPINDI: The government plans to increase the number of families benefiting from the Benazir Income Support Programme (BISP) by five million during the next financial year implying budget expenditure of Rs65 billion, official sources revealed to Dawn. 

For 2010-2011, the government envisages further increase in the number of beneficiary households to seven million. In addition, the province of Punjab is expected to continue its own programme during the next fiscal year (2009-10). 

The government is also considering reforming other components of the social safety net system, including the merger of the cash transfer component of Bait-ul-Mal with the Benazir Income Support Programme, sources further stated. 

The government, under the poverty scorecard system adopted to improve targeting of the Benazir Income Support Programme (BISP), is expected to be completed in sixteen districts as a pilot programme by the end of next month. 

An official government report says the roll-out of the scorecard to all 130 districts is planned to be completed between December 2009 and June 2010. As the roll-out of BISP turned out to be more complicated than originally envisaged, BISP disbursements did not take place in the first half of the fiscal year, points out the report. 

However, the government has now approved 1.5 million beneficiary families, using the pre-scorecard targeting system and expected to disburse the budget amount of Rs34 billion. Additionally, the government was continuing the implementation of Bait-ul-Mal with a budget of Rs6.7 billion and the province of Punjab has commenced its own cash transfer programme with an envelope of Rs17 billion in the fiscal year 2008-09. 

The Small Public Works Programmes of Rs28 billion also provide a social safety net for the rural and urban poor through small-scale employment opportunities. 

Looking forward, the report says, the number of families benefiting from BISP cash transfers will be increased to 5 million in 2009-10 using the new scorecard system, implying budgetary expenditure of Rs65 billion. For 2010-11, an increase in the number of beneficiary households to 7 million is envisaged.

DAWN.COM | + Pakistan | Benazir Income Support program to be expanded


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## sohailbutt

*Policy rate and market expectations​*RELAX! There is no need to be bullish! Thats the message sent out by the State Bank of Pakistan in its second quarterly report on the state of the economy. The report has been released weeks ahead of the banks quarterly review at the end of this month of its monetary policy for May-July. 

The report dimmed hopes of a sharp cut in interest rates being anticipated by the market in view of a declining headline inflation (consumer price index), and the decreasing benchmark Karachi inter-bank overnight rate (KIBOR), which fell to 12.50 per cent, well below the SBPs key policy discount rate of 15 per cent, in three months. 

The money market reacted immediately to the banks cautious stance on the economic recovery and KIBOR rose sharply after a broad-based rise in the cut-off yields on T-bills last week. The stock market also pushed away bulls to welcome bears. 

The money market had been misreading the earlier decline in the T-bill rates as signals from the central bank of a sharp U-turn in its monetary stance, contends Asad Farid, an analyst with AKD Securities. 

Considering that the T-bill cut-off yields are now determined by the ministry of finance and not the SBP, movement in the market interest rates do not indicate future trajectory of the monetary policy, he says. 

Although the SBP has separated debt management from monetary management, the decline and hike in T-bill rates reflect the market sentiments on the SBP monetary policy stance. Asad attributes the fall in market yields primarily to improved liquidity conditions coupled with an expectation of a sharp reversal in the monetary policy. 

The current rise in T-Bill rates clearly shows that the money market has now adopted a cautious stance, he says. He anticipates upward pressure on KIBOR and treasury bill rates to remain if the central bank fails to reverse its monetary stance in line with the money market expectation of 200 to 300bps cut in the policy discount rate. In the long term, however, he expects the liquidity position of the banking sector to improve further and help sustain the downward trend in market interest rates. 

But the SBP report cautiously celebrates improvement in the macroeconomic indicators and contraction of aggregate demand in the economy because of stabilisation programme. If it talks of stabilisation gains, it also speaks clearly of the risks to the economy and fragility of the recovery seen after the International Monetary Fund (IMF) agreed in November to give $7.6 billion balance of payments loan. Demand pressures in the economy are easing due to improvement in fiscal discipline, which has complemented a tight monetary policy and improved prospects for low inflation, the report says. 

The report says, the fiscal consolidation has been a major priority under the macroeconomic stabilisation agenda during the current year, which seems to be having an impact as the fiscal deficit for the first half of the year to December is estimated to have dropped to 1.9 per cent of the projected annual GDP compared to 3.4 per cent a year earlier. 

The fiscal deficit for the first half appears to be in line with the annual target set in the budget as well as that agreed with the IMF. But the bank warns that the fiscal improvement thus far has largely been brought about by eliminating oil subsidies and cutting development spending. Non-development spending, especially defence and debt servicing, remain rigid and continue to constrain the governments ability to free up resources for development for economic recovery. While inflation is still very high, there is an expectation that it will decelerate sharply in the final quarter of the financial year to June. 

After peaking to 25.3 per cent year-on-year in August, the headline consumer price index (CPI) inflation started easing to fall to 21.07 per cent in March. But the bank warns that this inflation is higher compared to 20.5 in January and 11.3 per cent in the same month previous year. Also it cautioned that annualised CPI inflation will be in the range of 19.5 to 20.5 per cent. 

The bank says there is a distinct improvement in the external sector, with a fall in the cumulative trade deficit in the first eight months of the fiscal to February. Trade gap declined to $11.6 billion from $12.478 billion as imports fell year-on-year by 1.52 per cent to $23.77 billion and rose by 4.25 per cent to $12.155 billion in eight months. 

It is the first reduction for this period in seven years. The narrowing trade deficit and robust remittances have triggered a reduction in the current account deficit, which surplus of $146 million in February, allowing for a build up of the foreign exchange reserves to above $11 billion. The continued compression in the imports, principally attributed to weakness in domestic demand and lower import unit values, will reduce the current account deficit, allowing Pakistan to build-up foreign exchange reserves further. 

Thus, the aggregate 68.6 per cent growth in overall external account deficit during the first eight months of this fiscal is accrued essentially during the first four months of the period to October, it argues. 

In the short to medium-term, it would be imperative to rely on concessional external assistance to finance development expenditure, the bank says. Also, given the drying up of capital flows, official assistance seems to be the only option for countries like Pakistan to stimulate its economy to put it back on sustainable path of growth and development. 

Farid says the March CPI inflation however clears the likely direction of the monetary policy: the reversal, though inevitable, will only be gradual. The process of monetary policy reversal will begin this month and speed up in the first half of next fiscal year, he says. Farid expects revival of domestic demand and economic growth from the next year onwards. But former finance advisor Salman Shah wants a substantial reduction in interest rates to kick off economic growth and recovery. He argues that the monthly movement of CPI and other indices since October shows that the economy is experiencing deflation, except for February when the index rose slightly, or zero inflation. 

That is a clear case against the SBPs tight monetary policy stance, he contends. He says Pakistan, like the rest of the world needs quick economic growth to come out of the present troubles. The rest of the world is cutting interest rate to zero while we have raised it to prohibitively high level and put credit out of reach of the industry, he says. 

Salman insists that the economy will suffer hugely if the State Bank did not cut cost of credit immediately. Once the manufacturing is closed, it will not be easy to revive it. The responsibility will rest with the central bank, he warns. 

First Capital Equity Limiteds Mohammad Imran Khan however favours tight monetary stance to preserve price and exchange rate stability. 

The economy is improving but is not back on the path of recovery. The deflation in monthly inflation seen by Salman is only because of higher base effect of the CPI. The index base has moved up to 192 from 146 in July 2007. That shows that even a slight upward movement in the index base will signify pretty big movement in the prices, he argues. He says the economy is still in a precarious situation in the face of huge risks as underlined by the central bank. We need to move cautiously. Theres no need to be bullish at this moment, Imran maintains.

DAWN.COM | Business | Policy rate and market expectations


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## sohailbutt

*British advertising company to expand business in Pakistan​*LONDON: Pakistan has received a strong endorsement of its economic prospects from one of the biggest names in the global advertising company, says a report in the influential British daily The Financial Times. 

Sir Martin Sorrell, the chief executive of WPP, has said his company intends to expand its business in the south Asian country in spite of a growing Islamist insurgency and a fall in economic growth this year. 

Despite all the political and security issues our businesses in Pakistan continue to grow strongly, said Sir Martin, chief executive of WPP, which employees 131,000 people and has 2,000 offices in 106 countries. 

We plan to continue to grow there and develop our industry's leading position in the country. 

According to the newspaper, Sir Martin is not alone. 

Public and private companies, including Antofagasta, the Chilean mining company, and Abraaj Capital, the Dubai-based private equity group, are seeking opportunities in Pakistan. Some small-scale investments, particularly in the energy and infrastructure sector, show companies taking a cautious approach, however. 

Acquisitions by UAE, Singapore and Malaysian investors account for more than half of the cross-border deals of the past five years. 

Abraaj Capital, the Middle Easts biggest private equity firm, agreed a $361 million deal to buy half of KES Power, the holding company of Karachi Electric Supply Company (KESC). 

Our focus in Pakistan is to purchase defensive assets, like power, infrastructure, distribution, or downstream oil and gas, said Omar Lodhi, executive director of Abraaj Capital. We work with them to develop them for sale to strategic groups. 

CDC Group, the UK state-owned private equity group, invested in Pakistan in 2006, putting $40 million in the debut fund of Karachi-based JS Private Equity. 

With its huge and young population and good commercial history it is still an attractive investment, said Richard Laing, chief executive of CDC.

.:: SAMAA - British advertising company to expand business in Pakistan: report


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## sohailbutt

*Prime Minister to announce special development package for Sialkot soon​*SIALKOT (April 13 2009): A comprehensive strategy is being prepared for initiating mega projects in Sialkot, which is the export-oriented city and nucleus of cottage industry of the country. Prime Minister, Syed Yousaf Raza Gilani, would soon visit to Sialkot and announce a special development package for the city, the Federal Minister for Population Welfare, Dr Firdous Ashiq Awan expressed her views while addressing a news conference held here on Sunday.

During the conference she said that the government has accorded its special attention on promoting better working relationship between employers and employees aimed at ensuring smooth productivity in the country.

The government was making ample efforts for reducing the problems and difficulties confronted by the business community, she said. She revealed that a Workers Welfare Project (WWP) would soon be developed to facilitate the industrial workers of Sialkot and land for the proposed project had been acquired at village Rai Pur.

The proposed project would facilitate not only the industrial workers but also the workers of Sialkot Dry Port, Sialkot International Airport and Sialkot Export Processing Zone she added.

In order to provide clean drinking water to the masses a project costing Rs2 billion with help of World Bank would be started shortly in Punjab and under the programme Sialkot district would get its due share, she revealed. She pointed out that water filtration plants were installed in various parts of the country previously had become checked due to the lack of proper look after.

Dr Firdous further informed that the development work on Sialkot-Lahore motorway would be undertaken soon and under the revised formula 50 per cent Punjab government and 50 per cent federal government would share in the project and hopefully the mega-project would be accomplished by 2010.

To reduce the traffic load a ring road would also be constructed in Sialkot for diverting the heavy traffic towards this track, she added. The federal minister said that the arrangements were being made for starting Hajj flights from Sialkot International Airport from upcoming Hajj season to facilitate the people of Sialkot, Gujranwala, Gujrat, Narowal and many adjoining areas.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*ROVERS DIARY: The concerns are genuine​*ARTICLE (April 13 2009): Everybody talks about sovereignty of the country and sovereignty of the parliament these days. While the first is a cherished goal, the second is a debated slogan by the jurists who believe that in any polity the real sovereignty has to be of the constitution. (An issue I might take up some other time). The troubling issue is why after over 61 years we have not been able to achieve both the objectives. Lets examine briefly the two issues.

Whether it is an issue of unabated drone attacks or the frenetic diplomatic activities every time we have a political impasse in the country, we shout from the pulpit that our sovereignty is being violated by the big powers. But very seldom these protagonists of sovereignty mull over the fact that why our political and territorial boundaries are breached by other countries.

We have so far failed to manage our affairs in Pakistan. It has resulted in the US drones incursion, assistance to disgruntled armed groups by India and intervention of the US, Britain and some Arab diplomats in our politics. When we speak against the drone attacks or the interference of foreign powers in our politics, and rightly so, we should keep in mind the basic principle of international laws regarding sovereignty. These laws have evolved over the last many centuries.

The concept of sovereignty of state is roughly four hundred years old. For centuries many states felt free to invade and conquer other states to establish their empires - the Roman, British and Muslim empires are some examples. But in 1648, over 130 European Princes resolved to stop intervention of states in one anothers domestic affairs and signed the Peace of Westphalia. This brought an end to the bloody Wars of Religion.

Most scholars like Morganthau Carr and Fowler agree that this resolution was the first formal acknowledgement of state sovereignty. Ideally, this theory has come to express the idea that the state "is a final and absolute authority in the political community."

Students of political science know that sovereignty is based on the democratic principle of equality of states. Both the concept of sovereignty of states and evolution of a democratic state have grown together drawing strength from each other. Hence sovereignty of a state is closely linked with the sovereignty of an individuals human rights.

According to Professor Dr Douglas Stuart "state sovereignty still remains an ambiguous and convoluted theory. As one looks at the role of state sovereignty in todays international system it is important to set some basic guidelines." He argues that "the empowerment of local movements by strong international non-state actors poses a serious challenge to the theory of state sovereignty."

This is where Pakistans predicament begins. We have been working on secession of Kashmir from India since 1948. Though our claim is that Kashmir should have come to us because majority of the population residing there was Muslim, the main concern of the government is the control of India over water resources. Pakistan has not accepted accession of Kashmir with India and thus may feel justified in supporting the local movements.

This is a legitimate concern, but not a typical problem. Many states in the world share the rivers and the lower riparian states have been wary of the advantages of the countries from where the rivers originate. In the case of water distribution between Pakistan and India the issue was resolved under the Indus Water Treaty which was signed by both the countries. This treaty has survived the two wars between the two countries.

But in the last couple of years Pakistans concern that India would eventually deprive it of its due share of water has gained ground. India has started constructing dams on the rivers assigned to Pakistan, claiming that these are for producing electricity and not for agriculture. Owing to the trust deficit between the two countries Pakistani establishment is seriously worried that India might use these dams to twist our arms by diverting the water flow.

This fear is coupled with the paranoia about India. These apprehensions are the logical outcome of the basic political formulation on which the edifice of Pakistan was built. In reaction the establishment has always felt the need to nurture militant "non-state actors." Now the problem is that instead of finding a solution to the problem remaining within the norms of the international law that govern the sovereign states, our governments have been happy over "non-state actors" intrusions. Dictated by the same sense of insecurity and myopic view our establishment has got itself stuck in the quagmire of Afghanistan. The desire to have a client state in Afghanistan which shuns Indian overtures has made us pushy to the extent that most governments in Kabul have remained unhappy with Islamabad.

Pakistani establishment has not been able to win any war against India, but has been successful in engineering resistance against the Afghan and Soviet army. And it has the Indian army bogged down in Kashmir. At the face of it this looks like a great victory that our short-sighted nationalists love to celebrate.

But the fact is that such a policy has given an opportunity to the US and Nato forces to violate our sovereignty; and to the Indians to fuel the nationalist upsurge in Balochistan. If we want the drone attacks to stop, we should stop our land from being used by the militants who want to capture the government in Afghanistan. We will have to deal with the Kashmir and water issue politically, remaining within the norms of international law. And not through breeding a number of Frankensteins, who are now up to tear our social fabric and dictate a belligerent foreign policy.

Those who support the establishments national security policy argue that Pakistan can only check-mate Indian influence in this region by keeping these trouble-makers alive. They forget that the best recourse for smaller and weaker sides in any conflict is to invoke the laws that are made to protect their interest. These laws are needed by smaller countries and if they violate them the other side gets the chance to use power. States like Pakistan cannot match the Indian economic and military power, no matter what the protagonists of hidden support to the Muslims talk about. Some have blamed this realistic observation as a defeatist cry. These are the same people who were telling us in 1965 and 1971 that we are winning by sheer will power, and were rudely kicked in the shin by the reality, when we lost half the country.

Our demand that drone attacks should be stopped is legitimate, but then what should be done with the local and Afghan terrorists who openly claim that they are using Pakistans territory to launch attacks inside Afghanistan. The obvious answer is we are fighting to hold them back. Its true that Pakistans army is fighting against some of these elements in FATA and has lost many soldiers. But the world is not convinced that we are fighting the real Taliban who are interfering in Afghanistan. They know it well that we are upset about the growing influence of India in Afghanistan and their activities close to our Northern borders. We have never tried to hide it. And to check this growing Indian influence we keep our own favourite Taliban humoured.

That the Indians are making roads close to our borders is worrying our war strategy planners. What they do not realise that these roads look dangerous to us because we only think in war terms. We have never bothered to think about peace time relations, in which we can use the same roads to connect Pakistan with the central Asian market. We have never realised that if we allow the Indian goods to pass Pakistan by road how much money we can make. But then it is only possible when we stop thinking in military terms and start thinking about building regional economic co-operation in this region. One thing is certain that we cannot fight our way through; we can only take advantage of peace and subsequent economic development.

Now, on the issue of foreign interference in our politics. The concerns are genuine. But if we should stop and ponder on the issue, we would realise that these foreign diplomats get their opportunity because our politicians are like rowdy and brawling school children. The foreign powers role is that of a teacher of democracy and the army is a self-appointed monitor. Does the blame stop here? No. The reason that our political parties and political culture has not developed to establish the sovereignty of constitution and the parliament is that frequent military interventions have retarded their growth. If the political system is allowed to evolve through its natural course, I am sure our politicians will rise to the occasion and act with maturity required by a democratic society.

The moral of the story is that our sovereignty would only be respected if we start respecting the sovereignty of our neighbours. Similarly sovereignty of the parliament would only be established if the politicians would accept the sovereignty of constitution and respect each other.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Tunnel farming getting popular ​* 
Tuesday, April 14, 2009

LAHORE: Tunnel farming is gaining acceptance among educated farmers as it provides them with an opportunity to grow vegetables in off-season by using less than 40 per cent water and managing required temperatures by capturing heat during winters.

Agricultural experts point out that three main impediments that impact agricultural growth in the country are chronic water shortages, low per acre yield and low value of crops. They said these drawbacks could be overcome by growing high value summer vegetables during winter through tunnel farming.

They claim that by adopting tunnel farming technique farmers can obtain 80,000 kg of cucumber, 30,000 kg green chillies and 30,000 kg of capsicum from one acre. This is 2-2.5 times higher than the average harvests the farmers get for these crops.

The farmer earns from Rs200000 per acre to Rs500000 per acre if he markets the produce in the local market. Since all of those involved in tunnel farming are educated farmers they are now exploring export markets as well where they expect to earn 100 per cent more.

The experts say that the tunnel farming operates on the principle that of creating conditions during winter that are equivalent to those in summers. The vegetables sown in summer are then cultivated in these tunnels during winter. The entire farming area is covered by transparent plastic fixed over D-shaped steel pipes. The entire soil is also covered with black coloured plastic sheet with small holes from where the seeds are sown.

The sunlight during the day passes through transparent plastic sheet and is absorbed by the black sheet spread over the soil. This raises the temperature to desired levels. The plastic sheet on the soil serves three purposes. First it traps heat, second it reduces water loss and third it eliminates growth of weeds as seeds germinate from the holes made in the plastic sheet.

Former President Lahore Chamber of Commerce and Industry Mian Shafqat Ali who has closed his steel pipe factory to concentrate on tunnel farming says that Pakistani farmers have adopted a low cost version of tunnel farming that is cost effective compared with foreign models that use electricity as a major input to control temperatures. He said one acre of tunnel of Pakistani version costs Rs300,000 to Rs1.5 million while foreign version may cost almost Rs5 million.

He said it must be borne in mind that the farmers procure quality hybrid seed of reputed brand. Moreover he added the PH of the soil should be adjusted to 7-7.5. The total dissolved solid (TDS) contents should not be more than 600. He said the underground water in most of Punjab is suitable for tunnel farming but the farmers should always check the quality of their water source.

He said another aspect that the farmers should know is that the soil takes some time in adjusting to tunnel farming technique. He said the farmer might get 60pc of the potential yield of the seed in the first year and the productivity potential would be achieved in the third year. 

The News found that a progressive farmer Mian Shaukat who is currently heading the Punjab Agriculture Marketing Company (PAMCO) has been practicing tunnel farming for the last 10 years. He has 350 acres of tunnel farms. The farmers point out that the income from tunnel farming could double even locally if the role of middleman is eliminated.


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## Neo

*Pakistan to seek $4bn budgetary support from FoDP: Tarin ​* 
*Says militancy caused closure of 22,000 industrial units in NWFP, Balochistan​*
Tuesday, April 14, 2009

ISLAMABAD: Pakistan will seek $2 billion for security related projects; $4 billion as budgetary support for health and education for next years and $1-2 billion for Trust Fund to cater to development needs of NWFP and Balochistan, said Advisor to Prime Minister on Finance Shaukat Tarin

Flanked with Federal Information Minister Qamar-uz-Zaman Kaira, Tarin during the press briefing on Meeting of Friends of Democratic Pakistan here on Monday said that Pakistan having sustained $35 billion loss in the war on terror during last 7 to 8 years will sensitise the Friends about worsening law and order situation that has arisen out of fight against militancy. 

He mentioned that because of the increase in militancy, some 2,200 industrial units in terrorism-hit NWFP and troubled Balochistan have been closed down and about 590 units are in operational form.

This has triggered huge poverty in the said federating units, which has given impetus in militants activities in general in the whole country and in particular in NWFP. Tarin said: During the FODP and Donors moot, broad based problems of Pakistan will be identified.

Pakistan diverted huge resources from other sectors of economy to fight war on terror, which is why main social sectors of education, health and projects to erase poverty remained neglected. 

Pakistan is in dire need of $4bn for allocating maximum budgetary allocation for education and health, which will ultimately help erode the poverty. Pakistan is at present spending 15pc of GDP on education while 0.5 to 0.6pc of GDP on health which is very low while India is spending 4 to 5pc of GDP on health and education.

He said that on security front, Pakistan needs Special Forces equipped with latest equipment and training to deal with militants, as the conventional forces of Pakistan do not have capacity to deal with this menace. 

To a question he said that Pakistan would seek $2 billion for security related schemes. He said that because of the ongoing war Pakistan has now about 300,000 Internally Displaced People who need to be taken care of properly, but Pakistan lacks resources to handle IDPs.

When his attention was drawn to the fact that donors are ready to come up with about 60 billion dollars commitments but they want the transparency of international standards to gauge the right utilization of funds, Tarin said that Pakistan would ensure the transparency in utilisation of funds and good governance while getting the commitment of about $30 billion for medium to long terms partnership for development in various sectors of economy.

The advisor said that Pakistan needs to get its house in order and the commitment for transparency and good governance has been included in the 9-point agenda, which Pakistan would share from FoDP.

Coming to the initiative that the government is undertaking to address the poverty, safety nets would be ensured under Benazir Income Support Program. For this purpose, with the help of World Bank, poverty census has been initiated in about 16 districts. 

Once this process gets completed, every house which falls in the poverty census will be given Benzair Card of Rs1,000 per month. Moreover one person of the said house will also be given skill keeping in view the needs of their particular areas so that he could get the jobs there. The skill development would also be given for overseas employment.

This will help reduce the poverty in the country. He said that Health Insurance of Rs20,000 for below poverty people would be introduced.


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## Neo

*$35bn spent on law, order: Fahim ​* 
Tuesday, April 14, 2009

KARACHI: Federal Minister for Commerce Makhdoom Amin Fahim has said that the government had already spent $35 billion on improving the poor law and order situation of the country and was ready to spend more on it as security is the highest point of concern for them. 

Addressing the business community at the Federation House on Monday, he invited written proposals from them on issues being faced and said that all the major ministries would sit together to discuss them in the first week of next month. In a meeting, Fahim repeatedly stressed the governments support for the trade and industry and assured them that he would suggest to the prime minister to hold a collective meeting with the latter before the budget was announced. Fahim further stated that a committee would sit to evaluate the performance of commercial counsellors who would then be reassigned on the basis of their re-evaluation.


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## Neo

*Expats in UK keen to invest in Pakistan ​* 
Tuesday, April 14, 2009

LAHORE: Expatriate Pakistanis, particularly those living in the United Kingdom, are keen to make investment in Pakistan through joint ventures with local businessmen. UK-Pakistan Chamber of Commerce and Industry Vice-President, Ishtiaq Ahmad stated this while speaking at the Lahore Chamber of Commerce and Industry (LCCI).

Ishtiaq Ahmad, while stressing the need for more interaction between the two sides, urged the LCCI office-bearers to arrange a delegation to the UK to increase volume of the two-way trade. He said that the UK being the fastest growing economy in the European Union, has a huge potential for Pakistani businessmen to have joint ventures with their counterparts there. He said that the process of globalisation is bringing people closer and there is a need to learn from the experiences of each other.

LCCI President Mian Muzaffar Ali said that there was no doubt that the UK, being an active member of the European Union, offered tremendous opportunities to Pakistani businessmen but both sides needed well-directed, sector-specific moves to achieve desired results.

He said that Pakistan was particularly interested in the transfer of technology but to materialise the very idea, expatriate Pakistanis would have to play their role. He said that exchange of business delegations and holding of single country exhibitions could boost up the bilateral trade. These marketing tools need to be studied by the chambers and the diplomatic missions of the two countries.

He said that these are the areas where UK-Pakistan entrepreneurs could sit together and chalk out a comprehensive business strategy for their mutual benefits. Keeping in view the current low level of trade between the UK and Pakistan there is a need for more focused efforts for expanding economic cooperation.

Muzaffar Ali invited the Pakistanis living in the UK to make investment in the fields of information technology, telecommunications, infrastructure development, education, and food preservation technologies.

The LCCI Senior Vice President Tahir Javaid Malik, said that the visit would prove beneficial for the both the sides. He said that there are a lot of opportunities waiting for the potential investors particularly in the field of textiles and leather. He said that the increase in total foreign private investment is enough to prove that Pakistan has a lot to offer and the foreign investors should take advantage of the situation.


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## Neo

*Local auto sales down 46 percent in FY09​*
KARACHI: As the macroeconomic indicators are getting better and the economy is on the path of recovery the fiscal year 2009-10 may witness better for the wavering auto industry that has been suffering from sagging conditions since last two years, industry officials told Daily Times.

Continued decline in the steel prices in international market and the expected decline in the interest rate would help manufacturers to reduce the prices, they added.

Car sales during first 9MFY09 has dropped by 49 percent year-on-year (YoY), as it stood at 61,185 units as compared to 120,246 units in the same period of the last year, with Pak Suzuki and Dewan Motor among the major losers as both witness sales decline by 52 percent and 76 percent, respectively, figures released by the Pakistan Automotive Manufacturers Association (PAMA) show.

However, cumulative auto sales (Cars + LCVs) recorded depressing numbers for 9MFY09 as they stood at 73,668 units depicting a decline of 46 percent YoY.

Auto sales were up 15 percent MoM in March 2009 primarly at the back of low base effect from February 2009 (only 23 working days). Honda Atlas and Pak Suzuki were amongst the major gainers as their sales increased by 36 percnet and 21 perecnt, respectively. Moreover, Dewan Motor also showed some improvement with sales up 26 percent MoM. However, Indus Motor failed to post positive growth as their sales declined by 2 percent.

After an impressive start in January-09 where MoM sales were up by 95 percent, February-09 auto sales slid by 18 percent MoM to 6200 units, but now in March 2009 the car sales have increased by 14 percent to stand at 6,525 units.

"Political and economic instability, frequent increase in car prices by manufacturers and high rates of auto financing remained the main sources for this decline," Atif Zafar, analyst at Jahangir Sinddiqui Research told Daily Times.

He said that the next fiscal year could be a better one for the auto industry as besides, positive macroeconomic indicators, government is also going to check the unjustified increase rates by the manufacturers.

In 9MFY09, Indus Motor captured significant market share at the expense of Pak Suzuki largely on account of their succesful launch of new Corolla model during the period. Indus Motor's market share increased to 31 percent from 25 percent in June 2008 while Pak Suzuki's market share fell to 54 percent from 61 percent. Similar to Indus Motor, launch of new Honda City helped Honda Atlas Car substantally increase its market share to 12 percent from 8 percent earlier.

Sales of automobiles have been falling for more eighteen months now owing mainly to the increased rates of interest charged on loans. Besides, the 25 percent high inflation has pushed many potential buyers away.

Automobile manufacturing had boomed when interest rates were low thanks to the increased liquidity available with Pakistani banks after the 9/11 attacks. Banks and leasing companies were liberal in giving loans to individuals. Now, as the numbers of defaults are rising because of increased interest rates, they have tightened their policies. Many banks have even stopped auto financing. There has been hardly any advertisement for car loans on televisions and newspapers for sometime.


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## Neo

*Govt cuts federal component of PSDP to Rs 219bn from Rs 337bn​*
ISLAMABAD: Keeping in view the financial constraints, the government has cut Federal component of Public Sector Development Programme (PSDP) 2008-09 from Rs 337 billion to Rs 219 billion, sources told Daily Times here on Monday.

The net cut in PSDP 2008-09 was Rs 118 billion, which was Rs 18 billion higher than the announced cut of Rs 100 billion at a time when the Prime Minister visited Planning Commission on February 13. The sources claimed that the financial constraints further compelled the government to cut the PSDP. The sources further said that allocations for all ministries and divisions would also be reduced accordingly. The government allocated Rs 62.420 billion for Water and Power Division (Water Sector) in the annual budget 2008-09. After the cut in PSDP, the allocation for water and power sector reduced to Rs 31.210 billion. The allocation for Finance Division is reduced to Rs 6.7 billion from earlier allocation Rs 16.752 billion.

The budget allocation in the PSDP for Defence Division was Rs 1.819 billion, which after cut reduced to Rs 802 million. The reduced allocation for Information and roadcasting Division was Rs 406 million from earlier budget allocation Rs 1.038 billion.

The development budget for ministry of production and industry was Rs 10.458 billion, which after cut is reduced to Rs 2.529 billion, the official maintained. The revised allocation for PSDP 2008-09 showed reduced allocation Rs 1.5 billion for Law, Justice and Human Rights Division from earlier allocation of Rs 2.381 billion in the annual budget 2008-09. The allocation for Communication Division (including NHA) reduced to Rs 19.032 billion from earlier allocation Rs 36.821 billion.

The revised allocation for ministry of Food, Agriculture and Livestock was Rs 14.407 billion from earlier annual budget allocation Rs 20.515 billion, the official maintained.

Revised allocations for other ministers are: Pakistan Atomic Energy Commission to Rs 15 billion from earlier Rs 15.330 billion, Ports and Shipping to Rs 140 million from earlier allocation Rs 372 million, Railway Division to Rs 6.560 billion from initial budget allocation Rs 11.280 billion, Higher Education Commission to Rs 12.6 billion from earlier allocation of Rs 18 billion.

The change allocations for more ministries/divisions are: Health Division to Rs 13.990 billion from earlier allocation to Rs 19.010 billion, Information Technology and telecommunication Division to Rs 800 million from earlier allocation of Rs 1.976 billion, the revised allocation for Science and Technological Research Division Rs 1.510 billion from initial allocation of Rs 3.015 billion, Petroleum and Natural Resources Division to Rs 201.2 million from initial allocation of Rs 850.4 million.

The revised allocation for Education Division was Rs 4.162 billion from earlier Rs 6.269 billion, Population Welfare Division to Rs 3 billion from earlier allocation Rs 4.315 billion, Women Development division to Rs 113 million from original budget allocation Rs 334.6 million, revised allocation for Social Welfare and Special Education was Rs 354 million from initial allocation of Rs 509.5 million, Environment Division to Rs 1.141 billion from earlier allocation Rs 2.252 billion, Cultural Division to Rs 186.5 million from Rs 413.2 million, Sports Division to Rs 140 million from Rs 350.4 million, Interior Division to Rs 5.359 billion from Rs 6.942 billion.

Other reduced allocations were: SUPARCO to Rs 1.493 billion from earlier Rs 3.120 billion, Cabinet Division to Rs 572 million from earlier allocation Rs 2.879.5 billion, Housing and Works Division to Rs 2.837 billion from earlier allocation Rs 4.070 billion, Narcotics Control division to Rs 384 million from original allocation Rs 768 million, Revenue Division to Rs 1.546 billion from earlier allocation Rs 2.370 billion. Similarly the revised allocation for other ministries/divisions finalized, the official claimed.

For the last several months the officials of Planning Commission had initiated rationalization process of development projects. The official claimed that all these projects would not be scraped from the PSDP and some would be transferred to the Infrastructure Project Development Facility (IPDF) for execution with the private sector investment.


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## Neo

*Pakistan may get close to $4bn aid in Donors Conference​*
ISLAMABAD: The upcoming Tokyo Donors Conference might pledge $4 billion to Pakistan over the next two years, Japans Special Representative for Assistance to Pakistan and Afghanistan Motohide Yoshikawa said on Monday.

Talking to reporters at the Japanese embassy, he said Tokyo had been advocating for assistance to Pakistan and had raised the issue at the G-20 group meeting. He said Pakistans stability and prosperity was in the interest of the world.

The special representative said that the international community would demand broad political support in the fight against terrorism and a plan of action for economic reforms and eradication of poverty.

He said more than 30 countries and organisations would participate in the conference.

Yoshikawa said a bilateral meeting would be held during President Asif Zardaris visit to Japan and during the meeting the Japanese prime minister would announce assistance to Pakistan in the shape of a soft loan.

Earlier, Yoshikawa called on President Zardari and discussed the upcoming meeting of the Friends of Democratic Pakistan forum due in Tokyo on April 17, as well as the regional situation, bilateral ties and mutual cooperation.

Foreign Minister Shah Mehmood Qureshi, Information Minister Qamar Zaman Kaira, Interior Adviser Rehman Malik and Secretary General to President Salman Farooqui attended the meeting.

Japans Ambassador to Pakistan Chichiro Atsumi was also present.

Zardari said he hoped the international community would support Pakistan in the upcoming Friends of Pakistan meeting.


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## Neo

*Pakistan seen getting close to $4 billion aid target​* 
ISLAMABAD (April 14 2009): Japan on Monday expressed hope that Pakistan would get aid pledges close to $4 billion for socio-economic needs from this weeks donors conference in Tokyo, said Motohide, Japans Special Representative for Assistance to Pakistan and Afghanistan, here on Monday.

"Japan is close to feeling confident that pledges will be close to four billion dollars, which is being expected by Islamabad," he said at media briefing after he met President Asif Ali Zardari. Two separate meetings on Pakistan are to be held in Tokyo on Friday, April 17: first with Friends of Democratic Pakistan (FoDP) in the morning, and second the aid donors conference in the afternoon. Yoshikawa said that the exact amount could not be told because most of the pledges would come bilaterally between Pakistan and the concerned donor country or agency.

He did not say how much Japan would give, but the Nikkei business daily reported on Saturday that Japan was finalising plans to provide Pakistan with up to $1 billion over two years. Japan, the diplomat said, has urged the governments and international donors to make generous contributions in aid to Pakistan.

He said that major demands from Pakistan were to see that Pakistan remains committed in fight against terrorism and extremism and stick to the economic reforms. Apart from this, the international community also wants to remain within the budgetary framework and alleviate poverty.

The FoDP meeting will raise the level of information about Pakistan problems. There will be political commitment from the international community not to leave Pakistan alone, he added. He said that Pakistans tribal areas had become real trouble. "The militancy from these areas is becoming threat to Pakistan itself," he said.

About the drone attacks, he said that international law and Geneva convention must be followed. At the same time, he added, he had no authority to speak on drone attacks. He also refrained from giving any comment regarding Pakistan-India tension.

Earlier Yoshikawa, held a meeting with President Zardari. Zardari and expressed hope that at Friends of Pakistans meeting, the international community would come up with full support to help the country fight the ongoing war on terror and extremism. They also discussed bilateral relations and the level of co-operation between the two friendly countries.

The meeting was attended among others by Foreign Minister Shah Mehmood Qureshi, Information Minister Qamer Zaman Kaira, Advisor to PM on Interior Rehman Malik, Secretary General to President Salman Faruqui and Japans Ambassador to Pakistan Chichiro Atsumi.


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## Neo

*War on terror: economy suffered $35 billion loss so far, says Tarin​* 
ISLAMABAD (April 14 2009): Advisor to Prime Minister on Finance Shaukat Tarin on Monday said Pakistan would get $4 billion from donors in the upcoming Tokyo meeting in April for poverty reduction and bringing about improvement in health and education sectors.

"We will collect $4 billion in donors meeting for poverty, health and education," said the advisor here on Monday briefing media about plan he would present before Friends of Pakistan in Tokyo to convince them to help Pakistan which suffered great damage on economic and security fronts in war on terror.

"We have not been able to focus on social sector because of financial constraints owing to increased spending on security," said the advisor along with Information Minister Qamar Zaman Kaira who said anything compromising the national interest would not be accepted.

He said that two back-to-back meetings of Friends of Pakistan and donors would be held on April 17 with pledges to come by the post-lunch meeting of donors. A briefing would be given to the FoP in the pre-lunch session wherein they would be apprised that Pakistan is faced with growing threat of terrorism. This growing menace was the consequence of Afghanistan and Pakistan support to global war on terror after 9/11 resulted in spread across Pakistan destroying its economy and causing massive loss of lives.

Tarin said damage to Pakistan economy for being partners in war on terror was $8 billion alone in 2008. So far he said the country has suffered $35 billion brunt to its economy but terrorism threat was increasing and due to this menace, the minister said, no investors was coming to Pakistan because of fear, a price Pakistan has been paying for being ally in war on terror. Because of growing terrorism threats, the advisor said even the local investors are closing down their units. The number of industrial units has come down from 2200 to just 590 because investors are unwilling to invest in this unsecure environment.

Tarin said in this background meeting of FoP was scheduled and Pakistan would share its problems with the member countries and apprise them that it could not pay attention to social sector because it had to pool all resources towards security. Pakistan needs $4 billion for two years to streamline social sector, he added.

He said that friend countries are also expected to help 0.3 million people who were internally displaced because of ongoing global war. Tarin said some countries in the forum view Pakistan having no economic plan and he would be briefing them about the government 9-point agenda of economic turnaround. They would be apprised in detail about the salient feature of the plan that envisages safety nets on top agenda to bring people out of poverty.

He said he would also be sharing with them the household survey in the pipeline to determine the income of each and every household to bring the deserving families in the safety net. On the basis of this determination, the families would be issued Benazir Income Support Cards (BISP), provided health insurance of Rs 20000 and its members would be given technical training to make the family stand on its own feet.

Also, they would be sharing the plan to improve productivity of agriculture and manufacturing sectors because both of them cater to the maximum in the country. They would be apprised about the integrated energy plan to meet the future needs of the country. The issues of education, health, infrastructure and capital market would be other sector to be discussed with the Friends of Pakistan during the meeting in Tokyo.

The advisor said that 9-point economic plan would be shared with the FoP as well as security and setting up a trust fund for development of NWFP and Balochistan. There would be no pledging in the FoP session prior to lunch and only briefing would be given on the Pakistan plan for economic improvement.

He said Pakistan received massive assistance three times in the past but this was never used to remove the structural problem. Kaira said that Pakistan would not compromise on national interests for aid. We want the Friends to help Pakistan in moving towards transparency, he added.


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## sohailbutt

*Biggest Pak industrial output dip in 2 decades​*ISLAMABAD: Pakistans large-scale industrial production has dropped 5.71 percent  the biggest in over two decades  in the first eight months of the current fiscal year, owing to a host of domestic and global factors.

The quantum index numbers of the Large Scale Manufacturing (LSM) industries compiled by the Federal Bureau of Statistics suggest that production dropped 5.71 percent in eight months and 7.91 percent in February 2009 compared with the same month last year.

This suggests that loadshedding, political and economic uncertainty and perhaps a global recession have started adversely affecting Pakistans industrial sector. Adding fuel to the fire is the high interest rate environment and apparently uncontrollable inflation. 

This is likely to signal a further slow-down in economic activities, an increase in joblessness and poverty and negligible gross domestic product (GDP) growth  perhaps even lower than 2.5 percent this year. 

The production of petroleum products dipped 10.77 percent from July 2008 to February 2009 when compared with the same period last year. The production of petroleum products declined 8.40 percent in February 2009 over the same month last year. 

Large-scale manufacturing recorded by the federal ministry of industries, comprising 25 industries, fell 4.61 percent in February and 5.71 percent in eight months. 

Likewise, provincially big industry production went down 13.46 percent in February and 5.30 percent in eight months of the current financial year.

Out of 90 large-scale industries, the production of 60 items dropped while others remained static or improved. In the petroleum sector, diesel production fell by 31.36 percent. This suggests that not only the transport sector was performing below par but that the agriculture sector was also under pressure.

The production of trucks, buses, jeeps and cars declined 35 percent, 51 percent and 48 percent, respectively, in the period under review. 

This means that the automobile sector produced just 367 buses, 1,857 trucks and 57,000 jeeps/cars in the first eight months of the current financial year. On the positive side, tractor production increased 8.69 percent in eight months. Also, Pakistan Steel Mills coke production increased 55 percent.

.:: SAMAA - Biggest Pak industrial output dip in 2 decades


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## sohailbutt

*KSE-100 Index slips 25 points on profit taking​*KARACHI: Profit taking continued on the second day at the Karachi Stock Exchange (KSE) as 100-Index slipped 25.77 points to close at 7,807.08, dealers said.

The turnover volume also soared to 282.605 million shares as prices of 221 sustained losses and 107 scrips recorded gains and 14remained unchanged.

A dealer at a leading brokerage house said that market witnessed a volatile day on heavy selling. The market was bullish in the morning, but fell on heavy selling as Index went down as low as 7600level.

However, the market recovered on some buying before the close of day's session, he added.

The market capitalization was eroded by about Rs 10.8 billion toRs 2.334 trillion. Jahangir Siddiqui was the volume leader on the second consecutive day with a turnover of 25.497 million shares followed by Fauji Fertilizer 19.257 million shares, D G Khan Cement 18.003 million shares, OGDC 14.884 million shares and Bank Al-Falah 14.828 million shares.

Bank Al-Falah closed at 13.11, NBP 106.99, PTCL 19.76, Lucky Cement 58.17, OGDC 80.26, Nishat Mills 39.86, D G Khan Cement 29.87and Jahangir Siddiqui Co 43.24.

Wyeth Pak recorded the highest gain of Rs 32 to close at 1449.50 followed by Attock Petroleum which went up by Rs 10.31 to 307.28 while Colgate Palm dipped by Rs 15 to 292 and Pak Oilfields went down by Rs8.61 to 169.11.

KSE-100 Index slips 25 points on profit taking - GEO.tv


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## sohailbutt

*Three more KPT berths go out of action​*KARACHI: The port authorities on Monday suspended discharge of coal on three KPT berths at the East Wharf owing to damage suffered by the berths due to movement of heavy cranes not designed for berths.

According to official sources, the coal discharge was stopped after the deputy conservator (DC) was directed by the Planning and Development Department to stop using berth Nos. 1, 2 and 3 for unloading of coal.

The KPT had been using these berths for the last three years for unloading coal for which heavy cranes were used. Therefore, stresses created by the load and movement of these cranes caused damage to these conventional berths, which were not designed to be used for such heavy operations, official sources disclosed.

The port authorities have now allocated berth 4 and 5 at East Wharf for coal discharge, which is widely used by cement industry, source said.

The incident has deprived the Karachi Port of 11 berths because eight berths (10 to 17) had collapsed two years ago during heavy rains. 

The debris of some of the collapsed berths is yet to be removed, while others are under construction, sources said.

There are in all 27 berths with three oil piers at the port. However, after three more berths went out of operation, about one third of ports cargo handling capacity will remain unutilised for some time.

Port and shipping experts told Dawn that instances indicated how the KPT was taking care of its assets and is also a manifest of sheer negligence and lack of maintenance by the P&D department.

A KPT insider told Dawn that the damage was so severe that the RCC filling would have to be made with steel mesh to reinforce the damaged surface of the berths.

However, due to shortage of berths the port, authorities are temporarily allowing loading of cement at berth No 1, 2 and 3, which would be only done by ship cranes. 

Similarly, fertiliser is also reported to be handled in the same way to further restrict damage to these berths.

Experts further said that port authorities are planning to spend billions of dollars on a mega deep sea port, which is yet to be technically proven through hydraulic lab tests, but are not taking care of existing port assets.

They further said that global economic slowdown has forced many giants in port and shipping industry to shelve or freeze their new projects as well as expansion plans but KPT is moving ahead to develop Pakistan Deep Sea Container Terminal at Keamari Groyne.

DAWN.COM | Business | Three more KPT berths go out of action


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## sohailbutt

*Tokyo donors meeting​*It is argued by some that the physical battle against militancy has been a drain on Pakistans resources. Seen in this light, the prime ministers adviser on finance is stretching a point when he says that health and education suffered over the last few years because funds had to be diverted towards security needs.

The fact of the matter is that healthcare and education have been routinely neglected by successive governments, irrespective of their ideology or the geopolitical needs of the hour. The word from Islamabad is that Pakistan will be seeking $4bn at an international donors meeting in Tokyo on April 17. Japan alone, it is said, may commit to an outlay in the region of $1bn. On paper at least, these funds are to be spent on health, education and poverty alleviation  areas that are clearly interconnected  over the next two years. 

Access to healthcare and schooling are of course basic human rights that must be respected across the globe. On one level there is the unacceptable human misery associated with disease, illiteracy and poverty. There are tens of millions of people in this country who spend a lifetime in conditions that others from more privileged backgrounds would not bear for a day. 

On a wider level, no developing country can hope to prosper until it ensures that the majority of its citizenry and workforce is healthy and educated. In the context of Pakistan, there is another pressing reason why the social sectors cannot be neglected any longer. Poverty, hunger and illiteracy are preyed upon by the Taliban who draw most of their recruits from among the ranks of the marginalised and ideologically susceptible. An educated populace with prospects is less likely to be tempted by the call of extremist ideologies.

The final numbers are not known yet. Nor is it clear how the funds pledged in Tokyo will be utilised. Will the money go directly to the government or will it be channelled through intermediary organisations and private-sector implementing authorities? The latter option may not be acceptable to Islamabad. 

As such, to ensure transparency in execution  never the forte of Pakistani officialdom  we may profit from a combination of non-governmental and public partnerships in which each learns from each and helps keep an eye on the other. Any money received for healthcare and education must be wisely invested and with honesty of purpose. We can make or break our future. The latter should not be an option.

DAWN.COM | Business | Tokyo donors? meeting


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## sohailbutt

*Japan agrees to provide aid for KCR, two other projects​*ISLAMABAD (April 15 2009): Japan has agreed to provide assistance for three projects, including Karachi Circular Railway project (KCR), sixth secondary transmission and grids project of Gujranwala Electric Power Company (Gepco) and New Khanki Barrage. Japan may make formal announcement in the Friends of Democratic Pakistan (FoDP) meeting scheduled in Tokyo on April 17.

The sources revealed to the Business Recorder on Tuesday that the government had requested Japan to provide assistance for 20 projects that also included Neelum Jhelum hydropower project and Bhasha dam, but Japan agreed to extend support for three projects. The assistance will be provided through Japan International Co-operation Agency (Jica).

The consultant Scott Wilson Railways, UK, appointed by Pakistan Railways revalidated the feasibility study report on revival of KCR. The draft report of the consultant advised to conduct detailed feasibility study of the project. The Jica has already undertaken the supplementary studies, including demand traffic forecast model and environment impact assessment (EIA) studies.

The loan will be STEP loan repayable in 40 years, including 10 years grace period. The length of revival of KCR project is 49.1 kilometres and the cost is 872.316 million dollars. Under the STEP loan, Pakistan would ensure import of 70 percent material for the project and 30 percent locally produced material to be used to complete the project, sources said.

Japan has also agreed to provide assistance for project "sixth secondary transmission and grids project, to be undertaken by the Gepco, costing Rs 5173.331 million with foreign component of Rs 1200.285 million. Under the project, the transmission lines of the Gepco will be improved and its network will be extended. The Punjab Irrigation Department has planned the construction of a new barrage at Khanki and PC-1 of the project has been prepared. The Jica is expected to provide assistance for the project.

Pakistan is also seeking assistance from Islamic Development Bank (IDB) to provide financing for Diamer Bhasha dam and Neelum Jhelum hydropower project. The IDB has initially indicated to provide 30 million dollars for Bhasha dam in 2011.

Pakistan requires 11.4 billion dollars for Diamer Bhasha dam against earlier estimates of 6.5 billion dollars in 2005. The government will establish a consortium of all major multilateral and bilateral donors, led by the Asian Development Bank (ADB), before the next budget for funding the construction of Diamer-Basha Dam. The IDB may also become part of the upcoming consortium for investing into Basha Dam.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*US to make Pakistan pledge but backs strings​*WASHINGTON (April 15 2009): The United States said Tuesday it planned an aid pledge to Pakistan at this week's conference in Tokyo but rejected Islamabad's pleas that its assistance come without conditions. "We'll be making a pledge," State Department spokesman Robert Wood told reporters. He declined to give details ahead of Friday's conference in the Japanese capital.

US President Barack Obama, vowing a new focus on rooting out extremism from Pakistan, has already thrown his support behind a bill in Congress to triple non-military assistance to Pakistan to 1.5 billion dollars a year. But Wood said the United States would go ahead and establish "benchmarks" for progress:

"We want to see certain standards and goals met," he said. "I think you would expect when the US taxpayer is providing money, assistance to a country, that we want to make sure that we're not only getting our money's worth but that certain things that we care about we want to see that they be dealt with," he said.

He did not specify conditions, but Obama last month said Pakistan should take stronger action in rooting out al Qaeda extremists, who are believed to be holed up in areas bordering Afghanistan. Obama, in backing the aid package, called it a "down payment" for future security despite strained US financial resources due to the economic crisis. The World Bank said Monday that Pakistan could get pledges of between four and six billion dollars at the Tokyo donors conference, to be attended by Pakistani President Asif Ali Zardari.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Fehmida for enhanced Sino-Pak economic co-operation​*ISLAMABAD (April 15 2009): Speaker National Assembly Dr Fehmida Mirza Tuesday said the relations between Pakistan and China were exemplary and would be further strengthened through enhanced economic co-operation. She said this while talking to a six-member Chinese delegation of Shanghai Academy of Social Science (SASS) headed by its Vice President Huang Renwei, who called on the Speaker in the Parliament House Tuesday.

The Speaker said China was a great emerging economic power in the world and there was lot for Pakistan as well as countries in the region to benefit from its experiences. She said Pakistan and China have commonality of views on all regional and international issues and there was a need to further strengthen these relations through frequent parliamentary interaction.

The Speaker said that the variety of economic projects in Pakistan were infusing strength and proving a source of great economic activity. The Speaker said that security and prosperity were the common objectives of the two countries for which effort needed to be expedited.

Fehmida said that the country at the moment was facing a number of challenges, which would overcome soon with the support of people and friendly countries like China. The Head of the Chinese delegation Huang Renwei said that China understands well the strategic importance of Pakistan and it believes that economic development in the area was essential for security of the region. He said that China believed that a stable Pakistan was necessary for regional prosperity and assured full support in this regard.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Government to promote use of CETPs in Punjab Industrial Estates​*FAISALABAD (April 15 2009): Industries based in Punjab are discharging toxic and persistent waste into fertile croplands, rivers, and groundwater sources due non-availability of wastewater treatment facilities. It is obvious that wastewater treatment facilities are too expensive for the most individual units to afford.

Keeping in view this difficulty, the Government has tried to promote the use of Combined Effluent Treatment Plant (CETPs) in Punjab Industrial Estates, said ADB update study. According to report, the two CETPs set up in Korangi and Kasur were subjected to long delays during implementation, and continue to face operational problems owing to unclear institutional arrangements and regulations.

In 2005, the provincial government established the Punjab Industrial Estates Development and Management Company, which has a development fund of Rs 3 billion and oversees seven CETPs across the province. This is an opportunity for ADB to introduce effective, competitive, efficient, and sustainable arrangements for the implementation and management of CETPs. The project investment cost is estimated at 77 million dollar, including taxes and duties worth 3.5 million dollar. The total cost includes physical and price contingencies, as well as interest and other charges during implementation, ADB report mentioned.

Commenting over the "Continuous Water Supply (CWS) in Zones of Karachi and Sindh's Secondary Cities," ADB report said that almost 100 percent of the samples of piped water in Karachi are contaminated at point of entry/use by bacteria of fecal origin. While the provision of an intermittent water supply is standard practice among water utilities, it is less than satisfactory from a health point of view. Moreover, the uncertainty of supply has led the households installing suction pumps that worsen the contamination.

Under the Country Partnership Strategy (CPS), focal area 3.1 calls for enhancing competitiveness of cities. ADB is already engaged in turning around the water supply and sanitation, and SCIIP is forthcoming to continue the engagement.

However, the outcome performance indicator in the design and monitoring framework for SCIIP is to enhance the duration of intermittent water supply from 2 hours to 12 hours daily. This is another opportunity for ADB to support the conversion from an intermittent to a CWS, zone by zone, in Sindh's secondary cities.

Commenting over the "Integrated Solid Waste Management Systems for Upper Sindh Secondary Cities," ADB report mentioned that most of the municipal solid waste generated in Sindh Secondary Cities is open dumped within or just outside the city boundaries. The waste is not spread, compacted or covered. Municipal solid waste should be segregated at source. There should be primary collection from the doorstep, and the use of streets for open dumping of wastes should be discouraged. Waste should be transported in covered vehicles, and degradable materials should be processed for composting or power generation. SCIIP envisages sanitary landfill sites, but a sanitary landfill requires a population of around one million people for economical operation. Under this ongoing project ADB can support for a proper regional sanitary landfill facility for Upper Sindh secondary cities for final disposal of non-bio-degradables.

According to ADB study, Capacity Building for Environmental Management System has become a crucial part of establishing and maintaining industry and the country competitiveness. Pakistan lags behind in achieving EMS certification, such as ISO 14001, and this has affected the export competitiveness of its industry sector.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*PARB approves 18 agricultural projects worth Rs 359.8 million​*LAHORE (April 15 2009): Punjab Agricultural Research Board (PARB) has given approval of 18 agricultural projects worth Rs 359.8 million to carry out research in wheat, rice, vegetables and cotton crops. The approval was accorded at the 18th meeting of the PARB board of directors held here on Tuesday with the Punjab Agriculture Minister, Malik Ahmad Ali Aulakh.

All these projects will be completed in three to five years. The Board will review progress on these projects every six months and funding would be stopped of any project in case of unsatisfactory progress was observed. The meeting also decided to acquire services of senior researchers and experts of foreign universities.

These projects include five projects for wheat, two for cotton, four for rice, four for fruits, one project for oilseed development and two for vegetables. Out of these seven projects are of University of Agriculture Faisalabad worth Rs 115 million, two projects of Punjab University worth Rs 54 million, one project of CABI International worth Rs 38 million and one project of University of Sargodha worth Rs 28.25 million.

According to the sources, these projects include research to look for remedy for Leaf-Curl virus disease in cotton (CLVC), getting more production with less use of fertilisers in non-irrigated areas, new and better variety of mangoes and research to reduce expenses on transporting fruits and vegetables to markets from farms.

These also include preparing a new variety of wheat suitable for drought hit areas and paddy variety for salinity affected areas. The meting also decided to give five gold medals to the five top five agricultural scientists this year and allocated a sum of Rs 0.5 million in this regard.

The Minister for Agriculture, Malik Ahmad Ali Aulakh emphasised to promote demand driven research to address farmers' problems for meeting food requirements. The meeting was attended among others by the Secretary Agriculture Punjab Arif Nadeem, Chief Executive PARB Dr Mubarak Ali, Vice Chancellor Agriculture University Faisalabad, members of the Punjab assembly and other board members.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Friends of Pakistan meeting: Pakistan to seek $10.8bn debt swap from Paris Club countries​*
ISLAMABAD: Pakistan would seek debt swap facility to the tune of $10.8 billion from 19 countries members of Paris Club at the forum of Friends of Democratic Pakistan forum, official sources told Daily Times on Tuesday. 

Paris Club member countries include Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, Netherlands, Norway, Russia, Spain, Sweden, Switzerland, United Kingdom and United States. 

Pakistan would table its request at FODP meeting scheduled at Tokyo on April 17, however, bilateral negotiations would be held with these member countries separately later on, the official sources added. 

Possibility to conduct debt swaps: According to the mechanism available with Paris Club member countries for debt swap, on a voluntary and bilateral basis, the government of each creditor country or its appropriate institutions may sell or exchange, in the framework of debt for nature, debt for aid, debt for equity swaps or other local currency debt swaps : (i) all ODA loans ; (ii) the amounts of other outstanding credits, loans and consolidations. All elements necessary to evaluate the operation, its impact on Pakistans economy and on the evolution of creditors exposure will be transmitted to the Secretariat including. 

Paris Club creditors agreed on January 23, 2001 with the Government of the Islamic Republic of Pakistan to a restructuring of its public external debt. Representatives of the creditor countries welcomed the efforts at economic recovery undertaken by Pakistan, and supported by a Stand-By Arrangement approved by the International Monetary Fund on November 29, 2000. 

The agreement provides for the rescheduling of roughly $ 10.8 billion consisting of arrears as of November 30, 2000 and of maturities falling due between December 1, 2000 and September 30, 2001. 

Paris Club creditors agreed on December 13, 2001 with the Islamic Republic of Pakistan to a restructuring of its public external debt. Representatives of the creditor countries welcomed the efforts for economic recovery undertaken by Pakistan, supported by a three- year arrangement under the Poverty Reduction and Growth Facility with the International Monetary Fund, approved by the Executive Board of the Fund on December 6, 2001. 

The agreement provides for a comprehensive restructuring of a stock of debt amounting to $12.5 billion as of November 30, 2001. The restructuring is conducted according to the following terms : commercial credits are to be repaid over 23 years, with 5 years of grace and progressive payments, at the appropriate market rate ; Official Development Assistance credits are to be repaid over 38 years, with 15 years of grace at in interest rate at least as favourable as the concessional rates applying to those loans. 

Taking into account the current situation of Pakistan, the Participating Creditor Countries decided to grant the Islamic Republic of Pakistan substantial cash-flow relief during the program period. They decided to defer between November 30, 2001 and June 30, 2002 the maturities of post cut off date debts as well as the interest payments due on the restructured amounts. During the following two years, 20 percent of interest payments will also be deferred.


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## Neo

*Proposal on 1,000 megawatts power from Central Asia vetoed by Cabinet ​* 
ISLAMABAD (April 15 2009): The Cabinet has 'vetoed' a long-debated proposal of the Ministry of Water and Power regarding import of 1000 MW electricity from Central Asia -South Asia (CASA) until the project's tariff, economic feasibility and other issues are resolved, sources close to the Ministry's Additional Secretary, Zarar Aslam, told Business Recorder.

The project had been overwhelmingly pushed by World Bank, Asian Development Bank (ADB) and US government. Now, ADB is least interested in the project due to geo-political situation of the region. Last year, the Ministry of Water and Power had inked Memorandum of Understanding (MoU) with the Ministers of CASA countries, but did not get Federal Cabinet's nod before signing the agreement.

The Ministry, sources said, had submitted a summary to the Cabinet for ex post facto approval to the MoU and agreement for import of electricity from the CASA market, which was not cleared by the Cabinet in its meeting on April 8, 2009, they added.

"The Cabinet observed that the decision to import electricity could be taken only after its tariff/import price was estimated, and its economic feasibility conclusively established, in comparison with the existing sources including rental plants," sources said.

Official documents, obtained by this correspondent, show that Pakistan's team, IFI consulting teams and the representatives of the US government had met over July 3l-Aügüst 2, 2008 to discuss the CASA 1000 mw project and reached the following consensus, which is to be considered as a recommendation to the IGC for endorsement.

*INSTITUTIONAL STRUCTURE* The concession would now also include the Kyrgyz-Tajik link (aka AC facilities). The concession company would develop, construct and operate Tajik-Afghan-Pakistan transmission system (aka the DC facilities) as well as construct Kyrgyz-Tajik link. A decision on whether to also include the operations and maintenance of the AC facilities in the concession is under consideration.

*TRADING ARRANGEMENTS* In the first IGC meeting over VC, it was considered in principle that Barki Tojik (Tajikistan) could be the consolidator in the initial phase which would require Kyrgyz Genco to sell power to Barki Tojik (at the Tajik-Kyrgyz border) on the Kyrgyz-Tajik link (which is part of the CASA 1000 mw project) and Barki Tojik will then sign a single PPA each with DABM/DABS and CPPA. But this was subject to further discussion.

The documents further said that decision was reached to consider concluding a joint commitment of energy from Kyrgyz Republic and Tajikistan. While they may conclude separate direct PPM with the purchasers, they will make arrangements for close co-operation on energy delivery and storage to meet their joint commitment.

*LEGAL FRAMEWORK* There will be a single concession agreement. The legal advisors will examine the need for host country agreements, one with each country, to capture the country-specific rights and obligations (eg tax, labour laws) and concessionaire's rights and obligations to that country (environmental, social).

*ENERGY FLOWS* Until additional exportable capacities are developed, Kyrgyz Republic and Tajikistan should together firmly commit 5 TWh flow on average per year through the line during the operating period of the concession agreement (which will be 25-30 years) to be delivered during the summer months. Roughly speaking, Tajikistan should commit to 3 TWh and Kyrgyz Republic to 2 TWh. Exporting countries will invest to cover the load growth and, in doing so, they can maintain the summer surplus.

Once the line is constructed, the options for additional generation include upgrading existing facilities and constructing new generation projects. This could include thermal projects which would allow for non-summer power to be exported. The long-term objective of all the parties is to stimulate additional low cost generation to expand the CASA regional electricity market and all parties agree to ensure the conditions for early implementation of new generation capacity.

*INVESTMENT AND FINANCING* The inter-government negotiators had recognised that there had been increases in costs, in part because of demand for electricity equipment and in part because of commodity price increases (eg for steel and aluminium). The final project cost will be determined through the bidding process.

For purposes of determining the threshold to be used during the tendering process, the EPC cost to be used will be $774 million (DC: $574 million, AC: $200 million) as estimated by SNC (June 2008 prices). In addition, other costs are included in the total project cost in the model such as supervision by owner's engineer, interest during construction, environment and social mitigation costs, and other financing costs. ADB has noted that this EPC price does not include contingencies. Both components are to be financed 100 percent under CASA-1000 mw project. Additional financiers will be needed to be brought in to fill any financing gaps.

*PROJECT TENDERING TRANSMISSION TARIFFS* Average transmission tariff estimates for the TSA will be the ones calculated by IFC/Infra Ventures incorporating the assumptions referred to in the investment and financing. These tariff estimates will be adjusted once the final EPC is determined during the tendering process. IFC/Infra Ventures will recommend options for transmission service pricing between sellers and buyers as a basis for TSA negotiations.

*WORKING ARRANGEMENTS* The countries agree to authorise their advisors to meet for the purposes of advancing the agreement on the commercial terms of the project without the presence of IGC members and the need for formal meetings. However, each country's advisors will be responsible for seeking necessary approval of all proposed contractual terms.

*ROLE OF IFC INFRA VENTURES* The governments and the IFIs also recognised that IFC/Infra Ventures is contributing to the development of the project by preparing appropriate terms and documents and a financial model for consideration and negotiation by other project parties.

In elaboration of the agreed principle during the first IGC meeting via videoconference, for the early stage efforts and the risk taken by IFC/InfraVentures, an amount equal to 110 percent of the expenses incurred by IFC/InfraVentures will, if the project reaches financial close with a private investor, be convertible into an equity investment in Concession Co.

Each of the governments and the IFIs had acknowledged that IFC/InfraVentures is acting as a surrogate for a private sector project developer and not as an advisor to any government. The government and IFC/InfraVentures will conclude an agreement elaborating this arrangement at the appropriate time. Sources said that the Cabinet has accorded approval of the MoU, which is not binding, as proposed by the Ministry.

Ex post facto approval of the inter-governmental agreement was, however, deferred till tariff/ import price of electricity from these sources was estimated conclusively, established economic feasibility in comparison with the existing sources, including rental plants.


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## Neo

*To Tokyo with great expectations ​*
Eisuke Suzuki 

ARTICLE (April 15 2009): Japan and the World Bank will co-host a Pakistan Donors Conference on April 17, 2009, in Tokyo. It is expected that Pakistan will present its strategy for the challenges it faces today along with its assistance needs. During the Donors Conference it is also expected that countries and international organisations will pledge additional resources to support Pakistan's efforts.

On the same day in Tokyo, the Government of Pakistan will hold the Friends of Democratic Pakistan (FDP) Group's Ministerial Meeting to discuss a mid-term strategy for Pakistan, and each country is expected to announce political support for the country.

For President Asif Ali Zardari, April 17 will be a very busy day as he not only heads the Pakistani delegation to the Pakistan Donors Conference, but he will also chair the FDP's meeting itself. For Pakistan in need of massive infusion of foreign aid at the dire state of national and global financial situations, expectations are understandably very high.

The "Friends of Democratic Pakistan" was organised in September last year at the initiative of President Asif Zardari to garner international support for bolstering Pakistan's security and economic situation.

At present, there are 15 countries and international bodies in the group: Australia, Canada, China, France, Germany, Italy, Japan, Saudi Arabia, Turkey, UAE, UK, USA, EU, EC and the UN. In addition, Sweden, Norway, Spain, The Netherlands and others are likely to join the forum in the near future. But the overall situation surrounding Pakistan has undergone a drastic change, both economically and militarily.

The war in Afghanistan is already in the front yard of Pakistan's leadership. According to Samina Ahmed, the International Crisis Group's long-time Pakistan analyst, the Taliban and other extremists have placed half the country beyond the control of security forces. The government had recently ceded control over the Swat Valley, 100 miles from the nation's capital, to the extremists who installed Sharia law.

The United States' renewed determination to eradicate al Qaeda elements and Taliban extremists in the tribal areas by the persistent bombing by US forces, whether by manned-aircraft or remote controlled unmanned aerial vehicles like Predators, which invariably result in the killing and maiming of civilians, is no doubt creating a rift between the Pakistani authorities and the United States. And, more importantly, it has been only reinforcing hostility to the United States among ordinary Pakistanis.

President Asif Ali Zardari himself warned the United States against violating Pakistan's territorial integrity: "We will not tolerate the violation of our sovereignty and territorial integrity by any power in the name of combating terrorism," he said in his first address to a joint session of parliament on September 20, 2008. But the reality is that attacks by drone aircraft continue today.

The extremism, for the Obama administration, has made Pakistan quite possibly the most important, and dangerous, country in the world. For the American people, President Obama announced on March 27, 2009, this border region has become the most dangerous place in the world. The New York Times Sunday Magazine published James Traub's long article, Can Pakistan Be Governed? on April 5, 2009.

Not surprisingly, it was followed by The Financial Times which ran, on April 7, 2009, an article, For America, the problem is Pakistan, written by Anatol Lieven, a professor in the War Studies Department of King's College, London. Commentaries from outside Pakistan have not been particularly encouraging.

Even Pakistan's foreign minister acknowledged that the bottom line is the question of trust between the two countries, particularly over the issue of American missile attacks in Pakistan's tribal areas.

Minister Shah Mehmood Quresh, with two high ranking American officials, the chairman of the Joint Chiefs of Staff, Adm. Mike Mullen, and the special envoy to the region, Richard C. Holbrooke, at his side, openly stated: We did talk about drones, and let me be very frank: there is a gap between us.

The foreign minister's public criticism of the US was followed by the head of Pakistan's intelligence service, Lieutenant General Ahmed Shuja Pasha's refusal to meet separately with Holbrooke and Admiral Mullen. The deep wounds between the two countries are now breaking up in open. This gap of appreciating the other party's situation between the two countries is quite big.

The war in Afghanistan is casting a wide shadow over the country as the war is being waged both sides of the border with Afghanistan. Without co-operation from not only Pakistan's authorities, but also from Pashtun population, the United States alone cannot carry out the war successfully.

That much is well understood; however, the more the United States asks Pakistan to join its military strategy, the more it creates schisms in a large majority of Pakistani citizens, who are not happy about their government helping the United States attacking the Taliban.

As I mentioned previously in this column (The War in Afghanistan II, October 29, 2008), a new strategy calls for a political settlement. Principal commanders on the ground are more or less in agreement: the solution to the war in Afghanistan is not in the military power, but in more basic improvements in the conditions of life: rehabilitation and construction of infrastructure, provision of better basic services of government, and the establishment of good governance in all public sector administration in addition to more training of Afghan troops and police force. The same applies to Pakistan's strategy against extremism.

To change the attitude and perspectives of ordinary Pakistani citizens in general and those in the tribal areas in particular will require sustained and consistent efforts over a long period of time. To do that will cost an enormous amount of investment. Just consider Marshall McLuhan's notion of social changes as the effect of new technologies (self-amputations of our own being). That would be the effect of such transformation of tribal villages in Pakistan.

The forthcoming April 17 conference will be critical for Pakistan. Pakistan is seeking between $4 to 6 billion in economic aid at the donors conference to fill a financing gap over the next two years. All donor countries, the World Bank and the Asian Development Bank, will closely examine the proposal of the Government of Pakistan for the purpose, amount and use of each item of expenditure.

The Japanese government is reported to have been contemplating economic aid of up to $1 billion over the next two years. The assistance would consist of yen loans and grant aid, and is aimed at helping poverty-stricken areas that could become breeding grounds for extremists, as well as financing infrastructure, education and job training.

They all recognise the potential linkage between poverty and the supply source of Taliban/al Qaeda extremists. In a larger context of the global decision process, these donor conferences provide an opportunity for review and appraisal by the international community of Pakistan's policy and its performance.

Apart from the obvious economic and financial questions, there are two related questions: (a) whether the Charter of Democracy of May 2006 will be implemented; and (b) whether the government is doing credible efforts in strengthening civil society by promoting transparency and accountability.

As discussed previously in this column (The emperor's new clothes and the Charter of Democracy,May 27, 2008), the history of Pakistan's political processes is punctuated by military coups, each of which was rationalised by the Supreme Court: the Dosso case of 1958, the Jilani case of 1970, and the Bhutto case of 1977. Musharraf's coups of 1999 and 2007 are no exception.

The army became the singular underwriter of the civilian government. The civilian leadership sought and cultivated the army's support to enable itself to govern. Ayesha Siddiqa ably analyses the immense economic, financial and corporate interest of Pakistan's army in her book, Military Inc.

Whether Pakistan's civilian leadership will be able to marshal its own resources and determination to govern the nation without the assistance of the army is the fundamental question to the restoration of democracy. The development of civil society is an indispensable component to that end. The only way to counter the rising force of extremism in Pakistan today is through the strengthening of civil society, I was told. Zardari is doing just the opposite.


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## Neo

*Record remittances ​*
EDITORIAL (April 15 2009): The country has been very fortunate this fiscal year to have received the much needed relief in the form of a very handsome increase in home remittances. According to the latest data released by the State Bank of Pakistan (SBP) on 13th April, the overseas workers sent the highest-ever amount of dollars 739.43 million as remittances in March, 2009, surpassing the previous record of dollars 673.50 million received in December, 2008.

The remittances during the month were also higher by 22.79 percent or dollars 137.22 million than dollars 602.21 million received in February, 2009. Overall inflow during the first nine months (July-March, 2009) amounted to dollars 5,658 million as against dollars 4,728 million during the same period last year, showing an increase of dollars 930 million or 19.66 percent.

This amount includes only dollars 0.45 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs). The highest amount of remittances was received from USA (dollars 1.29 billion), followed by UAE (dollars 1.21 billion) and Saudi Arabia (dollars 1.11 billion).

It may be mentioned, however, that amount received from USA during July-March 2009 was marginally lower than dollars 1.31 billion received in the comparable period last year. An increase of over dollars 103 million per month in home remittances is very welcome indeed, particularly at a time when other elements of current account balance of the country including the merchandise trade account were showing disturbing trends.

Obviously, if such a huge amount of foreign exchange had not been received, the country would have been forced to borrow more from other sources to keep itself solvent or constrained to restrict imports by a huge margin which would have negatively impacted the flow of essential imports.

A great advantage of home remittances is that these are unrequited transfers and do not add to the foreign debt burden of the country. No need to add that if the present trend continues, the target of dollars 7.5 billion fixed for home remittances during 2008-09 would easily be surpassed. However, a sharp increase in remittances during the year would appear to be somewhat surprising to many analysts.

Though narrowing of difference between the exchange rate offered by banks and informal channels and closer scrutiny of the money changers by the government might have induced the expatriates to send a higher level of their remittances through banking sources, the increasing political uncertainty, militancy and lawlessness within the country could have been huge negative factors impacting the flow of remittances.

Anyhow, Pakistan was lucky that overseas workers did not pay much attention to these negative developments and continued to have faith in the destiny of the country. The maintenance of such an attitude on longer term basis would of course depend on positive vibes from the country and certainly would be a great challenge for the political and economic leadership of Pakistan.

Of course, expatriates of Pakistani origin are patriots but we should not continue to mess-up the domestic scenario and test their resolve to the extreme limits. The policy makers need to understand that it is very easy for the workers based in foreign countries to maintain their bank accounts abroad in a risk-free environment.


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## Neo

*Pakistan may get $6bn in donor pledges: World Bank​*
WASHINGTON: The World Bank said on Monday Pakistan is expected to get pledges of aid from four to six billion dollars at a donors conference in Tokyo this week.

We are still making efforts, we think this is possible, Isabel Guerrero, the banks vice president for South Asia, told reporters when asked whether such an aid projection could be met at the talks on Friday.

Guerrero said 27 countries and 16 organisations would attend the conference. She said a Friends of Pakistan meeting on political and security issues would be held before the donors conference, which could also include pledges.

Hajime Hayashi, a senior Japanese embassy official, said the Pakistan government was under heavy pressure and it is naturally very important for the international community to provide fresh pledges to provide financial assistance. afp


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## Hasnain2009

During 2008-2011: external debt to reach 32.5 percent of GDP: IMF

ASMA RAZAQ/ZAFAR BHUTTA
*ISLAMABAD (April 15 2009): *The International Monetary Fund (IMF) has projected the external debt stock of Pakistan to rise, temporarily, to around 32.5 percent of gross domestic product (GDP) during 2008-2011 due to significant increase in external financing from official creditors, including the Fund itself, to help Pakistan with recent balance of payments pressure.

It has been stated by IMF in a report titled 'Pakistan: 2009 Article 1V consultation and First Review under the stand by agreement-Staff Report', released on Tuesday. Combined shocks to growth, current account, and depreciation could vault the end-period debt stock to around 45 percent of GDP, significantly higher than under the baseline scenario.

According to IMF, the debt ratio of Pakistan is projected to rise, temporarily, due to significant increase in external financing from official creditors (including the Fund) to help Pakistan with the recent balance of payments pressure. The debt stock would be around 32.5 percent of GDP during 2008-2011, and then gradually decline to 27.5 percent of GDP by 2013-14.

Pakistan's external debt burden has been relatively moderate in recent years as a result of successive debt relief undertaken in the late 1990s and early 2000s. At the end of financial year 2007-08, external debt stock stood at around 26.5 percent of GDP and debt service was about 15 percent of exports of goods and services. Most of its debt was public sector debt owed largely to official creditors, and there were limited private sector debt.

The debt service burden would increase, but remain manageable, during the projection period. Debt service as a ratio of exports of goods and receipts are projected to increase to 20 percent under the baseline scenario. This increase is sizeable but debt service burden will decline markedly following repurchase of outstanding Fund credits.

The relatively benign debt outlook under the baseline scenario is subject to serious downside risks. They include risks from higher non-interest current account deficit, lower growth, higher depreciation, higher interest rates, as well as lower FDI flows. The standard bound tests show that debt ratios are sensitive to shocks to higher current account deficits, large depreciation of exchange rate, and lower FDI inflows given the large financing needs.

The Fund said, for example, if non-interest current account deficits are higher by half of the ten-year standard deviation, the debt as a ratio to GDP would rise sharply and be over 10 percentage points higher than under the baseline scenario.

Pakistan's public sector debt burden declined through 2006/07, but has been rising since then, reflecting the expansionary fiscal stance. At the end of fiscal year 2007-08, the public sector debt stock stood at 57.4 percent of GDP, with domestic public debt 31.2 percent of GDP slightly exceeding external public debt 26.2 percent of GDP.

Interest payments 4.7 percent of GDP are a significant burden for the budget, accounting for 32.6 percent of total revenue excluding grants and 26.3 percent of current expenditures. Interest payments on domestic debt accounted for only 12 percent of total interest expenditure, partially reflecting that official creditors account for the bulk of total external debt.

The public debt ratio is projected to decline gradually, reflecting fiscal consolidation and lower interest rates in line with macroeconomic stabilisation. The stock of external public debt will increase temporarily in 2008-09 owing to external financing from official creditors, including the Fund, to address Pakistan's recent balance of payments pressure.

The total stock of public debt is projected to decline gradually to 47.5 percent of GDP by 2013-14. The burden of interest payments on the budget would be halved. The ratio of interest payments to total revenue excluding grants would decline from 31 percent in 2008-09 to 14 percent in 2013-14, despite an increase in interest expenditure on external public debt by about 65 percent in dollar terms.

The standard bound tests show that risks from shocks resulting from higher interest rates or lower growth are moderate, as they would slow down rather than reverse the medium-term decline in the public debt ratio. However, a primary balance shock as well as 30 percent devaluation and a contingent liabilities shock would lead to a perceptible increase in the public debt ratio.

Copyright Business Recorder, 2009


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## Hasnain2009

Thats why i say Musharraf is da best!!


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## Neo

*KESC to add 400MW by December ​* 
Thursday, April 16, 2009

ISLAMABAD: The federal government has managed to strike an implementation agreement (IA) with the new management of Karachi Electric Supply Company (KESC) under which it would inject $361 million investment into the power sector and in the first phase it will add 400 megawatts to the Karachi electricity system by December this year. 

Minister for Water and Power Raja Pervez Ashraf said this here on Wednesday during a press briefing. In case the new management violates the implementation agreement, he said, the government will act accordingly. 

According to an official, the prime minister has already constituted a three-member committee, which has been given the mandate to monitor the execution of the implementation agreement. About massive financial irregularities in the Private Power Infrastructure Board (PPIB), the minister said when he took charge as minister of water and power, he placed order for conducting a special audit. Now audit report has been finalised and whosoever found guilty will be sternly dealt with as per law. 

To a question, the minister said there still exists a financing shortfall of Rs185 billion between electricity generation and its supply. Although the government gives Rs65 billion subsidy, but it still bears loss of Rs100 billion meaning the PEPCO absorbs Rs10 billion loss per month. Justifying the recent hike in power tariff, the minister said the government does not want to raise it, but the matter of the fact is that the government annually absorbs the loss of Rs185 billion as power generation cost is very high. 

He said in the whole world, subsides are being reduced, but we are still extending to the masses. 

He said the electricity is still being stolen at a large scale owing to which the system is facing tremendous duress. To tackle this issue, a task force has been constituted which will have the mandate to disconcert the connection even of any influential. The minister also unveiled that the government will soon announce a mid-term renewable energy policy focusing on alternative and indigenous resources to produce electricity on affordable prices. 

Under the policy the comprehensive short and long term plans will be made to make sure all the renewable energy resources available to overcome power crises. The minister announced that Prime Minister Yousuf Raza Gilani will inaugurate the countrys first wind farm in Jhimpir on April 9. He explained that the farm, established by leading Turkish company, will meet the demand for electricity of 7,400 homes. He said the National Electric Power Regulatory Authority (NEPRA) has awarded tariff of US cents 12.1057 per KWH, which is cheaper than the electricity generated from thermal sources. However, the tariff will be further reduced to 4.5 US cents on per KWH after 10 years. Under the project five turbines have been installed in the first phase, with capacity to generate 6MW electricity, enough to cater to the power needs of 7,400 homes. 

He indicated this project would be expended in years to come in order to have the capacity to generate 50MW. He said the ministry has received tariff determination from the NEPRA however the government still didnt increase the electricity tariff. 

Justifying the decision of advancing the clocks, the minister claimed that around 250MW to 300MW are being saved per day as per the research he himself carried out. Pakistan this time will have enough water in Terbela and Mangla not only to cater to Kharif season needs. 

The minister reiterated his claim that by December 2009 the government will include additional 3,500MW electricity in the system that will erase the load-shedding after December 2009. 

He mentioned that the country possessed huge wind energy potential of 346,000MW, out of which 50,000MW in Gharo, Keti Bandar wind corridor, renders excellent opportunities for private sector developers to execute their project. With a view to supporting development of wind energy sector in the country, indigenous fabrication of wind towers has also kicked off.


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## Neo

*Foreign investment down 36pc ​* 
Thursday, April 16, 2009

KARACHI: Net foreign investment in Pakistan fell 35.9 per cent to $2.08 billion in the first nine months of the 2008/09 fiscal year compared with $3.25 billion in the same period last year, the central bank said on Wednesday.

Foreign private investment fell 19.5 per cent to $2.62 billion in the July to March period, compared with $3.26 billion the previous year, the State Bank of Pakistan said.

Out of total foreign investment, foreign direct investment was down 8 per cent to $3.04 billion, compared with $3.31 billion in the year-earlier period.

There was an outflow of $957.5 million from July to March this year compared with an outflow of $53.1 million in the same period last year.

There have been outflows from the stock market because of political uncertainty, and economic and security worries.

Foreign investors also lost confidence and sold shares when stock market authorities placed a floor under the main index in August following sharp falls. The floor was removed in December.


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## Neo

*PM happy with 98pc recovery rate ​* 
Thursday, April 16, 2009

ISLAMABAD: Prime Minister Syed Yusuf Raza Gilani has said that microfinance is an important pillar and integral part of Pakistans poverty reduction strategy and the government is making all out efforts to expand its coverage through microfinance banking, microfinance institutions and rural support programme.

Gilani expressed these views while chairing a high-level meeting on microfinance network at the Prime Minister House on Wednesday. Micro-credit is the best way of reaching out to the marginalised and the forgotten and can change the destinies of the have nots of the country, Gilani said.

The Prime Minister said government is making multiple interventions to cause reduction in poverty. As part of our lasting and sustainable poverty reduction strategy, Gilani said, we are focusing on creating income generating avenues for the poor and disenfranchised and specially the women through micro-credit institutions.

Gilani said government has adopted a holistic and all-inclusive strategy for the spread of micro-credit. The government, he added, is promoting public-private partnership and encouraging civil society organisations and enterprising philanthropists to come forward and involve themselves in organising microfinance credits to the less privileged sections of society. He said there is a growing trust between the policy makers and practitioners to work jointly to develop the sector. He expressed satisfaction over the 98 per cent recovery rate, 50 per cent rural-urban share as well as observance of gender equality during disbursement of loans.


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## Neo

*No signs of tapering off: LSM declined by more than 5 percent in first eight months​*
KARACHI: The most important indicator for the economyLarge Scale Manufacturinghas witnessed the a decline of 5.73 percent in the first eight months of current financial year, reflecting the eroding capability of industrial sector to withstand the global financial crunch along with the domestic impediments in the form of power outages and law and order situation.

With these dismal figures, further layoffs are expected in the industrial sector. Major downsizing has already taken place in the textile, auto, electronics and other key sectors. The weakness of industrial sector was not confined to one sector only as almost all the components of the large scale manufacturing performed poorly during the current fiscal and it was also evident from the month of February when it saw a massive plunge of 7.91 percent over the same month of previous year.

The worst show of industrial sector has cast a negative impact on the overall countrys economic scenario as it is the largest contributor in the revenue and employment generation. Food, textiles and apparel, and leather industries to the extent of heavily dominate Pakistans manufacturing industry over 50 percent. Other major segments in manufacturing include chemicals and pharmaceuticals (15.2 percent), basic metal industry (7.7 percent), nonmetallic mineral products (5.1 percent), machinery (4.6 percent), cement (4.4 percent) and automobiles (4.4 percent).

Though, global financial crisis has impacted the industrial activities in the country in the shape of dampened demand for the exports particularly textile and clothing from Pakistan. However, economists pointed out that it the domestic problemsinfrastructure, power, law & order situation, high financingwhich have devastated the local industry. The month of April, an analyst pointed out, is important as it would determine how the things shape up for the future of industry. Any revision in the policy discount rate by the central bank would be made in April as well as whether the government would take corrective measures to ensure the power outage because of the start of summer in next month.

Petroleum sector was the worst performer and its overall production fell 8.40 percent in first eight months of current fiscal. Jet fuel declined 8.62 percent, kerosene oil 12.38 percent, high-speed diesel 4.00 percent, furnace oil 9.14 percent, LPG 20.28 percent. In food sector, production of vegetable ghee declined by 10.86 percent, cooking oil 4.89 percent, wheat and grain milling 6.94 percent, beverages 4.06 percent. The production of tea blended and starch and its production rose 1.32 and 6.73 percent, respectively.

Production of refrigerators dropped 12.94 percent, deep-freezers 17.08 percent, air-conditioners 29.91 percent, electric bulbs 25.30 percent, electric tubes 23.85 percent, fans 6.63 percent, motors 19.29 percent, electric meters 5.66 percent, switchgears 23.36 percent, transformers 14.68 percent, TV sets 38.00 percent and bicycles 30.26 percent. Production of cotton yarn and cotton cloth declined 0.38 and 0.65 percent, respectively.

In the auto sector, the production of trucks decreased 34.39 percent, buses 50.80 percent, jeeps & cars 47.58 percent and motorcycles 18.98 percent.


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## Neo

*Govt finalises 9-year investment plan for infrastructure development​*
ISLAMABAD: Government has finalised a $3.11 billion 9-year investment plan for reduction in cost of doing business and to enhance competitiveness of the economy of the country, official sources told Daily Times on Wednesday.

To ensure required financing for the projects included in this plan the government has decided to it to place before the Friends of Democratic Pakistan as well donors at Tokyo meeting scheduled on April 17.

The investment plan seeks to upgrade Pakistans highways to neighboring countries with an estimated investment of $975 million, Railways net work expansion to neighboring countries with an estimated investment of $1.780 billion and up-gradation of ports and shipping as well as Pakistan National Shipping Corporation with an investment of $355 million, the official added.

The details of the plan available with Daily Times are

Roads: The plans seek to invest $125 million in two years on Lawari Rail Tunnel. To link Gawadar with China and Afghanistan, the investment required is estimated at $594 million for the next five years. Similarly, up gradation of Kara Kurrum Highway from Mansehra to Sazin some 258 kilometers has been estimated with an investment of $256 million in next 7 years.

Road sector plans seeks an investment of $212 million in first year, $148 million in second year, $143 million in third year, $225 million in fourth year, $216 million in fifth, $16 million in sixth and $15 million in seventh year.

Railways: This plan seeks up gradation of Quetta-Koh-I-Taftan section to link rail net worth with Iran with an estimated cost of 438 million in next four years. A new rail link for connecting Gawadar Port with Mastung and Quetta in 9 years time frame has been finalized with an estimated cost of $1.342 billion.

Ports and Shipping: This plan seeks to support for private sector to make investment in shipping sector with $100 million, developing capacity for capital and maintenance dredging (upgrading port handling capacity) with estimated cost of $50 million and $50 million for Pakistan National Shipping Corporation. This plan also seeks to invest $155 million in mineral development.

Reducing the cost of doing business: Improvement and modernisation of the transport system is important to Pakistans economy and its competitiveness. Through infrastructure improvements, including transport, the country aims to greatly reduce the cost of doing business. Transport contributes about 10 percent of GDP. Road transport accounts for 90 percent of national passenger traffic and 95 percent of freight traffic.

Pakistan has about 5.0 million vehicles on the roads, growing at about 8 percent annually. This includes about 250,000 commercial vehicles. The road transport industry is deregulated and predominantly in the private sector. Pakistans road traffic has grown at an average annual rate of 14.1percent during the twenty-year period between 1985 and 2005 (from 70,000 vehicle trips/day in 1985 to 277,000 vehicle trips/day in 2005). Pakistans inland freight and passenger traffic has grown at an average annual rate of 10.6 percent and 4.4 percent respectively during the ten-year period between 1991 and 2001. However, Pakistan Railways freight traffic has declined (by 48 percent from 11.8 million tons in 1985 to 6.1 million tons in 2005) and passenger traffic stagnated during this period. The countrys truck fleet mostly comprises obsolete, underpowered, and high emission vehicles. Often trucks are overloaded. Their speeds are consequently slow, ranging between 20 to 25 kph compared to 80-90 kph in Europe, and journeys take three times longer than in Europe.

Pakistan has a total road network of 260,000 km of which about 60 percent is paved. The road density is 0.32 Km/Sq. Km. This network has grown at about 4.2 percent annually over the past decade. The National Highway Authority (NHA) under the Ministry of Communications (MOC) is responsible for approximately 11,500 km National Highway and Motorway system (4 percent of the total) which carries 75 to 80 percent of Pakistans total commercial inter-city traffic.

The National Highway Authority (NHA) needs to spend about Rs.5.0 billion annually to simply conserve the network in its present condition. Over the past decade, NHAs maintenance spending averaged less than 6 percent of total expenditures and covered less than 25 percent of stable network needs. NHA has depended almost exclusively on transfers from the governments recurrent budget to finance its road maintenance expenditures. This has not worked, since these transfers have been inadequate.

Two major ports, Port Karachi and Port Qasim, handle 95 percent of all international trade, and 14 dry ports cater to high value external trade. A few oil pipelines  about 2,100 km in length  have a yearly pumping capacity of 6.0 million tons. Container dwell times  11 days on average  are four times those in developed countries, and three times the average in East Asia. Of this, customs clearance alone takes 4-5 days as compared to 1.25 hours in Singapore. Port entry costs are 5-9 times more than some others in the region  vessel call charges in Pakistan are $30,000, in Jebel Ali they are $6,700, and in Salalah, Oman, they are $3,900. In addition, the ports limited draught  at 9-12 meters  keeps the latest and most efficient ships from calling. Redundant dock labor costs trade $15-20/TEU.

Desired end-state: The desired end-state calls for rapidly reducing transport times and improving the sectors quality and efficiency. This applies to rail, road and the ports.

In the rail sub sector, governments priority is to improve the quality of freight services, rapidly improving delivery times, reliability and tracking information. Presently, PR takes 21-28 days to deliver upcountry at a distance of 1800 km, which is 4 to 7 times slower than in China and the US. Freight rates in Pakistan, at 1-2 cents/ton-km, offer no real advantage over road transport which costs the same. In contrast, China rail is 2-3 times cheaper than road. As a result, the railways have a very low and stagnant market share, carrying less than 5 percent of freight and 10 percent of passenger traffic.


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## Neo

*Microfinance integral to poverty reduction strategy: Gilani​*
ISLAMABAD: Prime Minister Syed Yousaf Raza Gilani has said that microfinance is an important pillar and integral part of Pakistans poverty reduction strategy and the government is making all out efforts to expand its coverage through microfinance banking, microfinance institutions and rural support programme.

The Prime Minister expressed these views while chairing a high level meeting on Microfinance Network at the Prime Minister House here this afternoon.

Micro-credit is the best way of reaching out to the marginalized and the forgotten and can change the destinies of the have nots of the country, the Prime Minister said.

The Prime Minister said the government is making multiple interventions to cause a dent in poverty. As part of our lasting and sustainable poverty reduction strategy, the Prime Minister said, we are focusing on creating income generating avenues for the poor and disenfranchised and specially the women through micro-credit institutions.

The Prime Minister said the government has adopted a holistic and all-inclusive strategy for the spread of micro-credit. The government, he said, is promoting public-private partnership and encouraging civil society organisations and enterprising philanthropists to come forward and involve themselves in organising microfinance credits to the less privileged sections of society.

The Prime Minister underscored the need that microfinance network should expand its operation to help the less privileged sections of society thus improving their standard of living. He said in Pakistan microfinance is poised for growth, as the regulatory environment for micro finance institutions (MFIs) in the country presents all the major features of a conducive and enabling policy environment for MFIs. staff report


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## Neo

* FoDP pledge $5.28 bn to help stabilise Pakistan: FM ​*
Friday, April 17, 2009 

KARACHI: Foreign Minister Makhdoom Shah Mehmood Qureshi said on Friday that Friends of Pakistan (FoDP) have pledged up to 5.28 bn dollars to help stabilise Pakistan in Tokyo ministerial meeting.

Talking to Geo news, the foreign minister thanked all donor countries who extended their support to Pakistan to meet countrys economic challenges and effectively address the issue of terrorism. Qureshi also thanked the government of Japan in organising the donors conference.

He said Iranian foreign minister announced to launch Iran-Pakistan gas pipeline project and promised 330 million dollars which would help Pakistan meet its energy requirements. Qureshi said the donors pledged unconditional economic support for Pakistan. 

To a question, the foreign minister said that Pakistan would get the pledged amount within two years. He said the date of new FoDP would be announced after consultations with the Turkish foreign minister. 

Qureshi said that Pakistan played a vitally important role in efforts of the international community to counter terrorism and extremism.


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## Neo

* IMF says Pakistan must focus on tax reform, reduce inflation ​* 
Friday, April 17, 2009

TOKYO: Pakistan must focus on reforming its tax system and lowering inflation to restore its economy, but political instability is a key risk to growth, the International Monetary Fund said on Thursday ahead of a donors conference.

Allies of cash-strapped Pakistan meet in Tokyo on Friday to pledge aid and seek assurances from the nuclear-armed country that it will implement economic reforms and take more urgent action against an increasingly formidable Islamist insurgency.

While Pakistans economic policies are on the right track, the global economy has worsened and the domestic political environment is a risk, said Adnan Mazarei, IMF assistant director for the Middle East and Central Asia department.

I would be remiss if I do not mention that a key risk to Pakistan is political, Mazarei, mission chief for Pakistan, told Reuters in an interview.

The private investors and the financial market players that we often ask, they point to political uncertainty as a key factor.

The international community is worried an economic meltdown in Pakistan, which narrowly averted a balance of payments crisis last year with a $7.6 billion IMF loan, could fan popular support for al Qaeda and other militant groups.

Pakistan hopes Fridays meeting of donors ñ including Japan, the United States and the European Union  will pledge $4 billion to fund efforts on poverty alleviation, education and health.

Mazarei said Pakistan needed to focus on controlling its budget in the near term, by starting tax reforms and making sure revenues are secured so authorities could then focus on longer-term issues such as reducing poverty.

It is critical that this revenue problem is addressed, with two lines under the word critical, he said.

Otherwise, the social services that are needed will not be provided, the public investment that is needed will not be provided.

He added that Pakistans inflation, which has eased from a record high of 25.3 per cent in August to 19.07 per cent in March, was still stubbornly high, but added that its external reserves position had improved and its exchange rate had stabilised.



Not alone 

Pakistan is central to US President Barack Obamas plan for South Asia, which includes trying to stabilise Afghanistan, where Taliban militants  many operating from lawless northwest Pakistani enclaves  have thrown US success into doubt.

In a gathering ahead of the donors meeting on Friday, Pakistan is expected to assure its allies of its commitment to tackling economic and security problems.

Pakistan, at the Friends of Pakistan ministerial meeting, is also expected to present a prioritised wish-list of projects it has drawn up worth $30 billion, which it wants to see implemented over the next 10 years.

The projects include hydro-electric dams, roads, and projects aimed at improving security in its violence-plagued northwest on the Afghan border.

A UN official hoped the talks on Friday would lead to a longer-term dialogue to support socio-economic development.

The Friends of Pakistan will show, through their pledges, that they are ready to stand by Pakistan in its development process, that Pakistan is not alone in its struggle, Fikret Akcura, the Resident Representative for the United Nations

Development Programme in Pakistan, told Reuters in an interview. And hopefully this commitment will continue, that its not short-term effort.


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## Neo

*Pakistan, Azerbaijan focus on energy, privatisation ​* 
Friday, April 17, 2009

ISLAMABAD: Azerbaijans Ambassador to Pakistan Dr Eynulla Madatli on Thursday said that Pak-Azerbaijan Joint Ministerial Commission (JMC) was exploring new avenues for focusing on various sectors including information technology, oil and gas, energy, privatisation and investment.

Azerbaijan intended to benefit from the experience of Pakistan in services, transport, privatisation and investment, the diplomat stated this in a meeting with Syed Naveed Qamar, Federal Minister for Privatisation here.

Naveed Qamar said that Pakistan has the largest privatisation programme and the fairly big experience in South Asia, which can be mutually beneficial for entrepreneurs of the entire region including Azerbaijan. He lauded the efforts of the envoy for promoting economic relations and further cementing them.

The minister informed the envoy that privatisation process has been given new dimension with the promulgation of the new privatisation policy for associating the private sector through Public-Private Partnership mode, which was the real engine of economic growth and could ensure efficiency, increase in production, bring in fresh investment and expand operations with latest technologies and ensuring job opportunities.

He assured the envoy of full assistance for benefiting from Pakistans experience in establishing regulatory regimes and privatisation and investment activities. The government always gave priority to bring the private sector forward through the best privatisation programme in a most transparent, open and fair manner, he added.


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## Neo

*Pakistan seeks preferential market access to EU ​* 
Friday, April 17, 2009

ISLAMABAD: Pakistan is seeking preferential market access to the European Union (EU) and a political will can go a long way in helping the country achieve this goal, said Federal Minister for Commerce, Makhdoom Amin Fahim.

Ambassador of France, Daniel Jouanneau, High Commissioner of Bangladesh and Ambassador of Turkmenistan, Sapar Berdiniyazo separately called on the federal minister here on Thursday.

Secretary Commerce Salman Ghani and other officials of the Ministry were also present in these meetings. Pakistan is facing law and order problem and we have spent US$35 billion on this subject and to revive our economy, we want trade and business access to advanced markets, he added.

Fahim said that the country's priorities are maximum export and access to the EU market, which is one of the largest trading partners.

The Ambassador of France said that they encourage French companies to view Pakistan positively, because it has tremendous economic potential in different sectors.

Economic sectors like power and energy need help in Pakistan, the Ambassador added. 

The High Commissioner of Bangladesh also called on the federal minister for commerce.

The minister expressed that both countries were enjoying excellent and cordial trade relations. He also expressed his warm feelings for the people of Bangladesh and showed interest in exchange of trade delegations between the two countries.

The minister asked that work on the Early Harvest Programme be accelerated. 

The minister, while talking to the Ambassador of Turkmenistan, suggested that they come up with some proposals on how to increase bilateral trade.

Trade between the two countries is restricted to a few items like textile, surgical instruments and rice, which need some diversification, the Ambassador pointed out.


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## Neo

*IFC invests $50m in Packages ​* 
Friday, April 17, 2009

ISLAMABAD: The International Finance Corp (IFC), a member of the World Bank Group, is making a $50 million equity investment in the Packages Limited, Pakistans largest paper and board producer, to support a socially-responsible company that directly provides jobs for nearly 3,500 people and indirectly for about 27,000.

According to a statement issued by the IFC, the investment will help Packages enhance the companys capital base, improve cost competitiveness and strengthen its ability to cope with the effects of the global economic crisis. With IFCs support, the company will also undertake several programmes designed to have a positive impact on climate change. These include increased waste-paper collection and installation of waste-heat recovery systems and closed-loop systems for water at company factories.

IFCs Director for Middle East and North Africa Michael Essex, said: This investment underscores IFCs commitment to providing its clients with capital and other support to help them withstand the global economic crisis.


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## Neo

*Pakistan may become leading dairy producer by 2020 ​* 
Friday, April 17, 2009

KARACHI: Pakistan, having a vast potential in dairy production, is gaining momentum to emerge as an important player in the sector and lead the world by 2020.

Engro Foods Pakistan Chairman Asad Umer stated this while speaking on The Dairy Business at a forum organised by the Food Association of Pakistan the other day.

Asad said Engro Foods was projected to be the biggest business of Engro Company in the next five years.

Commenting on the challenges faced by the local dairy sector, he said existing knowledge gap, scattered animal holdings, poor milk collection infrastructure and legal framework on land availability were some of the main hurdles in the way of developing dairy farming in the country.

He said Pakistans dairy sector would emerge on the world scene as a significant producer by next year, as his companys board of directors has approved to go global shortly.

During the forum, PFA President Rafiq Rangoonwala, Vice President Syed Farukh Mazhar, General Secretary Umer Qasim, Razi Ahsan and Azfar Ahsan highlighted the aims and objectives of the association.


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## Neo

*FoDP conference: Pakistan lobbying hard for multilateral support in Tokyo​*
ISLAMABAD: Pakistan is keen to get firm commitment from bilateral donors on market access from USA, EU and Japan, $7 billion oil supply on deferred payment basis, $3 billion securitization of remittances from Saudia and UAE during the Friends of Democratic Pakistan (FoDP) meeting and Donors Conference scheduled today (Friday) at Tokyo, official sources told Daily Times on Thursday.

USA: Pakistan would try to get firm commitment from United States to initiate Free Trade Agreement (FTA) negotiations to offset losses sustained by Pakistan as front line state in war against terrorism. Similarly, it would also seek early finalisation of Bilateral Investment Treaty (BIT) on mutually agreed terms, the sources added.

Second demand that Pakistan would place before the US authorities is to ensure investment with buy back arrangements to promote private investment from US companies. Pakistan would also request the US authorities to allow industrial units to be set up Balochistan eligible for incentives of Reconstruction Opportunity Zones (ROZs) package.

EU: In the area of market access and economic cooperation, Pakistan would pursue European Union to agree on initiation of FTA negotiations to compensate Pakistans losses in war against terror. As an interim arrangement until the finalisation of FTA, Pakistan has already placed a demand before the European Commission (EC) to include Pakistan in Generalized System of Preferences, GSP+ scheme for next few years.

Japan: Japan being major investment partner, is maintaining higher import tariffs on agriculture commodities. In the area of market access and economic cooperation, Pakistan would seek market access for its agriculture commodities in the Japanese market by entering in to a preferential trading arrangement for Pakistan.

Saudi Arabia: Pakistan has been enjoying for years the Saudi Oil Facility (SOF) in the recent past and is trying to convince Saudi authorities to restore it for the next 2 years at a level of $5 billion oil facility on deferred payment basis.

UAE: Pakistan has plans to hold talks with UAE authorities for provision of oil worth $2 billion on deferred payment for next two years to ease out its balance of payment difficulties.

Pakistan is expecting $7 billion remittances in the current fiscal year from overseas Pakistanis mainly from Saudia Arabia and UAE and has plans to securitise it. This facility would help Pakistan enhance its foreign exchange reserves at a comfortable level as well as improve its credit rating.

Paris Club: Pakistan would also get initial feed back on its request relating to debt swap of $10.8 billion from Paris Club member countries. Debt Swap would be sought for conversion of debt in to development aid for social sectoreducation, health and other basic facilities for the population in rural areas.

Donors Conference: Pakistan would share the aims and targets of Pakistan development Trust Fund worth $4 billion with FODP member countries as well as donors. According to the sources multi-donor trust fund would administer the development in Federally Administered Tribal Areas (FATA), Balochistan, NWFP and Azad Jammu and Kashmir.


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## Neo

*IMFs Analysis: Pak must reform tax system to restore economy​*
TOKYO: Pakistan must focus on reforming its tax system and lowering inflation to restore its economy, but political instability is a key risk to growth, the International Monetary Fund said on Thursday ahead of a donors conference.

Allies of cash-strapped Pakistan meet in Tokyo on Friday to pledge aid and seek assurances from the nuclear-armed country that it will implement economic reforms and take more urgent action against an increasingly formidable Islamist insurgency. While Pakistans economic policies are on the right track, the global economy has worsened and the domestic political environment is a risk, said Adnan Mazarei, IMF assistant director for the Middle East and Central Asia department. I would be remiss if I did not mention that a key risk to Pakistan is political, Mazarei, mission chief for Pakistan, told Reuters in an interview. The private investors and the financial market players that we often ask, they point to political uncertainty as a key factor.

The international community is worried an economic meltdown in Pakistan, which narrowly averted a balance of payments crisis last year with a $7.6 billion IMF loan, could fan popular support for al Qaeda and other militant groups.

Pakistan hopes Fridays meeting of donors  including Japan, the United States and the European Union  will pledge $4 billion to fund efforts on poverty alleviation, education and health. Mazarei said Pakistan needed to focus on controlling its budget in the near-term, by starting tax reforms and making sure revenues are secured so authorities could then focus on longer-term issues such as reducing poverty.

It is critical that this revenue problem is addressed, with two lines under the word critical, he said. Otherwise, the social services that are needed will not be provided, the public investment that is needed will not be provided. reuters


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## Neo

*Pakistan has largest privatisation programme​*
ISLAMABAD: Pakistan has the largest Privatisation Programme and the fairly long time experience in the South Asia, which can be mutually beneficial for the entrepreneurs of entire region including Azerbaijan, Syed Naveed Qamar, Federal Minister for Privatisation stated during a meeting with Dr Eynulla Madatli, Ambassador of Azerbaijan to Pakistan who called on him here Thursday.

Syed Naveed Qamar informed the envoy that privatisation process has been given new dimension with the promulgation of new Privatisation policy for associating the private sector through Public Private Partnership (PPP) mode, which was the real engine of economic growth and could ensure efficiency, increase production, bring in fresh investment and expand the existing operations with the latest technologies and ensuring new job opportunities.

He assured the envoy of full assistance for benefiting from Pakistans experience in establishing the regulatory regimes and the process of open, fair and transparent privatisation and investment activities. The present government always gave priority to bring the private sector forward through the best privatisation programme in a most transparent, open and fair manner, he added.

Dr Eynulla Madatli that Joint Ministerial Commission (JMC) of both the countries were exploring the new avenues for focusing in various sectors of economy including Information Technology, Oil & Gas sectors, Energy, Privatisation and Investment.


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## Neo

*Zardari seeks new Japanese investment​*
TOKYO: Pakistans President Asif Ali Zardari, visiting Tokyo for a major aid conference, Thursday sought to drum up Japanese investment for his poverty-stricken country. Zardari told Japans Trade Minister Toshihiro Nikai that Pakistan plans to set up a special Japanese economic zone near the southern port city of Karachi, a Japanese trade ministry official told reporters after the meeting.

Pakistan has already set up a similar zone for Chinese companies in a suburb of the city of Lahore, said the official, Yoshihiro Sekine.

Zardari wrote in Thursdays Japan Times daily he was visiting Tokyo not only for the Pakistan aid conference Friday but also to encourage entrepreneurs from the worlds second-largest economy to invest in Pakistan.

He said, Japanese investment will help us in reviving the economy and fighting violent extremism and terrorism but also enable Japanese entrepreneurs to benefit from the liberal pro-investor policies adopted by our government.

The Pakistani president also said a business mission from the South Asian country would visit Japan in late May, according to the official. Zardari arrived in Tokyo late Wednesday to attend Fridays donors meet, which aims to raise $4 billion to $6 billion to help stabilise his country, seen as a frontline state in the battle against Islamic militancy. afp


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## mdmm

SORRY I POSTED IN WRONG PLACE.THIS WAS SUPPOSED TO BE IN AN OTHER FORUM.
HAS TO BE DELETED NOW


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## Neo

*Japanese experts arrive soon​*
TOKYO (April 17 2009): Japanese Minister for Economy, Trade and Industry Tashihiro Nikai called on President Asif Ali Zardari here on Thursday and discussed matters of bilateral interest. The Japanese Minister told the Pakistani leader that the Japanese government would facilitate the import of mangoes from Pakistan by the private sector, and a delegation of mango experts would visit Pakistan soon to remove all hurdles in this respect.

President Zardari said Pakistan would establish a special economic zone for the Japanese companies and investors in Karachi on an area, covering 2,500 acres of land. Tashihiro Nikai said Japan was satisfied with Pakistan's economic strategy and programme, as despite the global economic Recession, the country's economic prospects look positive and the economy were track of growth.

President Zardari stressed the need of increased people-to-people contacts, particularly enhanced enrolment of Pakistani students in Japan, which currently stood at around 200, to strengthen the bilateral relations between the two countries. During the meeting, the two sides also discussed the prospects of increased trade and economic co-operation between Pakistan and Japan, with particular focus on the promotion of trade and investment ties.

They also exchanged views about the matters relating to the Friends of Democratic Pakistan (FoDP) ministerial meeting and the donors' conference being hosted by Japan here on Friday. Minister for Information and Broadcasting Qamar Zaman Kaira, Advisor on Finance and Economic Affairs Shaukat Tareen and Advisor on Interior Rehman Malik were also present in the meeting.


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## Neo

*LSM sees decline of six percent in eight months​* 
KARACHI (April 17 2009): Large Scale Manufacturing (LSM) growth has decelerated and registered a decline of 6 percent during the first eight months of the current fiscal year, mainly due to the energy shortages, high cost, lower domestic and external demands. The performance of the manufacturing sector was impressive during the last five years, as it posted an average growth of over 10 percent per annum since 2003.

However, battle on the political front, rising cost, poor law and order situation and negative economic indicators have pushed the LSM growth on a downward side. LSM had already presented poor performance during the last fiscal year, 2008, and registered a six-year lowest growth of 3.76 due to the political uncertainty, power shortage and deteriorating law and order situation.

Federal Bureau of Statistics (FBS) on Thursday revealed that Quantum Index Number of LSM industries witnessed a negative trend of some 5.73 percent during the July-February of fiscal year 2008-09. Official provisional statistics of Quantum Index Numbers of Large Scale Manufacturing Industries (QIM) of FBS depicting the production of major industries in the country are also on the decline.

QIM shows the industrial productivity of the 100 items received from different sources ie Oil Companies Advisory Committee (OCAC), Ministry of Industries and Production and Provincial Bureaus of Statistics. OCAC supplied the data of 11 items, Ministry of Industries and Production supplied the data of 35 items and Provincial Bureaus of Statistics (BOS) gave data for 54 items.

Major share in the present negative growth has contributed most by OCAC, as during the July-February OCAC index declined by 8.40 percent to 159.17 points while, the ministry of industries index has dipped by 5.71 percent to 195.68 points. In addition the provincial BOS index stood at 199.04 points after a decline of 5.30 percent during the first eight months.

The LSM growth during February 2009 also registered a significant decline of 7.91 percent, when compared to February 2008. As in February 2009 QIM stood at 206.15 points from 223.85 points. "A number of factors, including intensified energy shortages, rise in input cost, as well as lower domestic and external demands are responsible for this decline," economists said.

They said that interruptions in energy supplies and upward adjustment in the prices of electricity, gas and diesel lowered the productivity and rise in the cost of production of domestic industry have also contributed to the negative growth. Economists pointed out that rupee depreciation, with a greater volatility, also increased the cost of imported inputs. While, at the same time, export demand has decline due to the global economic, recession.

Decline in consumer demand in the domestic market is attributed to the high interest rates on consumer financing (due to the tight monetary policy) and commercial banks' reluctance in providing consumer financing for consumers due to rising NPLs, they added. They said that almost all large industries, oil, auto, sugar, steel and others have posted a negative growth during the first eight months. "We are expecting some 7 percent decline in the LSM growth by the end of fiscal year 2009 against a growth of 3.76 percent in fiscal year 2008," they said.


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## Neo

*Surge in Pakistan's foreign exchange reserves​* 
KARACHI (April 17 2009): The country's foreign exchange reserves have gone up by 57.9 million dollars during the week ended April 11, 2009, the State Bank of Pakistan said on Thursday. With the current surge the overall foreign exchange reserves have reached 11.2289 billion dollars as on April 11, 2009 from 11.1710 billion dollars a week earlier.

The central bank reserves witnessed a surge of 59.8 million dollars to 7.8651 billion dollars, while banks' reserves declined by 1.9 million dollars to 3.3638 billion dollars.


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## Neo

*Centre taking measures for development of Balochistan​*
ISLAMABAD (April 16 2009): Mir Humayun Aziz Kurd, Federal Minister for Livestock, Fisheries and Dairy Development, has assured that the federal government would extend maximum opportunities to the young and educated people of Balochistan in curricular and extra-curricular activities. The Minister expressed these views while talking to Mir Shah Nawaz Khan Marri, Balochistans Minister for Sports and Youth Affairs who called on him here on Wednesday.

Mir Humayun Aziz Kurd said that the federal government was sincerely taking concrete measures for the development of Balochistan, bringing it at par with other provinces. "The President of Pakistan has already announced a special package for the people of Balochistan, which he announced during his recent visit to Quetta," Mir Humayun Aziz Kurd maintained.

Mir Shah Nawaz Khan Marri, Provincial Minister for Sports and Youth Affairs highlighted the measures aimed at promoting healthy sports activities in Balochistan. He said that the provincial government was focusing on the exchange of inter-provincial youth delegations so that the people from different parts of the country interacted regularly thereby promoting harmony and sharing each others experiences.

Mir Shah Nawaz Marri called upon the Federal Government for allocations of substantial funds for upgrading the existing healthy recreational facilities in Balochistan. The Provincial Minister maintained that the budgetary allocations during the current financial year were too meagre to help carry out sports activities in the countrys largest province.-PR


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## Neo

*KSE gains 124 points on news of $5bn aid ​* 
Saturday, April 18, 2009

KARACHI: The commitment by Friends of Democratic Pakistan (FoDP) of giving over $5 billion aid to the country kept Karachi bourse up in the green territory on Friday.

This news prompted investors to push up the market by 1.63 per cent on active short covering. 

KSE 100-shaer index posted a handsome recovery of 1.63 per cent or 124.87 points and closed at 7,794.95 points. The parallel running junior 30 index surged by 1.72 per cent or 144.73 points and finished at 8,540.16 points. 

Leading analyst M Sohail said that the announcement of over $5.28 billion aid to the country by FoDP was well in line with expectation and the decision retrieved market in green. Earlier, the market opened on a confused note and fell in red immediately. The extended correction took market down to 7,524.71 points intra-day low, losing another 155 points from pre-opening level. Sohail added that the market faced some selling pressure in early hours owing to likely unchanged outlook of the tight monetary policy to be announced by the State Bank of Pakistan on Monday, April 20. If SBP did not announce a significant or even a little cut in the exorbitant discount rate then there shall be seen no battering in the market and the impact would be neutral, as it (market) has already posted the due discount on conflicting news about maintaining the current rate high at 15 per cent in the next quarter as well. The market would, however, react positively if central bank announces a cut and eases the policy, he further said. 

Ahsan Mehanti at Shahzad Chamdia said that the investment activities at bourses would increase, as investors were expecting further pledge from FoDP donors conference, which would also stabilize the economic outlook of the country. 

Moreover, expectation of good result announcements in oil, banks and fertilizer sectors remained a major catalyst for positive activity, he added. Out of total 302 actives on board, 171 stocks advanced, 115 stocks declined, while the value of remaining 16 stocks closed unchanged. 

Among the notable stocks, Pak Oilfields, Lucky Cement, EFU General Insurance, Attock Refinery and Pak Refinery settled in red territory. Furthermore, the day turnover declined to 259.365 million shares against 337.353 million shares traded in the ready market a day earlier, showing a decline of over 23 per cent on day-to-day basis. Activities in the future market remained lull with zero shares turnover. On the contrary, the overall market capitalisation surged by Rs28 billion and stands at Rs2,323 billion. 

The foreign portfolio investors also injected funds worth over one million dollar in this session at three local bourses, according to NCCPL website. 

Highest volumes were witnessed in JS Company at 23.825 million closing at Rs43.73 with a gain of Rs1.46, followed by National Bank at 16.273 million closing at Rs84.26 with a gain of Rs2.88, Pak Oilfields at 14.383 million closing at Rs155.06 with a loss of Rs5.75, DG Khan Cement at 13.512 million closing at Rs28.72 with a gain of 32 paisa, and Oil & Gas Development Company at 12.418 million closing at Rs78.08 with a gain of Rs1.35.


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## Neo

*Forex reserves reach $11.228bn ​*
KARACHI: The countrys liquid foreign exchange reserves rose to $11.228 billion on the week ending on April 11, 2009 as compared to $11.171 billion last week, figures released by the State Bank of Pakistan showed on Thursday. The overall reserves witnessed an increase of $57 million during the last week. The reserves held by the central bank witnessed a major increase of $60 million to reach $7.865 billion as compared with $7.805 billion last week. However, the reserves held by banks (other than SBP), witnessed a decrease of $3 million, as they fell to $3.363 billion.


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## Neo

*Current fiscal: Estimates show nominal GDP to be $162.6 billion​*
ISLAMABAD: Due to the economic slowdown in the country and the global financial crisis, nominal gross domestic product (GDP) of the country has been estimated at $162.6 billion in this fiscal year 2008-09 as compared with $167.5 billion in last fiscal year 2007-08 showing a decrease by $4.9 billion. 

However, it has been projected that nominal GDP would grow to $171 billion in next fiscal year 2009-10 as compared with GDP estimates of $162.6 billion in current projection. The revised Macroeconomic framework for the current fiscal and proposed macroeconomic targets for the next fiscal year incorporated in PRSP II document by the Ministry of Finance show. 

Exchange Rate: Exchange rate that had been at Rs 62.5 a US dollar in the last fiscal year 2007-08 is estimated to remain at Rs 79.8 a dollar in current fiscal year and Rs 83.6 a dollar in 2009-10, and Rs 95.9 a dollar in 20012-13. 

Per Capita GDP: Per Capita Income that had increased to $1,041 in the last fiscal year would come down to $993 in the current fiscal year and again increase to $1,027 in next fiscal year 2009-10. 

Agriculture: Agriculture growth has been estimated at 3.3 percent in this fiscal as against the growth of 1.5 percent in last fiscal year and projected growth of agriculture is 3.5 percent in next fiscal year.

Manufacturing: Manufacturing sector that had posted a growth of 5.4 percent in last fiscal year is projected to witness a negative growth of 2.9 percent in the current fiscal and projected to rebound to 2.5 percent in the next fiscal year. 

Services: Services sector, which remained main contributor in GDP growth of the country during last few years, is projected to post a growth of 4.1 percent in the current fiscal as against growth of 8.2 percent in the last fiscal year. It has been projected that services sector to register a growth of 4.6 percent in next fiscal year 2009-10.

Inflation: Inflation based on Consumer Price Index (CPI) is estimated to stay around 20 percent in the current fiscal year as compared with 12 percent in the last fiscal and projected to come down to 6 percent in next fiscal year 2009-10. 

Investment: Investmen as compared with GDP is estimated at 19.5 percent for the current fiscal as against 21.6 percent in the last fiscal and it has been projected at 20.3 percent in next fiscal year. 

National Savings: National Savings has been estimated at 13.6 percent in current fiscal compared with 13.2 percent in last fiscal year. However, it has been projected that national savings to increase to 16 percent in the next fiscal year 2009-10.

Pakistans Consolidated Fiscal Framework: Total revenue has been estimated at Rs 1.973 trillion in current fiscal as compared with Rs 1.5 trillion in last fiscal year and it has been projected that total revenues would be Rs 2.271 trillion in next fiscal year. Total expenditures are estimated at Rs 2.535 trillion in the current fiscal as compared with Rs 2.279 trillion in last fiscal and Rs 2.746 trillion in next fiscal year 2009-10.


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## Neo

*WFP approves $64m for food assistance to IDPs​*
ISLAMABAD: United Nations World Food Programme (WFP) on Friday announced that it would continue providing food assistance to Pakistan's internally displaced persons (IDPs) until November under its new emergency operation, said a press release.

With a total value of $64.2 million, the WFP would be able to provide over 97,000 tons of food to about 600,000 beneficiaries who had fled Federally Administered Tribal Areas (FATA) and some districts of North West Frontier Province (NWFP) because of insecurity.

The number of displaced people eligible for humanitarian assistance had been increasing due to progress with their registration while their resources were being exhausted. Although some IDP families were said to have returned to their home areas, their number in IDP camps was still increasing. The WFP assistance would be available to IDPs in communities and camps.

The WFP has been providing food assistance to over 360,000 IDPs living in camps and in host communities. The data, compiled by Social Welfare Department of NWFP and UNHCR, allowed the WFP to revise its distribution strategy by establishing a single distribution point (humanitarian hub) for each district and food assistance was made available at a 'one-stop-shop'. These humanitarian hubs also facilitate provision of non-food assistance from other UN agencies.

WFP Country Representative in Pakistan Wolfgang Herbinger said, "NWFP is traditionally a province that is not self-sufficient in wheat production and depends on food imports. In neighbouring FATA region, food prices are currently the highest in the country."

He said, "Majority of the IDPs is residing in host communities and depend on their generosity. However, most host families are poor themselves and cannot sustain the additional burden in these days of high food prices and declining economic opportunities."

The newly approved WFP emergency operation had already received generous pledges and confirmed contributions from the US, Germany, Japan, UK, European Commission, Australia and the government of Punjab.


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## Neo

*Friends pledge $5bn for Pakistan​*
** 31 countries, 18 world organisations take part in meeting 
* Aid targeted for areas like health, education, governance and building democracy 
* Participants concerned over Pakistans security situation 
* FM says next donors conference will be held in Turkey​*
TOKYO: Pakistan secured more than $5 billion in fresh aid over two years at a donors conference on Friday after President Asif Ali Zardari vowed to step up the fight against the Taliban.

The pledges, bigger than an expected $4 billion, reflect the international communitys worries that an economic meltdown in Pakistan could fan popular support for Al Qaeda and other militant groups. The participants also noted concern about the security situation in Pakistan and the impact on development, the investment climate, and growth, co-chairs Japan and the World Bank said in a statement.

The new aid is targeted for areas such as health, education, governance and building democracy. World Bank Vice President for South Asia Isabel Guerrero told a news conference: It is very important that these development resources are used in a way that they do reach the poor, that they do increase the productivity of Pakistans economy, so that Pakistan can go back to a high growth path and to poverty reduction.

US special envoy Richard Holbrooke lauded the outcome of the donors gathering, telling reporters it was an extreme success, Reuters reported. Japanese Prime Minister Taro Aso told the gathering he was impressed by President Zardaris resolve to combat extremism.

Turkey: Foreign Minister Shah Mehmood Qureshi said the next donors conference would take place in Turkey, adding the conferences schedule would be announced after a meeting and consultation with the Turkish foreign minister, Online reported. agencies


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## Neo

*Current account deficit narrows down by $2 billion ​* 
KARACHI (April 18 2009): Pakistan's current account deficit has posted a decline of some 2 billion dollar (21 percent) during the first nine months of the current fiscal year, mainly due to the higher home remittances and sharp decline in the trade deficit. "Decrease in the current account deficit has occurred due to rising home remittances, decline in imports and trade deficit, besides aggressive performance of services sector," analysts said.

Strengthening the current account would also help stabilise the exchange rate to a reasonable level and further build the country's forex reserves, they added. They said that month-on-month basis current account deficit is also narrowing, which reflects that the country's current account deficit would be around 8-8.5 billion dollar by the end of June 2009.

"The improving current account situation also indicates an overall economic stability and we are expecting further stability in the near future," they added. Official statistics revealed on Friday that the country's current account deficit has declined by 1.982 billion dollar during the July-March of fiscal year 2008-09.

With this decrease, the country's overall current account deficit has narrowed down to 7.645 billion dollar in the first nine months as compared to some 9.627 billion dollar in the same period of last fiscal year. The country had also registered a slight current account deficit of some 172 million dollar during the March 2009.

In the earlier five months of the current fiscal year 2009, current account was constantly on the rise with an average deficit of some 1.36 billion per month on the back of high imports, slowdown of exports and slow foreign inflows.

However, since the last three months things are improving and after a long gap the current account deficit - a major economic indicator, is presenting a positive indication. With this decline in the current account deficit, the average deficit has also plunged. The average monthly current account deficit till February 2009 was over one billion dollar. However, after the March statistics it has declined to 955 million dollar.

Trade and services sector have presented a significant improvement and contributed major share in narrowing current account deficit, while income deficit is still witnessing an upward trend.

Services deficit has declined by some 38 percent during the first nine months of the current fiscal year. Services sector deficit stood at 2.954 billion dollar with 2.633 billion dollar exports and 5.587 billion dollar imports in July-March of the current fiscal year as compared to a deficit of 4.782 billion dollar with 2.384 billion dollar exports and 7.166 billion dollar export in the corresponding period of last fiscal year.

Overall deficit including goods, services and income stood at 15.776 billion dollar against the current account transfers of 8.227 billion dollar during the July-Mach of fiscal year 2008-09. The country's overall goods imports stood at 24 billion dollar and exports at 14.46 billion dollar with a trade deficit of 9.51 billion dollar during the first nine months of the current fiscal year.

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## Neo

*MoU to be inked with China for oil and gas exploration ​* 
ISLAMABAD (April 18 2009): Pakistan and China are set to sign memorandum of understanding (MoU) to enter into joint venture for oil and gas exploration. The MoU will be signed by Advisor to Prime Minister on Petroleum and Natural Resources Dr Asim Hussain, who left here for China on Friday.

Sources revealed to the Business Recorder that the MoU would enable Pakistan Petroleum Limited (PPL) to enter into joint venture with China state run oil and gas exploration companies for exploration activities in Pakistan as well as in foreign countries.

The government had increased the well-head gas price cap to 100 dollars per barrel crude oil price from 45 dollars per barrel crude oil in 2009 Petroleum and Exploration Policy that would also attract the Chinese companies to explore oil and gas reserves in Pakistan, sources said.

The PPL has already entered into joint venture with Australian Company, MOV, which has already secured Block-29 for oil and gas exploration in Yemen. This step is a milestone by virtue of being the first effort by a local public sector company to extend its exploration activities beyond the border with a minimum financial commitment of 15 million dollars.

The sources said that PPL was also expecting to sign a MoU with the government of Turkmenistan during the forthcoming visit of Dr Asim Hussain to Turkmenistan during the last week of the current month. The PPL is one of the pioneer exploration and production (E&P) companies in Pakistan oil and gas sector that has qualified to participate in the second field development bidding round for substantial E&P opportunities in Iraq that was launched on December 31, 2008.

There were 35 companies, which participated in the first bidding round, and The PPL was among the nine companies that have qualified for the second round to participate for the 19 fields offered by the government of Iraq for development. Few other opportunities that are currently in focus are in the process of technical screening and evaluation includes Libya, Algeria, Morocco, Armenia, Uzbekistan, Senegal and Mauritania.

Dr Asim Hussain has directed the PPL and OGDCL to go into world in pursuit of exploration and production of hydrocarbons, particularly in the countries like Yemen, Libya, Iran, Turkmenistan and Iraq, in a bid to secure much needed energy security and sustainable future for the country.


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## Neo

* Country could face export slump this year: economist ​* 
Sunday, April 19, 2009

KARACHI: Leading economist Dr Kaiser Bengali has pointed to the decline in exports as the root cause of local economic slowdown and predicted that the country would face the worst export slump in August or September this year. 

He was speaking at a seminar on Financial Meltdown & Global Economic Recession: Causes & Effects, organised by the Karachi Council on Foreign Relations, Economic Affairs & Law (KCFR), here on Saturday. First nine-month (July 2008 to March 2009) figures show that the countrys exports were mere $13.41 billion against $26.12 billion of imports, with trade deficit widening to $12.71 billion. He maintained that the local crisis has a 30-year history, beginning from 1977, and has no or little linkage with the world financial meltdown. 

The local crisis would hit its peak in 2009-10, he foresaw. Throwing light on the history of the crisis, he revealed that the Social Policy and Development Centre (SPDC), under his chairmanship in 2003, had predicted 2009 as a year of crisis on the basis of the last regimes policies. The crisis, therefore, occurred one year earlier in 2008, he added. 

He explained that the crisis began with Gen Zia period, as the state made a major shift in its policies from state development to state security. From 1977 to date, no factory, power station and industrial complexes were set up nor were any dams and highways constructed. 

Especially since 2000, no expansion in power generation was made. The county, however, witnessed a number of collapses including Rann Pathani Railway Bridge, Karachi Port Berths and Karachi flyover during 30 years of assets depletion period. 

Bengali further said that the annual growth rate of countrys defence budget rose to nine per cent in 1980s from two per cent in 1970s, witnessing 4.5 fold increases. Simultaneously, the annual growth rate of development budget fell to 2.7 per cent in 1980s from 21 per cent in 1970s, registering 7.8 decline. He declared these changes in figures as paradigm shift in state policies from pro-development to pro-security. 

He also suggested to the government to give tax relaxation to the manufacturing industry in a bid to make the sector sustainable and added it should eliminate sales tax on shares transactions and impose capital gain tax instead. 

Ambassador (R) Najmul Saqib Khan stressed to develop a strong regulatory framework at the world level to keep the risk lower in running financial sector i.e. banks and stocks markets so that the tax payers money would not be pumped again into the system to save it from collapsing. He suggested to the government to shift its focus towards establishing production, goods and services sectors, as they should be the engine of economic growth, instead of taking care of the banks and stocks markets. 

State Bank of Pakistan Governor Syed Salim Raza said Pakistans economy was likely to grow between 4-4.5 per cent in the next fiscal year. Responding to a question, he said that the purpose of revising set target of minimum paid-up capital requirement (MCR) to Rs10 billion by banks by 2013 against Rs23 billion earlier was to support medium size banks in the country, while revised target was still higher as compared to other countries banks MCR.


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## Neo

*Trade deficit to come down by $4bn in FY08-09: MoF​*
** Trade deficit is projected to be $11.3 billion in 2008-09 as compared with $15.3 billion in last fiscal year​*
ISLAMABAD: By putting in place the restriction on import and protectionist policies by the economic managers, the trade deficit is projected to be $11.3 billion in 2008-09 as compared with $15.3 billion in last fiscal year, according to the Balance of Payment Outlook 2007-08 to 2012-13 of the Ministry of Finance. 

Outlook incorporated in PRSP II document reveals that exports of the country are projected to post, a negative 5.5 percent growth with total exports at $19 billion in the current fiscal year 2008-09. 

Trade policy 2008-09 had projected taking countrys exports to $22.1 billion, however, revision in macro-economic targets reveals that exports target is to be missed by a big margin of $3.1 billion, in case exports stood at $19 billion by June 30. The outlook further reveals that the country had managed to export goods worth $20.1 billion in 2007-08 and is projected to realise exports to the tune of $19 billion in the current fiscal and it has projected exports at $19.3 billion for 2009-10. 

Similarly, after putting in place the measures to slow down the economy, the imports are also projected to register a negative growth of 14.5 percent with total imports at $30.3 billion in current fiscal year 2008-09. 

According to the outlook, the macroeconomic framework projects a drastic reduction in the trade gap from $15.3 billion in FY 2007-08 to $11.3 billion in FY 2008-09 that would enable reduction in the current account deficit from $14.0 billion to $9.7 billion in 2008-09 and $7.4 billion in 2009-10. 

As a percentage of GDP the current account deficit is projected to decline from 8.4 to 4.2 percent of GDP during this period. The reduction in the trade deficit is mainly on the back of drastic compression of non-essential imports as well as stabilisation of prices of crude and edible oil along with commodity prices. 

Exports are expected to grow in the single digit, which is below their long-term average of 14-20 percent in the medium term. With the declining trade deficit, the current account deficit will also fall and thus necessitates external debt reduction from 27.3 percent of GDP in FY 2007-08 to 26.0 percent by the end of the macroeconomic framework period 2012-13. 

According to an analysis of the Ministry of Commerce, some of these structural challenges relating to both the demand and supply are Pakistans low ranking on the competitiveness scale due to its internal inefficiencies, thus making the cost of doing business in Pakistan relatively higher. Poor governance coupled with excessive red tape results in extra costs for producers and exporters. Power supplies are inadequate and a costly input for producers. Infrastructure especially relating to transportation is substandard resulting in extra costs for exporters. High cost of capital, low reliability of the legal dispute resolution system inhibiting investment and increase in commercial activity. Low productivity of human resource due to lack of education and skills deficit, lack of emphasis on quality in production and service provision and lack of diversification of our export portfolio and over reliance on textiles.


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## opinion786

Excellent website for Economic facts & figures: Economic Pakistan



1- Economic way forward for Pakistan - written by ex- PM Shaukat Aziz

2- Textile Industry

3- Pakistan&#8217;s Financial Services Sector (updated)

4- Pakistan&#8217;s Hydroelectric Power Development

5- Pakistan&#8217;s Defense Industry goes UAV

6- Cement Industry

7- Musharraf Era: Pakistan Flourishes

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## Neo

*Pakistan and Iran may reach gas agreement this week: disputes to be resolved under UN law​* 
ISLAMABAD (April 20 2009): Pakistan and Iran are said to have agreed to resolve the disputes on gas pipeline project in accordance with the United Nations Commission on International Trade Law (UNCITRAL), sources in Petroleum Ministry told Business Recorder.

The two countries are expected to trim the Gas Sale Purchase Agreement (GSPA), possibly during the current week, to materialise the much-delayed multi billion dollars project.

On April 8, 2009, the Federal Cabinet gave approval for the project, subject to the condition that, for the present, Pakistan should not commit to purchasing more than 750 mmcfd gas, against the initial plan of one billion cubic feet, at offered crude oil parity of 80 percent.

"If the parties are unable to settle any dispute through mutual consultation then, depending upon nature of dispute, either party may refer it to either an expert or to arbitration, in accordance with clause 19 (Dispute Resolution). Arbitration will be governed in accordance with UNCITRAL Arbitration Rules which provide for appointment of three arbitrators," sources said.

They said that arbitrators would be appointed by Director, Kuala Lumpur Regional Centre for Arbitration, and their determination will be final and binding for both parties. The agreement will be for contracted supply of up to 750 mmcfd gas for 25 years, renewable for another five years. Delivery point for the gas is at the Iran-Pakistan border, near Gwadar, at an agreed pressure of not less than 798 psig (55 barg).

The GSPA provides for ramping up of supplies from 35 percent (350 mmcfd) in the first year to 65 percent (650 mmcfd) in the second year, followed by full capacity of 1bcfd starting third year.

Elaborating the GSPA, sources said that this is a supply contract, wherein the gas supplier is legally bound to supply the contracted volumes, or otherwise pay liquidated damages.

"In the case of supply shortfall, the seller has to pay following to the buyer: (i) 9 percent discount on the contract price for the corresponding shortfall volume; (ii) buyers shipment tariff, ie transportation charges from border to pipeline system; (iii) difference of price between the contract gas price and a basket of alternative fuels (HSFO and HSD in a ratio of 80:20)."

According to sources, GSPAs are confidential in nature, and not available in public domain information. Therefore, exact details are not available. However, as per media reports, the Iran-Turkey GSPA is that it is for 1 billion cubic feet daily (bcfd) over a 25-year supply period, starting 1996. The contract volume has recently been increased to 2.0 bcfd.

Turkey pays 80 percent crude oil parity price. This information has not been officially confirmed by either Iran or Turkey. However, unofficial sources have confirmed this price. Further, there is a clause in the Iran-Pakistan GSPA that the gas price will be the weighed average of all pipeline exports from Iran including Turkey.

The Iran-Turkey pipeline is 2,577 kilometres long natural gas pipeline, which runs from Tabriz in North-West Iran to Ankara in Turkey. The construction of the pipeline started in 1996, after signing a gas deal between Turkish and Iranian governments. The GSPA was signed on August 8, 1996 for a supply period of 25 years. The contract volume during plateau is 10 BCMA (lBcfd), which accounts for about 22 percent of Turkey's natural gas imports. The pipeline has a maximum capacity to pump 14 BCMA, commissioned on 26th July 2001.

The Turkish section, operated by Botas, cost $600 million. In Erzurum, the South Caucasus Pipeline is linked to the Iran-Turkey pipeline. In future, these two pipelines will be the main supply for the planned Nabucco Pipeline from ISGS engaged a UK based pricing consultant Energy Contract Company to advise on the gas pricing regimes in the global gas trading hubs.

The consultant has advised that in the pure gas trading hubs such as Henry Hub (USA) and NBP (UK), where the gas is traded as a commodity it is not linked with crude oil. However, based upon historic data, natural gas on the average is being sold at 70 percent of crude oil parity. The consultant has also advised that where the gas is linked with crude oil and oil products, the parity is comparatively higher, the sources maintained.

The consultant has advised that, based upon the price formulae in pipeline gas supplies to Southern Europe, at an oil price of $62/bbI ($10.88/mmbtu), and including an estimate of the transportation price, an estimate of the current price under two supply contracts to Southern Europe is as under:

-- Algerian GME delivered Spain $7.7/mmbtu 71 percent oil parity

-- IE Italian Benchmark @ border $8.1/ mmbtu 75percent oil parity

As regards, the Iran-Turkey or Iran-Armenia gas prices, the consultant has advised that the benchmark price offered to Pakistan is that at which it is selling gas to Turkey which is assessed at 85 percent oil parity, as also confirmed by Pakistan Embassy at Tehran.

The consultant has also advised that although there are certain global gas pricing parameters, the gas prices are frequently negotiated considering the peculiar markets dynamics.

As per press reports, all recent gas price negotiations have been concluded at much higher gas prices as compared to the previous in the major gas trading hubs. Iran has recently (in February 2009) finalised a deal to import gas from Turkmenistan. The price of gas being paid by Iran to Turkmenistan is $300-350/MCM, which translates to $8.5-10/mmbtu, as compared to $8.2/mmbtu offered to Pakistan. The price agreed ranges from 81 percent to 94 percent at a crude oil price of $60/bbI as against 78 percent to Pakistan.

In a recent agreement, in January 2009, Ukraine agreed to pay Russia on the average $260-300/MCM ($7.36-8.5/mmbtu during 2009 as against the $179/MCM ($5.1/mmbtu) in 2008. The agreed price comes to 70 percent-81 percent of the crude oil parity as against at 50 percent crude oil parity in 2008.

In addition, of the recent developments in the global gas market, the most critical development to note is that in future the Gas Exporting Countries Forum (GECF)--of which Iran is a member along with Russia, Qatar and others--is expected to play a proactive role in controlling the world gas/LNG prices. Although not stated, the prime objective of the forum appears to establish the minimum floor for the gas prices while ensuring the indexation of the gas price as close as possible to the oil prices.

Recently, during December 2008, in the context of adoption of the charter of GECF, the Russian Prime Minister was quoted by the press saying as: "The era of cheap gas is over". Industry analysts interpret this equally applying to LNG.


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## Neo

*All set to launch 90 reconstruction projects in AJK​*
MUZAFFARABAD (April 20 2009): As many as 90 reconstruction projects are being launched through Muzaffarabad city development project (MCDP) under JICA Master Planning programme, here. Two Chinese construction companies CWE and Xingjian Beixing Engineering company have arrived in AJK capital Muzaffarabad.

This was said in a press release issued here by the Office of MCDP of AJK government working under the Earthquake Rehabilitation and Reconstruction Authority (Erra) administration.

These companies will undertake the reconstruction of projects under Muzaffarabad city Development projects in accordance with the Master plan of JICA and Nespak and some 90 projects would be launched including buildings, parks, commercial plazas, satellite town, bus terminals, road and bridges.

It said that approximately 60 Chinese Engineers have arrived in Muzaffarabad to start the construction work. Initially they have started survey and planning work of the projects.

Whereas, the project Management Unit and MCDP is completely co-ordinating with the Chinese construction companies and providing all sorts of support, help and guidance according to their demand, it added.


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## Neo

*Sialkot industries putting efforts to double exports volume​* 
SIALKOT (April 20 2009): Sialkot is an export-oriented city of Pakistan and possesses a century old industrial heritage. It has developed a remarkable exports culture over the period and is contributing more than $1billion to the national exchequer annually.

Yet the exporters' community is putting their outmost efforts to double the volume of exports despite tough competition in the world market to fetch valuable foreign exchange for the country.

Undoubtedly, the Small and Medium Enterprise (SMEs) were playing a significant role not only in strengthening the national economy but also providing employment to thousands of workers in Sialkot.

In order to develop true and secure SME culture in the district of Sialkot, the government should formulate a special package of incentives and concessions for the SMEs of the area to increase the exports volume and to redress their problems. The city is sprinkled with thousands of small and medium enterprises, which are successfully honouring their global commitments for export of value-added quality goods such as sports goods, surgical instruments, leather goods, gloves, badges and musical instruments etc.

Moreover, the development of cottage industries in Sialkot has assumed a model status for the developing world. The city has developed industrial edge over other cities of the country, especially in the manufacturing of sports goods and surgical instruments.

Over 1.20 lakh industrial workers are engaged with both the industries and are earning their livelihood in a respectable way. Many researchers of different foreign universities are considering conducting research on the unique export culture of Sialkot, which is a hub of cottage industries and export-oriented city of Pakistan. The researchers would penetrate on ascertaining how the successfully the industrialists of Sialkot are doing their export business and where every third businessman is an exporter.

The business community of Sialkot is playing a tremendous role not only in bringing boom in exports but also fulfilling the social responsibilities and the uplift of the city on voluntarily basis.

The soccer ball industry had totally been purged from the menace of child labour and Sialkot has set a role model for others to follow for the elimination of child labour.

The business community had managed to develop the culture of 'Do it yourself' in Sialkot under which, the businessmen were playing a pivotal role for the development of the city and welfare of the people.

For the construction of city roads and drains, Sialkot Chamber of Commerce and Industry (SCCI) initiated Sialkot City Package in collaboration with other trade bodies in the city.

Under the programme, exporters are voluntarily contributing 0.25 percent against their export invoices. As a result, many city roads and drains have been constructed. The mega project of Sialkot International Airport has become operational, which has been constructed by the local business community on the basis of Build, Operate and Own (BOO) worth over Rs3 billion.

Three international and one domestic flights are operating, while Qatar Airline is operating its cargo flights from Sialkot airport.

It is expected that regular cargo flights would be started from Sialkot international airport very soon. Sialkot International Airport is a unique project in private sector and first of its kind in not only in the country, but also in South-East Asia.

Despite of extra-ordinary contribution of the local exporters, the city, which deserve a special status, was being ignored in many respects. Keeping in view the importance and contribution of Sialkot towards country's economy, the city should be treated, as city of cottage industry and both federal and Punjab governments should announce special concessions and incentives for this export-oriented city for the larger interest of the SMEs. Further, a mega project of Sports Industries Development Centre (SIDC), which was approved by the federal government in 2006 at the cost of Rs272.61 million, was in doldrums.

The concept of initiating the SIDC project was to enable sports goods industry to cope with the changing trends by adopting modern technology of machine stitched footballs. It may be mentioned that new technology was introduced and successfully marketed by Adidas, which was posing serious threats to hand stitched football industry of Sialkot.

Over 85 percent of total production of soccer ball of the world are produced in Sialkot, while all international brands are sourcing their supply of footballs from this city. The success story of Sialkot based industries can be attributed to unmatched skill of local workers and their craftsmanship.

However, it is regretting that the soccer ball manufacturers and exporters were facing serious hardships due to slow pace of the project and were of the opinion that if the situation remains unchanged then Pakistan will lose international market. Keeping in view the importance of the SIDC project, the government should release grant at earliest possible time for accomplishment of the project.


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## Neo

*'Chinese public sector keen to enter into joint ventures'​*
LAHORE (April 20 2009): Chairman, Yunnan Chamber of Commerce, China, Li Jiashou, leading high level Chinese delegation, on Sunday said that Chinese public sector is keen to enter into joint ventures with their counterparts in Pakistan to promote bilateral trade between the two countries.

Speaking at a dinner hosted by Vice President, Saarc Chamber of Commerce and Industry (Saarc CCI) and veteran trade leader, Iftikhar Ali Malik here on Saturday night at his residence, Li Jiashou said, 'We are in Pakistan to explore the avenues and study the scope of investment in different sectors and invite President Saarc CCI, Tariq Sayeed along with 15-member delegation as key speaker at the inaugural session of 3-day China South Asia Business Forum to be held in kuming China on June 05 under the aegis of China Council for Promotion of International Trade (CCIPT).' He said, 'it the earnest desire of the Chinese public sector to promote business and enter into joint ventures with Pakistan as both countries are time tested friends of each other in their hours of trial.'

He said that people of China love Pakistani as compared to all other countries across the globe. Ms Tan Yun said that there was vast scope for promoting tourism in Pakistan and Pakistani diplomats must provide necessary information and tour package regarding tourists spots to attract Chinese to Pakistan.

She said that majority of the Chinese are not aware of the world's best scenic valleys and spots in Pakistan especially in northern areas, including Gilgit, Hunza, Naran, Kaghan, Lahore, Multan, Harrapa and Murree etc.

Welcoming the Chinese delegation, Iftikhar Ali Malik said that China's Trade is about $600 billion in the region and its only $6 billion trade is with Pakistan. He said it is absolutely imbalance of trade and balance of payment is in favour of China. He urged the Chinese delegation for co-operation to get market access to China and asked them to invest in Pakistan.

Iftikhar Ali Malik said that they are already importing hybrid rice seeds from China which has increased their yield hundred percent. He said that time has come that China must transfer its technology to Pakistan.

The dinner was attended by Ms Tan Yun, Vice Secretary General CCPIT, Yunnan Sub-Council, Ms Fan Juanjuan, IR&MA, CCPIT, Yunnan Sub Council, Taimur Ali Malik, Dr Waqar Chaudhary, Anwwar A Sheikh and other elite of the town.

Earlier, the delegation met Sultan Chawla, President FPCCI and Mohibullah Shah, Chairman, Trade Development Authority Pakistan (TDAP). It is worth mentioning here that prominent business leader and President Saarc CCI,Tariq Sayeed has been invited for the second time.


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## Neo

*Electricity from Central Asia​*
EDITORIAL (April 20 2009): According to a Recorder Report the federal cabinet has refused to give post facto approval to a memorandum of understanding signed last year by the Ministry of Water and Power and representatives from Kyrgyzstan and Tajikistan for the import of 1000MW electricity from those countries.

The cabinet said that the decision to import electricity would be taken only after its tariff/import price was estimated, and its economic feasibility conclusively established in comparison with the existing sources, including rental plants, which makes eminent sense. There are some unstated reasons also for the delay. One, of course, is the lingering instability in Afghanistan, though it can be hoped that by the time the project actually gets off the ground, the current conflict would have come to some sort of a conclusion.

Notably, the US has been pushing the project, lining up the World Bank and the Asian Development Bank to support it. The US interest in the project was backed by two obvious motives. One was to keep Pakistan from forging closer co-operation with Iran, which had been offering to sell both electricity and gas to Pakistan. And the other, in the wake of Bush administration's decision to give a civilian nuclear programme to India, was to deflect Pakistan's own demand to be treated likewise to meet its growing energy requirements.

The Americans kept telling Islamabad publicly that they would help it overcome its energy needs through the import of electricity from Central Asia and exploitation of its coal reserves for energy production. The US was one of the participants in stakeholders meeting held last July 31-August 2. The meeting came up with a detailed proposal under which Kyrgyzstan and Tajikistan together were to firmly commit 5 TWh (the former 2 TWh and the latter 3TWh) average line flow per year, to be delivered during the summer months, through the operating period of the concession agreement (25-30 years).

It was further decided that the exporting countries would make investments to cover the load growth, and in doing so they could maintain the summer surplus. All of this looks fine on paper. But it is also a case of there being many a slip between the cup and the lip.

As it transpires Kyrgyzstan and Tajikistan may actually not be in a position to generate the surplus electricity which was supposed to be exported to this country. The two countries have long wanted to construct hydropower project over their two rivers, Syr Darya and Amu Darya. But the neighbouring Uzbekistan, being downstream, does not like the idea, nor does Kazakhstan.

Reports emanating from those countries as recently as the current month show the Uzbek government in particular remains strongly opposed to the project for fear it would reduce water flows across its borders. As things stand, one can only hope the project will materialise. But we should also keep exploring all other options, taking timely steps to grab opportunities in accordance with our needs and interests.


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## Neo

*A great new beginning: wind power production​*
EDITORIAL (April 18 2009): Federal Minister for Water and Power Raja Pervez Ashraf told a press conference on Wednesday that the country's first ever windmill project in Jhimpir, Sindh, will become functional on April 19. This would mark an important beginning towards power production from alternative sources of energy. Built by a Turkish company, the project is part of a 50mw wind farm.

Its successful completion raises the hope that the government will pursue, with greater vigour, more projects, especially in the Gharo-Keti Bandar wind corridor, which, according to the minister, could generate some 50,000mw electricity.

He also said that the likely existence of other wind corridors is being studied, and that the country possesses a theoretical wind energy potential of 346,000mw - an incredible volume, indeed. We also have enormous possibilities to generate hydel as well as solar power. Going by the preceding estimates, harnessing of wind power alone can help us not only to overcome the present crisis, but also to attain huge surpluses in the foreseeable future.

It goes without saying that wind being a clean and renewable source of energy like solar power, deserves to be harnessed on a priority basis. Hydel power, of course, is equally good and, as Raja Ashraf claimed, we have the ability to produce 50,000MW hydroelectricity. But it entails some serious problems such as inter-provincial disputes over dam construction and the spectre of reduced water flows in our river system.

Hydel projects also have a quite long gestation period. Windmills, on the other hand, do not take a long time to be set up; the negative factor in the case of both wind and solar power projects, though, is an initial high cost of construction. Still, as compared to some other conventional sources like thermal plants, electricity from windmills is low-priced, and with the passage of time gets progressively cheaper.

Except for maintenance work, no recurring expenditure is involved. In the present instance, the tariff, as determined by the Electric Power Regulatory Authority, is 12.1057 cents per KWH, which is lower than the thermal power rate, and after a 10-year period, it is to come down to 4.5 cents only. Like in so many other areas of national endeavour we have wasted too much time to develop alternative sources of energy.

While we never forget to draw comparisons with India, our policy planners make no special efforts to match the national ambition to do better, or at least equally good. Turning to that inevitable comparison we learn that India has moved far ahead of us in both wind and solar power production, manufacturing indigenous machinery and equipment for the purpose.

In the case of the present project, even after the Alternative Energy Development Board (AEDB) had completed its feasibility work for the setting up of windmills in Sindh to produce 1200mw electricity, the project ran into unnecessary delays over tariff and some other issues for nearly two years.

At one point the Turkish company, along with several competitors, pulled out of the bidding, reluctantly returning later to reapply. Now that an example has been set, it should not be difficult for AEDB to attract the interest of other potential investors as well in the remaining projects. It must act quickly to ensure that this happens sooner rather than later.


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## ihero06

_> Friends pledge $5bn for Pakistan
> 
> 
> * 31 countries, 18 world organisations take part in meeting
> * Aid targeted for areas like health, education, governance and building democracy
> * Participants concerned over Pakistans security situation
>* FM says next donors conference will be held in Turkey
>
_


Hi,
Does anyone know how much each countries provided/pledged to Pakistan?
I know Jap provided $1B. What about UAE, China, and other countries?


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## Hyde

ihero06 said:


> _> Friends pledge $5bn for Pakistan
> >
> >
> > * 31 countries, 18 world organisations take part in meeting
> > * Aid targeted for areas like health, education, governance and building democracy
> > * Participants concerned over Pakistans security situation
> >* FM says next donors conference will be held in Turkey
> >
> _
> 
> 
> Hi,
> Does anyone know how much each countries provided/pledged to Pakistan?
> I know Jap provided $1B. What about UAE, China, and other countries?



I think

Japan and US provided $1 billion each and Saudi Arabia provided $700 Million dollars and EU provided $640 million and rest of the money from other countries, this is what i read in the newspaper that day


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## ejaz007

*Record Gulf remittances bleak comfort for Pakistan*

KARACHI: Pakistani expatriate workers wired home a record $739.4 million last month, but experts warn job losses from the global credit crunch could soon slash remittances and rock the economy.

Pakistanis working overseas sent $5.66 billion home during the first nine months to March 31, 20 percent up on the same period last year, said the central State Bank of Pakistan. Remittances in March surpassed the previous monthly record of $673.5 million in December 2008 and clocked up a significant increase from expatriates working in the Gulf countries, it added.

Pakistanis in the United Arab Emirates (UAE) sent back $175 million, up from $112 million in March 2008, and 151 million from Saudi Arabia compared to $120 million in the same month last year, it added.

"The increase will certainly help our foreign exchange reserves to grow but we should not be happy," independent economist AB Shahid told AFP.

Pakistan's economy relies heavily on its roughly four million expatriates -- around two million in the Gulf and the rest divided largely between Britain and North America.

Their remittances account for 4.4 percent of Pakistan's gross domestic product and the $5.66 billion paid so far this fiscal year make up around half the country's foreign exchange reserves of $11.22 billion. But thousands of Pakistani workers have lost jobs, mainly in the Gulf. Low-paid Asian workers have fallen victim to the global credit crunch as companies run short of business and money.

A report published in the UAE in February showed that $582 billion worth of building projects (45 percent of the total) had been put on hold due to the slowdown. "Our exchange reserves will remain healthy this fiscal year but next year a decline in remittances will certainly hit us," Shahid said. Most Pakistanis are unskilled workers associated largely with construction, transport and civic services such as sanitation in the Middle East.

The ruler of Dubai, Sheikh Mohammad bin Rashed al-Maktoum, acknowledged this month that economic growth in the UAE would probably fall to around three percent in 2009, down from 7.4 percent last year.

Private recruitment companies say the slowdown means fewer jobs.

"We had long queues of people wanting to go to the Middle East last year but now their number has declined significantly," said Illahi Bakhsh, owner of the Personnel Services Bureau, one of hundreds of Pakistani recruitment companies.

The economic downturn has closed scores of industrial units in Pakistan, rendering thousands unemployed. Soaring at 20 percent, inflation is hammering the ordinary man on the street and squeezing prices.

Wilting under extremist attacks and a fragile economy, the International Monetary Fund agreed last November to give Pakistan a 7.6 billion dollar loan to avoid a balance of payments crisis. International donors pledged $5.28 billion in Tokyo last week to stabilise the frontline state in the US-led "war on terror". Analyst Rauf Nizamani believes there is some hope provided returning workers invest their cash in small businesses. 

"They could still contribute to the economy if they invest in small businesses and not use the money on private consumption." 

Businessman Majyd Aziz was optimistic, noting that people were increasingly sending money home officially rather than through backhand channels. "Certainly, Pakistanis and other Asians are suffering lay-offs but our remittances have also increased because most Pakistanis now use official channels instead of hundi," he said. The traditional method -- by which money is transferred within days through agents anywhere in the world to even the most remote village -- is illegal in Pakistan, but experts say most expatriates rely on the system. The government is now campaigning to dissuade expatriates from patronising moneychangers allegedly involved in hundi. afp

Daily Times - Leading News Resource of Pakistan


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## Omar1984

*Karachi to get 234-megawatt electricity from Nov *

Updated at: 1636 PST, Thursday, April 23, 2009







ISLAMABAD: The government signed on Thursday an agreement with a Turkish company to hire a 234-megawatt power plant to address the electricity crisis in Karachi.

The agreement signing ceremony took place at Private Power and Infrastructure Board (PPIB) between the Turkish company and the government of Pakistan. The Managing Director of PPIB, Fayyaz Elahi said the Turkish power plant would start providing electricity to the Karachi Electric Supply Corporation (KESC) by November 2009.

Elahi said that under an agreement, the PEPCO would be bound to purchase electricity from the power plant for a period of five year. 



Karachi to get 234-megawatt electricity from Nov - GEO.tv


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## sohailbutt

*Four N-power plants to be built near Kanupp​*KARACHI: Four more nuclear power plants will built by the Pakistan Atomic Energy Commission (PAEC) near the existing Karachi Nuclear Power Plant (Kanupp) as part of a plan to build more energy units in the country to meet the target of 8,800 megawatts from nuclear energy by 2030.

The chairman of the PAEC, Dr Ansar Pervez, said this in his address at the Kanupp Institute of Nuclear Power Engineering (KINPOE) convocation 2009 held here on Tuesday.

Dr Ansar saw better prospects for nuclear energy plants because of what he called a renaissance of nuclear power in todays world. The other reasons for the revival of nuclear power plants, he said, were the good performance of more than 400 already operating plants all over the world, uncertain oil prices, and international concerns over carbon dioxide emission.

Nuclear power plants do not emit greenhouse gases and they have showed that they are more cost-effective, safe and reliable, he claimed.

From its early days, the generation of electrical energy through nuclear power has been one of the PAECs primary objectives. For this purpose, it established nuclear power plants and a complex network of associated fuel cycle technology. It has also been providing benefits of sophisticated nuclear techniques to the medical and agriculture sectors, he said.

He said that the cooperation for a peaceful application of nuclear energy between Pakistan and China was progressing because of good relations between the two countries.

He said that the PAEC had been assigned the task of generating 8,800MW of nuclear electricity by 2030 and some of the new plants would be built near Kanupp.

We have already purchased 585 acres near Kanupp to build additional plants. Although the cost of the land amounting to Rs350 million has already been paid, and the lease agreement was signed in August 2008, the mutation and demarcation of the land have not been carried out yet, he said.

Dr Ansar said that he had requested the authorities concerned to expedite the case of the land so that PAEC could start development work at the site. He said that based on the experience gained from the reverse osmosis plant, Kanupp was now working as a consultant for 100,000 gallon per day capacity reverse osmosis plant at Gwadar.

The PAEC could also offer its technical assistance in setting up large-sized desalination plants, he said.

Dr Ansar said that Kanupp was setting up a nuclear desalination demonstration plant with the capacity of 400,000 gallons per day, which is indigenously built in PAEC with some assistance from the IAEA. We can also offer technical assistance to the Karachi city government for its planned 50 million gallons per day desalination plant, he added.

He also pointed out that among all developing countries; Pakistan took the lead in the generation of electricity from nuclear power plants by setting up the Karachi Nuclear Power Plant.

It has been kept operational despite many embargoes imposed on us. It is now operating on extended life through modifications and safety retrofits done entirely by our own experts, he added.

He also enumerated the services rendered by the PAEC towards the socioeconomic uplift of the country by running 13 cancer hospitals across the country with five more under construction, agricultural, biotechnology and genetic engineering institutes and a series of human resource development and goal-oriented research centres.

He said that PAECs agriculture and biotechnology institutes were contributing at the national level by developing crop varieties that have higher resistance to disease, mature early and give higher yields.

The vice-chancellor of the NED University, Abdul Kalam, who was the chief guest at the convocation, awarded degrees of MSc nuclear engineering to 86 successful graduates of the 13th and 14th batches along with merit certificates and gold medals.

DAWN.COM | Metropolitan | ?Four N-power plants to be built near Kanupp?

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## sohailbutt

*Emirates Group to buy farmland in Pakistan​*SHARJAH: Emirates Investment Group is in the process of acquiring farmland in Pakistan to export more food to the Gulf region and is seeking international partners, a company executive said on Tuesday.

EIG, a private-sector investment company based in Sharjah, already exports vegetables and grains such as rice and wheat from Pakistan to the Gulf, Vice Chairman Raza Jafar told Reuters.

In the pipeline we have a number of deals for leasing and buying land in the Punjab which come through by the end of the year, he said in an interview, declining to comment on the size or cost of the land.

Once the land is acquired, EIG plans to produce vegetables, including onions, tomatoes and potatoes, Jafar said. 

We are also looking to producing citrus fruits and cattle farming. He added that the company is seeking international partners specialised in agriculture to handle these projects.

You have to keep in mind that this is a business for us, not a charity or a social project, so all we are after at the end like any company is to maximise profits, said Jafar.

Governments of Gulf States have been seeking to acquire farmland in developing nations to secure their food supply.

We are not working with the government, we are a private company, but if people want to give us the credit of securing food supply, then so be it, said Jafar.

This month the Federal Minister of Investment, Waqar Ahmed Khan, said that the country was offering 1 million acres (404,700 hectares) of farmland for sale or long-term investment. 

The Pakistani government has been very supportive of our plans and encouraging more investments, Jafar said.

EIG is looking at expanding its agriculture business to Eastern Europe, Sudan and Egypt, Jafar added. 

The company has investments in a wide rage of sectors including real estate, aviation and financial services in the UAE and Pakistan.Reuters

DAWN.COM | Business | Emirates Group to buy farmland in Pakistan

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## sohailbutt

*Over 300 textile units shut down in past two years​*ISLAMABAD: Thanks to higher mark-up rates, energy crises, the worsening law and order situation and the global recession, over 300 textile units have been closed down during the last two years, eliminating seven hundreds thousand of jobs in the process.

Until 2007, textile sector contribution in total exports remained 60 per cent on average and employee 38 per cent of the total workforce. It has a share of 8.5 per cent in the GDP.

The Textile ministry has acknowledged the closure of 90 large units in 2008 alone. Each company employed a minimum of 1,000 workers. These factories were closed in sub-sectors like hosiery and knitwear, polyester filament, spinning, garments, denim and silk and rayon.

The ministry record shows closure of 245 companies from the hosiery and knitwear sub-sector alone in last five years. Of which 99 units were closed in 2008 alone. These units employed 100 to more than a few thousand workers each. The 99 factories that closed down in 2008 seven were in Karachi, 78 in Faisalabad, six in Sialkot, two in Islamabad and one factory was operating in Kasur. Before that up to 2007, another 146 mills had shutdown in Karachi. Most of these mills were knitwear manufacturers.

The hosiery and knitwear sub-sector comprises 3,500 large, medium and small units, 85 per cent of which are small enterprises, 10 per cent medium ventures and only five per cent large integrated factories. The knitwear exports consists of knitted garments; knitted bed sheets, socks etc. and has the largest share of the nations textile exports. Export of these products is 35 per cent of the nations exports. The knitwear industry consequently emerges as the countrys top foreign exchange earner.

The All Pakistan Textile Mills Association (APTMA) spokesperson confirmed the closure of hundred of units and stated that the textile sector directly employees three million work force, and the figure of 700,000 people being unemployed due to slow down of business in underestimated. 

The spokesperson said the western world markets were avoiding giving import orders to Pakistan due to worsening law and order situation. The buyers prefer to place order in India or China despite premiums of around five per cent. 

He said that a broad based textile policy which aimed to enhanced the textile exports to $25 billion by 2015 is under preparation. He said APTMA has been satisfied from the policy approach but the final shape of the policy will be unveiled after its announcement in the budget. The upcoming textile policy will introduce calculation based rebate system instead of Research & Development support, he added. For instance there has been 4.5 per cent import duty on import of polyester fiber and importers can claim the same as rebate from the government, he explained.

DAWN.COM | Business | Over 300 textile units shut down in past two years


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## sohailbutt

*Seafood exports up 20%​*KARACHI: Despite the EU's ban, Pakistan's seafood exports have gone up 20 percent to reach $172 million in the current fiscal year from $144 million last year.

New markets are being explored for exports from Pakistan's fisheries. China, UAE and Thailand are markets which have been come to the forefront.

According to exporters in the fisheries, new processing units have been set up on the shores of Balochistan and fish that used to go to waste is now being exported.

President of the Pakistan Fisheries Exporters Association said, "There is a ban on fishing in the months of June and July but the government is doing away with the prohibition, which will be fatal for the fisheries."

European countries have been importers of fisheries from Pakistan for years, but now, circumstances being what they are, targeting new markets would be beneficial for the industry.

.:: SAMAA - Seafood exports up 20%

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## sohailbutt

*OMV to start gas production from Tajjal field​*The Energy Business Review reported Friday that OMV Aktiengesellschaft announced with its partners, Pakistan Petroleum Limited, Eni S.p.A and Government Holdings Limited, the start of the extended well test of Tajjal-1 which discovered the Tajjal gas field located about 120 kilometers (km) south east of Sukkur in Sindh.

As part of the fast track development the gas is routed via a 20km long pipeline to the Sawan gas plant which is operated by OMV (PAKISTAN) Exploration Ges.m.b.H.

Sui Northern Gas Pipelines LTD (SNGPL) as gas buyer will distribute this additional gas from Tajjal to Northern Pakistan.

The initial extended well test gas rate from Tajjal-1 is around 25 mn scf/d (4,000 boe/d) and the planned testing period will last for about three months. After the extended well test of Tajjal-1, OMV will decide with partners on an appraisal well program and a field development plan will be submitted to the government of Pakistan for approval. The execution of the field development plan will further increase Tajjal gas production from 2011 onwards.

The Tajjal gas reserves are the result of continuous successful exploration efforts of OMV together with its joint venture partners in Pakistan to enhance domestic gas production in Pakistan.

The joint venture of the Gambat exploration license consists of OMV (35% operator), Eni (30%), PPL (30%) and GHPL (5%).

.:: SAMAA - OMV to start gas production from Tajjal field


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## sohailbutt

*AJK begins socio-economic development plans​*MIRPUR (April 29 2009): The AJK government has kicked off a broad-based plan for the speedy socio-economic progress besides the uplift of tourism sectors in Azad Jammu Kashmir, official sources said. The sources told APP here Tuesday that an international tourism conference would be held in Mirpur to work out ways and means for materialising the idea of making AJK a most attractive hub of tourism in South Asia.

Various world fame tourism organisations will be invited to attend the moot. Referring to the government's resolve to ameliorate the life style of common man, the sources said the government has directed the concerned machinery to identify the problems of the common man coupled with the healthy proposal for their rapid solution.

The sources revealed that in order to promote the technical education in AJK, a Technical Education Board would also be set up in the near future. The government has also directed the state-controlled Azad Jammu Kashmir Logging and Sawmills Corporation to set up Artisan Schools at Mirpur and Muzaffarabad for producing the skilled manpower related to the wooden Industry.

The sources revealed that Chambers of Commerce and Industry were being set up in all districts of Azad Jammu Kashmir for the sake of accelerating the trade and commercial activities across Azad area. The AJK government officials to accelerate the work for the execution of the projects like Export Processing Zone, Industrial Estates and the proposed Mirpur International Airport in the private sector.

The state government has decided in principal to invite overseas Kashmiris in various development and educational activities besides the business and industrial sector. An Overseas Kashmiris cell is also being set up soon at the Prime Minister Secretariat in Muzaffarabad to provide them all required information related to the development activities, ensuring their maximum participation in all spheres of life, the sources said.

Business Recorder [Pakistan's First Financial Daily]

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## sohailbutt

*Cultivation of BT Cotton: Pakistan to bag $25 billion through textile policy​*FAISALABAD (April 29 2009): Textile policy will help Pakistan to bag $25 billion during first five years through cultivation of BT Cotton and optimum values addition to cotton chain, the Federal Minister for Textile Industry, Rana Mohammad Farooq Saeed Khan said.

Addressing a certificate distribution function for the successful participants of the stitching machine operators training (SMOT) programme of the ministry of the textile industry at Chenab Limited. He said, 'Pakistan has huge potential to develop its cotton chain, but we failed to exploit it because of inconsistent policies.'

He said that textile policy would cover the entire cotton chain rights from growers to the export of fashion garments. We are consulting with all stakeholders to make this policy a result oriented, he added. He was critical of the agriculture scientists and said that they failed to give any high yielding and pest resistant cotton variety during the last 5-6 years.

He said that BT Cotton has the potential to double the cotton production without any additional expenses or inputs and sugarcane crop, being water intensive, has become less profitable. Further, he said that growers should cultivate BT Cotton to get maximum financial benefit in addition to doubling our cotton production and the product has the potential to give at least 60 to 70mound per acre yield.

The minister also said that textile ministry was providing training to the workers to improve the quality of our exportable value added products. He said that Chenab Limited has trained so far 200 workers including 140 female and 60 male.

He said this government was also making serious efforts to overcome the load shedding and hoped that continuous supply of gas and electricity would further gear up the pace of industrial production. He also paid best tribute to PPP leadership and said that it has been trying to develop Pakistan into a modern and dynamic country. He urged upon the people to support its policies in greater national interest.

He said that Pakistan would set up a textile institute in Karachi in collaboration with Korea, where technical courses in different sections of garments, would be conducted. He said that ECC has already approved this Project.

Earlier, in his welcome address, the ex-MNA Farhan Lateef said that 200 female workers have already completed the Stitching Machine Operators Training at Chenab Limited. He said that initially this training program was launched in Faisalabad, Karachi and Lahore, but later it would be expanded to other cities as well.

He demanded a level playing field for textile sector and demanded decrease in bank mark up and round-the-clock supply of electricity and gas to the Textile Sector on subsidised rates, enabling Pakistan to compete in the global markets. The Chairman, Chenab Limited, Mian Muhammad Latif also spoke on this occasion and said that pick and drop facility to female workers was also being provided.

The Secretary, Textile Ministry, Dr Waqar Masud, Chairman, Faisalabad Dry Port Trust, Sheikh Ashfaq Ahmed and Chairman, Faisalabad Garment City, Sheikh Mukhtar Ahmed also attended the Ceremony. Later, the minister distributed certificates among the successful participants of SMOT programme.

Business Recorder [Pakistan's First Financial Daily]

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## sohailbutt

*Private sector imports over $1.2 billion power generation machinery​*KARACHI (April 29 2009): The country has spent over $1.2 billion on import of power generation machinery during the current fiscal year, depicting a surge of 63 percent over last year, as the power generation utilities have not been able to meet the power demand, importers said.

They said that despite all efforts, the government and power companies had failed to provide sufficient power. Therefore, continuing power shortage led the general public, industrialists and exporters to acquire power generation machinery.

They said that import of power generation machinery increased by $464.679 million, or 63 percent, to $1.202 during July-March period of the current fiscal year against last year's $737.787 million. During March, 2009, power generation machinery worth $98.54 million was imported as compared to $89.92 million in March 2008, recording an increase of 10 percent.

"Industrialist and exporters are not relying on the country's power utility providers, like Karachi Electric Supply Co-operation (KESC) and Water and Power Development Authority (Wapda), and after suffering the worst kind of problems, they have acquired self-generation plants, importers said.

They said that continued power failure in the country has also bashed the industrial activities, especially the export-oriented ones, besides causing serious delay in exports. "We had only two ways out: either to put export process in jeopardy, or to go for self-power generation," said a leading textile exporter, adding that "we chose the second way".

He said that self-power generation has become a primary need for general public and all export-oriented units. He added that a specific space and amount is being allocated for power generation in budgets to avoid power crisis during their operations.

Self-power generation is much costlier than the locally provided utilities but is the only way to save exporters from huge financial losses in terms of cancellation of orders by international buyers, which are much higher than expenses of power plant installation.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Thanks but no thanks, Pakistan to tell IMF​*ISLAMABAD: Pakistan will tell the International Monetary Fund that it will not need a $4.5 billion loan as the Friends of Pakistan group has agreed to give it $5.25b in aid to avert a financial crisis.

Pakistani officials will apprise the IMF of this decision at their next meeting in Dubai from May 4-11. The treasury has informed the president and prime minister that Pakistan will not need the money because of developments at the Tokyo donors conference. 

AGENCIES ADD: The White House hopes to send up to 400 million dollars in emergency aid to Pakistan within days amid deep worries about the nuclear-armed country's stability, lawmakers said Tuesday.

"We are discussing with the administration what is needed, and I think that all of us are very concerned about what's happening in Pakistan," Democratic House Majority Leader Steny Hoyer told reporters.

Republican Senator Jon Kyl described the monies as a down payment of sorts on 1.4 billion dollars in Pakistan aid included in an 83.4-billion-dollar emergency spending bill that may not clear the US Congress before July.

"I just returned from Pakistan, and the situation there is deteriorating," Kyl told reporters, warning that "if we were to wait until roughly close to the 1st of July, it could be too little, too late."

"The administration is looking right now at pulling a small part of that money out, somewhere between 200 million dollars and 400 million dollars, for both counterinsurgency and economic assistance, that we could pass really quickly, in just a matter of days," said Kyl.

Even as US military and diplomatic officials praised Pakistan for military operations against Taliban militants in the northwest and voiced hope the offensive would be sustained, lawmakers expressed deep concerns.

"Bottom line with Pakistan: It is terribly worrisome. It's probably the place that most people worry about the most right now," said Democratic Senator Chuck Schumer, who predicted Democrats would be "strongly supportive" of urgent US aid for the "war on terrorism" ally.

Hoyer, Democratic House Speaker Nancy Pelosi, and other key lawmakers were to meet later Tuesday to discuss the matter and try to map a way forward, said a Democratic aid, who requested anonymity.

Obama's special envoy for Pakistan and Afghanistan, veteran diplomat Richard Holbrooke, made the case for urgent aid in meetings with top Democrats in recent days, another a Democratic congressional aide told AFP.

That aide said it was not clear how much support existed in the US Congress for speeding financial assistance to Pakistan amid concerns that US aid does not reach the Pakistani people.

But Hoyer said lawmakers would act: "If something needs to be done, I think the answer to your question is we're going to address it."

"Pakistan in many ways is of higher concern right now than Afghanistan," he said. "And Afghanistan is something that has a high level of concern as well.

"I think everybody's concerned about what's happening there, what's happening with the Taliban. The stability of Pakistan is very, very important to not only the region but to the United States as well."

The Wall Street Journal, citing unnamed sources, reported that, barring congressional action, Obama could seek to push the money through presidential actions that may not require congressional support.

.:: SAMAA - Thanks but no thanks, Pakistan to tell IMF

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## Jihad

I don't think we are in any position to say "Thanks but no thanks".
Especially regarding our economic position at the current moment.


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## Anonyomous Man

Jihad said:


> I don't think we are in any position to say "Thanks but no thanks".
> Especially regarding our economic position at the current moment.



I agree with you on this one,anyways thanks for the info sohail butt


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## Neo

*SBP lists factors impeding economic activities​*
Global recession, severe power outages and bad law and order conditions have taken their toll on domestic economic activities, said the State Bank of Pakistan in its monetary policy statement on Monday. The SBP said that dismal performance of large scale manufacturing (LSM) in July-February, FY09 with negative growth of 5.7 percent, and weaker than target growth of agriculture sector point towards the weaker real economic activities of commodity producing sector for FY09.

In tandem with weak performance of commodity producing sector, services sector is also likely to show a weaker growth in FY09 compared to FY08. However, the agriculture sector is expected to register a growth of 3.0 percent due to better output of major crops in Kharif season (particularly of rice and cotton) and expected bumper crop of wheat of around 23.5 tons.

This will provide some grace to overall real GDP growth, though agriculture performance will be lower than the original target of 3.5 percent. The SBP pointed out that LSM sector growth, in particular, the performance of export driven industries (particularly, textiles) has been negatively affected amid energy outages, deteriorated law and order condition, and most critically, weaker external demand due to the recessionary tendencies in most of the major trading partner countries.

The domestic demand for automobile, electronics and other consumer durables has also remained weak which is attributed to high interest rates on consumer financing and increased risk averseness of commercial banks about consumer financing due to rising NPLs in this sector, the SBP added.

Services sector is also expected to register a slower growth than the target of 6.1 percent for FY09. As a result, the prospect of overall growth remains modest and the economy is expected to register a growth of 2.5 to 3.5 percent in FY09, the SBP said.


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## Neo

*Traders welcome donors pledges of $5.28 billion​*
ISLAMABAD: Traders and industrialists in a meeting held at Islamabad Chamber of Commerce and Industry (ICCI) welcomed donors pledges of over $5 billion in aid to bolster Pakistans troubled economy and fight war on terror.

They said according to some estimates, Pakistan suffered a loss of about $35 billion so far by becoming a key partner in war against terrorism and though this pledge is far less compared to magnitude of our economic damages.

However, they said it will prove quite helpful for Pakistan at a time when our economy is on the downward slide, says a statement of the ICCI.

The US and Japan pledged $1 billion each, Saudi Arabia added $700 million and the EU $640 million while the total pledged was $5.28 billion.

President ICCI Mian Shaukat Masud called upon the donors to provide their contributions pledged to Pakistan as early as possible to provide new blood to its sagging economy.

He said Friends of Pakistan should provide more financial aid to Pakistan in proportion to the extent of our economic losses suffered for fighting terrorism.

The world should realise that economically strong Pakistan will prove beneficial for all.

He said government should utilise these contributions on improving the economic climate in the country through infrastructure and other projects to bring stability in the economy.

He said this aid should also be used for poverty reduction and social sector development projects, which so far did not get proper attention in government priorities. He said health and education sectors also need more financial resources to uplift people quality of life.

The ICCI president said being strategically located in the heart of Asia, Pakistan should step up its efforts to get easy access to all the growing markets of the world to create better economic opportunities for its economy in order to capitalise on its strategic location.

Pakistan, he said should further improve investor friendly policy, broad features of which include, proactive facilitation and guarantees of equal treatment of both local and foreign investors, easy tariff structures and a liberal regime on repatriation of profits.

Businessmen were of the view that government should plan to undertake further structural reforms in various sectors of the economy to attract investments both foreign and domestic.

Power sector should get top priority for investment both foreign and domestic. Power sector should get top priority for investment because power shortage is proving the biggest hurdle in promotion of business activities. app


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*Package of incentives for Gwadar EPZ blocked by Cabinet​*
The Federal Cabinet has reportedly blocked a package of incentives for Gwadar Export Processing Zone (EPZ), secretly prepared by the Industries Ministry to "facilitate" one private entity, well-informed sources told Business Recorder on Monday.

"The Gwadar EZP comprised land owned by a private entity, which would derive undue benefit from the proposed package. Lessons learnt from the past must be kept in sight so as to obviate the painful reversal of special packages, the sources quoted the Federal Cabinet as saying in its arguments. It is not known, which entity owns land in the EPZ.

The sources said that the Federal Cabinet was informed on April 8, 2009 that a package of incentives, available to the Export Processing Zones (EPZs), had been developed and considered by the Economic Co-ordination Committee (ECC) of the Cabinet, in its meeting on September 23, 2008.

A committee, constituted by the ECC, had recommended that the proposed incentive package for Gwadar EPZ, should be extended to the entire master plan area of Gwadar. The Industries Ministry explained the details of the package to the Cabinet with the indication that the Finance Division and Revenue Division had certain reservations and wanted rationalisation of the proposal, the sources added.

Prime Minister Syed Yousuf Raza Gilani, who was presiding over the meeting, observed that the government was fully supportive to the development of Balochistan. However, notwithstanding, the other dimensions of Gwadar, it would be advisable to develop a package of incentives for the under-developed and deserving areas, including Balochistan.

The sources said the Cabinet also observed that a few provisions of the proposed package were contrary to the existing EPZ policy and tariff regime. The Industries Ministry, in its summary seen by this correspondent, revealed that the ECC in its September 23, 2008 meeting considered the summary and decided to constitute a committee under the chairmanship of the then Advisor to the Prime Minister on Industries (now the Industries Minister) to thoroughly examine the issue.

The committee, in its second meeting held on January 14, decided that proposed incentive package for Gwadar EPZ should be extended to the entire master plan area of Gwadar. The committee also decided that following package of incentives for Gwadar EPZ, in addition to the existing incentives available to EPZs, might be approved by the Cabinet.

-- Tax holiday for 20 years from the commencement of commercial operation of the project.

-- Permission to export up to 80 percent of the production from zone to tariff area of the country on payment of usual duties.

-- Incentives for exports available to projects established anywhere in the country shall be applicable to exports from the projects in the zone.

-- The plots to be provided to investors on lease (as per existing EPZ's procedure) at a reasonable rate be determined in consultation with the Balochistan government, keeping in view the size of investment.

-- Zero-rating of sales tax on supply of construction materials to EPZs investors as well as to EPZ, Gwadar, for development of zone infrastructure.

-- Exemption from stamps duty. After detailed discussion, the Cabinet constituted a committee, under the chairmanship of Industries Minister Mian Manzoor Wattoo and comprising Ministers for Commerce, Ports and Shipping and Prime Minister's Advisor on Finance Shaukat Tarin to revisit the matters and finalise a practical and viable proposal.


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*Agri credit disbursement rises to Rs 151.861bn​*
KARACHI: Disbursement of credit to the agriculture sector by commercial and specialized banks has increased by 9.57 percent year-on-year to Rs 151.861 billion during the first nine months of current fiscal year.

Agricultural credit disbursement, in absolute terms, rose by Rs 13.264 billion in July-March, 2009 period when compared with disbursement of Rs 138.597 billion during the same period of last fiscal year.

Overall credit disbursement by Allied Bank, Habib Bank, MCB Bank, National Bank of Pakistan and United Bankfive big banksstood at Rs 74.365 billion during July-March period of 2008-09, period, compared with Rs 65.125 billion during the same period of 2007-08, depicting an increase of Rs 9.24 billion or 14.2 per cent.

Zarai Taraqiati Bank, the largest specialized bank, disbursed Rs 45.40 billion, up 14.76 percent when compared with Rs 39.561 billion during the same period of the last fiscal year.

Disbursement by Punjab Provincial Co-operative Bank stood at Rs 3.539 billion compared with Rs 3.935 billion during same period last fiscal year. Besides, 14 domestic private banks also loaned a combined Rs 28.557 billion, compared with Rs 29.975 billion disbursed during the same period of last year.

The State Bank of Pakistan has set an indicative credit disbursement target of Rs 250 billion for the agriculture sector for the current fiscal year, which is higher by Rs 50 billion or 25% than last fiscal years target of Rs 200 billion and Rs 38 billion or 18% higher than the actual disbursement of Rs 212 billion in FY08.


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*Long-term finance facility: SBP allows one-time refinance of loans for non-textile sectors​*
KARACHI: The State Bank of Pakistan has decided to allow a one-time opportunity for export-oriented industries to refinance their outstanding long-term loans availed from banks/DFIs for import/purchase of plant and machinery with loans under SBPs Long Term Finance Facility (LTFF) Scheme.

According to a circular issued by the State Bank on Tuesday, only those long term loans will be eligible for refinance under the LTFF Scheme which had been disbursed by banks/DFIs from 01-01-2005 to 31-03-2009 to the exporters of eligible sectors/sub-sectors mentioned in Schedule 1 of the Scheme excluding textile & garments.

No loan disbursed prior to the January 1 2005 shall be refinanced under these arrangements, the circular said. This refinance facility shall be a one-time opportunity effective from April 21, 2009 and will remain valid only up to June 30, 2009.

The circular pointed out that exporters of textile and garments will not be eligible for refinance under these arrangements. They will, however, continue to be entitled for fresh financing under LTFF Scheme provided their industry is covered in the list of eligible sectors/sub sectors of the Scheme.

According to the circular, refinance to banks/DFIs shall be provided only to the extent of 50 percent of outstanding principal amount at the time of grant of refinance. Remaining 50 percent shall continue to be financed by the banks/DFIs from their own sources as per original terms & conditions of respective lending institutions, it said. Similarly, no refinance shall be allowed to non-performing loans (NPLs) classified under SBP Prudential Regulations.

It said that refinance under the arrangements shall be provided at the markup rate prevailing at the time of securing the refinance from the offices of SBP-BSC under LTFF Scheme. The rate of mark-up shall be applicable from the date of securing refinance under the LTFF Scheme. The banks/DFIs shall prepare the repayment schedule for refinanced portion (principal amount only) in line with the repayment schedule already agreed at the time of sanction / disbursement of the original loan. They may, however, amend the repayment schedule in a way that the borrowers can make repayments in equal quarterly or half yearly installments as mentioned in LTFF Scheme. However, total tenor of loan shall remain the same.

The circular said in case the borrowers repay their obligation in part or in full on or before due date(s) the banks/DFIs shall adjust the loan amount on pro-rata basis keeping in view the share of financing made by them through their own sources and refinance availed from SBP. They shall repay SBPs portion of loan amount so received from the borrower immediately, but not later than two working days, to the concerned office of SBP-BSC, failing which fine for late adjustment will be charged from the PFI at the rates prescribed in the Scheme, it added.

Meanwhile, in a separate circular the State Bank has also allowed financing for plant, machinery & equipment under LTFF to be used by the export-oriented projects in sub-sectors/processes of spinning sector including doubling, twisting, combing, slubbing, lycra, and yarn dyeing.


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*Pakistan doing well on economic front: WB​*
ISLAMABAD: The World Bank has stated that the scale of the donor pledges made on April 17 in Japan was a manifestation of regard for the tough measures the economic team led by Shaukat Tareen has taken in Pakistan in the past few months.

The complimentary message for the Pakistan government and Shaukat Tareen came from WB vice-president Isabel Guerrero at the end of Friends of Democratic Pakistan (FODP) conference co-hosted by Japan and IFI&#8217;s.

The message said the present government took robust stabilising measures and entered into an International Monetary Fund Stand-By Arrangement on November last year which remains on track.

In a world crowded with problems, Pakistan won important aid commitments, it said.

&#8220;The international community rallied to support Pakistan&#8217;s economic programme with more than $5 billion in funding designed to meet its immediate needs and protect expenditures on safety net and human development initiatives critical for poor people.&#8221;

Through this difficult adjustment made all the harder by a global downturn Pakistan has done well to protect the poorest 25 percent of its citizens, said the WB vice-president for South Asia in the message.

The Government of Pakistan shared development plans at the conference and committed to tough measures that would sustain macroeconomic stability while rolling out expanded social safety nets and laying the foundation for accelerated growth.

Development partners supported new social safety net programmes being introduced by the government.

The World Bank is working with Pakistan to refine the targeting of these programmes to make sure support reaches the poorest citizens in a transparent manner, the message underlines.

The successful monitoring and evaluation of this programme was of particular concern to donors.

The Donors&#8217; sideline evaluation of the government&#8217;s ongoing 9-point economic reforms agenda has lent credence to the scale of robust efforts Pakistan has undertaken in core economic areas like macro-economic stabilization, social protection, agri reforms, industrial competitiveness, Human Resource Development, integrated energy generation plan, capital market reforms, Public-Private Partnership and administrative reforms.

Redesigning the internal fiscal policies through various economic structures undertaken by Central Bank is part of the package of economic measures and monetary operations put in place by the government.


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*Zardari approves mega uplift projects for Sindh​*
President Asif Ali Zardari on Monday presided over a high-level meeting on the development projects in Sindh at Bilawal House here. The President approved Shaheed Benazir Bhutto Transit CNG Bus Project for Karachi, which would be a public transport scheme under which 500 environment-friendly CNG buses would ply on the city roads.

Only women would have the right to ownership besides 50 percent of the seats would be reserved for women passengers. The scheme would be launched by City Nazim Karachi, who would also oversee implementation of the project.

The federal government would provide an interest subsidy of Rs 700,000 per vehicle. The number of buses in Karachi under the project would increase to 4000 by 2012.

Karachi Mass Transit project: The government would provide sovereign guarantee for the KMT, which would be carried out on BOO basis. International competitive bids would be invited soon. This scheme would be launched immediately.

Karachi Circular Railway: Karachi Circular Railway is being revived with a cost of $1.6 billion with international assistance. The President desired that the scheme must be implemented as soon as possible without delay. The President said that a resettlement plan be immediately prepared for the rehabilitation of the people settled on the way of KCR.

Lyari Express Way: About Lyari Express Way, the President approved the financing of the project. The project would be implemented immediately and the Planning Commission will finance it without delay. The President desired that the Governor and Chief Minister undertake vertical development for the settlement of those who have been displaced due to Lyari Express Way.

Bus Rapid Limit System. The President approved the Bus Rapid Transit System (Bagota Model), implemented by City Nazim of Karachi immediately and without delay. Three corridors initially will be developed in Karachi.

a. Nagan Chowrangi to Cantt Station

b. Saforan Goth to Numaish Chowrangi

c. Orangi to Board Office Chowrangi

*KARACHI-HYDERABAD MOTORWAY:* The President directed construction of Karachi-Hyderabad Motorway as a modern motorway in conformity with international standards. It was also decided that work on Larkana-Khairpur bridge will be accelerated for timely completion.

The meeting revived the road networks in Sindh and directed SHA for completion of works on priority basis on Sukkur-Shikarpur Jacobabad Express way and Rato dero-Sehwan additional carriageway. Karachi Sewerage Scheme was also approved.

*THAR COAL:* The President expressed desire to expedite the Thar Coal project and directed that the development projects in infrastructure sector must get the top priority and the quality should be in conformity with international standards.

*REALIGNMENT OF RBOD-III:* Regarding the issue of realignment of RBOD-III, the President directed that the consultants be assigned with the task of proposed change of alignment. He also directed that a meeting of Sindh and Balochistan public representatives be held to resolve outstanding issues.

The President further directed that scheme be prepared for improvement of Phuleli canal located in Badin District. The President also reviewed progress on the Hyderabad-Mirpurkhas dual carriageway. The meeting was informed that the project is at an advanced stage of technical evaluation and will be ready for approval shortly.

The President stressed improvement of canal system and lining of distributaries and minors to ensure water conservation and supply to tailenders.

*The LBOD:* Regarding the sufferings of people of Badin and Thatta, Wapda should come up with concrete proposals to restore the issues of LBOD and tidal link on permanent basis. For irrigation water use optimisation, the President desired that Sindh government should prepare extensive projects for drip and sprinkler irrigation to help poor farmers of the province.

The meeting was attended by Chief Minister Syed Qaim Ali Shah, Governor Dr Ishratul Ebad, Federal Communication Minister Dr Arbab Alamgir, Federal Minister for Water and Power Raja Pervaiz Ashraf, Sardar Aseff Ahmed Ali, Deputy Chairman Planning, Secretary General to President Salman Farooqui, Provincial Ministers Dr Zulfiqar Mirza, Agha Siraj Durrani, Mir Nadir Magsi, Shazia Marri and other federal and provincial officials.


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*Record Gulf remittances bleak comfort for Pakistan​*
KARACHI: Pakistani expatriate workers wired home a record $739.4 million last month, but experts warn job losses from the global credit crunch could soon slash remittances and rock the economy.

Pakistanis working overseas sent $5.66 billion home during the first nine months to March 31, 20 percent up on the same period last year, said the central State Bank of Pakistan. Remittances in March surpassed the previous monthly record of $673.5 million in December 2008 and clocked up a significant increase from expatriates working in the Gulf countries, it added.

Pakistanis in the United Arab Emirates (UAE) sent back $175 million, up from $112 million in March 2008, and 151 million from Saudi Arabia compared to $120 million in the same month last year, it added.

"The increase will certainly help our foreign exchange reserves to grow but we should not be happy," independent economist AB Shahid told AFP.

Pakistan's economy relies heavily on its roughly four million expatriates -- around two million in the Gulf and the rest divided largely between Britain and North America.

Their remittances account for 4.4 percent of Pakistan's gross domestic product and the $5.66 billion paid so far this fiscal year make up around half the country's foreign exchange reserves of $11.22 billion. But thousands of Pakistani workers have lost jobs, mainly in the Gulf. Low-paid Asian workers have fallen victim to the global credit crunch as companies run short of business and money.

A report published in the UAE in February showed that $582 billion worth of building projects (45 percent of the total) had been put on hold due to the slowdown. "Our exchange reserves will remain healthy this fiscal year but next year a decline in remittances will certainly hit us," Shahid said. Most Pakistanis are unskilled workers associated largely with construction, transport and civic services such as sanitation in the Middle East.

The ruler of Dubai, Sheikh Mohammad bin Rashed al-Maktoum, acknowledged this month that economic growth in the UAE would probably fall to around three percent in 2009, down from 7.4 percent last year.

Private recruitment companies say the slowdown means fewer jobs.

"We had long queues of people wanting to go to the Middle East last year but now their number has declined significantly," said Illahi Bakhsh, owner of the Personnel Services Bureau, one of hundreds of Pakistani recruitment companies.

The economic downturn has closed scores of industrial units in Pakistan, rendering thousands unemployed. Soaring at 20 percent, inflation is hammering the ordinary man on the street and squeezing prices.

Wilting under extremist attacks and a fragile economy, the International Monetary Fund agreed last November to give Pakistan a 7.6 billion dollar loan to avoid a balance of payments crisis. International donors pledged $5.28 billion in Tokyo last week to stabilise the frontline state in the US-led "war on terror". Analyst Rauf Nizamani believes there is some hope provided returning workers invest their cash in small businesses.

"They could still contribute to the economy if they invest in small businesses and not use the money on private consumption."

Businessman Majyd Aziz was optimistic, noting that people were increasingly sending money home officially rather than through backhand channels. "Certainly, Pakistanis and other Asians are suffering lay-offs but our remittances have also increased because most Pakistanis now use official channels instead of hundi," he said. The traditional method -- by which money is transferred within days through agents anywhere in the world to even the most remote village -- is illegal in Pakistan, but experts say most expatriates rely on the system. The government is now campaigning to dissuade expatriates from patronising moneychangers allegedly involved in hundi. afp


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*CDWP likely to approve 51 projects costing Rs 59.6 billion on April 30​* 
Central Development Working Party (CDWP) of Planning Commission is likely to recommend and approve 51 development projects worth Rs 59.6 billion in its meeting scheduled for April 30, it is learnt here on Monday. According to the agenda, a copy of which is available with Business Recorder, CDWP will consider 6 projects in energy sector worth Rs 23.6 billion.

Government is focusing on the energy sector projects to overcome the current power shortfall. The projects that CDWP will consider for approval include Electricity Distribution and Transmission Improvement Project (MEPCO) (Modified) worth Rs 195.606 million, Electricity Distribution and Transmission Improvement Project PC-II (IESCO) costing Rs 144.230 million, Rs 183 million Interconnection of IPPs with National Grid (Phase-II) for dispersal of power from 200 MW Nishat Power near Chunian project, Diber Khawar Hydropower project (130-MW) costing Rs 14217.395 million, Khan Khawar Hydropower project (72MW) worth Rs 7652.645 million and 4MW Hydropower Project Thak Chilas, (modified PC-I) at the cost of Rs 1113.90 million.

In Transport and Communication sector, the CDWP may recommend another big project to ECNEC for approval is Environment Friendly Public Transport System for major urban centre of Pakistan (Karachi, Lahore, Quetta, Peshawar, Faisalabad, Multan, Rawalpindi/ Islamabad, Hyderabad and Sukkur (PPP) at the cost of 5.billion. The nine other projects are

improvement and up gradation of existing single lane metalled road to double lane metalled road, Kohala - Dhirkot (Mujahid-e-Awal Road ) Length 27 k.m. Distt. Bagh (amended PC-I) worth Rs 941.039 million, Construction of PCC Road, District Dir NA-22, Rs 470.000 million, Construction of Suspension/ Arch Bridge at Distt. Dir, NA-33, Rs 217.261 million; Const. of Matalled Road from Gandha Singh to Kanganpur road along Dipalpur Canal, Distt. Kasur, Rs 418.493 million; Widening and Rehabilitation of Matalled Road from Radha Kishan Road to Khundian Dist.

Kasur, Rs 238.670 million; Widening & Black Topping of Road from Jamrud to Mullahgori (17-km) from K.M. No 23 to 39 from Lowera Maina to Azam Banda (Phase-V) Khyber Agency, Rs 418.739 million; Improvement Widening & B/T of Road from Takhta Baig to Mathani via Bara By Pass and Sheikhan (30-KMs), Rs 466.420 million; Construction & Black Topping of Road from Jamrud via Mullagori to Landikotal (Phase-IV) 10 kms Khyber Agency Rs 274.790 million;

Widening/ improvement of Road from Gillwala to Ghumanwala via Bhuttla Jhanda Singh and Qila Didar Singh Length=38 kms in District Gujranwala, Rs 281.677 million; Construction/ Black topping of road from Hub to Dureji District Lasbella (length 129.00 km) Rs 1000 million; Construction of Link roads from Kohlu town to By pass, Rs 79.865 million; Construction of various black topped road to link different villages with main Kohla town, Rs 222.245 million; Construction of By pass road at Kohlu, Rs 197.810 million.

Establishment of the Highway Research and Training C0entre (HRTC) Rs 914.810 million with foreign component of Rs 566.840 million; Diamer Basha Dam project - Construction of By pass "Shatial - Thor Nullah - Existing Karakorum Highway (KKH) Rs 3,928.558 million.

In water resources, CDWP will consider 12 projects for recommendation and approval. These projects are Rs 2,478.344 million Sukkur Barrage Rehabilitation and improvement project, Sabakzai Dam project (2nd revised) worth Rs 2005.545 million; Research Studies on Drainage, land reclamation, water, management and Use of Drainage water, Rs 426.902 million;

Chashma Right Bank Irrigation project stage-III Remedial measures in NWFP portion, Rs 563.490 million; constructing additional VR bridges on Dists and minors in Chashma Right Bank Canal Division, Taunsa Sharif (amended) Rs 72.209 million; construction of office building for the office of Indus River System Authority (Revised PC-I) Rs 68.863million; acquiring consultancy services for preparation of detailed design of 75 small dams. Detauked syoervision etc, located in Kohitan and Nagarpakar areas on Sindh Rs 162.000 million; providing protective measures Muhammad Shahwala Flood Bund Bursla Branch against erosion by River Ravi (Guide Spur Road 419+420 Burala Branch) Rs 50.392 million; construction of J-Head Super No 2 of Pir Adil Minor and I-I Disty of Link Rs 141.497 million; construction of guide head supr at RD 165+000 Link Rs 53.033 million; construction of SPUR No 34 & 35 along Right Bank of River Indus District DI Khan (NWFP) Sub Work Construction of SPUR No 34 at the cost of 198.752 million and extension of stone apron pitching along K.K. Bund Mile 11/3 to 12/4 and Rcoapment of Damage Apron pitching from Mile 10/7 + 550 to 11/1+110 in Begari Sindh Feeder Circle amounting to Rs 2623.000 million.

In agriculture and food sector, poverty reduction through small holders livestock and dairy development worth Rs 2500.000 million will be tabled before CDWP for consideration. In Forestry and Wildlife, establishment of model forestry park near Rawal lake Rs 239.017 million is expected to get nod of CDWP. In Physical Planning & Housing the project is to be considered are constriction/replacement of new and existing water supply line under Special Development Plan Lyari, at cost of Rs 370.410 million, construction/replacement of new and existing sewerage system under special development Plan Lyari worth Rs 367.002 million, rehabilitation and improvement of lighting system of road/streets and playgrounds at Lyari Town Rs 191.454.

Projects in Industries and Commerce include "Foundry Service Centre Lahore" worth Rs 179.4 million and Rs 435.636 million may get approval. Devolution and Area Development projects are Mohmand and Bajur Area Development Projects (Phase 111) costing Rs 125.195 million and in education, CDWP will consider one project that is construction of Inter Girls College at Kohlu (Revised) amounting to Rs 125.590 million.

In Higher Education, CDWP may approve establishment of Women University Multan (Prime Minister's directive) costing Rs 1715.830 million and strengthening of Allama Iqbal Open University Islamabad at the cost of Rs 389.655 million.

CDWP is expected to clear Position Papers (PPs) that include immediate needs of the University of Science and Technology Bannu worth Rs 427.861 million and Rs 485.567 million Strengthening of Institute of Space Technology (Phase 1) project. The other project is development of University of Balochistan Quetta worth Rs 971.878 million. In Labour and Manpower, short term vocational training courses under Prime Minister Special Initiative for Hunarmand Pakistan Programme costing Rs 106.994 million and establishment of a National Training Centre (NTTC) Kasur at the cost of Rs 494.459 million will be tabled before CDWP for consideration.

In Governance sector, two projects will be considered that are Institutional Strengthening and Efficiency Enhancement of Planning Commission amounting to Rs 494.459 million and Rs 79.481 million and project of establishment of office of Inspector General Development Projects Balochistan (Phase 11). In health establishment of 400-bed woman hospital and chest disease centre at Ralwapindi at the revised cost of 2.643 million and construction of 50 bedded hospital at Kohlu costing Rs 225.704 million will be tabled before the meeting.


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*Pakistan offers farmland to foreign investors​*
Pakistan is offering one million acres of farmland, protected by a special security force, for lease or sale to countries seeking to secure their food supplies, an official from the ministry of finance said on Monday. Gulf Arab countries, mainly reliant on food imports, have been seeking farmland in developing nations to secure supplies and have expressed interest in Pakistan's offer.

Donors including the United States, Japan, Europe, Saudi Ararbia and Iran pledged more than $5 billion in aid over two years at a conference in Japan this month to help Pakistan as it battles militants and repair its economy. "We are offering one million acres of land across Pakistan for investors who want to buy or lease the land for a long period of time," said Waqar Ahmed Khan, the Federal Minister of Investment.

Pakistan's government is now in talks with Saudi Arabia, the United Arab Emirates, Bahrain and other Arab states, said Khan. "And very soon we will be signing the deals," he added. The ministry, which was formed in October to promote foreign investment in Pakistan, will also provide investors with a legislative cover to protect them from changes in the government, Khan said in an interview to Reuters and a local newspaper.

"We want to give Pakistan a corporate style and corporate look and with that we also want to protect investors from any changes that happen politically, which never used to happen before," he said, adding parliament would approve this within three months.

"For the first time I can say that whole government including the upper and the lower house and the opposition are on board for this project and are supporting the idea of improving Pakistan's economic situation." Khan said the ministry will also make sure that all machinery being brought in will be exempted from duty charges.


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*Fahim for improving quality of export goods​*
ISLAMABAD: Federal Minister for Commerce, Makhdoom Amin Fahim on Wednesday suggested exporters to focus on quality improvement and efforts for bringing innovations into designing to make the product of international standards.

A six-member delegation of Pakistan Carpet Manufacturers and Exporters Association called on him and discussed the problems faced by the industry.

The minister showed concern over the decline in carpet exports from $146 million to $103 million during the current year.

The minister assured complete support of the Ministry of Commerce and Trade Development Authority of Pakistan (TDAP) to facilitate the carpet exporters. Chairman of Pakistan Carpet Manufacturers and Exporters Association Akhtar Nazir Khan said that carpet export sector had remained one of the main export sectors and about 2 million people were attached to the industry. staff report


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*Non-textile exports continue to post growth​*
KARACHI: The handsome growth in non-textile exports helped to avert the major loss in the overall export volume caused by dismal show of textile products. The export of non-textile products posted 10 percent growth to $6.220 billion in first nine months of current financial year over $5.648 billion in the corresponding period of previous year.

Whereas textile exports registered 7.58 percent negative growth to $7.193 billion in the period under review against $7.783 billion in the same period of last financial year.

Rice, fisheries, fruits, footwear, engineering goods etc, trigger the substantial growth in the non-textile products. The strong performance of the non-textile sectors, analysts and exporters pointed out, was mainly driven due to commodities, which so far performed well. Apart from commodities, the various categories in non-textile areas are also struggling hard to compete in the international market.

The talks of expanding the export base has been heard for a long time, they added, but it is still confined to few sectors. Earlier this textile sector, which was leading in the export volume and stabilizing the export figures and now this time it was commodities like rice and fisheries, which have exceptionally well particularly the fisheries that is facing the European Union (EU)s ban on its export.

Official export figures indicated that export of rice rose by 52.66 percent in July-March period of 2008-09. The export of Basmati rice increased by 42.05 percent and export of other varieties of rice jumped 66.05 percent during the period under review.

The export of fisheries and its products rose by 21.17 percent, fruits 3.13 percent, vegetables 12.29 percent, spices 15.58 percent, meat & meat preparations 16.01 percent.

The export of sports goods declined 2.21 percent. Export of leather goods fell 19.74 percent and carpets export decreased by 29.67 percent. Cutlery export fell 2.83 percent, whereas onyx manufactures are up 113 percent.

Chemical and pharma products export increased 7.49 percent, engineering goods 39.50 percent, jewellery 20.04 percent, molasses 134 percent, cement 60.42 percent.

The export of auto parts and accessories decreased 36.41 percent, gems 59.60 percent and furniture 19.49 percent. The export of petroleum products and coals fell by almost 23 percent.

In textile group, the export of cotton yarn fell by 15.52 percent, cotton carded 5.62 percent, yarn other than cotton yarn 53.39 percent, knitwear 4.80 percent, bedwear 11.80 percent, tents 19.29 percent, readymade garments 13.10 percent.

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*Pak-Saudi bilateral trade volume crosses $4bn/annum​*
ISLAMABAD: Saudi Arabia is among the 15 export partners of Pakistan with which bilateral trade volume has gone above $4 billion per annum and this would be further increased in the future.

This was stated by the President Islamabad Chamber of Commerce and Industry, Mian Shaukat Masud during a meeting with Ambassador of Saudi Arabia to Pakistan, Ali Awadh Assari, who paid a farewell visit to ICCI on Wednesday.

Speaking on the occasion, Ali Awadh said that there was a need to devise a short- and long-term strategy to boost the trade and business relations between the two countries. He asked for encouraging efforts for boosting direct trade between Pakistan and Saudi Arabia to benefit the people of both the countries.

He said that due to the involvement of a third country, prices of goods more than doubled because of taxes and the quality of the goods like fruit and vegetable was also decomposed. The ambassador suggested to increase the number of cargo flights between both of the countries to save extra tax expenditure as well as quality of a product. He urged the local business community to interact with the Saudi businessmen to further boost trade in the fields of surgical instruments, furniture, leather goods, fruit and vegetable.

The people from every corner of Pakistan are serving in different sectors including health, education, construction and communication, which was a symbol of trust and historic friendship between both the countries.

The ambassador informed that Saudi embassy was processing about 1,400 work visas per day to facilitate the business community.

He said that Pakistan was facing many challenges including extremism and terrorism that can be resolved only through home made strategy, adding that best minds and leadership was present here to meet any challenge. Saudi Arabia would continue its diplomatic and financial assistance and efforts to help Pakistan for the development and prosperity of its people.

President ICCI thanked the ambassador for his farewell visit to ICCI and said that Saudi Arabia has always provided considerable economic and financial assistance, which played an important role in the economic development.

He asked for simplifying the visa process to further facilitate the business community in the country.

ICCI chief said that there were 350 Pakistani investors in the Kingdom who have obtained licenses from Saudi Arabian General Investment Authority and have established companies in various fields.


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*SBP sees inflation at eight percent in 2010​*
The State Bank of Pakistan on Monday said that inflationary pressures are easing and average inflation is expected to come down to 8 percent in fiscal year 2010. The SBP, in its monetary policy statement said that reduced domestic demand pressure, as evident in shrinking twin deficits, is expected to narrow the output gap and reduce inflation.

However, supply shocks such as power shortages and worsening law and order situation may delay the eventual fall in inflation. In fact, the persistence in inflation is largely due to these factors and is evident in various inflation indicators. Nonetheless, other supply side factors such as falling international commodity prices and improved food supply coupled with strong expectations of low inflation in the near future will have a beneficial impact on current inflation.

The SBP pointed out that declining trend in inflation now appears robust as headline CPI inflation (YoY) has come down to 19.1 percent in March, 2009 from the peak of 25.3 percent in August, 2008. "Present declining trend is likely to continue as indicated by an expected average inflation of around 14 percent in Q4-FY09 and 8 percent for FY10," the SBP added. However, due to strong inertial impact, average CPI inflation for FY09 would remain around 21 percent.

Core inflation, measured by 20 percent trimmed mean, which remained firm around 21.7 percent since October 2008, declined to 19.3 percent in March 2009. Similarly, non-food non-energy (NFNE) measure has also eased to some extent. On month on month basis, both core inflation measures, have reverted to levels prevailing in FY07 (0.5 percent) after rising above 2.0 percent during earlier month of FY09, which provides further support to expectations of falling inflation in the coming months, the SBP said.

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## Neo

*Poverty reduction: Pakistan undertaking home-grown strategy ​*
Pakistan is undertaking a home-grown strategy for growth and poverty reduction that will be implemented with the support of the IMF and other development partners.

According to a statement issued by Finance Division here on Wednesday, development partners at the meeting of Friends of Pakistan (FOP) have pledged new financing for Pakistan totalling more than $5 billion over the next two years to provide additional support to social safety nets, human development, and pro-poor development expenditures.

Donors also reaffirmed their commitment to the existing programs (currently totalling more than $15 billion dollars) for ongoing and medium-term development initiatives in Pakistan, reduce poverty and enhance economic growth.

The action of development partners included financial support, but also broader support development and stability in the regional context of Pakistan and its neighbours. .A meeting of 'Friends of Democratic Pakistan' preceded the donor conference where development partners welcomed and took into account the government's commitment to address security concerns and noted the need: for strong regional co-operation to address common issues.

The meeting addressed Pakistan's reform program, and financing needs. The Government of Pakistan presented a statement outlining its overall approach to addressing the interlocking challenges which it confronts. Development partners noted the need to maintain reform momentum of particular tax revenue generation and its impact on macroeconomic planning. Pakistan's short-term financing needs focus on protecting poor, maintaining pro-poor services, and continuing programs in health, education and social protection. In particular, development partners were supportive of expanding social safety nets. Participants emphasised the importance of ensuring transparency and good government in implementation of the safety nets, as well as rapidly increasing capacity for monitoring and evaluation.

There was broad support for Pakistan's Poverty Reduction Strategy and its articulation at the meeting with a focus on safety nets, skills developments, social mobilisation, education and health. Delegations also recognised the importance of accelerating investments in infrastructure, agriculture, power, and irrigation over the medium term. The importance of term strategy was emphasised, particularly given the current security challenges.

Participants of the FoP conference also noted concern about the security situation in Pakistan, and the impact on development, the investment climate, and growth. The meeting addressed how to undertake effective development work, and the meeting addressed how to undertake effective development work in the face of rising terrorist attacks. The Friends of Democratic Pakistan, which took place immediately prior to the Donors Conference, addressed security issues, development, and regional co-operation.

Participants recognised the need for ongoing co-operation among partners and the government with a view to increasing co-ordination, making funding both more predictable and more accountable and strengthening implementation. The meeting concluded that the Government of Pakistan will host a Pakistan Development Forum (PDF) within one year's time.


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## Neo

*40kW wind power plant to be inaugurated today ​*
Federal Minister for Water and Power Raja Pervez Ashraf would inaugurate 40 kW demonstrative micro wind power plant project in Kalar Kahar today (Thursday). The project would be the first wind project to be set up in Punjab. The inauguration of the demonstrative project follows the commissioning of the first commercial wind farm in Jhimpir Sindh last week.

Alternative Energy Development Board (AEDB), which acts as a one window facility for the investors in renewable energy sector, has facilitated M/s SUNEC Wind Power Generation (Pvt), a Chinese firm, in setting up of the project. SUNEC, on successful completion of the demonstration project, plans to install 160 turbines of 600 kW each, thereby setting up a farm for 100 MW.

Chief Executive Officer AEDB, Arif Alaudin said AEDB was vigorously working for promotion of various renewable technologies as to help the country meet its growing energy needs. "Pakistan has a vast array of renewable energy sources. We are turning that into a reality with a progressive and distinct approach to make renewables a driver of sustainable economic growth."-PR


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## Neo

*IMF and Pakistan: what needs to be done ​*
After World War II, economists and politicians created the International Monetary Fund (IMF) to help keep the international financial system stable. From the outset, the Fund's specific roles were to promote balanced growth of international trade, provide funding to countries in economic distress, and safeguard income levels necessary for people to purchase essential goods and services.

The IMF provides credit to countries facing a balance of payment (BoP) crisis. Under a stand-by arrangement, an IMF member country is provided a specified amount during a given period, usually in tranches, subject to the borrower's compliance with performance criteria and other conditions embodied in the agreement.

Typically, IMF conditionality regime stipulates reducing fiscal deficit, devaluation of the domestic currency, a flexible exchange rate, liberalisation of trade and investment regime, privatisation of state-owned enterprises, tightening of the monetary policy and overall de-regulation of the economy. These targets not only lack a sound economic basis but prompted cutbacks in public spending on health, education, and other vital services that poor and vulnerable populations rely on governments to provide.

It does not really matter what the intentions of the IMF are. The fact is that the Fund is not a charity institution. Regardless of its noble claims of strengthening countries, it is at the end an institution working in its own interests, and one should not be naive enough to either deny or criticise that. The loans may be meant to stir up the economy, but history has shown us the failures of this policy.

One cannot blame the IMF for the Pakistan government's own ineffectiveness. Borrowing to develop, and then borrowing again to finance the previous borrowing, is a policy that can now be called a failure, as we have no development, but only borrowing bills to show for it.

There is only one reason for Pakistan's failed policies, be it related to development, trade or investment and that is over reliance on external sources of financing. In a globalise world, transactions with other countries are a compulsion. External Finance has been a major constituent in development. No doubts there. However, Pakistan has been over enthusiastic about it. It cannot be the sole mode of survival.

Pakistan needs to survive on its own, and then use the best economics has to offer to interact with the rest of the world. External finance should be an opportunity for growth, not a necessity for survival.

*THROUGH THIS ARTICLE I WANT TO SUGGEST A FEW THINGS:* One of the aspects which needs to be focus is defaulting. Pakistan owes its foreign debt to a trade deficit, foreign commercial banks, international bonds and the IFIs. The worst that can happen if there is default on the foreign commercial banks and International bonds is that Pakistan loses credit worthiness and the foreign banks don't want to have anything to do with it.

It loses all confidence in the International Bond market. If the local currency depreciates due to the flight of capital, it may cause cost pushed inflation as the prices of imports rise. However, the inflationary control measures taken through the tight monetary policy by the central bank will to a great extent offset this. The one advantage: it saves Pakistan from the IMF.

The price seems big, but compared to the other costs, it's the minimum. The world recession already means decreasing investment globally. The instability and insecurity means bailing out investment, no matter what rate of interest you offer, because no investor wants to invest where there is risk to property. The investment in the past few years was mostly on FMCGs {Fast Moving Consumer Goods} so it cannot be used for sustenance.

Pakistan can compensate for the loss in growth by simply building ie encouraging saving, discouraging expenditure and supporting private investment. Despite the credit trustworthiness issue, local investors may still be persuaded with subsidies, tax incentives and support schemes. Foreign investment is important in a global world, but if letting go of it means relief from the IMF, it's the lesser bitter pill to take.

Trade is also an important aspect to be addressed. There is a trade deficit of $3.522 billion (FY08). Unfortunately that would have to be paid. Pakistan needs to curtail its imports, but for the current period, it cannot afford to do this. Oil, machinery, iron and steel remain the biggest imports. Pakistan is dependent on its imports and, therefore, cannot endanger the supply, or raise their prices.

If Pakistan is ready to lose out on investment, it would need to have the trade door still open for it to interact with the rest of the world. Current account default would be a trade suicide, one that cannot be afforded under any circumstances. How it is done with no foreign exchange reserves is a bigger challenge. Go for bilateral funding, use up money from the domestic debt, and take out whatever Pakistan can from wherever it can to finance the deficit.

In May 1998 the government had gone to the extent of freezing the foreign currency accounts. Even if such dire action cannot be called for, at least some action needs to be taken to make this a priority. The trade deficit could be decreased by: increase in exports and decrease in imports. Pakistan's current major exports include cotton, so measures should be taken to increase the quality and yield, but it cannot be done because fertilisers are imported from Morocco.

More sports goods or leather items cannot be exported either, because the machinery comes from China, and Pakistan cannot make its own capital goods because the iron and steel has to be bought from Japan. So the only way to increase exports is to also increase imports, as all the raw materials for exports are imported. Decreasing the trade deficit is not that simple after all!

-- Pakistan will have to increase both the value and threshold of its exports. Its largest trading partner is the European Union, and United States is the single country to which it export the most. Therefore there is a dire need to increase the trade diversity (trade with more countries).

-- Pakistan's exports have been limited to a few items. Over the years it has faced immense competition from countries, including China, India, Korea, and Taiwan. Trade has grown for its rivals, but with hardly any effort to improve the quality or yield of its own exports, and has been left behind in the competition.

-- Investment should be made in Research and Development, focus should be on finished products instead of unfinished crude goods, brands should be introduced and exporters supported through reduced taxes, schemes etc.

-- The imports should be minimised. Oil, steel or iron are necessity but the latest cars, mobile phones and watches are not. A free hand should be taken to tax the luxury import items (it will help ease the fiscal deficit too). The Be Pakistani Buy Pakistani Scheme should be revisited. Another important aspect to be addressed is fiscal deficit. The ever-increasing fiscal debt causes further borrowing from the IFIs.

-- Instead of borrowing from the Central Bank; the Government should opt for direct public financing if it has to borrow. It does not have an adverse effect on interest rates and, therefore, investment. The monetary base is not affected by the deficit funding and therefore it does not cause inflation. Most importantly, it makes the Central Bank independent and does not dictate or affect the Monetary Policy. Borrowing from the Central Bank causes inflation.

-- The government expenditure should be reduced ie expenditure by the government (ministers in big cars, huge entourages, political dinners and functions at the Presidency) not the public spending. Given the political economy of Pakistan, if there are to be any drastic cuts in public spending, these have to be on subsidies or development expenditure.

The government has already eliminated oil subsidy and announced to phase out power subsidy by the end of the current fiscal year. The size of the public sector development programme will also be trimmed. Removal of oil and power subsidy and cuts in development spending will hit hardest the poor and low-income sections of society.

The rulers should bring back their deposits from foreign banks, cut their expenditures and also forego their stipend for the days they availed leaves. The fiscal deficit is a tragic 122 billion (FY08), the least that can be expected is a cut down on the Jiye Bhutto monuments. The common man should be empowered. Income disparity is one of the biggest problems. It is not enough to generate wealth, the effect has to trickle all the way down.

-- Agriculture sector should be developed as it remains the largest in the economy. While industrialisation, investment etc accumulate wealth for a certain class, agriculture benefits the common man. It is also the rare case where there is no reliance on imports for its development and a competitive advantage can be gained in its trade (this will also help with the current account deficit). Investment should be made in R&D to improve yield.

-- Investment should be made in cottage industries rather than waiting for the big factories to open up. Employment should be created for the common man and Vocational/technical training should be provided. Pakistan has plenty of labour, but it has to be trained to be more productive.

It will also affect export favourably. Development will not come about by distributing small amounts of cash as pocket money to the poor; it will come about by giving a man a job that allows him to improve his standard of living. Attempts should be made by the government to bring the people on board and create a sense of unity to face the economic challenges through schemes/campaigns.

-- Campaigns should be launched to achieve policy incentives. For example to encourage using public instead of private transport to save on fuel, buying local goods instead of imported one, saving more, conserving energy etc. The sense of alienation should be removed.

Imposing these policies is the only way for long term sustenance. Short term growth may be effected but compared to the conditions that accompany the IMF loan; it's a price worth paying. There is a need to cut down on defence budget and reduce the fiscal deficit. The increase in tax, including the GST, is all to be borne by the lower and middle classes, while the rich and elite enjoy a regressive taxation system.

The government wants to take the loan and bear the price in the short term, and then introduce development programs for growth purpose. The same strategy should be kept; only pay the price in terms of default in the capital market. Stop using the IMF as a ventilator every time external finance fails us. This should be turned into an opportunity to develop basic infrastructure, redistribute the wealth and put local resources to use.


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## Neo

*Barge-mounted power unit to lend support to KESC: Pepco and Turkish firm sign contract ​* 
Minister for Water and Power Raja Pervez Ashraf said on Thursday that people of Karachi would soon see relief in load shedding. He said this after signing ceremony of rental services contract of 232 MW barge-mounted Karkey Rental Power Project, a project of Karkey Karadeniz Elektrik Uretim A.S., Turkey.

He said there was a current shortage of 200 MW - 300 MW in Karachi area, and this project would provide a significant support to Karachi Electric Supply Company (KESC) system. The signing ceremony was held at Private Power and Infrastructure Board (PPIB), which was also attended by Turkish Ambassador Rauf Engin Soysal, PPIB Managing Director, representatives of Karkey Karadeniz, all directors of PPIB and other senior government officials.

Chief Executive Officer of Lakhra Power Generation Company Limited Qazi Hafiz-ur-Rehman on behalf of Pakistan Electric Power Company (Pepco) and Chairman of Karkey Karadeniz Orhan Remzi Karadeniz on behalf of the company signed the contract.

The Minister said that the Karkey project, which is expected to be commissioned by November 2009, would further strengthen the bilateral ties of Pakistan and Turkey, and congratulated the PPIB and Pepco teams for working hard with Karkey to bring the project to an advanced stage.

The Turkish Ambassador highly appreciated the policies of the government of Pakistan, and termed it as a very happy occasion as it was also coinciding with a national ceremony being held in Turkey on Friday. Referring to the recent Friends of Democratic Pakistan (FoDP) meeting held in Tokyo, attended by the President of Pakistan, the Turkish Ambassador said that there was a strong support from the friends and Turkey was also very keen to further enhance development of Pakistan-Turkey relationship.


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## Neo

*Pakistan may bring LNG and LPG from Turkmenistan ​*
Pakistan is likely to bring Liquefied Natural Gas (LNG) and Liquefied Petroleum Gas (LPG) from Turkmenistan to meet its energy requirements besides offering Turkmenistan a facility at Gwadar Port for processing gas and export to other markets of the region.

Sources told Business Recorder that Advisor to Prime Minister on Petroleum and Natural Resources, Dr Asim Hussain during his forthcoming visit may offer Turkmenistan this proposition. The Petroleum Advisor is also expected to explore the possibility of importing LPG from Turkmenistan.

Pakistan's energy requirements are increasing with the passage of time and the country is currently working on two proposed gas pipeline projects including Iran-Pakistan-India (IPI) gas pipeline and Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline to import gas to fulfil its energy needs.


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## Neo

*PSDP outlay during 2009-10: government may allocate Rs 400 billion as Federal component ​*
The government may allocate Rs 400 billion as Federal component in total Public Sector Development Programme (PSDP) outlay during 2009-10. During the current financial year, the Federal component in the total PSDP has already been reduced to Rs 219 billion.

Talking to selected group of media persons in his office here on Thursday, Deputy Chairman of Planning Commission Sardar Assef Ahmed Ali said that the focus would be on the infrastructure development and the Federal component of the PSDP would be around Rs 400 billion in the next fiscal year. He said that the financial conditions were very tight during the current fiscal year and the Federal component in the PSDP outlay would be limited to Rs 200 billion.

He termed the outcome of Friends of Pakistan meeting in Tokyo as a great success for country that was under the severe financial crisis. He maintained that out of 5.8 billion dollars pledged as soft loans and grants at the forum, 3.8 billion dollars would be utilised for development, poverty reduction and budgetary support.

He said that the remaining amount of two billion dollars would be utilised for projects relating to internal security, up-gradation of civil armed forces and rehabilitation of displaced persons. He hoped that the Friends of Pakistan would disburse the pledged amount in six months time. He said that political-based subsidies were only a temporary solution to the economic crisis faced by the people and Roti scheme, launched by the Punjab government, had landed the province in financial troubles.

He said that grants and subsidies should be replaced with economic empowerment plans, and added that Pakistan needed to launch projects related to human resource development, infrastructure development and poverty reduction. However, he said that all these measures were ad hoc to support the poorest of the poor and not a way of life for a section of the society, adding that the government believed in economic empowerment of the masses.

He said the Planning Commission was initiating an "alternate development vehicle" to improve rural economies and the first project would be of dairy sector, under which the stakeholders would be empowered in decision-making process and public sector departments would only give technical inputs.

The Deputy Chairman of Planning Commission said that Benazir Income Support Programme (BISP) would be increased to Rs 60 billion and the number of beneficiaries would be 16,000 in each constituency of the National Assembly members. He added that the scheme would be upgraded and the next BISP card would be like a credit card.

"But before that we want to conduct a poverty survey to have updated information of all vulnerable population," he said. At the Friends of Pakistan forum, the donors also wanted Pakistan to conduct a poverty survey, he said, adding the initial working of the Planning Commission revealed that the poverty survey should contain all relevant information of the card holders.

This included information related to the income of the family, marital status if a recipient was a widow or if there was any handicapped person in the family. He also said that the Planning Commission had proposed that all the utility stores should be upgraded in the country to accept the BISP card. Later, the provision of medical support would also be included in the card. "But all these cards would be issued to the housewives only," he said, adding that only mothers were the best judge of expenditures.


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## sohailbutt

*Drastic fall in customs duty collection​*KARACHI: There was a drastic fall in collection of customs duty on Thursday as the city remained under the grip of tension following bloody ethnic violence erupted a day earlier.

With public transport staying away from roads causing a lot of hardship to people to reach their work-places, attendance in offices and commercial establishments remained very poor.

Most of the customs staff and clearing agents or importers could not reach their work-places and lesser number of Goods Declarations were presented for clearance.

As a result of this, there was lesser collection of revenue and almost all the customs points of the city, including Air Freight Unit (AFU), recorded a steep fall in collection of customs duty.

Official sources told Dawn that appraisement customs on Thursday collected Rs27 million only towards customs duty as against Rs166.3 million collected a day earlier.

Similarly, Model Customs Collectorate (PaCCS) collected Rs291.57million on Wednesday but collected Rs111 million (up to 4 pm) only on Thursday.

As business and industrial activity remained paralysed, collection in government revenue recorded a steep fall. 

At customs stage, collection of duty was the hardest hit where importers and clearing agents did not turn up to clear their goods.

At AFU, sources said, revenue collection dropped because lesser number of GDs were presented for clearance of goods. 

On an average, around 250 GDs are filed daily but on Thursday only 180 to 190 GDs were presented for clearance of goods.

The revenue collection at customs stage has already fallen owing to lesser imports but ethnic violence causing panic and fear in the city on Thursday forced people to stay at home.

The Port Qasim Collectorate also recorded a steep fall in revenue collection on account of customs duty as lesser number of GDs were presented for clearing goods.

Official sources told Dawn that on average the collectorate collects Rs2 billion per month towards customs duty. This brings daily average collection at Rs65 million. 

However, on the last day of each month, customs duty collection rises to Rs100 million. But unfortunately, on Thursday which was also a last day of the current month (April), collection dropped to Rs41million only. The collectorate staff has to personally approach importers or their agents to improve revenue collection, sources said.

Any kind of strife in the business capital of the country results in losses to national economy and it has been greatly felt by the business community that the government should do its level best to keep the Karachi normal and free of conflicts.

DAWN.COM | Business | Drastic fall in customs? duty collection


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## sohailbutt

*Korea to construct $331 million hydropower project in AJK: accord with consortium signed​*ISLAMABAD (May 01 2009): A signing ceremony for Patrind hydropower IPP project of 150 MW capacity worth 331 million dollars was held in Seoul on Thursday. Ministry of Investment Secretary Tariq Iqbal Puri attended the ceremony where the consortium of K-water, Sambu Construction and Daewoo E&C signed the agreement.

Vice-Chairman of Al-Ghurayr Group Essa Abdullah Al-Ghurayr also attended the ceremony. The three renowned Korean companies will have 49 percent share in the 331 million-dollar project. Patrind is a run-of-the-river hydel project, which will be catering to the energy needs of one million people of the Muzaffarabad, Azad Jammu and Kashmir (AJK).

Being a hydropower project, it is in line with the green vision of the government of Pakistan. Speaking on the occasion, Tariq Puri highlighted the enormous investment opportunities available in Pakistan, especially in the infrastructure and energy sectors.

Informing about the successes of 27 renowned Korean companies in two billion-dollar investment projects over the last two years in Pakistan, he invited greater Korean interest in the upcoming projects worth around 50 billion dollars, which were in the offing, especially in the wake of deep commitment shown by the Friends of Democratic Pakistan (FoDP) in the recent meeting in Japan.

Earlier in the day, the Ministry of Investment Secretary held a meeting with Vice-Chairman of the International Contractors Association of Korea (ICAK) Won, In-hee, to explain the opportunities available for Korean construction and energy companies in Pakistan. An ICAK delegation would soon be planning to visit Pakistan to have a first hand knowledge of the projects in the construction and energy sectors. After the signing ceremony, a round table conference with strategic partners was also chaired by the Ministry of Investment Secretary.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Two 450 megawatts IPP units to be operational this month: Pepco​*LAHORE (May 01 2009): Two new Independent Power Producer (IPP) units with a generation capacity of 450MW will be operational in current month, followed by addition of another two rental power plants to the system next month, said Managing Director (MD) Pakistan Electric Power Company (Pepco). MD Pepco Tahir Basharat Cheema said that installation of another plant of 320MW, gifted by the UAE government, is also being expedited by the government.

However, he advised the consumers to keep all options open including moonlight to deal with the load shedding phenomenon in the meantime. It may be noted that Cheema had assured the media on last Saturday that the load-shedding phenomenon would be away for a month at least because of improving generation system. But this assurance proved temporary and the country was passing through consecutive load shedding with the start of current week.

Talking to Business Recorder, Cheema, who was in Islamabad to attend high-level meetings, said the consumers' reliance on air conditioners registered phenomenal rise, inviting a deficit of 962MW to the system that led two to six hours load shedding across the board.

Besides the sudden increase in temperature, limited flows of water from the Mangla and Tarbela dams are another dilemma being faced by the Pepco. According to him, the water flow on both points was averaging around 40,0000 cusecs, which used to touch the level of 275,000 cusecs in the past from the month of April onwards. It is worth noting that the Pepco consumers are in a highly miserable situation because of the load shedding, especially during the night hours.

Those who can afford alternative arrangements, including mini-generators and Urgent Power Supply (UPS), have wasted no time in switching over to these options. But still a large majority of the consumers have no option but to rely upon the assurances extended by the government functionaries on overcoming the load shedding phenomenon from time to time. Cheema said water releases by the Indus River System Authority (Irsa) would keep on increasing after every 10 days from May 1 onwards.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Libya, Pakistan sign trade deals​*TRIPOLI: Pakistan has signed a string of agreements with oil-rich Libya to bolster economic ties on the sidelines of a visit by President Asif Ali Zardari, the official JANA news agency reported on Saturday.

The two countries signed an oil and gas cooperation agreement as well as accords to develop trade and investments, it said. 

Libya and Pakistan also decided to bolster ties in the fields of banking, health, education, public works and construction, JANA said. 

Zardari was due to wrap up a three-day visit later on Saturday. According to official estimates Libya and Pakistan have a volume of trade of about six million dollars annually, and some 10,000 Pakistani expatriates now work in Libya, down from a peak of 150,000 in the 1970s. 

Zardari also met Libyan leader Moamer Qadhafi during his first official trip to the North African country since his election in September 2008.

DAWN.COM | Business | Libya, Pakistan sign trade deals


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## sohailbutt

*Govt setting up industrial zone in Shahdadpur​*KARACHI: The Sindh industries department has initiated a project to set up a China Special Industrial Zone at Shahdadpur at a cost of Rs548 million. 

The zone, to be set up at 100 acres on the directive of the President, would be completed on fast track to invite Chinese investors to set up industries, and plots would also be given to local industrialists who want to shift their units from a nearby small industrial estate now fully colonised. 

Industries secretary Ali Ahmed Lund told Dawn on Thursday that the PC-1 of the project had been submitted for an early approval. 

Exact details about Chinese investment and nature of industries to be set up by them are still not known. The setting up of the zone might have been discussed during the Presidents recent visit to China.

The secretary, however, insisted that the special zone would attract investment mainly in agro-based industries. 

The Sindh Small Industries Corporation plans to set up industrial estates in every district of the province. 

The feasibility study said that six talukas in the Sanghar district, namely Jam Nawaz Ali, Khipro, Sanghar, Shahdadpur, Singhro and Tando Adam, are known for cash crops, such as wheat, rice, cotton, sugarcane and fruits and vegetables, which could provide abundance raw material for food processing units set up in the zone. 

The study says that there has been an increasing demand from the local industrialists for a new industrial estate at Shahdadpur as a nearby estate at Tando Adam has been fully colonised. 

The zone has been envisaged for a variety of industries, such as poultry farming, food processing units, cattle feed, light engineering, rice husking, flour mills, milk plants and oil expelling units. 

The special industrial zone would be completed in a record time of two years from the date of approval by the P&D. The SSIC would be responsible for developing infrastructure at the zone. To begin with, a water supply scheme has been prepared to start development work. 

DAWN.COM | Business | Govt setting up industrial zone in Shahdadpur


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## Neo

*Pakistan achieves autarky in producing CNG equipment ​*
ISLAMABAD (May 04 2009): Pakistan has achieved self-sufficiency in manufacturing the equipment of international standard used in Compressed Natural Gas (CNG) sector. "Locally produced CNG equipment are now competing with international brands quality-wise as well as in performance in the market," official sources said.

In order to promote indigenous production of CNG equipment, the Oil and Gas Regulatory Authority (Ogra) had given permission to eight companies for manufacturing/assembling CNG compressors, dispensers and conversion kits for vehicles subject to conformity of the laid down international technical standards. After achieving the self-sufficiency, these companies have recently started to export the locally manufactured dispensers to Argentina and Bangladesh.

Presently, Tesla Industries - Islamabad, Advanced Electronic International - Karachi, Global Pakistan - Lahore, Comcept Pvt Ltd - Islamabad, Carbon Products - Islamabad, Green Technology - Peshawar, Siddiq Sons - Rawalpindi and Landi Renzo, Pakistan are operating in the country and producing compressors, dispensers, priority panels and conversion kits.

The CNG sector has witnessed unprecedented growth during the corresponding fiscal year 2007-08 with setting up of 764 new CNG stations across the country. "Operational CNG stations across the country in the year were 2,214 as compared to the previous year's 1,450, which shows unprecedented growth of 53 percent," sources observed. Ogra has so far granted about 6,115 licences to construct CNG stations in different parts of the country. Almost 80 percent vehicles in the country have been converted into CNG since introduction of this cheaper fuel in 1992.

Now, the government is taking steps to replace diesel with CNG in public service transport, initially in major cities of the country, they added. They said the number of CNG run vehicles is growing at a fast pace due to investor friendly policies of the government and effective role of Ogra. Further promotion of this sector would greatly help cut down annual oil import bill as presently the country is importing more than 4.6 million tonnes of diesel oil annually at a cost of more than US $3.9 billion.


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## Neo

*21 percent fall in CFS investment ​* 
KARACHI (May 04 2009): The investment under CFS declined by Rs 108 million, or 21 percent, to Rs 412 million in the week ended on May 2, 2009. With phasing out of CFS Mk-II from April 8, 2009, investment level under CFS has been falling by day, as investments made earlier are being released, analysts said.

The CFS rate, however, increased to 24.52 percent towards the weekend amid tight liquidity, with no financing product available. The top 5 scrips by CFS investment were ICI, Engro, UBL, NBP and POL contributing 72 percent of total investment.


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## Neo

*Finance proposes Rs 255 billion outlay for 2009-10 PSDP ​* 
ISLAMABAD (May 03 2009): The Finance Ministry has proposed federal outlay of Rs 255 billion for next financial year's (2009-10) Public Sector Development Programme (PSDP), which is Rs 116 billion less than that of current financial year. The Annual Plan Co-ordination Committee (APCC) in the Planning Commission, scheduled to meet on May 21-22, will consider the said federal component of PSDP and, in turn, recommend it to the National Economic Council (NEC) for approval.

Total demand from all ministries amounted to Rs 876 billion. Planning Commission had recommended Rs 400 billion allocation as federal component of PSDP for next financial year. However, the Finance Ministry's priorities committee is reported to have approved the federal component in PSDP ranging between Rs 245 and Rs 255 billion due to financial constraints and in an effort to meet the fiscal deficit target of 3.4 percent of GDP committed to IMF for the next fiscal year.

The government had allocated Rs 371 billion in federal PSDP and Rs 170 billion for the provincial PSDP during the current financial year (2008-09). It deducted Rs 34 billion, allocated for Benazir Income Support Programme in federal PSDP and put it into recurring budget. After deducting the amount of Rs 34 billion for BISP, government allocation of Rs 337 billion in federal PSDP has been reduced to Rs 219 billion comprising cut of Rs 118 billion due to financial constraints.

The Rs 118 billion cut in PSDP is Rs 18 billion higher than the announced cut of Rs 100 billion during the Prime Minister's visit to the Planning Commission on February 13. Sources said that the financial constraints further compelled the government to cut the PSDP for current financial year. The government had released Rs 71 billion in first half (July-December) of the current financial year.

The second half of the current fiscal year envisages release of Rs 148 billion. However, few expect this amount to be actually disbursed. Due to financial constraints, Finance Ministry may further delay the release of these funds in next year. Due to financial constraints, Planning Commission has also proposed that provinces should generate funds from their own resources to complete the development projects, as the federal government is faced with severe financial constraints.

Pakistan requires additional budgetary resources both from multilateral and bilateral donors in order to support social safety nets and development spending, keeping in view the tight fiscal position for the current year and the expected tight position in the next financial year (2009-10).


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## Neo

* Cut in PSDP ​*
May 03 2009: The Planning Commission has received a total demand of Rs 876 billion from all the ministries for development projects under the PSDP 2009-10, and will, in all likelihood, recommend Rs 400 billion as the federal government component, sources have informed Business Recorder. However, the final decision will be taken by the Ministry of Finance.

There is also a perception that the total volume of PSDP may go up to Rs 500 billion for FY 2009-10, as against Rs 371 billion for the federal PSDP and Rs 170 billion for provincial PSDP during FY 2008-09. The government has deducted Rs 34 billion, allocated for the Benazir Income Support Programme in federal PSDP and put it into the recurring budget.

After the deduction, the government had allocated Rs 337 billion in the federal PSDP that was reduced to Rs 219 billion, reflecting a cut of Rs 118 billion due to financial constraints. The cut of Rs 118 billion is Rs 18 billion higher than Rs 100 billion cut that was announced when Prime Minister Gilani had visited the Planning Commission in February this year.

The federal share in the PSDP was slashed from Rs 371 billion to Rs 200 billion during the current fiscal year due to the resource constraints, and to meet the fiscal deficit target of 4.3 percent of the GDP, in accordance with IMF conditionalities under $7.6 billion Stand-By Arrangement (SBA).

Meanwhile, according to the Deputy Chairman of the Planning Commission, Sardar Assef Ahmad Ali, the additional pledges of Rs 5.28 billion made at the Friends of Democratic Pakistan conference would help bridge the financing gap. "If Pakistan is able to get Rs 3 billion to Rs 3.5 billion from these pledges and Rs 1 billion from the US under the Kerry-Lugar bill per annum, then the financing needs can be met," a news report has quoted him as saying.

He has also said that PSDP allocations could be doubled in the upcoming budget to Rs 400 billion from Rs 200 billion in 2008-09 due to improved financial flows and the macroeconomic situation. The sectors to which the cut has been applied include, among others, water and power, production and industry, education, including higher education, ports and shipping, health, science and technology, women's development, environment etc.

An earlier Recorder Report had said that due to the government's throw forward initiative, the social sector faced a cut of Rs 79.5 billion. Making a judicious cut in PSDP allocation will be an effective, short-term strategy to help the country get out of the financial cul-de-sac.

The IMF-World Bank prescription for restoring the country's economic health is the only option left for us to pursue to gain macroeconomic stability. However, the downside to the $5.28 billion pledges at the Friends of Democratic Pakistan and Donors' conference is this will further push up the country's external debt from its current level of $50-51 billion to about $55-$60 billion.

This underscores the need for us to make the most judicious use of the money in the sectors for which it has been pledged. This principle should also apply to the $7.6 billion SBA. What is worrisome, though, is the prospect of failure on the part of the government to repay the debt, particularly when the GDP growth target set for the current and the next financial years is projected to be around 2.5 percent and 5 percent respectively.

The acute financial crunch faced by the country is obviously a direct result of bad fiscal management practised over the years by successive governments. As one analyst has put it, in addition to the current account deficit, the budgetary deficit has also been brought down because of the drastic cuts made in the development budget, and the withdrawal of subsidy that used to benefit the consumers, although the current non-development expenditure of the government has not been reduced.

This is said to be a major reason of why inflation continues to hover at around 20 percent. As long as non-development spending is not brought under control, through tough measures, including the trimming of public sector flab, our economy will remain in the red no matter whatever the amount of relief or sustenance we may receive from abroad.

There are forecasts that the current level of inflation of 20 percent will go up to 21 percent in about six months, which will further burden the country. Secondly, the government has been reluctant to cut POL prices despite a significant drop in the price of this commodity in international market largely because of its keenness to meet the deficit target of 4.2 percent of the GDP.

It is said that the trouble in fact lies with the midway re-setting of PSDP priorities, which is dictated by the gap that exists between the government's development goals, and its restricted delivery capacity, largely because of the country's weak infrastructure base.

Inaction over the decades has saddled the economy with handicaps that need to be addressed through a shift in allocation of resources to development sectors, as well as to drastically curtail all non-development expenditure. If a country like the USA can be run with a cabinet the strength of which is less than one-quarter of ours, why can't we bridge the gap though drastic pruning?

Similarly, there is a need to curtail, as far as feasible, the perks and privileges not only of the ministers but also of bureaucrats so that the country can live within its financial means. As we have argued in this space earlier, the government should launch a co-ordinated hunt to ferret out all the budgetary allocations that are either lying partially used or un-used, to make these a part of the PDSP for 2009-10.

The root cause of the problem is that successive governments in the country have displayed a reckless tendency to spend more than they earn. This has resulted in incremental piling up of both our internal and external debt. There is an urgent need for us to practice genuine austerity, to narrow the fiscal gap. And lastly there is a need to put greater emphasis on tapping agriculture with its varied value-added, not only to generate additional resources, but also to serve as an employment generator and poverty alleviator.


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## Neo

*FTA with EU: France reiterates support for Pakistan ​* 
ISLAMABAD (April 25 2009): France has reiterated support to Pakistan regarding Free Trade Agreement (FTA) with the European Union (EU) and Generalised System Preferences (GSP) plus. This assurance was given by the French Director General of Ministry of Economy, Jean-Christophe Donnellier at a meeting with Commerce Minister Amin Fahim.

The French Ambassador to Pakistan and other official of the Embassy were also present in the meeting. Amin apprised them on the law and order situation concerns to Pakistan and its heavy commitment to fight war against terror, for which increased market access by the EU is extremely important.

He said that Pakistan has been endeavouring since long to enter into an FTA with the EU, but the lengthy negotiation process was hindering progress. The minister said that Pakistan requires some urgent support of the EU for its increased market access to meet the extra burden for war on terror.

The delegation was also apprised that Northern Areas economy is linked heavily with trade as local transport for freight forwarding is substantially controlled by the people of northern areas. Therefore, greater access in trade will directly help those areas.

He acknowledged that the EU was the first forum to offer increased market access in the year 2001 which helped the economy faster and Pakistan's exports to the EU increased by $1.0 billion as a result of the facility of EU's GSP drug related scheme. The Minister sought support of French government to Pakistan's efforts for persuading the European Commission for increased market access in the short run and support for FTA soon.

French Director General of Ministry of Economy renewed assurance that they would support Pakistan for efforts for start of FTA process and promised to extend French government's support for any modification in the GSP scheme or any other way out considered as short term solution for increased market access to Pakistan.

The Commerce Minister thanked the French delegation for their commitment of euro 300 million in the recent meeting of Friends of Pakistan (FoP) in Tokyo. Total trade between France and Pakistan remained $856.5 for the year 2007-08.


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## PeacefulIndian

> Total trade between France and Pakistan remained $856.5 for the year 2007-08.



Are we looking at a typo here? Unless you guys traded only pizzas & sandwiches


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## Neo

A typo indeed, the correct amount should be $856.500.000.

Reactions: Like Like:
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## Neo

*Planning commission okays 98 projects ​*Thursday, 30 Apr, 2009 

ISLAMABAD: Planning Commission has on Thursday approved 98 projects worth Rs146.2 billion, with maximum allocations of 51 per cent of the total going for the for the transport and communication sector.

The Deputy Chairman of the Planning commission, Sardar Asif Ahmed Ali, detailed the media over the decisions made in the Central Development Working Party (CDWP) meeting and said that serious move has been made towards development of Thar coal in the forthcoming budget.

A pilot project has been approved for extracting combustible gas from Thar coal, Sardar Asif Ahmed Ali said adding that the project would be launched by Pakistani firm.

He said that the physical location of 24.6 per cent of all the projects would be in Punjab.

There are 22 projects worth Rs36.1 billion in Punjab followed by seven projects worth Rs23.8 billion in the NWFP, Sardar Asif Ahmed Ali said adding that Sindh has 13 projects costing Rs16.9 billion. 

Balochistan would have 10 projects amounting to Rs4.3 billion, FATA would have four projects worth Rs1.6 billion, Northern Areas three projects costing Rs10.3 billion and 37 projects amounting to Rs41.2 billion were approved for the all Pakistan implementation. 

Among the projects approved by the CDWP, 51 are for infrastructure development having the cost of Rs103.4.

The sub classification of infrastructure projects includes 20 projects for transport and communication worth Rs32.6 billion, 16 water-related projects are approved amounting to Rs40 billion, 10 projects are for the energy sector worth Rs29 billion and physical planning and housing has five projects amounting to Rs1.2 billion. 

In the production sector industries and commerce has five projects worth Rs1.9 billion, while eight projects are for the agriculture sector worth Rs3.8 billion.

The meeting has approved 30 projects in the social sector worth Rs25.1 billion, these includes five projects for the higher education commission worth Rs3.3 billion.

Twelve projects in the health sector worth Rs11.7 billion have been approved.

He said that fourteen projects have upward revision mainly due to delays, those are the water related projects and the delays are mainly due to acquiring of land.

Replying to a question Sardar Ahmed Ali said that most of the projects are vetted thoroughly by the planning commission before approval including those suggested by the president and the prime minister.

They only suggest projects and we have not received any single project from the higher authorities with directives for approval, the deputy chairman planning commission said.

He told media here in the planning commission that out of these 23 projects worth Rs128 billion would be forwarded to the ECNEC and finally to the national Assembly for approval. 

Only those projects approved by the national assembly would be finally included in the Public Sector Development Project of next fiscal year. Sardar Asif Ahmed Ali said.

Deputy Chairman planning commission said that the development budget for the current fiscal year has been curtailed to Rs219 billion from its approved allocations of Rs371 billion due to the economic condition faced by the country.


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## Screaming Skull

PeacefulIndian said:


> Are we looking at a typo here? *Unless you guys traded only pizzas & sandwiches*



  Good one LOL!


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## Hyde

good man i have forgotten going to newspaper websites i just come here and read the news from you guys  you are doing a tremendous job for all of us. Good man share more news


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## sohailbutt

*Textile exports decline by 7.58 percent​*ISLAMABAD: Textile exports during the first nine months of the current financial year witnessed negative growth of 7.58 percent as compared to the corresponding period of the last year. 

Textile exports during July-March (2008-09) were recorded at $7.193 billion as compared to the exports of $7.783 billion during July-March (2007-08), according to Federal Bureau of Statistics. 

During the period under review, exports of cotton yearn declined by 15.52 percent, cotton carded or combed by 5.62 percent, yarn other than cotton yarn by 53.30 percent while the exports of knitwear declined by 4.80 percent. 

Similarly, exports of beadwear witnessed negative growth of 11.68 percent, tents, canvas and tripulin 19.29 percent, readymade garments 13.10 percent, art, silk and synthetic textile 32.50 percent, made up articles (excluding towels and beadwear) 2.69 percent while the exports of other textile materials witnessed negative growth of 16.37 percent. 

However, the exports of raw cotton during the period under review witnessed increase of 73.57 percent, exports of towels by 7 percent and exports of cotton cloth 3.53 percent as compared to the same period of last financial year. 

Textile exports decline by 7.58 percent - GEO.tv


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## sohailbutt

*Too many projects, too little funding: mismatch delays completion of uplift schemes​*LAHORE (May 05 2009): A mismatch between planned project funding, the budgetary allocations and the actual release of funds are one of the factors, contributing to delays in projects completion. The development experts believe that the planning, programming, budgeting and managing processes of the government are flawed.

The analysis of the Federal Public Sector Development Projects (PSDPs) and the provincial Annual Development Programmes (ADPs) for the periods 2000-01 through 2005-06, for major infrastructure sector projects - water, power, roads and irrigation - suggested that the number of projects in hand were much greater than the funds available for allocation, they opined.

"This implies large throw-forwards for projects each financial year, as is also evident from the large number of projects accumulated in the portfolio," they added. According to these circles, too many projects are taken up simultaneously with limited resources, resulting in a mismatch between the planned completion of projects and the funding made available.

For example, in the roads sector, where projects were typically planned to be completed within two to three years, the average allocations per year for the Federal projects were 17 percent of the cost of projects, which implied a completion period of six years, they added. For provincial projects, they said, average annual allocations were about nine percent of the cost, implying a completion period of almost 11 years.

Similarly, for the irrigation and power sectors, the completion time of projects based on annual allocation of funds was found to be 18 years. "Unavailability of funds as required cause delays in completion of projects, and such delays obviously have an associated cost effect.

"Further, the allocations and expenditures reviewed for the period show that out of more than 5,000 projects in the four years. Under the PSDPs and ADPs, there were only 744 projects, which had both allocations and expenditures. Out of 744 projects, 174 had expenditures less than the allocations, while 248 equal to allocations and 322 had expenditures substantially higher than allocations.

"Certain projects received additional allocations even at the expense of other "planned" projects, possibly due to political interference. There were many projects, which showed expenditures greater than the funds allocated and several projects, which had been allocated funds, but incurred no expenditures at all," they said.

"Similarly, there were projects where no allocations were made, but had incurred expenditures. Besides a mismatch of plans and allocations made, said the development experts, the funds were mostly released during the last quarter of a financial year.

In the water sector (which includes irrigation and power) for instance, they said, the percentage utilisation of the PSDP allocations did not exceed 50 percent in the first three quarters of 2005-06. As a result, more money was released to projects during the last quarter of 2005-06, than the first three-quarters put together. "The provincial data for Balochistan for the years 2000 through 2005, shows that except for 2001-02, the Balochistan government had released 100 percent of its share of project allocation each year.

"In contrast, the Federal government provided only 20 to 70 percent of its share in any given year. Projects are bound to be delayed when funds are not made available when needed," they said. According to the development circles, the portfolio of projects is clearly not manageable even at current levels of the PSDP with too many projects and too little funding.

The medium-term development framework (MTDF) envisages a total and an overall national PSDP expenditure on infrastructure of Rs 2, 162 billion. The annual phasing of the overall PSDP was in the range of Rs 272 billion during 2005-06, to Rs 597 billion during 2009-10. This is almost six times the average PSDP over the past three years. Besides the PSDP, projects undertaken through public-private sector partnerships and private sector financing are estimated to cost an additional Rs 554 billion in the power and transport & communications (T&C) sectors alone.

In addition, they said, there were other emerging infrastructure programmes that were required to respond to the rapidly developing economy, and were not entirely included in the 2005 MTDF. These include the National Trade Corridor Improvement Programme (NTCIP), the construction of large water reservoirs (Kalabagh, Diamer, Bhasha), the rehabilitation of the key barrages, delivery of clean drinking water, sanitation and electricity to all, and the new Islamabad airport, which alone requires substantial investments over and above the MTDF.

Clearly, delivery of the projects planned under the MTDF will be a challenge given the current institutional capacities of the government stakeholders.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*FDI declines by eight percent​*ISLAMABAD (May 05 2009): Foreign Direct Investment (FDI) has declined by eight per cent during the first eight months of current fiscal to $3.0421 billion against $3.306 billion in the same period of last year, according to Ministry of Finance's "Review of Economic Situation".

The Review of Economic Situation released here on Monday for July-March 2008-09 showed that FDI declined in Chemical and Petro-Chemicals by 15.4 per cent to $72.3 million from $85.5 million during the period under review. The cement sector received 64.9 per cent less FDI during the period under review against the same period of last year. The FDI inflow in cement sector squeezed to hardly $31.3 million this year against $89.1 million a year ago.

Automobile sector received 64.5 million FDI during July-March of current fiscal which is 12.2 per cent less from $73.4 million a year ago while FDI in power sector declined by 5.7 per cent to $140.4 million from $149 million in the same period of last year.

The FDI in communication sector declined by 12.7 per cent and shrank to $806.1 million against $922.2 million a year ago. In financial business, the FDI dwindled by 28.7 per cent during the ongoing year to $672 million against $942.7 million in the same period of last year while in personal service it declined by 3.2 per cent.

According to the economic outlook, Pakistan External Debt and Liabilities (EDL) have risen to $49.7 billion during at the end of March 2009 against $46.3 billion at the end of June 2008.

The EDL recovered in the third quarter and actually fell in absolute as well as relative terms between end-December 2008 and end-March 2009, mainly because of lower than anticipated net disbursements and positive translation impact of appreciation of dollar versus Yen, SDR and Euro. External debt stood at $49.7 billion or 30.7 per cent of the projected GDP for the 2008-09 at the end of March 2009 which is higher than end-June 2008 stock of $46.3 billion or 27.6 per cent of GDP.

It implies that EDL grew both in absolute and relative terms during July-December period but witnessed some correction in the third quarter. Almost all categories of EDL barring Paris Club, Eurobond and military, have witnessed increase; however, highest increase in absolute term was recorded in debt stock owed to the IMF as a result of inflow of $3. 1 billion on account of Stand by Arrangements (SBA) signed with the IMF in end-November 2008. On the liabilities side $500 million are added by Bank of China, the review added.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Sale of agricultural land to foreigners: move fraught with serious repercussions​*ARTICLE (May 05 2009): The Ministry of Investment has decided to offer one million acres of farmland for long-term investment or sale to the foreigners and emirates investment group is in the process of acquiring farmland in Pakistan to export more food to the Gulf region.

Apparently, the decision looks continuation of privatisation process similar to selling shares of PTCL, DFIs, banks and other state enterprises or attracting foreign investment, but if seen in-depth and historical perspective, this can have serious repercussions in future. Selling one million acres of farmland means once again inviting East India Company to our country.

It is due to the sale of Kashmir to the Dogra Maharaja that Kashmiris were deprived of freedom despite the fact that the State of Jammu and Kashmir was having an overwhelming majority of Muslim population in 1846 when Amritsar Treaty was signed and it was having 95% Muslim population in 1947 and there was no reason as to why it should not become part of Pakistan.

Despite the fact Jammu and Kashmir was contiguous to the area which was declared Pakistan in 1947, but due to the Maharaja Hari Singh's dishonest act Kashmiris could not reap the fruit of freedom. Selling of farmland is in fact selling of homeland and can give birth to many evils. It can create security risks for the country.

As Emirates Group is looking for international partner and total land available for sale is one million acres, as such, our enemies can manage to become partners or individual buyers directly or indirectly. The history has recorded the biggest blunder of Palestinians when they sold land to Jews and gradually rich Jews took their land and Israel appeared on the world map.

The authorities are requested to kindly read the history and see how Israel managed to capture the land of Palestinians and appeared as an independent country on the world map. Palestinians are the victims of their own mistake and Israeli has become permanent pain in their neck.

The decision to offer farmland of one million acres to foreigners is far away from foresight and vision and is only to draw short term gains at the cost of selling the homeland.

THE JURISTS HAVE DEFINED CONTENTS OF A STATE AS UNDER:-

1- Land

2- Population on land

3- Unanimous decision of people about their right and obligations (constitutions)

4- Body to implement the constitution and control the state (government) with legislation and judiciary as part of it. Human population on a piece of land is the basic requirement to form a state.

On world map we can see the countries whose area is less than one million acres. The decision to sell one million acres of farmland can prove extremely dangerous in the long run.

Pakistan allowed some foreigners in tribal areas to fight against Russia and these foreigners were allowed to reside in these areas without proper immigration documents and passports, as a result these foreign elements have become the greatest threat for the country and our government has failed to send them back to their native countries.

These so-called Mujahideen occupied some area of our tribal region (less than one million acres) and despite the Drone attacks, both USA and Pakistan have failed to get rid of these people who are not only a threat to Pakistan, but for whole world.

It is known to every one that Usama Bin Laden, Baitullah Mahsud and others were having free movement in Afghanistan before 9/11 and a few years before they were allies of USA in the war against Russia. Now Baitullah Mahsud accepts the responsibility of all suicidal bomb attacks in Pakistan while living in tribal areas of Pakistan, ie, on our land.

While selling the land we always keep in our mind its lithosphere only and are not aware of natural resources like gas, oil and other minerals under it. The land at Sui in Balochistan may look barren to our eyes, but who knew that it carried trillions of cubic feet of gas under it. Similarly, barren areas of Sindh are rich in minerals.

Pakistan discovered the world's largest coal reserves in Thar. We may need foreign exchange to meet our requirements to import our luxuries, but it would be immodest and cruel to our future generations. The concept should be that we have not inherited the homeland from our forefathers but merely borrowed it from our children. Our future generations would never forgive us for this mistake which amounts to spoiling their future.

By selling one million acres of land we will introduce new type of feudalism and create relative deprivation in the area which can spoil the future of our sons of the soil, who are already victims of our short-sightedness. Pundit Nehru, the first Prime Minister of India, introduced land reforms in India and feudalism was buried once and for all and total land divided among landless farmers.

As a result, the per-acre yield in India is much more that what we get in Pakistan. The decision of selling farmland may result into corruption and future scandals.

There are many other options to utilise this land and some of these are: Instead of selling the government should offer such land on 30 years lease, secondly, the farmland may be offered to domestic investors on comparatively easy terms. Thirdly, government may distribute this land among landless farmers and help them to cultivate the same.

Instead of selling land it would be better to sell its yield to the people in the Gulf region. The countries with food and water resources have a great future provided they don't sell their land and water for short-term gains. It is surprising why the media has been silent on this issue of national importance. The issue must be discussed in the parliament before making any deal with any foreign groups.

If the authorities are bent upon selling the land, then it would be better to lease it so that Pakistan has a right on its land to get it back after the expiry of the lease period like Hong Kong and Macao who remained under foreign occupation for more than 99 years and were returned to China after the expiry of the lease deed which China was forced to sign after its defeat in the opium war.

For the utilisation of such land the government should prefer local investors and poor landless farmers and support them in cultivation of land to increase our GDP and per capita income. Finally, government can easily assess the population growth in the country in coming years and our country would be needing more and more cultivated area to feed our own population, rather than feeding other nations.

This issue is full of adversities and needs caution and thorough discussion in parliament before signing any such deal. Availability of land is a great fortune in our hands and the same can become misfortune if sold to foreigners.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Government urged not to allow flour export to Afghanistan*​
PESHAWAR (May 05 2009): The bakers, atta dealers and people of the food insecure NWFP has asked federal government to reject the demand of the flour milling industry for the export of flour to Afghanistan to avoid flour crisis again. "The allowing of export would once again push the country towards the food crisis surfaced in the year 2008," Jehanzeb, a baker feared while talking to Business Recorder.

The government, he said should never allow the flour millers to export the commodity to anywhere and create artificial shortage in the country in general and in NWFP in particular. The flour millers, he said would indulge in the smuggling of the commodity pushing the prices in the local market high.

Munazam, a resident of Peshawar alleged that in the garb of the export, the flour millers are bent upon to push the province to another flour crisis. He said that flour millers utilise all such kind of situations in their favour to fill their pockets. However, he urged on the government not to accept the demands of the millers and foil the conspiracy hatched by the vested interest. "The people of the province will not bear waiting in long queues for the sake of a single sack of the flour," added Munazam.

Shabbir, a worker at the baking shop alleged that the flour millers used to export the good quality flour while the substandard commodity is being marketed in the local market. He complained that the baking of bread from the substandard flour is very hazardous.

Abdul Sattar, another baker while opposing the export of flour to Afghanistan said that the neighbouring country instead of importing the commodity from Pakistan to create crisis should make arrangements from other countries. "We have come out of crisis afresh and the allowing of the export in such a situation would not be considered a wise decision. It could once again push Pakistan into a food insecure state," added Sattar.

Ikhtiar Wali, a businessman said that they would oppose any move in this direction. The production of the bumper crop does not mean the selling of the commodity to other countries. He said that the export of the commodity could create problems in our own country. "The government, instead of the export should provide cheap roti to the people," he suggested.

"The export of the commodity could create artificial shortage of the commodity in the local market and would promote black marketing," feared Latif, an atta dealer at New Rampura Gate. He urged the government to reject t the demand of the flour millers for the export of the commodity.

Interestingly, Muhammad Akbar Khan, chairman Pakistan Flour Mills Association (PFMA) NWFP Chapter out rightly rejected the hue and cry of the bakers, atta dealers and common man saying the export will not create any kind of crisis in the country.

He said that the country was heading for a bumper crop and according to estimation it would produce 23.5 million ton wheat against the domestic demand of 21 million ton. He said that the after the completion of the procurement the country would have a stock of 2.5 million ton as surplus.

He said that per hectare production of wheat as compare to 2000-01 has went up by 2 mounds per hectare. The production this year has climbed to 29 mounds per hectare as compared to 27 mounds per hectare produced in the year 2000-01.

The government in the year 2001 allowed the export of flour to Afghanistan, but banned in 2007 in the pretext of the demand of the commodity in the local market. He said that the total requirement of Afghanistan is 0.5 to 0.6 million ton. We are demanding permission of the export of flour not wheat to Afghanistan as the country has low grinding capacity. The allowing of the export of flour to Afghanistan, he said would help strengthen the flour milling industry of NWFP. Defending the demand of the flour millers, he said Punjab has the market of NWFP while the flour milling of Industry of this part has sole market in Afghanistan.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Review of Economic Situation 2008-09: External account remains vulnerable​*
By Sajid Chaudhry

ISLAMABAD: The Ministry of Finance (MoF) said on Monday the fiscal deficit target of 4.3 percent of GDP and the current account deficit target of 5.9 percent of GDP were achievable.

However, recent global financial crisis and extremely vulnerable security environment added risks to the economy. The external sector data for the last quarter (April-June 2009) would give a real reflection of the impact of global financial crisis on Pakistans external sector.

In a report on July-March period of 2008-09, MoF stated that the global economic slowdown was making inroads into real economy through contraction in demand in the export sector and as well as shrinkage of external inflows. Pakistans economy continues to remain exposed to the vagaries of international developments as well as internal security environment, it said. Despite support from the IMF and other bilateral and multilateral donors, Pakistans external account remains exposed to a host of uncertainties, it said.

The outlook for economic growth remained pessimistic as import demand shriveled, tax collection declined, and inflows of foreign investment and privatization dampened.

Real Sector: Notwith-standing the vulnerabilities, the economy is set to post economic growth in the range of 2.5 percent to 3.5 percent, far lower than its historical average, but relatively satisfactory in the given international environment. The real GDP growth outlook drew strength from positive outlook of the agriculture sector, which has given all indications of a healthy growth. The outlook is based upon anticipated high wheat crop and above target growth of minor crops and reasonably good outturn by the livestock sub-sector.

Manufacturing Sector: Large-scale manufacturing depicted negative growth of 5.73% during July-February 2008-09 as against 5.27% positive growth in the comparable period of last year. Going forward the situation may improve to some extent because of lower base effect and some improvement in energy supplies.

The LSM growth is adversely impacted by a sharp reduction in demand from both domestic and international buyers.

Services sector has exhibited resilience to fluctuations in the economic activity. The FDI inflows in the telecommunications, financial businesses and personal services have reached a level of saturation in the first nine months (July-March) of the current fiscal year. There are enough anecdotal evidence that financial sector is set to provide substantial growth.

Inflation: Pakistan still faces high double-digit inflation. The dirty work of extra-market forces kept fruits of falling inflation away from Pakistans consumers. Given current trends and barring any adverse shocks, it is expected that the average inflation for the year (2008-09) as measured by CPI will be close to 20 percent.

Capital Market: The local bourse remained buoyant throughout the month of March 2009 thanks to encouraging developments on the political and economic fronts. The recovery phase of the premier stock exchange after floor removal has been hopeful and this outstanding performance has made it one of the best performing markets of the world in 2009.

Fiscal Policy: The fiscal improvement in the first nine months (July-March 2008-09) has largely based on reduction of oil subsidies and a cut in development spending. The government received Rs 141.1 billion in gross external inflows against outflow of Rs 104.1 billion which means net availability of Rs 37 billion.

Tax Collection: Tax revenue collected by the Federal Board of Revenue (FBR) stood at Rs 813.6 billion (net) during the first nine months (July-March) of the current fiscal year (2008-09) compared with Rs 679.9 billion in July-March, 2007-08  posting a healthy increase of 19.7%. Given these developments, the tax revenue target of Rs 1250 billion seems a herculean task.

External Sector: The external sector has shown definite sign of improvement. The current and trade account balance has improved but there were some slippages on account of current transfers. However, buoyancy in remittances is more than offset by substantial declining trend in inflows through exchange companies.

CAB: Current Account Balance (CAB) shrank by 20.8 percent during July-March 2008-09. Current account deficit shrank to $7.6 billion during this period as against $9.6 billion during the same period of last year. Pakistan need investment driven current account deficit neutralized to some extent by rising savings level.

External Debt: External debt and liabilities (EDL) stood at $49.7 billion or 30.7 percent of the projected GDP for the 2008-09 at the end of March 2009 which is higher than end-June 2008 stock of $46.3 billion or 27.6 percent of GDP.


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## Neo

*Agri sector to achieve growth target of 3.3%​*
ISLAMABAD: The agriculture sector is likely to achieve its growth target of 3.3 percent for the current year, according to Review of Economic Situation, July-March (2008-09) released by the Ministry of Finance on Monday. According to the report, all livestock products witnessed an increase in prices and thus the target of 3.2 percent would be achieved as the demand for livestock products was growing at a phenomenal pace. The agriculture had been facing acute irrigation water shortages and the water intensive Kharif crops sugarcane and maize fell short of the target and depicted a negative growth of 18.5 percent and 7.5 percent in 2008-09. However, other two major crops cotton and rice have registered positive growth of 7.3 percent and 13.5 percent, respectively. The combined weight of sugarcane and maize in overall agriculture was 6.2 percent while that of cotton and rice was 13 percent. 

The Rabi season started with an estimated water shortages of 31.6 percent, however, widespread rainfall during December 2008 to February 2009 in most parts of the country had a positive impact on the outlook for the Rabi crops. Fertilizer off-take (both urea and DAP) decreased by almost 6.5 percent during July-March 2008-09 amid weak demand due to higher prices and vague market signals, which led to shortages. Disbursement of credit to agriculture sector by commercial and specialised banks has increased by Rs 13.3 billion or 9.6 percent on yearly basis to Rs 151.9 billion during nine months (July-March) of the current fiscal year (2008-09) from Rs 138.6 billion of corresponding period of last fiscal year (2007-08), the report added.

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## Neo

*Cotton production falls by 2.8m bales in 2008-09: PCGA​*
By Razi Syed

KARACHI: Pakistans cotton production for 2008- 09 crop season witnessed a shortfall of 2.8 million bales, chairman Pakistan Cotton Ginners Association (PCGA) said Monday.

Chairman PCGA, Rana Abdul Sattar while talking to Daily Times said it remained below the governments target of 14.1 million bales on account of non-supply of better quality seeds, short supply of quality inputs and insufficient water supply.

He said the Pakistan Central Cotton Committee keeping in view the situation had revised the target to the level of 12.5 million bales, but the production could not touch the revised target.

According to Pakistan Cotton Ginners Association (PCGA) Monday, the country achieved 11.7 million bales of cotton during 2007-08 production year, which was lower than 2.4 million bales than the the initial target. In 2007-08 the country had failed to meet the cotton production target set by the government.

Member on Cotton Committee of Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Ghulam Rabbani said the last arrival on Monday shows the final figures.

Rabbani said final arrival for 2008-09 stood at 113,49029 bales at the ginneries, out of which textile sector purchased 103,19134 bales, private sector exporters bought 294,865 bales, Trading Corporation of Pakistan bought 185,033 bales while stocks remained at 546,547 bales.

The higher cotton prices would put further pressure on the gross margins of textile manufacturers, and at the same time, the 23 percent rupee depreciation (year to date) is expected to translate a significant revenue increase impact for export oriented ventures, which would ultimately help them to more than mitigate the pressure on margins, he added.

The textile and spinning sector will have to bear additional burden around of $1.20 billion on the import of lint to keep their wheels running, said Rabbani.

The US Department of Agricultures World Agricultural Supply and Demand Estimates for September 2008 also indicate lower world cotton production on the back of reduced contribution from India, Australia, Pakistan, African Franc Zone and Turkey.

During August 2008, average domestic cotton prices reached an all-time high level of Rs 4,235 per maund, he added.

He said though, with the initial arrival of new crop in the market during April 2009, domestic prices receded to the level of Rs 3,650 per maund. He said lint price was still 25 percent higher than last years average price level of Rs 3,300 per maund during the same month.

The cotton prices are likely to remain at soaring levels with lower production and comparatively higher consumption.

The clash of short-term negative supply fundamentals and the outlook for lower production and a sharp drop in stocks for the 2008-2009 season should help keep cotton prices volatile for the short-run.

The International Cotton Advisory Committee indicates that world cotton ending stocks for the 2008-2009 season falls by 5 percent to 10.96 million tonnes. This is down from 12.7 million tonnes two years ago.

He said lack of expertise in fighting cotton virus and minimising crop from heavy rainfall, around 20 percent crop in the Punjab and interior Sindh has been affected.

Other factors attributing behind lower production are less area under cultivation due to shift towards sunflower and sugarcane etc, severe weather conditions and crop diseases like Cotton Leaf Curl Virus (CLCV) and mealy bug.

On the consumption side, ICAC projects 1 percent yearly decline in world cotton consumption during 2008-09 due to slowdown in global economic growth and relatively higher cotton-polyester price ratio.


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## Neo

*Deep-sea fishing policy may be revised​* 
ISLAMABAD (May 06 2009): The government is reportedly revising the terms and conditions of the deep-sea fishing policy, approved by General Pervez Musharraf (Retd) as Chief Executive in 2001 as the amended policy did not yield desired results, official sources told Business Recorder here on Tuesday.

Musharraf government had approved a "buffer zone" of eight nautical miles, between 12 and 20 nautical miles from the coastline, aimed at providing exclusive fishing rights to small-scale fishermen in the specified area. "We have recommended that royalty and licence fee should be reverted to the position of 1995 policy, besides declaring the Federal area between 12-20 nautical miles (buffer zone) as Zone-II and from 20 to 200 nautical miles as Zone-III.

The main reasons for the failure of Musharraf-backed deep-sea fishing policy are poor response from foreign vessel operators due to high royalty, licence fee etc as compared to neighbouring countries, unprecedented increase in the price of fuel, sizeable reduction in the annual foreign exchange earning from Rs 80 million to Rs 40 million, reduction in other government revenues from Rs 90 million to Rs 37 million annually and considerable decrease in the annual fish landings from 15,000 metric tonnes to 3,000 metric tonnes from the Federal waters due to fishing by low number of vessels.

The sources said the Inter-Ministerial Scrutiny Committee (IMSC), comprising the representatives of the Ministry of Livestock and Dairy Development, Ministry of Finance, Ministry of Port and Shipping and other stakeholders, including Sindh and Balochistan, were of the unanimous view that the amended deep-sea fishing policy had not given tangible results and it should be revised.

The IMSC had also taken into consideration that the royalty and licence fee prevailing in the neighbouring countries were much less as compared to the fees being charged by the government of Pakistan, said the sources.

"We have proposed changes in the deep-sea fishing policy that would bridge the yield gap through increasing productivity, increasing investment, increasing foreign exchange, rationalising fee structures vis-à-vis neighbouring countries, thus achieving economic growth, increasing fishing vessels operations in Zone-III with increase in the landed catch at Korangi Fish Harbour," said an official of the Ministry of Livestock.

According to the prevalent policy, fishing in Zone-I is exclusively reserved for traditional small-scale fishermen of Sindh and Balochistan provinces, while 100-250 Gross Registered Tonnage (GRT) medium size vessels have been allowed to fish in Zone-II, and 300-500 GRT stern trawlers/300-l000 GRT long liners for industrial fishing in Zone-III under licences issued by the then Minfal (now Minfa). The small-scale fishing vessels, though limited by their capability and capacity, are free to fish beyond Zone-I limits.


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## Neo

*833 percent growth in cement sector July-March profits​* 
KARACHI (May 06 2009): The cumulative profit of listed cement sector companies increased to Rs 3.7 billion in the nine months of FY09 depicting a massive growth of 833 percent over the corresponding period in FY08 of Rs 395 million.

"Although total dispatches were down 0.4 percent, net retention prices up 64 percent to Rs 230 per bag (partly down to effective price arrangement between manufacturers) and better export based revenue amid rupee depreciation (21 percent on year-on-year basis) resulted in net sales growth of 74 percent", Atif Zafar, an analyst at JS Global Capital, said.

As a result, gross profits depicted 287 percent growth with gross margins increasing by 1,491bps to 27 percent, compared to the nine months in FY08 gross profit margins of 12 percent. However, 96 percent increase in financial charges due higher average 6-month KIBOR (434bps) during the period took some gloss off the bottom line as net margins recorded an increase of just 317bps to 4 percent, he said.

He said this massive earnings growth has been largely due to price arrangement between companies in the local market to keep prices high. However, local demand-supply dynamics do not suggest such high prices would continue. Moreover, the export market only looks attractive for the short term as new capacities could soon come online in the Middle East along with weak domestic demand on the back of low PSDP and economic growth.

"Our sample includes 18 out of total 21 listed companies, representing 94 percent of cement sector market capitalisation. Moreover, we have removed one-time impairment loss on acquired goodwill recognised by Javedan Cement of Rs 3 billion", Atif said.


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## Neo

*Nine percent decline in cement exports in one month​* 
ISLAMABAD (May 06 2009): Pakistan's cement industry, which pocketed windfall profits in previous years, is claiming that its exports declined by 9 percent in April as compared to March 2009. The All Pakistan Cement Manufacturers Association (APCMA) is already in hot pursuit of fiscal incentives in the 2009-10 federal budget with the argument that it would collapse if the government did not extend a rescue package to it.

The Association says that reduction in Public Sector Development Program (PSDP), the high cost of energy, high interest rate and Rs 96 per bag tax are some of the reasons for the decline in cement industry. According to the Association's data for the first ten months (July-April) of current fiscal year, local dispatches declined by 15 percent, whereas 6.47 percent growth had been witnessed in the previous year.

Last year, local dispatches were estimated at 22.396 million tons, against the 15.909 million tons of first ten months of current fiscal year. Overall exports of clinker and cement increased by 51.3 percent, to 8,996,839 tons against 5,946,706 tons of last year. Last year, growth was 150 percent. Interestingly, the data released by the cement manufacturers does not contain the impact of high cement prices.

Analysts in the Ministry of Industries and Production have termed cement manufacturers' claim of financial losses as an effort to harvest more financial gains by understating some of the facts, which are challengeable. The cement industry is of the view that the cost of one bag of cement, inclusive of all duties and taxes, comes to Rs 358, whereas it is being sold at Rs 340, which means that manufacturers are already facing a loss of Rs 18 per bag.

"Without concerted efforts, the cement industry will collapse," the industry said in a presentation to the government, a copy of which was made available to this newspaper. The cement industry, which operated on 81 percent capacity, is now utilising 71.57 percent of its capacity due to world-wide economic melt down.

The figures show that cement exports to Afghanistan declined from 362,869 tons in March to 244,698 tons in April 2009, followed by India, from 103,424 tons to 97,965 tons. However, export of cement from sea route increased from 300,963 tons to 341,355 tons. Thus, total export of cement and clinker in April was 1,003,943 tons against 790,547 tons. In the presentation, APCMA has tried to convince the concerned officials that the industry is about to die, because of taxes imposed on it.

"High inland costs of transportation and port handling make sea exports non-viable for the plants based in the north, which account for most of 10.59 million tons surplus capacity," the Association said. The Competition Commission of Pakistan (CPP) has evidence of cartelisation against the cement manufacturers. The Association, in turn, has taken a stay order against the CCP, which is in the process of having the stay order vacated.


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## Neo

*Health, microfinance sectors: IDB to provide $100 million​*
ISLAMABAD (May 06 2009): The Islamic Development Bank (IDB) has agreed to provide $100 million to achieve the targets of Poverty Reduction Strategy Paper (SRSP-II) set for health and microfinance sectors. Sources said that recently agreed assistance is in addition to the earlier proposed three-year rolling financing plan worth $577 million for the year 2010-12.

Sources said that IDB officials held a meeting with Economic Affairs Division (EAD) and Finance Ministry officials here on Tuesday. The two sides will finalise the modalities of the assistance soon. The agreed assistance will be disbursed to Pakistan for projects in health and microfinance sectors.

The microfinance industry grew at a rapid pace of 40 percent a year during the period of the PRSP-I. By March 2008, the sector had more than 1.7 million savers, and about 1.6 million borrowers, of which nearly half were females. The provision of these loans to businesses and individuals for economic purposes helped create additional employment in different parts of the country.

Microfinance service providers are present in 105 districts, including some in the most far-flung areas such as FATA. Six specialised microfinance banks currently provide services, with a major share of their advances going to the livestock sector, followed by micro-enterprises and agricultural inputs. Several NGOs also provide microfinance services to marginalised communities. The sector is growing rapidly and plans to reach 3 million borrowers by 2010 and 10 million by 2015.

The private sector is very active in the provision of microfinance. The Pakistan Microfinance Network (PMN) is dedicated to improve the outreach and sustainability of microfinance in the country. It also aims to establish performance measures, enhance the capacity of retail microfinance institutions through specialised training, and promoting the financial transparency of such institutions. The PMN is well positioned with 95 percent of the total microfinance coverage and with the 20 leading microfinance institutions and banks as its members.

An important player in this regard is the Pakistan Poverty Alleviation Fund (PPAF), which has aligned itself with the evolving microfinance landscape in the country. The cumulative outreach of PPAF has extended to around 85 districts of the country. About 800,000 persons have been disbursed credit, with a considerable percentage of PPAF loans going exclusively to women (375,000). Up to September 2008, the PPAF had disbursed total Rs 27.5 billion to over 1.7 million borrowers. The PPAF also helps to deal with special problems. Thus, in the wake of the October 8, 2005 earthquake, an amount of Rs 300 million was diverted from PPAF's existing programme to the relief efforts.

According to the World Health Organisation (WHO) guidelines, a child should receive a BCG20 vaccination to protect against tuberculosis, three doses of DPT21 to protect against diphtheria and tetanus, three doses of polio vaccine, and a measles vaccination. The increase (in full immunisation) was particularly impressive in rural areas, from 46 percent in FY 2001/02 to 73 percent in FY 2006/07. Under the 'record' method, full immunisation rate was low at 50 percent in FY 2006/07 compared to 76 percent under the 'recall' method. However, there had been an improvement in record-based immunisation rate, from only 27 percent in FY 2001/02 to 50 percent in FY 2006/07.


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## Neo

*'Efforts underway to attract foreign investment'​*
ISLAMABAD (May 06 2009): Federal Minister for States and Frontier Region (Safron) Najmuddin Khan has said that present government is trying to bring more foreign investment in the country and planning to offer legislative cover to protect investor. While talking to the Deputy High Commissioner of South Africa Qasim Pir in his office here on Tuesday, the minister said that government is committed to enhancing co-operation and harmony between local and foreign investors.

The minister said that Pakistan Peoples Party (PPP) believes in mass power and maximum efforts would be made to provide all basic facilities to the masses on their door-step on priority basis according to the vision of Benazir Bhuttoo. He said that South Africa is Pakistan's friend and a big donor. The Deputy High Commissioner of South Africa thanked the Government of Pakistan to facilitate and protection to their investors in the country.

He showed his gesture and said that co-operation will continue in all sectors especially in education field. Earlier, the minister also met country representative of UNHCR Guenet Guebere in his office. They agreed to enhance co-operation between UNHCR and Ministry of Safron to help of Afghan Refugees and RAHA project.


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## Neo

*Construction of Diamer Basha Dam given top priority​*
ISLAMABAD (May 06 2009): The Government has chosen construction of Dimer Basha Dam as top priority project and would begin its construction work during the next financial year. Talking to APP the sources of the Ministry of Water and Power said that the budget allocation for the construction of Diamer Basha Dam Project would be made during the next financial year and work on offering open International Competitive Bidding has been finalised.

Its construction would help meet electricity requirements besides increasing water storage capacity, sources said. Arrangement of finances from the foreign donor agencies for the construction of the project is under process. Notice for Expression of Interest (EOI) for short listing of Consultants for Construction Supervision and Contract Administration of the Project, from Firm/Joint Ventures has been invited and the last date to receive applications is June 15.

A number of applications from international and local contractors have already been received for pre-qualification of contractors for Lot-I, 2 and 3 and evaluation for pre-qualification is under process. The dam will have a live storage capacity of 6.4 MAF and power generation capacity of 4,500 MW. The estimated cost of the Project is $11.34 billion and it is anticipated that the work will be completed by the year 2019-20.

The Project will be the highest Roller Compacted Concrete Dam in the world having height of 272 meters. Diamer Basha Dam Project is planed to build on river Indus, about 300 km upstream of Tarbela Dam Project and about 40 km downstream of Chilas Town, which is the headquarter of Diamer District of Northern Areas.

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## Neo

*ADB may extend $1bn to end power sectors circular debt ​* 
Wednesday, May 06, 2009

ISLAMABAD: The Asian Development Bank has indicated that it might extend the credit line of $500 million to $1 billion to Pakistan to wriggle out Pakistan Electric Power Company (PEPCO) from the circular debt in the energy sector, a senior official at Ministry of Water and Power told The News.

We have approached World Bank and ADB for loan to erase by June 30, 2009 the remaining part of the circular debt which stands at over Rs100 billion, as the incumbent regime had generated Rs92 billion through Terms Finance Certificates, said the official. 

Once the whole circular debt gets cleared the smooth functioning of the power sector will be ensured, he said.

To a question he said Pakistan is seeking the loan from ADB at LIBOR+150 to 200 basis points and in case Pakistan gets this loan, then some of the capital will be injected by the government to erase the whole circular debt.

When asked as to why World Bank has not come forward to bail the country from circular debt which became the monster and inflicted the huge damage to smooth functioning in the energy sector, the official said that World Bank has shown its inability to provide loan to the regime saying it has no space to provide credit to the country for this particular issue. So now the regime is banking on the Asian Development Bank for the loan, said the official.

The Finance Ministry had opposed seeking the credit from WB and ADB, as it wanted to generate the required capital by hedging the assets of the entities involved in the circular debt with the banks under the concept of REIT (Real Estate Investment Trust).

In this regard the official said that the RIET process is a lengthy and technical process and it will take at least one and half to two years, which the government cannot afford.

The government wants to erase the whole circular debt by June 30, which is why the Ministry for Water and Power is under talks with ADB.

President Asif Ali Zardari in January ordered hi economic team to wipe out in next six months the issue of circular debt in power sector and we are working in line with the Presidents direction, the official said. 

When asked PEPCO would be able to repay the loan with interest, the official said that electricity tariff is being increased and required pace in recoveries of dues is being introduced to make the financial health of all eight power distribution companies which ultimately make the PEPCO sound enough to easily retire the whole debt it is getting to end the circular debt.


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## Neo

*Pakistan lacks elements to attract investment ​* 
Wednesday, May 06, 2009

KARACHI: Portraying Pakistan as a joint venture and foreign direct investment destination depends on three major factors: a stable economy, law and order and skilled workforce, Sindh IT Minister Mohammad Raza Haroon said on Tuesday.

Pakistan was currently lacking in all three elements, he said while speaking to media at the 4th Information and Communications Technology Exhibition and Conference CONNECT 2009 at the Karachi Expo Centre.

The government and the people of Pakistan have to struggle to improve the economy, law and order and education and skill levels to put the country on an investment destination map, he said.

He invited foreign business delegates and local entrepreneurs to invest in the planned 200 acres IT Park on the Northern Bypass. Land has been allocated for the park, he said, adding that the project would generate immense economic activities and open new vistas of employment for the educated Pakistani youth.

Haroon articulated that holding exhibitions of international standards was a necessity for Pakistan as this was one definite way to defeat elements that were trying to tarnish the image of the nation.

Chairman of Pakistan Telecommunications Authority, Dr Mohammad Yasin said that the governments deregulation policies over the past decade have brought about increased competition, which has helped achieve basic telephony coverage of 90 per cent.

Pakistan Software Houses Association (PASHA) President Jehan Ara praised the local IT industry for growing at a 50 per cent rate for the past 4-5 years. She said that even in the face of global economic crisis, Pakistans IT industry is still growing, albeit slower than the previously recorded pace.

Earlier, the IT minister stated that MQM would expose all those behind the conspiracy of 12th May 2007 and bring them in front of the public as they had a right to know who had passed orders to create mayhem in the city which had claimed many innocent lives.

Haroon said that MQM would bring out the culprits by sharing video footages and voice recordings. He said that the country was not in a very good condition and had constant internal and external threats. He said that the economic crisis had also made it very vulnerable.


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## Neo

*Hina reviews economic, trade ties with Germany​*
ISLAMABAD (May 06 2009): Minister of State for Finance, Revenue, Economic Affairs and Statistics, Hina Rabbani Khar on Tuesday had an in depth exchange of views with Karin Kortman, Parliamentary State Secretary, Federal Ministry for Economic Co-operation and Development, Germany and other members of her delegation attending the ADB meeting.

Hina, who is leading Pakistan's five-member delegation to attend the 42nd ADB Annual Meeting, also discussed matters pertaining to economic collaboration between the two countries, said a message received from Bali (Indonesia) Tuesday.

They discussed matters pertaining to economic collaboration between the two countries. Talking to Kortman, the Minister appreciated Germany's role in the debt swap arrangements for the social sector development in Pakistan citing this as an example for other bilateral partners.

She emphasised on further co-operation in the energy sector, technical and vocational programmes for human resource development in the country. Further, she expressed particular interest for Germany's expertise in renewable energy. Hina also stressed on attaining relatively higher dividends, if a more focused partnership in these areas could be realised.

The German Minster appreciated Pakistan's role in the regional context, both on the political and economic fronts, especially in case of Afghanistan. The two sides agreed to develop a more focused partnership with an emphasis on capacity building.

On an area of concern, the Minister of State apprised her German counterpart of the vision and strategy that the Government of Pakistan is contemplating to reform the tax management structure at the strategic and operational levels. She reaffirmed Government's commitment to considerably improve the tax to GDP ratios and introduce significant initiatives in the new fiscal year in this context.

The Minister further apprised her German counterpart that the decentralisation process was continuing with some minor changes. The head of the German delegation viewed the solid foundation on which Pak-German economic relations were based, as an excellent framework to expand and strengthen this relationship.

Kortman, who is also the Governor for Germany in the Asian Development Bank's (ADB) Board of Governors, invited Pakistan to join the Energy Sector partnership, which has already been signed with 78 member countries to avail the energy sector assistance from Germany. Meanwhile, Hina also met Michael Foster, Head of UK Delegation to ADB Annual Meeting on Tuesday. They discussed areas of mutual interest including developments in the current political and economic situation in Pakistan.

She reaffirmed Pakistan's resolve to combat terror and highlighted the measured and firm steps the Government was taking to address the security situation in Pakistan. She shared with the UK delegation the improved economic indicators of Pakistan after the Fund support of the home grown economic, financial and administrative reforms under the nine point economic reform agenda of the Government. They also shared views on the future modalities for realisation of the commitments and pledges made at the meeting of the Friends of Democratic Pakistan and donors' conference held at Tokyo recently.


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## sohailbutt

*Molasses exports soar by 134pc in cfy​*KARACHI: Pakistan export of molasses during the current fiscal year was seen soared by 134 percent.

According to official data, molasses exports during July-March surging by 134 percent reached $76.7 million as against $32.6 in the same period previous year.

Sindh Abadgar Board Secretary General, Nawaz Shah told Geo News that last years high sugarcane production spurred a vigorous surge in molasses exports. He further said that the current sugarcane crop as compared previous year stood 40 percent less, which gives rise to the possibility of molasses export falling next year. 

Molasses exports soar by 134pc in cfy - GEO.tv


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## sohailbutt

*17.7 percent more revenue received in July-April: FBR​*ISLAMABAD: The Federal Board of Revenue (FBR) has collected Rs898.641 billion in 10 months (July-April) of current fiscal year 2008-09, which works out to 17.7 percent more than the same period previous year, however, the Board faces a gigantic task of collecting another Rs350 billion in the remaining two months to meet the target of Rs1250 billion.

In April alone, the FBR collected Rs83.532 billion. According to provisional figures, collection of direct taxes in the first ten months of the current fiscal year amounted to Rs332 billion, while in the same period previous it stood at Rs284 billion. 

Revenue received on account of sales tax during the period under review amounted to Rs358 billion, of which, Rs194 billion received from sales tax locally and Rs164 billion at import stage.

Federal excise duty received in July-April current fiscal year amounted to Rs90 billion and customs duty Rs117 billion.

17.7 percent more revenue received in July-April: FBR - GEO.tv


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## sohailbutt

*India to get Afghan transit trade route​*WASHINGTON: Pakistan and Afghanistan signed on Wednesday a memorandum of understanding to begin talks on a transit trade agreement which will ultimately allow India to use the Wagah-Khyber route for trade with Kabul.

The memorandum of understanding commits the two countries to achieving a trade transit agreement by the end of the year, which we believe will have great economic benefits for both peoples, said US Secretary of State Hillary Clinton who hosted the Afghan and Pakistani presidents for the first round of the second trilateral talks.

This is an historic event. This agreement has been under discussion for 43 years without resolution, she said.

Afghanistan and Pakistan have reached an important milestone in their efforts to generate foreign investment and stronger economic growth and trade opportunities.

Secretary Clinton also used the opportunity to regret the loss of innocent lives in US bombings, saying that she wanted to convey to the people of both Afghanistan and Pakistan that we will work very hard with your governments and with your leaders to avoid the loss of innocent civilian life. And we deeply, deeply regret that loss.

Later, the Afghan and Pakistani foreign ministers signed the memorandum before Presidents Asif Ali Zardari and Hamid Karzai went to the White House for a trilateral summit with President Barack Obama. 

Pakistan and Afghanistan are conjoined twins. Our suffering is shared. Our joys are always shared, said President Karzai while talking to the media after Secretary Clinton.

The life that we live is affected by the opportunities that we have and the lack of opportunities that occurs because of the circumstances in which we live today.

Today we sit here as three democratic states, enjoined in the history of democracy, looking forward to working together, said President Zardari while responding to his remarks. 

Although India is not mentioned in the memorandum of understanding, it will be the main beneficiary of a transit trade agreement between Pakistan and Afghanistan as Kabuls major trade partner. 

Both India and Afghanistan have long insisted that Pakistan open its land route for transit trade between the two countries which do not have a common border. 

But Secretary Clinton said that the opening of a transit trade route will also open new opportunities for both Afghanistan and Pakistan. 

When  I look at the map of the world and see how strategically located both countries are, this is an agreement that will bring prosperity to both countries along the trade routes and beyond, she said.

Nothing opens up an area to economic development better than a good road with good transit rules and an ability to transport goods and people effectively.

The agreement, she said, would also help bring more foreign direct investment into Afghanistan and Pakistan, because thats always the first question: How do we get our goods to market? How do we get them to another economy in another country?

Secretary Clinton brought a high-powered delegation to the talks which included Director CIA Leon Panetta, Director FBI Robert Mueller, Pentagons Under-secretary for Policy Planning Michele Flournoy, and chief of the US Central Command General David Petraeus. 

The Pakistani delegation, headed by President Zardari, also included Bilawal Bhutto Zardari, three ministers, several advisers and the DG ISI. 

Bilawal Zardari, two ministers, advisers and the DG ISI left after the first round so did the CIA and FBI chiefs and Afghan intelligence and military officials. 

SECOND ROUND 
Only the two presidents, their foreign ministers and envoys in Washington attended the second round with Secretary Clinton who was assisted by the US special envoy Richard Holbrooke.

Secretary Clinton said that Wednesdays discussions focussed on concrete initiatives to expand economic opportunities and trade, to bolster the agricultural sector as an essential source of revenue and jobs in both Afghanistan and Pakistan. 

The three countries also discussed measures to help build the industrial sector in Pakistan, to create more jobs and opportunities for people. They also discussed measures to improve joint cooperation on security. 

We do not believe either Afghanistan or Pakistan can achieve lasting progress without the full participation of all of your citizens, including women and girls. The rights of women must be respected and protected.

President Zardari urged the US, the worlds oldest and most powerful democracy, to nurture democracies in other countries.

We thank the United States for its support for democracy, for security in Pakistan, and look forward to further support, he said. The president said that Afghanistan, Pakistan, and United States were all victims of terror.

I am here to assure you that we shall share this burden with you all, for no matter how long it takes and what it takes, democracies will deliver, he said. My democracy will deliver.

The Pakistanis, he said, stood with our brother Karzai and the people of Afghanistan against this common threat  this is a cancer. It needs to be done away with.

The president said that Pakistan carried a huge burden of confronting al Qaeda and Taliban together, but we are up to the challenge because we are a democracy, and democracy is the only cure to this challenge.

Mr Zardari said that as the United States was making progress after seven years of engagement in Iraq and Afghanistan, Pakistan will too. 

He said that democracy in Pakistan was only seven months old and during this period, the government had performed better than the dictatorships in the past years. 

Mr Zardari said that Pakistan would need high level of support in the days to come and would also be far more transparent in its actions. 

Democracy will avenge the death of my wife and thousands of other Pakistanis and citizens of the world. Pakistani democracy will deliver. The terrorists will be defeated by our joint struggle, he said.

Afghan President Karzai welcomed the US promise to minimize civilian deaths in the fight against the Taliban, hoping that the US could work together with Pakistan and Afghanistan to reduce and eventually completely remove the possibilities of civilian casualties. 

Afghanistan would like to assure the United States, its most valued strategic ally, and Pakistan, its neighbor, brother and friend that it would do its best to defeat the terrorists.

DAWN.COM | World | India to get Afghan transit trade route


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## white_pawn

*Pak, IMF discuss budget targets​*
Updated at: 1103 PST, Thursday, May 07, 2009

ISLAMABAD: Pakistan and International Monetary Fund (IMF) discussing budget targets for next fiscal year.

Finance ministry sources told Geo News that finance ministry and IMF officials in an ongoing meeting in Dubai discussing budget targets for next fiscal year. IMF officials expressed concern over failure in achieving revenue targets whereas Pakistani officials in their briefing said decline in imports and economic growth rate affect the revenue collection.

Sources said IMF also exchanged views on slump in budget deficit by government of Pakistan and transfer of debts to commercial banks instead of State Bank.


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## white_pawn

*Telecom sector attracts huge foreign investments ​*
KARACHI: The telecommunications sector attracted an investment of about $9 billion in the last three years.

This was stated by the Pakistan Telecommunication Authority chairman Dr Mohammad Yaseen while speaking at the inaugural session of 4th connect conference 2009 at Karachi Expo Centre here on Wednesday.

Long distance and international operators have made huge investment in optical fiber, system up-gradation and installation of other communications equipment, he said.

He said that the companies, like Multi-net, Wateen and Link Direct, have installed almost 15,000 km long optical fiber between Karachi and Peshawar.

If the optical fiber of PTCL is included, the total length of optical fiber will reach 30,000 to 40,000 kms, he noted.

Talking about measures to check quality of service, Dr Yaseen pointed out that the PTA has installed state-of-the-art equipment for this purpose.

We are carrying out a survey to assess the quality of Internet service providers on a daily basis, and on the basis of our findings, we are suggesting them about corrective measures, he said.

Dr Yaseen pointed out that billions of rupees have been collected by USF Company for laying network lines by the operators.

Under the agreement, all telecom operators are required to deposit 1 to 1.5 per cent of their revenue minus expenses with USF Company.

This company provides a subsidy from this amount to telecom service operators for laying a broad band network to unconnected areas in the country, he added.

So far, two districts, including Faisalabad, have been provided broad band facility while Multan would also be connected soon, he said. The PTA chairman said that the number of mobile phone subscribers has increased from five million in 2004 to 91 million in 2009 and fixed line users have grown from 3.7 million in 2004 to 4.5 million in 2009.APP

DAWN.COM | Business | Telecom sector attracts huge foreign investments


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## white_pawn

*Benazir Tractor Scheme approved by Cabinet​*MUSHTAQ GHUMMAN


ISLAMABAD ( 2009-05-07 04:26:41 ) :The Cabinet on Wednesday approved the Benazir Tractor Scheme to provide 20,000 tractors to farmers at discounted rates, aimed at boosting the neglected agriculture sector. Presided over by Prime Minister Yousuf Raza Gilani, the Cabinet meeting deliberated upon the scheme, cleared by the Economic Co-ordination Committee (ECC) of the Cabinet.

Under the scheme, the government would share up to 50 percent of the cost of tractor, up to a maximum of Rs 200,000 per beneficiary. The farmers will be provided subsidised tractors through a ballot system. In Punjab, farmers owning 5 acres to 50 acres land, in Sindh and Balochistan farmers with 5 acres to 100 acres, and in NWFP, AJK and PATA farmers with land holding of 2 acres to 50 acres will be eligible to benefit from this scheme. Total cost of the Scheme will be Rs 10 billion and it would be implemented through Zarai Taraqiati Bank Ltd (ZTBL).

The Prime Minister directed the Ministry of Food and Agriculture (Minfa) to earmark special quota for Balochistan farmers. The meeting also approved amendments in terms and conditions of the Deep Sea Fishing Policy, approved during Musharraf regime. These include rationalising royalty and licence fee at the position of 1995, and declaring the federal area between 12-20 nautical miles (buffer zone) as Zone-II and from 20-200 nautical miles as Zone-III.

These measures are anticipated to bridge the yield gap through increasing productivity, enhancing investment, improving foreign exchange, rationalising the structure vis-à-vis neighbouring countries, thus achieving economic growth and increasing fishing vessels' operations in Zone-III.

Keeping in view the importance of Housing and Population Census for good governance and effective planning, the Cabinet approved, in principle, to hold Sixth Population and Housing Census "in a fair and transparent manner".

However, the Cabinet decided that the modalities to ensure transparency by taking all the stakeholders on board would be worked out in the inter-provincial meeting, to be chaired by the Prime Minister, which would be attended by the Chief Ministers, NWFP Governor, Prime Minister of AJ&K, and Chief Executive of Northern Areas. The Cabinet directed the Statistics Division to ensure effective monitoring of the process.

The Prime Minister, taking the Cabinet into confidence, apprised the meeting of the recent security situation in the country, with particular reference to the status of Swat agreement, Army action in Lower Dir and Buner, and relief activities for the internally displace persons (IDPs) in NWFP. The Prime Minister informed the Cabinet that the Army in certain areas of NWFP was called by the provincial government.

The Prime Minister said that the federal government had already sanctioned Rs 500 million for the provision of food and shelter as well as facilitating relief activities for the IDPs and, in addition, Rs 8 million has been granted for the provision of food items on emergency basis for the IDPs through Utility Stores Corporation (USC) from their regional set-up at Peshawar.

He said that the NWFP government has been directed to mobilise its financial and physical resources to provide immediate assistance to IDPs till their return to their areas after the restoration of peace. The Prime Minister informed the Cabinet that the government would soon invite Imam-e-Kaaba to visit Pakistan and preach the true face of Islam, which strongly abhors suicide bombings indiscriminately killing the people.

In order to enhance relationship between National Institute of Defence Studies, Japan, and National Defence University of Pakistan, the Cabinet approved, in principle, to start negotiating an MoU between the GoP and Japan. Under the MoU, students and faculty members of both universities will undertake visits on reciprocal basis, exchange information on current issues, and may conduct joint research projects.

The meeting approved to start negotiations for an agreement on economic and technical co-operation with Egypt. The agreement is aimed at promoting co-operation among companies, public works sector and private sector of both the countries in establishing joint ventures, and encouraging mutual investments in both the countries.

This will also include granting scholarships in economic and technical fields on reciprocal basis. To further cement socio-economic and political relations with the Government of Cuba, the Cabinet gave approval for signing of an agreement between Pakistan and Cuba for establishment of 'joint economic commission'.

Under the agreement, both sides will undertake feasibility studies to identify viable investment projects, exchange of specialists, granting of scholarships in specialised studies, etc.

The Cabinet granted ex post facto approval for initiation of negotiations and approval for signing of MoU with Germany on co-operation regarding Clean Development Mechanism (CDM) project activities. CDM, introduced under the Kyoto Protocol, is a market-based mechanism that helps the developing countries in achieving the goal of sustainable development by reducing greenhouse gases and earning foreign exchange by sale of certified emission reductions generated through their projects to mitigate the climate change effects.

The MoU also covers areas of co-operation in the fields of climate change, exchange of information and transfer of environment-friendly technologies for renewable energy and energy efficiency. The Cabinet approved, in principle, to start negotiations for signing of visa abolition agreement with Ukraine for holders of diplomatic and official passports.

In order to strengthen international law enforcement co-operation at all levels in combating illicit trafficking of narcotics, psychotropic substances and their precursor chemicals, the Cabinet approved to initiate negotiations for an MoU with the governments of Australia and Libya. The Cabinet also ratified the decisions taken by the ECC on March 19, 2009.

AAJ TV : Pakistan Ki Awaz


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## Neo

* Wheat production expected to be around 25.7 million ​* 
Thursday, May 07, 2009
By Aftab Maken

ISLAMABAD: Wheat production is expected to be around 25.7 million tonnes crossing government estimates of 23.3 million tonnes.

The increase in wheat out put estimates is being attributed to rise in both the area under wheat cultivation and per acre yield, reveals a survey on Wednesday.

The area under wheat cultivation was up by 9.8 per cent against the last season while per acre yield increased by 19 per cent over last year.

The increase in Guaranteed Minimum Price (GMP) of Rs950 per 40 kg for wheat encouraged growers to enhance wheat production, says the joint survey of Punjab Lok Sujag and South Asia Partnership-Pakistan.

The survey interviewed 956 farmers from 168 villages of 14 districts, which contribute half of the wheat production in Punjab.

The survey also pinpointed the massive production has become an insurmountable challenge for the governments wheat procurement departments that now find themselves over stressed with the burden of buying the produce.

The smaller as well as large farmers during the on-going harvesting season in Punjab have witnessed an average increase in production of 30.6 per cent when compared with the corresponding period of last season, the survey added.

Only two of the survey districts, Narowal and Toba Tek Singh, showed a negative trend as area under wheat reduced here. Narowal also had to face a decline in yield as weather in the area has not been favourable resulting in an overall decline in production. 

Toba however compensated the reduction in the area by better yield to produce more wheat than the previous year, the survey highlighted.

In contrast many other districts have thrived on the back of high yield alone. Attock increased area under wheat by only 1.8 percent, yet a high increase of 28 percent in yield resulted in increased production. 

Lodhran surpassed all other districts in rise in yield as the per acre wheat production in the district rose by a hefty 57.6 percent, it said.

The survey further said that rise in wheat production in Okara was mainly contributed by a big increase in area under wheat. Okara and adjoining areas is the hub of potato production that failed to fetch a good price in the previous seasons. This coupled with the ensured high price for wheat wooed a number of farmers to replace potato with wheat. An additional rise in yield resulted in the big increase of 52 percent in wheat production in Okara.

Small farmers have been afraid that it might become difficult for them to buy wheat for home consumption at high rates at any point in the coming year. While medium and large farmers realised that wheat cultivation has become a profitable activity for the first time ever. They abandoned other cash crops performing poorly at the market and opted to grow wheat, the survey concluded.


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## Neo

*TDAP devises strategy to boost exports by 20pc ​* 
Thursday, May 07, 2009
By Mansoor Ahmad

LAHORE: Pakistans exports are currently under pressure because the easy money that came into the country after 9/11 was spent on importing cornflakes, chocolates and other goodies instead of building capacity of economy.

Trade Development Authority of Pakistan Chief Executive Syed Mohibullah Shah stated this while briefing members of the Lahore Economic Journalists Association on how Pakistan could meet the challenges of global economy.

He said the trade imbalance could not be corrected solely by increasing exports. It had to be supported by measures that curb unnecessary imports.

In October 2008, he said, the TDAP recommended to the federal government to take some measures including increase in tariff to discourage imports of 360 items which were an unnecessary burden on foreign exchange. Pakistan could curb these imports while staying within World Trade Organisation (WTO) rules.

He said the TDAP had chalked up a strategy to broaden the export base both in terms of area and products and achieve a 20 per cent increase in exports. However, he cautioned the TDAP alone could not meet the target unless there was a linkage between investment, trade and industrial policies.

Currently, he said, the country lacked essential ingredients for a sustained growth. There is a need to liberate creative powers of entrepreneurship in the society through social sector reforms. The enabling power of education and skills is necessary to increase productive capacity of society.

Shah said the protective power of governance was another reform to unleash the true potential of economy as it provided a level-playing field for all and ensured that rights and rewards were not usurped by the powerful.

The TDAP chief executive said the countries that undertook these reforms had outpaced Pakistan. Citing an example, he said in 1951 exports from Pakistan amounted to $160 million while South Korean exports were one-third of that at $60 million. Last year (2008), Pakistans exports were below $20 billion while exports from South Korea reached $400 billion.

In another example, he said in 1981 exports from both Pakistan and Turkey were worth $2.5 billion each. However, in 2008 Turkish exports jumped to $120 billion against $20 billion from Pakistan.

Shah said in the past six years exports from Pakistan grew at an average rate of 13.73 per cent while imports grew 25.71 per cent. Only five items accounted for 80 per cent of exports while 54 per cent of exports went to the US and European Union, he added.

In order to broaden the export base, he said, the TDAP had identified three sectors which were agro-based products, minerals and human resource. For expansion of geographical reach, the new regions identified by TDAP were Russia, Central Asian Republics, Iran, China, South Korea and South Africa.

By focusing on these sectors and regions, he said, the TDAP hoped to increase exports by 20 per cent annually. The strategy is based on unexploited potential of these sectors.

Elaborating his point, Shah said Pakistan is the fourth largest producer of milk in the world but is ranked 33rd in exports, in meat production it is ranked 15th but 53rd in exports and fourth largest producer and third largest consumer of cotton but 33rd in clothing exports. Exports in these sectors, he added, could be multiplied with little facilitation. He pointed out that explored and unexplored mineral reservoirs in Pakistan were double than that of India but mineral exports were negligible.


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## Neo

*Pakistan on Britains priority list for trade ​* 
Thursday, May 07, 2009

LAHORE: UK Trade and Investment Director Robert Gibson has expressed optimism that trade relations between Pakistan and the United Kingdom would grow further in coming days as Pakistan is on Britains priority list for having enormous potential and opportunities.

He was speaking at the Lahore Chamber of Commerce and Industry (LCCI) on Wednesday. Both sides discussed matters relating to expansion of bilateral trade, investment and economic cooperation especially investment climate in Pakistan in the wake of global economic crisis.

He said the UK was seriously working on further strengthening business relations between the two countries. Pakistan has a huge potential for foreign investment with rich human resource. He said that global recession could be tackled with collective approach and there is a need that both the UK and Pakistani businessmen should work hand-in-hand to fight it out.

Speaking on the occasion, LCCI President Mian Muzaffar Ali said that Pakistan was keen to have British investment that could provide transfer of technology and help it become a knowledge-based economy.

He said presence of around one million Pakistanis in Britain gives added strength to the traditional relationship. Above all, the UK is Pakistans largest trading partner within the EU and the second largest foreign investor. We can understand that some of the Pakistani areas are critically suffering from security risks but these risks are confined to those areas alone. The perception that the investors are shying away from Pakistan is no longer there, he added

Ali said that Pakistan has tremendous investment opportunities in the field of information technology, telecommunications, infrastructure, education and food preservation technology. He said that in this age when the world had shrunken into a global village, there is a dire need to learn from the experiences of each other.

Speaking on the occasion, the former LCCI President Mian Misbahur Rehman urged the UK official to ensure Pakistani entrepreneurs match-making in the UK as Pakistani merchandise are simply the best when are compared with goods belonging to other countries.


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## Neo

*Cabinet gives go-ahead to tractor scheme​*
ISLAMABAD: Federal Cabinet Wednesday approved incentive worth Rs 4 billion for the launching of Benazir Tractor Scheme aimed at providing 20,000 tractors to the farmers at concessional rates.

The government would share up to 50 percent of the cost of tractor subject to a maximum of Rs 200,000 per beneficiary.

Federal Cabinet approved the revision of terms and conditions of the Deep Sea Fishing Policy with a view to maximise the benefits of deep-sea fishing and strengthen monitoring mechanism and earn foreign exchange.

Federal Cabinet met under the chairmanship of Prime Minister, Syed Yusuf Raza Gilani.

The farmers shall be provided subsidised tractors through a ballot system. In Punjab farmers owning land 5 acres to 50 acres, in Sindh and Balochistan farmers with 5 acres to 100 acres and in NWFP, AJK and PATA farmers with land holding of 2 acres to 50 acres shall be eligible to benefit from this scheme.

The total cost of Benazir Tractor Scheme shall be Rs 10 billion and it shall be implemented through Zarai Taraqiati Bank Ltd.

The Prime Minister directed the Ministry of Food and Agriculture to earmark special quota for Balochistan farmers.

The Cabinet approved the revision of terms and conditions of the Deep Sea Fishing Policy. This includes rationalising the royalty and license fee at the position of 1995 and declaring the Federal area between 12-20 nautical miles (buffer zone) as Zone-II and from 20-200 nautical miles as Zone-III.

These measures are anticipated to bridge the yield gap through increasing productivity, enhancing investment, improving foreign exchange, rationalising the structure vis-à-vis neighbouring countries, thus achieving economic growth as well as increasing fishing vessels operations in Zone-III.

ECC okayed rationalised gas import proposal, advising Ministry of Petroleum to seek Cabinet ratification and approval before signing said GSPA with Iran.

The meeting approved to start negotiations for an agreement on economic and technical cooperation with Egypt. The agreement is aimed at promoting cooperation among companies, public works sector and private sector of both the countries in establishing joint ventures and encouraging mutual investments in both the countries. This will also include granting scholarships in economic and technical fields on reciprocal basis.

The Cabinet gave approval for signing of an agreement between Pakistan and Cuba for the establishment of joint economic commission. Under the agreement, both sides will undertake feasibility studies to identify viable investment projects, exchange of specialists, granting of scholarships in specialised studies, etc.

The meeting granted ex-post facto approval for initiation of negotiations and approval for signing of MoU with Germany on cooperation regarding Clean Development Mechanism (CDM) project activities.

The MoU covers areas of cooperation in the fields of climate change, exchange of information and transfer of environment friendly technologies for renewable energy and energy efficiency. The Cabinet also ratified the decisions taken by the Economic Coordination Committee of Cabinet held on March 19, 2009.


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## Neo

*Budget for 2009-10: Govt to approve Rs 2.466bn for Ministry of Industries​*
ISLAMABAD: The government is likely to allocate Rs 2.466 billion in the development budget for the Ministry of Industry and Production for 2009-10, sources told Daily Times here on Wednesday.

Last year the government allocated Rs 10.458 billion for the ministry in the annual budget 2008-09, which after financial constraints was reduced to Rs 2.529 billion. The new expected allocation of Rs 2.466 billion shows 76 percent less allocation as compared to last years allocation. Keeping in view the financial constraints, the sources claimed that the government was making rational allocations in the upcoming budget.

In the development budget for Ministry of Industry and Production, allocations would be made for 22 ongoing, four approved and 36 unapproved projects. Total number of development projects of the ministry was 62 and the final figure would be decided in the Annual Plan Coordination Committee meeting, scheduled to be on May 21.

Some of the ongoing important projects of the ministry are Clean Drinking Water for All worth Rs 15.843 billion, Clean Drinking Water Initiatives worth Rs 955.100 million, Sports Industries Development Centres Sialkot worth Rs 272.620 million, Women Business Incubation Centre worth Rs 31.220 million, Gujranwala Tools, Dies and Moulds worth Rs 878.040 million, 2MGD Water Desalination Project worth Rs.378.860 million, Ceramic Complex Guiranwala worth Rs 314.470 million, Foundry Service Centre Lahore with cost of Rs 150.040 million.

Other important on-going projects of the ministry are Product Development Centre for Composite Based Sports Goods Sialkot worth Rs 380 million, Development Projects of Pakistan Gem and Jewellery Development Company worth Rs 1.400 billion, Development of Marble and Granite Sector worth Rs 1.980 billion, and many others.

Apart from the above projects, the Central Development Working Party in its latest meeting approved six projects of the ministry. These projects are Agro-Food Processing Facilities Multan, Sports Industries Development Centre Sialkot revised, Foundry Service Centre Lahore Revised, Khadi Crafts Development Company (KCDC) Multan and Leather Crafts Development Company (LCDC) Multan.

Sources claimed that total 40 projects would be considered for allocation in the APCC meeting in which four projects were approved and 36 projects were unapproved.

Sources claimed that there was possibility that the number of projects might be increased in the coming APCC meeting because in democratic government public representatives would present more and more projects with the passage of time.


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## Neo

*Impact of Talibanisation on economy: 300 marble units in NWFP shut down, 250 on verge of closure​*
** Mining, excavation activity halted in FATA, Mohmand Agency
* About 25,000 tonnes raw marble used to be excavated daily​*
KARACHI: Mining and excavation activities of world-class quality marble and granite have stopped in Mohmand, Khyber, Bajour and Kurram agencies of Federally Administered Tribale Areas (FATA).

The activities have become zero at the major zones where huge quantities of marble are extracted. These deposits have a great variety of colours and fabrics and thus have vast potential in international market, an official of Pakistan Stone Development Company (PASDEC) said Wednesday.

All Pakistan Marble Mining, Processing, Industry and Exporters Association (APMMPIEA) expressed its concern over the slaying of one of its member, Habib Khan at the hands of Taliban Wednesday. He was first kidnapped and then beheaded by the extremists, whereas hundreds of loaders, dozers, excavators and other vehicles have also been lifted by the Taliban, APMMPIEA said.

Founder chairman and a senior member APMMPIEA, Sanaullah Khan said war on terror has disrupted the economic activities completely and the work on a marble city in Mohmand Agency has been stopped since the last couple of weeks.

He said around $5 million export orders from the Middle East have been cancelled so far and cancellation of hundreds of other export orders are on the cards due to zero supply of marble. The government is also being deprived of income on lease of around Rs 1 million to Rs 1.5 million daily as the industrial activities at the mining sites were stopped.

He said development of infrastructure at the FATAa first industrial estate on an area of 300 acres under PASDEC was also being affected. Nearly 200 manufacturing units of marble in Peshawar on Warsak and GT Road have been facing acute shortage of raw material and are expected to shut down within a couple of days, he added.

Khan said similarly, in Mardan around 100 marble units have been shut down and around 15,000 direct employment has been rendered jobless. He said nearly 250 industrial units in Buner and 50 in Mingora have been closed down while 50 units in other parts of the affected area were also not functioning since disruption. Around 20,000 skilled and semi-skilled manpower in Buner and around 35,000 indirect employments at allied industries have been laid off. The government has set an export target $500 million to be achieved by 2013 from export of marble and granite.

But due to war on terror, the marble and granite sector, serving as an engine of development, economic growth and poverty alleviation with more than 7,000 million tonnes of good quality marble ranging from super white, silky and grey varieties exist in Mohmand, Khyber and Bajaure agencies, was facing total hardship. He said in Ziarat FATA, good quality of marble mines exists and the government has started extraction from there.


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## Neo

*Germany to consider Pakistan its preferential trade partner​*
ISLAMABAD: Germany is prepared to consider Pakistan as its preferential trade partner, Industries and Production Minister Manzoor Wattoo told Prime Minister Yousuf Raza Gilani on Wednesday. Briefing the prime minister on his visit of Germany, Wattoo said the German Chamber of Commerce would exchange delegations with its Pakistani counterpart on reciprocal basis to enhance trade and bilateral relations.


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## Neo

*Pakistan may receive $8 billion aid against expected $14 billion​* 
ISLAMABAD (May 07 2009): Pakistan may receive only $8 billion foreign assistance against the expected requirement of $14 billion, facing a shortfall of $6 billion during the current fiscal year. As per an International Monetary Fund (IMF) estimate noted in a press conference on 25 November 2008, Pakistan's financial requirement for 2008-09 was $13.4 billion.

But sources in the ministry of Finance, on condition of anonymity, revealed to Business Recorder on Wednesday that approximately $8 billion will be made available till the end of the current fiscal year. The major portion of this amount $3.947 billion to date is sourced to the $7.6 billion dollar IMF stand by arrangement. In the current year an additional 800 million dollars will be received from International Monetary Fund (IMF) and the remaining $3 billion from other International Financial Institutions (IFIs) and bilaterals.

Pakistan received $5.668 billion foreign loans during the first nine months of 2008-09. Out of this an amount of $3.947 billion has been released by IMF so far with $3.1 billion as first tranche of the standby arrangement in November 2008, and $847 million on March 31 as the second tranche. The remaining $1.721 billion was received from other donors, including World Bank and Asian Development Bank (ADB). IMF is expected to release another tranche of $800 million during the current fiscal year while an additional $1.3 billion from IFIs is also expected to be released within the current fiscal year.

Former Senior Vice President of WB Shahid Javed Burki said that Pakistan would require $12 billion every year for at least the next five years from external sources to meet its financing requirements. Pakistan is expecting to receive $14 billion assistance in the next two years from different sources which include: $3 billion from Kerry Lugar bill, $5.2 billion from Friends of Democratic Pakistan, $2 billion each from World Bank and Asian Development Bank (ADB) and $1 billion each from Islamic Development Bank (IDB) and DFID.

There are serious concerns amongst the policy makers as to how much of the pledges made so far would transform into money in the federal kitty. After the devastating earthquake of 2005, when there was much international sympathy, about $6 billion pledges were made yet these pledges were not all changed into reality. Thus the government would do well to tamper its expectations of the recent bilateral pledges and focus on raising domestic revenue through bringing the untaxed sectors into the tax net, analysts are urging the government.

Burki said Pakistan would require $60 billion external financing in the next five years, arguing that the government must bring more untaxed sectors into the tax net, including agriculture and stock market for revenue generation. He maintained that government would have to enhance revenue collection by bringing it to 15 percent of GDP during the next five years. He opposed slashing development budget, and urged that development budget for the growth oriented sectors should be enhanced.

Dr Ashfaq Hassan Khan, former advisor in ministry of Finance, said it would be a major challenge for the government to achieve fiscal deficit target on the face of massive revenue shortfall. The government will bridge the fiscal difference through PDL this year but it may not have the space of PDL by next fiscal year as the petroleum prices are again on the rise. He said the real problem would be for the government to achieve the target of 3.3 per cent fiscal deficit by next year as committed to the IMF. To a question about Friends of Pakistan pledges, he said it would entirely depend upon the government how it pursues the pledges.


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## Neo

*Sharp fall in export put pressure on external balances, complicate growth recovery: World Bank​* 
FAISALABAD (May 07 2009): Pakistan's macroeconomic imbalances are rooted in the sharp rise in international prices of oil and food in 2007-08, combined with policy inaction and internal political turmoil.

To avoid a balance of payments crisis and default on foreign debt payments, the authorities developed the stabilisation program, which was supported by the IMF through a 23-month Stand-By Arrangement (SBA) in November 2008, said an updated report of South Asia Poverty Reduction and Economic Management Unit (SASEP), World Bank.

According to the report, the program includes a medium-term macroeconomic framework (MTMF), with fiscal and monetary tightening to bring down inflation and reduce the external current account deficit to sustainable levels. At the first quarterly review of the SBA in February 2009, the stabilisation program remained on track.

GDP growth in Pakistan's export markets is likely to fall sharply in 2009, which would translate into a starker-than projected decline of Pakistan's export growth in the medium-term, put pressure on Pakistan's external balances and complicate growth recovery.

Risks to the domestic financial sector may increase, and it seems almost certain that even the downward-revised revenue target will not be met in this fiscal year. Stringent implementation of the government's IMF-supported economic stabilisation program will be critical to success, and timely responses of fiscal and monetary authorities to emerging risks will be essential to ensure it remains on track.

WB report revealed that the rapid decline in international commodity and oil prices since August 2008 has reduced the risks, and facilitated improvement in the external position and the achievement of set targets. However, given the global economic crisis, the medium-term outlook presents significant downside risks.

The sharp deterioration in the global economic and financial outlook poses significant risks to exports, remittances and external financing. Even though projections in these areas as well as forecasts about the speed of real economy recovery were significantly moderated during the first programme review in February 2009, they may still turn out to be optimistic.

Over the last few months, WB report stated that the stabilisation efforts together with a decline in international commodity prices have succeeded in reducing external imbalances, rebuilding foreign exchange reserves, narrowing fiscal overruns and lowering inflation.

However, the sharp deterioration in the global economic and financial outlook poses significant risks to exports, remittances and external financing. Even though projections in these areas as well as forecasts about the speed of real economy recovery were significantly moderated during the first program review in February 2009, they may still turn out to be optimistic.

For example, economic growth countries to which Pakistan exports is likely to continue to fall sharply in 2009, which would translate into a decline in Pakistan's export growth, put pressure on Pakistan's external balances and complicate growth recovery. The risks to the domestic financial sector may increase. The medium-term revenue projections are ambitious and will be difficult to meet.

The March 2009 Federal Board of Revenue tax collections fell short of the downward revised revenue target. This highlights the need for a rigorous implementation of reforms, while protecting core development spending, in particular social spending, to ease the adjustment for the poor and vulnerable people.

Stringent implementation of the economic program will be critical to success, and timely responses of fiscal and monetary authorities to emerging risks will be essential to ensure it remains on track. In the current economic environment, any medium-term projections are uncertain and regular adjustments are necessary in response to changed circumstances.

Given the global economic crisis, WB report revealed that the medium-term outlook presents significant downside risks. The external environment is expected to deteriorate further, with global growth turning negative and a gradual recovery starting only 2010.

In the government's revised MTMF, Pakistan's real GDP growth is projected to remain low in 2008/09 and 2009/10, and increase gradually from 2.5 per cent in 2008/09 to 6.5 per cent by 2012/13, although longer-term projections are particularly uncertain in view of the volatile global economic environment.

Aided by increasing public investment-among other things in infrastructure, power, and transport-gross capital formation is projected to rise and contribute to growth recovery and facilitate private sector activity. In parallel, gradually increasing private sector credit growth is projected to help economic activity.

Agriculture is showing good growth prospects, while manufacturing and services are expected to recover only gradually as the domestic aggregate demand picks up and the availability of power improves as a result of investments in power generation. With the global recovery, exports are also projected gradually improve and reduce Pakistan's external vulnerability.

The government's revised macroeconomic framework targets projects a decline in the fiscal deficit (excluding grants) from 4.3 percent of GDP in 2008/09 to 2.3 percent of GDP in 2012/13. The cornerstone of this outlook is a significant increase in Federal Board of Revenue tax revenues, which are projected to rise by 3.1 percentage points of GDP to 12.7 percent of GDP by 2012/13.

Excluding grants, overall revenues are projected to rise from 14.3 percent of GDP in 2007/08 to 17.3 percent of GDP in 2012/13. To meet the ambitious revenue targets, WB report observed that the authorities consider implementing bold and comprehensive tax policy and administration reforms. This would include quick and decisive implementation of value-added taxation (VAT) of goods and services, elimination of tax exemptions and zero-ratings, and revamping of the tax administration.

This would be the key measure to expand the tax base and revenues, since currently services, which account for about 60 percent of GDP, currently remain outside the tax net. In the meantime, as part of the 2009/10 budget, the government may adopt significant legal changes to the current General Sales Tax (GST), moving it closer to VAT by minimising exemptions and zero-ratings, and thereby broadening tax base and revenues. Significant untapped revenue potential remains also at the provincial level, which would warrant attention.

Owing to this sizeable revenue effort, total expenditures are projected to slowly climb back to about 20 percent of GDP in 2012/13. In line with current projections of low oil and commodity prices, and following the elimination of power and fuel subsidies and maturing of the remainder of high interest-yielding Defence Savings Certificates, current expenditures will decline as a share of GDP and make space for a steady increase in development spending from 3.2 percent of GDP in 2008/09 to 5.6 percent of GDP in 2012/13.

According to WB report, the external current account deficit is projected to decline to about 4.2 percent of GDP by 2012/13. Foreign exchange reserves are expected to build-up from $9.1 billion by end-June 2009 to about $11.9 billion by end-June 2012/13. The sharp decline in international commodity prices, reduced private sector credit growth, and the economic recession are expected to curtail import growth in 2008/09 and 2009/10.

Exports are projected to start recovering from 2009/10 onwards with gradual global recovery and imports from 2010/11 onwards, but the growth of both remains moderate during the medium term. Remittances are projected to grow over the medium term. Foreign direct investment, after a drop in 2008/09, is projected to start gradually recovering in 2009/10 with the re-launch of the privatisation process, and portfolio flows are predicted to turn positive only from 2010/11 onwards.

In the medium term, increased productivity and export competitiveness are necessary to generate growth and reduce external vulnerability. To this aim, structural reforms to strengthen the investment climate and competitive environment are required.

These will include measures to ease firm entry and exit, reduce barriers to competition and trade, and enhance the labour market flexibility. In addition, efforts to improve the financial sustainability and efficiency of the power sector will be essential to attract investment in new power generation, WB report maintained.


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## Neo

*Construction sector contributes only two percent to GDP​* 
LAHORE (May 07 2009): Pakistan's construction sector has been contributing not more than 2 percent to the Gross Domestic Product (GDP) while, in other regional countries the industry contributes at least 5 to 10 percent to the GDP, sources in Planning and Development (P&D) Board said.

The construction sector has often been used to stimulate economic activity in countries because of the numerous forward and backward industry linkages. In Malaysia, for example, during the financial crisis during the late 1990s, the construction sector was used to jump-start the economy through demand-side interventions.

The sector has clearly been neglected and remains underdeveloped in Pakistan and sector inefficiencies are costing the economy dearly, added the sources. It may be noted that the government plans a sizeable amount of investments in infrastructure over the next decade; Medium Term Development Fund (MTDF) envisages a total investment of Rs 2162 billion for federal PSDP.

This planned PSDP expenditure during 2005-2010, is roughly three times the development expenditure during 2000-2005. Rs 993.2 billion (or nearly half of the PSDP for 2005-10) will be invested in the improvement of physical infrastructure alone, compared to an investment of about Rs 278 billion during the past five years.

An additional Rs 405 billion investment in roads, airports, ports and power projects is expected from public and the private sector. However, it is believed that industry stakeholders will be unable to deliver without institutionalising reforms.

The construction industry, on the other hand, has pointed out that the major gaps lie in the ability of the government to plan for the long-term and implement such plans and appropriately budget for the projects taken up in the development portfolios. According to these circles, the allocation of funds is not made as required for timely completion of the projects and funds that are allocated are not released by the federal government or by the provincial finance departments as per the requirements of the project implementation schedules.

Most funds allocated to a project are released in the last quarter of the financial year. Federal and provincial allocation rates for projects have been low enough to imply an average completion time of 6 and 12 years for road projects, respectively, and 18 years for irrigation projects, they added.

In addition, the client agencies are weak and lack capacity in procurement, project administration and management of their own sectoral portfolios and projects, resulting in delays in decisions, payments made to consultants and contractors and rampant interruptions in overall projects implementation.

But the contractors also suffer from a lack of professional management, and access to credit and financing. They often operate equipment and machinery which is old, with inadequately trained operators resulting in low productivity level. There are demand-supply gaps in construction material resources and the industry has to face rapid escalation in prices, which is not adequately compensated for or in many cases with no compensation at all.

Similarly, consulting firms are weak and lack the required technical skills to take on major infrastructure projects, are poorly compensated for intellectual inputs, and are given unrealistic time to carry out detailed designs which results in sub-optimal designs and incorrect cost estimates.

Both the contractors and consultants have to accept contracts, which are biased towards the clients and also face unfair competition from state-owned enterprises and parastatal firms.

This distorts market competitiveness and hampers private sector growth. The industry suffers from a shortage of adequately qualified, trained professionals and skilled human resource at all levels and amongst all stakeholders. A continuous brain-drain of qualified personnel to regional countries exacerbates the demand-supply gaps in human resources.


----------



## Neo

*Plan to make AJK self-sufficient in power production​*
MIRPUR (May 07 2009): An integrated broad-based plan has kicked off by AJK government to make Azad Jammu and Kashmir a welfare model state, official sources said. The sources told APP here on Wednesday that since AJK government intends to make AJK self-sufficient and self-supported in power production during next three years period, the state electricity department has launched at least 20 hydel power projects in a year.

The projects are aimed not only to meet the local needs of energy but also to supply power to various parts of the country in next three years. The sources said various public-sector institutions including industries and commerce, tourism, education, health, communication and public health departments were being expanded to achieve the task.

It may be added that under the public sector uplift programme, colossal funds have been allocated for uplift schemes for constituencies of Kotli, Bhimber and Mirpur district of Mirpur division.

The development funds have been equally disbursed for the development projects in all the electoral constituencies through the members of the AJK Legislative Assembly hailing from the concerned constituencies. All the projects will be completed by the end of ongoing financial year 2008-09, the sources added. The plan would help elevate and improve the lifestyle of the common man besides providing latest basic facilities of life to the people of AJK.


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## Neo

*'Country needs big dams to overcome energy crisis'​* 
LAHORE (May 07 2009): Former Chairman Water and Power Development Authority (Wapda) and Former Federal Minister Engineer Tariq Hamid has said that country needs big dams to over come the energy crisis. He was addressing the 1st Engineering Exhibition organised by the Institution of Engineers Pakistan (IEP) on Wednesday.

He said that small rental power plant is not the solution for overcoming the energy crisis because they are producing expensive electricity. He also said these rental power plants are temporary arrangements and could not be beneficial in the long run.

He stressed the need of the construction of dams because they are capable of producing 2000 to 3000 MW of cheap electricity. He also said that there is a need of creating awareness among the people about the saving of the electricity Hamid said that government should give incentives to the manufacturers of the electric appliances this will create jobs in the country as well as people will get cheap electricity products.

President IEP Aftab Islam Agha said that more then 22 companies of electric products have established their products in the exhibition. He said that such type of exhibitions should be helpful in boosting the economic activity. He also said that they are planning to organise such type of exhibitions in other cities of the country also.


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## Neo

*Poverty swells to 40pc: Sardar Aseff ​* 
*Planning Commission deputy chairman says; $5.28bn pledges made at Tokyo donors moot are all grants​*
Friday, May 08, 2009

ISLAMABAD: Poverty in Pakistan has increased to 40 per cent and every second citizen is living below the poverty line, which is an alarming development, Deputy Chairman Sardar Aseff Ahmad Ali said on Thursday.

He was talking to media persons after the conclusion of a one-day workshop on Results of Social Health Protection Mapping and Health Financing.

Although there exists some controversy over poverty figure, but it ranges somewhere between 38 and 40 per cent as per World Bank estimates, he said.

When asked as to when the World Bank has come up with the latest estimates about poverty incidence despite the fact that World Bank has just initiated a poverty census in certain districts of the country to ensure the distribution of the amount under Benzair Income Support Programme transparent, Ali responded and stressed that the poverty hovers even more than 40 per cent in the country. 

Ive read the document of the World Bank according to which the poverty has increased. However, the final figure would be furnished once the poverty census process that the World Bank has initiated gets completed, he said.

He said this year 3.5 million households will get the benefit of the Benazir Income Support programme and next year the number beneficiaries will increase to seven million households.

Deputy Chairman of the Planning Commission unveiled that all the pledges amounting to $5.28 billion made in the donors moot in Tokyo are 100 per cent grants as per his preliminary information. 

Regarding social sector spending, he said the government is about to come up with the 10th 5-year plan that is to be named Peoples Five Years Development Plan. 

Under the plan human resource development programme will be kicked off and to this effect the government will establish 127 training and vocational centres in every district. And after five-year time, Pakistan will have 2.5 million skilled workers every year. The expertise of the said skilled workers would not be less than international standards. 

This will increase their capacity to earn more that will help erase the regional and economic disparities. 

Sardar Aseff Ali appreciated Germany based NGO GTZ for completing the survey of National Heath Accounts in Pakistan saying it has dispelled the impression of some of the world organizations that Pakistans spending on health sector has always been very low.


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## Neo

* More Pakistanis to be sent abroad for work​* 
Friday, May 08, 2009

KARACHI: Bureau of Immigration Director-General Muhammad Ummer Morio has said that the number of Pakistanis working abroad could be substantially increased by producing more skilled manpower in the country.

He was speaking at a reception in his honour hosted by the FPCCI Standing Committee on Aviation, Chairman Muhammad Yahya Polani and Pakistan Overseas Employment Promoters Association (POEPA) Chairman Hanif Rinch.

He said that the government is taking all possible measures to widen the existing network of private establishments involved in manpower training in the country. He said that about 0.43 million Pakistanis were provided overseas jobs by the Bureau in 2008.

He said that tenders for three new projects worth $800 million had been offered by Saudi Arabia and hoped that this would open new vistas of employment for Pakistanis.

Morio further disclosed that the Bureau of Immigration would be sending skilled manpower to Africa, Eastern Europe and Italy in the coming years. With this end in view, we are restructuring the Bureau and will soon be able to focus more effectively on value-addition of Pak labour, he added.

Polani lauded the Bureau of Immigrations efforts to promote overseas employment and expressed the hope that its re-structuring would go a long way towards helping the government deal with the ever-increasing unemployment and inflation in the country. 

He said that in order to reduce unemployment in the county, the government should fully capitalise on employment opportunities abroad for Pakistanis.

POEPA Chairman, Hanif Rinch said that the number of training centres imparting skills to people in the country was being raised in order to send more manpower overseas.


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## Neo

*Pakistan opens railway industry to private sector ​* 
Friday, May 08, 2009

KARACHI: Pakistan invited expressions of interest on Thursday from companies for running private train operations, as it seeks to open up the railway industry which has been a state monopoly.

The Ministry of Railways has asked private firms and consortia to submit their EoIs for running passenger and freight trains on the existing infrastructure by May 25.

This is the first time the government has moved to open up the railways to the private sector, although private airlines are allowed to operate.

The selected train operating companies may use various railway routes, yards ... etc on mutually agreed terms and conditions, the ministry said in a newspaper advertisement.

Agreements would initially be for 20 years, and operating companies would be required to procure and mobilise their own rolling stock and locomotives, it said. A government official, requesting anonymity, said at least two local companies have expressed interest in the project. We are hoping that they will be able to arrange for a tie-up with some foreign company as well, he said, adding that the project could see investment of up to $300 million.


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## Neo

*Trade between Pakistan and China exceeded $7 billion during 2008​* 
ISLAMABAD (May 08 2009): Chinese ambassador to Pakistan Lou Zhaohui has said the annual trade between Pakistan and China surpassed $7 billion during 2008 and the figure will reach $15 billion by 2011. He stated this while talking to journalists after addressing the business community at Islamabad Chamber of Commerce and Industry (ICCI) here on Thursday.

He said that Sino-Pak time-tested relations would be taken to new heights by bolstering the already cemented mutual ties between the two friendly countries and establishing a long-term strategic relationship with Pakistan is the top priority of China.

Earlier addressing the business community at ICCI, he said that China shared 600-km long common border with Pakistan due to which the two countries had many similarities in their civilisations and cultures. He said Pakistan was the first country in South Asia that signed FTA with China to further deepen bilateral trade and economic relations. "China has always helped Pakistan in need of the hour whether it was to overcome banks deposits problems, AJK earthquake, Pakistan satellite programme etc", he added.

He said that over sixty Chinese companies were operating, 122 Chinese projects are going on and about 10,000 Chinese engineers are working in Pakistan, which shows China's commitment to make Pakistan's economy stronger. China is also interested in enhancing co-operation in hydero electricity projects, agriculture sector and other areas with Pakistan, he said, adding that it wanted an economically strong and prosperous Pakistan for further expanding economic relations.

He said during three trips of President Asif Ali Zardari to China, lot of agreements and MoUs were signed to take our bilateral relations to further heights. He invited Pakistani businessmen to increasingly participate in Kashgar and other trade fairs held in China from time to time for exploring new opportunities to enhance bilateral trade and investment.

ICCI president Mian Shaukat Masud said China is Pakistan's strategic partner and our relations are based on mutual trust and unanimity of views on important regional and international issues. "These close relations were strongly supplemented and supported by the people and businessmen of both the countries. The friendly co-operation between Pakistan and China was a model of good neighbourly relations based on the principles of peaceful co-existence", he added.

Exchange of business delegations and holding of single country exhibitions could boost the bilateral trade, he said, adding that the marketing tools needed to be studied by the chambers and the diplomatic missions of the two countries. He said people-to-people contacts and exchange of students would give further boost to our friendly relations between the two countries. He suggested for issuance of long term business visas to regular Pakistani businessmen with China.


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## Neo

*US approves additional $1.9 bln in aid to Pakistan ​* Friday, May 08, 2009 

WASHINGTON: The US Congress Committee has approved $1.9 billion in additional assistance to Pakistan, Islamabad ambassador to Washington Hussain Haqqani said on Friday.

Speaking to media persons here, Haqqani said: The United States wants enduring bilateral ties with Pakistan.

Terming the approval of $1.9 billion by the US committee a great success, he said that it was a proof that America wants better relations with Islamabad.

We have told the US that no compromise will be made on the countrys sovereignty,


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## Neo

*Punjab govt plans one million tonne wheat export ​*Saturday, 09 May, 2009

LAHORE: The Punjab government has decided to export one of its two million tonnes in surplus wheat and has formed a committee to explore markets and price possibility, says Provincial Food Minister Malik Nadeem Kamran.

At a press conference here on Friday, the minister said the committee, headed by Senator Ishaq Dar, would come up with a report within days so that the process could be accelerated and stocks cleared.

Flanked by Law Minister Rana Sanaullah and Food Secretary Irfan Elahi, the minister claimed that the province needed 3.5 million tonnes and normally supplied 500,000 tonnes to other federating units. Its stocks had already touched 3.67 million tonnes, more than the provincial requirements, he claimed.

He said the province would have over six million tonnes by the end of this procurement season, which would be two million tonnes more than its requirements. The Punjab government had decided to export one million tonnes wheat and keep another million as buffer stocks till any decision was taken about it, he said.

He reiterated official stance that the government would remain part of the procurement drive till proverbial last grain and would clear food farrago at all costs.


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## white_pawn

*Islamic banking gains ground in Pakistan ​*
LAHORE: Islamic banking is fast gaining ground in Pakistan because it is risk free as compared to conventional modes of banking. 

This was stated by chief executive officer AlBaraka Islamic Bank Mohamed Isa Al Mutaweh while talking to Lahore Chamber of Commerce and Industry president Mian Muzaffar Ali here on Thursday. 

He said that Islamic financing products such as Murabaha, Ijara, Musharaka and Islamic Export Refinance were catering to a diverse cross-section of the economy, including the corporate, SMEs and consumer sectors. 

Speaking on the occasion the LCCI president said that more than two hundred and fifty Islamic financial institutions were operating worldwide from China to US. Western banks through their Islamic units in UK Germany, Switzerland, and Luxembourg were also practicing Islamic banking. 

He said that Islamic finance was practiced mostly in the Muslim world throughout the middle ages facilitating trade and business activities. In Spain and Baltic States, Islamic merchants became indispensable middlemen for trading activities. Many concepts, techniques and instruments of Islamic finance were later adopted by European financers and businessmen. 

He said that the Islamic financial system employed the concept of participation in the enterprise, utilising the funds at risk on a profit-and-loss-sharing basis.

DAWN.COM | Business | Islamic banking gains ground in Pakistan


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## white_pawn

*Volume of gold trade shoots up by 250 percent​*
Saturday, May 09, 2009

KARACHI: The volume of gold trade soared up by 250 percent, following National Commodity Exchange (NCE) stretched up its working hours to 21.

NCE released handout said that NCE management at the beginning of the current year had installed new fast trading software, which triggered the volume of trade shooting up by 250 percent and 7000 deals for the sale/purchase of 2.5 tons of gold were finalized in April. 

Besides, after extension in trading hours from 9.00 A.M. in morning to next day 6.00 A.M. morning, gold trading in exchange now continues up to 21 hours. 

NCE said it is working on the arrangement for trading of more products in the exchange.


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## Neo

*IMF may agree to allow more fiscal space to Pakistan ​* 
*Country will have Rs180bn more in hand if IMF allows 1.2pc hike in fiscal deficit target​*
Saturday, May 09, 2009

ISLAMABAD: Pakistan and the International Monetary Fund (IMF) have agreed on an additional fiscal space of 0.8 to 1.2 per cent of gross domestic product (GDP) in the next budget 2009-10 in a bid to give a boost to sluggish economic activities in the country.

By relaxing fiscal deficit target in the range of 0.8 to 1.2 per cent of GDP, which is currently under discussion, the exact size of fiscal space will be finalised during policy level talks to commence on Saturday between both sides in Dubai, it is learnt.

Pakistan is asking the IMF to allow an increase in the fiscal deficit target by 1.2 per cent of GDP to 4.5 per cent instead of earlier target of 3.3 per cent for the next fiscal year.

If the IMF allows Islamabad to hike its fiscal deficit by 1.2 per cent of the GDP, it will give fiscal space to the incumbent regime in the range of Rs170 to Rs180 billion for spending more on development projects as well as raising salaries and pensions by around 15 to 20 per cent as adhoc relief for public sector employees.

In case the fiscal space shrinks the chances for giving solace to inflation stricken masses will be diminished, added the official sources.

Pakistan and Fund authorities have completed technical level talks in Dubai on Friday and now policy level talks will start from today. 

Advisor to PM on Finance Shaukat Tarin will leas the Pakistani side while Chairman FBR, Ahmed Waqar and Governor State Bank of Pakistan Saleem Raza would also participate into the policy level talks. The policy talks will be completed by May 11, 2009.

When contacted the official spokesman of the Finance Ministry, Asif Bajwa, who is also additional secretary finance ministry and part of Pakistani delegation currently holding review talks with the IMF in Dubai, told this scribe on telephone that the size of the fiscal space came under discussion but nothing had so far been finalized in this regard.

In the policy level talks, both sides will decide the issue of additional funding by jacking up the quota for Pakistan as well as the fiscal space for the next budget 2009-10, he concluded.

Pakistan economic managers are holding review talks with the IMF for the next tranche worth $840 million under $7.6 billion Standby Arrangement (SBA) program.

The IMF considers the fiscal deficit target as sacrosanct and it is the known view of the Fund that the increased fiscal deficit basically fuels inflation. 

But Pakistani side is arguing that they have taken measures by tightening fiscal and monetary measures, resulting into slowing down of the national economy. 

Now there is time for stimulus package by easing down fiscal and monetary policies in order to revive the sluggish economic activities in the country. The IMF should not adopt the approach of one shoe fit for all in order to overcome ills being faced by Pakistans economy.

The sources said that the Friends of Democratic Pakistan (FoDP) had pledged $5.28 billion for the next two years but Islamabads economic managers were worried about realization of these funds. If these funds are not materialized in hard cash then Pakistan requires lenient view from the IMF in terms of fiscal deficit target envisaged for the next financial year 2009-10.

Keeping in view this scenario, Pakistan would ask the IMF for allowing additional resources equivalent to 1.2 per cent of the GDP for spending on social sector of the country which means that the fiscal deficit target could go up to 4.5 per cent by the next budget in case of agreement with the IMF.


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## Neo

*10 million tonnes wheat available in Punjab for procurement​*
ISLAMABAD: Farmers of Punjab have over 10 million tonne of wheat available for sale from a total of around 20 million tonne production, a survey of Punjab Lok Sujag and South Asia Partnership-Pakistan revealed Friday.

This was a quarter more than the raised procurement target of the two government departments. The Punjab Food Department had raised its target from 4 to 6 million tonne while the federal governments PASSCO has increased it to 2 million tonne to be met from all over the country. 

To date the two departments have hardly achieved half of their targets due to lack of finances, gunny bags, storage capacity and insufficient human resource.

The survey showed this unbelievably high quantity available for procurement from farmers was quite plausible if compared with the neighboring Indian state of Punjab. Indian Punjab had produced 15.6 million tonne of wheat in the current season. The six state departments assigned with procuring wheat have set a target of 11.5 million tonne of which 10.6 million tonne had been purchased till May 6.

The government experts have been calculating the tradable surplus in wheat as 30 percent of the total production. (The surplus is the quantity the farmers offer for sale after saving for home and sharing with others).

The procurement agencies use this figure to set their targets, which helped stabilise the market at the government announced Support Price. The survey further showed the method to assess tradable surplus was flawed and that it was much higher than the official calculations for the current season.

The survey showed farmers keep over 10 percent of their production for home consumption and a similar quantity was paid to the teams of harvesters. The 956 surveyed farmers had sold 64 percent of their produce in 2007-08.

The shares in wheat crop of various partners were not constant in percentage terms. Crop reapers were paid in maunds (40 kg) of wheat per acre while threshers were paid a percentage of wheat produced. Share croppers get a fixed weight from each farming family. 

Quantity saved for home consumption depends upon number of persons in the family and remains constant whatever the production. These factors result in a varying portion offered for sale in each year. 

The market share in wheat production (tradable surplus) had accrued to 72 percent of the total production of surveyed farmers.

The survey showed farmers with less than one acre of land sell no wheat while those with 1 to 2.5 acre of land sell just 14 percent of their production. In contrast farmers owning more than 50 acres of land sell 74 percent of their production.

Government was the only buyer in the market as low international prices and other local factors were keeping the private buyers away from the market. Though the government had set all-time-high procurement targets, they still fall short of the actual quantities available in the market. 

The survey showed the expected amount that would not be procured by the government departments almost equals the quantity being offered by the small farmers. This effectively means that around 2 million small farmers would be the likely victims of this poorly planned wheat season.


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## Neo

*E&P sector achieves 23.8 percent growth during July-March ​* 
KARACHI (May 09 2009): The exploration and production (E&P) sector continued its robust performance during the nine months' period in the current fiscal year FY09 and showed growth of 23.8 percent. The cumulative profit after tax (PAT) of the sector stood at Rs 72 billion as against Rs 58.2 billion in the same period in FY 08.

"Despite falling crude prices during the period, the sector witnessed growth due to deferred impact of high international oil price on gas prices and depreciation of Pak rupee against dollar", Husna Azhar, an analyst at Ismail Iqbal Securities, said. The major beneficiary was Pakistan Petroleum Limited (PPL) due to its gas dominant revenues, she added. The E&P sector yields forward PER of 4.7x wherein among the listed E&P sector companies, the cheapest is PPL with PE multiple of 4.7x.

OGDC witnessed growth of 22.3 percent in the bottom line to Rs 44.4 billion (EPS: Rs 10.33) as compared to Rs 36.3 billion (EPS: Rs 8.44) in the same period of last year. Despite fall in gas and crude volumes during the period, higher realised prices in rupee term led to increase in sales revenue by 12.8 percent to Rs 100.2 billion during the said period as against Rs 88.9 billion in nine months of FY08.

The company made two new discoveries during the period and continues its aggressive stance towards exploration. The resolution of discount factors on Qadirpur gas pricing by the end of current month and likely cap of HSFO price of $400/ton as against current cap of HSFO price of $200/ton was an important revenue trigger for the company as it accounted for 40 percent of its total gas sales volume.

In addition to this, the development activities at Tal block and capacity enhancement at Qadirpur by 100mmcfd are important revenue catalysts, going forward. PPL remained the star performer in the entire sector mainly in the wake of upward revision in pricing of Sui and Kandkot and weakening rupee against dollar.

The profit after tax of the company grew by 40.1 percent to Rs 20.9 billion (EPS: Rs 25.27) in the nine months of FY09 as compared to Rs 14.9 billion (EPS: Rs 18.04) in the same period of last year. Net revenue witnessed a jump of 36.9 percent to Rs 45.3 billion during the period under review. The increase in profitability of PPL witnessed in FY09 is not likely to continue in FY10 as crude prices witnessed a continuous fall since July 2008. However, development activities taking place at Tal block and increased exploration activities by the company can be potential revenue drivers in the upcoming fiscal year.

The Pakistan Oilfields (POL) volumes continued downward journey. The PAT of the company dropped by 13.6 percent to Rs 4.68 billion (EPS: Rs 19.82) during the nine months period in FY09 as compared to Rs 5.42 billion (EPS: Rs 22.92) in the same period in FY08, on the back of fall in top line. Net revenue fell by 6.6 percent to Rs 11.32 billion during the said period as compared to Rs 12.13 billion in this period in FY08 mainly on the back of continued decline in sales volume. Crude volumes fell by 26.8 percent whereas gas volumes reflected decline of 13.2 percent during the nine months period in FY09 as compared to the corresponding period of last year.

The only silver lining for the company was the development of Tal block to be brought online by the end of the current month or early next month. "In case there is any delay than we might expect the first quarter of FY10 to be very tough for the company as no recovery has been witnessed from its key fields Pindori and Pariwali", Husna said.

The Mari Gas Company (MARI) showed increase of 34.6 percent in the bottom line mainly on the back of higher average selling prices during the period under review. The average selling price increased from Rs 124.5/mmcf to Rs 156.4/mmcf. This increase was partially offset by increase in operating expenses and finance cost.


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## Neo

*IMF assures support for economic growth ​*
WASHINGTON (May 09 2009): The International Monetary Fund has assured Pakistan of its support for economic development of the country as Managing Director Dominique Strauss-Kahn had a meeting with President Asif Ali Zardari. "You can count on our support for growth and sustainable economic development," Kahn said, according to officials.

He applauded Pakistan's economic performance in recent months despite difficult conditions and said the Fund supports the country's programs for poverty alleviation. President Zardari apprised the IMF leader of his government's economic policies, saying these prioritise fiscal and economic stabilisation as well as development of the poor through programs aimed at their well-being.

Meanwhile, US Congresswoman and co-chair of Pakistan Congressional Caucus, Sheila Jackson Lee called on President and reaffirmed her support for Pakistan's efforts to rid the region of violent extremism and achieve economic development of the Pakistani people.


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## Neo

*US House body approves $1.9 billion security, economic aid ​*
WASHINGTON (May 09 2009): The US House Appropriations Committee has approved $400 million counterinsurgency assistance for Pakistan in the current financial year as well as another one billion dollars economic and security aid for the key anti-terrorism partner for the next fiscal year beginning October 1, 2009.

The total assistance for Pakistan would be about $1.9 billion, Pakistan's ambassador to the United States Husain Haqqani said welcoming the development.

"The US Congress is more receptive to Pakistan's views as a result of President Asif Ali Zardari's visit and diplomatic efforts by the embassy in Washington," he said. According to the break-up, the assistance is part of a $96.7 billion 2009 war funding bill for Iraq and Afghanistan and includes about $600 million economic and $400 million for enhancement of counterinsurgency capability in the new fiscal year beginning October 1, 2009.

The $600 million will help address the economic crisis including agriculture and food security, assist the displaced population, strengthen national and provincial governance, expand the rule of law, and improve access to and quality of education. According to the committee, the $400 million security assistance is for the Pakistan Counterinsurgency Capability Fund to build the counterinsurgency capabilities of the Pakistani security forces.

Earlier, Information Minister Qamar Zaman Kaira and presidential spokesman Farrattullah Khan Babar said at a joint press briefing that the United States has pledged to provide about dollar one billion to Pakistan on urgent basis to meet its immediate defence and economic requirements.

"The Obama administration will provide about dollar one billion economic and security assistance to Pakistan on immediate basis - dollar 500 million economic and dollar 497 military assistance." "We hope to receive it by the end of this month", they said.

The high-level consultation between President Asif Ali Zardari and the US President Barack Obama this week has been very productive and the US administration agreed to help Pakistan on urgent basis, they said. President Obama declared that his government was looking forward to a stable, strong and democratic Pakistan.

"We will be going back home with greater confidence" Faratuallah Khan Babar said, referring to Obama's statement, which emphasised that the security of Pakistan and Afghanistan is inter-linked with the security of US. "This is a far-reaching statement, which demonstrates the concern of the Obama's administration on bringing peace and stability in the region." The Obama administration is now fully convinced that insecurity in Pakistan can harm the security of the United States as well.

This was for the first time that US. Pakistan and Afghanistan at trilateral summit agreed to formulate a unified strategy on the security related issues to defeat militancy. The Obama administration appreciated Pakistan's recently taken economic and diplomatic initiatives and showed willingness to provide it short and long-term assistance.


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## ajpirzada

*65 ships reach Gadani for scrapping By Saleem Shahid* 
Saturday, 09 May, 2009 | 10:14 AM PST | 

These ships would produce around half a million tons of scrap for steel industry in the country and add billions to customs duty and income tax. &#8211; Reuters/File photo of workers dismantling a decommissioned ship 

QUETTA: Ship-breaking industry is flourishing once again in the country as 65 more abandoned ships arrived at the Gadani&#8217;s ship-breaking yard from various countries for scrapping.

&#8216;More ships are expected to reach Gadani,&#8217; official sources told Dawn, adding such an activity was seen at the Gadani beach after two decades, and it would provide thousands of jobs to area people.

&#8216;These ships would produce around half a million tons of scrap for steel industry in the country,&#8217; sources said.

&#8216;Around rupees one billion has, so far, been generated from customs duty and income tax,&#8217; said Additional Collector Customs Gadani Ali Sher Bhihan.

Pakistan&#8217;s ship-breaking industry was at its zenith in the 70s when up to 150 ships had been brought to Gadani&#8217;s ship-breaking yard.

However, the industry lost its charm in the 90s when rates of ships increased and the PML-N government imposed duty on ship-breaking.

However, as scrap smuggling from Iran and Afghanistan to Pakistan stopped, it proved a boon for local ship-breaking industry.

&#8216;The local steel industry is now depending on Gadani&#8217;s ship- breaking industry for scrap as its smuggling stopped from Iran and Afghanistan,&#8217; said a source.

Sources said rates of abandoned ships have been reduced in the international market due to economic recession.

Balochistan would also get more financial resources with a boost in the ship-breaking industry in Gadani. 

The provincial government is providing maximum facilities to ship-breakers at Gadani&#8217;s ship-breaking yard.

DAWN.COM | Business | 65 ships reach Gadani for scrapping

this is really gud for ppl of balochistan


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## ajpirzada

*65 ships reach Gadani for scrapping By Saleem Shahid* 
Saturday, 09 May, 2009 | 10:14 AM PST | 

These ships would produce around half a million tons of scrap for steel industry in the country and add billions to customs duty and income tax.  Reuters/File photo of workers dismantling a decommissioned ship 

QUETTA: Ship-breaking industry is flourishing once again in the country as 65 more abandoned ships arrived at the Gadanis ship-breaking yard from various countries for scrapping.

More ships are expected to reach Gadani, official sources told Dawn, adding such an activity was seen at the Gadani beach after two decades, and it would provide thousands of jobs to area people.

These ships would produce around half a million tons of scrap for steel industry in the country, sources said.

Around rupees one billion has, so far, been generated from customs duty and income tax, said Additional Collector Customs Gadani Ali Sher Bhihan.

Pakistans ship-breaking industry was at its zenith in the 70s when up to 150 ships had been brought to Gadanis ship-breaking yard.

However, the industry lost its charm in the 90s when rates of ships increased and the PML-N government imposed duty on ship-breaking.

However, as scrap smuggling from Iran and Afghanistan to Pakistan stopped, it proved a boon for local ship-breaking industry.

The local steel industry is now depending on Gadanis ship- breaking industry for scrap as its smuggling stopped from Iran and Afghanistan, said a source.

Sources said rates of abandoned ships have been reduced in the international market due to economic recession.

Balochistan would also get more financial resources with a boost in the ship-breaking industry in Gadani. 

The provincial government is providing maximum facilities to ship-breakers at Gadanis ship-breaking yard.

DAWN.COM | Business | 65 ships reach Gadani for scrapping

this is really gud for ppl of balochistan


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## white_pawn

*Pre-budget advice from Lahore​*
INDEPENDENT think-tanking, especially on matters economic, has not been an established practice in Pakistan. In the run up to the budget, a plethora of unhelpful ideas do flood the system from various interest groups. There is also a tradition of pre-budget seminars organised by the print media. The origins of the pre-budget seminar can be traced to the days of Dr Mubashir Hasan in the finance ministry when the government itself took the initiative to hold some very vibrant discourses. The process was led by the veteran journalist Syed Najiullah and this writer. 



Some of the best-known names today emerged on the national scene during these debates. Lately, the electronic media has been experimenting with counter-budgets. Professional conferences, such as the annual meetings of the Pakistan Society of Development Economists and the Lahore School of Economics held in the first and the third weeks of April, also spelled out critical themes for the policymakers. 



All these are, however, not efforts leading to structured and usable reports in the next budget. One is aware of only two such initiatives launched in the 1990s  the attempt to produce a Citizens Report by the Sustainable Development Policy Institute in Islamabad and the regularly appearing annual reviews by the Social Policy and Development Centre in Karachi. Since last year, Lahore has offered some serious competition. By launching its Second Annual Report on May 2, the Institute of Public Policy in the Beaconhouse National University, Lahore has announced its intent to stay in the competition. 



The latest report offers concrete advice on how to emerge from the prevailing crisis. In the past decades, the economy of Pakistan has emerged from crisis after crisis. But the crisis that it faces today has, according to Shahid Javed Burki, all the elements of a perfect storm. The simultaneous occurrence of negatives like security breakdown, economic downturn, governance failure and political instability has thrown up a vicious cycle that is virtually carrying us to a point of no return. 



Sartaj Aziz wonders why it is always the democratically elected governments that have to face up to such serious crises. His major policy concern is that poverty reduction cannot and must not continue to be a mere add-on in a situation where the number of poor is becoming a defining characteristic of the population. 



Akmal Hussains prescription was not just to move away from growth without equity, but also to shun half-hearted efforts at growth with equity and consciously strive for growth through equity. 



Some wild estimates have been floating around about the costs of the present crisis. One occurs in the latest Poverty Reduction Strategy Paper and another is a $35bn idea mentioned in public pronouncements by the economic team. Aisha Ghaus-Pasha has made an interesting attempt to put some rational sense into the whole issue of costing the crisis. She picked up two key contributors to the perfect storm, the impact of power crisis on industry and the security crisis. 



In 2008 alone, industrial losses amounted to Rs210bn or about two per cent of GDP. Exports suffered a billion-dollar hit. Socially most disquieting, as many as 400,000 jobs disappeared. Security crisis has led to thousands dead and injured. While the overall direct and indirect costs of the war on terror in 2007-08 are estimated at Rs380bn, the disconcerting fact to note is that defence expenditure is 62 per cent higher than it would have been and law and order expenditure is 48 per cent higher than it would have been. 



Concrete budgetary proposals came from the person who knows them best, Hafiz Pasha. His advice to avoid new taxation, particularly in the industrial sector, and enlisting the hitherto untaxed sectors at a time of negligible GDP growth per capita is sound. The burden of adjustment should be on expenditure, with a switch from current to development budget. It has to be a mix of improved tax administration, withdrawal of exemptions, strong reduction of current expenditure and higher but properly prioritised development expenditure. 


The deputy chairman of the Planning Commission gave a concluding speech at the launch of the report. While he made the right noises about the war on terror, he was completely out of touch with the economic reality on the ground and the reality of the organisation he heads; its professional incapacity to deliver on anything is no more an official secret. One is horrified to hear the talk about managing a gasification project for Thar coal and implementing the Ayub days idea of a polytechnic in each district by an organisation which is unable to manage properly its own abode: Block P in the Secretariat.

DAWN.COM | Business | Pre-budget advice from Lahore


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## Neo

*Pakistan among gold producing countries ​*
ISLAMABAD: By producing 7.746 tonnes of gold during the last five years  2004 to 2008  Pakistan has joined the ranks of gold producing countries.

A senior official of the Ministry of Petroleum and Natural Resources told APP, Presently copper, gold, silver and magnetite are being produced from the Saindak Copper-Gold Project in Balochistans Chaghi district.

According to the data available with the Saindak Metal Limited  during the last five years  Pakistan has produced 86,013 tonnes of copper, 7.746 tonne gold and 11.046 tonne silver, besides the production of 14,482 tonnes of magnetite concentrate (iron), bringing in a total of $633.573 million.

The minerals produced from the Saindak Copper-Gold Project were being internationally marketed by the lessee M/s MRDL, as the project was producing blister copper with contained minerals.

The MRDL lacked refinery facilities to separate the gold from the silver, which resulted in their being exported to other countries. The iron concentrate was being sold to Pakistan Steel Mills, the official said.


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## Neo

*Electricity shortfall aggravates to 2,000 megawatts​* 
LAHORE (May 11 2009): There was an unprecedent aggravation of electric power shortfall, touching 2,000MW mark on Sunday resulting in frequent loadshedding. The shortfall in the demand and supply was 900-MW on Saturday.

The Pakistan Electric Power Company (Pepco) sources confirmed that the total electricity shortfall on Sunday was recorded as 2000-MW due to steep rise in temperatures and owing to technical problems, there was 750-MW shortfall in generation at Uch and Roosh power plants.

The sources said that immediate repairs are underway and both plants are expected back on line within a day. "The 2000-MW shortfall was managed by proportionate distribution (loadshedding) through the Distribution companies", the sources added. In a self praise, the sources clarified that due to satisfactory generation and better management no loadshedding was carried out from 3rd May to 6th May 2009.

The distribution companies were executing their loadshedding programmes in a co-ordinated manner and nowhere in the country normal life was paralysed due to prolonged load management. Meanwhile the Pepco has commissioned its newly built Ghakhar grid station and started supply of electricity to more than two hundred thousand consumers in Sialkot, Narowal, Mandi Bahauddin and Hafizabad districts with the extension of 132-KV lines.


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## Neo

*China's Exim Bank to finance purchase of 75 locomotives ​*
BEIJING (May 11 2009): China's Exim Bank has agreed to provide loan for the purchase of 75 locomotives for Pakistan Railways and has submitted its terms and conditions to lend money, said Assad Saeed, General Manager, Services and Manufacturing of Pakistan Railways. 'Basically our visit was to negotiate loan with Exim Bank for the purchase of 75 locomotives for Pakistan Railways,' he told APP on Sunday.

Saeed, who is heading a six-member delegation, said they held meetings with Exim Bank of China and its sister insurance company, which agreed to provide loan and submitted their terms for the credit facility.

The GM Railways said the delegation is leaving for home on Monday and would submit the terms and conditions for examination to the Ministry of Finance and Economic Affairs Division and for the final decision to be taken by the competent authority. The total cost of the agreement is $105 million dollars out of which, the Government of Pakistan would pay 15 percent and the Exim Bank would pay remaining $89 million.

Referring to their visit to locomotive manufacturing factory in Dalian, Assad Saeed said that China has made great advancement in this technology and they are now manufacturing locomotives of various categories including 7200 KW (Electric) and over 6000 Horse Power (diesel). To a question, he said these locomotives are suitable for our climate and meet our requirements, adding that Pakistan railways has good experience of their performance in the past.

He also said, although railways faced some problems in 69 locomotives purchased earlier from China, however, for the last three years, their performance is very satisfactory after removal of the snags by Chinese. Keeping past performance in view, Railways floated tenders for the purchase of 75 locomotives, he said adding, the important fact was that the Chinese manufacturers have not increased cost of the unit and price mentioned was almost the same, as it was in 2001.

Saeed said if this cost is taken into consideration, it is almost half of the price quoted by other countries. The agreement, when signed, included transfer of technology, training of staff and routine inspections of the locomotives, he said. 'They agreed to provide transfer of technology, so that in future Pakistan could be able to manufacture these locomotives that would also help save precious foreign exchange,' he noted.


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## Neo

*World Bank chief delighted with Pakistan's performance ​*
WASHINGTON (May 10 2009): The World Bank President Robert Zoellick, who had a meeting with President Asif Ali Zardari on Friday, has deeply appreciated Pakistan's economic performance in a sign of growing international confidence in the country's policies.

The World Bank president said, "we are delighted with Pakistan's performance," in the face of difficult challenges, Foreign Minister Shah Mehmood Qureshi told a gathering of Pakistani Americans Friday, while informing them about the diplomatic, political and economic support Islamabad has earned due to its policies.

In the meeting with World Bank leader, President Zardari apprised him of the policies the PPP-led government is pursing to stabilise the economy as well as shield the poor from affects of rising cost of living. He thanked World Bank's support for economic development of Pakistan.

The World Bank co-hosted with Japan a Friends of Democratic Pakistan moot in Tokyo last month, which secured more than $5.1 billion pledges from major economic powers, the Gulf nations and industrialised countries in support of Pakistan's efforts to come out of its economic straits, caused partly by the ongoing fight against terrorists along the Afghan border.

US Treasury Secretary Timothy Geithner also called on President Zardari during his four-day official visit to Washington and discussed ways to bolster development co-operation between the two countries.


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## Hasnain2009

They were not happy in 2005 when we broke 30 year old record and posted GDP growth of 8.4&#37;, but now they are happy bcoz our growth rate is below 2.5%!


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## Neo

*IMF changes revenue target to 10.2 percent of GDP growth ​* 
KARACHI (May 10 2009): The International Monetary Fund (IMF) has removed the current revenue target slab of Rs 1.327 trillion after negotiations with the team of taxmen in Dubai, and linked it with 10.2 percent of annual GDP growth, Business Recorder learnt on Saturday.

A member of the delegation of the Federal Board of Revenue (FBR), who attended the meeting held with the representatives of IMF, said on phone that 10.2 percent of GDP growth has been set as revenue target for current fiscal year.

He said that IMF has suggested establishing a fair and efficient tax administration that would not impede investment or production incentives and would also raise enough revenues for development and poverty reduction programs. Several issues pertaining to overall macroeconomic constraints, present revenue administration, assessment of main taxes, sub-national taxation and political economy of intergovernmental reforms were also discussed.

He said that FBR had earlier fixed Rs 1.25 trillion, which later was revised by Rs 1.32 trillion, when the GDP growth was expected around 8 percent in the current fiscal year.

However, the official statistics, reconciled by the State Bank of Pakistan, have shown that the current GDP growth is not above 3 percent. The official said that it was a very intricate matter to achieve the target of Rs 1.3 trillion when the growth rate of GDP is less than the expectation.

He said that the only major source of revenue collection was petroleum development levy, being collected on sales of petroleum products. He said that FBR is still left with Rs 431 billion, which has to be collected in two months, and termed it as a formidable task to achieve. However, he was optimistic about crossing the Rs 1,200 billion mark, saying that if the department collected Rs 1.2 trillion in current fiscal year, the budgetary target, which is now linked with the GDP growth, would be achieved.


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## Neo

*Erasing power sector debt ​*
EDITORIAL (May 10 2009): The Asian Development Bank has signalled its readiness to extend a credit line of $500 million to $1 billion, sought by the Ministry of Water and Power to rid Pakistan Electric Power Company (Pepco) of the accumulated circular debt of around Rs 180 billion. The debt has badly affected the functioning of the entire power sector.

A news report quoting a Ministry of Water and Power source has said that Pakistan is seeking the ADB loan at LIBOR plus 150 to 200 basis points. If successful in obtaining the loan, the government will inject some of the capital to erase the entire power sector circular debt. The Ministry of Finance had opposed seeking the loan as it wished to generate the required capital by hedging the assets of the entities involved in the circular debt under the concept of REIT (Real Estate Investment Trust).

However, this would have taken at least one and a half to two years - a timeframe the government was not willing to allow, as it wanted the debt to be erased by June 30, 2009. When asked how the Pepco would repay the loan along with the mark-up, an official is reported to have said that the power tariff was being raised by around 4 percent, and the process of recoveries was also being expedited to improve financial health of the Discos.

A news report has meanwhile claimed that the monthly earning of Pepco stands at Rs 25 billion against an expenditure of around Rs 38 billion, representing a monthly deficit of Rs 13 billion. Controlling such a huge monthly deficit through pursuit of rigorous financial discipline and prudent practices can help Pepco to conserve financial resources.

A major cause of the accumulated circular debt was the steep increase in oil prices in 2008, to around $147 per barrel from around $50 per barrel. Although oil prices have since attained stability, the price surge has left behind the huge circular debt, which continues to destabilise the energy chain. The steep rise in oil prices and the subsequent negligence of the government to increase power tariff and POL prices had caused the Discos and OMCs to incur losses.

As one analyst has put it, this had generated a situation where receivables from the government to the OMCs came under control, but the losses sustained by power distributors rendered them incapable of paying their dues. As the dues of power distributors mounted, the receivables of IPPs too increased.

In order to ease pressure on themselves, the IPPs had to let their payables slide as well, which landed the OMC sector in grip of debt. The circular debt is thus a result of the "chain reaction." Unless power sector defaulters are made to pay the outstanding dues, Pepco cannot effectively run the power sector, as it has to purchase power from the IPPs, at rates that are believed to be exorbitant. The IPPs' threat last year to call the sovereign guarantee had forced Pepco and its allied companies to pay Rs 30 billion.

The IPPs generate power with sovereign guarantees given by the government regarding the purchase of power, and payment thereof by public sector companies, which purchase power from them for onward distribution to different types of consumers. Secondly, fuel companies have to supply fuel to the IPPs, but these have to be paid their dues on time to enable them to keep the fuel supply intact.

A major cause of the persisting energy crisis is that despite a huge surge in oil prices, the government remained reluctant to pass on the increase to the end consumers. This has resulted in the petroleum price differential between the government, the fuel supply companies and the IPPs. The petroleum differential claims after netting off have been settled through issuance of Term Finance Certificates worth Rs 85 billion to the banks.

However, due to persistent deficit the circular debt is piling up once again. This is one side of the picture. The other side is that as there has been a steep rise in the use of furnace oil for power generation in Pakistan, electricity has become prohibitively expensive.

If increased by another four percent, power tariff will make payment of electricity bills even more difficult for the consumers, particularly in Balochistan, Fata, Peshawar and Hyderabad, where the receivables are already the lowest, partly because of the tenuous security situation and partly because of the high level of poverty. Rationalisation of oil prices through removal of some of the non-essential taxes can therefore help the Discos augment their recoveries.

As Pakistan's external debt has already soared to over $50 billion, seeking a fresh credit line cannot be termed a rational response to the power sector's financial crunch. We believe that the Finance Ministry's proposal to generate the required capital by hedging assets of the entities involved in the circular debt with the banks under the concept of REIT was quite sound, which needs to be reconsidered to find a cost-effective way out of the power sector debt.

Going for a fast-track, six-month erasing of debt that has accumulated as a result of ill-considered policies over the years can produce many complications, including the burdening of power consumers further still.

There is a need to pursue a two-pronged strategy: start collecting the power bills in areas and regions, which have remained out of the bill collecting dragnet so far, with a possible concession of a lower tariff rate in keeping with the financial status of the province. Secondly, the government should undertake a comprehensive exercise to restructure the prevailing power tariff regime.

As energy fuels a country's economy, the government should order fast-track implementation of hydropower and coal projects, to keep the energy cost low. Instead of burdening the energy sector with more taxes, it should diversify levy of taxes to include sectors such as agriculture, real estate etc to make up the shortfall in tax collection.

Finance Ministry's proposal to go for REIT mechanism for Wapda/Pepco is attractive - why this is not utilised to settle the growing overdraft of Pakistan Railways? After all, the lands belonging to PR are all freehold and much more expensive than the land utilised for power and grid stations. Second, settling circular debt through TFCs does not address the tight liquidity conditions in the banking system. Injection of one billion dollars or Rs 80 billion from ADB takes care of this issue.


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## Neo

*Pakistan grabs $50 million orders in sports goods​*
KARACHI: Pakistan is all set to regain its soccer ball market from China and India as both its competitors could not meet the required standard of hand-stitched balls.

The countrys sports goods exhibitors who participated in recently-held Hong Kong Gifts and Premium Fair told Daily Times. 

The sports goods manufacturers at the exhibition held from April 26-30 said they have received encouraging trade enquiries during the four days extravaganza, expressing the hope they could manage over $50 million orders. About 12 exhibitors from Pakistan had displayed their products in the fair.

If the Pakistani government helps out in exploring markets especially the Latin America and Asia Pacific, we will be able export soccer balls worth $100 million well before next Football World Cup to be held in 2010, a Sialkot-based manufacturer said. 

He said that its a labour-intensive industry providing direct and indirect job opportunities to about 80,000 workers, while sub-contracting of work on piece rate is a common practice, resulting in more jobs for people. But the governments non-interesting behavior towards this industry has not let it grow for a long time. 

There are over 3,500 small and medium sized sports goods industrial units and some 60 well established industries functioning in Sialkot. The sports goods industry of Sialkot, producing quality goods mainly for foreign markets has over a century old history.

A major portion of the total production comes from cottage and small scale manufacturing units. However, some units have joint venture collaboration with foreign manufacturers, which benefit technical and marketing support to their foreign partners. 

The Sialkot exporters appealed many times to federal and provincial governments to set up sports goods and surgical instruments cities to facilitate the SMEs.

The city was earning foreign exchange to the tune of $1 million annually and strengthening the national economy. 

He said presently, Pakistan is competing with India, China and Japan in international markets. India has an advantage of cheap labour and raw material, whereas countries with semi-automatic mechanised units can produce low-cost and inexpensive sports gear such as metal rackets and cricket bats etc.


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## Neo

*Used German power plants may help curb power shortage​*
KARACHI: The chronic power crisis being faced by Pakistan for so many years may be permanently over if the government initiates serious negotiations with the German government to procure large power plants at very low rates.

The proposal has been given to the government of Pakistan through Pakistans Counsel General to Hong Kong Dr Ahmad Balal by EU Convener of Independent Power Producers Forum (IPPF) Normen S Kegler. 

Kegler along with Secretary General IPPF Joel Laykin is scheduled to arrive in Pakistan on invitation by the Minister of Investment Salim Mandviwala during Pakistan Oil, Gas and Energy Exhibition 2009, and will hold high-level meetings with the governments high-ups in Islamabad on the issue. 

Kegler and Laykin are also working on providing easy options to solve Pakistans power crisis and setting up power plants utilising Thar coal, said Dr Balal. 

He said that both the consultants have advised the government to go for options to acquire second-hand power plants with production capacity from 250 megawatts to 450 megawatts at extremely low prices. 

Pakistan must discuss the potential of efficient power plants that would be out of commission by 2011 in Germany to meet energy shortages, the envoy said. 

These plants would produce power for next 25 to 30 years with efficient electricity production performance, he added. The German government has planned to reduce carbon emissions and planned a gradual closure of old power plants.


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## Neo

*WB to provide $520m soft loan to Pakistan by June end​*
LAHORE: The World Bank (WB) will provide $520 million in soft loan to Pakistan by the end of June this year, a private TV channel reported. According to the channel, the loan being provided on a 0.75 mark-up would be in addition to the $300 million that had already been announced by the bank in the Friends of Pakistan forum. The channel quoted sources in the Economic Division as saying the bank would provide $120 million for the Punjab Education Programme, $100 million for the Sindh Education Programme and a further $100 million for higher education, by the end of June. The bank would provide $200 million to Pakistan in the fourth quarter of the current financial year under the Pakistan Safety Net.


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## white_pawn

*IMF relaxes Pakistans budget deficit target ​*
WASHINGTON: The International Monetary Fund announced on Monday a preliminary agreement to raise the budget deficit target Pakistan must meet to take advantage of international aid. 
Following a meeting with Pakistani authorities in Dubai over the past week to discuss the IMFs $7.6 billion standby agreement with the country, the IMF agreed to raise the deficit target for fiscal year 2009-2010 to 4.6 per cent of gross domestic product from 3.4 per cent. 

The slowing economy, additional donor support and the need to protect priority expenditures call for a relaxation of the fiscal deficit target for 2009/10, the IMF said in a statement issued in Washington after its mission returned from the region.

Shaukat Tarin, the prime ministers financial adviser, held two rounds of meetings with IMF and World Bank officials over the past two weeks. 

President Asif Ali Zardari too met senior IMF and World Bank officials in Washington last week, discussing various measures to help stabilise economy. 

President Zardari and his Afghan counterpart Hamid Karzai also held a joint meeting with the World Bank president and agreed to expedite efforts to promote electricity trade between South and Central Asian regions. 

On Monday, the IMF noted that Pakistan remained on track to fulfil conditions under the IMF-sponsored programme. 

While the external current account deficit has started to narrow and inflation has declined, the drop in the demand for exports and uncertainty regarding the prospects for workers remittances pose risks to the external outlook, it said, noting that the international assistance would enable the country to pursue counter-cyclical policies.

The authorities and the IMF team agreed the Tokyo package should be regarded as a bridge towards the stronger medium-term revenue effort, the fund said. 

In this regard, it is crucial to reinforce efforts to increase the tax revenue-to-GDP ratio through tax policy and administration reforms.

The IMF plans to complete discussions on the second review of Pakistans programme over the next few weeks.

DAWN.COM | Business | IMF relaxes Pakistan?s budget deficit target


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## white_pawn

*Remittances soar by 19 per cent ​*
KARACHI: Despite deep recession in the US and massive fall of oil income of the Middle Eastern countries and erosion of boom in the Gulf countries, remittances sent home by overseas Pakistanis grew up by over 19 per cent in the first 10 months of the current fiscal year. 

Inflows from the Middle Eastern countries were amazing and registered a high growth of 34 per cent. 

The State Bank reported on Monday that Pakistan received a total of 6.355 billion (double than the foreign direct investment so far received this year) as remittances which was over $1 billion or 19.5 per cent higher than the same period last year. 

The remittances showed that Pakistanis living abroad were still on jobs and were sending dollars to their homeland. 

The inflow from US slightly declined by $28 million during this period, but still highest remittances were coming from the US economy plagued by deep recession. 

In the last 10 months, Pakistanis in US sent $1.435 billion helping the country to keep its vulnerable foreign exchange reserves intact. 

The inflows from the Middle Eastern countries, including UAE and Gulf countries (Oman, Qatar, Kuwait and Bahrain) witnessed a substantial increase in remittances. 

Oil exporting Arab countries were baldy hit by the enormous fall in oil prices as a consequence of recession in the biggest US economy along with other developed economies. 

The fall of oil income forced the Arab governments to close down projects worth billions of dollars and it resulted in loss of thousands of jobs. 

The impact of loss of jobs was reflected from the declining inflows from these countries during April, but the fall was not massive. 

However, during these 10 months, the inflow from Saudi Arabia rose by $262 million to $1.264 billion, remittances from UAE increased by $459 million to $1.366 billion and from GCC by $201 million to $966 million. 

The inflows were encouraging as these jumped by 34 per cent from the Middle Eastern countries which showed the depth and strength of economies. 

The economy of Dubai plunged during a year due to global financial crisis and over 40 per cent employees have lost their jobs alone in Dubai. 

Financial hardships in Dubai, Saudi Arabia and other UAE countries have not yet made their full impact on Pakistan. 

Analysts said if recession persists for a longer period and if oil prices remain below $60 a barrel, Pakistanis might lose more jobs in the months to come and it might be a severe blow to the economy of Pakistan and foreign exchange reserves.


DAWN.COM | Business | Remittances soar by 19 per cent


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## white_pawn

*Customs duty collection up 21pc in 10 months ​*

KARACHI: Customs duty collections increased by 21 per cent to Rs39.873 billion during July-April of the current fiscal year against Rs33.041 billion collected during the same period of last year.

Though the dutiable imports recorded a fall of nine per cent during the period under review to Rs259.607 billion from Rs284.850 billion registered earlier, the Model Customs Collectorate of PaCCS collected higher duty at Rs39.873 billion.

It is interesting to note that the total imports increased by 16 per cent to Rs589.040 billion during July-April as against Rs509.276 billion same period last year.

The duty-free imports rose by 47 per cent to Rs329.432 billion from Rs224.427 billion as compared to same period last year. This shows that the customs authorities were left with lesser space to collect customs duty compared to last year. 

In all Rs2,84,749 containers of import cargo were cleared by the customs during the current ten months thereby showing a fall of 13 per cent to 3,28,903 boxes disposed of in the same period last year.

Similarly, the number of Goods Declaration (GDs) processed and cleared by the customs declined by six per cent to 144,764 from 153,728 GDs of last fiscal.

There is a drastic fall in clearance of goods through Green Channel as the authorities put more items under appraisement and examination to check growing menace of mis-declaration and under invoicing, which had been causing huge revenue leakages.

According to official figures there was 20 per cent decline in clearance of goods through Green Channel to 44,294 GDs against 55,452 GDs cleared earlier.

Almost all the other taxes, including sales tax, advance income tax, regulatory duty and federal excise duty recorded rise during the period under review.

Official sources told Dawn that administrative measures taken by the customs to check rampant revenue leakages through mis-declaration and under invoicing at the MCC have produced some good results.

However, it is being strongly felt that if more stringent steps are taken it will help to weed out corrupt elements from the PaCCS, who collaborate with importers or customs agents to cause huge revenue loss.

It is further urged that under the current fast movement of merchandise across the globe a foolproof auto-clearance system could only keep pace with the inward and outward goods from the country.

Customs could further plug the leakages by taking pragmatic steps such as frequent changes in customs posts and keeping a close watch on system operators, who normally become a tool in revenue leakages.

DAWN.COM | Business | Customs duty collection up 21pc in 10 months


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## Neo

*Remittances up 19pc as workers seen returning home ​* 
Tuesday, May 12, 2009

KARACHI: Remittances sent home by overseas Pakistanis jumped 19 per cent year-on-year in April 2009 as the worst prediction of the government officials started to come true with more expats coming back clutching on to their belongings after losing jobs abroad.

Last month remittances increased to $697.52 million as compared to $590.7 million received in the same month of 2008, reflecting what employment agencies call transfer of capital mostly from the Middle East.

Labourers in cities like Dubai, which has been hit by a property slump, are coming back in large numbers, says Zohair Ashir, CEO of Access Consulting. That is what seems to be adding up to higher remittances.

The figures released by State Bank of Pakistan (SBP) on Monday showed that total remittances in the past 10 months to April jumped 19 per cent to $6.35 billion. The remittances from UAE have gone up by 50 per cent year-on-year to $1.36 billion.

A record 23 per cent jump in remittances in March rang alarm bells in the government circles with Federal Minister for Overseas Pakistanis, Dr Farooq Sattar, fearing a tsunami of homeless expats heading back.

SBP has already cautioned the government against too much reliance on remittances to meet the current account deficit, citing the global economic slowdown that has caused tremendous job losses.

According to a 2004 report of the ministry of overseas Pakistanis, the number of expatriates is 4 million but Sattar said that has crossed well over 5 million now. While there are no figures available to ascertain the origin or the exact number of expatriates coming home, the recruiting consulting agencies say the flight could be from places beyond UAE.

Ashir of Access Consulting said stringent working permits in UAE and other Middle East states dont allow workers to hang on for long. Once your visa is taken away, there is no other option but to head home with all the belongings.

But, he cautioned, there could even be an exodus from among the Pakistanis based in US. Compared to six months ago, I have seen substantial increase is CVs sent by those seeking jobs in Pakistan.

The sudden jump in remittances has coincided with a national crackdown on illegal money transfer networks called Hundi and Hawala. Some officials say the increase in remittances is in part reflection of more expats using the legal channel to send money to their families.

During July-April 2008-09, the highest amount of $1.4 billion was received from the US, the global powerhouse where hundreds of thousands of people have been sacked in past few months. Pakistan subscribed to a $7.6 billion IMF loan late last year to avert a balance of payment crisis, which was caused by a huge trade deficit and falling foreign inflows.


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## Neo

*July-April 2008-09: Remittances rise to $6.355bn​*
KARACHI: Remittances sent home by overseas Pakistanis continued to show a rising trend as an amount of $6.355 billion was received in the first ten months (July-April) of the current fiscal year 2008-09, showing an increase of $1.036 billion or 19.49 percent over the same period of the last fiscal year. The amount of $6.355 billion includes $0.45 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

In April 2009, an amount of $697.52 million was sent home by overseas Pakistanis, up 18.08 percent or $106.81 million, when compared with $590.71 million received in the same month last year.

The inflow of remittances in the July-April, 2009 period from USA, UAE, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $1,435.65 million, $1,366.79 million, $1,264.07 million, $996.02 million, $467.98 million and $196.53 million respectively as compared to $1,463.73 million, $907.52 million, $1001.71 million, $795.18 million, $379.03 million and $147.65 million respectively in the July?April, 2008 period. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the first ten months of the current fiscal year 2008-09 amounted to $628.09 million as against $622.06 million in the same period last year.

The monthly average remittances for the period July-April 2008-09 comes out to $635.56 million as compared to $531.91 million during the same corresponding period of the last fiscal year, registering an increase of 19.49 percent.

During last month i.e. April 2009 remittances from UAE, Saudi Arabia, USA, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $156.64 million, $150.49 million, $144.18 million, $102.83 million, $61.55 million and $20.86 million respectively as compared to $113.90 million, $119.76 million, $151.39 million, $90.91 million, $44.18 million and $16.52 million in April 2008. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during April, 2009 amounted to $60.97 million, up from $54 million received in same month last year.


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## Neo

*CPI-based inflation grows by 17.19 percent​*
KARACHI: Inflationary pressures continued to recede as the headline inflation hit one-year low in month of April current fiscal.

Consumer Price Inflation (CPI) registered 17.19 percent growth in the period under review over the corresponding period of previous year, official figures indicated Monday. The growth in CPI was 19.07 percent in the preceding month of March.

The reduction in inflation was triggered by substantial drop in the food inflation, which impacted the overall inflation scenario positively during the month.

Analysts pointed out that decrease in inflation has been caused by falling food inflation particularly the wheat price. However they observed that although prices are expected to rationalise, the downward trend in the prices and increase in the electricity tariffs would partially offset the base effect.

They noted that food inflation could have been further brought down if the full impact of commodities prices in the international market had been passed on to domestic consumers.

During the July-April 2008-09, CPI grew 22.35 percent over the same months of last financial year. It also rose by 1.41 percent in April over the preceding month March of current fiscal.

The decreasing inflation has raised the hopes of interest rate cut by the central bank, which slashed the policy discount rate by 100 basis points in its monetary policy review during the month of April.

Analysts noted that further cut in the interest cut could come only if the core inflation also continued to decline in the coming months when central bank will go for its next policy rate by end of July in the next financial year. Core inflation fell by 17.7 percent in the months under review.

Food inflation rose 17.02 percent  non- perishable food items 16.22 percent and perishable food items 22.71 percent  house rent up 18.86 percent, fuel & lighting 26.68 percent, transport & communication 8.65 percent, education 23.04 percent and medicare 13.36 percent.

Sensitive Price Indicator (SPI) and Wholesale Price Index (WPI) are still hovering around 26.33 percent and 21.44 percent in first ten months of current fiscal.


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## Neo

*Foreign mining venture seeks investment guarantees ​* 
Tuesday, May 12, 2009

ISLAMABAD: A joint venture of western mining giants has sought sovereign guarantees from Pakistan for protection of its estimated investment of over $5 billion in the resource-rich field of Reko Diq, having known deposits of around 4 billion tons of copper, it is learnt.

Tethyan Copper Company, a joint venture between Antofagasta of Chile and Barrick Gold Corporation of Canada, holds a 75 per cent interest in the exploration licence concerning Reko Diq field in the Chaghi hills of Balochistan while the remaining 25 per cent share is held by the Balochistan government.

Balochistan would earn billions of dollars in profits and royalty over the life of the mine, sources said, adding there was a need to set a good precedent so that the country could become an attractive place for investors in future.

Negotiations are in progress among three parties including the federal government, the provincial government of Balochistan and Tethyan Company for reaching a mineral agreement to establish a framework for future investment, said a high-level official of the Ministry of Petroleum when asked for comments.

In case an agreement is finalised, Tethyan is expected to invest around $5 billion till 2013. The agreement is proposed to be for 13 years and each year an investment of around $1 billion will be made, taking total investment to $13 billion.

When Director General Mineral, Ministry of Petroleum, was contacted for comments, he confirmed to The News that negotiations were under way to finalise a framework for future investment, which was expected to be finalised in a few months.

Under the Mining Act 1948, provinces give concession grants to the parties concerned. Reko Diq field holds large copper and gold reserves on the Tethyan belt in the remote and sparsely populated province of Balochistan.

At the end of 2008, combined deposits of resources at Reko Diq were estimated at over four billion tonnes. A feasibility study for the project was initiated in December 2007 and is expected to be completed in the second half of 2009. An additional 146,000 meters were drilled in 2008, which mainly related to infill drilling to upgrade the existing resources.

Costs incurred by Tethyan in 2008 amounted to $100 million, including expenditures on feasibility study and acquisition of additional surface rights. When Tethyan was contacted at its office in the federal capital for comments, a written reply was sent which states: In our negotiations with the government, the sovereign guarantees that we are seeking are already being provided to foreign investors in Pakistan, particularly in the oil and gas sector.

According to the terms of the agreement for the exploration licence of which the government of Balochistan is 25pc partner, TCC has made 100pc investment for exploration and feasibility of Reko Diq project.

At present, negotiations are in progress with the government of Balochistan and the federal government for a mineral exploration agreement to establish a framework for future investment. We hope to conclude this agreement soon and are keen to make this a win-win deal for all the parties involved.


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## Neo

*LSM downslide continues as index falls by 7.67%​*
KARACHI: Countrys industrial production fell 7.67 percent during the first nine months of current financial year, reinforcing fears of further layoffs in the industrial sector of the country.

The dismal performance also depicted the inability of the industrial sector to withstand against the global economic meltdown as well as the local factors confronting it in the form of infrastructure and power problems.

Analysts said that sector has witnessed already the major downsizing particularly textile, auto, electronics and other key sectors are the victims in the current deteriorating situation and feared that more downsizing is in the pipeline in the industries in view of no improvement in the current situation.

During the month of March, the negative growth was much higher in terms of percentage as it plunged by 20.67 percent over the same month of last year.

The poor performance of the industrial output was across the board in the months under review with the exception of few.

Industrialists having grave concerns about the situation said that falling industrial production is casting negative impact on the overall countrys economic scenario as it is the largest contributor in the revenue and employment generation. Food, textiles and apparel, and leather industries heavily dominate Pakistans manufacturing industry by over 50 percent. Other major segments in manufacturing include chemicals and pharmaceuticals (15.2 percent), basic metal industry (7.7 percent), nonmetallic mineral products (5.1 percent), machinery (4.6 percent), cement (4.4 percent) and automobiles (4.4 percent).

Though, analysts felt global financial crisis has adversely affected the industrial activities in the country in the shape of dampened demand for the exports particularly textile and clothing from Pakistan. However, they pointed out that it the domestic problemsinfrastructure, power, law & order situation, high financingwhich have devastated the local industry.

The fragile security situation has also been singled out as the major impediment in the precarious health of industrial sector as the foreign buyers are reluctant to visit the country, resultantly impacting the export-oriented industries negatively.

Petroleum sector was the worst performer and its overall production fell 9.19 percent in first nine months of current fiscal. Jet fuel declined 10.64 percent, kerosene oil 17.26 percent, high-speed diesel 5.08 percent, furnace oil 8.84 percent, LPG 22.49 percent and motor spirit 3.13.

In food sector, production of vegetable ghee declined by 8.17 percent, cooking oil 3.52 percent, wheat and grain milling 6.36 percent, beverages 3.76 percent. The production of starch and its production rose 5.87 percent.

Production of refrigerators dropped 10.25 percent, deep-freezers 17.75 percent, air-conditioners 49.89 percent, electric bulbs 29.19 percent, electric tubes 31.42 percent, fans 5.75 percent, motors 16.26 percent, electric meters 7.79 percent, switchgears 22.92 percent, transformers 18.11 percent, TV sets 38.81 percent and bicycles 30.42 percent.


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## Neo

*Pakistan can let deficit grow to protect spending: IMF​*
** Fund says discussions will continue over next few weeks to complete second review under loan programme​*
WASHINGTON: The International Monetary Fund on Monday said Pakistan has room to raise its fiscal deficit to protect crucial spending as it makes progress in coping with the global economic crisis.

An IMF staff mission that met last week with Pakistani government and central bank officials in a second review of Pakistans progress under a 7.6-billion-dollar IMF emergency loan programme found the country on track with reforms, the multilateral institution said in a statement.

The discussions in Dubai focused on Pakistans fiscal programme and financing needs as the country struggles with macroeconomic troubles over the past two years that have been aggravated by the global financial and economic crisis.

The slowing economy, additional donor support, and the need to protect priority expenditures call for a relaxation of the fiscal deficit target for 2009-2010, the IMF mission leader, Adnan Mazari, said in the statement.

The IMF found that the Pakistani authorities had expressed strong resolve to strengthen the economy.

The IMF advised the central bank, the State Bank of Pakistan, to hold its key interest rate unchanged, at 14 percent, after slashing it by a percentage point on April 20.

Given the persistence of inflation, the decision on any further cut in the SBPs discount rate will await a significant decline in core inflation, Mazari said.

The 23-month, 7.6-billion-dollar Stand-By Arrangement for Pakistan announced on November 24 was approved under the IMFs fast-track Emergency Financing Mechanism procedures.

The IMF disbursed about 3.1 billion dollars of the loan on November 26, 2008, and a second payment of some 847 million dollars on April 1.

Discussion: The IMF said the staff and Pakistani authorities would continue discussions over the next few weeks to complete the second review under the loan programme. afp


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## Neo

*July-March period: LSM sector growth depicts eight percent decline​* 
KARACHI (May 12 2009): Large-ccale manufacturing (LSM) sector growth posted a broad-based decline of 8 percent during nine months of the current fiscal year 2008-09 as compared to 6 percent rise during the same period of last fiscal year. Economists said that greater energy crisis during last two years, rise in input cost and lower and slow domestic and external demand were responsible for the decline in production of LSM sector.

They said that global economic recession had also taken its toll on export-driven industries including textile with over 60 percent share in the country's exports, which also declined by 8 percent in current fiscal year. The export-oriented units are also difficulties in marketing due to the country's poor law and order situation, security problems, and the country's image, which affected Pakistan's exporters' and producers' ability to meet the delivery deadlines, they said.

"Although we are assuring our importers of on-time delivery, yet despite all guarantees they are hesitant in placing orders and prefer our neighbour countries," a leading exporter said. He said that on marketing side the need is that the government should launch a campaign in collaboration of export bodies to boost the country's exports. "Otherwise we are expecting further decline in the growth of LSM sector and the country's exports".

Federal Bureau of Statistics (FBS) data on Monday showed a negative trend of some 7.67 percent in the Quantum Index Number of LSM industries during July-March period of 2008-09. Official provisional statistics of Quantum Index Numbers of Large Scale Manufacturing Industries (QIM) of FBS depict that the production of major industries, including oil, sugar auto, textile etc, was on decline during the period.

QIM shows the industrial productivity of 100 items received from different sources ie Oil Companies Advisory Committee (OCAC), Ministry of Industries & Production and Provincial Bureaus of Statistics. OCAC supplied data of 11 items; Ministry of Industries & Production supplied data of 35 items; and Provincial Bureaus of Statistics (BOS) provided data for 54 items.

Major share in present negative growth was contributed by OCAC, as its index declined by 9.19 percent to 158.76 points, Ministry of Industries index dipped by 7.69 percent to 195.46 points; and the provincial BOS index declined by 7.38 percent to 200.13 points.

During March 2009, the LSM growth posted a big decline of 20 percent agains 8 percent of February 2009. Muzammil Aslam, an economist at JS global said: "We believe lower exports and slow domestic demand led to the steep decline". He said that frequent power breakdowns, higher tariff and interest rate, and bad law and order situation also affected the production.

"Given the dismal trade numbers and decent inflation statistics, we believe substantial policy action would be required from policy makers to boost the confidence of the industrial sector," Aslam said. He said that interruptions in energy supplies and upward adjustment in the prices of electricity, gas and diesel and rupee depreciation with greater volatility also increased the cost of imported inputs.


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## Neo

*CPI inflation up by 22.35 percent ​* 
ISLAMABAD (May 12 2009): The Consumer Price Index (CPI) inflation surged by 22.35 percent during July-April 2008-09 against 10.27 percent in the same period of 2007-08. According to Federal Bureau of Statistics (FBS) figures released here, during April 2009, food inflation stood at 17.04 percent, whereas prices of non-perishable items surged by 16.22 percent and perishable items by 22.71 percent over April 2008.

Ten-month (July-April 2008-09) average Wholesale Price Index (WPI) inflation stood at 21.44 percent. Last year, during the same period, WPI stood at 13.7 percent. Increase in WPI-based inflation indicates further increase in retail prices of essential commodities.

CPI that covers the retail prices of 374 items in 35 major cities reflects changes in the cost of living in urban areas. According to it, in April 2009, fuel and lighting charges went up by 26.68 percent, education 23.04 percent, house rent 18.86 percent, cleaning laundry and personnel appearances 16.03 percent, recreation and entertainment 13.86 percent, medicare 13.36 percent, household furniture and equipment's 12.63 percent, apparel textile and footwear 12.34 percent and transport and communication charges increased by 8.65 percent over April 2008.

It is interesting to note that high inflation trend in food has been noticed since the start of the last fiscal year (July 2007), food inflation stood at 8.47 percent, August 8.62 percent, September 12.97 percent, October 14.67 percent, November 12.47 percent, December 12.21 percent, January, 2008 it stood at 18.25 percent, February 16.05 percent, March 20.61 percent, April 25.5 percent, May 28.48 percent, June 32.05 percent, July 33.81 percent, August 34.09 percent, September 29.91 percent, October 31.67 percent, November 30.44 percent, December 27.92 percent, January 2009 21.61 percent, February 22.90 percent, March 19.73 percent, and now during April it stood at 17.04 percent.

Wholesale Price Index (WPI) stood at 8.30 percent during the month under review as compared to 23.50 percent in corresponding month of the last fiscal year. In the basket of WPI, raw materials prices went up by 18.44 percent, food 17.18 percent and manufactures by 5.15 percent while fuel, lighting and lubricants expenses were down by 4.70 percent in April over corresponding month of the last fiscal year.

The wholesale prices of tomatoes went up by 55.64 percent, vegetables 14.47 percent, potatoes 9.54 percent, gur 8.89 percent, wheat flour 7.31 percent and fresh fruits by 7.10 percent over March 2009. In raw materials, wholesale cotton price went up by 7.34 percent and cottonseed 3.23 percent, furnace oil prices up by 14.70 percent, cotton yarn 4.05 percent, other electrical goods 3.35 percent and blended yarn by 1.75 percent over March 2009.


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## Neo

*Malaysia top importer from Pakistan for July-December ​*
ISLAMABAD (May 12 2009): Malaysia has emerged as the top importer from Pakistan for the first six months of the current financial year among South East Asian countries, with imports of $68.65 million. The Philippines comes second, with imports of $39.09 million, followed by Thailand with $39.01 million and Vietnam with imports of $35.01 million.

According to the data released by Trade Development Authority of Pakistan (TDAP), Malaysia is among the top 40 destinations of Pakistani exports and is on 24th position, world-wide. Data shows that Malaysia increased its world share of Pakistan's imports from 0.33 percent in July-December 2007-08 to 0.77 percent in July-December 2008-09, registering 2.5 times value ie an increase of 138 percent, compared to imports of $28.80 million in the corresponding period of last year (July-December 2007-08).

According to the data, Malaysia's imports from Pakistan included cotton fabrics, readymade garments, textiles like bedware, towels, tents and canvas bedding and mattresses, cotton yarn, knitted fabrics and synthetic textiles.

According to the Acting High Commissioner for Pakistan in Malaysia, Jamshaid Iftikhar, the substantial increase in import by Malaysia from Pakistan in the first six months of the current financial year as compared to corresponding period of last year was a reflection of confidence reposed by Malaysian businesspersons and investors on the business and investment-friendly policies of the government.

The government is taking all-out measures to root out global terrorism from its soil. Pakistan has called in its army to flush out militants from Swat Valley and adjacent areas and, in doing so, all organs of the state and people of Pakistan are working in Unison which clearly reflect the government's determination to quell militancy and confront extremism and terrorism.

According to the Commercial Counsellor in Pakistan High Commission, Majid Qureshi, Malaysia-Pakistan Closer Economic Participation Agreement (MPCEPA), which became effective from January 1, 2008, provided enormous opportunities to the Malaysian importers to forge business alliances with exporters from Pakistan, and benefit from reduced duties, taxes and procedural concessions made available to the Malaysian importers.

He said that to reap maximum benefits from high quality but competitive products of Pakistan, importers should diversify their imports by importing animals and animal products, chemicals and allied industries, tobacco & tobacco substitutes, inorganic chemicals, metals like iron, steel and copper, organic chemicals, edible preparations of meat and fish, machinery and mechanical appliances, mineral products like salt, sulphur, lime and cement, raw hides, skins, leather, and articles of stone, like plaster, ceramic products, and glass and glassware.


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## Neo

*CDWP clears 11 projects worth Rs 41.6 billion ​* 
ISLAMABAD (May 12 2009): The Central Development Working Party (CDWP) of the Planning Commission on Monday cleared 11 development projects, costing Rs 41.6 billion. The meeting was presided over by Planning Commission deputy chairman Aseff Ahmed Ali. The CDWP conceptually cleared the big project of "Construction and planning of Rural Access Roads" in the country costing Rs 30 billion.

The Party advised the Ministry of Local Government to negotiate aid with the development partners and prepare PC-1 for the consideration of CDWP/Ecnec. Representatives of the federal and provincial governments, and special areas ie AJK, NA, FATA attended the meeting.

Other 10 projects costing Rs 11.6 billion mainly relate to Education, Health, Information Technology, Industries & Commerce, minerals and Environment. The projects include NCHD program worth Rs 6 billion in the education sector, construction of a hangar at heliport Islamabad at a cost of Rs 349 million, two projects for Nadra in the IT sector worth Rs 482 million.

Two projects in the health sector include a 120-bed hospital for Pakistan Rangers in Karachi and establishing a 150-bed hospital in Pulandri, AJK, at a cost of Rs 591.4 million. A project worth Rs 462 million is planned for Islamabad to develop a Shahdara complex of monuments and an inland navigation project worth Rs 450 million has also been approved by the CDWP.

In the industries and commerce sector, CDWP approved Rs 411 million project Restructuring of Pakistan Institute of Trade and Development capacity building. The CDWP also directed the ministries and all stakeholders that while preparing projects efforts should be made to avoid undue expenditures on project delivery.


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## Neo

*Country's foreign assistance requirements ​*
EDITORIAL (May 11 2009): Discrepancies, estimated at about 5 billion dollars, between the country's financial requirements from external sources and actual disbursements are patently evident less than two months prior to the end of the current fiscal year.

In the first quarter of 2008-09, prior to Pakistan's acceptance of the International Monetary Fund (IMF) programme that led to the 7.6 billion dollar stand-by arrangement, federal ministers as well as senior government officials were in agreement that the country's financial requirements for foreign assistance for the year were about 14 billion dollars. This assessment was supported by the IMF staff, in a press conference late November last year. The exact amount quoted by the IMF was 13.4 billion dollars.

Subsequently around 4 billion dollars has been received from the IMF under the programme. Another 1.7 billion has been released from other international financial institutions (IFIs) like the World Bank and around 500 million dollars has been received from China as budgetary support. More inflows are expected from the World Bank and Asian Development Bank before end-June.

There seems little likelihood that the shortfall will be met by the end of the financial year through either pledges already made during the Friends of Democratic Pakistan (FoDP) meeting on March 17 in Tokyo or through another assistance package from the IMF, as was indicated by the Special Advisor to the Prime Minister on Finance Shaukat Tarin prior to his departure to Washington DC. There is just not enough time for the bilaterals and the multilaterals to process a loan in less than two months. Exports are expected to be lower by four percent.

Home remittances, so far, have been good but are unpredictable in the future. And, even if we cross the hump in end-June, next year's external assistance need would be higher. The original estimates of total foreign assistance required for the year took account of the rising external current account deficit. What could be attributed to the ongoing global recession are softer commodity prices including oil and metals such as steel. This may well have worked to Pakistan's benefit. The unexpected rise in Pakistani's remittances in the current calendar year - a rise of 2 billion dollars may be due to stoppage of outflow of money for investing in the real estate in UAE.

This amount has lowered the requirements for external financing in the current year and one would assume the shortfall is about two to three billion dollars. There is evidence to suggest that hectic efforts are underfoot to convince many a bilateral and IFI to expedite loan processing and release as much money as is possible prior to the end of June - the deadline for the current fiscal year. In case this is successful our books will be balanced; but, if not, the country will experience a further reduction in Public Sector Development Programme (PSDP) and a rise in Petroleum Development Levy (PDL) in June to make up the shortfall.

If in FY2010-2011, the present falling trend in exports persists, or oil and commodity prices go up, the external financing gap could be higher. Friends of Democratic Pakistan pledge of $5.28 billion would be crucial. The division between grant and loans as well as cash and project financing needs to be in the right mix. Pakistan would need at least two billion dollars in cash grant to tide-over its external financing need in the next year. Debt servicing as a percentage of the budget needs to be kept in check.

External debt repayments as a percentage of export earnings need to show a decline. Otherwise, the uncontrolled twin deficits - budget and current account - will continue to lead to slower growth, escalating trade friction. Such a situation will cause a setback to efforts aimed at creating fiscal space for social and economic development.


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## Neo

*Reduced imports shrink July-April trade deficit ​* 
ISLAMABAD (May 13 2009): Pakistan's trade deficit crossed $14 billion during the ten months (July-April) of current fiscal year due to negative growth in exports and a low decline in imports. This situation should be a wake-up call to senior government officials who had been proclaiming earlier this year that exports would increase by 10 percent in spite of the present economic meltdown.

To meet this situation challenging forecast was the rationale used by several officials of the Commerce Ministry to undertake foreign tours, costing the exchequer valuable foreign exchange.

The Commerce Ministry, which is preparing a blueprint of a three-year trade policy, had claimed in Parliament a couple of weeks ago that the exports target for the current year would be achieved, but the latest provisional trade figures, released by the Federal Bureau of Statistics (FBS), indicate that it would be very hard to achieve the target.

According to the figures, trade deficit has been recorded at $14,160,136 million in July-April 2008-09 as compared to $16,836,407 million in the corresponding period of last year, showing a contraction of the deficit by 15.9 percent.

Exports during the period amounted to $14,762,231 million against $15,222,946 million of the corresponding period of last year, indicating a decline in exports by 3.03 percent. However, imports also declined by 9.78 per cent--to $28,922,367 million (nearly $29 billion) during the ten months of current fiscal year as compared to $32,059,353 million ($32 billion) of last year.

According to the statistics, in April 2009, exports registered a negative growth of 23.92 percent, to $1,362,497 million, as compared to $1,790,809 million in the same month of last year; whereas imports declined by 31.74 percent, to $2,798,369 million against $4,099,870 million in the same month of last year. However, trade figures showed 3.76 percent growth in exports in April 2009, if compared with March 2009. In April, exports amounted to $1,363,497 million against $1,313,146 million of March.

Imports showed a growth of 18.83 percent, to 2,798,369 million, in April from $2,355,017 million of March. Trade deficit of March and April has been calculated at 37.82 percent, to $1,435,972 million, against $1,041,871 million.

Executive Directors of International Monetary Fund (IMF) commended the authorities for the progress achieved under the stabilisation program. They observed that fiscal consolidation and improved coherence between fiscal and monetary policies had helped to tackle the roots of large imbalances, while structural reforms had progressed broadly as envisaged. As a result, the exchange rate broadly stabilised; inflation had come down; and foreign reserves had strengthened.

They noted the increased risks stemming from the subdued global outlook and slower domestic activity. Weaker demand for exports and uncertainty about workers' remittances entail important risks for the external position, while tight domestic credit and dim external private financing prospects could constrain growth. The Directors also observed that political risk had risen recently.

Advisor to PM on Finance, Shaukat Tarin, in the Letter of Intent (LoI) of March 16, 2009 had given assurance to the IMF that Pakistan had recently modified cash margin requirements on letters of credit for certain imports, which resulted in non-observance of the continuous performance criterion against imposing or intensifying exchange restrictions.

"We will issue a regulation to eliminate this restriction by end-June, 2009 and, on this basis, we request a waiver of non-observance for the missed performance criterion," Tarin said. The IMF Executive Directors had accepted Pakistan's request, and granted waiver.


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## Neo

*May 12 holiday cripples Karachi's trade, industry: economic losses estimated at over Rs 10 billion ​* 
KARACHI (May 13 2009): Tuesday, May 12, was another day. Although heavens did not fall, the whole of Karachi city remained in a state of somnolence. It was the result mainly of the past few days' hullabaloo raised by rival political parties to observe May 12 as a day of mourning to remember the dead, and condemn the gory events of two years ago.

Indeed, the whole country is faced with more serious problems and issues than the one which was kicked up by the politicians in Karachi. What is happening in Swat, Dir and Malakand should have taken precedence over these basically regional issues. But hype was created by the politicians to draw mileage out of an event which is surely a non-issue in the present situation when the army is engaged in a big operation against Taliban.

The result of this rigmarole had been that though the strike calls had been withdrawn, because of fear, all markets and industrial areas remained closed, and industrial activity came to a grinding halt.

How badly the economy suffers could be calculated from the fact that Karachi is estimated to generate about Rs 10 billion of gross domestic products of the country per working day in an economy of Rs 12 trillion, according to Engr M A Jabbar, Chairman of Site Association of Industry (SAI), the biggest industrial estate of Pakistan.

In this loss, the manufacturing and industrial goods' share is almost half of Rs 10 billion. The revenue collections from Karachi's industrial and commercial service sectors-supported economy contributes about Rs two billion a day.

Site alone is the biggest shareholder of the gross domestic product of Karachi's Rs 10 billion economy a day, and so is the case of this industrial estate being the biggest contributor towards estimated revenue generation of Rs two billion a day.

Jabbar said he wondered why the government should seek reduction in gross domestic product of the country by excluding the economic and industrial hub from engaging into economic activities.

One could also question the wisdom of the Government of Pakistan for not taking cognisance of the situation of the reduction in revenue tax collection due to officially announced holiday by the government of Sindh. The government of Pakistan may face difficulties in managing the reviews of IMF for releases of tranches.

Reduction in tax collection against the revised targets by IMF are coming under big pressure, he said, adding that it is the government which is buying pressure by not controlling the 'forced holidays' and by not preferring to stay away from declaring public holidays without any tangible reason.

Jabbar said it was very amazing that the Sindh government is now itself declaring holidays which, to the extent of relaxing its own functioning, may not be as objectionable as it would when under the provisions of Factories Act 1934 labour department issues notification imposing holidays which are fully paid just for the reason that the government feels incapacitated to provide order in the industrial areas for safe working.

He said that industrialists had a meeting with Sindh Acting Governor Nisar Ahmed Khuhro on Monday in which it was emphasised that industry was more disturbed when holidays are extended to manufacturing in terms of Factories Act by invoking powers available with the provincial government.

He said he was apprised of the need to have some suitable amendments in the Factories Act through the powers available in the Factories Act whereby government could exempt the applicable provisions so that all holidays other than public holidays may remain immune from charge of the holiday for industrial activity.

The Governor was further apprised that he being from the party which is ruling in alliance with MQM and ANP and with no opposition political alliance, why the law and order was not improving to sell confidence to the investors. Investors have lost trust in any assurances given and they appear to be restraining themselves from making investments in the Greenfield and would stay away even from making long-term investments in the given situation.


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## Neo

*Mines and minerals in Sindh: big chunks of funds not utilised ​* 
KARACHI (May 13 2009): Millions of rupees, which were allocated by the Sindh government for different mines and minerals exploitation during the current fiscal year 2008-09, are likely to remain unutilised due to the unwillingness of higher authorities. According to sources the provincial government had earmarked at least Rs 2081.237 million for the development of vast coal reserves, mines and minerals during the current year for some 31 schemes.

But after nearly one year, they said, the Finance Department had released only Rs 350 million so far and only around Rs 201 million were utilised, adding that Rs 1731.237 million were not used, affecting the plans of the government. They opined that the performance of the provincial mines and minerals department is a reflection of the present democratic government that how sincere they are about carrying out development at the natural resources sites in Tharparkar district.

The sources said that Rs 498.850 million were earmarked for three major schemes that include the establishment of training institute in the field of mechanised mining/coal-based power generation in collaboration with renowned foreign institutions, introduction of improved mining practices on small scale mining sector and Shaheed Benazir Bhutto Youth Development Programme (SBBYDP).

They said that SBBYDP scheme, costing Rs 98.850 million, was still not approved due to the delaying tactics of the administrative department. The PC-I of the scheme has been submitted to the Provincial Co-ordinator of SBBYDP, but no further progress was made, they said.

However, the remaining two schemes with a cost of Rs 400 million were approved last September, but no funds have been released so far. Further, they said, Rs 1 million was allocated for the environmental impact assessment of coal-mining and coal fired power generation, but not a single penny was released due to non-settlement of tariff by Nepra.

They said that the finance department has yet to release a total of Rs 530 million for three schemes, which include preparation/up-gradation of bankable feasibility (Rs 130 million), development of open cast mining at Thar (Rs 350 million) and re-settlement and compensation for inhabitants of coal mine area (Rs 50 million).

The sources said that so far an amount of Rs 11.25 million was yet to be utilised on organising road shows to attract potential investors and international financing institutes, Rs 5.581 million on the construction of Thar Lodge, Rs 3.604 million for exploration of coal reserves in Sanghar area, one million for hydro-geological studies near Khorwah Village Mulla Hassan in Badin, Rs 6.5 million for analytical laboratory for coal and core library in Karachi, Rs 2.373 million for rehabilitation of existing accommodation at Mithi and Rs 34.925 million for construction of road from Islamkot to the airport.


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## Neo

*A strong hint of moderation in price pressures ​*
EDITORIAL (May 13 2009): The latest figures on price situation released by the Federal Bureau of Statistics (FBS) suggest that though inflation is still a serious problem, the hope for easing of inflationary pressures, at least in percentage terms, stands a good chance to materialise in the near future. The CPI, SPI and WPI in April 2009 were up by 17.19 percent, 15.78 percent and 8.30 percent respectively over April, 2008.

These indices had recorded higher increases of 17.21 percent, 24.94 percent and 23.50 percent in the corresponding period of last year and of 19.07 percent, 20.10 percent and 11.08 percent respectively in the previous month over March, 2008. The notable feature of the latest monthly price indices was not only their slowdown in percentage terms but a comparatively higher deceleration in the rate of increase in WPI which is generally the precursor of trend in other indices including CPI. As such, this bodes well for future price developments in the country.

Some softening of price pressures was also discernible from the average monthly data. The CPI, SPI and WPI which had recorded average increases of 22.97 percent, 27.64 percent and 23.07 percent upto March during the current fiscal rose by a somewhat lower margin of 22.35 percent, 26.33 percent and 21.44 percent respectively during July-April, 2009 over their level a year ago. Another positive development was the slowdown in trimmed core inflation and non-food and non-energy core inflation which declined from 21.6 percent and 18.8 percent in December, 2008 to 19.3 percent and 18.6 percent in March and further to 17.6 percent and 17.7 percent respectively during April, 2009.

However, while looking at the latest price indices, it needs to be kept in mind that a higher base in April 2008 may have contributed partly to the easing of price pressures calculated in percentage terms. Such a view is confirmed by a sudden jump in all the price indices which was witnessed in April, 2008 and obviously impacted the subsequent price trends.

A higher increase of 1.41 percent in CPI and 1.68 percent each in SPI and WPI during April, 2009 over the last month as compared to the rise of 1.37 percent in CPI, 0.62 percent in SPI and 0.42 percent in WPI in March, 2009 over the previous month was also somewhat disquietening because it could be interpreted as the accentuation of price pressures rather than a reversal of the previous rising trend.

Looking at the overall picture, however, it is not very difficult to guesstimate the evolving price situation in the country. Although prices are still increasing but there are early indications of an expected deceleration in the average rate of inflation and on the point to point basis. With the continuation of the trend witnessed in April, 2009, the inflation rate during 2008-09 as measured by the average increase in CPI would be somewhere near 21 percent and could decline to a single digit during 2009-10. Such an outcome could be viewed as moderation in price pressures and would be, more or less, in accordance with the expectations of the authorities.

However, moderation or easing of price pressures should not be confused with decline in prices but should be taken to mean a deceleration in the present rate of inflation which could lead to price stability over time. Understandably, a rise of more than 20 percent in prices during FY09 would have a very negative impact on the quality of life of ordinary persons and all-out efforts need to be made to soften the blow as far as possible and ensure financial stability in future. It also needs to be remembered that stability in prices could only be brought about and sustained with the implementation of right policies both on the demand and supply side.

An appropriate mix of tight fiscal and monetary stance has to be maintained for the containment of overall demand in the economy. At the same time, GDP growth rate has to be improved to a respectable level to ensure higher level of availabilities and reduce prices. Sadly, the GDP is projected to grow by only about 2.5 percent this year which has compounded the inflationary pressures in the economy.

While paucity of credit, low saving rate, inferior quality of infrastructure and higher cost of doing business in Pakistan are the usual culprits impeding growth, there is now mounting evidence that factors like political instability, poor law and order situation and increasing militancy and insurgency on the western border have lately started playing a more dominant role in determining the level of investment and affecting the pace of development.

Needless to say, that the authorities need to give utmost attention to all these inhibiting factors to spur growth in order to contain the rate of inflation. In the meantime, let us hope that as a result of suitable policies expected from the government, the price pressures would subside to a reasonable level to provide a sigh of relief to the majority of population. Other benefits could accrue in the form of reduction in lending rates and improvement in the external sector accounts.


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## white_pawn

*ADB to provide $1bn for trade financing By Dawn Reporter ​*
ISLAMABAD: Eleven Pakistani banks will receive $1 billion under the Trade Finance Facilitation Programme (TFFP) from the Asian Development Bank (ADB) to boost export and import trade. 

The trade-financing agreements between the ADB and a large Pakistani bank will be signed on May 15, which is expected to enhance trade among the ADB member countries and to help counter declining exports. 

According to the ADB, the TFFP has been devised after witnessing the lending difficulties of commercial banks due to the current global financial crisis. 

An ADB official said that its Board had recently approved an expansion of the TFFP to $1billion. 

The programme provides a mechanism to reduce and mitigate commercial and political risks associated with international trade among the ADB member countries, including Pakistan. 

Under the programme the ADB works with the private sector to maintain and enhance trade credit to member countries by supporting imports of goods, including critical goods such as machinery, food, medicine, fuel, and inputs for export products. 

The TFFP will enable ADB to provide Pakistani banks access to more trade credit lines and help develop correspondent relationships with confirming banks. 

The ADB official said, TFFP would also avoid the need to place cash collaterals and provide more support to importing and exporting clients. 

44 countries are members of Asian Development Bank and the bank is a regular donor for Pakistan, which has received around $18.59 billion in loans and grants since joining the ADB in 1966.During the current fiscal year the ADB was providing $1.74 billion disbursements to Pakistan, which includes $161 million worth of project loans and $645 million programme loans during the current quarter. 

The ADB has expressed concern over the rising poverty level in the country, particularly in health and education sector. 

The finance ministry officials said that the ADB disbursements to Pakistan were at nominal interest rates of 0.75 per cent. He said that the loans cost less than the actual amount when repaid after many years due to inflationary impact 

The ADB has also pledged $200 million grants to the country at the donors conference recently held in Tokyo.

DAWN.COM | Business | ADB to provide $1bn for trade financing


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## white_pawn

*April trade deficit shrinks ​*
ISLAMABAD: The countrys trade deficit narrowed to $1.43 billion in April, compared with $2.30 billion in April last year, Federal Bureau of Statistic said on Tuesday. 

Exports stood at $1.36 billion in April this year, as against $1.79 billion in the same period last year. Imports were worth $2.79 billion compared with $4.09 billion last year. 

The deficit in the first 10 months of the 2008/09 fiscal year to April, narrowed to $14.16 billion compared with $16.83 billion in the corresponding period last year, the data showed.

The change is put down to weaker fuel prices, and a lower demand for imports following the global recession 


DAWN.COM | Business | April trade deficit shrinks


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## white_pawn

*KSE index could increase by 25pc: Credit Suisse​*
Updated at: 0906 PST, Wednesday, May 13, 2009

KARACHI: Karachi stock market could see a surge in index by 25 percent, following the successes in war against terrorism.

Credit Suisse analyst, Farid Khan in an interview to a foreign agency told this. He said that a surge in the stock market could be seen, as the government has stepped up its operation against the terrorists.

Farid Khan said that Pakistan stock market index could be included in the Morgan Stanley Frontier Index, which would help in reviving the confidence of the investors.

He said that inflation has mellowed down and a further cut in the interest rate by the Central Bank was expected. 

Geo TV Pakistan - Breaking News, World, Business, Sports, Entertainment, & Video News


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## Neo

*Trade deficit down by 15.9pc ​* 
Wednesday, May 13, 2009

ISLAMABAD: Pakistani economy is likely to miss one-sixth of its exports target for the outgoing fiscal.

During the first ten-month of 2008-09 only 70 per cent of the target export target could be achieved - a worrisome signal for economic health of the country.

The export target for 2008-09 was $21.1 billion. Total volume of exports during July-April 2008-09 stood at $14.76 billion, which is 3.03 per cent less than what, was recorded in corresponding period of the last fiscal ($15.22 billion), the Federal Bureau of Statistics (FBS) said on Tuesday.

During the period, economy also racked up $14.16 billion in trade deficit, however it is 15.90 per cent (or $2.67 billion) less than what was recorded in the corresponding period of the last fiscal ($16.836 billion).

According to statistical bureau, during the period under review, the economy pulled in imports worth $28.92 billion which were more than double its exports $14.76 billion.

During the same period of the last fiscal 2007-08, imports stood at $32.06 billion and exports at $15.22 billion. This depicts a 9.78 per cent decline in imports and 3.03 per cent in exports.

Depressing aspect of the data was that during April 2009, trade gap widened to $1.43 billion which is 37.82 per cent more than the trade shortfall of $1.04 billion recorded in March 2009.

During the month under review, imports up by 18.83 per cent to $2.798 billion and exports went up by only 3.76 per cent to $1.36 billion over the previous month (March 2009).

Besides, comparing trade figures of the month under review with the corresponding month of the last fiscal, in April 2009 trade gap declined by 37.82 per cent from $2.31 billion recorded in same month of the last fiscal. Exports declined by 23.92 per cent from $1.79 billion documented in April 2008 while imports were down by 31.74 per cent from what was recorded in the corresponding month of the last fiscal ($4.09 billion).

Trend of trade activities during April of the current fiscal year eggs on the prospect of slowing down the pace of burgeoning deficit as imports reduced sizably against previous months. If the current trend persists and Pakistani economic planners are able to take reasonable measures for bridging the gap, it would be very helpful to economy.

The trade deficit has pushed up current account deficit, which is still a potential threat to the economic health of the country.


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## Neo

*Ukraine to help Pakistan explore natural resources ​* 
Wednesday, May 13, 2009

ISLAMABAD: Pakistan is rich in natural resources and Ukraine could extend assistance for exploitation of these resources for economic prosperity of the country.

Pakistan is rich in resources which can be made useful through research and the government of Ukraine will provide assistance in the form of research equipment, Ambassador of Ukraine to Pakistan, Ahoor Pasco said while speaking at a programme at the National Press Club on Tuesday.

The ambassador said Ukraine will also provide assistance in terms of research on mineral resources. 

Pasco assured full support of investing in technologies in Pakistan to resolve energy crisis, poverty issues and the problem of water reservoirs.

Pasco said relations between Pakistan and Ukraine were established before independence of Ukraine, which have now been very strong, adding, efforts were now being made to further promote cooperation in the defence field.


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## Neo

*Auto sales down by 47 percent​*
KARACHI: The year-on-year based growth in local auto sales including cars and LCVs has declined by 47 percent to 81,143 units during the first ten months (July-April) of current fiscal. The auto sales units stood at 153,846 during the corresponding period of previous financial year.

According to the latest data released by Pakistan Automotive Manufacturers Association (PAMA), the auto sales were up 6 percent in April 2009. Interestingly, during the last two months auto sales have shown a rising trend. In April 2009 alone, auto sales have risen to 7,475 units, up 6 percent month-on-month (MoM).

However the company wise data reveales that Pak Suzuki and Indus Motor are amongst the major gainers as their sales increased by 38 percent and 24 percent respectively on MoM basis. Moreover, Dewan Motors also showed some improvement with sales up 41 percent MoM largely due to low base effect. However, Honda Atlas failed to post positive growth as their sales declined by 44 percent.

In 10MFY09, Indus Motor captured significant market share at the expense of Pak Suzuki largely on account of impressive performance of newly launched Corolla model. Indus Motors market share increased to 33 percent from 25 percent in June 2008 while Pak Suzukis market share fell to 53 percent from 61 percent. Similarly, with launch of new Honda City, Honda Atlas Car was able to capture market share of 12 percent from 7 percent earlier.

Economic slowdown, high car prices, political tensions and high rates of car financing are the key issues behind the decline in sales. In the first 10 months, car sales alone declined by 50 percent YoY with Pak Suzuki and Dewan Motor among the major losers as their sales plummeted by 55 percent and 75 percent respectively.


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## Neo

*Pakistan, Iran to expand trade​*
ISLAMABAD: Pakistan and Iran have agreed to exchange lists of new exportable items for inclusion in Preferential Trade Agreement with mutual consent and also to increase the extent of concession on some items already included in the PTA.

According to an official statement issued here, Makhdoom Amin Faheem, Federal Minister for Commerce visited Tehran to attend 5th meeting of Pak-Iran Joint Trade Committee (JTC).

The meeting of JTC was inaugurated by Makhdoom Amin Faheem and his Iranian counterpart Dr. Masoud Mir Kazemi and was also attended by senior officials from both sides.

A 3-member delegation of Rice Exporters Association of Pakistan (REAP) also conducted negotiations with Government Trading Corporation (GTC) and Iranian private sector importers of Rice.

During the 5th JTC both sides agreed on expansion of Preferential Trade Agreement (PTA): Both Pakistan and Iran have implemented PTA since September, 2006, wherein concession in import duties have been granted on about 647 items by both sides on reciprocal basis.

However, the current volume of bilateral trade between the two countries is not reflective of the true potentials of the two countries. Both sides agreed to exchange lists of news items for inclusion in PTA with mutual consent and also to increase the extent of concession on some items already included in the PTA.

Both sides further agreed to hold a meeting of experts in mid-August 2009 at Islamabad to finalize these lists.

The meeting also agreed on increase in bilateral cooperations: Both sides discussed and finalised two MoUs between the following organizations for increasing cooperation.


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## Neo

*16 foreign companies register with SECP for investment​* 
ISLAMABAD (May 13 2009): Sixteen foreign companies and international business establishments, registered with the Securities and Exchange Commission of Pakistan (SECP) during April 2009, would make investment in key sectors including services sector, construction business, trading, imports/exports, oil refinery, information technology and consultancy services.

Sources told Business Recorder on Tuesday that the companies' registration data for April 2009 clearly indicated positive trend of foreign investment by international companies in Pakistan despite the ongoing security situation in Swat and Malakand Division.

The registration showed the trend that foreign companies from USA and France are on top of the list in imports/exports and trading businesses, besides China, Australia, Germany, Italy, Jordan, Korea (N), Lebanon, Malaysia, Qatar, Singapore and Turkey. The SECP data showed that certain foreign companies, from USA, would invest in imports/exports business and construction sector. Mondo International (Pvt) Ltd from USA would invest in imports and exports business at Karachi.

Asia (Pvt) Limited from USA would make investment in construction-related allied business. Some French companies would make investment in trading and miscellaneous business at Karachi. Foreign companies from France included L'oreal Pakistan (Pvt) Limited and SDV Pakistan (Pvt) Limited which have invested in Pakistan.

Two foreign companies from China would make investment in trading allied business at Lahore. These companies have also obtained registration from the SECP during April 2009. JMJ (Pt) Limited from Australia would make investment in the construction sector. Another foreign investor from Germany would make investment in import and export and consultancy business at Lahore.

Malaysian companies like Modular NTL (Pvt) Limited have also obtained registration in Pakistan to invest in information technology business and other allied business. An Italian company (Research One Marketing Services) would also invest in consultancy business.

Other companies--from Jordan and Lebanon--would invest in services sector and consultancy services respectively. A North Korean company, Crescent Global Pakistan (Pvt) Limited, would make investment in imports and exports business at Lahore. Sources said that a foreign investor, Jaber Al Jaber from Qatar, would make investment in the sector of oil refining. A foreign investor from Singapore would also make investment in consultancy services, sources added.


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## Neo

*ADB to provide $1bn for trade financing ​*By Dawn Reporter 
Wednesday, 13 May, 2009

ISLAMABAD: Eleven Pakistani banks will receive $1 billion under the Trade Finance Facilitation Programme (TFFP) from the Asian Development Bank (ADB) to boost export and import trade. 

The trade-financing agreements between the ADB and a large Pakistani bank will be signed on May 15, which is expected to enhance trade among the ADB member countries and to help counter declining exports. 

According to the ADB, the TFFP has been devised after witnessing the lending difficulties of commercial banks due to the current global financial crisis. 

An ADB official said that its Board had recently approved an expansion of the TFFP to $1billion. 

The programme provides a mechanism to reduce and mitigate commercial and political risks associated with international trade among the ADB member countries, including Pakistan. 

Under the programme the ADB works with the private sector to maintain and enhance trade credit to member countries by supporting imports of goods, including critical goods such as machinery, food, medicine, fuel, and inputs for export products. 

The TFFP will enable ADB to provide Pakistani banks access to more trade credit lines and help develop correspondent relationships with confirming banks. 

The ADB official said, TFFP would also avoid the need to place cash collaterals and provide more support to importing and exporting clients. 

44 countries are members of Asian Development Bank and the bank is a regular donor for Pakistan, which has received around $18.59 billion in loans and grants since joining the ADB in 1966.During the current fiscal year the ADB was providing $1.74 billion disbursements to Pakistan, which includes $161 million worth of project loans and $645 million programme loans during the current quarter. 

The ADB has expressed concern over the rising poverty level in the country, particularly in health and education sector.

The finance ministry officials said that the ADB disbursements to Pakistan were at nominal interest rates of 0.75 per cent. He said that the loans cost less than the actual amount when repaid after many years due to inflationary impact 

The ADB has also pledged $200 million grants to the country at the donors conference recently held in Tokyo.


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## Neo

*World Bank to release $961 million by June 30​*
Saturday, 09 May, 2009

ISLAMABAD: After releasing $645.8 million during July 08-March 09, the World Bank is scheduled to release $961 million in the last quarter of current fiscal year.

According to the figures compiled by the Economic Affairs Division (EAD), total World Bank disbursements for Pakistan during the current fiscal year would amount to $1.60 billion, out of which one billion dollars is for programme loans and $600 million for project loans.

Officials told Dawn that the first major World Bank tranche to reach Pakistan in five years was the program loan of $484.8 million for poverty reduction.

During February this year Pakistan received $528 million from the World Bank which included a project loan of $44 millionm, an official said, adding that in the early meetings with the World Bank in mid-2008 the World Bank clearly stated that any program for Pakistan was subject to its clearance from the IMF. 

Pakistan had received mere $117 million of previous project loans from the World Bank in the first six months of current fiscal.

However, during the period April-June this year the World Bank was releasing $439 for various project loans and $522 program loans.

During the current quarter the bank was also releasing soft loans and grants worth $322 million for the education sectors.

The EAD document said that the disbursements for the education sector includes $100 million for the Sindh education programme, $100 million for the higher Education Commission and $122 for the Punjab education program.

Addtionally, international donors are also giving $200 million loans for poverty reduction program of the government during the current quarter of the fiscal.

Sources in the finance ministry also conceded that the attitude of the WB officials towards Pakistan has changed in the past three months mainly due to changing geo-political scenario of the region.

The officials said that all the loans obtained by Pakistan from the World Bank are at nominal interest rates of 0.75 per cent and payable up to ten years.

The markup of less than one per cent was also the service charges, EAD official said adding that the country would actually be paying less amount then it was taking due to inflationary impact after five to ten years.


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## white_pawn

*Foreign investment may reach $10bn by September ​*
DUBAI: Foreign investments in Pakistan are expected to reach $10 billion by September this year while remittance payments are on the rise, investment minister Waqar Ahmed Khan told a press conference on Wednesday.

Remittances reached $1.36 billion in the period from July 2008 to April 2009 compared to $1.02 billion in the same period of the previous year.

He said foreign investments in the energy sector had reached $2 billion.

The minister further stated that Abu Dhabi government-owned International Petroleum Investment Companys (IPIC) plans to build a refinery in Pakistan.

I just had a meeting with the IPIC two days ago and they told me the project is on track, Waqar Ahmed Khan told reporters.

Executives from IPIC declined to comment. 

In January IPIC said it had delayed plans to set up a $5 billion refinery which will run 250,000 barrels per day in Pakistan.

The only reason why IPIC said the project could be delayed in January was because of international financing decisions they have to make during these hard times, he told Reuters after the news briefing.

It has nothing to do with the Pakistans political situation. Last year Khadem al-Qubaisi, the CEO of IPIC said that the company faced problems in Pakistan and would delay the project until fundamental issues were resolved.

Pakistan faces an electricity shortfall of 4,500 megawatts, which creates opportunities for significant investment in the energy sector, said Khan.

Although this figure is expected to decrease to 2000-2500 MW within the next 18 months, increased energy consumption may, in fact, result in an increase in the shortfall. He added that the government was in the process of enacting a legislation that will provide foreign investors with legislative cover, with no subsequent change later.

Pakistan also faces a shortage of Liquefied Natural Gas (LNG) imports and will talk to producer Qatar on the matter on Thursday, Khan said.

During this weeks visit to the UAE, the minister held talks with Abu Dhabis Future Energy Co (Masdar) and Taqa.

DAWN.COM | Business | Foreign investment may reach $10bn by September

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## white_pawn

*WB approves $25m loan to Pakistan​*
Updated at: 0859 PST,  Thursday, May 14, 2009

WASHINGTON: World Bank has approved $25 million credit to help Pakistan improve its trade and transport logistics.

WB statement issued here said the Second Trade and Transport Facilitation Project would provide technical advisory services to help implement the National Trade Corridor Improvement Program (NTCIP), a comprehensive government programme designed to significantly cut the cost and time of exporting and importing goods.

The programme encompasses services, infrastructure, reforms and investments in highways, trucking, ports, maritime and air transport, railways and trade facilitation. 

Over the past decade, the government of Pakistan has done much to improve its procedures and logistics services, said Yusupha Crookes, the WB country director for Pakistan.


Geo TV Pakistan - Breaking News, World, Business, Sports, Entertainment, & Video News


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## Neo

*Services trade deficit declines 38.26 percent​*
KARACHI: The services trade deficit shrunk by 38.26 percent in the first nine months of current financial year due to strong growth in its export and falling imports.

The trade deficit in services totaled $2.592 billion in July-March of 2008-09 over $4.782 billion in the corresponding period of last year, Federal Board of Statistics reported on Wednesday. 

The reduction in services trade deficit has been encouraging for economic outlook of the country at a time when goods trade deficit also went down.

The export of services sector registered 10.50 percent growth to $2.663 billion during the months under review over $2.383 billion in the same period of previous year.

Imports fell 22.04 percent to $5.586 billion in the said period against $7.166 billion in the same months of previous year.

In the month of March, the deficit reduction was even much higher by 59.67 percent as it touched $236 million compared with $586 in the month of March last year and was 6.31 percent down against the preceding month of March of current fiscal. Total services export in March, however, fell 19.29 percent to $250 million against $310 million in the same month of last year and imports decreased 45.70 percent to $486 million over $896 million in the last year.

The service sector comprises government services, travel services, transportation services, financial services, communication services, construction services, computer and information services, royalties and licenses. Despite having enormous potential, the growth and development of services sector in Pakistan has been quite negligible. 

It is perceived as supplement to the exports in the goods sector. Lack of knowledge about the international regime on services export, capacity constraints, inadequate networking, poor marketing and politico administrative environment are the major factors for underperformance in this very important area of the economy. 

Government is currently working on the project to boost the export and for the purpose a special cell has been created in Trade Development Authority of Pakistan (TDAP). TDAP initially identified five high potential sectors including construction and architecture, health and medical, legal and accountancy, information technology and financial services including banking, insurance and financial management.

The world market services valued more than $3 trillion in 1998 and believed to reach 50 percent of the world trade by 2020.


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## Neo

*MoI decides to sell 1m acres of farmland to foreigners​*
** Joint ventures for agri uplift should be invited: PTA​*
KARACHI: The Ministry of Investment (MoI) has decided to offer one million acres of farmland for long-term investment or sale to foreigners and an Emirates Investment Group.

Emirates Investment Group is in the process of acquiring farmland in Pakistan to export more food to Gulf region, Chairman Pakistan Tanners Association (PTA), Agha Saiddain said Wednesday. Instead of selling land it would be better to sell its yield to the people in the Gulf Region. 

Apparently the decision of continuation of privatisation process looks similar to selling shares of PTCL, ***s, banks and other state enterprises or attracting foreign investment, he added.

But if it is seen in depth and historical perspective this can have serious repercussion in the future. 

Selling one million acres of farmland does mean inviting East India Company to our country once again. 

It can create security risk for the country and the decision to offer farmland to foreigners is far away from foresight and vision and is only to draw short-term gains at the cost of selling the homeland.

If the authorities are bent upon selling the land then it would be better to lease it so that Pakistan has the right to get the land back after expiry of lease period. 

For utilisation of such land the government should prefer local investors and poor landless farmers and support them in cultivation of land to increase our GDP and per capita income. 

This issue is full of adversities and needs caution and thorough discussion in parliament before signing it.

There are many other options to utilise the land, instead of selling, the government should offer such land on 30-year lease, secondly, the farmland may be offered to domestic investors on comparatively easy terms and thirdly the government may distribute this land among landless farmers and help them to cultivate the same.

Similarly, China and Middle East countries are reported to have invested in horticulture sector to the tune of $5 billion in Pakistan during the current year. This is the right way to invite FDI with sharing formula as in this case, he added.

Saudi Arabia and China are interested to acquire land on lease besides to join hands with the private sector stakeholders for growing soft crops and vegetables.

China and Middle East will be the key players of investment in horticulture sector as they were interested in rice, wheat and vegetable crops in the country, he added.

He said it was expected that after investment the country could save most of its exports of agricultural produce as it was hampered by lack of modern storage facilities, conform to international standards.


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## Neo

*Islamabad and Kabul agree to fast track transit trade pact ​* 
ISLAMABAD (May 14 2009): Foreign Minister Shah Mehmood Qureshi on Wednesday said that the recently signed Transit Trade Agreement between Pakistan and Afghanistan in Washington has nothing to do with India. The Foreign Minister was talking to media and stated that Pakistan and Afghanistan have agreed on fast track conclusion of Afghanistan and Pakistan Transit Trade Agreement before end of the current year.

He was of the opinion that the trade agreement has nothing to do with India as it is totally Pakistan and Afghanistan specific and would not damage Pakistan's interest in the region. The foreign minister further said that the two countries had agreed to set up a joint Afghanistan Pakistan Transit Trade Co-ordination Committee to resolve all issues relating to cross-border commerce and inland trade.

The recent SCO Conference on Afghanistan, he said, has helped further strengthen SCO's engagement with Afghanistan in the regional context. He said in the domain of energy trade, the Central Asia - South Asia Regional Electricity Market Initiative has made appreciable headway.

Talking about the ongoing military operation in Swat and Malakand division, the foreign minister said that the operation is successfully going on and hoped that it would come to a logical end. To a question, the foreign minister said that under the proposed Karry Lugar Bill, the United States would triple the assistance to Pakistan for its socio-economic development. Qureshi said that Pakistan has made it clear to the US that Pakistan's nuclear assets are in safe hands and any country should not express its concern in this regard.


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## Solomon2

Damage to peach crop in Swat likely

ISLAMABAD: Thousands of tons of peach crop is feared to be wasted in the Malakand division this season again as mass exodus of people continues from the area after the launch of military operation &#8216;Rah-i-Haq-II&#8217; for flashing out Taliban.



The Pakistan Horticulture Development and Export Board (PHD&B) has said that the peach crop is in full bloom in Swat. But deteriorating law and order situation in Swat has created a situation worse than last year when thousands of tons of fruits, especially peach, were thrown by contractors and growers due to weeks-long curfew...


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## Neo

*International trademark registration crosses one million mark​*
KARACHI (May 14 2009): The number of international trademark registrations topped the one million mark, when Austrian 'eco' company GrNne Erde, which specialises in natural wood, textile and cosmetic products, registered its mark this month under the WIPO-administered Madrid system for the international registration of marks.

According to a WIPO communication received on Wednesday, the trademark registrations often mirror evolving consumer tastes, as the companies work to strengthen their market position. In this case, the millionth trademark registration is a 'green' brand, reflecting a growing environmental awareness among the general public and the business community.

'Trademarks and the branding efforts they support, help consumers make informed choices about the products they buy,' WIPO Director General, Francis Gurry said. 'They are extremely valuable commercial assets. WIPO's international trademark registration system is a cost-effective, user-friendly and streamlined means by which businesses operating internationally can protect and manage their trademark portfolio,' he added. GrNne Erde founder and Managing Director, Reinhard Kepplinger said the company is delighted to be registered as the millionth international trademark.

'We have found that the Madrid system offers an easy and inexpensive way for our company to register its trademark internationally,' he said. Kepplinger added that GrNne Erde, which employs more than 300 people, is tangible proof that it is possible to create an ecologically-aware company that is highly successful within the marketplace. The company produces and sells a range of some 5000 products made from natural materials including furniture, textiles and cosmetics.

The increasingly rapid growth of the Madrid system over the last two decades reflects the increased internationalisation of trade and broader recognition of the commercial importance of trademarks. After the first international trademark was registered in 1893 by Swiss Chocolate-maker Russ-Suchard and Company, it took some 93 years to reach the 500,000th mark, registered in 1986 by Sandoz AG of Switzerland (now owned by BASF SE of Germany).

The 750,000th mark was registered 15 years later in 2001 by microTec Gesellschaft fr Mikrotechnologie mbH of Germany. The 900,000th international trademark was registered five years later in 2006 by a Chinese company, Chaozhou Fengxi Jinbaichuan Porcelain Crafts Factory, with the millionth mark registered just three years later.


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## Neo

*Plan to set up EPZ in Azad Kashmir​*
MIRPUR (May 14 2009): In order to boost the country's exports from Azad Jammu and Kashmir, the AJK government has principally decided to get established the Export Processing Zone (EPZ) in Mirpur in the near future and the site for the proposed EPZ has been reserved on 2,000 kanals of land in the local main industrial estate, official sources said.

The sources told APP here on Wednesday that the integrated plan to carve an Export Processing Zone in Mirpur Azad Kashmir is the part of the proposed plan by the federal government to set up more Export Processing Zones in various parts of Pakistan including Azad Jammu and Kashmir under a phased programme in the near future.

The sources indicated that several EPZs were already operating in various parts of the country for the progress of various export-based industries. Of new proposed Export Processing Zones, seven are proposed to be set up in Punjab, four in Sindh, five in Balochistan and one each is proposed to be established in NWFP, Northern areas and Azad Jammu and Kashmir.

Sources said that the establishment of the new EPZ was aimed at not only to enhance the exports of the quality products from Pakistan from the developed industrial zones but also to encourage maximum investments by the private sector in the export-based industries in various export-oriented developing areas of NWFP, Northern Areas and Azad Jammu and Kashmir.


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## Neo

*LSM decline and IMF deficit target readjustment​*
EDITORIAL (May 14 2009): According to a Business Recorder exclusive large scale manufacturing (LSM) sector registered a decline of 8 percent during the first nine months of the current fiscal year. This reflects a worsening trend as data for the first five months of the current year (July-November) had revealed a decline of 5.57 percent. This negative trend therefore has strengthened over time and, at present, there appears to be no major policy decision targeted to deal with this major issue.

Given that the government had forecast a growth of 6 percent for LSM for the current fiscal year during the budget speech, this decline incorporates an error of 14 percent, significant by all counts. Critics of the government may well argue that this over estimation was deliberate on the part of the government for two major reasons.

First and foremost it allowed the government to understate the scale of hardships that would have to be borne by the people of this country as a direct consequence of a decline in the LSM - hardships that would be manifest through lower tax collections thereby leading to lower outlays on development projects as well as rising unemployment levels and inflation; and second it allowed the government to negotiate with the International Monetary Fund (IMF) from a position that was considerably worse than what was accepted as the benchmark during the negotiations between the Fund staff and the government.

More than ten months into the year, the Pakistani people continue to suffer from hardships associated with a decline in LSM by 8 percent; and the IMF has been forced to further downgrade the deficit target that it agreed on previously because tax collection target, with LSM accounting for about 60 percent of all tax collections, is not likely to be met.

Be that as it may this may not be an adequate reflection of the true picture. Quantum Index Numbers show industrial productivity of 100 items received from different sources notably from the Oil Companies Advisory Committee (OCAC), the Ministry of Industries and Production and Provincial Bureaus of Statistics. The OCAC supplies the data of 11 items, the Ministry of Industries and Production of 35 items and Provincial Bureaus of Statistics provide data of 54 items.

The major contributor to the negative growth was OCAC as, during July-November 2008, Oil Companies Advisory Committee index declined by 7.52 percent to 163.02 points from 176.28 points while the Ministry of Industries index dipped by 6.37 percent to 186.53 points from 199.22 points over the corresponding period of last year.

The reason for this decline ranges from the failure of the government to deal with the rising circular debt - an issue not dealt with till early this year through the issuance of Term Finance Certificates, as well as a severe energy shortfall. Law and order problems also negatively impacted on productivity of a range of products including textiles, chemicals and pharmaceuticals, basic metal industry, nonmetallic mineral products, machinery, cement and automobiles.

Supporters of the government would, no doubt, provide another rationale for the decline in the LSM: global economic recession or, in other words, external factors impacted on the LSM growth rate thereby affecting the tax collections negatively.

There is little doubt that productivity in the country has declined due to the fact that orders for our products are simply not forthcoming due directly to the global recessionary phase. Lower orders would, automatically, lead to lower output levels that would, in turn, lead to lower exports. However there are powerful internal factors at play as well and the government would do well to deal with them on a sustained basis.


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## Neo

*Pakistan less affected by global crisis: SBP chief ​* 
KARACHI (May 15 2009): Governor State Bank of Pakistan (SBP) Salim Raza said Pakistan has been less affected by the current global crisis as the country's banks are well capitalised and their assets and liabilities are squarely domestically based.

Compared with other Asian economies, which heavily rely on exports to developed world, Pakistan is less affected because of its limited exports and low exposure in the international financial markets.

While addressing, as a chief guest at the Management Association of Pakistan's (MAP) 26th Annual Corporate Excellence Awards Ceremony held at a local hotel on Thursday, the SBP Governor said, "With inflation coming under control, and with a huge domestic market, we could very usefully produce more for domestic economy, and take the opportunity to develop domestic commerce and domestic brands."

Governor State Bank of Pakistan said the current global economic crisis may result in slowdown in globalisation and added that the most painful consequences of this would be felt by the emerging markets and the developing world. He further said the emerging economies are suffering from loss of export markets and withdrawal of foreign direct investment as capital is retained and repatriated.

"The slowdown and reversal could be long, and would, by itself, slow or even reverse the movement out of poverty, and limit the middle class expansion we were seeing," he added. SBP Governor said that the current financial crisis has overwhelmed the whole global story since the early 1980's wherein deregulation, liberalisation, privatisation resulted in financial globalisation which was achieved not only by growth but also through cost effective, innovative and efficient supply chains.

The governor advocated economic managers should devise strategies to retain the positive effects of globalisation that transformed the world and to ensure a balance in the economic management to allay the fears of emerging markets that current global crisis may result in state control of capital; trade protectionism and restrictions on immigration.

He said that globalisation has achieved a cut in global production costs as manufacturing shifted to cheaper overseas bases, prominently China and also other Asian countries. This kept costs down, dampened inflationary pressures for the US consumer, and the fact that the Balance of Payments surpluses generated by exports would be reinvested in the US kept the dollar strong, and supplied liquidity that kept interest rates low.

He said the US financial sector debt grew from 22 percent in 1997 to 117 percent in 2008 and to 230 percent in the UK, while US household sector debt grew from 66 percent of GDP in 1981 to 100 percent in 2008. The US in the 2000s was absorbing 70 percent of the world's savings.

"In the US we had over-borrowed consumers, financial institutions and the Government, while private markets are largely to blame, excess leverage was significantly made possible by the US Fed keeping interest rates low, and ignoring the consequent of real asset inflation," he said adding that anyhow, the bubble burst and the consequences are before us.

"So we have now, according to the IMF, about 4 trillion dollar of debt to be written off banks balance sheets, vast amounts of money are going in to salvage banks, and interest rates are the lowest in history, but the consumer is building up his balance sheet, and banks are not lending," he said.

SBP Governor said the monetary policy in the developed world will not work under these conditions, and the whole weight lies on fiscal policy. Fiscal policy is exclusively directed by the Government and the cost of bailouts is likely to mean higher taxes now and in the future. "Without heavy Government intervention now, everywhere in the major economies the economy and the markets cannot revive," he added.

Earlier, addressing the ceremony, Waqar A Malik, president MAP said the "Corporate Excellence Awards" are one of the most coveted corporate tributes in Pakistan, akin to the Oscars of the country's corporate world. These are intended to promote excellence in all forms of management in the corporate sector of Pakistan.

Later, the overall best managed company awards were given to Pakistan Tobacco Company, Siemens Pakistan Engineering Company Limited, in the category of Business & Industrial while IGI Insurance Company in Financial category.

The other companies related to the two categories' sub-divided sectors, like Chemical & Allied Sector, Automobile & Allied Sector, Food & Allied Sector, Fuel & Energy Sector, Engineering & Allied Sector, Miscellaneous Sector, Non-Listed Companies Sector, Non-Profit Social Services Sector, Commercial Banking Sector, Investment Banks & securities Sector, Leasing & Modarabas Sector and Insurance Sector were also distributed awards and certificates.


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## Neo

*OGDCL discovers gas in Pasakhi deep well ​* 
KARACHI (May 15 2009): Oil and Gas Development Company Ltd (OGDCL) has discovered gas in its exploratory well ie Pasakhi West Deep Well No 1, located in district Hyderabad, Sindh. According to information sent to Karachi Stock Exchange (KSE), the well was drilled down to the target depth of 3,500 meters, targeting to test the potentials of sands of Lower Goru Formation of cretaceous Age.

Based on log data, 2 zones were selected for testing. Production testing of zone-1 (massive-sands) of Lower Goru Sand member started on May 4, 2009, which did not produce at surface. Production testing of zone-2 (massive-sands) of Lower Goru Sand member started on May 11, 2009, which proved productive. The short duration initial testing results of zone-2 are tabulated as quantity of gas 6.70mmscfd and quantity of condensate 80bpd.


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## Neo

*US House approves $2.3 billion for Pakistan ​* 
WASHINGTON (May15, 2009) The US House of Representative has approved a $96.7 billion supplemental measure to fund Iraq and Afghanistan wars, with $ 2.3 billion flowing into Pakistan as economic and security assistance as well as financing for enhanced American diplomatic missions in the key anti-terror allied country. 

According to the House Appropriations Committee, the $2.3 billion for Pakistan include about $ one billion for socio-economic development, $ 400 million for strengthening counterinsurgency capability of Pakistani forces and some other expenditure like US diplomatic operations, diplomatic security and a new secure embassy and consulates in the country. 

The economic assistance for Pakistan will be $ 997 more than the Obama administration had requested - and help address the economic crisis, including agriculture and food security, assist the displaced population, strengthen national and provincial governance, expand the rule of law, and to improve access and quality of education. 

On the military side, $ 400 million have been allocated for the Pakistan Counterinsurgency Capability Fund (PCCF) to help train and equip the Pakistani security forces for counterinsurgency operations. 

The funds for PCCF would be available on September 30, 2009. 

Noting the importance of the region to American security the bill affirms support for the democratic Pakistani government, saying the United States and the international community have welcomed and supported Pakistans return to civilian rule after almost nine years with the free and fair elections of February 18, 2008. 

The congressional findings cited in the bill say that Afghanistan and Pakistan are experiencing a deterioration of their internal security resulting from a growing insurgency fueled by al Qaeda, the Taliban and other extremist networks that continue to operate along the western border of Pakistan, including in the Federally Administered Tribal Areas. 

The bill urges that the governments of both Afghanistan and Pakistan must expand the writ of the national government across all provinces to secure their borders, protect their population, enforce the rule of law, and tackle the pervasive problem of corruption in order to bring security and stability to their people. 

Meanwhile, the Senate Appropriations Committee has passed its own version of the war supplemental bill. After passage of the measure in the Senate, the versions of the two chambers will be reconciled before the bill is sent to President Barack Obama for his signatures.


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## Neo

*EU gives 5.5 million euros for IDPs ​*
ISLAMABAD (May 15 2009): The European Union on Thursday gave Pakistan 5.5 million euros ($7.5 million) in aid to help civilians driven from their homes by the country's assault on Taliban. The emergency donation is intended to provide refugees from the fighting in restive Swat Valley and surrounding areas with shelter, food, basic utensils and medical supplies, Aaj TV reported.

In some places, it will also fund clean drinking water and improved sanitation, said the EU's executive, the European Commission. The money will be channelled through relief agencies such as the Red Cross and Red Crescent, the UN's High Commission for Refugees (UNHCR) and the World Food Programme.


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## Neo

*Transit trade pact with Afghanistan: no concession given to India: foreign office ​* 
ISLAMABAD (May 15 2009): Pakistan on Thursday said that it has not given any concession to India while signing Transit Trade Agreement with Afghanistan in Washington last week. During the weekly press briefing, Foreign Office Spokesman Abdul Basit said that Pakistan would not do anything against its national interest and it had not given any anti-Pakistan concession to India under the trade agreement.

He said that the negotiations would be held with Afghan authorities to finalise the terms and conditions of the transit trade by end of this year. To a question Basit said that negotiations between Pakistan and US were underway about transferring of the ownership of US drones to Pakistan. However, he refused to give any details in this regard.

Commenting on the statement of Bangladesh's Foreign Minister, the spokesman said that Pakistan had already regretted in 1974 through a tripartite agreement over its act committed with Bangladeshis in 1971 war. He added that both the countries were enjoying good relations and should move forward without going into the past.

Responding to a question, he said that Pakistan and the US would discuss the additional conditions of the Kerry-Lugar Bill. About the latest status of the Pakistani students in UK, the spokesman said that President Zardari had took up the issue with the UK authorities during his recent visit and the students were undergoing through a legal process and Pakistani High Commission in London was providing legal assistance to them.

To a question, he said that Pakistan would welcome any solution of the burgeoning Jammu and Kashmir issue, which should be according to the wishes of the people of the valley. He added that Pakistan would always welcome solutions of the issues with regional approach. Basit also informed the media that President Asif Ali Zardari would visit France on Friday (today) for talks with his French counterpart on the entire gamut of bilateral relations and regional and international issues.


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## Neo

*Ten-year plan requires $8.161bn for meeting energy demand ​*
ISLAMABAD: To meet ever-increasing demand for energy and avert any future nightmare for the industry in Pakistan, the energy efficiency investment plan requires $8.161 billion during the span of ten years (2010-2019), the Asian Development Bank (ADB) informed this in a workshop on 3rd Consultative Group of the Planning Commission here on Thursday. 

These amounts were required under Multitranche Financial Facility (MFF). The timeline of the investment is planned: for the year 2010 an investment of $34 million, $266 million in 2011, $464 million in 2012, $1.133 billion in 2013, $1.479 billion in 2014, $1.660 billion in 2015, $1.075 billion in 2016, $1.089 billion in 2017, $700 million in 2018 and $260 million in 2019. 

After completion of the plan the government would be able to save 2880 GWh in industrial, residential, and public sector electricity use. 

The ADB official expressed the need for integrated approach to tackle the energy issue in Pakistan. All the ministries relating to energy sectors, planning commission and donors agencies involved in this sector should work from a single platform, then the matters would be resolved easily. He also stressed for energy conservation and increase competition in this sector. The ADB seeks sustainability both in generation and distribution of power so as to get ride of frequent power break down, he maintained. 

The seminar was held under the chairmanship of Member (Energy) Planning Commission Pervaiz Butt and was attended by key government officials including development partners from Asian Development Bank (ADB), French Development Agency (AFD), United States Agency for International Development (USAID), GTZ and the World Bank. The meeting was informed that the Government of Pakistan (GOP) was struggling to resolve the crisis. The CDWP had already cleared the concept for energy efficiency investment plan of $1.15 billion for the next 8-10 years to be financed by ADB, AFD and GOP. 

A diagnostics assessment of the energy sector was conducted and found that it had large untapped energy efficiency potential. The past efforts to mainstream and implement energy efficiency projects in Pakistan could not get desired results due to lack of sustainable management, discipline and financing. The government of Pakistan was keen to implement a systemic energy efficiency investment programme and was looking for a flexible public sector financing mechanism and to make a mechanism for private sector financing to (i) scale up the deployment of proven energy efficiency technologies in energy supply and use, and (ii) establish a dynamic energy efficiency market. 

Improving energy efficiency and energy productivity were key components of Pakistans energy strategy. Reducing unproductive and volatile demand can result in immediate energy savings and lower energy intensity would boost energy access and meet social development goals. The government is determined to pursue a sustained long-term plan to optimize the energy mix and consumption across all sectors of the economy, member energy of the Planning Commission maintained. 

Pakistans energy demand would continue to increase in the next 20 years. The overall cost to the economy, businesses and consumers would be huge unless there is a concerted shift in policy and consumption.

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## white_pawn

*Govt ponders cutting petroleum prices ​*
KARACHI: The stakeholders are not ready to share the burden of the likely cut in petroleum prices and have made it clear that the government will have to absorb the load on its own. 

The sources in the oil sector were of the view that the only viable option before the government was to take a hit on the revenue collection by reducing the petroleum development levy (PDL) to comply with the Supreme Courts direction to cut petroleum prices. 

They said the making amendments to Sales Tax Act would be difficult for the government. 

The apex court has given one weeks deadline to the government to bring down the prices of petrol and gas in line with international rates. 

The government is pocketing Rs14.91 in PDL and Rs7.95 in GST on per litre petrol. On April 1, 2009, PDL on petrol was Rs19.54 per litre. On diesel, the PDL is Rs11.86 per litre. 

Adviser to Prime Minister on Petroleum Dr Asim Hussain on Thursday told Dawn that the government had been left with few options as the deadline was drawing near. If the PDL is reduced it will increase budget deficit and the finance ministry will be forced to find other ways to bridge the gap, the adviser observed. 

He added that the government may have to impose new taxes or ponder on other options for generating revenue to offset the impact of cut in revenues from the PDL. 

He said he would talk to the prime minister and finance ministry officials shortly to discuss the apex courts decision in details and find out a solution regarding cut in petroleum prices. 

Chairman Pakistan Petroleum and CNG Dealers Association Abdul Sami Khan also said that only PDL could be cut but it may create problems for the government in terms of revenue. 

A leading analyst Mohammad Sohail said that the government could reduce the margins of OMCs and dealers and also cut the margins of refineries and it could reduce PDL and GST and check the corruption at the inland freight equivalisation margin. 

In case the margins of dealers, refineries and OMCs are reduced then it may hurt future investments by these stakeholders. If the PDL and GST are cut, then it will create a revenue crunch, he said. 

The government finds itself now in hot waters as it has to maintain respect of the Supreme Court at one hand and on other it has been striving to encourage future investment and revenue generation, Sohail said. 

Any cut in PDL and GST may spark anger at the International Monetary Fund (IMF) which has been urging the government for increasing the revenues, he said. 

The IMF has given a target of Rs1.3 trillion for revenue collection in the current fiscal year. The government cannot also afford or ignore the IMF conditionalities, he added. 

If the PDL is reduced, then the issue of price differential claims (PDC) will crop up between the government and OMCs, thus leading to circular debt problems which had intensified few months back. 

The government changes the rate of PDL time to time in order to offset the impact of increase/decrease of international crude prices on domestic prices. When global crude oil prices go up the PDL is reduced and when crude oil prices come down the government raises the PDL to keep the oil prices unchanged.


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## white_pawn

*12 Pakistani scrips enter MSCI Frontier Index By Dilawar Hussain ​*
KARACHI: Twelve securities traded on the Pakistan capital market were added to the MSCI Frontier Markets Index at the semi-annual index review on May 13. The changes would take effect from the close on May 29. 

Following its earlier expulsion from the MSCI Emerging Market Index as a protest against the imposition of floor under the KSE-100 index late last year, MSCI Pakistan index was able to find a foothold in the Frontier market index, represented by the following 12 companies: Fauji Fertilizer Company; Hub Power Company; Jahangir Siddiqui & Co; Kot Addu Power Company; MCB Bank; National Bank of Pakistan; NIB Bank; OGDC; Pakistan Oilfields; PSO; PTCL and UBL. 

Analyst and stock strategist Mohammad Sohail at the Karachi Stock Exchange observed that the inclusion of Pakistan in the MSCI Frontier Market Index was not a big surprise as index provider had already disclosed those plans in March. 

However, the countrys index downgrade from emerging market to frontier market will attract lower portfolio investment since global funds tracking Frontier Markets are fewer in number than those watching the emerging markets, he said. 

A statement released by the MSCI from Geneva on Thursday announced changes to at least seven MSCI Equity Indices, including that of the MSCI Frontier Markets. 

The apex index provider recalled that it had already announced on March 23 that Pakistan would be added to the MSCI Frontier Markets Index at the time of the May 2009 Semi-Annual Index Review. 

In addition, as announced on Feb 18, Argentina will simultaneously be removed from the MSCI Emerging Markets Indices and added to the MSCI Frontier Markets Index at the time of the May 2009 Semi-Annual Index Review. 

Though a special mention was not made, another new entrant in the Frontier Market appeared to be Croatia. 

Wrapping up the details, The MSCI Inc observed: Thirty-two securities will be added to and 23 will be deleted from the MSCI Frontier Markets Indices. The three largest additions to the MSCI Frontier Markets Index are Neal & Massy Holdings (Trinidad & Tobago), Telecom Argentina B ADR (Argentina) and MCB Bank (Pakistan). 

MSCI Inc, has been acclaimed as a leading provider of international Equity indices, which include 120,000 indices calculated daily across more than 70 countries. 

Headquartered in New York, MSCI Inc maintains research and commercial offices around the world. Morgan Stanley, a global financial services firm, holds the controlling equity in MSCI Barra.


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## Neo

*Pakistan, IMF see fiscal deficit at Rs671bn ​* 
IMFs Resident Chief in Pakistan, Paul Ross,explains IMF had not calculated 35pc power tariff hike

Saturday, May 16, 2009

ISLAMABAD: Pakistan and the International Monetary Fund (IMF) have envisage fiscal deficit target in the range of Rs671.6 billion, equivalent to 4.6 per cent of the GDP, for the next budget.

Additional fiscal space agreed by the Fund will be spent on social sector development, security and Internally Displaced Peoples (IDPs), it is learnt.

Talking to this scribe on telephone on Friday, the IMFs Resident Chief in Pakistan Paul Ross explained that the calculation of 35 per cent hike in power tariff was not done by the IMF. 

In order to put things in right prospective, it should be explained that it was not the IMF which basically calculated a wrong figure, he added.

Answering another query about timeframe for concluding the ongoing talks between the two sides, he said that it would be completed in the next few weeks but he did not share any exact timeframe in his conversation.

The additional funding available to Islamabad authorities will be mainly spent on social sector uplift as vulnerable segments of the society will be protected, Paul Ross concluded.

However, the official sources said that the IMF has allowed Pakistan to hike its fiscal deficit by 1.2 per cent of the GDP up to 4.6 per cent from earlier envisaged target of 3.4 per cent of the GDP for the next budget, enabling Islamabad to get additional Rs160 to Rs180 billion fiscal space during the next financial year.

Actually the IMF has relaxed its way of calculating fiscal deficit target and now Pakistan will be able to utilize donors money which will be given by the Friends of Democratic Pakistan (FoDP) in the next fiscal year, said the official.

The IMF is basically concerned about the fiscal deficit target as tax collection figures are not included into the basic performance criteria to gauge the performance of the loan recipient country. 

So it depends upon Pakistani authorities either to choose revenue generation or reducing its expenditures in order to achieve its overall fiscal deficit target in line with the IMF program. 

Pakistans one per cent GDP, calculated by the IMF, will be standing at around Rs146 billion by the next fiscal year so the fiscal deficit in the range of 4.6 per cent of the GDP means that the government will borrow Rs671.6 billion through domestic and external avenues for bridging the gap of fiscal deficit.

After the recent review talks, the IMF states that the additional donor support pledged to Pakistan for 2009/10 and 2011/12 at the Donors Conference held last April in Tokyo is welcome and provides scope for counter-cyclical policy. 

The mobilization of this support is crucial to support growth and higher social, development, and security expenditure.

Discussions focused on the fiscal program and Pakistans financing needs. The slowing economy, additional donor support, and the need to protect priority expenditures call for a relaxation of the fiscal deficit target for 2009-10. 

The authorities and the IMF team agreed that the Tokyo package should be regarded as a bridge toward the stronger medium-term revenue effort. In this regard, it is crucial to reinforce efforts to increase the tax revenue-to-GDP ratio through tax policy and administration reforms. 

Moreover, the need to manage carefully expenditure was agreed, in particular to contain and eliminate poorly targeted subsidies, including those for electricity, while maintaining the life-line tariff to protect vulnerable groups.

Social protection is a key element of the authorities program and in collaboration with the World Bank, the government has developed a plan to strengthen the social safety net and improve targeting to the poor. The rollout of the reformed Benazir Income Support Program (BISP) has started, but will take longer than expected.


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## Neo

*Gold finds new way into foreign markets ​* 
Saturday, May 16, 2009

KARACHI: Gold dealers have found a perfectly tax-free legal way to ship the precious metal into another country with an intention to sell them for a profit. Have women wear them as jewellery and travel to the desired destination.

Gold rates in Pakistan are considerably stable now than few months ago. However, it continues to remain cheaper by Rs300-500 per 10 grams compared to the Dubai bullion market.

Recently, a case was brought to light when a man tried to take around 100 tolas (1.17kg) of gold jewellery out of the country in a very simple way. He had his wife and daughters adorn heavily with gold jewellery, which he had planned to sell in another country.

President of All Pakistan Supreme Council of Jewellers Association, Haroon Rashid Chand said, this is not an unusual way to ship gold to other countries with the intention of selling them.

It isnt illegal for women to wear heavy gold jewellery and carrying the same is not a crime. Taking advantage of this fact, many families and more than often, dealers ship gold and other precious metals and stones out of the country in this way.

He explained that this was a perfectly legal way to sell precious metals and gems in other markets that were far more lucrative than Pakistan.

Referring to the incident, Chand was of the view that had the man sold all that jewellery in the Dubai market, he could have earned a profit of Rs40,000, keeping the difference between current local and UAE rates in mind.

He continued to say that earlier Customs used to believe that gold was only brought into the country and not exported abroad. However, the practice of smuggling gold to other bullion markets has existed for long and only recently has the Customs taken note of it.

Referring to the variety of gold being sold in Pakistan, Chand said that it was mostly local recycled jewellery. A thin percentage of international gold was brought in the country mostly by women visiting/living abroad, Chand said adding gold imports were now almost negligible of the total volume of local bullion trade.

Chand said that the Pakistani bullion market was cold as an average persons purchasing power continued to decline by the day and hence consumers preferred to stay away from the markets.

Gold was valued at Rs23,657 per ten grams and Rs27,600 per tola on Friday. International bullion rates stood at $923.50 an ounce on Friday.


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## Neo

*US House okays $1bn for Pakistan​*
WASHINGTON: The United States House of Representatives on Thursday overwhelmingly approved a 96.7-billion-dollar measure to pay for Iraq and Afghanistan, including $1 billion in aid for Pakistan.

Lawmakers passed the bill, which also included $2 billion to prepare for fighting an influenza pandemic, by a lopsided 368-60 margin.

The House bill includes $400 million to help build up the Pakistani security forces ability to wage counterinsurgency warfare.

And it includes another $600 million in economic development aid to Pakistan and to improve education and democratic reforms.

It also includes $47.7 billion to cover the wars in Iraq and Afghanistan through October 1, and another $23 billion to replace equipment damaged in the two conflicts. afp


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## Neo

*Pakistan may seek additional $4.5 billion from IMF​*
ISLAMABAD: Pakistan would seek additional $4.5 billion Stand by Facility from International Monetary Fund (IMF) in June this year in case financial assistance from Friends of Democratic Pakistan (FoDP) is delayed. 

Pakistan would receive $2.5 billion by end June 2009. World Bank and Asian Development Bank have sown willingness to finance mega dam projects with increase in annual lending volume for Pakistan. United States has also agreed to start Free Trade Agreement (FTA) negotiations along with finalizing Bilateral Investment Treaty (BIT). 

FODP: Shaukat Tareen, Advisor to Prime Minister on Finance and revenues, in a media briefing after a month long foreign tour, termed Tokyo FODP Conference as success and informed that Pakistan has received encouraging response from FODP as against the expectations of $4 billion, $5.28 billion pledges were made in the Tokyo meeting. Explaining the composition of pledges, advisor informed that $600 million would be in the shape of grant and soft loans, $400 million as budget support and $4.3 billion as project financing. Apart from these said pledges, Britain, Norway and Switzerland are in a process of finalising increase in their annual aid for Pakistan and decision would be made soon.

He informed that FODP social sector financial assistance would be used for four interventions like cash support and poverty reduction, skill development, medical insurance for poor and job creation at tehsil level. Remaining assistance would be used for education and health sector development, he added.

IMF: Tareen informed the country achieved all the performance benchmarks set for the period under discussion. He informed that IMF has allowed Pakistan to increase its budget deficit from projected 3.4 percent to 4.3 percent. He said that Pakistan would seek additional loan from IMF on incase the assistance from FODP faced delay and if needed, Pakistan would ask for Stand by Facility that would be 300 percent higher against the allocated quota. IMF has also allowed Pakistan to use this additional loan for financing its initiatives like promotion of agriculture, manufacturing and infrastructure that are required to build sound base for economy. 

The International Monetary Fund (IMF) would recommend the release of $840 million to Pakistan, the third tranche of a loan. Therefore, in a board meeting in mid-June, they will recommend release of a tranche which amounts to about $840 million, Tareen said.

WB: He informed that World Bank has agreed to enhance its lending under three year lending programme. We have asked World Bank to assist in development of agriculture sector and mega infrastructure projects like big dams and WB authorities have agreed to consider it. WB has also agreed to lend for construction of transmission line from Tajikistan via Afghanistan to Pakistan for import of 700MW power in first phase and low cost 3000MW hydel power in second phase. 

Pak-Libya: During the President of Pakistan visit to Libya, both the countries have agreed to enter into Strategic Economic Partnership under which Libya has demanded manpower, help in infrastructure, banking sector and agriculture sector development. Pakistan has invited Libyan companies to invest in oil and gas sector of Pakistan. He said that Pak-Libya holding company would pursue cooperation in these areas for bilateral benefits. 

He said that during US visit a remarkable achievement has been achieved and USTR has agreed to start bilateral Free Trade Agreement (FTA) process. We have demanded increase in area of Reconstruction Opportunity Zones (ROZs) with inclusion of Balochistan. 

Tareen informed that Pakistan is to receive around $2.5 billion by end June 2009, IMF $840 million from IMF, $800 million from WB, $600 million from ADB, $23 million from IDB and $1 billion from US. 

Responding to questions, Tareen informed that the government would not be able to run the country on Petroleum Development Levy (PDL) and the government would soon finalise a transparent mechanism of POL price fixation. He said that inflation might come down to single digit by October 2009 as against earlier projection of July 2009. 

Budget 2009-10: Tareen informed that during IMF talks four new sectors have been identified for expansion in tax base. However, he made it clear that only two new sectors would be taxed in the next fiscal year 2009-10. He said focus of the next budget would be on revenue generation for poverty reduction, promotion of agriculture, manufacturing, energy sector development and infrastructure development. We dont want to increase tax rates, our focus in to tax new sectors for increased revenue generation.


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## Neo

*Frequent power failures hit industrial production​*
KARACHI: The unabated load shedding has jolted the production in different industries in the city, particularly the export-oriented garments industries, industry sources told Daily Times. 

Anjum Nisar, President Karachi Chamber of Commerce and Industry said that if the ongoing crisis of power were not resolved, it would have disastrous consequences for the industry and will increase the lay-offs. 

According to industry sources, uninterrupted power and water supply is essential for the garments industries but the supply of both are so poor that it has become difficult to ensure shipment of products as per schedule.

The current shortfall of 400MW in the city owes to the tripping of Bin Qasim power plant. 

He said the Karachi Electric Supply Corporation (KESC) is not utilising its full production capacity despite a visible fall in international prices of furnace oil. 

The government has been reiterating since last 12 months that rental power plants would be installed to deal with the energy problem in the short-term but nothing has been done so far in that regard. 

We request the government to instantaneously bring in rental power plants to feed the industry; if not, then this summer will be devastating for the industrial production, he said. 

An official from All Pakistan Textile Mills Association said that the industrial productivity has remained under pressure across the country as the industries used to run three shifts a day and now are operating with only two shifts. The association strongly protests against unscheduled disruption of power supplies to its member units. 

The industrial production in the city could plunge by as much as 30 percent. Sectors like textile, leather and salt appear to be among the worst hit. Industry associations put the loss in production at around Rs 40 billion per month.

Siddique Memon, chairman Karachi Traders Action Committee said that this situation has badly affected the small traders. Giving an ultimatum of 48 hours to Karachi Electric supply corporation (KESC), he warned that if the situation remains unchanged small traders would initiate their protest against the KESC. 

Only 35 percent of the small traders have alternative power supply, while around 600,000 traders from 559 markets of the city have been ruined from this situation, he lamented.


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## Neo

*France offers civilian nuclear technology to Pakistan​*
** Qureshi says talks in July, MOU likely in Sept 
* France pledges euros 12m aid for IDPs​*
PARIS: French President Nicolas Sarkozy told President Asif Ali Zardari on Friday that he wants Pakistan to have a wide-ranging deal to to buy nuclear equipment like the one obtained by its rival India, Foreign Minister Shah Mehmood Qureshi said on Friday. 

France has agreed to transfer civilian nuclear technology to Pakistan ... they have agreed that Pakistan should be treated like India, Qureshi told reporters after a meeting between Zardari and Sarkozy. 

President Sarkozy said ... what can be done for India can be done for Pakistan as well, Qureshi said after the meeting in Paris. 

Talks: He said that negotiations over the transfer of technology would be held in July, and a new framework agreement and an MOU were likely to be signed during Sarkozys visit to Pakistan in September. 

An official in Sarkozys office said France wanted Pakistan to improve its nuclear security, but did not comment on the idea of an India-style deal. The president confirmed that we are prepared ... to cooperate with Pakistan in the area of nuclear safety, he said. 

Qureshi dismissed concerns over the safety of Pakistans nuclear arsenal and its proliferation history. 

Aid: At the meeting, France pledged to provide Pakistan 12 million euros as aid for internally displaced people. 

Sarkozys office issued a statement reaffirming Frances support for Pakistan while urging Zardari to fight all terrorist groups threatening his own country and its neighbours from Pakistani territory. 

Zardari said the struggle was not just a military operation, but a battle of ideas, and vowed not to give up. agencies


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## Neo

*France agrees to transfer of civilian nuclear technology: Pakistan facing 'energy crisis', says Qureshi ​*
PARIS (May 16 2009): France and Pakistan have agreed to cooperate in the nuclear field, officials said Friday, with Islamabad claiming an important breakthrough in its bid to be seen as a responsible nuclear power. Following talks between France's President Nicolas Sarkozy and counterpart Asif Ali Zardari, the French leader's office said he had offered to help Pakistan improve its "nuclear safety" capability.

Pakistani Foreign Minister Shah Mahmood Qureshi went further, saying France had agreed to a transfer of civilian nuclear energy technology, despite international concerns over the stability of Pakistan's government. Sarkozy's office would not comment on Qureshi's statements, and any such deal - while a diplomatic coup for Zardari - would need the agreement of other nuclear powers and the United Nations nuclear watchdog, the IAEA.

France is a major exporter of nuclear technology, and in February agreed to supply Pakistan's rival India with between two and six modern reactors. "France has agreed to transfer civilian nuclear technology to Pakistan," Qureshi told reporters, explaining that Pakistan was suffering an "energy crisis" and needed nuclear power to guarantee its electricity supply.

In addition to maintaining a small arsenal of nuclear armed missiles, Pakistan has a civilian nuclear energy programme developed with Chinese aid, with one working power station and another under construction. A spokesman for the French presidency said Sarkozy had "confirmed France was ready, within the framework of its international agreements, to cooperate with Pakistan in the field of nuclear safety."

"This is so the Pakistani programme can develop in the best conditions of safety and security," he added. Qureshi hailed the French offer as an important sign of his government's credibility. "That is a significant development, and we have agreed that Pakistan should be treated like India. President Sarkozy said, and I quote him, 'What can be done for India, can be done for Pakistan as well.'," he said.

"Pakistan has no issues with the IAEA ... Pakistan will give all necessary international guarantees," Qureshi insisted. "The world recognises the steps Pakistan has taken to assure and protect its nuclear assets. Everyone who matters is confident about our arrangements, the three-layer security system that we have put in place."

Asked when French shipments might begin, he said: "Today, in principle, the two countries agreed that there is a necessity that has to be fulfilled. In principle they've agreed, and now the modalities will be worked out."


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## Neo

*300 million euro economic assistance announced ​*
PARIS (May 16 2009): France on Friday announced a 300 million euro aid in economic assistance and another 12 million Euros for the rehabilitation of Internally Displaced Persons in Pakistan. France also pledged to hammer out a Framework for Co-operation Agreement within the next three months that will comprehensively cover co-operation in the fields of energy including civilian nuclear power plants for peaceful purposes, trade, civil aviation and defence.

In a statement, Spokesperson of the President former Senator Farhatullah Babar said that the assurances of French pledges came during a meeting today in the Elysee Palace in Paris between President Asif Ali Zardari and President Sarkozy. Foreign Minister Shah Mahmood Qureshi, Interior Minister Rehman Malik, Ambassador Asma Anisa and Spokesperson of the President was also present on the occasion.

France deeply admires the determination of the Government of Pakistan to root out militancy from the country, the French President said, adding, "France totally supports you President and it is our determination to see Pakistan succeed". France will not only directly support Pakistan but also seek the support of the international community to the economic and political stability of Pakistan, the French President said.

The Spokesperson said that the French President assured President Zardari that at the forthcoming summit of the EU in Brussels he will seek to persuade the grouping to allow Pakistan greater market access to enable it stabilises its economy and provide jobs to its people.

President Sarkozy said that he looked forward to the interlocutors from Pakistan and France meeting soon to hammer out a comprehensive framework of co-operation agreement before the fall this year. Earlier, President Asif Ali Zardari explained to his French counterpart the steps taken by the government in rooting out militancy and the range of economic and political assistance it needed in this regard.

Pakistan requires massive and immediate assistance in rehabilitating the Internally Displaced Persons (IDPs) displaced from Swat and other areas as a result of the fight against militants. Poverty, lack of education and shelterlessness provided breeding grounds for extremism and the world must come forward in helping Pakistan, President Zardari said. "We need trade and not aid", the President said, adding, "We also need international assistance in broadening and strengthening our educational base".

He said that the over 17,000 madrassahs in Pakistan provided free education, shelter and food to the children of poor families. Some of the political madrassahs had also been imparting lessons in extremism and militancy. To counter it the President said that Pakistan needed to provide free education to its children.

This alone, the President said, had been calculated to cost nearly two billion dollars a year. President Zardari also emphasised the importance of strengthening the civilian law enforcing agencies by providing it with weapons, transport, bomb proof police stations and better pay scales to fight the militants who were better and far better paid by their masters.


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## Neo

*Pakistan to receive $2.3 billion by June: Tarin ​*
ISLAMABAD (May 16 2009): Pakistan will receive $2.3 billion from US and other donors before end of June, Advisor to Prime Minister on Finance Shaukat Tarin told a news conference here on Friday. Giving details of his meetings at Japan, Libya, US and with International Monetary Fund (IMF) at Dubai, he said.

The World Bank, Asian Development Bank, and US would release $600 million, $800 million and $900 million respectively, whereas International Development Bank (IDB) will give $23 million. He said that Pakistan's delegation had convinced the IMF during the review of March quarter in Dubai for allowing an increase in fiscal deficit by next fiscal year.

This fiscal space was required owing to decline in revenue on account of negative growth by large-scale manufacturing (LSM) and shrinking import as both contributed 60 percent and 40 percent respectively to the revenue. He said that the IMF allowed increment in fiscal deficit by 1.2 percent (from 3.4 to 4.6 percent in the next fiscal year) which would enable Pakistan to use Rs 180 billion as a short-term measure to increase industrial productivity.

He said that IMF was told that Friends of Pakistan (FoP) pledges would not cater Pakistan's urgent need of short-term growth and this could only be possible through increase in fiscal deficit. The advisor said that IMF was satisfied with performance of Pakistan economy and would soon release $840 million tranche.

The board meeting in mid-June will recommend release of the tranche, he said, adding that Pakistan budget figures for next fiscal year were also discussed in the Dubai meeting.

The advisor said Pakistan would seek stand-by facility of $4.5 billion for next three years and the IMF had agreed to this facility for both fiscal space and balance of payments. "We will use this facility in case delayed assistance from FOP."

Tarin said Pakistan received encouraging response from FOP in Tokyo and pledges of $5.28 billion were made against $4 billion gap. Giving details, Advisor said that $600 million was pledged as grant/soft loans and $400 million for budgetary support, whereas $4.3 billion would be for projects financing.

He said that Britain, Norway and Switzerland would also increase their annual aid to Pakistan. The FOP assistance would be used for cash support and poverty reduction, skill development, medical insurance for poor and job creation at tehsil level. Remaining assistance would be used for education and health sectors development, he added.

He said that during FOP meeting talks on security were held and a plan was presented involving $10 billion for setting up special force to counter insurgency. "We have also proposed setting up a trust fund of Rs 2 billion for NWFP and Balochistan and pledges in this regard are expected to be made at next meeting of FOP in Turkey."

The advisor said that Pakistan would need $800 million for the settlement of internally displaced persons (IDPs) in three phases and Donor's Conference is scheduled on next Thursday at Islamabad. He said a special allocation would be made for the IDPs in the 2009-10 budget.

He said that World Bank and Asian Development Bank have agreed to increase Pakistan's financial assistance from next year and wanted the WB help in agriculture and infrastructure sectors particularly. "We have informed FODP member countries that Pakistan has already suffered losses to the tune of $35 billion in eight years due to war on terror and to win this war Pakistan would require immediate help" added Tarin.

Immediate market access would be a best option for helping Pakistan as its economic indicators are exhibiting negative growth due to war against terrorism. Tarin said that Pakistan is expecting $1.5 billion coalition support from United States in next two months. POL prices would be lowered in one week on the directions of Supreme Court.

Sharing details of President's visit to Libya, Tarin said both countries agreed to enter into Strategic Economic Partnership under which Pakistan would give them manpower, help in infrastructure and banking sector and invited Libyan companies to invest in oil and gas sector of Pakistan. He said that Pak-Libya Holding Company would pursue co-operation in these areas. He said President's visit to the US was also successful as the latter had agreed on talks on Free Trade Agreement (FTA).

Tarin said that the government would take decision on petroleum prices within a week. He said that it would be possible to run the country on petroleum development levy (PDL) next year as the oil prices were going up. He said that the PDL procedure would be made transparent in the next budget. The advisor admitted that food inflation should had been at 15 percent by now instead of 17 percent and he had requested the Prime Minister to take up the issue of prices during his meeting with the Chief Ministers as price control was a provincial subject.

He said that new FBR boss would take all stakeholders on board and take reforms process ahead. He cautioned that officers who want to avail leave (as protest on appointment of non-tax man as new chairman) should keep in mind that their seats could be declared vacant. About upcoming budget, he said focus would be on revenue generation for poverty reduction, promotion of agriculture, manufacturing, energy sector and infrastructure development.


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## Neo

*Afghan transit trade facility: no mention of Delhi-Kabul route in the agreement ​* 
ISLAMABAD (May 16 2009): Pakistan has reportedly refused to extend road transit facilities to India for trade with Afghanistan, which was a longstanding demand of New Delhi, having been conveyed to Islamabad through different international channels, sources told Business Recorder on Friday.

"There is no mention of India in the final draft we formulated on Thursday at a meeting with the Afghan team. All stakeholders were present in the negotiations," sources said. The final draft will be submitted to the Cabinet for approval, before signing the new Afghan-Pakistan Trade Agreement (APTA), they added.

Sources said that whatever the viewpoint of America, or Afghanistan, Pakistan has to take decisions that are in its own national interest. Commerce Ministry has, reportedly, not submitted the new draft of APTA to the Cabinet sent by the Afghan government, "being too laborious".

"A draft APTA, prepared by the Afghan government, was received by Pakistan Embassy in Kabul on November 18, 2008. The draft, including its protocols, is quite voluminous, consisting of 66 pages, and salient features have been attached with the summary," sources quoted Commerce Ministry as justification for not submitting the entire draft.

A para of the proposed draft states: "A new transit agreement is required not only to continue to provide Afghanistan with access to the sea through Pakistan but also to provide Afghanistan with new land routes towards China and India through Pakistan as well as Pakistan with direct routes to the Central Asian States (CAR) through Afghanistan" from the top decision making body.

Suleman Ghani, Secretary, Commerce, in a detailed talk with this correspondent clarified that Pakistan is re-negotiating transit trade agreement with Afghanistan, and not with India. "We are re-negotiating transit trade agreement with Afghanistan because the current agreement is outdated and unfavourable to Pakistan," he said.

He said that the current Afghan Transit Trade Agreement (ATTA), which was signed in 1965, does not contain provision for transit trade to Central Asian Republics (CARs) through Afghanistan, "which is an impediment to Pakistan's aspirations to become a gateway for transit trade" to Central Asia.

"At the time the agreement was signed there was no prospect of trade with CARs. There was a little smuggling of goods at the time of signing the ATTA so much so that the government at that time had encouraged establishment of Bara market in Landi Kotal" he added.

Regarding recent controversy over APTA with special reference to providing transit facilities to India for trade with Afghanistan, he said that Pakistan's existing arrangement with Afghanistan allows any country to trade with Kabul through sea ports.

"As far as land route is concerned, Afghanistan can export its goods to India through Wagha border, but this facility is not available to India," Ghani said. "Trade agreement in place between the two neighbouring countries grants and guarantees freedom of transit of goods without reservation. Because of this, the Afghan government objects to the negative list imposed by Pakistan," said other sources.

Another flaw in the ATTA is that it restricts transportation of Afghan cargo through Pakistan Railways only, while much of the cargo is now being transported by National Logistics Cell (NLC), sources added. A third flaw in the agreement is that it provides for movement of Afghan cargo through one sea port ie Karachi, whereas Pakistan now has three operational sea ports--Karachi, Port Qasim and Gwadar.

According to sources, customs and other procedures, stipulated in the ATTA 1965 are outdated and provide opportunity for pilferage and smuggling. "Now we are re-negotiating the agreement with only Afghanistan in the light of our best national interests ie transit facilities for CARs and improvement in system to eliminate smuggling or at least reducing it," Ghani said.

According to the draft, the main purpose of the proposed agreement is to (i) ensure efficient and effective administration of transit transport, avoiding unnecessary delays in the movement of goods and commercial vehicles in transit through their territories; (ii) to bring about simplification, transparency and harmonisation of documentation and procedures relevant to cross border traffic and traffic in transit; (iii) to promote the use of containers in accordance with the general trend of development of containerisation, (iv) to minimise the incidence of customs fraud and avoidance; and (v) to monitor the trade of controlled chemical substances with the aim of preventing their diversion to illicit purposes (manufacture of narcotic drugs). "In all this there is no India as we have separate bilateral arrangements with New Delhi for trade," Ghani added.

MAIN PROVISIONS: The most convenient routes used for international traffic in transit, including going to third countries, through Pakistan and Afghanistan include:

1) Road and rail links between Pakistan's ports and Afghanistan; and (2) transit corridors connecting land border stations between Pakistan and Afghanistan and their respective neighbouring countries, India and China for Pakistan, Tajikistan, Uzbekistan, Turkmenistan and Iran for Afghanistan.

"As Afghanistan is already exporting its goods to India through Pakistan and demands identical facilities for India, we will examine the proposal in accordance with our bilateral arrangement and composite dialogues," Ghani said. He said that this demand could not be seen outside the bilateral arrangements, explaining "there is no danger of any slippage in that manner, we are very clear".

With reference to the impression in India that Pakistan is being compelled by the US to provide transit facility to New Delhi for trade with Kabul, he categorically stated that irrespective of what India may want, Pakistan would negotiate to ensure that its national interests are served.

"In the first meeting on APTA held on Thursday, neither the USA nor India was present because these were just bilateral deliberations," Ghani said. Commenting on the 'hidden' American pressure on Pakistan for provision of land route to India for Afghanistan, he said: "You are seeing American pressure; but I as negotiator and Secretary, Commerce, do not see such a thing". He said that nobody was pushing him as he was running the office of Secretary Commerce and not anybody else.

This reporter cited a passage from the MoU signed in Washington between the foreign ministers of Pakistan and Afghanistan under the auspices of Hillary Clinton that led many an analyst to argue that India was exerting considerable pressure to compel Pakistan to open its land for transit trade with Afghanistan: "the Government of Islamic Republic of Afghanistan and the Government of the Islamic Republic of Pakistan commit to realise the advantages of greater regional and global trade linkages and export-oriented business development." Asked if the use of the word 'regional' in the MoU may open the door for India, Ghani said: "This is ridiculous. I am tired of it. There is no confusion, except in your mind."


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## Neo

*July-April foreign investment down 43 percent ​* 
KARACHI (May 16 2009): Domestic shocks such as worst law and order situation, negative economic indicators, power shortage and future uncertainty have largely hurt foreign investment, which has posted a sharp decline of over 43 percent during the first 10 months of current fiscal year.

"During the last five years, Pakistan was the most favourite country for foreign investors in the wake of high profit margins, however at present foreign investors are reluctant to invest in Pakistan due to the discouraging economic indicators and domestic shocks," economists said.

They pointed out that reduction in private sector credit clearly reflects that local investors have also stopped new investment due to power shortage and worst law and order situation. Economists said that operation against militants and rising tension in the northern areas have also played an important role in the depleting net foreign investment.

"If the operation against miscreants in Swat and other northern areas would not end in next few weeks, it would put negative impact on the country's economy in long term," they added. They said that the country's overall net foreign investment, which was in positive zone in the initial months of current fiscal year, has been constantly on decline for last few months due to domestic shocks.

"Only portfolio investment was on decline during the first half of current fiscal year due to high outflows from the equity market, however at present both Foreign Direct Investment (FDI) and portfolio investment are presenting negative growth," they added.

They said that major dip has been witnessed in the portfolio inflows, as foreign investors are reluctant to invest in the equity market due to uncertainty on the political and law and order side. "Foreign investors have adopted wait and see policy and stopped new investment in the country until the situation in the northern areas is cleared," they added.

The State Bank of Pakistan on Friday said that net foreign investment comprising foreign direct investment (FDI) and portfolio investment has registered a decline of some 1.6496 billion dollars during the first 10 months (July-April) of current fiscal year-2009. After current decline, overall net foreign investment stood at 2.2129 billion dollars during the first 10 months of FY09 as compared to 3.8625 billion dollars in the same period last fiscal year.

Statistics show that both Foreign Direct Investment (FDI) and portfolio investment have presented a negative trend during the period. FDI has shown a decline of 13.8 percent, while the massive outflow from the country's equity market has posted a significant decline of 792 percent in portfolio investment.

FDI stood at 3.2054 billion dollars during July-April as compared to 3.7191 billion dollars in the corresponding period of FY08, depicting a decrease of 513.7 million dollars.

Portfolio investment stood in the negative at 992.5 million dollars during the first 10 months of current fiscal year over the investment of 143.4 million dollars in the same period of last fiscal year. Total private investment including privatisation proceeds shows a decline of 27.9 percent to 2.7539 billion dollars during July-April as previously it stood at 3.818 billion dollars.


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## Neo

*Smeda tasked to prepare economic revival plan for Malakand​* 
PESHAWAR (May 16 2009): The Ministry of Industries has tasked Small & Medium Enterprise Development Authority (Smeda) for preparing Economic Revival Development Plan for the Malakand region. The purpose of the plan would be rehabilitation of the business activities in the Malakand Division where security forces are battling militants, who had challenged the writ of the government through running parallel administration.

The plan would cover strategy for both the skill development of the IDPs residing in different camps as well as rehabilitation plan after the completion of the military operation.

The military operation in Swat, Buner and Dir Lower had caused massive migration of the residents to safe areas of the province. The government has established 14 camps in districts, Dir Lower, Malakand, Mardan, Swabi, Nowshera, Charsadda and Peshawar. The two years long insurgency and launching of the military operation to clear the area of the militants has brought business activities in the tourists attractive summer resort to standstill.


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## sohailbutt

*GDP growth well below target​*ISLAMABAD: Pakistan failed to achieve even the revised GDP growth rate target, with GDP growth for the current fiscal year a paltry 2.37 per cent, the National Accounts Committee was informed here on Saturday. 

The decline comes despite the government&#8217;s usage of what sources in the finance ministry have deemed &#8216;improper methods of calculation.&#8217; Despite the availability of nine month figures for large scale manufacturing (LSM) from the federal bureau of statistics, the group opted to use eight month numbers.

Chaired by the secretary statistics division, the 88th NAC meeting approved the statistics during the nine months of current fiscal year. These figures will be utilised for preparations of economic survey 2008-09 and eventually the budget for the next fiscal year.

The meeting observed that the country would be falling short of meeting the GDP growth target of 2.5 per cent which had already been revised downwards from 5.8 per cent after Pakistan entered the IMF program.

The NAC also approved the revised GDP growth of the previous fiscal year, which has been reduced from 5.8 per cent to 4.1 per cent. However sources in the finance ministry said that the reduction served only elevate the economic standing of the country during the current fiscal year.

Experts suggest that not revising last year&#8217;s GDP growth rate and using 9 month LSM data have shown negative growth rates for GDP and income per capita this year.

However, using the new definitions, the NAC approved income per capita growth rates of around one per cent in the fiscal 2008-09 against the previous fiscal period.

The committee approved the negative growth of Large Scale Manufacturing at 5.73 per cent from July 08 to February 09, while over nine months the LSM growth rate was more than negative seven per cent. 

Official sources told Dawn that the three main component of the GDP are agriculture, manufacturing and the services sector, and that the NAC was informed that only the agriculture sector registered positive growth in the nine months of the current fiscal year.

The NAC also approved the industrial sector&#8217;s negative growth of 2.57 per cent against previous fiscal sources said, adding that the manufacturing sector registered a decline of two per cent. 

The data approved by NAC showed the construction sector declining a massive 10.8 per cent against the previous period, while the electricity and gas sector registered a negative growth of 3.7 per cent. 

With the industry and manufacturing sector moving into negative territory, the services sector also witnessed a negative growth of 3.8 per cent in the nine months of current fiscal year.

Sources informed Dawn that the national accounts committee approved the agriculture sector growth of 4.7 per cent, while the manufacturing sector registered a decline of two per cent, the industrial sector declined by 2.6 per cent and the services sector dropped 3.8 per cent. 

The NAC approved the cotton production figures in the country at 11.81 million 

bales against the target of 14.11 million bales, sugar cane production at 50.04 million tonnes showing a drop of almost ten per cent against its target.

The NAC acknowledged that the wholesale and retail trade witnessed a rise of 3.8 per cent . 

During the current fiscal year private sector investments registered a growth of 11.6 per cent and the public sector investment growth was 8.4 per cent. 

The meeting was attended by financial experts and economists from the planning commission, finance ministry, state bank, federal bureau of revenue and other departments. 

The committee will review the economic performance of current fiscal year and that of previous fiscal year for 2009- 2010 budgetary preparations and the final figures are the basis for the economic survey. 

DAWN.COM | Business | GDP growth well below target


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## sohailbutt

*$14.5bn investment needed in energy sector​*ISLAMABAD: Speakers at a consultative group meeting on energy efficiency and conservation here on Thursday highlighted that Pakistan needs $14.5 billion investment in the energy sector in 10 years. 

Sponsored by the Asian Development Bank (ADB), the conference was informed that Pakistan offers huge potential for investment in fuel and electricity sector. 

The experts also said that the regulator has to improve fuel efficiency in both the public and private sectors. 

Bayanjargal Byambasaikhan, ADB energy expert, highlighted the concept of energy efficiency investment programme (EEIP) of $1.20 billion for Pakistan for 8-10 years. 

The programme is being financed by the ADB, French official aid and the government of Pakistan. 

Energy efficiency is the quickest and cheapest way for Pakistan to reduce the electricity demandsupply, he said and added that conservation of electricity and gas through energy efficiency saves equivalent to the total generation capacity of 6,770 MW. 

ADBs country director Rone Strom pointed out that subsidies were causing financial burden to the sector and the government. 

The conference was informed that in the first phase of $1.2 billion programme, around 30 million energy savers would be introduced in the country. 

The cost of this project is estimated at $60 million. This programme after implementation would help reduce the peak load by 1,131 MW. 

This was a low cost solution compared to $2.02 billion needed to establish a 1,751 MW generation plant, Mr Byambasaikhan informed the seminar. 

The other projects in EEIP includes efficiency improvement of oil and gas sector, including the energy utilised by both the Sui gas companies to compress and push gas forward in their pipelines. 

Similarly, thermal power plants of the country in the public sector were also high energy users. The programme has offered $675 million for the efficiency improvement of generation companies (GENCOS) and Sui gas companies. 

The programme would also offer technical support to manufacturers of gas heaters and geysers and other electrical appliances to improve their efficiency as per international standards. 

Pakistan has to improve its industrial base which was a heavy energy users segment and educate its domestic consumers to conserve electricity and fuel, Byambasaikhan said, adding that would eventually benefit the end-user. 

Experts said that Pakistans energy demand will continue to increase in the next 20 years, while the overall cost to the economy, businesses and consumers would be huge unless there is a concerted shift in policy and consumption. 

Donors highlighted the projects and proposals for strengthening the energy sector in Pakistan and in the region, including development of regional energy hub where electricity and gas would be imported from central Asia for consumption in South Asia.The consultative group decided that the energy section of planning commission, headed by Dr Pervaiz Butt, member energy, would be responsible for ensuring proper implementation of the projects finalized in meetings with donor agencies and the government of Pakistan.

DAWN.COM | Business | $14.5bn investment needed in energy sector


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## Neo

*Afghanistan offered use of Gwadar, Port Qasim ​* 
*In return Pakistan seeks access to CARs under new transit trade accord​*
Sunday, May 17, 2009

ISLAMABAD: Pakistan has offered Afghanistan to use Gwadar and Bin Qasim ports for trading activities under the Afghan Transit Trade Agreement (ATTA) while in return it wants access to Central Asian Republics (CARs), official sources confided to The News on Saturday.

The current Afghan Transit Trade Agreement (ATTA) signed in 1965 allows Afghan cargo movement only through Karachi Port. After that, the cargo is transported to the landlocked country either through Landi Kotal in NWFP or Chaman, Balochistan.

The current ATTA does not contain any provision for transit trade to Central Asian Republics (CARs) through Afghanistan, which is an impediment to Pakistans efforts to become a gateway to Central Asia.

Pakistan and Afghanistan signed a memorandum of understanding (MoU) in the US during the recent visit of President Asif Ali Zardari for improving trade and accession facilities between the two sides.

Under the MoU, both sides agreed to conclude and sign a complete Afghanistan Pakistan Transit Trade Agreement (APTTA) as early as possible and no later than December 31, 2009. Afghanistan has submitted a draft of the new agreement with the government of Pakistan.

In view of the MoU, a joint working group met in Islamabad the other day to discuss the advantages of greater regional and global trade linkages and export-oriented business development, an official who attended the meeting told this scribe.

They also discussed trade liberation and facilitation and public outreach on trade-related issues with a goal to improve processes and reduce impediments affecting the trade and investment environment in Afghanistan and Pakistan, the same official said. 

The meeting also agreed that the next meeting of the group will be held in Afghanistan in June and date will be communicated with understanding. 

They also agreed to coordinate and resolve all the issues relating to cross-border commerce and inland freight transit trade.

Under the expired Afghanistan Pakistan Transit Trade Agreement (APTTA), Islamabad has kept six items in the negative list that include i) cigarettes, and cigarettes of tobacco or of tobacco substitute, ii) cooking oil, iii) automobile parts, iv) television, v) telephone and vi) and tyres and tubes.


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## Neo

*Pakistan just misses IMFs GDP growth target ​* 
Sunday, May 17, 2009

ISLAMABAD: Pakistan has missed its revised GDP growth target by a slight margin as the economy grew 2.37 per cent in the current fiscal year 2008-09 against the target of 2.5 per cent, which had been agreed with the International Monetary Fund.

The National Accounts Committee (NAC) met here at P Block auditorium on Saturday to approve provisional economic figures, during which gross domestic product (GDP) growth for the last financial year 2007-08 was sharply revised downward by 1.7 per cent, for the first time in the last few decades. As a result, GDP went down to 4.1 per cent in accordance with final figures from earlier projection of 5.78 per cent in 2007-08.

By lowering the baseline, the government reached close to the growth target of 2.5 per cent agreed with the IMF under $7.6 billion Standby Arrangement (SBA) programme.

According to a working paper approved by the NAC, a copy of which is available with The News, provisional GDP estimates for 2008-09 stand at Rs5532.4 billion compared to the previous fiscal years Rs5404.5 billion, showing an increase of 2.37 per cent.

The contribution of industrial sector showed a negative growth of 2.6 per cent, while agriculture and services sector grew 4.7pc and 3.8pc respectively in the current fiscal year.

Per capita income achieved a slight growth of 0.97 per cent at constant factor in rupee terms, but its current level had not been calculated by the authorities concerned. Growth in electricity, gas and water supply was negative at 3.68 per cent in 2008-09. The countrys overall GDP grew by 6.81pc, 4.1pc and 2.37pc in 2006-07, 2007-08 and 2008-09 respectively.

Although, the agriculture sector rescued the country by achieving a growth of 4.7 per cent in the current fiscal year against revised final estimates of 1.08 per cent growth in last financial year, the government failed to achieve its wheat production target in 2008-09 which stood at 23.4 million tons against the target of 25 million tons.

The major crops in agriculture sector achieved a growth of 7.67 per cent in 2008-09 compared to negative growth of 6.4 per cent in 2007-08. Despite this, all major crops except rice missed their envisaged targets. Minor crops production declined to achieve a growth of 3.62 per cent in 2008-09 against 10.9 per cent in the previous fiscal.

The livestock and fishery sectors grew by 3.70pc and 2.33pc respectively in 2008-09, while forestrys growth registered a negative growth of 15.67 per cent.

Industrial sector demonstrated negative growth of 2.57 per cent in ongoing fiscal year against a positive growth of 1.70 per cent in the last financial year. The mining and quarrying sector grew by 1.31pc, large scale manufacturing by negative 5.73pc, small scaling manufacturing by 7.51pc and slaughtering by 4.22pc in fiscal year 2008-09.

The construction industry witnessed a major decline registering a negative growth of 10.79 per cent in the outgoing fiscal year. The commodity producing sectors growth was standing at 0.72 per cent in fiscal 2008-09.

The services sectors growth stands at 3.82 per cent in FY2008-09. In services sector, transport, storage and communication sector grew by 2.88pc, wholesale and retail trade by 3.75pc, finance and insurance registered negative growth of 1.19pc, ownership and dwellings grew by 3.51pc, public administration & defense by 4.99pc and social, community and public services by 7.30pc in 2008-09.

In transport, storage and communication sector, Pakistan Railways witnessed negative growth of 6.41pc, water transport saw positive growth of 6.40pc, air transport negative growth of 2.08pc, pipeline transport negative growth of 8.02pc, communication positive growth of 3.65pc, road transport positive growth of 2.91pc and storage positive growth of 2.65pc in 2008-09.

In the shape of net factor income from abroad, total receipts are projected at Rs845.880 billion in 2008-09, compared to Rs564.010 billion in last fiscal year, showing a growth of 49.98 per cent.

Investment income from abroad declined to Rs65.586 billion in the ongoing fiscal compared to Rs100.047 billion, witnessing negative growth of 34.44 per cent.


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## Neo

*GDP growth estimates of 2.37pc fudged: official ​* 
Sunday, May 17, 2009

ISLAMABAD: The government has fudged the figures in an attempt to bring the reasonable GDP growth estimates of 2.37 per cent of ongoing fiscal close to the target of 2.5 per cent as agreed with International Monetary Fund.

If the government did not manoeuvre the figures, the GDP growth for current fiscal would be 0.5 per cent even if the cut in the size of GDP of fiscal 2007-08 by 1.7 per cent from 5.78 per cent to 4.1 per cent was acknowledged. And if the last years GDP of 5.78 per cent is kept as base, the GDP growth of the current fiscal must stand at -1 per cent, reveals the detailed investigation conducted by the News.

The National Account Committee that met here on Saturday put its credibility on stake as it approved without any objection the working paper on GDP prepared by Federal Bureau of Statistics, a senior official told The News.

For instance, the Federal Bureau of Statistics (FBS) did not include in the national accounts the growth in Large Scale Manufacturing of -7.7 per cent registered during July-March period, instead it included the growth of LSM registered during July-February period that stands at -5.7 per cent, the official said. 

Moreover FBS included dubious figures of growth of major crops in GDP growth estimates for 2008-09. According to Planning Commissions Annual Development Plan (ADP) for 2007-08, the major crops growth target was 4.5 per cent. Under the ADP, the target of wheat was earmarked at 24 million tonnes, rice 5.7 million tonnes, sugarcane 56.5 million tonnes and cotton 14.1 million bales.

But in the working paper prepared by FBS which NAC approved, it has been shown that rice produce in the ongoing fiscal has been estimated at 6.96 million tonnes as against target of 5.7 million tonnes; but wheat produce estimates have reduced to 23.4 million tonnes against target 24 million tonnes, cotton 11.8 against 14.1 million bales and sugarcane 50 million tonnes against 56.5 million tonnes. 

However, the working paper of FBS shows that major crops growth has increased to 7.7 percent despite the decline in growth of three major crops as against the target of 4.5 percent.

If the real picture of the major crops is accounted for, the agriculture growth stands at 2.7 per cent and if the LSM growth of -7.7 per cent in July-March period and agriculture growth of 2.7 per cent is included in the national accounts the GDP growth of country for the ongoing fiscal stands at 0.5 per cent.

Advisor to Prime Minister on Finance Shaukat Tarin when contacted for comments over the massive reduction in last years GDP growth from 5.78 per cent to 4.1 per cent by FBS and NAC and not including the LSM growth in July-March period in national accounts and inclusion of faulty major crops figures in national accounts, he said: Let me find out as to what has been approved by National Accounts Committee and then I will come to you for comments for response.

When he was informed that the NAC approved the working paper of FBS as it is, of which the copy is available with The News, he said it is quite alarming if it happened so.

However, latter The News tried again and again for comments but his cell phone was found powered off.

The official who attended the NAC meeting said that the FBS has also took a dubious decision to drastically reduce the last year GDP growth by 1.7 percent from 5.78 percent to 4.1 percent.

The official said for last 10 years it never happened that growth of last year has drastically been adjusted downward. The said decision has been apparently taken to reduce the base so that the GDP for current fiscal could be shown at reasonable level closed to 2.5 percent GDP target.

In 2006-07, the provisional growth was at 7 percent, which got later revised at 6.8 per cent and finalized also at 6.8 per cent. However, the provisional GDP growth for 2007-08 was calculated at 5.78 per cent, which has been finalized by National Accounts Committee at 4.1 percent.

The official also disclosed that one of the participants objected on non-inclusion of LSM growth till March which is of -7.7 per cent, but the FBS official said that the month of March was abnormal because of the Long March activities so the growth in March was not included knowing the fact that whole current fiscal remained the abnormal year but it did not mean the abnormal months and year should not be includes in national accounts.

Head of the National Accounts Wing in FBS could not be contacted for comments despite many attempts.


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## Neo

*Experts suggest steps for improving economy ​* 
Sunday, May 17, 2009

LAHORE: Trade, industry and economists are hoping that the government would determine the economic direction of the country as its failure to chalk out a recovery plan has increased unemployment and poverty.

Economists point out that the inaction of economic managers during the past 14 months has increased poverty to an unprecedented level. They said the government has in fact taken the approval of IMF to increase targeted subsidies for poor families as the number of poor is on the rise.

Increase in poverty could have been arrested, had the government taken timely decisions to facilitate the manufacturing sector, particularly small and medium enterprises that generate huge employment opportunities.

Senior economist Naveed Anwar Khan, an FCA, said that the negative growth of large-scale manufacturing sector by 8 per cent has been accompanied with an even higher decline in SME productivity during the first nine months (July to March 2008-09) of the current fiscal year. He said this year there have been more retrenchments than the jobs created in the industry, adding high inflation had already eroded the purchasing power of poor families.

He said low-paid workers from poor families lost more jobs than the high-paid white collar workers. Increase in productivity is the only answer to resolve the current crisis. 

This needs a paradigm shift in economic policies that should be forthcoming in next budget.

Leading engineering entrepreneur Almas Hyder said that the planners would have to decide whether they want Pakistan to be a trading, manufacturing or an agriculture nation. He said current policies do not support any of these concepts. Trading nations like Singapore, Hong Kong and Dubai allow imports at a fixed low duty and allow export of all imported items to any destination in the world.

He said with a small population, these countries are able to ensure full employment to their people through services. Pakistan, he added, cannot afford this because it needs to create four million jobs a year just to absorb the four million persons that join the workforce every year which a service-oriented economy cannot absorb.

He said another option for supporting the manufacturing sector required a different approach altogether. He said the government would have to improve transparency, governance and infrastructure. At the same time, the high cost of doing business would have to be tackled by bringing the mark-up to a single digit and arresting the high inflation in the country.

Almas said agriculture can not be promoted in the country if the government continues to encourage the import of agricultural commodities as it discourages farmers to increase productivity. He said farmers would increase productivity if they are assured that their efforts would not be compromised by importing the agricultural produce.

A Canada based Certified Public Accountant said that the best way to reduce poverty is to increase the expenses of the poor so that they are motivated to work hard. He said in Pakistans case that condition has been fulfilled but the government is depressing the incentive of the poor to work by disbursing monthly cash subsidies to the heads of poor families. He said that the industry has been left alone to struggle for survival and even the infrastructure has been allowed to deteriorate because of lack of funds.

He said the global recession demands a prudent pro industry approach by the government that has not come as yet. He hoped that some of the major issues faced by the manufacturing sector would be addressed in the next budget.


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## Neo

*GDP growth rate further revised to 2.37% during FY09​*
ISLAMABAD: The real Gross Domestic Product (GDP) growth has been further revised downward from 2.5 percent to 2.37 percent, official sources told Daily Times.

These estimates were reviewed at National Accounts Committee (NAC) meeting held here under the chairmanship of the Tariq Shafiq Khan, Federal Secretary Statistics Division. Officials from federal economic ministries and officials from provinces participated. 

Federal government targeted GDP growth at 5.5 percent in the budget 2008-09; however, with the finalisation of $7.6 billion Stand By Arrangement (SBA) with International Monetary Fund it was decided to slowdown the economy to curtail demand. 

Keeping in view the IMF programme conditionalities and the aim of lowering inflation along with impact of world financial crises, the government had agreed to revise its GDP growth target from 5.5 percent to 2.5 percent for the ongoing fiscal year 2008-09. 

NAC Estimates: According to the NAC meeting estimates, less than expected growth in services sector of 3.8 percent against the target of 4.1 percent resulted in missing the downward revised growth target of 2.5 percent, official sources informed. Agriculture sector has emerged the only better performing sector in the economy during current fiscal year as it recorded a growth of 4.7 percent as against the target of 3.3 percent. 

Major crops have recorded a growth of 7.7 percent against the target of 4.5 percent which has surprised the economic experts as they strongly feel the three major crops have missed their production targets. 

Explaining the situation the sources said that that wheat production has been estimated at 23.4 million tonnes against the target of 24 million tones. Cotton production also fell short of the target as its production has been estimated at 11.8 million bales against the target of 14.1 million bales. Similarly, sugar cane production was estimated at 50 million tonnes against the target of 56 million tonnes. 

Growth in livestock sector helped the agriculture to post healthy growth of 4.7 percent against the revised target of 3.3 percent. 

Industrial sector posted negative growth at 2.67 percent as against the projected negative growth of 2.9 percent for the ongoing fiscal year 2008-09. Small-scale manufacturing witnessed a growth of 7.51 percent as compared to Large Scale Manufacturing (LSM), which nose-dived to negative 5.73 percent due a host of reasons. 

Load shedding, gas shortages, depreciation of Pak-Rupee along with other difficulties led to negative growth in industrial sector, which are the largest employers of the country and major contributor in federal and provincial taxes. 

According to the official sources the NAC has also revised downward GDP growth estimates for the last fiscal year 2007-08 from 5.8 percent to 4.1 percent. Revision up to 1.7 percent in GDP has been done for the first time in the history of the country. Sources said that was done to project higher GDP growth in ongoing fiscal year from a low base. Otherwise, the sources said the GDP growth estimates should have been less than 2.37 percent. 

According to the sources, Large Scale Manufacturing latest figure for the month of March was available, however, to keep GDP growth estimates higher, the NAC used the LSM figure of July-February instead of Jul-March. 

According to the other estimates, Construction sector posted negative growth of 10.79 percent, Electricity and gas production negative 3.68 percent and per capita income recorded 1 percent growth in the ongoing fiscal year.


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## white_pawn

*FDI plunges 13 per cent in 10 months ​*
By Shahid Iqbal 
Sunday, 17 May, 2009 | 04:49 AM PST | 

KARACHI: Foreign direct investment declined by 13 per cent during the first 10 months of the current fiscal year as compared to the corresponding period of last year, but the fall is mainly because of sharp reduction of inflows from the US.

Situation in Northern parts of the country has shattered confidence of foreign investors and impact is gradually appearing during the last couple of months.

The State Bank reported on Saturday that FDI from the US sharply declined to just $745 million while the inflow during the same period last year was $1.161 billion.

The overall FDI declined by 13.8 per cent during July-April, 09 while the FDI from US fell by 36 per cent or a decline of $415 million.

Experts and economists feel that the situation is still not hopeless as FDI has globally fallen due to changing financial health of the developed and developing economies. 

During the 10 months of the current fiscal year, Pakistan received $3.205 billion against $3.719 billion in the same period of last year. It shows a shortfall of about $514 million which is close to the decline in FDI from the US which is $415 million. FDI inflows from developed economies fell from $2.108 billion to $1.661 billion, a fall of 21 per cent. 

The developed economies are under serious recession prevailing in the US, the biggest stakeholder of the global economy. The European economies are also following the same path which collectively hampered flow of dollars from developed to developing countries.

However, China remains attractive for FDI despite a consecutive seven months fall in FDI. 

China attracted a record $92.4 billion in non-financial FDI in 2008, an increase of 23.6 per cent from 2007.

Foreign Direct Investment in China has dropped 22.5 per cent year-on-year in April for the seventh straight monthly fall. 

Pakistan has a relatively better record despite massive difference in the volume of FDI of the two countries. 

Experts view the situation becoming more negative for FID since both the political and economic growth are not in the direction of improvement. 

However, they said inflow of dollars would rise despite fall of FDI as the US has recently approved $1.9 billion to help the country deal with terrorism in north of Pakistan and the internally displaced people.

The country still has great attraction for investment in the energy sector, especially power generation and distribution, said Mohammad Imran, an analyst. 

The country is facing a serious shortage of power which has crippled its manufacturing sector while the government is facing growing criticism over its failure to resolve the problem.

Analysts internationally believe that the FDI could improve with recovery of global economy and 2010 is the year of recovery.


DAWN.COM | Business | FDI plunges 13 per cent in 10 months


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## white_pawn

*CFS rates soar to record 40 per cent By Dawn Staff Reporter ​*
Sunday, 17 May, 2009 | 04:39 AM PST | 

KARACHI: The CFS rates on the Karachi Stock Exchange last week soared to a record high of 40 per cent after early having shown divergent movements, reflecting an erratic demand for fresh credit lines, analyst Muniba Saeed said.

The market talk followed by KSE delegations meeting with the SECP high-ups that the ban on the in-house badla may be lifted to easy pressure on money supply was the chief factor behind the two-way movement, she said, adding the net increase was 14 basis points.

But on the other hand CFS investment maintained their downward drift for the fourth week in a row and posted a sharp fall of 17 per cent at Rs214 million, she added. 

The top five companies, which accounted for 86 per cent of the total amount were led by ICI Pakistan followed by Engro Chemical, United Bank, MCB Bank and Lucky Cement. 


DAWN.COM | Business | CFS rates soar to record 40pc


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## white_pawn

*Rs2740 billion next fiscal year budget expected​*
ISLAMABAD: The national budget for the fiscal year 2009-10 is expected to amount to Rs2740 billion, higher by Rs211 billion as compared to the current fiscal year.

Finance ministry sources told that following February 2009 talks held with the IMF, it was being expected that the amount of Budget- 2009-10 expected to be higher by Rs211 billion as compared to the sum for current fiscal year.

Sources said that the total expenditures for 2009-10 have been estimated at Rs2170 billion as against Rs2120 billion for the current fiscal year. Similarly, Rs690 billion would be paid on debt financing, which works out to Rs72 billion higher as compared current fiscal year.

The government has estimated an income of Rs2270 billion for 2009-10, constituting of Rs1710 billion from taxes and Rs560 billion from non-tax sources, while the total income for current fiscal year was kept at Rs1970 billion.

Sources said that the budget deficit for the fiscal year 2009-10 was estimated at Rs475 billion as against expected Rs562 billion during the current fiscal year.


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## white_pawn

*Current account deficit shrinks in July-April *
Tuesday, 19 May, 2009 | 03:22 AM PST | 

KARACHI: Pakistans current account deficit narrowed to $8.547 billion during the 10 months to April compared with $11.173 billion in the same period a year earlier, the State Bank of Pakistan said on Monday.

Analysts said the main reason for the narrowing in the shortfall was lower global commodity prices. 

For the month of April, the current account recorded a deficit of $457 million compared with a revised deficit of $243 million in March.

The reason for a higher deficit in April as compared to March is due to slowdown in current transfers and also because of monthly fluctuations in imports, said Asif Qureshi, head of research at Invisor Securities Ltd.

Pakistans trade deficit narrowed to $1.43 billion in April, compared with $2.30 billion in April last year, data showed last week. 

Pakistan entered an emergency International Monetary Fund programme for a 23-month emergency loan of $7.6 billion in November to avert a balance of payment crisis.

DAWN.COM | Business | Current account deficit shrinks in July-April


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## white_pawn

*Ship-breaking picks up pace at Gadani By Parvaiz Ishfaq Rana ​*Tuesday, 19 May, 2009 | 04:55 AM PST 

KARACHI: The ship-breaking activity has further intensified at Gadani where presently around 70 ships are beached for dismantling and another seven to eight ships are waiting at the outer anchorage. 

Fearing re-imposition of customs duty and sales tax in the new budget importers are trying hard to bring in as many vessels as they can before the end of current fiscal year on June 30.

Ali Sher Behan, Additional Collector Customs at Gadani, talking to Dawn in his office said that the number of vessels at the ship-breaking yard is expected to cross 100 before the end of current fiscal.

He said that removal of customs duty and sales tax had helped revive the ship-breaking industry after a lull of over eight to 10 years.

Giving details of revenue collection Behan said that as there was no customs duty, which generally ranged between 1 to 25 per cent and sales tax at 16 per cent, the national exchequer has collected Rs129.055 million only on 70 ships which have already beached the yard. He said this collection is on account of 1 per cent income tax (withholding tax) at import stage.

However, he said, there is nominal collection of customs duty, sales tax and federal excise duty on those items, which are not part of the vessel but are loaded as leftovers.

Full activity at Gadani generates economic activity in a big way and creates employment opportunities from seashores of Balochistan to up North where most of the foundries and re-rolling mills are located, the collector observed.

He further said that 80 per cent of ship scrap and plates found their way to the Punjab where most of engineering industry is located and there is huge demand for quality steel.

Due to brisk ship dismantling activity presently around 10,000 to 12,000 workers, mostly from NWFP, are working in the scorching heat and under highly hostile environment where no worth mentioning basic facilities are available.

Chaudhry Abdul Majeed is one of the pioneers of ship breaking industry and entered this business about 35 years back. Talking to Dawn at his plots No111 to 114 said that initially small vessels of 3,500 LDT (long displacement tonnage) were imported for scrapping.

There was a time when there were few ship breaking plots but today these have increased to 127, which are fully operating and another five plots are under development, he added.

Chaudhry said 35 years ago the ship-breaking was done manually starting from cutting, moving ship plates up for loading on trucks. For moving down heavy equipments from a ship with an average height of 60 feet a trolley fixed on wire rope was used. On an average it used to take three years for dismantling one ship but today with all sorts of equipments like cranes, cutters, lifters etc one ship is dismantled within two to three months, he maintained.

He said the present boom at the Gadani ship-breaking yard began early this year after customs duty and sales was waived in the last budget. Presently, ships being dismantled are bulk carriers as they are cheaper than oil tankers in the world market.

However, he looked a bit wary about the future of the ship-breaking industry in view of falling rates of ship plates and scrap. Chaudhry Majeed said the situation prevailing in the country was causing damage to trade and industry as there was a lesser off-take of steel from re-rolling mills. 

He further said there were strong rumours that the federal government in forthcoming budget may impose customs duty and sales tax under strong pressure from importers of shredded scrap from Dubai and Singapore. 

It would be unfortunate, he said, if the government falls under their trap because their activity does not create jobs nor it gives any benefit to the people of far-flung areas such as Gadani.

DAWN.COM | Business | Ship-breaking picks up pace at Gadani


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## Neo

*Pakistan opens more farmland to foreigners​*
DUBAI (May 18 2009): Pakistan dramatically increased the amount of farmland open to foreign investors to 6 million acres, but will require outsiders to share half of their crop with local growers, investment minister told Reuters.

Crop sharing will defuse tensions with local farmers fearful of being crowded out by wealthy foreigners as Pakistan opens existing farmland to outsiders for sale or long-term lease, said Minister of Investment Waqar Ahmed Khan.

Gulf Arab countries reliant on food imports have ramped up efforts over the last year to buy land in developing nations ranging from Pakistan to the Philippines and Ethiopia. "We expect the investors in farmland to give the local farmers 50 percent of the land's yield, in addition transferring the technology which will help increase the output of the land by three times," Khan said during a trip to the United Arab Emirates to rally investor support.

"We have to apply these regulations to support the interests of the local farmers, otherwise we will be facing objections from the farmers, and we need to keep them happy," he added.

Farmers' concerns have led the Balochistan province to block direct deals between private investors based in the United Arab Emirates, Nasir Khosa, general chief-secretary of Balochistan's provincial government, said last month.

The United Nation's Human Right Council has expressed concern over the sale of farmland and called for a code of conduct.

"We will do everything to protect farmers' interests," said Khan. Last month, Khan said the country had a million acres of farmland to offer to investors.

"Recently, we have been able to identify around 6 million acres of farmland in various parts of the country which can be leased out on long-term basis or sold," he said. Six million acres is the equivalent of 2.43 million hectares.

During Pakistan's Gulf farmland sale road show, which started last week, a lot of interest came from UAE investors, especially in acquiring farmland to produce animal feed and rearing livestock, said Amjad Nazir, the joint secretary at Pakistan's Ministry of Food and Agriculture.

"All week we had meetings with investors from both the private and the public sector and I think very soon we will be sending delegations to study the opportunities here," said Nazir. Emirates Investment Group, a private-sector investment company based in Sharjah, the third-largest emirate of the UAE, said last month it was in the process of acquiring farmland in Pakistan to export more food to the Gulf region. Last year, private Abu Dhabi-based investment firm Al Qudra said it had plans to start agriculture projects in Pakistan.


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## Neo

*Pakistan would miss even revised growth target​* 
ISLAMABAD (May 17 2009): Pakistan would miss even the revised GDP growth target for the current fiscal year as the National Account Committee was informed that the actual growth would be 2.37 percent and not 2.5 percent. Sources said that the NAC meeting chaired by Secretary Statistics Division here on Saturday approved the nine months figures of the ongoing fiscal year as well as revised downward the growth of previous year from 5.8 percent to 4.1 percent.

The meeting noted that the growth this year would be 2.37 percent and that too because of outstanding performance by agriculture sector. The figures on the economic indicators approved by the NAC for the ongoing fiscal year would be the source of Economic Survey to be released ahead of the budget.

The growth in agriculture and services sectors would be 4.7 and 3.8 percent respectively during the current fiscal year whereas a negative growth of 5.73 percent is expected in Large Scale Manufacturing (LSM). The data approved by the NAC shows that a serious blow has been witnessed by the construction sector with its growth declining by 10.8 percent, while the electricity and gas sectors witnessed a negative growth of 3.8 percent. The industry and manufacturing sectors are also said to have witnessed 2.6 and 2.1 percent negative growth during the nine months of the current fiscal year.

The NAC also approved the cotton production figures at 11.81 million bales against the target of 14.11 million bales and sugarcane production 50.04 million tonnes. The meeting also acknowledged that the wholesale and retail trade witnessed a rise of 3.8 percent. The meeting approved an increase of 1 percent in per capita.

During the current fiscal year private sector investment registered a growth of 11.6 percent while the public sector investment growth stood at 8.4 percent. The meeting was attended by financial experts and economists from the Planning Commission, the finance ministry, the State Bank, the Federal Board of Revenue and other departments. The committee will review the economic performance of current fiscal year and the next budget preparations would be undertaken in light of these figures.


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## Neo

*Contraction in trade deficit​*
EDITORIAL (May 18 2009): According to the latest figures released by the Federal Bureau of Statistics (FBS), Pakistan's trade deficit narrowed to $14.16 billion during the first ten months of the current fiscal year as compared to $16.84 billion in the corresponding period of last year, showing a contraction of 15.9 percent. The decline in deficit was attributable to a larger fall in imports than exports.

While imports during July-April, 2009 slumped by 9.78 percent to $28.9 billion from $32.1 billion during the same period in 2007-08, exports came down by only 3.03 percent to $14.8 billion from $15.2 billion last year. The fall in trade deficit was much more pronounced on a monthly basis as the gap between imports and exports during April, 2009 fell to $1.43 billion from $2.30 billion in April, 2008, indicating a sharp decline of 37.8 percent. Imports during April this year were worth only $2.79 billion compared with $4.09 billion last year while exports declined from $1.79 billion to $1.36 billion in the same period.

A glance over the latest data would reveal that the behaviour of country's trade balance so far is at variance with the original projections for 2008-09 which targeted exports at $22.1 billion. At the present rate, exports are not likely to exceed $18.5 billion which would mean a substantial shortfall of about $3.6 billion from the target. Though imports were not targeted at a particular level, yet they were expected to amount to $36 billion, resulting in a trade deficit of about $14 billion.

With the continuation of the present trend, imports could amount to $34.5-35.0 billion, resulting in a trade deficit of about 16.0 billion or so. Whatever the deviation from the original projections, the reduction in trade deficit during 2008-09 over the previous year would appear to be a welcome development in the sense that it would exert a less negative impact on the external sector balance this year. In other words, it would be easier for the country to finance a lower trade deficit through surging home remittances and increased official and non-official assistance and loans from a variety of sources including multilateral financial institutions.

In fact, there has already been adequate increase in foreign exchange reserves of the country due to reduced trade deficit and higher inflows from other sources which has helped the country to regain the necessary confidence in its solvency and improve other macroeconomic indicators. However, it may be added that reduction in trade deficit would have been much more welcome if it had been due to expansion in exports or contraction in imports due to import substitution.

As it is, exports appear to have declined mainly because of global recession and imports dived due to sluggishness of economic activity at home. Such a situation is certain to have ugly repercussions for the growth rate, employment of labour force and poverty level in the country. In our view, at the present juncture, weaker demand for exports and uncertainty about workers' remittances, in particular, entail very high risks for the external sector.

No less important is the mood of international community which could change any time due to strategic reasons and affect the flow of resources from external sources. Therefore, there is a dire need for the government to study the emerging situation in the external sector from all angles in order to prepare the country to face any kind of eventuality. Of particular importance is the urgency to diversify external trade and find non-traditional export items to insulate the country from the impact of business cycles in the developed world.


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## Neo

*Revival of ship-breaking industry​*
EDITORIAL (May 18 2009): Ship-breaking activity at the Gadani Beach is picking up momentum after a break of nearly two decades. According to a press report, 65 merchant vessels recently arrived for scrapping. More are scheduled to come soon. These are mostly cargo ships, whose average life is between 20 and 25 years.

Global recession and an unprecedented increase in commodity prices have rendered some of them idle before time. Pakistan along with India and Bangladesh is one of the world's major ship-breaking centres, mainly because of cheap labour, proximity to the international shipping routes, and also because the occupational safety and health standards are pretty lax, which is a real cause for concern. It may be recalled that in Pakistan ship-breaking became a thriving business in the 1970s through the 90s because of low labour costs and the demand for scrap steel for reprocessing. Unfortunately, in the later period it became a casualty of the then open political confrontation between the two main parties, Pakistan People's Party and Pakistan Muslim League. The PPP government discouraged ship-breaking industry through imposition of heavy duty on the pretext of protecting the Pakistan Steel Mills whereas the general belief was that it had something to do with the PML leadership owned foundries' need for scrap. Those worried about the safety and health issues as well as environmental pollution were happy to see the activity slackening.

The news of revival can only be welcomed since we need the scrap to fulfil our growing reprocessed steel requirements. And also because it has a significant job creation potential. Already those associated with the industry are saying the new ship-breaking business is to produce around half a million tons of scrap for our steel reprocessing industry, and thousands of jobs for the people living off Gadani Beach. It also is a reminder that the government must fulfil its responsibility towards the labour force, which comprises people who are mostly uneducated and hence ignorant about the hazards the work involves.

The workers must be provided with the necessary protection equipment. Special care needs to be taken in the handling of dangerous materials, such as carcinogenic asbestos, which is retrieved and recycled for reuse. The relevant laws concerning safety and health issues must be implemented strictly through a proper system, like in the case of industrial zones. Last but not the least, the government must also ensure that the toxic substances from the vessels are not allowed to drain off into the sea, polluting its water and harming the marine life.


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## Neo

*A new engineering sector policy needed​*
EDITORIAL (May 17 2009): Although Pakistan's motorcycle industry is endowed with plenty of potential for it to be able to compete in international market in terms of quality, it has not been able to get its due share in the world market due mainly to the high cost of production in the country, a report prepared by the Engineering and Technology sub-committee of KCCI has said.

The report says that there exists an enormous scope for motorcycle industry in the South East Asian market, for instance, but Pakistan has unfortunately not succeeded in getting its rightful share because of absence of effective policy mechanisms required for supporting the engineering industry.

The KCCI report has essentially attributed this state of affairs to policy failure. Secondly, despite signing ETD way back in 1990, Pakistan has not been able to introduce any development programmes for its engineering industry, while India has since implemented provisions of the treaty and has reaped all the benefits accruing from it.

By implementing the ETD programme, India has also upgraded its technology and the SME sector. Further, absence of an effective taxation system in Pakistan too has hampered development of the country's engineering industry. According to one of the KCCI sub-committee members, as long as Pakistan does not reduce the cost of production of engineering goods, it cannot increase its exports in the engineering sector.

Incidentally, the high cost of production is directly linked to the rising input cost, which has eroded competitiveness of our exports. Pakistan's low standing in the international engineering sector can be gauged from the fact it had a share of only $270 million per annum in 2005 in the $6 trillion world engineering trade.

Obviously, renewed and focused efforts would be needed to achieve sustainable growth in the country's engineering sector, which has been rightly termed as the backbone of the manufacturing sector. The international engineering sector accounts for as much as 56 percent of the entire world trade, which shows the importance that is attached to the engineering industry.

A study on the newly industrialised economies such as Korea, Malaysia and Singapore has meanwhile found that engineering sector had spearheaded economic transformation in these economies. Being the fulcrum of industrial transformation activity, the engineering industry has been rightly termed as the prime mover of economic growth in such economies.

It is now widely believed that the key to achieving self-reliance and economic independence through import substitution in major areas lies in the engineering sector. Its benefits to the economy include generation of employment opportunities as a spin-off effect, as well as the socio-political and economic uplift of the country; increased export earnings, improved trade balance and the saving of foreign exchange.

Pakistan will have to establish more steel mills to meet its requirements, if it wants to impart vibrancy to its engineering industry. As a rule of the thumb, a country wishing to raise the living standard of its people cannot ignore its engineering sector.

A major cause of the slump in Pakistan's manufacturing sector - a twin of the engineering sector - is that this sector has largely revolved around the traditional low value-added industries - a policy that needs to be discarded. Secondly, investment in upgrading technology has been quite low and diversification in the emerging markets, products and processes has been either slow or nearly stagnant.

Thirdly, an efficient international high-quality investment chain, which is an essential pre-requisite for the local industry to flourish, has been conspicuously absent, due mainly to the bundling of raw material, parts and modules by the multinationals in their assembly-oriented systems, which has discouraged progress of the local vendor industry.

Diversifying the manufacturing sector, developing the SMEs and increasing productivity are the major targets that need to be achieved in the manufacturing sector, for it to develop competitiveness at the international level. The time has come for Pakistan to make critical choices to ensure sustainable growth of its manufacturing sector in the rapidly changing and highly competitive international environment of today.

This calls for making large-scale structural changes, a shift in the production paradigm to technology and knowledge-based industrialisation, with particular emphasis on qualitative growth of an integrated and competitive engineering industry. Further, the share of engineering, electronics, pharmaceutical, chemical and non-metallic mineral products should be suitably increased to revitalise these sub-sectors.

However, the liquidity crunch in the banking sector has played a contributory role in creating slump in the engineering sector. The government should consider making a rational cut in taxes on engineering sector, to spur its growth, though no levy of taxes on brand manufactories, as demanded by the KCCI sub-committee would amount to taking things rather too far.

The government should devise a new policy on engineering sector by factoring in all its needs for attaining competitive growth. The government should carefully weigh all the proposals made by the KCCI sub-committee, and accept only those that are in the larger interest of national economy.


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*Pakistan and Iran about to finalise gas line project: Dr Asim​* 
KARACHI (May 19 2009): After India's exit from the Iran-Pakistan-India (IPI) Gas Pipeline Project, Pakistan and Iran are about to finalise the project, which has become Iran-Pakistan (IP) Gas Pipeline Project. Advisor to the Prime Minister on Petroleum and Natural Resources Dr Asim Hussain said this while talking to media at the inaugural ceremony of a four-day "Pakistan Oil, Gas and Energy Exhibition and Conference 2009" (Pogee-09) at Karachi Expo Center, here on Monday.

"I will visit Iran to finalise the remaining issues with the Iranian authorities relating to this important project soon," he said. The construction work on the project would start during the current year, he added. Dr Asim pointed out that prices of petroleum products and gas would be reduced this week. "I am unable to tell the exact date and the amount of relief, however, I can say that the prices would be reduced any time during this week," he added. He said that he will be visiting Iran this month to discuss Iran-Pakistan (IP) Gas Pipeline Project with the Iranian authorities.

He said that progress on Turkmenistan-Afghanistan-Pakistan-India Gas Pipeline Project is satisfactory. He admitted that Pakistan was facing severe energy crisis, however, the government and his ministry have planned a strategy to address the issue. He said that work on Thar Coal Project would start soon.

He said that drilling in various fields would start by different oil and gas exploration companies during the current year. He said the government was collecting Rs 13 billion per month on account of Petroleum Development Levy (PDL) and after reduction in POL prices, this amount will reduce substantially. However, he said, the government will bridge this gap with other resources.

Dr Asim Hussain in his speech at the opening ceremony expressed his pleasure on the participation of foreign companies in the event. He said that Pakistan is producing 70,000 barrels of oil against the requirement of 370,000 barrels, while the production of natural gas is 3.9 BCF.

The adviser brought to light the issues of the Iranian and Turkmenistan gas pipeline projects. He said that the Iranians have completed the pipeline close to the border, which will be completed within a short span of time. Dr Hussain also announced the ministry's hydrocarbon vision for the next 20 years. Later, Dr Asim Hussain inaugurated the 7th Pakistan Oil, Gas and Energy Exhibition & Conference - Pogee 2009 and the 5th International Fire and Security Exhibition & Conference - FIRE & SECURITY Pakistan 2009.

The inaugural ceremony was also attended by Farhat Hussain, President of Fire Protection Association of Pakistan (FPAP); Abdul Sami Khan, Chairman CNG Dealers Association and Pakistan Petroleum Dealers Association; and Aasim Haq, Director SAP Pakistan.

Farhat Hussain, speaking on the occasion, stressed on acquiring latest equipment and technology for fire fighting. He said that exhibitions such as fire and security provide a perfect platform to achieve such objectives. Abdul Sami Khan praised the decision of the Supreme Court for reducing the price of petrol and CNG and stressed on the need to hold high-level meetings to resolve the energy problems.

Asim A Siddiqui, Chairman and Managing Director of Pegasus Consultancy - the event managing company- in his address of welcome said that the aim to organise such exhibitions is to attract more foreign investors and foreign direct investment in the country.

He said that such exhibitions play key role in building the image of the country globally. "Pakistan is one of the largest gas producer and also a consumer in the world. There is much potential to explore more reserves in the country. "We can convey our massage globally that there is much potential in Pakistan in the oil, gas and energy sector.

He said that it was the fifth exhibition being organised by them during the current year. The ceremony was largely attended by the diplomats, industry leaders and professionals and exhibitors. Pogee and FIRE & SECURITY Pakistan 2009 are together playing host to more than 300 companies from 31 countries including China, Iran, Austria, UAE, UK and the US.


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*Japan pledges around $20 million aid​* 
ISLAMABAD (May 19 2009): Japan on Monday pledged around US $20 million (2 billion Japanese Yen) Non-Project Grant Aid (NPGA) to Pakistan for budgetary support. The notes for the NPGA were duly signed and exchanged between Chihiro Atsumi, Ambassador of Japan to Pakistan and Farrukh Qayyum, Secretary, Economic Affairs Division (EAD) here.

Addressing the signing ceremony, Chihiro Atsumi, Ambassador of Japan said that NPGA will be utilised for importing commodities and machinery such as oil, medicine, fertiliser, and tractors etc, which are necessary for economic and social uplift. He also said that government of Pakistan could use it for the internally displaced persons (IDPs).

"The Government of Pakistan will deposit all the proceeds from sale and lease of these commodities and machinery in Pakistani currency in "Counter Value Fund" expected to be utilised for economic and social development in Pakistan, Chihiro Atsumi said.

He said that NPGA is an important assistance that can be delivered quickly, and represents the long term commitment of the Japanese government for the development of Pakistan as well as the stability of the region. He said that Japan had also hosted Friends of Pakistan meeting and also announced one billion dollars for Pakistan that would be in shape of soft loan and grant. He said that it depends on Pakistan where to use the amount, announced in FOP meeting.

Farrukh Qayyum, Secretary, Economic Affairs Division (EAD) said that Japan has been a partner for development in Pakistan, and it had always supported in hour of need. He thanked the Japanese government for hosting the FOP meeting, which according to him was a remarkable success. He said that the pledged grant of $20 million by Japan would be available for budgetary support, and it would be used for the projects where the budget of Pakistan had no space.

He said that government of Japan would disburse the grant within next two to three weeks. He also said that Pakistan values government of Japan's assistance in the fields of education, health, energy, environment, disaster management in general and for this grant in particular. Farrukh Qayyum noted that assistance by Japan has played a key role in the development of our social sector with specific focus on human resource development and poverty reduction.


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*Malaysian team to explore business and investment opportunities: MATRADE mission due on may 25​* 
LAHORE (May 19 2009): A 20-member delegation of Malaysian professionals, entrepreneurs, traders and investors is visiting Pakistan from May 25 to June 2 to explore business, trade and investment opportunities in Pakistan. The visit has been planned by Malaysia's External Trade Development Corporation (MATRADE).

According to the Commercial Counsellor of Pakistan in Kuala Lumpur, mission, during its stay in Pakistan, will visit Karachi, Islamabad and Lahore and would meet trade, investment and industrial representative bodies. The delegation will undertake factory visits, besides studying the market potential for Malaysian products and services in Pakistan and to forge business ties with their Pakistani counterparts.

Officials say that objective of the mission is to promote Malaysian products and services as well as explore market opportunities in Pakistan and to cultivate direct business contacts between businessmen in the two countries and take advantage of Malaysia-Pakistan free trade agreement (FTA).

According to Director of International Networking Division of MATRADE Dzulkifli Mahmud, the visit is in line with the Malaysia's vision to increase the volume of trade between the two countries from its exiting level of 1.17 billion dollars to 10 billion dollars by 2015.

The delegation also includes representatives of Professional Skills Development Corporation of Malaysia (PSDC), representatives of which during their visit will explore bilateral co-operation in services sectors of the two countries, particularly in the field of capacity building of Pakistani professionals.


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*Recession renders 300,000 Pakistanis jobless ​* Tuesday, May 19, 2009 

KARACHI: Unemployment is on rise in Pakistan since the beginning of fiscal year 2009. According to an analysis about 0.3 million people have lost jobs in the aftermath of world recession and slowdown of local economy. The exodus of laid-off expatriate workers back to Pakistan is yet to come.

The worst part of this scenario is partial awareness at the government level. No concerned ministries, departments and officials have any estimate, as to how many people were unemployed and to what intensity the exodus of Pakistani expatriates would be. They, however, are not clueless on the subject too.

Ministry of Labour & Manpower; Board of Investment; International Labour Organisation; Friends of Pakistan (a representative organisation of about 10 million acclaimed overseas working Pakistanis); Immigration Department; and Ministry of Overseas Pakistanis; all replied to this correspondent that they had no specific data, which can tell the number of non-resident Pakistanis coming home after losing jobs.

Friends of Pakistan, Country Coordinator, Abdullah Butt said he cannot give any estimate, even rough, as to how many Pakistanis would come back following the loss of their jobs over there.

A number of Pakistanis have lost jobs abroad, but many of them were still staying there waiting for their children examination to end in June 2009 - especially in Dubai and the West, he explained.

Last month, Pakistan witnessed an abnormal increase of about 19 per cent in remittances received for the first 10-monhts of fiscal year 2009 against same period of last year. Experts, including Minister of Overseas Pakistani Dr. Farooq Sattar, were of the view that this massive increase in remittances was seen as non-residents were transferring their savings to Pakistan before leaving their host counties.

Ministry of Labour, Islamabad Bureau, Director General told that his ministry and department maintains the data of Pakistanis going abroad for job but no data of expat workers coming back.

He further said that his department has noticed an increase of five to six per cent of people going abroad for job in March 2009 as compared to corresponding month in 2008. Employers Association of Pakistan (EAP) Industrial Relations Committee (IRC) Chairman, Fashiul Kareem Siddiqui, said that many of the Pakistanis returning from abroad were working in IT and software designing departments, while majority of construction labour working in Dubai was from India and Bangladesh and not Pakistan.

As far as the job cut here in Pakistan is concerned then it should be around 30 per cent on an average, Siddiqui gave a rough estimate. Highest job losses were recoded in the banking and textile sectors that were the worst affected industries in recent economic slowdown, he said. The telecom sector has laid-off about 10 per cent of employees.

Access Consulting CEO Zohair Ashir giving his estimates developed on the basis of data gathered from different sectors said about 0.3 million people had lost jobs in Pakistan since recent recession began. This includes 7,000 employees sacked by one of the banks functioning in the country. He, however, did not disclose the name of that particular bank.

According to his estimates the unemployment rate in Pakistan has surged to 30-32 per cent, which includes the unemployment in informal, unregulated and undocumented sectors. Leading economist S. Akber Zaidi said the other day that unemployment was one of four major fallouts in the country, which took place in the aftermath of world economic recession.

He was of the view that Pakistan was not among the worst affected countries of world recession, but it faced the worst owing to misconduct of economic affairs at local governmental levels.


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*Current account deficit widened 88pc in April ​* Tuesday, May 19, 2009 

KARACHI: Pakistans current account deficit increased 88 per cent to $457 million in April 2009 compared to the previous month as imports outstripped exports at a greater pace, State Bank of Pakistans data showed on Monday.

Trade deficit increased 22 per cent to $845m in April from $694m in March which along with a fall in workers remittances scarred an otherwise good performance of the 10-month current account.

Remittances were slightly down to $698m in April compared to $739m received in March. Oil price was higher last month and so was the volume of oil imports, said Fawad Khan, Head of Research at KASB Securities, about the April deficit. One of the refineries was closed for maintenance while demand for furnace oil was up.

From July-April 2008-09, the current account deficit improved and came down to $8.5 billion from $11.1bn recorded in the same period of previous year. The April numbers reflect the vulnerabilities attached with the current account balance of the country, which had to take a loan from the International Monetary Fund last year to avert a balance of payments crisis.

While remittances over the 10-month period increased to $6.3bn from $5.3bn, experts are voicing concern over its sustainability as people continue to lose jobs abroad because of global recession.

Definitely, a drop in home remittances will have a negative effect on the current account balance, said Khan of KASB. The State Bank has already cautioned the government against too much reliance on remittances to bridge the current account deficit.


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*Fish export to EU likely to resume in July ​* Tuesday, May 19, 2009 

HYDERABAD: Sindh Fisheries Minister Zahid Ali Bhurgri has said that fish export to European countries, which is banned, would start by July this year for which a delegation from the European Union will visit Pakistan soon.

He stated this while briefing the first sitting of Sindh Information Department (SID) Media Forum established at the Regional Directorate of Information Hyderabad, here on Monday. The forum is aimed at getting the point of view of the government functionaries, VVIPs and other personalities on socio-economic development and achievements.

Briefing journalists after inaugurating the forum, the fisheries minister said the European Union had prohibited import of fish from Pakistan because of unhygienic conditions. He said the government considering fisheries as a big economic sector, had introduced some reforms in fish harbour and facilitated fishermen in increasing and improving fish production. He said all the reservations raised by the European Union have been addressed by providing fibre boats, crates, ice box and ice plant machines to the fishermen of the Karachi harbour.

In addition to that, he said a water ambulance has also been provided to the fishermen and a watch tower has been installed to warn the fishermen about sea cyclones. As a result, he said, not only fish production has been increased up to 31 per cent but quality of production has also improved up to international level.

He said that a delegation from the European Union was due in Pakistan shortly to inspect and allow fish export. Replying to a question, Zahid Ali Bhurgri said that production of 253 tons of fish is being achieved per day at Karachi Fish Harbor while annual export of dollars 250 million was being made from other than European countries at present.

He said that according to estimate as many as 3.8 million acres of land in Sindh was lying abandoned due to water logging and salinity. He said now the Sindh government has decided to utilize this abandoned land by establishing hatcheries and fishing ponds under the public private partnership not only to raise the fishing production but also eradicate the unemployment from the society. He said the Sindh government has decided to constitute Fishermen Welfare Board.


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*Govt may increase funds for atomic energy projects to Rs17bn​* Tuesday, May 19, 2009 

APCC documents reveal proposal for federal share in PSDP at Rs294.4bn with foreign aid component seen at Rs41.4bn

ISLAMABAD: The government is all set to sanction an allocation of Rs17.147 billion for development projects of Pakistan Atomic Energy Commission (PAEC) in the Public Sector Development Program (PSDP) for 2009-10 against revised allocation of Rs15 billion for outgoing fiscal 2008-09, envisaging an increase by around 11 per cent.

The Annual Plan Coordination Committee (APCC) will consider recommending Rs294.4 billion as federal share in the PSDP with foreign aid component of Rs41.4 billion in its scheduled meeting on April 22, 2009, a working paper prepared for the APCC, a copy of which is available with The News states on Monday.

The working paper also reveals that the government is proposing Rs447.4 million allocations for consideration of the APCC approval for Pakistan Nuclear Regulatory Authority (PNRA) in the next budget 2009-10 against revised allocation of Rs257.5 million for the outgoing fiscal 2008-09.

For Defence Division including SUPARCO, the government has envisaged allocation of Rs5.391 billion in 2009-10 against revised allocation of Rs2.295 billion in the outgoing fiscal year.

For Interior Division, the government has envisaged allocation of Rs5 billion in 2009-10 whereas the allocation for Law, Justice and Human Rights Division will be jacked up to Rs2.551 billion in the next PSDP for 2009-10 against Rs1.5 billion for ongoing fiscal year 2008-09. For much trumpeted National Reconstruction Bureau (NRB) during the era of Musharraf regime, the PPP led government is going to earmark Rs1 million PSDP for the next fiscal year.

The Planning Commission asked an outlay of Rs473 billion for the PSDP with local component of Rs359 billion and foreign aid component of Rs114 billion for 2009-10.

Against actual demands of the executing agencies of Rs851 billion outlay for the PSDP, the Priorities Committee has recommended Rs294.4 billion as federal share of the PSDP to the APCC, which will finalize its allocation on May 22, 2009. The APCC will recommend its size of PSDP to the National Economic Council, a competent body to approve the exact size of the PSDP when it will meet with Prime Minister in the chair on June 1, 2009.

For Earthquake Reconstruction and Rehabilitation Authority (ERRA), the government has indicated an allocation of Rs25 billion in the next budget 2009-10. Out of total Rs294.4 billion as federal share of the PSDP for the next budget, there is an allocation of Rs192 billion for the federal ministries, Rs35 billion for special programs, Rs27.4 billion for special areas and Rs40 billion for corporations.

For proposed sectoral allocation, the APCC will consider recommendations of Rs133.1 billion for infrastructure, Rs134.7 billion for social sector, Rs10.8 billion for production supporting sector, Rs10.7 billion for science & technology and Rs5.1 billion for environment in 2009-10. There is zero allocation indicated for Overseas Pakistanis Division in the fiscal year 2009-10.

The proposed 2009-10 development program places equal emphasis on the development of social sector (45.1 per cent) and physical infrastructure (45.7 per cent). The social sector allocation includes Rs29 billion out of which education and Higher Education Rs22.2 billion and health Rs4.8 billion.

Within infrastructure, Rs47.3 billion, Rs31.8 billion and Rs42.9 billion have been proposed to allocate for water, power and transport & communication sectors respectively for the next PSDP.

The working paper clearly states that the federal allocation of Rs294 billion by the Priorities Committee does not even fully meet funding requirements of ongoing projects. To maintain the momentum of development and accommodate present governments development priorities and initiatives given in the nine point agenda, the size of the PSDP should be enhanced to a reasonable level. Additional funds would be required to finance governments priority programs such as skill development, construction of grain storages, cool chains and many others, the working paper added.

The ministries/division wise proposed allocations envisaged Rs34.454bn for water sector, Rs14bn for power sector, Pakistan Atomic Energy Commission Rs17.147bn, Pakistan Nuclear Regulatory Authority Rs447.4m, Petroleum & Natural Resources Rs580m, Communication Division including NHA Rs26.165bn, Ports and Shipping Rs200m, Railways Division Rs8.968bn, Social Programs Rs35bn, Finance Division Rs10.189bn, Planning and Development Division Rs4.675bn, Local Government & Rural Development RS224m, Tourism Division Rs32.5m, Housing & Works Rs3.019bn, Ministry of Foreign Affairs Rs250m, Narcotics Control Division Rs611m, Education Division Rs6.482bn, Higher Education Commission Rs22.5bn, Health Division Rs20bn, Population Welfare Division Rs4.770bn, Women Development Division Rs173m, Social Welfare and Special Education Rs329m, and Labour & Manpower Division Rs121.4m.

The government has envisaged an allocation of Rs392m for Culture Division, Rs297.5m for Sports Division, Rs47.8m for Youth Affairs Division, Rs2.065bn for Cabinet Division, Rs639.8m for Information and Broadcast Division, Rs1.560bn for Defence Production Division, and Rs16.880m for Food and Agriculture Division.


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*OICCI recommendations for budget 2009-10 ​* Tuesday, May 19, 2009 
By By our correspondent

KARACHI: The Overseas Investors Chamber of Commerce and Industry (OICCI) have recommended mandatory documentation of all sectors of the economy including real estate, agriculture, capital markets and manufacturing.

In their budget proposal for 2009-2010, the OICCI said that by making documentation mandatory, the government will be able to substantially increase the tax revenue as about 40 to 50 per cent of the total manufacturing in Pakistan is done by the medium and small scale manufacturing sector operating in the unorganized sector. Salient features of the proposals are as follows:

Reduce Rate of Corporation Tax to Below 30%: Pakistan has one of the highest rates of corporate tax in the region. This discourages investors from coming in the country as regional competitors not only offer lower rates but also better security and infrastructure facilities. It is, therefore, recommended that the corporate tax rate be gradually reduced from 35 to 28 per cent over the period of 2 to 3 years to make it compatible with other countries in the region.

Rebates and Tax Credits to Encourage Reinvestment of Capital: Through such measures the effective rate may be reduced with corresponding economic benefits. In Pakistan all such benefits, except accelerated depreciation have been removed. It is imperative to re-introduce rebates and tax credits to encourage re-investment of capital in the business.

Outsourcing of Audit Function: An audit can never be a tax collection measure, especially where there is inelasticity in constituents and delinquents are effectively outside the tax net. Moreover, the high levels of compliance set for tax payers usually result in harassment rather than having any value addition. A process of independent audit outsourced to professionals can be implemented as an interim measure to build confidence levels.

Cascading in Import Duty Structure: Throughout the world subsidiary and allied industries flourish when a sustainable base for the primary manufacturing sector is provided. However, it has been observed that over the past decades, cascading adjustments for local industries have been fundamentally disturbed. The current duty structure encourages the import of finished goods rather than manufacturing even in those cases where reasonable manufacturing facilities are available in Pakistan. FBR and the National Tariff Commission (NTC) need to undertake a long term holistic exercise for the development of an industrial and manufacturing policy for the country to encourage the manufacturing sector.

Zero Rated Import of Plant Machinery & Equipment, Spares and Raw Materials Not Locally Available: Up front duties and taxes on the import of Plant Equipment & Machinery, Spares and Raw materials not locally available hamper industrial growth by limiting the amount of Foreign Direct Investment (FDI) and suppressing the export potential of industries by raising costs. Zero rated import of all plant equipment and raw materials which are not locally manufactured will result in foreign direct investment, local skill development and incremental revenue to the government from alternate revenue sources such as sales and corporate taxes which would more often then not offset the revenue lost by the government.

Quantitative Ceiling on Imports for Afghanistan (ATT): Agreement of a quantitative ceiling for imports for Afghanistan (Afghan Transit Treaty) and streamlining of exchange control mechanism is required so that administrative and economic barriers are placed to control smuggling.

Consolidation of All Labor Levies with a Rate of 2 to 3% (WWF and WPPF): In Pakistan, the corporate tax rate is 35 per cent. An additional 2 per cent Workers Welfare Fund (WWF) and 5 per cent Workers Profit Participation Fund (WPPF) is levied. This effectively makes the rate equal to 42 per cent which is one of the highest corporate tax rates in the world. Government should consolidate of all labor levies with a rate of 2 to 3 per cent in line with regional standards; or allow companies to utilize the contribution for the welfare of labor in the form of providing health, education and housing for their factory employees or in the areas their factories/industries are located.

Presumptive Tax Regime be Eliminated Sector by Sector or for Documented Companies: An effective tax system requires identical procedures for the same kind of business, without any discrimination between sectors. PTR has been made inapplicable for the manufacturing sector. It is recommended that this practice should be extended to other sectors which are properly documented and should eventually be abolished completely. Continuation of PTR is a major bottleneck in the sustainable growth of Tax to GDP ratio.

Overall Rate of Indirect Taxes Needs to be Reviewed and Reduced: At present effective indirect tax rate is 28 percent (16 % GST + 12 % FED). This high level of taxation encourages a substantial part of the manufacturing base to operate in the unorganized sector. There is a need to review the issue of overall incidence of indirect taxes so that possibilities and comparative advantages of evasion are reduced and minimized. It is also recommended that the rate of Value Added Tax (VAT) be brought down to 10 per cent over a period of two years encompassing all sectors and segments of the economy specially the services sector.

Overhaul or Introduction of Sales Tax on the Whole Supply Chain: Sales tax of 2 per cent at the import stage has been levied on all products. The rationale for this levy is that in the case of imported products, the subsequent supply chain is unorganized and therefore, tax on the whole chain of value addition needs to be collected at the import stage. Additionally, there is no contribution by the medium and small scale manufacturing sector which is responsible for 40 to 50% of all manufacturing taking place in Pakistan. Such an instance, therefore, highlights the need for overhaul or introduction of sales tax on the whole supply chain.

Promotion of Retirement Benefits: There should be encouragement for promotion of retirement benefit schemes complemented with schemes for investment by such funds in investments required for industrial growth.

Special Benches For Tax Cases: Delay in ultimate decision by the appellate authorities and their quality is a hurdle in the development of a tax base. To improve quality and capacity of the first stage of appeal, it is recommended that special benches for tax cases be set-up. It has been noticed that even after judgment is received, execution is delayed. This needs to be reviewed. 13. Allowability of NPL for Banks: Debts considered as Loss under the Prudential Regulations as issued by SBP (as applicable at that time) be allowed as deduction (Pre-7th Schedule). The amendments in the Prudential Regulations (Post 7th Schedule) revived the Forced Sale Value (FSV) of collateral which was not accounted for before. Now the State Bank of Pakistan for its own purposes has allowed credit for proportion of FSV.

Allocation of Expenses Should be Streamlined - Banks: There are inconsistencies in the treatment of allocation of expenses for income exempt from tax. This issue attains importance for banks as there is substantial investment in shares where capital gain is exempt from tax. It is suggested that the matter of disallowance of allocation of expenses against exempt income should be streamlined. Specific rules need to be introduced to the effect that allocation of expenses has to be made on the basis of amount invested in exempt securities rather than earning there from.

Transitional Provisions for Banks and Provision for Consumer Loans: Unabsorbed depreciation and written down value for assets on finance lease outstanding as at December 31, 2007 should be allowed over a five year period. Furthermore, there is a need to revise the limit of 3 per cent for consumers' loan for all the years prior to Tax Year 2009. In the Seventh Schedule such deductions be allowed as are approved under the Prudential Regulations.

Clarification for Reinsurance Premium: Finance Act, 2008 has introduced withholding tax on Reinsurance Premium. Such withholding is not applicable where the recipient is protected by the Double Taxation Treaty (DTT). A clarification needs to be issued that where there is DTT protection and the re-insurer is not in Pakistan, either directly or through agent, provision relating to withholding shall not apply; In all other cases, standard requirement of information will apply.

Withholding for Insurance Companies of Recipient: In the case of banking companies subject to Seventh Schedule, an exemption has been provided to banks from withholding as recipient as such entities are all in the organized sector and are subject to advance payment of tax. Same principle requires to be adopted for the insurance sector.

Tax on Transfer Pricing: Since the introduction of the Income Tax Ordinance, 2001 there are very few cases where tax proceedings have been finalized under the new provisions of the Ordinance. All the cases from Tax Year 2004 to Tax Year 2008 are effectively exposed to action by tax officers on the matter of Transfer Pricing. However, fiscal issues relating to non-arms length consideration are a matter of determination of fact rather than application and interpretation of any law. The OECD model also supports the same principle. It is suggested that agreed upon processes be undertaken to prescribe the procedures for implementation of fiscal measure for taxing non-arms length transactions.

Resolution of Input Tax Adjustments: In Pakistan, credits for input taxes are treated as inadmissible whilst determining the overall tax liability in many cases. This results in higher rates for sales tax and federal excises. This problem emanates on account of improper implementation rather than any provision of law. It is required that implementation issues in the admissibility of input tax in sales tax be resolved and proper guidance on that matter be obtained from other countries where such systems are already in operation.

Federal Excise Duty: In Pakistan, input tax for Federal Excise Duty (FED) for many sectors is not allowable under the law. This places the said tax outside the ambit of VAT regime. It needs to be decided by the government whether such a levy is to be operated as VAT or a straight indirect tax. If the second option is to be implemented, that rate of tax will have to be reduced. OICCI considers that implementation of a full- fledged VAT with same rate, is a better option.

Franchise Fee: Royalty payments have been subjected to FED. The term used in the law is Franchise fee which is at time distinguishable with royalties in strict commercial and practical sense. This has lead to serious issues of interpretation and misapplication in many entities. It is, therefore, recommended that FED procedures for franchise fees be streamlined and the same be brought in line with SBPs regulation. Such measures will resolve the issue correctly as most of the organized entities remit such fees through SBP and there are well laid down procedures for the same.

Capacity Building of Personnel - Group Taxation: Over the last two years, positive provisions have been introduced in fiscal laws for promoting the formation of holding companies and introduction of group taxation. However, like any other fiscal measure, problems are being faced in the implementation of group taxation as the issues are unique and new. Therefore it is recommended that capacity building at FBR and SECP by way of training and study of such measures in other countries be undertaken to take full advantage of such a positive provision.

No Taxation on Inter-Corporate Dividends: Group taxation requires elimination of inter-corporate dividend taxation. This matter has been taken care of in the present law. However, over the last two years virtually no group structure has evolved on account of problems relating to inter-corporate dividends. No industrial group will endeavor to switch to holding company structure unless there is a clear position with regard to no taxation on inter-corporate dividend. 24. Stock Options: In order to promote proper disclosure and taxability of stock option, it is recommended that stock option given by MNCs for Pakistani employees be treated similar to stock option given by Pakistani companies. Moreover, stock option should be taxed as capital gains.


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*India, Pakistan closer to wheat export after years ​* Tuesday, May 19, 2009 

NEW DELHI/SINGAPORE: India and Pakistan moved closer on Monday to export wheat and wheat products for the first time in several years after bumper harvests left them with surpluses.

While India is near to exporting two million tons of wheat and wheat products, Pakistan is expected to ease curbs on wheat product exports on Tuesday, taking a step closer towards allowing sales of the grain.

The export of around 2.5 million tons from the two nations, paltry in global trade of around 120 million tons, could present competition to the Black Sea wheat in the Asian and the African markets.

Rising global wheat stocks have pressured the benchmark Chicago Board of Trade wheat this year, even though the market has found some strength in recent weeks on delay in US spring wheat plantings.

India will shortly allow exports of 2 million tons of wheat and wheat products, but it will not subsidise shipments, Trade Secretary GK Pillai told Reuters.

Exports will be allowed through select ports. This has been done to monitor how much wheat is being exported, he said, adding a formal government order would be issued shortly. Indian traders said they were ready to immediately start exporting to neighbouring countries such as Bangladesh and Nepal but sales to other destinations needed government subsidy.Wheat from Indias eastern state of Bihar, where government agencies have not bought wheat, can be supplied to Bangladesh even at current international prices.

Wheat exports to Bangladesh and Nepal are viable, said one Mumbai-based trader. Wheat sourced from Bihar can be delivered to these two countries at $230 per tonne. India, which sets the price of wheat it buys from farmers, announced a minimum support price for wheat of Rs1,080 per 100 kg, or $225 per ton, to ensure adequate returns for farmers.

Black Sea wheat is quoted around $230-235 a ton, including cost and freight to Southeast Asia. Traders said exports to other regions were not viable without government subsidy. Theoretically, allowing exports without subsidy is fine, but practically it may not happen without government subsidy as international prices of wheat and wheat products are lower, said Vinod Kapoor, former head of Wheat Products Promotion Society.

In neighbouring Pakistan, the countrys economic panel is expected to meet on Tuesday and allow sale of wheat products after the procurement this year reached eight million tons, the highest in seven years.

The economic coordination committee meeting will take place tomorrow, said Shahid Raja, additional secretary in Pakistans food and agriculture ministry. We are pretty sure it will be allowed tomorrow, they will revoke the ban on wheat product exports.

He said Pakistan is likely to sell up to 500,000 tons of wheat products to Afghanistan and the Middle East. Pakistan, which consumes about 22 million tons of wheat a year, is expected to harvest a bumper crop of more than 24 million tons because the area under the crop rose following favourable growing conditions. Two years of bumper harvests lifted Indias wheat stocks to 29.8 million tons on May 1, rising by two-thirds from a year ago.


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*US agrees to provide preferential market access to Pakistan​*
ISLAMABAD: United States has agreed to consider Pakistans demand for allowing market access on preferences to compensate trade losses due to war on terror as well as forming long-term partnership for promotion of bilateral trade, Salman Ghani, Federal Secretary Commerce informed here on Monday.

At the conclusion of the meeting of advisory council held to solicit proposals from trade bodies for finalising Trade Policy 2009-12, Secretary Commerce informed that during the recent visit of US issues related to trade and Reconstruction Opportunity Zones (ROZs) were discussed at length.

He said that Pakistan has demanded US to allow immediate market access to compensate trade losses the country has sustained due to the war on terror. The US authorities have not expressed any denial to the Pakistani demand. Both sides have agreed to form a Joint Study Group to workout modalities of market access on preferences long-term partnership for promotion of bilateral trade. He said that Joint Study Group is expected to be formed next month representation from both sides. He informed that the export target of $22.1 billion was too ambitious as the world trade, according to the World Trade Organizations figure, is growing by 6 percent and our export target envisages 15 percent growth. Its now difficult to achieve this ambitious export target in ongoing fiscal year and exports are likely to be at the level of last fiscal, he added.

Explaining the reasons of low growth in exports, secretary informed that demand is shrinking world wide due to the low credit demand and financial crisis especially in US and European Union, which are the major trading partners of Pakistan. He said that as per past practice the Ministry of Commerce would submit its tariff proposals to Federal Board of Revenue in a meeting to be held next week. MoC want tariff rationalisation and more liberalised trade regime in the country, as the current tariff structure is not enhancing exports.

He said MoC has decided to prepare Trade Policy Framework for the next three years based on medium-term initiatives. To finalise the proposals, the ministry has decided to hold detailed discussion with its all stakeholders. After the advisory councils meeting the MoC would hold separate meeting with all major exporters associations in the head offices to complete this process during June so that a policy with its implementation strategy that would also be finalised in consultation with stakeholders. sajid chaudhry


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## Neo

*US approves $1.9 billion aid for Pakistan, says Babar​*
** President Zardaris spokesman says UK committed £640 million in next four years, France offered nuclear technology to Islamabad*

ISLAMABAD: The US House of Representatives has approved $1.9 billion in aid for Pakistan, President Asif Ali Zardaris spokesman Farhatullah Babar said.

The president returned to Islamabad on Monday after concluding an official visit to Libya, the UK, the US and France.

The tour also saw the UK committing £640 million over the next four years and France offering civil nuclear technology to Pakistan after decades of embargo in addition to specific aid for the immediate rehabilitation of IDPs and broadening of the partnership to fight the scourge of extremism and militancy, Babar said.

He said wide-ranging measures that were announced during the visit would strengthen Pakistans economy and garner international support to the country.

Babar said the approval of $1.9 billion was in addition to assistance the Obama administration had requested for Pakistan.

No less significant was the French presidents offer of a wide ranging civil nuclear deal to Pakistan to help it overcome its energy crisis to make the industries run and create jobs and opportunities, the spokesman said.

In view of the crisis of the internally displaced population of Pakistan, the UK and France announced 12 million euros each for the IDPs while the US House of Representatives made a special provision for them in the aid bill.

Babar said in a week that saw the National Assembly backing operation against the Taliban, wire services transmitting pictures and TV channels sound bytes of displaced people lining up for food in camps, President Zardari cautioned the international community that it was extremely critical that the IDPs were rehabilitated to prevent them from falling prey to the Taliban propaganda.

The president, he said, also flew to New York from Washington to urge the UN Secretary General Ban Ki-moon for a global appeal to help Pakistan deal with the human catastrophe resulting from the action against the Taliban in Swat, a request which the UN chief accepted. The presidential brief included a multi-dimensional plan prepared by the government to defend the countrys democratic system against the Taliban onslaught, Babar said, adding that over half a dozen items in the plan contained details ranging from massive investment in education to strengthening of the civilian law enforcing agencies, from recruitment of another 100,000 special police force to building of bomb-proof police stations, from improving the border security regimen to overcoming the energy crisis and from specific projects in agricultural development to opening of European and US markets to Pakistani products to help regenerate the countrys economy.

The call for trade, not aid was heeded as the British prime minister addressed a letter to the European Union to place this issue on its summit agenda in Brussels on June 17, he said.


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## Neo

*PSDP for 2009-10 likely to increase by 20 percent​*
** Rs 650 billion programme will include Rs 450 billion federal component and Rs 200 billion provincial component​*
ISLAMABAD: Annual Plan Coordination Committee (APCC) is likely to recommend a Rs 650 billion Public Sector Development Programme (PSDP) for the 2009-10 fiscal year  a 20 percent increase from last years Rs 541 billion.

The sum includes a Rs 450 billion federal component (compared with last years Rs 371 billion that was later reduced to Rs 219 billion) and a Rs 200 billion provincial component (a 17 percent increase from last years Rs 170 billion).

The APCC meeting to finalise the proposed PSDP will be held on May 22. The Priorities Committee has already proposed a development budget of Rs 294 billion for the ongoing projects, and will make recommendations to National Economic Council (NEC) for new projects. The NEC meeting will be held soon.

Official documents obtained by Daily Times reveal that the Priorities Committee has made allocations to some discontinued projects on request by the sponsors. The APCC will decide whether the discontinued projects are to be continued as a result of rationalisation exercise during 2009-10 or kept on hold for another two to three years or until the fiscal situation improves, the documents say.

A senior official in the Planning Commission said the Priorities Committee in its meeting on May 2 to 16 had a detailed discussion with the ministries/divisions/project authorities to assess fund requirements for the ongoing projects during 2009-10. The committee made it clear it would only consider ongoing projects for allocation, and that new projects would be considered by the APCC, the official said.

He said total demand by the executing agencies was Rs 851 billion, the federal Planning Commissions assessment was Rs 473 billion, and the Priorities Committees recommendation was Rs 294.4 billion.


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## Neo

*Illegal flow of remittances continuing, says Tarin ​*Wednesday, 20 May, 2009

ISLAMABAD: Pakistans federal budget for 2009-10 will be presented in the first half of June, the countrys economic manager said, although he has not been able to decide on a final date. 

Advisor to the prime minister on Finance Shaukat Tarin has said here on Tuesday that the federal budget for 2009-10 will be presented either on June 6 or June 13.

Preparations for the budget have almost been completed but the final budget announcement date would be decided soon, he said talking to media at the launch of World Banks report on Bringing finance to Pakistans poor 

The federal budget 2009-10 would be the first budget for Mr Tarin in capacity as the finance manager of the country. 

Shaukat Tarin said that illegal channels still contribute to the major inflow of remittances into the country. 

He acknowledged that the contents of the WB report that informal supply occurs through the organized hundi / hawala sector and through committees, shopkeepers, moneylenders and transfers through friends and family.

The WB report has called for easier access to finance for poor in Pakistan and added that un-official estimates of remittances to Pakistan are around $16 billion.

Mr Tarin said that though the remittances play a valuable role in supporting the economy by providing foreign exchange and improving financial strength to the individuals. 

Responding to the WB report Mr Tarin said that the government has set the target to increase the outreach of the microfinance services to three million borrowers by 2010.

The report said that 14 per cent of Pakistanis were using a financial product or service of a formal financial institution including savings, credit, insurance, payments and remittance services.

While, it said that 40 per cent of adults in the country have no access to formal or informal financial systems, but the report said that if the informal financial access is taken into account around 50.5 per cent of Pakistanis have access to finance.

Shaukat Tarin said that there are 40 Microfinance providers which include seven Microfinance Bank with an overall operating base of 1,550 branches and services centers to serve a clientele of approximately two million. 

The potential cliental base of microfinance sector is estimated to be around 25-30 million borrowers of whom a significant portion still remains unserved by both regulated and un-regulated sector, he added. 

The advisor to the PM said that there are potentials for other products such as insurance, payments savings that could be launched through postal services network and mobile phones. 

He said that increasing access to finance for the small and medium enterprises (SMEs) could also be facilitated by attracting institutional investors with a track record in SME lending and assisting other banks to go down market. 

The Country Director for the World Bank in Pakistan, Yusupha Crookes presented the address of the welcome and highlight the main features of the report Bringing Finance to Pakistans Poor. 

The report said that Pakistan microfinance market has much potential for a rapid outreach expansion and faces considerable unsatisfied demand, especially for saving products. 

Tatiana Nenova, Senior Economists WB and lead author of the report, said that if appropriately supported, SMEs have the potential to be the growth engine of economy due to their ability to create jobs, foster entrepreneurship and to provide depth to the industrial base. 

The SMEs sector get a small share of credit despite having a greater role to play in the economic development.

SME lending accounts to only 16 per cent of the total lending volumes. Ms Nenova said adding that an aggressive promotion of an enabling environment leading to higher financing for the SME sector was needed to reverse this trend. 

The World Bank Country Director Yusupha B Crookes was of the view that despite significant banking sector reforms and efforts to expand financial market coverage over the past few years, outreach has lagged behind the countrys growth and development needs. 

He said that this report demonstrates that there is an enormous growth potential for financial services in Pakistan, especially in the rural areas. 

According to the report Policy efforts to increase access to finance in Pakistan have taken time to bear fruits, but now access is indeed expanding quickly in certain financial sectors especially the microfinance remittances, but at a very low base.

The WB report also speaks about the rapid growth of Islamic banking in the country but said that it lacked liquidity management instruments.


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## white_pawn

*Cargo handling increased at Karachi Port​*

Updated at: 1056 PST, Wednesday, May 20, 2009

KARACHI: The cargo handling at Karachi port has been increased to 10 percent despite economic recession, Chairperson Karachi Port Trust (KPT) said.

Talking to media in Federation of Pakistan Chambers of Commerce and Industries, KPT chairperson Nasreen Haq said this is happened because of increment in cement exports.

On the other hand, according to Federal Statistic department, decline in trade volume of Pakistan has been recorded due to economic crunch. 

Analysts said in the backdrop of declining imports and exports, increment in port handling is surprising.

Geo TV Pakistan - Breaking News, World, Business, Sports, Entertainment, & Video News


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## white_pawn

*Pakistan to send up to 50,000 workers to Libya 
​* 
Wednesday, May 20, 2009
By Salman Siddiqui

KARACHI: Ambassador of Pakistan to Libya, Jamil Ahmed Khan, has said that around 30-50 thousand skilled and semi-skilled labourers would be sent from Pakistan to Libya by the end of the current calendar year.

He was briefing a group of journalists here the other day in the backdrop of President Asif Ali Zardaris recent visit to Libya. This was the first official visit from any president to Libya since Zulfiqar Ali Bhuttos government ended, he said.

At present, some 12,000 Pakistani employees are working in Libya, out of which 25 are rendering their services at top managerial posts, Khan said in reply to a question.

In 1974, around 0.15 million Pakistanis were working in Libya. However, relationship between the two countries cooled, as the Libyan head of state Colonel Moammar Gaddafi did not support the governments of two dictators in Pakistan after the end of Bhuttos government.

Since President Zardari was a symbol of democracy the relationship between Pakistan and Libya was moving fast on the path of normalisation, he said.

In reply to a query, Khan said that cross-investment between the two counties would amount to $2 billion in the next two years, while Libya has shown interest to invest in the windmill sector.

The Joint Ministerial Committee (JMC) of the two countries would meet at the end of July this year. It would also discuss the feasibility study of the windmill project. This study would probably be conducted between July and September, he said.

Some 300 companies from across the world, mostly from China, India and the West, have arrived in Libya and are exploiting investment opportunities, he said, adding that most of these companies were investing in energy and infrastructure development.

Libya (also) has great potential in sectors like textile, agriculture (dairy), construction, and plastic goods, he explained.

He told that Pak-Libya Holding Company would open a bank in Libya very soon, adding that Pakistan can greatly help Libya in the development of its banking system, as the Libyan banking system was still passing though its infantry period.

Libya has allocated about $100 billion to be invested in various projects during the next five years. Moreover, it holds sovereign liquidity of $200 billion, he disclosed.

Ambassador of Pakistan to Libya further said that Pakistan International Airline (PIA) would review its decision of resuming its flights to Libya, and in case it does not find flights profitable, then the government of Pakistan would ask private airlines to exploit the available opportunity.

Therefore, hundreds of thousands of Chinese and Philippines working in Libya would use our airline services if PIA or any other airline resume flights, as I have already talked to concerned officials in China in this regard, he added.

Pakistan would also hold a single country exhibition in Libya in September and would participate in its Revolutionary Day and cultural shows, he further told the media.

During President Zardaris visit, the two countries signed six MoUs and one agreement, ie, Extradition Treaty.


Pakistan to send up to 50,000 workers to Libya


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## white_pawn

*Trade balance improves by Rs1.5bn ​*
Wednesday, May 20, 2009
By Jawwad Rizvi

LAHORE: Pakistans balance of trade has improved in the first ten months of fiscal year 2008-09 (July-April) by Rs1.519 billion due to decline in imports of industrial raw materials and services while imports of petroleum products and luxury items are still on rise. 

The official data released by the central bank showed that the net imports of the goods and services in the country during the July-April stood at Rs26.775 billion and exports at Rs15.981 billion showing a trade deficit of Rs10.794 billion.

The imports of the goods and services in corresponding period of last year were Rs28.715 billion and export Rs16.402 billion with a trade deficit of Rs12.313 billion.

Thus a decline of Rs1.519 billion in trade deficit was recorded in the ten months of the fiscal year 2008-09. 

However, the decline in trade deficit was not the result of increase in exports or decline in imports of luxury items and petroleum products. The exports of the country in the first ten months have decline by Rs421 million. 

The import of raw material declined due to economic recession and energy crisis in the country. Large number industrial units shutdown their operations or reduced the production by curtailing the working shifts. 

Imports of food group have increased by Rs134 million despite being an agrarian country. The imports of various agri products including tea, dry fruits, chocolates, tin foods and beverages were Rs3.155 billion in the ten months of fiscal year 2008-09 as compared to the corresponding period of Rs3.021 billion.

Similarly, imports of petroleum products were up by Rs741 million and so far Rs8.680 billion had been spent on it as compared to the last years bill of Rs7.939 billion. 

On the other hand imports of machinery has dropped by Rs44 million to Rs4.236 billion as compared to Rs4.676 billion last year. The experts said that the industrial growth had stopped in the country following the high mark-up rates, economic recession and energy crisis. No new industry is being setting up in the country then the import of machinery would automatically decline. 

The imports of transport group declined by Rs146 million and recorded at Rs813 million from the last year Rs959 million. The decline was recorded after reduction in car sales, which sharply reduced the sales of automobiles in the country and the auto manufacturers cut back the imports of Completely Built Unit (CBU), Completely Knocked Down (CKD) kits and other spare parts. 

The imports of textile group had registered a decline of Rs521 million as the imports of raw material down following energy crisis, which forced the textile units for closure. Textile group imports were recorded at Rs1.070 billion against Rs1.591 billion seen during the similar period last year. 

The government had focused on the agriculture sector but the imports of agriculture raw material including worth, fertilizers, pesticide, insecticides and other items fell by Rs184 million to Rs4.103 billion during the period under review against Rs4.287 billion recoded during similar period last year. 

The import of metal group dropped Rs228 million to Rs1.633 billion as compared Rs1.861 billion last year due to decline in international steel products which benefited the country.

The import of other industrial raw material including rubber and tyres industries, paper and papers boards and others reduced by Rs125 million and Rs495 million were spent on it as compared to the last year Rs620 million. 

This decline was also depicted the decline in the use of industrial raw material. 

The question rises that the import of countries had reduced in industrial raw material heads which are due to economic recession. http://www.thenews.com.pk/daily_detail.asp?id=178436Thus the government had not curtailed the imports of luxury and unnecessary items and petroleum products. 

http://www.thenews.com.pk/daily_detail.asp?id=178436


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## Neo

*US unveils $110m in emergency aid for IDPs​*
** Hillary says she senses a national mood change in Pakistan against Taliban​*
WASHINGTON: US Secretary of State Hillary Clinton unveiled on Tuesday $110 million in emergency aid for civilians fleeing the military operation against Taliban in Swat, Buner and Lower Dir.

Were doing this because the future of Pakistan is extremely important to the United States, Clinton told a press conference at the White House. The advance of extremism is a threat to our security, she added.

But the top US diplomat said she sensed a national mood change against the Taliban in Pakistan, and heaped praise on the military offensive against the Taliban.

There is a real national mood change on the part of the Pakistani people that we are watching and obviously are encouraged by, Clinton said.

The aid from the State Department and Pentagon will be sent to Pakistan to help ease the plight of two million people who have fled the fighting in northwest Pakistan, a White House statement said.

The funds will be used to deliver tents, halal meats, water trucks, generators and other supplies, Clinton said, adding some of the money would be used to buy Pakistani wheat to boost the local economy. Pakistan is facing a major humanitarian crisis, she said.

Pakistan can succeed in coping with the crisis but only if the international community and the US do its share, Hillary said.

Providing this assistance is not only the right thing to do but essential to ensuring global security, she added. afp


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## Neo

*World Bank report: Pakistans poor still cannot access finance​*
ISLAMABAD: Despite significant growth of Pakistans financial system, access to finance remains elusive for most Pakistanis, especially among poor people, women, and small businesses in rural areas, says a new World Bank report launched Tuesday.

The report, titled Bringing Finance to Pakistans Poor: A Study on Access to Finance for the Underserved and Small Enterprises, says the average Pakistani household remains outside the formal financial system, saving at home and borrowing from family or friends in cases of dire need. In fact, only 14 percent of adults have access to a formal financial institution and about 40 percent have no financial access to formal or informal financial systems.

Policy efforts to increase access to finance in Pakistan have taken time to bear fruit, the report says, but now access is expanding quickly in certain financial sectors such as microfinance and remittances albeit from a very low base. The report says the major constraints to financial access arise from high levels of poverty, combined with low awareness of and information about available financial services, as well as gender bias. In addition, financial institutions efforts to expand access have been discouraged by slow technological advances, weak legal foundations, and unsuitable financial processes, and products.
Despite significant banking sector reforms and efforts to expand financial market coverage over the past few years, outreach has lagged behind the countrys growth and development needs, said Yusupha B Crookes, World bank Country Director for Pakistan This report demonstrates that there is an enormous growth potential for financial services in Pakistan, especially in rural areas. Around one-third of the population borrows, but only three percent use formal services to do so.

The report says the formal financial sector could learn from and cooperate with informal arrangements to increase coverage. Financial services provided by the informal sector are perceived as being more geographically accessible, less complex, with fewer requirements, and easier to understand. For one, formal financial institutions could differentiate their products more, attuning them to the specific needs of various population segments, such as women.

Micro and small enterprises have seen a worsening of access to finance, while medium-size enterprises have seen improvements, the report says. Enterprises do not seem to be excluded from financial markets due to poor performance. Instead, an incomplete legal and regulatory framework and non-SME-friendly products and procedures hamper increased SME lending.

If appropriately supported, SMEs have the potential to be the growth engine of the economy due to their ability to create jobs, foster entrepreneurship, and to provide depth to the industrial base of the economy, said Tatiana Nenova, World Bank Senior Economist and lead author of the report. However, SMEs get a disproportionately small share of credit relative to their economic importance. In fact, SME lending accounts for only 16 percent of total lending volume. Aggressive promotion of an enabling environment for SME lending is vital to reverse this trend.

The report says Pakistans microfinance sector has considerable growth potential. The formal microfinance sector reaches less than 2 percent of the poor, as opposed to over a quarter in Bangladesh, India, and Sri Lanka.

Remittance flows can play a valuable role in providing foreign exchange, but more importantly also offer significant potential to support incomes of poor and vulnerable groups, the report says. International remittance inflows were at $5.7 billion over the period of July 2008 to March 2009. In Pakistan, however, formal remittances have not been a major part of income for poorer households, and have not reached the poor, women, and rural areas, where service is mostly informal. The State Bank of Pakistan (SBP) has taken various measures that have significantly increased remittances through formal channels, though a large share of domestic remittances remains informally transferred.


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## Neo

*Power shortfall rises to 3000 MW: PEPCO ​* 
KARACHI ( May 20, 2009): The electricity shortfall has risen to 3000 MW due to which load shedding of up to 10 hours is being observed in various parts of the country, Aaj News reported on Wednesday.

According to the channel, PEPCO officials confirmed that unscheduled load shedding was underway due to overloaded power usage especially in late hours.

Power production stood at 12690 MW while its current demand is 15193 MW.

An apparent contradiction in figures provided by the ministry of water and electricity, and that of PEPCO, caused confusion among the masses.

The Islamabad Electric Supply Corporation, meanwhile, said consumers were being provided 925 MW of electricity against demand of 1323 MW.

The IESCO spokesman said load shedding of up to 4 hours was being carried out in urban areas, while power outage of up to 6 hours was being observed in rural areas.


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## Neo

*World Bank will shortly approve around $1.9 billion for Pakistan: $300 million to be disbursed immediately​* 
ISLAMABAD (May 20 2009): The World Bank Country Director Yusupha Crookes on Tuesday said that the bank would shortly approve around $1.9 billion for Pakistan of which $300 million will be disbursed immediately. He said that $200 million was earmarked for the safety net to protect poor while $100 million for Higher Education Commission (HEC). This amount will be disbursed before June 30, he added.

Talking to reporters after attending the ceremony to launch the WB report "Bringing Finance to Pakistan Poor: A study on access to finance for the undeserved and small enterprises," Crookes said that around $650 million was ready for disbursement to Pakistan for the education programmes in Sindh and Punjab. "If Punjab and Sindh showed their performance in universalising education, the amount could be released immediately," he said.

Primarily these programmes are aimed at increasing the students' enrolment. For quite some time, the education departments are reluctant to show their performance due to which the disbursements were stopped.

The WB country said that $350 million could be released to Punjab and $300 million for Sindh. "These amounts could be released once we see the performance of the concerned authorities over the implementation of the projects," he added. He praised the government decision of increasing the power tariff.

"This was one of the toughest decisions taken by the present political government," he added. Crookes said that power sector reforms such as establishment of power distribution companies (Discos), etc, is having very limited impact on improving the power distribution system and reducing the sector's losses.

"Despite having established Discos, Wapda is still all in all. Wapda's role is still the same," he added. There is need to give more powers and responsibility to Discos. They should have autonomy in their spheres. They should maintain their own balance sheets. This will have far reaching consequences to improve the power sector, he added.

The WB country director admitted that poverty had increased in Pakistan. However, there is safety net available to protect the poor electricity consumers. The international aid agencies, he said, are pleased after they learnt that subsidies are being withdrawn in power sector.

The WB report called for easier access to finance for Pakistan poor. The report said that average Pakistani household remains outside the formal financial system, saving at home and borrowing from family or friends in cases of dire need.

Only 14 percent of Pakistanis are using a financial product or service of banks and other financial institution compared to 32 percent of the population having access to formal financial system in Bangladesh. This figure amounts to 48 percent in India and 59 percent in Sri Lanka, the report said.

Over half of the population saves, but only 8 percent entrust their money to banks or any other financial institution. One-third of the population borrows, but only 3 percent use formal financial institutions. As a result of banking sector reforms, the private sector credit touched the figure of Rs 2,523 billion on May 2008, as compared with Rs 356.3 billion a year earlier. The SME credit increased from Rs 18 billion in fiscal year 2000 to Rs 403 billion till March, 2008.


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## Neo

*ADB provides $5.3 billion for 60 ongoing projects​*
KARACHI (May 20 2009): The Asian Development Bank (ADB) has approved $5.3 billion for 60 on-going development projects for Pakistan as of July 2008, which included financing of $2.166 billion for energy projects. This was stated by ADB country director Rune Stroem at the 5th Pogee conference at Karachi Expo Centre here on Tuesday.

He said that ADB had provided $1.8 billion in 2007, $1.2 billion in 2008 and $1.5 billion for 2009 to Pakistan, "and stands as the largest development partner of this country". He said that these projects were in key infrastructure sectors including energy, transportation, water resources and reforms. Rune said that ADB was also the largest development partner in energy sector and across the power supply chain.

The ongoing loans included $510 million for renewable energy, $800 million for power transmission, $810 million for power distribution enhancement, he added. Similarly, ADB will provide $350 million for sustainable energy efficiency, $800 million for power transmission enhancement and $500 million for energy infrastructure under its future loan programme.

Rune said that the ongoing technical assistance programme included gas sector restructuring, establishment of central power purchase agency, renewable energy policy formulation and capacity building, power distribution enhancement and energy efficiency.

He said that ADB has recently concluded technical assistance programme for the development of Thar coal fields and provision of technical support to office of energy advisor to Prime Minister. He said that future technical assistance programme included Nepra institutional capacity building and energy infrastructure.

In addition, ADB is also investing in private sector energy projects including Fauji Kabirwala, Dharki Power, New Bong Hydro, Rajdhani, Winpower and LNG projects. Earlier, Hydrocarbon Development Institute Director General Hilal Raza said that Pakistan's energy demand would reach over 360 million tons of oil equivalent in 2030 which is six times the present needs.

Former SSGC managing director Muwanar Baseer Ahmad talked about Pakistan's new energy plan 2010-2030. He said it was unfortunate that Thar coal was discovered 20 years ago but not a single bankable feasibility was available for the project. PPIB Executive Director N A Zuberi discussed opportunities and challenges for private power generation in Pakistan, while Aqeel Ahmed of ABB Ltd gave suggestions for energy efficiency to avoid power shortages.


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## muse

Pakistan, one step forward, two steps back.


* Agriculture, real estate, bourses to come under tax net *




Thursday, May 21, 2009
Cabinet approves five per cent quota for minorities in govt jobs

By our correspondent

ISLAMABAD: Information Minister Qamar Zaman Kaira on Wednesday hinted that the government may bring the real estate, stock exchange, services and agriculture sectors under the tax net in the coming budget for the fiscal year 2009-10.

Briefing newsmen here after the cabinet meeting that was chaired by Prime Minister Syed Yousuf Raza Gilani, the minister said the cabinet appreciated improvement in the economic conditions of the country despite internal and external challenges, approved five per cent quota for minorities in government jobs and addition of security features in Rs500 note. Though the minister hinted that the four new sectors may be brought gradually under the tax net, he did not give any further details in this regard.

However, when questioned specifically whether the cabinet has taken a *final decision to bring the agriculture sector into the tax net in the coming budget, he said the question of bringing the agriculture income into the tax net arises when this sector sustains itself*.

He said due to government&#8217;s good fiscal policies various economic indicators, including the current account deficit, the fiscal deficit and the inflation rate, have improved significantly. Kaira said the country could not be run only on foreign aid and the government would impose taxes on new sections of the society. However, the number of taxes would be reduced, he added.

He said five per cent quota for minorities in all government and semi-autonomous departments would be strictly maintained, as minorities, too, have equal rights over resources of the country.

He said additional security features for five-hundred-rupee note have been approved in view of some complaints. He said the security features adopted by the Security Printing Press are being recognised the world over and many countries get their currencies printed from Pakistan. The information minister said during the meeting Adviser on Finance Shaukat Tareen gave a detailed briefing on the economy and informed the cabinet that the economic conditions have improved significantly despite global recession and war on terror.

He said the *adviser told the cabinet that it was because of the bitter and difficult decisions taken by the elected government that fiscal deficit has come down from 7.4 to 4.3 per cent, current account deficit from 8.4 to 5.3 per cent of the GDP and inflation has reduced from 25 per cent in August last year to 19.1 per cent in March this year.

He said the foreign exchange reserves that stood at $3.4 billion in October last year have increased to $7 billion and the target of $12 billion is expected to be achieved by the end of the current fiscal year*.

The cabinet was informed *that the tax collection is expected to be around Rs1.25 trillion this year in view of reduction in imports that resulted into revenue losses.Kaira said the GDP growth rate is likely to be around 2.5 per cent this year because of global recession and internal challenges.

He, however, noted that the country&#8217;s agricultural sector performed well this year. &#8220;The country had a bumper wheat crop and in a few days support price for cotton would be announced which would help increase its production,&#8221; *he added.

The minister said the World Bank and the Asian Development Bank have made financing commitments for Bhasha dam and other projects. He said allocations for the Benazir Income Support Programme would hopefully be doubled from the existing Rs34 billion to alleviate poverty. He said the cabinet also decided to extend lease of Uch gas filed to the Oil and Gas Development Company Limited.


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## white_pawn

*Credit to farm sector up 11pc in July-April ​*By Our Staff Reporter 
Thursday, 21 May, 2009 | 05:37 AM PST | 

KARACHI: Banks improved their lending to agriculture sector but remained far behind the target during the first ten months of the current fiscal year.

Despite strong agriculture output in this season the credit flows remained restricted to just Rs174.8 billion during July-April, 2008-09, against Rs250 billion target fixed for the current year. Last year, the credit to agriculture sector exceeded by Rs12 billion from its original target of Rs200 billion. The State Bank set an increased target of Rs250 billion or 25 per cent higher than the last year.

The State Bank reported on Wednesday that the disbursement of credit to the agriculture sector by commercial and specialised banks increased by 10.92 per cent to Rs174.8 billion during the first ten months of the current fiscal year.

Agricultural credit disbursement, in absolute terms, rose by over Rs17.21 billion in July-April, 2009, when compared with disbursement of Rs157.566 billion during the same period of the last year.

Overall credit disbursements by five major commercial banks, including Allied Bank, Habib Bank, MCB Bank, National Bank of Pakistan and United Bank Ltd stood at Rs86.552 billion during the period under review compared with Rs74.328 billion same period last fiscal year, depicting an increase of over Rs12.22 billion or 16.45 per cent.

Zarai Taraqiati Bank Limited, the largest specialised bank, has disbursed Rs52.505 billion during the ten months up 14.71 per cent when compared with Rs45.773 billion of the corresponding period of last year.

The disbursement by Punjab Provincial Co-operative Bank stood at Rs3.610 billion compared with Rs3.983 billion. Besides, 14 domestic private banks also loaned a combined Rs32.111 billion compared with Rs33.482 billion disbursed in July-April, 2008 period.

DAWN.COM | Business | Credit to farm sector up 11pc in July-April


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## white_pawn

*Single digit poverty target set for 2015 ​*Thursday, 21 May, 2009 | 06:00 AM PST |

KARACHI: The State Bank and the federal government have been actively promoting financial inclusion to help achieve the target of reducing the level of poverty to a single digit by 2015, said Yaseen Anwar, deputy governor SBP on Wednesday.

Delivering a keynote address at the launch of World Banks study on Access to Finance for the Underserved and Small Enterprises at a local hotel he said the financial inclusion was the core component of State Banks financial sector development strategy, which envisages transforming the financial market into an equitable system with efficient market-based financial services to the otherwise excluded poor and marginalised population, including women and young people.

He said the central banks efforts to promote financial inclusion had been recognised by the World Banks Consultative Group to Assist the Poor (CGAP). The group said that the State Bank had one of the most conducive policy and regulatory frameworks, which encourage access to financial services. 

He said the number of corporate borrowers increased by 83 per cent, SME borrowers by 134 per cent; agricultural borrowers by 44 per cent; consumer finance borrowers tripled over 5 years; whereas mortgage loans over the same period have risen by 78 per cent and microfinance outreach is at 1.7 million by Dec 2008, which is five times the level of Dec 2003, when the country had only 330,000 clients. 

Anwar said that the SBP had established a Development Finance group comprising of sector specific departments promoting microfinance, SMEs finance, agriculture finance, and housing & infrastructure finance. 

He said that under the Branch Licensing policy commercial banks with 100 or more branches are required to open at least 20 per cent of their branches outside big cities and have branches in Tehsil headquarters where no branch of any bank existed. 

Of the 555 new bank branches opened during 2008, 20 per cent i.e. 111 are now in rural areas. Moreover, banks are encouraged to establish low-cost sub-branches, booths and service centres for performing limited banking functions, he added.

Anwar said the State Bank has encouraged partnerships for innovation to create synergies and achieve scale and recently a partnership between Pakistan Post and the First Microfinance Bank resulted in 35,000 microfinance loans disbursed through 68 post offices in little over one year. 

He said that under the State Banks expanding microfinance outreach strategy Pakistan will have 3 million microfinance borrowers by 2010 and 10 million by 2015. 

He also talked about SBPs partnership with the UK Department for International Development, which has given a grant of 50 million pounds for the Financial Inclusion Programme (FIP) that will be implemented in five years targeting poor, small entrepreneurs, women and marginalised communities. 

He said a microfinance credit guarantee facility has also been launched with GBP 10 million in Dec, 2008 to encourage commercial banks to provide wholesale funds to microfinance banks and institutions for onward lending to the poor and marginalised groups to improve financial outreach.

DAWN.COM | Business | Single digit poverty target set for 2015

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## white_pawn

*Growth estimated at 3.3pc for next fiscal year ​*By Kalbe Ali 
Thursday, 21 May, 2009 | 05:15 AM PST | 

ISLAMABAD: A plan prepared by the Planning Commission for the 2009-10 fiscal year suggests a growth target of 3.3 per cent. It will be considered by the Annual Planning Coordination Committee at a meeting on Friday.

However, official documents say that the actual growth will depend on the performance of three major sectors  agriculture, manufacturing and services.

The documents say that the monetary expansion will be in line with the projected growth of 3.3 per cent. The government has also set CPI inflation target at 9 per cent, less than half of the 20 per cent in the current fiscal. 

The trade deficit for the next fiscal year is estimated at $8.8 billion with exports of $19.9 billion and imports declining to $28.7 billion from $30.2 billion in the current fiscal. 

The current account deficit has been projected at $9.5 billion which is close to $9.4 billion of the current fiscal. The remittances are expected to stand at $7 billion next year.

The documents estimate that the growth in agriculture would be 3.8 per cent, in manufacturing sector 1.8 per cent and in services sector 3.9 per cent.

The Planning Commission estimates that the GDP at the current market prices would increase by 10 per cent.

The documents say that the real challenge will be to revive the manufacturing sector that has shown a negative growth of more than 7.7 per cent during the first nine months of the current fiscal year. The growth in manufacturing sector is estimated at 1.8 per cent, but it will be possible only with smooth supply of energy to industries and adequate incentives for export competitiveness. 

The large scale manufacturing is estimated to grow by 1 per cent against the negative growth in the current fiscal. 

The services sector is likely to grow by 3.9 per cent with wholesale and retail trade growing by 3.3 per cent and finance and insurance by 3 per cent.

The total investment in the next fiscal is expected to be 20 per cent of the GDP. The national saving is projected to be 14.7 per cent, implying that it would be used to finance almost 74 per cent of investments. The remaining 26 per cent will be financed by other sources.

The total public sector investment is expected at 4.7 per cent of GDP.

DAWN.COM | Business | Growth estimated at 3.3pc for next fiscal year


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## Neo

*Per capita income falls to $1,071 ​* 
Thursday, May 21, 2009

ISLAMABAD: Pakistans per capita income fell to $1,071 in 2008-09 compared to $1,102 in the previous fiscal year, show official figures, which will be released in the upcoming Economic Survey for 2008-09, but available with The News.

Finance Adviser Shaukat Tarin, when contacted on Wednesday for comments, said depreciation of the rupee against the dollar and decline in real gross domestic product growth caused the drop in per capita income in fiscal year 2008-09. Pakistan will have to return to growth in order to show improvement in per capita income in the years ahead, he added.

He said rupee stability could help boost per capita income, but the country required real GDP growth of 5 to 6 per cent per annum for achieving sustained progress on the economic front.

Discussing the factors behind the fall in per capita income, official sources said the real GDP growth touched 2 per cent in accordance with the initial assessment done by the National Accounts Committee (NAC) a few days ago while the rupee fell 30 per cent against the dollar in the current financial year. The rupee dropped from Rs60 a dollar to Rs80 just in a few months in 2008-09.

Population growth was 1.9 per cent per annum while real GDP growth came to around 2 per cent, meaning a negative growth in per capita income in 2008-09.

Per capita income is treated as one of the major indicators suggesting the depth of growth and general well-being of any country.

Per capita income, defined as gross national product at current market price in dollar terms divided by the countrys population, has grown at an average rate of around 13 per cent per annum during the last five years rising from $586 in 2002-03 to $926 in 2006-07 and further to $1,085 in 2007-08, initial estimates show. According to final figures of 2007-08, per capita income increased to $1,102.

Real per capita income in rupee terms increased by 4.7 per cent, on average, in the last five years. Real per capita income grew by 4.2 per cent as compared to 4.8 per cent last year.


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## Neo

*Tunisia targets $300m trade with Pakistan ​* 
Thursday, May 21, 2009

LAHORE: Tunisian Ambassador Mourad Bourehla has said there is a wide scope of cooperation with Pakistan in textile, science and technology, telecommunications, health, education, tourism and agriculture to achieve the target of $300 million in bilateral trade by 2010.

Speaking at the Lahore Chamber of Commerce and Industry on Wednesday, he said keeping in view rapidly changing international economic environment and global economic and financial crisis, Tunisia wanted to diversify and reinforce bilateral cooperation.

He said Tunisias modern infrastructure, favourable laws, climate of stability and growth and favourable geographical situation in the heart of Mediterranean region had made it the first country on the southern shore of the Mediterranean sea to sign an association agreement with the EU.

The agreement was designed to enhance Tunisias integration into the world market and to make it a hub for investment, production and distribution. He said Pakistani businessmen could utilise the opportunities by initiating joint ventures with their Tunisian counterparts.


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## Neo

*Govt declares 10-year tax holiday for Gwadar Export Processing Zone​*
ISLAMABAD: The government has decided to provide ten-year tax holidays for Gwadar Export Processing Zone, Federal Minister for Industries and Production announced it during a press conference here on Wednesday.

The cabinet has approved awarding tax holidays for industrial units to be set up in Gwadar. The zone would be established over 46,000 acres areas where industrial units, hotels, warehouses and others would be established.

There would be zero percent sales tax on construction materials and stamp duty will also be exempted. Terming the development of Gwadar Port development as landmark achievement of the present government, he claimed that capacity of the Gwadar port was more than Karachi Port.

It would enhance Pakistan's trade with China, Russian States, Middle East, Afghanistan, Iran and others. He said that trade centres would be established at Gwadar port, which would enhance trade and economic activities in Balochistan that ultimately would help in removing their deprivation.

About fertilizer meeting held today, the minister claimed that the government decided to provide Rs 20.88 billion subsidy on imported and locally manufactured urea fertilizers for Kharif Crops. Among the total Rs 14.38 billion would be provided to local manufacturers of urea fertilizers in the form of subsidy on gas and Rs 6.5 billion subsidy would be provided on imported urea fertilizers. The price of imported urea fertilizer was Rs 1200 per 50 kg bag and the government would provide Rs 500 per bag subsidy.

The minister told reporters that 19.246 million acres area was brought under cultivation for Kharif Crops including cotton, sugarcane, rice, maize and others Three million tonnes urea fertilizers was required for cultivation on this area.

About 2.55 million tonnes urea fertilizers would be produced locally and 0.45 million tonnes would be imported. The government has already imported 164,000 tonnes while tenders have been open for 255,000 tonnes for which letters of credit would be open soon. "We are importing extra commodity in order to avert any possible risk of shortage," he added.

He requested the growers not to make panic and ensured that it was duty of the government to ensure availability of urea fertilizer in the country. The minister claimed that the panic would create black marketing, however, he cleared that retail price of urea fertilizer would be Rs 710 per 50 kg bag.

Answering a question, the minister said the government was taking appropriate measures to stop smuggling of the commodity, as its price at international level was higher as compared with price in Pakistan.


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## Neo

*Revised target of 2.5 percent missed: GDP growth recorded at just 2 percent in FY09​*
ISLAMABAD: The economy during current fiscal year 2008-09 registered a growth of just 2 percent against the budgetary target of 5.5 percent and downward revised target of 2.5 percent and only agriculture sector posted a positive growth of 4.7 percent against the target of 3.7 percent, according to the revised figures after the National Accounts Committee (NAC) meeting.

The country have been pushed back to decade of nineties with low growth, unemployment, higher inflation and higher interest rate regime leaving all the sectors of economy to suffer, official sources told daily Times on Wednesday. Almost all other indicators were found in red zone due to the world financial crisis, governments policy to pacify the economy to curtail demand.

According to the officials at Ministry of Finance, Pakistans economic performance in 2008-09 must be judged against the policy objectives of the government, international developments and domestic constraints. Faced with tenable balance of payments situation and rapidly declining foreign exchange reserves, the government took decisive actions to restore macroeconomic stability. This entailed curtailing domestic demand through contractionary fiscal and monetary policies and rationalised planned public sector development expenditures. According to the revised figures, commodity producing sectors growth, which was targeted at 4.8 percent, have been recorded at 2 percent only in ongoing fiscal year. Agriculture sector surpassed its target of 3.5 percent and posted a growth of 4.7 percent.

Within the agriculture major crops posted a growth of 7.7 percent against the target of 4.5 percent, minor crops 3.6 percent growth against the target of 2 percent, livestock 3.7 percent growth against the target of 3.2 percent, fishery posted a low growth of 2.3 percent against the target of 3.4 percent, forestry negative 15.7 percent against the target of 1.5 percent growth.

Industry: Industrial sector posted a negative growth of 3.6 percent against the growth target of 6 percent fixed for current fiscal year 2008-09. Mining and quarrying posted a growth of 1.3 percent against the target of 5 percent.

Manufacturing: Manufac-turing sector also missed its growth target of 6.1 percent as its growth has been recorded at negative 3.3 percent for ongoing fiscal year. Within manufacturing sector LSM posted a decline of 7.7 percent against the target of 5.5 percent, small scale and house hold posted a growth of 7.5 percent against the target of 8 percent, other sectors within industry were also under pressure and posted a growth of 4.2 percent against the target of 5.2 percent, construction sectors growth declined to 10.8 percent against the growth target of 8 percent, electricity, gas and water supply sector also declined by 3.7 percent against the target of 3 percent.

Services: Services sector, which was targeted to growth by 6.1 percent, has recorded a growth of 3.6 percent in ongoing fiscal year 2008-09. Within this sector transport, storage and communication posted a growth of 2.9 percent against the target of 4.5 percent, wholesale and retail trade declined to 3.1 percent against the target of 5.4 percent, finance and insurance also witnessed a negative growth of 1.2 percent against the target of 12 percent, ownership of dwellings stood at 3.5 percent against the same target. Public administration and defence recorded 5 percent against the target of 4 percent.


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## Neo

*KESC increases generation capacity by 560MW​*
KARACHI: KESC is set to aggressively deliver on its commitment to improve electricity supply for the people of Karachi, by increasing its internal generation capacity with the addition of a 560MW power plant, obtained from GE.

The contract for a 560MW of dual-fired combined cycle plant at Bin Qasim was initially signed in June 2008. Following new managements takeover at KESC, the price was successfully re-negotiated bringing the original prices down by $15 million. The reduced package price, of $378 million will produce power at $675 perMW. This makes the project one of the most economical combined-cycle projects in Pakistan, compared to projects being constructed using the same technology and projecting prices of $800 or more per MW.

Keeping in mind the need for dependable solutions for Karachis electricity grid, KESC has selected the proven technology of GEs 9E Frame Gas Turbines, manufactured in France, as well as including a Steam Turbine to provide a Combined Cycle Power Plant. M/s Harbin of China has been selected to perform Project Works and Plant Commissioning, with an advance payment of $56.6 million. The project is to be built under a fixed price formula, and will follow World Bank guidelines to ensure environmentally-friendly guidelines are met.

The plant is to be completed in four phases, with the first GT expected to be online within 24 months (May 2011), and the second and third GTs to be commissioned in June and July 2011 respectively. The Steam Turbine will be commissioned by January 2012, thereby achieving total capacity of approximately 500 MW connected to the 220 kV network through GIS.

Naveed Ismail, CEO, KESC has said that, We are moving as quickly as possible to install additional power generation capacity to meet the critical needs of Karachis business and residential sectors. KESC has selected GE technology because they have a proven track record in Pakistan and the technology can be installed very quickly.

Furthermore, GE also has the manufacturing capacity to meet our needs for succeeds for such a large number of engines in a very short period of time. We are confident that this project will go a long way towards helping KESC improve grid service to support economic growth in the city, which is of vital interest to the entire country.

The addition of this power project will take KESC a key step closer towards self-reliance in power generation to meet Karachis long-term needs. In addition to reducing load-shedding as an immediate priority, KESCs efforts are aimed at providing the best value for its shareholder and consumer money. KESCs management is fully committed to change the face of the company through positive results. This current addition is a culmination of an extensive effort to provide power solutions that are most competitive on a per MW basis.


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## Neo

*Chinese team invited to invest in energy sector​*
ISLAMABAD: The business community on Wednesday invited Chinese businessmen to invest in power, agriculture and automobile sectors of Pakistan. The Chinese delegation led by Ms Kay Zhang of Commerce and Sourcing House Co., Ltd met today with Islamabad Chamber of Commerce and Industry leaders. The delegation was informed that Pakistan offered attractive investment opportunities in different sectors and urged the Chinese investors should take advantage of these prospects.


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## Neo

*APCC to consider PC's 3.3 percent growth target on May 22​* 
ISLAMABAD (May 21 2009): The Planning Commission has proposed an ambitious growth target of 3.3 percent for the next fiscal year, 2009-10, in its annual plan to be considered by the Annual Planning Co-ordination Committee (APCC) scheduled to meet on Friday, it is learnt.

The Annual Plan for next fiscal year will be taken up by the APCC on May 22, and growth target of 3.3 percent would be entirely dependent on the performance of three major sectors--agriculture, manufacturing and services sectors.

The proposed growth has been calculated on the assumption of 3.8 percent growth in agriculture, 1.8 percent in manufacturing, and 3.9 percent growth in services sector. Analysts believe that a slight decline in the growth of these sectors would affect the annual growth for the next fiscal year.

They said that the real challenge for the government would be how to revive the manufacturing sector which has shown negative growth of 7.7 percent during nine months of the current year due to energy crisis, high input cost, and skyrocketing interest rate. This compelled the government to revise the GDP growth downward to 2 percent from 2.5 percent.

As an outcome of the envisaged economic scenario, GDP at current market prices would increase by 10 percent. Agriculture sector has been estimated to grow by 3.8 percent with 3.5 percent growth forecast for major crops, 4 percent for livestock, 2.4 percent for fisheries, and 1 percent for forestry. Rice production has been estimated at 5.9 million tons, sugarcane 56.5 million tons, and cotton 13.36 million bales for the next fiscal year.

The growth in manufacturing sector has been estimated at 1.8 percent for next fiscal year, but this may be possible only after the supply of energy to the industrial sector rises, and incentives are provided for export competitiveness in the budget. Large-scale manufacturing is targeted to grow by 1 percent, which should be viewed against the backdrop of negative growth of 7.7 percent during the ongoing fiscal year. The services sector is likely to grow by 3.9 percent, with wholesale and retail trade growing by 3.3 percent, and finance and insurance by 3 percent.

Total investment in the next fiscal year is expected to be 20 percent of the GDP. National saving is projected to be 14.7 percent, implying that almost 74 percent of investment would be financed through national savings.

This will leave 26 percent of investment to be financed from foreign savings, which would be 5.3 percent of the GDP. Monetary expansion would be in line with the projected GDP growth of 3.3 percent, and CPI inflation is targeted at 9 percent, the CPI of 20 percent for the current year.

The estimated trade deficit for the next fiscal year would be $8.8 billion, with $19.9 billion exports and $28.7 billion imports. Imports are estimated to decline by 0.5 percent to $28.7 billion from $30.2 billion in current fiscal year. The projected exports are close to current year's export target of $19.5 billion.

The current account deficit for next fiscal year has been estimated at $9.5 billion, which is also close to $9.4 billion for the current fiscal year, and remittances at $7 billion for next year are close to the level of remittances target for the current fiscal year.

Total investment has been projected at 19 percent in current financial year against 21.2 percent last year in line with the trends in GDP growth. Total public sector investment is forecast at 4.7 percent of GDP and national savings have been projected at 13.6 percent during the current financial year against 12.9 percent of last year.


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## Neo

*EC allocates euro 50 million to Pakistan to solve food crisis​*
ISLAMABAD (May 21 2009): European Commission (EC) allocates Euro50 million (roughly Rs 5.4 billion) to Pakistan to help solve the food crisis in the country. The initiative is part of the recently announced aid package at the Friends of Democratic Pakistan meeting in Tokyo last month.

To this effect, the European Commission organised a workshop on food scarcity in the country in collaboration with FAO at the National Agricultural Research Centre here Wednesday. More than 40 participants discussed the existing food shortages and the ways and means to it through the EC's Food Facility initiative. Officials from Pakistan's Ministry of Food and Agriculture, diplomats from the European Union Member States' Missions, researchers from the National Agriculture Researcher Centre, the UN agencies' representatives and partner NGOs attended the event.


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## white_pawn

*Planning Commission likely to propose Rs650bn PSDP​*By A Reporter 
Friday, 22 May, 2009 | 05:40 AM PST 

ISLAMABAD: The Planning Commission, in the pre-Annual Plan Coordination Committee (APCC) meeting held here on Thursday, decided that the overall size of the PSDP is Rs650 billion, which includes Rs450 billion for federal government and Rs200 billion for provinces development budget.

The pre-APCC also asked the provinces to concentrate on the completion of ongoing projects instead of initiating new projects due to financial constraints faced by the country.

The pre-APCC was chaired by the Deputy Chairman Planning Commission Sardar Aseff Ahmed Ali and the representatives of all four provinces, FATA, AJK and Northern Areas attended the meeting. 

The meeting on Friday will give final shape to federal and provincial development budgets, which would be recommended to the National Economic Council (NEC) for final approval.

The NEC is scheduled to be held on June 1 to be chaired by the prime minister.

Sources said that during the pre-APCC, experts of the Planning Commission asked the provinces that the ratio of 80:20 between ongoing projects and the new projects may be altered to 90:10 for the next fiscal year.

The experts reviewed the ongoing and new projects proposed by the provinces and asked them to reduce the cost of projects by completing these on time. 

The Annual Plan Coordination Committee will also consider the federal PSDP, which, for the current fiscal year was originally set at Rs371 billion but was later revised to Rs219 billion due to financial constraints and economic crunch. 

The working papers of APCC said that the federal PSDP for the next fiscal would be Rs253 billion of local component and Rs41 billion worth of foreign portion. 

For the federal PSDP the maximum allocation of Rs16.86 billion has been recommended for projects related to ministry of food and agriculture and the ministry of livestock.

While, Rs34.45 billion has been recommended for water related projects and Rs14 billion for power related projects.

The Annual Plan Coordination Committee working papers said that Rs35 billion has been recommended for special programmes and Rs22.5 billion for the higher education commission.

Projects related to Pakistan Atomic Energy Commission amounts to Rs17.14 billion, which include establishing fuel rods for future nuclear plants for electricity generation.

DAWN.COM | Business | Planning Commission likely to propose Rs650bn PSDP


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## white_pawn

*International bids invited for Bhasha dam ​*By Our Staff Reporter 
Friday, 22 May, 2009 | 04:34 AM PST | 

ISLAMABAD: International bids have been invited for the construction of Bhasha dam, the presidents spokesman said after a meeting convened by President Asif Ali Zardari on Thursday to monitor the progress on Chinese-aided projects.

Talking to newsmen, Farhatulah Babar said the offer contained an incentive clause for early completion of the project.

Three Chinese companies had already expressed interest in the project. He said the feasibility study had been offered to Chinese companies.

The president was informed that the Water and Power Development Authority had invited bids for project consultancy on international competitive bid basis.

A special invitation had been extended to the three Georges Dam Corporation of China to participate in the construction of the dam and other projects.

The Executive Committee of the National Economic Council has already approved the project. It will include a reservoir for 8.1 million acre feet of water. The Ecnec sanctioned $745 million for acquisition of land and payment of compensation to people affected by the project, which will cost $12.6 billion and is likely to be completed in seven years.

The president was also briefed about the projects undertaken in collaboration with China after his visit to Beijing, Babar said.

About progress in other areas, the meeting was informed that Chinese companies had been invited to explore possibility of transfer of hybrid technology.

A Chinese delegation visited Pakistan about two weeks ago and brought hybrid rice seeds for sowing in selected areas on an experiential basis.

Other Chinese companies have offered hybrid seed of cotton and wheat and drip irrigation technology to optimise use of water and save its resources.

The meeting was informed that the Chinese Academy of Agricultural Sciences was imparting technical expertise to Pakistanis and also acting as coordinator with Chinese firms.

An MoU has been signed with the Agricultural Sciences Academy of China. The Chinese ambassador also attended the briefing.

DAWN.COM | Pakistan | International bids invited for Bhasha dam


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## white_pawn

*EU wants to expand trade ties with Pakistan ​*By Our Reporter 
Friday, 22 May, 2009 | 04:05 AM PST |

LAHORE: European Commission Ambassador Jan De KOK has said that the European Union was seriously considering on broadening and deepening of its trade relations with Pakistan. 

Speaking at the Lahore Chamber of Commerce and Industry on Thursday, the envoy said that for the first time Pakistan-EU Summit was going to take place on June 17, 2009 in Brussels to discuss the issue of trade with Pakistan. 

He said that the decision to hold Pakistan-EU summit was taken on Dec 18 last year by the Council of EU Foreign Ministers because before that the trade and trade policy regarding Pakistan was discussed at technocrat and bureaucrat level. 

The council had now decided to take up the issue at political level which would definitely go a long way in expanding trade ties between the two sides.

He said that it was a difficult process to win any favour for Pakistan but it was no more a secret that political will at the highest level in Europe was there. There were, however, a number of manufacturing sectors in Europe which did not want any sort of FTA or GSP Plus status for Pakistan under the pretext that Pakistani manufacturers could be more competitive. 

He said that EU was among the largest trading partners of Pakistan and presently its 20 per cent of exports were going to Europe and of that about 65 per cent were textile and foot wear. 

The European Commission dealt with the trade policy of the European Union and no individual state could speak on the issue of FTA individually. There was, however, a consensus on broadening economic relations with Pakistan in the EU and in EU. 

On the issue of assistance to Pakistan, the ambassador said that the EU commitment with Pakistan in terms of assistance was for a longer term. We are very committed and we would continue to extend assistance. 

LCCI President Mian Muzaffar Ali said that European Union should help Pakistan for sustained development through more investment and trade. 

Pakistan had always viewed the European Union as a key partner with sound opportunities for trade and investment. The presence of a remarkable number of Pakistanis in Europe gave added strength to the traditional relationship. 

The LCCI president reiterated the need for Free Trade Agreement between Pakistan and the European Union saying that by helping Pakistan in trade the European Union would be actually helping itself as well, as it had its own strategic interests in this region.

DAWN.COM | Business | EU wants to expand trade ties with Pakistan


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## Neo

*Load-shedding to continue till Dec 2010: minister ​* 
Friday, May 22, 2009

LAHORE: Federal Minister for Labour, Manpower and Overseas Pakistanis, Syed Khurshid Ahmad Shah, has said people would continue to face the problem of load-shedding till December 2010, though the federal government is putting in its best efforts to overcome the power shortage.

The minister was speaking at the Lahore Chamber of Commerce and Industry (LCCI) on Thursday. He said that to cope with the shortage of electricity, the government was considering all options including wind and coal energy.

Shah said that the government was quite conscious of the problems being faced by the industry due to power shortage, which is a major raw material for a number of industrial sectors.

He also made it clear that the government was well on its way to modify all out-dated industry related laws and in this regard, a consultation process with all stake-holders is very much on. He said that the new laws would be free of any complexities.

He, however, urged the Lahore Chamber to forward its suggestions and proposals for Industrial Relations Act 2010 which is in the formulation process. We want to facilitate them. We want proper care of their childrens health. We want to educate them and for that purpose, all available resources will be utilised.

The minister also revealed that his ministry has finalised a proposal to construct 40,000 new houses for the industrial workers of Punjab, which would be given to them on ownership basis.

Speaking on the occasion, LCCI President Mian Muzaffar Ali said that at a time when the all businesses and industries are in crisis, increase in mark-up rates, rupee/dollar disparity, high cost of inputs, labour inspections and policy are adding to the problems.

He said that a peaceful industrial relation system is actually needed at this moment. The LCCI President said that the Lahore Chamber has already sent proposals for the formulation of Labour Policy 2009 to the Ministry of Labour and Manpower wherein it has suggested: the policy should be employment oriented; labour laws and procedures must be very simple; effective utilisation of welfare funds collected from employers, social security and old age contribution through one window operation and management by tripartite boards headed by the employers.

About Industrial inspections, the LCCI president suggested to the minister that the inspections must not be outsourced as this would lead to corruption and financial burden on the government exchequer or the end users.


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## Neo

*Macroeconomic Framework for the 2009-10​*
*Petroleum group to dominate $9.365bn import bill for 2009-10​*
ISLAMABAD: Petroleum group would continue to dominate countrys imports with projected oil import bill at $9.365 billion during next fiscal year 2009-10 as compared with latest estimated bill of $9.858 billion in ongoing fiscal year 2008-09. The oil import bill was targeted to be $13.669 billion in ongoing fiscal year 2008-09, however, with the decline in oil price in international market, it is projected to be $9.858 billion in ongoing fiscal.

Total imports of the country are projected to be $28.7 billion in 2009-10 as compared with estimated imports of $30.187 billion by end 2008-09, projecting a decline of $1.487 billion. According to the projections contained in Macroeconomic Framework for the 2009-10, total imports were targeted to be around $37.196 billion in 2008-09, however, due to the measures taken by the government and slowdown in economy, total imports of the country are projected to be at $30.187 billion.

Machinery groups imports were projected to be around $7.269 billion in ongoing fiscal year but latest estimates suggest that machinery imports are to end up at $5.180 billion for the ongoing fiscal year. It is projected that machinery imports would decline by $259 million and would be around $4.921 billion in 2009-10.

Food groups imports were projected to be $3.130 billion in ongoing fiscal year and latest estimates suggest that these imports to end up at $3.033 billion by end June. Food groups imports are now projected to decline to $2.881 billion in 2009-10 against the estimates of $30.033 billion in ongoing fiscal year showing a decline of $2.848 billion.

Transport groups imports mainly vehicles were projected to be $2.411 billion in the ongoing fiscal year 2008-09, however, additional duties imposed on import of luxury vehicles and reduction in depreciation rate on used cars imported by overseas Pakistanis, such imports are now projected to be $1.936 billion. Transport groups imports are projected to further decline by $97 million and to be around $1.839 billion in 2009-10.

Textile groups imports like raw cotton, fiber and yarn were projected to be $868 million, and however, such imports are now projected to be around $1.703 billion with an increase of $$835 million. The imports of this group are projected to be around $1.617 billion in 2009-10.

Agriculture and other chemical imports were targeted to be around $2.659 billion in ongoing fiscal; however, such imports are now projected to be around $2.435 billion by end of this fiscal year. Agriculture and other chemical imports are projected to be around $2.313 billion in 2009-10 with fertilizer imports at $727.3 million. Metal groups imports were targeted to be $2.224 billion in ongoing fiscal year but latest estimates suggest that such imports to end up at $1.840 billion for this fiscal with iron and steel imports at $1.114 billion. This group is projected to import such metal products at $1.748 billion in next fiscal year 2009-10 with $1.087 billion imports of iron and steel.

Miscellaneous groups imports were targeted to be $655 million and latest estimates suggest such imports at $549.8 million in ongoing fiscal year 2008-09. Such imports are targeted to be around $522 million in 2009-10. All other imports were targeted to be at $7.616 billion but latest estimates suggest that such imports are to increase to $7.833 billion in 2008-09. These imports are targeted to be around $7.442 billion in next fiscal year 2009-10. sajid chaudhry


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## Neo

*US to invest billions in Pakistan: envoy ​* 
Friday, May 22, 2009

LAHORE: The United States wants to make investment of billions of dollars in Pakistan and will continue to provide relief for the displaced people of Swat.

Speaking at the launch of American Business Forum (ABF) here on Thursday, the US Ambassador to Pakistan, Anne W Patterson, said that the US has already announced $110 million relief funds for the Internally Displaced Persons (IDPs) and would continue its assistance in future as well.

Terming the launch of ABF a positive signal for Pakistan and its economy, the ambassador said American business community is willing to invest in Pakistan. She pointed out that US companies had already invested $750 million in Pakistan during this year and paid some Rs40 billion in the shape of different taxes.

Regarding trade relations between US and Pakistan, Patterson said Pakistan imported $3.6 billion worth of products and exported items worth $2 billion.

She hoped that ABF would be helpful in strengthening the relationship between US companies and Pakistan. She further said that ABF would also work for US foreign direct investment in Pakistan and hoped that it would bring $1.3 billion FDI from the US to Pakistan.

US wants closer ties with Pakistan and would construct Reconstruction Opportunity Zones (ROZ) soon, the ambassador said, adding US companies are interested in making investment in energy projects.

Speaking on the occasion, State Minster for Investment, Senator Waqar Ali Khan, said Pakistan is passing through a new era and facing new challenges. To handle the situation bold steps are needed, he said, adding that the most important thing was the implementation on bold steps.

He urged the nation to unite. He said that foreigners were interested in five sectors of Pakistan including energy, oil & gas, food, corporate farming and Information Technology (IT).

Founding President of ABF, Country Manger Pakistan-Afghanistan of Coca-Cola, Rizwan U Khan, in his welcome address, said that the forum was constituted with 35 member US companies operating in Pakistan. He said US bought 25 per cent of the total exports of Pakistan.


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*Accord for mini-hydropower plants in Chitral ​* 
Friday, May 22, 2009

ISLAMABAD: United Nations Global Environment Facility (GEF) on Thursday signed a project document with Alternative Energy Development Board (AEDB) and Economic Affairs Division (EAD) for the implementation of a $19.2 million plan for setting up mini-hydel power plants in the Chitral district.

The agreement for the project titled Productive Uses of Renewable Energy in Chitral district (PURE-Chitral) was signed by Mikiko Tanaka, Deputy Country Director UNDP, Arif Alauddin, CEO AEDB and Muhammad Asif, Joint Secretary (UN/China) for EAD. Federal Minister of Water and Power Raja Pervez Ashraf witnessed the signing ceremony, a press release stated.

Under the project, 103 micro/mini-hydropower plants (MHPs) would be installed with a total capacity of 15 megawatts.

Ashraf said, Rural electrification has always been a central objective for power sector reforms in Pakistan and about 130,000 villages will be supplied power by decentralised options, of which mini and micro hydropower (MHP) can provide sufficient capacity to provide power for social and productive uses to initiate rural economic development.

Tanaka said, In partnership with AKRSP, PPAF and AEDB, we are hopeful that the planned activities would lead to the promotion of clean and manageable energy resources, thereby demonstrating climate change mitigation through local actions. Furthermore this project fits in the framework of UN joint programme on environment which has targeted interventions on access to sustainable energy sources.

The objective of the project is to harness the micro/mini-hydel energy resource at selected sites in Chitral district and promote productive use of renewable energy. The project will create new local jobs and sources of income while directly mitigating some 461,465 tons CO2 equivalent in the first seven years and 1,890,868 tons CO2 equivalent over 22 years.


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## Neo

*EU considering broadening trade ties with Pakistan​*
LAHORE: The Ambassador of European Commission, Jan De KOK, has said that European Union is considering seriously broadening and deepening its trade relations with Pakistan. The Ambassador was speaking at Lahore Chamber of Commerce and Industry on Thursday. LCCI President Mian Muzaffar Ali, Senior Vice Tahir Javaid Malik and Vice President Irfan Iqbal Sheikh and a number of executive Committee members also spoke on the occasion. The Ambassador said that for the first time ever, Pakistan-EU summit is going to take place on June 17, 2009, in Brussels to discuss the issue of trade with Pakistan. He said that President of Pakistan, Asif Ali Zardari will be presiding over the summit from Pakistan side while the European side would be represented by Czech Republic that holds the rotating Presidency of European Union and most likely Sweden that is going to take charge of the EU Presidency on 1st July, 2009, would also be there to ensure continuity in policies formulated at the summit.


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## Neo

*Chinese companies among bidders for construction of Bhasha dam​*
** President reviews progress on Pak-China collaborative projects​*
ISLAMABAD: International bids had been invited for the construction of Bhasha dam with an incentive clause for early completion and three Chinese companies were among the bidders, a meeting on the follow up action on Pak-China collaborative projects was informed in the Presidency on Thursday.

The meeting  presided over by President Asif Ali Zardari  was called to review the progress on ongoing Chinese-aided projects in Pakistan. Interior Minister Rehman Malik, Finance Adviser Shaukat Tareen, Petroleum Adviser Dr Asim, Special Assistant to the Prime Minister on Water Kamal Majidullah and General Secretary Salman Farooqi attended the meeting. The Chinese ambassador in Islamabad was also present.

Talking to reporters about the meeting, presidents spokesman Farhatullah Babar said the feasibility study of the dam had already been offered to the Chinese companies. The president was informed that WAPDA had also invited bids for project consultancy on an international competitive bid (ICB) basis, Babar said, adding that special invitation had also been extended to the three Chinese companies to help in the construction of the dam and other projects.

Zardari was also briefed about the ongoing collaborative projects with Beijing undertaken recently following his visit to China, the spokesman said.

He said Chinese companies were invited to Pakistan to explore the possibility of transfer of hybrid technology. A Chinese delegation that had visited Pakistan two weeks ago brought with them hybrid rice seeds to be planted in selected areas in Pakistan as an experiment.

More Chinese companies would visit Pakistan with samples of hybrid seed of cotton and wheat and drip irrigation technology to optimise the use of irrigation water and save water resources, Babar said, adding that the state-run Chinese Academy of Agricultural Sciences had been involved in imparting technical expertise and coordination with the Chinese companies, the meeting was informed.


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## Neo

*UAE-gifted power plants: location for installation not yet finalised ​* 
ISLAMABAD (May 22 2009): The Ministry of Water and Power has failed to finalise the location for installation of 320 MW "outdated" power plants, gifted by the United Arab Emirates (UAE), despite the fact that the country is passing through its worst ever power crisis, well-informed sources told Business Recorder on Thursday.

Federal Minister for Water and Power Raja Parvez Ashraf had signed a memorandum of understanding (MoU) with the relevant UAE authorities and worked out a detailed plan for implementation of the agreement for the dismantling, packing and shifting of the plant to Pakistan.

The sources said the UAE government's gifted power plants were not in use in the UAE as they had been replaced with modern plants at the time of signing of the MoU. Pakistan's Ambassador to UAE Khurshid Ahmed Junejo has registered protest with the government for not providing complete information to the UAE government as to where these plants are to be installed.

The sources said the contract department of Abu Dhabi Water and Electricity Authority (ADWEA) was in the process of completing formalities relating to phase-II of transfer of plants to Pakistan. "They have reminded the embassy to provide complete information relating to exact installation locations in Pakistan," said the sources.

According to sources, the Minister for Water and Power written a letter on February 19, 2009 to his counterpart in the UAE and identified two locations, ie Faisalabad and Sheikhupura. However, the ADWEA contract department had informed the embassy that there was no additional space available at Sheikhupura location for installation of plant, the sources added.

The sources said that the process of getting "obsolete" power plants as a gift from the UAE had stared during Shaukat Aziz's tenure. Raja Parvez Ashraf, before leaving Dubai a couple of months ago, had stated that the people of Pakistan would always remember this precious gift, which they were receiving with love and sincerity from brotherly country of the UAE.

He said that the Pak-UAE relations would receive a further boost as a consequence, and expressed the hope that the two countries would help each other in the energy sector in the near future. It may be mentioned here that Sheikh Khalifa bin Zayed Al-Nayhan had offered to donate used power plant of 320 MW capacity as a gift to Pakistan during the last visit of the President of Pakistan to the UAE. The MoU was signed in the presence of President, Asif Ali Zardari in Dubai on February 4.


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## Neo

Daily Times - Leading News Resource of Pakistan*US must help Pakistan with economic aid: Kerry​*
WASHINGTON: Senator John Kerry on Thursday underscored the need for continued US support to help Pakistan take care of the people displaced from Swat following the military offensive launched to eliminate the Taliban from Malakand division.

Chairing the Foreign Relations Committee that received testimony from Admiral Mike Mullen, the top US military officer on US policy toward Pakistan, Kerry recalled the goodwill engendered by US relief efforts in the post-2005 earthquake and called on building the current aid effort.

The current humanitarian crisis in Swat valley is a pressing immediate need. It is also an opportunity, we have a chance here to demonstrate the USs friendship for the Pakistani people, the lawmaker said.

After the Kashmir earthquake, he noted, the sight of US servicemen and servicewomen saving the lives of Pakistanis was incontrovertible proof of our good intentions. He said the Pakistanis started trusting Americans more than the radicals as a result of the humanitarian relief mission.

We (however) failed to follow up on that effort  but the bill proposed by Senator Lugar and me aims to correct this failure, he said, pointing to the importance of the pending legislative measure providing Pakistan $1.5 billion annually for economic uplift of its people.

The lawmaker emphasised the need to fix a Pakistan policy [that the US has pursued over several past years] that has largely failed, we need to create a bold new strategy.

Sen Lugar and I have introduced legislation which we believe helps to do just that. By tripling non-military aid, authorising it for 5-10 years, and de-linking this aid from our security assistance, we can put our relationship with Pakistan on an entirely new foundation, Kerry added.

We can ground our ties on the bedrock of the Pakistani people. Thats why President [Barack] Obama explicitly called on Congress to pass the Kerry-Lugar bill as part of his overall strategy.

Citing his recent visit to Pakistan, Kerry also called for the need to equip Pakistan with economic tools to hold the areas clear of Taliban and consolidate the military gains with development initiatives. app


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## Neo

*Rehabilitation of IDPs: donors pledge $224 million for immediate relief ​* 
ISLAMABABD (May 22 2009): Donors have pledged $224 million for immediate relief and rehabilitation of the Internally Displaced Peoples (IDPs) of Swat whereas preliminary estimates suggest Pakistan would need over $1 billion for their resettlement.

Speaking at the news conference, after the donors' conference chaired by the Prime Minister Syed Yoisaf Raza Gilani, Minister of State for Finance Hina Rabbani Khar said UN would launch 'Flash Appeal' and pledges are expected to increase to $500 to $600 million for the IDPs.

To a question about how much contribution was made by the Muslim Countries, she said they have entirely different modus operandi and would pledge on bilateral level for which President was already in touch with them. The conference attended by 40 countries was given detailed briefing about what was immediately required to alleviate the plight of IDPs. To another question, the Minister said preliminary estimates showed that Pakistan would be requiring over $1 billion for reconstruction and rehabilitation of IDPs and this cost could even rise.

Giving details of the pledges made during the conference, she said US would provide $110 million, Japan $43.35 million, UK $18.54 million, France $16.32 million and Germany pledged $17.6 million. Canada, Denmark and Norway pledged $4.32 million, one million and $2.95 million, respectively for the IDPs whereas EU pledged $9.526 million. United Nations (UN) will launch a formal appeal on Friday in a bid to raise $500 to 600 million for the IDPs.

She said that donors have assured to provide full support to Pakistan in all the three phases from providing relief to reconstruction and rehabilitation of IDPs. The amount pledged would be utilised for relief and reconstruction activities under the umbrella of United Nations. She said that the response of the donors was very positive to deal with the humanitarian crisis. The donors gave positive response to the three pronged strategy for relief, return and rehabilitation.

Earlier, Prime Minister Yusuf Raza Gilani sought donors help for rehabilitating the IDPs, apprised them about efforts made so far as well as about government three pronged strategy to provide immediate relief and their permanent settlement. Gilani said Pakistan was grappling with the menace of terrorism and launched a multi pronged action in Swat and adjoining areas to eradicate it from its roots.

The government was aware of the fact that the recent influx of IDPs has led to a manifold increase in the magnitude of the crisis and wanted the help of world community in dealing with the problem. Prior to the on-going Swat military operation, he said the crisis of IDPs was manageable and was being looked after by the NWFP government, he added.

"Prime Minister's Special Fund for Relief of Victims of Terrorism" was set up to receive donations from both domestic and international donors, over Rs 2 billion was provided to the NWFP government for immediate support to the IDPs. Apprising them about Pakistan's strategy for the IDPs, the Prime Minister said it was based on three phases including Relief, Return, and Rehabilitation & Reconstruction.

The UN would lead the relief phase, in consultation with the NWFP government, and would also make a 'UN Flash Appeal' in consultation with all stakeholders. However, it should be our effort that the relief phase should be as short as possible. For the Rehabilitation & Reconstruction phase, the World Bank is preparing to undertake a Post Conflict Needs Assessment Study. This is a time-consuming exercise and the results shall be shared with the donor community in due course of time.

The Prime Minister said given the magnitude of the task that lies ahead, Pakistan would like to seek the support from the donor community, both for the ongoing relief efforts and for the rebuilding process. Pakistan is looking forward to a positive and visible response from the international community in this regard and reiterates its resolve to root out militancy from its soil.


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## Neo

*Water and power gets top priority in PSDP with Rs 48.45 billion allocation ​* 
ISLAMABAD (May 22 2009): The Planning Commission has given top priority to water and power in its proposed allocation of Public Sector Development Programme (PSDP) for 2009-10 fiscal year by recommending Rs 48.45 billion. The government had allocated Rs 62.420 billion for water and power sector in the 2008-09 budget that has been reduced to Rs 31.210 billion due to financial constraints.

At present, the country is going under energy crisis and proposed allocation for water sector is Rs 34.454 billion and Rs 14 billion for power sector to be considered by Annual Plan Co-ordination Committee (APCC), scheduled to meet Friday. The APCC will consider Rs 294.4 billion proposed Federal share in the PSDP.

In the proposed allocation, the Planning Commission has given second priority to the Communications, including National Highway Authority (NHA) sector, proposing Rs 26.165billion allocation for the next fiscal year. The government had allocated Rs 36.821 billion for the current fiscal year that has been slashed to Rs 19.032 billion due to financial crunch.

Higher Education Commission (HEC) may also get big share of allocation worth Rs 22.5billion for the next fiscal year. It is interesting to note that its proposed allocation is more than proposed allocation of Rs 6.482billion for Education Division. The government had also allocated Rs 6.269 billion for Education Division for the current financial year that has been reduced to Rs 4.162 billion.

The proposed allocation for HEC is double against the last year's allocation of Rs 12.6 billion for HEC now reduced to Rs 18 billion. The proposed allocation for Pakistan Atomic Energy Commission (PAEC) is Rs 17.147 billion and Rs 447.4 million for Pakistan Nuclear Regulatory Authority for the next fiscal year.

Under the rationalisation programme, the government did not cut the big share of Pakistan Atomic Energy Commission's allocation for the current fiscal year that has been revised to Rs 15 billion from earlier allocation of Rs 15.330 billion.

THE PROPOSED ALLOCATION FOR OTHER MINISTRIES AND DEPARTMENTS ARE FOLLOW: 

PETROLEUM AND NATURAL RESOURCES: Rs 580 million;

PORTS AND SHIPPING: Rs 200 million;

RAILWAYS DIVISION: Rs 8.968 billion;

SOCIAL PROGRAMMES: Rs 35 billion;

FINANCE DIVISION: Rs 10.189 billion;

PLANNING AND DEVELOPMENT DIVISION: Rs 4.675billion;

LOCAL GOVERNMENT AND RURAL DEVELOPMENT: Rs 224 million;

TOURISM DIVISION: Rs 32.5 million;

HOUSING AND WORKS: Rs 3.019 billion;

MINISTRY OF FOREIGN AFFAIRS: Rs 250 million;

NARCOTICS CONTROL DIVISION: Rs 611million;

POPULATION WELFARE DIVISION: Rs 4.770 billion;

WOMEN DEVELOPMENT DIVISION: Rs 173 million;

SOCIAL WELFARE AND SPECIAL EDUCATION: Rs 329 million; and;

LABOUR AND MANPOWER DIVISION: Rs 121.4 million;

CULTURE DIVISION: Rs 392 million;

SPORTS DIVISION: Rs 297.5 million;

YOUTH AFFAIRS DIVISION: Rs 47.8 million;

CABINET DIVISION: Rs 2.065 billion;

INFORMATION AND BROADCASTING DIVISION: Rs 639.8 million;

DEFENCE PRODUCTION DIVISION: Rs 1.560 billion; and;

FOOD AND AGRICULTURE DIVISION: Rs 16.880 million.

For Defence Division, including Suparco, the proposed allocation is Rs 5.391 billion in 2009-10 against the revised allocation of Rs 2.295 billion in the outgoing fiscal year. For Interior Division, the proposed allocation is rupees five billion in 2009-10, whereas the allocation for Law, Justice and Human Rights Division may be Rs 2.551 billion in the next financial year PSDP against Rs 1.5 billion for ongoing fiscal year 2008-09.


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## Neo

*Pakistans Economy May Expand 4% Next Year on Higher Spending ​*
May 22 (Bloomberg) -- Pakistans economy is forecast by the government to expand at a faster pace in the next fiscal year starting July 1 as the government spends more on power and water projects.

The economic team has set a growth target of 3.3 percent but this could go to 4 percent if we get additional support from development partners, Sardar Assef Ali, deputy chairman of the Planning Commission told reporters in the capital, Islamabad, today.

The government will spend 600 billion rupees ($7.54 billion) on development projects in the year starting July 1, compared with a budgeted 541 billion rupees this year. Power, water, agriculture and social sector spending will be priority areas, Ali said.

Pakistan set the economic targets ahead of next months budget announcement for the forthcoming fiscal year. The Pakistan Peoples Party-led coalition government predicts the economy will grow by an average of more than 6 percent in the next five years helped by a $7.6 billion bailout from the International Monetary Fund.

The government predicts the economy will grow two percent in the year ending June 30, the slowest pace in eight years, from 5.8 percent in the previous year, Ali said. The farm sector, which accounts for one-fourth of GDP, is estimated to expand four percent in the year ending June 30, he said.

Slowing Inflation

Inflation is expected to slow to nine percent in the year starting July 1, he said. The central bank predicts inflation may ease to 11 percent in June.

The bailout by the IMF has helped South Asias second biggest economy avoid defaulting on its debt and increase foreign-exchange reserves that last year dropped 75 percent.

The IMF has agreed to provide an additional $4.5 billion package to Pakistan, Shaukat Tarin, finance adviser to the prime minister, said last week. The government will decide next month whether it needs the additional IMF loan, he said.

The government is expecting to receive more than $4 billion in assistance funds by the end of June from the U.S., the Asian Development Bank and the World Bank, Tarin said.

Pakistans economy deteriorated this year because of political wrangling and the nations battle against Taliban insurgents in the tribal areas and Swat valley. A month-long battle has so far displaced about 2 million people from Swat. The military says it has killed more than 1,000 militants.

Budget Deficit

The IMF has agreed to ease Pakistans budget-deficit target next fiscal year to help boost economy. An increase in the budget deficit target to 4.6 percent of gross domestic product from 3.4 percent will provide fiscal space and boost growth, the Washington-based lender said in a report this month.

In 2008, Pakistans rupee plunged 22 percent, the benchmark stock index fell 58 percent and the balance-of-payments deficit widened to a record.

The economy deteriorated as the central bank increased its key interest rate to a 10-year high of 15 percent. The bank last month cut its benchmark lending rate by one percentage point to 14 percent to boost growth.


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## Neo

*Development budget for 2009-10 seen at Rs600bn​*Saturday, May 23, 2009

ISLAMABAD: Sardar Aseff Ahmad Ali, Deputy Chairman Planning Commission, has said next development budget outlay will be around Rs600 billion, including federal government share of Rs400 billion in the Public Sector Development Programme and provincial share of Rs200 billion.

He was speaking at a press briefing here on Friday afternoon at the P Block of Planning Commission where a meeting of the Annual Plan Coordination Committee (APCC) was underway.

Ali said next years GDP growth had been projected at 3.3 per cent which would increase to over 4 per cent keeping in view the size of budgetary allocations amounting to Rs600 billion for next fiscal year, which would trigger economic activities and accelerate growth.

However, he said the GDP growth for the ongoing financial year had been estimated at 2 per cent against 2.5 per cent agreed with the International Monetary Fund (IMF). Last years growth of 5.8 per cent has been readjusted at 4.1 per cent. However, next years inflation target has been projected at 9 per cent.

Although there was no relief as inflation stood at 17.8 per cent, the government had managed to check price rises, he said and hoped the inflation would come down to 14 per cent by June 30.

Ali acknowledged that government policies provided no respite in inflation, but defended the massive increase in wheat support price to Rs950 per 40kg, saying if it were not provided to the farmers, Pakistan would have faced a wheat crisis.

Talking about administrative measures for bringing down inflation, he said earlier magistrates had an effective role to curb inflation at the local level, but the last government changed the system and the local governments had miserably failed to deliver on that front.

He said budgetary allocations would be fine-tuned in the meeting of the National Economic Council (NEC), which was scheduled for July 1. This time, we have got the fiscal space in the range of Rs85 to Rs90 billion, which will be spent in 2009-10 on new development schemes.

However, the main chunk of Rs400 billion would be spent on ongoing development projects. In case, ERRA project allocations were included in the PSDP, available fiscal space for the development budget would increase to Rs105 billion.

To a question, he said Kalabagh dam had not been officially shelved and Pakistan needed more dams. However, those dams would be completed which had complete consensuses from the four federating units. Since Pakistan is a federation, so every water reservoir would be completed after developing consensus.

He said Akhori dam could not be approved as small provinces had raised some objections in the APCC meeting and to that effect he had asked the Ministry of Water and Power to address the reservations of Sindh and NWFP.

He said the government gave paramount importance to Diamer-Basha dam and formal work on it would kick off next year, adding bids had been invited from local and foreign construction companies.

To a question, he said budgetary demand for ongoing development schemes stood at Rs825 billon, but the huge demand had been rationalised keeping in view resources available with the government. He said the secretary finance had assured the Planning Commission that budgetary releases for the PSDP of 2009-10 would be ensured on time so that no project could face any delay.

To a question, he said the government had prioritised various sectors which would be having total focus. The social sector had been put on top and then came water, electricity, agriculture and infrastructure. These sectors development would ensure economic activities in the country.

Ali said the Planning Commission had started chalking out plans for the rehabilitation of Internally Displaced Persons (IDPs) and reconstruction of areas destroyed during the military operation against the militants.

However, he said the projects for reconstruction of IDP areas would be out of PSDP.


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## Neo

*US Senate okays Pakistan economic and security aid​*
WASHINGTON: The US Senate approved economic and security assistance on Thursday evening to bolster Pakistans development and counterinsurgency capabilities as part of a massive $91.3 billion supplemental bill for Iraq and Afghanistan wars.

The House of Representative has already passed a similar bill, and a reconciled version would now be presented to US President Barack Obama for his endorsement early next month. The Senate measure allows the Obama administration to use $400 million to build Pakistans counterinsurgency capability, as part of a $3 billion, five-year programme.

It allows more than $500 million to be used for Pakistans economic development, strengthening law-enforcement agencies and good governance, providing humanitarian assistance and funding counter-narcotics and economic support programmes. In addition, nearly $900 million would flow into Pakistan for US diplomatic operations and improvement of security at its diplomatic missions in the country.

The US and the international community have welcomed and supported Pakistans return to civilian rule since the democratic elections of February 18, 2008, says the bill. It notes that Afghanistan and Pakistan are facing grave threats to their internal security from a growing insurgency. app


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## Neo

*Budget 2009-10 growth-oriented, people friendly, says Tareen​*
ISLAMABAD: Advisor to Prime Minister on Finance Shaukat Tareen said on Friday that upcoming budget 2009-10 will be growth oriented and people friendly.

Talking to PTV, he said, sizable amounts would also be allocated for poverty alleviation and others peoples welfare projects.

He said, initiatives will also be announced in the budget to increase the countrys growth rate.

The Advisor said the government will also announce measures to create more job opportunities as it will help alleviating poverty.

The budget will focus on agriculture, energy, manufacturing sectors and to develop infrastructure.

He said the government did not believe on imposing more taxes on its people rather it wanted to increase tax net and to improve administration.

Shaukat Tareen said the government with the cooperation of masses will increase tax net in the coming days.

He said more areas and people will be brought under tax net in the budget. The budget having care of poor segment of society, measures for the growth of different sectors, step to control price hike can be called good one, he added.

About oil prices, he said, the prices have been decreased as per promised by the government with the people of the country.

He informed that the government is not in a position to decrease more oil prices in future as the prices of oil has increased in the international market.

To a question, he said, the prices of CNG revised after the period of six moth. He hoped that the prices of CNG will also be decreased in near future.

To a question about donor conference, he said international community in Tokyo has pledged of 5.28 billion dollar.

He said international community have also made commitment for IDPs.

He said 2 billion dollar plus will be required for IDPs rehabilitation. He said response of the international community was very positive in IDPs conference. app


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## Neo

*Two big energy sector projects in doldrums​* 
ISLAMABAD (May 23 2009): After Kalabagh Dam, two other big projects in energy sector are in doldrums as provinces have raised objections over the Thar Coal Project and Akori Dam. The Water and Power Ministry had submitted the feasibility study of Akori Dam for allocation in the Public Sector Development Programme 2009-10 but the Annual Plan Co-ordination Committee (APPCC) refused to recommend allocation for the project due to objections raised by provinces in the meeting.

Addressing a press conference, Planning Commission Deputy Chairman Aseff Ahmed Ali said that the ministry concerned has been directed to remove the objections of provinces on the Akori Dam and bring it again to the Commission for consideration. He also announced that Kalabagh Dam was not officially shelved but added that reservations of provinces should be addressed to develop consensus on the project.

According to sources, Thar Coal Project approved by the Central Development Working Party (CDWP) costing Rs 2.5 billion is in doldrums as Sindh has objected to the role of Thar Coal Mining Company as executing agency. According to sources Sindh wants to assign the role of executing agency to the Thar Coal Energy Board and due to controversy between federal government and Sindh, the project seems to be in doldrums, sources claimed.

In the last meeting, the CDWP had approved a Thar Coal project through which gas would be derived from coalmine. The project was the pilot project to generate 1000 MW electricity.

The Deputy Chairman of Planning Commission said during the press conference that President Asif Ali Zardari has taken interest in forming the Thar Coal Energy Board that comprised the members of Sindh as well as federal government to resolve the differences between federal and Sindh government. He said that the government had devised a plan of gasification from Thar coal because mining of Thar coal could create ecological problems for Thar district.

He said the government required billions of dollars for setting up the coal-based power plants and was devising a business plan to attract global investors. He said the government was also giving top priority to the Diamer Bhasha Dam and would make block allocation for the water and power sector in the upcoming budget for development projects including Bhasha Dam.


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## muse

"People friendly" -- WTF? 
Whats' "people friendly"?? Is this a govt spending bill we are talking about? If yes, then some people's pet projects will not get funded, will those people cease being "people" and the budget become "unfriendly" to them??

Ok, I understand your confusion, you cannot understand how a process of choosing the most worthwhile projects can be "friendly" or "unfriendly" --- So, with your permission, I might attempt an explanation? hainji? "Friendly" is when you give free money -- "Unfriendly" is when you don't give free money

It's vitally important to use the correct name for things - and such misdirection as "people friendly" should be your first clue that someone else (a guess, but most likely a politician or his cronies or extended family) will have access to a significant portion of the treasury, in the name of the "awam" and their "welfare", and those who have a job and live on a salary can expect to finance the "friendly" spending for the "welfare" of the "awam" , for which politicians and their cronies thank you, ghost jobs thank you and bureaucrats holding numbered accounts thank you -- to avoid you feeling the pain now, financing will be pushed to overseas financiers, but one way or another, you will pay that bill, for the "welfare of the Awam".

But hey, you are rich, you can afford it - you studied, you have a good job, you had chances in life - the Awam did not, and the politicians and bureaucrats who have made this argument on behalf of the "Awam", are they also poor ? Did not have opportunities that you had? BTW, when did you last have an opportuinity to raid the treasury, enrich yourself and your buddies?

Reap as you sow, it's a universal law, plant corn and hope to harvest wheat?

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## Neo

I'd more than happy if GoP brings inflation back to single digit as promised by Mr Tarin a few weeks ago. Thats the best way to help the poverty stricken country.


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## Neo

* Govt to protect foreign investment through legislation ​* 
*Waqar says $10bn investment target to be achieved, Qatar to supply LNG​*
Sunday, May 24, 2009

LAHORE: Federal Investment Minister Waqar Ahmad has expressed confidence that the foreign investment target of $10 billion by the end of December will be achieved as the government is in constant touch with foreign investors and expatriate Pakistanis.

He was speaking at the Lahore Chamber of Commerce and Industry. He said agreements to be reached with investors would be protected through legislation so that future governments could not be able to scrap those agreements. Despite all odds, he said, a number of potential foreign investors were ready to make investment in Pakistan in various sectors.

Over the issue of power and gas shortage in the country, the minister said Qatari government had agreed to provide two million tonnes of liquefied natural gas (LNG) provided Pakistan entered into a long-term agreement. In that regard, a high-powered delegation, headed by the federal petroleum minister, would be visiting Qatar very soon.

He said LNG, being an efficient fuel, would not only meet gas shortage in the country but would also help increase efficiency of all thermal power generation units, which would be able to produce an extra 1,200 to 1,300 megawatts of electricity.

On completion of all formalities with the Qatari government, he said, the LNG could reach Pakistan within three months, adding the agreement would also help curtail the oil import bill.

He said Pakistan is an attractive place for investment in the construction sector as there is a shortage of eight million houses. He said Pakistanis, who had invested $8.5 billion in the UAE, could be prospective investors besides UAE investors.

He said the business offered a return of 40 per cent on investment, adding the government was planning to offer land as its equity to these investors who had a capacity to construct 60 houses per day with an investment of $4 million only. Even if one million houses were constructed through the process, he added, it would generate a cash flow of $15 billion.

He said a task force comprising private sector experts was being set up to guide the government in its investment policy initiatives.

LCCI President Mian Muzaffar Ali said there was a dire need for foreign investment in labour-intensive industries because every year four million people entered the workforce. He said it could easily be done through active participation of commercial attaches working in foreign countries and private sectors collaboration with the chambers of commerce in other countries.

He said the present year like 2008 was witnessing a terrible state of affairs, whether in the shape of terrorism, higher energy prices, exceptional surge in food inflation or financial market crisis matching the Great Depression of 1930s.

He said foreign investment was constantly shrinking. Overall foreign investment during fiscal year 2008 had declined by 32.2 per cent and stood at $3.6 billion against $5.3 billion in the previous year. Worst of all, he said, energy crisis had increased the cost of doing business in the country.


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## Neo

*Pakistan to offer special zone to Japan ​* 
Sunday, May 24, 2009

KARACHI: A Pakistani delegation is leaving for Japan on Saturday to offer special industrial zone to Japanese investors in Karachi at the 5th round of Pak-Japan joint business dialogue next week.

This was stated by the Board of Investment (BoI) Chairman Saleem H Mandviwalla, while speaking at a press conference at BoI office on Saturday.

The meeting will be held at Tokyo Chamber of Commerce and Industry on Monday. He said the delegation will present a report that will finalise modalities about the special zone and Japanese investors will select land from the two designated sites, both available in Port Qasim area, he added.

Mandviwalla said that about 300 acres of land of the national industrial park and 1,300 acres of land from Sindh government will be offered to Japanese investors. Japanese investors will have the choice of developing land for the zone either by themselves or through a joint venture with Pakistani counterparts.

He pointed out that work on this project had started since last two years and so far four rounds have been held in both the countries. Mandviwalla said that one-to-one meetings will be held during the three-day stay.

Mandviwalla said that similar delegation from Japan will also visit Pakistan after this summit. He said Japanese investors will be offered incentives including tax exemption, duty-free import of machinery and raw material for re-export purposes at this zone.


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## Neo

*New five-year plan sees GDP growth at 6pc ​* 
Sunday, May 24, 2009

ISLAMABAD: The government has envisaged around six per cent GDP growth under the upcoming 10th Five Year Plan and its approach paper will be presented before the next National Economic Council (NEC) meeting with Prime Minister Syed Yousuf Raza Gilani in the chair on June 1.

The concept paper also talks about envisaging higher growth rate in the next five years in order to tackle rising trend in poverty and unemployment.

The government also wants to put in place monitoring and evaluation mechanism in each ministries/divisions in order to ensure effective utilization of multi billion rupees projects. The people centric policies will help in achieving the improvements in social sector.

The concept paper also states that since 2001 the economy has suffered around $35 billion loss due to outfall of the 9/11. Pakistan should be given market access to compensate its losses.

The concept paper also highlights policies being adopted by the government to uplift the social sector and envisage targets to remove regional disparities in the next five years.

The NEC, the sources say, will also consider approval for approach paper of 10th Five Year Plan (2010-15) in which priorities will be given to social sector as well as removing regional disparities among provinces and areas of the country.

The Planning Commission Chief Economist Dr Rashid Amjad is heading the task force working for preparation of the next Five Year Plan, which the government is going to tagged as Peoples Plan.

Dr Rashid Amjad told this scribe that the approach paper would basically outline priorities of the government for the next five years. The main issue is sustained growth with human face, he said and added that the social sector remained neglected in last few years but now the development strategy would be based upon bringing improvements in peoples lives. 

The APCC in its meeting had recommended the size of Rs600 billion for the next Annual Development Plan (ADP) out of which the federal share was proposed at Rs400 billion while the provinces share stood at Rs200 billion for 2009-10. The NEC will accord its final approval in the meeting going to be held on June 1, 2009. The draft of the approach is ready which will be given final shape by the next week.


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## Neo

*NEC may approve Rs 19.05 billion for Bhasha dam, two nuclear power plants ​* 
ISLAMABAD (May 24 2009): The National Economic Council (NEC) is likely to approve Rs 19.05 billion for the construction of Diamer Bhasha dam and two new nuclear power plants (Ch-3 Ch-4) at Chashma in the Public Sector Development Programme (PSDP) of next budget (2009-10). The Council is scheduled to meet on June 1.

The Annual Plan Co-ordination Committee (APPC) has allocated Rs 16 billion for Neelum Jhelum Hydropower Project in AJK. The NEC may also approve allocation of Rs 22.9 billion for 800 MW Guddu steam power project. The Finance Ministry Priorities Committee has made these allocations and Planning Commission Deputy Chairman Sardar Aseff Ahmed confirmed to Business Recorder that all the recommended allocations by priorities committee were endorsed by the APPC in its meeting held on Friday.

The NEC may also approve allocation of Rs 3.55 billion for Chashma Nuclear Power Project 3-4 and Rs 15.5 billion for the construction of Diamer Bhasha Dam project in the next budget. The Water and Power Ministry had sought the allocation of Rs 8 billion for the Bhasha dam project but the priorities committee recommended allocation of Rs 15.5 billion. Pakistan Atomic Energy Commission had sought allocation of Rs 23.9 billion for Ch-3 and Ch-4 but the priorities committee had recommended Rs 3.55 billion and the amount was approved by the APCC.

According to sources, the APCC also recommended the said amount to be allocated for these projects in the next budget. The APCC has also recommended Rs 8.6 billion for the ongoing Chashma nuclear power project -2 Mianwali. The APCC has also recommended Rs 366.58 million for other project namely MPS-3 Taunsa-2 Uranium Mining Project. Two projects relating to uranium exploration have been recommended that include Rs 176.3 million allocation for detailed exploration of uranium (phase-vii) DG Khan and Rs 231.7 million for detailed exploration of uranium resources in Bannu Basin and Kohat Plateau.


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## Neo

*Pakistan hopeful of achieving $10 billion FDI target ​* 
LAHORE (May 24 2009): Federal Minister for Investment Senator Waqar Ahmad, while expressing his optimism about substantial increase in foreign direct investment (FDI) into Pakistan, has hoped that the country would achieve the target of 10 billion-dollar foreign investment during the current year.

Speaking at Lahore Chamber of Commerce here on Saturday, the Federal Minister said that Pakistan was an attractive place for investment in construction sector due to shortfall of eight million houses in the country. The Pakistanis, who had invested 8.5 billion dollars in the United Arab Emirates (UAE) real estate business, could be the prospective investors in Pakistan, he said.

Besides, the UAE-based investors were also expected to think over investing in Pakistan to tap the existing potential in the housing sector, he added. He said the business carried a return of 40 percent on investment, and added the Federal government was planning to offer land as its equity to these investors, who had a capacity to construct 60 houses per day with an investment of four million dollars only. The construction of a million houses under the programme could generate a cash flow, amounting to 15 billion dollars, the minister added.

Taking about the measures taken to mitigate the power shortage issue, Waqar Ahmad Khan said the Qatar government had agreed to give liquefied natural gas (LNG) provided the government of Pakistan entered into a long-term agreement. Headed by the Federal Minister for Petroleum, a delegation would visit Qatar very soon to finalise details, he maintained.

The LNG, being an efficient fuel, would not only bridge gas shortage in the country, but would also help increase the efficiency of all power generation thermal units that would be generating an extra 1200 to 1300 Megawatts of electricity.

He said that on completion of all formalities with the Qatar government, the LNG could reach Pakistan within three months time. He said that the agreement would also help curtail existing import bill. Waqar further said that legal coverage would be provided through legislation to all agreements to be made with the investors so that these could not be scrapped in future. He said that despite all odds, a number of potential foreign investors were ready to make investment in Pakistan in various sectors.

He said that the Ministry of Investment had decided to set up a task force in collaboration with the private sector to attract foreign investment, and urged the LCCI to give the names of the businessmen so that they could be included in the task force.

Appreciating the Federal governments efforts aimed at promoting investment in the country, LCCI President Mian Muzaffar Ali said that there was a dire need for foreign investment in labour-intensive industries because every year four million new people were adding to the existing workforce.

He said that it could easily be done through active participation of commercial attaches, working in foreign countries, and private sector's collaboration with the chambers of commerce in other countries.

The LCCI President said that like 2008, the current was witnessing a terrible state of affairs, whether they existed in the shape of terrorism, higher energy prices, an exceptional surge in food inflation or in the form of a financial market crisis to match the great depression of 1930s. He said these developments had adverse consequences of differing degrees for economies in different parts of the world, including the US and UK.

He said these external developments had equally played an important role in stressing Pakistan's macroeconomic imbalances while unsettled domestic political conditions and an uncertain security environment had adversely affected the performance of the Pakistan economy.

As a result, the foreign investment was constantly shrinking, he said, adding that the overall foreign investment during the 2008 fiscal year had declined by 32.2 percent and stood at 3.6 billion dollars as against 5.3 billion dollars in the comparable period of the previous years. He said the worst of all, severe energy crisis had increased the cost of doing business in the country. The LCCI President said if present alarming situation continued, the wheel of industry, which had already slowed down, would get jammed due to the growing energy shortage in the country.

He said the LCCI had repeatedly requested the government to seriously focus on the increase in production on a sustainable basis, and to fully exploit renewable energy resources so that "we can promote our businesses on sustainable lines." He said the government also needed to develop a strong liaison with the business community and whatever the decisions it took must be on permanent basis and not on ad hoc basis.


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## white_pawn

*Subsidy on electricity being removed, tariff to be raised ​*Monday, 25 May, 2009 | 10:46 PM PST | 

ISLAMABAD: The government has decided to end subsidies on electricity from the next fiscal year and the first batch of tariff raises will be made in July, sources in the finance ministry said.

The government has decided to raise the power tariff by ten per cent in July while the next phase of tariff increases will be made in December 2009, to cover up the revenue losses faced by electricity distribution companies (Disco) in absence of the subsidy, sources in said. 

Officials said that the government was currently subsidising 17.5 per cent of the electricity tariff as decided in recent meetings held between Pakistan Electric Power Company (Pepco), ministry of water and power and the finance ministry. 

The decision made by finance ministry has been conveyed to Pepco and the ministry of water and power that the subsidies would have to go from next fiscal year.

Despite an agreement with the International Monetary Fund, the government would be subsidizing electricity worth more than Rs120 billion during the current fiscal year; almost double the amount allocated in the budget. 

The government had allocated Rs65 billion for power subsidies in the budget 2008-09, besides Rs2billion in terms of reduced tariff to the agriculture tube wells and more than Rs4.5 for tube wells in Baluchistan.

The country was not under the IMF obligations in June last when the budget for approved, said an official of the finance ministry adding that the there will not be any subsidy for electricity in the budget of current fiscal year.

However, the decision has yet to be taken over the subsidies for the life line consumers, who utilise up to 50 units electricity per month. 

Officials of PEPCO said that the difference between the cost of electricity and the notified tariff is much higher than the allocated amount in the budget.

Besides the IMF the Asian Development Bank (ADB) has also asked the government to rectify the affairs of power sector.

The government has approached the ADB for support to clear the circular debt issues once and set the power sector on path of growth, said Tahir Basharat Cheema, the Managing Director of Pepco. However the final decisions over the outcome of the talks with ADB would be decided by the ministry of finance and the ministry of water and power.

After a series of meetings with stake holders the synchronised circular debt figures amount to Rs216 billion rupees out of which term finance certificates worth Rs80.11 have already been floated with the support of ten local and international banks.

Sources in the ministry of water and power said that the government wants to obtain soft loans from ADB of Rs136 to clear all the circular debt and then only Pepco would be under the debt.

However, before signing any loan the ADB wanted Pakistan to ensure that subsidies would end, and Discos would improve their recoveries besides reducing line losses.

DAWN.COM | Business | Subsidy on electricity being removed, tariff to be raised


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## white_pawn

*Final deal on gas pipeline in three weeks: Iran ​*
Tuesday, 26 May, 2009 | 05:07 AM PST 

TEHRAN: There are no outstanding issues impeding the project for laying a gas pipeline between Pakistan and Iran and a final deal will be signed in three weeks, an Iranian official said on Monday. 

The final contract will be signed between the National Iranian Gas Export Company and Interstate Gas System of Pakistan in three weeks, chief executive officer of the National Iranian Gas Company, Reza Kasaizadeh, told ISNA news agency.

Kasaizadeh said: Issues of price, revision of price, the pricing formula and other questions have been finalised. 

Although a date for the completion of the multi-billion-dollar pipeline has not yet been announced, Kasaizadeh said that about 250 kilometres of pipeline remained to be built and that export to Pakistan could then start within four years.AFP

DAWN.COM | Business | Final deal on gas pipeline in three weeks: Iran


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## white_pawn

*Peace pipeline at last Dawn Editorial ​*Tuesday, 26 May, 2009 | 06:39 AM PST |

There is little good news these days, but perhaps we should not despair. Iran and Pakistan have signed a deal to construct a gas pipeline that had been on the cards since 1995, notwithstanding the numerous turns and twists in negotiations. The gas sales agreement should also be signed shortly. 

We can then hope for work on the project to begin. This is a major breakthrough for Pakistan which will gain tremendously in the energy sector. When completed the 2100-kilometre pipeline will carry 750 million cubic feet of gas per day from Irans South Pars fields to Nawabshah in Sindh. This gas will be used only for energy generation and help produce 5000MW of electricity for this power-starved country. The price agreed upon for the moment i.e. 80 per cent of the oil price, may not be as low as initially bargained for. But in the absence of alternatives this appears to be the most feasible offer. With oil prices falling as they are these days, Pakistan should benefit. 

There are, however, two aspects of this project that must be kept in mind. One is directly linked to Pakistans security concerns in Balochistan. Fears have been expressed that the turmoil in Balochistan will threaten the security of the pipeline since a great length of the 1,000 kilometres inside Pakistan passes through that province which borders Iran. 

Islamabad could convert this factor to its advantage if it can ensure that in the construction of the pipeline indigenous labour is hired and the gains of the economic activity inevitably generated by projects of such magnitude are focused on Balochistan for the benefit of its poverty-stricken people. The peace pipeline will begin functioning in another five years. This period should be used by Islamabad to address the Balochistan problem in earnest to find a just solution that redresses the grievances of the provinces citizens. 

The international implications of the Iran-Pakistan pipeline accord also have great significance. At one stage India had expressed serious interest in the project as it also stood to benefit from it. Had India not dropped out  as it did last year  the pipeline would have emerged as a powerful focal point in a region that is emerging as an important site on the world energy map. The two signatories have kept the door open for New Delhi that can still join the arrangement at some point. Plans to reduce the circumference of the pipeline should keep the prospects of Indias entry in view. Very importantly, Pakistan has displayed a measure of independence vis-à-vis Washington which has been a persistent opponent of the pipeline deal. With changes in the global equations in the offing and there being a possibility of a US-Iran dialogue, one can only say that Pakistan stands vindicated.


DAWN.COM | Business | Peace pipeline at last


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## white_pawn

*625m social security net on the cards By Amin Ahmed ​*Tuesday, 26 May, 2009 | 02:44 AM PST |

RAWALPINDI: The government is expected to launch a $625 million social safety net system during the financial year 2009-10 for which it has sought financing of 200 million dollars from the International Development Association (IDA), it has been learnt.

The board of World Bank Group is expected to approve the financing of the new programme in Washington next month before the government announces its budget 2009-10. 

The remaining financing of 425 million would be arranged by the federal government from its own sources. 

The IDA credit would be transferred to the federal government in accordance with the terms of the financing agreement between Pakistan and the World Bank Group.

The implementation and monitoring of the safety net reforms are currently being managed by Benazir Income Support Programme (BISP), while the ministry of finance coordinates the overall reform agenda with the assistance of the Planning Commission. 

The new safety net system will provide the chronic and transient poor with both basic income support and access to opportunities for graduating out of poverty.

Specifically, the financing will support the establishment of an appropriate policy framework for an efficient national safety net system including the development of sound institutions for the effective implementation of the BISP, sources said.

At the same time, a World Bank report says, while potential benefits to the proposed operation are very significant, there are also substantial political, economic and implementation risks.

Explaining the political risks, the World Bank report says attaining a sharp reduction in the fiscal and current account deficits will require political leadership and cohesion. 

The scale and speed of the required economic policy response to the macro-economic imbalances to improve economic growth and poverty reduction prospects in the long run could intensify social tensions in part of the population.

The sustainability of the programme could also be undermined by possible differences among the countrys main political parties on other issues including constitutional reforms and the security situation. 

The development of a well-governed and targeted safety net could help mitigate the economic and social impact of necessary structural reforms on the poorest segments of the population, promoting social peace.

In addition, the involvement of parliamentarians in the initial beneficiary selection could also pose a major risk to its governance. 

The development of effective institutions and strong monitoring and evaluation systems that can provide information on programme performance and gain the confidence of the public could mitigate this risk. 

The consensus across the political spectrum on the need for a safety net programme will also ensure continuity of the programme though the name or institutional home may change.

On the external side, a renewed rise in international energy and commodity prices, a reduction in foreign remittances especially from the countries of the Middle East, and a further deterioration in the world economy and international financial markets could weaken the export sector, reduce household transfers, lower capital inflows, limit economic growth and reduce flexibility for policy reforms. 

Owing to these reasons, the external imbalances may continue to widen despite the short-term measures taken. 

On the internal side, the inability of government to restore fiscal and external balance as agreed could reduce business and consumer confidence. 

This could cause a fundamental shift in market expectations and a loss of confidence at home and abroad, leading to a sudden reversal of financial assets held in Pakistans stock and bond markets.


DAWN.COM | Business | $625m social security net on the cards


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## white_pawn

*Textile exporters find new markets ​* 
Tuesday, May 26, 2009
By Mansoor Ahmad

LAHORE: The countrys export profile of textiles reveals that the country has lost some of its most established markets but exporters have found new export avenues that were neglected in the past.

According to the data available, in cotton yarn Pakistans exports have increased by 10 per cent in China, Bangladesh, more than double in France, Singapore, Madagascar and Australia during the first seven months of this fiscal year.

The increase in exports to Singapore amounted to $588,000 against last years exports of $74,000. Djibouti, Yemen, Sudan, Qatar and Jordan were the new markets, with Djibouti accounting for the highest exports of $140,000.

Pakistan lost cotton yarn markets during the same period in over 32 countries. Major declines were recorded in Hong Kong $44.65 million, Portugal $13.99 million and Korea $41.25 million. These losses could be attributed to the slowdown in textile activities in these countries. Other major declines were in Turkey, Italy, Brazil, Poland, Vietnam, Indonesia and Iran.

Pakistan managed to increase its exports in cotton fabric, which is a value-added textile product, in 29 countries including Turkey, Bangladesh, Italy, Germany, USA, China, Korea, Brazil, Indonesia, UK and Singapore. The new market discovered was in Iraq, where exports were made worth $5,000. 

It is interesting to note that fabric exports increased in many countries where Pakistan lost its yarn market. The country lost fabric markets in the US, Sri Lanka, Spain, Hong Kong, India, Vietnam and 15 other countries. 

The sharpest loss in terms of percentage was in Jamaica, where fabric exports declined from $87,000 in July-Jan 2007-08 to $6,000 during July-Jan 2008-09. Readymade garments exports increased in Europe, Australia, Singapore, China, India and Afghanistan along with Vietnam, which was a new market discovered with exports worth $8,000. The highest growth in exports of garments was in Afghanistan that increased from $7,000 in July-Jan last fiscal year to $137,000 during the same period this year.

Decline in exports of readymade garments were in major European and American markets. Exports to US were down by $66.81 million, UK $16.78 million, Spain $14.62 million. France, Netherland, Italy, USA and Canada were other countries where exports declined. Knitwear (hosiery) exports figures during the first seven moths of the current fiscal do not depict the actual trend as the massive decline in exports occurred from January onwards. 

However, figures for July-Jan 2008-09 showed that exports increased nominally in the UK, Germany, US, Netherlands, Belgium and Sweden. Exports in Afghanistan grew from $7,000 last year to $446,000 in first seven months of this fiscal year. Similarly, exports from Jamaica increased from $27,000 to $305,000, Chile from $173,000 to $449,000, Kuwait from $265,000 to $506,000 and

Malaysia from $475,000 to $997,000. The trend in growth is similar in many recently explored export markets of different countries for knitwear.

The highest decline of $17.97 million in knitwear exports during first seven months of this fiscal was recorded in Italy. The country lost markets in the US, Spain Canada, France, Turkey and Ireland. Vietnam the new market discovered two years back was completely lost.

Exporters discovered new markets of bedwear in Iraq, Korea and Thailand. The bedwear market was lost in the US and European Union. Tents and canvas registered a decline of 17.86 per cent but its exporters explored new markets this year in Hong Kong, Sweden, Madagascar, Turkey, Japan, Poland Mexico, Canada, Thailand and Brazil.

Textile exporters find new markets


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## white_pawn

*Halal food production technology to boost exports ​*
Tuesday, May 26, 2009
By our correspondent

ISLAMABAD: The Ministry of Livestock and Dairy Development has introduced Halal food production technology and certification system to capture the Halal food market, which will help increase the countrys exports, especially to Muslim countries, said the ministrys Secretary Mohammad Ali Afridi on Monday.

Briefing the National Assembly Standing Committee on Livestock and Dairy Development which met here, Afridi said the government has introduced a programme to support people living in rural areas under the public-private partnership programme. Under that, the government would provide subsidy of 60 per cent to cattle and fish farmers on establishing farms.

About 30-35 million rural population is engaged in the livestock business, while one million people were connected with the fisheries, he added.He informed the committee that the government has also launched a programme to extend livestock production and extension services at farmers doorsteps under the Prime Ministers Special Initiative for Livestock.

In the first step, about seven districts in Balochistan are being covered, while a mass-scale vaccination and de-warming programme has been started in Khuzdar district. The secretary disclosed that his ministry has initiated 11 projects at a cost of Rs11.69 billion under the Public Sector Development Programme. Seven projects pertain to livestock development, while four are in the field of fisheries, he added.

He informed the committee that in order to enhance livestock production and its exports, the government is giving priority to improvement of infrastructure facilities for value added products. Planning, monitoring and evolution, and WTO wings are also being established in the ministry to improve the production of livestock, he added.

He said that 2000 veterinarians and veterinary assistants, along with more than 3500 livestock farmers including 500 women, were provided short term training in livestock farming, while 6 were provided high level training from European universities.

Committee members appreciated the efforts of the ministry and appreciated its efforts considering the short period of time. They stressed that the vaccination system should be improved further and services to farmers should be provided at their door steps to save livestock from diseases. The committee will meet again on June 5th to discuss the development of fisheries.

Halal food production technology to boost exports


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## white_pawn

*President stresses improved trade corridor to enhance trade ​* 
Tuesday, May 26, 2009
ISLAMABAD: President Asif Ali Zardari on Monday said that Pakistans strategic location at the crossroads of Central Asian Republics was an asset and needs to be fully exploited for increased intra-regional trade through an improved trade corridor.

Chairing a meeting for the National Trade Corridor Improvement Programme (NTCIP) here at the President House, the President said the project must aim at revamping the physical infrastructure, trade logistics and services to make business more competitive.

The President advised the government to closely observe the development of inland water ways as a means for cost effective and pollution free bulk transportation particularly of goods in the country to relieve the burden on roads and railways. This is an area in which the public private partnership can play a pivotal role, he said.

Development and use of inland water ways transportation will also make our trade more competitive in the region, the President observed.He also called for a separate briefing on inland water ways to give some shape to the proposal. The meeting was attended by federal ministers Amin Fahim, Babar Khan Ghouri, Ghulam Ahmad Biloor, Deputy Chairman, Planning Commission Sardar Assef Ahmad Ali, SAPM Kamal Majidullah, Secretary General Salman Faruqui and others.

The meeting was informed that NTCIP will modernise and streamline trade and transport logistics, practices and customs services, improve port efficiency, reduce the costs for port users and enhance port management accountability. The corridor also aims at sustaining the delivery of an efficient, safe and reliable National Highways system; promote and ensure safe and efficient civil aviation operations, enhance the export of perishable commodities by establishing a cool chain system. 

President stresses improved trade corridor to enhance trade


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## Neo

*50pc women are unpaid family workers in Pakistan: survey ​* 
Tuesday, May 26, 2009

ISLAMABAD: Urban men in the country, in contrast to urban women, spend five times more on economic activities such as house maintenance, care for children, sick, and community services. 

However, rural women spend more time on economic activities as compared to rural men. Urban men and women spend more time on socio-cultural activities compared to men and women of rural areas. These are the findings of a recently-concluded Time Use Survey 2007. 

The survey is supported by the United Nations Development Programme and is the first-ever nationwide survey of its kind. This survey was conducted in collaboration with the Ministry of Finance and the Federal Bureau of Statistics to report on how people spend their time. The recently-held launch was attended by government officials, development partners, researchers and civil society representatives. 

Rana Assad Amin, National Project Director, UNDP Deputy Country Director, Mikiko Tanaka and Asif Bajwa, Additional Finance Secretary spoke on the occasion. They appreciated that through an exhaustive stock of household activities, the survey has generated wealth of data to provide empirical perspective for research on various social, economic and cultural issues. The information on unremunerated work has made it possible to quantify the relative contribution of men and women through unpaid work in formulating and implementing socio-economic development plans with a gender equality dimension. 

These findings will facilitate policy making which will help to address the issues being faced by women by bringing them to the attention of the policy makers. The report reveals that 50 per cent women in Pakistan are unpaid family workers and only 13 per cent belong to white collar jobs, 69pc brown collar (service, agriculture and trade workers). 

Rural women spend more time in economic activities compared to men. More than half (56pc) of employed respondents were in brown collar jobs. About one-fourth (24pc) of males are white collar workers compared to about one-eight (13pc) of females. The survey states that 50pc females compared to 14pc males are unpaid family workers.


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## Neo

*President stresses improved trade corridor to enhance trade​*
ISLAMABAD: President Asif Ali Zardari Monday said Pakistan's strategic location at the crossroads of Central Asian Republics was an asset and needs to be fully exploited for increased intra-regional trade through an improved trade corridor.

Chairing a meeting for the National Trade Corridor Improvement Programme (NTCIP) here at the President House, the President said the project must aim at revamping the physical infrastructure, trade logistics and services to make business more competitive.

The President advised the government to closely look at the development of inland water ways as a means for cost effective and pollution free bulk transportation particularly of goods in the country to relieve the burden on roads and railways. 

This is an area in which the public private partnership can play a pivotal role, he said. 

Development and use of inland waterways transportation will also make our trade more competitive in the region, the President observed. 

President Asif Ali Zardari also called for a separate briefing on inland waterways to give some shape to the proposal.

The meeting was attended by federal ministers Makhdoom Amin Fahim, Babar Khan Ghouri, Ghulam Ahmad Biloor, Deputy Chairman, Planning Commission Sardar Assef Ahmad Ali, SAPM Kamal Majidullah, Secretary General Salman Faruqui and Secretaries of relevant ministries and entrepreneurs and representatives from the private sector.

The meeting was informed that NTCIP will modernise and streamline trade and transport logistics, practices and customs services, improve port efficiency, reduce the costs for port users and enhance port management accountability.

The corridor also aims at sustaining delivery of an efficient, safe and reliable National Highways system; promote and ensure safe and efficient civil aviation operations, enhance export of perishable commodities like fruits, vegetables and livestock by establishing an efficient and viable cool chain supply system.

The President was informed that the National Trade Corridor Task Force (NTC Task Force) headed by Deputy Chairman Planning Commission with Federal Secretaries of Communications, Railways, Ports and Shipping, Defence, Petroleum and Industries, Chairman FBR as its members were working along with two task forces headed by the private sector experts on maritime industry, private sector development and inland waterways.


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## Neo

*Pakistan should diversify its export base: ADB​*
ISLAMABAD: Pakistan should diversify its export base by moving up the value addition chain and shift its focus on exporting manufactured goods, which earn more foreign exchange as compared to its traditional exports, this is concluded by Asian Development Banks study on Is Pakistans Growth Rate Balance-of-Payments Constrained? Policies and Implications for Development and Growth. 

The more recent slowdown was primarily associated with Pakistans domestic and international political tensions. But the question is whether or not there are other factors that could prevent any attempt to achieve a sustained faster rate of growth. Recent developments in Pakistans economic conditions suggest that the main limitation

is likely to come from an underperformance in growth of exports and the consequent

balance-of-payments (BOP) problems. While it is necessary to be cautious about drawing conclusions concerning Pakistans long-term prospects from its performance over only the last couple of years, nevertheless this gives cause for concern. Although Pakistan has achieved a reasonably fast growth of output and output per capita since the downturns in 1997 and 1999, there are indications that growth in fiscal year 2009 is likely to be fragile and the reasons point to deep-seated weaknesses in Pakistans economy. 

In its conclusions, the paper has looked at the various options facing Pakistans economic development. Of particular importance is the BOP-constrained growth rate. It has been argued that this is the major problem facing Pakistans development. Attention needs to focus on supply-side improvements that will raise the growth of sophisticated exports. In other words, Pakistan needs to move out of its traditional export areas and shift the structure of its trade toward the export of manufactured goods with higher sophistication, given the countrys capability set. In a growth context, static comparative advantage is not a good guide to a development strategy for Pakistan. 

The paper has highlighted that there are a number of problems common to all developing countries. These include the need to increase capital accumulation, both physical and human. The former includes not only investment in domestic private firms, but the efficient investment in public utilities and transport infrastructure. The investment in human capital includes the provision of appropriate education at particularly the primary and secondary levels. Other targets are the eradication of malnutrition and provision of public health. Wider aims should be the abolition of rent seeking, reduction of red tape, elimination of corruption, and encouragement of FDI. 

The BOP-constrained growth model shows that while these economy wide policies may increase the growth of exports as well as domestic output, if the former is not fast enough, the economy will run into a BOP crisis. Growth can only be domestically led to some degree. Thus, the BOP-constrained growth model demonstrates the importance of measures to improve the performance of exports. This includes identifying, for example, supply bottlenecks in the production of exports, poor transport facilities including ports, and excessive bureaucracy and red tape in the import and export of goods. The last also includes the multiplicity of tariffs and claw-back arrangements with their high resource allocation and administrative costs. 

If the BOP constraint is binding, it can be seen that one way of relaxing it is by restricting imports through quotas and tariffs. This will reduce the domestic income elasticity of demand for imports.. The introduction of tariffs may well lead to an increase in the price of essential imports necessary for exporting. Moreover, to the extent that this reduces competitive pressures on domestic firms, this could reduce their efficiency, which in turn could be detrimental to export growth. A long period of import restriction, especially without a sunset clause as to when it will end, can lead to rent seeking and more concern with the distribution of a given level of output rather than with incentives to increase output. Given the prevalence of increasing returns, the infant industry argument shows that for a country to break into the production of high value-added exports an element of protection is required, at least in the early stages, the paper added.


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## Neo

*PHDEB fixes mango export target at 100,000 tonnes for 09​*
KARACHI: The Pakistan Horticulture Development and Export Board (PHDEB) have fixed the mango export target at 100,000 tonnes for the year 2009. 

During the year 2007-08, the export was 110,000 tonnes but the board in consultation with the exporters reduced the export target for the current year due to low production in Sindh and global economic conditions.

Chief Executive Officer (CEO) PHDEB, Shamoon Sadiq said despite severe global economic recession, Pakistan would be able to retain its export volumes due to various interventions in the pre and post production areas and entering into new international markets. The board expects to fetch around $43 million from the export of 100,000 tonnes, he added. 

According to the Mango Development Strategy devised by PHDEB for the current year, they plan to target new markets such as China, Jordan, Germany and USA. The USA market would depend upon the approval by FDA-USA of the newly established irradiation facility in Lahore. Sadiq appreciated the efforts being taken by the government to convince the Japan government to facilitate import of mangoes from Pakistan. 

Besides, the development programme would ensure improving the cosmetic appearance and increase shelf life of mango through de-sapping and heat removal techniques and better handling methods including packaging and transportation through reefer, etc. 

Experimentation efforts are also being made to transport mangoes to EU through sea transportation, which would decrease the cost, making our product more competitive in the international market. 

In the long-term, PHDEB has set itself a mango export target of $80 million by the year 2011-12. Although there is a huge potential to capitalise the high-end markets but this would only be possible if we can comply with their quarantine requirements, which means adapting quality standards throughout the supply chain. An important component is to establish required infrastructure such as packing houses with hot water dip facilities and cold storages at production areas. 

PHDEB plans to establish two mango pack-houses through public-private partnership, equipped with hot water treatment facility, one each in Sindh and Punjab. Also, two ethylene ripening chambers for mangoes (combo type field heat removal and ripening chambers) will also be installed in the mango production areas. It is expected that 3,000 acres of mango orchards will be GlobalGAP certified in Punjab, while, 2,000 in Sindh awareness seminars, one in Sindh and 2 in Punjab. The adoption of GlobalGAP standards has indicated that the possibilities for development of indigenous commodity specific standards for either local or export marketing should be initiated. Initially the PakGAP standards will be developed in consultations with relevant organisations and certification bodies, Sadiq concluded.


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## Neo

*Tenth five-year plan (2010-15): Paper suggests changes in development paradigm of economy​*
ISLAMABAD: There should be fundamental changes in the development paradigm of the economy for improving economic situation and putting the country on sustained socio-economic growth, the Approach Paper for the Tenth Five Year Plan (2010-15) suggests. 

The plan suggests for redirecting resources to accelerate growth in Balochistan, NWFP, FATA and under-developed areas in other provinces and regions so that disparities in human development and social indicators in these areas with the national average. 

The Approach Paper obtained by Daily Times on Monday revealed that in order to meet these immediate economic challenges and to ensure that all the people of the country have a strong stake in the development process for nation building, there was a need to provide a new direction. 

For overcoming the social deficit, the five year plan suggested for setting-up a comprehensive social protection system and providing significantly better quality education and health services, to fulfill on the governments promise of being responsive, efficient and caring for the people. 

Embedding poverty reduction into the growth process by ensuring that growth results in the creation of decent and productive employment and engulfs those sectors where the poor live and work. 

The paper also suggested for designing public policy for achieving a better distribution of income and wealth and to ensure that incremental incomes were more evenly distributed than has been the case in the past. 

It also asked for building state-of-the-art technical training institutes that produce world-class graduates and diploma holders based on internationally recognised certification. It would help in overcoming the widening skill gap responsible for low productivity and lack of competitiveness in the country. 

The proposed 5-year plan also suggested for reinventing the role of government at all levels by dispassionately analysing what works and could not work to accelerate economic development and provide better quality services. 

The Approach Paper further suggested that agriculture and agro-business to serve as a leading sector for economic development and stressed for its development. 

It also recommended for developing the Pakistani firm as part of a global value chain by increasing their competitiveness and reducing the cost of doing business. 

The paper claimed that the countrys past strategies had delivered spurts of high economic growth but unfortunately these had not been sustainable leading to boom-bust cycles. In most cases these spurts have been ignited by favourable international developments and increases in foreign assistance. Once these flows had slowed down so has the momentum of economic growth. This was because growth has been consumption-led and import-dependent and not driven by increasing investment and exports. 

More importantly, the growth has not met peoples expectations and there was increasing disillusionment with the development process. Progress in human and social indicators had been disappointing. Poverty levels remained high, job opportunities that meet aspirations lacking and glaring income inequalities appearing in recent years. 

Socio-economic tensions have heightened due to increasing disparities between Provinces. Within provinces significant areas feel deprived of the gains that should have resulted from economic growth. 

The paper said that given this scenario it was not surprising that Pakistan was described as a case of economic growth without real economic development. 

This situation needs to be urgently rectified. The Tenth Five Year Plan (2010-15) must play a pivotal role in bringing about a fundamental change in the development paradigm. In the new paradigm ordinary people, especially those in less developed provinces and regions must be at the center of the development process and have a strong stake and ownership in the economic development of the country. 

The preparatory process for the Tenth Plan (2010-15) with active involvement of all stakeholders should send a strong message that Pakistan was looking beyond its immediate economic crisis and preparing itself to fight its multifaceted economic challenges in a concerted and integrated manner.


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## Neo

*US should expand IDP aid to $1bn ​*
* PAL-C says children living in IDP camps need particular attention

WASHINGTON: An advocacy group working on the Capitol Hill has urged the US to expand assistance for internally displaced persons (IDPs) to $1 billion. 

In addition to the assistance required to provide basic services, there will be further assistance required to provide education and counselling to the children housed in the camps, said the Pakistani-American Leadership Centre (PAL-C). The centre drew attention of both the US Congress and administration to the urgent needs of the IDPs. According to Mossadaq Chughtai, a noted PAL-C founding director, children living in the IDP camps need particular attention. 

Another Pakistani-American organisation, Friends of Pakistan, has also launched a fund-raising campaign to marshal resources that would help Islamabad take care of the largest migration of people the country is witnessing since Independence. The Obama administration and the Pakistani embassy in Washington have been encouraging Americans to contribute to relief assistance through the UN High Commissioners Office for Refugees (UNHCR), by taking part in a text messaging initiative announced by Secretary of State Hillary Clinton last week. 

A bipartisan group of US senators has also asked President Barack Obama to significantly expand American humanitarian assistance as part of efforts to help Pakistan look after the displaced people properly. Meanwhile, Ambassador to the US Husain Haqqani is scheduled to host members of the Pakistani American community this week to mobilise support for the people of Swat. app


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## Neo

*Pipeline or pipe dream?​*By Rasul Bakhsh Rais 

If all or most of the Iranian gas is used for the power sector, as stated by the government, then our energy mix will remain lopsidedly dependent on imported fuel

After more than a decade of negotiations and many ups and downs, Iran and Pakistan signed the framework on the Iran-Pakistan peace pipeline during President Asif Ali Zardaris visit to Tehran, pushing the much-delayed project a notch forward. The gas pipeline project makes economic sense: Iran has surplus gas to sell and Pakistan needs gas.

But situations, particularly in the extended Southwest Asian region, dont always follow economic logic; instead, they are determined by politics, strategic interests, rivalries and conflicting views, particularly about Afghanistan. 

Since the pipeline project presently concerns Iran and Pakistan, it would be better to comment on the nature of Pak-Iran ties and whether or not moving forward with pipeline will also move forward the somewhat troubled relationship between the two states. The answer lies in how we read the nature of this relationship and how it is likely to develop in the context of the larger context of power between a variety of players  Iran, Afghanistan, Pakistan, India and the United States. 

The smiles and tight embraces of diplomats and political leaders of Iran and Pakistan dont tell much about the hidden tensions, mistrust and cloak-and-dagger behaviour between the two countries. All the talk about common cultural and civilisational roots doesnt carry much weight for territorialised nation states, which have their own interests. 

It is the conflict or congruence of these interests that can either cause rifts between states or bring them closer together. And in todays world, specific issues drive relations between states like Iran and Pakistan, and within the context of the larger strategic vision of each country. 

We are not sure if the strategic visions or regional and outside powers and the games they play create any groundswell for comprehensive partnerships beyond certain specific issues. The strategic partnership between Iran and Pakistan was shaped by the dynamics of the Cold War, and American dominance in Iran ended three decades ago with the Iranian clergys capture of the state.

The Iranian clergymen, like their counterparts in Pakistan, have a worldview, a strategic map and a policy framework to order Irans regional and global relationships. In their bipolar view of the East (Muslim countries) and the West, Pakistan has been on the other side of their policy and ideological fence. It has not been easy for Pakistan to win real friendship of the post-Shah Iranian leadership.

We dont think Pakistans pragmatic tilt toward the West, more specifically the United States, was or could be a major roadblock in the way of closer relations between Tehran and Islamabad. What causes these hidden tensions, then, are conflicting interests in Afghanistan and horizontal partnerships between feuding Afghan social groups and regional states like Pakistan and Iran. This rivalry has fuelled the fire between the Taliban and the Northern Alliance, causing tremendous harm to Afghan society at large.

Conflicting visions of Iran and Pakistan have not changed in the structural sense, but there appears to be a growing agreement on three specific issues that may perhaps help to transform this relationship: the war on terror; the stability and reconstruction of Afghanistan; and energy trade.

These are not ordinary problems. They are critical and have the potential to reshape the development and security paradigms of the entire region. They key to all these issues is closer cooperation between Iran and Pakistan on the one hand, and between Afghanistan and Pakistan on the other. 

While stabilising Afghanistan and creating a shared regional interest in the future of this state may take a long time, and the war against terrorism may require greater understanding than we have at the moment, the gas pipeline has a real chance of success. It can be a great infrastructural project, and the first of its kind to connect Pakistani consumers, industries and power plants to Iranian gas-fields. 

What are its potential benefits and drawbacks for Pakistan?

A straightforward argument is that the pipeline project is a perfect match between a country with an energy surplus and an energy-deficient country, and that the deal is going to benefit both. It is a win-win situation. 

The real potential benefit of energy trade between Iran and Pakistan, with the possibility of its extension to India once New Delhi is on board, is in creating latent interdependence. The reason for naming the proposed gas pipeline as a peace pipeline is because of its value in making the three countries interdependent on one another, and thus subjecting old disputes to the economic rationalism required in this day and age.

Economic interdependence leads to much larger and complex relationships, forming an unbreakable web and creating dense partnerships, and causing a spill-over from one set of issues to another. It is of course not an automatic process, and is subject to critical political decisions. 

And those decisions are about how to harmonise conflicting strategic visions that dominate in our region in all other aspects of inter-state relations. We can also approach the issue of energy trade and larger economic cooperation by separating them from conflicting strategic pursuits, and then let the real economic benefits work on reshaping the respective strategic visions of each country. 

The outcome will depend on whether it is economic rationalism or divergent strategic views that shape this partnership. It is better to realise economic benefits and let them shape the future course of our relationships than unsettled strategic problems and conflicts. But in a region like ours, competing security interests cannot easily be sidelined from the decision-making process. 

Pakistan, however, runs the potential risk of over-dependence on Iranian gas, which may affect efforts to explore and develop our own gas fields. If all or most of the Iranian gas is used for the power sector, as stated by the government, then our energy mix will remain lopsidedly dependent on imported fuel.

Another serious question is why our rulers continue to ignore our hydroelectric power potential and the Thar coal deposits, some of the largest in the world. The lack of consensus that is often cited as the reason for not utilising our own resources is also politically manufactured, as the interests of important political players at a given point in time may demand something else. 

Before we find leadership with a national vision and the political will to help ourselves through our own resources, let us do what energy-starved countries do: import.

Dr Rasul Bakhsh Rais is author of Recovering the Frontier State: War, Ethnicity and State in Afghanistan (Oxford University Press, 2008) and a professor of Political Science at the Lahore University of Management Sciences. He can be reached at rasul@lums.edu.pk


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## Neo

*IPI becomes peace pipeline​*
The big dividend from the tripartite Iran-Afghanistan-Pakistan meeting is the Iran-Pakistan gas pipeline deal announced on Sunday. President Asif Ali Zardari and President Mahmoud Ahmadinejad signed a framework agreement in Tehran which will lead to a formal agreement on the building of a pipeline in a fortnight. The pipeline project has taken 14 years to materialise because of the political vicissitudes of the region and, one has to admit, inexperience on the part of the parties concerned of the culture of pipelines.

The project, earlier dubbed Iran-Pakistan-India pipeline, was conceived in 1995. Last year, as a result of India signing the US-India nuclear treaty, based on a US Congress law which suggests that India follow the American line on Iran, India quit the pipeline deal. Irans own relations with India went through some ups and downs because of the formers frequent change of mind on done deals. Pakistan also faltered on oil-pegged price-setting with Iran in a sellers market when oil was selling at nearly $150 per barrel. Thankfully, all that now seems to have been sorted out.

India is out for the time being. But Prime Minister Manmohan Singh, the economist, might realise in his new tenure that nuclear technology has been trumped by Indias colossal demand for energy. Today, when the price of oil is $60 a barrel, the deal Pakistan has clinched looks greatly attractive. Pegged to 80 percent of the price of oil, the gas Pakistan will get will save it a billion dollars a year. But since these savings will be in the sector of oil and furnace oil imports the advantage will be durable. Also, the 2,000 km pipeline, shared half and half by the two countries, will not go through the troubled area of Khuzdar in Balochistan but will enter Pakistan from its border near Gwadar and go to Nawabshah in Sindh, which is the hub of gas pipelines in Pakistan.

Pakistan will receive one billion cubic feet of gas from this pipeline but will expect India to rejoin the project. But India will have to decide pretty soon what it wants as the project will start on the ground in 2010. If India doesnt, then the pipeline will become forever a two-state pipeline because of its diametrical size. Pakistan will use this gas for industrial and power generation (5,000MW) purposes. It seems that the dream of Pakistan becoming a transit country for gas supply to India and China is on hold for some time. But the destiny of Pakistan as a transit hub will not be negated by war forever.

The changing of the name of the pipeline to peace pipeline is not without significance. The signatories, Iran and Pakistan, cannot avoid the innuendo that peace has prevailed after a period of non-peace between the two. And the big development since the beginning of 2009, when the project was stalled because of pricing difficulties, has been Pakistans final decision to take on the Taliban inside Pakistan. Only a few months ago, hostile commentators in Pakistan were noting the presence of Irans foreign minister in Mazar-e-Sharif as a plot against Pakistan, but the truth is that Iran was greatly threatened by the possibility of the return of the Taliban to power in Afghanistan and said so when its officials recommended that Pakistan stop the Taliban onslaught in Pakistan.

From the low point when Iranian diplomats were killed in Mazar-e-Sharif in 1998, Iran-Pakistan relations have come out of their dark patch this year. The transit route war which began with India helping Iran build the Chabahar port right next to Gwadar is hopefully at an end; and after Pakistans opting for its true role in South Asia, the gas pipeline will serve to integrate the regional economies. Pakistans geopolitical, significance will be demonstrated to the world after the pipeline is completed and Iranian gas from gasfields near the Gulf is used by industries right next to the Indian border. After that, Pakistan will not be able to avoid prosperity, which is the birthright of the people of Pakistan, by choosing conflict instead of cooperation.


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## Neo

*Zardari for development of inland waterways ​* 
ISLAMABAD (May 26 2009): President Asif Ali Zardari Monday said Pakistan's strategic location at the crossroads of Central Asian Republics was an asset and needs to be fully exploited for increased intra-regional trade through an improved trade corridor. Chairing a meeting for the National Trade Corridor Improvement Programme (NTCIP) here at the President's House.

The President said the project must aim at revamping the physical infrastructure, trade logistics and services to make business more competitive. The president directives came a few days after he signed the controversial Memorandum of Understanding (MoU) in the US allegedly giving transit to India for trade with Afghanistan via Pakistan.

According to an official statement, the President advised the government to closely look at the development of inland waterways as a means for cost effective and pollution free bulk transportation particularly of goods in the country to relieve the burden on roads and railways.

This is an area in which the public-private partnership can play a pivotal role, he said. Development and use of inland waterways transportation will also make our trade more competitive in the region, the President observed. President Asif Ali Zardari also called for a separate briefing on inland waterways to give some shape to the proposal.

The meeting was attended by federal ministers Makhdoom Amin Fahim, Babar Khan Ghouri, Ghulam Ahmad Bilour, Deputy Chairman, Planning Commission Sardar Assef Ahmad Ali, SAPM Kamal Majidullah, Secretary General Salman Faruqui and secretaries of relevant ministries and entrepreneurs and representatives from the private sector. The meeting was informed that NTCIP will modernise and streamline trade and transport logistics, practices and customs services, improve port efficiency, reduce the costs for port users and enhance port management accountability.

The corridor also aims at sustaining delivery of an efficient, safe and reliable National Highways system; promote and ensure safe and efficient civil aviation operations, enhance export of perishable commodities like fruits, vegetables and livestock by establishing an efficient and viable cool chain supply system.

The President was informed that the National Trade Corridor Task Force (NTC Task Force) headed by Deputy Chairman Planning Commission with Federal Secretaries of Communications, Railways, Ports and Shipping, Defence, Petroleum and Industries, Chairman FBR as its members were working along with two task forces headed by the private sector experts on maritime industry, private sector development and inland waterways.


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## Neo

*Funds for Thar coal project unlikely in 2009-10 budget: Centre, Sindh government remain at loggerheads ​* 
KARACHI (May 26 2009): The federal government is unlikely to allocate funds in the 2009-10 budget for generation of power from Thar coal, in view of severe differences between the federal and provincial government officials regarding control over the bodies responsible for execution of the project, Business Recorder learnt on Monday.

According to sources, the Centre is insisting to carry out the development work through Thar Coal Mining Company, to be established by the federal government, whereas the Sindh government had constituted Thar Coal Energy Board, and also recently created a new department, 'Coal and Energy Development Department' for the purpose.

Sources said that the federal government had proposed only 20 percent share of the vast reserves of Thar coal to the Sindh government, and 80 percent to go to the Centre, if the mining company is allowed to carry out the uplift works. In the present setup, they said that it seemed that the federal government did not want to develop Thar coal due to a dispute, and added that no development work had been carried out at the site for past 15 years. The Centre and the provincial governments remain at loggerheads due to authoritarian control of the Thar Coal, they added.

During a meeting of the Annual Plan Co-ordination Committee (APCC), they said, the deputy chairman of the Planning Commission, Assef Ahmed Ali, had told Sindh government officials that funds could only be earmarked if the province agreed for uplift by the mining company.

Presently, they said, the country is facing a shortfall of around 3,500 MW and the delay in Thar coal project, from which some 200,000MW could easily be generated, would further aggravate the situation and push the country into darkness. Moreover, they said, the Planning Commission (PC) had also rejected to include Thar Coal and Power Technical Assistance Project of the World Bank, which was later approved following strong protest by Sindh Chief Minister Qaim Ali Shah.


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## Neo

*Decline in oil and gas production ​* 
KARACHI (May 26 2009): Pakistan produced an average 66,000 barrels per day (bpd) of crude oil during the first ten months of the ongoing fiscal (Jul-Apr 2009), five percent less than the previous year's 10-month average output of 70,000 bpd. On the other hand, gas production remained flatter with average supply recorded at 3.99 billion cubic feet (bcf) per day in the 10 months of FY09 compared to 3.98bcf/day during the similar period of last year.

The combined oil and natural gas production, in barrel equivalent (boe), topped-out at 707,000 bpd, depicting a flat trend versus the level of 709,000 bpd, previously. All three listed E&Ps registered production decline in the period under review. OGDC produced 41,356 bpd oil in the first 10 months of FY09 - a dip of 5 percent over the last corresponding period's production of 43,415 bpd.

Faraz Farooq, an analyst at First Capital Equities said that lower production volumes mainly ensued from the decline in production from Dhodak (-75 percent), Bobi (-21 percent), Chanda (-13 percent), Lashari Center (-32 percent), Thora (-31 percent), Pasahki NE (-25 percent), Noorai Jagir (-64 percent) fields in the operated and Pindori (-71 percent) and Adhi (-7 percent) in the non-operated areas. Nonetheless, the production declines from these fields were largely, though not completely, offset by the improved volumes at Pasakhi (+31 percent), Kunnar (+31 percent), Mela (+26 percent) and 'First Oil' from Moolan North and Chak-66 NE fields.

OGDC's gas production remained flatter with one percent increase at 995mmcf/day versus that of 982mmcf/day, previously. While the company reported better yields at Dakhni (+36 percent), Nandpur (+40 percent), Mela (+57 percent) in operated and Bhit (+10 percent) in non-operated divisions, decline at Dhodak (-79 percent) and lower output at Uch (-2 percent) in operated and Miano (-21 percent) in non-operated sections restricted the overall gas volumetric growth in the 10 months of FY09. Average gas production in April 2009 was at 1,055mmcf/day (+11 percent on year-on-year basis).

PPL produced 4,087bpd oil in the 10 months of Y09, just 2 percent above the previous year's 10-month average of 4,014bpd. In this regard, the production decline at operating filed, Adhi (-7 percent) and non-operating Makori (-7 percent) was more than offset by the higher volumes at Kandhkot (+19 percent) and Mela (+26 percent) fields. Whereas, the gas production topped-out at 875mmcf/day in this period- down by 3 percent over that of 902mmcf/day, previously.

Faraz said that the main reason for this decline was 6 percent lower production from heavyweight Sui field. Moreover, production volumes also remained lower at non-operating Sawan (-10 percent) and Miano (-21 percent) fields. The impact was, however, partially offset by the better averages at Adhi (+3 percent), Kandhkot (+11 percent), Qadirpur (+3 percent) and 'First Gas' from Tajjal and Latif fields commenced from January 2009. In the month of April 2009, PPL's oil output was 9 percent on year-on-year higher at 4.3kbpd while gas supply remained flat on yearly basis at 882mmcf/day.

POL's oil production during the first ten months of FY09 averaged at 3,828bpd - a massive decline of 26 percent over 5,200bpd recorded in the similar period of last year. This decline was largely contributed by subdued production volumes at Pindori (-71 percent).

The average oil production from this filed in the 10 months of FY09 was 912bpd versus that of 3,149bpd, previously. In April 2009, the oil volumes even dropped below the first three digit mark (100bpd) and recorded at 74bpd - a decline of 97 percent over 2,125bpd in April 2008. The current production (2nd week of May) at Pindori is 312bpd.

In addition to Pindori, lower volumes at Pariwali (-22 percent) also shared the dip in headline oil volumes. The similar pattern was observed when it comes to gas production which depicted 13 percent decline in this period at 39mmcf/day compared to 45mmcf/day, previously. Again this was largely led by substantial declines at Pindori (-70 percent) and Pariwali (-17 percent).


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## Neo

*Japanese businessmen urged to enhance imports from Pakistan ​*
ISLAMABAD (May 26 2009): Chief Executive of Trade Development Authority of Pakistan (TDAP), Syed Mohibullah Shah stressed upon Japanese businessmen to enhance imports from Pakistan. According to a press release from the Embassy of Pakistan received on Monday, the TDAP Chief during his meeting with Japanese businessmen in Tokyo on Monday briefed them about superior quality of Pakistani carpets, furniture, textile products and handicrafts.

He apprised Japanese businessmen about high quality Pakistani products with much lower prices as compared to other countries in the region. Shah called upon Japanese traders to enhance their imports from Pakistan saying that current Pakistani exports to Japan were too small.

He assured the traders that the TDAP would extend all possible support to Japanese businessmen interested in importing products from Pakistan and also extendded invitation to the Japanese businessmen to attend EXPO Pakistan to explore new products available in the Pakistan market. He will also met the Japan's Vice Minister for Agriculture,Forestry and Fisheries to resolve almost decade long issue of the export of Pakistani Mango to Japan, the release added.


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## Neo

*'Pakistan and Jordan to sign FTA soon' ​*
ISLAMABAD (May 25 2009): Pakistan and Jordan will sign "free trade agreement" very soon to further promote bilateral trade and for the benefit of the business community of the two countries.

This was stated by the Ambassador of Hashemite Kingdom of Jordan to Pakistan Dr Saleh Ahmad Al-Jawarneh in a message on the occasion of celebration of 10th anniversary of assumption of power by King Abdullah II and 63rd anniversary of Hashemite Kingdom.

The Jordanian ambassador is hosting a reception on Monday in connection with the celebrations of anniversary of assumption of power by King Abdullah II and 63rd anniversary of Hashemite Kingdom.

The ambassador said "free trade agreement" between Pakistan and Jordan is expected to be signed in the near future. He said a number of Jordanian companies have already been working in different fields in Pakistan while both the countries have been engaged in trade of various commodities and the FTA will further increased. He said the people of Jordan celebrating 10th anniversary of King Abdullah II Ibn Al-Hussein's assumption of power and 63 independence day of Hashemite Kingdom of Jordan this week.

The ambassador Dr. Saleh Ahmad Al-Jawarneh said both Pakistan and Jordan have very warm, brotherly and friendly ties. He said these brotherly relations established since the inception of both the nations and flourished in all the years.

The Jordanian ambassador said, "These ever growing bilateral relations touch every facet of a nation's existence, political, economic and social aspects." He said it is most fortunate for both Pakistan and Jordan that such conditions exist and continue to be strengthened as the two nations maintain this historical friendship and association.

The Jordanian ambassador said there has been always excellent diplomatic ties between the two nations, as there have been numerous exchange of visits in the recent past such as the visit to Jordan made by Minister for Investment Waqar Ahmed Khan who led Pakistan delegation participated in the World Economic Forum. King Abdullah II is the 43rd generation direct descendant of the Prophet Muhammad (Peace Be Upon Him). He assumed his constitutional powers as King of Jordan on June 9, 1999.

Referring to the efforts of King Abdullah II, the Jordanian ambassador said Pakistan and Jordan made progress in improving relations in different fields. The Jordanian ambassador said King Abdullah II, who is a brilliant leader and passionate man and possessed innovative ideas and has the drive to translate them into reality.

He said King Abdullah II made supreme efforts towards effecting peace throughout the Middle East using his well-earned reputation of being a sincere brother to all Arab nations, including furthering the cause of the Palestine people.

The ambassador said Queen Rania Al-Abdullah is also very active in the social welfare projects especially relating to women rights. She remained engaged in development, humanitarian and charitable causes as well as towards furthering the cause of women's rights.

The ambassador in his message extended a warm welcome to all the Pakistani brothers and sisters to make a tour of Jordan and seek out the profitable business and investment opportunities.


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## white_pawn

*Pakistan and Indonesia agree to expand cooperation ​*
ISLAMABAD (May 27 2009): Indonesia on Tuesday reiterated its support for Pakistan's bid for Full Dialogue Partnership in ASEAN, as it desires higher-level of political and economic integration with ASEAN. Talking to Foreign Secretary, Salman Bashir on the sidelines of the 9th ASEM Foreign Ministers Meeting in Hanoi, the Foreign Minister of Indonesia Dr N Hassan Wirajuda expressed satisfaction at the long-standing brotherly relations between the two largest Muslim countries.

He briefed the Foreign Secretary on various regional initiatives, both inside and outside ASEAN's auspices, to tackle the global financial crisis. The Indonesian Foreign Minister appreciated Pakistan's role in regional stability and campaign against religious extremism and terrorism. Foreign Secretary thanked the Foreign Minister for Indonesia's role in strengthening Pakistan's close association with the East-Asian region.

He emphasised that despite the present security challenges, national development agenda remained Pakistan government's top priority. In this context, he stressed that regional and trans-regional linkages were essential to realise the full economic potential. The Foreign Secretary also briefed the Indonesian Foreign Minister on regional security situation and trilateral processes of engagement with Afghanistan, particularly the President's recent visit to Iran for the Pakistan-Afghanistan-Iran summit.

Business Recorder [Pakistan's First Financial Daily]


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## white_pawn

*Pakistan and Thailand pledge to expand bilateral ties ​*
ISLAMABAD (May 27 2009): Pakistan and Thailand Tuesday agreed to comprehensively expand bilateral co-operation across the political, trade, economic, commercial, energy, education and cultural fields. This was decided during the meeting between Foreign Secretary, Salman Bashir and the Foreign Minister of Thailand, Kasit Piromya held on the sidelines of the 9th ASEM Foreign Ministers Meeting in Hanoi, Vietnam.

Foreign Office Spokesman, Abdul Basit giving details of the meeting said the two sides shared the view that immense potential existed not only in further broadening and deepening bilateral co-operation in various fields, but also in benefiting from each other's strategic location to undertake collaborative ventures in third regions.

The Foreign Secretary, while emphasising Pakistan's desire for building a comprehensive economic partnership with Thailand, stressed the importance of forging regional linkages and promoting trans-regional development co-operation.

In this context, he particularly emphasised Pakistan's objective of Full Dialogue Partnership as well as higher-level political relationship and economic integration with ASEAN community. The Foreign Secretary also apprised the Thai Foreign Minister of Pakistan's participation in various trilateral initiatives to promote stability in Afghanistan and advance the trans-regional development agenda.

The central theme of this engagement was to enhance regional connectivity through trade and energy corridors and infrastructure development with a view to maximising the economic potential of the region, he said. The Thai Foreign Minister reciprocated the commitment to up-grade the overall bilateral relationship, with a particular emphasis on a strong economic partnership. He identified co-operation in the fields of food processing, bio-technology and textiles as possible avenues for expanded economic collaboration.

He noted that the two countries could also work to promote trilateral co-operation through projects in Central Asia, the Gulf, and South Asia. It was agreed to schedule bilateral Political Consultations at an early date and hold the next meeting under the MoU on Combating Terrorism. The two sides also agreed to intensify mutual collaboration in regional organisations and multilateral fora.

Business Recorder [Pakistan's First Financial Daily]


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## white_pawn

*Malaysia keen to increase trade with Pakistan: Consul General ​*
RECORDER ERPORT 
KARACHI (May 27 2009): Consul General of Malaysia, Mohammad Khalid Abdul Razak has said that Malaysia is interested in increasing two-way trade with Pakistan. He was speaking at a dinner meeting hosted by Karachi Chamber of Commerce and Industry (KCCI) in honour of 13-member trade delegation of Malaysia. The Consul General said Pakistan and Malaysia are enjoying excellent relations in trade, economic, social and other fields.

He said that a number of Malaysian companies were actively engaged in Pakistan, besides frequent exchange of delegations between both countries. He said that Malaysia has made huge investment in palm oil sector in Pakistan. He said that Pakistan should make efforts to improve its image abroad to attract foreign investors. The foreign investors and importers feel that Pakistan is facing economic instability and added that efforts should be made to build better image of Pakistan.

Trade Commissioner of Malaysia, Zain Uddin Ahmed Jalil said Malaysian investors are keen to invest in services sector and transport in Pakistan. He said that Malaysia has a population of 27 million out of which 35 percent is associated with service sector.

He said at present Malaysia is importing rice, textile products and seafood items whereas exporting palm oil, rubber and food items, etc. He said that Malaysia is keen to increase trade of rice, lather and leather products and tea with Pakistan.


Business Recorder [Pakistan's First Financial Daily]


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## white_pawn

*Ghauri seeks National Assembly body's help to get Gwadar, PQA lands vacated ​*ISLAMABAD (May 27 2009): Pakistan Navy has illegally occupied 584 acres land of Gwadar Port and 1,250 acres land of the Port Qasim, hampering further development and extension of both the ports and for promotion of export through these ports. This was stated by Federal Minister for Ports and Shipping Babar Khan Ghauri, who sought the help of the National Assembly Standing Committee on Ports and Shipping, which met in Parliament House here Tuesday with Rana Mahmood-ul-Hassan in the chair.

During the briefing, the committee took serious notice and strongly recommended that the Pakistan Navy immediately hand over the possession of the land to the Gwadar port and Port Qasim in order to extend the ports to their requirements and to make it profitable and uplift to the international standard. The committee also discussed the split of oil from Tasman Spirit ship in Pakistani water near Karachi in detail and emphasised the report, made by the Ministry of Environment, be obtained to enable the committee to reach at final decision.

The committee also expressed deep concern on encroachment of the land of Karachi Port Trust and decided that the Inspector General of Police, Sindh, will also be invited in the next meeting to discuss the encroachment issue and the government of Sindh may also cooperate to settle the issue amicably. The committee was briefed on the installation of an expensive Fountain at Karachi seashore and other affairs of the Ministry of Ports and Shipping and its attached departments in detail.

Babar Ghauri, participating in the meeting, said that the Fountain at the Karachi seashore was a new addition in the beautification of Karachi and icon of Pakistan. It would become a profitable fountain in the near future, he added. Babar Ghauri informed the committee that they were constructing a civic centre at Gwadar Port of international standard in order to facilitate the public and to attract more foreign investors to get all the facilities at one place. He further said that they were also going to install treatment plant for the Karachi so that the sewerage directly falls into the sea.-PR


Business Recorder [Pakistan's First Financial Daily]


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## white_pawn

*Punjab food support disbursement to reach Rs 11 billion next month​*RECORDER REPORT 
LAHORE (May 27 2009): The 10th instalment of Punjab Food Support Scheme would be dispatched to the deserving families on June 1st, 2009. After this instalment, the total distributed amount among the needy families would reach to Rs 11 billion. The Administrator, Punjab Food Support Scheme, S A Hameed said while presiding over a meeting of MPAs belonging to Lahore district.

He said that 1.4 million deserving families are being provided with Rs 1000 each on monthly basis across Punjab. He said that in case of any problem about the distribution of money orders, DCOs and the officials of the Pakistan Post of the concerned district should be contacted.

Hameed instructed the MPAs to review the status of Tandoors under 'Sasti Rotti Scheme' in their constituencies and inform the district administration about the utilisation of Atta on these Tandoors.

He also instructed the district administration to hold meetings of MPAs and co-ordinators to fully monitor the "Sasti Rotti Scheme." Further, he said that the registration of Tandoors found selling less weight Roti or over charging would be cancelled. The Administrator further said that sale of fruits and vegetables in 'Sunday Bazaars' at affordable prices would be ensured, besides provisioning drinking water for the general public. MPAs from Lahore District, DCO Lahore and other high ups of the concerned department attended the meeting.

Business Recorder [Pakistan's First Financial Daily]


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## white_pawn

*FBR proposes Rs 1.405 trillion target for 2009-10 ​*
SOHAIL SARFRAZ 
ISLAMABAD (May 27 2009): The Federal Board of Revenue (FBR) has proposed Rs 1405 billion revenue collection target for next fiscal year (2009-10) against the projected collection of Rs 1160-1170 billion for current fiscal year (2008-09). Revenue Division Secretary General Salman Saddique told the National Assembly Standing Committee on Finance here on Tuesday that the FBR still needs to collect Rs 280 billion in May-June 2009 to meet the revenue collection target for current fiscal year.

FBR STILL NEEDS TO COLLECT RS 280 BILLION IN MAY-JUNE 2009 TO MEET THE REVENUE COLLECTION TARGET FOR CURRENT FISCAL YEAR According to a presentation of the FBR on budget 2009-10 before the committee, the federal revenue target for fiscal year (2009-10) has been estimated around Rs 1400 billion.

The strategy for achieving revenue target in 2009-10 included better team management; enforcement through transparent audit and linking incentives for tax administrators with quantifiable performance (market equalisation fund). The tax officials informed the committee that the FBR had been successful in achieving the assigned revenue targets for the last several years.

However, this year is unusual in many ways; economic slowdown, weak performance of manufacturing sector and demand compression had an adverse impact on federal revenue collection. The target was revised upward in November 2008 from Rs 1250 billion to Rs 1360 billion under the IMF Economic Stabilisation Programme on the basis of the First Quarter Performance.

However, the growth in revenue was all due to higher oil prices. And as the economy stumbled after the first quarter so did the revenue. The FBR data revealed that the financial year 2008-09 has been a roller coaster ride for the FBR. It is evident from the data that the July-October was an upswing where total revenue collection was Rs 354.3 billion, reflecting a growth of 30.5 percent as compared to previous fiscal year.

The downswing started in November 2008 and November-April collection was Rs 544.9 billion, showing a growth of 10.7 percent. However, the overall collection during July-April stood at Rs 899.2 billion, reflecting a growth of 17.8 percent as compared to previous fiscal year.

The assumed growth for meeting upward revised target of Rs 1360 billion included expected growth of GDP at 22 percent; Large Scale Manufacturing (sales tax domestic growth of 22 percent); growth of 32 percent in sales tax at the import stage and 25 percent growth on the import of dutiable items.

On the other hand, the assumed growth for achieving original target of Rs 1250 billion included projected GDP growth of 17.3 percent; LSM (sales tax domestic growth of 16.5 percent); growth of 12.5 percent in sales tax at the import stage and 8 percent growth on the import of dutiable items.

One of the major reasons for shortfall in revenue collection is the fluctuation in POL prices. The POL has 28.3 percent share in indirect tax revenue ie sales tax (domestic) 44 percent; sales tax (import stage), 33 percent; customs duty 14 percent and share of POL in the federal excise duty collection stood at 4 percent. Thus, any fluctuations in POL prices, quantity or rates have a direct effect on revenue.

During 2008-09, revenue collection from POL stood at Rs 406 billion against Rs 366.4 billion in 2007-08, showing an increase of 10.8 percent. A major reason for shortfall of revenue collection at the import stage is the import compression. The import related taxes constitute about 35 percent of total tax revenue. Besides fluctuations in POL, import of the other commodities especially, automobiles, machinery and edible oil also declined during July-April (2008-09).

Resultantly, the effective rates of customs duty and sales tax decreased despite 1 percent increase in sales tax rate from 11.6 percent to 10.8 percent in customs duty and from 7.5 percent to 6.9 percent in sales tax. Another major reason for shortfall also included slowdown in manufacturing especially automobile and services sector especially telecom.

The FBR officials said that the growth is telecom was comparatively less against anticipated growth worked out at the start of the 2008-09. Giving reasons for shortfall in direct taxes collection during this period, the FBR specified that less than expected growth in CIT was due to overall slowdown. Against the targeted 25 percent growth in revenue, the overall performance of public companies was 11.7 percent; private companies 8.4 percent; banking 9.6 percent; foreign 7.0 percent and total growth stood at 10.0 percent.

The data further disclosed that the collection from "Advance Tax" grew by 2 percent only against the expected growth of 25 percent. The capital value tax (CVT) on purchase/trading of shares and property is also affected due to crash in stock market and slump in real estate sector. These two major factors resulted in decrease in CVT collection during 2008-09.

In the case of withholding taxes, the overall collection from WHT is almost 57 percent of total direct taxes collection. The WHT were assumed to grow by 37 percent, however the overall growth is around 20 percent as compared to 31 percent during the last fiscal year.

Other reasons for shortfall in direct taxes collection was largely due to non-obligatory cut on development projects/schemes, slowdown in imports and low profitability of the corporate sector. It was expected that efficiency gains from the tax administration reforms would give some revenue increase, however, self-assessment without complementary audit did not produce the desired results, the FBR added.

Business Recorder [Pakistan's First Financial Daily]


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## Neo

*Iran gas to generate 5,000MW, says Asim ​* 
Wednesday, May 27, 2009

KARACHI: Prime Ministers Advisor on Petroleum and Natural Resources, Dr Asim Hussain said that natural gas imported from Iran will be exclusively used to generate 5,000 megawatts of electricity.

He said that country needs 8 to 10 billion cubic feet of gas while the supply is only four billion cubic feet. To a question, he said that Irani gas is not expensive in comparison to natural gas, which is going to be even costlier than petrol due to its high caloric value and environmental-friendly nature.

Gas is also a raw material for fertiliser, textile and other industries and it is 15pc more efficient than the furnace oil used in power generation, he noted. He said cost of pipeline project has been reduced to $1.2bn as 42 inch diameter pipeline will be locally made and the cost of steel is $700m.

Dr Asim said that those who were opposing the gas pipeline project were enemies and do not want development in the country. Pakistan can face a grave energy crisis if we are not able to materialise this pipeline project, he said.

While giving calculations about the savings on Iran-Pakistan gas pipeline, Asim said Pakistan would save about $1.2 billion at $60 a barrel of oil, and save $2 billion if oil price increased to $100 a barrel.

He said locally produced gas costs Rs364 or $4.5 per mmcf while Irani gas will cost Rs643 per mmcf. He said Iran has completed laying 900 kilometres of pipeline and would lay another 100 kilometres to reach the supply point at Irani border to supply nearly 1 bcf of gas per day.

To a question, he said that if India indicated willingness to join the project within the processing period, it will get gas from this pipeline, otherwise a separate 52 inch pipeline will have to be laid. He said gas price of Turkmenistan has been fixed at $10 per mmcf.

He pointed out that the results of Karachi off-shore seismic survey are encouraging and a couple of companies will start drilling activities by the end of this year.


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## Neo

*IFIs alarmed at manipulation of GDP growth figures ​* 
Wednesday, May 27, 2009

ISLAMABAD: International Financial Institution (IFIs) have expressed alarm over the manipulation and change in methodologies of calculating the GDP of construction and agriculture to bring the current fiscals GDP growth closer to 2.5 per cent target as agreed with the IMF, a senior official at the Ministry of Finance told The News.

Earlier the state-controlled Federal Bureau Statistics came up with projection of 2.37 per cent GDP growth that was very close to IMF target, but The News identified the faults committed by the authorities in measuring the GDP growth, the official said.

The Finance Ministry took notice of the issue and corrected only one fault by including the -7.7 per cent growth of Large Scale Manufacturing for July-March causing 2.37 per cent GDP to further tumble to 2 per cent, he added.

Earlier FBS and National Account Committee (NAC) included only the LSM growth of -5.7 percent registered during in July-February period.

The FBS also changed the methodologies for measuring the construction and agriculture growth without informing the NAC.

Furthermore the FBS has also reduced the size of the GDP at current market price by Rs350 billion some three days ago without informing the competent forum of NAC.

The reduction of Rs350 billion in GDP at market price will have far reaching consequences for many key macro-economic variables such as per capita income.

When contacted for comments, Asif Bajwa, spokesman of Finance Ministry said that there stands no major change in the methodologies and said that he is not aware of any displeasure shown either by IMF nor World Bank has shown any sort of displeasure over the method of calculating the GDP growth. Bajwa said he is not competent authority to respond to such technical issues.

Advisor to Prime Minister on Finance Shaukat Tarin was not in the country as he is in Iran as a part of delegation of President Asif Zardari.

Coming to the change in methodologies in construction and agriculture sectors, The News managed to get the document, which clearly says that the construction sector covers land improvement, construction of residential and non- residential buildings, highways and bridges and other construction activities.

The document says that due to non-availability of authentic data on construction activities, the NAC in its 85th meeting held in May 2006 had decided the size of the construction activities may be ascertained with consumption of cement and steel.

The NAC gave the approval of change in methodology in 2006, but this year FBS changed the methodology in the 88th meeting of NAC held on May 16, 2009 with informing the committee.

As a result of change in methodology, the last years number of value added in construction changed drastically from positive 15.2 percent growth in construction sector to -3.9 percent, a variation of 19 percent. This is one reason for the downward adjustment of last years growth from 5.8 percent to 4.1 percent.

The question arises here why NAC was not informed of change in methodology? Has NAC given the approval to the change to new methodology in construction? Is FBS now capable to get authentic data on construction activities?

Similarly, FBS also changed it methodology on measuring the value added in major crops without bringing it to the notice of NAC.

Within a week of NAC meeting held on May 16, 2009, major revision in national accounts have taken place such as reducing the GDP growth estimates for current fiscal from 2.37 percent to 2 percent. This has put the credibility of the government in jeopardy in the eyes of international financial institutions.


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## Neo

*Budget expected to deliberate on structural issues: analysts​* 
KARACHI (May 27 2009): The budget 2009-10 is expected to deliberate on Pakistan's long-standing structural issues, led by the tough performance and qualitative criteria set by the IMF, analysts said.

This includes elimination of electricity subsidy, resolution of circular debt, tax administration & policy action plan (including merger of income & sales tax department, carbon tax & introduction of VAT) and lastly, formation & activation of single treasury accounts, a pre-budget research report by JS Global Capital said.

Unlike the outgoing fiscal year, the government of Pakistan's ability to finance budget deficit will be better placed, driven by commitments from Friends of Pakistan and international financial institutions (IFIs). Resultantly, the financing mix will shift from domestic sources to external. This should take the pressure off bank borrowing. The subsidies on fuel and electricity will be eliminated. The GoP had budgeted Rs 295bn worth subsidies for FY09, which is likely to decline in FY10.

However, subsidy to agriculture sector is expected to continue even in FY10. Higher Public Sector Development Programme (PSDP). Recent IMF approval for counter-cyclical policies to accommodate the recent external flows commitment will stimulate the PSDP allocation for next fiscal year. In FY09, the GoP slashed its development budget massively, due to constraint financing options. The report said that the Advisor to PM on Finance Shaukat Tarin has called next budget as - pro-growth, poor and markets. "We also view the next budget as positive, even in the presence of the IMF's looming tax threat," it added.

The reasons why we are positive are as follows: 

-- Status quo for Capital Gains Tax (CGT) and turnover taxes.

-- No change likely for corporate and dividend tax.

-- Some relief to cement companies likely through excise duty cut-down.

-- Reduction in WHT along with abolishment of excise duty on auto sales.

-- Fertiliser subsidy and higher agri-credit targets to prompt agriculture growth.

-- Proposed reduction in GST and mobile activation charges for telecom sector.

As this budget will be supervised by the IMF, the report revisited the IMF notes and extracted the key highlights and recommendations regarding taxes, which are as follows:

-- Imposition of carbon taxes on sale of petroleum products.

-- Introduction of VAT and elimination of zero-rated sales tax.

-- Taxes on services sector, agriculture and real estate sector.

-- To enhance the tax base, a concept of gross asset tax is also likely to be proposed.

"Things are positive on the market, however, sector-wise it is expected that OMCs and cement would stage a strong recovery," the report said. The budget FY10 is likely to be a non-event for E&Ps, power, oil & gas marketing and financial sector. However, it is likely to carry good news for cement, auto and fertiliser sectors, the report said.


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## Neo

*Business community opposes Afghan transit trade agreement​* 
ISLAMABAD (May 27 2009): The business community has impressed upon the federal government to avoid inking new Afghan Transit Trade Agreement to save the economy and industrial sector from further damage as it will provide Indian products free access to Pakistani markets. The business community has also called for bringing the agriculture and services sectors in tax net.

The transit trade agreement would be tantamount to accepting the Indian hegemony, therefore, no self esteemed Pakistani would accept this agreement, said Asad Mashhadi, President Rawalpindi Chamber of Commerce and Industry (RCCI). He was briefing the media about the declaration of the conference of Presidents of Chambers of Commerce and Industry from all over Pakistan.

The RCCI hosted the conference to discuss the prevailing situation in the country. The conference was organised to discuss the local and international pressures faced by the country. Recommendations were prepared at the conference to save the industrial sector from further damages.

President Rawalpindi Chamber Asad Mashhadi presided over the day-long conference, while Mirza Abdul Rahman President Attock Chamber, Naseem-ur-Rehman Mardan chamber, Malik Ashiq Awan President Haripur Chamber, Mian Hamid Javed President Faisalabad Chamber, Muhammad Akram Badshah President Gujranwala Chamber, Malik Khalid Pervaiz President Gujrat Chamber, Abid Hussain Khokhar President Jhang Chamber, Chaudhry Shafqat Rasool president Okara Chamber and Raja Muhammad Anwar Jhelum Chamber, Shahban Khalid Acting President Islamabad Chamber and Tairq Iqbal Mughal Vice President Shiekhupura chamber participated in the conference.

"If the revival of the Afghan Transit Trade Agreement is imperative then the government should make the categories and quantities of products clear and notify them, besides providing Pakistani business community access to Central Asian Markets," Mashhadi said, adding that the entire NWFP should be included in the establishment of ROZs.

Presidents of Chambers have demanded of the government to declare the NWFP a war affected area and announce special incentives for the industrialists of the province, particularly for the industrialists of Swat and other parts of Malakand division. They also demanded special incentives for the industrialists of the Northern Areas for the revival of their industries. Asad Mashhadi said the presidents of chambers had asked the government to bring a revolutionary budget to revive the country's economy and remove distrust.

In budget proposals for the upcoming budget, the conference called for bringing the General Sales Tax to single digit from present 16 per cent, and for bringing the Income Tax rate on corporate sector to 25 per cent.

The participants of the conference demanded the inclusion of agriculture and services sectors in tax net, saying that minimum taxable amount be brought to Rs 300,000 from existing Rs 180,000 and every individual in any sector coming in this slab be brought to tax net. He said agriculture contributed 22 percent in the GDP but its share in taxation was just one percent. The multiple slab system be converted into a one rational slab, he added.

The conference termed the load-shedding a major set back to the industrial sector and asked the government to decrease the electricity tariff, Mashhadi said, adding that the government should look towards the alternative energy sources to fulfil the requirements of masses as well as industrial sector.

Mashhadi told the media that the conference deliberated on the issue of the bank loans outstanding with business community and it was demanded that bank loans to industrialists be restructured, besides giving easy loan financing to support the small and medium enterprises. He said: "banking sector has earned a lot during the last three years by squeezing the business community, but now there is the time to pay back by reducing interest rates."

The conference urged the government to settle the law and order issue in the country, especially in the NWFP without any further delay and pay concentrate towards revival of the economy. They also underlined the need of reducing interest rate and cutting down tax slabs.

The business leaders offered their full support to the affectees of Swat operation and expressed solidarity with them. They also discussed ways and means to increase the co-operation and co-ordination between all the Chambers of Commerce and Industry. The meeting also called for halting all kinds of tax audit except desk audit. Mashhadi said involvement of Chambers in the national policy making was vital for the progress of the economy. The potential of the industrial sector was not yielding any results due to law and order situation and energy crisis, he added.

The participants of the conference were of the view that Pakistan has a lot of potential as well as human resources, but due to misperception and lack of proper marketing and branding techniques, it is far behind. "We could not add value to our products due to high cost of doing business," he added.


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## Neo

*Pakistan and Indonesia agree to expand cooperation​*
ISLAMABAD (May 27 2009): Indonesia on Tuesday reiterated its support for Pakistan's bid for Full Dialogue Partnership in ASEAN, as it desires higher-level of political and economic integration with ASEAN. Talking to Foreign Secretary, Salman Bashir on the sidelines of the 9th ASEM Foreign Ministers Meeting in Hanoi, the Foreign Minister of Indonesia Dr N Hassan Wirajuda expressed satisfaction at the long-standing brotherly relations between the two largest Muslim countries.

He briefed the Foreign Secretary on various regional initiatives, both inside and outside ASEAN's auspices, to tackle the global financial crisis. The Indonesian Foreign Minister appreciated Pakistan's role in regional stability and campaign against religious extremism and terrorism. Foreign Secretary thanked the Foreign Minister for Indonesia's role in strengthening Pakistan's close association with the East-Asian region.

He emphasised that despite the present security challenges, national development agenda remained Pakistan government's top priority. In this context, he stressed that regional and trans-regional linkages were essential to realise the full economic potential. The Foreign Secretary also briefed the Indonesian Foreign Minister on regional security situation and trilateral processes of engagement with Afghanistan, particularly the President's recent visit to Iran for the Pakistan-Afghanistan-Iran summit.


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## Neo

*Pakistan and Thailand pledge to expand bilateral ties​*
ISLAMABAD (May 27 2009): Pakistan and Thailand Tuesday agreed to comprehensively expand bilateral co-operation across the political, trade, economic, commercial, energy, education and cultural fields. This was decided during the meeting between Foreign Secretary, Salman Bashir and the Foreign Minister of Thailand, Kasit Piromya held on the sidelines of the 9th ASEM Foreign Ministers Meeting in Hanoi, Vietnam.

Foreign Office Spokesman, Abdul Basit giving details of the meeting said the two sides shared the view that immense potential existed not only in further broadening and deepening bilateral co-operation in various fields, but also in benefiting from each other's strategic location to undertake collaborative ventures in third regions.

The Foreign Secretary, while emphasising Pakistan's desire for building a comprehensive economic partnership with Thailand, stressed the importance of forging regional linkages and promoting trans-regional development co-operation.

In this context, he particularly emphasised Pakistan's objective of Full Dialogue Partnership as well as higher-level political relationship and economic integration with ASEAN community. The Foreign Secretary also apprised the Thai Foreign Minister of Pakistan's participation in various trilateral initiatives to promote stability in Afghanistan and advance the trans-regional development agenda.

The central theme of this engagement was to enhance regional connectivity through trade and energy corridors and infrastructure development with a view to maximising the economic potential of the region, he said. The Thai Foreign Minister reciprocated the commitment to up-grade the overall bilateral relationship, with a particular emphasis on a strong economic partnership. He identified co-operation in the fields of food processing, bio-technology and textiles as possible avenues for expanded economic collaboration.

He noted that the two countries could also work to promote trilateral co-operation through projects in Central Asia, the Gulf, and South Asia. It was agreed to schedule bilateral Political Consultations at an early date and hold the next meeting under the MoU on Combating Terrorism. The two sides also agreed to intensify mutual collaboration in regional organisations and multilateral fora.


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## Neo

* Pak-Vietnam bilateral relations reviewed​*
ISLAMABAD (May 27 2009): Pakistan and Vietnam Tuesday expressed satisfaction over the existing warm and friendly relations vowed to further enhance and strengthen these ties which were underpinned by commonality of values. According to foreign office spokesman, the leader of Pakistan delegation at ASEM Senior Officials Meeting (SOM), Additional Secretary, Masood Khalid held a bilateral meeting with his counterpart from Vietnam at the Foreign Ministry.

They noted the need to have more frequent high-level bilateral exchanges, which were going to provide added impetus to the bilateral relationship. The need to hold the meetings of Joint Economic Commission and schedule Bilateral Political Consultations was also emphasised. The Foreign Office spokesman said the two sides exchanged views on possible areas for enhancing bilateral economic co-operation.

They identified agriculture and fisheries sectors as having potential for bilateral collaboration. It was noted that Pakistani pharmaceutical products are in great demand in Vietnam. A delegation of Pakistan Chambers of Commerce and Industry will soon be visiting Vietnam to explore avenues for bilateral economic collaboration. Both sides vowed to implement a road-map in fulfilment of their desire to promote mutually beneficial co-operation.

Pakistan proposed the establishment of a Joint Investment Company and conclusion of Free Trade Agreement (FTA) between Vietnam and Pakistan for furthering trade and economic co-operation. They also explored the possibility of expanding defence collaboration. Vietnam reiterated its strong support for Pakistan's desire for Full Dialogue Partnership with ASEAN.


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## Neo

* Malaysia keen to increase trade with Pakistan: Consul General​* 
KARACHI (May 27 2009): Consul General of Malaysia, Mohammad Khalid Abdul Razak has said that Malaysia is interested in increasing two-way trade with Pakistan. He was speaking at a dinner meeting hosted by Karachi Chamber of Commerce and Industry (KCCI) in honour of 13-member trade delegation of Malaysia. The Consul General said Pakistan and Malaysia are enjoying excellent relations in trade, economic, social and other fields.

He said that a number of Malaysian companies were actively engaged in Pakistan, besides frequent exchange of delegations between both countries. He said that Malaysia has made huge investment in palm oil sector in Pakistan. He said that Pakistan should make efforts to improve its image abroad to attract foreign investors. The foreign investors and importers feel that Pakistan is facing economic instability and added that efforts should be made to build better image of Pakistan.

Trade Commissioner of Malaysia, Zain Uddin Ahmed Jalil said Malaysian investors are keen to invest in services sector and transport in Pakistan. He said that Malaysia has a population of 27 million out of which 35 percent is associated with service sector.

He said at present Malaysia is importing rice, textile products and seafood items whereas exporting palm oil, rubber and food items, etc. He said that Malaysia is keen to increase trade of rice, lather and leather products and tea with Pakistan.


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## Neo

*Russian Gazprom eyes role in Iran-Pakistan pipeline ​*Wednesday, 27 May, 2009

MOSCOW: Russian gas export monopoly Gazprom is keen to participate in a pipeline to carry Iranian gas to Pakistan, the Kommersant daily reported on Wednesday, citing company and government officials.

We are ready to join the project as soon as we receive an offer, Russia's deputy energy minister Anatoly Yankovsky told the daily.

The paper quoted another top government official as saying Moscow sees the pipeline as a means to divert Iranian gas from competing with Russian exports on the European market.

This project is advantageous to Moscow since its realisation would carry Iranian gas toward South Asian markets so that in the near future it would not compete with Russian gas to Europe, Kommersant wrote.

Russian exports satisfy over one quarter of Europes gas needs, but the European Union has sought to lessen its dependence with the construction of the Nabucco pipeline to pump Caspian Sea gas to Europe which would bypass Russia.

The multi-billion dollar Iran-Pakistan pipeline, which aims to pump an initial 11 billion cubic metres of Iranian gas per year to Pakistan, could deprive the Nabucco project of one possible source for gas supplies.

Gazprom spokesman Sergei Kupryanov confirmed the companys interest in the project, Kommersant reported.

It cited an unnamed official in the company as saying Gazprom could serve as the pipeline operator or also participate in its construction.

The start date for construction of the much-delayed pipeline is planned for September 2009 to be completed in June 2014, the paper reported.

Iranian officials have said the supply of gas to Pakistan could begin in three to four years.

The pipeline project, when initially mooted in 1994, had proposed to carry gas from Iran to Pakistan and India. But India withdrew last year from the talks over repeated disputes on prices and transit fees.

The 900-kilometre pipeline is being built between Asalooyeh in southern Iran and Iranshahr near the border with Pakistan and will carry the gas from Iran's South Pars field.

Iranian officials said Monday that the final contract would be signed in three weeks. AFP

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## white_pawn

*World Bank, GoP ink accord for strengthening NTCIP ​*
ISLAMABAD (May 28 2009): World Bank and the Government of Pakistan on Wednesday signed an agreement for strengthening the National Trade Corridor Improvement Programme (NTCIP) amounting to $25 million in the Economic Affairs Division for the trade and Transport Facilitation Project-II(TTFP-2).

Under the Agreement, the World Bank committed the amount to support Government of Pakistan in the implementation of the NTCIP, and also to strengthen the institutional arrangements for NTCIP. The agreement was signed by Farrukh Qayyum, Secretary Economic Affairs Division on behalf of the Government of Pakistan and Yusupha B. Crookes, Country Director, World Bank on behalf of the World Bank.

The objective of the project is to improve the performance of Pakistan's trade and transport logistics by facilitating: (a) the implementation of the National Trade Corridor improvement Programme (NTCIP): and (b) the simplification and modernisation of the Pakistan's international trade practices and procedures.

The project will be implemented by the National Trade Corridor Management Unit (NTCMU) in the Planning Commission, and the Trade and Transport Facilitation Unit (TTFU) in the Ministry of Commerce and Trade. The Project closing date is December 31, 2013. The committed amount is a soft loan and Government of Pakistan will repay the credit in 35 years including 10 years of grace period. The credit is interest free, however service charges at the rate of 0.75 per cent per annum and commitment charges of maximum 0.5 per cent per annum on un-disbursed balance will apply.

Business Recorder [Pakistan's First Financial Daily]


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## white_pawn

*World Bank to give $25m soft loan for NTCIP ​*Thursday, 28 May, 2009 | 02:10 AM PST 

ISLAMABAD: The World Bank has agreed to give a soft loan of $25 million for strengthening the National Trade Corridor Improvement Programme (NTCIP) and implementation of the Transport Facilitation Project-II (TFP-2).

Secretary Economic Affairs Division Farrukh Qayyum and World Bank Country Director Yusupha B. Crookes here on Wednesday signed the agreement.

The objective of the project is to improve the performance of the countrys trade and transport logistics by facilitating implementation of the NTCIP and the simplification and modernisation of the countrys international trade practices and procedures.

The government will repay the interest-free loan in 35 years including 10 years of grace period. However service charges at the rate of 0.75 per cent per annum and commitment charges of maximum 0.5 per cent per annum on un-disbursed balance will apply.

DAWN.COM | Business | World Bank to give $25m soft loan for NTCIP


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## white_pawn

*provide $50mn for Sindh irrigation projects ​*By Amin Ahmed 
Wednesday, 27 May, 2009 | 08:11 PM PST | 

RAWALPINDI: The International Development Association (IDA) of the World Bank Group has agreed to provide additional financing of 50 million dollars for improving water resource management and enhancing agricultural productivity under the Sindh On-Farm Water Management Programme (SOFWMP), official sources disclosed on Wednesday.

The proposed additional financing will focus in the areas of three participating area water boards (AWBs) of Nara Canal, Left Bank Canals and Ghotki Feeder. The total cost of the project will be 61.7 million dollars which will also include government financing of 2.7 million dollars and nine million dollars by local farmer organizations.

Sources said that the new IDA financing expected to be approved next month, will help improve the efficiency, reliability and equity of irrigation water distribution at water-course levels; support agricultural productivity enhancement measures to complement and enhance the benefits of improved water management, and enhance long-term financial sustainability of the irrigation system by fostering self-sustaining farmer organizations  Watercourse Associations  at the watercourse levels. 

The original SOFWMP was approved and became effective in 2004 supporting the Sindh government in implementing five main components of the project. The total amount of credit provided was 61.14 million dollars. The project is currently rated as moderately satisfactory for both development objectives and implementation progress. 

The watercourse improvement works completed under the Sindh On-Farm Water Management Programme (SOFWMP) and the National Programme for Improvement of Watercourses (NPIW) have already demonstrated the effectiveness of the intervention, especially in improving water supply and enhancing equitability of water distribution. 

The project-related document says by 2010, all watercourses in the project area were expected to be improved under the ongoing NPIW. However, due to current Government budget crisis, and subsequent drastic cuts in funding, the implementation of NPIW has slowed down sharply during the fiscal year 2008-09. The inability of NPIW to complete the planned watercourse improvement works in the project area may prevent realizing the full benefits of Banks two ongoing projects in Sindh. 

Providing additional financing to carry out the planned watercourse works in the project area would allow maximizing the overall development impacts of Bank-financed projects. Moreover, additional resources provided by the World Bank for watercourse improvement in the project area would give the Government the opportunity to reallocate some of previously earmarked funds to watercourse improvement to other equally important areas of NPIW in the province, thereby reducing fiscal strains on the Government programme.

Preliminary impact assessment and observations from field visits suggest that the improved watercourses under the project have made positive impacts in terms of enhanced and more equitable water supply and increased income by farmers, hence increasing the watercourse improvement activities would augment the positive development impacts of the project, says the report.

Both federal and provincial governments are fully committed to watercourse improvement interventions. In the wake of current fiscal crisis, the Federal Government has re-prioritized and streamlined its portfolio of ongoing and new projects and discontinued many programmes, which are considered to be of lower priority. 

However, NPIW is still on Governments list of high priority programmes and the Government is committed to complete it. During the past five years, the Government has accumulated considerable experience in implementing watercourse improvement works and has established effective and well-tested implementation mechanisms for the programme. 

The entire institutional set-up and technical infrastructure of NPIW used for watercourse improvement works completed under the Project, are still in place and can be readily deployed for scaling-up activities. This will greatly facilitate the implementation process.

Under the component of watercourse improvement, around 2500 watercourses, comprising earthen improvements, lining, installation of concrete turnouts and culverts will be improved.For the enhancement of productivity, 11,000 hecates of farm land will be precisely leveld using laser-guided equipment in addition to development and dissemination of improved seeds, demonstration on tunnel farmling for high-value crops, training of farmers in improved water management and agricultural practices and new technology, and integrated pest management, and monitoring pesticide residue effects on crops.

DAWN.COM | Business | WB to provide $50mn for Sindh irrigation projects


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## white_pawn

*Foreign investors go wild on stocks​*Dilawar Hussain 
Thursday, 28 May, 2009 | 01:33 AM PST

KARACHI: Foreign investors went wild on stocks at the KSE on Wednesday with about the highest one day sale and purchase so far this year. 

Local individual and institutional investors, meanwhile, managed to keep their sangfroid.

Foreign investors bought $11.3 million worth of equity as the markets opened on a cheerful note following expected favourable decision in court cases against the two top politicians. But traders soon began to draw long faces due to avalanche of sell orders that started to descend as gory pictures of blood were splashed all over TV screens on the tragic Lahore bomb blast. 

Net outflow of portfolio investment, therefore, also mounted to the tall order of $10.12 million. Traders said that foreign sell orders were fully absorbed by local investors and institutions, which was why the KSE-100 index managed to climb by 12 points for the day. 

The investors were willing to pay cash for stocks (in the absence of the popular leverage product), which speaks well for the market, commented an analyst.

Stock strategist Mohammad Sohail at brokerage, Topline Securities observed that foreign activity, generated on both sale and purchase side could be taken as a sign of encouragement as it showed that the Pakistani equity market was on the international investment radar. 

He said that the recovery in the international markets generated buy orders in large cap exploration stocks, while selling was witnessed in a couple of GDR related shares. 

The analyst hoped that increase in foreign investor interest and the cut in PIB rates would help push equity prices up, going forward. PIB cut off yield stood down by 61 basis points to 12.63 per cent in the auction on Wednesday.

Scrolling back, analyst Ahsan Amir Ali at brokerage Invest and Finance Services could locate the previous massive foreign activity at the KSE on April 14. 

Substantially lower than that on Wednesday, foreign funds had that day bought shares worth $7.7 million and sold them of the value of $8.2 million.

Analysts thought that major selling on Wednesday was in the heavyweight E&P stock, OGDC, while sale side was dominated by banks, particularly MCB and NBP. 

There were no firm figures of foreign portfolio investment in the Pakistan equity markets, but some brokers consider it to account for 15 per cent of the free float.

I believe overseas investors still hold $1 billion worth of stocks in our markets, says Sohail at Topline Securities.


DAWN.COM | Business | Foreign investors go wild on stocks


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## Neo

*France offers buying office to textile sector​*Thursday, May 28, 2009

LAHORE: The government of France has offered the Pakistani textile sector to open a buying office in France to get business.

The French Commercial Counsellor in Pakistan Dominique Simon made this offer during his recent visit and meeting with the Faisalabad Chamber of Commerce and Industry (FCCI) and representatives of the textile associations.

The News has learnt that French Commercial Counsellor in his meeting with the textile sector stakeholders said that the industry had badly suffered due to energy crisis, increase in input costs and economic recession.

He offered the textile sector to open a combine buying house for whole textile sector of Pakistan and announced full support of French government in this regard. Dominique Simon offered facilitation for getting visas to people going to France for business purposes.

He mentioned in the meetings that the owing to trade facilities the Bangladeshi producers can send their products to all European markets. Contrary to this despite rich in quality, Pakistani products are not competing due to high cost and no special facility available to Pakistani producers.

Similarly, European companies have opened their buying houses in Bangladesh and quickly updating the Bangladesh textile industry about change in fashion. So every new fashion product is being produce in Bangladesh timely. However, due to law and order situation no businessman is ready to come to Pakistan. Thus in this scenario only one option is left with Pakistani textile producers to open a combine selling house in France which cater the needs of whole Pakistani industry.

The office would approach the fashion and garment companies in France, market Pakistani products and get orders. Similarly, it will timely update the textile industry about the changing fashions in France follow up the trends and fashions and call up the producers to stop production of any particular fashion product and start production of the new fashion product. Once the French companies build trust, starts business with Pakistani products they will also start coming in Pakistan as the law and order situation would change as well.

The French Commercial Counsellor during his meetings with textile stakeholders showed his government full support to Pakistani industry. He also mentioned that a delegation of French businessmen would come in September 2009 and meet with the textile industry stakeholders.


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## Neo

*new development schemes in 2009-10.​*
*The main chunk of the Rs400 billion will be spent on the ongoing development projects.&#8221;​*
The meeting will also approve enhancing powers of Central Working Development Party (CDWP) to approve projects valuing Rs1 billion, as under the existing powers the CDWP can approve projects worth Rs500 million only. The official said that because of the massive depreciation of Rupee, the cost of Rs500 million has swelled manifold.

This is the main reason from which the said proposal is going to be recommended to NEC for approval.

The meeting will also review the Public Sector Development Plan for 2008-09 and approve PSDP for 2009-10.

The government has prioritised various sectors, which will be having the focus in next year development budgetary plan.

The social sector has been put at top on priorities list and then comes water, electricity, agriculture and infrastructure sectors. These sectors development will ensure the economic activities in the country.

The four provinces would also come up with their development plans, which will be accorded approval after through discussion.


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## Neo

*NEC to okay development budget on June 4 with 3.3pc growth ​* 
Thursday, May 28, 2009

ISLAMABAD: The National Economic Council (NEC), which was scheduled to meet on June 1, will now meet on June 4 with Syed Yousuf Raza Gilani in the chair and approve the development plan for budget 2009-10 with 3.3 per cent GDP growth target for next fiscal year, a senior official told The News

The Annual Plan Coordination Committee (APCC) has already recommended development budget outlay of Rs600 billion, which includes federal share of Rs400 billion and provincial share of Rs200 billion.

However, sources in the Ministry of Finance said that the size of proposed development budget may be slashed to Rs559 billion as per agreement reached with the International Monetary Fund (IMF) during the last Dubai talks when the Fund revised the fiscal deficit target from 3.4 to 4.6 per cent.

When contacted Shaukat Tarin, who is in Karachi told The News no doubt we have agreed at Rs559 billion development budget with the IMF, and we stick to it, but over Rs30 billion will be added to the development budget for IDPs and Rs10 billion for FATA which is why the PSDP size swells to Rs600 billion.

According to Planning Commission Deputy Chairman Sardar Assef Ahmad Ali, the government has this time managed to get the fiscal space in the range of Rs85 to Rs 90 billion, that will be allocated on new development schemes in 2009-10. 

The main chunk of the Rs400 billion will be spent on the ongoing development projects.

The meeting will also approve enhancing powers of Central Working Development Party (CDWP) to approve projects valuing Rs1 billion, as under the existing powers the CDWP can approve projects worth Rs500 million only. The official said that because of the massive depreciation of Rupee, the cost of Rs500 million has swelled manifold. 

This is the main reason from which the said proposal is going to be recommended to NEC for approval.

The meeting will also review the Public Sector Development Plan for 2008-09 and approve PSDP for 2009-10.

The government has prioritised various sectors, which will be having the focus in next year development budgetary plan. 

The social sector has been put at top on priorities list and then comes water, electricity, agriculture and infrastructure sectors. These sectors development will ensure the economic activities in the country.

The four provinces would also come up with their development plans, which will be accorded approval after through discussion.


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## Neo

*By December 2009: Govt to reduce group credit exposure limit from 50% to 45%​*
ISLAMABAD: The government plans to introduce phased reduction in the group credit exposure limit from 50 percent to 25 percent gradually to minimise the risk to the banking sector on default of big business groups, official sources told daily Times on Wednesday.

A commitment made with the World Bank for the upcoming fiscal year 2009-10 is to reduce the group credit exposure limit from 50 percent to 45 percent by December 2009 and 40 percent by December 2010, the sources added.

In this regard, prudential regulations would be amended to introduce phased reduction in group credit exposure limit so that systemic risk are minimised as well as putting in place improved banking sector regulations.

According to banking sector expert, at present banks are allowing credit up to 50 percent of equity of entire companies based on purely good working relations. However, in the recent past, default of different companies of a big business group of the country have threatened the banks and their capital have been blocked. At a time when world as well as Pakistans economy is undergoing a difficult phase, entire banking sector is exposed to systemic risk.

To reduce this risk, the government has committed with World Bank that group credit exposure limit would be reduced in phased manner not only to save banking sector but also to enable the banking sector to diversify its lending to comparatively smaller and medium groups.

Credit to private sector witnessed a net increase of Rs 55.4 billion during July 01, 2008-April 18, 2009 as compared with Rs 359.7 billion in the comparable period of last year. The stocks still went up by 9.1 percent. SBP undertook aggressive monetary tightening during the period, further increasing the policy rate by 300 bps in two rounds. On a cumulative basis, this means a 550 bps increase during the last 18 months up to March 2009. However, the policy rate was decreased by 100 bps on April 20, 2009. These policy measures were in response to carryover of macroeconomic stresses of the preceding year and increase in real aggregate demand. Monetary tightening has worked in the right direction.

Weighted average lending rate have witnessed slight decline from 15.5 percent in October 2008 to 14.8 percent in February 2009. Weighted average deposit rate on the other hand has increased from 6.2 percent in October 2008 to 7.0 percent in February 2009 which implies narrowing of the spread amidst intensive deposit mobilisation efforts on the part of the banks. The weighted average yields on 6 months T-bill has declined by almost 250 basis points to 11.5 percent in March 2009 as against 14 percent in November and December 2008.


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## Neo

* Government to send 50,000 skilled workers to Libya​*
ISLAMABAD: The government will export 50,000 skilled workers to Libya by the end of this year under a MoU signed between the two countries during recent visit of President of Pakistan to Libya.

Ambassador of Pakistan in Libya Jamil Ahmed Khan expressed these views while giving a presentation on Libya to the local business community at Islamabad Chamber of Commerce and Industry here on Thursday. Pakistan and Libya have tremendous opportunities of enhancing cooperation in diversified fields and the Embassy of Pakistan in Libya had stepped up its efforts to explore new areas of mutual interest for the two countries.

He said Libya had one of Africas highest per capita incomes of $14,500 with surplus budget of more than $25 billion & forex reserves of $134 billion. He said Libya holds the largest proven oil reserves in Africa (43.66 billion barrels as of 2007) while its proven natural gas reserves as of 2007 were estimated at 54.38 trillion cubic feet and all these indicators showed its good economic strength. He said Libya was gradually opening up its economy and liberalizing its trade. Private enterprises were encouraged to do business in Libya and Pakistani entrepreneurs should look for increasing their share in Libyan economy.

He said major industries of Libya were petroleum, farming, food processing, cement and agriculture. Libya imports about 75 percent of its food and Pakistan has vast scope to enhance the exports of its food products to Libya. He said Libyan oil and gas sectors projects were open for foreign companies and called upon Pakistani businessmen to explore opportunities for themselves in Libya in these sectors.

Pakistan could also provide software, hardware and personnel to oil companies in Libya. Highlighting other areas of cooperation, he said Pakistan could increase its exports of textile products, commercial goods, plastic products, score of items used in the housing sector from cement to wood, furniture, IT, oil and gas equipment, auto parts, sports goods, tractors, agriculture implements, transformers, telecommunication towers and many other items.

In the housing and construction sector, he informed that Libya planned an investment of $100 billion during the next five years which means $20 billion a year - which was something Pakistan could take very big advantage. He said in coming days Libyas importance would further grow as the next President of the UN General Assembly would be from Libya and its President Moammar Qadafi was also the Chairman of 53-nation African Union. Therefore, Libya could became a best source for Pakistans access to African countries and their markets.

Speaking on the occasion, Shaban Khalid, Acting President, Islamabad Chamber of Commerce and Industry said the skilled workforce of Pakistan, well recognized in the US and the West, could best be utilized in the health sector, infrastructure development, engineering projects, information technology, education, banking and finance. He said in 1970s, Pakistani doctors, engineers and other professionals rendered valuable contribution to lay the foundation of Libya as a nation emerging from Italian Imperialism and established good credibility.

Therefore, Libya should import from professionals and workers from Pakistan, he demanded. He said Pakistan had well-developed banking sector and it could provide useful support and expertise to Libya in banking sector as well. He said Pakistan could not only support projects within Libya it could also contribute towards Libyas various African Development programs. He said enhanced exchange of business delegations was the best way to explore areas of cooperation & to take optimum advantage of them. He asked the Pakistan Ambassador in Libya to use his efforts for making visa procedures and processes more easy and quick to facilitate the business communities of both countries.


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## Neo

*Import of power from Tajikistan, Kyrgyzstan: US pressing Pakistan and Afghanistan​* 
ISLAMABAD (May 28 2009): Washington is pressing both Islamabad and Kabul to import 1000 megawatt electricity from Central Asia, despite the fact that Asian Development Bank (ADB) has withdrawn from the project, according to official documents made available exclusively to Business Recorder.

At a recent tripartite meeting in Washington, there was general consensus that energy constraints faced by Pakistan and Afghanistan were limiting the growth potential of the two countries. However, a number of concerns were raised on the viability of the project, particularly by Pakistan's and Afghan officials.

Some key concerns mentioned in the meeting were:

(i) the adequacy of World Bank financing, given ADB's reported withdrawal from the project;

(ii) even though a report confirms the economic viability of the project which includes 500 kV AC interconnection between Kyrgyzstan and Tajikistan and a 500 kV DC interconnection from Tajikistan to Pakistan via Afghanistan such that 1300 MW can be exported from Tajikistan and Kyrgyzstan with 1000 MW imported by Pakistan, yet concerns about surplus energy remain;

(iii) the impact of transit fees and power purchase tariff rates on the economic viability of the project; and (iv) risk coverage arrangements, ensuring continuity of supply on long term, sustainable basis.

The Cabinet has already vetoed the project titled 'Central Asia-South Asia', (CASA) until the project's tariff, economic feasibility and other issues are resolved. The United States has fully supported this project and, during the Bush administration it pressured the regional governments, including Pakistan, to seek energy from Central Asia instead of other sources, particularly Iran.

Responding to the concerns raised by the officials of Pakistan and Afghanistan, Robert Deuttsch, Senior Advisor on Economic Integration, US Department of State, said that it would be necessary to set up an "outage reserve fund", and adequately capitalise it, to ensure cash flows in the eventuality of disruption of supply on account of sabotage.

According to sources, he further clarified that IFC has developed an economic model for the project and suggested a framework for the power purchase agreement. Preliminary details have been shared with power generation companies of the two countries.

After detailed discussion on CASA, it was agreed that:

1) Definition of outage reserve fund will be finalised by the US, in consultation with CASA partners including IFC and MIGA, by the end of July, 2009.

2) US will solicit support of other donors for the reserve fund. Information on the initiative will be shared with Afghanistan and Pakistan by the end of October, 2009.

3) Process of contributions to the fund will be held by MIGA and are likely to be concluded by the US by December 2009.

4) Afghanistan and Pakistan will convene an inter-governmental council meeting with Tajikistan and Kyrgystan by June 15, 2009 to agree on revised project timing. IFC joint project development agreement will also be signed by this date.

5) Afghanistan and Pakistan will conclude agreement with other CASA partners on term sheets for commercial contracts, power purchase and opening concession/investments by end of July, 2009.

6) World Bank will issue Request for Proposal (RoP) for the project based on country agreed documents by end of October, 2009. The Ministry of Water and Power had submitted a summary to the Cabinet for ex post facto approval to the MoU and agreement for import of electricity from the CASA market, which was not cleared by the Cabinet in its meeting on April 8, 2009, sources added.

"The Cabinet observed that the decision to import electricity could be taken only after its tariff/import price was estimated, and its economic feasibility conclusively established, in comparison with the existing sources including rental plants," sources said.

Official documents, obtained by this correspondent, show that Pakistan's team, IFI consulting teams, and the representatives of the US government had met over July 3l-August 2, 2008 to discuss the CASA 1000 MW project, and reached the following consensus, which is to be considered as a recommendation to the IGC for endorsement.

*INSTITUTIONAL STRUCTURE:* The concession would now also include the Kyrgyz-Tajik link (aka AC facilities). The concession company would develop, construct and operate Tajik-Afghan-Pakistan transmission system (aka the DC facilities) as well as construct Kyrgyz-Tajik link. A decision on whether to also include the operations and maintenance of the AC facilities in the concession is under consideration.

*TRADING ARRANGEMENTS:* In the first IGC meeting over VC, it was considered in principle that Barki Tojik (Tajikistan) could be the consolidator in the initial phase which would require Kyrgyz Genco to sell power to Barki Tojik (at the Tajik-Kyrgyz border) on the Kyrgyz-Tajik link (which is part of the CASA 1000 mw project) and Barki Tojik will then sign a single PPA each with DABM/DABS and CPPA. But this was subject to further discussion.

The documents further said that decision was reached to consider concluding a joint commitment of energy from Kyrgyz Republic and Tajikistan. While they may conclude separate direct PPM with the purchasers, they will make arrangements for close co-operation on energy delivery and storage to meet their joint commitment.

*LEGAL FRAMEWORK:* There will be a single concession agreement. The legal advisors will examine the need for host country agreements, one with each country, to capture the country-specific rights and obligations (eg tax, labour laws) and concessionaire's rights and obligations to that country (environmental, social).

*ENERGY FLOWS:* Until additional exportable capacities are developed, Kyrgyz Republic and Tajikistan should together firmly commit 5 TWh flow on average per year through the line during the operating period of the concession agreement (which will be 25-30 years) to be delivered during the summer months. Roughly speaking, Tajikistan should commit to 3 TWh and Kyrgyz Republic to 2 TWh.

Exporting countries will invest to cover the load growth and, in doing so, they can maintain the summer surplus. Once the line is constructed, the options for additional generation include upgrading existing facilities and constructing new generation projects.

This could include thermal projects which would allow for non-summer power to be exported. The long-term objective of all the parties is to stimulate additional low cost generation to expand the CASA regional electricity market and all parties agree to ensure the conditions for early implementation of new generation capacity.

*INVESTMENT AND FINANCING: *The inter-government negotiators had recognised that there had been increases in costs, in part because of demand for electricity equipment and in part because of commodity price increases (eg for steel and aluminium). The final project cost will be determined through the bidding process.

For purposes of determining the threshold to be used during the tendering process, the EPC cost to be used will be $774 million (DC: $574 million, AC: $200 million) as estimated by SNC (June 2008 prices).

In addition, other costs are included in the total project cost in the model such as supervision by owner's engineer, interest during construction, environment and social mitigation costs, and other financing costs.

ADB has noted that this EPC price does not include contingencies. Both components are to be financed 100 percent under CASA-1000 mw project. Additional financiers will be needed to be brought in to fill any financing gaps.

*PROJECT TENDERING TRANSMISSION TARIFFS:* Average transmission tariff estimates for the TSA will be the ones calculated by IFC/Infra Ventures incorporating the assumptions referred to in the investment and financing section.

These tariff estimates will be adjusted once the final EPC is determined during the tendering process. IFC/Infra Ventures will recommend options for transmission service pricing between sellers and buyers as a basis for TSA negotiations.

*WORKING ARRANGEMENTS:* The countries agree to authorise their advisors to meet for the purposes of advancing the agreement on commercial terms of the project without the presence of IGC members and the need for formal meetings. However, each country's advisors will be responsible for seeking necessary approval of all proposed contractual terms.


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## Neo

*PTCL buyer withholds $799.3 million till transfer of properties​* 
ISLAMABAD (May 28 2009): Etisalat, the buyer of Pakistan Telecommunication Company (PTCL), has withheld $799.3 million until the Government of Pakistan (GoP) transfers properties in Sindh and Punjab in favour of PTCL, sources in Privatisation Commission told Business Recorder.

PTCL was privatised through sale of 26 percent shares for $2,598,960,000.00, to be paid in nine equal instalments, payable on biannual basis. As per Share Purchase Agreement (SPA), GoP is required to provide clean titles of 100 percent of PTCL properties (3384 in number) by January 12, 2008. Payment of balance sum of $1.198 billion was contingent upon transferring titles to the properties in question.

Three further installments of $133,000,000 ($133 million) were paid by the buyer upon transfer of the corresponding number of properties. In the event of non fulfilment of this obligation, GoP is obliged to nominate a list of non-transferred properties to the buyer whereafter GoP and buyer will separately appoint property valuators to determine the value of such properties. The valuations have been procured.

Following such valuations, the buyer has the option to surrender its right to the use of non-transferred properties and deduct the estimated value from balance payments or withhold such payments till the titles to the properties are transferred.

In order to ensure timely completion of transfer of title and possession of the properties in question, GoP constituted a steering committee headed by Secretary, Ministry of Information Technology, (who is also Chairman of the PTCL Board of Directors).

However, to date, a balance of 161 non-transferred properties (including 71 in Punjab and 45 in Sindh) remain outstanding and consequently the instalments ($133.218 million each), due on March 12, 2008 and September 12, 2008 have been withheld by the buyer. Etisalat has now paid a total of $1.799 billion and the balance of $799.3 million remains, which Etisalat intends to adjust against the value of non-transferred properties, sources said.

The Privatisation Commission (PC), on its part, has followed up the case of transfer of properties with earnestness and various meetings have been held with the Provincial Chief Secretaries/Senior Members, Boards of Revenue for resolving the issue. The Minister for Privatisation and Advisor to Prime Minister on Finance have also written letters to the Chief Ministers of Punjab and Sindh to help facilitate the transfers but no progress has been made.

The Punjab government has conveyed that it proposes to charge the current market price plus 10 percent surcharge for transferring the properties to the federal government or the PTCL. Sindh government has, however, agreed to charge fees at amenity rate (50 percent of the commercial rate). In this regard, Sindh government has asked for Rs 11.4 billion, whereas Punjab is demanding higher figure.

Sources said that meetings were also held between Secretary Privatisation Commission, Chief Secretary Sindh and Senior Member Board of Revenue Sindh to discuss and finalise valuation of these properties. "We are very close to arriving at a figure for payment to Government of Sindh for transfer of the properties in that province," sources added.

They said that Chairman and CEO Etisalat was kept updated by Secretary PC through personal meetings, telephonic discussion, and letters and was assured of GoP's full support at all levels.

However, vide his letter dated 10-3-2009, the Chairman and CEO Etisalat, in a letter on March 10, informed the PC that EIP has decided to exercise its rights under clause 2.8(a) of the SPA which allows the buyer to instruct PTCL to surrender the right to eleven high value properties, together with a surrender of EIP's corresponding payment obligations in respect of such surrendered properties. The aggregated value of these properties was far in excess of Pakistan's own assessment carried out by our external valuator, sources said.

A Privatisation Commission team headed by the Secretary visited Abu Dhabi on May 4, 2009 at the invitation of CEO, Etisalat, to discuss the process of transfer of properties. In the meeting it was discussed that subject to the approval of the GoP, PC/ GoP would expedite the process of transfer of properties and Etisalat agreed to a period of three months for this purpose.

However, payment of balance sale considerations and release of shares would automatically happen at the end of this period. Payment would be released in full by Etisalat of outstanding amounts subject to deduction for those properties not transferred at the end of the three-month period.

Privatisation Commission also held a meeting with Chief Secretary Punjab on May 22, 2009 to discuss the transfer of outstanding properties on the pattern of the arrangement agreed with the Sindh Government. It was agreed in this meeting that clean titles and possession of properties be transferred to PTCL in the shortest possible time.

The properties would be valued at market price by the District Price Committees under the supervision of senior member Board of Revenue Punjab. The Punjab Government would transfer titles @ 50 percent of the market price for all the 71 properties located in that province within a period of one month, provided the payments of valuated price was made to them.


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## Neo

*Rs 500 billion to be earmarked for PSDP​* 
KARACHI (May 28 2009): The country has come out of the financial crisis and, with sufficient fiscal space, Public Sector Development Program (PSDP) for the next fiscal year will be of about Rs 500 billion. This was stated by Federal Minister for Information, Qamar Zaman Kaira, while briefing newsmen about the decisions at a meeting of senior bureaucrats of Sindh, presided over by President Zardari at Chief Minister House here on Wednesday.

Sindh Governor Dr Ishratul Ibad Khan, Chief Minister Qaim Ali Shah, and Federal Minister Information Qamar Zaman Kaira were also present in the meeting besides high officials of Sindh government. Kaira said that PSDP for the current fiscal year was fixed much higher but only Rs 220 billion has been utilised. He said that the President told the meeting that work on NFC Awards would begin soon after the presentation of federal budget. There will be no resource shortage, but need is to improve the mechanism and execution of funds on projects in an optimal way.

"President Asif Ali Zardari has also made it clear that local governments system will continue in the country. However, it would be improved through reform process and consultation with all the four provinces," Kaira said.

The President formed a committee headed by Advisor to PM on Finance, Shaukat Tarin, to sort out all issues relating to Thar coal projects and speedy work. "Thar coal is a property of Sindh and all hurdles in the development of coal reserves would be removed," Zardari said. Kaira said that President urged the bureaucracy to ensure good governance and work together to build a better Pakistan for the next generation.

The President, while paying tributes to ZA Bhutto and Benazir Bhutto, said that he was following in their footsteps and policies to make Pakistan stronger, he added. He said that the President has also urged for better facilities for the farmers and said that quality seeds, on time water availability, and latest technology for better production should be provided to them.

"We want to improve the life style of farmers by giving them fair return on their production, as we believe if we will facilitate farmers they will provide us food security," he added. The President said that bureaucracy should emulate and learn lessons from success stories of the world and implement them in Pakistan. "We have to work together for a victory because there is no option for defeat. We have to win this war and deliver service to the public and we have to achieve prosperity, political and economic stability", the President added.

Kaira said that power crisis has not been created by the present government. However, the government is working on the issue by establishing new power plants. All new mega power generation plants are being setting up at Karachi, he added. The President said that bureaucracy should remove hurdles in the way of Sindh development and world on public-private partnership for a speedy work.


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## Neo

*IMF may allow use of additional loan facility for budgetary support ​* 
Friday, May 29, 2009

ISLAMABAD: The International Monetary Fund Board (IMF) will consider the option to allow the Government of Pakistan to use some part of its additional facility for budgetary support or fiscal development, Paul Ross, Resident Chief of the Fund told this while briefing media people on Regional Economic Outlook in the Middle East and Central Asia.

So far nothing has been decided to this effect as the Fund Board is going to consider this option. The next tranche for Pakistan under the $7.6 billion bailout package will be released in the month of July, he disclosed.

To a question, Ross said: We have provided the relaxation to the government in fiscal deficit target from 3.4 per cent to 4.6 per cent to craft fiscal space that is to be utilised on social sector development and welfare of internally displaced persons (IDPs) in the wake of ongoing military operation against militants.

The government is also providing the relief to IDPs from the Benazir Income Support Programme (BISP).

While discussing the regional economic outlook Ross said that the exports and private capital inflows is on the decline. He mentioned that last year private capital inflows stood at $5.5 billion, which has now been projected at $3.5 billion keeping in view the ground realities of economic slow down at world level.

The contraction of global economy and its impact on Pakistan economy has reduced exports, private capital inflows and workers remittances, Ross said.

Pakistan is to continue to face in next fiscal more risks of reduction in exports, private capital inflows and workers remittances and to this effect the government needs to come up with strategy effective macro economic stability and ensure the protection for vulnerable segment of society.

Tokyo pledges seem feasible and will be materialised, which will help fuel the economic activities in the country. Coming to the revenue issue of the country, Ross recommended the medium terms strategy to tackle this issue. 

Mentioning about the monetary policy he said that discount rate reduction is linked with fluctuation in core inflation about which the Fund had estimated it will plummet, but did not come down as per the estimates. However, the inflation in Pakistan has started coming down. 

The IMF had earlier estimated the inflation at 7 percent with 3.5 percent GDP growth for next fiscal year, which would now be revised keeping in view the new ground realities.

When his attention was drawn towards the debt sustainability issue as the external debt has surged manifold, Ross said there exists no stress on Pakistan over particular issue. 

Dilating upon the global economic outlook, he said that across the globe, GDP is falling and the world economy is estimated to contract by one percent in 2009, which is why the unemployment is rising. 

However, Paul Ross predicted that the world economy will start recovering in 2010 subject to the concerted policy actions to stabilize financial conditions, strong macroeconomic policy support to bolster demand and gradual improvement in credit conditions.


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## Neo

*prolonged recession: Severe effect on Pakistans GDP growth likely: IMF​*
ISLAMABAD: International Monetary Fund (IMF) indicated a prolonged economic recession in oil importing partner countries including Pakistan could have major impact on their growth and unemployment. IMF also cautioned poverty could also rise substantially.

"Growth is slowing down while financial sectors are now showing some sign of vulnerability," Paul Ross, IMF resident representative of Pakistan said. 

Prolonged recession in trading partner countries and reduced availability of external financing could lead to worse outcomes on growth and unemployment, he added.

After a session on Regional Economic Outlook on Middle East, North Africa and with special focus on Pakistan, he said, "This will also leave weaker corporate sector and banks balance sheets."

He said, "Impact of contraction of world economy on Pakistan has resulted into reduced economic growth, reduced exports and lower private capital inflows." 

Paul identified decline in exports, private capital inflows and remittances as risk for Pakistan's economy and suggested consolidating macroeconomic stability and protecting vulnerable groups should be policy priority.

On huge size of the government and non-observation of cut in current expenditures, Paul said, "The government has already started reducing its current expenditures by eliminating its subsidies that were not poor centered and even rich were also benefiting from subsidies." The best use of this money is to spend it on health and education and other social sectors, he added. 

He said pledge of donor's support at Tokyo meeting would prove as bridge and consolidating revenue generation efforts for Pakistan. However, he indicated delay in disbursement of donor's support would be a risk. 

He said IMF's executive board has not yet received any request from Pakistan for additional loan, however he said third tranche of Stand-By-Arrangement would be released to Pakistan in July 2009.

He admitted inflation in Pakistan was not coming down as per expectation and suggested use of monetary policy as well as fiscal policy was required to bring inflation down. Heavy debt burden is considered as potential risk, Pakistan has the capacity to repay the debt without any stress, he added. 

On suitability of proposed tax collection target of Rs 1.405 trillion, Paul said, "I don't see it unreasonable".

It was informed during the presentation the current monetary policy stance is consistent with domestic and external stability. In the area of consolidating macroeconomic stability, donor's support will provide scope for counter cyclical policy to support economic growth. As a result the budget deficit target agreed has been increased from 3.4 percent of the GDP to 4.6 percent of GDP for 2009-10. 

For protecting vulnerable groups, the social safety net will be strengthened by improved targeting of poor under the Benazir Income Support Programme. 

The roll out of reformed BISP has started and Internally Displaced Persons (IDPs) due to Swat operation have also been included in this scheme. 

The relaxation in increase in fiscal deficit target for 2009-10 would provide space to the government for additional social spending, settlement of IDPs and security expenditures. 

Total government debt that was 57.4 percent of GDP in 2007-08 is projected to decline to 56.9 percent in 2008-09. Current account balance that was $9.6 billion in 2008 is projected to decline to $8.3 billion due to decline in imports and it will come down from 5.9 percent of the GDP to 4.9 percent of the GDP in 2009. 

Total gross external debt to increase from 26.5 percent of the GDP in 2007-08 to 31.9 percent in 2008-09.

Due to contraction in the economies of US, EU and Gulf Cooperation Council member countries, labour demand from Pakistan is to decline, as well as reduce private capital inflows, he concluded.


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## Neo

*Forex reserves increase to $11.193bn​*
KARACHI: The countrys foreign exchange reserves increased to $11.193 billion on the week ending on May 23, 2009 as compared with $11.14 billion last week, figures released by the State Bank of Pakistan showed on Thursday. 

The total reserves witnessed an increase of $53 million during the last week.

The reserves held by the central bank witnessed an increase of $57 million as the reserves reached to $7.883 billion, as compared with the last weeks figures of $7.826 billion. However, the reserves held by the banks (other than SBP) showed a decline of $3 million to reach $3.310 billion, as compared with $3.313 billion last week.


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## Neo

*Increase manufacturing sectors share by 30% of GDP: experts​*
ISLAMABAD: Economic experts have suggested the government to increase the share of the manufacturing sector by more than 30 percent of the gross domestic product (GDP) and tax compliance rate should be increased rather than broadening the tax base.

This was revealed during the Pakistan Institute of Development Economics (PIDE) seminar on Pre-Budget Consideration for Revenue, Expenditure and Deficit Management. Speaking on the occasion VC PIDE and Chief Economist Dr Rashid Amjad stressed the need to stabilise the economy through increase in development expenditure and completion of ongoing projects rather than starting new projects. He also appraised the Benazir Income Support Programme, which has the capacity to meet the need of the time. He also suggested improvement in taxation by increasing visible services like better health, safe drinking water and infrastructure, etc. Earlier, Dean NUST Business School Dr Ashfaque Hasan Khan talked about expenditure, fiscal deficit and major issues in fiscal management. He pointed out that in contrast to the general perception the defence budget is now 12 percent of GDP where as the interest payments have increased up to 25 percent of the GDP. He suggested that the size of PSDP should be consistent with macro-economic structure. He said that funds should also be allocated for maintenance for physical infrastructure and third party validation should be made for public projects. Finally he recommended that tax compliance rate should be increased rather than broadening the tax base.

Professor at NUST Dr Ather Maqsood said that the GDP and FBR taxes are increasing and decreasing with a similar trend showing the absence of efforts to collect more taxes. He also said that tax compliance rate is poor such as Rawalpindi pays more taxes as compared to Gujranwala, which is the hub of industries. He recommended we should stabilise exchange rate otherwise the borrowing cost will increase. He also recommended that we should limit our expenditure and further suggested structural transformation wherein the share of manufacturing sector should increase by more than 30 percent of the GDP. IBD Chamber of Commerce Mohsin Khalid suggested that corporate taxes should be reduced from 35 percent to 25 percent. Dr Hussain from the government of NWFP emphasised the role of incentives for taxpayers by reducing tax rate and simplifying the payment procedures.


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## Neo

*Pakistan and Gazprom sign MoU ​* 
ISLAMABAD (May 29 2009): Pakistan and Gazprom, the largest extractor of natural gas in the world and largest Russian company, have signed a Memorandum of Understanding (MoU) for laying the 950 km gas pipeline under the Iran-Pakistan-India (IPI) project. Pakistan and Iran have recently finalised the draft of Gas Sales Purchase Agreement (GSPA) and are close to signing the deal.

Work on the IPI gas pipeline project is scheduled to commence in September 2009 and completed in four years. "Gazprom and Pakistan have already signed the MoU to carry out the project," sources in Petroleum Ministry revealed to the Business Recorder.

A pre-feasibility study of the IPI project was undertaken in 2006; to further develop the project, a bankable feasibility study as well as Front End Engineering Design (FEED) will be undertaken that would enable the project managers to approach prospective investors and financiers. Sources said that a Pakistani company would undertake feasibility study and design.

The country is facing a massive power shortage, which has led to widespread load shedding across the country. As many as 48 percent of thermal power generation is based on furnace oil of which 62 percent was imported costing over $2 billion in financial year 2007-08. Official sources said that gas imported from Iran would be utilised mainly for power generation that would be 25 percent cheaper as compared to the power generated through furnace oil. Pakistan has made a commitment to Iran to import minimum 750 million cubic feet gas per day and maximum one billion cubic feet gas per day.


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## Neo

*PM announces Rs 50 bln for Balochistan ​*Saturday, May 30, 2009 

ISLAMABAD: Prime Minister Syed Yousuf Raza Gilani Saturday announced Rs 50 billion for Balochistan, besides 3 billion each for provincial budget and Quetta saying the government was cognizant of the problems and would do all to end sense of deprivation. Chairing a meeting here at the PM House, the prime minister said the government was doing all within its limited resources to provide best possible facilities to the people of Balochistan, including health, education, communication and infrastructure development to bring it at par with the rest of the country.

The prime minister said this year the government would provide Rs 8 billion more as compared to the last year for development of the province. 

The meeting was attended by the Governor Zulfiqar Magsi, Chief Minister Balochistan Nawab Aslam Raisani, Deputy Chairman Senate Jan Mohammad Jamali and members of provincial assembly. 

The Prime Minister apprised the delegation that he in his capacity as the vice-chairman of Pakistan Peoples Party (PPP) has formed a committee on Balochistan, comprising Commerce Minister Makhdoom Amin Fahim, Minister for Parliamentary Affairs Dr Babar Awan, Minister for Labour and Manpower Syed Khursheed Shah, Mian Raza Rabbani and PPP Balochistan President Haji Lashkari Raisani.

He said Mian Raza Rabbani has been asked to finalize the draft recommendations for Balochistan that will be presented before the All Parties Conference. 

The prime minister informed the delegation that the government has summoned the meeting of the PPP Balochistan Provincial Executive Committee on June 5 to take the provincial party on board. 

He said like the previous year, the government will try to provide Rs 5 million each for constituency of the national assembly. 

The prime minister also took into confidence the Baloch leadership about the ongoing operation in Swat and Malakand divisions and said the action had to be taken as a last resort, as the other party did not honour its part of the commitment.


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## Neo

*Pakistan, Indonesia to finalise trade accord soon ​* 
Saturday, May 30, 2009

RAWALPINDI: Ambassador of Indonesia Ishak Latu Consina said the business community can play a vital role in further strengthening ties between Pakistan and Indonesia, which are already strong because of both culture and religion, and frequent visits of trade delegations will promote bilateral trade.

He was talking to Rawalpindi Chamber of Commerce and Industry President Syed Asad Mashadi during his visit to the RCCI. The intention of my visit to RCCI is to enhance cooperation between Pakistani and Indonesian entrepreneurs so that any advancement should be made towards joint ventures. The governments of both countries are also working to ink a trade agreement, which would soon be finalised, the diplomat added. 

He informed the meeting that at present the trade volume between two sides is almost $1.12 billion that has increased by 33.9 per cent in last one year but this trade is in favour of Indonesia but both the sides want to create a balance in trade so that Pakistan and Indonesia could get benefit equally. 

He said the Indonesian embassy has softened the process of getting business visa on the recommendations of chambers of commerce so that the contact between business communities might be developed. He also invited a delegation of RCCI to participate in the largest Indonesian trade fair Expo-09which will be held in October in Indonesia. 

Mashadi assured the ambassador that a delegation from the Rawalpindi chamber will take part in the exhibition. 

He said there is a lot of scope to boost the trade between Pakistan and Indonesia and now it is up to the private sector that how it may take advantage of this opportunity. 

The business community is eagerly waiting for trade deal among two countries. 

Mashadi said that there is a great demand of Indonesian palm oil in Pakistani market whereas Pakistan can export fruits, cotton made garments and leather goods to Indonesia. He said the RCCI would encourage joint ventures, extend full cooperation to Indonesian industrialists in holding single country exhibitions in Pakistan as well.


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## Neo

*IPDF running 13 projects worth Rs230bn ​* 
Saturday, May 30, 2009

KARACHI: The government wants to provide sovereign backing and improve credit worthiness of local governments in order to attract foreign investors to form partnerships with them, said Ghulam Murtaza Satti, Head of Infrastructure Project Development Facility (IPDF).

According to a press statement, he said the IPDF was running 13 projects worth Rs230 billion. Of these, he noted, the projects nearing completion included the Karachi Circular Railway costing Rs80 billion, CNG buses being imported at a cost of Rs0.4 billion, Rs12 billion cool chain system along the National Trade Corridor and Rs12 billion IT park under the Pakistan Software Export Board.

Satti said that high-level meetings had taken place recently between the IPDF, World Bank, its UK-based consultants, the Cambridge Economic Policy Associates (CEPA) and important officials of the Ministry of Finance. They discussed setting up two funds, Viability Gap Fund (VGF) and Project Development Fund (PDF).

The purpose of these funds is to supplement the Public Private Partnership initiative in the infrastructure sector.


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## Neo

*Bidders may offer $150m to $200m for RBS​*
KARACHI: Bidders are likely to offer between $150 million (Rs 12 billion) and $200 million (Rs 16 billion) for the acquisition of businesses of Royal Bank of Scotland (RBS), banking sources and market players told Daily Times here on Friday. 

Sources further said that MCB Bank and Habib Bank are likely to withdraw from the race for acquiring the foreign bank. Spokesman for MCB Bank said his bank was very much in the race for the acquisition and that there had been no intention of withdrawing. Calls made at the Habib Bank were not answered. 

Bids were to be presented to the seller on June 5, a banking source said. Due diligence by the prospective buyers was to continue till May 29, but more time was obtained by the bidders for due diligence. 

Orascom group, who is running leading companies in Pakistan including Mobilink, has also entered into the race. 

However, the spokesman for State Bank of Pakistan, Syed Wasimuddin, said the central bank had given on Friday the approval to Orascom to conduct due diligence of RBS. 

After the approval granted to Orascom for due diligence it is likely that the date for bidding would be extended further because it might not be possible for Orascom to complete due diligence in only six to seven days. It is pertinent to mention here that the other three bidders spent about one month in due diligence. 

Jahangir Siddiqui group and Orascom are the major contenders for RBS, a market source said. These groups may offer between $150 million and $200 million, he added.

RBS is being eyed by bidders as a medium-sized bank with a decent branch network, an excellent depositors base, and a highly skilled workforce. 

RBS Pakistan had announced in February that it was exploring new ownership for the retail, commercial, GBM and GTS businesses in Pakistan. It said there had been several reasons why this decision had been made. 

The annual report of RBS Pakistan for 2008 said it had been decided by the new management of RBS plc to revisit its global footprints in various countries to decide about the future world wide strategic presence to ensure optimum capital rationing. Based on the results of a strategic review conducted for all the locations, RBS Plc had announced its intention to explore new ownership for its businesses in fifteen countries including Pakistan. 

MCB Bank and HBL had expressed their interest in RBS on April 13 while JS Bank joined the race on April 14.


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## Neo

*July-March debt servicing mounts to $3.6 billion: 16 percent rise over last year​* 
KARACHI (May 30 2009): The country's external debt servicing has crossed 3.6 billion dollars mark in first nine months of the current fiscal year mainly due to payments for Euro bond and short term loans. The State Bank of Pakistan (SBP0 on Friday said that the country's payments under external debt servicing stood at $3.654 billion including principal amount of $2.836 billion and $818 million interest payment in July-March period of fiscal year 2009.

This debt servicing was 16 percent higher than overall debt servicing of last fiscal year, which was $3.161 billion including $1.931 billion principal amount and $1.23 billion interest payment.

The country rescheduled billions of dollars foreign loans due to insufficient foreign exchange reserves, and over $1.6 billion foreign debts have been rescheduled in July-March of current fiscal year to reduce payment of foreign debt and maintain foreign exchange reserves at a suitable level. Rescheduled loans in last fiscal year 2008 stood at $1.2 billion.

Economists said that major reason behind current surge in debt servicing was payment of Euro Bond worth 500 million dollars and short-term loans of Islamic Development Bank (IDB).

They said that rising payments of debt servicing was an alarming situation, as the country's foreign reserves are already on downward track due to the high foreign payments and at this stage country needs to further develop foreign reserves. "The country's foreign reserves declined to some 6 billion dollars in November 2008 from a peak level of 16 billion dollars in November 2007 due to the slow foreign inflows and rising outflows," they added

Economists said that huge payments under the debt servicing and depleting reserves have also put a negative impact on exchange rate, which was at Rs 60-61 to the dollar in fiscal year 2008 relative to Rs 80 to the dollar in fiscal 2009. The major payments under the debt servicing have been made on account of public and publicly granted loans, under which some 2.843 billion dollars (including 2.221 billion dollars principal amount and 622 million dollars) have been paid under debt servicing.

Similarly, debt servicing under private non-guaranteed loans stood at 459 million dollars in July-March of fiscal year 2009. Payments to IMF and Paris Club stood at 160 million dollars and 295 million dollars respectively in first nine months of current fiscal year. The country also availed the opportunity of rescheduling in the wake of high debt servicing payment and rescheduled some 1.650 billion dollars worth of loans in July-March to defer payments for a specific time period.

Rescheduling of loans is some 450 million dollars higher than the overall rescheduling of loans in last fiscal year, in which international financial institutions rescheduled some 1.2 billion dollars. It may be mentioned here that during the fiscal year 2008 payments under debt servicing had gone up by 6.18 percent to 3.161 billion dollars as compared to 2.977 billion dollars in fiscal year 2007.


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## Neo

*Exports unlikely to reach $18 billion mark ​* 
ISLAMABAD (May 30 2009): Pakistan's exports are unlikely to touch $18 billion mark--nearly 19 percent lower than the target--by the end of the current fiscal year (2008-09) due to government policies and international recession. The government has fixed $22.1 billion export target for the current fiscal year, a gross overestimation. Actual exports till the end of April 2009 were 12.5 percent less than in the same period of last year.

According to official documents, the government had achieved 79.3 percent of total export target during ten months of 2007-08, but during the same period of the current fiscal year 66.8 percent of the target has been achieved. Commerce Ministry's top foreign trade officials have been engaged in several foreign tours during the last ten months with little positive outcome, in terms of higher exports, to show for the expenses they incurred.

Analysts say that for the country to recover from the decline in industrial output a focused approach must be undertaken by the government that should seek to provide incentives to the export sector and credit at affordable rates, coupled with uninterrupted energy supply. Or, in other words, monetary and fiscal policies are required to strengthen the export sector.

Pakistan's trade deficit crossed $14 billion during ten months (July-April) of the current fiscal year due to negative growth in exports and a decline in imports. A couple of months ago, Commerce Ministry officials were happy when growth in exports was about ten percent, but now it seems that exports have nose-dived.

Reduced imports have shrunk the trade balance to some extent during the first ten months of the current fiscal year but declining trend in exports and a gradual increase in crude oil prices in the international market indicates that this trend is not long-lasting and the government has to revisit its trade policy.

The government increased regulatory duty on dozens of non-essential items, but the result of this decision was not as encouraging as was expected as it resulted in increased smuggling of such items from Afghanistan. A former commerce minister, Humayun Akhtar, stated that exports rose dramatically during his tenure--from $7.8 billion to $20 billion--for which the entire economic team and exporters had played a pivotal role.

Talking to Business Recorder, he said that Pakistan must demand free trade agreement (FTA) from the European Union (EU) and the US to boost its exports. He further questioned as to how exports could improve when exporters were grappling with issues like load shedding, non-availability of capital and absence of tax incentives to the exporters.

Exports also declined because of external factors, notably global recession that has negatively impacted on the growth rate, employment and poverty levels in the country. At a recently held trade advisory council meeting under the auspices of Commerce Ministry, most of the industrialists, exporters and other trade bodies stressed upon the government to provide incentives to industry or else more and more units would close down.

Executive Directors of International Monetary Fund (IMF) commended the authorities for the progress achieved under the stabilisation program. They observed that fiscal consolidation and improved coherence between fiscal and monetary policies had helped to tackle the roots of large imbalances, while structural reforms had progressed broadly as envisaged. As a result, the exchange rate broadly stabilised; inflation had come down; and foreign reserves had strengthened. It is now up to the government to support the industry in general and exporters in particular in the forthcoming budget, so state analysts.


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## Neo

*Foreign investors withdrew $22.327 million from KSE during May ​* 
KARACHI (May 30 2009): Foreign investors withdrew $22.327 million from Pakistan's equity market during May 2009. The outflow of foreign investment started from 2008 due to weakening economic indicators, Mohammad Sohail, a leading analyst and CEO of Topline Securities said. The downgrade rating and exclusion of Pakistan Index from MSCI EM Index was also negative for foreign investors and they preferred to withdraw their investment from the equity market, he added.

He said that the imposition of price floor at the share market was also a major reason that shattered foreign investors' confidence and they opted to offload their holdings in the local bourses. He said that the global recession also forced the foreign investors to withdraw their investments abroad and invest at home.

The prevailing political uncertainty and law and order situation in the country also invited foreign selling at the equity market, he noted. According to the National Clearing Company of Pakistan Limited (NCCPL) data the outflow of foreign portfolio investment continued as the offshore investors withdrew $644.974 million from January 1, 2008 till date. The previous month recorded an outflow of $12.216 million of this mode of investment.

The situation slightly improved during the previous week ended May 22 with a fresh inflow of $1.634 million however; once again the offshore investors remained net sellers of $4.107 million this week ended May 29.

The week started on a negative note as an outflow of $1,921,105 was witnessed on Monday. This trend continued as offshore investors withdrew another $3,343,741 on Tuesday. On Wednesday, the situation improved with a fresh inflow of $1,184,458; however, the foreign investors remained net sellers of $2,273,724 on Thursday. On Friday, the offshore investors once again remained net buyers of $2,246,902.


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## Neo

* 'Branding culture a must for economic turnaround' ​* 
LAHORE (May 30 2009): Both the public and private sectors would have to workout methodology to promote branding culture in Pakistan to wear off the intensity of economic meltdown being observed by the leading economies of the world. This was the upshot of speeches delivered at a seminar on 'Successful Branding' organised by LCCI Standing Committee on e-media and Marketing.

The objective of the seminar was to educate the participants about the importance of creating a unique brand identity for Pakistani Brands. Speaking on the occasion the Provincial Minister for Excise and Taxation Mujtaba Shujaur Rehman said that despite the fact that Pakistan has all resources in abundance and quality-wise its goods are 'best of the best' in the entire world but it has so far failed to get its share in the world economy only because of poor brand management in Pakistan.

The present government understands that branding is one of the tools that helps highlight the soft image of any country besides giving required boost to its exports, he said. The Lahore Chamber of Commerce and Industry (LCCI) President Mian Muzaffar Ali said that all over the world, the branded products are considered to be better than that of non-branded ones.

He said that branding is key to success it not only increases sales at local levels but earns much needed foreign exchange by winning due place in the global market. He said that the value of the brand is determined by the amount of premium it generates for the product and the manufacturer. This is the outcome of a combination of increased sales and increased price.

The Convenor LCCI Standing Committee e-media and Marketing Mohammad Usman stressed the need for development of brand mechanism on scientific lines. He said Pakistani products such as textiles, leather, surgical and exports goods have no parallel in the entire world but very little branded products, which have won consumers' confidence locally and globally. He reiterated the resolve that the LCCI would continue to conduct such seminars to update its members on latest techniques of marketing through various activities so that they could enhance their productivity and profitability and contribute towards the economic growth of Pakistan.


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## sohailbutt

*KESC to inject 1,500 to 1,600 megawatts in its system in three years​*Karachi Electric Supply Company (KESC) is going to add some 1500 to 1600 MW electricity in its system during next three years, as the new management after taking over the utility has started investing in the company. This was stated by Naveed Ismail, Chief Executive Officer of KESC, in an exclusive interview with Business Recorder.

He said that the company had already added almost 450 MW in the system and another 150 MW would be available by the end of June while the two gas turbines with generation capacity of 90 MW each would be functional in July and September this year.

According to the CEO, the 560 MW dual-fired combined cycle plant at Bin Qasim plant would be completed in four phases, with the first GT expected to be operational within two years (May 2011), and the second and third GTs to be commissioned in June and July 2011, respectively while the steam turbine would be commissioned by January 2012.

He said that after rectification of lines' faults, the required gas supply from Sui Southern Gas Company (SSGC) has been restored that increased power generation by the gas-based units of the company, he added.

Rejecting the allegation that the current drastic reduction in the load shedding was due to the presence of high officials of the federal government including President Zardari in the city, he said the generations was improved after the investment of at least $87 million since the take over of the company by the present management.

After the maintenance work, the unit-1 of Bin Qasim Thermal Power Plant (BQTPP) has started generating at least 200 MW while the electricity generation of other gas-based units of BQTPP has increased to a maximum level of 180 to 200 MW each, he added.

"I am looking forward to almost double the generating capacity of Bin Qasim's gas-based plants with using efficient technology," he added. "No utility wants to resort to load shedding as it causes losses of billions of dollars to itself," the CEO said adding that the allegation of saving money through cutting the power generation of oil-based units was unfounded.

To a query he said that the barge-mounted engines, which were demanded by the government from Turkey, had nothing to do with the power situation of the city as it was demanded by Wapda. Only the routine supply from Wapda to KESC will continue and no additional megawatts was supposed for Karachi after installation of these engine, he added. He said that the new management had started investing in the company as a legal shareholder after signing the formal agreement with the government in April 2009, and the investment would be over $102 million by June 2009.

To a question he said that due to unresolved issue of circular debt, the company was neither receiving it receivables nor being able to pay the dues it owed to different institutions like Wapda, SSGC, etc. "We have not disconnected the power supply to the pumping stations of Karachi Water and Sewerage Board (KW&SB) to avoid inconvenience to the people as a result of water shortage," he said adding that the Water Board was yet to pay over Rs 7 billion dues of KESC.

Business Recorder [Pakistan's First Financial Daily]

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## sohailbutt

*Six new plants to provide 1,132 megawatts in Gepco area soon​*The Chief Executive of Gujranwala Electricity Power Company (Gepco), Muhammad Ashraf Zahid, has said that six power generation projects were being initiated for generating 1132 megawatt electricity in Gujranwala region.

Addressing members of Sialkot Chamber of Commerce and Industry (SCCI) here on Friday he said that Sahuwala power station (with oil) would generate 150 megawatt power; Eminabad Gulf rental power station (oil) 62 megawatt; Hub Power (oil) (an IPP) 225 megawatt; Tapal rental power house Kamoki (oil) 70 megawatt; Nandipur power station (genco) (oil/gas) 425 megawatt; and Gulistan energy GRW (oil) (IPP) would produce 200 megawatt electricity.

He said that Sahuwala power project and Eminabad Gulf power stations would be completed by December 2009, Hub Power--Narowal and Tapal--rental power would be accomplished by March 2010; and Nandipur and Gulistan power stations would be completed in March 2011 and June 2011 respectively.

He said that regular functioning of Sahiwal and Narowal power projects would help and would be much supportive in reducing the power crisis being faced by the industrial sector of this export-oriented city and hub of cottage industry.

The Gepco Chief Executive said: "We are making great efforts for providing better and improved electricity service to the consumers in Gujranwala division. We can get rid of electricity load shedding if we control our unneeded consumption and adopting some precautionary measures for saving electricity."

In his address of welcome, SCCI President Hassan Ali Bhatti said that unscheduled load shedding was creating adverse effect on industrial sector of Sialkot. He said that Sialkot is an export-oriented city and is producing exportable products, but electricity load shedding is hindering the continuity of productivity. As a result, the exporters community has been facing financial constraints, he added.

He urged the Gepco authorities that electricity load shedding duration should be curtailed to three hours from nine hours to protect the industrial sector of Sialkot. Bhatti said that load shedding scheduled should be revised and the new schedule should be prepared on the blueprint of Faisalabad to facilitate the business community of Sialkot.

Business Recorder [Pakistan's First Financial Daily]


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## sohailbutt

*Gadani ship breaking hit by suspension of oxygen gas supply​*GADANI: The suspension of oxygen gas supply by the DOC Company has severely hit the ship breaking industry here, throwing thousands of workers out of employment, while as many as 78 scrap ships worth billions of rupees are waiting at the docks for necessary dismantling.

Additional collector customs, Ali Sher told Geo News that about 5.75 lacs tons of scrap ships standing anchored at the docks, but for lack of supply of oxygen gas, Gadani workers were under-employed, as they were compelled doing only those works, which could be done manually.

Gadani labour leaders have demanded immediate restoration of the supply of oxygen gas, saving the labourers from wages loss and facing starvation. 

Gadani ship breaking hit by suspension of oxygen gas supply - GEO.tv


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## sohailbutt

*Bidders may offer $150m to $200m for RBS​*KARACHI: Bidders are likely to offer between $150 million (Rs 12 billion) and $200 million (Rs 16 billion) for the acquisition of businesses of Royal Bank of Scotland (RBS), banking sources and market players told Daily Times here on Friday. 

Sources further said that MCB Bank and Habib Bank are likely to withdraw from the race for acquiring the foreign bank. Spokesman for MCB Bank said his bank was very much in the race for the acquisition and that there had been no intention of withdrawing. Calls made at the Habib Bank were not answered. 

Bids were to be presented to the seller on June 5, a banking source said. Due diligence by the prospective buyers was to continue till May 29, but more time was obtained by the bidders for due diligence. 

Orascom group, who is running leading companies in Pakistan including Mobilink, has also entered into the race. 

However, the spokesman for State Bank of Pakistan, Syed Wasimuddin, said the central bank had given on Friday the approval to Orascom to conduct due diligence of RBS. 

After the approval granted to Orascom for due diligence it is likely that the date for bidding would be extended further because it might not be possible for Orascom to complete due diligence in only six to seven days. It is pertinent to mention here that the other three bidders spent about one month in due diligence. 

Jahangir Siddiqui group and Orascom are the major contenders for RBS, a market source said. These groups may offer between $150 million and $200 million, he added.

RBS is being eyed by bidders as a medium-sized bank with a decent branch network, an excellent depositors base, and a highly skilled workforce. 

RBS Pakistan had announced in February that it was exploring new ownership for the retail, commercial, GBM and GTS businesses in Pakistan. It said there had been several reasons why this decision had been made. 

The annual report of RBS Pakistan for 2008 said it had been decided by the new management of RBS plc to revisit its global footprints in various countries to decide about the future world wide strategic presence to ensure optimum capital rationing. Based on the results of a strategic review conducted for all the locations, RBS Plc had announced its intention to explore new ownership for its businesses in fifteen countries including Pakistan. 

MCB Bank and HBL had expressed their interest in RBS on April 13 while JS Bank joined the race on April 14.

Daily Times - Leading News Resource of Pakistan


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## white_pawn

*Japan increases investment by $130 million ​*
KARACHI (May 31 2009): Japanese Consul General in Karachi, Akinori Wada, has said that even today Japan considered Pakistan as the potential country with market of 170 million people and has increased its investment here by US 130 million dollars. Addressing members of Site Association of Industry (SAI) here on Friday.

He recalled that a few days back a very important meeting was held between Pakistani and Japanese businessmen in Tokyo where important reports were submitted to both the governments. Those reports had suggested proposals for expanding mutual trade and investment, he added.

Inviting attention of the participants towards the declining trend of imports from Japan, he said those had declined by more than 20 percent since 2005 and the exports from Japan had increased by 30 percent during the same period.

He said in his opinion the reasons behind this could be firstly because of the changing attitude of Japanese business community to go for a higher value added and profitable values of merchandise, adding the other reason could be due to more competition from China in respect of textile, home-made textile and clothing.

The Consul General apprised SAI members that Pak-Japan relations, multi-dimensional in nature and character, had grown rapidly over the years in different fields and diverse sectors. Major sectors of investment of Japanese joint venture projects are automobiles; include motorcycle and related sectors. Other sector include leasing, investment bank and power projects.-PR

Business Recorder [Pakistan's First Financial Daily]


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## white_pawn

*Pakistan's budget deficit for nine months at 3.0 percent of GDP ​*
KARACHI (May 31 2009): Pakistan's budget deficit for the first nine months of 2008-09 (July-March) fiscal year was 3.0 percent of gross domestic product(GDP), according to data posted on the Finance Ministry's Web site on Saturday. The deficit for fiscal year 2008-09 was targeted at 4.3 percent of GDP.

"We are on track for achieving full year target for budget deficit," said Asif Qureshi, head of research at Invisor Securities Ltd. The budget for the coming fiscal year is expected to be unveiled on June 13. It will be closely scrutinised by the International Monetary Fund, which granted Pakistan a $7.6 billion emergency standby facility in November, 2008 to stave off a balance of payments crisis.

Business Recorder [Pakistan's First Financial Daily]


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## white_pawn

*UK urged to grant direct access to markets for Pakistani exporters​*
RECORDER REPORT 
MULTAN (May 31 2009): Former President of Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Mian Tanvir Ahmed Sheikh, has asked the British government to give direct access to Pakistan exporters to British markets so that they could easily introduce their products to bring economic prosperity and improvement.

Exchanging views with British Trade officers/Deputy Director Trade investment, Ahmed Arif and Trade Information officer, Waqar-ullah here on Saturday, Tanvir Sheikh said that Pakistan was incurring huge losses in the war against terror while this war was in the benefit of the whole world.

Furthermore, he said that world should help Pakistan in boosting up its trade to compensate it. He said that it would be our responsibility to maintain the quality and demand of the buyers.

He urged the British trade officials to provide equal facilities to Pakistan just as it is offering for Indonesia Bangladesh and India, however, expressing his optimism he said that the trade relations between Pakistan and the United Kingdom would grow further in coming days as Pakistan is on the priority list of the United Kingdom (UK) for having enormous potential and opportunities.

Moreover, President, MCCI, Anis Ahmed Sheikh also threw lights on the matters relating to expansion of bilateral trade, investment and economic co-operation, especially, investment climate in Pakistan in the wake of global economic crisis. The Deputy Director, UK Trade and Investment, said that UK is seriously working on further strengthening the business relations between the two countries, adding that Pakistan has a huge potential for foreign investment with rich human resource.

He said that global recession could be tackled with collective approach and there is a need that both the UK and Pakistani businessmen should work hand-in-hand to fight it out once for all. He said that Pakistan was keen to have British investment that could provide transfer of technology and help it become a knowledge-based economy.

He said nurturing relations with the UK is a corner stone of Pakistan foreign policy as Pakistan views the UK as a key industrialised country with sound opportunities for trade and investment because it is an important member of the G-8 and the EU, and a partner in the Commonwealth.

The presence of around one million Pakistanis in Britain gives added strength to the traditional relationship. Above all, the UK is Pakistan's largest trading partner within the EU and the second largest foreign investor. The perception that the investors are shying away from Pakistan is no longer there.

The concessions provided by a business friendly environment to them are so enormously attractive that investors are willing to take certain amount of risk. Therefore, UK investors should bring more and more investments into Pakistan. The MCCI President also stressed the need to further widening of bilateral economic bonds.


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## white_pawn

*July-March development expenditure declines, defence surges ​*
ZAHEER ABBASI 
ISLAMABAD (May 31 2009): The development expenditure declined by 25.30 percent whereas defence expenditure surged by 14.29 percent during July-March 2008-09 over the same period of last year, the finance ministry figures revealed on Saturday.

Official figures of fiscal operation for the third quarter released by the ministry show that the development expenditure and net lending of Rs 224.207 billion during the first nine months of the current fiscal year was 25.30 percent less compared to Rs 329.775 billion for the same period of last year. Cut in development expenditure seems to have helped the government curtail fiscal deficit to 3 percent of the GDP during the period under review.

Analysis of the data showed that Rs 224.207 billion defence expenditure during July-March 2008-09 is 14.29 percent higher as compared to Rs 196.162 billion for the same period of last year. The government collected Rs 74.645 billion through development surcharge on petroleum products, Rs 10.494 billion through development surcharge on gas and Rs 23.676 billion by retaining discount on crude oil.

The budget deficit during the said period was Rs 405.2 billion, 3 percent of the GDP, is less than 5 percent for the same period of last year. The fiscal deficit of Rs 405.200 billion was met through Rs 83.983 billion from external sources and Rs 321.217 billion from domestic.

In terms of debt repayments, the other major expenditure, the government spent Rs 442.76 which included Rs 395 billion for domestic debt and Rs 47 billion for foreign debt ie 3.3 percent of GDP as against Rs 354 billion or 3.5 percent of GDP in the last fiscal year. The size of the GDP in nine months of this fiscal year was counted at Rs 13.38 trillion compared to Rs 9.97 trillion for the same period of last year.

The data showed that federal tax collection during July-March 2007-08 was recorded at Rs 849.199 billion which included Rs 307.580 billion direct taxes, Rs 3.260 billion taxes on property, Rs 404.497 billion from taxes on goods and services, Rs 83.360 billion from excise duty and Rs 321.137 billion from sale tax.

Rupees 105.391 billion tax collection came from international trade, Rs 28.471 billion from others, Rs 7.826 billion from stamp duties and Rs 5.660 billion from tax on motor vehicles and Rs 14.985 through other taxes.

The non-tax revenue included Rs 452.216 billion which included Rs 033 million from profit of post department/PTA, Rs 16.276 billion from interest (PSEs and other), Rs 40 billion from dividends, Rs 135.263 billion from SBP profit, Rs 39.659 billion from defence, Rs 5.288 billion from citizenship, naturalisation and passport fee, Rs 74.645.

Business Recorder [Pakistan's First Financial Daily]


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## white_pawn

*Romanian envoy meets FPCCI president ​*
KARACHI (May 31 2009): The Ambassador of the Republic of Romania to Pakistan, Emilian Ion, called on the FPCCI President Sultan Ahmed Chawla at the Federation House on Saturday morning. He told the gathering that Romania imports almost 40 percent of its total textile needs from Pakistan, and Pakistani businessmen could further increase this volume if they explore the markets of his country.

The Romanian ambassador invited the FPCCI to send businessmen's delegation to Romania. The FPCCI chief accepted the offer and told him that a delegation of Pakistani businessmen would visit Romania in late September or early October this year.

The FPCCI chief Sultan Chawla said there existed very cordial relations between Pakistan and Romania, but the bilateral trade between both countries, which stood at $130 million last year, did not reflect these relations. Chawla told the Romanian envoy that Pakistan had huge coal reserves of 1.8 billion tones, and wanted to exploit these reserves for power generation.

He urged the Romanian envoy to help tap the coal reserves, in which Romania had ample mining expertise. The FPCCI chief also suggested the setting up of joint ventures, which could make use of Pakistani manpower and Romanian know-how.

A businessman at the meeting suggested that Romania could transfer one of its surplus ball-bearing manufacturing plants and set it up in Pakistan, as such many plants had become surplus in Romania after its membership in the European Union. The Romanian Ambassador, Emilian Ion thanked the FPCCI office bearers, and said he was pleasantly surprised and happy to see such affinity for Romania among Pakistani businessmen.-PR

Business Recorder [Pakistan's First Financial Daily]


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## Neo

* Budget deficit reaches Rs405.2bn in 9 months ​* 
Sunday, May 31, 2009

ISLAMABAD: Budget deficit during the first nine months of current fiscal 2008-09 has touched Rs405.200 billion.

According to a summary of the consolidated federal and provincial budgetary operations during July-March period of 2008-09 released from the finance ministry, budget deficit has been registered at 405.2 billion, which was financed during the period under review through borrowing from external and domestic resources.

The country borrowed Rs83.983 billion from external resources and Rs321.217 billion from domestic sources. However, for the countrys defence, the government spent Rs224.207 billion.

Pakistan managed to get external monetary inflows amounting to Rs264.113 billion and repaid Rs180.130 billion as external debt and interest on debt, meaning that net external inflows of Rs83.983 billion have arrived.

However, expenditures under the head of debt servicing for domestic loans surged to Rs395.030 billion and Rs47.732 billion under the head of foreign debt servicing.

Total development expenditures have been registered at Rs216 billion under Public Sector Development Programme (PSDP) 2008-09. Development expenditures include Rs106.8 billion from the federal government and Rs109.179 billion from provincial governments.

Total share of four federating units in federal revenue in the first nine months of the current fiscal stood at Rs381.030 billion, out of which Punjab got its share of Rs191.336 billion, while Sindh received Rs116.3553 billion, NWFP Rs47.657 billion and Balochistan Rs25.684 billion.

Punjab is the only province which is running a deficit of Rs14.273 billion, as its expenditures have surged to Rs264.577 billion against revenue of Rs20.304 billion collected in July-March.

However, the Sindh government, according to the summary, is not in deficit, rather it is in surplus of Rs1.933 billion as its expenditures have been registered at Rs140.363 billion against total revenue that stood at Rs142.296 billion during the period under review.

NWFP government went in surplus with Rs25.365 billion during July-March period as it managed to go for total expenditure only to the tune of Rs56.584 billion against revenue of Rs81.949 billion.

However, the poor province was not given profit from hydro electricity in the first two quarters, but in the 3rd quarter it has been given Rs2 billion under the head of Net Hydel Profit.

The Balochistan government is not facing a deficit, rather like other federating units barring Punjab, is enjoying a surplus of Rs8.924 billion with expenditures at Rs38.230 billion and total Revenue at Rs47.154 billion.


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## Neo

*Rice exports have crossed $1.8bn: REAP chairman ​* 
Sunday, May 31, 2009

KARACHI: Rice Exporters Association of Pakistan (REAP) Chairman Abdul Rahim Janoo has said that total rice exports from Pakistan have crossed $1.8 billion for the period July 1, 2008 to May 30, 2009.

He hoped that in the remaining one month of the current fiscal year rice exports would cross $2 billion. This has become possible due to the business-friendly policies of the government. If this trend continues, we will achieve our Vision 2012 target in which we have planned to cross the $4 billion mark in rice exports, he said.

Praising REAP members he said they had achieved the target despite the global financial meltdown and depressed international markets. In the last fiscal year 2007-08, Pakistan exported 3.5 million tons of rice valuing more than $2.2 billion, making the country the third largest rice exporter in the world.

He said REAP had sent trade delegations with the help of Trade Development Authority of Pakistan (TDAP) to Saudi Arabia and South Africa, which received a lot of orders. Two more delegations would visit Qatar and EU countries in June to explore new rice markets and to promote Pakistani rice, which had the best quality in the world, he informed.

REAP has also planned that in July and August it would send delegations to Kuwait, Iran, Senegal and Zambia, which are also big markets of rice.


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## Neo

* Purchasing power falls more than 50 per cent ​* 
Sunday, May 31, 2009

ISLAMABAD: The earnings of ordinary fixed-income Pakistanis, especially pensioners, have reduced in real terms to half due to falling purchasing power of the rupee and skyrocketing inflation during 2008-09.

This indicates that now, consumers can buy 50 per cent less with the same amount what they could a year back. 

Yet the PPP-led government is sleeping on the wheel and the consumers have been left to the mercy of multinational companies, unjust profiteers and big cartels having political backing. Every body knows about this open secret of involvement of some politicians and government machinerys high ups in criminal trade distorting the economy.

Depreciating rupee and record high inflation are the monsters that also contributed in raising Pakistans external debt burden, debt servicing and loan repayments.

This has badly confused the governments economic policymakers and confronted them with the dilemma of balancing financial accounts. Roughly, one rupee against US dollar, contributes to debt burden by more than Rs47 billion.

During the fiscal year under review, Pakistani rupee depreciated by one third or 20 rupees against US dollar and other major currencies. This indicates that during the last one year, external debt burden mounted by about a trillion rupees due to reduced rupee value. 

Average ten months (July-April 2008-09) inflation stood at 22.35 per cent against corresponding period of the last fiscal. For each one per cent increase in inflation, more and more people fall into poverty as the poor are highly sensitive to price changes in food, particularly staple food items, economists believe. 

The government is claiming that in 2009-10, inflation would come down to single digit. Independent economists believe that the decline would not be due to government efforts but because of base effect. When the Federal Bureau of Statistics (FBS) would compare the prices with the 2008-09 high prices, it would show reduced inflation. This is just the game of numbers, and in real terms prices would be still high. 

A person getting Rs10,000 per month a year back was meeting day-to-day food and necessities no has in real terms less than 5,000 rupees and due to double digit inflation and currency depreciation it is hard to meet food and necessities. 

The sugar, cement, fertilizers and various other cartels are fleecing the common man and earning unjust profit of billion of rupees. 

The Competition Commission of Pakistan (CCP) has proved to be toothless watchdog against violators. 

The Bretton Woods Institutions for the last few years have been advising Pakistan to depreciate the rupee, to rein in the runaway trade deficit. Though during the period under review, the Pakistani rupee depreciated by 33 percent, yet that neither helped in slowing down imports growth, nor in increasing exports but pushed prices of essential commodities up. 

Pakistans traditional exports are inelastic, therefore devaluation gives no big boost, because there is a small quantum of value added exports and major requirement is based on export of raw material. 

Devaluation also makes imports costlier contributing to inflation. At the moment the government seems to be helpless to rein in the spiralling inflation and save rupee from free fall. 

For the outgoing fiscal, the exports target was $21.1 billion while during July-April 2008-09, volume of the countrys exports stood at $14.76 billion which is 3.03 per cent less than what was recorded in corresponding period of the last fiscal ($15.22 billion).

Though devaluation helps increase revenue collection and savings in repatriation of profits and royalties by existing foreign investors, bringing illegal foreign exchange leakages into official channels and putting an end to gold smuggling. 

Inflow of foreign capital can be improved by devaluation only, if prices do not rise. But in Pakistani case, it jacked up prices and further stimulated inflation. 

In short run, the obvious consequences of devaluation is worsening balance of payment position due to which, Pakistan had to go again to International Monetary Fund (IMF) for $7.6 billion loan under the standby arrangement program. Besides, it also raised burden of Pakistan s foreign debt and debt service liability and foreign loans repayment. Upset the cost-price relationships in economy, lead to galloping inflation, and stall many ongoing projects due to cost overrun.


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## Neo

*PM announces Rs 50bn PSDP for Balochistan​*
ISLAMABAD: Prime Minister Yousuf Raza Gilani on Saturday announced Rs 50 billion for Balochistan in the Public Sector Development Programme (PSDP) 2009-10.

The allocation for Balochistan is Rs 8 billion more than last years PSDP allocation for the province.

Gilani made the announcement in a meeting with a delegation of the Balochistan cabinet.

The prime minister said the Rs 21 billion unspent amount of Balochistan in the present PSDP would be made available to the province in the next financial year. He announced packages worth Rs 9 billion for Balochistan, including Rs 3 billion for Quetta, Rs 3 billion for budgetary support and Rs 3 billion for development schemes that would be identified by members of the provincial assembly.


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## Neo

*World Bank to give $30 million for Thar coal project: agreement signed with Sindh government​* 
KARACHI (May 31 2009): The Sindh government and the World Bank (WB) on Friday night signed the long-awaited $30 million agreement for the proposed 'Thar Coal and Power Technical Assistance Project' (TCAP). Sources said that under the agreement, which could be possible because of timely interference of President Asif Ali Zardari during his recent visit here, the WB, would loan $30 million to Sindh government in four yearly tranches with a ten-year payback time.

They said that out of total amount, $25.8 million would be provided to the provincial Mining Board, and the remaining $4.2 million will be given to the Private Power and Infrastructure Board (PPIB) to provide technical assistance for the development of Thar coal.

They said the WB had set a condition to get the proposal approved from the Executive Committee of National Economic Council (Ecnec) by June 8, 2009, but it was being delayed since March. Sindh Chief Minister Qaim Ali Shah had apprised the President about the delay during his recent visit to the city, which led to its approval, they added.

Sources said that the chief minister, who is also Chairman of the Coal Development Board, had also informed Advisor to Prime Minister on Finance Shaukat Tarin in writing about the delay in approval by Ecnec, but no progress was made.

They said that the Bank has included the scheme, a joint provincial and federal level effort, into its Board's presentation scheduled for June 30, 2009, adding that the activities would be implemented in parallel by the province (to facilitate the coal mining), Thar Coal Block No 1, having a surface area of 122 sq. km, and the federal government (to facilitate coal-to-power development).

They said that the bank has also asked the Ministry of Water and Power to set up a Project Support Unit within the PPIB, which would supervise consultants' work, ensure that implementation of federal component is on track and provide liaison with the project steering committee established by the Sindh government, Project Monitoring Unit in Karachi, Thar Coal and Energy Board and the World Bank.

They said that the bank's assistance would be provided for geographical survey and date interpretation related to Thar coalfield and in greater detail for Thar Block No 1, supervision/technical assistance with the interpretation of the regional hydro-geological study, developing overarching coal and coal bed methane t power sector/legal/regulatory/safeguards including those related to mineral licensing and tendering procedures.

The bank would also help attracting private investors to develop Thar Block 1 besides finalising bid methodology for a coal mine power plant, information memorandum and transaction and transaction of principles and intentions policy document.


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## Neo

*KESC increasing generation capacity ​*Sunday, 31 May, 2009

KARACHI: The KESC will increase generation capacity by 220MW in June, and a further 80MW in September this year, the utilitys CEO has told top government officials.

Briefing Sindh Governor Ishratul Ibad and various MQM leaders at the Governors House on Saturday, KESC CEO Naveed Ismail also claimed that the utilitys dependable capacity had increased by 131MW, and that a 50MW rental power project had been commissioned in March 2009.

He said that adding all of the increases together, a total of 481MW of additional power would be available soon. 

In addition, he claimed that the 560MW planned power plant at Bin Qasim would also considerably increase generation capacity. He said that in this respect a $56 million down payment had been made to a Chinese company, and the project was being fast-tracked.

The project was originally announced by the Al-Jomaih group when they owned the utility, but work could not begin because of differences with contractors.


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## Neo

*Rice exporters may achieve $2bn target ​*Sunday, 31 May, 2009

KARACHI: After exporting rice worth $1.8 billion during the first 11 months (July-May) exporters are expecting to achieve a target of $2 billion by the close of the current fiscal year.

According to details released by the Rice Exporters Association of Pakistan (Reap) during July-May period, the country exported 801,72 tons of Basmati and fetched $908 million and non-Basmati 1.782 million tons, thereby earning $920 million.

Abdul Rahim Janoo, Reap chairman, while appreciating exporters achievement of the target of $1.8 billion, said it was only possible because of business friendly policies of the government.

He said it is a remarkable achievement when looked at global recession and financial crisis. 

Mr Janoo said last year (2007-08) the country exported 3.5 million tons of rice, valuing more than $2.2 billion but this was only possible when global prices of rice and other commodities were going higher every day.

He said Reap has sent trade delegations with the help of TDAP to Saudi Arabia and Republic of South Africa for further enhancing rice exports.

Mr Janoo said next month two other rice exporters delegations would be leaving for Qatar and EU countries to explore new rice markets and promote Pakistan rice which is the best in the world. 

Similarly, the Reap is planning to send delegations in July and August to Kuwait, Iran, Senegal and Zambia which are also big markets for rice.


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## Neo

*Pakistan puts $12.6bn, 4.5 GW hydro project out to tender​*
31 May 2009 - Pakistan has invited international bids for the construction of Diamer Bhasha hydroelectric dam project.

The hydro-electric dam will be built at a cost of $12.6bn. Upon completion the dam will add 4500 MW of hydro-power to the national grid and will take seven to eight years to go into operation.

The NEC (National Economic Council) has approved $1.5bn toward the construction of the dam.

The power generated from the project will add 30 per cent to Pakistan's current available generation capacity and has the potential to significantly reduce thermal power reliance and average generation cost.

The project is said to be located in a mountainous, earthquake-prone area.


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## white_pawn

*Shahbaz chairs meeting Development projects under ADP reviewed ​*
JALIL HASSAN AKHTAR 
LAHORE (June 01 2009): A high level meeting was held here on Sunday under the chairmanship of Punjab Chief Minister, Muhammad Shahbaz Sharif to review development projects under Annual Development Programme and set priorities for the next year. Chief Secretary Punjab, Chairman Planning and Development, Secretary Finance, Communication and Works and senior officers attended the meeting.

The meeting considered Annual Development Programme formulation for next provincial budget.

Addressing the meeting, the Chief Minister said that provision of basic amenities was the top priority of the government and all available resources were being utilised for this purpose. He directed that proper and realistic utilisation of funds for rapid development of the province and prosperity of the people should be ensured and priorities should be set in such a manner that better facilities could become available to the people within available resources.

He said that increase in non-developmental expenditure would not be allowed. He directed to set up a special committee headed by Chief Secretary to review non-developmental expenditure and measures for its curtailment. He said that besides paying attention to provision of education, health, infrastructure and prompt justice to the people, a comprehensive strategy should also be adopted for the uplift of backward and far-flung areas of the province.

He said that proper planning should also be made for the welfare of such segments of the society that had been neglected during the last 62 years. He said that government had taken solid measures for the elimination of illiteracy and ignorance from the province and TEVTA had been reorganised for the promotion of vocational education while modern courses had also been introduced in keeping with the demands of the local industry.

He said that computer labs had been set up in more than 4000 schools of the province while Danish schools equipped with modern facilities were also being established where boarding and lodging facilities would also be available to male and female students. He said that backward areas are being given priority in this regard.

He said that the development programmes should be aimed at laying the foundation of a balanced development process and welfare planning and the deprived segments should draw maximum benefit from this programme. Chairman Planning and Development delineated the outlines of next Annual Development Programme and threw light on various development projects. Secretary Communication and Works presented various proposals for infrastructure development in the province.

Business Recorder [Pakistan's First Financial Daily]


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## ajpirzada

how many of you think that decision to keep interest rates in double digits was a rit decision???
i think we should have never done that. its main purpose is to control inflation but only when ur inflation is caused due to increase in demand. here situation was different. it wasnt excess demand but a sudden shortage in supply. also our gov fixed wheat price at 950 per 40Kg which was quite high compared to last year. now no matter wat u try, this price wont come down coz its been controlled. food is 45&#37; of our inflation basket. and wheat forms the major portion of our food group.


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## Neo

*Diamer-Basha dam to be completed in time: minister ​* 
ISLAMABAD (June 01, 2009): Minister for Water and Power, Raja Pervez Ashraf on Monday said that all resources will be utilized for timely completion of Diamer-Basha dam project to generate clean and cheaper electricity in the country.

He said this while presiding over a meeting to review the progress of Diamer-Basha dam project. Minister for Kashmir Affairs and Northern Areas and Information and Broadcasting, Qamar Zaman Kaira and Minister for Parliamentary Affairs Babar Awan also participated in the meeting.

Ashraf said that the generation of 4,500 MW cheap hydel power from Diamer-Basha dam will reduce the dependence on thermal power resulting saving of huge foreign exchange and make available 6.4 MAF of water for irrigation.

He said that the project will create massive infrastructure and job opportunities leading to the overall socio-economic uplift of the area.

The Minister directed the Wapda authorities to follow the schedule to ensure timely completion of such a project of national importance.

Qamar Zaman Kaira said that the government is giving priority to all such mega projects and every efforts is being made to make funds available for this important and national project.

He asked the Wapda to early undertake the resettlement plan for the affectees of the dam in Northern Areas and NWFP.

Earlier, the Chairman Wapda briefed the meeting on the progress of the project and said that the ECNEC had approved the project for land acquisition and resettlement of the dam at a cost of about Rs. 60 billion.

He said that the Diamer-Basha dam will be the highest roller compacted concrete dam in the world having height of 272 meters. He added 323 KM of Karakoram Highway from Havelian to dam is to be upgraded by National Highway Authority (NHA) for transportation of heavy machinery and equipment.

He said that design and feasibility study has been completed while the tenders have been invited for construction of the project. He informed the participants that the project is on schedule and will be completed within the prescribed time frame in 2016.

He said that a very positive response from international financing institutions have been received for the project financing.


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## Neo

*President for releasing Rs 500 million from PBM for IDPs​* 
ISLAMABAD (June 01 2009): President Asif Ali Zardari has asked the government to immediately release Rs 500 million from Pakistan Baitul Mal (PBM) for emergency relief to the internally displaced persons (IDPs) in the camps in the Frontier province.

In a statement issued here President's spokesman Farhatullah Babar said that the President was deeply concerned about the people living in the camps and asked the government to step up the relief work with emphasis on transparency, monitoring and accountability.

"Relief and rehabilitation of the displaced persons is central to this fight", the President said adding, "It is a fight that will be carried to its logical conclusion". The internally displaced persons were the heroes of the war against militancy, he said.

The President directed that the district committees set up during his visit to camps in Shah Mansoor near Swabi on Friday should begin working immediately and that its members should be available to the people round the clock to redress their problems. "Each and every internally displaced family and person will be rehabilitated in their homes with honour and dignity", the president said. The displaced people will not stay in the camps indefinitely and will return to their homes sooner than later and their properties damaged or destroyed by the militants will be repaired and rebuilt by the government, the President said.

The President said that the campaign for seeking international assistance will be boosted during his forthcoming visit to Brussels to ask the EU summit for massive assistance for the relief and rehabilitation operations. He said that the government will continued to be guided by its police of three Ds namely Dialogue, Deterrence and Development as guiding principles in waging war against militancy. This was a policy that had also been endorsed by the national Parliament, he said.

The President reiterated the government's commitment not to allow the militants impose their obscurantism agenda on the people through use of force, bullets and guns. Apart from setting up five district committees the President has already appointed Mohammad Shehzad Arbab, Additional Secretary to the President as focal/contact person in the President's Secretariat to deal with all IDPs matters in the Presidency. Babar said that on Saturday the President also held meetings with the parliamentarians from Malakand and also with the Pakistan American Congress on the issue of relief and rehabilitation of the people living in camps.


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## Neo

*Unprecedented rise in inflation: monetary policies, authorities held responsible​* 
ISLAMABAD (June 01 2009): A panel of economists who had submitted a report to the government in October 2008 highlighting issues and recommending policy actions termed monetary policy from 2002-2008 as ineffective and held monetary authorities responsible for the unprecedented rise in inflation, which has crushed the poor people, sources told Business Recorder.

They said that the panel had given a detailed presentation to the Economic Co-ordination Committee (ECC) of the Cabinet in its meeting on May 19, 2009, on the invitation of Advisor to Prime Minister on Finance, Shaukat Tarin, who is also Chairman of the ECC.

"Expert economists in their presentation to the ECC held loose monetary policy from 2002-08 and lack of independence of monetary authorities responsible for unprecedented high inflation in the country," sources said. According to the economists, high inflation was contributing to increasing vulnerability and fall in real income of lower, middle and fixed income segments of the society.

"There is uncertainty about future business environment, instability of the financial system, erosion of business and investor confidence and slowing down of real economic activities like investment, economic growth and employment," sources quoted the economists as saying. The present government inherited a perfect storm, but government credibility should be firmly established to fight inflation. Although the government is on the right track but prices cannot be brought down administratively as inflation this time is a monetary phenomenon, sources quoted the economists as observing.

Sources said that ECC stressed on expansion of the tax base and raising the tax-to-GDP ratio. Some members observed that new areas should be brought under the tax net and, to improve tax collection, administrative set-up should be overhauled. "Present government intends to follow inclusive policies to enhance tax collection and would certainly avoid destructive policies," sources quoted Shaukat Tarin as saying.

According to sources, the economists advised the Finance Ministry to reduce budget deficit, cut expenditure, do away with circular debt, retire federal government debt to State Bank of Pakistan (SBP), refrain from further borrowing, and constitute a fiscal and monetary policy co-ordination board. The panel of experts was informed by Shaukat Tarin that all prescribed steps had already been taken by the government, including reconstruction of the board.

A couple of days ago, International Monetary Fund (IMF) stated that a prolonged economic recession could increase the number of poor in Pakistan. "Growth is slowing down, while financial sectors are now showing some signs of vulnerability," Paul Ross, IMF resident representative in Pakistan said.

On May 20, the Federal Cabinet was briefed by Tarin that the current account deficit and fiscal deficit have been brought down to 5.3 and 4.2 percent, respectively, from 8.4 percent and 7.4 percent. Inflation and trade deficit have also come down and efforts are afoot to bring inflation down to single digit by the end of current fiscal year.

Analysts are of the view that inflation will rise after the budget is announced, as sales tax is expected to be revised upward by one percentage point.


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## white_pawn

*German companies keen to invest in Pakistan ​*
ISLAMABAD (June 02 2009): A German delegation led by Axel Pliefke, CEO, Handel Services Consulting, Germany alongwith Mehr Muhammad Yousaf Chand, Honorary Investment Counsellor (HIC) and Tariq Mahmood visited Ministry of Investment (Board of Investment) and called on Saleem H. Mandviwalla, Minister of State & Chairman BOI on Monday. Mandviwalla welcomed the delegation, and appreciated German companies interest to invest in Pakistan. He highlighted the policy parameters of investment in Pakistan.

While stressing so he underlined the policy, which allows 100 percent foreign equity in major sectors and full repatriation of profits and dividends in all the sectors. It was further explained that the average rate of return is almost 30 percent and in some cases up to 50 percent.

Axel Pliefke expressed his keen interest for a joint venture in Pakistan's Solar, Wind and Hydel energy sectors. He said that German entrepreneurs are keen to invest in Pakistan but, due to security concerns potential investors are keeping themselves at a distance. The government should take steps to remove the negative perception about Pakistan.

Furthermore, the delegation informed that within 4-5 weeks they will be bringing the first prototype wind mill (small unit) in Punjab, which will cater to the needs of tube wells in small towns and villages. The delegation also showed interest in the establishment of 50 MW wind mills in Pakistan. The Minister of State assured to extend all possible assistance required by the German delegation. Mandviwalla thanked members of the delegation for visiting Pakistan.-PR

Business Recorder [Pakistan's First Financial Daily]


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## white_pawn

*Rs 2.9 trillion outlay for 2009-10 budget: Rs 1,406 billion tax target set, National Assembly body told ​*
ZAHEER ABBASI 
ISLAMABAD (June 02 2009): The next budget outlay, for financial year 2009-10, will be worth Rs 2.9 trillion, with Rs 1406 billion target to be set for revenue collection, Ministry of Finance told the National Assembly standing committee on finance, sources said.

They said that Finance Secretary Salman Siddique in his detailed presentation informed the committee that current expenditure would be Rs 2.1 trillion, including Rs 655 billion for debt servicing, Rs 343 billion for defence, and Rs 245 billion will be earmarked for grants and subsidies.

Provincial transfers would amount to Rs 590 billion, whereas overall development budget will be around Rs 745 billion. Media persons were not allowed in the presentation, but sources said that in an overview of the budget the committee was briefed by Finance Secretary about budget expenditure for 2008-09 and budget proposals for 2009-10.

The overall size of the development outlay will be Rs 745 billion in the next budget, that would include Rs 400 billion federal, Rs 200 billion provincial, Rs 70 billion Benazir Income Support Program (BISP), Rs 50 billion for internally displaced people (IDPs) and Rs 7 billion for Bait-ul-Maal. Rs 70 billion, Rs 50 billion and Rs 7 billion have been earmarked in the budget to strengthen social safety net under BISP, internally displaced people (IDPs) and Bait-ul-Maal heads, respectively.

Salman said that fiscal deficit and inflation targets were kept at 4.5 to 5 percent and 9.9 percent respectively for the next fiscal year. He said that tax administration reform program proposals, being worked out by the Economic Advisory Council (EAC) and to be finalised on June 5, would enable them to increase tax-to-GDP ratio in the next fiscal year by 0.6 percent.

The Secretary also shared with the committee the anticipated risk to the budget, saying that low growth, less revenue by the Federal Board of Revenue (FBR), additional security cost and additional cost on rehabilitation of IDPs are seen big threats and pose risk to the budget.

He said that defence expenditure has been increased to Rs 343 billion in the budget from Rs 311 billion allocated for the ongoing fiscal year owing to law and order situation. He said that increase in defence budget was critical and could not be avoided. About addition revenue collection, he said that Rs 60 billion new revenue sources have been identified, whereas Rs 30 billion are being looked for additional income.

Salman, however, added that there would be no burden on the poor and the industrial sector. Sources said that the meeting wanted the government to impose tax on agriculture sector in a way that small farmers are not affected. Big farmers should be taxed, at the same time ensuring protection to the small farmers. Minister of State for Finance Hina Rabbani Khar also attended the meeting.

Business Recorder [Pakistan's First Financial Daily]


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## white_pawn

*NEC may approve 3.3 percent growth target ​*
ZAFAR BHUTTA 
ISLAMABAD (June 02 2009): The National Economic Council (NEC) is likely to approve 3.3 percent GDP growth target for the next financial year (2009-10). The growth target of 3.3 percent has been calculated based on 3.8 percent growth rate in agriculture, 1.8 percent in manufacturing and 3.9 percent in services sector in the Annual Plan 2009-10, to be tabled before the NEC for approval on June 4.

The proposed Annual Plan 2009-10 envisages $8.8 billion trade deficit with projected exports of $19.9 billion and imports of $28.7 billion. Projected exports are close to current year's estimated exports of $19.5 billion and imports projection has been scaled down to $28.7 billion against estimated $30.2 billion imports for 2008-09.

According to sources, agriculture sector has been projected to grow by 3.8 percent. Its components have been forecast to have the following growth rates: major crops 3.5 percent; livestock 4 percent; fisheries 2.4 percent; and forestry 1 percent.

In the financial year 2009-10, manufacturing sector has been projected to achieve a growth rate of 1.8 percent, provided energy shortage is overcome and exports competitiveness improves through appropriate incentives and policy measures. Large-scale manufacturing sector is targeted to grow by 1 percent. The services sector is likely to grow by 3.9 percent, with wholesale and retail trade growing by 3.3 percent, and finance and insurance by 3 percent.

Total investment during the next fiscal year (2009-10) is being projected at around 20 percent of GDP, and national saving 14.7 percent of GDP, implying that almost 74 percent of investment would be financed through national savings and 26 percent from foreign savings, which would be 5.3 percent of GDP. The inflation (CPI) for the next financial year (2009-10) has been targeted at 9 percent, against expected CPI inflation of 20 percent in 2008-09.

The Annual Plan 2009-10 envisages remittances of $7 billion, close to the level of remittance target for the current fiscal year. Current account deficit has been estimated at $9.5 billion, that is also close to $9.4 billion for the current fiscal year (2008-09).

During the current financial year (2008-09), the economy registered a growth of 2 percent, against the target of 5.5 percent. Large-scale manufacturing sharply contracted with growth turning negative by 7.7 percent based on July-March figures for the first time in ten years. The construction sector also contracted by almost 11 percent. Only agriculture sector has surpassed the target, registering a growth rate of 4.7 percent, as compared to its target of 3.5 percent.

The services sector is estimated to grow by 3.6 percent during 2008-09. For the year 2008-09, current deficit has been estimated at $9.4 billion (5.7 percent of GDP), significantly lower than the annual plan target of $12.7 billion (7.2 percent of GDP), due to reduction in trade deficit and robust increase in workers' remittances.

Exports are estimated at around $19.5 billion, against the annual plan target of $22.9 billion for 2008-09. Imports are estimated at $30.2 billion, against the annual plan target of $37.2 billion. Remittances in year 2009-10 are estimated at $7.2 billion due to return of Pakistanis working abroad with their savings owing to economic slowdown in the developed countries.

Business Recorder [Pakistan's First Financial Daily]


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## white_pawn

*Pakistan may accede to UN Convention on transit trade ​*MUSHTAQ GHUMMAN 
ISLAMABAD (June 02 2009): Pakistan is likely to accede to 'Transports International Routiers (TIR) Convention 1975' of the United Nations, aimed at promoting transit trade in the region, official sources told Business Recorder here on Monday. Commerce Ministry has placed the matter before the Cabinet, which will discuss the issue in detail, besides other important issues including IDPs.

Customs Convention on the international transport of goods, under cover of TIR Carnet, known as TIR, was adopted under the aegis of United Nations Economic Commission for Europe (Unece) in 1975. The Convention provides a legal framework for traffic-in-transit of goods across borders among the contracting countries without involving payment of customs duties and taxes, and serves as an effective instrument of international transit trade, compatible with national legislation, and containing inherent safeguards for revenue protection.

At present, all ECO countries, except Pakistan, are signatory to the Convention. Other ECO countries have strongly been urging Pakistan to accede to it. It is, therefore, imperative that Pakistan, too, should sign and accede to the Convention so as to play an active role in the transit movement of goods and vehicles in the ECO region, sources said.

In order to promote transit trade in the region through operationalisation of the 'North-South Corridor', linking Pakistan with Central Asian Republics (CAR), Pakistan deposited an Instrument of Accession to the TIR Convention, 1975, on October 21, 2004, with the United Nations at New York, along with the following reservation:

"Pakistan declares that under Article 8, paragraph 4 of the customs Convention on the International Transport of Goods under the cover of TIR Carnets (TIR Convention) concluded at Genera, on November 14, 1975, acceptance of TIR Carnet by the Customs office means that national legislation allows the transit of such goods and from a particular country".

The office of the Legal Affairs of the United Nations, however, refused to accept Pakistan's application for accession to the Convention on the grounds that the reservation "allowing the transit of such goods and from a particular country" entered by it, was not permissible under article 58, paragraph 3, of the Convention.

Sources said that several meetings with concerned ministries/stakeholders were held under the chairmanship of Commerce Secretary to resolve the issue of withdrawal of reservation.

After detailed deliberations in these meetings, it was decided, with consensus of all stakeholders ie FBR, Ministry of Law, and Ministry of Foreign Affairs, that FBR will submit a revised document for accession to the TIR Convention, incorporating a permissible reservation under Article 57 paragraph 2 to 6 of the TIR Convention.

It was also decided to obtain concurrence/view of Attorney General of Pakistan on the language/substance of the Declaration of Understanding. Consequently, a reference was made to Attorney General of Pakistan, through Ministry of Law. The Attorney General advised that, except for the permissible reservation, any other statement, even if camouflaged as 'reservation' under the heading 'Understanding', would not be acceptable.

According to sources, the subject was further discussed on January 26, 2009 in a meeting chaired by FBR Chairman. It was decided, in consultation with the Ministry of Foreign Affairs, that Pakistan should deposit the Instrument of Accession to the TIR Convention. Federal Board of Revenue, Ministries of Foreign Affairs and Communications have been consulted and all support the accession proposal.

Business Recorder [Pakistan's First Financial Daily]


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## aziz raza

What is latest Economy News and what is our nowadays GDP ratio.


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## aziz raza

Can anybody give comments on Lowari Tunnel .


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## aziz raza

Neo said:


> *Diamer-Basha dam to be completed in time: minister ​*
> ISLAMABAD (June 01, 2009): Minister for Water and Power, Raja Pervez Ashraf on Monday said that all resources will be utilized for timely completion of Diamer-Basha dam project to generate clean and cheaper electricity in the country.
> 
> He said this while presiding over a meeting to review the progress of Diamer-Basha dam project. Minister for Kashmir Affairs and Northern Areas and Information and Broadcasting, Qamar Zaman Kaira and Minister for Parliamentary Affairs Babar Awan also participated in the meeting.
> 
> Ashraf said that the generation of 4,500 MW cheap hydel power from Diamer-Basha dam will reduce the dependence on thermal power resulting saving of huge foreign exchange and make available 6.4 MAF of water for irrigation.
> 
> He said that the project will create massive infrastructure and job opportunities leading to the overall socio-economic uplift of the area.
> 
> The Minister directed the Wapda authorities to follow the schedule to ensure timely completion of such a project of national importance.
> 
> Qamar Zaman Kaira said that the government is giving priority to all such mega projects and every efforts is being made to make funds available for this important and national project.
> 
> He asked the Wapda to early undertake the resettlement plan for the affectees of the dam in Northern Areas and NWFP.
> 
> Earlier, the Chairman Wapda briefed the meeting on the progress of the project and said that the ECNEC had approved the project for land acquisition and resettlement of the dam at a cost of about Rs. 60 billion.
> 
> He said that the Diamer-Basha dam will be the highest roller compacted concrete dam in the world having height of 272 meters. He added 323 KM of Karakoram Highway from Havelian to dam is to be upgraded by National Highway Authority (NHA) for transportation of heavy machinery and equipment.
> 
> He said that design and feasibility study has been completed while the tenders have been invited for construction of the project. He informed the participants that the project is on schedule and will be completed within the prescribed time frame in 2016.
> 
> He said that a very positive response from international financing institutions have been received for the project financing.



*We need Dams and Basha can Contribute a lot 
*


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## Neo

*Provinces to get Rs590bn under Federal Divisible Pool​**No plan to monetise perks of public-sector employees​*
Tuesday, June 02, 2009

ISLAMABAD: The government on Monday informed the provinces that it would transfer financial resources up to Rs590 billion to them under the Federal Divisible Pool (FDP) in the next budget 2009-10, it is learnt.

A crucial meeting was held between the centre and four provinces here at Finance Ministry on Monday in which the provinces were informed that their share could go up in the range of Rs590 billion in the next budget.

The federating units asked the government to provide additional funds outside the Federal Divisible Pool (FDP) in order to help them for preparing the next budget.

During the meeting, it was also told that the government holds no plan to monetize perks and privileges of 3.5 million employees of the public sector in the next budget 2009-10 while only adhoc relief in the range of 10 to 20 percent will be granted to ease their financial woes, it is learnt.

Ministry of Finance is working on three scenario by proposing the incumbent regime to increase salaries and pension in the range of 10-15 or 20 per cent. The Finance Ministry will prepare a summary in this regard which will be tabled before the federal cabinet to apprise the federal minister about the cost involved for approval each of the three options. The government will announce the approved range of salary and pension increment in the budget on June 13.

With no plan to monetize the perks of public sector employees the luxuries such as provision of housing as well as cars for top bureaucrats at the cost of public expense will continue for another fiscal year 2009-10.

The pay scales will not be revised and only adhoc relief will be provided to the employees in order to help mitigate the sky rocketing inflationary pressures, a high-level official in Finance Ministry confided to The News here on Monday.

The government is also considering linking the proposed hike in salaries and pension of public sector employees with exorbitant inflationary pressure, which was projected to remain in the range of 20 per cent for the outgoing fiscal year.

So the employees salaries should be increased at least 20 per cent, said the sources but finance ministry high-ups stated that it depends upon the fiscal space how much the government could absorb burden owing to rising bill of salaries and pensioners.

When contacted, a high-level official in Finance Ministry on Monday, said that the government has decided to take the Pay and Pension Commission led by Dr Ishrat Hussain into confidence before finalizing the proposals to increase the salaries and pension in the next budget.

The last Pay and Pension Committee led by Moeen Afzal had talked about monetizing the perks and privileges for public sector employees in its detailed report but they did not recommend the government to move ahead without wasting any time.

A member of the Pay and Pension Commission told this scribe on Monday that there was vested interest involved in it baring the government to move ahead in a serious manner. If the government decides to monetize the perks and privileges it will not be appropriate to provide Rs10,000 to Rs20,000 because no one can get a rented house in this range in major cities, he added.

There are no chances to start monetization of housing from the next budget, said the sources. Provinces had already refused to monetize housing facility for over 2 million employees in the next budget for 2009-10 owing to severe financial constraints as they cannot afford a budgetary hit of Rs120 billion at their own.

The federal government has estimated that it requires Rs80 billion for monetization of housing facility for 1.5 million public sector employees in one go.The monetization means that the public sector servants will be deprived from their existing official accommodations and cash amount will be provided in order to enable them to set their priorities keeping in view the requirements.

There are about 3.5 million public sector employees both at the federal and provincial governments. A major chunk of employees belong to the provinces, hovering around over 2 million in the fold of the public sector. As food inflation is on higher side, the salaried and pensioners are the major victims of price hike, and they are eyeing on the next budget for another raise in their salaries and pensions.


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## Neo

*Load-shedding reduces investment by 60pc​*Tuesday, June 02, 2009

Ten to twelve hours long load-shedding in upper Sindh has affected daily business and investment has reduced by 60 per cent.

Load-shedding in Upper Sindh has compelled local investors to stop investment as they are incurring losses worth millions of rupees.Load-shedding has also affected agricultural growth and there is a possibility of scarcity of sugar.

People of upper Sindh are already facing poverty and now they are being deprived of business activities, as even after the passage of one year, peoples confidence in the present government has not been restored.

Local businessmen have invested million of rupees in the agricultural sector, flourmills, ice factories and ginning factories. Chaudhry Sajid Hussain, Chairman Anjuman-e-Tajiran Khairpur, said that the traders of Khairpur are not taking any more risks of investing in the market as the government has failed to provide them power. He said that there is a possibility that traders may face bankruptcy, as they had got loans from different banks for establishing their business.

The power outage has created tension and stress among the business community, because of not getting the required results from their invested money. Agriculturalist Nazir Ahmed Langhah says they use tube wells for irrigating but 15 to 16 hours long load shedding in rural areas of the upper Sindh has affected the agricultural output.

He informed that there is a possibility of shortage of the sugar as sugar cane crop needs plenty of water but there is no water for irrigating which affects the growth of the crop. He said that there is already a shortage of wheat and the people of upper Sindh depend on agriculture for their livelihood, but this is near collapse due to load shedding.

He said that framers had installed tube wells as a substitute for the shortage of irrigation water, but the government instead of giving subsidy enhanced the power rates, which is shocking for growers.

Ahmed Hussain Ujjan sharing his views says that people are deprived of cold water as many ice factories have closed down due to losses caused by unabated power outages. He said that load shedding in the past was not an issue but now it is a critical and chronic issue, which is responsible for the destruction of agricultural growth here in upper Sindh.

Dr. Aftab Lashari renowned child specialist said that outage of power put children as well as adults under stress. He said that load shedding is affecting people as businessmen and traders have complaints of the tension, and stress.

Zahid Hussain said that there are hundreds of small flourmills in upper Sindh but due to load shedding there is a shortage of flour.

He appealed to the government to take notice of the public, industrial and businessmen community and restored their confidence so that the business activities can be started in upper Sindh.

He said that the people of Upper Sindh are unable to purchase generators as prices of these appliances have increased two folds due to load shedding.


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## Neo

*Minister reviews progress of Diamer-Basha dam project​*
ISLAMABAD: To generate clean and cheaper electricity for future requirements all resources would be utilised for timely completion of the Diamer-Basha dam project, Federal Minister for Water and Power, Raja Pervez Ashraf said on Monday.

The minister expressed these views while presiding over a meeting to review the progress of Diamer-Basha dam project. Federal Minister for Kashmir Affairs and Northern Areas and Information, Qamar Zaman Kaira and Babar Awan was also present on the occasion.

Addressing the meeting, Raja Pervez Ashraf said the generation of 4500MW cheap hydel power from Diamer-Basha dam would reduce the dependence on thermal power resulting saving of huge foreign exchange and would make available 6.4 million acre feet of water for irrigation. He said the project would create job opportunities leading to the overall socio-economic uplift of the area. The minister directed the Wapda authorities to follow the schedule to ensure timely completion of the project.

Minister for Kashmir Affairs, Qamar Zaman Kaira said that the government was giving top priority to all such mega projects and every effort is being made to make funds available for this important and national project. He asked the Wapda to undertake resettlement plan for the affectees of the dam in Northern Areas and NWFP.

Earlier, Chairman Wapda briefed the meeting on the progress of the project and said that the ECNEC had approved the project for land acquisition and resettlement of the dam at a cost of about Rs 60 billion. He said the dam would be the highest roller compacted concrete dam in the world having height of 272 meters.

He said design and feasibility study had been completed while the tenders had been invited for construction of the project. He also informed the participants that the project was on schedule and would be completed within the prescribed time frame in 2016. He further stated that a very positive response from international financing institutions have been received for the project financing.

Wind power: Meanwhile, a five members delegation headed by Axel Pliefke, CEO of Handel Services Consulting, Germany called on the Federal Minister for Water and Power, Raja Pervez Ashraf today and expressed their interest to invest in the wind power generation up to 500MW. The minister welcomed the German investment for investment and assured to encourage and facilitate the German investors and asked to submit detail proposal for wind power generation in Pakistan. The minister said that Pakistan had great potential of 350,000MW in wind power and the incentive based liberal policy would encourage the investment.


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## Neo

*Proposed textile policy aims at $25 billion exports, 2.9 million jobs​* 
ISLAMABAD (June 02 2009): Prime Minister Yousuf Raza Gilani on Monday constituted a Cabinet committee to evaluate the proposed textile policy, envisaging specific initiatives, for achieving an export target of $25 billion and creating 2.9 million jobs over the next five years.

The new policy would lay foundation for a prospective plan spread over the next 15 years under which the country would move at the higher end of world textile map by achieving a target of textile exports between $75 billion and $100 billion.

The meeting also approved proposal regarding special initiatives aimed at enlarging women's role in the textile sector. Secretary, Textile Industry, Dr Waqar Masood, gave a presentation to the Prime Minister on salient features of the new policy. The briefing was attended by Minister for Textile Industry Mohammad Farooq; Advisor to Prime Minister on Finance Shaukat Tarin; Food Minister Nazar Mohammad Gondal; Privatisation Minister Naveed Qamar and Investment Minister Waqar Ahmad.

The new law is being framed in the wake of dwindling exports from the textile sector. The exports of textile and clothing sector declined by 9.27 percent during July-April of the current fiscal year to $7.898 billion, against $8.706 billion of corresponding period of last year.

The proposed policy would also focus more on research and development to increase supply of quality fibres and increase efficiency of downstream sector in line with domestic and international market requirements. An official statement issued after the meeting said that the Premier said that these measures would greatly help in reinvigorating this vital sector, which is the backbone of national economy.

The Prime Minister said that the government would provide all possible incentives for modernising the textile industry and making it more efficient since it is a valuable asset of the country.

He emphasised on focusing on areas and regions in the country through which optimum yield of cotton could be procured. He underscored the need for improvement in the quality and quantity of cotton to strengthen the competitiveness of the textile industry and facilitate exports of textile products.

The Premier called for integrated textile value chain which could help towards adding value to the country's agriculture potential by serving domestic needs as well as high value export demand through a well planned industrial structure, product diversification and institutional framework.

Secretary, Textile, in his presentation briefed the meeting about the salient features of the new textile policy, aimed at bolstering the sector in a big way by facilitating the sector to develop international and domestic-driven capabilities, development of state-of-the-art infrastructure facilities, comprehensive skill development framework to increase supply of efficient human resource, development of standards for international compliance, increasing productivity and improving quality. The PM was informed that the ministry of textile has formulated the textile policy after threadbare consultations with the private sector and other stakeholders.


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## Neo

*German companies keen to invest in Pakistan​*
ISLAMABAD (June 02 2009): A German delegation led by Axel Pliefke, CEO, Handel Services Consulting, Germany alongwith Mehr Muhammad Yousaf Chand, Honorary Investment Counsellor (HIC) and Tariq Mahmood visited Ministry of Investment (Board of Investment) and called on Saleem H. Mandviwalla, Minister of State & Chairman BOI on Monday. Mandviwalla welcomed the delegation, and appreciated German companies interest to invest in Pakistan. He highlighted the policy parameters of investment in Pakistan.

While stressing so he underlined the policy, which allows 100 percent foreign equity in major sectors and full repatriation of profits and dividends in all the sectors. It was further explained that the average rate of return is almost 30 percent and in some cases up to 50 percent.

Axel Pliefke expressed his keen interest for a joint venture in Pakistan's Solar, Wind and Hydel energy sectors. He said that German entrepreneurs are keen to invest in Pakistan but, due to security concerns potential investors are keeping themselves at a distance. The government should take steps to remove the negative perception about Pakistan.

Furthermore, the delegation informed that within 4-5 weeks they will be bringing the first prototype wind mill (small unit) in Punjab, which will cater to the needs of tube wells in small towns and villages. The delegation also showed interest in the establishment of 50 MW wind mills in Pakistan. The Minister of State assured to extend all possible assistance required by the German delegation. Mandviwalla thanked members of the delegation for visiting Pakistan.-PR


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## Neo

*India casts wary eye on China's role in Pakistan​*
LONDON (June 02 2009): Washington's focus on Pakistan and economic dependence on China are forcing India to reassess its own place in South Asia, reviving long-standing fears of strategic encirclement by its giant northern neighbour. Analysts say Indian suspicions about China, suppressed during the boom years by burgeoning trade ties, have been stoked by Chinese involvement in Pakistan and a sense that Beijing has replaced India as the favoured friend of the US in the region.

"There is a very strong feeling that China is India's threat number one," said Subhash Kapila at the South Asia Analysis Group, an Indian think-tank. Under former President George W. Bush, the United States forged close ties with India - in part seeing it as a counterweight to growing Chinese power - culminating in a deal effectively recognising its nuclear-armed status.

India and China also made efforts to mend relations soured by a border war in 1962, while their growing clout in the world economy earned them the nickname "Chindia". "During the Bush era, US policy was seeking to build India as a counterweight to China," Brahma Chellaney, from India's Centre for Policy Research, said at a conference in London. Long Pakistan's closest ally, China has been steadily building ties with India's other neighbours, supplying weapons to Sri Lanka and improving its relationship with Myanmar and Nepal, all stoking Indian fears of strategic encirclement.

"India has been gradually ceding space in its own backyard, especially to China," said Chellaney. China has stressed it sees no competition with India, but rather that both can benefit from rising bilateral trade as well as co-operation on issues where the two countries share similar views, including on Doha trade talks and climate change. "Neither of the two poses a threat to the other," Ma Jiali, from China Institutes of Contemporary International Relations, told the conference in London.

Until very recently, India shared that view and set aside distrust which lingered on from its defeat by China in the 1962 war. At the same time the government also played down alleged incursions along the disputed border to avoid spoiling the mood.


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## Neo

*Fiscal deficit and Budget 2009-10​*
Tuesday June 02, 2009

The budget 2009-10 is dogging after the poor, and certainly many of its pages would be dog-eared. Curbing inflation must be at the anvil and ironically speaking the anvil may be the worthy plight of the poorest! According to the first quarterly of SBP, the July-Sep 2009 revenue stands at Rs 385 billion, the expenditures at Rs. 524 billion meaning a budget deficit of Rs. 139 billion. A revised target of tax to the tune of Rs 1.879 trillion is already set for the next financial year.

Other targets remain to be as expenditure of Rs 3.064 trillion, debt servicing Rs 751 billion, defence expenditures Rs 380 billion and development expenditures at Rs. 616 billion [the difference in numbers is due to differing time slots]. If properly administered, potentially Pakistan can generate Rs 300 billion to Rs 400 billion. Further, it can generate revenues of over Rs100 bullion -150 billion if only tax exemption is revisited. In the wake of chronic fiscal deficit, it is estimated that Pakistan would need $12 billion constantly for next few years to meet its recurring revenue gap. Specifically, enhancing tax revenue is the favourite recipe of the IMF.

Fathoming the implementations and implications of IMF conditionalities has never been straightforward. The reason for that is that their stratagems fructify in years and show their true and sometimes gruesome impact after decades. The developing countries (DCs) and especially less developed countries (LDCs) have had this experience since the advent of aid-syndrome after the Second World War. The same IMF has prescribed as before to broaden tax base and raise the tax to GDP ratio. These two variables seemingly have zero correlation yet a good measure. The tax to GDP ratio currently has declined to 9.5 per cent, which during 1980s and 1990s remained at 12 and 13 per cent respectively.

Still it is lower in the region where the average is about 15 per cent. At the higher front of advanced countries like EU it is ranging between 24 to 44 per cent. However, now Pakistan has targeted it to be between 15-18 per cent to be ascertained through tax reforms in the next five years. The approval of IMFs second tranche of $800 million out of $7.6 billion is subject to meeting Pakistans fiscal deficit otherwise it may be delayed. Previously, IMFs tilt was towards monetary measures to meet macro-economic imbalances of the country. It has recently started taking the fiscal rout. Presently, the governments central challenge is to put downwards pressure on inflation, reducing fiscal deficit and increasing tax to GDP ratio. IMF has further implied that agriculture should be declared as industry and brought within the tax bracket accordingly. However, this has its own pros and cons. Simply put, increased tax on agricultural produce will boost their prices on one hand and discourage agriculturists on the other. If coupled with subsidy may end up as zero sum.

Nevertheless, a sector contributing 22 per cent to GDP and providing 60 % employment contributes to tax revenue only by 1 per cent. But Pakistan cannot help except taking adequate measures where agriculture is taxed appropriately. The new VAT [value added tax] system is supposed to replace the existing GST. It is said to be regressive and burdening the poorer. Through this ghost traders will comfortably evade VAT, whereas the unregistered groups will be beneficiaries. This method will increase administrative cost with respect to tax collection as well.

To conclude, mammoth debt servicing (or debtor servicing) and huge defence expenditure converge to same parties. This is so since we borrow to build our defence because we have been pushed to wall of war against terrorism to which our neighbour is accomplice. The foolhardy pusher is the lender also ultimately scaring us that our nukes are unsafe. If so how impotent and oblivious we are while building our capacity of deterrence? Looks that lenders are making illogical assertions or they are impractical! If not so, the lenders are at least potentially self-destructive and will ultimately wipe out everything including themselves. There was a door, to which I found no key, There was the veil through which I might not see, Some little talk awhile of me and thee, There was and then no more of thee and me.


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## white_pawn

*'Punjab budget 2009-10 will be people friendly' ​*MUHAMMAD SALEEM 
LAHORE (June 03 2009): With focus on poverty alleviation and public welfare, the Punjab budget for the year 2009-10 would be 'people friendly' in which no new tax will be imposed. Sources in the PML-N led Punjab government told Business Recorder, here on Tuesday that Chief Minister, Muhammad Shahbaz Sharif has already asked the authorities concerned that in the Punjab budget 2009-10, attention must be paid to the provision of maximum relief to the masses.

The sources claimed that the PML-N leadership is determined to provide basic amenities to the citizens and has already taken a number of initiatives in education, health, agriculture and other sectors. Various public welfare steps such as provision of free medicines, 'Sasti Roti' scheme, Food Support Programme, Punjab Educational Endowment Fund, would continue.

According to the sources, 1.8 million poor families are benefiting from Food Support Programme while a programme has also been evolved for imparting vocational education to the children of such families so that they could achieve self-reliance and play an active role for the development of the country. 'Sasti Roti' scheme is continuing successfully and not only the number of enlisted Tandoors is being increased but also public-spirited persons and civil society is also being included in this welfare project.

The sources claimed that Punjab Educational Endowment Fund has been set up for the first time in the country's history for the benefit of talented students, while provision of free medicines in hospitals as well as free of charge dialysis facilities have been ensured.

Talking about the Annual Development Programme (ADP) of Punjab, the sources claimed the government wanted to initiate such development projects under next ADP, which could directly benefit the common man besides helping in poverty alleviation. The government wanted to evolve a comprehensive strategy for the provision of basic amenities to the deprived segments of the society and progress of backward and far-flung areas, the sources added.

The government will pay attention to the schemes of education, health, water supply and drainage and poverty alleviation under Annual Development Programme (ADP) so that process of development of the province could be accelerated and the problem of unemployment could be overcome, the sources said.

The sources further claimed that the government has already put in place evolved an affective system for the monitoring of development projects while third party audit system has been introduced regarding mega development projects so that proper and transparent utilisation of every penny of public money could be ensured.


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## white_pawn

*CDA seeks Rs 28 billion budget allocation to meet expenditure​*
SEHRISH WASIF 
ISLAMABAD (June 03 2009): Capital Development Authority (CDA) has sought budget allocation of Rs 28 billion for 2009-10 to meet its development and non-development expenditure. Sources disclosed here on Tuesday that out of total proposed allocation, CDA has sought Rs 8 billion for recurring expenditure, while Rs 20 billion for development projects in the next financial year 2009-10.

In 2007-08 fiscal CDA had allocated 79 per cent of its budget for development projects that is Rs 20 billion and 21 per cent for non-development expenditures that is Rs 5 billion, sources revealed.

The proposed allocations have been increased from Rs 25.8 billion in current financial year to Rs 28 billion for the next financial year despite the fact that the authority is expecting to utilise only 70 per cent of current year allocation by the end of June 2009.

Sources further said that the Authority failed to utilise the major chunk of the current budget due to the lethargic and non-serious attitude of the officials. 'Even the Authority failed to start work on a number of approved projects and didn't launch any project to improve the environment of the capital during the ongoing fiscal year,' sources added.

Sharing the details sources said that in the current fiscal year, CDA's self-finance allocation was Rs 20 billion, PSDP Rs 392.114 million, revenue Rs 1.166 billion, and others Rs 3.482 billion, most of which was not utilised.

However, the officials claimed that up till now the Authority had utilised 34 per cent of self-finance, 40 per cent of revenue and 13 per cent of PSDP allocations, sources maintained.

In addition, the sources said that the most important PSDP projects included addition of third and fourth lane on Kashmir Highway from Peshawar Mor to Golra Mor at a cost Rs 50 million, improvement of HVAC system and furnishing of Aiwan-e-Sadar building Rs 19.537 million, construction of permanent offices of chairmen standing committees of the parliament Rs 50 million and purchase of land for construction of Pakistan Institute of Parliamentary Services Rs 34.472 million. Though the amount allocated for development included allocation for improving environment, up-gradation of water supply and sewerage system, roads, interchanges, underpasses and so on not much has been achieved.

Business Recorder [Pakistan's First Financial Daily]


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## ajpirzada

these ppl always ask for more and then end up spendin less. how does that help the economy.


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## Neo

*NEC may approve Rs595bn PSDP ​* 
Wednesday, June 03, 2009

ISLAMABAD: The National Economic Council (NEC), which will meet on Thursday, is all set to approve the Public Sector Development Programme with a total outlay of Rs595 billion, including federal share of Rs395 billion and provincial share of Rs200 billion. The total size of the proposed budget includes an operational shortfall of Rs20 billion.

A Planning Commission team, headed by its Deputy Chairman Sardar Aseff Ahmad Ali, is to brief on Wednesday President Asif Ali Zardari and Prime Minister Yousuf Raza Gilani on the proposed PSDP for 2009-10 and will get input from the top men, a senior official at the Planning Commission told The News.

However, the PSDP may be altered after getting the input from the President and Prime Minister during the presentation, but the size of the development budget will remain the same.

Earlier, the Annual Plan Coordination Committee (APCC) suggested a development budget of Rs600 billion with federal share of Rs400 billion and Rs200 billion for provinces. But now the federal share has been reduced by Rs5bn to Rs395bn, according to a working paper for NEC meeting.

The working paper shows that Rs25bn has been allocated for earthquake reconstruction, which will be treated outside the PSDP, meaning that the total development outlay would be Rs620bn.

The federal share of Rs395bn includes Rs262bn for federal ministries, Rs38bn for special areas (AJK, FATA, Northern Areas), Rs35bn for special programmes and Rs60bn for corporations.

According to the paper, the country will undertake two nuclear power projects called Chashma Nuclear Power Plant 3 and 4 with an investment of Rs190bn. These would have the capacity to generate 600 megawatts of nuclear power by 2016.

The allocation for the health sector has been increased by 82 per cent from Rs14bn to Rs26bn to achieve improvement in productivity of human capital and general quality of life.

For education and training, fund allocation has been increased 60pc from Rs20bn to Rs32bn to ensure availability of qualified human resource to match the highly competitive world market.

Water allocation has been proposed at Rs58bn, accounting for 14pc of the federal development outlay. Thirty-two small and medium-sized dams, eight in each province, will be financed. Similarly, adequate allocation has been made to the National Programme for Water Courses, irrigation system rehabilitation and lining of canals and distributaries.

To complete the Mangla raising project including resettlement of people, Rs12bn has been proposed and the Water and Power Development Authority will be able to store 2.9 million acre feet of additional water in the next monsoon.

The paper says in order to overcome energy shortages, investment by the government and WAPDA from its own resources will be around Rs139bn for power generation and its conservation.

A major initiative in the power sector will be the Diamer-Basha dam for which the government and WAPDA will arrange finances. Expenditure on the transport and communications sector has been estimated at Rs70bn, of which Rs40bn will go to the National Highway Authority (NHA) and Rs12bn to railways.

With a view to reducing poverty, providing employment and better quality of life and promoting good governance, the government will take various measures including establishment of technical institutes in 27 districts at a total cost of Rs27bn, continuing the Benazir Income Support Programme with outlay of Rs70bn, continuing the housing programme for poor and government servants with allocation of Rs1bn, initiation of an integrated agriculture marketing and storage infrastructure project to ensure food security and higher incomes for farmers, assisting small farmers with Rs4bn, introducing public-private partnership in dairy products with allocation of Rs3.5bn and establishing Reconstruction Opportunity Zones in NWFP and Balochistan at a cost of Rs3bn.

Thar coal infrastructure will be developed and for that the World Bank has pledged to provide assistance. Productivity of labour is very low compared to other countries and to sharpen the skills of the labour force, Hunarmand Pakistan programme will be financed.


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## Neo

*Rice exports expected to cross $2bn during FY09​*
KARACHI: Total rice export from Pakistan has crossed $1.8 billion during the first eleven months of current financial year and it is expected that it will cross $2 billion mark, Abdul Rahim Janoo, Chairman Rice Exporters Association of Pakistan said.

He said this in a meeting with High Commissioner of the Republic of Kenya in Pakistan, Mishi Masika Mwatsahu at REAP House Tuesday. 

"This spike in export is a result of the policies of the government of Pakistan and if the policy stance is continued we expect to cross the $4 billion rice export target set in the Vision 2012," Jano said. 

It is pertinent to mention that during fiscal Pakistan was third largest rice exporting country in the world with exports amounting to 3.5 million tonnes of rice valuing more than $2.2 billion. 

He said that REAP has sent trade delegations with the help of TDAP to Saudi Arabia and South Africa, which are the most successful delegations of the history of REAP as we received encouraging response in the shape of huge orders. Two more delegations are going in the month of June to Qatar and EU Countries as well. REAP has also planned to send delegations to Kuwait, Iran, Senegal and Zambia which are also the big markets of rice during July-August, he added.

High commissioner praising the role of REAP said that since Pakistan is a leading rice country we are strengthening relations with Pakistan to be one of its partner in commodity export. 

She said that there is great demand of Pakistani rice in Kenya. "Talks are under way with the government officials to reduce duty on rice export," she said adding that we hope that problems in trade with Pakistan would soon be resolved. 

"There is a great need to explore African markets as they have good potential for rice import," an exporter told Daily Times. He said although there is a problem of import duty in Kenya but other East African countries can give good results. 

Only on Irri-6 rice quality there is about 35 percent import duty in Kenya, as they have to pay $150 per tonne and $3750 per container of 25 metric tonnes, he informed adding that on basmati rice the duty is much more than Irri-6. 

Budget proposals: Meanwhile, REAP has sent following proposals and suggestions for the budget 2009-10 for the betterment of rice export: 

Reduction in withholding tax on exports of rice from 1 per cent to 0.5 percent. 

Reap has demanded matching grant facility for rice exporters in refinance part II only for one year. 

In order to have safe trade activity, top priority should be given to law and order situation, especially in Karachi. Many countries link their import with export to get market access, we have done with Kenya and can do with many countries, for instance, with Malaysia for rice and palm oil. Growers should be given subsidy on purchase of seeds, pesticides, etc and on electricity as well. 

REAP representatives should be taken on board for both Kala Shah Kaku and Dokri Rice research institutes.


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## Neo

*US willing to facilitate Pakistani businessmen​*
KARACHI: The US government is ready to provide all possible cooperation to the Pakistani businessmen to get their proper share in US market. 

Principal officer, Consulate of United States of America in Lahore, Bryan D Hunt said this while talking to a delegation of Pakistan Tanners Association (PTA) Tuesday.

However, he said that FTA is not possible because of the textile sector as providing free access to Pakistans textile sector would result in job losses in USA. He said Pakistani entrepreneur should come up with more creative idea like China to get more business in USA. There is already preferential treatment for Pakistan as compared to India and promised that he will suggest US government for more facilities and projects in the field of education and health.

Hunt said US government was already working in some underdeveloped and remote area of Punjab in the field of health care and to reduce child mortality. 

He said opening of Visa Counter at Lahore was already under consideration and hoped it would be operational in near future. He said that people of both the countries should come closer to each other to have better understanding of both the nations. Chairman PTA, Agha Saiddain informed the US official due to frequent terrorist attacks in various cities of Pakistan and no travel advice of US government the customers were reluctant to visit Pakistan. 

He said in these circumstances there was a dire need to facilitate Pakistani businessmen to have market access in all sectors specially leather, leather garments and leather footwear. Per capita shoe consumption of USA is 8 shoes per annum which is highest in the world and Europe which is number two after USA consumes four pairs per annum. China is the main beneficiary of US market and Pakistanis export of shoe, garments, upholstery and leather is negligible as compared to China, India, Italy and Turkey. He said idea of ROZs in FATA and boarder area should only be expanded to interior Punjab, Sindh, Baluchistan and NWFP.


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## Neo

*US seeks extra $200m for IDPs ​* 
ISLAMABAD (June 03, 2009): The United States is seeking an extra 200 million dollars in emergency aid to help Pakistanis displaced by a military offensive in the northwest against the Taliban, US special envoy to Pakistan, Afghanistan Richard Holbrooke said on Wednesday.

"Today, the president has asked me to inform you and your government that he has requested the Congress of the United States to allocate an additional 200 million dollars," said Holbrooke.

"Our delegation has come at very short notice at the personal instruction of President (Barack) Obama," the US ambassador told a news conference in Islamabad flanked by President Asif Ali Zardari.

"He sent our team to Pakistan to do several things, first to show our concern to the people of Pakistan and to the world our concern for the internal refugees," Holbrooke added.


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## Neo

*Rs 150 billion out of donors' funds to be added to PSDP ​* 
ISLAMABAD (June 03 2009): Succum-bing to pressures from various quarters, the government has altered its policy of adopting an expansionary fiscal policy, said Shaukat Tarin in an exclusive talk with Aaj TV program 'Islamabad Tonight'. The government is enhancing developing spending to almost Rs 750 billion, with Rs 150 billion outside Public Sector Development Program (PSDP), to be funded from additional Rs 200 billion, to come from donors, he said.

"Key challenge for the government is to revive growth now, while we have achieved fiscal and balance of payments balance after a strenuous effort", he sid, adding: "We still need to work more on reduction in inflation and to continue achieved balance of payments deficit".

The pay and pensions of government employees would be increased up to the level of inflation, which comes up to 20 percent as the running basic. In addition, poor class would get various levels of support, with increase in four components of Benazir Income Support Program, he said.

Tarin said that the overall size of the consolidated budget would be near Rs 3 trillion, and fiscal deficit could reach up to 5 percent of the GDP in next year, as expenditure on internally displaced persons (IDPs) would force to spend more.

He said that two new banks were being set up, which would focus to offer long-term industrial loans. Initial equity for one bank would be around Rs 6 billion. The government is encouraging public-private partnership in running government commercial organisations. IPDF of Finance Ministry would be given four new projects for promotion of public-private partnership, he said.

Tarin said that to promote transparency entire taxes on petroleum would be consolidated into one tax, though its details were being worked out. Budget announcement would entail Resolution Trust Corporation for sick units and introduction of bankruptcy law would also help industrial units to take new shape and cope with their problems, he added.


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## Neo

*Increasing external debt servicing ​*
EDITORIAL (June 03 2009): It looks that mismanagement in the external sector would continue to haunt the country for a long time to come. This has become our habit to finance the current account deficit, resulting from an excess in import payments over export receipts through loans and other capital inflows from various sources which have to be repaid over time.

The structural external sector imbalance and its financing has thus become a kind of vicious circle which is hurting the country increasingly and pre-empting foreign exchange resources in larger amounts with the passage of time. According to the latest data released by the State Bank, the country's external debt servicing stood at dollar 3.654 billion including principal amount of dollar 2.836 billion and dollar 818 million of interest payment in July-March, 2009.

This was 16 percent higher than overall debt servicing of last fiscal year, which was dollar 3.161 billion (principal amount of dollar 1.931 billion and dollar 1.23 billion of interest payment). The major payments under debt servicing were made on account of public and publicly guaranteed loans, under which dollar 2.843 billion were paid while debt servicing under non-guaranteed loans stood at dollar 459 million during July-March, 2009.

Payments to IMF and Paris Club stood at dollar 160 million and dollar 295 million respectively. Major reason for current surge in debt servicing was stated to be payment of Euro Bond worth dollar 500 million and short-term loans of Islamic Development Bank. It needs to be pointed out that huge amount of dollar 1.165 billion of debt servicing was also rescheduled due to insufficient foreign exchange reserves during the first nine months of the current fiscal year as against dollar 1.2 billion during FY08.

A sharp increase in external debt servicing during the current year is indeed a disturbing development and reflects mainly the growing stock of outstanding external debt and liabilities (EDL) caused mainly by a high current account deficit of the country. The EDL which stood at dollar 46.3 billion at the close of June, 2008 are now estimated to be around dollar 50 billion. The rise in external debt servicing would not have been much of a problem if foreign exchange reserves of the country were swelling or at least adequate to meet the foreign liabilities expected in future but the position of Pakistan is quite the reverse.

Our foreign exchange reserves had declined to a dangerously low level of dollar 6.0 billion in November, 2008 from a peak level of dollar 16 billion in November, 2007 due to slow foreign inflows and rising outflows. The current level of reserves at about dollar 11 billion is not only barely sufficient to meet the country's foreign exchange needs but has been largely accumulated through contracting of more foreign loans from various sources which certainly is poor house keeping.

If the present trend continues, a substantial part of country's foreign exchange earnings would have to be earmarked for meeting the external debt servicing requirements of the country, with little left for other essential imports. Of course, the State Bank or the government cannot print dollars or other hard currencies and the only way to reverse such a dangerous trend is to earn a surplus in the current account balance of the country.

It is not difficult to understand that in order to arrive at such a sustainable position in the external sector and reduce the level of external debt servicing, the country has to expand exportable surpluses. Exporters may need to be helped with a more favourable exchange rate. The President and the Prime Minister need to press our trading partners, who claim to be our friends, for more market access and at the same time contain import demand through a combination of tight monetary and fiscal policies along with appropriate exchange rate regime to maintain our competitiveness in the international market.

SBP may need to shift the total load of oil import need on the interbank market earlier than committed to the Fund. It needs to be recognised, nonetheless, that in the recent past, Pakistani authorities have done quite a bit and tried to move in the desired direction but obviously much more needs to be done to improve the current account balance of the country to a satisfactory state.

We know the difficulties of the government, particularly at this juncture, to undertake the necessary efforts to steer the country out of the developing crisis but ignoring the problem of mounting debt servicing for a considerable length of period has also its own perils. Postponing the problem by rescheduling of debt is only a temporary respite and should only be considered as a last option under exceptional circumstances.


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## Neo

*Supplement revenue increase with expenditure cuts ​*
EDITORIAL (June 03 2009): Talking to the media, after a detailed presentation on the budgetary outlays to the National Assembly Committee on Finance, the Federal Secretary Finance and Revenue Salman Siddique has revealed that the provinces have agreed on taxing four services (without disclosing the names) in the next budget. And, he expects to net Rs 15 to 30 billion.

Another positive development reported by him, was the agreement, reached with the provinces on levy of Capital Gains Tax on property. A meeting is scheduled to be held to have uniformity of rate and collection methodology, Salman revealed. With the economy growing at six percent plus - tax collection in absolute numbers did go up.

However, the tax to GDP ratio continued to stagnate and in fact declined this year. The economic slowdown in current financial year is now forcing the government to get its act together and obtain a national consensus to have more equitable sharing of burden of tax. Escalation of tax rates will militate against the objective of revival of growth.

In fact, the corporates are clamouring for a reduction. In 2008, a World Bank and FBR study estimated the measure of tax evasion in corporate income tax at four percent of the GDP. A reward based mechanism for tax men needs to be introduced to plug the leakages.

Country's Constitution allows the Federal Government to collect sales tax on goods only. Sales tax on services is a provincial tax. Federal government can collect the same on behalf of provincial government, against a nominal fee.

Our eastern neighbour collects sales tax in non-adjustable mode on 90 odd services. These include: Accountants; Shipping; Architects; Import cargo handling; Customs Agents; General Insurance; Banking and Financial Services etc.

FBR has selected four sectors out of 45 identified for imposition of sales tax in 2009-10. This provincial sales tax has to be a flat rate of five percent or less non-adjustable. 16 percent adjustable (ie in VAT mode) would not fetch substantial revenue. If imposed on four services the collection would be less than Rs 15 billion.

To collect Rs 30 billion, a dozen sectors, at least, would need to be roped in. Decision-makers are busy in planning steps or measures aimed at improvement in revenue collection. Once the budget exercise is over, attention needs to be diverted towards reduction in expenditure.

It appears that Prime Minister's target of 40 percent cut in establishment cost has been forgotten. In fact, 25 to 30 percent increase - excluding rise in subsidies and defence - over the budgeted figure is expected for 2008-09. PPP-led coalition government has been promised support, on national issues, by both PML (N) and PML (Q).

The time is appropriate to adopt a zero based budgetary approach for reducing 31 divisions, 422 attached departments and 105 autonomous bodies and corporations under Parliamentary supervision. This would result in reducing the federal government to 18 ministries and 24 divisions.

This appears to be politically unfeasible. Success on this score is the real test of leadership. Non-operational salary expenses within the government can be reduced and user charges for services levied with retention of proceeds. People can live with big government provided it is a government which can deliver. Unfortunately, this is not so.


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## white_pawn

*July-April: Rs 145 billion released for PSDP projects ​*ZAFAR BHUTTA 
ISLAMABAD (June 04 2009): The Finance Ministry released Rs 145 billion for development projects under Public Sector Development Programme (PSDP) during nine months (July-April) of the current financial year. According to sources, the Ministry has assured the Planning Commission that it would release the entire amount of Rs 219 billion allocated for development projects under PSDP by the end of June 2009.

The so far released amount includes 66 percent foreign aid and 39 percent of the original allocation. Due to financial constraints during the current financial year 2008-09, the government had conducted a rationalisation exercise to reduce the burden on PSDP.

Initially, the Planning Commission advised the Ministries/Divisions in August 2008 to review their ongoing and future projects/programmes focusing on high priority projects; medium priority projects; projects likely to be delayed for 2-3 years; projects to be dropped/discontinued and projects likely to be shifted on public private partnership (PPP) mode.

In January 2009, Finance Division advised the Planning Commission to reduce throw forward of ongoing projects by 20 percent to qualify for World Bank's Poverty Reduction Support Credit-1 (PRSC-1). In turn, Ministries/Divisions were requested to review their ongoing portfolio and identify possible savings placing projects in categories including:

Projects of high priority to be fully protected; Projects which implementation could be delayed for 1-2 years; to identify projects to be dropped from PSDP, projects likely to be shifted to the public private partnership mode and projects in Balochistan NWFP be exempted from any rationalisation.

Consequently, 140 projects were either discontinued or placed for execution as private public partnership that reduced future liability by Rs 385 billion. In March 2009, Finance Division reduced the size of federal PSDP to Rs 219 billion against approved size of Rs 371 billion. Finance Division has also transferred the Benazir Income Support Programme from the development to current budget.

Finance Division slashed allocation in infrastructure sector by 50-70 percent from Rs 178 billion to Rs 96 billion with Rs 82 billion reduction. Social sector allocation was reduced by 70 percent of original allocation from Rs 161 to Rs 99 billion placing a cut of Rs 62 billion. Production sector faced a reduction of Rs 3 billion from Rs 20 to Rs 17 billion, Science and Technology Infrastructure from Rs 7 to Rs 5 billion and Environment allocation was reduced from Rs 5 to Rs 2 billion.

Business Recorder [Pakistan's First Financial Daily]


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## white_pawn

*Government expects approval of four projects: World Bank Board meets today ​*RECORDER REPORT 
ISLAMABAD (June 04 2009): The World Bank (WB) is likely to consider five development projects worth $1.2 billion as the WB board meets on Thursday in Washington. Sources told Business Recorder on Wednesday that Pakistan is seeking the amount for various development projects in education, poverty alleviation and social safety net.

The projects include Sindh Education Sector Programme costing $300 million, Punjab Education Sector Programme $350 million, Poverty Alleviation Fund III $200 million and Social Safety Credit Policy worth $200 million. According to sources there is another project, however, they refrained from giving any detail. The government expects that the Board would only approve the four projects costing around $1050 million.

Business Recorder [Pakistan's First Financial Daily]


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## white_pawn

*Stocks breach psychological barrier of 7,000 points *​By Our Staff Reporter 
Thursday, 04 Jun, 2009 

KARACHI: The KSE 100-share index on Wednesday fell below the 7,000-level as some of the leading base shares ended with lower-locks followed by reports of massive foreign unloading. The index was down by 135.17 points or two per cent at 6,989.94.

The bulk of the targeted selling remained confined to market pivotals such as OGDC, Pakistan Oilfields, National Bank, MCB Bank and some other base shares dragging the index sharply lower.

However, unlike the pre-budget sessions when the market rose and fell on a mixed combination of positive and negative leaks, this time the trend is on the lower side no flutters here and there.

The decline was led by the banking and oil sectors. The former came in for active selling on reports of likely imposition of service charges followed by fears of slow growth, while the latter on foreign selling.

After early rising to the sessions high of 7,183.52, it steadily fell to finish slightly above the low of day at 6,989.94, shedding another 136.17 points eroding Rs41 billion from the market capital.

The KSE 30-share index on the other hand suffered a massive loss of 226.78 
points or about three per cent at 7,445.14 on active profit-selling in some leading industrials.

Analysts said as the budget announcement (June 13) is drawing nearer, speculators were becoming more active in spreading rumours, notably those which could accelerate the pace of selling on the blue chip counters.

Leading gainers were again led by Dreamworld and Atlas Honda, up by Rs11 and Rs6.12, followed by Mehmood Textiles, Liberty Mills, KSB Pumps, Abbott Lab, Ferozsons Lab, Packages, Glaxo-SKF and Atlas Honda, up by Rs1.57 to Rs6.12.

The prominent losers included Bata Pakistan and Unilever Pakistan, off by Rs30 and Rs28.99. They were followed by Adamjee Insurance, EFU General, Shell Pakistan, Mari Gas, Dawood Hercules, Sanofi-Aventis, Colgate Pakistan and Shezan International, which suffered fall ranging from Rs4.50 to Rs7.71.

Trading volume rose to 140m shares from the previous 84m shares as losers held a strong lead over the losers at 212 to 86, with 15 shares holding onto the last levels.

The active list was again topped by JS & Co, off Rs1.32 at Rs25.20 on 19m shares, followed by OGDC, lower by Rs1.86 at Rs74.86 on 10m shares, National Bank, off Rs3.33 at Rs64.70 on 8m shares, Arif Habib Securities, off Rs1.49 at Rs28.49 also on 8m shares, KESC, up by 22 paisa at Rs3.12 on 8m shares, PTCL, lower 46 paisa at Rs16.04 on 7m shares and D.G. Khan Cement, easy by Rs1.25 at Rs23.77 also on 7m shares.

MCB Bank followed them, sharply lower by Rs7.71 at Rs148.66 on 5m shares, Saudi Pak Bank, firm by 97 paisa at Rs7.56 on 5m shares and Pakistan Petroleum, up Rs1.31 at Rs180.36 also on 5m shares.

Forward counter

Barring Fauji Fertiliser and some other leading shares which managed to finish on the higher side, all other blue chips showed widespread fall including Habib Bank, MCB Bank, National Bank, PSO and others.

But the decline was speculative as no transaction was noted in any of them and price decline was not halted till the close.

Defaulter counter

The trading pattern on this counter on the other hand was mixed as some shares managed to finish higher under the lead of Unity Modaraba and Delta Insurance, up by four paisa and Re1, but on the other hand Trust Brokerage and Elahi Cotton fell by Re1 each on stray selling. 

Among the actives, Zeal Pak Cement and Japan Power were leading, lower by one and three paisa at Rs0.41 and Rs2.07 on 1.373m and 0.404m shares respectively. Others were modestly traded.

DAWN.COM | Business | Stocks breach psychological barrier of 7,000 points


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## white_pawn

*Telecom companies to jointly invest one billion dollars ​*By Ahmad Hassan 
Wednesday, 03 Jun, 2009 

ISLAMABAD: The Chief Executive officers of major telecom companies working in Pakistan have expressed their commitment to jointly invest at least US$ one billion in infrastructure, capital expenditure and technology in the next fiscal year to complement the enabling environment that the government is providing as a stimulus.

According to an official handout, the CEOs of all telecom companies in Pakistan including Mobilink, Warid, Ufone, Telenor and China Mobile called on Prime Minister, Syed Yousuf Raza Gilani at the PMs House Wednesday afternoon and discussed with him matters relating to the cellular companies in perspective of the upcoming budget.

The Prime Minister appreciated the investment made by the mobile companies in the telecom sector of Pakistan, which has so far attracted foreign direct investment of US$ nine billion amounting to 46per cent of countrys total FDI in the last three years.

Ambassadors of China, Mr. Luo Zhaohui; Egypt, Mr. Megly Amer; Norway, Robert Kvite and UAE, Mr. Ali Saif Al-Awani were also present during the meeting.

The Prime Minister appreciated the investment made by the mobile companies in the telecom sector of Pakistan, which has so far attracted foreign direct investment of US$ nine billion amounting to 46per cent of countrys total FDI in the last three years.

The Prime Minister assured the meeting that the government would continue to provide incentives to the telecom industry so that the sector may continue to attract more investment and create more jobs. 

DAWN.COM | Business | Telecom companies to jointly invest US$ one billion


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## Neo

*IMF programme no solution to Pak economic ills: ADB ​* 
*Says Pakistan facing high inflation due to under-utilisation of domestic resources, fiscal restraint is the wrong recipe for its woes​*
Thursday, June 04, 2009
By Khalid Mustafa

ISLAMABAD: The Asian Development Bank (ADB) has surprised the economists of the country, saying that the IMF programme loan of $7.6 billion under Stand By Arrangement with its conditions is not the right recipe for Pakistans economic ills.

Indeed, we believe that the IMF conditions will reduce the capacity to engineer a solution to the problems of inflation and falling foreign currency reserves without increasing the unemployed buffer stock, said Jesus Felipe, William Mitchell and L. Randall Wray, the authors of the ADBs report titled A Reinterpretation of Pakistans Economic Crisis and Options for Policymakers released here on Wednesday.

While the IMF statement suggested it is keenly aware of the need to deploy a socially acceptable solution, we consider that a policy strategy based on fiscal austerity will create unacceptable levels of socio-economic hardship in Pakistan, the report said.

The report was written at the time when agreement with IMF for the 23-month stand-by arrangement amounting to $7.6 billion was reached to support economic stabilisation programme and the first tranche of $3.1 billion was released to Pakistan.

There existed two key objectives of the IMF loan that included I) restoration of macroeconomic stability and confidence through a tightening of macroeconomic policies; and ii) to ensure social stability and adequate support for the poor and vulnerable in Pakistan.

Under the loan terms the external balance is to be targeted via a fiscal tightening from a deficit of 7.4 per cent of GDP for the fiscal year 2007-2008, to 4.2 per cent in 2008-2009, and then 3.3 per cent in 2009-2010.

The tightening is to be achieved by phasing out energy subsidies, better prioritising development spending and implementing strong tax policy and administration measures, interest rate hike to contain inflation, offload central bank borrowings, and build reserves.

As per loan terms the social assistance is to be strengthened but better targeted such that spending on the social safety net will be increased to 0.9 per cent of GDP in 2008-09, an increase of 0.6 percentage point of GDP.

The authors of the report criticised the said covenants of the Funds programme loan saying it would not help bail out Pakistans economy. The Fund is less than clear on; (i) the nature of currency sovereignty; (ii) the nature and financing of budget deficits; and (iii) the nature and financing of trade deficits.

Although Pakistans problems are result of misguided policies, it does not mean that the only solution available is to subject the economy to an austerity programme. In the words of Joseph Stiglitz renowned economist and former SVP of World Bank, Stabilisation policy cannot be separated from growth policy. Failure to stabilise may hurt growth, but stabilisation, in the traditional sense of the term (price stability and fiscal adjustment), does not necessarily lead to economic growth.

Architects of the ADB report believe that the IMF programme does not correctly portray the sources of inflation pressures, or the constraints on economic development. Pakistan faces high inflation and insufficient progress toward development, the report points out and says that the country is not fully utilising its domestic resources.

Pakistan in order to achieve sustainable development should mobilise domestic resources to improve incomes and reduce supply bottlenecks through expansion of domestic capabilities, the ADB report suggests.

Given substantial levels of redundant resources, they say, it should have been obvious that Pakistans inflationary bias could not be a simple matter of excessive demand. Thus, in appraising the inflationary impact it is incorrect to presume that fiscal policy has been excessively expansionary. 

Using budget deficits as evidence of excessive expansionary policy is therefore erroneous, unless the deficits have pushed the economy beyond full capacity use of its resources. For this reason, fiscal restraint may not be the medicine that is required in a situation in which a country is actually living below its means - as indicated by idle or under-utilised resources, they concluded.

We do recognise that Pakistans current situation is one in which robust growth over 5 per cent will tend to generate a current account deficit. They explained further saying that: From the orthodox perspective the consequences for Pakistan of having balance of payments (BOP) problems are straightforward. When Pakistan encounters a BOP problem before short-term capacity utilization is reached, demand is curtailed, disguised and open unemployment increase, and capital accumulation has to be reduced. This leads, in the long run, to a relative deterioration of the countrys export potential compared with that of its main competitors. This situation tends to lead to a vicious circle with further BOP problems.

They said: We do not endorse the orthodox solution. Given that Pakistan operates with what we define below as a modern money regime that includes flexible exchange rates, we consider it has sufficient domestic policy space to pursue an alternative, sustainable growth path. It can make use of this space to pursue economic growth and raising living standards, even if this means expansion of the current account deficit and depreciation of the currency.

They also criticise the orthodox solution to a current account deficit saying it will actually make it more difficult for Pakistan to reduce dependence on imports.

The report is of the view that the IMF programme does not address the failures in the policies of the previous government, largely focused on a consumer-driven growth strategy despite the import dependent nature of the economy.

It is clear that while the country enjoyed very high levels of FDI the funds were largely concentrated in the consumer sector. This had two consequences: (i) it increased demand for foreign exchange; and (ii) it created a foreign exchange liability. The other significant point is that this investment did not generate corresponding amounts of foreign exchange revenue because it did not improve export capacity.

The policy emphasis on fiscal restraint is also fraught with problems, the report said saying the targets to reduce the budget deficit as required by the IMF agreement may help lower inflation, but only because the fiscal drag acts as a deflationary mechanism that forces the economy to operate under conditions of excess capacity and unemployment. This type of deflationary strategy does not build productive capacity and the related supporting infrastructure, thus offers no growth solution. 

Likewise, fiscal restraint may not be successful in lowering budget deficits for the simple reason that tax revenue can fall as the taxable base shrinks because economic activity is curtailed.


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## Neo

*Govt to bring changes in growth, development path ​* 
*Approach paper of 10th five-year plan says country lost around $35bn due to destruction of infrastructure and output losses since 2002-03​*
Thursday, June 04, 2009

ISLAMABAD: The Tenth Five Year Plan (2010-2015) has outlined the importance to come up with the exact cost of ongoing fight against militancy, terrorism and extremism, stating that the plan will lay solid foundation for just and equitable development, which will be best way of defeating the obstructionist forces. 

The approach paper of the tenth five-year plan, which will be tabled before the National Economic Council (NEC) on Thursday for formal approval in its meeting with Prime Minister Syed Yousuf Raza Gilani in the chair, states that Pakistan lost around $35 billion due to the destruction of infrastructure and output losses since 2002-03 after becoming part of the ongoing war against terrorism. 

The NWFP and FATA have been most adversely affected. The government, for the first time after assuming the reins of power, is going to make a promise with the masses through the approach paper for the tenth five-year plan that it will bring fundamental changes in growth and development path which was followed in the recent past during the Musharraf regime. 

Given this scenario, it is not surprising that the country is being described as a case of economic growth without real economic development, the approach paper states, a copy of which is available with The News. The NEC will approve the exact size of development outlay and macroeconomic targets for the next budget 2009-10. The plan will also devise a strategy about sustainability of external debt in which efforts will be made to adhere to limits envisaged under the Fiscal Responsibility and Debt Limitation Act 2005. 

The plan also spells out importance for placing an effective implementation, monitoring and evaluation mechanism. This has been the proverbial Achilles heel of past development plans. In a period of global and domestic uncertainty, this will pose even a greater challenge. An evaluation and monitoring system of selected ongoing development projects has been set up in the Planning Commission (PC). Similar capacity needs to be strengthened or built in sectoral ministries at the federal and provincial levels. 

The paper is being issued at a time when national imperatives and global developments provide compelling reasons to make fundamental changes to growth and development path. Our past strategies have delivered spurts of high economic growth. Unfortunately these have not been sustained and only led to boom-bust cycle it states. In most cases, these spurts have been ignited by favorable international developments and increase in foreign assistance. 

The paper says: This is because growth has been consumption led and import dependent, and not driven by increasing investment and exports. More importantly, it states that this growth has not met our peoples expectations and there is increasing disillusionment with the development process. 

It says progress in human and social indicators has been disappointing, poverty level remains high, job opportunities that may meet citizens are lacking and we have witnessed glaring income inequalities appearing in recent years. 

This situation must be rectified urgently as the plan is to play a pivotal role in bringing about a fundamental change in development paradigm. In this new paradigm, ordinary people, especially those in less developed provinces and regions, must be at the center of the development process and have ownership in the economic development of the country.


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## Neo

*KSE to be on new Dow Jones indexes ​* 
Thursday, June 04, 2009

KARACHI: The Dow Jones Indexes and the Federation of Euro-Asian Stock Exchanges (FEAS) have jointly planned to launch three indexes on Friday (June 5) under the banner of Dow Jones FEAS Indexes.

These indexes are created with an aim of measuring the performance of companies across the Euro-Asian region. These indexes are being formulated for the first time, said the Karachi Stock Exchange (KSE) in a press note on Wednesday.

The indexes include one composite and two regional sub-indexes. The Dow Jones FEAS Indexes are designed to underline index-linked investment products such as funds and structured products, statement added.

Dow Jones FEAS Composite Index currently includes component stocks of 10 of the 32 member states of the Federation of Euro-Asian Stock Exchanges. The exchanges included Abu Dhabi (UAE), Amman (Jordan), Bahrain (Kingdom of Bahrain), Belgrade (Serbia), Bulgaria (Bulgaria), Istanbul (Turkey), Karachi (Pakistan), Macedonia (Republic of Macedonia), Muscat (Oman), and Zagreb (Croatia).

The Dow Jones FEAS Middle East/Caucasus Index currently includes stocks from the following four FEAS member exchanges: Abu Dhabi, Amman, Bahrain, and Muscat. The Dow Jones FEAS South East Europe Index measures the performance of companies in the following five FEAS member exchanges: Bulgaria, Zagreb, Macedonia, Belgrade and Istanbul.

FEAS has promoted the development of emerging stock exchanges across the Euro-Asian region and has supported a transparent market environment between FEAS members to advance trading in these markets, said Dow Jones Indexes President Michael A Petronella in the statement. The introduction of the Dow Jones FEAS Indexes will support this mission as the index provides market participants with easy access to a unique combination of emerging and frontier market stocks, he added.

I can clearly remember the day when we founded FEAS, with merely 12 regional exchanges, fourteen years ago. Today, FEAS covers an area from Mongolia in the East to Croatia in the West, with 32 stock exchange members and seven affiliate members.


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